Grasim Industries to sell consumer products business to Future Consumer Enterprise

Aditya Birla Group company Grasim Industries has decided to sell its consumer products business to Kishore Biyani-run Future Consumer Enterprise Limited on a slump sale basis.

"The company has signed a business transfer agreement with Future Consumer Enterprise Limited for the sale of its consumer products division on a slump sale basis," Grasim Industries said in a filing with the Bombay Stock Exchange.

Grasim's consumer products division makes face care wipes, baby wipes and other products in baby and house care segments under brands such as Kara, Puretta, Handys and Prim.

The company said this division has a small contribution in its overall business. "The transaction is expected to be completed in June", Grasim stated.

In 2014-15, Grasim's net sales were Rs 9.52 crore against the total net sales of Rs 6,252.34 crore at standalone level and Rs 32,437.63 crore at consolidated level.

Grasim's core businesses are viscose staple fibre and cement, contributing over 90 per cent of its revenues and operating profit. This is the second deal that the Biyani has struck with the AV Birla group.

In April 2012, the AV Birla Group had acquired a majority stake in Future Group's flagship Pantaloon fashion apparel retail chain with the infusion of Rs 1,600 crore.

The acquisition comes a mere three weeks after the Future Group took control of Bharti Retail by merging its retail business with the latter and forms part of the ongoing consolidation that is taking place in the retail sector.

In a two-tier deal announced on May 4, Future Retail had announced that it would demerge its retail business into Bharti Retail while Bharti's retail infrastructure business would also undergo a similar process to be merged into Future Retail.

It was a stock deal worth Rs 750 crore that created a Rs 15,000-crore behemoth with a pan-India network.

The announcement of the Future-Bharti deal had come merely a day after the Aditya Birla Group announced the merger of its apparel businesses to create a Rs 5,290-crore fashion giant.

According to market experts, retail is an evolving sector and it needs economies of scale.

Mergers and acquisitions are also taking place at a time when the brick-andmortar retail sector is facing a major challenge from fastgrowing e-commerce companies such as Flipkart and Snapdeal which are flush with foreign funds and offering hefty discounts to attract consumers.