Marico enters South Africa

Marico Ltd has informed that The Marico Group (Marico) on October 31, 2007 has announced its entry into the South African ethnic hair care and Health care market. It has acquired the consumer division of Enaleni Pharmaceuticals Ltd, through purchase of 100% shares in Enaleni Pharmaceuticals Consumer Division (Pty) Ltd (EPCD), an Enaleni subsidiary. The deal is valued at South African Rand (ZAR) 92.8 million (about Rs 52 crore). Marico clinched this deal in a competitive bidding process.

The Durban-based EPCD is present across segments such as Hair Relaxers, After Care -Hair food and Hair Conditioners. EPCD's Current annualised Turnover is about ZAR 95 Million, that is about Rs 53 crore, (1 ZAR = Approx INR 5.6) EPCD operates 3 leading brands, viz. Caivil in premium ethnic hair care, Black Chic in VFM hair care, Hercules in OTC Health Care.

Announcing the acquisition in Mumbai, Mr. Harsh Mariwala, Marico Group Chairman stated "I am delighted at this acquisition- it provides us an opportunity to participate in the rapidly growing ethnic consumer products marker in South Africa. I am personally excited about this opportunity- it helps us extend the Marico footprint to a new geography with potential, thus taking us a step further towards becoming a global player in beauty and wellness,"

The market for Ethnic Hair Care and Relevant OTC Healthcare products in South Africa is estimated to be in the region of ZAR 1.1 billion ( about Rs 600 crore) growing at Over 20% EPCD's Market Share in relevant segments of Hair Care is about 5%- 6%, going up to 9%-10% in relevant OTC segments. The brands are also present in key Super market chains like Clicks & Discom, with about 10% share. The competition comprises local brands such as Amka and Western MNC brands of Unilever and L'Oreal. Mr. Vijay Subramaniam, CEO, International Business said— This acquisition helps us to consolidate our position in Africa, as it complements our entry into Egypt last year. Caivil & Hercules are brands with good equity; We will invest in these brands and expand the franchise over a period of time."

The acquisition comes with integrated operations, including Manufacturing facilities at Mobeni, Durban, along with a team of about 100 members. EPCD will continue to be headed by John Mason, who will now be the Managing director of Marico's operations in South Africa. The local management will continue. Mr. Milind Sarwate, Marico's Chief- HR & Strategy, remarked- "As with any acquisition in a new country with a different culture, there will be challenges of integration and sustaining performance. However, we have inherited from Enaleni a competent team of professionals and I am confident that Marico South Africa will deliver. Coming at the heels of our recent acquisitions of Hair Code in 2007 and Fiancee, Nihar and Manjal in 2006, EPCD now puts us on an accelerated path to our near team turnover target of Rs 2000 crore."

The deal provides value to both the Parties. For Enaleni, it gives sharper focus on their significantly larger core business in pharmaceuticals. For Marico, it provides an entry in South Africa, through successful brands, The Marko Group plans to finance the acquisition through a US Dollar denominated term loan.