Hll Seeks Alliance With Wheat Units For Kissan Flour

Consumer goods major Hindustan Lever will as a backward integration move for its packaged Kissan Annapurna Atta, look at entering into strategic alliances with large wheat processors.

Although the company does not rule out the possibility of moving into wheat production itself, it is not likely in the near future says M S Banga, director, detergents, Hindustan Lever.

Tying up wheat supplies is crucial for HLL, as branded packaged basic food has been identified as a key growth area by the Anglo-Dutch MNC.

The Indian market for this class of product has been identified to be worth Rs 40,000 crore and HLL is preparing to make early gains in this still nascent market.

 

By getting into direct alliances with large wheat processors, the company will be able to reduce costs even as quality can be strictly monitored and maintained, Banga said while talking to newsperons here yesterday.

The country produces about 50 million tonnes of wheat, all of which is turned into atta by small flour mills in the unorganised sector. "Both in terms of volume and value the market has an immense opportunity for a company like HLL.

The growth potential and the cost benefits are just right for us to justify long-term investments," says Banga.

The supply chain skills of HLL can only make the business more attractive, he added.

More products are to be launched this year under the Kissan Annapurna brand. Product categories that are being looked into include rice, rava, maida etc. In keeping with HLL philosophy the company is looking to launch at least ten to twelve new products this year.

A major expansion of the household-care segment is also on the cards. The market accounts for a small share of the total turnover of the detergents division but is growing at 15 per cent compared with the 11 per cent achieved in the laundry and personal wash categories of the division. The Domex household cleaner has already made significant inroads into the market and five new brand extensions are to be launched this year.

Similarly, Raid, a household insecticide launched in partnership with Johnsons, a world leader in the field, is consolidating its position in the Rs 300-crore household insecticide market. Demand for such products is estimated to grow by an impressive 20 per cent per annum.

HLL will also focus more on market penetration in rural India. In the detergents division, the rural market accounts for 55 per cent of the personal wash products and 67 per cent of the laundry soap.

But, in the case of household care, rural India accounts for just seven per cent of the market HLL operates in. "This number signifies a major opportunity for growth," Banga said.

Market reach into the rural heartland is to be strengthened further. From the current 6,50,000 villages covered the company plans to increase its reach to 1.5 million in the next two years.