As Reckitt Benckiser’s India business heads towards contributing more than 5% to global revenues, B&E highlights the possible opportunities and imperatives for the company.
Winters are generally dull for FMCG companies in India. But such was not the case with Reckitt Benckiser last year. Even as the December 2010 winter fog hovered over the Indian plains, Reckitt Benckiser, the British health & hygiene FMCG giant sharpened its growth ambitions in India by acquiring OTC-drug maker Paras Pharma for $726 million. Experts said it was a high price, but Reckitt rebutted them by countering that it’s an apt price for a healthy future. In the warmer sunny days of April this year, the man behind the action, Rakesh Kapoor, then EVP of Category Development, was awarded the CEO baton and his role in acquisitions was key to his case. He led the acquisition of Boots Healthcare in 2006 and SSL International and Paras Pharmaceuticals in 2010, which added brands like Strepsils and Clearasil (Boots), Dr Scholl’s and Durex condoms (SSL) and D’Cold, Dermicool, Livon and Setwet (Paras), to Reckitt’s kitty. Reckitt Benckiser’s acquisitive strategy has brought it to a position of reckoning. Instead of the P&Gs and the Unilevers, its major global competitor was a much smaller SC Johnson (over $8 billion in annual sales, also in the health & hygiene space).
Last month, Rakesh Kapoor was in India accompanied by his board members. India is among the top two developing markets in the company’s agenda, and the company is eager to make its Indian arm count. The Indian FMCG industry with a worth of over $13 billion is dominated by the personal care/beauty segment, which comprises of more than 50% of the market, and is dominated by players like P&G, HUL, ITC, Colgate Palmolive, Marico and Dabur. Health (& hygiene) comprises about 25% of the FMCG space. It’s widely fragmented in terms of players (local & international), as well as product offerings. But it’s rapidly growing, and central to Reckitt’s grand plans.
Reckitt Benckiser India’s turnover is just over Rs.20 billion (of which Dettol alone makes over Rs.10 billion). With the assimilation of Paras Pharma, which has a turnover of around Rs.5 billion, and Reckitt’s own CAGR of around 40% should see it rise the Indian FMCG ladder and soon match the likes of GCPL and Dabur (revenues of around Rs.40 billion), in near future. Moreover, Reckitt’s India division is well on its way to cross the 5% contribution (to global turnover) benchmark, even before HUL & P&G.
Reckitt is investing over Rs.2 billion in a Paras manufacturing facility near Badii to further strengthen its OTC offerings. Chander Mohan Sethi, MD, Reckitt Benckiser India informs, “Currently, OTC comprises 15-20% of business, and is one of our strategic growth pillars.” With Reckitt’s track record for innovation – 40% of its sales comes from products developed over the last three years better times are expected. Besides, it gives Reckitt the opportunity to enter hitherto unknown categories like haircare/body care (Set-Wet deodorants & hair gels), hair oil (Livon). Reckitt has already moved up to the third spot in the Rs.75 billion soap market with its Dettol variants.
Winters are generally dull for FMCG companies in India. But such was not the case with Reckitt Benckiser last year. Even as the December 2010 winter fog hovered over the Indian plains, Reckitt Benckiser, the British health & hygiene FMCG giant sharpened its growth ambitions in India by acquiring OTC-drug maker Paras Pharma for $726 million. Experts said it was a high price, but Reckitt rebutted them by countering that it’s an apt price for a healthy future. In the warmer sunny days of April this year, the man behind the action, Rakesh Kapoor, then EVP of Category Development, was awarded the CEO baton and his role in acquisitions was key to his case. He led the acquisition of Boots Healthcare in 2006 and SSL International and Paras Pharmaceuticals in 2010, which added brands like Strepsils and Clearasil (Boots), Dr Scholl’s and Durex condoms (SSL) and D’Cold, Dermicool, Livon and Setwet (Paras), to Reckitt’s kitty. Reckitt Benckiser’s acquisitive strategy has brought it to a position of reckoning. Instead of the P&Gs and the Unilevers, its major global competitor was a much smaller SC Johnson (over $8 billion in annual sales, also in the health & hygiene space).
Last month, Rakesh Kapoor was in India accompanied by his board members. India is among the top two developing markets in the company’s agenda, and the company is eager to make its Indian arm count. The Indian FMCG industry with a worth of over $13 billion is dominated by the personal care/beauty segment, which comprises of more than 50% of the market, and is dominated by players like P&G, HUL, ITC, Colgate Palmolive, Marico and Dabur. Health (& hygiene) comprises about 25% of the FMCG space. It’s widely fragmented in terms of players (local & international), as well as product offerings. But it’s rapidly growing, and central to Reckitt’s grand plans.
Reckitt Benckiser India’s turnover is just over Rs.20 billion (of which Dettol alone makes over Rs.10 billion). With the assimilation of Paras Pharma, which has a turnover of around Rs.5 billion, and Reckitt’s own CAGR of around 40% should see it rise the Indian FMCG ladder and soon match the likes of GCPL and Dabur (revenues of around Rs.40 billion), in near future. Moreover, Reckitt’s India division is well on its way to cross the 5% contribution (to global turnover) benchmark, even before HUL & P&G.
Reckitt is investing over Rs.2 billion in a Paras manufacturing facility near Badii to further strengthen its OTC offerings. Chander Mohan Sethi, MD, Reckitt Benckiser India informs, “Currently, OTC comprises 15-20% of business, and is one of our strategic growth pillars.” With Reckitt’s track record for innovation – 40% of its sales comes from products developed over the last three years better times are expected. Besides, it gives Reckitt the opportunity to enter hitherto unknown categories like haircare/body care (Set-Wet deodorants & hair gels), hair oil (Livon). Reckitt has already moved up to the third spot in the Rs.75 billion soap market with its Dettol variants.
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