Godrej Consumer Products Ltd (GCPL), has outperformed analyst projections in the July-September quarter. Managing Director DALIP SEHGAL explains the reasons and the way forward in a chat with Seema Sindhu. Excerpts:
What do you attribute the growth to?
There are a number of factors. We have invested a huge amount of money in advertising and publicity. Our spends increased by 50 per cent compared with the corresponding quarter last year. Rural sales pushed growth further. Rural sales have grown by 40 per cent in the past six months, double the 20 per cent we have seen in urban areas.
We have increased our penetration in rural markets. In the past six months, we added 1,700 new small towns and 5,000 villages to our rural coverage. We have a target to reach 8,000 towns (from 5,500) and 50,000 villages (from 15,000) within the next three years. The rural segment contributes 42 per cent to our total sales and we expect to make it 50 per cent in three years.
Competition in the soaps category is heating up. How do you plan to counter this?
We have achieved a market share of 11 per cent in the soap category, the second largest player. Godrej No 1 is the No 1 soap in the north now. It exceeds Rs 500 crore and continues to be the country’s third largest soap brand. During the quarter, Godrej No 1 achieved leadership in volume and value in Uttar Pradesh. Cinthol’s market share has increased from 2.5 per cent to 2.8 per cent. Cinthol deodorant has grown by 50 per cent in this quarter.
How have the overseas subsidiaries performed?
Our international businesses grew 20 per cent. It contributes 25 per cent to our overall business. In the UK, the skin care business has done quite well. Cuticura Hand Hygiene’s sales increased 3-4 times because of the H1N1 scare. Due to the recession, premium products were affected in UK.
But since we operate more in mass segment, the impact on us was marginal. In South Africa, Rapidol and Kinky have performed well and we plan to roll out into the rest of the African continent.
You had kept Rs 1,000 crore for acquisitions in emerging markets. Any progress on that?
We are aggressively pursuing targets. As soon as things materialise, we will share the details.
Unilever and Procter & Gamble have been eyeing the international business of Sara Lee. What material impact will this have on your business if the deals go through?
Operationally, we don’t see any effect, as it’s a separate company here. Rest, things can be evaluated only when they happen.
What’s your outlook for the year ahead?
As the pillars of growth are in place, we expect continuous growth across the categories.
