ITC to acquire Horlicks brand

By NT Bureau Published on Jul 28, 2018 02:36 PM IST

Chennai: ITC has made it clear that it is open to acquisition of GlaxoSmithKline's (GSK) Horlicks brand when it is put up for sale, provided the price is 'right'.

The bid is expected to be opened next month. However, ITC is not interested in the Complan brand of health drinks from Kraft Heinz. It is suggested that in case of a takeover of Horlicks, the acquirer may also have to take over several other brands like prickly heat powder Nycil and glucose drink Glucon D.

Diversified conglomerate ITC Ltd's managing director Sanjiv Puri, said, "We would explore buying the Horlicks brand if it is up for sale and at a right price."

According to reports, ITC is in the list of suitors for the popular malt-based health drink brand Horlicks. Nestle, Dabur, Mondalez, Kraft Heinz and Hindustan Unilever were the others also believed to be in the fray.

GSK had gone for a strategic review of the Horlicks brand to fund the Novartis deal pegged at $13 billion.

"If it (Horlicks) is the right price, why not? But I don't think the bid has been opened for that," Sanjiv Puri said.

Asked if Complan is also under consideration, he said, "That is a very clear no. Both these malt-based health drinks are reportedly up for sale and have been drawing interest from several other FMCG firms."

Recently, ITC made its foray into the dairy business by launching their packet milk in Bihar. Adding health drink brands would only increase this portfolio. "We can also do something organically and from an open mind," Puri said.

In the Rs 70-billion health food and drinks market, GSK is the leader and holds 49 per cent share, followed by Bournvita from the Mondelez stable at 11 per cent and Complan at seven per cent. Chairman of the firm, Y C Deveshwar said protein-based supplements are now more popular than milk-based products.

Last year, ITC had announced its interest in foraying into health care and has set up a team for this. A report is expected to be submitted in a year's time, after which a decision on this venture will be taken. Deveshwar, during the AGM, said ITC had little knowledge and expertise on this front and would not rush into it.

ITC is also pursuing a long-term strategy to build a cost effective cold-chain that would lend a new growth driver to the agri business, while contributing to raising rural incomes, Deveshwar said. T

he company's investment in setting up integrated consumer goods manufacturing and logistics facilities will help co-locate a distributed network of cold-chain infrastructure at a shared marginal cost, he said.

Non-tobacco biz revenue
Revenue from the non-tobacco business for ITC stands at around Rs 260 billion, accounting for 59 per cent of its total revenue, with capital employed in non-cigarette business at Rs 1.9 billion

Gross profit from this part of the business accounted for Rs 33.39 billion in the last fiscal. "As older categories now have scale, they are in a position to give better returns," Puri said.

Hotel trade
 On its hotels business, with a strong presence of owned properties and six others currently under the construction phase, including one in Colombo, ITC will be focussing more on managing properties rather than invest in buying assets.