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I am very pleased to share with you the events, developments and the progress that your Company has made during the financial year ended March 2013. The overall performance of your Company has been good despite several challenges on the economic front, both globally and in India. The year gone by is representative of the value Godrej Industries continues to create for all stakeholders as a result of its diversified presence across key segments of economic activity in the country.
As a conglomerate with diverse business interests, growth at the consolidated level is pursued through competitively growing our core businesses, building an environment to achieve transformation while also nurturing and investing in emergent businesses of the future. The essence of our business strategy is captured in our approach called CREATE which stands for:
I would like to summarize the year for each dimension of our CREATE strategy:
C – Consumer and Chemicals
FY2013 proved to be another year of good performance in both the domestic and international operations of Godrej Consumer Products. We continue to be the market leaders in household insecticides and hair colour in India and have the number two position in soaps. The integration of our overseas acquisitions has gone well and overall our international businesses have had a year of good results.
A major focus area for us this year was to accelerate our innovations and to back our new products with strong marketing investments. We have had a number of successful launches in both the domestic and international business and believe that these launches will further enhance our competitiveness, improve the equity of our brands and drive both penetration and consumption.
In order to continue to deliver healthy performance and create value year after year, we will be focused on six strategic pillars of growth, viz, leading in our core categories, growing our international businesses in line with our 3 by 3 strategy, driving innovation and renovation, creating a future ready sales system, building a best in class supply chain, and fostering an agile, professional and high performance culture. We are confident that GCPL's pace of growth will continue on its strong path as we derive benefits from the strategic foundation we have put in place.
I would like to take the opportunity to thank A. Mahendran, the Managing Director of GCPL for his many contributions to the business over the last eighteen years. A. Mahendran will be retiring at the end of his current term on June 30, 2013. The GCPL Board has decided to appoint Vivek Gambhir, the Chief Strategy Officer for Godrej Industries, as the Managing Director of GCPL effective July 1, 2013. Vivek Gambhir has been a key architect of GCPL's 3 by 3 growth strategy and has played a key role in the Company's overall value creation and transformation story over the last few years. We are confident that he will successfully lead GCPL through its next phase of growth.
Overall volatility in the global macroeconomic environment and raw material price fluctuations resulted in our Chemicals business facing a tough year. The team sharpened its efforts on execution to mitigate the impact of external factors and we believe that this will bode well for us in the coming year. Our new oleochemicals facility at Ambernath is progressing on schedule and is expected to be operational in Q3 FY 2013–14. Our strong distribution network and differentiated manufacturing process make us the preferred supplier to key players across industries we cater to, enabling us to capture value from healthy demand in the domestic and international markets. Diversified end–user industries and concerted efforts at moving towards specialty chemicals give us confidence in an enhanced performance in the future as well.
I would like to take this opportunity to discuss the change in leadership at the Chemicals business. After a long and illustrious career spanning 36 years, Mathew Eipe has retired on April 30, 2013. Nitin Nabar has taken over as Executive Director and President (Chemicals) and we are very confident that he will successfully lead the Business going forward.
R E – Real Estate (GPL)
Despite challenges on the economic front, Godrej Properties had a very good year. During FY 2012–13 Godrej Properties had 13 successful launches across the country including in Mumbai, NCR, Bengaluru, Pune, Ahmedabad and Kolkata. With 8 new projects added to the portfolio, new business development momentum has also been sustained. A small amount of fresh capital is committed to acquire new deals and a favourable risk profile is ensured for all new projects. This combination of adding substantial value without excessive risk or capital deployment is key to sustaining our strong track record in business development. With a pan–India presence and a strong business model, we firmly believe that GPL is well poised on a strong growth trajectory.
A – Agri Business (GAVL)
The year at Godrej Agrovet was tough on several counts including deficient monsoons and rising input costs. However, a resilient business portfolio and a strong suite of innovative agri products enabled us to achieve a growth of 26% in FY 2013 revenues. The outlook for the Company remains robust anchored by strong growth from the oil–palm business and the agri–inputs segment. To provide capacity for future growth in key animal feed markets, three new feed mills were also commissioned. A strategic development during the year was introducing Temasek as an investor and a partner in GAVL. We believe that this will prove to be highly beneficial given their global credentials and knowledge in agribusinesses and should enable GAVL to accelerate its strong momentum going forward.
T – Transformation
As a Group, we believe in inclusive growth that aims at enhancing the competitiveness of our businesses while simultaneously advancing the economic and social conditions of the communities in which we operate. This focus is implemented Group wide through the shared value initiative called 'Godrej Good and Green'.
As part of Good & Green, the Group aspires by 2020, to create a more employable Indian workforce, a greener India and innovate for products that are greener or cater to the bottom of the income pyramid. The Group has made good progress on each of the objectives during the last fiscal year. Through employability programs in beautician training, channel sales, rural entrepreneurship and animal husbandry, we have been able to train thousands of unemployed or underemployed youth in the last year.
I am pleased to share with you that in the recently published Brand Trust Report, 2013 Godrej has been ranked the 6th most trusted Brand in India, up five places from last year. This is a strong validation of our focus on building superior brand equity and ensuring that our heritage brand is relevant and dynamic.
Building on our human capital has always been a priority and during the year we undertook various activities that assisted in enhancing leadership capabilities through specially designed programs. To help us objectively understand the progress made, in FY 2013, we conducted a survey across both domestic and international businesses in association with Aon Hewitt, a leading HR consultancy firm. I am delighted to share with you that Godrej Industries and its Associate companies (including Consumer Product, Real Estate, Agrovet and Chemicals businesses of the group) employee engagement level is high (76%) and falls within the Aon Hewitt Best Employer Range. This score has been calculated on the basis of responses to 27 drivers of engagement, measured by the survey.
E – Emergent Businesses
As part of our business strategy, through the years, we have selectively incubated businesses and grown them successfully. Natures Basket, our gourmet food retailing business, is one such business where we see good potential. The progress witnessed by this business has been encouraging, with contribution to performance coming from rising same store sales as well as opening of new stores. We are now spread across 6 key metros in India through 27 outlets.
Our seeds venture, Godrej Seeds and Genetics Limited, which is still in a nascent stage, has reported encouraging performance during the year and through concerted efforts we are confident of significantly building this business in the coming years.
As part of our commitment to superior value creation for all stakeholders, we have been following a disciplined approach to profitably grow our core portfolio of businesses and make clear choices to focus on areas where we have a competitive advantage and the best growth opportunities. In line with this portfolio strategy, in September 2012, we divested our stake in the Godrej Hershey joint venture.
I am happy to share that the Company successfully concluded the Equity Issue –Institutional Placement Program (IPP) during the year. In the midst of a capital scarce market environment we raised Rs. 370 crore where the issue was oversubscribed by 1.67 times, thereby reaffirming the faith of the investor community in your Company. The Public holding in your Company, post this issue is 25%, in line with SEBI's minimum public holding norm.
Before I conclude, I would like to say that as we enter into the next fiscal year, we stay committed to improving operational efficiencies, building and strengthening alliances, deriving value from group synergies and continuing to reward stakeholders with a shared commitment towards profitability and sustainability.
Finally, I would like to express my appreciation to all our employees, for their contributions towards the performance of Godrej Industries. I would also like to extend my gratitude towards our business partners and associates, vendors and also the Central and the State governments for their continued support. And to all of our shareholders, I would like to express my sincere appreciation for your continued faith, trust, encouragement and support.