It’s a move scripted to take Marico to its next level of growth. By acquiring the personal care portfolio of Paras Pharmaceuticals from current owner Reckitt Benckiser, the Harsh-Mariwala-promoted company has attempted to fill crucial gaps in its portfolio. In the process, it has extended its presence well beyond hair oils (Parachute, Nihar), hair treatment (Hair & Care, Mediker) and soaps (Manjal) into skin creams (Borosoft, Recova), lip balms (Dr Lips), hair gels (Setwet), hair serums (Livon) and deodarants (Zatak).
In one swell swoop, say experts, the Rs 3,128-crore company now has access to so many more categories within personal care. Analysts say Marico's move is a clever one - to have grabbed the opportunity at hand. For the healthcare-focused Reckitt, Paras’s personal care portfolio had no meaning at all. Chander Mohan Sethi, regional director, South East Asia, Reckitt Benckiser says, “The personal care business is focused on deodourants, hair gel and specialty hair care, segments that are not strategic to us.”
The Rs 600-crore acquisition, which is four times Paras’ personal-care-division sales, is also an important addition to Marico’s international portfolio, where the Mumbai-based company has a presence in a fairly wide range of segments from skin care to hair care and male grooming. “Operationally, there are great synergies and we can reach out to a global audience with these additional brands,” says Saugata Gupta, chief executive officer of Marico’s consumer products business.
The larger ambition, say experts, of going the whole hog in personal care, is also linked to a certain extent to Marico’s need of reducing its dependence on core brands Parachute and Saffola, and emerging as a more well-rounded company that has more brands to play around with. Together the Parachute and Saffola brands contribute the bulk of revenues - nearly Rs 1,600 crore - to Marico. “But if the company can build additional brands, it will obviously help,” says Kaustubh Pawaskar, analyst at Mumbai-based brokerage Sharekhan. Both personal care and healthcare tie in well with Marico’s stated objective of playing in the beauty & wellness and healthy lifestyle spaces.
While Saffola leads the charge in healthcare, it is in personal care, say experts, that the option of building additional brands exists. Marico at the same time has also attempted to extend the Parachute name to skincare with the launch of Parachute Advansed Body Lotion, two variants of which were rolled out nationwide recently after extensive test marketing in West Bengal. Parachute Advansed Body Lotion has achieved a market share of five per cent within a short period of time.
But even then, say experts, shaking off Parachute’s tag of being mainly a haircare brand may not be easy. Company executives, however, say that the Parachute Advansed platform was built to allow Marico to dabble in extensions it could not have otherwise done. "Parachute Advansed stands for care and nurturance and the idea here is to have a slew of products from haircare to skincare,” says a company executive.
As Marico looks to do this, the Paras acquisition is also likely to act as a crucial flank, helping it mark its presence in “tailwind categories”. “Setwet, Livon and Zatak have been growing at a clip of about 20 per cent per annum. This allows us to participate in high-growth categories,” says Milind Sarwate, group chief financial officer, Marico.
By industry estimates, the male grooming category, including pre and post-shaving products, men’s toiletries, skin care and hair care products, is close to Rs 3,000 crore in size. The segments of haircare (Set Wet and Livon) and deodourants (Zatak), in particular, are growing at a clip of about 25 per cent and are estimated to be Rs 300 crore and Rs 400 crore in size, respectively.
