June 12,2011 ?25 HUL's Nitin Paranjpe and Harish Manwani

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June 12,2011 ?25 HUL's Nitin Paranjpe and Harish Manwani Size : 21110.98 Business Today Sunday, 12 Jun 2011 Page# :1 sq.cm. June 12,2011 ?25 HUL's Nitin Paranjpe and Harish Manwani How Nitin Paranjpe and Harish Manwani forced change at a bruised Hindustan Unilever and got its mojo back. By SUMAN LAYAK and ANUSHA SUBRAMANIAN / wanna know you inside unL, le.ll nut mvylhint],,. an Uttar Pradesh village, about 100 km from - Bryan Adams, Inside Out Lucknow, knew the use of face wash. Copal Vittal, the company's Executive Director for home and hile Bryan Adams might personal care, says he was pleasantly taken aback succeed in gctUng his lans when he conversed with young schoolgirls in re- to toil all, Nitin Paranjpe, mote Bihar villages in English. Managing Director of This was Mission Bushfire at 111JL in 2010. Hindustan Unilever, de- And, to get a feel of the company's recent success cided to turn his company five quarters of volume growth tiller nearly a insidWe out with one aim — to 14ct into the con- decade it would rather forget - Business Today sumer's mind. So. in 2010, about two years alter travelled to villages near Punc. The Bhegdewadi he took over the top job in April 2008, he made hamlet, 30 km from the industrial city of Pune, is HUIJ accountants, production and human re- perhaps as far removed from I he plush, steel and sources people go out. and meet consumers in vil- glass tlUL headquarters in Andheri, a Mumbai lages across India. Just as he did himself - and suburb, as can be. there was learning. Village women frequent the modest home of At a village home in Tamil Nadu, Paranjpe Vandana Bhegde-a member of Project Shakti, an found a sachet of Comfort fabric conditioner and IIIJL programme of leveraging sell-help groups to thought something was amiss. "I was worried. I enhance hyperloca! distribution - to buy the com- thought the poor lady must have mistaken it to be pany's product s. One of the visitors, Renuka, wants a shampoo sachel and bought this brand wanting to buy Dove soap, a product HUL positions as a to use it 0x1 her hair," says Paranjpe. "So, I asked premium, upmarket brand, and Domex floor her: what is this, what do you use it for? She cleaner. At a kiranu store in the nearby Ghotawade looked at me as if 1 was a strange guy and said, bazaar, Knorr Soupy noodles sell out the fastest. Tor clothes'." All this is good news for a company coming out The findings coming from elsewhere on the of a rough patch. HUL has spent the past decade ground were as surprising, if not startling. (Tirls in si niggling with incremental growth, and the slock 68 LiUSINKSS TODAY jimc 12 2Oi l COVER STORY HUL 2002: Hungry for more: >2000: Growth mantras: HLL starts seeds joint venture. HLL stock is split 1:10. KJi Dadiseth Acquires Modern Foods through disinvestment. Ayush is launched. # announces nine growth engines. HLL 2005: New face: • 2007: Parent's name to connect all distributors engage Harish Manwani takes over as is middlename: Company with women self-help groups. non-executive chairman of HLL changes its name to Hindustan §2003 • On a diet?: Hind Lever Chemicals from Banga. Tea estates sold Unilever Ltd. Completes 75 Dadiseth hands over the merges into Tata Chemicals. Edible oils and fats and transferred to subsidiaries. years in India. Announces share •2008 • Demand dips: Nitin Paranjpe takes chairmanship baton to M.S. (Vindi) business transferred to Bunge. Glucovita is sold Starts review of power buyback at 7230 a share. over from Bailie. HUL sees consumer demand slip, Bangain May 2000. to Wipro. A Modern Foods factory is closed. brands strategy. Shah Rukh Khan models for Lux. says a question mark over future demand. Hindustan (Uni) Lever over a decade •2001: Flavour is in foods: Banga announces Food Revolution: a plan that he claimed would reduce food prices, increase consumption and bring more money for the 2004 • Shakeout: Banga moves to • 2009: War mode: • 2010: Buying back: farmers. International Best Foods (Knorr brand) Unilever home and personal care head for Asia. Vaseline is relaunched as a HUL announces its second merges into HLL. Starts JV with ICI called Quest He remains non-executive chairman, but HLL wide range of skin care products; buyback in four years- on flavours and fragrances. Decides to reward opts for diffused leadership in India. Home HUL rationalises distribution; this time at ?280 a share. shareholders with bonus debenture scheme. & personal care and foods have separate decides to grow despite pressure Rin gets a patented boost Announces focus on 30 power brands. leaders. HLL sells its mushroom business. on costs. for removing yellowness. has been mostly listless. {See Vlatlinex) ft had a driven its volume sales up at the cost of profit will use this to extend loans to its distributors. shift production to supplier-owned factories close good year in 2008, and then in 2009 it got margins, or the ratio of profit to revenues. Today, Elsewhere, Shakti members have become last to the market led to savings of ,000 tof 1,500 caught in the vortex of a global slowdown. The liemant Bakshi, the company's Executive mile payment collectors for cable operators or per tonne," says Viltal. And, not everyone knows darling of the bourses as well management stu- Director for sales and distribution, says the com- even caretakers for low-cost telecom towers. HUL that Wheel has two mixes for different parts of dents In the nineties had turned a pariah. This pany will not cede tuiy space to competition even has cast a wide net, fuelled by Innovation (also the country: hnrdwater mix for northern India was a period when IHIL lost out as it was not if it. means cutting prices and allowing a higher see fiat Pray Love, on page 82). All this adds to the and softwater mix for the south. leading the sector, says Paranjpe. (See We Were. share of margin to retailers. importance of the Shakti Annna and adds to her in July 2010, Rin washing soap was infused Leaders But We Were Not: Leaclinfj on page 78.) With good reason, liarish Man want, income. Details of HUl/s game plan will be un- with a patented technology for removing yel- Kotak institutional Fquities's Manoj Menon, Chairman and also President for Asia, Africa and veiled as the pilots work out. lowness in clothes thai comes »wilh use. The an analyst who spent the first four years of Ills east and central Europe for Unilever, says the At the product and logistics level, too, mas- result was a }0 per cent career at IIIJL in corporate finance and thcri at a Anglo-Dutch parent wants 70 per cent of its sive change is aloof. For instance, Wheel deter- sales, which crossed the FTimachal Pradesh factory, delves into basic revenues to come from emerging markets, gent, which contributes more than ^2,000 crore, 11,000 crore mark in economic theory to explain how Hill, was over- against 53 per cent now. From 1 7 emerging or more than 12 per cent of H l II ,'s 119,000 crore 2010/11. And. Rin taken by nimble rivals. "Historically, the com- market countries on its radar, Tndia and Brazil sales, is now supplied from 20 supplier-owned is priced differently pany was too margin-focused. It kept losing are the two larger ones in focus for Unilever. factories across the country rather than being market share and allowed companies like (lodrcj concentrated in particular /ones. "This move to Consumer Products, Reckltt & Bencklser and Redlines to Greenlines Wipro to grab market share," he says. "With the ffow radical is the shift or change at HUT,? loss of market share, HUL also lost some bargain- Sample this: at Satara in Maharashtra and ing power.1'While Godrej.No. I Is the top selling Mysore in Karnataka, HUL is doing a pilot with soap by volume In northern states, Wipro's its Shakti self-help groups on financial inclusion , Santoor leads In the southern stales. The Shakti group members can open an ac- TheTndian arm of Unilever, among the most, count. in the State Bank of India "faster than BSE Sensex and HUL scrip daily closing charted on a common base of 100 aggressive global consumer companies when it they do at an SHI branch in Mumbai", says comes to emerging markets, seems to have shed Bakshi, Shakti Annua, as female Shakti entrepre- Flatliner Its margin obsession now. in fact, over the past neurs arc called, does this with a machine that five quarters, the company has successfully uses biomctric identification. Soon tile company The HUL scrip is up around 44 per cent since 2001 while the Sensex has catapulted over 400 per cent 70 PiTTSTNF„SS TODAY June 12 2011 /line 12 2011 BUSINESS TODAY 71 COVER STORY HUL MS aloo Bhegde. a resident, of groups to sell its products. day and notching up sales of up to Bhegdewadi hamlet, 30 Now. as HUL makes a spirited ! f30.000. is able to cover the cost, of km west DI' Pune, knows push to expand and strengthen its distribution. But, when sales are what it is to juggle jobs to reach in the hinterland, it has only ^10.000 even after covering Bmake a livelihood. Born into a 10 villages, the economics breaks roped Bhegde in, too. He is a farmer family, the 43 year old Shaktimaim, roped In for the next down. "It. Is a trade-off between cost worked at the Rand Polyproduets' big leap the Anglo-Dutch multina- of distribution and revenue," says (a manufacturer of specialty poly- tional wants to make in India: Khanna.
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