Godrej Consumer Products Ltd. (GCPL), a packaged consumer goods firm, has agreed to purchase Raymond’s Consumer Care business, which includes the deodorant KS Spark, Park Avenue men’s grooming products, Kamasutra sexual health products, and Park Avenue men’s grooming products
The acquisition is a complement to GCPL’s business portfolio and growth strategy along with under-penetrated categories. This offers a long runaway to growth, ; said the managing director and CEO Sudhir Sitapati.
Also, InCredMAPE, the investment banking arm of In Cred Group, acted as the M & A advisor on the transaction.Over the span of two years, Raymond group has been in talks with various potential buyers. As per the textile group, Raymond group is not core to its business. Raymond has been operating in the FMCG industry through Raymond Consumer Care Ltd (RCCL) under the personal care, sexual wellness and home care brands that were integrated in FY20.
With this acquisition, GCPL will be increasing its space in men grooming and sexual wellness category. GCPL’s portfolio includes Cinthol’s men’s soap, Ezee liquid detergent and household insecticide brands like Hit and GoodKnight. GCPL will be providing the impetus to drive growth of the brands, said the Raymond group vice chairman Atul Singh. In the middle of 2022, direct-to-customer company Good Glamm group had initiated a talk with Raymond’s consumer care business with the negotiations being stalled over valuations. The deal had been valued to Rs.2500-Rs.2800 crore. Raymond will be continuing manufacture the brands in contract basis at its Aurangabad plnt and seel them to GCPL. Raymond will be exporting its brand for B2B sales in the domestic market.
In FY22, Raymond made sales of Rs.522 crore. Also, Raymond is among the top 5 players in men’s deodrant’s category, third in condoms and a fringe player in soaps and shampoo. Raymond has 650,000 retail outlets (with a reach in chemists, modern trade, e-commerce, stand alone in R &D center for development). As per the analysts, the deal is accreative to GCPL as both Park Avenue and KamaSutra are extendable to djacenies.
Recently, Raymond Limited announced the demerger of its lifestyle business to Raymond Consumer Care in order to create a listed entity.
According to Sameer Shah, chief financial officer of GCPL,“While we have paid Rs.2,725 crore net of cash for the deal, the real value is around Rs.2,325 crore as we will have around Rs.400 crore of lower cash tax due to slump sale. Adding to this, This works out to around 3.75 times value to sales”
After the demerger, Raymond Ltd will be holding the realty business, apparel manufacturing and JK files. On the other hand, Raymond Consumer Care will handle the lifestyle businesses. Along with the sales, the parent company, Raymond will become debt free, the company said.
