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Markets love companies that create disruptive products because they lead to the creation of new markets. Godrej Consumer Products has created a new market with its new paper format mosquito repellant. This new product is called Good Knight Fast Card and is nothing more than a slip of paper that burns for three minutes but is effective for nearly four hours. It consumes no electricity and is smoke-free, which makes it different from all other mosquito repellants in the market so far. The product has been priced at an attractive Re 1/per use and comes in a pack of 10 cards. Mosquito coils from Godrej Consumer are priced at Rs 2.50 a piece.
Analysts are bullish on the company as this product will lead to the creation of a new category and also because the product is better than other existing products in the market and gross margins are expected to be double that for mosquito coils. PhillipCapital estimates the market size of this product to be Rs 700 crore over the next five years. The brokerage expects addition of Rs 25-40 per share to the current market value as the paper product has significantly better gross margins profile than the coil format.
While some analysts believe this product will cannibalize some of the existing products of GCPL, there seems to be consensus that this product will also target new markets too. Analysts say that 56% of Indians don’t use mosquito repellants. In rural markets 72% of the population does not use any such product, therefore, the product would be able to tap new users.
Godrej Consumer’s research and development team in India and Indonesia has developed this product. The product has already been launched in Indonesia under the brand name Hit Paper Magic. The product has achieved a fair amount of success in Indonesian markets since its launch, claim analysts, which is why the expectation is that the product would do well in India too.
