Adi Godrej, chairman of the R15,000-crore Godrej Group, is fine-tuning the company’s organic and inorganic growth strategy to sustain its growth momentum in the R1,40,000-crore Indian FMCG sector. Godrej strongly believes that the implementation of GST (goods & services tax) will be a major growth driver for the Indian FMCG industry. In an exclusive interview with FE’s Lalitha Srinivasan, Godrej talks about the company’s strategic plans this fiscal.
Do you think the implementation of Goods & Services Tax (GST) will lead to price reduction in the FMCG space?
Yes. Once the GST is implemented, the price reduction in the FMCG space could be around 4 to 5% across categories. As the prices of consumer goods fall, consumption would increase considerably. The introduction of GST will lead to an incremental GDP growth of 1.5 to 2 percentage points. Once GST is introduced, India will have 10% GDP growth for ten years in a row. The government has appointed Sushil Modi, deputy chief minster of Bihar as the head of empowered committee of state finance ministers. He is taking necessary steps for the early implementation of GST.
After clinching seven acquisitions last year, you have acquired a 51% stake in Darling Group Holdings in Africa two months ago. Are you still scouting for acquisitions?
Yes, we are looking at acquisition opportunities both in the domestic as well as international markets. We are looking for acquisitions in hair care, personal wash and household goods sectors. Our acquisition focus is on developing countries.
With the rising input costs, many FMCG companies have taken price hikes in the last few months. Do you think the down-trading syndrome will now gain momentum in India?
It’s possible. Actually, it’s difficult to predict what will happen. But we have to sell our products at different price points to retain our consumers. To offset the rising input costs, we have also taken price hikes for our brands. Over all, I am not apprehensive about the down-trading trend in the FMCG space.
Could you tell us about your rural expansion strategy?
We are planning to set up new plants for Godrej Agrovet in rural India. Also, we are adding on manufacturing capacity for our Oleo chemicals business. In fact, our rural FMCG business has grown by 25 to 30% in the last few months. We plan to sustain our growth momentum in rural India this fiscal.
What are GCPL’s expansion plans in Q2 FY12?
We will be investing in capabilities and distribution models to sustain our performance in FY 2011-12. We are hiking our ad budget by 30% to promote all GCPL brands this fiscal. GCPL’s core strategy will be to leverage the advantages between its new acquisitions and existing brands to fuel sales growth. Our factories have devised ways to maximize production in our existing plants.
(Courtesy: The Financial Express)
Do you think the implementation of Goods & Services Tax (GST) will lead to price reduction in the FMCG space?
Yes. Once the GST is implemented, the price reduction in the FMCG space could be around 4 to 5% across categories. As the prices of consumer goods fall, consumption would increase considerably. The introduction of GST will lead to an incremental GDP growth of 1.5 to 2 percentage points. Once GST is introduced, India will have 10% GDP growth for ten years in a row. The government has appointed Sushil Modi, deputy chief minster of Bihar as the head of empowered committee of state finance ministers. He is taking necessary steps for the early implementation of GST.
After clinching seven acquisitions last year, you have acquired a 51% stake in Darling Group Holdings in Africa two months ago. Are you still scouting for acquisitions?
Yes, we are looking at acquisition opportunities both in the domestic as well as international markets. We are looking for acquisitions in hair care, personal wash and household goods sectors. Our acquisition focus is on developing countries.
With the rising input costs, many FMCG companies have taken price hikes in the last few months. Do you think the down-trading syndrome will now gain momentum in India?
It’s possible. Actually, it’s difficult to predict what will happen. But we have to sell our products at different price points to retain our consumers. To offset the rising input costs, we have also taken price hikes for our brands. Over all, I am not apprehensive about the down-trading trend in the FMCG space.
Could you tell us about your rural expansion strategy?
We are planning to set up new plants for Godrej Agrovet in rural India. Also, we are adding on manufacturing capacity for our Oleo chemicals business. In fact, our rural FMCG business has grown by 25 to 30% in the last few months. We plan to sustain our growth momentum in rural India this fiscal.
What are GCPL’s expansion plans in Q2 FY12?
We will be investing in capabilities and distribution models to sustain our performance in FY 2011-12. We are hiking our ad budget by 30% to promote all GCPL brands this fiscal. GCPL’s core strategy will be to leverage the advantages between its new acquisitions and existing brands to fuel sales growth. Our factories have devised ways to maximize production in our existing plants.
(Courtesy: The Financial Express)
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