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Gillette to rejig setup post-P&G takeover

Gillette to rejig setup post-P&G takeover

Author | Source: Business Standard | Tuesday, Jan 17,2006 7:49 AM

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Gillette to rejig setup post-P&G takeover

Gillette India (GIL) today announced that it would be adopting a new organisational structure as part of the Proctor & Gamble (USA) acquisition. While Gillette would continue as a separate legal entity in India, its headquarters will be relocated from Gurgaon to Mumbai.

Ahmed Zubair, managing director, Gillette India, said: “We believe that with GIL remaining a separate legal entity in India, leveraging synergies from P&G in the areas of organisational structure, distribution, systems and facilities will help increase our reach, cost-efficiencies, speed to market and current growth momentum.”

As part of the re-organisation, GIL would adopt P&G’s global business unit (GBU), market development organisation (MDO) and global business services (GBS) structures.

Under the new GBU, the company will move away from business units based on geographical regions to units based on product lines. The MDOs will adopt global programmes to suit local markets and develop market strategies accordingly.

The GBS will bring together business activities such as accounting, human resource systems, order management and information technology.

As a result of the new structure, GIL would relocate some of its employees to Singapore – P&G’s regional headquarters. GIL will also transfer some employees to the new headquarters in Mumbai, and offer VRS packages to others affected by the restructuring.

The relocation to Mumbai would be effective from July 1, 2006. It also hopes to be able to focus on big brands and move the market faster.

The other changes to be effected will be on the distribution front, where GIL will move from its current distribution structure to P&G distributors.

“We believe the new distribution structure will significantly enhance GIL’s direct and wholesale coverage, and thereby help service more retailers and reach out to more consumers efficiently,” said Ahmed.

To synchronise its financial year with P&G, Gillette would also start following the July-June accounting year and, hence, would extend its accounting year for 2006-07 for January 2006 to June 2007, subject to necessary approvals.

Since a significant portion of the restructuring costs would be incurred in the first two quarters of 2006, it would reflect in the results for those quarters. The company, however, expects the benefits to result in higher earnings in the medium term, as well as in the long term.

RIPPLE EFFECTS

As part of the restructuring Gillette would adopt P&G’s global business unit, market development organisation and global business services structures

GIL would relocate some of its employees to Singapore, and also transfer a few to the new headquarters in Mumbai

GIL would move from its current distribution structure to P&G distributors

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