Lever To Double Foods Turnover In 3 Years

Hindustan Lever has made significant changes in its growth strategy, with a sharper focus on the still-evolving foods business.

"The foods business turnover is now close to Rs 2,000 crore. We hope to easily double that over the next three years," the new chairman of the fast-moving consumer goods major, Manvinder Singh Banga, told Business Standard.

The thrust has become crucial to the company because of the slowdown in some of its mainline businesses, like soaps and detergents and personal care products, which contribute about 60 per cent to HLL's Rs 10,952 crore turnover.

Pointing out that Kissan Annapurna has been identified as its flagship brand, Banga said: "I expect to see it emerge as a Rs 1,000 crore brand in three years."

 

Kissan Annapurna, which now has a turnover of Rs 300 crore and covers various food products, will provide brand support to a slew of ready-to-eat products also to be launched soon.

"The tea business has seen significant slowdown over the last two years (due to a controversial tax system which has just been withdrawn). We now see tremendous opportunity in the business," Banga added.

As part of its strategy, the company is evaluating the feasibility of setting up a countrywide chain of tea-vending machines. It will be initially restricted to urban areas. But Banga said HLL would have to alter customer preferences in the rural areas as well.

He indicated that the growth in the foods business was going to come more from staple food items than popular products like ice creams, beverages and others.

On the foods business, he said HLL planned to grow organically as well as inorganically. "We are actively looking at acquisitions in this sector," Banga added.

HLL acquired Modern Foods last year for Rs 125 crore. With 14 units and 22 franchisees, Modern Foods will lead HLL's staple foods thrust.

The change in strategy will see a significant shift in the foods business' contribution to Hindustan Lever's turnover. In India, this business contributes only around 17 per cent to the company's turnover, while it accounts for around 40 per cent of Unilever's global sales. The phenomena of downtrading and a high level of penetration already achieved in both soaps and detergents and personal care products business have slowed down HLL's topline growth. Analysts fear that this could impact HLL's strategy of doubling its turnover and profit every four years. Banga said the other existing lines of businesses would not be neglected, and the company would make significant investments to grow them as well.