Vice Chairman & Managing Director, Emami Limited
Emami's Market Dynamic & More 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 (37 segments)
I
Interviewer0:06
CNBC TV8 Weekender, welcome back. Still in conversation with the household of Emami. Before the break we were talking about K King and the individual brands. One brand that really disrupted the market was Fair and Handsome—your competitors had it for the taking, but you swooped in. Tell me how you decided to go into Fair and Handsome and how that came about.
H
Harsha Agarwal0:30
The idea came in almost 2002, when I was touring a market and saw some guys buying a female fairness cream. I asked the retailer why, and he said nearly 50% of his sales came from boys in a nearby hostel. That struck an idea. We did research and found that 30% of men used women's fairness cream.
I
Interviewer1:00
I'm sorry, I'm interrupting. Personal question: have you all tried the product? I don't think you'll need to.
H
Harsha Agarwal1:06
Trust me or not, I've been using this product for 12 years, every day. If you had seen me then and now, you'd see a visible difference.
I
Interviewer1:16
His wife? Right now there's social discord—people saying fairness creams are racism. Do you think that really holds value in terms of sales, or is it just talk?
H
Harsha Agarwal1:36
People have different opinions. We're absolutely fine with it. It's an individual's choice. Some are for it, some against, and we value everyone's choice. We want to give consumers the choice.
I
Interviewer1:52
Why have Fair and Handsome cream sales dropped about 6% in the last nine months? What are the challenges?
H
Harsha Agarwal2:00
The first few months weren't growing, and the last four or five months saw slight degrowth. The overall category is struggling, but we've changed our stance and launched a new campaign that should lift momentum.
I
Interviewer2:15
You mentioned plans for Fair and Handsome with the face wash launch. What's the sales breakup between the cream and the face wash?
H
Harsha Agarwal2:25
It's almost 20% face wash and 80% cream.
I
Interviewer2:33
Is that mix likely to change going forward? What are your targets?
H
Harsha Agarwal2:37
Face wash is an emerging category growing 20–25% year-on-year. Hopefully in the next 2–3 years, the mix will be roughly 65% cream and 35% face wash.
I
Interviewer2:47
How long before Fair and Handsome becomes a 1,000 crore revenue brand?
H
Harsha Agarwal2:53
Five years would be a good target on this growth trajectory.
I
Interviewer2:56
What kind of growth can we expect from Jandu in the next three years on an annual basis?
H
Harsha Agarwal3:01
We believe Jandu will give us higher growth than the company average. With the company targeting 13–15% next year, Jandu could be 18–20%.
I
Interviewer3:16
Lots of aches and pains in people's lives. May Jandu go to 1,000 crore? By when?
H
Harsha Agarwal3:22
Next three years for Jandu, next five years for Fair and Handsome.
I
Interviewer3:28
Tell me the Jandu bam song story. What came first—the Munni Badami song or the proposition that Jandu bam should be added? How did that advertisement happen?
H
Harsha Agarwal3:43
It just happened. They put the brand name on their own and decided to do that, so it became a superhit. We later went to them and did a contract. It was a roaring success and helped sales. But we've been pioneers in in-film advertising since a very old movie with Rajesh Khanna and Raj Babbar where the whole film revolved around Emami.
I
Interviewer4:42
I remember Emami not just as a pioneer of in-film advertising, but of advertising as a whole. Each brand has such distinct character and recall. I hope you continue that. Thank you.
H
Harsha Agarwal4:56
Thanks for your good wish.
I
Interviewer4:58
What's the new brand pipeline for the next year? How many launches can we expect?
H
Harsha Agarwal5:03
We aren't launching any new brands. Our focus is on the power brands we already have—Navaratna, Fair and Handsome, Boro Plus, K King, Jandu. We see a lot of headspace there. For example, in Men's Grooming, we have another brand called HE, and we just launched a face wash that doesn't need water. It came from consumer insights and R&D innovation.
I
Interviewer5:59
Emami's revenue grew five times in ten years, from around 600 crore to 2,600 crore. When will the next five times—roughly 12,000 crore—come? Next 10 years? Next 5 years?
H
Harsha Agarwal6:18
We don't look at a 10-year horizon. The market is dynamic and fluid. We focus on the next three years. Our target is 15–20% growth without acquisitions. With acquisitions, we could hit 5,000 crore in four years.
I
Interviewer6:59
At 5,000 crore, what would the revenue profile look like? How much from each brand?
H
Harsha Agarwal7:08
Let's wait and watch. But aura will take a big lead, and Jandu has to play a significant role to reach 5,000 or 10,000 crore.
I
Interviewer7:19
You're looking for acquisitions. What category?
H
Harsha Agarwal7:27
We're looking in personal care and healthcare—skin care, hair care, etc. Mostly personal care and healthcare products.
I
Interviewer7:38
Any announcement in the next six months?
H
Harsha Agarwal7:41
I don't think so, but we'd be happy to make announcements in the next six months.
I
Interviewer7:46
What's the plan for international business? It contributes roughly 14%.
H
Harsha Agarwal7:51
MENA and Africa are struggling, but Bangladesh is growing 25–30% year-on-year. The worst is over, and we expect improvement. A 20% growth for the next 3–5 years internationally is possible.
I
Interviewer8:24
You have the highest margins in the business at 27%. How long is that sustainable?
H
Harsha Agarwal8:33
We've been successful sustaining it, and we don't see any immediate challenge. We're confident we can manage and hold 27%. We don't foresee risks of it dropping significantly below 27%.
I
Interviewer9:08
All right, we'll take a short break and come back with more fun stuff and family stories. Stay tuned to CNBC TV8 Weekender.