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October 2002

Godrej Consumer Products Limited. October 2002. Agenda. Background Product Profile Performance Shareholder Value Initiatives. Background. The Company. GCPL is a result of the demerger of the Consumer Products Division of Godrej Soaps Limited (now renamed Godrej Industries Ltd.)

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October 2002

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  1. Godrej Consumer Products Limited October 2002

  2. Agenda • Background • Product Profile • Performance • Shareholder Value • Initiatives

  3. Background

  4. The Company • GCPL is a result of the demerger of the Consumer Products Division of Godrej Soaps Limited (now renamed Godrej Industries Ltd.) • Focused FMCG company • Presence in Personal, Hair, Fabric & Household care market categories • Market Leadership in Hair Colour & Liquid Detergents • High Standards of Corporate Governance • Owns all its Brands GCPL - category-wise Revenue and Growth Figures in parentheses refer to revenue growth rates (net of excise) over corresponding period of previous year Liq.Detergents Liq.Detergents (54%) (10%) Toiletries Toiletries (-10%) (-6%) Soaps Hair Care Soaps Hair Care (10%) (14%) (14%) (17%) FY 2002 H1 FY2003

  5. Godrej Soaps Limited Consumer business was part of the conglomerate, with core profitability of the consumer segment not being unlocked Godrej Industries focus on AOS and Fatty Alcohol along with investments in Godrej Sara Lee and Godrej Agrovet was not appreciated by the market Consequently, GCPL was de-merged from Godrej Soaps Limited (renamed as Godrej Industries Limited). GCPL’s focus is the FMCG sector with emphasis on personal & household care Godrej Consumer GCPL emerges as one of the fastest growing FMCG companies with a CAGR of 20% for past 3 years Four categories: soaps, hair colours, toiletries and detergents Focus on employee empowerment and performance linked incentives has led to this phenomenal growth Asset efficiency ratios rank among the highest amongst peers with ROCE for FY2002 at 90% Godrej Consumer - A new focus

  6. Godrej Consumer Products Ltd: A new management Board of Directors Qualifications • Adi Godrej - Chairman & Managing Director M.S. (MIT) • Jamshyd Godrej B.S. (Illinois Institute of Technology) • Nadir Godrej B.S. (MIT), M.S.(Stanford),M.B.A. (Harvard) • Bala Balachandran Distinguished Professor at Kellogg • Rama Bijapurkar Faculty at IIMA, Marketing Strategist • Bharat Doshi FCA, FCS, LLM, PMD (Harvard) • Anupam Puri Ex-partner, McKinsey • Hoshedar Press -Exec.Director & President B.Tech (IIT), PGDBM (IIM)

  7. Current Shareholding Pattern & Shareholder Information • GCPL shares are traded on The Stock Exchange, Mumbai (BSE), National Stock Exchange (NSE) & stock exchanges at Chennai, Kolkata, Delhi and Ahmedabad. • Listed on BSE on 18-June-01 • Listed on NSE on 20-June-01

  8. Facilities & Network Manufacturing Facilities - 3 Branches - 4 C & F Agents - 32 Distributors - 2000 Retail Outlets covered - Above 500,000 Retail Coverage of any Godrej Soap - 1.6 mn Retail Coverage of any Godrej Hair Dye - 1.2 mn

  9. Product Profile

  10. GCPL Brand Matrix Rs mn Sources: ORG-MARG retail sales audit for FY2002

  11. Key Brands Personal Care Hair Care Fabric & Household Care

  12. Performance

  13. GCPL Performance Highlights • GCPL outperformed its peers in the FMCG sector Market GrowthGCPL Growth Q2 FY03 FY02 Q2 FY03 FY02 Toilet Soaps -3.1% -6% 16% 10% Hair Colour -1.5% 10% 18% 17% Liquid Detergents 22.4% -11% 51% 10% Q2 FY03 figures for Industry is for July & August ‘02 Source: ORG MARG retail sales audit for FMCG industry

  14. Toilet Soaps • Contributed 63% to own branded sales in H1 FY03 (58% in FY02) • Soap industry faced an extremely challenging environment in FY02. The top 10 brands contracted and overall sales for the industry was down by 6% • “Godrej No. 1” continues to outperform and gain market share in the sub-popular category (now available in 3 variants: Rose, Sandal & Natural) • Godrej Fairglow consolidated position in the fairness soap category • Increased focus in the Cinthol range to improve presence in the premium segment

  15. Hair Colour • Contributed 27% to own branded sales in H1 FY03 (25% in FY02) • Leader in this category with a 44.5% market share in H1 FY03 (44.6% in FY02) • Presence across all price points: powder, oil, liquid and high end fashion colours • Low penetration suggests high growth potential • Production at Guwahati to optimize fiscal benefits • Launched new variants in the Godrej Colour Soft range and also Godrej Nupur in sachets

  16. Liquid Detergents • Contributed 8% to own branded sales in FY02 • Ezee is the market leader with a share of 83.3% in H1 FY03 (82% in FY02) • Demand is seasonal in nature with application on woolens and soft clothing • Plans to introduce a product targeted at other washing applications to reduce seasonality

  17. Toiletries • Contributed 8% to own branded sales in H1 FY03 (9% in FY02) • Presence in shaving cream, fairness cream, talcum powder and deodorant • High growth category providing exciting opportunities • Gaining market share in shaving creams • Production at Guwahati to optimize fiscal benefits • New products in deodorants and other categories to drive growth

  18. Market Shares 2000-01 2001-02 Apr-Sep’02 Toilet Soaps 5.6% 5.8% 5.8% Hair Colour 42.1% 44.6% 44.5% Liquid Detergents 75.9% 81.9% 83.3% Fairness Cream 2.1% 3.4% 2.5% Shaving Cream 10.3% 10.5% 12.1% Talcum Powder 1.7% 1.3% 1.7% Deodorant - - 1.5% Source : ORG Data All figures shown are % for All India Value Market Share

  19. GCPL’s Performance Highlights Growth drivers for future earnings • Low incremental capex • Growth in revenues expected to exploit economies of scale in purchases and manufacturing, further enhancing operational efficiencies • Our advertising and promotional spending to branded sales is at the higher end of the FMCG sector as we invest aggressively in the business. A&P to Sales is lower in FY03 because of efficiencies in buying media time, use of channels for rural market & efficient execution of advertising.

  20. H1 FY03 Performance Power Brands: • Cinthol, Godrej FairGlow, Godrej No.1, Godrej Hair Colour, Ezee. • Power Brands sales grew by17% Toilet Soaps • Godrej Brand Soaps sales grew by 14% (against degrowth of the category) from Rs.1158mn in H1 FY02 to Rs.1314mn in H1 FY03, led by Godrej No1 which grew by 96% • Relaunched Godrej FairGlow • Launched special trade and consumer initiatives to mark the completion of 50 years of the Cinthol Brand Hair Colour • Hair Colour sales grew 14% from Rs.489mn in H1 FY02 to Rs.560mn in H1FY03 • Launched Mehendi Power in sachets under the brand name Godrej Nupur • Launched Copper Brown, Dark Mahogany & Burgundy fashion shades of Godrej Coloursoft. • No.1 in volume in fashion colours • Godrej HairCare Institute (GHCI) salon activity intensified • PHD sachet distribution continues to grow with special focus on rural distribution – crosses 1.2 million outlets

  21. Summary Financials * Sales are net of excise duty

  22. Shareholder Value

  23. High Free Cash Flow Generation • GCPL generates significant free cash flows, which are returned to shareholders as dividends FY 2002 Div % Div per share 1st Interim Dividend 50.0% 2.00 2nd Interim Dividend 87.5% 3.50 (on face value of Rs.4 Share) FY 2003 1st Interim Dividend 50.0% 2.00 2nd Interim Dividend 50.0% 2.00 Strong EVA growth • Lower capital expenditure coupled with negative working capital enabled a high EVA of Rs301mn for FY02 (Rs.202mn for H1 FY03). EVA to capital employed at 40% for FY02 (41% in HI FY03) We remain committed to deliver shareholder value

  24. High Free Cash Flow Generation • GCPL has completed the shares buyback • Shares bought back • Number % of share capital Amt utilised Avg price Period • 1,456,593 2.5 Rs.92.6mn Rs.64 Jan-Jun 2002 • 411,962 0.7 Rs.46.0mn Rs.111 Jul-Sep 2002 • Third shares buyback • Approved by the Board of Directors on October 22, 2002 • Maximum outlay - Rs.100 mn • Buyback from open market (BSE & NSE) at market price • Maximum price of Rs.175 per share of face value of Rs.4/- • Buyback for both Demat as well as physical shares

  25. Share Price Performance Source: Prowess The stock outperformed the broad and narrow indices

  26. Initiatives

  27. Initiatives • Divisionalisation of business carried out with the formation of Soap and Personal Care teams effective 1st Oct ’02 with mfg, procurement and marketing under one roof • Focus on Personal, Hair & Fabric care categories • Consumer centricity to guide all business actions • Restructuring of Distribution System - Super & Sub Stockists appointed • SKU Rationalisation • Implementing distributor-level inventory management systems for its key dealers • Leverage group synergies such as combined purchases of raw materials and media • Exploit tax benefits in backward areas; new factory in Guwahati to enhance profitability • Return excess cash to the shareholders through dividend and shares buyback • EVA Implementation complete across the organisation. • Measurement & Remuneration based on EVA. Introduction of Individual Performance Factor (IPF) in year 2 • Red & Blue Team Project - Think Tank - Young Executive Board constituted

  28. Thank You

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