Pursuing an aggressive acquisition strategy, Wipro Consumer Care & Lighting (WCCL) has entered the South African market with the acquisition of the country's leading personal care company, Canway.
This is the 12th acquisition for the Bengaluru-based company in 16 years. It has spent nearly $950 million on acquisitions to date.
"For us, this is a good entry point, as South Africa has the second largest GDP in Africa and the largest personal care market on the continent", said Vineet Agrawal, Chief Executive Officer (CEO) of WCCL. Until now, the consumer care company had a limited presence in Africa, with its flagship brand Santoor available only marginally in Egypt and Sudan.
Through this acquisition, WCCL gains access to Canway's brands such as Oh So Heavenly, present in the bath products and hand cream segment, IQ, a dermatological care brand, Iwori, an organic brand, and Dr Sole, specializing in foot care.
As part of the deal, WCCL also acquires Canway's manufacturing plant located in Durban. Canway's brands, valued at $21 million in terms of sales, are distributed exclusively through a health and beauty chain called Clicks, and represent 30% of the South African personal care market.
"The Clicks brand is also present in other countries such as Namibia, the Seychelles and Ghana, and as Clicks grows, Canway will also grow", said Agrawal, adding that this acquisition gives the company an advantage in extending Canway products to other regions of the world. WCCL also plans to introduce this product portfolio in India.
Looking ahead, Agrawal indicated that approximately 55% of the company's revenues will soon come from international markets. International markets currently account for approximately 51% of the company's total revenue.
In reality, the international business that the Consumer Care division of the Wipro group, led by billionaire Azim Premji, has developed relies almost entirely on acquisitions.
Agrawal stated that the performance of past acquisitions gives the company the confidence to continue acquiring other companies. "Unza has been multiplied by 3.2, Yardley by 3.8 and Chandrika by five since their acquisition", he said. The acquisition of Singaporean company Unza Holdings for 1,000 crore rupees was the company's largest transaction in 2007.
This is the second international acquisition in a year for the Yardley deodorant manufacturer. In April of this year, it acquired Philippine personal care company Splash Corporation for $80 million, after a three-year pause, giving it access to new categories such as skin exfoliants and hair conditioners. Malaysia remains its largest global market with a revenue contribution of over $140 million, followed by China and Vietnam.
The company is setting up a production plant in China, which represents its first "greenfield" industrial facility outside of India and demonstrates the importance it places on this neighboring country. What has helped WCCL expand in the highly competitive Chinese market is its constant focus on localization. It has 3,000 employees in China, representing approximately 30% of the group's approximately 10,000 employees worldwide.
While China, Vietnam and Indonesia continue to show double-digit growth for WCCL, Malaysia is recording single-digit growth.
Article sources: Business-standard.com
