Gillette's Restructuring in India|Business Strategy|Case Study|Case Studies

Gillette's Restructuring in India

            
 
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Case Details:

Case Code : BSTR129
Case Length : 15 Pages
Period : 1984-2004
Organization : Gillette India Ltd.
Pub Date : 2004
Teaching Note : Available
Countries : India
Industry : Consumer Products

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"It is when international marketers play with a low-value market that they discover hard facts." 1

- Roshan L. Joseph, Director, Eveready Industries India Ltd,2on Gillette India Limited's operations in 2002.

"Gillette India's performance is an outcome of a strong franchise growth, a culture of innovation, functional excellence and enhanced capabilities. We have successfully completed our turnaround through excellent sales performance backed by a profitability improvement strategy."3

- Zubair Ahmed, Managing Director, Gillette India Limited, in 2004.

Introduction

Gillette India Limited (GIL), the Indian arm of The Gillette Company (Gillette), the world's largest manufacturer of shaving products, had been in India for a decade and half by 1998-99, but was unable to generate the expected growth.

In particular, the company's net profit margin took a severe beating during the period 1998-2000(Refer Exhibit I). To turnaround the company, in 1999-2000, GIL started a restructuring programme. The programme was three-pronged. It focused on functional excellence, a strategic re-look at the organization and a financial turnaround. The firm implemented the first with the objective of benchmarking and improving systems, processes and resource deployment in the company with that of the industry as a whole. This resulted in increased productivity, lower overheads and working capital deployment. At the strategic level, the company exited from non-profitable and non-strategic businesses to focus on profitable businesses.

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It concentrated on the grooming and oral care business and exited the battery and household appliances activities.

For the financial turnaround, the company paid attention to working capital management and improvement in operating efficiencies. The company achieved a 56% reduction in net working capital from Rs 1.56 billion to Rs 684.2 million between December 2001 and December 2002.

There was decrease in receivables, product lines and inventories. The savings were put into marketing.

Improved performances in key product segments and effective cost management resulted in GIL achieving a turnaround in the early 2000s (Refer Exhibits II, III).

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1] Shailesh Dobhal, "Gillette's Rerun," Business Today, May 12, 2002.

2] Eveready Industries India Ltd., a competitor of Gillette's battery operations in India, is engaged in the manufacturing and marketing of carbon zinc, rechargeable and alkaline batteries. The company with sales of over US $ 200 million in 2003 is the flagship of the Williamson Magor Group.

3] "Gillette Net Profit Zooms 594%", Financial Express, February 26, 2004.

 

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