presentation at icici securities’ - “india unlimited” second annual … · 2020-06-08 ·...
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ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Presentation at ICICI Securities’ - “India Unlimited”Presentation at ICICI Securities’ - “India Unlimited”Second Annual Investor Conference Second Annual Investor Conference
New York, September 8-10, 2003New York, September 8-10, 2003
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
FH’03 Performance HighlightsFH’03 Performance Highlights
StrategyStrategy
ContentsContents
EconomyEconomy
OverviewOverview
2003 and beyond...2003 and beyond...
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
FH’03 Performance HighlightsFH’03 Performance HighlightsFH’03 Performance Highlights
StrategyStrategyStrategy
ContentsContents
EconomyEconomy
OverviewOverviewOverview
2003 and beyond...2003 and beyond...2003 and beyond...
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Economic OutlookEconomic Outlook
2001-02 2002-03 2003-04 (E)*
Agriculture 5.7 (3.2) 7.5
Industry 3.3 6.0 5.0
Services 6.8 7.1 7.5
GDP 5.6 4.3 6.5
• Fourth Largest economy in PPP terms • GDP growth second only to China among Asian Economies• Strong Revival expected in Agricultural growth • Resurgence of manufacturing sector• Strong performance of services sector
Growth%
* CMIE Estimates
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Indian Economy - SnapshotIndian Economy - Snapshot
Positives• Favorable monsoons• Healthy GDP growth at 6.5% estimated for 2003-04 (CMIE estimates)• Revival of industrial growth to 6% in 2002-03• Strong forex reserves at 81 bn $• Current account surplus at 2.8 bn $ (Apr - Dec ‘02)• Upturn noticed in broadbased demand conditions
(Non food credit expected to rise by 16.0% in 2003-04)• Robust growth of 17.8% in exports in 2002-2003• Low inflation 3-4%• Rapid development of infrastructure
Concern• Fiscal defict at 9.3% in 2002-03 and expected to rise in 2003-04• Lag effect of poor agri-output in 2002-03• Total foodgrains production drop of 13.9% in 2002-03
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
FH’03 Performance HighlightsFH’03 Performance HighlightsFH’03 Performance Highlights
StrategyStrategyStrategy
ContentsContents
EconomyEconomyEconomy
OverviewOverview
2003 and beyond...2003 and beyond...2003 and beyond...
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Our purpose is to meet the
everyday needs of people everywhere -
to anticipate the aspirations of our
customers and consumers and to
respond creatively and competitively
with branded products and services
which raises the quality of life
Hindustan Lever Corporate Purpose
Hindustan Lever Corporate Purpose
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Hindustan Lever…. India’s largest & leading FMCG company
Hindustan Lever…. India’s largest & leading FMCG company
Turnover 100 2193
EBITDA (Operational) 21 461
Net Profit (bei) 17 373
EPS 7.98 (Rs) 18c
Economic Value Added 12 263
Market Capitalisation 412 9035
* Figures based on FY2002 Audited Results
Personal Products
21%
Beverages12%
Foods7%
Ice Creams1%
Exports12%
Others3% Soaps &
Dets43%
* Based on FY2002 segmental revenues
US $ MnRs Bln
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Source : Mkt Capitalisation at BSE ( 4th September 2003 )
Market Capitalisation Market Capitalisation
ONGC Reliance Indian Oil HLL Infosys
Market Cap (US $Bln) 20.3 12.6 9.7 9.0 6.1
% of Total Market 10.3 6.4 4.9 4.6 3.1
% Wt in Sensex 15.0 9.0 9.7
% Wt in Nifty 12.4 8.9 6.0
20.3
12.6
9.7 9.0
6.1
0.0
5.0
10.0
15.0
20.0
25.0
ONGC Reliance Indian Oil HLL Infosys
Hindustan Lever...on the Indian Bourses
Hindustan Lever...on the Indian Bourses
(US
$B
ln)
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
58.9
39.8
59.555.4
33.7
63.5
54.7
64.1
30.7
49.8
33.9
74.9
27.6
8.314.8
0
10
20
30
40
50
60
70
80
90
100
Pers
onal W
ash
Fabri
c W
ash
Dis
hw
ash
Skin
Tooth
paste
Talc
um
Pow
der
Hair
Wash
Deodra
nts
Packet
Tea
R&
G C
off
ee
Insta
nt
Coff
ee
Jam
s
Ketc
hups
Bra
nded A
tta
Bra
nded S
alt
Market Leader Strong No. 2
Hindustan Lever ….dominant player across FMCG categories
Hindustan Lever ….dominant player across FMCG categories
Mar
ket S
hare
%
Source: : AC Neilson ORG Retail Audit
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
FMCG...Opportunities in India
FMCG...Opportunities in India
Category Market Size (US $Mn)
HLL - Market
Share (%)
Urban Penetration
(%)
Rural Penetration (%)
Total Penetration
(%)Fabric Wash 1210 39.8 89.6 82.9 84.9
Personal Wash 938 58.9 97.9 90.7 92.8
Packet Tea 635 30.7 91.2 82.2 84.9
Toothpaste 409 33.7 69.8 32.3 43.5Skin 312 55.4 36.6 19.8 24.7Hair Wash 230 54.7 40.1 16.3 23.3Talcum Powder 148 63.5 66 36.8 45.1Branded Atta 107 8.3 44 30.2 34.3Dishwash 102 59.5 54.6 11.5 24.4Instant Coffee 55 33.9 N.A. N.A. N.A.
R&G Coffee 30 49.8 N.A. N.A. N.A.
Ketchups 25 27.6 12.5 0.7 4.2Deodrants 19 64.1 N.A. N.A. N.A.
Jams 13 74.9 N.A. N.A. N.A.
Source : Indian Readership Survey 2002
• Significant scope for growth• Clearly differentiated strategies for : - High penetration categories > 50%: Drive upgradation / consumption - Low penetration categories : Drive penetration
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
13.9
9.0
4.72.6
02468
10121416182022
UK Brazil Thailand India
1.311.46
0.87
0.50
0.00.20.40.60.81.01.21.41.61.82.0
UK Brazil Thailand India
FABRIC WASHPer Capita ( Kgs )
PERSONAL WASHPer Capita ( Kgs)
0.23
0.61
0.40
0.070.00.10.20.30.40.50.60.70.80.91.0
UK Brazil Thailand India
0.40
0.72
0.38
0.040.00.1
0.20.3
0.40.5
0.60.7
0.80.9
1.0
UK Brazil Thailand India
TOOTHPASTEPer Capita (Kgs )
SHAMPOOPer Capita ( Kgs)
FMCG...Opportunities in India
FMCG...Opportunities in India
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
50.0
19.0
20.011.0
Water Soap Naturals Shampoo
HLL Share ofShampoos
60%
Share of Hair wash occasions
HLL Share ofHair Wash
7%
Redefine potential for growth
FMCG...Opportunities in India
FMCG...Opportunities in India
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
FH’03 Performance HighlightsFH’03 Performance HighlightsFH’03 Performance Highlights
StrategyStrategy
ContentsContents
EconomyEconomyEconomy
OverviewOverviewOverview
2003 and beyond...2003 and beyond...2003 and beyond...
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
RecapRecap
HPCSustained Profitable Growth
FOODSImproved Profitability
DOMESTIC FMCG
EXPORTSFocus on core , value add
OTHERSDivest / discontinue
NON FMCG
STRATEGIC FOCUS
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
• Focus resources on 30 Power brands• Power brands selected to occupy all relevant consumer appeal & price segments• Marketing spend, level of innovation supported by consumer insight & new technology platforms• Grow Power Brands by
– consumer relevant innovation– cross category extensions– leveraging channel opportunities
Strategic FocusPower Brands
Strategic FocusPower Brands
✔ Greater rigour
✔ Focused advertising and promotion spend
✔ Reduction in brand cannibalization
✔ Efficient supply chain
✔ Effective market activation
moremoremoreisisisisisisisisisisisislesslessless30 30
PowerPowerBrandsBrands
1010RegionalRegionalJewelsJewels
63 Brands63 Brands110 Variants110 Variants
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
HPC...Power Brands Drive Growth
HPC...Power Brands Drive Growth
-1.8
5.3 4.95.6
3.5
-4.0
4.1
6.3
8.2
4.6
6.16.1
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
MQ 02 JQ 02 SQ 02 DQ 02 MQ 03 JQ'03
HPC- HLL Sales Growth
HPC- Power Brands Growth
Growth %
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
FAL : 16%Lifebuoy : 33% Ponds : 22%
HPC Power Brands...Delivering strong growth - FH’03
HPC Power Brands...Delivering strong growth - FH’03
* Group BasisNihar : 11%
Lakme : 53%
Pepsodent : 15% Sunsilk : 6% Lux : 7%
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
(7.5)
(9.8)
4.3
(10.0)
(5.0)
-
5.0
10.0
FH’02 SH’02 FH’03
(16.1)
(11.6)
17.6
(15.0)
(10.0)
(5.0)
-
5.0
10.0
15.0
20.0
25.0
FH’02 SH’02 FH’03
Strong growth in Foods Power Brands...Strategy shows results
Strong growth in Foods Power Brands...Strategy shows results
Power Brands BeveragesPower Brands Beverages(20.0)
Power Brand Processed FoodsPower Brand Processed Foods
Power Brand Total FoodsPower Brand Total Foods* Processed Foods and Total Foods exclude Edible Oils and Fats business
(11.0) (11.3)
4.7
(15.0)
(10.0)
(5.0)
-
5.0
FH’02 SH’02 FH’03
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
* Group BasisAnnapurna : 26%
Bru : 17% Taaza : 11%
Foods Power Brands…Delivering strong growth - FH’03
Foods Power Brands…Delivering strong growth - FH’03
3 Roses : 10%
Kissan : 11%
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Foods business to be “fit for growth & scale”
• Reasonable scales of operations achieved• Focus now on improving profitability
• Portfolio rationalization• Value added innovation• Re-engineering the supply chain• Improve margins on traditional portfolios -Tea,Oils
• Stop value destruction in Ice Creams - new strategyformulated
• Focus on premium products in 6 citadel cities• Turnaround Modern Foods• Aggressive investments in brand building &developing new categories
700
-550
700
1,170
555
Overall HLLFoods excl
ODF
ProcessedFoods excl
ODF
ODF Beverages Ice Creams
Bps change in Gross Margins in 2002
“strategy delivers step change in margin profile”
Strategic Focus Foods : Underlying Profitability
Strategic Focus Foods : Underlying Profitability
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Strategic FocusNon FMCG Businesses
Strategic FocusNon FMCG Businesses
•Exports•Discontinue non value-adding exports•Focus on core categories - position as Preferred Competitive Source•Non Core : Build only on Country / Company strengths; exit others
•Other Non FMCG Businesses•Opening up of the economy & access to world class technology
•Need to focus on core businesses•Variety of options actively reviewed - best solution for each business•Seek players with global expertise who are able to support future growth
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Strategic FocusCore - Value added Exports
Strategic FocusCore - Value added Exports
Growth %
Core Value added portfolio drives growth
Continuing ExportsContinuing Exports
-28.3
4.6 5.3
-30.0
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
FY 02
MQ 03 JQ 03
ExportsExports
1.0
15.2
7.7
0.0
5.0
10.0
15.0
FY 02 MQ 03 JQ 03
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
NonFMCGbusine
ssAFS
Quest
Nickel Catalyst
Adhesives
Seeds
Diversey Lever
DIVESTED TRANSFER
Leather
Mushrooms
Transferred to subsidiariesfor potential JV / disposal
Strategic FocusSecuring the future of Non FMCG
Strategic FocusSecuring the future of Non FMCG
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Effective execution of strategyEffective execution of strategy
HPCSustained Profitable Growth
FOODSImproved Profitability
DOMESTIC FMCG
EXPORTSFocus on core , value add
OTHERSDivest / discontinue
NON FMCG
STRATEGIC FOCUS
• HPC records all round performance - profitable growth• Step change in profitability of Foods business - “Fit for Growth”• Ice Cream strategy halves losses• Exports portfolio rationalised - core exports do well• Significant progress on divestment of non-core businesses
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
FH’03 Performance HighlightsFH’03 Performance Highlights
StrategyStrategyStrategy
ContentsContents
EconomyEconomyEconomy
OverviewOverviewOverview
2003 and beyond...2003 and beyond...2003 and beyond...
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Source: : AC Neilson ORG Retail Audit
Growth % 2000 2001 2002 FH - 2003
Personal Wash 6.1 -9.9 -6.1 -1.6
Fabric Wash 5.7 -2.9 -2.1 -4.6
Dishwash 19.2 11.1 -1.8 -2.9
Toothpaste 10 2 -5.5 -11.8
Shampoo 12.5 10.7 7.8 -5.2
Skin Products 12.9 2.6 0.6 4.3
Packaged Tea 0.3 2.4 -9.7 -14.1
HPC 7.6 -2.3 -3.1 -3.3
FMCG 6.7 -1.5 -3.5 -2.8
Market GrowthMarket Growth
... key categories decline in 2002, depressed trend continues in FH’03
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
FH 2003 ResultsHighlights
FH 2003 ResultsHighlights
• Overall sales grows by 2.2%, Continuing businesses grow by 3.2%
• HPC FMCG grows by 4.5% with power brands growing by 6.2%
• Good improvement in foods sales performance
• Sales impacted by
– Uncertainty in VAT implementation
– Truckers’ strike
• Operating profit improves by 9%, margins up 114 bps
• PAT (bei) improves by 10.5%
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
FMCG SalesGrowth Momentum Picks up
FMCG SalesGrowth Momentum Picks up
-3.9
2.6
-0.9
1.4
2.1
-0.2
-4.0
1.0
MQ 02 JQ 02 SQ 02 DQ 02 MQ 03 JQ 03
FMCG Sales
Growth %
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
HPC PerformanceHPC Performance
1.9
4.5
5.5
Total HPC
...accounts for 65% of revenue & 85% of profits
FH 2002
SH 2002
Growth %
-5.5
-1.3
-3.3
1.4
5.44.6
1.3
5.36.2
-6
-4
-2
0
2
4
6
8
HPC MARKET HLL GROUP HPC GROUP POWER BRANDS
“HPC sustains growth momentum” “HPC Category and PowerBrands beat the market”
* Market growth rates as per ORG New Panel
FH 2002
SH 2002
FH 2003
FH 2003
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Soaps & DetergentsPerformance Highlights
Soaps & DetergentsPerformance Highlights
• Innovation led growth in Personal wash– Strong growth inspite of truckers’ strike
– Growth momentum in Lux and Lifebuoy sustained
– Slew of launches/relaunches in the category
• Laundry Market impacted adversely with continued downtrading.
– Pressure on the mid price and premium segments of the portfolio
– Rin re-formulated and launched with patented “Nil Mineral Bar” technology
– Surf Excel prices reduced and brand relaunched in JQ’03; volumes surge
• Dishwash grows by 8.3% in JQ’03 in a declining market (-)2.7%– Vim Polycoat launched
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Personal Wash...Innovation led growth
Personal Wash...Innovation led growth
1.4
-4.3
11.1 11.3
8.8 8.1
0.3-2.3-7.7
-12.9
13.1
-3.1
-15
-10
-5
0
5
10
15
MQ 02 JQ 02 SQ 02 DQ 02 MQ 03 JQ'03
PW Market Growth HLL PW sales Growth
Growth %
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Lifebuoy...Excellent innovation led performance
• Strong double digit growth for 5 consecutive quarters• >30 % growth for 4 consecutive quarters.
-3.7
26.6
35.4 35.6 36.3
31.3
16.8
15.815.5
16.816.7
17.6
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
MQ 02
JQ 02 SQ 02 DQ 02 MQ 03 JQ 03
14.5
15
15.5
16
16.5
17
17.5
18
Lifebuoy Growth Lifebuoy Market Shares
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Soaps and DetergentsRecent Innovations
Soaps and DetergentsRecent Innovations
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Personal ProductsPerformance Highlights
Personal ProductsPerformance Highlights
• Growth sustained in JQ’03– Growth led by Skin, Talc, Hair Oil and Shampoos
• Strong double digit growth in Skin for 5 consecutive quarters– FAL, Lakme and Ponds show high growths
• Oral performance better than market decline– Value proposition redefined– New SKUs launched at convenient price points– Share gain from low price competition
• Shampoo sales growth driven by volume growth– Market Value decline continues– Sunsilk registers strong growth of 8% in JQ’03– New SKUs launched at convenient price points in MQ’03– Value proposition redefined
• Hair oils deliver double digit growth for 3 consecutive quarters
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
PP shows strong growth for thesecond consecutive quarter ...
PP shows strong growth for thesecond consecutive quarter ...
MQ’03 growth sustained
1111....1111
15151515....9999
8888....1111
0000....0000
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10101010....0000
15151515....0000
20202020....0000
FYFYFYFY 02 02 02 02 MQMQMQMQ 03 03 03 03 J QJ QJ QJ Q 03 03 03 03
Personal Products
Growth %
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Skin-Consistently beating the market...Backed by volume growth
Skin-Consistently beating the market...Backed by volume growth
Strong growth for six consecutive quartersDouble digit growth for 5 consecutive quarters
4.9 3.5
48.6
21.824.0
14.3
-5.7
-1.32.2
9.17.7
19.0
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
MQ 02 JQ 02 SQ 02 DQ 02 MQ 03 JQ'03
Skin Market Growth HLL Skin Sales Growth
Growth %
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Skin Power BrandsSurge ahead..
18181818....6666
26262626....1111
8888....8888
0000....0000
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20202020....0000
25252525....0000
30303030....0000
FYFYFYFY 02 02 02 02 MQMQMQMQ 03 03 03 03 J QJ QJ QJ Q 03 03 03 03
FAIR & LOVELYFAIR & LOVELY
0000....1111
53535353....3333 53535353....1111
0000....0000
10101010....0000
20202020....0000
30303030....0000
40404040....0000
50505050....0000
FYFYFYFY 02 02 02 02 MQMQMQMQ 03 03 03 03 J QJ QJ QJ Q 03 03 03 03
LAKMELAKME
1111....0000
21212121....111123232323....0000
0000....0000
5555....0000
10101010....0000
15151515....0000
20202020....0000
25252525....0000
FYFYFYFY 02 02 02 02 MQMQMQMQ 03 03 03 03 J QJ QJ QJ Q 03 03 03 03
PONDSPONDS
Growth %
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Personal ProductsRecent Innovations
Personal ProductsRecent Innovations
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
BeveragesCore Portfolio Strengthened
BeveragesCore Portfolio Strengthened
• Tea impacted by weak commodity prices & low cost loose tea players
• Topline decline restricted to (-)2.7% and flat UVG in JQ’03
• Good improvement in beverages sales performance
• Power Brands 3 Roses, Red Label and Taaza grow well
• Master Brand “BROOKE BOND” launched
• Bru delivers strong growth for 6 consecutive quarters
• Leveraging new opportunities
– ‘OOH” channel
– Lipton Ice Tea Business
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Beverages...Power Brands deliver growth
----12121212....8888
----8888....7777
5555....4444
----15151515....0000
----10101010....0000
----5555....0000
0000....0000
5555....0000
FYFYFYFY 02 02 02 02 MQMQMQMQ 03 03 03 03 J QJ QJ QJ Q 03 03 03 03
RED LABELRED LABEL----15151515....6666
10101010....555512121212....3333
----15151515....0000
----10101010....0000
----5555....0000
0000....0000
5555....0000
10101010....0000
15151515....0000
FYFYFYFY 02 02 02 02 MQMQMQMQ 03 03 03 03 J QJ QJ QJ Q 03 03 03 03
TAAZATAAZA
----5555....0000
10101010....00009999....0000
----5555....0000
0000....0000
5555....0000
10101010....0000
FYFYFYFY 02 02 02 02 MQMQMQMQ 03 03 03 03 J QJ QJ QJ Q 03 03 03 03
3 ROSES3 ROSES
10.7
17.515.6
0.0
5.0
10.0
15.0
FY 02 MQ 03 JQ 03
BRUBRU
Growth %
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
BeveragesRecent Innovations
BeveragesRecent Innovations
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
• Popular Foods shows strong double digit growth in both quarters of 2003
• CPD grows by 18.5%in JQ’03 backed by strong UVG
• Wide assortment of consumer exciting innovations
Processed foods...On Growth Path
Processed foods...On Growth Path
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Processed Foods...Continue to growProcessed Foods...Continue to grow
Healthy growth trend after profitability improvement
((((6666....7777))))
7777....0000
20202020....7777
((((10101010....0000))))
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----
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20202020....0000
25252525....0000
FYFYFYFY''''02020202 MQMQMQMQ''''03030303 J QJ QJ QJ Q''''03030303
Processed Foods Sales Growth
* Processed Foods excludes Edible Oils and Fats business
Growth %
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Culinary Products...Volume growth momentum sustained
7777....6666
----2222....9999
18181818....5555
----15151515....0000
----10101010....0000
----5555....0000
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20202020....0000
25252525....0000
30303030....0000
FYFYFYFY 02020202 MQMQMQMQ ‘‘‘‘03030303 J QJ QJ QJ Q 03 03 03 03
CPD SalesCPD Sales
5555....0000
((((13131313....8888))))
9999....2222
((((15151515....0000))))
((((10101010....0000))))
((((5555....0000))))
0000....0000
5555....0000
10101010....0000
FYFYFYFY''''02020202 MQMQMQMQ''''03030303 J QJ QJ QJ Q''''03030303
CPD UVGCPD UVG
Growth %
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Popular Foods...Strong Growths in 2003 backed by UVG
----16161616....9999
17171717....7777
23232323....2222
----25252525....0000
----20202020....0000
----15151515....0000
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----5555....0000
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FYFYFYFY 02 02 02 02 MQMQMQMQ’’’’03030303 J QJ QJ QJ Q ‘‘‘‘03 03 03 03
Popular Foods SalesPopular Foods Sales
28282828....3333
22222222....3333
((((25252525....8888))))((((30303030....0000))))
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30303030....0000
FYFYFYFY''''02020202 MQMQMQMQ''''03030303 J QJ QJ QJ Q''''03030303
Popular Foods UVGPopular Foods UVG
Growth %
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Processed FoodsRecent Innovations
Processed FoodsRecent Innovations
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
8
10
12
14
16
18
20
22
1996
1997
1998
1999 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2000 2001 2002Rolling 12-month EBITDA Margins
EBITDA Margin ProgressionEBITDA Margin Progression
% Sales
2003
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
80
120
152
188
237
271
0
50
100
150
200
250
300
1997 1998 1999 2000 2001 2002
* EVA = Net Operating Profit after Taxes - Cost of capital Employed
US $ MnCAGR 27.6 %
Economic Value AddedEconomic Value Added
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Delighting the shareholder Delighting the shareholder
Rs Shareholder receipt in last6 months (per Re 1 Share)
Final Dividend (2002) 2.659*
Interim Dividend (2003) 2.500*
Special Dividend 1.765*
Bonus Debenture 6.000
Total 12.924* Pursuant to change in dividend tax incidence announced in recent Budget
Dividend Per Share of Re 1 2001 2002 2003Interim 2.500 2.500 2.867Final 2.500 3.000
Total 5.000 5.500 2.867
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
FH’03 Performance HighlightsFH’03 Performance HighlightsFH’03 Performance Highlights
StrategyStrategyStrategy
ContentsContents
EconomyEconomyEconomy
OverviewOverviewOverview
2003 and beyond...2003 and beyond...
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
2003 & Beyond…..2003 & Beyond…..• Growth in current categories
– High Penetration Categories - upgradation/consumption– Low Penetration Categories– Greater consumer insight– Technology led innovation
• Scale up New Initiatives– New categories, new consumers & new Consumption opportunities
• Continued thrust on innovation in Foods• Building a New Exports Horizon
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Leverage Channel Opportunities
Ice Cream Vending
Lakme Beauty Salons
Beverages Out of Home
2003 & Beyond…..2003 & Beyond…..
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Scale up New Initiatives
Lever Ayush Max Confectionery Sangam E-tailing
Rural Connectivity (Shakti)
2003 & Beyond…..2003 & Beyond…..
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Lever AyushLever Ayush
• Ayush launched in June ‘02 after rigorous R&Dand extensive clinical testing
• 5 OTC non prescriptive products introduced• Purity of ayurvedic ingredients endorsed by AVP ,
Coimbatore• Soaps, Oils and Shampoos launched nationally• Roll Ons and Cough Syrup under test• “Ayush Therapy Centre” started
truth of Ayurveda proof of Science
truth of Ayurveda proof of Science
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
g Max forays into confectionery
g Child centric product development / innovation
g Nationally rolled out post success in Tamilnadu
g ‘Max’ range of confectionery annualised sale > US $ 10 Mn
Max set to become the largest kids impulse brand
Extending Max to ConfectioneryExtending Max to Confectionery
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
HLL - Network
• Aviance relaunched as HLL Network - Jan’03
• Portfolio widened
– Products added:
• Lever home range
• Male grooming
• Reach - 1068 towns
• 1,15,000 consultants in July’03 to grow to 1 Mn by 2007
Sales increases 3 fold
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
g Leveraging on cost arbitrage opportunities with the West& Unilever sourcing
g Focus on categories with company / country specificadvantage
g Build sourcing partnerships on the basis of- World class quality- Technological / process expertise- Customer service- Cost competitiveness
g Exports not at the cost of domestic businessg Sourcing business will improve Exports margin basket
Building a New Exports Horizon
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
• RS-net implementation
- Connectivity with HLL RSs
– Benefits
• System cost reduction
• Secondary Sales Tracking
• Robust sales & production planning
• Higher ROI for Redistribution Stockist
• Field force focus on “the HLL Way of Sales”
• Project Leap
• Shared Services
Key InitiativesA New Paradigm Supply Chain
Key InitiativesA New Paradigm Supply Chain
...make today what we
sold yesterday...make today
what we sold yesterday
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Key InitiativesProject “Shakti”
Key InitiativesProject “Shakti”
• Self Help Groups (SHGs) appointed as Dealers
• SHGs distribute goods directly to consumers
• Piloted in 2001& extended across several states
• Partnerships with several NGOs forged
• More than 5000 villages covered touching
7.5 Mn rural lives
• 40% increase in no of villages covered prior to the project
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Key InitiativesThe ‘HLL Way in Sales’
Key InitiativesThe ‘HLL Way in Sales’
• Improved Secondary Sales focus
• Differentiated approach to channels
• Redefined role of Stockist
• Diamond model - new sales organisation
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Diamond ModelDifferent Channels, Different Needs
Diamond ModelDifferent Channels, Different Needs
WholesaleWholesale
Retail TradeRetail Trade
MT & SSTMT & SST
Mass retailMass retail
Key A/c Retail
Key A/c Retail
WholesaleWholesale
CSDCSD
RuralRural
Go as 'one'Go as 'one'
PC specificPC specific
Concern approach toConcern approach toderive critical massderive critical mass
ICICI - Securities Annual Investor Conference, New York September, 2003September, 2003
Thank YouThank You