Oiling the wheels of growth

LUNCH WITH BS/Harsh Charandas Mariwala

Around the mid-1990s, then Hindustan Lever Ltd (HLL) chairman Keki Dadiseth sounded him on selling his company. According to one version of events, considerable pressure was put on him to sell his business.

But Harsh Charandas Mariwala, chairman and managing director of Marico Industries, dug in his heels. Later he even discussed an alliance against HLL with Nirma's Kersanbhai Patel, though he now dismisses this as having been just "a casual talk".

Mariwala today is uncomfortable discussing the episode but bends enough to disclose that HLL did not mention any sale price. "I was clear I would not be selling out. Money beyond a point is not relevant.

Whether I have Rs 50 crore or Rs 500 crore, I am not going to change my life style," he says. But he learnt a lesson. "We learned not be scared of anyone," he adds much later.

We are lunching at the Taj Land's End in Bandra, the Mumbai suburb. Mariwala lives in Bandra and his office is a few minutes' drive from the hotel, which is why he chose this venue. I arrive late and Mariwala, punctilious about time, is furious, on the verge of calling off the lunch.

But his innate courtesy takes over and we head for the hotel's Chinese restaurant, Ming Yang. He's a vegetarian, but has no food preferences. Quite the contrary. Food does not really interest him. Nor does he eat out often "" once or twice a year, at the most. "I go out very rarely. For me, lunch is just a break and then it's back to work," he explains.

The tall, balding Mariwala is an unpretentious industrialist, a man who's not overly concerned about the accoutrements of wealth. He's dressed casually in a shirt and trousers.

At 52, he looks trim. He should "" he says he's very finicky about health and exercises every day. He walks, listening to music, and lifts weights at a gym thrice a week. "On Monday, it's the gym, on Tuesday I walk, on Wednesday I go to the gym, on Thursday I walk, on Friday it's the gym again and on Saturday and Sunday I play golf," he says.

What sort of man is Mariwala? Does he have lots of friends? He comes across as a private person but says he has friends in different circles.

It's time to order food. We decide to settle for the steward's suggestions "" Ming Yang chicken for me, a vegetarian dish for him, with steamed bread, followed by another vegetarian dish and chicken. Both decline to order coffee or dessert. It's a sparse meal but we are disinterested in sampling the restaurant's gastronomical delights.

I gently probe Mariwala's past. His family originally were spice traders (the name Mariwala means a trader in black pepper) from Kutch, though the last two generations have lived in Mumbai. His grandfather started the business in Bombay and south India, and his father was responsible for the transition from trading to manufacturing.

After obtaining a B Com from Mumbai's Sydenham College, Mariwala, an only son (he has three uncles), joined Bombay Oil Industries, the family company, in 1971. Bombay Oil Industries then had a presence in spice extracts, chemicals and edible oils. He headed the edible oils business.

"The bulk of our turnover came from edible oils, supplied in barrels, in big tins branded as Parachute and Saffola, and supplied loose to other packers. I did not have any management background. It was a small company, we hardly had any professionals, so I had no one to teach me," he notes.

In 1975, he switched the company's oil packaging to plastic bottles. Bombay Oil had earlier tried to launch oil in plastic containers but that had failed. "There was huge dealer resistance to plastics. We ourselves had launched plastics before I joined and it completely flopped, so there was a negative mindset. I had to fight internal and external battles," he recalls.

Plastics cost roughly half the cost of tins; so profits improved dramatically and the company put more money into marketing, advertised the product on TV and so turned Parachute from a brand that was present only in Gujarat and Maharashtra into a national brand. By then, he'd built up the consumer products division to an Rs 80 crore business, from less than Rs 50 lakh when he joined it.

In 1988, he formed Marico Industries, which two years later took over Bombay Oil's consumer products division and then went public in March 1996. Marico will end this fiscal year with a turnover of Rs 880 crore.

It now has several brands: Parachute and Oil of Malabar, both coconut oil products that together accounted for 49.1 per cent of the coconut oil market in 2003 and are market leaders (HLL's coconut oils had a market share of 12.4 per cent, according to ORG-MARG figures); Revive, a fabric starch which again is a market leader; edible oil brands Saffola and Sweekar (number three in the market); Mediker, an anti-lice treatment product (number one in the market); and three hair oil brands (number two). The company has been reducing its dependence on Parachute from about 75 per cent of sales in the early 1990s to about 45 per cent of sales now.

But can a company that is dependent on edible oils and hair oils survive in a market that will soon be flooded with imported products? Mariwala is convinced that it can. About 60 per cent of the hair oil in India is still sold in loose form, and most Indians still don't use hair oil.

So an opportunity exists here, he says. Then, Marico exports coconut oil to west Asia and has a full-fledged subsidiary in Bangladesh. This is, he says, an area where Marico has no global competitors. He also argues that there's no reason to worry about competition from multinationals, that hair oil is a low priority area for them, that Proctor & Gamble had thought of launching a Pantene hair oil but didn't, and that the trick is to identify areas where multinationals won't enter.

In its pursuit of niches, Marico took over a small company in the US that offers spa products and repositioned it to offer Ayurvedic massage products. "We give the products, we train people in massaging, then the products are sold in the spas. It is a small market, we are doing a turnover of only $ 1 million. The US is a very expensive market, so you cannot advertise and brand the products. We have to do it differently," Mariwala says.

Furthermore, Marico has launched a skin treatment subsidiary called Kaya. "If you go there, you are examined by a dermatologist who recommends treatment. Currently, we have five clinics but in a month's time we will have seven clinics in Mumbai. In Delhi we have three now, but in a month we will have three more," Mariwala says.

Will Marico grow through brand acquisitions, I ask. After all, it tried unsucessfully to acquire the Chandrika soap brand. One should always be open to brand acquisitions, he replies, though Marico is not negotiating for any brand at the moment. Is Marico's Sil brand of jams, then, still up for sale? "It is a small, Rs 7 crore to Rs 8 crore brand. If we get a good buyer, one would look at it," he says.

How hands-on is he at Marico? Does he control the company tightly? He says he doesn't, but does know what's going on through reports that are sent to him, and that he talks every day to executives who report to him.

"My whole objective is to add value to whatever someone is doing. I want to get involved in the strategic creation and to understand what is happening. Marico is, in a way, a highly-empowered company, but at the same time I must know what is happening in the key areas," he says.

Before we rise from the lunch table, I ask him a question. What mistakes has he made in his life? If he were to live his life again, would he do things differently? He admits to two mistakes "" he was very rigid on labour matters and faced two battles with his company's union, including a three-month Datta Samant-led strike.

Secondly, he says he did not deal with factory safety proactively, until a worker died. But no, had he to live his life again he would not launch some other business.

Yet the big question is, what would happen to Marico if he were to die tomorrow? He's not flustered by the question. Nothing will happen in the short term, he replies. It will go on autopilot for some time. But yes, he has no answer as to who will step into his shoes. His 21-year-old son is still studying in New York and his daughter is 23.

"That is an issue I will have to resolve within the next two or three years, because it is too dangerous for the organisation and the owners," Mariwala adds.