HLL to make Mumbai the sole power centre

HLL to make Mumbai the sole power centre

Author | Source: The Economic Times | Wednesday, Jul 19,2006 7:46 AM

HLL to make Mumbai the sole power centre

Consumer heavyweight Hindustan Lever (HLL) is believed to be consolidating its operations under one roof and is thinking of putting an end to its decades-old system of two power centres - home and personal care in Mumbai and foods in Bangalore.

Such a move will ensure a single chain of command through the chief executive to ensure benefit of synergies across businesses. The company is understood to be examining a plan to put on sale one of its top-notch properties in India - the 10-acre palatial, sylvan Brookefield facility in Bangalore, which is home to many of HLL's food brands like Brooke Bond and Lipton.

The foods business, accordingly, will relocate to Mumbai. The property, which currently houses around 300 employees, came into the HLL fold following the acquisition of Brooke Bond in 1984 by Unilever in a global deal. The massive property was set up in 1983 when tea major Brooke Bond moved its headquarters from Kolkata to Bangalore.

HLL officials denied any such plans. “This information is absolutely untrue and is baseless speculation. The company does not have any plans, whatsoever, to sell off the Brookefield facility,” a company spokesperson said. However, people close to the decision said that the company has begun top-level discussions on handling the issue sensitively and avoiding any negative HR repercussions.

The need for a separate office in Bangalore has come into question especially since the plan is to bring the languishing food business under the gaze of the top management, and infuse a new sense of purpose and accountability. For years, HLL's food business has functioned almost as a separate company with no common consensus on the growth strategy.

The separation gained even more importance after Brooke Bond Lipton was merged with Hindustan Lever in 1996 and R Gopalakrishnan, the vice-chairman, handled the foods business from Bangalore.

Sources said the idea was to have all divisional heads in one office with a common sense of purpose. Top officials have blamed the separation of the foods division as one of the reasons for its poor performance.

Unlike the HPC business, which has done exceedingly well in recent years, the foods business has been a non-starter with most of its acquisitions going dud and unable to take on competition.

Lipton was acquired by Unilever in 1972, and Lipton Tea (India) was incorporated. Later, the two companies were united before being merged with Hindustan Lever.

Bangalore has been a preferred testing ground for new consumer products and was one of the earliest cities to embrace modern retail formats like Food World. Britannia's registered office is Kolkata, but its business is run out of Bangalore. Similarly, ITC which is headquartered in the same city runs its foods business from Bangalore.

A regional structure has been set up by the Unilever group, wherein the local units will be responsible for activities like activation, distribution and on-ground strategy. The regional (Asia-Pacific in this case) centre will man activities like branding, innovation and advertising. A separate structure may even be better at times, say, for a new venture.

Surplus land sales are usually due to a restructuring of businesses, which either leads to manufacturing operations being realigned or in fewer cases, commercial operations being realigned. Whenever large corporations merge, surplus real estate is created because of duplicate corporate structures and even manufacturing locations.

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