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Strategy playbook is clear. It's all about execution from now

GCPL under Sudhir Sitapati's leadership (see report Leadership Matters) is targeting double-digit UVG (underlying volume growth) over the medium term. No ifs and buts. We like it. The presentation was jargon-free (a rarity in Consumer Staples!); it had measurable targets and granular build-up of growth. During the course of Sudhir's presentation, this analyst was reminded of strategy templates presented by Nitin Paranjpe, CEO, HUL (2008 - 2013).

GCPL's refreshed template includes (1) focus on penetration-led growth (we like this – we just wrote yesterday that many companies are likely getting distracted from the core agenda - link), (2) focus on category development (we reckon the thought process is that cost of category development is lower than that of chasing market shares), (3) reducing complexity (can't agree more), (4) focus on core, (5) larger, impactful innovations with higher patience and staying power, and (6) save (gross margins, discounts, overheads, non-media ATL) and invest (in media, sampling, talent, digital, automation, distribution).

1. Focus on category/market development: The single-most important highlight of Sudhir's presentation was to increase focus and ability on category development, which (we believe) to some extent, was missing in Godrej (till now).

2. Increasing penetration: Sudhir highlighted that penetration increase till now had lacked focus given the fear that it may lead to down-trading (in the near term). In our opinion, Sudhir is focussing on the life-cycle value of a (new) consumer, which is critical for Godrej (at the current juncture).

3. Creating category teams: Godrej (in the past) has also intended to drive benefits of cross-learnings but lacked the framework. Sudhir is attempting to create a flexible structure here through category heads (with demarked responsibilities) which should not slowdown the decision making and implementation agility.

4. Harvesting gains for re-investment: Sudhir is cognizant that increasing penetration and category development will require resources (higher ATL activities, media spends and sampling). More importantly, the headroom for increased investments has to be created in an inflationary RM environment. For this, Sudhir has highlighted multiple measures for driving cost savings (with simplification at the core) - including (1) better gross margins (through better mix), (2) lower discounts, (3) reducing overheads, and (4) eliminating non-media ATL.

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