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Directors Report of Hindustan Unilever Ltd.

Mar 31, 2015

To the Members,

The Company''s Directors are pleased to present the 82nd Annual Report of the Company, along with Audited Accounts, for the Financial Year ended 31st March, 2015.

1. FINANCIAL PERFORMANCE (STANDALONE)

1.1. Results

(Rs. crores>

For the year ended For the year ended 31st March, 2015 31st March, 2014

Revenue from operations, net of excise 30,805.62 28,019.13

Profit before exceptional items and tax 5,523.12 4,799.71

Profit for the year 4,315.26 3,867.49

Dividend (including tax on distributed profits) (3,881.22) (3,272.97)

Transfer to General Reserve - (386.75)

Profit & Loss Account balance carried forward 1,177.09 743.05

1.2. Category Wise Turnover

(Rs. crores)

For the year ended For the year ended 31st March, 2015 31st March, 2014

Sales Others* Sales Others*

Soaps and Detergents 14,640.66 235.95 13,460.98 222.43

Personal Products 8,865.03 141.50 7,979.79 141.10

Beverages 3,581.31 50.18 3,275.12 36.74

Packaged Foods 1,863.42 28.38 1,620.75 27.55

Others (including Exports, Chemicals, Infant Care Products, Water, etc.) 1,220.29 92.61 1,071.63 84.67

TOTAL 30,170.71 548.62 27,408.29 512.49

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

1.3. Summarised Profit and Loss Account

(Rs. crores)

For the year ended For the year ended 31st March, 2015 31st March, 2014

Sale of products less excise duty 30,170.50 27,408.29

Other operational income 635.12 610.84

Total Revenue 30,805.62 28,019.13

Operating Costs (25,597.38) (23,543.87)

Profit Before Depreciation, Interest, Tax (PBDIT) 5,208.24 4,475.26

Depreciation (286.69) (260.55)

Profit Before Interest & Tax (PBIT) 4,921.55 4,214.71

Other Income (net) 601.57 585.00

Profit before exceptional items 5,523.12 4,799.71

Exceptional items 664.30 228.68

Profit Before Tax (PBT) 6,187.42 5,028.39

Taxation (1,872.16) (1,160.90)

Profit for the year 4,315.26 3,867.49

Basic EPS (Rs.) 19.95 17.88

2. DIVIDEND

Your Directors are pleased to recommend a Final Dividend of Rs. 9/- per equity share of face value of Re. 1/- each for the year ended 31st March, 2015. The Interim Dividend of Rs. 6/- per equity share was paid on14th November, 2014.

The Final Dividend, subject to the approval of Members at the Annual General Meeting on 29 th June, 2015, will be paid on or after 3rd July, 2015 to the Members whose names appear in the Register of Members, as on the date of book closure, i.e. from Tuesday, 23rd June, 2015 to Monday, 29th June, 2015 (both days inclusive). The total dividend for the financial year, including the proposed Final Dividend, amounts to Rs. 15/- per equity share and will absorb Rs. 3,881 crores, including Dividend Distribution Tax of Rs. 636 crores.

3. RESPONSIBILITY STATEMENT

The Directors confirm that:

- in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

- they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period;

- they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 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.

12.1. 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. Some of the identified risks relate to competitive intensity and cost volatility. During the year, your Company has set up a new Risk Management Committee in accordance with the requirements of Listing Agreement to monitor the risks and their mitigating actions. The key risks and mitigating actions are also placed before the Audit Committee of the Company.

The Company''s internal control systems are commensurate with the nature of its business and the size and complexity of operations. These systems are routinely tested and certified by Statutory as wett as Internal Auditor and cover att offices, factories and key business areas. Significant audit observations and fottow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the Company''s internat controt environment and monitors the imptementation of audit recommendations, inctuding those retating to strengthening of the Company''s risk management poticies and systems.

Foreign Exchange transactions are futty covered with strict timits ptaced on the amount of uncovered exposure, if any, at any point in time. There are no materiatty significant uncovered exchange rate risks in the context of Company''s imports and exports. The Company accounts for mark-to-market gains or tosses every quarter end, in tine with the requirements of Accounting Standard 11. The detaits of foreign exchange earnings and outgo as required under Section 134 and Rute 8(3) of Companies (Accounts) Rutes, 2014 are mentioned betow:

Foreign Exchange Earnings & Outgo

[Rs. crores]

For the year ended For the year ended 31st March, 2015 31st March, 2014

Foreign Exchange earnings 573.43 547.91

Foreign Exchange outgo 3,846.50 3,132.40

13. LEGAL, GOVERNANCE AND BRAND PROTECTION

Your Company continued to focus on the key areas and projects within the Legat, Comptiance and Corporate Affairs functions. The Company has devetoped an in house workftow based comptiance toot ''Setf-Compti'' that tracks comptiances across factories and offices. The toot is one of the best practices and is being exported to other businesses of Unitever. The focus on titigation management continued during the year as atso on combating unfair competition with a series of actions to protect your Company''s Brands from counterfeits, took-atike and grey imports. As part of cascading knowtedge of Competition Law, the Company cottaborated with the Federation of Indian Smatt and Medium Enterprises to conduct Competition Law Awareness Sessions for Smatt and Medium Enterprises.

13.1 Corporate Governance

Your Company is renowned for exemptary governance standards since inception and continues to tay a strong emphasis on transparency, accountabitity and integrity.

The new Companies Act, 2013 and amended Listing Agreement have strengthened the governance regime in the country. Your Company is in comptiance with the governance requirements provided under the new taw and had proactivety adopted many provisions of the new taw, ahead of time. Your Company is committed to embrace the new taw in tetter and spirit. In tine with the requirements of new taw, your Company has constituted new Board Committees. Your Company has in ptace att the statutory Committees required under the taw. Detaits of Board Committees atong with their terms of reference, composition and meetings of the Board and Board Committees hetd during the year, are provided in the Corporate Governance Report.

During the year, your Company has adopted new policies and amended existing policies such as Policy on Related Party Transactions, Policy on Material Subsidiaries, CSR Policy and Whistle Blower Policy in line with new governance requirements. These policies are available on the website of the Company at www. hul.co.in/investorrelations/CorporateGovernance/. The Company has established a vigil mechanism for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report.

During the year, Secretarial Audit and Secretarial Standards Audit were carried out by M/s S. N. Ananthasubramanian & Co., Company Secretaries, the Secretarial Auditor of the Company for the financial year 2014-15. There were no qualification, reservation or adverse remarks given by Secretarial Auditors of the Company. The detailed reports on the Secretarial Standards and Secretarial Audit are appended as an Annexure to this Report.

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

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 Clause 49 of the Equity Listing Agreement with the Stock Exchange(s). A Certificate of the CEO and CFO of the Company in terms of sub-clause IX of Clause 49 of Equity Listing Agreement, 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.

13.2 Related Party Transactions

In line with the requirements of the Companies Act, 2013 and Equity Listing Agreement, your Company has formulated a Policy on Related Party Transactions which is also available on Company''s website at www.hul.co.in/investorrelations/ CorporateGovernance/. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.

This Policy specifically deals with the review and approval of Material Related Party Transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. 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 Arm''s 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 Equity Listing Agreement.

All Related Party Transactions entered during the year were in Ordinary Course of the Business and on Arm''s Length basis. No Material Related Party Transactions, i.e. transactions exceeding ten percent 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.

13.3 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 Complaints Committees (ICC). The Company has designated the external independent member as a Chairperson for each of the Commettees which was beyond the requirements of law. During the year, 2 complaints with allegations of sexual harassment were filed with the Company and the same were investigated and resolved as per the provisions of the Act.

14. SUSTAINABLE LIVING

Your Company has embraced the Unilever Sustainable Living Plan (USLP) since the year 2010 and has made good progress on the goals set by the Plan. The Plan spans your Company''s entire portfolio of brands, has a social and economic dimension and works across the entire value chain; from the sourcing of raw materials to the delivery of products to the consumers.

USLP has three big global goals to achieve:

- I mproving Health and Well-being - By 2020, we will help more than a billion people take action to improve their health and well-being.

- Reducing Environmental Impact - By 2020, our goal is to halve the environmental footprint of the making and use of the products as we grow our business.

- Enhancing Livelihoods - By 2020, we will enhance the livelihoods of millions of people as we grow our business.

Your Company progressed well on its goals. The highlights of progress in the year 2014 are given below:

- The Company reached out to a total of 63 million people through Lifebuoy Handwashing Programme since 2010.

- Pureit in-home water purifier provided 55 billions litres of safe drinking water by the end of 2014.

- All your Company''s children''s ice cream brands now contained, 110 kilocalories or fewer per portion.

- CO2 emission per tonne of production was reduced by 88% compared to 2008.

- Your Company created water conservation potential of nearly 100 billion litres through Hindustan Unilever Foundation partnerships.

- All manufacturing locations of your Company achieved zero non-hazardous waste to landfills.

- A total of 111 tea estates in Assam, West Bengal, Kerala and Tamil Nadu are certified as ''Sustainable Estates''

- A total of 85% of tomatoes used in Kissan Ketchup are now sourced from sustainable sources

- Project Shakti network expanded to include over 70,000 Shakti Entrepreneurs (Shakti Ammas) by the end of 2014.

During last year, the Unilever Sustainable Living Plan was broadened with a more substantive and far reaching ''Enhancing Livelihoods Programme''. The three new commitments under this pillar are:

- Drive Fairness in the Workplace by advancing human rights across the operations and extended supply chain.

- Advance Opportunities for Women by promoting their safety, providing up-skilling and expanding opportunities.

- Develop Inclusive Business to improve the livelihoods of smallholder farmers, improve the incomes of small- scale retailers and increase the participation of young entrepreneurs in the value chain.

Your Company continued to put more emphasis on human and labour rights and enhanced the role of women in the value chain while growing the business sustainably and driving social and economic development. During the year, your Company recruited over 50 women to work on shop floors in its factories taking the total number of female employees on shop floors to 100.

As part of Project Prabhat, your Company initiated projects around its manufacturing operations to ensure development of local communities. These focussed on improving health and hygiene, conserving water and enhancing livelihoods. Prabhat''s livelihood programme saw enrollment of over 3,000 candidates across 13 livelihood centers in India.

Your Company''s ''Project Sunlight'' which aims to involve consumers as a part of the USLP, progressed well in 2014. Your Company worked to make sustainability more relevant to the common people by involving children as agents of change. Your Company identified two issues that are important for India to create a brighter future - first, to stop littering and second, to reduce water wastage. Children were the key influencers for both the activations.

Your Company has shared its progress on Unilever Sustainable Living Plan in India which is made available on the website of the Company, www.hul.co.in/sustainable-living-2015/. Your Company has also released the Business Responsibility Report that describes the initiatives undertaken in line with the key principles enunciated in the ''National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of

Business'' framed by the Ministry of Corporate Affairs. The report is made available on your Company''s website, www.hul.co.in, and forms a part of this Annual Report. The Business Responsibility Report shall be kept open for inspection at the Registered Office of the Company. If a Member is interested in obtaining a hard copy of the Business Responsibility Report, they may write to the Investor Service Department at the Registered Office of the Company.

In accordance with the requirements of Section 135 of Companies Act, 2013, your Company has constituted a Corporate Social Responsibility Committee. The composition and terms of reference of the Corporate Social Responsibility Committee is provided in the Corporate Governance Report.

Your Company has also formulated a Corporate Social Responsibility Policy which is available on the website of the Company at www.hul.co.in/investorrelations/ CorporateGovernance/. Annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been appended as Annexure to this Report.

15. EMPLOYEE STOCK OPTION PLAN (ESOP)

Details of the shares issued under Employee Stock Option Plan (ESOP), as also the disclosures in compliance with Section 62 of Companies Act, 2013 and Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 and SEBI (Share Based Employee Benefits) Regulations, 2014 and SEBI (Employees Stock Option Scheme and Employees 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 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 Re. 1/- each. These awards will vest only on the achievement of certain performance criteria measured over a period of three years.

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 Company''s shareholding, where Unilever held 67% shareholding. During the year, 204 employees, including Whole time Directors, were awarded conditional rights to receive 1,58,840 Equity Shares at the face value of Re. 1/- each. It comprises conditional grants made to eligible managers covering performance period from 2014 to 2016 and from 2015 to 2017.

16. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year, the Board of Directors appointed Ms. Katpana Morparia as an Additional Director with effect from 9th October, 2014, to hold office up to the date of forthcoming Annual General Meeting. Being eligible, Ms. Morparia offered herself to be appointed as the Independent Director of your Company.

As per the provisions of the Companies Act, 2013, Independent Directors are required to be appointed for a term of five consecutive years, but shatt be eligible for reappointment on passing of a special resolution by the Company and shatt not be tiabte to retire by rotation. Att other Directors, except the Managing Director, witt retire at the ensuing Annuat Generat Meeting and, being etigibte, offer themsetves for re-etection. 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 detaits of training and famitiarization programmes and Annuat Board Evatuation process for Directors have been provided under the Corporate Governance Report.

The poticy on Director''s appointment and remuneration inctuding criteria for determining quatifications, positive attributes, independence of Director, and atso remuneration for Key Manageriat Personnet and other emptoyees forms part of Corporate Governance Report of this Annuat Report.

17. MANAGEMENT COMMITTEE

The day-to-day management of the Company is vested with the Management Committee, which is subjected to the overatt superintendence and controt of the Board. The Management Committee is headed by the Chief Executive Officer and has Functionat / Business Heads as its members.

During the year, Mr. Sridhar Ramamurthy, Executive Director, Finance & IT and Chief Financiat Officer was etevated to the position of Senior Vice President, Finance for Gtobat Markets and Mr. P. B. Bataji succeeded him and joined the Management Committee in his capacity as Executive Director, Finance & IT and Chief Financiat Officer with effect from 1st Juty, 2014.

Mr. Hemant Bakshi, Executive Director, Home and Personat Care (HPC) was etevated as CEO of Unitever''s Indonesia business and ceased to be a member of the Management Committee of your Company. Considering the scate of business and requisite focus to further grow the categories in which the businesses operate, it was decided to divide the Home and Personat Care business of the Company into Home Care and Personat Care with separate Executive Directors heading each business. Accordingty, Ms. Priya Nair and Mr. Samir Singh were appointed as members of Management Committee as Executive Director, Home Care and Executive Director, Personat Care, respectivety with effect from 1st October, 2014.

Mr. Manish Tiwary, Executive Director, Sates and Customer Devetopment was etevated as the Managing Director of the Gutf business of Unitever and Mr. Punit Misra, VP, CD Gtobat RTM, TT was appointed as Executive Director, Sates and Customer Devetopment and a member of the Management Committee, in ptace of Mr. Manish Tiwary with effect from 1st November, 2014.

18. AUDITORS

M/s. B S R & Co. LLP were appointed as Statutory Auditors of your Company at the tast Annuat Generat Meeting hetd 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 Annuat General Meeting.

The Report given by the Auditors on the financiat statements of the Company is part of the Annuat Report. There has been no quatification, reservation, adverse remark or disctaimer given by the Auditors in their Report.

M/s N. I. Mehta & Co., Cost Accountants carried out the cost audit for appticabte business during the year. The Board of Directors have appointed M/s R. A. & Co., Cost Accountants for the financiat year 2015-16.

19. OUTLOOK

The gtobat economic ctimate continues to be votatite, uncertain and prone to geo-potiticat risks. The marked stowdown in gtobat markets is expected to continue in 2015. The sharp fatt in growth of emerging markets, notabty China, witt continue to keep commodity prices inctuding oit, which is significantty tower than tast year, votatite. The divergence in devetoped market growths as a resutt of the US recovery is expected to add to the votatitity in the currency markets.

In this gtobat backdrop, India is expected to perform better, aided by improving macroeconomic fundamentats. However, execution of the reform agenda and kick starting the investment cycte witt be key determinants of India''s economic performance. White currentty inftation is benign, upside pressures on inftation from the vagaries of monsoon or sudden changes in the rupee, coutd have a significant bearing on inftation.

FMCG markets are expected to grow. White consumer confidence has increased, this has not yet translated into significant improvement in FMCG market conditions. There are a few green shoots in market growths; however, uncertain global economic environment, inflation and competitive intensity continue to pose challenges. White the near term conditions pose a challenge for the economy, the medium to tong term secular trends based on rising incomes, aspirations, tow consumption levels, are positive and an opportunity for the FMCG sector. Your Company, with its brands, talent and investment in capabilities, is wett placed to benefit disproportionatety from this opportunity

20. APPRECIATIONS AND ACKNOWLEDGMENTS

Your Directors ptace on record their deep appreciation to emptoyees at att tevets for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the emptoyees have enabted the Company to remain as industry leaders.

Your Directors woutd atso tike to acknowtedge the excettent contribution by Unitever to your Company in providing the tatest innovations, technotogicat improvements and marketing inputs across atmost att categories, in which it operates. This has enabted the Company to provide higher tevets of consumer detight through continuous improvement in existing products and introduction of new products.

The Board ptaces on record its appreciation for the support and co-operation your Company has been receiving from its supptiers, redistribution stockists, retaiters, business partners and others associated with the Company as its trading partners. Your Company tooks upon them as partners in its progress and has shared with them the rewards of growth. It witt be the Company''s endeavour to buitd and nurture strong tinks with the trade based on mutuatity of benefits, respect for and co- operation with each other, consistent with consumer interests.

The Directors atso take this opportunity to thank att Investors, Ctients, Vendors, Banks, Government and Regutatory Authorities and Stock Exchanges, for their continued support.

On behatf of the Board Harish Manwani

Mumbai, 8th May, 2015 Chairman

(DIN: 00045160)


Mar 31, 2013

To the Members,

The Company''s Directors are pleased to present the 80th Annual Report of the Company, along with Audited Accounts, for the financial year ended 31st March, 2013.

1. FINANCIAL PERFORMANCE (STANDALONE)

1.1. Results

(Rs. crores)

For the year ended For the year ended 31st March, 2013 31st March, 2012

Revenue from operations, net of excise 25,810.21 22,116.37

Profit before exceptional items and tax 4,349.48 3,350.16

Profit for the year 3,796.67 2,691.40

Dividend (including tax on distributed profits)* (4,655.68) (1,883.90)

Transfer to General Reserve (379.67) (269.14)

Profit & Loss Account balance carried forward 535.28 1,773.96

* During the year, the Board of Directors declared a Special Dividend of Rs. 8.00 per Equity Share, which was paid out of the accumulated Profit & Loss Account balance and exceptional income generated in the first half of the financial year 2012-13.

1.2. Category wise Turnover

(Rs. crores)

For the year ended For the year ended 31st March, 2013 31st March, 2012 Sales Others* Sales Others*

Soaps and Detergents 12,460.96 240.86 10,488.38 147.90

Personal Products 7,309.10 162.56 6,486.45 98.91

Beverages 2,913.67 60.99 2,577.02 40.41

Packaged Foods 1,473.86 31.88 1,341.93 17.53

Others (including Exports, Chemicals, Infant Care Products, 1,048.79 43.99 841.82 55.04 Water, etc.)

Total 25,206.38 540.28 21,735.60 359.79

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

1.3. Summarised Profit and Loss Account

(Rs. crores)

For the year ended For the year ended 31st March, 2013 31st March, 2012

Sale of products less excise duty 25,206.38 21,735.60

Other operational income 603.83 380.77

Total Revenue 25,810.21 22,116.37

Operating Costs (21,806.46) (18,825.03)

Profit Before Depreciation, Interest, Tax (PBDIT) 4,003.75 3,291.34

Depreciation (236.02) (218.25)

Profit Before Interest & Tax (PBIT) 3,767.73 3,073.09

Other Income (net) 581.75 277.07

Profit before exceptional items 4,349.48 3,350.16

Exceptional items 608.40 118.87

Profit Before Tax (PBT) 4,957.88 3,469.03

Taxation (1,161.21) (777.63)

Profit for the year 3,796.67 2,691.40

Basic EPS (Rs.) 17.56 12.46

2. DIVIDEND

Your Directors are pleased to recommend a Final Dividend of Rs. 6.00 per equity share of face value of Re. 1/- each for the year ended 31st March, 2013. The Interim Dividend and Special Dividend of Rs. 4.50 and Rs. 8.00 per equity share, respectively, were paid on 16th November, 2012.

The Final Dividend, subject to approval of Members at the Annual General Meeting on 26th July, 2013, will be paid to the Members whose names appear in the Register of Members, as on the date of book closure, i.e. from Friday, 12th July, 2013 to Friday, 26 th July, 2013 (inclusive of both dates). The total dividend for the financial year, including the proposed Final Dividend, amounts to Rs. 18.50 per equity share and will absorb Rs. 4,655.68 crores, including Dividend Distribution Tax of Rs. 655.69 crores.

3. RESPONSIBILITY STATEMENT

The Directors confirm that:

- in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

- they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period;

- they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and,

- they have prepared the annual accounts on a going concern basis.

4. CUSTOMER DEVELOPMENT

During the year, your Company ensured that it continues to build on its reputation of a distribution and execution powerhouse with a best in class quality and a vast distribution network of more than 2,500 re-distribution stockists.

Your Company has undertaken some important initiatives during the year to become more customer centric and win in the market place. These initiatives include establishing dedicated call centres for distributors as well as retailers to reach out to the Company. The call centres set up for retailers have helped millions of outlet owners reach out directly to the Company. The calls received from retail outlets provide useful insights and help the Company understand issues and opportunities in the market place better and address them effectively. Your Company has also launched a structured Consumer & Customer License programme, under which Company employees spend time with the customers to understand their needs better. These initiatives have helped in keeping the consumers and customers at the heart of your Company''s business model.

During the year, your Company set up a state-of-the-art Customer Insight and Innovation Centre (CiiC) at Mumbai, the latest among seven such centres across Unilever worldwide. This centre is equipped with the latest technologies to help us work closely with our distributive and modern trade partners to develop sharp and incisive shopper insights and platforms to win with shoppers.

Your Company further strengthened the Perfect Stores programme to drive superior availability and visibility of its products at the market place. The Perfect Stores programme has proven to deliver higher growth and share for the business. Your Company continues to make good progress in covering more stores under the Perfect Stores programme.

Modern Trade, which is the growth channel for the future, continues to be a focus area for your Company. The relentless focus on joint business planning and ensuring best in class on-shelf availability to grow the business together was appreciated by modern trade customers. Your Company was awarded the ''Best Supplier'' by leading modern trade customers for yet another year.

Leveraging the rural distribution network of the Company, the rollout of Telecom Distribution alliance with Tata Teleservices Limited (TTSL) into 13 Telecom Circles nationally for the distribution of telecom products, was completed during the year. The Company is now distributing these products in more than 95,000 telecom outlets through over 720 rural distributors. This distribution alliance has helped the Company further drive rural growth with enhanced earning potential for its channel partners, rural distributors and Shakti entrepreneurs.

5.1. Project Shakti

Your Company continued to drive its rural coverage agenda through Project Shakti, which now has 48,000 Shakti entrepreneurs (Shakti ammas) complemented by over 30,000 Shaktimaans, the male members of Shakti amma''s family. Shakti ammas have proved successful in increasing the Company''s presence in rural areas, building strong local relationships with consumers, thereby encouraging brand loyalty. Shakti ammas are also acting as your Company''s ambassadors to spread awareness of health and hygiene in deep rural India with limited media reach. At the same time, Shaktimaans distribute Company products on bicycles, covering over 135,000 villages in 15 States and serving 3.3 million households.

In order to further strengthen the rural coverage and streamline the supply chain network, your Company has deployed a low cost mobile IT solution for Shakti programme, during the year. This is a mini ERP (Enterprise Resource Planning) package run on an entry level smart phone to help the Shakti entrepreneurs manage their enterprise better. The package is now being used by over 40,000 Shakti entrepreneurs across the country. This solution is available in eight languages and allows the Shakti entrepreneurs to book orders and manage inventory. The application also provides updates on the promotions and offers. The information received through this solution provides business insights which helps recommend categories to be driven in lower population markets. This application will equip your Company to become more organised and scientific in its sales and distribution planning in rural India.

Your Company''s Supply Chain agenda for the year was focused on strengthening five key areas: Customer Service Excellence, Focus on Consumer & Customer Quality, Robust Supply Chain Saving Programme, Turbo-Charging TPM (Total Productivity Management) and Partner to Win through Continuous Improvement, Teaming and Collaboration.

Your Company has made significant progress in its vision to deliver outstanding customer service and enable sustainable growth. The service delivery standards improved steadily with CCFOT (Customer Case Fill on Time) increasing to 93%. The Customer Satisfaction Survey Scores and Best Supplier recognition from customers have been encouraging and suggest that the actions taken by your Company are in the right direction. Modern Trade OSA (On-Shelf Availability) has further improved during the year. Your Company has embedded Sales and Operation Planning Process (S&OP) and Innovation Process Management (IPM) as business enabler and is adding value to the business.

The quality performance measured as Consumer Relevant Quality Standard (CRQS) has shown 50% improvement over last year. Quality continues to be a major focus area, with a thrust on design quality improvement and new quality standards implementation for warehousing and transportation. The consumer care lines have been improved and are being used as channels to engage with consumers.

Your Company has a robust Supply Chain savings programme with continuous focus on end-to-end Supply Chain cost reduction through new technologies, alternative sources of energy, efficient processes and methods. During the year, your Company has delivered 5% saving in Supply Chain cost with sourcing network optimisation, logistic efficiency through improved utilisations, factory production cost reduction through improvement in energy efficiency, technical efficiencies, wastage reduction and yield improvement.

The TPM journey, with strong focus on autonomous maintenance, preventive maintenance, focused improvement and strong circle engagements, has helped the Company improve employee engagement, efficiency and derive competitive advantage. The performance across PQCDSM (Productivity, Quality, Cost, Delivery, Safety, and Morale) is showing sustained improvement.

Your Company has progressed on the long term plan to create capacities through efficiency improvement, speed improvement and high speed technologies to support volume growth while managing costs. Your Company has successfully executed all capacity creation projects on time to ensure smooth delivery during the year.

There has been a 15% improvement in innovation OTIF (On Time in Full) with more than 150 innovation networks being executed during the year touching more than 50% of the product portfolio. The focus on better and faster innovation and capability development has significantly helped the Company launch innovations first time right. Your Company has identified beauty, foods, modern trade and rural as key capabilities to win in the future and the supply chain function has significantly improved capability and skill building in these areas during the year.

The Partner to Win programme with supplier and business partners in procurement function focuses on reducing lead time, decreasing procurement cost, improving reliability and work on new innovation. Your Company leverages benefits of scale and synergy through Unilever''s global buying network.

Your Company continues to derive sustainable benefit from the strong foundation and long tradition of Research & Development (R&D) which differentiates it from many others. New products, processes and benefits flow from work done in various Unilever R&D Centres across the globe as well as in the Research Centres in India. The R&D labs in Mumbai and Bangalore are aligned to Unilever''s global R&D. Many of the projects run out of these centres are of global relevance and have a strong focus on the needs of this region and the overall Developing & Emerging (D&E) world. With the world class facilities and a superior science and technology culture, your Company is able to attract the best talent to provide significant technology differentiation to its products and processes.

Your Company''s R&D programmes are focused on development of breakthrough and proprietary technologies with innovative consumer propositions. The R&D team of over 750 people comprises highly qualified scientists and technologists working in areas of Home & Personal Care, Foods & Beverages and Water Purification. The R&D group also comprises critical functional capability teams in the areas of Regulatory, Clinicals, Patents, Digital R&D, Product & Environment Safety and Open Innovation.

During the year, your Company introduced several innovations in Soaps and Detergents category. In Wheel, a new surfactant was introduced to enhance superior performance and quality. Surf Excel Blue was re-launched with significantly improved efficacy. Household Care launched Domex toilet cleaner in a child safe pouch form to make hygiene more affordable. New water saving rinse aids ''Magic'' and ''Comfort One Rinse'' were introduced in a test market.

In Personal Care category, particularly Skin Care, the key deliveries during the year were PPARs (Peroxisome Proliferation- Activated Receptor) and a new modified sunscreen system. Both of these products were launched as world''s first skin and spot lightening cream sensory, with SPF20 under Pond''s White Beauty. The PPARs, along with next-generation instant optics, were also launched as a part of the new Fair & Lovely Advanced Multivitamin formula.

In Hair Care category, Clinic Plus was re-launched with improved formulation that provides enhanced wet and dry conditioning and a significantly superior hair fall reduction benefit. A colour rescue variant in Dove, specially formulated for care of coloured hair was introduced. TRESemme, an international salon brand, with a formulation tailored for Indian hair and endorsed by salon professionals, was launched for the first time in India. The entire range of Sunsilk was re-launched with enhanced benefits and premium packaging. At the end of the year, premium hair oil under Dove, comprising a special, light and non-sticky nourishing formula with precious oils and real flowers, was launched.

In Oral Care category, Pepsodent Expert Protection was launched in the premium segment with a new regime based claim, ''action of toothpaste, mouthwash and floss in one tube''. Closeup was re-launched with a new anti-malodour agent and new claims, such as 3X more fresh breath for 12 hours.

The year witnessed several new R&D innovations in Beverages category. Brooke Bond Taaza was re-launched with new proposition, packaging and a superior product delivery aimed at enhancing economy of use for consumer. Lipton Iced tea powder mixes were revamped with new product and packaging. Taj Mahal leaf tea range was extended to new geographies with location specific blends.

The Foods R&D team has continued to focus on delivering winning formulations and product superiority. A new variant called ''Sweet & Spicy'' was launched under Kissan ketchups, which is a winning formulation when compared in blind with other products in the market by consumers. In the Jams portfolio of Kissan, a new pack at an affordable price of Rs. 5/- was introduced to drive penetration in the category. In Frozen Desserts category, a new variant of Cornetto, ''Pistachio'' was also developed and launched. Premium single origin, freeze dried coffee range under BRU was expanded with the launch of a new unique variant, Guatemala. R&D along with supply chain and procurement teams, also focused on developing innovative end-to-end solutions to proactively manage commodity cost pressures.

In Water business, advanced Pureit with significantly enhanced design was launched. A long life battery kit was also launched for Pureit during the year. The year also witnessed the launch of a reverse osmosis based water purifier, Pureit Marvella UV.

R&D has further contributed to the Company''s sustainability agenda by enabling significant reduction in packaging material consumption through several material efficiency initiatives. Your Company''s R&D is also working on novel technologies to help save substantial amount of water.

With strong scientific expertise and the potential to deliver high value technologies, India continues to occupy a premier position in Unilever R&D. Your Company is well placed to meet the challenges emanating from the increased competition intensity and the opportunities to drive faster growth on the back of strong support from R&D as well as brand development capabilities.

Your Company had entered into a Technical Collaboration Agreement (TCA) and a Trade Mark License Agreement (TMLA) with Unilever. The TCA provided for payment of 1% royalty on net sales of specific products, manufactured with technical inputs developed by Unilever. The TMLA provided for the payment of trademark royalty at the rate of 1% of net sales on specific brands, where Unilever owns the trade mark in India. Given that the pace of innovations and the scope of services have expanded over the years and that Unilever''s global resources are providing greater expertise, superior innovations and scale advantage for all Unilever entities, your Company is enjoying the benefits of an increasing stream of new products and innovations, backed by technology and know-how from Unilever. Your Company is also receiving support and guidance to drive functional excellence in marketing, supply management, media buying, IT, etc., which helps your Company to remain competitive and further step-up its overall business performance.

Unilever is committed to ensuring that the support in terms of new products, innovations, technologies and services is commensurate with the needs of your Company and enables it to win in the market place. Given the need for increased levels of service and the consequent additional costs, your Company has entered into a new agreement with Unilever in order to ensure a fair recovery of costs by Unilever. In terms of the new agreement, the existing royalty cost of c. 1.4% of turnover will increase, in a phased manner, to a royalty cost of c. 3.15% of turnover no later than the financial year ending 31st March 2018, i.e. a total estimated increase of 1.75% of turnover.

The details of expenditure on scientific research and development at the 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, 2013, are as follows:

- Capital Expenditure : 1.67 crores

- Revenue Expenditure : 35.66 crores

8. ENVIRONMENT, SAFETY, HEALTH AND ENERGY CONSERVATION

Your Company continues to focus on the vision of being an ''Injury Free'' and ''Zero Environment Incident'' organisation. A behavioural safety programme was deployed across the Company as the core of our safety journey. This has been supplemented by a consistent focus on prevention of hand-in-machine and slip-trip- fall injuries at workplace and multiple initiatives for improving road safety. In 2012, the safety incident rate measured as total recordable frequency rate (TRFR) decreased by 61% over 2008 baseline.

The behavioural safety model has now been customised as BeSafE and will be launched company-wide in latter half of the year. Your Company has taken safety programmes to the families and homes of employees, through ''Beyond Work Safety'' campaigns, which have been very well received. Your Company continues to benchmark itself with the units known for best safety performance in the country and across Unilever. Your Company has received many awards from the Government and independent organisations for its safety practices.

Your Company continues to make excellent contribution to the Unilever Sustainable Living Plan, where Unilever''s vision is to double the size of its business while reducing the overall impact on environment and improving its positive social impact. Your Company has been taking steps to reduce electricity and water consumption in its manufacturing processes as well as control waste generation. The key actions in this direction include:

- Use of biomass fired boilers and hot air generators, which reduce consumption of fossil fuels like coal and furnace oil.

- Use of plant waste / by-products like spent tea leaves and coffee beans as fuel.

- Shift to cleaner sources of energy like natural gas and other renewable sources, wherever available.

- Adoption of energy efficient technology, like LED lights, high efficiency motors, electronic drives / inverters, screw compressors.

Your Company has reduced CO2 emissions (per tonne of production) in India by 22% compared to 2008 baseline. Use of renewable energy has increased to 15% of the total consumption. Your Company has reduced water usage in manufacturing operations by 29% compared to 2008 baseline. Rainwater harvesting has been implemented in 22 units to recharge up to 3,32,000 KL /annum ground water. In addition, rainwater recycling being done at seven sites of your Company has reduced up to 51,000 KL / annum of freshwater usage. Total 31 sites became ''zero-discharge site'' i.e. 79% of our sites do not discharge any liquid effluent.

In all Company units, recyclable waste e.g. packaging material, empty raw material containers, spent lubricants, project scrap, etc. are systematically segregated and tracked for effective recycling. More than 98% of total waste is recycled in environment friendly ways. Total waste per tonne from the manufacturing sites has reduced by 77% against the 2008 baseline.

The information required under Section 217(1 )(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 with respect to energy conservation is appended hereto and forms part of this Report.

9. HUMAN RESOURCES

Your 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 shopfloor.

Your Company''s employer brand has been built with high levels of rigour and thoroughness through a large number of student interactions and qualitative and quantitative analysis of the responses. Your Company is widely acclaimed for its people development practices and has reinforced its position in this area. This, coupled with the ability to attract best talent, gives a competitive edge to the organisation. Your Company, for the fourth consecutive year, retained its position as the Dream Employer with students of top business schools. Your Company was voted to this position from a mix of FMCG, Consulting, Financial Services organisations, etc. Your Company has also been voted as the No. 1 Employer for Mid Career recruits in a survey conducted amongst active job candidates in the FMCG sector.

Your Company has a vision to improve its Gender Balance and the roadmap involves a four pronged approach:

- Increasing the number of female talent through proactive market mapping.

- Staying connected with our stakeholders through digital recruitment campaigns.

- Creating a culture of inclusion.

- Leveraging visible leadership role models.

The enablers for these could be as varied as flexi time to agile working to customised solutions for women who come back from maternity breaks. ''Career by Choice'', a unique re-hire programme, provides a platform for women looking for real opportunities to work flexibly and part time for live business projects. With these enablers and focused plans, your Company has witnessed 8% shift in the Gender Balance Ratio over the last two years.

The initial part of the journey for Talent and Organisation Assessment was undertaken successfully. Your Company has now institutionalised the next phase of the Talent and Organisation Assessment charters, which will take-off during 2013 and chart out the best practices for each stream. The aim is to meet the requirements of the current talent pool and to enhance the Company''s future readiness.

In addition to building core capabilities in marketing, sales and distribution, your Company is investing in the areas of beauty, foods, digital, e-commerce, frontline capabilities and crafting brands for life, to win in the future. Your Company has developed comprehensive plans in each of these key areas that are customised to suit the present and future business needs. In addition to building capabilities, your Company has also identified two key behaviours, Bias for Action and Consumer and Customer Centricity that will supplement the capabilities to achieve business goals. In order to drive Bias for Action, your Company has developed Project Sunset which is an online platform for speedy resolutions of issues within the Company and has a satisfaction score of over 88% from internal employees. To drive Consumer and Customer Centricity, your Company has undertaken a number of activities to regularly communicate with and reach out to its consumers and has a well defined programme to capture insights from its consumers.

Your Company undertook intensive training programmes through a combination of face-to-face and virtual learning approaches. Over 41,600 e-learning registrations took place indicating that the spirit of ''learn where you are'' is imbibed in employees of the Company. Your Company is also investing in building capabilities in digital and social media to find new platforms for brands to engage more effectively with Indian consumers.

The Global People Survey is a part of the Unilever Employee Insight Programme, which aims to give a voice to the Company''s people and provides a vehicle to make their views heard. The Survey also provides regular, meaningful and actionable feedback to the leaders in the organisation. It has questions spread across several dimensions in the areas such as Strategic Leadership, Immediate Boss Effectiveness and Engagement. Feedback from this survey forms the basis of holistic engagement plans, which are reviewed regularly. As per Global People Pulse Survey 2012, India features in the top 25 countries across Unilever. An extremely favourable 91% of employees expressed pride to work for your Company. This is in recognition of your 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. Sparkle has been a pioneering tool in the area of workmen capability development that promotes higher transparency and focused training intervention linked to individual and business needs. The tool has delivered results for over two years now and your Company has successfully completed appraisals, thereby identifying top performers and completing skill gap analysis of over 10,000 workmen online. ''Sparkle'' has been recognised as a best practice and adopted for a global roll-out. Business Linked Engagement and TPM Edge programmes continued with full focus and rigour during the year and delivered significant improvement in factory 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.

10. INFORMATION TECHNOLOGY (IT)

Your Company continues to invest in IT, leveraging it as a source of competitive advantage. The enterprise wide SAP platform, the backbone of IT, encompasses all core business processes in your Company and also provides a comprehensive data warehouse with analytics capability that help in better and speedier decisions. SAP is used to collaborate with the suppliers and customers. Supply Chain optimisation, enabled by the IT capability, remains a source of significant value. Your Company continuously invests in upgrading the SAP platform to leverage the latest functionality and technology enhancements to deliver business efficiencies.

Your Company has institutionalised an extensive IT capability for Customer Development function to support front-end execution. All distributors run a standard distributor management system. The salesmen of the distributors use handheld devices for accepting retail orders, which enable faster tracking and real time sales information. Your Company has used analytics and the existing IT infrastructure to build a capability for an intelligent sales call. This enables your Company to customise sales call for each outlet on a scientific basis, thus helping to significantly improve the effectiveness and efficiency of the sales process.

Your Company is leveraging GIS (Geographic Information System) based mapping technology to aid planning for coverage expansion drives in urban and rural markets. The capability allows field personnel to identify pockets for coverage and also evaluate their attractiveness to help derive coverage plans.

Your Company is further enhancing IT capabilities built for rural expansion to equip Shakti ammas with low cost mobile technology to help them work in a more controlled and efficient manner. This technology now allows your Company to standardise selling processes across the Shakti network and also track outlet sales information which can be leveraged through analytics to further aid the selling process.

Your Company continues to invest in IT infrastructure to support business applications and has made use of India''s expanded telecom footprint to provide high bandwidth terrestrial links to all operating units. Your Company also uses software as a service to provide agile and cost effective IT capabilities in select areas.

As the IT systems and related processes get embedded into the ways of working of the organisation, there is a continuous focus on IT security and reliable disaster recovery management processes to ensure all critical systems are always available. These are periodically reviewed, upgraded and tested for efficacy, adequacy, security and reliability.

11. FINANCE AND ACCOUNTS

Your Company continued to focus on cash generation. The focus on managing optimal levels of inventory, sound business performance, operating efficiencies and cost savings across the organisation helped generate healthy cash flows. Your Company managed investments prudently by deploying cash surplus in a balanced portfolio defined to offer primacy to safety and liquidity of the investments. Capital Expenditure during the year was at Rs. 409.34 crores (Rs. 310.01 crores in the previous year).

The Finance function of your Company has initiated a multi-fold transformation programme, aligned to the ambition to be the Best Finance Team in the Industry. During the year, multiple finance processes across accounting and reporting, controls and information management were reviewed and work streams were defined to implement global best practices. Significant broad-based progress has been made on this agenda during the year. Project ''Parivartan'' delivered a further step up in the efficiency of the Purchase to Pay process along with a corresponding improvement in vendor satisfaction. This is now being driven to the next level of simplifying and centralising end-to-end invoice processing. Project ''My Business Information'' took an ambitious goal of revamping your Company''s information management function. Significant steps are underway towards further exploring this space to get increased information insights to drive growth, margins and cash.

In the initial phase of the project ''Effective Financial Controls and Reporting'' (EFCR), the finance control environment has been streamlined and strengthened with 50% of key controls being automated by further leveraging SAP. Similarly, significant process and technology interventions were taken up to achieve over 25% reduction in time consumed on annual closing processes. The EFCR Project aims to simplify, standardise and automate processes whilst driving value beyond transaction processing. Your Company also focused on simplifying banking processes by driving a reduction in the number of bank accounts operated across the Company. This has helped to streamline banking operations, strengthen controls and optimise cash utilisation. All these initiatives will lead to a transformation of the finance function to world class standards, thereby ensuring operational excellence.

Your Company has not accepted any fixed deposits during the year and there was no outstanding towards unclaimed deposit payable to depositors as on 31st March, 2013. In terms of the provisions of Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, Rs. 3.13 crores of unpaid / unclaimed dividends and interest / redemption of debentures were transferred during the year to the Investor Education and Protection Fund.

Return on Net Worth, Return on Capital Employed and Earnings Per Share (EPS) for the last four years and for the year ended 31st March, 2013, are given below:

Period pndpd Particulars 2009-10 2010-11 2011-12 2012-13 31st March, 2009

Return on Net Worth (%) 103.6* 88.2 74.0 77.7 94.7

Return on Capital Employed (%) 107.5* 103.8 87.5 96.8 109.1

Basic EPS (after exceptional items) (Rs.) 11.46** 10.10 10.58 12.46 17.56

* 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, Water Business, Infant Care Products, etc. The audited financial results of these segments are provided as a part of financial statements.

11.1. Risk and Internal Adequacy

Your Company has an elaborate Risk Management procedure, which is based on three pillars: Business Risk Assessment, Operational Controls Assessment and Policy Compliance processes. Some of the risks relate to competitive intensity and cost volatility. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed with both Management Committee and Audit Committee.

The 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 manages cash and cash flow processes assiduously involving all parts of the business. There was a net cash surplus of Rs. 1,707.89 crores, as on 31st March, 2013. The Company''s low debt equity ratio provides ample scope for gearing the Balance Sheet, should that need arise. Foreign Exchange transactions are fully covered with strict limits placed on the amount of uncovered exposure, if any, at any point in time. There are no materially significant uncovered exchange rate risks in the context of Company''s imports and exports. The Company accounts for mark-to-market gains or losses every quarter end, in line with the requirements of AS-11.

12. LEGAL, COMPLIANCE AND BRAND PROTECTION

Your Company continued to focus on the key areas and projects within the legal and compliance functions, which include transiting to a workflow based software tool ''Self-Compli''. This tool enables compliances to be made and tracked by factories and offices of your Company across the country. In the area of Brand Protection, your Company has taken significant actions against counterfeits, fakes and other forms of unfair competition, during the year, under the Company''s programme of Combating Unfair Competition.

13. MERGERS, ACQUISITIONS, JOINT VENTURES AND DISPOSALS

Your Company entered into a Share Purchase Agreement with the promoters of Aquagel Chemicals Private Limited (ACPL) for acquisition of additional 74% of equity share capital of ACPL. ACPL is engaged in the business of manufacturing soaps and detergents. Prior to acquisition, it was a third party manufacturing unit. Your Company earlier held 26% of ACPL''s equity share capital. Consequent to the acquisition of remaining 74% of the equity share capital, ACPL became a wholly owned subsidiary of the Company with effect from 1st April, 2013.

14. SUSTAINABLE LIVING

Sustainability is at the core of your Company''s way of doing business. It guides your Company on the path to achieve long term success in a world where the battle for resources can only escalate. In this direction, Unilever globally has set out the ''Unilever Sustainable Living Plan'' (USLP), which embeds sustainability in its business model. The USLP sets out to decouple growth from environmental impact, while at the same time, increase positive social impact.

USLP has three big goals to achieve by 2020:

- Help more than 1 billion people improve their health and well-being.

- Halve the environmental footprint of our products.

- Source 100% of our agricultural raw materials sustainably and enhance the livelihoods of people across our value chain.

Supporting these goals are seven commitments underpinned by targets spanning your Company''s social, environmental and economic performance across the value chain. In the second year of the Plan, your Company made steady progress to achieve these goals.

In the area of health and hygiene, your Company reached over 17 million people through Lifebuoy Handwashing programmes in 2012. Through continuous and focused efforts under the Handwashing initiative, your Company has reached 47 million people since 2010. Your Company''s Pureit water purifier continued to fight the menace of diarrhoeal diseases. More than 45 million people gained access to safe drinking water from Pureit globally by the end of 2012.

Your Company made good progress under its Nutrition Enhancement Programme to lower the levels of salt, saturated fat, trans fat and sugar in its Foods and Beverages portfolio. By the end of 2012, 66% of Foods portfolio (by volume) was compliant with the 5g per day salt target. Your Company''s portfolio is virtually free from trans fats originating from partially hydrogenated vegetable oil. For example, the Frozen Desserts portfolio is fully compliant and does not use any raw materials containing partially hydrogenated oil. More than 60% of the products in Frozen Desserts for children contain 110 kilocalories or fewer per portion, meeting the interim 2012 target.

In the area of environment impact, your Company worked to further reduce its environmental impact on four priority areas across the value chain - greenhouse gases, water, waste and sourcing. CO2 emissions per tonne of production reduced by 22% compared to the 2008 baseline. This was achieved through several environment friendly initiatives in your Company''s manufacturing operations such as usage of biomass boilers, thermic fluid heaters and hot air generators at factory sites. These projects helped increase the share of renewable energy to 19% by 2012.

Water usage in your Company''s manufacturing operations reduced by 29% compared to the 2008 baseline. Your Company has launched innovations that help consumers use less water in laundry process through products like Magic water saver and Comfort One Rinse fabric conditioner. Magic saves upto three buckets of water per wash while Comfort One Rinse saves two buckets of water per wash.

In the area of waste management, your Company continued to focus on reducing, reusing and recycling waste. Reduction in total waste per tonne from your Company''s manufacturing sites was 77% against 2008 baseline. A total of 31 factories of your Company became 100% zero non-hazardous waste to landfill.

Under the USLP, your Company has committed to source 100% of its agricultural raw materials sustainably. By 2012, your Company sourced 70% of its agricultural raw materials sustainably. All of the palm oil was from sustainable sources and 100% of palm oil volumes of India were covered by ''Green Palm'' certificates by end of 2012. During the year, over 60% of tomatoes used in Kissan Ketchup in India were from sustainable sources. Your Company aims to source 100% of tomatoes from sustainable sources by 2015. Your Company entered into a public-private partnership with the Maharashtra Government for sustainable sourcing of tomatoes locally. For this project, the Government of Maharashtra registered 618 farmers who grow tomatoes over 1,208 acres.

Enhancing livelihoods of hundreds of thousands of people by 2020 is another goal the USLP aims to achieve. Your Company has a wide range of initiatives from sourcing to distribution focused on improving livelihoods of small-scale entrepreneurs. Project Shakti is your Company''s flagship rural distribution initiative that focuses on enhancing livelihoods in small villages. Project Shakti has 48,000 Shakti entrepreneurs (called Shakti ammas) in 15 States. The details of Project Shakti is provided at para 5.1 of this report.

As evident from the above initiatives, your Company''s progress to deliver on USLP has been consistent. However, USLP is ambitious and your Company has much more to do. Your Company continues to strive to deliver the stretching goals.

In April 2013, your Company released Unilever Sustainable Living Plan India Progress Report. This report shares the results of your Company''s journey so far and chronicles the steps taken to deliver growth that is competitive, profitable and sustainable. You can view this report on our website www.hul.co.in.

The Securities and Exchange Board of India (SEBI) vide its circular dated 13th August, 2012, has mandated the top 100 listed companies, as on 31st March, 2012, to submit a Business Responsibility Report as part of the Annual Report of the Company. The Business Responsibility Report describes the initiatives taken by the Company in line with the key principles enunciated in the ''National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business'' framed by the Ministry of Corporate Affairs (MCA). In line with Green Initiative, the Business Responsibility Report of the Company for the year 2012-13 is made available on the website of the Company www.hul.co.in and forms part of this Annual Report. The Business Responsibility Report shall be kept open for inspection at the Registered Office of the Company. The Company will also make available a printed copy of the Business Responsibility Report upon request by any Member of the Company interested in obtaining the same. A Member interested in obtaining the hard copy may write to the Investor Service Department at the Registered Office of the Company.

15. EMPLOYEE STOCK OPTION PLAN (ESOP)

Details of the shares issued under Employee Stock Option Plan (ESOP), as also the disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, are set out in the Annexure to this Report. No employee has been issued share options, during the year, equal to or exceeding 1% of the issued capital of the Company at the time of 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 the existing ''2006 HLL Performance Share Scheme''. The Scheme has been registered with the Income Tax authorities, in compliance with the relevant provisions of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. In accordance with the terms of the Performance Share Plan, employees are eligible for award of conditional rights to receive equity shares of the Company at the face value of Re. 1/- each. These awards will vest only on the achievement of certain performance criteria measured over a period of 3 years. During the year, 204 employees, including Wholetime Directors, were awarded conditional rights to receive 4,19,408 Equity Shares at the face value of Re. 1/- each. It comprises conditional grants made to eligible managers covering performance period from 2012 to 2014 and from 2013 to 2015.

16. CORPORATE GOVERNANCE

Your Company is renowned for exemplary governance standards since inception and continues to lay a strong emphasis on transparency, accountability and integrity. In 2011, your Company received the National Award for Excellence in Corporate Governance instituted by the Institute of Company Secretaries of India, in recognition of its Corporate Governance practices. In 2012, Investor Relations Global Rankings (IRGR) ranked your Company amongst top five companies across the globe for Best Corporate Governance. In 2013, at the Asian Centre for Corporate Governance and Sustainability Awards, your Company won the award for Best Audit Committee.

A separate report on Corporate Governance is provided at page no. 50 of this Annual Report, together with a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange(s). A Certificate of the CEO and CFO of the Company in terms of sub-clause (v) of Clause 49 of Listing Agreement, inter alia, confirming the correctness of the financial statements, adequacy of the internal control measures and reporting of matters to the Audit Committee is also annexed.

The Ministry of Corporate Affairs, Government of India, introduced the Corporate Governance Voluntary Guidelines, 2009. These guidelines have been issued to provide Corporate India a framework to govern themselves voluntarily as per the highest standards of ethical and responsible conduct of business. The recommendation of the Voluntary Guidelines pertaining to separation of offices of the Chairman and the CEO, constitution of Audit Committee and Nomination and Remuneration Committee, Risk Management framework, are already practised by your Company. Your Company has been in substantial compliance of 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. 66 to 67 of this Annual Report.

17. OUTLOOK

Global economic activity remains subdued amidst signs of diverging growth paths across major economies. While near term risks to global financial stability are retreating, the global economic climate continues to be volatile and uncertain.

For India, economic activity is expected to show a modest improvement over last year, with a pick-up likely only in the second half of the year. Conditional upon a normal monsoon, agricultural growth could return to trend levels while the outlook for industrial activity remains subdued. Accordingly, the RBI projects a baseline GDP growth for 2013-14 at 5.7%. Upside pressures on inflation, both at wholesale and retail levels, remain high stemming from elevated food inflation, ongoing administered fuel price revisions and volatility in exchange rates.

FMCG markets are expected to grow; however, uncertain global economic environment, inflation and competitive intensity continue to pose challenges. While the near term conditions pose a challenge for the economy, the medium to longer term secular trends based on rising incomes, aspirations, low consumption levels, etc. are positive and an opportunity for the FMCG sector in general and for your Company in particular.

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

As a part of the initiatives in the area of Corporate Social Responsibility, your Company had promoted a Section 25 Company ''Hindustan Unilever Vitality Foundation'' now known as ''Hindustan Unilever Foundation'' (HUF) to work in the areas of social, economic and environment development. During the year, your Company acquired additional equity share capital of HUF to make it a subsidiary of the Company.

Pursuant to the Share Purchase Agreement entered into with the promoters of Aquagel Chemicals Private Limited (ACPL), as detailed in Para 13, ACPL has become a wholly owned subsidiary of the Company with effect from 1st April, 2013.

A statement pursuant to Section 212 of the Companies Act, 1956, relating to Subsidiary Companies, is attached to the Accounts. In terms of General Exemption, under Section 212(8) of the Companies Act, 1956, granted by Ministry of Corporate Affairs vide its circular no. 02/2011 dated 8th February, 2011, and in compliance with the conditions enlisted therein, the Audited Statement of Accounts, Auditors'' Reports thereon and the Reports of the Board of Directors of the Company''s subsidiaries for the financial year ended 31st March, 2013, have not been annexed. The Annual Accounts and related documents of the Subsidiary Companies shall be kept open for inspection at the Registered Office of the Company. The Company will also make available these documents upon request by any Member of the Company interested in obtaining the same. However, as directed by the said circular, the financial data of the subsidiaries have been furnished under ''Subsidiary Companies Particulars'' forming part of this Annual Report (refer page no. 150). Further, pursuant to Accounting Standard (AS-21) issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company in this Annual Report include the financial information of its subsidiaries.

Dr. Sanjiv Misra was appointed as an Additional Director on the Board of the Company with effect from 8th April, 2013, in accordance with Section 260 and Article 111 of Articles of Association of the Company. Pursuant to Section 257 of the Companies Act, 1956, notices have been received from Members, together with necessary deposits, proposing the appointment of Dr. Sanjiv Misra as a Non-Executive Independent Director on the Board of the Company.

Dr. R. A. Mashelkar has attained the age of seventy years and in accordance with the Company policy, will be retiring at the conclusion of the ensuing Annual General Meeting by not offering himself for re-appointment as a Director. Dr. Mashelkar was appointed as an Independent Director of the Company in April 2008 and has served as a member of the Audit Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee of the Company. The Board places on record its deep appreciation for the distinguished service rendered by Dr. Mashelkar during his tenure as a Director of the Company.

In accordance with the Articles of Association of the Company, all other Directors, except for the Managing Director, will retire at the ensuing Annual General Meeting and, being eligible, offer themselves for re-election.

20. MANAGEMENT COMMITTEE

The day-to-day management of the Company is vested with the Management Committee, which is subjected to the overall superintendence and control of the Board. The Management Committee is headed by Mr. Nitin Paranjpe, as the Chief Executive Officer, and has Functional / Business Heads as its members.

During the year, Ms. Leena Nair, Executive Director, Human Resources was elevated to the position of SVP Leadership and Organisation Development, Unilever PLC. Mr. B. P. Biddappa joined the Management Committee of the Company as Executive Director, Human Resources in place of Ms. Leena Nair. Mr. B. P. Biddappa joined the Company in 1992 and has worked in a variety of roles within Unilever. Before joining the Management Committee of the Company, Mr. Biddappa was the Vice President, Human Resources - Supply Chain, Asia, Africa and Russia.

M/s. Lovelock & Lewes, Statutory Auditors of the Company retire and offer themselves for re-appointment as the Statutory Auditors of the Company, pursuant to Section 224 of the Companies Act, 1956.

22. APPRECIATIONS AND ACKNOWLEDGEMENTS

Your Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain as industry leaders.

Your Directors would also like to acknowledge the excellent contribution by Unilever to your Company in providing the latest innovations, technological improvements and marketing inputs across almost all categories, in which it operates. This has enabled the Company to provide higher levels of consumer delight through continuous improvement in existing products and introduction of new products.

The Board places on record its appreciation for the support and co-operation your Company has been receiving from its suppliers, redistribution stockists, retailers, business partners and others associated with the Company as its trading partners. Your Company looks upon them as partners in its progress and has shared with them the rewards of growth. It will be the Company''s endeavour to build and nurture strong links with the trade based on mutuality of benefits, respect for and co-operation with each other, consistent with consumer interests.

The Directors also take this opportunity to thank all Investors, Clients, Vendors, Banks, Government and Regulatory Authorities and Stock Exchanges, for their continued support.

On behalf of the Board

Harish Manwani

Mumbai, 29th April, 2013 Chairman


Mar 31, 2012

The 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 for the year ended 31st March, 2012 31st March, 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 for the year ended year ended 31st March, 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. 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 Wal-Mart and Metro that helped bring alive the Unilever Sustainable Living Plan (USLP). The learning's of Modern Trade were extended to General Trade and a Joint Business Planning process with top customer was institutionalized 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 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 organization 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, Clinical, 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 moisturizing and skin lightening benefits were re-launched with distinctive packaging and formats. Fair & Lovely Spot Corrector Pen, Ponds 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. Pepsodent Germicheck was re-launched with improved formulation during the year. Peps dent 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 Kssan 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 flavors'. R&D made a significant contribution in developing a premium range of flavored 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' organization. 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 optimization 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 fertilizer 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 organizational 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 organization. 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 organizations, 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 Organization 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 institutionalized the next phase of the Talent and Organization 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 organization 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 customized 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 rigout 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 optimization, enabled by the IT capability, remains a source of significant value.

Your Company has institutionalized 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 customize 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 organization, 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 2009-10 2010-11 2011- 12

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.

Pure it 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, Lifebuoy' shygiene programme reached more than 30 million people in India, spreading hygiene awareness and encouraging behavior 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 behavior 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 liters 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 Whole time 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 introduced 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 practiced 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 fertilizers 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 favorable monsoon would be critical to the realization 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. 02/201 1 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 Whole time 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 ACKNOLLEDGEMENTS

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


Mar 31, 2011

The Companys Directors are pleased to present the 78th Annual Report of the Company, along with Audited Accounts for the financial year ended 31st March, 2011.

1. FINANCIAL PERFORMANCE (STANDALONE)

1.1 Results

Rs. Crores

For the year ended For the year ended 31st March, 2011 31st March, 2010

Turnover, net of excise 19,401.11 17,523.80

Profit before tax 2,730.18 2,707.07

Net profit 2,305.97 2,202.03

Dividend (including tax on distributed profits) (1641.96) (1,655.97)

Transfer to General Reserve (230.60) (220.20)

Profit & Loss Account balance carried forward 1235.60 802.19

1.2 Category wise Turnover

Rs. Crores

For the year ended For the year ended 31st March, 2011 31st March, 2010

Sales Others* Sales Others*

Soaps and Detergents 8,683.88 107.68 8,180.29 85.35

Personal Products 5,750.68 93.42 4,969.36 78.54

Beverages 2,309.23 34.74 2,119.44 22.99

Processed Foods 890.33 12.24 713.97 16.81

Ice creams 271.95 2.63 228.94 2.06

Exports 1093.12 6.53 1000.15 5.10

Others 401.92 36.11 315.50 31.22

Less: Inter segment revenue - (3.85)

Total 19,401.11 293.35 17,523.80 242.07

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

1.3 Summarised Profit and Loss Account

Rs. Crores

For the year ended For the year ended 31st March, 2011 31st March, 2010

Net sales 19,401.11 17,523.80

Other operational income 334.09 201.53

Total 19,735.20 17,725.33

Operating Costs and expenses (17,035.90) (14,975.36)

PBDIT 2,699.30 2,749.97

Depreciation (220.83) (184.03)

PBIT 2,478.47 2,565.94

Interest Income (net) 251.71 141.13

PBT 2,730.18 2,707.07

Taxation (576.93) (604.39)

PAT (before exceptional items) 2153.25 2,102.68

Exceptional/Extraordinary items (net of tax) 152.72 99.35

Net profit 2,305.97 2,202.03

Basic EPS (Rs.) 10.58 10.10

2. DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs.3.50 per equity share of the face value of Re.1/- for the year ended 31st March,2011. The interim dividend of Rs.3.00 per equity share was paid on 15th November, 2010.

The final dividend, subject to approval at the AGM on 28th July, 2011, will be paid to the shareholders whose names appear in the Register of Members as on the date of book closure i.e. from Tuesday, 12th July, 2011 to Wednesday, 27th July, 2011 (inclusive of both dates).

The total dividend for the financial year including the proposed final dividend amounts to Rs. 6.50 per equity share and will absorb Rs. 1,641.80 Crores including Dividend Distribution Tax of Rs. 231.34 Crores.

3. BUY-BACK OF EQUITY SHARES

The Board of Directors in their meeting held on 11th June, 2010 approved the buy-back of Companys fully paid-up equity shares of Re. 1/- each, at a price not exceeding Rs. 280/- per equity share, up to an aggregate maximum amount of Rs. 630 Crores, i.e. within the limit of 25% of the total paid-up equity share capital and free reserves of the Company as on 31st March, 2010. The approval of the shareholders for the buy-back was obtained through postal ballot, the results of which were declared on 26th July, 2010.

The buy-back was made out of free reserves and the share premium account of the Company through open market purchases through the Bombay Stock Exchange Limited and National Stock Exchange of India Limited using their nationwide electronic trading facilities, as per the provisions contained in the SEBI (Buy Back of Securities) Regulations, 1998. The buy-back offer was open from 23rd August, 2010 to 28th March, 2011.

The cumulative number of Equity Shares bought back under the scheme is 2,28,83,204 equity shares for a total consideration of Rs. 625.30 Crores, at an average price of Rs. 273.26 per share. The paid-up capital of the Company after the extinguishment of shares bought back under the scheme stood at Rs. 215.94 Crores comprising of 2,15,94,36,598 equity shares of Re.1/- each.

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.

15. SUBSIDIARY COMPANIES

During the year, the Board of Directors agreed to divest 43.31% stake in Hindustan Field Services Private Limited (HFS) in favor of Smollan Group (the JV partner). Your Company will continue to hold 7.69% shareholding in HFS. HFS will, accordingly, cease to be a subsidiary of the Company post completion of the divestment.

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 and the Auditors Reports thereon for the financial year ended 31st March, 2011 along with the Reports of the Board of Directors of the Companys subsidiaries have not been annexed. The Annual Accounts and related documents of the Subsidiary Companies shall be kept 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. 146). 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.

16. CORPORATE SOCIAL RESPONSIBILITY

Your Companys strategy is to integrate the social, economic and environmental agenda in the fabric of its business and operations. This requires the business, to identify the relevant impact areas and define strategies that drive consumer preference, and in parallel, address these issues i.e. strategies that do well by doing good. The reasons for growing the business sustainably are compelling and your Company sees no conflict between promoting sustainable development and business growth.

Your Companys vision is to increase the positive impact in the social agenda by improving health and well being, reduce the environmental impact from greenhouse gases, water and waste and work towards prosperity of India and business by enhancing livelihoods amongst farmers through sustainable sourcing and expanding our small distributor model.

During the year, Unilever launched the Unilever Sustainable Living Plan globally. The Unilever Sustainable Living Plan (USLP) has three significant outcomes by 2020:

# Help more than a billion people take action to improve their health and well-being

# Halve the environmental impact of the making and use of Unilever products

Enhance the livelihoods of thousands of people in Unilevers supply chain

The first outcome is to help more than a billion people to take action to improve their health and well-being. Our everyday use products like soap, spreads and toothpaste can make a meaningful difference to peoples lives. The Lifebuoy handwashing education programme has already reached over 124.7 million people in India and South Asia. Clinical trials reveal that washing hands at key moments helps in significantly reducing the risk of diarrhoeal disease - one of the biggest reasons for fatalities among children.

Today, nearly 1 billion people do not have access to safe drinking water. The UN estimates that nearly one-and-a-half million children die each year from water related diseases. A few years ago your Company decided that there had to be a better, cheaper, more sustainable way to provide safe drinking water. The product developed to address this is Pureit, a water purification system. The water it produces is as safe to drink as boiled water, tastes a whole lot better than water purified with chlorine based sachets, and is a fraction of the price of bottled water. It is easy to operate and safe to use.

To make this product affordable to low income groups, your Company works with NGOs and Womens Self-Help Organisations to facilitate the availability of low-interest micro-loans. Today, Pureit is protecting around 20 million people with clean, safe drinking water. After the success of the product in India, Unilever has decided to introduce Pureit across other countries in South - East Asia, Latin America and sub-Saharan Africa.

The second outcome is to halve the environmental impact of the making and use of our products. This means halving water, waste and greenhouse gases across the lifecycle of the products. The Company has reduced water usage in manufacturing operations by 36% since 2004 (measured on per tonne basis). Fifty six percent of our own manufacturing sites now have rainwater harvesting facilities and five of the sites have potential to return more water to the ground than their consumption.

The products/business life cycle impact analysis shows that your Companys direct impact is relatively small; it is the sourcing of raw materials and usage of the products that accounts for a much larger impact. This means that the Company has to design products, which allow consumers to get better results with less energy and less water consumption.

The third outcome is to enhance the livelihoods of thousands of people in Unilevers supply chain. Your Company works with many small holding farmers, small-scale distributors and micro- entrepreneurs (for example Project Shakti in India) helping them improve their skills and increase productivity.

The outcomes that Unilever has committed to itself are ambitious and challenging and each person at Unilever is willing to stretch, given the excitement for and the belief that it is the right way to go; for our business, for the society and for the environment.

Our products touch the lives of 2 out of 3 Indians everyday, hence changes made to the way the products are designed, sourced and used will have a far reaching impact in making consumption sustainable.

Your Company released its first Sustainable Development Report at the Annual General Meeting held on 27th July, 2010. Your Companys Sustainable Development Report presented the Companys Corporate Responsibility (CR) framework which integrates the social, economic and environmental agenda with business priorities. An update on progress on our commitments made under the CR strategy of the Company is provided at page no. 17 of the Annual Report.

17. BOARD OF DIRECTORS AND MANAGEMENT COMMITTEE

There are no changes in the Board of Directors and Management Committee of the Company during the year.

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.

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.

18. 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.

19. 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 we operate. 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 Companys 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 Mumbai Harish Manwani

9th May, 2011 Chairman

 
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