Wipro applying thought for FMCG?
Wipro Consumer Care and Lighting (WCCLG), quietly founded by Wipro Group in 2003 with Rs 360 crore as start-up capital, is beginning to make noise - about its global and local acquisitions, marketing strategy, diversification and new product launches. Vishnu Rageev R unearths the other side of this IT major.
Azim H Premji, chairman, CEO and MD of Wipro Group, believes in legendary Chinese leader Deng Xiaoping's philosophy – “It doesn't matter whether the cat is black or white, as long as it catches mice.” So, it doesn't matter if you are in software or FMCG, as long as it makes money.
Nearly a month after taking a major plunge into the global FMCG arena by acquiring Unza Holdings Ltd, a Singapore-based personal care products manufacturer, for $246 million (Rs 1,010.2 crore) in an all-cash deal, the Wipro chieftain is back in news for picking up 1.24 per cent stake in Marico Industries, one of the country's top FMCG companies.
When contacted, Marico's spokesperson informed that Premji in his personal capacity has picked up the stake (75.72 lakh shares) in Marico. It is learnt that he picked up the stake during the first quarter of this financial year, though the news saw light only last week.
“Earlier it was Unza Holdings; now it is a small stake in Marico. All these are clear indicators of Premji's interest in FMCG retailing, which is booming and booming. The company is geared up for more acquisitions – both global and local – across various categories,” sources close to Wipro confirmed.
In November 2003, Wipro set up a wholly owned subsidiary called Wipro Consumer Care solely for manufacturing FMCG products in its Himachal Pradesh unit. The subsidiary started by manufacturing toilet soaps, focusing on its flagship brand Santoor.
“Wipro Consumer Care and Lighting is the mother division of Wipro Ltd, with its roots going back to 1945, when Western India Vegetable Products was incorporated as a private limited company to manufacture edible oil,” said a company spokesperson.
“Over the years, WCCLG crossed various milestones and metamorphosed from being a manufacturer of hydrogenated vegetable oils to a strong player in the FMCG space, with robust brands addressing consumer needs in various categories like personal wash, fabric wash, toiletries, personal grooming, baby care, cooking medium, domestic and industrial lighting, and energy drinks,” the spokesperson added.
Currently, the company has brands across three separate retail divisions – Consumer Care, Lightings, and Furniture. Santoor (soap and talcum powder), Wipro Baby (soap and talcum powder), Milk & Roses (soap), Wipro Shikakai (soap), Glucovita D (energy drink), Chandrika (soap), and Safe Wash (detergent) are under Consumer Care; Wipro Smartlite (voltage-saving tubes), Vipro Bulbs and Tubes, and Wipro Domestic Accessories are offered under Lightings; and a variety of stylish office furniture are retailed under the Furniture division.
The furniture business was initiated recently. It is learnt that while supplying custom-made lighting solutions for big corporate houses, the company found a latent demand for office furniture and moved into that space.
Until August 2007
From 2003 to 2007, acquisitions formed a defining strategy at Wipro. In a bid to expand its FMCG basket, Wipro acquired Chandrika Soaps for Rs 31 crore and Glucovita (glucose drink brand) for Rs 5 crore in 2003. It bought Chandrika Soaps from Bangalore-based SV Products and Glucovita from Hindustan Lever Limited (HLL). Last May, Wipro bought North West (electrical switches brand) from North West Switchgear Ltd for Rs 102.2 crore.
After acquiring Chandrika and Glucovita, it is learnt that the company scouted to buy Mysore Sandal Soap — Karnataka Soaps & Detergents Limited's (KSDL) flagship heritage soap brand – but it fell through.
“ WCCLG has been buying brands selectively in the last three years or so – such as Chandrika, Glucovita and North West (electrical switches). The acquisition of Chandrika in December 2003 has heralded Wipro's entry in the fast-growing natural products market,” states an industry watchdog.
Latest on the line is the Marico stake (acquired by Premji, as mentioned earlier), culminating immediately after settling the Unza deal. Although the stake in Marico picked up from the secondary market is considered minuscule, it clearly indicates the growing interest of Wipro's in the FMCG sector.
Rumour had it three years back that Marico and Wipro were in a fierce battle for Chandrika. Industry watchdogs are surprised about Premji's new move. They are keenly watching his next move. Could it be a majority stake next time in Marico? Only Premji would know.
Little did Wipro know that it would become the only Indian company to make the largest acquisition in the personal care segment, when it bought 100 per cent stake in Unza Holdings Ltd. In acquiring Unza, it is learnt that Wipro outbid large companies like Dabur, Emami, Godrej, Unilever, Colgate Palmolive and Sara Lee. Unza is Southeast Asia's largest maker of personal care products and has a successful portfolio of deodorants and household care products. It has an employee base of about 4,000 in five manufacturing locations spread across four nations – Malaysia, Indonesia, Vietnam and China.