International Bestfoods Loses 40% Sales Staff
Following the announcement of the merger proposal between niche foods company, Bestfoods of the US, and Unilever in June 2000, the former's Indian subsidiary, International Bestfoods, has lost about 40 per cent of the frontline sales personnel and field managers.
"In view of the uncertainties involved due to the above transaction and the innovative management issues arising out of the joint selling agreement, sales of the company have been affected considerably," the company has informed the Bombay Stock Exchange.
HLL has entered into a joint selling agreement with IBL to jointly sell and distribute IBL products. The agreement, which came into effect from January 2001, allows IBL employees in the sales and distribution stream to become employees of HLL.
International Bestfoods recorded a net loss of Rs 41.2 crore for fiscal 2000-01, as against a net loss of Rs 13.5 crore in the previous year. Total income for the period declined from Rs 104.3 crore to Rs 67.1 crore.
The company reported that sales during the year have been affected due to intense price competition during the first half of the year (April to September 2000), especially in its salt business that has resulted in lower prices and margins. International Bestfoods' salt brand is Captain Cook.
During the December quarter, the company closed down almost all of its distributors and appointed HLL's distributors as its distributors from January 1, 2001. The company also had to take back stocks from the distributors resulting in higher sales returns.
International Bestfoods has become a subsidiary of Hindustan Lever, effective April 21, 2001. The company recently decided to merge International Bestfoods with itself.
IBL's current portfolio of brands apart from Captain Cook are Knorr, Brown & Polson and Rex, which will complement HLL's food and culinary product portfolio.
The company has decided to phase out the Captain Cook brand of atta and salt. The idea behind the strategy is to avoid any possibility of cannibilisation with HLL's flagship brand in the foods business, Kissan Annapurna.