Companies

Next few months key to see how demand pans out: HUL chief

Thomas K Thomas /Vinay Kamath Mumbai/ Chennai | Updated on September 26, 2021

Sanjiv Mehta, Chairman, HUL   -  Businessline

Current picture clouded by base effect

The next two to three months are going to be very critical for the economy because a clear picture would emerge on the underlying demand, which, in turn, would help take a call whether more policy interventions are required, according to Sanjiv Mehta, Chairman, Hindustan Unilever Ltd.

“We are a consumption-driven economy. Right now, it is difficult to fathom the actual demand because of the base factors and the interruptions that have happened. But the next two, three months are going to be very critical for the economy. And if we can prevent the third wave, we will get a good appreciation of the underlying demand unfettered by the base. That would be a good indication whether further intervention is required, or the economy has started building momentum,” Mehta told BusinessLine in a recent interview.

Pat for the government

Mehta acknowledged that the government has done a good job when it comes to rural consumers and the rural poor with interventions such as direct transfer of money, free foodgrains, enhancement of the outlay on MNREGA and increase in minimum support price that has added to the resilience of the rural market. However, over the last few quarters, the disruption has been more in urban areas, according to the HUL chief.

“Not much has been done for the urban poor. One of the things that the government should definitely do is to identify the urban poor by using platforms like Aadhaar. So just like the intervention for rural poor, there could be some interventions for urban poor,” he said.

Mehta added that though the government has done a lot on the supply side, it is not easy to address the demand side of the equation. “If you give direct intervention, the risk is that people will save money rather than spending money. So, it’s not easy,” he said.

₹6-lakh crore market cap

Despite the economic slowdown and the pandemic hitting the supply chain badly over the last two years, Mehta has been able to steer the company towards the ₹6-lakh crore market cap mark. But Mehta insists that chasing market valuation is not part of his philosophy. “I would be absolutely wrong if I were to tell you that I had envisaged that we will take the market cap from $17 billion to $83 billion in eight years. But I come from a philosophy that if you do the right things, then the valuation happens. I think what we need to do is create value and valuation will follow,” he said, adding that growth margin and capital velocity have been the mantra of creating value.

While HUL’s status as the largest FMCG player in the country is under no real threat, Baba Ramdev had recently claimed that his company, Patanjali, would become the top FMCG company over the next couple of years. Mehta, however, is unperturbed. “We respect all our competitors. Many times, I feel we know more about a competitor than the competitor knows about them themselves. But our obsession is with consumers, not with competitors. If we do the right thing for the consumers, they will award us with their loyalty,” he says.

Mehta believes HUL has the best possible talent. “I am a great believer in the India story and believe in the runway that exists for FMCG and, therefore, I’m very confident about the prospects of HUL in India. Now the question, will anyone dethrone us? Let me be very categorical: Not under my watch.”

Published on September 25, 2021

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