Mr. Subodh Bhargava ’s SPEECH FOR THE FIFTY EITHTH ANNUAL GENERAL MEETING
Dear Shareholders, Ladies & Gentlemen
Welcome to this Fifty Eighth Annual General meeting of your Company.
Let me, first of all thank each one of you for your commitment and sustained support. It is because of your active association that the Company has achieved the stature that it enjoys today.
To be able to stay ahead of the curve, GSK Consumer Healthcare continues to adapt itself. With consumer insights and product innovation at the heart of the business, the Company continues to be on a positive growth trajectory and for F.Y 16-17 achieved sales of Rs. 4,209 crores and the profits before tax stood at Rs. 1,010 Crores. While topline performance was driven by market penetration achieving wider and greater access and distribution of our products, Science and innovation continue to differentiate and drive progress as our anchor strategy.
I am happy to state that your Company’s stock value has remained positive and is currently trading at around Rs. 5500/-. Based on Company’s financial performance for the year ended March 31, 2017, the Board has recommended a final dividend at the rate of Rs. 70 per equity share of Rs. 10 each subject to your approval at today’s meeting.
During F.Y 16-17 India witnessed transformational policy initiatives, dynamic global political landscape, shifting attitudes, economic disruption, increased competitive intensity and uncertain external environment.
The economy regained some of the lost momentum during the year that experienced bold yet disruptive times. One of the key reform has been ‘Demonetization’ that may have had short term disruption but is expected to benefit the economy in the long run. Your company mustered its way through this phase by responding well to the volatile demand situation with an agile supply chain and strong support to the trade with extended credit terms.
India also saw the rollout of the Goods and Service Tax (GST), the biggest tax reform since
Independence. This revolutionary tax regime will not only smoothen the credit chain, improve tax compliance but would also bring in transparency and efficiency. I must add that the Company is well prepared across critical functions, ensuring no business disruptions.
Looking forward, though India cannot be insulated from the global winds, the economy today is wellpoised to register a new phase of growth. In the midst of a highly volatile, unpredictable and changing environment; Indian Economy is uniquely positioned to continue to grow and at the same time avoid the speed breakers that the rest of the world has experienced in their journey from 'developing' to 'developed'. India remains a key player in the global economy with a stable government and a healthy GDP growth. Owing to shift in consumer behavior and expenditure pattern, India is expected to be the third largest consumer economy as India’s consumption may triple to US$ 4 trillion by 2025. We have
seen consumer confidence improving riding on dynamic economic environment and lower inflation.
FMCG continues to be an exciting arena. With predicted good monsoons, growth for the FMCG sector is expected to come from rural markets. This along with rising per capita income of Indians will accelerate the FMCG industry growth. At present, GSK Consumer Healthcare has 64% market share in HFD category, significantly ahead of competition. Two of our products Horlicks and Boost are among the top 3 brands in HFD segment with Horlicks continuing to be the market leader. This clearly demonstrates that customers have faith and trust in Company’s brands within the competitive market dynamics. Focus on innovation, consumer insight and R&D resulted in key product launches maintaining GSK at the top.
In 2016, the Company introduced three new Health food drinks Horlicks 2x Immunity, Horlicks Growth+ & Horlicks Cardia+. Horlicks 2X Immuno Nutrient is scientifically proven and helps body’s natural defence system along with addressing the mental and physical growth of children, thereby living upto the product proposition of making child “Taller, Stronger and Sharper”.
Horlicks Cardia+ is a scientifically designed advanced nutrition for heart health that helps reduce blood sugar, insulin and cholesterol spikes. Growth+ is India’s first clinically proven HFD that focuses specifically on the lost growth of a child.
Boost through ‘Play the Pros’ campaign, at the Chennai Open, recorded a new Guinness Record for the “largest” number of Kids at a Tennis Session which further enhanced consumer connect.
Your Company’s R&D team continued to develop relevant product pipeline delivering high value to the end consumer. Seamless collaboration with expert & digital marketing helped in enhancing insights to feed the future Innovation funnel and build the pipeline. The supply chain function through its Freight strategy BOLT [Buy Smart, Optimize Network, Load More and Travel Less] has managed to bring down costs significantly. I would like to complement the team’s commitment and effort!
GSK Consumer Healthcare is expanding its reach and presence not only to newer markets but also into the consumer mind space. On the back of exceptional modern trade performance, market displays, distribution and consumer retail and e-commerce activation, the Company has witnessed category driven momentum across regions.
GSK Consumer Healthcare has constantly endeavoured to create last mile access to its products and build a sustainable business model. Today our products reach approximately 20,000 villages. Our rural business has contributed significantly to the growth. The Company has also improved its distribution in wholesale channel by 12% over the last year. The total reach of GSK products through direct and indirect distribution stands at 43 lacs stores in FY 2016-17. This is reflective of an excellent in-market execution. Sachet strategy has further strengthened our community based activation programs.
Horlicks Swasthya Abhiyan aims to improve standard of hygiene and health in rural areas. Today, the Abhiyan reaches to over 5700 villages and 1 million rural households targeting to nourish the potential of each individual, enabling them to do more, feel better and live longer.
The Village Level Entrepreneur (VLE) program touches lives of people in more than 2000 villages providing livelihood to under privileged women while enhancing access of your Company’s products directly to homes in villages. You will agree with me that the role of any enterprise in the society decides its success in the long run.
This year the Company has stepped up its CSR initiatives with focus on micronutrient deficiency, responsible medication and improving oral health across the country.
9 out of 10 children are believed to be at risk of ‘Hidden Hunger’, a form of malnutrition caused due to low absorption of vitamins and minerals, leaving the child prone to infections and impaired development.
One of the key priorities of Company’s CSR programme- “Mission Health” is to address micro-nutrient deficiency in child’s life. Partnership with NGO SHARP is targeting 1000 schools across Uttar Pradesh, Madhya Pradesh, Bihar & Karnataka in creating awareness on malnutrition among 150,000 children Company’s partnership with Akshaya Patra Foundation provides mid-day meals to 50,000 children in more than 150 schools in Karnataka; Company’s association with CII Foundation is focused on food safety enabling society to access high quality nutritious food without any adulteration.
These efforts are the real differentiators that make your Company stand apart and fulfil its vision of do more, feel better, live longer. As new generation of innovations take root and the FMCG industry structure shapes up under competitive pressure, companies will come across new challenges, and more importantly opportunities. The key is to reignite growth, but growth that is sustainable and responsible. With our robust portfolio backed by science and innovation; driven by consumer insights; competitive position and strong leadership, we are well placed to take advantage of this rapidly changing environment to strengthen
our leadership position even further.
Your Company takes pride in the diversity of talent it has across gender, culture, demography & geographies. I complement each one of our employees for their focus, hard work, dedication, collaboration and teamwork. I would also like to appreciate, the efforts put in by the senior management team in successfully driving the diversity and inclusion agenda.
I would also like to appreciate and congratulate Mr Manoj Kumar, Managing Director and his team for their leadership, goal-oriented efforts and pushing boundaries setting renewed standards of success.
On behalf of my fellow Board members, I express our appreciation and thanks to all our stakeholders and business partners – vendors, dealers, distributors for their constant support and contribution.
Thank you and best wishes!