Godrej Consumer Products : A Letter to Our Shareholders

A Letter to

Our Shareholders

Dear shareholders,

I hope this letter finds you and your families well and safe.

A second year of the COVID-19 pandemic, the Ukrainian war, China disruptions, and the Great Resignation have posed several new challenges for our team. We, however, remain optimistic.

There is a change underway at your company, which I believe will serve us well, both in the short and longer term. But before I share with you the reasons for my optimism, I want to reflect on where we are today; the good news, and the bad.

The good news

Despite all the uncertainty, your company delivered on a lot of what we set out to do. We have progressed well against some of the key priorities outlined in my letter last year. This is our second year of double-digit sales growth-11% sales growth (2-year CAGR of 11%). On the category front, Personal Care continued to grow strongly at 17%. From a geography perspective, our India, Africa, and Latin America businesses delivered strong growth.

Accessible and innovative products are the DNA of GCPL. Our R&D pipeline continues to go from strength to strength, and I am excited about the new products that will come to market in the year ahead. In fact, one of my best moments last year was meeting a consumer who said that she had tried to buy a product prototype we had given her, at DMART.

Spending time with our teams in India and South Africa, thanking them for their service, visiting consumers, and learning about new growth opportunities

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I believe the best news of this year (and hopefully for the years to come) is that Sudhir Sitapati is now the CEO of GCPL. His strategic clarity and excellent execution capabilities have already started impacting the company positively.

What has delighted me in particular though is his integrity and humility-values that are core to us at Godrej. I really enjoy working with and learning from him, and look forward to him taking GCPL to a new level of ambition and achievement.

Sudhir Sitapati and I share ideas and seek feedback from our India leadership team at our team offsite in March 2022

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The bad news

Our performance in Indonesia continued to be disappointing. Getting the business onto better ground will be a key imperative for the year ahead. Rajesh Sethuraman, our new CEO for Indonesia, and the rest of the team will have our full support in doing what is necessary. In our Africa business, we recorded very poor profits in the last quarter due to a theft of inventory in South Africa. Africa is our business with the lowest profitability, so we must focus both on expanding margins and making sure we don't have similar governance issues going forward. Dharnesh Gordhon, CEO for Godrej Africa, USA, and Middle East, and Adesola Sotande-Peters, our new CFO, are a very experienced leadership team, and I look forward to their guidance in strengthening the fundamentals of the business.

While we had turned a corner in Household Insecticides in fiscal year 2021 with 15% growth globally, and Q1 of fiscal year 2022 was also very strong, overall performance this year was a big disappointment with flat growth. We have introduced several initiatives for the year ahead, including a repositioning of Goodknight. I look forward to them driving growth in the category.

The external environment continues to be very volatile due to high inflation, the Great Resignation, and climate change. Despite and perhaps even because of all these challenges, there are significant opportunities to build a more resilient and purposeful organisation.

We are strengthening our leadership capabilities required to navigate these contexts, and doing more zero-based thinking on how we operate, while continuing to be guided by our values and principles in decision-making. You will be happy to note that, as always, we do not change the total fatty matter (TFM) in our soaps, even though the cost of palm oil in fiscal year 2022 went up by 60%. We do this to maintain the quality that consumers expect from us.1

1 A high percentage of TFM makes soap last longer and is better on the skin.

Adesola Sotande-Peters, our new CFO for the Godrej Africa, USA, and Middle East business cluster, at our global leadership meet in Mumbai in April 2022

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