I don't believe in very long periods of burning money: Harsh Mariwala

FMCG doyen Harsh Mariwala, who carved Marico out of his family oil business in 1990 and grew it into a Rs 68,000-crore conglomerate, doesn't like burning money for an indefinite period. His stance on new-age businesses and innovation is, in fact, reflective of the larger sentiment among veterans of India Inc.

However, Mariwala also prides himself on being a big believer in innovation. Marico, in fact, has been one of the frontrunners when it comes to legacy companies looking to grab a slice of India's startup-and-innovation pie. It currently has a portfolio of six to seven D2C brands, and is very clear when it comes to providing "guidance" to young entrepreneurs.

"We don't want the FMCG mindset to displace the D2C mindset, which is very different. But I don't believe in very, very long periods of burning money [either]. D2C brands must turn around at a much shorter period of time," the Marico chairman shared in a conversation with YourStory Founder and CEO Shradha Sharma at the inaugural session of TechSparks Mumbai on Thursday.

There's no denying that the D2C revolution has compelled traditional FMCG companies into being more agile and innovative, which weren't really their hallmarks even a decade ago. They believed in moving slowly, but surely. But the times are changing, he said.

"The FMCG segment was perceived to be very defensive. Any brand launch would take a minimum ad budget of Rs 25 crore. On top of that, you needed a strong distribution network for selling those brands. But come the digital revolution, we saw the entry barriers in terms of distribution and marketing spends reduced," Mariwala explained.

"The defensive sector has gotten some degree of threats from the new emerging brands," he added.

Old versus new

A new threat needs a new contingency plan, of course.

In Marico's case, that has come in the form of acquisition of a slew of D2C brands—Beardo, Just Herbs, True Elements—over the last few years. The FMCG major has also launched a few of its own D2C brands, including hair and skin care brand CocoSoul, clean beauty brand PureSense, and nutraceutical brand Fittify.

"We have been one of the most aggressive FMCG companies in this [regard]. Some of our brands like Beardo have hit a Rs 150-crore turnover and also breaking even," Mariwala revealed.

"In a highly competitive environment, if you launch a me-too brand, it will be difficult to scale. You need to bring in something that is pioneering and has a strong value proposition that cuts the ice with the consumer," he added.

Lack of resources, however, should not come in the way of business growth, and grabbing an opportunity should be very important for an entrepreneur, he shared.

"Take Parachute, for instance. We drive more growth through the extensions of the core hair oil now, but we can do very little to the basic product given the large quantities [7 crore packs] we make annually," he added.

Delegate, when you grow

The veteran entrepreneur also underscored the importance of delegation when a business expands. Mariwala himself had no qualms about letting go. He stepped down from a daily operations role at Marico on realising that "the business needs new blood". But this doesn't come easy to all business leaders.

"Entrepreneurs are too much in love with their businesses and are not able to delegate. When you get medium-sized from small, you get things done from others, and you have to build processes," he observed.

"I stepped down after 40 years, and gave over the reins to someone who had been working with me for 10 years. Most entrepreneurs are not able to make that shift."

As a consistent backer of India's thriving entrepreneurial ecosystem, Mariwala stated that it is the new breed of doers and hustlers who can propel India to a $5-trillion economy "in a very short period of time".

That is why his family office, Sharrp Ventures (run by his son Rishabh Mariwala), came into being.

"I am very passionate about entrepreneurs, and realised that it was very important to back them. Initially, we invested 80% in the public markets, but now our portfolio is 50% each across unlisted and listed companies, and we've seen 50X returns on some of our early bets," he revealed.

In essence, Harsh Mariwala—and Marico by extension—has not only kept up with the changing times, but has also actively participated in the shifting paradigms of consumer businesses.