Godrej Consumer CEO Aims for Double-Digit Expansion

Godrej Consumer Products Ltd's new managing director and chief executive, Aasif Malbari, has outlined a strategy to improve the company's volume and profit expansion. He presented the plan in a call with analysts and investors, characterizing the firm's recent performance as good but not great.

Malbari is making several operational changes. A key move is a planned reduction in general trade inventory worth 125-150 crore rupees over the next three quarters. The company will bring inventory days down to 10 from the current 20. New demand-forecasting tools are enabling this leaner model. The CEO also announced a 200 crore rupee investment in a new research and development facility and improvements in digital marketing.

Malbari stated that GCPL's core portfolio has been neglected. This includes soap brands Godrej No.1 and Cinthol, along with Good Knight mosquito repellents. He said core category revenue expansion has been flattish with profits under pressure.

He attributed this to the company's focus on newer entries, which meant the core brands did not get full benefits from R&D and innovation. The company has also struggled with execution, missing opportunities in large categories like fragrances, which he called a huge opportunity for 2040.

The new vision marks a shift from the prior strategy under former CEO Sudhir Sitapati. A major change is moving away from heavy reliance on 'speedboats' for overall revenue expansion. These were high-innovation products like Godrej Fab liquid detergent, Spic toilet cleaner, and innovative air fresheners.

On 7 August, Sitapati said these 'speedboats' accounted for 15% of the company's overall revenue in FY26, up from 11% the previous year. They represented 17% of revenue in the June 2026 quarter.

Despite the shift, Malbari expressed confidence in expansion from new categories and adjacencies. These include dishwashing soap Rizz, stain remover Zap, and the new pet food business under the Ninja brand, which will expand into cat food.

The pet care business, launched in 2025, started in Tamil Nadu and is scaling in South India with plans for a national rollout. Malbari said it currently has an annual run rate of 10 crore rupees. The company is committed to scaling this business to 500 crore rupees by around FY30.

The company's ultimate goal is to be an outperformer, which Malbari defined as delivering double-digit immediate profit and achieving double-digit underlying volume expansion for FY27. In the June quarter, GCPL reported 19% year-on-year growth in consolidated revenue and 9% underlying volume growth.

However, the five-year picture is less robust. Underlying volume has grown at a 4% compound annual growth rate since 2021, while consolidated profit after tax has risen just 2% annually.

Analysts from Nomura noted that Sitapati's sudden resignation in August was a shock, as he had driven a material transformation in strategy and innovation. Following a meeting with the new management, analysts at Emkay said the company aims to significantly improve execution and deliver double-digit volume expansion, calling the outlook encouraging. They believe GCPL is well positioned for double-digit earnings expansion over the medium term, though they lowered their valuation multiple by 10% to account for management change uncertainties.

Shares of GCPL fell 10% on 11 August when Sitapati's resignation was announced but closed flat on the day of Malbari's investor call.