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Godrej Consumer Products signs an agreement to pay Rs. 2,825 crore for Raymond Consumer Care’s FMCG division.

Packaged consumer goods company Godrej Consumer Products Ltd (GCPL) has signed an agreement to acquire Raymond’s Consumer Care business, which includes men’s grooming brand Park Avenue, sexual wellness brand Kamasutra and deodorant KS Spark, the diversified group announced on Thursday.

Godrej will pay Rs 2,825 crore in cash for the buyout. The deal is expected to be completed by May 10, 2023.

Raymond’s FMCG business is being sold to GCPL along with the trademarks of Park Avenue (for the FMCG category), KS, KamaSutra and Premium, through a slump sale, the company said in a stock exchange filing.

“This acquisition allows us to complement our business portfolio and growth strategy with under-penetrated categories that offer a long runway of growth,” said Sudhir Sitapati, Managing Director and CEO, GCPL. “Raymond is a leading player in the deodorants and sexual wellness categories with brands like Park Avenue and KamaSutra. These categories have the potential to deliver double-digit multi-decade growth given the low per capita consumption in India compared to similar emerging markets.”

Per-capita consumption (USD) of deodorants in India is 0.4x that in Indonesia, 0.05x that in Brazil and 0.04x that in the USA, Sitapati said, adding the company is looking forward to building on this potential by unlocking the significant integration synergies with our business.

The Singhania-family owned Raymond group, which owns 47.66 per cent stake in the consumer care business, had been in talks with various potential buyers for over two years now, since the textiles group is of the view that the consumer brands are not core to its business.

With the acquisition, GCPL will increase its play in the male grooming space and foray in the sexual wellness category. Existing brands of GCPL Cinthol men’s grooming, Ezee liquid detergent and household insecticide brands Hit and GoodKnight.

Raymond Group operates in the FMCG industry through its associate company Raymond Consumer Care Limited (RCCL), under which the personal care, sexual wellness and home care were integrated in FY19-20. The integration brought about business synergies, operational efficiencies, and channel distribution strengths with premium brands like Park Avenue, KamaSutra, KS and Premium.

Raymond’s Consumer Care business reported sales of Rs 522 crore in financial year 2022. With sales of Rs 522 crore in FY 21-22, Raymond is one of the top five players in the men’s deodorants category, third largest in branded condom segment, but is a fringe player in mainstream soaps and shampoo market.

While GCPL had acquired hair care brand Bblunt, this would be its first large deal with an Indian brand, if it materialises. Before the latest deal, most of GCPL’s acquisitions have been in other Asian markets. GCPL company said in a pre-earnings exchange filing it was expecting to deliver healthy gains in volume offtake and value sales, after six to eight quarters when volume offtake had declined on account of price hikes.

“In India, consumer demand trends remained steady through the January-March quarter, with the FMCG sector expected to witness gradual recovery in growth rates. The performance of our India business has exceeded expectations, especially on the volume front,” GCPL noted adin the filing.

Mid last year, direct-to-consumer company Good Glamm Group had called off talks to acquire Raymond’s consumer care business, with negotiations being stalled on valuations. At that time, the deal had been valued at Rs 2,500-2,800 crore.



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