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INDUSTRY
SNAPSHOT
INDUSTRY Consumer Goods or FMCG
COUNTRY PERSPECTIVE India
BROAD CATEGORIES Household Items | Personal Care | Food & Beverages
SIZE USD 13 Billion (12) | USD 33 Billion (15)
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| USD 100 Billion (15)
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KEY CHARACTERISTICS
Strong MNC Presence | Well Established Distribution Network | Low Penetration Levels |
Low Per Capita Consumption
COMPANY
SNAPSHOT
COMPANY NAME MARICO INDUSTRIES LIMITED
COUNTRY OF ORIGIN India
TYPE Public
KEY PRODUCT Hair Oils (Personal Care category)
FOUNDED 1987
PRESENCE 25 Countries Across Asia, Africa And North America

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Projections; (Source: NIELSEN)

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CONTENTS
INTRODUCTION ................................................................................................................................................................................................................... 3
ENVIRONMENT ANALYSIS ................................................................................................................................................................................................... 3
COMPETITOR ANALYSIS ...................................................................................................................................................................................................... 4
ALIGNMENT......................................................................................................................................................................................................................... 6
FIVE FORCES ANALYSIS........................................................................................................................................................................................................ 6
RECOMMENDATIONS ......................................................................................................................................................................................................... 7


EXHIBITS
Exhibit 1: Net Profit of Marico Industries ................................................. 3
Exhibit 2: Environmental Analysis ............................................................. 4
Exhibit 3: Competitor Analysis .................................................................. 5
Exhibit 4: Five Forces Analysis ................................................................... 7
Exhibit 5: Bibliography .............................................................................. 8

ACRONYMS
FMCG Fast Moving Consumer Goods
CAGR Compound Annual Growth Rate
INR Indian National Rupee
USD United States Dollar
ERP Enterprise Resource Planning
GST Goods and Services Tax



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INTRODUCTION
Marico Industries has evolved from a coconut oil manufacturer
into one of the leading Indian FMCG companies.
Over the years the company has gained a strong foothold on the
beauty and wellness platforms catering to hair care, health care
and skin care segments.
The key product lines of the company comprising of products such
as coconut oil (hair oil), cooking oil, rice, oats, and dermatological
products.
The company has been showing a strong positive financial growth
since 2009, as illustrated in Exhibit 1.
Marico has different competitors in each of its key segments as all
the major player in the FMCG industry diversify by launching a
variety of products across multiple categories. Main competitors
of Marico would be Hindustan Unilever Limited, Dabur India,
Emami India, Agro Tech Foods, Adani Wilmer and P&G.
Exhibit 1: Net Profit of Marico Industries


ENVIRONMENT ANALYSIS
The consumer goods sector in India is highly competitive and due to its low margins and high volume model, often very low profits are realized due to the
highly saturated market.
From the total population (1.2 Billion) of India which is Maricos key market, about 70% live in rural areas and this segment accounts for about 60% of
consumer goods consumption in the country, highlighting a huge opportunity for the FMCG industry. However in regard to Maricos key product viz. Hair
oil, the consumption has decreased as oil has been substituted by other hair products such as gels and creams which are more in tune with the kind of image
todays youth wants to portray.
On the technology front many advancements have been made recently such as improved information sharing and optimization of supply chain as well as
inventory management. Marico uses IBMs Cognos TM1 ERP solution for better management of its data
2
.

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Business Standard website, Accessed on 9
th
September 2013
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52.5
56.0
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20.0
30.0
40.0
50.0
60.0
70.0
80.0
2009 2010 2011 2012 2013
N
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(
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Year
Net profit (2009-2013)

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In reformative regimes the newly proposed Goods and Service Tax or better known as the Harmonized Sales Tax will positively affect the consumer goods
industry. GST will consolidate the tax system and eliminate all the secondary and tertiary taxes such as Central and State specific sales tax, this will bring
down manufacturing costs and enable better margins for the industry.

Exhibit 2: Environmental Analysis
DEMOGRAPHIC TRENDS SOCIO-CULTURAL INFLUENCES
o Rise in income especially of the rural population.
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o Decrease in consumption of hair oil by majority of young population.
TECHNOLOGICAL DEVELOPMENTS POLITICAL-LEGAL PRESSURES
o Implementation of better information sharing platforms to enable faster
decision making.
2

o Supply chain and inventory optimization solutions
3

o Political unrest affects the enter market especially low margin high
volume sectors such as FMCG.
2

o New GST (Goods and Services Tax) regime aims to consolidate the
various taxes levied on consumer goods.
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MACROECONOMIC IMPACTS GLOBAL TRADE ISSUES
o Low per capita consumption of FMCG products
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COMPETITOR ANALYSIS
Maricos including its competitors incur heavy launch costs on new products on launch advertisements, free samples, celebrity endorsements & product
promotions and so does Marico to ensure greater market penetration. Competitors of Marico also have extensive distribution networks & logistics this
enables high level of penetration in both the urban & rural markets.
On the basis of Maricos key product hair oil, its main competitors will be Hindustan Unilever Limited (or HUL), Dabur and Emami which have launched new
hair oil products directly competing with Maricos Parachute.
o HUL has about ten times the market capitalization as compared to Marico, however Marico owns just as much assets as HUL. The key strategy at
HUL seems to be risk management through diversification evident by its portfolio of more than 50 brands
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.
o Dabur has a greater sales turnover indicating high volume of Dabur products are being sold. Dabur India has established itself as the market leader
in ayurvedic (herbal) products and is leveraging that to foray into the hair oil segment as well.

3
Optimizing the supply chain in India: Promise and peril (Delloite.)
4
GST India website, Accessed on 10
th
September 2013
5
Indian FMCG Sector: The Innovation Imperative (PwC)
6
Dinodia Capital Advisors, The Indian FMCG Industry, September 2012

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o Emamis hair oil is targeted towards the weaker sections of the economy due to its low prices, this is highly different than Maricos Parachute which
is propounded on the basis of purity and an overall hair care solution.
o Marico faces competition from Bajaj Corp. due to their highly successful almond hair oil similar innovations such as oils with herbal ingredients, non-
sticky oils, and anti-dandruff hair oils, among others are giving tough competition to Marico.
In regard to the edible cooking oil segment, Marico faces competition from the Adani Wilmer Group (Privately held) and from Agro Tech Foods. On the
beauty care products front Maricos key competitors are Godrej and Proctor & Gamble (or P&G), this segment is also characterized by a large number of
small players focusing mainly on personal care.


Exhibit 3: Competitor Analysis
(All figures in Million USD)
MARKET CAP. SALES TURNOVER NET PROFIT ASSETS
MARICO INDUSTRIES 2,282.2 567.8 71.5 441.2
HUL 21,868.5 4,300.2 632.7 445.7
DABUR 4,969.8 724.8 98.3 306.0
EMAMI 1,827.0 271.2 53.8 136.7
BAJAJ 658.3 101.0 27.8 80.5
GODREJ 1,481.8 244.0 16.0 116.2
P&G 1,435.2 281.0 33.8 103.2


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ALIGNMENT
VALUABLE
The three key product lines of the company are positioned
in such a manner that all of their products are of high value
for the consumers.
The key products of Marico are highly valuable to the consumers as these have been established
over a long period of time and have loyal consumer base, also products like hair oil and edible oil
garner high involvement from consumers as they are used for personal use (applying to hair and
cooking food) and thus consumers prefer trusted brands.
INIMITABLE
Due to the company being in the FMCG sector, most of its
products are easily substitutable, as products are easy to
produce with little to no differentiation.
The materials to produce coconut and edibles oils are easily available thereby suggesting that
competitors can easily launch products with low differentiation and reduce Maricos market share.
But there are some of the products such as Mediker (medicated lie shampoo) which have no
competitor.
RARE
Raw materials for manufacturing the companys key
product are easily available and easy to procure.
Easily available raw materials also gives rise to imitability as many unorganized and local players
have consistently copied Maricos Parachute hair oils packaging and the core product as well.
NON-SUBSTITUTABILITY
Companys key products viz. are hair and edible oils have
close substitutes in the market but despite that the
companys brand has managed to retain majority share in
their segment of operation
Due to being in the FMCG sector the company has to face high risk of substitutability from its
competitors products.


FIVE FORCES ANALYSIS
Recently though after facing stiff competition from other hair oil brands which were favored by the youth over Parachute, Marico also decreased its dependence
on the coconut oil by product line extension through adding value-added hair care products and other skin care products into its stable. These products are sold
under the umbrella brand of Parachute to leverage the superior brand name it has acquired over the years. The response has somewhat been mixed as the
bargaining power of the consumers is high in the industry due to low switching costs and also high promotional activities undertaken by the competitors. Marico
has also launched oats and other cereal foods to capture the health conscious demographic which is mushrooming rapidly.

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The entire FMCG sector rests in the balance due to its suppliers and other vendors as with any other manufacturing based sector, thereby giving suppliers
somewhat moderate bargaining power provided long term relations are established. The price of FMCG goods for the most part are governed by the commodity
markets thereby making the industry players price takers leaving very little room for market skimming by launching products at a higher price initially.
Exhibit 4: Five Forces Analysis










RECOMMENDATIONS
Marico needs improved efforts to retain its competitive position in the hair oil market by offering complete hair care solutions.
Marico should consider launching their products under a different brand name, as Parachute is still associated to stickiness which holds back
the new products (non-oil based such as hair gels, etc.) that the company has been launching.
Marico needs to invest in establishing distribution channels in rural areas of the country which have a huge untapped market potential.
Marico should also aggressively push its newly introduced oats and cereal based products as demand of health foods is increasing manifold.

Threat of Substitutes: HIGH
multiple brands with low product
differentiation
new companies compete at
prices which increase product
substitution
New entrants: MODERATE
presence of low regulatory barriers
high competitive industries require
large investments, so small players
create less impact
Rivalry among competitors: HIGH
more MNCs are entering the
market since liberalization of the
economy
heavy spending on marketing & the
strategies are becoming more
aggressive
Power of Suppliers: MODERATE
due to long term relations with
suppliers
prices are governed by
international commodity
markets, making most FMCG
companies price takers
Power of Customers: HIGH
high brand loyalty to some
products discourages product
shift, but switching costs are
low
aggressive promotional efforts
induce customers to switch

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Exhibit 5: Bibliography
"FMCG firms adopt new tech to improve efficiency | Business Standard." Business Standard: News & analysis on economy, business and market.
Web. 9 Sept. 2013. <http://www.business-standard.com/article/companies/fmcg-firms-adopt-new-tech-to-improve-efficiency-
109090600028_1.html>.
"Parachute | SWOT Analysis | BrandGuide | MBA Skool-Study.Learn.Share.." MBA Skool-Study.Learn.Share.. Web. 11 Sept. 2013.
<http://www.mbaskool.com/brandguide/fmcg/1124-parachute.html>.
The Indian FMCG Industry, September 2012, Dinodia Capital Advisors, Web Document Retrieved 11 Sept. 2013
<http://www.dinodiacapital.com/pdfs/Indian%20FMCG%20Industry,%20September%202012.pdf>.
Optimizing the supply chain in India: Promise and peril, Delloite.. Web Document. Retrieved 12 Sept. 2013.
<http://www.deloitte.com/assets/dcom-unitedstates/local%20assets/documents/us_cppip_supplychainindia_2009.pdf>.
"FMCG companies shut plants as political turmoil escalates | Business Standard." Business Standard: News & analysis on economy, business and
market. Web. 9 Sept. 2013. <http://www.business-standard.com/article/companies/fmcg-companies-shut-plants-as-political-turmoil-escalates-
113082400774_1.html>.
"GST India." GST India. Web. 9 Oct. 2013. <http://gstindia.com/>.
Indian FMCG Sector: The Innovation Imperative. PwC. Web Document. Retrieved 15 Sept. 2013. <https://www.pwc.in/en_IN/in/assets/pdfs/rc-
publications/innovation-in-fmcg.pdf>.