HINDUSTAN UNILEVER LIMITED
ANNUAL REPORT 2011-2012
DIRECTOR`S REPORT
To the Members,
Your Company`s Directors are pleased to present the 79th Annual Report of
the Company, along with Audited Accounts for the financial year ended 31st
March, 2012.
1. FINANCIAL PERFORMANCE (STANDALONE)
1.1 Results (see para 1.4)
Rs. Crores
For the year ended 31st March,
2012 2011
Revenue from operations, net of excise 22,116.37 19,735.51
Profit before exceptional items and tax 3,350.16 2,730.20
Profit for the year 2,691.40 2,305.99
Dividend (including tax on distributed profits) (1,883.90) (1,641.96)
Transfer to General Reserve (269.14) (230.60)
Profit & Loss Account balance carried forward 1,773.96 1,235.60
1.2 Category wise Turnover (see para 1.4):
Rs. Crores
For the year ended For the year ended
31st March, 2012 31st March, 2011
Sales Others* Sales Others*
Soaps and Detergents 10,488.38 147.90 8,683.88 117.18
Personal Products 6,746.95 98.91 5,750.68 99.71
Beverages 2,577.02 40.41 2,309.23 37.27
Packaged Foods 1,341.93 17.53 1,162.28 16.15
Others (including Exports,
Chemicals, Water etc.) 581.32 55.04 1,474.94 64.37
Total 21,735.60 359.79 19,381.01 334.68
* Others represent service income from operations, relevant to the
respective businesses.
1.3 Summarised Profit and Loss Account (see para 1.4)
Rs. Crores
For the year ended For the year ended
31st March, 2012 31st March, 2011
Sale of products less excise duty 21,735.60 19,381.01
Other operational income 380.77 354.50
Total Revenue 22,116.37 19,735.51
Operating Costs (18,825.03) (17,057.12)
PBDIT 3,291.34 2,678.39
Depreciation (218.25) (220.83)
PBIT 3,073.09 2,457.56
Other Income (net) 277.07 272.64
Profit before exceptional item 3,350.16 2,730.20
Exceptional Item 118.87 206.83
PBT 3,469.03 2,937.03
Taxation (777.63) (631.04)
Profit for the year 2,691.40 2,305.99
Basic EPS (Rs.) 12.46 10.58
1.4 Demerger of FMCG Exports Business:
In order to fully exploit the opportunity in exports market and to provide
necessary focus, flexibility and speed to the business, the Board of
Directors had approved in-principle a Scheme of Arrangement for transfer of
the FMCG Exports Business Division (demerged business undertaking) of the
Company into its wholly owned subsidiary, Unilever India Exports Limited
(`UIEL`), on 9th May, 2011 which subsequently was approved by the
shareholders on 28th July, 2011. The Hon`ble High Court of Bombay
sanctioned the said Scheme with the appointed date of 1st April, 2011.
Accordingly, the financial results of the demerged business undertaking do
not form part of the audited results of the Company for the year ended 31st
March, 2012. However, the audited results of the Company for the year ended
31st March, 2011 included the results of the said demerged business
undertaking and hence, to that extent, previous year figures are not
comparable with the current year figures. The results of the Company
excluding the results of the demerged business undertaking for both the
years are given below:
Rs. Crores
For the year ended 31st March,
2012 2011
Revenue from operations, net of excise 22,116.37 18,796.24
Profit before exceptional items and tax 3,350.16 2,654.48
Profit for the year 2,691.40 2,246.19
2. DIVIDEND
Your Directors are pleased to recommend final dividend of Rs. 4.00 per
equity share of face value of Re.1/- each for the year ended 31st March,
2012. The interim dividend of Rs. 3.50 per equity share was paid on 22nd
November, 2011.
The final dividend, subject to approval of shareholders at the Annual
General Meeting on 23rd July, 2012, will be paid to the shareholders whose
names appear in the Register of Members as on the date of book closure i.e.
from Friday, 6th July, 2012 to Friday, 20th July, 2012 (inclusive of both
dates).
The total dividend for the financial year including the proposed final
dividend amounts to Rs. 7.50 per equity share and will absorb Rs. 1,883.90
Crores including Dividend Distribution Tax of Rs. 262.96 Crores.
3. CHANGE Of THE REGISTERED
Office
In January 2010, your Company inaugurated the new Corporate Office named
`Campus` at Andheri, Mumbai. The Board of Directors at their meeting held
on 31st October, 2011, approved the change of Registered Office of the
Company to Unilever House, B. D. Sawant Marg, Chakala, Andheri East, Mumbai
400 099 from the earlier office at 165/166 Backbay Reclamation, with effect
from 1st January, 2012.
4. 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 irregularities; and
* they have prepared the annual accounts on a going concern basis.
5. MANAGEMENT DISCUSSION AND ANALYSIS
In order to avoid duplication between the Directors` Report and Management
Discussion and Analysis, we present below a composite summary of
performance of the various businesses and functions of the Company.
5.1 Economy and Markets
The after effects of the global financial crisis of 2008 have continued to
cast their shadow on the economies around the world even now. The crisis
brought to fore the vulnerabilities of the systems of regulation and
operation of the financial and fiscal processes. The unprecedented scale of
fiscal stimulus that was required to manage this crisis has meant that
bringing the fiscal deficit back to acceptable levels is an equally
daunting challenge.
For India, the weak external demand conditions have been exacerbated by the
high crude oil prices. Slow export growth and rising import bill have led
to rising current account deficit. The Union Budget for 2012-13 indicated
the need for strong measures to revert to a fiscal adjustment path. Central
Government subsidies were to be capped at 2% of GDP and some measures to
widen tax net were taken.
The area in which there has been relief is the decline in inflation rate
from the near double digit rates seen in the past two years. Although there
are risks associated with the petroleum sector prices and some of the food
sector prices, the non-food manufactured products prices have shown
deceleration.
The opening up and expansion of the economy, rising income levels and
changing consumer beliefs and behaviours have led to an increase in
consumption. This represents a tremendous opportunity for your Company.
Your Company`s performance for the year 2011-12 has to be viewed in the
context of the aforesaid economic and market environment.
Performance of Businesses and Categories
Some highlights are given below in respect of each of the business
categories of the Company.
5.2 Home & Personal Care Business (HPC)
The HPC business consists of Fabric Wash, Household Care, Personal Wash and
Personal Products which includes categories like toothpaste, shampoo, skin
care, deodorants and colour cosmetics. During the year, the HPC business
registered double digit volume growth and a robust price growth, leading to
a value growth of 19.4%.
The opportunity for growth in India continues to be immense across all HPC
categories and your Company believes that market development is critical
for sustained growth. While focusing on the core categories, your Company
has invested heavily in the `Categories of tomorrow`. Your Company
delivered double digit growth in the highly competitive scenario, with new
entrants in the market and brands being launched every quarter. Your
Company maintained marketing and trade spends at competitive levels
throughout the year. After the successful interventions in rural marketing
under `Khushiyon Ki Doli` programme in 2010, the programme was extended to
five more states, viz. West Bengal, Bihar, Maharashtra, Andhra Pradesh and
Uttar Pradesh, in 2011. This multi brand campaign helped cover around
70,000 villages, 4 lakh retailers and 250 lakh consumers. `Khushiyon Ki
Doli` is a cost efficient rural brand activation module, which assisted in
increasing reach of various Home and Personal Care brands such as Wheel,
Surf Excel, Vim, Fair & Lovely, Sunsilk, Lifebuoy and Closeup.
Volatile and rapidly changing commodity markets, including vegetable oil
and crude oil, coupled with fluctuating currency markets posed a major
challenge during the year. The impact of cost inflation was felt in inputs
such as palm oil, laundry chemicals, packaging and freight cost. The
business was managed dynamically with increased frequency of cost and
pricing review and aggressive cost saving programmes, which helped to
minimise the cost impact.
Your Directors believe that sustained investments behind brands by way of
technology, innovation, consumer communication and continued focus on
market development will benefit the business in creating long-term value.
5.2.1 Soaps and Detergents
In Soaps and Detergents category, value grew by 20.8% on the back of strong
underlying volume growth and pricing actions.
Fabric Wash recorded another successful year of growth, with the highest
ever volumes. In spite of steep increase in input costs, the margins were
sustained by excellent execution of pricing decisions and cost saving
programmes.
The focus on innovations resulted in successful execution of projects in
brands like Surf Excel Quickwash Powder and Surf Excel Bar. In fabric
conditioners, Comfort Green with 99% Anti-Bacterial Action was launched to
give additional benefit of bacteria free clothes. Rin Perfect Shine, a
fabric whitener, was launched as the latest addition to Fabric Wash
portfolio. Speed to market was the key focus for laundry business. Various
initiatives across the Fabric Wash category ensured that the products are
right priced in the right markets at the right time. Your Company will
continue to focus on Fabric Wash business by driving innovation, control
over costs across the value chain and relevant communication.
Household Care products recorded double digit volume growth during the
period. Vim bar continues to perform well. VimLiquid also witnessed
sustained growth on the basis of good quality and strong advertising. The
brand entered the Guinness Book of World Records for washing 15,000 plates
with one 500ml bottle. Domex continued on its journey to provide better and
germ free toilets to the Indian consumer. Household products business is
focused on innovation in the portfolio to give more value to consumers.
Personal Wash category recorded robust growth during the year. This was
driven through innovations across the portfolio, such as re-launch of Lux
and new campaigns in Dove, Pears and Lifebuoy, backed by strong micro
marketing plans. Incorporating learnings from the past and focusing on cost
efficiencies, the Company was able to grow the category profitably, despite
significant volatility in commodity costs during the first half of the year
and increasing foreign exchange rates during the second half of the year.
The growth was broad-based and across every segment of the category. The
growth was witnessed not only in core bars business but also through
penetration and consumption of personal wash liquids.
5.2.2 Personal Products
Personal Products categories comprises Hair Care, Skin Care, Oral Care,
Deodorants and Colour Cosmetics. The Personal Products category grew by
17.3% during the year, led by strong underlying volume growth.
Hair Care category recorded robust volume and value growth during the year.
This was largely driven through increased consumption and premiumisation.
Your Company had a strong year, strengthening its position by becoming the
market leader in the hair conditioner category along with maintaining its
leadership in shampoos. Dove continues to lead the premiumisation agenda
and has consistently gained market share. Clinic Plus continues to be the
largest shampoo brand in the category. Clearled the anti-dandruff agenda
with a comprehensive re-stage in the first half of the year, with the brand
showing strong early signs of growth.
Your Company continued its focus on market development by investing
strongly behind the nascent but emerging high potential hair conditioners
segment, thus growing ahead of the market.
Skin Care category had a strong year, led by strong growth in the core
brands. Fair & Lovely, Pond`s and Vaseline grew strongly in double digits.
The growth was further aided by good traction that was witnessed in new
segments like Anti Ageing and Premium Lip Care. Some of the skin lightening
segments your Company entered in the last two years, like Healthy White
Body Lotion and White Beauty Cream, have achieved good share of market and
continued to grow very well. Vaseline Body Lotion was re-launched with a
breakthrough moisturising technology and Dove Body Lotion range was
introduced during the year; both the offerings performed exceedingly well.
In this segment, your Company has the right portfolio to take full
advantage of the India growth opportunity.
Your Company embarked on a plan to accelerate Oral Care business growth and
strategic actions were put into market during the year. Pepsodent Gum Care
credentials were further strengthened with a comprehensive restage in the
second half of the year. Closeup continued to build its freshness
credentials and grew in line with the market. The toothbrush market has
witnessed intense competition during the year and your Company has put in
place robust actions to compete in this fast growing market.
Lakme Colours performed strongly in 2011-12, driven on the back of strong
innovations and a revamp of the retail front-end consumer experience. The
core segment was strengthened by building Perfect Radiance Compact to
become a key focus pack in the face segment. The nail portfolio was further
strengthened by introduction of Color Crush. Lakme is rapidly premiumising
the brand by offering added benefits and superior formats with the launch
of its long wear make-up line, `Absolute`. Absolute, is a high performance
long wear make-up range with world class products that last up to 16 hours.
Elle18 has delivered a strong 29% growth in 2011-12.
Deodorants business continued to witness aggressive growth. Your Company
continued its market leadership with a comprehensive restage of stronger
Axerange and launch of Denimdeodorants. Your Company has leveraged digital
media to build over 2 million strong community and has leveraged gaming and
viral campaigns to drive high levels of interaction between consumers and
the brand. The category has significant potential for growth in future.
Your Company is now poised to capitalise in this emerging category with its
comprehensive portfolio of Axe, Denim, Dove and Sure by straddling the
pyramid and meeting different needs of different consumers in the segment.
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.
Kimberly Clark Lever Private Limited (KCL)
KCL is a Joint Venture between your Company and Kimberly-Clark Corporation,
USA. The primary product category for KCL is infant care diapers and this
business registered double digit growth during the year. The year witnessed
the national launch of Huggies Diaper Pants, Huggies Natural Baby Wipes and
the limited edition Huggies Jeans Diaper Pants.
This category has huge potential for growth in the context of the low
levels of penetration of infant care diapers in the Country. This growth
opportunity has attracted increased levels of competitive intensity in the
recent past with multinationals making significant investments in India.
KCL is committed to participate effectively in this growth opportunity and
will bring regular innovations to the market, which will call for sustained
investments in the short to medium term.
5.3 foods
The Foods portfolio of your Company comprises Beverages (Tea and Coffee),
Processed Foods (Kissan, Knorr and Annapurna range of products), Frozen
Desserts, Bakery products (Modern Foods) and Out of Home operations
including Bru World Cafe.
During the year, Foods business has delivered good double digit growth
across the portfolio. Your Company added incremental growth and consumers
through many relevant and successful innovations in Beverages, Frozen
Desserts and Processed Foods. Your Company has continued its focus on
availability expansion across trade channels and micro-marketing
initiatives in core categories to increase consumption and penetration.
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 more offerings that can
best fulfill existing and emerging consumer needs.
The Foods business was faced with multiple challenges during the year,
including high competitive intensity from multinational, national as well
as local players in many categories and significant food inflation across
the spectrum. Your Company has proactively managed the challenges by
responding through increased brand investments, value enhancing
innovations, consumer centric value packs, judicious price increases and
aggressive cost saving programmes.
5.3.1 Processed foods
Kissancontinues to remain one of the most trusted brands among Indian
consumers. Kissanregistered strong double digit growth during the year, led
by volume growth. In ketchups your Company continued to grow shares.
Kissans new foray into creamy spreads is being nurtured in emerging
channels.
Your Company maintained its value leadership in the soups segment through
Knorr. Through launch of an affordable range and instant soups for the
young adults, your Company plans to drive market expansion. Knorr Soupy
Noodles continued to be the highlight of the Packaged Foods business. The
Company has managed to double the business during the year as the product
has received good response from consumers across all the markets. Your
Company will continue to invest in this category and focus on consumer
relevant innovations in future.
The staples business, through Annapurna, has registered a modest
performance during the year. Your Company will continue to focus on key
geographies and optimising costs to further enhance the profitability of
the portfolio.
During the year, the Company has significantly strengthened its capability
to engage consumers at the point of sale by setting up the food ambassadors
programme across the top food stores in the Country; this has encouraged
trials of all new innovations from the category.
Bakery (Modern foods)
Bakery (bread and cakes) sustained its growth momentum and continued to
deliver strong underlying growth and profit improvement through enhanced
scale and better operational efficiencies. The new products in adjacent
categories like Idli and Dosa batter and dry mix powders, launched during
the year, were well received in select geographies.
5.3.2 Beverages
The tea market, which witnessed downtrading in 2010-11 stabilised in 2011-
12. The market saw low single digit volume growth and close to double digit
value growth. Commodity prices remained stable through most of the year. In
this scenario, the business witnessed strong turnover growth which has been
led by good underlying volume growth.
In 2011-12, most parts of the portfolio witnessed good performance. 3 Roses
had another year of strong growth strengthening its position in the
southern part of India. Red Label witnessed second consecutive year of
volume and value growth ahead of market, across geographies. Natural Care,
a value added variant of Red Label and 3 Rosesalso grew well ahead of the
market by building on the differentiated proposition of immunity. Taj Mahal
and Lipton led the charge in the premium segment and witnessed both price
and volume growth. Tea bags had a very successful year, with the launch of
new flavoured and green tea bags under these two brands, enabling the
Company to build leadership in the format of the future. Lipton Ice Tea was
launched in ready to drink and powder formats to enter into the fast
growing non-carbonated beverage market and to make the tea portfolio future
ready.
Taaza sales, which witnessed a slow start in the first half, picked up the
pace in the second half of the year. Taaza Gold was launched during the
year, as a premium variant of Taaza, in its largest geographies and has
received a very good response. A strong entry in the bottom of the pyramid
and mid price segment was made in select geographies through relevant
brands like Taaza Bachat, Ruby, A1 and Super.
The Instant Coffee market registered strong double digit value and volume
growth during the year. Sharp unprecedented inflation in coffee beans has
moved up the overall price table in the market but a clear consumer shift
in favour of coffee and a steadily evolving cafe culture continues to boost
coffee consumption.
The year 2011-12 saw many firsts from the house of Bru starting with its
entry into the premium freeze dried coffee segment with the launch of Bru
Exotica, followed by the launch of pure coffee with Bru Gold. Your Company
gained volume leadership with Bru in Instant Coffee segment. Bru also
registered strong double digit value growth gaining value market share
handsomely.
The Out of Home business continues to have high growth potential and has
made very good progress during the year. Your Company has also entered into
the retail services space with eight Bru World Cafes opened in Mumbai.
Depending upon the response to these Bru World Cafes, a view will be taken
on expanding and setting up more outlets.
5.3.3 Frozen Desserts
The Kwality Wall`s business had an excellent year and the growth during the
year was c. 13% higher than the average growth of the previous three years.
The three key platforms; Cornetto, Paddle Pop and Selection Take Home Tubs,
which are popular with youth, children and families respectively, continued
to do well by delivering a high double digit growth. Innovations continued
to help the category deliver a higher growth, particularly Cornetto Disc
launched in the premium cones segment delivered excellent results. In
addition, the innovations under Paddle Pop and Selection also did well and
helped the category deliver a higher growth.
Cornetto Luv Reels (CLR), which is India`s first internet and mobile based,
crowd sourced movie talent hunt was scaled up and three movies were
released under CLR 2. The campaign got a very positive response and
continued to win accolades and prestigious awards. In Paddle Pop, where it
is critical to have a portfolio across all child friendly price points,
your Company had a very successful launch of Apple Grape Jelly, which
became a rage amongst children. Paddle Pop Gaming League in its new avatar
continued to do well by becoming the largest kids gaming league across the
Country. Your Company also launched two popular flavours in the premium
Selection range; `Roasted Almond Choc` and `Black Current and Raisins`. The
Selection range continues to build consumption through activation during
festivals and strengthening association with the `Special Weekend Moments
with your family`.
During the year your Company achieved another milestone by adding 88
Swirl`s Parlors and crossing the 200 number of Parlors across the Country.
This helped to create almost 7 million plus happiness moments, while
serving unique offerings through the Kwality Wall`s Swirl`s outlets across
the Country.
Availability and visibility are the most important drivers of growth for
the category and your Company continues to invest in order to enhance
availability through more freezer deployment and usage of information
technology and analytics to drive better asset utilisation.
5.4 Exports Business
While the reported turnover was impacted by the transfer of the FMCG
exports business to wholly owned subsidiary, Unilever India Exports Limited
(UIEL), the underlying exports operations recorded 10% growth in turnover
during the year.
The Home & Personal Care segment witnessed a good year driven primarily by
Skin Care and Hair Care categories. Pearscontinued its good run and
achieved a robust growth of 14%.
The Foods & Beverages segment witnessed an excellent year. The flagship Tea
Bags category maintained strong sales in Australia and Japan. Sales of
Instant Coffee remained steady, but the profits for the overall segment
grew significantly, with export incentives being extended to conventional
Tea, Instant Tea and recently to Instant Coffee. The Marine Exports segment
significantly improved its profit compared to previous year, with focus on
more profitable product portfolio. The Rice business also reported healthy
growth in turnover and profits.
A robust value analysis, cost saving program, leveraging of government
incentive for exports and a favorable exchange rate enabled your Company to
improve margins. The business maintained high levels of customer service
and product quality and rationalised working capital levels, thereby
improving cash generation.
The demerger of FMCG exports business into UIELwas completed with all the
requisite approvals from Members, statutory authorities and Hon`ble High
Court. This demerger will enable the organisation to fully exploit the
opportunity in export markets and to provide necessary focus, flexibility
and speed to the business. Your Company will continue to provide the
necessary support to UIEL to drive the growth of exports business.
Leather (Pond`s Exports Limited)
The Leather business performed well to improve operating profitability and
achieved a robust sales growth of 9%. This performance was achieved through
new product designs, excellent customer service, world class quality and
cost innovations.
5.5 Water
Pureitis a breakthrough range of drinking water purifiers that provides
complete protection from harmful viruses and germs. Pureit`s germkill
performance meets the stringent criteria of the Environmental Protection
Agency (EPA), the regulatory agency in the USA. Pureitprovides this high
level of safety without needing electricity or continuous tap water supply.
Pureit also comes equipped with an end-of-life indicator, and an auto-shut
off system to further ensure complete safety for consumers.
During the year, your Company achieved another milestone in its mission of
making safe drinking water available to every Indian with the launch of
Pureit Intella at a very affordable price of Rs. 900/-. The Company also
expanded the Pureitpurifier portfolio with the launch of the premium
`PureitMarvella RO` which provides the additional consumer benefit of
removing dissolved salts. This new and advanced purifier ensures consistent
delivery of safe, pure and tasty drinking water through its unique 5-stage
purification system. In addition, the advance alert systems warns the user
for replacement of the RO membrane kit 15 days prior to the membrane
shutting off. The business team has also made substantial progress in
evolving a more scalable and viable distribution model.
Pureit has protected over six million homes across India. Pureit continued
to receive a range of external awards including the Golden Peacock Award
for innovation. This reflects the high regard in which the brand is held by
the scientific community and the public at large.
5.6 Hindustan Unilever Network
Hindustan Unilever Network business consists of three major brands Aviance
(Personal Care), Lever Ayush (Health Care) and Lever Home (Fabric Wash,
House Hold Care and Toothpaste). Your Company has re-engineered the
business both in terms of cost as well as the profile of business partner
base and is now fit for growth. Your Company has registered strong growth
in premium and prestige beauty & wellness segment and has successfully
begun the repositioning of the portfolio from mass market to premium and
prestige beauty & wellness segment. The Company, has now begun the process
of accelerating top-line growth in a profitable manner through focus on on-
ground activation, training and launch of differentiated innovations.
5.7 Beauty & Wellness
Lakme Lever Private Limited (LLPL), a wholly owned subsidiary of the
Company, has substantially accelerated the expansion of salons in 2011 by
opening 45 salons. During the year Lakme Ivana, a new unisex salon format
was launched and 8 such salons have been opened in this format. There are
174 Lakme salons in aggregate, of which 43 are Company owned / managed and
131 are franchisee salons. Lakme Academy was launched in collaboration with
Pivot Point, world leaders in beauty education to ensure adequate supply of
quality talent. Your Company will continue to support LLPL to drive growth
in this attractive market opportunity.
6. CUSTOMER MANAGEMENT
In 2011-12, your Company has built on the initiatives of the previous years
and has further strengthened its reputation as an execution and
distribution powerhouse. One of the key thrusts during the year was
coverage expansion in the rural markets. The Shakti network has been
leveraged to enroll 30,000 Shaktimaan who distribute in 100,000 new
villages. The Company has added a million stores over the last two years to
its coverage, thus doubling its direct coverage and tripling its rural
coverage. Your Company has now built a clear distribution advantage with a
direct reach of more than 2 million outlets.
The Perfect Store programme aimed at improving availability and visibility
of Company`s products at the point of purchase continued making good
progress with over a million retail outlets being enrolled under this
programme across urban and rural India. With a single minded focus on the
Perfect Store programme, your Company converted 500,000 enrolled outlets
into Perfect Stores during the year. It is now established that stores
which are consistently Perfect grew sales well ahead of average retail
growth and had higher market share growth for your Company`s overall
portfolio compared to overall share growth.
Your Company believes that the end consumer can be better served if the
capabilities of the front-end resources on the ground get enhanced. With
this objective in mind, work on a project to build a Human Resource
Information System (HRIS) for 20,000 plus third party associates, who work
in the market, was completed. This project is in the direction of improving
the systems and processes and the capabilities of our associates and
reaffirms your Company`s commitment towards its customers and consumers.
The year also saw greater focus on customers to drive growth and ensure
seamless working relationship with the partners. cross functional `Customer
Care` teams were deployed for the Modern Trade customers to drive higher
levels of customer service and engagement, which resulted in overall
customer delight. This initiative has given very good results and your
Company was awarded the best supplier by almost all leading Modern Trade
customers in this year. Your Company also developed `Best-in-Class`
sustainability initiatives with Walmart and Metro that helped bring alive
the Unilever Sustainable Living Plan (USLP). The learnings of Modern Trade
were extended to General Trade and a Joint Business Planning process with
top customer was institutionalised under the umbrella of `Unistar`, a
comprehensive customer reward and recognition program.
Your Company launched `Customer Credo` across 2300 plus distributors to
further improve customer connect and faster resolution of issues. Under
this initiative, the Company proactively engaged with distributors and
trade to get into the shoes of the customer and experience issues from
their lens. This was supported with a resolution mechanism using
`Levercare`, the customer helpline, taking customer centricity to the next
level. The programme was christened `Happy 2 Help` and is planned to be
repeated once every quarter.
During the year, your Company piloted an alliance with Tata Teleservices
Limited (TTSL) for the distribution of telecom products, leveraging its
rural distribution footprint. The Company has scaled up the distribution
alliance with TTSL to four states covering over 150 channel partners. This
distribution arrangement is aimed at accelerating rural growth by enabling
the Company to go deeper into rural India due to improved viability for
channel partners. This initiative not only helps the Company build more
stable Shakti entrepreneurs but also enables it to increase rural
investments thereby unlocking growth in this channel.
6.1 Project Shakti
During the year, your Company further strengthened the Shakti initiative by
extending the relationship with Shakti Amma to her family, through project
Shaktimaan. Project Shaktimaan enrols the unemployed / under employed male
members of the family to sell your Company`s products into the satellite
villages of Shakti. The initiative serves two convergent purposes -
enhances the livelihood opportunity of the Shakti family and improves the
quality and depth of your Company`s distribution network. This initiative
strengthens the philosophy behind Shakti, which comprises of:
* Leading market development
* Establish a suitable livelihood for the underprivileged
* Creating a self-sustaining business model
* Accessing markets beyond the reach of traditional distribution models
By the end of this year, the Shakti network has been leveraged to enroll
30,000 Shaktimaan who distribute in 100,000 new villages and the Shakti
programme had spread to 500,000 outlets, adding another dimension to your
Company`s distribution and contributing to tripling the rural footprint.
7. SUPPLY CHAIN
During the year, your Company has made significant progress towards its
vision of delivering outstanding customer service and enabling sustainable
growth. The service delivery standards showed steady improvement with CCFOT
(Customer Case Fill on Time) maintained at 90% and loss reduction by 20% in
comparison to last year. The Customer Satisfaction (eQ) survey scores have
been encouraging and suggest that the actions taken by the Company are in
the right direction. With the help of a sustained improvement program, the
Modern Trade OSA (On-Shelf Availability) has seen further improvement with
a loss reduction of 25% in comparison to last year. Your Company has
embedded Sales and Operation Planning Process (S&OP) ways of working as
part of the organisation culture and this is adding value to the business.
The Quality performance measured as CCPMU (Consumer Complaints Per Million
Units) has shown 12% reduction over last year. Quality continues to be a
focus area with thrust on design quality improvement and new quality
standard implementation for warehousing and transportation.
Your Company has a robust Supply Chain savings programme with continuous
focus on end-to-end Supply Chain cost reduction with new technologies,
processes and methods. During the year, your Company has delivered 6%
saving in Supply Chain cost with factories delivering more than 8% saving
with quantum improvement in technical efficiencies, wastage reduction and
yield improvement.
The renewed focus on TPM (Total Productivity Management) and visible
leadership commitment toward turbo charging TPM, through strong focus on
autonomous maintenance, strong circle engagement, loss analysis and reduced
losses to improve PQCDSM (Productivity, Quality, Cost, Delivery, Safety and
Morale), have helped the Company to improve employee engagement, efficiency
and derive competitive advantage.
In order to support the volume growth, your Company has progressed on the
long-term plan to create capacities in line with demand so as to enable
growth while managing costs. Your Company has successfully executed all
capacity creation projects on time to ensure smooth delivery during the
year. A number of projects on sustainable energy (bio-mass boilers), rain
water harvesting and waste reduction projects like sludge digesters and
vermi-composting have been initiated and commissioned across manufacturing
sites.
There has been significant improvement in Innovation OTIF (On Time in Full)
with more than 100 innovation networks being
executed during the year. This ability of execution powerhouse is
supporting business to delight consumers and customers and catering to
growth.
The Procurement function of the Company has focused on `Partner to Win`
programme with supplier and business partners to reduce lead time,
procurement cost, improving reliability and working on new innovation. Your
Company also leverages benefits of scale and synergy through Unilever`s
global buying network.
8. RESEARCH, DEVELOPMENT AND INNOVATION
Your Company continues to benefit from the strong foundation and long
tradition of Research & Development (R&D) which differentiates us from many
others. These benefits flow not only from work done in Research Centres in
India, but also from the centres of Unilever`s global research work. With
the world class facilities and a superior science and technology culture,
we are able to attract the best of talent to provide significant technology
differentiation to our products and processes.
The R&D labs in Mumbai and Bangalore are aligned significantly to
Unilever`s global R&D. Many of the projects which are run out of these
centers are of global relevance and with a strong focus on needs of this
region and the overall Developing & Emerging (D&E) world.
The R&D programmes of your Company 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 the areas of Health and Hygiene,
Laundry, Household Care, Skin Care, Water Purification, Beverages, Frozen
Dessert and Naturals. The R&D group also comprises critical functional
capability teams in the areas of Regulatory, Clinicals, Patents,
Information Technology, Safety and Open Innovation functions.
On the back of strong R&D inventions, close to hundred new products were
launched successfully in the market in 2011-12. In Skin Care, Vaseline Men
range products with improved moisturising and skin lightening benefits were
re-launched with distinctive packaging and formats. Fair & Lovely Spot
Corrector Pen, Pond`s White Beauty daily spot-less lightening cream with
proprietary photo protection technology delivering SPF 20 PA++ and Fair &
Lovely Anti-Marks were also introduced during the year. In Skin Cleansing,
improved Lux and Hamam soaps, including a new variant on Lux (Lux Fresh)
were launched with improved consumer benefits. Luxliquid hand wash and body
wash were also introduced in the market along with a range of facial
cleansing products of Pond`s, Fair & Lovely, Vaseline and Dove.
New variants of Dove hair care range, including shampoo, conditioner and
other post wash formats, were launched to meet the needs of different
segments of the hair care market.
Clear shampoo was re-launched with a superior formula and a separate range
for men and women. PepsodentGermicheck was re-launched with improved
formulation during the year. Pepsodent Gumcare strengthened its position by
highlighting the mechanism of action in communication. Fire-Freeze, the new
dual-sensation extra-freshness variant of Closeup was introduced during the
year.
During the year, Surf and Wheel range of detergents were re-launched with
improved product propositions. New designs of Pureit, developed by R&D to
the cater to needs of the mass market and premium consumers, were also
launched during the year.
Foods R&D made significant contribution in 2011-12 to the Company`s Foods &
Beverages portfolio by delivering several innovations in the market. Among
them were an exciting range of instant soups under Knorrwith the great
taste of soups and crunch of croutons. In the Instant Coffee segment, R&D
delivered two major product and packaging innovations - Bru Gold, a premium
agglomerated 100% instant coffee and Bru Exotica, a range of single origin
freeze dried coffee, both packed in an innovative triangular glass bottle
design. R&D contributed towards the re-launched formulation and packaging
of Kissan tomato ketchups and Jams. In the Frozen Dessert segment,
Unilever`s flagship brand Fruttare made with real fruits was launched. A
premium range of Selection Tubs was launched with a global packaging design
and 3 new flavours. R&D made a significant contribution in developing a
premium range of flavoured tea bags under the Taj Mahal brand and a range
of ready to drink and ready to prepare ice tea under the Lipton brand.
R&D has further contributed to the sustainability agenda of the Company by
enabling significant reduction in packaging material consumption through
several material efficiency initiatives.
The continuous stream of innovative and technically advanced products
launched in the market was a result of significant R&D investments and the
scientific talent that the Company can attract and retain. With its strong
scientific expertise and potential to deliver high value technologies,
India continues to occupy a premier position in Unilever R&D. With the
strong support from R&D as well as the brand development capabilities, your
Company is well placed to meet the challenges arising from the increased
competition intensity and the opportunities to drive faster growth. Your
Company is working towards further strengthening the in-house scientific
capabilities of the Indian R&D function and building new expertise bases to
retain the competitive edge in the market place.
The details of expenditure on scientific research and development at the
Company`s 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,
2012 are as under:
* Capital Expenditure : Rs. 1.88 Crores
* Revenue Expenditure : Rs. 22.91 Crores
9. environment, safety, health and energy conservation
Your Company continues to focus on the vision of being an `Injury Free` and
`Zero Environment Incident` organisation. The behavioral safety programme
is in place for more than seven years now. With increased focus on road
safety campaigns, defensive driving training, hand in machine and other
campaigns across units your Company has reduced accidents, measured as
Total Recordable Frequency Rate (TRFR), significantly over the last 4 year
period. The TRFR has come down by 46% in 2011 (in comparison to 2008
baseline) with 10.8% reduction in 2011 (in comparison to the previous
year).
In line with targets of the Unilever Sustainable Living Plan (USLP), where
Unilever`s vision is to double the size of its business while reducing the
overall impact on environment, your Company has steadily taken steps to
reduce CO2 emissions. In 2011, the CO2 emission in Company units has
reduced by 9.9% over 2010 and 14.7% over 2008 baseline. With respect to
energy consumption, the Company`s operations achieved 12% improvement over
2010 and 21.7% improvement over 2008 baseline. Your Company has also
increased the use of renewable resources like bio-mass fuel. The renewable
energy proportion has reached 13.7% of total energy consumption in 2011.
With respect to water usage, your Company`s operations achieved reduction
of 10.1% over 2010 and by 21.5% over 2008 baseline. Rain Water Harvesting
(RWH) has been implemented in more than 50% of the manufacturing units and
5 units of your Company have created the RWH potential to return more water
to the ground than their water consumption and 33 manufacturing sites have
been made zero discharge sites.
Your Company pursues a three pronged approach in waste management; Reduce,
Reuse and Recycle.
* Reduce waste generation through technical interventions and optimisation
of processes like CIP (Cleaning in Place), sludge digester and filter press
at Effluent Treatment Plants.
* Reuse waste using new technologies of co-processing with cement
manufacturers and generating fuel from waste.
* Recycle waste through initiative like vermi-composting project. This has
been initiated at three sites to treat the Effluent Treatment Plant waste
into manure. The manure is being used as fertiliser in the garden which is
effective in disposing waste in a sustainable manner. In 2011, over 96% of
waste generated was liquidated through sustainable recycling.
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.
10. human resources
Your Company`s 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 shop floor.
Your Company`s employer brand has been built with high levels of rigor and
thoroughness that has gone into making its consumer brands and reaching out
to its customers. Your Company is widely acclaimed for its people
development practices and has reinforced its position in this area in 2011-
12. This, coupled with its ability to attract the best talent, gives a
competitive edge to the organisation. Your Company, once again, retained
its position as the No. 1 Employer Brand with campus students of top
business schools in 2011 and was voted to this position from a mix of FMCG,
Consulting, Financial Services organisations, etc.
Your Company has a vision to improve its Gender Balance, which requires an
overhaul of your Company`s policies and programmes to ensure alignment and
support to our Gender Balance agenda. The roadmap involves a combination of
bringing in women in adequate numbers and creating enablers to ensure a
culture of inclusion. These enablers could be as varied as flexi time to
agile working, to more open and visible leadership models. `Career by
Choice` is one such initiative which is a unique re-hire programme that
will provide a platform for women looking for real opportunities to work
flexibly and part time for live business projects.
The initial part of the journey for Talent and Organisation Assessment was
undertaken successfully in 2010. Keeping in mind the needs and requirements
of the current talent pool and also enhancing the Company`s preparedness
for the future, your Company has now institutionalised the next phase of
the Talent and Organisation Assessment charters by charting out the best
practices for each stream.
Your Company has identified Beauty, Foods, Modern Trade, Rural and Water as
key capabilities in order to win in the future and our investment in
capability building is focused on these in addition to our core
capabilities in Marketing, Sales and Distribution. Your Company has also
launched a programme in mid 2011 with an aim to build capability, manage
performance and augment the levels of engagement for 3P sales associates to
enable active presence at the Point of Purchase (PoP), which will be a
source of sustainable competitive advantage in the long run. Your Company
undertook intensive training programmes through a combination of face-to-
face and virtual learning approaches. Over 35,000 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
capability in digital and social media to find new platforms for brands to
engage with consumers in India more effectively.
The Global People Survey is a part of the Unilever Employee Insight
Programme which aims to give a voice to the Company`s people throughout the
organisation and provide a vehicle to make the views of everybody heard, as
also to provide leaders with regular, meaningful and actionable feedback.
It has 112 questions spread across 20 dimensions in the area of Strategic
Leadership at Unilever level, Strategic Leadership at Organisation level,
Immediate Boss Effectiveness and Engagement. Feedback from this survey
forms the basis of holistic engagement plans which are reviewed
consistently. Global People Pulse Survey (2011) confirmed that India scores
featured in the top 25 countries across Unilever. An extremely favorable
94% of employees said that they were proud to work for your Company. This
was on account of a number of proactive and innovative initiatives to
engage our employees, the most significant being continuous and consistent
business linked engagement, a vision for the future of the business and
clarity and transparency to individuals on their own careers. This is also
in recognition of your Company`s 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. The tool has been a pioneering tool in the area of workmen
capability development and promotes higher transparency, focused training
intervention linked to individual and business needs. The tool has
delivered results for over a year now and your Company has successfully
completed appraisals thereby identifying top performers and completed skill
gap analysis of over 10,000 workmen online. Business Linked Engagement and
TPM Edge programmes continued with full focus and rigour during the year
and delivered significant improvement in factory operations.
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.
11. information technology
Your Company continues to invest in Information Technology, leveraging it
as a source of competitive advantage.
The enterprise wide SAP platform forms the backbone of IT and encompasses
all core business processes in the Company and also provides a
comprehensive data warehouse with analytics capability that helps in better
and speedier decisions. SAP is now used for collaboration with the
suppliers and customers. Integrating systems with the key customers has
allowed your Company to partner much more closely, leading to better
customer service. Supply Chain optimisation, enabled by the IT capability,
remains a source of significant value.
Your Company has institutionalised an extensive IT capability for customer
development function to support execution in the front-end. All
distributors run a standard distributor management system. The
distributors` salesmen 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 gives your Company, the ability to
customise the sales call for each outlet on a scientific basis. This has
helped improve the effectiveness and efficiency of the sales process
significantly.
Your Company is further enhancing IT capabilities built for rural expansion
to equip Shakti Ammas using low cost mobile technology in order to make
their market working more controlled and efficient. This is one of the key
enablers that will allow to leverage our rural distribution to other
partnerships in the future.
Your Company continues to invest in IT infrastructure to support business
applications and has made use of India`s expanded telecom footprint to
provide high bandwidth terrestrial links to all operating units. Your
Company also used software as a service to provide agile, 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 and tested
for efficacy and adequacy.
12. FINANCE AND ACCOUNTS
Your Company`s continued focus on cash generation resulted in a strong
operating cash flow during the year; driven by good business performance,
efficiencies and cost savings across the Supply Chain and continued focus
on working capital management. Your Company managed investments prudently
by deploying cash surplus in a balanced portfolio of safe and liquid
instruments. Capital Expenditure during the year was at Rs. 310.01 Crores
(last year - Rs. 311.31 Crores). This was primarily in the areas of
capacity expansion, consolidation of operations, information technology,
energy and other cost savings.
The finance team of your Company has undertaken a programme to strengthen
the processes across transactions, accounting, reporting and information to
support the Company`s growth plans. One of the significant projects that
has been implemented during the financial year is `Project Parivartan`
which was aimed at transforming the payment process. This project, aimed at
simplifying the payments process and improving payment efficiency, has been
implemented and rolled out across all units of the Company and has shown a
significant improvement in efficiency levels. Similar projects are underway
in the area of accounting, reporting and information management which will
move the Company`s processes to world class levels and support the growth
plans of the Company. These programmes are aligned with the overall finance
programme within Unilever.
The Company has not accepted any fixed deposits during the year. There was
no outstanding towards unclaimed deposit payable to depositors as on 31st
March, 2012.
In terms of the provisions of Investor Education and Protection Fund
(Awareness and Protection of Investors) Rules, 2001, Rs. 7.76 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, 2012 are
given below:
Period ended
2007 31st March, 2009-10 2010-11 2011-12
2009
Return on Net Worth (%) 80.1 103.6* 88.2 74.0 77.7
Return on Capital
Employed (%) 78.0 107.5* 103.8 87.5 96.8
Basic EPS (after
exceptional items) (Rs.) 8.73 11.46** 10.10 10.58 12.46
* Annualised numbers for proportionate period
** for fifteen month period
Segment-wise results
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 and Water. The audited financial
results of these segments are given as part of financial statements.
12.1 Risk and Internal Adequacy
Your Company manages cash and cash flow processes assiduously involving all
parts of the business. There was a net cash surplus of Rs. 1,830.04 Crores
as on 31st March, 2012. The Company`s debt equity ratio is very low which
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 Company`s imports and exports. Company accounts for mark-to-market gains
or losses every quarter end in line with the requirements of AS-11.
The Company`s 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 Company`s internal
control environment and monitors the implementation of audit
recommendations including those relating to strengthening of the Company`s
risk management policies and systems.
Your Company has an elaborate process for Risk Management. This rests on
the three pillars of Business Risk Assessment, Operational Controls
Assessment and Policy Compliance processes. 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. Some of the risks relate to competitive
intensity and cost volatility.
13. DEMERGER
Consequent to the approval of the Members in the Court Convened Meeting
held on 28th July, 2011 and approval of the Hon`ble High Court at Bombay,
the Scheme of Arrangement for transfer of certain assets, liabilities and
properties of FMCG Exports Business Division of the Company to its wholly
owned subsidiary, Unilever India Exports Limited was made effective
1st January 2012.
14. CORPORATE SOCIAL RESPONSIBILITY
Sustainability has always been integral to your Company`s way of doing
business. In November 2010, Unilever launched the Sustainable Living Plan,
which puts sustainability at the heart of its business strategy. The
central objective of the Unilever Sustainable Living Plan is to decouple
growth from environmental footprint, while at the same time increasing your
Company`s positive social impacts. The Unilever Sustainable Living Plan
(USLP) has three significant outcomes by 2020:
* Help more than a billion people to improve their health and well-being
* Halve the environmental footprint of our products
* Source 100% of our agricultural raw materials sustainably
Underpinning these three broad goals are around 60 time bound targets
spanning our social, economic and environmental performance across the
value chain - from the sourcing of raw materials all the way through to the
use of products in the home.
The Unilever Sustainable Living Plan represents a long term goal and
progress in 2010-11 has already been encouraging. By the end of 2011, for
example, almost two-thirds of the palm oil used in products globally was
being purchased from certified sources. In India, 60% of tomatoes are
sourced sustainably.
Pureit in-home water purifier delivers safe water, without requiring
running water or electricity, and at a low cost, to over 30 million people
in India. In 2010-11, Lifebuoyshygiene programme reached more than 30
million people in India, spreading hygiene awareness and encouraging
behaviour change.
Your Company has taken steps to ensure that the food brands have a better
nutritional profile. Around 60% of the major food and beverage brands, viz.
Brooke Bond, Bru, Knorr, Kissan and Kwality Wall`s, comply with the
`Healthy Choice` guidelines as on date.
In 2011, your Company reduced CO2 emissions by 14.7% (per tonne of
production over 2008 baseline); water use by 21.5%; and waste by 52.8% in
factories in India. Your Company has improved CO2 efficiency in
transportation by 17.8% despite significant increase in volumes. During the
year, the Frozen Dessert business has deployed over 23,775 environment
friendly HC-based freezers in its fleet.
Your Company has extended the Shakti initiative by adding 30,000 Shaktimaan
(male family members of existing Shakti entrepreneurs who have enrolled for
the programme), to sell the products by visiting the surrounding villages
on bicycles.
Even though the Company is making changes across the length and breadth of
its business, much remains to be done. The Company has to develop products
and processes that enable growth in a resource stressed world, and
encourage behaviour and habits that help people live sustainably. While
your Company has an ambitious and challenging agenda, it certainly doesn`t
have all the answers. What it knows, is that it requires all of us to work
together for achieving a sustainable future.
Your Company is also working in partnership with governments and NGOs to
implement water conservation projects in more than 180 villages in 17
districts of India. By 2015, your Company aims to create water conservation
capacity of a hundred billion litres to enable a better future for a
million people.
In April 2012, your Company has released India progress report on Unilever
Sustainable Living Plan as well as a report on your Company`s community
water conservation projects.
15. EMPLOYEE STOCK OPTION PLAN (ESOP)
Details of the shares issued under 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 grant.
Pursuant to the approval of the Members at the Annual General Meeting held
on 29th May, 2006, the Company adopted the `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. As per the
terms of the Performance Share Plan, employees are eligible for the award
of conditional rights to receive equity shares of the Company at the face
value of Re. 1/- per share. These awards will vest only on the achievement
of certain performance criteria measured over a period of 3 years. During
the year 168 employees, including Wholetime Directors, were awarded
conditional rights to receive a total of 4,12,633 equity shares at the face
value of Re. 1/- each. The above mentioned comprises of conditional grants
made to eligible managers covering performance period 2012-14.
The `2006 HLL Performance Share Scheme` was introducted as a measure to
reward and motivate employees as also to attract the talent and retain the
key employees. On a review of the operating experience of the said scheme
and bearing in mind the charges in the global trends on management rewards,
it is proposed to revise the approach of award of share options under the
scheme by adopting a revised `2012 HUL Performance Share Scheme`.
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 the year 2011 your Company received the ICSI National Award
for Excellence in Corporate Governance, in recognition of its Corporate
Governance practices.
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 with the view 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 Remuneration Committee, Risk Management
framework, are already practised by your Company. Your Company has been in
substantial compliance of these guidelines.
During the year Secretarial Audit and Secretarial Standards Audit were
carried out. The detailed reports on the same are given at page nos. 67 to
69 of this annual report.
17. OUTLOOK
The fiscal year 2011-12 witnessed slowdown of economic activities
particularly industrial output. Inflation also remained at elevated level
throughout the fiscal year. Private investment has declined in its pace of
growth considerably affecting the growth rate of the economy. Higher
spending on subsidies on account of oil and fertilisers widened the fiscal
deficit of the centre more than the budget estimates.
The RBI has projected a GDP growth of 7.2% for 2012-13 whereas the Economic
Survey 2011-12 projected a GDP growth of 7.6%. All these projections point
to continuation or improvement over the pace of economic activity of the
previous year. Combined with a lower inflation rate, the prognosis for the
new financial year is one of improved performance on growth front. Stable
external conditions and a favourable monsoon would be critical to the
realisation of these projections. The growth prospects for agriculture in
2012-13 will hinge on the performance of monsoon.
FMCG markets are expected to grow, however uncertain global economic
environment, inflation and adverse impact of rupee depreciation and
competitive intensity continue to pose challenges for the future. While the
near term conditions pose a challenge for the economy, the medium to longer
term trends based on rising incomes, aspirations, low consumption levels,
etc. are positive and an opportunity for the Company.
17.1 Cautionary Statement
Statements in this report, particularly those which relate to Management
Discussion and Analysis, describing the Company`s 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
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 Company`s
subsidiaries for the financial year ended 31st March, 2012 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 the
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 includes the financial information of its subsidiaries.
19. BOARD OF DIRECTORS
Mr. Deepak Parekh, Independent Director and Chairman of the Audit Committee
of the Company, stepped down from the Board of the Company with effect from
27th December, 2011, after a tenure lasting more than 14 years. The Board
acknowledges and places on record its deep appreciation for the
contribution made by Mr. Deepak Parekh as an Independent Director and the
Chairman of the Audit Committee of the Company.
Mr. Gopal Vittal, Executive Director, Home & Personal Care resigned from
the Board of the Company with effect from 20th January, 2012, to pursue
opportunities outside Unilever. The Board acknowledges and places on record
its appreciation for the contribution made by Mr. Gopal Vittal as a
Wholetime Director on the Board of the Company.
Mr. O. P. Bhatt was appointed as an Additional Director on the Board of the
Company with effect from 20th December, 2011, in accordance with Section
260 and Articles of Association of the Company. Notices have been received
from Members pursuant to Section 257 of the Companies Act, 1956 together
with necessary deposits proposing the appointment of Mr. O. P. Bhatt as
Non-Executive Independent Director on the Board of the Company.
The Members of the Company in the Extraordinary General Meeting held on 4th
April, 2008 had appointed Mr. Nitin Paranjpe as a Managing Director and
Chief Executive Officer (CEO) of the Company for a period of five years,
with effect from 4th April, 2008. The current term of office of Mr. Nitin
Paranjpe as a Managing Director and CEO of the Company is due to expire on
3rd April, 2013. It is proposed to re-appoint Mr. Nitin Paranjpe as the
Managing Director and CEO for a further period of five years commencing
from 4th April, 2013.
In accordance with the Articles of Association of the Company, all other
Directors, except for 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 affairs of the Company are 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. Geetu Verma joined the Management Committee of the
Company as Executive Director - Foods to succeed of Mr. Shrijeet Mishra,
who resigned from the services of the Company.
Mr. Hemant Bakshi, who earlier held the position of Executive Director -
Sales and Customer Development, was appointed as Executive Director - Home
& Personal Care of the Company. Mr. Hemant Bakshi has succeeded Mr. Gopal
Vittal, Executive Director - Home & Personal Care, who ceased to be the
member of the Management Committee consequent to his resignation.
Mr. Manish Tiwary was appointed as a member of the Management Committee as
Executive Director - Sales and Customer Development. Before being appointed
to the Management Committee, Mr. Manish Tiwary was Vice President, Modern
Trade of the Company.
21. AUDITORS
M/s. Lovelock & Lewes, Statutory Auditors of the Company retire and offer
themselves for re-appointment as the Statutory Auditor 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 at
the forefront of the Industry.
Your Directors would also like to acknowledge the excellent contribution by
Unilever to your Company in providing with 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 their 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 Company`s endeavor to build and nurture strong links
with the trade based on mutuality of benefits, respect to and co-operation
with each other, consistent with consumer interests.
The Directors also take this opportunity to thank all investors, clients,
vendors, banks, regulatory and government authorities and stock exchanges,
for their continued support.
On behalf of the Board
1st May, 2012 Harish Manwani
Mumbai Chairman
ANNEXURE TO THE DIRECTORS` REPORT
Disclosure Of Particulars With Respect To Conservation Of Energy:
For the year ended 31st March,
2012 2011
Canned and processed fruits and vegetables
A POWER AND FUEL CONSUMPTION
1 Electricity
(a) Purchased
Unit Lakh KWH 68.35 53.65
Total Amount Rs. Lakhs 435.43 309.49
Rate / Unit Rs. 6.37 5.77
(b) Own Generation
(i) Through own generator
Unit Lakh KWH 0.88 0.87
Unit per ltr of diesel oil KWH 2.47 2.74
Cost per unit Rs. 16.84 14.79
(ii) Through steam turbine/generator Nil Nil
2 Furnace Oil
Quantity KL 1,260.14 1,139.23
Total Cost Rs.Lakhs 566.77 392.03
Average Rate Rs. / KL 44,976.63 34,411.88
B. Consumption per unit of production
Electricity Kwh/Tonne 270.72 281.08
Furnace Oil Lts/Tonne 49.91 59.69
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 plan of action have been discussed in details in
the Director`s report
3. Expenditure of R&D:
Rs. Crores
For the year ended 31st March,
2012 2011
(a) Capital 5.84 5.79
(b) Recurring 155.39 93.57
(c) Total 160.69 99.36
(d) Total R& D Expenditure as a percentage
of total turnover 0.73% 0.50%
TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION
1. Efforts, in brief, made towards technology absorption, adoption and
innovation:
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 Director`s report.
3. Imported Technology:
(a) Technology imported
(b) Year of import > Continuous Import from Unilever under technical
collaboration agreement
(c) Has technology been fully absorbed
Rs. Crores
For the year ended 31st March,
2012 2011
FOREIGN EXCHANGE EARNINGS & OUTGO
Foreign Exchange Earnings 495.75 1,428.24
Foreign Exchange Outgo 2,198.72 2,645.01
DISCLOSURE PURSUANT TO THE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF
INDIA (EMPLOYEE STOCK OPTION SCHEME AND EMPLOYEE STOCK PURCHASE SCHEME)
GUIDELINES, 1999
2001 HLL Stock Option Plan:
2001 2002 2003
a) Options 24,75,100 equity 32,33,601 equity 42,76,090 equity
granted shares of Re. 1/- shares of Re. 1/- shares of Re. 1/-
each valued at Rs. each valued at Rs. each valued at Rs.
53.82 crores 68.02 crores 58.16 crores
b) The Closing market Closing market Closing market
pricing price as on the price as on the price as on the
formula date date date
of option grant - of option grant - of option grant-
24.07.2001 23.04.2002 24.04.2003
Rs. 217.45 Rs. 210.35 Rs. 136.00
c) Options Options vested Options vested Options vested
vested after three years after three years after three years
from date of grant from date of grant from date of grant
(24.07.2001) (23.04.2002) (24.04.2003)
d) Options 15,90,600 equity 23,05,101 equity 32,53,000 equity
exercised shares of Re 1/- shares of Re 1/- shares of Re 1/-
(as at 31st each each each
March, 2012)
e) The total 15,90,600 equity 23,05,101 equity 32,53,000 equity
number of shares of Re 1/- shares of Re 1/- shares of Re 1/-
shares each each each
arising
as a result
of exercise
of option
f) Options 8,84,500 equity 9,04,320 equity 6,18,345 equity
lapsed (as shares of Re 1/- shares of Re 1/- shares of Re 1/-
at 31st each each each
March,
2012)
g) Variation Reduction in Reduction in Reduction in
of terms of exercise price by exercise price by exercise price by
options Rs.8.76 per share Rs.8.76 per share Rs.8.76 per share
h) Money Rs 9.68 crores Rs 15.62 crores Rs 4.21 crores
realized by
exercise of
options
during the
year
h) Money Rs 9.68 crores Rs 15.62 crores Rs 4.21 crores
i) Total Nil equity shares 24,180 equity 4,04,745 equity
number of of Re.1/-each. shares of Re 1/- shares of Re 1/-
options in each each
force (as
at 31st
March, 2012)
2001 HLL Stock Option Plan
2004 2005
a) Options granted 16,30,450 equity 15,47,700 equity
shares of Re. 1/- shares of Re. 1/-
each valued at Rs. each valued at Rs.
20.95 crores 20.44 crores
b) The pricing formula Average of highs Closing market
and lows for price, prior to the
two week period date of meeting
preceding the date of the Board of
of option grant- Directors in which
30.06.2004 the options were
granted-26.05.2005
Rs 128.47 Rs. 132.05
c) Options vested Options vested Options vested
after three years after three years
from date of grant from date of grant
(30.06.2004) (27.05.2005)
d) Options exercised 10,79,106 equity 10,30,900 equity
(as at 31st March, shares of Re 1/- shares of Re 1/-
2012) each each
e) The total number of 10,79,106 equity 10,30,900 equity
shares arising as a shares of Re 1/- shares of Re 1/-
result of exercise of each each
option
f) Options lapsed (as at 3,33,500 equity 2,66,900 equity
31st March, 2012) shares of Re 1/- shares of Re 1/-
each each
g) Variation of terms of NA NA
options
h) Money realized by Rs 1.88 crores Rs 2.16 crores
exercise of options
during the year
i) Total number of 2,17,844 equity 2,49,900 equity
options in force (as at shares of Re 1/- shares of Re 1/-
31st March, 2012) each each
DISCLOSURE PURSUANT TO THE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF
INDIA (EMPLOYEE STOCK OPTION SCHEME AND EMPLOYEE STOCK PURCHASE SCHEME)
GUIDELINES, 1999
2006 HLL Performance Share Scheme:
2006 2007 2008
a) Options granted Conditional Conditional Conditional
grant of grant of grant of
3,49,750 2,35,950 2,06,250
equity shares equity shares equity shares
of Re.1/-each of Re.1/-each of Re.1/-each
valued at Rs. valued at Rs. valued at
3.49 lakhs 2.35 lakhs Rs.2.06 lakhs
b) The pricing Book value of Book value of Book value of
formula Re.1 Re. 1 Re.1
c) Options vested 2,55,166 2,66,180 1,57,455
options vested options vested options vested
on 01.11.2009 on 01.05.2010 on 20.03.2011
d) Options exercised 2,55,166 2,64,530 1,53,952
(as at 31st March, equity shares equity shares equity shares
2012) of Re.1/each of Re.1/each of Re.1/- each.
e) The total number 2,55,166 2,64,530 1,53,952
of shares arising equity shares equity shares equity shares
as a result of of Re.1/-each of Re.1/each of Re.1/-
exercise of option each.
f) Options lapsed NIL 1,650 equity 52,308 equity
(as at 31st March, shares of shares of
2012) Re 1.-each Re 1.-each
g) Variation of NA NA NA
terms of options
h) Money realised NIL NIL 1.54 lakhs
by exercise of
options during
the year
i) Totalnumberof NIL NIL NIL
options in force
(as at 31st March,
2012)
2006 HLL Performance Share Scheme
2009 2010 2011
a) Options granted Conditional Conditional Conditional
grant of grant of grant of 3,38,905
3,33,811 2,87,934 equity equity shares
equity shares shares of of Re.1/-each
of Re.1/- each Re.1/- each valued at Rs.3.39
valued at valued at lakhs
Rs.3.33 lakhs Rs.2.88 lakhs
b) The pricing Book value of Book value of Book value of
formula Re.1 Re.1 Re.1
c) Options vested Options will Options will Options will
vest after 3 vest after 3 vest after 3
years from years from the years from
the date the date of grant date of grant
of grant (29.03.2010) (29.03.2011)
(11.05.2009)
d) Options exercised NIL NIL NIL
(as at 31st March,
2012)
e) The total number NIL NIL NIL
of shares arising
as a result of
exercise of option
f) Options lapsed 68,990 equity NIL NIL
(as at 31st March, shares of
2012) Re 1. - each
g) Variation of NA NA NA
terms of options
h) Money realised NIL NIL NIL
by exercise of
options during the
year
i) Total number of Conditional Conditional Conditional
options in force grant of grant of grant of 3,38,905
(as at 31st March, 2,64,821 2,87,934 equity equity shares of
2012) equity shares shares of Re.1/-each
of Re.1/- each Re.1/-each
2006 HLL Performance Share Scheme
2012
a) Options granted Conditional
grant of 4,12,633 equity shares
of Re.1/-each valued at Rs.4.12 lakhs
b) The pricing Book value of
formula Re.1
c) Options vested Options will
vest after 3 years from the date
of grant (17.02.2012)
d) Options exercised NIL
(as at 31st March, 2012)
e) The total number NIL
of shares arising
as a result of exercise
of option
f) Options lapsed NIL
(as at 31st March, 2012)
g) Variation of NA
terms of options
h) Money realised NIL
by exercise of options
during the year
i) Total number of Conditional
options in force grant of
(as at 31st March, 4,12,633 equity
2012) shares of Re.1/- each
j) Employee wise details of options granted to:
i) Senior managerial personnel: Refer Note iii
ii) any other employee who receives a grant in any one year of option
amounting to 5% or more of option granted during that year;
Under Performance Share Plan 2012, Nitin Paranjpe-Managing Director and CEO
was awarded 30,212 shares (7.3%) and Sridhar Ramamurthy-Executive Director
(Finance & IT) and CFO was awarded 12,085 shares (2.9%).
iii) Identified employees who were granted option during any one year,
equal to or exceeding 1% of the issued capital (excluding outstanding
warrants and conversions) of the Company at the time of grant:
Nil
k) Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise
of option calculated in accordance with Accounting Standard (AS) 20
`Earnings Per Share`. Rs. 12.45
l) i) Method of calculation of employee compensation cost The Company has
calculated the employee compensation cost using the intrinsic value method
of accounting to account for Options issued under the "2006 HLL Performance
Share Scheme".
ii) Difference between the employee compensation cost so computed at (i)
above and the employee compensation cost that shall have been recognised if
it had used the fair value of the Options Gain of Rs. 0.95 crores
iii) The impact of this difference on profits and on EPS of the Compan:
The effect of adopting the fair value method on the net income and earnings
per share of 2011-12 is presented below:
Net Income Rs. Crores
As reported 2,691.40
Add: Difference between Intrinsic value and Fair
Value Calculation 0.95
Adjusted Net Income 2692.35
(Rs.)
Earnings Per Share
(Basic & Diluted) Basic EPS Diluted EPS
-As reported 12.46 12.45
-As adjusted 12.46 12.46
m) Weighted average exercise price and weighted average fair value:
Excercise Price is Re.1/-
n) Fair value of Options based on Black Scholes methodology:
Assumptions
Risk free rate 7.78% for 2011 and 8.23% for 2012
Expected life of options 3.125 years for each plan
Volatility 30.86% for 2011 and 25.81% for 2012
Expected Dividends Rs. 7.50 per share
Closing market price of
share on date of option grant Rs.276.70 for 2011 and Rs.383.70 for
2012
Notes:
i) Pursuant to approval of the Members at the Annual General Meeting of the
Company held on 29th May, 2006, the Company had adopted a revised Scheme
"2006 HLL Performance Share Scheme" in place of the existing "2001 HLL
Stock Option Plan".
ii) The Pricing Formula adopted by the Company for `Employees Stock Option
Plan` for the years 2001 to 2005, was based on the "Market Price" as
defined in SEBI (Employees Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines 1999, and Maximum number of options to be issued per
employee in a fiscal year did not exceed 0.01% of the outstanding issued
share capital, as expressed in Clause 11 of the `2001 HLL STOCK OPTION
PLAN` in the line with Clause 6.2(h) of SEBI (Employees Stock Option Scheme
and Employee Stock Purchase Scheme) Guideline 1999.
iii) Details of Options granted to senior managerial personnel.
Name Performance shares awarded
Nitin Paranjpe 30,212
Sridhar Ramamurthy 12,085
Leena Nair 9,555
Pradeep Banerjee 5,460
Hemant Bakshi 15,104
Dev Bajpai 5,460
Geetu Verma 5,460
Manish Tiwary 8,190
SECRETARIAL AUDIT REPORT
The Board of Directors,
Hindustan Unilever Limited,
Unilever House,
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, 2011 to
31st March, 2012 for compliances of provisions of:
1. The Companies Act, 1956 (the Act) and the Rules made thereunder;
2. The Depositories Act, 1996 and the Regulations and Byelaws framed
thereunder;
3. The following Regulations and Guidelines prescribed under the Securities
and Exchange Board of India Act, 1992 (`SEBI Act`):
(a) Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997 (effective till 22nd October, 2011)
and Securities Exchange Board of India (Substantial Acquisition of Shares
and Takeovers) Regulations, 2011 (effective from 23rd October, 2011)
(b) Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 1992;
(c) Securities and Exchange Board of India (Employee Stock Option Scheme
and Employees Stock Purchase Scheme) Guidelines, 1999;
(d) Securities and Exchange Board of India (Buyback of Securities)
Regulation, 1998.
4. The Securities Contracts (Regulation) Act, 1956 (`SCRA`) and the Rules
made thereunder; and
5. The Listing Agreements entered into with Bombay Stock Exchange Limited
and National Stock Exchange of India Limited.
Based on our examination and verification of the registers, records and
documents produced to us and according to the information and explanation
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 entries therein;
(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 78th Annual General Meeting held on 28th July,
2011;
(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 re-appointment of Directors including the
Managing Director and Executive Directors;
(k) payment of remuneration to the Directors including the Managing
Director and Executive Directors;
(l) appointment and remuneration of Statutory Auditors and Cost Auditors;
(m) transfer and transmission of the Company`s shares, issue and allotment
of shares and issue and delivery of certificates 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 Protection Fund;
(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; and
(s) generally, all other applicable provisions of the Act and the Rules
made thereunder.
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 the Act;
(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
Officers.
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 dematerialised 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 Bombay Stock Exchange Limited and the
National Stock Exchange of India Limited;
(b) the Company has complied with the provisions of the Securities and
Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 (effective till 22nd October, 2011) and Securities
Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011 (effective from 23rd October, 2011) including the
provisions with regard to disclosures and maintenance of records required
under the Regulations;
(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 2006 HLL
Performance Shares Scheme and 2001 HLL Stock Option Plan, grant of options
and other related aspects.
S. N. ANANTHASUBRAMANIAN & CO.
Company Secretaries
S N ANANTHASUBRAMANIAN
Date : 16th April, 2012 Proprietor
Place: Mumbai CP No. 1774 |