We want to play a catalytic role to fuel innovation: Harsh Mariwala

Harsh Mariwala, Chairman of Marico Ltd, is also the Chairman of the Marico Innovation Foundation, which mentors start-ups. According to him, the economic recovery India is witnessing, post unlocking, is sustainable; but the Centre has to step in with demand generation initiatives. On the start-up front, new entities will tap growing business opportunities arising in segments like health and hygiene, and digital.

In an interview to BusinessLine , Mariwala talks about economic recovery, stimulus packages, start-ups and way forward for Marico Innovation Foundation. Edited excerpts:

This trend of economic recovery is sustainable. But we still have a long way to go.

We saw a GDP contraction in the previous quarter, and if we average out, then contraction for the full year is expected to be around 10 per cent. So that means, we have to recover much faster in the October-December and January-March quarters. I expect this will happen with more sectors or areas opening up for economic activities. The government is proactive in opening up places like restaurants, gyms and movie halls. I also do not see any immediate reversal of opening-up.

Everybody realises that the pandemic will continue for some time, and people have to get back to their normal lives. So as this happens, you’ll see people go back to gyms, theatres or restaurants, with proper precautions. Economic activities will start picking up again. I don’t think the recovery we are witnessing is driven by just festive demand.

In Q1, the GDP declined by 23 per cent, and I reckon, it is predicted to decline around 5 per cent in Q2 (September quarter). We are expecting the decline to be in the range of 1-2 per cent in the next quarter. Maybe from next year, you’ll see growth coming back. When it comes to (comparison with) other countries, we are way behind. They have managed to grow. Bangladesh, for instance, is expected to grow by 4-5 per cent this year, as against India de-growing.

The stimulus package has come in phases, with the first one concentrating more on supply-side reforms. Post that, the government took initiatives on improving farm productivity and towards labour law reforms. Some of these reforms will have long term impact and not so much of a short-term effect. The first phase included things like credit flow to small and medium enterprises.

Now you require initiatives to increase demand. The government took a step with the LTC advance towards government employees and I’m sure more will follow towards generation of demand initiatives.

Start-ups don’t need too many government measures. The government’s role (for them) is that of a facilitator who creates the right economic environment for investors to come-in.

I really do not think the government can do much for the start-up ecosystem in terms of funding. Perhaps, those funding start-ups need to loosen their strings. Investors may have become cautious which in turn seems to be impacting fund flow to start-ups. Ultimately, these investors will have to take a call on the opportunities they see and disperse capital accordingly.

Does Marico Innovation Foundation see an opportunity, in terms of start-up funding?

We have been awarding start-ups who work/excel in social innovation. When Covid happened, we gave grants to organisations who were working in areas of PPEs or to those looking at having low cost healthcare solutions. We gave grants to five organisations that have done good work in inventing innovative solutions like world-class, affordable ventilators and innovative personal protective gear.

More recently, we recognised innovations under Innovation for India Awards across start-up, business, social, and global game-changer categories. This time we also had a special mention. The aim of this programme is to help spur and drive innovation, give opportunity for recognition and relevant network to create impact on the growth of the innovation.

We don’t fund start-ups and neither have plans to do so. We want to play a catalytic role to fuel innovation. Having said that, Marico Innovation Foundation will recognise companies that are innovative, work with them, mentor them, so that they can scale-up.

A lot of consumer habits have changed and people are far more conscious about health and hygiene. Future business opportunities will be along these trends. Digital is another big thing, covering sectors like work from home, meetings and consultations, e-commerce, tele-medicine, healthcare and education. I see more start-ups emerging to fulfill these new consumer needs by leveraging right digital opportunities. We will likely see more start-ups in the agriculture and farming spaces too.

Investor expectations have changed in the post pandemic scenario. The expected lead time for start-ups to generate profits has definitely become shorter as compared to pre-Covid times. So, investors are evaluating start-ups more carefully before providing the funds. This is a good sign. Earlier businesses were generating volumes, but not profits. One cannot keep burning cash indefinitely. Every business has to generate profit ultimately. And a shift in investor focus will automatically steer start-ups to prioritise profitability earlier in their journey and create more value for the customer along the way.

I think we might see that trend tapering down, and the funding will be led by PE funds in the times to come.

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