Wipro’s other billion dollar business bet

Names like Gervenne, Romano, Vigor, Enchanteur, Vitalis, Enear, Zici, Pahnli, Aiken would probably leave most of you flummoxed. Well, they are brand names of a shower cream, a catch-all men’s grooming brand, a detergent, female personal care brand, women’s deodorant, bodycare products, homecare and a hygiene brand respectively. These are popular brands owned by an Indian conglomerate.

Meet Wipro Consumer Care & Lighting (WCCL), one of the fastest growing FMCG companies, not just in India but across South East Asia, Middle East and China. While Wipro today, for most people is associated with being an IT giant, the consumer care business under WCCL has been hiding in plain sight. It was split from the parent company, and spun off into an independent entity in 2014. It is now part of Wipro Enterprises, which holds several non-IT businesses apart from WCCL.

However, WCCL in a sense, represents the group’s true legacy as Wipro started off as Western India Palm Refined Oils (WIPRO) in 1945 and was a pioneer in the consumer care category. Unshackled from technology services company and with a greater focus, as well as a sharper mandate, Vineet Agrawal, the CEO of WCCL and a long-term lieutenant of Wipro’s Founder Chairman Azim H Premji – have quietly gone on to build a consumer care behemoth.

Today WCCL is among the top players in personal care in markets such as Malaysia, Vietnam, Singapore, Middle East, a leading player in female fragrances in Indonesia, amongst top three players in body lotions and hair styling in Philippines or in detergents and male grooming products in Southern China, apart from its obvious base in India. It has made a tentative foray into African markets. WCCL’s international forays have come through carefully strategised acquisitions.

Growth through acquisitions

WCCL has made more than a dozen acquisitions in the last 15 years, including major ones like Malayasia-based Unza Holdings as early as 2007, Yardley UK and Singapore-based LD Waxsons in 2012, China-based –Zhonghshan Ma Er in 2016, South African Canway Corporation and Filipino company Splash Corporation in 2019. 

Agarwal says, cumulatively the consumer care business has spent a little over a billion dollars till now – to build a strong portfolio of brands. This has also helped the company to get the majority of its revenues from the international markets. For the year ended March 31, 2022, WCCL did about ₹8,600 crore in revenue of which 52 per cent came from outside India with EBITDA margins in low double digits. “Of course, because of the pandemic like everybody else, we too were impacted, otherwise both the growth and margins would have been even better,” avers Agarwal. 

While growth has come from acquisitions, the VP, Marketing, of an MNC competitor, says, “WCCL is essentially a value buyer which waits for an opportune moment and picks up strong brands which have latent potential and cachet but are either constrained by scale, funds or lack of attention from owners who might be looking to exit for whatever reason. WCCL plays the long-haul game and has largely been successful given the track record of how well they have integrated their acquisitions.”

Agarwal says that even after acquisition, it is local teams in those markets who run operations, but usually WCCL brings its best practices and learnings to bear on manufacturing, operations and finances. Also, it carefully picks and chooses its battles. Which is why in a vast market like China – which like India is actually several markets rolled into one, each with their own distinct features - WCCL is mostly confined to the South China market due to reasons of logistics and Zhongshan Ma Er’s own established footprint. “China has several strong local brands and Pahnli, for instance, our liquid detergent care brand is a strong number three in southern China. Also, we don’t play the price game but focus on delivering value,” adds Agarwal. 

Today, China contributes about $110 million in revenue just behind Malayasia which is about $150 million, with Vietnam not far behind at $90 million. Asked whether some of its international portfolio of brands would be launched in the domestic market, Agarwal says an emphatic no. “Brands need to have local resonance and identity. However, we might bring across those formulations and suitably package it depending on the needs of each market. However, We do have some brands like Hygienix which we introduced from the international portfolio to the domestic market during the pandemic, but we are very selective,” he adds.

Newer vistas

Just before the pandemic, it entered the African continent by buying Durban-based Canway Corporation, which has several locally well-known brands in body spray, bath and shower products and kids’ personal hygiene products. WCCL is believed to be looking at opportunities in Africa in a big way and apart from South Africa, it also has a small business in Nigeria. 

“But it is very small. Africa is still a white space from a geographical point of view. Also, a lot of companies (in Africa) have not had a good experience. So, one has to be careful. Now that we have a foothold, we’ll figure out how to expand. One of the reasons is that we are more like a touch and feel company. We like to physically visit places and meet people before we decide. We have not been able to do it in the last two years because of travel restrictions which eased only recently,” says Agarwal 

Branding and marketing maven Harish Bijoor, commenting on WCCL’s international expansion strategy through acquisitions believes that it is rather a good move. He says, “WCCL knows that establishing a brand with a label outside of India is difficult. So, picking up marquee brands from various markets at the right price and putting them under its team to manage and grow is a good business strategy. “Growing inorganically is faster as the acquired brands have equity in the local markets. In fact, they should continue with this strategy.” 

Domestic market

In the domestic market, one of the biggest success stories has been brand Santoor, which has emerged as its flagship brand. Santoor with alone across various categories of soaps, shampoo, handwash and numerous other product extensions is today a ₹2,300 crore brand. In certain markets like Andhra Pradesh, it is the number one brand outselling even established competitors from HUL and Godrej. Even in the domestic market, WCCL has carefully acquired brands such as Glucovita and Chandrika, which it helped scale up in various categories. From household names like Santoor, Chandrika, Yardley, Enchanteur, Safewash, Maxkleen, Giffy, Softtouch, It today has a portfolio of products in personal hygiene, liquid detergents, dish wash liquid, floor cleaners, surface sanitisers to energy drinks.

WCCL boosts the growth of domestic brands

Earlier, it acquired Northwest Switchgear and today, has a range of lighting products primarily in the LED segment under the Wipro Garnet name. It also recently announced its foray into packaged foods. including snacks, spices and ready-to-eat categories. Queried whether in the domestic market too the company will look at inorganic opportunities, Agarwal says, “We are always looking at the right acquisition opportunities if we find a good fit.”

WCCL has taken minority equity stakes in seven start-ups in the country. The company says its holding is anywhere between 15-25 per cent and the maximum investment in a single company is ₹25 crore. They will be run independently,” explains Agarwal.

Similarly, the venture funding arm of WCCL, Wipro Consumer Care Ventures, has invested in DSG Consumer Partners IV, a Singapore-based fund which will look at investing in start-ups in the broader South East Asian region. With e-commerce becoming more important by the day, WCCL is seen as playing catch up in that space compared to some of its larger competitors. 

Marketing guru Bijoor warns that venturing into too many segments would lead to a loss of focus. “This is their weakness; it is extremely critical to maintain a narrow bandwidth – the Wipro brand must not become a supermarket brand. Instead, it should become a house of brands. When one becomes a supermarket brand, focus gets lost, and it is not a constructive move to diversify the portfolio in this way.”

For now, though WCCL is on a winning wicket with a nice bounce expected as the FMCG sector recovers from the impact unleashed by the pandemic. Agarwal is justifiably – for now at least - gung-ho about WCCL’s prospects and its billion-dollar bet paying off in a big way.