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When 55-year-old Shantanu Khosla chose to call it a day at Procter & Gamble India, no loud announcements accompanied the departure. It was low-key, much as the man himself, considered the most low-profile of executives in arguably one of the most high-profile of businesses, fast moving consumer goods (FMCG).
In the close to a decade and a half that Khosla helmed the Indian unit of P&G, he was responsible for stabilising operations at the company after its split with Godrej in the late 1990s, growing turnover 10-fold and helping the Indian entity enter new segments beyond detergents, shampoos, female hygiene and baby care, some of the first few categories it had entered in the initial years of setting up shop in India.
A measure of Khosla's success, an IIT-IIM alumnus who spent a total of 32 years at P&G, is that the Indian unit continues to be among the top in its categories of operations, despite stiff competition in most of these. In the past year, it has lost share in segments such as female hygiene, diapers, skin creams and shampoos. Oral-B toothpastes has faced stiff resistance from competitors such as Colgate but the company has not pulled out the product, indicating it is not likely to give up without a fight.
P&G's overall annual turnover in India (across unlisted entity P&G Home Products and listed entities Gillette India and P&G Hygiene & Healthcare) is now Rs 10,000 crore. FMCG analysts say the task for Managing Director-designate Al Rajwani, an Indian-American who takes charge on July 1, will be to take off from where Khosla leaves (he steps down on June 30).
Rajwani, 56, is currently vice-president, P&G Arabian Peninsula & Pakistan. A chemical engineer by qualification (he began as a product supply management executive at P&G Canada in 1981), he has worked in multiple markets in 34 years, including the US, China, Canada, Korea, Pakistan and West Asia. His understanding of both developed and developing markets is expected to hold him in good stead as he helps the Indian operations grow their share in a challenging environment.
As with most FMCG companies, P&G has not been spared the consumer slowdown. Its two listed entities saw sluggish growth in revenue (between eight and 11 per cent ) for the quarter ending March (the financial year for these two companies ends in June).
P&G Hygiene and Healthcare's net profit was not healthy either, growing only eight per cent for the March quarter, though Gillette's bottom line grew over three-fold in the same period. But analysts tracking Gillette said this was mainly on account of the management's ability to cap overall expenditure at Rs 446 crore for the quarter, growth of only two per cent over the year-ago period.
This miniscule growth in total expenditure was mainly on account of lower commodity costs, a cushion not likely to be available as oil prices begin to shoot up. The demand environment also remains challenging as consumers cut back spending in anticipation of better times. Most FMCG chief executives are counting on a normal monsoon and revival of sentiment in urban areas to improve growth numbers in the coming quarters.
P&G, say industry sources, is likely to keep the focus on its existing businesses before contemplating new launches. India accounts for close to two per cent of the Cincinnati-based consumer products major, whose global annual revenue is $83 billion (Rs 5.2 lakh crore).
