ET AWARD .. COMPANY OF THE YEAR HINDUSTAN UNILEVER

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