Big Brother HUL Chops Lakme Salon Top Brass

CEO Anil Chopra among biggies to quit over last few months; HUL maintains to always have oversight of services arm

KALA VIJAYRAGHAVAN MUMBAI

    In early 2009, the board of Hindustan Unilever Ltd (HUL) set up a whollyowned subsidiary to develop a “uniquely different business model-…with singularity of purpose and dedicated focus.” The business: beauty salons. The subsidiary: Lakme Lever Pvt Ltd (LLPL). HUL went on to say that it would “not be directly engaged in the services business of Lakme salons…”
Almost three years later, HUL seems to have done a strategy rethink – or at least that’s what people closely involved with LLPL claim. They maintain that the HUL management is trying to take ownership of the salon venture at a time when it is showing signs of gaining scale and turning into an eminently-viable business.
This apparent interference in the management of LLPL has resulted in the exit of its entire top leadership team over the past couple of months. CEO Anil Chopra, whom HUL had called back out of retirement to infuse an entrepreneurial culture at the services subsidiary, quit at short notice a month ago. Other notable exits from the leadership team in the recent past include head of marketing Kiran Gill, HR head Sandeep Sengupta and head of operations Rakshit Harghave. Poornima Shah, national business manager for company-owned salons who had come in from Avon, also quit a few months ago.
The feeling within LLPL is that HUL is keen to take charge of Lakme salons now that the business is on an even keel. The Lakme services operation now directly reports into Gopal Vittal, HUL’s executive director for the home and personal care business (HPC). Currently, a former McKinsey consultant Karthik Seth is heading the salon venture.
An HUL spokesperson dismisses the notion that HUL has out of the blue begun interfering in LLPL’s operations. “As a 100% subsidiary of HUL, HUL has always had an oversight of LLPL’s operations. This will continue. Therefore, the CEO of the business, while operating independently to meet three objectives —of building a distinctive set of capabilities, and a service business with focus and a distinctive culture —has always reported to the Executive Director-HPC, who is a member of the HUL Board,” says the spokesperson. His contention is that Chopra decided to move on “for personal reasons. We are now on the look out for a replacement for someone to come on board and replace him.”
Chopra has been associated with Lakme since it was a Tata company. In the mid-90s it entered into a JV with HUL. Three years later the Tatas sold it to the consumer products giant. Chopra is credited with establishing Lakmé as an iconic beauty brand and conceptualising and running the Lakme India Fashion Week.
Chopra declined to comment on his exit and the possible reasons for it. Those close to him aver that HUL may just be trying to steal his thunder. After all, they say, that since Chopra rejoined after retirement with a growth-linked compensation package in 2009, growth has stepped up. Annual same store growth is 20%, Chopra has added some 65 new salons since 2009, and overall growth since then is 40-45% annually.