To the Members,
Your Companys Directors are pleased to present the 80th Annual Report of the
Company, along with Audited Accounts, for the financial year ended 31st March, 2013.
1. FINANCIAL PERFORMANCE (STANDALONE)
||For the year ended 31st March, 2013
||For the year ended 31st March, 2012
|Revenue from operations, net of excise
|Profit before exceptional items and tax
|Profit for the year
|Dividend (including tax on distributed profits)*
|Transfer to General Reserve
|Profit & Loss Account balance carried forward
* During the year, the Board of Directors declared a Special Dividend of Rs. 8.00 per
Equity Share, which was paid out of the accumulated Profit & Loss Account balance and
exceptional income generated in the first half of the financial year 2012-13.
1.2. Category wise Turnover
( Rs. crores)
||For the year ended 31st March, 2013
||For the year ended 31st March, 2012
|Soaps and Detergents
|Others (including Exports, Chemicals, Infant Care Products, Water, etc.)
* Others represent service income from operations, relevant to the respective
1.3. Summarised Profit and Loss Account
||For the year ended 31st March, 2013
||For the year ended 31st March, 2012
|Sale of products less excise duty
|Other operational income
|Profit Before Depreciation, Interest, Tax (PBDIT)
|Profit Before Interest & Tax (PBIT)
|Other Income (net)
|Profit before exceptional items
|Profit Before Tax (PBT)
|Profit for the year
|Basic EPS (Rs.)
Your Directors are pleased to recommend a Final Dividend of Rs. 6.00 per equity share
of face value of Re. 1/- each for the year ended 31st March, 2013. The Interim Dividend
and Special Dividend of Rs. 4.50 and Rs. 8.00 per equity share, respectively, were paid on
16th November, 2012.
The Final Dividend, subject to approval of Members at the Annual General Meeting on
26th July, 2013, will be paid to the Members whose names appear in the Register of
Members, as on the date of book closure, i.e. from Friday, 12th July, 2013 to Friday, 26th
July, 2013 (inclusive of both dates). The total dividend for the financial year, including
the proposed Final Dividend, amounts to Rs. 18.50 per equity share and will absorb Rs.
4,655.68 crores, including Dividend Distribution Tax of Rs. 655.69 crores.
3. RESPONSIBILITY STATEMENT
The Directors confirm that:
in the preparation of the annual accounts, the applicable accounting standards
have been followed and that no material departures have been made from the same;
they have selected such accounting policies and applied them consistently and
made judgments and estimates that are reasonable and prudent, so as to give a true and
fair view of the state of affairs of the Company at the end of the financial year and of
the profits of the Company for that period;
they have taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 1956, for
safeguarding the assets of the Company and for preventing and detecting fraud and other
they have prepared the annual accounts on a going concern basis.
4. MANAGEMENT DISCUSSION AND ANALYSIS
In order to avoid duplication between the Directors Report and the Management
Discussion and Analysis, we present below a composite summary of performance of the
various businesses and functions of the Company.
4.1. Economy and Markets
The global economy continues to be sluggish with a moderation in growth in China adding
to the continuation of the crisis in the European Union and the United States being unable
to show clear signs of economic recovery. The global economy seems fragile with revival of
economic activity not yet discernible.
Within the domestic economy, growth slowed much more than anticipated, with the GDP
growth for fiscal year 2012-13 being pegged at 5.0%, the lowest in a decade. Inflation,
which remained high through most part of the year, eroded domestic consumer savings and
curtailed consumption reflecting in slowing market growth. The slowdown was particularly
stark in discretionary categories which were further accentuated by slowdown in modern
trade on the back of stores rationalisation by certain retailers.
Your Companys performance for the year 2012-13 has to be viewed in the context of
the aforesaid economic and market environment.
Performance of Businesses and Categories
4.2. Home & Personal Care (HPC)
The Home & Personal Care (HPC) business consists of Personal Wash, Fabric Wash,
Household Care and Personal Products, which includes categories like Skin Care, Hair Care,
Oral Care, Deodorants and Colour Cosmetics. During the year, HPC business registered a
robust volume and price growth, leading to a value growth of 16.5%.
The opportunity for growth in India continues to be immense across all HPC categories.
This fact is also reflected in high levels of competitive intensity in the market place.
Your Company believes that unwavering defence of market shares in core categories as well
as market development to build segments of future is critical for sustained growth and
long term value creation. While focusing on the core categories, your Company has also
invested significantly in the segments of future, the segments which are expected to drive
future growth. Rural continues to be a key area of focus for your Company, with the
Khushiyon Ki Doli programme continuing across the States of West Bengal,
Bihar, Maharashtra, Andhra Pradesh and Uttar Pradesh. Khushiyon Ki Doli is a
cost efficient, rural brand activation module, which assists in increasing the reach of
various HPC brands, such as Wheel, Surf Excel, Vim, Fair & Lovely, Sunsilk, Lifebuoy
In a highly competitive scenario, where new brands and offerings are entering the
market almost every quarter, your Company delivered double digit growth driven by
innovations and maintenance of marketing and trade investments at competitive levels
throughout the year. Your Company has also significantly stepped up investment in Digital
Media, which is expected to be the media channel of the future. Your Company continued to
leverage and benefit from the various inputs from Unilever across various aspects of the
business, including technology, innovation and communication.
Volatile and rapidly changing commodity markets, including vegetable oil and crude oil,
coupled with fluctuating currency markets continued posing a major challenge during the
year. Cost inflation impacted several input costs, such as laundry chemicals and supply
chain costs. Even in this challenging environment, your Company delivered profit growth
through robust cost saving programmes and dynamic pricing without compromising on the
competitiveness of brand investments, both in terms of technology as well as advertising
4.2.1. Soaps and Detergents
Soaps and Detergents turnover grew by 18.8% on the back of strong underlying volume
growth and pricing actions.
Personal Wash category recorded strong, double digit growth during the year, driven by
robust volume growth resulting from strong marketing plans, consumer centric activations,
effective pricing and sustained high levels of distribution. The growth was broad based
and across every segment of the category, led by Dove, Lux and Lifebuoy. The category
growth was witnessed not only in the core bars business but also in personal wash liquids,
through penetration and increased consumption. Focus on cost efficiencies and mix
improvements driven by premiumisation helped the Company improve category margins.
Fabric Wash category recorded another successful year with consistent volume growth
despite steep increase in input costs. The category margins were sustained by excellent
execution of cost saving programmes and dynamic management of pricing actions. The focus
on innovations resulted in successful launches / re-launches in brands like Surf Excel and
Rin. These brands continued to lead category premiumisation by delivering double digit
volume growth. Speed to market was a key focus for the Fabric Wash business. Various
initiatives across the Fabric Wash category ensured that the products are competitively
priced and the right mix is available in the relevant markets. Comfort continued to drive
market development and build the fabric conditioner market. Your Company will continue to
focus on driving innovations, exercising control over costs across the value chain and
delivering effective communication to win in Fabric Wash category.
Household Care category recorded robust volume and value growth during the year through
focused innovation in the portfolio to provide greater consumer value. Vim bar continues
to delight consumers by delivering superior performance and new offerings like the
Anti-Germ Bar and the Monthly Tub Pack. Vim liquid continues to develop the liquid dish
wash category driven by superior product quality and strong advertising. It has
effectively accomplished the dual job of growing the liquids market by reaching out to
more households, while increasing consumption in existing households. Domex continued to
provide clean and germ free toilets to the consumers.
4.2.2. Personal Products
Personal Products categories comprise Skin Care, Hair Care, Oral Care, Deodorants and
Colour Cosmetics. In a challenging economic environment where growth rates slowed down
during the year, the Personal Products categories delivered good turnover growth of 12.7%,
led by strong underlying volume growth.
Skin Care category registered double digit growth during the year in a challenging
market context. New segments like Face Washes, Body Lotions, Skin Lightening and Anti
Ageing witnessed robust growth. Ponds Skin Lightening, Ponds Anti Ageing and
Lakm Perfect Radiance, which were re-launched during the year, registered a strong
double digit growth. Fair & Lovely was also re-launched during the year and has
strengthened its market leadership in a slowing mass skin lightening segment. The second
half of the year witnessed double digit growth in winter products, such as Ponds
Body Lotion and Cold Cream and Vaseline Body Lotions and Petroleum Jelly.
In Hair Care category, your Company registered robust double digit growth during the
year. Your Company has strengthened its position in the premium segment with the launch of
TRESemm range of shampoos and conditioners. Dove continues to lead the growth agenda and
has consistently gained market share. The brand has also made a foray into the premium
hair oil segment with the launch of Elixir range of oils, which has been received well in
the market. Sunsilk grew strongly on the back of effective communication. Clinic Plus,
with the help of a strong re-launch in first half of the year, continues to be the largest
shampoo brand in the category. Your Company continued its focus on market development by
investing strongly behind the emerging high potential hair conditioners segment, thereby
growing ahead of the market.
Oral Care category delivered strong volume led double digit growth. Your Company
continued to focus on strengthening the Oral Care brands and the portfolio. Pepsodent
stepped up its play in the Advanced Care segment with the launch of the Expert Protection
range, which has helped in the premiumisation of the brand. Closeup was re-launched during
the year and a new flavour variant, Closeup Eucalyptus Mint, was introduced to add to its
product portfolio. Your Company has also put in place a robust plan to strengthen the
toothbrushes portfolio with launches at both the premium as well as the mass end of the
Your Company continued to strengthen its Deodorant portfolio by introducing Lux in the
fast growing womens deodorant segment. Axe launched a new variant Axe Apollo, which
received strong initial response with a first of its kind promotional campaign, where
Consumers of Axe Apollo stand a chance to win a trip to space. Dove deodorant,
which was re-launched with added skincare benefits, has been well received by the
The brand continues to have a strong focus on modern trade as a channel. Your Company
currently imports a large portion of deodorants in the aerosol form. Unilever is in the
process of implementing a project to establish a world class deodorants manufacturing
facility in India and this plant will provide regular supply of high quality deodorant
products to service markets across the world, including India.
Lakm Colors delivered double digit value growth in the year, driven by strong
innovations and expansion of the beauty advisory channel. Lakm Colors portfolio has been
built on four platforms, viz. Core, Absolute, 9 to 5 and Elle 18. The core segments
growth was led by strong performance in Face products where Lakm Radiance Compact and
Lakm Perfecting Liquid Foundation particularly performed well. The Nail portfolio grew
on the back of solid sales performance in Color Crush and nail enamel remover. Absolute,
the top-end long-wear makeup with wide range of products in eye, nail, face and lip,
continues to drive relevance and premiumisation. During the year, the 9 to 5 portfolio was
further strengthened with the launch of Eyeconic Kajal. Elle 18 was re-launched towards
the end of the year to rebuild itself as a brand targeting the younger beauty aspirants.
4.3. Foods & Beverages (F&B)
The Foods & Beverages (F&B) portfolio of your Company comprises Tea, Coffee,
Processed Foods, Frozen Desserts, Bakery products and Out of Home operations, including
BRU World Caf.
During the year, F&B business delivered double digit growth with an appropriate
balance of volume, price and mix. The Packaged Food category continues to represent a
significant consumer and business opportunity given the shifts in the income pyramid,
increase in working women, growing health concerns and need for taste with convenience.
Your Company is consistently focused on developing newer offerings that can best fulfil
existing and emerging consumer needs. Your Company continues to focus on driving
availability and distribution alongside building salience for its brands through
micro-marketing initiatives in core categories. In addition, your Company is driving
upgradation across categories with strong research and development support from Unilever
and an intimate understanding of Indian consumer and customer needs.
The F&B business was faced with multiple challenges during the year, including high
competitive intensity from multinational, national as well as local players in many
categories, significant commodity cost inflation across the spectrum and a general
slowdown in consumer spends due to impact of high food inflation. Your Company has
proactively managed the challenges by responding through value enhancing innovations,
consumer centric value packs, judicious price increases and aggressive cost saving
During the year, the tea market grew in volume and value for the second consecutive
year driven by upgradation. The commodity prices showed steep increase in latter part of
the year. In this context, your Company recorded competitive and profitable growth. This
was achieved largely through a combination of brand building efforts on the lead brands in
our portfolio, supplemented by strong on-ground efforts to expand distribution and
Taj Mahal and Lipton continue to drive premiumisation and market development through
formats like Tea bags and Iced tea powder enabling your Company to build leadership in
these segments of the future. Taaza was re-launched with a new proposition which propelled
the brands growth in latter half of the year. Red Label and 3 Roses witnessed third
consecutive year of volume and value growth ahead of market. All brands of your Company
showcase the inherent goodness of tea. While Red Label and 3 Roses bring out the health
benefits of flavonoids, Taaza focuses on improving concentration power through theanine.
The Instant Coffee market grew strongly during the year with commodity prices
witnessing an unprecedented increase. In this context, your Company recorded strong
growth, led by the core franchise. Your Company expanded the premium BRU Exotica coffee
range with the launch of Guatemala (freeze dried coffee), supported by appropriate media
Your Companys Out of Home business performed well during the year and continues
to have high growth potential. Investments are being stepped up in the business, portfolio
and Go to Market capabilities. Your Company is expanding the business into new
geographies and segments like hotels, restaurants and catering. Your Company continues to
explore the Out of Home consumption opportunity through its BRU World Cafe outlets in
4.3.2. Packaged Foods
Kissan, which continues to remain one of the most trusted brands among Indian
consumers, consolidated its offerings during the year. Ketchups continued to lead with
strong underlying volume growth, helping your Company gain market share. The Kissanpur
campaign, spread across print, digital and on-ground activations, was highly successful
and went on to win many media and creative awards, such as the Grand Prix at Spikes Asia
and bronze at Emvies and Effies.
Your Company maintained its strong position in the soups segment through Knorr. The
instant soups range, targeted for the young adults, performed well. Your Company is
committed to drive market expansion in the category. Knorr Soupy Noodles has been restaged
towards the end of the year with a superior offering.
The staples business, through Annapurna, grew well despite the challenges posed by the
rising commodity costs. Your Company will continue to focus on key geographies and
optimise costs to further enhance the profitability of the portfolio.
The Food Ambassadors programme has significantly strengthened your Companys
capability to engage consumers at the point of sale, which has increased trials of new
offerings. Your Company will continue to leverage this platform to connect with consumers.
Bakery business (Modern Foods) sustained its performance and continued to deliver
strong underlying growth with profit improvement from distribution expansion, scale and
better operational efficiencies. The new products and offerings in adjacent categories,
like cakes, cookies, idli/dosa batter, dry mix powders and others have contributed well to
The Kwality Walls business had a good year in a challenging market environment on
the back of exciting innovations launched at the onset of the summer season. The three key
platforms; Cornetto, Paddle Pop and Selection Take Home Tubs, which are popular among
youth, children and families respectively, continued to perform well and delivered double
digit growth. During the year, your Company successfully launched a new brand Fruttare, an
ice candy made with real fruits in three variants, Mango, Grape and Litchi.
Selection range of in-home tubs was re-launched with exciting western flavours and new
Indian flavours under the Shahi Delights platform. In addition, the innovations under
Cornetto, Paddle Pop and Kulfeez also performed well, helping the category deliver higher
growth. Your Company continued to focus on expansion of Swirls parlours across the
country. This helped to create over 10 million happiness moments, while
serving unique offerings through Kwality Walls Swirls outlets.
During the year, input costs put significant pressure on profitability. The robust and
well rounded portfolio and strong innovations have helped the business to take prudent
price increases. Availability and visibility are the categorys most important growth
drivers. Your Company continues to invest in more freezer deployment and usage of
information technology to enhance availability and to drive better asset utilisation.
Pureit continues to strengthen its position in a slowing consumer durables market.
During the year, Pureits new product innovations focused on driving superior
functionality and aesthetics with the launch of Pureit Advanced and Pureit Marvella UV.
Pureit Advanced was launched with a breakthrough design that promised a double protection
functional benefit. It has become the new benchmark for superiority in the non-electric
purifier segment thereby further strengthening Pureits market position. The launch
of Pureit Marvella UV was another testimony to Pureits pioneering innovativeness.
This purifier comes equipped with a unique feature of an Advance Alert System for filter
change. This feature is in line with Pureits product philosophy of delivering safe
drinking water till the very last drop. In addition, Pureit Marvella UV is the first UV
purifier to have a built-in storage of five litres of purified water, thereby giving
consumers an easy way to manage the uncertainty relating to water supply and electricity.
During the year, your Company focused on building distribution reach for its range of
purifiers in different retail formats across the country. Substantial progress was made in
evolving the business model to make it more scalable.
4.5. Exports Business
FMCG Exports (Unilever India Exports Limited)
In order to fully exploit the opportunity in exports market and to provide necessary
focus, flexibility and speed to the business, the FMCG Exports Business Division of the
Company was transferred to a wholly owned subsidiary, Unilever India Exports Limited
(UIEL) consequent to a Scheme of Arrangement. The Exports business has
successfully re-cast itself into two units; one focused on driving cross border sourcing
to Unilever companies and the other leveraging the equity of locally developed brands
among the ethnic diaspora in international markets. The strategy of a dedicated business
unit driving distribution of locally developed brands, such as Kissan, BRU, Brooke Bond,
Lakm, Pears have yielded strong growth in these brands in its first year. The Home and
Personal Care segment in the exports business witnessed a stable year, driven primarily by
Skin Care and Hair Care categories leading to a moderate growth in volume and core
operating profit. Brands like Pears and BRU have also registered healthy growth in the
focused markets through strong advertising and activation support. The Foods and Beverages
segment of the business witnessed a modest growth. The tea bags category maintained strong
sales in Australia and the United States. Instant Coffee sales remained steady. The
profitability for the overall segment improved, with export incentives being extended to
conventional tea, instant tea and instant coffee.
In the specialty business, which continued to be part of your Company post the above
mentioned demerger, rice registered a strong double digit growth with dedicated focus on
expanding geographies, seeding opportunities and marketing / brand building support.
Leather (Ponds Exports Limited)
The Leather business performed well with improved operating profitability and robust
sales growth. This performance was achieved through new product designs, excellent
customer service, world class quality and cost innovations.
4.6. Beauty & Wellness (Lakme Lever Private Limited)
Lakme Lever Private Limited (LLPL), a wholly owned subsidiary of the Company, has 185
salons, of which 46 are Company owned / managed and 139 are franchisee salons. LLPL
delivered double digit salon growth for the third consecutive year although expansion
slowed down. During the year, Lakm Absolute Salon, the defining salon experience with
exclusive bespoke services across Skin and Hair, was opened in New Delhi and Bangalore.
LLPL created a focused cross functional New Salon Team to accelerate the
expansion of new salons. LLPL is investing in improving customer service and building
delightful imagery to support the Lakm PROstylist proposition. Your Company will
continue to support LLPL to drive growth in this attractive market opportunity.
4.7. Hindustan Unilever Network
Hindustan Unilever Network business consists of three major brands Aviance (Personal
Care), Lever Ayush (Health Care) and Lever Home (Fabric Wash, Household Care and
Toothpaste). Your Company has made significant improvements in re-positioning the
portfolio from the mass market to the Prestige and Premium segments. This has been
accomplished through an improved business partner profile. Your Company continues to
invest in on-ground activation and training.
4.8. Kimberly Clark Lever Private Limited (KCL)
KCL is a Joint Venture between your Company and Kimberly-Clark Corporation, USA, with
infant care diapers as its primary product category. The year witnessed the re-launch of
Huggies Diapers and Huggies Wonder Pants with improved product features and performance,
which has been well received in the market. Low levels of penetration in Indias
infant care diapers markets offer significant growth potential for this category. This
growth opportunity has attracted increased levels of competitive intensity in the recent
past with multinationals making significant investments in India. With a view to
participate effectively in this growth opportunity, KCL aims to bring in regular
innovations to the market through sustained and appropriate investments in the short to
medium term. Your Company continues to be committed to make appropriate investments in
5. CUSTOMER DEVELOPMENT
During the year, your Company ensured that it continues to build on its reputation of a
distribution and execution powerhouse with a best in class quality and a vast distribution
network of more than 2,500 re-distribution stockists.
Your Company has undertaken some important initiatives during the year to become more
customer centric and win in the market place. These initiatives include establishing
dedicated call centres for distributors as well as retailers to reach out to the Company.
The call centres set up for retailers have helped millions of outlet owners reach out
directly to the Company. The calls received from retail outlets provide useful insights
and help the Company understand issues and opportunities in the market place better and
address them effectively. Your Company has also launched a structured Consumer &
Customer License programme, under which Company employees spend time with the customers to
understand their needs better. These initiatives have helped in keeping the consumers and
customers at the heart of your Companys business model.
During the year, your Company set up a state-of-the-art Customer Insight and Innovation
Centre (CiiC) at Mumbai, the latest among seven such centres across Unilever worldwide.
This centre is equipped with the latest technologies to help us work closely with our
distributive and modern trade partners to develop sharp and incisive shopper insights and
platforms to win with shoppers.
Your Company further strengthened the Perfect Stores programme to drive superior
availability and visibility of its products at the market place. The Perfect Stores
programme has proven to deliver higher growth and share for the business. Your Company
continues to make good progress in covering more stores under the Perfect Stores
Modern Trade, which is the growth channel for the future, continues to be a focus area
for your Company. The relentless focus on joint business planning and ensuring best in
class on-shelf availability to grow the business together was appreciated by modern trade
customers. Your Company was awarded the Best Supplier by leading modern trade
customers for yet another year.
Leveraging the rural distribution network of the Company, the rollout of Telecom
Distribution alliance with Tata Teleservices Limited (TTSL) into 13 Telecom Circles
nationally for the distribution of telecom products, was completed during the year. The
Company is now distributing these products in more than 95,000 telecom outlets through
over 720 rural distributors. This distribution alliance has helped the Company further
drive rural growth with enhanced earning potential for its channel partners, rural
distributors and Shakti entrepreneurs.
5.1. Project Shakti
Your Company continued to drive its rural coverage agenda through Project Shakti, which
now has 48,000 Shakti entrepreneurs (Shakti ammas) complemented by over 30,000
Shaktimaans, the male members of Shakti ammas family. Shakti ammas have proved
successful in increasing the Companys presence in rural areas, building strong local
relationships with consumers, thereby encouraging brand loyalty. Shakti ammas are also
acting as your Companys ambassadors to spread awareness of health and hygiene in
deep rural India with limited media reach. At the same time, Shaktimaans distribute
Company products on bicycles, covering over 135,000 villages in 15 States and serving 3.3
In order to further strengthen the rural coverage and streamline the supply chain
network, your Company has deployed a low cost mobile IT solution for Shakti programme,
during the year. This is a mini ERP (Enterprise Resource Planning) package run on an entry
level smart phone to help the Shakti entrepreneurs manage their enterprise better. The
package is now being used by over 40,000 Shakti entrepreneurs across the country. This
solution is available in eight languages and allows the Shakti entrepreneurs to book
orders and manage inventory. The application also provides updates on the promotions and
offers. The information received through this solution provides business insights which
helps recommend categories to be driven in lower population markets. This application will
equip your Company to become more organised and scientific in its sales and distribution
planning in rural India.
6. SUPPLY CHAIN
Your Companys Supply Chain agenda for the year was focused on strengthening five
key areas: Customer Service Excellence, Focus on Consumer & Customer Quality, Robust
Supply Chain Saving Programme, Turbo-Charging TPM (Total Productivity Management) and
Partner to Win through Continuous Improvement, Teaming and Collaboration.
Your Company has made significant progress in its vision to deliver outstanding
customer service and enable sustainable growth. The service delivery standards improved
steadily with CCFOT (Customer Case Fill on Time) increasing to 93%. The Customer
Satisfaction Survey Scores and Best Supplier recognition from customers have been
encouraging and suggest that the actions taken by your Company are in the right direction.
Modern Trade OSA (On-Shelf Availability) has further improved during the year. Your
Company has embedded Sales and Operation Planning Process (S&OP) and Innovation
Process Management (IPM) as business enabler and is adding value to the business.
The quality performance measured as Consumer Relevant Quality Standard (CRQS) has shown
50% improvement over last year. Quality continues to be a major focus area, with a thrust
on design quality improvement and new quality standards implementation for warehousing and
transportation. The consumer care lines have been improved and are being used as channels
to engage with consumers.
Your Company has a robust Supply Chain savings programme with continuous focus on
end-to-end Supply Chain cost reduction through new technologies, alternative sources of
energy, efficient processes and methods. During the year, your Company has delivered 5%
saving in Supply Chain cost with sourcing network optimisation, logistic efficiency
through improved utilisations, factory production cost reduction through improvement in
energy efficiency, technical efficiencies, wastage reduction and yield improvement.
The TPM journey, with strong focus on autonomous maintenance, preventive maintenance,
focused improvement and strong circle engagements, has helped the Company improve employee
engagement, efficiency and derive competitive advantage. The performance across PQCDSM
(Productivity, Quality, Cost, Delivery, Safety, and Morale) is showing sustained
improvement. Your Company has progressed on the long term plan to create capacities
through efficiency improvement, speed improvement and high speed technologies to support
volume growth while managing costs. Your Company has successfully executed all capacity
creation projects on time to ensure smooth delivery during the year.
There has been a 15% improvement in innovation OTIF (On Time in Full) with more than
150 innovation networks being executed during the year touching more than 50% of the
product portfolio. The focus on better and faster innovation and capability development
has significantly helped the Company launch innovations first time right. Your Company has
identified beauty, foods, modern trade and rural as key capabilities to win in the future
and the supply chain function has significantly improved capability and skill building in
these areas during the year. The Partner to Win programme with supplier and business
partners in procurement function focuses on reducing lead time, decreasing procurement
cost, improving reliability and work on new innovation. Your Company leverages benefits of
scale and synergy through Unilevers global buying network.
7. RESEARCH & DEVELOPMENT
Your Company continues to derive sustainable benefit from the strong foundation and
long tradition of Research & Development (R&D) which differentiates it from many
others. New products, processes and benefits flow from work done in various Unilever
R&D Centres across the globe as well as in the Research Centres in India. The R&D
labs in Mumbai and Bangalore are aligned to Unilevers global R&D. Many of the
projects run out of these centres are of global relevance and have a strong focus on the
needs of this region and the overall Developing & Emerging (D&E) world. With the
world class facilities and a superior science and technology culture, your Company is able
to attract the best talent to provide significant technology differentiation to its
products and processes.
Your Companys R&D programmes are focused on development of breakthrough and
proprietary technologies with innovative consumer propositions. The R&D team of over
750 people comprises highly qualified scientists and technologists working in areas of
Home & Personal Care, Foods & Beverages and Water Purification. The R&D group
also comprises critical functional capability teams in the areas of Regulatory, Clinicals,
Patents, Digital R&D, Product & Environment Safety and Open Innovation. During the
year, your Company introduced several innovations in Soaps and Detergents category. In
Wheel, a new surfactant was introduced to enhance superior performance and quality. Surf
Excel Blue was re-launched with significantly improved efficacy. Household Care launched
Domex toilet cleaner in a child safe pouch form to make hygiene more affordable. New water
saving rinse aids Magic and Comfort One Rinse were introduced in a
In Personal Care category, particularly Skin Care, the key deliveries during the year
were PPARs (Peroxisome Proliferation-Activated Receptor) and a new modified sunscreen
system. Both of these products were launched as worlds first skin and spot
lightening cream sensory, with SPF20 under Ponds White Beauty. The PPARs, along with
next-generation instant optics, were also launched as a part of the new Fair & Lovely
Advanced Multivitamin formula.
In Hair Care category, Clinic Plus was re-launched with improved formulation that
provides enhanced wet and dry conditioning and a significantly superior hair fall
reduction benefit. A colour rescue variant in Dove, specially formulated for care of
coloured hair was introduced. TRESemm, an international salon brand, with a formulation
tailored for Indian hair and endorsed by salon professionals, was launched for the first
time in India. The entire range of Sunsilk was re-launched with enhanced benefits and
premium packaging. At the end of the year, premium hair oil under Dove, comprising a
special, light and non-sticky nourishing formula with precious oils and real flowers, was
launched. In Oral Care category, Pepsodent Expert Protection was launched in the premium
segment with a new regime based claim, action of toothpaste, mouthwash and floss in
one tube. Closeup was re-launched with a new anti-malodour agent and new claims,
such as 3X more fresh breath for 12 hours.
The year witnessed several new R&D innovations in Beverages category. Brooke Bond
Taaza was re-launched with new proposition, packaging and a superior product delivery
aimed at enhancing economy of use for consumer. Lipton Iced tea powder mixes were revamped
with new product and packaging. Taj Mahal leaf tea range was extended to new geographies
with location specific blends.
The Foods R&D team has continued to focus on delivering winning formulations and
product superiority. A new variant called Sweet & Spicy was launched under
Kissan ketchups, which is a winning formulation when compared in blind with other products
in the market by consumers. In the Jams portfolio of Kissan, a new pack at an affordable
price of Rs. 5/- was introduced to drive penetration in the category. In Frozen Desserts
category, a new variant of Cornetto, Pistachio was also developed and
launched. Premium single origin, freeze dried coffee range under BRU was expanded with the
launch of a new unique variant, Guatemala. R&D along with supply chain and procurement
teams, also focused on developing innovative end-to-end solutions to proactively manage
commodity cost pressures.
In Water business, advanced Pureit with significantly enhanced design was launched. A
long life battery kit was also launched for Pureit during the year. The year also
witnessed the launch of a reverse osmosis based water purifier, Pureit Marvella UV.
R&D has further contributed to the Companys sustainability agenda by enabling
significant reduction in packaging material consumption through several material
efficiency initiatives. Your Companys R&D is also working on novel technologies
to help save substantial amount of water.
With strong scientific expertise and the potential to deliver high value technologies,
India continues to occupy a premier position in Unilever R&D. Your Company is well
placed to meet the challenges emanating from the increased competition intensity and the
opportunities to drive faster growth on the back of strong support from R&D as well as
brand development capabilities. Your Company had entered into a Technical Collaboration
Agreement (TCA) and a Trade Mark License Agreement (TMLA) with Unilever. The TCA provided
for payment of 1% royalty on net sales of specific products, manufactured with technical
inputs developed by Unilever. The TMLA provided for the payment of trademark royalty at
the rate of 1% of net sales on specific brands, where Unilever owns the trade mark in
India. Given that the pace of innovations and the scope of services have expanded over the
years and that Unilevers global resources are providing greater expertise, superior
innovations and scale advantage for all Unilever entities, your Company is enjoying the
benefits of an increasing stream of new products and innovations, backed by technology and
know-how from Unilever. Your Company is also receiving support and guidance to drive
functional excellence in marketing, supply management, media buying, IT, etc., which helps
your Company to remain competitive and further step-up its overall business performance.
Unilever is committed to ensuring that the support in terms of new products,
innovations, technologies and services is commensurate with the needs of your Company and
enables it to win in the market place. Given the need for increased levels of service and
the consequent additional costs, your Company has entered into a new agreement with
Unilever in order to ensure a fair recovery of costs by Unilever. In terms of the new
agreement, the existing royalty cost of c. 1.4% of turnover will increase, in a phased
manner, to a royalty cost of c. 3.15% of turnover no later than the financial year ending
31st March 2018, i.e. a total estimated increase of 1.75% of turnover.
The details of expenditure on scientific research and development at the Companys
in-house R&D facilities eligible for a weighted deduction under Section 35(2AB) of the
Income Tax Act, 1961 for the year ended 31st March, 2013, are as follows:
Capital Expenditure : 1.67 crores
Revenue Expenditure : 35.66 crores
8. ENVIRONMENT, SAFETY, HEALTH AND ENERGY CONSERVATION
Your Company continues to focus on the vision of being an Injury Free and
Zero Environment Incident organisation. A behavioural safety programme was
deployed across the Company as the core of our safety journey. This has been supplemented
by a consistent focus on prevention of hand-in-machine and slip-trip-fall injuries at
workplace and multiple initiatives for improving road safety. In 2012, the safety incident
rate measured as total recordable frequency rate (TRFR) decreased by 61% over 2008
The behavioural safety model has now been customised as BeSafE and will be launched
company-wide in latter half of the year. Your Company has taken safety programmes to the
families and homes of employees, through Beyond Work Safety campaigns, which
have been very well received. Your Company continues to benchmark itself with the units
known for best safety performance in the country and across Unilever. Your Company has
received many awards from the Government and independent organisations for its safety
Your Company continues to make excellent contribution to the Unilever Sustainable
Living Plan, where Unilevers vision is to double the size of its business while
reducing the overall impact on environment and improving its positive social impact. Your
Company has been taking steps to reduce electricity and water consumption in its
manufacturing processes as well as control waste generation. The key actions in this
Use of biomass fired boilers and hot air generators, which reduce consumption of
fossil fuels like coal and furnace oil.
Use of plant waste / by-products like spent tea leaves and coffee beans as fuel.
Shift to cleaner sources of energy like natural gas and other renewable sources,
Adoption of energy efficient technology, like LED lights, high efficiency
motors, electronic drives / inverters, screw compressors.
Your Company has reduced emissions (per tonne of CO2 production) in India by 22%
compared to 2008 baseline. Use of renewable energy has increased to 15% of the total
consumption. Your Company has reduced water usage in manufacturing operations by 29%
compared to 2008 baseline. Rainwater harvesting has been implemented in 22 units to
recharge up to 3,32,000 KL /annum ground water. In addition, rainwater recycling being
done at seven sites of your Company has reduced up to 51,000 KL / annum of freshwater
usage. Total 31 sites became zero-discharge site i.e. 79% of our sites do not
discharge any liquid effluent.
In all Company units, recyclable waste e.g. packaging material, empty raw material
containers, spent lubricants, project scrap, etc. are systematically segregated and
tracked for effective recycling. More than 98% of total waste is recycled in environment
friendly ways. Total waste per tonne from the manufacturing sites has reduced by 77%
against the 2008 baseline.
The information required under Section 217(1)(e) of the Companies Act, 1956, read with
the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules,
1988 with respect to energy conservation is appended hereto and forms part of this Report.
9. HUMAN RESOURCES
Your Companys Human Resource agenda for the year was focused on strengthening
four key areas: building a robust and diverse talent pipeline, enhancing individual and
organisational capabilities for future readiness, driving greater employee engagement and
strengthening employee relations further through progressive people practices at the
Your Companys employer brand has been built with high levels of rigour and
thoroughness through a large number of student interactions and qualitative and
quantitative analysis of the responses. Your Company is widely acclaimed for its people
development practices and has reinforced its position in this area. This, coupled with the
ability to attract best talent, gives a competitive edge to the organisation. Your
Company, for the fourth consecutive year, retained its position as the Dream Employer with
students of top business schools. Your Company was voted to this position from a mix of
FMCG, Consulting, Financial Services organisations, etc. Your Company has also been voted
as the No. 1 Employer for Mid Career recruits in a survey conducted amongst active job
candidates in the FMCG sector.
Your Company has a vision to improve its Gender Balance and the roadmap involves a four
Increasing the number of female talent through proactive market mapping.
Staying connected with our stakeholders through digital recruitment campaigns.
Creating a culture of inclusion.
Leveraging visible leadership role models.
The enablers for these could be as varied as flexi time to agile working to customised
solutions for women who come back from maternity breaks. Career by Choice, a
unique re-hire programme, provides a platform for women looking for real opportunities to
work flexibly and part time for live business projects. With these enablers and focused
plans, your Company has witnessed 8% shift in the Gender Balance Ratio over the last two
The initial part of the journey for Talent and Organisation Assessment was undertaken
successfully. Your Company has now institutionalised the next phase of the Talent and
Organisation Assessment charters, which will take-off during 2013 and chart out the best
practices for each stream. The aim is to meet the requirements of the current talent pool
and to enhance the Companys future readiness.
In addition to building core capabilities in marketing, sales and distribution, your
Company is investing in the areas of beauty, foods, digital, e-commerce, frontline
capabilities and crafting brands for life, to win in the future. Your Company has
developed comprehensive plans in each of these key areas that are customised to suit the
present and future business needs. In addition to building capabilities, your Company has
also identified two key behaviours, Bias for Action and Consumer and Customer Centricity
that will supplement the capabilities to achieve business goals. In order to drive Bias
for Action, your Company has developed Project Sunset which is an online platform for
speedy resolutions of issues within the Company and has a satisfaction score of over 88%
from internal employees. To drive Consumer and Customer Centricity, your Company has
undertaken a number of activities to regularly communicate with and reach out to its
consumers and has a well defined programme to capture insights from its consumers.
Your Company undertook intensive training programmes through a combination of
face-to-face and virtual learning approaches. Over 41,600 e-learning registrations took
place indicating that the spirit of learn where you are is imbibed in
employees of the Company. Your Company is also investing in building capabilities in
digital and social media to find new platforms for brands to engage more effectively with
The Global People Survey is a part of the Unilever Employee Insight Programme, which
aims to give a voice to the Companys people and provides a vehicle to make their
views heard. The Survey also provides regular, meaningful and actionable feedback to the
leaders in the organisation. It has questions spread across several dimensions in the
areas such as Strategic Leadership, Immediate Boss Effectiveness and Engagement. Feedback
from this survey forms the basis of holistic engagement plans, which are reviewed
regularly. As per Global People Pulse Survey 2012, India features in the top 25 countries
across Unilever. An extremely favourable 91% of employees expressed pride to work for your
Company. This is in recognition of your Companys Performance Management and Reward
processes, which are geared towards building a performance and execution focused culture.
Your Company has been investing in progressive employee relations practices to ensure
that it invests in capability at the grass root level. Sparkle is a centrally
hosted intranet based tool that supports skill mapping, skill assessment, performance
assessment, gap analysis and enables training plan identification which is customised to
each workman basis priority areas. Sparkle has been a pioneering tool in the area of
workmen capability development that promotes higher transparency and focused training
intervention linked to individual and business needs. The tool has delivered results for
over two years now and your Company has successfully completed appraisals, thereby
identifying top performers and completing skill gap analysis of over 10,000 workmen
online. Sparkle has been recognised as a best practice and adopted for a
global roll-out. Business Linked Engagement and TPM Edge programmes continued with full
focus and rigour during the year and delivered significant improvement in factory
Information as per Section 217 (2A) of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules, 1975, forms part of this Report. However, as per the
provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent
excluding the statement containing the particulars to be provided under Section 217(2A) of
the Act. Any Member interested in obtaining such particulars may inspect the same at the
Registered Office of the Company or write to the Company Secretary for a copy thereof.
10. INFORMATION TECHNOLOGY fiITfi
Your Company continues to invest in IT, leveraging it as a source of competitive
advantage. The enterprise wide SAP platform, the backbone of IT, encompasses all core
business processes in your Company and also provides a comprehensive data warehouse with
analytics capability that help in better and speedier decisions. SAP is used to
collaborate with the suppliers and customers. Supply Chain optimisation, enabled by the IT
capability, remains a source of significant value. Your Company continuously invests in
upgrading the SAP platform to leverage the latest functionality and technology
enhancements to deliver business efficiencies.
Your Company has institutionalised an extensive IT capability for Customer Development
function to support front-end execution. All distributors run a standard distributor
management system. The salesmen of the distributors use handheld devices for accepting
retail orders, which enable faster tracking and real time sales information. Your Company
has used analytics and the existing IT infrastructure to build a capability for an
intelligent sales call. This enables your Company to customise sales call for each outlet
on a scientific basis, thus helping to significantly improve the effectiveness and
efficiency of the sales process. Your Company is leveraging GIS (Geographic Information
System) based mapping technology to aid planning for coverage expansion drives in urban
and rural markets. The capability allows field personnel to identify pockets for coverage
and also evaluate their attractiveness to help derive coverage plans. Your Company is
further enhancing IT capabilities built for rural expansion to equip Shakti ammas with low
cost mobile technology to help them work in a more controlled and efficient manner. This
technology now allows your Company to standardise selling processes across the Shakti
network and also track outlet sales information which can be leveraged through analytics
to further aid the selling process.
Your Company continues to invest in IT infrastructure to support business applications
and has made use of Indias expanded telecom footprint to provide high bandwidth
terrestrial links to all operating units. Your Company also uses software as a service to
provide agile and cost effective IT capabilities in select areas. As the IT systems and
related processes get embedded into the ways of working of the organisation, there is a
continuous focus on IT security and reliable disaster recovery management processes to
ensure all critical systems are always available. These are periodically reviewed,
upgraded and tested for efficacy, adequacy, security and reliability.
11. FINANCE AND ACCOUNTS
Your Company continued to focus on cash generation. The focus on managing optimal
levels of inventory, sound business performance, operating efficiencies and cost savings
across the organisation helped generate healthy cash flows. Your Company managed
investments prudently by deploying cash surplus in a balanced portfolio defined to offer
primacy to safety and liquidity of the investments. Capital Expenditure during the year
was at Rs. 409.34 crores (Rs. 310.01 crores in the previous year). The Finance function of
your Company has initiated a multi-fold transformation programme, aligned to the ambition
to be the Best Finance Team in the Industry. During the year, multiple finance processes
across accounting and reporting, controls and information management were reviewed and
work streams were defined to implement global best practices. Significant broad-based
progress has been made on this agenda during the year. Project Parivartan
delivered a further step up in the efficiency of the Purchase to Pay process along with a
corresponding improvement in vendor satisfaction. This is now being driven to the next
level of simplifying and centralising end-to-end invoice processing. Project My
Business Information took an ambitious goal of revamping your Companys
information management function. Significant steps are underway towards further exploring
this space to get increased information insights to drive growth, margins and cash.
In the initial phase of the project Effective Financial Controls and
Reporting (EFCR), the finance control environment has been streamlined and
strengthened with 50% of key controls being automated by further leveraging SAP.
Similarly, significant process and technology interventions were taken up to achieve over
25% reduction in time consumed on annual closing processes. The EFCR Project aims to
simplify, standardise and automate processes whilst driving value beyond transaction
processing. Your Company also focused on simplifying banking processes by driving a
reduction in the number of bank accounts operated across the Company. This has helped to
streamline banking operations, strengthen controls and optimise cash utilisation. All
these initiatives will lead to a transformation of the finance function to world class
standards, thereby ensuring operational excellence.
Your Company has not accepted any fixed deposits during the year and there was no
outstanding towards unclaimed deposit payable to depositors as on 31st March, 2013. In
terms of the provisions of Investor Education and Protection Fund (Awareness and
Protection of Investors) Rules, 2001, Rs. 3.13 crores of unpaid / unclaimed dividends and
interest / redemption of debentures were transferred during the year to the Investor
Education and Protection Fund.
Return on Net Worth, Return on Capital Employed and Earnings Per Share (EPS) for the
last four years and for the year ended 31st March, 2013, are given below:
||Period ended 31st March, 2009
|Return on Net Worth (%)
|Return on Capital Employed (%)
|Basic EPS (after exceptional items) (Rs.)
* Annualised numbers for proportionate period.
** For fifteen month period.
Your Company has identified five business segments, in line with the Accounting
Standard on Segment Reporting (AS-17), which comprise: (i) Soaps and Detergents, (ii)
Personal Products, (iii) Beverages, (iv) Packaged Foods, including Culinary, Branded
Staples and Frozen Dessert and (v) Others, including Exports, Chemicals, Water Business,
Infant Care Products, etc. The audited financial results of these segments are provided as
a part of financial statements.
11.1. Risk and Internal Adequacy
Your Company has an elaborate Risk Management procedure, which is based on three
pillars: Business Risk Assessment, Operational Controls Assessment and Policy Compliance
processes. Some of the risks relate to competitive intensity and cost volatility. Major
risks identified by the businesses and functions are systematically addressed through
mitigating actions on a continuing basis. These are discussed with both Management
Committee and Audit Committee.
The Companys internal control systems are commensurate with the nature of its
business and the size and complexity of its operations. These are routinely tested and
certified by Statutory as well as Internal Auditors and cover all offices, factories and
key areas of business. Significant audit observations and follow up actions thereon are
reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of
the Companys internal control environment and monitors the implementation of audit
recommendations, including those relating to strengthening of the Companys risk
management policies and systems.
Your Company manages cash and cash flow processes assiduously involving all parts of
the business. There was a net cash surplus of Rs. 1,707.89 crores, as on 31st March, 2013.
The Companys low debt equity ratio provides ample scope for gearing the Balance
Sheet, should that need arise. Foreign Exchange transactions are fully covered with strict
limits placed on the amount of uncovered exposure, if any, at any point in time. There are
no materially significant uncovered exchange rate risks in the context of Companys
imports and exports. The Company accounts for mark-to-market gains or losses every quarter
end, in line with the requirements of AS-11.
12. LEGAL, COMPLIANCE AND BRAND PROTECTION
Your Company continued to focus on the key areas and projects within the legal and
compliance functions, which include transiting to a workflow based software tool
Self-Compli. This tool enables compliances to be made and tracked by factories
and offices of your Company across the country. In the area of Brand Protection, your
Company has taken significant actions against counterfeits, fakes and other forms of
unfair competition, during the year, under the Companys programme of Combating
13. MERGERS, ACQUISITIONS, JOINT VENTURES AND DISPOSALS
Your Company entered into a Share Purchase Agreement with the promoters of Aquagel
Chemicals Private Limited (ACPL) for acquisition of additional 74% of equity share capital
of ACPL. ACPL is engaged in the business of manufacturing soaps and detergents. Prior to
acquisition, it was a third party manufacturing unit. Your Company earlier held 26% of
ACPLs equity share capital. Consequent to the acquisition of remaining 74% of the
equity share capital, ACPL became a wholly owned subsidiary of the Company with effect
from 1st April, 2013.
14. SUSTAINABLE LIVING
Sustainability is at the core of your Companys way of doing business. It guides
your Company on the path to achieve long term success in a world where the battle for
resources can only escalate. In this direction, Unilever globally has set out the
Unilever Sustainable Living Plan (USLP), which embeds sustainability in its
business model. The USLP sets out to decouple growth from environmental impact, while at
the same time, increase positive social impact.
USLP has three big goals to achieve by 2020:
Help more than 1 billion people improve their health and well-being.
Halve the environmental footprint of our products.
Source 100% of our agricultural raw materials sustainably and enhance the
livelihoods of people across our value chain.
Supporting these goals are seven commitments underpinned by targets spanning your
Companys social, environmental and economic performance across the value chain. In
the second year of the Plan, your Company made steady progress to achieve these goals.
In the area of health and hygiene, your Company reached over 17 million people through
Lifebuoy Handwashing programmes in 2012. Through continuous and focused efforts under the
Handwashing initiative, your Company has reached 47 million people since 2010. Your
Companys Pureit water purifier continued to fight the menace of diarrhoeal diseases.
More than 45 million people gained access to safe drinking water from Pureit globally by
the end of 2012.
Your Company made good progress under its Nutrition Enhancement Programme to lower the
levels of salt, saturated fat, trans fat and sugar in its Foods and Beverages portfolio.
By the end of 2012, 66% of Foods portfolio (by volume) was compliant with the 5g per day
salt target. Your Companys portfolio is virtually free from trans fats originating
from partially hydrogenated vegetable oil. For example, the Frozen Desserts portfolio is
fully compliant and does not use any raw materials containing partially hydrogenated oil.
More than 60% of the products in Frozen Desserts for children contain 110 kilocalories or
fewer per portion, meeting the interim 2012 target.
In the area of environment impact, your Company worked to further reduce its
environmental impact on four priority areas across the value chain greenhouse
gases, water, waste and sourcing. emissions per tonne of production reduced by CO2 22%
compared to the 2008 baseline. This was achieved through several environment friendly
initiatives in your Companys manufacturing operations such as usage of biomass
boilers, thermic fluid heaters and hot air generators at factory sites. These projects
helped increase the share of renewable energy to 19% by 2012.
Water usage in your Companys manufacturing operations reduced by 29% compared to
the 2008 baseline. Your Company has launched innovations that help consumers use less
water in laundry process through products like Magic water saver and Comfort One Rinse
fabric conditioner. Magic saves upto three buckets of water per wash while Comfort One
Rinse saves two buckets of water per wash.
In the area of waste management, your Company continued to focus on reducing, reusing
and recycling waste. Reduction in total waste per tonne from your Companys
manufacturing sites was 77% against 2008 baseline. A total of 31 factories of your Company
became 100% zero non-hazardous waste to landfill. Under the USLP, your Company has
committed to source 100% of its agricultural raw materials sustainably. By 2012, your
Company sourced 70% of its agricultural raw materials sustainably. All of the palm oil was
from sustainable sources and 100% of palm oil volumes of India were covered by Green
Palm certificates by end of 2012. During the year, over 60% of tomatoes used in
Kissan Ketchup in India were from sustainable sources. Your Company aims to source 100% of
tomatoes from sustainable sources by 2015. Your Company entered into a public-private
partnership with the Maharashtra Government for sustainable sourcing of tomatoes locally.
For this project, the Government of Maharashtra registered 618 farmers who grow tomatoes
over 1,208 acres.
Enhancing livelihoods of hundreds of thousands of people by 2020 is another goal the
USLP aims to achieve. Your Company has a wide range of initiatives from sourcing to
distribution focused on improving livelihoods of small-scale entrepreneurs. Project Shakti
is your Companys flagship rural distribution initiative that focuses on enhancing
livelihoods in small villages. Project Shakti has 48,000 Shakti entrepreneurs (called
Shakti ammas) in 15 States. The details of Project Shakti is provided at para 5.1 of this
As evident from the above initiatives, your Companys progress to deliver on USLP
has been consistent. However, USLP is ambitious and your Company has much more to do. Your
Company continues to strive to deliver the stretching goals. In April 2013, your Company
released Unilever Sustainable Living Plan India Progress Report. This report shares the
results of your Companys journey so far and chronicles the steps taken to deliver
growth that is competitive, profitable and sustainable. You can view this report on our
The Securities and Exchange Board of India (SEBI) vide its circular dated 13th August,
2012, has mandated the top 100 listed companies, as on 31st March, 2012, to submit a
Business Responsibility Report as part of the Annual Report of the Company. The Business
Responsibility Report describes the initiatives taken by the Company in line with the key
principles enunciated in the National Voluntary Guidelines on Social, Environmental
and Economic Responsibilities of Business framed by the Ministry of Corporate
Affairs (MCA). In line with Green Initiative, the Business Responsibility Report of the
Company for the year 2012-13 is made available on the website of the Company www.hul.co.in
and forms part of this Annual Report. The Business Responsibility Report shall be kept
open for inspection at the Registered Office of the Company. The Company will also make
available a printed copy of the Business Responsibility Report upon request by any Member
of the Company interested in obtaining the same. A Member interested in obtaining the hard
copy may write to the Investor Service Department at the Registered Office of the Company.
15. EMPLOYEE STOCK OPTION PLAN (ESOP)
Details of the shares issued under Employee Stock Option Plan (ESOP), as also the
disclosures in compliance with Clause 12 of the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, are
set out in the Annexure to this Report. No employee has been issued share options, during
the year, equal to or exceeding 1% of the issued capital of the Company at the time of
Pursuant to the approval of the Members at the Annual General Meeting held on 23rd
July, 2012, the Company adopted the 2012 HUL Performance Share Scheme in place
of the existing 2006 HLL Performance Share Scheme. The Scheme has been
registered with the Income Tax authorities, in compliance with the relevant provisions of
SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
In accordance with the terms of the Performance Share Plan, employees are eligible for
award of conditional rights to receive equity shares of the Company at the face value of
Re. 1/- each. These awards will vest only on the achievement of certain performance
criteria measured over a period of 3 years. During the year, 204 employees, including
Wholetime Directors, were awarded conditional rights to receive 4,19,408 Equity Shares at
the face value of Re. 1/- each. It comprises conditional grants made to eligible managers
covering performance period from 2012 to 2014 and from 2013 to 2015.
16. CORPORATE GOVERNANCE
Your Company is renowned for exemplary governance standards since inception and
continues to lay a strong emphasis on transparency, accountability and integrity. In 2011,
your Company received the National Award for Excellence in Corporate Governance instituted
by the Institute of Company Secretaries of India, in recognition of its Corporate
Governance practices. In 2012, Investor Relations Global Rankings (IRGR) ranked your
Company amongst top five companies across the globe for Best Corporate Governance. In
2013, at the Asian Centre for Corporate Governance and Sustainability Awards, your Company
won the award for Best Audit Committee.
A separate report on Corporate Governance is provided at page no. 50 of this Annual
Report, together with a Certificate from the Auditors of the Company regarding compliance
of conditions of Corporate Governance as stipulated under Clause 49 of the Listing
Agreement with the Stock Exchange(s). A Certificate of the CEO and CFO of the Company in
terms of sub-clause (v) of Clause 49 of Listing Agreement, inter alia, confirming
the correctness of the financial statements, adequacy of the internal control measures and
reporting of matters to the Audit Committee is also annexed.
The Ministry of Corporate Affairs, Government of India, introduced the Corporate
Governance Voluntary Guidelines, 2009. These guidelines have been issued to provide
Corporate India a framework to govern themselves voluntarily as per the highest standards
of ethical and responsible conduct of business. The recommendation of the Voluntary
Guidelines pertaining to separation of offices of the Chairman and the CEO, constitution
of Audit Committee and Nomination and Remuneration Committee, Risk Management framework,
are already practised by your Company. Your Company has been in substantial compliance of
During the year, Secretarial Audit and Secretarial Standards Audit were carried out.
The detailed reports on the same are given at page nos. 66 to 67 of this Annual Report.
Global economic activity remains subdued amidst signs of diverging growth paths across
major economies. While near term risks to global financial stability are retreating, the
global economic climate continues to be volatile and uncertain.
For India, economic activity is expected to show a modest improvement over last year,
with a pick-up likely only in the second half of the year. Conditional upon a normal
monsoon, agricultural growth could return to trend levels while the outlook for industrial
activity remains subdued. Accordingly, the RBI projects a baseline GDP growth for 2013-14
at 5.7%. Upside pressures on inflation, both at wholesale and retail levels, remain high
stemming from elevated food inflation, ongoing administered fuel price revisions and
volatility in exchange rates. FMCG markets are expected to grow; however, uncertain global
economic environment, inflation and competitive intensity continue to pose challenges.
While the near term conditions pose a challenge for the economy, the medium to longer term
secular trends based on rising incomes, aspirations, low consumption levels, etc. are
positive and an opportunity for the FMCG sector in general and for your Company in
17.1. Cautionary Statement
Statements in this Report, particularly those which relate to Management Discussion and
Analysis, describing the Companys objectives, projections, estimates and
expectations, may constitute forward looking statements within the meaning of
applicable laws and regulations and actual results might differ materially from those
either expressed or implied.
18. SUBSIDIARY COMPANIES
As a part of the initiatives in the area of Corporate Social Responsibility, your
Company had promoted a Section 25 Company Hindustan Unilever Vitality
Foundation now known as Hindustan Unilever Foundation (HUF) to work in
the areas of social, economic and environment development. During the year, your Company
acquired additional equity share capital of HUF to make it a subsidiary of the Company.
Pursuant to the Share Purchase Agreement entered into with the promoters of Aquagel
Chemicals Private Limited (ACPL), as detailed in Para 13, ACPL has become a wholly owned
subsidiary of the Company with effect from 1st April, 2013.
A statement pursuant to Section 212 of the Companies Act, 1956, relating to Subsidiary
Companies, is attached to the Accounts. In terms of General Exemption, under Section
212(8) of the Companies Act, 1956, granted by Ministry of Corporate Affairs vide its
circular no. 02/2011 dated 8th February, 2011, and in compliance with the conditions
enlisted therein, the Audited Statement of Accounts, Auditors Reports thereon and
the Reports of the Board of Directors of the Companys subsidiaries for the financial
year ended 31st March, 2013, have not been annexed. The Annual Accounts and related
documents of the Subsidiary Companies shall be kept open for inspection at the Registered
Office of the Company. The Company will also make available these documents upon request
by any Member of the Company interested in obtaining the same. However, as directed by the
said circular, the financial data of the subsidiaries have been furnished under
Subsidiary Companies Particulars forming part of this Annual Report (refer
page no. 150). Further, pursuant to Accounting Standard (AS-21) issued by the Institute of
Chartered Accountants of India, Consolidated Financial Statements presented by the Company
in this Annual Report include the financial information of its subsidiaries.
19. BOARD OF DIRECTORS
Dr. Sanjiv Misra was appointed as an Additional Director on the Board of the Company
with effect from 8th April, 2013, in accordance with Section 260 and Article 111 of
Articles of Association of the Company. Pursuant to Section 257 of the Companies Act,
1956, notices have been received from Members, together with necessary deposits, proposing
the appointment of Dr. Sanjiv Misra as a Non-Executive Independent Director on the Board
of the Company.
Dr. R. A. Mashelkar has attained the age of seventy years and in accordance with the
Company policy, will be retiring at the conclusion of the ensuing Annual General Meeting
by not offering himself for re-appointment as a Director. Dr. Mashelkar was appointed as
an Independent Director of the Company in April 2008 and has served as a member of the
Audit Committee, Nomination and Remuneration Committee and Corporate Social Responsibility
Committee of the Company. The Board places on record its deep appreciation for the
distinguished service rendered by Dr. Mashelkar during his tenure as a Director of the
In accordance with the Articles of Association of the Company, all other Directors,
except for the Managing Director, will retire at the ensuing Annual General Meeting and,
being eligible, offer themselves for re-election.
20. MANAGEMENT COMMITTEE
The day-to-day management of the Company is vested with the Management Committee, which
is subjected to the overall superintendence and control of the Board. The Management
Committee is headed by Mr. Nitin Paranjpe, as the Chief Executive Officer, and has
Functional / Business Heads as its members. During the year, Ms. Leena Nair, Executive
Director, Human Resources was elevated to the position of SVP Leadership and Organisation
Development, Unilever PLC. Mr. B. P. Biddappa joined the Management Committee of the
Company as Executive Director, Human Resources in place of Ms. Leena Nair. Mr. B. P.
Biddappa joined the Company in 1992 and has worked in a variety of roles within Unilever.
Before joining the Management Committee of the Company, Mr. Biddappa was the Vice
President, Human Resources - Supply Chain, Asia, Africa and Russia.
M/s. Lovelock & Lewes, Statutory Auditors of the Company retire and offer
themselves for re-appointment as the Statutory Auditors of the Company, pursuant to
Section 224 of the Companies Act, 1956.
22. APPRECIATIONS AND ACKNOWLEDGEMENTS
Your Directors place on record their deep appreciation to employees at all levels for
their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the
employees have enabled the Company to remain as industry leaders.
Your Directors would also like to acknowledge the excellent contribution by Unilever to
your Company in providing the latest innovations, technological improvements and marketing
inputs across almost all categories, in which it operates. This has enabled the Company to
provide higher levels of consumer delight through continuous improvement in existing
products and introduction of new products.
The Board places on record its appreciation for the support and co-operation your
Company has been receiving from its suppliers, redistribution stockists, retailers,
business partners and others associated with the Company as its trading partners. Your
Company looks upon them as partners in its progress and has shared with them the rewards
of growth. It will be the Companys endeavour to build and nurture strong links with
the trade based on mutuality of benefits, respect for and co-operation with each other,
consistent with consumer interests.
The Directors also take this opportunity to thank all Investors, Clients, Vendors,
Banks, Government and Regulatory Authorities and Stock Exchanges, for their continued
||On behalf of the Board
|Mumbai, 29th April, 2013
Annexure to the Directors Report
Dfisclosure of Particulars with Respect to onservation of Energy
||Canned and processed fruits and vegetables
||For the year ended 31st March, 2013
||For the year ended 31st March, 2012
||For the year ended 31st March, 2013
||For the year ended 31st March, 2012
|A POWER AND FUEL CONSUMPTION
|Rate / Unit
|(b) Own Generation
|(i) Through own generator
|Unit per ltr of diesel oil
|Rate / Unit
|(ii) Through steam turbine / generator
|2 Furnace Oil
|Rate / Unit
||Rs. / KL
|3 Other / Internal Generation
|Rate / Unit
||Rs. / (000 Scm)
|Rate / Unit
||Rs. / Kg
|B CONSUMPTION PER UNIT OF PRODUCTION
DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION
1. Specific areas in which R&D carried out by the Company
- New product / process development
- Quality enhancement to achieve International Standards.
- Technology Upgradation
- Speciality ingredients from natural sources
- Development and evaluation of alternative raw materials
- Project of Global relevance
2. Benefits derived as a result of the above R&D and future plans of action:
The benefits and future plans of action have been discussed in details in the
3. Expenditure of R&D
||For the year ended 31st March, 2013
||For the year ended 31st March, 2012
|(d) Total R& D Expenditure as a percentage of total turnover
TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION
1. Efforts, in brief, made towards technology absorption, adoption and
The Company maintains interaction with Unilever internationally.
This is facilitated through a well co-ordinated management exchange programme.
2. Benefits derived as a result of the above efforts:
The benefits have been covered in the Directors report.
3. Imported Technology:
(a) Technology imported
(b) Year of import } Continuous Import from Unilever under technical collaboration
(c) Has technology been fully absorbed
FOREIGN EXCHANGE EARNINGS & OUTGO
||For the year ended 31st March, 2013
||For the year ended 31st March, 2012
|Foreign exchange earnings
|Foreign Exchange outgo
"I belfieve that nothfing can be greater than a busfiness, however small fit may
be, that fis governed by conscfience and that nothfing can be meaner or more petty than a
busfiness, however large, governed wfithout honesty and wfithout brotherhoodfi"
William Hesketh Lever
Transparency and accountability are the two basic tenets of Corporate Governance. We,
at Hindustan Unilever, feel proud to belong to a Company whose visionary founders had laid
the foundation stone for good governance long back and made it an integral principle of
the business, as demonstrated in the words above.
Responsible corporate conduct is integral to the way we do our business. Our actions
are governed by our values and principles, which are reinforced at all levels within the
Company. We, at Hindustan Unilever, are committed to doing things the right way which
means taking business decisions and acting in a way that is ethical and is in compliance
with the applicable legislation. Our Code of Business Principles is an extension of our
values and reflects our continued commitment to ethical business practices and regulatory
compliances. We acknowledge our individual and collective responsibilities to manage our
business activities with integrity. Our Code of Business Principles inspires us to set
standards which not only meets the applicable legislation but also exceeds them in many
areas of our business operations.
To succeed, we believe, requires highest standards of corporate behaviour towards
everyone we work with, the communities we touch and the environment on which we have an
impact. This is our road to responsible, sustainable and profitable growth and creating
long term value for our shareholders, our people and our business partners. The above
principles have been the guiding force for whatever we do and shall continue to be so in
the years to come.
The Board of Directors (the Board) is responsible for and committed to
sound principles of Corporate Governance in the Company. The Board plays a crucial role in
overseeing how the management serves the short and long term interests of shareholders and
other stakeholders. This belief is reflected in our governance practices, under which we
strive to maintain an effective, informed and independent Board. We keep our governance
practices under continuous review and benchmark ourselves to the best practices across the
THE BOARD OF DIRECTORS
The Board of Directors is entrusted with the ultimate responsibility of the management,
general affairs, direction and performance of the Company and has been vested with the
requisite powers, authorities and duties. The Management Committee of the Company is
headed by the Managing Director and Chief Executive Officer and has business / functional
heads as its members, which looks after the management of the day-to-day affairs of the
The Board comprises such number of Non-Executive, Executive and Independent Directors
as required under applicable legislation. As on date of this Report, the Board consists of
nine Directors comprising one Non-Executive Director, five Independent Directors and three
Executive Directors. The composition of the Board represents an optimal mix of
professionalism, knowledge and experience and enables the Board to discharge its
responsibilities and provide effective leadership to the business. The positions of the
Chairman of the Board and the Chief Executive Officer of the Company are held by separate
individuals, where the Chairman of the Board is a Non-Executive Director. The detailed
profile of the members of the Board of Directors are provided at page nos. 24-27 of the
Annual Report. The Board of Directors, at their meeting held on 8th April, 2013, had
appointed Dr. Sanjiv Misra as an Independent Director on the Board of the Company.
The details of each member of the Board along with number of Directorship(s) /
Committee Membership(s) and date of joining the Board are provided hereinbelow:
Composition and Directorship(s) / Committee Membership(s) as on 31st March, 2013
||Date of joining the Board
||Directorship in other Companies#
||Membership of Committees of other Companies##
||Chairmanship of Committees of other Companies##
|Managing Director and CEO
|Executive Director (Finance & IT) and CFO
|R. A. Mashelkar
|O. P. Bhatt
# Excluding Private Limited Companies, Foreign Companies, Section 25 Companies and
# # Includes only Audit Committee and Shareholders/Investors Grievance
None of the Directors is a member of the Board of more than fifteen Companies or a
member of more than ten Board-level Committees or a Chairman of more than five such
Appointment & Tenure
The Directors of the Company are appointed by Members at the General Meetings. All
Directors, except the Managing Director, step down at the Annual General Meeting each year
and, if eligible, offer themselves for re-election, in accordance with the Articles of
Association of the Company. The Managing Director of the Company is appointed for a term
of five years as per the requirement of the statute.
The Executive Directors on the Board serve in accordance with the terms of their
contract of service with the Company. As per the Company policy, the Independent Directors
retire at the Annual General Meeting held after attaining the age of seventy years, by not
offering themselves for re-appointment at such Annual General Meeting. The age of seventy
years has been voluntarily fixed by the Company. The proposed Companies Bill, 2012
provides for two terms of five years each as tenure of Independent Directors. The Company
will adopt the provisions with respect to tenure of Independent Directors as contained in
the proposed Companies Bill, 2012, when made effective.
Our definition of Independence of Directors is derived from Clause 49 of
the Listing Agreement with Stock Exchanges. Based on the confirmation / disclosures
received from the Directors and on evaluation of the relationships disclosed, all
Non-Executive Directors other than the Chairman are Independent in terms of Clause 49 of
the Listing Agreement. Mr. Harish Manwani, who is the Chief Operating Officer and a member
of the Unilever Leadership Executive (ULE) of the parent Company is not considered as an
The Board meets at regular intervals to discuss and decide on Company / business policy
and strategy apart from other Board business. The Board / Committee Meetings are
pre-scheduled and a tentative annual calendar of the Board and Committee Meetings is
circulated to the Directors well in advance to facilitate them to plan their schedule and
to ensure meaningful participation in the meetings. However, in case of a special and
urgent business need, the Boards approval is taken by passing resolutions by
circulation, as permitted by law, which is confirmed in the next Board Meeting.
The notice of Board meeting is given well in advance to all the Directors. Usually,
meetings of the Board are held in Mumbai. The Agenda for Board / Committee meetings is set
by the Company Secretary in consultation with the Chairman and the Chief Executive Officer
of the Company. The Agenda is circulated a week prior to the date of the meeting. The
Agenda for the Board and Committee meetings includes detailed notes on the items to be
discussed at the meeting to enable the Directors to take an informed decision.
During the financial year ended 31st March, 2013, seven Board meetings were held on
30th April, 2012, 1st May, 2012, 23rd July, 2012, 26th October, 2012, 14th December, 2012,
22nd January, 2013 and 18th March, 2013. The maximum interval between any two meetings was
well within the maximum allowed gap of four months.
The normal business of the Board includes:
framing and overseeing progress of the Companys annual plan and operating
framing strategies for shaping of portfolio and direction of theCompany and for
corporate resource allocation;
reviewing financial plans of the Company;
reviewing quarterly and annual business performance of theCompany;
reviewing the Annual Report and accounts for adoption by theMembers;
reviewing the progress of various functions and businesses ofthe Company;
reviewing the functioning of the Board and its Committees;
reviewing the functioning of the subsidiary companies;
considering and approving declaration / recommendation of dividend;
reviewing and resolving fatal or serious accidents or dangerousoccurrences, any
materially significant effluent or pollution problems or significant labour issues, if
reviewing the details of significant development in human resources and
industrial relations front;
reviewing details of foreign exchange exposure and steps takenby the management
to limit the risks of adverse exchange rate movement;
reviewing compliance with all relevant legislations and regulations and
litigation status, including materially important show cause, demand, prosecution and
penalty notices, if any;
reviewing Board remuneration policy and individual remuneration packages of
advising on corporate restructuring such as merger, acquisition, joint venture
or disposals, if any;
appointing Directors on the Board and Management Committee;
reviewing Corporate Social Responsibility activities of the Company;
reviewing details of risk evaluation and internal controls;
reviewing reports on progress made on the ongoing projects;
The Company Secretary is responsible for collation, review and distribution of all
papers submitted to the Board for consideration. The Company Secretary is also responsible
for the preparation of the Agenda and convening of the Board meetings. The Company
Secretary attends all the meetings of the Board and its Committees, advises / assures the
Board on Compliance and Governance principles and ensures appropriate recording of minutes
of the meetings.
With a view to leveraging technology and reducing paper consumption, the Company has
adopted a web-based application for transmitting Board / Committee Agenda and Pre-reads.
The Directors of the Company receive the Agenda and Pre-reads in electronic form through
this application, which can be accessed through ipad and internet browser. The application
meets high standards of security and integrity that is required for storage and
transmission of Board / Committee Agenda and Pre-reads in electronic form.
Independent Directors Meetings
The Non-Executive Independent Directors meet at least once in a quarter. They also have
a separate meeting with the Chairman, without any of the Executive Directors being
present, to discuss issues and concerns, if any. The Non-Executive Independent Directors
met six times during the financial year ended 31st March, 2013 on 1st May, 2012, 23rd
July, 2012, 26th October, 2012, 14th December, 2012, 22nd January, 2013 and 18th March,
2013. In addition to these formal meetings, interactions outside the Board meetings also
take place between the Chairman and Independent Directors.
Board Induction and Training
Upon appointment, Directors receive a Letter of Appointment setting out in detail, the
terms of appointment, duties, responsibilities and expected time commitments. Each newly
appointed Director is taken through a formal induction programme. The Company Secretary
provides new Directors, both Executive and Non-Executive, with a briefing on their legal
and regulatory responsibilities as Directors and the Chief Executive Officer provides a
briefing on Companys current structure and performance of business. The induction
for Non-Executive Independent Directors includes interactive sessions with Management
Committee Members, Business and Functional Heads, visit to market / plant, etc.
The induction process for Directors is designed to:
build an understanding of the Company, its businesses and themarkets and
regulatory environments in which it operates;
provide an appreciation of their roles and responsibilities;
fully equip them to perform their roles on the Board effectively;
build links to Unilevers people and build an understanding
ofUnilevers key relationships. Strategy meetings are held where Business and
Functional Heads share with the Board their short term and long term plans, major
activities, likely risks and challenges with actions to mitigate them in their respective
areas. The Boards suggestions and comments are incorporated in the business plans of
COMMITTEES OF THE BOARD
The Board Committees play a crucial role in the governance structure of the Company and
have been constituted to deal with specific areas / activities which concern the Company
and need a closer review. The Board Committees are set up under the formal approval of the
Board to carry out clearly defined roles which are considered to be performed by members
of the Board, as a part of good governance practice. The Board supervises the execution of
its responsibilities by the Committees and is responsible for their action. The minutes of
the meetings of all
Committees are placed before the Board for review. The Board Committees can request
special invitees to join the meeting, as appropriate. During the year, the Board of
Directors, at their meeting held on 14th December, 2012, has constituted and
re-constituted / re-designated the Board Committees in order to align them with the
requirements of Companies Bill, 2012 ahead of time.
The Board has currently established the following statutory and non-statutory
The Companys Audit Committee comprises all the five Independent Directors. The
Audit Committee is headed by Mr. Aditya Narayan and has Mr. S. Ramadorai, Dr. R. A.
Mashelkar, Mr. O. P. Bhatt and Dr. Sanjiv Misra as its members. Dr. Sanjiv Misra has been
appointed as a member of the Committee with effect from 8th April, 2013. All the current
members of the Committee have relevant experience in financial matters.
The Audit Committee of the Company is entrusted with the responsibility to supervise
the Companys internal controls and financial reporting process and inter alia
performs the following functions:
overseeing the Companys financial reporting process and disclosure of
financial information to ensure that the financial statements are correct, sufficient and
recommending the appointment and removal of external auditors, fixation of audit
fee and approval for payment of any other services;
reviewing with management the quarterly and annual financialresults before
submission to the Board;
reviewing with management the annual financial statementsof the subsidiary
reviewing the adequacy of internal control systems with the management, external
auditors and internal auditors;
reviewing the adequacy of internal audit function;
discussing with internal auditors any significant findings andreviewing the
progress of corrective actions on such issues;
reviewing the findings of any internal investigations by the internal auditors
in matters where there is suspected fraud or irregularity or a failure of internal control
systems of a material nature and then reporting such matters to the Board;
discussing with external auditors, before the audit commences,the nature and
scope of audit as well as having post-audit discussions to ascertain areas of concern, if
recommending the appointment of cost auditors;
reviewing the Companys financial and risk management policies;
examining reasons for substantial default in the payment toMembers (in case of
non-payment of declared dividends) and creditors, if any;
reviewing the progress made on cases that are reported underthe Code of Business
Principles and Whistle Blower Policy of the Company and implication of these cases, if
any, under the UK Bribery Act, 2011.
In addition to quarterly meetings for consideration of financial results, special
meetings of the Audit Committee are convened. In these meetings, the Audit Committee
reviews various businesses / functions, business risk assessment, controls and security
critical IT applications and internal audit and control assurance reports of all the major
divisions of the Company. The Audit Committee also reviews the functioning of the Code of
Business Principles and Whistle Blower Policy of the Company and cases reported
The meetings of Audit Committee are also attended by Chief Executive Officer, Chief
Financial Officer, Statutory Auditors and Internal Auditors as special invitees. The
Company Secretary acts as the Secretary to the Committee. The minutes of each Audit
Committee meeting are placed and discussed in the next meeting of the Board. The Audit
Committee also meets the internal and external auditors separately in absence of any
The Audit Committee met six times during the financial year ended 31st March, 2013 on
1st May, 2012, 12th June, 2012, 23rd July, 2012, 26th October, 2012, 14th December, 2012
and 22nd January, 2013.
Internal Controls and Risk Management
The Company has robust systems for internal audit and corporate risk assessment and
mitigation. The Company has an independent Control Assurance Department (CAD) assisted by
dedicated outsourced audit teams.
The internal audit covers all the factories, sales offices, warehouses and businesses
and functions controlled centrally, as per the plan agreed with the Audit Committee. The
audit coverage plan of CAD is approved by the Audit Committee at the beginning of every
year. Every quarter, the Audit Committee of the Board is presented with key control issues
and actions taken on the issues highlighted in previous report.
Business Risk Assessment procedures have been set in place for self-assessment of
business risks, operating controls and compliance with Corporate Policies. There is an
ongoing process to track the evolution of risks and delivery of mitigating action plans.
Financial controls review procedures and guidelines are issued by Unilever annually in
line with Sarbanes-Oxley (s. 404) requirements. Unit heads are responsible for
implementing these procedures to confirm the effectiveness of the financial controls in
that unit and to correct any instances of weaknesses identified. In addition,
effectiveness of operational and non-financial controls is also reviewed by the unit
heads. During the year, financial control environment was streamlined and strengthened
with 50% of key controls being automated by further leveraging SAP. These procedures
provide the management an assurance on the internal processes and systems.
Nomination and Remuneration Committee
The Board of Directors, at their meeting held on 14th December, 2012, re-constituted
and re-designated the Remuneration and Compensation Committee as the Nomination and
Remuneration Committee to be consistent with the requirements of the Companies Bill, 2012.
The Committee comprises
Mr. S. Ramadorai as the Chairman and Mr. Aditya Narayan, Dr. R. A. Mashelkar, Mr. O. P.
Bhatt, Dr. Sanjiv Misra, Mr. Harish Manwani and Mr. Nitin Paranjpe as members of the
Committee. Dr. Sanjiv Misra has been appointed as a member of the Committee with effect
from 8th April, 2013.
The role of Nomination and Remuneration Committee is as follows:
determining / recommending the criteria for appointment ofExecutive,
Non-Executive and Independent Directors to the Board;
determining / recommending the criteria for qualifications, positive attributes
and independence of Directors;
identifying candidates who are qualified to become Directorsand who may be
appointed in Senior Management and recommending to the Board their appointment and
reviewing and determining all elements of remuneration package of all the
Executive Directors, i.e. salary, benefits, bonus, stock options, pension, etc.;
reviewing and determining fixed component and performancelinked incentives for
Directors along with the performance criteria;
determining policy on service contracts, notice period, severance fees for
Directors and Senior Management;
evaluating each Directors performance and performance of the Board as a
The Committee also plays a role of a Compensation Committee and is responsible for
administering the Stock Option Plan and Performance Share Plan of the Company and
determining eligibility of employees for stock options.
The Nomination and Remuneration Committee met four times during the financial year
ended 31st March, 2013 on 1st May, 2012, 23rd July, 2012, 22nd January, 2013 and 18th
Board Membership Criteria
The Board of Directors is collectively responsible for selection of a member on the
Board. The Nomination and Remuneration Committee of the Company follows a defined criteria
for identification, screening, recruiting and recommending candidates for election as a
Director on the Board. The criteria for appointment to the Board include:
composition of the Board which is commensurate with the size of the Company, its
portfolio, geographical spread and its status as a listed Company.
desired age and diversity on the Board;
size of the Board with optimal balance of skills and experienceand balance of
Executive and Non-Executive Directors consistent with requirements of the law;
professional qualifications, expertise and experience in specific area of
balance of skills and expertise in view of the objectives and activities of the
avoidance of any present or potential conflict of interest;
availability of time and other commitments for proper performance of duties;
personal characteristics being in line with the Companys values, such as
integrity, honesty, transparency, pioneering mindset.
The reward philosophy of the Company is to pay market competitive reward with a strong
linkage to performance. The reward philosophy is set forth into practice by various
policies governing different elements of reward. The intent of all these policies is to
ensure that the principles of reward philosophy are followed in entirety, thereby
facilitating the Company to recruit and retain the best talent. It also ensures the
effective recognition of performance and encourages a focus on achieving superior
The appointment of the Executive Directors is by virtue of their employment with the
Company as management employees and therefore their terms of employment viz. salary,
variable pay, service contract, notice period and severance fee, if any, are governed by
the applicable policies at the relevant point in time. The reward of the Executive
Directors is determined by the Nomination and Remuneration Committee. A fair portion of
the Executive Directors total reward is linked to Companys performance. This
creates alignment with the strategy and business priorities to enhance shareholder value.
The total reward package for Executive Directors is intended to be market competitive with
a strong linkage to performance in line with the Companys reward philosophy.
The Nomination and Remuneration Committee reviews the total reward annually, taking
into account external benchmarks within the context of group and individual performance.
In addition, the Companys Share Plans seek to reward Executive Directors by aligning
their deliverables with shareholders interests. Pursuant to the approval of Members
at the Annual General Meeting of the Company held on 23rd July, 2012, the Company had
adopted a revised scheme 2012 HUL Performance Share Scheme in place of the
2006 Performance Share Scheme. The revised scheme provided for conditional
grant of Performance Shares without charging premium to eligible management employees.
Non-Executive Independent Directors are eligible for sitting fees and commission not
exceeding the limits prescribed under the Companies Act, 1956. The remuneration payable to
Non-Executive Directors is decided by the Board of Directors subject to the overall
approval of Members of the Company. The Company benefits from the professional expertise
of the Independent Directors in their individual capacity as competent professionals /
business executives and through their invaluable experience in achieving corporate
The Independent Directors are currently paid sitting fees of Rs. 20,000/- for attending
every meeting of the Board or Committee thereof and commission on profits at the rate of
Rs. 10 lakhs for each year, which is within the limits approved by theMembers at the
Annual General Meeting of the Company held on 27th July, 2010, which is valid for a period
of five years upto 31st December, 2015.
In order to be consistent with globally accepted governance practices, it is proposed
to adopt a Differential Remuneration Policy for Non-Executive Directors. As
per the Differential Remuneration Policy, the Non-Executive Directors will be paid
remuneration linked to their attendance at the meetings of the Board or Committees thereof
and depending upon their position in various Committees of the Board, whether that of the
Chairman or member of the Committees.
In order to adopt the new policy and for the remuneration to be commensurate with
enhanced role and engagement of the Non-Executive Directors of the Company, it is
proposed, subject to the approval of Members, to revise the maximum limit of remuneration
to Non-Executive Directors from the existing Rs. 90 lakhs to Rs. 150 lakhs. The revised
limits shall be made effective 1st April, 2013 for a period of five years. The
remuneration payable to each Non-Executive Director shall be determined by the Board or
Committee thereof within the overall limits.
The Non-Executive Directors, who continuously serve minimum three terms of three years
each, are also entitled to one time commission of Rs. 10 lakhs at the time of stepping
down from the Board, due to retirement or otherwise.
During the year, there were no pecuniary relationships or transactions between the
Company and any of its Non-Executive Directors apart from sitting fees and commission. The
Company has not granted any stock options to any of its Non-Executive Directors. The
Non-Executive Chairman of the Company does not receive any sitting fees, commission or
stock options from the Company.
The details of remuneration paid, stock options and conditional grants made to
Executive Directors and remuneration paid to Non-Executive Directors for the financial
year ended 31st March, 2013 are provided hereinafter:
Details of Remuneration of Executive Directors for the financial year ended 31st March,
||Contribution to PF
Details of Stock Options and Conditional Grants made to the Executive Directors
||Outstanding as at 31st March, 2012
||Options / Grants Exercised during the year
||Grant under Performance
||Balance as at 31st March, 2013
||Share Scheme during the year
* Adjusted for 9,405 shares vested against 9,900 options granted.
$ Adjusted for 9,114 and 23,612 shares vested against 9,906 and 20,355 options granted
$$ Adjusted for 19,001 shares vested against 16,380 options granted.
Details of Remuneration of Non-Executive Directors for the financial year ended 31st
|R. A. Mashelkar
|O. P. Bhatt
* Includes fees paid for Board and Board Committees meetings.
# The Commission for the financial year ended 31st March, 2013 will be paid to
Independent Directors, subject to deduction of tax after adoption of accounts
byshareholders at the Annual General Meeting to be held on 26th July, 2013.
Stakeholders Relationship Committee
The Board of Directors at their meeting held on 14th December, 2012, re-designated the
Shareholders / Investors Grievance Committee as the Stakeholders
Relationship Committee in order to align with the requirements of the Companies Bill,
2012. The Committee comprises of Mr. O. P. Bhatt as the Chairman and Mr. Nitin Paranjpe
and Mr. Sridhar Ramamurthy as members of the Committee.
The role of Stakeholders Relationship Committee is as follows:
considering and resolving the grievances of shareholders of the Company with
respect to transfer of shares, non-receipt of annual report, non-receipt of declared
ensuring expeditious share transfer process in line with the proceedings of the
Share Transfer Committee;
evaluating performance and service standards of the Registrar and Share Transfer
Agent of the Company;
providing guidance and making recommendations to improve investor service levels
for the investors.
During the financial year ended 31st March, 2013, the Committee met twice on 12th June,
2012 and 22nd January, 2013.
Details of Shareholders / Investors Complaints
During the financial year ended 31st March, 2013, 81 complaints were received from the
shareholders. All complaints have been redressed and none of them were pending as on 31st
|Nature of Complaint
|Non-Receipt of Dividend
|Non-Receipt of Shares lodged for
|Others (e.g. non-receipt of
TREND OF COMPLAINTS RECEIVED DURING LAST 5 YEARS:
Corporate Social Responsibility Committee
The Board of Directors at their meeting held on 14th December, 2012, constituted the
Corporate Social Responsibility Committee in order to be consistent with the requirements
of the Companies Bill, 2012. The Committee comprises Mr. O. P. Bhatt as the Chairman and
Mr. Aditya Narayan, Dr. R. A. Mashelkar, Dr. Sanjiv Misra, Mr. Nitin Paranjpe and Mr.
Sridhar Ramamurthy as members of the Committee. Dr. Sanjiv Misra has been appointed as a
member of the Committee with effect from 8th April, 2013.
The role of Corporate Social Responsibility Committee is as follows:
formulating and recommending to the Board Corporate SocialResponsibility Policy
and the activities to be undertaken by the Company;
recommending the amount of expenditure to be incurred onthe activities
reviewing the performance of the Company in the area of Corporate Social
providing external and independent oversight and guidance on the environmental
and social impact of how the Company conducts its business;
monitoring Corporate Social Responsibility Policy of the Company from time to
During the financial year ended 31st March, 2013, the Committee met once on 22nd
Share Transfer / Transmission Committee
The Share Transfer / Transmission Committee is formed as per the requirement of
relevant rules exclusively to look into share transfer and related applications received
from shareholders, with a view to accelerate the transfer procedures.
The Committee comprises three Directors of the Board. The Committee inter alia
considers applications for transfer, transmission, split, consolidation of share
certificates and cancellation of any share certificate in compliance with the provisions
in this regard. The Committee is authorised to sign, seal or issue any new share
certificate as a result of transfer, consolidation, splitting or in lieu of share
certificates lost, defaced or destroyed.
The Committee meets at regular intervals to approve the share transfers and other
related matters. The Committee reports to the Board and the minutes of the meetings are
placed before the Board for confirmation.
Committee for Allotment of Shares under ESOPs
The Committee for Allotment of Shares under ESOPs has been constituted as per the
requirements of relevant regulations to expedite the process of allotment and issue of
eligible shares to the employees of the Company under the Stock Option Plan of the
The ESOP Committee comprises three Directors of the Board. The Committee is constituted
for approval, issue and allotment of shares under ESOPs, pursuant to and in terms of
2001 HLL Stock Option Plan, 2006 HLL Performance Share Scheme and
2012 HUL Performance Share Scheme. The Committee reports to the Board and the
minutes of the meetings are placed before the Board for confirmation.
Other Functional Committees
Apart from the above statutory Committees, the Board of Directors has constituted the
following Functional Committees to raise the level of governance as also to meet the
specific business needs.
Routine Business Matter Committee
The Routine Business Matter Committee comprises three Directors of the Board and has
been set up inter alia to oversee routine items that are in the normal course of
the business, such as decision on banking relations, delegation of operational powers,
appointment of nominees, etc. The Committee reports to the Board and the minutes of the
meetings are placed before the Board for confirmation.
Committee for approving Disposal of Surplus Assets
The Committee for approving Disposal of Surplus Assets comprises of three Directors of
the Board. The Committee is entrusted with the responsibility of identifying the surplus
assets of the Company and to authorise sale and disposal of such surplus property. The
Committee is fully authorised to take necessary steps to give effect to sale and transfer
of the ownership rights, interest and title in the said property, for and on behalf of the
Company. The Committee reports to the Board and the minutes of the meetings are placed
before the Board for confirmation.
Attendance of Directors at Board and Committee Meetings
The following table shows attendance of Directors at the Board and Committee meetings
for the year ended 31st March, 2013. Attendance is expressed as number of meeting(s)
attended, (including meetings attended through Video Conferencing) out of the number of
meeting(s) required to be attended.
||Nomination and Remuneration Committee
||Stakeholders Relationship Committee
||Corporate Social Responsibility Committee
||7 of 7#
||2 of 2
||7 of 7
||2 of 2
||2 of 2
||1 of 1
||7 of 7
||2 of 2
||1 of 1
||7 of 7
||6 of 6#
||4 of 4
||1 of 1
||7 of 7
||6 of 6
||4 of 4#
|R. A. Mashelkar
||4 of 7
||3 of 6
||3 of 4
||1 of 1
|O. P. Bhatt
||7 of 7
||6 of 6
||4 of 4
||2 of 2#
||1 of 1#
||6 of 7
The last Annual General Meeting of the Company held on 23rd July, 2012 was attended by
all the members of the Board of Directors.
Code of Business Principles
The Code of Business Principles (CoBP) is the Companys statement of values and
represents the standard of conduct which all employees are expected to observe in their
business endeavors. It forms the benchmark against which the world at large is invited to
judge the Companys activities. The Code reflects the Companys commitment to
principles of integrity, transparency and fairness. The copy of the Code of Business
Principles is available on the website of the Company www.hul.co.in.
The Code of Business Principles of the Company, among other things, sets out the rules
for dealing with conflict of interest situations. The proposal for appointment of any
Senior Management Personnel of the Company to serve as Director, Supervisory Director,
Trustee etc. on outside Board, whether for commercial ventures or for non-profit making
bodies, is subject to prior internal approvals.
The Chief Executive Officer (CEO) through the Management Committee and Business / Unit
Heads is responsible for ensuring that the Code is understood and implemented throughout
the Company. The Code is also applicable to everyone with whom the Company is associated.
The complaints, issues and concerns received under CoBP framework are duly investigated
and reviewed by the CoBP Committee(s). Appropriate actions are taken after completion of
investigation. The Company periodically cascades the principles embodied under CoBP across
Preventing Conflict of Interests
The Board of Directors is responsible for ensuring that rules are in place to avoid
conflict of interest by the Board members. The Board has adopted the Code of Conduct for
the members of the Board and Senior Management Team. The Code provides that the Directors
are required to avoid any interest in contracts entered into by the Company. If such an
interest exists, the Directors are required to make disclosure to the Board and to abstain
from discussion, voting or otherwise influencing the decision on any matter in which the
concerned Director has or may have such interest. The Code also restricts the Directors
from accepting any gifts or incentives in their capacity as a Director of the Company,
except what is duly authorised under the Companys Gift Policy.
The members of the Board and the Management Committee annually confirm the compliance
of the Code of Conduct to the Board. The Code is in addition to the Code of Business
Principles of the Company. A copy of the said Code of Conduct is available on the website
of the Company www.hul.co.in. In addition, the members of the Board also submit, on an
annual basis, the details of individuals to whom they are related and entities in which
they hold interest and such disclosures are placed before the Board. Transactions with any
of the entities referred above are placed before the Board for approval. Details of all
related party transactions are placed before the Audit Committee on an annual basis.
Whistle Blower Policy
The Company has adopted a Whistle Blower Policy to provide appropriate avenues to the
employees to bring to the attention of the management any issue which is perceived to be
in violation of or in conflict with the fundamental business principles of the Company.
The Company has provided dedicated e-mail addresses email@example.com and
firstname.lastname@example.org for reporting such complaints. Alternatively, employees can also
send written communications to the Company. The employees are encouraged to raise any of
their concerns by way of whistle blowing and none of the employees have been denied access
to the Audit Committee. The Company Secretary is the designated officer for effective
implementation of the policy and dealing with the complaints registered under the policy.
All cases registered under the Code of Business Principles and the Whistle Blower Policy
of the Company, are reported to the Committee of Executive Directors and are subject to
the review of the Audit Committee.
Share Dealing Code
In accordance with The Securities and Exchange Board of India (SEBI) (Prohibition of
Insider Trading) Regulations, 1992, as amended, the Company has established systems and
procedures to restrict insider trading activity and has framed a Share Dealing Code. The
Share Dealing Code of the Company is an important governance code to prevent any insider
trading activity by dealing in shares of the Company. The Code restricts the Directors of
the Company and other specified employees to deal in securities of the Company on the
basis of any unpublished price sensitive information, available to them by virtue of their
position in the Company.
The objective of this Code is to protect the interest of shareholders at large, to
prevent misuse of any price sensitive information and to prevent any insider trading
activity by dealing in shares of the Company by its Directors and employees. The Code also
prescribes sanction framework and any instance of breach of code is dealt with in
accordance with the same. A copy of the Share Dealing Code of the Company is made
available to all the employees of the Company and the compliance of the same is ensured.
The Share Dealing Code is available on the website of the Company www.hul.co.in
UN Global Compact
Unilever is a signatory to the United Nations Global Compact Programme and is fully
committed to the principles of the UN Global Compact which cover human rights, labour
practices, environment commitment and prevention of corruption in the business
organisations. The UN Global Compact is a symbol of leadership in a complex business world
and provides a forward looking forum in which the United Nations, companies and civil
society organisations can come together in an open and transparent dialogue. The
Companys CoBP mechanism upholds these principles in all aspects of its business
AFFIRMATION AND DISCLOSURE
All the members of the Board and the Management Committee have affirmed their
compliance with the Code of Conduct as on 31st March, 2013 and a declaration to that
effect, signed by the Managing Director and Chief Executive Officer (CEO), is attached and
forms part of this Report.
There were no materially significant related party transactions, pecuniary transactions
or relationships between the Company and its Directors for the financial year ended 31st
March, 2013 that may have a potential conflict with the interests of the Company at large.
All details relating to financial and commercial transactions where Directors may have
a pecuniary interest are provided to the Board and the interested Directors neither
participate in the discussion nor do they vote on such matters.
Transactions with related parties, as per requirements of Accounting Standard 18, are
disclosed in this Annual Report and they are not in conflict with the interest of the
Company at large.
DISCLOSURE OF PENDING CASES / INSTANCES OF NON COMPLIANCE
There were no instances of non-compliance by the Company, penalties and strictures
imposed on the Company by the Stock Exchanges or SEBI or any other statutory authority on
any matter related to the capital market during the last three years.
The Company has been impleaded in certain legal cases related to disputes over title to
shares arising in the ordinary course of share transfer operations. However, none of these
cases are material in nature, which may lead to material loss or expenditure to the
COMPLIANCE WITH THE GOVERNANCE FRAMEWORK
The Company is in compliance with all mandatory requirements of Clause 49 of the
Listing Agreement. In addition, the Company has also adopted the non-mandatory
requirements of constitution of the Remuneration Committee and establishing of Whistle
SECRETARIAL STANDARDS AND SECRETARIAL AUDIT REPORT
The Company has undertaken Secretarial Standards Audit for the year 2012-13 for audit
of secretarial records and procedures followed by the Company in compliance with relevant
Secretarial Standards issued by the Institute of Company Secretaries of India. The
Secretarial Standards Audit Report is given on page no. 66 of this Report.
The Company has also undertaken Secretarial Audit for the year 2012-13 which, inter
alia, includes audit of compliance with Companies Act, 1956 and Rules made under the
Act, Listing Agreement and Regulations and Guidelines prescribed by the Securities and
Exchange Board of India. The Secretarial Audit Report is given on page nos. 66-67 of this
General Body Meetings
Details of last three Annual General Meetings and the summary of Special Resolutions
passed therein are as under:
|Financial year ended
||Date and Time
||Special Resolutions Passed
|31st March, 2010
||27th July, 2010 3.00 p.m.
||Birla Matushri Sabhagar, 19, Marine Lines, Mumbai - 400 020
||Approval of revision in remuneration to be paid by way of commission on profits to
Non-Executive Directors of the Company, for a period of five years commencing from 1st
January, 2011 and authorising the Board to determine the amount upto a maximum of Rs. 90
lakhs in aggregate or 1% of Net Profits, whichever is lower.
|31st March, 2011
||28th July, 2011 3.30 p.m.
||Birla Matushri Sabhagar, 19, Marine Lines, Mumbai - 400 020
||No Special Resolution was passed at this meeting.
|31st March, 2012
||23rd July, 2012 10.30 a.m.
||Unilever House, B.D. Sawant Marg, Chakala, Andheri (East), Mumbai - 400 099
|| Re-appointment of Mr. Nitin Paranjpe as Managing Director for another term of
five years with effect from 4th April, 2013
|| Increase in the maximum limit of salary payable to Managing Director(s) of the
Company from the existing Rs. 180 lakhs per annum to Rs. 290 lakhs per annum effective 1st
|| Adoption of the revised 2012 HUL Performance Share Scheme in
amendment of 2006 HLL Performance Share Scheme.
Annual General Meeting 2013
||Friday, 26th July, 2013
||Unilever House, B.D. Sawant Marg, Chakala, Andheri (East), Mumbai - 400 099
|Book Closure Dates for Final Dividend
||Friday, 12th July, 2013 to Friday, 26th July, 2013
|Last Date of receipt of Proxy Forms
||Wednesday, 24th July, 2013 before 3.30 p.m. at the Registered Office of the Company
Calendar of financial year ended 31st March, 2013
The meetings of Board of Directors for approval of quarterly financial results during
the financial year ended 31st March, 2013 were held on the following dates:
|First Quarter Results
||23rd July, 2012
|Second Quarter and Half yearly Results
||26th October, 2012
|Third Quarter Results
||22nd January, 2013
|Fourth Quarter and Annual Results
||29th April, 2013
The Board of Directors at their meeting held on 29th April, 2013, recommended a Final
Dividend of Rs. 6.00 per equity share of face value of Re. 1/- each, for the financial
year ended 31st March, 2013. Together with Interim Dividend of Rs. 4.50 per share and
Special Dividend of Rs. 8.00 per share, paid on 16th November, 2012, the total dividend
for the year works out to Rs. 18.50 per equity share of face value of Re. 1/- each. Final
Dividend, if approved by Members, will be paid on or after 30th July, 2013.
Tentative Calendar for financial year ending 31st March, 2014
The tentative dates of meeting of Board of Directors for consideration of quarterly
financial results for the financial year ending 31st March, 2014 are as follows:
|First Quarter Results
||26th July, 2013
|Second Quarter and Half yearly Results
||28th October, 2013
|Third Quarter Results
||23rd January, 2014
|Fourth Quarter and Annual Results
||28th April, 2014
As per the Companies Act, 1956, dividends that are unclaimed for a period of seven
years, statutorily get transferred to the Investor Education and Protection Fund (IEPF)
administered by the Central Government and thereafter cannot be claimed by investors. To
ensure maximum disbursement of unclaimed dividend, the Company sends reminders to the
concerned investors, before transfer of dividend to IEPF.
The unpaid / unclaimed dividends upto Final Dividend 1995 (39F) had been transferred to
the General Revenue Account of the Central Government. The Investors, who have not claimed
their dividend for the said period till date, may claim the amount from the Registrar of
Companies, Mumbai. Apart from above, the Company has transferred the unpaid dividends upto
Interim Dividend of 2005 (50I) to the IEPF. The unclaimed Interim Dividend of 2005
pertaining to erstwhile VDL shareholders (i.e. 50I (VDL)), Final Dividend of 2005 (i.e.
50F) and Interim Dividend of 2006 (51I), is due for transfer in May 2013, June 2013 and
August 2013 respectively. In view of this, the Members of the Company, who have not yet
encashed their dividend warrant(s) may write to the Company immediately.
Due Dates for Transfer of Unclaimed Dividend to IEPF
||Number of Warrants
||Dividend Amount (Rs. lakhs)
||Dividend rate per share (Rs.)
||Date of Declaration
||Unclaimed as on 31st March, 2013
||Unclaimed as on 31st March, 2013
F Final I Interim S Special
Distribution of Shareholding as on 31st March, 2013
|1 - 5000
|5001 - 10000
|10001 - 20000
|20001 - 30000
|30001 - 40000
|40001 - 50000
|50001 - 100000
|100001 and above
Categories of Shareholders as on 31st March, 2013
||No. of Folios
||Shares Held (Nos.)
||% of Holdings
|Unilever PLC and its Affiliates
|Mutual Funds and Unit Trust of India
|Financial Institutions / Banks
|Foreign Institutional Investors
|NRIs / Foreign Bodies Corporate / Foreign Nationals
|Qualified Foreign Investor
|Directors and their Relatives
|Resident Individuals and Others
Top 10 Shareholders as on 31st March, 2013 (Other than Promoters)
||Life Insurance Corporation of India
||Oppenheimer Developing Markets Fund
||Virtus Emerging Markets Opportunities Fund
||The New India Assurance Company Limited
||Aberdeen Global-Emerging Markets Equity Fund
||Aberdeen Global Indian Equity Fund Mauritius Limited
||Vontobel Fund Emerging Markets Equity
||Vontobel India Fund
||Bajaj Allianz Life Insurance Company Limited
||The Aberdeen Emerging Markets Institutional Fund
Bifurcation of shares held in physical and demat form as on 31st March, 2013
||No. of Shares
* includes shares of Unilever PLC and its Affiliates
There are no outstanding GDRs / ADRs / Warrants / Convertible Instruments of the
|Name of Stock Exchange
|BSE Limited (BSE)
|National Stock Exchange of India Limited (NSE)
The listing fee for the financial year ended 31st March, 2013 has been paid to the
above Stock Exchanges.
Share Price Data
The monthly high and low prices and volumes of shares of the Company at BSE Limited
(BSE) and the National Stock Exchange of India Limited (NSE) for the year ended 31st
March, 2013 are as under:
Source: BSE and NSE website
Note: High and low are in rupees per traded share. Volume is the total monthly volume
of trade (in numbers) in shares of the Company on the respective Stock Exchange.
10 year Performance of Hindustan Unilever Share vis--vis Sensex and Nifty
|Date of Purchase
||HUL Share Price on BSE
||HUL Share Perfor- mance
||Sensex Perfor- mance
||HUL Share Price on NSE
||HUL Share Perfor- mance
||Nifty Perfor- mance
Source: BSE and NSE website
All comparisons are with respect to 1st January, 2013 (the reference date).
Mergers and Demergers
The details of Mergers and Demergers with Companies and respective share exchange
ratios are available on "Investor Centre" page on the website of the Company
The details of Plant Locations are available at page nos. 152 & 153 of this Report.
COMMUNICATION TO SHAREHOLDERS
Effectivecommunicationofinformationisanessentialcomponent of corporate governance. It
is a process of sharing information, ideas, thoughts, opinions and plans to all
stakeholders which promotes management-shareholder relations. The Company regularly
interacts with shareholders through multiple channels of communication such as results
announcement, annual report, media releases, Companys website and subject specific
The quarterly, half yearly and annual results of the Companys performance are
published in leading newspapers such as Times of India and Maharashtra Times. These
results are also made available on the website of the Company www.hul.co.in.The website
also displays vital information relating to the Company and its performance, official
press releases and presentation to analysts. The Company also sends quarterly, half yearly
and annual results as well as the notice of the Board Meeting to Members on e-mail.
The Investor Centre of the Companys website provides more than 50 Frequently
Asked Questions on various topics related to transfers and transmission of shares,
dematerialisation, nomination, change of address, loss of share certificates, dividend and
sub-division of share certificates. In addition, various downloadable forms required to be
executed by the shareholders have also been provided on the website of the Company.
In compliance with Clause 52 of the Listing Agreement, the Quarterly Results,
Shareholding Pattern and all other corporate communication to the Stock Exchanges have
also been filed under Corporate Filing and Dissemination System (CFDS).
Web-based Query Redressal System
Members may utilise the facility extended by the Registrar and Transfer Agent for
redressal of queries. Investors may visit http://karisma.karvy.com and click on
"INVESTORS" option for query registration through free identity registration
Investors can submit their query in the "QUERIES" option provided on the
above website, which would give the grievance registration number. For accessing the
status / response to the query submitted, the grievance registration number can be used at
the option "VIEW REPLY" after 24 hours. Investors can continue to put an
additional query relating to the case till they get a satisfactory reply.
Investors can provide their feedback on the services provided by the Company and its
Registrar and Share Transfer Agent by filling the Shareholder Satisfaction Survey form
available on website of the Company at www.hul.co.in/investorrelations/
Alternative Dispute Redressal
Long pending litigations involve significant investment as monetary value of the
disputed shares and accrued dividends / other benefits are locked up unutilised till the
dispute is settled. Further, in terms of the requirements of the Companies Act, 1956, such
dividends / other specified incomes remaining unclaimed / unpaid for a period of seven
years are to be credited to the Investor Education and Protection Fund and the
shareholders are not entitled to claim the same thereafter.
Keeping the above in mind, the Company in the year 2004, had pioneered the mechanism of
providing an alternate dispute redressal for shareholders to resolve the shares related
disputes pending before the courts / authorities by amicable settlement. The Company had
started this unique initiative of organising Alternative Dispute Redressal meetings
wherein aggrieved investors come face to face and get a chance to settle their disputes,
some of which were pending for years.
The first of such meeting was held in Ahmedabad in the year 2005 wherein 14 cases were
resolved by amicable settlement. Similar such meetings were held in other cities like
Mumbai and Kolkata wherein 31 more cases were resolved to the satisfaction of the parties
to the dispute. The Company had engaged the services of retired Judges to preside over the
meeting in order to give a fair view to each case.
A number of shareholders have availed the benefit of this process and the Company
through its various initiatives keeps exploring the possibilities of settling such issues.
The process helps the investors in releasing the locked up investment and save their time
consumed in contesting legal proceedings. The objective of this process is to facilitate
quick resolution between the parties.
The shareholders who are willing to avail the benefits of Alternative Dispute Redressal
mechanism may approach the Investor Service Department of the Company at the address
Consumers / Customers
In line with one of the Companys key tenets of Consumer and Customer Centricity,
the Company commenced a process of resolving consumer and customer disputes and grievances
through an alternative disputes redressal mechanism. The Company appointed four retired
Judges of different High Courts, one in each region, to act as Ombudsman to hear the
Companys consumers and customers in a bid to resolve long pending disputes. The
Ombudsman independently reviews the merits of the complaint and decides on the issue. The
Company has taken the view that the decision arrived at such disputes resolution meetings,
while being fully binding on the Company, may not be binding on its consumers and
customers and if they choose to continue with litigation, they are free to do so. These
meetings were held in all the four regions and achieved reasonable success. The Company
believes that such independent dispute resolution mechanism will further reinforce its
commitment and credibility with its consumers and also set new benchmarks for the
The Company has also set a consumer care helpline Levercare, to help
consumers reach the Company for their grievances, suggestions, ideas and to help brands
reach out to consumers.
Address for Correspondence
All shareholders correspondence should be forwarded to M/s. Karvy Computershare
Private Limited, the Registrar and Transfer Agents of the Company or to the Investor
Service Department at the Registered Office of the Company at the addresses mentioned
The Companys dedicated e-mail address for Investors Complaints is
|Karvy Computershare Private Limited
||Investor Service Department
|Unit : Hindustan Unilever Limited
||Hindustan Unilever Limited
||Mr. Dev Bajpai
|Plot No. 17 to 24, Vittal Rao Nagar,
||Executive Director, Legal & Corporate Affairs and Company Secretary
|Madhapur, Hyderabad - 500 081
||B. D, Sawant Marg, Chakala,
|Phone : +91 - 40 - 23420815 - 824
||E-mail : email@example.com
|Fax : +91 - 40 - 23420814
||Mumbai - 400 099
||Phone : +91 - 22 39832557 / 32358 /
|E-mail : firstname.lastname@example.org /
||Phone : +91 - 22 39832285 / 32452
||32532 / 32312
||Fax : +91 - 22 - 28249457
|Website : www.karvy.com
||Website : www.hul.co.in
Loans and advances in the nature of loan to subsidiaries:
Information pursuant to Clause 32 of the Listing Agreement
|Name of the Company
||Balance as at 31st March, 2013
||Maximum outstanding during the year
|Lakme Lever Private Limited
|Brooke Bond Real Estates Private Limited
|Ponds Exports Limited
CHIEF EXE UTIVE OF ER EO & HIEF FINAN IAL OF ER FO ERTI ATION
The Board of Directors
Hindustan Unilever Limited
We, the undersigned, in our respective capacities as Chief Executive Officer and Chief
Financial Officer of Hindustan Unilever Limited ("the Company"), to the best of
our knowledge and belief certify that:
(a) We have reviewed the financial statements and the cash flow statement for the
financial year ended 31st March, 2013 and based on our knowledge and belief, we state that
(i) these statements do not contain any materially untrue statement or omit any
material fact or contain any statements that might be misleading.
(ii) these statements together present a true and fair view of the Companys
affairs and are in compliance with the existing accounting standards, applicable laws and
(b) We further state that to the best of our knowledge and belief, there are no
transactions entered into by the Company during the year, which are fraudulent, illegal or
violative of the Companys code of conduct.
(c) We hereby declare that all the members of the Board of Directors and Management
Committee have confirmed compliance with the Code of Conduct as adopted by the Company.
(d) We are responsible for establishing and maintaining internal controls and for
evaluating the effectiveness of the same over the financial reporting of the Company and
have disclosed to the Auditors and the Audit Committee, deficiencies in the design or
operation of internal controls, if any, of which we are aware and the steps we have taken
or propose to take to rectify these deficiencies.
(e) We have indicated, based on our most recent evaluation, wherever applicable, to the
Auditors and Audit Committee:
(i) significant changes, if any, in the internal control over financial reporting
during the year;
(ii) significant changes, if any, in the accounting policies made during the year and
that the same has been disclosed in the notes to the financial statements; and
(iii) instances of significant fraud of which we have become aware and the involvement
therein, if any, of the management or an employee having significant role in the
Companys internal control system over financial reporting.
|Mumbai : 29th April, 2013
||Managing Director and Chief Executive Officer
||Executive Director - Finance & IT and Chief Financial Officer
AUDITORS ERTI ATE REfiARDIN OMPLIAN E OF ONDITIONS OF ORPORATE fiOVERNAN E
To the Members of
Hindustan Unilever Limited
We have examined the compliance of the conditions of Corporate Governance by Hindustan
Unilever Limited for the year ended 31st March, 2013 as stipulated in Clause 49 of the
Listing Agreement of the said Company with the stock exchanges in India.
The compliance of the conditions of Corporate Governance is the responsibility of the
Companys management. Our examination was carried out in accordance with the Guidance
Note on Certification of Corporate Governance (as stipulated in Clause 49 of the Listing
Agreement), issued by the Institute of Chartered Accountants of India and was limited to
the procedures and implementation thereof, adopted by the Company for ensuring the
compliance of the conditions of Corporate Governance. It is neither an audit nor an
expression of an opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations
given to us, we certify that the Company has complied with the conditions of Corporate
Governance as stipulated in the above-mentioned Listing Agreement.
We state that such compliance is neither an assurance as to the future viability of the
Company nor the efficiency or effectiveness with which the management has conducted the
affairs of the Company.
||For Lovelock & Lewes
||Firm Registration No. 301056E
|Mumbai : 29th April, 2013
||Membership No. 39985
SECRETARIAL STANDARDS REPORT
The Board of Directors,
Hindustan Unilever Limited,
B. D. Sawant Marg,
Chakala, Andheri (East),
Mumbai - 400 099
We have examined relevant registers, records and documents maintained and made
available to us by Hindustan Unilever Limited ("the Company") for the period
commencing from 1st April 2012 to 31st March 2013 for compliances of Secretarial Standards
issued by the Institute of Company Secretaries of India (ICSI)
Secretarial Standards issued by ICSI are presently recommendatory in nature. The
management has voluntarily decided to adhere to these standards and comply with the same.
Our examination was limited to procedures and implementation thereof adopted by the
Company for ensuring the compliance of Secretarial Standards.
In our opinion and to the best of our information and according to the explanation
given to us, we report that the Company has complied with all material aspects of
applicable Secretarial Standards issued by ICSI.
||S. N. ANANTHASUBRAMANIAN & CO
||S N ANANTHASUBRAMANIAN
|Date: 11th April, 2013
||CP No. 1774
SECRETARIAL AUDIT REPORT
The Board of Directors,
Hindustan Unilever Limited,
B. D. Sawant Marg,
Chakala, Andheri (East),
Mumbai - 400 099
We have examined the registers, records and documents of Hindustan Unilever Limited
("the Company") for the period commencing from 1st April, 2012 to 31st March,
2013 for compliances of provisions of:
1. The Companies Act, 1956 (the Act) and the Rules made there under;
2. The Depositories Act, 1996 and the Regulations and Bye-laws framed there under;
3. The following Regulations and Guidelines prescribed under the Securities and
Exchange Board of India Act, 1992 (SEBI Act):
(a) Securities Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011;
(b) Securities and Exchange Board of India (Prohibition of Insider Trading)
(c) Securities and Exchange Board of India (Employees Stock Option Scheme and Employees
Stock Purchase Scheme) Guidelines, 1999;
(d) Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998.
4. The Securities Contracts (Regulation) Act, 1956 (SCRA) and the Rules
made there under; and
5. The Listing Agreements entered into with BSE Limited and National Stock Exchange of
Based on our examination and verification of the registers, records and documents
produced to us and according to the information and explanations given to us by the
Company : - We report that the Company has, in our opinion, complied with the provisions
of the Act and the Rules made thereunder and with the Memorandum and Articles of
Association of the Company with regard to:
(a) maintenance of various statutory registers and documents and making necessary
(b) closure of the Register of Members;
(c) forms, returns, documents and resolutions required to be filed with the Registrar
of Companies and Central Government;
(d) service of documents by the Company on its Members and the Registrar of Companies;
(e) notice of Meetings of the Board and Committees thereof;
(f) minutes of the meetings of the Board and Committees thereof including passing of
resolutions by circulation;
(g) notice convening the 79th Annual General Meeting held on 23rd July, 2012;
(h) minutes of general meetings;
(i) approvals of the Members, the Board of Directors, the Committees of Directors and
government authorities, wherever required;
(j) constitution of the Board of Directors / Committee(s) of Directors and appointment,
retirement and reappointment of Directors including the Managing Director and Executive
(k) payment of remuneration to the Directors including the Managing Director and
(l) appointment and remuneration of Statutory Auditors and Cost Auditors;
(m) transfer and transmission of the Companys shares, issue and allotment of
shares and issue and delivery of certificate(s) of shares;
(n) declaration and payment of dividends including interim dividend;
(o) transfer of amounts as required under the Act to the Investor Education and
(p) satisfaction of charges, if any, registered with the Registrar of Companies;
(q) form of balance sheet as prescribed under Part I of Schedule VI to the Act and
requirements as to Profit & Loss Account as per Part II of the said Schedule;
(r) contracts, common seal, registered office and publication of name of the company;
(s) generally, all other applicable provisions of the Act and the Rules made there
We further report that:
(a) the Directors have complied with the requirements as to disclosure of interests and
concerns in contracts and arrangements, shareholdings / debentures holdings and
directorships in other companies and interest in other entities;
(b) the Directors have complied with the disclosure requirements in respect of their
eligibility of appointment, their being independent and compliance with the Share Dealing
Code and Code of Conduct of the Company;
(c) the Company has obtained all necessary approvals under the various provisions of
(d) there was no prosecution initiated against or show cause notice received by the
Company and no fines or penalties were imposed on the Company during the year under review
under the Companies Act, SEBI Act, SCRA, Depositories Act, Listing Agreement and Rules,
Regulations and Guidelines framed under these Acts against the Company, its Directors and
We further report that the Company has complied with the provisions of the Depositories
Act, 1996 and the Bye-laws framed under that Act by the depositories with regard to
dematerialisation / rematerialisation of securities and reconciliation of records of
dematerialized securities with the securities issued by the Company.
We further report that:
(a) the Company has complied with the requirements under the Listing Agreements entered
into with the BSE Limited and the National Stock Exchange of India Limited;
(b) the Company has complied with the provisions of the Securities Exchange Board of
India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 including the
provisions with regard to disclosures and maintenance of records required under the
(c) the Company has complied with the provisions of the Securities and Exchange Board
of India (Prohibition of Insider Trading) Regulations, 1992 including the provisions with
regard to disclosures and maintenance of records required under the Regulations;
(d) the Company has complied with the provisions of the Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 with regard to implementation of 2012 HUL Performance Shares Scheme, 2006 HLL
Performance Shares Scheme and 2001 HLL Stock Option Plan, grant of options and other
||S. N. ANANTHASUBRAMANIAN & CO
||S N ANANTHASUBRAMANIAN
|Date: 11th April, 2013
||CP No. 1774