Opportunities for acquisition in international businesses are greater: Harsh Mariwala, Chairman, Marico

In an interview with ET Now, Harsh Mariwala, Chairman, Marico, talked about the company's revenue growth and other future plans. Excerpts:

ET Now: In a recent interview, you have just indicated that Marico is confident of maintaining a 20% revenue growth. Why are you so confident because the business environment for FMCG companies is not looking strong?

Harsh Mariwala: First of all, we are a growth-oriented company, so growth is very important to us. We drive growth both through organic as well as inorganic means. It is just not this year but every year, we need to target 20-25% growth. Partly, its inflation this year and because of that, we may surpass the 20-25% target because there has been high degree of inflation as far as our raw material costs are concerned and that has to some extent got passed onto the final consumer, so there is an inflation element, there is an organic growth and it is a combination of both these, which will make growth happen.

ET Now: With the decline in raw material costs for most FMCG companies, is there a possibility of a price cut in the near term as well?

Harsh Mariwala: It is too early. First of all, the decline is depending on what you are consuming. The decline has been marginal, and it has happened too recent. One has to see whether it is sustained or not. In our case, it has not been so dramatic that it will change our cost structures to such an extent. There is a marginal dip in some cases of raw materials and at this stage, we have to wait and watch but I do not think there will be a price cut as far as we are concerned in the near future.

ET Now: Kaya, your healthcare and lifestyle business is still loss making. By when do you expect a turnaround there?

Harsh Mariwala: If you look at Kaya totally, Kaya has three parts. We have an acquisition, which we made in Singapore last year. We have Kaya India business, and we have Kaya international business mainly in the Middle East markets. If you combine all that, we will make at least breakeven this year definitely.

ET Now: You have been actively looking at acquisitions in the beauty and the wellness space as well. Have you identified any targets, any updates that you would have?

Harsh Mariwala: Any growth oriented company will have certain targets but ultimately there has to be a seller and a buyer at the right price. There are many ifs and buts, so beyond a point, no point speculating what will be the target for acquisition. You have to have an open mind, and you have to look at ultimately what make sense for you.

ET Now: You have reduced your advertisement spends recently. If I look at your advertisement spends as a percentage of total sales, it is the lowest in last seven years, so if you are confident that Marico is a growth company. Why have you reduced your advertisement spends?

Harsh Mariwala: I do not think so because if our market share was lost because of some cut in advertisement spends. First of all the advertisement spends have not been curtailed forever. There could be some short-term pressure, there may be some quarterly swings in advertisement spends but on an annualised basis, we are saying that we will spend 9-10% on advertising and separately even in one quarter if we have reduced, it has not impacted our growth or also our market share.

ET Now: Any launches that you may have in the offing in the next six months or so because we had heard that Marico will have some launches in the wellness space in particular?

Harsh Mariwala: We do not talk about our launches in advance, so we will launch and as and when we launch, you will come to know about it through the marketplace.

ET Now: What about your international business? International business currently contributes to 25% after total profitability. Do you see that number changing going forward?

Harsh Mariwala: Overall the international business has been growing faster than domestic businesses, so to some extent partly because of acquisitions, so I reckon that over a period of time the opportunities for acquisition in international businesses are far more, so theoretically or logically, it may add more to our total turnover as we go forward.

ET Now: You are targeting to increase your presence in Asia as well as Africa via organic and inorganic modes. What is the kind of capex that you are looking at?

Harsh Mariwala: Our FMCG business is not highly capex oriented. We need actually to put money in brands and distribution. In many cases we already have capacities, especially in Middle East markets through Egypt operations as well as in South Africa, so if at all we need capex, it will be in the near future in Bangladesh where we are putting up a factory.