Godrej Consumer Buys Raymond’s FMCG Business for Rs 2,825 Crores in an All-Cash Deal

Godrej Consumer would buy the FMCG business of Raymond Consumer for Rs 2,825 crores.

Godrej Consumer Products Limited (GCPL) would pay Rs 2,825 crores for the FMCG business of Gautam Singhania-led Raymond Consumer Care Limited (RCCL) to get a foothold in India’s deodorants and sexual health sectors.

Park Avenue and DS deodorants, as well as KamaSutra and Premium condoms, had sales of Rs 411 crore in FY21, Rs 522 crore in FY22, and Rs 622 crore in FY23, valuing the acquisition at nearly five times the revenue. The Godrej Group anticipates that the all-cash transaction will be completed by May 10, 2023, using a slump sale approach.

The Raymond Group, on the other hand, will continue to manufacture these products, sell them to B2B consumers, and export them. This implies that Raymond will produce and distribute these products under contract to Godrej Consumer Care. This also means that the departure will be limited to the consumer-facing aspect of the firm in the domestic market.

According to Sudhir Sitapati, MD and CEO of GCPL, this purchase will complement Godrej’s business portfolio and growth plan. Given the low per capita consumption in similar emerging nations, the deodorants and sexual wellness categories can potentially produce double-digit multi-decade growth.

Meanwhile, Raymond Group announced the demerger of its Lifestyle division to RCCL to form a publicly traded company. A Suiting business with manufacturing plants, B2C Shirting and MTM companies, branded apparel including garmenting business with manufacturing facilities, and a B2B Shirting business with manufacturing plants comprise the Lifestyle business. The group anticipates completing the demerger process within the next 15 months.

Group chairman and managing director Singhania, who owns 49% of RCCL, has stated that he will not profit from the transaction. A part of the funds would be utilised to entirely settle the group’s net debt, which stood at Rs 920 crore as of December 2022 and gross debt of Rs 2,000 crore. More than Rs 1,000 crore from this transaction will go into RCCL, which has always been debt-free. The remainder of the revenues would be utilised to make the group debt-free, with the balance going to other commercial reasons, bringing the promoter’s equity investment to Rs 1,400 crore.

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