NEW DELHI: India will continue to see merger and acquisitions (M&A) and private equity activity within the FMCG sector both on a domestic and cross-border basis, notwithstanding the global economic slowdown, according to a report by consulting firm PwC.
"The fast growing and differentiated Indian FMCG sector will continue to receive interest from financial investors, who will remain focused on the demand being created by Indian consumers, and western corporates who need to look at emerging markets to meet wider growth aspirations," said the report.
As per the report titled 'The Indian Consumer Sector: What's the deal?', it established that Indian corporates will continue to seek out acquisitions in overseas markets.
"While the slow growth and mature profile of western markets is unlikely to be appealing, Indian companies are likely to continue to focus on high growth markets such as South-East Asia, Africa, Latin America," the report added.
Acquirers can gain significantly from choosing to follow an inorganic growth route, said PwC.
There is an opportunity to gain market share and footprint in other fast growing countries/regions through acquisitions and also access to an established and well invested distribution infrastructure capable of leveraging existing products that will be adaptable to the new geography, the report added.
Indian FMCG companies have been active in overseas acquisitions with the likes of Godrejand Wipro taking the lead.
While Godrej had made a series of acquisitions in the past three years in Indonesia, Africaand Argentina, Wipro Ltd acquired Singapore based LD Waxon, which sells skincare and healthcare products, in December 2012. Wellness and beauty company VLCC acquired Malaysia's Wyann International in November, 2012.
On the other hand, multinationals have also been in M&A activities in India. After acquiring Ahmedabad-based FMCG firm Paras Pharmaceuticals in 2011, Reckitt Benckiser had sold part of it homegrown firm Marico Industries. Likewise, Jyothy LaboratoriesBSE 0.17 %acquired 50.97 per cent stake in Henkel India LtdBSE 1.20 % in 2011.