Management Control SystemOf

Hindustan Lever Limited’s (HUL)

Presented By:Mamta Verma(1012)N. Krishna Iyer(1024)Shweta Modi (1039)

HUL formerly Hindustan Lever Limited

Formed in 1933 as Lever Brothers India Limited

Market leader in Indian products such as tea, soaps,

detergents

India’s largest exporters of branded Fast Moving

Consumer Goods.

Recognized by the Government of India as a Golden

Super Star Trading House

Offers high level of service with flexibility and

responsiveness thorough out the supply chain

Key focus in the exports business:

1. Home & Personal Care (HPC)

2. Food and Beverages (F&B)

MISSION

Hindustan Unilever’s mission is to add Vitality to life. Meet everyday needs

for nutrition, hygiene, and personal care with brands that help people feel

good, look good and get more out of life

GOALS

1. First priority is to be a successful business and investing for growth and

balancing short-term and long-term interests

2. Caring about consumers, employees and shareholders, business partners

and the world in which we live

3. To succeed requires the highest standards of behavior from all of us

Departments

Home and Personal Care

Legal

Finance and IT

Foods

Sales and Customer Development

Supply Chain

Human Resource

Corporate Responsibility

HUL has an integrated approach towards recruitment, which

looks at both skills and competencies

Competencies

Competencies are personal characteristics that can be assessed

in a clearly observable behavior. Skills would refer to the

expertise one has and is measured by demonstrated capability.

This would refer to the academic achievements and the

knowledge one gains over time

Procedure

There are 4 regional branches in each of the 4 big metros

1. Look at the CV

2. Short-listing

3. Preliminary interview

4. Screening

5. Final interview

.

Labor relations

Active unions and Collective bargaining Indian Labor legislation

protects freedom of association, the right to organize and

collective bargaining

Wages, bonuses and social security

The national minimum wage is set by the government and

adapted from time to time

How-ever there are indications that these wage levels are not

fair and realistic

HUL contributes to the Provident Fund and pays a Dearness

Allowance

The LTS provides for the workers’ rights to paid and sick leave

The policy on paid leave, sick leave and casual leave is such that

it discourages people to be absent

Training

15 months of intensive training

The Levers Business Leadership Training Program (BLTP) is

probably the most thorough warming up that a trainee can ever

get

The rigorous training will help the recruits develop an almost

natural ability to take calculated risks, cope with the pressures

of corporate life and hone the leadership skills

CONTROLLINGCONTROLLINGInternal Control:

Audit committee meet six times

Review the internal control measures & providing an

update to the Board

Looks into controls and security of the Company’s

critical IT applications,

Into all major divisions, and look after deviations from

the Code of Business Principles

Production Improvement:

reduction in specific energy and water consumption

levels by the use of alternative sources of energy and

recycling/reuse of energy / water

the continuing excellence in TPM implementation

across units

Entering Pass

Software used – Setup gate pass software

Details required

Name:-

Age:-

Sex:-

Qualification:-

Arriving & Departing time:-

Name of Concern person:-

Photo Identification:-

Purpose of Meeting etc:-

MFG/PRO used in HUL starting from Raw material MFG/PRO used in HUL starting from Raw material requirement to final dispatch of productrequirement to final dispatch of product

Waste checking

Waste capturing will be done manually

MFG/PRO will compare Material reduced & Finished Stock Increased

Difference would be treated as waste

PAY GINI Software

Used for HR department

Services by this Software

Attendance

Salary Calculation

PF Calculation

Accounts of all Employees

FLOW OF INPUT MATERIAL

TRANSACTION PROCESSING SYSTEM

Raw material received entry

Finished goods output entry

The security gate head update the log book daily and send it to

the accounts department

HUL’s reward philosophy is to provide market competitive salary and

benefits with a strong linkage between performance and pay

Fixed Salary

Variable Salary that is linked to company and individual

performance

Equity compensation (at eligible levels) that is linked to long

term (3 year) company performance and their potential.

o Benefits and Perquisites aimed at providing the employees choices.

o Retirement benefits that are market competitive

It fosters a balance among different strategic measure in an

effort to achieve goal congruence

In HUL Every department right from marketing, logistics, sales,

finance and Human resource are internally connected

It is very important for an organization like HUL to have an

internal fixed process - very less profit margin

good competition from proctor and gamble

HR strategy of HUL is so good that the employee satisfaction is

to the highest level - motivation in the employees and allows

them to be very open in their minds

HLL staple controlHLL staple control

Manvinder Singh Banga Chairman- 2002

Mid 1990 the company’s core brand were maturing

Declined to 7% , 5%, 4% in 1999, 2000, 2001 resp.

Historically the company’s growth strategy:

HLL prioritized opportunities which built upon existing

assets & capabilities

They avoided spreading their management talent too thinly

They had received a great deal of recognition for the giants

strides they had made in developing innovative approaches to

product development sales, & marketing – Indian’s rural poor

1995- Kissan Annapoorna for staple foods – Iodized Salt

India’s population was poor by global standards, with an average

annual income of about $2,200 at PPP -1999

Their products and services had been designed for developed-

world customers, and this resulted in cost structures that priced

the poor out of the market

Finding innovative ways to serve poorer customers was one

possible avenue, one that a handful of multinationals were

turning their attention to in the early years of the 21st century

It believed that by 2010, half of its sales would come from

the developing world, up from 32% of its sales in 2000

Many companies assumed that high-tech R&D couldn’t

possibly fit in the budget for low price products, and that

developing products for the poor was simply a matter of

making existing products cheaper by lowering quality

HLL’s research-intensive approach was the development of a

Breeze 2 in 1

Marketing to the rural poor

Finally, HLL found new ways to sell

Much in the style of Avon and Amway, it encouraged villagers

by the dozens to go into business for themselves selling HLL

products

HLL believed they could expand their presence in foods

dramatically

The logic was threefold:

The market was tremendous—food accounts for 50% of all

economic consumption in India

HLL’s existing system for selling and distributing throughout

rural India could be used to improve the economics for most

food products

HLL had proven it possible to create nationwide, mass-market

brands despite India’s overwhelming ethnic and cultural

diversity

In 1993, through an acquisition, they expanded into processed

fruit and vegetable products, such as ketchups, jams, and cold

beverages

The team learned that 80% of the food purchased off the shelf

in India is raw and unprocessed

the team investigated markets for several staple like

wheat, rice, beans, salt, spices, and others

Management Control of the Staple FoodsManagement Control of the Staple Foods

HLL staffed the Kissan Annapurna team internally.

Anil Dua, the senior brand manager

HLL had a great deal of experience in launching new brands

As a result, they were able to make reasonable estimates of the cost

of creating a new brand

no mathematical formula, but substantial data on other brands

Each year, they identified a limit to the total losses they were willing

to take as the new operation ramped up

This limit was not negotiated directly

if the total budget was out of line with previous brand-building

experience, the plan would be reconsidered

Over the life of the brand, the greatest uncertainties were

associated with the research into the iodine encapsulation

technique

Each month, the financial results were reviewed at the

corporate level, with a detailed variance analysis of plan vs.

actual. Changes to action plans were made based on these

performance evaluations

A few key performance measures were regularly reviewed, including

the fraction of customers that were upgrading from unbranded

products

This variable was an important input to their financial projections.

They also closely monitored percentage gross margin, which they

viewed as a direct indication of the value customers placed on a

brand

No dramatic changes in the business plan as the iodized salt business

evolved.

There were regional hurdles to overcome, but no changes that

affected the overall plan

India is a fast developing country with a huge population

whose per capita income is growing rapidly and there is huge

opportunity for FMCG companies

The opportunities are as follows:

Increasing per capita income is driving FMCG growth in India

India’s consuming class is growing rapidly