Marico is the market leader
in the Indian coconut oil and branded refined oil segment. Its brand Parachute
dominates the Rs 7 bn branded coconut oil market with a 54% market share.
Marico's presence in the refined oil category is marked by two brands, namely,
Saffola (safflower oil) and Sweekar (sunflower oil). These command a combined
market share of 17% of the Rs 12 bn branded edible oil market.
Marico's Hair & Care is the No.2 brand commanding 27.9% of the Rs 800 m non-sticky
hair oils market. Marico has also launched several variants under its Parachute
brand name. Parachute Lite holds 8.6% market in the value added coconut oils
market and competes directly with Dabur's Vatika.
Marico's Revive dominates the branded starch category in the niche fabric care
segment, which is growing at about 5-10%. Marico also has a presence in the
processed food segment with Sil range of jams (10% market share).
Marico has a well-established distribution network of 600,000 retail outlets covering
18 m households. This has helped it leverage marketing and distribution tie-ups
with Indo Nissin Foods (for Top Ramen range of instant noodles - 21.4% market
share in February 1999).
Marico has also tied-up with Procter & Gamble for purchase and distribution of
Clearasil, Old Spice, Pampers, Camay and Ariel detergent bar (turnover valued
at over Rs 500 m in FY99).
In FY99, raw/refined oils and hair oils contributed Rs 5 bn (94%) to
The company's leading brand Saffola was affected by a raw material
shortage due to a crop failure. Low priced competitor products forced it to
drop prices of Parachute by about 18% in the first quarter, though the third
quarter saw prices being raised by about 6%. The 12.5% growth in turnover in
FY99 was primarily due to value growth in refined oils and Hair & Care.
The Revive brand contributed Rs 15 m (0.3%) to Marico's FY99 turnover.
During the year, the company extended the Revive brand by introducing Revive
In April 1999, Marico further strengthened its hair-care portfolio by acquiring
Mediker (an anti-lice treatment shampoo) from Procter & Gamble India. Mediker
with a turnover of Rs 80 m has an absolute monopoly in its category.
Things to come
Focus on value addition through line extensions of existing brands and increasing
product portfolio through acquisitions. Marico recently entered the hair-grooming segment with Parachute Nutri-Sheen cream and
liquid. It also entered the processed food segment in a major way by launching
Saffola Salt and Atta (flour).
Marico's tie-up with Proctor & Gamble will not only generate additional fee
based revenues but also build a wider and cost effective distribution reach.
The acquisition of Mediker will give Marico a chance to extend its distribution
reach to chemist outlets and also to apply for registration of the Mediker
brand in some Middle-East countries and Sri Lanka and Bangladesh.
The company is focussing on further developing its distribution competency
by covering most 100,000 plus population towns. To achieve this, it spent Rs
217 m in FY99 (up 18.5% over FY98) towards distribution expenses (roughly
4% of FY99 turnover).
Repositioning and repackaging products with an eye on the rural market.
Marico has spent Rs 390 m (7% of FY99 turnover) as advertisement and sales
promotion costs to maintain its market shares and give its products a rural
Bombay Oil Industries-BOIL (a group company) owns the Parachute and Saffola
brands. Marico pays a royalty for using these brand names. Brand extensions
however, do not attract any royalty payment. Marico is authorised to use
these brands till the promoter holding reduces to below 25%. The promoters
(Mariwalas) currently hold 63% stake in the company.
Marico operates four manufacturing units. Of these, 3 are its own and one is
leased from BOIL. It pays a licence fee of Rs 3.6 m per annum to BOIL for use
of this plant.
The key raw materials for Marico - copra and other oil seeds (safflower and
sunflower) are commodities, which have high price volatility. The company's
raw material cost is as high as 59% of sales.
Supply of raw materials is also constrained by high dependence on climatic conditions for
better crop yield. As stated above, in FY99, volumes of Saffola declined by
15% due to unavailability of safflower crop on account of unseasonal winter
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