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No beating about the bush.
The pain-relief segment is now taking the low-unit pack route, after the success of this strategy in shampoo and hair-oil marketing
Velvet Shampoo was the trend-setter in the sachet market many years back when it introduced shampoo sachets at Re1 to penetrate the rural market. This gave an edge to the company and better market penetration due to the low price point.
Other fast-moving consumer goods (FMCG) players like Hindustan Unilever Limited, Godrej Consumer Products and Dabur India Ltd have also tried this route for their different products, at different price points. Now the pain-relief segment is also trying to penetrate the rural segment with this time-tested strategy.
Emami Group is launching low-unit packs (LUPs) of Zandu Balm at Rs2. The pack will weigh 1.2 grams and it will be used to penetrate the rural market. “We feel that any consumer suffering from headache, cold or backache will be able to get relief from the LUPs instead of looking for a Rs-20 packet. This will not only add to the convenience of the consumers, but will also generate rapid sales of the product,” said Mohan Goenka, director, Emami Group.
The LUP market forms 35% of the total Indian FMCG market. “The market size for LUPs is different for different categories. For example, in shampoos, close to 80% of sales come from sachets. The LUP market for balms is around Rs100 crore; it is currently contributing about 20%-25% of the total sales of balms. Looking at this trend, we are confident that the LUP market for balms is certainly bound to grow and hence the decision to launch LUPs for Zandu Balm,” said Harsh V Agarwal, director, Emami Group.
The company is trying to push the product deeper into rural areas through its mobile trading scheme (selling products door-to-door through vans or bicycles) and the ‘small village shop scheme’ (where products are sold from shops based in rural houses).
According to the CEA website, peak-hour deficit has increased from 11.9% in 2008-09 to 13.3% in 2009-10. Experts believe that pent-up demand may be higher than the projected 11%, further worsening the situation
The power ministry plans 100% electricity supply all over India by 2012. However, statistics from the Central Electricity Authority (CEA) show an increase in the demand-supply gap during peak hours from 11.9% in 2008-09 to 13.3% in 2009-10.
The total energy deficit has come down from 11.1% in 2008-09 to 10.1% in 2009-10. However, power experts believe it is the peak-hour deficit that is the main concern and which needs to be monitored.
“I would be concerned about the peak deficits. We will have to plan capacities to match the peak deficits. There is a lot of electrification that needs to be done, there is a lot of pent-up demand,” said Kuljit Singh, energy expert and partner, (transaction advisories services), Ernst & Young, India.
Mr Singh also pointed out that the peak-hour deficit might be much higher than the projection by the government body. “The real peak demand may be much higher than the projected peak demand. There may be a lot of peak demand that is not coming on-stream because there is no capacity. The 11% projected deficit is also not in synch with the experiences of larger cities that are going through load-shedding for hours together,” stated Mr Singh.
If the official figures released by CEA are anything to go by, the western region and the north-eastern region have recorded a significant improvement in the demand-supply scenario. The power deficit in the north-eastern region has improved from 14% in 2008-09 to 11.1% in 2009-10. Similarly, in the western region, the power deficit has improved from 16% to 13.7% in the same period.
While passing an order banning ULIPs late on Friday night, SEBI said the entities have not obtained any registration from the regulator though the ULIPs were in the nature of collective investment schemes like mutual funds
The move of the Securities and Exchange Board of India (SEBI) to unexpectedly ban 14 major private insurance companies, including SBI Life, ICICI Prudential and Tata AIG, from selling Unit-linked Insurance Plans (ULIPs), will open up legal battles, level the playing field between mutual funds and insurance companies somewhat, slow down the scorching growth of insurance companies and stymie the plans of several insurance companies to go public.
“We are examining all legal options. The matter is certain to end up in the court,” said the head of a large insurance company, reacting to the SEBI move. Curiously, while banning 14 insurance companies, SEBI has left out Life Insurance Corporation of India (LIC), by far India’s largest insurer. LIC is owned by the government and has been used by the government to push through large disinvestments of public sector companies for which public and institutional appetite was lacking.
While passing an order banning ULIPs late on Friday night, SEBI said the entities have not obtained any registration from the regulator though the ULIPs were in the nature of collective investment schemes like mutual funds.
"I hereby direct the entities... not to issue any offer document, advertisement, brochure soliciting money from investors or raise money from investors by way of new or additional subscription for any product (including ULIPs) having an investment component in the nature of mutual funds, till they obtain the requisite certificate of registration from SEBI," said Prashant Saran, wholetime SEBI member in an order.
The insurance companies against whom SEBI passed an order are Aegon Religare Life, Aviva Life, Bajaj Allianz, Bharti AXA, Birla Sunlife, HDFC Standard Life, ING Vysya Life, Kotak Mahindra Old Mutual Life, Max New York Life, Metlife India and Reliance Life, apart from SBI Life, ICICI Prudetial and Tata AIG. The SEBI order will put a brake on the scorching growth of ULIPs, which combine investment with insurance. A few months back, SEBI had sent letters to several life companies asking them why they were selling investment products without its approval. Companies had responded that insurance laws permit them to offer investment product with a life insurance policy. In its final order SEBI said, “I find that the entities by their own admission have stated that there are two components of ULIPs— an insurance component where the risk on the life insurance portion vests with the insurer and the investment component where the risk lies with the investor. This establishes conclusively that UlLIPs are a combination product and the investment component need to be registered with and regulated by SEBI”.
ULIPs have been a hot-selling product. The total first-year premium underwritten by the life insurance industry has grown 15% between February 2009 to January 2010. Almost 80%-90% of this comes from ULIPs. Only a small part of this actually ensures insurance cover, inviting charges of mis-selling.
SEBI’s move will halt the plans of life insurance promoters who have sunk in over Rs26,000 crore in capital and would like to extract some of this through public issues. Insurance companies will have to land up in the doorstep of SEBI to have their prospectuses cleared. Even before that they have to win a legal battle of ULIP that now seems inevitable.