The Hindu Business Line : Godrej Consumer sees buoyant growth — Bets on new products improved sales network

UNPERTURBED by the current monsoon scenario, Mr Adi Godrej, Chairman and Managing Director, Godrej Consumer Products Ltd (GCPL), said the company would continue its "robust" growth on the back of improved distribution network and sustained thrust on new products.

"We are not too much worried about the monsoon at this juncture. The rabi season was good and we are seeing a strong demand for FMCG products from the semi-urban and rural areas,'' Mr Godrej said.

Currently, one-third of GCPL's revenues come from semi-urban and rural areas.

"Our main product categories - soaps and hair colour - have been reporting a strong offtake in these areas," Mr Godrej said.

According to him, this is primarily because GCPL's distribution is skewed towards the smaller towns.

"The profile of our products are good for the rural market. Our flagship soap brand, Godrej No. 1 does very well in rural markets,'' he said.

GCPL has been continuing to build its distribution in this segment of the market over the past couple of years.

"We will continue to grow our distribution by 10 per cent," he said.

Improved rural incomes manifested in higher demand since the last quarter of the previous fiscal, Mr Godrej said.

This has been reflected in a 24 per cent increase in sales value of soaps as against a two per cent growth in the industry during the first quarter of the current fiscal.

Similarly, GCPL's hair colour sales increased by 19 per cent against the industry's growth of 13 per cent.

In all of its new products launched, sales have been higher in smaller towns as compared to large metros, Mr Godrej said.

Therefore, the focus on this market would continue for GCPL despite a not so satisfactory monsoon so far.

GCPL, he said, had a robust growth during the 2002/2003 fiscal despite the failure of the monsoon season.

The opening up of the SAARC markets,particularly Pakistan, would augur well for GCPL, Mr Godrej said.

"We do export to countries like Sri Lanka and Bangladesh but the potential is much higher if tariffs are lowered," he said.

According to him, the worst is over for the FMCG sector.

Higher rural incomes, and improvement in the economy would help negate the impact of poor monsoon.

"We think our strategy is right. GCPL will have a buoyant growth during this fiscal on the back of launch of new products and better distribution set-up," he said.

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