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Wipro consumer arm eyes firms in emerging markets

Viveat Susan Pinto  |  Mumbai 

The consumer arm of Bangalore-based Wipro Ltd has identified the developing markets of Asia, Africa and West Asia as areas to scout for acquisitions, says Vineet Agarwal, president of the division.

In the past six years, Wipro Consumer Care & Lighting (WCCL), whose revenues contribute nine per cent to the parent’s overall turnover, has wrapped up buyouts mainly in India. It began with energy drink Glucovita in 2003, followed by Chandrika soap in 2004 and North-West Switches (from Delhi-based North-West Switchgear Ltd) in 2006. Its Unza buyout in Indonesia in 2007 and Yardley buyout in 2009 have been the only two international acquisitions so far.

Agarwal wouldn’t comment on this year’s acquisition plans but said the company was on the lookout in the categories it was presently in — personal care, lighting and health & wellness, in the regions mentioned earlier..

Close to 48 per cent of WCCL’s revenues, he says, have come from the acquisitions made so far. This proportion, according to analysts, is likely to grow as WCCL increasingly focuses on buyouts in emerging markets.

Organic growth
While the focus on acquisition remains, Agarwal said the company was not shying away from organic growth. Its top line growth of 20 per cent during the quarter ended September 30 was driven mainly by segments such as institutional lighting, furniture and domestic fast moving consumer goods, areas where it has been growing organically.

Wipro’s second-quarter net sales were Rs 665 crore, while operating profit was Rs 83 crore. The growth in operating income for the company, which contributes six per cent of its profit before interest and tax to the parent, was 14 per cent year-on-year.

In institutional lighting, which grew 26 per cent during the second quarter, the focus of the company, says Agarwal, is shifting to high-end products such as LEDs (light-emitting diodes), as commercial enterprises increasingly move to energy-efficient solutions. Of 108 ‘green’ buildings in India that are certified by the US Green Building Council, Wipro provides lighting to 64, says Agarwal.

It also launched six new LED products during the quarter.

Performance in the furniture business, which grew 36 per cent during the quarter, was enhanced by mainly a pipeline of innovative products thought up by both local and international designers. “This will continue, says Agarwal. “Almost 35 per cent of our furniture business is driven by premium products. The focus on innovation ties in well with our strategy of increasing our presence in the premium space.”

In domestic fast-moving consumer goods, which grew 29 per cent during the quarter, Wipro extended its Santoor brand into handwashes in August, besides hiring actress Katrina Kaif as the face of Yardley in India. Apart from soaps and talcs, the Yardley portfolio in India includes deodarants, launched with the objective of targeting youth, says Agarwal.

Yardley’s famed perfumes, available through the import route, may also be aligned with the domestic portfolio, he says.

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First Published: Mon, October 25 2010. 00:41 IST