HLL Vs ITC

Its the tragic case of reversal of fortunes for two FMCG companies. A decade or even a few years back, HLL was king and anything that came out of the hallowed stables of HLL was considered sacrosanct - be it products, business vision or even the financials. And ITC was considered the big bad guy of the corporate sector - both ethically & financially - as it was dependent on cigarettes and would succumb to the govt regulations.

But things just dont go the way they are supposed to. A case of what goes up has to come down and vice versa. Its not just the latest quarterly results of the two companies that has prompted this blog, but the overall reversal of fortunes.

HLL BV (before Vindi Banga) and probably during the heydays of Keki Dadiseth was the golden egg with a bouquet of brands that gave nightmares to other FMCG players. The monolith was unshakeable and the BSE swore by HLL.

But what went wrong is the million dollar question?

Its the oft repeated statement of small players taking on the Anglo-Dutch giant. But then how did they allow this guerilla warfare by Cavin Kares and Jyothy Laboratories of the world.
Reason : Sheer lack of vision coupled with a misplaced confidence (or should I say arrogance) on its dominance in brand equity, finance and distribution.

But Banga seems to have done everything to revitalise the company :
- restructuting into two just divisions - Personal products and Food
- pruning the big dhobi list of brands and product extensions to just the 30 power brands
- not to forget the new ventures which seem to be non starters (Ayur seems to be still in the low growth stage and HLL Network which has been bordered on the lines of Amway seems to be a bad idea. Not just that, even e-tailing projects are yet to take off.)

My take (probably not that of an expert but an outsider viewpoint) : The company is spreading itself wide and thin in too many activities when its big bang objective should be to focus on revitalising the exisiting power brands and focusing on getting into the uncharted rural markets to expand its distribution network. Not to forget , launch a focused attack to regain lost marketshare from the smaller regional brands (which it lost out mainly on the price front).

On the other hand, the erstwhile tobacco company was mired in problems with BAT on one hand and the increased pressure from the govt on smoking regulation on the other. It was a company which was headed for more problems, or that was what was portrayed by the market pundits.

Today the company is growing from strength to strength. It is not just a tobacco company. Its a garment retailer, hotelier, food and agri products company, agarbathi and matchbox manufacturer,..it's like the classic case of Tata Steel "We also make cigarettes".

But it's major initiative of e-choupal which seeks to wire the farmers has taken off in a big way with awards coming abegging. But how far will the initiative be really successful in the overall gambit will be seen in the years to come ?

The only difference between HLL and ITC diversification moves is that while HLL is doing it under pressure for survival, ITC is flush with funds and is finding way to invest this money and grow.

But its still not write-off time for HLL...the company will bounce back despite people leaving the company in hordes (I had a boss in my earlier company from HLL..he was a perfect example of a bad HLL guy...guess he is one of my reasons to hate HLL)...
But dont let that make you not buy the HLL shares. Its a vulture capitalist's delight with its attractive pricing.

My bets are always on this gem which was once the cherished dream job for all MBAs (and i lost out in the second stage of selection in campus).

Well the future fortunes of this two behemoths will definitely be tracked with keenness as these two FMCG companies belong to the sacred precincts of the handful MNC FMCG companies which have been successful in India

Brand(y) Mix - The Heady Feeling

The guru was in full flow, errr i meant Philip Kotler's Indiatimes lecture in Mumbai recently. Talking about his much maligned 4 P concepts (that even got extended to 8 Ps by self styled marketers) , he was woeful about how marketers and brand managers were focusing only on the P of Promotions and not having a balanced 4P approach. Sad, albeit very true.

Guruji, dont was your time. There seems to be lack of powerful ideas that can break the clutter.
Same old ideas of advertising and ad-making . Over that, spending crores of obscene money in media buying and advertising Somehow i hate the ad community , not only because they are a pseudo crowd, but i think that "ideas" seem to have dried out completely. Same old wine in news bottles.

Personally, there has definitely been a big relief (according to me) in the big bad brand world. Its about Coke and Pepsi. No we are not talking about CSE's Sunita Narain raking the issue of fertilisers again and confirming the level of fertilisers in soft drinks to be decided by 2004 end.

I am talking about the complete & total withdrawal of media advertising by Coke for the last couple of months and Pepsi's decision to carry on with the old ads and also reducing the number of spots. More suprising is that it comes at a time when cricket is at its fever pitch with the Australians raring to knock the daylights out of the Indian team.

With the big bosses of both Coke and Pepsi visiting India back to back and deciding to focus more on operations rather than marketing , has brough about a lot of cheer in me. Thank heavens, someone from US has to come and tell the goofies and mickeys in Gurgaon - "Stop Advertising, Focus on Operations, distribution and financial restructuring".

To just quote some numbers...coke spent close to Rs 50 crores for advertising in the first half of this year (thats the size of a small and medium enterprise) with unofficial accumulated losses being put at almost 2000 crores. Thats the revenues of one quarter of TCS.

I strongly believe in IASP (Individualised Area Specific Promotions) rather than big budget star cast ads , shot by film makers (includes Rajiv Menon, Ashutosh Gowariker) and self proclaimed promiscuos (and proud of it) geniuses (Prahald Kakkar obviously no one else). A focused hard hitting approach makes better impact and has a stronger brand recall and better word of mouth results. Not just that, it also does not burn the pockets.

But the best part is , the number of people who will get employment is much more than in print and media advertising which only further deepens the pockets of Colvyn Harrises (the new JWT Head) and the Suhel Seths of the world. (Furthermore to irritate people , Suhel Seth is acting in films. Wonder what he would do if he really were smart)...

Lets just hope that these are positive indicators and that print and media advertising costs comes down and more "big ideas" emerge that can revolutionise selling.

Moonshine & Skytoffee

Moonshine & SkyToffee - Thats the name of the latest Magic Lantern play that I watched on 26th Sep at Alliance Francaise (realised only lately that it is prounced as Alliyonce..was always using the typical Madrasi brahminical pronunciation of the word equivalent to matrimonial matching. Matromonial, lets not talk about it as the word causes deep sense of paranoia. Guess thats another blog)

Well the play was very hilarious but when compared to the contemporary Evam and Boardwalkers plays, it was very slow probably commensurate with the setting in Kerala. Within the initial ten minutes, I was even tempted to walk out as itwas not picking pace. But the protagonist was hilarious showing his "asattu siripu" (difficult to translate in English) right through and the screenplay slowly started gaining pace.

There are just 5 characters in the film and how the two lead pairs unite is the story. How women enjoy having men behind them and give them a tough time before they express their love is the crux of the story.

I walked in just 5 minutes before the start of the play and hence I was asked to wait while they checked the availability of vacant seats. At the counter was Pasupathi who acted as Kothalla Devar in Kamal's "Virumandi" and has also essayed lead villain roles in Dhool and Sullan. But guess this talented actor is getting stereptyped in his recent roles. Only Kamal and ManiRatnam know how to get the best out of people. Heard he is also part of the theatre group "Koothupatrai".

At the end of the play, they distributed Kerala sweets & savouries along with hot and piping Irani tea to lend the Malloo flavour. Yummy. No wonder high cholestrol levels continue to be my best pal.

Back from Nasik

Came back from Nasik this morning at 4 am. Arduous journey i should say as I had to travel from Mumbai to Nasik and back to Mumbai by road. Albeit an air-conditioned Ford Ikon, the bad condition of the roads ensured that my head went into a tizzy both ways. But thankfully did not puke during the return journey. What aggravated the onward journey as it was preceded by a turbulent travel from Chennai to Mumbai as the flight hit couple of air pockets.

I had been to Nasik to participate as a speaker at Symbiosis Centre of Management & HRD's annual event Aksh 2004 . I was scheduled to speak at 12.55 pm but due to some reshufle, I was the last speaker of the two day event. My session was just preceding the valedictory address by ex CBI Director Karthikeyan, the man behind Rajiv Gandhi SIT investigation.

Guess, the presentation went off well and the institute director offered me to visit the campus for a guest lecture when i travel again to the western part of India. So need to take permission from my boss next time I travel to Mumbai so that I can go to Pune ...a city which is always close to my heart.

Amazed at how the b-school students of these days are trained to organise events so meticulously . Just hope that they do not get chaotic when they enter the corporate sector. Stayed at Taj Residency. Very impressive property. And equally impressive was the sleepy little town of Nasik which reminded me of Pune some 7 years back when I landed there for a management degree. Since I had the full day with me, went for a stroll on the streets after breakfast. Pleasant weather. Not much cosmo. No retailing boom apart from one Big Bazaar.

Guess time flies.