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At times when its sales have soured and nimble competitors are biting into its share, India's biggest FMCG Company, HLL, is out to make the most of `sourcing' out to global companies, especially to its parent, Unilever.
What does a giant 10 times bigger than its nearest competitor do to beat the protracted slump in its sales? More so, when the scope for increasing market shares in most of its product categories is next to nothing? And, when the Goliath is attacked by not one or two but several nimble footed Davids?
HLL (Hindustan Lever Limited), India's largest FMCG company is facing such a such a dilemma. It has dominant shares in detergent and toilet soap industry with a market share of 60% and 40% respectively and with small nimble competitors eating biting into its market share, there is little hope of augmenting its share. HLL's once fast moving businesses are gradually declining. Last year, for instance, the soaps business de-grew by 1% and detergent sales grew by just 7%. Other personal products together (household care, oral care, skin care, hair care, color cosmetics) registered a 14% YoY growth. Beverage sales, which moved largely with commodity price trends, have remained on a downtrend. Branded tea business de-grew by 10%, while coffee business registered a 7% YoY growth.
Sourcing seems to be the way out for HLL. That would mean to act as an outsourcing base for other companies, including its parent company's worldwide operations, by capitalizing on the cost advantages it enjoys vis-à-vis its global counterparts. The FMCG behemoth envisions building a billion dollar sourcing business outside India for its hair and personal care and tea products. The company desires to identify, nurture and promote sourcing sectors by suggesting to the government to set up a quasi-Government apex sourcing body, establish virtual Special Economic Zones (SEZs), privatize two major ports at Mumbai and Chennai and driving productivity through Total Productivity Maintenance (TPM) and move towards an enabling fiscal and regulatory regime.
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