Adi Godrej, chairman of the Godrej group, tells Olga Tellis that the most important reform on the table is the introduction of the goods and services tax (GST). He calls this the single most important step after the opening of the economy in 1991.

You are the chairman of the executive board of the Indian School of Business (ISB) in Hyderabad. What would you say is the ISB’s signal achievement as it celebrates its 10th anniversary?
The ISB is recognised globally for being the youngest institution in the world to be ranked among the top 20 global B-schools by the Financial Times, London. Currently it has the largest business-school class in Asia with 540 students. Next year we will be setting up the Mohali campus which will be operational by April. It also has tie-ups with top management institutions worldwide.

Godrej has now grown into an Indian multinational group. What are your future plans?
We have manufacturing facilities in West Asia, Vietnam, Singapore and Malaysia that make steel furniture. In the consumer goods industries we have facilities in Indonesia, Argentina, South Africa, Nigeria and Mozambique. We have acquired Africa’s Darling group which deals in hair extensions. Africans have curly hair and they straighten it by using “relaxers” or use hair extensions.
Darling is one of the largest companies in the hair-care business in Africa. We own 51 per cent at present. We will take over the company in three stages by September next year and have the option to own the whole company in three to five years. Darling has a presence in 14 countries in sub-Saharan Africa. We have also acquired other companies in Africa like Rapidol which makes the Inecto brand hair colours, Kinky and Tura. Godrej hair-colour products have the leadership position in 21 countries in South America, Africa and Asia.

How big is your hair colour business as you have competitors like L’Oreal and P&G?
The hair-colour business has sales of about `800 crore. We are the largest manufacturers of powder hair colour in the world which sells very well in developing countries. Yes, we compete against the likes of L’Oreal in many countries.

What is your strategy for the growth of your `15,000-crore group in the future?
Our strategy is 10x10, that is grow 10 times in 10 years. This means we will have a compounded annual growth of 27 per cent, of which 15-20 per cent will be through organic growth and the balance through acquisitions.

Where are you looking for acquisitions?
On three continents. Our strategy is 3x3 — hair care, personal wash and household products in Asia, Africa and South America where we can translate our products, technology and business processes. We are not looking for acquisitions in the developed world.

How much do you spend on research?
One per cent of our sales is on R&D. And our research centre in the household insecticide business is one of the best in the world.

To what extent is your business affected by the slowdown in the economy?
There is definitely a slowdown, but it is also a shame that many reforms, like FDI in multi-brand retail, have been stalled. The bigger and more important reform, however, is the goods and services tax (GST) which will add two percentage points to the GDP. It is a huge reform — the single most important reform after the opening of the economy in 1991. We expect the economy to grow strongly. India will find its way and our business is growing and doing well.

Since much of the future growth depends on reforms, what other reforms would you like to see implemented?
I would like to see the new manufacturing policy and reforms in controlling corruption. The new Companies Bill, for instance, could help, and so can the new direct taxes code (DTC), in controlling corruption. But the biggest single reform is the GST.

What reforms do you think could directly help in controlling corruption?
There are two things required — one, the Lokpal Bill must expose and punish wrong-doers, and two, the system must be transparent. The government should not have powers to give permissions on a case-by-case basis. To give an example, the FMCG sector is not ridden with corruption only because there is no need for interaction with government, unlike in infrastructure where one sees a lot of corruption.
Let’s look at another contrast. After the 2G scam came the 3G auction and it was excellent. There was no corruption as the system was transparent. So you need strong punishment and a transparent system that reduces opportunities for corruption.

Are you hopeful of GST and DTC coming into force soon?
In the present circumstances it is difficult to be hopeful. But this is true not only of our country. Look at the bickering in the US and Europe where politicians are not allowing economic reforms to be implemented. The problem is that there are too many politicians in the world and far too few statesmen.

Do you see the global situation improving?

The global situation, particularly in Europe, is grave — a cause for concern. But the leaders are determined to find a solution. If they fail, it will be detrimental to global growth.

You seem fortunate to be operating in countries that are doing better.

Yes, the developing world is doing reasonably well. China, India, Brazil, Indonesia, Africa etc. They could do better. We are fortunate to have made acquisitions in these places. The per capita sales of our FMCG products are the highest in Argentina, South Africa and Indonesia. The revenue from our FMCG business outside India is 35 per cent.

What would you say distinguishes the Godrej group from other groups in the country?

Our distinction is that there are 500 million Indians who use our products daily. We are one of the largest among companies headquartered in the developing world in terms of number of consumers. China Mobile is the only company we know that has more consumers than us.

Your were probably the first business group to give equal opportunities to the daughters in the
family.

Yes, Tanya, my eldest daughter has been in the business for 20 years. We have always believed in equal opportunity for girls in the family.