Godrej Consumer Products expects stronger growth in H2FY21: Nisaba Godrej, Chairman

Nisaba Godrej, Chairperson and Managing Director, Godrej Consumer Products Limited, talks about the volume growth of the company, outlook for the future quarters, analysts concern related to diversification and International market during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: Despite all the geographies doing well but the volume growth has been only 5%. What has been the larger region because other FMCG companies have done well?

A: See, the 5% volume growth in India growth. In our international markets where we actually grew 11% two-thirds of that growth was actually of volume growth. I think, if you look at the quarters before like last year our volume growth was actually ahead of the pack so I think a better balance between volume and pricing. We hope to see stronger volume growth also going forward. 

Q: What kind of outlook you can give in terms of how much you will grow from here?

A: We have seen a very strong October and we have seen sequentially categories like hair colour and hair care also improving. So, I think, what we hope is that the tailwind categories like hygiene, household and insecticides continue to have short of strong consumer demand and growth. There has been a lot of penetration in certain categories and some of the categories, which we did see perhaps headwinds, we have seen them sequentially getting better. So, we are hoping the second half is stronger than our first half.     

Q: The growth in the soap and hygiene segment has been quite strong and robust. Do you think that this is going to be sustainable from here on? 

A: We have opened a separate soap and hygiene out have a little bit although exactly the same trend. Taken soap, we are seeing a few things, we are seeing good market share gains because both are value for money and Cinthol on germ protection and our health protect shops are doing well. I think the palm oil prices when they are high we tend to see a lot of local players shot of sit on the edge of fall out and the branded players benefits, so we are seeing that trend also happening. We are also seeing a little bit more of bathing going on as people step out, and when they come home and take bath. So, we see that consumption has to go up. In categories like hand wash, penetration in India was 13% pre-COVID and post COVID it is 30%. And interestingly enough even in rural India penetration was 5% in hand wash is 20% now. So, what we are seeing that these categories will grow as the penetration was growing very strongly actually before pre-COVID because of all this education of health & safety. 

Q: There is one concern that analysts are quite worried that the company is excessively diversified. How do you respond to that and what will you do to address that concern? Also, how are you seeing your international market performance panning out?

A: Our purpose is being in the goodness of health and beauty to the emerging market. So, you know what we are good at, low-cost manufacturing, distribution, very innovative value for money products whether it is our Rs 55 Aer pocket, Rs 30 sachet hair colour and we feel that these kinds of products are strong traction in all emerging markets not just in India. That being said that India is about 60% of our business and international is about 40%. And, actually when I look at it than India growth in this quarter has been 11% and international growth has been at 11%. The EBITDA growth internationally has been higher than the India growth. So, we do believe quite strongly that countries like Indonesia and the African continent have very strong term opportunities for GCPL. I think in the Africa business definitely not only a strong growth is required but a strong margin growth is also required and we are very focused on that. Actually, our Indonesia business is pretty much like our India business.

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So, it has been very similar and the country from the GDP point of view and ability point of view has been quite stable ever since we invested in it.