Godrej Group is scouting for acquisitions in consumer businesses that include personal and household care segments. Acquisitions will be explored “mainly” in the “developing” economies of Asia, Africa and South America.
According to Adi Godrej, Chairman, The Godrej Group, in case of inorganic growth, the emphasis will be on group outfits, Godrej Consumer Products Ltd (GCPL) – which is into personal and household care – and the unlisted Godrej Agrovet – into animal feed and agri-feed.
The Group has already made acquisitions through Godrej Agrovet – the country’s largest animal feed producer – in the last few years.
“In inorgnanic growth, emphasis is on GCPL and Godrej Agrovet. Of course other businesses also have inorganic growth; but these are the two major ones,” he told
“Because of the global situation being a little dull, you can acquire (a) company at a little lower (price) than in the past,” he added.
According to the Group Chairman, there are no budgets on probable acquisitions.
“Our objective is 10 times in 10 years. We don’t think we can have such a good growth organically. So some of that will have to inorganic,” he said adding that by a “rough estimate” there could be 15 per cent organic growth and 10 per cent inorganic growth.
Godrej however, pointed out that while inorganic growth “will be one of the ways forward”, organic growth, “will be the most important”. The company is stressing on R&D to see through the organic growth.
Poor monsoons apart and “dis-inflation”, he said, has led to a slowdown in organic growth.
Rural Demand
According to the group Chairman, rural sales account for 35 per cent of GCPL’s turnover. However, ideally, the share should move up.
The total rural population of is about 60-65 per cent. “So obviously we will be happy if 65 per cent of our sales come from rural India. As of now rural consumption is less than urban consumption,” Godrej said.
Good monsoons are expected to lead to a pick up in rural consumption.
“In H2 we expect to do better as the monsoons good this year. We are already seeing signs (of rural pick-up),” he said.
Private Investment
Private investment, which has seen a slow off-take so far is expected to pick up next fiscal onwards; when all sectors – especially agro-based ones – do well.
Increased consumption post a good monsoon; and a “sensible rate” for Goods and Services Tax (GST) can boost the economy.
“From this quarter, I see signs of increased consumer off-take which will become more conspicuous in next few quarters….consumer spend will pick up.”, he said.
“Once consumption takes off and GST is implemented, I expect private investment to take off,” Godrej added.