he headquarters of the $4 billion (sales turnover) Godrej Group was buzzing with activity when The Hindu caught up with Group Chairman Adi Godrej for a freewheeling interview. The former President of the Confederation of Indian Industry (CII) is confident that his Group will grow 10 fold in 10 years, while three product categories will attain market leadership in three continents. Edited excerpts :
You just ended your tenure at the CII. How was the experience?
Well, it took lot of my time. I travelled a lot. I led about 12 delegations outside India, travelled a lot in India and went to many States. At CII, we had our goal of reviving growth through reforms and governance. We are happy that, during the second half of my tenure, reforms started happening. I am hopeful that with this momentum, growth in India will come back.
Has the Government done enough, in terms of reform?
Definitely. The most important thing is that some negative perceptions still remain. While negative perceptions such as retrospective amendment and GAAR have been addressed, some have still remained. Some companies recently also got tax notices which many feel are unreasonable. So government needs to change this perception to see that investors feel comfortable. And the Cabinet Committee on Investment (CCI) which has been formed is a good move. The government should try and ensure that many projects are cleared at the earliest.
What is your priority at Godrej Group, now that you are available full time?
We already have a very strong organisation. We have a very strong professional management in place. My children are also very active in business. So I will continue to look at strategic, human resource and growth objectives of the Group.
We have an objective called 10/10 which we enunciated two years ago. We aim to grow 10 fold in 10 years and this means a compounded annual growth rate of 26 per cent or more. So, I will pay attention to achieving this goal, which will occupy much of my efforts.
Currently your group turnover is $4 billion. What target are you hoping to achieve?
We started the 10/10 objective in 2011 and that time our turnover was about Rs. 15,000 crore. We would like to have a turnover of Rs. 1,50,000 crore by 2021. This will be through high growth in domestic and international operations as well as through acquisitions.
What is your acquisition strategy?
We have a 3/3 strategy in acquisition. Our acquisitions are mainly in the FMCG business, so it will be in Godrej Consumer Products and in three areas where we are very strong. These are hair care, household products and personal wash. The strategy involves three continents of the developing world which is Africa, Asia and South America.
Today 25 per cent of your group’s turnover comes from overseas operations. Is this ratio going to grow?
It is possible. Our growth internationally will be higher because of acquisitions, although our growth in India is fairly good. There is not much play in India though we would like to make some acquisitions here.
Why has the Godrej group not ventured into high growth businesses of financial services, IT and modern retail?
We are into IT and retailing. We have a company, Geometric Software, which is into engineering services software. We have a company called Nature’s Basket, which is into gourmet retailing. Both are specialized companies. We are not into financial services and we are not interested also because we find we are better in branded marketing enterprises.
Godrej Properties has become a pan-India brand quickly. What is your expectation from this company?
It will be our fastest growing business. It is also possible that at some stage in the future, it may be a very large operation. The reason we feel that it will grow very rapidly is because in property, the market is huge. No one player has even 5 per cent market share, so there is no direct competition of the type you see in consumer products. So growth possibility is very strong in real estate. It is the single biggest business category in the country, bigger than automobiles, and bigger than many other categories in the country. It is the fastest growing business in our Group despite the fact that real estate in general has not done well. It has leveraged our brand and reputation very well. Apart from taking up projects in joint venture with other parties, Godrej Properties will work with any Godrej business which has land or would be moving into new locations.
The Tatas recently appointed a brand custodian and a chief ethics officer to protect the group’s brand identity. Are you thinking on this line?
My daughter, Tanya Dubash, is already the chief brand person in the Group. She is in charge of brand, marketing and communications for the whole Group.
So we have already paid attention to those areas. We also re-launched the Godrej brand in 2006, positioning it to young India.
Recently we launched a major new campaign, across all our companies and products, with Aamir Khan as the brand ambassador.
What was the need for the new campaign? Has the Godrej brand moved away from the youth?
No. Clearly we want to appeal the youth because they are our market and are our future. But this campaign is for all our consumers. Today about 500 million Indians use one or the other of our products every day.
In 2011, the group exited the typewriter business. Are you planning any more exits?
We have exited several businesses in the past including the BPO business, the medical diagnostics business and we recently exited from a food joint venture business with Housie. Just like we are acquiring new businesses, we are also exiting non-core businesses. But our growth is despite the exits. We have more or less completed our divesture programme.
How many people will you hire?
We are hiring very regularly in all our businesses. Now we have about 30,000 employees across the globe, out of which two-thirds are in India. We will be adding more than 10 per cent per annum.
What is the Godrej Group’s succession plan? All your children are in the Group.
We have a succession plan for all the senior personnel in our Group, numbering a couple of hundred. But on the family succession plan, we do not talk about it in public.
Your three children (Tanya, Nisa and Pirojsa) are already into the business. What about the children of your brother Nadir and cousin Jamshyd?
They are much younger. My cousin Jamshyd’s son Navroze was in Godrej & Boyce and now he has gone for further studies to America. Others are studying. They will join the business after completing their studies.
What are your children doing?
They are all in good positions. My son, Pirojsha, is Managing Director in Godrej Properties. Tanya is Executive Director and Head of Marketing, Brand and Communications. Nisa, my other daughter, is on the board of several companies including Godrej Consumer Products. She is also in charge of overall strategy, innovation and HR of the Group.
How did the slowdown affect the Godrej Group last year?
We have grown well despite the slowdown. As I mentioned, our progress in achieving the 10/10 goal, which we started two years ago, has been maintained. This is due to innovation, acquisition, new product launches and business process improvement.
In which countries are you expecting growth apart from India?
Our growth in Africa and Indonesia is very strong. The per capita sale of all the subsidiaries of Godrej Consumer Products in Indonesia, South Africa, Argentina, Uruguay and Chile is higher than our per capita sales in India. So we have size and scale in many countries and we have manufacturing operations in 25 countries now.
What are your thoughts on India and the Godrej Group?
We are very buoyant on the Indian economy. We think India will continue to grow very strongly.
Our expectation is that by 2050, which is a long time away, India will be the largest economy in the world, overtaking both the U.S. and China.