Building Muscle At HUL

EVEN THOUGH the MD and CEO of Hindustan Unilever (HUL), Sanjiv Mehta, retired on June 1 after a 10-year stint, his tenure with the Anglo-Dutch conglomerate extends till March 2024 when his role as Unilever Indonesia chairman ends. Mehta has been travelling extensively to bid goodbye to team members across locations. Just back from Karachi after his farewell, he sinks into a couch in the library of the plush World Tower in Mumbai (where he lives) and reminisces about his years in HUL. “I bid farewell with gratitude in my heart and prayers on my lips,” he says.

Mehta took charge in 2013 when HUL’s turnover was ₹25,000 crore. Ten years later, when he stepped down, net sales were ₹59,549 crore. Market cap grew from ₹1.01 lakh crore in 2013 to ₹6.01 lakh crore in June 2023. In past one year, the company has added ₹8,000 crore revenue, growing the topline 16%. Volumes expanded 5% compared to FMCG industry’s -0.4% growth.

Mehta had an eventful tenure. When he took over in 2013, the country was in the midst of a rural slowdown. Then came demonetisation and GST followed by Covid and more recently high inflation. Mehta decided to focus on protecting the business model and strengthening the consumer franchise. “During high inflation, it was not about increasing margins. It was about ensuring that the business model is intact and margin dilution remains at acceptable levels. We grew market share in a very large part of our portfolio.” On the other hand, he stepped up innovations at the premium end to enhance margins — ₹10,000 crore-plus revenue in last 10 years has come from portfolios which didn’t exist earlier.

But category development and building the premium portfolio is complemented by attendance to the core brands. During one of his visits to a Tier-II market, he felt there was something wrong with the bar of Lux soap at the hotel. He asked for a few more bars and wasn’t happy with them either. He spoke to the distributor and the contract manufacturer and realised that the formulation needed to be tweaked. “We changed the formulation and the market share spiked,” says Kedar Lele, executive director (customer development), HUL.

During the inflationary period, HUL did not make any drastic cut in advertising or even capital expenditure either “We have never shirked from long-term commitment to the business,” he adds. The long-term perspective applied to talent management too. “He always told me to spend disproportionate time on choosing the right people,” says Anuradha Razdan, executive director (human resources).

Mehta’s colleagues call him a demanding boss. However, he is a people’s person too. “During Covid, he used to call every member of his team personally to check how their families were doing,” says Lele. “He told us to drive a culture of high performance and accountability. You must first invest in building deep relationships and trust; the latter gives you licence to do the former,” adds Razdan.

People-centricity has been core to Mehta’s way of doing business. “Look after your people and the people will look after your business. I learnt this during the Arab Spring when I was leading the business in Middle East and North Africa. During Covid, we looked after not only our 23,000 employees but also the 3,00,000 people who work in our ecosystem,” says Mehta, recalling that the then CEO of Unilever, Paul Polman, had given him two briefs before he came to India — increasing competitiveness of the Indian market and ensuring that India was accretive to Unilever’s global margins.

His most talked about strategy is Winning in Many Indias. It was about recognising the heterogeneity of the country and launching products and strategies which resonated locally. “I was inspired by my previous role as chairman of North Africa and Middle East. We had more than 20 countries in my region. When I came to India, I recognised that those 20 countries had more in common than the 29 states of India. They had predominantly one language, Arabic, one predominant religion, Islam, and one predominant culture. Here, languages and palettes are different. Even the way we dress is different.” Mehta encouraged his team to innovate keeping in mind local needs. Therefore, the formulation of Brooke Bond Red Label tea in North is different from, say, in the East, as tea brewing methods differ.

Mehta also bet on technology. “We said we have to reinvent HUL. Whether it is agile innovation or highly digitised backend, whether it is our proprietary models such as Jarvis or Chanakya where we use algorithms and machine learning to optimise variables that go into an FMCG business or the front-end with Shikhar app (which has onboarded over one million retailers), we have transformed HUL.” The former HUL CEO is particularly proud of cost saving initiative ‘Project Symphony’. In most consumer goods companies, margin improvement initiatives are led by supply chain or finance functions. Mehta got others also to also come up with cost-saving ideas. The project generated over 800 ideas in first year of launch in 2015. Before Covid, the company expanded margins in 32 out of 33 quarters. So, what’s next for Mehta? He wants to be an ambassador of India’s consumption story. “I am a huge believer of the India story,” he says. He is already on the board of Danone India and Air India and says he will soon let the industry know about his next move. The 63-year-old is certainly not in a mood to hang his boots.