Financial Times

Reckitt Benckiser in turnaround
Reckitt Benckiser (Lanka) Ltd., the consumer products company which was rocked by financial losses, plant closure and mass resignations of top executives amid allegations of Indian domination a year ago, has made a turnaround and expects to post a "decent" profit this year.

The company, a subsidiary of the British multinational that is among the FTSE top 25, also plans to introduce new products such as depilatories, aerosols and gels, its new country manager, Nael Ahmed, told The Sunday Times FT in an interview. "We made a big loss in 2003 but hope to end 2004 with a pretty decent profit." Sales are close upon a billion rupees and growing at about 34 percent. The company's highest turnover comes from its pest control products.

Reckitt Benckiser, which has been here for 40 years, has no plans to resume manufacturing household cleaning and health and personal care products on its own in the foreseeable future but still gets the bulk of its portfolio produced mainly by domestic small industries.

"A lot of people think we walked away from Sri Lanka," Ahmed said. "Now we're manufacturing more in Sri Lanka than we were when our plant was fully operational. Then we were importing more. Now 70 percent of our products are manufactured in Sri Lanka through Sri Lankan manufacturing units. Close to 30 percent of products are imported."

Reckitt Benckiser has not only outsourced production mostly to small industries but also to companies like Upali. Ahmed explained that outsourcing was a global model the company was following with plants being closed not only in Sri Lanka but in India and Pakistan as well when they no longer gave economies of scale. Reckitt Benckiser (Lanka) intends to expand its business by developing existing product lines as well as introducing two new categories such as depilatory (hair removal) products and upscale air care portfolio products like aerosols and gels.

"We will not care about revenue or profits in the first few years but first concentrate on developing and establishing the brands," Ahmed said. In its existing portfolio, the company will focus on three core categories - pest control where Mortein mosquito coils are a popular product, lavatory care in which Harpic is well known, and the anti-septic category where Dettol is a household name.

"Our company is very hot on new product development. In our three core categories you'll see maximum innovation and line extensions," Ahmed said. "We'll also introduce new categories of products next year such as more modern pest control products."

Ahmed, who is from Pakistan, cheerfully dismisses suggestions he was posted to Colombo because of perceived hostility towards Indian expatriate managers, pointing out that apart from himself the firm has only three expatriates - two Indian managers, one Bangladeshi - from a workforce of almost 300 people.

"Whenever a company does not do well, questions are asked," he said. "Some people resign over nervousness over what may happen, some are asked to leave. But a person asked to leave or who leaves out of nervousness becomes bitter.

It takes a big man to admit he did badly. Generally people blame everything except themselves." He said criticism of Indian managers at the time of the management turmoil was played up. He dismisses it as a "good tune that went down well with local audiences."

Reckitt Benckiser is a company in which senior management is rotated around the world. Three Sri Lankan executives are serving in company subsidiaries in the UK and Nigeria.

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