Tried and tested

Being the biggest consumer goods company in the country is no guarantee against tough times. Hindustan Unilever (HUL) has certainly seen its share of turbulence in the past decade. But now it’s made a comeback — and how. With a substantially enhanced product portfolio, the company has, despite its size, matched growth rates of many smaller competitors. All this has happened without the behemoth losing its bottomline fixation. And that, perhaps, is the effect, not the cause, of moving at a snail’s pace in the foods business. 

Ultimately, it all boils down to choice. For HUL, that meant either growing the home and personal care portfolio that it has perfected, or doggedly investing in foods where it lacks a domestic legacy. The truth is that, unlike in personal care, there is very little in its parent Unilever’s food portfolio that can be transplanted to India. That means acquisitions aside, the company needs to start from scratch — from conceiving the right product to launching and nurturing it. 

That’s obviously a very costly and time-consuming affair with no guarantee of success. Rival ITC has taken more than a decade to clean up the red in its foods business. It has been more than patient — perhaps a little too patient for the comfort of its shareholders. But that may have still been acceptable because ITC’s tobacco business is a cash-generating monster. HUL’s shareholders won’t take kindly to the FMCG giant showing that level of loss tolerance. 

So while analysts can argue that HUL will lose its bastion as the country’s largest consumer company if does not make big moves in foods, the management action shows that it continues to favour sure growth while chasing rainbows on the side. Read our cover story, Not new, but improved, on how HUL has reinvented itself and how sustainable is its pace of growth. 

In other stories, we have a feature on realty funds that have had phenomenal exits. Read Solid high ground to see how locally-owned private realty funds have delivered outstanding returns for their investors.