'N-E is good for us'

Employees work at one of the company’s production units. Telegraph pictures

One of the market leaders in the country’s FMCG sector, Emami has found the Northeast an excellent place to do business. With its products getting good response in the region, the company is looking at setting up its third plant here by 2014.

Roopak Goswami of The Telegraph talks to the company’s managing director about the road ahead for Emami in the Northeast and elsewhere.

Excerpts from the interview

The Telegraph: The Northeast is being seen as a region with a lot of potential for investment but nothing much has happened over the years. As a company having big stakes in region, what do you think is the problem and what is the solution?

Sushil Goenka: We have a large stake in the Northeast and have not encountered any major stumbling blocks to our growth here. We find the Northeast’s culture, its people and the environment conducive to industrialisation. We believe in creating a harmonious atmosphere and for this, we have undertaken various development activities here.

TT: When did you start operations in the Northeast and what prompted you to invest here?

SG: We had set up our manufacturing operations in the early days of industrialisation — 2000.

The Northeast presented ample opportunities in terms of growth and expansion of business, availability of land, support from the government and availability of skilled and unskilled manpower.

Further, the government offered various fiscal benefits under the then industrial policy of 1997 and later under North East Industrial and Investment Promotion Policy (2007).

Emami managing director Sushil Goenka

TT: How has the Northeast been for your company and how successful have your ventures been here? You’re also setting up a third plant here. Where is it coming up?

SG: The overall growth of our business after entering the Northeast has been extremely good.

We have expanded into various diversified activities with growing demand for our products. Many new products were launched that won consumer confidence; some of these products were category creators in their respective segments.

Our major procurement of raw material is from the Northeast for the products manufactured at our two plants. We currently have two big units here and setting up the third unit at Changsari near Guwahati.

TT: The Northeast markets are a bit different from others. How have you managed to resolve this issue?

SG: The issues we face in Northeast are very specific to the region and we have been able to adapt to these challenges over the years. While one can easily reach the capital and major cities these days, the connectivity to the other parts of the region is still erratic. Owing to low population density in the region and the large geographical area, the penetration and consumption of categories/brands is low. Relatively poor infrastructure/connectivity are impediments in reaching the consumers.

We have partnered with enterprising locals in almost all big towns and major villages across the region and working with them to improve our sales and, thereby, create markets for our brands. We also engage them to organise local consumer-centric activities. This has helped build not only our franchise for the brands there but also created job opportunities for the locals.

TT: How much has the company invested in the region till now, and how much is being put into the third unit? What will this unit manufacture and when will it come up?

SG: We have invested around Rs 100 crore in the region. The new plant will require approximately Rs 40-50 crore and it is expected to come up in 2014. We will manufacture our various healthcare and personal products there.

TT: How important are the factories here for the company? If these were to be shut down for a long time, what would be the impact?

SG: We have plants in various parts of the country and have a well-defined diversified product ratio and allocation to various manufacturing units. Though each and every unit has its own importance and cannot be immediately replaced by other units, we, as a company, have always assessed our risks and taken measures to mitigate and address the same.

The importance of the units here is huge. While we do not expect any issues that would warrant a shutdown, we are well equipped to mitigate the risk by covering it through other units.

TT: When is your plant in Bangladesh going to start? How will it help the Northeast?

SG: Work on the Bangladesh plant has commenced recently and it is expected to be fully operational during the financial year 2013-14. We have great expectations from our Bangladesh operations.

TT: Are you looking at any other foreign country for investment or acquisitions?

SG: We had initiated the process to put up a plant in Egypt. Though we had planned to start the plant through a small Brownfield acquisition, we are revisiting the strategy.

TT: Any new plans?

SG: To cater to the growing Rs 1,30,000-crore FMCG market, we may have to consider setting up more plants. However, no decision has been taken in this regard yet.