Confident on India's growth profile and margin profile: Srinivas Phatak, Unilever

Unilever remains optimistic about its performance in India, calling it a consistently strong and strategic market. The FMCG giant is seeing continued share gains in the region and plans to double down on its investment across core categories such as Home Care and Hair.

“Coming to India, I think it's important to really put into context it is a very strong business for us. It is a consistent performer for us. It has been gaining shares for the last three years and there is a lot to play for,” said Srinivas Phatak, Acting CFO, during the company's earnings call.

Despite global economic volatility, the company does not foresee any new challenges emerging from the Indian macroeconomic environment. On the contrary, Phatak highlighted a range of supportive factors that are likely to fuel both core growth and market development.

“There are no new headwinds for us. I think that's an important element to call out,” he said. “There are potential tailwinds, there are benefits coming from the government incentives, tax relief, lower food and lower oil inflation, and many, many factors which are playing to really, not only drive core but also to lead market development.”

The company is set to ramp up investments in categories where it holds leadership positions. While Home Care and Hair are on the growth radar, Unilever is also aiming to revive performance in segments like Lifebuoy and GAL (Glow & Lovely).

“In some of our core, we have to address GAL, we have to address Lifebuoy, which in the short-term will mean we need to really invest behind these brands and in some categories we are seeing competitive intensity go up,” Phatak explained.

Acknowledging short-term pressures, he remained firm on the long-term strategic potential of the Indian market. “There are periods when the dial is down but the long-term economics of that market prevail and we are well positioned to do that and in defending some of these categories we will be unblinking,” he said.

The Foods category has emerged as an area needing sharper focus, and the company plans to take corrective steps, as per Phatak.

He added that Unilever is confident in India’s overall growth and profitability trajectory. “This is a market where we will be unblinking in our defence, and when we get our growth engine moving up we know how to really make money here and how really to drive earnings ahead of growth. So all in all, we are very confident both on the growth profile, as well as on the margin profile for India.”

On the product front, Unilever saw a modest uptick in its Skin Cleansing category, while Lifebuoy continued to face pressure across several markets.

He acknowledged the challenges facing Lifebuoy, especially in the Asian markets. “Lifebuoy declined due to challenging markets in Indonesia, China and India. In India, we are addressing the decline by relaunching the brand with an elevated proposition for skin protection,” he added.

Adding to this, Unilever has seen one of their international competitors in India resort to significant discounts particularly in the liquids format. Fernando Fernandez, CEO, highlighted, “We have responded to that and that has also weighed down our performance in Home Care, but we will not blink when it comes to the defence of our position there.”