The country’s leading FMCG company Hindustan Unilever (HUL) believes that it is one of the few top companies of this category with an estimated 22-23 per cent Ebita estimate. HUL Managing Director and Chief Officer Rohit Java spoke on all aspects including the company’s investment with Charlin D’Souza and Dev Chatterjee. Edited part of the conversation:
Has there been any basic change in consumption and consumer income in India as HUL’s volume and income increased by just 2 per cent while the economy is increasing at a rate of 6.5 per cent?
If you see only one quarter or a year, you will not be able to see a big picture. In the last decade, HUL’s annual compound rate has been around 8 per cent and the company’s profits have also improved. This growth has been inspired by volume and price. If you look at the per capita consumption in all our categories, it has increased in the last 10 years. Currently average per capita average consumption is $ 50, which is $ 25 in rural areas and $ 100 in urban areas. These figures are 15 to 20 percent of our neighboring countries. We are probably going through a period where consumption can remain softened for a few years. We should be patient because the market continues to fluctuate. The process of improvement is going on but overall private consumption should have been high. I believe that interest rate cuts, tax relief, inflation and decrease in crude oil prices are good signs for urban economy and the most important thing is that better monsoon estimates are auspicious sign for rural economy. Rural areas are already growing faster than urban areas.
What does HUL’s strategy mean to pay attention to volume instead of margin?
Our margin is good. The next few quarters have to invest to promote our priority growth. We believe that with 22-23 per cent Ebit Estimates we are still among the top companies in the consumer packaged product category. This is more than the average of Unilever. This is a good, profitable business that will perform well and perform well. We have enough ability to invest in our business.
What have you planned to invest in the market?
Income and profits motivate investment. One of the three major ways of investment is to invest in business, whether it is to help our distributors or expand distribution. Our direct reach of stores contributing higher value in the last few quarter has increased. This requires investment but it increases more. Another method of investment is to invest for product quality and reasonable price and quality equation. The price of commodities is fluctuating, so we need to fix the right price, but we are never able to increase the price of products once. In case of cost decrease, we like to give advantage of it at a time. The third area of investment is media and A&P.
Consumers’ income is not increasing, so how are you able to make more consumers than mass category?
We need to see India not one but many as India. Not every consumer is the same. We have to ensure that different income groups are considered separate and respond to them. There are two types of class in India in India – rich and hyperactive. The income of people of this category is Rs 10 lakh and above. Their number has been doubled in the last five years and they are likely to double again. Consumers of this class have purchasing power. We have the product for every consumer class and we are in the best position to give the opportunity for upgradation at all value. We are investing very thoughtfully in the development of the market. We have identified many products in our portfolio as market makers.
Which other categories are you looking for the possibility of landing?
We have a lot of opportunities to move forward. For example, there are many opportunities in beauty and health, especially in the premium segment. In recent few months we have launched Nexus and Liquid IV which are global brands. With Liquid IV, we have increased access to the hydration segment and in the salon care and massage segment with Nexus.
How is the ice cream business going?
We hope that the ice cream business will be separated and listed by the end of the current financial year. It will be an independent unit that will decide its own future.
Are you thinking of improving other brands after Lifeboy and Glow and Lovely?
We are doing this in Horlicks but this work has not been completed yet. All our major main brands have been given a new look. Our focus is on maintaining our main brand safe and over time. We will invest where there is an increase.
How are the distribution channels changing?
In organized medium like modern business, e-commerce we can see that Quick Commerce is growing rapidly. Quick commerce is also increasing its reach in small cities and e-commerce is also expanding. Despite this, the scope of traditional medium of sales in India is quite widespread. Even today, the traditional channel contributes about 70 per cent in the total sales and remains the center of our business. Hence the grocery -centered distributor model is our priority.
First Published – April 30, 2025 | 11:03 pm IST
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