Godrej Consumer Products' deft acquisitions in the emerging markets and its sharp focus on select product categories have helped it pull off superlative performance in the FMCG space. But can GCPL transform itself into a truly world-class multinational?
Personal care and household goods maker Godrej Consumer Products has, over the years, continued to deliver high growth within the FMCG space, by acquiring new brands, entering new categories and building a robust market overseas. In fact, over the past three years it has managed 51% compounded annual sales growth and a net profit growth of 49% on a consolidated basis during the same period. Today, GCPL commands a 10.1% market share in the domestic soaps segment and is the leader in hair colours segment with a 29.4% share. With 100% acquisition of Godrej Sara Lee, GCPL is also the leader in household insecticide business, with 36.6% share in the domestic market.
The company posted a 36% increase in consolidated net profit for the fourth quarter ended March 31, 2012 at Rs.1.92 billion. In the year-ago period, the company’s consolidated net profit was Rs.1.41 billion. Net sales in the fourth quarter of 2011-12 increased 30.85% to Rs.13.23 billion as against Rs.10.11 billion in the same quarter in the year-ago period. For the fiscal 2011-12, consolidated net profit increased 41.19% to Rs.7.26 billion compared to Rs.5.14 billion in the previous fiscal. Its net sales grew 31.95% to Rs.48.50 billion during the fiscal, against Rs.36.76 billion in 2010-11. The strong numbers have helped move the GCPL scrip to new highs, and in past quarter it also outperformed the market, surging 22.48% as against 0.27% decline in the Sensex. Commenting on GCPL’s performance, Chairman of Godrej Group Adi Godrej said to B&E: “I continue to be very confident of the opportunities for GCPL both in India and overseas. We will continue to pursue a prudent but aggressive growth strategy through a blend of organic and inorganic initiatives.”
GCPL’s earnings have been strengthened by strong positive EPS (earnings per share) accretiveness of new acquisitions and excellent domestic business performance across all three categories of household insecticides, hair colour and soaps. While domestic business grew by 21% in the fourth quarter, the company witnessed healthy growth across core categories. Home care grew by 28%, more than 3x of the category growth of 9%, led by strong marketing investments and distribution synergies benefits. Soap sales growth was 30%, nearly 1.5x of the 20% value category growth and representing a volume growth of 17% against category volume growth of 4%. Sales growth of hair care products was 13%, led by Godrej Expert powder hair colours and Nupur natural mehendi.
Going ahead, the company apparently aims to continue seeking growth opportunities in these categories. “The macroeconomic environment is strong. We continue to explore opportunities to strengthen our presence and competitive position in the home care, personal wash and hair care space,” says Godrej. In line with this strategy, GCPL has set an ambitious target of growing 10 times over the next 10 years from its current turnover of over Rs.48.5 billion through acquisitions as well as normal expansion in both domestic and international markets. “We want to be 10 times bigger in size in 10 years’ time, which is a compound annual growth rate of about 26%,” says Godrej. Elaborating the strategy, he says: “We hope to achieve about 15% to 20% organic growth and the balance through inorganic growth... We hope to achieve about 15% to 20% organic growth and the balance through inorganic growth.”
Besides strengthening its domestic presence in soaps, household insecticides and hair colours, the company is pursuing growth through overseas acquisitions in a major way. The acquired companies are mostly in emerging economies of Asia, Africa and Latin America. The company has identified Africa as a key market for growth and is aiming to be the largest Indian FMCG firm on the continent. Last year GCPL had expanded operations in Africa with the acquisition of a 51% stake in African hair care company Darling Group Holdings, which operates in 14 countries across Africa, selling hair extension products under brand names like ‘Darling’ and ‘Amigos’. For the fiscal ended March 31, 2012, Africa contributed 23% to GCPL’s international business. In FY 2011-12, GCPL’s sales from its main international markets of Asia (excluding India), Latin America, Africa and Europe stood at Rs. 5.13 billion.
Personal care and household goods maker Godrej Consumer Products has, over the years, continued to deliver high growth within the FMCG space, by acquiring new brands, entering new categories and building a robust market overseas. In fact, over the past three years it has managed 51% compounded annual sales growth and a net profit growth of 49% on a consolidated basis during the same period. Today, GCPL commands a 10.1% market share in the domestic soaps segment and is the leader in hair colours segment with a 29.4% share. With 100% acquisition of Godrej Sara Lee, GCPL is also the leader in household insecticide business, with 36.6% share in the domestic market.
The company posted a 36% increase in consolidated net profit for the fourth quarter ended March 31, 2012 at Rs.1.92 billion. In the year-ago period, the company’s consolidated net profit was Rs.1.41 billion. Net sales in the fourth quarter of 2011-12 increased 30.85% to Rs.13.23 billion as against Rs.10.11 billion in the same quarter in the year-ago period. For the fiscal 2011-12, consolidated net profit increased 41.19% to Rs.7.26 billion compared to Rs.5.14 billion in the previous fiscal. Its net sales grew 31.95% to Rs.48.50 billion during the fiscal, against Rs.36.76 billion in 2010-11. The strong numbers have helped move the GCPL scrip to new highs, and in past quarter it also outperformed the market, surging 22.48% as against 0.27% decline in the Sensex. Commenting on GCPL’s performance, Chairman of Godrej Group Adi Godrej said to B&E: “I continue to be very confident of the opportunities for GCPL both in India and overseas. We will continue to pursue a prudent but aggressive growth strategy through a blend of organic and inorganic initiatives.”
GCPL’s earnings have been strengthened by strong positive EPS (earnings per share) accretiveness of new acquisitions and excellent domestic business performance across all three categories of household insecticides, hair colour and soaps. While domestic business grew by 21% in the fourth quarter, the company witnessed healthy growth across core categories. Home care grew by 28%, more than 3x of the category growth of 9%, led by strong marketing investments and distribution synergies benefits. Soap sales growth was 30%, nearly 1.5x of the 20% value category growth and representing a volume growth of 17% against category volume growth of 4%. Sales growth of hair care products was 13%, led by Godrej Expert powder hair colours and Nupur natural mehendi.
Going ahead, the company apparently aims to continue seeking growth opportunities in these categories. “The macroeconomic environment is strong. We continue to explore opportunities to strengthen our presence and competitive position in the home care, personal wash and hair care space,” says Godrej. In line with this strategy, GCPL has set an ambitious target of growing 10 times over the next 10 years from its current turnover of over Rs.48.5 billion through acquisitions as well as normal expansion in both domestic and international markets. “We want to be 10 times bigger in size in 10 years’ time, which is a compound annual growth rate of about 26%,” says Godrej. Elaborating the strategy, he says: “We hope to achieve about 15% to 20% organic growth and the balance through inorganic growth... We hope to achieve about 15% to 20% organic growth and the balance through inorganic growth.”
Besides strengthening its domestic presence in soaps, household insecticides and hair colours, the company is pursuing growth through overseas acquisitions in a major way. The acquired companies are mostly in emerging economies of Asia, Africa and Latin America. The company has identified Africa as a key market for growth and is aiming to be the largest Indian FMCG firm on the continent. Last year GCPL had expanded operations in Africa with the acquisition of a 51% stake in African hair care company Darling Group Holdings, which operates in 14 countries across Africa, selling hair extension products under brand names like ‘Darling’ and ‘Amigos’. For the fiscal ended March 31, 2012, Africa contributed 23% to GCPL’s international business. In FY 2011-12, GCPL’s sales from its main international markets of Asia (excluding India), Latin America, Africa and Europe stood at Rs. 5.13 billion.
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