Crisis is good time to make changes in company: Nestle India CMD on lessons from Maggi fiasco
Remove Ads
Tired of too many ads?
Remove Ads
Tired of too many ads?
Remove Ads
Crisis is a very good time to make changes in a company, jettison things that are not adding value and put those that serve the purpose, Nestle India 's outgoing Chairman & Managing Director Suresh Narayanan said as he shared the lesson learnt from the Maggi crisis that hit the company a decade ago.Narayanan, who will retire at the end of this month after leading Nestle India for a decade and turning the company around from an existential crisis to a thriving business, in an interview with PTI said when there is "any movement in the environment, a company should be on top of it in terms of gauging how impactful it is going to be".The company's popular instant noodles Maggi was banned by the food regulator FSSAI in June 2015 for allegedly containing lead beyond permissible limits, forcing the company to withdraw the product from the market.Narayanan who was then serving as Chairman and CEO of Nestle Philippines, was immediately moved to India by the Swiss food multinational to handle the crisis. He joined Nestle India on August 1, 2015, as Managing Director, and Maggi was relaunched in November 2015, five months after the ban was lifted.When asked about what lessons were learnt from the Maggi crisis, he said, "Crisis is a very good time to make change. You can jettison all the things that are not serving the purpose of adding value to the consumer and put in things that add value to the consumer."Remembering his experience during the Maggi crisis, he said his first 100 days had been one of the greatest challenges of his career."I came into Nestle at a very troubled time. It was probably the existential crisis that was happening. It was one of those situations where Maggi was at the centre of all the news in the business world of India," he noted.Recollecting the experience, Narayanan said, "A crisis of this kind is more than technical facts. It is perspectives and perceptions that matter. Our initial response was more on facts, whereas we underestimated that Maggi as a brand was so much more impactful with the consumers."Therefore, he said, "When we started the conversation, not only with the environment, but also with the media, we brought to bear the power of the brand and what we stood for as a company that is of the highest food quality and safety."Second one, Narayanan said, "I think we learned a lesson that any movement in the environment, a company should be on top of it in terms of gauging how impactful it is going to be."According to him, it was the trust of brand Maggi and the collective strength of its employees, partners, distributors, suppliers and consumers that helped the company bounce back with a renewed vigour."We accepted the dictum that failing to succeed will help us to succeed," said Narayanan, often called the "crisis manager" of Nestle who steered Nestle from crises in several other markets such as Egypt and Singapore besides the Maggi incident in India.After the Maggi crisis, Nestle India quickened the pace of innovations, added Narayanan who is hanging his boots on Thursday after having a 26-year-long stint with the Swiss multinational Nestle.Elaborating further, he said, "We were an innovative company, but rather slow in innovation. So today we innovated about four times the rate of what we were doing pre-crisis. We have introduced almost 150 to 160 new products."Now the Rs 20,000 crore FMCG company is stronger, vibrant and connected, added Narayanan,It again got its pole position in the fast-growing instant noodles segment, where it still dominates with over 60 per cent market share from near extinction."It's the only example of a brand that went from market leadership to death and back to leadership in three months time and from then on it has been a journey that has been upwards despite the crisis that we have faced," said he noted.Nestle India's turnover is now about 2.5 times what it was in 2015 and our profits are about five times what it was in 2015, before the Maggi crisis."Our market capitalisation is about 4 times what it was in 2015. Our number of shareholders is about 7 times," he said, adding, "our return of equity, which is a measure of the performance of the company went up from 19 per cent to almost 90 per cent."Overall, the proportion of new innovations, which was around 1 to 2 per cent of the turnover, went about 7 per cent now.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
30 minutes ago
- Mint
President of wealthy Switzerland rushes to Washington to try to avert steep US tariffs
GENEVA — After weeks of working with U.S. officials to try to avoid hefty tariffs on Swiss goods, negotiators from Switzerland got assurances that a deal was all but done. Swiss businesses vowed to pour tens of billions in investment in the United States in the coming years. Still, President Donald Trump said no to any special deal. Now a scramble is underway ahead of Thursday, the deadline for when the whopping 39% tariff on Swiss products announced last week goes into effect. Switzerland's President Karin Keller-Sutter and other top officials traveled to Washington on Tuesday to try to convince Trump that the measure — among the highest from the Trump administration — was too much and could cut profits for famed Swiss industries like chocolates and watchmaking. The new rate is over 2 1/2 times higher than the one on European Union goods exported to the U.S. and nearly four times higher than on British exports to the U.S. — raising questions about Switzerland's ability to compete with the 27-member bloc that it neighbors. Under the U.S. announcements from last Friday, the export duties imposed on Swiss companies will now only be surpassed by those on firms from Laos, Myanmar and Syria, which are facing 40-41% rates. Switzerland's case is a lesson in do's and don'ts of doing business with Trump. The thinking goes, if a rich country with economic might that excels in technology, pharmaceuticals and finance can't convince the U.S. president to scale back the high tariffs, who can? Trump himself seems to be focused on a single, high number: Switzerland's trade surplus in goods with the U.S. In an interview with CNBC on Tuesday, Trump alluded to a recent call he had with Keller-Sutter, saying 'the woman was nice, but she didn't want to listen' and that he had told her: 'We have a $41 billion deficit with you, Madame.' It was not immediately clear where that $41 billion figure came from. According to the U.S. Census Bureau, the U.S. ran a $38.3 billion trade imbalance on goods last year with Switzerland. That figure excludes exports of services. Keller-Sutter, who also serves as Switzerland's finance minister, has faced criticism in Swiss media over the last-ditch call with Trump before a U.S. deadline on tariffs expired Aug. 1, which some say appeared to make things worse. The 39% rate is even higher than the 31% on Swiss goods announced on Trump's 'Liberation Day' in early April — before the Swiss started negotiating with U.S. officials. The new figure took many Swiss business leaders by surprise. 'It's hard to negotiate when you're dealing with someone as unpredictable as Donald Trump,' said Ivan Slatkine, head of the Federation of Romandie Enterprises, which groups companies in the French-speaking part of Switzerland. 'We had a government that gave the impression the deal was done, it only awaited a signature from the president,' Slatkine told The Associated Press over the phone. 'We have the impression that we were punished, but we don't know why.' The United States is Switzerland's second-biggest trading partner after the EU, which nearly surrounds the Alpine country of more than 9 million. The Swiss government said Tuesday's trip was meant to 'facilitate meetings with the U.S. authorities at short notice and hold talks with a view to improving the tariff situation for Switzerland.' Swiss officials have argued that American goods face virtually zero tariffs in Switzerland, and the Swiss government says the wealthy Alpine country is the sixth-biggest foreign investor in the U.S. and the leading investor in research and development. Switzerland's powerful pharmaceutical industry — which promised tens of billions of investments in the U.S. in recent months amid the tariff worries — is exempt from the 39% rate. But Slatkine said the steep tariff level could be aimed to send Switzerland's Big Pharma — epitomized by Roche and Novartis — a message that it too could come under pressure. The trip comes a day after Switzerland's executive branch, the Federal Council, held an extraordinary meeting and said it was 'keen to pursue talks with the United States on the tariff situation,' according to a government statement. After consulting with Swiss businesses, the council said it had developed 'new approaches for its discussions' with U.S. officials and was looking ahead to continued negotiations. "Switzerland enters this new phase ready to present a more attractive offer, taking U.S. concerns into account and seeking to ease the current tariff situation," the council said. According to figures published by the Swiss Embassy in Washington, the U.S. has been Switzerland's most important goods export market since 2021, while Switzerland is the fourth most important export market for U.S. services — not goods. The bilateral trade volume in goods and services between Switzerland and the U.S. reached a total of $185.9 billion in 2023, the embassy says on its website. This article was generated from an automated news agency feed without modifications to text.
NDTV
an hour ago
- NDTV
Trump Says Tariffs On Pharma, Chips Coming By "Next Week Or So"
US President Donald Trump signaled Tuesday that fresh tariffs on imported pharmaceuticals and semiconductors could be unveiled as soon as the coming week, as he presses on in efforts to reshape global trade. Trump's latest comments, in an interview on CNBC, come days before a separate set of tariff hikes takes effect on dozens of economies later this week. The sweeping tariff plans have sparked a flurry of activity as governments seek to avert the worst of his threats -- with Switzerland's leaders heading to Washington on Tuesday in a last-minute push to avoid punitive duties. But he appears set to widen his trade wars further. The US president told CNBC that upcoming tariffs on imported pharmaceuticals could reach 250 percent, while adding that he plans for new duties on foreign semiconductors soon. "We'll be putting (an) initially small tariff on pharmaceuticals, but in one year, one-and-a-half years, maximum, it's going to go to 150 percent," Trump said. "And then it's going to go to 250 percent because we want pharmaceuticals made in our country." Trump also said that Washington will be announcing tariffs "within the next week or so." He added: "We're going to be announcing on semiconductors and chips." Concern For US Economy Trump has taken aim at products from different countries with varying tariff rates after imposing a 10-percent levy on almost all trading partners in April -- with excluded products targeted by sector. While Swiss leaders are seeking to stave off a US tariff hike to 39 percent come Thursday -- which excludes sectors like pharma -- Trump's plans for a steep pharma levy will likely be a point of contention in any talks. Pharmaceuticals represented 60 percent of Swiss goods exports to the United States last year. Besides probing pharmaceuticals and chips imports, Trump has already imposed steep duties of 50 percent on imports of steel and aluminum, alongside lower levels on autos and parts. In the same CNBC interview, Trump said he expects to raise the US tariff on Indian imports "very substantially over the next 24 hours" due to the country's purchases of Russian oil. This is a key revenue source for Moscow's military offensive on Ukraine. His pressure on India comes after signaling fresh sanctions on Moscow if it did not make progress by Friday towards a peace deal with Kyiv, more than three years since Russia's invasion. Moscow is anticipating talks this week with the US leader's special envoy Steve Witkoff, and the Kremlin has criticised Trump's threat of raising tariffs on Indian goods. Weak employment data last week pointed to challenges for the US economy as companies take a cautious approach in hiring and investment while grappling with Trump's radical -- and rapidly changing -- tariffs policy. The tariffs are a demonstration of raw economic power that Trump sees as putting US exporters in a stronger position while encouraging domestic manufacturing by keeping out foreign imports. But the approach has raised fears of inflation and other economic fallout in the world's biggest economy.
&w=3840&q=100)
Business Standard
2 hours ago
- Business Standard
Despite near-term concerns, analysts upbeat on ABB India's stock
ABB India (ABB) suffered a miss during the April-June quarter (Q2) of CY25 due to higher competitive intensity and new quality control order (QCO) guidelines. Weakening order inflow may also impact operations, going forward. However, ABB gained share in base orders in Tier III and IV cities and is well-placed to benefit from a return of investment. It could remain a market leader despite competition. ABB India's Q2CY25 (the company has a December year ending) results disappointed with order inflows down 12 per cent year-on-year (Y-o-Y). For Q2CY25, revenue grew by 12 per cent to ₹3,170 crore, while earnings before interest, taxes, depreciation and amortisation (Ebitda) fell by 24 per cent to ₹410 crore and PAT slipped 20 per cent to ₹350 crore. Ebitda margin was down 610 basis points (bps) at 13 per cent. Electrification revenue growth was strong, but other segments were weak. Gross margin declined 350 bps quarter-on-quarter (Q-o-Q) and 470 bps Y-o-Y. The Ebitda margin contracted 620 bps Y-o-Y to 13 per cent with sharp contraction in electrification and robotics & motion segments, which were affected by competitive pricing and forex loss. Order inflows were down 12 per cent at ₹3,040 crore. Base orders formed ₹3,020 crore (up 5 per cent). The order book moved to ₹10,060 crore. The company expects a revival in the second half of CY25. Ebitda margin decline was due to contraction in the electrification and motion segments. Forex fluctuations worth ₹56.5 crore were recognised due to Euro and Swiss franc appreciation. Also, in order to adhere to the QCO implementation timeline, ABB India had to import a lot of components, resulting in higher impact of forex fluctuations and larger inventories. ABB may have to rely on importing for a few more quarters for certain components. Electrification segment saw 23 per cent Y-o-Y revenue growth in Q2CY25, while earnings before interest, taxes (Ebit) margin declined 700 bps Y-o-Y to 16.1 per cent due to higher import content and a one-time impact of ₹39.5 crore. Order inflow declined 4 per cent owing to high base. Demand remains strong across renewables, data centres, smart buildings, and infrastructure. PBIT margin recovery is a key monitorable. In motion & robotics, revenue growth was healthy but order inflows were weak despite rising adoption. Robotics revenue grew 181 per cent, margins contracted to 6.5 per cent (14.6 per cent in Q2CY24) and order inflow dropped 24 per cent to ₹120 crore. In motion, revenue inched up 1 per cent, and order inflows declined 17 per cent. Analysts expect sharp margin recovery. Process automation remained under pressure as both order inflows (down 12 per cent) and revenue (down 22 per cent) declined. But Ebit margin held up at 17.2 per cent (16.2 per cent in Q2CY24), supported by good service mix, operational efficiencies, and project closures. ABB expects near-term pressure to persist. The company remains a market leader and its execution momentum is intact. The order book ensures revenue visibility over the next six quarters. The management says the overall pipeline has not reduced but is facing delays in decision making and there is increased Chinese competition in process automation and heavy industries. Valuations are always high for ABB and it's trading about PE 60 times on trailing 12-month earnings. Given margin pressures, there could be valuation downgrades and certainly cuts to EPS targets. But once QCO implementation is over, ordering may ramp up. Investors may also worry about slow order inflows, pricing pressures, supply chain issues, and geopolitical risks. However, many analysts remain positive on the stock.
