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Friday, Apr 16, 2004

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Can HLL sustain growth levels?

Latha Venkatraman

Mumbai , April 15

IN 1999, Mr K.B. Dadiseth, then Chairman of Hindustan Lever Ltd, had warned that the company had grown to a significant size and in the years to come it may not be able to sustain the growth level.

Today HLL is in the midst of a major management and operational restructuring. Will those changes bring out a new growth story for this FMCG major that has straddled the Indian markets with an extensive range of products?

"There is no growth story yet,'' said an analyst.

For the last 2-3 years, HLL has been operating in an extremely challenging market - inadequate rains resulting in sluggish rural demand had a telling effect on the company and the FMCG sector's growth.

Abundant and widespread rains in 2003 also brought no respite for the sector.

The much-awaited rural spending never materialised, much to the disappointment of the FMCG sector.

While the domestic market was in the grip of a de-growth, imports continued their flow, intensifying competition for the FMCG sector.

The consumer excitement possibility had also reached a saturation point. What kept HLL going was its power brands strategy. The strategy employed by the company bore fruit to its fullest extent in 2003. Will these management changes lead to growth? Most analysts were sceptical that these alterations are not likely to propel the company's topline or bottomline. There is no indication of a growth strategy yet, they said.

Most HLL Chairmen have headed back to the Unilever headquarters at the end of their term.

This time around Mr Banga will head Unilever's HPC business in Asia. Are the Unilever bosses unhappy with HLL's performance or is Asia emerging as a major destination for the Anglo-Dutch foods company?

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