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Kolkata-based fast-moving consumer goods major Emami is eyeing acquisitions or “strategic investments” across the digital space. The aim is to strengthen its presence in premium and niche categories, and enter those where it does not yet have a presence.
Apart from FMCG, including consumer care, the company may explore acquisition opportunities in healthcare space.
The move comes on the back of e-commerce sales doubling for Emami and with discretionary-spend items such as personal care and male-grooming products witnessing improved demand.
According to Harsha V Agarwal, Director, Emami, is open to invest up to ₹ 100 crore for strategic investment and partnership with “digital-first brands”. Acquisitions will be explored “only if there is a strong strategic fit, high growth opportunity and right price, for which the investment size could be much higher.”
“We see huge opportunities in the digital space and have identified it as an important strategic area for investment for the next few years. Growing our own brands through various initiatives, partnering with digital-first brands and acquisitions are a few major initiatives through which we wish to take advantage,” he told BusinessLine .
A favourable cash balance and absence of debt are seen as main pivots for the company to explore inorganic growth routes. The promoter share pledge has also been reduced significantly, say market sources.
“We remain debt-free at Emami and have favourable cash surplus. If a good opportunity comes in the healthcare space, we will take a look at it, too,” Agarwal said. “It is not that we have created a war-chest or are focussing on inorganic growth, per say. But an investment of up to ₹ 100 crore in strategic partnerships or partnering with digital-first brands looks pretty reasonable.”
Other FMCG majors such as Marico have already made acquisitions in the digital space and are eyeing new investments in the segment.
Previous investments
Incidentally, Emami has earlier made strategic investments in two niche start-ups — male grooming brandThe Man Company, and professional salon and spa products firm Brillare. In the former, it holds around 33 per cent stake, while in the latter, it has around 35 per cent stake.
“We have the option of hiking our stake in both these companies as per agreed timelines,” Agarwal said.
Rising e-commerce sales
Emami has, over the past few quarters, been strengthening its digital channel presence that includes ramping-up the product portfolio and SKU (stock-keeping unit) counts. A host of digital-first launches has also taken place. For instance, in the healthcare category, under Zandu, there were 18-19 launches in the April-September period, many of which were online first.
“As of now, we are not launching any digital-specific brands. The mother brands are quite strong and we would like to continue with them in the online channels. The company can explore the possibility of sub-brands, if required,” Agarwal said.
According to him, the company is looking for “good strategic acquisitions” in international markets, including Bangladesh.
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