GCPL steps up cluster management of markets

Viveat Susan Pinto, Business Standard, 19 September 2016

The consumer products arm of the nearly $3.5-billion (or Rs 24,000 crore) Godrej Group is stepping up its cluster management of markets as it seeks to grow aggressively in the next few years. Godrej Consumer (GCPL), whose consolidated net sales for the financial year ended 2015-16 was nearly Rs 9,000 crore, is at the forefront of the Godrej group's effort to grow tenfold in ten years. The other areas identified as growth drivers by the group include agri products and real estate.

Specifically, GCPL is now dividing some of its broad regions of Africa, Latin America & UK, Indonesia & West Asia into sub-clusters to drive synergies and growth. The objective is to also optimise resources in areas such as manufacturing and marketing, says Vivek Gambhir, managing director, GCPL.

As part of this effort, he explains, the company is looking at driving synergies between Chile and Argentina, two Latin American markets where GCPL has a strong presence through acquisitions. In 2010, GCPL had acquired hair colour majors Issue and Argencos in Argentina and then bought 60 per cent stake in Chilean company Cosmetica Nacional in 2012.

"We have taken over the joint venture from our Chilean partner in Cosmetica Nacional. We have full control of operations and will look to accelerate growth there. Neighbouring Argentina as a country is also entering a much stronger period of growth because of the economic reforms the government is undertaking there. That should benefit us. So, there is a greater scope for organic growth in these markets as well as the opportunity for driving synergies between Chile and Argentina, which are market leaders in hair colour," Gambhir says.

With selective integration between Chile and Argentina, Gambhir says, the plan is to open up existing markets such as Paraguay, Uruguay, Peru, Colombia and Bolivia even more. Issue, for instance, already has a presence in Paraguay, Uruguay and Peru besides Argentina, and could benefit from this move, he explains.

Similarly, in Africa, Gambhir says, the plan will be to integrate the Darling and Rapidol-Kinky businesses in South Africa into one entity with one leader in charge.

"So far, we've had two separate chief executive officers for the two businesses in South Africa. This year, we will bring the two together under one leader in that market," he says.

Another mini-cluster, the company is eyeing are Nigeria and Ghana in west Africa and the third one will be the East African block of Kenya, Uganda and Tanzania, Gambhir says. Parallely, synergies are also being driven between South Africa and Mozambique in areas such as manufacturing, he adds.

In the Southeast Asian region, where GCPL has a strong operation in Indonesia, the company is eyeing inorganic opportunities in markets, such as Vietnam, and looking to spread itself organically into countries such as Myanmar, Gambhir says.