Godrej Consumer Products Limited

Avi Mehta

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Avi Mehta

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Pratik Dantara

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Percy Panthaki

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Mihir Shah

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Dharnesh Gordhon

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Mihir Shah

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Mihir Shah

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Mihir Shah

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Dharnesh Gordhon

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The challenge is again this issue of while some of the markets have to fix the complexity issue, I do not want ~ I CONSUMER PRODUCTS to throw new things at them to be honest because you need the muscle power, you need the brain power to drive the execution, but Nigeria so West Africa, Middle East we already for example number two player in the UAE already which is small market but it tells us what we can do and the fact that we have products that are winning proper consumer propositions.

— Dharnesh Gordhon

If in my ideal dream world I had the currency where it was two years ago in most of my key markets today we will be celebrating 600, 700 basis points improvement of margin and I think this is a challenge.

— Dharnesh Gordhon

So what isnt within our control in input costs, what is within our control is controllable cost , driving efficiencies, driving a better mix because actually on a like-for-like basis we have a far more profitable mix today; however, when you are buying something that is like raw material that are dollar based when you are having a currency devaluing 25% - 30% you can imagine the challenge, but look I also understand that is how business is.

— Dharnesh Gordhon

Q

Hi Dharnesh, it is a pleasure speaking with you again after a gap of almost a year. Dharnesh I just wanted to kind of take the strings back from there and pick it up from there, you had highlighted them that effective distribution was one of the most important lever that you had identified for driving growth, now since then obviously we have seen very strong constant currency growth span out, but competition has also normalized and I would assume that the easy gains from that investment are largely behind us, could you give us a sense on how do you see growth kind of trending as we move forwar

Dharnesh Gordhon

Firstly, I think the view that competitive intensity has changed, I am not sure. I think what happened over time is the big players got stronger across the key geographies and for example we believe that driving availability of product, driving numeric distribution has definitely given us gains in the early days, but it is something we continue to sustain, so we have got more than two-and-a-half times the numeric distribution or outlet coverage that we had in the early days of 2020. So I think we are building a far more robust ecosystem of sales which goes back to availability of our product p

Q

Hi! Good afternoon. Before I can squeeze my question looking for some basic sales breakup of the GAUM business. Firstly, what percentage is US, secondly ex-US what is the split between the main segments which is your dry hair care, wet hair care and others and also if you can give some idea as to over the last two or three years which segment has grown faster and how this mix has changed that would be very helpful? Thank you.

Dharnesh Gordhon

Sure, if you do not mind I will let my colleague present some of that input to you. Broadly US is about 20%- 25% of our business and within the whole GAUM cluster the West Cluster which comprises of Nigeria and Ghana would be about 30%- 35% followed by South Africa which should be in the range of about 25%- 30% and the rest of it will comprise of primarily Kenya, but some of the other smaller markets as well and from a category perspective about 55% should be dry hair and the balance should be FMCG and within that wet hair is a big part. . This 55% dry hair the denominator here is only Africa

Q

My first question was that a few quarters back I think Sudhir in one of the presentations he made highlighted one of the key issues as complexity Could you kind of talk about what level of complexity reduction are you looking at and as you do that could there be some negative impact on growth because we will probably be looking at sales and some markets maybe moving into a different model so what does it mean for growth as well as profitability?

Dharnesh Gordhon

I think this issue about complexity and when you look at the portfolio that we have that we had over time across the different markets what does complexity brings you. I think we were trying to do many things, rightfully, wrongfully, but we are trying to figure out what and where are the areas that we could really expand, what are the opportunities, so when I look at portfolio complexity, SKU complexity, all of these things and just think about simply what is it that we have. Most companies across and I just used Africa in my previous experience most successful organizations have three or four

Q

I just wanted to check if you can talk a bit about the progress of building retail infrastructure in Nigeria specifically I recall you had highlighted that the numeric distribution that you aim to achieve in Nigeria was about 40% and about 85% to 90% in South Africa where are you in that journey currently that is my first question?

Dharnesh Gordhon

If I can take Nigeria in 2020 we were reaching directly about 10,000 stores, today we are about 80,000 stores, and by mid next year we have a plan to get to 120,000 stores. Now the way we are doing this is one is we are expanding our what we call key distributor model and related to the key distributor model is an ecosystem which includes sales motorcycles and salon ambassadors because we also have a salon program on the hair extension which we also expand into our hair care portfolio and I would say which then drive into sub distributor model, etc., so I think that will only take us to about

Q

Hi Dharnesh thanks for the insight so far. You talked a lot about reducing SKU complexity I was just wondering if you have plans to reduce footprint or exit any of the smaller markets to reduce geographical complexity here?

Dharnesh Gordhon

Actually my answer would be no and no means I am not going to reduce geographic footprint but I am going to reduce complexity and I think the way to answer this is we do not have to be colonialists we do not have to put a flag operation in every country and I think we have done some of that not so well in the past I think the fact that our category and our products have value in a market we have to find other business models and one of the big steps we are taking right now is doing a thorough revision for example today in the DRC and I just use a simple example hypothetically we are selling x

Q

Thanks for this opportunity to interact with you again. I have two questions, one is with respect to HI Market in the GAUM Cluster just wanted to get a sense how big that category size is and what could be the larger split between aerosols and LVs and if you have a coil also over there that is my first one?

Dharnesh Gordhon

I do not know the answers to all your questions except to tell you total HI is probably about $800 million what we can establish the key market is actually South Africa by far the most developed and the most competitive and it is mainly in aerosol. LV is very new and is very upper income in if I take South Africa or even Kenya or a little bit in Nigeria. What I do think is really interesting is our play which is we have launched this thing called Goodknight Power Shots which is a very different play and it is really exciting because it really sets us a platform the regular aerosol player, it i

Q

Guys I am sorry but I think Dharnesh got logged off up and we are not able to reach him, but I think it is time to wind up. Thanks everyone for joining the call, if you have any further questions do reach out to the IR team and we will be happy to answer them. Thank you.

Management