The Hindu Business Line : Leveraging the name

After toying with the move for over a year now, Hindustan Lever this week announced a proposal to change its name to better reflect its global parentage. It will shortly seek shareholder approval to change its name to Hindustan Unilever. "We will be the only Unilever subsidiary to retain a local prefix," says company chairman Harish Manwani. It will also remain the only Indian arm of a multinational in the FMCG space to retain a local flavour to its nametag. The domestic arms of Colgate-Palmolive, Procter & Gamble, Nestle and GlaxoSmithkline Consumer simply add an `India' to their parent's name.

While getting shareholder approval will be the easy part, implementing the name change will surely be a gargantuan task for a behemoth the size of Lever that claims to reach out to two out of every three Indians. The name change will have to be communicated to 36,000 Lever employees and 3.8 lakh individual shareholders, apart from being implemented across 80 factory locations, 2,000 suppliers and 7,000 re-distribution stockists. Finally, the change has to be communicated to and accepted by the company's 250 million rural consumers.

Name changes on this scale are never a cakewalk. Sandoz's re-christening as Novartis, Telco's renaming as Tata Motors and Glaxo India's abortive attempt to rename itself as Glindia in the late Eighties, were all long drawn-out processes. However, in this case, Lever managers should surely be heaving a sigh of relief that unlike Colgate or Cadbury brands, Hindustan Lever's largest brands have never relied too heavily on the corporate identity for consumer acceptance or recognition.

Indeed, Hindustan Lever's products have traditionally enjoyed a strong individual identity and are best recognised by their own brand names. Many consumers may not even be aware that brands such as Brooke Bond, Clinic Plus, Pears, Rin, Bru and others, spanning 20 different FMCG categories are churned out by a single company. The transition from Hindustan Lever to Hindustan Unilever may therefore, not be materially disruptive, either to the company's market shares or its consumers.

If the corporate identity does not make a material difference to the company's brand portfolio, why then, is Hindustan Lever attempting this change? The company explains this in terms of "strength and synergies to harness Unilever's global scale for the Indian company's benefit," and assistance in "attracting and retaining talent." Simply put, the change appears to be an attempt to obtain two key benefits for the Indian company. Greater integration of the Indian company's identity with that of the parent could be reflective of more integrated operations, with the Indian operations leaning more heavily on Unilever for procurement of materials. The possibility of Indian operations emerging as a manufacturing and sourcing base for FMCG products for Unilever also remains open. Finally, it is also clear that the company is also looking at the `Unilever' label as an employee retention tool.

Given that Hindustan Lever has always been the favourite poaching ground for every consumer and retail company on the hunt for management talent, a more pronounced MNC tag could certainly add more appeal to the company as a favoured destination for management graduates.

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