The billionaire chairman of Godrej Industries, one in every of India’s oldest conglomerates, says he expects robust instances for his enterprise in Africa as corporations brace for a worldwide financial downturn.
Godrej expanded past its Indian house market to Latin America, Indonesia and Africa, promoting merchandise starting from pesticides to hair extensions. However within the coming months, “Africa might be very tough,” mentioned Nadir Godrei, the corporate’s chairman and managing director. “It is already tough,” he added.
The greater than century-old conglomerate is amongst corporations working in rising markets which are bracing for an anticipated slowdown as central banks wind down pandemic-related stimulus and lift rates of interest.
The group’s companies, from actual property and palm oil manufacturing to agrochemicals and skincare, entice blue-chip worldwide traders. Singapore’s sovereign wealth fund Temasek has a $108 million stake in listed chemical subsidiary Godrej Agrovet.
In Africa, the group’s Godrej shopper merchandise division focuses on hair merchandise and has acquired a number of private and hair care manufacturers since 2006. 1 / 4 of its 2021-22 income got here from Africa, the US and the Center East. However annual revenue from Africa was “very poor” within the newest quarter attributable to “stock theft” in South Africa, the corporate mentioned.
“We have made a variety of completely different acquisitions in Africa, and it is tough to convey them collectively as a coordinated complete,” Godrej mentioned. “However we have now a brand new initiative to enhance governance and create synergies.”
In distinction, Godrej mentioned, “In India, we’re not seeing a lot influence from the worldwide recession. We appear to be considerably remoted from it.”
Regardless of his optimism, the most recent quarterly outcomes of Godrej Industries’ subsidiaries had been dismal. The group’s shopper merchandise division had an “optically poor” begin to the monetary 12 months, its chief govt Sudhir Sitapati advised analysts, with quarterly income falling in Indonesia and Latin America however rising in India and Africa.
Godrej Agrovet posted a quarterly quantity enhance, however greater uncooked materials costs and a fall in home costs of soybean meal, used for animal feed, led to decrease profitability, leaving it a expensive backlog. Balram Singh Yadav, managing director, advised analysts that his crop safety enterprise had “taken a very long time” attributable to outdated techniques.
India’s post-pandemic confidence restoration has been threatened by sharp swings in commodity costs which have pushed inflation to greater than 7 p.c since Russia’s invasion of Ukraine. New Delhi has neither condemned nor endorsed the warfare by its longtime companion Russia, however Indian refiners have benefited from diverted and cheaper Russian crude.
Godrej mentioned his father pushed him to be “anti-authoritarian” and that he had “extra sympathy for Ukraine, however I perceive the place they stand.” [the Indian government] got here.”
He mentioned that within the case of Astec Lifesciences, a chemical producer owned by Godrej Agrovet, gross sales to Russia have declined. “They solely do pay as you go gross sales, they usually had been going to ship one thing that the Russians paid for upfront, after which the ship refused to hold it due to the sanctions.”
Final month, India’s central financial institution launched a scheme to permit funds in worldwide commerce to be made in rupees, a transfer seen as serving to Russian and Indian corporations bypass the greenback and keep away from sanctions points. Godrej mentioned the corporate has not thought-about rupee settlement “but” as a result of till now Russians pays by unsanctioned banks or different strategies. However we will take a look at it after some time.”
He mentioned India may gain advantage from Russia’s warfare in Ukraine within the type of “low-cost uncooked supplies”. [than] the remainder of the world – perhaps fertilizer, crude oil – and to the extent that Russia is compelled to promote cheaper.”
Godrej, an avid poet who studied Russian and different languages, heads the household group within the firm’s workplace within the enterprise middle in japanese Mumbai, overlooking the mangroves the household has owned for many years.
Based in 1897 by Ardeshir, the elder brother of Parsi businessman Godrei, the household enterprise went on to fabricate locks, cleaning soap and safes, in addition to produce 1.7 million poll containers for impartial India’s first election.
Ardeshir died childless, leaving the enterprise to Godrej’s father and three nephews. Whereas the companies are professionally managed, now the fourth technology of the Godrejs group has joined the fold.
“There isn’t a member of the family who’s the CEO proper now,” Godrej mentioned. “However we insist on taking part in a stronger function in each governance and technique.”
Like many Indian household conglomerates, the Godrej empire has succession points.
Nadir, who was appointed chairman of Godrej Industries late final 12 months after his elder brother Adi Godrej took over the honorary title, has to handle a posh division of the enterprise between his household and his cousin Jamshid Godrej.
Jamshid is the chairman of the privately held Godrej & Boyce, which mixes 10 industries, together with aerospace, and owns land round Mumbai, India’s monetary capital.
Either side of the household started discussing the group’s formal cut up final 12 months. Godrej declined to reply questions on the topic.