Hindustan Unilever Ltd Management Discussions.


To the Members,

Your Companys Directors are pleased to present the 84th Annual Report of the Company, along with Audited Accounts, for the financial year ended 31st March, 2017.


1.1 Results

(Rs. crores)
For the year ended 31st March, 2017 For the year ended 31st March, 2016
Revenue from operations (including excise duty) 34,487 33,491
Profit before exceptional items and tax 6,155 5,977
Profit for the year 4,490 4,137

1.2 Category Wise Turnover

(Rs. crores)

For the year ended 31st March, 2017

For the year ended 31st March, 2016
Sales Others* Sales Others*
Home Care 11,123 223 10,585 228
Personal Care 16,078 226 15,791 220
Refreshments 1,102 22 1,078 18
Foods 4,795 53 4,434 48
Others (including Exports, Infant and Feminine Care) 797 22 1,043 9
TOTAL 33,895 546 32930 524

*Others include service income from operations, relevant to the respective businesses.

1.3 Summarised Profit and Loss Account

(Rs. crores)
For the year ended 31st March, 2017 For the year ended 31st March, 2016
Sale of products (including excise duty) 33,895 32,929
Other operational income 592 562
Total Revenue 34,487 33,491
Operating Costs 28,440 27,742
Profit Before Depreciation, Interest, Tax (PBDIT) 6,047 5,749
Depreciation 396 321
Profit Before Interest & Tax (PBIT) 5,651 5,428
Other Income (net) 504 549
Profit before exceptional items 6,155 5,977
Exceptional items 241 (31)
Profit Before Tax (PBT) 6,396 5,946
Taxation 1,906 1,809
Profit for the year 4,490 4,137
Basic EPS (Rs.) 20.75 19.12

The financial statements for the year ended 31st March, 2017 are the first the Company has prepared under IND AS (Indian Accounting Standards).

The financial statements for the year ended 31st March, 2016 have been restated in accordance with IND AS for comparative information.


Your Directors are pleased to recommend a Final Dividend of Rs. 10/- per equity share of face value of Rs. 1/- each for the year ended 31st March, 2017. The Interim Dividend of Rs. 7/- per equity share was paid on 15th November, 2016.

The Final Dividend, subject to the approval of Members at the Annual General Meeting on 30th June, 2017, will be paid on or after Wednesday, 5th July, 2017 to the Members whose names appear in the Register of Members, as on the date of Book Closure, i.e. from Saturday, 24th June, 2017 to Friday, 30th June, 2017 (both days inclusive). The total dividend for the financial year, including the proposed Final Dividend, amounts to Rs. 17/- per equity share and will absorb Rs. 4,394 crores, including Dividend Distribution Tax of Rs. 715 crores.


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 judgements 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, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

• they have prepared the annual accounts on a going concern basis;

• they have laid down internal financial controls for the Company and such internal financial controls are adequate and operating effectively; and

• they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.


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.


While the global economies continued to witness slow growth during the current year as well, the Indian economy on a macro basis stayed fairly robust. The below par performance of global economy was reflected in a continued slowdown in growth in most emerging and developing economies, driven by weaker capital inflows and a subdued global trade. India, however, was one of the faster growing large economies in the world, with a currency that performed better than most other emerging market currencies.

There was a significant upturn in commodity prices after a year of deflation. Consumer spending remained subdued during the early part of the year impacted by two years of drought. The gradual recovery of the market was temporarily impacted by adverse liquidity conditions post demonetisation and especially in the December quarter. Overall, this was a year of moderate growth rates across FMCG categories.

Given the backdrop of slow market growth, volatile input cost environment and heightened competitive intensity, the operating environment for your Company during the year continued to be challenging.

Your Companys performance for the year 2016-17 has to be viewed in the context of aforesaid economic and market environment.


Your Company delivered yet another year of resilient performance, aided by healthy marketing and trade investments, exciting innovations, and stepped up market development and sharper in-market execution. Your Company continued to leverage and benefit from the inputs received from Unilever across various aspects of the business, including technology, innovation, services and marketing mix that enabled your Company to launch several new offerings to serve the needs of consumers.

The year began with a sharp upturn in the commodity cycle with crude and vegetable oil prices rising significantly whilst the market continued to remain volatile. Your Company had proactively passed on the benefits of lower commodity costs to the consumers when the commodity prices were deflationary last year. During the year, your Company had to take calibrated price increases as commodity prices increased sharply.

To fuel growth, your Company continued to deploy effective cost savings programmes. These savings not only aid in deploying investments to build brands and capabilities but also help the Company in delivering its profit objective. During the year, an extensive review of the business under the ‘Zero Based Budgeting project was conducted and your Company has crafted some well-considered plans to further drive operating efficiencies in the coming years.

Your Company strives to be the supplier of choice across the distribution channels it operates in. During the year, your Company continued to focus on quality of distribution in General Trade, improving in-store presence in Modern Trade and building capabilities in e-commerce. Your Company continued to build upon the ‘Winning in Many Indias agenda to benefit from geographical focus while leveraging scale. Your Company also continued to focus on magnifying innovations in the marketplace through brilliant execution and on building markets of the future or what we call as ‘market development.

During the year, your Company re-organised its business under four major categories i.e. Home Care, Personal Care, Foods and Refreshments. The change in the reporting structure is in compliance with the new Indian Accounting Standards (converged IFRS Reporting). Home Care category comprises Fabric Wash, Household Care and Water businesses. Personal Care category includes Personal Wash, Skin Care, Hair Care, Oral Care, Colour Cosmetics and Deodorants. Foods category includes Packaged Foods and Popular Foods. Refreshments category comprises Tea, Coffee, Ice cream and Frozen Desserts. The residual segment of Others includes Exports, Infant and Feminine care.

5.1 Home Care

The year witnessed volatile crude oil prices coupled with significant competitive intensity. Your Company optimised media and trade spends, maintained competitive prices and invested in developing new segments, to ensure sustainable growth.

The Fabric Wash business delivered strong topline growth through premiumisation led by Surf. In the emerging segments of Machine Wash, Surf excel Matic and Comfort Fabric Conditioner continued to perform well. Your Company successfully launched Surf excel Matic liquids during the year. Sunlight soap, which has been protecting the colours of the consumers clothes for 75 years, launched a unique mentorship programme -‘Sunlight Banglar Guner Rang to preserve the true colours of Bengal, which is its rich culture.

In Household Care, Vim continued to develop and premiumise the category through the liquids portfolio. The proposition of ‘power of 100 lemons combined with a superior product and great activation helped the product become more appealing and desirable amongst consumers. Domex brought its social mission alive by actively driving awareness about the issue of open defecation in India through the ‘See-Through Toilet Installation in Mumbai during the Global Citizen event. The activation provided consumers with first-hand exposure to the difficulties and hardship associated with the practice of open defecation, thereby driving the need for improved access to toilets.

Pureit, the worlds largest selling water purifier, continued to strengthen its position as a responsible and purpose-driven brand. Pureits mission is to provide safe drinking water to 100 million people by 2020. By 2016, Pureit provided over 74 billion litres of safe drinking water. Pureit continued to target potential consumers from the bottom of the pyramid and partnered with Micro Finance Institutions (MFIs) to provide them access to safe drinking water through affordable instalments. Pureit expanded its play in the growing branded Reverse Osmosis (RO) segment with a successful launch of Classic RO range of water purifiers. This has democratised the segment by providing consumers a quality range of RO water purifiers at an affordable price.

5.2 Personal Care

The strategic thrusts of Personal Care business include strengthening the core, accelerating premiumisation, investing in developing segments of the future and building capabilities such as digital and e-commerce for the future. This was achieved through innovations, cut-through advertising, brand engagement platforms and touching millions of consumers through market development efforts. Your Company believes that there is substantial potential that exists in all segments within its Personal Care business. The mission of this business is to inspire a billion Indians to attend better to their personal care.

The year witnessed a significant inflation in key raw material prices for the Personal Wash Category. Your Company took calibrated pricing actions to offset the cost increases. The price increases in this category impacted the volumes. The business witnessed muted growth in this category for most part of the year. With steps taken to address some issues around Lux, Hamam and Lifebuoy soap brands, the growth trend was reversed in the last quarter, with the category registering reasonable growth. Lux was supported by a big intervention, the Lux Golden Rose Awards, a buzz-creating brand engagement platform. Your Company continued to invest behind market development of handwash and bodywash.

Skin Care category grew well on the back of both core as well as premium offerings. Fair & Lovely drove consumption through a focussed campaign based on local insights and premium offerings like BB cream. Ponds sustained its momentum by strengthening its proposition of ‘Spotless Radiance while Lakm continued to lead with innovations like the ‘colour-transform cream. Your Company continued to lead market development of body lotions with Vaseline through the ‘healing power activation of the brand. Your Company refreshed the portfolio play in Facial Cleansing across Fair & Lovely, Ponds and Lakm. Towards the end of the year, your Company made a foray into the Baby Care segment, with the launch of a range of products under the brand, ‘Baby Dove.

Hair Care sustained its strong performance, with all brands growing ahead of the market. Innovations and well-crafted activations have led to a preference for Hair Care brands with Dove, Clinic Plus, Sunsilk and TRESemm, all doing well.

Oral Care had a subdued performance. Closeup was relaunched with an improved product towards the latter part of the year and the brand continued to build the youth-oriented campaign on making your ‘First Move. Pepsodent has also been strengthened with an improved flavour and an activation built on the insight of children craving for sweets during festive occasions. The Oral Care category is undergoing a shift in its construct with ‘naturals, ‘freshness and ‘care & problem solution segments moving towards equal proportions in the market. This reshaping of the category has created new growth opportunities for your Company, especially in the ‘naturals segment.

Lakm Colors continues to drive premiumisation by upgrading users through the long lasting ‘9 to 5 platform, and taking the latest trends from the runway to the consumers under the ‘Absolute platform. The brand has continued to pioneer the launch of the best makeup innovations, with the launch of Argan Oil variant as well as Enrich Matte Lipsticks, which have been well received.

In Deodorants, through Axe, your Company has further strengthened its position at the premium-end with the launch of fine fragrances under the Signature range, while building its current assortment with new variants in the perfume sprays segment.

During the year, your Company made its foray into the fast-evolving ‘naturals segment by reviving the brand LEVER Ayush and through the acquisition of Indulekha. LEVER Ayush was first launched in the year 2002 both in product and services space. LEVER Ayush has been re-launched with new mixes in select geographies as a master brand across major categories like Skin Cleansing, Skin Care, Hair Care and Oral Care and promises the 5,000 year old wisdom of ayurveda for modern day beauty problems. Indulekha has started off well post acquisition, gaining distribution, and through improved marketing under your Company. Your Company will continue to expand the footprint of this brand. Your Company also introduced ‘naturals variants in core brands such as Fair & Lovely Ayurveda, Clinic Plus Ayurveda and TRESemm Botanique, to ensure your Company builds a comprehensive portfolio at scale in this fast growing segment.

5.3 Foods

The Foods business of your Company comprises culinary products such as jams, ketchups and squashes under Kissan; soups, soupy noodles, meal makers and seasonings under Knorr and staple foods comprising atta and salt under Annapurna. While your Company continued to grow ahead of the markets in most categories, the overall growth of the categories and consequently our business slowed down as compared to the previous years.

Kissan maintained its leadership across categories while increasing penetration and reaching more households than ever before. Both ketchup and jam showed strong distribution increase and strengthening of consumer preference. The launch of three exciting new variants of premium jams helped the brand reach new households while contributing to the growth of the jams category.

Knorr brand had a healthy performance with the convenient instant soups ‘single serve format performing particularly well. Your Company expanded its ‘cook up soup offerings with the launch of international flavours in a ‘4 serve format. This, supported by widespread sampling, ensured that the soup category has grown in relevance as a healthy in-between meal option. The Knorr Meal Maker portfolio continued to be led by in-store sampling and activations.

Your Company continued its focus on improving the profitability of the Annapurna business by driving efficiencies across the value chain.

Your Company also scaled up its experiential marketing initiatives. Given the relevance of market development, it is critical that consumers sample your Companys products and discover the great taste and convenience that the products offer. As an important player in the industry, your Company continues to partner with the Regulator towards a more balanced approach to foods regulations which takes care of the consumers interest while fostering innovation.

5.4 Refreshments

The Refreshments business delivered a good year with both Beverages and the Ice cream & Frozen Desserts portfolio registering healthy growth. Most of the brands continued to grow well and improved their brand equity scores. There were new products and variants launched across categories which were received well by consumers.

The Beverages segment delivered broad based growth across both Tea and Coffee. The growth across key brands was driven by leveraging the ‘Winning in Many Indias approach.

Brooke Bond Red Label walked the talk on its purpose of ‘making the world a more welcoming place by sponsoring Indias first transgender music band – Brooke Bond Red Label 6-Pack Band. This initiative was lauded as a path-breaking one and was conferred with several prestigious national and international awards, including a Grand Prix at the Cannes Lions Festival.

Brooke Bond Red Label and 3 Roses Natural Care Tea, with its differentiated immunity benefit of using the goodness of ayurvedic ingredients, continued to delight consumers. Your Company continued to grow the Green Tea category, under the brand Lipton on the back of sustained market development.

The Coffee business, under the brand BRU, delivered strong growth, led by the instant coffee franchise. The brand continued its pioneering task of consistently driving penetration of instant coffee through innovative sampling methods and a compelling proposition. The pure coffee franchise of BRU Gold continued to lead category premiumisation.

The Ice cream & Frozen Desserts business continued to deliver strong performance with double-digit growth and improved profitability. During the year, there was increased focus on widening distribution and making brands more accessible for consumers. The impulse portfolio continued to grow faster with improved brand equity across Cornetto and Feast. New variants of Cornetto as well as Kulfi performed well in the market.

5.5 Subsidiaries and Joint Venture

The summary of performance of the subsidiary and joint venture companies is provided below:

Unilever India Exports Limited

Unilever India Exports Limited (UIEL) is a 100% subsidiary of your Company and is engaged in FMCG exports business. The focus of the FMCG exports operation is two-fold: to develop overseas markets by driving distribution of ethnic brands, such as Kissan, BRU, Brooke Bond, Lakm, Pears among the Indian diaspora in international markets and to effectively provide cross-border sourcing of FMCG products to other Unilever companies across the world.

The topline growth of the Company was driven by robust growth in Personal Products segment. Brands like Pears, Lakm, Fair & Lovely and Vaseline have registered healthy performance in the focussed markets. Overall, the business delivered healthy profit during the year. UIEL continued to be one of the most preferred sourcing companies for other Unilever countries.

Lakme Lever Private Limited

Lakme Lever Private Limited (LLPL), is a 100% subsidiary of the Company and has 355 salons, of which 54 salons are LLPL owned / managed and 301 are franchisee salons. LLPL also operates a manufacturing unit at Gandhidham which carries out job work operations for your Company manufacturing toilet soaps, bathing bars and detergent bars.

In a market witnessing lower discretionary spends, LLPL expanded its salons business with a net addition of 75 salons. The Customer Club was reinvented as Runway Rewards with delightful introductions like a Showstopper tier along with thematic promotion campaigns which helped drive footfall growth. The Show Stopping Bridal Collection was launched at Lakm Fashion Week and activated with the Cover Bride campaign, with the winning bride gracing the cover of a leading womens magazine. The business is implementing an integrated IT platform which will leverage technology to drive growth and optimise resources. Your Company will continue to support LLPL to drive growth in this attractive market opportunity.

The Gandhidham unit of LLPL is one of the largest Dove Bar manufacturing units of your Company. During the financial year, the unit doubled the manufacturing capacity of Dove. The unit has performed well and has delivered key financial parameters. This unit has also pioneered end-of-line operations through high speed lines and auto-bundling machines for Personal Wash category.

Ponds Exports Limited

The leather business, under the subsidiary Ponds Exports Limited faced a tough year, due to challenging economic conditions in Europe-its main market which was exacerbated by a weaker Euro.

During the year, your Company sold the movable assets and inventory of the leather business to M/s. Hindustan Foods Limited and thereby, discontinued the business operations.

Unilever Nepal Limited

Unilever Nepal Limited (UNL), a subsidiary of your Company, is engaged in manufacturing, marketing and sale of detergents, toilet soaps, personal products and laundry soaps in Nepal.

In circumstances that remained tough in Nepal, UNL has delivered profitable growth. Unilever Nepal brands continue to have very good equities and are well admired. The strength of brands and continued investments behind these brands have enabled UNL to maintain leadership across categories in the market.

Hindustan Unilever Foundation

Hindustan Unilever Foundation (HUF) is a not-for-profit Company that acts as a vehicle to anchor water management related community development and sustainability initiatives of Hindustan Unilever Limited. HUF operates the ‘Water for Public Good programme, with specific focus on farm based livelihoods, in 54 districts across India in partnership with 20 NGOs. HUF also supports several knowledge initiatives in this area. This partnered programme of HUF has achieved the following community benefits:

• Water conservation: Cumulative and collective water potential of more than 300 billion litres has been created through improved supply and demand management of water.

• Crop yield: The projects undertaken have generated additional agriculture production of more than six lakh tonnes.

• Person days: These projects have generated more than 37 lakh person days of employment.

• Capacity building: Over one lakh and seventy thousand people have been trained in water conservation activities, better agricultural practices and related areas.

The cumulative impacts of these projects initiated by HUF have been independently assured.

Bhavishya Alliance Child Nutrition Initiatives

Bhavishya Alliance Child Nutrition Initiatives (BACNI) is a not-for-profit subsidiary of the Company and conducts hand washing behaviour change programme with an aim to reduce diarrhoea and pneumonia in children under the age of five years.

During the year, the Bihar Handwashing programme (BHP) reached out to 3.3 million children across 8,482 schools and conducted 7,600 sessions to educate mothers who are the key influencers for their children. Through our sustained efforts under this programme, the Government of Bihar has issued a directive to include Handwashing Session before Mid-Day Meals, thereby assisting in inculcating the habit of handwashing with soaps.

Other Subsidiaries

Daverashola Estates Private Limited is a subsidiary of the Company, which has been exploring opportunities to enter into appropriate business activities.

Jamnagar Properties Private Limited is a subsidiary of the Company whose land is under litigation.

Levers Associated Trust Limited, Levindra Trust Limited and Hindlever Trust Limited subsidiaries of the Company, act as trustees of the employee benefits trusts of the Company.

Joint Venture

Kimberly Clark Lever Private Limited

Kimberly Clark Lever Private Limited (KCLL) is a joint venture between your Company and Kimberly-Clark Corporation (KCC), USA, with infant care diapers as its primary product category sold under the brand Huggies and feminine care products sold under the brand Kotex. The business continued to face tough competitive environment especially on pricing and trade spends. There is a continuing shift in the market from regular diaper to the pants version which had an adverse impact on the growth. During the year, your Company announced its intention to divest its stake in KCLL to the JV partner KCC. This decision is in line with the Companys objective to focus on the core business. In the interim, both parties remain committed in ensuring that the business operations continue as usual and the transition is smooth.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 (Act), a statement containing salient features of financial statements of subsidiaries, associates and joint venture companies in Form AOC 1 is attached to the Accounts. The separate audited financial statements in respect of each of the subsidiary companies shall be kept open for inspection at the Registered Office of the Company during working hours for a period of 21 days before the date of the Annual General Meeting. Your Company will also make available these documents upon request by any member of the Company interested in obtaining the same. The separate audited financial statements in respect of each of the subsidiary companies are also available on the website of your Company at https://www.hul.co.in/investor-relations/annual-reports/.

Your Company has not made any downstream investments in subsidiaries or joint venture during the year.


The Customer Development eco-system of your Company encompasses capturing the demand, fulfillment of demand and generation of demand. As far as demand capturing is concerned, the focus of your Company has been on driving quality of coverage and increasing the assortment using data-centric and analytical approach. Your Company has also set up an integrated front-end system for performance and presence management. With respect to demand fulfillment, process and technology interventions have been used for improving service and efficiencies. For demand-generation, the strategy of your Company encompasses winning in traditional trade in both open and closed formats, winning in ‘route to market as well as winning in emerging channels like Modern Trade and e-commerce.

In traditional trade, the focus has been on optimal servicing with appropriate beat lengths and in improving the in-store visibility. In ‘route to market, your Company has been driving the distribution of the market development portfolio through differentiated investment pattern.

In Modern Trade, the foundation of your Companys success is based on collaborative planning with key customers. Your Company has also significantly improved investments in ‘assisted selling. Building ‘brands in store remains a key thrust in this channel and has yielded good results and translated into healthy growth during the year on the back of growing brand penetrations. The e-commerce space is growing exponentially in India. Your Company has made significant investment in capability building in e-commerce, and is committed to being the best FMCG player in this channel. A specialised team is working closely with all key e-commerce partners to create competitive advantage for the business and scaling up the business at a rapid pace.

Your Company has derived the benefits of tailor-made consumer and customer plans across categories as part of ‘Winning in Many Indias agenda due to strengthened connect with customers, consumers and shoppers. This will continue to be a source of competitive advantage for your Company.

Your Company continues to focus and drive ‘Project Shakti, the initiative for driving social responsibility and sustainability, aimed at enhancing livelihoods and building opportunities for small scale entrepreneurs in rural India. Your Company has now close to 72,000 Shakti Entrepreneurs (Shakti Ammas) across 16 states, making a respectable living by distributing your Company products.

Your Company has been a thought leader in the area of big data and analytics as a tool to drive sustainable growth. The Company uses intelligent analytics at the back end, to deliver better on-shelf availability in stores. Your Company continues to strengthen this capability to stay ahead of the competition.


Your Companys Supply Chain agenda was centered on five core areas - Customer Service Excellence, Creating Consumer Delight by dedicated end-to-end Quality Focus, Creating Value through cost savings programme, Sustainability and Supplier Partner to Win Programme.

The service levels improved steadily with Customer-Case Fill-On-Time (CCFOT) increasing to more than 95%. This was achieved by developing a segmented approach and having a clear roadmap developed for Category, Geography and Channels. Your Company continues to focus on last-mile delivery improvement programme and on strengthening the Sales and Operation Planning (S&OP) process to facilitate shorter planning cycles and response to market demands. This capability helps to align goals across Finance, Customer Development, Marketing, Research & Development and Supply Chain.

During the year, your Company set up a new state-of-the-art manufacturing facility in Doom Dooma Industrial Estate, Assam in record time and has already commenced commercial production. The first despatch was completed on 15th March, 2017. This unit will augment the production capacity of Personal Care products and make it a strategic sourcing site for the Company. The unit reinforces the Companys long-term commitment to the state of Assam and to ‘Make in India.

Your Company acknowledges the excellent support it received in this regard from the Government and the local community. Your Company continued its focus on quality by linking and improving on-shelf consumer relevant quality standards, thereby bringing together every part of the business to work on improving overall consumer experience. ‘Delighting consumers everyday is core to how your Company drives quality in its products and has been able to substantially improve the on-shelf quality by 37% over 2015.

With a robust funnel of savings programme, your Company continued on its path of delivering consistent end-to-end cost savings and achieved savings of six per cent of the total cost. Your Company brought down its inventory holding by 2.7 days.

Your Company has increased its renewable energy share to 28% in line with the Unilever Sustainable Living Plan commitments. This was achieved by converting agricultural process waste from its operations into fuel, besides increasing the utilisation of traditional biofuels like agri-waste. Your Company installed equipment to convert process wastes such as spent coffee and tea from beverages factories into fuel for boilers and air-heaters. Specialised burners were installed to utilise heavy vegetable oil residue from DFA operations as fuel, substituting furnace oil. Factory teams also worked to reduce specific energy consumption by eliminating idle operation of equipment, rightsizing of drives and installation of digital controllers. This has also contributed to reduction in your Companys CO2 footprint by 13% over the previous year.

All factories and warehouses continue to maintain ‘zero non-hazardous waste to landfill site status. Year-on-year reduction of water usage continues to be a key priority for your Company. Increase in harvested rain water utilisation in processes, reuse of treated effluent water, reduction of water losses from boiler and cooling tower blowdown, process water requirement optimisations, etc. have all contributed to reduction of fresh water abstraction and lowering of water consumption across factories by nine per cent over previous year.

Your Company continues to progress on world-class manufacturing journey and covers 25% of production cost perimeter. Factories started delivering more than 10% cost savings on perimeter by eliminating non-value added activities.

Your Companys ‘Partner to Win programme, aims at developing Joint Business Plans with suppliers and business partners. It has resulted in reduced lead-time and costs, improved reliability and new innovation- delivery.


Your Company continues to derive sustainable benefit from the strong foundation and long tradition of Research & Development (R&D) at Unilever, which differentiates it from many others. New products, processes and benefits flow from work done in various Unilever R&D centres across the globe, including India. The Unilever R&D labs in Mumbai and Bengaluru work closely with the business to create exciting innovations to help us win with our consumers. With world-class facilities and a superior science and technology culture, your Company is able to attract the best talent to provide a significant technology differentiation to its products and processes.

The R&D programmes, undertaken by Unilever globally, are focussed on the development of breakthrough and proprietary technologies with innovative consumer propositions. The R&D team comprises highly qualified scientists and technologists working in the areas of Home Care, Personal Care, Foods, Refreshments and Water Purification and critical functional capability teams in the areas of Regulatory, Clinicals, Digital R&D, Product & Environment Safety and Open Innovation.

Your Company has an existing Technical Collaboration Agreement (TCA) and a Trade Mark License Agreement (TMLA) with Unilever which was entered in the year 2012. The TCA provides for payment of royalty on net sales of specific products manufactured by your Company, with technical know-how provided by Unilever. The TMLA provides for the payment of trade-mark royalty, as a percentage of net sales on specific brands, where Unilever owns the trademark in India. The pace of innovations and the scope of services have expanded over the years. Unilevers global resources are providing greater expertise and superior innovations. Your Company is enjoying the benefits of an increasing stream of new products and innovations, backed by technology and know-how from Unilever, such as those mentioned below. This has helped in bringing to the Indian consumers bigger, better and faster innovations.

During the year, your Company introduced several innovations across categories. Dove, a beauty brand trusted by women and mothers around the world, recently marked its entry into the Baby Care category in India with the launch of Baby Dove during the year. Developed for babies with normal to dry skin, the range includes the Baby Dove Rich Moisture Baby Bar, Baby Lotion, Diaper Rash Cream, Baby Wipes and a Sensitive Moisture Baby Bar to take special care of babies with sensitive skin. The range is built on its heritage of moisture, mildness and care to develop cleansers enriched with Doves iconic moisturising cream - a technology to protect the skins natural barrier. Dermatologist-tested and pediatrician-approved, Baby Dove range is formulated uniquely to replenish essential nutrients and is hypoallergenic and pH-neutral for skin types of all babies.

Lifebuoy continued to delight consumers by creating winning mixes and raising the bar on its germ protection technologies through Active Silver Formula to give strongest protection against both ordinary and stronger infection-causing germs.

In the Fabric Wash business, Surf excel Hand wash and Matic powders were relaunched with increased stain-removal efficacy, thereby driving better in-wash, tough and oily stain removal. Fabric conditioner was also relaunched with improved performance and fragrance delivery.

In the Water business, your Company launched ‘Classic RO - a range of five product variants in the ‘affordable reverse osmosis (RO) devices segment of the market. The R&D team developed a novel manufacturing process for making carbon filters, which resulted in a 60% reduction in emissions with a significant reduction in electricity consumption, CO2 manpower and water-use compared to the earlier process.

In the Skin Care business, Ponds, for the first time, launched pimple-clear face wash based on thymol-terpineol technology to visibly clear pimples, such that the difference could be seen in just three days.

Next generation skin-lightening molecule ‘Hexyl Resorcinol and ‘diamond powder was introduced in Lakm Perfect Radiance Serum portfolio to claim ‘Hi-Res Crystal Radiance. Lakm also, for the first time, introduced a transformation technology in the form of Lakm ‘9 to 5 CC transform cream with key claim of ‘Fairness cream that changes color to give a make-up finis.

In Hair Care, TRESemm offered ‘Beauty-full Volume where unique Reverse Wash System was developed for consumers seeking voluminous hair. TRESemm was awarded ‘Product of the Year for its range of shampoo and conditioners.

LEVER Ayush introduced 16 products and 23 SKUs as part of the launch across Skin Care and Cleansing, Body, Oral and Hair Care. LEVERAyushproducts,formulatedwithayurvedicingredientswritteninthe 5000-years-old ‘granthas, use ingredients that are highly beneficial to the skin, hair and teeth. The goodness of ingredients like turmeric, saffron, cows ghee, cardamom, rock salt, etc. are authentic solutions to modern day beauty problems.

In Foods, the year saw the launch of new variants of premium jams of Kissan. These have met with strong initial success and we continue to expand their availability footprint.

In Beverages, your Company launched for the first time, boilable tea bags in 3 Roses called ‘tasty tea buds in Tamil Nadu as a value-added tea proposition. As part of your Companys commitment to sustainable sourcing, your Company contributes towards defining Maximum Residue Limits (MRLs) for pesticides in tea through the Plant Production Code Committee, an initiative of the Tea Board of India. Unilever has commissioned a research project with Centre for Agriculture and Biosciences International (CABI) and Tea Research Institutes in India to evaluate ecological approaches for pest management in tea.

R&D has further contributed to the Companys sustainability agenda. Your Company was ranked 2nd in the first-ever India Access to Nutrition Index (ATNI). Your Company continues to work on improving the taste and nutritional quality of its products using globally recognised standards. 100% of the childrens Frozen Desserts and edible ice products have 110 kilocalories or fewer per portion.

With access to strong scientific expertise and the capability to deliver high value technologies developed globally by Unilever, your Company is well-placed to leverage the opportunities to drive faster growth on the back of strong support from R&D as well as brand development capabilities. At the same time, your Company is equipped to meet the challenges of increased competition.

8.1 Technology Absorption

Your Company maintains strong and healthy interactions with Unilever through a well-coordinated management exchange programme, which includes setting out governing guidelines pertaining to identifying areas of research, agreeing timelines, resource requirements; scientific research based on hypothesis testing and experimentation which leads to new / improved / alternative technologies; supporting the development of launch-ready product formulation based on research and implementation of the launch ready product formulations in markets. Your Company continuously imports technology from Unilever under the Technical Collaboration Agreement and the same is fully absorbed. The benefits derived by your Company through technology absorption and R&D have been detailed earlier in this report.

Your Company also receives continuous support and guidance from Unilever to drive functional excellence in marketing, supply management, media buying and IT, among others, which help your Company to build capabilities, 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 marketplace.

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, 2017, are as follows:

Capital Expenditure : Rs. 2 crores
Revenue Expenditure : Rs. 28 crores


Your Company upholds Safety, Health and Environment as non-negotiable values. The Companys Safety approach not only encompasses employees and assets, but also the communities that it operates in. An environment of safe work, safe behaviour and safe travel is achieved through implementation and internalisation of your Companys vision of an injury-free organisation. This is reflected in the continually reducing injury rates, which came down by over 20% in 2016 as compared to 2015. The absolute injury rate in 2016 was less than 0.4 injuries per million man-hours worked.

To further improve the safety performance, your Company has introduced ‘WCM Risk Assessment Tools at specific sites in addition to the existing BeSafE initiatives across all factories and offices. BeSafE is a behavioural safety framework, which helps in bringing about a change in the behaviour patterns and aims to eliminate unsafe acts by improving risk perception of the employees, be it in factories, offices or homes.

Your Company has a robust system of recording and investigating safety incidents. All cases of injuries requiring medical intervention are reported in Unilevers global safety portal and the same is audited by an external agency. Learnings from safety incidents are cascaded top-down for mitigation of risks, which can avoid repeat incidents.

Your Company celebrates National Safety Day each year across all sites. Special programmes are designed by the Corporate Safety Team jointly with the sites and many of them extend the events to a full Safety Week.

Your Company has a Central Safety, Health and Environment Sub-Committee, which is led by the Managing Director and Chief Executive Officer of the Company. In this forum, performances of specific safety and environment related sub-committees, each of which is led by a Managing Committee (MC) member, are reviewed. This helps in bringing newer insights and direction from the top management.

As part of Unilever Sustainable Living Plan (USLP), your Company strives to grow the business whilst reducing environmental footprint and increasing positive social impact. Accordingly, your Company has taken ambitious targets of year-on-year reductions in emissions (kg per CO2 tonne of production), groundwater abstraction (cubic meter per tonne of production) and waste generation (kg per tonne of production) in its operations. Some of the sustainability initiatives undertaken during the year were:

• In order to reduce groundwater usage, factories are working on direct use of rainwater in plants and processes. In several sites, make-up water for utilities is taken from rainwater harvested during monsoons. 2016 saw an impressive increase of 22% in rainwater re-use in operations over 2015. Water consumption, in cubic meter per tonne of production, reduced by 53% as compared to 2008 baseline and by 9% over 2015.

• In continuation of your Companys successful trials of using vegetable oil residue as fuel in Orai, similar equipment was installed in Pondicherry and Bhuj to maximise in-house use of such residue as source of renewable energy.

• Amli and Kandla factories installed solar thermal plants for heating of process water, utilising the high solar insolation. The project at Amli has also received partial subsidy from Ministry of New and Renewable Energy (MNRE). More such installations have been planned.

• Biogas plants for utilisation of canteen waste for gas generation were installed in five factories.

• The contribution of renewable energy in total energy consumed for the year was 28.5%. This was supported by sustained usage of biogenic fuels across factories. emissions (kg per tonne of production) CO2 reduced by 49% versus 2008 baseline and by over 13% versus 2015.

• Over 23 million units (KWH) were reduced from your Companys energy footprint during the financial year 2016-17 due to execution of various capital projects ranging from installation of energy efficient chillers and motors, condensate recoveries, air compressor heat recoveries, etc. Your Company has made investments totalling Rs. 17 crores in such projects in the above period.

• Total waste generated from the factories reduced by 21.5% in 2016 as compared to 2015. Factories identified newer avenues for re-use and energy recovery from waste, in addition to the current reduction and recycling streams, within the purview of statutory guidelines of waste disposals. Your Company maintained the status of ‘zero non-hazardous waste to landfill from all factories and offices.

With the continuous evolution of the USLP in a changing landscape, in January 2017, Unilever announced a commitment to ensure that all of our plastic packaging will be fully re-usable, recyclable or compostable by 2025.

Your Companys initiatives in the area of Safety and Environment were recognised through awards from National Safety Council, Shrishti Green Governance, Karnataka State Pollution Control Board, Confederation of Indian Industry (CII), GreenTech, Frost & Sullivan, etc.


Your Company considers Great Brands and Great People as its biggest assets. The Human Resource agenda continues to support the business in achieving sustainable and responsible growth by building the right capabilities in the organisation. It continues to focus on progressive employee relations policies, creating an inclusive work culture and a strong talent pipeline.

Your Company is known as the ‘Leadership Factory, that exports talent to Unilever and to India Inc., the industry at large. The foundation of all your Companys learning practices is based on a 70-20-10 approach to learning. 70% of learning is done through on-the-job training, building business-linked capabilities to achieve ambitious business targets. 20% of learning is coaching and 10% of learning is through formal development. Your Companys learning curriculum is designed to support the entire life cycle of an employees career.

Driven by the ‘Leaders build Leaders philosophy, your Companys flagship management trainee programme, the Unilever Future Leaders Programme (UFLP) has been the training ground for many inspiring leaders, which provides extensive cross functional experience through live projects and assignments.

As per the latest Campus Track Business School Survey, conducted by Nielsen for B-School students, your Company has been chosen as the preferred employer across all sectors.

Your Company has also retained the ‘Dream Employer status. Your Company is known for having the best people practices for developing future leaders. The ability to attract the best talent, provides a competitive edge to the organisation.

A series of programmes like maternity and paternity support, Career by Choice and location flexibility have helped in driving the Inclusion and Diversity agenda. Your Company continues to focus on driving inclusion through building leadership capability and recognising line managers who provide a simple, flexible and respectful work environment for their teams.

Your Company has been recognised as one of the ‘Top 10 Best Companies for Women in India by The Best Companies for Women in India (BCWI) Study 2016. This award is a recognition of your Companys commitment towards creating a diverse and inclusive work-culture.

In the beginning of the year, Unilever launched the ‘Connected 4 Growth (C4G) framework which entailed setting up of empowered Cluster Category Business Teams (CCBTs) with representatives from different functions. During the year, the C4G framework has been embedded well in the business through 15 fully functional CCBTs. Your Company is confident that this framework will help bring more speed and agility in its operations to compete in the marketplace and strengthen the consumer connect.

Over the years, the Industrial Relations function of your Company achieved many milestones by strengthening its base through Institutional Capability Development Initiatives, Gender Diversity, Digitisation and Community Development. Your Company drives sustainable growth by leveraging employee-potential through capability development initiatives in line with Unilever Production System and by reducing cost and complexity in Supply Chain units.

Your Company is focussed on building a high-performance culture with a growth mindset where employees are engaged and empowered to be the best they can be. Developing and strengthening capabilities of all employees in your Company has remained an ongoing priority.

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Act and Rule 5 (1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (Rules) have been appended as Annexure to this report. Details of employee remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) and 5(3) of Rules are available at the Registered Office of the Company during working hours, 21 days before the Annual General Meeting and shall be made available to any shareholder on request. Such details are also available on your Companys website https://www.hul.co.in/investor-relations/.


The agenda for the Finance and Accounts function of your Company is to assist in driving superior performance of the business, pioneer thought-leadership and develop future-ready talent in Finance.

During the year, your Company implemented projects to leverage technology for building business intelligence thereby, enabling growth and reducing costs through project Livewire and Zero Based Budgeting (ZBB). Massive simplification of processes led to deploying people on value partnering through projects like Finance Excellence Team (FET), Amazingly Simple and One Accounting Centre.

Project ‘Livewire was implemented for end to end business analytics. It continues to evolve as a pioneering technology enabling your Company to drive business performance management with speed and agility. The tool based on bringing together raw data from different sources, delivers ready-made off-the-shelf analytics in pictorial and graphical form, and offers actionable insights that help us spot opportunities and challenges in a faster manner.

To enhance standardisation of accounting processes, improve efficiency in operations and enhance accounting expertise, three accounting centers are being formed for consolidating - Sales Accounting, Head Office Accounting and Factory Accounting.

Your Company invested in a common distribution management system that has been further upgraded during the year to make it future-ready. The common mobility solution has also been upgraded. These would enable a sharper and richer sales execution process in the marketplace.

The e-commerce capabilities have been further enhanced. Ability to manage the digital content of our products and brands and to seamlessly publish the same to our partners have helped improve the quality of consumer engagement online. Analytical solutions have been developed for improved understanding of consumer sentiments and to engage with them in an agile manner.

Your Company has also invested in rewiring processes and tools to transform into an amazingly simple organisation. Investments in new technologies like Financial Closing Cockpit have cut timelines and improved predictability of the month-end close process. Expanding the SAP Global Available To Promise (GATP) capability to run the order management process has helped move the needle on customer service. Your Company has continued the active engagement with the external environment and is investing to enhance solutions across the value chain, thereby preparing itself for the Goods and Services Tax (GST) era. Your Company continues to drive resilience through targeted remediation of high risk Information Technology (IT) components, including hardware, database, operating systems and applications. Alongside the investment in technology, your Company is also improving its service management processes to prevent any defects in the IT environment and to enable faster resolution of any such incidents with minimum business disruption.

Indian Accounting Standards (INDAS) – IFRS Converged Standards

Your Company, its subsidiaries and joint venture had adopted IND AS with effect from 1st April, 2016 pursuant to Ministry of Corporate Affairs notification dated 16th February, 2015 notifying the Companies (Indian Accounting Standard) Rules, 2015. Your Company has published IND AS Financials for the year ended 31st March 2017 along with comparable as on 31st March 2016 and Opening Statement of Assets and Liabilities as on 1st April 2015.

Your Company has proactively shared all four quarters re-stated IND AS Profit and Loss Statement with Investors along with quarterly results for June, 2016, for comparison.

Capital Expenditure during the year was at Rs. 1,372 crores (Rs. 750 crores in the previous year).

During the year, your Company did not accept any public deposits under Chapter V of Companies Act, 2013. In terms of the provisions of Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 / Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, Rs. 5.43 crores of unpaid / unclaimed dividends 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, 2017, are given below:

Particulars 2012-13 2013-14 2014-15 2015-16 2015-16 2016-17
Return on Net Worth (%) 94.70 104.10 99.50 88.70 72.80 76.70
Return on Capital Employed (%) 109.10 130.20 127.70 128.40 105.80 105.90
Basic EPS (after exceptional items) (Rs.) 17.56 17.88 19.95 18.87 19.12 20.75

There were no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year to which this financial statements relate on the date of this report.

Segment-wise results

During the year, your Company re-organised the businesses into four categories - Home Care, Personal Care, Foods and Refreshments. Accordingly, the Management Committee reviews performance of categories basis new segments.

Your Company identified five business segments, in line with the Accounting Standard on Segment Reporting (IND AS-107), which comprises: (i) Home Care, (ii) Personal Care, (iii) Foods, (iv) Refreshments, and (v) Others, including Exports, Infant and Feminine Care, etc. The audited financial results of these segments are provided as a part of financial statements.

Details of loans, guarantee or investments made by your Company under Section 186 of the Companies Act, 2013 during the financial year 2016-17 is appended as an Annexure to this report.

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. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The Company has set up a Risk Management Committee to monitor the risks and their mitigating actions and the key risks are also discussed at the Audit Committee. Some of the risks identified by the Risk Management Committee relate to competitive intensity and cost volatility. 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 business areas. 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.

During the year, your Company started monitoring and reporting Controls through Livewire - a comprehensive analytics tool that tracks compliance with internal controls framework established by the management. The controls dash board allows the management to perform a thematic analysis of its control health across different processes and activities, time periods and responsibility centers. This will enable the management to pro-actively protect value through implementation of a robust control environment.

Your Company manages cash and cash flow processes assiduously, involving all parts of the business. There was a net cash surplus of Rs. 1,671 crores (2015-16: Rs. 2,759 crores), as on 31st March, 2017. The Companys low debt equity ratio provides ample scope for gearing the Balance Sheet, should the 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 Accounting Standard 11. The details of foreign exchange earnings and outgo as required under Section 134 of the Act and Rule 8(3) of Companies (Accounts) Rules, 2014 are mentioned below:

(Rs. In crores)
For the year ended 31st March, 2017 For the year ended 31st March, 2016
Foreign Exchange earnings 541 559
Foreign Exchange outgo 1,214 1,084

11.2 Mergers, Acquisitions and Divestments

During the year, your Company completed the acquisition of Indulekha Hair oil. The addition of this brand has further strengthened our position in the evolving ‘naturals segment. The brand is now fully integrated into our Personal Care portfolio and is performing well.

Your Company also completed the sale and transfer of its rice exports business carried out under the brands ‘Gold Seal Indus Valley and ‘Rozana, to LT foods Middle East DMMC, a group Company of LT Foods Limited.

Your Company announced its intention to divest its shareholding in Kimberley Clark Lever Limited (KCLL) to its JV partner Kimberley Clark Corporation (KCC). The decision to divest from this business is in line with our strategy focus on core business.

11.3 Goods and Service tax

Goods and Services Tax (GST) is a landmark reform which will have a lasting impact on the economy and on businesses. Implementation of a well-designed GST model that applies to the widest possible base at a low rate can provide significant growth stimulus to the business and contribute to the Prime Ministers mission of ‘Make in India. Your Company has been preparing for migrating to GST for the past year; changes across IT systems, Supply Chain and operations have been made keeping in mind the sweeping changes that GST would bring in. While there are a few areas that need to be addressed, the Government has announced an intention to go live on GST on 1st July, 2017 and your Company will be ready for this transformative reform.

11.4 Scheme of Arrangement

Subsequent to the approval of the shareholders at the Court Convened Meeting held on 30th June, 2016, to the Scheme of Arrangement for transfer of the balance of Rs. 2,187 crores standing to the credit of the General Reserves to the Profit and Loss Account, your Company had filed the petition for sanction of the Scheme of Arrangement with the Honble High Court of Mumbai. Upon the Scheme becoming effective, the amount so transferred is proposed to be distributed to the shareholders from time to time, by the Board of Directors, at its sole discretion, in such manner, quantum and at such time, as the Board of Directors may decide.

Consequent to the notification of certain pending sections of Companies Act, 2013 including sections related to the Compromise and Arrangements and National Company Law Tribunal (NCLT), the jurisdiction for sanctioning the Scheme of Arrangement has been transferred to the NCLT from High Court of Mumbai. The Scheme is currently pending with NCLT for sanction.


The Legal function of your Company continues to be a valued partner in facilitating the business agenda in the areas of claims management, legislative changes in both emerging and existing regulations, effectively dealing with unfair competition and ensuring regulatory compliance. The Legal function also works closely with different stakeholders like Industry Associations, Regulators, key opinion formers to develop a progressive regulatory environment in the best interest of all the stakeholders.

The focus of the Legal function has been to partner the business on strategic issues that present either areas of opportunities or in mitigating risks besides focussing on core legal work like litigation management, combating unfair competition to protect Companys brands from counterfeits, look alike and grey imports. One of the activities that the Legal function has engaged itself with across the country is in propagating intellectual property awareness. Your Company believes that it is important to educate students on intellectual property and build awareness and understanding of the subject so that students start respecting intellectual property rights from a young age. Your Company is of the view that the menace of counterfeits can be effectively addressed if enforcement actions are supplemented with building awareness amongst the consumers of tomorrow.

12.1 Update on Kodaikanal Soil Remediation

Your Company had informed the shareholders about the long-standing dispute with the former workers association of the former factory in Kodaikanal. A Memorandum of Settlement was signed towards the end of the last financial year with the association bringing to an end this long-standing issue.

The other issue on this matter, which is pending, pertains to commencement of soil remediation in the premises of the former factory of your Company. Since this issue first came to light in 2001, your Company has actively sought to address it in a responsible and transparent manner. During this year, basis the decision from the Honble Madras High Court, Tamil Nadu Pollution Control Board (TNPCB) in December 2016 granted permission to your Company to commence preparatory work and soil remediation on a trial basis for a period of three months after obtaining applicable local approvals. The grant of consent by TNPCB was challenged in the Southern Bench of the National Green Tribunal (NGT), Chennai. Through an interim order, the NGT has directed that soil remediation should be commenced in accordance with the consent granted by TNPCB. The Company is committed to conduct soil remediation at the factory site at the earliest.

12.2 Corporate Governance

A separate report on Corporate Governance is provided together with a Certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Listing Regulations. A Certificate of the CEO and CFO of the Company in terms of Listing Regulations, inter alia, confirming the correctness of the financial statements and cash flow statements, adequacy of the internal control measures and reporting of matters to the Audit Committee, is also annexed.

The extract of annual return in Form MGT-9 as required under Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as an Annexure to this Report.

12.3 Related Party Transactions

In line with the requirements of the Companies Act, 2013 and Listing Regulations, your Company has formulated a Policy on Related Party Transactions which is also available on the Companys website at https://www.hul.co.in/investor-relations/corporate-governance/. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.

All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for Related Party Transactions on a quarterly basis for transactions which are of repetitive nature and / or entered in the Ordinary Course of Business and are at Arms Length. All Related Party Transactions are subjected to independent review by a reputed accounting firm to establish compliance with the requirements of Related Party Transactions under the Companies Act, 2013 and Listing Regulations.

All Related Party Transactions entered during the year were in Ordinary Course of the Business and at Arms Length basis. No Material Related Party Transactions, i.e. transactions exceeding 10% of the annual consolidated turnover as per the last audited financial statements, were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is not applicable.

12.4 Prevention of Sexual Harassment at Workplace

As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘Act) and Rules made thereunder, your Company has constituted Internal Committees (IC). While maintaining the highest governance norms, the Company has appointed external independent persons, who have done work in this area and have requisite experience in handling such matters, as Chairpersons of each of the Committees. During the year, one complaint with allegations of sexual harassment was received by the Company and the same was investigated and resolved as per the provisions of the Act.

In order to build awareness in this area, the Company has been conducting programmes in the organisation on a continuous basis.


Your Companys Vision is to accelerate growth in the business, while reducing environmental footprint and increasing positive social impact. This vision has been codified in the Unilever Sustainable Living Plan (USLP), launched in 2010, which is your Companys blueprint for achieving sustainable growth. By spurring innovation, strengthening Supply Chain, lowering costs, reducing risks and building trust, sustainability is creating value for your Company as well as society.

Your Company has made good progress on the three USLP big goals to be achieved globally: To help more than a billion people take action to improve their health and well-being, to halve the environmental footprint of the making and use of the products while growing the business and to enhance the livelihoods of millions of people while growing the business.

Detailed information on the progress of your Companys USLP initiatives and CSR activities is available in the Annual Report on CSR and Business Responsibility Report which is appended as Annexure to this Report.


Details of the shares issued under Employee Stock Option Plan (ESOP), as also the disclosures in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014 are uploaded on the website of the Company https://www.hul.co.in/investor-relations/annual-reports/. No employee has been issued share options during the year, equal to or exceeding one per cent 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 23rd July, 2012, the Company adopted the ‘2012 HUL Performance Share Scheme in place of ‘2006 HLL Performance Share Scheme. 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 Rs. 1/- each. These awards will vest only on the achievement of certain performance criteria measured over a period of three years. The Company confirms that the 2012 HUL Performance Share Scheme complies with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014.

Under the said Plan, eligible Managers were given Conditional Performance Grant of shares of Unilever and the Company in the ratio of 67:33, to mirror your Companys shareholding, where Unilever held 67% shareholding. During the year, 203 employees, including Whole-time Directors, were awarded conditional rights to receive 135,721 Equity Shares at the face value of Rs. 1/- each. It comprises conditional grants made to eligible managers covering performance period from 2016 to 2018 and from 2017 to 2019.

The employees of the Company are eligible for Unilever PLC (the ‘holding Company) share awards namely, the Management Co-Investment Plan (MCIP), the Global Performance Share Plan (GPSP) and the SHARES Plan. The MCIP allows eligible employees to invest up to 100% of their annual bonus in the shares of the holding Company and to receive a corresponding award of performance related shares. Under GPSP, eligible employees receive annual awards of the holding Companys shares. The awards under MCIP and GPSP plans vests after 3-4 years between 0% and 200% of grant level, depending on the satisfaction of the performance metrics. Under the SHARES Plan, eligible employees can invest in the shares of the holding Company for specified amount and after three years one share is granted to the employees for every three shares invested subject to the fulfillment of conditions of the scheme. The holding Company charges the Company for the grant of shares to the Companys employees based on the market value of the shares on the exercise date.


Mr. Dev Bajpai, Executive Director, Legal & Corporate Affairs and Company Secretary was appointed as an Additional Director on the Board of the Company with effect from 23rd January, 2017 to hold office till the conclusion of the next Annual General Meeting of the Company. Mr. Dev Bajpai has also been appointed as a Whole-time Director on the Board with effect from 23rd January, 2017, for a period of five years, subject to approval of Members of your Company at the Annual General Meeting.

As per the provisions of the Companies Act, 2013, Independent Directors have been appointed for a period of five years and shall not be liable to retire by rotation. All other Directors, except the Managing Director, will retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-election.

The Independent Directors of your Company have given the certificate of independence to your Company stating that they meet the criteria of independence as mentioned under Section 149(6) of the Companies Act, 2013.

The details of training and familiarisation programme and Annual Board Evaluation process for Directors have been provided under the Corporate Governance Report.

The policy on Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Director, and also remuneration for Key Managerial Personnel and other employees, forms part of the Corporate Governance Report of this Annual Report.


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 the Chief Executive Officer and has Functional / Business Heads as its members.

During the year, your Company re-organised the Foods and Refreshments (F&R) business into two separate businesses of Foods and Refreshments. Accordingly, Mr. Sudhir Sitapati, Category Vice President, Refreshments (South Asia & Africa) was appointed as Executive Director, Refreshments and member of Management Committee. Ms. Geetu Verma, who was Executive Director (Foods & Refreshments) was designated as Executive Director (Foods), responsible for the Foods business of your Company.

During the year, Mr. Punit Misra, Executive Director, Sales and Customer Development resigned from the services of the Company. Mr. Srinandan Sundaram was appointed as Executive Director, Sales and Customer Development and member of Management Committee of the Company.


M/s. BSR & Co. LLP were appointed as Statutory Auditors of your Company at the Annual General Meeting held on 30th June, 2014 for a term of five consecutive years. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Auditors is required to be ratified by Members at every Annual General Meeting.

The Report given by the Auditors on the financial statements of the Company is part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

M/s. RA & Co., Cost Accountants carried out the cost audit for applicable businesses during the year. The Board of Directors have appointed M/s. RA & Co., Cost Accountants as Cost Auditors for the financial year 2017-18.


The global economy continues to remain under pressure from the ongoing political, policy and economic uncertainties around the world. However, it is expected that the global growth should stabilise in future.

The Indian GDP growth rate continues to be one of the fastest growing large economies of the world. Economic growth is expected to further improve on the strengthening consumer sentiment. The medium to long term secular trends based on urbanisation, rising aspirations, low level of penetration for most of our categories and improving consumption levels are positive for the FMCG sector. Your Company, with its brands, talent and investment in capabilities, is well placed to leverage this opportunity.

The enactment of the GST legislation has been a milestone reform that will create a win-win environment for all stakeholders and heralds an integrated and productive economy, and is expected to further boost economic growth. However, there could be temporary transition challenges during the cut-over.

18.1 Cautionary Statement

Statements in the Annual 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. Although the expectations are based on reasonable assumptions, the actual results might differ.


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 your 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 Shareholders, Clients, Vendors, Banks, Government and Regulatory Authorities and Stock Exchanges, for their continued support.

On behalf of the Board
Harish Manwani
Mumbai, 17th May, 2017 (DIN : 00045160)