Forbes India|June 5, 2020
The first time Marico started making contingency plans for Sars Cov2-related disruptions was in mid-February. At that point, India’s infection numbers were still in single digits and news headlines were focussed on an impending visit by US President Donald Trump.
Marico, however, was more focussed on the goings-on in China. What was needed was a plan for a situation if India too were to shut down. “As a company, we did not have a ready template,” admits Saugata Gupta, managing director at Marico. “So we used established frameworks.”
As India’s shutdown enters its ninth week, it has laid bare the importance of having a business continuity plan in place. Managing operations during that time can make a difference between a company staying alive and thriving in the post lockdown world or withering away on account of the new business reality.
The early moves that Marico made gave it a fighting chance in a world that gets gradually used to living with the virus.
The effects of slowing sales are already visible. Net profit for the fourth quarter of the financial year ended March 2020 fell by 3 percent (excluding an exceptional item) from ₹204 crore a year ago. Sales were down by 7 percent to ₹1,496 crore and volumes declined by 4 percent.
In an interview with Forbes India, Gupta speaks about Marico’s early start in dealing with what was to turn into a multifaceted disordering of the company’s operations. Managing factory operations, consumer preferences, supply chain and distribution, and the workspace are all likely to undergo change. Gupta is acutely aware that business rules in the post-Sars Cov2 world are on track to change and the company needs to play by them. There may be less demand for its premium products. Distributors may want to stock less and make sure they get a higher return on capital employed. Employees may prefer to work from home. For now, the annual planning exercise goes out of the window. “We have to live quarter to quarter and even within the quarter have a Plan B,” he says.
Preparing for a pandemic is something few Indian companies had done before. In Marico’s favour was the fact that its supply chain was not dependent on China. Against it was that its business was heavily reliant on distribution and boots on the ground. A contagious virus would require special care.
In early February, Marico began engaging an external agency to come up with a framework to deal with the crisis. What stood out was that the world over, consumers had been reacting similarly: Health and wellness was among the top internet searches. This would lead to the company launching a vegetable sanitiser.
You can read up to 3 premium stories before you subscribe to Magzter GOLD
Log in, if you are already a subscriber
Get unlimited access to thousands of curated premium stories and 5,000+ magazines
READ THE ENTIRE ISSUE
June 5, 2020