FMCG major Marico Ltd saw a 21 per cent year-on-year sales growth in the first quarter of FY19. Domestic volumes saw a 12.4 per cent growth in the quarter after a 9 per cent drop in the corresponding quarter of last fiscal, which witnessed transition and destocking effects of GST.

According to Vivek Karve, CFO, Marico Ltd, GST is now a thing of the past, and the company has navigated its business well under the new tax regime. In an interview with BusinessLine , he talks about the effects of GST one year down the line, profitability for acquired start-ups such as Beardo, and new products. Edited excerpts:

You had warned last year of a ‘black swan effect’ because of GST. What is the scenario now?

GST, to me, is a thing of the past. While the business was disrupted in the first quarter of last year because the trade destocked, the business came back on track in Q2. Thereafter it’s been business as usual.

How have you benefited from GST? How much are you saving on transport and warehousing costs?

One thing that GST has done for us in the tangible form is the restructuring of our supply chain. For example, the number of depots – we had around 32 depots – have now been brought down to 26. And by the end of next year, that number should come down to below 20. In the process, we have been able to accrue some small savings in logistics costs. With freedom to restructure the supply chain based on total delivered costs, the savings in the years to come are likely to be higher than what we have so far accrued. At a macro level, the entire area of transportation – in terms of truck movement and warehouse automation – is also being revolutionised.

What is the status of your investments in start-ups such as Beardo? Any plans of product integration with Marico?

Beardo is an acquisition. But we would rather keep these businesses separate from our core businesses. These [Beardo] are niche businesses, and they behave very differently in terms of consumer engagement and even selling. Sales predominantly happens through e-commerce, while for our core businesses, they are more general or modern trade-focussed. Our current thought is to continue running them independently.

Is Beardo profitable?

I can’t share numbers, but the business is not resource-hungry. The top-line growth has been to our satisfaction.

So if you had a Beardo in the online area, why introduce a compet ing Set Wet Studio X brand there?

Beardo is complementary to Set Wet Studio X. The brand Set Wet has a distinct equity which we can capitalise on. There is a significant male grooming segment and Set Wet can help us increase our play there.

Coming to healthy food, will you extend Saffola beyond oats?

We now have a a ₹125-crore healthy foods franchise, primarily anchored in oats, and we will continue to grow the segment. We will target a 20 per cent value CAGR in the category. We are looking at a broad-based play in the healthy foods segment in the years to come – healthy meals / snacks, nutraceuticals, among others. Our next milestone will be to achieve a top-line of ₹200 crore by FY20.

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