Bajaj corp - acquisition strategy

Acquisitions Initiative/Strategy

Bajaj Corp has identified inorganic growth as a strategy to create shareholder value over the long term. This may take the form of purchasing brands or acquiring companies as a means to gain access to high growth categories, new markets or consolidate market share in existing categories like hair care. In line with our acquisition strategy of entering high growth categories where we believe we can add value, your Company has pursued several opportunities during the FY2012-13 both within India and outside India. The Company had progressed to different stages of the M&A process in various transactions in multiple geographies including in India.

During the process of its acquisition forays your Company had engaged the services of reputed advisors, both in India and in foreign geographies. The advice was availed in the field of strategic advisory, tax and structuring advisory, as the case may be. Your Company will continue to take counsel of such experts as it believes that such services bring tremendous knowledge, expertise and also some excellent processes which help enhance the Company's competencies besides helping in areas of governance.

Your Company continues to pursue M&A very aggressively and expects to close a couple of acquisition transactions in FY 2014. However, in interest of its shareholder value the Company will make very prudent decisions on acquisitions by way of strategic importance, pricing of the deal and its financing, having observed some hard knocks that several Indian and foreign companies have taken in the last few years when such companies were over aggressive in pursuit of their inorganic growth and the hits taken on account of impairment / forex losses for cross border acquisition and challenges at the time of closing of their ECBs.

The Company's acquisition initiatives will primarily be focused in India, where the company believes it can create shareholder value by leveraging the strengths of your Company's marketing, sales and distribution, although assets in India continue to remain expensive even though there is slight slowdown in the FMCG sector. Few emerging markets in Africa, Middle East SAARC and South East Asia are also targeted for M&A initiative if opportunities can be developed to fit our strategy and meet investment philosophy. 

From 2012 ar

In the Red Herring document for the Bajaj Corp Limited IPO in August 2010 the Company had informed that part of the IPO funds would be used for acquisitions i.e. inorganic growth.

Towards this initiative, Bajaj Corp created a formal organization structure with a team of executives and managers to aggressively pursue the Merger and Acquisition (M & A) initiative in a structured and methodical manner. A head of M&A was brought on board as Executive Director - Business Development in August 2011 and a team of managers was appointed to drive the M & A initiative. The Executive Director had prior experience of leading M&A at one of the largest Indian FMCG companies with a strong track record of both domestic and cross border M&A as well as operating International Business.

By the 3rd quarter of FY 2011 an M&A Play Book was in place which provided the framework and boundaries for the acquisition strategy of Bajaj Corp. Hair care and skin care were identified as top priority categories in the M&A Play book, followed by other personal and household care segments. Skin care and hair care are the two fastest growing sectors in personal care across the world and also in India.

The Company has pursued several opportunities during the FY2011-12 both within India and outside India. The Company has progressed to different stages of the M&A process in various transactions in multiple geographies including in India. In view of the confidentiality obligations the Company is not in a position to share the details of the opportunities pursued, including some where the process of negotiations with the sellers is in progress as on date.

For each acquisition opportunity a very robust and detailed process is followed by the Company's M&A team .

The Company continues to pursue M&A very aggressively and expects to close some acquisition transaction in H1 of FY 13. However, in interest of its shareholder value the Company will make very prudent decisions on acquisitions by way of pricing of the deals, having observed some hard knocks that other Indian and foreign companies have taken since 2008 when they have been over aggressive in pursuit of their inorganic growth and the hits taken on account of impairment / forex losses and challenges at the time of closing of their ECBs.

During the process of its acquisition forays the Company had engaged the services of reputed advisors in the field of strategic advisory, tax and structuring advisory and legal advisory as the case may be. The Company will continue to take counsel of such experts as it believes that they bring tremendous knowledge, expertise and also some excellent processes which help enhance the Company's competencies besides helping in areas of governance.