October 2002 Godrej Consumer Products Limited. 1 Agenda Background Product Profile Performance ...
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Transcript of October 2002 Godrej Consumer Products Limited. 1 Agenda Background Product Profile Performance ...
October 2002
Godrej Consumer Products LimitedGodrej Consumer Products Limited
2
Agenda
Background
Product Profile
Performance
Shareholder Value
Initiatives
3
Background
4
The Company GCPL is a result of the demerger of the Consumer Products Division of Godrej Soaps Limited
(now renamed Godrej Industries Ltd.) Focused FMCG company Presence in Personal, Hair, Fabric & Household care market categories Market Leadership in Hair Colour & Liquid Detergents High Standards of Corporate Governance Owns all its Brands
63.0%26.8%
8.2%1.9%
GCPL - category-wise Revenue and GrowthFigures in parentheses refer to revenue growth rates (net of excise) over corresponding period of previous year
Soaps
Liq.DetergentsToiletries
Hair Care 58.1%
25.1%
9.0%
7.8%
FY 2002
Soaps
Liq.Detergents
Toiletries
Hair Care
H1 FY2003
(10%)
(10%)
(-6%)
(17%)
(54%)
(14%)(14%)
(-10%)
5
Godrej Consumer - A new focus
Godrej Soaps Limited
Consumer business was part of the
conglomerate, with core profitability of the
consumer segment not being unlocked
Godrej Industries focus on AOS and Fatty
Alcohol along with investments in Godrej
Sara Lee and Godrej Agrovet was not
appreciated by the market
Consequently, GCPL was de-merged
from Godrej Soaps Limited (renamed as
Godrej Industries Limited). GCPL’s focus
is the FMCG sector with emphasis on
personal & household care
Godrej Consumer
GCPL emerges as one of the fastest
growing FMCG companies with a CAGR of
20% for past 3 years
Four categories: soaps, hair colours,
toiletries and detergents
Focus on employee empowerment and
performance linked incentives has led to this
phenomenal growth
Asset efficiency ratios rank among the
highest amongst peers with ROCE for
FY2002 at 90%
6
Godrej Consumer Products Ltd: A new management
Board of Directors Qualifications
Adi Godrej - Chairman & Managing Director M.S. (MIT)
Jamshyd Godrej B.S. (Illinois Institute of Technology)
Nadir Godrej B.S. (MIT), M.S.(Stanford), M.B.A. (Harvard)
Bala Balachandran Distinguished Professor at Kellogg
Rama Bijapurkar Faculty at IIMA, Marketing Strategist
Bharat Doshi FCA, FCS, LLM, PMD (Harvard)
Anupam Puri Ex-partner, McKinsey
Hoshedar Press -Exec.Director & President B.Tech (IIT), PGDBM (IIM)
7
Current Shareholding Pattern & Shareholder Information
FIIs, NRIs & OCBs8.1%
Individuals & Other Bodies
Corporate17.4%Promoter
Group69.4%
Banks, Insurance Cos, MFs and FIs
5.1%
GCPL shares are traded on The
Stock Exchange, Mumbai (BSE),
National Stock Exchange (NSE) &
stock exchanges at Chennai,
Kolkata, Delhi and Ahmedabad.
Listed on BSE on 18-June-01
Listed on NSE on 20-June-01
8
Facilities & Network
Manufacturing Facilities - 3
Branches - 4
C & F Agents - 32
Distributors - 2000
Retail Outlets covered - Above 500,000
Retail Coverage of any Godrej Soap - 1.6 mn
Retail Coverage of any Godrej Hair Dye - 1.2 mn
9
Product Profile
10
GCPL Brand Matrix
Categories Industrysize
GCPL'ssales
Marketshare (%)
Key Godrej brands
Toilet soap 41,047 2,409 5.8 Cinthol Lime, Cinthol Regular, CintholInternational, FairGlow, Godrej No.1
Hair colour 2,572 1,117 44.6 Godrej Hair Dye - Liquid, Powder, ColourSoft,Nupur, Kesh Kala, Kali Mehndi
Liquid Detergent 310 254 81.9 Ezee
Toiletries
Skin cream 12,594 236 1.9 FairGlow
Shaving cream 1,190 122 10.5 Godrej
Talcum powder 6,082 81 1.3 Cinthol
Sources: ORG-MARG retail sales audit for FY2002
Rs mn
11
Key Brands
Fabric & Household Fabric & Household CareCare
Hair CareHair CarePersonal CarePersonal Care
12
Performance
13
GCPL Performance Highlights
GCPL outperformed its peers in the FMCG sector
Market Growth GCPL GrowthQ2 FY03 FY02 Q2 FY03 FY02
Toilet Soaps -3.1% -6% 16% 10%
Hair Colour -1.5% 10% 18% 17%
Liquid Detergents 22.4% -11% 51% 10%
Total Sales (net of excise) (Rs mn)
0
200
400
600
800
1000
1200
1400
Q1FY01
Q2FY01
Q3FY01
Q4FY01
Q1FY02
Q2FY02
Q3FY02
Q4FY02
Q1FY03
Q2FY03
YoY Sales Growth (%) -GCPL vs FMCG Industry
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Q1 FY02 Q2 FY02 Q3 FY02 Q4 FY02 Q1 FY03 Q2 FY03
GCPL Industry
Source: ORG MARG retail sales audit for FMCG industry
Q2 FY03 figures for Industry is for July & August ‘02
14
Toilet Soaps
Sales (net of excise) (Rs mn)
0
100
200
300
400
500
600
700
Q1FY01
Q2FY01
Q3FY01
Q4FY01
Q1FY02
Q2FY02
Q3FY02
Q4FY02
Q1FY03
Q2FY03
Contributed 63% to own branded sales in
H1 FY03 (58% in FY02)
Soap industry faced an extremely
challenging environment in FY02. The top
10 brands contracted and overall sales for
the industry was down by 6%
“Godrej No. 1” continues to outperform
and gain market share in the sub-popular
category (now available in 3 variants: Rose,
Sandal & Natural)
Godrej Fairglow consolidated position in
the fairness soap category
Increased focus in the Cinthol range to
improve presence in the premium segment
15
Hair ColourSales (net of excise) (Rs mn)
0
50
100
150
200
250
300
Q1FY01
Q2FY01
Q3FY01
Q4FY01
Q1FY02
Q2FY02
Q3FY02
Q4FY02
Q1FY03
Q2FY03
Contributed 27% to own branded sales in
H1 FY03 (25% in FY02)
Leader in this category with a 44.5%
market share in H1 FY03 (44.6% in FY02)
Presence across all price points: powder,
oil, liquid and high end fashion colours
Low penetration suggests high growth
potential
Production at Guwahati to optimize fiscal
benefits
Launched new variants in the Godrej
Colour Soft range and also Godrej
Nupur in sachets
16
Liquid Detergents
Sales (net of excise) (Rs mn)
0
50
100
150
200
250
Q1FY01
Q2FY01
Q3FY01
Q4FY01
Q1FY02
Q2FY02
Q3FY02
Q4FY02
Q1FY03
Q2FY03
Contributed 8% to own branded sales in
FY02
Ezee is the market leader with a share
of 83.3% in H1 FY03 (82% in FY02)
Demand is seasonal in nature with
application on woolens and soft clothing
Plans to introduce a product targeted at
other washing applications to reduce
seasonality
17
ToiletriesSales (net of excise) (Rs mn)
0
20
40
60
80
100
120
Q1FY01
Q2FY01
Q3FY01
Q4FY01
Q1FY02
Q2FY02
Q3FY02
Q4FY02
Q1FY03
Q2FY03
Contributed 8% to own branded sales in H1
FY03 (9% in FY02)
Presence in shaving cream, fairness cream,
talcum powder and deodorant
High growth category providing exciting
opportunities
Gaining market share in shaving creams
Production at Guwahati to optimize fiscal
benefits
New products in deodorants and other
categories to drive growth
18
Market Shares
Source : ORG Data
All figures shown are % for All India Value Market Share
2000-01 2001-02Apr-Sep’02
Toilet Soaps 5.6% 5.8% 5.8%
Hair Colour 42.1% 44.6% 44.5%
Liquid Detergents 75.9% 81.9% 83.3%
Fairness Cream 2.1% 3.4% 2.5%
Shaving Cream 10.3% 10.5% 12.1%
Talcum Powder 1.7% 1.3% 1.7%
Deodorant - - 1.5%
19
GCPL’s Performance Highlights
Growth drivers for future earnings
Low incremental capex
Growth in revenues expected to exploit economies of scale in purchases and manufacturing,
further enhancing operational efficiencies
Our advertising and promotional spending to branded sales is at the higher end of the FMCG
sector as we invest aggressively in the business. A&P to Sales is lower in FY03 because of
efficiencies in buying media time, use of channels for rural market & efficient execution of
advertising.
(Rsmn) FY2002 H1FY03
Advertisement & Sales Promotion 668 287
Total A & P to own brand sales (net of excise) % 17% 14%
(Rsmn) FY2002 H1FY03
Depreciation (Rs mn) 94 45 Depreciation to net revenues % 2% 2% Net Block 935 906
20
H1 FY03 PerformancePower Brands:
Cinthol, Godrej FairGlow, Godrej No.1, Godrej Hair Colour, Ezee.
Power Brands sales grew by 17%
Toilet Soaps
Godrej Brand Soaps sales grew by 14% (against degrowth of the category) from Rs.1158mn in H1 FY02 to Rs.1314mn in H1 FY03, led by Godrej No1 which grew by 96%
Relaunched Godrej FairGlow
Launched special trade and consumer initiatives to mark the completion of 50 years of the Cinthol Brand
Hair Colour
Hair Colour sales grew 14% from Rs.489mn in H1 FY02 to Rs.560mn in H1FY03
Launched Mehendi Power in sachets under the brand name Godrej Nupur
Launched Copper Brown, Dark Mahogany & Burgundy fashion shades of Godrej Coloursoft.
No.1 in volume in fashion colours
Godrej HairCare Institute (GHCI) salon activity intensified
PHD sachet distribution continues to grow with special focus on rural distribution – crosses 1.2 million outlets
21
Summary Financials
Rsmn FY2002 H1 FY03
Net sales * 4,586 2,335
Operating profit 755 425
Depreciation 94 45
Interest & Financial charges (net) 45 14
PBT 632 371
PAT 420 268
Networth 531 601
Debt 225 344
Net Fixed Assets 935 906
Net Current Assets (285) (63)
Cash & cash equivalents 132 132
Operating Profit Margin (%) 16 18 Net Profit Margin (%) 9 12
RoCE (%) 90 79
RoNW (%) 79 89
Dividend payout ratio (%) 80 87
* Sales are net of excise duty
22
Shareholder Value
23
High Free Cash Flow Generation
GCPL generates significant free cash flows, which are returned to shareholders as dividends
FY 2002 Div % Div per share
1st Interim Dividend 50.0% 2.00
2nd Interim Dividend 87.5% 3.50
(on face value of Rs.4 Share)
FY 2003
1st Interim Dividend 50.0% 2.00
2nd Interim Dividend 50.0% 2.00
Strong EVA growth
Lower capital expenditure coupled with negative working capital enabled a high EVA of Rs301mn
for FY02 (Rs.202mn for H1 FY03). EVA to capital employed at 40% for FY02 (41% in HI FY03)
We remain committed to deliver shareholder value
24
High Free Cash Flow Generation
GCPL has completed the shares buyback
Shares bought back
Number % of share capital Amt utilised Avg price Period
1,456,593 2.5 Rs.92.6mn Rs.64 Jan-Jun 2002
411,962 0.7 Rs.46.0mn Rs.111 Jul-Sep 2002
Third shares buyback
Approved by the Board of Directors on October 22, 2002
Maximum outlay - Rs.100 mn
Buyback from open market (BSE & NSE) at market price
Maximum price of Rs.175 per share of face value of Rs.4/-
Buyback for both Demat as well as physical shares
25
Share Price Performance
50
70
90
110
130
150
170
190
210
Jun-0
1Ju
l-01
Aug-0
1Se
p-01
Oct-0
1No
v-01
Dec-0
1Ja
n-02
Feb-0
2Ma
r-02
Apr-0
2Ma
y-02
Jun-0
2Ju
l-02
Aug-0
2Se
p-02
Oct-0
2
BSE 200 Index BSE Sensex Godrej Consumer
The stock outperformed the broad and narrow indices
Source: Prowess
0
20
40
60
80
100
120
140
Jun-
01Ju
l-01
Aug-
01Se
p-01
Oct-0
1
Nov-
01De
c-01
Jan-
02
Feb-
02Ma
r-02
Apr-0
2Ma
y-02
Jun-
02Ju
l-02
Aug-
02Se
p-02
Oct-0
2
0
500000
1000000
1500000
2000000
2500000Godrej Consumer Volume (RHS)
26
Initiatives
27
Initiatives
Divisionalisation of business carried out with the formation of Soap and Personal Care teams
effective 1st Oct ’02 with mfg, procurement and marketing under one roof
Focus on Personal, Hair & Fabric care categories
Consumer centricity to guide all business actions
Restructuring of Distribution System - Super & Sub Stockists appointed
SKU Rationalisation
Implementing distributor-level inventory management systems for its key dealers
Leverage group synergies such as combined purchases of raw materials and media
Exploit tax benefits in backward areas; new factory in Guwahati to enhance profitability
Return excess cash to the shareholders through dividend and shares buyback
EVA Implementation complete across the organisation.
Measurement & Remuneration based on EVA. Introduction of Individual Performance Factor
(IPF) in year 2
Red & Blue Team Project - Think Tank - Young Executive Board constituted
28
Thank You