www.businessworld.in RNI NO. 39847/81 I 25 JUNE - 09 JULY 2020

INDIA'S GREAT MID-SIZE WORKPLACES RESILIENT INSIDE: Interview RONOJOY DUTTA, CEO, IndiGo INC. Amid the Covid-ravaged tales of despair and ruin, there are examples of resilience across sectors. We look at some of them

Harsha V. Agarwal, Director,

CK Ranganathan, CMD, CavinKare

Sanjiv Puri, CMD, ITC

Suresh Narayanan, CMD, Nestlé

Mohit Malhotra, CEO, India

Rs 100 Nisaba Godrej, Executive Chairperson & MD, Angshu Mallick, Deputy CEO, Adani Wilmar A SURVEY ON THE IMPACT OF COVID-19 ON INDIAN INDUSTRY COVER STORY FMCG TECTONIC SHIFT IN FMCG BUSINESS

34 | BW BUSINESSWORLD | 25 June - 09 July 2020 ESPITE THE PANDEMIC, three things Piling inventory, still remain true of the Fast Moving staggered output and Consumer Goods (FMCG) sector in India. Firstly, it is the fourth-largest a disrupted supply- in the country’s economy. Secondly, chain have not been the organised market size stands at over Rs 4.2 lakh crore and is growing able to daunt the FMCG and thirdly, while urban India con- sector, which is now tributes a little over half, it is semi- urban and rural India that drives resurging and re- growth. What has indeed changed due to the Covid-19 pandemic, par- calibrating priorities ticularly in the initial days – from By Jyotsna Sharma lockdown till mid-April – was a sub- dued consumer demand, increased & Ashish Sinha need for ‘personal care and personal

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cases on the rise, the market environ- significant contribution as it recorded ment for FMCG companies are a five per cent growth in revenue – Rs unlikely to change. 12,844.23 crore – over the previous year (on comparable basis, excluding Adverse Impact the Lifestyle Retailing Business), the Covid-19 had an impact on one and company said. Before the outbreak of all. Limited the pandemic, the FMCG-others seg- (HUL), India’s largest fast-moving ment was on track to register a dou- consumer goods company, saw a ble-digit revenue growth for the challenging business environment fourth quarter, on a comparable with lower GDP growth and slow- basis, it said after the results. “ITC down in consumption for FY20. responded to the challenges with “Given the disruptions to the supply agility, speed and resilience, together chain arising from Covid-19 in March with a structured process of proactive 2020, for the full year 2019-20, planning, to operate in the ‘new domestic consumer growth was two norma’,” said B. Sumant, Executive “The pandemic taught us per cent, with underlying volume Director, ITC, speaking to BW many lessons and presented growth of two per cent,” said Sanjiv Businessworld. opportunities to accelerate Mehta, Chairman and Managing Mohit Malhotra, CEO, Dabur our innovation pipeline to Director, HUL, in the company’s lat- India, recalled how Dabur had surged stay not only relevant, but est annual report. forward on its growth track in the Despite the challenges, HUL’s net emerge stronger as an profit for FY20 was up 11.48 per cent “ITC responded to the organisation” at Rs 6,756 crore while sales were up challenges with agility, HARSHA V. AGARWAL, 1.44 per cent at Rs 39,136 crore. It Director, Emami generated over Rs 9,600 crore as speed and resilience, ‘cash from operations’, up Rs 1,357 together with a structured hygiene’ category, drastic decline in crore over the previous year. While process of proactive demand for beauty care products and food and refreshments saw profitable planning, to operate in the perhaps, greater dependence on local growth, performance in the beauty ‘new normal’” kirana stores and greater trust in and personal care division was ecommerce. impacted. Hindustan Unilever’s cost B. SUMANT, Most organised FMCG companies saving programmes delivered it a Executive Director,ITC Limited responded to these changes in the on- welcome seven per cent gross savings ground situation after the initial in its turnover last year. shock of a countrywide lockdown. Sanjiv Puri, Chairman, ITC, Now that most publicly traded FMCG recalled that the lockdown seemed companies have declared their results like “an impossible task” but thank- for the financial year (FY) 2019-20 fully optimism prevailed when the and that of the last quarter (Q4 FY20 top-brass of ITC realised that they - January to March 2020), a picture would be able to sail through it. This emerges. It is a picture of recovery, Kolkata-headquartered diversified increased consumption, rationalisa- business generated a tion of product categories and points gross revenue of Rs 46,323.72 crore to the direction the industry will take that saw an increase of 2.4 per cent over the next few quarters. Analysts over last year despite tough market say that the top ten FMCG companies conditions. Its Profit-after-Tax grew generated free cash of over Rs 26,000 21.4 per cent to Rs 15,136.05 crore, crore in FY20 despite the adverse aided by reduction in corporate impact of the pandemic in the sec- income tax rates during the year. ond-half of March. With coronavirus The FMCG business of ITC had a

36 | BW BUSINESSWORLD | 25 June - 09 July 2020 SURESH NARAYANAN, CMD, NESTLÉ INDIA ‘STORY IS STILL first two months of Q4 FY20, with its quarterly revenue from operations UNFOLDING’ growing by 4.5 per cent till February- end. “Covid-19 outbreak and the How has Covid-19 impacted your sector? resultant lockdown significantly There is a new word that has been added to the lexicon of consumer impacted our business in the month needs in the pandemic, which is “Immunity” for self and the family. A of March 2020, due to which the Q4 re-calibration of consumer wallets is taking place where “essentials” revenue ended with a 12.3 per cent are taking precedence over “luxuries however affordable” they are. We decline. For the full year 2019-20 too, are in for tectonic shifts in FMCG and the story is still unfolding! Dabur was on track to deliver a six per cent revenue growth and 13.8 per What has been the impact on Nestlé India? cent growth in net profit but for the For the last 10-quarters without fail, including the first quarter of this pandemic,” he added. year, Nestlé India has recorded double digit value growth and has also Nestle India Chairman and recorded about 8-10 per cent volume growth. For us, volume growth is Managing Director, Suresh still important and will depend on how the base levels of demand Narayanan, said Covid-19 has had a revive. profound impact on the pace, chan- nel, texture and frequency of con- Did you launch any new products during this period? sumption, across a variety of seg- We have recently launched a new Maggi range as an addition to our ments in FMCG. “There is a re-cali- noodles family – Yummy Capsica, Chatpata Tomato and Desi Cheesy. bration of the consumer wallets tak- For the first time, consumers can taste and vote for India’s new loved ing place where ‘essentials’ are taking taste, by logging onto our website www.Maggi.in. precedence over ‘luxuries’ however affordable they are. We are in for tec- In the post Covid -19 era what segments do tonic shifts in FMCG and the story is you think will drive demand? still unfolding,” Narayanan added. The coronavirus pandemic has led to cer- Another diversified business entity, tain changes in consumer behaviour, which Emami, saw a dent in its FY20 reve- going forward can create a host of new nues owing to the pandemic. The rev- opportunities for Nestlé India. There is an enue for the full year stood at Rs 2,655 increase in in-home indulgence; consumers crore, showing a marginal drop of are experimenting with new forms of one per cent due to a 17 per cent cuisine. Alongside this, Covid-19 has decrease in Q4 FY20 numbers. also led to enormous concern for “Tight cost control measures helped nutrition, quality and safety of improve gross margins by 130 bps brands and products among con- (basis points) at 67 per cent and sumers. despite one-time write-off amount- ing to Rs 11 crore, Emami generated a Your views on layoffs – how to rem- cash profit at Rs 639 crore that grew edy this? by two per cent during the year,” the During tough times, such as the company has said in a statement. relentless lockdown, we at Nestlé Harsha V. Agarwal, Director, India had one paramount concern Emami said, “We strongly believe – the safety and security of our peo- that even an adverse situation pre- ple. I have said this before, but fer- sents an opportunity. The pandemic vently believe every word, that, “In taught us many lessons and pre- a crisis you do not run a company; sented opportunities to accelerate you serve a family”. our innovation pipeline to stay not only relevant, but emerge stronger as [email protected] an organisation.” After the initial lockdown, panic

Photograph by Ritesh Sharma 37 | BW BUSINESSWORLD | 25 June - 09 July 2020 MOHIT MALHOTRA, CEO, DABUR INDIA ‘ECOMMERCE IS THE FASTEST WAY TO REACH CONSUMERS’ Which segments will drive demand in the post Covid-19 era? I feel, the importance of personal hygiene and preventive healthcare, particularly with Ayurveda, will grow in the consumer mind space. I feel healthcare will gain as consumers seek more of it. “While the FMCG sector is better placed than other What lessons have been learnt from this pandemic? sectors, I believe the annual Prior to Covid, we were highly dependent on pre-season loading. growth will be sharply lower Because of the lockdown disruption and our focus on healthcare prod- than in the past,” ucts, we could not do this at the end of 2019-20, and this reflected on our results for the year. Now, we have reduced that dependence and are ANGSHU MALLICK, becoming more disciplined about it. Deputy CEO, Adani Wilmar

Given that the world has moved online in a big way, how does that buying by consumers led to an affect you? increased demand for various essen- E-commerce is today the fastest mode to reach out to consumers, par- tial products, especially household ticularly with the lockdown in place. This is the reason we chose to items and groceries. “While the launch several of our new introductions through the ecommerce route. FMCG sector is better placed than That said, the neighbourhood kirana stores have again gained rele- other sectors, I believe the annual vance in the minds of consumers during this growth will be sharply lower than in period and this will continue post-Covid-19. the past,” said Angshu Mallick, Deputy CEO, Adani Wilmar, one of Your views on layoffs and job losses suf- the fastest growing food FMCG com- fered – how to remedy this? panies in India and a joint venture At Dabur, we have been clear of one thing: that between the and there would not be any lay-offs, furloughs or of Singapore. salary cuts. This decision was taken to Adani Wilmar clocked a total rev- create a secure working environment. enue of Rs 28,000 crore in FY19 of We also did not cut back on new hiring, which Rs 18,000 crore came from its both from campuses and lateral hiring. consumer business. Its ‘Fortune’ We, in fact, honoured all our commit- brand is estimated to be worth over ments with respect to placement Rs 14,000 crore and is one of the offers made to B-School graduates for leading brands in the packaged cook- our Management Trainee pro- ing oil segment. gramme and the Young Sales C. K. Ranganathan, Founder- Leadership programme. We have Chairman, CavinKare, a diversified hired 15 fresh graduates for our FMCG company headquartered in Marketing and Sales requirements, Chennai, confessed that due to sub- and they are undergoing online dued consumer demand, economic induction and training through the slowdown and then Covid, FY20 rev- virtual mode. enues for the company remained more or less similar to the previous [email protected] year’s numbers of around Rs 1,800 crore. “In April, we did only half of the

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business compared to April last year. Savlon (ITC), Himalaya, BoroPlus the company’s product portfolio. “We In May, the percentage improved to (Emami) Protekt and Cinthol are thinking of ‘Hygiene’ (as a cate- 70 per cent of the business done in (GCPL), CHIK, Nyle (CavinKare), gory) very aggressively,” she had said May 2019. In June, we hope to cross Sanitize (Dabur), Nycil (Zydus) and in mid-May. 80 per cent. Minus some categories many more. “We are clear that hand Value Packs: ‘Small is large’ now. and verticals, we have managed to wash as a category will stay because it With the lockdown, salary-cuts, job cope and work around the pandemic,” has become a habit and even sanitis- losses and low consumer sentiments, said Ranganathan. ers,” said Ranganathan. FMCG players are also pushing value- The Q4 FY20 for Godrej Consumer Emami also recognised the impor- packs. “Our ratio of consumer packs Products (GCPL) saw its India sales tance of health and hygiene, which and bulk packs has changed from decline by 18 per cent to Rs 1,089 was the need of the hour and launched 65:35 to 85:15 now. This is because crore while volumes declined by 15 BoroPlus Advanced Anti-Germ we are seeing more people buying per cent. Secondary sales (sales from Hand Sanitizer in April. This was fol- smaller packs,” said Mallick of Adani distributors to retailers) also dropped lowed by the launch of an Ayurvedic Wilmar. Other FMCG firms also by 11 per cent. Sanitizer under the Zandu brand. anticipate that consumers will now look for value packs. “You will start seeing the smaller packs starting to “In April, we did only half of do better,” predicted Narayanan. the business compared to April Ecommerce & kirana: There is a last year. In May, the clear shift in channel dynamics. “We percentage improved to 70 per ourselves have witnessed the contri- cent of the business done, in bution of ecommerce going up sig- nificantly, while the out-of-home sec- May 2019 ...” tor has not done well. The channels C. K. RANGANATHAN, are undergoing sharp change,” said Founder-Chairman, CavinKare Narayanan at Nestle India. The good old kirana shops will also play an important role, as they will have loca- The company has recently expanded tion advantage, service to home the BoroPlus range of hygiene prod- delivery advantage, assortment ucts to antiseptic and moisturising advantage and credit advantage. If soaps and handwashes. there is a lockdown in the future, you Godrej Consumer Products can run down to them and get what- (GCPL) responded to the Covid-19 ever you want. “The old kirana stores situation by reducing the price of the will become a friendlier place to shop Godrej sanitiser (50 ml bottle) ‘in because of social distancing, sanitisa- public interest’ and in line with ‘gov- tion and hygiene norms,” he said. ernment regulations’ from Rs 75 to Malhotra of Dabur said the neigh- Rs 25, despite the rise in input cost by bourhood kirana stores have gained 30 per cent. The company decided relevance in the minds of consumers. not to increase soap prices due to the “This will continue in the days post- Tackling Covid-19 coronavirus crisis. “We are planning Covid too,” he predicted. But e-com- Push for Hygiene: Sensing greater for some very disruptive products as merce is today the fastest mode to demand in the personal hygiene cat- we have done in other categories. In reach out to consumers, particularly egory, all players in the FMCG space fact, we are targeting for almost five with the lockdown in place. “This is not only increased production of per cent of our revenue in Q1 FY20 to the reason we chose to launch several hand-sanitisers, but also reduced come from hygiene,” Nisaba Godrej, of our new introductions through the retail prices. Those who did not have Executive Chairperson & MD, Godrej e-commerce route,” said Malhotra. sanitisers in their portfolio quickly Consumers Products had said during added it. These include leading a call with analysts in mid-May. [email protected]; brands like Lifebuoy (Hindustan Godrej said there will be a strong [email protected]; Unilever), Dettol (Reckitt Benckiser), demand for “at least 70 per cent” of @ashish_BW

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