STRATEGIC MANAGEMENT ASSIGNMENT

COMPANY : HINDUSTAN UNILIVER LIMITED

1 SEPT, 2012 TO 31 JAN, 2013
4 SEPT, 2012
EXPANDING HAIR OIL PRESENCE
In Premium Play, HUL Plans Dove Hair Oil
MUMBAI
Hindustan Unilever plans a strong foray into the hair-oil market by extending its Dove brand into
the largest segment of hair-care business, two people with direct knowledge of the launch said.
"HUL is planning to launch Dove hair-oil at a price point ranging Rs180-200 for a 100 ml
bottle," said one of them. This would make it a super-premium brand, costlier than rival brands
such as Maricos Parachute Scalp Therapie and Bajaj Almond Drops.
A Hindustan Unilever spokesperson said the company does not comment on market speculation.
A senior company official on condition of anonymity said that around three variants of Dove hair
oil will be launched in November.
The move comes six years after the countrys top consumer products maker exited the hairoil
segment by selling its brand Nihar to Marico for Rs 240 crore. Its other brand Clinic oil is sold
only in select markets.
Hair oil accounts for 52% of the Indian hair care market estimated at Rs 12,800 crore, followed
by shampoos with around 31% share, hair conditioners and dyes. But hair oil has one of the
highest market penetrations at 90% and is highly competitive. The branded hair oil segment grew
19.8% CAGR in value terms during FY07-12, while light hair-oil segment, where HUL is
launching Dove, grew 25% a year.
HUL, which is the market leader in shampoo and conditioner, is entering the premium end of the
hair-oil market dominated by mass-priced brands of Marico, Dabur and Bajaj Corp.
Coconut-based oils dominated by Maricos Parachute brand account for half the market, while
perfumed-based oils such as light hair oil and amla contribute 30% where Bajaj and Dabur are
strong, Param Desai, senior research analyst at Nirmal Bang Institutional Equities, said. There
is room in the light hair oil segment as consumers are increasingly shifting from coconut based
oil to perfumed ones, he said.
Rising urbanisation and modern trade are driving the consumer shift towards perfumed-based
oils.
Devendra Chawla, president, food and FMCG, at the countrys top retailer Future Group, says
that consumers are moving towards specialty hair oils, which are growing faster in modern trade
and earn better margins for retailer and brands. Personal grooming is taking centrestage in

consumers life and hair oil category will get a hair lift with innovative specialty oils, he says.
Unilever, the Anglo-Dutch parent of HUL, has so far extended the 55-year-old Dove brand into a
range of skin, body and hair wash products where per-capita consumption is low in the country.
In hair oil, Dove will be super premium at Rs 180-200 for 100 ml. The same quantity of Bajaj
Almond Drops and Parachute Scalp Therapie will cost Rs 125, while Maricos Hair & Care is
priced just Rs 44 for 100 ml.
Since the last few years, HUL has been trying to extend most of its key brands into newer
categories such as hand and face wash, liquid detergent and premium skin lightening.
It has been particularly aggressive in the personal care portfolio that contributes 30% to its Rs
22,000-crore sales and over half its operating profit. The company has significantly increased the
number of innovations/renovations in the home and personal care categories, especially in
premium products, and revamped 60% of its portfolio in 2011-12. HUL's high-margin personal
products business has seen very stable growth in the range of 15%-20% over the past nine
quarters, driven by strong double-digit volume growth.
14 Sept, 2012
Class of 2012 Links Up to Gurus
Hindustan Unilever got 30 students from top B-schools across the country to engage with its
category heads and top global HR managers and understand how they faced real-life leadership
challenges
MUMBAI
The closest Satej Sirur, management student at ISB, Hyderabad, could get to really understand
how Unilever works, was through a textbook case study. So, being picked by his institute to
spend two days at the India headquarters of Hindustan Unilever in suburban Mumbai was
exciting. To do that in a group of 30 students handpicked from 30 best B-schools in the country
was challenging. But, to meet and engage with Doug Baillie, the man now responsible for all the
1.71 lakh people working for the multinational was quite something else. It was inspiring to see
a person who has been associated with the company for so long to continue to be so excited and
enthusiastic, says Sirur, recalling his meeting with Unilvers global chief HR officer this week.
Hindustan Unilever set up this engagement with top-rung B-school students to give them a taste
of real-life leadership as a part of its larger sustainability mission. The programme, which
reinforces the crucial role corporations can play in spawning young leaders, was aimed at
extending leadership grooming to the larger community and building leadership capacity for the
industry.
We are passionate about leadership within the organisation and leadership not only for
ourselves but leaders for building leaders, says Baillie. These students may or may not join us.
I am not worried about that... (but to) grow leadership as a core skill for the world over the next
10 years to contribute to sustainable living for what we think is really important for a
purposedriven organisation.
Besides Baillie, seven other top HR managers from Unilevers operations in different countries,

and several category heads were part of the initiative. The workshop not only gave the students
opportunity to participate in informal conversations on leadership with the top management from
Unilever, learn through innovative exercises, interactive sessions and group activities on
influencing skills, but also gave them scope to interact with peers from top business schools and
share ideas. Several Hindustan Unilever category heads, many of whom had risen from these
very schools, also shared their leadership moments. Our views on leadership were so far
restricted to peers, says Jagannath Kalaimani, IIM Indore student and the secretary of its
placement committee. But this unique initiative gave us a completely new and broader
perspective on leaders and how they have been moulded, he adds Jagannath.
Referring to the companys focus on partnering, collaboration and participative leadership,
Leena Nair, executive director HR, HUL, said: There is more collaboration (being seen
now). In the past leaders were directive. You had one leader and everybody would follow. (Now)
its about participative leadership. Its about co-creating along with your team, along with your
external partners. The whole space of working in a very different leadership style (is very
important).
The 30 students, each from one of the top Bschools including IIMs, TISS, ISB, SP Jain, FMS,
were nominated by their institute deans and directors and hold leadership position on campus
such as placement committee representatives, cultural secretary, sports secretary, and students
counsel president.
We need to build leadership capacity. There is a real vacuum in terms of leadership around the
world. The concept of leadership and the world needing leaders in every walk of life is critically
important. That is one of the reasons of organising this programme, Baillie told the students. He
was CEO of Hindustan Unilever from 2006 to 2008. The company said the initiative is not about
getting a private view of the best talent, but aimed at building leadership capacity for
corporations in general.
We are always on the lookout for the best talent and every opportunity to interact with the best
talent we dont want to miss. This is not about looking at them as possible people who we can
hire, said Anuradha Razdan, general manager, leadership development, HUL.
Asked about specific leadership challenges in India, Baillie says, one of the biggest challenges is
in getting alignment behind a common vision. Its about painting a vision, painting a picture
and marshalling the resources behind that and driving people towards that, he says. Also,
important is having a real leadership purpose and creating the right environment that enables
developing young talent and promoting an inclusive culture.
Unilever, known to be a CEO factory, has over the years set up robust leadership training
infrastructure and talent management processes. Among its various leadership initiatives is the
Unilever Future Leaders Program (UFLP), which is designed to give an accelerated start to
talented graduates to become managers. The programme, focused on building leadership
capability, involves number of job rotations and cross-functional stints, international stints, and
opportunity to network with support from coaches and mentors from Unilever and provides
scope to fresh graduates to continually assess and develop their leadership skills while gaining
insight into the organisation. Over the past few years, HUL has progressively adopted a more
informal and accessible style of leading, under leaders like Baillie and current CEO Nitin
Paranjpe. To sustain its latest leadership initiative,HUL together with the students now plans to
create a Linkedin or Facebook group that will help them remain connected and share ideas and
knowledge in future. Says Satej, who is very enthusiastic about keeping the group alive: 5-10
years down the line we will be senior people at various places. A network platform for young

leaders will help in sharing of ideas and knowledge. So will HUL feature among their preferred
employers on campus? Says Febin Sagir, management student from IIM Bangalore: I will like
to take a job where the company is people-centric. And, this workshop has reinforced that.
28 Sept, 2012
Hind Unilevers Sustainability Drive Fails to Impress Everyone
Cos contract-farming project for tomatoes in state may fall short on environment marker
Hindustan Unilever (HUL) wants to go from being an importer of tomatoes to becoming selfsufficient and, in time, meeting its parents entire global requirements. And, in keeping with the
vision for 2020 outlined by Paul Polman, the CEO of parent Unilever, HUL wants to do it
sustainably: namely, by improving livelihoods and by decoupling growth from environmental
impact.
An HUL contract-farming pilot, initiated in April and shown to the media last week, delivers on
livelihoods but falls short on the environmental marker. This pilot, in the Nashik district of
Maharashtra, works with the state department of agriculture to provide about 600 farmers
subsidised agricultural equipment, instill good practices and assured offtake of their produce.
Today, we (HUL) are importing 30-35% of our tomato pulp for Kissan from China, says
Ramesh Krishnamurthy, procurement operations director, HUL & South Asia, Unilever. With
the right agricultural practices, we are also aiming to export sustainable Indian tomatoes to
Unilever for other countries, says Krishnamurthy.
By right agricultural practices, Krishnamurthy means deploying newer technologies like drip
irrigation to conserve water, training farmers on hybrid-seed varieties, and using branded seeds,
fertilisers and pesticides, promoted by the companys other private partners for this initiative
which include Bayer CropSciences, Indus and Syngenta. With new sustainable agricultural
technologies, farmers save, on an average, 20% of costs on labour, fertiliser and water,
says Vijay Sachdeva, agronomist, HUL. The use of chemicals, even in an efficient manner, leads
to a deterioration in soil quality and increases the cost of cultivation, making agriculture
unsustainable in the longrun, says Vijay Shankar, director of research, Samaj Pragati Sahyog
(SPS), a non-governmental organisation that works to promote low-cost sustainable agricultural
practices for the poor.
Where is the sustainability angle here? asks Shankar, making a case for organic farming.
They are just telling farmers how to maximise the use of these chemicals without wastage.
There is no attempt here to move to non-chemical-based agriculture. A HUL spokesman says
the company plans to train farmers on vermi-composting from the second season onwards,
which will further improve the fertility of the soil.
This private-public partnership (PPP) pilot, which will run for a year, till March 2013, will cover
an area of 800 hectares and involves cultivating two seasons of crops across Nasik, Ahmednagar
and Pune. So far, in the first phase, 579 farmers, who grow tomatoes on about 440 hectares of
land, have registered. The total project cost is . 15 crore; of this, Maharashtra will contribute

49.5%, farmers 49% and HUL 1%.

The state meets its share of costs by providing a 50% subsidy on infrastructure like seeds, microirrigation systems, fertilisers and crates for storing and transporting the produce. The farmer
bears the other half and cost of labour. HUL trains farmers and government officials, as well as
ties up with input companies.
When ET visited the project last week, a Bayer representative was making an elaborate
presentation to a gathering of around 25 farmers on the benefits of using his companys
fertilisers and pesticides. After the presentation,farmers were given a Bayer kit, costing . 6,000,
for . 5,200.
Sachdeva of HUL advises farmers on agri-practices. One advice is to use hybrid seeds, which, he
says, are supple and grow on the ground. The traditional way of growing tomatoes is on vines,
via a process called staking. Sachdeva says by removing this practice of staking, farmers save .
10,000-15,000 per hectare mainly on labour costs; the crop cycle is also reduced to 120 days
from 180 days. According to Shankar of SPS, hybrid seeds deliver high yields, but they cannot
be reused and need to be purchased every year. This increases input costs for the farmer.
Companies are fostering a dependency (of farmers) on seed, fertilisers and pesticides, says
Shankar. In Punjab, farmers used hybrid seeds. With increased use of chemicals, the soil quality
has deteriorated.
But the economic benefit has been more clear-cut. With HULs help, Yashwant Murlidhar
Sonawane, a 41-year-old farmer, is inter-cropping guava, tomatoes and marigold on his 1.5-acre
plot. Earlier, I was making . 70,000-80,000 a year, he says. With the new additions, I expect
my income to increase to . 3 lakh. HUL provides a buyback guarantee: 75% of a farmers
tomato produce is bought by Varun Agro, an HUL partner that has a processing plant nearby,
while the remaining 25% can be sold in the open market.
We have not received much participation from farmers because of the price fluctuation in the
market for tomatoes, says Kailash Shirsath, district nodal officer and taluka agriculture officer
in Dindori, Nasik, who has been assigned to work with farmers in this project.
28 Sept, 2012
Unilever Now Takes HUL Strategies to First World
Offers smaller packs, cheaper variants, single serves for developed mkts recession-hit
consumers
MUMBAI

During a 2009 India visit, Paul Polman, CEO of Anglo-Dutch consumer goods major Unilever,
couldnt conceal his delight with the Indian subsidiarys strategy of offering brands with multiple
price and packaging options, helping consumers trade down or up depending on the state of the

economy.
If we had that (such options) in the United States, there is no reason why we would be hit in a
recession. We have seen that we tend to do well in markets that have a wide portfolio of brands
in a category. So, we are trying to do the same in other markets, Polman had said.
Three years on, the Unilever CEOs words are ringing true in developed markets. The home &
personal care and foods giant is now dipping into the sales strategies being deployed by outposts
in developing and emerging (D&E) markets, such as Indias Hindustan Unilever Ltd (HUL), to
appeal to recession-ravaged consumers in the US and Europe. These include selling smaller pack
sizes, affordable variants of best-selling brands for the developed worlds bottom of the pyramid
consumer, and single-serve sachet variants. Company officials say consumers in developed
markets plagued by unemployment and shrinking disposable income are displaying similar
habits of thrift as those in developing markets.
The maker of brands such as Axe, Dove, Knorr and Lipton is selling small packs of its brands in
markets such as Spain, Greece and the US. In Spain, for instance, Unilever sells Surf detergent in
packs offering five washes, and offers mashed potatoes and mayonnaise in small packages in
Greece. It has also launched a low-cost brand for tea and olive oil for the euro markets.
Confirming the move, a Unilever spokesperson said: We have reverse-engineered products
from D&E markets where we have big, long-established businesses starting with a price
point that people can afford and then working our way backwards along the supply and
manufacturing chain to make sure that we can make it a profitable business model. We know that
this works as a way of meeting the needs and aspirations of consumers who struggle to make
ends meet be that through low-price sachets of shampoos or basic bouillons.
Across Europe, Unilever has noted that the recession drives more consumers to packed lunches
and home-baking. The company has now introduced new baking products like Stork baking
liquid as an option to the more expensive butter as well as in packs that can be re-used as lunch
boxes. The spokesperson also points out that Unilever runs marketing campaigns on mayonnaise
that seek to inspire people to make the most of their leftovers. Groups of consumers see value
differently. The cash strapped are really about spending the least out of pocket as possible;
whilst smart shoppers might be looking for the best price per portion; and bargain hunters the
best possible promotional deal, explains the spokesperson.
One way Unilever is trying to meet consumer needs is by positioning specific brands as valuefor-money alternatives. Example: the spreads portfolio has I cant Believe its not Butter in the
United Kingdom, Homa in Germany and Delma in Poland. Unilever is also rolling out Saga, a
strong value-for-money tea brand in central European markets.
The consumer goods giant has also dramatically increased the number of products that retailers
can choose to sell at a 1 or 1. In tea, for instance, theres PG Tips One-Cup and in dressings
theres a 450-mg jar of Hellmanns Salad Mayonnaise. Within the Knorr Bouillon range,
Unilever has launched Knorr Economica with an entry-level stock cube thats priced some 60%
lower than the normal line.
Another strategy involves offering more at an affordable price: like ice-creams in mega packs,

large jars of mayo, and PG Tips in 240 Tea Bag formats.

Much of what Unilever is replicating in the developed world has originated in India. For
instance, HUL had launched a sachet blitz across such power brands as Close-Up, Pepsodent,
Sunsilk, Ponds, Vaseline, Brooke Bond Taj Mahal and Bru to increase product penetration at the
bottom of the pyramid. However, a relatively smaller player, Cavin-Kare from the South, had a
huge role to play in ushering the sachet revolution as a strategy for low-unit pricing to drive sales
at the low end.
Unilever is now busy taking such lessons from D&E markets which contribute roughly 53% to
the global turnover to a developed world thats teeming with bargain hunters and value seekers.
Innovations that add value, particularly at the lower end of the price spectrum, are being shipped
to developed markets. What we have been able to do better as a business is take some of the
techniques we use in one part of the world and apply them where they are appropriate
elsewhere, adds the Unilever spokesperson.
Kannan Sitaram, operating partner at India Equity Partners, a New York-based private equity
firm, says with Unilever adopting value-for-money strategies in the developed world, the bottom
of the pyramid term has now got a new dimension. Bottom of the pyramid does not mean poor
consumers; it includes those who want a particular value at a price, across categories.
10 Oct, 2012
P&G Packs a 1.5k-cr Investment Kitty to Help Arm Take on HUL
Cos largest-ever India investment will be used to fund ongoing business activity, expansion
plans
MUMBAI
Procter & Gamble, the worlds largest consumer goods firm plans to invest . 1,540 crore in its
unlisted arm P&G Home Products, its largest investment since it entered the Indian market two
decades ago, indicating its commitment to challenge the domination of Hindustan Unilever in
Asias third-largest economy.
In a board meeting held last month, P&G Home Products decided to increase its authorised share
capital by issuing an additional 2 crore shares of . 10 each at a premium of . 760 to its parent
company.
Confirming the fund infusion into the 100%-owned subsidiary that makes Ariel, Tide and
Pantene, a P&G spokeswoman said the money will go into supporting ongoing business activity,
fund capital expansions for P&Gs operations and meet working capital needs in India.
The capital limit increase in Procter & Gamble Home Products is in line with P&Gs focus on
India as a key developing market, and one that the parent company continues to invest behind.
P&G India has been achievingdouble-digit growth consistently in the past few years and is one
of P&Gs fastest growing markets globally, said the spokeswoman.
The Cincinnati US-headquartered company has struggled to revive sluggish sales in developed

markets while emerging countries have gradually climbed to a $32-billion business for the
company, generating 38% of sales and 44% of volume.
India is still one of the smallest markets for P&G with just $1-billion sales across three
subsidiaries Procter & Gamble Health & Hygiene, which markets feminine hygiene brand
Whisper and Vicks anti-cold balm; Gillette India, a maker of razors and other shaving products;
and Procter & Gamble Home Products, best-known as the maker of Ariel and Tide detergent.
Analysts feel that P&Gs fresh investments could be disruptive for key rivals, especially
Hindustan Unilever that share retail shelves in detergents, skin and hair care products, if P&G
tries to increase market shares by cutting prices. P&G has such a strategy every three to four
years, the last being in 2008-09 when a price war was seen in detergents catgory. So we expect
investments to reflect in advertising as well as price war by next year, said Anand Shah, senior
analyst at Elara Capital. The parent company isnt downplaying Indias growth prospects either.
Were focused on our top 10 developing markets where growth prospects are highest, including
the important BRIC markets of Brazil, Russia, India and China, where sales have grown an
average of 20% over the past decade, it said in a recent presentation to investors. Among BRIC,
the Indian business recorded a 27% compounded growth between 2002 and 2012, the highest
among the BRICs, followed by Russia at 25%, and China and Brazil at 23% and 17%,
respectively.
Last year, the US-based consumer goods maker approved an investment plan of over . 900 crore
in its unlisted arm P&G Home Products. Most of those funds were to power P&Gs Project 2-34, which is aimed at doubling the number of Indians who use its products, trebling per capita
spending by Indians on its products and quadrupling net sales of its India operations by 2015. A
substantial part of this has gone into sprucing up its existing multi-product manufacturing facility
at Bhopal. In addition, the company is also planning to set up another plant in Hyderabad in line
with its global mandate to set up over 20 production centres and acquire one billion new
consumers in emerging markets by 2015.
Making more products locally, a reversal of its decade old strategy of importing products, would
mean faster launches which would help it take on its arch rival Unilever on the Indian turf. P&G
is facing several headwinds relating to costs and slower growth in developed countries which
have put the company on the back foot. However, given its vast product portfolio and enforcing
its plans to cut costs by $10 billion by 2016 would help improve profitability. But reduced focus
on emerging markets (by P&G) is evident as HUL has been reporting continuous margin
improvement in the soaps and detergents category largely on account of P&Gs reduced
competitive intensity in India, said a report by Edelweiss.
27 Oct, 2012
HUL Sees Strong Opportunity Even as Volume Lose Some Zip

Net Profit rises 17%; sales up 16%; volumes rise just 7%; shares fall 2%
MUMBAI
The countrys largest consumer goods company, Hindustan Unilever (HUL), on Friday reported
some moderation in volume growth in Indias challenging consumer market. The company
whose presence in a range of daily consumption items such as soaps, shampoos and food
makes its performance a good proxy for consumer sentiment said profit and sales grew more
than 15% in the three months to September. At a time when manufacturers are worrying over
worsening slowdown, HUL said it did not see any evidence of its customers opting for cheaper
options. The company said net profit in its second quarter rose 17% yearon-year to . 806.9 crore,
while sales grew nearly 16% to . 5,875.8 crore. We have seen some clear signs of moderation in
volume growth, particularly in some of the discretionary categories, chief financial officer
Sridhar Ramamurthy said. In terms of the cost environment, it remains volatile and competitive
intensity further went up.
Chief executive and managing director Nitin Paranjpe said consumer opportunity continues to be
very strong and robust in India in the medium to long term. We are fortunate that we operate
in categories which are everyday needs, and to that extent, we are relatively better insulated from
the sort of changes and impact that macro-economic environment has, said Paranjpe.
However, the companys volume growth at 7% the lowest since fourth quarter of FY10 hit
shares, which lost 2.1% to close at . 551.75 on the Bombay Stock Exchange. According to the
company, one of the reasons impacting volume growth was the budget rationalisation in the
Canteen Stores Department, which provides consumer goods to defence personnel. CSD
contributes nearly 7% to HULs domestic business. HUL increased its EBITDA (earnings before
interest, tax, depreciation and amortisation) margin by 74 basis points to 15.5%, its highest for
the second quarter since September 2003. The company said the performance in rural markets
was one of the key drivers of overall growth, helped by a trebling of its rural distribution
network.
Besides investors, analysts also expressed concern over the companys volume growth.
Moderation in volume growth is cause of concern, segmental personal product disappointed on
volume front and overall margins have been maintained largely due to price hike and raw
material cost coming down, said Rikesh Parikh, vice-president of markets strategy and equities
at Motilal Oswal Securities.
During the quarter, sales of soaps and detergentsHULs biggest business segmentrose 22%
to Rs 3,176 crore, while personal products sales grew 12% at Rs 1,745 crore.
Beverages and packaged foods segment saw 10% growth at Rs 720 crore and Rs 3,663 crore,
respectively.
Revenue from other businesses, which includes chemicals and water purifiers, declined 38% to
Rs 288 crore over the three months.
Announcing its quarterly results, HULs parent Unilever had said on Thursday that despite
continued high levels of competitive intensity, depressed economies and increasing global

imbalances and uncertainty, it saw solid growth with a good balance between volume and price.
Our emerging markets businesses delivered another quarter of double-digit growth, taking year
to date growth to 11.7%, Unilever said in a statement. Developed markets declined in the
quarter but are up 0.8% year to date.
Harish Manwani, non-executive chairman of HUL and COO of Unilever, said: We don't believe
that we are in a situation where markets were growing and suddenly it will stop growing. There
will be some categories that will grow faster, some less fast and there will be period when there
will be acceleration and then somewhat lesser acceleration. That's the reality of any developing
market. Unilever now makes more than half of its turnover from China, Brazil, India and other
emerging markets and predicts sizeable profits from these markets thanks to their burgeoning
middleclass population.
16 Nov,2012
Unilever Scripts Global HR Role for HULs Nair
SAGAR MALVIYA & CHAITALI CHAKRAVARTY
MUMBAI | NEW DELHI
Unilever, the worlds second-largest FMCG company, has elevated Hindustan Unilevers human
resource head and executive director Leena Nair as its global senior vice-president for leadership
and organisation development.
Nair, 43, will shift to the London headquarters of the Anglo-Dutch company and report to Doug
Baillie, the chief HR officer of Unilever, from January 1, 2013, a company spokesman said.
Being one of 5-6 people reporting directly to Baillie, Nair will have a fair shot at taking up the
top HR job in Unilever when her 57-year-old boss moves on.
Nair could not be contacted
as she is on an annual leave. The development puts the spotlight on a new breed of Indians that
multinationals groom for top jobs globally people managers. At least half-a-dozen Indians
have moved to global human resource roles in the past two years, mainly because of their
experience in a culturally diverse country like India.
The experience in India helps the professionals deal with a multi-ethnic workforce spread across
the world.
(The) Indian workforce is quite diverse and has different kind of sensitivities. Exposure to such
diversity becomes a very important virtue at a global level considering they are well-equipped to
handle challenges better, saysAditya Narayan Mishra, president (staffing business) at Randstad
India, a division of the worlds second-largest HR services firm Randstad Holding NV. Nair has
a Two-decade Association with HUL
Earlier, Indians, with their inherent knowledge of a challenging but high-potential market
environment, were mostly chosen for operational roles globally as multinationals shifted focus to
emerging markets to maintain growth momentum. A gold medallist from XLRI, Nair has been
with Hindustan Unilever for two decades and is credited for a number of HR interventions.
Since 1992, when she joined HUL as a summer trainee, Nair has had many firsts to her credit
from being one of the first women managers to opt for a factory stint, in the industrial belt of
Taloja, to becoming the first woman on HULs management committee and its youngest
executive director five years ago. There is more collaboration (being seen now). In the past,

leaders were directive. You had one leader and everybody would follow. (Now) its about
participative leadership. Its about co-creating along with your team, along with your external
partners, she told ET last month, referring to the companys focus on partnering, collaboration
and participative leadership. Come January and Nair will join a growing number of Indian HR
managers taking up global roles in multinationals.Diversity is the biggest agenda for all global
CEOs and boards. Thus, being Asian and a woman means your career could accelerate to the
highest echelons of the global corporate world, says Vibhav Dhawan, managing partner at
Positive Moves Consulting.

4 Jan, 2013
HUL, Nestle to Extend Knorr, Maggi into Oats
Kellogg and GSK Consumer too plan to launch masala oats soon
MUMBAI
Two of the country's largest food companies, Hindustan Unilever and Nestle India, will soon
launch oats, extending their battle in readyto-cook food category from noodle and soup to the
healthy cereal.
Hindustan Unilever and Nestle plan to launch oats under Knorr and Maggi brands, respectively,
as healthy extensions of their noodle segment this year, two people familiar with the
development said.
While Nestle didn't comment to an email query, a HUL spokesperson declined to comment on
market speculation.
Oatsa grain that is still considered horse feed in some parts of the world including pockets in
Indiahas already emerged a popular breakfast cereal on the back of increasing demand for
health food in metros and big cities.
While PepsiCo's Quaker Oats, which calls itself the World's No. 1 Oats brand, entered India over
seven years ago, more than half a dozen food companies including GSK Consumer, Kellogg
India, Britannia and Marico have entered the . 200-crore oats market, which is growing more
than 40% annually, over the last few years. Despite a healthy growth rate, the . 600-crore
breakfast cereal industry has not made much progress in trying to convince Indians to change
their eating habit from oily parathas to healthy options.
Thats because when they have had to make a choice, Indians have always preferred health to
taste. For example, Nestles Maggi noodles alone is estimated to be more than . 1,100-crore
brand, almost double the size of overall breakfast cereal market.
Now, some experts say marketers have found a way to bring taste and health together with
flavoured oats.
A lot of experimentation has taken place in last 2-3 years in breakfast category and with the
recent launch of flavoured oats specially with Indian taste the entire story has changed and we
seem to have, for once, found the solution to marketers dilemma of whats healthy is not tasty
and whats tasty is not healthy, Devendra Chawla, presidentFood Bazaar at Future Group,
says.
Hence, companies are shifting their communication to oats being amenable rather than just

healthy to Indianise their offerings.

"While there challenges in changing Indian consumers' food habit, breakfast as an occasion is
seeing the maximum change, says Sameer Satpathy, marketing head of Marico, which was the
first company to launch masala oat variant. "The organized breakfast market is under penetrated
and new entrants will help grow the segment even as competition intensifies," he added.
PepsiCo's Quaker is by far the market leader with share of over 35% ahead of Marico's Saffola
and GSK Consumer's Horlicks. Traditionally, companies were focused on South India, which
accounts for more than three-fourth of the total market but recently began expanding nationally.
Quaker, which has been selling the masala variant since last year, has extended the brand to
Indian ready-tocook mixes such as upma and poha this week.
Industry officials said that Kellogg and GSK Consumer too plan to launch masala oats soon.
Future Groups Chawla says oats has the potential to grow beyond just a morning snack. While
consumer interest is high, the challenge is to take it beyond breakfast including snacking and
meals like noodles and even include kids, which currently is not the case, he says.
The decision of HUL and Nestle to enter the segment is also triggered by their slowing growth.
For instance, while HULs processed food and beverages portfolio has grown at 16.4% CAGR
over CY05-FY10, its growth rate has decelerated to 13.2% in the last two years, despite the
company being aggressive with its Knorr portfolio.
Similarly, Nestle is expected to post its lowest revenue growth of 11.3% in 7 years in 2012.
Anand Mour of ICICI Securities, in a report, wrote that Nestles low revenue growth is driven
by channel rationalisation, deceleration in growth of food business and competition in noodles
segment.
23 Jan, 2013
Higher Royalty may Hurt HULs Bottom Line
The signs of a slowdown in consumer demand were first reflected in the performance of
Indias largest fast-moving consumer goods or FMCG company HUL in the quarter to
September last year. That has been reinforced by the latest set of numbers.
A volume growth of 5% the lowest in the past several quarters is an indication that price
increases by the company over the past one year have come to bite it. It has adversely impacted
the consumption of its products, especially in an intensely-competitive market. Add to it, the
higher expenditure towards advertising and promotion failed to significantly drive the companys
sales volume. The profitability of the companys largest product segment of soaps and detergents
also took a beating, with segment margins dropping 100 bps to 12.4%.
For investors, many of whom had bought more of the HUL stock last year when economic
growth was faltering, besides the below-par showing this time, what will also hurt is the decision
of the company to pay higher royalties to its parent Unilever. The Indian arm of the
multinational firm has been making royalty payments to its overseas parent from FY10
kicking it off with a payment of 0.9% of net sales, which rose to1.4% of net sales in FY12. The
rise in royalty payments to close to 3.15%, from 1.4%, of net sales by FY18 is likely to
significantly impact the companys bottom line. HULs net sales have been growing at a
compounded annual growth rate, or CAGR, of 13.5% during the past five years. Assuming this
growth rate is maintained over the next six fiscals, it could mean a royalty payment of . 1,548
crore by the company for FY18. This is five times the royalty paid by the company in FY12 and

contrasts with the fact that the companys dividend payout ratio has been steadily declining from
72% in FY10 to 66.7% in FY12.
The performance of London-based Unilever HULs overseas parent has been impacted
with a slowdown in consumption in developed markets. The companys net sales have grown at
a CAGR of 4% in the past five fiscals till FY11. Its gross margins have declined to 39.8% in
FY11 from 48.8% in FY07 and it has been looking to its subsidiaries in emerging markets to
drive growth.
Given this backdrop, the decision to charge a higher royalty from some of its fast-growing
subsidiaries in emerging markets such as Indonesia and India may lead the company open to the
charge of attempting to boost income.
Volatility in the global and local markets and inflation impacting consumer spending and
growing competition are likely to impact HULs performance in the near term, which may force
the company to don the battle gear in the next few quarters till prospects brighten. For now,
higher royalty payments at a time when the company is battling a slowdown in the Indian
consumer market and disappointing numbers signal a double whammy for shareholders of HUL,
making the stock less attractive than its peers such as ITC and Godrej Consumer Products.

23 Jan, 2013
HUL Net Up 15%, but Low Volumes Worry Street
Investors also fret over cos plan to increase royalty to parent
MUMBAI
Hindustan Unilever (HUL), the countrys largest consumer goods company, posted a 14.6% rise
in net profit in line with expectations on the back of rising prices, but low volume growth and a
proposal to increase royalty payments to its parent resulted in its share falling 8% from an intraday high. It closed at . 481.55, down 2.88% in a flat market.
The Indian arm of Unilever Plc now pays a royalty of over 1.4% of net sales, which will
increase, in a phased manner, to 3.15% by 2018, the company said. From next month till March
2014, it will be hiked by 50 basis points (one basis point is one-hundredth of a percentage point)
and, subsequently, between 30 bps and 70 bps each year for the next four years. Our
preliminary analysis suggests 3% and 5% contraction in EBITDA post this new royalty, if other
things are constant, said Rikesh Parikh, VP - markets strategy & equities, Motilal Oswal
Securities. Defending the increased royalty payments, HUL said as competition intensifies,
particularly from global players, Unilever is committed to supporting it with new products,
innovations, technologies and services. But, given the need for increased levels of service
and the consequent additional costs, Unilever asked for a review of the royalty arrangement to
ensure a fair recovery of costs. In recent years, Unilever has been globalising the resources for
doing innovations, developing technology and functional capabilities. In developing and
emerging (D&E) markets, you need to compete with the scale and might of Unilever in totality.
More costs are being incurred to create technology and innovations and there is an increased
focus on D&E markets that includes India, said R Sridhar, chief financial officer, HUL. HULs

Royalty Rate to be Lower Than Global Peers

Even after March 2014, HULs royalty rate will be lower than global consumer goods companies
such as Nestle India and GSK Consumer, which pay 3.4% and 3.6% of sales, respectively, to
their parent companies. The royalty rate for Colgate Palmolive India is 5.4% and P&G Hygienes
is 4.9%.
HUL posted a 14.6% growth in profit, but said it may have to combat challenges arising from
inflation and currency volatility. It vowed to maintain relentless focus on cost management and
execution to contain these threats.
HUL said its profit after tax before exceptional items rose to . 873.09 crore in the three months to
December 2012, against . 762.17 crore in the year-ago quarter, and its operating margin at 16%
was up by 40 bps. The companys domestic sales, widely seen as a proxy for demand for fastmoving consumer goods (FMCG) in the country, went up by 15% to . 6,158 crore from . 5,360
crore in the year-ago period, in line with the FMCG industry, which grew by 14-16% during the
quarter, HUL said. Of the total sales growth, 5 percentage points came from underlying volume
growth, its lowest in the last three years.
In the short term, clearly, there is inflation. There will be some stress on consumer wallets and,
therefore, there is a possibility that the slower pace of growth in discretionary categories that we
saw could continue for a little while, said Sridhar. But will it continue structurally in the next
five years? Absolutely not.
Its cost of goods sold during the period was 30 bps lower than in the year-ago period. HULs
performance, however, indicates that consumer demand is gradually getting impacted after
robust sales in the last two years because of inflation and a slowing economy.
Analysts, too, are concerned by the slowdown in volumes the actual number of products that
customers were putting in their shopping baskets in key segments such as soaps and detergents.
We believe weakening consumer sentiment following high inflation and employment
challenges is putting pressure on consumers wallets. Discretionary categories are now facing
stress and the lack of inclusive growth in the economy will continue to hurt low-ticket spending,
Nitin Mathur, consumer research analyst at Esprito Santo Securities, said. HUL, also Indias
largest advertiser, increased its advertising and promotion spends by 100% to . 822 crore, or
12.4% of its sales, in the third quarter. The sales of its largest segment soaps and detergents
rose 20% in the quarter, mainly due to price hikes and new launches in brands like Lifebuoy.
New launches in Dove and Fair & Lovely drove up sales of personal care products by 13%.
24 Jan, 2014
HUL Plunges 4.3% on Downgrades
MUMBAI
Shares of Indias largest soap and detergent maker Hindustan Unilever plummeted 4.34% on
Wednesday to close at . 460.05 as several brokerages downgraded the stock after the company
reported lower-than-expected third quarter earnings and hiked its royalty payment to Anglo
Dutch parent Unilever. The maker of Lux soap said it will pay royalty of 3.15% of the turnover
by 2018 from 1.4% now for launching products and accessing technology from its parent.
The royalty payment for HUL will keep on increasing progressively over next few years, said
Manish Jain, analyst at Nomura, in a note to its clients. The tax burden is also likely to increase
over the next couple of years, all this together will impact profit growth.

HUL, on Tuesday, reported a 16% rise in third quarter net profit to . 871 crore. Net sales rose
12% to . 6,655 crore during the same reporting period. We have cut our earnings per share
estimates by 3-7 % over fiscal year 2014 to 2015. We expect 50 basis points or half a percent rise
in annual royalty between fiscal year 2014 and 2015, said brokerage CLSA in a research note.
In the past three months, the stock has underperformed the markets plunging by over 20%
against the benchmark 30 share index Sensexs gain of nearly 8%. The BSEs FMCG index
during the same period fell by only 1.5%. HUL has delivered a disappointing set of Q3 numbers
with only 5% volume growth for domestic consumer business which is the lowest in last three
years, says V Srinivasan, research analyst, FMCG, at Angel Broking Operating profit margin
is down 122 bps due to higher input costs and advertisement & promotion expenses.

25 Jan, 2013
Succession Never a 1-Horse Race at HUL
FRONTRUNNERS ET lists some of the brightest talent eying future leadership at Indias
largest FMCG firm that has of late been facing increasing challenge in keeping its flock
together

MUMBAI
Unilever may have surprised many last week when it named BP Biddappa, who has been out of
India for more than a decade, successor to Leena Nair as executive director, HR, at Hindustan
Unilever, but not those who know how HULs talent search engine functions.
Succession planning at the countrys largest packaged consumer products maker has always been
a two-horse race, they say.
There is always a back-up candidate in this talent-rich organisation and so it is never very
obvious as to who will land the job, a former top-level executive at HUL said. Now, there are
several young Indians working at the general manager and vice president levels in the firm
across countries. ET has identified 10 of the brightest who have a shot at moving into HULs
corner room in the future (see the graphic).
Insiders say the firms talent hunt often starts with four of five possible candidates, and closer to
the date of appointments, it narrows down to two people. For CEO-level appointment, any time
there are at least three people in the race. A senior HUL official said the company tests the mettle
of promising youngsters by offering them certain roles that may not seem big but are
challenging. For instance, when Manish Tiwari was heading modern trade, some initiatives
helped shares of several brands in modern trade growing faster than even the traditional trade,
and HUL rewarded him by appointing him as executive director sales in January
2012.An HUL spokesman said the company gives challenging assignments to its general
management cadre and provides focused development plans and special training for these
executives. Leaders take the ownership and commitment of building the next generation of
leaders and are held accountable for the same, he said.
In recent years, HUL has taken urgent steps to be relevant to young executives who are not
company loyalists and have different perceptions about career. The leadership style, under

Unilevers chief HR officer Doug Bailie, COO Harish Manwani and HUL CEO Nitin Paranjpe,
has become informal and accessible. But HUL is facing increasing challenge in keeping its flock
together.
Unilever CEO Paul Polman, the first outsider in 77 years to head Unilever, is forcing the
company to consider outside talent, upsetting growth aspirations of internal candidates. Polman
has also mandated longer tenures at each position for its top management. This would make job
rotations and promotions slower.
Some people such as Gopal Vittal, currently CEO of Bharti Airtel, grew very fast within the
system. Unless an organisation has challenging roles for such stars, they tend to move out of the
system, an industry observer said.
Several ex-HUL officials also say the rigour in company training is missing because of what they
call Unileverisation. Unilever is doing the thinking and HUL is acting on that locally, a
former senior official said. Some top people have left HUL in recent times since there is no
freedom in decision-making anymore. One of the latest to quit is Harpreet Singh Tibb who
left HUL this month after 15 years to join Kellogg as its marketing director for India and South
Asia.
Observers, however, point out that when there is growth and success nobody asks questions.
There are still quite a few top notch talent of high calibre who believe in thinking through their
plans, an official said.
HUL last year posted its best results in years. And the rush for global postings, earlier a rage
within the firm, has come down.
25 Jan, 2013
Hind Unilevers 10 For The Top
In 2003, Brand Equity, The Economic Times marketing journal, had dubbed Nitin Paranjpe as
Lister No. 1, alluding that he may take over the reins at Hindustan Unilever (HUL). Five years
later, he was anointed CEO of the company. Kala Vijayraghavan and Sagar Malviya now turn
the spotlight on 10 of HULs brightest who have a shot at succeeding Paranjpe.
28 Jan, 2013
Manwani Backs Royalty Hike, Says HUL Owes it to its Parent
Hindustan Unilever chairman Harish Manwani has defended the companys decision to more
than double royalty payments to parent Unilever, saying the turnaround in the performance of
Indias top consumer goods company in the past two years was partly because it had successfully
leveraged the Anglo-Dutch firms scale and innovation pipeline.
A decision by HUL last week to raise its royalty payout to Unilever to 3.15% of sales in a phased
manner from 1.4% now had spooked the firms shares and triggered a flurry of downgrades by
analysts who were worried about the impact of the increased royalty payments on margins. The
stock lost more than 4% last week.
But Manwani, who is the firms non-executive chairman, said the decision was taken after a lot
of deliberation. The board took the decision after considering whether the basis of cost

allocation was fair and does it benefit all shareholders. An independent third-party assessment
about cost allocation has been conducted, he told ET in an interview on the sidelines of the
World Economic Forum meeting in Davos. Explaining the need to increase the royalty number,
Manwani, who is also the chief operating officer of Unilever, said it reflected changes in
the operating structure at the wider Unilever Group. Our supply chain management, innovation
and functional support have become more global. Costs are being incurred on a global basis. We
want the might of Unilevers scale to benefit all operating companies. The turnaround in the
performance of HUL has a lot to do with the fact that we have leveraged the innovation and
functional expertise of Unilever, with local insight and expertise of HUL.
He added that the innovations and supply chain efficiencies undertaken globally had helped the
Indian unit. Do we want to operate in India with the capability of a $5-billion business or the
capability of a $65-billion business? We are keen to do both. We have to be globally leveraged
and be locally relevant. We must think local and act global, he said. Manwani also sought to
play down concerns of some analysts who fear that the company might cut advertising and
promotional spends in its bid to preserve margins, which would be impacted because of higher
royalty outgo. It would be naive to suggest that we would do anything that would impact the
performance or competitiveness of our business. Last week, YC Deveshwar, the chairman of
HULs rival ITC that is making steady inroads into the fast-moving consumer goods territory,
had said that royalty payments by local units of MNCs to their parents resulted in Indian money
going abroad and the government losing out on corporate tax. But Manwani said HULs direct
and indirect contribution to the exchequer was huge.
HULs royalty increase comes into effect in a phased manner from this year, with the first
increase of 50 basis points taking place in March 2013. Subsequently, each year could see
royalties rise between 30 and 70 bps until a 175 bps increase is achieved by 2018.