Patanjali is the most overhyped brand: Marico chairman Harsh Mariwala
Marico chairman Harsh Mariwala says the impact of the Patanjali brand on his company’s market share has been ‘low’
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Mumbai: After having built Marico Ltd into one of India’s biggest packaged consumer goods companies, Harsh Mariwala started a not-for-profit initiative called Ascent to mentor young entrepreneurs and help them overcome challenges in scaling up their businesses. In an interview at the Mint Wealth Creators Summit 2017, Mariwala spoke about the new generation of entrepreneurs, family-owned businesses and the emergence of Baba Ramdev’s Patanjali Ayurved Ltd. Edited excerpts:
We have seen at the Tata group and Infosys that promoters in India can find it difficult to let go. Why is that?
There should be perfect alignment between the promoters and the management. In this case, I don’t think there was an alignment. There is a way to resolve the entire tussle, one need not go public and declare everything. A mediator could have helped in this case.
You have a professionalized management in Marico. What happens when conflicts happen?
I gave up the role of managing director three years back. My board of directors (BOD) had asked me to make my role and the managing director’s role very clear, which included things like the kind of media and investor interactions we will have. Very detailed understanding between the two of us has helped us sail through last three years easily. I’m not involved in day-to-day decision making. I call it hands-off but mind-on.
How different is a present-day consumer from the 90s consumer?
I think today the consumer has changed quite a lot. There is more demand and competition in the market. Due to urbanization, there has been an increase in nuclear families which further increases different types of demand. Earlier families, used to prefer one single brand but now due to changing consumption pattern, demands are also different and changing eventually. Now there are individual brands. As wealth grows, there is a movement to higher value-addition products. Every individual wants different things. Therefore we have varieties of products to cater to such demands for example, hair gel, hair serum, etc. Customers are going up the value chain with wealth rising.
So is this change of consumer pattern a good thing or a bad thing? If we take the case of Flipkart and Amazon, they are trying to build consumer loyalty, but that is not happening and price is the only differentiator.
Well, I’m not aware of these two businesses, but you cannot have price as your competitive advantage unless you have a strong structural advantage which is difficult for others to have.
Pricing can never be a route to success for a longer period of time. Value has to be created. Since I’m from an old school of business..., I really can’t relate with these two companies.
A recent article in the Financial Times said that in Japan, brokers and bankers are doing 10 deals a week and that the surge is driven by succession-driven deal making. Do we also see something similar in India, where the next generation is not interested in the family business, leading to businesses being put on the block?
It depends on what kind of business you are in. Earlier there was a social stigma around selling your business, but now things are changing. Family businesses will get encashed more and more in future. But a lot depends on the kind of entrepreneur you are.
So, would you sell?
I will not sell out. That is why I am making the board very strong so that even if I am not there, the board will be running the company and hopefully it will not be sold in the next 50 years.
As the founder of Ascent, when you meet new entrepreneurs, what is the one thing which impresses you and one which is a major put-off?
Ascent is a new initiative which I started few years back. I wanted to promote this because I believe that entrepreneurs can create value by providing jobs, contributing to the ex-chequer, working with associates. Things which make me feel sad about young entrepreneurs are that they lack leadership style and cannot easily trust anyone. They find difficulty in recruiting good talent. Even though they have good ideas, they fail to implement them properly. As of today we have about 300 entrepreneurs with us in the Ascent journey.
What advice would you give to the young entrepreneurs who are in a hurry to scale up early on in their careers?
You have to have your feet on the ground. You have to have some building blocks. One has to have a strong ‘right to win’ and with time and experience, one can achieve anything. Being young is not a disadvantage.
What are your views on Patanjali?
Within a short period of time they have covered the whole gamut of products in every segment of FMCG (fast moving consumer goods) basket, and I must give credit to them for doing that. Products which have stronger association with the brand have done well like ghee, atta, toothpaste.
But in most of the cases they are still struggling with a market share of 2-3%. Their impact on us is very low. Looking at the future, they cannot succeed in all the categories, they will succeed in some categories. Patanjali, according to me, is the most overhyped brand in India.