Thirsting once again

There's a gush of news about players wanting to enter the packaged water business. Just look at the names doing the rounds: Coca-Cola India, Groupe Danone, surprise entry of Wipro and of course, the usual suspect Bisleri. As the dust settles, or should we say water, Wipro has denied even an interest in the category, for now. "There have been rumours in media that Wipro is considering acquisition of Bisleri, which is not part of our current market address," says Vineet Agrawal, President, Wipro Consumer Care & Lighting. "While we continue to look at inorganic growth opportunities, these are focussed on supplementing growth in our current addressable market segments," he adds. Ramesh Chauhan, the old warhorse chairman of Bisleri International, also denies being in the race: "I do not want to sell out to Coca-Cola India or anyone. There are no plans for raising private equity either. We are a cash-rich, zero-debt company," he says.

So what's all the song and dance about? The noise in the approximately Rs 2,000-crore category (organised only) is gaining ground as French player Danone is supposed to be in talks with smaller players such as DS Group for its packaged water brand 'Catch'. And joining the race for valuations are many other players that have built sizeable businesses. For a few years now, things have been quite tepid in the water business, due to distribution hurdles and poor profit margins. "But as the economy has grown, there's potential now for benefits of economies of scale to kick in," says Ritesh Chandra, Associate Director, Transaction Advisory Services, Ernst & Young India.

Therefore, there are reports that Coke wants to launch its international brand Bonaqua, besides which big Indian players such as ITC, Dabur, and Reliance Retail may enter the market as well. But as E&Y's Chandra says, "it will only be a few large players that will dominate the scene". So smaller regional brands such as Catch, Aava, and Oxyrich may get bought by their bigger and more ambitious rivals.