Submitted by - Group B5
Aayushi Singh, 13041
Mudassir Sharieff G M, 13063
Neenu Varghese, 13064
Pratik Porwal, 13070
Ruben Barreto, 13074
Group B5, II PGDM
Emami Limited 2
Table of Contents
Introduction ...................................................................
....................................................... 3
Vision .........................................................................
........................................................... 3
Mission ........................................................................
.......................................................... 3
Competitive structure of the industry ..........................................
....................................... 4
Competitive position of the company ............................................
..................................... 4
Competiveness and Position of rivals ...........................................
..................................... 6
Major Competing companies in FMCG segment ......................................
.......................... 6
Drivers for Growth .............................................................
................................................... 7
SWOT Analysis ..................................................................
................................................... 7
Key Success Factors Emami ......................................................
...................................... 8
Strategic Approach .............................................................
................................................. 8
Approach for top line growth - Sales ...........................................
............................................... 8
Approach for bottom line growth - Profits ......................................
.......................................... 8
Porters 5 Forces Model Analysis .................................................
...................................... 9
External Factor Evaluation Matrix EFE Matrix ...................................
.............................10
Internal Company Analysis ......................................................
...........................................10
Competition Analysis ...........................................................
...............................................12
Financial analysis .............................................................
...................................................12
We would strive
To be part of every household in the country
To be a major player in every product category we venture into
To be one of the most respected marketer in the country
To be recognized as a global brand
Group B5, II PGDM
Emami Limited 4
Competitive structure of the industry
The consumer products industry has been growing at a brisk pace in the past few
years backed by robust economic growth and rising rural income. Growth drivers
such as rapid urbanization, evolving consumer lifestyles and emergence
of
modern trade have shielded the industry from the slowdown.
The industry is still urban-centric with majority of the goods being
consumed by
urban India. Metropolitan cities and small towns (population of 1-10 l
akh) have
been driving the FMCG consumption in urban India since 2002.
Consumer goods are retailed through two primary sales channels - Gene
ral
Trade and Modern Trade. General trade comprising of the ubiquitous kir
ana
stores is the largest sales channel forming 95% of overall retail sales.
The implementation of the Goods and Services Tax (GST) is expected to benefit
the sector immensely by reducing the overall incidence of taxation. GST aims to
reduce the cascading effect by replacing a multitude of indirect taxes
such as
central excise, service tax, VAT and inter-state sales tax with a single GST rat
e.
Competitive position of the company
Emami Limited, the flagship company of the Rs 2000 crore Emami Group, is a leadi
ng
player in the personal and healthcare consumer products industry in In
dia. A jewel in
the crown of the conglomerate, the company is a coveted Rs 700 crore business en
tity
engaged in manufacture and marketing of health, beauty and personal ca
re products
that are based entirely on ayurvedic formulation.
The companys financials show it has repeatedly outperformed the industry
standards.
Emami Ltd has maintained a CAGR of 25% over the last three years compared to the
industry average of 16-17%.
Understanding the human needs and fulfilling them by dint of technical
research is a
positive feature of Emami. This is being made possible by Himani Ayur
veda Science
Foundation (HASF) that generates the very best of Ayurveda formulations
. The
foundations unique range of healthcare products aptly caters to consumer needs. T
he
world class quality control methods and processes maintained by HASF e
nsure
Group B5, II PGDM
Emami Limited 5
Strengths
Brand name
Research and Development
Distribution Channel
Market Share
First Mover Advantage
Mens Fairness Cream
Weakness
Lack of Diversification
Oppurtunities
Growing Population
Evolving consumer lifestyle
Diversification in related categories
Threats
Entry of International brands
Unbranded Healthcare products
Group B5, II PGDM
Emami Limited 8
Bargaining power of
suppliers
Moderate to Low
Dominance of suppliers is low
Dependence on supplier is not
so high as every company has
multiple suppliers for same
resources
Switching costs are low
Substitute Products Moderate to Low
No good substitutes are
available
Quality of substitutes is
questionable
Overall the threat is moderate; however, Emami keeps on evolving itself by creat
ing and
sustaining value for money products and fulfill consumer needs in ever
y possible
aspect. This competent feature of Emami helps it overcome competition
and beat the
industry performance year on year.
Weighted Score
0.2
2 0.1
4 0.2
Emami Limited 11
Strong brands in its portfolio
Rs 100 crore plus brands - Boroplus, Navaratna, Fair & Handsome, Zandu
Emami covers all the states with 32 depots across India and enjoys a wide
distribution network comprising strong network of 3500 distributors and 40000
sub distributors , with direct retail reach across of 5,00,000 outlets
Customer loyalty
Procurement policy
Company procured raw materials from vendors from no excisable areas like
Assam, Uttaranchal and Himachal Pradesh etc at affordable costs
Hedging
Company strengthened their hedging policy to mitigate the risk of volatile
commodity prices.
Operational excellence:
Automated processes - filling, capping, labeling and cartooning.
More than 80% of the production is derived from tax-exempt zones. Outsourcing
manufacture of select products to reduce costs and focus on branding.
Research and development
Weaknesses
Lack of diversification
Company offering FMCG products based on Ayurveda only and hence limits its
scope of product mix.
Emami focuses only on products with higher margin.
Company depends on ITC e-Choupal to distribute its product and does not have
its own system established.
Lack of scale
A lack of scale means Emamis cost per unit of output is very high. Increasing
volume, while maintain quality, would help reduce those costs
Competition at peak
Group B5, II PGDM
Emami Limited 12
Competition Analysis
Sales data of competitors for the years 2012 and 2013
Financial analysis
Ratio based analysis
The EV/EBITDA ratio is a relevant ratio for financial analysis. Emami Ltd shows
a
EV/EBITDA ratio of 22.72 for the next 12 months.
This is significantly higher than the median of its peer group: 14.82. According
to this
financial analysis Emami Ltd s valuation is way above its peer groups.
This ratio is significantly higher than the average of its sector (Software): 8.
89.
According to this financial analysis Emami Ltd s valuation is way above its sect
or s.
The liquid ratio is decreasing year after year. Though the ratio is above 1 in a
ll the five
years, it is preferable to improve upon the situation. This may be due to the fa
ct that the
stock is major composition of current assets, which excludes liquid assets.
The debt to equity ratio is decreasing year after year, which indicates, the ser
vicing of
debt is less burdensome and consequently its credit standing is not adversely af
fected.
Group B5, II PGDM
Emami Limited 13
The cash ratio is decreasing year after year.
The fixed assets ratio is increasing year after year which proves that the fixed
assets
are utilized to its optimum level, thereby increasing the production and reducin
g the
cost.
It can be stated that the working capital management of the company seems to be
satisfactory. But in certain years there is decrease in working capital, which i
s due to
higher amount of current liabilities especially, increasing in provision for div
idend and
taxation and creditors.
Internal Factor Evaluation Matrix IFE Matrix
Total weighted average score is 3.45 which indicate that the company is well equ
ipped
with strategies and tactics to tackle the internal environment changes.
Key Internal Factor Weight Rating Weighted Score
Opportunity Factors
Market share .2 4 0.8
Quality .1 3 0.3
Operational Efficiency .15 2 0.3
Customer Loyalty .05 3 0.15
Threat Factors
Product mix .2 4 0.8
Lack of diversification .1 4 0.6
Economies of scale .1 3 0.3
Counterfeit products .1 2 0.2
Group B5, II PGDM
Emami Limited 14
Strategic Formulation SWOT analysis
SWOT Analysis
Develop niche segments into brands
Strength
First movers advantage - Fair and Handsome
Domestic distribution network
Strong brands - Boroplus, Navaratna, Fair & Handsome
International presence
Weakness
Lack of diversification
Opportunity
Demographic trends
Related diversification into growing categories
3. Modern retail distribution E commerce
Threats
Competition - Recognized Brands and Private Label Brands
FDI in retail
Value Creation
The Company follows the strategy of extending brand equity through sub-segmentat
ion
of the core brand, hence expanding market reach
world
Emami
rural
to be
Group
Emami Limited 18
Emami first invested in creating a separate distribution system for rural market
s
under Project Swadesh in 2010-2011. It has since covered 8,000-9,000 villages,
each with a population of 20,000 or above, across 15 states, including Uttar
Pradesh and West Bengal.
Pricing
Emami is planning to take on Johnson and Johnson in the baby products arena
with a two-pronged strategy which hinges on working out a right pricing formula
on the one hand and marketing products based on ayurveda on the other.
The company had priced its products at least 20-30 per cheaper than the marketleader while introducing smaller packs to expand the market and bring baby
products within the reach of all.
Emami has also revised its product prices. Over the past one year, it has
launched Zandu balm and Navratna oil in Rs.2 and Rs.1 packs, respectively. It is
also test marketing talcum podwer pouches priced at Rs.1 under the Navratna
brand in Uttar Pradesh and Bihar.
3. Corporate Strategies
Mergers and Acquisition
In 2006, J B Marketing & Finance Ltd., the erstwhile marketing company of the
Emami Group merged with Emami Ltd. and the total turnover of Emami including
sales in domestic and export market stood at Rs 516 crores at the end of the
fiscal year 2006-07.
Within three decades, the company Emami Ltd has a turnover of Rs. 1500 crore,
the flagship company of the Rs.5000 crore Emami Group.
Emami Limited with an investment of Rs 730 crore acquired Zandu
Pharmaceuticals Works Ltd on the basis of huge business synergy between
Zandu and Emami. Post the acquisition of Zandu Pharmaceuticals, a century old
household name in India, some of its prominent brands like Zandu Balm, Zandu
Chyawanprash, Zandu Kesri Jeevan, Zandu Pancharishta, Sudarshan and
Nityam Churna came under Emamis basket of brands.
Business restructuring
The Emami group is looking to restructure the business of its recent acquisitio
n,
the Mumbai-based pharma firm, Zandu Pharmaceutical Works.
A Rs 2,000 crore diversified group with interests in the FMCG sector, healthcare
and realty, Emami also plans to recast its realty business managed by group
company Emami Realty. Emami Ltd has been looking to consolidate Zandu s
business and become a dominant player in the FMCG segment. Since the
Group B5, II PGDM
Emami Limited 19
company has tremendous growth potential, Emami intends to tap them to
improve its topline as well as bottom-line.
Future Prospects
Based on the following points, Emami Group is expected to grow between 8 to 10%
yoy
over next 2 years. The points mentioned below refer performance in the year 2013
in
comparison to year 2012.
Initiations in Operations
Initiated to cover 600 distributors under the outreach secondary sales software
,
contributing to 60% of sales
Land acquired for third unit in North-east India under a mega project scheme an
d
the unit is expected to commence operations in FY16
Construction initiated for warehouses in 4 locations : Kolkata, Patna, Ambala
&Guwahati
Performance in Sales and Turnover
Consolidated net sales Rs 1,821 crore grew by 7.2%
Domestic sales Rs 1,511 crore grew by 5.1%
International business Rs 221 crore grew by 23.0%
Cost of goods sold at 37.4% of sales decreased by 470 bps.
Profitability
EBIDTA Rs 441crore grew by 27.1%
EBIDTA margin 24.2% improved by 380 bps
PAT Rs 402.4 crore grew by 27.9%
PAT margin 22.10% improved by 357 bps
EPS 17.73 also grew by 27.9%
The growing business trend and operational efficiencies are the major reasons fo
r this
prediction. Increase in distributor capacity, Investment in plant capacity is de
finitely
resulting in top line growth Sales.
Brand name, strong distribution network are major strengths of the company which
can
provide competencies in the long run.
Differentiation, Pricing, Mergers and Rural penetration strategies are expected
to
provide for the projected growth of 10% in the domestic markets.
Costs associated are investment in 25,000 outlets across the country, re-launch
of
certain brands with value added benefits.
The growing business trend and asset additions form basis for this projection.
Wealth maximization and creating shareholder value are major strengths of the
company. Diversification and vertical integration are the strategies adopted to
provide
for the projected growth.
Investments in plan
Rs 125 crore to expand capacity at various plants across the country in next 3
years.
Rs 200 crore on construction of warehouses at 4 locations : Kolkata, Patna,
Ambala & Guwahati
second generation Promoter Directors from the two families. Emami Limited has a
team of over
4000 people running one of the leading and fastest growing personal a
nd healthcare
businesses in India.
Bibliography
http://www.cii.in/
http://www.emamiltd.in/
http://www.gnimonline.org/Download/pdfresearchprojects/FMCG_industry.pdf
http://www.mbaskool.com/brandguide/fmcg/6597-emami.html
http://www.infinancialsanalytics.com
http://www.emamiltd.in/investor-info/index.php#AnnualReport
http://www.ukessays.com/essays/marketing/emami-limited-analysis-ofproduct-diversification-marketing-essay.php