The Hindu Business Line : Marico banks on value-addition for growth

"Despite the slack trend in the FMCG market, Marico has been growing. The current year should see a 10-15 per cent increase in sales value and 15 per cent growth at PBT level for Marico," Mr Milind Sarwate, Chief Financial Officer, Marico Industries, said.

Marico has been focusing on value-addition. This time round, this value-addition coincides with the upturn in the economy. According to Mr Sarwate, Marico has used consumer offers judiciously as opposed to other FMCG players. This has helped in preventing a brand fatigue, he said. "Marico did not go in for too many consumer offers because we realised that this strategy would wean away consumers when such offers are withdrawn," Mr Sarwate said.

"We are the market leaders in most of our categories. We are not competition-centric but consumer-centric," he said.

According to him, there has not been a growth in incomes that could reflect in higher buying of consumer goods. However, the increase in incomes in the rural areas could result in higher demand for durables than in urban areas.

However, Marico has an exposure to the rural market to the extent of 23 per cent and this market is largely in the small towns of about 20,000 population. "Marico is not an exceptional rural company," Mr Sarwate said.

Marico will continue to focus on its core brands. Innovation in terms of packaging as well as value addition in the existing product range will be the main feature of the company to propel growth.

Marico believes that its job is to modernise the hair-oil industry primarily because it is one of the largest stakeholders in that market with its flagship product, Parachute. "Hair oil is much less understood market. This product is unique to this sub-continent. Therefore, packaging changes keeps the buzz on the brand," Mr Sarwate said. The brand was relaunched during the third quarter.

Marico had reported a 5.8 per cent increase in consolidated profit after tax at Rs 14.74 crore during the third quarter of the current fiscal against Rs 13.92 crore in the year-ago period. Total revenues amounted to Rs 232.23 crore (Rs 206.25 crore).

Volume growth in all its categories, especially in its high margin product category, has driven the company's financial performance.

Growth in Marico's new business - Kaya Skin Clinics - is driven entirely by the presentability boom in the country, according to Mr Sarwate. Kaya Clinics have had 7000 visitors with a `fairly good' repeat clientele. Currently, there are 11 clinics in India and overseas and the plan is to take it to 15 by March 2004.

The increase in male grooming has also bolstered this business and male clientele make up for 15-20 per cent of the total number of clients with the number growing. However, the Sundari range of products has been slow.

The launch of Mediker anti-lice oil has propelled growth by a 40 per cent in this franchise.

In terms of margins, Marico's edible oil business remains under pressure. "We have been chasing margins instead of volumes," Mr Sarwate said.

With prices of copra edging down from their recent highs, the company would be able to retain some margin yet effect a reduction in prices at the consumer end.

The company has been prototyping its big brands with value addition - Suffola Gold for Punjab, Sampoorna, herbal hair oil, for Maharashtra and Parachute shampoo for Andhra Pradesh.

The company has planned more prototypes of new products, which will be tested shortly.