Adi Godrej: He wants to increase his company's size several folds

LOOKING AHEAD

» In five years, Godrej wants 50 per cent of revenues from international markets, up from 20 per cent today. » He also plans to scale up by entering categories dominated by Lever, P&G and Colgate-either hair care, or skin care or detergents or toothpastes, or perhaps two of the four-in the next one to two years.

The fast-moving consumer goods (FMCG) sector hasn't had it so good in a long time. For one, it's back in the double-digit growth groove, and that's likely to sustain for the next few years. For another, pricing power is back, which is reflected in the price hikes across industry leader Hindustan Lever Ltd's (HLL's) frontline brands. So, what does a player like the Rs 569-crore Godrej Consumer Products Ltd (GCPL)-which wasn't impacted by the recent slowdown, growing at 20 per cent (between fy03 and fy05)-do when the going gets better? It begins to think bigger, and braver. The ambition of size is reflected in Chairman Adi Godrej's objective of realising half of his revenues from international operations, up from 20 per cent currently, in five years. And the bravado is in ample display when he talks about entering categories over which multinational giants like HLL, Procter & Gamble and Colgate have an iron grip. Godrej is eyeing hair care (possibly shampoos), skin care, detergents and oral care. "We will enter one or two of these categories in the next two years. And we are clear we will not offer a me-too product," reveals the Godrej group Chairman.

Even as he prepares to take on the might of the multinationals in India, Godrej is chalking out his own plans to become an Indian MNC. "The structure of the company will change over the next five years and we will be several fold our present size," he says. Much of the future growth will be inorganic, and a start was made last year with the acquisition of brands like Erasmic and Nulon, among others, from Keyline of UK for Rs 130 crore, which analysts point out should contribute 5-7 per cent to the consolidated profits of GCPL in 1-2 years. "We have no debt on our books and that is a huge advantage when we go for acquisitions," offers Godrej.

Clearly, after building leadership positions in niche but sizeable markets like hair colour and baby diapers, Godrej is keen to take on the key players in key categories. He's been in soap for some time now, with some success, but as Hoshedar Press, Executive Director, GCPL, says: "In soap, we are a distant second. The objective is to be a respectable second (after HLL)." Along the way, Godrej says he will be disappointed if GCPL's consolidated profits do not double in two to three years. With analysts predicting long-term double-digit growth for the industry, GCPL might not have a big problem meeting that objective.

Can Godrej pull it off? Analysts are bullish about his plans to garner chunky revenues from overseas. However, it's the competition in new categories that makes them cautious. Says Pritee Panchal, an FMCG analyst at Mumbai-based Angel Broking, "In new segments like oral care, it may be difficult to make a dent since there are large players like Colgate and HLL, unless GCPL chooses to acquire a brand." Perhaps that's just what Godrej has in mind.