The heir takes over 

“ACTUALLY, THERE WAS no surprise at all,” says the newly anointed executive chairperson of Godrej Consumer Products (GCPL) about her elevation from executive director. Cynics may say that surprise would have been the dominant emotion had her name not been Nisaba Godrej, daughter of group patriarch, Adi Godrej. But sharing a name with her father (and the building) is not enough reason for her leading role; after all, she’s one of three siblings who share that name. Not to mention assorted cousins and sundry other relatives.

Godrej has put in her time at the company she’s heading, proving her chops across departments: product design, finance, human resources, marketing, and strategy. In 2012, when I spent a week or so at the GCPL office in Vikhroli, meeting Adi Godrej and his senior team, it was difficult to overlook Nisaba Godrej. She was in office at 8.30 am every day, sending mails, making calls and lists, and setting up her day well before any other employee got in. At the time, she was seen as one of the inheritors of Adi Godrej’s mantle; the patriarch had then said of his children: “[Eldest daughter] Tanya for repositioning the brand, Nisa for selecting key talent and strategy collaboration, and [son] Pirojsha for taking Godrej Properties public.”

But clearly the father saw one as most capable of running the group’s largest public company. GCPL is widely seen as the jewel in the Godrej crown, and who holds GCPL probably holds the group. (With due apologies to Rudyard Kipling’s Kim: “Who hold Zam-Zammah, that ‘fire-breathing dragon’, hold the Punjab”.) And that’s why Godrej debuts on this year’s Most Powerful Women rankings at No. 27.

In many ways, Nisaba Godrej is the modern face of one of India’s oldest industrial houses, founded in 1897, and arguably the first next-generation leader to successfully transition into an active role for a company its size. “Her advantage is that she has a very long runway to fine-tune leadership,” says Adi Godrej.

If the last five years allowed her to drill down into details of various businesses, grow the enterprise value of her business, and pave the way for her to take charge, then the next few years promise to test her mettle in transitioning into a visionary leader. The challenges are many. She will need to deliver on big bets made in Africa, the success of premium hair products, and the success of what could be the next Rs 1,000 crore brand: Aer air fresheners.

GODREJ IS, OF COURSE, keenly conscious that she is to the manor born. Equally, she is aware that she will have to answer to all stakeholders, investors, and thousands of Godrej employees if she doesn’t perform.

She has ambitious plans to grow the business, but first she’ll have to transform the stodgy, Old Economy image of GCPL into a slick, modern one that the younger generation will find attractive. This is where her years in product design and marketing will come in handy, because the quest for a new image means a heightened focus on packaging, product descriptions, and user experience.

Management consultant Dinesh Jain, who runs IndianMaze Advisory, says GCPL needs to be more customer-centric, and move beyond the mass market set that it currently caters to. He points to Paper Boat, the beverages company run by Hector Beverages, as a classic case of a company innovating for a specific market by tapping nostalgia and remembered flavours to create a niche. GCPL, and other consumer goods companies, need to “innovate trends and make products through consumer understanding on a premium platform”.

Because she understands the importance of innovation as well as the market, there are some things Godrej is prepared to do, and some that she isn’t. In the latter category is entering new product categories such as packaged foods or toothpaste. Vivek Gambhir, managing director, GCPL, and one of Godrej’s early hires, says there’s been discussion about these categories, which can successfully ride on GCPL’s penetration and distribution. But, he says, the company prefers to stay away from categories that will demand huge marketing budgets to beat existing competition.

In the case of toothpaste, for instance, the market already has the likes of Pepsodent, Close-Up, and Ayush from Hindustan Unilever; Colgate from Colgate-Palmolive; Promise, Red, and Meswak from Dabur; Vicco Vajradanti from Vicco Labs; and Himalaya Dental Cream from Himalaya. Dislodging them from their well-established niches would be expensive and time-consuming.

But then, will GCPL look at competing with the newer companies that proudly advertise their ‘Made in India’ cred? “Patanjali doesn’t keep me up at night,” says Godrej bluntly. She explains that even though they do compete on some products like soaps, “GCPL mostly operates in different categories, and in a different mind-space”. And yes, if GCPL wants to compete with Patanjali, it can advertise the fact that it was the first to make soap without animal fat, back in 1918 when it launched Chavi soap. But Godrej doesn’t plan to go down that path.

Instead, she’s focussing on the company’s particular strength in making products that embed themselves in consumer behaviour. For example, shaving cream; once customers found it worked, few switched. Its popularity may have been helped along by that classic television commercial. Who doesn’t remember “Sir, which shaving cream do you use?” Classic advertising aside, this mass popularity of such products is one of the hurdles to GCPL creating premium products, which, by nature, are lower-frequency buys.

To be fair, the quest for premiumisation was probably the reason for GCPL taking a 30% stake in B:Blunt, a chain of premium salons. The company invested Rs 34 crore in 2013 in the Mumbaibased company, the creation of Adhuna Bhabani, former wife of Bollywood actor Farhan Akhtar. The investment allowed GCPL to inorganically enter an aspirational segment of premium products along with a readymade narrative at a small price. “It’s prudent to buy an existing brand story than to grow it from scratch but it also signals that once the new products gain momentum, the services business will not expand,” says Darpan Sanghvi, founder of Sanghvi Brands, a company that runs MyGlamm, an e-commerce venture that sells cosmetics. He points to Frederic Fekkai, a French hairstylist who moved to New York and opened a couple of salons, launched a line of products, and was acquired by Procter & Gamble for hundreds of millions of dollars.

Balram Yadav, managing director, Godrej Agrovet, shares the story of when Godrej sewed up a joint venture with U.S.-based Tyson Foods in 2008. The American foods giant wanted to enter India, and had, Yadav says, approached Rabo Bank seeking a business to buy. At the time, Godrej Agrovet had a bleeding balance sheet and the group was eager to hive it off. Godrej, who assisted Yadav in the negotiations with Tyson, was upfront and transparent with the American company, explaining the straits Agrovet was in. After months of discussion, Tyson was in, and today, the joint venture is going strong. “If she was zooming in on the details then, the big change now is she’s making the transition to seeing the big picture,” says Yadav, who still works closely with Godrej.

Many of these acquisitions and strategic moves were flagged off under the group’s Project Leapfrog, of which Godrej was a significant part. Project Leapfrog was launched to transform the group’s consumer goods focus and scale. One of Godrej’s strategic recommendations was to wind up an unprofitable joint venture with Hershey, the U.S. chocolate confectionery giant. She also recommended merging Godrej Sara Lee with GCPL by buying out Sara Lee’s 51% stake in that venture.The result was greater scale and distribution, as well as shedding an unprofitable venture.

Like any storied conglomerate, the Godrej group is largely averse to taking too many risks; Jain says its companies rarely wander too far from their core strength. A company may know how to push a mass market soap, yes. But does it use the consumer understanding from there to jump-start innovation? “Beard oil, or moisturiser cream for men who sport bald pates are the sort of products that are niche but could add to the consumer connect and that’s when the product rub-off kicks in,” says Jain.

ASK ANYONE AT GCPL what Godrej’s key input has been over the past decade, and chances are they’ll say “recruitment”. In charge of the human resources function from 2009, Godrej was responsible for hiring many of the key members of the team that steers GCPL today, including its managing director, Gambhir. A partner with consultancy Bain & Co., Gambhir had been hired in 2009 as chief strategy officer. The Gambhir-Godrej partnership has been credited with growing GCPL’s market capitalisation from Rs 3,200 crore in March 2008 to Rs 66,416 crore at present. That puts it second only to the consumer goods giant, Hindustan Unilever. Revenues also grew from Rs 952 crore in FY07 to Rs 9,584 crore in FY17.

For this kind of growth to continue, Godrej will also need to be able to take some hard calls.Doubters should talk to Yadav, who has experienced her decisiveness first-hand. In 2001, Godrej Agrovet acquired Goldmohur, Hindustan Unilever’s animal feed business. Yadav’s predecessor preferred to keep Agrovet and Goldmohur as separate entities, effectively doubling the number of purchase managers, accounts managers, and branch heads.

Not capturing synergies was the least of it. For Agrovet, animal feed was the biggest business, while it was losing cash on poultry retail. Yadav, then a junior at Agrovet, suggested merging the two businesses, but was told by his superiors that this was a high-risk move that would alienate distributors of both divisions. The company continued to bleed cash till 2007, when Yadav was promoted to managing director. He suggested merging the divisions again. By then, the company was reporting operating loss of Rs 40 crore, though the animal feeds division was still pulling in a small profit.

Godrej was then executive vice president, strategy, at Godrej Industries, as well as on the board of Godrej Agrovet. Naturally, she took a keen and active interest in the company. Yadav recalls that he and Godrej discussed his suggestion for over three weeks. “Initially, her queries were subjective but then became quantitative,” he says. As she became more familiar with the business, Godrej began asking more incisive questions about costs, depreciation, HR implications, and so on. Yadav appreciates the fact that she could have ignored the details and looked at the big picture leaving him to take any flak later. Instead, she was with him every step, and was clearly part of the team that decided to merge the divisions, reduce management by at least 25%, and lay off close to a 100 people.

There’s a lot more about Godrej the manager, her HR nous, the focus on a diverse workforce, and so on. “Besides equality for humanity, she [Godrej]says being equal and fair makes great business sense where her team performs better with no fear of prejudice because of their identity. It is bosses like her that pave the way to equality,” writes activist Harish Iyer in a recent column in the daily newspaper DNA.

Which is all very good for GCPL, but the big question now is where Godrej plans to take the company.

TO AFRICA, TO start with. To be sure, this is not her brainchild. Adi Godrej, back in 2012, had spoken about GCPL’s Africa push, and the company has so far invested Rs 4,500 crore in that continent. (She credits GCPL’s Africa push to Omar Momin, the company’s head of M&A, and formerly Adi Godrej’s executive assistant.) The Africa play is part of GCPL’s global strategy, which it calls 3x3— to focus on three categories (personal wash, hair care, household insecticides) in three continents (Africa, Asia, South America). This was spelled out in 2010, and the company has been following it since. The Africa business now accounts for 25% of GCPL’s revenue; 50% of total revenue comes from international markets.

Godrej is determined to build on this. “We are basically wanting to be the largest company for African hair care,” she says. It’s an attractive market, sure. According to market research, African women in general spend three times more money on hair care than women elsewhere in the world, Gambhir says. Abneesh Roy, senior vice president at Edelweiss Financial Services, says that the Godrej group has made the biggest punt among Indian players in Africa. “Africa is profitable, bringing decent margins. The future is exciting, with the potential of more products from India coming through [better] distribution.”

However, the problem with the continent is that it is hugely diverse; there are vast differences within countries, to say nothing of between them. And then there’s the tricky matter of the kind of hair, the kind of treatment for that hair, and other socio-technological issues. “African hair is a different universe altogether, and is unlike that of women in other countries,” says Darshan Gandhi, head of design at GCPL. Gandhi spends a lot of her time in Africa, getting a feel of the market and trying to understand what women want from their hair care product .

She’s not the only one. Godrej herself is on the road a lot. “In a month, I’m travelling at least eight days, mostly to Africa but to other markets as well,” she says, adding that she wants GCPL to be seen as a “cheap and chic” brand across Africa. She knows it’s not going to be an easy job. “This is a 20-year play, and we will make mistakes along the way but we need to get the brand strategy and people right,” she says.

Ireena Vittal, former management consultant with McKinsey who is on the GCPL board, says that Godrej’s long-term game plan must focus on three points. “The first is to hunker down in India and stay relevant; the second is to make Asia bigger; and the third to nurture existing investments in Africa,” she says. By long-term, she’s talking of 30 years or so, roughly the time Godrej has before she retires.

GODREJ KNOWS SHE has a lot to do. But even as balance sheets and M&A strategy occupy her time, her top job, as she sees it, is ensuring the company upholds its values. When I meet her, she’s busy clarifying the company’s mission statement, which was codified in April this year. Called The Godrej Way, it spells out the company’s values and principles. “It talks about why we exist and how we add value together,” is how Gambhir describes it in his blog. Apart from the mission statement, Godrej has her own set of dos and don’ts as far as the company is concerned. For instance, she’s clear about not investing or setting up shop in China, or about spending huge sums on an e-commerce engine.

She is also keenly aware that the 16 other members of the Godrej Family Council, one of the largest shareholders, will not hesitate to critique her performance if things go awry. Maybe deep down inside, this unnerves her. But to the outside world, she insists that nothing has changed with her elevation. She laughs about it, saying that perhaps the only change is that she now wears flats “because I can’t run after my two children in heels”. Otherwise, she says, “it’s the same”.

Except, really, it’s not. For one, it’s now her signature on the term-sheets, annual reports and letters to investors. She’s now in the hot seat, and it’s not going to be easy, despite the Godrej name and legacy. She says she is aware of the fact that she cannot afford to disappoint GCPL’s stakeholders, who have become used to steady performance from the company. As Gambhir says: “Nisa’s style is to be extremely trusting, very open-minded and listen to everyone, but she is clear about where the buck stops and who takes the call.”

A lot of this will become clear in the next several years. For now, the big positive for any stakeholder is the fact that Godrej’s elevation has resolved that most contentious and sticky issue in any large conglomerate: succession. That’s one part of the battle already won.

(The article was originally published in the November 2017 issue of the magazine.)