EMAMI Chairmans Speech

Dear Shareholder’s


When we ventured to create Emami more than four decades ago, there were a number of commandments that we resolved we would follow. Similarly, there were a handful of commandments that we decided we would not follow. One of them was ‘Thou shalt not imitate.’


Looking back, we believe that this has been one consistent ingredient in our success. We have invested in innovations - innovative products, innovative ingredients, innovative marketing, innovative packaging and innovative communication. While we promoted innovations, we watched peers launch short-lived me-too products.


We often applied that one standard filter when presented concepts by senior managers or consultants: ’Is me naya kya hai?’ This singular focus has been the biggest catalyst in our transformation from a 150 sq.ft room in the alleys of North Kolkata to a RS.24,000 crore market capitalisation business comprising nine manufacturing units, more than 60-country presence and nearly 3,100 employees.


The message is that when you think differently, the business grows naturally.


At Emami, we believe that practiced innovation is derived from a combination of art and science. More importantly, nayi soch extends beyond product innovation to an entire different way of running the business.


R&D differentiation


At Emami, product conceptualisation could easily have involved the simple exercise of copying what some of our successful competitors were doing. We selected to work harder instead. We invested extensively in research and development; we allocated a sizeable annual budget; we created a large facility to centralise research professionals; we charted out an ayurveda direction; we identified product directions; we outlined deadlines for prospective launch; we unambiguously highlighted our desired goal: ’Market ko hila dene waali baat!’


When we launched a fairness cream for men in a segment where it was non-existent, we created history. Till then, most men found it convenient to use fairness cream for women and as we were about to launch our innovation, some well-meaning sceptics even indicated: "Shaayad galat kar rahe hai". No man would want to go to the market and buy a tube of fairness cream. Log kya kahenge?


But we changed the popular habit. We brought men’s grooming centre-stage. We created market. When people further saw Shah Rukh Khan endorsing the product, they felt ’Usko to koi sharm nahi aati cream laagane me, toh hamey kyun?’


And that is how we opened out to a gold mine of opportunities in the male grooming segment that extended to the launch of our very latest innovation of the country’s first-ever waterless face wash - ’HE-On the Go’.


When Emami decided to enter the already cluttered hair oil market, the offering had to be something completely different. Most of the competitors were offering oils with one or two ingredients. Our research team came in handy with another breakthrough innovation by combining the benefits of seven herbal ingredients into one product - Emami 7 Oils in One. The product has already carved out a niche for itself in the crowded hair oil market in India.


The other example of Emami’s innovation was cool talc. No Indian company offered cooling element in talcum powders and when Emami came out with Navratna Cool Talc, it took the market by storm. The unique positioning of ’duniya ka sabse chhota AC’ also helped in driving growth of the brand.


Promotional differentiation


At Emami, it would have been simple to launch and say ‘Now let the market take over’. We were obsessive; we wanted to capture and dominate consumer mind space; we had products endorsed by prominent sports-persons and film personalities. We got the average user into thinking that ‘If it is good for them, then surely it must be good for us. ‘We were the first in the country to commence in-film promotion in the 80’s. We enlarged the role of celebrity endorsements. We utilised diverse media. We combined and permuted schemes that made people say ‘Let us try it out once. What is the harm?’


Packaging differentiation


Emami wooed through differentiated packaging. The Company offered products in attractive PET packages at a time when it was still fashionable to productise in tin tubes. It pioneered smaller sachets in the cool oil segment when competitors continued to trust larger unwieldy packaging options. We revolutionised the balm market by launching the Mentho Plus balm in a dibbi. In doing so, we didn’t just reach out to an existing body of consumers; we took pride in having widened and deepened markets. We didn’t just service customers, we created many.


Strategic differentiation


At Emami, we believe that identifying the right opportunities at the right time is the key to disproportionate growth. A few years after we acquired Zandu, we acquired Kesh King. We perceived an operating leverage; we identified headroom within each company and space, we reckoned that the acquisitions would grow faster with the Emami cocktail and even though a number of industry observers quietly predicted ‘Failure!’ we are pleased to report that our acquisitions have proved value-accretive. We improved the formulation, repackaged the acquired products, heightened the promotion, revisited product strategies, restructured the distribution channel and enhanced market footprint. The Result: The Zandu and Kesh King portfolios now account for more than 30% of our domestic revenues. Zandu offtake has trebled since acquisition and profits have increased manifold.


Emami transformed a challenge into an opportunity through a deep understanding of consumer need. We keep our ears to the ground to comprehend evolving consumer preferences. Besides, each consumer (housewife, farmer, banker, college student, rural consumer and urban buyer) behaves differently even as there are broad patterns that are common, providing us with a rich understanding of what to include in the core of our products.


So, what are these products that we keep launching and transforming into winners?


Products that plug gaps that existing products do not.


When BoroPlus was launched, there was already a category leader in the domestic market. We combined the goodness of ayurveda with contemporary packaging; the result was that we emerged as the leading player within a few years of launch and continue to command more than 75% market share three decades later.


One might assume that launching innovative products would have been enough; the skill lies in maximising consumer reach. In line with this, we created low unit packs marked by attractively low price points. We researched consumption patterns to create products easily consumable. For instance, a number of laxative options were available but their powdery form made them messy and inconvenient to use; we responded with Nityam Tablets that enhanced consumption convenience and the product proved an instant winner.


Thereafter, we enhanced consumer convenience through promotional activities - television commercials and product placements in fairs and festivals. The result: an enhanced awareness and quicker offtake.


We created a network comprising more than 3,250 distributors, 6,500 sub stockists and 1,800 field sales personnel. The result is that Emami products are available off-the-shelf in more than 16,700 villages and towns where the population is less than 50,000.


The combined result of these initiatives has been a perpetually rejuvenating business model. Even as the country was struggling with a cash crunch following demonetisation in late 2016, Emami could hold onto its business on account of its positioning around ‘necessary’ over ‘discretionary’.


The year 2016 was favourable as the seasons began and ended on time. Despite the consumer disruption following demonetisation, we succeeded in maintaining our business around margins higher than the industry average; we maintained our market share.


The GST implementation is expected to create a level-playing field for organised players in India, narrowing the unorganised sector. Our core brands have gained market share; our products launched in the last few years are expected to gain traction.


The future is here and we are ready.


RS Agarwal RS Goenka

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
“2019 © COPYRIGHT DYNAMIC EQUITIES PVT. LTD.”

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

  • Download our Mobile App
  • Available on Google Play
  • Available on App Store
  • RSS