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A Project Report On SURF EXCEL
TABLE OF CONTENTS
• • • • • • • • • ACKNOWLEDGEMENTS INTRODUCTION EXECUTIVE SUMMARY INDUSTRY ANALYSIS COMPANY OVERVIEW FINANCIAL STATEMENT ANALYSIS MARKETING MIX OF ORISSA COMPETITORS ANALYSIS PROJECT1: o OBJECTIVES o SCOPE AND LIMITATIONS OF THE STUDY o RESEARCH METHODOLOGY o DATA ANALYSIS § • CONSUMER ANALYSIS
o CONCLUSIONS APPENDIX o CONSUMER’S QUESTIONNAIRE o DETAILED FSA
The project assigned to us was to study the business and marketing practice, competitors in business and customers of Surf Excel, for Orissa market. For this a questionnaire was prepared for the consumers. A sample of 53 consumers was surveyed. The respondents were interviewed in market places across Bhubaneswar. After the analysis we came to the conclusion that the Surf Excel enjoys a space in the top 2 positions in brand recall of the consumer. This is a positive sign for HLL. The research also shows that the market share of Surf Excel in Orissa’s detergent market is approximately 66%. Also, from the survey it is evident that brand name, price and cleansing action are three of the most important attributes a consumer looks for in any detergent brand. Surf Excel enjoys a good reputation with the consumers with respect to all these attributes. Another thing that we noted in this survey was that Television is the most used information source for the consumer. The exact communication recall however, is very poor among the consumer. This could be attributed to the ever increasing advertisement clutter, across all media. Thus, HLL should consider looking for other media like outdoors. It was also noted that over 50% of the consumers who used Surf Excel, would purchase packs whose size was 1/2 – 1 kg and did not prefer purchasing the 200gm pack. We tried to find out the reason as to why this practice occurred, but to no avail. HLL should consider promoting this pack size in some way, or phase it out totally. Thus, we can conclude that Surf Excel enjoys excellent customer reviews. It gets special recognition for its superior cleansing action, the convenient packs it comes in, the ease it
is available with. 3. . and the fact that its price is at par with similar products available in the market today. OBJECTIVES OF THE STUDY 1. The study was also aimed to understand the business and marketing practice of Surf Excel and the marketing mix used by HLL for Surf Excel. The primary objective of the study was to understand the customers of Surf Excel ( type/ quality/ their decision making style/ source of information that they use for collecting information regarding Surf Excel) 2. Another important objective of the study was to understand the competitors of Surf Excel. Hindustan Lever Limited. 4. Efforts were also made to evaluate the financial strength and market capabilities of the parent firm.
personal care. Brand equity. Perhaps. the area which accounts for 70% of the total Indian households So far. HLL. FMCG refers to consumer non-durable goods required for daily or frequent use. wide distribution networks and scale economies of these companies deter new players from entering. The FMCG sector consists mainly of sub segments viz. the journey seems to have just now begun for the players as the majority of the rural populace are yet to get access to the items of daily usage like toothpastes. This has led to the industry players scrambling for greater rural penetration as a future growth vehicle. But. Health and Hygiene products. the sector has been in existence for quite a long time. hair care products. and maintain a robust distribution network Post-reforms. and tea and beverages. therefore. the rural markets have been witnessing intense competition in almost all the consumer product classes. soaps and shampoos. it has been a chequered graph for the MNCs operating in the Indian FMCG industry. The sector touches every aspect of human life. beauty cosmetics. It has taken tremendous consumer insight and market savviness for the FMCG players to reach where they are today.) have a very strong presence through their strong brands. Though.INDIAN FMCG INDUSTRY Background The FMCG sector has been the cornerstone of the Indian economy. The sector touches every aspect of human life. etc. Generally. from looks to hygiene to palate. it began to take shape only during the last fifty-odd years. is an extremely important factor in FMCG industry. from looks to hygiene to palate. This can be further sub-divided into oral care. oral care and household products. the industry's growth has been hinging around a burgeoning rural population which has witnessed significant rise in disposable incomes. Diversified portfolios. defining an industry whose scope is so vast is not easy. P&G. develop. Another reason which has led to rise in this trend is the saturation in urban markets in most of the consumer non-durable goods categories. Major Indian consumer product companies (like Britannia. Perhaps. soaps and detergents. . food and dairy-based products. Domestic companies are only beginning to make their presence felt in the industry. Consequently. defining an industry whose scope is so vast is not easy. One of the other most critical factors is the ability to build. cigarettes.
Price cuts became inevitable to keep the market share from shrinking. which was witnessing a major change in its aspiration and lifestyles and even had an income that translated into increasing volumes. . which are desperate to find ways out to gain deeper penetration. Companies such as HLL. Certainly. With reason. whose distribution is largely urban. towards the rural market. Britannia pushed its Tiger biscuits to every nook and corner of the country. which hit consumer spending hard. an interesting trend in the Indian FMCG sector has been brand acquisitions. Not surprising that the Indian FMCG sector is busy putting in place a parallel rural marketing strategy. These FMCG companies embarked upon major restructuring and cost rationalization exercises as business continued to become fiercely competitive. there has been a phenomenal improvement in rural incomes and rural spending power. Those who could not do it on their own went piggyback on somebody else. Colgate and Britannia who already had a strong rural focus. Of late. stepped up the gas further. Rural India accounts for as much as 70 per cent of the nation’s population. Not just the rural population is numerically large. nonetheless. With small product portfolios like theirs. Economic recession hit the urban pockets badly and forced companies to train their guns on rural India. the cuts touched ridiculous levels. This represents a growing awareness among the FMCG players are talking today more and more of product "fits" while discussing brand acquisitions. Marico Industries.Value for money Ever since the global recession of 1991-94. It is not just acquiring anything and everything as it was in the past Rural marketing has become the latest marketing mantra of most FMCG majors. India was no different. value-formoney has become the buzzword for FMCG companies globally. it is growing richer by the day. What Nirma did all these years suddenly became the buzzword for many FMCG players. are interesting cases. There was a paradigm shift towards value-formoney products and. True. rural India is vast with unlimited opportunities. marketed effectively and sold at the right price Of late. chose to leverage Marico's retail reach. Hindustan Lever. All waiting to be tapped by FMCGs. Among the FMCG majors. they have been able to achieve what others could not and proved that what you need is a good product. India’s agrarian economy is fundamentally strong. Sometimes. That means rural India can bring in the much needed volumes and help FMCG companies to log in volume-driven growth. while Colgate went about wooing the rural masses by offering low-priced products in convenient packaging. Several packaging innovations were also resorted to. to some extent. HLL unleashed its "Operation Bharat". P&G and Smith Kline Beecham. P&G. ColgatePalmolive and Britannia Industries are only a few of the FMCG majors who have been gung-ho about rural marketing. rural marketing holds the key to success of FMCG companies.
FMCG sector performance in last decade The fmcg sector in India showed a constant decline in the last decade. What started as 2025% growth rate in year 1994-96, had reached a negative growth rate of -2.8% in Q1’04. The FMCG sector is now mockingly called SMCG or slow moving consumer goods.
Source India Today - R K Swamy BBDO Guide to Urban Markets *Soap, Shampoo, Nail Polish, Washing Powder, Footwear, Tea, Coffee, Cigarettes, Electric Bulbs.
Rank 1 2 3 4 5 6 7 8 9 10
Towns Chandigarh Greater Mumbai Chennai Ahmedabad Vadodara Pune Coimbatore Ludhiana Faridabad Hyderabad
States Chandigarh Maharashtra Tamil Nadu Gujarat Gujarat Maharashtra Tamil Nadu Punjab Haryana Andhra Pradesh
Average Monthly Spending on FMCG Products* in Rs. 3,418 2,955 2,886 2,869 2,816 2,804 2,684 2,674 2,596 2,533
The Fabric Care Market In India
Detergents The Indian fabric wash market consists of synthetic detergents (comprising bars, powder and liquids) and oil-based laundry soaps. The detergent powder market is further segmented based on price and form. It is characterised by brands from a plethora of regional and local players competing with the national marketers primarily in the lowpriced and mid-priced segments The synthetic detergent market can be classified into premium (Surf, Ariel), mid-price (Rin, Wheel) and popular segments (Nirma), which account for 15%, 40% and 45% of the total market, respectively. The product category is fairly mature and is dominated by two players, HLL and Nirma. Nirma created a revolution in the market by pioneering the concept of low-cost detergents. Currently, the market is highly segmented with the differential between the premium and popular segments at almost 7X. Growth Although the per capita consumption of detergents in India (2.7 kg pa) is comparable to some countries like Indonesia, China and Thailand (around 2 kg pa), it is lower than in others such as Malaysia, Philippines (3.7 kg) and the USA (10 kg). High consumer awareness and penetration levels will enable the market to grow at an average 8-10% per annum with slightly higher growth in the rural areas. Higher penetration stems from popularity of low-cost detergents. Hence, besides increase in per capita consumption, there is tremendous scope for movement up the value chain. Leading Fabricare Brands Available In India
Surf Excel Surf comes from the stables of Hindustan Lever, the largest player in this market with an offering at each price point. Surf was the first detergent powder brand to be launched in the country. It created the detergent powder category and introduced the concept of bucket wash to housewives hitherto used to washing clothes with laundry soap bars. Surf has, since, become generic to detergent market. Consumers refer to all their powders as Surf, even competitive powders are called Surf e.g. Nirma Surf
This low lather variant is the first eco-friendly detergent in the country. it brought to the consumer Surf Excel Quickwash. In order to help consumers dose correctly for the best possible clean. Research showed that consumers seek a solution to heavy duty laundry. Whether it was through 'Surf with Easy Wash'.a low lather variant. recognising changing consumer purchase patterns. as it uses almost half the water other detergents require. washing has been simplified with the ready to dose packs of Surf Excel Automatic. Wheel has been growing strongly. in 1994 or 'Surf with Wash Boosters' (1995) that provided 'best clean' even in hard water. it once again redefined value for the consumers by introducing the concept of monthly packs. which contain a high percentage of soda. Understanding the need for easy-to-store packaging. Sensitive to the increasing concerns on environmental pollution and water scarcity problems across the country. like bed sheets and curtains. For convenience seekers. Consistent innovation addressing ever-evolving consumer needs has earned the brand a place in the hearts of consumers. Developing on this insight. Surf is the market leader in the concentrate and premium powder price segments Surf has always been the first to recognize and respond to trends. Surf has innovated beyond the basic product into other aspects of laundry. Surf was rated in the top Ten Most Trusted brands in The Economic Times survey in 2003 Wheel Wheel is India's number one detergent brand.Selling over 60. with the new positioning of 'best clean with less effort'. In 2003. measuring scoops were built into the packs. Surf Excel Blue and Surf Excel Automatic – which address different laundry needs but each offers stain removal as the key benefit. Ever since its relaunch in 2001. Wheel does not burn hands or harm clothes like some other detergents. making a laborious chore like washing light and easy. Launched in 1987.000 tonnes per year. tubs and jars were introduced. wheel sought to . The brand Surf Excel now has three variants – Surf Excel Quickwash. it cleans effectively with lesser effort. Moreover.
Nirma and Nima.000 million. are distributed through more thantwo million retail outlets across the country.The Economic Times. Nirma products are sold through two million retailers and reach 400 million. The Nirma Yellow Washing Powder is available in pack sizes of 30 gms. Nirma . 1997].The Nirma success story is a result of its founder. 500 gms and 1 kg. and successfully challenged large multinational leaders in the process. generating gross sales in excess of Rs. Karsanbhai Patel's relentless focus on quality. March 11. Nirma brand has been ranked as highest in terms of penetration in washing powder category [BT Rural Market Watch. June 22. Nirma is one of the large st selling single detergent brands in the world. cost and value.eliminate the trouble of tough dirt or heavy-duty laundry. the company's two brands.a home-grown product that revolutionized the detergent market in India. Business Today. . 26. Dr. Mass market consumers have welcomed the solution. making it the number one. The distribution model. Today. sustained line extensions and umbrella branding strategies have enhanced the brand's cost leadership. As per the ORG-MARG Rural Consumer Panel [December 1998] survey. 200 gms. 1999]. In the fabric care category. This brand had been ranked as the “Most widely distributed detergent powder brand in India” as per All India Census of Retail Outlets carried out in 435 urban towns by the AIMS (Asian Information Marketing & Social) Research agency [Brand Equity . and is ranked as the largest selling single detergent brand in the world. Nirma has three products for the lower-end market.
23/and Rs. For example. The new prices of Ariel and Tide are as follows: . which cleans everyday soil and dirt from garments. the brand has gained popularity among Indian housewives. while a ½ kg pack of Ariel cleans a family’s one-month laundry in just Rs. longer-lasting perfume. Both Tide and Ariel are billion dollar brands in sales for P&G globally. India -.March 02. while maintaining the superior quality. Launched in India in mid-2000. and the P&G proprietary cleaning technology. 23/-. creative advertising starring Shekhar Suman.only Mumbai. Introduced in India in 1991.Procter & Gamble today announced that it has reduced the prices of Ariel and Tide bags (large packs) by 20-50%. thanks to its superior whitening. Now Large Packs of Tide and Ariel World’s Best Detergents at Rs. 50/-. Tide is the World’s Oldest and Most Trusted Billion Dollar Detergent and is the market leader in 23 Countries around the world. This significant price reduction will now allow many more Indian consumers to experience the world-class experience of outstanding whiteness from Tide and superior stain-removal from Ariel in every wash. and its Value-for-Money proposition. Ariel has continuously led other detergents in product innovation. The superior quality ½ kg pack of Tide now cleans a family’s one-month laundry in just Rs. Over the years. it pioneered the use of enzyme technology for superior and safe stain-removing power.World-over Ariel epitomizes ‘stain removal’ and removes even the toughest stains in the first wash. 2004 -. the brand has enjoyed endorsement from celebrities such as the former actress and now MP Shabana Azmi and lakhs of other homemakers in India. Tide provides outstanding whiteness on white clothes and provides excellent everyday cleaning for colored clothes too. 50/.
000 consumers across the length and breadth of India and observed over 25. P&G's move to slash detergent prices is ostensibly to get more consumers to experience its brands but the industry sees it primarily as a move to wrest the advantage from HLL in a sluggish market.A = Not Available in that size. . 46 N.Pack Size 200gm 500gm 1kg 1. The drop in prices by the P&G has forced HLL to also react in a similar way thus shrinking the overall profit margins for the group. 88 The prices of sachets (20gm) of Ariel and Tide remain unchanged. 30 Rs. Six months ago.000 washing sessions in consumers’ homes. positive response from consumers across India that P&G was encouraged to offer the irresistible value to Ariel and Tide bag users as well. 23 Rs. 85 N.A Rs. 10 Rs. P&G talked to over 3. P&G reduced the prices of Ariel and Tide sachets by 50% in order to encourage a larger number of consumers to experience their superior quality. 145 Old Price Tide Rs. 70 Rs. 50 Rs. 160 N. improving margins in the business remains doubtful. 20 Rs.A* New Price Tide Rs.5kg 2kg Old Price Ariel Rs. 22 Rs.A New Price Ariel Rs. 180 N. The better value offer on sachets received such an overwhelming. 135 Rs. Consumers believed in the superior quality of Ariel and Tide but indicated ‘pricing’ as a constraint in using Ariel and Tide on a regular basis. * N. While the immediate impact of any price slash is bound to result in more volumes and thereby shares for the companies concerned.A Rs. thereby make the world’s best detergents accessible to a larger number of Indian consumers. 99 Rs. 43 Rs.
like The Economic Times. soap 1905 Lux flakes introduced 1913 Vim scouring powder introduced. has rated Hindustan Lever as the best consumer household products company. Detergents and Home Care products. Asiamoney has rated HLL as one of India’s best managed companies. Jams and Squashes. Surf Excel. a brand developed in India. .In Oral Care. HLL’s brands have become household names. It has the country’s largest Personal Products business. (all soaps). Leading national publications. HLL's Hair Care franchises are Clinic.Company Overview Hindustan Lever Limited (HLL) is India's largest fast moving consumer goods company. Skin Care Products. Castor Oil and its Derivatives. and 10 other brands which are strong in certain regions. HLL's brands.Pears. HLL markets Fair & Lovely Skin Cream and Lotion. HLL is also one of the country's biggest exporters and has been recognized as a Golden Super Star Trading House by the Government of India. Home Care Products. touch the lives of two out of three Indians. HLL is India's largest marketer of Soaps. 1895 Lifebuoy soap launched 1902 Pears soap introduced in India 1903 Brooke Bond Red Label tea launched. leading in Shampoos.3000 crores. In Skin Care. Each of these mega brands has a potential scale of Rs. It has been extended as an Ayurvedic cream. the portfolio comprises Close-up and Pepsodent toothpastes and toothbrushes. & Wheel (all detergents). and Ice cream. Tomato Products. HLL is India's largest exporter of branded fast moving consumer goods. Colour Cosmetics and Deodorants. spread across 20 distinct consumer categories. an under-eye cream. Business World. HLL is also driving exports in chosen areas where India has a competitive advantage – Marine Products.1000 crores in the foreseeable future. In the Personal Products business. Market leading brands 1888 Sunlight soap introduced in India. The top five brands together account for sales of over Rs. HLL is also the market leader in Tea. with leadership in Home & Personal Care Products and Foods & Beverages.000 crores. the largest selling Skin Care Product in India. The leading business magazine. Basmati Rice. it is a net foreign exchange earner. Tea and Coffee. Some of the big brands in Soaps and Detergents are Lifebuoy. . Liril. It is India's largest exporter of Marine products. The company’s strategy is to concentrate its resources on 35 national power brands. and Business Today have also rated HLL as one of India’s most respected companies and the number one in Market Value Added and EVA. branded Wheat Flour. HLL also markets the Vim and Domex range of Home Care Products. Rin.Rexona & Dove. Processed Coffee. The company's Exports portfolio includes HLL's brands of Soaps and Detergents. Surf.10. Personal Products. it is now exported to over 30 countries. Soups. Lux. Far Eastern Economic Review has rated HLL as India’s most respected company. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of Rs. and one of the largest global players in castor. Forbes Global. Sunsilk and Lux shampoos. Hamam.
offering the Lever Home range of Laundry and Home Care products and the Aviance Personal Care range. HLL is one of the world’s largest packet Tea marketers. the key brands are Rexona. and Cornetto Ripple Softies. Vaseline and Lifebuoy. Squashes. In Colour Cosmetics. Red Label. Dandruff Naashak Shampoo. offering standardised services. The other major Skin Carefranchises are Pond’s. a direct selling channel. The Kissan and Knorr Foods range comprises Spreads & Jams. HLL has started franchised Lakme Beauty Salons. The innovative offerings are changing consumer habits into using processed. Fair & Lovely. like Wheat Flour and Iodized Edible Salt. called Sangam. The coffee business comprises Bru Instant Coffee and Deluxe Green Label Roast & Ground Coffee. Taaza.and talc. Headache Naashak Roll-on. Cornetto and Feast. The service is now available in select areas of Mumbai and Navi Mumbai. popular ‘Impulse’ segment products like Max. have met with remarkable success. Tomato Ketchup. The product range comprises Cough Naashak Syrup. a diverse range of about 5000 branded and unbranded products. Axe and Denim are HLL’s franchises for Men’s toiletries. because children are a key consumer segment in confectioneries too. Denim and Pond's. It is for the first time that rigorous testing procedures of the pharmaceutical industry have been applied to Ayurvedic products. hygienic. Vaseline. HLL and Pepsi have formed an alliance to distribute a full range of tea and coffee and soft beverages through vending machines. Axe. Max was extended in 2001 as sugar confectioneries. it also markets Lipton Ice Tea. That is why the brand seal is ‘Truth of Ayurveda. In Deodorants. Proof of Science’. Puree. which can home-deliver on order by phone or through the Net. while the Talc brands are Pond's. The company has set up the Hindustan Lever Network. Sauces. This is among the new businesses HLL has chosen to enter. . Liril. The Kwality-Wall's Ice Cream range comprises exotic Sundaes. Its Tea brands – Taj Mahal. under the Knorr Annapurna brand name. in line with the strategy to add a service dimension to relevant brands. Hair Rakshak Oil and Body Rakshak Soap. . Lakme and Pears. Popular Foods. Soups. healthy and convenient products. Viennetta Desserts. Health Care is among the new businesses HLL has chosen to enter. besides Thane. 1930 Unilever is formed on January 1 1931 Hindustan Vanaspati Manufacturing Company registered on November 27 1932 Vanaspati manufacture starts at Sewri 1939 Garden Reach Factory purchased outright 1943 Personal Products manufacture begins in India at Garden Reach Factory 1947 Pond's Cold Cream launched. The purity of the Ayurvedic ingredients in Lever Ayush is endorsed by the renowned Arya Vaidya Pharmacy (AVP) of Coimbatore. The company has also begun an e-tailing service. HLL already has a base of around 15000 such machines. and Cooking Aids. The range has been expanded with ready-to-eat 10-second chapatis. in line with the strategy to take brands across relevant categories. HLL has recently launched Lever Ayush Ayurvedic Health & Personal Care Products.are among the top brands in the country. Biscuit Sticks. HLL markets the Lakme and Elle-18 ranges.
HLL sees its Power Brands as being able to occupy a unique position in the consumer's mind and therefore being able to stretch into other product formats and categories. and there are more to come. Historically. HLL has launched new products.” HLL's products. HLL's distribution network. All such initiatives have had a promising start. HLL's scale enables it to provide superior customer service including daily servicing. The need for a strong distribution network is imperative. dispatches.000 suppliers and associates. Besides upgrading the existing Modern products.. a unique Network Marketing opportunity . Modern Foods was the first Public Sector Undertaking to be disinvested. The objective is to catalyse HLL’s growth by ensuring that the right product is available at the right place in right quantities. in the most cost-effective manner.000 redistribution stockiest about one million retail outlets. directly covers the entire urban population. RS Net covers about 80% of the company's turnover. information sharing and monitoring. for online interaction on orders. 1969 Rin bar launched 1975 Close-up toothpaste launched. stockists have been connected with the company through an Internet-based network. considering the potential Hindustan Lever has launched Hindustan Lever Network (HLN). . among them biscuits. since HLL’s corporate purpose is “to meet the everyday needs of people everywhere. comprising about 7. called RSNet. manufactured across the country.that which helps reach out its products across the length and breadth of this vast country. An IT-powered system has been implemented to supply stocks to redistribution stockists on a continuous replenishment basis. HLL is using the opportunity of interfacing more directly with consumers in this retail environment through specially designed communication and promotions. entering the bread market. In addition to the ongoing commitment to the traditional grocery trade. 1978 Fair & Lovely skin cream launched. brands originated and stayed within a category format. Anik ghee launched. and about 250 million rural consumers. 1964 Etah dairy set up. HLL is building a special relationship with the small but fast emerging modern trade. Animal feeds plant at Ghaziabad. This is building traffic into the stores while yielding high growth for the business. 1959 Surf launched. HLL's foray into Network Marketing As per the market surveys conducted it is expected that the consumer market in India is worth 13000 crores per year and in few years the network market will capture 500 crores as per market surveys. The Distribution network HLL’s distribution network is recognised as one of its key strengths -. HLL is liberating its brands from their existing category mindset. 1930 Unilever is formed on January 1 1988 Launch of Lipton Taaza tea. improving their range availability whilst reducing inventories. Sunsilk shampoo launched..HLL has acquired Modern Food Industries (India) Limited. For this. the operations involve over 2.
938/Rs64. from 1 to 2 to 4. Given below are the approx.28.. wholesalers and retailers... the marketing co. The growth in the beginning will be slow. This is called network marketing. The benefits will be more for higher purchases and bigger groups. A person is invited to join and become a member (also called Consultant) of the network marketing company.The Network marketing concept In the normal marketing system... these middle men are eliminated.. Group Strength Benefits: 253Nos(1+12+60+180) 1531Nos(1+18+216+1296) 3061Nos(1+36+432+2592) Rs17..but later on it will be rapid. This increases the price by approximately 45 per cent. benefits received. In network marketing. 1993 Tata Oil Mills Company (TOMCO). rewards and special incentives. . depending upon your group strength and on the assumption that each consultant has purchased goods worth Rs 1.558/Rs 1. merges with the company 1994 HLL introduces Wall's. These middle-men add their establishment costs and their own margin of profit or commission on the price. This group is made to steadily grow and it can grow into thousands or tens of thousands.. in the course of time. depending upon the enthusiasm with which the Consultant pursue the sponsorship of new Consultants. These Consultants make purchases of the products of the marketing company for self use and also for sale to other consumers. handsome bonuses.. in turn invite their acquaintance to join under them. gives discounts..818/- 1991 Surf Ultra detergent launched.and so on. 1995 HLL enters branded staples business with salt 1996 HLL introduces branded atta. The consumer therefore gets the product at atleast a 45 per cent markup from the manufacturer's price. the manufacturer supplies the products through the middle men such as brokers. For their loyalty in regularly purchasing the products.000/. Surf Excel launched 2002 HLL enters Ayurvedic health & beauty centre. These group members. This person in turn invites many more people to join under him to form a group. Each consultant in the group gets his shares of benefits depending upon the purchases made by him and also by the number of the consultant under him (called downlines). 1000 to 2000 to 4000.in the month.
the company has integrated both HPC and Foods portfolios for modern trade chains like Margin Free. Into villages where people cannot spend more than Rs 20-25 on FMCGs in a month Project Shakti will expand the distribution cover bottom-up. This gave each division "The advantage is that these divisions get us enormous scale. Maharashtra and West Bengal. HLL has pushed its products down into the country. the drastic slimming down of the brand portfolio which threw up huge problems in execution is now over. The respective state governments and several NGOs are actively involved in the initiative. Started in 2001. It seeks to empower underprivileged rural women by providing income-generating opportunities. which is double their average household income. its large portfolio . Madhya Pradesh. and creating access to relevant information through the iShakti community portal.1.000 women entrepreneurs in its fold.000 per month. Shakti already has about 13. Tamil Nadu. These decisions had major impact on the how distribution of lever products is managed in the market. Punjab. Project Shakti .Andhra Pradesh. Once again. The costs of expanding into these villages will be too high for most companies. Gujarat. Rajasthan. This is known as HLL’s Power Brand strategy. A typical Shakti entrepreneur earns a sustainable income of about Rs. For one. In recent past Hindustan lever took some major decisions to remodel its business." The company decided to whittle its brands down from 110 to 35.Shakti-Hll Rural Project Shakti is HLL's rural initiative. Instead of different sales teams servicing the same retailer. which targets small villages with population of less than 2000 people or less. Chattisgarh. And to ensure that Lever would not lose sales. Shakti has already been extended to about 50. To identify these power brands. This will be a huge competitive advantage for Lever. HLL is already combining its scale advantage to offer retailers a bigger basket of products and better service. over the next three years. Hindustan lever took the decision to simplify the company it merged all the different business units into two large divisions: home and personal care (HPC) and foods and beverages (F&B). the rural project will be top-down.By using self-help groups.700 -Rs. Uttar Pradesh. Orissa. profit delivery and the size of the opportunity. Karnataka. it was decided to migrate these brand users to the designated power brands.000 villages in 12 states . managers were asked to consider their growth potential. which do not have a portfolio spanning teas to detergents. health and hygiene education through the Shakti Vani programme.
S. Harish Manwani Mr. K. V. Ravindranathan Mr. is already growing at 15-20 per cent and will continue that way for a long time. S. it is possible for Lever to service these modern trade outlets on a daily business. Modern trade. A. HINDUSTAN LEVER LIMITED --. Arun Adhikari Non Executive chairman Vice Chairman Managing Director (Home & Personal Care) Managing Director (Foods) Finance & IT Director Director Director Director Director Mr. D. Narayan Mr. Narayan Mr. Sundaram Mr.range helps Lever to use the power of customer relationships to corner greater shelf space and a disproportionately higher share of the branded segment.BOARD OF DIRECTORS Mr. D. K. Sharma Mr. these retailers do not have to maintain high inventory levels. it reckons. Prahlad . As a result. Parekh Mr. M. C. By bulking up the businesses.
Asia's No. P&G Home Products Limited is one of India's fastest growing Fast Moving Consumer Goods Companies that has in its portfolio P&G's global brands such as Ariel and Tide in the Fabric Care segment. 1 shampoo. the world’s largest selling shampoo. HLL’s response to the latest challenges is being eagerly studied by the corporate India. The major competitors of HLL are: Detergents: Toothpaste: Beverages: Tea: Coffee: Ice-creams: Shampoo: P&G. Pantene .world's No. 1 beauty shampoo. In India P&G has launched following brands: • • • Ariel Front-O-Mat Ariel 2 Fragrances Tide Detergent Tide Bar Hair Care In India. In order to gain a foothold in Indian FMCG sector various domestic and MNC companies are using all kind of schemes to woo customer from HLL. 1 Anti-dandruff shampoo and Rejoice – Asia’s No. • • • Pantene Pro V Head & Shoulders Rejoice . Coca-Cola (Sun fill) Tata tea Nestle Amul P&G.The Competitors The Indian FMCG markets have witnessed some of the classic struggles involving HLL. 1 Shampoo. and in the Hair Care segment: Head & Shoulders . Garnier Procter & Gamble P&G Home Products Limited is a 100% subsidiary of The Procter & Gamble Company. Fabric Care Procter & Gamble has two of its world-leading detergents – Tide and Ariel. in India to cater to the main concerns of the Indian households. USA. and Rejoice . the world’s No. So far Levers have been able to stand their ground but times are changing.world's largest selling anti-dandruff shampoo. Head & Shoulders. Henkel Spic Colgate-Palmolive Rasna. Nirma. P&G’s beauty care business comprises of Pantene.
eventually the largest consumer pocket and quickly emerged as dominating market player. P&G will continue to be a midget. The addition of Gillette's businesses could help P&G expand its portfolio and acquire a more extensive distribution network. This makes Nirma the largest detergent and the second largest toilet soap brand in India with market share of 38% and 20% respectively. 13 per kg. THE Procter & Gamble -Gillette deal could result in the former getting a significant boost both to its scale of operations and range of products in the Indian market.100 crore. grooming products and toothbrushes has no overlap with that of P&G in India (shampoos. in turnover terms. This may strengthen P&G's hand in the ongoing war for market share with Unilever arms in the Asian markets. Godrej entered into a strategic alliance with P&G for inter alia toilet soap business. Nirma Nirma is one of the few names . Now.Baby Care • Pampers In India. P&G's distribution network is largely urban and has a reach of 0. 3 per kg. However post marketing alliance with P&G. Nirma entered this market with the launch of ‘Nirma Bath Soap’& ‘Nirma Beauty Soap’ . where the domestic detergent market had only premium segment. i. That Gillette's portfolio of shaving razors. detergents. which were marketed by a joint venture company. just a tenth of Hindustan Lever's sales. Nirma stepped into toilet soaps relatively late in 1990 but this did not deter it to achieve a volume of 100. priced at an astonishing Rs. cold medication) is a positive. the company lost significant part of its market share and subsequently the arrangement was discontinued. which took on mighty multinationals and rewrote the marketing rules to win the heart of princess. gels. under which Godrej used to manufacture soaps. which is. It was 1969. the year 2004 sees Nirma’s annual sales touch 800. feminine hygiene. sensing a strong need to expand the market through Penetrative Pricing. the consumer. when compared to Hindustan Lever. when the available cheapest brand in the market was Rs.In 1998 Nirma expanded its product line in the soap . making it one of the largest volume sales with a single brand name in the world. The two P&G subsidiaries in India (P&G Hygiene and P&G Home Products) today generate a combined turnover of about Rs 1.000 per annum. with very few players and was dominated by MNCs. Nirma created an entirely new market segment in domestic marketplace. It was way back in ‘60s and ‘70s.which is instantly recognized as a true Indian brand.000 tones. In 1994. Looking at the FMCG synergies. Soaps In 1992. Godrej’s entire distribution network was then taken over by P&G. when Karsanbhai Patel started door-to-door selling of his detergent powder. particularly with Hindustan Lever in India.e. In a short span.4 m outlets.
It is available in 100g and 150g pack sizes. . resulting into instant trial by the consumers. Nirma washing powder Nirma super Nirma popular Edible Salt Nirma has also entered the Food market in the recent past with launch of Nirma Shudh. Presently Nirma has different variants in Indian market. This brand had carved a niche in its segment by achieving leadership position just within two months of its launch.category by introducing ‘Nirma Lime Fresh’ & ‘Nirma Rose’. Nirma entered the premium soap segment when it launched ‘Nirma Sandal’ Detergents Nirma launched “Nirma Washing Powder” in Indian market in year 1969. This product was priced at almost one third to that of the competitor brands.
FINANCIAL ANALYSIS Ratio Analysis .
23 3800 1169.56 1208.2 1.68 1680 3919.65 2269 3841.33 25 145.33 61.91 86.04 21.31 6077.01 3713.55 1687.15 7761.99 2262.15 27.52 0.55 3273.31 1.86 5389.37 49.75 12.Particulars Sales Total assets Net worth Borrowings Capital Employed Debtors PAT PBDIT Depreciation PBIT Current liabilities & Provisions Current assets Current assets -Inventories Long term Debt Interest Total Purchases All figures in Rs cr Dec 2001 12420.42 21.97 16.71 0.49 1757.032 163.55 12.77 56.63 2009 3709.31 192.17 3505 2201 102.33 2462.59 2461.2 38.86 102.17 12.65 7820.25 .20 0.88 0.59 0.79 0.77 14.218 0.68 28.48 Profitability Ratios Operating Profit Margin (%) Net Profit Margin Ratio (%) ROTA (%) ROCE Return on Equity (%) Liquidity Ratios Current ratio Quick Ratio Absolute Cash Ratio Solvency Ratios Debt Equity Ratio Interest Coverage Ratio Efficiency Ratios Debtor Days Creditor days Total assets turnover ratio .63 202.71 3132 1574 1604.023 176 40.5 44.41 1254.68 2189.25 136.75 Dec 2002 10641.47 2211.18 3904 1228.23 1.25 3752 793.11 149.23 59.62 1.92 3510 2146 86.18 69.71 7089.62 131.3 0.4 1875.23 12.74 37.51 29.06 3170.23 0.71 3610 2120 1715.30 16.254 0.40 0.04 8104.67 1604.47 Dec 2004 11594.92 58 77 0.25 5413.22 1715.5 10.34 2148.72 47.78 32.92 199.944 0.37 Dec 2003 11919.12 5438 19 14.91 0.85 135.9 4084.38 1576.55 0.63 195.
It implies that the company would have problems in managing its short term liabilities and liquidity requirements. 1 of Sale before Interest and Taxes It ultimately makes 10.42 paisa on every Re. also we do see that the PAT of the company has fallen by about 23% and the shareholders equity has also decreased by 32% in comparison to the year 2004.12 crores to 136.25 crores. This is mainly due to the fact that the interest cost of HLL has almost doubled from 69. increased interest burden and high indirect taxes. Though the ROCE has seen a considerable change. Here. The reason is that since the company is . The company is earning a return of 44. even now the company is getting good enough returns and can pay good enough dividends to the shareholders as we saw the case in the year 2004 where the rate of dividend was 250%. We can see that the operating margin has decreased considerable in the last year. This signifies that HLL has short term liabilities greater than the short term assets.5% Return on Total Assets (ROTA) that it employs in its operations in the year ended 2004. 1 of Sale after Interest and Taxes. It could be because of high competition as a result of which profits have decreased and the total assets of the company have increased. As we can see that the Return on Capital Employed (ROCE) for Hindustan lever Limited has decreased considerably during the last year mainly due to lower profit margins. It is visible that Hindustan Lever Ltd. But Even now an ROE of about 56. The Return on Equity Ratio (ROE) states how much profit a company earned in comparison to total amount of shareholders equity on the balance sheet of the company. • Liquidity Ratios: It can be seen from the above table that the Current Ratio for all the years is less than 1. has not been able to increase its Operating Profit margin constantly over the years. HLL generates 21. ROTA has decreased in the last year mainly due to the fact that its profit margin has decreased.5 paisa on every Re.77% on the funds employed by it. This is mainly due to the decrease in sales by Rs.Interpretation: • Profitability Ratios: HLL earns 14. we see that the ROE of HLL has increased in comparison to the year 2001 but this cant be concluded as a favourable situation for the company as looking at the figures in detail we can notice that there has been a near to 30% decrease in ROE in comparison to the year 2003 . The Net Profit Margin has also decreased by 17. Moreover the company’s operating expenses have increased by almost 75 % in the year 2004.826 cr.The efficiency has certainly decreased over the last few years mainly owing to high operating expenses .8 % in 2004 as compared to 2001.23% is considered to be very good. We can observe that the current assets have decreased by 13 % and at the same time the current liabilities have decreased by just 4 % in the last year. The company might have to resort to financing its short term liquidity requirements by long term sources of finance.
Other receivables have also decreased by more than 66% leading to a fall in current assets. gradually the company has employed more debt and as a result of which the interest burden has increased significantly. • Solvency Ratios: The company was highly unleveraged in the years 2001 and 2002. Thus. It was risky as the company had invested a huge amount of its own funds as compared to debt. It has realized the importance of trading on equity .75 is not good enough as compared to industry norms of 2:1 but the company is moving towards a favourable debt equity mix. due to high competition and operating inefficiency the earnings of the company have declined. from the Asset Turnover Ratio we can know how efficiently the firm is using its assets.33 is still very impressive which reflects the company’s ability to pay interests on loans easily. Ø DU-PONT RATIO ANALYSIS: The Du Pont ratio analysis is a combination of financial ratios in a series in order to assess the investment returns of the company. It combines the financial ratios of both the Income Statement as well as the Balance Sheet in order to assess either the Return on Equity or the Return on Investment. From this we can interpret that the company has a favorable cash position as it is making its payments long after receiving the dues from the debtors. This is a good indicator to the various financial institutions providing long term sources of finance to HLL. . One of the Plus points of this method is that it provides a clear understanding of how the company generates its return. This analysis provides an insight into the importance of asset turnover as well as sales to overall return. As a result the Interest Coverage ratio is very high.using long term sources of finance to fund its short term obligations therefore the interest burden has increased and as a result the cash balance has decreased . • Efficiency Ratios: Here. Though the debt equity ratio of 0. the ratio for which is pretty low for the company. The Creditor Days as well as Debtor Days both show negative growth which reflects negatively on the company’s financials. Here. However in the last 2 years the company has changed its policy and is leveraging the advantage of debt along with equity. As a result the ICR has reduced from 163.2 to 12.In the initial years when the firm had not employed debt its interest burden was very low.The Company has increased its debt burden by 1470% in the last 4 years Interest Coverage Ratio(ICR) basically signifies the ability of a firm to service its interest burden through the profits generated . looking into these figures we can analyze that the efficiency level of the company has gone down vis-à-vis the previous years and hence the company needs to look urgently into these matters so as to improve the efficiency of the company. The Asset Turnover Ratio also shows negative growth which is also not a good sign for the company. However an ICR of 12.33 in the last 4 years. Moreover. This formula shows the relationship of profit margin and turnover how these two complement each other. we see that the Debtors Days for the company is less than the Creditor Days of the company.
total asset turnover.48 RETURN ON ASSETS ROA=PAT/TA =15.42% TOTAL ASSET TURNOVER =SALES/TA =1.44% Growth Trends Over The Years Particulars Dec-01 Dec-02 Dec-03 Dec-04 .The Du Pont ratio divides the Return on equity into three parts: Net Profit Margin. DU-PONT CHART FOR HLL FOR THE YEAR 2004 RETURN ON EQUITY =PAT/NETWORTH 56.23% Equity Multiplier =TA/NW =3.64% NET PROFIT MARGIN =PAT/NETSALES =10. and the company’s use of leverage referred to as Equity Multiplier also.
26 -3.48 6.15 8690 -14.35 -25.7 ------- -18.46 1889 437.91 4.65 10076 -2.22 12.75 -28.39 -0.46 97.38 ----- -15.71 10627 --- 10641.Sales Expenditure Change In Sales (%) Change In Expenditure (%) Change in PBIT (%) Change in PAT (%) Change in Borrowings (%) Change In Interest (%) 12420.12 .33 11919.48 14.04 9941 12 11594.99 1.94 11.
Product Price Promotion Placement system Packaging-Reason for putting it separately is because symbols and packaging becomes very important when literacy levels are very low. 2. dealers and consumers discounts. 2. 3. Promotional activities consist of advertising. After 44 years. appearance. retailers and overall logistics. along with new perfumes have ensured that the product meets the evolving consumer needs. Continuous improvements in the formulation of the product and introduction of new ingredients e. . 5. distributors. Placement (distribution) system consists of dealers. The brand Surf Excel now has three variants – Surf Excel Quickwash. 4. Product quality. Surf brand has been upgraded and made more modern and contemporary. Surf has changed – the entire brand is now called “Surf Excel”. Price Structure consists of prices. enzymes. 1. Education is very important for rural sector-eg. media.g. 7. 3. 6.COMMON MARKETING MIX FOR ALL MARKETS consists of brand. Empowerment Example-Project Shakti and Self Help Groups. MARKETING MIX FOR RURAL MARKET 1. PRODUCT Surf derives its name from ‘Surfactant’ the basic ingredient of a detergent. Project Shakti 8. 4. Retailer is the one who gives all information about brand choice and consumer feedback.
500gm. 500gm. Sizes available:. 1kg Attributes: Low lather detergent.20gm. 1. 20gm. Nirma and Henkel-Spic India (HSIL) has proved that price in the marketing mix is very critical for growth of HLL products. Sizes available:. simultaneously they had to ramp up spending on advertising and promotions to increase consumption and penetration in the market and retain values of premium brand .600gm.Surf Excel Blue and Surf Excel Automatic – which address different laundry needs but each offers stain removal as the key benefit. Hindustan Lever (HLL). 750gm. 200gm. If Surf excel prices were reduced to match the price cuts of their competitor (P&G). stain removal.5kg. 1kg. PRICE Latest price war between detergent majors. 3kg Surf Excel Quickwash (also called as Surf Excel Easy wash) (Hitherto known as just Surf Excel) Target segment: Superior quality for washing machine users. Sizes avalaible: 25gm. anti corrosive. Proctor and Gamble India (P&G). 1. Attributes:-Removes stains without fading colours.5kg Attributes:-Stain removal Surf Excel Automatic Target segment:-Washing machine owners –Top and front loading machines . Surf Excel Blue Target segment: Economic segment. ensures longer life of fabric.
This was backed by Win with Stains campaign – one of the largest campaigns taken up by Surf excel. • Surf has taken communication beyond mass media advertising and involved consumers in the brand’s promise in the real world. They have roped in former South African cricketer Jonty Rhodes to participate in the 'Win with stains' washathon to wash the largest stain in town with kids of the NGO Magic Bus 1 bucket free with 3kg of Surf Excel has really managed to increase sales revenue of Surf excel. In some of their promotions.PROMOTIONS Surf communication has been pleasant. Various promotions being used for Surf are: • Scholarship offer –Rs five lakh scholarship. The protagonist himself is barely in his teens. An innovative and clever way of underscoring the core promise of Surf Excel — stain removal!! Visual depiction in the ad is studentfocussed — there are no mothers or daughters to be seen in the ad. Surf Excel has had a distinctively bold ‘tongue in cheek’ style of communication. Surf Excel has always been sensitive enough to recognise the change in the consumer choice dynamics. Extremely rare and intelligent use of the marketing budget. they have pampered influencers considering that brand choice in family products is a collective exercise. Most of the people in the ad are in their teens. soothing and gentle. The aim of the whole campaign is to drive home the point that stains are good in life and one is not to be scared to get themselves dirty. This is the most successful consumer promotion till date in Orissa market. advertisements but branded horoscope columns in keeping with the theme of luck and fortune. . They are not only doing road shows. Beauty of this promotion is in its design.a roadshow that invites consumers to get first-hand experience of using Surf. Choice of various promotional gifts is usually governed by what can be bought cheap rather than any brand-related factors. Gift is offered to the consumer to gain shortterm patronage or to engineer enhanced consumption. • Surf KidStains . This promotion is happening in Orissa markets which is aimed at offering consumers a chance to win prizes as well as give students an opportunity to pursue further studies. It has touched consumer’s life through school contact and in-store programmes. Promotions for Surf Excel are more often than not tactical weapons. This can be an indication towards changing consumer algorithm. Road shows have helped to go to the consumers and demonstrate superior performance vis-à-vis competition.
bullock cart. But HLL is into the exercise of reducing number of channels in Orissa by increasing territory size of each dealer. It has already appointed 6000 such sub-stockists. Project Streamline. . HLL Distribution in Rural Markets HLL has come up with new distribution channels to cater to rural markets. HLL has mounted an initiative. reaching about 250 million consumers. who has 15-20 rural sub-stockists attached to him.PLACEMENT SYSTEM In Orissa. For long-term benefits. to further increase its rural reach with the help of rural sub-stockists. The sub-stockists then performs the role of driving distribution in neighboring villages using unconventional means of transport such as tractor. Each of these substockists is located in a rural market.000 villages.etc. The Streamline system has extended direct HLL reach in these markets to about 37% of India's rural population from 25% in 1995 and the number of HLL brands and SKUs stocked by village retailers has gone up significantly. HLL has around 100 dealers and distributors. The pivot of Streamline is the Rural Distributor (RD). the distribution network directly covers about 50. As a result.
5kg 153 NA 103 3 kg NA NA 220 .750 per month) taking micro-credit from banks.PACKAGING Packaging plays a key role in rural markets. which operate like direct-to-home distributors. This is example of Project Shakti which is explained in detail later. EMPOWERMENT HLL runs the program of Self-Help Groups (SHG). The model consists of groups of (15-20) villagers below the poverty line (Rs. Since customers are daily wage earners and they don’t have monthly incomes like the urban consumers have. so Surf excel is packaged in smaller sizes of 20gm so that they can afford given their kind of income streams. which they will then directly sell to consumers Prices of products Surf Quickwash Surf Automatic Surf Blue 20gm 2 NA NA 25gm NA NA 2 200gm 23 NA 16 500gm 53 NA 40 600gm NA 90 NA 750gm NA NA 53 1kg 103 145 NA 1. and using that to buy HLL products. HLL is training their new sellers to basic education levels. EDUCATION Since vast majority of rural India lacks even basic education levels and modern outlook.
Sale of 200gm Surf Excel Sale of 20 gm Surf Excel Dealer Discount of 8% Dealer Discount of 12% Wholesale Distributor Margins They get a standard discount of 1. For the SHG women.80-140 per kg at Rs. They are operating through Self Help Groups (SHG's) which is makes women direct-tohome distributors of HLL. . For villagers. doubling their household income. Now out of a total of 15. Currently women entrepenuers are earning an average income of Rs.5% on sale of any variant Strategies in Orissa market 1.Range of products If we divide detergent industry into three tiers – • • • Premium Mid-price Popular at Rs. The sellers which are all ladies are paid margins of 3% on their sale of products. They are trained and given basic education to sell products.15-25 per kg Popular segment accounts for 80% of the detergent industry. HLL leads in detergent powders with Premium Surf Excel Mid price Sunlight Popular Rin. Wheel Dealers and distributors Retail Distributor Margins Example of various distributor discounts on sale of these variants. the Project Shakti is implemented in Orissa. it provides a stable. Partnerships with several NCOs and support from state governments have been key enablers for the programme. All products which are priced below Rs 5 are sold through this project. Housewives and old ladies are targeted for this project. Shakti Program With a twin objective of creating "income-generating capabilities" for underprivileged rural women and "improving their rural living standard" through health and hygiene awareness.454 Shakti Entrepreneurs across India. sustainable source of income.per month. Orissa has over 928 (6%)Shakti Entrepreneurs spread across 22 districts. this channel has become a source of genuine and correctly priced products. 7007.30-50 per kg at Rs.
672 1996 pieces July sales July sold quantity .Bhubaneshwar Sales figures of Surf excel and is competitors Surf 1.SALES TREND IN BHUBANESHWAR Big Bazaar .21.246 341 pieces Tide 71.000 1787 pieces Ariel 26.
80% SALE OF SURF EXCEL ON BASIS OF DIFERENT SIZES 10% 25% 20gm 200gm 500gm 50% 15% others(1kg.200gm) .1. 20% Orissa.MARKET SHARE OF SURF Bhubaneswar. 65% Bhubaneswar. 35% Surf Excel Surf Blue Orissa.5kg) SALE OF SURF BLUE ON BASIS OF DIFERENT SIZES 7% 5% 13% 20% 500gm 750gm 1kg 3kg 55% others(25gm.
PERCENTAGE SHARE OF SURF IN PREMIUM DETERGENTS MARKET 25% Surf Excel Ariel 75% SALE OF SURF EXCEL ON BASIS OF SEASONS Customers reduce their washing frequency in rains. 12% 18% Summers Winters Rains 70% . so the sales are drastically affected. Sale of detergents is strongly affected by seasonal changes as shown in the chart below.
COMPETITOR ANALYSIS. It also contains a lesser amount of bleach than Ariel or Tide. The USP here would be removal of tough stains while taking care of cloth quality and imparting a fresh fragrance to it. The price of each product and its variant is shown in the table b 20gm 200gm 500gm 600gm (30sachets) 2 23 53 NA NA NA NA 90 NA 16 40 NA 2 22 50 NA 1 10 23 NA 750gm 1kg 1. Product Comparison: HLL (market share – 40%. viz. Ariel Front-o-mat. The USP of Surf Excel is that it reduces soaking time and water usage by 50%. Market Share: The per capita consumption of detergents in India is 2. Ariel Spring Clean and Ariel Fresh Clean. including all 3 segments) manufactures Surf Excel in three avatars. Super Nirma washing powder and Nirma popular washing powder. including all 3 segments) produces both Ariel and Tide.5kg 2kg NA NA 53 NA NA 103 145 NA 99 46 153 NA 102 145 NA NA NA NA NA 88 3 kg NA NA 220 NA NA 4kg NA NA NA NA 186 Surf Quick wash Surf Automatic Surf Blue Ariel Tide . Ariel is produced in three types. Proctor and Gamble (Ariel. Tide) and Nirma Ltd (Nirma washing powder). Surf Excel Automatic and Surf Excel Quick wash. Nirma (market share – 30% of popular segment) comes in three variants. Pricing Comparison: We now compare the prices for these brands. Nirma washing powder. Surf Excel Blue. In this section we compare HLL with its competitors. Its USP would be low prices and the value for money it gives to the customer. Tide detergent improves washing experience while imparting a lingering lemon fragrance to clothes. The synthetic detergent market can be classified into three main categories – Premium (Surf and Ariel) – 15% of total market Mid price (Rin and Wheel) – 40% of total market Popular (Nirma) – 45% of total market.We now compare these products and the companies on the various counts. P&G (market share – 12%.7 kg per annum.
The distribution channels have played a significant role in making Nirma a household name. The delivers its finished products to various Carrying and Forwarding Agents. via whom they reach the consumers. stockists have been connected with the company through an Internetbased network. wherein there exist networks of rural sub-stockists. Nirma Limited markets its products through its fully owned subsidiary Nirma Consumer Care Limited (NCCL). The efficient network has made Nirma Washing Powder the brand with highest penetration in its product category. The network is well equipped to meet the demands of the loyal consumers of the Company across the country. which consists of about 450 exclusive distributors. The NIRMA brand is marketed through the first network.NCCL then resells the products through ‘Nirma’ and ‘Nima’. who operate in the rural areas itself. From here the goods are delivered to either rural or urban retailers. The principle channel for Nirma’s Products is the lowest cost system in India with in built flexibility and speedy distribution. The Company has been successful in establishing an extremely good urban as well as rural presence through the two distribution channels. The objective is to catalyze HLL’s growth by ensuring that the right product is available at the right place in right quantities. Nirma pioneered the concept of flat distribution network. HLL's scale enables it to provide superior customer service including daily servicing. . All NIRMA and NIMA range of products have a retail reach of over two million retail outlets and more than 40 million loyal consumers spread all over the country. called RSNet. For this. via whom the goods reach different wholesalers.Place comparison: HLL’s distribution system is one of its key strengths. An IT-powered system has been implemented to supply stocks to redistribution stockists on a continuous replenishment basis. which was incepted in 1985. in the most cost-effective manner. The sub-stockists are then responsible for distributing the products in rural areas.20-30 sub-stockists come under a rural distributor (RD). As far as distribution to rural areas is concerned. Nirma Consumer Care Limited operates with two parallel distribution networks. they use a process called Project Streamline. It is one of the lowest cost FMCG distribution channels of the country. improving their range availability whilst reducing inventories. for online interaction.
and not just because she offered a rational argument. It basically plays on Surf Excel’s strength to perform with lesser amounts of water. It has indulged in numerous advertisement campaigns which have gained a lot of popularity. ‘Surf Excel hai naa!’ was the first national detergent brand on television. Consumers' faith in Surf was restored. Slice of life situations have generated high levels of interest in the communication. Surf excel. Advertising. even the most common of people can make a difference to our environment. Using consumer speak in the form of testimonials has helped in building credibility in the brand. The currents advertisement on television shows noted actor and human rights activist Shabana Azmi (who did promote Ariel once upon a time). `Sasti cheez or achchi cheez me farak hota hai. “She was a hard-headed bargain-hunting housewife who demanded value for money and not just cheap price.Promotion comparison: HLL. We showed her bargaining with the vegetable vendor about good tomatoes and bad tomatoes . Surf Excel and Lalitaji ad also was in news for a long time. synonymous with the catch line. The real reason Lalitaji was believed was because she was trusted by the Indian housewife to get her a good bargain. ... bhai saab. It thus underlines the fact that by buying Surf Excel.' " This advertisement reversed a declining brand share trend. walking with two buckets of water and encouraging a crowd of people to do the same.
4. The tide advertisements generally show people going about their daily activities. By purchasing packs of Vicks. Tide. P&G also indulges in numerous promotional offers from time to time. after she had worn in to a party.Sales Promotions. She then used Ariel to remove the stain just as her mother-in-law came home. Whisper. 3. 700gm and 1kg) will get a stained cloth. HLL has indulged in numerous promotional activities like the ‘win with stains’ campaign. This tries to show that nothing is as white/clean as something washed with Tide. On washing the cloth the consumer will get a chance to win a grand prize of Rs. It boasts of enjoying endorsements from celebrities like Sharmila Tagore (actor and wife of Nawab of Pataudi). In Orissa distributors of HLL indulge in activities like washing clothes in public places. P&G. 2. leaving a sparkling white garment. Ariel. 'Win with stains' is a promotion aimed at offering consumers a chance to win prizes as well as give students an opportunity to pursue further studies. Like HLL. Advertisements. 5 lakh scholarship or a Zenith Personal Computer or runs of 1. Tide and Ariel have recently slashed their prices in order to penetrate into deeper markets. in order to acquaint people with the effectiveness of Surf Excel.On collecting 12 runs the consumer would be entitled to receive an Oxford Dictionary worth Rs. 325. P&G in association with Sony Entertainment Television. when suddenly the screen has something orange rushing through. 5 and 6. Smriti Irani (television actor and BJP member) An advertisement that had gained a lot of popularity was the one where the daughter-in-law had stained her mother-in-laws saree. launched the ‘shiksha-secure your child’s future’ as a promotional campaign. Under the "Win With Stains" consumer promotion every consumer who purchases a large pack of Surf Excel Quickwash (500gm and 1kg) or Surf Excel Blue (500gm. Head & Shoulders and Pantene between 21st April . Ariel has a very vigourous advertisement campaign in it’s kitty. a . Sales promotions.12th June 2003.
as early as 1975. And then Nirma comes to the rescue.mother can win either Rs. Advertisements. Nirma’s telelvision advertisement history is synonymous with the dancing girl. reached out to lakhs of people. and a number of Consolation Prizes.000 towards Next Year's Tuition Fee for one child (96 such Prizes). 5. Nirma began it’s advertisement by playing it’s ever popular jingle on the radio. NIRMA. In the 1980’sit overtook it’s biggest competitor Surf.’ A current advertisement features a small child using Super Nirma to wash his soiled clothes before his mother can catch him doing so. These advertisements generally appeal to the masses and are based on common problems and day to day incidents. all courtesy P&G. The brand gained enormous popularity because of this particular advertisement and soon grew to be the most used detergent in India.’ . 2 lakhs towards Graduate Education Fee of one child (24 such Prizes). and this was dubbed the ‘marketing miracle of the decade. This advertisement. which was broadcast on telelvision in 1982 for the First time. Another current Nirma Ad features the ever popular family feud wherein four daughters-in-law of a family have a tiff which ends up in a colourful food fight. or Rs. ‘Sab ki pasand Nirma.
Price and Advertisements effectiveness. Shaheed Nagar Market. Packaging. The following questions aimed at knowing the decision making criteria of the customers of detergent powder using various attributes like brand name. Kalpana Square. Availability. each one was administered the questionnaire. The objective of the first question was to determine the TOMA or the Top of Mind Awareness of the consumers. availability. The questionnaire contained a total of 14 questions. sources of information and their association with the parent company. Janpath. amount of water required for cleaning etc. price. • Big Bazaar. Most of the questions were close ended questions so that the respondent does not have any problem in answering them. During consumer interview. packaging. The primary sources of information were consumers. For collecting primary information one questionnaire were developed for the consumers. chemical content. advertisements. Unit 1 Market. This was followed by few questions for the users of Surf Excel pertaining to their consumption pattern. sales promotion. There was also a question to determine the preferred pack size of the customers. Consumer perception of Surf Excel was also tested on the attributes like Cleansing action. wholesalers and territory Sales incharge of HLL. The last question was targeted at the non-surf users to determine the reasons of not trying “Surf Excel”. The areas where the consumer survey was done were: • Markets of Bhubaneswar : Indradhanush Market. Bapuji Nagar Market. cleansing action.RESEARCH METHODOLOGY For the purpose of the project. Unit 4 Market. . retailers. For carrying out the survey a sample 53 consumers were interviewed. information was collected from both primary and secondary sources.
Territory Sales Incharge. and manager of big Bazaar. The secondary information contains information relating to the company. and various web sites on internet. its ambitions etc. Annual Reports. The secondary information pertained to company details and it was collected from the company brochures. SURVEY ANALYSIS Question : Which brand of detergent do you use to wash your cloths? Brand Used 6% 19% 9% 66% Surf excel Ariel Tide others Question : What is your average (per month) consumption of Surf excel? . its products in the market.Unstructured interviews were undertaken to get information from Distributors.
of respondents 6 4 2 0 >1Kg 1/2 .1 Kg 250 .(Rank in scale of 10) Attribute Ranking Chart Company Name Fragnanace Amt Of Water Reqd Sales Promotions Advertisment Availabilty Packaging Price Chemical Content Cleansing action Brand Name 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1st Prefrence 2nd Prefrence 3rd prefrence 4th prefrence 5th prefrence Question : Which pack of Surf excel do you generally buy? Attributes .500 gm <250 gm Consumption per month Question : Rank the following attributes in terms of importance while purchasing a detergent(Washing powder).Consumption per month 12 10 8 No.
5 Kg 1 Kg 1/2 Kg 200 gm 20 gm 56% Question: Details of respondents on basis of gender. Respondants 19% Males Females 81% Question: Details of respondents on basis of their annual income level.Pack Purchase 0% 10% 10% 24% 1. .
2 lk > 2 lk 37% .Annual Income Level of Sample 13% 34% 16% <50k 50K-1lk 1 lk.
the results of the study pertain to Bhubaneswar market only and might not be a true representative of Orissa market. 4. There was a general tendency in respondents to give incorrect personal or demographic information. The sample is very small to draw important conclusions and is not a true representation of the 36 mn plus population of the state of Orissa. As a consequence. The sample was restricted to the geographical limits of Bhubaneswar only. This might result in discrepancies. A sample of 53 customers was taken to carry out the study. . This might have an effect on the profile of the respondents. 2. 3. The demographic profile of the respondents is not the same as that of the target market.SCOPE AND LIMITATIONS OF THE STUDY 1.
a. Over 50% of the Surf Excel using respondents consume. e. on an average. As per the survey. ½-1 Kg Surf Excel.CONCLUSION CONSUMER’S SURVEY 1. Ariel (9%) and others (6%). Remaining was divided amongst tide (19%). This observation was verified by the actual market data. 2. price is perceived to be an important criterion by only 41% of the respondents. 5. 60% of the respondents find Brand Name to be very important buying criteria. c. 4. b. This is a sufficient indication of Surf Excel being market leader in Orissa market. . 66% of the respondents surveyed were Surf users. d. The research also establishes that consumer perceive the timely sales promotions offered by the company as an important buying criterion with over 47% respondents considering this as an important factor. But another interesting thing that came to light was that only a few respondents said Surf Excel. 22% of the respondents rated Chemical content to be very important buying criteria. collected from the Territory Sales Incharge. The decision making criteria of the consumers were also studied. The results of the same were as follows. 100% of the respondents had Surf in their TOMA of 3 brands. Another important point that came to light in our research was that the respondents using Surf Excel don’t prefer buying 200gm pack of surf excel. 3. 87% of the respondents rated Cleansing action to be very important buying criteria.
very easily available and competitively priced. which you’ll give. Questionnaire Dear respondent. with an assurance that all the information. ____________________________________________________________________ Q 2. This finding points towards the reduced recall of communication by the brands due to excessive cluttering on mediums like TV. We are students of XIM (Xavier Institute of Management) and as part of our curriculum we are conducting a market research. Q 1.6. The research showed that over 86% of the respondents find TV as the major source of information about Surf Excel. Despite of this only 26 respondents were able to correctly recall any surf excel advertisement seen on TV. (Rank the scale of 10): Most Important Least Important ii) Tide iv) LG Super Enz . Which brand of detergent do you use to wash your cloths”? i) Ariel iii)Surf Excel v) Any Other (Plz sepecify)________ Q 3. will remain confidential. Name any three detergent brands. 7. Another finding from the research was that a majority of the Surf Excel users were unaware of the fact Surf is a HLL product. Rank the following attributes in terms of importance while purchasing a detergent (Washing Powder). They find Surf Excel to be conveniently packed. 8. We would like your cooperation for the same. The research showed that the consumer perception about Surf Excel is by-large very good. Consumers perceive Surf Excel to be very good in cleansing action.
Size options available): Availability: Advertisements: .(5) (1) Brand Name: Cleansing Action: Chemical Content: Price: Packaging (incl.
Most Important (5) Least Important (1) Sales Promotions: Amt.V. What’s your average (per month) consumption of Surf Excel? i) >1kg ii) iv) 500gm-1Kg <250gm iii) 250gm-500gm Q 5. ix) Hoardings ii) Friends vi) Radio x) Promotional stalls iii) Relatives vii) Cinema iv) Press Ad viii)Displays xi) Any Other source _________ . How did you come to know about “Surf Excel”? i) Retailer v) T.of water required for cleaning: After wash fragrance: Name of Company: (Following set of questions are only for those respondents who use Surf Excel) Q 4. With which company do you associate the “Surf Excel”? i)P&G iii)J&J ii)HLL iv) Any Other (Plz sepecify)________ Q 7. For how long are you using Surf Excel? i) <6 Months iii) 1-2 year(s) ii) iv) 6 – 12 Months > 2years Q 6.
Any specific reason for not trying “Surf-Excel”. Can you recall any one of the advt. Which pack size of Surf Excel do you generally buy? i) 1. In what pack sizes is Surf Excel available? (Write down all the pack sizes stated by the respondent) Q 12. Rate your perception about Surf Excel on the given attribute.5 Kg Pack iii) ½ Kg Pack v) 20 gm satches ii) iv) 1 Kg Pack 200 gm Pack (Following question is only for those respondents who don’t use Surf Excel) Q 13.Q 8. of Surf Excel that you saw in past one month? If yes please narrate. Cleansing Action Excellent Pathetic Packaging (convenience) Convenient Availability Inconvenient Easy Price Difficult Low Advertisement High Effective Ineffective Q 11. ________________________________________________________________________ ________________________________________________________________________ Q 9. i) Lack of awareness ii) Highly priced .
000-1 lk Ο above 2 lk Thanks for your cooperation… .000 Ο 1 lk – 2 lk Ο 50.iii) Non availability v) Others (specify)______________ iv) Negative feedback Personal Details Name Gender Age Group Profession _________________________________ Ο Male Ο up to 18 Ο Student Ο Female Ο 18-25 Ο Service Ο 25-35 Ο Self-employed Ο above 35 Ο Business Ο Others (specify)______________ Annual Income level Ο Up to 50.
Marketing Management 3.google.BIBLIOGRAPHY 1. www.com 4. Market Research for Small Business. 2.magindia.com 5. www.blonnet. www.com by: Edmunds by: Philip Kotler .
The Profit Margin of a company determines its ability to withstand competition and adverse conditions like rising costs. There are two types of profitability ratios: • Profit Margin ratios o Operating Profit Margin ratio o Net Profit Margin ratio • Rate of Return ratios o Return on Total Assets (ROTA) o Return on Capital Employed (ROCE) o Return on Net Worth (RONW) A) Profit Margin ratios measure how much a company earns relative to its sales.30 Dec 2003 19 Dec 2004 14. return on investment (operating profit divided by total assets).e. return on capital employed (operating profit divided by capital employed) and return on equity (net profit divided by net worth of the company).17 Dec 2002 21. A company with a higher profit margin than its competitor is more efficient. The various profitability ratios used in the analysis are: operating profit margin (operating profit divided by net sales). the Profitability ratios speak about the profitability of the company. The ratio measures the percentage of profits earned per rupee of sales and is thus a measure of efficiency of the company. and is calculated as – Profit before Interest and Tax (PBIT) / Net Sales x 100 % Particulars Operating Profit Margin Dec 2001 16.Ratio Analysis of HLL Ø Profitability Ratios: Profitability Ratios show how successful a company is in terms of generating returns or profits on the Investment that it has made in the business i. falling prices or declining sales in the future. and is calculated as – . i) Operating Profit Margin ratio measures the earnings before Interest and Tax. the higher these ratios the better it is for the company. As obvious from the name. net profit margin (net profit divided by net sales).5 ii) Net Profit Margin ratio measures the earnings after Interest and Tax.
68 16.65 1208.12 cr to 136.42 15 Operating profit Net profit margi 10 5 0 2001 2002 2003 2004 Rate of Return ratios .5 10.42 paisa on every Re. It is visible that Hindustan Lever Ltd has not been able to increase its Operating Profit margin constantly over the years.Profit after Tax (PAT) / Net Sales x 100 % Particulars (Rs. 25 20 21.15 1757.42 Interpretation: For the year ended 2004 HLL earns 14.826 cr.51 14.4 10. Crores) Sales PAT Net Profit Margin Ratio(%) Dec 2001 12420.3 19 16.71 1576. increased interest burden and high indirect taxes. Moreover the company’s operating expenses have increased by almost 75 % in the year 2004.The efficiency has certainly decreased over the last few years mainly owing to high operating expenses .15 Dec 2004 11594.51 Dec 2003 11919. 1 of Sale after Interest and Taxes. This is mainly due to the fact that the interest cost of HLL has almost doubled from 69. 1 of Sale before Interest and Taxes It ultimately makes 10.47 12. We can see that the operating margin has decreased considerable in the last year.68 Dec 2002 10641.25 cr.59 16. This is mainly due to the decrease in sales by approximately Rs.33 14.04 1687.15 14.5 paisa on every Re.17 12.8 % in 2004 as compared to 2001. The Net Profit Margin has also decreased by 17.
However. The ratio measures the percentage of profits earned per Rupee of Asset and thus is a measure of efficiency of the company in generating profits on its Assets.33 Dec 2002 2461.3 % Interpretation: Clearly. It could be because of high competition as a result of which profit have decreased and the total assets of the company have increased.5 HLL generates 21.23 Dec 2003 2462.9 8104. It says how much profits we earn from the amount invested by the Shareholders. ROTA = PBIT / Sales (Profit Margin) x Sales / Total Assets (Asset Turnover) For HLL. ROTA has decreased in the last year mainly due to the fact that its profit margin has decreased.63 202.92 Dec 2004 1875.31 192. debentures and long-term loans. Looking at ROTA from another angle in order to do. it does not tell how well they are performing for the stockholders.65 2269 7761.63 2009 7089.99 2262.01 29. The ROTA of a company determines its ability to utilize the Assets employed in the company efficiently and effectively to earn a good return.68 1680 7820.68 27.34 21.06 28.5% return on the Total Assets (ROTA) that it employs in its operations in the year ended 2004. PBDIT Depreciation PBIT Total assets ROTA(%) Interpretation: Dec 2001 2211. HLL is a company which survives more on volume of sales than the profit margins on its products.i) Return on Total Assets (ROTA) ratio tells us how well management is performing on all the firm's resources. Capital Employed means the long-term funds employed in the business and includes the shareholder’s fund. we have.Profit before Interest . Dupont Analysis. ii) Return on Capital Employed (ROCE) ratio explains the overall utilization of funds by a business enterprise. Profit Margin ratio is 14. It is calculated as -Profit before Interest and Tax (PBIT) / Total Assets x 100 % Particulars.5 % & Asset Turnover ratio is 148.92 199.63 195.
3 Dec 2003 1687.86 102.and Tax is considered for computation of this ratio to make numerator and denominator consistent.72 Dec 2003 2262.77 As we can see that the ROCE for HLL has decreased considerably in the last year mainly due to lower profit margins.86 49.67 56.55 3273. The company is earning a return of 44.41 61.4 2148.37 Dec 2002 2269 3713.77% on the funds employed by it.Even now an ROE of about 56. PAT Shareholders Equity Return on Equity (%) The Return on Equity Ratio states how much profit a company earned in comparison to total amount of shareholders equity on the balance sheet of the company.91 86.67 1604. It is calculated as -Profit before Interest and Tax (PBIT) / Capital Employed x 100 % Where.23 Particulars. Capital Employed = Owner’s Fund (Share Capital plus Reserves & Surplus) + Long-term Debt Particulars PBIT Net worth Borrowings Capital Employed ROCE Dec 2001 2009 3170.47 3170.91 47.22 77 Dec 2004 1208. we see that the ROE of HLL has increased in comparison to the year 2001 but this cant be concluded as a favourable situation for the company as looking at the figures in detail we can notice that there has been a near to 30% decrease in ROE in comparison to the year 2003 . .22 1715. also we do see that the PAT of the company has fallen by about 23% and the shareholders equity has also decreased by 32% in comparison to the year 2001.18 3904 58 Dec 2004 1680 2148.23% is considered to be very good. Though the ROCE has seen a considerable change even now the company is getting good enough returns and can pay good enough dividends to the shareholders as we saw the case in the year 2004 where the rate of dividend was 250%. Return on Equity = Net income________ Shareholders Equity Dec 2001 1576. Here.23 3800 59.59 3713.33 2189.71 Dec 2002 1757.25 3752 44.9 2189.
23 58 27.3 29.5 %age 60 40 20 0 2001 2002 years 2003 2004 Return On Total Assets Return on Capital Employed Return on Equity Ø Liquidity Ratios Ability of the firm to meet short term obligation comes from holding of liquid assets which are readily convertible into cash.33 Rate of return ratios 77 59. We will analyze the two popular measures of the liquidity of the company. Current Ratio: Current Ratio = Current Assets / Current Liabilities Quick ratio: Quick ratio = (Current assets – Inventories) / Current Liabilities Also known as the acid test ratio. indicating whether liabilities could be paid without selling inventory.77 21.72 47.92 56.71 3132 1574 .92 3510 2146 Dec 2003 4084.23 44.100 80 61.71 28. Particulars Current liabilities provisions Current assets Current assets -Inventories Dec 2001 & 3709. It involves constant monitoring of cash flow position. It is similar but a more strenuous version of the "working capital" ratio.71 3610 2120 Dec 2004 3919. it is a stringent test that indicates if a firm has enough short-term assets (without selling inventory) to cover its immediate liabilities.37 49.17 3505 2201 Dec 2002 3841. It’s the responsibility of the treasury manager to maintain the right balance between investments and liabilities to get the maximum liquidity. It’s more reliable then current ratio because it considers only the most liquid assets and does not include the hidden factors like window dressing that may skew the actual scenario.
91 0. A proper mix of equity and debt is said to be always beneficial for the company rather than pure equity.88 0.79 Ø Solvency Ratios It’s the company’s ability to meet long term liability. It implies that the company would have problems in managing its short term liabilities and liquidity requirements.52 0.53 0.4 0.2 0 2001 2002 years Current Ratio Quick Ratio 2003 2004 0.Current Ratio Quick Ratio Cash and near cash items Absolute Cash Ratio 0. The reason is that since the company is using long term sources of finance to fund its short term obligations therefore the interest burden has increased and as a result the cash balance has decreased .944 0.218 0.55 0.254 0. The company might resort to financing its short term liquidity requirements by long term sources of finance.79 0.40 781. 1 0.25 0. We will have a look at few of the solvency ratios for HLL.52 892.944 0.25 0.88 0.8 0.28 0.6 0.91 0.59 0. This signifies that HLL has short term liabilities greater than the short term assets.4 0. We can observe that the current assets have decreased by 13 % and at the same time the current liabilities have decreased by just 4 % in the last year.59 943.4 0.Other receivables have also decreased by more than 66% leading to a fall in current assets. Also called the capital structure it is one of the major financing decisions for the company. Existence of debts disciplines management to some extent.55 977.20 It can be seen from the above table that the current ratio for all the years is less than 1 . DER: Debt to Equity Ratio .
However in the last 2 years the company has changed its policy and is leveraging the advantage of debt along with equity.6 0.78 Dec 2004 2148.18 0.7 0.2 0. Shareholders Equity Long term Debt Debt Equity Ratio Dec 2001 3170.86 102.032 Dec 2002 3713.3 0.9 69.1 0 0.55 .2 Dec 2002 2269 12.22 1715.74 Dec 2004 1680 136.8 0.67 1604.032 2001 0.33 .75 is not good enough as compared to industry norms of 2:1 but the company is moving towards a favourable debt equity mix.75 Debt 0.75 The company was highly unleveraged in the years 2001 and 2002.4 0.25 0.023 Dec 2003 2189.91 86.86 176 Dec 2003 2262.12 32.023 2002 years Debt Equity Ratio 2003 2004 Interest Coverage Ratio: ICR = (PBIT) / Interest Particulars PBIT Interest Interest Coverage Ratio Dec 2001 2009 12.DER = Long-term debt / Shareholders Equity Particulars. Though the debt equity ratio of 0.5 ratio 0.25 12.The Company has increased its debt burden by 1470% in the last 4 years which is mainly on account of issuing Debentures of the amount of 1320 cr in 2003.78 0. It was risky as the company had invested a huge amount of its own funds as compared to debt. 0.31 163. It has realized the importance of trading on equity .23 0.
Particulars Debtors Sales Debtor days Dec 2001 1254.85 Dec 2002 1169.04 37.65 25 The Debtor days for the company have seen a decline from 37.11 Dec 2003 1228. The Debtors have decreased by about 35% where as the sales have seen a decline of just 2.In the initial years when the firm had not employed debt its interest burden was very low.62 Dec 2004 793. Creditor Days: (Total No. and whether the business is overtrading or under trading on its equity (using borrowed funds).38 12420.15 40. A higher debtor day’s ratio signifies general problems in the collection of funds faced by the company or the financial position of the debtors. Ø Efficiency ratios: It measures the quality of a business' receivables and how efficiently it uses and controls its assets.33 in the last 4 years. of days of sales that are on the balance sheet of the company as debtors.49 10641.62 days in the year 2003 to 25 days in the year 2004. This is mainly due to the fact that there was a significant improvement in the companies receivables management. of Creditors/Total Purchases)*365 This ratio indicates the no. of days of purchases that are on the balance sheet of the company as creditors. This is a good indicator to the various financial institutions providing long term sources of finance to HLL.33 is still very impressive which reflects the company’s ability to pay interests on loans easily. As a result the Interest Coverage ratio is very high gradually the company has employed more debt and as a result of which the interest’s burden has increased significantly. However an ICR of 12. of days.2 to 12.55 11919. Expressed as no.56 11594.72%. of days. how effectively the firm is paying suppliers. of Debtors/Total Sales)* 365 This ratio actually indicates the no. Moreover due to high competition and operating inefficiency the earnings of the company have declined. This ratio is expressed in no. a lower creditor days ratio signifies that .71 38. Debtor Days: (Total No. As a result the ICR has reduced from 163.Interest Coverage ratio basically signifies the ability of a firm to service its interest burden through the profits generated .
We see a drop in the turnover ratio in the year 2002 because of a combined effect of a decrease in sales and increase in total assets simultaneously.62 days in the year 2003 to 145.06 5438 131. This analysis provides an insight into the importance of asset turnover as well as sales to overall return.47 Dec 2004 11594. .97 135.06 1.37 Dec 2003 11919. The Creditor Days for the company have seen a rise from 131. It combines the financial ratios of both the Income Statement as well as the Balance Sheet in order to assess either the Return on Equity or the Return on Investment.01 1.11 5413. Creditors Total Purchases Creditor days Dec 2001 2253.68 1.62 Dec 2004 2154. One of the Plus points of this method is that it provides a clear understanding of how the company generates its return.34 1. we can say that the payment policy followed by the company is not very liberal and the payment made by the company to its creditors is pretty late. Particulars.48 Total Assets turnover ratio signifies how efficiently the company is utilizing its assets to generate returns.15 7761.the company is liberal in paying its creditors and follows a policy of paying them at a faster rate.23 days in the year 2004.23 6077.77 145.91 5389.2 Dec 2003 1961.65 7820. It indicates efficient usage of assets by the company to generate constant sales . Hence.31 Dec 2002 2202.23 Here.71 7089.75 Dec 2002 10641.04 149. Ø DU PONT RATIO ANALYSIS: The Du-Pont ratio analysis is a combination of financial ratios in a series in order to assess the investment returns of the company. The company has maintained a constant turnover ratio in the years 2003 and 2004. Total Assets Turnover Ratio = Net sales___ Total Assets Particulars Sales Total assets Total assets turnover ratio Dec 2001 12420. we see that the credit days which the company enjoys from its suppliers are pretty high throughout the time period under consideration.04 8104.
and the company’s use of leverage referred to as Equity Multiplier also.This formula shows the relationship of profit margin and turnover how these two complement each other.42% TOTAL ASSET TURNOVER =SALES/TA =1.48 RETURN ON ASSETS ROA=PAT/TA =15.23% Equity Multiplier =TA/NW =3. The Du-Pont ratio divides the Return on equity into three parts: Net Profit Margin.44% . DU-PONT CHART FOR HLL FOR THE YEAR 2004 RETURN ON EQUITY =PAT/NETWORTH 56. total asset turnover.64% NET PROFIT MARGIN =PAT/NETSALES =10.
) Number of Characters: 74.dot Title: TABLE OF CONTENTS Subject: Author: ximb Keywords: Comments: Creation Date: 12/13/2007 3:06 PM Change Number: 3 Last Saved On: 12/13/2007 3:06 PM Last Saved By: tapan Total Editing Time: 2 Minutes Last Printed On: 12/13/2007 3:07 PM As of Last Complete Printing Number of Pages: 66 Number of Words: 13.265 (approx.Filename: Marketing Management Project ( Surf Excel) Directory: C:\Documents and Settings\tapan\Desktop Template: C:\Documents and Settings\tapan\Application Data\Microsoft\Templates\Normal.028 (approx.) .