Nihal Kaviratne couldn't have arrived in Indonesia to start a new job at a worse time. When he became chairman of Unilever Indonesia in November, 1998, the Asian financial crisis was hitting hard. The plunge in the value of the Indonesian currency deterred shoppers from buying Unilever's products, from toothpaste to shampoo. In 1998, revenue for the Anglo-Dutch giant's Indonesian unit fell by half, to $300 million. "When you go through a crisis, it doesn't feel like there's going to be an end," Kaviratne, 58, recalls.
What a difference four years makes. Last year, Unilever Indonesia brought in $650 million in revenues and earned $89 million in net income--up fivefold from 2000. Unilever Indonesia's (UNLRF) stock, which is listed on the Jakarta Stock Exchange, is now worth $2 billion--up from just $300 million in 1998. And the Bangalore-born Kaviratne, who graduated in economics from Bombay University and has taken management courses at Northwestern University and Harvard University, is given much of the credit. A 30-year Unilever veteran who has worked in markets from India to Argentina, he called on all his experience to turn the Indonesian operation around.
Kaviratne's strategy was simple: Slash costs but expand the business by snapping up local assets while they're cheap. It was a lesson he learned during a financial crisis in Argentina in the 1980s. "It's a simple piece of arithmetic," he says. "When a market falls by 50%, it has to grow by 100% to get back to where it was." Thus, Kaviratne moved to woo back customers by selling shampoo and detergent in single-use packages for as little as 4 cents--a price even unemployed Indonesians could afford.
As sales started picking up, Kaviratne began to buy local companies, taking advantage of a 1999 law that allowed foreigners to own retail outfits. He bought domestic retailer Yuhan, which owned a leading fabric-conditioner brand, and snapped up top-selling Bango soy sauce. A regional trade agreement made it possible for Unilever to move production of tea bags, soap, and ice cream to Indonesia.
What's Kaviratne's next act? He wants to boost sales by persuading Indonesians to bathe and brush their teeth twice a day. "Being able to take advantage of the recovery is as important as surviving during the crisis," he says. That's one of Asia's savviest managers talking.