GCPL eyes global market chipping in 50% of total sales
PTI, The Economic Times, 03 April 2016
Fresh from acquiring US-based Strength of Nature LLC, homegrown FMCG major Godrej Consumer Products Ltd (GCPL) expects overseas markets to account for more than half of its total sales.
The company had announced acquisition of the hair care firm Strength of Nature LLC last week for an undisclosed sum.
"Post this acquisition, the contribution of the international business to GCPL's overall revenues will be 50 per cent or slightly more," GCPL Managing Director Vivek Gambhir told PTI.
At present, domestic sales contribute 53 per cent of GCPL business and rest 47 per cent is from international business.
However, he added: "India will continue to be a big focus for us and our largest market."
GCPL has a total consolidated income of Rs 8,367.87 crore for the year ended on March 31, 2015.
The company said Strength of Nature LLC (SON) acquisition would take two to four weeks to close. The acquisition would make GCPL, a market leaders in dry hair care and hair colours, entry into wet hair segment.
However, Gambhir declined to share the value of the deal, which is reported to be around Rs 1,000 crore.
He further said the acquisition will be "funded through low cost USD denominated debt".
GCPL will first focus on the African market through the newly acquired brand and would cater the US market in the second stage.
"Our phase one focus in the first one-two years is on Africa. We see disproportionately higher growth coming from the African market. Then, in phase two, we will evaluate the US market," he said.
SON has a strong presence in the US market and the company sees potential to bring its dry hair care business.
"We will evaluate the potential of a further growing presence in the US market... Our focus in the US market will be on hair care for women of African descent," Gambhir said.
SON had a revenue of USD 95 million (around Rs 630 crore) in 2015 in which over 40 per cent revenue is from outside the US, 9 per cent from the Middle East and Europe and another 9 per cent from the Caribbean islands.
The company is looking at Africa as one of the biggest growth opportunities, which is a sixth of GCPL’s total business.
"The acquisition fits in very well with GCPL's priority to accelerate our growth in Africa and be the leading player to serve the needs of women of African descent. As part of our 3 by 3 strategy of international expansion, Africa is one of our main focus areas," Gambhir added.
GCPL has a strong history of acquisitions in global markets.
These include buying of Nigeria's Tura soap brand, Indonesia's household care firm Megasari Group, Argentinian hair care firm Argencos and Issue Group, a market leader in hair colour in Argentina, Peru, Uruguay and Paraguay, among others.