DGGI investigates Godrej's Rs 2,825 crore acquisition of Raymond's consumer goods business
30 Oct 2023
The Directorate General of GST Intelligence (DGGI) is currently investigating a recent deal involving Raymond and Godrej. Earlier this year, Godrej Consumer Products announced its acquisition of Raymond Consumer Care Limited's FMCG business, which is a significant player in the deodorant and sexual wellness sectors in India.
The GST authorities have requested Raymond Consumer Care to provide clarification on why GST should not be applied to the transaction amount of this deal. Godrej Consumer Products had paid Rs 2,825 crore to Raymond for this acquisition, which included the FMCG business and the associated trademarks of Park Avenue, KS, KamaSutra, and Premium, through a slump sale. Furthermore, DGGI also conducted an inspection at premises connected to Raymond. A spokesperson from Raymond clarified that this was an inspection and not a search, and they have already submitted a comprehensive explanation and supporting documents to assert that the transaction should not be subject to GST. The spokesperson pointed out that, according to independent tax expert opinions sought by both parties, this sale should not attract GST because it was a slump sale of the ongoing business on a going concern basis.
Sudhir Sitapati, the Managing Director and CEO of Godrej Consumer Product Limited (GCPL), when announcing the deal in April 2023, highlighted that this acquisition is in line with their business portfolio and growth strategy, particularly in under-penetrated categories with significant growth potential. Categories such as deodorants and sexual wellness, where Raymond holds a prominent presence, offer substantial growth opportunities due to the comparatively low per capita consumption in India compared to other emerging markets. Sitapati emphasized their aim to tap into the full potential of these categories.
Atul Singh, the Group Vice Chairman of the Raymond Group, explained that they have divested their FMCG business, including trademarks like Park Avenue and Kamasutra, in the FMCG categories to Godrej Consumer Products. He expressed pride in building strong homegrown brands that are leaders in their respective categories and believes that Godrej Consumer Products will play a pivotal role in further propelling the growth of these brands.
