In an exclusive chat with CNBC-TV18's Farah Bookwala Vhora, Godrej Consumer's MD, Vivek Gambhir explains what will continue to pin down the sector and the future course of action for GCPL.
The Lok Sabha elections may have helped revived economic sentiment to a great extent, but a revival in India's USD 1.5 billion FMCG sector is still away. In an exclusive chat with CNBC-TV18's Farah Bookwala Vhora, Godrej Consumer 's MD, Vivek Gambhir explains what will continue to pin down the sector and the future course of action for GCPL.
"It will take some time before you start seeing this reflected in FMCG. The reason for that is we saw a very significant slowdown in FMCG last year particularly in Q3 and Q4.
Growth with return back. Typically, FMCG tends to be the sector, which gets impacted the last when there is a slowdown. As the economy turns back, you will see a movement happening upwards. But you need to see economic growth first," he told the channel.
Below is a verbatim transcript of the interview
Q: When do you see the revival happening in the sector?
A: It is going to be quite difficult for Q1 and Q2. For the first two quarters, our expectation is that we will continue to see the same kinds of challenges we saw in Q3 and Q4. So, for the first six months of this year the situation will still remain quite tough, though I am optimistic that in Q3 and Q4 you will also see a lot more momentum that starts getting picked up.
Q: Your future strategy would be led by not just deeper penetration but also through brand extensions a combination of both?
A: Strategy in rural India is going to be drive penetration through very disruptive innovations. In urban India largely mosquito repellents and household insecticides have typically been used in the evenings. So, the opportunity now becomes all day usage both in homes and out of home and that\'s how you will start seeing a huge amount of consumption being driven in urban India. So, across categories companies will have to figure out both penetration opportunities and consumption opportunities.
Q: At what point do you see these categories becoming saturated?
A: The strategy is to focus on the core, but over time the definition of core will continue to expand. Our strategy is to continue finding adjacent categories around the core, which might be small today but which will represent future growth platforms.
Godrej Consumer stock price
On May 29, 2014, Godrej Consumer Products closed at Rs 761.75, up Rs 0.45, or 0.06 percent. The 52-week high of the share was Rs 977.40 and the 52-week low was Rs 672.00.
The company's trailing 12-month (TTM) EPS was at Rs 16.59 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 45.92. The latest book value of the company is Rs 97.71 per share. At current value, the price-to-book value of the company is 7.80.
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