acquisition of 100% equity stake in strength of nature llc [company update]

8/18/2019 Acquisition of 100% equity stake in Strength of Nature LLC [Company Update]

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Godrej Consumer Products Limited (GCPL) acquires Strength of Natur

a leading hair care company, to accelerate its growth in Africa

- Strength of Nature is a USA based company with a strong global presenc

compelling portfolio of leading hair care brands with affordable and innovativ

and has been serving women of African descent across 50 countries. - The acquisition enables GCPL to turbo-charge, creating a strong platform for W

products in Africa and to forge a stronger presence in the USD 1.8 billion glob

Care category

- Strength of Nature complements GCPL’s portfolio in Africa, building on its

position in Dry Hair Care and hair colours in the region

- This investment catapults GCPL to become one of the largest players globally

hair care needs of women of African descent. It will, over time, provide a platfoto further build and drive global leadership.


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“Strength of Nature has a seasoned management team with over 100 years o

experience in the industry,” he added. “Mario de la Guardia and his excellent team

great business over the last 16 years. We are very excited to partner with themworld-class global portfolio of hair care brands.”

Mario de la Guardia, Founder and President, SON, added, “We are excited a

Consumer Products’ investment in Strength of Nature. The investment is a great t

the value we have been delivering to our consumers through our innovative pr

pioneering hair care brands. Godrej shares our vision and values to deliver the

products at affordable prices to meet the needs of our consumers.”

Speaking on GCPL’s focus on Africa, Godrej said, “Africa is a key part of our gro

and we strongly believe that it holds tremendous potential. Africa has more than

world’s fastest growing economies, a fast growing middle class population and

urbanisation. Our operating model has enabled us to build a strong business

Africa. We have a good understanding of the African market and know what it

successful in the region. Our businesses in the region have been outperforming an

to now double our business in Africa in the next four years.”

SON complements GCPL’s portfolio in Africa, building on its leadership position


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ABOUT STRENGTH OF NATURE

Strength of Nature is one of the fastest growing companies in the hair care

women of African descent, driven by its strong commitment to consumer undersproduct innovation. A USA based company with manufacturing facilities in Savann

Strength of Nature is committed to providing value-priced, premium-quality hair ca

to multicultural consumers around the world. Strength of Nature markets a numbe

brands including African Pride, Profectiv, MegaGrowth, Motions, Just for Me, TC

Textures, Dream Kids, Elasta QP, Proline, Soft & Beautiful and Soft & Beautiful Bot

www.strengthofnature.com

ABOUT GODREJ CONSUMER PRODUCTS LIMITED

Godrej Consumer Products Limited is the largest home-grown home and pe

company in India. We are constantly innovating to delight our consumers with m

superior quality products at affordable prices.

We have bold ambitions and are becoming more agile and future ready. We rank

hair colour, household insecticides and liquid detergents and number 2 in soaps.


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ACCELERATING LEADERSHIP

IN AFRICAN HAIR CARE

01 April, 2016


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Disclaimer

Some of the statements in this communication may be forward looking statements within the meaning o

and regulations. Actual results might di ! er substantially from those expressed or implied. Important develop

a! ect the Company’s operations include changes in the industry structure, significant changes in politic

environment in India and overseas, tax laws, import duties, litigation and labour relations.

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Overview

3

Our

globalisation

journey so far

Africa - the

opportunity

and strategy

Hair care for women

of African descent -

the opportunity

Business

overview -

Strength of Nature


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Our globalisation journey so far

Our

globalisation

journey so far

Africa - the

opportunity

and strategy

Hair care for women


the opportunity

Business

overview -

Strength of Nature


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Becoming more global is one of the seven pillars of our stra

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We follow a 3x3 strategy for international expansion;a presence across 3 emerging geographies in 3 categories

Acquisitions have been the most rewarding route to internatgrowth

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7

Home Insecticides

Our acquisitions have enabled us to extend our core

Hair Colour Personal W

Home Care Hair Care Personal

Major acquisitions in Indonesia, Africa and Latin America


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Strategic acquisitions have strongly aided our growth story Significant contribution of international to sales and profit growth

8

78%

53%

22% 47%

FY09

9MFY16

Sales

78%

59%

22% 41%

FY09

9MFY

EBITDA

India I


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Today, we hold leading market positions in our key categoriacross geographies

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10

Our acquisitions have contributed significantly to value crea

3,000

24,513

31 March, 2009 31 March, 2015

Enterprise Value (INR Cr.)

EBITDA - India*

EBITDA - Acquisitions

242

4.7

964

476

58

12,100


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Tap into back-end

synergies and

leverage common

insights about

specific categories

We followed some key principles while integrating our acquiValues based partnering with selective integration

Stay away from the

typical MNC

approach of

standardisation and

consolidation;

acquired company is

a separate entity

Local innovations

and local agility

are key

differentiators

Put necessary

controls in place and

integrate key

processes (HR,

Finance, Risk

Management) and

systems (ERP)

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Establish stronger

local

entrepreneurial

cultures, supported

by global functions

Retain top

managem

supplemen

over time

Decentralise

decision making


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Africa - the opportunity and strategy

Africa - the

opportunity

and strategy

Hair care for women


the opportunity

Business

overview -

Strength of Nature

Our

globalisation

journey so far


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Africa is one of our key priorities and we have been focusingon growing our business

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Strategic

GrowthPillars

422711

1,0011,18

FY12 FY13 FY14 FY15

Africa Sales (INR Cr.)

23% 25%28% 30%

FY12 FY13 FY14 FY15

Percentage of Africa contributioInternational Sales

Extending fromHair Colour toWet Hair Care

Leveraging our existing

Household Insecticides

capabilities in India and

Indonesia

Increasing Dry HairCare penetration


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The foundation of our Africa business has been built overthe last decade

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Despite macroeconomic challenges, Africa continues to holdtremendous potential

C

United Nation

Doing Business 2016, : Measuring Regulatory Quality and Efficie

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GDP Growth

•

Africa has more than half of

fastest growing economies

in the world

•

Expected real GDP growth

of 5.1%

ExplodingPopulation

•

Fastest growing population

•

Will account for 40% of the

world’s population by 2030

•

By 2035, the number of

Africans entering the

working age population will

be more than the rest of the

world combined

Growing Middle Class andIncreasing Urbanisation

•

34% Africans now

classified middle class (300

million)

•

Expected 500 million city

dwellers by 2016

•

Sub-Saharan Africa is

among the fastest

urbanising regions in the

world; urbanisation

increased to 37% in 2014

from 27% in 1990

PolitImpro

• All

hav

gov

dec

•

30%

wh

bus

pla


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Our approach has enabled us to successfully navigate risks currency and ease of doing business

Unique,

cluster basedapproach

Talentpipeline

Systems andprocesses

Local

manufacturingcapabilities

Robust

distributionnetwork

Spread across Sub

Saharan Africa (our

business is equally

split between

Eastern Africa,

Western Africa and

Southern Africa)

Geographic breadth

insulates against

volatility in an

individual country

Bringing in worldclass talent

Investing indeveloping local

talent

Strong successionplans in place

Businessstreamliningthrough ERP

implementation

Stringent financial

controls to ensurecorporate

governance

Agility provides

competitiveadvantage

Sales teams ineach geography

Special salonfocus

IT enabledtracking

Hedges against

headwinds in

any particular

country

Portfolio

approach

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We see tremendous opportunities

to further accelerate our growthin Africa


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Hair care for women of African descent - the opportun

Africa - the

opportunity

and strategy

Hair care for

women of

African descent -

the opportunity

Business

overview -

Strength of Nature

Our

globalisation

journey so far


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The world has about 1 billion people of African descent,predominantly located in Sub Saharan Africa, the US and Ca


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The hair care category for women of African descent can beinto two broad segments - Dry Hair Care and Wet Hair Care

Kinky

Unmanageable

Weak

Solution Desired

Transform looks

Prevent damage to hair

Nourishment for scalp

and hairRelaxers

Maintenance

Natural Hair

Dry Hair

Wet Hair

Braids

Note: *Shampoos includes


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21

The Dry Hair Care category


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22

The Wet Hair Care category

Note: *Shampoos includes


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23

Hair care for women of African descent is a $ 4.5 billion mar


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So far, we have focused on driving leadership in Dry Hair Ca

Darling pan-Africamarket share25%


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Our leadership position has been aided by innovative produengagement and local manufacturing

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We seek to cater to the complete hair care needs of women odescent and believe that there are significant opportunities fWet Hair Care


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The US greatly influences hair care trends for women of Afridescent – both in the US and AfricaA presence in the US can be highly beneficial

Karan to share

US celebrities, publications and social media influence the style, colour and hair preferences of women


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The US serves as the source of innovation in hair careA presence in the US can be highly beneficial

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Attractive dynamics of the US market A presence in the US can be highly beneficial

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Sizeable market of $ 1.6 billion

Growing at over 6% annually

(faster than the general hair

care market)

Driven by an expanding

population of people of

African descent

Fuelled by increasing

purchasing power

African women spend

more than 3 times what

Caucasian women spend

on hair care

Opportunity to participate in

Dry Hair Care, given the

fragmented market


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Business overview - Strength of Nature

Africa - the

opportunity

and strategy

Business

overview -

Strength of Nature

Our

globalisation

journey so far

Hair care for women


the opportunity

C O i


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Company Overview

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Since being fo nded in 2000 it has gro n into a leading inde


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2000 2004 2005 2008 2009 2011 2013

Strength of Natureis founded by father

and son Mario de laGuardia Sr. and

Mario de la GuardiaJr. in associationwith Jack Wardlaw

Developsseveral

innovativeformulations

and

introducesthe Profectiv

brand

Commencesin-house

manufacturing

Invents acolour and

relaxercombinationproduct withpatentedformulation

Expands itsproduct

portfoliothrough the

acquisitionof ElastaQP

Completesthe

acquisitionof AfricanPride

Introducesthe

BeautifulTexturesbrands,furtherexpanding

its product

portfolio

Acquires fourbrands (Soft &

Beautiful, S&BBotanicals,

TCB, and Pro-

Line). TheReversible™Straighteningproduct ispatented andintroduced.

Mario de laGuardia Sr. is

President ofCarson

Products.Carson is

ultimately sold

to L’Oreal in

1996.

1982-1985

Since being founded in 2000, it has grown into a leading indemanufacturer of hair care products for people of African des

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United States

Caribbean

Sub

Mid

Eur

A strong, growing presence across geographies

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H i b d i h 15 ld l i


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Heritage brands with over 15 year old legacies

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Di ti t V l P iti


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Distinct Value Proposition

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An outstanding platform for growth, driven by a comm

innovation, brand acquisition and revitalisation capab

vertically integrated manufacturing

Holds three patents, three patents

pending and over 85 trademarks

Numerous market firsts, including

• Pre-measured single-use

relaxer packets

• Reversible straightening system

• Colouring relaxers

Portfolio is targeted at value

conscious consumers across

categories, who aspire for superior

quality products at affordable prices

Portfolio of he

relaxers, main

shampoos, ca

African desce

Ability to controof the value cha

savings, better

accelerated int

products to ma

Results in highe

the industry ave


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Transaction overview - Strength of Nature

Africa - the

opportunity

and strategy

Our

globalisation

journey so far

Hair care for women


the opportunity

Business

overview -

Strength of Nature

Ke Transaction Highlights


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37

1

Key Transaction Highlights

On 01 April, 2016, GCPL

entered into an

agreement to acquire

rights to 100% stake in

Strength of Nature, LLC

The acquisition will

include both domestic

and international

operations (primarily

Africa, Caribbean and

Middle East) of

Strength of Nature

We expect to close

the acquisition by the

mid/end of April 2016

Funding of the

transaction will be

done through low

cost overseas debt

Strength of Nature’

seasoned

management team

continue to lead the

business. GCPL wi

put in place financi

controls and cross-

functional teams to

address specific

synergies.

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Investment Thesis


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Investment Thesis

Strategic Rationale

Turbo charges the Wet Hair Care

platform for Africa

Provides a compelling portfolio of

Wet Hair Care brands with strong

positions and heritage

Presence in the US helps us

accelerate innovation with cutting

edge products and R&D

Seasoned management with over

100 years of combined experience in

the Wet Hair Care category

Provide a platform for a future play in

global hair care for women of African

descent

GCPL Value Add

Deep knowledge of Africa

consumers, along with

an understanding of the lo

business environment

Localised manufacturing i

Track record of establishin

business operations andsuccessfully running them

Design and R&D support f

innovation

Stronger processes in fun

Finance, Sourcing, HR an

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This acquisition catapults usto become one of the largest playserving the hair care needsof women of African descent.

Over time, this will provide us theto further build and drive global le

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Thank you

acquisition of 100% equity stake in strength of nature llc [company update]

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