Amrutanjan Health Care (Amrutanjan), the 118-year-old Chennai-based maker of ayurvedic and allopathic over-the-counter (OTC) products such as pain-relief balms and cough syrups, seems in no mood to be bought over. Reported to have been the target for acquisition of other FMCG companies last year, the Rs 89.78-crore Amrutanjan has taken its first step to diversify. It has acquired Siva’s Soft Drink, a privately-held company in Chennai which makes beverages, for Rs 26.2 crore. Siva’s Soft Drink has Fruitnik, a fruit-based beverage brand popular in Tamil Nadu.
For a company with its core business in OTC healthcare products, packaged beverages is a completely new territory. Amrutanjan Managing Director Shambhu Prasad thinks otherwise. “Amrutanjan’s products have been need-based so far. To grow, we felt we had to get into other FMCG product lines such as food and beverages. With Siva’s we plan to get into fortified beverages which would boast of vitamins and so on. Most importantly, we found distribution synergies with the beverage products of Siva’s.”
Prasad points out that not just fortified beverages, but any beverage packed in a plastic bottle can be sold through the neighbourhood pharmacy. “Four out of five pharmacies stock beverages in plastic bottles, a distribution footprint that we already service with Amrutanjan products,” adds Prasad. The supply chain too will have common vendors since “PET bottles used for these beverages come from the same suppliers who provide us with packaging for Amrutanjan”, adds Prasad.
Some of Siva’s product lines such as Rejoice, which has carbonated drinks like soda, and Fruitnik variants such as grape and apple have been lying dormant, which Amrutanjan plans to restore with more line extensions. The most popular, Fruitnik’s mango drink, had been clocking sales of Rs 15 crore in Tamil Nadu. Amrutanjan, with its distribution strongholds in the southern markets as well as in the east, will take the beverage brands first to Kerala and Andhra Pradesh. The company would enlist third-party manufacturers if it needs to expand capacity for its acquired business. A rebranding, while on the cards, will retain the name, Fruitnik, for the time being.
Prasad says, “This is the first acquisition in the history of the company. Rather than biting off more than we can chew, we would first like to integrate this acquisition and manage the brands well before scouting for other companies.”
From the looks of it, the company has been working its way for a bigger foray into the FMCG space for some time. “Over the last one year, we have been tweaking our distribution from being pharmaceutical-led to being more FMCG-friendly,” says Prasad. For example, if distribution in Andhra Pradesh consisted of 70-80 per cent pharmacies last year, this year it would comprise 60 per cent general stores.
For Siva’s brands, Amrutanjan will spend 15 per cent of its sales, in contrast to the current spends of 2-3 per cent of sales spent on promotions by the former owners.
