Jun 08 2015 : The Economic Times (Mumbai)
Outgoing P&G India Chief Shantanu Khosla Set to Join Crompton
Chaitali Chakravarty, Sagar Malviya & Arijit Barman
New Delhi | Mumbai:
Procter & Gamble India managing director Shantanu Khosla will join the consumer business of Crompton Greaves to spearhead the company under its new private equity owners. Khosla is coming on board in a senior leadership position and is likely to be the vice chairman and managing director, said multiple sources with knowledge of the matter.
Crompton Greaves' consumer division, Crompton Greaves Consumer Products, is being spun out and getting demerged from its parent into a separately listed company through a court approved process.
The 55-year-old, who will switch shampoo and detergents for fans and lighting, will have a board seat and a CEO under him to drive daily operations, said these sources who didn't wish to be identified.
Khosla made his name at P&G where he led several business units around the globe for more than three decades. During the 13 years when he was at the helm of the Indian unit, the company's revenue multiplied more than six times to Rs. 9,000 crore. Last week, P&G India announced Khosla is exiting the consumer products major with effect June 30.
“The trend of hiring professional management by financial sponsors is commonplace globally. It can add a fresh impetus for future growth of any consumer brand,“ said Ritesh Chandra, executive director, head-consumer group, at Avendus Capital.
Around a month ago, Crompton Greaves agreed to sell its consumer electricals unit for `. 2,000 crore to Advent International Corp and Singapore's Temasek Holdings to unlock value and help repair its leveraged balance sheet. After the separation, which received board approval in February, the shareholding pattern of the new consumer company will mirror that of Crompton Greaves.
The consumer electricals unit will be first demerged into a standalone company and will be listed separately. Advent and Temasek bought out the promoter stake of 34.38% in the business -a move that will also trigger an open offer for an additional 25% in the new company . Upon completion, the new PE owners could end up with close to 60% ownership. Both P&G and Advent declined to comment on Khosla's appointment.
“Khosla showed his marketing acumen when he took Hindustan Unilever head-on and gained share in many key categories. The products may be different but he will surely spearhead CG's brand-building initiatives in a space that is increasingly getting cluttered,“ said the CEO of a personal-care company who didn't wish to be named.
Crompton's consumer electrical unit, which accounts for nearly half its standalone business, generated a revenue of Rs. 3,232.6 crore for the fiscal year ended March 31, 2015. On a consolidated basis, the segment contributes a fifth to its group sales but half its operating profit.
The consumer business largely operates in four segments -fans, lighting, water products (pumps, etc.) and kitchen appliances. The first two clearly dominate its sales, together contributing 74%. In fans and domestic pumps segments, it is the market leader. In lighting, the company is third (14% share) while it is No. 4 in water heaters with a 10% share of the market.Scaling up in home and kitchen appliances have been very slow, feel analysts tracking the company .
“The entry of Advent and Temasek will lead to a focused business approach for the consumer business and allow the business to pursue aggressive growth opportunities,“ said a recent Motilal Oswal report.
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