This story first appeared in DNA Money edition on Tuesday, May 1, 2012.
Bajaj Corp, part of the Shishir Bajaj group of companies, is in advanced stages of discussions with fast moving consumer goods (FMCG) companies in India and abroad for an acquisition.
Bajaj Corp has major hair care brands such as Bajaj Almond Drops, Bajaj Kailash Parbat and Bajaj Brahmi Amla in its portfolio.
Bajaj Corp, part of the Shishir Bajaj group of companies, is in advanced stages of discussions with fast moving consumer goods (FMCG) companies in India and abroad for an acquisition.
Bajaj Corp has major hair care brands such as Bajaj Almond Drops, Bajaj Kailash Parbat and Bajaj Brahmi Amla in its portfolio.
“The acquisition will very likely be in the personal care space,” said a source familiar with the development, seeking anonymity. “The deal size could be any where between Rs 500-600 crore.”
Bajaj Corp officials refused to comment.
But the source said the company is targeting products that have the potential to be Rs 400-500 crore brands in the near future. “The products would have to be ones commanding gross margins upwards of 40-50%.”
Industry experts feel a good acquisition could set Bajaj Corp firmly on the growth path.
“A few large-ticket deals (Marico - Paras Pharma) have happened in the personal care space, thereby hiking the valuations and delaying the deal closure process. It will be interesting to see how the Bajaj Corp management goes about this acquisition,” said an FMCG sector analyst with a large domestic broking firm.
On the overall business front, Bajaj Corp sees no slowdown in the rural market despite the bad overall macroeconomic trend. The company, in fact, took an average price hike of 8.5% in March to compensate for the rise in input costs.
For the quarter ended March, it net sales were up 33.5% year on year at Rs 146 crore.
Net sales for the full year stood 31.66% higher at Rs 472 crore, with volume growth coming in around 21%.
“Towards the end of Q4’12, the company undertook an average price hike of 8.5% in its products in order to compensate the high input costs, i.e. LLP, glass bottles and vegetable oils. The input has seen a price rise of 25% year on year of late,” Sagarika Mukherjee, research analyst, Sbicap Securities wrote in a recent report.
The company also maintained that they it hasn’t seen any slowdown in the rural markets as opposed to the early indicators at the macro level. “The management is confident of the fact that it might see steady momentum in future as it entrenches deeper into the rural markets and increases penetration,” wrote Mukherjee.
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