| Mr. Harsh
C. Mariwala |
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Chairman & Managing Director, Marico Limited |
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God
afternoon all of you. I’m going to talk about the Marico
experience and the topic was mentioned very differently and
I was quite surprised when I saw that but it is our story of
the past and its work in progress in terms of going international.
I don’t think that we have arrived but we have done well
in some countries as you will se our experience. But as Dharen
was mentioning that we are a FMGC company that had started in
1990 and we were primarily in branded consumer goods. And now
services. In a way we are different in the terms when we go
internationally I see value addition happening more in the down
stream that is more at the consumer end as against many sectors
like the BPO and IT where lots of value addition occurs in the
back room. To that extent our journey of going international
is quite different. Basically we don’t leverage anything
of low cost, all our leveraging occurs in terms of value addition
at the consumer end. Our range of products we have Parachute
and few other brands. In skin care as Dharen was mentioning
is thru my solutions thru kaya, and sundari which we acquired
three years back. In wellness we have the Saffola brand name,
we have edible oil and beyond that we have gone to healthy salts
as well as functional foods thru atta additive. I think I will
skip this maybe….how did all start? It all started with
smuggling actually. Our products were being smuggled to Middle
East markets and export of coconut oil at that time was banned,
talking of early nineties and then we had to lobby with the
government to allow us to export. In the initial stages it was
only…when they used to give us license it would be only
for some time and once the license was exhausted we had to apply
for it again. It was very difficult to operate but over a period
of time we were able to get the license but now it is free for
export. Actually our journey is driven on three pivots; one
is to cluster where the Indian are settled abroad so that’s
mainly in gulf, US, Canada, Singapore and Malaysia. There are
Indians in South Africa and UK but they have left the country
so far back that they have forgotten what hair oil means. You
also try to leverage the common media foot prints, there is
common media that occurs in gulf and other SAARC countries.
Finally there are some other neighboring countries where hair
oiling habits still exists. Unfortunately hair oiling habits
has died down except parts of Asia which is terminally SAARC
countries and Middle East markets. So we have an opportunity
to go to Bangladesh, Pakistan, Nepal and Bhutan. How did we
go ahead? Basically we used to distribute the model to enter
the countries, appoint distributors in the gulf, SAARC, US,
Singapore and other markets and then we started investing in
the brand just like what we do in India. Most of our initiatives
in the FMCG section are thru the brand parachute because SAARC
has the flagship of Marico and that is what we have leveraged
outside India. As Dharen mentioned we are present in many countries,
90% of our exports are in the Middle East markets and Bangladesh
markets and this is our exports line that has spanned over a
period of time that is there from the years of 1996 to this
year that is march ending of 2006 closing at 116 crores and
next year we are targeting for 161 crores. That forms over a
ten percent of our turnover. Some of the work that we have one
over in the middle east, we are leveraging…started with
coconut oil in the middle east and then gone into other hair
oils which were not only sold to the Indian but also to the
locals. So we have a range of four different variations of parachute
brand like gold, lite, jasmine and this is again positioning
for different things. Then from the hair oils we have gone into
different hair care products like the hair creams. This is a
big initiative that we took about four years back and hair cream
is sold a lot in those markets and it is mainly used by Arabs.
Surprisingly in the Middle East countries this is used by the
ladies and in India we sell it to males but out there ladies
use the hair creams. There is also another product that they
use which is Hamam Z which is used post wash as a conditioner
which they apply it on the hair and keep it under a wet towel
and then wash it off. So we launched these two products three
years back. And we also leveraged the local celebrities; this
is a local celebrity who is a television actress. And the sales
of Middle East have gone up in the last four five years. It
is going well. Our cream is our largest contributor in the market
today and it is mainly sold to the local population. In some
markets we are number two players and the main competition is
mainly from the levers and Brylcreem. In the UAE markets we
have actually become number two within a period of three years.
And the key learning’s that occurred to me in going international
is we had to have a structure which only caters to the international
business. In earlier days we tried to combine our sales and
marketing with international business and it would just not
take off and it was so small compared to the local businesses
that it would always get a step motherly treatment and at that
stage we said that if we have to be serious about the international
business then we have to have a separate structure and a separate
person who will be heading this business. I think from that
time on our growth has increased in this area. We have to be
in businesses which is not core for the MNC’s, I can’t
be in shampoos where Bharat Patel exists because it is very
difficult for us to compete with players like levers and P&G
well. They have a global scale and R&D I can’t have
that kind of R&D budgets not only that but they would invest
in those categories is that what happened here in India in the
shampoos and detergents. It’s a global war if P&G
gets active and levers ahs to reduce prices you know. So I can’t
get caught between these two and consciously we chose areas
where we will not be caught between two MNC”s; I think
that local insights are very important to develop products,
the kind of products we develop for creams as well as Hamam
Z as well as inciting with the locals is very important for
us. Even advertising is developed in those local markets by
the ad agencies which are based there. Similar agencies but
they are based in advertising created out of Middle East. The
other thing that we have got out of this is that it has taught
us in advance the way to deal with modern trade and modern trade
is catching up with India and we have been dealing with it in
middle east markets for last five years so in a way it has helped
us in the terms of gaining experience dealing in modern trade
much in advance. And for our own people it was a great opportunity
to go outside and travel. So all in all it has been a very good
experience in Middle East markets, the sale is increasing and
also it is very profitable. I will talk a little bit about Bangladesh
now. its in a way those who have not been to Bangladesh, they
are 15 to 20 years behind India in terms of whatever we are
doing here. We started markets sometimes in 1995 and it was
a very large coconut oil market and it has been dominated mainly
by the local brands there. I think that whatever we had done
here earlier here which made us succeed in mainly in the initiative
of the area of packaging, this plastic packaging which is more
attractive, convenient to economical or it is a one rupee pack
which looks like a sachet but its is an alternative to the sachet
or a wide mouthed jar and combine that with the best practices
that we had here in India.
We have a 100 % subsidy here. I think I believe we are the largest
Indian company in Bangladesh. We did a turnover of about 100
crore Takas last year which is about 70 crore Indian Rupees.
It is very profitable. It is more profitable than the Indian
market.
We asked ourselves- beyond coconut oil what do we do? It’s
a country where we have to identify some other initiatives.
There is very little scope for hair creams or hair oils. So
we said let’s look at the soap segment. We are not present
in the soap market in India but we acquired two soap brands
in Bangladesh, and this is just about 3-4 months back. Currently
we are in the process of re-launching the soaps.
If you look at our sales, it is growing well from 34 crore Takas
to last year about 100 crore Takas, and we are expecting 156
crore Takas next year. In terms of market share, virtually from
a zero percent market we have become market leaders with a 55
% market share. That completes the part as far as the branded
consumer goods are concerned.
Now as I mentioned to you earlier, we are limited by the fact
that the hair-oiling habit is not prevalent in any other part
of the world except the Asian markets. We said, “if we
have to go outside, what do we have to do”?. So we decided
that either we have to leverage Indian habits like hair-oiling
or Indian food or some Indian raw material like spices or Indian
coconuts or Indian science like ayurveda or any other source
of competitive advantage which we may have.
We also found that developed markets were very cluttered in
terms of distribution as well as advertising. We could not create
a brand, say if we had to go USA and other markets. The cost
of entry was very high and most of the sectors were dominated
by multinationals. At that point, we said that can we actually
create a brand through an experience route and that is how we
came up with the “sundari” brand. Its a brand which
makes cosmetics- skin care cosmetics- based on principles of
ayurveda. It was earlier a brand which was holed in stores but
we have changed the focus. Now it has become a spa brand. We
sell our products as well as the back-bar products for protocols
in all the leading spas in US and all over the world now, and
we have decided to concentrate mainly on the resort-spas, which
are destination spas i.e. big resorts that have spas.…not
the day-spas.
We also developed new protocols in terms of training at the
spas and treatments like “shirodhaara” and “marma
points” which are ayurvedic treatments, are given to the
spas.
We got entry into prestigious spas like Four Seasons, Marriott,
Canyon Ranch in US, Oberoi chain in Mauritius, Best Western
and many others.
It’s a new business. It’s a completely different
business compared to what we are doing here. It is B-to-B marketing
as against marketing directly to consumers. It has taught us
a lot of things…long lead times in terms of getting an
entry, and it is currently a very niche brand to that extent
it is not a profitable business. Last year we did a turn over
of about 6-7 crores in this business, and next year we are targeting
about 10 crores.
I will talk a little bit about “kaya”. This is a
chain of skin clinics we started in India about 3 years back.
We provide customized solutions for skin. We look at skin from
3 angles – problem skin, normal skin, and anti-ageing
skin. We have a key differentiator in terms of having a dermatologist
in each of our clinics/. And the clinic looks like a spa. Recently,
we also launched hair services in Bangalore. We believe that
this is a unique business model because we have a doctor on
board. There are no chains of this type internationally because
the doctor cost is very high. Indian dermatologists cost one-tenth
of what international dermatologist cost. We are currently employ
more than 100 dermatologists for “kaya”. We asked
ourselves if we can leverage this in some other country, and
in that effort we opened 2 clinics in Dubai and just opened
one in Abu Dhabi, sending doctors and practitioners from here.
To me the advantage came in from a different business model
where we could advertise what we are doing here as well as source
from here low cost man power. We went through a huge learning
curve in this business because the regulations in the middle-east
markets were completely unclear…nobody knew. We did not
know and neither the Government authorities know what the regulations
were. Every time we got one set of permissions, somebody else
would say we had to get other permissions, and virtually for
1 or 2 years we struggled a lot.
I think most of the issues are over now…and now have got
a clear picture of what we need to do. So we now plan to increase
the number of “kaya” skin clinics definitely in
UAE markets. This year we are planning 3 more clinics in the
UAE markets...2 or 3 more in the other ECE countries, one in
Kuwait and may be one in Oman.
So that is the kind of things we are doing. I would like to
say that we are trying multiple business models for going international.
One business model is consumer products way forward, second
is “sundari” which is leveraging ayurveda, and the
third is “kaaya” which is leveraging this business
model for skin-care through dermatologists and our practitioners.
Going forward, we believe that we have an option to expand in
GCC and Bangladesh, and we are going to add many more products
in the GCC markets. In Bangladesh we are going to leverage our
soaps. We also identified some other countries where hair-oiling
habit exists…to Pakistan we are exporting close to about
1 crore rupees but there are restrictions. We are trying to
overcome the restrictions.
We want to expand “kaaya” and “sundari”
to Europe. I think what is done by the Organization beyond making
profit is that this opened a lot of career paths for our people.
One of biggest disadvantage we had as Indian companies is not
being able to transfer our people to places outside India. Now
we have our people sitting in the US, Middle East, Bangladesh
and many other countries on a job rotation and across different
types of jobs. It also enables us to leverage technology in
terms of different businesses, and also leverage marketing done
in India. It has also given us new domestic business ideas…for
example hamaam. We have launched the same cream formulation
in the Indian market which is also doing very well. And also
we are leveraging some common advertising mediums. Actually
I have seen in Kerala the product demand has jumped up after
we have started marketing them in middle-east.
Let me end this by saying that we have been passionate about
the Indian advantage. We call it uncommon sense. We want to
be global players in healthy living through distinctive solutions
largely leveraging Indian advantage…and when I am talking
about solutions, I mean what we do in “kaaya”. If
you go to “kaaya”, you will be examined by a dermatologist
so you get customised, individual diagnostics. This is followed
by a treatment in the clinic. Post that there is a prescription-
either for a topical application of a product, or if need be,
ingestible products also. So this 360 degree approach to looking
at an issue- for example, acne cream versus what we do for acne
has a far better impact. Our dream is to actually create solutions
not only for skin and hair but for wellness as well. A lot of
work we are doing internally. I cannot share them here at this
moment, but if we are able to do this solutions approach in
hair, skin, and wellness then we see many more opportunities
for us to go outside, in addition to what we have now. Thank
you. |
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