Who hasn’t used Parachute, the iconic hair oil product manufactured by its parent company Marico? It has become a household name among Indians for 2 decades.
Today it is the undisputed king of hair oil however the journey of this iconic franchise was not so easy. Starting from scratch in a market that is dominated by MNCs was difficult to enter.
The Birth of Giant- Marico
Earlier Marico used to be part of Bombay Oil Industries limited, a commodity business run by the Mariwala family. Harsh Mariwala very soon realizes that the future is not in a commodity business.
He urges his family members to separate the coconut oil business from other businesses as there is no synergy between them.
Thereby the Oil business was handover to Harsh Mariwala, who was going to make a Marico global brand. The major reason behind the separation of the business was the lack of synergy between the business of BOIL.
Additionally, they were unable to attract talent due to the tag of a family-run business.
Marico came with an IPO in 1996. It has given stellar 17000% returns to its shareholders since its IPO. Just imagine investing Rs 1 thousand in the company which your hair uses daily could have made you lakhs of rupees.
Today Marico operated in Many Asian and African countries and aspires to be the market leader.
Strengths of Marico:
1. Focus on core business
Many companies have scattered focus but Marico is an exception to such companies. They are sharply focusing on hair care and edible oil products. Due to sticking to their circle of competence Marico is able to become a market leader not only in India but also in Bangladesh.
Earlier coconut oil used to sell in a metal bottle but it used to be heavy. So, harsh decided to make the coconut oil in plastic bottles and soon the whole industry starts packaging plastic bottles.
Thereby parachutes saved a lot of money as manufacturing hair oil in plastic bottles was way cheaper. Hence, he was able to increase advertisement expenditure and market the product in the best possible way.
Saffola was one such example when Mariwala saw that heart diseases are increasing in India. He starts making Saffola a heart-healthy brand.
They started the health awareness campaign and met with doctors so that they can recommend Saffola to their heart patients.
3. Work culture
Investors often neglect the work culture but it is one of the most important parts for the organization to be successful. Most Indian companies have one thing in common they give more preference to their son and daughter. But it is the opposite with Harsh, he has tried and made Marico a professional organization.
HUL vs Parachute War
When the Parachute became the Ghar Ghar(household) ka brand HUL, the FMCG Giant starts starts showing interest in them.
Keki Dadiseth, CEO of HUL called Harsh Mariwala and said, “Mr. Mariwala, I will give you enough resources to take care of you and all your future generations.
Also Read: How you can create Money in the stock market crash?
A normal person would be horrified if the CEO of a Giant company is calling and openly threatening to sell the brand. The ordinary person might sell the company and enjoy the remaining life with huge money.
In spite of all of these, Mariwalas’s conviction becomes stronger and he decides to fight instead of surrender.
They even told Harsh that if he won’t sell the Marico to HUL then they would make Marico a history. Harsh could accept that offer and lived a lavish lifestyle but he was a true Gujrati businessman.
How would you bog down the man who is so passionate about his work and his commitment?
As the result, HUL introduces its brand Nihar and started selling below the Parachute’s price. They leave no room for Marico as advertisement spending was doubled.
On the other hand, Marico was no saint to keep quiet and see someone ruining their brand. Mariwala gave the form of war and name it “Parachute ki Kasam”. They even started an emotional ads campaign showcasing the importance of coconut in the Hindu tradition.
After burning huge money and resources, HUL can’t even dilute the market share of Parachute. Finally, The HUL VS Parachute war came to an end as HUL decided to sell their brand Nihar.
Surprisingly Marico was the one who put the highest bid and conquer the Nihar. Harsh Mariwala find it sexy and felt it was the most iconic moment to buy the Nihar.
Present-day situation: operating in 20 countries in Asia and Africa. Focusing on developing countries, captured the Bangladesh market of oil which was earlier dominated by the local players.
Today they have a 60% market share in hair oil in Bangladesh. The strategy of management is simple, They enter the new market only if they feel they can become a market leader in that segment.
Long-term prospects are good, people won’t stop using parachutes suddenly, for the long term Marico is one of the best stocks which can give good returns in the future.
Saurabh Mukherjea a well know fund manager has put Marico on the list of his top 7 stocks. You can read his book Unusual Billionaires to learn about the master franchises in the Indian stock market.
Many Indians don’t know the story of this iconic hero and iconic brand. So, don’t forget to share this story with your friends.