CEO of the Year: How Hindustan Unilever grew well under Sanjiv Mehta

Sanjiv Mehta, managing director and chief executive officer (MD & CEO) of Hindustan Unilever (HUL), one of India’s largest consumer goods majors, announced his retirement through a LinkedIn post only a few days ago, after being at the helm for 10 years and spending 31 years at Unilever.

Mehta began his post saying, “I started the day today with gratitude in my heart and prayers on my lips. Today, we announced my inning at Unilever will come to an end at the conclusion of HUL’s AGM on June 26.” He also said, “I will go with the comfort that our business today is much stronger than ever before and our impact on the country and society much larger.”

He also said that his 31-year career has seen an exhilarating rise. And for 21 years, he had the privilege of serving Unilever’s businesses in 25 countries in various parts of the world as CEO.

During his tenure, HUL’s revenue crossed Rs 50,000 crore in FY22 and in his 10 years at the helm, turnover increased by 2.3 times. Its Ebitda margin went up 8.6 percentage points and market capitalisation rose by five times to $70 billion (Rs 5.65 trillion). Mehta was also behind one of the biggest deals in India’s consumer space, which helped HUL gain a major share in the food and refreshment category with products like Boost and Horlicks.

The year 2021-22 (FY22) was marred by a slowdown owing to inflation, which impacted the Indian fast-moving consumer goods (FMCG) market. Moreover, the second wave of the pandemic at the beginning of the year had an impact.

While inflation remained a problem for the sector, packaging and transportation costs also shot up. HUL’s teams moved dynamically to ensure business continuity by securing material supply, onboarding new suppliers, flexing formulations and making strategic buying interventions. The maker of Lux soaps localised sourcing of many of its chemicals and leveraged the growing domestic chemical industry, to reduce import-dependency.

To remain future-fit in an increasingly technology-enabled world, HUL is now employing digital tools to identify new innovation partners, monitoring and reviewing quality performance, and tracking logistics and supply risks in real time.

HUL continued to grow its core in its beauty and personal care portfolio. It leveraged its ‘Winning in Many Indias’ (WiMi) philosophy and designed products based on the specific needs of consumers across India’s different regions. For instance, its skin-cleansing brands such as Lifebuoy and Lux introduced winning products by regions. Also, its market share in hair care touched a 15-year high in 2021. It also strengthened its leadership in tea and leveraged the WiMi strategy to deliver superior products tailor-made for varied consumer tastes.

In his LinkedIn post, Mehta described the WiMi strategy as a breakthrough that gave HUL a significant competitive edge that was “hard to replicate”.

In the home care business, Surf Excel became the biggest laundry brand, and in the last five years, its liquid detergents and fabric conditioners have grown four times. In 2022, it went on to become HUL’s first billion-dollar brand.

During the year, it also helped traditional trade embrace technology through its Shikhar app that enables zero-touch online ordering and has helped solve the two biggest challenges that retailers face — capital and space.

HUL’s consolidated revenue from operations grew 11.5 per cent to Rs 52,446 crore, aided by price hikes during the year to pass on the rise in input costs to consumers, while profit after tax grew 11.2 per cent to Rs 8,892 crore (over $1 billion).

This growth came at a time when consumer demand was impacted by high inflation. Many consumers were left with little choice but to move to lower-priced or smaller packs in order to keep up with rising inflation. Companies too, including HUL, were forced to increase prices across their portfolios. While other FMCG companies saw the impact on their volumes, HUL still managed to grow.

Notably, despite weak rural demand, HUL managed to outperform the market in both volume and value terms.

“The last few years have shown us that seemingly unbreakable systems and mechanisms can snap without warning; overwhelming and excessive information can lead to action paralysis; seemingly small and insignificant incidents can have disproportionate impact and comprehensive understanding of events and their effects is near impossible,” Mehta said. He added, “Even then, our world today is characterised as much by opportunities as it is by challenges. The only option is to adapt and thrive!”

In FY22, HUL worked continuously to keep its supply lines open with timely and strategic interventions, and even collaborated with other industries to meet the rising demand for some products. HUL also continued to innovate across business lines.

“At HUL, we innovate to meet trends, aspirations and needs of consumers across the socio-economic pyramid. With several consumer trends emerging out of the pandemic, such as home cocooning, need for health, hygiene and nutrition, e-everything etc, being close to consumers and understanding shifts in demand has never been as important,” Mehta said.

He explained, “We had to innovate — not only in products, but also in communication and route to market, to stay relevant and cater to evolving consumer needs. We must continue to invest in disruptive technologies that ensure a clean and sustainable future, to develop products and packaging that are both people- and planet-positive.”

While growing profits remains mandatory, like many in India Inc, HUL, too, contributed towards the safety and wellness of employees, workmen, their dependents and its outer core of around 300,000, including people who work for its distributors, small suppliers, and the Shakti Ammas.

During Mehta’s tenure in HUL, the share of women in the management has gone up to 45 per cent, from under 20 per cent earlier. He says HUL is on course to becoming a gender-balanced management by 2025.

Mehta was chairman and MD of Unilever Bangladesh, which he turned around into one of the finest companies in the country, delivering mid-teens growth. As chairman of Unilever, North Africa and Middle East, he navigated the financial crisis and the Arab Spring, and delivered market-beating double-digit growth over his five years at the helm in that region.

In India, the ‘Re-imagine HUL’ agenda is a great example of a legacy company re-inventing itself with data and technology.

HUL’s Shikhar app has been adopted by 1.1 million retailers and its Dapada factory has been recognised as a lighthouse factory by the World Economic Forum for Industry 4.0.