The Hindu Business Line : Eastern enterprise

It has been a year since the Emami Tower inaugurated by Amitabh Bachchan changed Kolkata’s landscape. The Emami Group’s 90,000 sq. ft. corporate office stands for one of the largest FMCG players in this eastern region. While the group has diversified rapidly, FMCG continues to be its core business and creating brands has been an ongoing task with its well-known line-up of brand ambassadors.

Having created its own brands all these years, today the Rs 620-crore Emami Ltd would like to acquire mid-sized companies and brands in the personal care space. Aditya V. Agarwal, Director, Emami Group of Companies, says, “It may take us a while but today we are open to acquisitions.” Emami has been getting feelers from a host of players including Marico (for its Sweekar brand) but deciding what price to pay has been a time-consuming process for the company. There is also a possibility of making an international brand acquisition for the new categories such as feminine hygiene products and diapers, which might not be added to its Indian portfolio of indigenous brands.

Targeting the mass market primarily, Emami believes there is wealth at the bottom of the pyramid. Challenging the rest of the mass marketers with its innovative products, this FMCG company has always tried to find a niche in the marketplace. Take the case of its Fair and Handsome Cream, where it decided to compete with Hindustan Unilever Ltd’s (HUL) Fair & Lovely. The strategy was not to attack the leading fairness brand head on but to find an untapped segment in the same category with a new male fairness cream. Mohan Goenka, Director, Emami Ltd, reminisces, “We realised that in the Rs 1,000-crore category, 30 per cent were men using the F&L brand. Our biggest challenge was to reach out to them and have them replace their creams with Fair and Handsome.” Today the Rs 55-crore Fair and Handsome brand continues to reign in its segment in spite of several others, including HUL, entering the men’s segment since 2005.

Emami, though, is not perturbed and continues to segment the fairness category with brand extensions under Fair and Handsome. A fairness cream for teenagers followed by another fairness cream for women over 30 (Fair and Ageless) is next on the cards. Brand ambassadors such as Shah Rukh Khan and Tamil actor Surya have also been roped in to ensure the brand fares handsomely in its segment. After tasting success with its men’s fairness category, Emami has decided to develop a full-fledged men’s toiletries portfolio under its own franchise with products ranging from shaving creams to soaps.

However, today among Emami’s plethora of brands, its biggest brand Navratna hair oil and Boroplus antiseptic cream continue to hold dominant positions in their respective categories. The Rs 200-crore Navratna oil with a 55.2 per cent share has had competitors such as Marico and Paras trying to enter its turf while Boroplus cream, with a 59 per cent share, in spite of being pitted against a heritage brand such as Boroline, has managed to become a leader. Both the mega brands have been extended. While Boroplus has been stretched to a prickly heat powder, light cream and body lotion, Navratna has added on a cooling talc.

In other categories such as Chyawanprash, Emami has been trying to catch up with the market leader Dabur. In spite of being a late entrant into the category, today its Sona Chandi Chyawanprash has a 13 per cent share in the category after Dabur and Baidyanath with Shah Rukh Khan again vouching for the goodness of the product. New variants are being experimented upon, such as Chocoprash, a chocolate flavour targeting children, and Amritprash, a cooling rose variant which is being promoted as an all-season chyawanprash.

There have been failures too. For instance, it had launched a glycerine soap which did not succeed due to limited resources. Emami now wants to make a comeback into this segment with its own Emami herbal glycerine soap, pitting itself against established brands such as Pears and Santoor.

Emami is making a comeback in the hair care category with a shampoo and hair dye. Besides, its ‘Beauty Secrets by Madhuri’ range comprising products such as hair oil, sunscreen lotion, shampoo and talcum powder were put on the backburner as the actor endorsing the brand decided to get married and move overseas.

Priti A. Sureka, Director, Emami Group of Companies, says, “This year, we are looking at a re-entry into the haircare segment with a new brand of shampoo which would be a one-stop solution for hair care.” With intentions of strengthening its presence in the hair care segment, Emami recently introduced an instant hair pack, Emami Hairlife, with soyaproteins, multivitamins and herbs.

Emami has been diversifying into new businesses within FMCG as well. A healthcare division was set up last year targeting a Rs 10-crore turnover with a slew of products ranging from laxatives to cough and cold relief to ayurvedic OTC medicines. Now a foray into foods and edible oil is envisaged. But there are going to be a new set of challenges in each of the new categories. As Agarwal says, “We do realise that edible oil is still a commodity in this country and that the branded market is still small. Besides, we would also have to look for a brand to build in this segment.” In foods, Emami has roped in professionals from companies such as Britannia to develop a portfolio of products ranging from breakfast cereals to ready-to-eat products and honey. The sensitive foods market is not going to be easy to crack but Emami with its ‘back to nature’ products would again be looking at creating a niche in this segment.

However, what is required is to build a robust distribution and supply chain for all its present and future products. The FMCG company recently appointed Ernst & Young to revamp its current sales and distribution structure into a stronger one. As Emami’s Agarwal says, “We want to take our distribution to the next level. We have appointed Ernst & Young to study and help grow the current distribution network and to have better cost reduction and inventory control.” Currently Emami has 3,500 distributors reaching out to seven lakh outlets across the country.

Emami has reached out to remote villages through the P&T Department. For instance, it is currently distributing its products through almost 5,000 post offices across Maharashtra and plans to ramp it up to 1.05 lakh post offices across the country. It also plans to use ITC e-choupal outlets in Uttar Pradesh and Madhya Pradesh and the Indian Army’s Canteen stores to further distribute its products.

At the same time the Emami group’s diversification into retail has been progressing rapidly. Having forged an equal joint venture with the Chennai-based retailer Landmark in the past, it has now bought the remaining stake in the company. Says Agarwal, “When Landmark was sold out to Trent, we bought out their stake in the venture and the name of our store was changed from Landmark to Starmark.” With plans of investing Rs 50 crore to expand its store format, Starmark is expected to have 10 more outlets by mid 2008. Besides its existing Frank Ross pharmacy outlets (Emami acquired Frank Ross Ltd in 1993 when it was a sick unit with one pharmacy) its first retailing venture is now poised to open more franchisee outlets. The group’s realty company (Emami Realty) with its malls, IT parks and residential projects, is also ensuring the growth of its retail business.

More diversifications into areas such as newsprint, plastic containers, life-saving drugs, hospitals, thermal power and IT have been made by the group since the time it started its FMCG business in 1974. The resources generated by the unlisted companies have ensured that its listed FMCG company, Emami Ltd, is not devoid of funds, especially when it is ready to acquire more domestic and international brands.

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