April 30, 2000

Dadiseth: ‘A quality product from HLL’

Though women make the purchase decision for most of HLL’s products, there are no women in top management. Women MBA’s will tell you that HLL avoids employing women. Dadiseth is unfazed by the charge; he does not deny it, but promises change

On Friday, Hindustan Lever (HLL) Keki Dadiseth, took off on his prestigious new assignment as one of the top four executives of Unilever plc. Typical of the HLL, there is not doubt at all that Vindi Banga will be a worthy successor with help from legal eagle, M K Sharma who will provide continuity as the new vice-chairman.

The job itself will be as challenging as ever. Apart from the paintings which Dadiseth left behind as his farewell gift to Banga, he has also left him a tough act to follow. For starters, the 24 per cent bottomline growth in the first quarter, has simply got to be maintained even if four states are reeling under severe drought and spending power is bound to be affected. But Dadiseth dismisses that with a wave - “There hasn’t been a single year when we have not forecast gloom and doom for some of our business, but we have managed. Our business is not linked to the GDP, it is in our ability to tap markets,” he says.

He is completely confident that Banga will deliver results. “Life is not easy, but if it were easy, we don’t need such high quality people to manage the business. It would be nice to know that you have the next year in your pocket, but if you really did, there would be no challenge left,” said Dadiseth, in a wide ranging chat with paper on his penultimate day at the Mumbai office. Next, there is Project Millennium to implement. Retaining high quality people, breaking down internal bureaucracy, fostering entrepreneurial behaviour among HLL’s quality people and increasing market penetration are the big challenges which form part of Project Millennium. So far, the company has merely announced “nine growth engines” aimed at unleashing a “tidal wave on entrepreneurial energy at Hindustan Lever”. These engines are carved out of the ‘six mega trends’ identified by the company - the shift to affordable indulgence, desire for quality time, increased awareness about health issues and consumer trends which include increased globalisation, what HLL calls ‘an inflexion point in rural consumption’ and finally ‘social disharmony’.

Though the exact business plans are a secret, the last two trends are clearly going to drive product innovation. The internet, identified as the main growth engine will sharpen the supply chain, cut costs and slash inventories and increase access with consumers as well as distribution intermediaries. But it is the worry about social disharmony, which will egg the company into going further down market and creating products for new market segments. According to Dadiseth, the idea is to convert the mega trends into markets for HLL products. So affordable indulgence and desire for quality time translates into services like high quality but affordable launderette franchises, beauty salons (expanding the Lakme parlours across the country) to push the use of HLL products. House keeping services (another outlet for HLL products) is identified as another opportunity, but is not being actively pursued at the moment. The roll-out plan, says Dadiseth, is “to have 10 for 15 of your own outlets as models and create franchisees for the others”.

The other big thrust is foods where the focus is clearly volumes and not premium products. Starting with salt and atta which were the entry point, HLL has a huge roll-out plan in foods and beverages. The accent is on Indian tastes. So Modern bread may be back, but the acquisition of Modern Foods will lead to a national distribution of ready-to-eat chapatis which are being test-marketed. Other plans including hawking tomato puree sachets through the local sabjiwali and pushing ready to drink tea and coffee through outlets which, Dadiseth says, will be “not more than a hole-in-the-wall”. If these ATM-like outlets works, HLL will also push ice cream and other food products through the holes-in-the-wall, he says.

For the rural market, HLL worked out ways to tap the “chai-ki-dukan”, mobile chaiwalas by providing them affordable tea packets, blended to the right rural taste for kadak chai. It is now test-marketing a ‘chai-ki-goli’ priced at four for a rupee. These fully soluble golis are merely dropped in a boiling milk-water combination. Project Millennium, however, depends on HLL’s ability to retain its “high quality” people and not lose even those who are bitten by the entrepreneurial bug. Its people focus was accelerated when one of its best managers went up to Dadiseth and announced plans to strike out on his own. “We told him that we will fund the project ourselves,” says Dadiseth. He then created a model to encourage in-house entrepreneurship for projects which have clear synergies with HLL’s businesses. HLL will provide the funding and office space - all at market rates of interest. The result, says the Chairman, was a burst of enthusiasm through the management ranks and the surfacing of more entrepreneurial proposals. “So far, we have evaluated three or four projects and have decided to fund two, but this is clearly going to be the trend and the only positive way of looking at things. We do not want to lose people to the Net, this way we ensure that they are linked in to us,” he says.

Finally, there is another issue - though women make the purchase decision for most of HLL’s products, there are no women in top management. Women MBA’s will tell you that HLL avoids employing women. Dadiseth is unfazed by the charge; he does not deny it, but promises change - its all part of the recognition that if HLL wants to work with the best people, it cannot ignore women. He insists that he made a serious attempt to bring in women at senior levels, but it hasn’t worked out. “We don’t want to pander to women by tokenism but want to become a more natural company which recognises that at a certain time women will always want to spend time with their children,” he says. Part of the plan is to build “fantastic creches” for children and also allow flexi-time for women who want to spend more time with their little ones until they come back to a full time job. It also plans to find a creative way to allow them to return without a loss in seniority.
Looking back, Dadiseth’s big satisfaction is not merely the corporate performance but the manner in which it was achieved. The only blip were the insider trading charges leveled by the Securities and Exchange Board of India (SEBI) which are being vigorously contented by the company. “I don’t want to talk about that,” says Dadiseth, turning grim, but it is to the company’s credit that none of the muck hurled by the regulator made no difference to HLL’s shareholders. Their warmth bordering on gushing was evident at the AGM when the bid goodbye to the man who like to describe himself as a “quality product from HLL”.

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The author's e-mail address is: suchetadalal@yahoo.com

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