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Business News/ Companies / People/  Failure is the only route to success: Harsh Mariwala
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Failure is the only route to success: Harsh Mariwala

Harsh Mariwala speaks about the company’s transformation and the future plans for brand Marico

There is no shortcut to launching products, says Harsh Mariwala. Photo: Abhijit Bhatlekar/Mint (Abhijit Bhatlekar/Mint)Premium
There is no shortcut to launching products, says Harsh Mariwala. Photo: Abhijit Bhatlekar/Mint
(Abhijit Bhatlekar/Mint)

Mumbai: In the last two months, consumer products maker Marico Ltd has moved its offices from the oldworld charm of Bandra West’s bylanes to a 60,000 sq. ft. space in the Bandra Kurla Complex. The change of address reflects Marico’s renewed focus on challenging rivals in competitive categories such as skin care, deodorants and hair care, dominated by Hindustan Unilever Ltd (HUL), L’Oreal India Pvt. Ltd and other multinational companies (MNCs). The company is currently known for niche brands such as Saffola, Parachute, Revive and Medicare that don’t compete with the overseas firms.

In January, the company announced a management recast and the separation of its beauty services business, Kaya, into a separate listed company Marico Kaya Enterprises Ltd. This is not the first time the company is transforming itself or taking ambitious bets. In the 1980s, the company metamorphosed from a trading company selling value-added oils to an innovative company creating brands such as Parachute and Saffola. In 2006, it bought Nihar, a coconut oil brand from HUL for about 227 crore, in what was then seen as an expensive acquisition. Marico chairman and managing director Harsh Mariwala, 63, spoke in an interview about the ongoing transition and future plans. Edited excerpts:

There are a lot of changes taking place at Marico.

Ever since we started Marico, the whole journey has been of transformation back then from packed edible oils to value-added oils, hair oil blends, edible oil blends and now we have got into personal products, hair care, skin care and even food.

Does this transformation require a different way of looking at business?

Yes. It is about product formulation, packaging, marketing and distribution. Moreover, even the nature of the competition has changed. In the branded commodities sector we were fighting with smaller players and more unorganized competition. Now we compete with the biggest MNCs and the most respected FMCG (fast moving consumer goods) companies in India. So to some extent the whole way of managing this transition to this value-added brands business requires a different approach across the organization.

Where are you in your journey now?

We are still in the transition. The transition started a few years back and has now accelerated as we acquired brands Set Wet and Livon from Reckitt Benckiser which originally belonged to Paras Pharmaceuticals Ltd in the grooming categories like hair gels, hair fall solutions, hair serums and deodorants. Additionally, we also ventured into skin care with Parachute and in oats with Saffola. The good news is that our entry in all these new categories has shown us very good results. As of today we are number two in the market, sometimes number three. So, the last two years have been exciting for us and we have shown that we can succeed in these categories and that has improved our overall confidence in going up the value chain.

Does that mean more diversification and new categories expansion?

At one level we are a focused company. We are focused on wellness and beauty. As long as it is in these domains we will look at our entry. It also will be defined by our right to win. When I say right to win, it means that we either have a strong brand, or a new technology or innovation that will play an important role. We will evaluate these opportunities and there will be many such we will identify and enter.

You have been known to make big, bold bets like the acquisition of Nihar in 2006 from Hindustan Unilever...

That was our first acquisition. People in the stock market at that time felt that we are making a big mistake as we are paying a heavy price for the acquisition. But looking back it has been one of the best acquisitions. It gave us tremendous power in the coconut oil category in the jasmine perfumed oil category. It is not so well known in the West as it is an East-centric brand. The brand is doing a turnover of 500 crore.

MNCs are now looking at getting back into the oil category.

We took a bet on hair oil based on consumer insights. A lot of people felt that hair oiling as a habit would die. But we went after the category even as many other companies exited from the category. Now they realize that they should have been there (HUL launched a hair oil under its brand Dove in 2012). For us the acquisition has paid off—the category has grown.

A lot of companies want to double their businesses every three years or so. What is your ambition?

We are a growth-oriented story. We have to plan growth with feet on the ground. We have to be realistic. My personal belief is under-promise and over-deliver. So basically, we would like to get a compounded growth average of 20% per annum for a three-year period.

You are known for creating strong brands. Can you tell us what it takes to create one?

I take a very long-term view of business. For instance, for our brands we take five-seven years viewpoint. For a new business we take a 10-year viewpoint. For an entry into a new country by an organic route we take a five-year view point. These businesses take a lot of investment, especially brand building. If we start focusing on making money in the short term then the business is not sustainable, as cutting on brand investments will hurt the brand, making it a weak number three or number four brand in the market. Investing from a long-term point allows you to develop a strong brand, become a market leader.

What happens when a brand or concept doesn’t succeed?

The key thing is to create the right innovation culture, which means that you have to empower people to think differently. You have to encourage failures. Failure is the only route to success. In our sector, the success rate is just 10-20%. You have to try 10 things for one to succeed. Ultimately there is no shortcut to launching the products. You can do market research, test certain hypotheses but this is not enough. At some stage, you have to make the entry in the market place. What we do is prototype the product in a small market.

Are you more aggressive about growth today than say five years ago?

If you see the kind of investments we have put into our brands it is a reflection of our changed mindset and approach. We are placing a few bets, but big bets. I don’t know whether it can be termed as aggressive. But yes, we are more focused and persistent now. So this at one level can be termed as aggressive because the money that we are putting in brand categories that we have defined as important is much larger than what we would have done in the past. As such, our overall ambition is much larger.

Will you look at more acquisitions for growth?

We will look at acquisitions with an open mind as we are a growth-oriented company. It has to make sense. Acquisitions is not an end in itself.

The macro-economic environment continues to remain tough. How will this impact your business?

The economic growth has come down to 5% from 9%. It is a matter of time that it will impact the consumer. The consumer also has to contend with inflation and he will be thinking of making cuts to his expenses. So, his overall mood is not positive. The first cut is made in consumer durables, automobiles. FMCG is not so badly impacted. The sector is still growing. Within the sector, the consumer has choices to make. He can shift his purchasing to suit his budget and save some money. There is some degree of deceleration of growth, but still growing.

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Published: 05 Jul 2013, 11:53 PM IST
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