Saturday, August 28, 1999
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B U S I N E S S | Saturday, August 28, 1999 |
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Amway makes no tall
claims: CEO M and M, Mitsubishi patch up |
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D S group forays into food and
beverages NPPA hikes price of asthma
medicine |
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Amway
makes no tall claims: CEO CHANDIGARH, Aug 27 — Amway India, a leading direct selling company, is opening its office in Chandigarh’s Sector 26 tomorrow. In the very first year of its operations ending this August, Amway has clocked a Rs 100 crore turnover — 75 per cent of it coming from product sales and the remaining 25 per cent from “non-product” sales. With Punjab emerging as the top contributor to sales, the company is shortly opening its offices in Ludhiana, Jalandhar and Amritsar. Direct selling is a new business concept about which many have apprehensions. Amway India CEO Sudershan Banerjee in an interview with Business Tribune sheds light on some dark corners of the business. Excerpts: Q. Why do direct selling companies make tall promises and often hire novice sellers instead of professionals for selling their products. Amway does not make any tall claims. Distributors do sometimes. We let the products do the talking. As for the second part of the question, anyone can become a distributor. He or she should fulfil two conditions. One, the candidate should be above 18 and secondly, be alive. Each distributor is charged Rs 4,200 as entry fee and an annual renewal fee of Rs 595. Q. Your products are quite expensive. A toothpaste costs Rs 99, a detergent Rs 550. Why should anyone buy your products? Going by cost per use, our products are actually cheaper. They come in concentrated form in large containers. That is why they appear costlier. We are planning to introduce smaller bottles and even sachets. A car wash bottle priced at Rs 200 costs Rs 2 per wash. Our toothpaste lasts twice longer than its rivals in the market. Q. Will you explain the concept of direct selling and how does Amway practise it? Direct selling is an alternative form of product distribution. It allows sellers to build a business through their own sales efforts and by inviting others to become sellers. Remuneration is based on a seller’s personal sales and on the combined sales of those they have sponsored, trained and motivated. A customer has the option to buy products at his own convenience. Amway has a unique money refund scheme under which 70 per cent cost of a product is refunded if a customer is not satisfied. A distributor can exit the business any time and his initial payment will be repaid after necessary adjustments. Each earns according to his ability and efforts. It’s like a university. We provide training and an opportunity to do business. Q. Why don’t you create assets, invest in real estate? It appears the company can disappear anytime. We do not invest in real
estate. But we have offices in various parts of the
country with satellite links. We have invested $ 35
million in the country. Of this $ 4 million has been
spent on providing technology and processes to our
contract manufacturers in Pune, Hyderabad and Daman. We
invest in training our distributors. Amway has a presence
in 80 countries and a network of three million
distributors. |
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CHANDIGARH: Yet another direct selling company, Amway of the USA, is fast expanding its presence in this region with Punjabis lapping up its products and business offers. Oriflame, Tupperware, Modicare and a smaller player, the Pinnacle, are already operational in this region. Some of these are multinational companies with a large network of direct sellers. Their business is not illegal, but controversial and highly risky.Representatives of these companies dole out “success stories” usually from western countries where the concept of direct marketing seems to have become popular. They hold seminars or public meetings, where participants are sometimes required to pay an entry fee. One such function was held recently at a Ludhiana hotel where each participant was made to part with Rs 350 as participation fee, was served snacks and cold drinks, and then told to buy a food coupon for another Rs 50. The invitation letter made no mention of such spot payments . Starry-eyed participants, some of whom come travelling long distances, reluctantly oblige the organisers. The participants are dished out “get-rich-quick” promises with lucky draws for a Mercedes or a free trip abroad. Villagers are told to ring up their relatives abroad to know how big the company was. Many, particularly housewives and retirees, succumb to the temptation. Those taking up the challenge — called network marketers or distributors in corporate parlance — are trained in selling tricks. While some companies charge an entry fee of about Rs 4,000 or so while others waive entry fee but pay no fee for a certain period. The real test of a direct marketer lies in selling products which are targeted at upper middle class homes. Products are costlier than — and claimed to be superior to — those available in the market. Only those belonging to or dealing with upper class families may be able to pass on these products to their relatives and neighbours. A housewife may cash in on her emotional appeal or friendship once or twice. She may soon find friends and relatives avoiding her, and may end up with her dreams crashed on the solid rock of reality. So weigh dispassionately
the pros and cons, your own strengths and weaknesses
before taking the plunge. These companies are not in
business to make you rich. Their primary job is to mint
money for themselves. Do not sleepwalk into the trap. —
NS |
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NEW DELHI, Aug 27 (UNI) — Mitsubishi Motors Corporation (MMC) of Japan today stated that it has not rejected any partnership proposals from Mahindra and Mahindra (M&M) and would continue with their existing tie-up for producing Voyager vans in India. In a joint statement issued here, both the companies stated that the existing tie-up for Voyager continues as before. “All the royalty payments with regard to Voyager are being made as scheduled.” Further stating that relations between both MMC and M&M were amicable, the companies said they intend to work together to further the success of the Voyager project. Curiously, Mitsubishi had yesterday issued a statement saying that it has rejected all partnership proposals with Mahindra and Mahindra. The Japanese auto major had further stated that all proposals with M&M have been put in the cold storage in view of the failure of its existing tie-up for Voyager. But the joint statement
today pointed out that no fresh proposals from M&M
have been received by the MMC. |
Lupin Labs net dips 26 per cent Lupin Laboratories Ltd has reported a 26 per cent fall in net profits at Rs 25.30 crore for the year ended June 30, 1999 as against Rs 34.24 crore in the previous year. The company has, however, maintained the dividend at 25 per cent. India’s third largest company has recorded a turnover of Rs 715.73 crore during 1998-99 compared to Rs 695.10 crore last year. The reduction in profits was partly due to trading policy correction in the domestic formulations market in the second half of the accounting year and conscious control of exports to CIS countries and China as also increase in costs led by expansion of domestic field force, Lupin Group Chairman, Desh Bandhu Gupta said in a statement here today. Higher interest costs at Rs 51.58 crore this year were on account of debt financing of its investments in the USA, he said. The company’s depreciations costs were also up at Rs 11.92 crore. The other group company, Lupin Chemicals has posted a 14 per cent rise in net profits to Rs 12.49 crore during the year on a turnover of Rs 110.38 crore as against Rs 109.21 crore last year. Lupin Chemicals has declared a dividend of 10 per cent for the year 1998-99. Turnover and profits would have been higher but for a one-month shut down at the plant for schedule maintenance and synchronisation of the new five MW captive power plant, he said Essar Power Ltd, has posted a 117 per cent rise in its net profit at 39 crore during the financial year ended March 31, 1999 as against the previous year’s Rs 18 crore. The turnover for 1998-99 was Rs 723 crore from last year’s Rs 410 crore. The company, in a release said that the growth in turnover as well as net profit has been achieved despite the company’s plant at Hazira being affected during the period under review by the natural calamities like cyclones in the June, 1998 floods in Gujarat during September, 1998. The 515 MW power plant had a plant load factor (PLF) of 71 per cent for 1998-99. UTI has objected to some of the provisions of the modified draft rehabilitation scheme for reviving sick Nirlon Ltd, including sale of company’s property in Mumbai. Objections raised by UTI include sale of two floors of Nirlon House at Mumbai, composition of sale committee for properties and right of recompense in respect of sacrifices under the one time settlement (OTS). The company owes Rs 32.36 crore to UTI. The Board for Industrial and Financial Reconstruction, had earlier this year circulated a rehabilitation scheme of Rs 78.48 crore for the company which included OTS of Rs 50.02 crore with various financial institutions including UTI. Kinetic Fincap, engaged in two wheeler financing has recorded a net profit of Rs 30.38 lakh in the first quarter (May to July) of the current fiscal as against Rs 22.5 lakh in the corresponding period in the previous fiscal. The Kinetic group company’s income rose by 20 per cent to Rs 9.64 crore from Rs 8.00 crore in the first quarter of 1998-99, it said in a statement here today. Kinetic Fincap’s asset base had crossed the Rs 200 crore mark and was expected to grow further since scooter finance had picked up, company’s Managing Director Ms Sulajja Firodia Motwani told the company’s board yesterday. Tata Tea Limited, will set up a new subsidiary in Europe to acquire major shareholding and management control in the UK based Tetley Limited. Tata Tea sources said
here today that the company will invest around £ 75
million for purchasing shares of the new subsidiary. —
Agencies |
I WOULD like to discuss this week, the need for adequate label information on all cosmetics/personal care products and other commonly used household products. Let me begin with a letter from a reader on the subject. Ms Lalitha Ravindranath says she was oiling her hair with an anti-dandruff hair oil and as she turned to pick up a comb, her one year-old son drank the contents of the bottle. Panic-stricken, Ms Ravindranath rushed him to a nearby hospital. She carried the empty bottle of hair oil with her, thinking that the doctor might like to seek the contents of the bottle in order to decide on the line of treatment. Much to her dismay, she soon realised that the label did not mention the contents at all. And worse, the doctor said he would not be able to treat the child without knowing what exactly he had consumed. Fortunately, says Ms Ravindran, the child did not suffer any adverse consequences. But the anxious moments spent watching the child for any signs of adverse reactions got Ms Ravindran thinking about the need for better label information on products. Such cases of children consuming cosmetics or personal care products are not rare. In the United Kingdom, for example, a consumer magazine, ‘Which?’ reported a case of a two-year-old going into a coma after consuming a mouthwash, which contained as much as 26 per cent of alcohol. Similarly in Australia, another consumer magazine, ‘Choice’, reported 15 serious cases of poisoning caused by consumption of eucalyptus oil by children under age 5. In one case, a child of two was in a coma for several days. There are also cases of children being treated for poisoning following consumption of lavender oil, the report said. Similarly, a report in the Indian journal of Paediatrics on cases of paediatric poisoning in Taiwan identifies cosmetics as one of the substances involved. In fact such cases of poisoning in children are reported the world over, including India. However, paediatricians admit that in many cases involving consumption of cosmetics or other commonly used household products, treatment is rendered difficult in the absence of label information on the ingredients in the product. One paediatrician recalled for example, a case of a child’s lips getting sealed by a strong adhesive it had put on its lips. While it is important for parents to keep these products out of the reach of children, it is equally essential for manufacturers to indicate on the label, all the ingredients used in the product, warnings against their consumption and antidote in case of accidental consumption by children. Such warning is necessary because sometimes even products made of natural products could be poisonous if consumed and parents may not realise it. Manufacturers should also write on the label a phone number on which consumers can seek additional information on the product if necessary. It should also become mandatory for every manufacturer of cosmetics, toiletries and other commonly used household products in the country to inform the National Poisons Information Centre, located at the All-India Institute of Medical Sciences in New Delhi, about the antidote in case of accidental poisoning or injury caused on account of consumption of these products. The Poisons Information Centre provides toxicological information and advice on the management of poisoning. It also gives information on prevention and early diagnosis of poisoning. Thus in case of emergencies, the parents or the doctors can call up the Poisons Information Centre, which gives information 24 hours a day, seven days a week. (Telephone number: 6850691). Specifying the ingredients on cosmetics/toiletries is necessary for another reason. It helps those who are prone to allergic reactions to (a) identify the ingredient causing the allergy and (b) avoid products containing it in future. Allergic reactions could manifest in different ways including inflammation of the skin, discolouration, eye or skin irritation, blister formation, itching, etc. Similarly, some people could be highly allergic to certain hair sprays, perfumes, room or air freshners. Dermatologists who treat various problems arising from allergic reactions to cosmetics and toiletries and ophthalmologists who come across allergic reactions in some patients to eyeliners, mascara, eye shadow, kajal, say that their job would be much easier and far more effective if manufacturers provided adequate label information on their products. And then, let’s not
forget the fact that a consumer has a right to
information. And here, since absence of adequate
labelling information could adversely affect the
interests of consumers, it should become mandatory for
all commonly used products including cosmetics, to
mention on the label, the ingredients used. However, for
this to happen, consumers must lobby for change in
labelling laws. And they must write to the Union Health
Ministry on this. They must also raise this issue with
manufacturers and insist on buying only those products
that comply with such practices. |
D S group
forays into food and beverages NEW DELHI, Aug 27 — The Rs 400 crore D S group today announced its foray into the food and beverages sector with the launch of “Catch Natural Spring Water”. A separate arm of the group, D S Foods Limited, has been established for the food and beverages sector. Over the next few months, the company plans to introduce a wide range of products including ice, tea, club soda, flavoured water and edible oil. The group, which already has the established “Catch” brands of salts and spices, plans to invest over Rs 100 crore in the next three years and “will work towards achieving a 5 to 10 per cent market share”. The company has already set up two state-of-the-art production facilities. The Noida plant in Uttar Pradesh will be dedicated for the production of a range of food products, while the plant at Kulu in Himachal set up with an investment of Rs 11 crore will be produce bottled spring water. Unlike the currently available mineral water in India, Catch Natural Spring Water is one of the first brands to bottle pure spring water from the Himalayas without subjecting it to chemical treatment, the Director of D.S. Foods Limited, Mr R.N. Goel, said. The product will be
available in four different sizes — 300 ml, 500 ml,
1 litre and 1.5 litres — and priced Rs 12, Rs 15, Rs
25 and Rs 30, respectively. |
NPPA hikes price of asthma medicine NEW DELHI, Aug 27 (PTI) — The National Pharmaceutical Pricing Authority (NPPA) has revised the prices of 16 drug formulations including Ventorlin Syrup used for the treatment of asthma and antibiotic Tetracycline. Out of the 16 formulations, the authority increased the prices of three drugs in the range between 13.90 per cent to 15.80 per cent and revised the prices downwards up to 46.98 per cent, an official release said here today. The NPPA has also fixed ceiling prices of some vitamin tablets and capsules as per the Drugs and Cosmetics Act, 1940 and with the provision of a price adjustment formula. With the ceiling price fixation, the prices of vitamins such as Beccosole-Z capsule, Sprovit, Zin Forte, Becozine cap, NVM tablet, Vitazinc cap, Zicomplex cap and Pro-Z will come down. The prices of Tetracycline HCI coated tab, manufactured by Hoechst Marion Roussel Ltd, has been revised downwards by 45 per cent to Rs 5.78 (a strip of ten) from Rs 10.52. The prices of capsules of vitamin B complex has been lowered by 42.28 per cent from Rs 15.80 to Rs 9.12. However, the authority
increased the prices of Ventrolin Syrup produced by
Kemwell Pvt Ltd by 13.9 per cent to Rs 8.44 from Rs 7.41. |
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CHANDIGARH, Aug 27 (TNS) — A one day training programme on electrical safety was organised by the CII today to expose participants to the electrical hazards in the installation, maintenance and use of electrical equipment. The programme covered electrical hazards, effects of electrical energy, selection of electrical equipment, practices in erection, commissioning and maintenance, electrical equipment grounding, operational and maintenance procedures while working on electrical components and systems, proper personnel equipment and statutory requirement for electrical safety. The programme was
conducted by Mr Sanjay Chopra, Sr Manager (Electrical),
Jagajit Industries Ltd, Mr D.K. Kalia, Manager,
Electrical Safety and Mr K.K. Sharma, Manager, EHS,
Ranbaxy. |
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