In mid-2004, Hindustan Lever Ltd (HLL), India’s largest Fast Moving Consumer Goods (FMCG) company announced disappointing results. The company seemed to be struggling to grow its business. Just a few months back, HLL had announced a major top management reshuffle. According to many press reports, this restructuring which had taken place at the instance of parent company, Unilever, seemed to be a public admission of the challenges being faced by the company. The question uppermost in the minds of analysts was whether HLL could return to the heady days of the mid-1990s, when double digit growth had come so easily. Such doubts had caused stock market operators to hammer down HLL’s stock price. On May 2, 2000 when M S Banga had taken over as HLL Chairman, the HLL share (face value = Rs. 10) was quoting at Rs. 2,190. In April 2004, the share (face value = Rs. 1) price was only Rs. 150.
HLL, was a 51% subsidiary of the Anglo-Dutch conglomerate, Unilever, one of the largest FMCG companies in the world. Over the years, HLL had acquired a tremendous reputation as one of India’s best-managed companies. Despite being the subsidiary of an MNC, HLL was perceived to be more Indian than foreign, in the way it managed its operations. HLL was believed to operate with considerably more autonomy than other subsidiaries in the Unilever system.
HLL’s origin went back to 1885 when the Lever Brothers set up ‘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 exported vanaspati to India), to form Unilever. In 1931, Unilever set up its first Indian subsidiary, the Hindustan Vanaspati Manufacturing Company for the production of vanaspati. This was followed by the establishment of Lever Brothers India Ltd. in 1933 and United Traders Ltd. in... [continues]
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