Godrej Consumer Products Reports Exceptional Loss in Africa Market
Godrej Consumer Products (GCPL) reported a significant exceptional loss of Rs 2,389 crore for the quarter ended January-March 2023-24. This loss was primarily attributed to a change in strategy for the company's Africa market.
The company completed the restructuring of its Africa business during the quarter, exiting the East Africa market. This restructuring resulted in an impairment loss of Rs 1,390.8 crore, related to the brand and goodwill for Africa, including the Strength of Nature brand.
Additionally, GCPL incurred a one-time loss of Rs 927.2 crore due to the sale of subsidiaries and businesses in East Africa. This loss reflects the company's revised business model and long-term strategy for the African market.
Furthermore, restructuring costs, including employee severance pay and inventory-related expenses, contributed an additional Rs 71 crore to the exceptional loss.
Despite these losses, GCPL remains optimistic about the future profitability of its Africa business. The company expects profit after tax (PAT) from this market to improve to Rs 50 crore in the medium term following the restructuring.
GCPL is also simplifying its hair fashion operations in select markets, primarily in East Africa, by transitioning to a royalty model.
The company's rest of the world business (excluding India and Indonesia) is expected to experience volume growth in the mid-single digits and achieve earnings before interest, tax, depreciation, and amortization (EBITDA) margins exceeding 15% in the medium term.