Marico: CEO doubts reaching 2020 revenue target

After setting a sales target of 10,000 crore rupees (approximately 1.5 billion US dollars) by 2020, Marico’s Managing Director has stated that the brand will take an extra one or two years to reach this due to several factors.

Marico’s Managing Director has stated that the brand will take longer than expected to reach its sales target - Marico- Facebook

The fast moving consumer goods (FMCG) brand Marico, well-known for their Parachute hair oil, set the sales target of 10,000 crore rupees (approximately 1.5 billion US dollars) in 2016. However, due to the unforeseen circumstances that have arisen in the years following, the brand’s Managing Director and Chief Executive Saugata Gupta recently said in a public interview that it would take an extra one or two years to reach this target. When Marico made the sales target during the 2016/2017 financial year, they had sales of 5,935.92 crore rupees (approximately 892.3 million US dollars).

Marico did report a 16 percent profit increase last month but slow volume growth, increased raw materials’ costs, and the launch of the Goods and Services Tax (GST) last July have made the Indian retail landscape a harsher one, especially in the past year. “We had one-and-a-half years of deflation and low volume growth, especially with GST and other things. I think we will fall short (of our revenue target) by one or two years,” said Gupta in the interview.

Another reason why times have been harder than expected for Marico is the price increases for copra and light liquid paraffin which are both used in their signature Parachute hair oil. In order to account for this, the brand has already increased Parachute coconut oil prices by around 22 percent in order to protect their profit margins.

The brand is planning to boost growth in a number of ways. One of these is by increasing its product portfolio and expanding into the fast growing male grooming section of the market which should become a major growth driver for the business. Marico will also expand their food and health product sections. “We are seeing early signs of our new products and innovations doing better, but we have to up that trend,” said Gupta.

Marico is also planning increase sales in rural areas and grow volumes by eight to ten percent nationwide. The business expects revenue contributions from rural India to increase from 31 percent in the 2017 financial year to around 40 percent over the next four to five years.

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