HUL Directors Report


and Management Discussion and Analysis

To the Members,

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


1.1 Results

(Rs, crores)

For the year ended 31st March, 2017

For the year ended 31st March, 2016

Revenue from operations (including excise duty)



Profit before exceptional items and tax



Profit for the year



1.2 Category Wise Turnover

(Rs, crores)

For the year ended 31st March, 2017

For the year ended 31st March, 2016





Home Care





Personal Care















Others (including Exports, Infant and Feminine Care)










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

1.3 Summarised Profit and Loss Account

(Rs, crores)

For the year ended 31st March, 2017

For the year ended 31st March, 2016

Sale of products (including excise duty)



Other operational income



Total Revenue


Operating Costs



Profit Before Depreciation, Interest, Tax (PBDIT)






Profit Before Interest & Tax (PBIT)



Other Income (net)



Profit before exceptional items



Exceptional items



Profit Before Tax (PBT)






Profit for the year



Basic EPS (?)



The financial statements for the year ended 31st March, 2017 are the first the Company has prepared under IND AS (Indian Accounting Standards). The financial statements for the year ended 31st March, 2016 have been restated in accordance with IND AS for comparative information.


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

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


The Directors confirm that:

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

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

- they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

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

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


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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

8.1 Technology Absorption

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

Your Company also receives continuous support and guidance from Unilever to drive functional excellence in marketing, supply management, media buying and IT, among others, which help your Company to build capabilities, remain competitive and further step-up its overall business performance. Unilever is committed to ensuring that the support in terms of new products, innovations, technologies and services is commensurate with the needs of your Company and enables it to win in the marketplace.

The details of expenditure on scientific Research and Development at the 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, 2017, are as follows:

Capital Expenditure : Rs, 2 crores

Revenue Expenditure : Rs, 28 crores


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

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

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

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

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

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

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

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

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

- Biogas plants for utilization of canteen waste for gas generation were installed in five factories.

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

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

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

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

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


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

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

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

As per the latest Campus Track Business School Survey, conducted by Nielsen for B-School students, your Company has been chosen as the preferred employer across all sectors. Your Company has also retained the ‘Dream Employer'''' status. Your Company is known for having the best people practices for developing future leaders. The ability to attract the best talent, provides a competitive edge to the organization.

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

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

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

Over the years, the Industrial Relations function of your Company achieved many milestones by strengthening its base through Institutional Capability

Development Initiatives, Gender Diversity, Digitization and Community Development. Your Company drives sustainable growth by leveraging employee-potential through capability development initiatives in line with Unilever Production System and by reducing cost and complexity in Supply Chain units.

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

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


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

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

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

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

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

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

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

Indian Accounting Standards (IND AS) - IFRS Converged Standards

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

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

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

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

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

2017, are given below:










Return on Net Worth (%)







Return on Capital Employed (%)







Basic EPS (after exceptional items) (?)







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

Segment-wise results

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

Your Company identified five business segments, in line with the Accounting Standard on Segment Reporting (IND AS-107), which comprises: (i) Home Care, (ii) Personal Care, (iii) Foods,

(iv) Refreshments, and (v) Others, including Exports, Infant and Feminine Care, etc. The audited financial results of these segments are provided as a part of financial statements.

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

11.1 Risk and Internal Adequacy

Your Company has an elaborate Risk Management procedure, which is based on three pillars: Business Risk Assessment, Operational Controls Assessment and Policy Compliance processes. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The Company has set up a Risk Management Committee to monitor the risks and their mitigating actions and the key risks are also discussed at the Audit Committee. Some of the risks identified by the Risk Management Committee relate to competitive intensity and cost volatility. The 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 business areas. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the 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.

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

Your Company manages cash and cash flow processes assiduously, involving all parts of the business. There was a net cash surplus of Rs, 1,671 crores (2015-16: Rs, 2,759 crores), as on 31st March, 2017. The Company''''s low debt equity ratio provides ample scope for gearing the Balance Sheet, should the need arise. Foreign Exchange transactions are fully covered with strict limits placed on the amount of uncovered exposure, if any, at any point in time. There are no materially significant uncovered exchange rate risks in the context of Company''''s imports and exports. The Company accounts for mark-to-market gains or losses every quarter end, in line with the requirements of Accounting Standard 11. The details of foreign exchange earnings and outgo as required under Section 134 of the Act and Rule 8(3) of Companies (Accounts) Rules, 2014 are mentioned below:

(Rs, In crores)

For the year ended 31st March, 2017

For the year ended 31st March, 2016

Foreign Exchange earnings



Foreign Exchange outgo



11.2 Mergers, Acquisitions and Divestments

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

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

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

11.3 Goods and Service tax

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

11.4 Scheme of Arrangement

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

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


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

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

12.1 Update on Kodaikanal Soil Remediation

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

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

12.2 Corporate Governance

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

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

12.3 Related Party Transactions

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

All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for Related Party Transactions on a quarterly basis for transactions which are of repetitive nature and / or entered in the Ordinary Course of Business and are at 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 Listing Regulations.

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

12.4 Prevention of Sexual Harassment at Workplace

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

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


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

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

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


Details of the shares issued under Employee Stock Option Plan (ESOP), as also the disclosures in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014 are uploaded on the website of the Company No employee has been issued share options during the year, equal to or exceeding one per cent of the issued capital of the Company at the time of grant.

Pursuant to the approval of the Members at the Annual General Meeting held on 23rd July, 2012, the Company adopted the ‘2012 HUL Performance Share Scheme'''' in place of ‘2006 HLL Performance Share Scheme''''. In accordance with the terms of the Performance Share Plan, employees are eligible for award of conditional rights to receive equity shares of the Company at the face value of '''' 1/- each. These awards will vest only on the achievement of certain performance criteria measured over a period of three years. The Company confirms that the 2012 HUL Performance Share Scheme complies with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014.

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

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


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

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

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

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

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


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

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

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


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

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

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


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

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

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

18.1 Cautionary Statement

Statements in the Annual Report, particularly those which relate to Management Discussion and Analysis, describing the Company''''s objectives, projections, estimates and expectations, may constitute ‘forward looking statements'''' within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumptions, the actual results might differ.


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

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

The Board places on record its appreciation for the support and co-operation your Company has been receiving from its suppliers, redistribution stockiest, retailers, business partners and others associated with the Company as its trading partners. Your Company looks upon them as partners in its progress and has shared with them the rewards of growth. It will be your 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 Shareholders, Clients, Vendors, Banks, Government and Regulatory Authorities and Stock Exchanges, for their continued support.

On behalf of the Board

Harish Manwani


Mumbai, 17th May, 2017 (DIN : 00045160)

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.

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at

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