Secret Diary of an Entrepreneur 2018

"In the FMCG business, it is always small innovations, driven by common sense, that have made the difference"

Secret Diary of Harsh Mariwala — Part 1

Of all things, I kept thinking about the dingy lanes of Masjid Bunder. When Pradeep (Harlalka) showed up, he was empty handed, with just a passport in his pocket. His idea of travelling was to bring back “imported” items from the US. Mine, to break free before plunging into the family business. Crisscrossing the US, we made our way to Europe, ticking off Paris and London in one month-and-a-half. What a time we had! Pradeep’s bag was, of course, bulkier — full of perfumes, clothes and chocolates — something we laugh about even now.

As a locality, Masjid Bunder was brimming with both handcarts and humanity. But it wasn’t a place for a youngster. I was keen to do an MBA. When I didn’t make it past the interview stage at IIMs and Jamnalal Bajaj, the aspiration was to go overseas. In one swoop, my father shot it down. Hearing all that business talk at home was no longer enough, I had to join the ranks. 

The first three years were slow, spent learning the ropes of the businesses we owned: edible oils, chemicals and spice extracts. Away from the bustle of Mumbai, Vidarbha was my karmabhoomi. My first lesson in consumer insight came from here, all the way back in the early 1970s. At 21, how much would you know about business? I just knew edible oil was our bread and butter; that it had been in the family for many years. Parachute was then sold in 500 grams, one kg and 15 kg tins in Vidarbha and parts of Saurashtra. I was sent to Vidarbha to meet distributors. It was the first time anyone from Bombay Oil Industries was visiting them. It would become a habit in less than a year — taking an overnight train to Nagpur and thereafter travelling by road to Jalgaon, Akola, Wardha and Yavatmal. 

I soon learnt that the 15 kg tin outsold the other two. Imagine my surprise though when I figured out that the distributors were selling our coconut oil in smaller tins, on their own. Parachute was a brand in its own right and the family had no idea of that! But if it was selling so well, why did I bother altering the script? Simply put, the opportunity to convert an unbranded commodity to a branded retail business was too big to ignore. There were very few coconut oil brands in India. Shalimar was successful in Kolkata. I took the train from Nagpur on one of my visits (it was second class in those days) to see how it was doing. 

Talks with the distributors in Vidarbha became my management lessons. Each day, there was a new case study. In that dusty bowl, I had found my passion. That feeling of selling our brand directly to retailers, even booking the orders in registers, gave me a high. A brand protected us from the vagaries of the traditional business. It helped do away with lower margins, and brought in product differentiation. The ride was cumbersome, to say the least. We first expanded in the west, then, moved to the south and north. The East was our final frontier. In eight to ten years, we grabbed 10% market share from just 1% earlier! This was in the mid-‘80s. By that time, we had set up regional offices. There were reasons to be happy but the quantum jump I wanted was still elusive. It was time to shake up the market.

In the FMCG business, it is always small innovations, driven by common sense, that have made the difference. The same thing happened with edible oils. Coconut oil was still being sold in tins. Plastic containers looked better, were easier to handle and cheaper as well. I thought we had a winner on our hands but the retailers were not enthused. It turned out, a company had tried going this route before, launching oil in square-shaped plastic bottles – only to see it fall prey to rat bites. The shape offered them an easy grip.

The answer was simple: a cylindrical, round-shaped bottle that the rodent couldn’t hold, let alone bite. We set up the prototype in rat cages to prove our point to the retailers. That small step paved the way for plastic bottles. It would still take a decade for the market to shift, but it showed how far a small innovation could go.

Like Parachute, Bombay Oil’s other brand, Saffola, had a presence in a few pockets in Mumbai and Delhi. It was déjà vu, converting the loose refined business to branded oil. Again, a good brand and sound distribution did it. Not being technologically inclined was probably what pushed me to FMCG. Along the way, building brands became a way of life.

If I roll back the years, Marico was the core of my existence. I was 39 when I became the managing director. I wanted to build a strong organisation, but who would want to work in Masjid Bunder! The Willingdon Sports Club, near my house, came to my rescue. It became the place to meet potential recruits over cups of chai and samosas. I was sly; these recruits must have left imagining a large office space and plush interiors. Luckily for me, the club approach worked on many occasions.

One look at Jeswant Nair and I knew Marico needed him. An XLRI graduate with a proven track record, he had handled HR at Blue Dart, Garware and Asian Paints. I figured people must have thought I had gone crazy, hiring an HR person before anyone else. I don’t blame them; it wasn’t a big function those days. Jeswant was outspoken, brash and a go-getter; just what I needed.

Marico was carved out following the bifurcation of Bombay Oil Industries and I knew the potential FMCG offered. At the same time, it was clear that I had to let go of the old style of working. The days of Bombay Oil Industries were over. When I think of what happened with RV Bindumadhavan, I still cringe. He had joined us from Ranbaxy to work on the new plastic packaging for Parachute. One of the general managers asked him, “So you have come here to buy dabba baatli?” It really upset him. I knew then that Marico had to forge a new culture.

In Jeswant, I saw someone who could convince others to believe in my dream. Over the next two years, we recruited a bright bunch of people. Pranab Datta (for finance) from Rallis, Raj Aggarwal, a marketing veteran from Colgate Palmolive (who sadly passed away at the prime of his career) and Shreekant Gupte for operations. We were still a lean organisation; there was a sense of ownership in the team, which meant greater job satisfaction. It was also an informal space. People called me by my name. I clearly remember Raj, right after joining us, came to work in a tie. That lasted for just two days! 

When I joined the business, I was rather rigid. The approach was to only win. One experience changed all that. Bombay Oil Industries had two strikes in the 1980s. Production was severely affected. The strike lasted for almost a year and it came at a time when we were establishing a new manufacturing unit for Parachute. We were up against Datta Samant, a prominent union leader. I was so overconfident that I took on the union. In the end, it was me who had to yield. It was a brutal lesson, but helped me transition from the “I have to win mindset” to “look for a win-win approach”. 

I have always been a workaholic. Though I would leave office at 5:30 pm, I carried work home daily. But I was flexible. I believe it’s best for people to decide how they want to manage their time. I would even make calls and send messages from the gym, but didn’t expect that from my team. There, it was a more democratic, less dictatorial approach. It worked! Over the next few years, the team grew so close, we went on retreats to Nepal and Fisherman’s Cove near Madras. 

People think I am cold. Maybe it’s because I have trouble expressing my emotions. It’s also because I am more of a loner. I like managing my own affairs, including my schedule, which goes in my black diary or rather my “lifeline”. That’s not to say I haven’t allowed emotions to get the better of me. The ‘90s were particularly stressful. The decision to set up Marico meant I was working 17-18 hours each day. Hiring the team and getting things working took up most of my time. In the middle of all that, there were negotiations with cousins over the separation. It took a toll.

Separation is never easy. Even the smallest issues have to be discussed threadbare. Things had reached a fairly decisive stage when they went awry. I was caught on the wrong foot. Simultaneously, there was the pressure of sustaining growth at Marico. After a series of long meetings, we had gathered for dinner in Madras. I didn’t realise when my emotions got the better of me and I broke down...

The decade started with me setting up Marico. Two years later, in 1992, the settlement process with the family began. I knew I needed money to pay off my cousins. A PE deal with Goldman Sachs was as good as done till differences cropped up, at the last minute. We then decided to go public. Again, by the time we reached a decisive stage, the capital market was in bad shape. In 1996, we bit the bullet and went public at Rs.175 a share. I was so nervous. When, the IPO was oversubscribed 2x, the burden was lifted. 

This is the first of a two-part series. You can read part two here.