Emami Limited – Personal Beauty Care

Emami Limited is one of the leading and fastest growing personal and healthcare businesses in India, with an enviable portfolio of household brands.

(A) About - Emami Ltd

Emami Limited is the flagship company of the Emami Group. It is a leading and fastest growing personal and healthcare business with an enviable portfolio of household brands.

BoroPlus, Navratna, Fair and Handsome, Zandu Balm and Kesh King are the some of its major brand.

Emami Ltd has a portfolio of 300+ products. Over 130 Emami products are sold every second somewhere in the world.

Further, the Company has total of 8 Plants (including one overseas unit)

(B) Journey Since Inception - Emami Ltd

In 1974, Two Friends Mr. R.S. Agarwal and Mr. R.S. Goenka left their high profile corporate jobs with the Birla Group to set up Kemco Chemicals, a cosmetic manufacturing unit in Kolkata.

With a vision for creating winning brands, the Company started its journey with a meagre amount of Rs. 20,000

(C) About Emami Group

Emami Group Established in early 70's. Emami Group has grown in India with presence in diversified sectors.

Today, Emami Group involved into FMCG, newsprint manufacturing and packaging boards, Edible oil and biodiesel, real estate, hospitals, ballpoint tip manufacturing, retail, pharmacy chain and contemporary art.

In addition, The Group was Founded by two childhood friends, Mr. RS Agarwal and Mr. RS Goenka.

Moreover, Emami Group has strong employee base of more than 20000 which leads to robust growth.

(D) Executive Board Members of Emami Ltd

(I) Mr. Radhe Shyam Agarwal (Founder & Executive Chairman)

Mr. R S Agarwal is the founder of Emami Group and Current of Chairman of Emami Ltd. he is 75 Years old and is a Chartered Accountant, Company Secretary, LLB and holds a Masters Degree in Commerce.

Mr. Agarwal has 50 years of experience and considered as a present day Management Guru For the Company. Moreover, he is the president and secretary of HGI Industries Ltd.

Mr. R S Agarwal received Rs 6.93 Crores as remuneration for FY 21 i.e. 0.24% of Net Sales and 1.51% of Net Profit.

(II) Mr. R S Goenka (Co-founder & Wholetime Director)

Mr. Radhe Shyam Goenka is the Co-founder of Emami Group and Whole Time Director of the company. He is 74 Years old and Holds qualifications of B.Com and M.Com.

Mr. Goenka had a 50 year of experience. He is Expert in taxation, Strategic Planning, Corporate affairs and Financing activities.

Also, he is a Director-Member of the Managing Committee of Merchant Chamber of Commerce & Industry (MCCI). 

Mr. R S Goenka received Rs 6.93 Crores as remuneration for FY 21 i.e. 0.24% of Net Sales and 1.51% of Net Profit.

(III) Mr. S K Goenka (Managing Director)

Mr. S K Goenka is the present Managing Director of the Emami Ltd. He is 63 years old with rich industrial experience of 40 Years.

Mr. S K Goenka Holds a degree of B.com. His key duties are Production, Factory operations, Distribution, Procurement and Packaging.

Mr. S K Goenka received Rs 1.41 Crores as remuneration for FY 21 i.e. 0.05% of Net Sales and 0.31% of Net Profit.

(IV) Mr Mohan Goenka (Whole time Director)

Mr. Mohan Goenka is son of Shri R S Goenka and currently at position of Whole time Director in the company.

Mr. Mohan Goenka is 47 years old. He had a qualification in Bachelor of commerce and Master of Business Administration.

Mr. Mohan Goenka Received Rs 1.29 Crores as remuneration for FY 21 i.e. 0.05% of Net Sales and 0.28% of Net Profit.

(V) Mr. Aditya V Agarwal

Mr. Aditya V Agarwal is the Non Executive Director of the company. Mr. Aditya Agarwal's helps in core Advisory of the company in leading the growth and Expansion.

He has a diverse experience in various segment of FMCGs like Edible oil, Bio Diesel, Cement, Healthcare.

(VI) Harsha V Agarwal

Mr. Harsha V Agarwal is 43 Years old and currently on the Board with the position of whole time Director.

Mr. Harsha V Agarwal is known for his strong leadership qualities, strategic vision and in-depth knowledge of various businesses. With extensive knowledge of marketing and brand development, he leads the Corporate Strategy, marketing, M&A, Human Resource, Information Technology, Corporate Communication, Media and Advertising functions of Emami Ltd. He also heads the Organisation's digital initiatives.

His strategic and Futuristic vision helped the company to acquire the new age Startups like Zandu, Kesh King and German Brand 21.

Mr. Harsha V Agarwal Received Rs 1.21 Crores as remuneration for FY 21 i.e. 0.04% of Net Sales and 0.26% of Net Profit.

(VII) Mrs. Priti A Surekha

Mrs. Priti A Surekha is an Executive Director of the company. She is 47 Years old and had a 19 Years of experience.

Mrs. Priti had a qualification of B.A and alumnus of the Harvard Business School. Prior joining to Emami ltd, She is working at JB Marketing & Finance Ltd.

Mrs. Priti A Surekha Received Rs 1.21 Crores as remuneration for FY 21 i.e. 0.04% of Net Sales and 0.26% of Net Profit.

(VIII) Prashant Goenka

Mr. Prashant Goenka is currently at position of whole time Director in the company.

Mr. Prashant Goenka is 46 years old. He has done MBA in International Marketing & Finance, from the University of Wales, Cardiff, UK, and also from IIM-Calcutta. He also holds a degree in B.Com.

His strategic vision, business acumen and in-depth knowledge of the overseas markets helped the company to spread its Emami footprints in 60+ Countries.

Mr. Prashant Goenka Received Rs 1.21 Crores as remuneration for FY 21 i.e. 0.04% of Net Sales and 0.26% of Net Profit.

(E) Family Structure of the Group

Emami Group was found by Mr RS Agarwal and Mr RS Goenka.

(F) Shareholding Pattern of Emami Ltd

Promoters and Promoters Group holds a good percent of total holding, which is 53.86% for the period ending Sep-21. But as on 19 November 2021, 27.64% of the promoters' holding is pledged (reduced from 30% in September 2021).

(G) Product Portfolio of Emami Ltd

For more than 35 years Emami has been innovating and launching brands meeting multiple consumer needs, spanning across various income and age groups.

The Company is involved in the manufacturing and distribution of Healthcare, Personal Hygiene and Homecare products.

(H) Brands under Emami ltd

(a) Boroplus

Boroplus is one the Leading Brand under Emami Ltd. Its Market Share (as on Dec '19) is ~74%. Its products Portfolio include products like BoroPlus Ayurvedic Antiseptic Cream, BoroPlus Prickly Heat Powder, BoroPlus Doodh Kesar Body Lotion BoroPlus Aloe Vera Gel and Boroplus Hygiene Range.

Boroplus Range consists of popular products such as Ayurvedic Antiseptic Cream, Prickly Heat Powder, Doodh Kesar Body Lotion etc.

It is a Power Brand of Emami Limited, which has strong contribution in overall sales.

(b) Navratna

Navratna Brand is the Core Brand of Emami Ltd. Navratna Brand positioned with ~66% market share (as on Dec '19). The company sells it in various sizes to cater different types of consumers as per their need; from 500 ml being the largest and the smallest 2.7 ml for Rs. 1.

Moreover, Brand Navratna has consistanly mainted the 18 year of Legacy in Thanda hair Oil segment.

Navratna range of products consists of Cool Oil, Talc, Ayurvedic Oils etc

(c) Zandu

Zandu balm is one of the biggest pain management brand and available in more than 5 Cr. Indian household across geographies. It is also highly distributed pain management brand with coverage of more than 13 Lakhs retail outlets across India.

Moreover, In Zandu Product portfolio, There are enormous products like which has strong market presence and popularity such as its Balm, Quick Relief Roll-On, hand sanitizer etc

Moreover, under Zandu, Emami has launched new variant of zandu chyawanprash with involving ingriedent such as Amla, jaggery, giloy, ashwagandha and satavari to maintain the ayurveda ascents.

(d) Fair and Handsome

Emami Ltd launched Fair and Handsome Cream, seeding the concept of male face skin care in India.

Further, recently, to tap the new market, the company has launched more advanced and innovative laser 12 Cream under Fair and handsome range.

(e) Kesh King - Haircare Oil

Kesh King Ayurvedic oil is also Dominating Brand in Ayurvedic hair Oil segment. Kesh King Ayurvedic oil enjoyed ~27% of market share during 2019-2020.

It is also a Power brand of Emami Product Portfolio.

To dominant in Ayurvedic oil segment, Company promoted its products through popular actresses Juhi Chawla and Shipla Shetty.

Over the time, Company developed its packaging quality and color, so that it increase the value for customers. Recently, the Company relaunched Kesh King with an innovative comb applicator coupled with a new formulation and communication.

(f) Mentho Plus

Mentho Plus is part of Emami's pain management portfolio. Zandu Balm is an all-round solution provider whereas Mentho Plus is positioned as a headache specialist. Zandu Balm and Mentho Plus Cumulatively account for ~55% of India’s balm market by volume (Dec’19).

(g) Emami 7 Oil in One

During FY21, 7 Oils in one became one of the largest selling brands in the International markets after the Company launched 7 new variants under the brand and initiated a media campaign with a Bangladesh based celebrity, Ms. Bidya Sinha.

(j) Vasocare - Herbal Petroleum Jelly

Emami Ltd claims this product to be 5 times more efficient than other petroleum jellies. It relieves, defends, heals, moisturizes, and nourishes. It has multiple uses especially for dry skin, feet, elbows, and hands.

Earlier, Company has advertise its Vasocare brand via some popular bollywood actress like Bipasa Basu.

(k) Diamond and Shine Color

This product was launched in back 2017. Moreover, Shilpa Shetty has been roped in to endorse the brand.

(l) Emasol Home Hygiene Solutions

Emasol, the name derived from the parent name of Emami, is India's first indigenous brand in home hygiene category which boasts of a complete range of home hygiene solutions.

Emasol aims to be a household name in hygiene and sanitization giving Indian consumers their peace of mind while keeping them a step ahead in protecting their homes and loved ones from the attack of Germs & Viruses.

Further, the Emasol range included a Disinfectant Floor Cleaner, Disinfectant Toilet Cleaner, Disinfectant Bathroom Cleaner, Antibacterial Dish Wash Gel and an All Purpose Sanitizer.

(l) Creme21

Creme21 is formulated with advanced German skincare technology. It has Strong brand in Germany with strong Brand recall.

The recently acquired German brand, Creme 21 was extended to North America, Bangladesh, Sri Lanka and other international markets performing exceptionally well during FY21.

Others products Emami Golden Beauty - Talc, Emami Naturally Fair Herbal Fairness Cream, HE- Deodorants etc

(I) Market Share of Top 5 Products - Emami Ltd

(J) Manufacturing Facilities

Emami manufactures products in seven state-of-the-art facilities located across India, and one unit in Bangladesh.

Further, Emami selected to invest tax-efficient locations. Also, the Company’s flagship Pacharia unit enjoys fiscal benefits till 2025-26

63% proportion of Emami's Operation are automated, which is positive point from labor cost for the company.

Also, 6 lakh units of various products are manufactured per hour.

Following are state-of-the-art manufacturing unit in different location

Domestic Manufacturing Facilities:

• Abhoypur, Assam
• Amingaon, Assam
• Pacharia, Assam
• Dongari, Maharashtra
• Vapi, Gujrat
• Pantnagar, Uttarakhand
• Massat, UT

Overseas Manufacturing Facility:

• Gazipur Bangladesh

Emami Ltd Increased dibbi capacity (balm) from 72 lac dozens/month to 92 lac dozens/month. Interestingly, Company has identified two international manufacturing units (third party).

Furthermore, the Company has commissioned renewable solar energy at two units in Western India

(K) Revenue Breakup of Emami Ltd

(i) Revenue Breakup - Geography Wise

Company Major revenue comes through Domestics Business, Whereas International and institutional business contributes total of 18%.

(ii) Revenue From Different Channels

Emami Ltd.'s Source its business from different channels, In which Direct and Frontlines accounts for 46%, Wholesale Channel accounts for 43%, ecommerce 2.90% and Modern trade for 8%,.

Market Share By Revenue - Emami Ltd

In the Overall FMCG industry, Emami has 2% of Market Share. Whereas, In Homecare and beauty Segment company is one the leading brand.

(L) Distribution Network of the company

• Emami strengthened its frontline sales team across North, East and West India.
• Company's Products available in 4.5 million retail outlets across India.
• Company has Direct reach to 9.4 lac retail outlets; nearly half across rural India.
• Moreover, Frontline sales force of more than 3,400 personnel covering most of the markets.
• Additionally, Emami Ltd expanding its coverage to rural areas and invested in manpower to to drive rural growth.
• Along with that, Company Accelerated offtake with a thrust on B2C initiatives and joint business plans with Modern Trade chains.
• Furthermore, Company Enhanced its focus on e-commerce with the launch of special packs and cross sales.
• To keep the Distribution chain smooth, Emami rolled out CDMS for distributors and hand-held devices to front-line sales force.

(M) Cost Structure of Emami Ltd

(i) Cost as % Of Total Expenditure

(ii) As % Of Net Sales

(iii) Cost Of Raw Material Consumed - Emami Ltd

In FY21, Company’s Raw material Consumption decreased to 32.93% of net Sales from the Previous year 33.32%.

Raw material prices were normal during the initial months of FY21, the second half of year saw inflationary pressures, mainly due to global supply-demand gaps and various other factors.

Furthermore, prices of waxes increased which is core raw material for the company.

The Company uses local material for its products and only 2% Raw Material is imported. (AGM)

(iv) Selling & Distribution Expense

Over the Years, Company’s aggressively spending on Advertisement and promotion to gain the market share and to build a Strong Brand in its Industry.

However, In FY21, Company spent less on A&P expense to mitigate the input cost on Raw Materials.

During FY21, the company roped in Bollywood superstar Salman Khan to endorse Navratna and Fair and Handsome.

Recently in FY22 Emami launched TV and Print campaigns roping in Bollywood celebrity Sonu Sood. The Company also bought on board the world-renowned wrestler Khali for Zandu Ultra Power Balm. Additionally, Boroplus launched a new variant targeting women between 25 years and 30 years of age with a light and non-sticky Boroplus soft ayurvedic antiseptic cream.

Emami launched a new communication with superstar Amitabh Bachchan (highlighting its digestive impact by working from the roots). Superstar Amitabh Bachchan has been endorsing BoroPlus for more than a decade.

Moreover, Emami is a pioneer in engaging celebrities to endorse its brands. These comprise renowned names from India’s film industry, sportspersons and performing artists.

Emami brands have been associated with more than 60 celebrities over the year and Invested ₹ 2312 Cr in Advertisement and Publicity in the past 5 financial years.

(N) CAPEX

In Financial Year ending 31st March 2016, Company Capex increased astonishingly to 1816 Cr. to acquire Kesh-King including total goodwill and all taxes.

Subsequently, in FY21 the Company spent only Rs 34 cr towards capital expenditure related for technology
and capacity creation.

The Company has invested Rs 674 Crore towards the upgradation of manufacturing units in the last five financial years.

The Company has no major CAPEX Plans for next 3 years, but it expects capex to be Rs 90-100 Crore each year in next three years.

(O) Group Structure

(i) Subsidiary and Associates of Emami Ltd.

(ii) Entities of Emami Ltd.

(N) Financial Parameter

• Emami Ltd recorded positive Net Sales growth in the FY21 of 8% but negative in FY20 of 1%. 
• Also, Over the 10 Years, Emami Ltd has delivered 8% CAGR of Net Sales and 7% CAGR of Profit after tax (PAT).
• In FY16, Company's suffered with liquidity due to demonetization, this result negative cash Flow of Rs. 1254 Cr.
• Whereas, its debt to equity improved over the years, due to a decrease in borrowings and increased net cash.
• In FY21 the Company did Rs 221 crore Quantum of share buyback

(O) Management Discussion & Concall Highlights - Q2 FY22

Revenue Growth in each revenue segment:

In the domestic business, Boroplus grew by 29%. Both, Male grooming and Kesh King grew by 15%
YoY, and Seven Oils saw a growth of 50% YoY. Pain Management and Healthcare grew by 6% and
5%, respectively. However, Navratna range declined by 9% YoY.

• The Company generated ~4% of domestic revenues from new launches. Around 40 number of products were launched by Emami in the domestic business in FY21. New launches are likely to contribute ~2.5%-2.75% to the top-line growth.
• The company does not foresee any acquisition plans in the near term.
• Pain management business had accelerated during covid. However, post covid demand for these products have moderated. Management expects to maintain the revenue levels of last year.
• Further, e-commerce business increased its contribution to 4.2% of domestic revenues.
• Further Company's Distribution expansion: Emami had increased it reach to 5,200 towns driven by Project Khoj and expects to increase its reach by 8,000-9000 villages by the end of this year.
• Fair and Handsome as well as Navratna brands represent discretionary product segments. Navratna is more of rural brand and rural demand is highly volatile.
• Company did a price hike of 3.5% in Quarter 1 of FY22. Because of favorable raw material prices, now there is no plan of price hike.
• There is no acquisition plan in near future. But the company may think of investing in startups like it did in The Man Company and Billare Sciences.

(P) Opportunities and Risk Concern

(a) Strengths

(i) Strong market position in niche product categories

The company's leading position in the niche ayurvedic segment (personal and healthcare consumer items) is underpinned by the market leadership of its key products, Navratna, Boroplus, Zandu and Mentho Plus, Kesh King and Fair and Handsome.

Market share gains for these brands over the last three fiscals reflect the strength of Emami's brands and the well-spread pan-India reach. Furthermore, strong presence acts as an entry barrier and insulates the company from downturns in the FMCG sector.

(ii) Diverse portfolio

The company has also relied on the acquisition of brands such as Zandu and Kesh King, complementing its current portfolio to diversify into new segments and strengthen the market position. Successful integration of these acquisitions has helped the company enhance its operating profitability. 

Boroplus, Kesh King and Zandu Balm form the high margin products of Emami Ltd.

(b) Risk Concern

(i) Exposure to intense competition

The FMCG industry has organised as well as unorganised players across segments. Also, growing popularity of herbal and natural products has led to other strong FMCG players launching products with similar positioning. Increase in competition necessitates higher advertising and promotion expenditure. Also, some of the products are seasonal, and any disruption in weather conditions can result in volatility in sales of these products.

Moreover, Rural sales contribute 50% of the domestic sales of Emami Ltd. Rural demand is highly variable. Navratna and Kesh King are also more of rural brands.

(iii) Volatility in raw material prices
Waxes, Mentha oil and polymers, comprising half of the company's raw materials, are crude-linked, exposing their prices to sharp volatility. Despite significant variation in raw material prices in the past three years, profitability has sustained above 25% because of Emami's market leadership. 

However, competitive pressure may limit the ability to pass on increasing input costs to customers. Also, focus on cost efficiency and continued price leadership will help mitigate the impact of volatility in raw material prices.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry’s Publications.

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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