marico ltd.-company research
TRANSCRIPT
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Company Research - Marico Ltd.
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TABLE OF CONTENTS
PART I
About Marico 3
Values 4
Top Management 4
Marico’s Strategic Business Units 4
Structure 5
Products and Brands 6
Work transfers across department 7
Fun at Work 7
Performance Appraisal 7
Miscellaneous 7
Changes in Marico in the last 5 years 8
Marico in 2009-10 : Growth Prospects 8
Future Plans 10
What has Marico done differently? 10
PART II
Recruitment (General) 11
How will a marketing student grow at Marico? 11
Recruitment Process at SPJIMR 11
General11
PPI 12
Inputs from the Alum 12
Autumn’s Project 12
Current work at Marico 12
Overall experience at Marico 12
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PART I
ABOUT MARICO
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. 23.9 billion (about USD 478 Million) during 2008-09. Marico
markets well-known brands such as Parachute, Saffola, Sweekar, Hair & Care, Nihar, Shanti,
Mediker, Revive, Manjal, Kaya, Aromatic, Fiancee, HairCode, Caivil and Black Chic. 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 is present in the Skin Care Solutions segment through
Kaya Skin Clinics (104 in India and The Middle East) and its soap franchise (in India and
Bangladesh).
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Marico's branded products are present in Bangladesh, other SAARC countries, the Middle East,
Egypt and South Africa. The Overseas Sales franchise of Marico's Consumer 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.
VALUES
Marico’s credo is – Think Consumer to be Big
THINK CONSUMER - Consumer centricTO - Transparency and Openness | Opportunity SeekingBE - Bias for Action | ExcellenceBIG - Boundarylessness | Innovation | Global Outlook
TOP MANAGEMENT
Marico is led by a team of talented and experienced leaders, with Mr. Harsh Mariwala, Chairman & Managing Director at the forefront.
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Marico Facts - Year 2009-2010
Turnover: Rs. 2661crNet Profit: Rs. 232cr
Turnover and profit consistently growing over the corresponding quarter of the previous year, for the past 38 quarters and more
1 out of every 4 Indians is a Marico consumer. Marico distribution network covers over 33lac retail outlets. Most Marico brands enjoy a
leadership position (No. 1 or No. 2) in their respective categories Parachute is the world's largest coconut oil brand Kaya cosmetic dermatology has been a pioneer with over 100 clinics in India, Bangladesh and
the Middle East Marico was awarded the NDTV Profit Business Leadership Award 2009 in the FMCG (Personal
Hygiene) category Superbrands voted Parachute a Super Brand in UAE & Bangladesh and Hair Code in Egypt Parachute ranked the 2nd Most Trusted Brand in Bangladesh Kaya was awarded the 'Most Admired Retailer for Health and Beauty' at the Images Retail
Awards '09 Marico's manufacturing unit won the Outstanding Achievement Trophy at the IMC
Ramkrishna Bajaj National Quality Award (RBNQA) 2009
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Unit Scope Leader Designation
Consumer Products Business
FMCG business in India, including all embedded functions
Saugata Gupta Chief Executive Officer- Consumer Products
International Business
FMCG business overseas including all embedded functions and Sundari
Vijay Subramaniam Chief Executive Officer- International Business
Kaya Business Kaya and Wellness businesses including all embedded functions
Rakesh Pandewill be succeeded by Ajay Pahwa
CEO, Kaya Ltd
Technology Research and Development, CQA & six Sigma for all SBUs and Fus
Vilas Shirhatti Chief- Technology
Finance, HR & Strategy
Strategy, Finance & Investor Relations for the Marico Group Human Resources for all SBUs and FUs.
Milind Sarwate Chief - Finance, HR & Strategy
MARICO’S STRATEGIC BUSINESS UNITS
The Marico Group business organisation is structured into three Strategic Business Units (SBUs) Consumer Products Business (India)
Personal & Nature Care Wellness & New Products
Major brand is Parachute with miscellaneous products under it.
International Business Group International FMCG BusinessInternational business spread across countries like Middle East (Dubai), Bangladesh, Egypt and South Africa.
Kaya (Branched out to form a separate company Kaya Ltd. a wholly owned subsidiary of Marico) Kaya Skin clinics Kaya Life
STRUCTURE
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At Marico, it’s a flatter structure with only a few hierarchical levels. At the topmost level is the CMD, Mr. Harsh Mariwala, followed by the business partners and then by managers and junior managers. A fresh graduate having an MBA degree would join as Junior Manager for a year and then escalates to the Manager’s position. They follow a flatter structure for faster decision making.
All three verticals –
Consumer Products Business [India]International Business GroupKaya [still in prototyping stage]
Work as separate units, having their own functional units of Sales, Marketing and Human resources. Moreover, the verticals have their own Chief Executive Officers, who meet up twice a month for sharing the different strategies and results. Thus the first three are the actual business verticals, working on their own, while the other two, Corporate Finance and Corporate HR assist the other business vertical to help Marico devise strategies over a global scale. The Finance and HR closely interact with the all the managers especially the in the three SBUs. This was lately introduced in Marico for streamlining individual business lines.
Now lesser number of levels implies, a member (they identify employees as members, similar to identifying students as participants in SPJIMR) spends longer period of about 5-8 yrs at each level before moving to higher level, but he surely moves up the responsibility ladder in the same level on yearly basis. The junior managers include the engineers, sales trainees and diploma holders.
The Span of Control varies from team to team. It could range from single person to maximum of 5-8 members under one supervisor.
PRODUCTS AND BRANDS
CONSUMER PRODUCTS BUSINESS (INDIA)
Product/Brand Positioning Key strength Other informationParachute
Parachute AdvansedParachute JasmineParachute AftershowerParachute Therapie
Positioned on the platform of purity
Innovations in Packaging – brought coconut oils out of tins into consumer friendly packaging.
Premium edible grade coconut oil. Market leader in its category
Saffola – Saffola OilsSaffola Salt PlusSaffola AriseSaffola Functional Foods
“Good for Heart” Impactful advertising and innovative marketing techniques
Forty year old brandBrand of the Year – 1993, 2005Brought Heart-care to edible oil categoryFirst blended oil in India
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CMD
Partners
Managers
Junior Managers
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First Mass Functional Food in India
Medikar For treating lice Constant innovation by the R&D team.Consumer centric communication.Excellent distribution.
Market leader in its categoryUrban as well as rural areas.
Hair & Care Lightest perfumed hair oil offering both “Style and Nourishment”
Innovator in packaging
Silk N Shine A leave in post wash conditioner
Revive Convenience of instant cold water starching at home
Created a market where none existed.Versatility of the product and ease of use.
Launched in 1993. Revive liquid launched in 2007.
Manjal Pure and complete protection of germs
Benefits of all Ayurvedic ingredients
Sweekar A Light and Healthy cooking medium
India’s first Low Absorb oil.
Emerged in 1988-89.One of the leading brands in consumer packs market.
Shanty Badam Amla “Goodness of Badam with Amla”
Carved out a niche for itself by adding Badaam to Amla.
Launched in 2001
Nihar On the platform of purity
Understanding of consumers.
Market leader in the eastern region
Starz (Parachute Advansed)
Effective nourishment for children
Range of Hair care products specially created for children.
Oil of Malabar Oil from the land of coconuts
Strong rural presence. Known for quality.
One of Marico’s recent acquisitions
KAYA
Kaya Ltd (erstwhile Kaya Skin Care Ltd.) was an entrepreneurial leap of faith, from consumer products to giving holistic solutions. This marked Marico's entry into skin care solutions business. It focuses on meeting the emerging needs of the modern day consumers by providing useful and effective services in the beauty and wellness space.
Today, Kaya is recognized as a pioneer in skin care and has become a benchmark for efficacy and client care. Over 6 Lakh delighted customers pledge their trust in Kaya.
WORK TRANSFERS ACROSS DEPARTMENTS:
The transfer across the departments is significantly guided by the need of the organization followed by members’ interest. The members’ interests are greatly taken care while planning for all future business strategies.
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FUN AT WORK:
Similar to many other companies, Marico also senses the importance of enjoyment at work. They have regular recreational events conducted. They celebrate all the festivals in the office by organizing competitions on those days. The HR plans a dedicated schedule for these events in the calendar year. One more significant thing is that most of the events are conducted regularly intrinsic to the team, if not across whole organization. This is done for the convenience purpose.
PERFORMANCE APPRAISAL:
They follow the regular MBO (Management by Objectives) process for yearly the performance appraisal. MBO is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization. The MBO is revised twice in a year, once at the starting of the year, and second at the mid year. The MBO is prepared after mutual understanding with the reporting supervisor and HR. A goal sheet is maintained and tracked all along the year.
Marico maintains exclusive software for performance evaluation. It’s called Potential Management System. This helps in various functions. Few to name are resource allocation, potential skill mapping across time periods. It also helps in leadership and succession planning. The role mapping is done taking both into consideration, members’ interest and organization requirement.
There are regular classroom trainings going on in the company to improve individual efficiencies.
MISCELLANEOUS:
The organization structure is simple because of its small size. It stretches to max 2000 members globally excluding the on-floor staff, as most of them are outsourcedFirst name addressingNo sabbatical policy- case on case discussion Marico believes in giving early responsibility.It follows flexible working hours; there is nothing as such as monitoring daily swipe in hours etc.
CHANGES IN MARICO IN THE LAST 5 YEARS
Year What did it do?
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
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lifestyle. Earlier Saffola campaign used the tag line - Saffola Swasth ParivaarKe Dil Ki DhadkanMarico 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 oilMarico industries has announced its foray into the beauty products segment with the launch of Silk-n-Shine, a post-wash haircare product
2006 Marico acquires HLL`s Nihar for Rs 216 crore
2008 They sold their SIL brand to Good Food Group, Denmark. The company wants to focus on its global beauty and wellness business. Analysts predict Sil's valuation to be around Rs 15 crore, which are twice its revenues of Rs 8 crore. Sil's range of products includes jams, sauces, baked beans, Chinese vinegar, sweet corn soup and mayonnaise
2010 Marico has entered the hair-styling market in Malaysia by acquiring Code 10, a Colgate-Palmolive owned brand, for an estimated Rs 28 crore. With sales of Rs 14 crore, Code 10 is Malaysia's third largest hair care brand with products like creams and gels and a market share of 10% in the Malaysian market.
MARICO IN 2009-2010: GROWTH PROSPECTS
At current market prices of Rs 131, Marico Industries now trades at a PE multiple of 33 times its trailing 12-month earnings. Not only is this at a huge premium to a behemoth like Hindustan Unilever (24 times), it is also at the outer boundaries of Marico's own historic valuations.
Boost from benign inputs
Marico Industries managed exceptional profit performance in 2009-10, closing the year with a 42% expansion in its consolidated net profits and an 11.4% sales growth.
While other players struggled for volumes, Marico's 14% volume growth showed robust demand. A 20-22% correction in the prices of Marico's key raw materials (copra and safflower seed) from their peaks of 2009 also helped. It allowed the company to provide for disputed excise duty claims, expand its advertising budget (from 10 to 13% of sales) and yet improve operating profit margins (from 12.7 to 14.1%) for 2009-10.
During Q4 FY10, all Marico's hair oils brands recorded healthy growth and the portfolio as a whole grew by about 27% over FY09. Marico's hair oils franchise had a volume market share of 21% during the 12 months ended Feb. 2010.
The year 2009-10 saw all three key segments of Marico deliver strong volume growth. The coconut oil franchise grew by 7% overall, with volumes accelerating in the fourth quarter after the company took price cuts on its smaller packs.
Despite Marico's dominant 53.3% market share in coconut oil, pricing power in this segment is constrained by the price differential of its brands with loose oils. In fact, it was to reduce this price gap and promote a shift to its brands that the company took its recent price corrections.
Prospects for Marico's other key segments - hair oils and Saffola - are brighter this year.
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Value-added hair oils, where it owns brands such as Parachute Advansed, Nihar Naturals, Shanti Amla and Hair & Care, managed a 16% volume growth in 2009-10 as higher penetration and aggressive promotions helped drive category growth.
Premium edible oil brand, Saffola, too has made a strong comeback, taking its volume growth to 16% for 2009-10.
The brand's strong positioning on the ‘wellness' plank, its extensions into other food products such as low glycemic rice (Saffola Arise) and the rising prices for edible oils, augur well for this business in the coming year.
Global foray pays off
While domestic FMCG brands have delivered a reasonable show for Marico, its international business (Rs 600 crore) has been its star performer, contributing 23% of sales after growing 36 per cent in 2009-10.
The company's strategy of stitching together several small overseas acquisitions into a strong presence in new regions such as Bangladesh, Africa, West Asia and South-East Asia have paid off well, with brands such as Hair Code styling products acquiring dominant market shares in these regions.
With the company streamlining its manufacturing base to reduce costs and using a newly acquired distribution network to market its Indian brands overseas, this business may sustain a 20% - plus growth over the medium term. However, the strengthening rupee and the rising uncertainty about the global economic recovery peg up the uncertainties associated with Marico's global operations at this juncture.
Summing up, Marico may sustain better-than-sector growth in both sales and profits over the medium term. However, risks to that growth do exist, and the stiff stock valuations do not offer much margin of safety.
FUTURE PLANS
Marico will soon prototype an oats’ meal product under its Saffola brand. The product, called Saffola Oats, has been soft-launched in about 12 cities. When asked, Saugata Gupta, chief executive officer, consumer products division, confirmed the test runs.
Marico is said to be banking on the south, where the market for oats is considered to be strong. The company was experimenting with healthy and functional foods under the Saffola brand name. Already, the Rs 400-crore Saffola brand, primarily a cooking oil positioned on the healthy heart platform, has been extended to low-sodium salt, an atta mix and to rice. The company also began prototyping a baked snack called Saffola Zest last year, now suspended.
WHAT HAS MARICO DONE DIFFERENTLY?
Marico, a relatively small name in the FMCG space, has strong presence in niche segments such as hair oil and edible oil.
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Its launch of value-added products and successful use of Parachute as a brand extension strategy has resulted in higher margins. The company has also used inorganic route to expand its reach in domestic as well as international markets. Overall, Marico would like to build its presence in hair, skincare and wellness products.
Growth with high margin
It has transformed its portfolio by introducing high margin items like hair cream, gel, moisturiser, soaps, and skincare products launched through Kaya stores rather than through traditional low-margin products like Parachute hair oil, Saffola and Sweekar refined oil.
Also, the use of brand extension strategy and positioning the products differently in new hair oil, hair cream and refined oil products has worked well in commanding higher price. This has ultimately resulted in improvement of margins from 9.46% three years back to 13.23% in FY2007-08. However, advertisement expenses have also seen a jump in the same period. Its Parachute hair oil brand recorded 11% volume growth in FY2007-08.
It has also launched haircare products for children and functional food for health-conscious consumers. The rising income levels, growing brand consciousness, aspiration for higher spending on health and beautycare products have resulted in Marico products penetrating the market.
Marico, being the leader in hair oil and premium refined oil segments, offers a limited scope for further volume growth. To drive growth, it has leverage its strength in the hair oil segment by acquiring brands in different markets.
It acquired a handful of brands in overseas markets like the US, Bangladesh, Egypt and South Africa to drive further growth.
It has completed seven acquisitions, both domestic and international, since 2003. The highest investment of Rs 227 crore was when it acquired Hindustan Unilever’s 'Nihar' brand.
It has bought one brand in every market it entered. This has given it a foothold in these markets. Now, whether the company will leverage its presence in these markets and expand is a thing to watch out for.
Apart from acquisition, Parachute is also sold in the middle-east market. This was done to increase reach and drive volume growth. One more reason for acquisition could be to propel the Parachute brand in these markets.
PART II
RECRUITMENT (GENERAL)
It’s more of specialization directive, like they particularly come and choose recruits from respective specializations as per organizational requirement, but as such there are no stringent rules that they don’t recruit across specialization-relevant work
It depends on the need of the market.
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The fresh recruits from MBA College are put on management trainee role for a year to get acquainted with the organization working. In this one year period of time, the student is exposed to more of on-job training compared to classroom training. He is shadowed under an experienced member, who is responsible for mentoring him in this period. At the end of completion of one year of successful management training, they are promoted to Manager Level, the second in the hierarchy.
How will a marketing student grow at Marico?
RECRUITMENT PROCESS AT SPJIMR
Phase 1: Presentation
Phase 2: Group Discussion – 2 elimination rounds
GD round 1 – GeneralGD round 2 - Case based
A simple case regarding sales issues and what would you do as an ASMAbout handling a team and resolving issues
Phase 3: Interviews – 2 elimination rounds
Round 1 – HR interviewRound 2 – specialization specific (Brand manager)
PPI
Phase 1: Psychometric test
Phase 2: HR interview
Grilling and weird (as the alum described)Questions like “Describe Gautam” (alum’s name)Deep rooted questions related to yourself
INPUTS FROM OUR ALUM: GAUTAM BHATIA
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Join as a management trainee
1 year (may get over in 10 months)
Under an ASM
Area Sales Manager (ASM)
1-1.5 year
Option to switch to marketing or continue
with salesInterview to qualify
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Autumn’s project
Type of Project: Mix of sales and supply chain
Analysis of the sales loss due to stock out in the retail stores
Did a pilot in Mumbai which is now being extended by the Company to 8 cities all over India
Hectic and time consuming project
Got the PPI
Current Work at Marico
Management Trainee (MT): 10-12 months
Working under an ASM
First month: Stint as a salesperson
Taking orders from the retailers
Trying to finish the targets
Giving presentation at the end of the month
It’s difficult to satisfy the senior management during the final presentation. Only 1/8 may get promoted to the next. For most others, the stint is extended to finish targets or give a better performance
Next stint: Territory Sales Officer (TSO)
Handling 4-5 distributors
Targets are heavier
Handling a team of 10 people
Getting work done is more difficult than doing it yourself
Overall experience at Marico
Heavy work load, being a smaller Company as compared to major MNCs
Have to work for 6 days a week
FMCG is tough to handle, especially in an Indian Company, so need to be well prepared.
Evaluation system is tough, so you need to show your worth to move up the ladder
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