Marico 2020 Annual Report Takeaways! Everything you need to know!

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Before we delve deeper into Marico Annual report takeaways, here is its Q1FY21 performance report card!

Here are some fun Facts on Marico!

Marico – What does it do?

Marico Limited is one of India’s leading consumer goods companies operating in global beauty and wellness categories. With its headquarters in Mumbai, Marico is present in over 25 countries across emerging markets of Asia and Africa. It nurtures leading brands across categories of hair care, skincare, edible oils, healthy foods, male grooming, and fabric care.

Product Portfolio Reach

Geographical presence

Product Portfolio

FY20 Highlights

Management Discussion & Analysis (MDA)

The World Bank has projected the Indian economy to contract by 3.2% in FY21. However, the Government of India has announced various fiscal and monetary measures to mitigate the economic fallout, the positive impact of which, is expected to be seen in the medium-term. Hopes of a faster recovery in the rural sector rest on improvement in agricultural output, on the back of a favorable monsoon forecast, a good harvest of Rabi crops, recent APMC reforms, hike in Minimum Support Prices (MSPs) and higher allocation under MNREGA.

In response to climate change, the Company has been able to improve the share of renewable energy in its operations to 79% at the end of FY20. Company’s trusted brands across all the key franchises continued to strengthen their position with market share gains over the previous year.

In line with sectoral trends, it was the Edible Oils and Foods segments that did well during the year, while personal care categories were subdued. While traditional trade declined in both urban and rural, modern trade and e-commerce sales grew steadily, with contribution rising to 17% and 5% of the Indian business respectively.

The International business had a relatively better year, with a mid-single constant currency growth and a healthy improvement in profitability. Bangladesh continued its stellar performance by delivering double-digit constant currency growth. Vietnam delivered mid-single-digit constant currency growth, as growth was impacted by moderating growth trends in the Home and Personal Care category. Businesses in the Middle East, North Africa, and South Africa had a lackluster year due to the unfavorable macro-economic backdrop and the impact of the pandemic in the last quarter. The New Country Development and Exports business continued to show promise.

Strategic overview and outlook

Going forward, Marico will stay focused on delivering market sustainable profitable volume growth and market share gains by growing the core portfolio, creating new engines of growth with portfolio expansion in existing and new categories and markets, while consistently moving along the path of creating shared value. Consumer-centric innovation, adaptive business, and GTM models leveraging technology and automation, cost management, nurturing talent and culture, and mainstreaming sustainability will remain key enablers in this journey.

While the current economic scenario is unprecedented and continues to be unpredictable in the near term, your Company expects to contain the impact given that about 85% of the portfolio comprises daily-use items.

As consumers are now increasingly conscious of nutrition, health, hygiene, and immunity as a part of their lifestyle, this calls for companies to realign their portfolio so they can actively innovate and adapt to this trend. Marico’s recent foray into the Hygiene segment is a step in this direction, and it is working on a pipeline of new products for a sustained and meaningful play in this segment.


Marico holds its medium-term aspiration of delivering 13-15% revenue growth on the back of 8-10% volume growth in the Indian business and double-digit constant currency growth in the International business. We expect to maintain operating margin at 19% + over the medium term

Value creation flowchart

Stakeholder Management.

Risk Management


Advertising and promotion spend as a percentage of sales, was about 9.9% in FY20, up 90 bps than last year. They backed an extensive number of new launches in the last 18 months while continuing to support the core.

So how does Marico create products? What’s the thought process?

Innovation | R&D

They are constantly innovating and creating unique and differentiated product offerings across the portfolio to address the evolving needs of its consumers. Through its best-in-class research and development (R&D) facility at Mumbai, Marico ensures that every product they develop meets the highest standards of quality. Resources to the tune of Rs 31.4 Crore were invested in R&D activities this year, supported by a dedicated team of 73 personnel.

Areas –

Foray into hygiene segment, Product development in Hair Care,  Skin Care and Foods, Male Grooming, Functional Foods, Packaging through design thinking and Healthy Foods and products portfolio.


Economic Landscape and FMCG Sector

India is the fastest-growing trillion-dollar economy in the world and the fifth-largest overall, with a nominal GDP of $2.94 Trillion. India has become the fifth-largest economy in 2019. overtaking the United Kingdom and France. Domestic consumption, which powers 60% of the GDP today, is expected to grow into a $6 Trillion opportunity by 2030.

This consumption growth will be supported by a 1.4 Billion strong population that is younger than that of any other major economy. Household savings have historically been high as thrifty and cautious Indian families put away more than a fifth of their incomes for a rainy day. This buffer provides support to domestic consumption expenditure even through challenging cycles in economic activity.

Fast-moving consumer goods (FMCG) sector is the fourth largest sector in the Indian economy with Household and Personal Care accounting for 50% of FMCG sales in India. Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the sector. The urban segment (accounts for a revenue share of around 55%) is the largest contributor to the overall revenue generated by the FMCG sector in India.

Rural consumption has also increased, led by a combination of increasing incomes and higher aspiration levels; there is an increased demand for branded products in rural India. Semi-urban and rural segments are growing at a rapid pace and FMCG products account for 50% of total rural spending. Being largely dependent on agriculture and allied activities, the factors affecting agricultural income like a monsoon and minimum support prices (MSP) of crops are critical for the growth in rural consumption demand. Various government reforms like increasing minimum support prices (MSP) of crops and direct benefit transfer targeted towards transferring the government subsidies and payments directly into beneficiary bank accounts are helping plug the systemic leakages and increased farmer incomes.

While demonetization and GST negatively affected rural demand, FMCG companies have changed their distribution model and working on increasing their direct reach. Demand for quality goods and services have been going up in rural areas of India, on the back of improved distribution channels of manufacturing and FMCG companies. Companies have also started launching smaller SKUs or price point packs, which not only reduce the immediate burden on customers but also allow companies to expand their product portfolio and upgrade the customers from loose to branded products.

Business Highlights

Marico India, the domestic FMCG business, achieved a turnover of 25,655 Crores in FY20, down 2% over the last year. The underlying volume growth was a muted 1%, vastly affected by the consumption slowdown witnessed in the economy through the year.

Coconut Oil (44% of India business) – Parachute’s rigid portfolio (packs in blue bottles) had a flat FY20 in volume terms, amidst a slow consumption environment, a delay in connecting specific pricing interventions to the retail shelves due to older inventory in the channel at the end of H1FY2020 and severe lockdown-led disruptions in March 2020. The brand strengthened its leadership position with a gain of 268 bps in volume market share (MAT Mar’20). The non-focused Coconut Oil portfolio had a soft year amidst the tepid consumption environment. Overall, the volume market share of the Coconut Oil franchise (includes Nihar Naturals and Oil of Malabar) improved by 208 bps to 62% (Mar’20 MAT).

Given Parachute’s volume market share in rural is much lower (47%) than in urban (61%), a pickup in rural spending presents the Company with an opportunity to improve its rural market share over the medium term. Of the total coconut oil market, approximately 30-35% in volume terms is in loose form. This component provides headroom for growth to branded players.

Parachute, being the market leader in the circa 25,000 Crore* branded coconut oil market, is well placed to capture a significant share of this growth potential on a sustainable basis. The Company operates in a band of gross margin per unit and will take judicious pricing decisions to maintain a sweet spot between volume growth and margins. The Company would continue to exercise a bias for franchise expansion as long as margins remain within a band. Towards that end, Marico will continue to invest in brand building and tactical inputs to remain competitive. Therefore, given the market construct and brand equity, the Company expects to deliver a 5-7% volume CAGR in Parachute Rigids over the medium term. In the near term, the brand can witness accelerated market share gains as marginal branded players could be contending with liquidity constraints. Also, as consumers grow weary of unhygienic loose oil, the franchise may further benefit as it stands for purity and is manufactured without the involvement of any direct human touch.

Saffola: Super Premium Refined Edible Oils and Foods (23% of India business) The Saffola refined edible oils franchise grew 9% in volume terms during FY20. While the brand posted growth in the traditional channel as well, higher salience in the new age channels of modern trade and E-Commerce enabled it to outperform through the year. The continued traction in Q4 was topped up by households stocking up on food and essential items in the early stages of the COVID-19 outbreak in March 2020. The brand has been backed by in-store promoter programs and significant media investments with communication to build relevance and drive adoption among its target consumers by re-affirming its superior credentials. The renewed communication appears to have resonated well with the consumer, and they will continue to implement differential packs/pricing/ channel strategies in an attempt to maintain a healthy growth trajectory for the brand. The brand gained 350 bps in volume market share brand to consolidate its volume market share at -76% in the Super Premium Refined Edible Oils category (MAT Mar’20). Rising health consciousness among consumers and a higher incidence of in-home cooking also augur well for the franchise.

Value-Added Hair Oils (24% of India business) – Value-added hair oils registered a volume decline of 2% during the year, largely due to underperformance in the mid and premium segments, while category growth flattened in a subdued demand environment, especially in rural. The performance was also affected by primary sales plummeting in the last fortnight of March, with the cessation of sales in the last 7 days of the year. However, offtake growth ahead of the category led the Company to consolidate its market leadership in the circa 28,200 Crore with a volume share of -35% and a value share of -26% (Mar’20 MAT).

Nihar Naturals Shanti Amla Badam has been the leading hair oil in volume sales among all sub-brands in the Value Added Hair Oils category. The brand gained 64 bps in volume share (MAT Mar’20) in the Amla Hair Oils category. Among the newer introductions, Parachute Advansed Aloe Vera Enriched Coconut Hair Oil and Hair & Care Dry Fruit Oil, both now scaled up to a pan-India level, continued to post healthy growths. The Company also stepped up participation in the bottom-of-the-pyramid segment through Nihar Shanti Jasmine and Nihar Naturals Gold, in addition to driving premiumization and scaling up new launches.

Premium Personal Care (5% of India business) – The Premium Personal Care portfolio, comprising Premium Hair Nourishment, Male Grooming, and Premium Skin Care, had a lackluster year amidst a sharp dip in discretionary spending during the year.

Within Premium Hair Nourishment, Livon Serums posted high single-digit volume growth in FY20. While the growth in the bottle packs was led by new-age channels of Modern Trade and E-commerce, the 2.5 ml sachet pack (priced at Z3) played its role as the key trial pack by expanding the brand’s reach in General Trade. With a dominant volume share of -65% (MAT Mar’20) in the leave-in conditioners category, the Company continues to focus on innovation and consumer engagement to drive category growth.

Marico has gone back to the drawing board for Parachute Advansed Coconut Crème Oil and True Roots after a lukewarm response. They believe that establishing category relevance would be the key growth driver for these brands and they will continue to direct efforts towards the same.

Within Male Grooming, Set Wet consolidated its 55% value market share in the styling category. Set Wet Hair Waxes also gained share in the overall styling segment.

Parachute Advansed Men Hair Creams grew healthily with sustained momentum in the E-Commerce channel. The Company has planned focused initiatives to accelerate the growth of this franchise. Execution will however be contingent upon the duration of lockdown and return to normalcy thereafter.


Balance Sheet

Profit & Loss (P&L)

Cash Flows

The company made a FCF (Free cash flow) of Rs 1000 Cr in FY19. For FY20, it made a FCF of 1024 cr.

Useful life of assets

Useful life of assets in years is as per the norm, nothing seems to be amiss here.

Current Borrowings

Borrowings are as per the prevalent bank rates. Nothing amiss here as well.

More Annual report takeaways here.


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JST Investments

JST Investments

JST Investments is a Mumbai-based investment firm that believes in long-term wealth creation. It's a brainchild of Aditya Kondawar, Aditya Shah, and Anish Moonka.
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