Excellent write up. You nailed the current quality of the promoters and management. Whistle blower sort!
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Hi…
Excellent work. Kudos !!!
However in my opinion, some really good things that GCPL has been able to achieve in the last few years are -
- To be able to disrupt the Bathroom air freshner category with Godrej Aer. Dabur’s Odonil was the undisputed king there. Godrej Aer disrupted the mkt with innovation and forced Odonil to follow their lead.
However, I am a little concerned about the quality of the the product off late. The fragrance barely lasts for a week. It used to last for over 15 days when it was initially launched.
- The Powder to Liquid handwash - Mr Magic seems to be doing really well. It has the potential to become a big hand wash brand where it was really difficult to make a mark with biggies like HUL, RB, ITC being deeply entrenched.
Channel checks with tier -2,3,4 retailers throw up really good results wrt Mr Magic due disruptive pricing and format. So…fingers crossed here and hoping for the best.
Disc : invested. Will definitely pay closer attention to the points brought out by you.
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Great post - the figures for the ROCEs for the different international businesses are eye openers.
But could it also be a large vision taking time to execute? I say that because:-
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Categories of FMCG products which are relatively niche and in product categories with relatively less global competition. They might compete with an SC Johnson or a LOreal globally, but that is better than competing with a Unilever or a Nestle in categories they dominate
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International businesses are always time consuming and very hard to build in the FMCG space - as distribution models which are easier are always tempting but have so many variables. If we look at the Indian business of several global FMCGs - tremendous value creation has now followed with time and patience. I see the Africa business and the Indonesia business as a similar animal - evolving countries with a scope for the product range. It would be very tough to generate ROEs in the beginning there - but with brand building and distribution expansion they should follow
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The question is also the space it occupies in the Indian market. To each their own, but for longetivity of growth, companies like Dabur, Marico and GCPL are not only stable FMCG business, but also potential global players. Versus a Nestle and an HUL building India businesses, at higher valuations, the choice is growth versus safety and ROCE can be compromised for that
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Agree with the points on Nisaba. A lot to prove - and I was personally disappointed to see Mr Gambhir leave. But I still do credit the Godrej group, I don’t blame business leaders for doing what they please if they think it’s right, consumer goods is a subjective business with several options abs good capital. Maybe he does not want to prioritise ROI and ROCE and is looking at a longer term picture which is more disruptive?
What if I project this as an Indian business with scope to increase margins, someone who have dirtied their hands and experienced high potential developing markets and finally having a product range which is well tested and differentiated in a similar developing tropical market like India?
Although I am just playing Devils advocate. Your concerns are very valid and backed by facts.
Disc: Invested
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Good luck to you:) Since you are invested, I hope you are right.
On a serious note - I am sure that is how the management is also looking at it. That is the judgement you have to make as an investor. I would always wager on companies investing in their core areas and core regions. But surely you can take the above view and wait for the mgmt to deliver.
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Hello , I was interested in looking at Godrej Consumer for a long time but was watching it from the sidelines & never really got down to studying it closely but the current fall in price made me look at it again …and i was looking for some reliable quick take on the currents / undercurrents …i must say Mr. Kadam & subsequent posters have done a marvelous job in bringing out the various aspects which is hard to come by unless you go through the exhaustive annual reports & follow the company regularly !
Hence a great job in laying out the aspects . I would add my 2 bits :
Somebody mentioned above about Indian Co.s having global MNC ambitions and then going for it is greatly exemplified by how Bharti forayed into Africa by taking in 16 Countries with diff. market dynamics in 2009 as a co. with Global Telecom ambitions ( Paid more to Zain and was one of the largest deals at that time for an Indian co. in excess of $10 Billion ) and not to mention the political stability of each region …the first thing they did was post their most dynamic and long time hand who actually made Airtel during its initial days ;Manoj Kohli to Africa to ‘replicate’ the success of India & --I see some parallels in Godrej’s strategy to foray internationally due to their Long dominance and Confidence in the FMCG categories …but i am not sure if they tried the Airtel Model of transporting its ‘proven’ on the ground Indian leadership to other country forays…mostly it should work as it saves you time to integrate the new Leader with the co.s culture etc and its product landscape …not sure if that happened here though FMCG could be totally different from Telecom dynamics so i could be wrong in thinking .
2) The Africa bet of Airtel started making losses from the word go …with 52 Qs of losses at one point in a straight line making it a real black hole ( no pun intended ) wherein they had to close done some Country ops like Sierra Leone ( due to security and political stability reasons ) etc etc …its only now in recent yrs that some much needed stability has come after 10/11 Yrs of ops…so i would agree with the poster that gestation of new countries will take their own sweet time no matter how good or efficient the mgmt is ( I Hope that’s the case here too ! )
3) Lastly , i dont know if the new CEO from the Godrej Family has that fire to make it a success but lets see how it goes .
Lastly , thanks again for the wonderful thread !
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A step down in transparency from GCPL as per their latest pre-quarter update.
GCPL will no longer report Home Insecticides (HI), Hair colours and Soaps separately. Rather they will bucket everything into Home care and Personal care. Some recently launched smaller categories like Fabric care, home cleaning and personal wash would be moved form ‘others’ and clubbed with the respective large segments.
Personally, I am taking this is as a negative. This seems a clear attempt to mask the weakness in HI numbers. This segment did well for a couple of quarters but unorganised incense sticks (both local and Chinese) may have come back with a vengeance. I hope they share the details on the call though but omitting the details of HI segment all-together from their reporting was unexpected.
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Yes I did see that they are clubbing the categories into two broad heads. However, haven’t read anywhere yet that they will not share sub category details. Have you read this anywhere or predicting it (You maybe very well right here).
Also, I see you very active in analyzing some FMCG shares like GCPL, Agro tech foods etc. Would be good to know any disclosure on what your are invested in FMCG bucket.
Disc: Invested and hence critical
Here is the excerpt from their press release:
“we will be consolidating our current and future categories
into Home and Personal Care in India. Accordingly, starting with the results for the quarter
ending June 30, 2021, we would be sharing quantitative details on Home Care and Personal
Care growth alongside directional growths and qualitative details of the key sub-categories
within the Home and Personal Care play.”
This means that you will get hard numbers only on home and personal care. On HI, Hair-colours and soaps, there will be no sales figures disclosed (qualitative details only). Qualitative probably means they will say ‘grew well’, ‘was steady’, ‘was weak’ or ‘grew mid-single digit’ etc.
Disclosure: Not invested.
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Agree, this clearly means that they are not going to share sub category details. Thanks for sharing this. Not sure, if this is the result of new leadership. No dividends since an year and now less transparency. I would wait and watch on how overall topline/bottom-line business progresses. It is a known fact that any cash cow sub category will gradually saturate but the extent of saturation and decline would have been good to know for shareholders…
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I am a bit confused here with regards to who is the actual CEO and calling the operational as well as strategic shots at GCPL. Many articles clearly mentions Nisaba as CEO & MD from June 2020 -
While their own website shows Nisaba only as MD and not as CEO and Sunil Kataria as CEO - India and SAARC.
https://www.godrejcp.com/know-us/global-leadership-team
Also one article from Oct 2020 mentioning Sunil Kataria as CEO - India & SAARC
Infact there are many articles back from 2018 as well wherein Sunil Kataria holds the same position of CEO - India & SAARC
In any case Nisaba is not mentioned as CEO anywhere in their own website.
Also what about geographies other than India and SAARC?
It is very strange such ambiguity exists.
Lastly any idea about why no dividend paid for FY 2020? I think first time in decade or even longer has GCPL not paid any dividends. Their profits and guidance has been good still why no dividends? Any long term shareholder has any insights on dividend policy or did management say something about any cash conservation for any impending acquisition or any other purpose?
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Nisaba is the Global CEO/MD (India, Indonesia and Africa). Sunil is mainly India CEO and may be for some adjoining regions. They have individual operational heads for Indonesia and Africa who look at operational issues. As for strategic decisions - the buck stops with Nisaba.
Their website says clearly that Sunil is CEO - India & SAARC. So seems only Indonesia remains as other major place.
Interestingly Sunil Kataria has been CEO - India & SAARC since even Vivek Gambhir days (as per some old 2018 articles I came across)
Nisaba is not a CEO as per GCPL website mentioning the Leadership team. She is not a Global CEO.
I believe if she holds that position, then its a major flaw in GCPL website. In any case the situation & communication looks ambiguous to me.
It looks below par, non-transparent to me compared to other Indian MNC companies I hold.
Disc: Invested & evaluating worthiness to keep holding
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Yet another CEO change 
Indeed, it was really amusing to see that…its with effect from Oct 2021…that’s another joke…overall profits for this FY increased by 15% and so did EPS but I am shocked to see no dividend announced yet…very disappointed!
Results seem as expected on a lower base of Q last year…not bad and neither extraordinary…(although markets may like growth, even though on low base, in household insecticides division)
Interesting to note that the new would be CEO held ED position in Foods & Refreshment division in HUL…and GCPL has no Food division…either this is yet another joke or they plan something in Foods division going ahead…
Overall, everything is fine by me, they are free to rope in as many CEO as they want but at least pay dividends to shareholders when your EPS is increasing healthily!!
Disc: Invested. Not a buy/sell recommendation. Maybe wrong in my assessment
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1_SE_outcome_of_BM_11052021.pdf (bseindia.com)
Key observations -
One time manpower remuneration has hit the India EBITDA margins by a massive 400 bps
Gross margins have been hit by lag between input costs and passing them on to consumers
As these two factors reverse by Q1, profits may just show a more than descent Bump Up
Good news - Sudhir Sitapati appointed as MD and CEO !!!
Disc : invested, biased
The guy they have hired as the new global MD is an absolute star from HUL. Major positive from a medium term standpoint.
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Sudhir was a lifer at HUL and has worked across foods, home and personal care over his tenure there.
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But its from Oct’21 …2 Qtrs hence …good to know about the reputation but having worked in MNCs all my life after starting in my first Job in an Indian MNC --i can tell you for a fact that …its a diff. kettle of fish ( my biased view --May not be the experience of others ) …it will take the star performer some-time to get a hang of the Org.---- translated to---- FY22 gone without a proper captain !!..my personal opinion --Not invested but tracking this interesting co. with potential but for the Mgmt Flip-flops !!
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I think after Gambir took position Nishaba but she may not easy to manage two key position… so it’s good to bring industry experts as a CEO… I don’t see anything wrong…
Dis invested