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| Edited By: Sumit Moitra |Source: DNA |Updated: Aug 20, 2018, 05:15 AM IST
Fast-moving consumer goods player Emami has been a disruptor. The Kolkata-based entity, run jointly by two families – Agarwals and Goenkas, created new segments like men's fairness cream. While it challenged biggies like Hindustan Unilever, it also got threatened by Patanjali, one of the newest players to have left a mark. Director Harsha V Agarwal, who heads key functions like mergers and acquisitions and spearheaded one of Emami's most high profile acquisitions, Zandu Pharma, talks to Sumit Moitra about the strategic decisions taken by the company, the opportunities and the way forward.
What we are doing here is not taking over brands but setting up partnerships. What I believe is that in India, as well as globally, we are passing through interesting times where consumer preferences and requirements are changing very fast. Now, for a company like us, the question is what we do? There are three options. First is try to do everything ourselves, second is we ignore most of what is happening around us and do whatever little we can afford to do, and third is we work with people who are coming up with new ideas and new business models. These are opportunities that have come before us. We need to partner with them in a win-win kind of a situation. There are many start-ups which have got passion, ideas; they want to create something big; they are sincere in their approach. What they need is capital, experiences, and some hand-holding. If these kinds of combinations come together, such opportunities must be taken up, and this is what we are trying to do. As a company, we believe we are not present in many areas. And the ideas we have invested in are some of the key categories to be in for the future. And in the categories we have identified, there would be a lot of action in the near future.
This is just the beginning. Ideally, we would like to invest in more such ideas and companies. But we would be careful in selecting companies that we would be partnering with. Since these would be partnerships, there are many things that we need to consider. The most critical factor would be the mindset and ethics of the promoters of the companies we would be investing in and see if these qualities gel with our mindset and ethics. And there are obviously other business factors which are considered in these kinds of deals.
Absolutely. Their investments are mostly financial in nature with a fixed tenure as they need to get out after a specific period. These are short-term in nature. We would stay invested for years to come, helping them grow and scale up. We are flexible in our approach and don't mind investing in companies which are very new, or in those companies which have established their concepts and scaled up a bit or even those companies which have scaled up a bit but now want to grow aggressively.
We won't try to manage them but we would be there to support them. We would come in where they need our help or when we believe we can contribute with our experiences and expertise. If we start micro-managing their businesses, we would be better off starting that business on our own. We are very clear that we won't be running the show, which would be left to the entrepreneur. Yes, this is a big challenge as promoters of these start-ups would be having their own individuality and style of functioning, but we are prepared to work with each one of them.
We are bullish about the prospects in the rural areas, for which we have now created a separate team and expanded our distribution network to identify consumers and opportunities over there, and also to decide on the way we create the SKUs (stock keeping units) that is most suitable for that segment. In the urban areas, there are several interesting developments, starting with, of course, the birth of online marketing and there is a growing segment of consumers who buy through that channel. It's now for us to decide how we can exploit this. Thirdly, consumers are now looking for products that can provide solutions to their individual needs in a better way. So that is one area where we are trying to see whether our current portfolio of products can be expanded. Our recent variants like Navratna i-cool talc and Fair and Handsome Laser were created with such consumers in mind.
This helps us to addresses the millennials, who are much more aware and evolved as a consumer segment. When we have to approach them, we need to create an offering which has to be world-class in terms of product features and packaging. Our involvement in brands like The Man Company or Brillare would help us in creating such premium offerings.
Yes, in the next couple of years, you would see several extensions being launched, moving beyond deodorants. We have already launched a water-less facewash product under it and would expand the range further.
We don't see ourselves competing with any one particular company. Our different brands compete with different companies. Like, yes, Fair and Handsome might be competing with Fair and Lovely. But as for Patanjali, I wouldn't say any of our large brands compete with them directly, except for Kesh King. We do keep track of the competition, but at the same time, our strategy is not decided by what they are doing. We base our strategies always on our consumers. We are more obsessed with our consumers than our competitors.
Though people largely know Zandu as a pain relief product - the balm is the highest selling product among the portfolio - Zandu also has more than 250 products under generic and ethical medicines which are promoted among doctors and also several OTC (over-the-counter) brands. In the last three to four years, we have focused on Zandu Pancharishta, which is doing well. Now we are promoting Nityam while we are launching some new products like Diabrishta for sugar control using ayurvedic medicinal properties. Ayurvedic healthcare as a segment is a bit nascent. But we are hopeful about its future. In India, people don't look at ayurvedic products separately within the healthcare segment. For them, it only matters whether the medicine can cure the disease and whether it is safe. This is one big opportunity for us in times to come.
Yes, for long Ayurveda didn't get its due. But now we see a lot of opportunities and would be seriously focusing on it. Over the past seven to eight years, we have seen consumers preferring healthcare solutions which are natural as there is a growing feeling that modern medicine, though effective in the short-term, brings problems like side effects after prolonged usage. We are gearing up for this opportunity, creating a strong research and development wing, with a separate business team with a distribution network to drive this segment.
For She Comfort, which is into female hygiene, I still believe that there was a lot of potential, but like I said earlier, you can't do everything. Resources are scarce and we realised that we would be better off putting our resources elsewhere rather than in that brand. So, we are not investing in that brand. Coming to Kesh King, I think it was a great acquisition. Yes, when we took over the brand at that point in time (June 2015), there was not much of competition. But after that, HUL bought out Indulekha (in December 2015) and Patanjali came up with rival products. In spite of these developments, the brand has performed well. Yes, there have been some challenges and we are taking some corrective measures. And in the next six months, you would see changes in the brand, which would further bring growth to it.
Obviously, the sectors we are present in like men's grooming, healthcare, skincare and personal grooming. These are the areas we would go forward with. While we have entered some new categories like hair colour, such entries have to be well thought out and we can't get into too many areas. That's why we talked about getting into partnerships for areas we are not present.
The last two years have been challenging because of geopolitical situations in some areas. But the situation has relatively stabilised. We are hopeful of the future as some of our brands are quite popular in some markets where we are present, which includes MENA (Middle-East and North Africa), CIS (Commonwealth of Independent States) and Saarc countries. We have brought in a senior executive Vivek Dhir (former chief marketing officer of Dabur International) to head the operations, and starting this year, we believe our overseas operations would do well going by early signs. We are also looking at acquisition opportunities in the international markets.
