Godrej Consumer Products Limited Q1FY21 report Card

Fun Facts

Godrej Industries was started by Ardeshir Godrej. He was an unsuccessful lawyer, later he started manufacturing surgical equipments, but failed. He worked as an assistant as well in a pharmacy store but left that too. One day he read a newspaper article by the police commissioner of Mumbai who called for better security of homes & offices due to the rise of burglary incidents. After reading that he decided to try to make the best lock. He learned all about locks, took a loan in 1897 in a tiny shed in central Mumbai, the 29-year-old started manufacturing anchor brand locks.

Here is the complete Godrej Group at a glance!

What are the top material issues on the mind of FMCG company Godrej Consumer Products Limited? And what are they planning to do regarding the same?

COVID Commentary

“The novel coronavirus outbreak in the last quarter of the fiscal year 2020 has significantly affected the consumer goods industry. However, at the time of this materiality exercise, the outbreak did not have a noteworthy impact. From the risk management perspective, we are monitoring and acting against the outbreak in line with our internal crisis management plan, which is overseen by the Global Risk Committee.

From the perspective of this materiality analysis, the outbreak has been treated as a singular event which occurred towards the end of the reporting cycle, rather than as a long-term and substantial risk to the business. During the reporting cycle, the pandemic was still developing and there was a high degree of uncertainty regarding its nature and progression. The materiality of this pandemic will be evaluated in the next reporting year in terms of the global and national response to the outbreak, the level of impact on our business and supply chains, and the likelihood of such events recurring in the future.”

About the Company

Godrej Consumer Products is a part of the over 123-year-young Godrej Group. Today, their Group enjoys the patronage of 1.15 billion consumers globally, across different businesses. In line with their 3 by 3 approach to international expansion, they are building a presence in three emerging markets, namely Asia, Africa, and Latin America, across three categories (home care, personal care, and hair care).

They rank among the largest household insecticide and hair care players in the emerging markets. In household insecticides, they are the leader in India and Indonesia and are expanding footprint in Africa. They are the leader in serving the hair care needs of women of African descent and are the number one player in hair color products in India and sub-Saharan Africa, and among the leading players in Latin America. They rank second in soap products in India, first in air freshener products in India and Indonesia, and lead in wet tissue products in Indonesia.

Approximately 23 percent of the promoter holding in the Godrej Group is held in trusts that invest in the environment, health, and education.

Management Team

Letter to shareholders

“Dear shareholders,

Over the last decade, GCPL has transformed into an emerging markets FMCG leader. While we are very proud of our achievements as a company, I believe we are only as good as what we do next. Before I share with you my reflections on what we need to do going forward to build towards this, I want to take stock of where we are today; the good news, and the bad.

The bad news – Our performance in fiscal year 2020 was not good. Sales declined around 4 per cent and Profit Before Tax (pre exceptions) was flat. March 2020 was particularly impacted by the spread of the COVID-19 pandemic and the eventual lockdown in many geographies where we operate. This resulted in virtually no sales in the latter part of the month. We now have with COVID-19, a health, humanitarian and economic crisis of epic proportions to contend with. The excellence we will require now, going against water rather than with water, to perform and take market share, means a significant step up in ways we probably haven’t even realised yet.

The good news – In our internal conversations, I have been telling our people – Yes, there is no denying that this is a bad situation. But, we are also fortunate that GCPL is an FMCG company with a robust portfolio to deliver in a COVID-19 world. Eighty percent of our product portfolio comprises health (household insecticides), hygiene, and value for money products. Many of our innovations have started playing out fully in the last couple of months and we have seen high growth in household insecticides and hygiene. We have gained share across categories in India and our exit market shares in March were our highest ever.

While we don’t get to choose market conditions or the intensity of our competitors, and certainly not a global pandemic, we do choose our attitude in the face of these. Godrej was founded in a crisis; as part of India’s freedom and swadeshi movement in 1897, and also during the bubonic plague that year. We first made soap in 1918 (also the first soap in the world to be made from vegetable oil and not animal fat) during the Spanish flu pandemic. So, as we see it, 2020 could be our ‘second beginning’ for the next 123 years of Godrej.”

Product portfolio

“We need to do more of what we do and do it even better. There is tremendous scope to leverage our global category insights (in household insecticides, hygiene, hair care, and air care) and unique multi-local approach to create long-term growth in our geographies. We will do this by offering amazing quality products at affordable prices. But more importantly, while helping solve significant global problems, including protecting our consumers from viruses and insect-borne diseases. Our approach – low-cost manufacturing; value for money, disruptive, sustainable products; very strong go to market capabilities – is focused on creating this delight for our consumers

What particularly drives me is this opportunity to innovate for very disruptive products that create penetration and actually solve real problems for our consumers. Our one rupee paper-based mosquito repellent, Goodknight Fast Card, for example, broke barriers, and drove penetration and reach in rural India where electricity is a problem and people cannot use electric mosquito repellents. Godrej Expert Rich Créme, which democratized hair color créme coloring in India, is a créme hair color in a sachet which costs just r30 and compares in quality to much higher priced products. Our Mr. Magic powder-to-liquid hand wash will do just the same with democratizing hand washing, which is a key tool to keep us safe from disease.

We are focusing our efforts and going where the demand is – in household insecticides, hygiene, and value for money. We have several new launches; strongly price-enabled, across geographies, to create more goodness. It is not just our categories; our channels too are seeing a shift, and we will be doubling down on platforms like e-commerce and chemists. Like Dharnesh Gordhon, our new Africa cluster business head keeps reminding us, a crisis is a terrible thing to waste.”

Some Innovations

Household insecticides business

2020 will be the Year of Resurgence for household insecticides business. This is their largest and most critical category globally. They are going where the consumer demand is and the demand is to protect their health. They see this as a long-term area of focus. People are definitely being more careful; they don’t want to take chances and want to protect themselves from insect-borne diseases like malaria and dengue, which are on the rise.

In fact, if anything, their struggle initially was enabling supply to meet demand, which has been very strong in the last couple of months. They are scaling up our supply systems and have never had stronger portfolios across price points and formats, in India and Indonesia, to serve this. They are also making a foray into this category in Africa, where it is still underserved.

Their household insecticides strategy is multi-pronged. GCPL wants to drive penetration with lower price point products, drive premiumization with very efficacious and safe electrical products, as well as meet the consumer need for natural-based products. Our largest, most profitable format is liquid vaporizers. Last year, we launched Goodknight Gold Flash, India’s most powerful liquid vapouriser and the only one with visible vapors, a major breakthrough in technology and efficacy

In the last couple of years, they have been impacted by unorganized incense sticks players, whose products are not just part of an unorganized market, but also illegal and dangerous to use. Their mistake was to spend too much time in conversations and messages about how they are illegal, instead of reacting quickly enough. But, they have corrected the missteps made on that front. They also have a full naturals range of coils, incense sticks, fly spray, liquid vapouriser, and personal mosquito repellent products on offer.


There is a significant opportunity to innovate and grow hygiene portfolio, which is currently 26% of their global business, by expanding existing strongholds in soaps in India, and wet wipes and disinfectants in Indonesia.

In response to COVID-19, they launched sanitizer products across India and SAARC, Indonesia, Africa, Latin America, and USA businesses in just a few weeks. In many of these markets, it was the first time they were entering the category. They will now be scaling these up into full portfolios with multiple product offerings

They are also particularly excited because this is the year for their dream product and dream technology – Mr. Magic hand wash. It is the first powder-to-liquid hand wash in the world, very sustainable, and available at just r15. They see in it, the potential to build out and democratize sanitation and handwashing across countries.

They are also pivoting existing categories and products for more relevance in these spaces. In air care, for example, they have launched new products with dual benefits of sanitation and air care. They said that stakeholders will now see their innovation engine in full throttle.

Ensure full potential growth for India and Indonesia; turnaround for Africa. Be very prudent on costs

Their businesses in India and Indonesia, which make up roughly 70 percent of the overall business, are very profitable and have similar portfolios in health, hygiene, and value for money. There are significant opportunities for growth here, especially given the current consumer demand trends, and they are well poised to leverage this.

They have big dreams for the Africa business and one of its largest investments outside of India is in the sub-continent. Africa, with its diverse countries, can be quite volatile on the macro-economic front. But where things are tough, there is also a lot of opportunities. Africa has a young, fast-growing, urbanizing population with growing aspirations. There is much to yet start unearthing as infrastructure, industrialization, and digital leapfrog. They see a tremendous opportunity there, to innovate and grow sustainably both in hair care and household insecticides, while also ‘doing good’.

The African Busine and its ecosystem are also very women-focused; they have two African women on the Board, 65 percent of team members are women and the consumer base is almost exclusively women. So, it is of great personal interest to them. Ardeshir Godrej, the founder of the Godrej Group, left behind a legacy in India that is now over 100 years old.

However, the performance in Africa, over the last few years, has not been up to the mark. As they drive the turnaround, it is very reassuring to be partnering with someone with the experience and passion of Dharnesh Gordhon, our new South Africa-born CEO of Godrej Africa, USA, and the Middle East.

Cost remains a focus, with Project Pi and newer opportunities we are seeing to be more efficient. They are also laser-focused on cash and receivables during this time.

Risks and Opportunities

Financial Ratios

Global Strategy

Broad emerging markets portfolio

In the fiscal year 2010, 23 percent of their overall revenues were derived from international businesses. In the fiscal year 2020, it is 46 percent, with Indonesia and Africa accounting for 41 percent.

Focused approach to category choices

They have moved from an over 50 percent soaps portfolio in 2010 to a more balanced and strategic category portfolio. Today, they have three core categories, namely household insecticides, personal wash, and hair care. They have entered into a new category to serve the hair care needs of African women. Air care, which they forayed into a few years ago in India, has now become the fourth global category.

Brands and their Value

Top 10 brands contribute ~70 per cent of revenue

Geographies and their Products

India and SAARC

Range of home care and personal care products, household insecticides, hair colour, liquid detergents, soaps, and air fresheners.

Sub-Saharan Africa and USA

Range of products across hair extensions, hair care, hair colour, personal wash, home care, and household insecticides


Range of household and personal care products – household insecticides, air fresheners, hair colour, and wet wipes

Latin America

Range of hair colour, hair care, depilatory products, and colour cosmetics


Innovation is core to its strategy. As category leaders, they are very focused on driving innovation-led growth and seeking new ways to disrupt categories. Democratizing while making superior-quality, delightfully designed products is particularly important given the focus on emerging markets. At the same time, they are also pursuing attractive adjacencies and creating new engines of growth to broaden our portfolio.

They follow a multifaceted process of design thinking, consumer centricity, and market analytics to accelerate, populate, and deliver the innovation pipeline, thereby enabling them to reimagine brands and create new ones. They are also ramping up capabilities, investing significantly in R&D, and cross-pollinating learning and products across geographies.

Approximately 23 percent of the promoter holding of the Godrej Group is held in trusts that invest in the environment, healthcare, and education.

Innovating for sustainable packaging

In a FMCG business, packaging plays a very important role in maintaining product integrity.

Goals –

Reduce packaging consumption per unit of production by 20 per cent from the base year of fiscal year 2018

Approach – Process improvements to make packaging more efficient

Ensure that 100 per cent of the packaging material is recyclable, reusable, recoverable, or compostable

Approach – Upgrade to newer technologies and innovate packaging raw materials

Use at least 10 per cent post-consumer recycled (PCR) content in plastic packaging

Approach – Partner with research organizations and start-up enterprises to develop packaging materials as alternatives to plastic and enable the use of recycled plastic instead of virgin material.

Expenditure on R&D

Balance Sheet

Profit & Loss

Cash Flows

GCPL generated a Free cash flow of Rs 1521 Cr in 2019. In 2020 it generated Rs 1436 Cr.

More Annual report takeaways here.


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