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Hindustan Unilever Limited Annual Investor Seminar 2012

Hindustan Unilever Limited Annual Investor Seminar 2012

Agenda

Winning Today, Winning tomorrow

Nitin Paranjpe

8.45

am to 9.45 am

Brand and Capability experience

Business heads

10.00 am to 1.00 pm

Q&A

CEO & CFO

1.00

pm to 1.30 pm

Hindustan Unilever Limited

Winning Today, Winning Tomorrow

Hindustan Unilever Limited Winning Today, Winning Tomorrow

Clear and compelling strategy

Strategic framework

S t r a t e g i c f r a m e w o

Sustainable Living Plan

g i c f r a m e w o r k Sustainable Living Plan Our

Our Goals

Consistent Growth

Competitive Growth

Profitable Growth

Responsible Growth

A business model that works

Virtuous circle of growth Cost Profitable Leverage Volume + Growth Efficiencies Cost Savings Innovation
Virtuous circle of growth
Cost
Profitable
Leverage
Volume
+
Growth
Efficiencies
Cost
Savings
Innovation
A&P/R&D

Focused on execution

FY 2011-12: Delivered on goals

Competitive growth

Ahead of market

18 14 Market HUL FMCG growth %
18
14
Market
HUL
FMCG growth %

Consistent growth

Volume led

18 10 8 UVG Price USG HUL FMCG growth %
18
10
8
UVG
Price
USG
HUL FMCG growth %

Profitable growth

Margin expansion

140 bps ↑ 17.5% Domestic consumer HUL Sales growth EBIT
140 bps ↑
17.5%
Domestic consumer
HUL
Sales growth
EBIT

Stepped up the growth momentum

Increasing FMCG USG (%)

18 10 8 FY10 FY11 FY12
18
10
8
FY10
FY11
FY12

Higher PP contribution (%)

31 28 FY10 FY12
31
28
FY10
FY12

PP – Personal Products; USG: Underlying Sales growth; F&B: Foods & Beverages

Higher Foods contribution to F&B

34 31 FY10 FY12
34
31
FY10
FY12
1
1
2
2
3 5
3
5

Straddling the pyramid

Compass - How will we win
Compass
- How will we win
Strengthening capabilities - Widening competitive gap
Strengthening capabilities - Widening competitive gap
Sustainability - USLP
Sustainability - USLP

Winning Principles

Our first priority is to our consumers, then customers, employees and communities. When we fulfill
Our first priority is to our consumers,
then customers, employees and
communities. When we fulfill our
responsibilities to them our
shareholders will be rewarded.

Embedding consumer and customer centricity

Consumer & Customer License

and customer centricity Consumer & Customer License Customer Credo Project Popeye Mission Bushfire – Perfect
and customer centricity Consumer & Customer License Customer Credo Project Popeye Mission Bushfire – Perfect

Customer Credo

and customer centricity Consumer & Customer License Customer Credo Project Popeye Mission Bushfire – Perfect stores
and customer centricity Consumer & Customer License Customer Credo Project Popeye Mission Bushfire – Perfect stores

Project Popeye

Mission Bushfire – Perfect stores

and customer centricity Consumer & Customer License Customer Credo Project Popeye Mission Bushfire – Perfect stores
and customer centricity Consumer & Customer License Customer Credo Project Popeye Mission Bushfire – Perfect stores

Our approach to Winning

Our approach to Winning

Step up in innovations Covering 60%+ of portfolio

Lux relaunch with silk protein extract Rin bar relaunch with superior formulation and packaging Vim
Lux relaunch with silk protein
extract
Rin bar relaunch with superior
formulation and packaging
Vim relaunched with “100
Nimbuon ki Shakti”

Fair & Lovely Future Tube:

Aspirational & affordable

Fair & Lovely Facewashes

Vaseline hand and body

Dove: Nourishing Oil Care range with Vita Oils

Sunsilk Keratinology for salon treated hair

Face Wash: Range expansion across brands

Lakme Absolute range

Pepsodent G relaunched

Clear Relaunched

Step up in innovations Covering 60%+ of portfolio

Soupy Noodles Cup–a–Soup Kissan range expanded and relaunched extension instant soups Fruttare Naturally
Soupy Noodles
Cup–a–Soup
Kissan range expanded and relaunched
extension
instant soups
Fruttare Naturally
refreshing flavours
with 100% Fruit
Selection
5 Rich and Creamy
International flavours
Lipton Ice Tea
Green and
flavored
Teabags
Bru Gold
Bru Exotica
100%
coffee
Pureit Marvella RO

Better quality products, stronger brands

Tripled blind product wins %

3X
3X

2011

2X
2X

2010

X
X

2009

Measured for the top 25 brands; *Exit 2011 Vs second half 2009

Improved brand equity scores 3/4 th of portfolio holding/gaining *
Improved brand equity scores
3/4 th
of portfolio
holding/gaining *

Driving mix through premiumization

Skin care

(Face)

Segments Market CAGR Market 2009-11 (%) construct (%) Premium 40 20 35 30 Mid Mass
Segments
Market CAGR
Market
2009-11 (%)
construct (%)
Premium
40
20
35
30
Mid
Mass
10
50

Moving up the ladder

Segments Market CAGR Market 2009-11 (%) construct (%) Premium 40 20 35 30 Mid Mass 10

Building segments of future

Facewashes Hand & Body Size: >Rs. 900 crs. Growth: c. 50% Size: >Rs. 2300 crs.
Facewashes
Hand & Body
Size: >Rs. 900 crs.
Growth: c. 50%
Size: >Rs. 2300 crs.
Growth: c. 30%
Noodles
Handwashes
Size: >Rs. 250 crs.
Growth: c. 30%
Size: >Rs. 1700 crs.
Growth: c. 30%

Market size and growth for 2011

Building segments of future

Premium Skin lightening Size: >Rs. 800 crs. Growth: c. 30%
Premium Skin
lightening
Size: >Rs. 800 crs.
Growth: c. 30%
Conditioners Size: >Rs. 250 crs. Growth: c. 30%
Conditioners
Size: >Rs. 250 crs.
Growth: c. 30%

Market size and growth for 2011

Anti Aging Size: >Rs. 250 crs. Growth: c. 30%
Anti Aging
Size: >Rs. 250 crs.
Growth: c. 30%
Tea bags Size: >Rs. 140 crs. Growth: c. 40%
Tea bags
Size: >Rs. 140 crs.
Growth: c. 40%

Building segments of future Delivering results

Portfolio contribution

of future Delivering results Portfolio contribution During financial year 2011-12 Core Categories Growth

During financial year 2011-12

results Portfolio contribution During financial year 2011-12 Core Categories Growth contribution Future Categories

Core Categories

Growth contribution

results Portfolio contribution During financial year 2011-12 Core Categories Growth contribution Future Categories
results Portfolio contribution During financial year 2011-12 Core Categories Growth contribution Future Categories

Future Categories

Our approach to Winning

Our approach to Winning

Leading market development

Leading market development More Users Drive preference More Usage Drive consumption More Benefits Develop segments

More Users

Drive preference

More Usage

Drive consumption

More Benefits

Develop segments

Repeatable models Successful deployment in Skin and Hair

More users
More users
Repeatable models Successful deployment in Skin and Hair More users More usage More benefits
More usage
More usage
Repeatable models Successful deployment in Skin and Hair More users More usage More benefits
More benefits
More benefits
Repeatable models Successful deployment in Skin and Hair More users More usage More benefits

Stepping up front end execution

More stores

DISTRIBUTED: 6.5 Mn CORE SERVICED : 2 Mn+ Direct
DISTRIBUTED:
6.5 Mn
CORE SERVICED : 2 Mn+
Direct

* Modern Trade on shelf availability

Better Stores

Product Proposition Place Pack Price Promotion
Product
Proposition
Place
Pack
Price
Promotion
Better served* 310 bps ↑ 2010 2011
Better served*
310 bps ↑
2010
2011

Delivering results

Perfect Stores

Increasing contribution, higher growth

Growth in perfect stores significantly higher Average Perfect stores
Growth in perfect stores
significantly higher
Average
Perfect stores

Modern Trade

Accelerating contribution growth 2010-11 2011-12
Accelerating
contribution
growth
2010-11
2011-12

Rural

Distribution gains contribution growth 2010-11 2011-12
Distribution gains
contribution
growth
2010-11
2011-12

Our approach to Winning

Our approach to Winning

Differentiated Supply Chain Driving benefits across value chain

Live Superior Service. Delivery Sustainable, Profitable Growth
Live Superior Service.
Delivery Sustainable, Profitable Growth
World class service
World class
service
Consumer perceived quality
Consumer
perceived
quality
E2E competitive costs
E2E
competitive
costs
World class service Consumer perceived quality E2E competitive costs Flawless execution, Safety and Sustainability
World class service Consumer perceived quality E2E competitive costs Flawless execution, Safety and Sustainability

Flawless execution, Safety and Sustainability

Focus on cash and savings

Step up in cost savings

Savings as a % of Turnover

2008-09 2011-12
2008-09
2011-12

Maximizing ROCE

Optimizing investments

% Contributed by 52% Productivity Capacity Improvement increase in 2011 48% New Capital Investments
% Contributed by
52%
Productivity
Capacity
Improvement
increase
in 2011
48%
New Capital
Investments

Delivering cash

TWC as a % of turnover

2010-11 2011-12
2010-11
2011-12

TWC: Trading working capital; includes debtors, creditors and inventory excludes cash; ROCE: Return on Capital employed

Driving Return on Marketing Investments Getting more out of advertising

More ads pre-tested

Up by 50%

2010 2011
2010
2011

Improvement in Ad preview scores

Up by 800 bps

70% Awareness Persuasion
70%
Awareness
Persuasion

Production and media fees

Lower by 900 bps

2010 2011
2010
2011

Driving Return on Marketing Investments Optimizing promotional spends

More activities evaluated

Up by > 50%

2010 2011
2010
2011

ROI: Return on Investment

More green activities

Higher by 1100 bps

+ -/- + TO Growth -/- ROI Positive
+
-/-
+
TO Growth
-/-
ROI Positive

Higher ROI

Up 200 bps

2010 2011
2010
2011

Our approach to Winning

Our approach to Winning

Performance culture that respects our values A broad based systematic approach

PERFORMANCE CULTURE
PERFORMANCE
CULTURE

Strengthening Performance culture

Aligned goals

Performance culture A l i g n e d g o a l s Sharper differentiation

Sharper differentiation

Reward linked to performance

Delivery Standards of Leadership
Delivery
Standards of Leadership

Fixed

t o performance Delivery Standards of Leadership Fixed Variable 2006-07 2011-12 Performance culture index is up

Variable

2006-07
2006-07

2011-12

Performance culture index is up by 14% in 2011
Performance culture index is up by 14% in 2011

Engaged to win

Step up in employee engagement scores

Engaged to win Step up in employee engagement scores 2009 Engagement scores for WL2+ 2010 2011
Engaged to win Step up in employee engagement scores 2009 Engagement scores for WL2+ 2010 2011
Engaged to win Step up in employee engagement scores 2009 Engagement scores for WL2+ 2010 2011
Engaged to win Step up in employee engagement scores 2009 Engagement scores for WL2+ 2010 2011
Engaged to win Step up in employee engagement scores 2009 Engagement scores for WL2+ 2010 2011
Engaged to win Step up in employee engagement scores 2009 Engagement scores for WL2+ 2010 2011
Engaged to win Step up in employee engagement scores 2009 Engagement scores for WL2+ 2010 2011
Engaged to win Step up in employee engagement scores 2009 Engagement scores for WL2+ 2010 2011
Engaged to win Step up in employee engagement scores 2009 Engagement scores for WL2+ 2010 2011
Engaged to win Step up in employee engagement scores 2009 Engagement scores for WL2+ 2010 2011
Engaged to win Step up in employee engagement scores 2009 Engagement scores for WL2+ 2010 2011
Engaged to win Step up in employee engagement scores 2009 Engagement scores for WL2+ 2010 2011

2009

Engagement scores for WL2+

2010

2011

Near Nil man days lost

preceding 2009 2010 2011
preceding
2009
2010
2011

5 year

average

scores 2009 Engagement scores for WL2+ 2010 2011 Near Nil man days lost preceding 2009 2010
scores 2009 Engagement scores for WL2+ 2010 2011 Near Nil man days lost preceding 2009 2010

Building a talent powerhouse

Building a talent powerhouse # 1 Employer of choice by Nielsen Campus track # 1 Best
Building a talent powerhouse # 1 Employer of choice by Nielsen Campus track # 1 Best
# 1 Employer of choice by Nielsen Campus track
# 1 Employer of choice by Nielsen
Campus track

# 1 Best employer in India, 2011 awarded by Aon Hewitt

# 1 Dream employer across campuses Survey by Nielsen

1
1
2
2
3 5
3
5

Straddling the pyramid

Compass - How will we win
Compass
- How will we win
Strengthening capabilities - Widening competitive gap
Strengthening capabilities - Widening competitive gap
Sustainability - USLP
Sustainability - USLP

Widening competitive gap Capability thrusts

Winning with Winning in Foods Winning in Rural beauty Segmented business models Leveraging technology •Target
Winning with
Winning in Foods
Winning in Rural
beauty
Segmented
business models
Leveraging
technology
•Target right for
growth
•Expertise and
authority program
•World class in-
store experience
•Beauty training
•Robust supply
chain
•CD capabilities
•Relevant
experience models
•Talent and culture
•Shakti/Shaktiman
•Telecom
•Financial Inclusion
• Differentiated
models - Lean and
agile
•Business planning
and operations
•Transactions
•Business analytics
•Digital Media

Winning in Rural Sizeable opportunity

Large Consumer base Significant Growing Rising contribution rapidly Income 146 million Households ~40% Double
Large
Consumer base
Significant
Growing
Rising
contribution
rapidly
Income
146 million
Households
~40%
Double
3.6X
of FMCG
digits
increase in
government
expenditure
Consumption and uptrading Strong growth in emerging categories
Consumption
and uptrading
Strong
growth in
emerging
categories

HUL rural: fast growing and profitable Expanded distribution, stepped up execution

Direct Expanding Consumer Leveraging Distribution presence awareness partnerships Tripled Project Shakti
Direct
Expanding
Consumer
Leveraging
Distribution
presence
awareness
partnerships
Tripled
Project Shakti
Khushiyon Ki Doli
Project Express
Winning in rural

Expanding HUL Rural presence ‘Project Shakti’

Expanding HUL Rural presence ‘Project Shakti’ 45,000 Shaktiammas 30,000 Shaktimaans 15 States 100,000 Villages

45,000 Shaktiammas

30,000 Shaktimaans

15 States

100,000 Villages

Expanding HUL Rural presence ‘Project Shakti’ 45,000 Shaktiammas 30,000 Shaktimaans 15 States 100,000 Villages
Expanding HUL Rural presence ‘Project Shakti’ 45,000 Shaktiammas 30,000 Shaktimaans 15 States 100,000 Villages

Driving consumer awareness and retail contact ‘Khushiyon ki Doli’

awareness and retail contact ‘Khushiyon ki Doli’ 2010 3 States 2011 5 28,000 Villages 70,000 10
awareness and retail contact ‘Khushiyon ki Doli’ 2010 3 States 2011 5 28,000 Villages 70,000 10

2010

3

States

2011

5

28,000

Villages

70,000

10 mln

Consumers

25 mln

170,000

Retailers

400,000

Addressing rural cost to serve challenge ‘Project Express’

IN PROGRESS COMPLETED
IN PROGRESS
COMPLETED
challenge ‘Project Express’ IN PROGRESS COMPLETED  HUL – TTSL Distribution Alliance • <20k markets

HUL – TTSL Distribution Alliance

• <20k markets across India

Win – win model

• Coverage expansion

• Improved servicing

• Higher income for Shakti entrepreneurs

Rolled out in four states

• Scale up in progress

• Improved servicing • Higher income for Shakti entrepreneurs  Rolled out in four states •

Widening competitive gap Capability thrusts

Winning with Winning in Foods Winning in Rural beauty Segmented business models Leveraging technology •Target
Winning with
Winning in Foods
Winning in Rural
beauty
Segmented
business models
Leveraging
technology
•Target right for
growth
•Expertise and
authority program
•World class in-
store experience
•Beauty training
•Robust supply
chain
•CD capabilities
•Relevant
experience models
•Talent and culture
•Shakti/Shaktiman
•Telecom
•Financial Inclusion
• Differentiated
models - Lean and
agile
•Business planning
and operations
•Transactions
•Business analytics
•Digital Media

Building competitive gaps Leveraging IT for growth

Supporting Customer Development

Improving coverage, quality of information and insights in traditional trade

Improving coverage, quality of information and insights in traditional trade

Enhancing brand engagement

Global digital

capability

Global digital capability

Driving S&OP

Enabled by End to End systems for business planning and operations

Enabled by End to End systems for business planning and operations

Supporting

transactions

Simplified payment processing

Simplified payment processing
Simplified payment processing

Leveraging IT for growth Supporting customer development

Leveraging IT for growth Supporting customer development

Leveraging IT for growth Driving new age communication - digital

Digital Engagement Readiness based communication Mobile, Social search, gaming and DTH Consumer insights,
Digital
Engagement
Readiness
based
communication
Mobile, Social
search, gaming
and DTH
Consumer
insights,
analytics, ROI
Build consumer
centric
platforms
•Building capability
•Focus on earned media
• 500% increase in
search, 100% in social
• More brands, more
platforms, always on
and 90% on mobile
• CMI integration on
DTH, mobile and
display
• 4.2 Mn Social
networking fans added
in 2011
•Axe Angels Club
-Top 10 FB page in
India
-2 nd largest Unilever
• Significant step up in
investment
• Online video is 10% of
total digital spends
• Pre-testing of digital
creatives
FB page
• JammyArt.com: India’s
• >1 billion social
impressions generated
• Digital campaign
effectiveness
largest Kida UGC
platform
• BeBeautiful.in: India’s
largest beauty
platform

Driving new age communication Mobile gaming

Driving new age communication Mobile gaming Reach 10 million game downloads Impact Avg. of 4.5 plays
Driving new age communication Mobile gaming Reach 10 million game downloads Impact Avg. of 4.5 plays

Reach

10 million game downloads

Impact

Avg. of 4.5 plays per person Excellent User Reviews

Driving new age communication Mobile activation

Driving new age communication Mobile activation

Driving new age communication Integrated video plus social networking

age communication Integrated video plus social networking 1 s t ever FMCG campaign from India to

1 st ever FMCG campaign from India to enter the ‘Facebook Studio hall of fame’

campaign from India to enter the ‘Facebook Studio hall of fame’ 3.3 lakhs channel views 126

3.3 lakhs channel views 126 subscriptions 60 videos

1
1
2
2
3 5
3
5

Straddling the pyramid

Compass - How will we win
Compass
- How will we win
Strengthening capabilities - Widening competitive gap
Strengthening capabilities - Widening competitive gap
Sustainability - USLP
Sustainability - USLP

Unilever Sustainable Living Plan Three big goals

Unilever Sustainable Living Plan Three big goals

Unilever Sustainable Living Plan India Highlights 2011

30 million people reached with Lifebuoy soap handwashing programmes in 2010-11

30 million people have gained access to safe drinking water by using Pureit in-home water purifier, since 2005

water by using Pureit in-home water purifier, since 2005 Around 60% of our major food and

Around 60%of our major food and beverage brands – Brooke Bond, Bru, Knorr, Kissan and Kwality Wall’s – comply with the ‘Healthy Choice’ guidelines’

Reduced CO 2 emissions by 14.7%, water use by 21.5% and waste by 52.8% in our factories, over 2008 baseline

Improved CO 2 efficiency in transportation by 17.8%

60% of tomatoes in Kissan Ketchup are sourced sustainably

Improved CO 2 efficiency in transportation by 17.8% 60% of tomatoes in Kissan Ketchup are sourced
Improved CO 2 efficiency in transportation by 17.8% 60% of tomatoes in Kissan Ketchup are sourced

Winning today winning tomorrow Driven by a clear and compelling strategy

Strategic framework

S t r a t e g i c f r a m e w o

Sustainable Living Plan

g i c f r a m e w o r k Sustainable Living Plan Our

Our Goals

Consistent Growth

Competitive Growth

Profitable Growth

Responsible Growth

Hindustan Unilever Limited Annual Investor Seminar 2012

Hindustan Unilever Limited Annual Investor Seminar 2012