Hll Desserts Unit Hobbles At 38% Capacity
Three years after commissioning, Hindustan Levers frozen desserts plant at Nashik, Maharashtra, is operating at less than 50 per cent capacity.
Published figures in the companys latest annual report show that THE production of frozen desserts in 1996 from the plant was 3,830 tonnes, a 38 per cent capacity utilisation. The plant has an annual capacity of 9,900 tonnes.
Sales of Hindustan Levers own production in the year was 4,270 tonnes, just 21 per cent of the overall sales of 20,269 tonnes of frozen desserts and ice cream during the year. The remaining 15,999 tonnes was outsourced from various producers, primarily Kwality.
The ice-cream and frozen desserts category represented just 1.8 per cent of Hindustan Levers net sales of Rs 6,600 crore for 1996.
A Lever spokesperson said last year was a different year as a lot of modernisation and upgradation work was going on at the Nashik plant. This summer, the company was selling close to one million litres per week, he added.
Hindustan Lever sells both frozen desserts and ice-creams. While ice creams are made from milk cream and were till early 1997 reserved for small scale sector, frozen desserts are made from vegetable oil. Levers Nashik plant uses vegetable oil, while Kwality and Milkfood use milk cream.
The poor capacity utilisation at Nashik and its small contribution to overall sales lends credence to reports that frozen desserts have not taken off in India. The Indian palate, long used to milk and cream in ice creams has rejected product based on a different commodity, vegetable oil.
One cannot generalise like that. It depends upon the consumer and his or her taste. Certain class of people like frozen desserts, while others prefer cream based ice creams. It is wrong to say frozen desserts have failed in India, reiterated the Lever spokesperson.
Before Lever entered ice creams, other producers like Kwality, Milkfood and Vadilal had a market share of close to 70 per cent. Due to its distribution clout and financial muscle, Lever bought over the marketing set-up of Kwality and Milkfood in a series of takeovers in 1994-95.
It set up the Nashik plant at a cost of Rs 40 crore which would produce 9,900 tonnes of frozen desserts working on single shift. Walls, Levers flagship frozen dessert brand was launched in 1994.
Though Lever still claims a national market share of 50 per cent, most of it is due to sales of Kwality and Milkfood, as can be discerned from the figures in the annual report.
Meanwhile, Levers sales of personal products has nearly doubled from 583 million units to 1.2 billion units, though the contribution of personal products to net sales dropped to 11.7 per cent from 15.8 per cent.
Total sales realised from personal products has risen 38.7 per cent to Rs 868.04 crore.
Soaps, still lead the table with 23.3 per cent contribution to net sales, followed by synthetic detergents with 16.1 per cent. Tea contributes 17.7 per cent, personal products 11.7 per cent and coffee, 2.3 per cent. Sales of synthetic detergents nearly doubled from 3.36 lakh tonnes to 6.83 lakh tonnes, thanks to the purchase of Hind Lever Chemicals popular detergent business in 1995.