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November, the senior management and members of the promoter family of the Rs 11,800-crore
Godrej group left the air-conditioned climes of their offices to hit the potholed roads that lead to
rural India. Group Chairman Adi Godrej and daughter Tanya Dubash, Group Executive Director and
President of Marketing, headed to the villages in and around Alibaug, a popular holiday destination
120 km to the south of Mumbai. Nisa Godrej, Adi's second daughter, who heads human resources
and innovation at the group, headed north of the Vindhyas to villages around Chandigarh.
Godrej attributes the phenomenal reach to the fact that the group has its presence in both FMCG and
consumer durables. LG is the other company with a similar business mix but its FMCG bit is largely
restricted to Korea. In fact, the Godrej model is pretty much a unique model — other than FMCG and
consumer durables, it also has other consumer-facing ventures that range from real estate to meat
processing and confectionery. Group holding company Godrej & Boyce has within it real estate
projects, domestic appliances and furniture. "Two-thirds of our business are consumer-facing," says
Jamshyd Godrej, Chairman, Godrej & Boyce.
What also makes the Godrej conglomerate like no other is its almost esoteric range of businesses,
many of them not consumer-facing (at least not directly). The group sells fatty acids to tyre
manufacturers, animal feed to farmers, and premium wine to the upwardly mobile in Mumbai and
Delhi. The group's customers range from five-year-olds buying confectionery (Nutrine) to vain,
ageing men (many who get their hair dyed at home) to housewives buying a bar of soap.
IT and ITeS companies like WNS, TCS and Accenture are also the group's customers as the Godrejs
rent out their sprawling campus in the Mumbai suburb of Vikhroli (and Godrej & Boyce earns Rs 100
crore a year for those efforts!). The Government of India, too, is a customer, procuring heavyduty
equipment for its hi-tech programmes.
In fact, when India's mission to the moon, Chandrayaan, blasted off from Sriharikota, it did so
powered by rocket engines made by Godrej, says Jamshyd. Finally, men stepping out for a haircut
should know that some 50,000 barbers across the country are likely to recommend a Godrej dye as
they snip away at your receding foliage.
The Godrejs' tour to the hinterlands is just one indicator of the renewed focus on the consumer. Joint
ventures (with Hershey's in confectionery and beverages, and with Tyson in processed foods),
acquisitions (mostly in FMCG) and divestments (of a pest control service and a rural retailing chain)
are all a part of that growth recipe.
"Ever since, the cheques have only gotten bigger," adds Mathew. Since 2005, GCPL has made seven
international acquisitions. Four of them, including its biggest acquisition, of Indonesia's Megasari
group for Rs 1,200 crore, happened this calendar year. It's the hunger for such buyouts in emerging
markets that has got equity analysts on Dalal Street licking their chops.
"If there's one company that has got it all right in the consumer space, it's GCPL. Its international
acquisitions have changed the scale it operates in drastically. It's catapulted itself to the top 3
consumer companies rather smartly," says Nikhil Vora, Managing Director, IDFC Securities. Back in
2008, the group set itself a target of tripling its growth in the FMCG business in three-four years.
"There was a realisation that if we had to make that kind of growth happen, it would have to be
inorganic and we would have to look outside India," explains Mahendran, the MD of GCPL. And then
began the slew of acquisitions — mostly in Africa, followed by Latin America and Asia — which saw
the company's stock price more than double since July 2008.
Analysts expect GCPL's international business to account for close to 30 per cent of revenues in the
current year, up from 18 per cent a year ago. At the same time, rural markets back home will also
start contributing more — to half of sales in two years against 42 per cent last year. To get there,
GCPL increased its penetration to 22,000 villages from 15,000, nine months ago. The company plans
to cover 50,000 villages in the next three years.
But that's just part of the reason why the Godrej management council hit the road. As Adi Godrej
explains: "Over the past decade, all our research began to show a diffused image of our brand. The
younger generation did not identify with the brand like the older generation…. we got reactions like
'It's my parents' brand', 'It's my grandparents' brand'."
So, the group, led by Tanya Dubash, launched a rebranding exercise in 2008, the most visible part of
which was a savvier logo that's uniform across all group companies. "Since the exercise began, the
Godrej portfolio has gained share by growing ahead of the market across audited categories by 10 per
cent," says Tanya Dubash.
Customer Hunting
ALL YOU WANTED TO KNOW ABOUT THE
But to understand how Godrej is reaching out to a
FAMILY...
new set of customers, especially in rural India,
...and how it runs its businesses. one needs to rewind back to May 2006. Jamshyd
"Most people in the poorer sections of society did not need a 180 litre fridge. Often, they lived in
small houses where there is a space constraint," explains George Menezes, COO, Godrej Appliances,
a division of Godrej & Boyce. That insight was the first step towards the creation of the ChotuKool —
a squat 45 litre minifridge priced at just Rs 3,250.
ChotuKool is currently being piloted in rural Maharashtra and Karnataka. Menezes hopes to sell two-
three lakh ChotuKools once it completes a year of going national (which should happen in a couple of
months). "In three years, probably millions," says Menezes, who also lets on that Godrej Appliances
is test-marketing television sets in Andhra Pradesh, Kerala, West Bengal and Maharashtra.
With revenues of over Rs 1,600 crore, Agrovet is the largest animal feeds company in the country.
Agrovet's also the largest crude palm oil producer in the country. "We supply animal feed to over
hundred thousand farmers across the country. We work with 10,000 oil palm growers across the
country and closely collaborate with 2,500 contract poultry farmers," says Yadav. With its JV with
American chicken processor and marketer Tyson Foods, Godrej Agrovet is also making a play for the
fast growing poultry market.
Godrej is also taking a stab at the food budget of the premium, urban, upwardly mobile Indian with
Nature's Basket, a gourmet retailing business that has grown at a compounded average rate of close
to 60 per cent in the past two years. With 10 stores in unmarked locations in Delhi and Mumbai,
Nature's Basket is set for expansion.
"Our outlet in Bandra (in suburban Mumbai) achieved cash profit in a single day. We have per sq. ft.
sales of Rs 23,500 — that's three times above the industry average," says Mohit Khattar, Managing
Director, Nature's Basket, adding that the store would probably never go the mass retail way.
"Nature's Basket reaches out to a whole new audience and in that sense, raises the brand profile a
bit," explains Tanya.
Land, Ahoy!
The real estate business too is likely to add several customers for the group. Adi Godrej calls it his
"'star" business because of its rapid growth: last year, revenues grew by 53 per cent to Rs 456 crore,
as approximately 1.89 million sq. ft. of area was booked. That's still a fraction of the 12.5 million sq.
ft. pushed by DLF in a bad year but Godrej Properties Ltd (GPL) which made an initial public offer in
January 2010, is already thinking of townships, like its bigger rival. "Our Ahmedabad project,
Garden City, will have 20,000 units. Over 1 lakh people will live in it when the project is completed
in 8-10 years. We are also planning to come up with townships in Kalyan and Pune this financial
year," says Milind Korde, Managing Director, GPL.
Finally, there is the land that the Godrejs own that was brought by the late Pirojsha Godrej in 1943 in
a public auction. Estimates of the acreage range from 3,000 to 3,500 — a little more than half of it
covered by mangroves — and its value from Rs 50,000 crore to Rs 65,000 crore. "I wouldn't want to
get into too many details on that but suffice it to say that it's more than half of Vikhroli," says Adi
Godrej.
"Most of that land is with The Pirojsha Godrej Foundation, a charitable trust, and we plan to
preserve the mangroves the way they are," adds Jamshyd Godrej. Estimates of the land that can be
developed range from between 350 acres and 800 acres. "Our vision is to make Vikhroli an iconic,
green, commercial, residential township. We are planning a high-street shopping development. We
would like to see hotels come up here," says Adi Godrej.
The transition of the Godrej group from a manufacturingfocussed company to one that is consumer-
oriented is well on its way. And the change is visible not just in the market place but also within.
"Last April, we had the top 100 managers — VP & above — of all Godrej companies taking pledges
that revolve around customercentricity," says Vivek Gambhir, who heads the strategy cell for the
group. "It was something as simple as 'I will spend 'X' number hours with customers'."
In a few weeks, the top management of the group will pack their bags and head to Indonesia to
understand the dynamics of that market. After all, there are another 100 million-odd consumers —
according to the company's early estimates — out there in the developing markets where the buyouts
have been made, who the Godrejs need to cotton on to.
With raw material prices on the upswing, Godrej Consumer Products Ltd today indicated that the
prices of soaps could go up shortly.
Godrej has soap brands such as Cinthol and Godrej No 1 under its umbrella. Raw material prices
such as commodities, packaging and transportation have gone by a maximum of 5 to 45 per cent on a
year-on-year basis, according to a report by Motilal Oswal.
Stating that growth in most business is higher than last year, the company said the second half of the
year should see positive growth. “Inflation is coming down and we expect the second half to deliver
profitable business,” he said.
Godrej Industries Ltd (GIL) has recorded a healthy performance in Q2 FY 11 with its PAT up 13 per
cent at Rs 75 crore as against Rs 67 crore in the year-ago period. Its total income rose 17 per cent to
Rs 1,083-crore (Rs 927-crore).
Mr Godrej reiterated that the company is scouting for acquisition both in developing world and
domestic markets.
“We are eyeing Asia, Africa and Latin America in areas such as hair care, household and personal
care.” GCPL recently acquired a slew of companies overseas, including Megasari in Indonesia and
Argencos in Latin America. He said the international business could add Rs 60 crore to the total
revenue.
The firm's international business clocked a 205 per cent vault in sales in Q2 FY 11 at Rs 337 crore and
accounted for 35 per cent of its total consolidated business revenues.
The company's net sales expanded 66 per cent at Rs 953 crore, while its PAT (profit after tax)
jumped 41 per cent at Rs 131 crore in the July-September period.
Mr Godrej said that the rural markets is likely to contribute to its growth. “There is a strong growth
coming from the rural areas backed by good crop and we hope it will continue in the coming quarters
as well.”
Mumbai, Apr 18: The Rs 7,200-crore Godrej Group has finally unveiled its brand new
corporate identity and branding strategy at its headquarters in Mumbai on Friday. The
group’s strategy outlined a roadmap to invest in a renewed Godrej masterbrand and corporate
identity to support the targeted revenue growth of 25-30% compounded annually, for the group.
It was two years ago that the 111 year old Godrej Group had appointed global brand consultancy firm
Interbrand to reposition its master brand with a makeover that makes the group identity modern as
well as contemporary.
Unveiling the group’s brand strategy, group chairman, Adi Godrej said, “The Indian consumer now
has a more demanding and youthful mindset. At Godrej, we have always been at the helm of
changing and redefining the marketplace and this will now be reflected in a marketing and branding
strategy that accelerates profitable growth.”
Incidentally, Godrej had closely worked with Interbrand to study the Godrej brand across employees,
consumers, investors and business partners and redefine its approach to harnessing the brand’s
intrinsic strengths. On the group’s makeover strategy, Tanya Dubash, excutive director & president
(marketing), said, “The revitalised corporate identity is a result of a detailed analysis of our product,
service and business portfolio. Using the Godrej brand as a unifier of our businesses and people
made sense because it is our most valuable asset, it cannot be replicated and it spans all our
businesses.”
According to Godrej, the group plans to invest significantly in the ‘Godrej Master Brand’ as part of a
systemic plan for creating a strong Godrej brand franchise through strategies for product and brand
development, retail channel strategy, communication and talent management.
“The initial phase of the initiative will build the Godrej Master Brand in tandem with the four
businesses of personal grooming, furniture, property and aerospace,” said Dubash.
Ever since the Godrej Group was founded at Lalbaug in 1887, the group had sported a traditional
logo that’s common for all its business ranging from soaps to steel boards. Shedding its fuddy-duddy
image, the group has now opted for a new brand identity to acquire an international appeal in global
markets.