Known to be one of India’s leading advertisers owing to its FMCG proposition, it was this year that FMCG major Emami completed its half-a-century journey in the country.
Launched in 1974, the story of Emami, as per R S Goenka, is not merely a narrative of business- but a story about the power of unity, the courage to dream, and the relentless hard work required to transform those dreams into reality.
Taking to the centre stage on Emami’s 41st Annual General Meeting, he stated, “As I welcome you all to the 41st Annual General Meeting of Emami Ltd, I can’t help but still feel the passion and excitement of the day when Shri RS Agarwal Ji and I made the pivotal decision in the early 70’s to leave our established corporate careers and embark on the uncertain journey of entrepreneurship. Looking back, we feel that it was the best decision of our lives, because it seeded the beginning of an eventful journey, which today is known to the world as ’Emami’.”
He added, “Innovation, differentiation, and vision for growth have always been the cornerstones of Emami’s journey. They played a crucial role in all our initiatives—whether it was the launch of products like Emami Vanishing Cream and Emami Talcum Powder, innovatively designed to compete with international standards, introducing niche offerings with BoroPlus and Navratna, pioneering the male grooming segment with Fair and Handsome in 2005, or even its first acquisition of Himani Ltd way back in 1978 or the landmark acquisition of Zandu Pharmaceuticals in 2008, followed by another significant acquisition of Kesh King in 2015, Creme 21 in 2019 and Dermicool in 2022.”
Having said that, he also went on to mention that in this journey of 50 years, the FMCG major has celebrated many victories and has had its own shares of challenges and failures, but what saw the company through and through was the values of togetherness and complete faith in each other.
“Our achievements are not just personal achievements, but it is also the collective achievement of all our stakeholders including our dedicated team. Emami’s story is woven around the threads of collaboration, togetherness, trust and belief in ourselves. As we celebrate brand Emami’s journey of 50 years, we take this moment to look forward to the next 50 years,” he echoed.
With this, he also emphasised that the journey ahead is going to be charted by the company’s ethos of its commitment towards consumers, investors, employees and all other stakeholders to continue with its endeavour to offer the world a unique differentiated experience with Emami and make lives happier.
“You are already aware that the Union Budget presented by the Hon’ble Finance Minister, significantly focusses on inclusive growth with macro-economic stability, reiterating the commitment towards shaping a Viksit Bharat. As the country forges ahead towards a promising economy, Emami remains committed to partner in this journey by building a future facing organisation with definite focus on innovation, adoption of modern technologies and commitment towards contributing for a sustainable world while at the same time staying rooted in Indian tradition and principles,” he said.
In addition to this, Goenka also mentioned that since the FMCG industry, especially personal care products are growing with various new and international brands entering the landscape with ‘premiumization’ and ‘innovation’ being the buzzwords, the domestic FMCG industry has grown at a 5-year CAGR of around 11% in FY24 and is estimated to grow in strong double digits in the coming years on account of rising levels of disposable income, changing lifestyles, increased urbanisation and extensive research and development undertaken by key players.
The surge in e-commerce, in his views, has significantly contributed to this growth story and with an eye on changing market dynamics and consumer behaviour, exclusive online arms of D2C channels offers a good opportunity for Indian FMCG companies to interact directly with their consumers, he suggested.
“They have emerged as a key sales booster with a quick reach out strategy to mobile savvy Indian consumers who have warmed up to the idea of shopping online for their specific needs,” he stated.
Commenting on the company’s performance in FY24, Goenka pointed out that despite various macro-economic challenges across the FMCG industry, Emami continued with a resilient performance.
“The financial year 2023-24 presented a complex demand environment, particularly with subdued consumption in rural markets. Indian households faced persistent inflationary pressures, with a Kantar study revealing that 38% of households were significantly affected. Weak monsoon conditions necessitated increased MGNREGA spending on wages, signalling deeper income challenges in rural India. Furthermore, unseasonal rains in the first quarter impacted the sales of our summer portfolio, while a delayed and milder winter affected demand for our winter products in the third quarter. Despite these hurdles, our commitment to innovation and consumer-centric strategies enabled us to navigate these challenges effectively with the Company’s revenues growing by 5% during the year. This growth might not be perceived as enough, but what one needs to focus are some of the positives that your Company achieved during the year,” he stated.
Picking from here, he also emphasised that Emami continued to invest in marketing and distribution, ensuring that its products remained accessible and appealing to its customers.
“Our agility in responding to market dynamics and consumer needs has been pivotal in sustaining our growth trajectory. With a moderation in inflation, key raw material prices softened, leading to a 280-basis points expansion of gross margins to 67.5%. Our EBITDA at Rs. 950 crore, grew by 10% with margins expanding to 26.5%, an increase of 120 basis points which are above pre COVID levels. Profit after tax saw an impressive growth of 13% to Rs. 724 crore,” he said.
Summing it all up, he also stated that from having a primarily rural market skewed approach, Emami has now expanded to adopting a universal character where along with its rural market optimisation, it is also present in a space where a section of consumers is keener towards premium, thereby being there for everybody across gender, age, season, geography and demography.
“Key brands such as Pain Management, Fair and Handsome, Kesh King, and strategic investments generate non-seasonal revenues; the proportion of revenues derived from non-seasonal brands are a high 56% today from 51% in FY2019-20. Further, around 45% of our topline today is generated from acquired brands, strengthening the perspective among consumers that ‘Emami has everything we need.’ Our distribution machinery was reinforced and along with our rural network, we focused on new age channels by accelerating Modern Trade growth with a thrust on B2C, & joint business plans with retail chains and using the latest tools to drive high fill rates within stores on the store shelves by tracking in store visibility, on-shelf inventory and store level line extensions across all Modern Trade formats and outlets,” he said.
Talking about another buzzing proposition- E-commerce, he stated that on the e-commerce front, Emami not only made its products available at all major online marketplaces, grocery, beauty and pharmaceutical platforms but also focused on Direct 2 Consumer by launching brand specific portals and also launching Digital First Products under major brands.
And the result of the evolved approach is now evident in the fact that Emami’s domestic revenue contribution from organised channels increased from 12% to 26% in five years.
Moving further, he also highlighted that as a part of Emami’s inorganic growth strategy, the FMCG was amongst the first in India to invest in direct-to-consumer brands.
In Fy24, Emami entered the juice category through a strategic investment in Axiom Ayurveda by acquiring a 26% equity stake in the company which makes products like ‘AloFrut’, making its presence in five new age categories, i.e. premium male grooming, premium and natural salon products, ayurvedic pet care, nutrition, and fruit juices with aloe vera pulp.
“Two of these D2C acquisitions have already become subsidiaries and contributed more than 5% to our FY2023-24 revenues. The Company launched more than 35 new products and variants during the year in the Domestic business, primarily as digital-first launches on its D2C portal, Zanducare. Overall, the Company has introduced more than 90 new products on Zanducare since its inception, displaying a commitment to diversification and innovation,” he said.
He added, “Despite geopolitical tensions and currency depreciation in international markets, our International business grew strongly by 12% in constant currency and 9% in INR terms. In FY24, sales of 7 Oils in One crossed INR 1 billion in international markets, while Creme 21 also achieved its highest-ever sales. Several existing geographies, including UAE, Oman, Qatar, Egypt, Saudi Arabia, Sri Lanka, certain Sub-Saharan countries, CIS, and Southeast Asia, recorded their highest-ever revenues. More than two thirds of manufacturing occurred outside of India, closer to consumption countries during the year. Additionally, new products introduced under existing power brands contributed to the top line, with Creme21 expanding into a holistic skincare brand. Overall, 15 new products and variants were launched in the international markets in FY24.”
