GODREJ ACQUIRES RAYMOND'S FMCG.

Godrej announced the acquisition of the consumer products business of Raymond Consumer Care which is a subsidiary of Raymond. The acquisition was for 2825 crore rupees in all cash deal. The acquisition through this transaction includes Raymond’s marquee brands such as Park Avenue (for the consumer products category), KS (deodorants), Kamasutra and Premium. Though the Park Avenue was acquired by Godrej, the same as a clothing brand will remain with Raymond. Thus RCCL will be a listed entity with a pure-play consumer-focused lifestyle business and therefore sells the FMCG business to GCPL in a slump sale, which means the transfer of undertakings for a lumpsum consideration without values getting assigned to the individual assets and liabilities.

                                                       According to Sudhir Sitapati, the CEO and Managing Director of Godrej Consumer Products Limited, the reason behind this acquisition is the expansion of the addressable market. This acquisition allows Godrej to complement their business portfolio and growth strategy with the under penetrated categories. Also, through this acquisition CGPL enters into two new categories. The size of the male deodorant category is about 5000 – 6000 crore rupees and the commercial latex category is about 1200 crore rupees. The GCPL will fund this acquisition with an all- cash deal and they have paid 2725 crore rupees net for the deal, the real value is 2325 crore and they will have 400 crore lower cash due to the slump sale. The CEO added that as both the brands, the Park Avenue and Kamasutra, have strong brand equity GCPL won’t be renaming them.

                                                      This acquisition will enable RCCL to be free of net debt. For RCCL, there was a reported revenue of 633 crore rupees for 2022-23, from which 85% was from the business which is now being sold to GCPL. Raymond will be into real estate with investment in the engineering and denim businesses. According to Amit Agarwal, the Chief Financial Officer of Raymond, the selling of the brands was because they needed a partner to take the brand they had created to the next level.