In the first ever organisational restructuring of this magnitude effected by Hindustan Lever Ltd (HLL), the FMCG business, which accounts for more than 90 per cent of the company’s revenues, has been split into home & personal care (HPC) and Foods. This realignment is in line with Unilever’s global strategy of having two main business divisions.
In a related development, HLL chairman MS ‘Vindi’ Banga has been appointed as Business Group President of Unilever’s $6 billion HPC business in Asia, effective July 1, 2004. He will continue as chairman on HLL’s board, but in a non-executive capacity.
The company has constituted a National Management chaired by HLL vice-chairman MK Sharma. The others include D Sundaram, director (finance & IT) and two newly appointed managing directors — Arun Adhikari (for HPC) and S Ravindranath (for Foods).
The National Management will have responsibility for HLL’s performance and results, and overall co-ordination of the Divisional Structure and Corporate Functions, the company said in a release.
Commenting on the changes, Mr Banga told FE: “On a personal level, I am delighted. But nothing is going to be that different, and my heart, soul and body will continue to be 200 per cent with HLL. These changes have been made to simplify the structure and ensure smoother functioning.”
The two managing directors will report to Mr Banga, and so will the vice chairman. With $6 billion of sales, Unilever’s Asia HPC business which Mr Banga will now look after, is larger than North America and Europe.
In a formal statement earlier in the day, Mr Banga said: “Consolidating on FMCG business units into two divisions — HPC and Foods — will considerably simplify the organisation and provide sharper focus on key brands and categories. There will be greater empowerment and much quicker decision making which will benefit the business. The divisions will continue to harness synergies of scale within and across businesses.”
Adding that the cost reduction generated will be used to provide “fuel for growth”, Mr Banga added: “We will also be able to leverage our linkages across Asia much more strongly.”
Mr Banga now HLL’s announcements had no major effect on the company’s stock price. The HLL stock opened at Rs 152.25 on The Stock Exchange, Mumbai, reached a high of Rs 153.75 before closing at Rs 150.65.
Mr Banga, in his new capacity, would be based primarily out of Singapore. He takes over from Jeff Fraser, and follows the footsteps of Indian managers who have made it big in Unilever. Keki Dadiseth is currently Global Division Director (Home & Personal Care) while Harish Manwani is currently President (Home & Personal Care-North America).
The HPC business of Unilever in Asia, covering India, China, Korea, Vietnam, Australia, New Zealand, Phillipines, Indonesia, Malaysia, Singapore, Hong Kong, Taiwan, Thailand, Pakistan, Bangladesh, Sri Lanka, Nepal accounts for a turnover of around $6 billion. HLL alone accounts for about 30 per cent of this turnover. Mr Banga will continue to provide strategic leadership and operational direction to HLL, the release adds.
As a result of these organisational changes, the board of directors has been recast. Mr Aart Weijburg, director (detergents) has moved to Unilever while Gurdeep Singh, director (human resources) has retired. Mr Adhikari and Mr Ravindranath has been inducted in these positions.
Mr Sharma’s portfolio has been broadened. In addition to his corporate and legal & secreterial functions, he will now oversee human resources, marketing services, corporate affairs, communications and technology.
The managing director positions for individual business is also a first in HLL’s history. The newly created HPC division, to be headed by Mr Adhikari will integrate the soaps & detergents business and the personal products business. Similarly, the Foods division, to be headed by Mr Ravindranath, will integrate the beverages, foods, ice cream and confectionary businesses.
The new Ventures and non-FMCG businesses, comprising Plantations and Speciality Exports, will continue to be headed by three executive directors — Dalip Sehgal (New Ventures), Satish Dhall (Plantations) and Anoop Mathur (Technology and Speciality Exports).
“This simplifies the organisation structure. It will enable the organisation to have a sharper focus on brands and enable better resource deployment,” said a HLL spokesperson.
However, he added that the re-organisation was at a senior level and it would not effect the manufacturing and sales operations at the ground level.
These changes come at a time when HLL is fighting a bitter pricing battle with its rival Procter & Gamble in the detergents and shampoo category.
According to HLL, it will continue to harness synergies of size and scale across businesses to generate competitive advantage. The cost reduction will enable further investment in brand building. The new organisation and leadership changes will also enable the company to leverage its linkage with Unilever across Asia more effectively.