Sunday, April 23, 2006

Why Marico acquired HLL Nihar brand?

Marico's Turnover: Rs. 1155 crores
Current annualised turnover of Nihar = Rs. 120 crore Catering 2 segments: coconut oil and perfumed hair oils
— this acquisition marks the first acquisition by Marico for over Rs. 100 crore
- process involved competitive bidding among select fast moving consumer goods (FMCG) companies
- transaction envisages transfer of the IPR and other rights associated with the brand in India and other parts of the world.

Locical Reasons: HLL people have a logic for this exercise, which is brand rationalisation. They will continue to operate brands other than Nihar in the value added hair oil segment. On the other hand Marico expects to reap significant synergies from Nihar. Its strengths in the East, especially its distribution reach in Bihar and Jharkhand, will provide Marico a platform for its other brands. Nihar’s regional strengths will complement Marico’s presence in this Rs 800-crore category. Harsh Mariwala, Chairman and Managing Director, Marico, said, "Nihar elegantly complements Marico's strengths in both coconut oil and perfumed hair oils."According to industry sources there will be effecient supply chain, larger scale of operations. High focus on coconut oils and hair oils will also enable Marico to drive cost advantages.

This will definately help Marico to climb the next peak of Rs. 2000 crores and may be someday cross Dabur, whose present turnover is around Rs. 1500 crores. Also, all those guys who track FMCG stocks, Marico is definately a destination to look for and reap benefits in long term.

Its really a win-win situation for both the FMCG players!!

6 Comments:

Blogger Nitin Kochhar said...

Hi, can you guys let us know how will HLL achieve brand rationalization?

April 23, 2006 5:24 PM  
Blogger Nitin Kochhar said...

As Marico already have a portfolio of brands catering to coconut oil segment. Their flagship brand is Parachut. And now portfolio is increased to Nihar coconut oil.

April 23, 2006 5:27 PM  
Blogger Nitin Kochhar said...

Also i would like to add one more point: Marico also acquired the herbal bathing-soap brand "Manjal" from Oriental Extractions.

April 23, 2006 5:28 PM  
Blogger Anil Agarwal said...

i think they want to canabalize the market. also nihar is not doing well in front of Parachute. so marico might want to capture the market share and HLL wants to get rid of Nihar as like t case with Captain Cook Salt.

April 24, 2006 12:02 AM  
Blogger Nitin Kochhar said...

Thanks Anil for posting your thoughts.

April 24, 2006 10:16 AM  
Blogger Nitin Kochhar said...

SOe news about Marico

FMCG major Marico Limited on Thursday posted a 24 per cent growth in net profit at Rs 23.8 crore for the fourth quarter ended March 2006 against Rs 19.2 crore in the year-ago period. Definately Marico is shining.

April 24, 2006 11:22 AM  

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