How has been your journey in the FMCG industry so far?
During the last ten years, our turnover has grown more than six-fold, from Rs 100 crore to Rs 650 crore in fiscal 1998-99. This works out to a compounded annual growth rate of 22 per cent. Profits too have gone up almost ten-fold, from Rs 4.5 crore to Rs 44 crore and this works out to a compounded annual growth rate of 28 per cent. Our brands too have increased from three to eight. Of the five new brands, three are acquired. There has been a significant growth in distribution. Some of our brands are available today at 15 lakh outlets. The number of distributors too has risen. Our international business worth Rs 20 crore is looking up too.

What would you attribute your success to?
It is not just success. We have had our setbacks too. Some of our extensions did not do well. We had to withdraw Parachute Herbal, Sweekar mustard oil and Sweekar groundnut oil. But our success still outweighed our setbacks. The reasons: we have a clear focus in terms of where we are headed and our organisational process is geared towards achieving results.

Why then did Parachute Herbal fail?
Parachute Herbal failed because the Parachute brand was known for coconut oil. I am not saying that herbal products are not our core competence. But, it was more to do with execution rather than core competence. However, we have learnt from our mistakes.

The vegetable oil business is Marico’s key business and it has tremendous potential. Just a couple of major players and dime-a-dozen players in the unorganised sector. How does Marico propose to consolidate?
Sure, there will be just three or four major players and many small players. We will be a player in the upper-end of the market. Lower-end of the market representing commodities such as palmoline is not our cup of tea. For two reasons. One, concentration is high there. And two, brand loyalty is much less over there. Basically, we will be moving up the value chain. We are also open to acquisitions provided they fit into our business plan.

Observers are not very comfortable with Marico's foray into food with brands such as Saffola atta and Saffola salt. What do you have to say to them?
Of the two, we have decided to go ahead with only salt. We have decided to shelve Saffola atta after test marketing it. At least for now. We would like to focus on the Parachute brand instead.

Apart from the fee income, Marico does not seem to get much out of the alliance with P&G. How does this alliance fit into your business plan?
We sell only those products of P&G which do not fit into their scheme. This does not cost us much. In the bargain, we get access to more outlets, especially the chemists.

How do you propose to fight competition?
We have identified branding, distribution, innovation and cost management as our focus area. We will continue to look for improvements here.

Are Indian FMCG players afraid of MNCs?
No, Indian FMCG players are not scared of MNCs. But, one must appreciate that the MNCs have an edge over the domestic FMCG players in R&D and they have global brands. We would not like to get caught between two global brands, like Thumps Up between Coke and Pepsi. Moreover, the MNCs have enough resources to bear losses for years and also the critical mass for R&D on a global scale. We look at areas where there are growth opportunities and leveraging our strengths has always been our strategy.

When MNCs had low-key Indian operations, Indian FMCG companies should have capitalised on this opportunity and there should have been more Maricos and more Nirmas around. Your comments?
I agree. But, this is more to do with the business environment that was prevailing in India then. Also, domestic majors were not able to professionalise themselves in time. The transition from a family-run setup to a more professionally-managed organisation was not fast and smooth. True, Marico could have done much more. But a 20 per cent annual growth is not bad.

What does strategising mean for an FMCG company? It seems to begin with marketing and end there. How important is conceptualising in the FMCG industry?
Conceptualising is very important in the FMCG industry. The stakes today are so high that if your brand fails, you lose heavily. So, you cannot go slow in advertising and marketing.

How are e-commerce initiatives crucial to the FMCG business?
I can talk about Marico here. We will start off with a B2B model. This B2B model will be brand-specific and here we propose to tie up with a few B2B portals. We will not be able to have our own B2C portal and here again we might tie up with strong B2C sites.

How important is rural marketing in the FMCG industry?
Rural India has tremendous potential. The question here however is how to tap that potential. Reaching out to the vast rural masses is an expensive proposition. The key here is to have a critical mass in terms of product depth. That is going to be the biggest handicap. So, FMCG companies need to develop sizable product portfolios. We propose to address this issue by finding out rural-fits of our existing products or develop new ones.

Brand-creators and brand-managers need to be protected from poachers. How does Marico propose to stem exodus of talent?
Protecting your talented team from poachers is very critical today. We place a lot of emphasis on HRD which revolves around culture-building and competence-building in key areas. We have a management review process in place. We have also adopted an aggressive reward system where one can earn as much as 50 per cent of ones guaranteed salary.

Our future course of action would involve bringing about changes in work culture, implementing changes in human resource practices such as external reality check, rewards system. training and development and leadership. We firmly believe in the tenet that market realities should drive all behaviour in the company. In fact, that was the basis which led us to the two-day workshop with Prof Wayne Brockbank of the University of Michigan who is an expert on aligning human resource practices with business needs. If you look at our new organisation structure, it is clearly based on a five-pronged theme: structure must support strategy, each business requires different competencies, improved co-ordination within a business and bring value-chain focus, goal congruence as far as people and organisation is concerned and create new stimulus and enthusiasm.

How serious is this problem of talent-poaching in the FMCG industry?
It is a serious problem. Talent-poaching is bound to continue, no matter what you do. In the past, FMCG companies have lost their personnel to all sorts of companies - telecom, media and so on. I think fresh threat should come from insurance companies in the near future.

There is a bit of a definitional confusion over the sector. FMCG was called the CPG sector and now the PMCG sector. There is no comprehensive definition of the sector. What do you have to say about this?
It really does not matter what is the nomenclature. Whatever it is, the industry stands for items of regular use, those products that are packaged and branded and are directly consumable. This is like rechristening a street. Stockmarket is comfortable with that name. I do not see any need to change that. If you ask me, there are more serious issues which need immediate attention.