HLL To Reinvent Distribution System

Mumbai, June 29 | Updated: Jul 1 2004, 04:04am hrs
Hindustan Lever Ltd (HLL) has announced plans to reinvent its distribution of personal care and food products to create new ways to reach consumers and to redefine current channels. The new system seeks to improve product availability, brand communication and brand experience for rural and urban India.

HLL chairman MS Banga, speaking at the 71st annual general meeting of the company here on Tuesday, said that different channels for urban consumers, such as chemists, malls and general stores, will be targeted with differentiated services, focusing on giving consumers higher interaction with products.

Mr Banga further said that in-store sampling of tea, coffee or soup and product demonstrations like the Sunsilk mobile health stations succeed at increasing customer interaction with HLL products. At the 64 Lakme Salons in 26 cities, over four lakh consumers were served last year. Meanwhile, with a goal of reaching 10 crore under-served rural Indians, HLLs Project Shakti hopes to encourage 25,000 women to become entrepreneurs, making them direct-to-home distributors of the company. To build a new distribution system throughout India, HLL is training 3,00,000 people. People and their skills are critical to the success of all these channel initiatives. We are, therefore, investing in building capability for training the large number of people involved in these initiatives, Mr Banga said.

Six of HLLs 30 brands account for 40 per cent of the turnover. HPC division is older, larger and more profitable than the food division, although he added that food margins have grown 13 per cent in three years. The ice cream business of the company has also made some progress.

Answering shareholders unhappy with HLLs rate of growth, Mr Banga acknowledged that, for the company this has been a period of challenge, when it has also reshaped and enhanced the quality of the portfolio. HLLs EPS has increased by 35 per cent over the past four years, while its EVA has increased by 66 per cent over the same period. Meanwhile, addressing queries about HLLs action on the mercury pollution by its thermometer factory in Kodaikanal, Mr Banga said that HLL suspended the production in March 2001 and no adverse health impact on employees has been noticed.