MD & CEO’s Message

Differentiating our way forward

Saugata Gupta


Dear Shareholders,

I am pleased to present to you Marico’s Integrated Report for the year ended March 31, 2020.

The year under review was unprecedented in many ways – a very difficult macroeconomic condition, plagued by demand slowdown across categories, with probably an exception of foods and allied categories, and culminating with a once-in- a-century phenomenon of a pandemic, the COVID-19 outbreak. Your Company’s performance was a mixed bag, marred to a large extent by the adverse macro conditions and also a few internal performance misses. While the top line growth was muted, your Company did reasonably well on profits as the gross margins expanded amidst benign raw material scenario. Your Company’s trusted brands across all the key franchises continued to strengthen their position with market share gains over the previous year. The pandemic has disrupted operations severely ever since its breakout in March’20. However, I have full confidence in your Company’s members and associates, whose dedication and bias for action will ensure that your Company not only fights adversity, but also come out as a winner. I take this opportunity to thank them all.

Saugata Gupta


FY20 overview

While the Management Discussion and Analysis (MD&A) in this Report provides a detailed account of our performance, I will attempt to sum up the year that was. Your Company started off on a positive note in the first quarter, but was unable to maintain a momentum in the face of a challenging macro environment that was characterised by progressively weakening consumer sentiment, liquidity constraints in the domestic business and COVID-led disruption in March. In line with sectoral trends, it was the Edible Oils and Foods segments that did well during the year, while personal care categories were subdued. However, despite the muted volume growth for the year, your Company’s brands continued to gain market share across each of its key franchises and outperform the overall category, which witnessed negative to muted growth. While traditional trade declined in both urban and rural, modern trade and e-commerce sales grew steadily, with contribution rising to 17% and 5% of the India business respectively.

The International business had a relatively better year, with a mid-single constant currency growth and a healthy improvement in profitability. Bangladesh continued its stellar performance by delivering double digit constant currency growth. Vietnam delivered mid-single digit constant currency growth, as growth was impacted by moderating growth trends in the Home and Personal Care category. Businesses in the Middle East, North Africa and South Africa had a lacklustre year due to the unfavourable macro-economic backdrop and the impact of the pandemic in the last quarter. The New Country Development and Exports business continued to show promise.

Strategic overview and outlook

Going forward, your Company will stay focused on delivering sustained profitable volume growth and market share gains by growing the core portfolio, creating new engines of growth with portfolio expansion in existing and new categories and markets, while consistently moving along the path of creating shared value. Consumer centric innovation, adaptive business and GTM models, leveraging technology and automation, cost management, nurturing talent and culture and mainstreaming sustainability will remain key enablers in this journey.

While the current economic scenario is unprecedented and continues to be unpredictable in the near term, your Company expects to contain the impact given that about 85% of the portfolio comprises daily-use items. We witnessed relatively weaker consumption trends in rural India through the year. However, recent government stimulus packages, agricultural sector reforms, higher agricultural output, good rabi harvest and projections of a near-normal monsoon bode well for disposable incomes in the coming year, while the reverse migration of labour would also lead to a shift in the consumption base. As availability has now become more critical than ever, your Company continues to invest in upgrading its GTM infrastructure in urban and rural, with a focus on expanding its direct reach. With more than 90% of portfolio comprising trusted leader brands, your Company is aggressively working towards enhancing the value proposition across its key franchises.

As consumers are now increasingly conscious of nutrition, health, hygiene and immunity as a part of their lifestyle, this calls for companies to realign their portfolio so they can actively innovate and adapt to this trend. Your Company’s recent foray into the Hygiene segment is a step in this direction, and it is working on a pipeline of new products for a sustained and meaningful play in this segment.

In the International business, your Company has systematically invested to strengthen both its brands and the requisite leadership and organisational capabilities. In Bangladesh, we will leverage its distributive strength to further consolidate market shares in the core portfolios, scale up new launches of FY20 as well as enter new categories. Being a market leader, the Vietnam business will continue to invest in the male grooming category and excellence in sales and distribution systems. An aggressive cost management programme is also underway in Vietnam, which will enable resource generation for brand building. Your Company remains cautious on the outlook for the MENA business but will be aggressive on cost management to enable it to tide over the challenging macros. We expect to protect the core franchise of ethnic hair care and healthcare in South Africa over the medium-term. We will also continue to invest in developing new export markets and scaling this business profitably.

Your Company holds its medium-term aspiration of delivering 13-15% revenue growth on the back of 8-10% volume growth in the India business and double-digit constant currency growth in the International business. We expect to maintain operating margin at 19% + over the medium term.

We will continue to invest behind brand building to support market growth initiatives in core categories and expansion into adjacent categories. With consumers spending significantly more screen time, your Company is reallocating A&P spends from non-media to media channels to drive share of voice in the core portfolios in the near-term, in addition to rationalising investment in premium/discretionary portfolios, which are witnessing lower demand. In addition, your Company continues to maintain a tight grip over costs across the organisation and is aggressively working towards cost transformation to extract savings that can be redeployed towards pricing and profitable growth.

Responsible Marico

Sustainability is a long-term commitment and a way of life at Marico. Your Company believes in conscious capitalism, and therefore, recognises its responsibility as a corporate citizen to partner with each of its stakeholders to create sustainable value for all.

In addition to the progress in the initiatives mentioned in the Chairman’s message, we have extended our vision of sustainability on to our value-chain partners. During the year, we made steady progress on our responsible sourcing initiative under ‘SAMYUT’, by completing certification of 22% of our critical value-chain partners.

The COVID-19 outbreak has been especially harsh on certain sections of the society that have been the worst affected in this crisis, either due to loss of employment or unavailability of daily necessities. Your Company has attempted to contribute by providing meals and personal protective equipment to the disadvantaged members of our society and those in essential services who are fighting at the forefront round the clock. Also, with most of our distributors now resuming operations, we have ensured our distributor salespersons are covered under insurance for COVID-19 related treatment and have also provided monetary assistance to them. We also created a collective fund through voluntary member contributions aided with equivalent contribution from your Company to help the front-line teams of our business partners, who are working on-ground and ensuring the availability of Marico products to consumers.

Our people help us stay ahead

On the announcement of the national lockdown, all offices across India were shut down and the ‘Work from Home’ policy was enforced. Since then, some of our offices have resumed with limited attendance in adherence with the government directions/advisories. Similarly, there have been total or partial lockdowns in our overseas markets as well. Despite the unprecedented times we are currently operating in, the exceptional level of grit, agility and spirit of collaboration that each and every member of your Company continues to exhibit, has been exhilarating to witness. I would like to express sincere gratitude to the entire team, for their passion and dedication that is the essence of the organisation Marico is today.
I am pleased to share that your Company has been recognised amongst India’s 5 Best Workplaces in FMCG as per the study conducted by Great Place to Work® Institute and The Economic Times in 2020, and is also ranked as the one of the 25 Most Desirable Companies To Work for across sectors, as per the Dare2Compete Employer Branding Report 2020.

Your Company has been able to consistently create value for all its stakeholders on the back of the leadership position and resilience of its trusted brands, an empowering and enterprising culture and focus on best-in-class governance and risk management. We believe it is our will to always keep punching above our weight and the unflinching support of all stakeholders that has and will continue to power us on. I would, therefore, like to take this opportunity to express my sincere gratitude to all of them – our shareholders, Board of Directors, management team, customers, suppliers, bankers, investors and partners for their exemplary faith in Marico’s ability to ‘make a difference’.

Warm regards,

Saugata Gupta