After taking charge as managing director of Marico, Saugata Gupta is putting in place new strategies to take the company forward. To start with, Marico plans to focus on deriving synergies from ?One Marico? after combining its domestic and international FMCG businesses. This includes acceleration of cross-pollination and portfolio harmonisation. The company plans to invest in increasing its rural reach and go-to-market transformation initiatives to improve its presence at chemists and cosmetic outlets. Marico has had a track record of sustainable profit growth ? a five-year annual compounded growth rate of 19% in both profit and revenue. In an interview with Lalitha Srinivasan, Gupta talks about the company’s strategic plans. Excerpts
What?s your action plan for sustaining the growth momentum this fiscal?
Market growth initiatives in core categories and expansion into adjacent categories will be supported by investments in ASP (advertising & promotions) that are 11-12% of sales. A significant part of the advertising spend will be on new products. Product platforms will be leveraged across geographies and the scale is expected to improve cost structures.
A significant portion of gains from the value-transformation exercise in India and overseas will be ploughed back to fund growth and innovation. We plan to improve the quality of our urban distribution this fiscal. We will focus on deriving synergies in ?One Marico?, which includes acceleration of cross-pollination and portfolio harmonisation.
What is your organic growth strategy going to be?
We believe that for international business, we should be driving towards sustained organic growth of about 15% in constant currency terms.
We have made a structural shift in operating margin. We are investing behind organic growth capability. We have four or five core markets, and there are adjacent markets as well as adjacent categories; so, there is enough headroom for organic growth in international business. For example, we are present in Vietnam and now we have moved to Myanmar and Cambodia; from Egypt we have moved to North Africa and so on. We are also exploring parts of South Asia.
Tell us about the ?Project One? initiative to improve urban distribution.
To grow our youth portfolio, we have to significantly increase our presence in direct distribution and improve reach at cosmetic and chemist shops.
?Project One? was conceived with the objective of increasing Marico?s direct coverage in India’s top six metros. Over the last nine months, the project has increased direct coverage in these cities by 60%. It has met with a positive response from the retailer community as it gives them convenience of service and access to promotions and loyalty programmes.
Are you looking at cross-selling opportunities for your acquired global brands? Tell us about your exports strategy.
We continue to explore opportunities for different brands and different formulations in other geographies. We have launched hair dyes in Bangladesh under the name ?Hair Code? (brand sold in Egypt). We have been able to extend Parachute in cream format in Egypt and the Middle East. We continue to explore and extend brands to locally relevant product formats, and also use locally strong brands with different product formulations.
Are you ramping up your R&D and foraying into new categories?
We have invested significantly behind building R&D capabilities. To drive innovation, the challenge is to create a culture of experimentation and risk-taking. We are present in sufficient categories and our focus is to maximise the potential in those categories.
