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Latha Venkatraman

Mumbai , Oct. 2

MARICO Industries Ltd, in the process of innovation, has been consciously shifting towards a high margin portfolio and has found value in international businesses and skin care services.

In an over-flogged FMCG market, innovation opportunities exist in seeking new geographies and entering the services business, said Mr Milind Sarwate, Chief Financial Officer, Marico Industries.

"We have moved away from selling to the masses in a general way to selling something specific," he said. This approach has given the company consumer insight and thereby value.

According to Mr Sarwate, the company's foray into services business has helped it to continue on the high margin portfolio path.

International businesses for Marico have been growing at a CAGR of 35-40 per cent over the past few years. Both international business and services business through the Kaya Skin Clinic provides the company high margins.

"As of now, there is no bottomline in Kaya because there are initial set up investments. But margins are very high," said Mr Sarwate. The Kaya business rides on a critical mass of high spenders.

"We have discovered that the deeper insight you develop with your consumer, the better you are in providing experience to the consumer, and the greater value you can charge, the greater margins you can enjoy,'' Mr Sarwate said.

In the first quarter of 2004/2005, international business recorded a turnover growth of 32 per cent. In Bangladesh, Parachute enjoys a 46 per cent market share and other perfumed hair oils a 20 per cent share.

Marico's international business presence extends to 18 countries.

"We have three main regions - Bangladesh, Middle East and the rest including US and Singapore," Mr Sarwate said.

The company has been able to grow beyond the Indian diaspora and will now focus on penetrating into the existing markets while looking for similar geographies.

Marico will focus on extending its reach within Middle East itself. It will look at Saudi Arabia and maybe Egypt at a later date. Annual turnover from the Middle East is around Rs 25 crore. In international business, Pakistan will possibly be the new location; Marico already supplies its products there. However, plans to set up a unit in Pakistan will largely depend on relations between the two countries.

Sundari, the ayurvedic skin care range, did allow Marico to get a toehold in the US market. Though the business continues to remain in the red, Marico believes it is positioned in the right direction.

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