Wipro buys Singapore-based consumer goods firm Unza Holdings

11 July, 2007: Wipro Limited has bought Unza Holdings Limited, Singapore-based consumer goods company, for Rs 1,025 crore ($250 million), in its biggest acquisition ever.

Wipro Limited has interests in software, consumer products, and energy. The all-cash buyout would give Wipro market access in Vietnam, Hong Kong, China, Indonesia and Malaysia – where Unza has its own operations, factories and manufacturing bases – to source soaps and toiletries at a lower cost for the Indian market.

The acquisition is expected to be completed by the end of July 2007.

The factories of Unza, two in Malaysia and one each in China, Vietnam and Indonesia, are located in zones with lower tax rates, enabling Wipro to “cross-sell” the multiple company brands, according to Vineet Agrawal, Wipro’s president for consumer care and lighting.

The acquisition will nearly double Wipro’s revenue from consumer products and lighting to over Rs 1,600 crore. It will not have any impact on the margins of the company, which closed 2006-07 with over Rs 15,000 crore revenues.

Wipro Limited, which is also India’s third-largest software services vendor, bought 58% of Unza from Standard Chartered Plc. and private equity investor Actis Capital LLC and the rest from the target’s staff.

About half of Unza’s revenues, across 48 brands, including products Eversoft and Enchanteur, come from Malaysia.

Analysts said the challenge for Wipro is to increase the net margins of Unza, currently less than 5%, to the higher margins of 10-14% enjoyed by Indian personal care and fast moving consumer goods companies such as Dabur India Limited.

Wipro plans to bring some of Unza’s products to India and sell them under its Santoor brand. It is also studying the tax structures for possibly manufacturing the Santoor brand of products in South-East Asia and selling them in India.

Wipro has eight factories – two each in Karnataka, Himachal Pradesh and Maharashtra and one each in Faridabad and Chennai. It also sources its range of products from third-party contractors in other locations.

The company’s consumer and lighting business has acquired local brands such as Chandrika soaps, glucose brand Glucovita, and Northwest Switches.

Since December 2005, Wipro’s technology business (Wipro Technologies) has spent over $200 million buying out seven companies in the United States and Europe, including consulting firm Nervewire, infrastructure management company cMango, and Austrian design services firm Newlogic.