Business Strategy

Marico Industries Ltd.

Submitted By:
Mousumi Mazumdar
Roll No: 22068

About Marico..
Industry

Consumer Goods

Founded

1987

Headquarters

Bandra, Mumbai, India

Key People

Harsh Mariwala

Products
Market Capitalization
Turnover
Profit

Edible Oil, Hair Oil, Skin

& Personal care, etc.
INR 14,000 Crore
INR 4,678 Crore
INR 485 Crore

Website

www.marico.com

TOP MANAGEMENT

Name-Designation
Mr.Harsh Mariawala

: Chairman
Mr.Saugata Gupta
: Managing Director & CEO
Mr.Milind Sarwate
: Cheif - HR and Strategy
Mr.Rakesh Pandey
: Chief Executive Officer - Kaya
Mr.Vilas Shirhatti : Chief Technology
Mr. Hema Ravichandar
: Chairman of Corporate
Governance Committee
Mr.Vijay Subramaniam
: Chief Executive Officer International Business
Mr.Vinod Kamath : Chief - Finance and IT and Compl.Officer
At Marico, everyone is a member and not an
employee. As a member, each individual is
empowered..

Vision- Its time- Make a

difference
As the global landscape changes, Marico sees that the way

forward for growth is through partnership and a shared

understanding of resources and needs. Having consolidated our
successes and innovations, we now look at streamlining our vision
for the future towards developing economies. A partnership with
these countries relies on collaborative effort - constantly giving,
taking, learning and enhancing value. Through directed strategy
and our hard earned expertise in nourishment and grooming, we
will focus our efforts in Asia and Africa towards creating a new
wave of recognition, awareness and penetration. While each
context demands specific, customized products, we offer a variety
of options through our diverse portfolio. We will be One Marico
spread across geographies and categories, and continue to create
more synergies and learnings as we move forward in this journey.
And we will continue to motivate and transform the lives of all
those we touch because we are empowered to make a difference!

MISSION

'COME WIN' ---- their mission is captured in this acronym, which

whenbifurcatedmeansthefollowing:Consumers:theyarethereasonweexist.
Theprimaryfocusofoureffortswillbetonotonlyunderstandwhat

adds greatest value to the consumer but also change and reinvent
ourselvesifneedbe.
Wewilltranslatetheconsumer'sneedsanddesiresintomarketable

products and an ever-expanding base of loyal consumers, with

speedandaqualityofresponsethatsurpassesthecompetition.

 Membership: For a sense of ownership empowers us.

Wholesome membership is when a person brings his/her

entire being into the organization.
It also gives each member a role in articulating and shaping
the destiny of the organization, which in turn, builds
commitment and ownership.
Excellence: For it unleashes our potential.

We will focus on policies and practices where people produce

consistently superior performances and where people are
encouraged to discover their untapped potential.

Wealth: For on it hinges our growth.

All our efforts must culminate in the creation of wealth. We will do so by

continuouslyaddingvalueineverythingwedothroughavarietyofmethods.
We will use sources productively, eliminate waste, reduce cycle times and
costsandenhancetheconsumerbase.

Innovation: For it gives wings to ideas.

Thefutureofourorganizationrestsonourwillingnesstoexperiment,pushin
new and untested directions, think in uncommon ways and take calculated
risks.
Continuousimprovementshouldbeapartofeverydaywork.
Weacknowledgethatfailureisinherentinanynewinitiative.Wewillcommit
resources for experimentation and invest in processes for reviewing and
sharingoflearning.

Focus on Growth
Prioritize volume growth (consumer franchise

expansion) over
short term profit
Emerging markets with low/moderate penetration
Maintain unit gross margin within a band
Re-invest profits to reinforce established brands
and build new
growth engines for the future
Prototyping : maintain innovation pipeline
Strategic Funding (% of profits each year)
ASP range of 10% to 12%
Inorganic Growth to supplement Organic Growth

Inorganic Growth
Focused on hair care, skin care and health care in India
International : primarily hair care, skin care and male

grooming
Internationally focused on developing markets in Asia and
Africa
Provides opportunity to enter a new market
New category in a core market
Achieve scale in an existing category
Establish potential to become No.1 or No.2
Establish potential to add value in branding and distribution
Enhance depth of category knowledge in hair care / skin care
Leverage across all Marico geographies
Keep track of ROCE benchmark over the medium term

Market Leadership: Key to Category

Choice

International Strategy
The international business grew by 16% with a structural shift in
the operating margins from 10-11% a few years back to over 16%
for the year and expect the long term operating margins to
stabilize in the range of 13-14%.

Future Growth Strategy

Expand Markets where we have significant leadership
Parachute coconut oil in India and Bangladesh
Saffola Premium healthy refined edible oil
Hair Code/Fiancee hair gels/creams in Egypt
Post Wash Conditioner/Hair Serums in India
Increase Share in other categories
Hair Oils in India & Bangladesh
Hair creams & gels in the Middle East
Male Deodorants in India & Vietnam
Male Shampoo in Vietnam
Introduce new products larger size than in the past
Saffola Oats, Parachute Advansed Body Lotion, Livon Hair Colours
Broader play of our product platforms across key markets
Geographic Expansion
South East Asia, Sub-Saharan Africa
Inorganic Growth to supplement organic growth

ENVIRONMENT ANALYSIS
The consumer goods sector in India is highly competitive and due to its low margins

and high volume model, often very low profits are realized due to the highly saturated
market.
From the total population (1.2 Billion) of India which is Maricos key market, about
70% live in rural areas and this segment accounts for about 60% of consumer goods
consumption in the country, highlighting a huge opportunity for the FMCG industry.
However in regard to Maricos key product viz. Hair oil, the consumption has decreased
as oil has been substituted by other hair products such as gels and creams which are
more in tune with the kind of image todays youth wants to portray.
On the technology front many advancements have been made recently such as
improved information sharing and optimization of supply chain as well as inventory
management. Marico uses IBMs Cognos TM1 ERP solution for better management of its
data2.
In reformative regimes the newly proposed Goods and Service Tax or better known as

the Harmonized Sales Tax will positively affect the consumer goods industry. GST will
consolidate the tax system and eliminate all the secondary and tertiary taxes such as
Central and State specific sales tax, this will bring down manufacturing costs and enable
better margins for the industry.

COMPETITOR ANALYSIS

Maricos including its competitors incur heavy launch costs on new products on launch advertisements,
free samples, celebrity endorsements & product promotions and so does Marico to ensure greater market
penetration. Competitors of Marico also have extensive distribution networks & logistics this enables high
level of penetration in both the urban & rural markets.
On the basis of Maricos key product hair oil, its main competitors will be Hindustan Unilever Limited (or
HUL), Dabur and Emami which have launched new hair oil products directly competing with Maricos
Parachute.
o HUL has about ten times the market capitalization as compared to Marico, however Marico owns just as
much assets as HUL. The key strategy at HUL seems to be risk management through diversification evident
by its portfolio of more than 50 brands6.
o Dabur has a greater sales turnover indicating high volume of Dabur products are being sold. Dabur India
has established itself as the market leader in ayurvedic (herbal) products and is leveraging that to foray into
the hair oil segment as well.
Emamis

hair oil is targeted towards the weaker sections of the economy due to its low prices, this is highly
different than Maricos Parachute which is propounded on the basis of purity and an overall hair care solution.
o Marico faces competition from Bajaj Corp. due to their highly successful almond hair oil similar innovations
such as oils with herbal ingredients, non-sticky oils, and anti-dandruff hair oils, among others are giving
tough competition to Marico.
In regard to the edible cooking oil segment, Marico faces competition from the Adani Wilmer Group
(Privately held) and from Agro Tech Foods. On the beauty care products front Maricos key competitors are
Godrej and Proctor & Gamble (or P&G), this segment is also characterized by a large number of small players
focusing mainly on personal care.

FIVE FORCES ANALYSIS

Recently though after facing stiff competition from other hair oil brands

which were favored by the youth over Parachute, Marico also decreased
its dependence on the coconut oil by product line extension through
adding value-added hair care products and other skin care products into
its stable. These products are sold under the umbrella brand of Parachute
to leverage the superior brand name it has acquired over the years. The
response has somewhat been mixed as the bargaining power of the
consumers is high in the industry due to low switching costs and also
high promotional activities undertaken by the competitors. Marico has
also launched oats and other cereal foods to capture the health conscious
demographic which is mushrooming rapidly.
The entire FMCG sector rests in the balance due to its suppliers and other
vendors as with any other manufacturing based sector, thereby giving
suppliers somewhat moderate bargaining power provided long term
relations are established. The price of FMCG goods for the most part are
governed by the commodity markets thereby making the industry players
price takers leaving very little room for market skimming by launching
products at a higher price initially.

RECOMMENDATIONS
Marico needs improved efforts to retain its

competitive position in the hair oil market by offering

complete hair care solutions.
Marico should consider launching their products under
a different brand name, as Parachute is still associated
to stickiness which holds back the new products (non-oil
based such as hair gels, etc.) that the company has been
launching.
Marico needs to invest in establishing distribution
channels in rural areas of the country which have a huge
untapped market potential.
Marico should also aggressively push its newly
introduced oats and cereal based products as demand of
health foods is increasing manifold.