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Godrej Consumer Products Limited (GCPL) acquires Strength of Natur
a leading hair care company, to accelerate its growth in Africa
- Strength of Nature is a USA based company with a strong global presenc
compelling portfolio of leading hair care brands with affordable and innovativ
and has been serving women of African descent across 50 countries. - The acquisition enables GCPL to turbo-charge, creating a strong platform for W
products in Africa and to forge a stronger presence in the USD 1.8 billion glob
Care category
- Strength of Nature complements GCPL’s portfolio in Africa, building on its
position in Dry Hair Care and hair colours in the region
- This investment catapults GCPL to become one of the largest players globally
hair care needs of women of African descent. It will, over time, provide a platfoto further build and drive global leadership.
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“Strength of Nature has a seasoned management team with over 100 years o
experience in the industry,” he added. “Mario de la Guardia and his excellent team
great business over the last 16 years. We are very excited to partner with themworld-class global portfolio of hair care brands.”
Mario de la Guardia, Founder and President, SON, added, “We are excited a
Consumer Products’ investment in Strength of Nature. The investment is a great t
the value we have been delivering to our consumers through our innovative pr
pioneering hair care brands. Godrej shares our vision and values to deliver the
products at affordable prices to meet the needs of our consumers.”
Speaking on GCPL’s focus on Africa, Godrej said, “Africa is a key part of our gro
and we strongly believe that it holds tremendous potential. Africa has more than
world’s fastest growing economies, a fast growing middle class population and
urbanisation. Our operating model has enabled us to build a strong business
Africa. We have a good understanding of the African market and know what it
successful in the region. Our businesses in the region have been outperforming an
to now double our business in Africa in the next four years.”
SON complements GCPL’s portfolio in Africa, building on its leadership position
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ABOUT STRENGTH OF NATURE
Strength of Nature is one of the fastest growing companies in the hair care
women of African descent, driven by its strong commitment to consumer undersproduct innovation. A USA based company with manufacturing facilities in Savann
Strength of Nature is committed to providing value-priced, premium-quality hair ca
to multicultural consumers around the world. Strength of Nature markets a numbe
brands including African Pride, Profectiv, MegaGrowth, Motions, Just for Me, TC
Textures, Dream Kids, Elasta QP, Proline, Soft & Beautiful and Soft & Beautiful Bot
www.strengthofnature.com
ABOUT GODREJ CONSUMER PRODUCTS LIMITED
Godrej Consumer Products Limited is the largest home-grown home and pe
company in India. We are constantly innovating to delight our consumers with m
superior quality products at affordable prices.
We have bold ambitions and are becoming more agile and future ready. We rank
hair colour, household insecticides and liquid detergents and number 2 in soaps.
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ACCELERATING LEADERSHIP
IN AFRICAN HAIR CARE
01 April, 2016
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Disclaimer
Some of the statements in this communication may be forward looking statements within the meaning o
and regulations. Actual results might di ! er substantially from those expressed or implied. Important develop
a! ect the Company’s operations include changes in the industry structure, significant changes in politic
environment in India and overseas, tax laws, import duties, litigation and labour relations.
2
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Overview
3
Our
globalisation
journey so far
Africa - the
opportunity
and strategy
Hair care for women
of African descent -
the opportunity
Business
overview -
Strength of Nature
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Our globalisation journey so far
Our
globalisation
journey so far
Africa - the
opportunity
and strategy
Hair care for women
of African descent -
the opportunity
Business
overview -
Strength of Nature
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Becoming more global is one of the seven pillars of our stra
5
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We follow a 3x3 strategy for international expansion;a presence across 3 emerging geographies in 3 categories
Acquisitions have been the most rewarding route to internatgrowth
6
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7
Home Insecticides
Our acquisitions have enabled us to extend our core
Hair Colour Personal W
Home Care Hair Care Personal
Major acquisitions in Indonesia, Africa and Latin America
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Strategic acquisitions have strongly aided our growth story Significant contribution of international to sales and profit growth
8
78%
53%
22% 47%
FY09
9MFY16
Sales
78%
59%
22% 41%
FY09
9MFY
EBITDA
India I
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Today, we hold leading market positions in our key categoriacross geographies
9
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10
Our acquisitions have contributed significantly to value crea
3,000
24,513
31 March, 2009 31 March, 2015
Enterprise Value (INR Cr.)
EBITDA - India*
EBITDA - Acquisitions
242
4.7
964
476
58
12,100
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Tap into back-end
synergies and
leverage common
insights about
specific categories
We followed some key principles while integrating our acquiValues based partnering with selective integration
Stay away from the
typical MNC
approach of
standardisation and
consolidation;
acquired company is
a separate entity
Local innovations
and local agility
are key
differentiators
Put necessary
controls in place and
integrate key
processes (HR,
Finance, Risk
Management) and
systems (ERP)
11
Establish stronger
local
entrepreneurial
cultures, supported
by global functions
Retain top
managem
supplemen
over time
Decentralise
decision making
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Africa - the opportunity and strategy
Africa - the
opportunity
and strategy
Hair care for women
of African descent -
the opportunity
Business
overview -
Strength of Nature
Our
globalisation
journey so far
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Africa is one of our key priorities and we have been focusingon growing our business
13
Strategic
GrowthPillars
422711
1,0011,18
FY12 FY13 FY14 FY15
Africa Sales (INR Cr.)
23% 25%28% 30%
FY12 FY13 FY14 FY15
Percentage of Africa contributioInternational Sales
Extending fromHair Colour toWet Hair Care
Leveraging our existing
Household Insecticides
capabilities in India and
Indonesia
Increasing Dry HairCare penetration
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The foundation of our Africa business has been built overthe last decade
14
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Despite macroeconomic challenges, Africa continues to holdtremendous potential
C
United Nation
Doing Business 2016, : Measuring Regulatory Quality and Efficie
15
GDP Growth
•
Africa has more than half of
fastest growing economies
in the world
•
Expected real GDP growth
of 5.1%
ExplodingPopulation
•
Fastest growing population
•
Will account for 40% of the
world’s population by 2030
•
By 2035, the number of
Africans entering the
working age population will
be more than the rest of the
world combined
Growing Middle Class andIncreasing Urbanisation
•
34% Africans now
classified middle class (300
million)
•
Expected 500 million city
dwellers by 2016
•
Sub-Saharan Africa is
among the fastest
urbanising regions in the
world; urbanisation
increased to 37% in 2014
from 27% in 1990
PolitImpro
• All
hav
gov
dec
•
30%
wh
bus
pla
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Our approach has enabled us to successfully navigate risks currency and ease of doing business
Unique,
cluster basedapproach
Talentpipeline
Systems andprocesses
Local
manufacturingcapabilities
Robust
distributionnetwork
Spread across Sub
Saharan Africa (our
business is equally
split between
Eastern Africa,
Western Africa and
Southern Africa)
Geographic breadth
insulates against
volatility in an
individual country
Bringing in worldclass talent
Investing indeveloping local
talent
Strong successionplans in place
Businessstreamliningthrough ERP
implementation
Stringent financial
controls to ensurecorporate
governance
Agility provides
competitiveadvantage
Sales teams ineach geography
Special salonfocus
IT enabledtracking
Hedges against
headwinds in
any particular
country
Portfolio
approach
16
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17
We see tremendous opportunities
to further accelerate our growthin Africa
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Hair care for women of African descent - the opportun
Africa - the
opportunity
and strategy
Hair care for
women of
African descent -
the opportunity
Business
overview -
Strength of Nature
Our
globalisation
journey so far
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19
The world has about 1 billion people of African descent,predominantly located in Sub Saharan Africa, the US and Ca
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20
The hair care category for women of African descent can beinto two broad segments - Dry Hair Care and Wet Hair Care
Kinky
Unmanageable
Weak
Solution Desired
Transform looks
Prevent damage to hair
Nourishment for scalp
and hairRelaxers
Maintenance
Natural Hair
Dry Hair
Wet Hair
Braids
Note: *Shampoos includes
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21
The Dry Hair Care category
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22
The Wet Hair Care category
Note: *Shampoos includes
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23
Hair care for women of African descent is a $ 4.5 billion mar
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24
So far, we have focused on driving leadership in Dry Hair Ca
Darling pan-Africamarket share25%
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Our leadership position has been aided by innovative produengagement and local manufacturing
25
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26
We seek to cater to the complete hair care needs of women odescent and believe that there are significant opportunities fWet Hair Care
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27
The US greatly influences hair care trends for women of Afridescent – both in the US and AfricaA presence in the US can be highly beneficial
Karan to share
US celebrities, publications and social media influence the style, colour and hair preferences of women
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The US serves as the source of innovation in hair careA presence in the US can be highly beneficial
28
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Attractive dynamics of the US market A presence in the US can be highly beneficial
29
Sizeable market of $ 1.6 billion
Growing at over 6% annually
(faster than the general hair
care market)
Driven by an expanding
population of people of
African descent
Fuelled by increasing
purchasing power
African women spend
more than 3 times what
Caucasian women spend
on hair care
Opportunity to participate in
Dry Hair Care, given the
fragmented market
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Business overview - Strength of Nature
Africa - the
opportunity
and strategy
Business
overview -
Strength of Nature
Our
globalisation
journey so far
Hair care for women
of African descent -
the opportunity
C O i
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Company Overview
31
Since being fo nded in 2000 it has gro n into a leading inde
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2000 2004 2005 2008 2009 2011 2013
Strength of Natureis founded by father
and son Mario de laGuardia Sr. and
Mario de la GuardiaJr. in associationwith Jack Wardlaw
Developsseveral
innovativeformulations
and
introducesthe Profectiv
brand
Commencesin-house
manufacturing
Invents acolour and
relaxercombinationproduct withpatentedformulation
Expands itsproduct
portfoliothrough the
acquisitionof ElastaQP
Completesthe
acquisitionof AfricanPride
Introducesthe
BeautifulTexturesbrands,furtherexpanding
its product
portfolio
Acquires fourbrands (Soft &
Beautiful, S&BBotanicals,
TCB, and Pro-
Line). TheReversible™Straighteningproduct ispatented andintroduced.
Mario de laGuardia Sr. is
President ofCarson
Products.Carson is
ultimately sold
to L’Oreal in
1996.
1982-1985
Since being founded in 2000, it has grown into a leading indemanufacturer of hair care products for people of African des
32
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United States
Caribbean
Sub
Mid
Eur
A strong, growing presence across geographies
33
H i b d i h 15 ld l i
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Heritage brands with over 15 year old legacies
34
Di ti t V l P iti
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Distinct Value Proposition
35
An outstanding platform for growth, driven by a comm
innovation, brand acquisition and revitalisation capab
vertically integrated manufacturing
Holds three patents, three patents
pending and over 85 trademarks
Numerous market firsts, including
• Pre-measured single-use
relaxer packets
• Reversible straightening system
• Colouring relaxers
Portfolio is targeted at value
conscious consumers across
categories, who aspire for superior
quality products at affordable prices
Portfolio of he
relaxers, main
shampoos, ca
African desce
Ability to controof the value cha
savings, better
accelerated int
products to ma
Results in highe
the industry ave
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Transaction overview - Strength of Nature
Africa - the
opportunity
and strategy
Our
globalisation
journey so far
Hair care for women
of African descent -
the opportunity
Business
overview -
Strength of Nature
Ke Transaction Highlights
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37
1
Key Transaction Highlights
On 01 April, 2016, GCPL
entered into an
agreement to acquire
rights to 100% stake in
Strength of Nature, LLC
The acquisition will
include both domestic
and international
operations (primarily
Africa, Caribbean and
Middle East) of
Strength of Nature
We expect to close
the acquisition by the
mid/end of April 2016
Funding of the
transaction will be
done through low
cost overseas debt
Strength of Nature’
seasoned
management team
continue to lead the
business. GCPL wi
put in place financi
controls and cross-
functional teams to
address specific
synergies.
2 3 4 5
Investment Thesis
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Investment Thesis
Strategic Rationale
Turbo charges the Wet Hair Care
platform for Africa
Provides a compelling portfolio of
Wet Hair Care brands with strong
positions and heritage
Presence in the US helps us
accelerate innovation with cutting
edge products and R&D
Seasoned management with over
100 years of combined experience in
the Wet Hair Care category
Provide a platform for a future play in
global hair care for women of African
descent
GCPL Value Add
Deep knowledge of Africa
consumers, along with
an understanding of the lo
business environment
Localised manufacturing i
Track record of establishin
business operations andsuccessfully running them
Design and R&D support f
innovation
Stronger processes in fun
Finance, Sourcing, HR an
38
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This acquisition catapults usto become one of the largest playserving the hair care needsof women of African descent.
Over time, this will provide us theto further build and drive global le
39
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Thank you