LOreal to open 100 million case hair-colour plant in Himachal Pradesh by mid-15
L'Oreal India, which sells premium shampoos and cosmetics under brands such as L'Oreal Paris, Garnier and Maybelline New York, is setting up a hair colour manufacturing plant at Baddi in Himachal Pradesh.
"We are in the process of opening a second factory in the North. It will be at Baddi in Himachal Pradesh and will be only for hair colour, for which we plan a capacity of 100 million units," L'Oreal India Managing Director Jean-Christophe told media.
The plant will be operational by the middle of next year and will cater to all its brands that sell cream-based hair colours, he said.
The company has a manufacturing unit at Chakan in Pune also.
The French company enjoys 70 per cent market share in the cream hair colour-based category that is estimated at Rs 700 crore, and growing at over 19 per cent in terms of value and over 60 per cent by volume.
Letellier, however, declined to divulge the investment detail but said it is part of the company's investment of Rs 900 crore from 2012-15.
By 2020, the global beauty care major is eyeing a turnover of Rs 7,000 crore and is on track to achieve this target, Letellier said.
"We will go beyond Rs 2,000 crore this year. Our target is to be up to two or three times the market growth. During the last two years, the market itself has slowed down but we have managed to grow over two times the market, but at a slower pace than what we would expect.
"We believe India will gradually recover. The foundations for market growth, personal care growth are very strong and robust. We should anyway be observing this ratio of 2:3 times growth above 20 per cent every year and reach that goal by 2020," Letellier said.
The company had clocked sales worth Rs 1,800 crore last year and is expecting to grow at 20 per cent this year. Acknowledging that India is not yet an evolved market, Letellier said it still features in the top five strategic countries for the group.
"It's a very promising market. It is already relatively big, even though for 1.26 billion people, the market size is not very big. It means the per capita is one of the lowest in the world, but the prospect of growth is immense.
"India has still a lot to bring in, in terms of evolution of disposable income and increase of GDP per capita," Letellier said.
"The natural aspiration of consumers as soon as they have more disposable income is to upgrade in terms of quality, especially their brands.
"This will drive the market consumption to 10-13 per cent and we expect that number to increase year-on-year, which will make India one of the fastest growing market in the world," he added.
The group plans to add 1 billion new customers over the next decade and they expect India to contribute 15 per cent of that, he said.
"It is not yet an evolved market. So, it has a huge opportunity and that is why India, for L'Oreal as a group, is one of the top five strategic markets.
"Out of the 1 billion customers that the group will be adding in the next 10 years, our objective is to bring 150 million Indians," he said.
In FY13, the total personal care mass market was estimated to be around Rs 28,730 crore, growing at over 7 per cent and L'Oreal's share was 6 per cent of it.
The company is placed at number three in the personal care category and hopes to jump a notch higher by next year.
"L'Oreal is the global number one. We are leader in the beauty industry, ahead of Unilever and Procter & Gamble worldwide.
"In India, we are still a challenger with a position of number three. We will go as soon as next year to the position of number two, that is our objective. But our intention in the mid-term is to be number one and we believe that is possible," he said.
Hindustan Unilever is looking at the rural market to drive sales in future. When asked if L'Oreal would also look to tap the hinterlands, Letellier replied in the negative.
"We are an aspiration driven company and will remain so. The idea is to build from the top and go up to the middle and that is it. We cannot do everything. The idea is not to reach everyone.
"We are not a luxury company, only talking to a few people but it is still very selective. We will not go down but we will welcome the rising middle-class," he added.