Godrej Consumer Products Ltd to buy domestic firms in India

Godrej Consumer Products Ltd is mulling domestic Indian acquisitions to bolster its growth. The firm, already having undertaken four overseas acquisitions this year alone, is interested in acquiring a number of domestic firms. Adi Godrej, chairman Godrej Consumers Products Ltd said the firm is keen on bolstering its Indian position and offering and will be acquiring a number of Indian firms.

Pegged at about 2.5 billion net worth, the group Monday said it will be acquiring firms that have the right price and the right terms. Mr. Godrej was speaking during the Reuters India Investment Summit when he revealed the firm’s investment plans for the future. The chairman was referring to unlisted personal care firm Paras Pharma based in the Indian city of Ahmedabad.

India is currently the fastest growing major economy after China and demand for products for products such as soaps, shampoos and hair conditioners are growing fast on the back of the increasing incomes in the country. According to Godrej, the firm’s first priority is acquisitions in India. In that regard, the acquisitions will all be done in sectors for which the firm has considerable knowledge, such as household insecticide, hair care and personal wash.

Godrej Consumer has a market value of 2.9 billion. Just recently, Godrej purchased the remaining 51 per cent stake in its Indian joint venture with Sara Lee Corp, Godrej Sara Lee that it renamed to Godrej Household Products Ltd. The purchase cost it 185 million Euros. The chairman said the company was interested in buying unlisted personal care firm Paras Pharma in Ahmedabad if the price was right.

Godrej reiterated the firm’s expectations with regard to the planned investments, saying that typically, valuations tend to be much higher than what the firm would be comfortable with. Two private equity firms that hold a majority stake Paras Pharma have said they were looking to sell the holding for as much as $700 million.

Godrej will continue to pursue opportunities overseas in South Africa, where it has hair care brands such as Rapidol and Kinky, Latin America and Indonesia to balance stiff competition in India. The company expects revenue to rise 25 per cent to 30 per cent in the current fiscal year ending in March. The newly acquired brands will grow at 15-20 percent in 2011/12, he said.

In its household insecticide business, the company expects revenue to rise 35 per cent to 40 percent in the September quarter, more than doubling from a 15 percent rise in the previous three months.

28 Sep 2010.