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THE INDEX
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Powerful
punch
Godrej: Efficient utilisation of resources
Prashant Kothari & Dhruv Rathi
After HLL, its now the turn of Godrej Consumer Products to identify
and focus its resources on its "power brands". The
Godrej management has identified toilet soaps Cinthol, Fair
Glow & Godrej No 1, Godrej Hair Dye and liquid detergent
Ezee as its five power brands. These five brands would be aggressively
marketed throughout the country, while the others would be supported
in areas where they are strong.
Godrej’s key brands in personal care segment are Cinthol, Fairglow,
Nikhar, Allcare, Godrej shaving cream, Cinthol freshness talc,
Fairglow fairness cream etc. The key brands in hair care segment
are Godrej Hair dye, Colour Soft, Kali Mehendi, Kesh Kala while
in the fabric and household care segment Ezee and Liquid Cleaner
Concentrate are the key brands. It may be recollected that HLL
had earlier decided to concentrate on 30 brands out of its total
portfolio of 110 brands. The balance 80 brands would be merged
with the other brands, for example, Cococare and Nihar.
This seems to be a healthy trend in terms of consolidation of
brands and is exactly in contradiction to the policy of having
multiple brands in the same category, which was previously followed
by FMCG companies. This strategy will not only give fewer but
better products to the consumers to choose from but it will
also enable the manufacturers to utilise their scarce resources
efficiently rather than sailing in all ships at the same time.
The brands chosen by Godrej are among the most successful brands
that the company has. The Fair Glow toilet soap has proved to
be a super hit product and registered a growth of 167 per cent
for the quarter to June 2001 at a time when the overall industry
showed a negative growth of 10 per cent. This brand is currently
valued at around Rs 100 crore.
Similarly, Godrej Hair Dye is the leader in the hair colour
market with a 45 per cent market share. The current hair dye
market is valued at Rs 250 crore and is expected to grow at
the rate of 25 per cent per annum. The company’s household care
market Ezee has a 75 per cent share of the Rs 32-crore liquid
detergent market. Godrej has projected a 20 per cent growth
for this brand.
The strategy of concentrating on five power brands should boost
the sales of these brands and improve Godrej’s long term performance.
The results for the current year may glow as a result of this
strategy.
Cadila Healthcare
Cadila Healthcare’s (CHL) sales growth of 5 per cent to Rs 152.79
crore during the quarter to September 2001 was much lower than
the expected average industry growth rate of 9 per cent.
Though, exports grew at a healthy 14 per cent, domestic sales
were hit by intense competition from new entrants. Operating
profits rose 6.3 per cent to Rs 27 crore and margins remained
flat at around 17.7 per cent. After lower tax provision, net
profit increased 15 per cent to Rs 21.87 crore.
CHL has launched "Atorva" (atorvastatin), "Amlodac"
(amlodipine) and "Losacar" (Losartan) that are growing
at the rate of over 50 per cent. Also, "Pantodac"
(Pantoprazole) - a proton pump inhibitor for treatment of ulcers,
has been doing well with a 45 per cent market share.
Recently, CHL acquired 50.66 per cent stake for Rs 272 crore
in German Remedies that boasts of leading brands in women’s
healthcare (that alone contributes 35 per cent of its total
sales), besides respiratory and oncologicals. Further, Kopran’s
anti-hypertensive drug "Aten" (atenolol) was acquired
for Rs 75 crore to strengthen the cardiovascular segment. Aten
has a market share of 24 per cent with an annual turnover of
Rs 37 crore.
The company has also entered into co-marketing agreement with
number of Indian drug companies like E Merck, Kopran, Nicholas
Piramal and Ranbaxy. Further, CHL plans to ramp up export of
20 brands and establish overseas operations in the high margin
export markets like the Philippines, South America and West
Africa.
The company aims to achieve an export turnover of Rs 120 crore
in the current year. The company currently invests around eight
per cent of its turnover on R&D in cardiovascular, pain-management
and anti-infective segments. Recently, Cadila invested $3 million
in a joint venture with US-based Onconova Therapeutics.
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