Many challenges for HUL's new boss

Sanjiv Mehta has cut himself an unusual career for a chartered accountant.

Rather than move up the echelons of finance management, he was part of crisis management at his first employer, and then the commercial head of home and personal care products and, lately, chairman of Middle East and North Africa for Unilever, the second-largest fast-moving consumer goods company in the world.

As he takes over as chief executive at Unilever’s India arm, and the country’s largest FMCG company, Hindustan Unilever, on Tuesday, he will be the first to not have had a stint in Indian business before doing so.

The current slowdown has not spared FMCG companies and though fortified on the back of an open offer and a reinforced supply chain, HUL has challenges of its own to battle.

If not for these, all Mehta had to do was ensure continuity to ride out the gloom.

However, he will now have to iron out creases at one of its bread and butter segments, skincare, at a time when HUL’s top brass’ drive on premiumisation is seeing resistance due to sobering consumer sentiment.

The company is different from the HUL in April 2008, when predecessor Nitin Paranjpe had taken over as CEO.

Paranjpe, who joins the Unilever Leadership Executive, took on the role of president, home care, moved up the ranks in laundry and home care and then personal care, right from being an area sales manager to being the executive director.

He took the company out of the woods during the previous slowdown that India had faced.

Jyothy Laboratories’ joint managing director, Ullas Kamath, says: “Nitin breathed new life into HUL by doing away with power brands, increasing rural and semi-urban reach and, most important, building a team that worked hard, stayed together in the past five years. I wish Sanjiv all the best; he should strive to not undo what has been done so far.”

Another industry peer points to the internal changes under Paranjpe’s watch and what Mehta would do well to preserve: “He brought Leena Nair on board and rehauled the human resources at HUL, with a young team which was answerable for bringing about results and members rotated every three years for a rounded experience.

Various programmes also led to low-cost production and an extensive distribution in the hinterlands.

It is like HUL is now on auto-pilot and process-driven in a way that people are more aware of the company than the man behind it, which is the mark of a leader.”

One of Paranjpe’s peers and batchmates says, “Mehta might need to reassure shareholders on not losing margins.

“He would have to think of ways in absorbing the pressure on volume growth in these times. One of these could be telling them that HUL would take a hit on volume but maintain margins since it can afford to do so.”

IIFL’s Jain wants Mehta to focus on innovation and relaunches. Nikhil Vora, managing director at IDFC, says: “Paranjpe has been able to restrict market share losses and even grow in some categories.

“But the biggest challenge remains the absence of a funnel of new products, especially because its core categories are only expected to grow weaker.”

Image: Nitin Paranjpe; Photograph, courtesy: Business Standard