GCPL Buys Raymond Unit

Raymond Group, that has a FMCG business under RCCL, has sold the same along with trademarks Park Avenue Deo, K.S. Deo, Kamasutra and Premium to GCPL in a slump sale. RCCL will retain its condom manufacturing facility and will continue to do contract manufacturing in Aurangabad, Maharashtra for both domestic and international markets, Raymond Ltd said in a separate announcement.

On Thursday, Raymond Ltd also announced the demerger of its lifestyle business to RCCL to create a listed entity with pure-play B2C focused lifestyle business. the company said this was initiated with the sale of its FMCG business under RCCL to GCPL. The move to de-merge the lifestyle business from Raymond Ltd will enable the business to be net debt free. Post demerger of the lifestyle business, Raymond Ltd will primarily be a listed real estate company with investments in engineering and denim business.

Addressing the media virtually on Thursday, Sudhir Sitapati, managing director and CEO, GCPL, said the deal will complement the company’s business portfolio and growth strategies with under-penetrated categories that offer a long runway of growth. Both categories can deliver comfortable double-digit growth for many years to come, he said. “In terms of our portfolio, the most attractive country to us is India by far. Within India, we have a large salience of soap which is a relatively slow growing category. We would like to increase our total addressable market on fast-growing categories in India," he said.

To be sure, the men’s deodorant category is estimated at ₹4,000 crore, with condoms pegged at ₹1,200 crore. Companies such as Hindustan Unilever, ITC and smaller players operate in the highly competitive deodorant market. Sitapati said that GCPL has paid ₹2,725 crore net of cash for the deal. “The real value is around ₹2,325 crore as we will have around ₹400 crore of lower cash tax due to slump sale. This works out to around 3.75 times value to sales," he added.