HUL Chairmans Speech

Dear Shareholders,


It gives me great pleasure to share with you an update on the overall performance of your Company in 2016-17. It was yet another difficult year for the global economy, characterized by low growth and geopolitical uncertainties. In India, rural demand continued to be sluggish in the early part of the year on the back of two consecutive poor monsoons. The overall market showed signs of recovery in the latter half of the year but faced a temporary slowdown in November due to demonetization.


In this challenging business environment, Hindustan Unilever Limited (HUL) delivered a resilient performance in 2016-17. This was enabled by our 4G model of growth - consistent, competitive, profitable and responsible growth. We believe that this model, particularly in times of uncertainty, is in the best long-term interest of all our stakeholders and a good indication of a robust strategy.


In the year under review, our Domestic Consumer business grew 4% with 1% underlying volume growth. EBITDA margin expanded by 38 bps and saw an improvement for the sixth consecutive year. Profit after tax before exceptional items, PAT (bei), grew by 3% to '''' 4247 Crores and Net Profit at Rs, 4490 Crores was up 9%. The strong track record of cash generation was sustained. The Board of Directors have proposed a final dividend of Rs, 10 per share, subject to the approval of the shareholders at the Annual General Meeting. Together with an interim dividend of Rs, 7 per share, the total dividend for the financial year ended 31st March, 2017 amounts to Rs, 17 per share.


Each of our businesses had an important role to play in delivering these strong results. In Home Care, growth was driven by premium Fabric Wash as Surf excel sustained its volume-led growth momentum and remains the biggest brand in the Company portfolio. Vim liquid continued to drive market development of the emerging premium household cleaning segment. The Water portfolio was expanded with the launch of the Reverse Osmosis (RO) range and was well-received by consumers.


The Personal Care business continued to lead trends across all categories with a particularly strong performance in Hair Care and Lakme colour cosmetics. In addition to driving our core business, we strengthened our presence in fast-growing segments of the market. We led the premiumisation of the Skin Care market with new launches on all our skin brands -Lakme, Fair & Lovely and Pond''''s. In the growing ‘naturals'''' segment, we launched a new and expanded range of authentic Ayurvedic Personal Care products under the LEVER Ayush brand name. Similarly, we entered the Baby segment with the launch of Baby Dove.


Our Foods business continued its focus on strong market building initiatives. To extend our appeal to young adults, Kissan launched a new range of ‘khatta meetha'''' jams in Berry, Strawberry and Orange flavours. Knorr expanded its international range with the launch of Italian Mushroom soup, Hong Kong Manchow Noodles soup and Shanghai Hot & Sour Chicken soup.


In the Refreshments category, Tea sustained broad-based growth by differentially leveraging its portfolio across the country. Coffee continued on its premiumisation agenda with BRU, while Ice Creams and Frozen Desserts exited the year with robust innovation led growth.


One of the major strengths of your Company is the relentless focus on execution and productivity and this helped us to sustain brand investments at competitive levels, while significantly improving margins. Our ‘Winning in Many India’s'''' (WIMI) organizational initiative has made us even more agile and responsive to a rapidly evolving marketplace with intensified competition, channel fragmentation and an increasingly segmented consumer base.


Technology and mobile connectivity are rapidly changing consumer behavior and business processes. We continued to lead the digital transformation within our organization and leverage our IT capabilities to drive competitive advantage. We grew strongly in the fast emerging e-commerce channel even as we adopted sophisticated IT solutions to improve our reach and service to millions of small retailers across the length and breadth of India. Technology is also enabling us to better understand our consumers. For instance, our Consumer and Market Insights group has created a People Data Centre that analyses trends from social media, consumer care-lines and digital marketing to turn millions of ‘conversations'''' into business decisions that optimize sales and revenue.


Our Sales and Marketing initiatives were ably supported by our world-class Supply Chain. In 2016, we set up a new state-of-the-art manufacturing facility in Doom Dooma, Assam. This project, christened ‘Project Rhino'''', went from concept to commissioning in just ten months and is an excellent example of operational excellence and a relentless bias for action.


Even as we expand our operations, we remain equally committed to the Unilever Sustainable Living Plan (USLP) and driving our environmental and social agenda through our brands and corporate actions. Lifebuoy, Domex and Pureit continued to lead our initiatives in the areas of hygiene, sanitation and safe drinking water. Through our ‘Swachh Aadat, Swachh Bharat'''' programme, we supported the Indian government''''s Swachh Bharat Abhiyan (Clean India Mission) and promoted good health and hygiene practices in communities across the country. Our efforts in the area of health and well-being reached over 130 million people by the end of 2016.


In line with our USLP goals, we took significant steps to further reduce waste, water consumption and energy usage in our factories and offices. The share of renewable energy used by us increased to 28% through several innovative initiatives such as converting our agricultural process waste into consumable fuel. In our Sumerpur unit, we are using solar energy that meets 80% of power requirement for most of the daylight hours. This increase in use of renewable energy and reduction in energy consumption has helped in reducing the carbon foot-print of our manufacturing locations by 13% over the previous year. Equally, initiatives such as reuse of treated effluent water and rain water utilization have helped in lowering water consumption across our factories by 9% over the previous year. In the last five years, per tonne of production, our energy consumption has reduced by over 30% and water consumption has reduced by 40%.


None of these achievements would have been possible without the passion and commitment of our employees - our biggest asset. During 2016, we launched a major initiative - ‘Connected 4 Growth'''', which strives to further empower our people and creates an organization that is even more consumer and customer-centric, faster and more efficient.


I am pleased to report that our focus on Human Resources development, yet again, ensured that we are chosen as the ‘No. 1 Employer of Choice'''' by students across premier B-schools in the Nielsen survey. We have been ranked in the Top 10 by ‘The Best Companies for Women in India'''' (BCWI) Study 2016. These are all recognitions of our ability to attract and retain the best talent and our commitment to a diverse and inclusive work culture.


I would like to take this opportunity to thank each and every employee as well as those who work with us across the value chain for their unstinting support and hard work in the service of our Company. I would also like to thank you, our shareholders, for your continued trust in the business.


Best Regards,


Harish Manwani


Chairman

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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