FMCG major Marico, in its annual report, said that it aims to ramp up its revenue from the foods portfolio to Rs 850 crore by FY24, after closing near the Rs 600 crore mark in fiscal 2023. The company is also targeting to build a digital-first brand portfolio with an annual run rate of Rs 400-450 crore by fiscal 2024.
The Company has witnessed continued strength and resilience in its core portfolios, undertaken extensive portfolio diversification and innovation initiatives in the domestic and international businesses, made ahead of-the-curve investments in modern trade and e-commerce channels and strategic investments in digital-first brands, Marico said in a regulatory filing. Marico posted a revenue of Rs 9,764 crore during FY23 from a revenue of Rs 7,334 crore in FY 2018-19, growing at a CAGR of 7.4 per cent. The recurring net profit increased from Rs 926 crore to Rs 1,280 crore, growing at a CAGR of 8.4 per cent. The operating margin stood at 18.5 per cent, up 87 bps. “The performance on both counts has been comparatively healthy and was delivered despite severe uncertainties and challenges in the operating environment since the onset of the COVID-19 pandemic,” Marico said.
During the financial year, the FMCG company has expanded its food segment with the launch of multiple products including, Saffola peanut butter and Saffola mayonnaise, oats, honey, noodles, and also entered into the ready-to-eat healthy snacking category under the aegis of Saffola Munchie. “We will continue to drive meaningful innovations in foods under the brand ‘Saffola’ and create a differentiation in the categories we foray into to drive trials and stay relevant with our offerings,” it added. Marico launched 14 new products during the financial year.
Marico’s performance from domestic and international businesses
Marico said that its domestic business achieved a turnover of Rs 7,351 crore, marginally higher than the last year while posting a volume growth of 1 per cent owing to “higher retail inflation weakening consumption trends, especially in the rural sector”. “The operating margin of the India business was at 19.8% in FY23 vs 17.4% in the previous year. The improved profitability was a result of moderation in the prices of key commodities such as copra and vegetable oils as well as a more favourable portfolio mix,” it said. In the domestic business, its newer portfolios of foods, premium personal care and digital-first segment have led to a shift in the company’s share of domestic revenues from 8 per cent in FY20 to 15 per cent in FY23. “We expect the share of these portfolios to move to 20 per cent of domestic revenues in FY24,” it said. Marico’s Parachute coconut oil contributed 37 per cent of its domestic business and Saffola franchise contributed 23 per cent.
In terms of international business, Marico posted a turnover of Rs 2,413 crore, registering a growth of 11 per cent over the last year. The business reported constant currency growth of 13 per cent, Marico stated, with each of the key markets growing in tandem. “The operating margin of the International business was at 23.7 per cent in FY23 vs 24.4 per cent in the previous year. Higher input costs and currency headwinds in certain markets impacted profitability of the international business,” it said.
Investment in R&D
Marico has spent Rs 32 crore in R&D during the financial year with 93 members in the R&D team during the quarter. “In FY23, Marico signed MoUs with very distinguished research centres such as Indian Institute of Millet Research (IIMR), Indian Institute of Toxicological Research (IITR) and Indian Fisheries Institute,” it said in the annual report.
Marico’s reach
Marico reaches 5.6 million outlets, serviced through its network of 900 distributors and 7,500 stockists. “Over the past year, we have witnessed a slowdown in general trade dragged by consumption stress in rural India and the lower and middle-income strata in urban areas,” said Saugata Gupta,MD & CEO, Marico, while addressing its shareholders. The company stated that the consumers, especially in the urban segment, are increasingly moving towards the alternate channels of modern trade and e-commerce. Marico is also increasing its investment towards building an omni-channel, agile and data-driven distribution strategy.
“We continue to strengthen our presence on alternate channels through trusted partnerships, channel-focused product strategy and customer engagement. Given the depth of the Indian market, we believe there is significant headroom for traditional and alternate channels to co-exist and grow harmoniously,” said Saugata Gupta. The FMCG firm is also working towards widening the stockist network as it expands rural direct reach. “A dedicated foods Go-To-Market is one of our strategic priorities, which focuses on top specialty foods stores and aims to deliver accelerated growth in our foods business through wider range availability, in-store execution and effective shopper engagement,” Saugata Gupta said.