Are Marico GCPL wealth creators
Are Marico GCPL wealth creators In our previous article, we showcased how two mid-sized FMCG companies, Marico and GCPL have been growing at a robust pace clocking average sales growth of 22% and 38%, respectively during the past five years. They owe their growth to the acquisition overdrive, and what is remarkable is that they are still managing to stay afloat. Both of them have recently diluted equity to fund their inorganic growth. In this article, we test the efficacy of their brown-field "brand-wagon" expansion strategy for generating shareholders return. Godrej Consumer Products Limited (GCPL) made its first acquisition of Keyline Brands in 2005, whereas Marico acquired its first domestic brand Nihar from HUL in 2006. So let us study the most recent five-year time-frame (FY06-FY11) to find out if, and how much shareholders have benefitted. The best way to test it is to determine the returns earned by shareholders on every additional rupee invested by them. In other word...