HUL PPT

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 PLAYERSCompany Brands Key Feature (s)

Britannia India Ltd (BIL)

Tiger Glucose, Mariegold, Fifty-Fifty, Good Day, Pure Magic, Bourbon

40% market share in the overall organised biscuit market

Dabur India Ltd. Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola, Lal Dant Manjan, Pudin Hara and the Real fruit juices

Largest Indian FMCG and ayurvedic products company

Indian Tobacco Corporation Ltd. (ITCL)

Kitchens of India, Sunfeast, Candyman, Bingo

Diversified presence in cigarettes, hotels, paperboards, food products

DOMESTIC PLAYERSCompany Brands Key Feature (s)

Marico Industries Parachute, Saffola, Sweekar, Shanti Amla, Hair & Care, Revive, Mediker, Oil of Malabar and Sil processed foods (Kaya Skin Clinics)

Leading Indian group in Consumer Products & Services in the Global Beauty & Wellness space

Nirma Limited Nirma Soap, Nirma Detergent, Shudh Salt

Homegrown FMCG major

Presence in the detergent and soap markets

GCMMF (Amul) Amul products (butter, ghee, cheese, milk powder, ice-cream)

Began as a cooperative 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)

Household Care

Personal Wash

Rs. 8,300 Cr.

53%

Detergents

Rs. 12,000

Cr.

38%

Market Size

Product Category

HUL’s Market Share

POTENTIAL FOR GROWTH

Per capita consumption in India is low for almost all the products

Growing demand in the market (rural & urban) for FMCGRural (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 PRINCIPLESBUSINESS PARTNERS CODE

1) Compliance with all applicable laws and regulations

2) Respect for human rights, and no employee shall suffer harassment, physical or mental punishment etc.

3) Wages & working hours will comply with all applicable wage and labour laws as per the rules and regulations

4) No use of forced or compulsory labour, and employees shall be free to leave employment after reasonable notice

5) 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) Safe and healthy working conditions will be provided for all employees

8) Operations will be carried out with care for the environment

9) All products and services will be delivered to meet the quality and safety criteria

10) 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 RivalrySupplier Power Buyer Power

Threat of New Entry

Threat of Substitution

Threat of New Entrant• Time and Cost of Entry • Specialist Knowledge• Economies of Scale• Cost Advantage• Technology Protection• Barriers to Entry

Supplier Power• Number of Suppliers• Size of Suppliers• Your Ability to Change• Cost of Changing

Threat of Substitution• Substitute Performance• Cost of Change

Competitive Rivalry• Number of Competitors• Quality Differences• Other Differences• Switching Costs• Customer Loyalty• Costs of Leaving Market

Buyer Power• Number of Customers • Size of Each Order• Difference between Competition• Price Sensitivity• Ability to Substitute• 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…

• Business optimisation through Technology. • Integrating suppliers and distributers through SAP• Best marketing talent from top B-schools• TPM and product flexibility in Operations• Emotional buying of satisfied customer

PORTER’S VALUE CHAIN ANALYSIS

…

MARGIN

HUMAN RESOURCE

ACCOUNTING AND INFRASTRUCTURE

PROCUREMENT AND TECHNOLOGY

INBOUND LOGISTICS

OPERATIONS OR MFG

OUTBOUND LOGISTICS

MKTNG & SALES

SERVICE &

SUPPORT

Support Functions

Primary Activities

GROWTH STRATEGIES

• Organic Growth

• Inorganic Growth through Acquisitions – Increasing Product Portfolio

Mergers

• Tata Oil Mills Company (TOMCO) April 1,

1993

• Alliance with the Kwality Ice cream Group,

1995

• Brooke Bond Lipton India Limited (BBLIL) January 1, 1996

Acquisitions

• Lipton 1972

• Brooke Bond 1984

• Pond's USA 1986

• 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 centresLocation Expertise

Port Sunlight, UK Fabric Wash, Hair Care, Deos, Oral Care, Surface Cleaners

Colworth, UK Beverages & Processed Foods

Vlaardingen, the Netherlands

Fabric Wash, Beverages & Processed Foods

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

• 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

Attracting, Motivating and Retaining the Best Talent

• 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

HR STRATEGIES

FUTURE RECOMMENDATIONS

• Product Innovations

• Economic Development

• Focus on Service 

• Creating Alliances

• Cost &Waste Reduction

Plan:- Create health-promoting products (Low Calories, High Nutrition) Reducing salt/sugar in food Food structuring – Creating food structures to suit changing tastes and

needs for millennia Clean clothes, less water Smoother, straighter hair Intelligent deodorant Healthy ice creams

Benefits:- Better customer satisfaction by providing them latest technology

products Adaptability to changing trends in market Higher competitive strength Increased Product portfolio

PRODUCT INNOVATIONS

Plan:- Promoting biodiversity & alleviating poverty in various rural areas Empowering women through micro enterprises Unilever Foundation for Education & Development Creating rural entrepreneurs

Benefits:- Market penetration in rural areas Economic development Creating company image Building trust in minds of customers

ECONOMIC DEVELOPMENT

Plan:- Customer feedback is the best way to improve the product Add benefit schemes like discount vouchers for customers

who give feedback Get feedback from customers on various products and on

nutrition, health and hygiene education, empowering livelihoods and eco-efficiency 

Benefits:- Company image will move from pure product based to

product-service based company Customer will feel more valued in turn brand loyalty can be

created and maintained Product is better accepted by customer would result in

increased sales

FOCUS ON SERVICE

Plan:- Farmer development program – Support farmers

financially to grow key ingredient in a popular Unilever brand

Building partnerships with suppliers Tree planting in deprived communities supported by

Unilever volunteers

Benefits:- Cost reduction Strategic alliance with suppliers and farmers will help

long term growth Rural/deprived community development

CREATING ALLIANCES

Plan:- Constantly monitor and re-engineer operations to reduce

waste and improve production process Putting palm oil waste to good use Reusing waste plastic to make jewellery & flower pots

Benefits:- Reduced manufacturing cost & waste would result in high

margins and more profit Better utilisation of resources Additional products from waste would add to product

portfolio

COST & WASTE REDUCTION

ANY QUESTIONS???

THANK YOU…!!!