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Why Lakmé’s Success Is Ideal For ‘Make In India’

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The year was 1971, and Pakistan had just finished its liberation struggle, resulting in the establishment of a new country, Bangladesh. Meeta Shah, a 19-year-old from Bhavnagar, Gujarat, persuaded her father to let her buy a native make-up item for herself by asking for ₹5 (a large sum at the time). After a brief moment of thought, her father consented to her request.

Out of the ₹97,000 crore beauty business in India, Lakmé cosmetics surpassed the ₹1,000 crore mark in sales in 2017-18. 

How did this desi brand, which has an international feel to it, break into the Indian market and make cosmetics accessible to middle-income families?

Self-sufficient India

The Indian cosmetics market relied significantly on multinational brands after independence. Imported cosmetics were in high demand among the growing middle and upper classes. Jawahar Lal Nehru, India’s then-Prime Minister, was alarmed by this and asked businessman Jehangir Ratanji Dadabhoy Tata to launch an indigenous cosmetics company. The company began as a subsidiary of Tata Oil Mills, and after considerable thought, it was given the name ‘Lakmé,’ which is an English derivative of Laxmi, the goddess of riches and beauty.

According to legend, the goal of adopting an exotic name was to avoid being associated with the concept of beauty, which is predominantly a western phenomenon. This was at a period when ‘dadi ke nuskhe,’ or simply talcum powder, was the epitome of beauty in desi households.

Lakmé’s Expansion

The developing firm needed a plan that would help the products to make inroads across all types of families during a period when make-up was deemed taboo in India, as only ladies with a ‘tainted character’ had kohl-rimmed eyes and ruby red lips.

Simone Naval Tata stepped in at this point. In the 1960s, Naval H. Tata’s Swiss-born wife took on the Herculean task of redefining beauty.

The road was not simple, even with the knowledge and dedicated employees. In the 1980s, things got complicated when the government imposed a 100% excise levy on cosmetics, even those made in the United States, causing margins to plummet. Simone met with Dr Manmohan Singh, the then-finance minister, to discuss the problem.

Lakmé’s Acceptance Factor

Supermodel Shyamoli Verma, a blend of modernity and Indianness, was Lakmé’s first face. Most of Lakmé products, such as mascara, face powder, lipstick, foundation creams, compacts, nail enamel, toners, and more, were introduced by Simone. The brand sought a well-known face to appear in their educational campaign, which aimed to dispel social stigmas around cosmetics.

She wore Lakmé make-up and performed Indian instruments like the sitar and flute, with the tagline, ‘If colour is to beauty what music is to mood, play on.’

After that, they took advantage of India’s love for Bollywood stars and enlisted the help of actresses like Rekha and, later, Aishwarya Rai Bachchan, the 1994 Miss World, as brand ambassadors.

In the current scenario

Lakmé is one of those brands that has influenced society in a variety of ways. In 1996, the Tatas sold Lakmé to Hindustan Unilever, a rapidly expanding FMCG company. Today, the company sells over 300 different goods in over 70 countries around the world. Their diverse product range, which starts at ₹100 and goes up to ₹1,000, caters to a wide variety of customers.

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Investor’s greed a problem, says Sankaran Naren

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Gordon Gekko might have felt that greed, for lack of a better word, is good, but that isn’t always the case. The human urge to clamour for more has caught many an investor on the wrong foot and Sankaran Naren, Executive Director and CIO at ICICI Prudential, opines that investor greed is increasing day-by-day, which is a problem.

Naren Indian equity portfolios at ICICI Prudential, and has worked with various financial services companies, including Refco Sify Securities India and HDFC Securities. Delving further into the issue at hand, he says, “We are not seeing a problem in the macro or business cycle. But investor greed is a bigger problem. They think that there is only one asset class called equity and there is nothing called risk and that is the bigger problem rather than anything else in the macro or business cycle from an India point of view. In the world, all the way from 2012, people have not seen market corrections in the US. There people are used to investing in stocks and not worrying at all about market corrections except in 2018 December and 2020 March,” said Sankaran.

At this point, he believes that it is very important for investors to practice asset allocation and that they should make choices based on earnings connected to 2021 or 2022, investing in names which have steady operating cash flows, dividend yield, etc.

“The key learning from 2007 is that investors who invested in IPOs based on 2014 earnings were in for a disappointment. There is a fair amount of froth in many parts of the markets, particularly in new-age areas. Unlike Asia which has seen periodic market corrections, since 2012, US equities have barely witnessed a meaningful correction,” said the fund manager.

“Today the number of loss-making new age companies trading at stretched valuations is very high in the US compared with dividend-paying, cash flow-generating old economy-oriented companies,” he concluded, as he offered an investment roadmap for stocks and mutual funds to a rapt audience. 

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Mercedes to slow expansion in India, opt for direct sales

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In what perhaps signal a shift in the often traditional ways of carmakers, Mercedes-Benz will not expand its dealer network in India beyond the current sales and service touch points as it transitions to a direct gross sales model. This will see the German titan assume responsibility for distribution, warehouse, retail, and even reductions. 

The company, which leads India’s luxury market, has committed Rs. 60 crore to the new retail concept, which will see sellers work as franchisee partners, largely responsible for product demos, model expertise, automobile supply, and after-gross sales. 

“The new direct-to-customer model – under the ‘Retail of the Future’ initiative — will help drive in transparency and ease into the whole system through installation of a robust online platform,” Mercedes India MD & CEO Martin Schwenk stated. 

Mercedes will announce a nationally-set cost under the new system, as it will own the whole inventory of vehicles and charge them directly to customers. The intriguing part is that dealers will not be permitted to provide any discounts to entice customers, and will instead be treated like franchise partners. Any incentive program can be implemented immediately by the company. 

This will be the first time an automaker completes direct gross sales with sellers and retailers – now referred to as franchise partners – who will be engaged purely for inquiries, customer service, supply, and repair help, earning a fee and incentive based on the volumes they sell. 

“We are present in around 50 cities, which is sufficient to take care of existing and new customers. We have no intentions to further increase or reduce this network.” said Schwenk. 

The firm says that the measure will guarantee higher dealer profitability by eliminating possibilities of any inter-dealer cut-throat worth warfare. The sellers may even profit by saving on the stock holding price that they presently have. Such expense usually runs into crores of rupees for every retailer, and carries a curiosity price and potential penalties if shares should not liquidate (bought) on time by them. This retail program has already been carried out in countries like Austria, Sweden and South Africa, and it will be interesting to see how it plays out in India. 

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Swiggy to give 2-day paid monthly period leave to female delivery partners

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Food delivery giant Swiggy has announced a two-day paid monthly period leave policy for female delivery partners, marking an industry first. Swiggy has over 1000 women on its delivery team, and has stated that since bringing on female delivery partners, it has been working to increase inclusivity and diversity across the platform. The company believes that providing a welcoming environment for women will inspire them to explore delivering with them.  

Other initiatives to deepen inclusivity include enabling access to vehicles, access to hygienic restrooms, and implementing safety measures for female delivery partners. Mihir Shah, Vice President of Operations at Swiggy, said discomfort from being out and about on the road while menstruating is probably one of the most underreported reasons why many women don’t consider delivery to be a viable gig.  

“To support them through any menstruation-related challenges, we’ve introduced a no-questions-asked, two-day paid monthly period time-off policy for all our regular female delivery partners,” said Shah.  

SoftBank-backed Swiggy has approximately 200,000 delivery partners, with about 1,000 of them being female. Swiggy hired its first female delivery partner in Pune in 2016. “Since then, we’ve been working hard to promote inclusivity and diversity across the platform, with a goal of increasing the number of female delivery partners in Swiggy’s delivery fleet,” Shah added.

“Swiggy understands the pain of a woman in the field and period leave will definitely motivate more women to choose this platform and be independent,” said Komal, a delivery partner from Chennai.  

Last year, rival company Zomato announced a period leave policy, allowing female employees to take up to 10 period leaves in a year. These are available to employees and not the gig workforce. It has, however, taken steps to have a more inclusive gig workforce. In June this year, it said it has set a goal of reaching 10 percent female delivery partners by the end of 2021 starting with Bangalore, Hyderabad, and Pune. 

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