ST.

JOSEPHS COLLEGE OF BUSINESS ADMINISTRATION

18 Residency Road, Bangalore 560025


Emami Limited
Module 1 & 2
Strategic Management




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
Ratio based analysis ...........................................................................................................12
Strategic Formulation SWOT analysis ............................................................................14
Strategic Formulation BCG Matrix ..................................................................................14
Competitive Advantages of Emami ....................................................................................15
Business model and Value Proposition .............................................................................15
Business Model ...................................................................................................................15
Value Creation .....................................................................................................................16
Strategies in action .............................................................................................................17
Future Prospects .................................................................................................................19
Projections ...........................................................................................................................20
Projected Income Statement for next 3 years ...................................................................20
Conclusion ...........................................................................................................................22
Bibliography ........................................................................................................................22
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Emami Limited
Introduction
Emami Limited is one of the leading and fastest growing personal and healthcare
businesses in India, with an enviable portfolio of household brand names such as
BoroPlus, Navratna, Fair and Handsome, Zandu Balm, Mentho Plus Balm and Fast
Relief.
Established in 1974, Emami has a portfolio of over 250 products based on Ayurveda
formulations. Emami Limited, the flagship company of the Group, recorded a turnover of
Rs 1821 crore in the financial year 2013-14.
Vision
Making people healthy and beautiful naturally
Mission
To contribute whole heartedly towards the environment and society integrating all
our stakeholders into the Emami family
To make Emami synonymous with natural beauty and health in the consumers
mind
To drive growth through quality and innovation in products and services.
To strengthen and foster in the employees, strong emotive feelings of oneness
with the company through commitment to their future
To uphold the principles of corporate governance
To encourage decision making ability at all levels of the organization
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
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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 lakh) have
been driving the FMCG consumption in urban India since 2002.
Consumer goods are retailed through two primary sales channels - General
Trade and Modern Trade. General trade comprising of the ubiquitous kirana
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 rate.
Competitive position of the company
Emami Limited, the flagship company of the Rs 2000 crore Emami Group, is a leading
player in the personal and healthcare consumer products industry in India. A jewel in
the crown of the conglomerate, the company is a coveted Rs 700 crore business entity
engaged in manufacture and marketing of health, beauty and personal care 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 Ayurveda Science
Foundation (HASF) that generates the very best of Ayurveda formulations. The
foundations unique range of healthcare products aptly caters to consumer needs. The
world class quality control methods and processes maintained by HASF ensure
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Emami Limited 5

optimum utility of each ingredient. The foundation is completely engaged in constant
innovation and pharmaceutical enhancements.
Boroplus brand is the market leader in the antiseptic cream segment; the Navratna Oil
is also in the pole position in the cool oil segment. Fair and Handsome is the pioneer in
the fairness cream for men segment. Emamis products in different categories like cool
oil, antiseptic cream, fairness cream for men, and the crme herbal hair pack have
carved a niche for themselves in their respective segments.
Boroplus has been selected as among the top 100 brands by the Brand Equity of The
Economic Times. In 2006 and 2007, Navratna has been ranked the 6th Most Energized
Indian Brand by the DY&R Brand Asset Valuator.
Sona Chandi Chyawanprash, Himani Fast Relief, (Ayurveda pain relief ointment)
Mentho plus (pain balm), Hairlife (crme herbal hair pack) and Emami Malai Kesar (cold
cream) are also major players in their respective categories. Brand extensions have
helped Emami consolidate its position in the market and also cater to varied consumer
needs.
Emami covers all the states with 28 depots across India. Its supply-chain management
assumes immense significance which was aptly reflected through remarkable
expansion in dealer-distribution network, outlets and manpower. The domestic sales
and distribution division directly covers 4,00,000 outlets all across the country along with
an additional 2100 modern retail outlets. Emamis products reach out to nearly 30 lakh
retail outlets across India through 4,000 distributors.
Emami Limited has recently been conferred the Most Enterprising Company of the Year
by IIPM (Indian Institute of Planning and Management) and The Sunday Indian
publication of the Planman Media Group. In 2007, the company received the Institute of
Cost and Works Accountants of India (ICWAI) Award for Excellence in Cost
Management.
In East India Emami occupies leadership in sectors such as paper and newsprint,
private hospital, edible oil, bio-diesel and real estate. Emami also has presence in ball
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pen tips manufacturing, contemporary art and retail chain with Frank Ross and
Starmark. Emami has also signed a MoU for a cement plant in Chhattisgarh.
Competiveness and Position of rivals

Major Competing companies in FMCG segment
HUL
Nestle
Marico
ITC

Name Last Price
Market Cap.
(Rs. cr.)
Sales
Turnover
Net Profit Total Assets
HUL 619.45 133,993.71 28,019.13 3,867.49 3,277.05
Dabur India 187.70 32,964.79 4,870.08 672.10 1,946.63
Godrej Consumer 815.00 27,744.71 4,079.84 564.84 3,021.92
Colgate 1,512.00 20,562.11 3,578.81 539.87 599.86
Marico 248.80 16,044.44 3,682.49 577.20 2,647.62
P and G 4,285.00 13,909.43 1,686.78 203.22 805.32
Godrej Ind 364.55 12,229.02 1,453.55 119.69 2,491.74
Emami 516.50 11,722.88 1,627.09 323.77 820.85
Gillette India 2,150.00 7,005.82 1,437.72 87.16 649.23
Bajaj Corp 242.90 3,582.78 671.73 150.44 483.82
Jyothy Labs 178.30 3,227.65 1,260.18 106.11 1,261.24
JHS Svendgaard 8.60 20.72 35.28 -28.79 149.70
GKB Ophthalmics 31.85 13.23 31.38 0.83 30.95
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Drivers for Growth
Growing Population
Rapid Urbanization
Evolving consumer lifestyle
Modern trade
Taxation Special reference to Goods and Services Tax GST
SWOT Analysis



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
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Key Success Factors Emami
Ayurveda Formulations
Strong Distribution Channel
40000 distributors and 400000 outlets across the country
Product innovations and brand extensions
Effective and efficient cost control initiatives in marketing
Low cost manufacturing techniques
Strategic Approach
The group strategy is for growth through both Organic and Inorganic expansion which is
driven by power brands, upcoming brand extensions and new launches, coupled with a
wider international presence through acquisitions.
Approach for top line growth - Sales
Enhance product recall through aggressive promotion via celebrities
Expand distribution to reach rural pockets
Differentiated Value For Money products
Innovate and enter new product categories
Undertake brand extensions
Wider international footprint ,entry in new geographies drive exports
Leverage existing distribution network
Approach for bottom line growth - Profits
Engage in effective and continuous cost control initiatives
Reduce proportion of ad- spend with increase in volumes
Stabilization of new launches and brands
Enjoy benefits of economies of scale
Leverage on low cost manufacturing taking full benefit of location advantage

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Emami Limited 9

Porters 5 Forces Model Analysis

Forces
Intensity of the
Force
Critical Reasoning
Risk of Entry of Potential
Competitors
Moderate
No identified new entrant other
than ITC in the segment
Emami has strong presence in
the markets it caters to
Rivalry among
established companies
Moderate to High
Consumption pattern and
Demand show increasing trend
Distribution network being
common is a critical factor
Bargaining power of
buyers
Moderate to High
Dominance of consumer is high
Dependence on end consumers
is high
Switching brands is easy
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 creating and
sustaining value for money products and fulfill consumer needs in every possible
aspect. This competent feature of Emami helps it overcome competition and beat the
industry performance year on year.



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Emami Limited 10

External Factor Evaluation Matrix EFE Matrix

Total weighted average score is 2.95 which indicate that the company is well equipped
with strategies and tactics to face the external environment.
Internal Company Analysis
Strengths
Brand name
A strong brand name is a major strength of Emami. This gives Emami the ability
to charge higher prices for their products because consumers place additional
value in the brand.

Key External Factor Weight Rating Weighted Score
Opportunity Factors
Rural Business development .05 4 0.2
Distribution Network .2 3 0.6
Modern Trade practices E
commerce
.1 2 0.2
Government Policies Taxation .05 2 0.1
Growing Incomes levels .1 3 0.3
Rapid Urbanization .05 3 0.15
International Markets .05 2 0.1
Threat Factors
Entry of International brands .05 4 0.2
Private Label Brands
Unorganized local products
.15 4 0.6
FDI in retail .1 3 0.3
Consumer preference .1 2 0.2
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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

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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 sector's.
The liquid ratio is decreasing year after year. Though the ratio is above 1 in all the five
years, it is preferable to improve upon the situation. This may be due to the fact 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 servicing of
debt is less burdensome and consequently its credit standing is not adversely affected.
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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 reducing 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 is due to
higher amount of current liabilities especially, increasing in provision for dividend and
taxation and creditors.
Internal Factor Evaluation Matrix IFE Matrix

Total weighted average score is 3.45 which indicate that the company is well equipped
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
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Strategic Formulation SWOT analysis

SWOT Analysis
Strength Develop niche segments into brands
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

Strategic Formulation BCG Matrix

Star - Boroplus

Question Mark - Mentho Plus

Cash Cow - Fair and Handsome Dog - airlife

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Emami Limited 15

Competitive Advantages of Emami
Sustainable business model
Innovative marketing campaigns
Distinctive product lines
Product differentiation
Wide and direct distribution network
Business model and Value Proposition
Emami Ltd. is engaged in the business of manufacturing and marketing personal care,
health care and beauty products.
Business Model
1. Value propositions
It is a promise of value to be delivered and acknowledged and a belief from the
customer that value will be appealed and experienced. Emami promises to Make
people healthy and beautiful, naturally and it certainly delivers all its promises
through it different brands like Navratna oil, Fair and Handsome, Zandu balm
(Acquired Zandu brand)
2. Target customer segments
Majority of the customer base of Emami is from rural segments. Revenues close
to 50% are from rural sales.
3. Distribution channels
Geographical presence increased to 40lakh outlets in India
Direct reach increased by 20% to 6 lakh outlets
Core capabilities Distribution channel and unique products
Rs. 279 crore spent on advertising and promotions
Strong network of 3000 distributors and 5600 sub-distributors, with a direct reach
across 6,00,000 retail outlets
Availability of products across 40,00,000 outlets
4. Customer relationships:
Project Swadesh increased Emamis distribution down to rural and isolated
population clusters of up to 10,000
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5. Low competitive intensity
Emami is the market leader in almost all the segments it is present because of
the unique products and less competition
6. Low Penetrated and Niche product categories
Antiseptic cream category
Pain management category
Mens fairness cream sector
Cooling oil category
7. Innovative & effective products
Fair and Handsome for Men (Fairness cream for men)
Value Creation

The Company follows the strategy of extending brand equity through sub-segmentation
of the core brand, hence expanding market reach














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Emami Limited 17

Strategies in action

1. Functional Strategies

Differentiation
Launch of Emami Talcum, Emami Vanishing Cream and Emami Cold Cream and
glycerin soap , which were great favourite brands with the quality conscious
consumers in the mid-seventies. The company soon became adept in selling
beautiful dreams to Indian women interested in finding their own identity. The
signature tune of Emami played over radio and TV became a household
favourite.

Innovation
Emami provides products that take the consumer experience a few notches
ahead each time. This is because Emami has commissioned a dedicated
research unit stewarded by experienced industry professionals who reconcile the
wisdom of ayurveda with the discipline of professional science.
In 2005, Emami created a completely new market segment by introducing Indias
first fairness cream customised for men. Travelling the region and by interacting
with a host of retailers and intermediaries Emami discovered that 30 to 35 per
cent of users of fairness creams are men, with a growing interest in personal
grooming. The sales of Fair and Handsome in its first year had touched around
Rs 50 crore. Another feather on the cap was when Emami roped in Bollywood
superstar Shah Rukh Khan to endorse the brand, targeting the male fairness
cream market in India which immediately made the brand even more popular and
trusted by the consumers.
In 2006 the company decided to introduce a Health Care Division and a number
of new brands of Ayurvedic OTC medicines. The company has taken up the
challenge of growing this new division with a dedicated and enthusiastic team
working on this project.

2. Business Strategies

Penetration into rural markets
Emami has selected to work in under-penetrated segments with potential and
introduced aspirational products without compromising mass relevance. In a
world where sustainable success is derived from sales across a wide footprint,
Emami has invested in deep geographic penetration. Emami has leveraged its
rural distribution channels that have made it possible for the Companys brands
to be sold down to rural population clusters of 10,000+.
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Emami Limited 18

Emami first invested in creating a separate distribution system for rural markets
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 market-
leader 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 acquisition,
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
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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 and
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%









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Emami Limited 20

Projections
Projected Income Statement for next 3 years














The growing business trend and operational efficiencies are the major reasons for this
prediction. Increase in distributor capacity, Investment in plant capacity is definitely
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.




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Emami Limited 21

Projected Position Statement for next 3 years














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





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Emami Limited 22

Conclusion
The inception of Emami Group took place way back in mid-seventies, in West Bengal; it was an
extremely bold step in the early seventies when the Indian FMCG market was still dominated by
multinationals. Within three decades, the company Emami Ltd has a turnover of Rs. 1500, the
flagship company of the Rs.5000 crore Emami Group.
Today, Emami Limited is led by Mr. R S Agarwal and Mr. R S Goenka with the help of the
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 and 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-of-
product-diversification-marketing-essay.php