Wealth Creator!
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WHY DO MOST PROFESSIONAL “EMAMI IN ONE SENTENCE? “success hAS BEEN UNDERSTANDING STOCK PICKERS CONTINUE TO PUT MASSTIGE.” A CONVERSATION WITH THE LATENT NEEDS OF OUR ALE a ‘buy’ on emami? ALYQUE PADAMSEE consumers” – EMAMI FOUNDERS S ’ COPY. NOT FOR FOR NOT COPY. ’ S EMAMI LIMITED SHAREHOLDER focusANNUAL REPORT 2013-14 WEALTH CREATOR! GROWING ITS PROFIT Emami has been FROM `92 CRORE IN 2008-09 TO `402 CRORE IN 2013-14. one of the most ENHANCING MARKET CAPITALISATION FROM remarkable wealth `1,542 CRORE TO AROUND `10,000 CRORE ACROSS THE creators within PERIOD. WHAT CAUSED THIS India’s FMCG INCREASE IN VALUE AND WEALTH? sector. SEE COVER STORY INSIDE 2013-2014 CORPORATE INFORMATION CHAIRMAN DIRECTORS R.S. AGARWAL R.S. GOENKA K.N. MEMANI MANAGING DIRECTOR Y.P. TRIVEDI SUSHIL K. GOENKA M.D. MALLYA P.K. KHAITAN CEO-FINANCE, STRATEGY & SajjaN BHajaNKA BUSINESS DEVELOPMENT AND CFO S.B. GaNGULY N.H. BHANsaLI AMIT KIRAN DEB VaIDYA S. CHATURVEDI COMPANY SECRETARY & AVP-LEGAL MOHAN GOENKA A.K. JOSHI ADITYA V. AGARWAL HARSHA V. AGARWAL AUDITORS PRITI A SUREKA M/S S.K. AGRAWAL & CO PRASHANT GOENKA CHARTERED ACCOUNTANTS BOARD COMMITTEES AUDIT COMMITTEE FINANCE COMMITTEE S.B. GaNGULY, CHAIRMAN R.S. GOENKA, CHAIRMAN R.S. GOENKA SUSHIL K. GOENKA SajjaN BHajaNKA MOHAN GOENKA AMIT KIRAN DEB ADITYA V. AGARWAL NOMINATION AND REMUNERATION COMMITTEE HARSHA V. AGARWAL (PREVIOUSLY KNOWN AS REMUNERATION COMMITTEE) PRITI A SUREKA AMIT KIRAN DEB, CHAIRMAN CORPORATE GOVERNANCE COMMITTEE SajjaN BHajaNKA S.B. GaNGULY, CHAIRMAN S.B. GaNGULY R.S. GOENKA SHARE TRANSFER COMMITTEE Y.P. TRIVEDI MOHAN GOENKA, CHAIRMAN AMIT KIRAN DEB ADITYA V. AGARWAL CORPORATE SOCIAL RESPONSIBILITY COMMITTEE HARSHA V. AGARWAL SUSHIL K. GOENKA, CHAIRMAN PRITI A SUREKA AMIT KIRAN DEB STAKEHOLDERS’ RELATIONSHIP COMMITTEE MOHAN GOENKA (PREVIOUSLY KNOWN AS INVESTORS’ gREVIANCES COMMITTEE) HARSHA V. AGARWAL SajjaN BHajaNKA, CHAIRMAN PRITI A SUREKA S.B. GaNGULY MOHAN GOENKA HARSHA V. AGARWAL BANKERS CANARA BANK | ICICI BANK LTD. | STATE BANK OF INDIA | HDFC BANK | HSBC REGISTRAR & TRANSFER AGENT REGISTERED OFFICE: EMAMI TOWER, 687, ANANdaPUR, MAHESWARI DATAMATICS PRIVATE LIMITED, 6, MANGOE EM BYPASS, KOLKATA 700 107, WEST BENGAL, LANE, KOLKATA 700 001, WEST BENGAL, INDIA, TEL : +91-33-6613 6264, FAX: +91-33-6613 6600, TEL: +91-33-2248 2248, FAX: +91-33-2248 4787, EMAIL: [email protected] EMAIL: [email protected] OUR PRESENCE SEVEN facTORIES, ONE OVERSEAS UNIT, FOUR REGIONAL OFFICES, 32 DEPOTS, FIVE OVERSEAS SUBSIDIARIES, 63 COUNTRIES ONLINE: WWW.EMAMILTD.IN | CIN: L63993WB1983PLC036030 Founders’ statement Special report focus 06 CONTENT “Our key to success has been understanding the Letter from the Editor latent needs of our consumers” 54 e are happy to bring you the R.S. Agarwal and R.S. Goenka 31st Annual Report of Emami Smaller is bigger! Founders WLimited. Emami’s story on sachetisation Over the decades, Emami Limited (started with a seed capital of H20,000) has become a wealth creator – in terms of its brands, turnover, profitability and market capitalisation – valued at around H10,000 crore. What makes our story compelling is that we have grown through a policy of ‘middle-class- isation’, we have grown through ruralisation, we have grown through endorsements, we have grown through category creation, we have grown through professionalisation. The result is that we are a rare sustained Indianised FMCG success story, one of the fastest growing and profitable in our sector. This report covers the various facets of the Emami success story and we hope readers will find it informative, insightful and enriching. R.S. Agarwal R.S. Goenka Forward-looking statement by using words such as ‘anticipates’, ‘estimates’, In this annual report, we have disclosed the ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’ Company’s objectives, expectations and forecasts and words of similar substance in connection to enable investors to comprehend our prospects with any discussion of future performance. 16 MD’s statement and take informed investment decisions. This Although we believe that we have been prudent report and other statements – written and oral in our assumption, actual results may differ Optimism! – that we periodically make may be forward- materially from those expressed in the statement. - SUSHIL K. GOENKA looking within the meaning of applicable The achievement of results is subject to risks, securities laws and regulations. We have tried Managing Director uncertainties and even inaccurate assumptions. wherever possible to identify such statements 2 | Emami Limited Special reports 68 36 Economic and Statutory Section Evolution business scenario 74 Directors’ Report 10 things you probably Management Discussion 81 Corporate Governance Report never knew about how and Analysis Financial Section Emami was started 104 Standalone Accounts Features 134 Consolidated Accounts 20 38 Daring to create a Hot property! new market, not 48 settling for a share of the existing market- Emami, the rare Fair &Handsome Indian multi-national 26 58 Pain management & Bringing the Emami BoroPlus magic touch to 32 Zandu! 12 things you need 62 28 24 to know about IT capability is ayurveda driving business Cash Cow! THE EMAMI RICH 35 efficiency AND famOUS “HR management represents the key 66 People 43 31 strategic thrust at Our brands MAKE OVER Why are market Emami” analysts bullish about Emami Limited. Promoter-driven emami stock? yet professionally-managed. Cover story 10 34 India’s biggest FMCG Wealth creator acquisition Emami has been one of the 41 most remarkable wealth creators “You cannot always within India’s FMCG sector. spend your way out of recession or borrow 64 your way out of a cash Photo feature Emami for the first time, organised crunch” Emami Cultural Fiesta, a series of events which aimed to reach out to all 44 those who appreciate music and the performing arts. Soul of Emami - CSR Guest interviews Facts & Profile 23 30 40 52 56 Figures 9 Young Leadership 4 “Emami has been “Emami in “Emami’s “We expect to “With Emami, Highlights 2013-14 18 Board of Directors one sentence? we have access 14 10 years’ highlight instrumental strength” reinvent the 42 Senior Masstige” right to the top!” 65 Awards & Management team in my growth An interview Zandu brand” A conversation Key Emami recognition 53 Team Emami as a media with Nigel Excerpts from dealer, Arun with professional” Williams, an interview Poddar (Poddar advertising brand with Hrishi Traders, New Rajesh Jain of guru Alyque Delhi), explains consultant Bhattacharyya, Prachar shares Padamsee what has helped his experience brand grow his Emami of working with consultant relationship over the decade Emami Annual Report 2013-14 | 3 HIGHLIGHTS 2013–14 PROFITS 1 EBIDTA H441crore grew by 27.1% WORKING CAPITAL 2 EBIDTA margin 24.2% improved by 380 1 Average collection bps TURNOVER period decreased from 24 days to 16 days 1 Consolidated net 3 PAT H402.4 crore sales H1,821crore grew by 27.9% grew by 7.2% 2 Average inventory holding increased from 4 PAT margin 25 days to 28 days. 2 Domestic sales 22.10% improved by H1,511 crore COSTS 357 bps grew by 5.1% 3 Net working capital 1 Cost of goods improved from 5 EPS `17.73 also sold at 37.4% of 41 days to 29 days 3 International grew by 27.9% business sales decreased by H221crore 470 bps. 4 Net Cash of 6 ROCE 40.9% grew by 23.0% H522 crore grew by 645 bps 2 Advertisement and Sales promotion 4 Institutional 7 ROE 43.2% business stood at H277 crore, grew by 270 bps H89 crore decreased from grew by 8.6% 16.4% to 15.2% of sales 4 | Emami Limited FACTS & FIGURES OPERATIONS 1 Direct retail reach CAPITAL increased to 6.25 lac MARKET BRANDS outlets reaching out 1 The Company along with a distributor issued bonus shares strength of 3,000 to shareholders in the 3 Menthoplus proportion of 1:2, i.e. one Balm and Zandu 2 Initiated to cover equity share for every Balm combined 600 distributors two shares held in the market share 61% under the outreach- Company in June 2013. secondary sales BoroPlus 2 Market Capitalisation 4 software, contributing of around Antiseptic Cream to 60% of sales H10,000 crore market share 78% in FY14 grew by 70 3 Modern trade 3 Initially shareholder who invested H1,000 for bps over FY13 business grew by 28% 100 shares eventually got in FY14 BRANDS back H4,000 after rights 5 The Zandu 4 Bangladeshi unit issue and are presently Ayurvedic HCD grew 1 Navratna Oil started operations owners of Emami shares by 36% in FY14 worth around H4.0 crore market share 57% in 5 Land acquired for – 10,000 times return in FY14 - surged 240 bps 6 New launches third unit in North-east 34 years over FY13 BoroPlus face wash, India under a mega Shareholders’ money 4 -Cool Talcum Powder 7 Oils in One, project scheme and increased by over 19 Fair and Handsome the unit is expected to times and over four times market share 24 % in commence operations on their investment after FY14 surged by 470 intense fairness face the public issue in March bps over FY13 wash in FY16 2005 and QIP in July 2009 6 Construction respectively Fair and Handsome 2 initiated for market share 61% in 5 More than 20 warehouses in FY14 grew 350 bps brokerage houses 4 locations : Kolkata, covering Emami stock over FY13 Patna, Ambala & include UBS, Credit Suisse, Nomura and Guwahati Macquarie. During the 7 Enterprise Risk year CIMB, Philip Capital, Management ICICI Securities among implemented and is others also initiated ISO 31000 : 2009 coverage on Emami certified Annual Report 2013-14 | 5 FOUNDERS’ STATEMENT “Our key to success has been understanding the latent needs of our consumers” T EMAMI, WE BELIEVE that THE POSITIONING indicated in the headline of this overview is as sound as it is relevant, for some Aenduring reasons.