Godrej Consumer Products Ltd is expecting its growth in the current fiscal year to be driven by strong volume growth with less reliance on pricing. For the next fiscal year (FY25), growth is expected to be led by pricing on stable volume growth.
The company is also planning to focus on India and invest more domestically while simplifying international operations.
Overall, the company expects high single-digit volume growth in FY24 with India leading the growth. Growth in EBITDA is also expected to be in the high teens.
Strategy reset
The company, led by Sudhir Sitapati, is undertaking a strategy reset with a focus on core products, simplifying the business and stepping up the pace of its investments in category developments.
The strategy seems to be motivated by the fact that most of the volume growth for the company in FY23 came from its Indian operations while in the March quarter, its revenue growth came on the back of 6 per cent underlying volume growth. Its business in Africa, the second largest revenue contributor, took a hit due to elections and demonetisation in Nigeria in the first two months of the quarter.
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During the year, though there was a 30 per cent rise in revenue from its African business and here, the company plans to expand its reach through distributors rather than on its own.
The management has indicated that in India it will be taking less price rise actions in the current fiscal year while there could be price growth in the international markets.
In the home insecticides category, where it has a significant market share, the company continues to perform well and after an underlying volume growth of 10 per cent in the March quarter, it expects the category to see high growth over the next 15-20 years. The company plans to ramp up to meet this demand with more launches in the offing.
The company saw strong demand in other high-growth categories such as hair colour, air care, and soaps, while it has gained market share in the soap segment.
To motivate and incentivise employees, Sitapati has linked rewards to input metrics such as volume growth and working capital. Media spending is no longer being used to manage profitability.
With regard to Indonesia, where sales declined sequentially every quarter, the company is beefing up distribution by shifting to third-party distributors from direct sales outlets.