'India has grown very quickly for us; it's now among our top five global markets'
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Time of India
2 hours ago
- Time of India
Legacy companies can no more think the small guy doesn't matter, says Nestle MD Suresh Narayanan
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads New Delhi: Legacy companies "can no longer have the luxury of thinking that the small guy doesn't matter," Nestle India 's outgoing managing director Suresh Narayanan told ET in an interview, adding that gradual urban demand recovery is visible."These small guys are not saying 'I want to sell one million tonnes'; they're saying 'I want to sell in six localities, in three pin codes'," Narayanan said. Legacy companies "really have to learn to think of smaller scale, more nimble, profitable operations, because the large-scale opportunities such as creating another Maggi noodles are going to be very difficult." They need to do multiple small things and fast, he is retiring after steering the maker of Maggi noodles and Nescafe coffee in India for a decade. He will be succeeded by former Amazon India country head Manish Tiwary effective August comments come amid hundreds of regional and direct-to-consumer brands, ranging from noodles and tea to cosmetics and snacks, disrupting and taking share from large players, riding on lower prices, local innovation, and last-mile reach through quick commerce Chiefs of Tata Consumer Products ITC and HUL , too, have called out increasing competition from smaller brands over the past 12-15 months."The game is definitely changing; it's changing across the world," Narayanan said. "In some parts of the world, big brands are no longer the marquees of quality and consumption. It's the local brands, the house brands."1to3 noodles, Rungta tea, Balaji Wafers and Mario biscuits are among local brands disrupting the large brands. "It would be short-sighted for anyone to deny that in India there are pressure points being created locally; there are some good offerings that are being done," Narayanan said. "I tell my teams there are smaller companies who are more nimble footed rather than the big giants."The Rs 20,000 crore-plus Nestle India 's capex has increased from 1.8% of sales in 2015, to 10% in said regional competition is good for the industry. "It keeps companies from getting complacent," he said. "Yes, they're playing the pricing game but what we can bring to the table is much wider."Narayanan said "companies have to increasingly work on keeping their brands relevant," and stressed the need for accelerating premiumisation. While keeping affordability intact, there are "enough opportunities for premiumisation in chocolates, milk and nutrition, coffee, pet foods," he India unit of the Swiss foods maker reported a 5.9% year-on-year increase in revenue for the April-June quarter at '5,096 crore, while net profit declined 13.4% to '647 crore, impacted by elevated commodity Godrej Consumer Products Marico and Dabur are among the companies that have indicated sequential recovery in urban and rural markets going forward, aided by easing inflation, good monsoons and policy incentives, signalling some relief for the sector after five quarters of slowing demand."I think that the times ahead will be definitely better. How much better? It's difficult for me to say, but possibly the worst is behind us," Narayanan said. "Underlying signs such as moderating food inflation, the income tax benefit which should start to kick in, good monsoon and urban demand which had been in slumber for a long time are picking up," he of edible oil, cocoa and coffee have stabilised over the past quarter, providing some relief from steep inflation."In a global context, too, we seem to be one of the most stable economies, compared to many others," the Nestle India chief said. "Mega cities and metros are now starting to come back positively. Plus, infrastructure spending is high... So, all this is putting money where it matters."Meanwhile, recent weeks have seen a spate of leadership changes among large companies such as HUL and L'Oreal in India, and Diageo, Kenvue and WPP globally, amid tough market conditions and diminishing shareholder value Addressing a query on the unprecedented C-suite churn, Narayanan said with the markets in general now "a lot more brutal," the greatest skill for a CEO would be understanding the market, inspiring their people. "The CEO needs more courage, more communication, more confidence," he said. "Yes, competence is needed, but probably competence is not the number one quality that is required now."
The Print
4 hours ago
- The Print
Sotefin Bharat plans Rs 80 crore IPO to build parking robot unit for automated parking in Bengal
'We are in the process of launching an IPO, which will help us become Atmanirbhar in the production of robots used in automated parking systems. The robot manufacturing facility will require around Rs 40 crore, while the remaining Rs 40 crore will be largely used for debt reduction and enhancing working capital to undertake larger projects,' Sotefin Bharat Managing Director & CEO Arup Choudhuri told PTI. The entire issue will be a fresh equity offer, with no stake dilution by the promoters or existing PE funds, a top company official said. Kolkata, Jul 27 (PTI) Swiss automated parking solutions major Sotefin SA's Indian subsidiary, Sotefin Bharat, on Sunday said it will hit the capital market to raise Rs 80 crore to support indigenous manufacturing of robots for automated parking systems in West Bengal. The company has announced a new manufacturing facility at Bagnan in West Bengal's Howrah district, entailing an investment of approximately Rs 40 crore. Once fully operational with in-house robotic manufacturing capabilities, the state-of-the-art plant is expected to create over 100 jobs and significantly boost Sotefin Bharat's production capacity, Choudhuri said. The facility is projected to support the creation of over 10,000 automated car parks or 25 automated parking projects per year, he added. The equity structure of the company is evenly held by two Indian promoters—Arup Choudhuri and Jignesh Sanghvi—Swiss partner Sotefin SA, and a clutch of PE funds, each holding 25 per cent. Post IPO, the fresh issue will dilute all existing promoter holdings by 6.25 per cent, taking public shareholding to nearly 25-26 per cent, Choudhuri said. The listing will also help unlock value, and the company is currently working with merchant bankers to prepare the Draft Red Herring Prospectus (DRHP), which is expected to be filed with the regulator within a month. The company has also started exporting its systems to the US and Dubai, officials said. 'Our order book currently stands at Rs 1,000 crore, which should support a 50–60 per cent growth over the next 3–4 years,' said Executive Director Jignesh Sanghvi. PTI BSM RG This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
Mint
8 hours ago
- Mint
Suresh Narayanan—the accidental CEO
NEW DELHI : Suresh Narayanan's entry into the corporate world was serendipitous. Growing up in pre-liberalized India, he didn't consider a career in the packaged consumer goods industry. He wanted to be a bureaucrat, following in his father's footsteps. But a chance encounter during his final year at the Delhi School of Economics led to his first corporate job. This week, he'll end his four-decade corporate career when he steps down as the chairman and managing director of Nestlé India Ltd. On 1 August, Amazon's Manish Tiwary will replace Narayanan, who has been with the Swiss packaged foods company for over 25 years, including a decade of leading its India operations. But a look back at his career, in some sense, suggests he was being prepared for this role from the very beginning. 'People wanted me to do engineering or medicine. I studied economics instead with every intention of being a bureaucrat that was drilled in me—my father was in government, so was my grandfather," said Narayanan. Hindustan Lever Ltd (now HUL), a coveted employer at the time, was recruiting on campus—a rare event back then. Narayanan, who hadn't even taken the CAT exam (mandatory for pursuing an MBA), was persuaded by a peer to apply, and to his surprise, he got the role. This prompted his move to Mumbai, with a monthly salary of ₹1,200 to ₹1,300. HUL and foods Narayanan's career at HUL was entirely focused on the food division, a natural precursor to what was to come. At HUL, his peers included Nitin Paranjpe (non-executive chairman of HUL) and Leena Nair (the current chief executive, Chanel), among others. He worked on brands such as Dalda and animal feeds and later became part of the Brooke Bond Lipton team. He eventually headed sales for their tea and coffee business before a brief stint at Colgate. While he respected Colgate's culture and values, the toothpaste and shampoo categories didn't appeal to him after years of being a 'foods guy". Narayanan joined Nestlé in 1999 as executive vice president for sales in India, a rare external hire into the company's core management committee at the time. 'What struck me about Nestlé was that it was a company with a huge premium on quality and safety and very strong brands," he told Mint in an interview earlier this month at the company's Gurugram office. What followed were over 25 years of service at the Swiss foods company, including international assignments in Nestlé Indochina, where he led sales, marketing, and food services across Thailand, Cambodia, Myanmar, Laos, and Vietnam. He also served as managing director of Nestlé Singapore Pte. Ltd, followed by chairman roles for Nestlé North Africa and Nestlé Philippines. He was chairman and CEO of Nestlé Philippines prior to joining Nestlé India as managing director. The Maggi crisis Narayanan returned to India and joined as managing director on 1 August 2015, in the midst of the Maggi noodle crisis. This period, he said, was an 'existential crisis" but also a defining one. Nestlé India's instant noodles brand got embroiled in controversy following allegations of high levels of lead and monosodium glutamate (MSG) exceeding permissible limits. The issue first emerged in March 2014 when a food inspector in Uttar Pradesh found MSG despite the 'no added MSG" label. This led to the Delhi government imposing a 15-day ban, followed by a nationwide recall order on 5 June 2015. Nestlé India recalled and destroyed approximately 38,000 tonnes of Maggi noodles, plummeting its market share from over 80% to zero in one month. Maggi noodles eventually returned to the market in November 2015 and have since regained market share, now hovering over 60%. In 2015, the company's net sales decreased by 17.2% to ₹8,123.27 crore, largely due to the crisis, with a profit after tax (PAT) of ₹563.27 crore. However, the crisis did push the otherwise media-shy company to open up more to investors, shareholders, and the public at large. 'It was groundswell not only from global, but from the local market as well. Nestlé has always been a reticent, low-profile company. There is less known about it than should be known. Post the crisis, we became more open. I became a kind of regular fixture on media calendars. We shared a lot more. We have come out of the crisis stronger," he said. Nestlé also stepped up its innovation efforts to shake off the company's dependence on the Maggi brand. 'In 2015, many considered us to be solely a Maggi noodles company. Since then, we have diversified our portfolio, expanding categories such as breakfast cereals, premium coffee, and pet food with over 150 new products that have contributed to 7% of sales," he said in the company's annual report for 2024-25. For instance, the company's pace of innovation is now 4X faster than it was a decade ago. 'We have become less failure-averse as a company," he added. In 2024-25, the KitKat chocolate maker reported sales worth ₹20,077.5 crore, more than double since Narayanan took over. PAT stood at ₹3,314.5 crore. 'Over the last decade, Nestlé India's revenue witnessed a compound annual growth rate of 10.3%, while the corresponding profits from operations grew by 13.5%.The capex levels have risen from 1.8% of sales in 2015 to 10.0% of sales in the fiscal year ending 2024-25," according to the company's annual report. Nestlé India's share price was around ₹654.86 when Narayanan took over. It has risen 248% to ₹2,279.20 as of 25 July. The Maggi troubles aside, the company has faced other challenges, such as skyrocketing coffee prices over the last year that have impacted margins and a sluggish demand for packaged foods in general. In the June quarter, profit fell because of input cost pressure and higher finance costs for the company. Analysts said Nestlé's volume growth was 'modest", and the company missed margin expectations due to input cost pressure. There were some misses, too, such as rival HUL outbidding it to buy health food drink brand Horlicks. However, Narayanan seems to have little regret over the deal now. 'Let us just say, we are a nutrition company," he said. In 2024, Nestlé India faced scrutiny over allegations of adding high levels of sugar to its baby food products, particularly Cerelac and Nodi infant cereals, sold in India and other developing countries. 'We were fully compliant with the laws of the land. We have launched products with low refined sugar," he said. India investments Meanwhile, the company has made substantial capex investments over the last five years, including expanding production capacities for Maggi, confectionery, and coffee. Narayanan expects the pace of innovation to pick up even more. 'We've invested almost ₹6,000 crore as capex (between 2020 and 2025). We have done a lot of capacity creation to meet the demand we are anticipating. I would reckon that the pace of innovation, which today contributes about 7% of sales, we should reasonably target at least a 10% interim goal going forward," he added. Narayanan said urban Indian consumers are changing, with greater emphasis on quality and more premium experiences. This is playing to the advantage of companies like Nestlé, he added. For instance, the company opened its premium coffee boutique, Nespresso, in India this year. It has also expanded into the pet care business and has a joint venture with Dr. Reddy's to sell nutraceutical brands. It has also stepped up distribution in rural markets after years of being an 'urban" company. Rural markets now account for 20% of its domestic sales, albeit less than the industry average, but growing. While affordability remains an important plank for FMCG companies in the Indian market, Narayanan has been pointing to a trend of 'premiumization", with consumers increasingly willing to pay for quality products. Beyond business, Narayanan has rarely held back views on broader economic and social trends. He said consumption growth in India will depend on controlling food inflation and creating meaningful employment opportunities, especially in sectors like manufacturing. Greater spending on infrastructure could go up, "that's what's fueling growth in rural India", he added. Second innings As he transitions into his 'second innings", Narayanan plans to pursue teaching, particularly in executive education, starting initially with guest lectures. He is also in conversations with private equity firms for advisory roles. 'I've worked for 44 years and have had my fair share of operating and running businesses. I have no desire to uproot myself, but I'd rather give back. I want to also see more places in India, and travel a bit of the world," he said. On management lessons, Narayanan said humility and keeping one's ego in check are critical, especially as people move up within organizations. 'One of the biggest challenges of leadership is that you develop the plaque of ego and you're not able to scrape it off," he added.
