04-03-2013, 12:13 PM
FEASIBILTY OF THE TARGET GROWTH OF GCPL
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ABSTRACT
Godrej Consumer Products Limited (GCPL) has set an ambitious target of growing 10 times over the next 10 years from its current turnover of over Rs 4,850 crore through acquisitions as well as normal expansion in both domestic and international markets. This would mean that they have to achieve a compound annual growth rate of 26% over the next ten years. According to Adi Godrej, the company plans to achieve the same via the route of both organic and inorganic growth. The organic growth is aimed at 15-20% while the rest is to be achieved via inorganic growth. The company has recorded phenomenal growth in the past few years chiefly via its acquisitions in Indonesia, South America and Africa. The path seems to have been all rosy till date with success kissing its feet in every footstep; but the retention of the 30% CAGR that it has recorded over the last five years will be a herculean task to achieve. To multiply by ten times in coming ten years, the company needs to implement an effective strategy which should create a lasting impact on the minds of the people, continuously improve its operational efficiency, record phenomenal top line and bottom line figures and retain as well as look for the best talents in the industry
COMPANY INFO
Godrej Consumer Products (GCPL) is a leader among India's Fast Moving Consumer Goods (FMCG) companies, with leading Household and Personal Care Products. Brands, which include Good knight, Cinthol, Godrej No. 1, Expert, Hit, Jet, Fairglow, Ezee, Protekt and Snuggy, among others, are household names across the country. They are one of the largest marketers of toilet soaps in the country and are also leaders in hair colours and household insecticides. Three of its brands have been placed in 100 most trusted brands in the country. Their mission is to continuously enhance the quality of life of consumers in high-growth markets with superior-quality and affordable home care, personal care and hygiene products. They also have a strong emerging presence in markets outside India. As part of increasing its global footprint, they recently acquired 51% rights in the Darling group in Africa. With acquisitions of Tura, a leading medicated brand in West Africa, Megasari Group, a leading household care company in Indonesia and Issue Group and Argencos, two leading hair colorant companies in Argentina, Keyline Brands in the United Kingdom, Rapidol and Kinky Group, South Africa and Godrej Global Mideast FZE, its own international brands and trademarks in Latam, Europe, Australia, Canada, Africa and the Middle East.
FINANCIAL POLICY - ‘10X10 STRATEGY’
As per the ‘10x10 Strategy’ developed by the company recently, the company hopes to achieve a target growth in its business 10 times in 10 years, growing at around 26% CAGR. The management has indicated plans to infuse equity capital into the company if the gearing increases materially beyond the 1:1 level. While the company is expected to have significant net cash accruals and the acquisitions are expected to be funded by low cost overseas debt.
MARKETING ANALYSIS
As Indian market has become saturated in FMCG sector with HUL and P&G as market leaders, also keeping in view the prevailing economic conditions which country is going through GCPL step to expand in overseas emerging markets seemed appropriate although GCPL has lot of consumer products that effect the daily lives of people and it is also among the market leader in Hair care, Insecticides and Household products.
GCPL from a long time been expanding its product range through a series of mergers and acquisitions both from domestic and overseas market. This has definitely given good returns to the company.
If we look at the Q1 results of 2012-13 report than Net sales growth is found to be 39% out of which the contribution from domestic business is 23% and International business contribution is 31%. Also the global businesses accounted for 38 per cent of Godrej’s total revenues in 2011-12, up from the 32 per cent the year before
GCPL wants to multiply its revenue by 10 times in the upcoming ten years for this Godrej is likely to go in an aggressive mode. To achieve their goal they have to grow organically as well as inorganically.
Human resources
The success of a Company depends on its employees. GCPL is proud of its human capital and believes that it constitutes an invaluable asset of the Company. The Company is committed to upgrade the skill set of its employees and to create an environment where excellence is recognized and rewarded.
The practice of 'Tough Love' is the HR philosophy at Godrej Consumer Products Ltd. People management is a two-way process. Employees have certain expectations and companies help them in achieving them. The process is tough as it is meritocratic and expectations from high performers keep going up. Love symbolizes the support the organization will provide the coach and mentor and the reward for high performers.