P&G firms up Gillette integration

P&G firms up Gillette integration

Author | Source: The Economic Times | Tuesday, Aug 15,2006 8:52 AM

P&G firms up Gillette integration

P&G India is fine-tuning the integration process with Gillette India, post the global acquisition in January '05. The Indian subsidiary of Gillette will continue to be a separate listed legal entity, at least for sometime, with both companies drawing upon and leveraging each other's strengths across functions, top company officials said.

Gillette has shifted from a company-owned sales representatives model to P&G's lean distributor-owned sales representatives structure. P&G's 29 distributors across the country will sell Gillette brands, Zubair Ahmed, managing director, Gillette India told ET.

Earlier P&G had over 1,000 distributors across the country, which was later streamlined into a tighter and leaner distribution structure where 29 stockists backed by strong IT systems and training processes exclusively stocked P&G brands such as Whisper, Head & Shoulders, Pantene, Vicks etc.

The stockists will now sell brands like Gillette razors and blades including the Mach3 and Venus brands, Duracell batteries, Oral-B manual and power toothbrushes, Braun shavers and small appliances.

Currently, almost 88% of Gillette's share is owned by P&G and other promoters. Analysts say it makes commercial sense for P&G to keep Gillette as a listed entity until it acquires the financial muscle to buy back the shares from the market.

"The financial impact to delist the company and purchase shares would have a huge impact on the company's profit & loss statement," an analyst with a foreign research outfit said. It is an eventuality in the long run, which P&G officials refrain from commenting on.

Almost 94% of Gillette employees (around 200) have moved to the new entity, while the overall casualty is placed at around 6%. "I personally wrote to the heads of all companies, which were on an expansion move in sectors like banking, telecom, FMCG and insurance that there was lot of talent available with Gillette post the acquisition and who are rendered surplus purely on account of similar functions in both companies.

The success of the employee-sensitive approach can be gauged from the fact that several of the Gillette employees who were immediately picked up by other companies remained with us till the hand-over process to P&G. Those who have not moved on to the new entity has done so for personal reasons for their inability to relocate either to Singapore or Mumbai."

Gillette India seems to have successfully managed to 'disengage' relationships with over 700 distributors (some of them unionised) across the country. "I think we approached the whole issue very sensitively both from a market and employee point of view.

We personally got in touch with the distributors with Gillette managers working out the best exit options for the distributors like giving them a fair lead time to dispose of stocks and offering to buy back the ones that remained unsold.

Also, the fact that Gillette distributors were also multi-brand distributors helped," said Mr Ahmed. Most of the Gillette distributors have now moved on to new businesses, especially telecom.

Like P&G, Gillette has now set up a global business unit (GBU) in Singapore (it had one in Boston) and a global business service (GBS) in Manila. The move will help us move closer to understanding the consumer in the emerging markets better, Mr Ahmed said.

Shantanu Khosla, P&G's MD, Ashok Chhabra, executive director and Deb Henretta president, ASEAN (Australia and India) with two other independent director will now be on the Gillette board.

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