The Emami Group has acquired 27.51% stake in ayurvedic products major Zandu Pharmaceutical Works, taking its total stake in the company to over 31.41%.
An open offer will follow the acquisition.
The personal care products firm may not be done yet: it is looking at more buyouts both in the domestic as well as international markets.
Harsh V Agarwal, director, Emami Group, told DNA Money that talks are on with at least 3-4 more companies. “We are interested in the personal care, household and healthcare sectors.”
Emami already held a 3.9% stake in Zandu. On May 28, the company acquired another 14.81% stake and on Friday, topped this up by buying 12.7% from one of the promoter groups.
That makes it mandatory for Emami to make an offer for 20% according to the Securities and Exchange Board of India regulations.
Emami will fund the buyout through internal accruals.
Zandu’s turnover was Rs 150 crore in the last financial year.
Agarwal said Emami has a deep understanding of ayurvedic products business.
“Also, Zandu is a strong brand with a very old heritage whose potential can be tapped though strategic marketing.”
Products such as Zandu Balm, Zandu Special Chyawanprash, Kesri Jeevan will now join share lineage with Emami’s Himani range brands such as Fair & Handsome cream and Navratna oil.
The fast moving goods category arm of the Rs 1,600 crore Emami group is a Rs 600 crore business.
It is present in niche segments where there is less competition from the multinational giants.
Analysts Shirish Pardeshi and Aniruddha Joshi of broking house Anand Rathi forecast stable revenue growth for Emami in the next three years.
“New categories, new products and SKUs, and further brand extensions would give it a 20% compounded annual growth rate from financial year 2008 to 2010,” Pardeshi and Joshi wrote in a report on Tuesday.
Emami Group is also present in segments such as paper and newsprint, ball pen tips, hospital, bio diesel, edible oil, cement, real estate and retail. It has recently floated a 100% subsidiary called Emami Realty Pvt Ltd for its real estate plans.
“There are 16 projects, comprising residential and commercial complexes, IT parks and shopping malls, located in Kolkata, Coimbatore, Ahmadabad and Hyderabad. For the projects under consideration, Emami has signed joint development agreements with developers or joint-venture agreements with land owners” Pardeshi and Joshi said.
Source: DNA India