In mid-2004, Hindustan Lever Ltd (HLL) executives looked back at the events of the past three years at their mercury thermometer factory in Kodaikanal in the south Indian state of Tamil Nadu. After mercury leakage from the plant had been reported in March 2001, heavy expenditure had been incurred in environmental risk assessment, waste disposal and health monitoring. The expenditure had exceeded the total profits generated by the plant since its inception. But the pressure from NGOs, led by Greenpeace, who had been protesting since March 2001 had not subsided.
The NGOs had indulged in novel ways of keeping the issue alive. These included chaining themselves to the HLL branch office in Chennai on 15th November 2002, disrupting the Annual General Meetings (AGMs) of HLL held on 13th June 2003 and 29th June 2004, shouting slogans and brandishing placards and enlisting sympathy from ex-workers and the general public. Greenspace also maintained the pressure on HLL through its website, photoalbums, posters, persistent media briefing and seminars. The NGOs had most recently attacked HLL in April 2004 in a seminar in Chennai.
Even as they waited anxiously for the regulator, Tamil Nadu Pollution Control Board’s (TNPCB) nod to start decontamination of equipment and remediation of soil, HLL’s senior managers believed they had discharged their duties conscientiously. They wondered what more was needed to be done to bring the whole episode to an amicable closure. Why had the events turned out to be far more complicated than anticipated?
HLL, a 51% subsidiary of the Anglo-Dutch Conglomerate, had acquired a tremendous reputation as one of India’s best-managed companies. Despite being the subsidiary of a Multinational Corporation (MNC), HLL was perceived to be more Indian than foreign, in the way it managed its operations, HLL’s origin went back to 1885 when the Lever Brothers was set up by ‘William Hesketh Lever’, in England. In 1888, the company entered India by exporting ‘Sunlight’, its laundry soap. In 1930, the company merged with ‘Margarine Unie’ (a Netherlands based company, which produced edible fats and margarine), to form Unilever. In 1931, Unilever set up its first Indian subsidiary, the Hindustan Vanaspati Manufacturing Company for production of vanaspati, followed by Lever Brothers India Ltd. in 1933 and United Traders Ltd. in 1935, for the distribution of personal products. In November 1956, the three Indian subsidiaries merged to form HLL in 1956. Unilever decided to offer part of its equity capital to Indian shareholders even though there was no regulatory requirement. HLL had been a listed and quoted company in India since 1957.
In the 1990s, HLL expanded its operations through both organic growth and mergers and acquisitions. In April 1993, the company acquired its largest competitor, Tata Oil Mills Company (TOMCO), the biggest such deal in Indian industry till that time. HLL formed a 50:50 joint venture with another Tata company, Lakme Ltd in 1995. The venture named ‘Lakme Lever Ltd.’ marketed Lakme’s leading cosmetics and other associated products. (Subsequently in 1998, the Tatas divested their 50% stake in the venture to HLL).
In January 1996, group company Brooke Bond Lipton India Ltd. (BBLIL) merged with HLL. Another group company, Pond's India Ltd, merged with HLL in January 1998. By the late 1990s, the integration of the different Unilever entities operating in India, had been completed by and large. (See Exhibit I for HLL’s financial performance in the past 10 years).
How it all began
It was in early March 2001, that news reached HLL’s senior management in Mumbai that something had gone wrong at the Kodaikanal thermometer plant. A query from Corporate Watch, an N.G.O, whether there had been any disposal of mercury contaminated waste (along with broken thermometers and ground glass) from the plant, came...