Emami Ltd - OTC Healthcare - India
Emami Ltd
Strategic Direction
·
With the acquisition of a
controlling stake in Zandu Pharmaceutical Works Ltd in October 2008, Emami Ltd
aims to expand its product portfolio and gain synergies from the combination of
the two companies. Emami Ltd will benefit from Zandu’s strong R&D base. The
company also intends to explore rural areas with a slew of marketing and
promotional activities, such as direct selling, retailing through forecourt
retailers and the launch of single-unit packs.
Key Facts
|
Full name
of company:
|
Emami Ltd
|
|
Address:
|
18, RN
Mukherjee Road, Kolkata 700001, India
|
|
Tel:
|
+91 33 2248
2679
|
|
Fax:
|
+91 33 2248
2773
|
|
www:
|
www.emamigroup.com
|
|
Activities:
|
OTC
healthcare and cosmetics and toiletries
|
Source: Euromonitor International from
company reports
|
Year end March
|
2005
|
2006
|
2007
|
|
Net sales
(Rs billion)
|
3.8
|
4.9
|
5.7
|
|
Net profit
(Rs million)
|
446
|
618
|
860
|
Source: Trade press (The Economic Times,
Business Standard, The Hindu Business Line), company research
Company Background
·
Emami has its roots in 1974,
when RS Agarwal and RS Goenka set up a cosmetics manufacturing unit in Kolkata,
as a partnership under the name of Kemco Chemicals. Kemco acquired the ailing
Himani Ltd, another cosmetics and toiletries company in Kolkata, in 1978.
·
Kemco changed its name to Emami
Ltd in 1995, and merged with Himani in 1998. Emami Ltd was a private company
until 2004, when it conducted its initial public offering.
·
The company’s leading brands
include Himani Boroplus prickly heat powder, Himani Boroplus topical
germicidal/antiseptic, Lal Dant Manjan tooth powder, Sona Chandi Chyawanprash,
Himani Boroplus soap and Himani Glycerin Plus soap.
·
The promoters of Zandu
Pharmaceutical Works Ltd, the Parikh and Vaidya families, decided to sell their
entire stake in the company to Emami Ltd in October 2008. In May 2008, Emami
Ltd acquired a 27.5% stake in the company. After staving off a hostile takeover
bid for months, the promoters of Zandu finally relented and sold their holdings
to Emami Ltd. As of October 2008, Emami Ltd controlled 65% of Zandu
Pharmaceutical Works Ltd.
Production
·
Emami Ltd has manufacturing
units in four locations in Pondicherry in South India. It also has facilities
in Amingaon, Guwahati and Calcutta in East and Northeast India. Emami has a
tie-up with an outsourcing unit in Baddi in Himachal Pradesh in North India.
Over 2004 and 2005, Emami commissioned a pilot plant at its Calcutta unit to
manufacture OTC healthcare products. In 2008, the company was in the process of
initiating a state of the art manufacturing unit at Abhoypur, in the state of
Guwahati, to further augment its capacity.
·
The company also began to
cultivate medicinal plants and herbs towards the end of the review period.
·
The company’s dispersed
manufacturing facilities benefit from a strong production system and robust
distribution network of over 2,100 direct distributors, catering to almost
400,000 retail outlets across all states in India.
·
Emami Ltd exports its products
to 53 countries, including Nepal, Sri Lanka, the Gulf countries, Europe, Africa
and the Middle East, having been granted 1-star export house status by the
government. The company’s subsidiary companies include Emami UK Ltd and Emami
Bangladesh Ltd. The company set up its first overseas manufacturing unit in
Bangladesh in 2006.
Competitive Positioning
·
Emami Ltd ranked sixth in
overall OTC healthcare in 2008 with a value share of just over 4%. The company
derives its strongest sales from topical germicidals/antiseptics, with its
Himani Boroplus range, chyawanprash, with Himani Sona Chandi Chyawanprash, and
topical analgesics, with Emami Mentho Plus and Himani Fast Relief.
·
The company has a strong focus
on rural areas and low-income consumers. The company introduced smaller pack
sizes for almost all its brands in 2008, to encourage product trial. These
packs are priced very cheaply, thereby making them accessible to lower income
consumers. Emami Ltd also pushed deeper into rural areas with innovative
strategies, such as hiring young people to go around villages on bicycles and
sell its products.
·
Towards the end of the review
period, the company focused on expanding distribution, entering new areas such
as Karnataka and Orissa. The company collaborated with the Post and Telegraphs
Department of Maharashtra to reach into previously untapped areas. Furthermore,
Emami Ltd entered into agreements with forecourt retailers at service stations
in India to sell its products.
·
In keeping with its ambitious
advertising strategies, Emami Ltd also introduced Hindi film star Amitabh
Bachchan as brand ambassador for Himani Boroplus topical
germicidals/antiseptics, Navratna Oil and Himani Fast Relief in topical
analgesics/anaesthetics.
·
Emami has its head office in
Kolkata in Northeast India, and the region is a traditional stronghold of the
company. Of the four regions, West India contributes the lowest share to the
company’s value sales.
|
Product
type
|
Value share
|
Rank
|
|
Topical
analgesics
|
8.5%
|
5
|
|
Topical
germicidals/antiseptics
|
40.2%
|
1
|
|
Dietary
supplements
|
2.2%
|
10
|
|
Chyawanprash
|
13.4%
|
2
|
Source: Trade press (The Economic Times,
Business Standard, The Hindu Business Line), company research, trade
interviews, Euromonitor International estimates
