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Vinay Kamath

NEW DELHI, April 25

FMCG major Hindustan Lever plans to partner insurance companies to distribute their products in remote rural areas through its Project Shakti.

The Project is a distribution model that HLL established in late 2000 to sell its products through women self-help groups who operate like a direct-to-home team of sales women in inaccessible areas where HLL's conventional sales system does not reach.

Mr Dalip Sehgal, Executive Director, New Ventures & Marketing Services, HLL, told Business Line that the company is in dialogue with non-competing companies for a partnership to distribute their products through the network that HLL has established. The company is in talks with insurance companies such as ICICI Prudential and Max New York Life to sell policies through its `Shakti dealers'. Sources said that a battery maker is also in talks with the company as it is not a product in the HLL portfolio.

HLL evolved Project Shakti to reach areas of low access and low market potential. The Project currently covers all districts of Andhra Pradesh and Karnataka, reaching almost 5,000 villages through 800 self-help groups (SHGs). The company intends to extend the model across Madhya Pradesh, Gujarat and UP in 2003. It is looking at the TN market too. The Shakti vision, as outlined by Mr Sehgal, is to have by 2007 at least 10,000 Shakti dealers, covering a lakh villages and touching at least 100 million consumers.

"Thirty per cent of FMCG business comes from villages with a population less than 2,000, but business viability is an issue in this population strata," said Mr Sehgal.

The Shakti model trains women from SHGs to distribute HLL products of daily consumption such as detergents, toilet soaps and shampoos - the latter's penetration being only 30 per cent in rural areas. The women avail of micro-credit through banks. Mr Sehgal explained that some of the established Shakti dealers are now selling Rs 10,000-Rs15,000 worth of products a month and making a gross profit of Rs 700-Rs1,000 a month. Each Shakti dealer covers 6-10 villages which have a population of less 2,000. The company is creating demand for its products by having its Shakti dealers educating consumers on aspects like health and hygiene.

Sources said that HLL might have seen incremental sales of Rs 1 crore a month each in AP and Karnataka where it has covered the whole State. An analyst, commenting on HLL's plans to partner other companies in using its Shakti distribution system said that it is "enlightened self-interest" as more income in the hands of villagers could translate into greater sales of the products of daily consumption that it sells.

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