HLL's move towards branded adhesives is a potential threat to leading player Pidilite Industries, which has over 40 brands in adhesives and a distribution network of over 30,000 dealers and three lakh retail outlets.While adhesives is not a new business for HLL, the test-market exercise seeks to explore whether the portfolio can be expanded for users who are currently not covered by the company, said a company spokesperson.

HLL has been in this business for over five years, addressing the needs of industrial users in book-binding, packaging, labeling, cigarette assembly and packaging, among others.

The spokesperson said: ``Our existing users are serviced directly, as in the channel for all our other industrialproducts. The product being test-marketed in Kerala is essentially meant for industrial use by carpenters, and not for use by the lay consumer as gum tapes or gum adhesive for home/office. However, the industrial market for carpenters can be addressed effectively through the distributive trade channel.''

The company has therefore chosen the distributive trade channel for marketing Himalaya-Life Bond. ``The appropriateness of the channel is the main difference between our existing operation and the testmarket initiative in Kerala. The branding is a corollary to the channel. Hence the issue is one of choosing an appropriate channel and not branding per se,'' he said.Analysts say that since the consumer goods business is largely driven by brand equity and distribution, in the adhesives business too brand loyalties are high.

However, demand is relatively price insensitive as adhesives account for an insignificant proportion of the total cost of the end product in which they are used, analysts said.

Thusindustrial paints and chemicals, pigments, etc. are typically sold in bulk to industrial buyers. Meeting technical specifications as per the users' requirement and consistency in quality play an important role in this sector, analysts point out.

The adhesives market (including the sealants segment) is estimated to be about Rs 500 crore. It has been growing at around 20 per cent per annum. Besides Pidilite Industries, other major players are Vam Organic, Mafatlal Dyes & Chemicals (MDC), Kitply and Ciba.

Pidilite has launched several brand variants in niche segments like Fevikwik, Fevigum, Fevibond, etc. Leveraging on its strong brand equity and distribution network, the company has ventured into the retail art material market.

Globally, HLL's parent company Unilever has sold off the speciality chemicals business which includes adhesives. In India, the subsidiary company is seeking joint ventures in speciality chemicals.