3X3 STRATEGY

Godrej Consumer Products Ltd (GCPL) has chalked out a new plan for focusing on the international
market. The company is driven by a 3x3 strategy which focuses on three business categories (personal
care, hair care and home care) across three geographies (Asia, Africa and Latin America).

The company spent Rs100 crore-Rs125 crore to acquire Tura, a Nigerian beauty products company. This
is the companys third acquisition in Africa. In April 2010, GCPL acquired Megasaria leading consumer
products company in Indonesia, which has notched up revenues of $120 million in the past fiscal with
estimated profit-after-tax margins of 11%-12%.

It is also the second-largest player in the insecticides market, enjoying 35% market share of Indonesias
household insecticides market (with a total size of $150 million, growing at 20%). It also has 45% market
share (of a total $68 million market, growing at 45%) in the air-care segment and 80% market share of
the $21-million wipes market (growing at 45%). Megasari has 15% share of the breakfast cereals market.

Earlier in October 2005, GCPL had acquired UK-based Keyline for approximately 13 million. During the
same year in September, it acquired the South African business of British company Rapidol for Rs50
crore. South Africa-based Kinky Group was bought out for around $34 million in April 2008.

Its portfolio is spread across Home Care (39%), Personal Wash (26%), Hair Care (24%) & other categories
(11%). It is the market leader in hair colors, household insecticides and liquid detergents, while, in soaps
segment it is the second largest player in India.

HOME CARE
The Home Care business of GCPL mainly consists of Household insecticides products, enjoying around 50%
of the total market share. HI business has recorded growth of 15% CAGR from FY12 to FY15, the slowdown
in sales growth in last few years was mainly due to irregular and poor monsoon which resulted into low
mosquito infestation.
A Study shows that the proportion of High-risk Population across the globe uses more Mosquito
Nets than Household Insecticides and Indoor Residual Spraying (IRS) to eliminate Mosquitoes -
Giving clear indication for growth of HI business.

According to World Malaria Report 2015, about 1.3 Bn people are at some risk of malaria in 10 countries,
with about 231 Mn people at high-risk.
South-East Asia Region
In 20122014, six countries (Bangladesh, Bhutan, Korea, Myanmar, Nepal and Timor-Leste) reported
delivering sufficient Insecticide-treated Mosquito Nets (ITNs) or Indoor Residual Spraying (IRS) to protect
more than 60% of their population which is at high risk. IRS coverage was highest in Bhutan and Korea

Middle East Region

According to World Malaria Report 2015, about 276 Mn people in 8 countries are at some risk of malaria,
with 108 Mn people at high-risk. Afghanistan, Djibouti, Pakistan, Somalia, Sudan and Yemen have areas
of high malaria transmission. Afghanistan, Sudan and Yemen distributed sufficient ITNs in 20122014 to
protect 100%, 54% and 82% of their high-risk population, respectively. Sudan and Yemen also used IRS
to a limited extent. ITNs were used in Iran and Saudi Arabia.

Africa
According to World Malaria Report 2015, about 313 Mn people in 12 countries of East & Southern Africa
are at some risk for malaria, with 254 Mn people at high-risk. About 158 Mn people in the 10 countries of
Central Africa are at some risk for malaria, with 145 Mn at high risk. About 342 Mn people in the 17 countries
of West Africa are at risk for malaria, with 289 Mn at high risk.
GCPLs management expects that there is big opportunity to increased usage of pest protection products beyond
mosquitoes.

Personal Wash Segment (India) - Future Growth in Soap business will be driven by higher
realization and Premium products

The Personal Wash segment of GCPL consists of Soap business contributing around 33% of the total
revenue, the second largest toilet soaps player in the country. The two major brands are Godrej No.1
(3rd largest soap brand by both value and volume) and Cinthol. The soap segment is highly penetrated
in both rural as well as urban India. Soap business has recorded growth of 13% CAGR from FY12 to
FY15, and going forward, we expect the major growth will be from value realization.

Hair Care Segment (India) will be driven by Salon & Fashion industry with Premium Brands

The increasing affluence among the youth and changing lifestyles are driving the demand for the
emerging hair colour segment. The Rs. 25 Bn hair colour market in India today is exciting, experimental
and transformative. The products range from an array of powders, gels, colours, while also assuring of
nourishing, conditioning, enriching benefits at the same time. milestone and Cinthol brand crossed Rs.5
Bn milestone. The soap segment is highly penetrated in both rural as well as urban India. Soap business
has recorded growth of 13% CAGR from FY12 to FY15, and going forward, we expect the major growth
will be from value realization.
Mens grooming has been a big impact since 2015 and the average clientele to a standard salon even in
a rural area is around 3-4 male customers per day for hair colour services. 80% professional salons keep
a choice of hair colour brands suit their customer needs, whereas the other 20% professional salons cater
to only one particular brand. Indias overall hair colour market is estimated to be around Rs.29 Bn with
new players in various categories and several brands. GCPL is targeting premium hair care through B-
blunt which is well connected to bollywood and fashion industry. Godrej Expert Rich Crme has recorded
a high growth in 9MFY16. The Hair care segment of GCPL contributes around 13% of the total revenue
and has recorded growth of 19% CAGR from FY12 to FY15; the recent decline was due to channel
destocking; this is a temporary dip and GCPL expects the growth rates to stabilise going forward.
SOURCE-BUSINESS STANDARD,MAY 8th 2015.

Godrej Consumer Products' aggressive international expansion strategy has helped the consumer
products firm take successful products from one market to another besides getting access to new
markets and product categories, a top official said.(SOURCE-ET Bureau, Aug 06, 2014, 05.14 PM IST)

Capitalising on international growth potential

GPCLs 3x3 strategy, focused on growth of its three core categories across three key emerging
markets(Asia, Africa and LATAM) has aided the company to attain a leadership position in most of the
geographies. The company is the number one player in the Indonesian air freshener, wet tissues market.
Further, it is a leader in hair extensions in Africa. Moreover, it is the second largest player in the
household insecticides in Indonesia.

The international operations have grown at a CAGR of 28% over last five years. In order to capitalise its
leadership position and high growth in the overseas market, the company has undertaken various high
profile acquisitions in the past. It recently completed acquisition of remaining 40% stake in the Latin
American company Cosmetica Nacional. It is a market leader in the hair color and cosmetics segment in
Chile.
"Mergers & acquisitions have helped us gain market share in growing markets and categories in which
we want to get into," Sunil Kataria,COO,Sales & Marketing,SAARC,GCPL.(Source- ET Bureau, Aug 06,
2014, 05.14 PM IST)

Source-INDUSLAND EQUITY REPORT

2014, 05.14 PM IST)

Non-India business contributes around 46% of the total revenue; GCPLs biggest international business
which includes Home Insecticide - Hit, Air Freshener - Stella and Baby Care - Mitu in Indonesia and
Hair care - Darling in East, West & Southern Africa. Of which, Darling business in Africa is growing at 20%
on YoY basis.

From the above chart, we can observe that the rest of Asia contributes around 10% of the total revenue,
of which the household insecticide business in Indonesia which consists of HIT brand contributes
around 40% of the Indonesias revenue, the Air Freshener & Baby care segments in Indonesia which
consist of Stella & Mitu brands contribute around 30% & 15% of the Indonesias revenue respectively.
The Africa business contributes around 6.5% of the total revenue, of which the Darling business which
is into hair care segment contributes around 15% of the Africas revenue.

SOURCE- FUNDS INDIA, Volume No. I Issue No. 45, October 20th, 2015

Innovation and cross pollination initiatives to drive

premiumization
Innovation has been a key strategy of growth for GCPL. It launched five innovative products in the market
during FY15 and plans to increase the number to 10 in FY16. The idea of innovation is largely to drive
growth in the premium category of the Household and Personal care segment of the company. Currently,
almost 40% of GPCLs incremental growth is being driven by these new launches which are sold at 20%
premium to the average prices of its other products. Likewise, GCPL has opted for the cross pollination
exercise to take products from one country to another. The unique hair colour cream in sachet which was
the product based out of Argentina got launched in India in 2012. Further, the company has launched air
freshner products based out of Indonesia under the brand 'aer'. Similarly, Good knight coils and aerosols
from India have been launched in Nigeria. Interestingly, all these products have got superb response in
the respective geographies.
We are accelerating our innovation pipeline, ramping up internal capabilities, investing significantly in
R&D and sharing learning across geographies to create more exciting products. We are doing a lot more
experimentation and prototyping and employing design driven thinking to come up with better and faster
innovations. We have cross-functional teams who come together to drive these different innovation
projects. Vivek Gambhir, Managing Director, Godrej Consumer Products Limited
Godrej Consumer Products Limited (GCPL) has ranked on Forbes' list of The World's 100 Most
Innovative Growth Companies 2015. GCPL's rank has moved up to number 24 in 2015, as compared to
number 31 in 2014. In both years, GCPL has been the highest ranked Indian company on the list. Forbes
lists GCPL's innovation premium for 2015 at 64.6%.(SOURCE- GPCL Press Release,MUMBAI, May 20,
2015)

Through innovation in their product pipeline, they are developing products that are safe and
environmentally sustainable.

Market leader in Household Insecticide (HI) business to be benefited as 82% of the total Indian
Population is at Malaria transmission risk area
Good knight Fast Card
(SOURCE- GODREJ BUSINESS REPORT- http://www.godrejcp.com/annual-reports/2015-16/godrej-
good-and-green.aspx)

About 3.3 billion people are at risk of malaria, worldwide. India alone sees 24 million cases of malaria
each year, with 90 per cent of our population residing in malaria prone areas.
In rural India, in particular, penetration of household insecticides is very low because current products are
either expensive or require electricity. With Good knight Fast Card, our idea was to launch a product that
would break the price barrier (available at just 1 per card), work instantly and not require electricity.
They leveraged the idea of this revolutionary paper-based mosquito repellent from their Indonesia
business and substantially modified the product for the Indian market.
Lower penetration to drive growth in core categories
GCPL commands leadership position in the Indian household insecticides and hair color
market. As per the Indian Home & Personal Care Industry Association (IHPCIA), the Indian
household insecticides (HI) market is valued at Rs. 3,800 Crores and is expected to grow at
double digit growth rate of 15% in the coming years. Further, HI category is underpenetrated
with an overall level of ~44% which provides scope for huge growth opportunities.
Interestingly, GCPL is a market leader in the HI category with more than 50% of the market
share. This category has grown at an average of ~13.5% over the last two years. During FY15-
17E, HI category is expected to grow at a CAGR of ~16%.
Going forward, it continues to focus on expanding its presence in the segment by combining
innovation and superior execution capabilities. This would support the company in further
widening the market share gap versus its competitors and sustain its double digit growth
momentum in the HI category. Its products like Good knight Fast Card, Good knight Xpress
liquid vaporizer and Neem Low Smoke Coil, continue to be well received by consumers driving
penetration. Good night fast card, Indias first paper-based mosquito repellent, became a
Rs.100 Crores brand in just 11 months among the highest run ups for a new FMCG brand.

SOURCE- FUNDS INDIA, Volume No. I Issue No. 45, October 20th, 2015

Likewise, in the hair color segment the penetration level in India stands at merely 37%. Being
the market leader with a focus on value for money offerings at attractive price points, GCPL
continues to yield higher volume growth in the segment. Its recent launch Godrej Expert Rich
Crme at just Rs.30 has gained one-third of the total hair color market in India. Further, this
category has posted an average growth of nearly 17% in the last two years. During FY15-17E,
HI category is expected to grow at a CAGR of ~15.5%.

SOURCE- FUNDS INDIA, Volume No. I Issue No. 45, October 20th, 2015