Gillette's Restructuring in India
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Case Code: BSTR129 Case Length: 15 Pages Period: 1984-2004 Pub Date: 2004 Teaching Note: Available |
Price: Rs.400 Organization: Gillette India Ltd. Industry: Consumer Products Countries: India Themes: Corporate Restructuring |
Abstract Case Intro 1 Case Intro 2 Excerpts
"It is when international marketers play with a low-value market that they discover hard facts."
- Roshan L. Joseph, Director, Eveready Industries India Ltd, on Gillette India Limited's operations in 2002.
"Gillette India's performance is an outcome of a strong franchise growth, a culture of innovation, functional excellence and enhanced capabilities. We have successfully completed our turnaround through excellent sales performance backed by a profitability improvement strategy."
- Zubair Ahmed, Managing Director, Gillette India Limited, in 2004.
Introduction
Gillette India Limited (GIL), the Indian arm of The Gillette Company (Gillette), the world's largest manufacturer of shaving products, had been in India for a decade and half by 1998-99, but was unable to generate the expected growth.
In particular, the company's net profit margin took a severe beating during the period 1998-2000(Refer Exhibit I). To turnaround the company, in 1999-2000, GIL started a restructuring programme. The programme was three-pronged. It focused on functional excellence, a strategic re-look at the organization and a financial turnaround. The firm implemented the first with the objective of benchmarking and improving systems, processes and resource deployment in the company with that of the industry as a whole. This resulted in increased productivity, lower overheads and working capital deployment. At the strategic level, the company exited from non-profitable and non-strategic businesses to focus on profitable businesses.
It concentrated on the grooming and oral care business and exited the battery and household appliances activities. For the financial turnaround, the company paid attention to working capital management and improvement in operating efficiencies. The company achieved a 56% reduction in net working capital from Rs 1.56 billion to Rs 684.2 million between December 2001 and December 2002. There was decrease in receivables, product lines and inventories. The savings were put into marketing. Improved performances in key product segments and effective cost management resulted in GIL achieving a turnaround in the early 2000s (Refer Exhibits II, III).
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