FMCG major Hindustan Unilever Ltd (HUL) on Thursday announced the appointment of Nitin Paranjpe, currently the chief operating officer of Unilever, as the non-executive chairman with effect from March 31. Sanjiv Mehta will continue as the chief executive officer and managing director.
The company separated the roles of chief executive officer/managing director and chairman in “consonance with emerging progressive governance trends'’. The HUL decided on separating the roles despite the Securities and Exchange Board of India (SEBI) recently saying that it was no longer necessary to separate the roles. The SEBI had made it mandatory for listed companies earlier to separate the position of CEO and chairperson and MD.
The move makes the maker of Dove soaps an outlier among large Indian corporates. Several companies had cited difficulties and challenges before the SEBI as reasons for not being able to split the roles. It had first notified the rules for separating the roles in May 2018. The deadline for compliance was extended from April 2020 to April 2022. According to the regulator, only 54 per cent of companies had complied with the rule as of December 2021. The SEBI then made it voluntary after the top 500 local companies failed to comply.
“We welcome Paranjpe back to HUL as the non-executive chairman,” HUL said in a statement. “He brings in huge knowledge and experience which will enrich the deliberations and add value to the board," it added.
“It’s an honour and a privilege to be appointed as the non-executive Chairman of HUL; one of the most respected companies in the country. I look forward to working closely with Sanjiv and the Board to further strengthen the company and help navigate the challenges and opportunities in the years ahead,” Paranjpe said, commenting on his appointment.
By virtue of his long association with the HUL, Paranjpe already has an understanding of India and HUL’s business in the country well. “So he will enrich the board and definitely work closely with the current MD and CEO Mr Sanjiv Mehta. This also helps Hindustan Unilever meet any potential requirement of separating the role of chairman and MD CEO although now it has been made voluntary,” Abneesh Roy, executive vice-president (research), Edelweiss Financial Services, said.
The HUL’s confidence in Paranjpe’s abilities to steer its India business was made clear when he was made the COO and some of the company’s key businesses were handed over to him. The company had also appointed him as the chief people’s officer and the chief transformation officer from April 1. The local leadership’s importance in the larger scheme of things for the global company has been highlighted in the appointment of Mehta and Paranjpe. Mehta is also a member of the Unilever Leadership Executive council.
“This will make the relationship between the parent Unilever and Hindustan Unilever that much stronger and seamless given Nitin Paranjpe also occupies leadership roles at the parent Unilever. This should definitely be a positive step. Although the role of Nitin Paranjpe is in a non-executive capacity, his understanding of the Indian consumer and Unilever is extremely rich and strong and definitely will add value to the Hindustan board and the company,” Roy says.
The HUL had recently said that India continued to be among the top three priority markets for its parent, Unilever, which has announced an organisational restructuring that will result in 1,500 job cuts across senior and junior management roles globally.
The company had said that the HUL has a mutually beneficial and interdependent relationship with the Unilever Group, bringing the best of trends, innovations and capabilities to the Indian market. A company spokesperson said, "We will continue to leverage this organizational structure to serve our consumers and customers even better."