AJAY KUMAR RATH*
Local and Global Operations of Multinational Corporations: Unilever in India
HINDUSTAN LEVER is one of the most controversial multinational companies operating in India. The company has figured many times in parliamentary discussions because of its involvement in various practices which are not fully in accordance with the FERA (Foreign Exchange Regulation Act) and MRTP (Monopoly and Restrictive Trade Practices) regulations. Some of the major allegations against the company are: foreign majority holding of equity shares, operation in areas belonging to the Reserved List like soaps and tooth-paste, excess production over the permitted capacity in some of these very areas (e.g., about 170 per cent above the permitted capacity in soap), exploitation of workers through sub-contracting etc. The aim of this paper is to bring out certain facts about the company which throw light on the role of a multinational corporation in India.
Hindustan Lever (HL) has two parent companies—Unilever PLC, London, and Unilever N.V., Rotterdam—who actually function as one company. They have identical Boards of Directors and are linked by agreements, one of which equalises the dividends payable on the ordinary capital of N. V. and of PLC according to particular formula set out. Although Hindustan Lever is registered as a subsidiary of the PLC, London, the control and management of it is in the hands of both PLC and N.V. Unilever operates in 75 countries and has as many as 812 subsidiaries, and produces and sells over 1,000 products. Today, the company is one among the top multinational corporations in the world (it ranked ninth in 1975).
The formation of the company took place in 1929 when a merger took place between Margarine Unie, the biggest margarine manufacturer in Holland (possibly in Europe) of that time, and Lever Brothers, the leading manufacturer of soaps and other consumer products in the U K. Lever Brothers' involvement in Indian business dates back to 1888 when Sunlight soap was first exported. In 1913 Lever Brothers (India) Ltd. was registered under the Company Act
*Works on the research staff of the Indo-Dutch Project on Dutch multinationals in India.