Vice Chairman & Managing Director, Emami Limited
Family Matters & More @Emami 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 to understand how the founding families of the brand manage to maintain their family relations
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 (26 segments)
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Narrator0:01
CNBC TV18 Weekender.
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Host0:07
Welcome back to the third and most fun segment of the Weekender. We're in conversation with the family of Emami. Let's talk about distribution. You've been talking about 0.8 million direct reach this fiscal. The question we keep asking is, 0.8 is a given—1 to 1.2 by when? What are the targets beyond 0.8?
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Harsha Agarwal0:29
This year we've taken a very aggressive target. We were at almost 6 million, and going from 6 to 8 itself is a big task requiring 400 to 500 frontline sales guys. We'll be able to do that by March 2018. After we consolidate, we'll take the next step because this is about 2 million outlets, and it will particularly come from the rural belts. So our target is to reach 2.8 million this year. After that, distribution will be very important for us. We'll keep increasing, but our benchmark isn't how much others are reaching. It will be our strategy—our numbers will depend on what we believe is the right number for us.
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Host1:21
Now let's get into the family business, or rather how the family manages the business. It started with Mohan and your father coming together as friends. You guys are the second generation. You've been going to office since school and college. Are your children going to office as well right now? What are they doing?
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Harsha Agarwal1:45
My kids are studying in the US right now, and after they come back I'm sure they'd want to either start on their own or join the family business. My son is in the US and my daughter is in class 10. I'm sure once they come eventually, the kids will come to office quite early. The Emami Limited FMCG business for the next foreseeable future is going to be managed by the family itself. We have very senior professionals working in the company—all our HODs, even some CEOs. Our role is there; we get involved in areas where we believe we can add value. The edible oils business is doing fairly well, one of the fastest-growing brands there.
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Host2:38
Why wouldn't you merge?
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Harsha Agarwal2:40
We were talking about a healthy margin of 27%. You cannot expect that kind of margin from the edible oil business. So why would we want to dilute our margin?
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Host2:51
So no scope for internal restructuring right now for growth?
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Harsha Agarwal2:52
Not at all. Not even in the Emami Limited business.
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Host2:56
No brands that you believe are ripe for some sort of demerger?
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Harsha Agarwal2:58
Why should there be merger of anything? Don't fix anything that isn't broken. Not at all.
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Host3:04
Yeah. Don't fix anything that's not broken. Sure. Okay. So talking about not being broken, the one thing that hasn't been broken is the bond that both families enjoy. How do you all manage that?
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Harsha Agarwal3:15
It's a very natural flow, very natural flow till now. If something doesn't happen on a single day—if I don't have lunch with them the same day—it feels off. These are very simple things that come naturally to us, but they have a big impact. Every day we all have lunch together—the whole Agarwal family and the other family. All of us—Mohan, myself, my elder brother, his younger brother—all of us. That's the time when we discuss all sorts of things: business, personal, general topics, everything. You spend so much time together, and these things ultimately improve the bond. We've all played together, we've grown together. Honestly, though the surnames might be different, we believe it's one family.
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Host4:18
All right, may that bond stay as always. You're fond of books—which was the last book you read?
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Harsha Agarwal4:23
I'm reading Competitive Advantage by Michael Porter.
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Host4:29
And your biggest competitor in the space right now is...?
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Harsha Agarwal4:30
My biggest competitor is Patanjali Kesh Kanti.
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Host4:35
Now Patanjali Kesh Kanti—how much market share do they have?
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Harsha Agarwal4:39
See, Nielsen doesn't report them correctly because they sell mostly through their own stores. So it would be wrong of me to quote any figures out there.
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Host4:45
Mo, you're a fitness freak. Which of your brands, according to you, needs a high-intensity interval training? HIIT as you call it.
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Mohan4:54
Fair and Handsome.
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Host4:57
100-meter dash for Emami versus a marathon for Emami—what are the targets?
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Harsha Agarwal5:00
Short term, we have to grow at about 15%. We need double-digit volume growth. That's our immediate target. And in the long run, as we said, 5,000 crores in the next 3 years. That's our 3-year target.
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Host5:14
All right. Great life, great family, great food, and a great company. Wish you all the best. It was a pleasure talking to all of you.
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Harsha Agarwal5:21
Pleasure. Thanks a lot. Thank you so much.
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Narrator5:27
CNBC TV18 Weekender.