This document provides an overview of Emami Limited, an Indian personal care and healthcare company. It discusses Emami's vision, mission, competitive position in the industry, and strategic approaches. Key points include:
- Emami is a leading player in India's personal care industry with a portfolio of over 250 ayurvedic products.
- Its vision is to make people healthy and beautiful naturally. It aims to be a major player in every category and a global brand.
- Emami has a strong competitive position, consistently outperforming industry growth, and market leading brands like Boroplus and Navratna oils.
- The document discusses Emami's competitive strategies around sales, profits, and portfolio
This document provides an overview of Emami Limited, an Indian personal care and healthcare company. It discusses Emami's vision, mission, competitive position in the industry, and strategic approaches. Key points include:
- Emami is a leading player in India's personal care industry with a portfolio of over 250 ayurvedic products.
- Its vision is to make people healthy and beautiful naturally. It aims to be a major player in every category and a global brand.
- Emami has a strong competitive position, consistently outperforming industry growth, and market leading brands like Boroplus and Navratna oils.
- The document discusses Emami's competitive strategies around sales, profits, and portfolio
This document provides an overview of Emami Limited, an Indian personal care and healthcare company. It discusses Emami's vision, mission, competitive position in the industry, and strategic approaches. Key points include:
- Emami is a leading player in India's personal care industry with a portfolio of over 250 ayurvedic products.
- Its vision is to make people healthy and beautiful naturally. It aims to be a major player in every category and a global brand.
- Emami has a strong competitive position, consistently outperforming industry growth, and market leading brands like Boroplus and Navratna oils.
- The document discusses Emami's competitive strategies around sales, profits, and portfolio
Submitted by - Group B5 Aayushi Singh, 13041 Mudassir Sharieff G M, 13063 Neenu Varghese, 13064 Pratik Porwal, 13070 Ruben Barreto, 13074 Group B5, II PGDM
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Table of Contents Introduction .......................................................................................................................... 3 Vision .................................................................................................................................... 3 Mission .................................................................................................................................. 3 Competitive structure of the industry ................................................................................. 4 Competitive position of the company ................................................................................. 4 Competiveness and Position of rivals ................................................................................ 6 Major Competing companies in FMCG segment ................................................................ 6 Drivers for Growth ................................................................................................................ 7 SWOT Analysis ..................................................................................................................... 7 Key Success Factors Emami ............................................................................................ 8 Strategic Approach .............................................................................................................. 8 Approach for top line growth - Sales .......................................................................................... 8 Approach for bottom line growth - Profits ................................................................................ 8 Porters 5 Forces Model Analysis ....................................................................................... 9 External Factor Evaluation Matrix EFE Matrix ................................................................10 Internal Company Analysis .................................................................................................10 Competition Analysis ..........................................................................................................12 Financial analysis ................................................................................................................12 Ratio based analysis ...........................................................................................................12 Strategic Formulation SWOT analysis ............................................................................14 Strategic Formulation BCG Matrix ..................................................................................14 Competitive Advantages of Emami ....................................................................................15 Business model and Value Proposition .............................................................................15 Business Model ...................................................................................................................15 Value Creation .....................................................................................................................16 Strategies in action .............................................................................................................17 Future Prospects .................................................................................................................19 Projections ...........................................................................................................................20 Projected Income Statement for next 3 years ...................................................................20 Conclusion ...........................................................................................................................22 Bibliography ........................................................................................................................22 Group B5, II PGDM
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Emami Limited Introduction Emami Limited is one of the leading and fastest growing personal and healthcare businesses in India, with an enviable portfolio of household brand names such as BoroPlus, Navratna, Fair and Handsome, Zandu Balm, Mentho Plus Balm and Fast Relief. Established in 1974, Emami has a portfolio of over 250 products based on Ayurveda formulations. Emami Limited, the flagship company of the Group, recorded a turnover of Rs 1821 crore in the financial year 2013-14. Vision Making people healthy and beautiful naturally Mission To contribute whole heartedly towards the environment and society integrating all our stakeholders into the Emami family To make Emami synonymous with natural beauty and health in the consumers mind To drive growth through quality and innovation in products and services. To strengthen and foster in the employees, strong emotive feelings of oneness with the company through commitment to their future To uphold the principles of corporate governance To encourage decision making ability at all levels of the organization We would strive To be part of every household in the country To be a major player in every product category we venture into To be one of the most respected marketer in the country To be recognized as a global brand Group B5, II PGDM
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Competitive structure of the industry The consumer products industry has been growing at a brisk pace in the past few years backed by robust economic growth and rising rural income. Growth drivers such as rapid urbanization, evolving consumer lifestyles and emergence of modern trade have shielded the industry from the slowdown. The industry is still urban-centric with majority of the goods being consumed by urban India. Metropolitan cities and small towns (population of 1-10 lakh) have been driving the FMCG consumption in urban India since 2002. Consumer goods are retailed through two primary sales channels - General Trade and Modern Trade. General trade comprising of the ubiquitous kirana stores is the largest sales channel forming 95% of overall retail sales. The implementation of the Goods and Services Tax (GST) is expected to benefit the sector immensely by reducing the overall incidence of taxation. GST aims to reduce the cascading effect by replacing a multitude of indirect taxes such as central excise, service tax, VAT and inter-state sales tax with a single GST rate. Competitive position of the company Emami Limited, the flagship company of the Rs 2000 crore Emami Group, is a leading player in the personal and healthcare consumer products industry in India. A jewel in the crown of the conglomerate, the company is a coveted Rs 700 crore business entity engaged in manufacture and marketing of health, beauty and personal care products that are based entirely on ayurvedic formulation. The companys financials show it has repeatedly outperformed the industry standards. Emami Ltd has maintained a CAGR of 25% over the last three years compared to the industry average of 16-17%. Understanding the human needs and fulfilling them by dint of technical research is a positive feature of Emami. This is being made possible by Himani Ayurveda Science Foundation (HASF) that generates the very best of Ayurveda formulations. The foundations unique range of healthcare products aptly caters to consumer needs. The world class quality control methods and processes maintained by HASF ensure Group B5, II PGDM
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optimum utility of each ingredient. The foundation is completely engaged in constant innovation and pharmaceutical enhancements. Boroplus brand is the market leader in the antiseptic cream segment; the Navratna Oil is also in the pole position in the cool oil segment. Fair and Handsome is the pioneer in the fairness cream for men segment. Emamis products in different categories like cool oil, antiseptic cream, fairness cream for men, and the crme herbal hair pack have carved a niche for themselves in their respective segments. Boroplus has been selected as among the top 100 brands by the Brand Equity of The Economic Times. In 2006 and 2007, Navratna has been ranked the 6th Most Energized Indian Brand by the DY&R Brand Asset Valuator. Sona Chandi Chyawanprash, Himani Fast Relief, (Ayurveda pain relief ointment) Mentho plus (pain balm), Hairlife (crme herbal hair pack) and Emami Malai Kesar (cold cream) are also major players in their respective categories. Brand extensions have helped Emami consolidate its position in the market and also cater to varied consumer needs. Emami covers all the states with 28 depots across India. Its supply-chain management assumes immense significance which was aptly reflected through remarkable expansion in dealer-distribution network, outlets and manpower. The domestic sales and distribution division directly covers 4,00,000 outlets all across the country along with an additional 2100 modern retail outlets. Emamis products reach out to nearly 30 lakh retail outlets across India through 4,000 distributors. Emami Limited has recently been conferred the Most Enterprising Company of the Year by IIPM (Indian Institute of Planning and Management) and The Sunday Indian publication of the Planman Media Group. In 2007, the company received the Institute of Cost and Works Accountants of India (ICWAI) Award for Excellence in Cost Management. In East India Emami occupies leadership in sectors such as paper and newsprint, private hospital, edible oil, bio-diesel and real estate. Emami also has presence in ball Group B5, II PGDM
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pen tips manufacturing, contemporary art and retail chain with Frank Ross and Starmark. Emami has also signed a MoU for a cement plant in Chhattisgarh. Competiveness and Position of rivals
Major Competing companies in FMCG segment HUL Nestle Marico ITC
Name Last Price Market Cap. (Rs. cr.) Sales Turnover Net Profit Total Assets HUL 619.45 133,993.71 28,019.13 3,867.49 3,277.05 Dabur India 187.70 32,964.79 4,870.08 672.10 1,946.63 Godrej Consumer 815.00 27,744.71 4,079.84 564.84 3,021.92 Colgate 1,512.00 20,562.11 3,578.81 539.87 599.86 Marico 248.80 16,044.44 3,682.49 577.20 2,647.62 P and G 4,285.00 13,909.43 1,686.78 203.22 805.32 Godrej Ind 364.55 12,229.02 1,453.55 119.69 2,491.74 Emami 516.50 11,722.88 1,627.09 323.77 820.85 Gillette India 2,150.00 7,005.82 1,437.72 87.16 649.23 Bajaj Corp 242.90 3,582.78 671.73 150.44 483.82 Jyothy Labs 178.30 3,227.65 1,260.18 106.11 1,261.24 JHS Svendgaard 8.60 20.72 35.28 -28.79 149.70 GKB Ophthalmics 31.85 13.23 31.38 0.83 30.95 Group B5, II PGDM
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Drivers for Growth Growing Population Rapid Urbanization Evolving consumer lifestyle Modern trade Taxation Special reference to Goods and Services Tax GST SWOT Analysis
Strengths Brand name Research and Development Distribution Channel Market Share First Mover Advantage Mens Fairness Cream
Weakness Lack of Diversification Oppurtunities Growing Population Evolving consumer lifestyle Diversification in related categories
Threats Entry of International brands Unbranded Healthcare products Group B5, II PGDM
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Key Success Factors Emami Ayurveda Formulations Strong Distribution Channel 40000 distributors and 400000 outlets across the country Product innovations and brand extensions Effective and efficient cost control initiatives in marketing Low cost manufacturing techniques Strategic Approach The group strategy is for growth through both Organic and Inorganic expansion which is driven by power brands, upcoming brand extensions and new launches, coupled with a wider international presence through acquisitions. Approach for top line growth - Sales Enhance product recall through aggressive promotion via celebrities Expand distribution to reach rural pockets Differentiated Value For Money products Innovate and enter new product categories Undertake brand extensions Wider international footprint ,entry in new geographies drive exports Leverage existing distribution network Approach for bottom line growth - Profits Engage in effective and continuous cost control initiatives Reduce proportion of ad- spend with increase in volumes Stabilization of new launches and brands Enjoy benefits of economies of scale Leverage on low cost manufacturing taking full benefit of location advantage
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Porters 5 Forces Model Analysis
Forces Intensity of the Force Critical Reasoning Risk of Entry of Potential Competitors Moderate No identified new entrant other than ITC in the segment Emami has strong presence in the markets it caters to Rivalry among established companies Moderate to High Consumption pattern and Demand show increasing trend Distribution network being common is a critical factor Bargaining power of buyers Moderate to High Dominance of consumer is high Dependence on end consumers is high Switching brands is easy Bargaining power of suppliers Moderate to Low Dominance of suppliers is low Dependence on supplier is not so high as every company has multiple suppliers for same resources Switching costs are low Substitute Products Moderate to Low No good substitutes are available Quality of substitutes is questionable
Overall the threat is moderate; however, Emami keeps on evolving itself by creating and sustaining value for money products and fulfill consumer needs in every possible aspect. This competent feature of Emami helps it overcome competition and beat the industry performance year on year.
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External Factor Evaluation Matrix EFE Matrix
Total weighted average score is 2.95 which indicate that the company is well equipped with strategies and tactics to face the external environment. Internal Company Analysis Strengths Brand name A strong brand name is a major strength of Emami. This gives Emami the ability to charge higher prices for their products because consumers place additional value in the brand.
Key External Factor Weight Rating Weighted Score Opportunity Factors Rural Business development .05 4 0.2 Distribution Network .2 3 0.6 Modern Trade practices E commerce .1 2 0.2 Government Policies Taxation .05 2 0.1 Growing Incomes levels .1 3 0.3 Rapid Urbanization .05 3 0.15 International Markets .05 2 0.1 Threat Factors Entry of International brands .05 4 0.2 Private Label Brands Unorganized local products .15 4 0.6 FDI in retail .1 3 0.3 Consumer preference .1 2 0.2 Group B5, II PGDM
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Strong brands in its portfolio Rs 100 crore plus brands - Boroplus, Navaratna, Fair & Handsome, Zandu Emami covers all the states with 32 depots across India and enjoys a wide distribution network comprising strong network of 3500 distributors and 40000 sub distributors , with direct retail reach across of 5,00,000 outlets Customer loyalty Procurement policy Company procured raw materials from vendors from no excisable areas like Assam, Uttaranchal and Himachal Pradesh etc at affordable costs Hedging Company strengthened their hedging policy to mitigate the risk of volatile commodity prices. Operational excellence: Automated processes - filling, capping, labeling and cartooning. More than 80% of the production is derived from tax-exempt zones. Outsourcing manufacture of select products to reduce costs and focus on branding. Research and development Weaknesses Lack of diversification Company offering FMCG products based on Ayurveda only and hence limits its scope of product mix. Emami focuses only on products with higher margin. Company depends on ITC e-Choupal to distribute its product and does not have its own system established. Lack of scale A lack of scale means Emamis cost per unit of output is very high. Increasing volume, while maintain quality, would help reduce those costs Competition at peak
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Competition Analysis
Sales data of competitors for the years 2012 and 2013
Financial analysis
Ratio based analysis The EV/EBITDA ratio is a relevant ratio for financial analysis. Emami Ltd shows a EV/EBITDA ratio of 22.72 for the next 12 months. This is significantly higher than the median of its peer group: 14.82. According to this financial analysis Emami Ltd's valuation is way above its peer groups. This ratio is significantly higher than the average of its sector (Software): 8.89. According to this financial analysis Emami Ltd's valuation is way above its sector's. The liquid ratio is decreasing year after year. Though the ratio is above 1 in all the five years, it is preferable to improve upon the situation. This may be due to the fact that the stock is major composition of current assets, which excludes liquid assets. The debt to equity ratio is decreasing year after year, which indicates, the servicing of debt is less burdensome and consequently its credit standing is not adversely affected. Group B5, II PGDM
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The cash ratio is decreasing year after year. The fixed assets ratio is increasing year after year which proves that the fixed assets are utilized to its optimum level, thereby increasing the production and reducing the cost. It can be stated that the working capital management of the company seems to be satisfactory. But in certain years there is decrease in working capital, which is due to higher amount of current liabilities especially, increasing in provision for dividend and taxation and creditors. Internal Factor Evaluation Matrix IFE Matrix
Total weighted average score is 3.45 which indicate that the company is well equipped with strategies and tactics to tackle the internal environment changes. Key Internal Factor Weight Rating Weighted Score Opportunity Factors Market share .2 4 0.8 Quality .1 3 0.3 Operational Efficiency .15 2 0.3 Customer Loyalty .05 3 0.15 Threat Factors Product mix .2 4 0.8 Lack of diversification .1 4 0.6 Economies of scale .1 3 0.3 Counterfeit products .1 2 0.2 Group B5, II PGDM
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Strategic Formulation SWOT analysis
SWOT Analysis Strength Develop niche segments into brands First movers advantage - Fair and Handsome Domestic distribution network Strong brands - Boroplus, Navaratna, Fair & Handsome International presence Weakness Lack of diversification Opportunity Demographic trends Related diversification into growing categories 3. Modern retail distribution E commerce Threats Competition - Recognized Brands and Private Label Brands FDI in retail
Strategic Formulation BCG Matrix
Star - Boroplus
Question Mark - Mentho Plus
Cash Cow - Fair and Handsome Dog - airlife
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Competitive Advantages of Emami Sustainable business model Innovative marketing campaigns Distinctive product lines Product differentiation Wide and direct distribution network Business model and Value Proposition Emami Ltd. is engaged in the business of manufacturing and marketing personal care, health care and beauty products. Business Model 1. Value propositions It is a promise of value to be delivered and acknowledged and a belief from the customer that value will be appealed and experienced. Emami promises to Make people healthy and beautiful, naturally and it certainly delivers all its promises through it different brands like Navratna oil, Fair and Handsome, Zandu balm (Acquired Zandu brand) 2. Target customer segments Majority of the customer base of Emami is from rural segments. Revenues close to 50% are from rural sales. 3. Distribution channels Geographical presence increased to 40lakh outlets in India Direct reach increased by 20% to 6 lakh outlets Core capabilities Distribution channel and unique products Rs. 279 crore spent on advertising and promotions Strong network of 3000 distributors and 5600 sub-distributors, with a direct reach across 6,00,000 retail outlets Availability of products across 40,00,000 outlets 4. Customer relationships: Project Swadesh increased Emamis distribution down to rural and isolated population clusters of up to 10,000 Group B5, II PGDM
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5. Low competitive intensity Emami is the market leader in almost all the segments it is present because of the unique products and less competition 6. Low Penetrated and Niche product categories Antiseptic cream category Pain management category Mens fairness cream sector Cooling oil category 7. Innovative & effective products Fair and Handsome for Men (Fairness cream for men) Value Creation
The Company follows the strategy of extending brand equity through sub-segmentation of the core brand, hence expanding market reach
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Strategies in action
1. Functional Strategies
Differentiation Launch of Emami Talcum, Emami Vanishing Cream and Emami Cold Cream and glycerin soap , which were great favourite brands with the quality conscious consumers in the mid-seventies. The company soon became adept in selling beautiful dreams to Indian women interested in finding their own identity. The signature tune of Emami played over radio and TV became a household favourite.
Innovation Emami provides products that take the consumer experience a few notches ahead each time. This is because Emami has commissioned a dedicated research unit stewarded by experienced industry professionals who reconcile the wisdom of ayurveda with the discipline of professional science. In 2005, Emami created a completely new market segment by introducing Indias first fairness cream customised for men. Travelling the region and by interacting with a host of retailers and intermediaries Emami discovered that 30 to 35 per cent of users of fairness creams are men, with a growing interest in personal grooming. The sales of Fair and Handsome in its first year had touched around Rs 50 crore. Another feather on the cap was when Emami roped in Bollywood superstar Shah Rukh Khan to endorse the brand, targeting the male fairness cream market in India which immediately made the brand even more popular and trusted by the consumers. In 2006 the company decided to introduce a Health Care Division and a number of new brands of Ayurvedic OTC medicines. The company has taken up the challenge of growing this new division with a dedicated and enthusiastic team working on this project.
2. Business Strategies
Penetration into rural markets Emami has selected to work in under-penetrated segments with potential and introduced aspirational products without compromising mass relevance. In a world where sustainable success is derived from sales across a wide footprint, Emami has invested in deep geographic penetration. Emami has leveraged its rural distribution channels that have made it possible for the Companys brands to be sold down to rural population clusters of 10,000+. Group B5, II PGDM
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Emami first invested in creating a separate distribution system for rural markets under Project Swadesh in 2010-2011. It has since covered 8,000-9,000 villages, each with a population of 20,000 or above, across 15 states, including Uttar Pradesh and West Bengal.
Pricing Emami is planning to take on Johnson and Johnson in the baby products arena with a two-pronged strategy which hinges on working out a right pricing formula on the one hand and marketing products based on ayurveda on the other. The company had priced its products at least 20-30 per cheaper than the market- leader while introducing smaller packs to expand the market and bring baby products within the reach of all. Emami has also revised its product prices. Over the past one year, it has launched Zandu balm and Navratna oil in Rs.2 and Rs.1 packs, respectively. It is also test marketing talcum podwer pouches priced at Rs.1 under the Navratna brand in Uttar Pradesh and Bihar.
3. Corporate Strategies
Mergers and Acquisition In 2006, J B Marketing & Finance Ltd., the erstwhile marketing company of the Emami Group merged with Emami Ltd. and the total turnover of Emami including sales in domestic and export market stood at Rs 516 crores at the end of the fiscal year 2006-07. Within three decades, the company Emami Ltd has a turnover of Rs. 1500 crore, the flagship company of the Rs.5000 crore Emami Group.
Emami Limited with an investment of Rs 730 crore acquired Zandu Pharmaceuticals Works Ltd on the basis of huge business synergy between Zandu and Emami. Post the acquisition of Zandu Pharmaceuticals, a century old household name in India, some of its prominent brands like Zandu Balm, Zandu Chyawanprash, Zandu Kesri Jeevan, Zandu Pancharishta, Sudarshan and Nityam Churna came under Emamis basket of brands.
Business restructuring The Emami group is looking to restructure the business of its recent acquisition, the Mumbai-based pharma firm, Zandu Pharmaceutical Works. A Rs 2,000 crore diversified group with interests in the FMCG sector, healthcare and realty, Emami also plans to recast its realty business managed by group company Emami Realty. Emami Ltd has been looking to consolidate Zandu's business and become a dominant player in the FMCG segment. Since the Group B5, II PGDM
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company has tremendous growth potential, Emami intends to tap them to improve its topline as well as bottom-line. Future Prospects Based on the following points, Emami Group is expected to grow between 8 to 10% yoy over next 2 years. The points mentioned below refer performance in the year 2013 in comparison to year 2012. Initiations in Operations Initiated to cover 600 distributors under the outreach secondary sales software, contributing to 60% of sales Land acquired for third unit in North-east India under a mega project scheme and the unit is expected to commence operations in FY16 Construction initiated for warehouses in 4 locations : Kolkata, Patna, Ambala &Guwahati Performance in Sales and Turnover Consolidated net sales Rs 1,821 crore grew by 7.2% Domestic sales Rs 1,511 crore grew by 5.1% International business Rs 221 crore grew by 23.0% Cost of goods sold at 37.4% of sales decreased by 470 bps. Profitability EBIDTA Rs 441crore grew by 27.1% EBIDTA margin 24.2% improved by 380 bps PAT Rs 402.4 crore grew by 27.9% PAT margin 22.10% improved by 357 bps EPS 17.73 also grew by 27.9%
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Projections Projected Income Statement for next 3 years
The growing business trend and operational efficiencies are the major reasons for this prediction. Increase in distributor capacity, Investment in plant capacity is definitely resulting in top line growth Sales. Brand name, strong distribution network are major strengths of the company which can provide competencies in the long run. Differentiation, Pricing, Mergers and Rural penetration strategies are expected to provide for the projected growth of 10% in the domestic markets. Costs associated are investment in 25,000 outlets across the country, re-launch of certain brands with value added benefits.
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Projected Position Statement for next 3 years
The growing business trend and asset additions form basis for this projection. Wealth maximization and creating shareholder value are major strengths of the company. Diversification and vertical integration are the strategies adopted to provide for the projected growth. Investments in plan Rs 125 crore to expand capacity at various plants across the country in next 3 years. Rs 200 crore on construction of warehouses at 4 locations : Kolkata, Patna, Ambala & Guwahati
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Conclusion The inception of Emami Group took place way back in mid-seventies, in West Bengal; it was an extremely bold step in the early seventies when the Indian FMCG market was still dominated by multinationals. Within three decades, the company Emami Ltd has a turnover of Rs. 1500, the flagship company of the Rs.5000 crore Emami Group. Today, Emami Limited is led by Mr. R S Agarwal and Mr. R S Goenka with the help of the second generation Promoter Directors from the two families. Emami Limited has a team of over 4000 people running one of the leading and fastest growing personal and healthcare businesses in India. Bibliography http://www.cii.in/ http://www.emamiltd.in/ http://www.gnimonline.org/Download/pdfresearchprojects/FMCG_industry.pdf http://www.mbaskool.com/brandguide/fmcg/6597-emami.html http://www.infinancialsanalytics.com http://www.emamiltd.in/investor-info/index.php#AnnualReport http://www.ukessays.com/essays/marketing/emami-limited-analysis-of- product-diversification-marketing-essay.php