Hindustan Lever Limited

Investor presentation

June 2006

Agenda

OVERVIEW

INDIA
OPPORTUNITY

2006
HIGHLIGHTS

GROWTH
AGENDA

1
 Agenda

OVERVIEW

INDIA
OPPORTUNITY

2006
HIGHLIGHTS

GROWTH
AGENDA

HLL - India’s largest FMCG company

16,000+ employees t
t
1,200+ managers t
t tt
2,000+ suppliers & t
t t t
t t
associates t
t t
t t t t tt
80 company factories t
India
t t t
45 C&FAs, 4,500 Stockists t
t
Population 1027 Mln
Direct Coverage - 1 Mn outlets t
t t
5,545 Towns
Total coverage - 6.3 Mn outlets t
t
t • 2.5 Mln outlets
Market reach - 166 Mn households t t
6,38,000 Villages
(8 out of 10 in India) tt
• 5.0 Mln outlets
t t
* Source:
(1) Statistics on India, Total Coverage : AC Nielsen, Census of India 2001
(2) Statistics on Market reach : MRUC, Hansa Research - Guide to Indian Markets 2006

HLL - Investor presentation June 2006

2
 Financial Overview
2005
Mn $
Turnover 2,464
Others
Exports
3% Soaps &
12%
PBIT 328 Detergents
Ice Creams
44%
1%
PBIT % 13.3% Foods
3%
Net Profit (bei) 302
Beverages
EPS 14c 11%

Surplus Cash Generated 441

Personal
Products
Market Capitalisation 9,216 26%

* Figures based on FY2005 Audited Results

++ Market Capitalization as on 13th June 2006
HLL - Investor presentation June 2006

Leadership across categories

HLL - #2
Category Market Market
Share (%) Share (%)

Fabric Wash 37.0 15.4

Personal Wash 55.9 9.4
Dishwash 56.5 10.8
Market Leader Skin 57.1 5.1
Shampoo 47.5 23.2
Talcum Powder 60.7 4.8
Packet Tea 29.3 20.5
Jams 73.0 4.4

HLL - #1
Market Market
Share (%) Share (%)
Toothpaste 31.0 47.0
Strong No. 2 Instant Coffee 37.3 62.7
Ketchups 23.9 39.0

Source : A.C Neilsen - Quarter Ended March 2006 Value shares

HLL - Investor presentation June 2006

3
 HLL shareholding pattern

Others
19.3%

Domestic FIs, Unilever

Mutual Funds 51.6%
14.9%
FIIs
14.2%

HLL Equity Capital - 50 Mn $

Market Capitalization - 9,216 Mn $

* Shareholding pattern as on 31st March 2006

++Market Capitalization as on 13th June 2006
HLL - Investor presentation June 2006

Agenda

OVERVIEW

INDIA
OPPORTUNITY

2006
HIGHLIGHTS

GROWTH
AGENDA

4
 Indian economy
9 8.5 8.1 600
2015
8 6.9 550
India GDP (US $ bn) $ 1411 bn 7 6.5
6.1
5.6 5.8 500
BRIC estimates 6
2010 4.8
5 4.4 450
4.0
4 400
2005 $929 bn
3
350
2
$604 bn 300
2000 1
0 250
1990- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005-
$ 469 bn 91 98 99 2000 01 02 03 04 05 06

GDP growth rate (%) Per Capita Income ($)

Demographics
Demographicsprovide
providetailwind
tailwindto
togrowth
growth Growing
Growingservice
servicesector
sectorleading
leadingthe
theeconomy
economy

Positives
Positives Concerns
Concerns
•Growing service sector •Infrastructure

•Low interest rates and steady inflation •Volatility in Agriculture

•External sector growth •Labour reforms

•Strong savings rate •Oil prices
HLL - Investor presentation June 2006

India Opportunity

India : Opportunities and challenges

HLL : Well positioned to create substantial value

FMCG industry : Potential inflection points

HLL - Investor presentation June 2006

5
 India Opportunity

India : Opportunities and challenges

HLL : Well positioned to create substantial value

FMCG industry : Potential inflection points

HLL - Investor presentation June 2006

Opportunities & Challenges

India : Opportunities and challenges

Increasing per capita income drives FMCG growth

A pyramid with large differentiated segment of consumers

Opportunity to grow consumption and penetration

Evolving trade structure

HLL - Investor presentation June 2006

6
 Increasing per capita income
drives FMCG growth
Disposable income per capita vs HPC spend per capita (2004)
400
2
R = 87%
350
HPC Spend Per Capita (USD)

300

250

200

150

100

50

-
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000
Per Capita disposable Income (USD)

• Per capita incomes in the long term drives consumption

• High R-squared for developed and developing countries
• High income countries have higher consumption

HLL - Investor presentation Source: Euromonitor, Morgan Stanley Research June 2006

Increasing per capita income

drives FMCG growth
Per Capita FMCG Expenditure ($)

16.1
13.8 CHANDIGARH

11.5
9.2
6.9
4.6 BIHAR
GUJARAT
2.3
0
0 230 460 690 920 1150 1380
Per Capita Income ($)

• Correlation of above 0.8 between FMCG consumption and PCI

• Growth in income is a good indicator of growth in FMCG consumption
• As India’s real income continues to grow at 7% + levels FMCG will benefit

HLL - Investor presentation June 2006

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 India - 2013

2003 2013
181 mn hhlds 231 mn hhlds

3 Rich 11

46 Aspirers 124

131 Strivers 96

The shape of India is going to change…

from a pyramid to a diamond
Source : NCAER

HLL - Investor presentation June 2006

Opportunity to grow consumption and

penetration
Per Capita Consumption (US $ )

11.0
Laundry
6.2
3.9
1.2 1.8 1.8

India China Indonesia Thailand Malaysia South

Africa

Shampoo 3.1
2.4 2.7

1.1
0.2 0.3

China India Indonesia Thailand Malaysia South

Africa

Source : Euromonitor
HLL - Investor presentation June 2006

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 Opportunity to grow consumption and
penetration

Skincare
7.4 7.7

4.7
2.3
0.3 0.6

India Indonesia China South Malaysia Thailand

Africa

Toothpaste 3.6
2.9
2.0
1.0
0.4 0.5

India China Indonesia Thailand Malaysia South

Africa

4.9
Deodorants

0.6 0.8
0.0 0.0 0.1

India China Indonesia Thailand Malaysia South

Africa

Source : Euromonitor
HLL - Investor presentation June 2006

Opportunity to grow consumption and

penetration

Penetration %
Category All India % Urban % Rural %
Deodorants 2.1 5.5 0.6
Toothpaste 48.6 74.9 37.6
Skin Cream 22.0 31.5 17.8
Shampoo 38.0 52.1 31.9
Utensil Cleaner 28.0 59.9 14.6
Instant Coffee 6.6 15.5 2.8

Washing Powder 86.1 90.7 84.1

Detergent Bar 88.6 91.4 87.4
Toilet Soap 91.5 97.4 88.9

Opportunity to drive penetration & consumption

Source : MRUC, Hansa Research - Guide to Indian Markets 2006

HLL - Investor presentation June 2006

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 Evolving trade structure

Others Traditional Modern Trade

Trade

100% 2 7 3
15 14 13 13
Retail Trade 22 24
80% 36 17
46 5
61 28
60% 76 59 54
97
40% 87
64 70 70
50 51
20% 32 32
3 22 26

Philippines

HongKong

Australia
Indonasia

Singapore
Thailand
Malaysia

0%

Taiwan
China
India

Korea
Well entrenched traditional trade but also growing influence of Modern retail:
• 7.5 mn small stores stocking FMCG products
• Modern trade grown by 25% p.a in last 3 years
25% of turnover to come through organized retailing

HLL - Investor presentation June 2006

FMCG Modern Trade stores

Thousands 2.5
2.4
%
2.1 5
2 1.8
4
1.5
1.2 3
1.1
0.9
1 0.7 0.8 2

0 0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Stores % contribution to
FMCG
• FMCG modern trade stores increasing at a CAGR of 15% in the last 5 years
• They account for 3% of FMCG today
• Modern trade accounts for 9% of FMCG in metros, 20% in South Indian metros
• HLL market share in Modern trade significantly higher in key categories
(compared with General trade)
Source : AC Nielsen

HLL - Investor presentation June 2006

10
 India Opportunity

India : Opportunities and challenges

HLL : Well positioned to create substantial value

FMCG industry : Potential inflection points

HLL - Investor presentation June 2006

HLL : Uniquely positioned

HLL : Well positioned to create substantial value

An unmatched brand portfolio

Innovation and R&D capabilities to straddle the pyramid

Track record of building profitable mass market brands

Versatile distribution network with multi-channel capabilities

Combining corporate responsibility and business strategies to aid the

development of rural India

Strong local talent base

HLL - Investor presentation June 2006

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 India Opportunity

India : Opportunities and challenges

HLL : Well positioned to create substantial value

FMCG industry : Potential inflection points

HLL - Investor presentation June 2006

India Opportunity

Indirect taxes in
India : 25-30%
of End Consumer
High
Price
Indirect taxes
VAT in China :
14.5%

Potential
Inflection
points
Poor Archaic
infrastructure labor
laws

Source: Mckinsey
HLL - Investor presentation June 2006

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 Agenda

OVERVIEW

INDIA
OPPORTUNITY

2006
HIGHLIGHTS

GROWTH
AGENDA

FMCG Markets
Growth momentum accelerating

% Growth driven by
rural markets

14 .0
9 .9
9 .1
8 .4
7 .7
6 .1
4 .5
3 .8 6 .4 4 .2
5 .8
1.8 4 .8
3 .5 4 .6
1.4 1.0
0 .6 2 .2 (0.2) 1.7 2 .5 1.9

JQ'04 SQ'04 DQ'04 MQ'05 JQ'05 SQ'05 DQ'05 MQ'06

(0.9)

Total FMCG market Urban Rural

Source: A C Nielsen

HLL - Investor presentation June 2006

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 Highlights
FMCG growth momentum sustained

HLL FMCG growth 18.3

15.9 15.8

11.9

7.1

MQ'05 JQ'05 SQ'05 DQ'05 MQ'06

Strong FMCG Volume growth

HLL - Investor presentation June 2006

MQ’06 Highlights

• Sales grow by 11.6% for the quarter

• FMCG grows by 18.3%; HPC (+20.0%), Foods (+10.8%)

• Growth broadbased and ahead of market

• A&P spends higher by 45.3%

• PBIT grows by 26.9%

• PBIT margin improvement of 140 bps driven by better mix

• PAT bei grows by 13.6%

• Underlying PAT bei grows by 34.5%

• Net Profit grows by 77.0%

• Impact of Nihar brand sale, other exceptional items

HLL - Investor presentation June 2006

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 Agenda

OVERVIEW

INDIA
OPPORTUNITY

2006
HIGHLIGHTS

GROWTH
AGENDA

Growth agenda
CAPABILITY BUILDING

• New Management Committee (MC) effective from 1st March 2006

• ‘One HLL’ Customer development organisation
• Segmented approach to general trade, modern trade and top-end channels
• Modern trade structure being strengthened to leverage market opportunities
• Consolidation of customers; improved customer service

MARKETS, STRATEGY

• Robust FMCG market growth; expected to continue

• International companies seeking market position
• High inflation in key raw materials
• Invest behind our brands and deliver consumer value
• Achieve cost leadership across the extended supply chain; margin improvements to
come by winning in market place, judicious price increases

HLL - Investor presentation June 2006

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 In summary

• India : A buoyant economy with huge opportunity

• Big opportunity to grow Penetration & Consumption

• Market share gains - Key focus area; further strengthening our

competitive position in strategic categories

• Continued investments behind innovation / brands

• Cost pressures, particularly in Laundry expected to continue; to be

managed by cost effectiveness programs and judicious price increases

• Building capability for long term value creation - Top priority

• New organization to leverage ‘One HLL’ and ‘One Unilever’

HLL - Investor presentation June 2006

Thank you

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