Godrej plans to grow 10 times in 10 years

The 114-year-old Godrej Industries Ltd (GIL) and its associated companies hope to expand revenue 10 times in the next 10 years to become an Rs.85,000 crore conglomerate.

The projection is part of the group’s 2020 vision and comes close on the heels of a rebranding and portfolio restructuring exercise in the past four years.

“We believe we now have the foundation to accelerate growth,” said Vivek Gambhir, chief strategy officer, GIL.

GIL and its associated firms are in packaged consumer goods, chemicals, farm products and real estate businesses, which together earned Rs.8,717 crore in revenue in the year ended 31 March. In the past 10 years, these firms grew at an compound annual growth rate (CAGR) of 17%.

They would now have to clock 26% CAGR in the next 10 years to touch revenue of Rs.85,000 crore, Gambhir said.

The vision 2020 was unveiled to the Godrej leadership forum, a panel of top 100 managers in the group, in April.

The group plans to diversify into new business segments in India along with overseas expansion to drive revenue growth.

In the past year, Godrej Consumer Products Ltd, the biggest constituent of the group with a revenue of Rs.2,442.64 crore in 2010-11, bought eight firms in India and overseas. One-third of its revenue now comes from overseas operations.

“It’s tough for consumer companies to get high growth rates of 25% from India alone,” said Anand Dikshit, partner and executive director, corporate finance and investment banking, PriceWaterhouseCoopers. “The India pie is not increasing and there is growing competition from MNCs (multinational companies) and local companies.”

The transformation of the group, which began with a brand relaunch in 2008, has also seen the management become younger. While the next generation of the Godrej family is already at the helm, the average age of its top executives has now fallen to 45 years, compared with 50 years in 2007. This is expected to dip below 40 in a few years, said Gambhir.

“I believe this can be a strength. The group needs to develop a robust internal managerial pool,” said Bharat Anand, a professor at Harvard Business School, who has been engaged with the company for the last four years in connection with a leadership programme.

However, managers would also need to refine and develop their game plan to managing firms globally, Anand said.


Source:- http://www.livemint.com/2011/06/15211706/Godrej-plans-to-grow-10-times.html?atype=tp


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Ankit Wani
Intern @ DENIP Consultants Pvt. Ltd.