Picture this: A decade back, you set aside Rs 10 lakh for investment in an up and coming fast-moving consumer goods (FMCG) company. You eschew higherprofile multinational companies like Hindustan Lever (now Hindustan Unilever) and Procter & Gamble (P&G)-you are looking for some wicked returns, not the incremental 10-20 per cent annual returns most other stocks would yield. After some research-and an ear glued to the crackle on Dalal Street-you decide to put your hard-earned Rs 10 lakh into a company de-merged in the summer of 2001-Godrej Consumer Products Ltd (GCPL), which is the soaps and toiletries portfolio of what was earlier Godrej Soaps Ltd.
Best in Wealth Creation (Mid-size Company)
P. GANESH, CFO/Godrej Consumer Products
Wealth creation is one thing, but to do it consistently over the long term-during which markets peak and bottom- takes some doing. Even in 2008-09, when stock markets all over the world crashed, GCPL was in winning mode. Its market capitalisation in that year was up by almost 40 per cent, to Rs 3,400 crore, over 2007-08.
Chairman Adi Godrej, Sehgal and the rest of the management team can take some credit for creating value by launching new products and categories and making overseas brand acquisitions. But there's another key decision-maker. P. Ganesh, CFO, GCPL. He is the man who steps into the breach during rough times-like in 2008-09-and on whose shoulders rests the challenge of creating shareholder value.
And was 2008-09 rough or what! "The year posed great challenges for us, especially in terms of profitability because high vegetable oil prices and commodity prices put a strain on our margins in the first half of the year," explains Sehgal. It was time for Ganesh to deliver, with all the weapons in his armoury: Cost management, squeezing out efficiencies from the supply chain, achieving negative working capital-thanks to the efficient supply chain-and not taking the foot off the growth pedal.
For instance, in 2008-09, GCPL continued to expand its rural network and made some key international acquisitions, including brands like Kinky (a hair care brand, in South Africa), and Keyline Brands from the UK. "We held our ground, improved market share, showed good sales growth (of 26 per cent) and also clocked a decent profit growth of 10 per cent - all of which was achieved in what was a tough year for business against the backdrop of the global meltdown," explains Ganesh.
With a balance sheet that's debt-free, and with Rs 250 crore of net cash, growth is a constant companion of GCPL-during a boom as well as a bust.