Godrej’s Rs-2,825-crore acquisition of Raymond’s consumer goods biz under DGGI lens: Report

The Directorate General of GST Intelligence (DGGI) is reportedly probing a recent deal between Raymond and Godrej. Earlier this year, Godrej Consumer Products had announced that it entered into an agreement to acquire the FMCG business of Raymond Consumer Care Limited, a leading player in deodorants and sexual wellness categories in India.

According to a report in The Economic Times, GST authorities have asked Raymond Consumer Care to explain why GST should not be levied on the transaction amount of the deal. Godrej Consumer Products had paid Rs 2,825 crore to Raymond for the deal that acquired the FMCG business along with the trademarks of Park Avenue, KS, KamaSutra and Premium, through a slump sale.

DGGI reportedly also conducted an inspection on the premises linked to Raymond. A Raymond spokesperson told the financial daily that it was an inspection and “not a search”. The spokesperson said that they have provided a suitable explanation along with documents to assert that the sale does not attract GST. “Given the contours of the deal and basis the independent tax expert opinion sought by both the parties, the said transaction does not attract any GST as it was a slump sale of the business on going concern basis,” the spokesperson told the daily.

Sudhir Sitapati, MD and CEO of GCPL, while announcing the deal in April, had said that the acquisition allows the company to complement their business portfolio and growth strategy with under-penetrated categories that offer a long runway of growth.

Categories like deodorants and sexual awareness, where Raymond is a leading player, have the potential to deliver double-digit multi-decade growth given the low per capita consumption in India compared to similar emerging markets, he had said. Sitapati said that they aim to unlock the potential of these categories.

Atul Singh, Group Vice Chairman, Raymond Group, had said, “We have divested our FMCG business with trademarks of Park Avenue, Kamasutra for FMCG categories to Godrej Consumer Products. We take pride in building strong homegrown brands that are amongst the leaders in their categories,” further adding that Godrej Consumer Products will provide the requisite impetus to further drive the growth of these brands.

Also read: Godrej Consumer to acquire Raymond's FMCG business for Rs 2,825 crore