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Inflation may not affect Marico’s brands

Harsh Mariwala, chairman and managing director of Marico Ltd, speaks to Saurabh Turakhia on the company’s growth drivers, its international businesses and the way it is managing costs and delivering growth in inflationary

business Updated: Dec 03, 2008 12:21 IST

Harsh Mariwala, chairman and managing director of Marico Ltd has successfully managed to establish Marico as an unconventional FMCG company, better known for its ‘uncommon sense’ and its innovations.

Over the years, while brands such as Saffola and Parachute have continued to do well for the company, Marico has also ventured into the beauty and wellness segment with brand extensions.

The company is also betting big on its functional foods business. Mariwala spoke to Saurabh Turakhia on the company’s growth drivers, its international businesses and the way it is managing costs and delivering growth in inflationary times.

How is the company keeping up with the spiralling inflation?

Most FMCG marketers are facing the problem of overall inflationary situation in the economy. The cost pressures are not only in oils, but several other items of daily consumption with most of the cost push being on account of crude oil inflation, which runs across the whole industrial spectrum.

We have been reacting to input cost pressures by taking necessary price increases in order to maintain its margins per unit volume. By and large, we have not necessarily been taking anticipatory increases, but have rather followed the cost-push. Our brands such as Parachute and Saffola have extremely strong consumer equity and the company believes that these price increases will not impact its volumes adversely. During the quarter ended June 30, we registered a revenue growth of 28 per cent, of which 15 per cent was on account of volume growth. I believe this number stands out in the overall segment.

Which segments have been your growth drivers?

Each of our businesses — consumer products in India, consumer products in the international markets and the Kaya skin care solutions business —have been showing healthy growth.

In established segments such as coconut oil in India and Bangladesh or the niche refined safflower and refined safflower blends market, where we have significant market share, we are playing the role of expanding the market.

In segments where we are No. 2, such as hair oils in India or hair creams in the Middle East, our strategy is to try and gain market share.

To create growth engines for the future, we are investing in a range of new products in beauty and wellness. Finally, inorganic growth also forms a key component of our growth strategy. In all, we are following a multi-pronged strategy for driving growth.

How is your health and wellness business doing?

Kaya’s skin clinic business has broken even. The business has been performing well. Last year, Kaya achieved a turnover of Rs 100 crore. We are now present through 60 clinics in India across 20 cities. We also have 10 clinics in the Middle East.

What are your plans for the functional foods business?

Saffola’s strong equity on heart health has a large potential to be leveraged. One of these is in the foods space, where our endeavour is to create a functional foods category in the country. We had begun a few years ago through Saffola Salt, a low sodium salt offering. Recently, we have introduced Saffola for cholesterol management and for diabetics in the roti mix format. If these prove successful, we will explore other formats for functional foods as well. These would primarily be products that can be laddered up to heart health.

Have you planned any acquisitions?

Yes, we are on the look out for acquisition opportunities in the beauty and wellness categories.

Your company has always been known for innovation. Do we see something new from the Marico stable soon?

In recent times, Parachute Advanced coconut oil introduced two packaging innovations; the Hot Champi (a pack with a warmer) and the Easy Champi (a spray pack). We have also introduced innovative products such as Saffola for Diabetics and Parachute Advanced Stars cream-gel for kids. We have been at the forefront of information technology-led process innovations in our sales system.

How has your international business grown?

International business contributes to about 16 per cent of Marico’s turnover. We expect it to continue to grow on the topline at over 20 per cent.