Marico didn’t wait for CSR spending regulation to start making an impact
Marico was named Corporate Citizen of the Year at the ET Awards 2022. The jury members voted in its favour, recognizing the consumer goods company’s efforts in water conservation, efforts to increase coconut farmer productivity, and startup mentorship programmes aimed at fostering innovation. Chairman Harsh Mariwala told ET that he has prioritised the organization’s interests.
Marico is one of India’s oldest FMCG companies. Do you believe the company should have pursued a more aggressive growth strategy?
It always appears that one could have done better, but I’m pleased with the outcome. We were not in FMCG when we started in the mid-1970s, so we had to learn how to build a distribution network, build brands, advertise, and understand consumers. We went public as a branded commodity player, but we are now a full-blooded FMCG player in comparison to other Indian and MNC FMCG behemoths. And we have the market’s respect. We made errors. But I don’t regret making them because we learned a lot and made course corrections that helped us drive market growth and success. Marico, like many other FMCG companies, has acquired.
Marico, like many FMCG companies, has acquired DTC brands. What was the concept behind it, and how did these brands fare?
Until about 4 or 5 years ago, the FMCG industry was thought to be a defensive industry that would be unaffected by competition. All of this was upended by DTC (direct-to-consumer) brands. Marico has its own DTC brands and has acquired three more. However, we have housed them in a different location and assigned a different team to care for them. When these businesses become large enough, we will try to integrate them, particularly in distribution.
Marico has always been a good corporate citizen. What are the key areas you made sure you didn’t lose sight of in order to accomplish this?
Because of the new regulations, many organizations have had to deal with the issue of good governance, CSR (corporate social responsibility) spending, or ESG (environmental, social, and governance). We’ve been doing it for a long time. Because my starting point is that I do not own this company. I and my family were the sole owners at one point, but once we went public, it no longer belonged to me. I also have other stakeholders to consider. If there is a conflict between the organization’s and the promoter’s interests, the organization’s interest should take precedence.
Are you pleased with how the Marico Innovation Foundation and its work have evolved over time?
We identified our purpose in 2000, which was to make a difference for all stakeholders. We did not have to wait for CSR spending to improve coconut farming productivity or drive innovation because it came from within. So, rather than investing in a hospital or a school, I believe in making a catalytic impact.
How do consumer companies like yours stay relevant and drive consumption as the world moves towards net zero targets and a circular economy?
No, I don’t believe that consumers becoming more conscious of overconsumption or recycling their used products will have an impact on consumption. The key for businesses is to use the appropriate materials. In our case, we recycle 95% of the plastics we use.
And it is our responsibility to improve the circular economy – how do you recycle plastics? How are the recycled materials collected? How would you repurpose that? There is currently a scarcity of good recycled materials. So, if we improve this, we can reuse many of our current plastics and replace them.
What advice would you give to the founders of new age startups, some of whom have been found to be lacking in governance?
It is critical for any entrepreneur, regardless of stage of their journey, to set the right example from day one because the moment you start taking shortcuts, you are creating a culture of taking shortcuts down the line, and changing that culture when you become larger is extremely difficult.