GCPL eyes sixfold increase in Africa business by 2020
Viveat Susan Pinto, Business Standard, 22 April 2015
The $2.25-billion (Rs 13,500-crore) Godrej Group has prepared a blueprint to place itself among the top consumer goods companies in Africa, one of three markets it has identified as a growth driver.
The group's flagship company Godrej Consumer Products Limited proposes to increase its African turnover six times in five years from around Rs 1,200 crore now through aggressive acquisition of local brands. The endeavour is to increase its presence in personal and home care, segments where Godrej Consumer is strong in India.
"Unlike multinational companies, which believe in having one brand across markets, our approach is to invest in local brands and let them be the face of the company. The back-end can be supported by our technology and category learnings," Vivek Gambhir, managing director of Godrej Consumer, said in a conversation with the Business Standard.
"There is a greater chance of us succeeding because consumers in Africa will be familiar with local brands rather than products transported from India," he added.
Good knight from Godrej Consumer's India portfolio is the only product to have been taken to Africa in the last few years. "Good Knight enjoys a strong equity in India and something the African (management) team felt would be accepted by people there. Which is why we took it there, beginning with pilot projects and then launching it. It is 12 months that Good Knight has been present in Africa in the aerosol format. It is the dominant product category in household insecticides there," Gambhir added.
Household insecticides and hair care are categories Godrej Consumer is expected to devote attention for acquisitions. So far, Godrej Consumer has wrapped up five purchases in Africa, including Rapidol, Kinky and Frika hair care brands in South Africa; Tura, a personal care brand in Nigeria; and the Darling Group, a hair care company that has a presence in 14 countries on the continent.
Analysts said the company had spent close to Rs 2,000 crore in making these acquisitions and was expected to spend a similar amount in the next few years. Godrej Consumer has made most of its purchases in the last decade in Africa, followed by Latin America (Issue, Argencos and Cosmetica Nacional) and Asia (Megasari Makmur in Indonesia).
Africa business, Gambhir said, was expected to see double-digit growth - top line growth has been close to 20 per cent - in the coming years, ensuring it remained among Godrej Consumer's key contributors to international revenue. Godrej Consumer derives half of its consolidated top line of Rs 7,583 crore from international operations.
To ensure the momentum is sustained, the African market has been divided into three clusters, South-Africa-Mozambique in the south, Nigeria-Ghana in the west, and Kenya-Uganda-Tanzania in the east. "These clusters will operate as hubs, allowing us to expand into nearby territories. Manufacturing will be located in these clusters. We could focus on expanding distribution in neighbouring territories," Gambhir said.