COMPANY IN FOCUS

Marico Industries Ltd.

Best known for Parachute and Saffola brands, Marico Industries
Ltd., (Marico) is one of the fastest growing FMCG companies in
India. Its brands are market leaders in categories such as coconut
oil, hair oils, anti-lice treatment, refined edible oils, fabric care and
food products. With its well-known brands, innovative marketing
initiatives and an enviable distribution network, Marico is in a strong
position to emerge as a leading player in the FMCG market.

M
arico Industries Ltd., (Marico) best known for its Parachute and Saffola brands, is one of the
India’s leading FMCG companies. Its brands are market leaders in categories such as coconut
oil, hair oils, anti-lice treatment, refined edible oils, fabric care and food products like jams
(as shown in Table I). Out of its 12 brands, 3 (Parachute, Mediker and Revive) are market leaders in
their respective segments (as shown in the Table I) 1. Parachute (occupies 35th rank) and Saffola
(occupies 66th rank) are among India’s top 100 most trusted brands. Marico’s famous brands are
Parachute, Jasmine, Saffola, Sweekar, Hair & Care, Shanti, Mediker and Revive. In recent times,
Marico has added substantially to its portfolio of businesses by venturing into skincare clinics (Kaya
Aesthetics), high-end cosmetics (Sundari LLC) and Soya-foods (meal maker). A key attribute of
Marico’s brands is the widespread availability of the company’s goods throughout India. Marico sells
over 4.6 crore packs to around 10 crore people every month through 17 lac retail outlets serviced by its
nation-wide distribution network.
A debt free company 2, Marico is growing at a CAGR of 17%. Its turnover has grown more than
seven-fold during the last 12 years {Rs. 104 cr (1990-91) to Rs. 775 cr (2002-03)}. Profit too has gone
up from Rs. 4.5 cr to Rs. 64 cr in the same period. Also, for the past ten years, Marico’s EVA3 has never
been negative and has grown at an impressive CAGR of 20.62 % 4.

Background note
Marico’s history can be traced back to 1857 when Kanji Morarji, started a small trading business in
Mumbai. The family set up Bombay Oil Industries Ltd. (BOIL) in 1948 which included coconut oil
extraction plant, vegetable oil refinery and a chemical plant. BOIL soon became one of the leading
players in industrial chemicals. Over the years, BOIL expanded and diversified through its subsidiaries.
In 1983, BOIL created three divisions: Consumer Products Division, Fatty acids & Chemicals Division
and Oleoresins Division (also called the Spice Extracts Division). In 1990, the consumer product
division was hived off into a separate company, Marico Industries Ltd. (Marico). In September 1990,
it entered into an agreement with Bombay Oil for the use of Parachute and Saffola brands. It made its
1
Marico, Annual report 2002-03.
2
Marico has no long-term debt in its book.
3
EVA (Economic Value Added) is the financial performance measure that comes closer than any other in capturing the true
economic profit of an enterprise. EVA® also is the performance measure most directly linked to the creation of shareholder
wealth over time. www.sternstewart.com
4
Marico, annual report 2002-03.

Global
© ICFAICEOPress.
• October 2003 Reserved.
All Rights 5
 Marico Industries Ltd.

Table I
Marico’s brand
Overview of brands Category Market share % Rank
Parachute Oil of Malabar Coconut oil 55-56 1
Revive Fabric starch ~100 1
Mediker Anti-lice treatment ~100 1
Saffola & Sweekar Refined edible oil in consumer packs 10-12 3-4
Hair oil brands Hair oils 12-14 2
Hair & Care Non-sticky hair oil 12-18 2
Parachute Jasmine Value added coconut oil 20-25 2
Shanti Amla hair oil 10-17 2
SIL Jams 7-8 2
Source: Marico annual report 2002-03

initial public offer of equity shares in March 1996. (See Table 2)

In July 1999, Marico entered into a distribution alliance with P&G for its Old Spice, a
shaving cream and lotion, Pampers diapers and Ariel detergent cake. In December 2002, the
three-year distribution alliance ended. In March 2000, Marico acquired jams, sauces and other
fruit & vegetable products from Kanmoor Foods at a consideration of Rs. 1.65 cr. In 2002-03,
Marico acquired a controlling equity interest in Sundari LLC, a US based company owing the
Sundari line of luxury Ayurvedic skin care products. Marico and its affiliates Adil & Associates
have together acquired 70.5% of the equity of Sundari LLC. Marico has acquired 63% and Adil
& Associates 7.5% of the equity.

Marketing strategy
Branding
Over the years Marico has tried to give each brand a unique position and personality. As a result, its
frontline brands have shown remarkable resilience against competition, even from FMCG giants like
Hindustan Lever and Dabur India. In terms of brand building initiatives, Marico has focused more on
creating new brands and less on defending the existing brands. Over the years, except for the launch
of Shanti Amla hair oil two years ago, many of the new brands have been line extensions. Now, a
Table II
Marico: Yesterday and today
Marico yesterday (1991) Marico today (2003)
A sales turnover of Rs. 1.1 bn A sales turnover of Rs. 7.75 bn
Two products with brand names — 12 brands, 3 of which are market leaders
Parachute and Saffola
Two factories — a coconut oil plant at Sewree, Bombay Six factories and sub - contract facilities
and a safflower refining plant (which has been shut
down since) at Mazgaon, Bombay.
Around 400 employees representing the blue collared A total strength of around 1000 members
workforce, staff and managers.
Source: www.maricoindia.com

6 Global CEO • October 2003

 COMPANY IN FOCUS

Table III
Marico’s brand marketshare over a period of 10 years
Brand Category 1992 (%) 2003 (%)
Parachute & OOM Coconut Oils 48-49 55-56
Saffola & Sweekar Refined Oils in Consumer Packs 5-6 9-12
Parachute Jasmine, Hair Oils — 12-14
Shanti, Hair & Care
Source: Marico, annual report 2002-03

substantial portion of Marico’s Advertising & Sales Promotion (ASP) spend is allocated towards new
brands. In 2003, the ASP expense on new products was 45% of the total ASP as compared to 23% in
FY02. (See Table 3)
Based on the functionality of the products, Marico’s brand portfolio is organized in three strategic
business units. Nature Care unit offers brands in Coconut Oil, hair oils and fabric care. Health Care
unit offers brands in edible oil. International Business unit oversees the export business.
Brand Portfolio
Parachute
Parachute, the No. 1 brand in coconut oil has 55% market share in Rs. 5 bn branded coconut oil
segment. During the last 3-4 years, Marico has introduced new products in order to reduce its dependence
on this single brand. Consequently, Parachute’s share in the topline has come down from 70-75% in
the 1990’s to less than 40% currently. Marico also has Parachute Jasmine and Parachute Enrich types
of coconut oil under the Parachute brand. Parachute Jasmine, the No. 2 brand in the value added
coconut oil market enjoys 25% market share. In Rs. 270 cr Amla oil market, Shanti Amla Oil enjoys
12.6% market share and is positioned on the “value for money” platform .
Hair & Care
Launched in 1990, Marico’s Hair & Care maintained its 3rd rank in the non-sticky hair oil segment
with a market share of around 20%. It is
positioned as a grooming oil. Marico’s Hair &
Figure I
Care has successfully differentiated vis-à-vis
New product launches
other players in the market, through Vitamin
E as the nourishing ingredient. 135
Shanti Thanda launched
18%
120 16%
Oil of Malabar Mediker Anti Lico Oil launched
% to Total Turnover

105
Turnover (Rs. cr)

14%
This brand was acquired in November 1999. 90 Saffola Nutri Blend launched
12%
Oil of Malabar, as the name suggests, is 75 Shanti Amla launched
10%
positioned on purity - as the oil from the land 6 0 Saffola Tasty
8%
of coconuts. Ever since its launch, the brand 45
Blend &
has been known for its quality and was Jasmine
3 0 stabilise
6%
amongst the earliest to launch flexi/pouch 15
4%
packs to tap the vast rural market. 0 2%
Q4FY00
Q1FY01
Q2FY01
Q3FY01
Q4FY01
Q1FY02
Q2FY02
Q3FY02
Q4FY02
Q1FY03
Q2FY03
Q3FY03
Q4FY03

Saffola
In the edible oil market, Marico’s Saffola has
made a niche for itself, as it is the only branded Source: Marico, annual report 2002-03

Global CEO • October 2003 7

 Marico Industries Ltd.

kardi oil available in the market and enjoys good positioning in the consumer’s mind as “good for the
heart” oil. Marico has expanded this niche to include blended oils. After the successful launch of the
kardi-corn blend (Saffola Tasty Blend), it has recently launched a blend with rice bran oil (Saffola
Nutri Blend). These products are available at lower price points and appeal to the price conscious
consumer with the added benefit of being healthy. Marico is currently No. 2 in this fragmented
market with a share of 12.3%.
Sweekar
Sweekar perceived to be the fighter brand, has become synonymous with good quality light edible oil.
Under Sweekar, Marico sells three types of refined oils which includes sunflower, soyabean and
groundnut. It is positioned as a light and healthy cooking medium.
Revive
Launched in 1993, this product created a market where none existed. It is the only Instant Cold
Water Starch in the country. Formulated with the latest International technology to give clothes
uniform, strong starching, it is uniquely positioned as a product that makes your “Clothes Look
Like New”.
Mediker
In June 1999, Marico acquired the Anti-Lice Treatment business under the brand Mediker from
Procter & Gamble for a consideration of Rs. 10 cr. Mediker is a premium anti-lice treatment shampoo,
a market leader in its category. Mediker has been positioned as a shampoo that results not only in
healthy hair but also as a rescuer from the embarrassment that lice can cause.
SIL & Top Ramen
SIL is the No.2 brand in the Jams category. It has a wide range of exciting products such as Jams,
Sauces, Baked Beans, Chinese Vinegar, Sweet Corn Soup and Mayonnaise. SIL stands for products
that offer “Lip-Smakin’ Goodness”. Top Ramen is a brand owned by Indo-Nissin Foods Limited which
is promoted by Nissin Foods, Japan. Marico has been handling the marketing and distribution of Top
Ramen since July 1998. It is positioned as the source of uninhibited taste enjoyment delivered through
Nissin’s global expertise in Instant Noodles.
Sundari ayurvedic products
The Sundari skin care brand consists of 20 products including cleansers, moisturisers and essential oils
with packaging designed by Fabien Baron. The brand is available at spas, high-end stores and on the
Net. Marico is primarily targeting the US market with its niche Sundari line of premium ayurvedic
products. The company has also forayed into skin care service business through Kaya Kalp Clinics.
The Kaya range of products, which includes the soothing cleansing gel, revitalising tonic, skin
brightening complex and skin repair serum.
New product development
Marico is focusing on ‘Big Bet’ new product launches. Identifying a few ‘Big Bets’ out of the ideas
through prototyping, a process wherein the new ideas are tested comprehensively on a smaller scale,
with the aim of improving their success potential when scaled up. The intent of prototyping is to
minimize the risk of failure and identify a future potential product. Marico has launched an intranet
based website called Ideology to capture ideas from people for challenges they are facing in their role.
This is helping the company to simultaneously try various ideas in the market place at lower risk.

8 Global CEO • October 2003

 COMPANY IN FOCUS
Over the last three years, Marico has launched many new products under ‘Big Bet’ strategy
through its prototyping methodology. In the hair oil segment it has launched Parachute Jasmine
(coconut oil), Shanti Amla (Amla oils), Shanti Thanda Tel (cooling oils) and Hair & Care (non-sticky
hair oils). The result hair oil volumes grew at 20% over FY02 consolidating Marico’s 2nd position in the
market share rankings. The new brands introduced by the company during the last 3-4 years now
contributes around 17% to its topline. Among Marico’s large Big Bets this year (2002-03) Shanti Amla
Oil, Parachute Jasmine and Saffola Kardi Corn have performed extremely well.
Packaging
Marico has introduced several new packaging designs. These include its Parachute flip top bottle,
Parachute easy jar, Parachute super pack, Parachute mini pack, Shanti Amla super pack, Saffola 15
ltr. jar with easy dispenser tap. With its innovative packaging, Marico’s Parachute mini pack won the
“World StarAward” for the year 2002.
Distribution
Marico believes distribution is one of its key strengths. The company’s distribution reach distribution
reach spans 1.7 million retail outlets serviced by its nationwide distribution network comprising 6
regional offices, 32 Carrying & Forwarding Agents (CFAs) and 3600 distributors. Marico’s distribution
network covers almost every Indian town with population over 20,000. It has integrated its distribution
chain with the web-based interface ‘Mi-Net’ (Marico Information Network) to access real-time
information on the status business operations between Marico and its distributors. Marico has already
implemented the ERP Package SAP R/3 to integrate its operations and supply chain.

The road ahead

A major portion of Marico’s segments is still dominated by the unorganized sector.5 Out of the
Rs.1,600 cr coconut oil market, the branded segment accounts for Rs. 750 cr and is growing at 6-8% per
annum. The loose segment accounts for the remaining Rs. 1,150 cr. Marico believes a huge opportunity
exists in converting the consumers of loose oil to branded Parachute Coconut oil. Marico plans to grow
by converting consumers of Coconut Oil from loose to packed oils through low cost packs, small unit
packs, product/packaging innovation and increased rural penetration.6 The value added hair oil
market is about Rs. 800 cr and is growing at a rate of 15-18% p.a. Marico is laying great emphasis on
increasing its market shares in hair oils by being present in all hair oil categories.
The consumption of branded refined edible oil market will also continue to grow with rising
awareness about the health hazards and risk of adulteration in loose oil. Marico is expanding the
refined oils franchise, through value adding blends straddling all price points. Marico’s strategy of
warding off competition by getting into niche and upmarket areas with its skin care range (both its
Kaya Clinics and Sundari are premium products and services) augurs well as the Rs. 250 cr Indian skin
care business is growing fast with the increased awareness and demand for cosmetic enhancement.
Today, most of Marico’s brands are leaders in their respective segments and household names in
India. With well-known brands, innovative marketing initiatives and an enviable distribution network,
Marico is in a strong position to emerge as a leading player in the FMCG market.
Rajesh Kumar Singh, CFA,
Assistant Consulting Editor, Global CEO.
E-mail: rajeshks@icfaipress.org
Reference # 15-03-10-01
5
Source: www.business-standard.com, December 28, 2002.
6
Source: www.business-standard.com, December 28, 2002.
Global CEO • October 2003 9