Project Report ON MARICO Submitted in INDIRA SCHOOL OF BUSINESS
STUDIES BY SHRUTI KUMARI Roll Number: F-46 PGDM
INDIRA SCHOOL OF BUSINESS STUDIES PUNEPage 1 of 46
(2011-2013)
EXECUTIVE SUMMARYIndias consumer market is riding the crest of
the countrys economic boom. Indias fast moving consumer goods
(FMCG) sector is the fourth largest sector in the economy of India
with a total market size in excess of US$ 13.1 billion. If we go by
statistics, roughly around 73% of the Indian population lives in
the rural areas- thats a very large market. Many giant players both
foreign as well as domestic, are competing in the market with a
view to capture it. The growing consumerism in India shows the
rapid increase in Indian consumer purchasing power, it shows
strengths and opportunity that lies in rural Indian markets
especially for FMCG products. As a result of it I have opted to
undergo the training in Marico Company a leading Indian FMCG
Company having excellent distribution channel and deep rural reach
in India .As the major part of the market is yet to be taped one
need to evolve a set of strategies and there by plans to tape the
potential Indian consumer market. To capture such a great
opportunity, only good product and brand awareness will not be
sufficient but proper distribution channel must be there With the
world moving toward's globalization and the phenomena of LPG is
touching each and every country and industry its effects are also
there on Indian FMCG sector. Thus Companies need to constantly
revive their 4P's strategy to be successful in the growing
competitive Market's. Considering purely the fundamentals laid down
by Philip Kotler is suggest that you need to have Right Product Mix
(Product),Proper Pricing Strategies(Pricing),Right Promotion
Offers(Promotion) and E fficientDistribution Channel (Place) to be
a Successful Company. So in order to have a clear picture of all
4P's of Marico and especially for having efficient distribution
channel, Satisfaction Level of Retailers on Various Products as
well as other micro Parameter's plays a vital role in identifying
the flaws and merits of Marico.
Page 2 of 46
IntroductionMarico is a leading Indian Group in Consumer
Products and Services in the Global Beauty and Wellness space.
Maricos Products and Services in Hair care,Skin Care and Healthy
Foods generated a Turnover of about Rs.13.6 billion (aboutUSD 380
Million) during 2006-07. Marico markets well-known brands such as
Parachute, Saffola, Sweekar,Hair & Care, Nihar, Shanti,
Mediker, Revive,Manjal, Kaya, Sundari, Aromatic, Camelia, Fiancee
and HairCode. Maricos brands and their extensions occupy leadership
positions with significant marketshares in most categories- Coconut
Oil, Hair Oils, Post Wash Hair Care, Anti-lice Treatment, Premium
Refined Edible Oils, niche Fabric Care etc. Marico is present in
the Skin Care Solutions segment through Kaya Skin Clinics (31 in
India and the Middle East), the Sundari range of Spa skin care
products (in the USA & other countries) and its soap franchise
(in India and Bangladesh).Marico's branded products are also
present in Bangladesh, other SAARCco untries, the Middle East and
Egypt. The Overseas Sales franchise of MaricosConsumer Products
(whether as exports from India or as local operations in a foreign
country) is one of the largest amongst Indian Companies and is
entirely in branded products and services. Marico was selected as
one of the eight. Indiancompanies in S & P's list of Challenger
Companies from various nations,compiled globally by Standard &
Poor's in June 2007.Marico has also won various other Awards such
as the following: 3 top Awards instituted by CNBC-TV18, U21 Global
and Watson Wyatt
Worldwide, in following categories: Indias Employer of Choice
for 2007 ,Award for HR Excellence & Award for Best Employer i n
t h e C o n s u m e r Products and Healthcare Sector. Gold Effie
(2007) for its Corporate campaign and a Bronze EffiePage 3 of
46
(2007) for Saffola. Kaya - Best Retailer in the Beauty and
Fitness category, India retail Forum(September 2007)9 NDTV Profit
Business Leadership Award, FMCG Personal HygieneCategory(Jul y
2007). One of India's 10 best marketers (Business Today September
2006). Brand Leadership Award at the India Brand Summit 2006
(September 2006) Kaya - Retailer of The Year Award (for the 2nd
consecutive Year) at IndiaRetail Summit 2006. The Gulf Marketing
Review Award in the Middle East 2006.
Every month, over 70 Million consumer packs from Marico
reachapproximately
130 Million consumers in about 23 Million households, through a
widespread distribution network of more than 2.3 Million outlets
inIndia and overseas. Maricos focus on sustainable profitable
growth is manifest through itsconsistent financial performance a
CAGR of 19% in Turnover and 19% inProfits over the past 3 years-
while setting a record of several consecutivequarters of year on
year growth- 32 for Profits and 28 for Sales. VALUES OF MARICO
INDUSTRY: Opportunity seeking Bias for Action Consumer Centric
Excellence Innovation openness & transparency Global outlook
Boundary lessness Marico has a set of articulated values that were
created at the inception of the organization, revisited and
modified once in the year 1997 and lately in 2003, through the
collective wisdom of Mariconians. The values since then have been
an integral part of the working of all Mariconians. Their values
are preferred practices that are employed in pursuit of their
Business. Direction. They sum up the philosophy that will build the
culture to drive business growthPage 4 of 46
Marico was famous for its 'Parachute' and 'Saffola' brands. In a
survey carried out by 'Brand Equity' of The Economic Times in early
2003, for India's 100 most trusted brands, Saffola ranked 75th and
Parachute ranked 29th. Marico's brands had shown resilience against
competition and maintained their market shares over the years.
Marico had maintained a steady sales and profit growth over the
years with a consistent Return On Capital Employed (ROCE) of over
30%.
In a survey of 500 companies conducted by 'Businessworld' in
2003, Marico ranked 16th in terms of ROCE while it ranked fourth
among FMCG companies. Marico's products reached around 100 million
Indians every month through 17 lakh retail outlets, which were
serviced by its nation-wide distribution network comprising six
regional offices, 32 Carrying and Forwarding Agents (CFAs) and 3600
distributors and stockists2. Marico entered two new lines of
business in the year 2002-03 - Skin Care services through its 'Kaya
Skin Clinics', and Ayurvedic Skin Care Products business in the US
by its acquisition of a controlling stake in 'Sundari LLC', which
owned the Sundari line of skin care products.
Page 5 of 46
Company History1988 - The Company was incorporated on 13th
October, under the name of Marico Foods Ltd. It obtained the
Certificate of commencement of business on 22nd November. - The
Company is engaged in the business of manufacture and marketing of
branded personal care products, edible oils, fabric care products
and processed foods. The Company's products are sold under the
brand names Parachute, Saffola, Sweekar, Marico's Hair & Care,
Revive and Sil.
1989 - The name of the Company was changed to Marico Industries
Limited w.e.f. 31st October. - In December, the Company entered
into an agreement with M/s.Rasoi Industries Limited for purchase of
its unit located at M.I.D.C.Industrial Estate, Jalgaon. 1990 - The
Company entered into a Registered Users Agreement dated 26 th
September, with BOIL for the use of the brands Parachute and
Saffola for an initial period of 3 years commencing from 1st April.
1993
Page 6 of 46
- The Company established a new plant at Kanjikode, Palghat
District, Kerala to manufacture Parachute Coconut Oil. This plant
with capacity of 24000 tons of coconut oil per annum began
commercial operation in May. - The products Parachute Coconut Oil,
Saffola and Sweekar are manufactured at the Company's factories.
The products Marico's Hair &Care, Revive Instant Starch,
Parachute Amla and Parachute Herbal are manufactured on job work
basis as per the Company's quality specifications and under the
brand names of the Company.
-The Company has two SSI Units namely M/s. Amardeo Plastic
Industries having its factory at Mumbai. - The SIL range of jams
and food products are manufactured by Kanmoor Foods Limited (KFL)
and marketed by the Company. - Saffola won the Most Outstanding
`Brand of the Year' Award instituted by the Advertising Club of
Mumbai. 1994 - Agreements dated 21nd February 1994 and 16th
November 1995 between the Company and The Bombay Oil Industries
Ltd. for using the Trademark Parachute and Saffola. 1995 - The
Company has acquired the Brand `SIL' from KFL in March for an
aggregate consideration of Rupees Three crores. 1996 - Memorandum
of Understanding dated 2nd January, between the Company and Karvy
Consultants Ltd. agreeing to act as Registrars to the Issue. - In
March, the Company made a fresh issue of 10,00,000 equity shares of
Rs.10/- each, at a premium of Rs.165/- per share, simultaneously
with an offer for sale by thePage 7 of 46
promoters of 26,25,000 equity shares of Rs.10/- each, at a
premium of Rs.165/- per share. - The Company decided to leverage on
the strong equity of the Parachute brand through appropriate
extensions. Accordingly, `Parachute Herbal' was launched. - The
Total Quality Movement within the Company has gathered speed and
now embraces virtually all locations. - The Company has made major
investments in information technology, a process which began four
years ago. Presently, all the establishments are covered by
information technology and networked with the Corporate Office.
- The Company has acquired a formidable reputation for its HR
practices and has been recognised by the National HRD Network in
the recent past. 1997 - Marico Industries has extended the Sweekar
oil brand to introduce two new refined oils-Sweekar cotton seed oil
and Sweekar mustard oil. - The company has set up a factory near
Jalgaon to process the cotton seeds and another factory near Jaipur
for the mustard oil. - The company has launched branded refined
mustard oil and cotton seed oil refined under its brand name
Sweekar Orange. - Marico Industries has been one of the few success
stories in the fast-moving consumer goods segment. - The company
has announced the extension of the Parachute brand name to other
products in the hair care segment, thus making it an umbrella
brand. - Marico Industries has launched three new variants of
coconut oil light oil, nutra sheen liquid and nutra sheen
creme-under the brand name Parachute. - Marico Industries Limited,
the Rs. 400 crore consumer goods company has been selected as a Top
Performing Global Growth Company from India by the World Economic
Forum, New Delhi.Page 8 of 46
1998 - The company was originally a join venture between a Lever
group company and Nissin of Japan, and its products were
distributed through HLL's channels. - Marico Industries Ltd has
taken the lead in launching a refined oil in the soya segment with
a new variant called Sweekar Refined Soya Oil. - The company has
recently launched a new variant in Postman called Sona, which is a
sunflower oil.
- MIL launched an innovative fabric care product named Revive
ColourFix which helps to fix the colour on cotton fabrics. - The
company has recently extended the brand equity of Parachute to
coconut-based hair grooming products like Parachute Lite and
Parachute Nutra-Sheen. The company is also considering testing
Parachute branded products in international markets like Europe and
America. 1999 - Marico Industries Ltd is focussing on relaunching
its SIL brands in its `healthcare' business, after a successful
repositioning of its Saffola and Sweekar brand. - The company is
planning to introduce a range of vegetable soups. - The company is
planning to set up a wholly-owned subsidiary in Bangladesh shortly.
- Marico Industries (Marico) and The Bombay Oil Industries (BOIL)
have reached an understanding in terms of which the brands,
Parachute and Saffola are being assigned to Marico. - ICRA has
retained the `A1+' rating for the Rs. 7.5-crore commercial paper
programme of the company. - The company is planning to set up a
local manufacturing unit is several other SAARC countries. 2000Page
9 of 46
- The Company launched Parachute Dandruff Solution Coconut Hair
Oil in Calcutta, the first oil to combine coconut oil with anti
dandruff properties in a single hair oil. - The Company has
launched the branded coconut oil in a tamper proof seal pack with a
flip top cap. - Marico Industries Ltd. has a tied up with the
International Association of Trichologists (IAT), a non-profit
organisation based in Australia.
2001 - Marico Industries has launched the Revive Anti-Bacteria
starch. 2002 -Marico Industries Ltd has informed BSE that the Board
approved the Issue of bonus redeemable preference shares of
aggregate face value of Rs 290 million. Ratio -- 1:1 on equity
enhanced after bonus issue of equity shares made by the Board on
April 18, 2002 and approved by shareholders on July 18, 2002. The
rate of dividend is 8% p.a.Increase in authorised share capital of
the Company from Rs 300 million to Rs 600 million. 2003 -Marico
Industries Ltd have appointed Erehwon consultancy firm for
initiatives of innovation in marketing and management. -Marico
Industries have acquired a controlling equity interest in Sundari
LLC. 2004 -Marico Industries' popular edible oil brand 'Saffola'
launches a fresh advertising campaign. The campaign by Grey
Worldwide has a new tagline, Aaj se jeene ka andaaz sudhariye
(Improve your lifestyle today), urges every Indian to take up
healthy lifestyle. Earlier Saffola campaign used the tag line -
Saffola Swasth ParivaarKe Dil Ki Dhadkan -High Court of Judicature
at Bombay approves the Scheme of Amalgamation of Anandita Arnav
Trading & Investment Private Ltd, Madhav Nandini Trading &
Investment Private Ltd, Rajvi Rishabh Trading & Investment
Private Ltd and RishabhPage 10 of 46
Harsh Trading & Investment Private Ltd with Marico
Industries Ltd on February 12,2004 -Announces 1:1 bonus issue -
Marico Industries launches 'Saffola Gold, a blend of Ricebran and
Kardi oils in a 70:30 ratio, which has dual benefits of lowering
cholesterol and enabling food cooked in it to absorb lesser oil
-Marico industries has announced its foray into the beauty
products segment with the launch of Silk-n-Shine, a post-wash
haircare product
2005 -Marico - MBL acquires soap brand Aromatic -Marico
introduces new Mediker Plus in southern market -Marico arm buys
toilet soap brand in Bangladesh 2006 -Marico Ltd has informed that
the Company has reached an agreement to acquire the brand 'Nihar'
from Hindustan Lever Ltd (HLL). Nihar gas a current annualized
turnover of about Rs 1200 million spread over two segments -
coconut oil and perfumed hair oils. -Marico Ltd has informed that
the Company has acquired the Herbal Bath Soap brand Manjal from
Oriental Extractions Pvt Ltd (Oriental) for an undisclosed
consideration. -Marico enters Egypt, acquires haircare brand
Fiancee 2007 -Marico Ltd has appointed Mr. Anand Kripalu as an
Additional Non-Executive Director on the Board of Directors of the
Company. - The Company has splits its face value from Rs.10/- to
Rs.1/-.Page 11 of 46
-Marico Uncommon Sense Campaign won Gold EFFIE in Corporate
Advertising Category Nihar Naturals and Saffola won Bronze each
under Consumer Products Category
2008 -Marico Limited has appointed Ms. Rachana Lodaya- Legal
Manager,as Company Secretary and Compliance officer of the Company,
with effect from August 01, 2008. -Marico Jalgaon was awarded the
CII National Water Management Award -Marico was ranked 2nd in
Sourcing Platform Benchmarking Program 2009
-Asia Pacific Quality Organization (APQO) - Marico won the 'Best
in Class' Award (Second highest) for the Large Manufacturing
category -Marico won the Greentech Environment Excellence Award
2009 in the Silver Category in FMC 2010 -Harsh Mariwala was awarded
the Ernst & Young Entrepreneur of the Year Award 2009 in the
Manufacturing category.
Page 12 of 46
VISIONMarico visions for:
Consumers: For they are the reason we exist Membership: For a
sense of ownership empowers us. Excellence: For it unleashes our
potentialPage 13 of 46
Wealth: For on it hinges our growth Innovation: For it gives
wings to ideas MISSION 2020
The Marico Innovation Foundations mission is to provide the
nation with first: a belief that Innovation is possible and is the
way to leapfrog India into the center stage of global business
leadership, and second: a framework to leverage innovation for
quantum growth.
Organization structureA Flat Structure:
Page 14 of 46
At Marico, which is flat with only five levels Of reporting
between the Managing Director and an operator on the shop floor.
They believe that a flat structure helps us in being more
responsive to the environment while providing enriched roles for
our members. Their structure defines clear roles and supporting
relationships but is by no means rigid. Keeping in mind the fast
and ever changing business environs, Marico's structure is dynamic
and constantly evolving.
Financial performance1. Leverage=long-term debt / total equity
Long term financial strength or soundness of a firm is measured in
terms of its ability to pay interest regularly or repay principal
on due dates or at the time of maturity. Such long term solvency of
a firm can be judged by using leverage or capital structure ratios.
(Debt-Equity ratio reflects relative contributions of creditors and
owners to finance the business. Debt-Equity ratio =Total
Equity/Total Debt The desirable/ideal proportion of the two
components (high or low ratio) Mar11 .63 Mar10 0.66 Mar09 0.84 Mar0
8 1.09 Mar07 0.91
varies from industry to industry.Page 15 of 46
Debt equity ratio in 2008 was 1.09 which implies that the debt
were 1.09 times more than the total equity which was a very risky
period for the company as they were running under lot of debt and
had taken lot of loans. as next year the ratio went below 1 that
means the assets increased to such an extent that it surpassed the
debt amount and the company attained a safe position. It went down
furthermore to 0.66 such a low ratio indicates the funds were not
spent as they should have been. Currently the ratio stands at 0.63
which can be said is satisfactory. Current Ratio = current
assets/current liabilities The current ratio measures the ability
of the firm to meet its current liabilities from the current
assets. Higher the current ratio, greater the short-term solvency
(i.e. larger is the Mar11 Current Ratio 0.99 Mar10 1.35 Mar09 1.28
Mar08 1.33 Mar07 0.90
amount of rupees available per rupee of liability)
Current ratio of the company has been gradually fluctuating
since 2007 on an annual basis the company has been not performing
consistently with a good amount of cash in hand. In the present
scenario the ratio stands at 0.99 which is a bit low compare to the
previous year i.e in 2010.Page 16 of 46
3.Quick ratio = (cur. Assets inventory)/cur. Liabilities Mar11
Quick Ratio 1.70 Mar10 1.23 Mar09 1.25 Mar08 1.07 Mar07 0.55
4. Working capital = Cur. Assets Cur. Liabilities Mar11 Working
Capital(Cr.) 687.27 Mar10 499.54 Mar09 402.11 Mar08 333.21 Mar07
165.80
4. Gross Profit (on sales) = Net Sales Cost of goods sold. Mar11
G.P(Cr.) 343.27 Mar10 333.02 Mar09 269.40 Mar08 209.06 Mar07
189.16
6. Interest coverage ratio = P.B.I&T / Interest Mar11
Interest Coverage RatioPage 17 of 46
Mar10 21.49
Mar09 10.08
Mar08 12.08
Mar07 10.21
18.77
7.Gross Margin = (Net Sales C.O.G.S) / Net Sales Mar11 Gross
margin 13.44 Mar10 15.37 Mar09 13.13 Mar08 12.06 Mar07 11.21
8. R.O.N.A [Return on net asset] = = Net Income/Shareholder's
Equity
Mar11 R.O.N.A 13.44
Mar10 15.37
Mar09 13.13
Mar08 12.06
Mar07 11.21
OWNERSHIP STRUCTURE:
CATEGORY OF SHAREHOL DER
NO. OF SHAREHOLDERS
TOT AL NO. OF SHA RES
TOTAL NO. OF SHARES HELD IN DEMATERIAL IZED FORM
TOTAL SHAREHOLD ING AS A % OF TOTAL NO. OF SHARES
SHARES PLEDGED OR OTHERWI SE ENCUMBE
Page 18 of 46
AS A % OF (A+B) AS A % OF (A+B+C)
RED NUMBER OF SHARES AS A % OF TOTAL NO. OF SHARES
(A) Shareholding of Promoter and Promoter Group (1) Indian
Individuals Hindu Undivided Family Bodies Corporate Any Others
(Specify) Trusts / 22 83,782,520 82,882,5 20 13.63 13.6 3 400,000
0.48
2 4
8,822,000 293,504,000 293,504,000 386,108,520
8,822,00 0 293,504, 000 293,504, 000 385,208, 520
1.43 47.74 47.74 62.80
1.43 47.7 4 47.7 4 62.8 0
400,000
0.10
4 28
Sub Total (2) Foreign Total shareholding of Promoter and
Promoter Group (A)
28
386,108,520
385,208, 520
62.80
62.8 0
400,000
0.10
(B) Public Shareholding
Page 19 of 46
(1) Institutions Mutual Funds / UTI Financial Institutions Banks
Insurance Companies Foreign Institutional Investors Any Others
(Specify) Foreign Bank / 8 101 7,044,780 156,208,572 7,044,78 0
156,203, 572 3,000 3,000 187,499, 464 1.15 25.41 1.15 25.4 1 30.5 0
45 3 24,181,936 66,176 24,181,9 36 66,176 3.93 0.01 3.93 0.01 -
1
3,000 3,000 187,504,464
30.50
-
-
1 158
Sub Total (2) NonInstitutions Bodies Corporate Individuals
Individual shareholders holding nominal share capital up to Rs. 1
lakh
699
14,773,041 20,415,226
14,731,0 41 19,474,0 36
2.40 3.32
2.40 3.32
-
-
32,7 29
Page 20 of 46
Individual shareholders holding nominal share capital in excess
of Rs. 1 lakh Any Others (Specify) Clearing Members Non Resident
Indians Trusts ESOP/ESOS/ ESPS Sub Total Total Public shareholding
(B) Total (A)+(B) (C) Shares held by Custodians and against which
Depository Receipts have been issued-m (1)Page 21 of 46
3,242,829 11
3,242,82 9
0.53
0.53
-
-
920
2,786,757 147,896 1,969,630 81,514 587,717 41,217,853
228,722,317
2,786,75 7 147,896 1,969,63 0 81,514 587,717 40,234,6 63
227,734, 127 612,942, 647 -
0.45 0.02 0.32 0.01 0.10 6.70 37.20
0.45 0.02 0.32 0.01 0.10 6.70 37.2 0 100. 00 -
-
-
210 674 3 33 34,3 59 34,5 17 34,5 45 -
614,830,837 -
100.00 -
400,000 -
0.07 -
-
-
-
-
-
-
(2) Sub Total Total (A)+(B)+ (C) 34,5 45
614,830,837
612,942, 647
-
100. 00
400,000
0.07
BUISNESS OPERATION&PLANT LOCATION ALL OVER THE WORLD:Page 22
of 46
Maharashtra India Pondicherry India Daman & Diu India
Kanjikode - Kerala India Goa India Jalgaon - Maharashtra India
Dehradun - Uttaranchal India Mumbai - Maharashtra India America:
USA Canada Asia-pacific: Afganistan Australia Bangladesh Bhutan
Malaysia Nepal Pakistan Singapore Sri Lanka Middle East: UAE Iran
Israel
Page 23 of 46
Kuwait Lebanon Oman Qatar Saudi Arabia Sudan Yemen
Page 24 of 46
EXECUTIVE PROFILE:
Name
EXPRIENCE
QUALIFICATION
Founded Marico in 1990 and transformed a traditional Harsh
Mariwala commodity driven business Chairman and into a leading
Consumer Products & Services Managing Company, in the Beauty
and Director Wellness space In March 2011, Harsh Mariwala was
elected as the President of Federation of Indian Chambers of
Commerce and Industry (FICCI). He is also on the Board of Cadbury
India Limited. In the past, he has held several positions as the
FMCG Committee Chairman of FICCI and CII. Harsh Mariwala is also a
part of the Young President Organization (YPO) and World Presidents
Organization (WPO) and has held the position of YPO Education. Mr.
Gupta CEO, Products BusinessPage 25 of 46
Saugata 20 years of experience mostly in FMCG as well as in
Financial Service Consumer
He has an engineering degree from IIT Kharagpur and a management
degree from IIM Bangalore.
Mr. Vijay Vijay began his career with Subramaniam United
Breweries as the All India Marketing Manager in CEO, 1991.
International Business Group
Vijay Subramanian holds a MMS degree from Jamnalal Bajaj
Institute of Management Studies and a Bachelors degree in
Engineering from Mumbai University. An MBA from IMD Lausanne
(Switzerland), Ajay also holds a Bachelors degree in Commerce from
Delhi University. His hospitality training includes a Diploma in
Hotel Management from Institute of Hotel Management (Delhi)
followed by Oberoi School of Management (Delhi). He also completed
a Certification Course in Chain Store Management from the Cornell
University (USA) Milind completed his professional education
(Chartered Accountancy, Cost Accountancy and Company Secretary
ship) during 198384, with high All India Ranks in CA and CWA,
following a B. Com. (Honours) from the University of Bombay in
1979. During 1996, he was one of the two Indian managers selected
for the CIIFulbright Fellowship for Leadership in Management at the
Carnegie Mellon University, Pittsburgh,
Mr. Ajay Pahwa CEO, Kaya Ltd
Ajay has 20 years of international experience in building global
retail brands and leading diverse teams
Milind He has 27 years of experience spread across diverse
domains such as Group Chief Consumer Products, Finance, Finance
Officer & Chief Corporate Development & Human Resource
Officer Strategy, Product Supply, Marico Limite and Human
Resources. Prior to Marico, he was associated with Hoechst
(Aventis) and the Godrej Group.
Mr. Sarwate
Page 26 of 46
Pennsylvania, U S A. joined Marico in 1999 and since then, held
several Executive Vice positions including HeadPresident and
Corporate HR, HeadHead Human Resources at Organizational
Development Marico Limited. and Head - HR& OD B Sridhar
Ashutosh Telang Bachelors degree in Statistics and a Masters in
Labour Studies from Mumbai Universit
Sridhar has over 16 years of BTech in Electronics from IT
experience in Sales, Trade BHU and MBA from XLRI B Sridhar is the
Marketing, Business Finance Jamshedpur. Executive Vice and General
Management. President and Head Sales & Business Finance
Consumer Products Business at Marico Limited.
Chaitanya Deshpande the Executive Vice President and Head
Investor Relations and M&A at Marico Limited
began his professional career, in 1986, as an Accounts Executive
with Bharat Gears
an alumnus of Jamnalal Bajaj Institute of Management Studies
having done his Masters in Management Studies in 1990. He is a
graduate in Commerce from Ness Wadia Institute (Pune
He joined Marico in 1999 and since then, has held the Executive
significant positions like Vice President and Head Finance &
Company Regional Head MENA at Affairs Bangladesh, Marico Limited.
Regional Head- South-East Asia and Executive Director & Country
Head, where he has demonstrated strategic vision and bottom line
focus. Prior to Marico, Debashish was associated with PerfettiPage
27 of 46
Debashish Neogi
An ACA from the Institute of Chartered Accountants of India, and
a degree from the Institute of Costs and Works Accountants of
India.
Limited, for nearly three years, as the Branch Accounts
Manager
Sameer Satpathy the Executive Vice President and Head Marketing
(Consumer Product Business) at Marico Limited.
Sameer joined Marico in 2002 and has since held several
leadership positions; namely as Head of Marketing for the Wellness
& New Products and the Category Head - Youth Products. Prior to
Marico, Sameer had a 7-year long stint at Berger Paints
He holds an MBA in Marketing from Xavier Institute of
Management, Bhubaneswar and a Bachelor of Commerce from Hansraj
College University of Delhi. He has also studied Consumer Marketing
Strategy at Harvard Business School and the Global Program for
Management Development at the University of Michigan.
Page 28 of 46
Joint venture
Marico Buys JV Partners Stakes(23 per cent stake) ;2003 Adani
(50:50 joint venture) It acquires Oriental Extractions-Manjal from
Oriental Extractions Pvt Ltd; Jan 03, 2006 It acquires Hindustan
Lever Ltd-Nihar from Unilever ;Jan 27, 2006 It acquires Sundari a
manufacturer of skin care products (7.5 per cent stake in Sundari)
It acquires Oil of Malabar from West Coast India; Nov 01, 1999
Acquired the aesthetics business, of the Singapore based Derma Rx
Asia Pacific Pte. Ltd. (Derma Rx), under the Kaya portfolio.
Page 29 of 46
Business status
Marico is a leading Indian Group in Consumer Products &
Services in the Global Beauty and Wellness space. Marico's Products
and Services in Hair care, Skin Care and Healthy Foods generated a
Turnover of about Rs. 26.6 billion (about USD 600 Million) during
2009-10. Marico's brands and their extensions occupy leadership
positions with significant market shares in most categories-
Coconut Oil, Hair Oils, Post wash hair care, Anti-lice Treatment,
Premium Refined Edible Oils, niche Fabric Care etc. Marico business
broadly classified into three Consumer Products Business FMCG
business in India International Business Group International FMCG
business Kaya Limited - A chain of skin care clinics Consumer
Products Business FMCG business in India Marico has strong presence
in Indian market & selling skin care, hair care, edible oil
products like parachute, medicare, manjal, saffola & oil of
malabar. International Business Group International FMCG business:
Marico's branded products are present in Bangladesh, other SAARC
countries, the Middle East, Egypt, Malaysia and South Africa. The
Overseas Sales franchise of Marico's Consumer Products is one of
the largest amongst Indian Companies and is entirely in branded
products and services. Kaya Limited - A chain of skin care clinics
Marico is also present in the Skin Care Solutions segment through
Kaya 100 Skin Clinics. These clinics are spread in India, Middle
East and Bangladesh. In addition, Marico also acquired the
aesthetics business, of the Singapore based Derma Rx Asia Pacific
Pte. Ltd.Page 30 of 46
(Derma Rx), under the Kaya portfolio. Category Brand Indicative
market share (Apx) 46% 74% Bangla Saffola desh Premium refined oil
Anti lice treatment Hair oils 53% 96% 22% Parachute jasmine, shanti
alma, hair care, nihar Parachute hair cream Kaya clinic skin
Dermatology led skin solution Instant fabric starch
Parachute
Coconut India
oil
Mediker
Hair cream 27%
Less than 60%
80%
Revive
Besides that in Egypt, Maricos brands have a total market share
of over 55% in the hair styling category.
Page 31 of 46
New initiatives & developments:
The company has entered into the south East Asian region through
the acquisition of Code 10 from Colgate Palmolive in Malaysia. A
new plant has been setup for manufacturing Parachute range of
products for supplying to the Middle East & North America. New
product launches during 2010 are Parachute Advanced hot oil,
Parachute Gold hair oil. Marico plans to launch various innovative
products under its two flagship brands Parachute and Saffola.
Marico plans to introduce cooling hair oil under its Nihar and
Parachute brands. It would extend the edible oil brand - Saffola
into the functional foods category, making it a lifestyle brand.
Marico Highlights
1 out of every 4 Indians is a Marico consumer. Marico
distribution network covers over 33 lacks retail outlets Most
Marico brands enjoy a leadership position in their respective
categories Parachute is the worlds largest coconut oil brand Marico
is well connected with 40000 farmers who are cultivating in 1-lac
acres of agricultural produce. THE MARICO GROWTH STORY: Marico
achieved a turnover of INR 3128 crore during FY11, a growth of 18%
over FY10.The volume growth underlying this revenue growth was
healthy at 12%. Profit after Tax(PAT) for FY11 was INR 286 crore, a
growth of 24% over FY10. Over the past 5 years, thetop line and
bottom line have grown at a compounded average growth rate (CAGR)
of 22% and27% respectively.
Page 32 of 46
Brief Industry overview and analysis :
SECTOR IDENTIFICATION
If we go by statistics, roughly around 73% of the Indian
population lives in therural areas. Thats almost 12% of the world
population. There are 600,000 villages in India. 23% of all
villages account for 63% of thetotal rural population. So you can
contact 63% of 680 million or 700 million population by simply
contacting 130000 villages - thats a very large market Since this
theoretically constitutes a huge market potential, marketers will
tendto throw in their hooks to catch the fish. Now with the urban
demand hittingthe plateau, rural markets are gaining more
importance and we cannot ignoreit. Hindustan Levers sales turnover
in rural market alone is over five thousandCrores thats a whopping
fifty percent of the total sales turnover. So we canimagine how
much potential the rural market has? To get the maximum out of this
opportunity, all organization needs to planstrategically. What has
happened from 1990 onwards is that advertisers spent a lot of on
and b y default they covered some rural markets as well. As a
bonus, theseadvertisers started getting certain returns from the
rural market - bonus of investment, which they had actually made
for the urban market What marketers and advertisers are today
worried about is how to develop ascalable model of influencing the
rural consumers mind over a large period of t i m e and keep it
going, given limited or reasonable budgets to make t h i s happen.
Many companies are entering to the rural market and the potential o
f t h e market encourage me to do project work in the rural
market
Page 33 of 46
ABOUT FMCG SECTOR INDIA Markets all over the world have been on
a roll in 2003 and the Indian bourses are no exception having
gained almost 60% in 2003. During this period, while there are
sectors that have outperformed this benchmark index, there are also
sectors that have under performed. FMCG registered gains of just
33% on the BSE FMCG Index last year. At the macro level, Indian
economy is poised to remained buoyant and grow at more than 10%.
The economic growth would impact large proportions of the
population thus leading to more money in the hands of the consumer.
Changes in demographic composition of the population and thus the
market would also continue to impact the FMCG industry. According
to a survey by 2013, Indians under 20 are estimated to make up 33%
of the population - and wield proportionately higher spending
power. Means, companies that are able to influence and excite such
consumers would be those that win in the market place The Indian
FMCG market has been divided for a long time between the organized
sector and the unorganized sector. While the latter has been
crowded by a large number of local players, competing on margins,
the former has varied between a two-player-scenario to a
multi-player one. Unlike the U.S. market for fast moving consumer
goods (FMCG), which is dominated by a handful of global players,
India's Rs.460 billion FMCG market remains highly fragmented with
roughly half the market going to unbranded, unpackaged home made
products. This presents a tremendous opportunity for makers of
branded products who can convert consumers to branded products.
However, successfully launching and growing market share around a
branded product in India presents tremendous challenges. Take
distribution as an example. India is home to six million retail
outlet sand super markets virtually do not exist. This makes
logistics particularly for new players extremely difficult. Other
challenges of similar magnitude exist across the FMCG supply chain.
The fact is that FMCG is a structurally unattractive industry in
which to participate.
Page 34 of 46
STRUCTURAL ANALYSIS OF FMCG INDUSTRY 1.The products often cater
to 3 very distinct but usually wanted for aspects -necessity,
comfort, luxury. They meet the demands of the entire cross
sectionof population. Price and income elasticity of demand varies
across productsand consumers. 2.Individual items are of small value
(small SKU's) although all FMCG products put together account for a
significant part of the consumer's budget. 3.The consumer spends
little time on the purchase decision. He seldom ever looks at the
technical specifications. Brand loyalties or recommendations of
reliable retailer/ dealer drive purchase decisions. 4.Limited
inventory of these products (many of which are perishable) are kept
by consumer and prefers to purchase them frequently, as and when
required. 5.Brand switching is often induced by heavy
advertisement, recommendation of the retailer or word of mouth
Page 35 of 46
SWOT analysisStrength
Centralized payment Decentralized collection Low invest Source
of funds Management of funds widespread distribution network of
more than 2.5 Million outlets in India and overseas. innovative
approach :focused on meeting the emerging needs of the modern day
consumers Wide variety of product Understanding of Indian consumer
behavior in the hair oil segment Large distribution network all
over India.Rural market reach one of the largest amongst Indian
FMCG company. Marico reach approximately 130 Million consumers in
about 23 Million households No. 2 player in the growing VACNO
(Value Added Coconut Oil) Strong brand equity Wide global presence
High bargaining power Diversification of business by expansion a
flat organizational structure empowered : everyone is a member and
not an employee Maricos structure is dynamic & constantly Good
personnel system Good industrial relation with other company
Personnel system Organisational and employee characteristics
Industrial relations Quality and motivation of personnel rated as
one of the most innovative companies by Business Today -Monitor
Group
Page 36 of 46
Weakness Fixed price Sales of Rural Area was Slowly Decreasing.
Not strong within the shampoo segment, having hardly any share Not
having any antidandruff hair oil whose market potential is worth
25% of the total oil market in India. Low company image Low
promotion Low export level High dependence on Parachute High
leverage compared to peers Indian labour laws are relatively
unfavorable to the trades and there is an urgent need for labour
reforms in India Opportunity India's Rs.460 billion FMCG market
Increase Income Level With Result in Faster Revenue Growth.
Need to concentrate within the various others market potential
zones like hair shampoo, hair colorants etc. Large Domestic Market
Growth Marico, is betting big on its international business and is
open to acquisitions provided they fit in with its overall growth
strategy . Growth in international markets Successful entry into
beauty and healthcare market Untapped rural market In rural
markets, brands are non-existent India is rich in highly trained
manpower Industry has large and diversified segments that provide
wide variety of products Population
Page 37 of 46
Threats Tax and Regulatory structure Economic slowdown resulting
in lower consumer spending. Marico's key raw materials include
copra, kardi oil, sunflower oil, corn oil and rice bran oil, which
are commodity crops whose availability isseasonal. Competition from
the diverse players present in the market can cause loss of market
share. Intense competition from global brands in international
market More job opportunities for the Human Resources around the
world International labor Laws Despite technological advances,
beverage sector remain labour-intensive Labor problems Any change
in Government policy
Page 38 of 46
CORPORATE SOCIAL RESPONSIBILITY
Marico believes in aligning the interest of all stakeholders in
the environment inwhich it operates its shareholders, consumers,
members, associates, government andsociety. Promoting conscious
capitalism is an important step towards fulfilling theCompany's
purpose. Marico has chosen the following areas of focus to make
itscontributions towards society and to function responsibly is
respect of the impact itsoperations have on the environment. 1.
Marico Innovation Foundation Marico instituted the Marico
Innovation Foundation (www.maricoinnovationfoundation.org)in 2003,
to provide a framework to the Industry and Social Sector to
leverage innovationfor quantum growth. The overall approach of the
Foundation is to be a catalyst thatconcentrates on creation of
knowledge through research, knowledge dissemination
&recognition through its Innovation for India Awards. The
Foundation has drawn insights from Indian organizations that have
challenged convention and achieved quantum growth through
innovation organizations that have considered ideas and not
resources as their key competitive advantage. Its social innovation
research seeks to highlight inspiring work that brings insight into
what differentiates social innovation which if scaled up, has the
power to address some of the fundamental problems in the country.
One of Foundation's popular researches resulted in a best seller
publication Making Breakthrough Innovation Happen: How 11 Indians
pulled off the impossible. This publication is a culmination of a
six year joint discovery effort to identify genuine breakthrough
innovations from within India and then uncover cutting edge
insights into; 'what these innovators did differently to make the
impossible happen'. The other knowledge building initiatives of the
foundation include alliances between top Indian Business Schools
and Indian organizations for a 2-month elective 'live' course on
Applied Innovation. To extend the Marico Innovation Foundation's
catalytic approach towards Innovation, it organises Innovation
Workshop for Social Enterprises'. The purpose of these workshops is
to enable social organizations to apply innovation as a key tool to
significantly increase their social impact and scale programs. The
3-day workshop focuses on innovation tools,Page 39 of 46
knowledge sharing from successful case studies, addressing
primary challenges in applying innovation and helping social
enterprises identify and put together an innovative roadmap to
scale up and create greater impact. After the workshop,
organizations are selected for a 12-18 month innovation incubation
program. Through the knowledge dissemination mechanism the
Foundation is able to propagate the findings of the researches
through large-scale mass platforms across India. It has shared its
learning at business schools, industry fora and management
associations to help take other organizations to take quantum leaps
instead of going through the process of rediscovery. In addition
its Innovation Exchange is a portal that brings the entire
Innovation Ecosystem including researchers, innovators,
entrepreneurs and academia across industry along with investors and
mentors together onto one single platform. This is an initiative in
association with the Indian Institute of Management, Ahmedabad (IIM
A) and the Department of Science and Technology, Government of
India. To recognize and applaud outstanding leadership with a focus
on innovation, the Marico Innovation Foundation institutionalized
Innovation for India Awards in 2006. These Awards acknowledge &
foster leadership with innovative focus in various Business &
Social sectors. From 2010 a new category - Public Governance, has
been introduced to recognize innovations where the Central or State
government or any wing of the government including public-private
partnership has innovated. The intent of the Awards is to reward
projects and businesses that make a real difference to India and
the community at large. Based on the criteria of uniqueness, impact
and scalability, 'India's Best Innovations' are declared
biennially. Since 2006, 32 innovators have been recognized. Bharti
Airtel and Tata Nano were recognized as Global Game Changers for
their spirit of innovation. An eminent Governing Council chaired by
Dr. R A Mashelkar FRS, CSIR Bhatnagar Fellow steers the work of the
Foundation. 2. Sustainability Initiatives Marico's sustainability
efforts are aimed towards conserving the ecology, whilst
institutionalizing a 'green mindset' amongst Mariconians. Marico
has successfully implemented over 50 ideas in the areas of energy,
water and paper usage reduction in the last 2 years. The ideas
varied from process changes in manufacturing to investing in
equipment that would reduce energy consumption to reduced usage of
plastic.
Page 40 of 46
We have gained considerable momentum in our efforts to reduce
our carbon foot print,most of our strategies and processes today
undergo a Green filter, as we intrinsically evaluate the
environmental implications of all initiatives.
Highlighted below are some key initiatives that had a
significant positive impact onthe environment. Energy Leveraged the
latest technology to reduce power consumption in our datacenter
Improved truck loading efficiency at our factories leading to
reduced fuel consumption Designed the new plant at Baddi in an
energy-efficient manner. Learning from here is being replicated
across all manufacturing locations Installed variable frequency
drives to reduce energy consumption at our Pondicherry factory Use
of bio mass fuel for boilers Water Reduction of water consumption
at Jalgaon plant by about 36% Rainwater harvesting across
manufacturing sites Drip irrigation system installed at the Jalgaon
factory Paper Use of recycled paper at Kaya Skin Clinic Plastic
Reduction in PVC Consumption by 90% in plastic bottles The Think
Fresh, Be Green initiative aims to build a Green culture at Marico.
Tree plantations on birthdays, using video conferencing to reduce
travel,celebrating festivals inPage 41 of 46
an eco-friendly way are part of the culture. We have also
institutionalized a Green Score Card which measures progress on our
Green journey through member feedback. Teams that have made
significant contributions to our sustainability journey are
recognized We conducted sessions for our C&FA agents (depots)
on the need and benefits of going Green, which has led to
considerable savings for the organisation. More importantly
however, it has increased the saliency of the need to adopt
sustainable work practices amongst our associates. Our achievements
in this space have been recognized through numerous awards, Marico
(Kanjikode) was conferred with the Kerala State Energy Conservation
Commendation Award 2010, in the large-scale energy consumers
category. Marico won 'Silver' at the Greentech Environment
Excellence Award 2010, in the FMCG sector. Marico bagged the
Runners-up trophy at the G-CUBE Marico (Jalgaon) won the Good Green
Governance Award.
3 . Safety Marico places prime importance on the safety &
health of all its members. In pursuit of a hazard and incident-free
work environment, we have defined an Environmental &
Occupational Health & Safety (EOHS) policy, which guides
systematic efforts to continually upgrade our systems, impart
relevant training andimprove communication system to handle
emergency situations. Some of the initiatives we have taken are:
Marico Factories are certified for OHSAS 18001:2007 by certifying
body DNV. They have recently undergone an ISO: 14001 and OHSAS:
18001 (EOHS) audit by an external agency. Safety Councils at our
plants, periodically review accidents, safety records andissues
related to safety, health and work environment. In factories, every
major project is routed through the Safety department. We have
installed diesel engines for the operation of the fire hydrant
systems,in case of power failures. All plants hold annual safety
weeks that aim to increase awareness of potentialhazards and serve
as a refresher for key safety procedures.
Page 42 of 46
Emergency preparedness and response procedures are tested
regularly by conducting mock drills. Members undergo Safety
Training as part of their induction. Health and safety seminars are
conducted for contract workers. Reinforcement training like Fire
fighting is compulsory at least once a year;other training is
imparted as per a training calendar. In recognition of our
achievement Marico plants at Jalgoan, Goa, Poanta Sahib and
Kanjikode have won the Greetech Award for Safety.
4 . Other Initiatives Most of these initiatives have been
primarily in the areas of Education and Training and support for
local communities. Education & Training: Marico's factories and
depots are present in rural areas, where there is an opportunity
for the Company to give back to the society by empowering the
younger generation. Keepingthis in mind, Marico has donated books,
stationery, study material, clothes and emergency lamps and aided
renovation at various local government schools. In order to give
students an industry perspective, Marico collaborated with the
local institutes to offer training programs to students. These
include training sessions on Supply Chain & TPM. Several plant
visits were organized for government primary schools. Marico also
conducted a training programme on FSSC for Food Safety Officers,
all across India. It covered about 650 Food Safety Officers. Marico
Bangladesh has organized communities under the Community based
organization. It educates and guides the community in solving
problems faced by them in areas of coconut production and
development and conversion of the coconuts to copra. It has also
worked towards establishment of other businesses that complement
copra supply to augment income of the participating groups.
Awareness sessions for the local communities were organized; Aids
Awareness programme for truck drivers by Pondicherry AIDS Control
Committee at the PondicherryPage 43 of 46
factory. In addition, parenting sessions were held for workers'
family members at some of the factories. Support for Local
Communities: As part of our contributions to the local communities
in which we are present Maricohas contributed towards participation
in blood donation camps at factory locations inIndia and overseas,
conducted skin care camps for Helpage India by dermatologists
fromKaya, provided financial support for weather risk insurance to
farmers and helped in therenovation exercise of the local police
station in Egypt. This year, Marico members also participated in
the week-long Joy of Giving Initiative,to promote 'Giving'. Joy of
Giving: Joy of Giving Week is a not-for-profit organization, run
and managed by a group of volunteers, that promotes 'Giving' in any
form- Money, Resources, Skills, Time. Marico organized a series of
activities at its various locations, during the week of September
26October 2, 2010. These included: Vastra Samman & Toy Bank: A
week long collection drive that encouraged members to donate old
clothes, toys, books and stationery. The donated items were in turn
distributed to rural areas and villages, through the NGO Goonj and
Toy Bank. Members donate denthusiastically for this cause. Make A
Wish Foundation: The foundation collects monetary donations, in
order to fulfill wishes of children facing life threatening
diseases. Members contributed generously to this cause. A variety
of wishes were fulfilled; holiday with family, owning a doll set, a
computer and many more. Crafts Bazaar: Marico organized a day-long
Crafts Bazaar at several of its locations .It invited NGOs that
support Women Empowerment, Children and Education to set up stalls
at its office premises. This gave the NGOs a platform to not only
display but also sell their products; the key objective being to
raise funds that would in turn be ploughed back into the NGO, to
further support their individual causes
Page 44 of 46
Mergers & AcquisitionsAcquisition of Derma Rx In May 2010,
Kaya Limited, Marico's wholly owned subsidiary delivering skin care
solutions in India, acquired the skincare aesthetics business of
the Singapore-based DermaRx Asia Pacific Pte Ltd. (Drx AP). Derma
Rx offers solutions to its customers through four clinics and
medispas located in Singapore and Kuala Lumpur (Malaysia). This
acquisition gives Kaya access to a range of highly efficacious skin
care products, some of which havebeen introduced in India and are
in the process of being introduced in the Middle East. Acquisition
of the brand Ingwe Marico, through its wholly owned subsidiary
Marico South Africa (Pty) Ltd (MSA),acquired the brand 'Ingwe' from
the South Africa-based Guideline Trading Company in August2010. The
product range comprises immuno boosters focused on the ethnic
consumer in South Africa. The acquisition of Ingwe brings in a
range of products that complements that of MSA's brand, Hercules.
Marico's entry into Vietnam Marico strengthened its foot hold in
South-East Asia by taking up 85% equity in International Consumer
Products Corporation (ICP), one of the most successful Vietnamese
FMCG companies, in February 2011. ICP was founded in 2001 by Dr.
Phan Quoc Cong and his partner. Its brands (X-Men, L'Ovite, Thuan
Phat and others) have a significant presenc eacross the personal
care, beauty cosmetics and sauces/condiments categories. X-Men is a
leading player in the male grooming segment in Vietnam and has been
rated the 2nd Most Trusted Personal Care brand in the country. With
over 35% market share, it leads the men's shampoo category.
L'Ovite, the company's premium cosmetics brand, ranks amongst the
top 5premium cosmetics brands in Vietnam.
Page 45 of 46
Divestment of brand Sweekar Marico divested its refined
sunflower oil brand 'Sweekar' to Cargill India Private Limited
(Cargill) in March 2011. This is in line with the Company's focus
on the wellness platform through its healthy refined edible oils
and functional foods brand Saffola
Page 46 of 46
