We would push acquired brands rather than the Indian ones in Africa: Adi Godrej

Interview with Chairman, Godrej Group

The Godrej group proposes to increase its presence in the African continent with a few more acquisitions, says Chairman Adi Godrej. The $4-billion (Rs 20,000 crore) group has already wrapped up four buys in the African market through its fast moving consumer goods arm Godrej Consumer, topping the list of regions where the group has bought companies. It is followed by Latin America with three buys, while Asia has one (household products company PT Megasari Makmur in Indonesia). Back from a trip to Africa as the president of Confederation of Indian Industry, Godrej, in an interaction with Viveat Susan Pinto, says the group has no plans to step into the agri-products space in the continent through Godrej Agrovet. The group's strategy in the continent would be led by consumer products. Edited excerpts:

What is the reason behind the decision to stick to consumer products in Africa? The region is rich in agricultural resources and Indian companies have been targeting the continent. Why have you opted to stay out of the sector there?
The African region as a whole is a developing market and there is enormous potential for growth in consumer products. There are also a large number of markets that show promise besides the two strong countries of Nigeria and South Africa, that have been on the radar of most Indian companies as well as ours, for long. For instance, there is Kenya, Uganda, Tanzania, Mozambique, Ethiopia and Congo. Given all these factors, we felt it would make sense for us to stick to consumer products. As far as agri-products are concerned, we have operations in Bangladesh and the UAE, besides India. The third market we propose to look at is Myanmar.

What is the status of the Darling acquisition. It was your fourth and most ambitious buy in the continent.
That is true. We have completed the first and second phases of the buy. This has given us a presence in six of 14 markets in Africa, where the company has operations. Darling operates in the haircare space and is one of the leading players in the continent. The third and final phase of the acquisition will kick off shortly. With this, we will complete the buy by taking control of operations of the company in the remaining eight markets. Effectively, we will strengthen our presence in the haircare space in Africa once the acquisition is completed.

We already had two haircare acquisitions earlier in Rapidol and Kinky in South Africa. Tura was a personal-care buy in Nigeria. So, Darling is the third haircare acquisition in the continent. Certainly, if we find something that is within the three categories we operate in, including hair care, personal wash and household insecticides, we will consider it.

How strong are exports of your domestic brands to Africa?
Organically, our operations in Africa constitute five per cent of our Rs 20,000-crore group turnover. If you take into account acquisitions, it will be higher. Now that we are going down the inorganic route in Africa quite aggressively, our preference would be to push the acquired brands rather than the Indian brands since recall for the former is higher than the latter. From a market share point of view too, it makes ample sense for us to push the local brands rather than the Indian brands in Africa.

Do you think Indian companies are much better represented across sectors than their Chinese counterparts in Africa?
I would think so. Indian companies have invested in natural resources, consumer goods and information technology in Africa. In comparison, the Chinese have largely invested in natural resources. Most of the Chinese companies are government-owned in comparison to Indian companies which belong to both the public and private sectors. For the Chinese, Africa has largely been a market for export. The Indians have gone a step beyond, acquiring local companies there.

Do you think Africa stands at a point today where India and China were 10 years ago?
Yes. The governance and growth in Africa is much better now than what it was earlier. There are risks attached, such as political risks. But things have improved, and as I pointed out earlier, markets there show promise.