Unilever to be Lifebuoy For Growth in India Biz
Unilever CEO Fernando Fernandez
said the company remains confident about its growth prospects in India, highlighting the absence of any new headwinds and the positive impact of government incentives, tax relief, and lower inflation in food and oil. These factors, he said, will drive demand in the country, where the company remains focused on expansion.
'We have strong positions in home care and health where we will invest and accelerate. In some of our core areas, we have to address… which in the short term will really mean that we need to invest behind these brands. In some categories, we are seeing competitive intensity go up — and it happens,' Fernandez told analysts during its earnings call.
'India is a consistent performer for us, has been gaining shares for the last three years and there is a lot to play for,' said Fernandez.
HUL, which owns Rin detergent, Lux soap and Sunsilk shampoo, is the country's largest fast-moving consumer goods (FMCG) company and its performance is considered a proxy for broader consumer sentiment. India is the second-biggest market for Unilever, accounting for 12% of global sales.
Fernandez said one of the issues with Unilever is that it is a federation of local and regional brands. 'I want to attack that, building a more coherent and consistent global portfolio, making US and India, the two anchors of our portfolio, and radically simplifying our business from a geographical point of view, from a technology point of view, and from a processes point of view,' said Fernandez, adding that it was very confident both on the growth profile as well as on the margin profile for India.
However, growth rate of its Indian business has tapered off over the past year with HUL sales growing 2% in FY25, as consumers tighten their budget amid inflationary pressures across categories. Unilever said it saw increased promotional intensity and price reductions in India by international competitors in the homecare segment during the March quarter, and it responded with price cuts of its laundry brands.
'The long-term economics of that market (India) prevail and we are well-positioned to do that. And in defending some of these categories, we will be unblinking. There is only one place that we need to address, which is food, and we will do that. When we look at it in its totality, I think 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,' said Fernandez, who was earlier the company's chief financial officer, and took over as its CEO in March this year.
HUL said it has started addressing some of the challenges. For instance, it has tweaked the price and positioning of Horlicks to make it more contemporary, slashed prices in laundry, repositioned its largest soap brand Lifebuoy and expanded Glow and Lovely into newer sub-segments.
In an investor call on Thursday, HUL said it expects stronger market demand in the next few quarters and will be on the offensive, and 'play to win' by increased investment in the segment of the future and innovations, which will mean growth over margins in the near term.
'That's the spirit, or what we are trying to do. Is there a price versus cost battle in a certain category? Yes. And we are going to unblinkingly defend and, in fact, go a step further. So, I think that's just to give you the mood and temperature of how we look at the business today, which is in a stronger, optimistic lens, and we do see the future six months gradually improving,' Rohit Jawa, managing director at HUL, said during the investor call.
ON CHALLENGES
In some categories, we are seeing competitive intensity go up — and it happens.
ON LONG-TERM VISION
When we get our growth engine moving up, we know how to really make money here.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)
Business Standard
35 minutes ago
- Business Standard
Sebi attaches bank, demat, MF accounts of Choksi to recover Rs 2.1 cr dues
Markets regulator Sebi has ordered the attachment of bank accounts and shares and mutual fund holdings of absconding diamantaire Mehul Choksi to recover dues totalling Rs 2.1 crore in a case of violation of insider trading rules in the shares of Gitanjali Gems. The latest move followed a demand notice issued to Choksi on May 15, warning attachment of assets as well as bank accounts if he failed to make the payment within 15 days. The demand notice came after Choksi failed to pay the fine imposed by the Securities and Exchange Board of India (Sebi) in January 2022 in a case of violation of insider trading rules in the shares of Gitanjali Gems Ltd. Choksi, who was the chairman and managing director as well as part of promoter group of Gitanjali Gems, is the maternal uncle of Nirav Modi. Both are facing charges of defrauding state-owned Punjab National Bank (PNB) of more than Rs 14,000 crore. Both Choksi and Modi fled India after the PNB scam came to light in early 2018. In April, Choksi was arrested in Belgium following an extradition request by Indian probe agencies. He was located in Belgium last year when he went there for getting medical treatment. He had been staying in Antigua since 2018 after leaving India. Modi was arrested by the Scotland Yard Police in March 2019 and is currently in jail in that country. In an attachment notice dated June 4, Sebi said the pending dues of Rs 2.1 crore include the initial fine of Rs 1.5 crore and interest of Rs 60 lakh. To recover the dues, Sebi asked all the banks, depositories -- CDSL and NSDL -- and mutual funds not to allow any debit from the accounts of Choksi. However, credits have been permitted. Further, Sebi has directed the banks to attach all accounts, including lockers, held by the defaulter. Initiating the recovery proceedings, Sebi said there is sufficient reason to believe that Choksi may dispose of the amounts in the bank accounts, mutual fund folios and securities in the demat accounts held with the depositories and "realisation of the amount due under the certificate would, in consequence, be delayed or obstructed". In its order passed in January 2022, the regulator imposed a penalty of Rs 1.5 crore on Choksi and restrained him from the securities market for one year. Sebi had found that Choksi communicated unpublished price sensitive information to one Rakesh Girdharlal Gajera, who sold his entire shareholding of 5.75 per cent in Gitanjali Gems in December 2017 with the intention of avoiding loss ahead of any event which may lead to disclosure of fraudulent issuance of LoUs (letter of undertaking) to Gitanjali Group and magnitude in public domain. It was noted that fraudulent LoUs were issued on behalf of entities belonging to the Gitanjali Group, including GGL. "Noticee no. 1 (Choksi) was found to have communicated UPSI (unpublished price sensitive information) to Noticee no. 2 (Gajera) without any underlying legal obligation or any legitimate purpose," Sebi had said in its final order. Through such activities, the two persons had violated the provisions of the PIT (Prohibition of Insider Trading) rules. In May 2023, Sebi sent a notice to Choksi directing him to pay Rs 5.35 crore in a case pertaining to fraudulent trading in the shares of Gitanjali Gems.
&w=3840&q=100)
Business Standard
35 minutes ago
- Business Standard
How Sri City's Ravindra Sannareddy turned scrubland into an industrial hub
Lunch with BS: Sri City has now grown to employ over 65,000 people. Sannareddy dream is to take it past 100,000 by its 25th year Shine Jacob Chennai Listen to This Article It almost feels like Chennai has quietly extended its industrial embrace across the Andhra Pradesh border to Sri City. The 55-km drive to this manufacturing hub, in the Tirupati district, is lined with warehouses and factory sheds, their insignia ranging from global conglomerates to rising Indian giants — all strategically leveraging their proximity to Chennai Port. The four-lane highway buzzes with container traffic, its rhythm set by South India's manufacturing metronome. At the end of it all, nestled among dry scrubland and slow-growing trees, is Sri City — a dream built on stubborn optimism, spiritual roots, and strategic foresight, one
Time of India
38 minutes ago
- Time of India
RBI as lender of last resort: A lifeline for NBFCs in crisis
Sunil Kanoria is a Kolkata-based Indian businessman with over 35 years of experience in the infrastructure sector including infrastructure leasing & finance. He had the distinction of serving ASSOCHAM, India's oldest and leading chamber of commerce, as President and has served as Member of the Infrastructure Sector in the 10th Five Year Plan of the Planning Commission of the Government of India. He also served as a Council Member of the Institute of Chartered Accountants of India, nominated by the Government of India. He is the former President of The Agri-Horticultural Society of India. Sunil has been engaged in policy advocacy on matters related to economy. Sunil is a visionary who correctly assessed the Indian economy's infrastructure needs at the beginning of his career and anticipated the imminent role of the private sector in infrastructure creation. With foresight and a knack for taking calculated risks, Sunil converted several pioneering ideas into business reality within the infrastructure domain, many of which were first-of-its kind in India. Focusing on spirituality, Kanoria Foundation has organized confluences with a conglomeration of major issues on Humanity, Power (inner & outer) and Spirituality at Work. Kanoria Foundation organized World Confluences since 2009 which was also attended by former Presidents of India, Late Dr APJ Abdul Kalam and Late Shri Pranab Mukherjee respectively, among other distinguished luminaries from all walks of life globally. LESS ... MORE The Reserve Bank of India (RBI) is reportedly set to redefine its role by preparing to act as a lender of last resort for non-banking financial companies (NBFCs), mutual funds, and microfinance institutions during severe liquidity crises. As reported by the press last week, this move aims to ensure the survival of these entities when they are excluded from lending markets during crises. Given their deep ties to the banking system through borrowings and investments, this step is vital for financial stability. The RBI's economic capital framework (ECF) committee recently raised the contingency risk buffer (CRB) band, indicating readiness to intervene in crises. While post-pandemic asset purchases focused on public assets, the RBI is now considering private asset purchases in future crises. This policy shift acknowledges that NBFCs and other regulated entities are as critical to financial stability as banks. Over the past two decades, the RBI has tightened NBFC oversight, aligning it with banking regulations. Extending the lender-of-last-resort function to these institutions is a logical next step. However, this initiative is overdue. Past crises have exposed NBFCs' vulnerabilities. For example, during the 2018 liquidity crunch, infrastructure finance companies faced a severe asset-liability mismatch, worsened by the RBI's COVID-19 moratorium guidelines in 2020. While borrowers received relief, NBFCs were pressured by creditors, leading to bankruptcy proceedings. Timely liquidity support could have averted such outcomes, stabilizing similar institutions and reducing risks to the financial sector. Globally, central banks have long supported non-bank institutions during crises. In the United States, the Federal Reserve has been instrumental in stabilizing NBFCs and mutual funds. During the 2008 financial crisis, the Fed's Commercial Paper Funding Facility (CPFF) provided liquidity to money market mutual funds and other non-bank entities facing funding shortages. In 2020, the Money Market Mutual Fund Liquidity Facility (MMLF) enabled institutions to purchase assets from money market funds, preventing a collapse in short-term funding markets. These actions highlight the critical role central banks play in supporting non-bank entities to maintain financial stability. In Europe, the European Central Bank (ECB) has similarly supported NBFCs during crises. In 2020, the ECB expanded asset purchase programs and offered targeted longer-term refinancing operations (TLTROs) to indirectly ensure liquidity for non-bank institutions through banks. The Bank of England's COVID Corporate Financing Facility (CCFF) also supported large non-bank firms by purchasing commercial paper, ensuring operational continuity during market disruptions. These global examples demonstrate the effectiveness of central banks extending their lender-of-last-resort function beyond banks. The RBI's proposed framework aligns India with these global practices. By acting as a lender of last resort, the RBI can prevent systemic shocks from liquidity freezes in NBFCs or mutual funds. Their interconnectedness with banks means their failure could trigger a domino effect, threatening the financial ecosystem. Past crises affecting infrastructure finance companies underscore the consequences of inaction. Had this mechanism been in place earlier, significant disruptions might have been avoided. Yet, the RBI must proceed cautiously. Extending this role requires clear guidelines to prevent moral hazard, where NBFCs might take excessive risks expecting bailouts. The RBI should establish strict eligibility criteria and robust oversight to ensure only well- managed institutions facing temporary liquidity issues receive support. It must also balance interventions to avoid crowding out private market solutions, which could stifle innovation and competition. The RBI's move to become a lender of last resort for NBFCs, mutual funds, and microfinance institutions is a forward-thinking step. It addresses a critical gap in India's financial safety net, aligning with practices of global central banks like the Federal Reserve and ECB. While commendable, its success depends on precise implementation to ensure stability without encouraging reckless behaviour. Had this framework been introduced earlier, the financial sector might have been spared some amount of distress. The RBI's proactive stance promises a more resilient financial system for India. Facebook Twitter Linkedin Email Disclaimer Views expressed above are the author's own.
