From Research Desk - Marico

Marico - another acquisition in Egypt

Marico Ltd. has acquired a hair creams and hair gels brand – HairCode from Egypt’s Pyramids Group for an undisclosed consideration. The Pyramids group has agreed for a non-compete agreement in certain segments with Marico. Marico has funded this acquisition through a short-term debt. The brand enjoys ~23% market share of the pre and post wash hair care market in Egypt. In September 2006, Marico had acquired a hair care brand called Fiancee, owned by the Ready Group of Egypt. With both these acquisitions, Marico has now achieved a dominant market share of ~50% in the Rs1.7bn pre and post wash hair care market in Egypt.

The management expects, Fiancee and HairCode brands to contribute ~Rs950mn plus to its consolidated turnover during FY08.

Marico has raised ~Rs1.5bn through a QIP issue of 2.9mn fresh equity shares at Rs522 per share. Post this placement, the issued capital of the company has increased by 5% Rs609mn from Rs580mn. Marico has used the money to retire some of the short-term debt on the company’s books and has brought down the debt: equity ratio from 1:1 as on September 30, 2006 to about 0.4:1. The current debt on the books is at ~Rs1.8bn.