Adi Godrej says that Godrej Industries' idea is to grow 10 fold over the next 10 years is achievable. They are expecting about 15-20 percent of that growth of 26 percent CAGR to come from organic growth and the balance from inorganic growth
Adi Godrej, chairman, Godrej Industries feels that investor mood is damp and everybody is a bit concerned about the lack of reforms, and the fact that there is no political understanding on economic reforms. Talking to CNBC-TV18, he says that the company’s idea is to grow 10 fold over the next 10 years is achievable. They are expecting about 15-20 percent of that growth of 26 percent CAGR to come from organic growth and the balance from inorganic growth, he says.
Below is the verbatim transcript of his interview with CNBC-TV18
Q: Let me start by asking you about the sentiment and the mood with regard to India because we have slowed down considerably. There has been a lot of apprehension about where the India story is headed. Most people now seem to believe that we are going to have to learn to live with the 5-6 percent growth rate at least for the next two years. What is the sense that you get from foreign investors and global entrepreneurs that you are speaking with?
A: Everybody is a bit concerned of the lack of reforms, the fact that there is not a political understanding on economic reforms. However, unfortunately this seems to be the situation in many countries, it is not just India which is afflicted with this sort of a situation.
Q: I want to talk to you about the group’s 10 x 10 plan that you announced in 2011. The idea is to grow 10 fold over the next 10 years and in order for you to do that you need to see a compounded annual growth rate (CAGR) of about 26 percent or approximately that. Given the fact that the Indian economy has slowed down significantly do you believe you will need to review that 10 by 10 plan and the kind of growth targets that you would set out for the group?
A: We are sticking to the 10 x 10. We think we can achieve it. Over the last three years we have achieved the 26 percent growth already. This growth plan is both organic and inorganic. We are expecting about 15-20 percent of that growth of 26 percent CAGR to come from organic growth and the balance from inorganic growth. So, we are sticking to it and we think we can achieve it. We have already done it over the last three years and in last couple of years India's economy has slowed down but have continued our growth.
Q: You talked about the international plans and the acquisition strategy. You have a three by three strategy as far as acquisitions are concerned and you intend doing more acquisitions in your haircare, household and personal wash businesses across Africa, Asia and South America. Are we going to see 2013 being a big year as far as acquisitions are concerned for the group given the fact that there is not much that seems to be happening on the domestic front?
A: Acquisitions will continue. It is difficult to foretell how much acquisitions we can do this year. Some of the acquisitions are already in the plan for example we have an agreement for acquisition in the Darling Group, we have already completed some of these acquisitions. More of the geographies in Africa in the Darling Group will be taken over during this year. So, some of that will come from past agreements already made. We are looking at other acquisitions and we have this three by three strategy but that is specifically for Godrej consumer products.
Q: I know that Godrej Properties is one of your fastest growing businesses within the group. We have just seen the government announce a real estate regulator, whether or not that bill finally makes it through parliament is another matter altogether but as somebody who is betting big on India's real estate story, do you believe that the real estate regulator will bring in the much needed transparency, probity, cleanup so to speak the real estate space?
A: It will help standardise things and when things are standardised players with a good reputation like us usually tend to benefit but I don’t think this bill will pass parliament in the near future because parliament is just not taking up various bills. There are more important bills to be passed. So, I have my doubts with this bill would be law within the next two years.
Q: The buzz in the air in India at this point in time comes back to the issue of succession. In the past on several occasions you have said that as far as family succession planning is concerned it is not something that you would like to discuss in public but are plans in place now? You have a succession plan as far as the professionals are concerned, are we likely to see any announcements as far as the family goes on the succession front?
A: As I mentioned this is not something we discuss publicly. It is an internal matter for the family and clearly there will be a proper succession planned out. However, this is not something we discuss publicly.
Q: Are you set for a longer innings? You have crossed 70, do you believe that you want to take a break or do you intend continuing?
A: No comments.