Godrej Consumer Products Limited 1225432389188096 8

8/8/2019 Godrej Consumer Products Limited 1225432389188096 8

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October 2002

Godrej Consumer Products LimitedGodrej Consumer Products Limited


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1

Agenda

Background

Product Profile

Performance

Shareholder Value

Initiatives


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2

Background


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3

The Company

GCPL is a result of the demerger of the Consumer Products Division ofGodrej Soaps Limited(now renamed Godrej Industries Ltd.)

Focused FMCG company

Presence in Personal, Hair, Fabric & Household care market categories

Market Leadership in HairColour & Liquid Detergents

High Standards ofCorporate Governance

Owns all its Brands

63.0%26.8%

8.2%

1.9%

GCPL - category-wise Revenue and Growth

Figures in parentheses refer to revenue growth rates (net of excise) over corresponding period of previous year

Soaps

Liq.Detergents

Toiletries

Hair Care 58.1%

25.1%

9.0%

7.8%

FY2002

Soaps

Liq.Detergents

Toiletries

Hair Care

H1FY2003

(10%)

(10%)

(-6%)

(17%)

(54%)

(14%)

(14%)

(-10%)


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4

Godrej Consumer - A new focus

Godrej Soaps Limited

Consumer business was part of the

conglomerate, with core profitability of the

consumer segment not being unlocked

Godrej Industries focus on AOS and Fatty

Alcohol along with investments in Godrej

Sara Lee and Godrej Agrovet was not

appreciated by the market

Consequently, GCPL was de-merged

from Godrej Soaps Limited (renamed as

Godrej Industries Limited). GCPLs focus

is the FMCG sector with emphasis on

personal & household care

Godrej Consumer

GCPL emerges as one of the fastest

growing FMCG companies with aCAGR of

20% forpast 3 years

Four categories: soaps, hair colours,

toiletries and detergents

Focus on employee empowerment and

performance linked incentives has led to this

phenomenal growth

Asset efficiency ratios rank among the

highest amongst peers with ROCE for

FY2002 at 90%


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5

Godrej Consumer Products Ltd: A new management

Board of Directors Qualifications

Adi Godrej - Chairman & Managing Director M.S. (MIT)

JamshydGodrej B.S. (Illinois Institute of Technology)

NadirGodrej B.S. (MIT), M.S.(Stanford),

M.B.A. (Harvard)

BalaBalachandran Distinguished Professor at Kellogg

RamaBijapurkar Faculty at IIMA, Marketing Strategist

Bharat Doshi FCA, FCS, LLM, PMD (Harvard)

Anupam Puri Ex-partner, McKinsey

Hoshedar Press -Exec.Director & President B.Tech (IIT), PGDBM (IIM)


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Current Shareholding Pattern & Shareholder

Information

FII , N I &

OCB

8.1%

Indi idual& Other

Bodie

Cor orate

17.4%Promoter

rou

9.4%

Ban ,

In uran e

Co , MF

and FI

5.1%

GCPL shares are traded on The

Stock Exchange, Mumbai (BSE),

National Stock Exchange (NSE) &

stock exchanges at Chennai,

Kolkata, Delhi and Ahmedabad.

Listed on BSE on 18-June-01 Listed on NSE on 20-June-01


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7

Facilities & etwork

Manufacturing Facilities - 3

Branches - 4

C & F Agents - 32

Distributors - 2000

Retail Outlets covered - Above 500,000

Retail Coverage ofany Godrej Soap - 1.6 mn

Retail Coverage ofany Godrej Hair Dye - 1.2 mn


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Product Profile


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10

Key Brands

F

abric & HouseholdF

abric & HouseholdCareCare

Hair CareHair CarePersonal CarePersonal Care


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11

Performance


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GCPL Performance Highlights

GCPL outperformed its peers in the FMCG sector

Market Growth GCPL GrowthQ2 FY 3 FY 2 Q2 FY 3 FY 2

Toilet Soaps -3.1% -6% 16% 10%

HairColour -1.5% 10% 18% 1 %

Liquid Detergents 22.4% -11% 51% 10%

Tota a e ( et o e e) ( )

0

200

00

00

00

000

200

00

Q

FY0

Q2

FY0

Q3

FY0

Q

FY0

Q

FY02

Q2

FY02

Q3

FY02

Q

FY02

Q

FY03

Q2

FY03

YoY

a e

Growth ( ) -

GCPL

FMCG du

tr

-

0!

-" !

0!

" !

0!

" !

20 !

2" !

30!

Q

FY02 Q2 FY02 Q3FY02 Q

FY02 Q

FY03 Q2 FY03

GCPL#

$du

%

tr&

Source: ORG MARG retail sales audit for FMCG industry

Q2 FY03 figures for Industry is for July & August 02


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Toilet Soaps

Sales et o e ise s

3

Y Y

3

Y Y Y Y

3

Y Y Y 3 Y 3

Contributed 63% to own branded sales in

H1 FY03 (58% in FY02)

Soap industry faced an extremely

challenging environment in FY02. The top

10 brands contracted and overall sales for

the industry was down by 6%

Godrej No. 1continues to outperform

and gain market share in the sub-popular

category (now available in 3 variants: Rose,

Sandal & Natural)

Godrej Fairglowconsolidated position in

the fairness soap category

Increased focus in the Cintholrange to

improve presence in the premium segment


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Hair Colour

Sales (net of excise) (Rs mn)

0

50

100

150

200

250

300

Q1

FY01

Q2

FY01

Q3

FY01

Q4

FY01

Q1

FY02

Q2

FY02

Q3

FY02

Q4

FY02

Q1

FY03

Q2

FY03

Contributed 2 % to own branded sales in

H1 FY03 (25% in FY02)

Leader in this category with a 44.5%

market share in H1 FY03 (44.6% in FY02)

Presence across all price points: powder,

oil, liquid and high end fashion colours

Low penetration suggests high growth

potential

Production at Guwahati to optimize fiscal

benefits

Launched new variants in the Godrej

Colour Softrange and also GodrejNupurin sachets


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Liquid Detergents

es net e ise s n

'

(

)

0 1

(

' 2

)

0 1

(

' 3

)

0 1

(

' 4

)

0 1

(

'

(

)

0 1 2

' 2

)

0 1 2

' 3

)

0 1 2

' 4

)

0 1 2

'

(

)

0 1 3

' 2

)

0 1 3

Contributed 8% to own branded sales

in FY02

Ezee is the market leader with a share

of 83.3% in H1 FY03 (82% in FY02)

Demand is seasonal in nature with

application on woolens and soft clothing

Plans to introduce aproduct targeted at

other washing applications to reduce

seasonality


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Toiletries

les et o e ise s

5 6

7 8

9

6

5

@

7 8

9

6

5 A

7 8

9

6

5 B

7 8

9

6

5 6

7 8

9 @

5

@

7 8

9 @

5 A

7 8

9 @

5 B

7 8

9 @

5 6

7 8

9

A

5

@

7 8

9

A

Contributed 8% to own branded sales in H1

FY03 (9% in FY02)

Presence in shaving cream, fairness cream,

talcum powderand deodorant

High growth category providing exciting

opportunities

Gaining market share in shaving creams

Production at Guwahati to optimize fiscal

benefits

New products in deodorants and other

categories to drive growth


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Market Shares

Source : ORG Data

All figures shown are % for All India Value Market Share

2000-0 200 -02 Apr-Sep02

Toilet Soaps 5.6% 5.8% 5.8%

HairColour 42.1% 44.6% 44.5%

Liquid Detergents 5.9% 81.9% 83.3%

Fairness Cream 2.1% 3.4% 2.5%

Shaving Cream 10.3% 10.5% 12.1%

Talcum Powder 1. % 1.3% 1. %

Deodorant - - 1.5%


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GCPLs Performance Highlights

Growth drivers for future earnings

Low incremental capex

Growth in revenues expected to exploit economies of scale in purchases and manufacturing,

further enhancing operational efficiencies

Ouradvertising and promotional spending to branded sales is at the higher end of the FMCG

sectoras we invest aggressively in the business. A&P to Sales is lower in FY03 because of

efficiencies in buying media time, use of channels for rural market & efficient execution of

advertising.

(Rsmn) H

Advertisement & Sales Promotion 668 287

Total A & P to own brand sales (net of excise) % 17% 14%

(Rsmn) FY2002 H1FY03

Depreciation (Rs mn) 94 45

Depreciation to net revenues % 2% 2%

Net Block 935 906


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H FY03 Performance

PowerBrands: Cinthol, Godrej FairGlow, Godrej No.1, Godrej HairColour, Ezee.

PowerBrands sales grew by 1 %

Toilet Soaps

Godrej Brand Soaps sales grew by 14% (against degrowth of the category) from Rs.1158mn

in H1 FY02 to Rs.1314mn in H1 FY03, led by Godrej No1 which grew by 96%

Relaunched Godrej FairGlow

Launched special trade and consumer initiatives to mark the completion of 50 years of the

Cinthol Brand

Hair Colour

HairColour sales grew 14% from Rs.489mn in H1 FY02 to Rs.560mn in H1FY03

Launched Mehendi Power in sachets under the brand nameG

odrej Nupur Launched CopperBrown, Dark Mahogany & Burgundy fashion shades ofGodrej Coloursoft.

No.1 in volume in fashion colours

Godrej HairCare Institute (GHCI) salon activity intensified

PHD sachet distribution continues to grow with special focus on rural distribution crosses

1.2 million outlets


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Summary Financials

smn F F

sal s *

Operati profit 755 425

Depreciation 94 45

Interest & Financial charges (net) 45 14

PBT 632 371

PAT 420 268

Networth 531 601

Debt 225 344

Net Fixed Assets 935 906

Net Current Assets (285) (63)

Cash & cash equi alents 132 132

Operating Profit Margin (%) 16 18

Net Profit Margin (%) 9 12

RoCE (%) 90 79

RoNW (%) 79 89

Di idend payout ratio (%) 80 87

* Sales are net of excise duty


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HighFree CashFlow Generation

GCPL generates significant free cash flows, which are returned to shareholders as dividends

FY 2002 Div Div per share

1st Interim Dividend 50.0% 2.00

2nd Interim Dividend 8 .5% 3.50

(on face value ofRs.4 Share)

FY 2003

1st Interim Dividend 50.0% 2.00

2nd Interim Dividend 50.0% 2.00

Strong EVAgrowth

Lower capital expenditure coupled with negative working capital enabled a high EVA of

Rs301mn for FY02 (Rs.202mn for H1 FY03). EVA to capital employed at 40% for FY02 (41% in

HI FY03)

We remain committed to deliver shareholder value


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HighFree CashFlow Generation

GCPL has completed the shares uy ack

Shares bought back

Num er of share capital Amt utilised Avg price Period

1,456,593 2.5 Rs.92.6mn Rs.64 Jan-Jun 2002

411,962 0. Rs.46.0mn Rs.111 Jul-Sep 2002

Third shares uy ack

Approved by the Board of Directors on October 22, 2002

Maximum outlay - Rs.100 mn

Buyback from open market (BSE & NSE) at market price

Maximum price ofRs.1 5 per share of face value ofRs.4/-

Buyback for both Demat as well as physical shares


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Share Price Performance

50

70

90

110130

150

170

190

210

Jun-0

1

Jul-01

Au

g-0

1

Se

p-0

1

O

ct-01

No

v-0

1

De

c-0

1

Jan-0

2

Feb-0

2

M

ar-02

Apr-02

Ma

y-0

2

Jun-0

2

Jul-02

Au

g-0

2

Se

p-0

2

O

ct-02

BSE 200 Index BSE Sens ex Godrej Cons umer

The stock outperformed the road and narrow indices

S o u r c e : Pr o we s s

0

20

40

60

80

100

120

140

Ju

n-

01

J

ul-01

Aug

-01

Sep-

01

Oc

t-01

Nov-

01

Dec-

01

Ja

n-

02

Fe

b-

02

Ma

r-

02

Ap

r-

02

May-

02

Ju

n-

02

J

ul-02

Aug

-02

Sep-

02

Oc

t-02

0

500000

1000000

1500000

2000000

2500000Godrej Consumer Volume (RHS)


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Initiatives


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Initiatives

Divisionalisation of business carried out with the formation of Soapand Personal Care teams

effective 1st Oct 02 with mfg, procurement and marketing under one roof

Focus on Personal, Hair & Fabric care categories

Consumer centricity to guide all business actions

Restructuring of Distribution System - Super & Sub Stockists appointed

SKU Rationalisation Implementing distributor-level inventory management systems for its key dealers

Leverage group synergies such as combined purchases of raw materials and media

Exploit tax benefits in backward areas; new factory in Guwahati to enhance profitability

Return excess cash to the shareholders through dividend and shares buyback

EVA Implementation complete across the organisation.

Measurement & Remuneration based on EVA. Introduction of Individual Performance Factor

(IPF) in year 2

Red & Blue Team Project - Think Tank - Young Executive Board constituted


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Thank You

Godrej Consumer Products Limited 1225432389188096 8

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