“Our strategy simply is to develop these
categories and fund the development of high margin categories through a radical
simplification of our organisation and to invest more in our existing
categories,” says Sudhir Sitapati, MD & CEO, Godrej Consumer Products.
On
Godrej Consumers portfolio & strategy
The Godrej Consumers portfolio is a great
high margin portfolio in underpenetrated categories that we operate in. Our
strategy simply is to develop these categories and fund the development of
these categories through a radical simplification of our organisation and to
invest more in our existing categories.
When we talk about FMCG, hyperinflation is
always a problem because increase in raw material prices lead to also packaging
and freight costs going up. But it is very difficult to pass that on to
consumers without any impact. How did Godrej manage that in Q3?
We’re experiencing hyperinflation like we
haven’t seen in a long time. I’ve never seen it before. The basics of
hyperinflation are that one must focus on the consumer and pass on price
increases gradually. It is impossible to do everything in one sitting. Godrej
has been doing this for a few quarters now. We’ve been watching inflation rise
for several quarters and have responded with moderate, periodic pricing hikes.
That’s how we’ve been getting it through without stunning the public and
absorbing a significant portion of the cost increase ourselves.
There
has been this debate between urban versus rural. What would Godrej want to say
about that? Is there any slowdown in rural areas? Some companies are saying it
is pretty strong and some companies are pointing out that it is not that great
in the rural areas?
In India, there is a noticeable decline in
consumption in Q3. It appears that rural has slowed, but when seen over a
two-year period, both rural and urban have slowed at nearly the same rate, and
possibly a two-year time is a better way to look at it because during Covid,
many urban stores were closed, and there was also rural migration.
Across
categories, which will be the high growth area for Godrej Consumer? The key
segments where you expect penetration to increase over the next three years?
Our flagship home insecticide business,
hair colour business, and air care business are the three categories where we
hope to see increased penetration around the world, not just in India. The air
care industry, in particular, is a relatively underserved sector in areas of
the poor world, and it will see significant growth as wages rise.
When
we talk about the Africa and Indonesia businesses, can you give us some colour?
How has the demand been there under the current scenario?
The Africa business has performed admirably
in recent quarters, and it did so again this quarter. Our Indonesian business
is experiencing some difficulties. This is due in part to Indonesia’s
macroeconomics, but it is also because to the Covid headwind that we are
experiencing in Indonesia. I’m hoping that the Indonesian economy recovers in a
few quarters. Courtesy: www.economictimes.indiatimes.com
