Godrej outlines plan for growth ahead
Viveat Susan Pinto, Business Standard, 08 May 2015
The $2.25-billion (or Rs 13,500 crore) Adi Godrej Group, which on Thursday completed 118 years of its existence in India, has identified fast-moving consumer goods (FMCG), consumer durables, estate, defence and agri-products to drive its next leg of growth.
Group chairman Adi Godrej, in a media briefing on Thursday, said verticals such as consumer goods and estate would take the lead in driving its ten-by-ten strategy, which was about growing the group's top line 10-fold in the next decade.
"Both FMCG and consumer durables will be a major area of focus for us. About 600 million Indians use one or more of our products each day. That is more than any other Indian group, even more than the Tatas' or Reliance's. Our objective would be to add to this 600 million number in the future," Godrej said.
"The other business that we think offers us great opportunity for growth is our estate business. It has been the fastest-growing business in our group in the last five years. We think the requirement for residential housing in India is going to grow dramatically as incomes rise and as affordability improves. We will look at opportunities in this area," he added.
Godrej also said his group would lay special emphasis on emerging channels of distribution such as e-commerce, to drive sales.
"E-commerce is taking off rapidly in India. The potential for e-commerce in India is stronger than modern retail's," Godrej said. He added that e-commerce enjoyed the benefit of lower logistics and estate costs than modern trade.
"We are taking a lot of steps to tap this growing channel. All our businesses are now marketing through the e-commerce route via third-party tie-ups. In Nature's Basket, which is our gourmet foods business, we have acquired an e-commerce firm and integrated it into our business. The objective is to grow the e-commerce part of Nature's Basket," Godrej pointed out.
"Even for our estate business, we have tied up with online marketplaces such as Snapdeal. We are also, in a parallel manner, strengthening our own company websites to push online sales. We are, for instance, doing this in properties and durables," he added.
Godrej said the objective of pressing all levers was to ensure the group grew at a compound annual rate of 26 per cent a year over the next decade.
"We believe 15-20 percentage points of that 26 per cent growth rate will be organic. The inorganic growth will come mainly from Godrej Consumer Products. A little less than half of the revenues of Godrej Consumer Products today already come from outside and we propose to continue making acquisitions in that business," he said.
"For this, besides acquisitions, we are looking at products targeted at all price segments, from bottom-of-the-pyramid to premium," he said. He added that under-penetration of branded goods in general in India allowed groups such as Godrej to look at a wide canvass of offerings.