India’s consumer goods market has significant potential for growth, with the country already amongst Procter & Gamble’s top 10 markets globally, LV Vaidyanathan, MD & CEO, P&G India, said in an investor call on Friday.
In his opening remarks, Vaidyanathan, who took over as India head of the US-based multinational company in July 2022, said that the maker of brands such as Whisper, Vicks, Gillette, Oral-B, Tide and Pantene, was doubling down on an “integrated growth strategy” that included having a strong portfolio of brands as well as ensuring superiority, productivity and constructive disruption across the value chain.
The company, which has four entities in India, three listed and one unlisted, also saw the broader fast-moving consumer goods (FMCG) market in India growing in mid-single digits over the next five to seven years. While the company would continue to drive topline and bottomline growth, the aim would be to drive profit growth ahead of sales growth, with the emphasis on driving productivity to fuel investments, fund innovation, raise the bar on superiority and absorb macro headwinds.
“The integrated growth strategy begins with having a portfolio of daily-use products where performance drives brand choice. The second aspect is to deliver irresistible superiority across product, packaging, communication, retail execution and value. The third aspect is productivity to fund superiority. And the fourth part is driving constructive disruption of our value chain to future-proof our business,” Vaidyanathan, 50, said.
For instance, P&G Hygiene and Health Care, which makes Whisper and Vicks, and is listed on the Indian stock exchanges, had driven savings of Rs 105 crore, while Gillette India, also listed in India, had delivered savings of over Rs 55 crore in FY23 thanks to efficient management of costs across the company’s value chain, Vaidyanathan said.
At the same time, there were FMCG categories in the country that were under-developed which showed strong potential for growth in double-digits, Gautam Kamath, chief financial officer, P&G India, said. These included feminine hygiene, male grooming and healthcare, with the company driving awareness and education, making products available at varied price points and retail channels and providing superior proposition to consumers, he added.
In terms of rural growth, Kamath said that there were visible signs of green shoots in the rural economy. “We remain optimistic about growth, but there are some concerns about monsoon and retail inflation. Though the broader trend is encouraging,” Kamath said.
P&G’s three listed entities – pharmaceutical firm P&G Health, shaving products maker Gillette India and P&G Hygiene and Health Care – together delivered a topline of Rs 7,625 crore for the financial year ended June 30, 2023. The company follows a July-June accounting year.
While topline growth of the three listed entities for FY23 came in at about 5% versus the previous year, net profit growth was stronger at 19.37% year-on-year, touching Rs 1,263 crore for the period under review.
The FY23 financials of the unlisted company P&G Home Products, which makes Ariel and Tide detergents, Pantene shampoo and conditioners and Pampers diapers have not been disclosed to the Registrar of Companies yet.
However, analysts say the unlisted unit remains the largest of P&G’s entities in India, with a turnover of close to Rs 7,000 crore and profit of nearly Rs 300 crore. The company has invested Rs 8,200 crore in the last decade and Rs 20,000 crore in the last 25 years to set up nine plants in India. The ninth manufacturing unit, announced in June in Sanand, Gujarat, will be set up at an investment of Rs 2,000 crore to manufacture healthcare digestives.
Kamath said on the investor call that the Rs 2,000-crore investment was happening in an unlisted entity of the company. However, P&G was working on assessing specific consumer needs in India and was introducing global products into the country after rigorous study and localisation.
“The launch of Zzzquil sleep aids, Vicks Steampods, and Whisper Period Panties to manage night flows over the last few months are prime examples of the global portfolio products serving the needs of our Indian consumers,” he said.