Marico?s fourth floor office in suburban Mumbai is decked up for the festive season around New Year and the staff are moving around spiritedly. We compliment Harsh Mariwala on the office and the homely environment within it, and he smiles. ?I sometimes feel this office is still not comparable with the plush modern day offices.? We quickly point out the positive environment. ?Yes, freedom and flexibility is inbuilt into our work culture. Our policies support it. We do not even maintain a muster in our organisation,? he says. To manage a work force of 2,900 without maintaining a muster may look challenging, but not for Mariwala. For him, such innovation in a human resource practice is just an extension of the innovation culture within the company?a culture that helped catapult it from a Rs 5-crore, family-managed business selling bulk edible oils a few decades ago to a Rs 2,660-crore FMCG giant. Ask Mariwala, who joined the business set up by his father under the name Bombay Oil Industries in the 1970s, about ?innovation?, and his response is whether we needed a ten-minute briefing or an hour-long presentation. Mariwala can surely handle both with ease, considering he is a much-sought after speaker at industry and academic forums on the topic.
We settle for a quick briefing, but that was enough for Mariwala to take us through a slew of innovations at Marico?HDPE containers that replaced tins for storing coconut oil, the popular all-season containers, and the flip-top packaging for Parachute that is both easy to use and tamper-proof, the special packaging for rural markets, and the game-changing Parachute Mini ?B? pack, that drove up the product?s market share in the sachet segment from 15% to a whopping 45%. ?Some time in the 1990s, we decided to take innovation as an organisation-wide initiative to launch innovative products. We have engaged consultants, but the innovation process is primarily driven internally.?
Plastic containers are now ubiquitous and widely accepted, but not so during the days when Marico started experimenting with the new packaging. There was dealer resistance, but Mariwala persisted, since he believed that, ?it is difficult to succeed in a market where the differentiation of the product is low?. The results were evident. Parachute is today a market leader, accounting for over 40% of the branded coconut oil market. This brought about a cyclic phase, where Mariwala began to pump in more money to advertise and create brand awareness?something that would eventually help him stand up to stiff competition from multinationals who could swing consumer preferences through high voltage advertisements backed by deep pockets.
Warding off competition from MNCs is a challenge to any home-grown FMCG company, but the story of how Mariwala turned the tables on Hindustan Unilever (erstwhile Hindustan Lever) in the earlier part of the decade is dramatic. HUL entered the coconut oil market by acquiring TOMCO and subsequently acquired Cococare in 1999. In the period 1999-2000, HUL positioned Nihar as a challenger to Parachute, splurged on advertising and flexed its distribution muscles. Then came the moment of truth for Marico? HUL was reportedly stalking Mariwala?s company, and the latter?s shares fell dramatically in the market. Mariwala wasn?t one who would throw in the towel, and went for an all-out offensive, beefing up product quality, promotions and distribution. A fourth element, unsung, but that helped mobilise a spirited sales force behind the product was the internal movement Parachute Ki Kasam (We swear by Parachute). The strategy surely worked for Mariwala. Not only did Nihar fail to make a dent in the market, Marico eventually acquired Nihar in 2006, which Mariwala considers ?an emotional and psychological victory for Marico?. The acquisition made perfect business sense too. ?Nihar has helped us improve our market share and specifically improve our margin and growth,? says Mariwala, adding that the brand is a leader in Bihar.
If packaging innovations changed the fortunes of Parachute, in the case of Saffola, marketing-led innovations proved to be the game-changer. ?We positioned Saffola as a brand for good health, and that has stayed for a long time,? says Mariwala, a health freak himself whose exercise regime comprises a combination of workout at the gym, walking, swimming and golf. He attributes Saffola?s positioning to a simple meeting his uncle had with a cardiologist, who said safflower is good for the heart. ?Medical opinion has changed over a period of time, and so have we,? he says. Marico launched Saffola variants in tune with changing medical opinion.
What also helped both these products was their extension into new business segments and positioning as a beauty brand?after-shower gels and creams, lighter, fragrant oils, hot and cooling oil in the case of Parachute, and Saffola?s journey beyond edible oils into healthy foods, including Saffola rice, oats and salt.
A major milestone in Marico?s journey was its entry into services through the launch of the Kaya skin clinics, a business that posted revenues of Rs 182 crore for Marico in 2010, but a segment Mariwala is prepared to bet heavily on. The idea came about when a friend wanted to sell laser hair removing machines to Mariwala. The discussions led to the idea of a skin clinic, and Mariwala leveraged on his friend?s domain knowledge and wide network. But the key was to create room for nurturing new ideas, and this was where the incubation cell, directly supervised by Mariwala helped. This cell, directly under Mariwala?s supervision, made sure that approvals did not get stuck within the labyrinthine organisational systems. The idea was to improve efficiency, and it worked. ?From the idea stage to the clinics, we entered the business in one year flat,? says Mariwala. From eight clinics in 2004, Kaya at present has 100 clinics across India, in Bangladesh and the Middle East. ?The right move we made in Kaya was that we made it a separate company, in a separate location, managed by a separate team, because in a service business you interact directly with your customers.? But Kaya had its own testing times too. After the first five years, there was pressure to grow faster. An introspection revealed that in the desire to become big, Kaya somewhere took its focus off from the customer. Moreover, competition had begun to wean away market share. ?Now, the whole business model has undergone a drastic change and we still need to change much more. We have to be far more customer centric, more sensitive to competition, we have to invest much more in training.? Thanks to a series of measures, including appointing most doctors on a full-time basis, Kaya?s sales have now stabilised. Mariwala uses a simple analogy to drive home the point. ?We were going in reverse gear earlier, now are in neutral, will go forward soon.?
Taking Marico global was yet another focus. Marico?s International Business Group (IBG), that was formed in the mid Nineties, reaches out to more than 25 countries across south Asia, south-east Asia, Middle East and the African continent. Initially, the company resorted to a total Indian population-centric approach driven by access to clusters of Indian expatriates in the Gulf, US, Canada, Singapore and Malaysia, and the common ethnicity and hair oiling habits in Bangladesh, Nepal, Pakistan and Bhutan. However, over time, the strategy shifted to developing localised products, new categories and growth through acquisitions. How have these acquisitions worked out for Marico? Mariwala says while most have worked out well, there were difficulties in integrating some others. ?In the case of Nihar, it was easy to integrate since we acquired only the brand, and we know the business of coconut oil inside out. We did not have to add anything in terms of people or factories.? Similarly, integration was smooth in South Africa. ?The business there was very clean, and we retained most of the team which was managing the acquisition.? However, acquisitions like those in Egypt were difficult to integrate owing to the barriers in language and practices. ?The key thing is flexibility, since you are going to inherit something that is not in your hands,? says Mariwala. International operations now account for 23% of Marico?s revenues at present.
We ask Mariwala if he has lined up holiday plans after a hectic year, which saw two acquisitions and the completion of another. The manager that he is, believing in delegating responsibilities, Mariwala says the fact that he has a good team around him helps keep matters in control. So, it will be business as usual for him, another year of innovations, and strategies to maintain and improve market share. As we bade Mariwala goodbye, the casual demeanour concealed a quiet confidence that was hard to miss. Was yet another innovation playing on his mind? Quite possible.