Reviving Hindustan Lever Limited
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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.
"There is initial euphoria surrounding Levers right now, but it is still early days to predict its comeback. There is no need to go overboard about its growth claims. It can possibly make a comeback with a 6-7 per cent topline growth, which is good, but it would still lag behind industry growth rates. Even if its stock price has moved up, it has still under-performed in its sector." 1
- Nikhil Vora (Vora), Vice-President (Research), SSKI Securities,2 in July 2005.
"Blame Lever's decline on a mixture of management hubris and a rapidly changing Indian market. After two decades of dominance, Lever's managers lost touch with consumers."3
- BusinessWeek, December 27, 2004.
Back on Growth Path
On December 16, 2005, Harish Manwani (Manwani), Chairman of Hindustan Lever Limited (HLL), India's largest fast moving consumer goods (FMCG) company announced that Douglas Baillie (Baillie) would take over as the Chief Executive Officer (CEO) of HLL from March 01, 2006.
HLL also reduced the prices of its detergents but this impacted its profit margins adversely. Though HLL's detergent sales volumes increased from 892 thousand tons to 930 thousand tons between 2001 and 2004, sales in terms of value dropped from Rs 19.75 billion to Rs 18.72 billion. HLL's management began a restructuring exercise that aimed at boosting growth both in terms of volumes and revenues, finally translating into better profits for the company.
1] Purvita Chatterjee, "HLL: On Comeback Trail?" The Hindu Business Line, www.blonnet.com, July 07, 2005.
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