Stake in Paras up for grabs
Paras Pharma is the Ahmedabad-based unlisted firm which manufactures over-the-counter and personal care brands like ‘Moov’, ‘Krack’, ‘D Cold’, ‘Set Wet’ etc.
Its products are popular but have a low penetration till now, which indicates their future potential. Its two major equity holders – Actis and Sequoia Capital – are looking to sell their stake for around $700 million. Companies that would have synergies with Paras Pharma products would be FMCG firms and other pharmaceutical companies. This synergistic effect has been recognised as is evident from the nature of the companies (Marico, Dabur, Emami, Glaxosmithkline) which have expressed interest in buying a stake in Paras.
P&G reduces prices; may lead to price war
(Market competitiveness strategy)
In what could lead to a price war in the competitive FMCG market, FMCG major P&G has decided to reduce the prices of certain brands even though input costs have been increasing. It has reduced the price of Whisper Choice, a product for female hygiene, by 20% and that of Pampers Baby Active, a baby care product, by 12%.
It is usually difficult for companies to reduce prices in these categories since they have high taxation. However, following the price cut by P&G, it is likely that rivals such as Johnson & Johnson will also cut prices, leading to a price war.
Expansion of JK Tyres
In view of increasing demand, JK Tyres is undergoing an aggressive expansion policy with smart pricing policies. Since the prices of rubber have risen (doubled in the past one year), JK Tyres has increased its prices and passed on the increase in raw material costs to the car and commercial vehicle manufacturers.
They have also decided to explore a segment they had left 20 years back – two wheelers – after looking at the rapid growth in the segment.
Vishal Retail finds buyer
Vishal Retail, which was under heavy debt and had been looking for a buyer, has finally succeeded in finding buyers for its business ensuring its survival. It will sell its frontend retail trading business to the Shriram Group and the back-end wholesale trading business to the Indian arm of private equity firm TPG for a total consideration of Rs 100 crore.The sale will also include all the underlying assets and liabilities of the firm.
Vishal Retail, which conducts its business under the names of ‘Vishal’, ‘Vishal Megamart’ and ‘Vishal Fashion Mart’, had declared accumulated losses of Rs 427 crore as on March 31, 2010, which exceeded the net worth of the company. It has expanded its business using the debt-heavy capital structure but its earnings fell below expectations during the economic slowdown.
Even though Vishal Retail has ensured its survival through this sale, it will lose its core business of retailing and will have to look at new business avenues.