HUL chief executive Mehta gets 15% raise

Hindustan Unilever's (HUL) managing director (MD) and chief executive officer (CEO) Sanjiv Mehta saw his remuneration increase by 15.39 per cent in 2014-15 as the head of the largest fast-moving consumer goods (FMCG) company steered it through the toughest year in a decade for the industry. Mehta's pay slip, including salary, perquisites, bonus and contribution to provident fund minus stock options, stood at Rs 14.17 crore, according to the company's annual report. Other FMCG majors are yet to release their 2014-15 annual reports.

Serving his first full-year term as HUL MD & CEO, Mehta during the company's recent fourth-quarter results had said the market had been challenging in 2014-15. "Volume growth for our industry has been under one per cent. Value growth has been between five and six per cent. Two years ago, value growth was in the mid teens. And volume growth was also higher," he said.

Against this backdrop, Mehta helped HUL register six per cent volume growth for the March quarter, the highest for the company in 2014-15. HUL's topline also touched the Rs 30,000-crore mark in 2014-15 and five of its brands entered the Rs 2,000-crore club. He was also responsible for bringing about changes in strategy, focusing on increasing sales in existing stores rather than pushing for wider distribution. He pruned non-performing stock-keeping units from the company's portfolio, besides focusing on high-margin, low-penetration categories such as packaged foods, skincare and male grooming, where chances of increasing sales were higher than soaps and detergents.

This strategy paid off, with packaged foods showing six consecutive quarters of double-digit growth up to March.

Categories such as skincare and male grooming showed consistent growth despite a consumer slowdown in 2014-15. In the March 2015 quarter, for instance, sales of Hindustan Unilever's personal products segment, which includes skincare and male grooming items, grew 13 per cent, second only to packaged products, which grew 14 per cent.

While lower raw material costs aided Hindustan Unilever's focus on sales in 2014-15, the company is not expected to take its eye off this objective in 2015-16. This despite raw material prices inching up.  Analysts expect Mehta to continue keeping his attention on improving volume growth, a key metric for FMCG companies.

Mehta has built the roadmap to achieve this: dividing the country into fourteen consumer clusters reporting to five sales branches. This go-to-market strategy is expected to help the company get more consumers into its fold with localised sales and marketing. Hindustan Unilever is also expected to tailor-make its products as well as formats in response to consumer needs.