Godrej Industries witnessed a 19-per cent drop in Q4 profits even though it posted robust growth for the full FY16.

Speaking to Bloomberg TV India , Godrej Group Chairman Adi Godrej says two factors will be a big boost for the consumer goods sector — good monsoon and passage of the Goods and Services Tax Bill in the Parliament. With rise in commodity prices, Godrej expects value growth to exceed volume growth in FY17 as rains will spread cheers in the hinterland and revive rural demand. After four buyouts in FY16, the century-old FMCG major has appetite for more acquisitions in both consumer and agro products to grow faster, he said.

Godrej posted a pretty dismal Q4 results. What was the main reason for the decline in profits? How has the company fared in FY16?

The net profit was down only for the fourth quarter of FY16. For the whole year (FY16), our consolidated profit increased by 20 per cent. In the particular Q4, Godrej Properties had a poor quarter although they had a fantastic year and Godrej Agrovet was affected by the drought situation. So it is only quarterly aberration.

How do you see FY17 panning out for Godrej Properties?

It could be very good. It depends on how demand continues in property. Last year, we had a very good demand. It is very difficult to predict in advance. But we expect to continue to do well.

With regard to Godrej Consumer, can you tell us how commodity and crude oil price rise will affect the company? Do you continue to see a volume growth or do you see a price-led growth?

Our volume growth has been quite good even last year. But value growth was low because prices were affected as commodity prices were down. Now commodity prices are rising. So we expect value growth to exceed volume growth in 2017. And if the monsoon is good, volume growth will further increase as rural demand will pick up. And if the GST Bill is passed, then the FMCG sector will do extremely well because it will give buoyancy to the sector.

The monsoons are expected to be good this year. Do you see a revival in consumer demand going ahead?

I think from the second half of this financial year I expect consumer demand to increase considerably.

Godrej Agrovet has seen a couple of challenging quarters. How do you see the outlook going ahead?

In FY17, it should perform very well for two reasons. One is that the monsoon is expected to be very good and secondly we have made two considerable acquisitions which will be consolidated during 2017.

Speaking of M&A, you made four acquisitions this year — two each in consumer goods and agro industry. What is the scenario looking like for acquisitions for Godrej Industries? Which segments and geographies are you focusing on?

We are looking at considerable growth through acquisitions, especially in Godrej Consumer Products. In Godrej Consumer Products, the acquisitions are likely to be in the developing world. We are not looking at the developed world although one of our recent acquisitions was an American company. But it supplies hair-care products to women of African origin in the US as well as in Africa and in the Caribbean. So we will look at further acquisitions in the developing world. In Godrej Agrovet, opportunities and acquisitions are likely to be in India.

What’s your overall outlook for Godrej Industries as well as the economy, for FY17?

We are very confident and very optimistic about the outlook. As I mentioned, the monsoon and the GST are the two important factors. And the great news is that the predictions point to a good monsoon. So we are very optimistic about the future of the economy in India.

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