HLL’s direct connection

That, he smiles, would translate into at least 100 more Corollas rewarded by HLL to its direct-selling agents. Coy about revealing actual figures, Negandhi says, ‘‘Sales are growing every day due to our exclusive products.’’ HLL Network’s sales are expected to touch Rs 100 crore this year and it has got into the black. A host of new products — including food — will be on the network.

HLL is clearly putting all its marketing weight behind Network. Dominated by Avon, Oriflame and Amway, the Rs 2,300-crore direct-selling industry is growing at between 15-20 per cent, higher than FMCG growth rates. A host of smaller, unorganised players have entered the market too. By adding its own name to Network (the venture was earlier called Aviance), HLL is sending a clear signal about its commitment to the new venture.

‘‘There is no advertising budget for products available under HLL Network,’’ says K K Rajesh, Business Head of HLL Network. ‘‘The ad budget is used to reward customers who can become distributors.’’

But for all its marketing muscle, market-watchers agree that HLL will have to earn its spurs in an industry where it has little experience. For one, the consumer has always connected with HLL’s household brand names — from Lifebuoy to Lux, from Wheel to Surf — than the company itself. ‘‘Their first attempt with Aviance had failed. The fact that they are re-entering the direct selling market just speaks about the potential of the industry,’’ says an Amway official.

Amway, which has Rs 636 crore in sales for 2003-04, also says Network’s product portfolio leaves much to be desired. “I don’t they are manufacturing anything exclusive for HLL Network except Denim. In fact, Ayush — which was available in retailer shelves — is now selling through HLL Network. So what exclusivity are they talking about?’’ says the Amway official. ‘‘We are, in fact, expecting sales to come down in 2004,’’ says Atul Rastogi, FMCG analyst with Motilal Oswal Securities. ‘‘The sales growth will come from new products launches and price cuts and re-orientation of their toothpaste brands. Our recommendation is neutral on the HLL scrip,’’ he adds. But HLL is going hell for leather and has a host of ventures in the works. Dalip Sehgal, ED of HLL, agrees the company needs new sales and distribution channels for growth.

‘‘Unlike historical models when retailer was the go-between, we are now reaching consumers directly. Urban customers can order their groceries over the phone without stepping out of their house,’’ says he. Project Sangam — rolled out in Mumbai recently — will even offer competitors’ products, say a Colgate toothpaste, if the consumer orders.