Marico targets revenues of Rs 10,000 cr by 2019-20: Chief

Indian consumer goods company Marico is optimistic on the situation improving in the January-March quarter. Speaking to CNBC-TV18, MD & CEO, Saugata Gupta says, the company will push for Rs 10,000 crore revenue by 2019-20. The impact of the demonetisation drive was high initially but now there seems to be an improvement, said Gupta.He further said that the company is comfortable with a blended margin of 17-18 percent. The company is also chasing 5 areas of transformation. Below is the transcript of Saugata Gupta’s interview to Priya Sheth on CNBC-TV18.Q: What is the impact of demonetisation?A: There is a short-term pain, but in the long-term it is good for the country. Yes, there has been some execution glitches, but as I said, we believe that the situation will take still more time. Sometime in the January-March quarter where things will perhaps ease out much more.Q: Is it the 30-35 percent kind of impact that we can run with as far as sales are concerned at this point in time? And when can we expect this to bounce back because as you mentioned, the January-March quarter, there have been some concerns as far as the timing of when the recovery will really happen.A: So, as I said, it varies from category to category. It will vary from how much is the company’s dependence on wholesales. As I said there are regional differences. So, if you look at some of the data that has come out in terms of off-take and other things, the range is pretty big, in certain category, a single digit decline.Q: In terms of margins, I wanted to ask you what is the kind of comfort range that you are running with? Is it the 16-17 percent range or are you aiming for a higher figure?A: We have already talked about this that we are okay with an overall blended margin of 17-18 for the whole company. Obviously, India business is more at 19-20 while the international business is at 17. Having said that, in some of our international markets, there is opportunities in terms of fixed cast leverage with scale because the fixed cost overheads of international business are slightly higher than the India business in certain markets. While we have set up capability ahead of growth, I think there is enough opportunity to drive scale advantages.Q: You mentioned earlier that the Rs 10,000 crore figure in terms of revenues, that is what you are expecting by about 2019-2020. Is that a number that you will still run by considering there are so many different kind of domestic factors that are really coming into play this time around?A: The number is an outcome. The first thing which we are chasing is we have identified five areas of transformation and we needed to be top-quartile in all these five areas. And we firmly believe that if you do the right things, results automatically happen. Yes, you were right that because of the deflation that number may have got pushed by a year or so. Having said that, the way to look at it is that if you look at historically, the inflation has been 6 percent for us in the last five years. You can take away a point or two because of the fact that we are entering an area of deflation, so as soon as you get a volume growth of around 10, if we have to get it and to add to that, you had a 4 percent inflation, that gives us closer towards a 14-15 percent revenue growth over a 4-5 year period. For that, we have to accelerate our new product performance and while everything is organic there, within a 3-4 year period, there could be inorganic opportunities. So, it is still a number we should be gunning for. The question is whether, even if we are close to it, we will be very happy about it.