Unlike most business families, the Mariwala father and son duo prefer equity to real estate, metals and debt, and market ups and downs don't really matter
Minutes after being escorted to a conference room facing a lush balcony garden at the Marico Ltd headquarters in the Santacruz suburb of western Mumbai, Harsh Mariwala, 66, and his son Rishabh, 35, arrive.
The founder-chairman, and non-executive director, respectively, of the Rs4,800-crore consumer packaged goods firm Marico Ltd, are wary given the topic of discussion: personal finance. Once assured that their personal balance sheets wouldn’t be public information, the conversation begins.
First off, the rationale behind setting up their family office, Sharrp Ventures.
“The motive was to de-risk our portfolio, as all our substantial dividends from Marico were invested in the company itself till about three years ago," says Harsh. “Of course, wealth creation and preservation for the long term, in addition to draining excess liquidity, were reasons as well," adds Rishabh.
“The point is to be clear about one’s objectives before making an investment. Once the objective is clear, it helps to make disciplined investments and leaves no room for distractions," says Harsh.
Speaking of the challenges at inception, Rishabh recalls, “Our average ticket size was Rs1 crore; this has now increased to about Rs7 crore. We realized we might spread ourselves too thin, so we invested higher amounts in fewer companies. A good investor shouldn’t spend time and resources keeping track of a larger number of companies."
Harsh has always maintained that he is fond of high-risk investments, and it shows. The corpus is divided in an 80:20 ratio with the majority invested in listed companies. “After Marico went public in 2002, it did exceedingly well, so we chose to invest 80% of our corpus in listed companies and the rest in the unlisted space. In the listed space, investments are made through mutual funds and portfolio management services. There is definitely an equity risk, but in the long term, equity returns are the highest. There are no investments in debt (funds), real estate, precious metals and direct equity, except in Marico and Kaya (Kaya Skin Clinics, is run by an independent company called Kaya Ltd, founded and owned by Harsh). Our verdict is still not out on advanced investments such as bitcoins and cryptocurrency," says Harsh.
About the unlisted investments, Rishabh says, “Most of these are in the consumer space because our expertise lies there. We have invested in eight companies, five funds and one incubator. We invest in funds at the seed, Series A or Series B stage. We have a family adviser in the listed space but in the unlisted space, we have to scout for trustworthy people and co-invest with them with a relatively small ticket size till there is a liquidity event, especially in the non-consumer space."
Harsh believes that an organization is of little value without its people and has paid great attention to the staffing of Marico and Kaya (Skin Clinics); the family office is no exception. “Rishabh and I interviewed a few candidates to find a specialized adviser who would provide the advantages of scale. We have neither the time nor the expertise to screen every investment opportunity that comes our way. Having a professional adviser do that systematically makes the process far more efficient and effective."
The performance of listed companies is reviewed once a month, while unlisted companies and managed investment schemes (MIS) are checked once every quarter. Portfolio management services and mutual fund performance are checked once a year.
“The objective is not to churn but to get a sense of how things stand. There is no panic when the market suddenly falls but I do insist that the family office adviser beat the Nifty by a certain margin," says Harsh.
Currently the chairman and a non-executive director on the Marico board, Harsh built the company from the ground up 26 years ago. Entrepreneurship runs in the family with Rishabh, now heading a chemical-free bath and body products venture, Soap Opera N More. He co-founded the company with his mother Archana in 2012-13. The company was expanded nine months ago with the launch of the brand PureSense.
On the cross-learning between being an investor in entrepreneurs and an entrepreneur himself, Rishabh says, “Through our investments, I know quite a bit about the overall market scenario. We are not very involved in the day-to-day running of the companies we are invested in, but keeping track of them helps me understand and improve strategies for my own businesses. Sometimes, I can take a leaf or two from my book and guide them but only when they express a need for it. We have no inclination to impose on them."
All this must keep their hands full. “For sure! Each day is different for me. At Marico, my role is hands-off, mind-on; I add value to the business rather than control it. I’m spending quite some time writing a book about my business life and scrolling through my Twitter feed. A new business, which I believe will be a pioneer in India, is also in the works and will be launched in three-odd months," says Harsh.
For the Mariwalas, the frequency of keeping tabs on the portfolio is in line with long-term wealth creation. Performance by listed companies is reviewed once a month, while unlisted companies and MIS are checked once a quarter.-
The initiative closest to his heart though is Marico’s corporate social responsibility programme; the division reports to him. “I meet an entrepreneur every month from our ASCENT Foundation (a not-for-profit peer-to-peer platform for budding entrepreneurs founded in 2012) to guide them." The foundation has 300 entrepreneur-members but Harsh’s long-cherished dream is to have 10,000 entrepreneurs as part of the network.
“The Mariwala Health Initiative, run by my daughter Rajvi, operates a pro bono telephone service, named the iCall Psychosocial Helpline, in collaboration with the Tata Institute of Social Sciences. The initiative also supports the Indian Law Society’s Centre for Mental Health Law and Policy, and the Bapu Trust for Research on Mind and Discourse." Rajvi was also part of Marico’s brand-building team, which she quit in 2009 to become a canine behaviourist.
Rishabh juggles his time between Soap Opera N More and heads the family office while also serving on the Marico board.
Talk of the board invariably leads to the question of the Mariwala legacy. “Marico has always been a professionally run organization and we intend to keep it that way. I’ve written out the values, purpose and strategy of the organization and the company culture I would like the board to perpetuate. I would also like Rishabh to continue my legacy as an owner-strategist but he could become an owner-investor or even an owner-manager," says Harsh.
“I truly believe, as they say, that culture eats strategy for breakfast but also that the role of stewardship is indispensable. The founder’s mentality should outlast him, that’s the true success of an organization. I fully intend to do that with Marico," says Rishabh.
Name: Rishabh Harsh Mariwala
Designation: Co-founder, Soap Opera N More; director, Sharrp Ventures; non-executive director, Marico Ltd
Education: Business degree from Zarb School of Business, Hofstra University, New York, US
What is your money mantra?
A good investor shouldn’t spend time and resources keeping track of a larger number of companies.
Name: Harsh Mariwala
Net worth: $2.3 billion
Source of wealth: Consumer goods
Education: Bachelor’s of commerce degree from Sydenham College, Mumbai
Brief: Harsh Mariwala transformed his family’s traditional business of trading in spices and edible oils into Marico, among the country’s leading consumer goods companies. Marico, which is best known for its Saffola cooking oil and Parachute hair oil, sells in 25 countries and aspires to be an Indian multinational. His other interests include Kaya, a chain of skincare clinics. Sharrp Ventures, his family office, is looked after by son Rishabh.