Hindustan Unilever Ltd.

Sector : Consumer Non-durables/FMCG

General Overview
Hindustan Unilever is in the FMCG business comprising primarily of Home Care,
Beauty & Personal Care and Foods & Refreshment segments. The Company has
manufacturing facilities across the country and sells primarily in India.

Beauty & Personal Care Segment (42% of revenues) In this segment, the company has a
wide-spread portfolio of more than 900 SKUs spread across one or more of categories
which are made for 14 consumer clusters identified in India. The company earns ~29%
margins from this segment which is the most among its divisions.
Home Care Segment (29% of revenues) The company sells products from various
categories under this segment. It benefits from a large portfolio that straddles the
economic pyramid with strong presence of brands across the mass, popular and
premium segments.
Foods & Refreshments Segment (29% of revenues) The company sells various food
products such as ketchups, jams, tea, coffee, soups, icecreams, nutrition products and
others under this segment. It focuses on improved innovation, increased penetration
and its Winning in Many Indias (WiMi) strategy to improve the sales.

 Shareholding pattern of the company

Sep 2020 Sep 2021
Promoters 61.90 61.90
FIIs 14.54 15.45
DIIs 10.82 10.48
Public 12.74 12.17
Promoter holding over the past year has remained stagnant, while FIIs have increased
stake over the last year and DIIs have reduced their stake, one of them being LIC.
Public shareholding has reduced.

 Management of the company

Mr Sanjiv Mehta (61) is the Chairman & Managing Director of Hindustan Unilever
Limited. He also leads Unilever’s South Asia business as President, Unilever, South
Asia and is a member of the Unilever Leadership Executive. Sanjiv has done his
Bachelors in Commerce (India), Chartered Accountancy (India) and has also completed
his Advanced Management Program (Harvard Business School). Sanjiv has been with
Unilever for 28 years and for the last 19 years he has led businesses in different parts
of the world. He has been Chairman and Managing Director of Unilever Bangladesh
Limited (2002 – 2006), Chairman and CEO of Unilever Philippines Inc. (2007 – 2008),
Chairman of Unilever - North Africa and Middle East (2008 – 2013) and from October
2013 he assumed his responsibilities of heading Unilever’s business in India and South
Asia

Mr Ritesh Tiwari (45) is the Executive Director, Finance & IT and Chief Financial Officer
of Hindustan Unilever Limited. He is also the Vice President, Finance for Unilever,
South Asia. Ritesh Tiwari joined Unilever as a management trainee in 1999 after
completing his certification as a Chartered Accountant & Cost and Management
Accountant. Over the last 22 years, he has led teams both within India and overseas at
Unilever in core finance and as a business partner to front-end sales, categories and
supply chain. His most recent role has been in the UK as the Vice President, Finance,
Global Performance Management for Unilever and CFO for Unilever International,
where he is credited with bringing digital transformation, simplification and leading
projects with high business impact.

Mr Dev Bajpai (55) has been a member of the Management Committee of HUL since
May 2010 and was inducted on the Board of Directors of HUL as a Whole Time
Director with effect from January 2017. Dev is a Fellow Member of the Institute of
Company Secretaries of India and has a law degree from the University of Delhi. He
completed an Executive Program for Corporate Counsels at Harvard conducted by
Harvard Law School. He has 30 years of experience in diverse industries that include
Automobiles, FMCG, Hospitality and Private Equity, in the areas of Legal, Governance,
Tax and Corporate Affairs.
  Strengths, Weaknesses, Opportunities & Threats (SWOT)
analysis of the company
Strengths in the SWOT analysis of Hindustan Unilever ( HUL )

1) Brand visibility – From soap to mineral water, HUL is shaping the life of 1.3
billion people daily. Being in consumer goods market with its 20 consumer categories
such as soap, tea, detergents, shampoo etc. & each having large assortments, helped
HUL in occupying the large shelf space of Grocery /departmental stores which itself
explains the acceptance/demand of their products in the market.

2) Market leader in consumer goods: According to Nielsen data 2 out of three Indian

consumers use HUL products. HUL used selective targeting strategy to emerge as a
market leader in the Indian market.

3) Innovative FMCG Company: Hindustan Unilever Research center (HURC),Mumbai

& Unilever Research India, Bangalore ,both research facilities were bought together in
a single site in Bangalore in 2006.Employees in this facility continuously  working &
developing innovations in products & manufacturing processes which is helping the
HUL to set it as front-runner in the consumer goods market.

4) Extensive & integrated distribution system: HUL’s brands are now household

name which is only possible due to its 4 tier distribution system namely

 a) Direct Coverage through common stockist within a town of population

under 50000 people.
 b) Indirect coverage: Villages closer to larger urban markets have been
targeted.
 c) Streamline: Leveraging the rural wholesale market to reach markets
inaccessible by road.
 d) Project SHATKI AMMA: It targeted the very small villages (2000
population) & tapped into pre-existing women’s SHG (self-help
groups). Markets have been segmented based on their accessibility &
business potential.

5) High Brand awareness: By signing popular celebrities for the advertisements of

their products HUL has created positive word of mouth over the ages which helped
them in social acceptance of their products intelligently targeted & meant for different
income groups.

6) Product line: It offers product categories namely oral care, personal care,

household surface, fabric care and pet nutrition etc. having deep assortments across
the product categories.
7) Financial position: Having more than 80 years of experience in the consumer
goods market & backed by Unilever who owns 67% controlling share in HUL, It is
financially strong.

8) Market share: Through high penetration in the market, HUL had managed to hold
their high market share in different product categories.

9) Share of Wallet: Whether one buys surf /wheel /Rin detergent it will go to HUL’s

pockets. HUL strategy to offer different products for different income groups (selective
targeting) has been successful in having share of wallet of a consumer.

Weaknesses in the SWOT analysis of Hindustan Unilever ( HUL )

1) Decreasing Market share: Competitors focusing on a particular product & eating up

HUL’s share, like Ghadi & Nirma detergent eating up HUL’s wheel detergent market
share.

2) Large number of brands in different product categories: Sometimes having

broad brand portfolio can lead to confused positioning. Price positioning in some
categories allows for low price competition like AMUL captured Kwality’s market share.

Opportunities in the SWOT analysis of Hindustan Unilever ( HUL )

1) Expanding market: By penetrating more in the rural markets through its project
Shakti AMMA and transition of unorganized business to organized one will lead to
further expansion of the consumer goods market.

2) Awareness in usage rate of consumer goods: People getting more aware and

conscious about the usage may be through advertising /word of mouth /doctor
prescription ,is resulting in increase in usage rate of the these products.

3) Increasing Income levels: Due to stable political scenario, improved literacy rate &
controlled inflation, disposable income of the people is increasing thereby resulting into
upsurge in demand & changing their lifestyle.

Threats in the SWOT analysis of Hindustan Unilever ( HUL )

1) Competition in the market: With increasing number of local & national players it’s
becoming very hard for the companies to differentiate themselves from others. There is
also threat from counterfeit products destroying its brand image in the market.

2) Price of commodities: Increasing price of commodities will result in further increase

in the price. Further increase in price will result in decrease in sales, margins & brand
switching.

3) Buyers power: With highly diversified consumer goods market where there are lots
of brands claiming different sorts of benefits, it’s very difficult for consumers to stick to a
particular brand & hence results into brand switching where consumer got power to
select a brand based on several factors  like availability, reference group
recommendation, preference & price.

 Competitive Analysis
Marico

UltraTech Cement Limited is India's leader in producing and selling cements and
construction materials. The group offers gray and white cements, granulates, ready-to-
use concrete, mortars, coatings, binders, etc. At the end of March 2021, UltraTech
Cement Limited had 23 cement plants, over 130 concrete factories in India and 27
grinding facilities (of which 23 in India). India accounts for 99.3% of net sales.

ITC ltd
Established in 1910, ITC is the largest cigarette manufacturer and seller in the country.
ITC operates in five business segments at present — FMCG Cigarettes, FMCG Others,
Hotels, Paperboards, Paper and Packaging, and Agri Business.

FMCG - Cigarettes (45% of revenue) ITC is the leader in the organised domestic cigarette
market with a market share of over 80% [1]. It's wide range of brands include Insignia,
India Kings, Classic, Gold Flake, American Club, etc.
FMCG - Others (28% of revenue) ITC has 25 mother brands spread across multiple
FMCG sectors.
Hotels Business (4% of revenue) Launched in 1975, ITC Hotels is one of the fastest
growing hospitality chains in India. It is the second-largest hotel chain in India, with 108
hotels at 70 locations in the country, operating across multiple market segments. It
possess a room inventory of ~290,000 rooms.
Agri. Business (13% of revenue) ITC is the second largest exporter of agri products from
the country. It trades in feed ingredients, food grains, marine products, processed fruits,
coffee etc. It also exports leaf tobacco under this vertical. ITC is India's largest and
world's 5th largest leaf tobacco exporter.
Paperboards, Paper & Packaging (10% of revenue) ITC is the market leader in value
added paperboards segment. It is also India’s largest converter of paperboard into high
quality packaging. ITC manufactures the entire spectrum of paperboards - from 100%
virgin, food-grade boards which are made from renewable and sustainable sources to
100% recycled boards.
Dabur
Dabur India is one of the leading fast moving consumer goods (FMCG) players dealing
in consumer care and food products. In Chawanprash segment they have around 60%
Market share in India. In Honey segment they have around 40% Market share in India.

 Conclusion
HUL has a robust distribution network of more than 50+ large distributors covering the
entire Indian subcontinent. It is estimated that 6 out of every 10 household products in
India are manufactured by HUL. Thus it has a strong economic moat which makes HUL
shares an attractive investment.