Godrej Consumer Products Limited (GCPL) hopes product innovation will drive growth in 2024-25.

“Year 2023 has been unique as the economy is doing well but the parts that affect FMCG have been tougher. I don’t know if things will get worse than what they are. I suspect they will get better. What we are seeing is also slightly unorthodox. There is such a big difference between (growth rates of) GDP and domestic consumption,” Sudhir Sitapati, MD and CEO, GCPL, said.

“Assuming things continue to be in FY25 the way that it has been in FY24, we have to see how we can innovate and give more value to the low income and rural consumers.”

The first advance estimates of national income and expenditure released in January shows private final consumption expenditure (PFCE) for FY24 at Rs 97,74,122 crore, a growth of 4.43 per cent from Rs 93,58,694 crore in FY23. The rate of growth of PFCE is lower than 7.52 per cent in FY23 over FY22.

In contrast, GDP is estimated to grow at 7.3 per cent to Rs 1,71,78,641 crore in FY24 from Rs 1,60,06,425 crore in FY23. The growth rate of GDP in FY23 over FY22 was 7.2 per cent. The share of PFCE in GDP is estimated to fall to 56.9 per cent in 2023-24 from 58.5 per cent in 2022-23.

Sitapati said GCPL has recently introduced liquid detergents Godrej Fab for select markets at Rs 99 per litre in southern India and has also entered into the Rs 1,200-crore anti-mosquito incense stick market with its Goodnight Agarbatti brand.

The company has posted a consolidated volume growth of 8 per cent in Q3FY24 and sales growth of 2 per cent in rupee terms with the topline being impacted by currency devaluation in overseas markets such as Argentina and Nigera. The company expects to post a 6-8 per cent volume growth for the year with profit growth in the high teens.

PFCE expectation

According to a SBI Research report authored by SBI group chief economic adviser Soumya Kanti Ghosh, PFCE is expected to expand post general elections.

“To test the sensitivity of PFCE towards headline CPI inflation, we have modelled inflation on PFCE and found a negative relation of 25 per cent. As inflation is going to decline materially in the coming months, it is expected that PFCE will expand commensurately post elections in April-May 2024,” the report said.