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Sunday, May 17, 1998

Kerala Soaps and Oils scouting for partners to meet capacity utilisation 

K Rajan  
KOZHIKODE, May 16: Kerala Soaps and Oils Ltd, the fully-owned subsidiary of Kerala State Industrial Enterprises (KSIE), is scouting for private parties for full capacity utilisation of its plants. This follows the company's failure to check cash loss on account of low output and weak market penetration.

KSOL's laundry/toilet soap plant now has a spare capacity of 10,440 tonnes a year while the pouching plant (for liquids), having an installed capacity of 12,000 tonnes, is now remaining idle. Already, the company has written to three major soap products manufactures detailing the spare capacity of the plants.

It is hoped that the company can supply soap products of the consumer majors like Wipro, Proctor & Gamble and even its main competitor Hindustan Lever Ltd as per their specifications. However, the whole move is viewed with suspicion by the workers on the ground that the production machinery of the company would have to be used completely for the supply of these market leaders with the end result thatKSOL products would be driven out of the market.

They pointed out that it was due to a similar agreement with HLL for the production of its products that the Kuttippuram-based Kerala State Detergents and Chemicals Ltd had to down shutters once the tieup was over. "We are not against any such agreement. But it should make sure that the company would not disturb the production of KSOL products," workers said.

Forty months after its revival, the company has added one more crore to the existing liabilities to the tune of Rs 22 crore. Following the traders withdrawal of the HLL products' boycott, the demand for the KSOL products fell drastically. Under-utilisation of the plant has gone to such an extent that laundry and toilet items required by the market for four months are produced in just a month. That is, the company's total sales in a month works out to just Rs 20 lakh on an average while the break even sales level of the PSU stood at Rs 75 lakh to Rs 80 lakh.

"The company, in fact could make sales inthis range during the boycott of HLL products. When the boycott was withdrawn, the favourable atmosphere was gone and we were left with huge stocks," said T Sasidharan, vice-president of the AITUC wing of the workers. During this period, the company could not put any emphasis on marketing its products. "Marketing of a consumer product like soap requires a substantial spending on advertisement through the media. But, we are forced to cope with a situation where we are not getting even sufficient working capital funds," said sources in the management.

Hence, one way left for the company, was to go in for a Nirma type of marketing by giving higher margins to the retailers and avoiding heavy advertisement.

According to KSOL marketing manager P K Venugopal, the company has targeted a total sales of Rs 10 crore during 1998-99 for a turnaround. Though it was expected to notch a sales of Rs 9 crore last year, it could record only Rs 4.5 crore sales due to an unfavourable market. However, the company's emphasis ontoilet soap as against laundry items is expected to pay dividend this year.

Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.

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