Worst is over, says Banga

Hindustan Lever (HLL) chairman M S Banga today said the company had reversed the downtrend in the country's fast moving consumer goods (FMCG) industry.

In his address to shareholders at the company's 72nd annual general meeting today, his last working day at HLL, Banga said the company had undergone a complete transformation over the last five years which helped it to return to the growth path and reversed the downtrend in the industry.

H Manwani replaced Banga today at a board meeting, which took place at HLL's headquarters in the city late in the evening. Banga will now be based in London as president, foods, at Unilever.

Banga said the value growth in FMCG markets stalled in 2000 and then declined in the next four years after an almost 15 per cent annual rise in the nineties owing to a combination of factors such as more avenues of expenditure, sharp drop in interest rate and explosive demand for consumer durables.

"The lure of new avenues of expenditure in products and services led to consumers restricting their spends on FMCG. Consumers shifted to lower prices substitutes from higher quality brands. This caused the market to decline in value in the last four years creating a major challenge for growth," he added.

According to him, it was HLL's main challenge to reverse the downturn in its categories. For this, the company chose to focus on 35 power brands against 110 in 2000.

"We are seeing the benefits. Six brands-Brooke Bond, Lifebuoy, Lux, Fair & Lovely, Rin and Wheel""have emerged as mega brands each with sales of more than Rs 500 crore," he added.

The company had disengaged from all non-FMCG businesses, with sales of Rs 1750 crores as in 1999.

Banga, who will now be based in London, was certain about India's potential. " Over the next 10 years, the per capita income is likely to double. FMCG market is expected to grow over Rs 100,000 crore from the current base of Rs 40,000 crore," he added.

Although it was business as usual for Banga at the AGM, shareholders were emotional with the fact that it was his last day. Asha Lata, a shareholder, handed over a flower bouquet to him. Some other shareholders also spoke about his contribution.

Only Hindustan Lever Employees Union was upset with the proposed move to transfer its Sewri factory into a subsidiary. Representatives of the union were seen distributing leaflets protesting the move.

An HLL executive said the unit was bleeding for the past 10 years and, therefore, its transfer would be in the best interest of the company.