GCPL looks to triple revenue from Indonesian business in 5 years
Viveat Susan Pinto, Business Standard, 01 August 2016
The INR 8,957 crore GCPL, fast-moving consumer goods arm of the Adi Godrej Group, proposes to triple revenue from its Indonesian business in five years, said Naveen Gupta, business head Indonesia & Middle East, in a conversation with Business Standard.
The move comes as the over USD 3 billion (INR 22,000 crore) group looks to grow top line 10-fold in the next decade.
Categories that will drive this growth include consumer goods, properties and agri-business. While the consumer goods and property units are listed, agri-business is not.
Godrej Agrovet, according to analysts, is considering an Initial Public Offer of equity in a bid to unlock value. The company, a subsidiary of Godrej Industries, had wrapped up two acquisitions in 2015-16. One was of city-based Astec Lifesciences. The second was an additional 25 per cent stake in Creamline Dairy, South India’s largest dairy producers.
GCPL has been very aggressive on acquisition, buying at least 10 companies in the past six years. In 2015-16, it acquired two - Canon Chemicals in Kenya and Strength of Nature in the US, spending nearly INR 1,200 crore.
The firm also completed acquisition of the balance 40 per cent stake in Chilean company Cosmetica Nacional last year, after buying a majority stake in the latter, a market leader in hair colour and cosmetics, in 2012.
Latin America, Africa and Asia are key regions for GCPL and constitute one half of the three-by-three strategy it has identified for inorganic growth.
The other half includes categories such as personal wash, hair colour and household insecticides, segments, where GCPL is focused in terms of acquisitions.
Gupta says a combination of organic and inorganic growth would be deployed to achieve the INR 5,000-crore turnover target in Indonesia, GCPL’s largest market outside of India. GCPL, for the record, derives 17 per cent of its consolidated top line from the Indonesian business.
For the just-concluded June quarter, however, Indonesia’s revenue growth was sluggish at eight per cent as the business battled slowdown.
This is lower than the constant-currency organic sales growth of 18-19 per cent the Indonesian business clocked between FY12 and FY16, brokerage IIFL said in a recent report.
In absolute terms, Indonesia's revenue growth was nearly INR 376 crore for the June quarter versus INR 350 crore for the corresponding period a year ago.
Gupta remains optimistic, saying his company had been making the right investments in the Indonesian business. "Like India, Indonesia is an emerging market, with a young, middle-class population. We see scope for growth in our existing categories (household insecticides, air care and wet wipes), as well as adjacencies in Indonesia," he says.
The company in July made a foray in the hair colour category in Indonesia with a creme sachet called Nyu. The product was developed with inputs coming from markets such as India, where a creme hair colour sachet was launched at an affordable price of INR 30 a few years ago, compelling rivals to respond quickly.
The company is expected to look at further launches in hair care and personal care, besides its existing categories in Indonesia.