Demand could be adversely affected by shift in consumer preferences. Given the explosion of social media, the speed of such a shift could be unparalleled.

• Investment in consumer insighting to adapt to changing consumer preferences
• Actively monitor social media trends to spot early consumer trends; quickly respond to these trends with innovative offerings

• Consumers
• Shareholders

Increase in the number of competing brands in the marketplace, counter campaigning and aggressive pricing by competitors could create a disruption.

• Diversification in product offerings (entered into categories such as healthy foods, male grooming, skincare, premium haircare)
• Protect volumes in preference to short-term profitability
• Invest in brand building
• Agile response mechanism to counter competitive moves

• Consumers
• Shareholders

The success rate for new product launches in the FMCG sector is typically low. New products may not be accepted by the consumer or may fail to achieve the sales target. This risk is even more pronounced in cases where industry leaders invest in creating new categories.

• Invest in a new product development process with a funnel approach to ensure continuous flow of new ideas, coupled with rigorous governance around scalable innovations
• Prototyping approach to new product introductions for accelerated learning and adjustment
• Identify and invest in big-ticket new ideas in the chosen categories for driving growth
• Resilient presence in marketplace with adequate investments in brand building

• Consumers
• Shareholders

Expansion of modern trade and e-commerce could lead to the emergence of private labels.

• Invest in brand building to improve the saliency of our brands in the consumers’ mind and partner with modern trade and e-commerce in category management

• Consumers
• Shareholders

Though the FMCG sector is not capital intensive, fund requirements arise on account of inventory position building, capital expenditure undertaken or funding inorganic growth. Changes in the interest regime and in the terms of borrowing could impact the financial performance of the Company. Further, this risk may also impact income on Company’s investment and mark-to-mark hit on its investment portfolio.

• Well-defined framework for capital gearing
• Maintain a liquidity chest for immediate working capital requirements
• In case of foreign currency borrowings, implement hedging as per policy
• Manage interest rate risk to investments by implementing board-approved investment policy, which focuses on safety and liquidity, thereby mitigating short-term interest risks.

• Shareholders

Marico has significant local presence in Bangladesh, South East Asia, Middle East, Egypt and South Africa. The Company is thus exposed to a wide variety of currencies. Fluctuations in these currencies could impact the Company’s financial performance.

• While the ‘translation risk’ will continue to be unhedged, Marico has a well-defined hedging framework for managing any foreign exchange risk in India and Bangladesh. The Board-approved policy in this regard is periodically reviewed for its effectiveness.

• Shareholders

Factors such as low GDP growth and high food inflation could result in down trading from branded to non-branded or premium to mass market products.

• Focus on value-added products available to masses at affordable prices by driving aggressive cost management
• Focus on franchise growth in preference to short-term profitability
• Portfolio diversification, which is one of the pivots of the future

• Consumers
• Shareholders

Disruption in business operation due to non-availability of critical information systems through cyber-attack and loss of sensitive information due to unauthorised access.

• Identification of business critical IT systems and putting in place disaster recovery plan. The plans are tested periodically and kept relevant.
• Implementation of IT security practices in line with ISO 27001 standards
• Implementation of the latest cyber security technologies with preventive, detective and reactive controls

• Shareholders
• Value-chain partners
• Consumers

Unexpected changes in commodity prices and supply could impact business margins and ability to service demand. The past few years have witnessed wide fluctuations in input prices. As a result, the overall uncertainty in the environment continues to be high.

• Commodity procurement is driven by a comprehensive process manual for each category that governs norms related to price discovery, inventory policy, supplier management, governance mechanism
• Company policy defines purchase of commodity in line with business requirement and in accordance with the inventory policy and does not encourage speculative buying or trading of said commodity either in physical form or in exchange
• Marico has developed and deployed various programmes in order to ensure sustainable availability of agriculture commodities to support future business requirements. Few of them include:
  1. Sponsoring research in agriculture breeding technology
  2. Developing strategic sourcing alternatives from other geographies
  3. Strategic presence in extended backward value chain
• Marico has well-defined norms for building strategic inventory positions as a hedge against price volatility

• Shareholders
• Value-chain partners

Unrest and instability in countries of operation could significantly impact business results.

• A comprehensive insurance programme to hedge all insurable risks
• At a macro level, our country selection template emphasises geopolitical stability and robust growth prospects

• Shareholders
• Members

Acquisitions may impose a financial burden on the parent entity. Integration of operations and cultural harmonisation may also take time, thereby deferring benefits of synergies.

• A well-defined playbook for selection of targets, due diligence, value finalisation and integration
• Well-defined performance tracking systems to for monitoring progress periodically
• Cross-application of governance practices of the parent organisation soon after the takeover to ensure controls

• Shareholders
• Members

Inadequate compliance systems and processes can pose reputation risk for the Company. This could expose the Company to legal consequences, resulting in financial losses and penalties.

• Invest in IT-enabled compliance systems and processes
• Ensure all functions and units are aware of the laws and regulations to comply with
• Ensure adequate monitoring mechanism towards compliance
• Communicate periodically to reiterate the importance of compliance

• Government body
• Members

Failure to act with integrity or behave in a manner inconsistent with the Marico purpose statement and values defined, can damage corporate reputation and business results.

• Code of Conduct (CoC) and Marico Code of Business Ethics (MCoBE) outlines the Company’s commitment to ethics and integrity
• Robust vigil mechanism, which enables the stakeholders to report concerns about unethical behaviour, fraud or violation of code
• Detailed personal orientation and mandatory certification on CoC for all employees
• Effective oversight by the Board of Directors

• Members
• Value-chain partners

Climate change related events that have the potential to disrupt Marico’s operations, include changes in weather patterns such as increased temperatures and altered rainfall patterns. This will affect the planning and day-to-day operation as the risk arises from availability of agriculture input materials, climate-related policy changes, evolving regulations and increased consumer concerns.

• Embrace climate change adaption and mitigation measures
• Promote scientific farming practices that are resilient to climate-related adverse impacts
• Continuous monitoring of environmental policies and regulations
• Investment in low-carbon technologies and equipment, and renewable and clean energy sources
• Adoption of CDP climate change disclosures and science based target (SBT) framework approach to minimise operational environmental footprint

• Shareholders
• Community
• Value-chain partners
• Consumers
• Government Body

Energy and water are crucial for our business and day-to-day operations. Non-availability of these resources will lead to operational disruptions and impact production plans and product delivery.

• Continuous focus on energy conservation measures
• Investment in energy-efficient systems
• Operationalising reduce-reuse-recycle model of water management across plants
• Comprehensive watershed management programmes leading to harvesting and ground water recharge augmenting supply and water availability for community

• Shareholders
• Community

The regulatory, consumers and community response to the environmental impact of plastic wastes and emerging regulation by different state governments on ban of use of certain plastics, require us to find sustainable packaging solutions.

• Adopt circular approach based on 4Rs – reduce, recycle, replace and recover
• Investment in R&D measures to enable design innovations and reduce weight of plastic used under value enhancement approach by Marico
• Strategic partnerships and collaborations to drive penetration of recyclable plastics and enhance use of recycled plastics
• Honour obligations under the Extended Producer Responsibility (EPR) commitments
• Continuous monitoring and tracking of plastic waste policies and regulations
• Awareness and communication to consumers and community on collection, segregation and safe disposal of plastic waste

• Community
• Government body
• Value-chain partners

Mismatch in hiring and attrition of skilled talent may adversely affect the Company’s ability to pursue its growth strategies effectively.

• Marico’s culture of openness, transparency and meritocracy coupled with its growth orientation helps attract top talent
• Marico’s talent value proposition of building challenging, enriching and fulfilling careers is aimed at retaining top talent
• Invest in ‘hiring right’ and ‘talent development and engagement’ best practices

• Employees

Social licence to operate refers to the level of acceptance by local communities in proximity to our operations. The absence of understanding and inability to maintain a harmonious relationship with communities could result in damage to our brand, reputation and pose risk to our operations.

• Commitment to sustainable and inclusive growth in all social outreach programmes and initiatives with an aim to augment social infrastructure
• Constant engagement channels with the local community stakeholders to understand their needs

• Community

The quality and safety of our products are of paramount importance for our brands and our reputation. Any failure to meet the product quality and safety requirements could lead to significant reputational risk, loss of consumer trust and potential exposure to regulatory actions.

• Robust system to ensure compliance to regulatory requirements
• Assessment of quality and safety aspects of products at each stage in the value chain
• Stringent quality and safety compliance check for suppliers before inducting in the system
• Ingredients assessment in line with the requirements set for its usage according to the law of the land
• Facilitate consumer feedback on product safety and quality through dedicated Consumer Service Cell (CSC)
• Robust crisis management framework

• Government
• Consumers
• Value-chain partners