Expect better growth rate going ahead: Godrej Consumer

A Mahendran, MD, Godrej Consumer Products, says that the company has been reporting a very good growth rate which is above the category and markets for last two years. He also says that the company is confident to maintain a growth rate of 35 percent as of today.

Also read: Godrej Industries to consider strategic partner(s) in its subsidiary Below is the edited transcript of his interview to CNBC-TV18. Q: How much growth do you expect in this and next year considering that you have some imponderables which investors will not be able to gage? For instance, multi-brand retail is here, even if it is in pockets, it will mean you have more places, more outlets for your products, how do you look at growth, will it be stepped up in the historical growth that we have seen in Godrej Products?
A: Godrej Consumer Products has been reporting very good growth rate above the category and market for the last two-three years. We will maintain that growth. I think next year, as you say so, a slight slowdown in consumption in the current quarter will get facilitated by the opening of the FDI. We have a good market share and good relationship with our current retail chain. The growth rate is good in the retail sector and we hope to post good growth numbers going ahead.  Q: Are you looking to maintain 35 percent growth rate or more?
A: As on today we are confident to maintain the same growth rate. Q: Last quarter your margins took a bit of a hit on the back of increased ad spends. In this quarter have we seen a similar increase in ad spends maybe due to other launches which could keep your margins subdued at the levels we saw last quarter?
A: For this quarter we will maintain the ad send level, because when we did some launches in the last quarter, we need to maintain the spend levels. But at the same time, the margins are pretty good. Recent softening of commodity prices has also helped. But as an FMCG brand player and when you get into a new product launches etc, you need to maintain the momentum. Otherwise, one will not get real benefit of the new product launches. Q: 'Need to address supply side bottlenecks, reasons to believe that the slowdown has bottomed out,' do you see it in demand?
A: Yes, I do. We expect fair a good growth as far as economy is concerned, particularly in current or next quarter. Q: Should we think that you will be concentrating more on the domestic economy or would your international ambitions be more?
A: We will concentrate on both the markets equally. Two-third of our turnover comes from domestic operation and the balance from international operations and we will continue to balance that weight age. Q: Your current share in soap market is estimated to be about 15-16 percent, do you see it going up in the next one year?
A: We hope our market share goes up. Q: What is your strategy?
A: All strategies are in place and triggered now. Q: On which products would you ride on in the next couple of years?
A: In categories, we have soaps, hair colour and household insecticides. As far as market share is concerned, particularly we are looking at soaps and we hope that the market share will go up. Q: If you think that the growth has bottomed out, do you see a possibility of the company taking price hikes in your various segments or if you could tell us where would we see price hikes maybe in the next six months?
A: As far as price hikes are concerned, it is purely on the category, which the leader of the category is. In the personal wash, we are number two in the country. We are not the leaders, so we leave it to the leader to design and we follow the leader normally. But if you look at household insecticide and the hair colour, we are the market leaders in India. As far as price hike is concerned, it depends on the various factors of cost push etc but right now we do not see much of price hike. Q: You regularly announce acquisitions abroad, should we expect something, do you rely on this strategy very strongly, should we hear something before the end of the fiscal year?
A: Inorganic growth is one of an important pillar and we have been following it for the last three-four years. We have a separate cell which works on this strategy. We hope to include some good acquisitions in future.