K K Modi Group to bring all businesses under one roof

The diversified K K Modi Group plans to undertake major branding exercise by bringing all 10 businesses including tobacco products, cigarette, tea, chemicals, retail, chewing products among others under one roof.

The Rs 8,500 crore (US$ 1.5 bullion) KK Modi Group has about 60 per cent of the total revenues coming from Godfrey Phillips India Ltd (GPI), which sells cigarette brands under the names of Four Square, Red and White, Cavanders among other operations.

According to senior officials of the group, the move is seen as a branding exercise of the company’s all businesses. Many other businesses including chemicals, retail among others have separate brands. In an exercise of over the next 2-3 months, all the businesses will be brought under one brand.

Company’s chief operating officer – Domestic, Nita Kapoor informed that GPI is increasing its focus on mouth freshener products including confectionary products and chewing products to maintain its growth trajectory. Even if company’s 90-95 per cent of the Rs 4200-crore revenues comes from cigarettes and only 5 per cent from chewing products, growth potential is expected more in chewing products.

“Growth potential is less in the Cigarettes business. The business is facing problems as about 46 per cent of the turnover goes to excise and VAT among others,” said Kapoor adding that confectionery business is getting more lucrative.

“The promoters are planning to consolidate all the verticals of businesses and bring it under one roof. A decision on the same is likely around Diwali this year,” Kapoor told media persons at the launch of chewing mouth freshener Pan Vilas Silver Dewz – silver coated cardamom (elaichi). The company has appointed an international consulting group Monitor Group for consolidation of businesses.

Launched in 2010, Pan Vilas has achieved Rs 160 crore turnover, which it expects to increase to Rs 500 crore in next 2-3 years. Company has lined up three more non-nicotine mouth fresheners and chewing products to be launched over the next couple of years. Pan Vilas Silver Dewz, priced at Rs 1 for 0.17 gm and Rs 10 for 1.7 grams, is the lead sponsor of Knight Riders (KKR) team of IPL.

Growing at double digit rate, Mouth fresheners are considered major contributor to India’s Rs 10,000-crore chewing and confectionery market.

In order to maintain its growth momentum, Godfrey Phillips has initiated product innovation and development for new launches in mouth freshener segment.

GPI, with Rs 400 crore exports, has already invested about Rs 250 crore towards setting up new manufacturing facilities at Faridabad and Ghaziabad. Also, it has planned Rs 100-crore capex for additional capacity expansion. “We have additional land available in Gujarat. We may set up a new manufacturing facility to producing some of the confectionery or chewing masala products at Gujarat. But that call will be taken by the promoters at appropriate time,” Kapoor added. Company shares closed at Rs 3,183.90 on the Bombay Stock Exchange (BSE) on Tuesday.

COMMENT NOW