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Crisis does not come with a calling card: Nestle MD Suresh Narayanan
In an interview with PTI before he hangs up his boots at the end of this month, Narayanan, who brought back Nestle India from an 'existential crisis' in 2015 after the Maggi fiasco to a thriving organisation, said there is opportunity even in crisis, and engaging with community, people and focusing on the goal of satisfying the consumer is a leadership he learnt from his varied experiences, including in Egypt.
Having gone through crises, including leading Nestle Singapore during Lehman Brothers collapse, and Nestle Egypt during the Arab Spring, Narayanan quipped that once his "boss" asked him to consult his astrologer and check his horoscope.
"The next crisis is always round the corner. So you cannot rest on your laurels and wish that nothing is going to happen. Something will happen -- it doesn't come with a calling card. The next crisis is always around the corner and (it is important) to keep the organisation vigilant for such moments," he said on what would be his leadership advise to his successor.
Manish Tiwary will take over as Nestle India Chairman and Managing Director from August 1.
Recollecting his 26 years in Nestle in various roles globally, Narayanan said, "I have had a whole series of different crises." He termed his stints as Managing Director of Nestle Singapore, Nestle Egypt Chairman and CEO Head of NEAR along with Nestle India Chairman and Managing Director as "the defining movements" in his journey with the company.
"When I was posted as the Managing Director of Nestle Singapore, it coincided with the Lehman Brothers collapse. Singapore was the first country to go through a recession. I had a difficult and challenging task. They were holding the water for the company, in terms of the growth and profitability. That was a big challenge. We did well, but it was a challenge," he recollected.
Then he went to North Africa, Egypt, and everything was peaceful. But not for long.
"Within a few months, the Arab Spring struck. So the whole region, which I was responsible for -- Egypt, Libya, and Sudan, went into turmoil. But again, I think one of the lessons I learned in leadership was that you really engage the community, engage with the people and you focus on the goal of satisfying the consumer, there is opportunity even in a crisis," Narayanan said.
He further said, "We grew double-digit for five years in a row and we invested more in those five years than we invested in the previous 15. We were a company of choice for Egyptians. I think I had one of the best years of my career during that period." After four months of leading Nestle in the Philippines, which was "a peaceful and calm posting", Narayanan was called to India to bail out Nestle India from the Maggi crisis.
"We don't like to invite a crisis. But when they happen, they become times when you can do a lot of revolution and a lot of reforms in the organisation. I think that has been the satisfaction," he noted.
Terming the Maggi crisis as a "difficult time", Narayanan gave credit to the "help and support of numerous colleagues, partners, and well-wishers, and the consumers" for helping the company stage a comeback.
"The only example of a brand that went from market leadership to death and back to leadership in three months' time and from then on, it has been a journey that has been upwards despite the crisis that we have faced," he said.
On how he entered the corporate world, Narayanan said, "It was more of an accident." "I was studying at the Delhi School of Economics pursuing master's in economics with every intention of being a bureaucrat after I completed my honours in economics from Delhi University. I had never given the CAT exam. So I was very clear that I wanted to be a bureaucrat because in the family, there were government servants. My father was one, my grandfather was one," he said, adding, "I always thought a career in the bureaucracy is what I should be pursuing." However, things started changing after FMCG major Hindustan Lever (now HUL) came for campus placements.
"And that was the first time they came and I think it's also the last time they came because they realised what a mistake they had made in making a selection," Narayanan said in a lighter vein.
The head of the placement committee cajoled him to apply for this, though he was not interested.
"But he said, no, just apply for it and I went for it. And lo and behold, as fate was to beckon me, I got selected as a management trainee in the company," which was considered to be a very "coveted job" at that time.
His father persuaded him to join HUL as he was getting a decent salary in a decent company. One of his uncles, who was an IAS officer, also convinced him.
He was 24 years old then, when he decided to go for the corporate world Narayanan said, adding "I have no regrets".
"I tell young people that sometimes accidents happen in life and you have to learn to live with the circumstances and live with what fate holds for you rather than always trying to mould it," said Narayanan.
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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.
