#FMCGDiaries: The Emami Story - A Chat with the Families Behind Some of India's Most Iconic Brands

Understanding Emami: Part 1

Emami's Market Dynamic: Part 2

Family Matters & More for Emami: Part 3

This was a very special chat. Travelled all the way to my favorite city, Calcutta, for this one. In 2 Days, I packed in a meeting with ITC (The Giant, more on that on another post, later), a meeting with Century Plyboards, Market Master Basant Maheshwari & a visit to the Emami Home for a chat with members of the founding families of Emami.

To know Emami well, you gotta know how they started, two friends, RS Agarwal & RS Goenka started a company way back in 1974. The friends, not only share their names, but also their passion for great consumer biz. The company mfgs & sells some of the most iconic brands in the country, an enviable portfolio of  household brand names such as BoroPlus, Navratna, Fair and Handsome, Zandu Balm, Mentho Plus Balm, Fast Relief and Kesh King.

The thing that’s common among all great consumer companies is the strength of the brand. Be it Marico’s Parachute, Emami’s Fair & Handsome, Zandu or Pidilite’s Fevicol, all of them have become synonymous with the category itself. The Brand is a Company’s biggest moat & servicing the brand, its biggest responsibility.

So, back to the Goenka-Agarwal Story: What struck me most was the bond b/w these families, not related by blood but love & respect for each other. Love & Respect, further strengthened by Non-Binding suggestions from Various MNC Consultants to only keep the bond intact.

Here’s an excerpt from an article about the Emami Story:

“The two families have formulated family governance rules consisting of code of conduct. The rules running into about 50 pages are mostly recommendatory, though some are obligatory. While preparing the rules, views of the younger generation were taken into account and professional advice from Barclays and Ernst & Young also was sought.

The elders, for instance, want the family to eschew businesses involving non-vegetarian food, tobacco or pan masala, and alcohol. This ruled out the possibility of the hotels business. There were a lot of discussions and it was decided that such businesses can be outsourced. The constitution, as the rule book is known, does not attempt to codify every detail. Care has been taken that the book should not look like a legal document.

The dos and don’ts cover everything from investing in shares, perks, travel, investments in new ventures, pocket money for daily expenses, and the number of holidays allowed in a year. All members are only eligible for economy-class air travel. For purchasing expensive cars like Mercedes a work experience of at least 13 years is required.

The two families are thinking that why should they not change their surnames from Agarwal and Goenka to Emami or Emamiwalas, as is the norm among many families in India. It will remove the duality in identity. The two are also talking to their advisors to set up a trust that will manage the two families' wealth, including their shareholdings in Emami Group. Some of the details have already been firmed up, including limiting rights of family members to sell shares in companies unless they have signatures of approval from at least two other members of the trust.”

I recommend you Read the whole Article: http://www.globalrecorder.com/business-hidden/317-emami-group-an-empire-built-by-two

Things I Found most Interesting During The Chat:

1)      The Bond b/w the families was for real, not for camera or on display for guests.

2)      The company’s focus on advertising & the power of Cinema: Most Star Studded Line-up

Emami’s brand ambassadors: Amitabh Bachchan, Shah Rukh Khan, Hrithik Roshan, Kangana Ranaut, Shruti Haasan, Malaika Arora. etc  There’s also an interesting story of a Film based on Emami, way back in the 70s.

3)      Focus on Youth Portfolio & Ayurvedic Pdts – He (Deos, Waterless facewash etc) and Kesh King

4)      Focus on Distribution

5)      Revamp of Brands: Zandu, Fast Relief, Fair & Handsome

Here’s some key takeaways:

Immediate Goal: Double-digit Volume Growth & 15% Revenue Growth

International Revenue to Grow 20% CAGR till 2020

Target `5,000 Cr Revenue In The Next Three Years

Margins To Sustain At 27%; Don't See Margin Pressure

Intend To Spend 19-20% of Sales On Advertising

Expect 12-15% Growth in Power Brands

Power Brands: Zandu, Boro Plus, Fair & Handsome, Kesh King

Zandu To Grow Above 18-20% For The Next Three Years

Expect Zandu To Be A `1,000 Cr Revenue/Year Brand In The Next 3 Yrs

Fair & Handsome To Be A `1,000 Cr Revenue/Yr Brand In The Next 5 Yrs

Expect Kesh King To Generate '500Cr By 2020

Hope You enjoy the chat.

Keep The feedback Coming.

Much Love.
M

PS: Don't treat that as investment ideas; I personally Don't Invest/Trade.