Mumbai: Consumer Products Godrej (GCPL) aims for the growth of the two-digit volume in the medium term, especially behind the development of categories, Sudhir Sitapati said to an analyst at a meeting, his first main interaction after taking over as MD & CEO of GCPL.
According to the Oswal Motilal research report, 50 percent of this will come from penetration up to half of the portfolio.
The rest will be made of 15 percent of the increase in moderate market share in half of the portfolio, 25 percent of the market growth led consumption, and 10 percent of disturbing innovation.
“The most important single highlight of Sudhir’s presentation is to increase the focus and ability in the development of categories, which (we believe) to some extent, lost in Godrej (until now),” said a report by ICICI Securities.
It is aware that increasing the development of penetration and categories – something that the former Hindustan Unilever Sitapati organization has been implemented in a focused manner – will require resources.
The ICICI Securities report added, “The headroom for increasing investment must be made in the inflation raw material environment.” Sitapati highlighted a few steps to encourage cost savings, including increasing gross margins (through a better mixture), reducing discounts, reducing overhead, and removing non-media ATL (above-the-line).
In an indication that the innovation process, which is enhanced GCPL over the past decade, can be simplified, Sitapati said the focus will be more on the core, with fewer, greater innovation.
In his report, Emkay Global Financial Services said, “From highlighting the strength of GCPL, including the culture of innovation, cost-effective mindset and obsession with product quality, Sudhir showed some weaknesses, including the development of low categories, too many innovations with fewer focus on the core, lack Global collaboration and lack of cost structure with low investment in automation.
“High complexity can cause less focused on the core.
For example, GCPL inventory, said the Oswal Motilal report, is 1.7x higher than the ideal level and hence the reduction of stock storage units (SKU) will be the main focus area.
Indian business, added the report, has 500 schuses, but most stores only maintain 12 schuses.