CLSA Investors’ Forum

23rd September, 2009

Mr Nitin Paranjpe
CEO and MD
Hindustan Unilever Limited
Safe harbour statement
This Release / Communication, except for the historical information, may contain
statements, including the words or phrases such as ‘expects, anticipates, intends, will,
would, undertakes, aims, estimates, contemplates, seeks to, objective, goal, projects,
should’ and similar expressions or variations of these expressions or negatives of these
terms indicating future performance or results, financial or otherwise, which are forward
looking statements. These forward looking statements are based on certain expectations,
assumptions, anticipated developments and other factors which are not limited to, risk and
uncertainties regarding fluctuations in earnings, market growth, intense competition and the
pricing environment in the market, consumption level, ability to maintain and manage key
customer relationship and supply chain sources and those factors which may affect our
ability to implement business strategies successfully, namely changes in regulatory
environments, political instability, change in international oil prices and input costs and new
or changed priorities of the trade. The Company, therefore, cannot guarantee that the
forward looking statements made herein shall be realized. The Company, based on
changes as stated above, may alter, amend, modify or make necessary corrective changes
in any manner to any such forward looking statement contained herein or make written or
oral forward looking statements as may be required from time to time on the basis of
subsequent developments and events. The Company does not undertake any obligation to
update forward looking statements that may be made from time to time by or on behalf of
the Company to reflect the events or circumstances after the date hereof.
Agenda

Context

Strategy &
Execution

Focus &
Priorities
Agenda

Context

Strategy &
Execution

Focus &
Priorities
FMCG Markets
¾ FMCG consumption growth is intact

¾ Broad based growth across categories and across urban

and rural

FMCG Market sustains growth of over 15% … but price element comes down
in last 6 quarters (eg skin cleansing)

16.0
Skin Cleansing
25.0 Price Growth%
24.2 14.0
20.8 22.5
18.1 18.9 18.6 12.0
16.1 20.1
14.9 16.5
18.4
10.0
17.6 18.3 17.7
8.0
15.6
11.0 6.0
8.5 4.0
HPC F&B FM CG 2.0

0.0
MQ'08 JQ'08 SQ'08 DQ'08 MQ'09 JQ'09 MQ'08 JQ'08 SQ'08 DQ'08 MQ'09 JQ'09 Jul'09

Source: AC Nielsen
2009 in perspective
¾FMCG market growth sustained, but
¾frequent price changes, especially in mass segment
¾downtrading in certain categories
¾down-stocking in wholesale and organised retail

¾Appropriate actions taken timely

¾focus on consumer value (including competitive pricing) at all times
¾playing the full portfolio across categories; relevant innovations launched
¾competitive brand support
¾increased execution rigour
¾step-up in cost efficiency programmes

¾Impact of actions will be visible over a period of time

¾linked to pipeline
¾transition impact on shares in the short term
Monsoon and Impact on Rural Markets
Monsoon status c. 20% deficiency;
mitigating factors expected to partly offset impact

Occupation % share of % share of Earning

Category Rural Rural Hholds Weight
Income
Regular Salary/ 20% 11% 1.80 Job Security +
Wages 6th Pay Commission

Others 3% 2% 1.50
Non Agricultural 15% 12% 1.25 Catering Local Demand
Self Employed
Self Employed in 43% 41% 1.07 Better Accessibility+
Agriculture 40% increase in MSP
Piece Work Labour 20% 36% 0.60 NREGA
(30% wage increase)
¾ Household incomes will continue to increase

¾ Disposable income rate continues to be high

¾ Traditional savings methods – no erosion of savings Source: NCAER

Changing Income Pattern

2003 2013
181 mn households 231 mn households Affluent
Top End Business
3 Affluent 11 Changing attitudes

Aspirers
46 Aspirers 124 Trebling
Credit Culture

131 Strivers 96
Strivers
B.O.P Opportunity

The shape of India is changing… from a pyramid to a diamond

Source : National Council of Agriculture & Economic Research

Agenda

Context

Strategy &
Execution

Focus &
Priorities
Our Vision

To earn the love and respect

of India, by making a real
difference to every Indian.

Competitive, Profitable and Sustainable Growth

Our Strategy

• Leverage brand portfolio and consumer understanding by

• Straddling the pyramid & deploying full portfolio

• Driving consumption & penetration opportunity

• Winning with consumers, channels, segments/markets of

tomorrow

• Build markets and capabilities for the future

• Leverage Unilever scale and know how

• Drive increased execution rigour

• Step-up in cost efficiency initiatives

• Integrate economic, environment & social objectives with

business agenda
Portfolio straddling the pyramid

Fabric Personal Shampoo Skin Tooth Tea Coffee

Wash Wash Paste

Affluent

Aspiring

Striving

Strong brands across categories addressing needs of every consumer

Identifying the opportunity and filling it is important

Strong portfolio across categories

Market Leader Strong No. 2

65

56.4
49.1 49.5
46.3 45.4
42.240.1
36.2
32.5 31.6
28.0
24.1 22.7
21.8 21.6

11.6 11.7
9.8 7.9
5 5.2

Fabric Personal Dishwash Skin Shampoo Deos Packet Coffee Jams Toothpaste Ketchups
Wash Wash Tea
HUL – Market Share (%) Competition Market Share (%)

Reversing recent share decline: Top Priority

Source : A.C Nielsen – June Quarter 2009 Value shares
Increasing consumption:
Lifebuoy Handwash Programme
Since 2002, the project has touched
50,676 villages and 120 million people.

Campaign Impact
•Awareness of germs - 52% to 83%

•Association of germs with disease - 35% to 57%

• Context
• Barriers to Soap Usage very high
• Insight : “ Visible clean is safe clean “

• Method
• Raise concern on the consequence of
invisible germs

• Challenge
• Low literacy, Low reach of conventional
media
Our Strategy

• Leverage brand portfolio and consumer understanding by

• Straddling the pyramid & deploying full portfolio

• Driving consumption & penetration opportunity

• Winning with consumers, channels, segments/markets of

tomorrow

• Build markets and capabilities for the future

• Leverage Unilever scale and know how

• Drive increased execution rigour

• Step-up in cost efficiency initiatives

• Integrate economic, environment & social objectives with

business agenda
Consumers of tomorrow: Dove

Dove Hair Fall Therapy

All India market share

already >1% within 3
months of launch

Launch of Dove Deos

Dove Shampoo - Rapid Market

Share Gain in Urban 7.1

All India 5.9

Urban 4.9
Dove Soaps – Shares 4.6
3.9
continuously
3.3
gaining shares for
last 8 quarters

BUILDING A $100 MN BRAND MQ08 JQ008 SQ08 DQ08 MQ09 JQ09

Consumers of tomorrow:
Lipton Tea & Taj Mahal Tea Bags
USP - With goodness of Theanine
DIGITAL
• First Tea Brand to use digital
to engage with a younger TG Relaunch of
• Facebook application, blogs,
Taj Tea Bags
IMV, innovations to engage

Worlds
Largest
Jigsaw
Challenge

DIRECT
CONTACT

•New campaign; •Launch of the Taj Mahal

• Activation in over
250 offices and •Supported with Core 10s trial pack &
theanine tea in over dispenser visibility Flavoured tea bags
1500+ locations
• EDMs to the 1.9
lac database on In flight
progress of puzzle activation in
Jet Airways

INNOVATIVE
MEDIA

• Impactful outdoor around Tea Bag

offices and at airports Conversion
: Education
• Clutter breaking print & Sampling
Channels of tomorrow: Modern Trade

Personal Wash Hair Care Skin Creams Toothpaste Deodorant

MTShares GTShares

In aggregate; MT shares > GT shares

Source : A.C Nielsen – June Quarter 2009 Value shares
Segments of tomorrow:
Hair Conditioners
HUL Shares and Market Growth%
Conditioners Market 35 45.0%

in India growing fast 32.4

40.0%
42.6%
with huge potential 30
HUL Shares
Market Growth% 28.3 35.0%
28.4%
25.6 30.0%
32.4% 31.5% 31.4%
25
22.7
27.5% 25.0%
Sachets to generate trials
20
19.4 20.0%
18.2
15.0%

10.0%
15

5.0%

10 0.0%

MQ'08 JQ'08 SQ'08 DQ'08 MQ'09 JQ'09

Source: AC
Nielsen
Share of Hair Conditioners in Hair Care
Impactful execution across mediums
India is still approx 3% only

Permanent branding 23.30%

21.10%
and shelf presence at 18.40%
POS
14.40%
15.70%

10.60%
9.40% 9.30%

Philippines China

1997 2000 2004 2008

Source: Euromonitor
Building new markets: Pure-it
Progress
Volume market leadership in South
India

>700 towns, 20 states covered

Increasing penetration through
retail presence in <10 L population
towns
More than 400 safe water zones
established
Growing consistently @ > 50%
More than 7 million lives protected

Complete protection …
`as safe as boiled water’
Meets US EPA standards
Works without electricity, pressurized piped water
Affordable:
Device Rs 2000 ( $40) Unique
Germkill Battery Rs 350 ($7)
Rs 0.35 per litre ( < 1 $ cent)
promotional
(incl. initial price) campaign
Strengthening capabilities:
Brilliant Activation

‘Call Me’
interactive
campaign

Generated over 3
million unique
calls

>2% market
share gain in Non
Metros
Axe Indexed Sales

Accelerated
Growth
achieved
after campaign

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
 Strengthening capabilities:
Out of Home
• SWIRL’S - a successful concept in Europe
• 68 parlours established across 10 Indian cities

Various • FRESH : Fresh Ingredients

shop and
product • CHOICE : Create Your Own
formats
• THEATER & FUN : Specially for You

68
No. of Swirl Parlours

40

20

2007 2008 Current

1.2 million consumer experience moments were created in FH’09

Strengthening capabilities:
Winning at Point of Sale

Winning Winning
In MT In GT

Power
Power of
of Power
Power of
of One
One Shopper
Shopper People
People
Analytics
Analytics Unilever
Unilever Insights
Insights

iQ
iQ GTM
GTM (U)
(U) Channel
Channel Programs
Programs Lean
Lean &
& Agile
Agile
Organization
Organization
GTM
GTM (R)
(R)
Creating a million perfect stores…

Creation of Perfect Stores

+
Mass Customization

Intelligent Information Systems

• Business insights from execution and sales data to
seamlessly support business decisions
• To enable superior execution and planning of events
• Appropriate product assortment to maximize sales

Already in pilot…
Leveraging Unilever: Global R&D Centres
Beverages, Processed Fabric Wash,
Fabric Wash, Hair Care, Deos, Foods, etc. Beverages, Processed
Oral Care, Surface Cleaners, Foods, etc.
etc.

Port Vlaardingen,
Sunlight, NL
UK
Colworth,
Trumbull,
UK
US
Shanghai,
China
Bangalore,
India

Skin Care, Deos,

Shampoos, etc.

Skin Care, Fabric Wash,

Beverages, Ice Creams, Shampoos, Skin Care, Ice
Processed Foods, Water Creams, Beverages,
etc. Processed Foods, etc.
Unilever Research and Development Strengths

Spray Technology Skin Mildness Product Processing

Deodorants and Moisturizing e.g. Ice Cream

Hair Structured Science of Tea

Technology Oils and Emulsions
Leveraging Unilever know how:
Surf Excel Bars
16.2 16.3 16.3
15.6
15

14
13.2 All India Value
Market Share

Q2 06 Q4 06 Q2 07 Q4 07 Q4 08 Q1 09 Q2 09

• Surf Excel – Nil Mineral Bar

• India’s first detergents bar with no fillers

• Patented technology with Competitive advantage

• High phosphate content for superior lather and excellent cleaning

Leveraging Unilever know how:
Skin Creams
Pond’s White Beauty Re-launch with Vaseline Healthy
improved formulation White MS (H&B 10.2
Creams)
Rapid Share Gain
6.6
after Re-launch
4.4

Education
0.9
and 0.2 0.3
sampling Jan'09 Feb'09 Mar'09 Apr'09 May'09 Jun'09

Winner of the
Amazing Skin Wall
comes on the
Print Innovation – Femina
Flicker Book Cover
PWB MS (Premium Face 10.4
Creams)
8.5
7.3
High Visibility 6.2 6.1

Digital
INSTANT IMPACT ON SALES
WITH HIGHER AWARENESS
Innovation
AND TRIAL RATES
DQ'08 MQ'09 JQ'09 Jun'09 Jul'09
Our Strategy

• Leverage brand portfolio and consumer understanding by

• Straddling the pyramid & deploying full portfolio

• Driving consumption & penetration opportunity

• Winning with consumers, channels, segments/markets of

tomorrow

• Build markets and capabilities for the future

• Leverage Unilever scale and know how

• Drive increased execution rigour

• Step-up in cost efficiency initiatives

• Integrate economic, environment & social objectives with

business agenda
 Improved Field Execution
Field Execution Field Execution
All India Rural
140 300

120
250

100
200

80

150

60

100
40

50
20

0 0
Dec'08 Jun'09 Jul'09
Field Execution Efficiency - All India Field Execution Efficiency - Rural

Improvement in Field Execution particularly in Rural

Indexed Chart (vs Dec 2008)
 Enhanced Customer Service
DOH Inventory Order Servicing
120 115

100 110

80 105

60 100

40 95

20 90

0 85
2008 Jan '09 Feb '09 Mar '09 Jun '09
Days on Hand (Finished Goods) Customer Order Servicing %

Better customer service along with strong cash delivery

Indexed Chart (vs 2008)
 Driving cost efficiencies
Indexed Chart (Base=2005)
200
180 Supply Chain Cost Savings
160
140
120
100
80
60
40
20 105
0 100 Overheads as % of turnover
2005 2008
95
90
Ì as % of turnover 85
+70 bps
(vs 2005) 80
75
70
65
60
2005 2008
* excl Water & exceptional items

Tight cost management ensuring continuous reduction of cost base

Our Strategy

• Leverage brand portfolio and consumer understanding by

• Straddling the pyramid & deploying full portfolio

• Driving consumption & penetration opportunity

• Winning with consumers, channels, segments/markets of

tomorrow

• Build markets and capabilities for the future

• Leverage Unilever scale and know how

• Drive increased execution rigour

• Step-up in cost efficiency initiatives

• Integrate economic, environment & social objectives with

business agenda
 Embedding sustainability
Prosperity People Planet
(Economic) (Social) (Environment)
1. Enhance 1. Health 1. Water
livelihoods
2. Empowerment 2. GHGs

Who :Brands will lead the effort

Where: Around our units of operation

How: Through Partnerships
 Embedding sustainability
Prosperity People Planet
(Economic) (Social) (Environment)
1. Enhance 1. Health 1. Water
livelihoods
2. Empowerment 2. GHGs
Partner DHAN foundation Partner with Pratham 45% water returned to
for enhancing livelihood for girl child education ground

Sourcing from Primary LB Swasthya Chetna: Reduced GHG by 35%

Growers (initiated Tomato) 15000 villages in 08 (2004 base)

45000 HOURS OF EMPLOYEE VOLUNTEERING !!

Agenda

Context

Strategy &
Execution

Focus &
Priorities
 Key Financials

2008-09** 2007 2006

Sales Growth* 15.5% 13.5% 10.0%

EBIT Growth 18.8% 15.4% 16.2%

EPS (cents) 24 18 17

Operating cash flow* $422 Mn $350 Mn $332 Mn

Dividend Payout Ratio 77% 121%@ 83%

* Before restructuring, disposals. Conversion rate $1= INR 48

** Audited results FY 2008-09 for 15 months. Sales and EBIT Growth Nos. are based on JQ’08-MQ’09 vs JQ’07-MQ’08
## EPS and Operating cash flow nos. are for 15 months MQ’08-MQ’09. Dividend Payout Ratio includes Dividend Tax

@ Includes special dividend

2009/10: Focus and Priorities
Ensure competitiveness across the portfolio, particularly at
the mass end

Continue to invest in emerging categories and segments

¾ Strengthen/ build Processed Foods, Water and
Premium Personal Care

Drive focus and speed alongside leveraging scale

Significantly strengthen Go-to-Market capability

Continued focus on Costs & Cash

Summary

• FMCG market growth continues to be robust

• Our goal remains unchanged

• Competitive, Profitable, and Sustainable growth

• Strategy consistent; increased execution

rigour
Thank You
CLSA Investors’ Forum
23rd September, 2009

Mr Nitin Paranjpe
CEO and MD
Hindustan Unilever Limited
 Volatility in 2009
COMMODITY PRICES
Crude Oil (USD Per Barrel) Palm Oil (MYR Per Ton) Benzene (USD Per Ton)
160 4500 1600
140 4000
1400
120
3500
1200
3000
100 1000
2500
80 800
2000
60 600
1500
40 400
1000
20 500 200

0 0 0

May-07

May-08

May-09
Nov-07

Nov-08
Jan-07
Mar-07

Jul-07
Sep-07

Jan-08
Mar-08

Jul-08
Sep-08

Jan-09
Mar-09

Jul-09
Sep-09
May-07

May-08

May-09
Nov-07

Nov-08
Jan-07
Mar-07

Jul-07
Sep-07

Jan-08
Mar-08

Jul-08
Sep-08

Jan-09
Mar-09

Jul-09
Sep-09

M ay-07

M ay-08

M ay-09
Nov-07

Nov-08
Jan-07
M ar-07

Jul-07
Sep-07

Jan-08
M ar-08

Jul-08
Sep-08

Jan-09
M ar-09

Jul-09
Sep-09
Source: Bloomberg
CONSUMER
PRICES Washing Powders (Market Avg Price Per Kg)
48.0
46.0
44.0
42.0
40.0
38.0
36.0
34.0
32.0
30.0
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09

Mass market Washing Powders witnessed several

rounds of price changes in FH’09
Source: AC Nielsen