A Presentation on

HINDUSTAN UNILEVER LIMITED

BY -:
THE FMCG INDUSTRY…
• Fast Moving Consumer Goods (FMCG) industry alternatively called
CPG (Consumer Packaged Goods) industry
•
• Primarily deals with the production, distribution and marketing of
consumer packaged goods
•
• Principal constituents are:
– Household Care
– Personal Care
– Food & Beverages
•
• FMCG products are those which have a quick
 turnover and relatively low cost

FEATURES
• Characterised by a well established distribution network, low
operating costs, low per capita consumption and intense
competition between the organised and unorganised
segments


• Availability of key raw materials, cheap labour costs and

presence across the entire value chain gives India the
competitive advantage


• Resulted in presence of global players through their

subsidiaries
THE INDIAN FMCG SECTOR
• Market size:
– US$ 13.1 billion (in 2005)
– US$ 18.2 billion (in 2008) i.e. Rs. 85,000 crore
•
• The fourth largest sector in the economy
•
• Creates employment for more than three million people in
downstream activities
•
TOP 10 FMCG COMPANIES (INDIA)
1. Hindustan Unilever Ltd.
2. ITC (Indian Tobacco Company)
3. Nestlé India
4. GCMMF (AMUL)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene and Health Care
10.Marico Industries

DOMESTIC PLAYERS
Company Brands Key Feature (s)

Britannia India Ltd Tiger Glucose, Mariegold, Fifty- 40% market share in the overall
(BIL) Fifty, Good Day, Pure Magic, organised biscuit market
Bourbon
Dabur India Ltd. Dabur Amla, Dabur Chyawanprash, Largest Indian FMCG and
Vatika, Hajmola, Lal Dant Manjan,ayurvedic products company
Pudin Hara and the Real fruit juices

Indian Tobacco Kitchens of India, Sunfeast, Diversified presence in cigarettes,

Corporation Ltd. Candyman, Bingo hotels, paperboards, food products
(ITCL)
DOMESTIC PLAYERS
Company Brands Key Feature (s)

Marico Industries Parachute, Saffola, Sweekar, Shanti Leading Indian group in

Amla, Hair & Care, Revive, Mediker, Consumer Products &
Oil of Malabar and Sil processed Services in the Global Beauty
foods & Wellness space
(Kaya Skin Clinics)
Nirma Limited Nirma Soap, Nirma Detergent, Shudh Homegrown FMCG major
Salt Presence in the detergent and
soap markets

GCMMF (Amul) Amul products (butter, ghee, cheese, Began as a cooperative

milk powder, ice-cream) movement
FOREIGN PLAYERS
• Cadbury India Ltd (CIL)
 Dairy Milk, Perk, Crackle, 5 Star, Éclairs, Gems,
Bournvita
• Coca-Cola India
 Thums Up, Limca, Maaza, Gold Spot, Citra
 Coca-Cola, Diet Coke, Kinley, Sprite, Fanta, Schweppes
• Colgate-Palmolive India
 Charmis skin cream and Axion dish wash
• H J Heinz Co
 Complan, Glucon-D, Farex, Nycil, Heinz ketchup
• Nestle India Ltd (NIL)
 Nescafe, Milkmaid, Maggi, Cerelac
• PepsiCo
 Pepsi
• Procter & Gamble Hygiene and Health Care Limited
 Vicks, Whisper

MARKET SIZE
(HOUSEHOLD PRODUCTS)
POTENTIAL FOR GROWTH
Per capita consumption in India is low for almost all the products
Growing demand in the market (rural & urban) for FMCG

 Rural (volumes)
– 2.2% of the world population is in the villages of India
– Rural income is rising, boosting purchasing power
• Low price products in convenient packaging
 Urban (value)
– Increase in the urban population
– Increase in income levels
• New categories to meet change in demand patterns


HINDUSTAN UNILEVER LTD.


• India's largest FMCG

• A subsidiary of Unilever which
 holds 52% of the equity
• 2 out of 3 Indians use its products
• Over 42 factories across India
• Around 45% of HUL’s sales turnover of
 Rs. 17,524 crore comes from rural markets,

valued at around Rs. 8,000 crore

•
HISTORY OF HUL
• In the summer of 1888, visitors to the Kolkata harbour noticed
crates full of Sunlight soap bars, embossed with the words
"Made in England by Lever Brothers". With it, began an era
of marketing branded Fast Moving Consumer Goods
(FMCG).
•
• Soon after followed Lifebuoy in 1895 and other famous brands
like Pears, Lux and Vim. Vanaspati was launched in 1918.
•
• In 1931, Unilever set up its first Indian subsidiary, Hindustan
Vanaspati Manufacturing Company, followed by
Lever Brothers India Limited (1933) and
United Traders Limited (1935). These three companies
 merged to form HUL in November 1956.
 PRODUCTS/BRANDS OF HUL
• Food Brands
 Red Label, Brooke Bond, Taj Mahal, Bru, Kissan, Knorr, Lipton ,
Kwality Walls…
• Personal Care Brands
 Lux, Liril, Ponds, Pears, Dove, Rexona, Hamam, Close up, Clinic Plus,
Pepsodent, Vaseline, Sunsilk, Lakme, Fair and Lovely, Lifebouy…
• Home Care Brands
 Surf Excel, Wheel, Rin, Domex, Cif…
• Water
 Pure It
•
•
VISION STATEMENT…
The four pillars


1. Create a better future everyday

2. Help people feel good, look good & get more out of
life with brands & services that are good for
them & for others
3. Inspire people to take small everyday actions that can
add up to a big difference for the world
4. Develop new ways of doing business that double the
size of the company while reducing
environmental impact


•

MISSION STATEMENT…


 Add Vitality to Life


 Meet everyday needs for nutrition, hygiene and personal care
with brands that help people feel good, look good and get
more out of life


 Total commitment to exceptional standards of performance

and productivity
PURPOSE
• Always working with integrity

• Creating positive impact

• Continuous commitment

• Setting out our aspirations

• Working with others

•

10 PRINCIPLES
BUSINESS PARTNERS CODE

1) Compliance with all applicable laws and regulations

2)
3) Respect for human rights, and no employee shall suffer
harassment, physical or mental punishment etc.
4)
5) Wages & working hours will comply with all applicable wage and
labour laws as per the rules and regulations
6)
7) No use of forced or compulsory labour, and employees shall be
free to leave employment after reasonable notice
8)
9) There shall be no use of child labour
10 PRINCIPLES

6) There shall be respect for the right of employees to freedom of

association
7)
8) Safe and healthy working conditions will be provided for all
employees
9)
10)Operations will be carried out with care for the environment
11)
12)All products and services will be delivered to meet the quality
and safety criteria
13)
14)No improper advantage sought, including the payment of bribes,
to secure delivery of goods or services to Unilever
companies
 PORTER’S FIVE FORCE MODEL…


Competitive Rivalry
 Threat of New Entrant Number of Competitors
Time and Cost of Entry Quality Differences
Specialist Knowledge Threat of New Entry Other Differences
Economies of Scale Switching Costs
Cost Advantage Customer Loyalty
Technology Protection Costs of Leaving Market
Barriers to Entry

Supplier Power Competitive Rivalry Buyer Power

Supplier Power
Number of Suppliers Buyer Power
Size of Suppliers Number of Customers
Your Ability to Change Size of Each Order
Cost of Changing Difference between
Threat of Substitution Competition
Threat of Substitution Price Sensitivity
Substitute Performance Ability to Substitute
Cost of Change Cost of Changing
 THREAT OF NEW ENTRANT
• In early 2000, HUL decided to enter Retail Market through direct
selling brand (B2C) by the name SANGAM direct
• Started in Bombay…with 2 stores, Sangam has vision to grow to 15
stores.
• With highly competitive retail market, Sangam faced 3 problems :
• Specialized knowledge
– Space constraints
– Cost disadvantage (No disc on competitor’s product)
– Time and Cost
•
•
COMPETITIVE RIVALRY

• Number of Competitors
• Quality Differences
• Other Differences
• Switching Costs
• Customer Loyalty
SUPPLIER POWER
• Large economies of scale
• HUL adopts Backward Integration, therefore –
– No of suppliers are less
– Size of Suppliers are moderate
– Ability to Change is Flexible
– Cost of Changing is Low

•
BUYER POWER
• No of customer’s is moderate
• Size of Each Order is in Bulk quantity
• Price Sensitivity
• Ability to substitute
• Cost of changing
•
Tie-ups with local complementary product manufacturer to

get products at cheaper and minimal rates

 PESTLE ANALYSIS…
• POLITICAL - Guhwati Tea Factory- had to be shut down because
of threat and extortion
• ECONOMIC – Increase in Oil Rates…yet HUL maintains its
profits and pricing power
• SOCIAL – 2009, SANKALP an initiative taken by HUL managers
to drive health and hygiene in rural areas
• TECHNOLOGICAL – 1991, first time soap bar was introduced…
Vim Bar and Odopic Bar
• LEGAL – HUL, so far has abided laws of land in regional as well as
national level.
• ENVIRONMENT – First company in its vision statement to
address the growing environmental damage

STRENGTHS…
• More than 50 years of operation (Rs. 3500 Cr. Fixed Assets
and Rs. 2000 Cr. Cash)


• Soaps and detergents segment contribute 47% revenue



• Sales (Rs. 17,500 Cr.) are 5 to 6 times that of Dabur, P&G

and Godrej


• Extensive product innovation through R&D for 51 years



• Business optimisation & integration of suppliers and

distributers through IT


• YOY increase in growth, EPS and dividend



• Very high returns e.g. ROA, ROC and RON


WEAKNESSES…
• Profitability margin parameters are low compared to ITC,
P&G, Dabur, Marico and Godrej
• Expenditure is 85% of sales (16% Advertising Expense)
• More emphasis on power brands or low focus
• Gain from other segments

OPPORTUNITIES…

• Huge Rural Market

• Increased purchasing power of
middle class
• Growth of other segments e.g. food
• New markets e.g. Ayurvedic
products
• Export advantage
•
 THREATS…

• Huge players both Domestic & International

• Inflation is reducing buying power
• Price rise
• Stiff competition with ITC
• Counterfeit products in rural areas
HUL VALUE CHAIN…

• B u sin e ss o p tim isa tio n th ro u g h

Te ch n o lo g y.
• In te g ra tin g su p p lie rs a n d d istrib u te rs
th ro u g h S A P
• Best marketing talent from top B -schools
• T P M a n d p ro d u ct flexib ility in O p e ra tio n s
• E m o tio n a lb u yin g o f sa tisfie d cu sto m e r
 PORTER’S VALUE CHAIN ANALYSIS
…

HUMAN RESOURCE
ort Functions ACCOUNTING AND INFRASTRUCTURE

PROCUREMENT AND TECHNOLOGY

MARGIN

INBOUND LOGISTICS
OPERATIONS OR
OUTBOUND
MFG LOGISTICS
MKTNG & SERVICE
SALES & SUPPORT

Primary Activities
GROWTH STRATEGIES
Organic Growth

Inorganic Growth through Acquisitions – Increasing Product Portfolio

Acquisitions Mergers
 Lipton 1972  Tata Oil Mills Company (TOMCO) April 1, 1993
 Brooke Bond 1984  Alliance with the Kwality Ice cream Group, 1995
 Pond's USA 1986  Brooke Bond Lipton India Limited (BBLIL)
January 1, 1996
 Dollops Ice-cream 1993
 Lakme Ltd. (50:50 joint
venture) 1996
 Kissan 1993 (from UB)
 Modern Foods 2002
MARKETING STRATEGIES
Straddling the pyramid & deploying full portfolio
To meet every need of people everywhere



MARKETING STRATEGIES
• Leading to Strong Portfolio across categories
MARKETING STRATEGIES
FOR RURAL INDIA
• For long term benefits, HUL started Project
Streamline in 1997
•

• Integrate Economic, Environment & Social

objectives with Business agenda
•

• Project Shakti, a partnership with Self Help

Groups of rural women extended to about 15
states in 80,000 villages with 45,000 women
entrepreneurs generating Rs.700 to1000 per
month for each woman
R&D STRATEGIES
• Innovation is the key


• Research & Development in Unilever includes:

– Looking at emerging technologies
– Exploring possible applications
– Collaborating with external experts to adapt products
for local markets


• Build segments & markets for the future in areas

 where Unilever has strong expertise



R&D STRATEGIES – BUILDING
THE FUTURE
R&D STRATEGIES
Six principal research and
development
Location Expertise centres
• Sunlight, UK Fabric
Port Wash, Hair Care, Deos, Oral Care, Surface
Cleaners
Colworth, UK Beverages & Processed Foods

Vlaardingen, the Fabric Wash, Beverages & Processed Foods
Netherlands
Trumbull, US Skin Care, Deos, Shampoos
Bangalore, India Skin Care, Fabric Wash, Beverages, Ice Cream, ,
Processed Foods, Water
Shanghai, China Shampoos, Skin Care, Ice Cream, Beverages,
Processed Foods
DISTRIBUTION STRATEGIES
•
• Mission is “to meet the everyday needs of people everywhere”


• 7,000 redistribution stockists covering about one million retail

outlets
•
• Provide tailor-made services to its channel partners
•
• Powered distribution RSNet – online interaction on orders,
dispatches, information sharing and monitoring


• Rural distribution through Projects Streamline and Shakti

•
HR STRATEGIES
Attracting, Motivating and Retaining the Best Talent

• The company's believes that a 'fair day's work deserves a fair day's
wages’
•
• 36,000 employees, including about 1,400 managers, are all sharply
focused on the common goal, which is to "add vitality to life".
•
• 200,000 indirect jobs in those sectors of the economy connected
with the company's operations
•
• On an average, HUL creates five indirect jobs for every single
permanent employee
•
• Environment for Empowering the people
•
HR STRATEGIES
• The manager works in different functions across villages and
international locations
• Progress is based on:
– Merit
– Ability and Performance
– Adhering to the Company's Code of Business
Principles
• The values of Truth, Courage, Action and Caring form the
bedrock of these business principles
• Creating a new generation of Industrial Workmen



FINANCE-RELATED STRATEGIES
• Company launching new products and brand
extensions with investments being made towards
brand-building and increasing its market share
• High divided yield, steady growth and strong market
standing in its product categories have enabled
HUL to command premium valuations compared to
other FMCG’s.
• Sustained improvement in cost saving program
• Tight focus on discretionary costs
•



FUTURE RECOMMENDATIONS

• Product Innovations
• Economic Development
• Focus on Service
• Creating Alliances
• Cost &Waste Reduction
PRODUCT INNOVATIONS
Ø Plan:-
Ø Create health-promoting products (Low Calories, High Nutrition)
Ø Reducing salt/sugar in food
Ø Food structuring – Creating food structures to suit changing tastes
and needs for millennia
Ø Clean clothes, less water
Ø Smoother, straighter hair
Ø Intelligent deodorant
Ø Healthy ice creams
Ø
Ø Benefits:-
Ø Better customer satisfaction by providing them latest technology
products
Ø Adaptability to changing trends in market
Ø Higher competitive strength
Ø Increased Product portfolio
ECONOMIC DEVELOPMENT
Ø Plan:-
Ø Promoting biodiversity & alleviating poverty in various rural areas
Ø Empowering women through micro enterprises
Ø Unilever Foundation for Education & Development
Ø Creating rural entrepreneurs
Ø
Ø Benefits:-
Ø Market penetration in rural areas
Ø Economic development
Ø Creating company image
Ø Building trust in minds of customers
Ø
Ø
Ø
FOCUS ON SERVICE
Ø Plan:-
Ø Customer feedback is the best way to improve the
product
Ø Add benefit schemes like discount vouchers for
customers who give feedback
Ø Get feedback from customers on various products and on
nutrition, health and hygiene education, empowering
livelihoods and eco-efficiency
Ø
Ø Benefits:-
Ø Company image will move from pure product based to
product-service based company
Ø Customer will feel more valued in turn brand loyalty can
be created and maintained
Ø Product is better accepted by customer would result in
increased sales
Ø
CREATING ALLIANCES
Ø Plan:-
Ø Farmer development program – Support farmers
financially to grow key ingredient in a popular
Unilever brand
Ø Building partnerships with suppliers
Ø Tree planting in deprived communities supported
by Unilever volunteers
Ø
Ø Benefits:-
Ø Cost reduction
Ø Strategic alliance with suppliers and farmers will
help long term growth
Ø Rural/deprived community development
COST & WASTE REDUCTION
Ø Plan:-
Ø Constantly monitor and re-engineer operations to
reduce waste and improve production process
Ø Putting palm oil waste to good use
Ø Reusing waste plastic to make jewellery & flower pots
Ø
Ø Benefits:-
Ø Reduced manufacturing cost & waste would result in
high margins and more profit
Ø Better utilisation of resources
Ø Additional products from waste would add to product
portfolio
•
ANY QUESTIONS???
THANK YOU…!!!