Marico Limited.

Project Report for MGT 372

[Marico Limited has emerged as the fastest growing FMCG
Company. Their approach to the market with uncommon
sense has helped them challenge the norm to push the
boundaries of their existing businesses and set up new
ones.]


Submitted To: Muhammad Ariful Ghani

Submitted By:
Md. Ashiq Hossain - 1010233030
K.M. Abdullah Al Baki Nayan - 1010237030
Farzana Faruque Nipu - 1020422030
Sabrina Humaun Upoma - 1110574030
A.F.M Arafatuzzaman 1030028030


2012
Group Project
Fall 2012
12/10/2012
pg. 2



Table of Contents:
Topic name Page Number
Executive Summary .3
Introduction of Marico .4
Values of Marico Industries .4-5
How Marico Structured .5
Primary activities .5-6
International FMCG Business .6-7
Reason for Global Success ..7
SWOT Analysis ..8
Porters Five Forces ..9
Technological advantage of Marico

..9-10
Financial statements .10-12
Conclusion .....12
Appendix & References .13


pg. 3

EXECUTIVE SUMMARY
MARICO INDUSTRIES LTD. is the market leader in organized Hair oil market and faces
competition from many players. The products offered by Marico Ltd. have not only created a
long lasting customer delight but has also given its shareholders a value addition. In India,
Bangladesh and Middle East Marico has grown every year. Time and again Marico comes up
with different variant of products to satisfy the customers and even enhancing its own image by
doing so. There are many FMCG players who are running their business in different countries in
different segments. The companys management strategies are built around differentiation. The
Company's products are sold under various brand names Parachute, Saffola, Sweekar, Marico's
Hair & Care, Revive and Sil. The products such as Marico's Hair & Care, Revive Instant Starch,
Parachute Amla and Parachute Herbal are work basis as per the Company's quality specifications
and under the brand names of the Company. Marico Industries has launched three new variants
of coconut oil. Marico has flat organizational structure, with just five levels between the
Managing Director and the Shop floor operator. Their aimed at delivering better performance as
each division operated as a strategic business unit and achieved the company reporting better
performance over the years. Marico concerned with inbound and outbound logistics and fewer
than two logistics Marico complete primary activities. In Maricos International business
continued to grow and record share gains in its traditional markets. In Bangladesh, Parachute
coconut oil has achieved market dominance backed by supporting strong market. In the
Middle East, Parachute Cream has yielded good results by advertising and in-store promotional
activities. This brand is now closing the gap between the leaders in the GCC counties. Marico
started the fast growing South African ethnic hair care. Their health care market position is
growing up through the acquisition of Enabling Pharmaceuticals Consumer Division Pty Ltd.
Marico continued its local currency rate against the United States Dollar about some pressure on
the International Business margins and growth in currency terms.
Marico has many competitors who provide almost same category product with better quality.
Through Marico have huge loyal customer but some new competitors which are threatened for
the company. The product of Marico are highly substitable but numbers of sellers very less
compare to the number of buyer that is serious problem for Marico.
pg. 4


INTRODUCTION OF Marico:
Marico is a leading Indian Group in Consumer Products & Services in the Global Beauty and
Wellness space. Marico Ltd is a family-owned company, incorporated on October 1988 as
Marico Foods Ltd. The name was changed to Marico Industries Ltd with effect from October
1989. In April 1990 the company commenced commercial operations by taking over the business
of the consumer products division of The Bombay Oil Industries Ltd (BOIL). Marico
later changed its name to Marico Ltd. Maricos Products and Services in Hair care, Skin Care
and Healthy Foods generated a Turnover of about Rs.13.6 billion during 2006-07
e.g.(http://fmcg-marketing.blogspot.com/2007/12).Marico is a flat organization with only five
levels of reporting between the managing director and an operator on the shop floor.
Parachute, Saffola, Sweekar, Hair & Care, Nihar, Shanti, Mediker, Revive,Manjal, Kaya, Sundar
Aromatic, Camellia, Fiance and Hair Code these are the products of Marico. Maricos 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, and Premium
Refined Edible Oils, niche Fabric Care etc. Marico is present in the Skin Care Solutions segment
through Kaya Skin Clinics and its soap franchise (in India and
Bangladesh).Marico's branded products are also present in Bangladesh, other SAARC countries,
the Middle East and Egypt. The Overseas Sales franchise of Maricos Consumer is one of the
largest amongst Indian Companies and is entirely in branded products and services. Marico has
also won various other Awards Like- Indias Employer of Choice for 2007, Award for HR
Excellence & Award for Best Employer in the Consumer Products and Healthcare Sector.
VALUES OF MARICO INDUSTRY
Opportunity seeking
Bias for Action
Consumer Centric
Excellence
Innovation
pg. 5

openness & transparency
Global outlook
Boundary lessness

How Marico structured
A Flat Structure:
At Marico, they are an organization, which is flat with only five levels of
reporting between the Managing Director and an operator on the shop floor.They believe that a
flat structure helps them in being more responsive to the environment while providing enriched
roles for their members. Their structure defines clear roles and supporting relationships .Keeping
in mind the fast and ever changing business neighborhood, Marico's structure is dynamic and
constantly developing. E.g. (Marico Bd. prospectors)
Primary Activities of MARICO
Inbound logistics
These are the activities concerned with receiving the materials from suppliers, storing
these externally sourced materials, and handling them within the firm.
Here goods are received from a company's suppliers.
They are stored until they are needed on the production/assembly line. Goods are moved
around the organization.
MARICO purchase their raw material from all around the world.
In order to maximize their availability of raw material MARICO maintain good
relationship with their suppliers.
MARICO use JIT (Just in Time) approach for handling of raw material



pg. 6

Outbound Logistics
These are all the activities concerned with distributing the final product or service to the
customers. For example, in case of a hotel this activity would entail the ways of bringing
customers to the hotel.
The goods are now finished, and they need to be sent along the supply chain to
wholesalers, retailers or the final consumer.
MARICO manage their Distributor and Super Distributor in different rural and urban
area.
MARICO make their product easily assessable. e.g.(Marico industries ltd./Scribd.com)

International Maricos Business
Maricos overall international business grew by 59%, while its organic growth over year 2007
was 21%. In its traditional markets, namely the Middle East and Bangladesh, Maricos
International business continued to grow and record share gains. In Bangladesh, Parachute
coconut oil has been going from strength to strength. It has gained market dominance backed by
strong marketing support. During the 12 months ended February 08, its market share was 67%.
E.g. (http://fmcg-marketing.blogspot.com/2007/12/maricos-distribution-network.html).Parachute
will focus on growing the branded market by encouraging conversions from loose oil. In the
Middle East, Parachute Creams focused marketing efforts, including advertising and in-store
promotional activities have yielded good results. The brand has now begun closing the gap on
the leader in the GCC countries. Its advertising is locally tailored and uses
a regional celebrity for endorsements. The GMR Outstanding Achievement in Marketing Award
was conferred upon Parachute for the second consecutive year. The Egyptian brands, Fiance
and Hair Code are performing as per expectations. They achieved a turnover of about Rs 88 core
during the year. Advertising support accompanied by promotional offers during the Africa soccer
championships helped in expanding the franchise. The current combined market shares of the
two brands in Egypt stand higher at 62%. Marico entered the fast growing South African ethnic
hair care and health care market through the acquisition of Enabling Pharmaceuticals Consumer
pg. 7


Division Pty Ltd. The market for Ethnic Hair Care and Relevant OTC Healthcare products in
South Africa is estimated to be in the region of about Rs. 600
core. A good performance from all geographic regions has enabled the International Business to
show healthy growth. Maricos International Business now comprises about 16% of the groups
turnover.
Reasons for Global Success
Its international success is due to the global mindset that the company has adopted. An
Indian company needs to stop thinking of an India-forward mind set and start playing by
the rules of that market. The key is to participate in formats relevant to that market as
opposed to transporting the India portfolio on an as is basis.
In the Middle East, Marico reformulated Parachute hair cream to work effectively under
high chlorine conditions prevalent in the region.
In Egypt, where soccer is almost a religion, Marico runs programs to leverage the soccer
fever.
The emerging economies in Asia and Africa like Bangladesh, the Middle East, Egypt,
and South Africa were chosen because they have low-to-medium penetrations in some of
the FMCG categories. This signifies considerable headroom for growth in the mid-term.
E.g. (http://fmcg-marketing.blogspot.com/2007/12/maricos-distribution-network.html).
Marico listed their wholly owned subsidiary in Bangladesh on the local stock exchange.
And in Egypt, where Marico acquired family-run organizations, professional managers
were sent.
Marico before entering a new geography always interacted with non-competing Indian
companies that have established themselves in that market and learnt from their
experiences. e.g. (www.scribd.com/marico)


pg. 8



SWOT Analysis of Marico Ltd.
Strengths:
Understanding of consumer behavior in the hair oil segment.
Rural Market search.
Large distribution network all over India, Bangladesh, Middle East etc.
Weakness:
Not strong within the shampoo segment, having hardly any share.
Not having any Anti-dandruff hair oil whose market potential worth 25% of the total oil
market.
Opportunities:
Need to concentrate within the various other market potential zones like hair shampoo,
hair colorants etc.
Threats:
Competition from the diverse players present in the market can cause loss of market
share.
FMCG market has to depend on volume for their profit maximization; they cannot play
the margin game for their growth. e.g.(http://sunnymarketing.blogspot.com/2009/05/swot-
analysis-of-all-fmcg-companies-in.html)


pg. 9


Porters Five Forces
Threat of Substitute Products:
The products in fast moving consumer goods industry are highly substitutable. For every single
product there are many players giving almost the same product or with some differentiation.
Threat of new entrants:
The establish companies have very huge base of loyal customers, which will create entry barrier
for any new entrant in the market. Even if some new competitor will be a potential threat for the
companies will buy out that competitor.
Determinants of buyers power: Since the products in the industry are highly substitutable and
the number of sellers in industry is comparatively very less with respect to the number of buyers.
The market is also very price sensitive, if a company increases the price of their products the
customer has many options to choose from. So the buyers can switch from one product to the
other.
Rivalry among existing players:
There is intense rivalry among the companies operating in the Indian and Bangladeshi FMCG
market; they sell the products with little or no differentiation. This includes some big and
established names in the market like HUL, Dabur, Uniliver and P&G etc. e.g.
(www.scribd.com/marico)
Technological advantage of Marico
Marico ltd. is the biggest player in the market for many reasons. Other than strategic marketing
and management, Marico's technological advancement gives it leverage over all the competitors
In Bangladesh; Marico has state-of-the-art plants for its flagship product, Parachute. Authorities
claim that their products are 100% pure, which is refined and packaged by machinery and not
pg. 10

touched by humans. With their modernized plants and automated system they rapidly took over
the small operations. Marico has a vast R&D department overtly concerned with health hazards,
new formulations and brand extension.
Marico ltd. uses the SAP ERP (enterprise resource planning), and they have recently bought this
software to Bangladesh. This strategy will give even more competitive advantage to the firm.
Kaya Skin Clinic has Aqua Skin Jet technology that no other competitor in the market possesses.
Saffola Gold is said to be one of the healthiest edible oil in the market. All these factors
synergize to give Marico ltd. a big technological advantage over the market competitors.
The highlights pertains to the financial performance of Marico Consolidated


Amount in Rs. Core
Year ended March 31
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Income from Operation 775.5 888.5 1007 1143.9 15556.9 1905 2388.4 26660.8 3135 4008.3
EBITDA 75.7 74.5 88.3 144.3 198.7 246.4 304 375.1 418.1 484.4
PBIT 64.9 64.5 75 103.1 156.7 225.1 280.4 333.3 368.5 444.5
Profit before Tax 63.8 63.3 73 98 136 194.5 244.7 307.7 327.5 402.1
Extraordinary / Exceptional
items
(14) (10.6) 15 9.8 (48.9) 1.8
Profit before Tax (PBT) 64 65.1 74.3 98 150.1 205 229.6 296 371.4 395.4
Profit after Tax (PAT) 56.2 59 70.1 86.9 112.9 169.1 188.7 231.7 286.4 317.1
Cash Profit 78.2 72.1 82.8 137.2 187.1 220.1 258.4 330.8 400.3 391.7
Economic Value Added 31.3 38.2 46 50.7 79.3 131.5 144.4 196 174.7 198.6
Total Capital Employed 214.1 203.6 288.7 509.4 443.3 672.7 828.5 1112.4 1364.3 1601.1
Net Worth 193 184.4 216.9 261.5 192.4 314.6 453.5 654 915.5 1143
EBITDA Margin (%) 9.8 8.4 8.8 12.6 12.8 12.9 12.7 14.1 13.3 12.1
Return on Capital
Employed
1

30.8 31.7 31 25.8 35.8 40.3 37.4 34.2 25.8 29.6
Net Cash Flow from
Operation per share
2.2 2.7 0.7 2.8 3.1 2.3 3.0 3.4 4.0 6.6
Earning per Share (EPS)
2
1.9 2.0 1.2 1.5 1.9 2.8 3.1 3.8 4.7 5.2
Dividend per Share 0.5 0.4 0.5 0.6 0.7 0.7 0.7 0.7 0.7 0.7
Debt /Equity 0.1 0.1 0.3 0.9 1.3 1.1 0.8 0.7 0.4 0.3
Book Value per share
3
6.7 6.4 3.7 4.5 3.2 5.2 7.4 10.7 14.9 18.6


1
PBIT*/Average Total Capital Employed@
2
PAT/ No. of Equity shares
3
Net Worth/No. of Equity shares
pg. 11






pg. 12





By the table, income from operation and net income rise at the highest level in 2012 which
indicate a very strong positive operational activity by the company. Earnings before interest,
taxes, depreciation and amortization margin is nearly stable and rational. This line of the graph
shows the strong control over the companys earnings against its expenditures. The graph also
shows a high trend of cash profit and indicates higher liquidity conditions over years. And the
tendency to pay dividend to the investors is very consistent indicate a strong financial condition
of the business. Highest raised EPS in 2012 also shows a strong earnings rate on shares.
E.g. (http://www.reportlinker.com/p0342227/Marico-Limited-531642-Financial-and-Strategic)



pg. 13





Conclusion:
The main criteria for a business to survive in this competitive market home or abroad are to be
creative and innovative. Maricos large investment in brand building, 360 degree approach in
marketing and expansion in distribution too has contributed rapid growth. Today, Marico
Limited has emerged as the fastest growing FMCG Company. Their approach to the market with
uncommon sense has helped them challenge the norm to push the boundaries of their existing
businesses and set up new ones. By tapping into the minds of consumers and gaining a deeper
insightful understanding of what they really seek, theyre able to identify opportunities and
create categories where none exist.
Marico Ltd's flagship, Parachute, is the market leader in hair oil for many bold reasons. It was a
great learning experience to conduct a project on this company and to see how differently it
functions from every other competitor in the market. The manufactured goods of Marico are
exceedingly substitable however figures of sellers incredibly a smaller amount compares to the
number of buyer that is serious problem for Marico. With a loyal and dedicated workforce as
they presently possess, it is quite safe to assume that Marico ltd. will remain at the top for quite
some time.




pg. 14




Appendices and References:
http://economictimes.indiatimes.com/opinion/interviews/Having-a-glocal-mindset-is-
crucial-Vijay-Subramaniam-CEO-Marico-IBG/articleshow/5833698.cms
http://sunnymarketing.blogspot.com/2009/05/swot-analysis-of-all-fmcg-companies-
in.html
http://www.rediff.com/money/2008/dec/09the-secret-of-marico-success.htm
http://www.thehindubusinessline.com/2004/02/24/stories/2004022401750200.htm
http://www.reportlinker.com/p0342227/Marico-Limited-531642-Financial-and-Strategic-
SWOT-Analysis-Review.html#ixzz1AsaOvQwN
http://fmcg-marketing.blogspot.com/2007/12/maricos-distribution-network.html
http://www.thehindubusinessline.com/2003/10/21/stories/2003102100420600.htm
www.scribd.com
Marico Bangladesh Ltd. Prospectors.




Total word count 2521 (without cover page and table of contents)