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Godrej Consumers: Annual report extracts

Aug 7, 2009

In 2008, Godrej Consumer Private Limited (GCPL) had been one of the fastest growing FMCG companies in India. This was achieved through a mix of organic and inorganic growth. The portfolio of GCPL consists of soaps, hair colours, toiletries and liquid detergents. The consolidated sales of the company grew by 27 % YoY in FY09. This was on the back of robust growth in sales and launch of new products. However, net margin as a percentage of sales fell to 12.4% due to rising raw material prices.

In the domestic market, Godrej No. 1 soap became the market leader in Gujarat, while maintaining its leadership position in Uttaranchal, Punjab, Haryana and Himachal. Godrej is the market leader in the hair colouring category with 33.5% market share. This category registered sale of Rs.2.3 bn for FY09 on the back of new colour launches. Among toiletries, shaving creams and deodorant spray had performed well.

The company in FY09 increased its focus on rural areas, so much so that the company expanded its distribution and supply chain with focus on this market. The products of the company are now available in 3 m outlets of which 0.2 m outlets were added during the year. Furthermore, launch of new unit packs targeting the rural areas increased the acceptance of the company's products. GCPL used Doordarshan for advertising in the rural areas which led to strong results.

Exports of GCPL were Rs.194 m with sales in 33 countries. UAE, Sri Lanka, Bangladesh, Thailand, Afghanistan, South Africa and Mauritius were the key geographies where GCPL exports.

On the international side, sales for Keyline Brands improved on the back of new launches in the Cuticura Hand Hygiene range along with relaunch at a higher price point of the skincare brand Aapari. Rapidol (Pty) Ltd. which markets hair colours grew by 12% thanks to Inecto –Super Black hair colour and due to Inecto Powder hair colour and henna. Godrej Global Mideast FZE which distributes soaps, hair colours and toiletries grew by 11% with toilet soaps growing by 28% and hair colour by 55%. Kinky Group which was acquired this year offers a variety of products which included hair pieces and hair accessories like hair gels and hair sprays clocked sales of Rs.513 m.

New products launched in FY09
Brand Country Product
Godrej No. 1 India Starberry & Walnut
Godrej FairGlow India New variants
Cinthol India Cinthol Deo Musk
Cinthol India Cinthol Fresh Aqua
Godrej Expert Hair India New Range
Liquid Detergent India Ezee Bright and Soft
Cuticura Hand Hygiene UK Hand Foamer
Cuticura Hand Hygiene UK Kids Foamer
Cuticura Hand Hygiene UK Kids wipes
Cuticura Hand Hygiene UK Crackling Mousse
Hair Colour Canada Hint of Tint
Inecto Powder Hair Colours South Africa New variants
Cinthol Deo Spray Middle East New range

For FY10 GCPL is expected to continue to its growth by launch new products, increasing its distribution and through acquisitions.

As per Godrej Consumer's latest June quarter result analysis, the company's strategy is paying off. Consolidated advertising costs for the company increased by 26% to help the company post robust volume sales growth and increase its market share in its soaps and hair colour categories. For June quarter, half of Godrej's sales came from rural area which now contributes 38% of sales of the standalone entity. The company has indicated that it has ear marked Rs.10 bn for acquisitions and is presently scouting for suitable targets both in the domestic and the international market.

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