Bangladesh: a jewel in Marico's crown

Bangladesh is a high-potential market for Marico, the Indian consumer goods company, as the level of penetration is still low in a lot of the product categories, said Saugata Gupta, its managing director and chief executive.

“There is enough bottom of the pyramid opportunity if you get the pricing right,” he told The Daily Star in an interview last week.

The bottom of the pyramid refers to the poorest socio-economic group, which also happens to be the largest.

In emerging markets, if the products are priced competitively and provide enough value for money, they become popular in no time, he said.

Gupta, who is based in Mumbai, was in Dhaka to pay a visit to Marico's wholly-owned subsidiary, Marico Bangladesh.

The Mumbai-based company operating in beauty and wellness space started operations in Bangladesh in 2000 with its flagship brand 'Parachute' coconut oil.

Over the years, Marico has invested nearly Tk 300 crore to set up factory and other facilities, encouraged by steady growth of its business in the country along with the economic and market potential.

Today, Marico is the third largest multinational consumer goods company in Bangladesh.

Gupta, also the chairman of Marico Bangladesh, said the Indian company believed in Bangladesh and it invested ahead.

“In any emerging market, it is very important to get growth. We should not be mindful of profit. Profits automatically come with scale,” he said.

Bangladesh is a very important market for Marico, which operates in 25 countries, as it generates 45 percent of the revenue of Marico's overall international business.

Overall, the country of 16 crore of population accounts for 10-11 percent of Marico's total turnover of $1 billion.

Marico Bangladesh, which manufactures 98 percent of the products locally, logged in Tk 781 crore in turnover in its financial year 2017-18, up from Tk 692 crore from a year earlier.

Its net profit soared 13.88 percent to Tk 164 crore in 20171-18, according to the company website.

“Bangladesh is a very important part for the Marico group. It is a jewel in the entire international business portfolio,” said Gupta, who joined Marico as head of marketing in 2004.

Marico is expecting its Bangladesh operations to register 10-15 percent compounded annual growth over the next five years.

“I will be disappointed with 10 percent growth. I will be very happy with the 15 percent growth.”

Citing the 7 percent growth of the Bangladesh economy over the last couple of years, he said: “I think the kind of development that is happening in Bangladesh in a lot of categories, there is enough headroom for growth in terms of penetration.”

Marico will continue to diversify its portfolio with the view to becoming a full-fledged fast-moving consumer goods company.

Its product portfolio at present consists of hair oil, edible oil, and men's deodorant and hair gel.  The company will launch new products in the personal care segment over the next couple of years.

Listed in the Dhaka Stock Exchange in 2009, sponsor shareholders hold 90 percent shares of Marico Bangladesh, institutes 2.74 percent, foreign entities 6.53 percent and general public 0.73 percent.

Marico offered higher dividend than its earnings per share to shareholders by spending reserves.

Quizzed, he said: “We have continued to invest behind factories behind brands and our focus is to grow organically. Therefore, as long as our reserves are enough to take care of any future need, that is the level we decide on the reserve.”

On July 19, each Marico share traded at Tk 1,175.

Asked if the company would offload more shares to the public, he said: “It is something we can explore over the long term.”

The company also wants to spend 1-2 percent of its profits on corporate social responsibility. Gupta, who began his career at Cabdury India, suggested youths and young professionals to continue learning.

“Your learning should never stop and what gets you here will not get you to the next level.”

Gupta, who had an engineering degree from IIT Kharagpur and a management degree from IIM Bangalore, also advised being curious and avoiding complacency and arrogance.

The best idea can come from anywhere. Therefore, one has to be extremely curious and inquisitive, he added.