Godrej Consumer Products Limited - Implementing EVA

            
 
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Case Details:

Case Code : FINC034
Case Length : 14 Pages
Period : 1997 - 2004
Pub. Date : 2004
Teaching Note :Not Available
Organization : Godrej Consumer Products Limited
Industry : FMCG
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Excerpts

Why EVA?

GCPL started facing problems with the liberalization of the Indian economy in 1991. Several leading multinational companies (MNCs) started entering the Indian FMCG market.

Apart from globally renowned products, they had the financial and technical muscle to dominate the Indian FMCG market. The problem was aggravated when the joint venture (JV) of GSL with Procter & Gamble (P&G) came to an end in 1996. Remembering the bad phase, Press said, "It hadn't been always so rosy for Godrej. There was a time when the company was struggling to keep pace with the changes of liberalization and the challenges of competition." GSL faced problems on several fronts including HR and marketing. After the dissolution of the JV, many capable managers left the company. Moreover, GSL was not able to attract new talent because most of them preferred working in MNCs...

Finance | Case Study in Management, Operations, Strategies, Finance, Case Studies

The Main Reason

A few analysts argued that GSL's move to adopt EVA was a well-thought plan. GSL had two divisions - GCPL and GIL.

The GCPL division was responsible for managing the consumer products business while GIL managed the chemicals and food business. Analysts opined that the product portfolio of GSL had become very large and unrelated ranging from soaps to detergents to food and chemicals. The growth in the product segments was not same. For instance, the consumer products business was performing better than the chemicals and food business (Refer Table II).

GSL hired Kotak Mahindra (Kotak), a leading financial advisory services company in India, to decide the fate of the GIL division, which was affecting GSL's financial performance...

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