MUMBAI: Godrej group chairman Adi Godrej has said the diversified conglomerate has begun its third and final phase of expansion in Africa, covering most key markets in the continent where it is "heavily invested".
The group is growing at 25-30% in Africa, Godrej said on Thursday. "In addition, we are growing through acquisitions. If you add acquisitions, we are growing much faster," said the chairman of the $3.3-billion group, which employs about 9,000 people in Africa alone.
"The third phase will give the group $70 million (over Rs 375 crore) additional revenues," Godrej said, adding that the final phase will take about a year to complete.
The shares of Godrej Consumer Products LtdBSE -2.30 %, the group's flagship company, hit an all-time high of Rs 732.80 a share, gaining 25.15 on BSE on Thursday.
"Africa is clearly the continent of the future," said Godrej, who last week led a business delegation to Uganda and South Africa in his capacity as president of the Confederation of Indian Industry, or CII, an industry body representing Indian businesses.
Godrej Consumer Products has acquired companies in Asia, Africa and South America to expand its presence overseas. Since 2010, it has made at least eight purchases, including its most recent acquisition of Chile's Cosmetica Nacional. About 40% of the company's sales came from outside India in the financial year ended March.
Africa contributed Rs 1,000 crore or 5% to the group's turnover. Godrej expects the growth to accelerate as he scours untapped markets in Africa and Myanmar to grow his hair care and household products businesses. "We'll continue to grow inorganically," he said, explaining that through the 'three by three' strategy, the group was eyeing opportunities in the developing world, particularly in Asia, Africa and South America.
Banking heavily on buyouts, Godrej Consumer has made key acquisitions in Africa. The Darling Group, a pan-African hair care business that Godrej acquired in 2011 for $222 million (about Rs 1,200 crore at current rates), and Tura in Nigeria for $50 million (about Rs 270 crore), have on average contributed about 25% growth annually, even as the African economies grew at an average of 6%.
Analysts Manish Jain and Anup Sudhendranath of Nomura Equity Research, in a research report dated October 23, said: "Once the company completed the acquisitions, there was significant scepticism that integration would take a long time and that the actual delivery on these acquisitions would not be easy."
Through the Darling Group, Godrej is operating in six countries in Africa. When it acquired a majority stake in Darling, it decided to adopt a three-phase strategy by initially concentrating only in three countries.
The first phase ended a year ago and the second phase has just been completed. The first and second phase involved three countries each. The six countries - South Africa, Mozambique, Nigeria, Uganda, Kenya and Tanzania - account for 70% of Godrej's revenues in Africa. Godrej has taken big bets in the developing market but has been fairly conservative in growing its acquisitions.