Financial Daily from THE HINDU group of publications
Monday, Oct 28, 2002
`Social obligation as important as making profit' Mr G. Rajamohan, CMD, Hindustan Latex
Mony K. Mathew
THIRUVANANTHAPURAM, Oct. 27
THE public sector Hindustan Latex Ltd, which started operations more than three decades ago with a single product, has now come to occupy a premier position in the country's family planning and related healthcare programmes.
With two manufacturing facilities in Thiruvananthapuram in Kerala and another one at Belgaum in Karnataka, it now boasts of an array of oral contraceptives and other products such as blood bags and surgical gloves.
More importantly, the company is prominently involved in creating planned social change in the rural interiors through the implementation of its contraceptive marketing projects, which feature some innovative methods.
The Chairman and Managing Director, Mr G. Rajamohan, spoke to Business Line on the company's promotional strategies and future plans. Excerpts:
Where does the company, which started off manufacturing only condoms, stand today in terms of product diversification?
The company started operations in 1969 by manufacturing condoms, the most effective modern contraceptive device known in those days. It remained so till the early eighties when new contraceptives such as oral pills began to be added to the company's product profile.
These included both hormonal (Mala-D) and non-steroid (Saheli) contraceptive pills.
The liberalisation process and the opening up of market in early nineties provided the company with the opportunity to redefine its role in a wider spectrum of the healthcare scene. We took up the manufacture of surgical gloves, blood bags and hydrocephalus shunts by mid-nineties even while keeping ourselves abreast of the growing demand for our core contraceptive products.
In your perception, what is the company's strong point vis-a-vis the competition from domestic private manufacturers and imports?
The wide marketing network of Hindustan Latex, which reaches the interiors of rural areas, is certainly its strong point. This, of course, has much to do with the company's social commitment to the family planning and healthcare programmes of the Government aimed at the poor and the needy in remote villages. In fact, the company is leading the campaign for effecting a planned social change in rural areas through efficient implementation of social marketing projects for contraceptives.
The social obligation being paramount, the company does not look at profitability alone, which, however, is sustained by direct marketing programmes and exports. Having said this, it should also be mentioned that the market for contraceptives is huge and there is space for more players in the field. For instance, it is estimated that out of seven to eight per cent of eligible couples who require condoms, the total production in the country caters to only two to three per cent.
Social marketing being one of the key areas of the company, what are the specific projects undertaken in this direction?
The social marketing projects are implemented through Hindustan Latex Family Planning Promotion Trust (HLFPPT), a society promoted by the company. The "rural marketing of contraceptives'' project, funded by USAID, in Uttar Pradesh, the "community-based distribution'' project in Madhya Pradesh and the "rural marketing'' project in Andhra Pradesh are some of the initiatives of the society.
These apart, new projects for community-based distribution of contraceptives have been launched recently in Bihar, Orissa and Jharkhand. The underlying principles and objectives of these projects include studying the specific promotional avenues and requirements in each area, bringing about behavioural change and creating awareness about limiting families, accepting spacing methods and improving the health of the mother and the child. Another important part of the campaign is to build widespread awareness about contracting diseases such as AIDS through irresponsible sexual behaviour and drugs abuse.
The programme features some non-conventional methods to effectively spread the message among the rural folks, such as staging street shows, holding village melas and employing video vans. It also enlists the support of self-help groups in the villages.
The company, through HLFPPT, recently set up a novel model clinic, styled "Vanitha Clinic'' in Andhra Pradesh for imparting family planning counselling. The project has received instant support from the State Government and more such clinics have been planned in other parts of the State with Government funding. In Maharashtra, the company has set up a Technical Support Group for providing programme management and technical assistance for implementing a project sponsored by the National Aids Control Organisation (NACO) and USAID.
How has the company been faring in its direct marketing efforts?
The direct marketing operations of the company have been doing well over the years. Last year, the turnover from direct marketing, both domestic sales and exports, was close to Rs 29 crore, which was 62 per cent more than the previous year. The market share of the company's contraceptive brands in the commercial sector is in the region of 15 per cent, while it is more than 60 per cent if social marketing is also taken into account.
The company has established C&F/depot operations across the country covering most of the States as part of streamlining the distribution system. It is also in the process of putting in place integrated logistics management software in order to ensure optimum inventory at C&F locations and better flow of data and information for effective management control.
Where do exports stand in the company's scheme of things? And, have you chalked out any new projects on the export front?
Despite the huge commitment in the social marketing sector, exports do figure in the company's strategy for shoring up the bottomline through direct sales. The export of condoms has been to the tune 70-80 million pieces, while almost 50 per cent of the blood bags produced by the company is being exported. Besides, our products are being registered in different countries like South Africa, Russia, Peru, Turkey, Morocco, Uruguay and China.
The company recently signed an agreement with Middle East Development and General Trading Company (MEDGT) of Dubai for distribution its contraceptive and other healthcare products in that region. It is also planned to set up a packaging unit for condoms in Dubai in association with MEDGT. Preliminary negotiations are also on for setting up a similar packaging unit in Ukraine to cater to the CIS countries.
What are the new products in the pipeline?
The immediate project is the manufacture of surgical sutures at one of the company's units in Thiruvananthapuram, which is expected to take off in the next couple of months. Recently, the Belgaum unit has started production of emergency contraceptives. Another product the company plans to come out with in the near future is female condoms. To begin with, it intends to market the product developed by a UK company and if found feasible, a manufacturing facility is also proposed to be set up within the country.
These apart, the company is looking at the possibility of taking up production of some other healthcare items, which currently command high prices in the domestic market. One of them is "tissue expanders'' used in plastic surgery which are priced in the region of Rs 10,000. The company hopes to manufacture and market them at much lower prices.
Has the company drawn up investment plans for the coming days?
Over the next two-three years, the company will make investments to the tune of Rs 50 crore. And, the target is to take the total turnover to around Rs 400-500 crore by then from about Rs 150 crore now. The healthcare market is ever expanding with more hospitals and super-specialities coming up almost everyday and Hindustan Latex will try to keep pace with the developments.
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