homehealthcare NewsAim to maintain growth momentum seen in H1; eyeing margin expansion, says Godrej Consumer
Aim to maintain growth momentum seen in H1; eyeing margin expansion, says Godrej Consumer
In otherwise challenging times, we have seen us maintaining more or less the growth momentum. It will be quite important for us to end the year on a high, said Sameer Shah, head finance-India and SAARC, Godrej Consumer Products Ltd (GCPL).
Godrej Consumer Products Ltd (GCPL) in their third quarter update has witnessed a relatively mixed demand across some of their geographies. Specifically on India, the company has seen marginally higher than mid-single digit volume growth, led by a gradual recovery in household insecticides.
Explaining the quarterly performance in detail, Sameer Shah, head finance-India and SAARC, Godrej Consumer Products Ltd (GCPL) said, “If you look at the overall October and November performance in the fast moving consumer goods (FMCG) space as well as the household and personal care space, the portfolio where we largely play in, we have seen incremental deterioration by around 1 to 2 percent compared to first half of this fiscal year and that is where we are sensing that there could be incremental deterioration largely in Q3 compared to the first half."
"I think mid-way during the course of this fiscal year, there was this hope of gradual recovery, which got pushed by 3 to 6 months. However we have, for our own self, continued, relatively strong volume growth momentum in Q3,” he said in an interview with CNBC-TV18.
Talking further about volume growth, he said, “The strategy for us at the beginning of the year was very clear in terms of driving volumes growth and so far it has got played out very well." So it is not just volumes growth but we have also seen volume market share gains across most of the big categories in which we play, he added.
With regards to margins, he said, in the first half of the year, we haven't seen any margin erosion, in fact they have expanded and on a full year basis too we will see expansion.
On ad spends, Shah said, they have been more or less same for the third quarter as well.
With regards to value growth, he said they will be close to the levels of value growth seen in the first half of this fiscal year. “Indonesia, on a full year basis remains quite confident of having at least a low double digit value growth."
The Indonesia business performance, over last seven years, from the time we have acquired the business has been teens to even mid-teens. So, there is no reason to believe why it should not be at similar levels of growths, he further said.
Talking about sales he said, “We have close to 27-28 percent of it coming from rural. So, we would be a bit unique to many of our peers; one, in terms of the rural-urban split, which for the FMCG space would be between 35-40 percent but for us is around 27-28 percent. Two, we are one of the few FMCG companies with a meaningful international presence. Around 45 percent of our revenues come from the international markets and 55 percent comes from India.
However, he specified that rural growth continues to be under pressure. Rural growth has being close to 0.6-0.65 times that of the urban growth compared to earlier 1.3 times and 1.7 times of urban growth, around 2-3 years ago.
For household insecticides the worst seems to be over and we have seen gradual recovery in the last three quarters, said Shah. "In Q2, we had 3-4 percent value growth in household insecticides and around 6-7 percent volume growth in household insecticides category and that trend should continue even going ahead,” he added.
On the overall growth outlook, he said, “In otherwise challenging times, we have seen us maintaining more or less the growth momentum we had seen in the fag-end of first half and it would be important for us to end the year on a high."
"Our objective would be to continue this momentum and if all goes well perhaps even build on this. Because we have had multiple launches over last 2-3 months to drive, as well as scale up the overall growth in India," he added.
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