Mumbai: On a day when consumer goods firm Unilever Plc. said it would combine its two main divisions—home and personal care products (HPC) and food—into a single unit under the leadership of M.S. “Vindi” Banga, the firm’s Indian subsidiary Hindustan Unilever Ltd (HUL) announced that Nitin Paranjpe would replace Douglas Baillie as the firm’s chief executive officer.
Baillie, the first expatriate to head the company in more than 50 years, will now head the company’s western European business and has also been inducted into Unilever’s global executive team. “Some changes at the Unilever executive (team) triggered the changes...,” Harish Manwani, chairman, HUL, and head of Unilever’s Asia-Africa operations, said. The changes have touched Manwani as well, and he will now also head Unilever’s central and eastern European business as well.
Change of guard: Nitin Paranjpe (left) will take over as HUL MD and CEO from Douglas Baillie (right). ( Ashesh Shah / Mint )
The changes at Unilever put Banga, 53, now the company’s foods chief, among the front-runners to succeed chief executive Patrick Cescau who turns 60 in September, when he decided to step down, people close to the situation said. Banga was chairman and managing director of HUL between 2000 and 2005.
Unilever left western Europe as a stand-alone region in its three-region worldwide structure and moved its central and eastern European business to join its expanded Asia-Africa region. It said, Kees van der Graaf, 57, head of Europe, and Ralph Kugler, 51, head of the company’s HPC business, will retire in May.
Not a great year
Baillie took over as HUL’s CEO in March 2006. In a contrast to his media-savvy predecessors, the Zimbabwe-born Baillie maintained a low profile in the country. In a rare media address on Thursday, he said he “tried to get the business on track and grow the bottom line ahead of the topline.”
“But the journey is not yet over and now the job is to take it to the next level,” he added.
A closer look at HUL’s market share, however, depicts a contrary picture. According to data from market research firm AC Nielsen, the company’s market share in categories such as personal wash, skin care, dish wash, tea, jams, toothpaste and talcum powder fell between March 2006 and September 2007. And HUL just about managed to retain its share in fabric wash. Its market share in categories such as shampoos, instant coffee and ketchup grew in this period.
“A local manager at the helm will help in getting some local flavour back. Also, Paranjpe is an old HUL hand. Under his stewardship, the HPC business grew well and he should be able to replicate this success in other categories as well,” said Unmesh Sharma, an analyst at Mumbai-based brokerage firm Macquarie Securities. “We, however, will still maintain a neutral stand on the company and wait and watch the developments,” Sharma added.
In 2007, at least two multinationals replaced their expatriate CEOs in India with Indians: General Electric named Tejpreet Singh Chopra to head its Indian operations and SAP AG named Ranjan Das as the head of its local operations.
To be sure, HUL’s problems, largely related to its inability to grow, predate Baillie. And a former executive of the company termed his stint “extremely successful” in terms of meeting the objectives that Unilever had set for him.
“Baillie came here with the agenda of Unileverizing India. His mandate was to bring Indian business structure, functions and processes in sync with Unilever’s global model. He managed to do this in an extremely efficient (manner) and short time,” added this executive.
After Baillie took over the reins of the company in 2006, HUL merged its foods and HPC divisions and replaced the dual management structure—which comprised distinct divisional management committees for HPC and foods headed by two managing directors and a national management committee—with a single management committee. “He also aligned the brand building and brand development streams with the global functions,” said another executive who recently left HUL. It was during Baillie’s tenure that the company changed its name from Hindustan Lever Ltd to Hindustan Unilever and adopted its global blue logo.
Baillie also cut 50 jobs this year in line with Unilever’s decision to prune workforce and boost profitability “He could take some tough decisions quite dispassionately. An Indian manager could not have carried these out,” said the executive.
Paranjpe, who joined HUL in 1987 as a management trainee, has risen rapidly through the ranks. During his initial years, he worked as area sales manager for detergents. He served two years in the global headquarters in London, and in March 2006, he was elevated to the post of executive director of the HPC business. “HUL has now identified the foods and water business as a huge growth opportunity and has charted out avenues for growth to be implemented in the next few years,” Paranjpe said.
The changes in Unilever’s executive management team mean that for the first time in the firm’s 78-year history, the-re will be no British or Dutch presence on its seven-person executive management team, which is set to include three Americans, two Indians (Banga and Manwani), one Frenchman, and a Zimbabwean.
(Reuters contributed to this story.)