Industrial Economics ProjectOn Marico Limited By Komal Maloo Gargee Ghosh Neha Goyal (Roll No- 31) (Roll No- 25) (Roll No- 44) Deepak Kumar Sahu (Roll No- 19) Faridul Haque Harsh Kulhara Abhinav Singh (Roll No- 24) (Roll No- 26) (Roll No - 2) National Institute of Industrial Engineering, Mumbai Indian FMCG Industry: The FMCG (Fast Moving Consumer Goods) industry is basically related with production, distribution and consumption of consumer packaged goods. Characteristics of these goods are: • • • • • • • • • Low cost goods Quick turnover Consumed directly by end consumers Consumed at least once within a month Have very less profit margin Mass production Overall profit is due to mass production Customer thinks less before purchasing these goods Have very less profit margin FMCG is the fourth largest sector in the Indian Economy with a total market size of Rs. 60,000 crores. FMCG sector generates 5% of total factory employment in the country and is creating employment for three million people, especially in small towns and rural India. It remained resilient to recession. It is a very innovative sector. FMCG Sector categorization based on Price Premium goods are those for which the customers are ready to pay more due to their high quality. They have a 25% of share in the industry, where as rest 75 % consists of the daily use non premium goods. The later comprises the rest a big and it share. 4. 7. 5. ITC (Indian Tobacco Company) Nestlé India GCMMF (AMUL) Dabur India Asian Paints (India) Cadbury India Britannia Industries Procter & Gamble Hygiene and Health Care . 6. 2. 9.FMCG Sector categorization based on Product categories: THE TOP 10 COMPANIES IN FMCG SECTOR IN INDIA Sl No. 1. Companies Hindustan Unilever Ltd. 3. 8. making it world’s 3rd largest importer of edible oil. 110 Saffola Sundrop Popular Fortune Dhaara Swee . Premiu m Segmen t >Rs. China & Brazil harvesting about 25 million ton of oilseeds against the world.2% of vegetable oil import & 9. Currently India accounts for 11. India imports half of its oil requirement. Marico Industries Marico is basically into three businesses • • • Edible oils Hair oils and Natural care Skin Care Indian Edible Oil industry: The Indian vegetable oil economy is world’s 4th largest after the US.3% of edible oil consumption.10. Vegetable oil consumption has increased following in a rise in household incomes & consumer demand. 70 Dalda Vanaspati (Palmoli an) *Price/Li tre About Marico Limited Marico is a leading Indian group providing consumer products and services in the areas of health and beauty.26. International Business Group: It includes international FMCG business .kar Segmen t <Rs.110 Gold winner Gold Drop Raag Gold Low End <Rs. the company generated a turnover of about Rs. In 2010. Marico’s international portfolio contributes to 23% of Marico Group’s revenue.6 billion in respect of its food. At present. It was founded in 1987. Marico clinched three international acquisitions. In February 2011 the company acquired one of leading Vietnamese FMCG Companies . During 2009-10. Its distribution network covers over 33lac retail outlets. hair care and skin care related activities. Marico’s focus on sustainable profitable growth is manifest through its consistent financial performance – a CAGR of 22% in Turnover and 27% in Profits over the past 5 years.46 for Profits and 42 for sales.International Consumer Products Corporation The Marico group business organization is structured into three Strategic Business Units (SBUs): • • Consumer Products Business: It constitutes personal & nature care products and wellness & new products. 1 out of every 4 Indians is a Marico consumer. Marico has successfully achieved several consecutive quarters of y-o-y growth. Parachute Jasmine • Baddi. Oil of Malabar and Nihar Naturals • Ponda. Kerala All SKUs of Parachute. Uttarakhand Parachute Hair cream. Himachal Pradesh All brands of Saffola and Parachute • Dadra and Nagar Haveli Parachute Advanced Plant locations in India . a wholly owned subsidiary of Marico) Kaya Skin clinics. Maharastra All brands of Saffola • Kanjikode. Hair & care. There are 8 major plants located all over India besides more than 200 Subcontract locations. Uttarakhand Shanti Badam Amla. Marico is a major player in FMCG sector mainly operating in Edible oil. Goa Parachute • Pondicherry All SKUs of Parachute. hair oils and skin care segments. The major plant locations are • Jalgaon. Oil of Malabar and Nihar Naturals • Deheradun. Silk and Shine • Poanta Sahib.• Kaya (Branched out to form a separate company Kaya Ltd. Presence of Marico in the world Overview of Saffola . . The heart healthy nutrients in Rice Bran Oil such as oryzanol are known for their cholesterol lowering ability. Saffola oils are ‘Free of trans fats’. Safflower oil has the highest levels of Linoleic acid. Saffola comes with 'LoSorb Technology'. reducing oil consumption in your diet. Saffola Oils New Saffola: The recent understandings in the role of oil in cardiovascular diseases have shown benefits attached with MUFA. reducing oil consumption in your diet. Saffola Gold contains Rice Bran Oil and Safflower oil. which is well known in reducing cholesterol levels. Saffola comes with 'LoSorb Technology'. Saffola encourages you and your family to take care of your heart by using less oil. rice and salt. an omega-6-polyunsaturated fatty acid. Since risk factors of Cardio Vascular Diseases (CVD) start early in India and prevention of these diseases requires an integrated life course approach. Saffola oils are ‘Free of trans fats’. which is also known as Kardi Oil. following a low saturated fat diet with regular exercise and a balanced lifestyle. New Saffola contains High Oleic Safflower. New Saffola contains almost 60% MUFA along with Oryzanol and Vitamin E. which is also known as Kardi Oil and Rice Bran Oil. due to which oil gets absorbed less. It has several products in its portfolio which include edible oils. following a low saturated fat diet with regular exercise and a balanced lifestyle. due to which oil gets absorbed less.Saffola is a heart care brand in the foods category in India. The MUFA combined with the proven cholesterol reducing benefits of Oryzanol resulted in formulation of New Saffola. functional foods. Saffola is known to be a brand which is good for heart and recommended by doctors. Saffola encourages you and your family to take care of your heart by using less oil. Saffola has over the years built an ecosystem which works actively towards adopting a healthier lifestyle. Saffola Gold: Studies have shown that a right combination of Safflower Oil and Rice Bran Oil is more effective in reducing cholesterol than each of the oils singly. Saffola life has been educating Indians on preventive heart care through the year. For the last 10 years. New Saffola provides the benefits attached to MUFA along with the proven cholesterol lowering effect of Oryzanol. Saffola encourages you and your family to take care of your heart by using less oil. reducing oil consumption in your diet. This oil blend provides the benefits of two oils. due to which oil gets absorbed less. It provides the high poly unsaturated fatty acid of Safflower oil and the taste of Corn oil. two important compounds known for promoting heart health. which is also known as Kardi Oil has the highest levels of linoleic acid. Omega-3 helps in lowering cardiovascular risk factors along with several other health benefits. . Saffola oils are ‘Free of trans fats’. To get these benefits. The heart healthy nutrients in rice bran oil such as oryzanol are known for their cholesterol lowering ability. Safflower oil. Saffola Active also contains Vitamin E. an omega-6-polyunsaturated fatty acid. Corn oil has a unique taste and aroma. which is well known in reducing cholesterol levels. Saffola encourages you and your family to take care of your heart by using less oil. thereby giving you added value. reducing oil consumption in your diet. Soyabean Oil is a good source of Omega-3. Saffola oils are ‘Free of trans fats’.Saffola Active: Saffola Active provides Omega 3 and Oryzanol. Saffola comes with 'LoSorb Technology'. due to which oil gets absorbed less. following a low saturated fat diet with regular exercise and a balanced lifestyle. following a low saturated fat diet with regular exercise and a balanced lifestyle. Saffola comes with 'LoSorb Technology'. Saffola Active is made with rice bran oil and soyabean oil. Saffola Tasty: Saffola Tasty was the first Saffola blend. Below mentioned table provides the information about the variety of oils available in saffola category and their composition. These oils are very good for heart.Production Saffola is a master brand under which a variety of premium edible oils are made. Rice bran oil (80%) Kardi oil (20%). Corn oil (80%) Process Preparation of saffola consists of following steps: . Rice bran oil (80%) Soya (20%). they are prepared by mixing two pure oils in fixed proportion by weight. Products and raw materials Product New saffola Saffola gold Saffola active Tasty Raw materials and composition Kardi oil (60%).e. These oils are basically blended oils i. This is due to high reduction in gum and fatty acid content in the oil made by refining. Rice bran oil (40%) Kardi oil (20%). active carbon Phosphoric acid (H3PO4) .Steps involved in preparation of saffola Chemicals Used Chemicals used at different steps of preparing saffola are: Steps Degumming Neutralization Pre bleaching Dewaxing Post beaching De-odorization Chemicals Phosphoric acid (H3PO4). hot water Caustic. Hot water Bleaching earth. active carbon Dicamol Bleaching earth. Separator rotates at 7000 rpm. First of all oil is heated and then bleaching earth is added to form slurry. Phosphoric acid is used to separate gums from oil. Degumming: It is used for removing gums from oil. Soap is then separated from oil. To neutralize oil add NAOH. spent earth and spent carbon . gums start flowing over oil. Adding water increases acidity of oil. It is centrifugal process. When H3PO4 is added. Addition of NAOH forms soap. Output: decolorized oil. Separator separates gums from oil. Retention time is given for reaction to take place.Processes involved in Saffola Refining 1. Output: Neutralized oil and soap (separated) 3. Output: Oil without gums and separated gums 2. Neutralization: Add hot water into oil. It is filtered twice first through pressure leaf filter and then through polish filter. Active carbon is added. Pre-bleaching: It is colour removal process. It is then fed into separators. The oil inside in the crystallizer is cooled bit by bit by passing chilled water through it. Post bleaching: As the colour is very high in case of some oils pre bleaching is required but post bleaching is the essential step in which high and final reduction in colour takes place. Now after suitable colour reduction the bleached oil is filtered first through Pressure Leaf Filters and then through Polish Filters. The odour in the oil is because of the large number of reactions that took place in the previous chemical treatments. Dicamol is the chemical added to the oil and kept in the crystallizer for fixed amount of time. 5. Dewaxing: This is the next step in which the wax is removed from the oil. These chemical treatments led to the formation of aldehydes and ketones. This oil is a feed to the next section i. These are evaporated in high temperature and are extracted by means of vacuum in the deodoriser vessel. . Wax is the component of oil that causes artery blockages in human body.e. Deodorization. Like Pre bleaching operation. This will lead to the formation of crystals of wax. Now the oil without wax is taken to the post bleaching section. Then the oil is filtered in polish filters and finally stored in finished oil storage tanks. In this processes we try to remove wax from oil and keep that in minimum percentage.4. 6. These are sweet components and are responsible for odour in oil. Deodorization: In this step the odour from the oil is removed. These crystals are then filtered with horizontal filter beds. Bleaching earth and Activated carbon is added to the oil and retention time is provided in the bleaching vessel. Raw Materials The raw materials with their quantities used to make 1 MT of Saffola is given below: Product Rice bran oil Kardi oil Dilute Phosphoric acid Hot water Caustic Soda Bleaching Earth Activated Carbon Dicamol Furnace Oil Type RM RM Chemical Chemical Chemical Chemical Chemical Chemical Fuel Quantity 0.4 MT 0.Steam Pressure .5 kg/cm2 3 kg/cm2 2-3 % 70-80 % 2.P.5-3 kg/cm2 >8 kg/cm2 2 3 4 5 Open steam pressure Bleaching earth dosing Bleacher level Temp of oil after complete crystallizer filling Pressure in horizontal filter press Open steam pressure Bleaching earth dosing Bleacher level Barometric Water Pressure H. 1 Process Degumming & Neutralization Pre bleaching Dewaxing Post bleaching Deodorization Critical Control Points Hot water Temperature Gum(ppm) Soap (ppm) Range 80-95 C 50 50 3 kg/cm2 2-3 % 70-80 % 29 C 4-4.6 MT 15 kg 10 kg 45 kg 30 kg 5 kg 5 kg 12 kg Performance Evaluation Parameters The following are the CCPs (Critical control points) which are monitored: Sl No. 5 ltr . Himachal Pradesh Edible Oil Saffola . 2 ltr . 15 ltr 1 ltr. 15 ltr 1 ltr. 5 ltr Jalgaon.Sparging Steam Pressure Vacuum Temperature 0. 2 ltr . 5 ltr. 5 ltr. Maharashtra Edible Oil Saffola Baddi. Plant Product Brand Pack Saffola Gold Saffola Active New Saffola Saffola Tasty New Saffola Saffola Gold Saffola Tasty SKU 1 ltr. The product distribution according to the plants is given below. 5 ltr .1-0. 5 ltr 1 ltr.5 kg/cm2 0-5 torr 230-260 C Two plants of Marico are involved in production of Saffola. 15 ltr 1 ltr. 15 ltr 1 ltr. 5 ltr 1 ltr. 2 ltr. 2 ltr. 3 2008 1905 205 40.2 196 2011 3128 376 25.3 31 46 2006 1143 98 25.4 2010 2660 296 34.8 50. Financial Highlights (Figures in Crores) Year Sales PBT PBIT Economic value 2005 1007 74.3 131.5 2009 2388 229 37.The Financial highlights of Marico Limited are explained below.7 201 .4 144.7 2007 1556 150 35.8 79. 8 4.2 1.9 2.added Book value per Share( Rs) 1.8 3.7 .1 3.5 1. . Saffola Blench Launching new products International Business Launching new products Sales turnover grew by 29% over the last yr Parachute advance after shower(an entry into male hair grooming market) & Saffola daily health function food Marico Bangladesh Ltd Subsidiaries . Silk n Shine.Reasons & policies behind continuous success story of Marico: • • • • • • • • • Understanding and anticipating consumer needs Developing product and packaging innovations to meet those needs Ensuring wide availability of its products on retail shelve Creating advertising campaigns to reinforce the value delivered Tracking metrics that support product positioning strategies Huge investment on R&D to focus on quality with development of new products exploring new ways of optimizing cost work with collaboration of many National & international research laboratories Achievements & accolades of Marico: The impact of adopting policies stated above upon the health of the company year wise can be summarized as: (from yr 2005-2011) FY2005: Milestones Overall turnover: 1000 Cr Rs. International business touched 100 Cr Rs(10% of group turnover) Consumer product business In domestic market Parachute hair oil rose by 8% in volume Saffola franchise is increased by 18% in volume Hair care range grew 14% in volume& 19% in value Parachute samporna. Hyderabad to M/S Intim Spectrum Registry Ltd.7 Cr Rs.04 Cr Rs Sales increased by 31% Loses lower than previous yr by 26% Subdivision inface value of equity shares of the company towards enhancements liquidity is marico scrip on stock exchange 2 Egyptian brands Fiancee Hair Code International FMCG business Kaya Skin Clinic Sundari Acquition FY2008: Domestic Market Parachute coconut oil volume sale grew by 10% over last yr Hair care range grew 16% in volume Saffola grew its franchise by 22% in volume Saffola Diabetics Alta Mix Refined oil blend of refined rice bran oil Refined Soya oil Launching new products . Mumbai to facilitate a better interface & services to shareholders due to location advantages New subsidiaries in Middle East Marico Middle East FZE Kaya Middle East FZE Subsidiaries FY2007: Domestic Market Parachute coconut oil volume sale grew by 12% over last yr Hair care range grew 21% in volume Saffola grew its franchise by 18% in volume Recorded a growth of 41% over the last yr with turnover 164. its business had breakdown a PBT of 0.3 Cr Rs turning with total growth of 65% Started use of advertisements Turnover: 74. a 57% increment over the previous yr In India.MBL Industries Ltd FY2006: Top stories Change of RTA(Registrar & Transfer Agency) from Karvy computershare pvt Ltd.8 Cr Rs excluding Egypt Operation in Egypt gave 28. Enaleni pharmaceuticals. a 34% increment over the previous yr Added 18 new clinic International business is extended upto Oman & Saudi Arabia Consumer products division. its decision to modify its distribution system impacted the turnover negatively Revenue: 157 Cr Rs.International FMCG business Kaya Skin Clinic Acquition Overall international business grew by 59% Organic growth increment: 21% Fiancee & Hair code turnover: 88 Cr Rs Revenue: 100 Cr Rs. a 57% increment over the previous yr Addition of 20 new clinics & as well new products Domestic Market New product launching International FMCG business Kaya Skin Clinic FY2010: Top stories Domestic Market Grew 11% with revenue or top line: 2661 Cr Rs Bottom line grew by 23% Parachute coconut oil volume sale grew by 10% over last yr Hair care range grew 16% in volume Nihar increased by 9% in volume Saffola Arise Parachute advance ayurvedic hair oil Parachute advance ayurvedic cooling oil Nihar cooling oil New product launching . South Africa FY2009: Top stories Growth 25% with revenue or top line: 2388 Cr Rs Bottom line grew by 12% with PAT=189 Cr Rs CAGR( for the last 5 yrs) Top line=24% Bottom line=28% Parachute coconut oil volume sale grew by 9% over last yr Hair care range grew 17% in volume Saffola grew its franchise by 11% in volume Saffola Zest Saffola Rice Hair & Care almond gold Parachute advance revitalizing oil Revive Recorded a growth of 43% over the last yr excluding Egypt In Egypt. a wholly. Jan 3.International FMCG business Kaya Skin Clinic Acquisition Covered 23% of total turnover Entered in South East Asia Turnover 600 Cr Rs. Marico Ltd acquired the Manjal soap brand of Oriental Extractions Pvt Ltd.owned unit of Marico Ltd. . Malaysians hair brand FY2011: Top stories Revenue increment: 11% Net profit increment: 24% CAGR(For the last 5 yrs) Revenue=22% Net profit=27% Took 85% share in International consumer product corporation in Vietnam. 2006: Marico Ltd acquires Oriental Extraction Manjal from Oriental Extractions Pvt Ltd. 2005: Marico Bangladesh Ltd acquires Aromatic Cosmetics-Aromatic from Aromatic Cosmetics Ltd. a health care products manufacturer. Terms were not disclosed. a personal care products manufacturer. 2. with increment of 36% Entered in Bangladesh Launched Kaya Life prototype to offer the customer heuristic weight management solution IPO of Marico Bangladesh Ltd The Hair Style Brand Code ‘Code10’. an entry in male grooming segment Derma Rx(An entry in Singapore) International FMCG business Acquisition Acquisitions Of Marico: 1. Oct 10. acquired the Aromatic toilet soap brand of Aromatic Cosmetics Ltd. Marico Bangladesh Ltd. Terms were not disclosed. Feb 8. 2008 : Scandic Food India Pvt Ltd acquires Marico Ltd-Sil Processed Foods from Marico Ltd . a brand of hair gels and hair creams in the Malaysian market. 2003: Marico Ltd acquires Sundari LLC US . Adil Albada & Associates acquired a 5. 1. a manufacturer of skin care products. a manufacturer of skincare products. acquired the Code 10 brand.Jan 4. 2010: Marico Malaysia Sdn Bhd acquires Colgate Palmolive-Code 10 from Colgate-Palmolive Co. a wholly-owned unit of Marico Ltd acquired the aesthetic skincare business of Derma-Rx (Asia Pacific) Pte Ltd. Marico Malaysia Sdn Bhd. Mar 11. a wholly owned subsidiary of Marico Middle East FZE of UAE. 2011: Consumer Prod. The Divestitures of Marico: Oct 28. Terms were not disclosed. Marico Ltd acquires International VIETNAM -Marico Ltd of India acquired a 90% interest in International Consumer Products Corp. Aug 13.2010: Kaya Ltd acquires Derma-Rx-Aesthetic Business from Derma-Rx(Asia Pacific)Pte Ltd. which in turn is a wholly owned subsidiary of Marico Ltd. 2004 : Marico Ltd acquires remaining interest in Kaya Skin Care Ltd.Marico Industries Ltd acquired a 33% interest in Sundari LLC (SL). a Ho chi minh. 2010: Marico Ltd acquires Ingwe Health Plan Marico Ltd of India acquired Ingwe Health Plan from Guideline Trading CC. The stakes of Marico: Feb 27.based manufacturer of personal care products. Concurrently. Kaya Ltd of India. May 25. from Colgate.5% interest in SL. Terms were not disclosed. Terms were not disclosed. a majority-owned unit of Good Food Group A/S.Scandic Food India Pvt Ltd. a personal care products manufacturer.INDIA . SUMMARY: Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 Total Acquisitions 0 3 0 0 0 1 1 1 0 0 0 0 3 9 Stakes 1 0 0 0 0 0 0 0 1 0 0 0 0 2 Divestitures 1 0 0 1 0 0 0 1 0 0 0 0 0 3 . acquired the Sil processed foods business of Marico Ltd.