Going Strong Even in
Tough Times
...and the award goes to
COMPANY OF THE YEAR HINDUSTAN UNILEVER
Hindustan Unilever (HUL) sells more products in India
than its global rivals Procter & Gamble, Nestle, Colgate,
GSK Consumer and Reckitt Benckiser put together.
Yet, in an environment where the country's consumer
products sector expanded at the slowest pace in a decade,
the Indian unit of the Anglo-Dutch giant grew 10% in
2014-15, at almost double the rate of the overall market.
A host of factors
contributed to this from doubling
distribution to 3.2-million outlets and launching premium
brands amid fall in spending on discretionary products to
novel marketing initiatives for reaching out to villages
beyond the range of traditional advertising avenues such
as TV and radio.
“We have taken several steps to make Hindustan Unilever
more agile, nimble and entrepreneurial,“ said Sanjiv Mehta,
CEO and managing
director, who joined the company two
years ago. “Equally, the various interventions that we
have made, from increasing the pace of our innovations
to the framework of `Winning in Many Indias' have helped
us to continue winning the hearts and minds of our
consumers and customers.“
Last year, HUL reorganised its go-to-market operations
from the traditional four sales branches to 14 consumer
clusters.HUL also added a fifth branch in central India to
accelerate sales in a relatively underpenetrated but
high-growth market. This strategy of countering regional
competition has helped improve market share for about
90% of its products.
In the Company of the Year category , the jury debated
between HUL, Lupin and Axis Bank. HUL was selected for
its size, consistent track record, strong governance
processes and ability to soldier on with a strong array
of brands in a tough market. “Sanjiv has steered HUL
well from where it was since taking charge,“ noted one
jury member.
The numbers bear witness to this. The company's net
profit doubled to `4,363 crore in the past four financial
years and revenue grew at a compounded annual growth
rate of 12% to almost ` 32,000 crore.
It also maintained an operating margin of 16% in the past
three years. HUL's market capitalisation tripled in the past
four years to more than `2 lakh crore. With the company
paying more than 80% of its profit as dividend, little wonder
HUL is valued at over six times its revenue even during
challenging times during challenging times for the sector.
Although P&G has stepped up its competitive intensity
and ecommerce channels are gaining popularity in urban
India, analysts are confident HUL will retain its position
as the market leader.
“While price cuts and increased sales promotions are
likely to partly erode the commodity-tailwind benefits,
the gap with regional players is being reduced and urban
sentiment is improving. Hence, we now expect the pace of
premiumisation to pick up again.HUL is the company best
positioned to take advantage of the Indian demographic
`dividend' and the premiumisation trend,“ said Nitin Mathur,
an analyst at French financial services firm Societe Generale.
Six HUL brands Surf, Wheel, Rin, Fair & Lovely, Brooke
Bond
and Lifebuoy have each crossed `2,000 crore in annual sales.
Five brands, including Lux and Dove, had sales exceeding
`1,000 crore each and another six brands generated
`500 crore each last year.
|
ET19OCT15
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