Mumbai: “Godrej Consumer Products, which has been scouting for acquisitions in personal care and household categories for over 2 years, hopes to close some deals by early FY11,” chairman Adi Godrej said on Tuesday.
“We are looking at several acquisitions and we hope to announce some early in the next financial year, depending on how the negotiations go,” Godrej said.
In December 2009, the company’s board had approved an enabling resolution to raise up to Rs3000 crore through debt and equity for mergers and acquisitions.
“This fund raising will take care of all the opportunities we are looking at currently,” he said. The total cash on books of the firm as on date stood at Rs300 crore.
The firm has been looking at buying 51% stake held by Sara Lee Corp in the joint venture (JV) Godrej Sara Lee, the market leader in the domestic insecticides segment.
Godrej Consumer has also been looking at buys in hair-colour segment in the range of about $50-$100 million. In 2008, it had acquired South African hair brand, Kinky.
The firm is planning to hike its advertising spend in the upcoming fiscal to retain its market share in the highly- competitive FMCG market in India.
“The advertisement spend will be at least 25% higher than in this financial year. Ad spend currently stands at 8% of the total revenues,” Godrej said.
Godrej Consumer, which makes and sells several brands across soaps, haircare and toiletries segments, is best known for its flagship brand Cinthol and Godrej Expert Hair Dye.
The company also plans to launch new products at low price points in FY11 in an effort to increase revenues from rural business and does not plan any hike in prices going forward. “There is no price rise on the cards as most of the input costs are quite benign. Palm oil prices are below what they were a year ago and they are well under control, so margins in the coming quarters are going to be taken care of,” he said.
Real estate business
“Godrej group’s real estate arm Godrej Properties is also looking at entering into more joint JVs for residential projects,” Adi Godrej said.
“Most of our projects are joint ventures with land owners, wherein we share either the profits, area or revenue. We have completed at least 15 JVs and we are doing many more,” he said, adding that the company was looking at least 15 more projects on a JV basis.
It is also looking at private equity at project levels, which are being done through special purpose vehicles (SPVs).
“In some of our SPVs we do take private equity, some of it is foreign investors, some are Indian investors. We are not taking any more equity at the corporate level. We may take in private equity at SPV level,” he added.
In December, 2009 Godrej Properties, a unit of Godrej Industries, had raised about $100 million through an initial public offering (IPO) of 9.4 million shares.
Shares of Godrej Consumer Products traded 1.84% down at Rs256.1 and Godrej Properties was down 0.92% at Rs468 in a firm Mumbai market.