TABLE OF CONTENT S. No Content Page No 1. Executive Summary 2 2. Introduction to HUL 3 3. History of HUL 6 4. Corporate Governance in HUL 16 5. Corporate Social Responsibility 18 6. Company Structure 17 7. Brands for Life 21 8. Market Analysis 44 9. Performance Analysis 47 10. SWOT Analysis 50 11. Recommendations 55 12. Project Shakti 59 13. Conclusion 60 14. Bibliography 61 EXECUTIVE SUMMARY Hindustan Unilever Limited is the Indian arm of the Anglo-Dutch company –Unilever. Both Unilever and HUL have established themselves well in the Fast Moving Consumer Goods (FMCG) category. In India, the company offers many households brands like, Dove, Lifebuoy, Lipton, Lux, Pepsodent, Ponds, Rexona, Sunsilk, Surf, Vaseline etc. Some of its efforts were also rewarded when four of HUL brands found place in
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TABLE OF CONTENT
S. No Content Page No1. Executive Summary 22. Introduction to HUL 33. History of HUL 64. Corporate Governance in HUL 165. Corporate Social Responsibility 186. Company Structure 177. Brands for Life 218. Market Analysis 449. Performance Analysis 47
Hindustan Unilever Limited is the Indian arm of the Anglo-Dutch company –Unilever. Both Unilever and HUL have established themselves well in the Fast Moving Consumer Goods (FMCG) category. In India, the company offers many households brands like, Dove, Lifebuoy, Lipton, Lux, Pepsodent, Ponds, Rexona, Sunsilk, Surf, Vaseline etc. Some of its efforts were also rewarded when four of HUL brands found place in the ‘Top 10 brands’ list for the year 2008 published in The Economic Times.
Unilever was a result of the merger between the Dutch margarine company, Margarine Unie, and the British soap-maker, Lever Brothers, way back in 1930. For 70 years, Unilever was the undisputed market
leader but now faces tough competition from Proctor & Gamble and Colgate-Palmolive.
HUL is also known for its strong distribution network in India. In order to further strengthen its distribution in the rural areas and to empower the local women, HUL launched a Project Shakti in 2000 in a district in Andhra Pradesh. The idea behind this project was to create women entrepreneurs and provide them with micro-credit and training in enterprise management, which would enable them to create self-help groups and become direct-to-home distributors of HUL products. Today Project Shakti is present across 80,000 villages in 15 states and is helping many underprivileged women earn their livelihood.
As the per-capita income of India is increasing along with the Indian population. So, the future for the FMCG Companies is bright. To analysis the past performance & the future demand of HUL, FMCG products we have considered following points:
• We have a listed the different FMCG product lines of HUL.
• We have done competitor’s analysis in which the market share of top FMCG companies are analysed & the market share of HUL’S different categories product are analysed with comparison to its competitors.
• Then performance analysis is made by taking 10 year financial data from 1998-2007. The profit & sales growth is analysed.
• We have done SWOT analysis to know the threat & opportunities of HUL in present market.
• The future opportunities for FMCG products are taken into consideration by analyzing the increased per capita income & increased disposable income to forecast the future demand of HUL.
Introduction to HULHindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods Company, touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. The company’s Turnover is Rs. 20, 239 crores (for the 15 month period – January 1, 2008 to March 31, 2009).
HUL is a subsidiary of Unilever, one of the world’s leading suppliers of fast moving consumer goods with strong local roots in more than 100 countries across the globe with annual sales of €40.5 billion in 2008. Unilever has about 52% shareholding in HUL.
Hindustan Unilever was recently rated among the top four companies globally in the list of “Global Top Companies for Leaders” by a study sponsored by Hewitt Associates, in partnership with Fortune magazine and the RBL Group. The company was ranked number one in the Asia-Pacific region and in India.
The mission that inspires HUL's more than 15,000 employees, including over 1,400 managers, is to “add vitality to life". The company meets everyday needs for nutrition, hygiene, and personal care, with brands that help people feel good, look good and get more out of life. It is a mission HUL shares with its parent company, Unilever, which holds about 52 % of the equity.
HeritageHUL’s heritage dates back to 1888, when the first Unilever product, Sunlight, was introduced in India. Local manufacturing began in the 1930s with the establishment of subsidiary companies. They merged in 1956 to form Hindustan Lever Limited (The company was renamed Hindustan Unilever Limited on June 25, 2007). The company created history when it offered equity to Indian shareholders, becoming the first foreign subsidiary company to do so. Today, the company has more than three lakh resident shareholders.
HUL’s brands -- like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Sunsilk, Clinic, Close-up, Pepsodent, Lakme, Brooke Bond, Kissan, Knorr, Annapurna, Kwality-Walls - are household names across the country and span many categories - soaps, detergents, personal products, tea, coffee, branded staples, ice cream and culinary products. They are manufactured in over 35 factories, several of them in backward areas of the country. The operations involve over 2,000 suppliers and associates. HUL's distribution network covers 6.3 million retail outlets including direct reach to over 1 million.
HUL has traditionally been a company, which incorporates latest technology in all its operations. The Hindustan Lever Research Centre (now Hindustan Unilever Research Centre) was set up in 1958.
Doing Well by Doing GoodHUL believes that an organisation’s worth is also in the service it renders to the community. HUL focuses on hygiene, nutrition, enhancement of livelihoods, reduction of greenhouse gases and water footprint.It is also involved in education and rehabilitation of special or underprivileged children, care for the destitute and HIV-positive, and rural development. HUL has also responded in case of national calamities / adversities and contributes through various welfare measures, most recent being the relief and rehabilitation of the people affected by the Tsunami disaster, in India.
HUL’s Project Shakti is a rural initiative that targets small villages populated by less than 5000 individuals. Through Shakti, HUL is creating micro-enterprise opportunities for rural women, thereby improving their livelihood and the standard of living in rural communities. Shakti also provides health and hygiene education through the Shakti Vani programme.The program now covers 15 states in India and has over 45,000 women entrepreneurs in its fold, reaching out to 100,000 villages and directly reaching to over three million rural consumers.
HUL also runs a rural health programme, Lifebuoy Swasthya Chetana. The programme endeavours to induce adoption of hygienic practices among rural Indians and aims to bring down the incidence of diarrhoea. It has already touched 120 million people in approximately 50, 676 villages across India.
If Hindustan Unilever straddles the Indian corporate world, it is because of being single-minded in identifying itself with Indian aspirations and needs in every walk of life.
VisionUnilever products touch the lives of over 2 billion people every day – whether that's through feeling great because they've got shiny hair and a brilliant smile, keeping their homes fresh and clean, or by enjoying a great cup of tea, satisfying meal or healthy snack.
A clear directionThe four pillars of our vision set out the long term direction for the company – where we want to go and how we are going to get there:
• We work to create a better future every day• We help people feel good, look good and get more out of life with brands and services that are good for
them and good for others.• We will inspire people to take small everyday actions that can add up to a big difference for the world.• We will develop new ways of doing business that will allow us to double the size of our company while
reducing our environmental impact.We've always believed in the power of our brands to improve the quality of people’s lives and in doing the right thing. As our business grows, so do our responsibilities. We recognise that global challenges such as climate change concern us all. Considering the wider impact of our actions is embedded in our values and is a fundamental part of who we are.
Purpose & PrinciplesOur corporate purpose states that to succeed requires "the highest standards of corporate behaviour towards everyone we work with, the communities we touch, and the environment on which we have an impact."Always working with integrityConducting our operations with integrity and with respect for the many people, organisations and environments our business touches has always been at the heart of our corporate responsibility.
Positive impact We aim to make a positive impact in many ways: through our brands, our commercial operations and relationships, through voluntary contributions, and through the various other ways in which we engage with society.
Continuous commitmentWe're also committed to continuously improving the way we manage our environmental impacts and are working towards our longer-term goal of developing a sustainable business.
Setting out our aspirations Our corporate purpose sets out our aspirations in running our business. It's underpinned by our code of business Principles which describes the operational standards that everyone at Unilever follows, wherever they are in the world. The code also supports our approach to governance and corporate responsibility.
Working with othersWe want to work with suppliers who have values similar to our own and work to the same standards we do. Our Business partner code, aligned to our own Code of business principles, comprises ten principles covering business integrity and responsibilities relating to employees, consumers and the environment.
History of HULIn 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 and the famous Dalda brand came to the market in 1937.
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; HUL offered 10% of its equity to the Indian public, being the first among the foreign subsidiaries to do so. Unilever now holds 52.10% equity in the company. The rest of the shareholding is distributed among about 360,675 individual shareholders and financial institutions.
The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903, the company had launched Red Label tea in the country. In 1912, Brooke Bond & Co. India Limited was formed. Brooke Bond joined the Unilever fold in 1984 through an international acquisition. The erstwhile Lipton's links with India were forged in 1898. Unilever acquired Lipton in 1972 and in 1977 Lipton Tea (India) Limited was incorporated.
Pond's (India) Limited had been present in India since 1947. It joined the Unilever fold through an international acquisition of Chesebrough Pond's USA in 1986.
Since the very early years, HUL has vigorously responded to the stimulus of economic growth. The growth process has been accompanied by judicious diversification, always in line with Indian opinions and aspirations.
The liberalisation of the Indian economy, started in 1991, clearly marked an inflexion in HUL's and the Group's growth curve. Removal of the regulatory framework allowed the company to explore every single product and opportunity segment, without any constraints on production capacity.
Simultaneously, deregulation permitted alliances, acquisitions and mergers. In one of the most visible and talked about events of India's corporate history, the erstwhile Tata Oil Mills Company (TOMCO) merged with HUL, effective from April 1, 1993. In 1996, HUL and yet another Tata company, Lakme Limited, formed a 50:50 joint venture, Lakme Unilever Limited, to market Lakme's market-leading cosmetics and other appropriate products of both the companies. Subsequently in 1998, Lakme Limited sold its brands to HUL and divested its 50% stake in the joint venture to the company.
HUL formed a 50-50 joint venture with the US-based Kimberly Clark Corporation in 1994, Kimberly-Clark Lever Ltd, which markets Huggies Diapers and Kotex Sanitary Pads. HUL has also set up a subsidiary in Nepal, Unilever Nepal Limited (UNL), and its factory represents the largest manufacturing investment in the Himalayan kingdom. The UNL factory manufactures HUL's products like Soaps, Detergents and Personal Products both for the domestic market and exports to India.
The 1990s also witnessed a string of crucial mergers, acquisitions and alliances on the Foods and Beverages front. In 1992, the erstwhile Brooke Bond acquired Kothari General Foods, with significant interests in Instant Coffee. In 1993, it acquired the Kissan business from the UB Group and the Dollops Ice-cream business from Cadbury India.
As a measure of backward integration, Tea Estates and Doom Dooma, two plantation companies of Unilever, were merged with Brooke Bond. Then in 1994, Brooke Bond India and Lipton India merged to form Brooke Bond Lipton India Limited (BBLIL), enabling greater focus and ensuring synergy in the traditional Beverages business. 1994 witnessed BBLIL launching the Wall's range of Frozen Desserts. By the end of the year, the company entered into a strategic alliance with the Kwality Ice-cream Group families and in 1995 the Milk-food 100% Ice-cream marketing and distribution rights too were acquired.
Finally, BBLIL merged with HUL, with effect from January 1, 1996. The internal restructuring culminated in the merger of Pond's (India) Limited (PIL) with HUL in 1998. The two companies had significant overlaps in Personal Products, Speciality Chemicals and Exports businesses, besides a common distribution system since 1993 for Personal Products. The two also had a common management pool and a technology base. The amalgamation was done to ensure for the Group, benefits from scale economies both in domestic and export markets and enable it to fund investments required for aggressively building new categories.
In January 2000, in a historic step, the government decided to award 74 per cent equity in Modern Foods to HUL, thereby beginning the divestment of government equity in public sector undertakings (PSU) to private sector partners. HUL's entry into Bread is a strategic extension of the company's wheat business. In 2002, HUL acquired the government's remaining stake in Modern Foods.
In 2003, HUL acquired the Cooked Shrimp and Pasteurised Crabmeat business of the Amalgam Group of Companies, a leader in value added Marine Products exports.
HUL launched a slew of new business initiatives in the early part of 2000’s. Project Shakti was started in 2001. It is a rural initiative that targets small villages populated by less than 5000 individuals. It is a unique win-win initiative that catalyses rural affluence even as it benefits business. Currently, there are over 45,000 Shakti entrepreneurs covering over 100,000 villages across 15 states and reaching to over 3 million homes.
In 2002, HUL made its foray into Ayurvedic health & beauty centre category with the Ayush product range and Ayush Therapy Centres. Hindustan Unilever Network, Direct to home business was launched in 2003 and this was followed by the launch of ‘Pure-it’ water purifier in 2004.
In 2007, the Company name was formally changed to Hindustan Unilever Limited after receiving the approval of share holders during the 74th AGM on 18 May 2007. Brooke Bond and Surf Excel breached the the Rs 1,000 crore sales mark the same year followed by Wheel which crossed the Rs.2,000 crore sales milestone in 2008.
On 17th October 2008, HUL completed 75 years of corporate existence in India.
MEANING OF THE NAME & HOW WAS IT NAMED& EVOLUTION OF THE NAME:HUL means Hindustan Unilever Limited formally it is known as Hindustan Lever Limited (HUL) through a merger of Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd. in 1956. The company was renamed in late June 2007 to “Hindustan Unilever Limited
Corporate GovernanceI believe that nothing can be greater than a business, however small it may be, that is governed by conscience; and that nothing can be meaner or pettier than a business, however large, governed without honesty and without brotherhood.”-William Hesketh Lever
Transparency and accountability are the two basic tenets of Corporate Governance. We, at Hindustan Unilever, feel proud to belong to a Company whose visionary founders had laid the foundation stone for good governance long back and made it an integral principle of the business, demonstrated in the words
above.
Our approach to Corporate GovernanceTo succeed, we believe, requires the highest standards of corporate behaviour towards everyone we work with, the communities we touch, and the environment on which we have an impact. This is our road to sustainable, profitable growth and creating long-term value for our shareholders, our people, and our business partners.
The Company's foundation has therefore been rooted to stringent Corporate Governance principles. At Hindustan Unilever, we believe that the principles of fairness, transparency and accountability are the cornerstones for good governance. The HUL Code of Business Principles reflects the Company's commitment to these principles. It is the Company's endeavour to continue to achieve highest governance levels.
As regards the compliance with the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges, the Company is in full compliance with the norms and disclosures.
BOARD OF DIRECTORS
The Board of Directors of the Company represents an optimum mix of professionalism, knowledge and experience. The total strength of the Board of Directors of the Company is 10 Directors comprising a Non-Executive Chairman, four Executive Directors and five Non-Executive Independent Directors.
COMMITTEES OF THE BOARD
Audit Committee
The Audit Committee of the Company is entrusted with the responsibility to supervise the Company’s internal control and financial reporting process. The Audit Committee also looks into controls and security of the Company’s critical IT applications,
Remuneration and Compensation Committee
The Remuneration Committee is vested with all the necessary powers and authority to ensure appropriate disclosure on the remuneration of whole-time Directors and to deal with all the elements of remuneration package of all such Directors within the limits approved by the members of the Company. The Compensation Committee administers the stock option plan of the Company.
Shareholder/Investor Grievances Committee
The Committee specifically looks into redressing of investors’ complaints with respect to transfer of shares, non-receipt of shares, non-receipt of declared dividends and ensure expeditious share transfer process. The Committee also monitors and reviews the performance and service standards of the Registrar and Share Transfer Agents of the Company and provides continuous guidance to improve the service levels for investors..
Other Functional Committees
Apart from the above statutory committees, the Board of Directors have constituted other functional committees such as committee for approving disposal of surplus assets of the Company, committee for allotment of shares under ESOP to raise the level of governance as also to meet the specific business needs.
Corporate Social Responsibility.(CSR) at HUL. Sales (2007-2008) = Rs.14000 crores (rounded off) Net profit after tax = Rs.2000 crores (rounded off) CSR Budget: Not Available
CSR Activities GREENING BARRIERS: Water Conservation and Harvesting
(Linked to product Pure-it)HUL's Water Conservation and Harvesting project has two major objectives:a. to reduce water consumption in its own operations and regenerate sub-soil water tables at its own sites through the principles of 5R - Reduce, Reuse, Recycle, Recover and Renew;b. help adjacent villages to implement appropriate models of watershed development. SHAKTI - Changing Lives in Rural India Shakti is HUL's rural initiative, which targets small villages with population of less than 2000 people or less. It seeks to empower underprivileged rural women by providing income-generating opportunities, health and hygiene education through the Shakti Vani programme, and creating access to relevant information through the iShakti community portal.
HEALTH & HYGIENE EDUCATION Lifebuoy Swastya Chetna (LBSC) is a rural health and hygiene initiative which was started in 2002. LBSC was initiated in media dark villages (in UP, MP, Bihar, West Bengal, Maharashtra, Orissa) with the objective of spreading awareness about the importance of washing hands with soap.
ECONOMIC EMPOWERMENT OF WOMEN
The Fair & Lovely Foundation is HUL's initiative which aims at economic empowerment of women across India. It aims to achieve this through providing information, resources, inputs and support in the areas of education, career and enterprise. It specifically targets women from low-income groups in rural as well as urban India. Fair & Lovely, as a brand, stands on the economic empowerment platform and the Foundation is an extension of this promise. The Foundation has renowned Indian women, from various walks of life, as its advisors. Among them are educationists, NGO activists, physicians. The Foundation is implementing its activities in association with state governments. SPECIAL EDUCATION & REHABILITATION Under the Happy Homes initiative, HUL supports special education and rehabilitation of children with challenges. Asha Daan:The initiative began in 1976, when HUL supported Mother Teresa and the Missionaries of Charity to set up Asha Daan, a home in Mumbai for abandoned, challenged children, and the destitute. Ankur:In 1993, HUL's Doom Dooma Plantation Division set up Ankur, a centre for special education of challenged children. The centre takes care of children with challenges, aged between 5 and 15 years. Ankur provides educational, vocational and recreational activities to over 35 children with a range of challenges, including sight or hearing impairment, polio related disabilities, cerebral palsy and severe learning difficulties. Kappagam:Encouraged by Ankur's success, Kappagam ("shelter"), the second centre for special education of challenged children, was set up in 1998 on HUL Plantations in South India. It has 17 children. The focus of Kappagam is the same as that of Ankur. Anbagam:Yet another day care center, Anbagam ("shelter of love"), has been started in 2003 also in the South India Plantations. It takes care of 11 children. Besides medical care and meals, they too are being taught skills such that they can become self-reliant and elementary studies.
Company StructureHindustan Unilever Limited is India's largest Fast Moving Consumer Goods (FMCG) company. It is present in Home & Personal Care and Foods & Beverages categories. HUL has about 15,000 employees, including over 1400 managersThe fundamental principle determining the organisation structure is to infuse speed and flexibility in decision-making and implementation, with empowered managers across the company’s nationwide operations.
Board of DirectorsThe Board of Directors as repositories of the corporate powers act as a guardian to the Company as also the protectors of shareholder’s interest.
Executive directorsThe Executive directors are members of the HUL Management Committee as
well as the Board of HUL. Mr. Nitin Paranjpe - CEO and Managing Director Mr. R. Sridhar - Chief Financial OfficerMr. Gopal Vittal - Executive Director, Home & Personal CareMr Pradeep Banerjee - Executive Director, Supply Chai
Non-executive directorsThe non-executive directors are the independent directors in the HUL BoardHarish Manwani - ChairmanD. S. Parekh - Independent Director(Late)C. K. Prahalad - Independent DirectorA. Narayan - Independent DirectorS. Ramadorai - Independent DirectorR. A. Mashelkar - Independent Director
Management CommitteeThe day-to-day management of affairs of the Company is vested with the Management Committee which is subjected to the overall superintendence and control of the Board.The Management Committee is headed by Mr. Nitin Paranjpe and has functional heads as its members representing various functions of the Company
Mr. Nitin Paranjpe - CEO and Managing DirectorMr. R. Sridhar - Chief Financial OfficerMr. Shreejit Mishra - Executive Director, FoodsMr. Gopal Vittal - Executive Director, Home & Personal Care Mr. Hemant Bakshi - Executive DirectorMr Pradeep Banerjee - Executive Director, Supply ChainMr. Ashok Gupta - Executive Director, LegalMs. Leena Nair - Executive Director, HR
Brands for life (Product Line)From sumptuous soups to sensuous soaps, our products all have one thing in common. They help you get more out of life.Two out of three Indians use Hindustan Unilever products. From feeding your family to keeping your home clean and fresh, our brands are part of everyday life.
Food BrandsHUL is one of India’s leading food companies. Our passion for understanding what people want and need from their food - and what they love about it - makes our brands a popular choice
Brooke Bond 3 RosesTo keep a relationship going, every young couple needs a little time to talk.
AnnapurnaAnnapurna Atta is aimed at helping the homemaker provide wholesome, tasty nutrition to her family.
Red LabelIndia’s favourite cup of tea, the great taste of Red Label brings people closer together and strengthens relationships.
Brooke Bond TaazaThe great refreshment of Taaza inspires women to have an identity beyond their homes and to refresh their lives.
Taj MahalA taste for the finer things in life.
Bru…Some moments in life are special and close to the heart. Bru makes these moments with loved ones even more magical…Its India’s largest coffee brand that offers a range of products in Instant coffee, Conventional coffee and premixes....Its rich aroma and unique blend makes every moment come alive…
KissanKissan acts as a catalyst, easing stressful moments at the dining table. With Kissan, good food is loved not shoved!
Kissan Amaze BrainfoodGood nutrition is the key for developing children’s’ brains and bodies to their full potential. Kissan Amaze Brainfood helps moms contribute to their kid’s brighter future by helping their mental development.
KnorrKnorr helps families make meal times special, nutritious, tasty and healthy.
Knorr helps families make meal times special, nutritious, tasty and healthy.
Kwality Wall’sA good honest scoop of daily pleasure.
Kwality Wall’s, the brand with a big heart, offers a range of delightful frozen desserts that bring smiles to the faces of millions of Indians – kids, teens and adults. We do so with our very popular brands - Cornetto, Feast, Paddle Pop, Selection & our award winning parlour concept, Swirl’s.
LiptonLipton has a range of vitality teas that truly encompass the goodness of tea
Worlds #1 tea brand
Home Care BrandsHUL has a diverse portfolio of brands offering home care solutions for millions of consumers across India.
Active WheelActive Wheel enables consumers to perform laundry chores, giving “Great Clean” within less effort.
CifCif- The World’s leading cream cleaner which gives you the power to deal with the toughest dirt is now in India.
ComfortFor most homemakers, ensuring their family's well-being is of utmost importance. Every task, whether it’s preparing a meal or washing the clothes, is an expression of her love and affection for the family.
DomexThe sheer power of Domex bleach gives you the confidence you need, eradicating all known germs. With Domex, you can be absolutely certain that the job is done.
RinClothes talk for us. Rin plays an integral part in enabling us to look good by providing demonstrably superior whites, giving us the confidence to realize our ambitions.
SunlightA dash of pink, a splash of yellow, a hint of purple and a bit of orange. Colours can liven up any wardrobe and can make you look and feel precious and if there’s one detergent brand that’s committed to colour care, it’s Sunlight.
Surf ExcelWhen children go out to play and get dirty, they don't just collect stains. They experience life, make friends, share with each other and learn from each other. This helps them get stronger and get ready for the world outside.
ViM
Created in 1885, the Vim brand is still innovating and using the magic of natural ingredients to create unbeatable results over a hundred years later.
Personal Care BrandsOur personal care brands, including Axe, Dove, Lux, Pond's, Rexona and Sunsilk, are recognised and love by consumers across India. They help consumers to look good and feel good – and in turn get more out of life.
AvianceAviance enables women actualize their unique potential through expert customized beauty solutions.
AxeAXE is a cool, iconic, youth brand available in more than 60 countries. In India, Axe, which has been launched in 1999, is the largest selling Male Deodorant.
LEVER Ayush TherapyRapid urbanization, booming economy, new job opportunities and high disposable incomes in India have paved way for an affluent lifestyle. But they also put you at the risk of lifestyle diseases like high blood pressure, diabetes, obesity, heart diseases etc. Through Ayush, this new generation of Indians can rediscover everyday health and vitality through customized Ayurvedic solutions.
BreezeBreeze makes use of a new revolutionary global technology which enhances the impact of world class perfumes in a much larger way, apart from bringing out the goodness of glycerine.
ClearNew Clear. Zero dandruff, Just fabulous hair
Clinic PlusClinic Plus understands that healthy hair is an important asset which helps your family progress in life and empowers you.
CloseupCloseup is synonymous with ‘Freshness’ that gives you the confidence to be close to someone.
DoveSince 1993, Indian women have relied on Dove for beautiful skin. Dove is known to be a keeper of promises and has given real products to women world over. To help you enjoy your own brand of beauty, Dove provides a wide range of personal care, hair care, skin care and deodorants. So choose a new way of pampering your skin, everyday, with Dove.
Fair & Lovely World’s No.1 fairness cream, HUL’s largest skin-brand. How Fair & Lovely is that!
HamamHamam brings alive the wisdom behind time-less skincare rituals in convenient and contemporary formats
Lakme“Lakme is the Indian woman’s Beauty Sutra” – inspiring expression of her unique beauty and sensuality”Key facts
LifebuoyLifebuoy, an undisputed market leader for 112 years, has a compelling vision “to make 5 billion people across the world, feel safe and secure by meeting their personal care hygiene & health needs”
LirilOver time, Liril has come to be synonymous with the freshness of limes, active energy and freedom of expression by its symbolic display of the uninhibited female form.
LuxLux stands for the promise of beauty and glamour as one of India's most trusted personal care brands.
Pears
Pears launched in India in 1902, exuberates a long heritage of purity. It is so pure that you can actually see through it!
Pepsodent
Pepsodent is a 15 year old brand that offers various oral care solutions to specific need based solutions.
Pond’s
Pond’s, has been listening to women’s needs and desires for 150 years and this has enabled us to deliver new products customised to their needs. Pond’s accompanies them on their journey to enhance the beauty of their skin.
Rexona
Rexona is the world's leading anti-perspirant brand. It was the first anti-perspirant deodorant to be launched in India.
Sunsilk
For 20-something single girls, hair is often an emotional rollercoaster. Sunsilk understands and has designed its wash, care and styling collections to enable her to express herself, through her hair.
Vaseline
Nobody knows skin –and how to keep it at its healthy best –better than Vaseline.
WaterPure-it is the world’s most advanced in-home water purifier. Pure-it, a breakthrough offering of Hindustan Unilever (HUL), provides complete protection from all water-borne diseases, unmatched convenience and affordability.
Protect your loved ones with a Pure-it today!
Market Share of Hindustan Unilever Limited HUL is enjoying the position of market leader and is followed by ITC as close second in the market share
of FMCG products.
PERFORMANCE ANALYSISHindustan Unilever Ltd is one of the leading FMCG company in India which having the following past
financial records we have taken for the analysis as follows:
DATA ANALYSIS:We have the sales and profit figures of HUL from the year 1998 to 2007 in the 10year past data from Yr1998-2007, after plotting two graph one of sales & other of profit as shown in here we can see that both profit and sales of the company rose from the year 1998 till 2001, but in the year 2002 we see that the sales fell but there was actually rise in the profit of the company. In the year 2004 we see that there was a steep fall in the profit of the company and from the year 2005 onwards there was a slow but steady rise in the profit of the company, but a rapid rise in the sales of the company in the given years.
Reason for the steep fall in the profit of the company in the year 2004:-
• The FMCG market in Urban India was attaining the saturation level and so companies had to expand its market in rural India. This resulted in the downfall in the profit of HUL. There was very aggressive advertising campaign by ITC in that year to set itself in the market this affected HUL who was enjoying the position of market leader and resulted in the fall in the profit of the company.
SWOT AnalysisSTRENGTH
HUL enjoys a formidable distribution network covering over 3400 distributors and 16 million outlets. This helps them maintain heavy volumes, and hence, fill the shelves of most outlets. The new sales organization named 'One HUL' brings "Household and Personal Care" and foods distribution networks together, thereby aligning all the units towards the common goal of achieving success. HUL has been
continuously able to grow at a rate more than growth rate for FMCG Sector, thereby reaffirming its future stronghold in Indian market
Project Shakti (Discussed later in Detail)- Rural India is spread across 627,000 villages and possesses a serious distribution challenge for FMCG Cos. HUL has come up with a unique and successful initiative wherein the women from the rural sector market HUL products, and hence, are able to reach the same wavelength as of the common man in village. Apart from product reach, the initiative also creates brand awareness amongst the lower strata of society. This has brought about phenomenal results.
WeaknessesHUL's market dominance, originating from its extensive reach and strong brand presence, allowed it to raise the prices even as raw materials were getting cheaper. Hence, though the volumes decreased, the margins grew, and company was able to earn more profits. But higher margins attracted competition in areas of operations. HUL's strategy remained focused on creating power brands and earning higher margins. It was not left with any other option but to try cutting down the costs in order to protect volumes, if not increase it. The key differentiators for an FMCG player are ability to call shots and pricing power, and HUL has shown weakness over both these factors.
HUL's weakness was its inability to transform its strategies at the right time. They continued with the same old strategy which helped them gain profits but were not genuine in this changed environment. HUL's risk aversion and market myopia led to stagnation of business, and ferocity of competition forced it into a defensive mode. Lack of pricing power in core business and absence of growth drivers have put HUL on a deflationary mode.
OpportunitiesIndia is one of the world's largest producer of FMCG goods but its exports are miniscule as compared to production. Though Indian Cos. have been going global, their focus is more towards Asian countries because of the similar preferences. HUL is one of the top companies exporting FMCG goods from India. An expansion of horizons towards more and more countries would help HUL grow its consumer base and henceforth the revenues.
Opportunity in Food Sector - The advent of modern trade has opened up greater opportunities for HUL to diversify its brand and strength its food division. It could look at introducing products from its parents stable like margarines and could also look at expanding its Knorr range of products.
Well-placed to take advantage of future FMCG Growth - HUL reach out 80% of 207 million households in the country through various brands. It has a very well-defined product portfolio spread across many product categories.
Penetration levels for some major categories like skin-cream (22%), shampoo (38%), toothpaste (48%) and processed foods, continue to remain low offerings but great growth opportunities products.
Threats
ITC has reduced its dependence on the cigarettes business - Contribution of the core business in revenues has come down from 87% in FY99 to 70% in FY’05. Over a period of five years, ITC has extended its presence into areas like foods, retailing, hotels, greetings, agriculture, paper, etc. These are businesses that can give it growth impetus in the long run. With ITC gaining momentum in each of these businesses, it is turning into a consumer monolith, and hence, the greatest threat to HUL's Business.
SSKI India has gone on to say, "We maintain Out performer on ITC with a price target of Rs. 2200, while our Under performer call on HUL remains unaltered (price target of Rs. 160)."
Economic Times, December 28, 2004
The battle lines are drawn between HUL and ITC for supremacy in the war for market capitalisation among FMCG companies. Riding high on better valuations, ITC has overtaken HUL's market capitalisation of Rs 31,600 crore by around Rs 1,000 crore (at Rs 32,695 crore) as of Tuesday. Earlier too, the company had overtaken HUL's capitalisation by around 5% in Aug-Sep '04.
Analysts say ITC continues to command pricing power in its core business, unlike HUL that is facing tremendous pricing pressure. ITC derives 95% of its profitability from cigarettes and has been investing heavily in its new businesses like foods and hotels. On the other hand, HUL has been preoccupied with protecting its turf from competition. ITC's increase in market capitalisation reflects the rise in its share price, which is up 40% to Rs 1,318 on Tuesday, compared to end June '04, while HUL's share price has risen by about 13% to Rs 143 in the same period.
Future Prospects: India is a fast developing country with a huge population whose per capita income is growing rapidly and there is huge opportunity for FMCG companies.
The opportunities are as follows:
• Increasing per capita income is driving FMCG growth in India
• India’s consuming class is growing rapidly
• Changing consumption pattern: Per capita income of Indian customer is increasing and FMCG products are relatively elastic in nature hence the expected sale should increase.
As per the future plans of HUL:
• HUL has drawn up a comprehensive plan to expand its portfolio in the area of Health Care and Contraceptives.
• Chemicals business (encompassing Flavours, Fragrances and other Specialty Chemicals), as well as several non-FMCG export businesses such as Thermometers and Mushrooms.
• HUL has been pepping up its rural distribution systems and has launched low unit price variants of its popular brands to draw in new users in the rural areas.
Project ShaktiWith the urban market saturated, FMCG companies are now targeting the rural markets. In spite of the income imbalance between urban and rural India, rural holds great potential since 70% of India’s population lives there. Due to the recent government measures like waiver of loans, national rural employment guarantee scheme and increasing minimum support price, disposable income in rural India has been rapidly increasing. However, rural markets present their own sets of problems. These include poor infrastructure, dispersed settlements, lack of education and a virtually nonexistent medium for communication. Furthermore, retailers cannot be present in all the centres as many of them are so small that it makes them economically unfeasible.
Hindustan Unilever Limited (HUL) to tap this market conceived of Project Shakti. This project was started in 2001 with the aim of increasing the company’s rural distribution reach as well as providing rural women with income-generating opportunities. This is a case where the social goals are helping achieve business goals.
The recruitment of a Shakti Entrepreneur or Shakti Amma (SA) begins with the executives of HUL identifying the uncovered village. The representative of the company meets the panchayat and the village head and identify the woman who they believe will be suitable as a SA. After training she is asked to put up Rs 20,000 as investment which is used to buy products for selling. The products are then sold door-to-door or through petty shops at home. On an average a Shakti Amma makes a 10% margin on the products she sells.
An initiative which helps support Project Shakti is the Shakti Vani programme. Under this programme, trained communicators visit schools and village congregations to drive messages on sanitation, good hygiene practices and women empowerment. This serves as a rural communication vehicle and helps the SA in their sales.
The main advantage of the Shakti programme for HUL is having more feet on the ground. Shakti Ammas are able to reach far flung areas, which were economically unviable for the company to tap on its own, besides being a brand ambassador for the company. Moreover, the company has ready consumers in the SAs who become users of the products besides selling them.
Although the company has been successful in the initiative and has been scaling up, it faces problems from time to time for which it comes up with innovative solutions. For example, a problem faced by HUL was that the SAs were more inclined to stay at home and sell rather than going from door to door since there is a stigma attached to direct selling. Moreover, men were not liable to go to a woman’s house and buy products. The company countered this problem by hosting Shakti Days. Here an artificial market place was created with music and promotion and the ladies were able to sell their products in a few hours without encountering any stigma or bias.
This model has been the growth driver for HUL and presently about half of HUL’s FMCG sales come from rural markets. The Shakti network at the end of 2008 was 45,000 Ammas covering 100,000+ villages across 15 states reaching 3 m homes. The long term aim of the company is to have 100,000 Ammas covering 500,000 villages and reaching 600 m people. We feel that with this initiative, HUL has been successful in maintaining its distribution reach advantage over its competitors. This programme will help provide HUL with a growing customer base which will benefit the company for years to come.
CONCLUSION
Hindustan Unilever ltd. Is a leading FMCG company in India and from last three consecutive years has shown accelerated growth in FMCG portfolio. Customers in India are also spending more in FMCG as their standard of living is growing. HUL has placed itself successfully in the position of market leader in FMCG products. Though there was some downfall in sales and profit of the company in the beginning of this decade but after that HUL has shown considerable rise in both sales and profit. The future of the company is also looking bright as FMCG market in India is still expanding and so we can safely conclude that HUL will be able to secure its number one position in FMCG product.
HUL has also started project SHAKTI that has provided it direct reach to rural market. This may be considered a revolutionary step since the urban market is reaching its saturation level and there is a huge scope exploring rural market. This will also be helpful not only increasing its market share but also fight competition.
