There is a perception that the Godrej Group has not been as successful in grabbing new growth opportunities as other old business houses.
This perception is probably because we don't have- large listed companies like other old business houses. For a long time, most of Godrej group companies were privately-held and they began to get listed only in the last decade or so. This is why our growth in emerging sectors such as real estate, agri-commodity, processed food, retail and consumer goods has remained hidden from public view. Like others, we have benefited from the economic boom and most of our companies have been out-performers in their respective segments.
However, I must add that the Godrej group has never ventured into capital-intensive and high-volume commodity businesses like steel, metals and cement, as other contemporary business houses. Our forte lies in marketing and brand building and we have been very successful in that. These businesses take time to mature and tend to be smaller (in terms of net sales) than their commodity cousins. Godrej is one of India's leading brands in personal care, white goods and furniture and our brand penetration is second only to Hindustan Unilever and continues to grow.
Going forward, what's your vision for the group?
We will maintain our focus on brand-building across all our businesses. However, there could be a re-alignment in contribution from various business segments. Right now, bulk of the group's revenues comes from consumer durables and FMCG businesses. Going forward, I expect real estate to emerge as the group's growth driver followed by retail and food.
Godrej Properties, which is 75%-owned by Godrej Industries, is likely to emerge as the group's biggest company in the next five years. In FY07, Godrej Properties' net profit was Rs 42 crore while revenue touched Rs 125 crore. We expect it to double its profits and revenue for at least the next two years. Godrej Property is expected to raise Rs 400-500 crore through an initial public offer some time by FY08 to fund its expansion plans.
We see real estate more as a brand and design-oriented business. We are targeting premium customers across India's top 10 cities. The aim is to emerge as one of country's top three real estate developers but without diluting our brand equity. All our properties are distinctive in design and offer something different than what is generally available in the market.
Currently, we are developing 27 million square feet of property across India's major cities. Our biggest project is the development of 50-storey high residential complex in central Mumbai. Once completed it will be India's tallest residential building and will become the landmark project for the group.
This perception is probably because we don't have- large listed companies like other old business houses. For a long time, most of Godrej group companies were privately-held and they began to get listed only in the last decade or so. This is why our growth in emerging sectors such as real estate, agri-commodity, processed food, retail and consumer goods has remained hidden from public view. Like others, we have benefited from the economic boom and most of our companies have been out-performers in their respective segments.
However, I must add that the Godrej group has never ventured into capital-intensive and high-volume commodity businesses like steel, metals and cement, as other contemporary business houses. Our forte lies in marketing and brand building and we have been very successful in that. These businesses take time to mature and tend to be smaller (in terms of net sales) than their commodity cousins. Godrej is one of India's leading brands in personal care, white goods and furniture and our brand penetration is second only to Hindustan Unilever and continues to grow.
Going forward, what's your vision for the group?
We will maintain our focus on brand-building across all our businesses. However, there could be a re-alignment in contribution from various business segments. Right now, bulk of the group's revenues comes from consumer durables and FMCG businesses. Going forward, I expect real estate to emerge as the group's growth driver followed by retail and food.
Godrej Properties, which is 75%-owned by Godrej Industries, is likely to emerge as the group's biggest company in the next five years. In FY07, Godrej Properties' net profit was Rs 42 crore while revenue touched Rs 125 crore. We expect it to double its profits and revenue for at least the next two years. Godrej Property is expected to raise Rs 400-500 crore through an initial public offer some time by FY08 to fund its expansion plans.
We see real estate more as a brand and design-oriented business. We are targeting premium customers across India's top 10 cities. The aim is to emerge as one of country's top three real estate developers but without diluting our brand equity. All our properties are distinctive in design and offer something different than what is generally available in the market.
Currently, we are developing 27 million square feet of property across India's major cities. Our biggest project is the development of 50-storey high residential complex in central Mumbai. Once completed it will be India's tallest residential building and will become the landmark project for the group.
Real estate is a new business for the group, but what about the group's core businesses in the consumer goods space?
We continue to invest in our bread and butter FMCG and consumer durables business. Godrej Consumer Products continues to outgrow the domestic market and is now clearly No. 2 in the domestic soap business. We have also maintained our leadership in the hair-colour market in India and plan to leverage it to build a global business in hair colour.
We have taken the first steps in this direction by acquiring Rapidol Pty, which is a market leader in the hair-colour segment in a number of countries in southern Africa and UK-based Keyline. Growth through acquisitions is a strong component of our growth strategy, especially in the overseas market.
We are also open to suitable targets in India. We have identified large emerging markets such as Indonesia, Pakistan, Bangladesh, Nigeria, China, Egypt, South Africa and Brazil to grow our international businesses. The income levels and demographics in most of these countries are similar to India and the consumers will easily accept our product .
What about Godrej Industries — your flagship and one of the most valuable companies in the Group right now?
Its chemicals division has just gone through a major expansion and more is in the pipeline to meet growing demand. However, the bulk of the company's consolidated revenues come from its subsidiaries including Godrej Agrovet, Godrej Properties and Godrej Hi-Care. Besides, the company is increasing the private-equity investment business, which is growing rapidly. The company plans to raise nearly Rs 600 crore through equity to further expand the investment business. We have identified a few IT companies in the US as possible investment targets.
Godrej Agrovet is a market leader in animal feeds besides being one of India's largest producers and processors of oil palm. However, its fastest growing business is chicken processing. We recently launched ready-to-eat chicken snacks and the products have met with initial success.
We now plan to launch more chicken variants and supplement the offering by vegetarian ready-to-eat products later. I have great expectation from this product and the opportunities will explode once organised retail spreads and income levels in urban areas rises further
Can you also elaborate on the group's retail businesses?
The group's retail initiative is divided into two companies. Godrej & Boyce (unlisted) is setting up Godrej Lifespace which will sell furniture, appliances, clothing and other lifestyle products. Godrej Agrovet has set up two formats — Aadhar and Nature's Basket.
While the former is targeted at rural customers and will stock agri-inputs and FMCG products, the later is focussed on upmarket urban consumers willing to pay premium for fresh fruits and vegetables, including imported ones.
The first Nature's Basket store, spread over 4,000 sq ft, recently opened in Mumbai and we are planning to open more such stores in India's top 10 cities. There are no immediate plans to target smaller cities right now.
Your IT business seems to lack focus and is divided into three companies. What new initiatives can we expect there?
This is not true. The bulk of the business is controlled by Geometric and its subsidiaries. We have a small BPO operation, but we are thinking to come out of this business. The group strategy is to focus on niche segments such as product life cycle management (PLM) solutions and manufacturing solutions. To strengthen its presence in the segment, Geometric is looking out to acquire information technology companies in the US.
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