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- About the company
- Journey
- Board Members
- Shareholding Pattern
- Business Portfolio
- International Portfolio
- Revenue
- Cost Structure
- Manufacturing Facilities
- Global Presence
- Competitors
- Subsidiaries
- Financial Parameters
- Management Discussion & Concalls
- Strength & Weakness
(A) About the company
Marico Ltd is an Indian multinational consumer goods company providing consumer products and services in the areas of health, beauty and wellness. With its headquarters in Mumbai, Marico is present in over 25 countries across Asia and Africa.
It owns brands in categories of hair care, skin care, edible oils, health foods, male grooming, and fabric care such as Parachute, Saffola, Hair & Care, Parachute Advanced, Nihar Naturals, and Mediker.
(B) Journey Since Inception
Family Tree
(C) Board Members of Marico ltd
(i) Harsh Mariwala - (Chairman & Non executive Director)
Harsh Mariwala is the founder and Chairman of Marico Ltd.
He began his career in 1971 at Bombay Oil Industries. In 1990, he founded Marico, an FMGC manufacturer and distributor that is now operating in 25 countries across Asia and Africa.
After that he is also the founder of Kaya Limited, which runs a chain of skin care clinics across India and the Middle East.
Mr Harsh Mariwala received Rs 3.7 Crores as remuneration for FY 21 i.e. 0.04% of Net Sales.
(ii) Saugata Gupta - Managing Director and CEO
Gupta serves as the Managing Director and Chief Executive Officer of Marico Ltd.
He joined Marico in 2004 as the Head of Marketing and was elevated to CEO of India Business in 2007 and in 2014.
He has completed his Graduations in Chemical Engineering from Indian Institute of Technology Kharagpur after that completed his Masters from Indian Institute of Management Bangalore.
Mr Saugata Gupta received Rs 14 Crores as remuneration for FY 21 i.e. 0.17% of Net Sales.
(iii) Amit Bhasin - Chief Legal Officer and Group General Counsel
Amit is Chief Legal Officer and Group General Counsel for Marico ltd. He is part of the Executive Committee of Marico Limited and is responsible for the Legal and Corporate Affairs Function for Marico Group both in India and International markets.
He has over 19 years of experience in Corporate Legal, Legal Business Partnering, Corporate Compliance and Governance. Prior to joining Marico, Amit was associated with Hindustan Unilever Limited as General Manager.
He has done his post-graduation certification in Sustainable Business from the University of Cambridge, the United Kingdom in 2011 after that he Graduated and a certified Chartered Secretary from the Institute of Company Secretaries of India (ICSI).
Directorship of the Executive Members in other companies
(D) Shareholding Pattern of Marico Ltd
(E) Business Portfolio of Marico Ltd
(i) Edible
(a) Edible Oil
Marico sell edible oils under the brand name of Saffola Oils
Its Oil which has the largest market share in the premium Oil category. However, they sell refined oil under into 6 sub brands- Active, Tasty, Gold, Total, Aura Refined Olive Oil and Aura Extra Virgin Olive Oil.
(b) Healthy foods
Under Healthy foods category, it provides Oats, Masala Oats, Meal Maker Soya Chunks, Honey under the name of Saffola along with some immunity booster products.
On the other hand, It also caters gourmets products under the brand name FITTIFY.
(ii) Hair Oil
Under the Hair Oil category Marico has established itself as the largest coconut oil player in comparison with the peers.
Additionally, It has various oil under the category of Parachute - Gold Coconut Hair Oil, Aloe Vera Enriched Coconut Hair Oil, Jasmine Coconut Hair Oil, Ayurvedic Hair Oil.
And has other hair oil under the name of Nihar
-Coconut Oil Market Share ( In Volume) of India
(iii) Personal Care
(a) Male Grooming & Styling
Marico has male grooming products under the name of Set Wet and Beardo.
Further it has a wide range of products starting from Hair Gels, Waxes, Deodorants, Beard oil, Beard wax, Beard Softener and Beard wash.
(b) Skin Care
Under skin care for youth Marico launched Kaya Youth Range for young women in addition Parachute Advansed Body care Lotion.
(iv) Others
It firstly introduced intimate hygiene products in the name of Keep Safe
Secondly Veggie for cleaning vegetables and Protect Surface to clean surfaces.
(F) International Portfolio of Marico ltd
(G) Revenue Breakup of Marico ltd
More than half of Marico's revenue (63%) comes from edible products which include edible oils and healthy foods.
Under the hair oil segment, Marico is the leader in the coconut oil segment, Parachute oil contributes the most in this segment along with Nihar.
Marico personal care consists of men's category under which it has the products under the name Set wet and Beardo along with skin care products.
In the other segment, it has products for hygiene in the Keep Safe range and products like Veggie & Surface Protect for removing chemicals and germs from the surfaces.
Revenue Segment YoY Trend
Revenue % in Personal care, hair oil and Other segment decreased due to Covid-19 in 2021
On the other hand we see an increase in sales of Edible segment from 58.33% to 63.15%.
Geographica Revenue contribution
Above all most of their revenue comes from India , Bangladesh and Vietnam remaining 5% from other countries.
Company is also working to launch new products in International markets.
Distribution Network
(H) Cost Structure of Marico ltd
(i) Cost Structure as % of Net Sales
After all expenses company has a maintaining a good margin.
It is also planning to reduce the advertising cost in year 2022.
(ii) Employee Cost as % of net sales
Meanwhile company cost to employee is constant during the past few years.
(iii) Advertisement Cost as % of Net Sales
(I) Manufacturing Facilities of Marico ltd - FY22
J) Global Presence of Marico ltd
(i) North Africa and Middle East
- Egypt
- Middle East
(ii) South Asia
- India
- Bangladesh
(iii) South East Asia
- Vietnam
- Myanmar
(iv) South and Sub-Saharan Africa
- South Africa
Till now revenue of the company is increasing at a CAGR of 8%.
Company is showing a good free cash flow which is growing consistently.
Their is decrease in net profit from year 2020 due to COVID-19 but company is still maintain the net profit CAGR of 16%.
K) Market Share - Peers of Marico Ltd
L) Subsidiaries and Joint Venture
M) Financial Parameters of Marico Ltd
Till now revenue of the company is increasing at a CAGR of 8%.
Company is showing a good free cash flow which is growing consistently.
Operating margin of the company decreased from 21.78% in FY20 to 20.98% in FY21. Profit reduced due to high input cost in the second half of the year.
There is a decrease in net profit from year 2020 due to COVID-19 but the company is still maintaining a net profit CAGR of 16% over last 10 years.
Year on year performance of last 4 quarters Marico ltd
Year on Year performance of Marico ltd
N) Management Discussion and Concall Highlights
Management Discussion Highlights
- Reduce the ad spend in the year 2022 from 8.67% to 8.37% of net sales as the company will only spend on discretionary categories.
- The company aspires to deliver 13%-15% revenue growth over the medium term on the back of 8-10% domestic volume growth and double-digit currency growth in the international market.
- Above all company is aiming to maintain its operating margin above 19%.
- Considering the market inflation in edible oil companies took cumulative MRP increase amounting to 30%aprox. during the second half of the year.
- Due to COVID their Modern Trade declined by 12% but saw a growth of 60% in e-commerce.
Further, the company launched two new products :
- Immunity Segment- They have launched Kadha Mix, Golden Turmeric Milk Mix as well as Saffola Arogyam Chyawan Amrut
- Healthy Foods- They have launched Saffola Mealmaker Soya Chunks and Oodles
Concall Highlights - Q3FY22
- Due to inflation rural sector is showing a slow down as compared to the urban sector.
- Soya Chunks launched last year have scaled above Rs 50 Cr in a year's time.
- Exit quarter run rate Digital brand has made 180-200Cr in revenue.
- Saffola oil volumes are showing flat growth, due to inflation the conversion rate of people upgrading the oil reduced.
- EBITDA margin contracts 190bps QoQ basis to 16%, due to high material cost.
- Q4FY22 revenue increased by 7.4% YoY.
- Saffola Foods has met its target of Rs 450-500 Cr in FY22.
Capex
Marico Ltd has acquired 53.98% of share in HW Wellness Solution Private Ltd a leading Digital First brand in healthy breakfast and snack segment, under the brand name "True Element".
Ongoing Disputes
In July 2020, a case has been filed by Dabur holding that Marico's packaging could confuse consumers even though the brand "Saffola" is featured on the label of Honey. Which is yet to be settled.
O) Strength and Weakness
Strengths
1. Leading position across product categories and improving product diversity -
Its brands, Parachute, Nihar Naturals and Oil of Malabar are well reputed, with an overall volume market share of around 61%.
2. Healthy operating efficiency-
Return on capital employed was a robust 55% although distributors provided a retail reach of about 53 lakh outlets in India and direct reach of nearly 10 lakh outlets.
3. Healthy financial risk profile-
The company is supported by strong cash-generating ability and low debt.
Weaknesses
1. Exposure to intense competition in the fast-moving consumer goods (FMCG) industry-
Intense competition has reduced the ability of players to pass on any increase in raw material prices.
2. Fluctuations in raw material prices -
The cost of key raw materials, copra, safflower, rice bran and liquid paraffin and polymers, account for more than 50% of sales. Their prices depend on geo-climatic conditions, international prices, and the domestic demand-supply situation. Hence, the operating margin is partially susceptible to fluctuations in raw material prices.
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References: Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry Publications.
Disclaimer: The report only represents the personal opinions and views of the author. No part of the report should be considered as a 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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