Execution is the Key; Hygiene will be a competitively fought segment: Nisaba Godrej, CMD, GCPL
Nisaba Godrej, Chairperson and Managing Director (CMD), Godrej Consumer Products Limited (GCPL), talks about Q1FY21 results, rural business, product launches and margins among others during an exclusive interview with Zee Business Executive Editor Swati Khandelwal
Nisaba Godrej, Chairperson and Managing Director (CMD), Godrej Consumer Products Limited (GCPL), talks about Q1FY21 results, rural business, product launches and margins among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts:
Q: The numbers of the quarter sequentially looks good. Was it just due to the household product segment that contributed the most? Just take us through the highlights of the quarter?
A: I think that the GCPL’s quarter 1 performance has been sort of resilient. We have seen that there has been very strong growth in the household insecticides and we were at 27% growth there globally. Another category that has done well for us is our hygiene portfolio, which is a large portfolio for us, where we were at 15% growth. We also have something that we call as value for money which includes things, like hair colour in Africa, that did decline. But what we saw there was sequential month-on-month sort of growth coming back.
Q: How the rural side of your business has performed in this quarter? How has been the urban demand, has it picked-up significantly by now?
A: In the first quarter, we saw that there was a very strong rural demand. Now we had a good monsoon, government spending and reverse migration. Also the effects, I think, of the lockdown were felt much more and even now heavily in urban India, where modern trade has been disrupted. What we have seen in July, again sequentially, I think urban is also improving but rural is well ahead of the urban still.
Q: What about the new launches and how they are scaling up? What have been the positive surprises from the products that you have been bringing in? Can you throw some light on them?
A: I think in both in the household insecticide and hygiene, we had new launches. One of the biggest categories is the liquid vaporizers and late last year and earlier this year, we have been regional sort of rollouts. So those products and the household insecticides are doing extremely well. In hygiene, we have products like magic hand wash power to liquid, which is the most affordable hand wash you can get. I think products like that are doing extremely well. We are also seeing that a whole new category on disinfectants like sprays and hand sanitizers. We feel that in the spray, disinfectants, we do have a strong advantage because we are one of the biggest producers in FMCG of aerosols cans. So, we have a cost advantage. We are also doing air fresheners plus disinfectants. In Indonesia, we launched this first and have seen a very strong up-tick on these products.
Q: What about the hair colour segment has the demand come back?
A: In the lockdown, we have seen that products like hair colours were not even considered essential, so we didn’t get them out. But now, we are seeing a sort of sequential recovery in demand.
Q: Margins are very critical and I want to get a sense on how you are looking at the margins because I can see that this time, your margins were held by lower spends and lower raw material costs. So, what is your outlook for the future?
A: I think that we can keep strong growth and I think that the margins will follow that. I think something like advertising sort of things will increase but we should also see an increase in gross margins. The fixed overhead is something that will remain under control because there we focus on our cost projects, and at a time, we are not increasing our headcounts, among others. So, margins should follow the growth.
Q: These are uncertain times but this could be an opportunity for companies and leaders like you to see and strategize or restrategize business models and also the products that you think can be the products of the future and rework on strategy in that sense. Is this a thought that comes to you and are you working or reworking on realigning the product strategy knowing very well that what can be the future? Is there any new segment where you would like to enter?
A: When I look at GCPL, I think we have a very strong portfolio. Again in household insecticides, we have such strong brands and strong innovations. I don’t want to get malaria or dengue and take a risk with my health. We have also seen ourselves gaining market share strongly in that category. Same with hygiene, I think hygiene will be very competitively fought because it is not so that we are the only company who want to keep people clean and safe. But I think there also have advantages, whether it is our distribution brands. We will look to do some more disruptive innovation within that category. So I think that we will actually focus on a lot on what we have because we think it is the right portfolio.
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I think, the game right now is to execute and to make sure that your factories are running smoothly as possible. You are getting your supplies and building up your distributor where you have lost it, increasing distribution in rural and most importantly keeping your people safe and healthy, while you are doing all this.
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