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Marico to roll out new products from stable, plans acquisitions

By Pradipta Mukherjee in Kolkata
Last updated on: January 16, 2007 02:41 IST

The Rs 1,144 crore Marico, a leading consumer products and services firm in global beauty and wellness space, will soon expand its network through acquisitions. It is also eyeing forays into newer categories.

"We expect inorganic growth to contribute up to 40 percent to our overall growth and the remaining would be organic. As we expand our market and consumer reach, we would be looking at newer businesses across the skincare, haircare and wellness segments," Harsh Mariwala, Marico chairman and managing director, said.

In 2006, Marico acquired four brands — Manjal, a turmeric-based herbal soap brand in Kerala from Oriental Extrations in January; Nihar, a perfumed coconut oil brand from Hindustan Lever in February; Fiancée, a post-wash haircare brand from the Egypt-based Ready Group in September, and HairCode, a haircream and hairgel brand in Egypt from the Soliman Group in December.

Marico spent Rs 227 crore for the acquisition of Nihar, including the transaction costs, and Fiancée cost them $35.1 million.

Analysts said that these brands were clocking healthy sales and Marico, post acquisition, could expect at least 10 percent increase in its bottomline.

Manjal, which is being marketed only in Kerala, was clocking about Rs 9 crore per annum, while Nihar recorded a turnover of Rs 110 crore largely in eastern India. Egyptian brand Fiancée's turnover was about Rs 48 crore, and HairCode clocked about Rs 32 crore in Egypt.

Milind Sarwate, chief financial officer of Marico, said, "The recent acquisitions would deliver a margin higher than Marico's current average. Much would also depend on how the company integrates these acquired brands into its system."

According to a recent Edelweiss report, Marico's topline in the third quarter of the current financial year is expected to grow by 33 per cent to Rs 403 crore.

The report has incorporated a 200 bps quarter-to-quarter decline in gross margin due to hardening of copra prices. Despite this, the gross margin will improve by 215 bps.

This, coupled with lower depreciation on account of special one-time charge of Rs 3.5 crore in third quarter during their last financial year, will result in EBIT (earning before interest, tax) growing by 111 percent to Rs 57 crore.

"We registered a turnover of Rs 750 crore during the first half of FY07. We are, therefore, on track to achieve a turnover of about Rs 1,500 crore for the year ending March '07," claimed Sarwate.

Pradipta Mukherjee in Kolkata
Source: source
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