The Hindu Business Line : Amway plans India as base to service Asian market

THE Rs 625-crore Amway India Enterprises - the wholly owned subsidiary of the US-based, $5-billion Amway Corporation - proposes to make India a manufacturing base for servicing other markets in Asia.

"Exporting Amway products made in India to other Asian markets is an opportunity. Certain sizes - such as 4 ml sachets and 65 ml bottles - are not available anywhere expect in India, which we could well export," Mr William S. Pinckney, Managing Director and CEO, Amway India, told Business Line.

Amway India now manufactures 85 per cent of its products indigenously through third-party contract manufacturing partners.

Its product range includes personal care, home care, cosmetics, nutrition & wellness, agriculture-based products and soft toys.

Speaking to newspersons at a visit to the Hyderabad-based Sarvotham Care Ltd (SCL) - Amway India's biggest third-party contract manufacturing partner - Mr Pinckney said, "We have commenced local manufacture of Nutrilite protein powder, and we plan to locally manufacture the entire Nutrilite brand."

While the company continues to import basic raw material for many of its products, the quality control, blending and packaging are done locally.

The company's other contract manufacturing partners are Naisa Industries at Daman, Yodeva Plastics at Hyderabad, Sai Mirra Innopharm at Chennai, and Golcha Talkum and Cosmetics at Mumbai.

It has FIPB approval that allows it two years of test marketing of products before beginning local manufacturing, according to Mr Sanker Parameswaran, Director (Corporate & Legal Affairs).

Amway India expects a 5-10 per cent growth this fiscal, as against last year's 13 per cent growth rate, Mr Pinckney said. He attributed the slowdown in the company's growth rate to the economic scenario prevailing in the country.

Amway's current investments in India stand at Rs 151 crore, of which Rs 26 crore is in the form of direct foreign investment.

Last year, it reinvested eight per cent of its total turnover on training of personnel.

The company has invested Rs 17 crore to scale up the contract manufacturers to requisite standards.

Later this year, Amway proposes to launch Nutrilite Iron and Folic for which it has identified the Chennai-based Sai Mirra Pharmaceuticals as contract manufacturer.

Other products on the launch block are Persona family soap and deodorants, and a new brand of cosmetic products developed for the Indian market.

The cosmetics brand will be priced at one-fifth the price of Artistry, Amway's super-premium cosmetics brand.

The company also proposes to introduce many other products in small unit packs, an exercise it began a couple of years ago.

The company could also consider foraying into rural markets in the future, Mr Pinckney said.

IDSA calls for legitimising industry

The Indian Direct Selling Association (IDSA), which had submitted a draft Act to the Government to regulate the direct selling industry two years ago, continues to push its cause.

"We have raised several issues, for example, protecting consumers against pyramid schemes, legitimising the industry, and distinguishing genuine direct sellers from look-alikes," Mr Pinckney said.

"The Government feels that the existing Sale of Goods Act and Consumer Protection Act provide sufficient safeguards, but several countries such as the US and Mexico have specific regulations to protect the direct selling industry."

The IDSA's turnover has risen from Rs 893 crore in 1999-2000 to Rs 1,723.7 crore in 2001-02. The industry grew 22.64 per cent in 2001-02 over the previous year.

Of the 200 direct selling companies operating in India, 12 are IDSA members.

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