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BW Businessworld

Expanding Their Foothold

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Think Godrej, think soaps, refrigerators and locks. However, there are more than a dozen lesser-known companies within the group in areas like aerospace, tea-coffee vending machines, precision engineering, material handling, chemicals and so on. These companies will be playing a supporting role in Godrej's march to $ 33 billion. All business heads at Godrej & Boyce that has 14 business lines have been given one message – build a company with a global footprint.

Take the case of the material handling business, where Godrej & Boyce foresees a large opportunity in forklift trucks. Currently Godrej is in the top 25 globally in that space. "But if we manage to acquire a larger player from Europe at Rs 200-300 crore, it will give us access to technology and design and catapult us into the top 10 globally," says Phiroze D Lam, executive director and president, Godrej & Boyce. That's just one among the many acquisitions or collaborations that Godrej & Boyce is exploring in its aggression to grow 300 per cent in five years. "You call it aggression. I call it normal expansion," says Lam, explaining the need for businesses to create a global presence.
In some cases, the company is entering newer businesses. Take the example of the acquisition of the Holland based maker of tea and coffee machines, Veromatic. Through the acquisition, Godrej & Boyce also managed to get hold of a water company owned by Veromatic, Water Wonder Benelux. "We always wanted to be in the water business. Now this acquisition gives us a presence in the institutional segment of water," says Lam. Post the Veromatic acquisition, Godrej has shifted production to India and managed to shave off costs by 40 per cent. "It makes the business compete better in Europe," says Lam.

Another case in point is that of the Rs 1,800 Agrovet business. Post a JV with US major, Tyson Foods, for the last three years, the business that was going through a rough patch because of bird flu, low realisation and so on has managed to do a turnaround in the last fiscal. "Tyson brings in efficiencies in poultry and we have efficiencies processes in feed," says Nadir B Godrej, managing director, Godrej Industries. Or look at the Rs 1,100 crore chemicals business was initially set-up to support the soaps business of the company. Now, they supply to the industry at large and only 2-3 per cent of its business comes from group companies. With a 15 per cent growth rate the business will not be as fast as the others in the pack. Nevertheless, it adds to the drops that will make the ocean of Rs 1,50,000 crore.