Back on Growth Path
On December 16, 2005, Harish Manwani (Manwani), Chairman of Hindustan Lever Limited (HLL), India's largest fast moving consumer goods (FMCG) company announced that Douglas Baillie (Baillie) would take over as the Chief Executive Officer (CEO) of HLL from March 01, 2006. |Having worked with HLL's UK based parent company - Unilever - for over 25 years, Baillie was promoted from the post of Group Vice-president| |and Head of Unilever AMET (Africa, Middle East and Turkey). HLL has been experiencing many problems since the late 1990s. The company's | |plans for 2006 include moves aimed at increasing its market share in the laundry and hair care segments. HLL's financial performance | |between 2001 and 2004 was not up to the mark. During the period, its revenues plunged by Rs 7.27 billion, while profits fell by Rs 3.5 | |billion. HLL which earlier commanded a dominant position in most of its product categories, lost market share in the detergents segment | |after competitors like Procter & Gamble (P&G) resorted to price cuts |
HLL also reduced the prices of its detergents but this impacted its profit margins adversely. Though HLL's detergent sales volumes increased from 892 thousand tons to 930 thousand tons between 2001 and 2004, sales in terms of value dropped from Rs 19.75 billion to Rs 18.72 billion. HLL's management began a restructuring exercise that aimed at boosting growth both in terms of volumes and revenues, finally translating into better profits for the company.
The company decided to do away with its 'margin approach' and aimed at getting more market share in all product categories, especially in the laundry and hair care segments. These decisions were taken in the face of its declining sales and margins. The company's stock too performed badly during this period. By focusing on volume and revenue growth, reviving promising products and concentrating on its 'power brands,'4 HLL hoped to enhance the company's revenues and profits in the long run. The new CEO is also expected to steer the company in this direction. All these changes, begun in 2002, have started to bear fruit as HLL registered double digit growth of 14% in its revenues in the third quarter of 2005. About HLL
In HLL's presence in India dates back to the late 1800s, when Sunlight soap manufactured by the Lever Brothers (UK) was imported to India in 1888. In 1895, Lifebuoy soap was introduced in the Indian market. This was followed by the launch of other popular global brands like Pears in 1902, Lux in 1905 and Vim in 1913. |The Lever Brothers launched several other products like Vinolia soap, Rinso soap powder and Gibbs dental preparation. Unilever was formed | |on January 01, 1930, with the merger of Lever Brothers and Margarine Unie.5 In 1931, Unilever established the Hindustan Vanaspati | |Manufacturing Company, its first Indian subsidiary. Unilever then established Lever Brothers India Limited in 1933, followed by United | |Traders Limited in 1935. When Lever Brothers started importing into India in 1888, it appointed agents in the cities of Calcutta, Mumbai, | |Chennai and Karachi to distribute its products. In 1941, with the growing success of the Lever brands, the company took over these agencies| |and acquired its own sales force. |
By 1942, Unilever began to train Indians to handle junior and middle management levels, instead of bringing in Europeans. By 1955, 65% of the company's managers were Indians. In the year 1956, Unilever merged Hindustan Vanaspati Manufacturing Company, Lever Brothers India Limited and United Traders Limited to form HLL.
HLL offered 10% of its equity to the Indian public, becoming one of the first foreign subsidiaries in India to do so. In 1958, HLL established a research unit at its...
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