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HLL chalks out 10-point plan to rebuild margins

Our Bureau

Mumbai , April 29

THE decline in margins across all categories is clearly a major issue for Hindustan Lever Ltd (HLL) prompting it to put forward a 10-point programme to address it.

Mr M.S. Banga, Chairman, HLL, also acknowledged competitive pressures and suggested that brilliant marketing will be the key to grow in such a scenario.

The 10-point programme to rebuild margins entails global buying initiatives, technology driven cost savings, restructuring funded through exceptional income, channel financing, tax efficient operations, large-scale logistics optimisation and increasing performance of value destroyers among others.

Mr Banga believes that the recent stagnation was a result of discontinuities, a choice explosion for the consumer and interest rate reduction. This choice explosion is also evident in the rural market, where signs of an improvement and beginning to manifest, Mr Banga said.

The year 2003 also saw a pricing reduction of 15 per cent. The price cuts, which have come about because of competitive action, have resulted in higher volume growth, Mr Banga said. "If faced with any further competition, we will not hesitate to put in place any action to protect our market share," he emphasised.

According to him, the new HLL organisation will be leaner, therefore, more faster in decisions and transfer of resources will be quicker. Focussed brand building, continuous innovation, dedicated activation of resources, strategic pricing, strong cost reduction should be the thrust of the new organisation.

Mr Banga reiterated that HLL would enter the growth mode once again as consumer aspiration is on a new high. "Consumer aspiration to look good, to feel good and get more out of life is on an upturn. HLL's home and personal care and foods brands are strongly positioned to deliver these," Mr Banga said.

In terms of per capita consumption, India is at half the level of China, indicating a growth potential.

On the much-awaited water project, Mr Banga said the company was on course. "We are very excited about this project and should be able to garner huge benefit from it," he said but declined to put a date to the entry into this business.

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