‘Project Pi’ will help GCPL to offset the inflationary pressures on Margins: Sunil Kataria, Business Head - India & SAARC
Sunil Kataria, Business Head - India & SAARC, Godrej Consumer Products Limited (GCPL), talks about the change in consumer preferences, business prospects in FY22, Business initiatives to cater to customer needs, LEAP Project and margins among others during a candid chat with Swati Khandelwal, Zee Business.
![‘Project Pi’ will help GCPL to offset the inflationary pressures on Margins: Sunil Kataria, Business Head - India & SAARC ‘Project Pi’ will help GCPL to offset the inflationary pressures on Margins: Sunil Kataria, Business Head - India & SAARC](https://cdn.zeebiz.com/sites/default/files/styles/zeebiz_850x478/public/2021/03/26/146173-untitled-design-2.jpg?itok=8dsAaLKF&c=c5af8c0f92ccc8e249257bf0f1cb18e8)
Sunil Kataria, Business Head - India & SAARC, Godrej Consumer Products Limited (GCPL), talks about the change in consumer preferences, business prospects in FY22, Business initiatives to cater to customer needs, LEAP Project and margins among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:
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Q: Tell us about how the consumer preference has changed during COVID and how you are gearing up for FY22 to maximize the business prospects?
A: COVID-year, i.e. 2020, has been an extraordinary year. Although, the year has ended, unfortunately, the second phase of COVID has started again. So, we are still amid the pandemic, in a way. Three trends are still panning out. A customer has been a very confined customer and we term it as a 3C trend of the consumer. The customer has to sit at his house, social spaces have reduced, outings have closed, and travels are almost over, so the customer is feeling very constrained and stalled, which means mental exhaustion has come in the customer. Secondly, consciousness and awareness have come in the consumer because there has been a lack of sensibility towards civic sense, taking precautions and preventive measure towards the health in our country. I think the COVID has given a shock to everyone. So, across classes, I think, the trend of health consciousness is increasing constantly. Going forward, I think, this thing will turn stronger in our culture. The third C is that our customer has turned into a connected consumer because people are not able to move physically, they are not able to go to shops, malls etc. Digital was growing in the country and has taken a big leap and customers are connected digitally in everything. They are shopping on the connected app, entertaining themselves on the apps and all type of commerce activities, maybe it is about the social media or social commerce, and they all have entered into the connected list. I think they have turned into a constrained customer, conscious customer and connected customers. And every business will have to pay attention to these three aspects in the coming time.
Q: If we will talk about your business and then tell us about the initiatives the company took in both rural and urban areas to cater to the customer needs?
A: In the last six months, we have seen that the consumption of rural customers is leading the economic revival. One thing is very clear in India that whenever the Indian economy has grown at a fast pace then the rural has always led the growth. Rural delta with the urban has always been 1 to 1.5-17. Before COVID, when the economy/GDP has fallen then that delta has moved to the negative zone. Right now, a trend is visible that the rural consumption is growing at a good pace and I think this is happening because government investments have increased a lot, monsoons have been quite good and I think, reverse migration has also helped this stimulus. So, I think that our rural network has always been very strong, and we are investing more there, for instance, we have around 10,000 sub-distributors who are covering us in the rural areas. During the COVID-year despite lockdown, we have increased the number by 3,000, which means, the 10,000 numbers have increased to 13,000 sub-stockiest. And, our direct village coverage, which used to around 65,000 has been increased by 5,000-6,000 villages and has reached to around 70,000-73,000. So, it will be our focus to reach directly to the rural and our customers. This is a very initiative for us. Apart from this, the focus of the health hygiene category has increased a lot, therefore, we have launched many products related to hygiene, like Godrej Protect is a very disruptive hand wash product, which is a powder to liquid hand wash and is at Rs 15, it is an affordable, high-quality hand wash. We have also launched a few more products in the hygiene pockets, like disinfectant spray, health soap and we have increased our presence in these products. Plus, we are also entering the toilet cleaners, floor cleaners and dish wash, which are a part of the urban hygiene category. To tap all these things, we have seen a very important channel for hygiene products, especially personal hygiene, and that is a chemist channel. So, we are also increasing our investment in the chemist channel to make sure that we can increase the chemist channel by around 1 lakh outlets. So, this is also going to be a very big initiative in the urban region.
The third thing that we have done is that we have increased the investment in technology and this technology is available on both, the marketing side as well as the sales side. So, all our frontline salesperson, who goes to the market to sell our products, have been provided with a technology-enabled selling mechanism from the very beginning in which we provide handheld terminals to them. Now, we have upgraded that technology and made them real-time connected so that we can get their data and analytics live and we can guide them through algorithms to increase their productivity. So, these are certain initiatives that we have taken as part of the GTM 3.0.
Q: Tell us about the LEAP project and how it has helped you? Also, the commodity prices are going up, logistics cost is also increasing, and they are impacting the margins. So, do you foresee any price hikes, if yes, what will be its quantum?
A: First let me tell you about the LEAP, few of the initiatives that I have talked about are part of the LEAP. Also, in the LEAP projects, we will focus on category management in the modern trade. So, there are two categories, which is our lead category, like household insecticide and air care. These two has the capability in which how to manage the category in modern trade so that the category growth increases and if you are the lead player in it then you will grow automatically. S, we have started focusing on category management as a future part of the LEAP project. I have already informed you about the rural area that comes under the LEAP project. Apart from this, the third important thing in it is that we have focused a lot on e-commerce. E-Commerce has a contribution of around 4-4.50% to our business and we expect that its business potential will go up to around 10% of our business in the next three years. We have set-up e-commerce as a separate business unit in our company and we are not treating it as a channel, but we are treating it as a P&L centre. And, separately, we have started building marketing capability and new product capability among others in the e-commerce channel.
As far as the margin is concerned, yes commodity inflation is definitely at the all-time high at present and you can see the crude prices, which has increased a lot as compared to the last year, Palmolive prices are up a lot over last year. So, there is a major inflationary trend in the overall market. We are doing two things in it. We have already passed-on some prices, like in soap we have taken a 4-5% price hike in the last three months and it has reached to the market and we will take selective price in other products. This is one thing but when we will increase the prices, then it will be done very strategically because we do not want to compromise on the volume growth. So, I think, we will have to take a smart, selective and strategic price hike. Apart from this, we take many cost initiatives in our company to counter the margin impact due to the inflationary pressures. For this purpose, we have a project for cost optimization that runs continuously at our company and we call it ‘Project Pi’ and our teams are working on it. And we will try to offset the inflationary impact through strategic price hikes and cost initiatives.
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