2010

COMPANY RESEARCH - MARICO LTD.

Sakshi Bhargava Marico Ltd. 7/24/2010

TABLE OF CONTENTS
PART I About Marico ................................ ................................ ................................ ................................ .... 3 Values ................................ ................................ ................................ ................................ ............... 4 Top Management................................ ................................ ................................ .............................. 4 Marico s Strategic Business Units................................ ................................ ................................ ...... 4 Structure ................................ ................................ ................................ ................................ ........... 5 Products and Brands ................................ ................................ ................................ ......................... 6 Work transfers across department ................................ ................................ ................................ ... 7 Fun at Work ................................ ................................ ................................ ................................ ...... 7 Performance Appraisal ................................ ................................ ................................ ..................... 7 Miscellaneous ................................ ................................ ................................ ................................ ... 7 Changes in Marico in the last 5 years ................................ ................................ ................................ 8 Marico in 2009-10 : Growth Prospects ................................ ................................ .............................. 8 Future Plans ................................ ................................ ................................ ................................ .... 10 What has Marico done differently? ................................ ................................ ................................ 10

PART II Recruitment (General) ................................ ................................ ................................ .................... 11 How will a marketing student grow at Marico? ................................ ................................ ... 11 Recruitment Process at SPJIMR................................ ................................ ................................ ....... 11 General ................................ ................................ ................................ ............................... 11 PPI ................................ ................................ ................................ ................................ ...... 12 Inputs from the Alum ................................ ................................ ................................ ...................... 12 Autumn s Project ................................ ................................ ................................ ................ 12 Current work at Marico ................................ ................................ ................................ ....... 12 Overall experience at Marico................................ ................................ ............................... 12

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PAR T I ABOUT MARI CO

Mari is a leading Indian Gr up in C nsumer Pr du ts & Servi es in the Global Beauty and

Wellness space. Marico's Products and Services in Hair care, Skin Care and Healthy Foods generated a Turnover of about Rs. 23.9 billion (about USD 478 Million) during 2008-09. Marico markets well-known brands such as Parachute, Saffola, Sweekar, Hair & Care, Nihar, Shanti, Mediker, Revive, Manjal, Kaya, Aromatic, Fiancee, HairCode, Caivil and Black Chic. Marico's brands and their extensions occupy leadership positions with significant market shares in most categories- Coconut Oil, Hair Oils, Post wash hair care, Anti-lice Treatment, Premium Refined Edible Oils, niche Fabric Care etc. Marico is present in the Skin Care Solutions segment through Kaya Skin Clinics (104 in India and The Middle East) and its soap franchise (in India and Bangladesh). Marico's branded products are present in Bangladesh, other SAARC countries, the Middle East, Egypt and South Africa. The Overseas Sales franchise of Marico's Consumer Products (whether

Marico Facts - Year 2009-2010 Turnover: Rs. 2661cr Net Profit: Rs. 232cr
y y y y y

y y y y y

Turnover and profit consistently growing over the corresponding quarter of the previous year, for the past 38 quarters and more 1 out of every 4 Indians is a Marico consumer. Marico distribution network covers over 33lac retail outlets. Most Marico brands enjoy a leadership position (No. 1 or No. 2) in their respective categories Parachute is the world's largest coconut oil brand Kaya cosmetic dermatology has been a pioneer with over 100 clinics in India, Bangladesh and the Middle East Marico was awarded the NDTV Profit Business Leadership Award 2009 in the FMCG (Personal Hygiene) category Superbrands voted Parachute a Super Brand in UAE & Bangladesh and Hair Code in Egypt Parachute ranked the 2nd Most Trusted Brand in Bangladesh Kaya was awarded the 'Most Admired Retailer for Health and Beauty' at the Images Retail Awards '09 Marico's manufacturing unit won the Outstanding Achievement Trophy at the IMC Ramkrishna Bajaj National Quality Award (RBNQA) 2009

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as exports from India or as local operations in a foreign country) is one of the largest amongst Indian Companies and is entirely in branded products and services.

VALUES
Marico s credo is Think Consumer to be Big THINK CONSUMER - Consumer centric TO - Transparency and Openness | Opportunity Seeking BE - Bias for Action | Excellence BIG - Boundarylessness | Innovation | Global Outlook

TOP MANAGEMENT
Marico is led by a team of talented and experienced leaders, with Mr. Chairman & Managing Director at the forefront. Unit Consumer Products Business International Business Scope FMCG business in India, including all embedded functions FMCG business overseas including all embedded functions and Sundari Kaya and Wellness businesses including all embedded functions Research and Development, CQA & six Sigma for all SBUs and Fus Strategy, Finance & Investor Relations for the Marico Group Human Resources for all SBUs and FUs. eader

De i nation Chief Executive OfficerConsumer Products Chief Executive OfficerInternational Business

Saugata Gupta

Vijay Subramaniam

Kaya Business

Tec nolo y

Rakesh Pande will be succeeded by Ajay Pahwa Vilas Shirhatti

CEO, Kaya Ltd

Chief- Technology

Finance, HR & Strate y

Milind Sarwate

Chief - Finance, HR & Strategy

MARI CO S STR ATEGI C BUSI NESS UNI TS

The Marico Group business organisation is structured into three Strategic Business Units (SBUs) Consumer Products Business (India) Marico Ltd. | 4

Mariwala,

P rso al & ature are Well ess & ew Products Ma or bra d is Parach t with

International usiness Grou International FM G usiness International business s read across countries li e Middle East ( ubai , angladesh, Egypt and outh frica. Kaya ( ranched out to for Marico Kaya in clinics Kaya Life a separate co pany Kaya Ltd. a wholly owned subsidiary of

RE

t Marico, it s a flatter structure with only a few hierarchical le els. t the topmost le el is the M , Mr. Harsh Mari ala, followed by the business partners and then by managers and unior managers. fresh graduate ha ing an M degree would oin as Junior Manager for a year and then escalates to the Manager s position. They follow a flatter structure for faster decision making. All three erticals Consumer Products usiness [India] International usiness Group Kaya [still in prototyping stage] Wor as separate units, ha ing their own functional units of ales, Mar eting and Human resources. Moreo er, the erticals ha e their own Chief Executi e fficers, who meet up twice a month for sharing the different strategies and results. hus the first three are the actual business erticals, wor ing on their own, while the other two, C rp ra Financ and C rp ra HR assist the other business ertical to help Marico de ise strategies o er a global scale. he Finance and HR closely interact with the all the managers especially the in the three s. his was lately introduced in Marico for streamlin indi idual business lines. ing ow lesser number of le els implies, a member (they identify employees as members, similar to identifying students as participants in PJIMR spends longer period of about 5 yrs at each -8 o le el before mo ing to higher le el, but he surely mo es up the resp nsibility ladder in the same le el on yearly basis. Th juni r manag rs include he engineers, sales rainees and diploma holders. he pan of Control aries from team to team. It could range from single person to maximum of 5-8 members under one super is or. Marico Ltd. | 5



iscella eous roducts u der it.



PR ODUCTS AND BRANDS

CONSUMER PRODUCTS BU SINESS (INDIA)

Good for Heart

Impactful advertising and innovative marketing techniques

Hair & Care

Silk N S ine Re i e

Lightest perfumed hair oil offering both Style and Nourishment A leave in post wash conditioner Convenience of instant cold water starching at home

Manjal Sweekar

Pure and complete protection of germs A Light and Healthy cooking medium

Created a market where none existed. Versatility of the product and ease of use. Benefits of all Ayurvedic ingredients India s first Low Absorb oil.

Launched in 1993. Revive liquid launched in 2007.

S anty Badam Amla

Goodness of Badam with Amla On the platform of purity Effective nourishment for children Oil from the land of coconuts

Starz (Parac ute Advansed) Oil of Malabar

Strong rural presence. Known for quality.

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Ni ar

Carved out a niche for itself by adding Badaam to Amla. Understanding of consumers.

Emerged in 1988-89. One of the leading brands in consumer packs market. Launched in 2001

Market leader in t e eastern region Range of Hair care products specially created for children. One of Marico s recent acquisitions

Medi ar

For treating lice

Constant innovation by the R&D team. Consumer centric communication. Excellent distribution. Innovator in packaging

Forty year old brand Brand of the Year 1993, 2005 Brought Heart-care to edible oil category First blended oil in India First Mass Functional Food in India Mar et leader in its category Urban as well as rural areas.

Product/Brand Parac ute Parachute Advansed Parachute Jasmine Parachute Aftershower Parachute Therapie Saffola Saffola Oils Saffola Salt Plus Saffola Arise Saffola Functional Foods

Positioning Positioned on the platform of purity

Key strengt Innovations in Packaging brought coconut oils out of tins into consumer friendly packaging.

Ot er information Premium edible grade coconut oil. Mar et leader in its category



KA A Kaya Ltd (erstwhile Kaya Skin Care Ltd.) was an entrepreneurial leap of faith, from consumer produc s to giving holistic solutions. This marked Marico's entry into skin care solutions business. It focuses on meeting the emerging needs of the modern day consumers by providing useful and effective services in the beauty and wellness space. Today, Kaya is recognized as a pioneer in skin care and has become a benchmark for efficac and client care. Over 6 Lakh delighted customers pledge their trust in Kaya.

WORK TRANSFERS ACR OSS DEPARTMENTS:

The transfer across the departments is significantly guided by the need of the organization followed by members interest. The members interests are greatly taken care while planning for all future business strategies.

FUN AT WOR K:
Similar to many other companies, Marico also senses the importance of enjoyment at work. They have regular recreational events conducted. They celebrate all the festivals in the office by organizing competitions on those days. The HR plans a dedicated schedule for these events in the calendar year. One more significant thing is that most of the events are conducted regularly intrinsic to the team, if not across whole organization. This is done for the convenience purpose.

PER FORMANCE APPRAISAL:

They follow the regular MBO (Management by Objectives) process for yearly the performance appraisal. MBO is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization. The MBO is revised twice in a year, once at the starting of the year, and second at the mid year. The MBO is prepared after mutual understanding with the reporting supervisor and HR. A goal sheet is maintained and tracked all along the year. Marico maintains exclusive software for performance evaluation. It s called Potential Management System. This helps in various functions. Few to name are resource allocation, potential skill mapping across time periods. It also helps in leadership and succession planning. The role mapping is done taking both into consideration, members interest and organization requirement. There are regular classroom trainings going on in the company to improve individual efficiencies.

MISCELLANEOUS:
The organization structure is simple because of its small size. It stretches to max 2000 members globally excluding the on-floor staff, as most of them are outsourced Marico Ltd. | 7

First name addressing No sabbatical policy- case on case discussion Marico believes in giving early responsibility. It follows flexible working hours; there is nothing as such as monitoring daily swipe in hours etc.

CHANGES I N MARI CO I N THE LAST 5 YEARS

Year 2003 What did it do? Marico Industries Ltd have appointed Erehwon consultancy firm for initiatives of innovation in marketing and management. Marico Industries have acquired a controlling equity interest in Sundari LLC. Marico Industries' popular edible oil brand 'Saffola' launches a fresh advertising campaign. The campaign by Grey Worldwide has a new tagline, Aaj se jeene ka andaaz sudhariye (Improve your lifestyle today), urges every Indian to take up healthy lifestyle. Earlier Saffola campaign used the tag line - Saffola Swasth ParivaarKe Dil Ki Dhadkan Marico Industries launches 'Saffola Gold, a blend of Ricebran and Kardi oils in a 70:30 ratio, which has dual benefits of lowering cholesterol and enabling food cooked in it to absorb lesser oil Marico industries has announced its foray into the beauty products segment with the launch of Silk-n-Shine, a post-wash haircare product Marico acquires HLL`s Nihar for Rs 216 crore They sold their SIL brand to Good Food Group, Denmark. The company wants to focus on its global beauty and wellness business. Analysts predict Sil's valuation to be around Rs 15 crore, which are twice its revenues of Rs 8 crore. Sil's range of products includes jams, sauces, baked beans, Chinese vinegar, sweet corn soup and mayonnaise Marico has entered the hair-styling market in Malaysia by acquiring Code 10, a ColgatePalmolive owned brand, for an estimated Rs 28 crore. With sales of Rs 14 crore, Code 10 is Malaysia's third largest hair care brand with products like creams and gels and a market share of 10% in the Malaysian market.

2004

2006 2008

2010

MARI CO I N 2009-2010: GR OWTH PR OSPECTS

At current market prices of Rs 131, Marico Industries now trades at a PE multiple of 33 times its trailing 12-month earnings. Not only is this at a huge premium to a behemoth like Hindustan Unilever (24 times), it is also at the outer boundaries of Marico's own historic valuations. Boost from benign inputs Marico Industries managed exceptional profit performance in 2009-10, closing the year with a 42% expansion in its consolidated net profits and an 11.4% sales growth. While other players struggled for volumes, Marico's 14% volume growth showed robust demand. A 20-22% correction in the prices of Marico's key raw materials (copra and safflower seed) from their peaks of 2009 also helped. It allowed the company to provide for disputed excise duty claims, expand its advertising budget (from 10 to 13% of sales) and yet improve operating profit margins (from 12.7 to 14.1%) for 2009-10. Marico Ltd. | 8

During Q4 FY10, all Marico's hair oils brands recorded healthy growth and the portfolio as a whole grew by about 27% over FY09. Marico's hair oils franchise had a volume market share of 21% during the 12 months ended Feb. 2010. The year 2009-10 saw all three key segments of Marico deliver strong volume growth. The coconut oil franchise grew by 7% overall, with volumes accelerating in the fourth quarter after the company took price cuts on its smaller packs. Despite Marico's dominant 53.3% market share in coconut oil, pricing power in this segment is constrained by the price differential of its brands with loose oils. In fact, it was to reduce this price gap and promote a shift to its brands that the company took its recent price corrections. Prospects for Marico's other key segments - hair oils and Saffola - are brighter this year. Value-added hair oils, where it owns brands such as Parachute Advansed, Nihar Naturals, Shanti Amla and Hair & Care, managed a 16% volume growth in 2009-10 as higher penetration and aggressive promotions helped drive category growth. Premium edible oil brand, Saffola, too has made a strong comeback, taking its volume growth to 16% for 2009-10. The brand's strong positioning on the wellness' plank, its extensions into other food products such as low glycemic rice (Saffola Arise) and the rising prices for edible oils, augur well for this business in the coming year. Global foray pays off While domestic FMCG brands have delivered a reasonable show for Marico, its international business (Rs 600 crore) has been its star performer, contributing 23% of sales after growing 36 per cent in 2009-10. The company's strategy of stitching together several small overseas acquisitions into a strong presence in new regions such as Bangladesh, Africa, West Asia and South -East Asia have paid off well, with brands such as Hair Code styling products acquiring dominant market shar es in these regions. With the company streamlining its manufacturing base to reduce costs and using a newly acquired distribution network to market its Indian brands overseas, this business may sustain a 20% - plus growth over the medium term. However, the strengthening rupee and the rising uncertainty about the global economic recovery peg up the uncertainties associated with Marico's global operations at this juncture. Summing up, Marico may sustain better-than-sector growth in both sales and profits over the medium term. However, risks to that growth do exist, and the stiff stock valuations do not offer much margin of safety.

FUTURE PLANS
Marico will soon prototype an oats meal product under its Saffola brand. The product, called Saffola Oats, has been soft-launched in about 12 cities. When asked, Saugata Gupta, chief executive officer, consumer products division, confirmed the test runs.

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Marico is said to be banking on the south, where the market for oats is considered to be strong. The company was experimenting with healthy and functional foods under the Saffola brand name. Already, the Rs 400-crore Saffola brand, primarily a cooking oil positioned on the healthy heart platform, has been extended to low-sodium salt, an atta mix and to rice. The company also began prototyping a baked snack called Saffola Zest last year, now suspended.

WHAT HAS MARI CO DONE DIFFERENTLY?

Marico, a relatively small name in the FMCG space, has strong presence in niche segments such as hair oil and edible oil. Its launch of value-added products and successful use of Parachute as a brand extension strategy has resulted in higher margins. The company has also used inorganic route to expand its reach in domestic as well as international markets. Overall, Marico would like to build its presence in hair, skincare and wellness products. Growth with high margin It has transformed its portfolio by introducing high margin items like hair cream, gel, moisturiser, soaps, and skincare products launched through Kaya stores rather than through traditional low-margin products like Parachute hair oil, Saffola and Sweekar refined oil. Also, the use of brand extension strategy and positioning the products differently in new hair oil, hair cream and refined oil products has worked well in commanding higher price. This has ultimately resulted in improvement of margins from 9.46% three years back to 13.23% in FY2007-08. However, advertisement expenses have also seen a jump in the same period. Its Parachute hair oil brand recorded 11% volume growth in FY2007 -08. It has also launched haircare products for children and functional food for healthconscious consumers. The rising income levels, growing brand consciousness, aspiration for higher spending on health and beautycare products have resulted in Marico products penetrating the market. Marico, being the leader in hair oil and premium refined oil segments, offers a limited scope for further volume growth. To drive growth, it has leverage its strength in the hair oil segment by acquiring brands in different markets. It acquired a handful of brands in overseas markets like the US, Bangladesh, Egypt and South Africa to drive further growth. It has completed seven acquisitions, both domestic and international, since 2003. The highest investment of Rs 227 crore was when it acquired Hindustan Unilever s 'Nihar' brand. It has bought one brand in every market it entered. This has given it a foothold in these markets. Now, whether the company will leverage its presence in these markets and expand is a thing to watch out for. Apart from acquisition, Parachute is also sold in the middle-east market. This was done to increase reach and drive volume growth. One more reason for acquisition could be to propel the Parachute brand in these markets.

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PAR RECR ITME T (GE ER AL

II

It s more of speciali ation directi e, li e they particularly come and choose recruits from respecti e speciali ations as per organi ational re uirement, but as such there are no -rele ant wor stringent rules that they don t recruit across speciali ation It depends on the need of the mar et. The fresh recruits from M A College are put on management trainee role for a year to get ac uainted with the organi ation wor ing. In this one year period of time, the student is exposed to more of on- ob training compared to classroom training. He is shadowed under an experienced member, who is responsible for mentoring him in this period. At the end o f completion of one year of successful management training, they are promoted to Manager Le el, the second in the hierarchy.

How will a marketing student grow at Marico?

Join s
1 ye

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10 Unde

ve s n ASM

1-1 5 ye

Inte v e to qualify

RECR ITME T PR CE
Phase 1: Presentation

AT PJI MR

Phase 2: Group iscussion 2 elimination rounds G round 1 General G round 2 - Case based A simple case regarding sales issues and what would you do as an ASM About handling a team and resol ing issues Phase 3: Inter iews 2 elimination rounds Round 1 HR inter iew Round 2 speciali ation specific ( rand manager

PPI
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Phase 1: Psychometric test Phase 2: HR interview Grilling and weird (as the alum described) Questions like Describe Gautam (alum s name) Deep rooted questions related to yourself

INPUTS FR OM OUR ALUM : GAUTAM BHATI A Autumn s project

Type of Project: Mix of sales and supply chain Analysis of the sales loss due to stock out in the retail stores Did a pilot in Mumbai which is now being extended by the Company to 8 cities all over India Hectic and time consuming project Got the PPI

Current Work at Marico

Management Trainee (MT): 10-12 months Working under an ASM First month: Stint as a salesperson Taking orders from the retailers Trying to finish the targets Giving presentation at the end of the month It s difficult to satisfy the senior management during the final presentation. Only 1/8 may get promoted to the next. For most others, the stint is extended to finish targets or give a better performance Next stint: Territory Sales Officer (TSO) Handling 4-5 distributors Targets are heavier Handling a team of 10 people Getting work done is more difficult than doing it yourself

Overall experience at Marico

Heavy work load, being a smaller Company as compared to major MNCs Have to work for 6 days a week FMCG is tough to handle, especially in an Indian Company, so need to be well prepared. Evaluation system is tough, so you need to show your worth to move up the ladder Marico Ltd. | 12