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Informist, Tuesday, Aug 27, 2024

 

By Avishek Rakshit

 

KOLKATA – Emami Ltd is looking to enter new product categories through acquisitions and stake buys to further its revenues and diversify its portfolio, Chairman R.S. Goenka said today. Addressing the company's shareholders at its 41st Annual General Meeting, Goenka said that Emami was looking out for "strategic opportunities in new categories".

 

In the recent past, Emami, which is focussed on personal care and pain relief products, ventured into the pet care category by acquiring stake in Cannis Lupus Services India Pvt Ltd. It had also entered the juice category through strategic investment in Axiom Ayurveda Pvt Ltd, acquiring a 26% equity stake around a year ago. 

 

Instead of acquiring companies outright, Emami has been making small investments first to understand the product category and identify the potential. After a period of time, Emami acquires the company fully. For instance, Emami first bought minority stakes in Helios Lifestyle Pvt Ltd and Brillare Science, and later went on to acquire these companies piece by piece, eventually turning them into subsidiaries.

 

Over the past two decades, Emami has been relying on acquisitions to grow the company. The first major takeover it made was in 2008, when it acquired a controlling stake in Zandu Pharmaceutical Works for 7.5 bln rupees. The Zandu portfolio, focussed on offering pain relief products, is a major revenue earner for the company currently. The second major acquisition was the Kesh King brand of hair oil in 2015, followed by numerous others including Dermicool brand of prickly heat powder from Reckitt Benckiser (India) Ltd in 2022 for 4.3 bln rupees. 

 

The acquisitions Emami has been making over the past few years have product line-ups that are non-seasonal in nature. Emami's core portfolio comprises seasonal brands with products consumed mainly in summer and winter seasons. 

 

Goenka said that in the year ended Mar 31, around 56% of Emami's revenue came from non-seasonal products, compared with 51% in 2019-20 (Apr-Mar). In the past, senior company officials maintained that Emami was looking at increasing its focus on non-seasonal products which ensure season agnostic revenue, but the company continues to depend largely on core brands like Navratna and Boroplus. 

 

Goenka said that in the last financial year, the company's domestic sales, which usually account for 85-87% of its consolidated revenue, were impacted due to erratic season. 

 

He, however, said that the progress of the monsoon current has been good so far, and Emami is eyeing a double-digit growth in the ongoing financial year which will improve its cash flow. The improvement in cash flow will be invested back in the company, Goenka said.

 

At 1244 IST, shares of Emami traded 2.6% higher at 839.7 rupees on the National Stock Exchange.

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Akul Nishant Akhoury

 

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