Godrej mulls relocating North East Indian units as sops go

Mumbai,Sumit Moitra: Sudden withdrawal of fiscal incentives to new manufacturing units in the North Eastern states has peeved Adi Godrej, whose group including the consumer division may be forced to relocate several factories it has in the region elsewhere.

“There are such good fiscal incentives in the North East, making the region an attraction. We have seven-eight factories in Mizoram, Meghalaya, Sikkim and Assam. But I think now they will stop giving further fiscal incentives. The incentive was to carry on for another three years but under a recent notification few days back there would be no new registration of units. If the incentives are withdrawn, there would be problem as logistics is an issue there. And to overcome the logistics (hurdles) we need fiscal incentives,” Godrej Group chairman Adi Godrej said.

Group’s flagship listed entity Godrej Consumer Products Ltd has plants in Sikkim and Meghalaya that enjoy fiscal incentives under the North East Industrial and Investment Promotion Policy.

The policy implemented in 2007 was meant for 10 years – till 2017. But a circular directing not to register any new units under NEIIPP 2007 effective December 1 has left Godrej fuming as it would hit company’s bottomline beginning the fourth quarter.

“I believe the states are going to protest,” Godrej said interacting with the media. The policy, in its earlier avataar was launched in 1997 as North East Industrial Policy covering states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura. The incentive policy was rechristened as North East Industrial and Investment Promotion Policy and Sikkim was included.

“All new units as well as existing units which go in for substantial expansion, unless otherwise specified and which commence commercial production within the 10 year period from the date of notification of NEIIPP, 2007 will be eligible for incentives for a period of 10 years from the date of commencement of commercial production,” the policy notification had said.

Meantime, Godrej is continuing to look at opportunities in overseas acquisitions as part of its aggressive strategy to keep maintaining a compounded annual growth rate of more than 25%.

“Under our 10/10 strategy we wish to grow 10 times in 10 years beginning 2010 which means a compounded annual growth rate of 26%. Quite a lot of that growth would come from organic but would also come from inorganic growth. We regularly look for acquisitions outside the country in consumer products.

The strategy also includes fully acquiring Darling group of Africa in stages after picking up 51% stake in 2011, a complex exercise as the business is spread across 14 sub-Saharan countries operating through different countries.

“We have an agreement to acquire that group in stages beginning with 51%. It has already been done in 8-9 of the 14 countries that it operates in. The process is on. There are issues including local legal and regulatory issues. We have acquired 100% in South Africa and Nigeria.”

The group is also targeting Asia and Latin America in personal care, home care and haircare categories to propel growth, he said.

Posted by on December 11, 2014. Filed under Editorial. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.