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We are cash-rich, looking at acquisitions: Adi Godrej

May 01, 2009 09:15 IST
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In an upbeat mood on good results, Adi Godrej, chairman of the Godrej group, tells Business Standard's Sapna Agarwal he is looking forward to a good year, as the fast-moving consumer goods sector remains unaffected by the general slowdown. Edited excerpts:

How would you rate your performance in the just-concluded quarter?

The softening of commodity prices, along with the fiscal incentives, have helped us. We have had a very good quarter, with a year-on-year sales growth of 26 per cent and a net profit growth of 44 per cent.

Does this mean consumers are still spending?

The FMCG sector is not seeing any slowdown. Our volumes have grown a robust 14 per cent this quarter. We expect volumes to be robust in the coming quarter as well and drive our revenue growth.

What's your take on the rural segment?

Urban markets account for 70 per cent of our revenues, the remaining by the rural segment. We are seeing both grow, with rural markets a few percentage points higher. We will be increasing our focus on rural markets, with increased distribution and direct-marketing initiatives. We will look at Doordarshan for reaching these markets.

Why have your advertising spends dropped?

In the corresponding quarter last year, we had two new big launches -- the new Cinthol with Hrithik Roshan and new hair colourants. This quarter, too, we launched Cinthol Aqua Fresh and relaunched the Godrej FairGlow moisturising soap, but we have benefited on account of cheaper advertising rates.

Besides, we have saved on our spends for the coming quarter, as we start with a promotion related to the Indian Premier League (cricket tourney).

Is the rising dollar a cause for concern?

Yes, it is. We import vegetable oil for soap and are paying a higher price in dollars for the same. However, the price of vegetable oil right now is much less compared with the first half of 2008 and, hence, there is some relief for us.

Do you see pressure on operating margins easing?

Margins should strengthen and the company expects to benefit from several efficiency initiatives taken during the year.

What about inorganic growth?

We are looking at more acquisitions in India and overseas, as we are cash-rich. In India, the focus is on personal care and hair colours; overseas, we will continue to focus on hair colours. GCPL continues to monitor the market conditions closely and will continue to focus on value creation.

What is your hiring outlook for the year?

Our hiring plans are intact. We will continue to recruit management trainees and do lateral hiring wherever required.

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