Financial Daily from THE HINDU group of publications
Thursday, Nov 04, 2004
Financial Daily from THE HINDU group of publications Thursday, Nov 04, 2004 |
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Soaps & Detergents Corporate - Restructuring HLL plans to hive off Sewri facility Our Bureau
Mumbai , Nov. 3 HINDUSTAN Lever Ltd has announced plans to hive off its Sewri facility in Mumbai, which manufactures soap and soap intermediates, to a subsidiary. It also plans to dispose of its functionalised biopolymers business including manufacturing facilities at Pondicherry. The board met on October 28 to consider these two proposals for sale or otherwise. Plans to hive off the Sewri plant, one of its largest facilities, have been on the cards, according to company officials and analysts. HLL has been setting up manufacturing facilities in some of the backward areas of the country to seek various benefits including tax holidays. The Sewri plant, seen as a cost-intensive facility within the HLL fold, has an employee strength of 1,174. This facility is at a considerable cost disadvantage, according to HLL officials. "There is a high incidence of octroi on raw materials, high water cess, power tariff, lease rentals and other infrastructure costs. The wage bill is also high," an official said. The Sewri facility stands on land leased from the Bombay Port Trust. HLL believes that hiving off this facility to a subsidiary would result in better focus in reducing cost and improve efficiencies. "The transfer of both these units will help operations on a standalone basis," the HLL official said. An HLL union member said the company has been shifting its production facilities every 10 years to seek tax benefits. "The benefits got thus are not for existing production capacities but for additional capacities," Mr Franklin D'Souza, General Secretary, Hindustan Lever Employees Federation, said. The Sewri facility manufactured 38,440 tonnes of soap in 2003. HLL's total soap volume during 2003 was 327,333 tonnes. The Pondicherry unit is a non-core business. The company has been exiting its non-FMCG businesses.
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