HLL seeks options for sick JV

New Delhi, June 3: Hindustan Lever Ltd (HLL) is considering various options for potentially sick joint venture company Lever Johnson (Consumer Products) Ltd, including whether to continue with the JV, due to the latter’s dismal financial performance.

The JV company deals in floor cleaners, insect control and air care products and became potentially sick during calendar 2000. Besides, due to its financial performance not being in line with projections, the JV partners had to inject fresh equity to fund the company’s operations, HLL said in its annual report.

"The management is currently evaluating various options for the future of the company. This would be based on a comprehensive review of the fundamental rationale of the JV, underlying assumptions vis-a-vis actual performance, JV partner’s current view of the potential of this JV and other relevant and material facts," it said.

The dismal financial performance of this company is despite the fact that all of its product categories have potential for future top line growth.

"While all categories provide promise for future top line growth of the company, the financial performance of the JV, has however, not been in line with the projections....The company also became potentially sick during the year and necessary compliances under the Sica have been made."

Of the three main businesses of floor cleaners, insect control and air care, the JV company has recently expanded the last segment by marketing incense sticks; these are currently available in a limited geography and their further extension will be based on learnings from this test market.

In floor cleaners, Domex phenolic 2-in-1 has grown marketshares in the top end segment of the phenolic market; besides a new, low-cost disinfectant cleaner was launched in the last quarter of 2000 in Bangalore as test market.

The insect control business, however, continues to be impacted by severe restrictions on trade licensing but the company proposes to introduce more innovative products in this category soon.

"The company (HLL) believes that deregulation is required in the larger consumer interest since India accounts for a significant part of the reported malaria cases in the world outside Africa," the report stated. (PTI)