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 INTRODUCTION

Hindustan Unilever Ltd

Type Public company BSE: 500696

Industry Fast Moving Consumer Goods FMCG)

Founded 1933

Headquarters Mumbai, India

Key people Harish Manwani (Chairman), Nitin Paranjpe (CEO and Managing

Director)

Products Home & Personal Care, Food & Beverages

Revenue 17,873.44 crore (US$3.88 billion) (2009-2010) [1]

Net income 2,202.03 crore (US$477.84 million)

Employees Over 65,000 direct & indirect employees

Parent Unilever Plc (52%)

Website www.hul.co.in

ABOUT THE COMPANY

Hindustan Unilever Limited (HUL) (BSE: 500696) is India's largest fast moving consumer
goods company. The Anglo-Dutch companyUnilever owns a 52% majority stake.

HUL 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 to indirect employment of
over 52,000 people. The company was renamed in June 2007 as “Hindustan Unilever
Limited”.

Hindustan Unilever's distribution covers over 1 million retail outlets across India directly
and its products are available in over 6.3 million outlets in the country, nearly 80% of all
retail outlets in India. It estimates that two out of three Indians use its many home and
personal care products, food and beverages.

BRANDS
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. Sixteen of HUL’s brands featured in the ACNielsen Brand
Equity list of 100 Most Trusted Brands Annual Survey (2008).[3] According to Brand Equity,
HUL has the largest number of brands in the Most Trusted Brands List. It has consistently had
the largest number of brands in the Top 50, and in the Top 10 (with 4 brands).

The company has a distribution channel of 6.3 million outlets and owns 35 major Indian brands.
[4]
 Its brands include Kwality Wall's ice cream, Knorr soups & meal
makers, Lifebuoy, Lux, Pears, Breeze, Liril, Rexona, Hamam and Moti soaps, Pureit water
purifier, Lipton tea, Brooke Bond (3 Roses, Taj Mahal, Taaza, Red Label)
tea, Bru coffee, Pepsodent and Close Up toothpaste and brushes,
and Surf, Rin and Wheel laundry detergents, Kissan squashes and jams, Annapurna salt and
atta, Pond's talcs and creams, Vaseline lotions, Fair and Lovely creams, Lakmé beauty products,
Clear, Clinic Plus, Clinic All Clear, Sunsilk and Dove shampoos, Vim dishwash, Ala
bleach, Domex disinfectant, Modern Bread, Axe deosprays and Comfort fabric softeners
Leadership
HUL has produced many business leaders for corporate India; one of these, Manvinder Singh
Banga, has become a member of Unilever's Executive (UEx). HUL's leadership-building
potential was recognized when it was ranked 4th in the Hewitt Global Leadership Survey 2007
with only GE, P&G and Nokia ranking ahead of HUL in the ability to produce leaders with such
regularity.
HUL is one of the country's largest exporters; it has been recognised as a Golden Super Star
Trading House by the Government of India.
In 2007, Hindustan Unilever was rated as the most respected company in India for the past 25
years by Businessworld, one of India’s leading business magazines.[8] The rating was based on a
compilation of the magazine's annual survey of India’s most reputed companies over the past 25
years.
HUL was one of the eight Indian companies to be featured on the Forbes list of World’s Most
Reputed companies in 2007.[9]

Research facilities
The Hindustan Unilever Research Centre (HURC) was set up in 1967 in Mumbai, and Unilever
Research India in Bangalore in 1997. Staff at these centres developed many innovations in
products and manufacturing processes. In 2006, the company's research facilities were brought
together at a single site in Bangalore.[10]

Community services
HUL also renders services to the community, focusing on health & hygiene education,
empowerment of women, and water management. It is also involved in education and
rehabilitation of underprivileged children, care for the destitute and HIV-positive, and rural
development. HUL has also responded to national calamities, for instance with relief and
rehabilitation after the 2004 tsunamicaused devastation in South India.
In 2001, the company embarked on a programme called Shakti, through which it creates micro-
enterprises for rural women. Shakti also includes health and hygiene education through the
Shakti Vani Programme, which now covers 15 states in India with over 45,000 women
entrepreneurs in 135,000 villages. By the end of 2010, Shakti aims to have 100,000 Shakti
entrepreneurs covering 500,000 villages, touching the lives of over 600 million people. 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. So far it has reached 120 million people in over 50,000 villages.[2]

Direct Selling Division

HUL also runs Hindustan Unilever Network (HULN), a direct selling business arm. Under
HULN, health products are marketed by AYUSH[disambiguation needed] in collaboration with Arya
Vaidya Pharmacy, Coimbatore; beauty products by Aviance; home products by Lever Home, and
male grooming by DIY.[disambiguation needed] There are also premium products for beauty salons and
others.

mercury pollution
In 2001 a thermometer factory in Kodaikanal run by Hindustan Unilever was accused of
dumping glass contaminated with mercury in municipal dumps, or selling it on to scrap
merchants unable to deal with it appropriately.

Skin lightening creams

Hindustan Unilever's "Fair and Lovely" is the leading skin-lightening cream for women in India.
[12]
 The company was forced to withdraw television advertisements for the product in 2007.
Advertisements depicted depressed, dark-complexioned women, who had been ignored by
employers and men, suddenly finding new boyfriends and glamorous careers after the cream had
lightened their skin.[13] In 2008 Hindustan Unilever made former Miss World Priyanka Chopra a
brand ambassador for Pond's,[14] and she then appeared in a mini-series of television commercials
for another skin lightening product, White Beauty, alongside Saif Ali Khan and Neha Dhupia;
these advertisements were widely criticised for perpetuating racism.

PRODUCT LINE
A) HOME AND PERSONAL CARE:
1) Personal wash
Lux Breeze
Lifebuoy Dove
Liril Pears
Hamam Rexona

2) Laundry 3) Skin Care

Surf Excel Fair and lovely
Rin Pond’s
Wheel Aviance

4) Hair care 5) Oral care

Sunsilk naturals Pepsodent
Clinic Close up

6) Deodorants 7) Colour Cosmetics

Axe Lakme
Rexona

8) Ayurvedic Personal and health care: Ayush

B) FOODS
1) Tea 2) Coffee 3) Foods 4) Ice cream
Brooke Bond Brooke Bond Bru Kissan Kwality walls
Lipton Knor
Annapurna
C) WATER PURIFIER
Pureit

ANNUAL REPORTS
Forma
t Title Date File size
2009-10
Annual Report 2009- 21-07- 3731.4Kb
10 2010
Annual Report 2009- 21-07- 1823.4Kb
10 - Subsidiary 2010
Companies
2008-09
Annual Report 2008- 21-07- 4861.6Kb
09 2009
2007
Annual Report 2007 21-07- 5221.7Kb
2008
 SWOT ANALYSIS
STRENGTH
 Variety of products
 Distribution Network
 Brand image
 Innovation and R&D strength
THREATS
 From High Class Competitor
 Proctor & Gamble
 Pantene
 Dabur
 Babool
 Dettol
 Palmolive
 Colgate, Nirma
OPPORTUNITIES
 Huge Market
 Increasing per capital income
 Potential for making more impact of brand image.
 Coming in technology e.g. in water purifiers
WEAKNESS
  Not able to compete with local competitor in the rural market
 Not focus on upper class population

COMPETITORS ANALYSIS

According to the market survey done by BUSINESS TODAY the top 10 companies of FMCG
sector are given below.

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)
3. Nestlé India
4. GCMMF (AMUL)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene and Health Care
10. Marico Industries

Competitive Strategy consists of move of companies in order to attract customers. With stand
competitive pressures and strengthen an organization's market position. The main objective of
Competitive Strategy is to generate a competitive advantage, increase the loyalty of customers
and to beat competitors.
 
Five main competitive strategies are:
 Overall low cost leadership strategy
 Best cost provider's strategy
 Broad differentiation strategy
 Focused low cost strategy
 Focused differentiation strategy
Here competitive strategy varies from sector to sector and company to company. Thus, it is not
easy to predict a single or to find a single strategy for the whole sector. When we come on to
FMCG Sector main strategies lay behind market strategies, cost, and quality strategies. Here in
this report you are going to get information about such type of strategies of FMCG giants.

THE COMPARATIVE DATA OF % MARKET SHARE OF HUL AND ITS

COMPETITOR IN QUARTER ENDED JUN’08

80
70
60
50
40
30
20
10 HUL(MARKET SHARE %)
0 COMPETITOR (MARKET SHARE
%)

(Above graph showing %age Market share of HUL and its competitor in different categories of
FMCG products)

As mentioned in the above graph, HUL is enjoying the leader position in the market and is
having highest market shares which are followed by the market challengers like Dabur India Ltd,
Nestle India Ltd, and ITC LTD, ETC…..In different categories of FMCG products like shampoo,
skincare , deo, jams, coffee, etc.

In some category these market challengers are giving high level competition in different product
lines such as ketchup and toothpaste (As shown in the graph below).
 60

50 47.9

40
30
30 27.6
24.5
20

10

0
TOOTH PASTE KETCHUP

HUL(Market share%) COMPETITOR(Market share%)

(Above graph showing the two category of products in which HUL percentage market share is
less than its competitor in Quarter ended JUN’08)
So we can see that in overall FMCG business HUL is distantly ahead of rest of the companies as
far as market share of different products are concerned.

MARKET SHARE OF FMCG COMPANIES IN INDIA

OTHERS
19% HUL
35%
DABUR
4%
BRITANNIA
6%

NESTLE
8% ITC
29%
In the above pie chart we see the position of various FMCG companies doing business in India.
We can see that HUL is enjoying the position of market leader and is followed by ITC as close
second in the market share of FMCG products.

What are HUL and ITC Ltd.?

HUL (Hindustan Unilever Ltd.)
This Company is earlier known as Hindustan Lever Ltd. This is India's largest FMCG sector
company with all type of household products available with it. It has Home & Personal Care
products, and also food and Water Purifier available with it. According to Brand Equity, HUL
has largest no of brands in most trusted brands list.
Products of HUL are: Annapurna; Ayush; Axe; Breeze; Bru; Brooke bond; Clinic; Dove; Fair
& Lovely; Hamam; Liril; Lux; Pears; Ponds; Pepsodent; Pureit; Rexona; Rin; Sunlight;
Surfexcel; Vaseline; Wheel.

ITC Limited
This Company was earlier known as Imperial Tobacco Company of India Ltd. It is currently
headed by Yogesh Chander Deveshwar. Company mainly operates in the industry like Tobacco,
Foods, Hotels, Stationary and Greeting Cards with the major products constitutes Cigarettes,
packed foods, hotels, and apparels. For the entire year ending Mar-2009 the turnover of company
is at Rs. 15388 Crore which is 10.3% higher than previous year's Rs. 13947.53 Crore, driven
mainly by robust 20% growth in non cigarette FMCG business with net profit stood at Rs. 3324
Crore.

Analysis of Both Companies

HUL & ITC are major companies in FMCG market in India. When we compare both companies
on the basis of their strategies i.e. , their competitive strategies in the present market. When we
look at the present segment breakup for both of the companies then we came to know that their
different products vary too much in the market.
Now let us take a comparative analysis of both the companies under some heads:
HUL & ITC
Hindustan Unilever (HUL) is the largest pure-play FMCG company in the country and has one
of the widest portfolio of products sold via a strong distribution channel. It owns and markets
some of the most popular brands in the country across various categories, including soaps,
detergents, shampoos, tea and face creams.
ITC is not a pure-play FMCG company, since cigarettes is its primary business. It is diversifying
into non-tobacco. FMCG segments like foods, personal care, paper products, hotels and agri-
business to reduce its exposure to cigarettes.

Performance
After stagnating between 1999 and '04, the company is back on the growth track. In the past
three years, till 2008 HUL's net sales have witnessed a CAGR of 11%, while net profit has
posted a CAGR of 17%.
Despite diversification, ITC's reliance on cigarettes is still huge. The tobacco business
contributes 40% to its revenues, and accounts for over 80% of its profit. This cash-generating
business has enabled it to take ambitious, but expensive bets in new segments and deliver modest
profit growth. 

Overall Strategy
HUL always believes in customer friendly products with major emphasis on low cost overall
without compromising on the quality of the product. They are leveraging the capabilities and
scale of the parent company and focusing on the value of execution. The entire product product
portfolio is also being tweaked to include premium offerings such as Pond's Age Miracle and
dove shampoo in skin and hair care.
ITC is focusing on delivering value at competitive prices. Its tremendous reach through extensive
distribution chain has been a competitive advantage. Additionally, the company's e-choupal
model for direct procurement is well known under which ITC partners with over 100,000
farmers for spices and wheat procurement and an even larger number for oilseeds. This kind of
rural pedigree is hard to beat.   
Growth Drivers
The Company has been launching new products and brand extensions, with investments being
made towards brand-building and increasing its market share. HUL is also streamlining its
various business operations, in line with the ‘One Unilever' philosophy adopted by the Unilever
group worldwide. Introduction of premium products and addition of new consumers via market
expansion will be HUL's growth drivers.
ITC's backward integration to ensure that its products pass efficiently from the farms to
consumers has helped it to cut down supply and procurement costs. ITC's non-cigarette FMCG
business leverages the large distribution network the company has developed by selling
cigarettes over the years. A rich product mix, along with ramp-up of investments in its new
sectors, will be instrumental in charting ITC's growth path.

Risk for both the companies

For HUL
Being an MNC operating in India, HUL is more conservative in its strategies than its Indian
counterparts. Moreover, given increasing competition, it faces the risk of being overtaken by
domestic players in various categories. Prolonged inflation may lead to margin contraction, in
case HUL is not able to pass on this burden to consumers. The company's large size also poses a
problem, since it does not give HUL the agility to address the competition it faces from national
and regional players.
For ITC
Increased regulatory clamps on tobacco, along with rising tax burden, pose a business risk for
ITC. So, it has started an ambitious diversification plan, which has its own set of risks. With its
foray into the conventional FMCG space, ITC has entered the high-clutter branded products
market. This will burden its resources in terms of ad spend and brand-building. Creating brand
recall and building market share in new products are ITC's key challenges. Export ban and rising
crop prices pose a threat for its agri-business, taxing its margins. 
 Conclusion
HUL's up-and-running business model is a treat for investors seeking exposure in the FMCG
segment. The company has delivered in the past and has the potential to do better in future. In the
small and medium term. ITC's growth story is still evolving. ITC is eyeing the pie which HUL
and other FMCG players currently enjoy. Though risky, the company's business model will pay
off in the long run. ITC has proved its expertise in the cigarettes, hotels, paper and agri-
businesses. Investors who want to bank on its execution ability in FMCG can consider the stock
with a long-term horizon.