Each HLL Mega Brand To Scale Rs. 1000 Cr In Foreseeable Future

Mr. Banga was speaking on the progress on HLL's strategy for sustainable profitable growth, outlined two years ago, and the future approach.

He said HLL's Power Brands have enormous space for growth. This will be achieved by leveraging their scale, redefining categories, liberating brands from their existing category mindset, exciting innovations for differentiated and relevant benefits, and leveraging technology for innovation.

Mr. Banga declared, "We are quite clear that we will be able to sustain growth in the face of competition as we have done in the past. In the Laundry market where there are over a thousand local players, our brand Wheel is now the clear market leader and the largest brand in HLL. In Personal Wash also, we grew our business by double-digits last year in the face of very aggressive low price competition. We will compete with low price competitors by playing to our strengths -- using our strongest brands backed by superior technology and the lowest cost supply chain. We will succeed in this by leveraging our unique combination of local and global scale."

HLL's brands today are available in 3 million outlets and touch the lives of two out of three Indians. The power of HLL’s scale is derived from its combined volume of about 4 million tonnes, sales of Rs.10,000 crores and its presence across more than 20 distinct consumer categories.

He noted that leveraging brand scale was crucial. "Brand scale enables us to get a larger share of the consumer's mind as well as a larger share of the retail shelf. For instance five of our Power Brands are among the top ten most heavily advertised brands in India. We derive scale competitive advantage from our combined media spends," Mr. Banga said.

Explaining the concept of liberating brands, he said, "Historically, brands originated and stayed within a category product format. We, however, see our Power Brands as being able to occupy a unique position in the consumer’s mind and therefore being able to stretch into other product formats or categories. The launch of Fair & Lovely Soap, Lifebuoy Talc, taking the Max Ice-cream brand to Confectionery are all examples of extending brands into new categories. All these extensions have had a promising start and there are more to come."

This will be supported through continued investment in technology, both to make better products and secure cost advantage. Citing the example of new Surf Excel, which reduces time taken for rinsing and water consumption by 50%, Mr. Banga said, "There is often a misconception that everyday products like ours do not need high technology. This is totally untrue -- in fact, we need technology of a very high order to offer superior benefits at an affordable price." HLL's own technology capability stemming from about 200 R&D people, coupled with the Unilever technology network of over 5000 R&D personnel and a budget of US$ 1.3 billion, gives the company enormous advantage.

He said the new opportunities for growth, which arose out of Project Millennium, increase the size of HLL's market opportunity by about 40%. HLL's entry into categories, like Confectionery and Ayurvedic Health Care, and initiatives, like the Sangam retailing business and the HLL Network direct-to-consumer business, have all made very good progress.

Speaking on the Foods business, he said, "There is a big opportunity to grow Processed Foods, which are still a very small proportion of the overall largely commoditised foods market. However, developing this market will require relevant and differentiated products which cater to Indian tastes and habits as well as sustained and considerable investment and time for market development." Over the last couple of years, gross margins had improved by 9%, albeit at the cost of some topline, thereby providing the fuel to invest in both innovation and differentiation. This was already visible in the new launches across the Foods & Beverages businesses, all of which have met with an encouraging response.

The company is building capabilities in the supply chain to support its growth. "We are making a quantum change in our supply chain, both in terms of enhanced customer service as well as increased efficiency. Significant investment in Information Technology has provided connectivity across the supply chain, from the supplier to the stockist, thereby enhancing customer service while bringing down working capital. Today, we know what our stockists have sold every day, to almost a million outlets.This has brought us much closer to the market place and significantly enhanced our speed of response," he added.

HLL is also increasing the width and depth of its distribution. It has established a single distribution channel for rural India by consolidating categories, and is now reaching out to 250 million rural consumers in approximately 50,000 villages. In addition, it has embarked upon Project Shakti, which while providing sustainable income opportunities to underprivileged rural women as direct-to-home distributors, will help the company touch the lives of another 100 million consumers in over 100,000 villages. Simultaneously, HLL is building a special relationship with the modern trade in urban India.

Mr. Banga said the most important determinant of HLL's growth was the quality of its people. "We are deeply privileged to continue to attract the very best talent as the number one preferred employer at leading campuses. We are also encouraging diversity in our talent base by recruiting people with complementary skills, especially for our newer businesses, and are also bringing in a large number of talented women, " he said.

"Today's market is very dynamic and increasingly competitive. We have confidence in our strategy and are learning to grow even in declining markets. We are putting in place key enablers to build our capability for sustained high performance. We have brands with rich heritage and strong consumer equity. We have people who bring the power of their ideas and execution to exploit the full potential of our brands towards delivering continued profitable growth for Hindustan Lever," he concluded.