He joined as a management trainee and has risen through the ranks to his current position of CEO, finance, strategy and business development. Under Naresh H. Bhansali, Kolkata-based FMCG major Emami has really come into its own.
Bhansali has played a major role in restructuring the organisation over the years. He has also closely monitored mergers and acquisitions and business development along with finance for the last 23 years.
Over the last few years, Emami has completed as many as 13 acquisitions, including Zandu Pharmaceutical Works. But the biggest feather in its cap remains the takeover of Kesh King, a shampoo and hair oil brand. Emami acquired the brand in June 2015 for Rs 1,651 crore from SBS Biotech, offering a valuation equal to 5.5 times its sales.
Emami has plans to reduce the debt it raised to fund the Kesh King acquisition by the end of this fiscal year. It wants to cut it down to Rs 600 crore by this fiscal end and to be completely debt-free in the next two years.
However, Bhansali says Emami will have to write off Rs 62 crore every quarter towards amortisation costs of the Kesh King intangibles for the next six to seven years, as it did in the December quarter.
But despite all this, the company is hopeful of achieving 15-16 per cent revenue growth in the next few years.
A String Of AcquisitionsUnder Bhansali, the company has truly donned the colours of a multinational as it set about making local and global acquisitions.
In June 2014, Emami acquired brand She Comfort with an investment of Rs 25 crore. In January 2015, Emami got 66.67 per cent controlling stake in Australian organic personal care products maker Fravin through a Dubai subsidiary, for Rs 13.70 crore. The acquisition marks Emami’s entry into the organic personal care products segment, which is growing at a rapid pace across the world and is expected to double in six years.
The fact that Emami has adequate borrowing room to drive organic and acquisition initiatives has also helped.
Industry analysts believe that Bhansali has not only focused on cost rationalisation but has also endeavoured to bring about tax efficiency in the company. Besides being operationally efficient, units and businesses have always been able to operate enjoying the highest fiscal benefits.
“In the last decade, the company has paid tax under Minimum Alternate Tax only with huge carry forward balance due to meticulous planning, and appropriate fiscal and tax policies,” says Vivek Veda, an independent FMCG analyst.
Fast GrowthEmami has maintained a five-year CAGR of 17 per cent in its revenue, emerging as one of the fastest growing Indian FMCG companies. This is because of the differentiated business model and the idea of going public that was initiated by Bhansali. It has also enhanced shareholders’ wealth over the decades. An Emami share that was offered at Rs 70 in the public issue in March 2005 had appreciated over 43 times at the close of 2014-15.
Looking back, in 2010, Bhansali decided to split the equity shares of face value Rs 2 each to face value Re 1 each so that a wider investor base could find the shares of Emami affordable. The decision resulted in significant growth of market capitalisation, which went from Rs 4,700 crore to Rs 23,000 crore by the end of 2015.
Besides heading the FMCG business, Bhansali spearheads the strategies, funds raising and financial structuring of the group companies. The plan for the next five years has been mapped out: acquiring more companies and brands, large and small, in India or abroad.
monica@businessworld.in @monicabehura
