HLL to sell Sewri unit to Bon

Consumer goods giant Hindustan Lever is transferring its soap and soap intermediates manufacturing facility at Sewri to Bon Ltd, its wholly owned subsidiary.

In a statement issued to the media, HLL said the company's board of directors has approved that Bon will acquire the company's Sewri undertaking, including the employees.

Accordingly, Bon will be suitably recapitalised with a mix of equity and debt, consistent with investments required to be made in the acquisition of the undertaking.

According to analysts tracking HLL, the sale would help in reducing the company's costs and improve efficiencies.

Mumbai has been identified as a high-cost area, largely because of high labour costs and companies have been closing down facilities and shifting production bases to relatively backward areas in the country. In the home and personal care segment, Hindustan Lever has set up two factories in Uttaranchal and Himachal Pradesh.

The Sewri plant that stands on land leased from the Bombay Port Trust, has an employee strength of 1,174. There is a high incidence of octroi on raw materials, high water cess, power tariff, lease rentals and other infrastructure costs.

The wage bill is also high, according to HLL executives. The Sewri facility manufactures over 38,000 tonnes of soap.

In soaps, HLL's Lifebuoy brand posted double digit growth for the third consecutive year.

Lifebuoy was relaunched in 2004 with a significantly improved mix and new communication. The company also added a new Lifebuoy green variant. The Lux franchise too has been expanded with a premium Lux body wash and Lux International bar and a mid-price soap, Lux with exotic flower petals and jojoba oil.

In 2004, it also strengthened Hamam, a leading brand in Tamil Nadu with improved quality, a new shape and fragrance. The company's soaps and detergents business recorded a turnover of Rs 4,470.74 crore in 2004 as compared with Rs 4,379.43 crore of 2003.