On journey of India and journey of HUL
I remember when I joined this company, many senior leaders used to use a phrase. They said if it is good for India, it would be good for HLL, as it was then called. The idea that what is good for the country is good for us as a business was true then and is true even today.
In many ways, the success of this organisation over this period of time has been because of this deep belief that our fortunes and the fortunes of the country and the nation and the society in which we operate are inextricably linked.
Tamanna Inamdar: You now have a very significant global role in Unilever as well. Many of the challenges are common throughout the world to global economies. We have an ongoing conflict in Russia and Ukraine which has pushed up crude prices. Economies are still recovering from two years of Covid-19, the price of every commodity is up through the roof. What has been the impact of that and do you see the impact continuing in a global and Indian context?
Nitin Paranjpe: These are extraordinary times despite being around for so long, I do not think I have seen a period where so many factors have come together to create the conditions that we find ourselves in.
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The levels of inflation that we are dealing with are unprecedented. In fact, we tend to use this term so often that it loses its meaning. But they truly are. I do not know how things will evolve, the world is simply too uncertain and too volatile for me to predict how long this will last but at this moment, all of us are dealing with levels of inflation which very few of us have seen before and that is the reality and it is true in India and it is true across the world.
In nations like India, which have very price sensitive consumers, the go-to method is to go in for smaller packaging and to try and bump up prices bit by bit. Is that trend still sustainable? Also, do you see any recent relief from palm oil prices and crude oil prices coming down a tad?
I wish I could say at this moment that we are seeing crude oil or palm oil trending low or any of the changes that are taking place are likely to be significant enough for us to heave a sigh of relief. I am still cautious. Yes, they have stopped moving up, yes they have altered a bit but nowhere close to a stage where we can say that the issues relating to inflation and commodity prices are behind us.
So for the immediate future, we have to deal with it. Now how do you deal with this? First, we have to acknowledge that this puts an incredible pressure on the ordinary person on the street and it does impact people. The cost of living issues are not just true in a place like India. I live in the UK and it is probably the single biggest topic which is being discussed.
When I see that people in developed countries are struggling to manage their household budget, I can begin to see the effect that would be there in countries like India. So our response as a company in situations like this as indeed most others is to first try and say how we can be very tough on cost, remove waste, remove inefficiencies and try and mitigate the burden that people will feel by driving efficiencies within the organisation.
That is in our interest and that is in our consumers’ interest too. We have begun with that but at these levels, price increases are absolutely inevitable. We try and manage that as sensibly as we can. Sometimes prudently and sometimes through a combination of small increases which make it reasonable and sometimes through reduction in fill levels to protect some price points which consumers find easy to buy.
So, it is a combination of measures. There is no easy answer. We do not like it but there is simply no alternative at this moment as all of us deal with these levels of increases.
Isn’t it eventually going to hit a wall? When it comes to impact on demand, that is already being seen and the latest numbers – the turnover, top line, all are fantastic but margin pressure is already visible?
For sure. But these are difficult times and there will be compression in demand and we will have to deal with that. The way we think about it as a company includes two things; we have to do what is required in the short term but never lose sight of our longer term purpose, why we are here and what we want to do.
Coming to the longer term perspective that we have on the country, our point of view is what it will take for us to succeed remains unchanged. We remain optimistic, we have high belief in the business model, the quality of our people and there is competitive advantage that we are building and the difference that our brands can make and therefore we look forward and look ahead to India, to our company in this country with a great degree of confidence and optimism.
As far as the short term is concerned, yes, these pressures do have the impact of compressing demand for all the reasons that we understand and we are seeing some of that for the first time.
For the first time in many years, we are seeing volume growth rates disappear in some categories and are actually becoming negative for a few months. It is understandable and it is really for all of us to navigate through these difficult times but just like good times do not last forever, neither do bad times.
You have an important target for 2030 and there is another one for 2039 of having zero emissions. What are the big steps that will be taken to reach there? You have said you are plastic neutral. Are you ready to put your money where your mouth is?
Our vision is to demonstrate that it is possible to deliver strong business performance, exceptional outcomes while being a purposeful and sustainable business and being a leader in this space. We are here to demonstrate that. We have set goals in the area of environment.
If we have to achieve zero emissions by 2039, many steps need to be taken, steps that we started working on earlier. I will give you an example of the progress that we have made. For example, in our production process, we have already reduced the carbon footprint by 94% over a 2008 baseline on which we started measuring it. That gives you a sense of some of the milestones that we need to hit if we have to get to those outcomes. We have already removed all our thermal energy usages. It is now green energy in all our operations.
So we take a goal like this, break it up into individual components and say what needs to happen this year, what needs to happen next year for us to have any chance whatsoever to get to that outcome. In several goals like this, one never sets a goal like this knowing every step along the way because so much will change, there will be new technologies that we cannot imagine, systemic changes will start happening which we cannot foresee at this moment.
But it helps when business creates conditions and puts a stake in the ground because it gets everyone working towards that and that creates innovation, new ideas, new thinking and new solutions emerge. If you take plastic, we have committed a shorter term goal; by 2025, we want 100% of our packaging to be reusable, recyclable or compostable.
We have also said that we want to be plastic neutral and that we must be in a position to take back, process and dispose safely at least as much plastic that we are putting out into the environment today. I am delighted to say that
, in 2021, actually became plastic neutral, collecting, along with its partners, 1,16,000 tons of plastic and finding a way to safely dispose it.
There was a survey recently that 4/10 employees in corporate India are waiting for their increment cycle to leave jobs. One of the big reasons was work life balance. People want a hybrid work model, they want that time to themselves as well. Social moorings are important as is inclusivity. Is it imperative for companies large or small to take cognisance of these things?
One hundred percent yes. We have to recognise that every generation looks at things in a certain way, values things in a certain way and through the pandemic, when people experienced a certain balance in working from home etc, I think people are looking for flexibility in ways that they have not looked at in the past. They are looking for a different balance in between their work and their life, their priorities in terms of what matters to them and companies need to be aware of this and factor it in. So the answer to that is yes.
The first point which you mentioned is everyone waiting for the increment cycle. The data might be true but it is also somewhat sad. It is somewhat sad that if you make a choice that if someone pays you a few hundred rupees or a few thousand rupees more, you leave. It also tells you how little you value what you have or care and the only reason that you are working is a little more money which also tells you that the work does not mean very much to you, you do not get any fulfilment through what you do.
The assumption that work cannot fulfill is fundamentally flawed, I do not believe in that. Work can be fulfilling, work can give you meaning, work can make you feel such that you are unlikely to make a shift for small sums of money. Money matters, I do not want to dismiss it at all. Money matters, but money has to be paid to a level where it does not become a dis-satisfier where you need to leave.