Building the brand ‘Marico’
Mr. Mariwala thanks so much for joining me you know your journey is well-chronicled I’ve spoken to you many times around it, how you entered a family owned business discovered the virtues of branding and created my report, what were the turning points the milestones in this whole journey.
Oh, I think how many turning points do you need?
Interviewer: Which were the turning points that played.
I think I would say 4 or 5 turning points, first is formation of Marico’s was one of the biggest turning point for me I would say that would be the biggest because that gave me a lot of freedom to build a company which which could give thrust to consumer products as against a company which had different businesses it gave me freedom to choose my own team and to drive my own destiny also the allocation of resources whatever money I was generating could be plowed back in the business so to me that has been the biggest turning point if you ask me and post that the second turning point would be when we went public in the year 1996 because going public is a completely different ball game quarterly pressure is working with the board of directors, analysts, investors, expectations, image building so I think the organization has to gear itself to being a public company is very very different and I think many promoters don’t realize what it means to go public it has its benefits but it could have have its down sides also but that’s also great benefits and I don’t have any regrets of going public in fact it’s a good thing that happened, so second would be public the third would be starting a completely new business like Kaya business you know then going through a huge learning curve you know we have made a lot of mistakes in Kaya but we had that persistence in terms of at some stage the business will turn around and we still go through a huge learning curve it’s a very difficult business to to manage because its combination of three different businesses it has hospitality it has medical and it has spa like wellness you know combine these three into one entity is very tough too manage doctors their expectation they way of working so I would say Kaya has been a big big high for me in terms of it’s a big discontinuity for me and the fourth discontinuity for me would be my role, I stepped down as managing director from 1st April 2014 so that has been a very big discontinuity for me because my role has changed completely so I would say that these are the 3 4 milestones for me in my journey.
Ah, that’s one part but you know I think the one big lesson that Marico has shown is the power of branding you are in a business where some of the biggest multinational companies have been so to manage to take a commodity and connect it to people through the branding exercise, what were the learnings when you did that, what are the learnings because they haven’t been as many successful FMCG brands as they could have been in a vibrant market like India?
See I think first of all for us portfolio choice was very important so what are the areas where we are going to enter, do we have a right to win in those areas, so if you look at our portfolio of products almost in 90% of our turnover we don’t fight with any MNC, so basically we have identified the right categories where we have the right to win, to me that is the most important step you know you need to identify the right category, now if I get into something where MNC’s are very active and there are not 1 but 3 or 4 MNC’s like shampoos and each one having a three three brands each then its, its very difficult for me to succeed against them because of whatever R&D work they are doing global scale, the kind of money they’re putting in because they’re doing it from global mindset so we decided consciously not to get into certain categories where we have lower right to win so in shampoos we have presence in lice shampoo, where they are not they are not it’s a small segment, it’s a niche so if you occupy that segment then we can hold on to it so I would say the first thing is to identify the category you are in after that I think the key thing is what are the consumer benefit your likely to give and it should be very simple simply understood this brand stands for heart Saffola or parachute stands for nourishment and after identifying that continuously reinforce that benefit over a period of time and I’m presuming that it is cutting ice with the consumer the third thing is to innovate more innovation happened not necessary through product, through packaging, through advertising, through trade merchandising, through sales so go on taking steps for innovation so that whenever some competition comes in your always two steps ahead of that competition because in our case competition comes in directly from some other player it can come indirectly through modern trade where you fight with private labels and now there is e-commerce and so are private labels so when you fight against them and they are low priced player and if you are actually innovating and doing something on a perpetual bases you are always two steps ahead of them and I think that also is relevant for the consumer also find that wherever the brands have a certain purpose I think it really or all strengthens the brand and I’ll give an example of Saffola and our purpose is to go beyond selling Saffola to our franchise so basically can be actually help our franchise and others also to lead a lifestyle which is good for the heart so we do Saffola heart day we have heart care check-up camps, we have cholesterol checkup free checkup objective to check basically all popularizing things like walking smoking non-smoking thing like that so that the brand actually has a larger purpose in terms of improving and using this life style preventive lifestyle to reduce the heart.
Marico in many senses is a product of liberalized India in that context you know, you ahh the way you set it up, my question to you is how are you seeing the FMCG sector change because while global MNC’s are more local than most of the because great penetration, companies like yours have gone into Middle-East and Africa and they are a whole bunch of new brands which are coming bottoms up, so how do you see this whole, is it more segmentation more competition, how do you see the change?
I think there are different types of in the industry, first of all there is MNC’s and you have new MNC’s that have come in then there are larger Indian players then there are smaller regional and local players you know so some of the players I think were relatively smaller they have become larger so I think a player like Emami even the Jyothi Labs there were earlier smaller they are now a national players and then there are some regional players like Cavinkare is more of a south player or there are some other regional players like Kesh King or Indulekha or whatever, they are smaller brands which are present in certain parts of the country and I think it’s a matter of time and they have been able to add value a company like Paras which builds brands which got sold but it became, came on its own so I find that wherever there is innovation which is done by the Indian player wherever they have gone into certain categories where they have right to win and where the MNC’s are not present I think that those are the categories where Indian’s are winning more and now you’ve seen ITC also now they have entered the category and now there are in the last players so ITC you can call Indian you can call MNC its more Indian than MNC so overall competition has increased in the category and the entry costs have increased substantially because if you have to advertise you have to advertise nationally a campaign which you have to spend 20-30 crores to launch a product and more importantly you have to have distribution network because if you’re a new player then it’s a chicken and egg situation unless you have offtakes you will not get distribution unless you have distribution you will not get offtakes so you have to go in and gradual manner you can just go all out if you’re a new player because you will just not be able to build you cannot get distributors so the root to success is not, cannot happen within a period of six months or 1 year it is a five ten year journey before you build that scale, you build that scale from the distribution point of view as well as from the brand point of view.
A lot of the challenge and fight is on the ground so to say, I’m going to ask you a question when you see young professionals coming into the sector are they coming with the right skill sets Mr. Mariwala do they have the right connect or do they take a long time to really understand the business, so what are how have you seen the people who are entering the profession change?
See I think we take a lot of management trainees we take about 15 to 17 management trainees every year, so they come I mean they are bright students they don’t come with most of them don’t have any experience so I think it is for us to mold them it is for us to train them it is for us to ensure that they learn from working with us so they don’t come with a background frankly because they are fresh and actually we prefer that otherwise if you and it’s just not that we are only recruiting from the management schools we are also recruiting laterally but most of the lateral recruitment is within the industry that means I take someone from manufacturing supply chain I get it from the other players you know so I think they I think it’s okay here most of the overall quality of talent in the sector is I would say is much better than most of the sectors that is why we find that the FMCG talent is able to get a job easily than other sectors are, then salaries also are I would say are on the higher end so there would be the highest-level be more like consulting companies and after that I think FMCG will be the higher end in terms of the overall salaries we give to our talent but in spite of that and the others have realized is durable in the industry the quality of talent in FMCG is good. So many a times the talent goes outside and I think we become like a training ground for others which is ok you know.
You spoke about the mistakes that you have made and how you learned from them, I’m going to ask you what are the 2-3 mistakes that you learned from that you would like to highlight where you really thought you learned some great management lessons?
I think one is in the initial phases I am talking about when you are small entrepreneur you tend to do things on your own and at that time you want to because you’re small you are I would almost call it penny wise pound foolish you know, you want to save on overheads you don’t want to get good talent and in that many a time when you start taking shortcuts for example you don’t want to have a quality assurance function you don’t want to have a legal in house section, in the initial phases we paid a price for it because we wanted to save and something backfire on the quality front or something backfire on the compliance is front and actually we were put back you know so I think it’s very important that the building blocks are their place and one should not want to cringe in terms of investing money which will improve the building blocks you know I think that was one set of mistakes that you need to have the right building blocks before you expend because if you expand without the building blocks then it can put you back so that one level you are getting speed and the same thing I can apply Kaya’s also you know all of a sudden in our quest for growth we just expanded very fast and we realized that we made many mistakes in terms of location whichever it was, the talent we recruited led to a lot of pressure selling again looking back it put us back by 2-3 years so the business may have increased in that one or two years but it has actually put us back so I think it’s very important that especially in sectors where you are dealing with consumer whether its direct consumer like Kaya or indirectly through products is very important that you have the necessary building blocks in place to before you grow so I think that’s one learning, number two talent is is the most important at least to me is everything is talent in FMCG you create brand out of nothing I can get that same product manufactured from somebody else I don’t need to put in any capital investments and that talent creates advertising so the talent is good and if you create the right culture for the talent to grow I think that will have a big big impact on the organization’s. I would say my learnings have been more in the area of processes, improving building blocks, in recruiting excellent quality talent and for that you also need what we call employee value proposition so organization has to be known and respected in the marketplace in the HR market saying that this is a good organization to work for and if I can give that assurance to people there is a good organization to work for I can attract that kind of talent so attraction of talent, retention of talent is very very crucial for success especially in FMCG but I also think that every organization needs to have the best quality talent.
How important is it for the talent to keep pace because you know when you say speed is all about the fact that, the fact is it’s a very competitive landscape, you have to really run, hit the ground running, how important is it for talent to keep pace with what’s happening and how do organizations facilitate that?
So I think it’s important that because I wouldn’t say one should act in a hurry because the stakes are very big in this so agility is important ahhhm, and especially if you are young and you know the agility is there but what happen, I think the bigger problem one faces when you expand a lot, if you’re a 100 crore company, if your 1000 crore company or a 5000 crore company, the talent required on the top or senior level has to be a very different type you know because a guy at 100 crores may not just be fit enough to do it at a 1000 crores, so because his mindset is very different you know at a 100 crore you’re doing things at 1000 crores you’re getting things done at 5000 crores your influencing others not even getting things done so your mindset has to change completely many times I’ve seen that a team worker who was excellent at one stage when we were small almost becomes non perform when we are medium so I think leads to again a certain situation where it’s better for the person to go out rather than allowing him to continue you know it has its short term pains but long-term it’s good for the organization you should do something good for the organization.
That is wonderfully put when you say companies moving from small to medium to large but as managers move up the ranks Mr. Mariwala it doesn’t become just about managing a product it becomes a 360 degrees and becomes managing a portfolio show etc., how should professionals keep pace with it how important is continuous learning in that?
I think it is very important every person has to learn and I think learning comes from different sources and we find that the biggest learning come from on the job training so we expect our talent to play different roles you were a functional hat you wear a job hat the exact job you’re doing if brand manager of certain when you’re doing your managing that brand your part of a function which is marketing and your part of an organization so your organizational hat which is Merico, so organizational hat, functional hat and job hat and increasing the organization should give people exposure to the functional hat and organizational hat, if I’m brand manager, if I am allowed to mingle and if there are joint forum to discuss about different brands that will improve my learning, I will also if, also depends on the freedom given to a person you know and I find that Indian organizations are giving more empowerment because you don’t have somebody else sitting at the headquarters calling all the shots so empowerment is a very great way to learn but for empowerment to happen you have to have very good quality talent should be able to act on their own and sometimes it’s okay to make mistakes sometimes the culture should encourage risk taking and failures and its ok to make mistakes so I think that’s the most important part of learning and then there is always that quest for learning through reading interacting with thought leaders attending training programs I think overall one has to go on learning until all your life .
What has your proudest moment been in this whole journey of Marico, I know you have had many many success?
I am not able to single out one, you know why.
Interviewer: So could it be the fact that you stepped back and now you are helping so many entrepreneurs through Ascent, I mean looking back what are the 2-3 things that would, that you would want to define you?
I would say in terms of satisfaction yeah I mean today I am enjoying doing different roles, very diverse roles so I look at Marico, I look at Kaya but I do a lot of other things for the society for some call center you know to help poor and middle class and the whole area of mental health something which I am going to pursue so these are very diverse I’m enjoying but I won’t call that proud I think proud would be anything with Marico the day when we went public the day whatever, when we win awards, we won more than hundred awards so I think it just reinforces but there is no one single moment I would say that it is the proudest.
Interviewer: it’s the journey, okay, fair enough. I am going to ask you a lot is changing you know the marketplace is changing the Indian economy is changing and suddenly now because of technology there is a huge change that’s happening, digital, e-commerce you know even in the backend technology is playing a big role, how what are the buckets in which technology is changing the FMCG sector?
So I think if you look at it externally and if you look at it internally and you need to look at both externally what is happening in the whole supply chain, sales area there are multiple huge changes happening, huge changes in the in the modern retail scenario, in the e-commerce scenario, or in the way consumer especially the young customers he does his shopping he does his information finds out about the product so the whole information needs for the consumer also have changed, so I think you need to be aligned with the changes which have just started are going to accelerate so you need to have a different way of handling changes the current field force will not be able to handle the modern retail, they will not be able to handle the the e-commerce so you need to have different segments within your organization to adjust those challenges and then there are the challenges like the digital challenge how the whole platform will change over a period time you know today we are consumer product company FMC or fast-moving tomorrow it could we digitial consumer company you know so how the whole digital sensors is going to change future is something which we need to be aligned to you know no one thought that UBER is going to come and gonna make big changes so you know we have to I think its going to impact each and every.
So you know the next 5 years in the general sense that technology is going to change every industry and the way we do business, looking ahead crystal ball gazing what do you see happening in FMCG, because already the distribution channels and the platform of distribution has changed in the last 2 years how do you see it panning out and how are you pacing yourself?
So you have seen marketing also a lot of investment is going in digital marketing and you know so you need marketing experts, earlier it was press and press then tv came in and now digital marketing so I think its changed I can’t see an overnight change but over a period time all of these are going to accelerate at one level and consumer habits also will change, so I think the rules will change rules success and the organizations will have to proactively invest in advance and predict how will it impact them and what can I do to actually make this as a opportunity at this stage I think what happened in terms of disruption some player coming in from outside I don’t see that happening in the FMCG in a big way there could be some disruption happening because the entry is easier for a player new player.
It happened in the mobile phone players for instance, because there the market has changed completely.
Entry is easier, earlier you need to have all the distribution, now you can tie-up with some e-commerce and you know you have some product it can start selling through those sites, so I think the barriers to entry will reduce for newer players and the kind of advertising which is required may not be required but so if you have something innovative business model or product I think he can enter and cause disruption.
What about areas like data analytics for you for instance the entire backend and frontend, how is that playing out?
I think is really important now you have created separate resource, analytic resource which has to look at analytics differently so where is all the input which are going into the into the trade schemes and things like which go or to sales or what goes into rain selling or distributors return or distributor stocking so whole analytics getting up and then consumers analytics in terms of consumer buying and which consumer, for example we being in hair oil so what will be the future of hair oils over a period of time earlier we used to do some research from AC Nielsen and get now we can back it up with a lot of other analytics sources you know so I’m saying that analytics has to be looked at proactively in every organization to be looking at analytics very very seriously to address issues not only with the consumer but also at the backend.
I have one additional question on technology you know for many Indian companies it’s going to be about survival it going to be about growth and adapting and adopting technology is going to be key, you can look at technology in two perspectives, one is as a challenge how do you surpass I mean or how do you control that beast which is technology and second is opportunity, how can you innovate using technology as a platform let’s look at both of these from Marico’s point of view, as a challenge how do you viewing it and deal with it and second as a opportunity how are you seeing it?
So I think both I would say challenge and opportunity are challenge in terms of competitive threats I said more of a threat I would say it is a challenge for us to go ahead and that’s why we are we’ve invested heavily into this in terms of recruiting some talent who are actually experts in this and proactively taking a lot of experiments in analytics and we have formed, we are going to form a task force now to look at all the digital impact and we have to look at it 2-3 steps ahead what is happening internationally and uh what is the impact of 4g you know on the consumer in other countries you know, so the whole mobile revolution is taking place so what happens to mobile apps, so I think we have to look at it proactively what is happening in other countries and invest heavily over invest take some risk take some experiment and get some new ideas and new insights to make an opportunity out of this.
So you’re seeing both as a challenge and opportunity. What, how have you seen you talk about India as a largely youth focus demographics what average age 29 etc., how do you see the youth in India because you’ve seen the consumer change and b what’s your advice for the youth in India to really succeed from what you have seen?
See I think youth is at a national level you’ll have you will have to segment it in different parts you know so depends what you’re talking about, smaller parts, rural parts, today’s youth is most of them are vialing away time they don’t know what to do so I think there is a big need to skill them get them employed make sure that they are gainfully employed you know, but if you’re talking the urban youth suppose which your talking about I think the urban youth is also undergoing a youth change in terms of the organizational wants to work for, very particular about what is the organization doing ethically, what the organization doing from the point of view environment, does the organization have a purpose so I think it is forcing organizations to go in the right direction in terms of sustainability and all those other initiatives which the organizations should anyway be doing, ahmm so they I think the youth today is quiet charged and they may when they work they will be completely you know working for you but.
You have to inspire them too.
We have to inspire them but old, olden days where you would expect you to continue for a longer period of time that may not happen you know the other trend that we are noticing is a lot of specially college where we go to do recruitment MBA schools a lot of them want to be entrepreneurs you know, so they want to become entrepreneurs straight away or want to become entrepreneurs after maybe after 2,3,4 years you know so the key question is what should I be, what kind of organization should I be working for if I want to become a entrepreneur, my advice is don’t go and join large organizations you have to be a big fish in the pond you know you need to go and join a small entrepreneur or startup because there you will learn maximum and for being a entrepreneur you need to have a 360 degree view of what’s happening in the organization and if you’re going in to a company like Marico you will get such a limited perspective if you’re a brand or part of the sales team that you will never get that larger perspective and you will take years and years so if you want to lead a professional career that it’s okay to join but if you want to go into a entrepreneur go to a small organization or go to a consulting organization I think the learning there will be much more for you to become a entrepreneur.
But I am going to ahhh, spend one minute on the rural youth that you were talking about, it’s a terrible terrible state of affairs to actually look at it because there are no jobs, there is not well skilled either because they have not been able to partake of the changes that have happened in the education system, my question to you is how important is skilling them and second can online become a very very big tool to really fill that need gap?
See I think a skilling will depend again on the location you’re in and I think most rural youths are and their families realize that going to big cities it is expensive because you need to stay in a place and so there us a certain reluctance for the family to send their kid to say Bombay ahh, so if I’m presuming that if they have to be settled in that wherever they are located skilling will have to be tailor made to the opportunities in this area you know and cannot be something which can be done independently so what are the kind of jobs for example if you are near the sea, they will be lot of opportunities in terms of fishing or if you are in a area where there are say 10 auto industries then logically you can go into it ya auto industries and then do skilling so there may be certain jobs in certain areas that can be done through the online but there will be some physical need also for training so you could depending on what the need is you will have to get skilled.
What about the educated who are not employable because they don’t have the skill sets the last, last piece of connectivity is not there how important is online education you think for them?
See as I said earlier depending on the kind of job you have to look into a lot will depend on the online but yes there will be certain areas where they can actually get in, there are certain jobs where you have to physically work on something like a welder or whatever you can just do it through online you know, so a lot will depend on the where that person is going to get employed but its chicken and egg situation again you need some industries to come in that area, you just skill them and there is no opportunity for them to work they will forget those skills so it has to match you know what is the need for a certain gap from the industry point of view wherever there are jobs then what is the skill gap you know.
You know you advice a lot of entrepreneurs you’ve created an ecosystem for them to learn from each other, what is your advice to entrepreneurs to succeed looking at your own experience and b has it become a little easier for entrepreneurs to do well?
Ahhh, compared to the past I would call it easier in terms of uhhh the ecosystem you know today you have such consultants who know most of consultants for finance for HR you have different ahh types of funds giving you funds whether it’s a seat fund or a angel fund or a VC or a private equity player so there are opportunities for you these days but at the same time the competition has increased compared to the past so you need to have viable propositions what will make you win in the marketplace and if you viable proposition then there are no resource constraints are there then you can get people get funding and but if you don’t have good viable proposition then to an extent you will just struggle you know.
I want to ask you for two bits of advice on to a person who wants to sit in your shoes, be the chairman of a big company and the second who wants to be a CEO in your company, what would your advice be to these sets of people?
I think first of all if you want to be the chairman you need to do just the chairman not the managing director, so basically you need to go through a certain shall I say experience to be perceived as a thought leader that ehh ahhm your role is only influence others and not really operational role and how can you add value at a chairman level through influence through talking through writing through whatever way and how do you divide the role between you and the managing director because you don’t want to step on someone else’s toe at the same time ensure that your adding value in my case it’s bit different because I was the promoter you know so what is known as the founder’s mentality you know founder has built the business and there is a strong value to that founder’s mentality what he has brought to the table so when the transition occurs from the founder steps down from a day to day role how do you ensure the founder’s mentality continues which again a source of competitive advantage how does it continue over a period of time so you need to have a necessary framework to ensure that whether its culture or the way you do things or identifying your products is continuing over a period of time even when the chairman is not there you know and so if you want to become the MD then basically then you have to have very strong tight control in terms of.
I’m more talking about the journey up to becoming that right for an entrepreneur to create a 1 billion dollar company I mean that’s the ambition of scale of being able to think big, vision what would your advice to him be or a young management graduate who wants to do well?
See first of all I presume that you have started a business and there is some traction for the business, the business there is at least some future or know that the business is going to succeed but at various stages you have to go on asking from small to medium to large you know what do I need to how do I need to change myself because most of the problems occur at the entrepreneurs end himself you know not able to delegate not able to take risk not able to recruit talent wrong leadership style because ultimately you need people you need delegation you need empowerment and at the same time you need to withdraw from what you are doing in the past you have to every 10 years I would say you need to ask how can I make myself redundant whatever I was doing and give it to a person who will do a better job than me and my role again will be to add value and over a period of time trust him and give him freedom and that has to occur multiple times and how do you create processes in the system to ensure that the organization goes on working on its own steam you know.
Your message for people on continuous education the stress for continuous education because that is the theme that has come in mind time and again?
No I think there is so basic at one level that without continuous education you will just fall down because you know the whole world is changing the environment is changing and its likely to change more and more unless you educate yourself in terms of what’s happening to the environment the likely impact of that on your business, you will just not be able to exist like a survival yes.
And on upgrad the fact that you’re taking this whole education and skilling online to reach out to more people what is your message about upgrad?
So I think it’s very good that we can actually use that model that medium to train more people is far more I would say seamless you can cover more larger numbers ahhh lot depends on the quality of the upgrad but there is great opportunity and space and I think it’s one way to look at large numbers, it is continuous learning again so I would reckon that it has to play a very important role in the future of the continuous learning.