Reviving Hindustan Lever Limited
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Case Code : BSTR206
Case Length : 19 Pages
Pages Period : 1998-2006
Organization : HLL
Pub Date : 2006
Teaching Note :Not Available
Countries : India
Industry : FMCG
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
Exploring New Businesses/Marketing Channels
Besides improving its core businesses, HLL started to venture into new areas such as the ayurveda/herbal market, water purification systems, and into new channels of marketing such as the direct selling model (through Hindustan Lever Networks) and Sangam Direct (dial-in services for groceries in Mumbai). In June 2002, HLL introduced Lever Ayush ayurvedic health and beauty care products. The purity of the ingredients used in the products was endorsed by the renowned Arya Vaidya Pharmacy of Coimbatore...
Focus on Food Business
Globally, most of Unilever's revenues came from its food business. In India, however, more than two-thirds of HLL's revenues came from its home and personal care business. Two successive CEOs - Banga and Manwani - wanted to increase the company's revenues from the food business in line with the trend in the parent company. In his outgoing speech, Banga said, "Historically, our foods business was fragmented and lacked scale. It was often commoditized with low margins. We recognized that changing food habits would require considerable investment, which the current business simply could not afford. Therefore we divested the non-value added parts, like vanaspati...
Changes at the Top
Banga was promoted and made President of Unilever's global food business. Manwani became Chairman of HLL in June 2005. During Banga's tenure, HLL went through several ups and downs. The slowdown of the FMCG sector in India due to the monsoon failure affected HLL's businesses. During this time, several small players made inroads into the rural FMCG market...
The Challenges Ahead
A few industry analysts were not impressed by HLL's moves. They pointed out that HLL had divested some of its power brands like Nihar, A1 and Dalda which had high potential. With the revival and growth of the Indian economy, there would be all-round growth in the FMCG sector and HLL would not be able to reap the full benefits of this growth, they opined. Others felt that Baillie's leadership would be crucial in ensuring the success of the company's revival strategies. They also opined that managing HLL would be tough for Baillie. First, he would have to boost the morale of HLL's employees which had fallen owing to the poor performance of the company over the last seven years...
Exhibit I: HLL Stock Performance
Exhibit II: FMCG Industry in India
Exhibit III: HLN Products and Prices
Exhibit IV: HLL - Revenues Contribution of Different Categories (%)