What Colgate’s new CEO hire means for its Indian business

Although, this is not the first time Colgate has hired from HUL. Photo: Mint (Mint)
Although, this is not the first time Colgate has hired from HUL. Photo: Mint (Mint)

Summary

  • An appointment of a new chief executive officer at Colgate India is usually a non-event. Usually, but not always

An appointment of a new chief executive officer at Colgate India is usually a non-event. Usually, but not always, the US-based maker of toothpaste and personal care products elevates managers from within to the leadership position in India. Departing from the norm, the company has announced the appointment of Prabha Narasimhan as the new MD and CEO of the company. She comes from rival Hindustan Unilever (HUL), India’s biggest consumer company, where she successfully generated profitable growth in the home and personal care categories.

Although, this is not the first time Colgate has hired from HUL—it earlier poached Mukul Deoras, who is now the chairman of the Indian subsidiary and heads the Asia Pacific division for Colgate—what’s interesting this time round is Narasimhan’s extensive experience in the home and personal care categories. The HUL website lauds her for her leadership in delivering a market-beating growth rate in Unilever’s skincare business. In 2020, she was moved to the home care category. Oral care falls in the personal care segment in HUL, but the profile has no previous leadership positions highlighted for Narasimhan in the area.

That’s what about this appointment is likely to stir investors’ interest the most. For a change at the top usually also means a change for the business. A CEO appointment tends to be a strategic management change. Therefore, the background of the new CEO offers insights into a company’s strategy for the future. Shareholders track such appointments closely to get a sort of a peek into the future.

In India, Colgate has remained focussed single-mindedly on the oral care segment. It’s not difficult to see why; The company generates 90% of its annual revenue of more than 5,000 crore from the Colgate brand of toothpaste and toothbrushes. Its non-oral care business in India is largely under the Palmolive brand in the personal hygiene category. New products and variants have been launched for handwashes and body washes, but the company hasn’t in its presentations at investor conferences offered indications of any significant expansion in the non-oral care categories.

Colgate’s global portfolio is less reliant on oral care. It generates 44% of its $17.4 bn revenue through oral care. The rest is almost equally split between personal care, home care, and pet nutrition, according to the company’s latest US regulatory filings. In the US and European markets, its basket of skincare and other personal care brands are popular.

Despite the heightened volatility in the stock markets amid the Ukraine-Russia war, Colgate’s share price in India picked up in response to the announcement of the CEO appointment after it held firm over the past month. There’s anticipation that Narasimhan at the helm indicates strongly that Colgate plans to expand its basket of non-oral care categories of products in India, given the new CEO’s experience at Unilever.

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