COMMITTED TO OUR PURPOSE
of making a difference
Consumers are visibly gravitating towards brands and products that enhance their health and wellbeing. The desire for more ethical and sustainable products is also on the rise. These trends echo the inherent ethos of your Company and its brands. Our brands have always led the way with authenticity and purpose to create deeper connections with consumers and do more for the communities."
Dear Shareholders,
I am pleased to present your Company’s Integrated Report for the year ended March 31, 2022.
FY22 was unprecedented in many ways and possibly had a lasting effect on all of us. However, through this period of uncertainty, your Company has been resilient and has worked hard to enhance the longterm value of the business and emerge stronger. It has been inspiring to see the agility, positivity and grit that our members have exhibited during these times. I would like to thank the incredible team at Marico, and especially the frontline sales and manufacturing personnel, for their sheer commitment to living our purpose every step of the way. I would also like to extend heartfelt gratitude to the extended Marico family – vendors, suppliers, distributors – who have been strong pillars of support and equal partners in this journey.
The challenging circumstances over the last couple of years have brought about a structural transformation in consumption patterns and shopping behaviours. Consumers have adapted and navigated uncertainty by means of technology and they expect brands to do the same as well. Having commenced our digital transformation initiatives ahead of the curve, we have been able to respond to these trends far more effectively. We have been aggressively investing towards ramping up this journey to enhance consumer engagement of brands and build capabilities in data analytics for faster and efficient decision-making across the value chain.
As the world becomes increasingly connected and the FMCG space becomes more competitive, the need for companies to differentiate their products is ever increasing. Consumers are visibly gravitating towards brands and products that enhance their health and wellbeing. The desire for more ethical and sustainable products is also on the rise. These trends echo the inherent ethos of your Company and its brands. Our brands have always led the way with authenticity and purpose to create deeper connections with consumers and do more for the communities. The impact of Nihar Naturals Shanti Badam Amla’s initiatives in education have received recognition across various industry and media platforms including Economic Times Shark Awards, CSR Journal Excellence Award and FICCI CSR awards. The Parachute Kalpavriksha programme has brought us closer to the farming community and has been a fulfilling initiative for us, as we have been able to make a positive difference to their lives.
FY22 Overview
As a company founded on the principles of conscious capitalism, we have strived to uphold the ideals of People, Planet and Profit. We strategically invested in our people, processes, technology and brands, which enabled us to deliver a stable performance in the year under review and should hold us in good stead over the long term as well. Hence, despite sharp volatility in business conditions, new COVID variants, geopolitical tensions, demand slowdown, interspersed with spikes in input costs, your Company was able to deliver a steady performance through the year.
As the year progressed, the impact of the pandemic on public health in India reduced and mobility levels picked up. However, since then, multi-year high inflation and the unleashing of pent-up demand in discretionary and out-of-home categories has resulted in consumers allocating a lower share of wallet to FMCG. Under these circumstances, your Company single-mindedly focused on strengthening the equity of its brands and executing smartly, which reflected in the consistent marketbeating revenue growth along with robust market share and penetration wins across the domestic portfolio. The core portfolios of Parachute Coconut Oil, Saffola Edible Oils and Value-added Hair Oils held steady against this backdrop, and given that the market construct and growth drivers of these categories remain intact, we expect these to grow in line with the stated medium-term aspiration, once inflation levels and consumption patterns normalise. We also took visible strides towards diversification of the portfolio during the year. In Foods, we see tremendous potential to build scale at an accelerated pace by picking categories with significant growth tailwinds and solving for unmet consumer needs through differentiated offerings. We are committed to delivering ‘better for you’ offerings to our consumers under our power brand, Saffola, and expanding its total addressable market in the bargain. The recent foray into nut butters and spreads is another step in this direction. The strategic investment in True Elements, a clean-label healthy breakfast and snacks brand, should only accelerate our journey in Foods. We expect to replicate learnings from the successful scale-up of the Oats business, as we aim to achieve similar scale and resultant efficiencies in the newer Foods initiatives. We crossed the aspirational milestone of ` 450 Crore this year and now set our sights on the ` 850-1,000 Crore mark in two years’ time. Livon Serums and the Set Wet Male Grooming portfolio grew in high double digits this year as mobility levels increased. Notably, Premium Personal Care categories have grown exponentially on Digital platforms over the last few years. With Beardo crossing the ` 100 Crore run rate and the strategic investment in the D2C Ayurvedic personal care brand, Just Herbs, your Company continues to ramp up its presence on Digital through organic and acquired brands. The digital-first brand portfolio clocked an exit run rate of ` 180 to 200 Crore in FY22 and we aspire to achieve the ` 450 to 500 Crore target by FY24.
The International business had a stellar year with handsome double-digit constant currency growth across markets, led by Bangladesh and South East Asia. The overall business inspires tremendous confidence of charting a sustainable and profitable growth trajectory over the medium term.
Sharp inflation in edible oils and crude-related raw materials exerted pressure on profitability through the year. However, copra provided some respite, as prices softened owing to a good crop yield and no linkage to global markets. Your Company took calibrated pricing actions and tightly managed costs to counter the cost-push in respective portfolios, but also continued to invest in long-term brand building instead of protecting short-term margins, as advertising spends grew healthily in line with revenues.
4 Ds - fulcrum to deliver sustainable growth
At all times, the trusted equity, leadership position and accessibility of our power brands have allowed us to maintain a stronghold in our core categories. The organisation also continually pursues all avenues of cost optimisation and aims to curb any inefficiencies in operations and processes through its ongoing institutionalised cost management programme (MarVal). Both of these enable your Company to remain competitive and consistently punch above its weight. In addition, we believe that focus on four strategic dimensions will enable us to unlock the next phase of growth - internally dubbed as the ‘4 Ds’ – Diversification, Distribution, Digital and Diversity.
We believe that focus on four strategic dimensions will enable us to unlock the next phase of growth - internally dubbed as the ‘4 Ds’ – Diversification, Distribution, Digital and Diversity."
The first dimension is diversification of business in both domestic and international markets, led by innovation. In the context of domestic business, we will continue to drive premiumisation of our hair nourishment play, turbocharge growth in Foods and scale up premium personal care along with the digital-first brand portfolio. In International markets, the focus will be to scale up newer portfolios in Bangladesh and similarly expand the addressable market of the businesses in Southeast Asia and MENA by replicating our successful operating model in Bangladesh.
The second dimension is Distribution, which encompasses our go-to-market (GTM) efforts within the evolving distribution landscape. While we strengthen the faster growing new channels, we believe traditional trade will continue to be the largest ecosystem for consumers. In rural, while we extend our footprint, we are also expanding our stockist network to expand our direct reach. In urban, we will maintain focus on augmenting our reach in chemist and cosmetic outlets. We are also setting up a dedicated food GTM as we widen our portfolio and aim to accelerate growth. We have recently institutionalised a Sales team framework to strengthen our micro market focus and execution, bring enhanced agility with on-ground decision-making and leverage technology and analytics. The new framework moves away from the four division (North, South, East and West) approach to multiple clusters, defined by consumer behaviour, brand preference and geographical contiguity. We will replicate distribution led growth in our key international markets as well.
The third dimension is Digital, which aims to raise the digital quotient across our value chain to make the organisation future ready. We continue to build capabilities in Digital and Analytics, which also reflects in how we are reinventing talent management strategies, such as adopting an agile hybrid working model, upskilling our existing talent and hiring people with digital skill sets.
The fourth dimension is Diversity. We look at diversity at the workplace not only from a gender lens but holistically - including race, caste, religion, ethnicity, sexual orientation, age, among others. We are amplifying equal opportunity for all at the workplace and believe that our positive, enabling and inclusive culture will give us a strong and competitive edge over the longer term. We have instituted Inclusion & Diversity (I&D) Council, comprising diverse member cohorts within Marico, in our endeavour to ensure all diverse voices within the organisation are equally heard and understood.
Creating 360O value, now and in the future
Underlying all our actions is our commitment towards sustainability. While profitability, productivity and revenues remain as important as ever – they cannot come at the cost of sustainability and people. Companies are now increasingly being evaluated on how they achieve their people, environmental, social and good governance objectives. Our ESG 2.0 framework is not only a set of commitments that will determine the business’ transformation journey in this decade of action, but will also be anchored as a constantly evolving and monitoring strategy to strengthen the business’s core purpose of making a difference to the planet and people who matter.
Our Chairman has apprised you of the progress in our ESG agenda, the set of goals for the next decade and our commitment to achieve net zero emissions in our global operations by 2040. Towards achieving net zero emissions, we have pivoted our carbon management strategy on three key aspects – resource optimisation and efficiency, transitioning to 100% renewable energy sources to meet operational requirements and investing in technological interventions that accelerate decarbonisation of our operations and value chain. You will be pleased to note that your Company’s entire global manufacturing landscape is designed using a zero-coal strategy. In FY22, 70% of your Company’s operational energy requirements came from renewable sources. Consequent to these initiatives, our direct GHG emissions intensity have seen a reduction of 80% from FY13 baseline.
We are also working along with our suppliers to drive up social and environmental standards in our supply chain by capacitating them to commit to sustainability goals. This is fundamental to the future growth of our business and our ambition to deliver positive impact. 46% of our critical value chain partners have been certified with SAMYUT (Marico’s Responsible Sourcing Framework) Level 1. Of these, 10% of our critical and largest vendors have also completed the Level 2 certification.
In line with our endeavour to achieve a sustainable future for all, we are proud to share Marico’s sustainability achievements. We were ranked among the top 3 India’s Most Sustainable Companies in 2021- 22 by BW Businessworld for setting a benchmark in integrating suppliers into the Company's sustainability strategy. We have also been recognised as the ‘Masters of Risk’ in the ESG category in the 8th edition of the India Risk Management Awards 2022 by CNBC-TV18 & ICICI Lombard. Additionally, we have received a Special Jury Citation in Fraud Prevention & Ethics Management in the Large Cap category. These recognitions are a testament to Marico’s efforts in keeping up with the call to action towards UN's Sustainable Development Goals (SDGs) as well as identification, assessment, and mitigation of ESG risks as part of our business excellence Strategy.
Strong governance and risk management practices have always been integral to the way we do business. You will be pleased to note that your Company has been recognised in the 'Leadership' category among S&P BSE 100 companies for two consecutive years as per the Indian Corporate Governance Scorecard, compiled by the Institutional Investor Advisory Services India Limited
As a recognition of our people-first approach and empowering work culture, Marico has featured amongst India's Top 30 Best Workplaces in Manufacturing 2021 by Great Place to Work® Institute. We were also ranked in top 20 in Best Companies To Work For by Business Today and were second in the FMCG industry.
The resilient performance delivered this year would not have been possible without the unflinching support from you, our shareholders. On behalf of the entire leadership team and all our members, I thank you for your continued faith in Marico.
Warm regards
Saugata Gupta
Managing Director & Chief Executive Officer