Co-Founder & Joint Chairman, Emami Limited
Making It Big Season 3 - EMAMI Part 1
Two childhood friends Radhe Shyam Agarwal and Radhe Shyam Goenka set up Emami some four decades ago. The Emami ...
Transcript (20 segments)
N
Narrator0:00
The nuclear family system is gaining currency and joint family system going out of fashion is public knowledge. This trend is not just urban; it is prevalent even in rural India. Fragmentation of land among farmers is a clear pointer. In urban India, the trend is common at individual level, but even more prevalent among family businesses. Too much wealth divides the family, lack of it keeps it together. Most family businesses have split either amicably or after a bitter battle. Once divided, not all breakaway factions do well. Save for a few, many fall by the wayside. This reminds me of the old saying, 'United we stand, divided we fall.' Perhaps this had a profound impact on two promoters, Radhe Shyam Agarwal and Radhe Shyam Goenka, when they set up Emami some four decades ago. Take a look at Emami's story and you'll know how to make it big by adopting the goodness of Indian joint family system in your business.
This famous item number from the box office hit Dabangg shows how once a brand becomes a household name, it becomes a figure of speech. People say Godrej cupboard for steel cupboards, Xerox for photocopying. Likewise, Zandu Balm has become synonymous with pain reliever. The 'Zandu Balm' song has made it even more famous, but the road to brand-dom was not a cakewalk.
The seed to success was sown four decades ago when two childhood friends, Radhe Shyam Agarwal and Radhe Shyam Goenka, quit their high-paying jobs in Birla Group companies and plunged into business from a 40-square-foot office in Kolkata's Chira Bazaar street.
R
R. Goenka2:29
In the year 1968, after completing our graduation, both myself and Mr. Agarwal thought how can we meet regularly because we have already completed our studies. Then the idea of starting a business came, and that's how we started the business in 1968. So, I took 20,000 rupees from my father, and we started a small cosmetics business. And our real success came in the year 1974 when we launched product under the brand name Emami, and that was Emami talcum powder, vanishing cream, and cold cream. And that product actually met with astounding success. That was looking like an imported talcum powder or the vanishing cream or the cold cream. That's how our success story began.
N
Narrator3:15
Call it providence, destiny, or business acumen, in a very quick time, these two old buddies, who have over a dozen things in common, redefined the FMCG space. Emami, which in Italian means love me, was built on a push-pull marketing strategy. At one level, the promoters launched a series of products like Boroplus, Navratna Cool Oil, Fair and Handsome, Sona Chandi Chyawanprash to woo customers. At another level, they roped in popular cricketers and film stars like Amitabh Bachchan, Shah Rukh Khan, Kareena, Mahendra Singh Dhoni, and Kathak dancer Birju Maharaj to endorse their products.
R
R. Goenka3:59
I think Emami, in fact, has a range of stars that no one can match in this country. There's an array of stars. I'd like to rephrase MGM, Metro Goldwyn Mayer. We have more stars than there are in the heavens. And I think Emami has more stars than that.
N
Narrator4:19
That's right. Since its inception, the company has had over 60 celebrities endorsing its products. What sets it apart is its strategy to use brand ambassadors to cross-sell other brands of the company.
R
R. Goenka4:32
For a person, if he requires a Fair and Handsome for becoming fair, he may also require a Fast Relief for his backache, or a talcum powder to be fresh. So, if Amitabh Bachchan or Shahrukh Khan is good for him for a Fair and Handsome, they are also good for him for the other products of the company.
N
Narrator4:50
Besides, the management's ear-to-the-ground approach has not only helped them create a new segment, but also saw them storming into the bastion of FMCG giants like Hindustan Unilever.
R
R. Goenka5:01
So, I was in a small town in Andhra. It's very interesting. I was in a shop, and interestingly, I saw some young guys, in the age of about 18-20, about three of them. And they bought Fair and Lovely. So, I asked the shopkeeper why these guys are buying a female fairness cream. So, he said that from his shop, he sells more women's fairness cream to men than to women. And that's where the idea triggered, you know? That why all these men? Then we, of course, did a research. So, the whole idea came from the market. And we just replicated it. And now, of course, Fair and Handsome is almost a 150 crore brand in just 5 years' time.
N
Narrator5:49
And all these strategies have paid off big time. Today, Emami is the market leader in most of the categories it operates. Boroplus, Navratna Oil, Fair and Handsome, Zandu Chyawanprash, Zandu Balm are money-spinning brands.
Organically, the company was growing, but with competition intensifying, it needed to expand its range of products. The big opportunity came Emami's way in 2008 when Emami acquired the 100-year-old Zandu brand from Vaidya family for 726 crore rupees.
R
R. Goenka6:24
Uh from the company's point of view, certainly acquisitions are also a good strategy to grow. Zandu was a very, very exciting takeover. It was a company where there were so many complications in terms of holding, etc. So, certainly I wouldn't say it was a very easy takeover, but at the same time, it has been a very fruitful takeover for us.
N
Narrator6:49
These acquisitions and new launches have seen Emami beating the industry growth rate. The 1 lakh 30,000 crore rupee FMCG sector has been growing at 11% while Emami at 22%. Little wonder for the year ended March 2011, the company has earned a net profit of 227 crore rupees on a turnover of 1,278 crore rupees. So, what makes them tick?
R
R. Goenka7:16
Like every person, this company also has an X-factor. It will be difficult to define this X-factor, but if we start thinking about what made Emami grow like this, then the first thing which comes to my mind is the strong basic values, the values of humanity, the values of leadership, the values of team manship, the values of giving something to the society. And basically all these things together combined together makes a wonderful combination and a formula which is difficult to define.
Though it's a family company run by the same members of the family, it is not in that sense hierarchical too much. And secondly, there's a good mix where the family members interchange ideas and I think, you know, help each other. So it's a nice family in the sense that there's a good helpfulness. So it's a joint family in the best sense of the word. Very often in real joint families, you find that there's a lot of squabbling and this and that, but here I find very little of that and they work well together. And I think that gives them a certain strength because they can exchange ideas very informally. They don't have to be at a big board meeting. Now we will interchange idea. It happens as I said earlier in the dining room.
N
Narrator8:50
In sum, the partnership firm has now grown into a medium-size pan-India company. It has seven manufacturing units, 31 depots in 29 states, and 3,500 distributors pushing its products through 4.5 lakh retail outlets. Its five overseas subsidiaries cater to Indian diaspora in 65 countries. Having transformed Emami into a 3,500 crore rupee group with presence in cement, power, edible oil, biotech, real estate, retail, and hospitals, the two childhood friends, Agarwal and Goenka, now in their mid-60s, are getting ready to hand over the reins to their children.
H
Host9:33
On that note, we take a short break. When we come back, we will talk to 66-year-old Radheshyam Agarwal, the moving force behind Emami. Also joining us on the show will be Sandeep Upadhyay of HSBC to give us the banker's perspective.
Welcome to the future of business news. CNBC TV18 Prime HD, a service designed to change the very landscape of business news. Inspiring you with cutting-edge analysis, covering topics with 360° perspective, and powering your decision-making. India's first business news channel in HD. CNBC TV18 Prime HD.
U
Unknown10:36
Australia has been very kind to me. I've had a wonderful experience in Australia. I've been able to strive to what I've always wanted. I've always dreamt of having my own restaurant. The best things about Australia: its landscape, the people, the natural beauty, breathtaking, almost too real to be true. The Australian people, warm, inviting, friendly, ever so magnanimous. There's so much to offer, extremely things to see. It's fantastic.