The Rs 2,500-crore Emami Group is foraying into new business areas, aiming to become a Rs 5,000-crore company by 2013. In an interview to Pradipta Mukherjee, Joint Chairman R S Agarwal says experts have been appointed to help identify potential companies for acquisitions. Edited excerpts:
Emami has been in the news for acquisitions. What are you targeting?
Our focus areas are haircare and skincare. We have acquired the Lakshmi Bilas hair oil brand from a 100-year-old company, M L Bose, based in Kolkata. The transaction expands the personal care products portfolio of Emami. We have also acquired M Bhattacharya, one of the largest homeopathy companies in India.
We are looking to acquire a few global brands. We have a number of international experts associated with us. We are also in talks with other international consultants and experts who would help us identify our potential overseas acquisitions and facilitate us in the process. We are looking at companies with turnover in the range of Rs 40 crore to Rs 1,000 crore, depending on what benefits they will bring for Emami.
How does the acquisition of smaller brands fit into your growth strategy?
We wish to acquire smaller but well-known brands which we believe we can revive. Managing a brand that has existed for many years is easy because it does not require much marketing and the cost of acquiring bleeding brands is also less expensive on pockets. With Lakshmi Bilas, we are trying to revive the brand and introduce around six new sub-brands under it. Our internal research shows that in order to keep consumers busy, we have to introduce at least four or five sub-brands of a particular product, backed by innovative marketing concepts. One of these innovations includes in-film branding and creating ad jingles beyond the film. We have implemented this for our new Boroplus advertisement.
How much investment have you lined up and in which areas?
Our immediate investments include Rs 170 crore in marketing and advertising. We are also planning entering new categories this fiscal and introducing some brand extensions as well. Also, we are investing around Rs 50 crore in setting up a personal care unit in Egypt. The plant should be operational in one year. This will strengthen our foothold in the country and also ease logistics’ challenges.
What do you plan to do with Zandu?
Zandu is perceived as a healthcare brand and we are planning more over-the-counter drugs under this brand. We are also planning new generic and ayurvedic medicines under Zandu. Recently, we have roped in Virender Sehwag, Dinesh Karthik and Amit Mishra as our brand ambassadors.
You are diversifying into newer businesses. How does it fit into your scheme of things?
We plan to become a complete, diversified conglomerate and have a turnover of Rs 5,000 crore by 2013. Emami’s strength lies in diversified businesses from FMCG (fast moving consumer goods) to edible oil and biodiesel to hospitals, retails, realty, art and paper business.
We also intend getting into the power generation and mining sectors. We are looking at mining contracts in Indonesia, Australia and Mozambique for new projects and working mines. In case we get a coal mine, it would make sense for us to use it for internal power generation. We have already signed a memorandum of understanding with the Madhya Pradesh government for 1,000-Mw power generation. This would take at least three years. Emami’s capital investment will be around Rs 4 crore per Mw. We are looking at thermal, hydel and solar power generation.
