Best HR EMAMIPractices IT Creating Driven Entering New Investor Professional Categories Wealth Management Celeb Power Youth-Focus THE NEXT Beyond Robust Boundaries Distribution Lower Gearing Unique ORBIT Innovations Entering New THE Categories Creating Investor Differentiated Wealth Mainstream Products NEXT Aggressive Deep Marketing Reach Beyond Boundaries EMAMI LIMITED ORBIT Under Penetrated Best HR Categories Practices Robust Distribution Inorganic Growth Focused Route ANNUAL REPORT 2014-15 REPORT ANNUAL Unique Professional Financial Innovations Management Management Consumer Insight Lower Aggressive Gearing Marketing Celeb Power ANNUAL REPORT 2014-15 Inorganic Growth IT Driven Route 2014-2015 Research, concept and design by print anderson 09903058982 Corporate Information Emami in News 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 Risk Management and Finance Committee S.B. Ganguly, Chairman (formerly known as Finance Committee) R.S. Goenka R.S. Goenka, Chairman Sajjan Bhajanka Sushil K. Goenka Amit Kiran Deb Mohan Goenka Nomination and Remuneration Committee Aditya V. Agarwal Amit Kiran Deb, Chairman Harsha V. Agarwal Sajjan Bhajanka Priti A Sureka S.B. Ganguly Corporate Governance Committee Share Transfer Committee S.B. Ganguly, Chairman Mohan Goenka, Chairman R.S. Goenka Aditya V. Agarwal Y.P. Trivedi Harsha V. Agarwal Amit Kiran Deb Priti A Sureka Corporate Social Responsibility Committee Stakeholders’ Relationship Committee Sushil K. Goenka, Chairman Sajjan Bhajanka, Chairman Amit Kiran Deb S.B. Ganguly Mohan Goenka Mohan Goenka Harsha V. Agarwal Harsha V. Agarwal Priti A Sureka BANKERS CANARA BANK | ICICI BANK LTD. | CITI BANK N.A. | HDFC BANK LTD | HSBC LTD | DBS BANK LTD. Registrar & Transfer Agent Registered Office: Emami Tower, 687, Anandapur, Maheswari Datamatics Private Limited, EM Bypass, Kolkata 700 107, West Bengal, 6, Mangoe 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 60+ Countries, 7 Factories, 1 Overseas Unit, 4 Regional Offices, 32 Depots, 9 Overseas Subsidiaries. Website: www.emamiltd.in | CIN: L63993WB1983PLC036030 Emami. `23,000 cr market capitalisation*. Wealth creator. Emami Limited is one of the fastest wealth creators in India’s FMCG sector. The Company achieved a market capitalisation of around H23,000 crore* by the end of 2014-15. The Company’s market capitalisation surged 132% in 2014-15. It outperformed the BSE FMCG index by 9.1x and the BSE Sensex by 5.4x. Now, it is taking the growth story ahead to the NEXT ORBIT... * As on 31st March, 2015. CONTENTS INTRODUCTORY LETTER n behalf of the Emami family, we bring forward to you to the 32nd Annual Report Oof the Company. Over the years, Emami has emerged as a preferred name in households across the length and breadth of the country. Emami has received countless accolades for its innovative and clutter-breaking products, which have carved out whole new segments from scratch in the Indian FMCG space and positioned the Company as one of FOUNDERS’ STATEMENT 6 the fastest-growing and most profitable companies in “Growing wider the sector. and deeper” With seven manufacturing locations in India and R.S. Agarwal & R.S. Goenka, Founders one in Bangladesh supported by a widespread COVER STORY distribution network, the Company is positioned to make its products available in every corner of the country. The international business performed NEXT extremely well and is expected to continue the momentum in the coming years. ORBIT The Company’s robust performance was reflected in Homegrown success. These are the two most its stock price, which appreciated by more than 132% faithful words one can use to describe Emami’s outstanding performance across the last couple during 2014-15 and touched an all-time high market of decades in India’s FMCG industry. capitalisation of H25,480 crore. PAGE 10 As a forward-looking strategy, the Company has Statutory Section Financial Section selected to enter the mainstream and emerging Directors’ Standalone segments with a slew of innovative products and Report Accounts 82 137 take its growth to the next orbit. Corporate Governance Consolidated Report 110 Accounts 171 This is just the beginning of an exciting journey. Forward-looking statement In this Annual report, we have disclosed the Company’s objectives, expectations and forecasts to enable investors to comprehend our prospects and take informed investment decisions. This report and other statements – written and oral – that we periodically make may be forward-looking within the meaning of applicable securities laws and regulations. We have tried wherever possible to identify such statements by using R.S. AGARWAL R.S. GOENKA words such as ‘anticipates’, ‘estimates’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’ and words of similar substance in Founder Founder connection with any discussion of future performance. Although we believe that we have been prudent in our assumption, actual results may differ materially from those expressed in the statement. The achievement of results is subject to risks, uncertainties and even inaccurate assumptions. Business support review Health Care Division 16 44 Ghar-Ghar mein Emami Managing 30 Rejuvenated! Director’s review: 54 Man-edging! “The future 57 Execution excellence appears exciting 34 Ayurveda at Emami!” 68 Enabling IT 24 Version 2.0 74 Moments to cherish Brand review: 75 And the award goes to... 28 Emami ratna Emami! 42 Skin Doctor 48 Pain 36 Beyond 76 Management Discussion management boundaries and Analysis 60 Handsome 53 Emami strategy – A Bullish Proposition 14 Board of Directors 27 Did you know? 48 Pain management 50 Celebrating with celebrities 56 Expanding bandwidth 56 Senior management team 72 Human touch 65 Team Emami 66 Emami’s quest Young and Energetic. for the perfect 19 Second Generation HIGHLIGHTS product business leaders FY 2014-15 4 Guest interviews 20 Journey over Q&A: Peter Francis the years. 33 “Our engagement with 52 Bugs 64 Utpal 69 Jitu Mehta 22 10-year Emami paves a strong growth Bhargava. Sengupta. Sweet - A cut above highlights opportunity for both the “Everything at spot! the rest companies in the near-future” Emami starts 62 Reaching out Peter Francis, Founder, Fravin, and ends with Australia talks why the strategic tie- consumers.” 70 New launches up with Emami will be a win-win proposition for both the entities Special Story Feature 40 ‘Oil’ is well 46 Brand! 58 Going modern 2 | Emami Limited | Annual Report 2014-15 | 3 ~ Highlights FY 2014-15 TURNOVER PROFITS 1 Consolidated net sales at 1 EBIDTA at H540 crore – grew by 22.4% H2,217 crore – grew by 21.8% 2 EBIDTA margin at 24.4% – improved 2 Domestic sales at H1,800 crore – grew by 19.1% by 20 basis points - Modern trade business grew by 36% 3 PAT at H486 crore – grew by 20.7% - New launches contributed around 6% of 4 PAT margin at 21.9% domestic sales 5 EPS at H21.40 – grew by 20.7% 3 International Business at 6 ROCE at 37.5% H318 crore grew by 43.5% 7 ROE at 39.5% 4 Institutional Business – Sales to Military and Paramilitary force at H100 crore – grew by 12.7% COSTS OPERATIONS 1 Direct retail reach increased to 6.4 lac 1 Cost of goods sold at 35.2% outlets along with a distributor strength of of sales, declined by 220 bps. 2,800. 2 Advertisement and sales 2 Covered nearly 1,100 distributors under promotion at H392 crore, outreach-secondary sales software, increased from 15.2% to contributing 97% of CCD sales. 17.7% of sales. 3 Setting up third manufacturing unit in 3 H74 crore was spent on North-East India under Mega Project advertising & promotions on Scheme, expected to commence operations new launches. in FY16 4 Enterprise Risk Management implemented and ISO 31000 : 2009-certified WORKING BRANDS CAPITAL 1 Navratna Oil increased its market 5 The Zandu Ayurvedic HCD range share by 890 bps at 65.5% continued its robust growth. 1 Average inventory - Sales grew by 16.5% - Sales grew 24.9% led by Zandu holding decreased from - Brand extension Cool Talc grew by Pancharishta, which grew 54.9%. 28 days to 21 days of 31.5% and gained market share by turnover equivalent. 6 Achieved leadership positions in 290 bps to 26.7%. international markets 2 Average collection period 2 Fair and Handsome enjoys - Navratna enjoys undisputed increased from leadership position in the men’s leadership in Bangladesh, UAE 16 days to 17 days fairness cream segment with a and Saudi Arabia with volume 3 Average payment period market share of 59.1% market shares of 47%, 93% and 91% increased from - Sales grew by 14.8%. respectively 29 to 32 days - Fair and Handsome enjoys volume 3 Menthoplus Balm and Zandu Balm market share of 30% in Bangladesh, 4 Net working capital (including Ultra Power) increased 37% in Saudi Arabia and 45% in UAE improved from 29 days market share by 40 bps to 60.9%. to 17 days resulting in a - BoroPlus Antiseptic Cream - Sales grew by 15.6% release of H41 crore continues to be the market leader in 4 BoroPlus Antiseptic Cream Russia with a volume market share 5 Net cash of over H800 continued to be the market leader of 36% crore as on 31st March, with a market share of 76.3%.