Chapter II-Company Profile

Zandu Ayurveda

1.1 HISTORY

Established in 1910 by Pattani, Prime Minister of the erstwhile state of Bhavnagar, Zandu went

public in 1919 with the issuance of stocks

The company derives its name from Vaidhya Zandu Bhattji, the original founder of the firm

named Zandu Pharmaceuticals. He was a renowned Vaidhya not only of Gujarat but India in late

19th century and early 20th century. The Vaidhya family's stake has been sold to Emami recently

The inception of Emami Group took place in the mid 1970s when two childhood friends, R S

Agarwal and R S Goenka, left their management jobs with the Birla Group to set up Kemco

Chemicals, an Ayurvedic medicine and cosmetic manufacturing unit in Kolkata in 1974. At that

time the Indian FMCG market was still dominated by multinationals.

The company was established with modest capital of Rs. 20,000 and started manufacturing

cosmetic products as well as Ayurvedic medicines under the brand name of Emami from a small

factory in Kolkata, targeting sales at the Indian middle class.

In the early days the founders personally sold their cosmetics from shop to shop, using hand-

pulled rickshaws. They soon established recurring consumer demand, and gradually hired

additional staff. A chain of distributors was established and the sale of Emami products spread

from West Bengal to rest of Eastern India and gradually to other states. Emami Talcum, Emami

Vanishing Cream and Emami Cold Cream sold well. The company's marketing techniques were

to sell dreams of beauty to Indian women using radio and TV advertising.

In 1978, Agarwal acquired Himani Ltd, a privately owned cosmetics company with a factory in

Kolkata. The business of Himani was almost 100 years old, although it had only been

incorporated in 1949 as a Private Ltd. Company; it had a good brand equity in Eastern India, but

was in financial trouble. Agarwal and Goenkamanaged to restore it to profit, at considerable risk

considering the small capital base of their own company at the time; this later proved to be the

turning point for their business.

Agarwal decided to produce health care items and toiletries based on Ayurvedic preparation in

the Himani factory. Ten years after commencement of the company, it launched Boroplus

Antiseptic Cream under the Himani umbrella in 1984. This became a flagship brand and was

extended to other products such as Boroplus Prickly Heat Powder. Emami brands started selling

in all states of North, East and West India. Today Boroplus is not only the largest selling

antiseptic cream in India but also in Russia, Ukraine, and Nepal.

In the 1983 Bollywood film Agar Tum Na Hote, one of the earliest brand placement campaigns

was achieved with lead actor Rajesh Khanna playing the managing director of Emami.

In the 1990s, Emami launches another flagship brand under the Himani Umbrella, Navratna Cool

Oil, and expanded production by opening its second factory, at Pondicherry.

The introduction of new brands continued and the company extended its distribution network to

South India, with Navratna spearheading the process. In 1995, the partnership firm Kemco

Chemicals was converted into a Public Limited Company under the name Emami Ltd. In 1998,

Himani Ltd was merged into Emami Ltd.

In 2000, with a view to concentrate on its core FMCG business, Emami's investment undertaking

was demerged by issuing shares in Pan Emami Cosmed Ltd to shareholders of Emami. In 2003 a

new factory unit was set up at Amingaon, Guwahati. A public issue of 5 million equity shares at

Rs.70 followed in 2005. The issue was oversubscribed by 36 times. The share price later rose to

Rs.210.

In 2005 Emami launched Fair and Handsome, the first fairness cream for men.

In 2006 the company decided to introduce a Health Care Division and a number of new brands

of Ayurvedic OTC medicines.

Among the brands created by the company, annual sales of Navratna are at Rs. 3 billion followed

by Boroplus at Rs. 2.50 billion and Fairness at Rs. 1 billion. Sona Chandi Chyawanprash,

Menthoplus and Fast Relief also among the top brands in their respective categories.

In 2006, J B Marketing & Finance Ltd., the erstwhile marketing company of the Emami Group

merged with Emami Ltd. and the total turnover of Emami including sales in domestic and export

market stood at Rs 5.16 billion at the end of the fiscal year 2006-07.

Emami Limited acquired a major stake in Zandu Pharmaceuticals Works Ltd, a century-old

household name in India, for Rs 7 billion. Emami added some of Zandu's prominent brands like

Zandu Balm, Zandu Chyawanprash, Zandu Kesri Jeevan, Zandu Pancharishta, Sudarshan and

Nityam Churna to its own range.

Within three decades, the company has grown to Rs. 10 billion Emami Ltd under the Rs.

30 billion Emami.

1.2 PRODUCT PROFILE

Zandu offers a wide range of products from healthcare to lifestyle. A Select few are:

Lifestyle and immunity products

Zandu Chyavanprash

Its high Amla content, a rich source of Vitamin C together with other nutritional herbs helps in

building body resistance against common ailments like cough and cold, weak digestive system &

promotes all round physical and mental health.

Zandu Sona Chandi Chyawanprash

"Immunity PLUS Mind Power" - Ordinary Chyawanprash provides you with immunity, but just

immunity is not enough in today's competitive world. To stay ahead in life you need the power

of "PLUS".

Only Zandu Sona Chandi Chyawanprash "Plus" offers you Immunity + 3 Mind Benefits of

Alertness, Better Memory & Concentration owing to the presence of NNA.

Natural Nootropic Agents (NNA) are traditionally known ayurvedic ingredients like Brahmi,

Almond oil, Shankhapushpi, Ashwagandha, & Jyotishmati which has been scientifically proven

to improve memory, learning and concentration.

Pain relief products

Zandu Balm

Zandu Balm is India's No 1 pain relieving balm. It is an iconic brand of Zandu portfolio and

become a generic name for balms for most of the consumers. It is a trusted balm for over a

hundred years. Zandu Balm is synonymous for headache, body ache and cold remedy and

considered as the best in thecategory.

Zandu balm is one of the biggest pain management brand and available in more than 5 Cr. Indian

household across geographies. It is also highly distributed pain management brand with coverage

of more than 13 Lakhs retail outlets across India.

Child health care products

Brento

Brento contains ingredients traditionally known as Medhya Rasayna which have been

used since ancient times in conditions such as cognitive dysfunction, mental debility, lack

of concentration. For paediatric patients, helps correcting disorders such as dyslexia and

hyperkinesis. Improves minor mental disorders. Brento induces mild tranquilizing effect

and helps reduce anxiety

The benefits of Brento are;

Promote physical growth Promote mental growth Build immunity Provide balanced nutrition

1.5 Present market share

The Zandu Ayurvedic (including ayurvedic generics, OTC and ethical products) grew

by 36% in FY14

The Zandu portfolio contributed Rs 400 crore and accounted for 22% in Emami's

total turnover of Rs 1,821 crore in the previous fiscal.

Emami.has a 23,000cr market capitalization

1.6 FUTURE STRATEGIES

Zandu bring to consumers, products that are of the highest quality and safety and is non-

negotiable. R&D is also critical in ensuring regulatory compliance of all international

products.

Zandu is also keenly focused on strengthening its presence in global markets and hence is

taking active part in tapping the consumer habits, attitudes and newer insights for product

development.

Zandu recently laid special emphasis on international operations. Zandu’s Ayurvedic

Herval Health Care products are available in all international markets including the USA,

parts of Europe, South East Asia and Africa.

Zandu is commited to its Vision to “add a new lease of life for Ayurveda and also make it

emerge as most powerful form of medicine make it the ultimate solution for all health

problems and create an awareness about the ancient Indian tradition across the world and

make Ayurvedic medicines more accessible to the common man thereby establish the

leadership of Ayurveda across all spheres of medical science.”

This year, Emami company plans to launch Zandu Nityam tablets in the constipation

category selectively and graduate it into a national brand campaigns.

The healthcare business (including ayurvedic generics, OTC and ethical products)

grew by 36% in FY14

The Zandu portfolio contributed Rs 400 crore and accounted for 22% in Emami's

total turnover of Rs 1,821 crore in the previous fiscal.

The year 2014-15 is expected to be landmark year for Zandu Pancharishta by

focusing on the key areas of creating further awareness through communication,

friendly packaging and aggressive distribution drive.

Zandu Vigorex shall be further strengthened by highlighting the unique proposition of

the brand supported by steady communication.

The company also said it intends to invest aggressively in brand spending, marked

by celebrity endorsements.

1.7 Achievements

1. Zandu set up a 'Rasa Shala' to manufacture products for his personal practice, according

to the tenets of Ayurveda – which deals with the fundamental principles in nature that

underlie the creation, preservation, and restoration of health and the promotion of

longevity.

2. Early 1900

His grandson Shri Jugatram Vaidya, inspired by the rich tradition, decided to start a

pharmacy to manufacture and market Zandu's Natural Herbal products (Ayurvedic

Products).

October 1910

In this endeavour, Shri Pattani Prime Minister of the erstwhile state of Bhavnagar, and

Shri Mathura Das Parikh assisted him. Thus, in the city of Mumbai, the trusted

indigenous pharmaceutical – Zandu was established.Since

3. 1911

‘Zandu’ signifies – ayurvedic healthcare remedies which mean – quality.In 1919

The great success received in the first 9 years necessitated immediate extension of the

production capacity. Zandu thus went public with the issuance of stocks.Since

4. 1940 

With the aid of modern equipments Zandu manufactures a wide range of Ayurvedic

products; specialised in Rheumatology, Gynaecology and CNS (Central nervous system)

etc.Post

5. 1960s

Using as many as 200 medicinal plants and their extracts, Zandu produces a range of over

300 health promoting products. In fact, Zandu products hold the key to health and

longevity. The products are manufactured at several up to date plants all across the

country.In

6. 2008 

Emami acquired Zandu from the Parikh family for approximately Rs 730 crore. This has

been a major step for both the firms.Early

7. 2009

Post acquisition, Emami and Zandu was merged. It undertook a major revamp of the

Zandu products. It launched the re-vamped Zandu Kesri Jeevan, Zandu Chawanprash,

Zandu Honey, Zandu Pancharishta and Nityam Churna.

8. 2009

Zandu Foundation for Healthcare

ZFHC with modern facilities conducts and promotes R & D in the field of health with

emphasis on Ayurveda to fulfill its social commitments. To augment the natural sources

of crude drugs and meet the increased demand for endangered medicinal plants is the

prime objective of ZFHC.Wide array of ambassadors were signed on for Zandu products,

including Pt Birju Maharaj, Bollywood star- Malaika Arora Khan, Southern super stars -

Suriya and Mahesh Babu, Indian cricketers - Amit Mishra, Virendra Sehwag, Dinesh

Karthik, MS Dhoni, Sac

1.8 Financials

The healthcare business (including ayurvedic generics, OTC and ethical

products) grew by 36% in FY14

The Zandu portfolio contributed Rs 400 crore and accounted for 22% in

Emami's total turnover of Rs 1,821 crore in the previous fiscal

Zandu being a part of Emami group, the consolidated financial is listed below;

Sources Of Funds March 2015 March 2014

Total Share Capital 22.70

Equity Share Capital 22.70 22.70

Share Application Money 0.00 0.00

Preference Share Capital 0.00 0.00

Init. Contribution Settler 0.00 0.00

Preference Share Application Money 0.00 0.00

Employee Stock Option 0.00 0.00

Reserves 1,207.94 909.42

Net worth 1,230.64 932.12

Secured Loans 19.29 21.77

Unsecured Loans 0.12 0.04

Total Debt 19.41 21.81

Minority Interest 4.56 0.01

Policy Holders Funds 0.00 0.00

Group Share in Joint Venture 0.00 0.00

Total Liabilities 1,254.61 953.94

Mar '15 Mar '14

12 mths 12 mths

Application Of Funds

Gross Block 625.84 546.64

Less: Revaluation Reserves 0.00 0.00

Less: Accum. Depreciation 172.94 150.78

Net Block 452.90 395.86

Capital Work in Progress 28.77 11.91

Investments 501.27 295.84

Inventories 126.65 141.15

Sundry Debtors 102.67 79.29

Cash and Bank Balance 354.11 269.96

Total Current Assets 583.43 490.40

Loans and Advances 109.95 108.27

Fixed Deposits 0.00 0.00

Total CA, Loans & Advances 693.38 598.67

Deferred Credit 0.00 0.00

Current Liabilities 285.44 210.07

Provisions 136.28 138.27

Total CL & Provisions 421.72 348.34

Net Current Assets 271.66 250.33

Minority Interest 0.00 0.00

Group Share in Joint Venture 0.00 0.00

Miscellaneous Expenses 0.00 0.00

Total Assets 1,254.60 953.94

Contingent Liabilities 118.22 108.87

Book Value (Rs) 54.22

Chapter IV- Comparative Analysis

4.1 SWOT Analysis

SWOT Analysis

Strength

1. Present in the market for last 100 years, thus has a kind of legacy and

Indianness associated with it and very well accepted in the market.

2. One of the power brands of Emami and assumes the leadership position in

the product category, it ranked no. 3 in the OTC personal care category as per

brand equity most trusted brands.

3. Availability in smaller containers of 1.2 ml ensures customer affordability

and wider reach.

4. Celebrity endorsements by people from diverse fields further strengthen

the brand

5. Good availability and distribution due to strong parent brand

6.  It enjoys a very strong distribution network

Weakness

1. It does not have any differentiating ingredients; all of its competitors claim

to have the same methyl salicylate and herbal ingredients as Zandu.

2. Involvement in controversies over copyright violation of Zandu balm with

Dabangg though gave it publicity but negatively affected the brand image.

3. Emami’s own brand Mentho plus also caters to the same segment giving

rise to cannibalization.

Opportunity

1. It has such intense emotional bonding with its users that every consumer

research on packaging throws back a design that is closest to the original

pack.

2. By Munni( malaika arora) doing a special ad for zandu, the brand would

benefit from the success of movie Dabangg too.

3. Sedentary lifestyles will create a fresh demand for pain relievers

Threats

1.  The Brand is moving towards becoming generic with such long years of

existence in the market. In 2010, the name being used in a movie song caused

a lot of furore.

2. Pain relief sprays might act as substitutes and hurt the entire category

3. Cheap imitation products

Competition

Competitors

1. Amrutanjan balm

2. Mentho Plus balm

3.Tiger balm

4.2 McKinsey’s 7S Model

The McKinsey 7-S model involves seven interdependent factors which are categorized as either "hard" or "soft" elements:

Hard Elements

Soft Elements

Strategy

Structure

Systems

Shared Values

Skills

Style

Staff

Strategy: The healthcare business (including ayurvedic generics, OTC and ethical products)

grew by 36% in FY1

The company also said it intends to invest aggressively in brand spending, marked by

celebrity endorsements.

The Zandu portfolio contributed Rs400 crore and accounted for 22% in Emami's total

turnover of Rs 1,821 crore in the previous fiscal.

The year 2014-15 is expected to be landmark year for Zandu Pancharishta by focusing on

the key areas of creating further awareness through communication, friendly packaging

and aggressive distribution drive.

Zandu Vigorex shall be further strengthened by highlighting the unique proposition of the

brand supported by steady communication.

Systems: Zandu is dedicated to finding, developing and retaining the best people for their

company. In return, they aim to make sure that their employees are happy and motivated .They

work in a family environment and value a long term and stable relationship with employees.

Shared Values:

Commitment & loyalty to institutional values and principles

Integrity

Customer orientation

Leadership and innovation

Attention to detail

Teamwork & team environment

Simple living, high thinking

Social responsibility

Environmental safety