Hind Lever plans fewer manufacturing sites

Hindustan Lever Ltd, India's largest consumer products company, is planning a comprehensive restructuring of its manufacturing operations as part of a cost rationalisation drive.

The company has close to 100 "manufacturing facilities", as company officials describe them, across India, and the number could be pared.

The move is also linked to parent Unilever's outsourcing deal. Hindustan Lever is striving to lower its cost of production in every product category. Among Unilever's 83 manufacturing hubs globally, Hindustan Lever is the least cost producer.

A Hindustan Lever executive said, "Our endeavour is to emphasise cost effectiveness in all spheres of manufacturing. One has to look at all aspects""local levies, raw material, manpower and logistics, among other things""of a manufacturing unit. Every unit has to emerge as an optimal production facility in terms of cost."

Hindustan Lever's main culinary products manufacturing unit in Bangalore has been shut, and the production will be outsourced.

"It's a drive to focus on operational efficiencies and cost reduction," a Hindustan Lever executive explained.

Hindustan Lever has a strong presence in soaps and detergents, personal products, beverages and food (culinary and branded staples, ice cream), and the recast of manufacturing operations will take place across every product category.

Last year, Hindustan Lever said its outsourcing agreement with Unilever would turn into a billion-dollar business opportunity. The company has made sourcing an integral part of its growth strategy.

Hindustan Lever hawks home and personal care products and beverages to Unilever. It is also focusing on exporting value-added marine, rice and castor products, in which India has a competitive edge.

The sourcing arrangement accounted for close to half of Hindustan Lever's total exports of Rs 1,256 crore in 2002.

The company enjoys international recognition within Unilever and outside, based on performance in both the domestic and export markets.

On the basis of manufacturing cost benchmarking studies across Unilever, Hindustan Lever was cited as one of the most competitive home and personal products company globally.