To the Shareholders
The Board of Directors (''Board'') is pleased to present the Twenty
Sixth Annual Report of your Company, Marico Limited, for the year ended
March 31, 2014 (''the year under review'', ''the year'' or ''FY14'').
In line with the requirements of the Listing Agreement with BSE Limited
and the National Stock Exchange of India Limited, your Company has been
reporting consolidated results – taking into account the results of its
subsidiaries. This report, therefore, covers the financial results and
other developments during April 2013 – March 2014 in respect of Marico
Consolidated comprising the unified FMCG business under Marico Limited
(''Marico'') in India and overseas. The consolidated entity has been
referred to as ''Marico'' or ''Group'' or ''Your Group'' in this report.
FINANCIAL RESULTS - AN OVERVIEW
Rs. Crore Year ended March 31,
Financials for the Group
Revenue from Operations 4686.52 4596.18
Profit before Tax 694.58 551.88
Profit after Tax 485.38 395.86
Marico Limited – financials
Revenue from Operations 3682.58 3407.10
Profit before Tax 717.27 541.99
Less: Provision for Tax for
the current year 140.05 112.90
Profit after Tax for the current year 577.22 429.09
Add : Surplus brought forward 1162.84 835.43
Profit available for Appropriation 1740.06 1264.52
Distribution to shareholders 257.95 32.24
Tax on dividend 9.37 5.23
Transfer to General Reserve 57.72 42.91
Debenture Redemption Reserve 20.86 21.30
Surplus carried forward 1394.18 1162.84
Total 1740.07 1264.52
DISTRIBUTION TO EQUITY SHAREHOLDERS
Your Company''s distribution policy has aimed at sharing its prosperity
with its shareholders, through a formal earmarking / disbursement of
profits to shareholders.
Keeping in mind the increase in the profits made by the Company over
the last five years and in an endeavor to maximize the returns to its
shareholders, the Company increased its dividend payout during the year
to 350% as compared to 100% during FY13. Your Company''s distribution to
equity shareholders during FY14 comprised the following:
First interim dividend of 75% on the equity base of Rs 64.48 Crore.
Second interim dividend of 100% on the equity base of Rs. 64.48 Crore.
Third interim dividend (A special onetime Silver Jubilee Dividend to
commemorate 25 years since incorporation) of 175% on the equity base of
The total equity dividend for FY14 (including dividend tax) aggregated
to Rs. 229.6 Crore. The overall dividend payout ratio hence is 47.3% as
compared to 19.3% during FY13. Excluding the one-time dividend, the
payout ratio for the year is 24.1%.
MANAGEMENT DISCUSSION AND ANALYSIS
An Annexure to this Report contains a detailed Management Discussion
and Analysis, which, inter alia, covers the following:
- Industry structure and development
- Opportunities and Threats
- Risks and Concerns
- Internal control systems and their adequacy
- Discussion on financial and operational performance
- Segment-wise performance
In addition, a Review of Operations of your Company has been given in
REVIEW OF OPERATIONS
During FY14 Marico posted revenue from operations of INR 4,687 Crore, a
growth of 10% over the previous year. This was contributed by 6%
expansion in volumes accompanied by 4% price increases and improvement
in sales mix. The business reported bottom line of INR 485 Crore,
growth of 12% over last year. The growth in PAT after excluding the
impact of certain one-time accounting adjustments made in FY13 is 19%.
During FY14, the Company has received 900% dividend from Marico
Bangladesh Limited on which income tax charge of INR 34.5 Crore has
been accounted in the books. This has increased the effective tax rate
(ETR) for the year. Profit growth excluding this tax impact is 26% for
The company has demonstrated steady growth on both the top line and the
bottom line. Over the last 5 years, the topline has grown by 16% and
bottom line by 21% at a Compounded Annual Growth Rate.
Domestic FMCG Business: Marico India
The Domestic FMCG Business achieved a turnover of INR 3,519 Crore
during FY14, a growth of about 8% over FY13. This was mainly led by
volume growth of 6% in an environment of subdued demand. The Company''s
brands have continued to improve their market shares.
Parachute coconut oil in rigid packs, the focus part of its portfolio,
grew by 4% in volume as compared to FY13. During the 12 month period
ended March 2014 Parachute along with Nihar improved its market share
marginally over the same period last year to 56%.
Marico''s value added hair oil brands (Parachute Advansed, Nihar
Naturals and Hair & Care) grew by 11% in volumes during the year.
Marico continues to gain market share and has emerged as a clear market
leader with 28% share (for 12 months ended March 2014) in the INR 4500
Crore (USD 834 million) market. Nihar Shanti Amla continues to gain
market share and achieved a volume market share of about 30% for the 12
months ended March 2014 in the Amla hair oils category (FY13: 25%).
The Saffola refined edible oils franchise grew by about 9% in volume
terms during FY14 compared to FY13 reporting an improvement in
performance albeit on a lower base. During the year, the Company
revamped one of its existing variants i.e., New Saffola with an
improved and top of the line offering for modern day needs Saffola
Total. The brand maintained its leadership position in the super
premium refined edible oils segment with a market share of about 55%
during the 12 months ended March 2014.
Saffola plain and savory oats represents Marico''s healthy foods
franchise. Saffola has a market share of over 14% by volume in the oats
category and has emerged as the number two player in the category.
Saffola Oats has increased its market share by about 24 bps as compared
to last year. Saffola Oats crossed Rs. 50 Crore landmark in top line
during the year under review. The Company expects to continue the
robust growth in Oats.
Parachute Advansed Body Lotion has achieved a market share of over 6%
(moving 12 months basis) and is the number 3 participant in the market.
The Company launched India''s first unique multi-dimensional ''spray-on''
body lotion. The new launch
DIRECTORS'' REPORT will be extensively supported with heavy media and
The acquired portfolio of the youth brands grew by 16% in value terms
during the year over FY13. The Company has established a leadership
position in the Hair Gels and Post Wash Leave-on conditioner market
with about 33% and 82% share respectively. Set Wet and Zatak increased
its market share marginally in the deodorants segment to 5% for 12
months ended March 2014, in this crowded category. In February, Set Wet
launched a new variant Set Wet Infinity, a non-aerosol perfume spray
with ''no-gas'' formulation.
The Company has entered into the fastest growing creams segment of Hair
Colour category by introducing Livon Conditioning Cream Colour in
January 2014. Entry into the hair colour category not only strengthens
the Company''s hair care portfolio in India but also establishes our
presence in categories which are replicable in other geographies.
In partnership with Union Swiss, the Company has introduced Bio-Oil in
India. Union Swiss is a privately owned MNC based in South Africa.
Marico will be marketing and distributing its flagship brand, Bio-Oil,
in India. With presence in 76 countries, Bio-Oil is the No.1 selling
product to improve appearance of scars and stretch marks. Having
Bio-Oil in the portfolio will further strengthen Marico''s presence in
channels such as chemists and modern trade.
International FMCG Business: Marico International
The international business reported a topline growth of 16% during FY14
albeit 10% of it came from favorable foreign exchange movement. The
overall volume growth in international business was 5%. It was a mixed
bag for the international business. Business in Vietnam and Egypt grew
in double digits while growth in Bangladesh was in single digit due to
political instability in the country. Your Group has managed to cut
back its losses in the Middle East region substantially and the
geography is showing early signs of revival.
OTHER CORPORATE DEVELOPMENTS
Marico''s Board of Directors, on March 25, 2014, approved the
appointment of Mr. Saugata Gupta, CEO Marico Limited as Managing
Director and CEO. Mr. Saugata Gupta has been inducted into the
Company''s Board of Directors effective April 1, 2014. Mr. Harsh
Mariwala, previously Chairman & Managing Director, has been
re-designated as Non-Executive Director. He will continue to act as
Chairman of the Board and will guide the MD & CEO on long term strategy
The Board, at its meeting held on April 30, 2014, approved appointment
of Mr. Vivek Karve, previously EVP and Head Corporate Finance, as the
Chief Finance Officer of the Company effective April 1, 2014, in place
of Mr. Milind Sarwate who moved on.
Demerger of Kaya Business
The Kaya Business, earlier a part of Marico, has been demerged
effective October 17, 2013, with April 1, 2013 as the Appointed Date.
Pursuant to the De-merger Scheme, the transfer of Kaya Business to
Marico Kaya Enterprises Limited (MaKE) has been accounted by the
Company by recording the transfer of the relevant assets and
liabilities of the Kaya Business at their book values as of the
appointed date. In accordance with the scheme approved by the Hon''ble
High Court of Bombay, the excess of book value of assets over
liabilities has been adjusted against Securities Premium Reserve.
Further, pursuant to the scheme, as on the Record Date i.e. November 5,
2013, every shareholder holding 50 fully paid equity shares with a face
value of Re. 1 each in Marico Limited has been allotted 1 fully paid
equity share of MaKE with a face value of Rs. 10 and a premium of Rs.
200 each . MaKE submitted the Listing application along with the
Information Memorandum to the Stock Exchanges on March 14, 2014 for
seeking relaxation from SEBI. In April 2014, MaKE has received the
necessary relaxations from SEBI and will now proceed with completing
other listing formalities.
Accordingly, the financial results of the Kaya Business do not form
part of the audited consolidated financial results for the year ended
March 31, 2014. However, the audited consolidated financial results of
previous year include the results of Kaya Business and accordingly, to
that extent, are not comparable with the results for the year ended
March 31, 2014.
Final Distribution of Halite Assets to MCCL
The shareholders of Halite Personal Care Private Limited (Halite), a
wholly owned step-down subsidiary of your Company, vide a special
resolution at their extra ordinary general meeting held on January 18,
2013, resolved that the company be voluntarily liquidated. The
shareholders also appointed a liquidator. In view of the liquidation,
the liquidator, on March 25, 2013, distributed the assets of Halite to
MCCL, being the sole shareholder of Halite. MCCL took over assets of
Halite at fair values, determined by an independent valuer, where
applicable. On distribution, MCCL received assets in excess of its
Equity investment in Halite, resulting in profit of Rs. 5.91 Crore as
mentioned below, which was shown as an exceptional item in the
Statement of Profit and Loss for the year ended March 31, 2013.
During the year under review, a final meeting of the shareholders of
Halite was held on January 15, 2014 to approve the Statement of
Accounts (stating the manner in which liquidation was conducted)
prepared by the Liquidator. Further assets were distributed on the said
date as below. The liquidation proceedings are now pending before the
Particulars As at March
31, 2014 As at March
Tangible assets (net) 0.73
Intangible assets 729.80
Distribution of other
assets and liabilities (net) 0.03
Cash and bank balance 0.45 20.98
Total 0.48 751.51
Less: Value of equity investments in
Halite in books of MCCL (745.60)
Excess of assets taken over
on investment 0.48 5.91
Classified as exceptional item
(Refer Note 39) 5.91
Classified as Miscellaneous income 0.48
MCCL Capital Reduction Scheme
During the year under review, the Honourable Bombay High Court vide its
order dated June 21, 2013 approved the Scheme of Capital Reduction
pertaining to Marico Consumer Care Limited (MCCL) (a wholly owned
subsidiary of your Company). Accordingly intangible assets aggregating
Rs. 723.72 Crore were adjusted against the Share Capital and Securities
Premium Reserves in accordance with the provisions of Section 78 (read
with sections 100 to 103) of the Companies Act, 1956.
Marico Employee Stock Option Scheme 2007
In pursuance of shareholders'' approval obtained on November 24, 2006,
your Company had formulated and implemented an Employee Stock Options
Scheme (the Scheme) for grant of Employee Stock Options (ESOS) to
certain employees of the Company and its subsidiaries. The Corporate
Governance Committee (''Committee'') of the Board of Directors of your
Company is entrusted with the responsibility of administering the
Scheme and in pursuance thereof, the Committee has granted 1,13,76,300
stock options (as at March 31, 2014) comprising about 1.76% of the
current paid up equity capital of the Company as at March 31, 2014. An
aggregate of 212,600 options were outstanding as on March 31, 2014.
Additional information on ESOS as required by Securities and Exchange
Board of India (Employees Stock Option Scheme and Employees Stock
Purchase Scheme) Guidelines, 1999 is annexed and forms part of this
None of the Non-executive Directors (including Independent Directors)
have received any stock options in pursuance of the above Scheme.
Likewise, no employee has been granted stock options, during the year
equal to or exceeding 0.5% of the issued capital (excluding outstanding
warrants and conversions) of the Company at the time of grant.
The Company''s Auditors, M/s. Price Waterhouse, have certified that the
Scheme has been implemented in accordance with the SEBI Guidelines and
the resolution passed by the shareholders at the Extra-Ordinary General
Meeting held on November 24, 2006.
During the year the Company approved Marico Employee Stock Option
Scheme 2014 (Marico ESOS 2014) for grant of 300,000 employee stock
options to the Chief Executive Officer of the Company at an exercise
price of Re. 1 per option. This does not have any impact on current
financial statement as the grant date is April 1, 2014.
On April 30, 2014, the Corporate Governance Committee and the Board of
Directors approved formulation of a new ESOP Plan for further grant of
ESOPs to the Managing Director & CEO on an annual basis as a part of a
long term incentive plan of the MD & CEO on a similar basis as Marico
ESOS 2014, for which approval of the shareholders is being sought in
the accompanying Notice of the 26th Annual General Meeting.
Marico Employees Stock Appreciation Rights Plan, 2011
Your Company had implemented a long term incentive plan namely, Marico
Stock Appreciation Rights Plan, 2011 (''STAR Plan'') in the previous
financial years for the welfare of its employees and those of its
subsidiaries. Pursuant to the STAR Plan the Corporate Governance
Committee of the Board of Directors notifies various Schemes granting
Stock Appreciation Rights (STARs) to certain eligible employees. Each
STAR is represented by one equity share of the Company. The eligible
employees are entitled to receive excess of the maturity price over the
grant price in respect of such STARs subject to fulfillment of certain
conditions and subject to deduction of tax. The Corporate Governance
Committee notified Scheme IV on December 2, 2013 and 1,079,000 STARs
were granted under the Scheme. The vesting date of STARs granted under
Scheme IV is November 30, 2016. The Company also granted 202,300
additional STARs under Scheme III on the same date. As on March 31,
2014, an aggregate of 31,05,900 STARs were outstanding.
Exemption from attaching the Balance Sheets, etc. of the Subsidiary
Companies with the Balance Sheet of the Company
The Ministry of Corporate Affairs (MCA) has vide its circular no.
02/2011 dated February 8, 2011, granted a general exemption under
Section 212(8) of the Companies Act from attaching copies of the
Balance Sheet, Profit and Loss Accounts, Directors'' Report and
Auditors'' Report of its subsidiary companies with the Balance Sheet of
the Company, subject to fulfillment of certain conditions.
In terms of the said circular, copies of the Balance Sheet, Profit and
Loss Account, Report of the Board of Directors and the Report of the
Auditors of the Subsidiary Companies have not been attached to the
Balance Sheet of the Company. The Company has presented Consolidated
Financial Statements comprising Marico Limited and its subsidiaries
duly audited by the Statutory Auditors of the Company. The Consolidated
Financial Statements prepared by the Company are in compliance with the
Accounting Standard AS-21 as prescribed by the Companies (Accounting
Standards) Rules, 2006 and the Listing Agreement with the Stock
Exchanges. The statement required under Section 212 of the Companies
Act, 1956 is attached to the annual accounts of the Company. The Annual
Accounts and related documents of all the Subsidiary Companies shall be
made available for inspection to the shareholders of the Company and
its subsidiaries at the Registered Office of the Company from Monday to
Friday during the hours between 11.00 a.m. and 1.00 p.m. The Company
will also make available physical copies of such documents upon request
by any shareholder of the Company or its subsidiaries interested in
obtaining the same and the same would also be made available on the
website of the Company.
There were no outstanding Public deposits at the end of this or the
previous year. The Company did not accept any public deposits during
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 (the Act)
amended by the Companies (Amendment) Act, 2000, the Directors confirm
- In preparation of the Annual Accounts of your Company, the Accounting
Standards, laid down by the Institute of Chartered Accountants of India
from time to time, have been followed and that no material departures
have been made from the same;
- Appropriate accounting policies have been selected and applied
consistently, and reasonable and prudent judgment and estimates have
been made so as to ensure that the accounts give a true and fair view
of the state of affairs of your Company as at March 31, 2014 and the
profits of your Company for the year ended March 31, 2014;
- Proper and sufficient care has been taken for maintenance of
appropriate accounting records in accordance with the provisions of the
Act for safeguarding the assets of your Company and for preventing and
detecting fraud and other irregularities;
- The annual accounts have been prepared on a going concern basis;
A report on Corporate Governance has been provided as a separate part
of this Report.
Directors retiring by rotation
The relevant provisions of the Companies Act, 2013 were notified and
made effective from April 1, 2014. In terms of Section 149(14) of the
Companies Act, 2013, Independent Directors are not liable to retire by
rotation. Accordingly, Mr. Rajen Mariwala, Non-Executive Director of
the Company is liable to retire by rotation at this 26th Annual General
Meeting and being eligible offers himself for re-appointment.
Appointment of Independent Directors
With the notification of the Companies Act, 2013 and the amended Clause
49 of the Listing Agreement with the Stock Exchanges, Independent
Directors who have served as such for 5 years or more with the Company
can be re-appointed for another term of maximum 5 years only. All
Independent Directors on your Company''s Board, except Mr. B S Nagesh,
have already served a term of 5 years or more. Accordingly, your Board
proposes re-appointment of all Independent Directors for a term of 5
years at the ensuing Annual General Meeting subject to your approval.
ADDITIONAL STATUTORY INFORMATION
Information under Section 217(1)(e) of the Companies (''the Act'') 1956
Act read with the Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, 1988 is annexed and forms part of this
Report. Information pursuant to Section 217(2A) of the Act read with
the Companies (Particulars of Employees) Rules, 1975, as amended by the
Companies (Particulars of Employees) Amendment Rules, 1999 forms part
of this Report. Although in accordance with the provisions of Section
219(1) (b)(iv) of the Act such information has been excluded from the
Report and Accounts sent to the shareholders, any shareholder desirous
of obtaining this information may write to the Company Secretary at the
Registered Office of the Company.
M/s. Price Waterhouse, Chartered Accountants and Statutory Auditors of
the Company retire at the ensuing Annual General Meeting. In terms of
Section 139 of the Companies Act, 2013, M/s. Price Waterhouse who have
been the Statutory Auditors of the Company over the last seven years,
are eligible for a further term of maximum three years from the date of
this Annual General Meeting. Such appointment shall be subject to
ratification by the shareholders at each of the subsequent Annual
General Meetings held during their tenure as Auditors. Accordingly,
your Directors recommend appointment of M/s. Price Waterhouse as the
Statutory Auditors of the Company to hold office from the conclusion of
this 26th Annual General Meeting until the conclusion of 29th Annual
General Meetting. M/s. Price Waterhouse have confirmed their
willingness and eligibility for such re-appointment.
Your Company appointed M/s. Ashwin Solanki & Associates, Cost
Accountants, Mumbai, to conduct the cost audit for the Financial Year
ended March 31, 2014 with respect to the products falling under
vegetable fats and oils, pharmaceutical products, cereals, flour and
product of cereals, prepared food products, food residues or prepared
animal feed, personal care products, soaps and cleansing agents and
albuminoidal substances, starches, glues, enzymes category. The Company
had received necessary approval from Central Government for appointment
of the Cost Auditor. The Cost Audit Report for the year ended March 31,
2014 will be submitted to the Central Government in due course.
Ernst & Young LLP, a Chartered Accountant Firm, has been associated
with your Company from the financial year 2012-13 as Internal Auditor
partnering your Company in the area of risk management and internal
The Board takes this opportunity to thank all its employees for their
dedicated service and firm commitment to the goals of the Company. The
Board also wishes to place on record its sincere appreciation for the
wholehearted support received from shareholders, distributors, bankers
and all other business associates, and from the neighbourhood
communities of the various Marico locations. We look forward to
continued support of all these partners in progress.
On behalf of the Board of Directors
Place : Mumbai Harsh Mariwala
Date : April 30, 2014 Chairman