Marico's distribution width and penetration is acknowledged as one of the best in the

industry and is a leverageable strength.

Every month, 56 million consumer packs are sold to about 1.8 million households through
1.6 million retail outlets spread across the country.
Marico's distribution network covers almost every Indian town with a population of over
20,000. The chart below depicts Marico's distribution network in the urban & rural
markets:
Thus, 1 out of every 10 Indians is a Marico consumer.
Distribution Alliance:
Our distribution strength has been recognised by Indo Nissin Foods Ltd. through their
association with us for the distribution of Top Ramen products on a national basis.
Rural Sales & Distribution:
Marico's parallel rural sales and distribution network ranks among the top three in the
industry and contributes 24% to the company's topline.
Their infrastructure comprises 882 direct distributors, 153 super distributors, catering to
2393 small stockists and 4523 van markets. A dedicated team of Territory Sales Executives
and Pilot Sales Representatives distribute Marico's as well as alliance brands through this
vibrant network.
Sales Capacity:
They have made significant progress in the areas that enhance sales capacity. Quality ofour distributors Quality and
number of the distributor field force Upgradation in the roleof the company's front-line sales force.
Technology (IT) in Sales:
Marico has been making investments in IT to ensure:
Supply Chain efficiencies
Availability of the SKU at the right distributor point,
at the right time in right quantities
Timely availability and reliability of Sales
MIS, which help in taking prudent decisions on a real time basis.
In order to reap maximum benefits from its sales and distribution network, Marico
embarked on an internet-enabled application - MI-Net - to establish a network between
Marico and its distributors through a web interface. This project is aimed at providing real
time information on the status of various business operations between Marico and its
distributors. This initiative is expected to provide business benefits in the form of
increased penetration by the sales force, reduced communication costs, reduced working
capital requirements, etc. The project went live on April 1, 2002 with connectivity to 330
urban distributors, who together account for about 3/4th of Marico's domestic turnover.
The business benefits are expected to accrue over a period of time.
The company has two types of distribution chains, the urban chain and the rural chain. Its business
process is divided into three business divisions: nature care, health care and the international
division. The company registered a turnover of Rs 700 crore, with a profit of about Rs 50 crore in the
last fiscal.

However, the company faced one big problem. On one hand product promotion calls for a lot of
creativity, but on the other a full-fledged ERP system in an organisation requires tremendous
amount of discipline. Psychologically, creativity and discipline move in opposite directions and so
the management realised that the ERP implementation would reflect a complete paradigm shift in
terms of attitude and that issue had to be tackled effectively, says Satish Pendse, general manager,
information systems, Marico Industries. Keeping this in mind, the company began a brainstorming
session highlighting the benefits of the implementation. Once the company realised the possible
return on investment through ERP it decided to go ahead with the plan, and set the ERP ball rolling.

IT Journey at Marico

1995 Foxpro & Ingres based system

1997-1999 In-house development of Foxpro based packages for DSS, Claim processing, Supply Chain

2000 ERP implementation starts (SAP R/3)

2001 MIDAS goes live, ERP goes live. Marico becomes the first company in India to use APO (the

supply chain of SAP). Gets the Star Installation award from SAP

2002 MI-NET goes live. All distributors / SAP integrated into one system

To optimise the distribution network and improve its delivery mechanism, Marico decided to
leverage on the strengths of an ERP system. The company began the implementation of this system
sometime in 2000.
Developing an extensive supply chain is unarguably one of the breakthrough B2B
achievements of the company. Going by the KPMG survey, the company made plans to
build a tool that would put them on par with other FMCG firms. An additional investment
of about Rs 4 crore was made for a customised software package called MI-NET (Marico
Information Network). Internet initiatives
Though Marico has basic Internet connectivity, it is solely used for the purpose of e-
mails, while data transfer largely happens through PAMA VSATs. Modems were installed
in 50 depots in various locations. After the company started working on its ERP operation
it realised the need for a better connectivity environment. Finding that a mix of VSAT
and VPNs gave it the best cost advantages, the company opted for these options. Out of
50 locations, 25 are integrated through VPN connections and the rest are connected
through 8 PAMA and TDMA VSATs. ³Though VSATs are more expensive they are known
for high uptime as compared to VPNs. We have tried to strike a balance between the two
to adopt a cost-effective approach,´ says Pendse.

Reaping returns
The implementation of SAP along with MI-NET has presented various benefits to the
organisation. It has brought in transparency of operations where all data is available on
a real-time basis. Most importantly it has shattered the myth that distributors do not
welcome automation, and have inhibitions in sharing data with each other and the
company. The system has also brought those distributors placed in remote locations
closer to Marico¶s management. A distributor is directly linked to the ERP system, which
enables him to access transparent information about the stocks-in-transit, pending
orders, accounts statement, etc. Pendse says that the company hopes to recover its IT
investment in three years.
Going forward
With its ERP and SCM implementation in place, what are Marico¶s future IT plans?
Explains Pendse, ³We are in the process of building a knowledge platform, which will
enable the group members to share information and knowledge across the entire group.´
In short, Marico aims to create the infrastructure for future collaboration and convert it
into a virtual knowledge community. Also on the anvil is the introduction of payment
gateways within the system to speed up the payment process. Marico also realises that
the IT infrastructure in terms of the SAP suite of products or MI-NET or the data-
communication network has good potential for further exploitation. ³When the users
start basic use of IT tools, they uncover more areas where the same set of tools can
deliver more benefits. The same applications can be used for different sets of internal
customers who are not tapped till now,´ says Pendse.

Distribution on Mi-net

Marico has a sizable distribution reach spanning 1.7 million retail outlets. It

is in the process of integrating its distribution chain with the web-based

interface Mi-Net, which shall provide real-time information on the status of

business operations between Marico and its distributors.

The company has already implemented the ERP Package SAP R/3 to

integrate its operations and supply chain. Its urban distributors since April

1, 2002 are web knit. 70% of Maricos rural distribution has also gone online

lately with the balance expected to go online by next year.

Exhibit 8: Sprawling distribution network

Urban Rural Total

Sales Territories 135 35 170

Towns Covered (000) 3.1 11 14.1

"Every month, over 70 Million consumer packs from Marico reach approximately 130 Million consumers in about
23 Million households, through a widespread distribution network of more than 33 lakh retail outlets in India and
overseas.
 
Marico's focus on sustainable profitable growth is manifest through its consistent financial performance - 
a CAGR of 21% in Turnover and 27% in Profits over the past 5 years- while setting a record of several consecutive
quarters of year on year growth- 43 for Profits and 39 for Sales.