Sanjiv Mehta is handing over the baton at Hindustan Unilever Limited (HUL) to Rohit Jawa, another Unilever veteran who has worked in various capacities all over the world. Java has big shoes to fill, but his track record and the goodwill he enjoys from fellow pros suggest he will thrive in the role.
Mehta is a tough act to follow. He took over as Managing Director and CEO in October 2013 at the relatively young age of 52. Jawa began his tenure at the age of 56. There was a disaster in 1984 in Bhopal.
Those crisis-management skills would have equipped him to deal with subsequent crises at India’s largest fast-moving consumer goods (FMCG) company. The demonetisation in November 2016 certainly created a crisis for the Indian economy as people suddenly found themselves bereft of liquidity. No company could put money in the hands of consumers, but they could reduce the pain in the distribution chain. HUL managed it in the best possible way.
In July 2017, India made changes to the Goods and Services Tax. A change in the tax regime need not signal a crisis, but in India we have the potential to create a crisis out of thin air. The FMCG giant handled the inventory already in the system admirably when the transition to GST began, given the lakhs of stock keeping units (SKUs) on which the labeling had to be changed.
However, the anti-profiteering department of the government’s GST administration accused the company of not passing on savings to the end consumer through cascading tax avoidance on taxes in the GST enabled supply chain.
Dealing with regulators and tax authorities is certainly one of the tasks of a corporate leader. Suave Sanjeev Mehta was good in that. Then he had to endure the pestilence and its disruptions. To his credit, the company remained strong on his watch. turnover exceeded 50,000 crore and the company’s market capitalization grew more than four-fold to $75 billion, making HUL more valuable than many global FMCG majors.
A Harvard Management graduate, Mehta has devised several strategies to help HUL thrive in India. One is what he calls a ‘victory in many Indias’. In his public comments, he has chosen to describe this strategy as one that is hard to replicate.
It may not be a red rag for a bull for the incoming MD & CEO, but it certainly is a challenge. Rohit Jawa is a relative stranger to the Indian media, having worked his way up the senior Unilever ranks outside the country after joining the company in 1988 as a management trainee.
But Gopal Vittal, one of HUL’s most senior executives before joining Bharti Airtel as CEO, has good words for Jawa. She has worked in India, Vietnam, Thailand, Singapore, Philippines, Indonesia and China with wide experience in home care, personal care and food sectors. He was the chairman of Unilever China. He is currently Head of Transformation at Unilever in London with experience in digitization.
Growth was underway for Mehta. During his tenure, India’s per capita income in dollar terms grew by 60% and the country jumped from low-income to middle-income (albeit at the low end of this range). This is a huge positive for consumer goods, as items like packaged food are suddenly being discontinued.
Java is likely to support rapid urbanization and greater concentration of purchasing power geographically and social segment-wise. This will allow a large portion to develop demand patterns similar to those of rich countries, even as the ‘many India’ that Mehta is bent on winning remains to woo consumers.
While online sales were expected to reduce the profits of connected players in the case of large distribution networks like HUL, it has not played out as expected so far. But the share of online sales in total retail sales has been low. This could change not only with the growth of Amazon, Flipkart and Reliance but also with new entrants including the government-sponsored Open Network for Digital Commerce (ONDC).
A new arms race in robotics and artificial intelligence, enabled by 5G communications, will follow in retail and other sectors. Jawa’s experience of transformation and digitization will help them meet these new challenges.
The well-thought-out, planned succession from within the Unilever universe, announced four months before the transition, sets a good example not only for other companies but also for the government, which can sometimes still four months after a key decision to identify a successor. Struggles. The player has left the office.
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