Kaya requires a completely different mindset to grow.

So taking off the Marico hat off Kaya and unshackling it from the Marico is the right thing to do

INDUSTRY ANALYSIS
KAYA SKIN CLINIC Service sector People oriented Skin Care industry Indian skin care industry is expected to grow 18% CAGR MARICO LIMITED Capital intensive sector Product-oriented FMCG products Recent budgets hike in NREGS and relief to tax payers is expected to give a boost to the FMCG sector.

Porters Five Force Model for Marico Limited

Porters Five Force Model SUPPLIER POWER

Low

PORTERS FIVE FORCE MODEL

BARRIERS TO ENTRY

High

THREAT OF SUBSTITUTES

High

BUYER POWER High

DEGREE OF RIVALRY -Entry and Exit barriersHigh -Industry growth - high -Switching costs - high -Brand identity - high -Diversity of rivals- High

Porters Five Force Model for Kaya Clinic

Porters Five Force Model SUPPLIER POWER

Low

PORTERS FIVE FORCE MODEL

BARRIERS TO ENTRY Moderate

Budding Dermatologists

THREAT OF SUBSTITUTES

Moderate
Herbal and ayurvedic products Eg. Himalayas products

BUYER POWER

High
People prefer unorganised players- skin spencialists Unwilling to pay premium prices

DEGREE OF RIVALRY
-Entry and Exit barriers- High -Industry growth -Product differences- Low -Switching costs - Low -Brand identity - Moderate -Diversity of rivals- High
Organised Competitors Unorganised competotors

Generic Business Model

SWOT ANALYSIS
STRENGTHS Large number of services under one roof Well trained staff Good ambience (physical evidence) Wide Geographical reach Skin bars are expected to boost revenue by 30% OPPORTUNITY WEAKNESS Overpriced products Marketing strategies only limited to social media.

THREATS

Untapped middle class segment Introducing products and services for males as well

Unorganised sector Organised players like VLCC, Dr. Batras

Impact of Demerger on Marico and Kaya Skin Clinic

Impact on Maricos valuations. Focus on core activities. Kaya Skin Clinic will have independent decision making. (There were strong cultural differences between Marico and Kaya that limited the growth prospects for Kaya.) Business model will be focused industry wise. The demerger will facilitate the consolidation of Maricos FMCG business in India and overseas.

Financials

Revenue Growth
4500 4000 3500

3000
2500 2000 1500 1000 500 0

2008
2009 2010 2011 2012

Revenue

Returns
80

70
60 50 40 30 20 10 0

ROCE
RONW

2008

2009

2010

2011

2012

Segment Analysis
Particulars Segment Revenue Segment Results Segment Assets Segment Liabilities Capital Expenditure FMCG 3730.01 443.82 1751.89 496.06 48.69 Kaya 278.27 (29.07) 354.28 161.25 43.22 Total 4008.28 414.75 2107.17 657.31 91.91

The Value of Kaya UNLOCKED

FMCG Kaya & Make
-360

Total Group Value

80 * 8 = 640

100 * 10 = 1000

100 * 10 = 1000

1000 + X

Suggestions for Kaya Skin Clinic

Rework on the 4Ps

Product
-Introducing newer products. -Cross-Selling and Up selling of products. -Introduce products and packages for middle class consumers

Price
-Price Bundling can increase the average bill per customer -lower priced packages to cater to the middle class

Place
-Expand your distribution base, through Organised retail shelves -Introduce skin bars, in tier 2 cities in a greater number

Promotion
-Traditional marketing -Free samples -New brand ambassador (youth icon for e.g. Sonam Kapoor, Anushka Sharma) -A name like Kaya, rather than Kaya Skin Clinic --communication of schemes and packages using various media channels.

People
-To deal with attrition rate, signing bonds with employees. -Have performance based rewards to motivate your sales force -Feedback from customers about the staff. -Delegation of authority, providing an intrapreneurial environment