Product details

In the recent past, Emami, a big brand in the FMCG market, had undertaken major plans for expansion. Following an inorganic route, the company had acquired big brands in the past having national and international presence. The latest acquisition of Emami was Kesh King, which was acquired to improve their brand presence in the hair care segment. Already having two major hair care products in their kitty, acquisition of Kesh King added on product lines like hair oils, shampoos and medicinal health capsules for hair growth. Kesh King was a related product in terms of having an ayurvedic stint, as Emami was always inclined towards promoting herbal varieties. Both the brands having an international market, the deal was supposed to strengthen the position of Emami in the FMCG segment. Kesh King was thought to be one of the largest acquisitions, valued at INR 16.51 billion. Although Emami was cash rich, acquisition of Kesh King was partially fuelled through debt funding. Experts claimed that increased cost of advertisements due to this acquisition could be a deterrent, as the hair oil market having slow growth was bombarded with too many players. Taking into consideration a low sales volume, coupled with high ad spend could have a direct impact on the operational profit of Emami. Conclusions from past observations had pointed out that Emami had dropped its' profit margin between FY' 2013 and 2014, considering the last quarter. This was due to decline in Net Sales. Therefore, question remained on whether Emami could sustain the market challenges in order to gain optimum profit under the current scenario.