Fast-moving consumer goods companies have had a few tepid quarters, mainly due to pressures in urban demand, even as rural growth has started to gradually pick up.
However, things are expected to turn around as we look ahead. Home-grown Godrej Consumer Products sees demand recovering over the next 12 months and sees volumes (packs sold) growing in mid-to-high single digits.
Consolidated revenue for the company that has operations spread from South-east Asia to Africa and Latin America are seen growing in high single digits, according to Sudhir Sitapati, GCPL managing director and CEO.
"Food price inflation has come down in January, February and March. Food price inflation, we know, has an immediate impact on FMCG consumption," he pointed.
Apart from that, the income tax relief announced in the Budget from April 1, and in the 8th Pay Commission likely to be implemented from 2026, should also give consumption a boost, he noted.
Hindustan Unilever, the largest FMCG company in the country, also recently said it expected the first half of the current financial year to be better than the second half of last year. Rohit Jawa, the CEO and MD of HUL had said that macro triggers were turning out to be favourable.
According to Sitapati of GCPL, if the country's GDP grows around 6 per cent, then the median volume growth for the FMCG sector should be around to 7.0-7.5 per cent, and GCPL aspires to grow ahead of the market.
In the January-March quarter, the company had reported a growth in volume of 4 per cent in the India business.
Last financial year, its soap business earnings were impacted due to a sharp rise in palm oil prices, which is a key ingredient. This increase accompanied import duties on palm oil. While GCPL did raise prices, it couldn't fully cover the higher input costs. With palm oil prices normalising, the soap business should see better days this year.
GCPL has planned to invest ₹700 crores over the next 18-24 months in manufacturing capital expenditure.
The company recently opened two new factories—one in Tamil Nadu and another in Madhya Pradesh. The planned capex will be to bolster the capacity at the new plants. The company also has plans to set up a new factory in Indonesia in next two years.
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GCPL has stepped up innovation and product launches in segments like deodorants, household insecticides and fabric wash. Also, many new products like hair colour shampoo, developed in India, are now being taken to its overseas markets.
At the same time, GCPL is also pushing deeper into rural markets to boost growth there. The company runs a rural van operation where their product vans reach out to sellers in 70,000-odd villages to boost its sales, pointed Sitapati.
GCPL has also recently entered the rapidly growing pet food business. India's pet care industry is estimated to be around ₹6,000 crores and is likely to touch ₹10,000 crores in the next 3-4 years.
Godrej Ninja dog food is currently available in Tamil Nadu. It will compete with already established brands like Pedigree and Whiskas. Several other FMCG companies too have in recent years entered the pet food market, amid rising pet demand post COVID-19.
