MANAGEMENT DISCUSSION AND ANALYSIS

This discussion covers the financial results and other India

developments for the year ended March 31, 2021, with India is the fastest-growing trillion-dollar economy in the
respect to our Consolidated business, comprising the world and the fifth-largest overall, with a nominal GDP close
domestic and international business. The Consolidated entity to 3 trillion. The ramifications of the pandemic have taken a
has been referred to as ‘Marico’ or ‘Group’ or ‘Company’ in heavy human toll, not just in terms of afflicting lives and human
this discussion. well-being, but also by impacting incomes and livelihoods.
The latest World Economic Outlook of the International
Some statements in this discussion describing projections,
Monetary Fund (IMF) released in April 2021 estimated India’s
estimates, expectations or outlook may be forward looking.
GDP to have slid by 8% in FY21. However, IMF’s prediction of
Actual results may however differ materially from those stated,
growth rebounding by 12.5% in FY22 is now facing significant
on account of various factors, such as changes in government
downside risks due to the resurgent second wave. During the
regulations, tax regimes, economic developments,
first wave, a stringent nation-wide lockdown for two months
exchange rate and interest rate movements among other
was followed by a calibrated opening. By the time cases
macro-economic factors, competitive environment, product
peaked in September 2020, we were already in the fourth
demand and supply constraints within India and the countries
phase of unlock, and pent up demand had started reflecting
within which the Group conducts its business.
in the faster rebound in economic activity. During the second
surge, states have announced restrictions of varying degree
ECONOMIC SCENARIO and duration, as they face increasing caseloads at different
Global periods. In terms of stringency, current restrictions are not as
Growth Projections strict as those imposed during the first nationwide lockdown.
While manufacturing, construction and transport have been
Global Advanced Emerging Markets allowed to function with caveats, many establishments
Economy Economies & Developing have been forced to curtail operations owing to supply-side
Economies
bottlenecks and employees being infected. Also, even as urban
6.7 demand remains weak (in the absence of any urban-focused
6.0
4.4 5.1 5.0
3.6 policy support and given that urban areas account for ~70%
of the services economy – the most-affected segment), rural
demand, which was buoyant last year, may have come under
FY20 FY21 FY22 FY20 FY21 FY22 FY20 FY21 FY22 threat this time around.
-2.2 Private final consumption expenditure (PFCE), the biggest
-3.3
-4.7 demand-side driver of India’s GDP, declined significantly in
FY21. However, owing to some pent-up demand and optimism
Source: IMF World Economic Outlook, April 2021
because of an improvement in the pandemic situation, PFCE
As per IMF’s World Economic Outlook (WEO) April 2021, global growth is most likely to have turned mildly positive in the
growth is projected at 6% in 2021, moderating to 4.4% in last quarter of FY21. The second wave has now put renewed
2022. The projections for the two years were stronger than pressure on it. The Reserve Bank of India’s latest consumer
the WEO projections from October 2020. The upward revision confidence survey also reflects this: the Current Situation
reflects additional fiscal support in a few large economies, Index fell to 53.1 in March 2021 from 55.5 in January 2021
the anticipated vaccine-powered recovery in the second half (a reading above 100 shows optimism). Respondents were
of 2021, and continued adaptation of economic activity to also worried about the year-ahead prospects, with the Future
subdued mobility. Expectations Index dropping to 108.8 from 117.1. The gap
between consumer and business confidence has never been
In advanced economies, occasional regional restrictions
as wide as it is today. The removal of mobility restrictions and
will likely be necessary at times to stem the progression of
reduced supply disruptions helped businesses to bounce back
new strains of the virus. As the vulnerable population gets
with greater confidence. However, a gradual job market revival
vaccinated, contact-intensive activities are expected to
and health and financial concerns prevented consumers from
resume and drive a significant pickup in growth, owing to
spending, weakening their confidence in the economic revival.
pent-up demand funded by accumulated savings in 2020.
Given the healthcare challenges posed by the enormity of the
In emerging market and developing economies, vaccine
second wave and expectation of an impending third wave,
procurement data suggest that effective protection will
restrictions imposed by states could stay for longer in one
remain unavailable for a large part of the population in 2021.
form or the other – at least for as long as a larger proportion of
Therefore, lockdowns and containment measures may be
the population is not vaccinated against Covid-19. A national
needed from time to time in 2021 and 2022 than in advanced
vaccination program began on 16 January 2021, for which the
economies, increasing the likelihood of medium-term scarring
government has budgeted ₨350 Billion to be spent in FY22.
effects on the potential output of these countries.
The rollout initially encountered delays and hesitancy, but with
teething issues solved and private sector help, the pace picked

124
 Corporate Value Creation Delivering Impact Statutory Financial
Overview at Marico with Stakeholders Reports Statements

up significantly. Ramping up vaccinations to cover a larger private sector credit improves confidence. Public investment
proportion of the population seems the only way to usher in is estimated to be higher as the government expands
speedier and broad-based recovery. The Indian government’s capital spending with the start of the Eighth Five-Year Plan,
target is to fully vaccinate the adult population by end-2021. 2021–2025. In FY22 (FY22, ended 30 June 2022), GDP growth
That translates to covering 68% of the total population. to edge up further to 7.2% as both exports and imports
However, the large population size and severe shortage of pick up under sustained global recovery. Continuing strong
vaccine supplies do present a challenge. The supply issue remittances will underpin growth in private consumption,
is expected to be sorted out by August, as higher domestic and private investment will accelerate on favorable global
production and imports start to kick in. economic conditions and efforts to improve the business
climate. Higher public investment in large projects will also
Therefore, five factors would be key to steering growth over
boost growth. On the supply side, agriculture is expected to
the next two years. First is the rapid pace of vaccination
accelerate if normal weather prevails. Double-digit growth in
and low fatality rates. Second, strong growth in private
industry is expected on continued strong global demand for
investment, and its rebound stimulated by reforms and
low-end garments produced in Bangladesh and government
schemes. Third, pent-up demand backed by savings made by
policy support. Growth in services is also expected to be
high- and mid-income consumers who are waiting to spend.
slightly higher, following the trend in agriculture and industry.
Fourth, fiscal spending on building assets and infrastructure
(that have a high multiplier effect on income, jobs, and private
investments) that will likely start gaining momentum on the Vietnam
ground; and lastly, a global economic rebound in late 2021, as Despite COVID-19, Vietnam’s economy has remained
forecasted by economists. resilient, expanding by 2.9 percent in calendar year 2020—one
of the highest growth rates in the world. The pandemic hit the
economy hard, but Vietnam has taken decisive steps to limit
Bangladesh
both the health and economic fallout. Swift introduction of
Despite headwinds from the COVID-19 pandemic,
containment measures, combined with aggressive contact
Bangladesh’s GDP continued to grow in fiscal year 2020
tracing, targeted testing, and isolation of suspected COVID-19
(FY20, ended 30 June 2020). GDP is estimated to have
cases, helped keep recorded infections and death rates notably
grown by 5.2% in fiscal year 2020, down from 8.2% growth
low on a per capita basis. Successful containment, along
in the previous year as the onset of the COVID-19 pandemic
with timely policy support, also helped limit the economic
reduced economic activities in the fourth quarter (Q4).
fallout and the size of the emergency response package.
Industrial growth slowed, with a sharp decline in readymade
COVID-19 vaccinations commenced on 8 March 2021, and
garment (RMG) manufacturing output. Service sector growth
will continue throughout the year with the goal of vaccinating
also decelerated due to disruptions in transport, retail, hotels,
80% of the population by June 2022.
and restaurants. Exports plummeted in Q4 as buyers canceled
garment shipments and new orders evaporated, and domestic According to the IMF’s latest annual assessment, the economy
COVID-19 containment measures restricted many economic is expected to grow by 6.7% in calendar year 2021 and 7.0% in
activities for 2 months. calendar year 2022—strong and steady growth made possible
by Vietnam’s success in containing the COVID-19 pandemic.
The Government of Bangladesh (GoB) responded to the
The drivers of this growth will be industry, especially
economic shock from the pandemic proactively. It announced
export-oriented manufacturing, increased investment, and
a COVID-19 response program of US$14.6 Billion (4.5
expanding trade. Private consumption is expected to recover
percent of estimated FY20 GDP). However, implementation
in tandem with private investment and modest inflation.
challenges remain, particularly in bringing resources to
Retail sales rose 5.1% in first quarter of 2021, indicating
small businesses and poor households. To support the
a recovery in consumer confidence. Business sentiment
GoB’s program, Bangladesh Bank eased monetary policy
is buoyant, as shown by a December 2020 survey in which
and introduced refinancing facilities. A national COVID19
80% of respondents expected business conditions to either
vaccination campaign began in February 2021, and is expected
improve in 2021 or remain stable.
to accelerate as Bangladesh receives doses under the COVAX
Initiative. However, achieving mass vaccination and herd Middle East and North Africa (MENA)
immunity will take time. The Middle East and North Africa (MENA) region, like the
rest of the world, remains in a pandemic-spawned crisis.
Asian Development Bank, in its annual outlook, estimates
World Bank estimates that the Middle East and North Africa
GDP growth to pick up to 6.8% in FY21 (FY21, ended 30
(MENA) region’s economies contracted by 3.8% in 2020.
June 2021), with stimulus package implementation and
The MENA region is expected to recover only partially in 2021,
recovery in global growth and world trade. Continued healthy
but that recovery is, in part, dependent on an equitable rollout
remittance inflow will likely keep domestic demand
of vaccines. In the short-term, fiscal spending is needed to
buoyant and underpin solid growth in private consumption.
mitigate the effects of the pandemic, including income
Private investment should pick up as moderate growth in

Marico Limited Integrated Report 2020-21 125

MANAGEMENT DISCUSSION AND ANALYSIS (Contd.)
transfers to support consumption of hardest hit families year, driven by domestic demand and commodity exports.
and health spending on testing, treatment, and vaccination. Household consumption will contribute significantly to
Most of the countries in this region started vaccinations in growth as the economy opens up and exceptional savings
December 2020 or January 2021 and are expected to inoculate last year are spent at least partially. Private investment
a significant share of their population by the end of 2021. will progressively strengthen. Inflation is increasing, but is
expected to remain below the central bank’s target, allowing
The real GDP growth of the GCC countries is forecast to stand
the monetary policy authorities to maintain current policy
at 2.7% in calendar year 2021 and 3.8% in calendar year 2022,
interest rates until the end of 2021. Fiscal policy will continue
according to the IMF’s report “Regional Economic Outlook
to be constrained to limit debt growth. However, implementing
for the Middle East and Central Asia” released in April 2021.
the government’s infrastructure investment plan is essential
Activity in oil-exporting countries is set to rebound, reflecting
to lift growth potential, requiring better prioritisation of
a carryover from the last quarter of 2020, and amplified by
spending. Unlocking electricity production will be key to lifting
the expected pickup in activity in the second half of 2021.
production bottlenecks and restoring confidence.
Higher oil prices and early vaccine rollouts support the outlook
for many Gulf Cooperation Council economies. The recent
increase in oil prices will boost confidence, supporting non-oil FAST MOVING CONSUMER GOODS (FMCG)
GDP. The recovery in oil importing countries is expected to be SECTOR IN INDIA
sluggish in the near term, with growth projected at 2.3 percent
The FMCG industry in India has witnessed positive momentum
in calendar year 2021.
post the initial disruption at the onset of the pandemic,
With the Covid-19 pandemic continuing to weigh on the growing 9.4 per cent in the quarter ending March 2021 after
Egyptian economy, both through the direct domestic channel growing by 7.3 per cent in the preceding quarter. This was
and its wider global effects, World Bank projects real GDP supported by price growth in staples and increased retail
growth at 2.3% in the fiscal year ending June 2021 from offtake of in-home consumption categories such as staples,
3.6% in the preceding year. The outlook for Egypt’s tourism essential non-foods and indulgence categories.
sector remains uncertain in the near term given that some
Rural markets continued their good run - growing by 14.6 per
major economies are still seeing rapidly surging cases in
cent in the March 2021 quarter after a 14.2 per cent growth
recent weeks. In this environment, announcements by the
in the December quarter. The current year is expected to
Egyptian government with regards boosting spending are a
have a good monsoon making it the third consecutive year
positive for GDP growth. As has been the case for much of
of rural rejoice. This had a boost up effect on earnings of
the five years since the economic reform programme began,
agrarian households and kept rural sentiments upbeat.
public investment will be a key driver of economic expansion.
Besides, increased focus on MGNREGA in terms of bigger
If the vaccine is sufficiently deployed by early-2022, Egypt
outlay; rise in wages and increase in MSP of key crops have
is expected to gradually regain its growth momentum
been instrumental in keeping FMCG consumption in rural
during FY22 and FY23.
markets buoyant.
South Africa
FMCG companies are facing unprecedented flux in the
The World Bank estimates that the economy contracted
market. As per BCG research, the current crisis is likely to
by 7% in 2020, as the pandemic weighed heavily on both
result in long-lasting, structural changes in FMCG that will
external demand and domestic activity as the government
advantage early movers:
implemented containment measures. South Africa entered
the pandemic after several years of low growth. In 2019, the • Channel mix will shift dramatically in favour of ecommerce
economy grew by 0.2% (in 2018 it was 0.8%). The spread
• The economic slowdown will create flight to value through
of the virus has slowed significantly since the peak of the
low price channels and private label offerings
third wave in mid-January. In February, the first phase of the
vaccination programme started, targeting over 1.5 Million • Temporary pressure on slow turning SKUs as retailers
healthcare workers. By mid-May, around 400 thousand people, cut tail, but will be reignited and grow once supply
less than one per cent of the population, had been vaccinated. chains stabilize
The rollout of the vaccination programme has started slowly,
• This pressure may make small high growth brands attractive
affected by the abandonment of a key vaccine. However, the
M&A targets and create organic growth opportunities
government has secured around 60 Million doses of alternative
through innovation
vaccines, which should allow vaccination of the targeted 14
Million adults between mid-May and October. • Supply chains will be more localized and flexible, providing
greater resilience for future shocks along with growth for
As per OECD’s outlook, the economy is projected to rebound by
smaller local suppliers
3.8% in 2021 and 2.5% in 2022.The strong rebound at the end
of 2020 has slowed in the first half of 2021 due to a protracted • Governments, businesses, and nonprofits will continue
second wave of the virus that has held back economic activity. to promote hygienic behavior, which will lead to sustained
However, growth should accelerate in the second half of the increase in consumption

126
 Corporate Value Creation Delivering Impact Statutory Financial
Overview at Marico with Stakeholders Reports Statements

• Advanced analytics will be critical in enabling winning Phygital experiences: Consumers are spending time on
performance given the fast changing consumer and multiple digital platforms, learning to engage with brands
competitor landscape in new ways but they are also still heavily reliant on known
friendly local kirana (mom and pop) stores for localised human
As companies continue to adapt to prolonged and unplanned
connect and trust. It appears that a seamless navigation of
lockdowns, their ability to rapidly digitise the value chain,
physical and digital world may be preferable as opposed to
form alliances for manufacturing, distribution, marketing
just digital. This is further confirmed by an observed behaviour
and product development, use data analytics to understand
that there is heightened sense of awareness of physical
consumers and shoppers better to maintain and possibly
environment, products, objects by way of paying attention to
improve customer experience, will be the big differentiator
their features, make, usability, safety aspects, among others.
in the industry.
This only reaffirms the need for physical or tactile experience
As the pandemic has impacted supply chain dynamics, there that only stores can provide.
are two opposing trends around realigning assortment by
Contactless Interactions: With increased adoption of digital
retailers, as observed by Nielsen research. Retailers are now
platforms, people are learning how to shift almost all daily
stocking more categories in their stores. The trend is more
activities such as working, shopping, banking, exercising,
pronounced among rural retailers that are now, on an average,
learning/studying, socialising to a digital platform. This is
stocking as many categories as an average urban retailer does.
also slowly building confidence in our ability to survive and
Staples and Habit Forming categories (within Food basket) and
potentially thrive with our social and business transactions
Essentials (within Non-Food basket) entered more stores and
becoming contactless. However, the need for human touch
increased depth of assortment. However, to make room for
across these interactions will still always be desired.
more categories, retailers are prioritizing on two levels - firstly,
they are dealing with a lesser number of SKUs per category Sense of community: One of the positive outcomes coming
and secondly, they are stocking a lesser number of units for out of this crisis, which has impacted visibly every human
each SKU they are dealing in. life on the planet, is the sense of social solidarity that has
connected people across geographies, continents, political
Since the pandemic has reshaped our lives from how we
aisle and social strata. This has led to people taking interest
shop, travel and work, this reorganisation is going to have
in how brands and organisations are taking care of their
a significant long-lasting impact on the way businesses
employees, helping communities which is resulting in trust
design products, services and operate as well as engage with
being fostered in the brand. There is a large momentum to
customers in the future. Following are emerging behavioral
also support local origin products especially ever since the
shifts that are likely to sustain over the longer term:
‘AatmaNirbhar Bharat Abhiyan’ was announced.
Increased focus on health, immunity, hygiene and
High value for money: The increased expectations of hygiene
personal wellbeing: The heightened awareness of personal
and safety coupled with product availability in the market is
hygiene and health has led to a surge in sales of personal
leading to willingness to pay more. There is also an increased
and home care products. Consumers are also paying more
spend across certain premium categories, perhaps due to
attention to their health, which is aiding the demand for
children, pets, senior citizens/high vulnerable group at home.
immunity-positioned supplements.
Also observed is a tendency to forego price comparisons at the
Consumer shift in channel preferences will be evident: moment. At the same time, there has been reduction in income
Consumers will continue to avoid crowded places and look due an economic downturn, significantly diminishing the
for safer access to products and services. While traditional purchasing power. Hence, the long term expected behaviour
grocery retailers will see a short-term spike in demand due of the consumer is to give priority to routine expenditures and
to ease of access, e-commerce will continue to benefit as to a brand that promises safety, at the same time seeking high
more consumers start to shop online. A recent BCG COVID value out of products/services they spend on.
Consumer Sentiment Survey suggests that 50% first
The industry goes omni-channel: The changing mindset of
time online shoppers are likely to continue buying online
consumers and greater competition from e-tailers is driving
post the pandemic.
brick and mortar retailers to launch their omni-channel
Seeking trust, safety and assurance: The reduced consumer strategies and websites. With the onset of lockdowns, multiple
confidence indicates that people are seeking transparency small and medium businesses are also ramping up their online
and assurance from brands on quality, delivery, hygiene so presence, Adoption of the omni-channel strategy can help
much so that they are spending more time learning about the the organized retailers and online players to connect with
quality of the product and what measures brands are taking to customers seamlessly through their channel of preference.
safeguard employees, vendors and customers. Safety being a
Direct-to-consumer (D2C) selling has also been growing
top priority implies that consumers are willing to pay more for
among retailers: Multiple Indian brands are focusing on the
products that promise safety. The brands that will establish
D2C strategy, selling and delivering merchandise directly
trust, safety, assurance in the minds of consumers, will
to consumers without depending on intermediaries such
stand to do well.

Marico Limited Integrated Report 2020-21 127

MANAGEMENT DISCUSSION AND ANALYSIS (Contd.)
as third party sellers, wholesalers and distributors and packs gaining market share of ~120 bps during the quarter
leveraging digital or online channels. A D2C model offers and 20 bps on a MAT basis. The brand is well poised to sustain
multiple opportunities to businesses to increase profit its good run as it enters FY22 with improving salience in
margins, enhance personalization and improve digital both core and non-core markets. Nearly a third of the total
payment capabilities. coconut oil market is unorganized, which continues to provide
headroom for growth of branded coconut oil on a sustainable
Government initiatives have also supported FMCG growth
basis. Given Parachute’s volume market share in rural is much
from time to time. In April 2021, the Ministry of Food
lower than in urban, a pickup in rural spending presents us with
Processing Industries (MoFPI) released the Production Linked
an opportunity to improve our rural market share over the
Incentive (PLI) scheme for the food processing industry.
medium term. The non-focused Coconut Oil portfolio also
Considering the change in lifestyle, consumption patterns
grew by 3%. Overall, the volume market share of the Coconut
and the pandemic’s impact, the future and opportunities
Oil franchise (includes Nihar Naturals and Oil of Malabar) was
in the Indian food processing ecosystem are higher in the
at 61% (March 2021 MAT).
tertiary and value-added processed goods in the form of
Ready-to-Eat/Ready-to-Cook segments, processed fruits Saffola: Super Premium Refined Edible Oils
and vegetables, etc. which is also evident from selected The Saffola refined edible oils franchise grew 17% in volume
target segment in the PLI schemes. Moreover, the scheme terms during FY21. The brand has delivered double-digit
provides an opportunity for complete participation in all volume growth for six consecutive quarters, owing to
the target segments across the value chain –production, increased household penetration, growing inclination towards
distribution, innovation and marketing. This further validates healthy cooking and topped up by the in-home consumption
India’s push towards enabling food processing businesses tailwind. Considering the marked inflation in the edible oils
and its focus on becoming a global hub and champion of food table, we took cumulative MRP increases amounting to ~30%
processing in the future. during the second half of the year.
We have put renewed impetus on enhancing accessibility and
THE MARICO GROWTH STORY driving a compelling value proposition. Media investments
In FY21, Marico posted revenue from operations of ₨8,048 during the first half of the year continued with the ‘Saffola wala
Crore (USD 1.1 Billion), 10% higher than the previous year, khana’ campaign building brand relevance and penetration
with an underlying domestic volume growth of 7% and by reaffirming its health credentials. Subsequently, a
constant currency growth of 7% in the international business. new thematic campaign ‘Rakhe Heart ka Khayaal’ was
The business delivered an operating margin of 19.8% and launched, with a message that reverses the stereotypical
recurring net profit of ₨1,162 Crore, a growth of 11% over gender roles and emphasises the impact of stress on our
the last year on a like-to-like basis. heart to drive home the relevance of proactive heart care.
Besides mainstream media, we leveraged digital media
Domestic Business: Marico India
through targeted campaigns during the lockdown to engage
Marico India, the domestic FMCG business, achieved a
with consumers and improve availability, such as:
turnover of ₨6,189 Crore in FY21, up 9% over the last year.
The underlying volume growth was 7%. Despite significant • Tied up with food tech brands to introduce Saffola store on
supply chain disruptions owing to the lockdown during the first their delivery platforms
quarter, the business progressively scaled up with restrictions
• Launched Saffola Healthy Snackathon with a series of
easing subsequently. The operating margin (before corporate
healthy and tasty recipes curated by renowned Chef
allocations) for the India business was healthy at 21.3% in
Kunal Kapoor.
FY21 vs 22.4% in FY20. The profitability was impacted by
severe input cost push during the second half of the fiscal, • Leveraged digital media to drive realisation around
which is expected to ease over the next year. the stress that women go through everyday via the
#CareForHerHeart campaign launched under the
Coconut Oil
not-for-profit banner Saffolalife on World Heart Day.
Parachute Rigids (packs in blue bottles) grew 6% in FY21 in
volume terms, despite the demand drop during lockdown The brand gained 450 bps in volume market share to ~81% in
affecting the first quarter. During the year, we also reinforced the Super Premium Refined Edible Oils category (MAT Mar’ 21).
our hygienic processing and safety credentials in the minds
Foods
of consumers with the launch of the ‘Untouched by hand’
The Foods franchise crossed the ₨ 300 Crore milestone
campaign. We maintained resilience throughout the second
in FY21, led by 41% growth in the Saffola Oats franchise.
half, despite a pullback of consumer offers and MRP increases
The Oats franchise continued to ride the health tailwind.
taken in response to the sharp inflation in copra prices.
In line with the growth strategy of driving penetration, the
During the second half of the fiscal, the cumulative increase in
new thematic communication ‘Shaam Waali Laalach’ went
effective consumer prices was at ~9%. The brand maintained
on air. The value market share of Saffola Masala Oats
its stronghold in the branded coconut oil market with the rigid

128
 Corporate Value Creation Delivering Impact Statutory Financial
Overview at Marico with Stakeholders Reports Statements

strengthened by over 800 bps to ~94% in the flavoured oats Jasmine and Nihar Naturals Perfumed Coconut Hair Oil also
category (Mar’21 MAT). recovered well through the year. Hair & Care was re-staged
with the new proposition of ‘Damage Repair’, supported by the
In response to the heightened immunity boosting needs of
addition of aloe vera to enhance its nourishment credentials.
the consumer, we launched Saffola Honey, 100% pure honey
Parachute Advansed Aloe Vera continued to gained salience
with no added sugar. Every batch of Saffola Honey undergoes
in its key South and West markets. Nihar Naturals Almond, a
the strict Nuclear Magnetic Resonance (NMR) test, which
premium offering at an affordable price, was launched during
is among the most advanced tests in the world to check
the second quarter and received positive response.
for purity and origin of food items through spectroscopic
fingerprinting. The brand gained salience across channels Over the medium term, we aim to build on to the growth in this
during the year, and exited just shy of double-digit market franchise by adopting a three-pronged strategy:
share in key Modern Trade chains and crossed 25% market
• Continue to aggressively participate at the bottom of the
share in e-commerce.
pyramid on the back of its leadership position, as consumers
To extend the play in the immunity segment, Kadha Mix and become increasingly value conscious in their purchasing
Golden Turmeric Milk Mix were launched in select channels behaviour and demonstrate heightened preference for
of Modern Trade and e-commerce under the umbrella brand, trusted brands.
Saffola ImmuniVeda. Both the products are proprietary
• Accelerate growth in the mid segment through pricing and
ayurvedic recipes inspired by the traditional recipe of ‘Kadha’
brand renovation.
and ‘Haldi Doodh’.
• Aim to gain market share in the premium segments,
We also forayed into the chyawanprash category with the
where we are relatively under-represented, through brand
launch of Saffola Arogyam Chyawan Amrut, an enhanced
building and innovations offering higher order sensorial and
variation of the traditional chyawanprash with a proprietary
functional benefits.
combination of added ingredients that consist of Ayush Kwath
herbs, Ashwagandha, Turmeric, Giloy and 50% more Amla. Premium Personal Care
The product had a moderate start but we will continue to Premium Personal Care (contributing to less than 5% of
invest behind brand building in this franchise. revenues) recorded sharp declines given the significant fall
in discretionary category sales during the year. Livon Serums
In line with our aim to strengthen presence in the healthy foods
regained significant traction as the year progressed.
segment, we entered the plant-based protein category with
Male Grooming continued to face headwinds, although Set
the launch of Saffola Mealmaker Soya Chunks, made using
Wet Hair Gels performed better in rural India, owing to its
Super Soft Technology, which keeps the chunks juicy and
strong distribution footprint and affordability. Skin Care
tender. Made with carefully chosen ingredients and a balance
remained below par. We expect these categories to regain
of key nutritional factors, the chunks ensure optimum quality,
fervour once discretionary spends pick up as the impact of
providing 53 grams of protein for every 100 gram of product,
the pandemic recedes over the next few quarters.
13% fibre and less than 1% fat. The product was launched
digitally and in select markets. The initial response to the Beardo
launch has been promising and ahead of internal estimates. The Beardo franchise has been gradually regaining traction
after the initial COVID-induced headwinds. With the second
To further augment our healthy foods portfolio, we launched
COVID wave flaring up, we would remain cautious on the
Saffola Oodles, a perfect combination of a delicious masala
near term outlook for the franchise but will continue to
flavour and the goodness of wholegrain oats and real
invest behind the strengthening equity of the brand over
vegetables, which make for a mouth-watering snack. It brings
the medium term.
a twist to the conventional noodles with its unique ring-shape,
making it a novel offering in the category. Saffola Oodles does Hygiene
not contain maida or artificial preservatives and is a perfect We forayed into the Hygiene segment to serve the surge
snack time option for kids, teens and adults alike. The initial in demand in the wake of the COVID-19 pandemic.
response to the launch has been very encouraging. Responding to the subdued demand in this category following
the initial surge, we consciously withdrew investments and
Value-Added Hair Oils
defocused from this segment.
Value-Added Hair Oils had a flattish year. After a sharp decline
in April 2020 due to lockdown restrictions not allowing billing Sales and Distribution
for most of the month, the hair oils portfolio turned around We reach 5.3 Million retail outlets, which are serviced by our
with 11% volume growth in the 11 months ended March 2021. nationwide distribution network. This network covers 58,000
We gained ~200 bps in volume market share in overall hair oils villages in India and almost every Indian town with population
category on a MAT basis (MAT March 2021). over 5,000. We have continued to expand direct distribution
and now serve about 1 Million outlets directly.
Nihar Shanti Amla kept up its momentum across its
stronghold and non-core markets. Parachute Advanced

Marico Limited Integrated Report 2020-21 129

MANAGEMENT DISCUSSION AND ANALYSIS (Contd.)
Amid severe supply chain constraints during the quarter, we In FY21, traditional trade bounced back strongly after the
were able to generate bulk of our sales despite operating decline in the first quarter to end the year at 9% growth
with a much lower number of SKUs across key portfolios. in volume terms with rural and urban growing 15% and
We will continue to systematically drive SKU rationalisation 5%, respectively. Rural contributed to 33% of domestic
periodically to bring about incremental efficiencies in supply sales in FY21. While social distancing norms led to a 12%
chain operations. decline in Modern Trade, it spurred a stellar 60% growth in
e-commerce. Modern Trade and e-commerce contributed to
While there were multiple challenges that affected day-to-day
14% and 8% of the India business respectively. CSD (6% of
operations – localised lockdowns in cities, unavailability of
sales) was down 13%.
workforce, distribution difficulties due to lack of vehicles,
among others, a multi-dimensional responsive GTM strategy International FMCG Business: Marico International
was prototyped to tackle the same. We joined forces with Marico International, our International FMCG business,
food service aggregators to use their platforms for direct posted a turnover of ₨1,859 Crore, a growth of 12% over the
delivery to customers. Post enforcement of complete last year. The business reported constant currency growth
lockdown, we set up central tele-calling operations covering of 7%. The operating margin (before corporate allocations)
top urban outlets and rural stockists and a web application for the International business expanded to 21.3% in FY21
for retailers to directly place orders through SMS/WhatsApp from 20.1% in FY20.
Messenger. To ensure uninterrupted supplies to retailers, we
Bangladesh
introduced direct supply from our warehouses to retailers,
The business posted constant currency growth of 15% in
from factories to the customer warehouse and also tied up
FY21, maintaining the double-digit growth momentum for
with new-age logistics start-ups for delivery from distributors
the fourth successive year. Parachute Coconut Oil grew
to retailers. We introduced a direct-to-home delivery portal
9% in constant currency terms, with the non-Coconut
for consumers in select metro cities. These measures have
oil portfolio leading with 26% constant currency growth.
been critical in ensuring business continuity during the crisis.
Beliphool, ExtraCare and Aloe Vera continued to lead growth in
With markets opening up by the second half of the year, Value-Added Hair Oils. Just for Baby (baby care) and Skinpure
direct distribution improved and is now ahead of pre-COVID (skin care) ranges introduced last year also had a healthy year.
levels in both urban and rural areas. To tap into the increased To further strengthen footprint in the personal care category,
opportunity in pharmacy/chemist channels in the top 10 we launched Parachute Naturale Shampoo in three variants -
cities across the country, we appointed specialist distributors Nourishing Care, Damage Repair, and Anti Hair Fall. Just for
during the quarter. Operations have been scaled up in the Baby Skin Cream and Saffola Honey were also launched during
top 5 metros as we expand into non-metro locations across the year. As a result, the revenue share of the non-Coconut
North, East and South. Consequent to this initiative, our reach Oil portfolio in Bangladesh moved closer to 40% in FY21 from
in pharma/chemist channels increased 5-6x so far, albeit on a sub 20% in FY17.
low base. We expect the same to stand it in good stead during
The Company will continue to leverage its strong distribution
the ongoing second COVID-19 wave.
network and learnings from the Indian market to quickly scale
Over the last 2 years, we have identified rural as a growth up future engines of growth in Bangladesh. The healthy macro
engine, considering the increase in rural income driven by good indicators also provide the required thrust for growth.
harvests and government stimulus. In order to leverage this
South East Asia
increase in rural consumption, we invested in improving the
The South East Asia (SEA) business ended the year on a
rural GTM network as well as drive relevant pack and portfolio
positive note clocking double-digit growth in the fourth
mix. In FY20, we expanded our rural stockist network by 25%.
quarter after missing the mark in the first three quarters of the
While we took a pause in FY21 due to COVID-19 disruptions, in
year. The Home and Personal Care (HPC) category in Vietnam
Q4FY21, we re-started the task of further expanding our rural
witnessed recovery as the year progressed, while the Foods
network by another 25% over the next 2 years. We also made
business continued its positive momentum. Given the much
significant improvement in digitization of the rural network,
slower start to the year, the SEA business was down 3% in
thereby improving efficiency of rural spends.
FY21. Based on the series of turnaround measures taken in
Project SARAL – In order to ensure that we remain the Vietnam, we expect the business to build a sustained growth
partner of choice for channel partners across the country, trajectory ahead.
several initiatives to improve engagement, collect feedback
Middle East and North Africa (MENA)
and ensure grievance resolution through a series of surveys,
The MENA business ended at 1% cc growth in FY21.
focussed group discussions and internal stakeholder meetings
Following the decline during the first quarter due to restrictions
were undertaken. We are working to create tech-enabled
stemming from the pandemic, the pace of recovery in the
and simplified processes/solutions for issue and grievance
Middle East was faster than in Egypt. While the growth
resolution of channel partners.
outlook for this business remains muted, the Company will

130
 Corporate Value Creation Delivering Impact Statutory Financial
Overview at Marico with Stakeholders Reports Statements

stay aggressive with cost management to enable it to tide OVERVIEW OF CONSOLIDATED RESULTS OF
over the challenging macros. OPERATIONS
TOTAL INCOME
South Africa
Our total income consists of the following
The South Africa business grew 9% in cc terms in FY21, driven
1. Revenue from operations comprises sales from ‘Consumer
by the Health Care portfolio. This was after the business
Products’, including coconut oil, value-added hair oils,
declined during the first quarter due to continued macro
premium refined edible oils, anti-lice treatments, fabric
headwinds coupled with restrictions imposed to contain the
care, functional and other processed foods, hair creams
outbreak of COVID-19 in the region.
and gels, hair serums, shampoos, shower gels, hair relaxers
New Country Development & Exports and straighteners, deodorants and other similar consumer
The New Country Development & Exports business has products, by-products, scrap sales and certain other
posted 4% constant currency growth in FY21. It has been a operating income.
reasonably stable performer over the years except during
2. Other income primarily includes profits on sale of
times of external disruption. The Company remain positive
investments, dividends, interest, GST budgetary support
on the future prospects of this business, as it incubates new
and miscellaneous income.
geographies to expand its franchise.
The following table states the details of income from sales and
services for FY20 and FY21:
Particulars (₨ in Crore) FY21 FY20
Revenue from operations 8,048 7,315
Other income 94 124
Total income 8,142 7,439

There has been 10% growth in revenue from operations,

owing to 9% growth in Marico India and 12% growth in
Marico International.

EXPENSES
The following table sets the expenses and certain other profit and loss account line items for FY20 and FY21:

FY21 FY20
% of Revenue % of Revenue
(₨ in Crore) (₨ in Crore)

Revenue from operations 8,048 7,315

Expenditure
Cost of materials 4,270 53.1% 3,741 51.1%
Employees cost 570 7.1% 478 6.5%
Advertisement and sales promotion 698 8.7% 733 10.0%
Other expenditure 919 11.4% 894 12.2%
PBIDT margins 1,591 19.8% 1,469 20.1%
Depreciation and amortisation 139 1.7% 140 1.9%
Finance charges 34 0.4% 50 0.7%
Tax 324 4.1% 331 4.5%
Profit after tax after MI (excl. one-offs) 1,162 14.4% 1,043 14.3%

Marico Limited Integrated Report 2020-21 131

MANAGEMENT DISCUSSION AND ANALYSIS (Contd.)
Cost of Materials Capital Expenditure and Depreciation
Cost of materials comprises consumption of raw material, The capital expenditure in FY21 stood at `142 Crore.
packing material and semi-finished goods, purchase of The capital expenditure in FY22 is likely to be in the range of
finished goods for re-sale and increase or decrease in the `125-150 Crore. Depreciation was at `139 Crore in FY21 as
stocks of finished goods, by-products and work-in-progress. compared to `140 Crore in FY20.
In FY21, average domestic copra prices were up by 17%, rice
Other Expenses
bran oil increased by 28%, LLP was up 4% and HDPE was up 8%.
The other expenses comprise fixed (~1/3rd) and variable in
Employee Cost nature (~2/3rd) expenses. Other expenses are likely to remain
During the year under review, employee cost grew by in the range of 11-13% of turnover in the medium term.
19% over FY20 due to i) higher incentive payout owing
Finance Charges
to better performance; ii) integration of Beardo; and
Finance charges comprise interest on loans and other
iii) higher share-based payout (linked to Marico’s share
financial charges. Finance charges was at ₨34 Crore in FY21
price performance on the bourses). Excluding the same,
as compared to ₨40 Crore in FY20.
the increase in employee cost was in line with average
salary increments. Direct Tax
The Effective Tax Rate (ETR), excluding exceptional items was
Advertisement and Sales Promotion (ASP)
21.5% in FY21. Pursuant to a change in the dividend taxability
ASP spends during the year was 8.7% of sales, down by
regime, we are expecting to claim tax exemption on dividend
5% over FY20, as the Company rationalized spends in
income from subsidiaries, which is to be set off against
discretionary categories, while sustaining its focus on the
dividend distributed by us, thereby leading to a decrease in
core categories.
ETR. This tax rate is basis the accounting charge in the P&L
account. In view of the recent changes in the corporate tax

rates, we will continue to recognise tax expense after availing SHAREHOLDER VALUE
the exemptions/deductions as per the existing provisions of
Our dividend distribution policy is aimed at sharing prosperity
the Income Tax Act and not opt for the revised rate structure.
with shareholders subject to maintaining an adequate chest
However, from a cash flow point of view, we will utilise MAT
for liquidity and growth.
credit accumulated over the years. The current MAT credit
stands at ₨169 Crore as on March 31, 2021. Dividend Declared
Keeping in mind steady increase in operating cash flows and in
CAPITAL UTILISATION an endeavor to maximise the returns to for our shareholders,
Given below is a snapshot of various capital efficiency we increased our dividend payout to 750% in FY21 as
ratios for Marico: compared to 675% in FY20. The overall dividend payout ratio
in FY21 stood at 83% of the consolidated profit after tax
Ratio FY21 FY20
(excl. one-offs).
Return on Capital Employed (ROCE) 44.6 42.4
Return on Net Worth (RONW) 37.1 34.8 OUTLOOK
Working Capital Ratios (Group)
Over the medium term, we will continue to drive sustained,
• Debtors Turnover (Days) 21 26
profitable, volume-led growth, through a focus on
• Inventory Turnover (Days) 57 70
• Net Working Capital (Days)
strengthening the franchise across core categories and
19 37
driving the new engines of growth towards gaining critical
Debt: Equity (Group) 0.10 0.11 mass. We aspire to be an admired emerging market MNC with
Finance Costs to Turnover (%) (Group) 0.4 0.7 leadership in the core categories of leave-in hair nourishment,
foods and male styling in the following regions – South Asia,
Note: Turnover ratios calculated based on average balances
Southeast Asia, the Middle East, North Africa and South
The ratios continued to be healthy for the year. The variation Africa. We plan to achieve this by winning with consumers,
in ratios is due to: trade and talent. We identified the following key strategic
drivers for achieving this goal:
• We reduced inventory norms across categories and drove
comprehensive SKU rationalisation leading to reduced • Grow and premiumise the core
inventory turnover days
• New growth engines
• Reduced Modern Trade and CSD contribution and
• Create shared value
introduced stricter credit control in GT (because of
reduced inventory levels), resulting in reduction in debtor We hold our aspiration to deliver 13-15% revenue growth
turnover days. over the medium term on the back of 8-10% domestic
volume growth in the domestic business and double-digit
constant currency growth in the international business.
132
 Corporate Value Creation Delivering Impact Statutory Financial
Overview at Marico with Stakeholders Reports Statements

However, macroeconomic challenges stemming from the systems. We initiated an aggressive cost management
resurgence of COVID-19 or any geo-political instability in our programme, which will enable resource generation for brand
key markets pose downside risks to our outlook for the near building. Myanmar and the rest of Southeast Asia are growth
term. We will aim to maintain our operating margin above the engines of the future. Overall, the consumer sentiments in
threshold of 19% over the medium term. Southeast Asia are reviving and we expect to chart a sustained
growth trajectory ahead. In the MENA region, we will focus on
In India, the calendar year 2021 started on a positive note
getting the basics right by judiciously investing behind brands
with the overall sentiment and the COVID-19 curve moving
and go-to-market initiatives. In the Middle East, we will work
in the right direction, but the recovery was interrupted by
towards strengthening the Coconut Oils and Hair Oils play.
the severe second wave. We hope for caseloads to trend
In Egypt, cost management initiatives will enable the business
downwards with localized lockdowns coming into effect
to weather the persistent macro headwinds. The South Africa
and vaccination gathering pace, while the Company is
business has ended the year on an encouraging note and is
adequately prepared to tackle any disruptions in the business
showing signs of revival. We are cautiously optimistic about
environment at this time. Parachute Rigids has clocked 6%
the near-term outlook of the business but expect to protect
volume growth in FY21. Given the market construct and
the core franchise of ethnic hair care and health care over
strengthening brand equity, we expect to grow volumes in
the medium term. The NCD and exports segment has been
the range of 5-7% over the medium term. Value-Added Hair
growing healthily over the years and we will continue to invest
Oils has delivered 20%+ volume growth in the second half
in developing presence across new countries and scale the
of the fiscal, after a slow start, with most brands performing
business profitably.
well. We aim to capitalise on its leadership position in the
market and sustain a double-digit growth trajectory over the
medium term. Saffola Edible Oils exceeded medium-term
HUMAN RESOURCES
aspirations on the back of improved penetration through a Talent and culture are among the key building blocks in shaping
variety of channel/pricing/promotion measures taken over us into a resilient and sustainable organization. Over the course
the last 18-24 months. As the base catches up, we expect of the last year, we took several initiatives in this direction,
to deliver high single-digit volume growth over the medium which are presented in the chapter titled Employees. We will
term in this franchise. Having crossed the `300 Crore mark continue to focus on the following strategic areas in order to
in the Foods category in FY21, we will aim to reach the leverage the potential of our human capital:
`450-500 Crore mark in FY22 while continuing to innovate
• People-first Culture
and broaden our play. Saffola Honey has gained considerable
salience since launch this year. The brand will continue to build • Inclusion and Diversity
consumer trust based on superior quality and nutritional value
• Digitization and Simplification of People Processes
and should touch `100 Crore in revenues in FY22. We will
aggressively invest behind Saffola Arogyam Chyawan Amrut, • Building Organization for Future
Saffola Mealmaker Soya Chunks and Saffola Oodles to gain
scale and reach critical mass. We will build the Premium INFORMATION TECHNOLOGY AND DIGITAL
Personal Care portfolios into growth engines of the future
We continued to progress on our roadmap of using digital,
and deliver double-digit value growth over the medium term
analytics and automation opportunities to deliver a better
in these portfolios. In the near term, expectations remain
and integrated experience to our consumers, associates and
muted given the uncertainty in discretionary spending levels.
employees. We continued to increase the use of digital as a
With Beardo integrated into our fold and tracking healthily,
media platform, with more brands establishing their presence
the business should touch a run rate of close to `100 Crore
through online, social and mobile media as well as using
in the next year unless the second COVID-19 wave materially
programmatic buying. The share of digital in the total mix
affects the business.
has been in double digits in percent terms in each of the last
Over the last few years, we have systematically invested in four years. In addition, analytics and automation led initiatives
core international markets to strengthen both the brands helped drive consumer and customer experience, boost sales
and the organisational capability to handle growth. We are growth and efficiency and improve employee engagement.
confident that the key markets are well poised to capitalise We also aim to accelerate our digital transformation journey
on the emerging opportunities. In Bangladesh, we will through building a portfolio of at least three `100 Crore-plus
aim to maintain the double-digit growth trajectory, as the digital-first brands, either organically or inorganically, within
medium-term macro prospects look promising. Therefore, we the next three years. Further details of the latest initiatives
will leverage our distribution and brand strength to further and developments have been provided in the chapter
consolidate market shares in the core portfolios, scale up new titled Consumers.
launches and enter new categories. As a market leader, the
Vietnam business will continue to invest in the male grooming
category and drive excellence in sales and distribution

Marico Limited Integrated Report 2020-21 133

MANAGEMENT DISCUSSION AND ANALYSIS (Contd.)
• Comprehensive internal audit and review system
RISKS & OPPORTUNITIES
• Well-defined Internal Financials Controls framework
Risks are an integral part of any business environment and
it is essential that we create structures and processes that • An effective whistle-blowing mechanism
are capable of identifying and effectively mitigating them.
• Training/awareness sessions on policies and code of
For us, the risks are multi-dimensional and therefore we
conduct compliance
look at it in a holistic manner, straddling both, the external
environment and the internal processes. These risks can be • Robust Crisis Management Framework
broadly classified into following categories:
The internal control system is regularly tested and reviewed
• Strategic Risk by Independent Internal Auditor. The internal auditor is
appointed by the Audit Committee of the Board. All possible
• Compliance and Governance Risk
measures are taken by the Audit Committee to ensure the
• Financial Risk objectivity and independence of the Internal Auditor, including
quarterly one on one discussions. The Company also has a
• Environmental Risk
management audit team which carries out internal control
• Operational Risk reviews and follow-up audits. The team is also responsible
for monitoring implementation of action points arising out
• Social Risk
of internal audits.
We integrate risk management with strategy formulation and
The internal auditors and management audit team, as part of
business planning processes. Details of the risks envisaged
their audit process, carry out a systems and process audit to
along with our strategic response to the same is presented in
ensure that the ERP and other IT systems used for transaction
the chapter titled Risk and Opportunities.
processing have adequate internal controls embedded to
ensure preventive and detective controls. The audit process
INTERNAL CONTROL SYSTEMS AND THEIR includes validation of transactions on sample basis to check if
ADEQUACY the operations of the company are conducted in compliance
We have a well-established and comprehensive internal control to internal policies and ethical standards defined by the
structure across the value chain to ensure that our assets are company. The audit report is reviewed by the management
safeguarded and protected against loss from unauthorized for corrective actions and the same is also presented to and
use or disposition, transactions are authorized, recorded reviewed by the Audit Committee of the Board.
and reported correctly and operations are conducted in an
Internal audits and management reviews are undertaken
efficient and cost-effective manner. The key constituents of
on a continuous basis, covering various areas across the
the internal control system are:
value chain like procurement, manufacturing, information
• Establishment and periodic review of business plans technology, supply chain, sales, marketing, compliance
and finance with the intent to cover all material business
• Identification of key risks and opportunities and regular
processes and locations under internal audit at least once in
reviews by top management and the Board of Directors
every 3-4 years. The internal audit programme is reviewed by
• Policies on operational and strategic risk management the Audit Committee at the beginning of the year to ensure
that the coverage of the areas is adequate. Reports of the
• Clear and well-defined organization structure and limits of
internal auditors are regularly reviewed by the management
financial authority
and corrective action is initiated to strengthen the controls
• Continuous identification of areas requiring strengthening and enhance the effectiveness of the existing systems.
of internal controls Summaries of the reports and actions taken on audit findings
are presented to the Audit Committee of the Board.
• Standard Operating procedures to ensure effectiveness of
business processes We have also deployed audit analytics in the domains of
sales, procurement, manufacturing, supply chain and
• Systems of monitoring compliance with statutory
employee spends. It helps in continuous control monitoring
regulations
of control effectiveness and areas where actions are
• Well-defined principles and procedures for evaluation of required. The Internal Controls team reviews output of this
new business proposals/capital expenditure tool and derives corrective action on timely basis. In order
to strengthen control environment, audit analytics will be
• Robust management information system
deployed in other functions of Marico’s India operations as
• Comprehensive Information Security Policies and guidelines well as key international geographies.

134
 Corporate Value Creation Delivering Impact Statutory Financial
Overview at Marico with Stakeholders Reports Statements

Deloitte Touche Tohmatsu India, LLP has carried out our We have implemented a robust internal financial controls
internal audit in the year under review. The work of internal framework within the Company. The Internal Financial
auditors is coordinated by an internal team at our end. Controls have been documented and embedded in the
This combination of our internal team and expertise of a business processes. Design and operating effectiveness of
professional firm ensure independence as well as effective controls are tested by the management annually and later
value addition and protection. audited by statutory auditors. Statutory auditors have issued
an unqualified report after checking the effectiveness of
Internal Financial Controls (IFC)
these controls.
As per section 134 (5) (e) of Companies Act 2013, IFC means
the policies and procedures adopted by company for ensuring: The management believes that strengthening IFC is a
continuous process and therefore it will continue its efforts
• Accuracy and completeness of accounting records
to make the controls smarter with focus on preventive and
• Orderly and efficient conduct of business, including automated controls as opposed to mitigating manual controls.
adherence to policies The Company has robust ERP and other supplementary IT
systems which are integral part of internal control framework.
• Safeguarding of its assets
The Company continues to constantly leverage technology
• Prevention and detection of frauds in enhancing the internal controls. On a voluntary basis, our
material subsidiary, Marico Bangladesh Limited (“MBL”) has
also adopted this framework. Over time, we will extend this
framework to our other overseas subsidiaries.

Marico Limited Integrated Report 2020-21 135