Godrej Consumer Products CEO Aasif Malbari Acknowledges Execution Failures and Weak Core Growth

Godrej Consumer Products’ new chief executive, Aasif Malbari, in his first investor call, acknowledged a string of execution failures, weak core-category growth and falling profitability, while promising a more aggressive push on innovation and overseas growth.

The assessment comes barely three weeks after Sudhir Sitapati’s abrupt departure as managing director and CEO, adding to investor concerns about the company’s ability to execute its long-term strategy.

Also Read: Godrej Consumer Products appoints Aasif Malbari as CEO, replacing Sudhir Sitapati

The biggest problem, he said, is closer to home. “Our core category revenue growth has been actually flattish, with profits actually kind of being under pressure.” He also flagged declining average profitability in India and Indonesia, while Latin America and other international businesses remain low-profitability operations.

Sitapati resigned on Aug 10, just three days after shareholders approved his reappointment for another five years and only months after the board had approved the extension. The company has not disclosed a reason for his departure. The board appointed Malbari, previously chief financial officer and head of the Africa business, with immediate effect.

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“We've delivered an organic UVG of 4% in India in standalone and at a consolidated level. The ULG has been 7% and 6%, and EBITDA has been 6%,” Malbari said. “We have definitely kind of made a significant shift below where we want it to be.”

The timing has made Malbari’s assessment of the business particularly significant. His message was blunt: GCPL’s strategy may not be changing dramatically, but its execution needs to.

The company now plans to spend about Rs 150 crore on a new research and development centre, while increasing international go-to-market spending and digital marketing. Together, these investments are expected to add about Rs 200 crore a year to operating costs once fully ramped up.

“These investments actually take 2-3 years to kind of pay back in full,” Malbari said, asking investors to accept higher costs even as it tries to repair profitability.

The company also disclosed that distributor inventory in India is too high. It expects to collect Rs 125 crore to Rs 150 crore of inventory over the next three quarters. Malbari said distributors are carrying about 20 days of inventory in general products, while GCPL believes it can operate within 10 days.

“Yes. I think it needs to be done,” he said when asked why the correction was happening suddenly. “It’s a little short-term thing because, yeah, Rs 150 crores is not small.”

The correction will put pressure on India profit growth, he acknowledged, even as the company maintains its FY27 guidance.

Also Read: Godrej opens Asia’s largest soap factory in Madhya Pradesh

Malbari also conceded that GCPL has struggled to execute several of its growth bets. On fragrances and deodorants, a category entered through the Rs 2,825-crore Raymond Consumer Care acquisition, he said the company “didn't get the execution right” when acquiring and integrating PAKS.

Market share in soaps has plateaued after years of gains, while household insecticides need better innovation, communication and distribution despite earlier product launches.

“We did fail to kind of convert it,” Malbari said, referring to the company’s inability to turn strategy into action. “It's more about resilience to convert the strategy rather than I would say ideas to kind of come out in terms of strategy.”

GCPL, however, is not changing its Vision 2040-style portfolio expansion. Instead, it is doubling down on it and wants its core categories to return to industry-level growth and its newer businesses to eventually push overall growth into double digits.

“The one thing which will define us being an out-performer is a double-digit immediate profit. The question will be when and not yet.”