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| Sunday, 4 May 2003 |
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Elephant ready for flight Trimming the fat and rationalising, Unilever Ceylon Ltd (UCL) Chief Ehsan Malik, talked of survival, of phenomenal growth and sending their elephant on its trajectory to flight. "We have a compelling vision. To double our core business over five years; maximise shareholder value by focusing on those parts that have the greatest growth potential and exiting from those where others can do a better job than you", Malik told the sixth Lanka Business Online-Lanka Business Report CEO Forum. The company hopes to turn around a sluggish performance in 1999 - 2001 and has since started a process of rationalising its brands and operations. "In a relatively protected economy and in the absence of strong competition, UCL managed to remain ahead of the others. But the beast had become somewhat lethargic and slow, putting on a bit of fat and becoming somewhat arrogant", Malik said."It has also expanded into areas where it was not as successful as it was at its core. Also due to a two-decade civil war, its mindset was that of survival, not growth". In 2001, the company exited from its failed Walls ice-cream operation, later selling the plant to supermarket chain, Cargills Ceylon. It also closed down its export tea-packing unit following government regulations that it would not allow import of tea for blending and started outsourcing soap packing out of its plant at Grandpass. These measures saw its head-count drop 35 per cent or 1000 people laid off in 14 or 15 months.They then launched Operation BIG (Businesses and Individuals for Gowth), of inward looking gowth and open dialogue, a program of 'to grow my brand, what I do counts'. As opposed to managing the entire company as one business, it now has brand teams, groups of six to eight people that manage each brand as an independent business.He cautioned however that Value for Money competition is emerging from imports, all fighting for that 60 per cent of households that have a disposable income of less than Rs. 15,000. And manufacturing costs are going up as the cost of packing materials for shampoo for example, attracts higher duties than import of the finished product. "Slowly but surely we will move the emphasis of investment away from bricks and mortar to brands and from manufacturing everything ourselves to brilliance in souring, sales and marketing", Malik added. Its efforts are bringing in the dividends and Unilever has reason to crow. "In all categories our market share is at least double that of our nearest competitor". This was the highest growth among Unilever businesses in South Asia, its turnover per capita five times that of its businesses in India. Of its 15 brands, 'Sunlight', one of its oldest and most popular brands of washing soap, alone brings in a turnover of Rs. 2 billion annually. The company also takes credit for raising toothpaste penetration in Sri Lanka to 60 per cent - double that of neighbouring countries. Unilever Ceylon is poised for take off said Malik: "In a thriving Sri Lanka, this slimmer and more agile elephant, with a healthy appetite for growth, will surely fly!" |
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