CavinKare scouts for acquisition

The CavinKare Group, a leader in the FMCG marketplace, is actively scouting for potential acquisition candidates as part of its inorganic growth strategy over the next two years.

Talking to Business Standard, CavinKare chairman and managing director C K Ranganathan, said the company was eyeing a controlling stake worth Rs 100 crore or more in the target company specialising in either the personal care or food segments in the Indian FMCG market.

"We are keen on retaining a controlling stake, which would translate into a strong strategic role for CavinKare management in the acquiree. As for our international ventures, we would like to continue growing organically in the near term," Ranganathan said.

The acquisition will be part of the run-up to the company's IPO filing within a timeframe of two years, he added.

"It helps us to have a controlling stake in the acquiree when we are in the process of consolidating our market reach and distributorships in India, the Middle East, Saudi Arabia and the United States. We expect revenues of Rs 20-25 crore from the Middle East region alone by this fiscal-end. We have entered into a distribution tie-up with Spinneys for the Middle East and Aipco for the Saudi Arabian market. In the US, we currently have five distributors. We are in the process of actively expanding in the region," Ranganathan said.

CavinKare expects to close fiscal 2007 with revenues of Rs 570 crore across its three primary divisions "� personal care, food and international ventures. Of this, the personal care division is expected to contribute about Rs 400 crore to the group turnover by the end of the current fiscal.

Personal care products accounted for Rs 350 crore out of Rs 500 crore in group revenues in fiscal 2006.

CavinKare launched its pickles in the US market about seven months ago, and also set up a 100 per cent subsidiary in Bangladesh. It scaled up the capacity of its Haridwar plant last year at an investment of Rs 60 crore, in line with growing distribution imperatives for its food and personal care products internationally. Ranganathan said the Haridwar plant, which started production in June last year, is currently running at 60 per cent capacity. "Once we graduate beyond our traditional sachet model in India and neighbouring countries like Bangladesh and Sri Lanka, we will be running to almost full capacity," he added.

He said that a foray into the men's personal care segment was likely within four years.

The company's new Chinni's pickles, targeted at the lower middle class, are marketed in the 50 paise (8 gm) and Re 1 (15 gm) low unit brackets. CavinKare runs pickles factories in Andhra Pradesh and Puduchery.

In fiscal 2007, CavinKare also divested its subsidiary, PIPL to Essel Propack Ltd and continued to gain market share in the haircare, personal care and skincare markets.