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Meet the men behind Emami's success

Pradipta Mukherjee & Pradeep Gooptu in New Delhi | October 20, 2008

If there is one distinctive quality that marks out R S Agarwal, 62 ,chairman, Emami Ltd [Get Quote], and R S Goenka, 61, joint chairman, Emami, it is their constant restless energy and creativity.

The two depend on a large family group as back up in ventures like Emami's takeover this week of Zandu. Goenka and Agarwal met for the first time in high school, studied commerce, law and accounting and then set up their businesses, after they had worked for a short time in a Birla company.

Agarwal prefers to focus on strategic planning and corporate affairs, while Goenka is the perfect man for taxation and financial planning issues. Their energy and creativity took them far beyond their humble start, of producing ayurvedic medicine and cosmetics at a small manufacturing facility in Kolkata, West Bengal.

Fellow entrepreneurs in Kolkata's Marwari community say the two have an uncanny knack of spotting emerging opportunities and business openings early, but have the good sense of biting off what they can manage rather than going in for foolhardy ventures.

This creativity took them into newsprint, private healthcare, edible oils, bio-diesel, real estate and cement. The FMCG business is today worth Rs 600 crore (Rs 6 billion) from a unit established in 1974.

Overall, the group turnover was Rs 1600 crore (Rs 16 billion) before the Zandu takeover - it has grown around 25 per cent annually over the past few years. More importantly, the group was extremely cash rich and has also been a big player in the money markets in the region. Plant expansion and exports are the latest focus areas for its original FMCG business group.

In recent years, exports have expanded into 60 countries with a focus on west Asia, Europe, Africa, CIS and the Saarc, supported by plants in West Bengal, Puducherry, Assam, Gujarat, Orissa, Uttarakhand, and Himachal Pradesh.

The Agarwal-Goenka pair pioneered categories like male fairness creams, ayurvedic beauty and cosmetic products focused on men, summer and cooling ('thanda') oils, to balms and lotions, and even different hair dyes for men and women.

"We see needs and develop products to fill in," said the duo.

Thanks to the constant branding and product tinkering, they succeeded in using these marketing, positioning and other innovations to reduce advertising as a proportion of revenues from 20.4 per cent in 2006-07 to 17.6 per cent in 2007-08.

As the promoter-duo told Business Standard recently at an exclusive meeting, Emami's next challenge was to initiate development of global brands in the domestic market as well as launch more over-the-counter drugs. However, both are wise enough to realise that it always pays to ask experts for advice if only to re-confirm the gut feeling.

In keeping with this viewpoint, the duo, engaged consultant Ernst and Young in April 2008 to leverage value for Emami's supply chain, sales, distribution and human resource capabilities. In one more display of their restlessness, they recently decided that their existing chain of 400,000 outlets was not enough.

The solution: they turned to the government's Department of Post in Maharashtra, and ITC Ltd [Get Quote], to get on board new customers in rural and sub-urban areas; they then allied with Indian Oil Corporation [Get Quote] (IOC) for distribution through rural petrol pumps.

Also as part of this, they launched in the June 2008 quarter, a super stockist network development plan to increase rural penetration with a pilot project in the states of Uttar Pradesh, Andhra Pradesh, Gujarat, Rajasthan, Punjab, and Maharashtra. Backing this up was a rural marketing strategy based on 7500 mobile traders in states like West Bengal, Chhattisgarh, Madhya Pradesh, Andhra Pradesh, Orissa and Karnataka.

The collaboration with ITC e-choupals was expected to target rural men who would usually shun beauty products and cosmetics outlets, while the post and telegraph tie-up in Maharashtra was to help get even more traditional customers.

Another unique aspect of their model is the clear and focused role of a large number of family members in the business, and the list goes like this: Sushil Goenka, the brother of R S Goenka and managing director, handles daily affairs; Mohan and Manish Goenka, sons of R S Goenka, handle non-FMCG business growth; Aditya Agarwal, R S Agarwal's son, handles all FMCG businesses; Harsh Agarwal, the other son of R S Agarwal looks after personal care products; Preeti Sureka, R S Agarwal's daughter, manages the hair care product group; Raj Sureka, Preeti Sureka's husband, leads the Emami real estate business; and Richa Agarwal, the wife of Aditya Agarwal, manages the group's foray into art auctions and related infrastructure under the Emami Chisel Art banner.



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