Emami sets up subsidiary in Sri Lanka to expand operations

Abhishek Law Kolkata | Updated on January 11, 2018

Entity will help market FMCG offerings, procure raw materials, explore manufacturing tie-ups

FMCG major Emami Ltd is planning to expand operations in Sri Lanka. In line with the strategy, the Kolkata-based company has recently set up a wholly-owned Sri Lankan subsidiary Emami Indo Lanka (Pvt) Ltd.

Market sources indicate that the FMCG major is looking at growth from politically stable markets in the SAARC region — Nepal and Sri Lanka especially — after international operations took a beating.

According to NH Bhansali, CEO, Finance, Strategy & Business Development and CFO, Emami pointed out that a separate subsidiary will help the company market its FMCG offerings; procure raw materials and also explore manufacturing tie-ups, if necessary.

“We feel there is a good potential for growth in our FMCG businesses and setting up a subsidiary can help us market our offerings or even source materials,” he told BusinessLine.

According to him, if the company sees volume growth in the neighbouring country, it can further explore manufacturing tie-ups (third party manufacturing) or even set up its own plant, at a later stage.

Bhansali did not elaborate on the products that they would like to introduce, but said FMCG and OTC (over the counter) non- prescription medicines were focus offerings.

As of now, exports to Sri Lanka – which fall within its overall export turnover – include brands ‘Fair & Handsome’ (facewash); 7 Oils and Navratna cool oil.

International operations

Of the ₹2,533-crore consolidated turnover that Emami reported in FY-17, around 11 per cent is international operations; 4 per cent is Canteen Stores Department (or to Indian Military) sales; and the remaining 85 per cent is domestic operations.

In the previous fiscal, Emami’s international business de-grew by 16 per cent with two of its main markets — Middle East and North Africa (MENA) – taking a hit owing to economic slowdown and geo-political issues.

Emami also undertook inventory correction (primarily in Russia), which was also a reason for its sales decline.

Mohan Goenka, Wholetime Director, during an investor’s conference call in May had said the FMCG major was confident of returning to “double-digit growth” in international business “over the next few years”.

“We have to still see the Middle East. If that ramps up, we are very confident of 15-18 per cent (growth). If that does not happen, still we are trying very hard from Bangladesh, Sri Lanka, Myanmar (and) South-East Asia,” he had said.

Published on July 05, 2017

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