Amway mulls exports from India, to up global sourcing

Written by R Ravichandran | Chennai | Updated: Feb 4 2013, 09:00am hrs
Amway India Enterprises, better known as Amway, a direct selling FMCG company, is seriously considering exporting products to neighbouring countries and make India as a sourcing hub for herbs, concentrates to its global operations.

The company is targeting to become a $1-billion company by 2020 for which it is setting up its first manufacturing facility in India in Tamil Nadu with an estimated investment of R500 crore, said William Scott Pinckney, managing director and CEO, Amway India.

In an interview with the FE, Pinckney, who was in Chennai to announce the launch of a slew of new women healthcare supplements, said: We are bullish on our growth prospects in India. We will definitely consider exporting range of products to countries such as Sri Lanka, Indonesia, Bangladesh, UAE and West Asia once our manufacturing plant in Tamil Nadu goes on stream by end of 2014. Since the plant is coming up at Nilakottai near Madurai, which has a port facility in the near vicinity of Tuticorin, Amway will definitely consider exporting as a potential opportunity as it would make lot of sense for us.

To a question on whether the company will do away with contract manufacturing owing to its own upcoming plant in Tamil Nadu, he said: No. Not at all. We are expanding and we have set a target to become a $1-billion company by 2020 from calendar 2012 level of R2,288 crore. We have been growing at a CAGR of over 20%. We will continue to contract manufacture to meet our targets and for expansion. However, we have plans to move some products , currently manufactured at Baddi in Himachal Pradesh to our own plant in Tamil Nadu.

Currently, Baddi plant manufactures 85% of Amways products and the company had invested around Rs 105 crore into this contract manufacturing, he added.

On the raw material sourcing, he said: Except a few raw materials from the US, the company completely sources from within India. It is interesting to note that Amway India is involved in sourcing some of the raw materials such as herbs, concentrates and some nutrition products to our global plants in the US and China. Currently, we are sourcing around R400 crore to our global plants, which would go substantially going forward and India would become one of the sourcing hub for raw materials.

To another question on distribution force, Pinckey said: We have around 15 lakh force (members). But only 5 to 6 lakh members are actively involved in distribution our products. We are working on packages and incentives, including foreign trips to keep our distributors more engaged to spruce up sales.

Of the total sales, nearly 50% come from our nutrition supplements under Nutrilite brand. It contributed around R1,100 crore. Nutrition continue to be our major revenue earner. We have 30 products under this segment and has introduced five more now, targeting, hairskin and nails, tri-iron and Folic and Black Cohosh and Soy for women well being. We have plans to introduce a few more under beautycare, healthcare during the year and we continue to explore newer areas, he said.

The new women nutrition supplements will be available in the market by end of February and expect to clock R50 crore business, he added.