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L’Oreal bets Rs 1,000 cr on India

Friday, 11 January 2013 - 4:12am IST | Place: Mumbai | Agency: dna

Eyes ayurvedic products, acquisitions and Rs7,000 crore in sales by 2020.

L'Oreal, the world’s largest beauty and cosmetic company based in Paris, will pump in close to Rs 1,000 crore in India over the next five years.

Pierre-Yves Arzel, MD of L'Oreal India, said 30% of its investments in India so far were for building up a research and development centre in Mumbai and another advanced research centre in Bangalore.

In the next phase, the company plans to expand the manufacturing capacity of its plant in Pune. "Right now, we've a production capacity in excess of 200 million units of beauty products a year and we are looking at doubling it," said Mohamed Kanji, director of research and innovation at L'Oreal India.

L'Oreal also plans to invest in improving its supply chain and distribution centres. That is not all. The company is aggressively looking at acquisitions to expand its footprint.

"We would be interested to consider potential acquisitions of Indian brands. We are waiting for an opportunity in this space,"said Jean-Paul Agon, chairman and CEO of L'Oreal.

The company is also turning its focus on ayurvedic and herbal ingredients. "In the coming years, we expect that more ingredients from the medicinal, aromatic plants from the world of ayurveda will be used in our products," said Kanji.

L'Oreal would be keen on harnessing ayurveda with its modern technology. For instance, the company is exploring ways in which henna can be used in modern hair colour.

Besides, the company may well enter the hair oil market. Analysts said this is not surprising, considering that Hindustan Unilever has also extended its Dove brand to hair oil.

On the services front, L'Oreal has been adding about 5,000-10,000 salons every year. It plans to sustain that pace even as it shifts its focus to opportunities in smaller towns, cities and e-commerce, particularly to promote its luxury fragrance brands like Giorgio Armani and Ralph Lauren.

In the premium segment, the company is planning to expand its Kiehl Boutiques.

With 8-10% of market share, L'Oreal India expects to clock in Rs 1,580 crore turnover. Agon said that going ahead, the plan is to more than quadruple this to Rs 7,000 crore by 2020.

Despite the slowdown talk in India, the company claims it has managed to post 30% compounded annual growth rate in the past ten years. It is confident of sustaining this growth rate.

For the first time in L'Oreal's history, emerging markets have begun to contribute more than established markets such as western Europe, making countries like India (which is now estimated to be the sixth largest beauty market) increasingly important.

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