Description
This is a presentation explains acquisition of Inidan consumer goods companies abroad
Indian Consumer Goods Acquisitions Abroad – What can we learn from MNC’s on the Brand Management Challenge
Market Overview-Consumer Goods Industry
Market Segments
? Food
products is the largest consumption category in India. of the leading players in this segment include Britannia Industries Ltd, Dabur India Ltd, GlaxoSmithKline Consumer Healthcare India Ltd and Gujarat Cooperative Milk Marketing Federation (GCMMF).
? Some
Key Players
www.ibef.or g
Key Players
www.ibef.or g
Introduction
? Leader among India’s FMCG, Household & Personal Care Products. ? Turnover of Rs. 2,400 crs, Operating profit: Rs. 456 crs (FY11) ? Brands include: Good knight, Cinthol, Godrej No. 1, Hit, Fairglow,
Expert, and many more.
? Global operations with acquisitions of well-established brands. ? Access to markets of Europe, Africa, Australia, Canada and Middle
east.
? Notable market Shares are as follows:
? Toilet soaps: 9.7%, ? Hair color: 28.7%, ? Household Insecticides: 39%
Key Overseas Brands
KEYLINE BRANDS
INECT O RAPIDO L SOFTLI NE
ISSUE GROUP
ARGENC OS
KINKY GRP
MEGASA RI MAKMUR
Acquisitions: 2 Instances
?Keyline Brands ?Darling Group Holdings
Keyline Brands
? A London-based consumer products company. ? UK’s admired Co in Consumer goods. ? Strength in Manufacturing, Marketing, Sales and Distribution. ? Revenue: £16.7 mn, PBT: £ 2.2 mn. ? Deal worth £ 17-18 mn, 8 times the Profit of acquired Co. ? Strong Portfolio of Brands like
Cuticura, Erasmic and Nulon in many
countries.
? Well-developed Customer base: Numerous Supermarket chains.
Boots, Sainsbury, Tesco supermarkets.
? First acquisition: Entry into Global market. ? Analogous brands across 2 companies. ? Market exploration of the West. ? Access to Trade channels of developed markets. ? Learning business model of the Western markets. ? Manifold bigger UK market. ? Hone Modern Trade Retail Skills.
Leveraging Brands
? ‘Godrej No. 1’ for Indian Ethnics in the west.
? Sandalwood variant
? Ayurvedic variant
? Targeting Indian Market with Brands under acquired company.
? Erasmic Shaving product.
? Cutting on manufacturing costs with productions in India.
Acquisition of Darling Group Holding
? Darling Group is the Market Leader in Hair extension products since
13 years.
? Darling has a total experience of 30 years in the market. ? It operates and supplies its product in 14 countries of Africa. ? Revenues of $200 mn, 15% growth. ? GCPL acquired 51% stake in Darling Group Holding. ? 3x3 strategy adopted by GCPL for acquisitions in Asia, Africa, and
South America.
Market Potential, Reasoning Deal
? Hair extension market - $1bn, highly unorganised.
? 75% of market held by 3 players; Darling, the Leader.
? Virgin market – No MNCs, Less competition. ? African demographics, culture similar to India. ? Indian Diaspora – settled in Africa. Huge market. ? Similarities in Retail & distribution of Africa. ? Brands are highly followed in Africa. ? Zero Debt on Balance Sheet of Darling. ? Darling along with Kinky enables all price-point coverage.
Introduction
? Fourth largest FMCG company in India
? Revenues – US $910 Million
? Market Capitalization – US $4 Billion ? Consumer product categories
? Hair Care
? Oral Care ? Health Care ? Home Care & Foods
? Products available in more than 60 countries ? Overseas business now contribute more than 20% of
Dabur’s overall sales
International Presence
Acquisition Strategies
? In 2008 company decided to expand its global presence.
They earmarked $ 200 million primarily for acquisition of brands and companies abroad. ? They segmented the markets into 3 categories
? Focus markets: Already has a presence, strategy is to acquire
smaller brands ? Potential markets: Markets like Malaysia, Uk and SA where company has a minimal presence ? New markets: No presence, strategy is to acquire medium and large sized companies.
? “The buy should work as a two-way deal in which our
products can run through the network of the acquired company. Similarly, the products of the acquired companies should be relevant for Indian consumers as well.”
Acquisition of Turkey based Hobi Kozmetic
? The acquisition happened in July 2010. Total deal ? ?
?
?
size - $ 69 million. First ever overseas acquisition. Turkey’s largest personal care products company. Dabur fully acquired three Hobi Group firms Hobi Kozmetik, Zeki Plastik and Ra Pazarlama. “This acquisition is an important step towards further consolidating and expanding our already substantial presence in the Middle East and North Africa region” Anand Burman, Chairman, Dabur India
Acquisition of US based Namaste Laboratories LLC
? The acquisition happened in November 2010. Total
deal size - $ 100 million. ? Founded in 1996 Chicago based Namasté Laboratories markets a portfolio of personal care products. ? The company is present in the US, Africa, Europe and the Caribbean region of North America with distribution platform across the US in mass, retail, beauty stores and salons. ? “The Namasté Group will be a gateway for Dabur to the US market and the acquisition will also add to Dabur’s strong presence in Africa.” Anand Burman, Chairman, Dabur
Focus on African Market
? Africa is one of the virgin markets, it is big and developing
? ? ?
?
very rapidly. It represents the next frontier of consumption growth outside BRIC. The ethnic population in African countries offers a good potential for Indian companies. Brand valuation is cheaper in Africa as compared to other markets. Most of the MNCs like L’Oreal, P&G and Unilever are generally not present in most of the markets and even if they are, they have premium product offerings as compared to products offered by Indian companies. "Try catching a well-heeled ethnic woman in frizzy hair. They straighten their hair before they do anything. That's how they go.”
Introduction:- Welspun
? Since its inception in 1985, the Welspun group has
?
? ? ?
rapidly evolved to become a Global leader in almost every segment that it operates viz. Home Textiles and SAW Pipes. Has associations with Most of the Fortune 100 companies, operating in Retailing industry & Oil and Gas. Turnover - US$ 3.06 billion Welspun Group has 5 verticals:- Energy, Infrastructure, Textiles, Steel & Pipes Welspun is India's leading and among the top five manufacturers of terry towels in the world exporting over 90% of its sales directly to leading retailers including Wal-mart, Bed Bath and Beyond, Linen n
? Has presence in almost 50 countries of world with
the employee strength of 24000+. ? Global Presence
Introduction:- Christy
? Christy has been established since 1850, when
Henry Christy visited the Palace of the Sultan in Constantinople. ? The first Christy towels were shown in the Great Exhibition of 1851 at Crystal Palace, where a set was presented to Queen Victoria. ? Christy uses only the very finest natural fibres to create beautiful towels and bed linen ? Available from major department stores and good linen shops across the UK, Christy products are also exported in Germany and the USA
? Annual turnover of Rs 300 crore. ? Employees- About 1000 ? Christy invented the first loom to mechanically
weave what remains today the basis of the modern towel and is the sole supplier of the world famous Wimbledon Championship tennis towel. ? Across the UK, Christy has established longstanding relationships with premium retail stores including Marks and Spencer, John Lewis, House of Fraser, Selfridges and Debenhams.
Acquisition
? The Welspun group had acquired an 85 per cent in CHT
Holdings Ltd, the holding company of the UK's leading towel brand Christy, valuing it at £15.6 million (Rs132 crore) on 3rd,July 2006. ? The overall enterprise value of Christy is Rs 132 crore and Welspun paid Rs 100 crore initially. Bank of India, which is funding the deal will pay Rs 60 crore while the remaining Rs 40 crore will be funded through Welspun's internal accruals. ? The Christy management team would continue to own the remaining 15 per cent of the Christy issued share capital and will operate Christy on a stand-alone basis, with the exception of Rajesh Mandawewala, joint managing director, who had been appointed chairman of Christy. ? From 1 April, 2009, the Welspun and the Christy management were able to exercise a put / call option, calculated on a formula based upon FY08 and FY09 EBITDA, to buy / sell the 15 per cent equity interest retained by the existing Christy management.
Reasons for Acquisition
? Access to the premium, high end Christy brand, ? ?
? ?
which could be extended to other home products. Access to the UK and European markets. Access to the leading retail stores in the UK for its product range including towels, bed linen and other home products. Leveraging Christy's presence in the premium US retail segment via Bloomingdales. Re-alignment of the company's US distribution network with Christy's own network.
? Transfer of technology / product development skills
to manufacture and manage premium end products. ? Access to proven retail experience, brand management and innovative product design skill sets which may be used to strengthen other parts of the Welspun Group. ? Extend the Christy brand to the Indian consumer through the company Retail. ? Christy has long-standing relationships with leading retailers across UK including Marks & Spencer, John Lewis, House of Fraser, Selfridges and Debenhams. Having established its credentials as a world class manufacturer of terry towel and bed linen, the company intended to move to the next level in the value chain viz. 'Branding' using Christy as its
Quotes
BK Goenka, vice chairman & MD of Welspun Group, had said: "Christy's acquisition strengthens their commitment towards achieving their goal of becoming a globally relevant strategic player in the home textiles segment. Christy's commercial, retail, design and technical excellence complements Welspun's established manufacturing capability and global reach as an international home textile manufacturer. Christy also complements their recent initiatives to develop a more robust model providing global consumers including both UK and US with contemporary products for the Home.“http://www.businessstandard.com/india/news/welspun-wrapsuks-
Christy managing director Joel Rosenblatt had said, “The acquisition will help create synergies between the two companies in terms of greater help with sourcing, roll-out of our brands through Welspun stores in India besides taking the Welspun brand and retailing to the United Kingdom.”
http://www.financialexpress.com/news/welspunbuys-85-in-uks-christy-for-rs-132.6-cr/169768/0
Introduction
? Turnover of
Rs. 31.3 billion (~USD 695 Million) in 2010-11. ? Consumer product categories - Personal care products, - Edible oils, -Fabric care products and -Processed foods. ? Present in more than 25 countries across Asia and the African continent. ? A widespread distribution network of more than 3.3 Million outlets in India and overseas.
Acquisition strategies
? Marico's International Business Group (IBG) has
an annual turnover of over USD 160 million. (2010-11). ? Its strategy has been to enter fast-growing economies with under penetrated consumer markets. ? After acquiring a firm and its brands, the company then focuses on brand-building and expanding distribution. ? Global presence in-Bangladesh, Middle East, Egypt, South Africa, Malaysia and Vietnam.
Acquisition of soap brand Aromatic
? Marico Bangladesh Ltd (MBL) acquired the toilet
soap brand "Aromatic" from Aromatic Cosmetics Ltd (ACL) ,Bangladeshi personal care product company. ? Aromatic has an aggregate turnover of about Taka 300 million in Bangladesh with a market share of around 5 per cent. ? Aromatic's brand equity owes its strength to the quality of the soap & its positioning based on the "halal" concept, which has a strong recall amongst consumers. ? The acquisition of Aromatic enabled MBL to strengthen its presence in the soaps category that was estimated to be about Taka 6,000
Acquisition of the Code 10 brand from Colgate-Palmolive
? Marico entered Malaysia’s hair styling market in
?
? ? ?
January 2010, with the acquisition of the Code 10 brand from Colgate-Palmolive. The Malaysian hair-styling market was estimated at 150 million ringgits ($43.86 million, or over Rs 200 crore). The turnover of the Code 10 brand was Rs 12 crore. Code 10 was the third-largest player in the country, with a double-digit market share. “Marico leads the market in key hair-styling segments, such as hair creams in West Asia. We hope to replicate this success in South-East Asia with this acquisition, our first one in this region.”
Framework :For Acquired Brands
? Introduction of Foreign Brands into India and Vice
versa
? Charging Premiums and making more margins ? Enhancing Corporate Identity Globally ? Having Brand presence across all market
segments
? Exposure to newer markets thereby improving
Brand Value
? Emphasis on more branding activities through low
Support system for Brand Management:? Acquiring well established Brands
? Entry in newer markets
? Entry into different segments of these markets ? Gaining Distribution Expertise in newer markets ? Product Design & Technological Know how ? Accessing newer customer base ? Developing newer management practices /
Business practices ? Horizontal Integeration
doc_526463198.pptx
This is a presentation explains acquisition of Inidan consumer goods companies abroad
Indian Consumer Goods Acquisitions Abroad – What can we learn from MNC’s on the Brand Management Challenge
Market Overview-Consumer Goods Industry
Market Segments
? Food
products is the largest consumption category in India. of the leading players in this segment include Britannia Industries Ltd, Dabur India Ltd, GlaxoSmithKline Consumer Healthcare India Ltd and Gujarat Cooperative Milk Marketing Federation (GCMMF).
? Some
Key Players
www.ibef.or g
Key Players
www.ibef.or g
Introduction
? Leader among India’s FMCG, Household & Personal Care Products. ? Turnover of Rs. 2,400 crs, Operating profit: Rs. 456 crs (FY11) ? Brands include: Good knight, Cinthol, Godrej No. 1, Hit, Fairglow,
Expert, and many more.
? Global operations with acquisitions of well-established brands. ? Access to markets of Europe, Africa, Australia, Canada and Middle
east.
? Notable market Shares are as follows:
? Toilet soaps: 9.7%, ? Hair color: 28.7%, ? Household Insecticides: 39%
Key Overseas Brands
KEYLINE BRANDS
INECT O RAPIDO L SOFTLI NE
ISSUE GROUP
ARGENC OS
KINKY GRP
MEGASA RI MAKMUR
Acquisitions: 2 Instances
?Keyline Brands ?Darling Group Holdings
Keyline Brands
? A London-based consumer products company. ? UK’s admired Co in Consumer goods. ? Strength in Manufacturing, Marketing, Sales and Distribution. ? Revenue: £16.7 mn, PBT: £ 2.2 mn. ? Deal worth £ 17-18 mn, 8 times the Profit of acquired Co. ? Strong Portfolio of Brands like
Cuticura, Erasmic and Nulon in many
countries.
? Well-developed Customer base: Numerous Supermarket chains.
Boots, Sainsbury, Tesco supermarkets.
? First acquisition: Entry into Global market. ? Analogous brands across 2 companies. ? Market exploration of the West. ? Access to Trade channels of developed markets. ? Learning business model of the Western markets. ? Manifold bigger UK market. ? Hone Modern Trade Retail Skills.
Leveraging Brands
? ‘Godrej No. 1’ for Indian Ethnics in the west.
? Sandalwood variant
? Ayurvedic variant
? Targeting Indian Market with Brands under acquired company.
? Erasmic Shaving product.
? Cutting on manufacturing costs with productions in India.
Acquisition of Darling Group Holding
? Darling Group is the Market Leader in Hair extension products since
13 years.
? Darling has a total experience of 30 years in the market. ? It operates and supplies its product in 14 countries of Africa. ? Revenues of $200 mn, 15% growth. ? GCPL acquired 51% stake in Darling Group Holding. ? 3x3 strategy adopted by GCPL for acquisitions in Asia, Africa, and
South America.
Market Potential, Reasoning Deal
? Hair extension market - $1bn, highly unorganised.
? 75% of market held by 3 players; Darling, the Leader.
? Virgin market – No MNCs, Less competition. ? African demographics, culture similar to India. ? Indian Diaspora – settled in Africa. Huge market. ? Similarities in Retail & distribution of Africa. ? Brands are highly followed in Africa. ? Zero Debt on Balance Sheet of Darling. ? Darling along with Kinky enables all price-point coverage.
Introduction
? Fourth largest FMCG company in India
? Revenues – US $910 Million
? Market Capitalization – US $4 Billion ? Consumer product categories
? Hair Care
? Oral Care ? Health Care ? Home Care & Foods
? Products available in more than 60 countries ? Overseas business now contribute more than 20% of
Dabur’s overall sales
International Presence
Acquisition Strategies
? In 2008 company decided to expand its global presence.
They earmarked $ 200 million primarily for acquisition of brands and companies abroad. ? They segmented the markets into 3 categories
? Focus markets: Already has a presence, strategy is to acquire
smaller brands ? Potential markets: Markets like Malaysia, Uk and SA where company has a minimal presence ? New markets: No presence, strategy is to acquire medium and large sized companies.
? “The buy should work as a two-way deal in which our
products can run through the network of the acquired company. Similarly, the products of the acquired companies should be relevant for Indian consumers as well.”
Acquisition of Turkey based Hobi Kozmetic
? The acquisition happened in July 2010. Total deal ? ?
?
?
size - $ 69 million. First ever overseas acquisition. Turkey’s largest personal care products company. Dabur fully acquired three Hobi Group firms Hobi Kozmetik, Zeki Plastik and Ra Pazarlama. “This acquisition is an important step towards further consolidating and expanding our already substantial presence in the Middle East and North Africa region” Anand Burman, Chairman, Dabur India
Acquisition of US based Namaste Laboratories LLC
? The acquisition happened in November 2010. Total
deal size - $ 100 million. ? Founded in 1996 Chicago based Namasté Laboratories markets a portfolio of personal care products. ? The company is present in the US, Africa, Europe and the Caribbean region of North America with distribution platform across the US in mass, retail, beauty stores and salons. ? “The Namasté Group will be a gateway for Dabur to the US market and the acquisition will also add to Dabur’s strong presence in Africa.” Anand Burman, Chairman, Dabur
Focus on African Market
? Africa is one of the virgin markets, it is big and developing
? ? ?
?
very rapidly. It represents the next frontier of consumption growth outside BRIC. The ethnic population in African countries offers a good potential for Indian companies. Brand valuation is cheaper in Africa as compared to other markets. Most of the MNCs like L’Oreal, P&G and Unilever are generally not present in most of the markets and even if they are, they have premium product offerings as compared to products offered by Indian companies. "Try catching a well-heeled ethnic woman in frizzy hair. They straighten their hair before they do anything. That's how they go.”
Introduction:- Welspun
? Since its inception in 1985, the Welspun group has
?
? ? ?
rapidly evolved to become a Global leader in almost every segment that it operates viz. Home Textiles and SAW Pipes. Has associations with Most of the Fortune 100 companies, operating in Retailing industry & Oil and Gas. Turnover - US$ 3.06 billion Welspun Group has 5 verticals:- Energy, Infrastructure, Textiles, Steel & Pipes Welspun is India's leading and among the top five manufacturers of terry towels in the world exporting over 90% of its sales directly to leading retailers including Wal-mart, Bed Bath and Beyond, Linen n
? Has presence in almost 50 countries of world with
the employee strength of 24000+. ? Global Presence
Introduction:- Christy
? Christy has been established since 1850, when
Henry Christy visited the Palace of the Sultan in Constantinople. ? The first Christy towels were shown in the Great Exhibition of 1851 at Crystal Palace, where a set was presented to Queen Victoria. ? Christy uses only the very finest natural fibres to create beautiful towels and bed linen ? Available from major department stores and good linen shops across the UK, Christy products are also exported in Germany and the USA
? Annual turnover of Rs 300 crore. ? Employees- About 1000 ? Christy invented the first loom to mechanically
weave what remains today the basis of the modern towel and is the sole supplier of the world famous Wimbledon Championship tennis towel. ? Across the UK, Christy has established longstanding relationships with premium retail stores including Marks and Spencer, John Lewis, House of Fraser, Selfridges and Debenhams.
Acquisition
? The Welspun group had acquired an 85 per cent in CHT
Holdings Ltd, the holding company of the UK's leading towel brand Christy, valuing it at £15.6 million (Rs132 crore) on 3rd,July 2006. ? The overall enterprise value of Christy is Rs 132 crore and Welspun paid Rs 100 crore initially. Bank of India, which is funding the deal will pay Rs 60 crore while the remaining Rs 40 crore will be funded through Welspun's internal accruals. ? The Christy management team would continue to own the remaining 15 per cent of the Christy issued share capital and will operate Christy on a stand-alone basis, with the exception of Rajesh Mandawewala, joint managing director, who had been appointed chairman of Christy. ? From 1 April, 2009, the Welspun and the Christy management were able to exercise a put / call option, calculated on a formula based upon FY08 and FY09 EBITDA, to buy / sell the 15 per cent equity interest retained by the existing Christy management.
Reasons for Acquisition
? Access to the premium, high end Christy brand, ? ?
? ?
which could be extended to other home products. Access to the UK and European markets. Access to the leading retail stores in the UK for its product range including towels, bed linen and other home products. Leveraging Christy's presence in the premium US retail segment via Bloomingdales. Re-alignment of the company's US distribution network with Christy's own network.
? Transfer of technology / product development skills
to manufacture and manage premium end products. ? Access to proven retail experience, brand management and innovative product design skill sets which may be used to strengthen other parts of the Welspun Group. ? Extend the Christy brand to the Indian consumer through the company Retail. ? Christy has long-standing relationships with leading retailers across UK including Marks & Spencer, John Lewis, House of Fraser, Selfridges and Debenhams. Having established its credentials as a world class manufacturer of terry towel and bed linen, the company intended to move to the next level in the value chain viz. 'Branding' using Christy as its
Quotes
BK Goenka, vice chairman & MD of Welspun Group, had said: "Christy's acquisition strengthens their commitment towards achieving their goal of becoming a globally relevant strategic player in the home textiles segment. Christy's commercial, retail, design and technical excellence complements Welspun's established manufacturing capability and global reach as an international home textile manufacturer. Christy also complements their recent initiatives to develop a more robust model providing global consumers including both UK and US with contemporary products for the Home.“http://www.businessstandard.com/india/news/welspun-wrapsuks-
Christy managing director Joel Rosenblatt had said, “The acquisition will help create synergies between the two companies in terms of greater help with sourcing, roll-out of our brands through Welspun stores in India besides taking the Welspun brand and retailing to the United Kingdom.”
http://www.financialexpress.com/news/welspunbuys-85-in-uks-christy-for-rs-132.6-cr/169768/0
Introduction
? Turnover of
Rs. 31.3 billion (~USD 695 Million) in 2010-11. ? Consumer product categories - Personal care products, - Edible oils, -Fabric care products and -Processed foods. ? Present in more than 25 countries across Asia and the African continent. ? A widespread distribution network of more than 3.3 Million outlets in India and overseas.
Acquisition strategies
? Marico's International Business Group (IBG) has
an annual turnover of over USD 160 million. (2010-11). ? Its strategy has been to enter fast-growing economies with under penetrated consumer markets. ? After acquiring a firm and its brands, the company then focuses on brand-building and expanding distribution. ? Global presence in-Bangladesh, Middle East, Egypt, South Africa, Malaysia and Vietnam.
Acquisition of soap brand Aromatic
? Marico Bangladesh Ltd (MBL) acquired the toilet
soap brand "Aromatic" from Aromatic Cosmetics Ltd (ACL) ,Bangladeshi personal care product company. ? Aromatic has an aggregate turnover of about Taka 300 million in Bangladesh with a market share of around 5 per cent. ? Aromatic's brand equity owes its strength to the quality of the soap & its positioning based on the "halal" concept, which has a strong recall amongst consumers. ? The acquisition of Aromatic enabled MBL to strengthen its presence in the soaps category that was estimated to be about Taka 6,000
Acquisition of the Code 10 brand from Colgate-Palmolive
? Marico entered Malaysia’s hair styling market in
?
? ? ?
January 2010, with the acquisition of the Code 10 brand from Colgate-Palmolive. The Malaysian hair-styling market was estimated at 150 million ringgits ($43.86 million, or over Rs 200 crore). The turnover of the Code 10 brand was Rs 12 crore. Code 10 was the third-largest player in the country, with a double-digit market share. “Marico leads the market in key hair-styling segments, such as hair creams in West Asia. We hope to replicate this success in South-East Asia with this acquisition, our first one in this region.”
Framework :For Acquired Brands
? Introduction of Foreign Brands into India and Vice
versa
? Charging Premiums and making more margins ? Enhancing Corporate Identity Globally ? Having Brand presence across all market
segments
? Exposure to newer markets thereby improving
Brand Value
? Emphasis on more branding activities through low
Support system for Brand Management:? Acquiring well established Brands
? Entry in newer markets
? Entry into different segments of these markets ? Gaining Distribution Expertise in newer markets ? Product Design & Technological Know how ? Accessing newer customer base ? Developing newer management practices /
Business practices ? Horizontal Integeration
doc_526463198.pptx