‘Marico’ - a Corporate Miracle -

Topics: Management, Coconut oil, Business school Pages: 22 (6281 words) Published: April 25, 2011

In the current Indian business history, Marico is almost a miracle. Transforming traditional products like vegetable oils into well accepted branded products and developing the urban and rural markets almost simultaneously has been the success story of Marico. For Indians, who are used to corporate growth cases of multinational companies, an Indian corporate entity like Marico is a welcome revelation. It is something like the story of ‘Amul’.

Vegetable oils like coconut oil and safflower oil traditionally used in different parts of the country due to their proximity to farm growth centres, are products where traditional management has been very successful. Coconut oil has been essentially an oil used for consumption mainly in Kerala and neighbouring areas in Karnataka and Tamil Nadu. Keralites living in foreign countries specially, the Gulf and the Middle East also consume this product practically every day. Similarly, safflower oil has been in use mostly in western and central India as these areas cultivate sunflower farms. Coconut oil has been one of the main ingredients in Ayurvedic preparations for skin care and related products, prescribed by Ayurveda doctors in some parts of the country, specially Kerala. The skin nourishing qualities of coconut oil is a well known fact and to develop that concept into a number of hygiene and cosmetic products needed a well thought out strategy. Perhaps, it is this deliberate policy of converting ordinary products into branded products by value addition or even value creation has been the business model for Marico.

Indian markets were not used to branding for daily consumption items. It took around 2 to 3 decades even for products like wheat flour, tea and coffee to be developed into branded products by well established corporates like ITC, Godrej, HUL, Nestle and Tata Coffee. In the case of Marico, it was a beginner even in 70s and 80s and did not enjoy the corporate image of a multinational from well developed countries like USA or Japan. Branding needs a longer shelf life and this is probably where Marico concentrated its managerial and technical skills in the beginning. This strategy also made the management of the company give a lot of importance for sourcing of quality raw materials and exclusive manufacturing techniques.

Vegetable oil processing has been, in India, mostly in small and medium sectors even though corporates like Tata Oil, Godrej and HUL put up oil crushing and refining plants in different parts of the country. Here again, Marico paid a lot of attention for processing steps like crushing and filtering. The manufacturing facilities of Marico incorporated the latest technology available in processing and packing as seen in developed countries.

Some of the management plans mentioned above as part of a strategy also needed an enlightened management with proper vision and mission and committed to quality of products and spreading social benefits to raw material suppliers including the farmers and the workforce. Today, Parachute and Saffola are well accepted brands, visible in many parts of India and the retail markets in Gulf and Middle East. Apart from a committed management at the Board level, Marico employs around 300 MBAs drawn from well known business schools at different levels of the organisation. Probably, management is the basic strength of Marico, whose turnover today is around Rs.2400 crores, a growth not seen in many Indian corporates marketing processed farm products. Marico’s turnover in 1971 was only Rs.50 lakhs. EMPHASIS ON QUALITY AND TEAMWORK

Marico’s basic philosophy has resulted in a flat organization setup. This helps all the workers, staff and the officers to participate in the management and make their suggestions which are usually treated seriously and acted upon. This self balancing mechanism helps to create the team spirit and also to achieve higher quality in all the functions of the...
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