Marico Eyes 15 pc Revenue Growth in Medium Term

Homegrown FMCG firm Marico is eyeing a 13-15 percent revenue growth in the medium term backed by an 8-10 percent rise in volume. The brand is planning to continue investing in brand building to support the growth initiatives. 

Besides, Marico would increase its reach in rural areas by expanding the stockist network by another 25 percent in the next two years; while in urban areas, Marico will focus on augmenting its reach in chemist and cosmetic outlets, according to the company's latest annual report.

"Your company holds its medium-term aspiration of delivering 13-15 percent revenue growth, backed by 8-10 percent volume growth in the India business and broad-based double-digit constant currency growth in the international business," said Saugata Gupta, Managing Director and Chief Executive Officer, Marico.

Moreover, the company is also ramping up its digital transformation journey to enhance consumer engagement, improve the digital quotient (DQ) of its brands and build capabilities in data analytics for faster and efficient decision-making across the value chain, it added.

"We have carved a separate business unit within the company to handle digital brands that operate independently in terms of processes and systems," said Gupta.

Its online men's grooming brand Beardo, which Marico acquired last year, is now fully integrated and may touch total sales of about Rs 100 crore in 2021-22.

"We aim to replicate this success by adding two-three more digital brands, either organically or inorganically, over the next three years," Gupta added.

Marico, which has accrued Rs 150 crore in cost savings in the financial year ended on March 31, 2021, will continue to drive ambitious cost-saving targets each year.

"The company would be comfortable maintaining operating margin at over 19 percent in the medium term," he said.

While discussing the company's strategic overview and outlook, he said Marico will stay "focussed on delivering sustained profitable volume growth and market share gains" by growing and premiumising the core portfolio, scaling new engines of growth in foods, and premium personal care categories.

"Consumer-centric innovation, adaptive business, and GTM (go-to-market) models leveraging digital and technology, cost management, nurturing talent and culture, and mainstreaming sustainability will remain key enablers in this journey," Gupta said.

Over the performance of the rural market, he said it has continued its good run through the year, driven by good harvests and government stimulus.

"We believe direct reach in rural serves as a competitive advantage and aim to expand our stockist network by another 25 percent over the next two years," said Gupta.

While, in urban areas, Marico will maintain focus on augmenting its reach in chemist and cosmetic outlets.

After the pandemic and subsequent lockdown, Marico had stepped up its efforts through innovative GTM models such as tie-ups with food-service aggregators like Swiggy and Zomato to deliver essential food items to consumers for ensuring availability of its products.

It has launched a direct-to-consumer portal, a telecaller facility for direct reach to the top retail outlets, and a retailer and consumer-ordering app, among others.

"We continue to invest in these initiatives to stay ahead of the curve in the event that any of these models present an opportunity to scale up over the medium term," he added.

Gupta also said the coronavirus pandemic also reinforced the importance of driving process simplification across the value chain and reducing the hidden cost of complexity to the extent possible.

"The rationalization of more than 25 percent inefficient SKUs (stock-keeping units) across our portfolio has been one of the key steps in this direction," he added.

While talking about Marico's international business, Gupta said that having invested in requisite leadership and organizational capabilities, the company now aims to chart a predictable and sustained growth trajectory in the medium term.

"We will also continue to invest towards developing new export markets and scaling this business profitably," he added.

For the financial year 2020-21, Marico's revenue from sales and service stood at Rs 8,048 crore, in which the international business contributed 23 percent. It had reported a net profit of Rs 1,162 crore.

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