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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Background Note

With manufacturing plants in 51 locations in 20 countries, Gillette catered to the need of more than 200 countries around the world. Globally, Gillette's portfolio of brands was organized into five business units: Blades and Razors, Personal Care, Oral Care, Duracell,⁴ Braun.⁵ (Refer Exhibit IV).

It was the market leader in alkaline batteries, toothbrushes and oral care appliances. Gillette started its Indian operations through a joint venture with the Kolkata- based Poddars⁶ in 1984. The venture was called the Indian Shaving Products Limited (ISPL) and Gillette had a minority stake of 24% in ISPL. In 1985, ISPL came out with an IPO for funding its manufacturing operations. ISPL's commercial production started in 1986 with the 7 O' Clock brand. Gillette increased the equity stake in ISPL from 24% to 40% in 1989 and further to 51% in 1993. It was with the launch of the Gillette Presto Readyshaver in 1993 that ISPL started selling products under the Gillette brand name.

Till then, ISPL was marketing products under the 7 O' Clock brand. In 1996, the Gillette Company started Gillette Diversified Operations Private Limited (GDOPL) in India to market the electrical and kitchen appliance brand, Braun. The merger of ISPL, Duracell India Limited⁷ and Wilkinson Sword India Ltd⁸ in 2000 resulted in the formation of GIL.

By 2002, Gillette had a stake of 75 per cent in GIL. The equity capital of GIL was Rs 325.9 million with Gillette holding 45 per cent. Another 30 per cent was owned through the investment vehicle, Gillette Group India Private Limited (GGIPL),⁹ thereby making the total group stake in GIL 75 per cent. The remaining shares were owned by the Poddar group and the general public. GIL had manufacturing units for razors and blades in Bhiwadi (Rajasthan) and Mysore (Karnataka), and one for oral care in Chennai (Tamil Nadu). Gillette Presto, Sensor Excel, Gillette Mach 3, Gillette Mach 3 Power and Gillette Series Shaving Gel were GIL's brands in the grooming segment. The grooming and oral care business contributed the bulk of the company's profits (Refer Exhibit V).

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4] Duracell International has its focus in the battery business. Gillette acquired Duracell International in 1996.

5] The Braun range of products comprised epilators, shavers, hand blenders, juicers, mixers, measuring gadgets etc. The Gillette Company withdrew Braun from the Indian and South Asian markets in 2003.

6] Poddar Group, through its joint ventures with foreign companies, operates in shaving products, personal care, batteries, sewing machines, travel related services and furniture businesses.

7] In India the products of Duracell were launched through Gillette Diversified Operations Private Limited.

8] A Gillette affiliate.

9] Gillette Group India Private Limited GGIPL is a wholly owned subsidiary of Gillette South Asia Inc. and Saratoga Investment, Inc., which is a subsidiary of The Gillette Company. Gillette's operations in India is conducted through GGIPL. By 2004, Gillette Diversified Operations Private Limited (GDOPL) became a subsidiary of GGIPL.