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Exclusive: Global Consumer hunts for acquisitions after fresh fundraise

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Global Consumer Products Pvt. Ltd, floated by former Godrej Group top executive Arumugham Mahendran, is looking at acquisition opportunities as it seeks to expand its product portfolio, a person privy to the development told VCCircle.

The fast-moving consumer good (FMCG) firm’s inorganic expansion plans come after it recently raised additional funding from existing investors Goldman Sachs and Mitsui.

The person cited above, who didn’t wish to be named, said that the Bengaluru-based company is in discussions with multiple targets and that investment bankers are working on potential deals. 

The person said that Global Consumer is looking to acquire small- or mid-sized firms that have a presence in the same categories where the company is operating. But he refused to divulge the identity of the target firms or investment bankers citing confidentiality issues.

The consumer goods maker operates in four categories–chocolate and confectionery under the LuvIt brand, fruit juices (Cherio), insecticides (DND) and ayurvedic personal products (Ved Rasaa).

“They are primarily looking at targets in the range of Rs 20-30 crore,” he said, adding that investment is hardly a constraint for the company.

The company, which has a major presence in south India, also plans to remain asset-light in its business approach, like many large FMCG firms in the country. 

Global Consumer doesn’t have its own factory and procures products from 16 contract manufacturers. It has a presence across the country through nearly 10,000 retailers serviced through 450 distributors.

Founder Mahendran had a long association of almost two decades with Godrej Group and was managing director of Godrej Consumer Products Ltd when he quit in 2013. He is now locked in a full-blown legal battle with his former employer. As first reported by VCCircle, Godrej Consumer has alleged that he was misusing classified information for the insecticide segment where his company competes with Godrej Consumer brands Hit and Good Knight.

Mahendran also runs pesticide services company ISS Hicare. In January 2014, private equity firm India Value Fund Advisors backed Mahendran to acquire the firm. ISS Hicare was started in 2004 by Godrej Group and Mahendran, and was formerly known as Godrej Hicare. It was acquired by Danish multinational ISS Global in 2009 for close to Rs 100 crore before the management buy-in by Mahendran.

FMCG deals
Global Consumer’s inorganic expansion plan comes as bigger rivals such as Godrej, Dabur India Ltd, Emami Future Consumer Enterprise Ltd, Marico Ltd are increasingly following this strategy for expansion.

Godrej Consumer has struck several acquisitions this year to boost its African operations. The deals include that of Strength of Nature and Canon Chemicals.

Earlier this month, Dabur agreed to buy the personal care, hair care and creams businesses of the South Africa-based CTL group of companies. Wipro Consumer Care & Lighting, part of billionaire Azim Premji-led Wipro Ltd, acquired China’s Zhongshan Ma Er Daily Products Ltd in September.

Global Consumer itself isn’t new to acquisitions; it entered the ayurvedic sector after acquiring Ved Rasaa last year. Other companies in the ayurvedic products segment include Kerala-based Kairali Ayurvedic Group, which runs alternative health treatment centres in India and overseas; Forest Essentials, Kama Ayurveda and Haridwar-based Patanjali Ayurveda.

While large consumer goods makers follow an M&A strategy, several new players have emerged in recent years in categories where Global Consumer operates. Many of these new entrants have also raised funds. 

In the beverages segment, for instance, Hector Beverages Pvt. Ltd and Rakyan Beverages Pvt. Ltd have attracted marquee investors such as Sequoia Capital.

Rakyan, which sells fresh cold-pressed juices under the RAW Pressery brand, raised Rs 30.8 crore in a Series B round of funding in February. Gurgaon-based Hector Beverages, which manufactures soft drinks and beverages under the Paper Boat brand, secured Rs 183 crore in a Series C round led by Belgian investment firm Sofina and China's Hillhouse Capital.

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(GCPL)

Godrej Consumer Products Ltd. is engaged in manufacturing and supplying household and personal care products. Its products include soaps, toiletries, fabric care, baby care, deodorant, fairness cream, liquid detergent, hair colour, shaving cream and gel. The firm sells its products under the brand name like Good Knight, Cinthol, Godrej No. 1, Expert, Hit, Jet, Fairglow, Ezee, Protekt and Snuggy. The company was incorporated in 2000 and is based in Mumbai, Maharashtra.

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