Wipro buys Yardley's personal care biz for $45.5m

Published on Thu, Nov 05, 2009 at 15:00 | Updated at Thu, Nov 05, 2009 at 19:34 | Source : CNBC-TV18

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Wipro Consumer Care and Lighting has acquired Yardley's Asia, West Asia and Australia operations for USD 45.5 million. This is the company’s second acquisition post Unza in 2007.

Commenting on the same, the company’s President, Vineet Agarwal, says, the focus will be on fast growing markets including deos and soaps for acquisition. “The acquisition will contribute about Rs 100 crore to all Wipro revenue and the income from the middle-east will double to USD 30 million after Yardley buy.”

Below is a verbatim transcript of the exclusive interview with Vineet Agarwal on CNBC-TV18. Also watch the accompanying video.

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Q: How is this really going to add to overall Wipro group revenues?
A: From a sheer number perspective it is close to about Rs 100 crore of turnover. However, the point is the fact that 70% of our business comes from the Middle East. So it really doubles our turnover in Middle East and makes us very strong there. Second thing is that it’s currently small in India but we believe the brand has a strong equity in India and with good distribution we can expand it. It has got products which are futuristic in terms of deodrant sprays, it’s got products which are iconic, which are known well in India like talcum powder and soaps and it adds to a premium portfolio which we never had earlier. It is even much more premium than ‘Enhcanteur’ that was acquired two years back. So to that extent it just adds to our overall strategic position.

Q: How are you funding this acquisition?
A: It is clearly through internal accruals from Wipro’s perspective it is still not a large acquisition so it can be funded easily through internal accruals.

Q: How are you looking at merging it along with the business that you have acquired? How are the products going to be merged?

A: Each of the countries will be handled differently. If I look at Middle East, where Yardley and Unza presence is good, as of now the distributors are different but over a period of time we will have to figure out how to leverage it better. Actually some of the distributors are common, so it becomes easier to handle it.

From an Indian perspective in lot of areas Yardley itself is not present, so that is where it has to go from the Wipro distributors and they can easily carry in terms of placing it in retail shop.

Q: What are some of the products that you are going to look at pushing? What are products you are going to focus on in the Indian market and specific regions that you are going to look at?
A: From a region perspective, since it’s a very premium product, it has to go to large towns. It is known very well across the country, so it’s not a specific region that one would do. Thus, it will be metros and class I that we would first focus on. In terms of products, we believe talcum powder and soaps would be one category and one of the emerging categories would be deodorants. Deo-sprays are something that Yardley has always been strong in––the Lavender range of perfume is known very well, so that is something that we will focus on.

The third one we will also look at is men’s range. So Yardley is known for its men’s range. At one point of time you would be surprised to know that it has sponsored the F1 racing. So it’s known for men’s range also. Hence, we will be pushing the men’s range too.

Q: You acquired the Yardley business only in specific markets, you haven’t touched US or Europe––any specific reasons for that, is that something we can look at going forward?
A: We have always focused on developing countries because these are fast growing countries. So when we looked at Unza acquisition we looked at markets which were fast growing something like South-East Asia which were developing markets and that is paying us back in Unza of the growths we are getting in Unza.

We were clearly focused on developing markets because these are fast growing markets and we believe that is something that we want to strengthen our presence in. So it was a strategic decision to be in these markets.

Q: This acquisition has added premium list to your brands, any other thing that you are maybe going to look at going forward anything we can expect from Wipro Consumer Care and Lighting?

A: I have always told that we would look at brands which fits into our strategy and any of the gaps in our strategy we will try to cover. So if there are still any gaps in our strategy we will look at them.

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