BackSuresh Narayanan to replace Etienne Benet as Nestlé India MD
The move to appoint an Indian as the managing director of the company is a step in the right direction, said analysts
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Mumbai: In the midst of one of the largest-ever food recalls in the country, Nestlé India Ltd is putting an Indian at the helm to manage the crisis.
The company’s managing director Etienne Benet is stepping down with immediate effect and will be replaced by Suresh Narayanan, who is currently the chairman of Nestlé Philippines, the company said in a statement to BSE on Friday.
Benet is leaving with effect from 25 July 2015 and will be relocating to Nestlé Group head office in Switzerland.
“Nomination has been received from Nestlé SA for the appointment of Suresh Narayanan as the managing director of the company with effect from 1 August 2015," said the company, adding that Narayanan has been with the group since 1999 and has a great deal of experience in India and overseas.
Since 1998, Nestlé has been led by expatriates in the country. In its hour of crisis, in the wake of the Maggi noodles ban, it found itself lacking a local face who could communicate directly and well with regulators and the media, Mint said in a 10 June story.
In contrast with Nestlé India, Hindustan Unilever Ltd (HUL), also a multinational, has been led by Indians since Prakash Tandon took over as the first chairman of the company in 1961. At that time, 191 of HUL’s 205 managers were Indian, a timeline on the company’s website says.
The move to appoint an Indian as the managing director of the company is a step in the right direction, said analysts. “In such a large and diverse country like India, having an Indian as CEO is critical," said Abneesh Roy, associate director, Institutional Equities-Research, Edelweiss Securities Ltd, while pointing out that multinationals like HUL and Procter and Gamble Co. have Indian chief executive officers running the business.
Interestingly, Nestlé India has enjoyed significant success in localizing its products or at least their usage—first with Milkmaid, a condensed milk offering that the company cleverly positioned as the ideal ingredient in tasty Indian desserts and then with Maggi, which has now been taken off the shelves.
Since 5 June when the ban was imposed on Maggi, Nestlé has destroyed 24,000 tonnes of the 30,000 tonnes of Maggi stock. This has caused a loss of ₹ 2,500 crore, amounting to 20% of the company’s annual revenues in India, Nestlé India’s counsel Iqbal Chagla said last Friday before the Bombay high court where the company is appealing against the national food regulator’s ban.
The regulator, Food Safety and Standards Authority of India (FSSAI), termed Maggi “unsafe and hazardous" for human consumption after finding high levels of lead and the presence of taste enhancer monosodium glutamate, on 5 June. The FSSAI also noted the company’s violation of product approvals in launching Maggi Oats, terming the act a breach of trust.
On Friday, shares of Nestlé India closed at ₹ 6025.85, down 0.46% on BSE , while the Sensex closed at 28.112.31, down 0.91%.
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