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Africa Business Update

Interaction with Mr. Dharnesh Ghordon, Business Head (Africa, USA, Middle East) provided much needed clarity and insights around GCPL’s Africa turnaround strategy. We like 1) focus on larger geographies and larger segments within categories (driving size and eventually scale), 2) focus on improving go-to-market GTM execution, 3) centralised category construct (ala MNCs) to drive cross pollination of marketing strategies (even more) efficiently, 4) building GCPL as an employer brand in Africa, 5) the recent entry / listing in Wal-Mart. GCPL is targeting double-digit revenue growth and mid-teens EBITDA margins for the region. We stay believers as early signs of turnaround in Africa business inspire confidence in consensus (and our) expectations of a sustainable turnaround under the new leadership. ADD.

* Focus on larger geographies (with better execution) and transformation in GTM strategy: The pillar to Africa turnaround strategy is focus on larger countries like Nigeria, South Africa, Kenya etc. by driving direct distribution (reduce dependence on wholesale, cash & carry etc.). Further, the plan is to be present in smaller tier II, III geographies with indirect distribution and transformation (to direct) to be attempted a tad later. The key word appears to be “discipline”. While this strategy has been implemented in some of the focus regions (like Nigeria) it is still a work-in-progress in rest of Africa, atleast an 18-month journey to cover all focus markets. Management targets double-digit revenue growth in Africa.

* Some functions to have centralised construct: Management believes (and we agree) that functions like innovation, communication etc. need to have a central architecture - as there were a lot of overlaps in each geography. Execution will remain regional though. We agree that this may potentially drives scale, improved cross pollination of ideas and better execution.

* Attracting the right talent and building an employer brand of GCPL in Africa is critical: GCPL has a journey to cover to achieve a pre-eminent employer brand equity in Africa (compared with MNCs like HUL, Nestle etc.). However, it has been able to attract some good local talent which is important as they understand the culture and how business is done in Africa. Management indicated that it is focused on strengthening the employer brand equity in Africa (which is critical in the longterm) by providing right opportunities to the local talent. The focus has been to make the team more agile.

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