From #22 in 2009 to #30 in 2010 and now #35 in B&E POwer 100 list. Onkar Pandey tries to find out where is HUL Going Wrong
Obviously it’s big base – HUL has grown from annual sales of Rs.113.92 billion in 2001 to a company with annual sales of over Rs.190 billion today – can be blamed for low growth rates, but that’s no excuse as the real problem is that most of the growth has been happening only in volume terms.
Nevertheless, satisfied with the company’s Q4 FY2011 performance (overall business grew by 14%, with personal care business growing by 16.2%, and homecare business by 13.6%), Harish Manwani, Chairman, HUL, said, “Our performance has been strong and consistent through the year. Input costs remain high, while the competitive environment has further intensified...” But then, the company has understood the very fact that there are challenges that it needs to take care of soon. And the as said by Manwani, the company has decided to focus on innovations and strong cost efficiency programmes to deliver long-term competitive, profitable and sustainable growth. However, the food business worries need to be addressed very diligently and immediately. The business that once contributed as much as 37% of the company sales (in 2001), after increased focus on home and personal care businesses lost sight and now contributes only 20%. Certainly ignoring the food division, considering that now the sector is growing at a faster clip now, really sounds like a bad strategy on HUL’s part. Anand Ramanathan, Manager, KPMG Advisory, says, “It’s definitely a cause for concern – the overall food market has out paced personal care and hence it is counter-intuitive for players such as HUL to not reflect this overall movement within the market.”
There is no doubt that after operating for so many years in India, HUL has the required bandwidth and management capability to come out of a slump like this. But for that, the company has to stabilise its top positions and of course, strategies. After all, neither can any CEO deliver overnight, nor can any strategy show sustainable developments in a jiffy; they both need time to fructify. At the same time, the company has to re-access its growth opportunities and focus on ongoing trends. The competition from hereon will only intensify to new degrees. So if HUL misses to build on the base that it has already created, then it might face the risk of losing the glorious India plot.
Nevertheless, satisfied with the company’s Q4 FY2011 performance (overall business grew by 14%, with personal care business growing by 16.2%, and homecare business by 13.6%), Harish Manwani, Chairman, HUL, said, “Our performance has been strong and consistent through the year. Input costs remain high, while the competitive environment has further intensified...” But then, the company has understood the very fact that there are challenges that it needs to take care of soon. And the as said by Manwani, the company has decided to focus on innovations and strong cost efficiency programmes to deliver long-term competitive, profitable and sustainable growth. However, the food business worries need to be addressed very diligently and immediately. The business that once contributed as much as 37% of the company sales (in 2001), after increased focus on home and personal care businesses lost sight and now contributes only 20%. Certainly ignoring the food division, considering that now the sector is growing at a faster clip now, really sounds like a bad strategy on HUL’s part. Anand Ramanathan, Manager, KPMG Advisory, says, “It’s definitely a cause for concern – the overall food market has out paced personal care and hence it is counter-intuitive for players such as HUL to not reflect this overall movement within the market.”
There is no doubt that after operating for so many years in India, HUL has the required bandwidth and management capability to come out of a slump like this. But for that, the company has to stabilise its top positions and of course, strategies. After all, neither can any CEO deliver overnight, nor can any strategy show sustainable developments in a jiffy; they both need time to fructify. At the same time, the company has to re-access its growth opportunities and focus on ongoing trends. The competition from hereon will only intensify to new degrees. So if HUL misses to build on the base that it has already created, then it might face the risk of losing the glorious India plot.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
