COMPANY PROFILE

PRESENT STATURE/INTRODUCTION

Type Public company BSE: 500696

Industry Fast Moving Consumer Goods FMCG)

Founded 1933

Headquarters Mumbai, India

Key people Harish Manwani (Chairman), Nitin Paranjpe (CEO and Managing Director)

Products Home & Personal Care, Food & Beverages

Revenue 17,523.80 crore (US$ 3.87 billion) (2009-2010) [1]

Net income 2,202.03 crore (US$ 486.65 million)

Employees Over 65,000 direct & indirect employees

Parent Unilever Plc (52%)

Website www.hul.co.in

Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods Company, touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal

Care Products and Foods & Beverages. The company’s Turnover is Rs. 17,523 crores (for the financial year 2009 - 2010)

HUL is a subsidiary of Unilever; one of the world’s leading suppliers of fast moving consumer goods with strong local roots in more than 100 countries across the globe with annual sales of about €40 billion in 2009 Unilever has about 52% shareholding in HUL.

Hindustan Unilever was recently rated among the top four companies globally in the list of “Global Top Companies for Leaders” by a study sponsored by Hewitt Associates, in partnership with Fortune magazine and the RBL Group. The company was ranked number one in the Asia-Pacific region and in India.

The mission that inspires HUL's more than 15,000 employees, including over 1,400 managers, is to help people feel good, look good and get more out of life with brands and services that are good for them and good for others.  It is a mission HUL shares with its parent company, Unilever, which holds about 52 % of the equity.

HISTORY OF HULIn the summer of 1888, visitors to the Kolkata harbour noticed crates 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 52.10% equity in the company. The rest of the shareholding is distributed among about 360,675 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 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 1996, HUL and yet another Tata company, Lakme Limited, formed a 50:50 joint venture, Lakme Unilever 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, Unilever Nepal Limited (UNL), and its factory represents the largest manufacturing investment in the Himalayan kingdom. The UNL factory manufactures HUL's products like Soaps, Detergents and Personal Products both for the domestic market and exports to India.

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 Ice-cream 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 1994, 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 Ice-cream Group families and in 1995 the Milk food 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, Speciality 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 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 Pasteurized Crabmeat business of the Amalgam Group of Companies, a leader in value added Marine Products exports.

HUL launched a slew of new business initiatives in the early part of 2000’s. Project Shakti was started in 2001. It is a rural initiative that targets small villages populated by less than 5000 individuals. It is a unique win-win initiative that catalyses rural affluence even as it benefits business. Currently, there are over 45,000 Shakti entrepreneurs covering over 100,000 villages across 15 states and reaching to over 3 million homes.

In 2002, HUL made its foray into Ayurvedic health & beauty centre category with the Ayush product range and Ayush Therapy Centres. Hindustan Unilever Network, Direct to home business was launched in 2003 and this was followed by the launch of ‘Pureit’ water purifier in 2004.

In 2007, the Company name was formally changed to Hindustan Unilever Limited after receiving the approval of share holders during the 74th AGM on 18 May 2007. Brooke Bond and Surf Excel breached the Rs 1,000 crore sales mark the same year followed by Wheel which crossed the Rs.2, 000 crore sales milestone in 2008.

On 17th October 2008, HUL completed 75 years of corporate existence in India.

CHRONICLE OF HLL

1888: Sunlight introduced in India1918: Vanaspati launched through imports

1931: Unilever registers company in India - Hindustan Vanaspati Manufacturing Company1933: Lever Brothers India Limited incorporated tomanufacture soaps1935: United Traders Limited incorporated in India to marketpersonal products

1956: HVM, LBIL, UTL merge to form HLL 1958: HLRC starts functioning1979: Chemicals complex commissioned in Haldia1993: TOMCO merges with HLL1994: JV, Kimberley-Clark Lever formed1995: Lakme Lever formed1996: HLL and BBLIL merge1998: Pond s India Ltd merges with HLL . HLL acquiresLakme2000: HLL acquires Modern Foods2001: Project Shakti, HLL s partnership with rural SelfHelp Groups. Launch of HLL s e-tailing service-SangamMax confectioneries launched2002: Lever Ayush launched

2003: Launch of Hindustan Lever Network

2005 Launch of Pureit water purifier

BUSINESS CATEGORIE

BRANDS OF HUL

At HLL, the purpose is to meet the everyday needs of people everywhere. Thisvision has made it India's largest packaged mass consumption goods company, withleadership in Home, Personal Care Products, Foods and Beverages. In New Ventures, thenew entrants are in Healthcare, Confectioneries and Network Marketing. It is also oneof the country's biggest exporters and have earned the distinction of a Super Star TradingHouse. Over the past 70 years, HLL has introduced about 110 brands, most, of whichhave become household names in the country.HLL'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 manycategories - soaps, detergents, personal products, tea, coffee, branded staples, ice creamand culinary products. They are manufactured in close to 80 factories. The operationsinvolve over 2,000 suppliers and associates. HLL's distribution network, comprisingabout 7,000 redistribution stockiest, directly covers the entire urban population, and about

250 million rural consumers.

HOW THE WORLD KNOWS HUL???

HUL is known world wide because of its quality products that are serving to theConsumers for the last 70 years. Following are the brands of HUL that themselves sayEverything about HUL s success as well as the trust & popularity that it enjoys amongConsumers:

THE PROFIT CENTRES OF HLL INCLUDE:1. HOME AND PERSONAL CARE

PERSONALCARE

FABRICWASH

HOMECARE

SKINCARE

HAIRCARE

ORAL

CARE

DEODRANTS &TALCS

AYURVEDICPRODUCTS&SERVICES

COLORCOSMETICS

BREEZE WHEEL, DOMEX

POND S

SUNSILKNATURALS

CLOSE UP

AXE, AYUSH LAKME

LUX,DOVE SURFEXCEL,

FAIR&LOVELY

CLINIC PLUS

PEPSOD ENT

REXONA

,HAMAM RIN POND S

LIFEBUOY

PEARS,LIRIL

2. FOODSTEA COFFEE FOODS ICE CREAMSBROOKE -BOND

Bur KISSAN, KWALITY WALLS

LIPTON ANNAPURNA

3. WATER

PUREIT WATER PURIFIERS

4. EXPORTS

HPC MARINEPRODUCTS

CASTOR RICE TEA

5. ENABLERS

INNOVATION DISTRIBUTION CREATING MARKETS NATIONWIDEMARKETS

PROFIT CENTRES

VISION OF HUL

Unilever products touch the lives of over 2 billion people every day – whether that's through feeling great because they've got shiny hair and a brilliant smile, keeping their homes fresh and clean, or by enjoying a great cup of tea, satisfying meal or healthy snack.

A clear direction

The four pillars of our vision set out the long term direction for the company – where we want to go and how we are going to get there:

We work to create a better future every day We help people feel good, look good and get more out of life with

brands and services that are good for them and good for others.

We will inspire people to take small everyday actions that can add up to a big difference for the world.

We will develop new ways of doing business with the aim of doubling the size of our company while reducing our environmental impact.

We've always believed in the power of our brands to improve the quality of people’s lives and in doing the right thing. As our business grows, so do our responsibilities. We recognize that global challenges such as climate change concern us all. Considering the wider impact of our actions is embedded in our values and is a fundamental part of who we are.

Purpose & principlesOur corporate purpose states that to succeed requires "the highest standards of corporate behavior towards everyone we work with, the communities we touch, and the environment on which we have an impact."

Always working with integrity

Conducting our operations with integrity and with respect for the many people, organisations and environments our business touches has always been at the heart of our corporate responsibility.

Positive impact 

We aim to make a positive impact in many ways: through our brands, our commercial operations and relationships, through voluntary contributions, and through the various other ways in which we engage with society. 

Continuous commitment

We're also committed to continuously improving the way we manage our environmental impacts and are working towards our longer-term goal of developing a sustainable business.

Setting out our aspirations 

Our corporate purpose sets out our aspirations in running our business. It's underpinned by our code of business Principles which describes the operational standards that everyone at Unilever follows, wherever they are in the world. The code also supports our approach to governance and corporate responsibility.

Working with others

We want to work with suppliers who have values similar to our own and work to the same standards we do. Our Business partner code, aligned to our own Code of business principles, comprises ten principles covering business integrity and responsibilities relating to employees, consumers and the environment.

At the heart of the corporate purpose, which guides us in our approach to doing business, is the drive to serve consumers in a unique and effective way. This purpose has been communicated to all employees worldwide.

Code of business principles

Introduction

Unilever has earned a reputation for conducting its business with integrity and with respect for all those whom our activities affect. This reputation is an asset, just as valuable as our people and our brands.

To maintain this reputation requires the highest standards of behaviour – consistently observed by all of us. Unilever’s Code of Business Principles sets out these standards and we expect all our employees to adhere to them.

Being a successful business does not just mean investing for growth and balancing short and long term interests. It also means caring about our consumers, employees and shareholders, our business partners and the world in which we live.

We therefore want this Code to be more than a collection of high sounding statements. It must have practical value in our day-to-day business lives and each of us must follow these principles both in the spirit and the letter.

If we do so, Unilever’s reputation will be enhanced, our business will perform better and our professional lives will be all the more fulfilling.

Standard of Conduct

We conduct our operations with honesty, integrity and openness, and with respect for the human rights and interests of our employees.

We shall similarly respect the legitimate interests of those with whom we have relationships.

Employees

Unilever 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 our company.

We will recruit, employ and promote employees on the sole basis of the qualifications and abilities needed for the work to be performed.

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

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

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

We will maintain good communications with employees through company based information and consultation procedures.

Consumers

Unilever 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 labelled, advertised and communicated.

Shareholders

Unilever will conduct its operations in accordance with internationally accepted principles of good corporate governance. We will provide timely, regular and reliable information on our activities, structure, financial situation and performance to all shareholders.

Business Partners

Unilever is committed to establishing mutually beneficial relations with our suppliers, customers and business partners. In our business dealings we expect our business partners to adhere to business principles consistent with our own.

Community Involvement

Unilever strives to be a trusted corporate citizen and, as an integral part of society, to fulfill our responsibilities to the societies and communities in which we operate.

Public Activities

Unilever companies are encouraged to promote and defend their legitimate business interests.

Unilever 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.

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

The Environment

Unilever is committed to making continuous improvements in the management of our environmental impact and to the longer-term goal of developing a sustainable business.

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

Innovation

In our scientific innovation to meet consumer needs we will respect the concerns of our consumers and of society. We will work on the basis of sound science applying rigorous standards of product safety.

Competition

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

Business Integrity

Unilever 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.

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

Unilever 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 our business success. The Unilever Board is responsible for ensuring these principles are applied throughout Unilever.

The Chief Executive Officer is responsible for implementing these principles and is supported in this by the Corporate Code Committee chaired by the Chief Legal Officer, Members of the Committee are the Group Secretary, the Chief Auditor, the SVP HR and the SVP Communications. The Global

Code Officer is Secretary to the Committee. The Committee presents quarterly updates to the Corporate Responsibility and Reputation and the Audit Committee, half-yearly reports to the Unilever Executive and an annual report to the Board.

Day to day responsibility is delegated to all senior management of the regions, categories, functions and operating companies. They are responsible for implementing these principles, if necessary through more detailed guidance tailored to local needs, and are supported in this by Regional Code Committees comprising the Regional General Counsel together with representatives from all relevant functions and categories. Assurance of compliance is given and monitored each year. Compliance with the Code is subject to review by the Board supported by the Corporate Responsibility and Reputation Committee and for financial and accounting issues the Audit Committee.

Any breaches of the Code must be reported in accordance with the procedures specified by the Chief Legal Officer. 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.

The fundamental principle determining the organization structure is to infuse speed and flexibility in decision-making and implementation, with empowered managers across the company’s nationwide operations.

Society: Creating a positive impactCreating a positive impact

We believe that the true worth of an organization comprises more than just its business achievements. The service it renders to society bestows great value on the organisation itself. We are committed to creating a responsible leadership that has a positive impact on society, and helps solve its most challenging issues.

In 2009, HUL contributed INR 30 crores towards community related initiatives. Our contribution in 2009 went either to long-term community investment partnerships or to commercial initiatives, with mutual benefits for both our business and our partners.

The United Nations reports that people need a minimum of 50 litres of water a day for drinking and other basic needs. In India, more than 50%of the population lives on less than 10 liters of water a day. Approximately 70% of the total water is consumed by the agriculture sector. India is an agri-economy, and as its population grows, there will be an increase in water consumption by the agriculture sector. These issues are likely to be exacerbated by climate change, making access to water an issue for farmers and society.

What we do

We have identified water conservation as an issue we would like to focus our energies on. We are working in close partnership with our stakeholders to conserve precious drops of water. Water management has been a key area of focus for HUL across the entire value chain.

We are also engaged in community projects to conserve water. We aim to conserve more than 20 billion litres of water by 2015.

Consumers: Making a difference through our brands

Making a difference through our brands

Despite advances in science and increasing prosperity, millions of people still lack access to basic sanitation, nutrition and healthcare. We believe that our brands can grow by addressing some of the most important social and environmental challenges facing the country today.

In 2005, we started to embed the sustainability agenda into our brands by using a process called Brand Imprint. It is a rigorous, diagnostic process that analyses the social and economic value, as well as the negative impacts of a brand.

This process has been carried out across all our key categories. Social and environmental considerations are now integrated with innovation plans for our major brands.

We believe we can make a difference – through our brands and behaviour change campaigns in the space of nutrition and hygiene, and by providing consumers, from all income groups, access to a better life.

Case studiesWe believe that the very business of doing business responsibly brings benefits to society.

Enhancing livelihoodsHUL is active in projects that contribute to economic development, from sharing good practice, training and technology to creating new distribution channels.

HUL committed to enhance livelihoods through Project SamruddhiHindustan Unilever Limited has embarked upon Project Samruddhi to create sustainable villages in Dadra & Nagar Haveli.

The project is aimed at community upliftment through its social, economic and environment-related activities in partnership with leading NGOs Aide et Action and Vanarai.

HUL in partnership with Aide et Action has set up iLEAD centers for youth in Silvassa offering vocational courses like tailoring, basic computers, electrical wiring etc. The Centre will train 1080 youths in 3 years covering 72 villages of Silvassa.

As of now, 60% of the trained students have been successfully placed in different organisations in the region. Young women like Vimala Chatta, who is a Class 2 dropout, today earns INR 3000 a month because of the tailoring skills she picked up in an iLEAD course. Deepak Pargi learnt how to use Photoshop and started his own photo studio at Surangi.

The short term courses offered by iLEAD are attuned to the demands and needs of the industry leading to more relevant employment opportunities, thus leading to higher returns. This is a win-win model for local communities and businesses. What is remarkable is that the youth from the iLEAD programme are pitching in by mobilizing new trainees, and providing necessary counselling about taking up jobs outside their village through an alumni association they set up! Youngsters are also given necessary space and advice when they want to establish their own enterprises.

Apart from capability building, HUL in association with an NGO, Vanarai, has embarked on a long-term project of water harvesting, which is aimed at increasing water availability in the area.

The community has so far built about 157 Vanarai bunds since 2003 when the project was started. This enabled the community to sow a second crop of vegetables, gram and wheat, thereby increasing their annual incomes by approx Rs 35000 – Rs 40000.

Due to improved availability of water, the farmers are able to grow second crop consisting of wheat, pulses, and seasonal vegetables. Continuous Contour Trenches reduced the velocity of water and stops soil erosion.  They also reduced soil erosion, increasing moisture holding capacity of soil, increasing its fertility as well as supporting water percolation and ground water recharge. Till date about 14 wells and 17 bore wells have been recharged.

Apart from this, medical / health camps and pulse polio immunisation programme are also conducted in the village. With the objective of improving animal health, animal husbandry and to educate farmers on advance agricultural practices 'krishi melas' were organized which received excellent response.

PROJECT SHAKTI “A BUSINESS INITIATIVE WITH

SOCIAL BENEFITS”

Shakti: Economic development through micro enterprise

 

Shakti, meaning ‘strength’ in Sanskrit, is a micro-enterprise programme that was established to create opportunities for women to sell Unilever products door-to-door in rural areas of India.

Our products reach people through a diverse network of retailers. Our major retail customers include Walmart, Carrefour and Tesco. In developing and emerging markets, however, we rely not only on distributors, wholesalers, small independent outlets and kiosks to serve our consumers but we also create ways to reach people in remote parts of countries. These areas often have no retail distribution network, no advertising coverage and poor roads and transport links.

As the Indian economy opened up in the early 1990s and competition increased, Hindustan Lever (now Hindustan Unilever) realized that in order to grow its business it needed to gain market access to the thousands of villages in rural India with under 2 000 inhabitants. The company created a new business model called Project Shakti.

Project Shakti started in 2000 as an innovative direct-to-consumer distribution channel using a network of women entrepreneurs to sell a range of affordable company products door-to-door, products in small sizes that met the needs and pockets of people with low incomes in remote rural populations. Piloted first in a few villages in Andhra Pradesh state, India, the pilot expanded to two states in 2002.

By the end of 2004, Shakti had grown to over 13 000 Shakti women entrepreneurs covering 50 000 villages in 12 states, selling to 70 million consumers. 2010 figures show 45 000 entrepreneurs selling products to 3 million households in 100 000 villages.

Unilever tapped into the growing number of women’s self-help groups in India by making presentations at rural group gatherings. Disadvantaged women were identified – mostly those from families living below the poverty line – and invited to become Shakti entrepreneurs. The company then invested in training and coaching, including how to sell, and imparting commercial and book-keeping knowledge. The women who were trained could then choose to set up their own business or become a Shakti distributor.

Each Shakti entrepreneur invests $220 in stock at the outset – usually borrowing from self-help groups or micro-finance banks, and aims to have around 500 customers, mainly drawn from her village or nearby villages.

Most Shakti women generate monthly sales of around $225, netting a monthly average income of between $16 – 23. After paying a few dollars monthly for the loan, the woman is left with about $150 annually.

These are usually women from poor and disadvantaged backgrounds and this is often a significant increase to their household income.

The company has had support from over 300 partners, including NGOs, banks and both state and local governments who recognise the potential for economic growth in India by encouraging women to become entrepreneurs.

Shakti is a business initiative with social benefits. It has helped double rural reach for Hindustan Unilever and it provides a means for many women in India to rise out of poverty and provide a better life and future for themselves and their families. In fact, Hindustan Unilever is aiming to expand the programme in 2010 to include men. These ‘shaktimaans’, often the husbands of Shakti entrepreneurs, will be given bicycles to enable them to reach more remote villages.

Shakti Vani takes Shakti on to another stage. Shakti Vani (’Voice’) raises health and hygiene awareness in rural villages. Hindustan Unilever trains local women to give talks to villagers about basic health practices such as good hygiene, disease prevention and pre- and post-natal care, using visual aids to overcome widespread illiteracy.

We have a similar micro-enterprise initiative running in Bangladesh. Project Joyeeta, a name derived from the Bengali word for ‘win’, started in 2003 with 25 women in villages across north Bangladesh. Joyeeta then became Project Aparajita – a joint programme between Unilever and the aid agency CARE International. In 2009, 3 000 women sold Unilever products to 1.8 million households through sales hubs set up by CARE. In 2010, the aim is to increase this number to 10 000 women covering a total of 6 million households.

Similar initiatives also run in Sri Lanka, the Philippines and Vietnam.

Shakti is our initiative that combines social responsibility, sustainability, and business strategy. India has more than 6, 30,000 villages, most of these are 'hard to reach' and offer relatively lower business potential. Hence, reaching them through the conventional distribution system is a challenge.

In 2000, we collaborated with Self-Help Groups (SHG) to extend our rural reach. We partnered with the SHGs by offering them opportunities for business. By promoting micro-enterprises, our initiative not only makes great business sense, but also has a deep social impact. The business objective is to extend our direct reach into untapped markets and to build brands through local influencers. The social objective is to provide sustainable livelihood opportunities for underprivileged rural women.

On an average, a Shakti entrepreneur earns INR 700 - 1000 a month, and since most of them live below the poverty line, this earning is significant, often doubling the household income.

Shakti started with 17 women in two states. Today, it provides livelihood enhancing opportunities to about 45,000 women in 15 Indian states and provides access to quality products across 100,000+ villages and over 3 million households every month.

Project Shakti contributes to 10% of rural turnover nationally. In most Shakti markets, we are dominant and enjoy a market share which is qualitatively better as compared to non-Shakti markets.

Shakti is not only a channel for increasing our reach, the Shakti entrepreneurs are also brand ambassadors for all HUL brands in rural India. Their relationship with consumers is forged by their home-to-home contacts, and goes a long way in building brand loyalty.

Our Shakti initiative can be described in many ways – as a sales and distribution initiative that delivers growth; a communication initiative that builds brands; a micro-enterprise initiative that creates livelihoods; and a social initiative that improves the standard of life in rural India by providing quality products. What makes Shakti scalable and sustainable is the fact that it contributes not only to our business, but also to the community it is a part of.*

 

* Unilever in India: Hindustan Lever's Project Shakti- Marketing FMCG to the Rural Consumer, V Kasturi Rangan/ Rohithari Rajan, HBS case study, March 2006

With the urban market saturated, FMCG companies are now targeting the rural markets. In spite of

the income imbalance between urban and rural India, rural holds great potential since 70% of India’s

population lives there. Due to the recent government measures like waiver of loans, national rural

employment guarantee scheme and increasing minimum support price, disposable income in rural

India has been rapidly increasing. However, rural markets present their own sets of problems. These

include poor infrastructure, dispersed settlements, lack of education and a virtually nonexistent

medium for communication. Furthermore, retailers cannot be present in all the centres as many of

them are so small that it makes them economically unfeasible.

Hindustan Unilever Limited (HUL) to tap this market conceived of Project Shakti. This project was

started in 2001 with the aim of increasing the company’s rural distribution reach as well as providing

rural women with income-generating opportunities. This is a case where the social goals are helping

achieve business goals.

The recruitment of a Shakti Entrepreneur or Shakti Amma (SA) begins with the executives of HUL

identifying the uncovered village. The representative of the company meets the panchayat and the

village head and identify the woman who they believe will be suitable as a SA. After training she is

asked to put up Rs 20,000 as investment which is used to buy products for selling. The products are

then sold door-to-door or through petty shops at home. On an average a Shakti Amma makes a 10%

margin on the products she sells.

An initiative which helps support Project Shakti is the Shakti Vani programme. Under this

programme, trained communicators visit schools and village congregations to drive messages on

sanitation, good hygiene practices and women empowerment. This serves as a rural communication

vehicle and helps the SA in their sales.

The main advantage of the Shakti programme for HUL is having more feet on the ground. Shakti

Ammas are able to reach far flung areas, which were economically unviable for the company to tap

on its own, besides being a brand ambassador for the company. Moreover, the company has ready

consumers in the SAs who become users of the products besides selling them.

Although the company has been successful in the initiative and has been scaling up, it faces

problems from time to time for which it comes up with innovative solutions. For example, a problem

faced by HUL was that the SAs were more inclined to stay at home and sell rather than going from

door to door since there is a stigma attached to direct selling. Moreover, men were not liable to go to

a woman’s house and buy products. The company countered this problem by hosting Shakti Days.

Here an artificial market place was created with music and promotion and the ladies were able to sell

their products in a few hours without encountering any stigma or bias.

This model has been the growth driver for HUL and presently about half of HUL’s FMCG sales

come from rural markets. The Shakti network at the end of 2008 was 45,000 Ammas covering

100,000+ villages across 15 states reaching 3 m homes. The long term aim of the company is to have

100,000 Ammas covering 500,000 villages and reaching 600 m people. We feel that with this

initiative, HUL has been successful in maintaining its distribution reach advantage over its

competitors. This programme will help provide HUL with a growing customer base which will

benefit the company for years to come.

HOW IT WORKS

•Villages with a population of about 2000–3000 are selected

•Personnel from HUL approach SHGs•Selection of the Shakti Amma•HUL vouches for Shakti Ammas with banks for credit•one Shakti entrepreneuris appointed for one village &Villages that are about 2 kilometres apart from her village(satellite villages ).•The Shakti dealer places initial orders worth Rs.

15,000/(principal customer of HUL)

•Finance : Self+SHG+micro credit

•Training by the Rural sales promoter.

•The Shakti dealer organizes, a ‘‘Shakti Day’’ in thevillage (display of products & free gifts )

•Core Brands: Lifebuoy, Wheel, Pepsodent, Annapurna salt, Clinic Plus, Lux, Ponds, Nihar and 3 Roses tea.

PRICING AND PACKAGING

Rural consumers are price sensitive•Sachets and small packs of premium products.•Price doesn’t exceed Rs.5 per sachet.•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.

Distribution

It is the combination of the 3 ways:•Door to door selling (11% margin on sales)•Sells from own home (11% margin on

sales)•Retailers (3% margin)•averages sales :•Rs. 10,000 - Rs. 15,000/month,•profit - Rs.1,000 per month

Creating rural entrepreneurs

A Shakti Entrepreneur in Action

45 000 Shakti entrepreneurs reach 100 000 villages.

Helping women, creating entrepreneurs Rojamma is a single parent living in Kurumurthy, a small village in the Indian state of Andhra Pradesh. When her husband left her, she earned a few rupees working in her mother's field but found it difficult to support her two daughters. Then she joined a women's self-help group and found out about Project Shakti. "From that moment my life changed", recalls Rojamma. . As Rojamma says: "When my husband left me I had nothing except my daughters. Today everyone knows me. I am someone now". It has meant she has been able to send her daughters to school, giving them the chance in life she didn't haveBefore joining Shakti in 2006, Sakamma’s husband was the sole bread earner for the familyof five. The meager income of 10,000 rupees per year was worsened by the husband’salcoholism. The needs of Sakamma’s growing children posed a daunting task. When theconcept selling meeting was organized by Hindustan Unilever, she decided to become aShakti entrepreneur.Today, Sakamma earns an additional yearly income of 10,000 rupees through Shakti. “Iwant my daughter to become an engineer,” she proudly says. She believes that this careerpath will make her daughter financially independent. Sakamma today has independentaccess to a bank and decides what investments to make. She recently invested in goldjewelry as has started preparing for her daughter’s marriage. Sakamma was recently alsochosen to work with the government to help educate rural populations on health issues.

Increasing income

After an initial investment in stock - usually borrowing from self-help groups or micro-finance banks facilitated by Hindustan Lever - most Shakti entrepreneurs net a monthly profit of 700 - 1 000 rupees (US$15 - 22). This is a far cry from the few rupees single mothers like Rojamma had earned before, and for those with husbands who work in the fields, this typically doubles the household income. 

By the end of 2009, 45 000 Shakti entrepreneurs were selling products to three million consumers in 100 000 villages. Shakti has brought them self-esteem, a sense of empowerment and a place in society.

To expand its markets, the challenge for Hindustan Lever (Unilever's business in India) was how to reach millions of potential consumers in small remote villages where there is no retail distribution network, no advertising coverage, and poor roads and transport. 

The solution was Project Shakti, launched in 2000 in partnership with non governmental organisations, banks and government. Women in self-help groups across India are invited to become direct-to-consumer sales distributors for Hindustan Lever’s soaps and shampoos. The company provides training in selling, commercial knowledge and bookkeeping to help them become micro-entrepreneurs.

By the end of 2009 there were more than 45 000 Shakti entrepreneurs covering 3 million homes in 100 000 villages in 15 states in India. We are rolling out similar initiatives in Sri Lanka and Bangladesh. For more information, please see the Supporting micro-enterprise section of our online Sustainable Development Report 2009.

Promoting Women’sEconomic Empowerment:

The Learning Journey of Hindustan Unilever

“What I am most proud of is the fact that thisLittle idea which started with 17 women in oneState is today over 45,000 women touchingMore than 100,000 villages across India.”

– Nitin Paranjpe,CEO

The company’s work has been guided by the belief that the private sector can help createSolutions to social challenges through innovative strategies that meet both business and socialObjectives. It is this belief that led the company to develop Shakti (meaning empowerment or

Strength), a direct-to-consumer sales distribution network that relies on over 45,000 femaleMicro-entrepreneurs from 15 Indian states to tap into remote, rural markets in India. The initiativeHas proved a resounding success. Using an innovative distribution channel, Shakti has helpedFurther rural development and has brought new business by opening previously unexploredMarkets.

Main Lessons

Developing innovative initiativesSuch as Shakti requires commitment and patience,where financial rewards maynot be immediate but long-termbusiness benefits could be large.

Multi-sector partnerships canstrengthen the distributionModel, especially when reachingPreviously untapped markets.

Aligning business goals with theemotional connect is importantfor ensuring staff commitment toa difficult but important cause.

Focus on Empowering WomenA Differentiating Strategy

As Hindustan Unilever was contemplatinghow to increase its reach, self-help groupsbased on the Grameen model of microfinancewere springing up and flourishing acrossIndia. Shakti started out by tapping into thesegroups in one rural part of Andra Pradeshin 2000. The idea was to create low-risk,profitable micro-enterprise opportunitiesfor women who become direct-to-homedistributors of Hindustan Unilever’s products.

By selling directly to consumers, the womentake on a role of influencers, strengtheningtheir position in the local community.The company wanted to focus on women fromthe beginning. This was not only becausewomen tended to be its main consumers,but also because of the belief that givingadditional income to women would result ingrater benefits for the household as a whole.

“Hindustan Unilever has always believed inan approach to doing business which we’vecalled ‘doing well by doing good,’”

Nitin Paranjpe, the company’s CEO and ManagingDirector has said. “In the Shakti initiative weactually went to the most remote villagesand identified underprivileged families whosehousehold income was as low as $15 to $20a month.”But the idea of tapping into self-help groupswas still a departure for Hindustan Unilever.“For a company like ours, the challenge wasto think completely out of the box. To thinkof working with these rural women who hadno apparent business skills at the time was astretch,” explains Krishnendu Dasgupta, thecompany’s Regional Brand Manager whoseportfolio includes Shakti.Shakti is not the first project that has usedwomen’s self-help groups. For years, nongovernmentalorganizations, donors, andgovernment have been establishing suchgroups across India. Today, eight millionIndians, 95 percent of whom are women,benefit from microfinance, but there is stillhuge unmet need. Companies like Avon orTupperware have used a similar distribution

model in more affluent markets. What makesthis program particularly interesting is itsfocus on the country’s poorest regions todeliver products to consumers that wouldotherwise remain outside its reach.Shakti entrepreneurs quickly became centralto the firm’s distribution network in ruralIndia. Over the years, the basic premiseof the program has remained the same,but the initiative is constantly evolving toaddress emerging challenges and changingcircumstances. Today, a distributor deliversstock at the woman’s doorstep. She thendistributes it directly to consumers and toretail outlets in her host and satellite villages.Margins are usually higher with the directto consumer option than in the retail outletoption, where maximum margins are limited to3%. The products are packaged in quantitiessmall enough to be affordable to rural buyersand often cost as little as half a rupee each. Arural sales promoter is responsible for severalvillages at a time and provides a helping handto the women as they grow their businesses.To recruit entrepreneurs, Hindustan Unilevermakes presentations at women’s self-helpgroup gatherings. Skakti is not a one-companyeffort. The program involves a variety of othernon-state and state actors and has workedwith over 400 organizations to date to recruitthe women, provide associated training, androll out related initiatives.While the women may be excited about thisincome earning opportunity, turning them intobusinesspeople can be challenging. “Buildingthe capabilities and skills of these ladies isone of our biggest challenges. They comefrom underprivileged homes and are notvery educated,” explains Hemant Bakshi, theExecutive Director of Customer Development

at Hindustan Unilever. To address this skillsgap, intensive training is required to helpthe women distributors become confidentand independent. Due to this intense level ofrequired effort, a team of about 1,200 peopleat Hindustan Unilever is involved in the initiative.To increase the credentials of Shaktientrepreneurs and enhance the standard oflife of the rural community, social activitieslike medical camps and education programsare run. Hindustan Unilever has also creatediShakti and Shahti Vani, which provide ruralIndia with access to information and socialcommunication. The iShakti communityportal, piloted in Andhra Pradesh, empowerscommunities by creating access to relevantinformation. Desktop computers are set up inthe homes of Shakti entrepreneurs, and userscan access content on categories such aseducation, employment, agriculture, health,grooming and entertainment.These educational initiatives are so importantbecause lack of awareness of basic hygienepractices is estimated to kill over 500,000children in rural India every year. Shakti Vaniseeks to spread awareness of best practicesin health and hygiene, while also benefiting thebusiness. Under this scheme, a local womanis appointed as ‘Vani’ (voice) for a cluster ofvillages. She receives training on personaland community health, and communicationmaterials, such as pictorial literature thatcan be understood by illiterate people. Sheattends meetings, organizes school contactprograms, and uses other social occasions toclarify issues of community hygiene. The Vaniproject operates in over 20,000 villages.While the programs have been costly to setup, increased awareness about hygiene isexpected to increase sales in the long term

while benefiting community well-being.Shakti is Hindustan Unilever’s most visibleinitiative on gender, but it is not the onlyone. The company is committed to creatingequal opportunities for their staff. In 2003they started the Fair & Lovely Foundation,which provides information, resources, andscholarships in the areas of education, careerand women’s enterprise. Hindustan Unileverhas also worked with the Dhan Foundationto enhance the livelihoods of 75,000 womenby providing them with business training andaccess to loans.The company’s next frontier has been toprovide safe drinking water. Poor qualitywater is a source of major disease in India.Hindustan Unilever has worked to developPureit, a relatively affordable home waterpurifier. Following pilots in the south of India,the company is now using its Shakti networkto distribute Pureit across the country.

Global Impact

By opening untapped markets through an innovative distribution channel, Shaktihas helped further rural development while generating business for Hindustan Unilever.The company has rolled out similar initiatives in Sri Lanka, Bangladesh and the Philippines.Shakti has resulted in significant newbusiness for Hindustan Unilever. It contributes to 15% of the company’s ruralbusiness in India and 40% of its growth in rural markets. In Shakti areas, the company’smarket share is about 10% better than in non-Shakti markets. In addition to theimmediate financial benefits, the work of Shakti entrepreneurs as brand ambassadorshas been crucial for building long-term brandloyalty for Hindustan Unilever. The initiative has led to increased income forwomen and improved community wellbeing.

A typical entrepreneur earns about $15 to$20 per month, often doubling householdincome. In 2010, the initiative is expectedto generate an annual combined income of over $25 million for Shakti entrepreneurs.This additional money in the hands of womenis significant, since they have limited other income generating opportunities and aremore likely to invest their income towards the overall benefit of their family.Through the program, women acquire education, improved standing in theircommunities, and greater self-esteem. They are often treated with more respect by theirfamily, since they provide additional income. One study found that the project made anumber of women aware that girls need sufficient education to be able to generatetheir own income. Shakti entrepreneurs tend to be more confident about socializing, morelikely to take lead roles in public activities, and they enjoy higher recognition and socialstatus among local people. “Until I met one of the Shakti women, I underestimated thepotential of what multinational corporations could do to improve the quality of life of theunderserved. By offering women opportunitiesto earn income, Unilever is transforming the lives of these women, their families and theirneighbors while also meeting the growth aspirations of their shareholders,” said TessMateo of PricewaterHouseCoopers after a Recent field visit to a Shakti village.

Working with suppliers

Paprika suppliers

Another example of this approach is a public–private partnership in South Africa, where we are working with local development and government agencies and academic institutions. The programme centres on the sustainable production of paprika in Keiskammahoek in the Eastern Cape and is already employing over 200 men and women from this impoverished part of the country.

The programme is helping local people develop essential farming and business skills while earning a sustainable income from their crop. Unilever benefits from a ready supply of paprika for brands such as Robertson Spice.

The aim is to scale up the project from 62 hectares to 300 hectares, benefiting more people in a region where the unemployment rate is 87%.

The initiative builds on the insights gained from the study we conducted with INSEAD on Unilever’s economic footprint in South Africa.

 

Allanblackia

Allanblackia trees grow largely in the wild in tropical African rainforests and have traditionally been harvested on a subsistence basis. Allanblackia seeds produce an oil that is ideal for use in our spreads.

Unilever is a co-founder of the Novella Partnership, a programme founded in 2002 to scale up production of allanblackia oil in Ghana, Tanzania and Nigeria while reducing poverty, promoting sustainable enterprise and conserving biodiversity.

Unilever and organisations such as the World Agroforestry Centre (ICRAF), the World Conservation Union (IUCN) and others continue to provide input and have invested over €12 million in the partnership. In 2009, management of the project was handed over to a local group of companies in Africa to strengthen decision-making, local ownership and implementation.

Around 10 500 people are taking part, either as farmers, collectors or processors of seeds. More than half of these are women. Since the start of the project, over €350 000 of direct income has been generated for local communities.

The project aims to scale up production to reach 10 000 tonnes a year by 2020, However, achieving this depends on finding additional funding and new supply chain partners who have expertise in setting up farms and are willing to commit to a public–private partnership model. Initial discussions have indicated that this is quite a challenge as it requires a long-term commitment to invest in a new cash crop where trees take five years to fruit.

Recognising this reality, the ambitions of the partnership have been adjusted from its previous goal of 200 000 farmers and 25 million trees by 2017 to focus on recruiting 40 000 famers and

planting eight million trees by 2020.  In 2010, 300 000 trees will be planted and we will purchase more than 200 tonnes of oil to be used for the first time in our European spreads.

Black soy beans

In Indonesia, we have worked with farmers to develop a high-quality sustainable supply of black soy bean for Bango sauce. In 2000 we started working with a local university to engage with local farmers, providing technical assistance and financing to help them improve productivity and boost incomes.

Currently there are 7 000 farmers engaged in the programme, planting black soybeans across 700 hectares.

Business Alliance against Chronic Hunger

Unilever is a partner in a project run by the World Economic Forum's Business Alliance against Chronic Hunger. It involves other multinationals together with Kenyan companies and banks. We have seconded one of our former country leaders to head the project. The aim is to work with smallholder farmers in a poor region of Kenya to strengthen their businesses and increase their earning potential. The initiative looks at developing markets for their products to encourage economic development across the value chain.

Future plans

•Project Shakti plans to extend to the states of West Bengal, Punjab andRajasthan.

•Partnership with other non-competitor companies to sell their products throughthe Shakti network.

•Nippo, TVS Motor for mopeds, insurance companies for LIC policies.

CONCLUSION

•Project Shakti is enabling families to livewith dignity and in better health &hygiene, education of the children and anoverall betterment in living standards.

•it creates a win-win partnership between HUL and the rural consumers for mutual benefit and growth.

BIBLIOGRAPHY:

While doing HINDUSTAN UNILEVER PROJECT SHAKTI, I needed opinions and

Guidance from some Authorities on similar matters. In this direction, I came across the

Following, which I have gone through for reference; they are listed below: ---

WEBSITES: -

www.hll.com

www.hll.unilever.com

www.unilever.com

www.google.com

www.forrestscott.com

www.workforce.com

www.shrm.com

www.motivationonline.com