GCPL Absorbs Rs 2,389 Crore One-Time Charge due to Strategy Adjustment in Africa Market
Godrej Consumer Products (GCPL) reported a Rs 2,389 crore exceptional loss for the quarter ended January-March 2023-24, owing to a change in strategy for its Africa market.
In the long run, the company expects the profit after tax (PAT) from this market to improve to Rs 50 crore in the medium term after the completion of its planned restructuring, it mentioned in its investor presentation following the announcement of its October-December quarter results.
In its presentation uploaded on exchanges on Tuesday, the company said that it had positive cash flow due to the East Africa reorganisation.
It also said that its rest of the world business (excluding India and Indonesia) expects volume growth in the medium term to be in mid-single digits and expects its earnings before interest, tax, depreciation, and amortisation margins to exceed 15 per cent.
GCPL reported that it completed the reorganisation of its Africa business in the January-March quarter and exited the East Africa market during that period.
Due to the restructuring exercise, the company reported an impairment loss of Rs 1,390.8 crore, attributed to its brand and goodwill for Africa, which included its brand Strength of Nature.
Additionally, the company also reported an additional one-time loss of Rs 927.2 crore, again related to the loss on the sale of subsidiaries and business in East Africa due to changes in its business model and long-term strategy for Africa.
An additional Rs 71 crore of exceptional loss was attributed to restructuring costs, including employees’ severance pay and inventory-related costs, the company said.
In its investor presentation following the announcement of its quarter ended October-December results, GCPL said that it expects profitability to improve in the medium term, with PAT projected to increase from zero to Rs 50 crore due to the reorganisation of the Africa business.
It also said that it is simplifying its hair fashion operations to a royalty model in select markets, largely in East Africa.
