Financial Daily from THE HINDU group of publications
Friday, Oct 04, 2002
Financial Daily from THE HINDU group of publications Friday, Oct 04, 2002 |
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Corporate
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Announcements P&G to outsource Vicks manufacture for exports Our Bureau
MUMBAI, Oct. 3 PROCTER & Gamble Hygiene & Healthcare (PGHH) today announced its decision to outsource the manufacture of Vicks Vaporub exports to a contract manufacturer - Maksons Ltd, Hyderabad. This outsourcing arrangement would enable PGHH to continue exporting Vicks Vaporub to Australia, Japan and other Asian countries at more competitive rates, said a company release which added that PGHH would continue to manufacture Vicks Vaporub for domestic sale at its plant at Kundaim in Goa. As a part of the deal, the contract manufacturer will purchase the land, building and machinery of P&G's Hyderabad factory, where Vicks Vaporub is currently being manufactured, for an undisclosed amount. This transition will happen over the next three to four months. In the year ended June 30, 2002, PGHH's exports to ASEAN countries, Australia and Japan amounted to Rs 29.7 crore as compared to Rs 29.5 crore in the previous year. In its annual report the company said, "Lack of growth in exports is pushing the cost per unit to a level which is becoming uncompetitive. The company is examining various options to enhance shareholder value which allows attractive returns by efficient utilisation of resources." According to the company, the outsourcing arrangement will help PGHH achieve cost-efficiencies, stay competitive in the market and help the contract manufacturer to expand his manufacturing base and optimally utilise the plant to deliver quality products at competitive prices. It further added that this move would not affect the interest of PGHH's shareholders, the company's financials or the availability of its brands in India. PGHH also said that it was working closely with its 60 employees at the Hyderabad plant to assist them with transfer opportunities to other P&G sites and those who do not find such transfer opportunities will be provided career counselling, retraining and financial support to assist them to transition to new beginnings. Mr Shantanu Khosla, Managing Director (PGHH) said, "People have always been the foundation of our success and we appreciate the commitment and outstanding contribution made by our employees at the Hyderabad plant. This was a tough business decision and in no way reflects on the quality and dedication of our employees at the plant. We will do our best to transfer them to other P&G sites and help them find alternative employment opportunities by providing career counselling, retraining and financial support."
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