Chairman of FMCG major Marico Limited, Harsh Mariwala , has moved away from day-to-day functioning of the firm to focus more on innovation and corporate social responsibilities. In an interview, Mr. Mariwala talked about the impact of demonetisation and Goods and Services Tax (GST) on the company and Marico’s journey towards innovation. Edited excerpts:
We don’t see the demand picking up despite good monsoons in the last two years. How optimistic are you this festive season?
FMCG firms are [a] bit under pressure because of this demonetisation and GST. It has its own impact upon business. Hopefully, they will remain short-term. I think things will start looking up from October-November onwards. GST has some impact upon rural areas and among the wholesale trade. The monsoons were good except for some deficit in some of the southern States. Last year, we felt the same thing with monsoons but demonetisation happened. So, this time, I will be cautiously optimistic.
Will demonetisation and GST force you to shift your aim of becoming a ₹10,000-crore company by 2020?
I play more of a strategic role at Marico these days. I think, to some extent, there will be some impact due to demonetisation and GST. The projected growth rate, which we anticipated, may not happen. The best guy to answer this is our CEO Saugata Gupta as the target was set by him.
When we talk about Marico, only Saffola and Parachute come to mind. Why don’t we hear about new brands?
Actually, there are many brands in our portfolio. Our Nihar brand is bigger than Saffola.
It’s a very strong brand in the North and the East but people in Mumbai don’t know about it. We have some 8-9 brands that may not be in thousands of crores but in the range of hundreds of crores.
What’s the impact of competition from Patanjali?
First of all, he (Baba Ramdev) had a an image associated with Indian yoga. His products are far more Indian than the product categories in which we are present. Maybe his pricing strategy in some of the categories worked. But as far we are concerned, he is not significantly present in the categories we are in.
Credit offtake is not happening. Do you see it as a worrying sign for India Inc.?
The government has come out with the insolvency law to solve the bad loan issue in a time-bound manner. It will force promoters to sell their assets and repay their debt. But the bottomline is that whatever you say, there is a substantial hit on public sector banks, ie, those who have given the loans. It’s still worrying as the debt is huge as I understand it. They (banks) had been negligent in giving the loans and the promoters were more greedy, so somebody has to pay the price now. It (credit offtake) will not happen immediately and it will take some time.
Despite many policy-level initiatives, things are not percolating to the ground level for India Inc. What’s your experience?
We are not in an industry where we need to invest in new factories or [make] capital investments. Our challenge is the demand at [the] consumer level. Demonetisation and GST have had their impact upon supply chain and demand. We have not started seeing an upturn in demand from consumers. The challenge for us now is: how do we increase sales. That potential can only come in when there is enough disposable income in the hands of consumers.
What keeps you busy these days?
I am directly in-charge on the corporate social responsibility (CSR) front. It’s my passion to drive innovation. So, we established the Marico Innovation Foundation (MIF) in 2003 with Dr. R. A. Mashelkar as [the] head of its governing council. The whole objective of the foundation is to bring innovation in business as well as on the social side. The bigger initiative is the Marico Innovations Awards. It’s very well curated event with great inspirational stories.
What are the key challenges faced by entrepreneurs?
The key challenges faced by entrepreneurs are one, how to succeed in a competitive environment; two, how do you deal with people; the third challenge is the use of short cuts. If you start taking short cuts, it will hit you.
We heard you are writing a book.
I am writing the book with Ram Charan. That’s the big thing as it’s an international cover opportunity. It’s about scaling up. It’s on track now and we will finish the book by February 2018 and [will take] maybe, another few months to publish it.
