Vice Chairman & Managing Director, Emami Limited
Understanding Emami's Biz On Weekender, CNBC-TV18
Manglam Maloo, CNBC-TV18 caught up with Emami's Mohan Goenka, Priti A Sureka & Harsha V Agarwal in City Of Joy Kolkata ...
About Harsha Agarwal
In a 2017 interview on CNBC-TV18's *Weekender*, Harsha Agarwal discussed Emami's distribution and growth targets. He stated that the company had set an "aggressive target" to expand its direct retail reach from 6 million to 8 million outlets, requiring 400 to 500 new frontline sales staff, with a near-term goal of reaching 2.8 million outlets that year, particularly in rural areas. Agarwal also outlined Emami's financial objectives, saying the company aimed for "double digit volume growth" of about 15% in the short term and a long-term target of reaching 5,000 crore rupees in revenue within three years. Agarwal addressed questions about the company's structure and family dynamics. He said there was "no scope for internal restructuring" and rejected the idea of merging or demerging any brands, stating, "Don't fix anything that isn't broken." When asked about competition, he identified Patanjali's Kesh Kanti as Emami's biggest competitor but noted that Nielsen data did not accurately report Patanjali's market share because it sells mostly through its own stores. He described the relationship between the founding families as "a very natural flow."
Transcript (17 segments)
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Interviewer0:09
CNBC TV18 Weekender. Hello and welcome to a very special episode of the weekend. We're in the beautiful household of Emami in Kolkata. We have the whole family with us: Mr. Mohan Goenka, Mr. Harsha Agarwal, and Priti Sua. Thanks a lot for joining in. You know, I've grown up with a lot of the Emami brands, but the one thing I always wanted to know: what exactly does Emami mean?
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Harsha Agarwal0:34
You know, Emami, the word actually has its origin in Italian. And if you see the word, there's a close philology out there. The meaning basically resides with love, beautiful, the so-called feminine aspects of life. Beautiful, there.
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Interviewer1:01
So let's come back to India after the international conversation. A few months ago we had demonetization, the demon as you'd like to call it, or as all the FMCG companies would like to call it. Your third quarter was resilient. People believe that a lot of the effects could be seen in the fourth quarter. Was demonetization just a blip, or has the effect come by in the fourth quarter as well?
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Harsha Agarwal1:21
I think the impact of demonetization has reduced gradually over months. But if you ask me whether it has totally gone, I would say no. Still we see some impact, particularly in the wholesale trade, where there's still some impact. That accounts for 55% of your business any which way, right? Yeah, and I would say we are still seeing the movement in the wholesale trade is still not back to normal. Not back to normal. How long before it goes back to normal? It's very difficult to predict, but we hope it should be in the next one or two months. We hope so.
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Interviewer2:07
So Boro Plus was a bit of a contention in the previous quarter. In the southern part, K King was a bit of a contention. So have those resumed their growth trajectory? Can we expect positive growth coming in there?
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Harsha Agarwal2:17
We've seen a very healthy growth with K King earlier, and right now we are feeling the pinch out there, but it's just a matter of time and we'll be on a high. Yeah, there has been a minor blip due to demonetization, but again, we are seeing it going back to normal.
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Interviewer2:36
So in terms of outlook for K King, now you have the coconut oil coming in and the 3-rupee sachets and all of that. What would the target be? 500 crore per year revenue from K King by when?
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Harsha Agarwal2:45
500 crores in a matter of 3 years, I would say. Now, in a matter of 3 years, anytime before that, not happening. Anytime before that, market conditions. We will be happy if it happens before that. So how long before the debt completely wanes off from the company? We would be retiring this debt by this year end. Be debt free. Yes.
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Interviewer3:07
Okay, so let's talk about another brand that you amortized last quarter, which was She. In the con call you said that you all are in two minds about it, whether to sell or not. What exactly is happening there?
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Harsha Agarwal3:17
Since then, we had decided now as a company. We still believe there's a lot of potential in the family and hygiene category, but we have other priorities and we have decided to focus on the other priorities in the existing brands. Right now we have decided to defocus the She brand. So that is where it stands. We will not be doing investment on the She brand, and right now no plan to sell it. No, right now we have taken it off the market. So yes, going forward we will see what we do with the brand.
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Interviewer3:51
So if you look at Emami, the core business which is that of your cool oils, you have Zandu, you have K King coming in along with Boro Plus and stuff. Over the last 9 months, the core business seems to have slowed down. Any particular reason for that in terms of growth rate and all of that?
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Harsha Agarwal4:07
No, if you see, we've got very healthy growths with Boro Plus. The core businesses, so to speak, of Boro Plus has seen a very healthy growth. But Navaratna and Fair and Handsome have... I think Navaratna is picking up. Navaratna has done quite well. Early it is the impact of demonetization which has been there. And if you see, our market share in all our brands has increased, which is a very important parameter to measure the health of the brands. So be it Navaratna oil, be it Fair and Handsome, be it Zandu Balm, be it Boro Plus, everywhere our market share has increased. So basically, overall the whole category of FMCG, the growth rate has come down a bit. So that is what we are seeing across categories, across companies, across brands. But yes, we are quite satisfied with the performance of all our power brands.
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Interviewer5:07
So going on a sustainable basis, 15% or 12 to 15% growth for the power brands, is that factored in?
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Harsha Agarwal5:11
Yeah, we are very confident. I think also this year we are going very aggressive in our total advertising and the mix also. So I think 12-15% is a reasonable target. And the new core would be 20% plus, 25% at least. Your Purnaris as well as the other new brands that you have come out with. Purnaris in fact has been giving us a growth rate of 30-35% CAGR. Exactly. So yes, going forward also we expect healthy growth rate from Purnaris and the other healthcare products. There's no doubt about that because we see huge potential in the health products. The overall Zandu brand, absolutely. In fact, you will be seeing a lot of activities around Zandu this year. We are going ahead with revamping the whole brand with the repositioning of the mother brand of Zandu. So those will happen in the second part of the financial year.
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Interviewer6:09
So you spoke about going big in advertising this year. 18% of sales is what is factored in, or you are going to increase that as well?
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Harsha Agarwal6:18
So most likely it would be that. But if we need, we are very need-based. If we see that the momentum is coming in, then we would up our advertising. So roughly we have estimated almost 19-20% this year.
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Interviewer6:32
We'll take a short break, come back, and we'll talk Fair, we'll talk Handsome only with the family of Emami. CNBC TV18 Weekender.