The CEO Factory-Management Lessons From Hindustan Unilever

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Few Indians have heard of Hindustan Unilever Limited (HUL). But they are intimate with the brands it sells. To name a few: Lifebuoy, Dove, Clinic Plus, Ponds, Lakmé, Closeup, Surf Excel, Vim, Brooke Bond, Bru, Kwality Wall's, Kissan and, as of 2020, Horlicks. Nine out of ten Indian households use an HUL product every month. Forget Google and Facebook, more Indians use HUL products than those who own a television, those who vote or even those who have running water or electricity. Even if you don't know much about Hindustan Unilever, you have grown up with it and you are touching it every single day of your life. Just like your parents, grandparents and their grandparents.

While researching for this book, I came across a faded copy of the first annual report of the newly incorporated Hindustan Lever in 1958. The company was already among the largest in the country and made a profit after tax (PAT) of Rs 1 crore. In 2019 the company made a profit of Rs 6080 crore - a compound annual growth of 15 per cent. In the same period that HUL grew its profits 6000 times, the Indian economy grew 1400 times. It is hard to find another large company that has delivered 15 per cent earnings growth over sixty years anywhere in the world. It is nearly impossible to find one that has stayed in the top five of a large country for over sixty years.

It is not just the long-term performance of HUL that is stellar. Its current return on capital employed (ROCE) of 92 per cent is by far the highest in the country. In just the last decade it has given shareholders an annual return of 23 per cent with its stock price up seven times.

This has made HUL an iconic company on Dalal Street. If analysts were to rate Indian companies over a century on financial and non-financial impact, HUL would feature on the top three of all and number one of most lists. HUL's market cap has now crossed $60 billion, making it one of the most valuable fast moving consumer goods (FMCG) companies in the world, ahead of the global valuations of Colgate Palmolive, Kraft Heinz, Mondelez and Reckitt Benckiser.