Amway India, the largest direct selling FMCG company, is looking to invest Rs 450 crore in the next two-three years in India as part of the company's expansion plans.
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 group of visiting journalists from Kochi, a core team is evaluating various options and will come up with a proposal and make recommendations shortly on the location of the plant.
He said the company has registered 17.5 per cent growth in the first five months of the calendar year, with the sales turnover touching Rs 838 crore. The company recorded a sales turnover of Rs 1,790 crore during January-December 2010. Considering the growth, the sales turnover is expected to touch Rs 2,500 crore by 2012, as the next two-three years will witness significant investments in infrastructure and more brand experience centres, he said.
According to Mr Pinckney, the expansion of the product basket in the health and beauty segment as well as on the infrastructure front by setting up new outlets, the launch of e-learning, a significant step towards education, knowledge updation and productivity enhancement of business owners, have contributed to robust growth in the current fiscal.
Almost 90 per cent of the products sold by Amway India are now manufactured in India by seven, third-party contract manufacturers. The company recently invested Rs 55 crore at its contract manufacturing plant in Baddi for expanding production. Currently, 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 recent reports of fraud involving multi-level marketing companies in Kerala, Mr Pinckney, expressing concern, pointed out that at present there was no legal framework in India for the operation of direct-selling companies. Kerala is a potential market for Amway as 10 per cent of the company's sales turnover is generated from it. However, he suggested the introduction of proper legislation which would be followed by various countries in the direct selling sector, banning fraudulent practices. There is a need to have a proper, mandatory regulation which will lay down conditions for identification of legitimate direct selling companies.
In India, the direct selling industry, which employs 15,000,000 entrepreneurs, had registered a turnover of Rs 4,120 crore. It is a labour-intensive industry and has a positive socio-economic impact. With the growth rate in momentum, the figure would touch Rs 7,120 crore by 2012-17. Currently, the Indian Direct Selling Association has 18 registered members in India, he added.