Bajaj Corp takes acquisition route for fuelling growth

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Bajaj Corp takes acquisition route for fuelling growth

It has been one of the top companies in the Rs 10,000 crore hair care industry in India, and is now looking at expanding in other geographies. Bajaj Corp, the maker of Bajaj Almond Drops and Kailash Parbat brands of hair oils says it is speaking with several potential targets right now and has several consultants advising it on it.

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It has been one of the top companies in the Rs 10,000 crore hair care industry in India, and is now looking at expanding in other geographies. Bajaj Corp , the maker of Bajaj Almond Drops and Kailash Parbat brands of hair oils says it is speaking with several potential targets right now and has several consultants advising it on it. Company officials, however, maintained that it is not compelled to make an acquisition.

Bajaj Corp's Managing Director Sumit Malhotra said the company is open to acquiring companies beyond the hair oil space. But it will be in the personal care segment and would complement its core categories.

Malhotra said it was too early to talk about the size of acquisition, but added, they were looking at targets anywhere from USD 10 million to USD 100 million.

"We were considering only India till last year. But valuations in India are very high. So maybe it is time to look at any opportunities abroad," he said in a conference call.

"We are looking at every geography to see what suits us best," said Narayan Raman, president, corporate and investor relations.

Bajaj Corp joins other Indian FMCG companies like Godrej Consumer Products , Marico and Dabur India , who have sought growth opportunities abroad over the last few years. Bajaj Corp doesn't yet own any company overseas.

Apart from acquisitions, Bajaj Corp is also exploring possibilities to build a small manufacturing plant in Gujarat. It currently has own factories in Uttarakhand and Himachal Pradesh. Plans to set up a new plant in Gujarat are in preparation for the GST (Goods and Services Tax) rollout, Malhotra said.

Meanwhile, Bajaj Corp has tried to allay investors' concerns over its recent acquisition of Uptown Properties and Leasing, which owns a plot of land at Worli in Mumbai.

Bajaj Corp shares plunged 15% on September 30, the day it announced that it was acquiring Uptown Properties for Rs 75 crore.

Company officials said on Thursday that the price it had paid for the property was at least 10% lower than similar deals in the area, and much less than around Rs 120 crore asking rate for the same property last year, and so in fact the company had got a good bargain.

Malhotra said that Bajaj Corp has acquired the property to integrate its various offices in one place and feels that bringing various departments, including sales and HR under one roof would led to better synergies and faster decision making. He said the company would redevelop the place over the next three years.

Meanwhile, Bajaj Corp late Wednesday said net profit for the second quarter rose over 90% year-on-year to Rs 28.75 crore. Net sales for July-September were up 31% from a year ago to Rs 106.77 crore. Volume growth in the second quarter was 22% - highest in the last eight quarters, the company said.

IPO expenses had hurt Bajaj Corp's net profit in the year ago second quarter.

Bajaj Corp's EBITDA margin was lower at 25.7%, down over 200 bps from the year ago quarter due to a rise in input costs. Raw material costs surged 55% year-on-year to Rs 43.94 crore, mainly on the back of a 31% year-on-year rise in the price of light liquid paraffin (LLP).

Bajaj Corp had hiked price across products by around 8.5% in the first quarter to offset some of the rise in input costs. Malhotra said the company has no plans to hike prices further at the moment.

Bajaj Corp raised Rs 300 crore via an initial public offering of shares in August 2010. It had set an issue price of Rs 660 a share. In May this year, the company split its each share of Rs 5 into five shares of Re 1 each.

The stock was trading up 2.3% at Rs 103.75 on NSE in afternoon trade on Thursday.

Nachiket Kelkar
nachiket.kelkar@network18online.com