Surabhi Chouhan

M. Sriraman
Manas Agarwal
Ujjval Jain
Arpit Bansal
Vignesh K.
Ritu Ranjan
Introduction

• Incorporated in the year 1933 with

• A heritage of over 80 years in India
• India’s largest FMCG company
• It has over 35 brands spanning 20 distinct categories
• It’s products include foods, beverages, personal care,
home care, etc.
• HUL is a subsidiary of Unilever which has 67% holding in
HUL
• As per a research, 2 out of 3 Indians use HUL products
History – timeline of events

• Lifebuoy, lux, Dalda brand Ponds India- • LIL merger

• Pears and Vim International acquisition • Lakme ltd. Joint venture

1918 1956 1993

1895 1937 1986 1996

Vanaspati launch 3 company merger • TOMCO merger

• Hindustan Vanaspati • 1994- Kimberly clark
• Lever Brothers India Ltd.
• United Traders Ltd.
History – timeline of events
• Acquired stake in Name changed to Prabhat- a Unilever Agreement with VDFPL
modern foods Hindustan Unilever Sustainable Living Plan with Vijaykant Dairy and Food
• Ayush product range Limited Products Limited

2003 2010 2016

2002 2007 2013 2018

• Acquired Cooked Shrimp and Unilever Suvidha- urban water,

Pasteurised Crabmeat Sustainable Living hygiene and sanitation
business Plan was launched community centre
• Pureit in 2004
• Direct to home business
 HLL formed Brooke Bond IL
Unilever begins Merger between HVMC, LBIL and
acquisitions
Kothari Foods; Doom Dooma, Kissan,
operations in India UTL Lipton

1933 1956 1991 1992 1993

Indian economy
liberalized Acquired TOMCO
It’s largest competitor in India

HUL’s M&A Acquires Lakme India

Buys the remaining 50% JV stake
Brooke Bond Lipton IL
merged with HLL

STORY 1999 1998 1996 1995

1933-2019
Ponds India Ltd merged Acquires Kwality &
with HLL Milkfood ice-creams
Also forms 50:50 JV with Lakme
Acquires Modern Foods HLL changes its name
First divestment by GoI to HUL

2000 2001 2007 2018 2019

International Bestfoods and Aviances HUL merges with GSK

merges with HLL Combined business worth
Rs.45000 crore
 HUL acquired TOMCO in 1993 through a merger in an exchange ratio of
1:0.133.
TOMCO had strong similarity with HUL’s product lines of soap and

Strategy for detergent.

After the merger the holding of Unilever was 51% and that of Tata Sons

Acquisition was reduced to 1% from 20%.

The main of aim of HUL acquiring TOMCO was to increase its market
share and market dominance especially in the segment of Detergents
The detergent industry was dominated by five major players: HUL,
TOMCO, Nirma, P&G and Godrej soaps.
After merger HUL became the largest company in terms of market
share.
The acquisition gave HUL entry in the lower end of detergent market
where current leader was Nirma.
 HUL drives its competitive advantage from its strong brands
This acquisition in 1996 gave HUL a range of brand’s in tea, packaged
foods and ice-creams
Strategy for HUL acquired BBLIL in 1996 through a merger in an exchange ratio of
1:0.45
Acquisition The merger made HUL emerge as the largest tea business in the world
The first step was taken in 1992 when plantation companies Doom Dooma
Ltd and Tea Estates Ltd in each of which Unilever had a 74 percent holding
merged with Brook Bond.
This has raised Unilever's equity holdings in Brook Bond to 49.9 percent.
Later Unilever increased its stake in BBIL to 51 percent.
Thus BBLL was the leading player in packaged tea and processed foods till
it merged with HLL
 HUL acquired Horlicks from GlaxoSmithKline in 2018
The merger of GSK India with HUL will be on a basis of an exchange
ratio of 4.39 HUL shares for each GSK CH India Share
Strategy for Footfall will be increased for HUL because Horlicks is a most trusted
brands in India
Acquisition Iconic brands of Horlicks combined with HUL capabilities will unlock
significant growth opportunities
The acquisition with GSK of HUL to build a sustainable and
profitable Foods and Refreshment business and expanding HUL
portfolio with great brand in India
Acquisition of strong Horlicks brands in the health food drinks
category would enhance the margin of HUL’s food business
 HUL acquired ponds in 1988 through a merger in an exchange ratio
of 3:4 ratio that means Indian shareholders getting three HLL
shares for every four shares

Strategy for Ponds had strong market presence with the beauty and personal
products in India

Acquisition After the merger the holding of Unilever was 51%

HUL had main focused to acquire Ponds was to increase its market
share and market dominance especially in the segment of beauty
and Personal care
Benefited of HUL to all Ponds Indian employees were easily would
become employees of Hindustan Lever.
After merger HUL became the largest company in terms of market
share in personal care segment
 HUL acquired Lakme in 1998 and divested its 50% stake in the joint
venture to the company
Lakme ranks number one in the coloured cosmetics market in India

Strategy for Lakme is the country's first cosmetic brand to introduce makeup to
Indian women

Acquisition After growing disposable income and changing lifestyles in urban to

increase the consumption of cosmetics products
The main of aim of HUL acquiring Lakme was to increase its market
share and market dominance especially in the segment of beauty
and personal care products
Lakme is a most trusted brand in India and growing at 20% per
annum
Capital Market Reaction
(Ponds-HLL Merger)
Ponds was fully merged with HLL on 26 Jan 2013 at swap ratio of 3:4
The Ponds scrip witnessed a flurry of activity
The scrip flared up to an intra-day high of Rs 1,194 but slipped to close at Rs 1138.75, up Rs
33.25 over the previous close. About 1.73 lakh shares were traded on the BSE and 2.26 lakh
shares on the NSE.
Market players predicted that the Ponds scrip would witness a sharp downturn in the days to
come
HLL, It touched an intra day high of Rs 1605 before closing at Rs 1579 on the BSE, up Re 1 over
the previous close. On the Bombay Stock exchange, 1.1 lakh shares were traded while on the
NSE, 2.28 lakh shares changed hands.
 Capital Market Reaction
( Tomco-HLL Merger)
Imp. Facts of TOMCO as at 31 Dec 1992 Imp. Facts of HLL as at 31 Dec 1992
EQUITY SHARE SHAREHOLDING EQUITY SHARE
SHAREHOLDING SHAREHOLDER SHAREHOLDER
DATA Unilever Group DATA
Financial Inst. FUNDS FUNDS
51%
44.84%
Face Value Rs.10 Financial Inst Face Value Rs.10
Equity Share 15% Equity Share
Public Bodies
36.29% Capital Capital
BookValue/Share Foreign Holdings BookValue/Share
21.51 Crs. 139.99Crs.
Rs.29.75 5% Rs.23.8
Corporate Bodies
Public
22.87% Preference Reserves
Equity/Share 29% Equity/Share
Share- 1.15 Crs. 193 Crs
Rs .3 Rs 7.3
Capital Market Reaction
( Tomco-HLL Merger)
Announcement of HLL-TOMCO merger was made on 9 March, 1993.
As consequence, the share price of TOMCO moved up from opening of Rs. 43.75 to Rs. 52.50 at
the end of the day.
HLL shares ended the day at Rs. 356.25 from the opening of Rs. 357.50.
Exchange ratio of merger: for every 15 shares of TOMCO 2 shares of HLL
Tomco Shareholder’s Premium = 356.25*2/43.75*15 -1 = 8.5%
 Capital Market Reaction
( GSK- HUL Merger)
Shares of HUL climbed 4.7 per cent to Rs 1,836 levels.
Shares of GSK Consumer Healthcare climbed 4.1 per cent to Rs 7,565 levels.
The merger of HUL with GSK Consumer Health will be on the basis of an exchange ratio of 4.39 HUL
shares for each GSK Consumer Health share
It is an excellent deal for HUL, which is adding around 50 per cent to its networth and 33 per cent to its
assets by diluting 8 per cent of equity. This is the power of enjoying rich valuations. It seems the deal is
more positive for HUL shareholders, but GSK shareholders will also stand to gain in the long run –
Analysts
All Capital Market Analysts raised their target price for HUL after this merger
 Reorganization of the three companies with
Training Indians for junior and senior
common management but separate marketing
management positions operations.

1937 1942 1944

Mr. Prakash Tandon, one of the

first Indian covenanted managers Mr. Prakash Tandon takes over as the Mr. Prakash Tandon
first Indian Chairman; 191 of the 205 becomes first Indian 1951
Change in managers are Indians. Director.

Leadership in 1968 1961 1955

HUL 65% of managers are
Mr. V. G. Rajadhyaksha Indians.
takes over as Chairman Mr. S. M. Datta takes
1971 over as Chairman

Mr. V. G. Rajadhyaksha
presents plan for
diversification into 1973 1980 1990 2000 2005
chemicals

Mr. T. Thomas takes over as Chairman

Dr. A. S. Ganguly takes over as M. S. Banga takes Harish Manwani tak
from Mr. V. G. Rajadhyaksha. Chairman from Mr. T. Thomas over as Chairman over as Chairman
21
Change in Leadership in HUL
Mr. Prakash Tandon(1961-68)
 Etah dairy set up, Anik ghee launched
 Lever's baby food, more new foods were introduced
 Taj Mahal tea launched
 Sun silk shampoo launched
 Signal toothpaste launched
V. G. Rajadhyaksha (1968-73)
 Fine Chemicals Unit commissioned at Andheri
 Rin bar launched; Fine Chemicals Unit starts
production
 Mr. V. G. Rajadhyaksha presents plan for
diversification into chemicals
 Clinic shampoo launched
 Bru coffee launched.
T. Thomas(1973-1980)
 Liril marketed
 Ten-year modernisation plan for soaps and detergent plants
 Close-up toothpaste launched
 Sodium Tripolyphospate plant at Haldia commissioned
 Fair & Lovely skin cream launched
Ganguly(1980-90)
 Foods, Animal Feeds businesses transferred to Lipton
 Agri-products unit at Hyderabad starts functioning
S M Datta(1990-2000)
 The erstwhile Brooke Bond India acquires the Kissan brand
from the United Breweries Group, giving HUL an entry into the
foods business.
 Tata Oil Mills Company (TOMCO), merges with the company
 Pond's India Ltd., merges with HUL
 HUL acquires Lakme brand
 Balance Scorecard for HUL (FMCG)
BA L A N CE S CO RE CA RD O R BS C I S A S T RAT E G IC P L A N N IN G TO O L T H E
I N T E G RATE S O BJ E CT I V ES , A S S E S S MEN T A N D ME A S U RE S TO P RO V I D E
S U S TA IN ABL E RE S U LT S I N BO T H F I N A NCIA L A N D N O N F I N A N CIAL
P E RF O RMA N CE G O A L S .
KEY PARAMETERS OF THE BALANCE SCORECARD:

Financials Innovation and Training

Internal Processes Customer Satisfaction

The balance scorecard can be calculated before and after the merger to ascertain the
success of the merger
26-08-2019 HUL M&A ANALYSIS 23
Customer Satisfaction
Unsatisfied (0-40) Neutral (40 - 79) Satisfied (80-100)
CRM Implementation efficiency

Organization Scorecard Relevance with Objectives

Weightage given to Customer Satisfaction

Importance given to customer expectations and exigencies

Rewards and Benefits of employees who have satisfied customers

Recognition of customer information as a strategic asset

Time and effort devoted by marketing team to improve customer relations

Effectiveness of feedback mechanism

Accuracy in Forecast of customer needs and problems

Receptivity to new ideas from customers by top management

26-08-2019 HUL M&A ANALYSIS 24

 Financials
Unsatisfied (0-40) Neutral (40 - 79) Satisfied (80-100)
Cost of Acquiring a new customer

Cost to create a loyal Customer

Cost of regaining a lost customer

Loss of sales from a dissatisfied customer

ROI prominence as a performance indicator

Similarities of cost with respect to customer loyalty and customer acquisition as

calculated by various departments

Top management targets for profitability

Customer Churn Rate

Revenue forecast associated with promotion campaign

Upselling and cross-selling impact on turnover

26-08-2019 25
 Internal Processes

Unsatisfied (0-40) Neutral (40 - 79) Satisfied (80-100)

Production Efficiency and Error rate

Delivery time of the consignments

Do product meet product/customer requirements

Customer involvement in product design and packaging

Improvements made in process methods to accommodate customer requirements

Technical service complaint redressal rate

Time taken to design and launch a new product

Top management opinion on the technological strength

Communication effectiveness to understand and meet customer expectations

Correlation between customer satisfaction and process improvement

 Innovation and Training

Unsatisfied (0-40) Neutral (40 - 79) Satisfied (80-100)

Responsibilities and roles for customer problem redressal

Freedom to make decision across levels

Quality of induction program to train new recruits

Correlation between employee interest and projects assigned

Rewards and Benefits for customer centric innovative ideas

training program to target and convert profitable customer

incentive system for innovative solutions across domains

Visits to conventions and product launches across globe

Integration and communication across departments for strategy implementation

Competitions and Contests to invigorate critical thinking