True North, the PE firm buys Sesa Oil for INR 1250 Crore

The acquisition of Sesa Oil by India based PE firm will boost the consumer goods sector and promulgate the growth of the industry in India.

India:  True North, India based PE firm has acquired the major controlling stake in the hair oil maker brand Sesa Oil which is based on Ayurveda, for INR 1250 crore. True North will own the major stake of 74% share in the new entity that has been created, called Sesa Care. It has been carved out from the parent company of Sesa Oil who also own detergent brands. This acquisition by the PE firm will majorly boost the growth of consumer goods sector.

Maulesh Ukani, the Gujarat based founder of the hair oil ‘Sesa’, will be owning the remaining stakes in the new entity created along with True North. SriKrishna Dwaram said, “We see great potential in the consumer sector and strongly believe Sesa Oil is a remarkable addition to our consumer portfolio.” The legal advisers to Sesa Oil and True North during the time of acquisition were the law firms JSA and Veritas respectively. Deloitte, who was previously the advisor on the sale of the brand Kesh King, also became the financial adviser to the founders of Sesa Oil.

The manufacturers of the hair oil have been regular targets for acquisition for FMCG companies in the past few years. Emami, which is a Kolkata based FMCG company acquired Kesh King, a hair oil brand for around INR 1600 crore almost three years back. Emami had paid almost five times more the value of annual sales of ‘Kesh King’, as a consideration for the purchase.

According to BlueWeave Consulting, the market for natural products has been growing rapidly. All the major hair oil brands have introduced oils which are made using ayurvedic formula, herbs and natural products. Thus, there has been a growing trend among the key FMCG players to acquire the hair oil brands to increase their domain of natural care and gain market share as well. On a similar note to Emami and the PE firm True North, Hindustan Unilever also acquired the Kerala based hair oil brand ‘Indulekha’ around three years back. The changing lifestyle and shift of the consumers towards all natural products is a major reason for the companies to come up with natural and ayurvedic products. The FMCG companies who do not own or produce any natural care product line are going forward by acquiring smaller scale brands and companies paying huge amount of money for the deals. Hair care is a major part of the natural products’ portfolio since people are increasingly becoming aware about the hair care issues caused by pollution and harmful chemicals. Thus, the Acquisition of Sesa oil by the India based PE firm will boost the consumer goods sector of the country and accelerate the growth of the industry.

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