Financial Daily from THE HINDU group of publications
Saturday, Jan 28, 2006
Financial Daily from THE HINDU group of publications Saturday, Jan 28, 2006 |
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Corporate
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Mergers & Acquisitions Marico to buy Nihar brand from HLL Our Bureau
Mumbai , Jan. 27 MARICO Ltd said that it has reached an agreement with Hindustan Lever Ltd (HLL) to buy the brand Nihar. It did not disclose the financial details of the deal. HLL has been scouting for a buyer for its brand Nihar, which has a current annualised turnover of about Rs 120 crore spread over two segments - coconut oil and perfumed hair oils. HLL said it had initiated the divestment as a part of its brand rationalisation exercise. "The process involved competitive bidding amongst select FMCG companies. The transaction envisages a transfer of the IPR and other rights associated with the brand in India and other parts of the world. HLL will continue to operate brands other than Nihar in the value added hair oil segment,'' a news release said. For Marico, the acquisition of Nihar would not only give it a strong position geographically but also a larger product range. As coconut oil and perfumed oils are high margin products, the company would be making a substantial leap in terms of topline and bottomline. "The annualised turnover of Rs 120 crore accounts for 10 per cent of Marico's revenues,'' Mr Milind Sarwate, Chief Financial Officer of the company, said. With this acquisition, Marico's share of coconut oil would go up to 63 per cent from the current 54 per cent and in perfumed hair oil to 60 per cent from 30 per cent. Nihar's strengths in the East - especially its distribution reach, in Bihar and Jharkhand - will provide Marico a platform for its other brands. In perfumed coconut oils, Nihar Naturals (Jasmine and Rose) is the national market leader, with significant presence in the East. In coconut oil, Nihar's regional strengths will complement Marico's presence in this Rs 800-crore category. "We see significant scope for value creation leveraging Nihar's equity. This will help us top up our healthy organic growth, as we move towards our target of reaching a Rs 2,000 crore turnover over the next three years,'' Marico said quoting its Chairman and Managing Director, Mr Harsh Mariwala. "Marico's efficient supply chain, larger scale of operations and high focus on coconut oils and hair oils will also enable Marico to drive cost advantages,'' the company said. Ambit Corporate Finance acted as Marico's advisors in this transaction. Shares of Marico moved up by Rs 35.65 or 8.85 per cent to Rs 438.3 on the BSE on Friday. Shares of HLL were almost unchanged at Rs 195.05.
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