You are here: Home » Markets » Q&A
Business Standard

Q&A: P Ganesh, Godrej Consumer Products

'We'll need more price rises, as commodity inflation soars'

Viveat Susan Pinto  |  Mumbai 

P Ganesh

P Ganesh, chief financial officer, Godrej Consumer Products, responds to questions from Viveat Susan Pinto on how it is dealing with these issues. Edited excerpts:

GCPL announced it would take price hikes in soaps in the month of April. But nothing has happened yet.
We took a four per cent hike in January. This is enough for the moment. As commodity inflation increases, we would need to take more price rises.

But palm fatty acid distillate (a key input) was up by 28 per cent in the past year. Is four per cent enough?
We are monitoring closely. It is impossible to pass everything on to consumers. The approach is to take calibrated price hikes.

What was the rationale, then, for the three to five per cent price rise in household insecticides recently?

It was taken more in the normal course of business. The last time we took a price hike was a year ago. Yes, there has been some inflationary pressure in household insecticides, but not in the same league as in soaps. We bore all the factors in mind when raising the price.

What are your estimates of growth in your three key categories of hair colour, household insecticides and soaps?
I am not at liberty to make forward-looking statements. Suffice to say that soaps has seen flattish growth for the entire industry, while hair colour and household insecticides has grown in double-digits in the past few quarters. Both hair colour and household insecticides have the potential to grow even faster. Soaps, on the other hand, is a highly penetrated category. This, coupled with high food and commodity inflation, will keep growth rates a bit muted there. Once food and commodity inflation come off a bit, there will be an improvement in that category.

Is GCPL comfortable with equity dilution in case you go in for a large acquisition in the future?
We are open to that. Promoter holding came down by 2-2.5 per cent when a qualified institutional placement of Rs 530 crore was made last year. This allowed us to bring our debt:equity ratio to a manageable level of 1.1: 1. So, yes, that lever is available to us.

What is the debt like on GCPL's books?
Rs 1,800 crore. This is way below the Rs 3,000 crore board approval we received for raising money for acquisitions. This was largely through the route of debt. So, we don't have to go back to the board just yet. If there is a small acquisition, it can be supported by debt. If there is a larger acquisition, a mix of debt and equity will be used.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, April 20 2011. 00:21 IST
RECOMMENDED FOR YOU
.