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Has Reckitt Benckiser bought the entire stake of Paras Is it an all-cash deal Reckitt Benckiser Group Plc

(RB) has agreed to buy Paras Pharmaceuticals Limited (Paras) for Rs 3,260 crore (approximately 460 million) from the current shareholders,including the Patel family and Actis.It is an all-cash deal and is expected to be closed by early Q2,2011. What does Paras bring to Reckitt We have a very strong Dettol franchise in India,with Strepsils,Durex and Disprin also present.And on the personal care side,we have Clearasil and Veet.Clearly the Paras healthcare brands we're acquiring are very complementary to our existing portfolio.Paras Pharmaceuticals has leading over the counter health and personal care brands,including Moov,the No 2 topical analgesic pain ointment,D'Cold,the No 2 cold and flu remedy,Dermicool,the No 2 for prickly heat,Krack,the No 1 medicated skin treatment for cracked heels,In addition,there is Itch Guard and Ring Guard,both anti-fungal creams.Paras Pharmaceuticals also has a personal care business led by Set Wet,a leading hair gel and a deodorant brand. Will the operations of Paras be merged with Reckitt's Indian operations It is a bit premature to state how we intend to map things out.Synergies and how things will map out cannot be shared at this point.However,RB already has good infrastructure and distribution in India,and the synergies will be attractive. Who will be heading the company here The synergies and the way we wish to roll things out,as mentioned above,is something we do not wish to speak about at this point. The valuation as I understand is around 8 times the sales.Isn't that a huge valuation for the company and its brands India is obviously an exciting,fast-growth market.Paras has delivered mid-teens net sales growth on average over the last four years - in fact,in the latest fiscal year,the net sales growth was closer to 30%.Given our existing strong platform in India - combined with RB's investment and innovation strength - we believe that we can build on the success which Paras has already enjoyed.As a result,the transaction value evidently reflects the future growth potential we see from these brands and the attractive cost synergies we expect to realise.For a growth asset,historic multiples of net sales and profit are clearly less meaningful. How is Reckitt financing the deal As we disclosed at the Q3 results stage,our available facilities are $3.4b.We do not disclose the cost of our individual facilities,however,suffice it to say that RB is currently able to fund at very attractive levels right now.

In an exclusive interaction with Sohini Das and Vinay Umarji. I have not yet made up my mind. S Raghunandan. a lot of work had to be put in to revamp the organisational structure and doubling its turnover in a span of two years.260 crore. Edited excerpts: Now that the deal is behind you.Reckitt Benckiser buys Paras . I am still evaluating my options.Emami stock up 7% on proposed . While Paras Pharmaceuticals had strong brands like Moov. he shares his experience of working with Paras. shares jump 20% Paras buy pharma . managing director and CEO of Paras Pharmaceuticals Ltd. seems to be a content man.Emami loses Paras bid. the company fetched a value that was eight times its turnover. Click here to visit SME Buzz Also Read Related Stories News Now . what next? Honestly speaking.Chander Mohan Sethi Sitting in a modest office in one of the most posh areas of Ahmedabad.Emami front-runner for Paras .Emami loses Paras despite .Girish Patel may Moov to engineering highest bid . With Reckitt Benckiser buying out Paras for Rs 3. someone who has just finished his assignment of creating huge value out of a small family-run venture. Krack and Livon in the market. A lot depends on what offers come across. As of now I am with Paras.

‘Raghu. When there is a good alignment between the promoter and the professional team. Moov. it is usually seen as a high risk-high return job. I created two marketing verticals. like the Moov-neck and shoulder. coming home. So. and reduced the difference in packages. hence. I fit the bill for the Paras assignment. But those who had been working with the company for years and had remained loyal. but somehow did not fit the current requirements. The entire sales and distribution system had to be re-vamped. I brought in an . I decided to take up the challenge. What are some of the strategies you employed to increase the efficiencies of the organisation? We increased our focus on sourcing. however. improve efficiencies. He said. including putting product development teams in place. and put an organisational structure in place. among others. “It is a strong business. when I was offered the Paras assignment. I told myself. Nearly 75 per cent of the people who now work in Paras are new recruits. It was the very first time I would be working with a private equity player. I had worked at a time when the company was transforming from a family-run business into a professionally managed one. and it is a very young organisation. What have been the main challenges in transforming Paras from a family-run business to a professionally managed entity? Paras was run by promoters. The average age is close to 30 years. Initially. Livon. Also. and worked on developing brand extensions. So. a lot of the task is made easy. In the last 18 months. I deeply admired the brands created by Paras. This eased the situation to a great extent. We had to go in for heavy recruitments and had to get people with the right capability. All this had to be changed. had higher remunerations. and on product development. but we feel that certain things have to change. He is very clear and transparent about the way he runs the company. we have launched at least 15 new product initiatives. there was a huge disparity in pay-packets between those from the old legacy and the new recruits. Hindustan Unilever and Dabur. Both companies operated in the personal care and over-the-counter (OTC) segment. I have always been a sales and marketing guy with FMCG majors like Asian Paints. this can make or break you’. OTC and personal care. including a number of brand extensions. I had to discuss these issues closely with the promoters and the PE firm. And in Dabur. were given the ‘golden handshakes’. In the first appraisal cycle. I realised there was only one person who handled the entire product portfolio of Paras. India is ‘the’ country to be in the FMCG sector. and it did not have a well laid out organisational structure. Lot of work was put in to bring in innovations around the existing brands. and they were allowed to leave with very decent settlements. The brief from Girish was very clear. He is a humble person and a nice human being. It depended mainly on advertisements to create demand. I needed another person to head the OTC vertical. We identified the power-brands for the company. Dermicool and SetWet. Some of the new people who got on board were seniors and. Paras got only two per cent of its turnover from modern trade. Sensex rallies 100pts Rupee down 15 paise/$ in early trade Tata Steel board gives nod to absorbing unit Gupta judge expresses 'concern' over SEC courts Hexaware eyes $10-15 mn per year from new contract More How has been the experience of working with Girish Patel? What was the brief that you had? Working with Girish was one of the best parts of the assignment. and while the rewards of working with a PE could be very high. Did you face resentment when you brought in new people on the board? It was expected. leveraging the true potential of the brands. and gave this guy the personal care vertical to look after.Also Read Related Stories News Now - Markets rebound. When I joined. What prompted you to take up the Paras assignment from your earlier stint as the international business head in Dabur? I was the CEO of Dabur’s international business in Dubai. together with increasing the top line and the bottom line”. including a sales and distribution revamp. Paras did not have a distribution-driven sales system. another consideration was the idea of coming back to India. and that implied higher costs. we decided to set things right.

Click here. Click here Smarter computing a new era of IT. This resulted in three per cent cost savings. Sensex rallies 100pts Rupee down 15 paise/$ in early trade Tata Steel board gives nod to absorbing unit Gupta judge expresses 'concern' over SEC courts Hexaware eyes $10-15 mn per year from new contract Tags : S Raghunandan | Paras Pharmaceuticals | Reckitt Benckiser | Girish Patel | Dabur | Hindustan Unilever | Read Business news in Advertisements 16GB USB microvault compact size & attractive color design. SmartInvestor Plus E-Zine @ less than 60 paise a day . supply chain management. and improvement in the gross margins. Grow your Wealth. A Perfect Blend of Luxury and Performance Car. who would look after purchase. Interpret Markets better.operations head. Other Stories - Markets rebound. as well as packaging and other related functions.

Redefining luxurious suburban living One stop online investment solutions for NRIs Hi-Speed USB 2. Although most revenues derive from the production of generic prescription drugs. The regulatory scheme of non-prescription drugs is not very clear. In 2009 it partnered with GlaxoSmithKline to market selected products in several markets outside India. Effective patent protection of drugs is a big problem in India since it is a major supplier of generic drugs in the world. yet poverty and non-regulated herbal/traditional products provide opportunities in the development of accessible. India is the second most populous country in the world with an estimated population of over one billion in 2010 according to Euromonitor International.0 for a convenient transfer of large files Give your business an edge in performance. Euromonitor International analysis the role of India in Consumer Health trends. the high level of exports and imports in India has led to the creation of trade programmes. United Kingdom. Furthermore. Venezuela. The Indian government does not deem necessary to prolong exclusivity on a drug with small added value. In December 2010 the Department of Industrial Policy and Promotion rejected a request by major global pharmaceuticals to amend the Indian Patent Act of 2005 to allow for incremental innovation to extend marketing exclusivity. Indian companies supply pharmaceuticals and consumer health products to the world Dr Reddy's Laboratories Ltd's corporate strategy is based on the co-development and licensing agreements with other major pharmaceutical companies. The company holds an international presence in the United States. Giftwithlove. anytime. The Central Drugs Standard Control Organization (CDSCO) does not publish a list of products approved as over-the-counter (OTC). a booming demand for generic OTC drugs and active pharmaceutical ingredients (APIs) is evident and supported by self-care initiatives in public health policies.Click for more Trading opportunities are tricky to recognise. Germany. especially when healthcare costs are on the rise. it is assumed that they are OTC. Russia. international inspections and dedicated cargo terminals for pharmaceutical products in 2010. If drugs or products are not scheduled or banned by CDSCO. Patent holders can claim infringements. yet Indian authorities can reverse a claim stating that the Indian population needs to have affordable access to the drugs in Anniversary/ B'day/ Midnight Flowers & cakes delivery in India The Power of India in Consumer Health Expansion Dec 2010 India is at the centre stage of consumer health thanks in part to its large generic drug manufacturing infrastructure. taxes online anywhere. which continue to develop at fast rates given the rising popularity of private label and the cuts in governmental healthcare costs for medicines in many countries. Indirect & State Govt. Pay Direct. The Indian government provides subsidies to local medium-size pharmaceutical companies to help them comply with international good manufacturing practices (GMPs) and become competitive in the international marketplace. Romania and other Eastern European countries. and some drugs still hold patent protection. It . Its current pharmaceutical infrastructure supplies the local demand for most pharmaceuticals. safe and efficacious consumer health products.

yet it will face competition from other global companies already established in India such as GlaxoSmithKline Plc. India remains as an attractive market for multinational companies Significant experience and production capabilities make Indian companies particularly attractive in licensing or in creating partnership deals with international companies. Allergy remedies. exports of Indian pharmaceuticals continue to boom. a subsidiary of Japanese Daiichi-Sankyo Co Ltd. vitamins and ginseng-based products are among the top ten products sold by the company according to corporate records. is an appealing proposition for several international companies around the world. However. Ukraine. an OTC emergency contraception drug from Cipla Ltd in March 2010. Boroplus Cream and Zandu & Mentho Plus Balm. among others. including India. Romania). This strategy will include future investments and synergies in emerging markets. Foreign companies not only secure a relatively inexpensive supply of generic drugs and APIs. legal issues related to intellectual rights remain a topic of disagreement. India. The United States is its largest market. The Procter & Gamble Co. Vitabiotics Ltd. Ranbaxy Laboratories. The company follows a strategy of sales development in rural communities under the Project Swadesh. The European Federation of Pharmaceutical Industries and Association (EFPIA) organized the “India Business Summit” on 10 December 2010 to support the creation of a solid partnership among European and Indian pharmaceutical industries under a Free Trade Agreement (FTA). Rising costs are pushing companies to seek cost-effective options to improve their margins. one of the largest consumer health companies in India. In October 2010. Supractiv Complete. Emami Ltd. mostly represented by herbal products and multivitamins such as the Revital brand. Regional companies based in Eastern Europe. to introduce a line of consumer health products in Russia and Ukraine. however. The company offers a comprehensive line of consumer health products based on ayurvedic medicine. Vietnam and Malaysia in the near future. an Indian company selling popular OTC and ayurvedic brands such as D'Cold and Moov. on 13 December 2010 Reckitt Benckiser Plc announced the acquisition of Paras Pharmaceuticals Ltd. Consequently. the generics pharmaceutical division. The OTC division. and Johnson & Johnson Inc. remains under Piramal's ownership and posted estimated sales of US$26 million in India in 2010. where the company was able to obtain the approval for an extended release formulation of OTC acetaminophen in 2009. Ranbaxy holds an estimated 5% share of the total pharmaceutical industry in India. In November 2010 Merck & Co stated in an investor's conference that it will seek to “complement Merck's portfolio with branded generics and other products through local and regional partnerships or acquisitions”. reported sales of US$210 million at the end of fiscal year ending March 2010. the Middle East and Latin America are inking deals with their Indian counterparts. .reported revenues of US$1 billion in generic drugs in fiscal year ending March 2010. was acquired by US-based Abbott Laboratories in May 2010 in a transaction valued close to US$4 billion. The company seeks to expand its line of consumer health products to Eastern Europe (Russia. and has a growing presence in the Middle East and Eastern European regions. the company signed a marketing exclusivity agreement with another Indian company. Lacto Calamine and Polycrol. In the most recent news. the Consumer Health division posted a growth of 12% in sales that reached US$44 million. Cipla Ltd. Its generics nutraceuticals division represented 6% of the company's revenues at US$86 million in fiscal year ending March 2010. with sales of US$293 million in 2009. Piramal's OTC portfolio includes the popular brands Saridon. but also can become more competitive by achieving low costs of production and pricing points in their respective markets. In India. Piramal Healthcare Ltd acquired i-Pill (levonorgestrel). The acquisition will provide Reckitt Benckiser Plc with immediate access and presence in consumer health in India. Unichem Laboratories Ltd is another important pharmaceutical company seeking to expand into North America and Western Europe. with a stronghold in medicated skin care through brands Navratna Oil. is one of the largest manufacturers of generics in the world. and with a UKbased company. Piramal Healthcare Solutions. as a provider of inexpensive generic drugs and active pharmaceutical ingredients (APIs).

Herbal/traditional products comprised 33% of retail value sales in the same year. .The Consumer Health industry in India is worth US$2 billion in 2009 according to Euromonitor International. The industry is anticipated to grow at 5% CAGR in constant value terms over the 2009-14 period.