Marico provides support to thousands of

farmers
Collection centres were initiated by Marico in 2003 to procure copra directly from Farmers & Converters in Tamil Nadu and
Kerala. These centres not only provide supply assurance to the Company but also a number of bene ts
to the farmers such as: Fair Pricing and Buying Assurance irrespective of market conditions.

There are 27 collection centres in Kerala & Tamil Nadu bene tting over 5,000 farmers. Marico is engaged with the
Coconut Development Board in 16 clusters bene tting 4,000+ farmers. In order to develop long-term sustainable farming
source, Marico endeavours to train farmers on best farming practices. Marico has trained approximately 1,200 farmers
towards model farm practices.

Marico has entered into a Public Private Partnership arrangement with Government of Maharashtra wherein the
Company has covered 1,250 acres of Sa ower area and 575 small and marginal farmers.

Talk about farmer

Talk about diversified brand

Talk about energy Page no 33

Talk about macro factors

Youth portfolio

ending December 2015, followed by the Philippines (117), Indonesia(115)andThailand(114).Consumercon dencein India has
remained high for nine consecutive quarters. India’s consumer in ation, which had been in double digits between 2010 and
2013, has come down to about 5%, in part due to the RBI’s tight monetary policy, the government’s measures to contain
food in ation and the sharp decline in commodity prices especially crude oil.

The FMCG sector at USD 38.8 Billion (Source: Nielsen) is one of the largest sectors in India. Over the last 5 years, the
sector has grown at compounded annual growth rate of 12.7%. In the past year, the growth rate has tapered o mainly due to
de ation and below normal monsoons. While sentiment appears to have improved, it has not yet translated to tangible
improvement in consumption across the sector. However, there is a silver lining. The recent “normal monsoon” forecast by
meteorological agencies augurs well for the sector. Some other factors expected to drive the recovery are a stronger GDP
growth (leading to investments in various sectors which eventually results in employment generation), moderate consumer in
ation, enabling government policy framework, continuing input cost bene ts, Direct Bene t Transfer Scheme (DBT), One
Rank One Pension (OROP) for ex- Military servicemen and increased pay-outs to government employees consequent to
implementation of 7th Pay Commission recommendations.

Over a medium to long-term, India’s potential to emerge as one of the largest consumption economies of the world is intact.
Apart from population growth, India is witnessing other trends that make it a favourable market from consumption
perspective. These include urbanisation, increase in number of nuclear families, improvement in education level, more
women in the workforce and modernisation of lifestyles. India’s GDP per capita has more than tripled over the past decade.
Various macro-economic studies have shown that growth in per capita consumption is not linear with per capita income.
World Bank suggests that at the current GDP/ capita of USD 1,581, consumption should accelerate from the current levels,
especially in premium categories. The FMCG sector will be the biggest bene ciary of the expected consumption boom.

The above macro-economic and demographic statistics make India look like a very attractive market for all consumer
companies. However, like any other market, India has its own share of challenges, overcoming which will be the key to
growth and pro tability. Economic inequality continues

GDP Growth %

8.00

7.40 7.00

6.00 5.00 4.00 3.00 2.00

7.60

2015-16

5.10

2013-14 2014-15

Source: Central Statistical O ce

The Indian economy has been through challenging times in the last two years due to weak global macros coupled with below
normal rainfall. However, even amid such weak global macros, the Indian economy has also transitioned from being one of
the most fragile economies amongst the emerging markets in mid-2013 to one that is currently receiving signi cant capital in
ows - taking the foreign exchange reserves to an all-new level of USD 350 Billion. GDP grew at a healthy clip of 7.6% in
FY16 with a forecast of 7.8% in FY17. The country remained the leader among all nations in the global consumer con dence
index with a score of 131 points for the quarter

42 MARICO LIMITED | ANNUAL REPORT 2015-16

STRATEGIC REPORT 02-40

ending December 2015, followed by the Philippines (117), Indonesia(115)andThailand(114).Consumercon dencein India has
remained high for nine consecutive quarters. India’s consumer in ation, which had been in double digits between 2010 and
2013, has come down to about 5%, in part due to the RBI’s tight monetary policy, the government’s measures to contain
food in ation and the sharp decline in commodity prices especially crude oil.

The FMCG sector at USD 38.8 Billion (Source: Nielsen) is one of the largest sectors in India. Over the last 5 years, the
sector has grown at compounded annual growth rate of 12.7%. In the past year, the growth rate has tapered o mainly due to
de ation and below normal monsoons. While sentiment appears to have improved, it has not yet translated to tangible
improvement in consumption across the sector. However, there is a silver lining. The recent “normal monsoon” forecast by
meteorological agencies augurs well for the sector. Some other factors expected to drive the recovery are a stronger GDP
growth (leading to investments in various sectors which eventually results in employment generation), moderate consumer in
ation, enabling government policy framework, continuing input cost bene ts, Direct Bene t Transfer Scheme (DBT), One
Rank One Pension (OROP) for ex- Military servicemen and increased pay-outs to government employees consequent to
implementation of 7th Pay Commission recommendations.

Over a medium to long-term, India’s potential to emerge as one of the largest consumption economies of the world is intact.
Apart from population growth, India is witnessing other trends that make it a favourable market from consumption
perspective. These include urbanisation, increase in number of nuclear families, improvement in education level, more
women in the workforce and modernisation of lifestyles. India’s GDP per capita has more than tripled over the past decade.
Various macro-economic studies have shown that growth in per capita consumption is not linear with per capita income.
World Bank suggests that at the current GDP/ capita of USD 1,581, consumption should accelerate from the current levels,
especially in premium categories. The FMCG sector will be the biggest bene ciary of the expected consumption boom.

The above macro-economic and demographic statistics make India look like a very attractive market for all consumer
companies. However, like any other market, India has its own share of challenges, overcoming which will be the key to
growth and pro tability. Economic inequality continues

FMCG as a sector faces extreme seasonality in supply and demand, so much so that fulfilling this
demand becomes a difficulty. In the FMCG sector, customer loyalty is very low as the cost of
switching is negligible, company’s needs to ask to prioritize which demand to fulfill and which to let go.
Therefore, capacity management at own location and at suppliers becomes a strategic problem.
With customer’s ready to experiment with new brands, more and more companies are fighting for
customer loyalty from the same customer group. Constantly meeting and exceeding customer
expectations was the key to success. For the FMCG company, demand for a particular product was
growing exponentially. However, the availability of the raw material for the product was seasonal in
nature, therefore forecast on availability was not accurate and finding new sources was also a difficult
task.
To cater to demand, options included either building inventory or building capacity – in-house or
outsourced. Though in-house capacity yielded reliability but it was an expensive alternative.
Outsourcing provided flexibility but also pushed prices up. Building inventory incurred additional
storage costs and required more space. All three options had to be simultaneously evaluated to
determine the lowest cost solution.
A planning tool has used to determine, an optimal way to meet demand, depending on demand,
production efficiency and distribution capabilities.
Production line efficiency and capacity, raw material availability, logistics cost, the cost of carrying
inventory and cost of distribution were evaluated to carry out a comprehensive analysis. All costs,
constraints and capacities were modeled, eliminating sub-optimization. Through all this, the company
was able to achieve a profitable way of meeting customer orders and managing all capacities within
the business.