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The secret of Marico's success

By Shyamal Majumdar & Sapna Agarwal
December 09, 2008 16:35 IST

A sense of emptiness envelops us as we walk past the coffee shop to get to the Ming Yang restaurant on the first floor of Taj Lands End at Bandra. The coffee shop, which is usually full of people, doesn't have a soul even at lunchtime, except for a couple of stewards performing an unfamiliar role -- waiting for guests, write Shyamal Majumdar and Sapna Agarwal.

Ming Yang also seems to be as lonely as the sole steamer on the sea outside -- barely a couple of tables are occupied. We are slightly late as our car was stopped 100 meters away from the hotel and we were asked to put our mobile phones and bags on a tray for screening. For now, at least, life in Mumbai is going to be very different from what we've been used to.

Harsh Charandas Mariwala was clearly aware of the new security bandobast at the hotel, which is just a two-minute drive from his office, and had come in earlier. We order fresh lime soda and Mariwala refers to the mass anger against politicians. He also talks about how companies such as Marico are seriously looking at including succession planning in its disaster management policy.

"We call it a drop-dead succession plan. The possibility of the entire leadership team being exposed to grave danger at one time may be remote. But terror attacks like these show companies have to address such uncomfortable issues", the Marico CMD says, quickly adding that life has to go on after all. We take the cue and ask him about Marico's remarkable transition from a localised oil manufacturer to a health and wellness powerhouse. The waiter serves steamed dimsums.

Mariwala had moved out of the six-decade-old Bombay Oils, a family-run commodity business, in the early '90s to set up Marico, which till a few years ago was dependent on just two brands -- Parachute and Saffola -- for a lion's share of profits.

"I figured out quite early in life that I love and know how to make money. So I worked hard to take Parachute beyond Maharashtra. But those were baby steps. If you have to take a giant leap forward, innovation is the key and that's possible only if you have talented people around you," he says.

An open office culture (everyone in his office calls him Harsh) was the first step. Over 250 MBAs from top-notch institutes now work with him and Mariwala -- who lacks an MBA degree -- realised he had to "upgrade (his) knowledge base" if he had to speak their language. He had done courses in IMD, Switzerland, is a regular participant at C K Prahlad's CEO Forums, and reads all five business dailies and at least four business magazines.

Since innovation is the key to the success of any FMCG brand, the CMD himself attends numerous sessions with target customers (from doctors for endorsing Saffola to barbers for Parachute after-shower cream) just to understand their needs. The tall, balding Mariwala is clearly an unpretentious industrialist, a man who is not overtly concerned about the accoutrements of wealth. He's dressed casually in a shirt and trousers.

As the main course arrives -- "burnt" garlic rice, vegetables in blackbean soya sauce and stir fried Kenya beans -- Mariwala says he would classify the changes that the company is going through in four different buckets: Transition from oils to value-added FMCG products (Saffola Gold, for example); from a purely Indian firm to a global entity (the company has huge operations in Bangladesh and has made a string of acquisitions in South Africa and Egypt); from low-value to high value-added products (Saffola atta mixes and Parachute gels); and from being only in the products space to becoming a solutions player (the highly successful Kaya clinics with their own range of skin care products).

One of the key reasons for Marico's success (over Rs 1,900 crore -- Rs 19 billion) turnover in 2007-08 and growing at over 20 per cent annually) is its constant ability to pick its spots in the crowded segment. For instance, edible oil is a huge category, but Marico occupies a small, high-end segment selling oil supposed to be good for the heart. This ensures higher margins and avoiding the chance of getting caught in a price war.

"I can't fight with MNCs in their primary categories. So what is a fringe category for them is the main category for us. I want to be the market leader in whatever category I am in. The trick is to identify areas where MNCs won't enter," Mariwala says.

That explains Marico's entry into the anti-lice shampoo segment where MNC presence is negligible. Even in South Africa, the company has concentrated on the ethnic hair category, which is growing at a scorching pace. That's also the reason why Marico has quickly exited the baby oil category where MNCs have a dominant presence.

One of the high points in his life was the acquisition of Nihar, a hair oil brand, from Hindustan Unilever in 2006. In the late 1990s, the then HUL Chairman Keki Dadiseth wanted to buy Marico lock, stock and barrel. HUL, which had just acquired Tata Oil Mills, was on an acquisition spree at that time. Many of his friends advised him to cash out when the "going is good", but Mariwala dug in his heels. "Money beyond a point is irrelevant. Marico's progress is a dream for me and I was in no mood to sell my dream," Mariwala says.

The experience, however, taught him an important lesson -- never be scared of anyone. Later, he even discussed an alliance against HUL with Nirma's Kersanbhai Patel, though he now dismisses this as "just a couple of meetings".

Emotional satisfaction and pride was just one reason why he bought Nihar. Shrewd business sense was another. Many had said the Rs 240-crore (Rs 2.40 billion) deal was too expensive, but the deal has worked very well for Marico in terms of a strategic fit in its hair oil portfolio.

The lunch is long over, and Mariwala says he will skip dessert. Not surprising, considering that he is, by his own admission, a fitness fanatic. He follows a rigorous physical regimen that sees him hit the treadmill regularly, take long walks on the sea face, and play golf.

He has lost six kilos in the last one year and wants to lose another two based on the advice of the doctors at Kaya Life. His exercise record is 355 out of 365 days -- one and a half hours every day. He is so conscious about his weight, that he has even outsourced his lunch to Calorie Care just to ensure that his intake doesn't exceed 600 calories at lunch a day.

That Calorie Care is doing a good job is evident given our difficulty in keeping pace with Mariwala on our 100-metre walk back to the place where his Honda Accord is waiting. Marico's MNC competitors would agree.

Shyamal Majumdar & Sapna Agarwal
Source: source