God of godrej
One of the oldest and strongest players in the market, Adi Godrej is now looking at the young Indian
By Abhinav Singh
Adi Godrej is busy checking updates on his latest Apple iPad inside his spacious office in suburban Jvlumbai. The chairman of the multibillion-dollar Godrej Group, Adi’s style certainly goes with his image as one of the richest men in India.
Even at 68, he is actively involved in the continuous process of improving his business empire. Constantly working on rebranding, acquisitions and innovations, Godrej, with Adi at its helm, is now looking at appealing to the young Indian consumer. And what better way than technology! The 113-year-old, $2.8 billion group is striving to become more technologically upfront.
Godrej has more than 480 million customers in India. “Our objective is to get every Indian to buy our product. At the same time, we would also want people from outside India to be our consumers both through exports and direct operations,” says Adi, who joined the company in 1963. Under his able leadership, the company has been divided into separate entities and today, the group employs around 22,000 people.
Godrej always has an eye open for good companies. It recently bought Indonesian household care vendor, Megasari and Nigerian personal care firm, Tura. “We would be looking at acquisitions both in India and in the developing world. Our acquisitions outside will be mainly in the Godrej consumer products division. In India, they can be in other divisions as well,” explains Adi. At the same time, the company also considers organic growth (growth through internal expansion) at is to 20 per cent.
Adi has never considered the new- age MNCs as a threat to his business. He feels that his group is doing better than its MNC competitors. “There are challenges in the market, but the Godrej Consumer Products Limited has been the best performing stock among the FMCG company shares over the last 10 years. Our share price has increased by a CAGR (Compound Annual Growth Rate) of 50 per cent and our market capitalization is today about 40 times of what it was 10 years ago,” he says.
He feels the future of the FMCG sector is very bright, especially since it is driven by the rural market. “Rural demand will be very strong and we feel that the growth in FMCG over the next 10 years would be the best. Ever that India has witnessed,” he says.
As a company that has witnessed the growth of the Indian electronic appliance market right from its early days, Godrej is not shaken by competition. On the contrary, Adi feels the market has grown tremendously with the arrival of new competitors. He has never been more bullish about his appliance business, which peaked in 2 009-10.
Rebranding has done well for Godrej. “Our sales and profit have gone up, thanks to rebranding. It is about repositioning the organization as a whole in the minds of the people. Those companies who have repositioned themselves have done well,” Adi says.
Despite large scale diversification, Godrej exited its operations in the BPO sector, pest control services and medical diagnosis. It also had a rural retail business called Aadhaar, which had supermarkets in rural areas. Although it was making a profit, the company played it down by selling 70 per cent of its shares to Kishore Biyani’s Future Group. Now it is only a financial investor at 30 per cent. “We felt that we would be competing with our own customers,” he says.
The focus, now, is to concentrate on the FMCG sector, consumer durables and property, which Adi holds close to his heart.
He is particularly optimistic about his property business. Though it is 20 years old, it went public only recently. With many projects coming up across 11 cities in the country; he hopes that in the next 10 years, the business will be the fastest growing and the single largest business in the group. The company gets into a joint venture with land owners and rarely buys land for development as it is less capital intensive than the model of buying land.
Adi says that his was one of the first Indian groups to have implemented an Enterprise Research Planning (ERP) solution which helped the company work on a negative working capital.
He is hopeful that the Indian economy will not only be able to achieve double digit growth in the next 10 years, but become the fastest growing economy in the world as well. He feels the introduction of the goods and services tax in the next financial year will add one-and-a-half to two percentage points to the Indian growth rate, which, in turn, will put the economy past the 10 per cent growth rate. “The economy is going in the right direction. We need to improve our governance by working on standard practices and see that our ideas are executed well. Opening of the Indian market to competition always helps the consumer and when the consumer does well, the economy does well, too;’ he says.
Though optimistic about the growth of the economy, he is sceptical about the Indian education system. Emphasis should be on training, he says.
A true supporter of education for all, Adi feels that the education sector should have an independent regulator and not be under the control of the education ministry. According to him, it should act as a facilitator on the lines of the telecommunication and the aviation sectors. “Once the education sector is opened to the private sector, there would be intense competition and good quality education will become more affordable for Indians.”
He is struck by the young Indians’ vibrant energy. “They are passionate, forward looking and have great pride in the country. They will take India to greater heights:’
Adi’s parents had a great influence on him. His mother, who was a teacher, taught him money management skills and increased his confidence, which helped him greatly in shaping up his career. “My mother encouraged me to walk alone at the age of six on the streets of Mumbai. At the age of 10, she put me on pocket money which was neither too liberal nor to parsimonious. I had to pay my school fees, buy my clothes, uniform and toys. I learnt to manage money. It taught me value for money;’ he says. On the other hand, he learnt the efficient use of technology from his scientist father, who had a doctorate in chemical engineering from Germany.
Adi still pursues his hobbies passionately and is very fond of sports. He exercises 10 hours a week and goes water-skiing every Sunday with his grandchildren. An avid squash player in his earlier days, he used to indulge in horse riding regularly. A voracious reader, he says he recently read The India Way: How India’s Top Business Leaders Are Revolutionizing Management by Peter Cappelli, Harbir Singh, Jitendra Singh, and Michael Useem, Ambani a Sons by Hamish Mcdonald and What the Dog Saw by Malcolm Gladwell.
He loves debating and meets friends over dinner to “talk and exchange views”. He goes trekking in the Himalayas. He loves travelling and has visited 85 countries. An admirer of Socrates, Gandhiji, Nelson Mandela, Margaret Thatcher and Dr Manmohan Singh, Adi says his journey to make Godrej the strongest brand in India continues.
Even at 68, he is actively involved in the continuous process of improving his business empire. Constantly working on rebranding, acquisitions and innovations, Godrej, with Adi at its helm, is now looking at appealing to the young Indian consumer. And what better way than technology! The 113-year-old, $2.8 billion group is striving to become more technologically upfront.
Godrej has more than 480 million customers in India. “Our objective is to get every Indian to buy our product. At the same time, we would also want people from outside India to be our consumers both through exports and direct operations,” says Adi, who joined the company in 1963. Under his able leadership, the company has been divided into separate entities and today, the group employs around 22,000 people.
Godrej always has an eye open for good companies. It recently bought Indonesian household care vendor, Megasari and Nigerian personal care firm, Tura. “We would be looking at acquisitions both in India and in the developing world. Our acquisitions outside will be mainly in the Godrej consumer products division. In India, they can be in other divisions as well,” explains Adi. At the same time, the company also considers organic growth (growth through internal expansion) at is to 20 per cent.
Adi has never considered the new- age MNCs as a threat to his business. He feels that his group is doing better than its MNC competitors. “There are challenges in the market, but the Godrej Consumer Products Limited has been the best performing stock among the FMCG company shares over the last 10 years. Our share price has increased by a CAGR (Compound Annual Growth Rate) of 50 per cent and our market capitalization is today about 40 times of what it was 10 years ago,” he says.
He feels the future of the FMCG sector is very bright, especially since it is driven by the rural market. “Rural demand will be very strong and we feel that the growth in FMCG over the next 10 years would be the best. Ever that India has witnessed,” he says.
As a company that has witnessed the growth of the Indian electronic appliance market right from its early days, Godrej is not shaken by competition. On the contrary, Adi feels the market has grown tremendously with the arrival of new competitors. He has never been more bullish about his appliance business, which peaked in 2 009-10.
Rebranding has done well for Godrej. “Our sales and profit have gone up, thanks to rebranding. It is about repositioning the organization as a whole in the minds of the people. Those companies who have repositioned themselves have done well,” Adi says.
Despite large scale diversification, Godrej exited its operations in the BPO sector, pest control services and medical diagnosis. It also had a rural retail business called Aadhaar, which had supermarkets in rural areas. Although it was making a profit, the company played it down by selling 70 per cent of its shares to Kishore Biyani’s Future Group. Now it is only a financial investor at 30 per cent. “We felt that we would be competing with our own customers,” he says.
The focus, now, is to concentrate on the FMCG sector, consumer durables and property, which Adi holds close to his heart.
He is particularly optimistic about his property business. Though it is 20 years old, it went public only recently. With many projects coming up across 11 cities in the country; he hopes that in the next 10 years, the business will be the fastest growing and the single largest business in the group. The company gets into a joint venture with land owners and rarely buys land for development as it is less capital intensive than the model of buying land.
Adi says that his was one of the first Indian groups to have implemented an Enterprise Research Planning (ERP) solution which helped the company work on a negative working capital.
He is hopeful that the Indian economy will not only be able to achieve double digit growth in the next 10 years, but become the fastest growing economy in the world as well. He feels the introduction of the goods and services tax in the next financial year will add one-and-a-half to two percentage points to the Indian growth rate, which, in turn, will put the economy past the 10 per cent growth rate. “The economy is going in the right direction. We need to improve our governance by working on standard practices and see that our ideas are executed well. Opening of the Indian market to competition always helps the consumer and when the consumer does well, the economy does well, too;’ he says.
Though optimistic about the growth of the economy, he is sceptical about the Indian education system. Emphasis should be on training, he says.
A true supporter of education for all, Adi feels that the education sector should have an independent regulator and not be under the control of the education ministry. According to him, it should act as a facilitator on the lines of the telecommunication and the aviation sectors. “Once the education sector is opened to the private sector, there would be intense competition and good quality education will become more affordable for Indians.”
He is struck by the young Indians’ vibrant energy. “They are passionate, forward looking and have great pride in the country. They will take India to greater heights:’
Adi’s parents had a great influence on him. His mother, who was a teacher, taught him money management skills and increased his confidence, which helped him greatly in shaping up his career. “My mother encouraged me to walk alone at the age of six on the streets of Mumbai. At the age of 10, she put me on pocket money which was neither too liberal nor to parsimonious. I had to pay my school fees, buy my clothes, uniform and toys. I learnt to manage money. It taught me value for money;’ he says. On the other hand, he learnt the efficient use of technology from his scientist father, who had a doctorate in chemical engineering from Germany.
Adi still pursues his hobbies passionately and is very fond of sports. He exercises 10 hours a week and goes water-skiing every Sunday with his grandchildren. An avid squash player in his earlier days, he used to indulge in horse riding regularly. A voracious reader, he says he recently read The India Way: How India’s Top Business Leaders Are Revolutionizing Management by Peter Cappelli, Harbir Singh, Jitendra Singh, and Michael Useem, Ambani a Sons by Hamish Mcdonald and What the Dog Saw by Malcolm Gladwell.
He loves debating and meets friends over dinner to “talk and exchange views”. He goes trekking in the Himalayas. He loves travelling and has visited 85 countries. An admirer of Socrates, Gandhiji, Nelson Mandela, Margaret Thatcher and Dr Manmohan Singh, Adi says his journey to make Godrej the strongest brand in India continues.
Stock Analysis
Analysts feel that Godrej Group is very strong in terms of its brand capability. Its properties business is expected to do well considering the rise in demand for residential housing in India. Things are promising in the consumer products business, too. However, “the rise in palm oil prices and its integration with international businesses may have some affect on its consumer products business in the immediate future. Otherwise it is right on track,” says Varun Lohchab, executive vice- president, Institutional Equity Research, Religare Capital Markets Limited. Analysts from Angel Broking feel that Godrej’s consumer products may witness a compound annual growth rate of 45 per cent in consolidated revenues in 2010-12. Average Stock Price of listed companies of the Godrej Group
Godrej Consumer Products Limited: Average share price was 426 at the BSE. Godrej Industries Limited:
Average share price was 217 at the BSE. Godrej Properties: Average share price was 710 at the BSE.
Analysts feel that Godrej Group is very strong in terms of its brand capability. Its properties business is expected to do well considering the rise in demand for residential housing in India. Things are promising in the consumer products business, too. However, “the rise in palm oil prices and its integration with international businesses may have some affect on its consumer products business in the immediate future. Otherwise it is right on track,” says Varun Lohchab, executive vice- president, Institutional Equity Research, Religare Capital Markets Limited. Analysts from Angel Broking feel that Godrej’s consumer products may witness a compound annual growth rate of 45 per cent in consolidated revenues in 2010-12. Average Stock Price of listed companies of the Godrej Group
Godrej Consumer Products Limited: Average share price was 426 at the BSE. Godrej Industries Limited:
Average share price was 217 at the BSE. Godrej Properties: Average share price was 710 at the BSE.
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