Godrej Consumer Products Limited posts tepid numbers

The company saw lower margins overseas and slower sales in India, but says the worst is over

After studying law I vectored towards journalism by accident and it's the only job I've done since. It's a job that has taken me on a private jet to Jaisalmer - where I wrote India's first feature on fractional ownership of business jets - to the badlands of west UP where India's sugar economy is inextricably now tied to politics. I'm a big fan of new business models and crafty entrepreneurs. Fortunately for me, there are plenty of those in Asia at the moment.

mg_92591_adi_godrej_280x210.jpgImage: Anindito Mukherjee / Reuters
Emerging market multinational Godrej Consumer Products Limited posted a lacklustre set of numbers as rising raw material prices impacted margins and net sales dipped marginally in India. This was a result of demand being adversely affected due to the recall of Rs 500 and Rs 1,000 currency notes. The company said India sales have since recovered.
 
Still, Godrej Consumer Products which, in addition to India, operates in Southeast Asia, Africa and South America, showed that is has the most resilient business model among consumer companies in India as international sales rose by 13 percent taking net sales to Rs 2,391 crore. Net profit rose by 4.9 percent to Rs 348 crore.
 
“Going forward, remonetisation should result in growth normalising in India over the next few months,” said Adi Godrej, chairman of Godrej Consumer Products. In addition to this, there are three factors that will result in improved performance in the next few quarters:
1)      Price hikes – The company hiked soap prices by 2 percent – expect more hikes in other products
2)      Slower rise in commodity prices
3)      Increasing sales volume in India, which comprises 50 percent of overall sales

For now, the market also believes Godrej’s best days are ahead. The stock is up by 7 percent to Rs 1,590 since the numbers were announced on January 30.

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