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GCPL expects sales, savings benefits from Sara Lee integration

GCPL expects sales, savings benefits from Sara Lee integration
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First Published: Mon, Jun 20 2011. 10 15 PM IST
Updated: Mon, Jun 20 2011. 10 15 PM IST
Mumbai: Godrej Consumer Products Ltd.(GCPL), India’s second largest maker of bath soaps, expects to add revenue of more than Rs1,500 crore a year in the next three to five years as it leverages the synergies from its acquisition of US- based Sara Lee Corp.’s majority stake in their local venture, Godrej-Sara Lee Ltd.
The company also expects additional savings of more than Rs200 crore a year from this fiscal itself, group chairman Adi Godrej told reporters in Mumbai.
“As Sara Lee was a large acquisition with operations in India, there was a lot of overlap of resources and the operations merger with GCPL required harmonization,” chief strategy officer Vivek Gambhir said. The combined entity now has an integrated management team, he said.
Godrej Sara Lee was a 15-year-old joint venture between the two firms and a market leader in household insecticides in India with brands including Goodknight and Hit.
GCPL, which reported a 78% rise in consolidated sales to Rs3,643 crore in the year ended 31 March, had bought out Sara Lee’s 51% stake in the joint venture for $233.7 million in May last year.
Subsequently, GCPL hired global consultancy firm McKinsey and Co. to put together an integration plan which got implemented by an internal team of five people.
“All acquisitions have synergies of cost either from additional volumes or from the acquirer getting to know a new way of doing things,” said Pinakiranjan Mishra, partner, retail and consumer practice at Ernst and Young. “This is a good opportunity to look at both top line and bottom line rationalization from a new line of products or supply chain savings.”
The acquisition was part of GCPL’s plan to capitalize on Sara Lee’s strong presence in south India, penetrate the chemists’ network and expand its reach into the smaller towns and cities. The two companies now have one combined distribution system that drives sales and savings on the supply-chain side.
GCPL has been on an acquisition spree over the past few years with nine local and overseas buys. As many as five acquisitions came in the last fiscal itself.
john.k@livemint.com
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First Published: Mon, Jun 20 2011. 10 15 PM IST