Speaker 1: Hello and welcome to business today. I'm Sadhat Zarabian. With
Speaker 1: me is Perosha god Ridge, the chairperson Designate at god
Speaker 1: Ridge Industries. Perosha, welcome, congratulations. You are taking over a
Speaker 1: storied legacy almost one hundred and thirty year, one hundred
Speaker 1: and twenty nine and the pressure of continuing the brand
Speaker 1: which you have in the process of reinventing, but continuing
Speaker 1: with that legacy and making this group relevant to Naia India. Nayabhara,
Speaker 1: it must.
Speaker 2: Be a big task. What's the core of this plat
Speaker 2: So it's great to be with you.
Speaker 3: Sadda, thank you so much for being here with us.
Speaker 3: I think we're at a very exciting juncture the group.
Speaker 3: You know, we're in a relatively unique position. We were
Speaker 3: both in some ways, as you rightly said, celebrating one
Speaker 3: hundred and twenty nine year legacy, enjoying the advantages of
Speaker 3: a brand that has built over the years a great
Speaker 3: sense of trust, a great sense of respect amongst its customers.
Speaker 3: But also as the Goodridge Industries Group just two years
Speaker 3: old in this new format. So I think the aspiration
Speaker 3: for the group in the period ahead is to try
Speaker 3: and bring together the best of what we've enjoyed in
Speaker 3: terms of our legacy, but also bring to that a
Speaker 3: new sense of energy, purpose and ambition, and combine those
Speaker 3: two things and where we feel, you know, there's tremendous
Speaker 3: opportunities in.
Speaker 2: The period ahead.
Speaker 3: We enjoy as a group a strong performance track record.
Speaker 3: So now at the Gordridge Industries Group, we have six
Speaker 3: operating businesses. Three of them are publicly listed Go Toadge
Speaker 3: Consumer Products, Godage Properties and Go to jaggravet and three
Speaker 3: are unlisted Go Toadge Capital, Go Toadge Chemicals and Go
Speaker 3: toad Ventures. Cumulatively, these businesses have already in the past
Speaker 3: five years delivered both sales and earnings growth of about
Speaker 3: twenty percent a little over twenty percent in fact a year.
Speaker 3: What we'd like to do in this next period is
Speaker 3: take that consistency, do another five years of over twenty
Speaker 3: percent learnings per share growth, make sure that we add
Speaker 3: to that at the company level.
Speaker 2: A return and of equity of at least eighteen percent.
Speaker 2: We're also looking forward to celebrating our legacy and our
Speaker 2: vision for the future through a new purpose statement. So
Speaker 2: we've put out the new Purpose Statement, which is crafting
Speaker 2: tomorrow since eighteen ninety seven, and that intends to show
Speaker 2: celebrate the legacy of the group since eighteen ninety seven,
Speaker 2: celebrate the values the group has stood for. But make
Speaker 2: sure that people understand that our gaze is firmly looking forward,
Speaker 2: that we believe that the best parts of the gold
Speaker 2: Ridge Group lie before us, and that you know, it's
Speaker 2: our opportunity to make that happen.
Speaker 1: You know, in the age of startups all across India
Speaker 1: and the world, it's remarkable and when you look at
Speaker 1: data that very few groups survive even five decades. The
Speaker 1: fact that you've been around for this extended period of
Speaker 1: time and I've seen pivotal moments in India's economic journey industry,
Speaker 1: I want you to take a moment before I get
Speaker 1: into some company specific question in terms of the larger
Speaker 1: environment macro environment that Indian business operates in p Rosha,
Speaker 1: how do you describe this moment? Lots of challenges, but
Speaker 1: lots of opportunities as well.
Speaker 3: Yeah, I think you know, if you look in a
Speaker 3: very narrow way, I think you can always focus on
Speaker 3: the challenges. I think there's lots of opportunities, for example,
Speaker 3: for ease of doing business to be better. You know,
Speaker 3: I've spent a lot of my career in the real
Speaker 3: estate sector. I can say firsthand that ease of doing business, you.
Speaker 1: Know that always as Alaine, You're your first baby, will
Speaker 1: always remain my first baby.
Speaker 3: But you know, very excited about all the opportunities of
Speaker 3: the group. But you know, I think there are opportunities
Speaker 3: for us as a country to get better, and I
Speaker 3: think we're doing a good job of focusing on going
Speaker 3: to do our best to improve them. Things like ease
Speaker 3: of doing business, creating an environment where we're attracting institutional
Speaker 3: foreign capital are all quite important drivers of the economic
Speaker 3: growth we hope to see unfold. At the same time,
Speaker 3: if you kind of zoom out a little bit and
Speaker 3: look at where India is today compared to ten years
Speaker 3: ago or twenty years ago, I think it is a
Speaker 3: new country. It is all pull of aspirations. If you
Speaker 3: look at things like our infrastructure is a transformation that's happened,
Speaker 3: not still to be done, but lots that has happen.
Speaker 3: So I think it's similar to the story of the
Speaker 3: group in some ways. That you know, I think there's
Speaker 3: been a huge amount of progress as a country over
Speaker 3: the last many decades, a lot of opportunity and a
Speaker 3: lot of hard work that lies ahead of us. But
Speaker 3: we think that it's a you know, a real privilege
Speaker 3: and blessing to be operating a business in India today.
Speaker 2: I think we we're.
Speaker 3: Obviously the country with the largest population in the entire
Speaker 3: world if you look at it. I think most analysts
Speaker 3: expect India's economy to be the fastest growing major economy
Speaker 3: over the next couple of decades. So that is a
Speaker 3: pretty unique place and a unique opportunity to be able
Speaker 3: to tap and to have an established brand, have established
Speaker 3: platforms like we have. We rarely do see it as
Speaker 3: an immense opportunity.
Speaker 1: You spoke about an established brand, and one of the
Speaker 1: unique things is that you would perhaps in my mind,
Speaker 1: be one of the finest examples of patman h Gerda.
Speaker 1: The current energy in security that the world faces on
Speaker 1: account of West Asia, and we see our dependencies not
Speaker 1: just in oil and gas but multiple industrial imputs. I
Speaker 1: just want a quick comment from you on how important
Speaker 1: is it to develop our own base and supply chains
Speaker 1: from raw material to final products. Because your group operates
Speaker 1: in so many areas and you have a very good
Speaker 1: sense of that, how critical is it for our economic
Speaker 1: security to be more artmor neighbor across the chain.
Speaker 2: You know, I have a mixed feeling about this.
Speaker 3: On the one hand, I think it's quite sad to
Speaker 3: see the way the world is going where this is
Speaker 3: becoming more necessary. I think the globalized world, as much
Speaker 3: maligned as it was in many Western countries, bought and
Speaker 3: before seen prosperity, got great growth, took millions and hundreds
Speaker 3: of millions of people in fact out of poverty. So
Speaker 3: it's a bit of a shame to see that being
Speaker 3: questioned in the way it is globally, and the globe
Speaker 3: going in a direction of each country needing to be
Speaker 3: self sufficient. But at the same time, of course, we
Speaker 3: have to take the world as it is, not as
Speaker 3: how as we hope it will be. And I think
Speaker 3: there is an opportunity and a requirement for India to
Speaker 3: look at becoming much more self sufficient in key inputs.
Speaker 3: We've seen now global disruptions many times in just the
Speaker 3: last few years. If you look at the pandemic, that
Speaker 3: made clear what kind of disruptions can be faced. How
Speaker 3: you need to make sure that your supply chains are
Speaker 3: more secure. The current situation globally with the war and
Speaker 3: the close of the Strait of homost is another example
Speaker 3: of how supply chains can be quickly impacted.
Speaker 2: So I think India.
Speaker 3: Will have to do a lot of work on gaining
Speaker 3: self sufficiency. This is not something that can happen overnight
Speaker 3: or in a year or two, but I think we
Speaker 3: will have to move in the direction of ensuring that
Speaker 3: at least key strategic things needed for the country's security
Speaker 3: first and foremost, but economic growth secondly are internally available. Now,
Speaker 3: it won't be again a short journey or an easy journey,
Speaker 3: but it is one that we'll have to undertake.
Speaker 1: Russia, I sat through your very detailed presentation and I
Speaker 1: got the sense and just for our yours to be
Speaker 1: able to understand it, that you are indicating and coming
Speaker 1: out now going public with a pivot. What does that
Speaker 1: pivot entail? How much of your legacy businesses will contribute
Speaker 1: to this stretch target of five lacro marketcab by twenty
Speaker 1: thirty one, And what about the new businesses? What will
Speaker 1: you be spending time on driving in terms of group growth?
Speaker 3: Well, I think you know the opportunities lie in all
Speaker 3: of these, So I think we have three listed businesses,
Speaker 3: each of which we think has tremendous potential. If you
Speaker 3: look at the three businesses, our FMCG business has a
Speaker 3: large portfolio of brands. I think we think that FMCG
Speaker 3: industry has been underperforming the last couple of years, but
Speaker 3: actually the last few quarters we are seeing that turnaround
Speaker 3: irrespective of industry performance. Furthermore, we think the brands we've built,
Speaker 3: the kind of steps the business has taken in recent
Speaker 3: years will lead to very strong performance there. So our
Speaker 3: our medium term aspiration for that business is to get
Speaker 3: to a ten percent volume growth. We think if the
Speaker 3: business can do that, of course revenue growth will be faster,
Speaker 3: earnings will be even faster, and that can unlock a
Speaker 3: huge amount of value. Similarly, another listed business of ours
Speaker 3: is Goodridge Properties, which has been one of the fastest
Speaker 3: growing businesses in the group, one of the fastest growing
Speaker 3: businesses in the sector.
Speaker 2: For the last three years.
Speaker 3: That business has consistently been the largest residential developer in
Speaker 3: the country. Its growth has been well distributed. It's the
Speaker 3: number one or two listed player in all five of
Speaker 3: India's largest real estate markets and despite now being a
Speaker 3: leader in the sector, our market share in that business
Speaker 3: is only about five percent, so we believe this tremendous
Speaker 3: opportunity to continue to benefit from the consolidation that is
Speaker 3: happening in the real estate sector, and we'd hope to
Speaker 3: about double our market share over the next five to
Speaker 3: seven years in Goodridge properties. We think that can again
Speaker 3: unlock a huge amount of value as that unfolds. Also,
Speaker 3: the accounting in that business is a little bit strange,
Speaker 3: where you have sales happening upfront, but vl recognition only
Speaker 3: when projects are delivered. So we actually think the market
Speaker 3: hasn't fully appreciated the scale of earnings that are going
Speaker 3: to unfold over the next couple of years through sales
Speaker 3: that have already happened. So we hope to see some
Speaker 3: value unlocked happen as we're able to prove that through deliveries.
Speaker 2: Over the next couple of years.
Speaker 3: Our agri business, similarly, is a listed player, hasn't seen
Speaker 3: much value creation unfortunately in the stock market in recent years.
Speaker 3: We're very committed to turning that around. It's almost a
Speaker 3: mini conglomerate of its own, with several different verticals under it.
Speaker 3: Some of those are already leaders in the categories they
Speaker 3: operate in with bright futures, like.
Speaker 2: Our oil palm businesses.
Speaker 3: Others like some of our food businesses in dairy and
Speaker 3: chicken processing, we think have much more potential than has
Speaker 3: been exhibited so far, and we're quite focused on turning
Speaker 3: those around. Equally some of our unlisted business I won't
Speaker 3: talk about all of them but in the interesting time,
Speaker 3: but I think you know one that we're very passionate
Speaker 3: about is our financial services business. That business is just
Speaker 3: five years old. It's the youngest business in our group.
Speaker 3: In the five years has already gotten to over a
Speaker 3: twenty five thousand coro AUM.
Speaker 2: Has scaled very well.
Speaker 3: We're very confident about the team that's in place in
Speaker 3: that business and the aspiration there is to take it
Speaker 3: from a twenty five thousand coro roughly to one hundred
Speaker 3: thousand coro AUM over this next five years. At that point,
Speaker 3: we think that business will be a very good candidate
Speaker 3: to be a publicly listed player, given the scale of
Speaker 3: the financial services business as an industry and the opportunity
Speaker 3: the gold Ridge brand provides. If we're able to execute well,
Speaker 3: I think over a period of time, this can be
Speaker 3: one off, if not largest business.
Speaker 1: Okay, when you talk about listing at least two more companies,
Speaker 1: what will the intent be raising capital or unlocking value?
Speaker 1: Why would you do that? And if you could talk
Speaker 1: about a generalized time frame.
Speaker 3: I think so this five year timeframe is the timeframe
Speaker 3: we're looking at for that. Within that, exactly when will
Speaker 3: this depend on how markets perform, how the individual businesses grow.
Speaker 3: I think the intent will be to make sure the
Speaker 3: businesses can raise the capital they need for their growth
Speaker 3: on an ongoing basis, in a sustainable manner. So the group,
Speaker 3: at the group level, we don't want to be funding
Speaker 3: businesses indefinitely. So once we've created a certain amount of value,
Speaker 3: businesses have gotten to a certain stage, we think it's
Speaker 3: both important to unlock some of that value and then
Speaker 3: think about new ventures at the group level, but let
Speaker 3: those businesses then grow on their own steam.
Speaker 1: Okay. I want to come back to property, not just
Speaker 1: because of how you scaled it up and people talk
Speaker 1: about the kind of effort that you made, and it's
Speaker 1: a business that's talked about, but primarily from where the
Speaker 1: real estate industry in India, residential particularly stands in terms
Speaker 1: of the cycle.
Speaker 2: Is it at the peak?
Speaker 1: What is likely to happen to rates and consumer adoption.
Speaker 2: I think we're probably somewhere in the middle part of
Speaker 2: the cycle.
Speaker 3: So if you look at it, a typical cycle, you know,
Speaker 3: starts with a couple of years of volume confidence coming back,
Speaker 3: and if you look at that's exactly what happened this time.
Speaker 3: So from twenty thirteen to about the end of twenty twenty,
Speaker 3: we were in a consistent down cycle. Volumes were going down,
Speaker 3: prices were going nowhere, and that was a pretty tough
Speaker 3: end of the cycle. But from the end of twenty
Speaker 3: twenty onwards, the cycle has been through a very strong phase.
Speaker 3: I would say twenty one and twenty two or more
Speaker 3: about volumes are covering the market, getting confidence that the
Speaker 3: market the cycle had in fact turned direction. Twenty three
Speaker 3: and twenty four were about very rapid price growth, very
Speaker 3: rapid volume growth, and that's very typical of the sector,
Speaker 3: and we saw that in our business as well, where
Speaker 3: you know places like NCR Bangalore or twenty thirty percent
Speaker 3: even more in some cases pricing growth in a single year.
Speaker 3: I think from about the middle of last year we've
Speaker 3: been in what I would call the most steady end
Speaker 3: of the cycle, which also typically lasts three or four years,
Speaker 3: so our best case estimate is for the next three
Speaker 3: years you should see pricing move roughly in line with inflation.
Speaker 3: Volumes should be healthy but not growing explosively as they
Speaker 3: were a couple of years ago. So we think there's
Speaker 3: lots of opportunities at this part of the cycle as well.
Speaker 3: And for the company growth comes in two forms. One
Speaker 3: is the sectoral growth with benefits from both the structural
Speaker 3: growth in the sector as in the urbanizes its incomes growth,
Speaker 3: but also is impacted by where you are in the cycle.
Speaker 3: But the second part of the opportunity at the company
Speaker 3: level is from consolidation and market share gains. And if
Speaker 3: you look at it, Codridge Properties has over the last
Speaker 3: five years doubled its market share from about two point
Speaker 3: five to five percent, and that opportunity remains very strong.
Speaker 1: Okay, as we come to the end of this conversation,
Speaker 1: I want to come back and once again ask you
Speaker 1: to tell our viewers about how the Goddage Group journey,
Speaker 1: including the separation that happened a couple of years ago.
Speaker 1: It's in some ways a textbook of how you handled it,
Speaker 1: and markets have seen that story. You have been communicating
Speaker 1: but as we look ahead, where do you see this
Speaker 1: group in terms of continuing to take forward the legacy
Speaker 1: that your forefathers have in place.
Speaker 3: Yeah, you know, I think the restructuring was a great
Speaker 3: example actually of the legacy in action, right. We wanted
Speaker 3: to do it in a way that showed trust, that
Speaker 3: showed respect, that showed fairness, that didn't get messy in public.
Speaker 3: And we're very happy, I think on both sides of
Speaker 3: the family that we were able to do that. Relationships
Speaker 3: remain very strong. We've been on holiday with each other since.
Speaker 3: I think business each side strategically exactly and most and
Speaker 3: both sides of the business now get the agility and
Speaker 3: freedom to kind of operate as they choose to do so.
Speaker 3: So I think that was a great example of actually
Speaker 3: the values of the group. You know, we're very clear
Speaker 3: that at the group we are talking about values, we're
Speaker 3: talking about valuation. We never want to be in a
Speaker 3: position where we're looking at just one and not the other,
Speaker 3: because frankly, valuation without taking forward the values of the group,
Speaker 3: I think will leave us all very dejected. We all
Speaker 3: feel hugely proud, hugely blessed to have inherit inherited this
Speaker 3: incredible system of values this culture, and it's incumbent of
Speaker 3: on us to make sure this next chapter celebrates that
Speaker 3: and strengthens that. But equally, you know, it's not just
Speaker 3: that valuation without values is meaningless. Values without valuation is also, frankly,
Speaker 3: at the end of the day, quite meaningless, because if
Speaker 3: we're not able to perform, nobody is really going to
Speaker 3: care very much what our values are. So I think
Speaker 3: the marriage of those two things, which we've managed in
Speaker 3: the past and that we want to add more momentum
Speaker 3: to going forward, is really where the magic can get created,
Speaker 3: and that's the aspiration we have.
Speaker 1: You've given me a fantastic ending line. Value and valuation
Speaker 1: go together, Perushia. I issue all the way best to you,
Speaker 1: your family, and that fantastic management team that you're built
Speaker 1: over the years to take this journey forward all the
Speaker 1: way best and thank you very much for spending time
Speaker 1: with us today. With that, it's a wrap on this conversation.
Speaker 1: We'll see you again. Until then, good bye.