Business Today

Reinventing HUL

Hindustan Unilever can trace its history in India back to the late 19th century.
twitter-logo Prosenjit Datta   New Delhi     Print Edition: August 12, 2018
Reinventing HUL

Hindustan Unilever can trace its history in India back to the late 19th century. It started by shipping Sunlight soap, Lifebuoy, Pears, Vim and others to the country from England. In the 20th century, between 1931 and 1935, it had set up three Indian subsidiaries - Hindustan Vanaspati Manufacturing Company, Lever Brothers Ltd and Hindustan Traders Ltd. Post Independence, the three subsidiaries merged to become Hindustan Lever Ltd in 1956. By the 1960s and '70s, it had made a name for itself for its products, its methodical expansion of distribution to reach the farthest corners of the country, and the excellent training of its executives and managers. (HUL - then HLL - has been a favourite poaching ground for managers by both Indian companies as well as global giants setting up shop post liberalisation.)

It continued growing through the decades with both organic means as well as buyouts and acquisitions. But as it grew bigger, it also had to deal with sudden market disruptions and challenges by smaller rivals from time to time. The most famous was the Nirma assault on Surf's detergent market. HLL fought back by introducing its own lower priced detergents and segmenting the market, but it had been caught flatfooted initially.

HLL also had to fight other battles over the years, though, many of them were with fellow MNCs (like the entry of P&G) but over the past decade or so, analysts had started worrying once again that HUL (it had been renamed in 2007) had become too big and too established to be nimble or show dramatic growth without taking over new companies.

In 2013, when Sanjiv Mehta took charge as the new CEO and MD, HUL was immensely profitable - but it was also being outwitted in smaller regional markets by rivals, who could innovate and roll out products quicker. For example, the rise of Patanjali definitely took it by surprise, though, HUL moved to revamp its Ayush portfolio once it got its act together. Since he took over, Mehta (who was made Chairman in July 2018) has been hard at work to reinvent the venerable giant, and create a new HUL for the future. He had banked on creating product variants that appeal to more local tastes, creating a structure that can help take decisions and launch products much faster, and also used Artificial Intelligence and other digital technologies to reshape the way Lever does everything from product development to stocking grocers to distributing more efficiently and frugally.

The results are beginning to show and the stock markets have applauded - sending HUL's stock price and market capitalisation shooting through the roof. In our cover story this issue, Senior Editor Ajita Shashidar looks at what Mehta has been doing so far.

Meanwhile, the Modi government is following an interesting strategy for the public sector enterprises. The brief to the Department of Public Enterprises Management secretary is to maximise returns to the investor (read: the government). Don't miss this and the other interesting features as well as the sector report on health care in this issue.

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