Emami has added to its international presence by acquiring a 66.67 per cent stake in the Fravin group, an organic personal care company. The stock hit a year’s high of Rs 930 during trade, though it has cooled off to close with a 3.4 per cent gain for the day.

Synergy

The acquisition is not out of sync with Emami’s own product range, which revolves around cooling oils, balms, deodorants, and skin care. The Australia-based Fravin group has certified organic brands for baby products, hair care (such as colouring and styling gels) and face care (such as moisturisers and toners).

Emami’s international operations are already extensive. But where this acquisition is different is that Emami’s overseas business strategy so far has been to take its own brands – Navratna Cooling Oil, Boroplus, Fair & Handsome – to other regions. Fravin, on the other hand, already has three main brands in each of its categories.

That gives Emami a platform on which to push sales, instead of having to build brands up from scratch. Emami already spends 15 to 18 per cent of its revenues on advertising and promotion, at the higher end compared to FMCG peers.

Two, Fravin has the technical know-how in organic cosmetics, a space that’s garnering increasing interest and where the company pegs the market to double in six years.

Financials

What is not certain is how much sales the acquisition will generate, at least in the short-term. Emami has also not disclosed the acquisition price, though it is comfortably placed on the funding front.

The company's international business grew 23 per cent in the 2013-14 fiscal, accounting for 12 per cent of consolidated revenues in the 2013-14 fiscal, up slightly from 10.5 per cent the year before.

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