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McKinsey to advise on identifying new lines of business as Emami group looks for greener pastures

The broad segments that are under examination are ready-to-eat, ready-to-cook and do-it-yourself in the foods business, apart from staples, sugar, salt or nuts. Depending upon the fit and need for investment, the venture would be taken up

Our Special Correspondent Calcutta Published 14.12.23, 07:36 AM
From left (standing): Harsha Vardhan Agarwal, Prashant Goenka, Manish Goenka and Mohan Goenka. (Sitting) R.S. Agarwal, Aditya V. Agarwal, Priti A. Sureka and R.S. Goenka

From left (standing): Harsha Vardhan Agarwal, Prashant Goenka, Manish Goenka and Mohan Goenka. (Sitting) R.S. Agarwal, Aditya V. Agarwal, Priti A. Sureka and R.S. Goenka Sourced by the Telegraph

From snow cream and talcum powder manufactured out of a two-room establishment in north Calcutta’s Muktaram Babu Street to more than 500 products straddling across personal care, food, paper and real estate, the Emami group has come a long way in the last 50 years.

As the group, founded by two childhood friends, approaches a significant milestone in the corporate journey, the promoter owners are looking for greener pastures to expand their horizon and accommodate the third generation joining the business.

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It has mandated McKinsey to identify new lines of business which may be taken up by group firms. The group, which has a combined turnover of Rs 30,000 crore, believes it understands the B2C segment well.

“We will look at more consumer facing businesses. Out of 7 or 8 sectors being studied, we will select one or two to start with,” Aditya V. Agarwal, director of Emami Ltd, said.

The broad segments that are under examination are ready-to-eat, ready-to-cook and do-it-yourself in the foods business, apart from staples, sugar, salt or nuts. Depending upon the fit and need for investment, the venture would be taken up either by personal care major Emami, the flagship which is listed, or unlisted Emami Agrotech, which is into edible oil and spices or a new entity.

Agarwal, who was speaking on the eve of the formal launch of a series of events to mark the golden jubilee, along with Mohan Goenka, vice-chairman and whole time director of Emami Ltd, said it was necessary to expand the horizon on two counts.

“Business has to grow. And more family members are joining business,” Agarwal, who is part of the second generation promoter group, noted. The group was founded by childhood friends Radhe Shyam Agarwal and Radhe Shyam Goenka, who left their corporate job to set up Kemco Chemicals, which later became Emami Ltd.

Now at least six members of the third generation family have joined the business. “They may have some new ideas. We won’t bind them with our thoughts. They will be allowed to fail,” Agarwal opined.

How do generations of members come to business decisions? The families have forums where issues are discussed and there is also a governance process, which is being renewed though, after the founders took back seat from the day to day activities.

High and low

Emami had many wins under its belt and some failures too. The group rapidly grew by acquisitions, starting from Himani in 1978 and launched Boro Plus. In 2008, it acquired Zandu Pharmaceuticals, Kesh King in 2016 and Dermicool in 2022. In between, it entered the paper business by acquiring a company in 1983 and edible oil via Emami Agrotech in 2008.

However, it had to sell the cement business to Nirma to reduce promoter level debt and a majority share in hospital chain AMRI to Manipal to cut losses. Agarwal recalled that the fire at the Dhakuria hospital, which claimed 92 lives, was the low point for the group.

“We are very proud of AMRI. But if we consider a low point for the family and the business and for society, we feel unhappy that 92 deaths happened in our place,” Agarwal pointed out.

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