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Direct selling health and wellness firm Amway has said lack of clarity on regulatory norms is hitting its business with the growth slowing to about 5-7 per cent this year.
William S. Pinckney, Managing Director and CEO, Amway India told Business Line , “Despite the fact that FMCG is relatively buoyant category, we are seeing a moderate growth. This is largely due to regulatory issue and if the issues are resolved it will be a double-digit growth.”
It may be recalled the Pinckney was arrested in May in Kerala for allegedly violating the Prize Chits and Money Circulation Schemes (Banning) Act. Industry bodies such as Indian Direct Selling Association condemned the arrest stating that direct selling companies were not operating ponzi scheme but conducting legitimate businesses.
Pinckney also noted that lack of clarity on definition of direct selling was creating confusion among its distributors who form the core of its business. “We were among the first to come and invest in the direct selling in 1995. You cannot ask companies to come and invest in India and abandon them midway when a problem crops. We have heard that the Government is looking to review the Act. A national template on PCMC Act will be a good idea as we are not a pyramid firm,” he said.
But despite the challenges, the company had recently taken a decision to invest Rs 500 crore in setting up a manufacturing facility in Tamil Nadu. Once the plant is set up the company will be able to manufacture all its products in India. Pinckney said Amway has a long-term view of India and will not pull out of India due to regulatory glitches. “There will be 300 million middle-class consumers and that is good business. Our growth drivers will be health and beauty. We operate like any other FMCG firm only we don’t have super stockist. Our agents are our distributors”.
He said Amway is also mulling to set up a research and development centre in India. “We are still evaluating the need. The R&D is being conceived to develop specific products for the Indian market”. Amway has 142 products in the Indian market out of the global portfolio of over 450 products. Amway India clocked a turnover of Rs 2,288 crore in 2012.
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