This story is part of Forbes' coverage of India’s Richest 2019. See the full list here.
When billionaire Harsh Mariwala decided to hand over day-to-day control of consumer goods giant Marico, he had a mantra for his role as chairman at the company he founded and ran for 24 years: “Mind On. Hands Off.” “The whole objective is to add value,” says Mariwala, 68. “Not control.”
That decision in 2014 to relinquish management of the Mumbai-based company he created in 1990 (and in which he and his family still own 59%) provided Mariwala with a springboard to return to his roots as an entrepreneur: Mariwala is now focusing on a variety of new business and philanthropic initiatives, including a string of startup investments, a mental health program for India’s underprivileged and a forthcoming book on the lessons of his entrepreneurial journey.
Mariwala started in the business in 1971, when he sacrificed a chance to go abroad to business school to join his father and uncles at Bombay Oil Industries, the trading firm dealing in spices, spice extracts, chemicals and oil that the family started in 1947. In 1990, Mariwala launched Marico to develop and market Bombay Oil’s brands: Parachute, Saffola and edible oil brand Sweekar, which was sold to U.S. food giant Cargill in 2011. “It took me two to three years to convince the family,” he says. “I assured them that the ownership wouldn’t change but it was more of a management split so that I could take independent decisions.”
The fledgling company was far from glamorous, and Mariwala recalls finding it a challenge to recruit management graduates, who balked at working in its office in Mumbai’s crowded Masjid Bunder market. He resorted to interviewing prospective employees at a sports club and selling them on Marico’s future. A move in 1992 to a more corporate-style office made recruiting a much easier proposition.
Marico held an IPO in 1996 and within three years was fending off a challenge in the hair oil market from consumer goods giant Hindustan Unilever. Marico prevailed and in 2006 Hindustan Unilever bowed out, selling its hair oil brand, Nihar, to Marico for more than 2 billion rupees. It then went on to acquire hair-care brands in Egypt and South Africa.
These days Mariwala still holds monthly review meetings with managing director and CEO Saugata Gupta, but limits his involvement to a strategic level. “How do you grow if you don’t make yourself redundant?” asks Mariwala. “I’m not saying you should abdicate responsibility, because you are equally accountable. You must have the pulse points. But if you want to sign each and every check, you don’t have the time to do futuristic things.”
Marico’s transition from family to professional management has been relatively smooth, according to Kavil Ramachandran, professor and executive director at the Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business in Hyderabad, because Mariwala has been clear about his role and has developed other interests to keep himself occupied. “He’d already created enough internal capabilities for Marico to be on its own,” says Ramachandran, “which is evident from its performance in recent years.”
Mariwala is using his free time to pursue pet projects outside Marico, including a sleep-related wellness business still on the drawing board and his privately-owned AquaCentric Therapy, which offers aquatic physiotherapy at two facilities in Mumbai. He is also managing director of beauty services provider Kaya, a chain of hair and skin-care clinics he started in 2003 under Marico and in 2013 listed as a separate company. Kaya has 120 clinics in India and the Middle East, but lost more than $2 million in its latest financial year. “The challenge with Kaya is the competition from dermatologists,” says Mariwala.
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Mariwala also works with son Rishabh, who manages the family office, Sharrp Ventures, established in 2014 using dividends from Marico. “I didn’t want all eggs in one basket,” says Rishabh, 37, Sharrp’s managing director. Among Sharrp’s investments are stakes in The Beer Café, India’s largest beer chain, nutritional company HealthKart, electronic security company Securens, and beauty retailer Nykaa. “We have 80% of our investments in listed entities and 20% in a range of startups.”
Mariwala also supports entrepreneurs though the Ascent Foundation he created in 2012. Ascent’s members are chosen from various industries and organized into groups of 10 to 12 members that meet monthly. Ascent already has more than 500 members in Chennai and Mumbai.
Mariwala has created another philanthropic venture to support mental health. The Mariwala Health Initiative, which he runs with his daughter Rajvi, provides grants and support to mental health programs and organizations. “We make mental health services available to marginalized communities,” says Rajvi, 39. “So we have projects in rural India or in the mountains of Uttarakhand or in bastees [slums] in urban areas.”
Mariwala has also somehow found time to write a book on his entrepreneurial journey, slated for publication next year by Penguin Random House. “I have a very active mind,” says Mariwala. ”I have the strong inner urge to prove new concepts. I keep reinventing myself.”
Well-Oiled Machine
Despite India’s faltering economic growth, CEO Gupta is unfazed. “We are trying to disrupt ourselves,” says Gupta, who took management control in 2014 from Mariwala. “What got us here is not going to take us to the next level.” To that end, the company is focused on expanding into new products and markets, from high-protein meal soup in India to baby oil in Bangladesh and roll-on deodorant in Vietnam.
The strategy seems to be working: Analysts forecast sales growth of roughly 11% in Marico’s current fiscal year from 73 billion rupees ($1 billion) last year, which was 16% higher than the year before. The company posted a record 9.3 billion rupees net profit last year, a 14% increase year-on-year. Marico’s shares have risen 22% in past year, lifting the net worth of Mariwala by 16% to $4.6 billion, putting him to No. 24 on our list from No. 32 last year.
Gupta’s disruption of Marico is well-timed. Marico’s brands, especially its flagship Parachute coconut hair oil and Saffola cooking oil, dominate the domestic market, but face a growing challenge from deep-pocketed rivals such as Dabur (owned by India’s Burman family, No. 13) in hair oil, Fortune cooking oil from a joint venture between Gautam Adani’s (No. 2) company and Singapore tycoon Kuok Khoon Hong’s Wilmar International, and in food from iD Fresh Food, which is backed by tech billionaire Azim Premji (No. 17). “I believe that if we don’t change in terms of products, the growth will be tougher,” says Gupta.
Rather than compete in highly competitive markets such as those for shampoos or soaps, therefore, Gupta targets new, niche products where Marico can create and dominate the market. In India, Marico has started developing new health foods, including a variety of ready-to-eat oatmeal with flavors tailored for local tastes such as Mumbai pav bhaji, and lemon and mint chutney. To distribute them, Marico installed vending machines in offices, hospitals and gyms across Mumbai, Pune and New Delhi.
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Marico also recently launched its own line of soups, shakes, green teas and coffee products. It’s also rolled out male grooming products and a premium skincare lineup. While these new segments are just 6% of domestic turnover, Marico expects sales of these products to grow 20% a year for the next three to five years. “If Parachute and Saffola are engine No. 1, these new products are engine No. 2 and engine No. 3,” says Gupta.
Marico is also expanding overseas, including in Bangladesh, Myanmar, Vietnam and the Middle East. International sales now make up more than a fifth of Marico’s global total. Parachute remains its biggest seller in Bangladesh, but it recently launched a line of baby oil and other infant products there. It has also made inroads into Vietnam with its X-Men brand of men’s shampoo and deodorant (no connection with the X-Men superheroes). To tap into India’s growing wellness trend, Marico last year paid an undisclosed sum for a roughly 23% stake in fitness and diet app Revofit, and says it plans to raise its stake to 37% this year.
As older executives may not know what younger customers want, Marico has turned to the Millennials who make up 65% of its 2,273 employees. They are doing reverse mentoring, where younger employees teach the older ones subjects such as digital marketing. To be more hip, Marico has also adopted a smart casual dress code and replaced training seminars with online tutorials. “The Millennial generation is very different,” says Mariwala. “They are socially responsible. They prefer natural to synthetic. They are sensitive to work-life balance.”
The company is now catering to trends such as the rising popularity of aloe for antiaging and charcoal for deep cleansing. Among its new products are Parachute Advansed Aloe Vera Enriched Coconut Hair Oil and the Set Wet Studio X Charcoal grooming range for men. Marico also launched the Set Wet Studio X last year as its first line available for online-only purchase, part of a wider effort to do more e-commerce. The disruption started by Gupta is far from finished.
