How do you turn a borrowed investment of Rs 20,000 in 1974 into a turnover of Rs 3,700 crore today? Ask childhood buddies R. S. Agarwal and R. S. Goenka, founders of the Emami Group. They started off selling beauty products to women. And then went on to other things such as healthcare, real estate, biodiesel and edible oil.

Today, the group is so cash-rich it says it has earmarked a sum of about Rs 5,000 crore, a mix of debt and internal accruals, for acquisitions, primarily in the personal and healthcare segments, says Harsh Agarwal, Director, Emami, who heads the retail division and brands such as Boroplus, Navratna and Zandu.

From its unlikely business perch in labour and political tension-ridden Kolkata, it's astonishing how the group's flagship FMCG firm, the Rs 1,300-crore Emami Ltd has managed to not just grow (it claims a CAGR of 27 per cent growth annually), but is also constantly stalking the market for acquisitions, competing with multinationals aggressively. If one looks at Emami's history (see box), perhaps the appetite for acquisition is not surprising. After all it was two big buys – Himani and Zandu – that have largely propelled the firm to where it is today.

When it lost the race to buy Paras Pharma last year, pipped at the post by British MNC Reckitt Benckiser, the company was rather wounded. But now that there's a balm at hand - with Reckitt inclined to dispose off the personal care products of Paras valued at about Rs 900 crore, Emami is leaving no stone unturned to apply it. There will be stiff competition, but Emami is in a mood to win.

Emami has roped in JP Morgan as a consultant for the Paras deal. “Due diligence is on,” says R. S. Agarwal, Chairman, Emami Group. The business includes brands such as Livon hair conditioner and hair tonic, Borosoft antiseptic cream, Set Wet hair styling products and Zatak deodorant.

Within India, says Harsh Agarwal, “We are not present in the household category such as pesticides, mats and coils so that will be a segment which we will be actively looking at. This apart, we are also open to acquisitions in the personal and hair care segments.” Emami is also in talks with various companies in the country and overseas. It is looking for acquisitions in CIS countries, Africa, West Asia and South East Asia.

So is the company, to extend a metaphor, chewing more than it can digest? Says founder R. S. Agarwal, “You cannot chew more than what you can digest, yes, but I believe that one cannot chew if his stomach is full, leave alone eat or digest.” However, Emami will not over-commit itself to acquisitions, he says. “We will not go beyond our resources, whether it is financial or manpower. Proper debt-equity ratio should be maintained before one plans to go in for raising debts for acquisition. We are not in the business of getting into business without understanding our business. I do not want my younger generation to get into trouble managing their business.”

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