The Hindu Business Line : P&G plans to set up shampoo manufacturing unit

PROCTER & Gamble is planning to set up its third manufacturing facility in India for shampoos but no final decision on the location and investment has been taken, the company Executive Director, Mr Ashok Chhabra, said here today.

"We have been thinking on these lines but a final decision will depend on whether we can achieve economies of scale. A shampoo plant is a very sophisticated one needing substantial investment so scale of operations is essential," he said.

At present, the company manufactures Ariel and Tide detergents at Mandideep in Madhya Pradesh and Whisper sanitary napkins and the Vicks range of products at Kundaim in Goa. However, it imports all of its shampoo brands - Head & Shoulders, Pantene and Rejoice - from overseas markets.

Analysts tracking the sector said most shampoo marketers operate through third party contract manufacturing since it keeps costs low and also provides logistical advantages.

But these advantages of third-party manufacturing are now decreasing, since places such as Himachal Pradesh offer backward area benefits as well as income-tax rebates.

They said setting up its own manufacturing facility will give P&G further cost advantages in the segment vis-à-vis competition, particularly Hindustan Lever Ltd (HLL).

Meanwhile, P&G announced the launch of fourth Pantene Shampoo variant called Amino Pro-V Complex, which contains a blend of three essential aminos that hair loses over time - lysine, tyrosine and histidine.

Mr Chhabra said price of the new Pantene variant will remain unchanged while adding that the company had no plans to further slash shampoo prices to gain volumes.

"We are not into the price cut game. Our three brands - Pantene, Head & Shoulders and Rejoice - command about 25 per cent of the shampoo market in India but we are still behind Hindustan Lever Ltd (HLL). Our aim is to become market leaders in shampoos in India," he said.

On whether the company would hike prices of its anti-dandruff variant Head & Shoulders after HLL's plans to make Clinic All Clear dearer by 10 per cent within the next fortnight, he said there were no such plans.

Procter & Gamble Hygiene and Health Care Ltd (PGHH) - the listed arm of P&G - posted 30 per cent sales growth at Rs 577.24 crore for the 12 months ended June 2004, with 35 per cent higher net profit at Rs 92.17 crore.

While PGHH deals with Vicks and Whisper product portfolios, its subsidiary P&G Home Products caters to shampoo and detergent brands in India.

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