'Reckitt Benckiser Pakistan will invest more in local production' an Interview with Kashan Hasan, CEO Reckitt Benckiser

Kashan has been associated with Reckitt Benckiser (RB), a global leader in consumer health and hygiene, for the last 12 years, serving in various successful leadership roles across the globe in Pakistan, UK, South Africa, Egypt and the Middle East. In his most recent role, he was serving as the Regional Sales Director for the Hygiene Home business for the MENA region.

He has recently been appointed by RB as the Chief Executive Officer for its Healthcare business in Pakistan. Kashan Hasan brings in over 18 years of leadership and management experience across various industries including consumer goods, consumer durables, consumer health, hygiene, home, food and confectionary. As a Sales and Marketing professional he brings in diverse experience in Sales, Trade Marketing, Key Account Management, and Customer and Consumer Marketing.

Following are the edited transcripts of a conversation BR Research recently had with Mr. Kashan Hasan as the new CEO of Reckitt Benckiser Pakistan Limited:

BR Research: As the CEO, what is your vision for Reckitt Benckiser Pakistan?

Kashan Hasan: I have been associated with Reckitt Benckiser (RB) for the last 12 years, serving in various leadership roles across the globe. My vision for RB Pakistan Limited is very simple: outperform in the market and continue to expand the business in Pakistan through people, performance and purpose. I strongly believe in building brands through innovation that creates value for our consumers.

At RB, our people are our top priority – we hire the right people with great potential and then nurture them to grow and develop into leaders. Similarly, my goal is to develop top talent from the Pakistan business, which not only drives outperformance locally but also outshines globally.

Being a leader in health and hygiene products, we aim to develop our categories further through innovative product solutions that help in better addressing the needs of our consumers. And to then use these products to deliver outperformance in the market, leveraging our partnerships with our customers.

We put ‘purpose’ at the heart of the company and our brands. With the vision of giving back to the community as an organization, I envision a cleaner and healthier Pakistan. “Hoga Saaf Pakistan” powered by our biggest brand Dettol, is not just a movement but is our commitment to Pakistan through which we want to educate and instill responsibility amongst all Pakistanis to work towards a Saaf Pakistan.

BRR: How do you classify your business segments? Which segment contributes the most to the revenues.

KH: In our Healthcare Business, our RB brands operate in multiple category segments and are key players in each. These category segments include: Personal hygiene (Dettol personal wash range; Veet) is our biggest segment which is followed by our OTC business (Strepsils, Gaviscon, Disprin). Additionally, we operate in Surface Hygiene (Dettol multi-purpose cleaning range and antiseptic liquid), reproductive well-being (Durex) and Infant nutrition (Enfa). Dettol, our biggest brand in Pakistan, is considered #1 germ kill brand globally. Veet is Pakistan’s #1 hair removal brand, Gaviscon is the #1 antacid brand in Pakistan, and Enfa is globally considered the #1 infant nutrition brand. So, all our brands in their own stature have a major contribution to the company’s overall product portfolio.

BRR: What value and efficiency does RB global operations bring to the local supply chain?

KH: RB has operations in over 60 countries, with headquarters in the UK and sales in 200 countries and territories. RB Pakistan began operations in the 1950s. As a multinational, we pride ourselves in bringing the best global practices to all the countries we operate in, including Pakistan. These global best practices and standards ensure that the company’s operations run smoothly and we are able to serve our consumers and our customers well. It also means that the people who work with us are trained and have access to all our global know-how and experience.

BRR: How have the falling global commodity prices and the current economic downturn, devaluation in the currency and rising interest rates affected the FMCGs? What has been the effect on Reckitt Benckiser Pakistan’s operations and profit margins? And what lies ahead for FMCGs?

KH: The current global economic slowdown has undoubtedly affected FMCGs. In Pakistan, currency devaluation has meant rising cost of doing business and margins are under pressure. High interest rates and double-digit inflation have slowed down economic activity, as consumer purchasing power is dropping. The structural changes in the revenue collection system also effected trader confidence.

In this scenario, RB Pakistan needs to ensure that our operations are very efficient, our investment is very effective, and our costs are minimized. So, our manufacturing operations and our entire supply chain needs to be efficient with no wastage and minimum overhead costs. Our marketing and trade related investments have to be very effective as again there is no room for wastage and inefficiency. We also have to manage and control costs very closely.

We are doing all of this by looking at technology solutions, big data and predictive analytics. The aim is to have the most cost-effective supply chain from factory to store and to find better and more efficient ways to drive brand activation and distribution.

In 2019, the economy went through macroeconomic challenges. However, this year we are anticipating more stability in the macroeconomic environment, as well as a more stable forex outlook, and less pressure on costs. This will ideally make 2020 a better year for business.

BRR: What has been RB’s strategy to combat falling profit margins? Price increase?

KH: As mentioned earlier, our strategy to sustain profitability is to employ best practices and learnings from across the RB world to ensure operational excellence and efficient systems even in the face of an economic slowdown. This is what continues to help us in combatting falling profit margins. Having said that, our products are leading brands in their categories, thus as market leaders we continue to develop our categories and markets by introducing new and innovative product solutions for Pakistanis at large.

BRR: What is RB’s marketing and advertising expense relative to the revenues? Have your marketing and advertising budgets been affected in the ongoing economic slowdown?

KH: RB is a health and hygiene company and for us our number one priority is to invest in bringing the best quality products and innovative solutions to households. It is also imperative to communicate with and educate our consumers by building their habits towards ensuring health and hygiene standards. We take pride in improving lives of 56 million people in Pakistan through our product solutions as well as our nationwide social impact programs.

As a purpose-led business, we are committed to ensure that we continue to reach and communicate with as many consumers as possible, therefore, we warrant enough marketing and advertising investment in media and on-ground to keep achieving this objective.

BRR: What is the competitive landscape and regulatory environment for FMCG sector like in Pakistan? What would you suggest to the authorities?

KH: The competitive environment for the FMCG sector is fair and there are regulations in place to ensure that all players are operating within the framework, which promote healthy competition. The present government’s policies are also helping to reduce the inflow of counterfeit products and infringement cases, but there is more to be done in this area, to protect the consumer against substandard products as well as protect businesses that are complying with local laws and paying taxes and duties. This will not only promote healthy competition but also improve the quality of products and services in line with international standards.

The regulatory authorities are working towards bringing a more structured approach to businesses and revenue collection systems. For businesses to progress, it is important that frequent changes in tax policies as well as pricing policies are avoided as they discourage long-term investments.

Counterfeits, Infringements and "Grey" trade remain a major phenomenon across industry, products and geographies in Pakistan. This area also needs focus and attention.

In a nutshell, the need of the hour is a more “enabling” FMCG and pharma sector, the right mix of enablement and policing by the government, implementation of law and order and ensuring protection against counterfeits, infringements and unregulated imports which is crucial to the development of the business community, especially multinationals investing in the country

BRR: What is your outlook for the economy in 2020?

KH: 2019 was a year in which corrective actions were taken, where the country went through major policy changes in the revenue and tax management systems towards a more structured and documented economy. This is the first step towards ensuring that businesses flourish by following a transparent and organized value chain.

We are looking forward to the year 2020 where it is anticipated that the preceding changes in policy from last year will bring in stability, which will potentially bring in better opportunities for a more constructive business environment.

BRR: With respect to dwindling FDI, what do you think are the key bottlenecks in Pakistan? Surely the correction in currency and improving security situation has not shown any significant improvements so far. What in your view needs to be done and which sectors have the potential to attract foreign interest?

KH: Pakistan remains one of the fastest growing consumer markets and a very important one for RB. RB as a group has been investing in Pakistan by upgrading our production facilities to ensure the best safety and quality standard products reach our consumers.

For FDI growth, it is important to ensure investor friendly policies through simplification and consolidation of levies and taxes. Moreover, it is vital for the government to ensure security through improved law and order in the country and safeguarding companies against infringement to ensure a healthy competitive market. Since the current government is already working towards import controls, duty structures and focus on collection, these tight controls will reduce grey channels trade and under invoicing practices, which will ensure a more investment-friendly environment for businesses.

I am optimistic that the measures being taken by the government will attract FDI in the coming years. Business thrives on stability, and with a more stable outlook for 2020 and beyond, we should expect higher inflow of FDI.

BRR: Any plans of getting listed?

KH: RB Pakistan was listed on the stock exchange till 2005, at which point we were de-listed after following the due legal and regulatory process. We do not have any plans in the foreseeable future for enlistment or trading in the stock exchange locally.

BRR: Any ongoing or future investment plans for Pakistan?

KH: As announced last year, we invest heavily in our social impact vision of “Hoga Saaf Pakistan” (HSP) which is powered by our biggest brand Dettol and supports the Government’s Clean Green Pakistan Movement. Under the HSP movement, we educate over 5 million people on good health and hygiene through our on-ground behavior changing programs. We have committed an investment of Rs1 Billion in the next 5 years for expansion of this program to improve the lives of fellow Pakistanis by promoting a healthier, more hygienic lifestyle for all, eventually aiming to reduce mortality.

In terms of investment specifically for business, we are excited for 2020 as RB Pakistan Limited will be investing more in local production. We have invested close to £6mn in the last 3 years for this purpose.

Moreover, RB as a responsible organization is also working towards becoming more sustainable and environment-friendly by moving towards solar power energy for our plants. Currently more than half our energy needs are met through solar power with a plan to go to 100 percent and then contribute towards the national grid.