A Micro Economics Project by: 49:Disha 50:Priyanka 51:Avinash 52:Sancheet 53: Parmindar 54:Janvi
Contents Corporate Information Introduction Chronology Products Demand Forecast Market Share Present Stature Competitors Policies Contribution to Society Survey
Corporate Information Registered Office
Hindustan Unilever Limited, 165/166, Backbay Reclamation Mumbai – 400 020 Tel : +91 – 22 – 39830000 Fax no. : +91 – 22 – 22026712
Executive Director (Legal) and Company Secretary
Ashok.K.Gupta, Email :
[email protected] Tel nos. : +91-22-39832567/ 39832358 / 39832557
Statutory Auditors
Lovelock & Lewes, Chartered Accountants 252, Veer Savarkar Marg Dadar, Mumbai- 400 028
Solicitors
Crawford Bayley & Co. State Bank Building N.G.N. Vaidya Marg Mumbai – 400 023
Registrar and Share Transfer Agents
Karvy Computershare Private Limited Unit : HINDUSTAN UNILEVER LIMITED Plot No. 17 to 24, Vittalrao Nagar, Madhapur, Hyderabad – 500 081. Phone : +91- 40 23420818-823 Fax : +91- 40 23420814 Email :
[email protected] Website : www.karvy.com
Subsidiary Companies
Unilever India Exports Limited Bon Limited Unilever Nepal Limited Pond’s Exports Limited Daverashola Estates Private Limited Jamnagar Properties Private Limited Shamnagar Estates Private Limited Brooke Bond Real Estates Private Limited Hindustan Unilever Field Services Private Limited Levers Associated Trust Limited Levindra Trust Limited Hindlever Trust Limited
INTROUCTION Hindustan Unilever Limited (abbreviated to HUL)) formerly Hindustan Lever Limited, is India’s largest consumer products company and has an annual turnover of over Rs 13,000 crores (calendar year 2007). It was formed in 1933 as Lever Brothers India Limited and came into being in 1956 as Hindustan Lever Limited through a merger of Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd.. It is headquartered in Mumbai, India and has an employee strength of over 15,000 employees and contributes for indirect employment of over 52,000 people. The company was renamed in late June 2007 to “Hindustan Unilever Limited”. In 2007, Hindustan Unilever was rated as the most respected company in India for the past 25 years by Business World, one of India’s leading business magazines. The rating was based on a compilation of the magazines annual survey of India’s Most Reputed Companies over the past 25 years. HUL is the market leader in Indian consumer products with presence in over 20 consumer categories such as Soaps, Tea, Detergents and Shampoos amongst others with over 700 million Indian consumers using its products. It has over 35 brands. Sixteen of HUL’s brands featured in the AC Nielsen-Brand Equity list of 100 Most Trusted Brands Annual Survey (2008). According to Brand Equity, HUL has the largest number of brands in the Most Trusted Brands List. It’s a company that has consistently had the largest number of brands in the Top 50 and in the Top 10 (with 4 brands). Hindustan Unilever distribution covers over 1 million retails outlets across India directly and its products are available in over 6.3 million outlets in India, i.e. nearly 80% of the retail outlets in India. It has 39 factories in the country. Two out of three Indians use the company’s products and HUL products have the largest consumer reach being available in over 80 per cent of consumer homes across India. The Anglo-Dutch company Unilever owns a majority stake (52%) in Hindustan Unilever Limited. HUL was one of the eight Indian companies to be featured on the Forbes list of World’s Most Reputed companies in 2007 .
CHRONOLOGY 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 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 1995, HUL and yet another Tata company, Lakme Limited, formed a 50:50 joint venture, Lakme Unilever Limited, to market Lakme's marketleading 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 Icecream 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 July 1993, 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 Icecream Group families and in 1995 the Milkfood 100% Icecream 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.
PRODUCTS i. ii. iii. iv. v. vi. vii. viii. ix. x.
AXE CLOSE UP DOVE FAIR & LOVELY LAKME LUX PEARS PEPSODENT PONDS SURF EXCEL
Axe, the deodorant that is considered cool, fashionable and stylish by young men was launched in India in 1999. Available in more than 60 countries around the world, it is a world leader in male toiletries. Axe has a mix that is completely harmonised globally – from its proposition and communication to the product, as available on the shelf. Axe is available in five fragrances: Java, Pulse, Dimension, Voodoo and Phoenix. Axe has become the leading male deodorant brand in India within just one year of its launch. Consumers associate a lifestyle of cool clubs, cool music and cool fashion with Axe. The youth view it as an icon which introduces many 'firsts' to their world of music and dance – like the first "World's Longest Dance Party" and the first ever 'Axe Voodoo Island Party'
Closeup is the original youth brand of India. The first brand targeting youth in the oral care market, with an edgy and youthful image which stays relevant till date. Ever since its launch in 1975, Closeup has broken every rule in the book on how toothpastes should behave! Closeup was the first gel toothpaste to be launched in India and has led the gel toothpaste segment ever since. In 2004, Closeup was re-launched with a bang. And this time it was packed with the power of Vitamin Fluoride System – a powerful mix of Vitamins, Fluoride, Mouthwash and Micro whiteners, the perfect combination of ingredients for fresher breath and stronger, whiter teeth. Closeup became the first Gel toothpaste with Fluoride in the Indian Market! The brand umbrella also includes Closeup Lemon Mint, gel toothpaste with the whitening benefits of lemon. The latest entry in the Closeup stable is Closeup Milk Calcium – revolutionary new toothpaste with the goodness of milk calcium in an industry-first core-in-sheath format, with white milk calcium nutrient on the inside and a refreshing blue gel on the outside.
Dove soap, which was launched by Unilever in 1957, has been available in India since 1995. It provides a refreshingly real alternative for women who recognise that beauty is not simply about how you look, it is about how you feel. The skin's natural pH is slightly acidic 5.5-6. Ordinary soaps tend to be alkaline, with pH higher than 9. Dove is formulated to be pH neutral (pH between 6.5 and 7.5) and to be mild on skin. This makes it suitable for all skin types for all seasons. While Dove soap bar is widely available across the country, Dove Body Wash is available in select outlets. Globally, Dove has been extended to many other countries. Since the 1980s, for example, Unilever has launched a moisturising bodywash, deodorants, body lotions, facial cleansers and shampoos and conditioners, providing a comprehensive range of solutions to bring out true inner beauty.
A woman's passion for beauty is universal and catering to this strong need is Fair & Lovely. Based on a revolutionary breakthrough in skin lightening technology, Fair & Lovely was launched in 1978. The Hindustan Lever Research Centre (it is among the largest research establishments in India's private sector, including pharmaceutical companies, with facilities in Mumbai and Bangalore) deployed technology, based on pioneering research in the science of skin lightening to develop Fair & Lovely. The formulation is patented. Its formulation acts safely and gently with the natural renewal process of the skin, making complexion fairer over a period of six weeks. Fair & Lovely is formulated with optimum levels of UV sunscreens and Niacinamide that is known to control dispersion of melanin in the skin. It is a patented and proprietary formulation, which has been in the market for 25 years. Niacinamide (Vitamin B3) is a water-soluble vitamin and is widely distributed in cereals, fruits and vegetables - and its use in cosmetic formulations has been known for various end benefits. The UV components of the formulation are scientifically chosen and used at optimum levels to provide wide spectrum protection against UV rays of the sun. Specifically, this patented formulation offers a high UVA protection, which is more relevant to Asian skin than plain SPF protection creams sold in the West. All the active ingredients in the Fair & Lovely formulation function synergistically to lighten skin colour through a process that is natural, reversible and totally safe. The brand today offers a substantive range of products, including Ayurvedic Fair & Lovely Fairness cream, Fair & Lovely Anti-Marks cream, Fair & Lovely Oil control Fairness Gel, Fair & Lovely for Deep Skin and Fair & Lovely Fairness Soap. The latest has been the Perfect Radiance, a complete range of 12 premium skincare solutions from Fair & Lovely.
Half a century ago, as India took her steps into freedom, Lakme, India's first beauty brand was born. At a time when the beauty industry in India was at a nascent stage, Lakme tapped into what would grow to be amongst the leading, high consumer interest segments in the Indian Industry - that of skincare and cosmetic products. Armed with a potent combination of foresight, research and constant innovation, Lakme has grown to be the market leader in the cosmetics industry. Lakme today has grown to have a wide variety of products and services that cover all facets of beauty care, and arm the consumer with products to pamper herself from head to toe. These include products for the lips, nails, eyes, face and skin, and services like the Lakme Beauty Salons
Since 1929, Lux in step with the changing trends and evolving beauty needs of the consumers, offers an exciting range of soaps and Body Washes with unique elements to make bathing time more pleasurable. One can choose from a range of skincare benefits like firming, fairness and moisturising. Lux stands for the promise of beauty and glamour as one of India's most trusted personal care brands. Lux Believes in passion for beauty .It continues to be a favourite with generations of users for the experience of a sensuous and luxurious bath. Lux believes that femininity shouldn’t be denied. Since its launch in India in the year 1929, Lux has offered a range of soaps in different sensuous colours and world class fragrances. Lux is a beauty soap of film stars, Lux recognized the need for a compelling message about beauty that would resonate with women of today. Lux has recently launched its two fruit extract variants – New Lux Strawberry & Cream and Lux Peach & Cream contain a blend of succulent fruits & luscious Chantilly cream that melts down into your skin making it soft and smooth.
Introduced in India in 1902, Pears soap has no equal. It is gentle enough, even for baby's skin. Pears is manufactured like any other soap, but unlike in conventional soaps, the glycerine is retained within the soap. That is the cause if its unique transparency. After manufacturing, the soap is mellowed under controlled conditions over weeks. At the end of this maturing process, it is individually polished and packed in cartons. Today Pears is available in three variants - the traditional amber variant, a green variant for oil control and a blue variant for germ protection
Pepsodent, launched in 1993, was the first toothpaste with a unique anti-bacterial agent to address the consumer need of checking germs even hours after brushing. Pepsodent packs included a Germ Indicator in February-May 2002, which allowed consumers to see the efficacy in fighting germs for themselves. As a follow-up, in October 2002, Pepsodent offered Dental Insurance to all its consumers to demonstrate the confidence the company has in the technical superiority of the product. Pepsodent connects directly with kids and their parents. Pepsodent has always worked in the direction of an overall awareness of dental health. The relaunch campaign in October 2003 widened the context to "sweet and sticky" food and leveraged the truth that children do not rinse their mouths every time they eat, demonstrating that this makes their teeth vulnerable to germ attack. Pepsodent's most recent campaign aims at educating consumers on the need for germ protection through the night. Pepsodent also includes a range of toothbrushes.
Pond's has been synonymous with skin care in India since 1947. The impressive track record of Pond's began when Theron T Pond, a pharmacist from Utica New York, introduced 'Pond's Golden Treasure' in 1846, a witch-hazel based wonder product. In 1914, Pond's Cold Cream and Vanishing Cream marked the brand's evolution to a beauty icon. In 1955 Pond's Extract Company merged with Chesebrough Manufacturing and in 1987 Unilever purchased ChesebroughPond's. By this time the Pond's brand had built up a powerful international presence. From one man in a tiny home-made laboratory, to today's state of the art R&D facilities led from Bangkok, Mumbai, New York and Tokyo, the Pond's promise has remained the same across 58 countries - to deliver products that make a real difference to women's skin and the way they live their lives.
A pioneer in the Indian detergent powder market, Surf Excel has constantly upgraded itself over the years, to answer the constantly changing washing needs of the Indian homemaker. Today Surf Excel offers outstanding stain removal ability on a wide range of stains. This means that mothers now have the freedom to let their kids experience life without worrying about stains. Surf Excel quick wash is powered with a path-breaking technology- it reduces water consumption and time taken for rinsing by 50%. It is a significant benefit, given the acute water scarcity in most of India. Surf Excel is available in 3 variants: Surf Excel Blue, Surf Excel Quick Wash and Surf Excel Automatic. So whatever be the need, Surf Excel hai na.
DEMAND FORECAST Hindustan Unilever Ltd. (Bombay Stock Exchange: 500696) makes fast-moving consumer goods (FMCG) such as detergents, toiletries, and food staples. The company has a distribution channel of 6.3 million outlets and 35 major Indian brands.. HUL recorded 20.02% year over year (yoy) growth in revenue at Rs 16660.38 crores during the year ended Dec'08. Its Soaps and Detergents business was its largest contributor to revenues with 46% of total revenues where as Personal Care products contributed the most (46%) towards EBIT (Earnings before Income Tax). Raw material prices for palm oil and other chemicals increased of 31% from Nov'07-Apr'08, which led the company to implement a price hike by a weighted average of 10% from April to June 2008 in order to protect its margins. From April to October 2008, however, palm oil prices declined 62.2% so Hindustan has accrued higher revenue on lower volume sales in late 2008, early 2009. Increase in per capita income in urban, as well as rural areas, of India has a positive effect on demand of consumer goods along with a shift in demand towards high end lifestyle products. Long a provider of low cost consumer goods, HUL has recently launched products in its high end segments.
Company Overview HUL, the largest FMCG Company in India by revenues was formed by merging three subsidiaries of Unilever in 1956. At present, Unilever Plc holds a 51.6% stake in the company. HUL’s portfolio of products covers a wide spectrum including soaps, detergents, skin creams, shampoos, toothpastes, tea, coffee and branded flour.]HUL's brands, spread across 20 distinct consumer categories. It owns 35 major Indian brands. HUL has consistently had the most number of brands in the Top 10 list for the most trusted brands in India from 2003 to 2008.Surf Excel, 'Pepsodent and Ponds in Home and Personal Care segment and Lipton, Kissan andBrooke Bond in Foods and Beverages Segment are some of its top brands. In 2008, it launched Ponds Age Miracle,Vaseline range of products
in skin care category and Axe-Dark Temptation in personal care segment as part of their expansion into higher end products.
Business and Financial Metrics[
Sales growth of 13.36% in CY'07 (Calendar Year 2007) and 9.38% in CY'06 can be attributed to aggressive launches, re-launches of products and a hike in product prices. The net Income of the company has not increased at the same pace as revenues because of a decline in margins (from 18.5% in CY'04 to 16.7% in CY'07) in its soaps and detergents business and investment in IT and water purifier business in CY 05-06.[
HUL Total Income and Net Profit over the years (in Rs. Crore)
There is an insignificant change in company's revenue mix in CY04-07 period. Soaps and Detergents business contributes highest (46%) towards revenues followed by Personal care products (26%). Despite being highest revenue generator soaps and detergents business is not the most profitable segment. Personal care contributes highest (46.2%) towards the EBIT which is due to high margins and low penetration of the market.
HUL Total Sales Revenue distribution across segments (in %)
[1]
Discussion FY'09 (Financial Year 2009) : HUL has shown steady sales growth by 19-20 % in Jan - Sep'08 but it was largely price led due to a hike in product prices in the previous two quarters . Volume growth has decreased from 10.2% in Q1CY08 (1st quarter Calendar Year 2008) to 6.8% in Q3CY08. EBIT margins fell by 30bps to 12.9 due to inflation of Commodities prices but net profit saw a raise to 34% on account of income from sale of properties.
Business Segments[
Soaps and Detergents (46% Revenue, 44% EBIT): This segment includes Laundry and Personal Wash products like soaps, detergent bars, detergent powders, detergent liquids, scourers,etc.Sales of the segment grew sales by 13.9% and 20.3% in CY07 and H1CY08 respectively. Fabric Wash has shown strong growth in this year with the market share moving up from 34.6% in Q4CY06 to 38.3% in Q2CY08 Profitability margins which declined from 25.7% in CY'02 to 13.7 % in CY'05 due to pricing actions from P&G in the Laundry segment have slightly recovered to 15.6% (CY'07).
Personal Care Products (26% Revenue, 46.2% EBIT) : This business which comprises mainly skin care, hair care and oral care is the most profitable segment for HUL.It is highest contributor to HUL’s EBIT at 47%. Low penetration and consumption of personal products has sustained these categories' high growth rates. This segment has shown a revenue growth of 20.9% in H1CY08 and the new launches in the Ponds and Dove range contributed to the profitability of the segment.
Beverages (11% Revenue,10.3% EBIT) : HUL's beverages business is operated through the Brooke Bond and Lipton brands for packet tea and Bru brand for coffee. With the aggressive relaunch of Brooke Bond, Taj Mahal and Taaza, the company has been able to arrest the decline in its market share.Overall margins have declined to 15% in CY'07 from 20% in CY'04 due to hike in Coffee bean prices.
Foods (4% Revenue, 0.8% EBIT) :In spite of having one of the best distribution networks (coverage of 6.3 mn outlets) in the country, the food business has never constituted a big part of revenues.Thats why this is the current focus area for the company. Presence in the foods category is mainly through soup mix, Chinese meal maker, jams, ketchups and salts. HUL is clearly keeping a low profile in the staples category, which is low margin business.Foods margin dipped partly due to launch related costs for Amaze brain foods (launched in two southern states during the January–March 2008 quarter).
Ice Cream(1% Revenue, 0.6%EBIT) : This segment includes include Ice Creams and Frozen Desserts.Kwality Wall's, launched in 1995, is the company's
master brand for ice cream. It has launched Moo brand that boosts children’s calcium levels in the June quarter of CY07. Exports : Exports include sales of Marine Products, Castor, etc. as well as sales of soaps and detergents, personal products, beverages and foods etc. by the Exports Division. Exports are the lowest-margin business for the company. It has already exited the low-margin shrimps and castor business. Others: This section includes Chemicals,Water purifiers, Agri seeds, Property Development, Water business, Ayush services etc. It has seen a growth of 41.5% as Pure It (a water purifier product) increased its reach to more than 600 towns.
HUL revenue distribution across segments for CY'07
[3]
Trends and Forces Increasing raw material prices drives HUL to raise its prices[ Raw materials constitute a big chunk (63%) of input cost for FMCG sector companies. For HUL- Palm Oil and Chemicals contribute 59% of total raw material cost. Due to inflated input cost in Soap and Detergents division EBITDA
(earnings before income tax and depreciation) margins fell from 19.7% in CY03 TO 13.7% in CY07. The first steep increase in the prices (31% in Nov'07-Apr'08 period) of key raw materials such as palm oil, LAB - Linear Alkyl Benzene, caustic soda, soda ash, raw tea, coffee and crude oil derivatives has led the company to implement price hikes in competitive segments like toothpaste, soaps, detergents and shampoo. The weighted average price increases were 8% in January-March 2008 period and 10% in April-June 2008. But recently softening Inventories - Raw Materials prices in the last 2-3 months have provided respite to FMCG sector companies. Raw material and packaging materials have fallen sharply from their highs recorded in Sep'08. Palm oil and Brent Crude have fallen by 62.2% and 40.1% from Aril'08 prices. The benefit of fall in raw material prices will be accured later when high cost inventory will be replaced by a cheaper inventory. Increasing per capita income drives FMCG sector growth[ Per capita Income in India has doubled in 4 years 04-07. As their incomes and standards of living improve, Indian customers’ for FMCGs are shifting towards higher lifestyle categories like skin care, hair care, deodorants, convenience foods, health foods etc. Rural India, where penetration levels are low as compared to urban areas, has a large consuming class with 41 per cent of India's middle-class and 58% of the total disposable income. Factors like loan waiver of farmers, hike in minimum support price for crops and flood inflation has helped farmers with rise in income. The purchasing power in rural areas has increased and spending behavior is also changing which shows a high growth potential for FMCG companies here. HUL has adapted itself to changing consumer spending patterns. Among many product launches, Dove hair care products, re-launch of Axe deodrants and launch of Ponds Anti Ageing cream are few to be mentioned in high end price spectrum in Personal care. Targeting low income group people, HUL has launched 50 paise shampoo sachets in 2007. Along with these, Company's premium products are now sold thorugh Modern Trade. Also it has entered into a Joint venture with Smollons
Holdings of South Africa to increase its capabilities to meet the merchandising demands in Modern Trade. Per Capita consumption of personal care products in India is one of the lowest among developing economies of the world.[] India has one of the lowest levels in per capita consumption of consumer goods among developing economies of the world. It has per capita consumtion levels of 1.4,0.3,0.2 and 0.3 US$ in detergents, shampoo, ice-creams and skin care segments respectively which are lower than that of China, Brazil and Indonesia. Consumption levels in the U.S., a developed country, are 16.6, 6.7, 49.4 and 36.6 in categories mentioned before. Low consumption coupled with increase in per capita income poses as a growth opportunity for consumer products companies.
Consumer goods consumption levels (in US $)
'
Detergents Shampoo
Skin Care
Icecream
Brazil
12.1
6.0
12.2
5.9
China
2.2
1.0
3.2
3.0
Indonesia
1.9
1.0
0.8
1.0
India
1.4
0.3
0.3
0.2
Highly Competitive FMCG Sector limits profit margins of HUL.[ In a volume driven and competitively intense environment with competition also from local players FMCG players are aggressively promoting their brands to gain product awareness, customer base, and their shares of the customers’ wallets. To facilitate launch new products and relaunch of existing products companies are increasing their research and development expenditure. These factors eat up the profitability margins of the companies.
HUL has consistently been the top advertisement spender over the years with expenditure of Rs 650 crore in the year 2008. Second largest spending is Rs 240 crore by a telecom company. P&G India and Colgate-Plamolive, other FMCG players, also feature in the top 10 advertisers list. HUL has increased its advertising expenses by 26.56% in CY'07.Also the money spent in Research and Development which facilitates new product launches and re-launches of existing products has seen a raise by 38.16% in the same year. Pricing scenario in current time is in favor of companies but in past due to pricing war with P&G in Soaps and Detergents, HUL's magins in the segment declined from a high of 25.7% in CY02 to 13.7% in CY05.
MARKET SHARE Total Turnover (in US$) 3500 3000 2500 2000 1500
Total Turnover (in US$)
1000 500 0
This chart explains more about the market share of HUL. The Total turnover of Hul was 2961 million US$ way ahead of its competitors like Nestle, Dabur, Godrej, Marico etc. HUL or Hindustan Unilever is the number one Indian Brand. It is The Market leader in number of products. In 2007, Hindustan Unilever was rated as the most respected company in India for the past 25 years by Business World, one of India’s leading business magazines. HUL is the market leader in Indian consumer products with presence in over 20 consumer categories such as Soaps, Tea, Detergents and Shampoos amongst others with over 700 million Indian consumers using its products. It has over 35 brands. Sixteen of HUL’s brands featured in the AC Nielsen-Brand Equity list of 100 Most Trusted Brands Annual Survey (2008). According to Brand Equity, HUL has the largest number of brands in the Most Trusted Brands List.
Market share 70 60 50 40 30 HUL 20
Competitors
10 0
This is the market share of various divisions of HUL products..The above Graph indicates the gap between HUL & other competitors.The value of the graph is 100 basis points. In the division of fabric wash Surf excel and Rin are the market leaders. Its value is 37% while its competitors value is13.2%.In case os personal wash HUL brands cross majority of market share of 50%.Brands like Lux, Dove, Pears are very popular. In case of Dishwsh Hul retains Majority with 56.4 % of market share while their competitors share was 8.6 %.In case of skin care HUL was again the number one brand with market share of 55 % while its competitors share was 7.4 %.In case of shampoos HUL was number one but Its competitors are also more. Brands like clinic all clear, sunsilk are the main products in this category. In the category of Talcum powder Brands like Ponds and Aviance helped HUL maintain marketshare of 59.8 %. The market share in Packet tea category is very competitive. But HUL has an slight edge over its competitors with brands like Brooke bond & Lipton. In category of Coffee Brooke bond Bru has majority of market share of 47.5 %, while Other competitors managed 36.8 %. Kissan jam is the market leader in category of Jams. It has 63.6 % of market share while other brands has 5.1% of marketshare
PRESENT STATURE Hindustan 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. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of nearly Rs.13718 crores. HUL is also one of the country's largest exporters; it has been recognised as a Golden Super Star Trading House by the Government of India. The mission that inspires HUL's over 15,000 employees, including over 1,300 managers, is to "add vitality to life." HUL 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 52.10% of the equity. The rest of the shareholding is distributed among 360,675 individual shareholders and financial institutions. HUL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, KnorrAnnapurna, Kwality Wall's – 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 over 37 factories across India. The operations involve over 2,000 suppliers and associates. HUL's distribution network, comprising about 2,500 redistribution stockists, covering 6.3 million retail outlets reaching the entire urban population, and about 250 million rural consumers. HUL has traditionally been a company, which incorporates latest technology in all its operations. The Hindustan Unilever Research Centre (HURC) was set up in 1958, and now has facilities in Mumbai and Bangalore. HURC and the Global Technology Centres in India have over 200 highly qualified scientists and
technologists, many with post-doctoral experience acquired in the US and Europe. HUL believes that an organisation's worth is also in the service it renders to the community. HUL is focusing on health & hygiene education, women empowerment, and water management. It is also involved in education and rehabilitation of special or underprivileged children, care for the destitute and HIVpositive, and rural development. HUL has also responded in case of national calamities / adversities and contributes through various welfare measures, most recent being the village built by HUL in earthquake affected Gujarat, and relief & rehabilitation after the Tsunami caused devastation in South India. In 2001, the company embarked on an ambitious programme, Shakti. 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 includes health and hygiene education through the Shakti Vani Programme, and creating access to relevant information through the iShakti community portal. The program now covers 15 states in India and has over 45,000 women entrepreneurs in its fold, reaching out to 135,000 villages and directly reaching to 150 million rural consumers. HUL is also running 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. The vision is to make a billion Indians feel safe and secure. 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.
COMPETITORS PRODUCT PROFILE OF SOME OF THE COMPETITORS:
The Fiama Di Wills range of soaps has been launched under the sub - brand SkinSense. The first variant to be introduced in this range is Soft Green. This is a gentle caring soap, which helps enhance retention of skin proteins making skin look beautiful and youthful. In February 2008, ITC launched two new ranges of soap - Vivel Di Wills and Vivel -to cater to the skincare needs of a wide range of consumers. Backed by consumer insights, the ranges offer a unique value proposition of bringing together ingredients that provide multiple benefits of Nourishment, Protection and Hydration in a single product. Hence providing the ever discerning consumer complete care. The packaging, reflecting the philosophy of the brand, fuses multiple benefits. The unique carton pack has been developed by ITC’s design team to provide a novel consumer experience.
Although the market trend shows that these ITC brands are no competition to Pears right now. But if ITC improves its distribution network then these brands can be a threat to HUL.
'Fairone Fairness Cream' was launched jointly by Elder Pharmaceuticals and Shahnaz Husain. Elder Pharmaceuticals Ltd and Shahnaz Husain, herbal beauty specialist, had entered into an agreement to launch four skin care products during 2006-2007. Elder undertakes the manufacturing and marketing of the products, while the conception and composition is done by Husain. Elder Pharmaceuticals Ltd. is one of the leading companies in India in the skin care sector. The company is a major manufacturer of aloe vera-based skin care products.
A fair complexion has always been associated with success and popularity. Men and women alike desire fairness, it is believed to be the key to a successful life. Well for women the market is loaded with fairness cream but for men there are very few creams. Emami Fair and Handsome is one such cream for men. Emami herbalists and dermatologists from India along with Activor Corp USA, has created “Fair & Handsome” a fairness cream for Men with a breakthrough Five Power Fairness System to make skin fair and handsome in 4 weeks.
Garnier is a division of L'Oréal that produces hair care products, including the Fructis line, and most recently, skin care products under the name, Nutritioniste, that are sold around the world. One of their key ingredients is a fruit concentrate used in all their products. It is a combination of fruit acids, vitamin B3 and B6, fructose and glucose.
Natural Fairever was initially launched in A.P. in 1998, following that a national launch was made in 1999. Fairever is the brand of CavinKare Pvt Ltd(CKPL). This cream has a blend of saffron and milk. It claims to work from within to provide a distinctly fairer, glowing complexion much like that of Kashmiri beauties in just 4 weeks Triple sunscreens also retain your fairness and reduce the harmful effects of UV rays. It comes in a pack of 50g and 100g. The 50g pack costs Rs.55. The Fairever claims to have consumers as a woman who is the young and contemporary woman of today. She has strong values and believes in using a natural product that will help bring out her natural beauty from within.
Cinthol talc is a product of GODREJ Consumer Products Ltd (GCPL). GCPL identifies Cinthol as its power brand. GCPL has launched new Cinthol range of soap, talc and deodorant with Bollywood actor Hrithik Roshan as its new brand ambassador. Cinthol offers a range of soaps, talc and deo sprays in three exciting fragrance - Classic, Cologne and Sport - in a new packaging.
Cinthol has come out with a combi pack for this summer. It is in pack of 300g + 100g for M.R.P Rs.80.
Spinz talc is CavinKare Pvt Ltd(CKPL) brand. Spinz Talc is packed in sizes of 20 g, 50 g, 100 g and 400 g and comes in three fragrances: Exotic Exchante Sandal The Spinz talc’s target are girls of around 18 to 26 years old from SEC A and B. Easy-going and fun-loving, who loves to have a lot of friends with whom she spends time.
Competition Last Price
Market Cap. (Rs. cr.)
HUL Dabur India Colgate Godrej Consumer Godrej Ind Marico P and G Gillette Emami Jyothy Labs
290.40 140.00 669.45 222.75 163.05 83.50 1,074.85 920.55 414.15 114.10
63,322.88 12,117.00 9,104.04 5,723.65 5,191.80 5,085.59 3,489.04 2,999.63 2,573.74 828.01
Sales Turnover 20,601.56 2,417.91 1,770.82 1,088.01 880.97 1,921.85 645.02 588.84 651.01 350.85
Total Assets Net Profit 2,496.45 373.56 290.22 161.55 19.33 142.12 131.41 117.37 67.36 40.88
The above table shows the competition among the Indian FMCG brands. HUL is the leader of the market with maximum market capitalization and maximum sales turnover. The Net Profit stood at whooping 2500 crore approximately. HUL has Dominated the FMCG market but now faces a lot of competitors like ITC , Procter & Gamble, Godrej Consumer products, Marico etc.
2,483.46 877.17 220.98 599.80 1,628.10 676.21 346.64 425.40 324.20 352.51
POLICIES Hindustan Unilever Limited (HUL) supplies high quality goods and services to meet the daily needs of consumers and customers. In doing so, the Company is committed to exhibit the highest standards of corporate behavior towards its consumers, employees, the societies andthe environment in which we operate. Towards this, the Company recognises its responsibility to ensure safety and protection of health of its employees, contractors and visitors in all its operating sites, which include manufacturing, sales and distribution, research laboratories and offices during work and work related travel. This Policy document defines the vision, principles, aim, required actions and scope of the policy application as well as the responsibility for execution. Vision Our vision is to be an injury free organisation.
Mission We will bring safety on top of mind for all employees and will integrate it with all business processes. We will realise our Vision through an Integrated Safety Management approach, which focuses on People, Processes, Systems, Technology and Facilities, supported by demonstrated leadership and employee commitment at all levels as the prime drivers for ensuring a safe and healthy work environment.
Safety Principles HUL's Occupational Safety and Health Policy is based on and supported by the following eight Principles. These Principles have the same status as the Company's Code of Business Principles:
All injuries and occupational illnesses are preventable All operational exposures can be safeguarded Safety evaluation of all business processes is vital Working safely is a condition of employment Training all employees to work safely is essential Management audits are a must Employee involvement is essential All deficiencies must be reported and corrected promptly Note: In order to facilitate operationalisation of the Safety Principles, a separate document has been prepared, which covers: a) Safety Principles b) Success Criteria c) Illustrative KPI This document will form the basis for the concerned Line / Organisations in developing KPI's for their respective functions / sites.
Scope of Application This section defines the scope of application of this Policy (where, when and to whom is this Policy applicable).
Where does this policy apply? All own/leased sites – Manufacturing, Research/Innovation, Offices, Depots, Warehouses In-house purchased services i.e. canteen, travel desk, IT implementation etc.
Sites of associates with HUL holding > 24% while carrying out operations of making, handling, using, transporting, selling or disposing off of our products
Who does the policy apply to? All employees at business anywhere Contractors and visitors while at our own sites
When does it apply? At work (our employees, contractors and visitors) Travel between home and work of our employees Business related travel including stay out of headquarter All Company organised business events i.e. training programmes, conferences, business related get-togethers, annual sports etc.
Implementation Responsibility HUL Management at all levels is responsible for Policy implementation. Every site shall prepare a responsibility matrix with respect to this Policy. Such SHE responsibilities shall form an integral part of overall job responsibilities of all employees. All Unilever and HUL Standards, Rules and Procedures on Occupational Safety and Health, including those that may be specific to a site are integral to this Policy and its implementation. All employees are required to ensure strict adherence. Quality is fundamental to our Business Success
Unilever’s mission is to meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life. And a key requirement is building in the quality expectations of our consumers into our products. To win consumers’ confidence and loyalty, we need to consistently deliver branded products of excellent quality. We understand the different needs of our consumers and customers and strive to develop and deliver superior brands to ensure that they’re the preferred choice. And by applying consistently high standards, we’re able to do things right first time, cut waste, reduce costs and drive profitability. Our Quality Policy describes the principles that everyone in Unilever follows, wherever they are in the world, to ensure that we are recognised and trusted for our integrity, the quality of our brands and products, and the high standards we set. Principles of the Quality Policy • Putting the safety of our products and our consumers first. We have stringent mandatory quality standards in place against which compliance is verified through regular audits and self assessments. These standards ensure we design, manufacture and supply products that are safe, of excellent quality, and conform to the relevant industry and regulatory standards in the countries in which we operate. Comprehensive management procedures are in place to mitigate risks and to protect our consumers and markets. • Putting consumers and customers at the heart of our business We actively engage our consumers and customers, translating their needs and requirements into our products and services, thus creating consumer value wherever we position our products. This is at the very heart of our innovation process. • Quality is a shared responsibility Quality and consumer safety is the responsibility of every Unilever employee and Unilever demonstrates visible and consistent leadership to meet this policy. The
drive for quality, in all that we do, is a passion reflected in our brand development, manufacturing and customer service processes and is also expected of our business partners. We partner with stakeholders to provide leadership, promote transparency and share best practice. And we’ve forged effective working relationships with suppliers and contract manufacturers. • Building and maintaining excellent systems to ensure the quality and safety of our products We’re proactively and continuously developing our systems and processes to ensure quality and safety throughout the whole value chain, and we’re setting a benchmark for the business. We provide appropriate training and resources, and will ensure that we deliver our quality objectives and targets. We regularly measure and improve our performance using both internal and external measures. We actively promote our Quality Policy and have a quality assurance organisation in place to ensure consistency and visibility of quality standards, processes and performance indicators across all Unilever businesses at all levels, and to anticipate and develop future quality capability requirements.
CONTRIBUTION TO SOCIETY Yashodadham: After the devastating earthquake in 2001, HUL reconstructed a village in the Bhachau Taluka of Gujarat's Kachchh district (in December 2002). The village, which has been named Yashodadham, was dedicated to the 1100 residents of Nani Chirai village, which was completely wrecked by the earthquake. Yashodadham, constructed with the active involvement of the villagers at every stage, is spread over 25 acres, and comprises 289 homes. HUL has also provided a school building, a playground, a multi-purpose community centre, a crèche, health centre, and community room and village administration office. All the structures are earthquake and cyclone-resistant. HUL has constructed both an underground reservoir and an overhead tank for water.
Tondiarpet: HUL contributed more than Rs. 10 crore towards relief and rehabilitation of Tsunami affected families by way of relief material, land and towards construction of facilities. The Company had distributed nutritional and personal hygiene products worth Rs 5 crore for immediate relief to the needy when the Tsunami had hit the region. Later, pursuant to a request from the Government of Tamil Nadu on a more pressing need to provide housing to the affected families, HUL donated 5.27 Acres of land (Market Value on a conservative basis Rs. 4.5 crore) at Tondiarpet, Chennai, to the Government of Tamil Nadu. Later the Community Hall was constructed for the benefit of Tsunami affected families at HUL Nagar, Tondiarpet in Chennai. The complex has 960 permanent houses spread over 5.27 acres of land donated by Hindustan Unilever Limited (HUL). HUL employees contributed Rs. 50 lakh towards the construction of the facilities in the complex. On the day of the disaster, employees of HUL factories and offices in Pondicherry, Tamil Nadu and Kerala had provided necessary relief to the Tsunami-hit people. The relief operations included distribution of bread and biscuits to over 500 families in Pondicherry, 12,000 cooked meals for families in Chennai, Nagapattinam, Cuddalore and Andamans. Over 12,000 dry relief packs, comprising of Company's dry rations and personal hygiene products were distributed.
Bihar Floods: After the floods in Bihar in 2008, HUL contributed 10, 000 kits worth Rs. 60 lakh as first instalment of relief material for the immediate relief of the flood affected families of Araria District in Bihar. The kit contained essential
items such as utensils, clothes, blankets and other useful material. Total of 12 truck load material was distributed to the affected families under the guidance of Araria District Magistrate. Also, over Rs. 40 Lakh of contribution was received from employees and matching contribution from the company was collected which is now being invested in rebuilding homes in a village of Bihar.
Survey We have conducted the survey about the popularity of Hindustan Unilever Ltd products. We asked a few people from various backgrounds through various locations. We asked the questions about popularity of HUL brands. We asked the usage of Products of FMCG(Fast moving Consumer Groups). HUL brands were very Popular. Our Findings: Soap In soap Category Hul’s Dove was most preferred followed by Lux, Pears and Cinthol. Dove is the brand of HUL so is Lux and Pears. So we can say that HUL enjoys Majority Of market Share. Detergents In Detergents category Surf Excel was preferred by majority of the people followe by Rin and Local detergents. Surf Excel was The market leader in this category. Shampoo In shampoo category Clinic and Head and shoulders faced stiff competition. Majority of the competitors had the market share. But HULs share was substantial. Toothpaste In Toothpaste category HUL was left tottering. Colgate enjoyed the market share while Closeup and Pepsodents market share was minimal. Perfume In Perfumes category Axe was clear favourite among the youth. Savy advertising has made the brand most popular and it enjoys majority of the market share.
Fairness cream In the category of fairness creams market leader Fair and lovely faced a stiff competition from fairever and other brands. Still it hass held on to the majority of the market share. Cosmetic Brand In case of cosmetic brand Garnier of Loreal was the market leader. Even though Lakme was not far behind. Tea In case of tea category Market share was found to be relatively uneven. Tata tea has slight edge over other brands like Brookebond and Taj mahal were also popular. Coffee In case of Coffee Nescafe was the most popular. In the sample we surveyed It was preferred by all of them. Brooke bond of HUL was not even heard of in this category.
CONCLUSION From The above Survey and through the findings of this project we can conclude that Hindustan Unilever was the most preferred Brand in India. It has wide range of products varying from Home care to food care and Other FMCG categories. It has also launched water purifier. It was listed in ET-500 ranking of Indias biggest Companies and its ranking was number 32. Hindustan Unilever was the market leader in majority of the categories. Though it was popular but its advertising expenditure was also huge. It has increased its expenditure upto 26% in FY09. The net sales was Rs 4,475 crore in this period. According to Senior executive Harish Manwani the company was strengthening its competiveness through advertising and they see improved turnover in the near future. Thus we can state that HUL is ready to improve its product awareness in order to capture the majority of the market. Competitors beware the” Big Bull is coming to crush you”
