Open to bigger acquisitions, quality matters more than size: Emami

Acquisitions have been a preferred choice for Emami's growth path. In an interaction with Avishek Rakshit and Ishita Ayan Dutt, Harsha Agarwal, director at Emami Ltd talks about a multi-pronged strategy which will make Emami future-ready. Edited excerpts:

Historically, Emami has been active in the acquisitions space. What kind of investments and acquisitions have you made in the last 2-3 years?

In the last 2-3 years, we have made strategic investments in The Man Company (TMC) and Brillaire, where we now have around 30-32 per cent stake, and had acquired Crème 21 which is a German personal care brand. This apart, we have also made minority investments in Loli.

How are these acquisitions playing out?

We can’t do everything on our own and hence we are partnering wherever we believe the promoters or entrepreneurs are capable and their ideas are good. For example, in the men’s grooming category, while we have brands like He and Fair & Handsome, they operate in the mass market segment. On the other hand, TMC is into the premium space centred on online sales and recently they have entered salons too.

At some point, will you look at acquiring them?

Yes, we have this option but not right now.

At one point in time, you were looking at big-ticket acquisitions while the ones you made in the last 2-3 years are small. Is it a change of strategy?

We are open to bigger ambitions but it really depends on the quality of acquisitions rather than the sheer size. The investments and acquisitions we made are growing and we are quite happy with the performance. In fact we are looking for more such opportunities in case we get some in more different categories and areas.

Will it be in India or outside?

While we will continue to focus on investing in strategic start-ups in India, we may consider acquisitions here only if it is a good one. But such opportunities are few and even if there are some targets, the expectation or the price is steep.

So will you invest in more start-ups?

Yes, we are evaluating a few more. At any given point of time, there are 10-15 companies which are being evaluated, of which one or two from the personal care and wellness categories will see us investing in them.

Growth has been steady for Emami. How do you think you can vitalise the company?

First, the focus will be on achieving higher growth rate on existing big brands like Navratna, Boro Plus, F&H, Zandu and Kesh King. Secondly, inorganic growth via acquisitions, which will add value to the company is a consideration. Third, we will continue to invest in strategic partnerships which we think will help the company to grow and enter new categories of the future. These apart, we believe that health and wellness segment is another big area where there is huge potential. If we can execute these plans, we should have good growth and it we would love to grow by alteast 15-20 per cent.

Your dependence on rural sales and seasonal products is high. Do you see it coming down?

Some of the major brands like Zandu, F&H, Kesh King and He are independent of the weather but two of the major brands are still dependent on seasonality. Larger sales volume and new brands introduction will help to mitigate this. We are working towards that.With regard to rural dependence, the performance of the portfolio will shape up eventually. As sales increase in brands like He and F&H, the volume in urban India will go up.

How is your e-commerce play shaping up and how significant is it going to be?

Last year we grew by 100 per cent in this channel and next year we are targeting to triple our sales from this channel. The right partnership with e-commerce platforms, the correct marketing initiatives and the SKU mix will drive this growth.