US-based consumer goods maker Amway aims to generate Rs 2,500 crores from its India operation in 2011, up by 25 per cent from 2010 net sales, said a top company official.
In 2010, the revenue growth was 27 per cent at Rs 1,790 crores.
“This is the third successive year that we have registered growth upwards of 25 per cent. In 2011, we are targeting Rs 2,500 crores revenue, which is about 25 per cent higher than 2010 net sales,” said William S Pinckney, managing director and chief executive officer of Amway India.
The company sells nutritional and personal care products through its large chain of human networks, known as direct selling.
Almost 95 per cent of its products are made in India, where seven contract manufactures make Amway products at Baddi, Himachl Pradesh.
But the company now plans to set up its own manufacturing unit with an investment of Rs 250 crores.
“Initially, we had to tie up with local manufacturing firms because of government rules. But now we are planning to build our own manufacturing facility. It will be a big project with Rs 250 cores of initial investment. But I can not tell where it will be located,” said Pinckney who was here to inaugurate Amway’s Bhubaneswar office.
He informed that the company has plans to source key raw materials from within India to cut down the import costs.
Even though the company sells India-made products here, it sources most of the raw materials from its organic farms located in the US, which are expensive because of higher import duty levied by India.
“We have no choice but to pass on the import duty to our customers as we can not get the quality raw material in India. So we may enter into farming here very soon”, the CEO said. To compete with domestic fast moving consumer goods (FMCG) makers, who have strong brand recall and easier product access, Amway will try to increase its advertisement spending, he said.
“Spending on our advertisements is not enough compared with other FMCG companies who spend 10-15 per cent of their revenue on it. For 2011, we have plans to spend Rs 30 crores in advertising, up from Rs 20 crores in 2011. We must remember that we sell our products through people, not stores,” said Pinckney.
