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Business – Q&A: Saugata Gupta, CEO, Consumer Products, Marico

Viveat Susan Pinto

FMCG major Marico expects business to be marginally impacted by input costs. It expects sales growth to be modest over the next few months, too. This despite the fact that its price-cut policy for entry-level packs of products such as Saffola and Nihar will be maintained for some months. Saugata Gupta, chief executive officer of the consumer products division, has his task cut out – sustain both top line and bottom line growth – in the next two quarters. In an interview with Viveat Susan Pinto, he explains how he plans to do so. Edited excerpts:

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How do you propose to improve your revenue and profit growth over the next two quarters?
Top line growth is a factor of inflation or deflation. That is not the best metric to guage performance. Instead, volume growth is something we track closely. Our key brands have registered high single-digit and double-digit growth in the last two quarters. We hope to maintain that. Partly because we are not likely to take price hikes, despite some inflationary pressures on the input front. Input-price pressures were down in the last two quarters. That allowed us to take a 10 per cent price cut in entry-level packs of Saffola and Nihar. There were no price cuts, however, in Parachute. Over time, inflationary pressures have risen a bit, but it is not steep. Which is why I don’t see any significant impact on pricing in the next three-four months, at least.

What products is Marico prototyping, besides cooling oils?
There is a low Glycemic Index (GI) rice under the Saffola brand that we are prototying at the moment. GI diets contain carbohydrates, which digests slowly, and helps release glucose over a longer period of time, keeping the body fuller, thereby helping in weight management. We are experimenting with healthy and functional foods under the Saffola brand. This is part of the effort. Our portfolio currently includes a low-sodium salt, an atta mix, besides the cooking oil. Rice is one more product we hope to add to the list.

The other product we are prototyping is under the Revive umbrella, which is called Revive Blue Plus. This has properties of a blue, plus a stiffener. So in that sense, it is an added bonus for the user. We are very bullish about this product. Cooling oils, we are prototyping in Bihar and Andhra Pradesh. It is a seasonal product. Typically, cooling oils do well during the summer season. In-home consumption of cooling oils is very high, which is what excites us about this product. The segment is one of the fastest-growing in the hair-oil category, clocking a CAGR (compound annual growth rate) of 13-15 per cent. It is clearly important for us to be there.

What’s the status on the divestment of Sweekar?
We’ve never said we are going to divest Sweekar. What we did say is that we are not going to invest behind the brand. It is a brand on float, in other words. That could have triggered speculation that we were looking to divest the brand. That’s not true. The brand contributes over Rs 100 crore to overall turnover. But, yes, we are not investing heavily behind it.

Have you made any progress on the Simple acquisition?
I cannot comment about it. We are an acquisitive company and keep looking at opportunities to expand our global footprint. Our emerging-market focus continues to be there. West Asia, North Africa are some of the markets we are looking at. Bangladesh and South Africa are our hubs already. Southeast Asia is another market we could look at in the future.

What’s the way forward?
That our key brands, including Parachute and Saffola, continue to grow and that our new launches are a success. The latter is something we are laying special emphasis on. It is critical that our new-product launches are a success, because that is what will drive growth in the future. For instance, we recently launched a hot oil under Parachute after successfully prototyping it last year. That is one product we are keeping our fingers crossed on. We’re constantly on the lookout for new segments where we can make our presence felt. That is why innovation is key to us. It’s important for our long-term growth and sustenance.

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December 15, 2009 - Posted by | Uncategorized |

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