Godrej Consumer Products Limited GCPL

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Godrej Consumer Products Limited (GCPL)
February 2006
www.godrejcp.com
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All Round Growth

• Robust macro economy.
• Strong GDP growth
• Good monsoon further driving agricultural
  incomes
• Strengthening GDP (Purchasing Power Parity)
  presently 4th highest globally
• Higher disposable incomes driving demand per
  capita income grows 5.2, increasing urbanisation
  visibly increased levels of confidence
• Driving FMCG sector
• Increasing share of wallet for FMCG products
• Consumers becoming more aware yet considered
• Downtrading coming to a halt
• Encouraging trends in most segments Toilet soaps
  currently growing at 12, Hair colours growing
  at 24

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GCPL 9M FY06 Performance Overview

• Sales and profitability growth sustained
• Sales improve 16
• Godrej Brand Sales grow by 20
• EBITDA margins strengthen from 18.3 to 22.3
• Net profit higher by 50
• Stakeholder value creation
• RoCE and RoNW ratios amongst the highest in
  corporate India at 133 and 124 respectively
• EVA up 48
• 225 dividend for nine months 64 dividend
  payout ratio
• Performance characterised by innovations and
  efficiencies
• New products and variants introduced in both
  business segments
• Supply chain improvements to reduce inventories,
  enhance distribution

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Highlights 9M 2005-06
9M 05-06 9M 04-05 Sales (own
Brands) 4740 20 3951 (net of
excise) Contract Mfg 78
189 Total Sales
4932 16 4242 Material Cost
2327 2112 Advt
Publicity 376 22
308 PBDIT 1098 41 777
PBT
988 47 674 PAT 910
50 608 EVA 809 48
546 EPS (Rs.) 21.5 50
14.3
Amts in Rs. Million
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Category-wise Turnover 9M 2005-06
Turnover (net of Excise) 9M
05-06 9M 04-05 Growth Toilet
Soaps 2942 2506 17 Hair Colours 1195
956 25 Liquid Detergents 353 318
11 Toiletries 250 172 46 Total
Godrej Brands 4740
3951 20 Contract Mfg 78 189 (59)
By-Products 114 101 12
Total Sales 4932
4242 16
Amts in Rs. Million
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Operating Categories

FY 2004-05
GCPL
Personal Care
Soap
Revenue Rs 3655 mil Mkt share 8.0
Oct-Dec05 Mkt Share 9.5
Oct-Dec05 Mkt Share Hair Colour 40.5
Healthy revenues from both businesses
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Segmental Overview
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Toilet Soaps
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Toilet Soaps Market Scenario

• Category grows 17 in value terms in 9M 0506
• Vegetable oil prices at reasonable levels
• Value For Money continues to be the dominant
  consideration in purchase decisions
• Growing appreciation of our quality
• Strong inclination to try new product offerings

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GCPL Performance Perspective 9M 0506

• Strong performance sustained in line with
  business strategy
• Sales growth outperforms segment
• GCPL is the second largest toilet soaps player in
  India
• Marketshare improves from 8.3 to 9.5 in the
  latest quarter
• All brands enjoy improved consumer offtake
• Cinthol continues to perform well
• Fairglow has regained momentum and recorded
• impressive growth
• Godrej No 1 continues to be the largest selling
  Grade 1
• soap brand available in over 1 mio outlets
• Growth driven by innovation, improved packaging
  and efficient operations
• Cinthol Deo Soap and Godrej No 1 Jasmine variant
• perform strongly
• Fairglow relaunched with attractive new
  packaging
• New plant at Baddi completely operational

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Toilet Soaps - GCPL BrandsValue Growth
Source ORG MARG for Industry figures
Company data for GCPL figures
Consistent segment outperformance Growth
improving year on year
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Toilet SoapsRevenue, Marketshare
Mkt Share is 9.5 in Dec05 Qtr
Source ORG data for All India value MS
13
SoapPBIT Perspective
Strengthening margins on the back of efficient
operations
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Toilet Soaps 90 Opportunity
Innovation efficiency

• Evaluating new VFM product and variant offerings
• in all brands
• Enhancing margins by sweating assets and
• leveraging oil procurement expertise

Sustained savings

• Fiscal Benefits continue to accrue
• Income Tax at Minimum Alternate Tax (MAT) rates

Sales marketing

• Savings being deployed in increased advertising
• and promotion support
• Enhancing presence and reach

Better distribution, better marketshare, better
efficiencies
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Personal Care
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Hair Colours
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Hair Colours Market Scenario

• Category improves growth momentum grows by
  25 in 9M 2005-06
• Market, however still under penetrated concerns
  around price, attitudes, health need to be
  addressed
• Increasing usage by younger generation

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GCPL Performance Perspective 9M 2005-06

• GCPL continues to be the market leader in the
  category
• Sales improve by 25
• Introduces offerings across price points, expands
  usage
• New product and variant launches receive healthy
  consumer response, drives growth
• Coloursoft relaunced in new ammonia free
  formulation
• Powder Fashion Hair Colours launched in 5 gm
  sachets in Burgundy, Natural Dark Brown and
  Auburn Red shades
• Godrej Renew extended to include four new
  variants Natural Darkest Brown, Copper
  Brown, Dark Mahogany and Light Golden Brown
• Distribution and supply chain management
  facilitates growth
• Inventory streamlining and supply chain
  initiatives to enable smoother distribution flow
• Distribution in over 2.3 million outlets

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Hair Colour Value Growth
Source ORG MARG for Industry figures
Company data for GCPL figures
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Hair Colour Revenue, Marketshare
Mkt Share is 40.5 in Dec05
Source ORG data for All India value MS
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Liquid Detergents
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Liquid Detergents Value Growth
Source ORG MARG for Industry figures
Company data for GCPL figures
Steady growth in a relatively small category
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Liquid Detergents Revenue, Marketshare
Source ORG data for All India value MS
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Toiletries GCPL Performance Perspective

• Shaving cream
• New packaging and advertising campaign expected
  to enhance sales further
• Talcum powder
• 11 offer drives sales
• Luxury and Cologne variants introduced

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Personal Care PBIT Perspective
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Personal Care Growth Thrust

• In house RD focused on identifying offerings
• across price points
• Periodic consumer interactions facilitate up to
  date
• awareness of psychographic and habit changes

Consumer centricity

Visibility

• New rejuvenated packaging
• Optimal use of above and below the line
• communication tools

Exports

• Thrust on entering geographies whose inhabitants
• possess similar psychographic characteristics
• Huge opportunity for lower priced hair colour
• offerings, e.g. Powder Hair Dye Sachet

Market expansion translates into greater growth
opportunity
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Acquisition of Keyline Brands, UK

• 100 ownership acquired effective October 31,
  2005
• Keyline Brands is one of UKs most admired FMCG
  Companies
• Sales GBP 16.7 Mio Profit Before Tax GBP 2.2
  Mio (CY 2004)
• GCPL now has ownership of several international
  brands and trademarks including CUTICURA,
  ERASMIC and NULON in many countries
• Acquisition enables GCPL to widen geographical
  presence and access trade channels in key
  developed markets including Europe, Jordan,
  Australia and Canada
• Transaction offers GCPL access to a strong
  customer base that includes Boots, Sainsbury and
  Tesco amongst others

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Summarised Profit Loss Account (Consolidated)
Rs.Million
Consolidated Results include one time financial
costs of Rs.0.8 Mio related to the acquisition
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Key Success Factors
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Operations in Economically Backward Areas

• Baddi manufacturing facility commissioned in six
  months
• Plant recognised for highest quality and
  environmental standards. One of the few
  facilities to have received integrated
  certification from BVQi comprising
• ISO90012000 certification for Quality
  Management System
• ISO 140011996 certification for Environment
  Management System
• ISO 180011999 certification fro Occupational
• Health and Safety Quality Assessment
• Considerable income tax and excise savings being
  redeployed into enhancing business performance

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Income Tax
Income Tax inclusive of current and deferred tax
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Advertising Publicity Spend
Savings being ploughed back into stronger AP
support amongst others
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Distribution and Supply Chain

• Virtual platform between company and
  distributors
• Comprehensive Business Intelligence enables
• in depth primary and secondary sales
• analysis

Project Sampark

• Intensified rural approach presence in all
• locations with over 10,000 population
• 130 Super Stockists, 2,450 sub stockists

Increased penetration

• Focus on availability of all products at all
  600,000
• outlets
• Focus on modern retailing

Retail thrust
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Human Resources

• Godrej Sales Academy Fresh graduates
• Career Path Classroom and e learning courses
• for all front line sales officers
• GALLOP Identifying future leaders

Rigorous training

• Baddi completely manned in six months
• Recruitment at all premier management
• institutes access to high quality talent

HR planning
Invigorating environment

• Opportunities for cross sector learnings
• through stints with Godrej Group companies
• Performance oriented remuneration EVA based

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Recent recognitions
Godrej Consumer Products was selected as a
Business Superbrand for the period
2004-06. Cinthol also recognised as a Superbrand
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Recent recognitions
Adjudged as the Best Managed Workforce in the
CNBC Hewitt Survey judging the best employees in
India from amongst 272 participating companies
Survey conducted by GrowTalent and
Businessworld We continue to be ranked amongst
the Top 25 for the third year in a row in 2005
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Recent recognitions
Malanpur factory first in the Indian Soap
industry to have been certified for ISO
140012004 New version
Adjudged the most popular brand by Indian
consumers in the emulsion base liquid hair
dye category at the AMGF Consumerworld FMCG
Awards 04
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Financial Perspective
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Quarterly Revenue Performance
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Yearly Revenue Performance
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Quarterly Earnings Performance
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Yearly Earnings Performance
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Segmental Overview
Revenues () FY 2004-05
Segment PBIT () FY 2004-05
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Ratios
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Cash Flow
After funding of Rs.190 Mln for Baddi Soap
factory out of internal accruals
Strong cashflows
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Shareholder Perspective
Enhancing EVA
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Shareholder Perspective
Consistently improving PBT per share and dividend
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Dividend
High dividend payout ratio
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Corporate Governance

• Independent and highly respected Board
• Audit Committee, Human Resources Committee,
  Shareholders Committee and Nomination Committee
• ICRA reaffirmed its rating to the Stakeholders
  Value Creation and Governance practices of GCPL
  at SVG2
• Companys rating on corporate governance also
  reaffirmed at CGR 2
• Frequently asked queries link on website
  affords greater transparency and keeps
  shareholders better informed

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Outlook

• Buoyant economy driving disposable incomes
• Consumption in both rural and urban areas
  expected to continue strong growth
• Introduction of VAT improving transparency,
  simplifying processes, leading to better
  compliance and widen tax net
• Rationalisation of taxes puts more money in the
  hands of the consumer

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GCPL.Going Forward

• Business decisions driven by EVA
• A sound and sustainable growth platform
  comprising
• A Value For Money product portfolio Quality at
  an affordable price
• Efficient and lean operations Continuously
  sweating assets
• Continuously growing distribution network Deepen
  penetration, enhance supply chain
• Soap
• Huge opportunity to grow
• Thrust on improving margins and enhancing
  marketshare
• Personal care
• Largely under penetrated
• Focus on significantly large potential both
  domestically and internationally
• Excise and income tax savings being redeployed to
  fuel growth
• Thrust on continuing identification of EVA
  positive inorganic opportunities

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Thank You