HLL bets bigger on Pureit

HLL bets bigger on Pureit

Author | Source: The Economic Times | Monday, Jul 10,2006 7:27 AM

HLL bets bigger on Pureit

Consumer heavyweight HLL is working on a phased-out extension of its much-touted water purification project, Pureit. A promising turnaround in its core categories has made the company more confident of taking on this challenging task.

Pureit is now being test-marketed in Tamil Nadu and is likely to be launched soon in other states. Based on a direct-to-consumer distribution model, the product will be targeted at the mid and low-end of the urban and rural market, primarily the SEC, B, C and D segments of consumers. It is believed that HLL's direct selling model, HLL Network, may also be roped to sell the brand.

The company has outsourced its back-end services to key service providers in each market, who in turn have set up a large third party field force to make cold calls, provide finance (through EMIs) and the requisite consumer follow-up. The business is expected to break-even in the next three to five years.

“Investments have been scaled up but I wouldn't want to put a figure to it currently. We hope to reach a tipping point primarily through a 'word of mouth' reference. It is a project based on Unilever technology and is viewed as a potential good business for other emerging markets,” said Dalip Sehgal, executive director, new ventures and marketing services.

Begun in '01, the project was delayed owing to the disinterest of the then management which was fighting fierce competition in its core categories. Hind Lever's inability to hit upon a right distribution system also contributed to the delay. The company's huge FMCG distribution seems ill-equipped to meet the peculiar demands of marketing a quasi durable.

The company has earlier been criticised for not identifying an effective marketing model at the project conceptualisation stage. Priced at Rs 1,500, the main system is almost like a refrigerator while the germkill battery kit, which costs Rs 250, will last for about 1,500 litres and will be technically an FMCG product.

HLL officials say over 100 scientists have worked on this technology and that it has taken the company about five years to make the product affordable and easy to use. The big players in the Rs 700-crore water purification market are Aquaguard from Eureka Forbes (a joint venture between Forbes Gokak and Electrolux of Sweden), Ion Exchange, Permionics India, Softel Machines and Sintex Industries.

Over 70% of the organised market is dominated by Eureka Forbes, while the rest is distributed among others. Eureka Forbes is understood to be keenly watching developments on the Lever front. It has a direct distribution model with employees on its pay roll unlike the strategy of Hindustan Lever to outsource its sales requirement.

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