
P&G can set up plants in India for exports: India MD & CEO Vaidyanathan

Summary
In an interview, L V Vaidyanathan, MD and CEO, P&G India said investments will “continue to come” to India as favourable demographics drive demand for its productsNEW DELHI : In July last year, LV Vaidyanathan took charge as managing director and chief executive of Procter & Gamble (P&G) India that comprises four separate entities, including two large listed companies—Gillette India and Procter & Gamble Hygiene & Health Care. On Wednesday, the local arm of the US company announced an investment of ₹2,000 crore to build a new export-focussed plant in the country. In an interview, Vaidyanathan said investments will “continue to come" to India as favourable demographics drive demand for its products and as the company builds on India’s role as a manufacturing and talent hub. He also said while fast-moving consumer goods (FMCG) businesses are seeing early signs of moderation in raw material prices, the company remains cautious in the short-term. Edited excerpts:
You have returned to India in an official capacity after a gap of nearly two decades. What changes have you seen in the market as well as in P&G’s business in India?
I approach this like my seventh country that I was getting into. I have to say that I am now blown away by the number of changes that I have seen, the level of awareness that consumers have about our categories, the level of aspiration that consumers have, and how the categories have actually grown over the last many years. The time when I left (2004), the business was less than ₹1,000 crore; today we are at about ₹16,000 crore. The number of employees has grown significantly; we used to have two plants, now, we have eight plants and 13 contract manufacturers. These plants, plus contract manufacturers and distributors have close to 55,000 employees. It’s great to see the journey that P&G has had in India. What this has done is that the (India) business has gained importance in the P&G world— it is now amongst the top 10 markets for P&G (globally). But more importantly, it’s also been a very important source of talent for the company. We have over 350 expats out of India in the system. Even if you look at our global leadership council, we have four Indians; when I left India, we had just one of them. P&G’s global COO (Shailesh G. Jejurikar) is Indian too. It’s great to see how this flywheel has worked.
What are P&G’s plans to expand its manufacturing operations in India?
Our manufacturing footprint in India has steadily expanded, both to cater to our domestic demand and exports. Over the last 25 years, we’ve invested over ₹20,000 crore on creating manufacturing capacity in India. We have announced a ₹2,000 crore investment into a manufacturing facility in the digestives space (within healthcare) in Sanand, Gujarat. This is a reaffirmation of how important the company sees India as not just in terms of domestic consumption but also as a place where we can set up manufacturing for exports.
FMCG firms are coming out of a very high inflationary period. Would you say the worst is behind you?
Well, it’s too early to say that but I would say there’s a little bit of easing up that we are seeing, at least on commodity inflation at this point in time. There are some commodities which are easing, there are others which haven’t yet eased up right now. We are treading very cautiously; I would not declare that across commodities we are seeing an easing up.
Has P&G started passing on any price benefits to consumers?
Again, it’s too early to comment on what the future really holds for us because, as I said, we are in a fairly uncertain phase at this point in time. Therefore, it would be difficult to guess where the industry is actually going to go. But just to step back and look at it—it has been a tough two years for the entire industry. We’re hoping that the cycle of inflation is starting to ease up; the data is still not conclusive enough for us to say that it’s easing up and that we are starting to see a very different cycle right now in our business.
Fundamentally, where do you think Indian households, especially rural consumers, are when it comes to paying for essential goods?
Purely, if I look at the data over the last three to six months, I see green shoots, I see some sequential improvement, but I really don’t see volume growth coming back. Volume growth typically in rural should be in early-to-mid single digits; they are not yet there.
Are you done with investments in India?
It is work in progress. The company views India very favourably, simply because of the demographics and the consumption that we already see and also the runway that we have growth. So, with that, investments will come as we keep going along.
Can you talk about P&G India’s integrated growth strategy?
We embarked on this integrated growth strategy journey about six-to-seven years ago. That starts with having a portfolio of brands and being in a set of categories where performance drives brands. The second one is to deliver ‘irresistible superiority’, as we call it—not just across products, but across different dimensions i.e. product packaging, communication, retail presence, and value. The third part of the strategy is productivity in everything that we do across all value streams. The fourth part of the strategy is what we call ‘constructive disruption’—basically building those capabilities which future-proof our business across different parts, whether it’s brand building, manufacturing, supply chain, go-to- market, innovation etc. And last is to build an organization, which is agile, empowered.
What's your view on the direct-to-consumer market? Is there an appetite to invest in this ecosystem?
There’s enough room for many players to come in and continue to offer propositions. If I look at a category like feminine-care, and look at the category development in India versus Indonesia or Philippines, there is still a lot of opportunity for the category. We continue to keep an eye on everyone who comes in with their offerings and how those are going to contribute to category growth. Our primary focus really starts from the consumer understanding their needs, the jobs to be done there and then designing our propositions to ensure that we delight them. We already have a direct-to-consumer play; our P&G store is on ONDC as well. We will keep learning in this space vis-vis our existing offerings and keep an eye on the rest of the brands and the ecosystem as well.