Anda di halaman 1dari 23

Deutsche Banks Namaste India Conference

Mumbai, 22nd Feb 2005

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Contents

Overview The India Opportunity FMCG markets & Strategy (00-03) Current Market Context Growth Agenda

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Contents

Overview The India Opportunity FMCG markets & Strategy (00-03) Current Market Context Growth Agenda

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

HLL - Indias Largest FMCG Company


t t t t t tt t t t t t t t t t t t t t t t t t t t t tt t t

36,300 employees 1,350 managers 2,000+ suppliers & associates 80 company factories 45 C&FAs 7,000 Stockists Direct Coverage - 1 Mn outlets

t t t tt t t t

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Financial Overview
Mn $ Turnover Operating Profit Operating Margin % Net Profit (bei) EPS Surplus Cash Generated Market Capitalisation 2,268 360 15.9% 275 13c 265 7,300
Personal Products 25% Beverages 12% Exports 12% Ice Creams 1% Foods 3% Others 3% Soaps & Detergents 44%

* Figures based on FY2004 Audited Results ++ Market Capitalization as on 17th Feb05

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

HLL - Indias Largest FMCG Company

100

Trailing 4 Quarters Sales Index : HLLs Sales = 100

24

23

16

12

10

9 GSK

HLL

Nirma Nestle Britannia Dabur Colgate Marico Tata Tea P&G (FMCG)

GCPL Gillette

*Estimated

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Leadership across categories


Category HLL Market Share (%) 38 57 57 60 49 61 30 79 HLL Market Share (%) #2 Market Share (%) 17 10 11 7 20 14 20 5 #1 Market Share (%) 47 61 43

Fabric Wash Personal Wash Dishwash

Market Leader

Skin Hair Wash Talcum Powder Packet Tea Jams

Strong No. 2

Toothpaste Instant Coffee Ketchups

33 38 29

Source : A.C Neilsen - ORG Marg FY04 Value shares

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

HLL Shareholding Pattern


Individuals 19.9%

Domestic FIs 14.8% FIIs 13.7%

Unilever 51.6%

HLL Equity Capital - 50 Mn $ Market Capitalisation - 7,300 Mn $


As on 31st Dec04

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Contents

Overview The India Opportunity FMCG markets & Strategy (00-03) Current Market Context Growth Agenda

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Economic Outlook
2001-02 Agriculture Industry Services GDP 6.5 3.3 6.8 5.8 2002-03 (5.2) 6.2 7.1 4.0 2003-04 (AE)* 9.1 6.7 8.7 8.2 2004-05 (E)* 1.1 6.8 8.0 6.2
* CMIE Estimates

Growth%

Positives Strong GDP Growth High Forex Reserves Growing Exports Focus on Rural & Infrastructure

Concerns Oil Prices Inflation Fiscal Deficit Agricultural Growth


22nd February , 2005

Deutsche Banks Namaste India Conference, Mumbai

The India Opportunity

More than 1 Billion Consumers



Growing Disposable Income Young Population: 45% less than 20 years* Growing aspirations fuelled by media Low levels of

Penetration Per Capita Consumption


* Source : Statistical Outline of India (2002-03)

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Opportunity to Drive Penetration


Category Urban Penetration (%) 69.8 36.6 40.1 66.0 54.6 12.5 Rural Penetration (%) 32.3 19.8 16.3 36.8 11.5 0.7 Total Penetration (%) 43.5 24.7 23.3 45.1 24.4 4.2

Toothpaste Skin Hair Wash Talcum Powder Dishwash Ketchup

Source : Indian Readership Survey 2002

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Opportunity to grow consumption


Per Capita Consumption (US $ )
Fabric Wash Toothpastes Shampoos China Indonesia Thailand India 1.7 2.0 4.7 1.2 0.8 1.1 3.0 0.4 1.1 1.2 3.7 0.6

Source : Euromonitor

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Growing Prosperity
Consuming Class Households to Treble
2003
3

Nos Indicate Mn Households

2013
11

Very Rich Consuming 46 Class

124

74

Climbers

79

33

Aspirants

9
Income Range per HH Income Class Very Rich Consuming Class Climbers Aspirants Destitutes HH (US$ p.a) >4,675 975-4675 475-975 350-475 <350

24

Destitutes

181
Source : NCAER; HLL Research

Total

231

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Contents

Overview The India Opportunity FMCG markets & Strategy (00-03) Current Market Context Looking ahead

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

HLL : Three Pronged Strategy


2000+
Grow through focus on POWER BRANDS Rationalization completed from 110 to 35 power brands 1300 Bps improvement in foods gross margins

Improve profitability of Foods

Secure future of Non - Core businesses

Portfolio focused: Share of Non FMCG down from 24% to 8% of sales (Value delivered 84 Mn$)

Profitable Growth Through Focus Deutsche Banks Namaste India Conference, Mumbai 22nd February , 2005

FMCG Markets
Slowdown in growth & then 2 years of decline
FMCG Market (HLL Categories) Growth%
6.7 3.4

'02 '00 '01 -1.1

'03

-2.5

'00 HPC F&B 7.6 1.9

'01 3.0 4.6

'02 0.3 -6.9

'03 -1.3 -7.8

Source : AC Nielsen ORG Marg Retail Audit

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Challenges Stagnation due to discontinuities

Choice explosion (Durables, Services, Entertainment)

Interest rate reduction (Easy Credit)

Price Led Local Competition International companies seeking market position Driving Penetration & Consumption
22nd February , 2005

Deutsche Banks Namaste India Conference, Mumbai

Contents

Overview The India Opportunity FMCG markets & Strategy (00-03) Current Market Context Growth Agenda

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

FMCG Markets
2004 - Revival after 2 years of decline
FMCG Market (HLL Categories) Growth% 2.0 0.8 '02 '03 Q1'04 Q2'04 -1.1 -2.5 -2.8
2004

6.1

Q3'04

Q4'04

HPC F&B

'02 0.3 -6.9

'03 -1.3 -7.8

Q1'04 -3.8 0.6

Q2'04 0.8 1.0

Q3'04 2.9 -1.6

Q4'04 7.0 2.7

Source : AC Nielsen ORG Marg Retail Audit

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

10

MQ 2004
Steps

Drive growth agenda Take competitive challenges head on Financial commitment for long term value

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Current Market Context

Pricing

Actions

Laundry : Price Reduction Shampoos: Value Improvement & Lower Price Points Toothpaste: Value Corrections & SKU rationalization

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

11

Pricing Actions in 2004


Price reductions
Laundry

26%

20%

Price reduction (Bottles) & Value improvement (Sachets)


Shampoo

20%

16%

30%

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Current Market Context

Pricing Laundry : Price Reduction Shampoos: Value Improvement & Lower Price Points Toothpaste: Value Corrections & SKU rationalization

Actions

Investments behind brands


Innovations Quality Higher A&P

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

12

Investments behind Brands


Innovation & Superior quality

Family - safe from germs

Petalsoft

Quick wash - 50% Water & effort saving

No mud

Rin Advance

Perfect Radiance

5 in 1 hair health benefits

Total Care

Whiter teeth

Fresher breath

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Investments behind Brands


Step up in HPC A&P Spends
132

100

A&P Spends HPC (April - Dec) 2003

A&P Spends HPC (April - Dec) 2004

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

13

Current Market Context

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 foods
Deutsche Banks Namaste India Conference, Mumbai

Actions

22nd February , 2005

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
Value Shares Jams Ketchup Salt MQ ' 04 78.8 29 15.4 JQ ' 04 78.7 27.8 15.2 SQ ' 04 79.5 29.9 16.1 DQ ' 04 78.4 30.3 15.7

Restructuring completed, category portfolio focused for growth


Deutsche Banks Namaste India Conference, Mumbai 22nd February , 2005

14

Current Performance
HPC- Growth

5.9 4.8 2.7 3.4

4.9

-0.5 JQ'04

SQ'04 Sales Growth% Volume Growth

DQ'04

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Current Performance
Fabric Wash
Actions taken
Volume Growth% 9.2
4.7 5.9 8.2

Price reduction Additional investment


in quality

MQ'04

JQ'04

SQ'04

DQ'04

Value Growth%
2.9 MQ'04 -0.9 -4.8 JQ'04 SQ'04

8.8

Higher A & P spends Brand repositioning

DQ'04

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

15

Current Performance
Fabric Wash
Actions taken
Volume Shares
26.4 24.9 25.3 25.5

Price reduction Additional investment


in quality

MQ'04

JQ'04

SQ'04

DQ'04

Value Shares
37.6 38.0 37.7 37.9

Higher A & P spends Brand repositioning

MQ'04

JQ'04

SQ'04

DQ'04

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Current Performance
Shampoo
Actions taken
Volume 42.5 Growth%
42.9 28.8

Price reduction - bottles Value Improvement - Sachets Innovations Sunsilk Clinic Plus CAC

1.6 MQ'04 JQ'04 SQ'04 DQ'04

Volume Shares
51.7 48.9 49.4 51.6

Higher A & P spends

MQ'04

JQ'04

SQ'04

DQ'04

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

16

2004 - Financial Highlights

Continuing sales flat HPC

Foods

HPC grows 6% in Volumes; growth across categories Pricing actions lead to 2% value growth Value growth momentum picking up Volume market shares gains in Laundry and Shampoo Strong growth in BrookeBond, Lipton and Instant Coffee BrookeBond, Decline by 7% impacted largely due to planned
discontinuation; stock reduction and one- offs one-offs
22nd February , 2005

Deutsche Banks Namaste India Conference, Mumbai

2004 - Financial Highlights

Operating Profits (PBIT) declines 29%


Competitive strategy in Laundry & Hair Additional A&P spends in HPC Higher foods losses
Deutsche Banks Namaste India Conference, Mumbai 22nd February , 2005

17

2005 - Scenario
High input cost escalation particularly in chemicals & packaging

materials impacting laundry most

Aggressive cost savings and judicious price increases to partly offset

cost pressures

High brand building investments will continue Deutsche Banks Namaste India Conference, Mumbai 22nd February , 2005

Key agenda will continue to be Topline Growth

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

18

Contents

Overview The India Opportunity FMCG markets & Strategy (00-03) Current Market Context Growth Agenda

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Driving the growth agenda Delivering Consumer Value

Brand Relevance

Superior Quality

Strategic Pricing

Ten Point Program to provide fuel Deutsche Banks Namaste India Conference, Mumbai 22nd February , 2005

19

Strategic Pricing
Rs 5 &2 Rs 10 Rs 2

Rs 4

Rs 5 Rs 5 Rs 10 Rs 20 Rs 40

Rs 5

Rs.5

Rs 25

Rs 2, Rs 4.50

Rs 5

Rs 5 Rs.1.50 Rs.1 Rs.5 Rs 0.50

Increasing Accessibility : Lower price points Driving Affordability : Strategic Price Reductions
Deutsche Banks Namaste India Conference, Mumbai 22nd February , 2005

Technology Focus

India is a base for

1 out of 4 Unilever Global Research Centers

5 Global Innovation Centers >100 Scientists

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

20

Winning the customer & channel focus

Customer focussed sales organisation Diamond model Developing new channels Rural marketing Direct selling Out of home Service centers

Concern approach to modern trade and rural distribution Category specific approach to general trade

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Developing new channels


Rural Marketing - Project Shakti
Challenges in Rural Markets Accessibility
Viability Media Dark

Rural selling through SHGs


Benefits Improving product reach Facilitating Brand-Communication Extended into 12 major states Over 50,000 villages covered - Touching 70 mn rural lives Plans to cover 1,00,000 villages - Touching 100 mn rural lives.

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

21

Developing new channels


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

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

In Summary
Big Opportunity to grow Penetration & Consumption
Strong brands : Rationalization completed Delivering Consumer Value
Brand relevance; Strategic Pricing; Quality

Innovation / Activation - supported by new organisation New sales organisation

Strong Capabilities of HLL

Powerful Brands; Robust Business Capabilities; Management Talent

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

22

Deutsche Banks Namaste India Conference


Mumbai, 22nd Feb 2005

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

Deutsche Banks Namaste India Conference


Mumbai, 22nd Feb 2005

Deutsche Banks Namaste India Conference, Mumbai

22nd February , 2005

23