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HLL identifies its weaknesses

04-June-2004
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HLL identifies its weaknesses

FMCG major, Hindustan Lever Ltd (HLL), has identified its complex supply chain configuration, price positioning in some categories and high social costs in the plantation business as its weaknesses as a part of the SWOT analysis for the company.

Among its weaknesses HLL has also identified the large number of SKUs with dispersed manufacturing locations. Without going into details, HLL, in its annual report for 2003, has said that price positioning in some categories has resulted in low price competition.

HLL is aware of the fact that increased consumer spends on education, consumer durable, entertainment, travel have resulted in lower share of wallet for FMCG goods.

Among its threats it has identified aggressive price competition from local and multinational players; grey imports; spurious and counterfeit products in rural areas and small towns; changes in fiscal benefits and unfavourable raw material prices in oils, tea and commodity.

The company said that 2003 was a challenging year for tea plantation industry. "Abundant supplies and slow-down in exports continued to adversely impact prices. This has affected the viability of the business. The profitability was further eroded by high labour cost and associated social costs," HLL said in its annual report.

The company said that there are opportunities through increased consumption depth and frequency of usage across all categories. The company would continue its market share as well as brand growth through increased penetration especially in rural areas. Upgrading consumers through innovation to new levels of quality and performance. Emerging modern trade is yet another opportunity particularly to introduce more upmarket personal care products. Though modern trade would be a small segment of its overall reach, HLL would lay emphasis on this, Mr M.S. Banga, Chairman of the company had told analysts at the time of full-year results.

Focussing more on out-of-home consumption was another opportunity that lay in the way of HLL.

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