Emami Group, diversifying too much, too soon?

Kolkata based Emami Group is expanding its FMCG portfolio basket and existing business of paper, healthcare and diversifying into cement, real estate, bio-diesel and power generation.

It is investing Rs 220 crore for acquisitions in personal care and healthcare space and product portfolio enhancement through forays into new categories of babycare, haircare and men’s grooming. It is expecting Rs. 500 crore revenue by 2010.

Emami Group is looking at developing in Orissa and Gujarat to add to the existing Coimbatore and Hyderabad projects. It is venturing into retail with opening 10 stores in eastern region. Its paper mill capacity of to be raised to 500 tonne per day from 150 tonne.

The 4 million tonne cement plant is to built in Chattisarh along with a 100 MW captive power plant at an investment of Rs 1,600 crore. Meanwhile, Emami is also planning to enter into bio-diesel business and set up a speciality hospital in Orissa to add to its existing JV hospital in Kolkata

The company’s brands, with their Ayurvedic positioning, are strong in various niche segments. But expanding this presence may be difficult in the face of intensifying competition in personal and health care, both from domestic companies and MNCs.

Also, the infrastructure projects taken up by company are insignificant to compete with big players in the respective areas. Its growth rate has been quite stagnant over the years and it was in 2003, when it had expected a Rs. 750 crore turnvoer.

But some of its leading brands have a considerable market presence and being endorsed by top celebrities, making it a prime acquisition target from multinational FMCG companies. To avoid such situation, maybe the company is diversifying to get a good valuation from the market and deter any takeover threats.