P&G, Marico race to buy Paras Pharma

           There’s a new twist to the ongoing race to acquire the Rs 500-crore Paras Pharmaceuticals in domestic markets. Even as Emami is leading the race for Paras, Procter & Gamble Hygiene and Health Care (PGHHCL) and Marico have joined the fray. At present, Paras Pharmaceuticals’ OTC (over-the-counter) brands include Moov, D’Cold Total, Krack and Dermi Cool among others. Incidentally, pharma majors such as Cipla and Piramal Healthcare are also interested in acquiring Paras Pharma’s OTC brands to extend their product portfolio.The race for Paras Pharma is hotting up with new companies jumping into the fray.

“With increasing competition, the valuations of the Paras Pharma has gone up to Rs 3,250 crore in the last few days. Despite the high valuation of Paras, many companies are keen to acquire the company’s OTC brands,” said an industry analyst based in Mumbai. Meanwhile, FMCG major Jyothi Laboratories is in advanced talks with Bengal-based Safechem Industries(makers of Safed) to acquire its detergent brands. In essence, the Rs 1.2- lakh crore Indian FMCG industry will witness a spate of acquisitions in the next few months.

According to industry analysts, PGHHCL has been looking at acquisition opportunities in consumer health care space for quite some time.” Paras Pharma’s OITC brands will have a strategic fit in P&G health care portfolio which includes Vicks,” said an analyst in Mumbai. 

When contacted by FE, Tapan Buch, chief financial officer, P&G India, said: “As per our company policy, we do not comment on strategy or future plans.” Meanwhile, Emami a key contender for Paras Pharma has just got its board’s approval to raise Rs 5,000 crore through debt and equity dilution-a clear signal that Emami is looking at a big ticket acquisition in the near future. In fact, the company has recently moved a special resolution in this regard. After its acquisition of Zandu Phrama two years ago, Emami is now keen to acquire controlling stake in Paras Pharma. Aditiya Agarwal, director of Emami, who is currently holidaying in Thailand, was reluctant to comment on his company acquisition plans.

Yet another FMCG major Marico is also in talks with Paras Pharma to acquire its OTC brands. Like P&G, Marico has been scouting for acuqitions in domestic market for quite some time. Chaitanya Deshmukh, head of Mergers &Acquisitions, Marico said, “As you might expect, Marico cannot either confirm or deny queries on this.” 

Marico to hike prices across categories by 6-7%

              
             Marico Ltd, the maker of Parachute coconut hair oil that initiated a price hike on flagship brands Parachute and Saffola in August to offset high input costs, is on course to take additional price increases this month.

On flagship Parachute alone, the companyplans to take a further 7-8% price hike.

Sector analysts suggest the hike across product categories the company is present in will be to the extent of 6-7%.

While prices of some of the products like the value-added hair oils portfolio have been hiked marginally during September-October, that of others are underway; Marico officials said on an analyst call on Tuesday.

The company is evaluating a second round of price hikes in the hair oils portfolio consisting of brands Parachute, Nihar, Oil of Malabar, Shanti Badam Amla, and on Saffola edible oil.

In August the hike on Parachute was 5% to offset a 10% increase in input costs. Similarly, Saffola prices were hiked by 3%.

While in August, the company limited the price hike to larger stock-keeping units (SKUs), it has this month increased prices of entry-level or the recruiter packs, in a move to place margin over volumes.

Marico expects the full impact of these price increases to flow in from the third quarter leading to an inflationary impact on the topline.

Typically, it takes 3-4 weeks for the finished goods to reach from the factories to retail stores.

Prices of copra oil, which make up for 40% of Marico’s input costs, rose 26% during the September-ended quarter on a year-on-year basis.

The company has recently started prototyping an ayurvedic hair oil under the Parachute Advansed brand in Tamil Nadu.

The ayurvedic hair oil category is vauled at Rs235 crore and growing at 19% annually. Marico has also rolled out 5 specialised skin care products from its acquisition of Derma Rx under the Kaya brand in India.

The company’s efforts to increase distribution in rural markets and to increase consumer base through increased focus on smaller SKUs has increased revenues contribution from rural markets to 27% now from 25% last year.

Marico achieved a turnover of Rs779 crore during in the second quarter, a growth of 12.6% year on year, with underlying volume growth of 15%.

Last fiscal had witnessed deflation in key input prices and the company had passed a part of this on to the consumers only during second half of last fiscal.

Value growth during the second half is therefore lower than the volume growth. Profit after tax for the second quarter was Rs72 crore, a growth of 15% year on year. 

Dabur CFO hopes to keep FY11 margin at 19-19.5%

Personal care and food products maker Dabur India Ltd expects to maintain a margin of about 19-19.5% and achieve a sales growth of 15-17% in 2010/11, a top official said on Wednesday.

"Monsoon has been good. The demand has been reasonably robust. Only challenge is inflation," Chief Financial Officer S. Raghunathan told Reuters over the telephone.

In July-Sept, Dabur increased prices of a few products - mainly hair oil by 3-4%. It may resort to further price increases this quarter, in its bid to maintain margin at last year's level of around 19-19.5%.

"Our objective is to hold our EBITDA margin. We have to watch inflation cautiously and do it in a calibrated way but immediately we are not looking at any big price increases," Raghunathan said.

India's wholesale price index rose 8.62% annually in September with food price inflation accelerating to 15.71%.

Dabur plans to launch two variants of flavoured Chyavanprash immediately and two over-the-counter health products for cold and vitality in the next few weeks, Raghunathan said.

NET UP ON VOLUME GROWTH

Dabur on Wednesday said its July-Sept. consolidated profit rose 15.4% to 1.6 billion rupees on strong volume and cost cutting measures. Sales rose 14.7% to 9.72 billion rupees.

"Despite a significant rise in input costs, Dabur contained its material inflation through higher buying efficiencies and stringent cost savings programmes, and expanded its EBIDTA by 16.2%," chief executive officer Sunil Duggal said in a statement.

International business, which contributes about 20-22% of total revenue, grew 19%, while the healthcare segment grew 19%, but growth moderated in shampoos, Raghunathan said.

Dabur plans to almost double its retail presence to about 40-50 stores in 12-18 months from 25 stores now, Raghunathan said.

"We have reworked our strategy on that. We have moved into much smaller size stores to make it more viable," he said, adding there was no plan to sell off the retail business.

Shares in Dabur, valued at about $4 billion, ended 1.2% down on Wednesday in a weak Mumbai market.

 

Coke plans to launch bottled Nestea before year-end

In a bid to strengthen its position in the instant tea segment in India, global beverage major Coca-Cola is considering to introduce ice tea brand Nestea in bottles before the -end of the year.

“We will be coming into bottles for Nestea brand before the end of the year,” said a company official.

Nestea is a product from Coca Cola’s global 50:50 joint venture with FMCG giant Nestle- Beverage Partners Worldwide. It is currently available in India in powdered pouches and through vending machines. The product is marketed in India by Nestle.

"Nestea is present in India for sometime now. It is available in sachets and vending machines. So the logical extension for us is into bottles,” the official added.

“At Coca-Cola India we are constantly evaluating and exploring opportunities to further strengthen and diversify our beverage portfolio. However, as a matter of policy, we do not comment on rumour or speculation,” a Coca Cola India spokesperson said.

We will focus on new products to take on MNCs

                   Parle Agro joint MD & CMO Nadia Chauhan is scripting a fresh growth strategy to take on multinational players in the F&B(food & beverages) sector in India. To start with, the company is planning to grow its foods business aggressively to fight global competition. Also, the company is planning increase its global presence this fiscal. The Rs 1,500-crore Parle Agro is currently present in over 18 countries including the USA, the UK and Australia. Chauhan tells FE’s Lalitha Srinivasan about Parle Agro's future plans.

What will be Parle Agro's strategy to fight multinationals in the F&B sector?

As an Indian company, we understand the pulse of the Indian consumer. We strongly believe in creating new categories and offering innovative product experiences to consumers. This has been the backbone of our success in India. The challenge is to offer consumers a product experience that they have never experienced before. To stay ahead of competition, we will continue to focus on introducing innovative products, strengthening our distribution network, increasing our consumer base and ensuring that our brands always remain relevant to consumers.

Recently, Parle Agro raised prices of its fruit juice brands to offset the rising input costs. Are you looking at any fresh price hikes ?

We don’t have any plans for price hikes as of now. We raised the price of Frooti 200ml Tetra from Rs 10 to Rs 12. We had sustained the Rs10 price point for more than a decade despite a rise in prices of all raw materials.

For high visibility of your brands, are you planning to increase your ad budget this fiscal?

Our ad budgets are revised every year as per each brand’s requirement. Besides ATL (above-the-line) we will be spending on BTL activities like consumer sampling and promotions at points of sale.

Are you planning to foray into new categories in India?Any new packaging intiatives?

New product development and product innovation are a constant at Parle Agro. We have just entered a new category in foods – round snacks, with Hippo Round-Round. We have recently introduced Frooti and Appy in 160 ml Tetra packs at Rs 10 and Rs 8 respectively.Both the price points are strategic a nd will help us capture the entry level segment for branded beverages.

Are you planning to take any of your home-grown brands to new georgraphies across the globe ?

We are definitely looking at increasing our global...

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Everest Brand Solutions appoints Samir Chonkar as Executive Creative Director.

       

                               Everest Brand Solutions has appointed Samir Chonkar as Executive Creative Director. Chonkar returns to Everest Brand Solutions after a successful stint at Draft FCB Ulka, where he was Creative Director since 2008, and handled a diverse portfolio of brands like Tata Indicom, Amul Ice Cream, Tata Consultancy Services, Tata Corporate and Bajaj Almond Oil among others.

For Chonkar, this assignment is more of a home coming. Armed with an art degree and passion for advertising, Samir walked into Everest in 1992 and stayed on for 14 years to create some memorable advertising for the agency’s diverse clients.

       During his stint at Everest, he worked on a slew of FMCG brands like Parle-G, Parle Monaco, Krackjack, and Hide & Seek cookies, Tortoise Mosquito Repellent, Frooti and Bailley. He handled brands ranging from Corelle to Emirates; LIC and ING Vysya to Hitachi, Siemens and SKF Bearings with aplomb. Samir’s work showed a spirited edge while working on brands like Bagpiper, Shark Tooth Vodka and Romanov.

His already well-rounded experience was further enriched by a stint at M&C Saatchi as Executive Creative Director, working on brands like Jet Airways, Franklin Templeton and Bajaj Allianz.

           D. Rajappa, President, Everest Brand Solutions, said, “Everest is delighted to welcome Samir Chonkar at a senior leadership level. In his role as Executive Creative Director, we hope Samir will not only create impactful and great campaigns but also play a mentoring role to his team. As a mature advertising professional, Samir’s vast experience across categories will benefit the select set of blue chip brands that Everest represents.”

                 "I would add to Team Everest's passion for creating effective advertising that works well for its clients," says Chonkar

           “Induction of senior professionals with exposure across categories is in line with Everest’s philosophy of offering valuable experience of mega brands and large agencies coupled with nimble-footed edge of a small agency--thus giving the best of both worlds to the clients,” added Rajappa.

                                 “I would add to Team Everest’s passion for creating effective advertising that works well for its clients,” said Chonkar.