Dear shareholders,
Thank you for your continued belief in GCPL and taking the time to read
this note.
I am pleased to share with you that your company delivered a good
performance in fiscal year 2023-24.Consolidated reported revenue growth was 6%.
Consolidated EBITDA for the year grew by 21%. Organic volume growth for the year was 7%
for the consolidated business, with growth in India and Indonesia at 6% and 11%,
respectively.
What excites me, though, is the time we spent on a sharply thought
through and well executed plan for strategic transformation that will fuel the next few
decades of growth.
I am grateful to Sudhir for the bold ambition in our Vision 2040 and
how he and our leadership team are very deliberately, through the ‘power of
backcasting', working backwards from that vision to create the building blocks needed
today.
Our organic expansion of Liquid Detergents with the new Godrej Fab, and
the inorganic entry into Deodorants and Perfumes with Park Avenue and Kamasutra, for
example, set us up to play in what will be among the biggest categories in India in 2040.
Our multi-year efforts to expand the Total
Addressable Market (TAM) we want to serve in India in the decades
ahead, are also aimed at this.
I am particularly proud that we have set up the Godrej DEI (Diversity,
Equity and Inclusion) Lab under the leadership of Parmesh Shahani and are doubling down on
our commitment to making Godrej a truly inclusive community where people thrive. The Lab
empowers inclusion within the Group, helps build DEI ecosystems across corporate India,
and aims to bring ideas and innovation related to DEI to the mainstream.
Over the last year, Parmesh and the team have provided strategic DEI
guidance to our Group businesses, including GCPL, and facilitated enhanced internal
collaborations and communication. They have set up a Group DEI advisory council, conduct
quarterly DEI updates and oversee the DEI scorecards of businesses.
As I do every year, I would like to share my perspectives on what could
have been better, what went well and what we need to do going forward.
What could have been better
Category development is at the heart of our strategy and the consistent
efforts towards this are showing in increased penetration and consumption. However, we
need to get some of our large, profitable brands like HIT and Ezee in India, Stella in
Indonesia and Inecto in Africa, really firing at their potential more
consistently.
Sustainability is core to our strategy and operating model, and we are
embedding it across various aspects of our business, but we aren't doing enough. Our
Environmental, Social and Governance
(ESG) scores on key indexes don't reflect the shifts we should
have been making.
Three of our Group companies are in the global leadership league for
climate action/ ESG in their respective industries, but GCPL is not. We must fix this in
the year ahead.
While our Board is gender balanced and so is our overall company, our
track record on senior leadership is not good. Our most senior women representation has
actually fallen 900 basis points in the last couple of years to 20%.
What went well
Household Insecticides is our most purposeful and our most profitable
category. In the last few years, we have faced growth challenges in the category in India,
but this year could end up being a gamechanger. I am very excited about the introduction
of Renofluthrin (RNF), which is 2x more effective than any other registered molecule. GCPL
has exclusive access to it in the medium term and that gives us a very powerful
competitive edge to serve our consumers well.
We have also launched Goodknight Agarbatti in India with this molecule
and are well positioned to formalise the illegal incense sticks market. The real potential
for consumer delight will come once we introduce this new molecule to our liquid
vaporisers and drive penetration. With the impact of climate change, we are seeing a
steady increase in dengue cases over the last 15 years. In
Latin America, this has risen from around half a million to six million
cases this year. The opportunity to serve consumer needs in this category is only
deepening.
In our Africa, USA and Middle East cluster and the Latin America
businesses, we are making significant moves to improve longer term profitability. In East
Africa, we have restructured the business model.
In Nigeria, we are restructuring our distribution model and rebalancing
the portfolio through FMCG. In the Americas, we are improving margins by outsourcing
manufacturing.
The growth of HIT in Indonesia is a great example of the power of our
multi-pronged approach to category development. We changed the formula to make it more
efficacious, improved perfume, scaled up the liquid vaporiser format and refreshed
packaging. Media spends increased by 1.5x in the last year, ensuring we built relevance
for the brand. Access packs are driving penetration and we have reached close to one
million households through trials. I am also happy to see brands like Godrej Aer in India
and Darling Ombre Braids in South Africa show consistent multi-year growth and category
development.
Ramping up availability is the next big step. On a trip to rural Madhya
Pradesh, I had the chance to see firsthand the kind of impact that our rural van
operations programme, Project Vistaar, is having. It is the largest of its kind in India
and is aimed at doubling our rural coverage. We are backing this up with a digital backend
revolution to track and improve the effectiveness of salespeople.
What do we need to do now?
As we build towards 2040, the two most important tasks for your company
in the year ahead are driving double-digit growth in Household Insecticides in India, and
significantly improving EBITDA margins in
Africa and showing a positive PAT.
We are doubling down on our investments in our R&D and Design teams
which are the fulcrum and key differentiator of GCPL's ability to be innovative and
serve our consumers well. This, together with the organic growth that we are targeting
from more of our large brands through working media investments, sets us up well for the
year ahead and beyond.
Becoming more diverse and inclusive to represent the global consumers
and communities we serve is critical to achieve our growth ambitions. It is particularly
important to me that we nurture leaders who lean into our values and use their corners of
the world to manifest a Godrej that is stronger and better for the future. We are
fortunate to have many of them. Together, we have made progress in improving the
representation of diverse and under-represented groups at GCPL, but there is lots more to
do. Recently, as a Group, we announced a comprehensive refresh to all caregiving people
policies: self-care, childcare and elder care. This included a move to cover healthcare
for transgender members more comprehensively than before.
One of my favourite days this year was spending time with the women
team members at our Malanpur factory in March. At the ‘Godrej ki Shakti' (the
strength of Godrej) event, we invited all women at the plant and their families to
celebrate the role of women in manufacturing and emphasise the importance of family
allyship in making this possible. We are investing in expanding capacity at Malanpur, also
among Asia's largest soap manufacturing units, to make the operations truly world
class. Ensuring this goes hand-in-hand with our inclusion and sustainability agendas is
key. We are also translating this commitment to our newest factory. We have signed a
Memorandum of Understanding (MoU) with the Government of Tamil Nadu to invest INR 515
crore in a state-of-the-art manufacturing facility near Chennai.
Our ambition is to develop this new factory as a ‘lighthouse'
for other manufacturing units; with an inclusive and gender-balanced workforce and
following Industry 4.0 and environmentally responsible practices.
Here, we plan to employ at least 50% women and a minimum of 5% members
from LGBTQIA+ and Persons with Disabilities (PWD) communities.
Sustainability is core to our strategy. We are designing how we do
business to drive sustainable growth while tackling the greatest challenges of our times
– climate change, inequality and nature loss. Our
Good & Green vision 2025 is aligned with the Paris Agreement goal
of limiting global warming to below 1.5 degrees Celsius and the World Business Council for
Sustainable Development pathways that tie with the
UN's Sustainable Development Goals.
The ESG Committee at our Board of Directors oversees our progress and
provides direction to our vision.
We continue to scale our Elimination of Mosquito Borne Endemic Diseases
(EMBED) programme. It runs in four Indian states, and, since 2015, has helped 5,225
villages become malaria-free and reduce malaria cases by 80% in 11 districts. We are now
addressing dengue and chikungunya in 11 cities, with a 65% reduction in the number of
cases.
Through waste management and plastics programmes, we recycled 7,287 MT
of waste; 3x more than what we achieved last year. We also partner local authorities to
strengthen waste management systems and invest in the well-being of waste workers.
We are on track with our net-zero by 2035 ambition and have strong
plans going forward to strengthen our renewable energy portfolio.
Our commitment to putting people and planet alongside profit is
showcased in our growing reconstitution portfolio which I am personally very passionate
about. This will not only help democratise access to health and hygiene products, but also
provide a ‘Green Discount' to our consumers. I think it is a western idea to
believe that we should just remove a bit of plastic and a bit of sugar from our products
to meet goals. That doesn't work. We need to fundamentally rethink our approach.
For me, a Green Discount is something that is more sustainable; serves
the consumer better, serves the environment, but also makes more money for GCPL. Drawing
from our ‘Less is more philosophy': with less packaging and less things
consumers don't need, costs come down and margins can be higher. We are seeing the
possibilities in both products and processes. By changing the wick in our liquid
vaporisers from an imported plastic one to an organic
India-manufactured one, we are being greener and saving INR 60 crore a
year.
The new Godrej Magic Floor Cleaner is an affordable and sustainable
product.
Compared to traditional cleaners, it uses
94% less plastic and 72% less paper in its packaging. Its compact
gel-based sachets allow more units per truck, reducing transportation and emissions and
lowering our environmental impact. This is what emerging market companies like ours need
to be excellent at.
On behalf of the GCPL Board and
Management Committee, I want to take this opportunity to express our
deep gratitude to our amazing team members across the globe, whose passion and values-led
leadership allows us to serve our consumers and communities so meaningfully.
To all our customers, business partners, shareholders, investors, and
communities, we greatly value your trusted partnership. We will continue to count on your
support as we build forward towards what I believe are the best years at your company.