Understanding Marico

 

 

  • Marico derives around 75-80% of Sales & EBIT from India, however its 50% of Capital is employed in International Business.
  • Bangladesh accounts for 45% of its International Business.
  • Parachute Coconut Oil accounts for around 30% of Sales and Saffola oil accounts for 15%. These are the two brands on which this company was built-in. Later on many brands were acquired by the company.
  • It makes Gross margin of ~40%. Ad & selling promotion expense amount to 20% of Sales. Average Net Profit Margin remains around 10%.
  • Company generates sales ~3 times of its Shareholders funds, to produce ROE of ~30%.
  • Around 45% of the Cash that it generated from business (FY10-16) was again plough back in business through Investment in Fixed assets. Around 20% of money was used in Brands acquisitions and Loans & Advances to subsidiaries. 30% was paid back to shareholders. This appears to be a good cash management and on account of which ROE has been in uptrend.
  • In 2012, company raised around Rs 5 billion through the preferential issue of shares to a affiliate of Govt of Singapore Investment corporation, which diluted the existing shareholders equity by 5%.
  • Over the years, company has reduced its debt significantly, though it already had low debt.
  • More than 50% of Total assets are in the form of Current Assets, most of which is in inventory and very low amount is in Debtors. Investments stand at 10%.
  • Unlike other FMCG companies, where major source of funds are creditors, in Marico major funding is through equity.
  • In 2013, it demerged Kaya, which was a very small division, representing 5% of the Sales.

 

marico_brandsunderstanding_marico

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