A RESEARCH PROJECT

ON

STUDY OF DISTRIBUTION CHANNEL OF HUL IN

RURAL MARKET

SUBMITTED TO THE PARTIAL FULFILLMENT FOR AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

UTTAR-PRADESH TECHNICAL UNIVERSITY, LUCKNOW

UNDER THE GUIDANCE OF: SUBMITTED BY:

Dr. Ranchey Bhateja Gaurav Mittal
MBA -IV Semester
Roll No.: 0702970036
Session: 2007-2009

KRISHNA INSTITUTE OF
ENGINEERING & TECHNOLOGY
GHAZIABAD (U.P.)
 TO WHOM IT MAY CONCERN

This is to certify that Mr. Gaurav Mittal, Roll no. 0702970036

is the student of MBA final semester has successfully

completed his research project on

“STUDY OF DISTRIBUTION CHANNEL OF HUL IN

RURAL MARKET”

DATE. HOD

DR. K.R.CHATURVEDI

2
 TO WHOM IT MAY CONCERN

This is to certify that Mr. Gaurav Mittal , Roll no. 0702970036, is the student of

MBA final semester has successfully completed his research project on

“STUDY OF DISTRIBUTION CHANNEL OF HUL IN

RURAL MARKET”

Under my super vision and guidance .This is an original and authenticated work

done by him.

Date Guide

Dr. Ranchey Bhateja

3
 DECLARATION

I Gaurav Mittal, Roll no.0702970036, student of MBA IVth Semester of KIET School of

Management, Ghaziabad hereby declare that the research project report on

“STUDY OF DISTRIBUTION CHANNEL OF HUL IN

RURAL MARKET”

is an original and authenticated work done by me. I further declare that, it has not

been submitted elsewhere by any other person in any of the University for the Award of

any degree or diploma.

Date Name of Student

Gaurav Mittal

4
 ACKNOWLEDGEMENT

“Obstacles are those frightful things you see when you take-off for your
goals”

And with no exception, this was the condition when I started my

dissertation work. But in due course of time with the thorough guidance of
my project guide, it has been a success. Though the deepest gratitude can
be felt inside heart, but in words with deepest esteem I wish to thank my
honorable guide Dr. Ranchey Bhateja for his enriching guidance, constant
encouragement and valuable suggestions while carrying out this
dissertation.

I am grateful to Dr.K.R.Chaturvedi,(HOD of KSOM), for creating a

conducive environment in the institute for a purposeful education.

And last but not the least I thank all my faculty members and
classmates, who have directly or indirectly contributed in
understanding the subject and constantly encouraged me in carrying out
the dissertation.

5
 CONTENTS

1. Executive Summary 07
2. Brief History 08-11
3. Company Profile 12-15
4. Financial Overview 16-17
5. Management Structure 18-19
6. Business Segments 20-21
7. Present Marketing Strategies 22-27
8. F.M.C.G. Markets 28-31
9. Brands 32-42
10. Research & Innovation Centres 43
11. Quality Policy 44-52
12. H.U.L. Distribution Network 53-56
13.Marketing Needs Everywhere 57-70
14. Competitors 71-72
15. Research Methodology 73-74
16. Finding, Data Analysis & Conclusion 75-80
17. Recommendations 81
18. Suggestions 82
19. Limitations 83
20. Bibliography 84
21. Questionnaire 85-91

6
 EXECUTIVE SUMMARY

Hindustan Unilever Ltd. (BSE:HUL) makes fast-moving consumer goods

(FMCG) such as detergents, toiletries, and food staples. The company has a

distribution channel of 6.3 million outlets and 35 major Indian

brands. HUL recorded 20.02% year over year (yoy) growth in

revenue at Rs 16660.38 crores during the year ended Dec'08. Its

Soaps and Detergents business was its largest contributor to revenues with

46% of total revenues where as Personal Care products contributed the most

(46%) towards EBIT (Earnings before Income Tax).

Raw material prices for palm oil and other chemicals increased of 31% from

Nov'07-Apr'08, which led the company to implement a price hike by a

weighted average of 10% from April to June 2008 in order to protect its

margins From April to October 2008, however, palm oil prices declined

62.2% so Hindustan has accrued higher revenue on lower volume sales in

late 2008, early 2009. Increase in per capital income in urban, as well as

rural areas, of India has a positive effect on demand of consumer goods

along with a shift in demand towards high end lifestyle products.

7
 BRIEF HISTORY

Over 100 years' link with India. In the summer of 1888, visitors to the
Kolkata harbor & noticed creates full of Sunlight soap bars, embossed with
the words "Made in England by Lever Brothers". With it, began an era of
marketing branded. Fast Moving Consumer Goods (FMCG).

Soon after followed Lifebuoy in 1895 and other famous brands like Pears,
Lux and Vim. Vanaspati was launched in 1918 and the famous Dalda brand
came to the market in 1937.

In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati

Manufacturing Company, followed by Lever Brothers India Limited (1933)
and United Traders Limited (1935). These three companies merged to form
HUL in November 1956; HUL offered 10% of its equity to the Indian public,
being the first among the foreign subsidiaries to do so. Unilever now holds
51.55% equity in the company. The rest of the shareholding is distributed
among about 380,000 individual shareholders and financial institutions.

The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903,
the company had launched Red Label tea in the country. In 1912, Brooke
Bond & Co. India Limited was formed. Brooke Bond joined the Unilever fold
in 1984 through an international acquisition. The erstwhile Lipton's links with
India were forged in 1898. Unilever acquired Lipton in 1972, and in 1977
Lipton Tea (India) Limited was incorporated.

Pond's (India) Limited had been present in India since 1947. It joined the

8
Unilever fold through an international acquisition of Chesebrough Pond's USA
in 1986.

Since the very early years, HUL has vigorously responded to the stimulus of
economic growth. The growth process has been accompanied by judicious
diversification, always in line with Indian opinions and aspirations.

The liberalization of the Indian economy, started in 1991, clearly marked an

inflexion in HUL's and the Group's growth curve. Removal of the regulatory
framework allowed the company to explore every single product and
opportunity segment, without any constraints on production capacity.

Simultaneously, deregulation permitted alliances, acquisitions and mergers.

In one of the most visible and talked about events of India's corporate
history, the erstwhile Tata Oil Mills Company (TOMCO) merged with HUL,
effective from April 1, 1993. In 1995, HUL and yet another Tata company,
Lakme Limited, formed a 50:50 joint venture, Lakme Lever Limited, to
market Lakme's market-leading cosmetics and other appropriate products of
both the companies. Subsequently in 1998, Lakme Limited sold its brands to
HUL and divested its 50% stake in the joint venture to the company.

HUL formed a 50:50 joint venture with the US-based Kimberly Clark
Corporation in 1994, Kimberly-Clark Lever Ltd, which markets Huggies
Diapers and Kotex Sanitary Pads. HUL has also set up a subsidiary in Nepal,
Nepal Lever Limited (NLL), and its factory represents the largest
manufacturing investment in the Himalayan kingdom. The NLL factory
manufactures HUL's products like Soaps, Detergents and Personal Products
both for the domestic market and exports to India.

9
The 1990s also witnessed a string of crucial mergers, acquisitions and
alliances on the Foods and Beverages front. In 1992, the erstwhile Brooke
Bond acquired Kothari General Foods, with significant interests in Instant
Coffee. In 1993, it acquired the Kissan business from the UB Group and the
Dollops Icecream business from Cadbury India.

As a measure of backward integration, Tea Estates and Doom Dooma, two

plantation companies of Unilever, were merged with Brooke Bond. Then in
July 1993, Brooke Bond India and Lipton India merged to form Brooke Bond
Lipton India Limited (BBLIL), enabling greater focus and ensuring synergy in
the traditional Beverages business. 1994 witnessed BBLIL launching the
Wall's range of Frozen Desserts. By the end of the year, the company
entered into a strategic alliance with the Kwality Icecream Group families
and in 1995 the Milkfood 100% Icecream marketing and distribution rights
too were acquired.

Finally, BBLIL merged with HUL, with effect from January 1, 1996. The
internal restructuring culminated in the merger of Pond's (India) Limited
(PIL) with HUL in 1998. The two companies had significant overlaps in
Personal Products, Specialty Chemicals and Exports businesses, besides a
common distribution system since 1993 for Personal Products. The two also
had a common management pool and a technology base. The amalgamation
was done to ensure for the Group, benefits from scale economies both in
domestic and export markets and enable it to fund investments required for
aggressively building new categories.

In January 2000, in a historic step, the government decided to award 74 per

cent equity in Modern Foods to HUL, thereby beginning the divestment of

10
government equity in public sector undertakings (PSU) to private sector
partners. HUL's entry into Bread is a strategic extension of the company's
wheat business. In 2002, HUL acquired the government's remaining stake in
Modern Foods.

In 2003, HUL acquired the Cooked Shrimp and Pasteurised Crabmeat

business of the Amalgam Group of Companies, a leader in value added
Marine Products exports.

11
 COMPANY PROFILE

The mission that inspires HUL's 36,000 employees, including over 1,350
managers, is to "add vitality to life. HUL meets everyday needs for nutrition,
hygiene, and personal care with brands that help people feel good, look good
and get more out of life. It is a mission HUL shares with its parent company,
Unilever, which holds 51.55% of the equity. The rest of the shareholding is
distributed among 380,000 individual shareholders and financial institutions.

HUL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely,
Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan,
Knorr-Annapurna, Kwality Wall's – are household names across the country
and span many categories - soaps, detergents, personal products, tea,
coffee, branded staples, ice cream and culinary products. They are
manufactured in close to 80 factories. The operations involve over 2,000
suppliers and associates. HUL's distribution network, comprising about
7,000 redistribution stockists, directly covers the entire urban
population, and about 250 million rural consumers.

HUL has traditionally been a company, which incorporates latest technology

in all its operations. The Hindustan Lever Research Centre (HLRC) was set
up in 1958, and now has facilities in Mumbai and Bangalore. HLRC and the
Global Technology Centres in India have over 200 highly qualified scientists
and technologists, many with post-doctoral experience acquired in the US
and Europe.

HUL believes that an organisation's worth is also in the service it renders to

12
the community. HUL is focusing on health & hygiene education, women
empowerment, and water management. It is also involved in education and
rehabilitation of special or underprivileged children, care for the destitute
and HIV-positive, and rural development. HUL has also responded in case of
national calamities / adversities and contributes through various welfare
measures, most recent being the village built by HUL in earthquake affected
Gujarat, and relief & rehabilitation after the Tsunami caused devastation in
South India.

Over the last three years the company has embarked on an ambitious
programme, Shakti. Through Shakti, HUL is creating micro-enterprise
opportunities for rural women, thereby improving their livelihood and the
standard of living in rural communities. Shakti also includes health and
hygiene education through the Shakti Vani Programme, and creating access
to relevant information through the iShakti community portal. The
programme now covers about 50,000 villages in 12 states. HUL's vision is to
take this programme to 100,000 villages impacting the lives of over a 100
million rural Indians.

HUL is also running a rural health programme – Lifebuoy Swasthya Chetana.

The programme endeavtheirs to induce adoption of hygienic practices among
rural Indians and aims to bring down the incidence of diarrhoea. It has
already touched 70 million people in approximately 15000 villages of 8
states. The vision is to make a billion Indians feel safe and secure. If
Hindustan Lever straddles the Indian corporate world, it is because of being
single-minded in identifying itself with Indian aspirations and needs in every
walk of life.

13
HINDUSTAN LEVER LIMITED INDIA’S LARGEST FMCG
COMPANY

14
 BUSINESS & FINANCIAL METRICS

Sales growth of 13.36% in CY'07 (Calendar Year 2007) and 9.38% in CY'06
can be attributed to aggressive launches, re-launches of products and a hike
in product prices. The net Income of the company has not increased at the
same pace as revenues because of a decline in margins (from 18.5% in
CY'04 to 16.7% in CY'07) [9]in its soaps and detergents business and
investment in IT and water purifier business in CY 05-06.

HUL Total Income and Net Profit over the years (in Rs. Crore)

There is an insignificant change in company's revenue mix in CY04-07

period. Soaps and Detergents business contributes highest (46%) towards
revenues followed by Personal care products (26%). Despite being highest
revenue generator soaps and detergents business is not the most profitable
segment. Personal care contributes highest (46.2%) towards the EBIT which
is due to high margins and low penetration of the market.

Discussion FY'09 (Financial Year 2009) : HUL has shown steady sales
growth by 19-20 % in Jan - Sep'08 but it was largely price led due to a hike
in product prices in the previous two quarters . Volume growth has
decreased from 10.2% in Q1CY08 (1st quarter Calendar Year 2008) to 6.8%
in Q3CY08.[4] EBIT margins fell by 30bps to 12.9 due to inflation of

15
Commodities prices but net profit saw a raise to 34% on account of income
from sale of properties.

FINANCIAL OVERVIEW

16
17
 Hindustan Lever Limited Shareholding
Pattern
Flls
13.7

Domestic
Fls
14.8 Unilever
51.6

Individual
19.9
HUL Equity Capital - 50 Mn $
Market Capitalisation - 7,300 Mn $

MANAGEMENT STRUCTURE

Hindustan Unilever Limited is India's largest Fast Moving Consumer Goods (FMCG)
company. It is present in Home & Personal Care and Foods & Beverages categories. HUL
and Group companies have about 15,000 employees, including 1200 managers. The
fundamental principle determining the organisation structure is to infuse speed and
flexibility in decision-making and implementation, with empowered managers across the
company’s nationwide operations.

Board
Management Committee

Board
The Board of Directors as repositories of the corporate powers act as a guardian to the
Company as also the protectors of shareholder’s interest. This Apex body comprises of a
Non- Executive Chairman, four whole time Directors and five independent Non –
Executive Directors. The Board of the Company represents the optimum mix of
professionalism, knowledge and experience.

18
Profile of the Board of Directors

ManagementCommittee

The day-to-day management of affairs of the Company is vested with the Management
Committee which is subjected to the overall superintendence and control of the Board.
The Management Committee is headed by Mr. Nitin Paranjpe and has functional heads as
its members representing various functions of the Company

Mr. Nitin Paranjpe –

Mr. D Sundaram –
Chief Executive Officer
Vice Chairman
and Managing Director

Mr. Shreejit Mishra – Mr. Gopal Vittal –

Executive Director Executive Director
Foods Home & Personal Care

Mr. Hemant Bakshi –

Mr. Dhaval Buch –
Executive Director
Executive Director
Sales and Customer
Supply Chain
Development

Mr. Ashok Gupta – Ms Leena Nair –

19
Executive Director Executive Director
Legal HR.

BUSINESS SEGMENTS

HUL EBIT distribution across segments (in %)

 Soaps and Detergents (46% Revenue, 44% EBIT) : This segment

includes Laundry and Personal Wash products like soaps, detergent

20
 bars, detergent powders, detergent liquids, scourers,etc.Sales of the
segment grew sales by 13.9% and 20.3% in CY07 and H1CY08
respectively. Fabric Wash has shown strong growth in this year with
the market share moving up from 34.6% in Q4CY06 to 38.3% in
Q2CY08.[13] Profitability margins which declined from 25.7% in CY'02
to 13.7 % in CY'05 due to pricing actions from P&G in the Laundry
segment have slightly recovered to 15.6% (CY'07). [1]

 Personal Care Products (26% Revenue, 46.2% EBIT) : This

business which comprises mainly skin care, hair care and oral care is
the most profitable segment for HUL.It is highest contributor to HUL’s
EBIT at 47%. [3] Low penetration and consumption of personal
products has sustained these categories' high growth rates. This
segment has shown a revenue growth of 20.9% in H1CY08 and the
new launches in the Ponds and Dove range contributed to the
profitability of the segment.

 Beverages (11% Revenue,10.3% EBIT): HUL's beverages business is

operated through the Brooke Bond and Lipton brands for packet tea
and Bru brand for coffee. With the aggressive relaunch of Brooke
Bond, Taj Mahal and Taaza, the company has been able to arrest the
decline in its market share.Overall margins have declined to 15% in
CY'07 from 20% in CY'04 due to hike in Coffee bean prices.

 Foods (4% Revenue, 0.8% EBIT) :In spite of having one of the best
distribution networks (coverage of 6.3 mn outlets) in the country, the
food business has never constituted a big part of revenues.Thats why
this is the current focus area for the company.Presence in the foods
category is mainly through soup mix, Chinese meal maker, jams,
ketchups and salts. HUL is clearly keeping a low profile in the staples
category, which is low margin business.Foods margin dipped partly
due to launch related costs for Amaze brain foods (launched in two
southern states during the January–March 2008 quarter).

 Ice Cream(1% Revenue, 0.6%EBIT) : This segment includes include

Ice Creams and Frozen Desserts.Kwality Wall's, launched in 1995, is
the company's master brand for ice cream. It has launched Moo brand
that boosts children’s calcium levels in the June quarter of CY07.

 Exports : Exports include sales of Marine Products, Castor, etc. as

well as sales of soaps and detergents, personal products, beverages
and foods etc. by the Exports Division. Exports are the lowest-margin

21
 business for the company. It has already exited the low-margin
shrimps and castor business.

 Others: This section includes Chemicals,Water purifiers, Agri seeds,

Property Development, Water business, Ayush services etc. It has
seen a growth of 41.5% as Pure It (a water purifier product) increased
its reach to more than 600 towns.

HUL revenue distribution across segments for CY'07

PRESENT MARKETING STRATEGY

Mission:

Hindustan Lever Limited mission is to add Vitality to life. We meet everyday needs for
nutrition, hygiene, and personal care with brands that help people feel good, look good
and get more out of life.

Policy:

22
HUL has earned a reputation for conducting its business with integrity and with respect
for the interests of those their activities can affect. This reputation is an asset, just as
real as their people and brands.

Their first priority is to be a successful business and that means investing for growth
and balancing short-term and long-term interests. It also means caring about their
consumers, employees and shareholders, their business partners and the world in
which we live.

From HUL Spokesperson “To succeed requires the highest standards of behavior from
all of us. The general principles contained in this Code set out those standards. More
detailed guidance tailored to the needs of different countries and companies will build
on these principles as appropriate, but will not include any standards less rigorous than
those contained in this Code.

We want this Code to be more than a collection of high-sounding statements. It must

have practical value in their day-to-day business and each one of us must follow these
principles in the spirit..

Obeying the Law:

HUL companies and employees are required to comply with the laws and
regulations of the countries in which they operate.

Employees:

 HUL is committed to diversity in a working environment where there is mutual

trust and respect and where everyone feels responsible for the performance
and reputation of the company. HUL will recruit, employ and promote

23
 employees on the sole basis of the qualifications and abilities needed for the
work to be performed.

 HUL are committed to safe and healthy working conditions for all employees.
We will not use any form of forced, compulsory or child labour.

 HUL are committed to working with employees to develop and enhance each
individual's skills and capabilities.

 HUL respect the dignity of the individual and the right of employees to
freedom of association.

 HUL will maintain good communications with employees through company

based information and consultation procedures.

Consumers:
HUL is committed to providing branded products and services which consistently offer
value in terms of price and quality, and which are safe for their intended use. Products
and services will be accurately and properly labeled, advertised and communicated.

Shareholders:
HUL will conduct its operations in accordance with internationally accepted principles of
good corporate governance. They will provide timely, regular and reliable information on
their activities, structure, financial situation and performance to all shareholders.

Business Partners:

HUL is committed to establishing mutually beneficial relations with their suppliers,

customers and business partners.

In their business dealings they expect their partners to adhere to business principles
consistent with their own.

Community Involvement:

24
HUL strives to be a trusted corporate citizen and, as an integral part of society, to fulfill
their responsibilities to the societies and communities in which they operate.

Public Activities:

HUL companies are encouraged to promote and defend their legitimate business
interests. HUL will co-operate with governments and other organisations, both directly
and through bodies such as trade associations, in the development of proposed
legislation and other regulations which may affect legitimate business interests.

HUL neither supports political parties nor contributes to the funds of groups whose
activities are calculated to promote party interests.

The Environment:

HUL is committed to making continuous improvements in the management of their

environmental impact and to the longer-term goal of developing a sustainable business.

HUL will work in partnership with others to promote environmental care, increase
understanding of environmental issues and disseminate good practice.

Innovation:
In their scientific innovation to meet consumer needs they will respect the concerns of
their consumers and of society. They will work on the basis of sound science, applying
rigorous standards of product safety.

Competition:
HUL believes in vigorous yet fair competition and supports the development of
appropriate competition laws. Their companies and employees will conduct their
operations in accordance with the principles of fair competition and all applicable
regulations.

Business Integrity:

25
HUL does not give or receive, whether directly or indirectly, bribes or other improper
advantages for business or financial gain. No employee may offer, give or receive any
gift or payment which is, or may be construed as being, a bribe. Any demand for, or
offer of, a bribe must be rejected immediately and reported to management.

HUL accounting records and supporting documents must accurately describe and
reflect the nature of the underlying transactions. No undisclosed or unrecorded account,
fund or asset will be established or maintained.

Conflicts of Interests:

All HUL employees are expected to avoid personal activities and financial interests
which could conflict with their responsibilities to the company.

HUL employees must not seek gain for themselves or others through misuse of their
positions.

Compliance – Monitoring – Reporting:

Compliance with these principles is an essential element in their business success. The
Unilever Board is responsible for ensuring these principles are communicated to, and
understood and observed by, all employees.

Day-to-day responsibility is delegated to the senior management of the regions and

operating companies. They are responsible for implementing these principles, if
necessary through more detailed guidance tailored to local needs.

Assurance of compliance is given and monitored each year. Compliance with the Code
is subject to review by the Board supported by the Audit Committee of the Board and
the Corporate Risk Committee.

26
Any breaches of the Code must be reported in accordance with the procedures
specified by the Joint Secretaries. The Board of Unilever will not criticise management
for any loss of business resulting from adherence to these principles and other
mandatory policies and instructions.

The Board of Unilever expects employees to bring to their attention, or to that of senior
management, any breach or suspected breach of these principles.

Provision has been made for employees to be able to report in confidence and no
employee will suffer as a consequence of doing so.

In this Code the expressions 'Unilever' and 'Unilever companies' are used for
convenience and mean the Unilever Group of companies comprising Unilever N.V.,
Unilever PLC and their respective subsidiary companies. The Board of Unilever means
the Directors of Unilever N.V. and Unilever PLC’.

Envoirment policy:

Hindustan Uniever Limited (HUL) supplies high quality goods and services to meet the
daily needs of consumers and industry. In doing so, the Company is committed to
exhibit the highest standards of corporate behaviour towards its consumers, employees,
the societies and the world in which we live.

The company recognises its joint responsibility with the Government and the Public to
protect environment and is committed to regulate all its activities so as to follow best
practicable means for minimizing adverse environmental impact arising out of its
operations.

The company is committed to making its products environmentally acceptable, on a

scientifically established basis, while fulfilling consumers' requirements for excellent
quality, performance and safety.

The aim of the Policy is to do all that is reasonably practicable to prevent or minimize,
encompassing all available knowledge and information, the risk of an adverse

27
environmental impact arising from processing of the product, its use or foreseeable
misuse.

This Policy document reflects the continuing commitment of the Board for sound
Environment Management of its operations. The Policy applies to development of a
process, product and services, from research to full-scale operation. It is applicable to
all company operations covering its plantations, manufacturing, sales and distribution,
research & innovation centres and offices. This document defines the aims and scope
of the Policy as well as responsibilities for the achievement of the objectives laid down.

The Vision:

Their vision is to continue to be an environmentally responsible organisation making

continuous improvements in the management of the environmental impact of their
operations.

HUL will achieve this through an Integrated Environment Management approach, which
focuses on People, Technology and Facilities, supported by Management Commitment
as the prime driver.

FMCG Markets
Slowdown in growth & then 2 years of decline

28
 FMCG Market (HLL Categories)
Growth%

00 01 02 03
8
6
4
6.7
2 3.4
0
-1.1
-2.5
-2
-4

FMCG Markets
2004 - Revival after 2 years of decline

02 03 Q1 '04 Q2 '04 Q3 '04 Q4 '04

8
6
4
2
0
-2 Pricing
-4
Action
in 2008

Price Reduction:

29
Price reduction (Bottles) & Value improvement (Sachets):

Investment Behind Brands:

Innovation & Superior Quality:

30
Family – safe Petalsoft Water & effort saving Quick wash - 50% No mud Rin
Advance from germs

Perfect Radiance “5 in 1” hair Total Care Whiter teeth Fresher breath

health benefits

Current Market Context

Actions:

31
 • Pricing
–Laundry : Price Reduction
–Shampoos: Value Improvement & Lower Price Points
–Toothpaste: Value Corrections & SKU rationalization
• Investments behind brands
– Innovations
– Quality
– Higher A&P
• Corrective actions in processed

Processed Foods:

• Corrective actions
– Phased stock reduction
– Withdrawl of ‘03 innovation
– Defocus of Atta in unviable geographies
• Sales decline of 26% arising from above actions
• Market shares held / improved

BRANDS

Sales Growth%
PRODUCTS

32
 Lux   Breeze
Lifebuoy   Dove
Liril   Pears
Hamam   Rexona
     
Surf Excel     Fair & Lovely  
Rin     Pond's  
Wheel

     
Sunsilk Naturals     Pepsodent  
Clinic     Close-up  

     
Axe     Lakme  
Rexona    

Ayush          
           
     
Brooke Bond   Bru    
Lipton         

     
Kissan   Kwality Wall's    
Knorr Annapurna
 

33
 INDIA'S LARGEST BRANDED FMCG EXPORTER
It was 1962. The reality of India then was very different from what it is today.
India's economy then suffered from foreign exchange shortage. Hindustan Lever
voluntarily decided to take up Exports to support the country's economy.

Today, HUL is India's largest exporter of branded Fast Moving Consumer Goods. It
has been recognized by the Government of India as a Golden Super Star Trading
House. Over time, HUL has developed appropriate capabilities to be globally
competitive in cost and quality for a viable Exports business.

Focus Areas:

HUL's Exports focuses on two broad areas. It is a sourcing base for Unilever brands
in Home & Personal Care (HPC) and Tea for supplies to other Unilever companies. It
also focuses on becoming a preferred supplier to both non-Unilever and Unilever
clients in three categories in which India, as a country, has competitive advantage -
Marine Products, Castor and its Derivatives and Rice. HUL enjoys international
recognition within Unilever and outside for its quality, reliability and speed of

34
customer service. HUL's Exports geography comprises, at present, countries in Asia,
Australia, Africa, North America and Europe.

HUL's Exports Portfolio:

HPC:
The categories are soaps, skin care products and oral care products. The brands are
Lux, Lifebuoy, Pears, Fair & Lovely, Dove, Vaseline, Close-Up, Pepsodent, Signal.
HUL is the only source of Pears soap across the world.

Tea:
The categories are branded packet tea, and instant tea for Unilever's ready-to-drink
tea business. The branded teas are Brooke Bond, Brooke Bond Red label, Brooke
Bond Taj Mahal, Lipton, Lipton Yellow Label, Lipton Green Label, Lipton Brisk, Lipton
3-in-1 premix, Chinese Rickshaw.

Marine Products:

HUL offers a comprehensive portfolio, ranging from Surimi, Crabsticks to Shrimps

and several value-added products. Among its customers is Icelandic, the world's
third largest seafood company. In addition, HUL has also become a part of
Unilever's supply chain in seafoods for Europe too. HUL's Marine Products brands
are Ocean Diamond, Ocean Excellence, Shogun, Hima, Gold Seal, Tara and Prima.

Rice:
The categories are Basmati Rice and Basmati Rice-based ready-to-eat rice meals.
The brands are Gold Seal Indus Valley, Rozana and Annapurna.

Castor:
The categories are Castor Oil, Castor-oil based products, like hydrogenated castor

35
oil, 12 - Hydroxy Stearic Acid, Ricinoleic Acid (used in grease and lubricant industry,
paints and surface coatings, cosmetics, emulsifiers), and Speciality Castor Oils (USP
grade, BP grade, DAB 10) etc used in pharmaceutical preparations. HUL's Castor
brand is Topsol. Today, Exports is a substantial business in HUL, accounting for
about 12% of the company's turnover. HUL believes that its competitive advantages
of cost competitiveness, process competitiveness and economies of scale both at
the company and country level, hold it in good stead. They position the company to
become one of the hubs for sourcing by Unilever companies in HPC and Tea, and
also simultaneously become a preferred partner to global customers in Marine
Products, Castor and Rice.
DIRECT SELLING

Product Range
• Lever home range
• Male grooming
• Oral Care
• Ayurveda
• Personal Wash
• Foods
Reach - 1400 towns (Largest in India)
Consultant base - 330,000

36
37
Accordingly, HUL's aims are to:
 Ensure safety of its products and operations for the environment by
using standards of environmental safety, which are scientifically
sustainable and commonly acceptable.

 Develop, introduce and maintain environmental management systems

across the company to meet the company standards as well as
statutory requirements for environment. Verify compliance with these
standards through regular auditing.

 Assess environmental impact of all its activities and set annual

improvement objectives and targets and review these to ensure that
these are being met at the individual unit and corporate levels.

 Reduce Waste, conserve Energy and explore opportunities for reuse

and recycle.

 Involve all employees in the implementation of this Policy and provide

appropriate training. Provide for dissemination of information to
employees on environmental objectives and performance through
suitable communication networks.

 Enctheirage suppliers and co-packers to develop and employ

environmentally superior processes and ingredients and co-operate
with other members of the supply chain to improve overall
environmental performance.

38
  Work in partnership with external bodies and Government agencies to
promote environmental care, increase understanding of environmental
issues and disseminate good practice.

Responsibilities:

Corporate

 The Board and the Management Committee of HUL is committed to

conduct the company operations in an environmentally sound manner.
The Management Committee will:

 Set mandatory standards and establish environmental improvement

objectives and targets for HUL as a whole and for individual units, and
ensure these are included in the annual operating plans.

 Formally review environment performance of the company once every

quarter.

 Review environment performance when visiting units and recognise

exemplary performance.

Nominate:

- A senior line manager responsible for environmental performance at the

individual HUL site.

HUL Environmental Co-ordinator:

 The Management Committee, through the nominated environmental

coordinator will:

39
  Ensure implementation of HUL Policy on environment and compliance
with Unilever and HUL environmental standards and the standards
stipulated under relevant national / local legislation. When believed to
be appropriate, apply more stringent criteria than those required by
law.

 Assess environmental impact of HUL operations and establish

strategies for sound environment management and key
implementation steps.

 Enctheirage development of inherently safer and cleaner

manufacturing processes to further raise the standards of environment
performance.

 Establish appropriate management systems for environment

management and ensure regular auditing to verify compliance.

 Establish systems for appropriate training in implementation of

Environment Management Systems at work.

 Ensure that all employees are made aware of individual and collective
responsibilities towards environment.

 Arrange for expert advice on all aspects of environment management.

 Participate, wherever possible, with appropriate industry and

Government bodies advising on environmental legislation and interact
with national and local authorities concerned with protection of
environment.

Individual Units:

40
 The overall responsibility for environment management at each unit
will rest with the Unit Head, who will ensure implementation of HUL
Policy on environment at unit level. Concerned line managers / heads
of departments are responsible for environmental performance at
department levels.

 In order to fulfill the requirements of the Environment Policy at each

site, the Unit Head will:

 Designate a unit environment coordinator who will be responsible for

co-ordinating environmental activities at unit, collating environmental
statistics and providing / arranging for expert advice.

 Agree with the Management Committee Member responsible for the

unit, specific environmental improvement objectives and targets for
the unit and ensure that these are incorporated in the annual
objectives of the concerned managers and officers and are reviewed
periodically.

 Ensure that the unit complies with Unilever and HUL mandatory
standards and the relevant national and state regulations with respect
to environment.

 Ensure formal environmental risk assessment to identify associated

environmental aspects and take appropriate steps to control risks at
acceptable levels.

 Ensure that all new operations are subjected to a systematic and

formal analysis to assess environmental impact. Findings of such
exercises should be implemented prior to commencement of the
activity.

41
 Manage change in People, Technology and Facilities through a planned
approach based on training, risk assessment, pre-commissioning
audits and adherence to design codes.

 Regularly review environment performance of the unit against set

objectives and targets and strive for continual improvement.

 Sustain a high degree of environmental awareness through regular

promotional campaigns and employee participation through training,
safety committees, emergency drills etc.

 Ensure dissemination of relevant information on environment within

the unit and to outside bodies, and regularly interact with Government
authorities concerned for protection of environment.

 Maintain appropriate emergency procedures consistent with available

technologies to prevent / control environmental incidents.

 Provide appropriate training to all employees.

 Ensure periodic audits to verify compliance with environment

management systems and personally carry out sample environment
audits to check efficacy of the systems.

 Report environmental statistics to HUL Corporate Safety &

Environment Group on a monthly basis.

42
 RESEARCH AND INNOVATION CENTRES

Since most new products and processes are developed in these Units,
certain additional

responsibilities devolve on them to ensure implementation of the

Environment Policy of the company. In addition to the Unit Head's
responsibilities outlined above, the heads of these units will:

 Ensure that a formal and systematic risk assessment exercise is

undertaken during the process/product development stage with
specific reference to environmental impact.

 Transfer technology to the pilot plant and main production through a

properly documented process specification which will clearly define
environmental impact and risks associated with processes, products,
raw material and finished product handling, transport and storage.

 Ensure that treatment techniques are developed for any wastes

generated as a result of the new product/process and is incorporated
into the process specifications.

43
 QUALITY POLICY

Hindustan Unilever Limited considers quality as one of the principal strategic

objectives to guarantee its growth and leadership in the markets in which it
operates.

The company is committed to respond creatively and competitively to the

changing needs and aspirations of their consumers through relentless pursuit
of technological excellence, innovation and quality management across their
businesses, and offer superior quality products and services that are
appropriate to the various price points in the market as well as to their
commitment to building shareholder value.

The company recognises that its employees are the primary stheirce of
success in its operations and is committed to training and providing them
the necessary tools and techniques as well as empowering them to ensure
broad base compliance of this policy in the organisation at all levels.

The company is committed to fulfill its legal and statutory obligations and
international standards of product safety and hygiene and will not knowingly
sell product that is harmful to consumers or their belongings. It will institute
systems and measures to monitor compliance in order to meet its
responsibilities to consumers.

44
The company will maintain an open communication channel with its
consumers and customers and will carefully monitor the feedback to
continuously improve its products and services and set quality standards to
fulfill them. The company is committed to extend its quality standards to its
contract manufacturers, key suppliers and service providers and by entering
into alliances with them, to jointly improve the quality of its products and
services. This policy is applicable to production from its own facilities as well
as to production that is outsourced.

The company will periodically review this quality policy for its effectiveness
and consistency with business objectives.

The company delegates authority and responsibility for dissemination and

implementation of this policy to each Business and Unit Head.

SAFETY AND HEALTH POLICY:

Introduction

Hindustan Unilever Limited (HUL) supplies high quality goods and services to
meet the daily needs of consumers and customers. In doing so, the
Company is committed to exhibit the highest standards of corporate
behaviour towards its consumers, employees, the societies and the
environment in which we operate.

Towards this, the Company recognizes its responsibility to ensure safety and
protection of health of its employees, contractors and visitors in all its
operating sites, which include manufacturing, sales and distribution,
research laboratories and offices during work and work related travel.

45
This Policy document defines the vision, principles, aim, required actions and
scope of the policy application as well as the responsibility for execution.

Their Vision

Their vision is to be an injury free organization.

HUL NEWS:”We will bring safety on top of mind for all employees and will
integrate it with all business processes. We will realize their Vision through
an Integrated Safety Management approach, which focuses on People,
Processes, Systems, Technology and Facilities, supported by demonstrated
leadership and employee commitment at all levels as the prime drivers for
ensuring a safe and healthy work environment”.

Safety Principles:

HUL's Occupational Safety and Health Policy is based on and supported by

the following eight Principles.

These Principles have the same status as the Company's Code of Business
Principles:

 All injuries and occupational illnesses are preventable

 All operational exposures can be safeguarded
 Safety evaluation of all business processes is vital
 Working safely is a condition of employment
 Training all employees to work safely is essential
 Management audits are a must

46
  Employee involvement is essential
 All deficiencies must be reported and corrected promptly

In order to facilitate operationalisation of the Safety Principles, a

separate document has been prepared, which covers:
a) Safety Principles
b) Success Criteria
c) Illustrative KPI
 Consumer satisfaction:

Indira is 20 years old, a tribal woman at Kondegaon village in Bastar

district. She is just back from the nearby jungles, collecting firewood.
After attending to her baby son, she will go to the village well to take a
quick wash. Yesterday her husband brought her a white soap, with pink
petals in it. Indira had requested him to buy one, for the festival later
this evening.

Indira is among millions of consumers in rural India who use Hindustan

Lever's products. She came to know about Lux through the TV set at the
community centre. It is not very costly, and also available nearby.

Home to over 700 million people, rural India comprises not only over
70% of India's billion-strong population, but also over 12% of the
world's population. The rural population already accounts for substantial
consumption of Fast Moving Consumer Goods and also consumer
durables. About 50% of the sales of soaps & detergents are generated
in rural India. Similarly, almost half the demand for black & white
television sets, pressure cookers, table fans, sewing machines also
comes from there.

47
Cost management:

But the potential is even larger, both in terms of consumption and

penetration. The fact that 70% of the population accounts for only 50%
of even relatively well-penetrated categories, like soaps & detergents,
indicates the enormous scope of consumption-led growth in these
categories. Therefore such categories will derive growth out of increased
usage. In categories, which are relatively less penetrated, like personal
products, rural India offers an even bigger growth opportunity through
greater penetration and then consumption. For example only three out
of 10 consumers in rural markets use shampoo or skin care products.
Therefore growth in such categories will emerge, as more consumers
purchase these products, and then continue to use them regularly.

Hindustan Lever has taken many initiatives over the decades to create
markets in the rural hinterlands. By marketing relevant products, at
affordable prices.

A unique example is Hindustan Lever's Lifebuoy soap. In rural India,

health is of paramount importance, because indisposition is very directly
related to loss of income. Lifebuoy, whose core equity is health and
hygiene , has for decades now been synonymous with soap in rural
India.

At the same time, if products have to come up the order in the rural
purchase hierarchy, they have to be affordable. If rural India today
accounts for about half of detergents sales, it is because HUL has
developed low-cost value-for-money branded products, like Wheel. The
company has also taken initiatives to create markets even for

48
apparently premium products, by offering them in pack sizes, like
sachets, whose unit prices are within the reach of rural consumers. For
example, initiated in the 1980s, sachets (Rs.2, Re.1, or 50 paise) today
constitute about 55% of Hindustan Lever's shampoo sales. With media
reach gradually increasing, rural consumers today, where the media has
its footprints, share the same aspirations with their urban counterparts.
HUL has responded to the trend with low unit price packs of even other
products - Lux at Rs.5, Lifebuoy at Rs.2, Surf Excel sachet at Rs.1.50,
Pond's Talc at Rs.5, Pepsodent toothpaste at Rs. 5, Fair & Lovely Skin
Cream at Rs.5, Pond's Cold Cream at Rs.5, Brooke Bond Taaza tea at
Rs.5.

Other Marketing Strategies:

For decades now, Hindustan Unilever has also taken initiatives to

circumvent the limitation in communication channels, by innovatively
leveraging non-conventional media. Among them are wall paintings,
cinema vans, weekly markets (haat), fairs and festivals. Given the rural
consumer's fascination for cinema, the cinema vans show popular
movies, interspersed with products advertisements. Weekly markets,
fairs and festivals are parts and parcel of rural life. They give an
opportunity to address consumers, spread over many tiny hamlets, at
one location. The occasions are used to demonstrate product benefits
and also sell such products. Such demonstrations have played a
significant role in creating, for example, the detergents market in rural
India. In recent times, such demonstrations are being deployed to
illustrate how visible clean is not hygienic clean, and how using soap is
essential to prevent easily avoidable infections.

Communication through fairs and festivals are backed by direct

consumer contact. For example, in 1998-99, Hindustan Lever

49
implemented a major direct consumer contact, called Project Bharat,
which covered 2.2 crore homes. Each home was given a box, at a
special price of Rs.15, comprising a low unit price pack of shampoo,
talcum powder, toothpaste and skin cream, along with educational
leaflets and audio-visual demonstrations. The project has helped
eliminate barriers to trial, and has strengthened salience of both
particular categories and brands. Similarly in 2002, Hindustan Lever has
launched a similar large-scale direct contact, called Lifebuoy Swasthya
Chetana, which already covers 70 million people in 18,000 villages of 8
states. The project is intended at generating awareness about good
health and hygiene practices, and specifically how a simple habit of
washing hands is essential to maintaining good health. The initiative will
involve interaction with students and senior citizens, who act as change
agents.

Availability of HUL’s Product:

Generating awareness pays dividends only when steps are taken to

ensure constant availability of products. In rural India particularly,
availability determines volumes and market share, because the
consumer usually purchases what is available at the outlet, influenced
very largely by the retailer.

Therefore, over the decades, Hindustan Lever has progressively

strengthened its distribution reach in rural India, which today has about
33 lakh outlets. Direct rural distribution in Hindustan Lever began with
the coverage of villages adjacent to small towns. The company's
stockists in these towns were made to use their infrastructure to
distribute products to outlets in these villages. But this distribution
mode could only be extended to villages connected with motorable

50
roads, and it could cover about 25% of the rural population by 1995.

Therefore in 1998, Hindustan Lever launched Project Streamline to

further extend its distribution reach. Under this initiative, the company
identifies sub-stockists in a large village, connected by motorable road
to a small town. This sub-stockist in turn distributes the company's
products to outlets in adjacent smaller villages using transportation
suitable to interconnecting roads, like cycles, scooters or the age-old
bullock cart. Hindustan Lever is thus trying to circumvent the barrier of
motorable roads. As a result, the distribution network, as of now,
directly covers about 50,000 villages, reaching about 250 million
consumers. The company simultaneously uses the wholesale channel,
suitably incentivising them to distribute company products.

HUL has in the recent past established a common distribution system in

rural areas for all its products. Given the number of brands and their
packs the rural retailer usually requires, one HUL representative can
take all the products from the company portfolio that he needs. This
common distribution system is now fully operational, under one
Regional Sales Manager exclusively dedicated to rural markets of each
region of the country.

Over time, Hindustan Lever will further strengthen its rural distribution
through mutually beneficial alliances with rural Self Help Groups (SHGs).
Over the last five years, financial institutions, NGOs and government
organisations are working closely to establish SHGs, whose objective is
to alleviate poverty through sustainable income-generating activities.
Since 2001, Hindustan Lever is implementing Project Shakti, whereby
SHGs are being offered the option of distributing relevant products of
the company as a sustainable income-generating activity. The model
hinges on a powerful win-win relationship; the SHG engages in an

51
activity which brings sustainable income, while Hindustan Lever gets an
interface to interact and transact with the rural consumer. HUL's vision
for Project Shakti is to scale it up across the country by 2005, creating
about 25000 Shakti entrepreneurs, covering 100,000 villages, and
touching the lives of 100 million rural consumers. Begun with 50 groups
in Nalgonda district of Andhra Pradesh, with the support of local
authorities, the project has been extended, as of now, to about 50,000
villages in 12 states. A typical Shakti entrepreneur conducts business of
around Rs.10,000 - Rs 15,000 per month, which gives her an income of
about Rs 700 - Rs.1000 per month on a sustainable basis. As most of
these women are from below the poverty line, and live in extremely
small villages (less than 2000 population), this earning is very
significant, and is almost double of their past household income. The full
benefit of Project Shakti will be realised after some years.

52
 HUL DISTRIBUTION NETWORK

This is the whole Distribution Chain of HUL to cover the Rural market.
The company have remarkably worked upon to make the supply chain
from manufacturers to retailers simple with very few number of
mediators and jobbers. It has helped them to maintain the transparency
in the cycle and also have let them established a prompt delivery
process. The products are manufactured in the factories all across India
and then is supplied from there to the various Carriage and Forwarding
(C&F) units which are 5-10 per state depending on the area they have
to cover and are established by the company. These C&F units then
supply the products to the various Wholesalers confined to their area
only and according to the wholesalers demand. The wholesalers then
supply the products to the semi-wholesalers and the retailers as per the
volume of their order. Then the semi-wholesalers deliver the products to
the retailers and customers.

53
STAGE 1-

In this stage the products reach to the Carriage and Forwarding unit
from various manufacturing units established all across India. The
volume of the delivery depends upon the quantity required/ordered by
the C&F unit. The depot sends the request of the volume of the products
to the Head Office, which then order the various factories to supply the
products to the mentioned depot. The supply is met within a week. HUL
has 45 C&F’s with 7000 stockists and 2000+ suppliers and associates to
target the market.

STAGE 2-

The C&F then supplies the products according to the demand of various
wholesalers. Each of the depot cover a region assigned to them.
Each C&F acquires 5-7 trucks and hire 4-5 more trucks to supply
products everyday.
They work on the concept of advance payment by DD by the
wholesalers and deposit them in the bank which is transferred to the
head office.

54
 NATION WIDE MANUFACTURING

80 factories, across India

The year was 1923. Lord Leverhulme, the legendary founder of Lever
Brothers, was visiting India. The nationalist sentiment in India was for
locally manufactured products. Lord Leverhulme, who believed that
what is good for a country is equally good for the company, responded
to that aspiration because he too shared that dream.

His dream ultimately was realised in 1934. In September 1934, after

more than a decade of discussions in London and in India, a Lever
factory was allowed to sprout on the land that had been reclaimed by
the Bombay Port Trust at Sewri. From here, a month later rolled out the
first cake of Sunlight soap to be manufactured in India. The same year,
Lever Brothers took over the Garden Reach Factory in Kolkata.

These two factories were the first in a manufacturing base, which today
literally dots the length and breadth of India. From Assam to Gujarat,
from Uttaranchal to Kerala.

Hindustan Lever's diverse product range is today manufactured in about

80 factories. In addition, the company outsources from 150 other units.
The operations involve 2,000 suppliers and associates.

55
 DEVELOPING BACKWARD AREAS
Several HUL factories are situated in backward areas. The company has
consciously responded to the national policy of development of
backward areas by setting up manufacturing units in these places, which
provide several direct and indirect employment opportunities for these
areas, and leads to general economic development of these regions
through industrialisation. In fact, all major investments of HUL, in recent
years, have been either in A-Category backward areas or No-Industry
Districts. These include factories in Khamgaon and Yavatmal
(Maharashtra), Chhindwara (Madhya Pradesh), Orai, Sumerpur and
Khalilabad (Uttar Pradesh), Haldia (West Bengal), Silvassa (Dadra &
Nagar Haveli), Pondicherry, Goa, Doom Dooma (Assam), Haridwar
(Uttaranchal) and Barotiwala (Himachal Pradesh). Since 2001 itself, HUL
has set up nine new factories in backward areas.

Equally, HUL has an enviable track record in taking over sick

enterprises, in response to requests from Government, and converting
them into viable operations. The company's units at Mangalore and
Rajpura all bear testimony to this achievement. In the process, HUL has
saved precious jobs and developed local economies.

HUL has adopted Total Productive Maintenance (TPM) for achieving

manufacturing excellence since 1994. As on date, TPM is in different
stages of implementation in 28 factories. Four HUL factories have
already received the TPM Consistency Award, and 14 factories have
been awarded with the TPM Excellence Award.

MARKETING NEEDS EVERY WHERE

56
How do you ensure that Mr. Ramesh in Kanyakumari gets his Lifebuoy soap
and Mrs. Kulkarni in Jammu gets to know how Bru coffee tastes even before
she has bought it? Well, you need to have a cutting edge distribution
network in place.

Hindustan Lever's distribution network is recognised as one of its key

strengths. Its focus is not only to enable easy access to our brands, but also
to touch consumers with a three-way convergence - of product availability,
brand communication, and higher levels of brand experience.

HUL's products, manufactured across the country, are distributed through a

network of about 7,000 redistribution stockists covering about one million
retail outlets. The distribution network directly covers the entire urban
population.

The general trade comprises grocery stores, chemists, wholesale, kiosks and
general stores. Hindustan Lever services each with a tailor-made mix of
services. The emphasis is equally on using stores for direct contact with
consumers, as much as is possible through in-store facilitators.

At the supermarkets:

Self-service stores and supermarkets are fast emerging in metros and large
towns. To service modern retailing outlets in the metros, HUL has set up a
full-scale sales organisation, exclusively for this channel. The business
system delivers excellent customer service, while driving growth for the
company and the store. At the same time, innovative marketing initiatives
are taken to provide consumers with experience of our brands at the store
itself, through product tests and in-store sampling.

57
In the villages:

HUL has also revamped its sales organisation in the rural markets to fully
meet the emerging needs and increased purchasing power of the rural
population. The company has brought all markets with populations of below
50,000 under one rural sales organisation. The team comprises an exclusive
sales force and exclusive redistribution stockists, under the charge of
dedicated managers. The team focuses on building superior availability,
while enabling brand building in the deepest interiors. HUL's distribution
network in rural India already directly covers about 50,000 villages, reaching
about 250 million consumers, through about 6000 sub-stockists.

Harnessing Information Technology

An IT-powered system has been implemented to supply stocks to

redistribution stockists on a continuous replenishment basis. The objective is
to catalyse HUL's growth by ensuring that the right product is available at
the right place in right quantities, in the most cost-effective manner. For
this, stockists have been connected with the company through an Internet-
based network, called RSNet, for online interaction on orders, despatches,
information sharing and monitoring. RS Net covers about 80% of the
company's turnover. Today, the sales system gets to know every day what
HUL stockists have sold to almost a million outlets across the country. RS
Net is part of Project Leap, HUL's end-to-end supply chain, which also
includes a back-end system connecting suppliers, all company sites and
stretching right upto stockists.

58
SHAKTI - Changing Lives in Rural India:

Shakti is HUL's rural initiative, which targets small villages with population of
less than 2000 people or less. It seeks to empower underprivileged rural
women by providing income-generating opportunities, health and hygiene
education through the Shakti Vani programme, and creating access to
relevant information through the iShakti community portal.

In general, rural women in India are underprivileged and need a sustainable

source of income. NGOs, governmental bodies and other institutions have
been working to improve the status of rural women. Shakti is a pioneering
effort in creating livelihoods for rural women, organised in Self-Help Groups
(SHGs), and improving living standards in rural India. Shakti provides
critically needed additional income to these women and their families, by
equipping and training them to become an extended arm of the company's
operation.

Started in 2001, Shakti has already been extended to about 80,000 villages
in 15 states - Andhra Pradesh, Karnataka, Tamilnadu, Maharashtra, Gujarat,
Madhya Pradesh, Chattisgarh, Uttar Pradesh, Rajasthan, Punjab, Haryana,
West Bengal, Orissa, Bihar & Jharkhand. The respective state governments
and several NGOs are actively involved in the initiative.

Shakti already has about 25,000 women entrepreneurs in its fold. A typical
Shakti entrepreneur earns a sustainable income of about Rs.700 -Rs.1,000
per month, which is double their average household income. Shakti is thus
creating opportunities for rural women to live in improved conditions and
with dignity, while improving the overall standard of living in their families.
In addition, it involves health and hygiene programmes, which help to

59
improve the standard of living of the rural community. Shakti's ambit
already covers about 15 million rural population. Plans are also being drawn
up to bring in partners involved in agriculture, health, insurance and
education to catalyze overall rural development.

HUL's vision for Shakti is to scale it up across the country, covering 100,000
villages and touching the lives of 100 million rural consumers by 2005.

Shakti Vani is a social communication programme. Women, trained in health

and hygiene issues, address village communities through meetings at
schools, village baithaks, SHG meetings and other social fora. In 204, Shakti
Vani has covered 10,000 villages in Madhya Pradesh, Chattisgarh and
Karnataka. The vision is to cover 80,000 villages in 2005.

iShakti, the Internet-based rural information service, has been launched  in

Andhra Pradesh, in association with the Andhra Pradesh Government's Rajiv
Internet Village Programme. The service is now available in Nalgonda,
Vishakapatnam, West Godavari and East Godavari districts. iShakti has been
developed to provide information and services to meet rural needs in
medical health and hygiene, agriculture, animal husbandry, education,
vocational training and employment and women's empowerment. The vision
is to have 3,500 kiosks across the state by 2005.

Pioneering New Channels:

Hindustan Lever is simultaneously creating new channels, designed on the

same principle of holistic contact with consumers.

60
Project Shakti, HUL's partnership with Self Help Groups of rural women, is
becoming an extended arm of the company's operation in rural hinterlands.
Started in 2001, Project Shakti has already been extended to about 50,000
villages in 12 states - Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh,
Tamil Nadu, Chattisgarh, Uttar Pradesh, Orissa, Punjab, Rajasthan,
Maharashtra and West Bengal. The respective state governments and
several NGOs are actively involved in the initiative. The SHGs have chosen
to partner with HUL as a business venture, armed with training from HUL
and support from government agencies concerned and NGOs.

Hindustan Lever Network (HLN) is the company's arm in the Direct Selling
channel, one of the fastest growing in India today. It already has about 3.5
lakh consultants - all independent entrepreneurs, trained and guided by
HLN's expert managers. HLN has already spread to over 1500 towns and
cities, covering 80% of the urban population, backed by 42 offices and 240
service centres across the country. It presents a range of customised
offerings in Home & Personal Care and Foods.

Out-of-Home consumption of products and services is a growing opportunity

in India, as elsewhere in the world. Hindustan Lever is already the largest
player in the hot beverages out-of-home segment, with over 15000 tea and
coffee vending points. The company is expanding the network aggressively,
in the education, entertainment, leisure and travel segments. HUL's allaince
with Pepsi will significantly strengthen this channel.

Health & Beauty Services are Hindustan Lever's simultaneous foray to meet
the increasing consumer need for such products and services. Lakme Salons
provide specialised beauty services and solutions, under the recognised
authority of the Lakme brand. The Ayush Therapy Centres provide easy
access to authentic Ayurvedic treatments and products.

61
Hindustan Lever, which once pioneered distribution in India, is today
reinventing distribution - creating new channels, and redefining the way
current channels are serviced. In the process it is converging product
availability, with brand communication and brand experience.

NOVEL PRODUCT NEW PROCESS:

Hindustan Lever's mission is to meet everyday needs for nutrition, hygiene,

and personal care, with brands that help people feel good, look good and get
more out of life. HUL's research & development base, one of the largest in
Indian industry, helps achieve this mission, with novel products and new
processes. The company has over 380 patents, demonstrating its leading
edge in consumer-relevant R&D.

The Hindustan Lever Research Centre (HLRC), with facilities in Mumbai and
Bangalore, and global technology centres in India have over 200 highly
qualified scientists and technologists, many with post-doctoral experience
acquired in the US and Europe. Set up in 1958, HLRC's aim is to develop
new products and processes, improving benefits and quality of existing
products, and optimal use of resources.
Major innovations have taken place, down the decades, in every category in
which HUL is present. From Home Care to Personal care, Beverages to
Foods.

Better cleaning, lesser water consumption

Consider for example, HUL's development of a water-saving technology for
its detergents. One of the most severe problems that India faces today is

62
shortage of water. Water scarcity affects one in every three Indians. In a
typical Indian home, at least 20% of the water consumed goes behind
washing of clothes. HUL decided that it would be of immense benefit to an
Indian household, if a technology could be developed, which would help
reduce water consumed in washing of clothes. HUL's scientists have
innovated a path-breaking technology - it reduces water consumption and
time taken for rinsing by 50%. The technology has already been introduced.

World's most advanced water purifier

People in cities and towns spend enormous amounts, either in fuel or
devices, to ensure safe drinking water. HUL's scientists have developed a
breakthrough device, called "Pureit", which purifies water as safe as boiled
water, providing 100% protection from all water-borne diseases; it also
removes pesticides that may be present in drinking water. Its operation does
not require electricity, running tap water and plumbing or expensive
maintenance. It thus provides water at a cost of just Re.1 for every six litres
- or less than 20 paise a litre.

Iodine In Salt - the vital ingredient

Iodine, it is well-known, is important for the mental development of young
children. Iodised salt is a well-accepted mode of ensuring appropriate iodine
intake. Yet Iodine added to salt is lost in transport, storage as well as in the
process of cooking. HUL scientists have developed a patented breakthrough
technology to stabilise iodine in salt, following work on the stability of iodine
under Indian conditions of storage and cooking. The technology has made it
possible to actually realise the purpose of iodised salt - that people get
appropriate iodine intake through the food they eat.

Technology of skin lightening

63
Research in the biology of skin pigmentation has led to the formulation of a
product like Fair & Lovely Skin Cream and Lotion. The product has been
periodically updated through new patented actives. It has now become a
global success through exports to over 30 countries. The product is equally
used by the local population of these countries, apart from those of Indian
origin.

HUL has equally developed new processes.

In-house machine development
The company has the capability to design and manufacture machines in-
house. This enables the company to set up plants at half the cost of others.
Such technological developments have also led to significant improvement in
productivity.

Energy conservation:
In the past, one of the most significant breakthroughs of HUL's research
initiative has been the development of a technology to use non-conventional
forest seed oils for soap-making which, since the 1970s, has helped save
around $1.2 billion in foreign exchange. HUL had received the Government
of India's prestigious award for import substitution. Development of
Structurant Technology for soap manufacturing also helped save costly
conventional oils without any compromise on product performance and
quality. The latest technology to produce Distilled Fatty Acid for soap making
and the resultant plant capacity expansion has drastically brought down
specific energy consumption while improving distillation yields. The evolution
of continuous soap processing technology has also reduced energy
consumption.

64
HUL believes that technology is critical to delight consumers. Creative
application of technology has made Hindustan Lever successful in launching
products and services, which raise the quality of life.

HELPING HANDS:

Hul commits rs. 8 crores for immediate relief, rehabilitation to tsunami-hit

communities.

MUMBAI, January 7, 2005: Hindustan Lever Limited (HUL) today announced

to commit, a total outlay of Rs.8 crores for immediate relief and helping
people to rehabilitate themselves so that they can resume their livelihood, in
the tsunami-hit areas of Pondicherry, Tamil Nadu and Kerala. Of this, Rs.5
crores (absolute value terms) is being utilized for distribution of the
Company's nutritional & personal hygiene products for immediate relief to
the needy. Another Rs.3 crores will be raised partly by contributions from
company employees and the balance contribution from the Company to be
used in collaboration with NGOs working with the community to provide the
people, notably fishermen, with means of livelihood and help them back on
their feet.

Since December 26, employees of HUL factories and offices in Pondicherry,

Tamil Nadu and Kerala have been providing necessary relief to the tsunami-
hit people. The relief operations include, distribution of bread and biscuits to
over 2000 families in Pondicherry, 12,000 cooked meals for families in
Chennai, Nagapattinam, Cuddalore and Andamans. Over 12,000 dry relief
packs, comprising of Company's dry rations and personal hygiene products
have already been distributed.

65
HUL's employees are donating a day's salary, matched equally by the
Company for exclusive use in rehabilitation.

The biggest concern is, that people/ fishermen have lost their means of
livelihood. HUL plans to focus its rehabilitation efforts to restore their means
of livelihood so that the local communities can quickly get back to their lives
at the earliest.

HUL has always been a front runner in its call for national duty and caring
for the community. Its employees not only donate generously, but volunteer
to take part in relief operations by committing their time and physical effort.
This is in line with our corporate value of “care” and our CSR mission which
has become an integral part in our way of doing business.

Earlier during the Gujarat earthquake, HUL had adopted and reconstructed a
new village, Yashodadham, in Bhachau Taluka of Kutch district.
Yashodadham, spread over 25 acres, comprises 289 homes, school building,
an exclusive playground for children and a multi-purpose community centre,
including an anganwadi (creche), health centre, community room and
panchayat office, an underground reservoir and an overhead tank for water.
All the dwelling units have electricity, and piped water and are now fully
occupied.

HUL is India's largest Fast Moving Consumer Goods company, touching the
lives of two out of three Indians. HUL’s mission is to “add vitality to life"
through its presence in over 20 distinct categories in Home & Personal Care
Products and Foods & Beverages. The company meets everyday needs for
nutrition, hygiene, and personal care, with brands that help people feel
good, look good and get more out of life.

66
Special Education & Rehabilitation:

Under the Happy Homes initiative, HUL supports special education and
rehabilitation of children with challenges.

Asha Daan:

The initiative began in 1976, when HUL supported Mother Teresa and the
Missionaries of Charity to set up Asha Daan, a home in Mumbai for
abandoned, challenged children, and the destitute. Subsequently, Asha Daan
has also become a home to the HIV-positive. The objective in supporting
Asha Daan was and continues to be to share the organsation's prosperity in
supporting the Mother's mission of serving the "poorest of the poor". Asha
Daan has been set up on a 72,500-square feet plot belonging to HUL, in the
heart of Mumbai city. HUL bears the capital and revenue expenses for
maintenance, upkeep and security of the premises. The destitute and the
HIV-positive are provided with food, shelter and medication for the last few
days of their lives. The needs of the abandoned challenged children are also
met through special classes of basic skills, physiotherapy and, if possible,
corrective surgery. At any point of time, it takes care of over 300 infants,
destitute men and women and HIV-positive patients.

Over the years, HUL has opened schools for challenged children with a
sharper objective of supporting families of such children, helping the children
become self-reliant by learning appropriate skills to be productive members
of the household.

67
Ankur:
In 1993, HUL's Doom Dooma Plantation Division set up Ankur, a centre for
special education of challenged children. The centre takes care of children
with challenges, aged between 5 and 15 years. Ankur provides educational,
vocational and recreational activities to over 35 children with a range of
challenges, including sight or hearing impairment, polio related disabilities,
cerebral palsy and severe learning difficulties. These physically and mentally
challenged children are taught skills, such as cookery, painting, embroidery,
bamboo crafts, weaving, stitching, etc depending on their aptitudes. The
centre has rehabilitated 10 children, including self-employment for 6 children
by providing them with shops, and 3 girls have been provided employment
as creche attendants. It has also moved to normal schools 18 children. Since
inception it has covered about 80 children. Ankur received the Lawrie Group
Worldaware Award for Social Progress in 1999 from HRH Princess Royal in
London.

Kappagam:
Encouraged by Ankur's success, Kappagam ("shelter"), the second centre for
special education of challenged children, was set up in 1998 on HUL
Plantations in South India. It has 17 children. The focus of Kappagam is the
same as that of Ankur. The centre has 17 children, being taught self-help
skills, useful vocational activities like making of paper covers, greeting cards,
wrapping papers, fancy stationery, napkins, brooms made out of coconut
leaves, candles, and also some home care products. About 12 of the children
have become relatively self-reliant by earning through crafts learnt at the
centre. Since inception, it has covered about 28 children.

Anbagam:
Yet another day care center, Anbagam ("shelter of love"), has been started in 2003 also in the
South India Plantations. It takes care of 11 children. Besides medical care and meals, they too are

68
being taught skills such that they can become self-reliant and elementary studies.

Over 20,000 individuals have benefitted from the Happy Homes initiatives since inception. HUL
is wholeheartedly involved with all four centres and will continue to be involved in the future.

HUL TRANSFERS TEA ESTATES INDIA TO

MAXWELL GOLDEN TEA PRIVATE LIMITED
Mumbai, March 01, 2006: Hindustan Unilever Limited (HUL) has transferred
its entire shareholding in its 100% subsidiary Tea Estates India Limited
(TEIL) to Maxwell Golden Tea Private Limited (MGT), a Woodbriar Group
company on March 1, 2006. TEIL owns 8 tea estates and 6 factories for
processing tea in the high-yielding belt of Tamilnadu with an average annual
output of approx. 10,500 metric tons.

Woodbriar Group has interests in plantations, insurance services and real

estate. The Group’s gardens are spread across the premium tea growing
regions in Tamilnadu and Kerala. HUL management believes that the
proposed transfer to Woodbriar Group is in the best interest of the tea
plantation business and all its stakeholders. Existing terms and conditions of
services of all TEIL employees will be fully protected in accordance with
applicable laws and terms of their employment.

The acquisition of TEIL by Woodbriar Group will provide scale and bring in
synergy benefits to Woodbriar Group, as a large portion of TEIL gardens are
contiguous to the existing tea gardens of Woodbriar Group. Canara Bank,
Madurai Circle has funded the debt component to Woodbriar Group for this
acquisition.

69
With this disposal of shareholding in TEIL, HUL has completed its exit from
its tea plantations business both in South India and Assam. It may be
recalled that HUL had sold its interests in Rossell Industries Limited and
Doom Dooma Tea Company Limited in Assam during the last 12 months.

DSP Merrill Lynch Limited acted as financial advisor to Hindustan Lever

Limited.

About HUL:
HUL is India's largest Fast Moving Consumer Goods Company, touching the
lives of two out of three Indians. HUL's mission is to "add vitality to life"
through its presence in over 20 distinct categories in Home & Personal Care
Products and Foods & Beverages. The company meets everyday needs for
nutrition, hygiene, and personal care, with brands that help people feel
good, look good and get more out of life.

70
 COMPETITORS

The Indian FMCG sector is the fourth largest sector in the economy with a
total market size of US$18 billion as of 2007. As the name suggests FMCG
products are frequently used and bought by the customers so there are large
number of players supplying same products. HUL is the only company in
Indian consumer goods market that has products in more segments than
any other company of the same sector. HUL is the largest FMCG company in
terms of revenues.

Procter and Gamble (P&G) India : HUL faces a fierce competition from
P&G India in its key segments i.e. Detergents and Personal Care. It operates
in India through three subsidiaries: Procter and Gamble Home Products
(100% subsidiary of the company), Procter and Gamble Hygiene and Health
care Ltd. (PGHH) and Gillette India Ltd. It has in its portfolio some of P&G's
Billion dollar brands such as Vicks & Whisper in health care and Ariel and
Tide in detergents segments.

Godrej Consumer Products Ltd. (GCPL): It has two segments: Soap

(64% of revenues) and Personal Care. GCPL is second largest soap player in
India after HUL with a market share of 9.2%. Personal Care includes hair
care products, shaving cream and other toiletries. On December 11, 2008, it
acquired 100% stake in SCA Hygiene Products which owns the Snuggy brand
of baby diapers.

Dabur India Limited - Dabur India Limited is an India-based fast moving

consumer goods company which deals in healthcare, personal care and food
products. In November 2008, Dabur India Limited announced the acquisition
of 72.15% of Fem Care Pharma Ltd which is primarily engaged in the
business of export of personal care products.

71
Colgate-Palmolive (India) Limited : It manufactures a range of products
marketed under the Colgate which includes oral care products and Palmolive
(skin care and hair care products) brand names.

Marico Limited: Marico has a portfolio on high margin "Beauty and

Wellness" platform which includes hair oils, soaps, edible oils, skin care etc.
This portfolio has shown a growth of 30% over a period of FY05-08.

Comparison of FMCG Companies in India

Operating Profit
' Net Sales Net Profit
Margin
(in Rs. (in Rs.
Growth (%) Growth (%) (%) (%)
Crore)[24] Crore.)
FY'08 FY'08 FY'07 FY'08 FY'08 FY'07 FY'08 FY'07
[25]
HUL 13880.56 13.36 9.38 1769.06 -4.65 31.76 14.95 14.74
[26]
GCPL 891.92 17.22 16.05 148.12 21.37 0.68 22.27 20
Dabur[27] 2093.63 19.9 29.7 316.77 25.66 33.3 18.59 17.45
[28]
Colgate 1518.88 14.03 16.02 231.71 44.66 16.4 18.09 18.79
Marico[29] 1575.99 14.76 31.39 143.41 23.45 17.47 13.29 13.77
PGHH
643.95 18.54 -4.98 131.42 46.3 -35.6 27.75 24.14
(P&G)[30]

72
 RESEARCH METHODOLOGY

The section includes the overall research design, the sampling procedure,
the data collection method, the field method, and analysis and procedure.
Research design:-
For this research project exploratory method is using

Data Collection Method:-

The data collect for the research can be classified as primary data and
secondary data.
Primary data is by visiting existing customer and expected customer of
Hindustan Lever Limited and making them fill up the questionnaire.
Secondary data is from internet, books, magazine etc.

Research instrument:

The instrument use for data collection is structured questionnaire. Question

is open and close ended depending upon the information that needed to be

73
elicited. I am also using the scaling technique to assess the attitude of the
customer.

Sampling plan:-
Keeping all the constrains in mind a sample size of 100 people .The sampling
procedure is systematic sampling

SCOPE

The Indian FMCG market currently appears to be at a crossroads, and HUL

are attempting to change customer perceptions of their brands and where
specific buying motivations appear to be replacing generalities.

This meanwhile, is quite unlike the west where buyers consider aesthetics,
comfort and safety, not necessarily in that order, before finalising a
purchase. “It’s smarter to think about emotions and attitudes, if marketers
are to do a better job of marrying what a HUL offers to the consumer’s
image of the offerings. Another important outcome of the research is the
believability of the claims. Most of the claims are realistic and easy to
understand. Most of the people don’t understand the quality claims by HUL.

The mindset of the Indian consumer is such that he is delighted if he buys a

pen a little cheaper than his neighbour. Things are, however, slowly
changing and customers at the upper end of the market are now ready to

74
pay more for more. I hope that this approach will soon enter the new era,
maybe not with the same intensity .

“Success will largely be determined to the extent a company

can differentiate itself in terms of intangibles that go with a
Product”. Thus, success could well hinge on the best of bundle of services
that HUL provides.HUL grew from zero to the 2,268 Million $, mark and the
number One FMCG company in India this year. Looking at the present
scenario it can be said that though there is lot of competition in the market
but HUL is picking up well. The landmark achievement comes in 74 years in
India after clinching its first overseas sale.

FINDINGS, DATA ANALYSIS AND

CONCLUSIONS WHEN COMPARED WITH
PROCTER AND GAMBLE LTD.

Findings

On the basis of research, we found that there is a nominal difference in the

efficiency of Hindustan leaver limited. vis-à-vis Procter and Gamble Ltd. I
have reached to this conclusion on the basis of following findings. They are
as follows.

Product line

Hindustan Unilever limited

HUL Home & Personnel Care:

75
 > In personal Wash they have Lux , Lifebuoy, Liril, Hamam, Breeze,
Dove, Pears and Rexona .

 In Laundry they have Surf Excel, Rin and Wheel.

 In skin care their brands are Fair N Lovely and Ponds.

 In hair Care they have Sunsilk Naturals and Clinic All clear.

 In Oral Care their brands are Pepsodent and Close-up.

 In Deodorants they have Axe and Rexona.

 In Colour Cosmetics they have Lakeme.

 In Ayurvedic Personal And Health Care they have Ayush.

Foods:

 In tea they have the brand name brook bond and lipton.

 In coffee they have bru.

 In foods they have kissan and kinnor annpuran.

 In ice creams they have the kwality walls.

Water:

 Hindustan Uniliver limited has launched pueit, the most advanced in

home water purifier in the world.

Procter and Gamble :- P&G Hygiene and Health care ltd. markets several
leading brands: Whisper sanitary napkins in the Feminine Hygiene category;
Health care products such as Vicks VapoRub, vicks action 500, Vicks Cough
Drops, Vicks Inhaler; skin care and cosmetic products viz. Old Spice.

P&G Home Products Ltd. markets several leading brands. In Fabric Care P&G
has two of its world leading detergents Tide and Ariel, in Hair Care they have
Pantene Pro V, Head & Shoulders and Rejoice. In Baby Care they have
Pampers.

76
CONCLUSION- As Hindustan liver limited has more brands in its basket
then Procter and gamble so it is more close to common man and touching
his or her daily life in a more comprehensive manner.

Dealers:

Hindustan Unilever limited:- While choosing the dealers HUL mainly

emphasizes on the ‘market potential of that area, dealer’s financial position,
and dealers back ground (previous business), present business, goodwill and
risk taking capabilities ,by the good responsibility of the dealer.

Procter and Gamble:- There is no difference as such in the process of

selection of dealers in Procter and Gamble also. Like HUL, P&G also
considers dealer’s financial position; present business, goodwill and risk
taking capabilities.

Conclusion: Dealers of HUL are satisfied by the companies support in there

sales because the company provides them with various schemes and
discounts, whereas satisfaction of P&G dealers lies in good promotional
activities, advertisement and the flexibility that the company provides them.
According to the senior officials of P&G it was found that it’s a volume based
company, hence all the above stated parameters helps the dealer to attract
more and more customers.

Mode of Transportation:

Hindustan Unilever limited; HUL uses modified trucks and rails to deliver
the products from various production sites to the dealers. They are using
new state of the art technology so that they can even track every single
bottle of shampoo. Transportation cost is shared by HUL and the dealer.

Procter and Gamble:- P&G is also using road and railway transportation
system to deliver product from various production sites to the dealers. They
are also using latest Information Technology to track there consignment

77
whose backend is managed by infosys. Each dealer has to keep the Good
Receipt Note (GRN) number and report of the whole items of delivered
products. Transportation cost is paid by P&G.

Conclusion:- Both P&G and HUL uses advanced tracking technology to track
the goods and both companies use railways and roadways for transporting
there products. In HUL transportation cost is shared by HUL and the dealer,
where as at P&G, transportation cost is paid by P&G.

Flexibility:

Hindustan Unilever limited:- As far as flexibility is concerned; our group

found that HUL provides more flexibility in terms of delivery of produce. HUL
has there own warehouses in every state and if the dealer orders more , he
is supplied with the products in time.

Procter and Gamble As far as flexibility is concerned; our group found

that P&G does not provides more flexibility in terms of delivery of produce
and in taking order from dealers.

Conclusion: our group has found that Dealers of HUL are more satisfied
than the dealers of P&G and therefore HUL is a step ahead in terms of
flexibility of placing orders and accepting orders from the dealers.

Distribution channel structure:

Hindustan Unilever limited- Hindustan Unilever limited channel structures

consist of whole seller, mass retailers, rural and modern trade. Their new
approach to distribution is holistic and seeks a three way convergence of
product availability brand communication and brand experience. They are
reinventing distribution—creating new channels and redefining the way
current channels are serviced. They are building new capabilities in training
the large number of people involved in these initiatives.

Procter and Gamble- Procter and gamble’s channel structure also have
whole sellers, mass retailers. They are revamping the company’s distribution
system using efficient consumer response {E C R} principles. The new
distribution system has given the company considerable cost and process

78
efficiencies while significantly availability and visibility of the company’s
product in the stores.

Conclusion- Our group has found that H.U.L. has more effective and
efficient distribution network as compared to P & G, which increases the
availability and presence of HUL product. HUL is also given emphasis on
penetrating the rural market as well.

Dealing with unsold and damaged merchandise:

Hindustan Unilever Limited-It depends on the condition and type of the

product. If company feels that it is not the fault of the dealer then company
would return it, unsold products are mostly taken back by HUL

Procter And Gamble- P & G replaces the damaged product with the new
one, it means that the damaged product are replaced by new product.

Conclusion- Our group has found that both the companies take back the
unsold product however P & G is more flexible in returning the damaged
product as compared to the HUL. Hence P & G is more flexible here.

Performance appraisal system:

Hindustan Unilever Limited- The performance appraisal system in

Hindustan Liver Limited is done under the supervisory of the Appraisal
supervisor. The supervisor keep track of the performance of the employees
and based on their performance he choose the right method of performance
appraisal.the main method of performance appraisal that have been adopted
by Hindustan liver limited are 360 degree appraisal and supervisory
appraisal methods.it is done as an early exercise and performance appraisal
parameter is the past performance of the employees.

Procter And Gamble- the performance appraisal system in Procter and

gamble is also done under the supervisory officer and almost same method
are used as in the Hindustan liver limited.

Conclusion- the conclusion that our group has found that there is hardly
any differences is the performance appraisal methods in both the
companies .both the companies are taking almost the same measures and

79
same parameters for performance appraisal , however both the company
were not willing to disclosed any changes brought in performance appraisal
system during the past five years .both of the companies said that there
have been change in some areas and which has shown positive results, but
not willing to give any reasons and what changes have been brought.

Targets:

Hindustan Unilever Limited: HUL has different channel members with

specified targets and they are intended to increase sales, HUL has also made
changes in channel members during 2001-2006 to increase sales of the
company. Every channel member has to fulfill there given targets, channel
members expect the company of ROI. Every channel member gets credit
period of two weeks. There was also change in performance appraisal
system during 2001-2006 to improve sales. HUL has also made changes in
commercial terms intended to increase the sales in different channels and
also to increase profit margins to company.

Procter And Gamble- P&G also has different channel members with
specified targets and they are intended to increase sales .P&G also made
changes in channel members during 2001-2006 to increase sales of the
company. The channel members expect ROI depending on there knowledge
and on there performance to. Channel members get credit period of 30 days.
Payment terms of P&G are also flexible to the channel members and P&G
also has flexible payment terms P&G also offers many discounts to these
channel members. P&G has made many changes to there commercial terms
during 2001-2006 to increase sales.

Conclusion-Both HUL and P&G are flexible to channel members, but HUL
runs some monopoly over the market by offering a credit period of only two
weeks where as P&G offers credit period of 30 days. HUL also sets targets to
there channel members and provides very less margins to dealers compared
to P&G.

Sales Functioning:

Hindustan Unilever Limited: HUL is emphasizing on rural areas through

project Shakti these days and sales also have been increased and HUL does
not have any sales outlets HUL assigns sales territory to there sales persons

80
according to there skill and experience and assigns targets to them.
Performance appraisal of sales force is done by appraisal supervisor and it is
done through 360 degree appraisal method, parameter used is performance
of the sales personnel . HUL adopts on the job and off the job training
system to there sales force it is emphasized on improving skill and
experience of the sales personnel. Sales personnel are motivated through
incentives and promotions.

Procter And Gamble: P&G has increased the number of outlets in the
country and the population in the area also increased and there is no effect
on sales. P&G sets targets to there sales force on the basis of increase or
decrease in demand and also according to the previous sales , sales
territories are assigned according to the capabilities of the sales personnel,
responsibility of the sales personnel is to clarify the doubts of the customer
and make sales of the product. Performance appraisal of sales force is done
by the manager by doing meeting with them parameters of appraisal is
increase or decrease in sales it is done on monthly basis. P&G trains their
sales force by on the job training and training process is emphasized on skill
and experience, P&G has also brought many changes in the training system
that has affected its sales too. P&G motivates their sales force by providing
them with targets and incentives.

Conclusion: Both P&G and HUL trains their sales force and has a good
performance appraisal system, P&G does appraisal on a monthly basis
depending on increase and decrease of sales where as HUL does it once in a
year.

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 RECOMMENDATIONS

Both the companies having good market share in India and it keep on
increasing. Both the co. i.e. HUL and P&G should open exclusive shop. HUL is
already having exclusive shop in Mumbai called SANGAM STORE. But it is
only in India so it should be increased. The employee should be given
uniforms in which the name of the company should be printed, by doing this
the sales people get motivated. These shops should be opened for 24 hours.
They should offer 24 hours free home delivery system. The delivery vehicle
should be attractive the name of the company should be printed in that so
that it becomes the sources of advertisement.

The companies should emphasis on its advertisement, there should be

BRAND FIT in that. For example when lux launch its advertisement with
sharukh khan with girls. It was heavily criticized because it was not fit with
the brand. It adversely affect the opinion of the customer and it results in
decrease in sales.

Both companies should emphasis their business in areas. They should

penetrate their business in the rural areas. 69% of the Indian population
lives in rural areas. There is huge market there and very less market has
been penetrated. Both these companies should concentrate on rural areas.
P&G has been hardly been seen in the rural areas.

So they should increase their presence.

They should increase their CSR activities in northern India. At present they
are currently doing their CSR in southern India. So they should increase
their activities in north India also.

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83
 SUGGESTIONS

Key attribute components:

Value for money and Customer Care
Operational attributes.
Physical attributes.
Brand Image.
Customer Specific Details.
In any correspondence with the customers the message should be sent in
these components only to have the maximum benefit from the
advertisement. Also these components should be dealt with independently.
The advertisements should speak only of the believable concepts rather than
glorifying the pretentious ones. The basic need of the customer need to be
addressed which is actually not much expensive and better quality.

HUL sales growth in June 2004 was decreased due to the problem with
promotion and pricing. Although being the most competitive product on the
basis of the Market Operating Price (MOP), the shampoos are still not selling
much. This is perhaps due to the bargaining stress on the customer and the
weak push given by the dealer to the particular item, when actually it should
be sold like a high volume product.
Another serious suggestion is that HUL must give good attention to their all
the products rice and all are not getting much attention. The dealers don’t
provide much support to the customers in making them understand the real
Quality behind them. Either, the technical details should be presented in a
clearer manner or the dealers need to be educated properly.

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 LIMITATIONS

Everything in this world has its own advantages and disadvantages which
shows ‘nothing is perfect’.

Following are the problems faced but it’s a part of game:

1. TIME CONSUMING: It is very much obvious that it is a time consuming

process. So much time has been spent for this purpose.

2. LOW PARTICIPATION: Obviously many respondents have not

participated in this and have also created some problems which simply
shows that they were not interested.

3. BIASNESS: Sometimes interested customers were also biased so the

collected figures involve both positive and negative figures.

4. It does not cover all the aspects of the company.

5. SUBJECTIVE: This project only tells you what it is all about.

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 BIBLIOGRAPHY

Books:-
 Kothari, C.R., 2005 Research Methodology, Wishwa Prakashan, India
 Philip Kotler,2005, Marketing Management, Prentice hall India
 Marketing Management, ICFAI University Press

Magazines:-
 Business Today
 Investor India
 Business World
 Economic Times
 Business Standard

Websites:-
 www.hll.com
 www.fmcg.com
 www.economictimes.com
 www.marketwatch.com

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 CUSTOMER SURVEY QUESTIONNAIRE

Name
Age
Address

Q1. How many members are there in your family?

Q2. Have you ever heard of HUL (Hindustan Unilever Limited)?

YES ______ NO ______

If Yes, from where?

Newspaper Magazines
Television Others _______

Q3. Are you using any HUL product?

YES NO

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Q4. If Yes, then are you satisfied?

YES NO

Q5. If No, then reason being

Poor quality High prices

No services Others

Q6. Which brand do you use in the following categories :

Personal Wash

Lux __________ Breeze ___________

Dove __________ Others ___________

Laundary

Surf Excel _______ Rin ________

Wheel Others

Skin Care

Fair&Lovely ________ Pond’s ________

Sunslik Naturals ________ Others ________

Oral Care

Pepsodent ________ Close-up ________

Others ________

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 Deodorants

Axe ________ Lakme ________

Rexona ________

Colour Cosmetics

Lakme ________ Others ________

Q7. What Recommendations or suggestions would you like to give for

improvement of our products?

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 RETAILER SURVEY QUESTIONNAIRE

1. Do you keep products of Parle in your shop? ( please tick mark on the
appropriate answer)

a).Yes b). No .

(If the answer is yes then go to question number: 3 )

2. Why don’t you keep the products of Parle in your shop or why did you
stop keeping its products?

Yes No

a). erratic supply

b). lack of demand
c). low margin
d). no supplier
e). don’t know about the company

3. Which products of HUL do you keep?

Personal Wash

Lux __________ Breeze ___________

Dove __________ Others ___________

Laundary

Surf Excel _______ Rin ________

Wheel Others

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 Skin Care

Fair&Lovely ________ Pond’s ________

Sunslik Naturals ________ Others ________

Oral Care

Pepsodent ________ Close-up ________

Others ________

Deodorants

Axe ________ Lakme ________

Rexona ________

Colour Cosmetics

Lakme ________ Others ________

4. What is the sales/demand of the product?

1. Very High 
2. High 
3. Average 
4. Rarely  
5. Very Rarely 
6. Never 

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5. From whom do you purchase your product?

1). Distributor 
2). Dealer 
3). Agency 
4). Wholesaler 

6. How do you rate the delivery process by the dealer?

1. Excellent 
2. Above Average  
3. Average  
4. Below Average  
5. Extremely Poor  

7. How many dealers are there in the district?

a).One 
b)Two. 
c)Three. 
d)More than three. 

8. Which vehicle do they mainly use for delivery?

1). Two wheeler 

a). scooters__ , b). motorbike__.

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 2) Three wheeler 
3) Four wheeler 
a) van__ ,b) truck__,c) others__.

9. What are the other schemes and incentives offered by them?

___________________________________________________
___________________________________________________.

10. What improvements would you like to have in the distribution

process?

___________________________________________________
___________________________________________________.
Personal Details:

NAME: _________________________________________

NAME OF THE SHOP_____________________________

VILLAGE_______________________________________

TEHSIL_________________________________________

DISTRICT_______________________________________

PHONE NO._____________________________________

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