Notwithstanding the turnover drop in its foods business, consumer goods giant Hindustan Lever is looking at launching a slew of new products in the second and third quarters of this year.

D Sundaram, executive director-finance, said, "The strategy is to introduce innovative products in the foods business, so that it would give us healthy margins to drive future growth."

On the cards is the launch of a healthy noodle and thick soup based snack item the Knorr brand. A new range of cooking aids is also being tested. It includes basic spices, like turmeric, coriander, red chilli, black pepper, blended spices, cooking pastes and cooking bases.

Its much talked about foray into the water business, according to HLL, the project is  in advanced stages and will be launching the product in the  second half of  this  year.

Its new venture -- confectionery business has reported a turnover of Rs 50 crore (Rs 500 million).

According to HLL, margins are good in the confectionery. It is yet to achieve a critical mass in the business and would take another 3-4 years. The confectionery is handled by the beverages segment.

Its beverages business for the quarter ended March 31, 2003, was impacted by commodity prices of tea and competition from loose tea. Its brands Three Roses and Taaza did well and recorded double digit growth, while in coffee, Bru recorded handsome growth.

AD spend cut: Meanwhile, the country's largest advertiser has lowered its advertising and sales promotion expenditure in the first quarter of the year. The ad spend for the first quarter ended March 31, 2003, witnessed a decline of 6.7 per cent to Rs 209 crore (Rs 2.09 billion) from Rs 224 crore (Rs 2.24 billion) in the corresponding period last year.

Last year, the company spent over Rs 841 crore (Rs 8.41 billion). However, within its business portfolio, the expenditure was high in home and personal care business, while it decreased promotional expenditure on its foods power brands, Sundaram, said.

"We have been focussing on media spends and less on promotional activities, as these give only short-term gains. Media spend has been on a rise," Sundaram added.

"Whenever we launch innovative products, we would definitely be upping our advertising and promotion expenditure. Since we plan to launch new products in the second half, it could go up again," he added.