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Mr.Satish Kumar, MD, Henkel India Ltd

India Infoline / 00:00 , Jul 18, 2008

Henkel India Ltd, founded in 1987, is a part of Henkel AG & Co. KGaA,Germany. The Henkel AG & Co.KGaA, a Fortune Global 500 company, operates in three strategic business areas ? Home Care, Personal Care and Adhesives, Sealants & Surface Treatment, which serves the transportation, electronics, aerospace, metal, durable goods, consumer goods, maintenance and repair and packaging industries, and offers a broad range of products for the craftsman and consumer adhesives. HIL along with its subsidiaries, manufacture and market a range of world class Detergents, Cosmetics, Household Cleansers and Hair care products. HIL has manufacturing plants located at Karaikal and Tiljala. Karaikal plant is the first detergent plant in India to receive the ISO 14001 certification and recently it was granted OHSAS 18001 certification signifying compliance of Occupational Health and Safety. Henkel India is also the winner of Greentech Award for Environmental Excellence in 2003 and FICCI National Award for Environment Protection for the year 2003 from the President of India. Henkel India?s product portfolio includes brands like Henko range of Detergents, Pril Utensil Cleansers, Bref range of cleaners, Fa range of Toilet Soap, Deodorants, Talc, Shaving Cream, and after-shave lotion, Mr. White range of detergents, Margo Toilet Soap, Neem Tooth Paste, Chek Beauty Soap, Chek Detergents, Tuhina Body Lotion, Aramusk Toilet Soap, Moloy Sandal Soap, Mahabringol Hair-oil. Hair care brands include Igora, Bonacure, Glatt from its Schwarzkopf Professional division and Silkience and Palette from its Schwarzkopf retail range.

Mr.Satish Kumar, Managing Director, Henkel India Ltd is an MBA from the Indian Institute of Management, Ahmedabad and an Alumni of The Columbia University through their Senior Executive program. He has over 20 years experience in the Industry. His recent accomplishments have been the startup business for Henkel in India beginning with the implementation of their production facilities, developing a National Sales and Distribution Network. He was awarded the Indira Super Achiever Award for the year 2004 and Bhartiya Shiromani Puraskar Award for the year 2005. He is in the Management Committee of number of bodies like Southern India Chamber of Commerce, Confederation of Indian Industry, The Madras Chamber of Commerce & Industry, India Soaps and Toiletries Makers Association. He is the Past President of Madras Management Association (MMA) and Indo - German Chamber of Commerce. He is in the Corporate Advisory Board of School of Management in SRM University, Advisory Board of the Rajagiri School of Management and Advisory Board of the Chennai Business School.

Replying to Anil Mascarenhas of India Infoline, Satish Kumar says, ?We are reworking on those SKUs and packet sizes which are frequently purchased.?

With people?s preference for lifestyle products on the rise, what changing trends are being seen in the Fast Moving Consumer Goods (FMCG) industry?
Convenience powered by functionality is the new mantra. Nuclear families are coming up and dual household incomes are on the rise. Consumers today do not have the time for household chores as before and hence there is a need for specialist products.

India is rapidly shifting into an urban country and people?s preference for lifestyle products is on the rise. Hence, the industry is experiencing strong growth in some categories such as skin care, deodorants and hair care products.

Organized retail such as shopping malls and supermarkets are also playing an important role for the boom in the Indian FMCG market.

Is the buying in FMCG products getting more impulsive?
Increasing salaries have improved people?s spending power on lifestyle products. Now, people can well afford to spend on quality products. The young and new generation consumers are driving the demand for lifestyle products. They are at the front seat changing and redefining the branding and marketing strategy.

Moreover, buyers are currently confronted with an endless array of brands and varieties of products all trying to appeal to them.

What impact have you felt post the rate hikes?
RBI's rate hike may have not have come as a surprise, but it is forcing manufacturers to take stock of their expansion plans and even working capital requirements. Our cash flow will be affected after the rate hike.

We are reworking on those SKUs and packet sizes which are frequently purchased. We have recently brought out Fa deodorant in 75ml and Margo Soap in 40 grams. The Pril dishwashing detergent is already available in sachets.

We have also just introduced a new 400 gm pack of Henko washing powder at Rs40 and withdrawn the 500 gm pack that used to sell for Rs46. We have re-introduced Pril liquid for Rs50 (425 ml bottle), down from Rs55 (500 ml).

Given the multiple headwinds hitting the economy, how often can you resort to a price hike? Have you seen demand dropping in case of a price hike?
Price changes are made only when input costs breach manageable levels. The price increases are not directly proportional to cost increases, but lower. I am positive about the industry?s performance even with rising input costs. We have not seen a drop in demand as a result of inflation. Generally, I do not see any major set backs; I think the industry will continue to do well.

Comment on some of your new launches. What kind of revenues and profits do you expect from the new variants?
One of the most recent launches is the ?Pril Multi-Degreaser?- a specialty cleaner. It has a unique patented foam generating pump. Foam sticks to the vertical surfaces to melt down grease without scrubbing and highly effective on the toughest stains. This is in line with our Henkel philosophy to innovate for better products and technologies to make our consumers lives easier, better and more beautiful.

The new Pril Multi-degreaser is a revolutionary product in the home cleaning segment. Pril Multi-degreaser basically has the quality and credibility associated with our power brand Pril and combines that with innovative technology of direct foam application which is at present, non ? existent in our market. This product will clearly establish Pril as an expert in Degreasing.

Under Fa we have launched our Natural and Pure range of Soaps and Deodorants. The two new light and natural fragrances deodorants are Rose Burst & Orange Bloom. In Fa soaps we have Rose & Almond Oil and Orange & Olive oil. Fa Men?s Shaving Cream and Fa Aftershave comes in two new variants, Sport and Speedster. The Aftershave has an international formulation which contains pro-vitamin B5.

What are some of the cost saving initiatives being adopted by the industry in general and your company in particular?
By optimizing and fine tuning our supply chain and absorbing some of the cost increases ourselves, we have tried to keep retail prices of goods under check. We are taking intensive efforts to control costs to minimize consumer impact while providing quality products. Our pricing is based on the value proposition to the consumer. Cost reduction initiatives with respect to logistics, packaging and energy are undertaken.

What growth are you seeing in the household cleaners' segment?
The household segment is divided into floor cleaners, multipurpose cleaners and specialty cleaners with Rs2.26bn market size and is growing at 18% per annum.

Our strength in the utensil cleaner segment could be gauged from the fact that sales have grown 500 % in this segment to Rs750mn in 2007 from Rs125mn in 2003. We are driving this category through continuous innovation to offer easier, better and more beautiful solutions to our consumers.

Explain to us your distribution and logistics set up.
We are strengthening our distribution and logistics. The whole idea is to bring more efficiency and innovation in the supply chain. Our stock levels and loading patterns are being closely monitored. We are working at our distribution system so that the smaller packs are easily available.

In India we act responsibly throughout our value chains ? from sourcing to servicing. This is pivotal to the way we conduct our business.

What is your marketing spend? Throw some light on your branding initiatives?
We spend a fair proportion on our net sales basis. New brands will have higher percentage spends.

Pril Home Care Academy is one example of our branding initiatives. Pril has been the ?Category Creator? for Liquid dish wash segment in India. And since only the Expert can be a trainer, Pril opened up a training academy for the maids where they are trained on the use of Liquid dish wash.

Also under the Pril Home Care Academy, a unique training program for maids was launched, for judicious use of the Pril multi-degreaser. Henkel would provide insurance cover to maids and also pay the premium for two years. So far 14,000 maids have been covered under the scheme in Chennai and New Delhi.

?Bref Clean Squad"; where the efficacy of Bref is demonstrated in the consumer?s home by the Bref Squad. The squad will remove the toughest stains in your home. Bref has recently been launched in India and has the umbrella brand approach for high quality, superior product benefit in the multi surface cleaners, toilet care.

Brief us on your manufacturing units?
We have manufacturing plants located at Karaikal and Tiljala. Karaikal plant is the first detergent plant in India to receive the ISO 14001 certification and recently it was granted OHSAS 18001 certification signifying compliance of Occupational Health and Safety. Henkel India is also the winner of Greentech Award for Environmental Excellence in 2003 and FICCI National Award for Environment Protection for the year 2003 from the President of India.

Which are the products that are imported?
We import Schwarzkopf range of products which is our Hair care section and Renuzit which are Air fresheners.

What is your vision for the company?
Our vision at Henkel has been to make people?s lives easier, better and more beautiful with our brands and technologies. We believe in using innovation as a platform to continuously strengthen our brands, to assure future viability and our capacity to adjust proactively in a world where change is constant.