Business is much easier to do after GST. It will add considerably to growth over the next few years!
Your brand has been one of the best managed corporates and you have guided the group higher during even the licence raj. In approximately 50 years, you have been active in India Inc. You have seen different economic cycles, different governments and leadership transitions. How has been the journey for you?
We have grown very well. During the license raj period, growth was more difficult. After 1991, post liberalisation, growth has been better and we now have 750 million consumers who use our products in India and about 1.15 billion consumers globally. We might very well be the group with the largest number of consumers headquartered in the developing world. Earlier, China mobile had more consumers than we did, but now we have overtaken them.
How do you see the real estate market building the value that you seek in the business? Under RERA, is there a strong chance of structured real estate development in the key markets?
The real estate industry in India has a huge opportunity for growth. We expect it to be the fastest-growing business and the opportunities are huge. There is need for a lot of housing in India even for commercial real estate company in Gurgaon. It is an area of great focus for us.
Has the Godrej Group been able to achieve what you had aspired for when you started off?
We have done even better. It is partly because I joined the group at a time when there were severe controls on everything and now of course there more and more liberalisation, more and more reforms and that is helping the Indian economy. The Indian economy is today the fastest growing major economy in the world and I fully expect India to continue to do very well.
You are one of the key representatives of India Inc who have been quite optimistic on the reforms brought about by the Modi government. What is the on-ground difference you have witnessed in the last four years?
It has been good. By far, the most important reform has been the goods and services tax (GST). It has changed the indirect tax picture in the country. Business is much easier to do. It will add considerably to growth over the next few years and that is a reform which was in the making for many years but the earlier governments were not able to put it through. But this government has and that is a great achievement.
Let us talk about individual businesses and let us start with consumer business first. Considering it is in the business of products that have discretionary premium as well. How do you see the Indian consumer evolve in their consumption choices over the years?
The Indian consumer has grown quite considerably in every aspect and the important thing to remember is our penetration. The number of families consuming particular consumer products is still quite low. The scope for further growth over the next decade or two is very considerable. There are only three packaged branded products which are totally penetrated & soaps, detergent and matchsticks. Everything else is under-penetrated.
The scope for growth over the next few years is very strong.
How conducive is the Indian consumer confidence in the backdrop of the way macros have shaped up thus far?
Consumer confidence is quite strong. Consumer growth is good. Not too many people realise and comprehend that rural growth is faster than urban growth. We have a very large rural population and as time goes by, there will be a bigger proportion of total consumers in India.
Given the dependence of rural economy on monsoon, how is the Godrej Group dealing with this erratic pattern of rural growth?
Rural growth is good because the rural economy is not totally about agriculture and monsoon only affects agriculture. A significant part of the rural economy now is animal husbandry, that is production of things like milk, eggs, etc. That is not monsoon dependent. Also the rural economy is growing in other directions. The growth retailing in the rural area is very big, employs a lot of people, creates a lot of income. So the rural economy has many dimensions. Most people look at it too narrowly as agriculture.
Godrej Consumers has a great deal of exposure to emerging economies and it is very vulnerable to currency volatility and economic slowdown. Will Godrej look at developed markets? What is your overseas strategy?
No we are not looking at developed markets because consumer businesses are growing very slowly there. Developing markets, on the other hand, are growing. Over the last few months, there have been some issues in the developing countries as also in India. Oil prices, dollar rate, etc, have had some effect but we still are growing quite well and we will continue to do that.
In fact, the one country where we had a substantial business in the developed world was the United Kingdom. We sold that business very recently at a very considerable profit.
Let us talk about the property business. Does the recent funding crunch open up opportunities for large players like yourself to acquire smaller players?
Yes, but we would not acquire businesses. What we are doing is acquiring projects. In other words, we are tying up with smaller builders to complete the projects they had started and couldn’t complete. But we would not acquire any companies. We do not need to acquire the companies, but we had taken over quite a few projects. That way our growth will be faster.