The billionaire head of Godrej Industries, one of India’s oldest conglomerates, has said he expects tough times for his business in Africa, as companies brace themselves for the global economic downturn.
Godrej has expanded beyond its Indian home market to Latin America, Indonesia and Africa, selling products ranging from pesticides to hair care. But in the coming months, “Africa can be tricky”, said Nadir Godrej, the company’s president and CEO. “Even now it’s tricky,” he added.
The more than 100-year consensus among emerging market companies is set for an expected slowdown, as the central bank unwinds stimulus measures linked to the disease raising interest rates.
The group’s businesses range from property and palm oil production to agrichemical and skin care products, attracting international blue-chip investors. Singapore-based wealth fund Temasek owns $108mn in listed chemical subsidiary Godrej Agrovet.
In Africa, the Godrej Consumer Products unit has focused on hair products and bought several personal and hair care brands since 2006. A quarter of its revenue for its financial year 2021-22 comes from Africa, the US and the Middle East. . But annual profits from Africa were “very poor” in the last quarter due to “theft of goods” in South Africa, the company said.
“We got a lot of different things in Africa and it was difficult for us to put them together as a whole,” said Godrej. “But we have new plans to improve governance and build relationships.”
In contrast, Godrej said that “In India we are not seeing much of the impact of the global recession. We seem to be very isolated from it.”
Despite his optimism, the latest quarterly results from subsidiary Godrej Industries were not very positive. The group’s products division had a “bad” start to the financial year, its CEO Sudhir Sitapati told analysts, with quarterly revenue falling in Indonesia and Latin America, but rising. in India and Africa.
Godrej Agrovet rose in the quarter, but said profits were hurt by rising raw material costs and a crash in domestic prices of soyabean, which is used for animal feed, to a record high. very expensive. Managing director Balram Singh Yadav told analysts that his crop protection business had “grown up big time” because of outdated systems.
Volatile commodity prices have undermined India’s strong recovery from the pandemic since Russia’s invasion of Ukraine, which sent prices up more than 7 percent. New Delhi has neither condemned nor endorsed Russia’s long-standing partner, but Indian oil refiners have benefited from Russia’s reluctance and undermining.
Godrej said his father instilled in him a long line of “anti-authoritarians” and that “his sympathies are more with Ukraine, but I understand where they are. [the Indian government] said.”
He added that in the case of Astec Lifesciences, a chemical producer majority-owned by Godrej Agrovet, Russian sales have fallen. “They sell only with advance payment and they want to import something where the Russians have paid in advance and then the ship refuses to carry it because of the embargo.”
India’s central bank last month introduced plans to allow international trade to be settled in rupees, a move widely seen as aimed at helping Russian and Indian companies avoid sanctions. by passing the dollar. Godrej said that the company “has not yet” looked at the use of the rupee settlement “because until now the Russians can pay, either through unlicensed banks or other means.” But we can look at it at some point. “
He said India would likely benefit from Russia’s war with Ukraine in the form of “getting cheap raw materials.” [than] the rest of the world – perhaps fertilizers, crude oil – and to the extent that Russia is forced to sell more cheap”.
Godrej, an avid poet who studied Russian and other languages, manages the family unit from an office in the eastern part of the factory. Mumbai, overlooking the mangrove forest that the family has owned for decades.
Founded in 1897 by grandfather Godrej Ardeshir, a Parsi businessman, the family business went on to make locks, soaps and safes, as well as produce 1.7mn ballot boxes for independent India’s first election. himself.
Ardeshir died childless, leaving the business to his three nephews, including Godrej’s father. While these businesses are now well managed, the fourth generation of Godrejs is now joining the group.
“Now, no family member is the boss,” Godrej said. “But we insist on playing a strong role in governance, and planning.”
Like many Indian family conglomerates, the Godrej empire has had its share of succession problems.
Nadir, who was appointed chairman of Godrej Industries late last year after his older brother Adi Godrej became chairman, will navigate the complex division of the business between his family and that of his uncle Jamshyd Godrej .
Jamshyd is a wholly owned subsidiary of Godrej & Boyce, which spans 10 industries including aerospace and owns a lot of land around Mumbai, India’s financial capital.
The two sides of the family began discussions about the division of the group last year. Godrej declined to comment on the matter.