Dividend Policy of Godrej Consumer Products Ltd

Topics: Stock, Dividend, Stock market Pages: 10 (3895 words) Published: March 12, 2011
Godrej Consumer Products Limited: Dividend History and Market Performance Godrej group of companies is one of the oldest corporate houses in India. The Godrej group was established in 1897. It had a total turnover of `.118 billion (US$ 2.62 billion) for the financial year 2010. With five listed companies with an aggregate market capitalisation of `. 165 billion as of March 31 2010, 58 manufacturing locations in India and overseas, and operations in 18 countries, it has a significant presence in the fast moving consumer goods, real estate, industrial engineering, appliances, chemicals, furniture, security and agri care sectors. Godrej Consumer Products is one of India‘s leading FMCG companies, with significant presence in other developing markets in Asia, Africa and South America, such as Indonesia, South Africa, Nigeria and Argentina. It manufactures and sells a wide range of personal wash, hair care and home care products. The total income and net profit for the financial year 2010 was `. 20,885.02 million and `. 3,395.86 million, respectively. Its international operations contributed `. 3,824.70 million, or 18.3%, of our total income for the financial year 2010. With our recently completed acquisitions, we expect our international operations to contribute more significantly to our total income going forward. Company’s product range in India includes toilet soaps, hair colorants, household insecticides, toiletries, hand sanitizers, hand wipes, hand washes and liquid detergents. For the financial year 2010, GCPL had the second largest value market share of 10.3% in India in the toilet soap category and the largest hair value market share of 33.9% in India in the hair colorant category. It was also the market leader in liquid detergents in India, with a 76.5% value market share for the same period. For the financial year 2010, our subsidiary, Godrej Household had the largest value market share of 33.1% in India in the household insecticides category. It also has significant presence in the shoe care and male hair care markets. GCPL has five manufacturing facilities in India at Malanpur (Madhya Pradesh), Guwahati (Assam), BaddiThana (Himachal Pradesh), Baddi-Katha (Himachal Pradesh) and Sikkim. In addition, Godrej Household has manufacturing facilities in Pondicherry, Chennai, Guwahati, Meghalaya, Jammu, Goa and Sri Lanka. During the past few years, we completed a number of acquisitions in India and overseas to increase our market share in selected product categories and expand our geographical reach (See Exhibit 1). In India, GCPL sought to achieve market leadership in household insecticides and increase our market share in personal care products by acquiring 49.0% of Godrej Household on June 1, 2009. On May 28, 2010, our Company acquired the remaining 51.0% stake in Godrej Household from our joint venture partner, Sara Lee Corporation. For the year ended March 31, 2010, Godrej Household had total income and profit after tax of `. 9,425.89 million and `. 1,371.80 million, respectively. FMCG Sector in India

With 12.2 % of the world’s population living in rural India, the prospects for India’s FMCG sector are bright. Demand for FMCG products like toilet soap, washing soap, detergents, toothpaste, processed foodstuffs and batteries is forecasted to increase because of India’s burgeoning middle class. As in 2010, 66 % of India’s demand was urban and the remaining 34 % was rural. Between 2003 and 2010 nearly 200 mn people shifted to consume processed and packaged foodstuffs, indicating rapid demand growth. As in 2010, India’s FMCG sector is $ 13.1 bn in size. It is expected to more than double to $ 33 bn by 2015. The sector is poised to grow by 10 to 12 % for the next ten years. The Indian FMCG sector has a lot of advantages. India is the world’s largest producer of coconuts, sugarcane, livestock, milk, spices and cashews. It is the second largest producer of rice, wheat and fruits & vegetables. India also produces...
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