Annual report for 2004/05 - Hemas Holdings, Ltd

FMCG Sectorin the market. In the Hair care category, we continue to lead the male hairgrooming segment through Pro Sport and Gold hairgel, whilst the relaunch of Kumarika shampoo hasbeen well received.In line with its strategy to diversify into relatedcategories, the Sector entered the Paper categoryacquiring the Fems brand of sanitary napkins inOctober 2004. Towards the end of the year, we signedan agreement to acquire the operating assets andliabilities of Nimesha Enterprises and its key brandNimex, which sells paper serviettes, toilet rolls and other related products. Thesestrategic acquisitions give the Sector a sound platform from which to grow in thisfast growing category.Consequent to the investment of a toilet soap plant during the previous financialyear, the Sector launched Velvet Skincare Soap in February2005. The launch has been well received and, together withBaby Cheramy soap, the Sector now has a significantpresence in the Personal Wash category.As internal initiatives during the year, we have redone themanufacturing layout in the Welisara factory with a view toincreasing productivity and margins. Further, the proprietarysales automation system, which links the distributors to thecompany, was fully rolled out to all territories.Looking forward, we are not optimistic that market growth rates will improvesignificantly given the multitude of challenges facing the government inaccelerating growth and combating inflation. With effect from 1st April2005, the government has legislated that 50% of all advertisingexpenditure will be disallowed for tax. We see this as a retrogrademeasure which will ultimately hurt consumers and local companies.The industry has made several representations urging the authoritiesto repeal or at least amend the statute, and we are hopeful that someconsideration to these appeals will be given in due course.In the coming year, continued focus and market share growth of ourcore brands would be a key priority. Ensuring the success of newly launched brandssuch as Diva and Velvet, along with the emphasis on new product development andacquisitions with a view to entering allied segments, would be our key strategiesfor long-term growth.A N N U A L R E P O R T 2 0 0 4 - 2 0 0 5 17