David took on Goliath — Marico fighting off Unilever’s takeover bid

6 min readFeb 12, 2022

How Harsh Mariwala resisted the might of Hindustan Lever, sustaining his home grown company against the odds and finally acquiring Hindustan Lever’s coconut oil brand

Being an entrepreneur, especially one disentangling from a family business, teaches one many lessons. One lesson that Harsh (Mariwala) swore by was never to underestimate the competition. He had an insatiable curiosity regarding competitor thought process and what the consumer felt about the brand.

Hindustan Lever, a listed subsidiary of Unilever Plc, now known as Hindustan Unilever Limited, was, and still is, the biggest and most respected player in the fast moving consumer goods (FMCG) sector. Conditions seemed right for it to expand its product portfolio. The route it chose was acquisitions. In 1993, it acquired Tata Oil Mills Company (TOMCO), predominantly a soap manufacturing company, which also had in its portfolio a coconut oil brand, Tata Nihar Coconut Oil, with distribution mainly in eastern India. Hindustan Lever was the gold standard in FMCG marketing and distribution and the TOMCO acquisition provided it with a beachhead to enter the coconut oil and hair oil segments and expand nationally.

Hindustan Lever had already proved its mettle as a marketer by unsettling consumer categories. It had done this in oral care. Colgate entered the India toothpaste market way back in 1937. It was the market leader in the oral hygiene market. In the 90s, Hindustan Lever upped the ante with huge investments in advertising behind its toothpaste brand Closeup. Backed by its distribution muscle, it made big strides and rapidly wrested a significant market share from Colgate. Colgate, being a multinational with deep pockets, was able to match Lever’s advertising spends and survive the onslaught. Colgate, almost a monopoly till then, had now to contend with a strong competitor forever.

Keki Dadiseth, who took over as the chairman of Hindustan Lever in 1996, built his career on corporate acquisitions. Along with mergers of some of the group businesses, he knew he could strengthen Lever’s position by acquiring promising companies — Prime among these targets was Marico.

When Hindustan Lever acquired TOMCO, one of the brands of that portfolio was Tata Nihar coconut oil. Nihar’s attempts to grow its share in the coconut oil market (which then stood at 7% were being thwarted by Parachute (which claimed 48%) and so Lever increased discounts to retailers, giving them a 35% margin against Marico’s 10%. Hindustan Lever managers then outspent Marico on advertising by a 2:1 ratio. This amounted to a full-blown assault on Marico.

While Harsh’s team was confident that Parachute would ultimately come up trumps, many outside the company believed that the direct assault by a multinational would seriously hurt Marico’s long-term future and set the stage for a buyout. If Marico’s management did not see the writing on the wall, they risked losing everything. Well-wishers approached Harsh and gave him their advice: take the buyout as an opportunity to sell.

Dadiseth knew how to apply direct and indirect pressure, and how to skilfully stoke fear to close a deal. He was confident they could add Marico to their own portfolio. As the weeks passed, Harsh saw that the situation had built itself to another unhappy consequence. Marico’s stock price fell sharply, with the PE multiple slipping to a single digit. The market believed that if Harsh sold Marico, the share price could rise again. Undeterred, he stayed the course.

One evening, Harsh received a phone call at home. ‘I am Dadiseth,’ the caller announced. He had never met Dadiseth before. A startled Harsh asked, ‘How did you get my home number?

Dadiseth brushed aside the question and made his case. Hindustan Lever was making a compelling offer. Dadiseth hinted at a lucrative sale of Marico with significant benefits for Harsh’s family. ‘The consideration will ensure that you and the next generations will be well cared for,’ he told Harsh. ‘You know that we’re in the coconut oil market. We’re very serious about this. We have a far superior and deep penetrating distribution network,’ he continued. ‘I’m giving you an opportunity to sell out.’

Harsh demurred, but Dadiseth would not take no for an answer. He backed up his offer with a not-so-veiled threat: if Harsh didn’t sell, he would lose everything he had struggled to build. ‘Marico will be history,’ he told Harsh. Even worse, Harsh’s family would pay the price. ‘Sell,’ said Dadiseth. ‘If you don’t, you will live to regret it.’

At the end of the five-minute call, Harsh hung up the phone. He was rattled that evening. Sleep eluded him. He had built Marico himself. His vision for it was just as long-term as any multinational’s plan. He wondered about the nerve of the caller.

Harsh woke up the next morning, his mind made up. The threatening call had had the opposite effect: there was no question of selling out. He and his uncle held 65% share holdings. The only way Hindustan Lever could hurt Marico was by causing it to bleed in the marketplace. Harsh was hell-bent on taking them on, well aware that it would be a long-drawn battle.

Harsh’s conviction was further bolstered by the fact that his team, like him, believed that Marico could take on Hindustan Lever. Strong rationale lay behind this conviction. Parachute was a high stakes game for him and Marico, comprising about 61 % of the company’s revenues at the time.

A huge advantage for Harsh was his in-depth knowledge of branded coconut oil: consumer insights, sourcing expertise, a well-established distribution and marketing set-up, and the significant cost optimization achieved across the value chain.

Meanwhile, the brand positioning and packaging re-design of Parachute had been completed. The rejuvenated Parachute brand was launched, backed by big ticket advertising. A massive TV campaign was aired, focusing on the relevance of the sacred coconut in Hindu religion and tradition… The campaign struck an emotional chord with consumers, and Parachute not only strengthened its position, but also notched up a double-digit volume of growth. It reached 18 million households and increased market share to 52%.

Marico’s outlet reach was strong in the urban areas but was relatively weak as it went further into small towns and rural areas.

It strategized a rural distribution thrust by appointing around 250 super-distributors who would sell, only to retail, in the rural markets and compensated them for the additional costs. With this structural weakness plugged, Marico would march on to build a distribution reach that matched the top FMCG companies in the country.

Another key ingredient in the mix was to enthuse and incentivize the sales force which experienced the Hindustan Lever aggression every day in the market, just like on a battlefield. A war room was created with dedicated telephone lines to get direct information from the field and respond to Hindustan Lever’s moves in real time.

As Harsh prepared for battle with Hindustan Lever, Uday Kotak, Chariman of Kotak Mahindra Bank Ltd, suggested that he should meet Karsanbhai Patel, the founder of Nirma, who had successfully taken on Hindustan Lever in the detergent space. He made a trip to Ahmedabad to meet him. As two Indian entrepreneurs fighting a multinational giant, there was an affinity and willingness to share counsel. Karsanbhai encouraged Harsh, telling him not to back down from the eyeball-to-eyeball fight. He added that in his experience, the Surf-Nirma fight did not result in Nirma losing. Instead the market for economy detergents expanded, with Nirma holding its own. Karsanbhai’s advice was to fight on with grit, guts and tactics and a win against the colossus would definitely be within the grasp of Marico.

Finally, Hindustan Lever relented and after an assault lasting over six years, they stopped investing in the coconut oil business. During the period from 2002 to 2006, Nihar’s market share in pure coconut oil plummeted from about 15% to 8%. The giant had lost his footing.

When Hindustan Lever decided to sell Nihar, Harsh was ready… In 2005, Unilever invited Marico to its data room at the training centre to start due diligence of the relevant documents. Two days later, Harsh conferred with Marico’s board and the directors’ stand was clear: they urged him to make an aggressive bid. The bid was upped to INR 2160 million. There was no contest as Marico’s bid price was much higher than all others and frankly, even beyond Unilever’s expectations.

Standing tall against Unilever’s onslaught not only helped Harsh and Marico survive against Unilever but create a USD 9 billion company in the long run.

Never underestimate competition

― Harsh Mariwala


Harsh Realities — Harsh Mariwala





Entrepreneur. A bibliophile with passion to write inspirational stories on selfmade millionaires.