Highlights of the 38th AGM at Emami Ltd.
Excerpts from the speech of R.S.Goenka, Co-Founder & Joint Chairman
Emami’s people centric approach amidst COVID PANDEMIC
This successful transformation of Emami feels all the more better when we realize that it has been achieved after keeping the health concerns of our employees as one of our topmost priorities. Business is important to us, but what is more important to our journey – are our human assets, our employees.
With almost 17 months behind us, we as an organization, have been continuing our growth story with a hybrid model having the flexibility of working from home and office depending on the operational demand.
The second wave of the pandemic in India was brutal and had a devastating effect on each and every individual either directly or indirectly. We also lost few of our colleagues while some lost their near and dear ones. A Covid Management Task Force with senior members of our management was immediately set up with designated mandate for providing guidance in execution of various planned activities to support employees during this time of distress. Emami’s Human Resource Department also ensured that the mental fatigue that employees might have experienced, during the pandemic with lack of normal social interaction was kept minimal as much as possible, by constantly engaging with them on various learning opportunities to promote self-growth and conduct various mental and physical wellness programs.
In FY 20-21, notwithstanding the pandemic led roadblocks, Emami went ahead to launch multiple products, infact more than 40 in the domestic market, some truly category defining innovations contributing around 4% to the overall revenue.
While some of the new launches delivered encouraging performances, all the Power Brands of Emami continued to successfully retain their market leadership positions and additionally acquired new consumers. Emami continued to stay invested in positioning, relaunches and extensions of the Power Brands amidst a weak consumer sentiment with the conviction of it being the best time to capture attention.
While some of the new launches delivered encouraging performances, all the Power Brands of Emami continued to successfully retain their market leadership positions and additionally acquired new consumers. Emami continued to stay invested in positioning, relaunches and extensions of the Power Brands amidst a weak consumer sentiment with the conviction of it being the best time to capture attention.
- Emami had been engaged in addressing diverse challenges in the last few years that found collective expression during the first half of the last financial year. These challenges were related to sales and distribution on the one hand and growth of brands like Kesh King, Fair and Handsome and Zandu Pancharishta on the other hand.
- Emami relaunched Kesh King with a special comb applicator coupled with a new formulation and communication. The shampoo was relaunched around new packaging in line with the category to enhance shelf-space visibility. The brand was marketed directly to consumers with a lower dependence on the wholesaler channel. Kesh King recorded strong growth of 15% in 2020-21 and is widely acknowledged as yet another Emami acquisition-cum-marketing success story.
- Emami’s leading male grooming brand, Fair and Handsome had not performed well in FY20 due to liquidity crunch, lower disposable incomes and increased preference for facial hair moderating surface application area for the consumers. We undertook corrective actions and relaunched the brand in the third quarter of FY21 around a new re-positioning strategy comprising revamped formulation, packaging and communication. The products were renamed as Fair and Handsome Radiance Cream and Fair and Handsome Instant Radiance Face Wash and a new differentiated packaging design was introduced for Fair and Handsome Facewash in line with Men’s Face Wash category codes The result is that post relaunch, the brand reported attractive growth of 18% in the second half of FY21.
- Emami revisited its existing strategy for Zandu Pancharishta and launched a new communication with superstar Amitabh Bachchan highlighting its digestive impact by working from the roots. We altered the packaging from glass to functionally safer PET bottles, strengthening offtake. The new positioning worked its magic with the brand growing by 18% in 2020-21.
The Broad Basing of Presence
In the distribution front, Emami decided to have a strong omni-channel presence beyond wholesale with a focused growth in direct retail reach, modern trade, e-commerce and D2C (Direct to Consumer) channels. Our direct reach increased to 9.4 lac outlets with the rural coverage strengthened through van operations. Contribution from Modern Trade revenues doubled to 8% in four years while e-commerce contribution increased to nearly 3%, a three-fold jump since the last financial year.
Within a very short span of its launch, the exclusive D2C e-commerce platform Zanducare has successfully garnered almost one crore unique visitors. Zanducare has been ranked as the No. 1 portal in India in the health and alternative health and remedy category by Similarweb. Apart from offering healthcare products to the consumers, the portal also provides Free Doctor consultation facility to the consumers.
Last year, the offtake of Zandu Healthcare improved by 45%, a major contribution of which has come from the D2C portal. This encouraging response has strengthened the resolve of the company to stay aggressive about this new distribution
Further, to augment the current distribution strength, Emami outlined a clear strategy to drive growth aggressively in the rural market. Digitalization of Rural Salesforce with launch of Rural SFA was completed successfully during the year, enabling the Rural sales team to capture all market orders digitally & manage sub stockist inventories.
International Business
Like every other FMCG Company, the international business also faced major disruption with the outbreak of the global pandemic. But Emami has taken some strategic measures like introducing hygiene range, launching entire oil range in Bangladesh including Navratna, 7 Oils in One and Kesh King and extending the international brand Creme 21 into skin care (for all ages), graduating it into a multi-category platform and widening its ASEAN footprint.
Besides, the Company localised the supply chain through own manufacturing in Bangladesh and contract manufacturing in Germany, Sri Lanka and Dubai. You would feel happy to note that the Company’s international revenue grew 12 by value over 2019-20 driven by strong performance across key markets.
Further, the strategy of identifying & tapping opportunities in markets that has high oil usage with introduction of brands such as Kesh King & 7 Oils in One, paid off well in those International markets. During the year, 7 Oils in One became one of the largest selling brands in the International markets after the Company launched 7 new variants under the brand and initiated a media campaign with a Bangladesh based celebrity, Ms. Bidya Sinha popularly known as Mim. As a result, Emami 7 Oils in One has become another power brand in the Company’s international portfolio of brands.
Media
During the year, Emami roped in Bollywood superstar Salman Khan to endorse Navratna and Fair and Handsome. The new commercials with Salman Khan generated good consumer traction for the brand. The company also roped in Indian cricketer Shikhar Dhawan to endorse EMASOL range of home hygiene products and Bollywood stars Juhi Chawla and Ayushmann Khurrana to endorse BoroPlus range of hygiene products.
Profitability
While revenues at Rs. 2881 Cr. grew by 8%, Emami significantly improved its profitability and margins during the year due to benign raw material costs in the first half of financial year and strict cost controls. A cost saving project called WoW (War on Waste) was applied across functions like media, raw material procurement, production, packaging and supply chain.
Emami finished the year 2021 with 6 times higher net cash at Rs. 357 crore on its books despite rewarding shareholders with dividends amounting to Rs 356 crore and a share buyback worth Rs 221 crore.
Shareholder Wealth Appreciation
An initial shareholder who invested Rs.1000 for 100 shares of Emami and thereafter invested Rs. 4000 in the Rights Issue, would presently own shares worth around Rs. 9.8 crores – in other words, initial investment attracted a return of 24,570 times over years Shareholder’s wealth also increased by 50 times following the public issue in March 2005 and by 11 times following the QIP in July, 2009. In more recent times, Emami’s share price since April 2020, has grown by more than 3 times enhancing shareholder wealth.
ESG Initiatives
Apart from business, Emami also made significant contributions to the society through its sustainability and community efforts.
As a sustainable manufacturer, Emami Ltd, took definitive measures to instill processes that moderate consumption of energy and natural resources on one hand and restricting carbon footprint on the other. In the year 2020-21, Emami has successfully increased the usage of renewable energy to 8% of total energy consumption in comparison to 2% in 2019-20. Emami also reduced its specific energy consumption vis-à-vis production by 7% compared to 2019-20.
Emami modified manufacturing processes to recycle 70% of water during the year 2020-21. By reusing of ETP- treated water for gardening and toilet usages, the Company has successfully turned its factories into zero-discharge units. Emami also reduced its specific water consumption vis-à-vis production by 8% and effluent generation by 13% compared to 2019-20.
Emami is also committed towards maximum optimization of packaging material and prudent plastic waste management. Around 80% of the Company’s packaging suppliers are localized thus reducing scope of transportation, fuel consumption and emissions. During the year, Emami reduced the consumption of 110 tons of plastics and 145 tons of paper through adopting superior design elements in packaging.
Under community development, Emami has undertaken CSR initiatives like Padho India Padho, Badhte Kadam, Padhenge Hum Padhane Ke Liye, Janakalyan, Swasthya, Swachhata and Sukanya in a systematic way to deliver long term sustainable benefits to the society across education, health and sanitation, backward society development, hunger eradication, animal welfare, environmental protection and promotion of traditional arts and culture.
During the Covid-19 pandemic, Emami’s CSR wing set up a helpline during the lockdown for 75+ years’ old senior citizens to access doorstep delivery of essential items, supported 1500 people in villages of Masat & Dongari area, provided infrastructure support to two hospitals in Kolkata and sanitized more than 20 Emami Foundation supported schools in post lockdown period. An innovative Telehealth service was also initiated in West Bengal, by using mobile and communication technologies, for zero contact prevention, diagnosis and treatment of various diseases. Emami also provided E- Learning / online education services for After-School Support Program in Kolkata and Haripal along with financial assistance to underprivileged students for internet connection and smartphones required for online education.
As a recognition to this, Emami received the Star of the Year Award for the second year in a row at Tefla’s Think CSR 2020 Forum for the highest standard of CSR activities done during the COVID 19 pandemic.
Emami also renovated the heritage property of 48B Muktaram Babu Street to restore its former architectural splendour. Located in northern parts of Kolkata, it was from a rented space in this building that Shri RS Agarwal and I started our dream called Emami in the early 70s. Thus, 48B holds a very special space in our hearts. The restored heritage property is now being used to carry out our Group’s CSR activities.