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Hindustan Unilever Ltd.
|BSE: 500696||Sector: Consumer|
|NSE: HINDUNILVR||ISIN Code: INE030A01027|
|BSE 14:34 | 18 Jul||1632.30||
|NSE 14:19 | 18 Jul||1634.10||
|Mkt Cap.(Rs cr)||353,328|
|Mkt Cap.(Rs cr)||353327.67|
Hindustan Unilever Ltd. (HINDUNILVR) - Director Report
Company director report
and Management Discussion and Analysis
To the Members
Your Company's Directors are pleased to present the 83rd Annual Report of the Companyalong with Audited Accounts for the financial year ended 31st March 2016.
1. FINANCIAL PERFORMANCE (STANDALONE)
1.2 Category Wise Turnover
* Others include service income from operations relevant to the respective businesses.
1.3 Summarised Profit and Loss Account
Your Directors are pleased to recommend a Final Dividend of Rs. 9.50 per equity shareof face value of Re. 1/- each for the year ended 31st March 2016. The Interim Dividend ofRs. 6.50 per equity share was paid on 2nd November 2015.
The Final Dividend subject to the approval of Members at the Annual General Meeting on30th June 2016 will be paid on or after 5th July 2016 to the Members whose names appearin the Register of Members as on the date of book closure i.e. from Friday 24th June2016 to Thursday 30th June 2016 (both days inclusive). The total dividend for thefinancial year including the proposed Final Dividend amounts to Rs. 16/- per equityshare and will absorb Rs. 4139.51 crores including Dividend Distribution Tax of Rs.677.25 crores.
3. RESPONSIBILITY STATEMENT
The Directors confirm that:
in the preparation of the annual accounts the applicable accounting standardshave been followed and that no material departures have been made from the same;
they have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profits of the Company for that period;
they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
they have prepared the annual accounts on a going concern basis;
they have laid down internal financial controls for the Company and suchinternal financial controls are adequate and operating effectively; and
they have devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS
To avoid duplication between the Directors' Report and the Management Discussion andAnalysis we present below a composite summary of performance of the various businessesand functions of the Company.
4. ECONOMY AND MARKETS
The trend of slowdown in global growth continued during the year. The below parperformance of global economy was reflected in a continued growth deceleration in mostemerging and developing economies driven by low commodity prices weaker capital inflowsand subdued global trade.
Against this global backdrop the growth in India stayed fairly resilient. India wasthe fastest growing large economy with a stable currency that performed better than mostother emerging market currencies. The domestic macro-economic conditions also remainedstable. A significant drop in commodity costs led by crude oil and other interventionsresulted in lower consumer inflation which allowed easing of interest rates in theeconomy. However a second consecutive year of drought and a low increase in supportprices have led to a sharply slower growing rural economy compared to earlier years.
Consumer spending remained muted and this was reflected in moderate growth rates acrossFMCG categories. Given the backdrop of a slowing market a volatile input cost environmentand heightened competitive intensity the operating environment for your Company duringthe year continued to be challenging.
Your Company's performance for the year 2015-16 has to be viewed in the context ofaforesaid economic and market environment.
5. PERFORMANCE OF BUSINESSES AND CATEGORIES
Your Company delivered yet another year of consistent competitive and profitablegrowth aided by strong marketing and trade investments a robust innovation pipelinestepped up market development and sharper in-market execution. Across the portfolio yourCompany sustained a strong focus on innovation and continued to delight consumers with arange of exciting offerings. The investment in non-television and digital media wassignificantly stepped up during the year. Your Company continued to leverage and benefitfrom the inputs received from Unilever across various aspects of the business includingtechnology innovation and communication that enabled your Company to launch several newofferings to serve and meet the needs of consumers.
The year began with a sharp drop in commodity prices including crude and vegetable oilsand these markets continued to remain volatile which posed a major challenge during theyear. Learning from the previous years your Company proactively passed on the benefits oflower commodity costs to the consumers thereby successfully securing the consumerfranchise. Additionally your Company had embarked on an ambitious cost savings programmethat delivered record savings during the year. These cost saving programmes along with thejudicious pricing without compromising on the competitiveness of brand investmentshelped deliver profitable volume led growth for the year once again.
Driving competitiveness in trade channels particularly Rural Modern Trade ande-commerce continued to be a focus area for your Company. During the year your Companyfurther built upon the "Winning in Many Indias" drive that was launched lastyear to benefit from geographical focus while leveraging scale and this will continue tobe a key strategic thrust in the future. Your Company continued its focus on drivinginnovation and building markets of the future to deliver value to consumers.
To build awareness and demonstrate the consumer benefits of its brands and productformats your Company continued to invest in consumer connect programmes. The schoolcontact programme run by your Company's brands Lifebuoy and Pepsodent encouraged andeducated children on the importance and correct method of washing their hands and brushingtheir teeth.
The business of your Company falls under five segments. Soaps and Detergents segmentcomprises categories of Soaps Detergents and Household Care Personal Products segmentincludes categories of Skin Care Hair Care Oral Care Colour Cosmetics and Deodorants.Beverages segment covers Tea and Coffee. Packaged foods segment includes Culinary andBakery Products Frozen Desserts and Ice cream. The residual segment of Others' isprimarily made up of Water business.
5.1 Soaps and Detergents
The year saw a significant reduction in raw material prices for the Soaps category.Your Company acted proactively to take decisive pricing actions resulting in growingvolumes ahead of the market. The momentum on key brands of Lifebuoy and Dove continuedthrough the year with both brands registering strong volume growth. Lux was relaunchedduring the year with significantly improved product offering. Market developmentinvestments in liquids portfolio of hand wash body wash and sanitizers also continuedduring the year.
The Detergent Category delivered volume led growth driven by acceleratedpremiumisation and strong growths in categories of the future. Surf continued to leadcategory premiumisation with double digit growth led by the continuing momentum of SurfExcel Easy Wash. Rin had a new thematic communication to accentuate the brightnessproposition. The new communication drove upgradation in the category. Rin also took a bigstep aligned to its purpose by launching its social initiative the Rin Career ReadyAcademy' in select states. The Rin Career Ready Academy offers to youth from modestbackgrounds mobile accessible courses that educate them on English Speaking OfficeDressing and Interview Skills thereby equipping them with skills that enhance theircareer prospects. The programme received a tremendous response with over 2 lakhregistrations. The developing segments of Machine Wash - Surf Excel Matic and ComfortFabric Conditioner continued to perform well.
With the fall in crude oil prices the category witnessed significant media andcompetitive intensity during the year. To remain competitive in the market the Companytook the lead in passing the benefits of decline in commodity costs to consumers whilealso investing to develop new segments.
In household care Vim continued to develop and premiumise the category through theliquids portfolio. The expansion of Vim liquid to rural India helped in delivering thedouble digit growth. The proposition of power of 100 lemons combined with a superiorproduct and great activation helped the product to become more appealing and desiredamongst consumers. Domex brand continued to enhance its hygiene credentials in the toiletcleaning category.
5.2 Personal Products
In a challenging market environment where the growth of discretionary categories hascontinued to remain under pressure the Personal Products segment delivered a healthybroad based performance. Your Company continued to invest for competitive growth in itscore categories and build the segments of the future.
Skin Care category grew well in a soft market. Face Care delivered robust growth acrossskin lightening facial cleansing anti-ageing and men's formats. Fair & Lovelycontinued to perform well in its third year of re-launch of the Best Ever' Fair& Lovely. The brand continued to drive premiumisation through innovations with the newFair & Lovely BB cream which was received well by the consumers. The Face Washsegment continued to do well across brands. Pond's growth was led by an encouragingperformance of the skin lightening portfolio. The activation around spot removal'buoyed Pond's White Beauty and continued to be acknowledged by its consumers. During theyear Pond's also strengthened its position in the male grooming segment with the launchof Men's range of facewash. Lakme sustained its growth momentum during the year. YourCompany continued to lead market development of body lotion with Vaseline through thehealing power' activation on the brand.
Hair Care continued to maintain its growth momentum with strong consistent growthacross brands. Your Company continued to deploy innovations and impactful campaigns on itscore brands while leading market development in the emerging conditioners segment. Theinvestment made by your Company in this category over a period of time to strengthen thebrand equities and mix in the marketplace is driving preference towards the brands withDove Clinic Plus Sunsilk and Tresemme performing well.
The year was challenging for Oral Care which saw high competitive and promotionalintensity. Closeup continued to grow and garner equity through its proposition aroundconfidence to make the first move'. Pepsodent Germi-check has been relaunched at theend of the year. Your Company also continued to invest in building oral health andhygiene and reached out to children across the country through a school contactprogramme.
Lakme Colors performance has been robust as it delivered double digit growth during theyear yet again. Lakme continues to drive premiumisation by upgrading users through longlasting 9 to 5 platform and bringing the global make-up trends to India under theAbsolute platform. The brand has continued to stand out and strengthen its position in thecategory with its multiple successful launches in premium make up the latest being thelaunch of Lakme Mousse Foundation and Lakme Absolute eye liner which have received anencouraging response from its consumers.
In the Deodorants portfolio through Axe your Company continued to deploy excitinginnovations and impactful campaigns. The perfume spray segment launched under AxeSignature' last year continues to perform well and has seen an increase in consumerfranchise during the year. The world-class deodorants manufacturing facility commissionedby Unilever in Khamgaon has become operational during the year and will provide a regularsupply of high quality deodorant products to cater to the markets across Asia includingIndia.
Your Company has made strategic foray in the fast evolving Naturals segment by revivingthe brand Lever Ayush' towards the end of the year. The new range of Lever Ayushproducts are available on the e-commerce platform. This is an inspiring range of personalcare products including hair skin and pain management. Your Company has signed anagreement to buy Indulekha' brand during the year which brings a premium brand withstrong credentials around Ayurveda that will complement the existing portfolio andstrengthen the presence of your Company in the Hair Care category. The brand enjoys strongequity amongst consumers with its naturals' and therapeutic positioning. YourCompany is committed to investing behind the development of both these brands tostrengthen its position in the fast evolving Premium Naturals segment.
The Beverages segment delivered broad based growth across both Tea and Coffee. Thegrowth across key brands was driven by a strengthened mix and focused in-marketactivities.
Taj Mahal Tea has been brought alive at the Brooke Bond Taj Mahal Tea House in Mumbaiwhich celebrates the brand's glorious heritage of great tea and Indian Classical Music. 3Roses has driven premiumization and strengthened its leadership position in South India.Red Label's journey of "brewing togetherness" over tea has earned fame with itsmuch talked about advertising. Red Label and 3 Roses Natural Care Tea with itsdifferentiated immunity benefit continues to delight its consumers. Your Company continuedto grow the Green Tea category during the year on the back of sustained market developmentand achieved value market leadership in the Green Tea segment during the year.
The Coffee business delivered strong double digit growth led by the Instant Coffeefranchise. The brand continued its pioneering task of consistently driving penetration ofinstant coffee in the South through innovative sampling methods and a compellingproposition. The pure coffee franchise of Bru Gold continued its strong run drivinghandsome share gain.
5.4 Packaged Foods
The Packaged Foods segment of your Company comprises culinary products such as jamsketchups and squashes under Kissan; soups soupy noodles and meal makers under Knorr;branded staples (Atta and Salt) under Annapurna; bakery products under Modern; and frozendesserts / ice creams under Kwality Walls and Magnum. The segment delivered a strongturnover growth and profitability during the year as your Company continued to drivegrowth in both topline and bottomline while continuing to invest in building thisbusiness.
Kissan sustained its strong consistent performance delivering another year of doubledigit growth driven by impactful activation around unlocking everyday relevance forconsumers. The brand reinforced its real' credentials that Kissan is made from 100%real fruits and vegetables through the Kissanpur' activation. The consumerpreference along with a strong distribution increase in both Ketchup and Jam resulted inthe business growing faster than the market. The year also saw the launch of exciting newvariants of premium jams and the relaunch of ketchup variants under the "Twist"platform. Kissan ketchup became market leader in the year.
The performance of Knorr was led by soups with the convenient instant soups singleserve format performing particularly well. Your Company expanded its instant soupofferings with exciting new flavors at magic price points. This supported by widespreadsampling ensured that the soup category has grown in relevance as a healthy in-betweenmeal option. The Knorr Meal Maker portfolio continued to be led by in-store sampling andactivations. The year also saw the launch of a new range of mixed spices under KnorrChef's Masala.
Your Company continued its focus on improving the profitability of the Annapurnabusiness by driving efficiencies across the value chain.
Your Company also scaled up its experiential marketing initiatives. Given the relevanceof market development it is critical that consumers sample your Company's products anddiscover the great taste and convenience that the products offer. Foods and Beveragesportfolio reached 1 in 12 Indians last year through sampling.
Modern Foods the division which deals with bakery products continued the goodperformance both in terms of top line and bottom line. Despite low growth in breadindustry due to challenges posed by other breakfast options and low entry rate in thesegment Modern Foods managed to maintain its strong position in most of the markets. Inline with its strategy to exit the non- core businesses your Company signed an agreementduring the year and completed a transaction relating to sale and transfer of its bread andbakery business under the brand Modern' to Modern Food Enterprises Private Limitedan investee company of Everstone Group.
The Frozen Desserts and Ice Cream business delivered another year of strong performancewith double digit growth and improved profitability. With improved distribution thebrands were made more accessible for consumers. The Impulse portfolio continues to growfaster with improved brand equity across Cornetto and Paddle pop. Cornetto and Magnum areconnecting with consumers through digital platform in addition to traditional media. Postthe successful launch of Magnum the premium indulgent ice-cream brand your Company haslaunched a new flavor Magnum Choco Brownie' during the year .
The packaged foods industry faced certain regulatory challenges last year whichresulted in uncertainty on the regulatory regime concerning the foods industry.Subsequently the uncertainty was removed with orders passed by the judiciary andclarifications issued by the food regulator. The clarifications issued help in fosteringinnovation in the packaged foods industry. As part of the industry your Company haspartnered with the regulator towards a more balanced approach to foods regulation whichtakes care of the consumer's interest while fostering innovation.
Pureit continues to grow with both modern trade and Pureit perfect stores performingwell. During the year Pureit also refreshed its strategy to play in a wider market ofsalt removal starting with the introduction of entry level RO in the market. This wouldhelp the brand reach newer consumers. At the premium end of salt removal devices Pureitintroduced another innovation in the form of Ultima RO+UV with Oxytube with theproposition of eat pure and drink pure'. This is the only purifier that gives bothsafe drinking water as well as removes chemicals and pesticides from the surface of fruitsand vegetables. The Pureit brand continued to lead the self-fill non electric purifierssegment with continued communication focusing on building relevance around safe drinkingwater. In this segment Pureit continued its partnership with microfinance institutions toreach the tower income consumers by offering them access to safe drinking water throughaffordable monthly instalments.
5.6 Non-FMCG Exports
Rice exports continued to do well whilst adding new customers in expanded geographiesand improving its mix. Your Company has signed an agreement for sale of the Rice Exportsbusiness carried out primarily under the brands Gold Seal Indus Valley' andRozana' to LT Foods Middle East DMCC a group company of LT Foods Limited in linewith its strategy to exit non-core businesses.
5.7 Subsidiaries and Joint Venture
The summary of performance of the subsidiary and joint venture companies is providedbelow:
Unilever India Exports Limited
Unilever India Exports Limited (UIEL) is a 100% subsidiary of your Company and isengaged in FMCG exports business. The focus of the FMCG exports operation is two-fold: todevelop overseas markets by driving distribution of ethnic brands such as Kissan BRUBrooke Bond Lakme Pears among the Indian diaspora in international markets and toeffectively provide cross-border sourcing of FMCG products to other Unilever companiesacross the world.
During the year UIEL achieved a significant milestone of reaching a turnover of Rs.1000 crores. The top line growth of the Company was driven by robust growth in PersonalProducts segment. Brands like Pears Lakme Fair & Lovely and Vaseline have registeredhealthy performance in the focused markets while foods and beverages helped to driveprofitability. Overall the business delivered healthy profitability during the year. UIELcontinued to be one of the most preferred sourcing companies for other Unilever countriesand added new geographies like Korea.
Lakme Lever Private Limited
Lakme Lever Private Limited (LLPL) is a 100% subsidiary of the Company and has 280salons of which 52 are Company owned / managed and 228 are franchisee salons. In achallenging environment marked by lower discretionary spends. LLPL delivered a robustinorganic growth with a net expansion of 50 salons.
Lakme Bridal Stylist looks collection which was showcased in Lakme Fashion Week WinterFestive 2015 enabled premiumisation of bridal portfolio. Portfolio of services wasstrengthened with clutter breaking innovations which delighted the consumers and helped todrive growth. Your Company will continue to support LLPL to drive growth in thisattractive market opportunity
Pond's Exports Limited
The leather business under the subsidiary Pond's Exports Limited faced a tough yeardue to challenging economic conditions in main market Europe and further pushed down by aweaker Euro. The Company continued its focus on consolidation of supply chain bringing inefficiency and improvement in customer service.
Unilever Nepal Limited
Unilever Nepal Limited (UNL) subsidiary of your Company is engaged in manufacturingmarketing and sale of detergents toilet soaps personal products and laundry soaps inNepal.
Nepal had an exceptionally challenging year due to the natural tragedy that hit thecountry last year. UNL supported relief operations in Nepal through NGO foundations aswell as through emergency material supplies such as Lifebuoy Vaseline and Pureit. Thecountry's economy then suffered due to the blockade of the country's borders during thepromulgation of the new constitution resulting in severe disruption of commercialactivities. The blockade impacted the availability of fuel and incoming materials whichresulted in disruption of the factory operations.
The above events in the country had an adverse impact on UNLs business performanceresulting in reduction of sales during the year. The Company however managed to limitthe fall in the profitability aided with the help of low commodity prices and tight costcontrols.
Hindustan Unilever Foundation
Hindustan Unilever Foundation (HUF) is a not-for-profit company that acts as a vehicleto anchor water savings related community development and sustainability initiatives ofHindustan Unilever Limited. HUF operates the Water for Public Good' programme withspecific focus on farm based livelihoods in 54 districts across India in partnership with20 NGOs. HUF also supports several knowledge initiatives in this area. The waterconservation programme of the Company has achieved the following community benefits:
Water conservation: Cumulative and collective water potential of 200 billionlitres has been created through improved supply and demand management of water
Crop yield: The projects undertaken by the Company have generated additionalagriculture production of 1.5 lakh tonnes.
Person days: These projects have generated more than 20 lakh person days ofemployment.
Capacity building: Over one lakh people have been trained in water conservationactivities better agricultural practices and related areas.
The cumulative impacts of these projects initiated by HUF have been independentlyassured.
Bhavishya Alliance Child Nutrition Initiatives
Bhavishya Alliance Child Nutrition Initiatives (BACNI) is a not-for- profit subsidiaryof the Company and has launched the Bihar Hand Washing Programme' (BHP) - a handwashing behaviour change programme in the state of Bihar that aims to reduce diarrhoea andpneumonia in children under the age of five years. The programme aims to reach 90 millionschool children across 50000 schools by 2018. BACNI has partnered with Children'sInvestment Fund Foundation a UK based philanthropic fund in this endeavour. BHP won aSilver at the Flame Asia Awards 2016 organized by Rural Marketing Association of India inthe Social Development Campaign of the Year category.
The programme witnessed remarkable momentum through 2015 and first quarter of 2016.Till date the programme has reached 1.3 million children across 4000 schools andconducted 3700 Mother Sessions to influence mothers who are the key habit formers forchildren. Through sustained efforts the Government of Bihar has released a directive toinclude Handwashing Session before Mid Day Meal thereby ensuring handwashing becomes amandatory practice. About 3900 mid-day meal sessions were also covered as part of the BHPprogramme.
Daverashola Estates Private Limited and Jamnagar Properties Private Limited aresubsidiaries of the Company which have been exploring opportunities to enter intoappropriate business activities. Levers Associated Trust Limited Levindra TrustLimited and Hindlever Trust Limited subsidiaries of the Company act astrustees of the employee benefits trusts of the Company.
Kimberly Clark Lever Private Limited
Kimberly Clark Lever Private Limited (KCL) is a joint venture between your Company andKimberly-Clark Corporation USA with infant care diapers as its primary product categorysold under the brand Huggies and feminine care products sold under the brand Kotex. Duringthe year the business faced tough competitive environment on pricing and trade spends.Also there has been a drastic shift of market from regular diaper to pants version whichimpacted revenue growth.
To meet the growing demand of pants format investments have been made to increase theproduction capacity. The competitive intensity in the infant care category remains highand continues to attract both local and global competitors. KCL will continue to drivegrowth in business through innovations that positively impact consumers.
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of financial statements of subsidiaries associates and jointventure companies in Form AOC 1 is attached to the Accounts. The separate auditedfinancial statements in respect of each of the subsidiary companies shall be kept open forinspection at the Registered Office of the Company during working hours for a period of 21days before the date of the Annual General Meeting. Your Company will also make availablethese documents upon request by any Member of the Company interested in obtaining thesame. The separate audited financial statements in respect of each of the subsidiarycompanies is also available on the website of your Company at
Your Company has obtained a certificate from the Statutory Auditors certifying that theCompany is in compliance with the FEMA regulations with respect to the downstreaminvestments made in its subsidiaries and joint venture companies during the year.
6. CUSTOMER DEVELOPMENT
During the year the most important deliverable for the Customer Development functionwas to win in the marketplace through great execution delivering competitive growth bywinning with 2700+ redistribution stockists and shoppers everyday whilst getting thefunction future ready for winning across markets.
The year witnessed strong and consistent in-market performance on launches andrelaunches which are key drivers of growth.
Your Company has put in place robust action for Building Brands in Stores' in theModern Trade environment and intends to scale up the initiative based on the learnings.This initiative has helped in growth in the Modern Trade retail with the business growingin double digits and also gaining market share. The e-commerce opportunity is evident andgrowing exponentially in India. Your Company has made significant investment in capabilitybuilding in e-commerce and is committed to being the best FMCG player in e-commerce. Astrong high quality team with diverse talent has been put in place which is workingclosely with all key e-commerce partners to create competitive advantage for the business.
In the previous year your Company undertook the ambitious transformation agenda ofWinning In Many India's' (WIMI) to leverage the diversity of people culturehabits economics and demographics that exists across India. This year has been a year ofstrengthening the WIMI thinking across markets embedding it into the ways of working.This initiative has helped your Company to improve quality of servicing and in-marketexecution by getting closer to customers shoppers and consumers. The creation of the newbranch office at Lucknow covering Central India (UP Bihar MP Chhattisgarh andRajasthan) has already started yielding results with these markets leading growthnationally. These markets have seen the benefits of tailor made consumer and customerplans across categories. Your Company is experiencing clear signs of the WIMI approachstrengthening connect with customers consumers and shoppers across geographical clustersand will be a source of continuing competitive advantage.
Your Company has been a thought leader in the area of big data and analytics as a toolto drive sustainable growth. Using millions of transactions captured every month yourCompany uses intelligent analytics at the back end to deliver better on shelfavailability in stores. Your Company continues to strengthen this capability every yearand will invest aggressively in the power of knowledge and big data to stay ahead ofcompetition.
Your Company continues to focus and drive Project Shakti' the initiative fordriving social responsibility and sustainability aimed at enhancing livelihoods andbuilding opportunities for small scale entrepreneurs in rural India. We now have close to70000 Shakti Entrepreneurs (Shakti Ammas) across 16 states making a respectable livingby distributing your Company products. These Shakti Ammas cover 162000 villages givingaccess to our brands to over 4 million rural households.
While rural remains a growth opportunity the large cities are also key drivers ofgrowth. To harness the growth opportunity in these big cites you Company has initiatedthe Perfect City programme which is a set of key projects for large Metros directed atwinning with shoppers across all socio-economic strata in these cities.
7. SUPPLY CHAIN
Your Company's Supply Chain agenda was centred on five core areas - Customer ServiceExcellence Creating Consumer delight by dedicated focus on quality End to end costsavings programme Sustainability and Partner to win through continuous improvement withvendors.
The service delivery standards improved steadily with Customer-Case Fill-On-Timeincreasing to 95%. This was achieved by developing a segmented approach and deploying itacross the business. Under the segmented approach different combinations of portfoliosgeographies and customer channels were made. This resulted in a fit for purpose strategyfor each element of Supply Chain. Your Company continued to strengthen the processes ofSales and Operation Planning (S&OP) and Innovation Process Management (IPM) which arethe foundation of your Company's operational performance.
Your Company continued its focus on quality by linking all actions to reduce consumercomplaints per million units and improving on shelf consumer relevant quality standardsthereby bringing together every part of the business to work on improving overall consumerexperience. Continued focus on consumer connects have helped further driving the topagenda of Delighting consumers'. While the overall engagement with our consumerswent up 67% over the previous year the consumer complaints reduced by 20%.
With a robust funnel of saving programmes your Company continued on its path ofdelivering consistent end to end cost savings. Inventory reduction achieved throughscientific IT tools helped in releasing a substantial amount of cash for the business.
In line with the USLP commitments your Company increased its dependence on Biomass asa source of fuel instead of fossil fuels. 25% of the energy requirement was met fromrenewable resources. Your Company is using locally available agri-waste like paddy strawcotton stalks saw dust and rice husk as fuel thereby helping local farming community torealize value out of these materials which was otherwise wasted and burnt in fieldscausing pollution. Besides small local industries have come up to convert these intobriquettes. All factories and warehouses were zero non-hazardous waste to landfill sites.Your Company continues to focus on water conservation by reducing ground water extraction.This is done by lowering process related consumption and reuse of treated effluent throughReverse Osmosis and secondly recharging of ground water table through Rain WaterHarvesting.
Your Company progressed well in implementing its long term manufacturing strategy withefficient capacity creation and introducing new technologies to support volume growth.Human resources for factories and Industrial Performance were introduced to drive yourCompany on the path of manufacturing excellence. World Class Manufacturing principleswhich focus on root-cause analysis and elimination of non- value adding activities helplead improvement in efficiencies and cost performance.
There has been a significant improvement in innovation OTIF (On Time in Full) with morethan 40 innovation networks being executed during the year touching about 60% of theproduct portfolio. The focus on bigger and faster innovation and capability developmenthas significantly helped the Company launch innovations first time right.
The Partner to Win Program developed by Unilever globally aims at developing JointBusiness Plans with suppliers and business partners. It has resulted in reduced lead timeand costs improved reliability and new innovation delivery.
8. RESEARCH & DEVELOPMENT
Your Company continues to derive sustainable benefit from the strong foundation andlong tradition of Research & Development (R&D) at Unilever which differentiatesit from many others. New products processes and benefits flow from work done in variousUnilever R&D centres across the globe including in India. The Unilever R&D labsin Mumbai and Bengaluru work closely with the business to create exciting innovations tohelp us Win with our Consumers. With world-class facilities and a superior science andtechnology culture your Company is able to attract the best talent to provide asignificant technology differentiation to its products and processes.
These R&D programmes undertaken by Unilever globally are focused on thedevelopment of breakthrough and proprietary technologies with innovative consumerpropositions. The R&D team comprises highly qualified scientists and technologistsworking in areas of Home Care Personal Care Foods & Beverages and WaterPurification. The R&D group also comprises critical functional capability teams in theareas of Regulatory Clinicals Digital R&D Product & Environment Safety and OpenInnovation.
Your Company had entered into a Technical Collaboration Agreement (TCA) and a TradeMark License Agreement (TMLA) with Unilever in 2012. The TCA provides for payment ofroyalty on net sales of specific products manufactured by your Company with technicalinputs developed by Unilever. The TMLA provides for the payment of trademark royalty as apercentage of net sales on specific brands where Unilever owns the trade mark in India.The pace of innovations and the scope of services have expanded over the years. Unilever'sglobal resources are providing greater expertise and superior innovations. Your Company isenjoying the benefits of an increasing stream of new products and innovations backed bytechnology and knowhow from Unilever such as those explained below. This has helped inbringing to the Indian consumers bigger better and faster innovations.
During the year your Company introduced several innovations in Soaps and Detergentscategory. In the Soaps category Lifebuoy continued to leverage its efficaciousformulation powered by Activ Naturol Shield (ANS) where the R&D team discoveredsynergistic combination of sustainable natural actives to provide superior efficacyagainst ordinary and evolved germs. Lifebuoy's efforts to reformulate Rs. 5/- mini-barproviding superior skin feel better value and superior germ protection were recognizedexternally through prestigious Edison Gold Award for its broad global impact on health andhygiene. A new variant of Dove without the presence of allergens Dove sensitive waslaunched for the care of sensitive skin.
In the Detergents category Surf Excel Handwash Powders were re-launched claiming"Tough stain removal" owing to improved formulation. Surf Excel Matics powderformulations were improved by increasing stain removal efficacy of the product. Wheelpowder was further improved to deliver higher performance with improvement in cleaning andfragrance.
In the Household Care category the quality of the Vim bar was improved significantly.Product re-engineering was done for both the Vim bar and Vim liquid to improve the valuedelivered to the consumers and also enlarge consumer base.
In Hair Category continuing the trend of innovations Clinic Plus the largest beautyshampoo brand in the country was relaunched with new formula providing stronger hair andnew bottle design. The new pack also received external recognition by "India StarAwards" and "Asia Star Awards" for its unique design. Dove launched a newvariant "Oxygen Moisture" catering to the needs of consumers seeking voluminoushair with bounce. TRESemme launched a new variant "Ionic Strength" withtechnology to protect hair against styling damage.
The Deodorants Category launched two new variants of Axe signature Champion andMaverick in the existing Axe signature range. To enable building antiperspirant market inIndia three variants of Rexona Antiperspirant underarm roll-ons powder dry shower freshand Aloe Vera were launched with claims involving prevention of body odour caused by sweatand bacteria.
In the Oral Care category Pepsodent Germicheck was relaunched with your Company's bestever flavour to provide an improved sensorial experience to the consumer.
In the Skin Care category Fair & Lovely launched BB cream an expert product thatbrings together the benefits of foundation and fairness cream. Fair & Lovely Menlaunched Max Fairness Oil Control face wash a product which is specially designed formale consumers. Vaseline relaunched its Intensive Care lotions - Deep Restore Cocoa Glowand Aloe Soothe lotion variants enriched with micro droplets of Vaseline Jelly TM torestore moisture reserves of skin instantly and helping your dry skin heal. Vaseline alsolaunched Intensive Care Advanced Repair lotion clinically proven to restore very dry skinin 5 days. Pond's White Beauty launched its first ever pearl cleaning gel which offers adifferential sensorial in whitening and freshness space. It is formulated to give glowingand fair skin and the oxy gel technology is effective in oil and dirt removal from deepwithin the skin without making the skin feel dry. Pond's Men launched Pollution Out DeepClean face wash. The product is formulated to cater to the hectic lifestyle of maleconsumers.
In Water business your Company launched an inline water purifier "MarvellaUV+Cold" based on UV purification technology. This point-of-use water purifier isequipped with a cooling feature which is first of its kind in this product category. Inthe RO portfolio "Classic RO+MF" a low cost RO water purifier was launched tocater to lower LSM consumers who do not have access to sweet potable water and toestablish leadership in the RO segment. The initial market response for this purifier hasbeen very promising. The R&D team has developed the Oxyblast' Technologyenabling the launch of the Pureit Ultima RO+UV with Oxytube. The technology removeschemicals and pesticides from Fruits and Vegetables and also purifies water through its6-stage RO+UV purification.
In Beverages Category Tea R&D team focused on re-launch of key brands Taaza3Roses and Red Label with superior products. Green tea category growth was acceleratedthrough strong claims substantiated through science and technology. The Tea R&D teamcontinued to build capability for tea and coffee and to dial up processing capability tounlock value across the value chain. Through R&D initiatives cost savings were alsodelivered to manage commodity inflation.
The Foods R&D team in its efforts to further develop the Company's Foods businesslaunched a number of new product ranges. The Kissan ketchup and tomato based sauce rangewas extended with Twist' products to extend the range with sauces to dip into oruse as a topping. Kissan mango jam was reformulated made partly with real Alphonsomangoes resulting in a delicious taste. The Knorr Soups range positioned as a greattasting healthy alternative for higher calorie snacks was further extended with a rangeof International cook up soups as well as instant soups. Knorr seasoning range waslaunched towards the end of the year. These products bring restaurant quality to homes inIndia through global Knorr Chefmanship skills.
In the Ice creams / frozen dessert category new products launched across differentimpulse brands made significant contribution in driving the category growth. UnderCornetto two variants of mini Cornetto with chocolate and butter scotch flavor werelaunched in the affordable snacks range. Launch of bubble gum jelly packed with excitingtaste and fun was among kids' favorite ice creams during the year. Under Premium segmentMagnum Choco Brownie' made an entry in the market.
R&D has further contributed to the Company's sustainability agenda by enablingsignificant reduction in packaging material consumption through several materialefficiency initiatives. During the year your Company focused on using lighter strongerand better materials that have a lower environmental impact. This has led to over 10000tonnes of paper and board waste reduction; and over 840 tonnes of polymer waste reduction.Your Company has also been successful in reducing glass wastage in Foods packaging bynearly 20 tonnes and wooden stick wastage in ice creams by nearly 11 tonnes.
Your Company is working in partnership with industry governments and NGOs to increaserecycling and recovery rates in our packaging. R&D has contributed significantlythrough several material efficiency initiatives which resulted in reducing packaging wastefootprint by 123 tonnes across Beverage and ice creams without compromising on deliveredquality.
With access to strong scientific expertise and the capability to deliver high valuetechnologies developed globally by Unilever your Company is well placed to meet thechallenges emanating from the increased intensity of competition and the opportunities todrive faster growth on the back of a strong support from R&D as well as branddevelopment capabilities.
8.1 Technology Absorption
The Company maintains strong and healthy interactions with Unilever. This isfacilitated through well-co-ordinated management exchange programme. The programmesinclude setting out governing guidelines pertaining to identifying areas of researchagreeing timelines resource requirements etc.; scientific research based on hypothesistesting and experimentation which leads to new / improved / alternative technologies;supporting the development of launch ready product formulation based on research andimplementation of the launch ready product formulations in our markets. The benefitsderived by your Company through technology absorption and Research and Development havebeen detailed earlier in this report. Your Company continuously imports technology fromUnilever under the Technical Collaboration Agreement and the same is fully absorbed.
Your Company receives support and guidance from Unilever to drive functional excellencein marketing supply management media buying and IT among others which helps yourCompany to build capabilities remain competitive and further step-up its overall businessperformance. Unilever is committed to ensuring that the support in terms of new productsinnovations technologies and services is commensurate with the needs of your Company andenables it to win in the marketplace.
The details of expenditure on scientific Research and Development at the Company'sin-house R&D facilities eligible for a weighted deduction under Section 35(2AB) of theIncome Tax Act 1961 for the year ended 31st March 2016 are as follows:
Capital Expenditure : Rs. 2.47 crores
Revenue Expenditure : Rs. 37.13 crores
9. ENVIRONMENT SAFETY HEALTH AND ENERGY CONSERVATION
Your Company places utmost importance on ensuring safety of its employees visitors toour premises and the communities we operate in. Safety is an overarching area ofmanagement being part of your Company's strategic framework (The Compass). Your Companyhas been achieving continuous improvement in safety performance through a combination ofsystems and processes as well as co-operation and support of all employees. The injuryrates in 2015 were less than A of the injury rates in 2008. In absolute terms the injuryrate last year was less than 0.5 injuries per million manhours worked. Each and everysafety incident at the sites is recorded and investigated. All injuries which require anymedical treatment are logged and reported to a global externally audited monitoringsystem.
One of the key enablers for your Company's vision of Zero Injury and Zero Incidentoperation is the ability to share knowledge globally and learn from incidents acrossUnilever sites preventing repetition of incidents. This is facilitated by regular inputsprovided by Unilever Global Safety team on corrective and preventive actions based onlearnings not only from Unilever sites across the world but also best practices from otherFMCG companies.
Safety receives the highest attention from all levels of management. All officialevents in the Company be it a CEO's address to a large group of employees or a smallmeeting addressed by a factory manager of a remote unit begin with a safety briefing. Topmanagement regularly use Safety Moments as a technique to share personal safety learningswith team members. All Managing Committee (MC) members personally lead a Safetysub-committee. Performance of the sub-committees led by MC members is periodicallyreviewed by a Central Safety Health and Environment sub-committee which is chaired bythe CEO. This provides strong crossfunctional support and senior level guidance for safetyteam.
Your Company also invests resources and efforts in training and hardware upgradation tomove the needle on safety. A customised behavioral safety framework called BeSafE is beingdeployed across factories and offices to improve risk perception of employees. Theprogramme targets change in behaviour patterns and elimination of unsafe acts since thesehave been found to be the root cause of majority of safety incidents.
Your Company has been leading sustainability initiatives in manufacturing operationsfor several years. Sustainability is integral to all the operations of your Companyranging from sourcing to manufacturing and logistics. Your Company has been achievingsignificant year-on-year reduction in use of water electricity and fuel in manufacturingoperations in line with
Unilever Sustainability Living Plan (USLP). Following are some of the milestones ofenvironmental performance during the year:
A facility at Orai was commissioned to burn vegetable oil residue (by-productfrom DFA plant operations) for steam generation. Use of vegetable oil residue as fuelhelps reduce the CO2 emissions besides being more cost-effective than furnaceoil. This is being evaluated for replication at other DFA plants.
Special efforts were undertaken to improve the uptime of biomass boileroperation across sites to maximise use of biogenic fuels and minimize use of standbyfurnace oil fired units. During the year one more biomass boiler was installed at Dapadabringing the total number of biomass fired units to 12.
Expert assessments of Water balance energy balance pump efficiency etc. areorganised at every factory and these are used to identify environment impact reductionopportunities. All new premises are designed compliant to high (Gold / Platinum) Leedsstandards for conserving energy throughout their life-time.
Rain water harvesting is practised across all the sites. In addition severalunits are collecting rainwater for use in plant operations such as cooling tower makeupwater to reduce groundwater extraction. Every site has been equipped with water meters totrack water usage in process and utility areas. The data collected is analysed on a weeklybasis. With these efforts Specific water consumption in manufacturing operations reducedby further 4% over 2008 baseline and now stands at 48% of 2008 baseline.
Your Company made capital investments amounting to Rs.14 crores during thefinancial year 2015-16 on energy conservations equipment and saved over 60000 GJ/annum ofenergy as a result. The annualized financial savings due to conservation initiativesamounted over to Rs. 12 crores.
Above initiatives enabled your Company to reduce our carbon foot-print too. YourCompany's CO2 emissions (per tonne of production) now stand at 42% of 2008baseline.
Practice of dumping waste into landfill sites leads to long term degradation of scarceland resources besides creating environmental contamination. Recognizing this issue yourCompany took a decision to stop sending non-hazardous waste from our factories and depotsfor landfill. Waste generation is minimised at source. Waste segregation facilities havebeen provided in all factories to enable disposal to certified re-use agencies for allrecyclable wastes such as packaging materials empty raw material containers and projectscrap.
Good segregation also enables better value recovery from the scrap. Remaining materialis sent for safe disposal through Co-processing route. Your Company has entered intoagreements with reputed cement manufacturers for the above. We have achieved ZeroNon-hazardous waste to Landfill status for all our factories and depots during the year.
During 2015 repeat awards were received by your Company from reputed national andinternational organisations such as Frost & Sullivan Bureau of Energy EfficiencyCII National Safety Council in recognition of your Company's efforts in the spheres ofSafety Environment and Sustainability.
10. HUMAN RESOURCES
Your Company's Human Resource agenda continues to remain focused on reinforcing the keythrust areas i.e. being the employer of choice building an inclusive culture and a strongtalent pipeline building capabilities in the organization and continuing to focus onprogressive employee relations policies.
Your Company has over 11000+ employees spread across 30 manufacturing units. Our Visionis to deliver world class service at optimal cost by making every employee a fully engagedand aligned team member.
Over the years there has been a paradigm shift in the approach adopted by EmployeeRelations through different initiatives in various capacities. We drive sustainable growthand have been instrumental in bringing in thought leadership in building strong employeerelations across the country. Development initiatives like Sparkle have been picked up androlled out globally within Unilever and a holistic approach is now in place to buildorganizational productivity and employee engagement.
Your Company is known for developing future leaders and having the best peoplepractices. This coupled with the ability to attract the best talent provides acompetitive edge to the organisation. According to the Campus Track Business School Survey2015 conducted by Nielsen for the 2016 graduating batch of the B-School students yourCompany has been chosen as the preferred employer across all sectors for the fifth year ina row. Your Company has also retained the Dream Employer' status for the seventhconsecutive year.
Your Company continued to build on the Diversity and Inclusion agenda. A series ofprogrammes like Maternity & Paternity Support Career by Choice and locationflexibility have helped in further driving the agenda. Your Company continues to focus ondriving inclusion through building leadership capability and recognizing line managers whoprovide a simple flexible and respectful work environment for their teams.
In a first of its kind initiative in the FMCG industry your Company now has an allwomen run factory at Haridwar in Uttarakhand. This is a testimony to your Company'sdiversity' initiatives which seek to promote gender-balance and accelerate theadvancement of high-potential women talent in the Company.
Your Company is focused on building a high performance culture with a growth mindset.Developing and strengthening capabilities for all employees in your Company has remainedan ongoing priority.
Your Company maintains momentum on building speed and simplification in ways ofworking. Sunset the online tool through which employees can access the top management forquick solutions keeps your Company agile. Your Company continues to drive thesimplification agenda and deliver substantial cost and time savings.
11. INFORMATION TECHNOLOGY (IT)
IT continues to support business operations and drive competitive advantages for yourCompany through continued investment in the enterprise wide SAP platform including dataanalytics. Your Company supports the distributors by providing a common distributionmanagement system which integrates with the Company's system. In addition a commonmobility solution is in place for all individuals who execute sales transactions in themarket place.
IT has played a key role in driving the new business channels like e-commerce. IT hasalso helped move the needle on digital marketing maturity in the Company with setting upoptimized web content for our brands facilitating consumer engagement and the ability tounderstand consumer sentiments and interact with them at speed.
Your Company has also invested in new capabilities like Oracle Transport Managementthat helps plan the inbound and outbound freight for the Company thereby optimizinglogistics costs. Your Company has also actively engaged with the external environment tounderstand the technology readiness for the GST era and has been one of the firstcompanies to complete the migration to the latest tax structure in SAP viz Tax-INN. YourCompany continues to drive resilience through targeted remediation of high risk ITcomponents including hardware databases operating systems and applications. Alongsidethe investment in technology your Company is also improving its service managementprocesses to prevent any defects in the IT environment and to enable faster resolution ofany such incidents with minimum business disruption.
12. PEOPLE DATA CENTRE (PDC)
Your Company has established a new capability to provide real time actionable insightsby integrating different data sources. PDC has three pillars: Social & BusinessAnalytics People Relationship Marketing and Consumer Engagement Centre.
Social & Business Analytics: There is increasing mention of your Company'sbrands and categories on social media. Social and Business analytics enable your Companyto track all conversations understand its implication on Company's brands get anunderstanding of emerging trends faster than ever before. This also optimizes the presenceof Company's brands on social media to build brand love strengthen the equity and thusboost your Company's growth.
People Relationship Marketing (PRM): PRM helps in capturing rich people data andengage with the consumers in a personalized manner through mobile and digital channels.This helps in building better relationships and boost sales while building brand equity.
Consumer Engagement Centre: During the year your Company transformed Levercareto Consumer Engagement Centre to build one-on-one relationships with consumers with anobjective to move from satisfied' consumer to delighted' consumer.
13. FINANCE AND ACCOUNTS
The agenda for the finance and accounts function of your Company is to drivesuperlative performance of the business pioneer thought leadership and develop futureready talent in finance. During the year the finance team helped the business navigatethe significant volatility in commodity driven categories and helped drive a strongsavings programme under Project Symphony'. The teams also set up the state of artnational transaction processing billing to cash centre at Mumbai and continued with theFinance Transformation agenda which is driven over the past couple of years. This agendahas enabled decoupling business growth from increased cost complexity and time oftransaction processing.
By focussing the business on volume led growth your Company was able to drive strongoperating leverage. Additionally the benefits of sustained improvement in cost savingshave given your Company the ability to invest in brands and pass the benefits to consumersand this in turn has led to a strong volume growth thereby driving the virtuous cycle ofgrowth.
Record to Report project began with the vision of creating one accounting excellencecentre at Bengaluru. This project enables consistent improvement in excellence inreporting both in terms of quality and the speed to release results to the market. YourCompany has taken several strides forward in this journey. Your Company was alsoappreciated at South Asian Federation of Accountants with a Merit Award for excellence infinancial reporting.
During the year your Company has constituted a cross functional "Livewire"team to drive end to end Business Analytics. Project Livewire which is a cross functionalinitiative led by Finance aims to harness cross functional data and use the power ofanalytics to deliver superior business insights. The project object was to deliverreadymade off the shelf instant business performance analysis to teams in a form whichis visually brilliant easy to comprehend and action oriented.
Indian Accounting Standards (Ind AS) - IFRS Converged Standards
Your Company and its subsidiaries and joint venture will adopt Ind AS with effect from1st April 2016 pursuant to Ministry of Corporate Affairs notification dated 16thFebruary 2015 notifying the Companies (Indian Accounting Standard) Rules 2015. In201516 your Company has substantially completed the assessment of the impact of thechange to Ind AS on reported reserves and surplus and on the reported profit for therelevant periods. Your Company has also completed the modification of accounting andreporting systems to facilitate the changes. The implementation of Ind AS is a majorchange process and your Company was among the first in industry who had organized an IndAS session to brief the analysts on the new provisions of Ind AS and present thepreliminary impact assessment on Company's standalone financial statements. Thepresentation is available on our website at
Capital Expenditure during the year was at Rs. 750.49 crores (Rs. 526.40 crores in theprevious year).
During the year your Company has not accepted any public deposits under Chapter V ofCompanies Act 2013. In terms of the provisions of Investor Education and Protection Fund(Awareness and Protection of Investors) Rules 2001 Rs. 3.80 crores of unpaid / unclaimeddividends 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 thelast four years and for the year ended 31st March 2016 are given below:
There were no material changes and commitments affecting the financial position of theCompany which occurred between the end of the financial year to which this financialstatements relate on the date of this report.
Your Company has identified five business segments in line with the AccountingStandard on Segment Reporting (AS-17) which comprise: (i) Soaps and Detergents (ii)Personal Products (iii) Beverages (iv) Packaged Foods including Culinary BrandedStaples Frozen Dessert and Ice Cream and (v) Others including Exports Chemicals WaterBusiness Infant Care Products etc. The audited financial results of these segments areprovided as a part of financial statements.
Details of loans guarantee or investments made by your Company under Section 186 ofthe Companies Act 2013 during the financial year 2015-16 is appended as an Annexure tothis report.
13.1 Risk and Internal Adequacy
Your Company has an elaborate Risk Management procedure which is based on threepillars: Business Risk Assessment Operational Controls Assessment and Policy Complianceprocesses. Major risks identified by the businesses and functions are systematicallyaddressed through mitigating actions on a continuing basis. The Company has set up a RiskManagement Committee to monitor the risks and their mitigating actions and the key risksare also discussed at the Audit Committee. Some of the risks identified by the RiskManagement Committee relate to competitive intensity and cost volatility.
The Company's internal control systems are commensurate with the nature of its businessand the size and complexity of its operations. These are routinely tested and certified byStatutory as well as Internal Auditors and cover all offices factories and key businessareas. Significant audit observations and follow up actions thereon are reported to theAudit Committee. The Audit Committee reviews adequacy and effectiveness of the Company'sinternal control environment and monitors the implementation of audit recommendationsincluding those relating to strengthening of the Company's risk management policies andsystems.
Your Company manages cash and cash flow processes assiduously involving all parts ofthe business. There was a net cash surplus of Rs. 2758.82 crores (2014-15: 2537.56crores) as on 31st March 2016. The Company's low debt equity ratio provides ample scopefor gearing the Balance Sheet should the need arise. Foreign Exchange transactions arefully covered with strict limits placed on the amount of uncovered exposure if any atany point in time. There are no materially significant uncovered exchange rate risks inthe context of Company's imports and exports. The Company accounts for mark-to- marketgains or losses every quarter end in line with the requirements of Accounting Standard11.
13.2 Mergers Acquisitions and Divestments
During the year your Company entered into an agreement with Mosons Group to acquireits flagship brand Indulekha'. The deal involved acquisition of the trademarksIndulekha' and Vayodha' intellectual property design and knowhow. Theproposed acquisition is in line with the Company's strategic intent to strengthen itsleadership position in Personal Care by providing an impetus to its play in the evolvingPremium Naturals segment.
Your Company completed the sale and transfer of its bread and bakery business under thebrand Modern' to Nimman Foods Private Limited (renamed to Modern Food EnterprisesPrivate Limited) an investee company of Everstone Capital Partners. The Company has alsosigned an agreement for the sale of its Rice Exports business carried out primarily underthe brands Gold Seal Indus Valley' and Rozana' to LT Foods Middle East DMMCa group company of LT Foods Limited. Your Company's decision to divest these business isin line with its strategy to exit non-core businesses while continuing to drive itsgrowth agenda in the core packaged foods business.
13.3 Scheme of Arrangement
The Board of Directors of the Company during the year have approved a Scheme ofArrangement which envisages the transfer of the balance of Rs 2187.33 crores standing tothe credit of the General Reserves to the Profit and Loss Account.
Your Company has built up significant reserves over the years through the transfer ofprofits to the General Reserves pursuant to the provisions of the erstwhile Companies Act1956. With Company's strong financial position and track record of cash generation thefunds represented by such accumulated General Reserves is seen to be in excess of theCompany's current and anticipated needs. In view of this your Company has proposed aScheme between the Company and its shareholders to give effect to the proposed transferand its subsequent payout. The Scheme besides being shareholder friendly will also drivethe efficiency of the Company's Balance Sheet.
The Scheme is subject to the approval of the shareholders in the Court Convened Meetingscheduled on 30th June 2016 sanction of the Court and such other approvals as may beapplicable. Upon the Scheme becoming effective the amount so transferred is proposed tobe distributed to the shareholders from time to time by the Board of Directors at itssole discretion in such manner quantum and at such time as the Board of Directors maydecide.
14. LEGAL GOVERNANCE AND BRAND PROTECTION
The legal function of your Company continues to be a source of competitive advantagefor the Company enabling the business to make competitive claims defend the positionwhile ensuring a level playing field in the marketplace by challenging the claims whichare frivolous and misleading to consumers. The legal function of your Company collaboratesand works closely with industry associations regulators and key opinion formers todevelop the regulatory environment that is progressive and is in the best interest of allstakeholders.
The focus on litigation management continued during the year as also on combatingunfair competition with a series of actions to protect your Company's Brands fromcounterfeits look-alike and grey imports. Your Company continued to focus on the keyareas and projects identified within the Legal Compliance and Corporate Affairsfunctions. The Company has developed an in house workflow based compliance toolSelf-Compli' that tracks compliances across factories and offices. The tool is oneof the best practices and is being exported to other businesses of Unilever.
14.1 Settlement of Long Standing Kodaikanal dispute
The Pond's HLL ex-Mercury Employees Welfare Association representing the ex-employeesof the former thermometer factory at Kodaikanal had filed a petition in the Hon'bleMadras High Court in February 2006 seeking economic rehabilitation. This petition wasfiled more than four years after your Company had made a full and final settlement withthe ex-employees in November 2001. The severance package offered to the ex-employees atthe relevant time was significantly higher than the statutory requirement. Theex-employees were also offered alternative jobs in another unit of the Company howeverthey opted out of service. Several expert studies have been conducted since the factory'sclosure and all have concluded that our ex-employees were not harmed by working in theformer thermometer factory at Kodaikanal.
During the year your Company has signed a Memorandum of Settlement with the Pond's HLLex-Mercury Employees Welfare Association representing the ex-employees of the formerthermometer factory in Kodaikanal. The settlement has been entered into on humanitarianconsiderations to put an end to this long standing matter pending in the Court for severalyears and also is in line with the suggestion of the Hon'ble Madras High Court. TheMemorandum of Settlement reached was recorded in an order passed by the Hon'ble MadrasHigh Court. As part of the agreement your Company with an objective to ensure long termwellbeing of its former workers has agreed to provide ex-gratia payments to 591 formerworkers / association members and their families towards livelihood enhancement projectsand skill enhancement programmes.
Following the settlement with former workers in Kodaikanal your Company continues toactively engage with the Tamil Nadu Pollution Control Board (TNPCB) on the issue relatingto soil remediation and is committed to address the clean-up of the former thermometerfactory site.
14.2 Corporate Governance
Your Company is renowned for exemplary governance standards since inception andcontinues to lay a strong emphasis on transparency accountability and integrity. TheCorporate Governance Code adopted by the Board of Directors of the Company is a statementof Company's practices and procedures in the area of governance.
The Companies Act 2013 and SEBI Listing Regulations have strengthened the governanceregime in the country. Your Company is in compliance with the governance requirementsprovided under the new law and listing regulations.
The Company has adopted the policies in line with new governance requirements includingthe Policy on Related Party Transactions Policy on Material Subsidiaries CSR Policy andWhistle Blower Policy. These policies are available on the website of the Company at
During the year Secretarial Audit was carried out by M/s. S. N. Ananthasubramanian& Co. Company Secretaries the Secretarial Auditor of the Company for the financialyear 2015-16. There were no qualifications reservations or adverse remarks given bySecretarial Auditors of the Company. The detailed report on the Secretarial Audit isappended as an Annexure to this Report. The Secretariat Auditors have also carried out anindependent assessment of the compliance of Corporate Governance Code by the Company.
The extract of annual return in Form MGT-9 as required under Section 92(3) and Rule 12of the Companies (Management and Administration) Rules 2014 is appended as an Annexure tothis Report.
A separate report on Corporate Governance is provided together with a Certificate fromthe Statutory Auditors of the Company regarding compliance of conditions of CorporateGovernance as stipulated under Listing Regulations. A Certificate of the CEO and CFO ofthe Company in terms of Listing Regulations inter alia confirming the correctness of thefinancial statements and cash flow statements adequacy of the internal control measuresand reporting of matters to the Audit Committee is also annexed.
14.3 Related Party Transactions
In line with the requirements of the Companies Act 2013 and Listing Regulations yourCompany has formulated a Policy on Related Party Transactions which is also available onCompany's website at https://www. hul.co.in/investor-relations/ corporate-governance/. ThePolicy intends to ensure that proper reporting approval and disclosure processes are inplace for all transactions between the Company and Related Parties.
All Related Party Transactions are placed before the Audit Committee for review andapproval. Prior omnibus approval is obtained for Related Party Transactions on a quarterlybasis for transactions which are of repetitive nature and / or entered in the OrdinaryCourse of Business and are at Arm's Length. All Related Party Transactions are subjectedto independent review by a reputed accounting firm to establish compliance with therequirements of Related Party Transactions under the Companies Act 2013 and ListingRegulations.
All Related Party Transactions entered during the year were in Ordinary Course of theBusiness 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 lastaudited financial statements were entered during the year by your Company. Accordinglythe disclosure of Related Party Transactions as required under Section 134(3)(h) of theCompanies Act 2013 in Form AOC-2 is not applicable.
14.4 Prevention of Sexual Harassment at Workplace
As per the requirement of The Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 (Act') and Rules made thereunder your Company hasconstituted Internal Complaints Committees (ICC). The Company has designated the externalindependent member as a Chairperson for each of the Committees which was beyond therequirements of law. During the year 2 complaints with allegations of sexual harassmentwere filed with the Company and the same were investigated and resolved as per theprovisions of the Act.
15. SUSTAINABLE LIVING
Your Company has a simple but clear purpose - to make sustainable living commonplace.Your Company believes this is the best long-term way for business to grow. To fulfil thispurpose your Company has embraced the Unilever Sustainable Living Plan (USLP) which waslaunched in 2010. USLP spans your Company's entire portfolio of brands has a social andeconomic dimension and works across the entire value chain - from the sourcing the rawmaterials to the delivery of products to the consumers.
USLP commits us to a value chain approach and your Company has made a good progress onthe three USLP goals of improving health and well-being reducing environmental impact andenhancing livelihoods and will continue to help make sustainable living commonplace.
Additionally your Company has identified water as a key area of intervention.According to estimates by 2030 the supply of water in India will be half its demand. Tounderstand and partake in meeting this challenge your Company set up Hindustan UnileverFoundation (HUF) in 2010 a not- for-profit company that anchors various communitydevelopment initiatives of Hindustan Unilever Limited. HUF supports national prioritiesfor socio-economic development through its Water for Public Good' programme. HUFhas initiated projects across 54 districts in 9 states and 2 Union Territories locatedacross 11 river basins in India. Water conservation programmes undertaken by HUF throughcollective action and in partnership with several NGOs communities other co-funders andpartners across India have helped in the creation of cumulative water conservationpotential of over 200 billion litres.
Your Company has launched the Swachh Aadat Swachh Bharat' programme in line withthe Government of India's Swachh Bharat Abhiyan (Clean India Mission) to promote goodhealth and hygiene practices. It stresses on adopting three simple good habits(Swachh Aadat') - washing hands five times a day using a clean toilet fordefecation and adopting safe drinking water practices.
Your Company's livelihood enhancement initiatives got a boost this year with Rin CareerReady Academy - a livelihood skills enhancement programme specifically for the youth.
Project Prabhat (Dawn) your Company's programme to contribute to and engage withcommunities around the manufacturing operations has also seen good progress across allthree pillars - improving health and hygiene conserving water potential and enhancinglivelihoods. Till date 27 manufacturing locations have been covered through thisprogramme cumulatively reaching out to 1.38 lakh people.
Project Shakti has continued to empower women both socially and financially. Thisinitiative has empowered nearly 70000 Shakti Ammas complemented by 48000 Shaktimaans.
Your Company has shared progress on similar social initiatives in the BusinessResponsibility Report that describes the initiatives undertaken in line with the keyprinciples enunciated in the National Voluntary Guidelines on Social Environmentaland 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.The Business Responsibility Report shall be kept open for inspection at the RegisteredOffice of the Company. If a Member is interested in obtaining a hard copy of the BusinessResponsibility Report they may write to the Investor Service Department at the RegisteredOffice of the Company.
In accordance with the requirements of Section 135 of Companies Act 2013 your Companyhas constituted a Corporate Social Responsibility Committee. The composition and terms ofreference of the Corporate Social Responsibility Committee is provided in the CorporateGovernance Report.
Your Company has also formulated a Corporate Social Responsibility Policy which isavailable on the website of the Company at
16. EMPLOYEE STOCK OPTION PLAN (ESOP)
Details of the shares issued under Employee Stock Option Plan (ESOP) as also thedisclosures 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 are set out in the Annexure to this Report. No employee has been issuedshare options during the year equal to or exceeding 1% of the issued capital of theCompany at the time of grant.
Pursuant to the approval of the Members at the Annual General Meeting held on 23rdJuly 2012 the Company adopted the 2012 HUL Performance Share Scheme' in place of2006 HLL Performance Share Scheme'. In accordance with the terms of the PerformanceShare Plan employees are eligible for award of conditional rights to receive equityshares of the Company at the face value of Re. 1/- each. These awards will vest only onthe achievement of certain performance criteria measured over a period of three years.
Under the said Plan eligible Managers were given Conditional Performance Grant ofshares of Unilever and the Company in the ratio of 67:33 to mirror your Company'sshareholding where Unilever held 67% shareholding. During the year 196 employeesincluding Wholetime Directors were awarded conditional rights to receive 169515 EquityShares at the face value of Re. 1/- each. It comprises conditional grants made to eligiblemanagers covering performance period from 2015 to 2017 and from 2016 to 2018.
17. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
As per the provisions of the Companies Act 2013 Independent Directors are required tobe appointed for a term of five consecutive years but shall be eligible for reappointmenton passing of a special resolution by the Company and shall not be liable to retire byrotation. All other Directors except the Managing Director will retire at the ensuingAnnual General Meeting and being eligible offer themselves for re-election.
The Independent Directors of your Company have given the certificate of independence toyour Company stating that they meet the criteria of independence as mentioned underSection 149(6) of the Companies Act 2013.
The details of training and familiarization programmes and Annual Board Evaluationprocess for Directors have been provided under the Corporate Governance Report.
The policy on Director's appointment and remuneration including criteria fordetermining qualifications positive attributes independence of Director and alsoremuneration for Key Managerial Personnel and other employees forms part of CorporateGovernance Report of this Annual Report.
18. MANAGEMENT COMMITTEE
The day-to-day management of the Company is vested with the Management Committee whichis subjected to the overall superintendence and control of the Board. The ManagementCommittee is headed by the Chief Executive Officer and has Functional / Business Heads asits members.
During the year Mr. Samir Singh Executive Director Personal Care was elevated to theposition of Global Executive Vice President Skin Cleansing at Unilever. Mr. Sandeep Kohlihas succeeded Mr. Samir Singh as Executive Director Personal Care and member ofManagement Committee of the Company.
M/s. B S R & Co. LLP were appointed as Statutory Auditors of your Company at theAnnual General Meeting held on 30th June 2014 for a term of five consecutive years. Asper the provisions of Section 139 of the Companies Act 2013 the appointment of Auditorsis 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 ofthe Annual Report. There has been no qualification reservation adverse remark ordisclaimer given by the Auditors in their Report.
M/s R. A. & Co. Cost Accountants carried out the cost audit for applicablebusiness during the year. The Board of Directors have appointed M/s R. A. & Co. CostAccountants as Cost Auditors for the financial year 2016-17.
The global economic climate continues to be volatile uncertain and prone togeo-political risks. Weak consumer sentiment and low commodity prices are expected toaffect global growth adversely.
For India 2016 will be a key year for consolidating its recovery and accelerating itsgrowth. Despite challenging global headwinds a stable macro performance will help Indiato remain an attractive investment destination. However execution of the reforms agendaand commencing the investment cycle will be key determinants of India's -economicperformance on a long term basis. While currently inflation is expected to be benignupside pressures on inflation exist from the vagaries of monsoon or due to competitivedevaluation of currencies. Roll out of Goods and Services Tax regime from April 2017 is akey need of the hour to remove cascading incidence of tax simplifying tax complianceenvironment and enhancing ease of doing business.
FMCG markets are expected to continue to grow. Consumer confidence has increasedhowever this has not yet translated into significant improvement in FMCG marketconditions. While the near term conditions pose a challenge for FMCG market growths themedium to long term secular trends based on rising incomes aspirations low penetrationand consumption levels are positive for the FMCG sector. Your Company with its brandstalent and investment in capabilities is well placed to leverage this opportunity.
20.1 Cautionary Statement
Statements in the Annual Report particularly those which relate to ManagementDiscussion and Analysis describing the Company's objectives projections estimates andexpectations may constitute 'forward looking statements' within the meaning of applicablelaws and regulations. Although the expectations are based on reasonable assumptions theactual results might differ.
21. APPRECIATIONS AND ACKNOWLEDGMENTS
Your Directors place on record their deep appreciation to employees at all levels fortheir hard work dedication and commitment. The enthusiasm and unstinting efforts of theemployees have enabled the Company to remain as industry leaders.
Your Directors would also like to acknowledge the excellent contribution by Unilever toyour Company in providing the latest innovations technological improvements and marketinginputs across almost all categories in which it operates. This has enabled the Company toprovide higher levels of consumer delight through continuous improvement in existingproducts and introduction of new products.
The Board places on record its appreciation for the support and co-operation yourCompany has been receiving from its suppliers redistribution stockists retailersbusiness partners and others associated with the Company as its trading partners. YourCompany looks upon them as partners in its progress and has shared with them the rewardsof growth. It will be the Company's endeavour to build and nurture strong links with thetrade based on mutuality of benefits respect for and cooperation with each otherconsistent with consumer interests.
The Directors also take this opportunity to thank all Investors Clients VendorsBanks Government and Regulatory Authorities and Stock Exchanges for their continuedsupport.
On behalf of the Board
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Mumbai 9th May 2016
Annexure to the Directors' Report
Particulars of Loans Guarantees or Investments
Amount outstanding as at 31st March 2016
Loan Guarantee and Investments made during the financial year 2015-16
# For details refer to Note 18 of Notes to the financial statements
On behalf of the Board
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Details of shares issued Under Employees Stock Option Plan (ESOP)
Details of Options granted during the year ended 31st March 2016 under PerformanceShare Plan 2016
k) No employee of the Company received grant of options during the year amounting to 5%or more of options granted or exceeding 1% of issued capital of the Company. During theyear 4902 options were granted to Mr. Dev Bajpai Executive Director (Legal &Corporate Affairs) and Company Secretary under the 2012 HUL Performance Share Scheme. Nooptions were granted to any other Key Managerial Personnel.
n) Weighted average exercise price and weighted average fair Exercise Price is Re. 1/-vatue
o) Fair value of Options based on Black Schotes methodology
i) Pursuant to approval of the Members at the Annual General Meeting held on 23rd July2012 the Company adopted the "2012 HUL Performance Share Scheme" in place of2006 HLL Performance Share Scheme'
ii) The Pricing Formula adopted by the Company for Employees Stock Option Plan'for the years 2001 to 2005 was based on the "Market Price" as defined in SEBI(Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 andMaximum number of options to be issued per employee in a fiscal year did not exceed 0.01%of the outstanding issued share capital in the line with Clause 6.2(h) of SEBI (EmployeesStock Option Scheme and Employee Stock Purchase Scheme) Guideline 1999.
On behalf of the Board
(DIN : 00045160)
Mumbai 9th May 2016
Annexure to the Directors' Report
Annual Report on Corporate Social Responsibility
(Pursuant to Companies (Corporate Social Responsibility Policy) Rules 2014)
1. Brief outline of the Company's CSR Policy including overview of projects/programmes undertaken
Your Company is committed to operate and grow its business in a socially responsibleway and has a simple but clear purpose - to make sustainable living commonplace. YourCompany believes this is the best long-term way for our business to grow. Your Company hasembraced Unilever Sustainable Living Plan (USLP) (Link - http://
The Corporate Social Responsibility (CSR) Policy of the Company as approved by theBoard of the Directors is available on the Company's website at
A brief overview of your Company's projects is as given below:
Improving Health and Well-Being
Handwashing Behaviour Change Programme: Every year in India alone 1.3million children die before they reach the age of five many due to preventable infections1.Handwashing with soap particularly after using toilet can reduce diarrhoeal diseases byover 40% and respiratory infections by 30% . Your Company's Lifebuoy handwashingprogrammes promote the benefits of handwashing with soap at key times in schools andanganwadis (pre-school centre). Since 2010 Lifebuoy has reached over 65 million people inIndia with its behaviour change programme which through a combination of comics songsgames and rewards encourages children to sustain good hand washing behaviours. In 2015your Company scaled up the partnership in Bihar with Children's Investment Fund Foundation(CIFF) and the Government of Bihar to promote handwashing behaviour change among childrenin Bihar with the aim to help prevent childhood illnesses and mortality. By 2018 45million people are expected to benefit through this programme.
Safe Drinking Water: The lack of safe drinking water is a major publichealth issue particularly in developing countries like India. Our Pureit water purifiershave been working towards making safe water accessible & affordable for millions.Globally so far Pureit has cumulatively provided 78 billion litres of safe drinkingwater.
Pureit's most affordable range of purifiers provide safe drinking water at a runningcost of just 30 paisa per litre without the hassles of boiling without the need ofelectricity or continuous tap water supply. In India Pureit has provided over 70 billionlitres of safe drinking water till date.
Your Company has also been partnering with existing micro-finance institutions (MFIs)to make water purifiers more accessible for people at the bottom of the pyramid. In 2015Pureit partnerships extended their footprint to new geographies such as Punjab andcontinued to provide safe drinking water to low income households in Kerala Tamil Naduand Karnataka.
Domex Toilet Academy (DTA): The World Bank has estimated that poorsanitation costs India $53.8 billion a year - equivalent to 6.4 per cent of the country'sGDP. It is clearly evident that access to sanitation is extremely important for thesocial physical and economic well-being of our society.
Domex Toilet Academy is HULs market-based entrepreneurial model that provides peopleaccess to sanitation in rural communities. In partnership with the social enterpriseeKutir and NGO - Population Services International (PSI) the DTA programme trainsentrepreneurs and masons to supply install and maintain toilets for local households;builds supply chains for sanitation hardware; provides access to micro-financing andcreates demand for sanitation in underserved communities. The objective is to reduce theincidence of open defecation and improve proper sanitation thereby promoting the adoptionof healthy hygienic habits.
Till date DTA has trained 255 micro-entrepreneurs. DTA has helped build over 30000toilets in Indian households as reported by our partners PSI and eKutir. This hasbenefited and estimated 160000 people in four states - Maharashtra Madhya PradeshOdisha and Bihar.
Swachh Aadat Swachh Bharat: HUL launched Swachh Aadat SwachhBharat' programme in line with Government of India's Swachh Bharat Abhiyan (Clean IndiaMission) to promote good health and hygiene practices. Given the scale of challenges thatIndia faces in the areas of water sanitation and hygiene (WASH) this programme is aneffort to help India realise the goals of Clean India Mission by 2019. This programmepromotes good health and hygiene practice by stressing the need to adopt three simple goodhabits (Swachh Aadat') - washing hands five times a day using a toilet fordefecation and adopting safe drinking water practices.
The Swachh Aadat Swachh Bharat programme has three key thrusts: An on-ground behaviourchange model a mass media campaign to drive engagement and awareness and mobile educationon health and hygiene led by our factory workers.
Swachh Basti - on-ground behaviour change model: In 2015 your Company haspiloted a behaviour change model in the slums of Mumbai and Delhi. The programme wasundertaken with the support of Municipal Corporations to reach out to students inMunicipal Schools where a four-week behaviour change programme was conducted throughengaging activities like skits demos and jingles. This programme covered mothers andother stakeholders in the local community such as doctors and support groups to createawareness and develop champions within schools and the community. Till date 200000people have been reached through multiple engagement points (school contact programmehome to home programme and neonatal programme).
Swachh Aadat' mass media campaign: A mass media campaign was launched topromote awareness across the country which reached out to 75 million people across India.Through this "Haath Munh Aur Bum" campaign children turn into agents of changeand propagate the adoption of three Swachh Aadat (clean habits)'. Till date thecampaign has received more than 20 million views on YouTube. The campaign video can beviewed at https://www.hul.co.in/news/press-releases/2015/15-12-04-hul-launches- swachh-aadat-swachh-bharat-programme-in-india.html?criteria=year%3d2015
Swachhata Doot (Messenger of Cleanliness): This is a mobile-led rural behaviourchange communication model wherein the employees at the factories workers become agents ofbehaviour change in their villages by sharing two-minute audio stories on clean habitsthrough their mobile phones. They reach out to school children parents and communitymembers thereby positively impacting rural communities. Your Company has successfullycompleted a pilot that has reached 100000 people.
Asha Daan: Asha Daan is a home in Mumbai for abandoned challengedchildren the HIV-positive and the destitute. Since the inception of Asha Daan in 1976your Company has been looking after the maintenance of the premises. Your Company takescare of over 400 infants destitute men and women and HIV-positive patients at Asha Daan.
Sanjivani: Your Company runs a free mobile medical service campSanjivani' near Doom Dooma Factory in Assam. The aim is to provide free mobilemedical facility in the interior villages of Assam. There are two mobile vans dedicated tothe project each vehicle has one male and one female doctor two nurses a medicalattendant (helper) and a driver. The vans are equipped with basic kits such as diagnostickit blood pressure measuring unit medicines and a mobile stretcher. More than 295000patients have been treated in these service camps since its inception in 2003. In 2015alone over 20000 patients were treated in the service camps.
Reducing Environmental Impact
Water Conservation Projects: According to estimates by 2030 the supplyof water in India will be half its demand. To understand and partake in meeting thischallenge your Company set up Hindustan Unilever Foundation (HUF) in 2010 a not forprofit company that anchors various community development initiatives of HindustanUnilever Limited. HUF supports national priorities for socioeconomic development throughits Water for Public Good' programme with the specific mandate to contribute to thewater discourse and practice through a partnered approach.
The key thrust of this organisation is water for public good with focus on farmlivelihoods. It supports people centred micro-level solutions to the challenges beingfaced by the water sector and uses the knowledge thus gained to shape the debate on water.Recognising that more than half of India's agriculture lacks any kind of irrigationfacilities and that agriculture is the major consumer of water HUF has been focusing onimproving agriculture's water efficiency.
So far HUF has initiated projects across 54 districts in 9 States and 2 UnionTerritories located across 11 river basins in India. Water conservation programmesundertaken by HUF through collective action and in partnership with several NGOscommunities other co-funders and partners across India have helped in the creation ofcumulative water conservation potential of 200 billion litres.
Solidaridad - Sustainability (Tea Procurement):
Your Company has a clear roadmap to achieve the bold commitment to source 100% ofagricultural raw materials sustainably by 2020. Sustainable agriculture means growing foodin ways which sustain the soil minimise water and fertiliser use protect biodiversityand enhance farmers' livelihoods. The Company will ensure that the agricultural rawmaterials that are used such as tea fruits and vegetables are sustainably sourced. Theprogramme aims to move the Indian tea industry producers into adopting a sustainabilitycode which shall promote sustainable agricultural practices improve productivity andreduce costs ensuring future security of tea supply in India and also protect theecosystems (soil water and bio-diversity) whilst improving the quality of life forproducers and workers.
Project Shakti: Project Shakti is an initiative to financially empowerrural women and create livelihood opportunities for them. It provides a regular incomestream for the Shakti entrepreneurs and their families. Your Company has trained thousandsof Shakti Ammas across the villages in a bid to develop an entrepreneurial mind-set andmake them financially independent and more empowered. Project Shakti has empowered nearly70000 Shakti Ammas complemented by 48000 Shaktimaans. Shaktimaans are typically thehusbands or brothers of the Shakti Ammas. They sell products on bicycles in surroundingvillages covering a larger area than Shakti Ammas can cover on foot.
Fair and Lovely Foundation: The Foundation identifies academicallyexceptional girls from financially challenged backgrounds and offers scholarships to thedeserving candidates. To maintain integrity and fairness the selection is done by a panelof eminent personalities from diverse fields. In financial year 2015-2016 the Foundationawarded scholarships to 200 deserving girl students. Till date 1200 girl students havebeen awarded scholarships.
Livelihood Programme - Prabhat: Prabhat' (Dawn) is a programmewhich focuses on development of local communities around your Company's manufacturinglocations. Through Prabhat HUL implements health and hygiene water conservation andlivelihoods initiatives. By end of 2015 your Company covered 27 of it's manufacturinglocations through Prabhat reaching out to 1.38 lakh people cumulatively.
Rin Career Ready Academy: Your Company launched the Rin Career ReadyAcademy in Tamil Nadu Andhra Pradesh and Telangana in 2015 with the aim to inspireeducate and equip the youth from modest backgrounds with skills in English trainingoffice dressing and interviewing. The programme allowed all the participants to take thecourse by simply giving a missed call. Mobile was the key medium for administering thecourse which was provided for free to all participants. Deserving individuals were put upfor a more intensive face-to-face three week course designed to suit their needs. Overtwo lakh people were reached through this initiative.
Ankur: Ankur was set up in 1993 as a centre by your Company's PlantationsDivision at Doom Dooma for special education for differently-abled children at Doom Doomain Assam. Ankur provides educational vocational and recreational activities to suchdifferently-abled children.
Relief Funds - Donation: Your Company has always been at the forefront inresponding to its call for national duty and has contributed generous amounts forupliftment of communities hit by natural disasters. It has done this through contributionto Government relief funds such as Chennai flood relief.
2. Composition of the CSR Committee
Please refer to the Corporate Governance Report for the composition of CSR Committee
d. Manner in which the amount was spent during the financial year is detailed below:
(i) eradicating hunger poverty and malnutrition; promoting health care includingpreventive health care and sanitation including contribution to the Swachh BharatKosh' set up by the Central Government for the promotion of sanitation and makingavailable safe drinking water;
(ii) promoting education including special education and employment enhancingvocational skills especially among children women elderly and the differently abled andlivelihood enhancement projects;
(iii) promoting gender equality empowering women setting up homes and hostels forwomen and orphans; setting up old age homes day care centers and such other facilitiesfor senior citizens and measures for reducing inequalities faced by socially andeconomically backward groups;
(iv) ensuring environmental sustainability ecological balance protection of flora andfauna animal welfare agroforestry conservation of natural resources and maintainingquality of soil air and water including contribution to the Clean Ganga Fund' setup by the Central Government for rejuvenation of river Ganga;
(x) Rural development projects.
Note 2 [i] :
Foundation for Ecological Society Mysore Resettlement and Development Agency Societyfor Promotion of Eco Friendly Sustainable Development Development Support Centre AgaKhan Rural Support Programme (India) DHRUVA Maharashtra Institute of Technology Transferfor Rural Areas (Khamgaon) Maharashtra Institute of Technology Transfer for Rural Areas(Nashik) So Lida ri dad Regional Expertise Centre Watershed Organisation Trust (WOTR)Sanjeevani Institute for Empowerment and Development Parmarth Samaj Sevi SansthanPeople's Action for National Integration Professional Assistance for Development ActionInternational Finance Corporation Samuha Baif Institute for Rural Development ParmarthSamaj Sevi Sansthan- Sumerpur Sahjeevan Integrated Rural Development Trust SamajPragati Sahayog.
Note 2 [ii]:
Labournet Services India Mann Deshi Foundation TARA International.
6. CSR Committee Responsibility Statement
The CSR Committee confirms that the implementation and monitoring of the CSR activitiesof the Company is in compliance with the CSR objectives and CSR Policy of the Company.
On behalf of the CSR Committee