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HUL to prune workforce in line with Unilever directive

Viveat Susan Pinto / 19 May 17 | 01:56 AM

Hindustan Unilever, the country’s largest consumer goods company, will rationalise its workforce as it reviews its business in line with parent Unilever's directives.

Last month, Unilever, the world's second-largest consumer goods company, said it would combine two of its main business units, food and refreshment, divest its spreads business, buy back shares worth 5 billion euros, raise dividend to 12 per cent, and target a 20 per cent operating margin by 2020, up from 16.4 per cent last year.

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While the measures were aimed primarily at boosting its business prospects in Europe and North America, the India business, which contributes eight-nine per cent to Unilever's $56.1-billion annual overall turnover, would feel the heat, especially in the area of workforce rationalisation, sector analysts said. 

In response to a query on the subject, HUL’s managing director and chief executive officer, Sanjiv Mehta, said the company was integrating “brand builders and brand developers" in a bid to optimise resources.

“As part of our Connected for Growth programme, we have brought together brand developers and brand builders, which will help us to do more with less. Our optimisation of resources, however, is much below our attrition level," Mehta said.

While HUL did not disclose its 2016-17 (FY17) permanent employee number on Wednesday, the day it announced its March quarter and full-year results, its FY16 permanent employee number stood at 7,429, about 18 per cent over FY16, when it was 6,289. Employee costs, however, have dropped seven per cent in FY17 to Rs 1,620 crore, based on its results disclosed on Wednesday, versus Rs 1,742 crore a year ago. 

As a percentage of net sales, employee costs, says Abneesh Roy, senior vice-president, research, institutional equities, Edelweiss, now stands at 5.4 (for FY17), expected to drop to 5.2 in FY18 and 5.1 in FY19.


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