Uncommon sense

Analysts Meet

May 03, 2007

New Organisational Structure

Thinking ahead in terms of structures to manage growth Strategic Business Units to enable higher focus and thrust on rapid growth A platform for functional support for growth

New Organisational Structure

Marico FY 07

Financial Results discussed are for the Marico Group (Marico Consolidated)

Results FY07
MARICO - GROUP

(Rs Crore) Turnover PBT PAT

FY07 1557 150 113

FY06 1144 98 87

Growth 36% 53% 30%

Growth Driven by Expanding Franchise Organic Growth Volume: Organic Growth Inflationary: Inorganic Growth: Overall Growth (Total): 20% 2% 14% 36%

All Round Growth

FY 07 : All businesses recorded high growth Domestic: International: Kaya: Sundari: 32% 65% 57% 31%

Sustained Profitable Growth

Track Record (Y-o-Y)
Turnover Growth 26th consecutive quarter Growth in Profits 30th consecutive quarter Quarterly Dividend 25th consecutive quarter

Portfolio Composition
FY04 (Rs Crore) Focus Brands Non-Focus Brands Total (Rs Cr) 604 284 889 % of group 68% 32% 100% FY07 Amount 1234 323 1,557 % of group 79% 21% 100%

Operating Margin (PBDIT to Sale)

16%

14% 13% 12% 11%

14%

10% 9% 8% 9%

6%

4%

2%

0% FY03 FY04 FY05 FY06 FY07

PBDIT + ASP to Sales (%)

30% 27% 25% 25%

20%

20% 17%

19%

15%

10%

5%

0% FY03 FY04 FY05 FY06 FY07

ASP to Sales
14% 13% 12% 12%

10% 10% 8% 8% 8%

6%

4%

2%

0% FY03 FY04 FY05 FY06 FY07

Distribution of ASP
120% 100%

80% Existing 51% Existing 66% 60%

Existing 37%

Existing 43%

Existing 32%

40% New Products 49% New Products 63% New Products 57%

New Products 68%

20%

New Products 34%

0%

FY03

FY04

FY05

FY06

FY07

Growth Strategies
Consumer Product Business - India & Overseas
Expand market size in dominant brands Grow Market Share where we face significant competition Prototype & roll out new products Explore new Territories in International Business

Kaya
Saturate India and grow in Middle East

Sundari
Gain critical size to help achieve turnaround

Inorganic Growth

Domestic Business

Indian FMCG Business

Coconut Oil Hair Oils Post Wash Hair Care
Conditioners, Hair Cream, Lotion

Anti Lice Treatment Premium Refined Edible Oils

Growth Opportunities
India itself is a large market
Hair Care
28% of World Hair is in India

Heart & Health Care

60% of CHD Deaths in India by 2010

Skin Care
only 0.07% of disposable income spent on skin care
Other BRIC countries ~ 4 times as high

Indian FMCG quite relevant

Growth Established Products

CAGR over last 3 years Parachute Hair Oils Saffola

% 12% 25% 14%

Largely volume drive growth

Parachute
Volume Growth : 13%
On the back of a strong FY06

Market share at 48%

Parachute Two Pronged Approach for Growth

Grow the branded market

Conversion from loose to packed
Through small packs

Communicate on purity & goodness

Hair Care (Oils)

Segments based on Consumer preference
Value added nourishment Non-Sticky Perfumed Amla

Portfolio grows in vol. ~17%

(Focus part: Rigid packs)

Hair Care (Oils)

Strategy
Establish a differentiated offering Gain market share

Hair Oils : Market Share

40%

Source : AC Nielsen
35%

34%

30%

25%

23%

20%

15%

10%

10%

9% 8%

5%

3%
0% D abur M a r ic o Em am i B a ja j D e y 's HLL

Market Share in the Perfumed Coconut Oil category:

Parachute Jasmine + Nihar : 82%

Parachute Advansed: Creating Excitement

Champi Massager

Creating excitement in a dull & boring category.

Parachute Advansed:Driving Criticality of Oiling Taking the Holi initiative one step further We adopted a 360 approach

The Diya Holi Film

Zoom party activation Full page endorsements in TOI

Parachute Advansed:Driving Criticality of Oiling The Winter initiative in North The idea Parachute Advansed prevents dryness caused by winter

Winter Film + Context building POS

2nd Flagship delivers too

Volume Growth (FY07) : 18%
Despite price hikes

Strategy to grow niche premium segment

From Cooking Oil to a Thought Leader Proactive lifestyle management

Our Sales teams lost 140 Kgs Radio One RJs lost 25 Kgs

Saffola World Heart Day WALK

Saffola : Non-Oil Extension

Prototyped Saffola Atta Mix in Mumbai Functional food helps manage cholesterol Leverages an existing habit of blending grains Rolled out in select metros and Saffola strong towns in Q4FY07

Accolades
Saffola Won the Silver Effie Award (Gold last year)

Readers Digest Most Trusted Brand (2007)

Second consecutive year

Creating the Future Pipeline

Prototyping : To enable experimentation and de-risked growth Prototypes Scaled Up during the year
Value added products moving up the value chain to improve margin profile

Entry into new categories

Hair Cream and Hair Gels
Market Size ~ 80 cr; Growth Rate ~ 40%

Hair Conditioners
Market Size ~ 50 cr; Growth Rate ~ 30%

Functional Foods: Nascent category

Distribution of ASP
120% 100%

80% Existing 51% Existing 66% 60%

Existing 37%

Existing 43%

Existing 32%

40% New Products 49% New Products 63% New Products 57%

New Products 68%

20%

New Products 34%

0%

FY03

FY04

FY05

FY06

FY07

Share of New Products to Sales

18% 16% 15% 14% 16%

12% 11% 10% 10%

11%

8%

6%

4%

2%

0% FY03 FY04 FY05 FY06 FY07

De-risking dependence on Parachute

50% 45% 43.5% 43.1% 42.6%

40%

Parachute in India share of Group Turnover

35.6%

35%

30%

25%

20%

15%

10%

5%

0%

FY04

FY05

FY06

FY07

Will reduce as Egypt has full year of operations in FY08

Industry Recognition
One of Indias 10 best marketers
Business Today (Sep 2006)

Brand Leadership Award

India Brand Summit 2006 (Sep 2006) Parachute (29th ) and Saffola (93rd )
Amongst Indias 100 Most Trusted Brands Brand Equity Survey - The Economic Times (Feb 2006)

Modern Trade
Current share of turnover small
Share in South India

~ 3%

~ 15%

All India share could increase to 8% to 10% over the next 3 years or so Marico brands at several leading chains
Big Bazaar, Reliance, Shoprite, Spencers, Metro

Modern Trade
Margins offered are ~ 3% to 4% higher than to normal retail However, affords advantages of
Superior visibility and merchandising Opportunity to customer to touch, feel and experience our products

Marico plans to take up category management at some chains Private labels could be a medium term threat

Modern Trade
Separate team to handle modern trade relationships Commenced separate distributors for modern trade, where feasible As volumes pick up
direct supplies from factory possible more cost effective packaging designs

Modern Trade Impact assessment

+ve factors
Strong Brands

-ve factors
Margin Squeeze

Retail compliant IT & Private labels Supply chain processes Ability to launch niche products at lower cost Capability and Skill levels of Sales System

Potential to drive higher Attrition share in select brands Good relationships

International Business

International Business
Sales in Rs crores
250 200 150 100 63 50 0 FY03 FY04 FY05 FY06 FY07

63%
116

193

23%
74

95

Growth

over LY : 63%

Organic growth 39%

International FMCG - Growth

Rs. Crore

Territory Bangladesh Egypt Gulf & Others Total

FY07 93 28 72 193

FY06 65 52 117

Growth 43% 38% 65%

International Business Middle East Parachute Coconut oil maintains leadership Parachute hair cream making good progress
Leader in UAE, making inroads into other countries Market share in GCC ~19%

360 Surround Program around Celebrity

MARKET DISPLAYS

ZAINAB : I use Parachute, Do you ?

HAIR CARE TIPS-BOOKLET

VAN BRANDING

PR

MEET & GREET

Parachute cream- Innovations

HAIROSCOPE - HAIR CARE TIPS BASED ON YOUR ASTRO SIGN

SPECIAL FEMALE PROMOTERS IN SAUDI A FIRST FOR ANY COMPANY

Leadership and Industry Recognition

Industry recognition Won awards in Oscars for Marketing in the region beating very strong brands with mega budgets like Pampers (P&G), Hummer (General Motors), Tang (Kraft), HSBC, Clorox

Parachute - Bangladesh
Market Share movement

62.1 59.1 56.9 57.2 56.7 56.8 56

63.3

Year 05/ 06

Q1 06/ 07

Q2 06/ 07

Oct-06

Nov-06

Dec-06

Jan-07

Feb-07

Gains through conversion from loose oil

Outlets up from 3 Lac to 3.5 Lac Growth of 17%

Egypt Acquisitions
.

Stable Economical and Political Structure Large population and attractive economic growth (GDP growth ~ 5.6%) Provides access to Middle East & North Africa

Acquisition Route
Organic Entry a long haul Our experience in Middle East & Bangladesh High import duty structure necessitates local manufacture Globally pre and post wash segments dominated by Creams / Gels / Conditioners Acquisition enables us to have a full scale play in these segments Attractive industry margin enabled acquisitions at reasonable multiples

Brands Acquired

Fiance in Sep 2006 Hair Code in Dec 2006 Dominate Gels and Gel-Creams
>50% market share

Two acquisitions provide supply chain synergies 2nd acquisition leverages same managerial bandwidth EBDITA margins higher than Marico avg. Likely turnover in FY08 ~18% ~ 90 cr

KAYA

Kaya Growth
Rs. Crore

Territory India Middle East Total

FY07 62 13 75

FY06 43 5 48

Growth 44% 169% 57%

Growth in India without adding clinics Clinics India :43, Middle East 5 Client base increases to 200,000 KSCL skin business breaks even

Kaya New Offerings

Services
Skin Lightening Hair services Intensive Hair root Therapy

Products
Post laser cream Pimple Free Cream DMS Sunscreen Travel pack to induce trials

Quality Initiative
Tie-up with SQ Center a subsidiary of Singapore Airlines Create a Customer First mindset for in-clinic staff Standardisation of service quality across clinics Expect a higher conversion rate from skinscription to services & products

Kaya Plans
Resume expansion plan after the consolidation in FY 07 Open ~ 15 clinics per year
Saturate current towns and add few more towns

No plan to franchise operations in near future

Quality a high priority

Thrust on product sales

Increase share of revenue from ~ 13% in FY07 Prototype shop-in-shop model for product sale outside Kaya clinics in FY08

Industry Recognition for Kaya

Reid and Taylor Retailer of the year award in the Beauty/Health segment
for the second consecutive year

Star Retailer Award - The Consumer Way,

by Franchisee India Holdings, adjudged by KSA Technopak

Sundari

Sundari
Spa Skin Care brand in the USA

Adopted strategy to target tier I-spas

Persisting with this strategy

Sundari FY07
Sales increased 30% to ~ US$ 1.8 mio Losses reduced to ~ US$ 1.0 mio

Acquisitions Quick Review

Nihar (Feb 2006)
Seamless integration Exceeded our year 1 acquisition assumptions Exceeded outlet reach compared to when Marico acquired the brand (especially for Perfumed coconut oil) Pricing benefits in Parachute Jasmine Reach synergies for Hair & Care

Acquisitions Quick Review

Manjal (Jan 2006): herbal soap acquired in India
Extended beyond Kerala to cover Southern States and Maharashtra Turnover during FY07 ~ 14 cr

Camelia & Aromatic (May/Oct 2005): Personal Soap brands in Bangladesh

Backroom integration has taken longer Aromatic relaunched recently FY 07 Turnover ~ 15 cr

Acquisitions Quick Review

Fiancee & HairCode (Sep / Dec 2006): Hair creams and gels in Egypt
Integration process has commenced Team is in place First six months on track Performance in line with valuation assumptions (topline & margins)

Adjustment of Intangibles
Intangibles in books adjusted against special reserves
With sanction from the High Court

Brands appreciate in value, whereas those carried in the books, require to be depreciated Home grown brands are not valued in the books

Adjustment of Intangibles
Value of adjustment
Amount net of tax

~ 300 cr

Depreciation charged in FY07 that will not appear in the books in FY08 ~ 28 cr Additional charge on account of deferred tax in FY08 ~ 30 cr

Effective Tax Rate

Effective Tax Rate (ETR) in 2006-07 20.6%
Excludes provision for earlier years

Major factors influencing tax rate

Exemption for profits from coconut oil plants
Now only Pondicherry plant 30% of profits exempt

Profits from plants at Uttaranchal 100% exempt Profits in Egypt exempt Deferred Tax charge on brands acquired

Likely ETR over the next 2 years

20% - 25%

Equity Capital
Raised equity capital (QIP)
29 lac shares at Rs 522 per share December 2006

151 cr

Share capital increased by 5% to 60.9 cr Stock split to face value of Re 1 in Feb 07

Capital Needs over next 3 years

Rs. Cr. Normal Capex (Pkg machine upgrading etc) ~ 40 Kaya Clinics - 1.5 per clinic New Corporate Office (Net) ~ 65 ~ 70

Total Acquisitions

~ 175 ??

Funding Growth
Cash Positions: Debt as on Mar 31, 2007 Marginal ~ 250 cr

Plans for further capital would depend on acquisitions made, if any

Distribution Policy
Over the last 3 years
Payout was ~ 40% to 50% Dividend Distributed every quarter
Since Q4 FY 2001

Acquisitions since 2005 Equity raised Debt: Equity on Mar 31, 07

~ 500 cr ~ 150 cr 1.33

Distribution Policy
Acquisitions to continue as part of growth strategy Need to conserve resources More conservative payout likely in near future

Talent Attraction
Launched a corporate brand equity campaign
Won the Pink Slip Award

Has had a good responses at premier campuses Marico continues to attract right talent

Growth Challenges
Grow market segments thru Parachute & Saffola New categories - Make a success Integration of International acquisitions Kaya - Balancing growth & profitability Sundari - Ensuring a quick turnaround Managing currency risk
US Dollar, Bdesh Taka, Egyptian Pound

Continue to be the preferred employer

Guidance for FY08

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Traded Market Cap : Pre and Post Split

5 .0 0 4 .5 0

S p lit in th e fa c e v a lu e o f s h a r e s : 1 0 :1 E ff e c tiv e d a te : F e b 2 1 , 2 0 0 7
Apr P o s t S p lit R s 4 .1 1 c r

4 .0 0

3 .5 0

3 .0 0

2 .5 0

Feb P r e S p lit R s 2 .8 8 c r

2 .0 0

1 .5 0

O ct R s 1 .9 8 c r

1 .0 0

0 .5 0

0 .0 0

O ct

Nov

Dec

Jan

Feb

M ar

Apr

Thank you