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Hindustan Unilever Ltd.

BSE: 500696 Sector: Consumer
NSE: HINDUNILVR ISIN Code: INE030A01027
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NSE 00:00 | 22 Oct 2454.10 8.35
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OPEN 2450.75
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VOLUME 98059
52-Week high 2859.10
52-Week low 2043.80
P/E 69.06
Mkt Cap.(Rs cr) 576,839
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 2450.75
CLOSE 2445.85
VOLUME 98059
52-Week high 2859.10
52-Week low 2043.80
P/E 69.06
Mkt Cap.(Rs cr) 576,839
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Hindustan Unilever Ltd. (HINDUNILVR) - Director Report

Company director report

Your Board of Directors is pleased to share with you the Business Performance alongwith the Audited Financial Statements for the financial year ended 31st March 2021.

THE CHANGING WORLD

We operate in a complex and volatile world. Our strategy is constantly evolving toadapt to the trends and forces shaping our markets and impacting our stakeholders.

Hindustan Unilever Limited is part of the Fast-Moving Consumer Goods (FMCG) industrywhich continues to be one of the biggest long-term sustainable business opportunities thatour country offers. Despite being one of the fastest growing markets globally for FMCGproducts India's per capita FMCG consumption is still amongst the lowest in the worldgiving the industry a long runway for growth.

2020 was a highly volatile and challenging year. Covid-19 changed almost every aspectof human lives in ways never imagined. The economic toll from the pandemic wasunprecedented. Operational challenges mounted due to restricted movement and disruptedsupply lines. As the Covid-19 cases continued to rise exponentially the economy declinedsharply. Our focus was on our people's health & safety ensuring uninterruptedsupplies of Covid-19 relevant portfolio meeting the demand of consumers arising out ofchanged behaviour and needs caring for the communities in which we operate preservingcash and protecting our business model.

As the country navigated through the crisis the Government and the Reserve Bank ofIndia took effective measures to support a robust economic recovery. The Union Budget 2021focused on regaining the growth momentum in the economy through several measures includingkeeping tax rates stable and enhancing investments in infrastructure. The agriculturesector performed well leading to a strong performance by rural markets. The impact ofCovid-19 was more pronounced in metros and bigger towns resulting in a slower recovery inurban markets. Global trade dynamics volatile commodity cycles and climate concernscontinue to create challenges and uncertainties for companies and categories across thespectrum. New technologies are changing the landscape of the consumer goods marketbringing opportunities for brands and consumers alike. Consumers are shopping through morediverse channels and smaller local brands as well as digital-first brands are increasinglyentering the market. In these times as the consumer and channel landscapes rapidlyevolve we continue to be agile and responsive to leverage market opportunities and deftlynavigate through the challenges. By staying close to the consumers and their needs weensure that our business continues to grow while having a positive impact on people andthe planet. Our strategy is constantly evolving to adapt to the trends and forces shapingour markets and impacting our multi stakeholders.

A. STAKEHOLDER REVIEW

The Unilever Compass and our business model are designed to create value for ourstakeholders. Understanding their changing needs helps us to make informed strategicdecisions.

Our multi-stakeholder model

We have identified six stakeholder groups critical to our future success: consumersour people customers suppliers & business partners planet & society andshareholders. The stakeholder review on pages 19 to 36 explains how we have worked tocreate value for each of our stakeholders in 2020-21 as well as how our business benefitsfrom these vital relationships.

In light of our purpose and our strategy to create long-term value as set out on pageno. 12 we take steps to understand the needs and priorities of each stakeholder groupthrough a number of mediums including by direct engagement or via their delegatedcommittees and forums. Here we provide a high-level summary of the concerns of ourstakeholders and how we engaged with them and had regard to their interests when settingour strategy and taking decisions concerning the business in the last year.

Stakeholder Interests and concerns How we engaged in FY 2020-21 Considerations and outcomes
Consumers Changes in consumer behaviour have accelerated leading to new insights about the way people shop and buy our products The pandemic has impacted consumer spending habits particularly for discretionary purchases. Consumers have become more conscious about their health and hygiene as well as being value seeking as they look to protect themselves from the consequences of the pandemic. Digital engagement and online shopping gained prominence as people pivoted to E-everything and a contactless culture. We have many direct and indirect touchpoints with our consumers. Our People Data Centre combines social listening with traditional consumer research while our Consumer Carelines give us rich insights into the experiences of consumers when using our products. We continue to collaborate with research agencies and household panels to conduct consumer surveys and understand on-ground consumer behaviour patterns their interests and concerns. We also engaged with consumers through our digital platforms such as Cleanipedia and BeBeautiful. These insights help us in building our understanding of consumer trends including those that are likely to continue in a post-Covid world. Our Board and Management Committee members regularly review consumer trends their concerns and consider these when making decisions. Basis insights on new trends shaping consumer choices and behaviours during the pandemic the Management Committee made changes to strategic directions and investments. We focused our innovations to serve health and hygiene needs of our consumers and launched more than 150 Stock Keeping Units (SKU). We also repurposed our brands to make them contextually relevant and drive salience.
For more on consumers see pages 22 to 25
Our People We stepped up engagement with employees significantly to help our people through the pandemic For more on people see pages 26 to 27 Covid-19 has been the overriding concern for our people during the year as the pandemic impacted virtually every part of their lives especially work arrangements. Through our engagement we also consistently see that career opportunities wellbeing purpose sustainability and being a more simple and agile business remain important for our people. Our leadership team members directly engaged with our employees throughout the year on issues of concern. Through empathetic leadership and always on two-way communication our line- managers across all levels could provide clarity in the time of crisis and strengthen connectedness. With our ‘Care to Connect' programme factory leadership teams connected individually with all our factory employees and their families. We conducted frequent pulse-check surveys throughout the year for instant feedback. Our annual UniVoice survey garnered a participation from 84% of our office-based employees. Safety and wellbeing of our employees is paramount to us. We operated with stringent safety protocols to protect our people in factories and frontline sales. We transitioned to 100% remote working for all our office-based employees and as the country opened up we resumed our office operations in a calibrated and safe manner wherever possible. Through the year we built a systemic approach on wellbeing with customised interventions for various employee segments. Our UniVoice survey showed improvements across all dimensions especially remarkable was that 88% employees felt positive and optimistic 90% believe that their line manager had supported them to be effective during Covid-19 crisis.
Stakeholder Interests and concerns How we engaged in FY 2020-21 Considerations and outcomes
Customers This year e-Commerce grew exponentially as shifting shopping behaviours affected retailers of all types. General trade also saw a resurgence For more on customers see pages 28 to 29 Covid-19 has given a huge fillip to e-Commerce. Our retail partners are working to become more competitive in a world where shoppers move seamlessly between online and offline channels. Traditional trade also saw a resurgence during Covid-19 the small retailers we partner with are increasingly embracing digital solutions like app-based ordering to speed up the restocking of products. Our customers play a critical role in our journey to reach consumers. During the peak of crisis we actively engaged with our retail partners to build a response plan to ensure availability of stocks. We also imparted training on safety and hygiene practices to help get shoppers into the stores. We are collaborating with e-Commerce and modern trade to capture the shopper trends and design portfolios appropriate for the channel. Shikhar our eB2B ordering app was useful in getting direct feedback from retail stores. We are investing in building capabilities for channels of the future viz. e-Commerce and modern trade and are co-creating differentiated offerings which are fit for the channel. We are scaling up adoption of Shikhar our eB2B app to create a digitally wired customer ecosystem which will help in optimising space and speed up restocking. Our partnership with the State Bank of India is aimed at solving liquidity issues for small retailers. We continue to empower women through our Shakti programme which now has nearly 136000 Shakti entrepreneurs.
Suppliers & Business Partners We worked closely with suppliers and partners to overcome unexpected challenges For more on suppliers and business partners see page 30 This year has been challenging for our suppliers and partners. Initial lockdowns affecting production and the challenges they had to face to service the surge in demand affected their cash flow. Border restrictions hampered logistics; and new government regulations to protect employees and ensure safe working environments demanded new ways of working often at very short notice. Our suppliers looked to us for working capital support. We communicated frequently with our high-risk material suppliers this year often daily. We leveraged our Unilever global supplier network to source materials from multiple countries. We built a Covid-19 information site for suppliers to share protocols and useful information to help keep them running safely. We ran workshops with key partners (including third-party manufacturers) to explain our new factory tier system as well as the protocols in place for site cleaning and employee safety. Dynamically monitoring the on- ground situation we did a number of interventions to support our suppliers during the pandemic including cashflow relief early payments to small and medium- sized suppliers. We carved a ‘Together We Can' programme with our suppliers to secure availability of essential material and land additional savings to protect our financial model. We also flexed our formulations and onboarded new suppliers as part of our resilience plan.
Stakeholder Interests and concerns How we engaged in FY 2020-21 Considerations and outcomes
Planet & Society People all over the world are speaking up and demanding that business does more for the planet and society For more on the planet and society see pages 31 to 33 Awareness and concerns around the environmental impact of human activity on the planet is growing. NGOs continue to campaign to reduce the impact of plastic packaging and products on the environment as well as for stronger action on climate change while citizens demand more from companies on these same issues. People increasingly want to know where the products they buy come from what's in them how they'll affect the environment and whether they've been tested on animals. Concerns around poverty inequality and jobs have been heightened by the economic uncertainty. We are seeing real desire for businesses to limit their use of plastic and take bold action on climate. We focus our external advocacy on the social environmental and economic issues most important to your Company and are also guided by our parent Company Unilever Plc on sustainability issues. In response to Covid-19 your Company stood with the nation and committed Rs 100 crores to the nation in the fight against Coronavirus. Our Chairman and Managing Director Co-chairs the Advisory Network to the High-Level Panel for a "Sustainable Ocean Economy". We continue to partner with trade associations like FICCI-India Sanitation Coalition on WASH international organisations like UNDP and Xynteo to drive behavioural change and work together on end-to- end plastic waste management projects. Hindustan Unilever Foundation the not- for-profit subsidiary of your Company continued its water conservation efforts across the country while generating livelihoods for the community. Sustainability issues form part of our Board/Corporate Social Responsibility committee discussions. Cross Functional Leadership Team reports to the Management Committee on the progress of our initiatives. Our new Unilever Compass strategy integrates sustainability into our business strategy reflecting our leadership's focus on doing business responsibly. Unilever's new commitments around Climate Nature and Society is the next step in our journey of being the leader in sustainable business.
Shareholders In this eventful year it's been even more important to keep our shareholders closely informed about our business For more on shareholders see pages 34 to 36 As well as an ongoing interest in our strategy and business performance our shareholders were interested in our priorities during the Covid-19 pandemic and the potential impact of this on our business. And they continued to be focused on our approach to sustainability including specific issues such as plastic waste as well as sustainability targets and reporting. Your Company has a large shareholder base close to 7.6 lakh shareholders. We speak directly to our shareholders through investor events meetings and calls quarterly results broadcasts and investor conference presentations. Our Chairman and Managing Director and Chief Financial Officer speak directly to shareholders at investor meetings on a broad range of strategic imperatives of the business such as business environment performance sustainability commitments and more. The Stakeholders Relationship Committee of the Board engages on issues that concern our shareholders and maintains oversight on shareholder queries and grievances. Apart from this relevant information is hosted on our website: www.hul.co.in. During the year your Company paid a special dividend of Rs 9.50 per equity share in pursuance to the Scheme of Arrangement for transfer of the balance standing to the credit of the General Reserves to the Profit and Loss Account resulting in total dividend payout of Rs 2232 crores. Shareholder feedback – around our strategy digital journey merger and acquisitions strategy and sustainability – forms a part of boardroom conversations. After each quarterly market update our Chairman and Managing Director shares feedback with the Board. A quarterly update is shared with the Management Committee on the investors' questions and feedback.

CONSUMERS

People's concerns around health & hygiene as well as the planet continued to growthis year

As the pandemic unfolded it reshaped how people lived worked and shopped. Almostovernight people's immediate concerns – health hygiene and immunity became apriority as people sought to protect themselves and their near-ones from Covid-19. Withthe country going into a lockdown daily habits changed dramatically: from eating out toeating at home from shopping in stores to shopping online and from working in offices toworking from home. While the immediate focus for many people was to deal with the crisishowever concerns around waste water climate change social inequality remained relevantfor people. People continued to look for convenient eco-friendly natural and chemicalfree products.

Our three Divisions worked to meet these changing consumer needs in a variety of waysviz. serving through product innovations creating awareness through contextualcommunication shifting to new distribution models and connecting with consumers throughtheir brand's purpose-led initiatives.

Beauty & Personal Care

We believe in beauty that cares for people society and our planet

In the Beauty & Personal Care (BPC) division we operate in categories that play asignificant role in consumers' lives and touch a vast majority of Indian households. Thecategories manifest an excellent opportunity to boost penetration consumption andpremiumisation presenting a healthy long-term potential. Leveraging our Winning in ManyIndias strategy we offer an extensive portfolio with many products tailored to specificregional preferences. With a product portfolio straddling the price-benefit pyramid weensure that our brands are accessible and aspirational for all consumers across thecountry.

Exhibiting resilience and portfolio strength during Covid–19

Covid-19 has had a varied impact on our categories. The humble bar of soap becamepeople's first line of defence against the risk of catching the infection resulting in anunprecedented demand for Skin Cleansing especially hand hygiene products. In contrastcategories like

Skin Care Colour Cosmetics and Deodorants witnessed a sharp decline as people stayedat home.

We swiftly pivoted to ser vice consumers' needs by expanding our range of hygieneproducts focused on supplying essential products drove relevant innovation designed forchannels like e-Commerce and communicated with contextually relevant messaging. Within ashort span of 30 days we launched 15 new SKUs in hand hygiene portfolio primarily throughour brand Lifebuoy to ensure the accessibility and availability of our products. Duringthe year LUX was re-launched with a superior product formulation. In line with ourstrategic intent to enter fast-growing segments of the future in the premium Beauty &Personal Care category we completed the acquisition of female intimate hygiene brandVWash and were off to a good start.

In Hair Care we continued to drive focus on the core brands and drive salience withimpactful communication while innovating to meet the emerging consumer needs. TRESemmlaunched a successful campaign "salon at home" to address the beauty-at-hometrend while driving innovation with its sulfate-free range and new offerings on serums andmasks. Dove brand launched a new campaign highlighting its proposition on hair damagerepair.

In Oral Care Closeup has always stood for confidence to get close superior freshnessand white teeth. The brand has upheld good oral hygiene that helps in building confidencein the youth and it continued to do so with a very relevant in-home contextual messagingduring the lockdown. We continue to strengthen our ‘naturals' strategy through thethree-pronged approach. While LEVER Ayush the master brand maintained focus on its keymarket in southern India we continued to build specialist brands like Indulekha andHamam. Your Company expanded the Indulekha franchise with the launch of a newvariant-Indulekha Neemraj Oil and Shampoo. Your Company also introduced one of Unilever'sbrand Love Beauty and Planet in India and it has been on its journey of making peoplemore beautiful while giving love to our planet. The third leg of our naturals strategyinvolves natural variants of our existing brands like TRESemm Botanique Glow &Lovely Ayurvedic Care Lifebuoy Neem and Turmeric Pears Naturale etc.

Building purpose-led brands

Our brands responded to Covid-19 through product donations innovations andcommunications supporting people's hygiene and wellbeing. Lifebuoy was the first to launcha public service campaign to use any soap for combating Covid-19. Lifebuoy also launched anew campaign ‘H for handwashing' when teaching alphabet to children to highlight theimportance of hand hygiene. Across our Beauty & Personal Care portfolio we areremoving the word ‘normal' from advertising and packaging. It's one of severalcommitments your Company is making as part of the new Positive Beauty vision that aims tousher in a new era of beauty that is inclusive equitable and sustainable. In Skin Carehaving successfully changed the proposition of Fair & Lovely to ‘HD Glow' at thetime of its relaunch in 2019 your Company took the decisive and logical step towardsinclusive beauty by renaming this iconic brand to Glow & Lovely in 2020. This wasaccompanied by purposeful communication and a massive media outreach to ensure eachconsumer of the brand is touched. Furthering our commitment towards promoting inclusionDove through its #StopTheBeautyTest campaign is challenging the societal stereotypes andurging people to adopt a more inclusive lens of beauty for women.

Celebrating International Women's Day our brand Clinic Plus that reaches 85% Indianhouseholds launched a film under its inspiring #MeriBetiStrong campaign to educatemothers about domestic violence and ignite meaningful conversations around the lessons ofstrength that need to be imparted to daughters in their developmental years. Your Companyhas taken an audacious goal to reach over 100000 women across our ecosystem and educatethem on their rights as well as provide resources to speak up against domestic violence.

For more on sustainability refer to Planet & Society on pages 31 to 33

Winning in channels of the future e-Commerce has gained unprecedented relevance inthese times and has been the go-to channel for many of our consumers during physicallockdowns. Your Company has set up the Premium Beauty Business Unit within Beauty &Personal Care organisation to strengthen its play in ‘Mass-tige' beauty segment. Theunit will work closely with our e-Commerce sales team and lead our entry into nichepremium formats like serums sheet masks hair masks etc. through existing and new brands.

Technology-driven commerce will continue to grow disproportionately and we aim toinvest in it ahead of the curve. With new channels new benefit segments and new brandswe are also focusing on the new marketing models to take our innovations and activationsto consumers. We continue to strengthen the content creation with platforms such as‘Be Beautiful' which educates consumers on their Beauty & Personal Care needs.While the pandemic impacted our Colours and Deodorants categories it also presented anopportunity to leverage technology to get closer to our consumers. The Lakm Direct toConsumer (D2C) site (www.lakmeindia.com) is a great example of our agility and intent tocontinue to drive growth.

We continue to strengthen our core by making our bigger brands better with consistentsupport and sustained innovation. Given our wide portfolio we aim to play it to ouradvantage by reaching up as well as reaching down the pyramid to serve our consumers.Besides designing for e-Commerce each of our big brands is also ensuring availability inaccess/recruiter packs in the right channels to continue to grow penetration and increaseusage. We are energised with the opportunity of leading market development acrosscategories with very low penetration through education sampling and targeted communication.

Home Care

We want to make people's homes a better world and to make our world a better home.

In financial year 2020-21 the need for a better home further got highlighted due toCovid-19. As people stayed inside their homes more to avoid infection and there was lesseroutdoor activity we witnessed differential impact on our categories. Parts of thebusiness like dish washing and surface cleaning became extremely relevant overnight and onthe other side category like laundry got impacted due to reduced usage.

Exhibiting resilience and portfolio strength during Covid–19

Fabric cleaning became less frequent during the year due to reduced mobility. Reversemigration and drop in income levels caused downtrading. With hygiene becoming the topmostconcern consumers are looking for germ-free wash for their clothes. Our biggest brandSurf quickly innovated and launched ‘Surf excel Active Hygiene'. We also launched thefirst Home Care product under Lifebuoy brand the ‘Lifebuoy Laundry Sanitiser' andstepped up our focus behind Anti Bac variants of Rin and Comfort. Surf excel introducedsmart spray with stain lifting technology a smart and convenient way to remove stains.Premium portfolio of liquid detergents and fabric conditioner was more resilient duringthese times delivering strong performance and driving our premiumisation journey ahead.

Our dishwash portfolio benefitted from in-home cooking trend and the need for cleangerm-free dishes. Serving the consumers' needs Vim launched anti-bacterial variants ofdishwash bars and liquids. Premiumisation opportunity on dishwash continues to be strongand we are well placed to lead this trend with Vim liquid which pioneers the formatupgradation in the country through its large-scale direct contact programme. During theyear Vim launched its Vim Matic range targeting dishwasher users. In floor cleaners welaunched Domex with a formulation containing sodium hypochlorite that is proven to destroyCoronavirus in 60 seconds. Domex also rolled out surface cleaner spray and wipes to extendthe brand usage.

We also launched Nature Protect our new brand that caters to the soft hygiene needs ofconsumers. A neem-based portfolio with the proposition of "Kill germs with nature'ssuperpower" it comprises of surface cleaners laundry fruit-and-veggie cleaners andon-the-go cleaner. Life Essentials category faced severe disruption during the lockdown inthe first half of the year. However during the second half of the year water purifierbusiness picked up momentum to win consumers through value-added innovations and channeldifferentiating products in e-Commerce. Our Pureit Copper+ innovation inspired by theage-old tradition of storing water in copper vessels continues to garner consumerappreciation.

Building purpose-led brands

Putting purpose at the heart of every action and communication our brands continue todrive salience. Domex donated toilet and surface cleaners to community toilets and alsopartnered with the Municipal Corporation of Greater Mumbai to offer disinfection servicesfor strategic places including public toilets. Domex also partnered Mumbai railways tohelp disinfect key stations as train services opened up for general public.

We continued our unabated journey of brand love through purpose filled proposition.Surf excel has been spreading its philosophy of ‘Daag Acche Hain' or ‘Dirt isGood' on the occasion of Holi this year Surf excel joined hands with HelpAge India tobring colours of joy to the elderly. Wheel has always valued the husband-wife relationshipand has been acknowledging the evolution of this relationship towards a more progressiveoutlook given that today's woman performs multiple responsibilities and is the anchor ofthe family. Through its new social media campaign Vim resolved to bust stereotype andcommunicated gender equality in performing household chores like dishwashing.

Towards a Clean Future: With a purpose of ‘Cleaning up Cleaning'

We know that consumers want sustainable products that perform just as well asconventional ones. In September Unilever announced Clean Future an ambitious blueprintfor reinventing cleaning and laundry products to give people affordable high-performingproducts that are kinder to both them and the environment.

Unilever globally will be investing €1 billion over ten years in researching anddeveloping new technologies to reduce the carbon footprint plastic waste and water useand increase the biodegradable and sustainable ingredients associated with our products.For example we will be replacing the crude oil and other fossil fuels used to make someof our chemicals with renewable and recycled carbon. We will achieve all of this throughpartnerships and cutting-edge innovation – applying the latest science andbiotechnology at scale to create cleaner more sustainable products that clean removestains and disinfect at least as well as conventional products. Our aim is to continue todeliver superior products which are better for the planet at affordable costs.

Winning in channels of the future

We continue our journey of growth in e-Commerce and modern trade. We have a strongportfolio of products with the right pack price architecture exclusively designed forthese channels such as Surf excel Matic value pack offers value to the consumers and iseconomically viable from a last-mile delivery perspective. We are using e-Commerce channelto drive new benefit segments and new formats such as Vim Matic dishwash range. We arealso seeding e-Commerce first brands like Nature Protect to expand our portfolio in thischannel.

Cleanipedia our online platform for housekeeping and cleaning tips stepped up tocreate meaningful content to ease consumers' worries around the pandemic and the lockdown.This helped our brands to engage with their consumers while resolving their queries.

Foods & Refreshment

We have a responsibility to make brands that not only taste and feel good but that area force for good

Our country faces the challenge of insufficient calories for the poor unsafe eatingout and a diet excessive in carbohydrates but deficient in protein and micronutrients. Asone of India's largest Foods & Refreshment businesses we will help lead the country'sprocessed food revolution by making food healthier safer and have less wastage.

Exhibiting resilience and portfolio strength during Covid–19

The need for healthy eating and strong immunity got further accentuated this year asthe pandemic enveloped the country. In response to this we focused on providing healthyin-home eating options through our portfolio of brands.

During 2020-21 we have made significant gains in both market share as well ashousehold penetration of our Tea business. The year saw unprecedented inflation on accountof the loss of tea crop led by Covid-19 induced lockdowns and a natural calamity inIndia's eastern region. We took judicious price increases to partly offset this inflationwhile maintaining market competitiveness of our brands. In Coffee we continue to performwell and have launched natural variant of our brand ‘BRU Veda'.

Riding on the in-home consumption trends our foods portfolio which includes soupsketchups sauces and noodles performed well. Expanding our portfolio of fortified foodsHellmann's mayonnaise a source of good fats was launched nationally. We also launchedKissan Peanut Butter that is made from 100% real peanuts and is an excellent source ofprotein and zinc.

Our out-of-home portfolio comprising of Ice Cream and Unilever Food Solutionsprofessional business that caters to institutional buyers like hotels and office cateringhad a challenging year on account of lockdowns. We collaborated with last-mile deliverypartners like Swiggy & Zomato to provide home-delivery solution for Ice Creams. Infood solutions we extended our range of products directly to consumers via e-Commerce. Asmore people stepped out of their homes we witnessed sequential recovery in ourOut-of-home categories quarter on quarter and are well poised for the coming year.

Nutrition – Our journey towards becoming one of India's largest Foods &Refreshment businesses

This year we integrated the Nutrition portfolio which was acquired from GSK CH. Thecategory has low penetration levels and offers huge headroom for growth. We have a clearstrategy of improving accessibility and reach landing impactful innovations increasingprofitability through synergies and investing behind the brands to drive growth. To makeour brands more accessible to the consumers your Company introduced new pouch packs and Rs2 sachets for Horlicks and Boost. Your Company has also expanded Boost across India.

We continued to invest in building a future-fit portfolio looking at the immunityneeds of consumers we launched Horlicks with added zinc which is known to boost immunity.We also relaunched "Plus" range from the house of Horlicks making our entry intothe high sciences space of Nutrition. Horlicks in its new campaign "When did you growup" is celebrating the confidence that empowers children.

Purpose-led Brands

As India's largest hot beverages business we continue to lead the expansion of tea andcoffee as a carrier of nutrition and as a beacon of sustainable agriculture practices.Brooke Bond Red Label which has very firmly embedded the brand purpose of "Taste ofTogetherness" continued to drive the #unstereotype agenda. It emphasised theimportance of compassion during lockdown with a lovely message that ‘we can besocially connected even when we are physically distant'. Horlicks led the purpose agendaby donating 2 lakh kilograms of Horlicks' products to essential workers and vulnerablechildren. In this challenging period Kwality Wall's went out of its way to support peoplein the extended value chain.

OUR PEOPLE

When we take care of our people our people take care of the business.

2020 was an unusually challenging year for our people. We were all affected by thepandemic in different ways. Even as the national lockdown hit us the tremendous effortsof our people across our sites enabled us to continue to work safely whether on factorysites in the market in our research & development labs or from a home office. Wequickly scaled up new ways of working – rethinking and reshaping our business.

As we worked with speed and agility to respond to the unexpected events this year wecontinued to nurture a culture in which our people can thrive and to prepare our peoplefor the future of work.

Going above and beyond

Consumers across the country were relying on us to produce the household necessitiesthey needed most during the pandemic so it was essential that we kept our factories anddistribution centres operating. We are grateful to our employees and to everyone in ourextended value chain at our distributor points depots and third-party manufacturingsites who made this happen. We saw many heroes coming to the fore–our people in ourfactories and frontline sales going above and beyond their jobs to grow our business ourmedical & occupational health teams working very hard to keep our people safe andmany inspiring stories of our people volunteering their time to help communities aroundour sites.

Working safely and at speed

In the midst of Covid-19 we concentrated on business continuity making it safe foressential staff such as factory workers and sales teams to return to workplace. We didso with extremely strict protocols to protect everyone's safety such as protectiveequipment social distancing regulations and frequent health checks including on people'smental health.

We seamlessly transitioned to 100% remote working for all our office-based employees.Each person needed the right equipment and systems to perform their roles and the Companyprovided the necessary support. We rolled out guidelines on working from home and ourteams swiftly found their own rhythm and cadence of working effectively.

People presence has been a key unlock to stabilising our operations. Our frontlineleadership teams ensured this through focused interventions dynamically adapting to thechallenges. In our factories each employee's family was mapped to a member of the factoryleadership team to support them through this journey. 100% employees were touched withindividual connect through this Care to Connect Programme. For our sales teams wefollowed a robust tier system to monitor high risk areas supported by standard operatingprocedures for market work thereby reducing risk to our people.

HUL has always had a best-in-class medical policy that includes medical cover for ouremployees and their dependents extensive tie-ups with hospitals and doctors in alllocations and cashless facilities. Early in the pandemic we reviewed our medicalreadiness and resilience particularly at our factories in remote locations and ramped upour medical infrastructure with observation and testing facilities and engaged moredoctors and medical staff. We also extended a Covid-19 medical insurance to people in ourextended value chain. We are providing_ support to our employees and their families toaccelerate the coverage of the national vaccination programme.

Wellbeing for all

During Covid-19 wellbeing emerged as a key priority for our people and their families.Through the year we built a systemic approach on wellbeing with customised interventionsfor various employee segments. We provided our people a range of tools to help them tofocus on their wellbeing. In a wider focus on mental health across the business we arebuilding a network of Mental Health Champions (MHCs) and till now we have more than 500MHCs in place.

Becoming more agile

We are transforming how we work at HUL by introducing more flexible and agile ways ofworking. This year has highlighted our agility in many ways most notably in our responseto Covid-19. With the dual objective of protecting livelihoods & resourcing businessgrowth imperatives we embarked on a holistic programme of redeployment. In a short spanof time we redeployed a number of people from business areas that were slowing such asour out-of-home food business to teams experiencing high demand like those producingpersonal and home hygiene products.

Preparing for the future of work

We have extensive online learning programmes not only to enable our people to upskilland reskill for their roles at Unilever but also to help them prepare for the changinglandscape of work.

a) Building Capabilities for the Future

We continue to build organisational capabilities with clear focus on functionallearning priorities to make our people future-fit and purpose-led. Our ambition is to makesure all our people can reskill upskill work more flexibly and adapt to the changingworld of work.

To prepare our end-to-end value chain for technology-led consumption models we areinvesting significantly in our digital transformation programme – ‘ReimagineHUL'. A Digital Council comprising cross functional leaders is the Steering Committee forthis initiative.

b) Managing Talent and Strengthening our Employer Brand

We continued to build meaningful and deep engagements with students digitally as wellas on campus to strengthen our brand amongst them and attract the best talent for theCompany. Our purpose-led and future-fit vision and culture ensured that we continue tohold our title of ‘No. 1 Employer of Choice' for the 12th year in a row.

c) Nurturing our Growth Culture

Our endeavour is to shape a Growth Culture based on three tenets: Human Purposeful andAccountable. We remain committed to listening to our employees and build these insightsinto actions. Our annual employee survey ‘UniVoice' conducted during the yeargarnered a participation from 84% of our office-based employees. The survey showedimprovements across all dimensions. Overall engagement stood at 90% pride to work in HULat 96% and 94% of our employees said that they believe we have the right strategy to win.The employee voice through these encouraging scores is testimony to our actions and howour employees experience our Company every day.

d) A Beacon for Diversity

We strive continually to be a diverse and inclusive organisation thereby enabling ourpeople to bring their real selves to work. Apart from enabling infrastructure such ascreche across 19 of our factories we are making some of our large manufacturing sitesaccessible for persons with disabilities. In our endeavour to #Unstereotype the workplacein 2020 we started an inclusive leaders training programme and are kick-startingconversations to sensitise employees on unconscious biases and helping them break limitingstereotypes. We are committed to be gender balanced in our managerial team in the next fewyears. Another small but important step in our diversity journey has been the recentinduction of female shop-floor employees at our Haldia and Kidderpore factories. We wantto make sure that people's experience of Unilever is fair for everyone and that we arefully including members of LGBTQI+ communities persons with disability and other minoritygroups.

With the alarming rise in domestic violence cases during the lockdown we took the batonto be the first employer in India to formally launch a holistic gender-neutral policy forsurvivors of domestic and other abuse. On the occasion of International Women's day 2021HUL launched the campaign #UNMUTE where we are committed to encourage employees to speakup against domestic violence and to support all employees and their families with theeducation awareness and resources around safety. We have taken an audacious aim to reachover 100000 women across our ecosystem and educate them on their rights as well as accessto resources.

CUSTOMERS

CUSTOMERS

We are supporting our customers from e-Commerce partners to small family-owned storesas they respond to people's rapidly changing ways of shopping.

We sell our products through 8 million retail outlets spread across the country.Through our network of distributors we reach a diverse universe of retailers from smallfamily-owned shops and value shops to large ‘brick & mortar' store partnersonline-only retail. As the route to reach consumers our customers are critical to ourbusiness success and our primary aim is to help them grow sustainably alongside HUL. WithCovid-19 affecting retailers of all types in unexpected and often very challenging wayswe worked closely with our customers to navigate the challenges and opportunities.

Protecting people in our extended value chain

Our people are our biggest asset and protecting their lives and livelihoods isparamount to us during Covid-19. As the infection started spreading we implemented strictsafety protocols based on global best practices WHO guidelines and Governmentrequirements. We setup supply lines to ensure availability of personal protectiveequipment (PPE) for not only our employees but also for employees of our business partnersand customers. We were one of the first companies to provide Covid-19 medical insurancefor all the front-end manpower including that of our distributors. Your Company alsolaunched life cover policy for workforce working in the market to ensure their family'sfinancial needs and children's education is taken care of in case of an unfortunate event.

HUL has proactively partnered with Ministry of Consumer Affairs to drive SurakshaStores Programme in key states in India. This included providing training to the stores onkey safety practices like sanitising the stores at regular interval social distancingmarkers the use of Aarogya Setu app etc. Our sales team was trained to cascade safetypractices to these stores.

Adapting to the changing world of shopping

People's behaviour changed everywhere in response to Covid-19 and this created a surgein demand in some product categories. As retailers worked to keep stocks of householdnecessities such as hygiene and cleaning items we supported them in a variety of ways. Weoffered cash flow relief to our most vulnerable customers. We also acted quickly to bringin new protective protocols when visiting customers during the months of lockdown so thatwe could continue to deliver products and keep shelves stocked. This also meant findingnew ways and entering new partnerships with front end logistics specialists to getproducts to customers. We came up with innovative last mile logistics solutions viz.direct store delivery hub & spoke model to increase the availability of our products.We remain focused on competitive growth through actions on execution coverageassortment and high line fill to drive distribution for all our brands. Channelling therobust ‘Winning In Many Indias' (WiMI) structure your Company pin-pointed demandshifts induced by reverse migration resurgence of neighbourhood stores and growth ofe-Commerce. We maximised growth by prioritising these focus areas and ramped upavailability of products and brand presence across categories and population strata. Ruraleconomy has become the driver of growth and we have doubled down to capture thisopportunity. We continue to empower our Shakti entrepreneurs and now have a network ofnearly 136000 covering 18 states across India.

E-everything

During the lockdown in 2020 a large part of people's lives moved online –learning socialising and most certainly shopping. This increase in online shopping led toemergence of Omni channel and e-Commerce as the fastest growing channels. The digitisationof shopping also brings new opportunities to understand shoppers' preferences and to helpour customers meet them. We have renewed our focus on shopper insights to give ourcustomers an edge expanding the focus of our People Data Centre from helping our brandsconnect with consumers to helping our customers serve their shoppers better. We are alsoengaging with our customers to co-create products suitable to the channel. Our focus onbuilding perfect store online and driving everyday great execution has ensuredbest-in-class online availability and discoverability of our products.

Modern trade stores inside shopping malls were non-operational for a large part of theyear thus posing massive challenges for the retailers. Retailers dialled up theiromni-channel initiatives and your Company replicated the learnings from e-Commerce toassist the retailers in this initiative. Besides key retailers adopted new models toreach out to shoppers viz. grocery-on-wheels tele-calling etc. and your Company haspartnered in these initiatives to help retailers fulfil shopper demand.

Resurgence of neighbourhood grocer

As mobility was restricted due to lockdowns people relied on their neighbourhoodgrocer to fulfil their needs of daily essentials. This led to an unexpected increase infootfalls in the small grocery stores and pharma chains. We engaged with the retailers tohelp them with the right assortment and in ensuring availability of stocks by takingorders through tele-calling. We also partnered with State Bank of India to makeaffordable credit accessible for these small stores.

Digitising our customer experience

The events of 2020 fast-forwarded the shift towards digital ordering and fulfilment.Small retail stores are now more convinced to adopt technology and are looking to us toprovide digital solutions. The true strength of your Company's prowess in technology anddata-driven decision making came to fore during the pandemic when digital journeysmanaged to mitigate many of the challenges faced due to physical restrictions amidststrict lockdowns across India. Shikhar our eB2B ordering app enabled hundreds of thousandsof retailers to place contactless orders safely and provided them visibility into thefulfilment of these orders through logistics tie-ups and intuitive interfaces. Furtheringour journey to create a digital customer ecosystem of connected stores we have piloted‘Samadhan' our direct-to-trade order-fulfilment platform in Chennai. ‘Samadhan'is fully integrated with our digital order capturing platform and aims to deliver speedierand reliable service to the retail outlets through warehouse automation and optimised lastmile logistics.

SUPPLIERS & BUSINESS PARTNERS

In supporting the resilience and growth of our suppliers and partners around the worldwe are helping our business succeed.

Our supplier ecosystem involves lakhs of people in India as well as around theworld–from large multinationals to small local producers. We also work with a widerange of business partners to help unlock growth and solve issues for the benefit of ourstakeholders. Without our suppliers and partners we can't run our business. And it'sthrough our direct suppliers who provide us with goods and services such as rawmaterials logistics advertising professional services and much more that we can mostinfluence change and help our business grow. We partner with around 1150 suppliers toinnovate our products and support mutual and sustainable growth.

An agile pandemic response

The events of 2020 highlighted the strength and agility of our supply chain. Thepandemic resulted in material and workforce shortages disruption of supply linesunanticipated surges and drops in demand for product categories. To ensure businesscontinuity our supply chain team acted fast by prioritising critical portfolio securingmaterial supplies onboarding dozens of new suppliers and flexing formulations. We wereable to restore operations with speed after the disruption due to nationwide lockdown. Weoperated in a dynamic manner shortening our planning horizon to ensure we respondedquickly to the changing environment. We focused on secondary service by dialling up ourcollaboration with partner ecosystem (Transporters C&FAs & RSs) to not onlynormalise our transportation performance but also improve the forecast accuracy at ourdistributor level by stepping up on digital capabilities.

Our suppliers provided critical operational support as we responded to extraordinarysurges in demand – increasing production volumes multiple times for some personalhygiene products such as hand sanitiser. To meet the spike in demand we re-purposedexisting HUL sites and added new capacities with our third-party manufacturers. With bothstate and national borders shut due to lockdown we also joined forces with suppliers toensure supplies of essential goods such as food hygiene and cleaning products. Our strongrelationships with suppliers meant that we were able to quickly shift our procurement ofessential materials in response to temporary sourcing issues. We carved out a‘Together We Can' programme with our suppliers and business partners to ensurecontinuity of supplies and land savings opportunities. We offered cash flow relief to oursmallest and most vulnerable suppliers to help them cope with financial liabilities andmaintain livelihoods. We protected employment by for example continuing to pay servicesuppliers – such as cleaners loaders canteen staff etc.–for three monthsdespite offices and some operations being closed. We helped to keep our suppliersfunctioning by providing them with PPE and sharing information on hygiene protocols andguidelines for safe practices in light of Covid-19. Under the ‘HUL stands with theNation' programme we worked with our suppliers to provide food relief as well asdistribute key hygiene products such as our Lifebuoy soap to migrant labour and otheraffected communities.

Our long-established Safety & Environmental Assurance Centre (SEAC) works withteams across the business to ensure the safety and environmental sustainability of ourproducts and the processes used to manufacture them. We have responded to the challengeof Covid-19 by introducing more effective ways of working. Onboarding of new materialssupplier partners and manufacturers was done collaboratively through digital changemanagement processes. We also adapted new tools to continuously monitor consumer feedbackto respond quickly on issues if any.

Intelligent growth

The need to react quickly to the unexpected particularly during the early stages ofthe pandemic highlighted the increasing importance of technology for an agile andfuture-fit supplier ecosystem. As we worked alongside suppliers to respond to the surgesand falls in demand across different product categories the value of data insightssmarter sourcing and more real-time visibility of goods and logistics became very clear.This is a critical focus for us–we are using increasingly sophisticated digital toolsto identify new potential innovation partners bring new suppliers on board auditsuppliers virtually and monitor logistics and supply risk in real time.

Partnering with purpose

The support of our direct suppliers who are the gateway to the lakhs of people in ourwider supply chain is critical to our progress towards key aims such as reducing carbonemissions stopping deforestation and improving diversity and inclusion. We can onlyachieve our ambitious goals by bringing our supply partners with us – in doing so webelieve we are positioning both our business and theirs for growth. Our relaunched Partnerfor Purpose programme aims to create an open inclusive ecosystem of supply partners todeliver our innovation growth and sustainability priorities.

PLANET & SOCIETY

Without natural resources and the hundreds of thousands of people who source make andsell our products our business simply can't grow.

The interconnection between a healthy natural world and a thriving society was throwninto sharp focus in 2020. By protecting nature and improving health and livelihoods theCompany will have a positive impact on the planet on people and ultimately on its ownbusiness.

Tackling climate change and social inequality have long been at the heart of theCompany's sustainability agenda. It was codified by its Unilever Sustainable Living Planwhich set out the Company's ambition of decoupling its growth from its environmentalimpact while increasing its positive social impact. Your Company is convinced that theUSLP made it a better business for the long-term. Unilever has now set ambitious newtargets for improving the health of the planet and contributing to a fairer and moresocially inclusive world with aggressive timelines. The Company is also encouragingothers – such as its suppliers and industry peers – to take bold steps sinceonly through working together can we make sustainable living commonplace.

Improving the health of the planet

The damaging effects of climate change and nature loss are becoming more obvious eachyear. As one of India's largest Fast Moving Consumer Goods Company with a vision to be theleader in sustainable business the Company has an opportunity to not just reduce impacton the environment but to also have a more positive one.

Net Zero Emissions

There's no doubt that the world needs to decarbonise and quickly. Your Company intendsto lead this transformation and this year Unilever announced a new target to achieve netzero emissions from sourcing to point of sale by 2039. This means removing as much carbonfrom its operations and supply chain as it can and only offsetting the remainingemissions as a last resort.

In your Company's own manufacturing operations it has reduced CO2 emissionsper tonne of its production by 91% compared to 2008 baseline. The Company is continuouslylooking for ways to replace fossil fuel energy with renewable sources and in 2020 itoperated its factories with 100% renewable grid electricity.

In September 2020 Unilever announced a transformational Clean Future programme for itscleaning and laundry products that will globally invest an additional €1 billion overthe next ten years to remove all fossil-fuel derived carbon from products by moving to100% renewable or recycled carbon. The Clean Future strategy has inspired enhanced use ofplant-based surfactants (green carbon) in laundry powders and liquids to reduce ourdependence on fossil carbon. The Company will continue to innovate and partner in the areaof fossil carbon reduction water and plastic sustainability for a Clean Future.

A Waste-Free World

Your Company maintained its long-held commitment to send zero non-hazardous waste tolandfill from its factories. Total waste generated from its factories reduced by 59%against the 2008 baseline and 100% of the non-hazardous waste generated at its factorieswas recycled or reused or sent for energy recovery in environment friendly ways.

Your Company has made clear commitments to make 100% of its plastic packaging reusablerecyclable or compostable by 2025. Your Company is working to reduce plastic pollutionthrough targets focused on an absolute reduction using more recycled and less virginplastic improving the recyclability of its plastic and collecting more plastic than itsells. The Company has done significant work in this area and has collected and safelydisposed more than 1 lakh tonnes of post- consumer use plastic waste in aggregate since2018 through collection and disposal partners.

Along with collection and processing your Company is also progressing towards makingplastics packaging circular by eliminating unwanted plastics using post-consumer recycledplastics (PCR) and recycle ready structures. Working along with partners such as BanyanNation your Company's purpose-driven brands such as Surf excel laundry liquid Sunsilkand TRESemm are using 25% r-HDPE (High Density Polyethylene). Vim is using 50% r-PET inits liquid bottles. The Company has also eliminated ~1 kilo tonne of plastic byeliminating plastics coating from soap cartons (Dove Lux Liril) and Lifebuoy's soapstiffeners and moved shampoo sachet soap wrapper and Vim bar flow-wrap to recycle readystructure.

Your Company recognises that the plastics problem cannot be solved alone. It is workingclosely with the Government and other partners such as United Nations Development

Programme (UNDP) for end-to-end pilot projects for plastic waste management. So farthe project has reached out to more than 40000 households collected more than 4000tonnes of plastic waste and onboarded more than 800 Safai Saathis (sanitation workers) inthe project.

To advocate and create awareness in the area of waste management your Companypartnered with Xynteo India Private Limited and has developed a curriculum called‘Waste No More' to create awareness and drive behaviour change on waste segregationand recycling among school children and people in housing societies. The programme hasreached out to more than 1 lakh students. In partnership with State Bank of India (SBI)and Municipal Corporation of Greater Mumbai your Company has initiated andoperationalised a Dry Waste Collection and Segregation Centre in Mumbai.

Protecting and Regenerating Nature

With a high agricultural footprint your Company has a responsibility to preserve landfor future generations. It is aiming to achieve this through sustainable sourcing of ourkey commodities regenerative agriculture practices and a deforestation-free supply chainenabled by greater transparency.

This year Unilever announced its aim to reach a deforestation-free supply chain by2023. Over the years the Company has made significant progress in sustainable sourcing.In 2020 93% of tomatoes used in Kissan ketchup continued to be sourced sustainably andover 67% of Tea in India procured for Unilever brands was sourced from sustainablesources. By the end of 2020 100% of the chicory was sourced sustainably as all theUnilever chicory farmers in India were covered under the Unilever Sustainable AgricultureCode providing farmers knowledge and expertise in sustainable agriculture practices.

Protecting Water

Access to safe water is a basic human right. It's become even more critical this yearwith the importance of good hygiene in protecting against Covid-19. And water scarcity andclimate change are of course inextricably linked. Your Company has made good progress inreducing the water usage (cubic meter per tonne of production) in its manufacturingoperations by 54% since 2008.

Your Company is also working to promote good water management particularly inwater-stressed areas. Hindustan Unilever Foundation (HUF) was set up in 2010 to supportand amplify scalable solutions that can help address India's water challenges –specifically for rural communities that intersect with agriculture. HUF established its‘Water for Public Good' programme anchored in the belief that water is a common goodand must be governed by citizen communities. The aim was to catalyse effective solutionsto India's water challenges involving government communities experts and mission-basedorganisations.

Through HUF's initiatives the cumulative and collective achievements delivered in2019-20 include a water potential of over 1.3 trillion litres through improved supply anddemand water management over 1 million tonnes of agricultural and biomass production andover 30 million person-days of employment. To underscore the importance of the waterpotential created by HUF; one billion litres of water can meet the drinking water needs ofover 8 lakh adults for an entire year.

A fairer and more-inclusive world

Your Company's business relies on the hundreds of thousands of people who work in itsvalue chain – including farmers factory workers small shop owners waste recyclersand others. The Company can only create widescale change by giving people opportunities toimprove their livelihoods. So it is working to improve people's health confidence andwellbeing; to create opportunities for all; and to respect and promote human rights.

Raising Living Standards

Payingallworkersfairlyfortheworktheydoisafundamental human right. In January 2021Unilever announced a goal that everyone who directly provides goods and services toUnilever will earn at least a living wage or a living income by 2030. Your Company willspecifically focus on the most vulnerable workers in manufacturing and agricultureworking with stakeholders to raise living standards through supplier selection practicescollaboration and advocacy wherever it operates.

Opportunities for All

To be a truly inclusive business your Company needs to make sure women especiallywomen from under-represented groups have the same access as men to opportunities. TheCompany continues to invest in women's livelihoods to benefit families and communitiesand to grow its business.

Project Shakti your Company's initiative is aimed at financially empowering andproviding livelihood opportunities to women in rural India. The initiative has reachednearly 136000 Shakti Entrepreneurs across 18 States.

Your Company's purpose driven brands such as Glow & Lovely and Dove have developedtheir brand purpose around skills and confidence building particularly focused on women.Glow & Lovely Careers is a mobile platform designed to help women create an identityfor themselves by providing them career guidance skill-based courses and information onjob opportunities.

Better health and hygiene

Your Company's purpose driven brands Lifebuoy and Domex have worked extensively toimprove hygiene and sanitation of people over the years. The Lifebuoy handwashingbehaviour change initiative helps in promoting the benefits of handwashing with soap atkey times during the day and encouraging people to adopt and sustain good handwashingbehaviour. In fact from 2010 to end of 2020 it has reached out to over 73 million peoplein India through the handwashing behaviour change initiatives with life-saving healthinformation.

Swachh Aadat Swachh Bharat

Your Company's ‘Swachh Aadat Swachh Bharat' (SASB) programme is in line with theGovernment of India's Swachh Bharat Abhiyan (Clean India Mission) to promote good healthand hygiene practices. The Swachh Aadat Curriculum teaches children in classes 1-5 theimportance of adopting three clean habits – washing hands with soap safe drinkingwater practices and using clean toilets over a 21-day period.

The textbook version of the curriculum has been rolled out in government schools inBihar Gujarat Maharashtra Uttarakhand and Haryana with a total reach of 2.1 millionchildren. In the absence of in school learning in 2020 and to ensure that learning didn'tstop the Company pivoted its existing model to digital and adapted the WASH curriculuminto 21 interactive animated videos.

The Community Hygiene Centre – ‘Suvidha' is another important project thatensures health hygiene and sanitation in urban slums. ‘Suvidha' a first-of-its-kindurban water hygiene and sanitation community centre was first set up at ChiragnagarGhatkopar one of the largest slums in Mumbai. Your Company has now opened four moreSuvidha centres in Mumbai in partnership with HSBC to give people access to clean watersanitation and laundry facilities. This project has saved over 25 million litres of watervia the five existing centres in Mumbai.

Healthier Eating

Your Company continuously works to improve the taste and nutritional quality of itsproducts using globally recognised dietary standards which are also compliant withapplicable Indian regulations.

Your Company's response to Covid-19

As a responsible Company we took several actions through product donations supportinghealthcare infrastructure donating food to migrant workers and promoting Covid-19appropriate behaviour through public awareness campaigns.

Your Company donated over 2 crores soaps and sanitisers bottles of Domex and packs ofHorlicks and other products to the frontline medical professionals police officialssanitation workers migrant population and vulnerable people of the country inpartnership with the Government and various NGOs. We partnered medical institutions toprovide almost 75000 test kits and medical equipment including over 40 ventilators tohospitals. We had partnered Apollo Hospitals State Bank of India and others to createisolation facilities. We also created isolation facilities near some of our factorylocations for the community. Our factory teams along with Prabhat partners donated 2weeks' food ration to close to 1.2 lakh migrant workers' families in over 200 locations.To educate people about Covid-19 appropriate behaviour your Company created#VirusKiKadiTodo campaign in association with UNICEF that reached 600 million peopleacross small towns and rural India through television and digital platforms.

In order to fight the second wave of the pandemic your Company is procuring medicalequipments including oxygen concentrators that will be distributed in the most affectedareas across the country. We will be partnering with Portea Medical and KVN Foundation tomake oxygen concentrators available to Covid-19 patients at home through aborrow-use-return mechanism in some of the most impacted cities. In addition to this toaugment the medical infrastructure we are making available ventilators to varioushospitals.

Central to our fight against Covid-19 is vaccinating our people. Your Company will befacilitating and covering the cost of Covid-19 vaccinations for 300000 people in ourextended ecosystem including suppliers distributors salesmen and Shakti Ammas. We willalso be organising vaccination camps for our employees and their dependants. Your Companyis also working towards amplifying awareness to reduce vaccine hesitancy.

For more information on your Company's response to Covid-19 go to https://w w w.hul.co.in/news/ n e w s - a n d - f e a t u r e s / 2 0 2 1/ c o v i d -1 9 - r e s p o n s e-hulstandswiththenation.html Detailed information on the progress of your Company's USLPinitiatives and CSR activities is available in the Annual Report on CSR and BusinessResponsibility Report which is appended as Annexure to this Report.

SHAREHOLDERS

In a volatile and unpredictable year we have demonstrated our resilience and agilitywhile delivering a strong competitive performance.

This year we drew on our clear and compelling strategy and our five growthfundamentals to navigate the uncertainty and volatility of the Covid-19 pandemic. Ourimmediate response to the pandemic was to focus on protecting our people restoringsupplies responding to new patterns of demand supporting our communities and preservingour cash and balance sheet strength.

We demonstrated the resilience of our business and unlocked new levels of agility inresponding to the unprecedented fluctuations in demand coupled with complex challenges inthe supply chain. Our focus on execution excellence repurposing our brands and portfoliointerventions delivered an improvement in competitiveness.

Our Performance in 2020-21

In the early days of the pandemic we decided the best way to manage our business wasto focus on competitive growth and protect our business model by looking at absoluteprofits and focusing on cash delivery. We have performed well against these objectiveswith 84% of our business winning volume share in the year ending March 2021 as per KantarWorldpanel. Our reported turnover growth stood at 18% domestic consumer business(excluding the impact of the merger of GSK CH and acquisition of ‘VWash') grew at 6%led by volume growth of 3%. From a portfolio lens c.80% of our business addressed theconsumer needs of Health Hygiene and Nutrition which grew strongly at 12%. Discretionarycategories like Skin Care Deodorants and Colour Cosmetics forming c.15% of our portfolioregistered a decline of 15% owing to pressure on household budgets and limited mobility.Out-of-home categories like Ice Cream Food Solutions which contribute c.5% to ourturnover were disproportionately impacted thus declining by 26%.

In our divisions Beauty & Personal Care grew by 4% led by robust double-digitgrowth in Skin Cleansing Oral Care and Hair Care. Home Care grew by 2% led bydouble-digit growth in Household Care and a marginal growth in Fabric Wash due to slowdownin laundry consumption owing to limited mobility. Foods & Refreshment outperformeddelivering 17% growth with a strong performance in Tea. Horlicks and Boost have alsoperformed well led by strong fundamentals.

Our EBITDA margin at 25% remained healthy Profit after tax of Rs 7954 croresincreased by 18% and our cashflow from operations (after taxes) are up by 23% to ` 8957crores. Tea and Palm Oil prices surged to their multi-year highs during 2020 puttingsignificant pressure on our margins. However a strong savings programme sharp focus ongenerating synergies from GSK CH merger and judicious pricing actions helped us navigatethese headwinds and deliver profitable growth. Your Directors are pleased to recommend afinal Dividend of Rs 17 per equity share of face value of ` 1/- for the year ended 31stMarch 2021. The interim Dividend of ` 14.00 per share was paid on 12th November 2020.The total Dividend for the financial year ended 31st March 2021 amounts to Rs 31.00 pershare of face value of Rs 1/- each. During the year special Dividend of Rs 9.50 per sharewas also paid on 17th August 2020.

Our strategic choices for future success

In early 2021 we set out in detail the Compass strategy to deliver our vision. Itguides our decisions and actions in five key areas: portfolio brands channels structure& capabilities and culture. All of this is underpinned by our focus on creating valuethrough our 4G growth model.

1. Developing our portfolio

We hold leadership position in most categories we operate in. As we strengthen ourfoundation to deliver long-term superior value accelerating growth is our top priority.

We are building a future-fit portfolio by strengthening our core brands creatingcategories of the future through market development and driving premiumisation bystraddling the price-benefit pyramid. Our focus is to make our bigger brands better bycapturing emerging trends and landing impactful innovations to fuel growth. In theunderpenetrated categories we are driving consumer education and recruitment throughtargeted sampling and by making our products more accessible.

We continue to work towards making our brands more aspirational by understanding theneeds of the consumer and scaling new benefit spaces. We have carved out a separatepremium beauty business within Beauty & Personal Care division to foster our play inthe fast-growing ‘Mass-tige' beauty segment.

2. Winning with our brands as a force for good powered by purpose andinnovation

We have a long track record as a leader in sustainability. We are continuing to leadthe way in sustainable business–ramping up our commitments on climate nature andcreating a fairer world (see pages 31 to 33 for more). We are embedding these commitmentsat the heart of our divisional category and brand agendas. Our purposeful brands are keyto delivering our sustainability ambitions and they are starting to cut through.Consumers see our brands as purposeful taking meaningful tangible action on issues theycare deeply about. We are innovating to ensure our brands also excel through their qualityand efficacy. See the consumer review on pages 22 to 25 for more examples of brands withpurpose and innovation.

3. Leading in the channels of the future

We are designing for growth channels like e-Commerce through focused channel teamsworking to create the right portfolio and execution with strategies based on deep shopperinsights. Our e-Commerce focused innovations include smart packaging solutions and rightpack price architecture to suit last mile logistics. The right portfolio for e-Commercemust be supported by operations built for this channel from demand-anticipatingalgorithms to fast order fulfilment and we are becoming more agile throughout our supplychain and operations.

Traditional distributive trade is the predominant channel in India with an estimated 10million outlets contributing to c.80% of the total FMCG market. e-Commerce explosion isalso leading to the transformation of traditional trade and bringing new opportunities forour eB2B programmes. Shikhar our eB2B retailer app has now been adopted by more than 5lakh stores enabling them to place order at their convenience without waiting for thesalesmen to visit their stores. We are looking to scale this up and at the same time workat the back end to build next day delivery systems. We are also working to solve capitalissues for our retailers through our partnership with State Bank of India (SBI) which willenable easy access to affordable credit.

4. Build differentiated structures and capabilities

India is a diverse country with multi-cultural multi-lingual and multi-regionalethos. The Indian consumers are also increasingly becoming more diverse. At one end we seethe emergence of the more digitally connected metro higher socio-economic classconsumers; then we have the middle-class consumers trickling from the semi-urban and tier1-3 cities; to the consumers in rurban and rural hinterlands. Within that your Companyoperates a complex business with a portfolio that spans across the price pyramid from Rs 1sachet to ` 1150 and sold through 8 million small and large retail outlets. In keepingwith the heterogenous nature of our country we have de-averaged India into 15 consumerclusters as part of our Winning in Many Indias (WiMI) strategy and are driving distinctiveactions across these clusters to accelerate growth. We have created 16 Country Categorybusiness teams (CCBT) which act as mini boards led by young general managers. These nimbleand empowered teams have made us more consumer and customer-centric helping us move withspeed and agility.

‘Reimagine HUL' is our multi-year transformation programme that aims to transformyour Company by leveraging the power of data & technology to thrive in thisincreasingly heterogenous consumer group and a complex business environment. The vision isto create an ‘Intelligent Enterprise' that helps power growth for the nextdecade in this new India.

As an ‘Intelligent Enterprise' we are moving from the traditional linearvalue chain model to an ecosystem approach. We continue to transform the core by buildingdistinctive capabilities across the value chain where we are making the core businessbecome smarter and more efficient by being data led and machine augmented. At the sametime we are creating bespoke platforms & digital ecosystems that createdifferentiated consumer & customer value. The work is organised around fourecosystems:

Consumer Ecosystem: Focusing on building superior experiences andproducts through: Agile Innovation Hub a virtual hub with always-on trend spottingsizing prototyping and validating; Next Gen Media real time data & analyticsfor media attribution to growth and Interconnected Consumer Platforms on engagementtrial and commerce.

Customer Ecosystem: A Connected Store programme which entails DemandCapture through Shikhar (our eB2B App) Demand Fulfilment (including buildingnext day delivery for stores) and a ‘My Kirana' and 'Ushop' portal as a B2C for

Demand Generation.

Operations Ecosystem: An ecosystem across the verticals of PlanSource Make and Deliver underpinned by digital capabilities for E2Emanufacturing & distribution network transformation.

Data Tech and Analytics Ecosystem: Data is core to our businessoperations and we continue to manage it like an enterprise asset. In 2020 we increasedthe leverage of (external) ecosystem data and this has helped to optimise operationsduring lockdowns. We continue to make progress to augment all key decisions withArtificial Intelligence & Machine Learning.

Building a purpose-led future-fit organisation and growth culture

Our people are key to delivering our strategy so we are focusing on our capacitycapability and culture. Agile ways of working and digital transformation are enabling usto find new capacity and refocus our people on the highest value work. We are equippingour employees with the skills they'll need to adapt to a changing world of work andcontinue growing our business.

We strive to be a beacon for diversity inclusion and value-based leadership. Apartfrom our commitment to be gender balanced in the next few years we are working towardsensuring a fair and inclusive environment for everyone including members of LGBTQI+communities person with disability and other minority groups. See pages 26 to 27 for moreon our people.

We will continue to demonstrate how sustainable business drives superior performance– building on our strengths that position us well for the consumer and demographictrends of the future and delivering on our strategic choices to create long-term valuefor all our stakeholders.

Technology Absorption

Your Company continues to derive sustainable benefit from the strong foundation andlong tradition of R&D at Unilever which differentiates it from others. New productsprocesses and benefits flow from work done in various Unilever R&D centres across theglobe including in India. The Unilever R&D labs in Mumbai and Bengaluru work closelywith the business to create exciting innovations that help us win with our consumers.Effective 1st April 2020 your Company added a new R&D facility for the Nutritionbusiness based at Gurgaon consequent to the merger of GSK CH with the Company. Withworld-class facilities and a superior science and technology culture Unilever attractsthe best talent to provide a significant technology differentiation to its products andprocesses.

The R&D programmes undertaken by Unilever globally are focused on the developmentof breakthrough and proprietary technologies with innovative consumer propositions. Theglobal R&D team comprises highly qualified scientists and technologists working in theareas of Home Care Beauty & Personal Care Foods & Refreshment and WaterPurification and critical functional capability teams in the areas of RegulatoryClinicals Digital R&D Product & Environment Safety and Open Innovation.

Your Company has an existing Technical Collaboration Agreement (TCA) and a Trade MarkLicense Agreement (TMLA) with Unilever which were entered into in 2013. Your Company isenjoying the benefits of an increasing stream of new products and innovations backed bytechnology and know-how from Unilever. The pace of innovations and the scope of serviceshave expanded over the years. Unilever's global resources are providing greater expertiseand superior innovations. This has helped in bringing to the Indian consumers biggerbetter and faster innovations. The TCA provides for payment of royalty on net sales ofspecific products manufactured by your Company with technical know-how provided byUnilever. The TMLA provides for the payment of trademark royalty as a percentage of netsales on specific brands where Unilever owns the trademark in India including use of‘Unilever Corporate logo'.

Your Company maintains strong and healthy interactions with Unilever through awell-coordinated management exchange programme which includes setting out governingguidelines pertaining to identifying areas of research agreeing timelines resourcerequirements scientific research based on hypothesis testing and experimentation. Thisleads to new improved and alternative technologies supporting the development oflaunch-ready product formulations based on research and introducing them to markets.

Your Company continuously imports technology from Unilever under the TCA which isfully absorbed. Your Company also receives continuous support and guidance from Unileverto drive functional excellence in marketing supply management media buying and IT amongothers which help your Company build capabilities remain competitive and further step-upits overall business performance. Unilever is committed to ensuring that the support interms of new products innovations technologies and services is commensurate with theneeds of your Company and enables it to win in the marketplace.

B. OUR RISKS AND OPPORTUNITIES

Our risk appetite and approach to risk management

Risk management is integral to your Company's strategy and to the achievement of HUL'slong-term goals. Our success as an organisation depends on our ability to identify andexploit the opportunities generated by our business and the markets we operate in. Indoing this we take an embedded approach to risk management which puts risk and opportunityassessment at the core of the Board's agenda which is where we believe it should be.HUL's appetite for risk is driven by the following:

• Our growth should be consistent competitive profitable and responsible.

• Our actions on issues such as plastic and climate change must reflect theirurgency and not be constrained by the uncertainty of potential impacts.

• Our behaviours must be in line with our Code of Business Principles and CodePolicies.

• Our ambition to continuously improve our operational efficiency andeffectiveness.

Our approach to risk management is designed to provide reasonable but not absoluteassurance that our assets are safeguarded the risks facing the business are beingassessed and mitigated and all information that may be required to be disclosed isreported to HUL's senior management including where appropriate the Managing Directorand Chief Financial Officer and the Audit Committee and the Board.

For each of our principal risks we have a risk management framework detailing thecontrols we have in place and who is responsible for managing both the overall risk andthe individual controls mitigating that risk. Our assessment of risk considers both shortand long-term risks including how these risks are changing together with emerging riskareas. These are reviewed on an ongoing basis and formally by Risk Management Committeeand the Board at least once a year.

Processes

HUL engages in a wide range of processes and activities across all its operationscovering strategy planning execution and performance management . Risk management isintegrated into every stage of this business cycle. These procedures are formalised anddocumented and are increasingly being centralised and automated into transactional andother information technology systems.

Risk and Internal Adequacy

The Board advised by the Risk Management Committee where appropriate regularlyreviews the significant risks and decisions that could have a material impact on HUL.These reviews consider the level of risk that HUL is prepared to take in pursuit of thebusiness strategy and the effectiveness of the management controls in place to mitigatethe risk exposure.

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 controls environment and monitors the implementation of audit recommendationsincluding those relating to strengthening of the Company's risk management policies andsystems.

Principal Risks

In the following pages we have identified the risks that we regard as the most relevantto our business. These are the risks that we see as most material to HUL's business andperformance at this time. There may be other risks that could emerge in the future.

Our principal risks have not changed this year. Albeit the Covid-19 pandemic hasincreased the potential impact and likelihood of some of these risks. Much of our riskmitigation focus during the year has been on managing these risks The Covid-19 impact wasfelt in the following risk areas –

1. People health & wellbeing concerns

To ensure safety and wellbeing of our employees we acted quickly and took relevantactions such as working from home for office based staff restrictions on travelprovision of protective equipment for factory workers and changes in working practices tofacilitate social distancing. The safety of those who continue to operate in ourworkplaces as well as the mental and physical wellbeing of employees facing an extendedperiod of working from home continues to be of paramount importance. We also havestringent return to office criteria and revised hygiene protocols to ensure a safe returnto the office when possible.

2. Future-fit portfolio transformation

As the pandemic evolves there have been significant shifts in demand across productcategories on account of changing consumer behaviours. The heightened concerns on healthand safety are reflecting in consumer demand trends in the space of protection andhygiene. We need to continue to develop and deliver consumer relevant innovations.

3. Channel transformation

Social distancing requirements and restriction on individual movements have drivenrapid increase in e-everything and online shopping. We continue to invest in developingour capabilities in this area rapidly

4. Supply chain agility

Rapidly changing global landscape required reconfiguration of supply chains andadherence to changing regulations which entails significant management. Operation oflogistics network to maintain sources of supply will continue to require ongoing focus andflexibility.

5. IT availability capability and resilience

The pandemic led change in ways of working has led to increased online transactions.Reliance on IT resilience for conduct of business operations requires keeping the ITinfrastructure operating effectively while managing heightened vulnerability to maliciousdisruptions & information leakages.

While the pandemic has significantly impacted the business this year it also hascharacteristics of an emerging risk with uncertainty around how it will unfold in 2021. Weregularly review our risk areas and the Company leadership retains the responsibility fordetermining the nature and extent of significant risks and drawing out commensuratemitigation plans.

As well as identifying the most relevant risks for our business we reflect on whetherwe think the level of risk associated with each of our principal risks is increasing ordecreasing.

We set out below our principal risks certain mitigating actions that we believe helpus to manage our risks and the increase/decrease corresponding to each of the these.

Nature of risk Management of risk Level of risk
Brand Preference
Our success depends on the value and relevance of our brands to our consumers and on our ability to innovate and remain competitive. Your Company monitors external market trends and collates consumer customer and shopper insights in order to develop category and brand strategies. We invest in markets and segments where we have built or are confident that we can build competitive advantage. Increased
Consumer tastes preferences and behaviours are changing more rapidly than ever before. We see a growing trend for consumers preferring brands which both meet their functional needs and have an explicit social purpose. Under indexation of product portfolio in segments where substantial market is moving to may lead to loss of market share and long-term competitive disadvantage. Our ability to create innovative products that continue meeting the needs of consumers and deploy the right communication both in terms of messaging content and medium is critical to the continued strength of our brands. Our Research and Development function actively searches for ways in which to translate the trends in consumer preferences and taste into new technologies for incorporation into future products. Our innovation management process converts category strategies into projects which deliver new products to market. We develop product ideas both in house and with selected partners to enable us to respond to rapidly changing consumer trends with speed.
The Covid-19 pandemic has driven significant changes in consumer habits and demands which requires rapid evolution of portfolio and continued innovations to remain relevant and competitive. Our brand communication strategies are designed to optimise digital communication opportunities. We develop and customise brand messaging content specifically for each of our chosen communication channels (both traditional and digital) to ensure that our brand messages reach our target consumers. Our brand teams are driving social purpose into their brand's proposition and communications.
Nature of risk Management of risk Level of risk
Supply Chain
Our business depends on purchasing materials efficient manufacturing and the timely distribution of products to our customers. Increased
Our supply chain network is exposed to potentially adverse events such as physical disruptions environmental and industrial accidents labour unrest trade restrictions or disruptions at a key supplier which could impact our ability to deliver orders to our customers. We have contingency plans designed to enable us to secure alternative key material supplies at short notice to transfer or share production between manufacturing sites and to use substitute materials in our product formulations and recipes. We have policies and procedures designed to ensure the health and safety of our employees and the products in our facilities and to deal with major incidents including business continuity and disaster recovery. Commodity price risk is actively managed through forward buying of traded commodities and other hedging mechanisms. Trends are monitored and modelled regularly and integrated into our forecasting process.
Covid-19 has challenged and continues to challenge the resilience and continuity of our supply chain. Rapidly changing global landscape and local regulations with enhanced health and safety requirements have called for reconfiguration of supply chains entailing significant management. Maintaining manufacturing and logistics operations will continue to require ongoing focus and flexibility. Despite the significant disruption caused by Covid-19 our supply chain teams demonstrated execution prowess and exceptional agility to manage supply of products.
The cost of our products can be significantly affected by the cost of the underlying commodities and materials from which they are made. Fluctuations in these costs may negatively impact business especially if such movements are not effectively managed. Your Company was able to ramp up and recalibrate capacities ensure safe working conditions with requisite infrastructure and diversify supply chain in terms of availability and sourcing unlocking flexible alternatives.
We are managing the adverse impact of the pandemic by deploying past learnings and responding proactively with a focused approach to deal with the disruptions that are primarily localised. In order to ensure that our supply chain and front-end sales staff are safe and secure we have supported vaccination of a large number of these employees and this effort will continue as more vaccines are made available.
Business Transformation No Change
Successful execution of business transformation projects is key to delivering their intended business benefits and avoiding disruption to other business activities. All acquisitions disposals and transformation projects have steering groups in place led by senior leadership teams. Sound project discipline is followed in all transformation projects and these projects are resourced by dedicated and appropriately qualified personnel. All such projects are monitored through strong governance and reviewed by the Board of the Company for delivery of maximum synergies.
HUL is continually engaged in major change projects including acquisitions disposals and organisational transformation including digital to drive continuous improvement in our business and to strengthen our portfolio and capabilities.
We have an extensive programme of transformation projects. Ineffective execution of strategic business transformation projects could result in under-delivery of the expected benefits/synergies inability to unlock growth opportunities and a significant negative impact on the value of the business. In order to ensure that we seamlessly integrate the Nutrition portfolio of GSK CH into our business we have put in place a dedicated specialist team resourced with representatives from all parts of business to ensure overall business integration process harmonisation controls compliance and delivery of synergies.
Nature of risk Management of risk Level of risk
Plastic Packaging
We use a significant amount of plastic to package our products. A reduction in the amount of single use plastic the use of recycled plastic and an increase in the recyclability of our packaging are critical to our future success. Advocacy: We are working with Government and Industry bodies on packing substitutes central regulation for all States framing of EPR regulation framework. No Change
Collection and Recovery: We are driving waste management pilots through tie ups with various companies/NGOs deploying mass collection processing and disposal models.
Consumer and customer responses to environmental impact of plastic waste and emerging regulations by Government to restrict the use of certain plastics requires us to find solutions to reduce the amount of plastic we use; increase recycling post-consumer use; and to source recycled plastic for use in our packaging. Not only is there a risk around finding appropriate replacement materials due to high demand the cost of recycled plastic or other alternative packaging materials could significantly increase in the foreseeable future and this could impact our profitability. We could also be exposed to higher costs as a result of taxes or fines if we are unable to comply with plastic regulations which would again impact our profitability and reputation. Design and development of alternative packing: We are working on innovative solutions for accelerated development of alternative packaging & associated Supply Chain capability in order to move away from Single Use Plastic.
Legal & Regulatory
No Change
Compliance with laws and regulations is an integral part of HUL's business operations.
Proliferation and instability in regulatory policies and regime in areas such as direct/indirect taxes data privacy corporate laws listing & disclosure food quality compliance labour laws consumer related regulations imports among others frequently leading to diverse compliances on the same subject may lead to avoidable regulatory actions adverse impact on growth and profitability and increased exposure to civil and/or criminal actions. HUL is committed to complying with the laws and regulations of the country. In specialist areas the relevant teams are responsible for setting detailed standards and ensuring that all employees are aware of and comply with regulations and laws specific and relevant to their roles. Our legal and regulatory teams are engaged in monitoring and reviewing our practices to provide reasonable assurance that we remain aware of and are in line with all relevant laws and legal obligations. We engage with Regulators with the objective of providing recommendations on emerging & existing regulations that are designed to address Regulator's concerns and also bring about ease of doing business.
Nature of risk Management of risk Level of risk
Systems & Information Your Company's operations are increasingly dependent on IT systems and the management of information. Increased
The cyber-attack threat of unauthorised access and misuse of sensitive information or disruption to operations continues to increase. Such an attack could inhibit our business operations in a number of ways including disruption to sales production and cash flows ultimately impacting our results. To reduce the impact of external cyber-attacks impacting our business we have firewalls and threat monitoring systems in place complete with immediate response capabilities to mitigate identified threats. We also maintain a robust system for the control and reporting of access to our critical IT systems. This is supported by an annual programme of testing of access controls.
In addition increasing digital interactions with customers suppliers and consumers place ever greater emphasis on the need for secure and reliable IT systems and infrastructure including back-up plans and careful management of the information that is in our possession to ensure data privacy. Given the changes in ways of working of all of our employees as well as our customers and suppliers as a result of Covid-19 there has been an increased reliance on certain elements of our IT infrastructure. We are particularly reliant on third party experts in this space and thus the impact of Covid-19 on their operations also poses a risk for us. Accelerated pace of digitisation of our operations also gives rise to the need to detect and mitigate risks arising from technological advancements such as deployment of AI Robotics Process Automation Machine Learning Quality & Safety The quality and safety of our products are of paramount importance for our brands and our reputation. We have policies covering the protection of both business and personal information as well as the use of IT systems and applications by our employees. Our employees are trained to understand these requirements. We also have a set of IT security standards and closely monitor their operation to protect our systems and information. Hardware that runs and manages core operating data is fully backed up with separate contingency systems to provide real-time backup operations should they ever be required. We have standardised ways of hosting information on our public websites and have systems in place to monitor compliance with appropriate privacy laws and regulations and with our own policies. We are increasingly putting in place review and monitoring frameworks for new age automations to assess inherent open risks and mitigate the same. Our product quality processes and controls are comprehensive from product design to customer shelf. No Change
The risk that raw materials are accidentally or maliciously contaminated throughout the supply chain or that other product defects occur due to human error equipment failure or other factors cannot be excluded. Labelling errors can have potentially serious consequences for both consumer safety and brand reputation. Therefore on-pack labelling needs to provide clear and accurate ingredient information in order that consumers can make informed decisions regarding the products they buy. Our internal safety and quality norms are constantly reviewed to ensure that our products meet the most stringent norms. HUL has a robust quality inspection process in all manufacturing and warehousing locations to avoid and detect quality and safety issues. Our key suppliers are externally certified and the quality of material received is regularly monitored to ensure that it meets the rigorous quality standards that our products require. We have processes in place to ensure that the data used to generate on-pack labelling is compliant with applicable regulations and HUL labelling policies in order to provide the clarity and transparency needed for consumers.
Nature of risk Management of risk Level of risk
People: Safety Wellbeing and Talent
Ensuring employee safety and wellbeing is a key priority for us. A skilled workforce and agile ways of working are essential for the continued success of our business. In light of Covid-19 we have been proactive and swift in ensuring safe working conditions and providing the necessary infrastructure and equipment across all operations to strictly adhere to government guidelines on Covid-19 safety measures. Increased New risk on people safety and wellbeing
The safety and wellbeing of our employees is vital to the success of our business. Covid-19 has had a significant impact on people's lives therefore helping our employees manage this impact and their ability to work effectively require continued focus. We have proactively evaluated and enhanced our medical safety footprint by sprucing up the medical and occupational health support facilities across sites for employees and extended enterprise.
With the rapidly changing nature of work and skills there is a risk that our workforce is not equipped with the skills required for the new environment. Our ability to attract develop and retain a diverse range of skilled people is critical if we are to compete and grow effectively. Over the years we have developed a good equity to attract top talent from the markets. We have an integrated management development process which includes regular performance reviews underpinned by a common set of leadership behaviours skills and competencies. We have development plans to upskill and reskill employees for future roles and will bring in flexible talent to access new skills. We have targeted programmes to attract and retain top and niche talent and we actively monitor our performance in retaining a diverse talent pool within HUL.
The loss of management or other key personnel or the inability to identify attract and retain qualified personnel could make it difficult to manage the business and could adversely affect operations and financial results. We regularly review our ways of working to drive speed and simplicity through our business in order to remain agile and responsive to marketplace trends. We are moving to agile ways of working to unlock internal capacity and prioritise work based on growth and impact.
Ethics
No Change
HUL's brands and reputation are valuable assets and the way in which we operate contribute to society and engage with the world around us is always under scrutiny. Our Code of Business Principles and our Code Policies govern the behaviour of our employees suppliers distributors and other third parties who work with us.
Acting in an ethical manner consistent with the expectations of customers consumers and other stakeholders is essential for the protection of the reputation of HUL and its brands. Any significant breach to our Code of Business Principles by employees or extended enterprises would lead to damage to HUL's corporate reputation and business results. Our processes for identifying and resolving breaches of our Code of Business Principles and our Code Policies are clearly defined and regularly communicated throughout HUL. Data relating to such breaches is reviewed by HUL Management Committee and by relevant Board Committees that helps to determine the allocation of resources for future policy development process improvement training and awareness initiatives. Our Responsible Sourcing Policy and Responsible Business Partners Policy help us improve the lives of the people in our supply chains by ensuring human rights are protected and makes a healthy and safe workplace a mandatory requirement for our suppliers.
Nature of risk Management of risk Level of risk
Macro-Economic Instability
Global and local macro-economic factors further accentuated by the on-going pandemic may result in reduction in disposable income of consumers adversely impact consumer confidence and cause a slowdown in FMCG markets. This may impact our growth and profitability adversely. HUL has a resilient portfolio of product which straddles across the pricing pyramid. Our flexible business model allows us to adapt our portfolio and respond quickly to develop new offerings that suit consumers' and customers' changing needs during economic downturns. We regularly update our forecast of business results and cash flows and where necessary dynamically reallocate resources across investment priorities. We believe that many years of exposure to challenging markets have given us experience of operating and developing our business successfully even during periods of economic & political volatility/ instability. Increased
Climate Change
Climate change and governmental actions to reduce such changes may disrupt our operations and/or reduce consumer demand for our products. As part of our sustainability targets we monitor climate change and are responding by ensuring that we reduce the environmental impact of our operations to the extent possible. We aim to minimise our contribution to climate change by committing to – No Change
Climate change may impact our business in various ways leading to reduced growth and profitability. It could lead to water shortages which would reduce demand for those of our products that require a significant amount of water during consumer use or decrease in sales on account of reduced product efficacy due to water shortage. Uncertainty in timing and severity of summer winter and monsoon may impact the seasonal swings that we get on our mixes. a. Remove as much carbon from our operations and supply chain as we can
b. Sustainably source all our key commodities
c. Ensure deforestation-free supply chain
Our inability to reduce our carbon footprint and meet conscious consumption agenda across consumer segments may be detrimental to our reputation and growth in the long-term. In order to deal with the water scarcity and quality problems in the country we are making water saving formulations available for seasonal deployment across portfolios. We also have ongoing plans to de-seasonalise our product portfolios to deal with extreme unfavorable seasonal swings.
We monitor governmental developments around actions to combat climate change and take proactive action to minimise the impact on our operations.

Opportunities What we are doing to respond to opportunities

Future-fit Portfolio

HUL's strategic investment choices in keeping with Our strategy and our business plansare designed to ensure that resources changing consumer demographics aspirations and areprioritised towards high growth segments. As on outcome of Covid-19 spending power willbring about an opportunity for there has been an upswing in categories like healthhygiene and nutrition. growth and improved margins. There is a huge headroom We have astrong pipeline of relevant innovations and are staying close to to grow through buildingour product portfolio in high consumers by proactively spotting consumer insights &capturing potential growth masstige and prestige segments/high potential trends to adaptto the emerging demand patterns in the short-term and white spaces. prepare for anystructural changes in the medium term. We are also focused on making brands aspirationaland driving premiumisation across the breadth of the product portfolio. HUL hassignificantly enhanced brand propositions and marketing investments to increase adoptionin under-penetrated categories.

Growing in Channels of the Future

With advent of technology enabled distribution models While HUL continues to drivegrowth in the traditional trade and route to there has been a hyper fragmentation ofchannels. market it is also critical to increase its footprint in emerging channels.Accelerated growth of e-Commerce and Modern Trade Covid-19 has accelerated the shift ofconsumers to online with the trend has brought about a huge opportunity to tap into theseof e-everything becoming highly discernible. Your Company is working on channels and drivebusiness growth. The Covid-19 rapid proliferation of technology enabled distributionmodels to engage key pandemic has driven rapid increase in online shopping customers andconsumers strategically. which require us to accelerate development of our Several newinitiatives have been piloted which include digitisation of e-Commerce and eRTMcapabilities. general trade-fast track POS activations smart demand capture along-withStrategically designed and flawlessly executed capturing opportunities in Omni channel andB2B2C and collaborating with transformation would open up a huge opportunity to tap keyplayers in e-Commerce. into the new age channels and drive business growth.

Digital Transformation

Opportunities arising from rapidly emerging digital HUL has been a leader in using bigdata and analytics as a tool to drive technologies analytics and big data present achance to sustainable growth. We continue to drive organisation wide digital makemeaningful interventions and develop capabilities transformation agenda under the umbrellaof "Reimagine HUL" to capture across the value chain redefining the way we dobusiness. the digital opportunity. Pre-empting the imminent disruption we haveestablished a sharp digital innovation portfolio in each Function and The ability to keepour operations future fit through continue investments in Innovation. These innovationsinclude those around building digital capabilities in systems workforce and our core ERPplatform using Cloud Artificial Intelligence and other digital business models will helpus stay agile and respond in technologies. Each day we build new capabilities in SystemsWorkforce and time to evolving consumer channel market requirements.

Business Models with strong focus on external orientation and partnership across largeIT Companies/Industry Bodies. We are also invested to make sure that our talent isdigitally enabled and future fit to ride the digital transformation wave.

C. FINANCIAL REVIEW

Results

(Rs crores)
For the year ended 31st March 2021 For the year ended 31st March 2020
Sales 45311 38273
EBITDA 11324 9600
Profit before exceptional items and tax 10717 9289
Profit for the year 7954 6738

Division Wise Turnover

 

(Rs crores)

For the year ended 31st March 2021 For the year ended 31st March 2020
Sales Others* Sales Others*
Home Care 13883 76 13559 83
Beauty & Personal Care 17709 255 17019 327
Foods & Refreshment 13148 56 7395 54
Others (including Exports Infant and Feminine Care) 571 298 300 48
Total 45311 685 38273 512

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

Summarised Profit and Loss Account

(Rs crores)
For the year ended 31st March 2021 For the year ended 31st March 2020
Sale of products 45311 38273
Other operational income 685 512
Total Revenue 45996 38785
Operating Costs 34672 29185
Profit Before Depreciation Interest Tax (PBDIT) 11324 9600
Depreciation 1012 938
Profit Before Interest & Tax (PBIT) 10312 8662
Other Income (net) 405 627
Profit before exceptional items 10717 9289
Exceptional items (227) (197)
Profit Before Tax (PBT) 10490 9092
Taxation 2536 2354
Profit for the year 7954 6738
Basic EPS (Rs) 33.85 31.13
Key Financial Ratios
Particulars 2020-21 2019-20 2018-19
Return on Net Worth (%) 17.0* 92.0 90.5
Return on Capital Employed (%) 22.9* 128.5 131.2
Basic EPS (after exceptional items) (Rs) 33.9 31.1 27.9
Debtors Turnover 30.2* 28.2 26.7
Inventory Turnover 14.0* 15.1 15.8
Interest coverage ratio 95.5 81.7 289.8
Current ratio 1.3 1.3 1.4
Debt Equity ratio 0.4 1.4 1.3
Operating profit margin (%) 22.8 22.6 21.5
Net profit margin (%) 17.6 17.6 16.0

*Opening balances adjusted for GSK CH merger

Return on Net Worth Return on Capital Employed and Debt Equity ratio have dropped infinancial year 2020-21 on account of increase in shareholders' equity pursuant to themerger of GSK CH.

There is no significant change (i.e. change of 25% or more as compared to the financialyear 2019-20) in the Key Financial Ratios except the ones mentioned above.

Detailed explanation of ratios

(i) Return on Net Worth

Return on Net Worth (RoNW) is a measure of profitability of a Company expressed inpercentage. It is calculated by dividing total comprehensive income for the year byaverage capital employed during the year.

(ii) Return on Capital Employed

Return on Capital Employed (RoCE) is a financial ratio that measures a Company'sprofitability and the efficiency with which its capital is used. In other words the ratiomeasures how well a Company is generating profits from its capital. It is calculated bydividing profit before exceptional items and tax by average capital employed during theyear.

(iii) Basic EPS

Earnings Per Share (EPS) is the portion of a Company's profit allocated to each share.It serves as an indicator of a Company's profitability. It is calculated by dividingProfit for the year by Weighted average number of shares outstanding during the year.

(iv) Debtors Turnover

The above ratio is used to quantify a Company's effectiveness in collecting itsreceivables or money owed by customers. The ratio shows how well a Company uses andmanages the credit it extends to customers and how quickly that short-term debt iscollected or is paid. It is calculated by dividing turnover by average trade receivables.

(v) Inventory Turnover

Inventory Turnover is the number of times a Company sells and replaces its inventoryduring a period. It is calculated by dividing turnover by average inventory.

(vi) Interest Coverage Ratio

The Interest Coverage Ratio measures how many times a Company can cover its currentinterest payment with its available earnings. It is calculated by dividing PBIT by financecost.

(vii) Current Ratio

The Current Ratio is a liquidity ratio that measures a Company's ability to payshort-term obligations or those due within one year. It is calculated by dividing thecurrent assets by current liabilities.

(viii) Debt Equity Ratio

The ratio is used to evaluate a Company's financial leverage. It is a measure of thedegree to which a Company is financing its operations through debt versus wholly ownedfunds. It is calculated by dividing a Company's total liabilities by its shareholder'sequity.

(ix) Operating Profit Margin (%)

Operating Profit Margin is a profitability or performance ratio used to calculate thepercentage of profit a Company produces from its operations. It is calculated by dividingthe EBIT by turnover.

(x) Net Profit Margin (%)

The net profit margin is equal to how much net income or profit is generated as apercentage of revenue. It is calculated by dividing the profit for the year by turnover.

Other Financial Disclosures

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 financialstatement relates on the date of this Report During the financial year there was noamount proposed to be transferred to the Reserves. Capital Expenditure during the year wasat Rs 4051 crores ( Rs 765 crores in the previous year).

During the year your Company did not accept any public deposits under Chapter V of theCompanies Act 2013. Your Company manages cash and cash flow processes assiduouslyinvolving all parts of the business. There was a net cash surplus of Rs 4321 crores(financial year 2019-20: Rs 5017 crores) as on 31st March 2021. The Company's low debtequity ratio provides ample scope for gearing the

Balance Sheet should the need arise. Foreign Exchange transactions are fully coveredwith strict limits placed on the amount of uncovered exposure if any at any point intime. There are no materially significant uncovered exchange rate risks in the context ofCompany's imports and exports. The Company accounts for mark-to-market gains or lossesevery quarter end are in line with the requirements of Ind AS 21. The details of foreignexchange earnings and outgo as required under Section 134 of the Companies Act 2013 andRule 8(3) of Companies (Accounts) Rules 2014 are mentioned below:

(Rs crores)
For the year ended 31st March 2021 For the year ended 31st March 2020
Foreign Exchange Earnings 247 283
Foreign Exchange outgo 2635 2467

Performance of Subsidiaries

The summary of performance of the Subsidiaries of your Company is provided as below:

Unilever India Exports Limited

The Company is a 100% subsidiary of Hindustan Unilever Limited and is engaged in FMCGexports business. The focus of the FMCG exports operation is two-fold: to develop overseasmarkets by driving distribution of brands such as Vaseline Dove Pears BRU Red LabelLakm Horlicks Boost and to effectively provide cross-border sourcing of FMCG productsto other Unilever companies across the world.

The topline growth of the Company was driven by robust growth in Personal Wash Tea andnewly added Nutrition portfolio. Brands like Pears Dove Lux Taj Mahal Lipton BrookeBond have registered healthy growth in the focused markets.

Lakme Lever Private Limited

The Company is a 100% subsidiary of Hindustan Unilever Limited. The Company is engagedin Salons business and also operates a manufacturing unit at Gandhidham which carries outjob work operations for your Company by manufacturing toilet soaps bathing bars anddetergent bars.

The Company has over 485 owned/managed and franchisee salons. At Lakm Salon safetyand wellbeing of our experts and consumers have always been the topmost priority. This isassured by detailed Lakm SOPs rigorous training and high-quality products. In order tofurther enhance hygiene and safety in the post-Covid the Company modified operations andservice protocols to be compliant with the applicable Government guidelines and incollaboration with medical professionals. The extended team comprising the housekeepingstaff experts salon managers and business partners have been trained in these newmethods to ensure complete adherence to protocols. The salons were re-opened afterthorough audit and review by an expert team who was responsible to ensure best in classsafety standards.

A compelling campaign with client testimonials leveraging social media led to anincrease in new customers. This has improved Company's Net Promoter Score significantly to84% post Covid from 58% pre Covid time. In a study conducted with 2000 clients 96.7%found Lakm Salon was SAFER THAN HOME. Dermalogica the world's leading professionalskincare brand was scaled up to 200 salons and innovations like Face Fit and Eye treatmenthelped grow the brand.

The profitability for the year has been largely impacted on account of Covid outbreak.After a stringent lock down which disrupted operations in the first half the Company inthe second half of the year has sequentially improved performance to almost previousperiods revenue backed by the relaunch of the Runway Rewards programme and a strongerfocus on products. With strong focus on safety and quality of operations betterconsultation through ‘expert' treatments and prudent cost optimisation the Companycontinues to be in the attractive beauty services category. Post the second wave of Covidstarting March 2021 salon operations are affected due to lock downs as per governmentguidelines. The Company is leveraging the digital medium to train our experts and to stayin touch with our clients.

Hindustan Unilever Foundation

The Company is a not-for-profit Company that anchors water management related communitydevelopment and sustainability initiatives of Hindustan Unilever Limited. The Companyoperates the ‘Water for Public Good' programme with a specific focus on waterconservation building local community institutions to govern water resources andenhancing farm-based livelihoods through adoption of judicious water practices. TheCompany's programmes currently reach 11300 villages* in 59 districts in 10 states and 2union territories across India in partnership with 19 NGO partners and multipleco-funders. The Company also supports several knowledge initiatives in water conservationgovernance and behaviour change. During the financial year 2020-21 over 400 billionlitres# of water saving potential created through improved supply and demandmanagement of water resources. By the end of 2020 the cumulative and collectiveachievements through partnered programmes of the Company (independently assured up tofinancial year 2019-20) include: Water Conservation: Water conservation estimatestood at 1.3 trillion litres cumulatively.

Crop Yield: Additional agriculture production of over 1 million tonnes has beengenerated.

Livelihoods: Over 30 million person days of employment have been created thoughwater conservation and increased agriculture production.

*The significant reach and livelihood impact are on account of the Company's support toan MGNREGS programme partnership in West Bengal with PRADAN a reputed non-profitorganisation. This programme reaches out to over 7000 villages across 54 blocks in 6districts.

 #subject to independent assurance

Unilever Nepal Limited

Unilever Nepal Limited (UNL) a subsidiary of your Company had a very challenging year.It was a tale of 2 halves where UNL delivered strong growth in the first 6 months (preCovid) and a resilient performance in the last 6 months (post Covid). In line with the 4GGrowth strategy UNL grew its revenue from operations during the pre Covid period. Thiswas led by a robust localisation innovation and distribution plans and the growth wasbroad based across. With the onset of Covid-19 operations of UNL's factories vendors aswell as customers were severely disrupted. During these difficult times UNL ensuredprotection of everyone in the value chain. Safety and wellbeing of their staff and workersremain top priority during these difficult times. Despite slowdown UNL's market presencecontinues to be strong reflecting the competitive growth of its brands. UNL brandscontinue to be the market leader in all the categories it operates in.

Unilever India Limited

The Company is a 100% subsidiary of Hindustan Unilever Limited incorporated on 7thJune 2020 to leverage the growth opportunities in a fast-changing business in this newenvironment. Presently the Company is in the process of setting up its manufacturingfacility at Sumerpur Uttar Pradesh. It is proposed to manufacture spray drying washingpowders at this factory.

Other Subsidiaries

Pond's Exports Limited is a subsidiary of your Company which was engaged in leatherbusiness and has currently discontinued operations.

Bhavishya Alliance Child Nutrition Initiatives is a not-for-profit subsidiary ofyour Company and had launched a hand washing behaviour change programme in the state ofBihar that aims to reduce diarrhoea and pneumonia in children under the age of five years.It discontinued operations & a similar handwashing programme is now being driven byyour Company directly.

Daverashola Estates Private Limited is a subsidiary of your Company which currentlyhas no business activity. There is an ongoing litigation on the property owned by theCompany in Tamil Nadu.

Jamnagar Properties Private Limited is a subsidiary of your Company. The litigationover the land of the Company is now over and accordingly the land has been surrendered tothe Government and a Deed of Surrender was signed to this effect.

Levers Associated Trust Limited Levindra Trust Limited and Hindlever TrustLimited subsidiaries of your Company act as trustees of the employee benefits trustsof your Company.

During the year scheme of merger of Ponds Exports Limited and Jamnagar PropertiesPrivate Limited into Unilever India Exports Limited was filed for which the hearing beforeNational Company Law Tribunal (NCLT) Mumbai was held on 1st March 2021 and the order hasbeen reserved. During the year your Company has obtained a certificate from the StatutoryAuditors certifying that the Company is in compliance with the FEMA regulations withrespect to the downstream investment made in its subsidiary company i.e. Unilever IndiaLimited.

D. OTHERS

Cost Audit

In terms of the Section 148 of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014 the cost audit is applicable for following businessessuch as Coffee Drugs and Pharmaceuticals Insecticides Milk Powder Organic ChemicalsOther Machinery Petroleum Products and Tea. The accounts and records for the aboveapplicable businesses are made and maintained by the Company as specified by the CentralGovernment under sub-section (1) of Section 148 of the Companies Act 2013.

Employee Stock Option Plan (ESOP)

Details of the shares issued under Employee Stock Option Plan (ESOP) as also thedisclosures in compliance with SEBI (Share Based Employee Benefits) Regulations 2014 areuploaded on the website of the Company www.hul.co.in/investor-relations/annual-reports/hul-annual-report-related-documents.html. Noemployee has been issued share options during the year equal to or exceeding one per centof the issued capital of the Company at the time of grant.

Pursuant to the approval of the Members at the Annual General Meeting held on 23rdJuly 2012 the Company adopted the ‘2012 HUL Performance Share Scheme'. Inaccordance with the terms of the Performance Share Plan employees are eligible for awardof conditional rights to receive equity shares of the Company at the face value of Rs 1/-each. These awards will vest only on the achievement of certain performance criteriameasured over a period of three years. The Company confirms that the 2012 HUL PerformanceShare Scheme complies with the provisions of SEBI (Share Based Employee Benefits)Regulations 2014.

No shares were awarded to employees under the ‘2012 HUL Performance Share Scheme'in the financial year 2020-21. The employees of the Company are eligible for Unilevershare award plans namely Performance Share Plan (PSP) and the SHARES plan. Through PSPall managers are eligible to receive a conditional grant of Unilever shares on an annualbasis. The Target PSP share award is equivalent to 50% of the Target Bonus for Managersand 100% of the Target Bonus for Senior Leaders. The actual share grant is determined bythe line manager basis the employees' sustained impact leadership and future-fit talentprofile. These shares vest after a 3 year period with vesting being determined by Companyperformance against metrics. Under the SHARES Plan eligible employees can invest in theshares of the Holding Company up to a specified amount and after three years one share isgranted to the employees for every three shares invested subject to the fulfilment ofconditions of the scheme. The Holding Company charges the Company for the grant of sharesto the Company's employees based on the market value of the shares on the exercise date.

Disclosures with respect to the remuneration of Directors and employees as requiredunder Section 197 of the Companies Act 2013 and Rule 5(1) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 (‘Rules') have been appended asAnnexure to this Report. Details of employee remuneration as required under provisions ofSection 197 of the Companies Act 2013 and Rule 5(2) and 5(3) of the Rules are availableto any shareholder for inspection on request. Such details are also available on yourCompany's website at www.hul.co.in/investor-relations/annual-reports/hul-annual-report-related-documents.html.

Dividend

Your Directors are pleased to recommend a final Dividend of ` 17 per equity share offace value of ` 1/- for the year ended 31st March 2021. The interim Dividend of Rs 14.00per share was paid on 12th November 2020. The total Dividend for the financial year ended31st March 2021 amounts to ` 31.00 per share of face value of ` 1/- each. During theyear special Dividend of ` 9.50 per share was also paid on 17th August 2020. The finalDividend subject to the approval of Members at the Annual General Meeting on Tuesday22nd June 2021 will be paid on or after Friday 25th June 2021 to the Members whosenames appear in the Register of Members as on the Book Closure date i.e. Wednesday 16thJune 2021 to Tuesday 22nd June 2021 (both days inclusive). The total dividend for thefinancial year including the proposed final dividend and the special dividend amounts toRs 40.50/- per equity share and will absorb Rs 9516 crores. In view of the changes madeunder the Income-tax Act 1961 by the Finance Act 2020 dividends paid or distributed bythe Company shall be taxable in the hands of the Shareholders. Your Company shallaccordingly make the payment of the final Dividend after deduction of tax at source.

Unpaid/Unclaimed Dividend

In terms of the provisions of Investor Education and Protection Fund (AccountingAudit Transfer and Refund) Rules 2016/Investor Education and Protection Fund (Awarenessand Protection of Investors) Rules 2001 Rs 10.42 crores of unpaid/unclaimed dividendswere transferred during the year to the Investor Education and Protection Fund.

Mergers and Acquisitions

The merger with GSK CH has been in line with the Company's strategy to build asustainable and profitable Foods & Refreshment (F&R) business in India byleveraging the megatrend of health and wellness. The merger has allowed significant valuecreation for all stakeholders and enabled us to drive better salience in a local context.Your Company seamlessly executed one of the largest FMCG acquisitions in India virtuallyamidst lockdown in the country. Through the merger we have successfully integrated largebase of vendors onboarded distributors. We are designing our Go-To-Market plan to ensurethat the combined strength of erstwhile GSK CH and HUL is leveraged in the market-place.During the year we also completed the integration of the acquired business into the HULSAP-ERP platform.

We continue to collaborate with GSK under the consignment selling model to acceleratethe growth momentum of the Over the Counter (OTC) – Oral Health Care (OH) businessand leverage on HUL's Go-To-Market capabilities. The merger also brought with it a greatopportunity for the HUL business to leverage the learnings of medical marketing andengaging with chemist channel for the larger HUL portfolio.

Acquisition of female intimate hygiene wash brand ‘VWash'

During the year your Company completed the acquisition of female intimate hygienebrand VWash. The addition of this brand has further strengthened our position in the fastgrowing ‘health and hygiene' segment. The brand is now fully integrated into ourBeauty & Personal Care portfolio and is performing well.

Particulars of Loan Guarantee or Investments

Details of loans guarantee or investments made by your Company under Section 186 ofthe Companies Act 2013 during financial year 2020-21 are appended as an Annexure to thisReport.

Governance Compliance and Business Integrity

The Legal function of the Company continues to be a valued business partner thatprovides solutions to protect your Company and enable it to win in the volatileuncertain complex and ambiguous environment. Through its focus on creating ‘valuewith values' the function provides strategic business partnership in the areas includingproduct claims mergers and acquisitions legislative changes combatting unfaircompetition business integrity and governance. As the markets continue to be disruptedwith newer technologies and ever-evolving consumer preferences the need to have aframework around data security and privacy is paramount. Your Company continues to ensureit has an appropriate framework and safeguards for data privacy of its stakeholders withenhanced legal and security standards. The legal function of your Company continues toembrace newer technologies to the make the function future ready to support the growthagenda of the business. Your Company is of the view that the menace of counterfeits can beeffectively addressed if enforcement actions are supplemented with building awarenessamongst the consumers of tomorrow. Your Company continued to engage with variousstakeholders including e-Commerce Channel Partners Industry Bodies and Regulators to curbthe menace of counterfeiting on the e-Commerce platforms.

One of the key activities undertaken by your Company in this direction is propagatingintellectual property awareness particularly among school students. Your Company believesit is important to educate students on intellectual property and build awareness andunderstanding of the subject so that students start respecting intellectual propertyrights from a young age. During the year we launched a digital version of ourintellectual property awareness programme for school students to enhance reach of theprogramme.

The Legal function of your Company works with leading industry associations nationaland regional regulators and key opinion formers to develop a progressive regulatoryenvironment in the best interest of all stakeholders.

Business Integrity

Our principles and values apply to all our employees through our Code and CodePolicies. The focus of your Company is very much on growth in line with our values not ongrowth at any cost. During the year the Code of Business Principles were refreshed toinclude the provisions of living wage to our employees ethical data use transparency anda greater focus on safety and mental wellbeing. Our employees undertake mandatory annualtraining on these Policies via online training modules and an annual Business IntegrityPledge. During the year your Company organised offline training sessions for all bluecollared employees across the Company. Our Business Integrity governance frameworkincludes clear processes for dealing with Code breaches.

During the financial year we closed 66 incidents across all areas of our Code and CodePolicies with 45 confirmed breaches. During the year we terminated the employment of 10employees as a consequence of such breaches. Our data around code breaches providesincreasing insights into exactly what the issues are and where-and we are focusing onunderstanding how to prevent behaviours that lead to such breaches. The Code and CodePolicies reflect our desire to fight corruption in all its forms. We are committed toeradicate any practices or behaviours that are not in line with our Code and Code Policiesthough our zero-tolerance approach to such practices.

Our Responsible Sourcing & Business Partnering Policy helps to give us visibilityof our third parties to ensure their business principles are consistent with our own.

Corporate Governance

Maintaining high standards of Corporate Governance has been fundamental to the businessof your Company since its inception. A separate report on Corporate Governance is providedtogether with a Certificate from the Statutory Auditors of the Company regardingcompliance of conditions of Corporate Governance as stipulated under Listing Regulations.A Certificate of the CEO and CFO of the Company in terms of Listing Regulationsinter-alia confirming the correctness of the financial statements and cash flowstatements adequacy of the internal control measures and reporting of matters to theAudit Committee is also annexed. Pursuant to Section 92(3) read with Section 134(3)(a) ofthe Act the Annual Return as on 31st March 2021 is available on the Company's website onhttps://www.hul.co.in/investor-relations/annual-reports/hul-annual-report-related-documents.html.

Prevention of Sexual Harassment at Workplace

As per the requirement of the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 (‘POSH Act') and Rules made thereunder yourCompany has constituted Internal Committees (IC). During the year we expanded the scopeof our POSH Policy to make it more inclusive and gender neutral detailing the governancemechanisms for prevention of sexual harassment issues relating to employees across gendersincluding employees who identify themselves with LGBTQ+ community.

While maintaining the highest governance norms the Company has appointed externalindependent persons who have prior experience of in the areas of women empowerment andprevention of sexual harassment as Chairpersons of each of the Internal Committees.During the year 5 complaints with allegations of sexual harassment were received by theCompany and they were investigated and resolved as per the provisions of the POSH Act. Tobuild awareness in this area the Company has been conducting induction/refresherprogrammes in the organisation on a continuous basis. During the year your Companyorganised offline training sessions for all blue collared employees across the Companywhich included POSH as one of the topics of training.

Related Party Transactions

In line with the requirements of the Companies Act 2013 and the Listing Regulationsyour Company has formulated a Policy on Related Party Transactions which is also availableon the Company's website at https://www.hul.co.in/Images/policy-on-materiality-of-rpt-and-dealing-with-rpt_tcm1255-547442_1_en.pdf.The Policy intends to ensure that proper reporting approval and disclosure processes arein place 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 at Arm's Length basis. No Material Related Party Transactions i.e.transactions exceeding 10% of the annual consolidated turnover as per the last auditedfinancial statement were entered during the year by your Company. Accordingly thedisclosure of Related Party Transactions as required under Section 134(3)(h) of theCompanies Act 2013 in Form AOC-2 is not applicable.

Board of Directors and Key Mangerial Personnel

Mr. Srinivas Phatak currently Executive Director Finance & IT and Chief FinancialOfficer of the Company has been elevated to the position of Executive Vice PresidentGlobal Financial Control and Risk Management Unilever and will be a part of theUnilever's Finance Leadership Executive Team. Based on the recommendation of Nominationand Remuneration Committee and Audit Committee the Board of the Directors have approvedthe appointment of Mr. Ritesh Tiwari as an Executive Director Finance and Chief FinancialOfficer of the Company. Mr. Ritesh Tiwari will join the Board of Directors of the Companywith effect from 1st May 2021 subject to necessary statutory approvals. The Board placeson record its appreciation for the leadership and invaluable contribution made by Mr.Phatak during his tenure as Executive Director Finance and IT and Chief Financial Officerof the Company.

The Company has sought approval of the Members of the Company through Postal Ballot forappointment of Mr. Ritesh Tiwari as a Whole-time Director of the Company designated as anExecutive Director Finance and Chief Financial Officer for a period of 5 (five) yearswith effect from 1st May 2021 liable to retire by rotation. As per the provisions of theAct the Independent Directors are not liable to retire by rotation. The IndependentDirectors of your Company have given the certificate of independence to your Companystating that they meet the criteria of independence as mentioned under Section 149(6) ofthe Companies Act 2013 and the Listing Regulations. All other Directors except theManaging Director will retire at the ensuing Annual General Meeting and being eligibleoffer themselves for re-election.

The details of training and familiarisation programme and Annual Board Evaluationprocess for Directors have been provided in the Corporate Governance Report. The policy onDirector's appointment and remuneration including criteria for determining qualificationspositive attributes independence of Director and also remuneration for key managerialpersonnel and other employees forms part of the Corporate Governance Report of thisAnnual Report.

During the year eight meetings of the Board of Directors were held. The details ofmeetings held and attended by each Director are detailed in the Corporate GovernanceReport which forms part of this Annual Report.

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 Chairman and Managing Director and has Functional/BusinessHeads as its members.

During the year the Board of Directors approved the appointment of Mr. Ritesh Tiwarias an Executive Director Finance and Chief Financial Officer and a member of ManagementCommittee with effect from 1st May 2021 in succession to Mr. Srinivas Phatak who willcease to be a member of Management Committee consequent to his elevation to the positionof Executive Vice President Global Financial Control and Risk Management Unilever.

Auditors

M/s. B S R & Co. LLP Chartered Accountants were re-appointed as Statutory Auditorsof your Company at the Annual General Meeting held on 29th June 2019 for the second termof five consecutive years. The Auditors have confirmed that they are not disqualified frombeing re-appointed as Auditors of the Company.

The Report given by the Auditors on the financial statement of the Company is part ofthis Report. There has been no qualification reservation adverse remark or disclaimergiven by the Auditors in their Report. During the year under review the Auditors had notreported any matter under Section 143 (12) of the Companies Act 2013.

M/s. R A & Co. Cost Accountants carried out the cost audit for applicablebusinesses during the year. The Board of Directors have appointed M/s. R A & Co. CostAccountants as Cost Auditors for the financial year 2021-22.

The Board of Directors had appointed M/s. S. N. Ananthasubramanian & Co. CompanySecretaries to conduct Secretarial Audit for the financial year 2020-21. The SecretarialAudit Report forms part of this Integrated Annual Report. The Secretarial Audit Reportdoes not contain any qualification reservation or adverse remark.

Disclosure

The details in relation to the composition of Audit Committee establishment of VigilMechanism for Directors and employees Internal Financial Controls and Director's

Remuneration Policy of the Company have been given in the Corporate Governance Reportforming part of this Annual Report.

No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impacts the going concern status and Company's operations in future.

Compliance with Secretarial Standards

The Company has complied with all the applicable provisions of Secretarial Standard onMeetings of Board of Directors (SS-1) Revised Secretarial Standard on General Meetings(SS-2) Secretarial Standard on Dividend (SS-3) Secretarial Standard on Report of theBoard of Directors (SS-4) respectively issued by Institute of Company Secretaries ofIndia.

Stakeholder Engagement

Our multi-stakeholder model aims to respect the interests of and be responsive towardsall stakeholders.

Stakeholder engagement and partnership are essential to grow your Company's businessand to reach the ambitious targets set out in the Compass sustainability commitments. TheCoBP which is the statement of values and represents the standard of conduct for everyoneassociated with your Company and the Code Policies guide how we interact with ourpartners suppliers customers employees shareholders Government Non - GovernmentalOrganisations (NGOs) trade associations and industry bodies. Through the underlyingstandards set in CoBP and Code policies your Company is committed to transparencyhonesty integrity and openness in all its engagements with the various stakeholders.

Outlook

The year 2020-21 saw unprecedented disruption to lives and livelihoods across the worldand India was no exception. The economy declined sharply during first half of the fiscalyear as the country grappled with the pandemic however effective measures taken by theGovernment of India and the Reserve Bank of India helped the Indian economy to recover.Rapid rollout of vaccines coupled with Government's efforts on stimulating growth improvedconsumer sentiments. Notwithstanding these encouraging developments the Covid-19 pandemicis far from over. The trajectory of the pandemic still remains unpredictable to a verylarge extent with country already witnessing a second wave of Covid-19. Our overridingpriority remains therefore to protect lives and livelihoods. We have alreadydemonstrated our ability to navigate through such a volatile and uncertain externalenvironment and being well placed to deliver to the needs of our multiple stakeholders. Weremain watchful of the situation while focusing on driving volume led competitive growth.

Even though conditions will remain unpredictable and we will be living with the effectsof Covid-19 for some time we remain confident of the medium to long-term growth prospectsof the FMCG sector. Our people have shown their resilience and commitment to rise in themost difficult circumstances. With our strong portfolio of trusted brands industryleading capabilities resilient workforce and a clear Compass strategy guiding ourdecisions we are well placed to deliver consistent competitive profitable andresponsible growth.

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 judgements 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.

Appreciations and Acknowledgements

Your Directors place on record their deep appreciation to employees at all levels fortheir hard work dedication and commitment in particular during this unprecedented year.The Directors place on record their special gratitude toward the front line employees whowere working in our factories and in the market to ensure that the Company's productsreach to the consumers. The enthusiasm and unstinting efforts of the employees haveenabled the Company to remain an industry leader.

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 distributors retailers business partnersand others associated with it as its trading partners. Your Company looks upon them aspartners in its progress and has shared with them the rewards of growth. It will be yourCompany's endeavour to build and nurture strong links with the trade based on mutuality ofbenefits respect for and co-operation with each other consistent with consumerinterests.

Your Directors also take this opportunity to thank all Shareholders Clients VendorsBanks Stock Exchanges Government and Regulatory Authorities both at the Central andState level for their continued support. The co-operation extended by the Government andRegulatory Authorities across the country during this year enabled the Company to servethe consumers with health and hygiene essential products.

On behalf of the Board
Sanjiv Mehta
Chairman and
Managing Director
Mumbai 29th April 2021 (DIN: 06699923)

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