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PROJECT ON

SANJANA GUPTA
CALCUTTA BUSINESS SCHOOL
PGDM 2014-16

Report On
CRITICAL ANALYSIS
On
GODREJ consumer products LIMITED
Submitted By:SANJANA GUPTA
Term-2nd
Roll No. 43
Calcutta Business School (Batch 2014-2016)

Submitted In partial fulfillment of requirement of PGDM


program at Calcutta Business School (CBS)
Under Supervision of
Dr. Tamal Datta Choudhuri
Principal
Calcutta Business School (CBS)
Date: 24RTH April, 2015

ACKNOWLEDGEMENT
I would like to express my special
thanks of gratitude to my teacher
Dr. Dr. Bidisha Mukhopadhyay who
gave me the golden opportunity to
do this wonderful project, which
also helped me in doing a lot of
Research and I came to know about
so many new things. I am really
thankful to him.
Secondly I would also like to thank
my parents and friends who helped
me a lot in finalizing this project
within the limited time frame.

CONTENTS
1.
2.
3.
4.
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6.
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12.

Introduction
Products & services
Company Profile
Vision & Mission
Major Competitors
Companys Performance
SWOT Analysis
BCG Matrix
Core competence
Porters 5 forces Analysis
Ratio Analysis
Conclusion

INTRODUCTION
Godrej Consumer Products (GCPL) is a leader
among India's Fast Moving Consumer Goods

(FMCG) companies, with leading Household


and Personal Care Products like Good Knight,
Cinthol, Godrej No. 1, Expert, Hit, Fair glow,
Ezee and Protekt. It is one of the largest
marketers of toilet soaps in the country and is
also leaders in hair colours and household
insecticides. Each company has several
SBUs, divisions and factories. They are
presently exporting their products to 30
countries.

PRODUCTS & SERVICES


PERSONAL CARE

Largest Grade 1 quality soap in India (simply put: more soap in each
soap)
Godrej No. 1 offers you Natures way to beauty with carefully chosen
ingredients to make your skin naturally beautiful
Increased innovations and strong brand presence in both urban and
rural markets
Launched Godrej No. 1 Lavender & Milk Cream this year, adding to an
existing portfolio of 8 variants.

Built on the high-energy proposition of alive is awesome, Cinthol


inspires you to step out of the stale and embrace the fresh, the new
With premium international fragrances and innovative designs, it is
undoubtedly one of the most refreshing grooming experiences across
soaps, deodorants, talc and shower gels
Second largest toilet soaps company in India
The fragrance and cleansing choice of vibrant, young India
Introduced an exciting new 360-degree campaign for Cinthol Cool soap

Delightful, differentiated and efficacious range of products across the


health, wellness and personal protection platforms
Range comprises three hand washes, a hand sanitizer and a personal
mosquito repellent spray includes Indias first instant foam hand wash
and alcohol-free hand sanitizer with 8-hour germ protection
Naturally derived ingredients and unique design-led and recyclable
packaging

HAIR CARE

Indias leading hair colour company


Indias largest selling hair colour, used by over 40 million satisfied
users
Innovative solutions include crme hair colour in a sachet, powder hair
colour with a unique gel technology, and herbal hair colour, at
unbelievably democratized prices
Hosted successful integrated marketing campaigns, unique initiatives
like extensive engagement with salons, barber training, innovative
media and communication
Godrej Expert Rich Crme Hair Colour launched a delightful The best
ever hair colour campaign, on the heels of the popular Oh my God!
campaign

HOME CARE

Built on the promise of protecting happy moments, Good knight aims


to delight consumers through a deep understanding of their needs
Ranked number 1, among the Most Trusted Brands in Household Care
in the Economic Times Brand Equity Most Trusted Brands Survey
this year
Innovative, paper-based mosquito repellent, Good knight Fast Card at
just ` 1 per card
Good knight Xpress, the new liquid vaporizer, is Indias fastest and
most powerful electric household insecticide product 3x faster than
other solutions.

Household insecticides are the no.1 player across all formats in India.
Clear leader in the aerosols market, focused on killing pests and
offering great efficacy
HIT Anti Roach Gel, an innovative non-messy gel-based product that
attracts and kills cockroaches and is effective for up to 45 days, is a big
success

Air freshener is the No. 2 player in the car category within 20 months
of launch
First branded player to introduce gel technology in the AC vent and non
AC formats for cars.

Ezee is the Leading liquid detergent player in India


Raahat - Ek Abhiyaan, our annual drive to encourage people to
donate woollens, reached out to over 21,000 underprivileged schoolgoing children in Delhi and the NCR

Major Competitors

Hindustan Unilever
ITC
Emami
Procter & Gamble
Loreal
Marico

COMPANYS PERFORMANCE

SWOT ANALYSIS
STRENGTH

Wide variety of products


High volume production
Large market
Trust
Efficient R&D
Strong in Ethics
Presence in more than 60 countries
Widespread distribution network across India

WEAKNESS

Volatile to market fluctuations


Godrej products has stiff competition from big domestic players and
international brand

OPPORTUNITIES

Tap rural populations


Increase in population
Mergers and acquisitions to strengthen the brand
Increasing purchasing power of people thereby increasing demand

THREATS

Market controlled by HUL


Intense and increasing competition amongst other FMCG companies
FDI in retail thereby allowing international brands

BCG Matrix is a tool to evaluate a companys position in terms of


its product range. It facilitates a company to think about its
products & services and makes decisions about which it should
keep, which it should let go and which it should invest in further. It
helps to think about where one can best allocate resources to
maximize profit in the future. To understand BCG Matrix, one must
understand how market share and market growth are
interrelated.

1. Question Mark- They are the products that grow rapidly and
as a result consume large amounts of cash, but because
they have low market shares they dont generate much
cash. A question mark has the potential to gain market share
and become a star, and eventually a cash cow when the
market slows down.
2. Dogs- They have a low market share and a low growth rate
and neither generate nor consumes a large amount of cash.
Dogs are a cash trap because the money is being is tied-up
in a business that has little potential.
3. Star- A star is being able to generate huge sum of cash
because of their strong relative market share, but
simultaneously it also consumes a large amount of cash
because of their high growth rate. If a star can maintain its
large market share it will become a cash cow when the
market growth rate declines.
4. Cash cow- It demonstrates a return on assets that is greater
than the market growth rate, so they generate more cash
than they consume.

CORE COMPETENCE
Companys Core Competence lie in toilet soap, godrej expert,
ezee and godrej goodnight.

PORTERS 5 FORCES FRAMEWORK

INDUSTRY COMPETITION
There is high competition in the FMCG sector with HUL, Marico, Emami.
Competitiveness among the Indian FMCG players is high. With more MNCs
entering the country, the industry is highly fragmented. Advertising spends
continue to grow and marketing budgets as well as strategies are becoming
more aggressive. Private labels offered by retailers at a discount to
mainframe brands act as competition to undifferentiated and weak brands.

THREAT OF POTENTIAL ENTRANTS


The Indian FMCG Industry is characterized with modest entry and exit

barriers. Integrated business model and increasing capital requirement in the


industry restrict new entrants. Huge investments in setting up distribution
networks and promoting brands and competition from established
companies.

BARGAINING POWER OF SUPPLIER


Prices are generally governed by international commodity markets, making
most FMCG companies price takers. Due to the long term relationships with
suppliers etc., FMCG companies negotiate better rates during times of high
input cost inflation

BARGAINING POWER OF BUYER


The bargaining power of buyer is very low. As the rates are decided by the
Godrej itself the bargaining power availability is low. High brand loyalty for
some products, thereby discouraging customers product shift. But low
switching cost and aggressive marketing strategies under intense
competition within the FMCG companies, induce Customers to switch
between products, thereby driving value for money deals for consumers.

THREAT OF SUBSTITUTES
Being an essential commodity the demand for consumer products is elastic.
Multiple brands positioned with narrow product differentiation. Companies
entering a category /trying to gain market share compete on pricing which
increases products substitution. Hence, threat of substitute is high in the
industry

Ratio Analysis

PROFITABILITY RATIOS
A class of financial metrics that are used to assess a business's
ability to generate earnings as compared to its expenses and
other relevant costs incurred during a specific period of time. For
most of these ratios, having a higher value relative to a
competitor's ratio or the same ratio from a previous period is
indicative that the company is doing well. Some examples of
profitability ratios are profit margin, return on assets and return
on equity.
GROSS PROFIT RATIO- It is a profitability ratio that shows
the relationship between gross profit and total net sales
revenue. It is a popular tool to evaluate the operational
performance of the business. The ratio is computed by
dividing the gross profit figure by net sales.

Formula:
The following formula/equation is used to compute gross profit
ratio:

When gross profit ratio is expressed in percentage form, it is


known as gross profit margin or gross profit percentage. The
formula of gross profit margin or percentage is given below:

The Gross Profit Ratio of Godrej Consumer Products Ltd. for the
year March 2013 is 16.69% and March 2014 is 17.43%.This
indicates that the company may reduce the selling price of its

products by 16.699% in March 2013 and 17.43% in March 2014


without incurring any loss. There is no norm or standard to
interpret gross profit ratio (GP ratio). Generally, a higher ratio is
considered better.

NET PROFIT RATIO- Net profit ratio (NP ratio) is a popular


profitability ratio that shows relationship between net profit
after tax and net sales. It is computed by dividing the net
profit (after tax) by net sales.
Formula:

The relationship between net profit and net sales may also be
expressed in percentage form. When it is shown in percentage
form, it is known as net profit margin. The formula of net profit
margin is written as follows:

The Net Profit Ratio of Godrej Consumer Products Ltd. for the year
March 2013 is 14.06% and March 2014 is 13.71%.A high ratio
indicates the efficient management of the affairs of business.
There is no norm to interpret this ratio. To see whether the
business is constantly improving its profitability or not, the
analyst should compare the ratio with the previous years ratio,
the industrys average and the budgeted net profit ratio.

ACTIVITY RATIOS
Accounting ratios that measure a firm's ability to convert different
accounts within its balance sheets into cash or sales. Activity
ratios are used to measure the relative efficiency of a firm based
on its use of its assets, leverage or other such balance sheet
items. These ratios are important in determining whether a
company's management is doing a good enough job of generating
revenues, cash, etc. from its resources. The total assets turnover
ratio and inventory turnover ratio are two popular examples of
activity ratios used widely across most industries.
ASSET TURNOVER RATIO- The amount of sales or revenues
generated per dollar of assets. The Asset Turnover ratio is an
indicator of the efficiency with which a company is deploying
its assets.
Asset Turnover = Sales or Revenues/Total Assets
Generally speaking, the higher the ratio, the better it is, since it
implies the company is generating more revenues per dollar of
assets. But since this ratio varies widely from one industry to the
next, comparisons are only meaningful when they are made for
different companies in the same sector.
The Asset Turnover ratio is also a key component of DuPont
Analysis, which breaks down Return on Equity into three parts, the
other two being profit margin and financial leverage.
The Asset Turnover Ratio of Godrej Consumer Products Ltd. for the
year March 2013 is 1.24 and March 2014 is 1.35. This means that
for every dollar in assets, Godrej Consumer Products Ltd only
generates 1.24 cents in March 2013 and 1.35 in March 2014.
INVENTORY TURNOVER RATIO- A ratio showing how
many times a company's inventory is sold and replaced over
a period. The days in the period can then be divided by the

inventory turnover formula to calculate the days it takes to


sell the inventory on hand or "inventory turnover days." A
low turnover implies poor sales and, therefore, excess
inventory. A high ratio implies either strong sales or
ineffective buying.

The Inventory Turnover Ratio of Godrej Consumer Products Ltd for


the year March 2013 is 6.68 and for the year March 2014 is 8.27.

LEVERAGE RATIOS
Companies rely on a mixture of owners' equity and debt to
finance their operations. A leverage ratio is any one of several
financial measurements that look at how much capital comes in
the form of debt (loans), or assesses the ability of a company to
meet financial obligations. There are several different specific
ratios that may be categorized as a leverage ratio, but the main
factors considered are including debt, equity, assets and interest
expenses.
DEBT TO EQUITY RATIO- A measure of a company's
financial leverage calculated by dividing its total liabilities by
stockholders' equity. It indicates what proportion of equity
and debt the company is using to
finance its assets.

Note: Sometimes only interest-bearing, long-term debt is used


instead of total liabilities in the calculation.
Also known as the Personal Debt/Equity Ratio, this ratio can be
applied to personal financial statements as well as corporate
ones. A debt to equity ratio of 1 would mean that investors and
creditors have an equal stake in the business assets.
The Debt to Equity Ratio of Godrej Consumer Products Ltd for the
year March 2013 is nil and for the year March 2014 is nil.
INTEREST COVERAGE RATIO- A ratio used to determine
how easily a company can pay interest on outstanding debt.
The interest coverage ratio is calculated by dividing a
company's earnings before interest and taxes (EBIT) of one

period by the company's interest expenses of the same


period:

The Interest Coverage Ratio of Godrej Consumer Products Ltd for


the year March 2013 is 41.86 and for the year March 2014 is
19.51.
Generally, companies would aim to maintain interest coverage of
at least 2 times. Interest cover of lower than 1.5 times may
suggest that fluctuations in profitability could potentially make
the organization vulnerable to delays in interest payments. A very
high interest cover may suggest the fact that the company is not
capitalizing on the relatively cheaper source of finance (i.e. debt)
and in such instances an increase in gearing ratio may actually
add value to the enterprise.

LIQUIDITY RATIOS
A class of financial metrics that is used to determine a company's
ability to pay off its short-terms debts obligations. Generally, the
higher the value of the ratio, the larger the margin of safety that
the company possesses to cover short-term debts.
CURRENT RATIO- A liquidity ratio that measures a
company's ability to pay short-term obligations.
The Current Ratio formula is:

The Current Ratio of Godrej Consumer Products Ltd of the year


March 2013 and for the year March 2014 is 1.18.
This indicates that the company may have difficulties for meeting
current obligations.
QUICK RATIO- An indicator of a companys short-term
liquidity. The quick ratio measures a companys ability to
meet its short-term obligations with its most liquid assets.
For this reason, the ratio excludes inventories from current
assets, and is calculated as follows:
Quick ratio = (current assets inventories) / current liabilities.
The Quick Ratio of Godrej Consumer Products Ltd for the year
March 2013 is 0.78 and for the year March 2014 is 0.39.

CONCLUSION
In a challenging macro-economic environment, the
Company continued to do well in most of its core
businesses. Godrej continues its efforts for the
betterment of the environment and conservation of
scarce natural resources. They say they touch
more consumers than any other Indian companyits not just with soaps, locks and cupboards. It
is because of their determination towards the
helping hand to society and commitment to serve
better every time through their CORPORATE
GOVERNANCE & its CORPORATE SOCIAL
RESPONSIBILITIES.