Amway looking to invest Rs 450 cr for expansion in 2-3 years

Amway India, direct selling FMCG company is looking to investment of Rs 450 crore in the next 2-3 years in India, as part of the company’s expansion plan.

The strategy involves setting up a second manufacturing plant, adding more touch points as well as brand experience centres. Mr William S.Pinckney, Managing Director and CEO, Amway India told a visiting group of journalists from Kochi that there is a core team in place which is evaluating various options. They will come up with a proposal and make recommendation shortly on the location of the second manufacturing plant.

He pointed out that the company has already registered a 17.5 per cent growth during the first five months of the calendar year touching a sales turnover of Rs 838crore.The company recorded a sales turnover of Rs1,790 crore during January-December 2010. Considering the growth, the sales turnover is expected to touch Rs 2,500 crore by 2012, as the next 2-3 years will witness significant investments on infrastructure and more brand experience centres, he said.

According to Mr Pinckney, the first five months of 2011 has shown positive indicators of yet another double digit growth year. The expansion of the product basket in health and beauty segment as well as on the infrastructure front by setting up new outlets has contributed the growth in the first five months. The launch of e-learning, a significant step towards education, knowledge updation and productivity enhancement of business owners, has also contributed a robust growth in the current fiscal, he added.

Almost 90 per cent of the products sold by Amway India are now manufactured in India through seven third party contract manufacturers. The company has recently invested Rs 55crore at its contract manufacturing plant at Baddi for expanding production to fuel growth. At present it has 130 products under its portfolio excluding seasonal offerings. The company had invested more than Rs 200 crore in India and has over 135 offices and 55 city warehouses across the country covering over 5,000 cities and towns through its home delivery network.

Answering a question on the recent scandals involving multi level marketing companies in Kerala, Mr Pinckney, while expressing concern, pointed out at present there is no legal framework in India for operations of direct selling companies. Kerala is a potential market for Amway as 10 per cent of the company’s sales turnover generates from the State. However, he suggested introduction of a proper legislation which was followed by various countries in the direct selling sector banning fraudulent practices. There is a need to have a proper regulation in place which will be mandatory and will lay down conditions for identification of a legitimate direct selling company.

In India the direct selling industry, which employs 15,000,000 entrepreneurs, had registered a turnover of Rs 4,120crore. It is a labour intensive industry and has a positive socio economic impact. With the growth rate in momentum, the figure would touch Rs 7120 crore by 2012-17. At present Indian Direct Selling Association has 18 registered members in India, he added.

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