Annual Report of HUL

7/31/2019 Annual Report of HUL

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today and tomorrow

Serving our consumers,

Hindustan Unilever is India's largest Fast Moving

Consumer Goods Company. We meet everyday

needs of mi ll ions of Indians, right f rom the

morning cup of tea to brushing at bedtime.

Our brands touch the lives of more than 700

million Indians.

It is this relationship with our consumers that we would like

to build upon and strengthen. We will continue to straddlethe consumer price pyramid to meet t he needs and

aspirations of diverse consumers across India.

Our stated strategy is to grow our business competitively,

prof it ably and sustainably. The key pil lars to achieving

this are:

Winning with brands and innovationWinning in t he market placeWinning through continuous improvementWinning wit h people

During the year, we have made signif icant progress on eachof t hese thrust areas. We are well placed to leverage the

tremendous opportunity in a fast growing market like India

by serving and del ight ing our consumers.

Annual Report 2009-10


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Chairmans LetterDear Shareholders,

My warm greeti ngs to al l of you.The year 2009-10 has been yet another challenging year forthe global markets. The resilience shown by the Indianeconomy in this challenging context is particularlyheartening. This bodes well for the long-term growthprospects of India which continues to be amongst the highgrowth economies in t he world today. However, there arestill some pressure points which need to be addressed tosustain this high growth. One of t he key immediate issues isfood inf lat ion which has remained at high levels for over a

year. This, along with firming up of commodity costs hascreated an infl ati onary business environment.

FMCG market s cont inued t o grow albei t at a slower pace.In addition, the strong growth potential of the Indianmarket has att racted many new compet it ors result ing ina substantial increase in t he competi t ive int ensit y acrosscategories. This has result ed in aggressive pr ici ng act ions

as wel l as heightened media and t rade spends. We havetaken decisive act ions to defend our l eadership posit ionand t o furt her st rengthen our compet it iveness, t hrough acombination of innovation, right pricing and competitivelevels of advertising investment. These timely actionshave resulted in an acceleration of volume growththrough the year.

In thi s chall enging environment, your Companyregistered an overall growth of 6.4%in 2009-10 while t he

domesti c consumer business grew by nearl y 9%. Thegrowth momentum improved through the year withdouble-digit volume growt h in the last quart er. During theyear, operating margin was improved by 15 basis pointscompared to t he previous year, despit e a signif icantincrease in i nvestment behind brand support . Over t helast fi ve years, your Company has performed well wit h aCAGR of 10%for total sales and 11.5%for FMCG sales.

02 Hindustan Unilever Limited


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Our growt h st rategy has been consistent t hrough thisperiod. We continue leveraging our deep consumer insightsand strong portfolio of brands to drive penetration andincrease consumption. At the same time, we are buildingnew capabilities and expanding our portfolio to win withconsumers, categories, segments and channels of thefuture. We have stepped up innovat ions not j ust in our corecategories but also in the emerging segments of tomorrow.We are driving market development of new categories li keHair Condit ioners, Deodorant s and Soupy Snacks. Equally,we have been strengthening our go-to-market capability,aiming to significantly increase our rural and urbandist ributi on. This will substant ially improve the availabili t y

Your Company has always st ood f or sust aidevelopment. I am pleased to inform you that this yeare publishing our first sustainability report. Thishowcase t he Company's posit ive impact on t he ecosociety and the environment. I firmly believe that create a sustainable model that works for consucustomers and communit ies, t he business anshareholders wil l be rewarded.

In conclusion, I wish to reiterate t hat we remain commto competi t ive, profi table and sustainable growth. Wbelieve that t he signif icant longer t erm opport unity inwil l result in a substantial step-up in competi t ive inte

of our products across the length and breadth of thecountry and furt her st rengthen our consumer base.Our cont inued effort s in reducing our cost base have helpedus support the increased investment behind our brands andat the same time sustain the profitability of the business.These efforts included leveraging the scale of Unilever inglobal procurement to manage commodit y costs. YourCompany has received enormous support from Unileverover the years and will continue to leverage Unilever'sbrands, t echnologies, business processes, global scale and

best practi ces.

During the year, Unilever launched a renewed, bold visionfor the Company to double the size while improving itsenvironmental footprint. Your Company will continue tobenefit from the high priority that Unilever places onDeveloping and Emerging markets which now account f orhalf of t he global business.

We will strongly defend our leadership positions whthe same time invest for the future. Our portfobrands, our people and our focus on contiimprovement through t he business will remain our sof competi t ive advantage.

I take this opportunity to thank you for your contsupport and look forward to the same in the future.

Wit h warm regards,

Harish Manwani



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SEGMENTAL RESULT*TOTAL EXPENDITURE

16%Advert isingCosts

6%Staff Costs

6%Ut il it ies, Rent,Repairs, etc

6%Carriageand Frieght

1%Depreciation

7%OtherExpenditure

58%Materials 42.2%Soaps andDetergents46.2%Personal

Products

11.4%Beverages

0.2%Foods0.5%Ice Creams

2.1%Exports

(-)2.6%Other Operation* Excludes net Unallocated expenditure, Taxation charge & net Financial ite


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To do this successful ly, consumerunderstanding is vital. We are constantlyobserving where and how consumersshop for and use our brands. It is thisundying curiosity that enables us to beclear about what our brands need to do.

We use this clarity to shape ourinnovation programme by developingproducts and solut ions that are relevantfor consumers in India. We leverageUnilever's global technology expertiseand the research and developmentcapabilities in India to bring innovative

products that meet the needs ofconsumers within India.

Some of our maj or innovations this yearhave been: Pureit Compact-in-home

water purifier

an affordable safedrinking water solution for low-incomeconsumers priced at Rs. 1,000, KnorrSoupy noodles providing wholesomenutrition to children's fun snackingmoment s, Brooke Bond Sehatmand teaoffering combined benefits of healthwith immunity for low-income ruralconsumers and the launch of Cif multi -purpose cleaner.

Equal ly, t here have been severalinnovations on our existing big brandsthat delivered significant superior

product and consumer experience. Theseincluded the relaunch of Lux, Wheel,Cli nic Plus, Hamam, Liri l and Pears.

Winning withbrands and innovationBrands and innovation are at t he heart of everyt hing we do. Webelieve that our brands remain fresh, young and relevant if we

are constant ly innovating behind them. Innovat ion in t erms ofproducts, propositions, communication and even mediadeployment. As incomes and aspirat ions change, consumerhabits, att it udes and behaviour change too. This constant changeis something t hat we are obsessed about. An obsession to ensurethat our portfolio of brands is evolving continuously to exploitthese changes.



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Winning inthe market place

While General Trade will continue to bethe primary channel for distributionaddressing diverse consumers across both

urban and rural markets, Modern Trade isan emerging channel for the future andwinning in this channel is one of the keypriorit ies for us. We invested ahead of t imeto build capabilities to serve our ModernTrade customers bett er while at the sametime partnered with them to win withshoppers at t he point of sale.

Distr ibution has always been acompetitive advantage for us. We arefurther building on this by significantlyincreasing our direct coverage while alsoimproving the quali ty of coverage.

We have deployed an end-t o-endtechnology solution which helps reduceinventory cycles while enabling opt imumservice levels. All our salesmen areequipped with hand-held devices which

help to improve on-shelf availability ofour products while also buildingassortment at individual store level.

Similarly, our merchandisers have beenequipped with hand-held devices toimprove in-store display of our productsso that our products are top-of-mindwhenever a shopper makes a purchase.This year, we rolled out a unique andinnovative concept of 'Perfect Stores' aspart of our endeavor to win withconsumers at t he point of sale.

Proj ect Shakti represents a unique andunmatched rural distribution model andoffers us tremendous opportunities inaccessing rural consumers. We intend to

fur ther leverage the Shakti network tosignif icantly enhance our directdistribution coverage in rural markets.This wil l not only ext end our presence in'difficult-to-reach' stores in rural areasbut also st rengthen the Shakt i network.

The biggest opportunity lies in growing the size of our marketthrough innovations and activit ies that drive marketdevelopment. Towards this end, we wil l further st rengthen and

broaden our relat ionship with our customers working togetheron areas of mutual benef it such as consumer research, shopperbehaviour and merchandising. Outstanding customer service andgreat in-store execution will be key to sustain winningrelationships with our customers and to grow our markets.



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Continuous improvement is key t odeveloping a customer and consumer-led,agile value chain. In this value chain, we

have tremendous opportunity forimproving efficiencies by leveraging ourscale. We are already doing so in oursupply chain in the area of procurementand rapid deployment of appropriatetechnologies.

This has enabled reduct ion in inventories,improved product freshness and time-to-shelf, which has resulted in significantreduction of working capital.

We prioritise speed and flexibility in oursupply chain to deliver growth. We are doingthis through simple ideas. For example, in

some of our detergent factories we arerunning 'twin track' on single productionlines. This has helped us to nearly double ourproduction thus enabling better customerservice while improving operatingefficiencies. Apart from this, today most ofour production lines have developed thecapabil it y of quick changeovers to meet themarket demand.

Our effort is to continuously reducebusiness waste and el iminate losses inour supply chain using TPM as a key

enabler. The savings generated areploughed back into our products. Wecontinue to drive our supply chain todeliver top-quality products with worldclass service at a compet it ive cost .

Return on market ing i nvestments (ROMI)is another area where we drivecontinuous improvement. ROMI is aboutmaximising the effecti veness of ouradvertising, promotional and tradeinvestments. We have developedadvanced marketing mix modellingtechniques that allow us to assess all themarketing levers to drive growth andsuper ior y ie lds f rom market inginvestment. For example, we haveidentif ied t he media elast icit y of each ofour brand which helps us to optimise ouradvert ising spends.

Winning throughcontinuous improvement

Delivering competitive, profitable and sustainable growthrequires a philosophy of continuous improvement. This meansbeing fast and flexible in the supply chain while keeping costscompetit ive. It also requires us to make the most of our scaleand aim for t he best return on every rupee spent .



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Winning withpeopleAt HUL, people are our inherent strength. Attracting,

developing and retaining talent is central to our HR strategy.It is vit al that we have the right talent and organisation tomatch our growth ambit ion and also to keep pace wit h thechanging business environment. Towards this end, we haveundertaken a detailed talent & organisat ional readinessassessment to review t he skil ls and capabil it ies as alsoorganisat ional st ructures needed to deliver our business goals.

Key to a great talent strategy is to firstattract top talent from the market. Wecontinue to put significant impetusbehind improving the HUL EmployerBrand i n top business schools.

A winning organisation must have ac u l t u r e t h a t e n c o u r a g e s h i g hperformance. Our rigorous performancemanagement processes are aimed atidentifying the best performing teamsand individuals. Equally, our rewardsystems are designed t o encourage ahigh performance culture by providing

super io r r ewards fo r super io rperformance.

We have designed and launched novelcapability building initiatives such as

e-learning (self paced learning). We providechallenging overseas assignments withother Unilever businesses to our youngmanagerial talent. These initiativescoupled with leadership coaching androbust ski ll and competency assessmentof each individual employee have furt herstrengthened our talent developmentinitiatives.

This year, we shifted our Head Office inMumbai t o a new campus. We leveragedthis as an opportunity to build a moreinclusive, flexible and connected

organisation. This, we believe, willcontribute significantly to inspiring ourpeople and motivating them to succeedcollectively as a team and deliver ourgrowth ambit ion.



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Remembering Prof. C.K. Prahalad

2010 marked the unfort unate and unt imely passing away of our director Prof . C. K. Prahalad.Prof. Prahalad was on our Board as an independent non-executive director since April 2000.

Management leaders across the globe t hrived on his wisdom. At Hindustan Unilever Limit ed,we frequently looked up to him for support and advice. He was always with us.

We will always cherish the fond memories of a leader who showed us new paths and gave usthe confidence to walk on them.



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Board of Directors

Mr. Harish Manwani (56) assumed charge as the Non-Execut ive Chairman of t he Company wit h

effect from 1st July, 2005. He is also President Asia & Africa, Central & Eastern Europe and amember of the Unilever Execut ive (UEX).

Mr. Manwani j oined t he Company in 1976. He j oined t he Board of the Company in 1995 as aDirector responsible for the Personal Products business. In addition, he held regionalresponsibility as the Category Leader for Personal Products for the then Central Asia & MiddleEast (CAME) Group. In 2000, Mr. Manwani moved to UK as Senior Vice President for t he Global HairCare & Oral Care Categori es, and in early 2001, he was appoint ed President Home & PersonalCare (HPC), Lati n America Business Group. He also served as the Chairman of Unilever 's Lati nAmerica Advisory Council . In 2004, he was appoint ed as the President and CEO of the HPC NorthAmerica Business Group, and in April 2005, was elevated to the Unilever Executive as thePresident Asia & Afr ica.

Mr. Manwani is an Honours Graduat e from t he Mumbai University and holds a Master's Degree inManagement Studies. He has also attended t he Advanced Management Program (AMP) at HarvardBusiness School.

Mr. Manwani is a member of t he Compensat ion Commit tee of t he Company.

Mr. Sridhar Ramamurthy (45) j oined t he Company in May 1989 and worked i n a number of f inanceand commercial roles in India t il l December 2002 spanning Internal Audit, Factory Commercial,Post -acquisit ion Int egrat ion of TOMCO with HLL, Supply Chain and Corpor ate Accounts.

In January 2003, Mr. Sridhar moved to Singapore to take up the posit ion of Vice President -Finance and Control ler, Home and Personal Care Business Group f or Unil ever in Asia. Wit h thechanges to t he Unil ever organisat ion duri ng 2005-2008, his role expanded over the years and thelast role was of Vice President Finance and Contr oller, Unil ever Asia, Afri ca, Middle East , Turkey,Centr al & Eastern Europe (AACEE), the largest of the 3 regions of Unilever.

On his ret urn t o India, Mr. Sridhar was appointed as Executi ve Director Finance & IT and ChiefFinancial Off icer of the Company, ef fect ive July, 2009.

Mr. Sridhar is a Gold Medall ist Chartered Accountant . He is also a quali fi ed Cost Accountant andCompany Secret ary. Mr. Sri dhar i s a Commerce Graduat e from R. A. Podar College, Mumbai.

He is a member of the Shareholders/ Investors Grievance Commit tee of the Company. Mr. Sri dhar Ramamurt h

Chief Financial Off icer

Mr. Nit in Paranjpe (47) j oined the Company as a management t rainee in 1987. In his early yethe Company, Mr. Paranj pe worked as Area Sales Manager-Deter gents and t hen Product ManaDetergent s. In April 1996, he became the Branch Manager, Chennai and in February 1999 heappointed as a member of t he Proj ect Mil lennium t eam. In 2000, he moved to Unilever Lonand was involved in a review of the organisation structure. During 2001, he was an execassistant to the Unilever Chairman & Executi ve Commit tee in London.

On his ret urn t o India in 2002, Mr. Paranj pe became the Category Head-Fabric Wash & RegBrand Director (Asia) f or several Laundry and Household Cleaning (HHC) Brands. In 200became Vice President - Home Care (Laundry & HHC) Indi a, responsibl e for the Home business. He was appointed as the Execut ive Director f or t he Home & Personal Care busineMarch 2006. Mr. Paranjpe was appoint ed as the Managing Director and Chief Executive Off icthe Company in Apri l 2008. He is also an Execut ive Vice President of Unil ever CompanSout h Asia.

Mr. Paranj pe holds a Bachelor 's Degree in Engineering (Mechanical) and is MBA in Market ing JBIMS, Mumbai.

Mr. Paranjpe is a member of t he Shareholders/ Investors Grievance Commit tee andCompensation Commit tee of the Company.

Mr. Harish Manwani,

Chairman

Mr. Nit in Paranj pe,Managing Dir ector and Chief Execut ive Off icer



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Mr. A. Narayan (58) i s the Non-Executi ve Chairman of ICI India Limited, now known as AkzoNobleIndia Limit ed. Start ing as a Management Trainee wit h ICI India in 1973, he grew t hrough diversefunct ions and businesses, including serving in senior posit ions like t he CEO of the Fert il izer andExplosives businesses of ICI Indi a. He was also a Corporat e Planning Manager at ICI Group headquarters in London before serving as Managing Director of ICI India over 1996 - 2003. During theperiod 2005 - 09, Mr. Narayan was the President & CEO of BHP Bil li ton India, before becoming it sNon-Execut ive Chairman.

Mr. Narayan is a B.Tech. f rom IIT Kanpur and also has formal quali f icat ions in Law. He was aFellow in Int erdi scipli nary Sciences at t he University of Rochester, USA. Mr. Narayan was aCommonwealth Scholar at the Manchester Business School in 1991 and a Fellow at the AspenInst it ute, Colorado, USA in 1998.

Mr. Narayan j oined t he Board of the Company as an Independent Director in 2001. Mr. Narayan isthe Chairman of Shareholders/ Investors Grievance Commit tee, Remunerati on Commit tee ofthe Company. He is also a member of Audit Commit tee of t he Company.

Mr. A. Narayan,Independent Director

Mr. S. Ramadorai ,Independent Director

Mr. S. Ramadorai (65), is the Vice-Chairman of Tata Consult ancy Services Limi ted. He is also onthe Boards of a number of reputed companies and educational institutions - Tata Industries,Tata Technologies, Bombay Stock Exchange and the MIT Sloan School of Management. Mr.Ramadorai was conferred the esteemed Padma Bhushan by the President of India in recognit ionof hi s contr ibut ions to IT industry of t he country. In 2008, Mr. Ramadorai was recognised as the'Internat ional CEO of t he Year' at the 14th Annual LT Bravo Business Awards and the 'Asia TalentManagement of the Year' at CNBC's 7th Asia Business Leader Award. In Apri l 2009, Mr. Ramadoraiwas awarded t he CBE (Commander of the Order of the Brit ish Empire) by Her Maj esty QueenElizabeth II f or his cont ribut ion to the Indo-Brit ish economic relat ions.

Mr. Ramadorai 's academic credent ials incl ude a Bachelors degree in Physics from DelhiUniversit y, a Bachelor of Engineering degree in Elect ronics and Telecommunications from IndianInst it ute of Science, Bangalore and a Masters Degree in Computer Science from t he Universit y ofCali forni a, USA. Mr. Ramadorai at tended the MIT Sloan School of Management's highlyacclaimed Senior Execut ive Development Program in 1993.

Mr. Ramadorai j oined t he Board of the Company as an Independent Director in May 2002. He is amember of t he Audit Commit tee and Remuneration Commit tee of t he Company.

Mr. D. S. Parekh (65) is the Non-Execut ive Chairman of Housing Development FinanceCorporation Limited and member of several prestigious committees appointed by theGovernment of India. Mr. Parekh has also held senior posit ions in Grindl ays and ChaseManhat tan. Mr. Parekh is recipient of the Padma Bhushan for his contr ibut ions to the nationaleconomy and publi c poli cy. Indian Indust ry, Government and Media has also honoured him wi thseveral awards including, Outstanding Business Leader of the year 2008 by CNBC and NDTVBusiness Leader of t he Year Award 2008. Internat ionall y, he has been pronounced as the f irstint ernat ional recipient of t he Inst it ute of Chartered Accountants in England and Wales'Outstanding Achievement Award - 2010. In 2008, he was recognized amongst t he 'Stars of Asia'by Business Week and has been li sted amongst the top 25 most inf luent ial people in business andf inance across Asia-Pacif ic by Asiamoney.

Mr. Parekh is widely consulted by the Government of India on a range of i ssues of nat ional importanceand has been a member of various Government appointed Advisory Committees and Task Forces whichincludes housing, financial services, capital markets and infrastructure sector reforms.

Mr. Parekh is a Commerce Graduat e and holds an FCA degree from England and Wales.

Mr. Parekh j oined t he Board of our Company as Independent Director i n May 1997. He is theChairman of t he Audit Commit tee of t he Company.

Board of Directors

Mr. D. S. Parekh,

Indepedent Director



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Mr. Pradeep Banerj ee (51) j oined t he Company as a Management Trainee in 1980. He has held aseries of assignment s in Supply Chain, Research & Development and Categories. Mr. Banerj eebecame the Vice President -Technical (Home and Personal Care) i n 2003 and later moved to UKin 2005 as Vice President -Global Supply Chain f or Personal Care Category. He served as the VicePresident for Global Procurement in Singapore.

Mr. Banerj ee was appoint ed as Execut ive Direct or, Supply Chain of the Company in March,2010. He holds a Bachelors Degree in Engineering (Chemical) f rom IIT Delhi .

Mr. Pradeep Banerj ee,Executive Director,Supply Chain

Mr. Gopal Vit tal (43) has 18 years experience in Market ing & Sales in t he FMCG market , includSkin Care, Soaps and Laundry. Mr. Vit tal has worked both in India and Asia for Unilever f or oveyears, following which he was the Marketing Director at Bharti Airt el f or a period of two yeleading the Market ing and Distr ibut ion st rat egy for the group. He rej oined the Company in 2008 as the Executi ve Director f or Home & Personal Care business.

Mr. Vit tal is an alumnus of Madras Chri st ian College and has completed his MBA from IIM, Kolk

Mr. Gopal Vittal,Executive Director,Home & Personal Care

Dr. R. A. Mashelkar (67), CSIR Bhatnagar Fellow, is presently also the President of Global Research

Alliance, a network of publicly f unded R&D inst it utes from Asia-Pacifi c, Europe and USA. He servedas the Director General of Council of Scient if ic and Industr ial Research (CSIR) f or over eleven years.He was also the President of Indian Nat ional Science Academy and t he Inst it ut ion of ChemicalEngineers (UK). Dr. Mashelkar i s only t he third Indian engineer t o have been elected as the Fellow ofRoyal Society (FRS), London in the twent iet h century. He is the fi rst Indian to have been elected asthe Foreign Fellow of Aust ral ian Technological Science and Engineer ing Academy.

In 1998, Dr. Mashelkar won t he JRD Tata Corporat e Leadership Award and he was the f irst scient ist towin i t . In 2005, he became the f irst Asian scient ist t o receive the award of 'Stars of Asia' at t he handsof George Bush (Sr.), the former President of USA. As the Chairman of the Standing Commit tee onInformation Technology of World Intellectual Property Organisation (WIPO), as a member of theInternat ional Int ellectual Propert y Rights Commission of UK Government and as the Vice-Chairmanon Commission in Intellectual Propert y Rights, Innovat ion and Publi c Healt h (CIPIH) set up by WorldHealth Organizati on (WHO), Dr. Mashelkar brought new per specti ves on the issue of IPR and thedeveloping world's concerns. Dr. Mashelkar has won over 50 awards and medals in t he fi eld ofscience and technology and was honoured by the President of India wi th t he Padma Shri (1991) andwit h the Padma Bhushan (2000), in recogniti on of his cont ribut ion to nation buildi ng. He has alsowon t he 'Punyabhushan Award' at the hands of t he legendary Dr. A. P. J. Abdul Kalam.

Dr. Mashelkar j oined t he Board of the Company as an Independent Direct or i n Apri l 2008. He is amember of t he Audit Commit tee and Remunerati on Commit tee of t he Company.

Dr. R. A. Mashelkar,

Indepedent Director



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Management Commit tee

Mr. Nitin Paranjpe,

Managing Direct or and Chief Executive Offi cer

Mr. Sridhar Ramamurthy,

Chief Financial Officer

Mr. Dev Bajpai,Executive Director,Legal and Company Secret ary

Mr. Hemant Bakshi,Executive Director,Sales and Customer Development

Mr. Gopal Vit t al,

Executive Director,Home & Personal Care

Ms. Leen a Nair,Executive Director,Human Resources

Mr. Shr ij eet Mishra,Executive Director,Foods

Mr. Pradeep Banerj ee,Executive Director,Supply Chain



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NoticeOf the Annual General Meeting

ORDINARY BUSINESS

SPECIAL BUSINESS

1. To receive, consider and adopt the Audited Profit andLoss Account for the financial year ended31st March, 2010, the Balance Sheet as at that date andthe Reports of the Directors and Auditors thereon.

2. To confirm the payment of Interim Dividend and todeclare a Final Dividend on Equity Shares for thefinancial year ended 31st March, 2010.

3. To elect and appoint Directors in place of the Directorsretiring by rotation.

4. To appoint M/s. Lovelock & Lewes, CharteredAccountants, Mumbai as Statutory Auditors of the

Company, to hold office from the conclusion of thisAnnual General Meeting until the conclusion of nextAnnual General Meeting and to fix their remunerationfor the financial year ending 31st March, 2011.

5. To consider and if thought fit, to pass with or withoutmodification(s), the following resolution as an OrdinaryResolution:

"Resolved that pursuant to the provisions of Section 257and other applicable provisions, if any, of theCompanies Act, 1956, Mr. Pradeep Banerjee, who wasappointed as an Additional Director of the Company

pursuant to the provisions of Section 260 of theCompanies Act, 1956, be and is hereby appointed asDirector of the Company, liable to retire by rotation, interms of the provisions of the Articles of Association ofthe Company."

6. To consider and if thought fit, to pass with orwithout modification(s), the following resolution asan Ordinary Resolution:

"Resolved that pursuant to the provisions of Sections 198,269, 309 and other applicable provisions, if any,of the Companies Act, 1956 read with Schedule XIII tothe Act, as amended, the approval of Members of theCompany be and is hereby accorded to the appointmentof Mr. Pradeep Banerjee as the Wholetime Director of the

Company, liable to retire by rotation, in terms of theprovisions of the Articles of Association of the Company.

Resolved further that the remuneration of Mr. PradeepBanerjee in his capacity as a Wholetime Director befixed by the Board or a duly constituted Committeethereof and thereafter be revised from time to time,within the limits as approved by the Members by way ofa Special Resolution adopted at their meeting held on4th April, 2008."

7. To consider and, if thought fit, to pass w

without modification(s), the following resoluta Special Resolution:

"Resolved that pursuant to the provisions of Sectioand other applicable provisions, if any, oCompanies Act, 1956 and Article 114 of the ArticAssociation of the Company, the Company be hereby authorised to pay to its Directors (othethe Managing Director and Wholetime Directors Company), for a period of five years commencing1st January, 2011, such sum by way of commissthe Board may from time to time determineexceeding 1% (one percent) or such other percentthe Net Profits of the Company in any financial ymay be specified by the Companies Act, 1956 fromto time and computed in the manner proin Section 198(1) of the Companies Act, 19Rs. 90 lakhs in aggregate whichever is lower."

Notes:

1. An Explanatory Statement pursuant to Se173(2) of the Companies Act, 1956, relating tSpecial Businesses to be transacted at the meis annexed hereto.

2. In accordance with the Articles of Association Company, all Directors (except Mr. Nitin Parawho has been elected as the Managing Directorterm of 5 years effective from 4th April, 2008), every year and, if eligible, offer themselve

re-appointment at the Annual General Meetingrelevant details of Directors seeking appointre-appointment as Directors under item nos. 3 above, are provided at page nos. 13 to 15 of this R

The details of Directorships and CommMemberships of members of the Board of Direcprovided at page nos. 20 and 21 of this Report.

3. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTTO APPOINT A PROXY TO ATTEND AND VOTE ON HISBEHALF, AND THE PROXY NEED NOT BE A MEMBER OCOMPANY. The instrument of proxy in order effective, should be deposited at the Registered of the Company, duly completed and signed, no

than 48 hours before the commencement omeeting. A Proxy Form is annexed herewith. Psubmitted on behalf of the limited compsocieties, etc., must be supported by an approresolution/ authority, as applicable.

4. The Register of Members and Share Transfer of the Company will remain closed from Sat10th July, 2010 to Monday, 26th July, 2010 days inclusive).

Notice is hereby given that the 77th Annual General Meeting of Hindustan Unilever Limited will be heTuesday, 27th July, 2010 at 3.00 P.M. at Birla Matushri Sabhagar, 19, Marine Lines, Mumbai- 400 020, to transac

following businesses:



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11. Shareholders desiring any information relating to theaccounts are requested to write to the Company at anearly date so as to enable the management to keep theinformation ready.

Registered Office : By Order of the Board165/166, Backbay Reclamation,Mumbai - 400 020.

Sridhar Ramamurthy25th May, 2010 CFO & Company Secretary

The Board of Directors of the Company had appointedMr. Pradeep Banerjee as Additional Director of theCompany with effect from 1st March, 2010. As per theprovisions of Section 260 of the Companies Act, 1956,

Mr. Pradeep Banerjee will hold office only upto the date ofthe forthcoming Annual General Meeting of the Company,and is eligible for appointment as Director. The Board hadalso appointed Mr. Pradeep Banerjee as Executive Director,Supply Chain with effect from 1st March, 2010, which issubject to the approval of the Members.

The Company has received Notices under Section 257 ofthe Companies Act, 1956 from certain members of theCompany along with the requisite amount, proposingappointment of Mr. Pradeep Banerjee as Director of theCompany, liable to retire by rotation.

A brief resume of the Mr. Pradeep Banerjee and nature ofhis expertise in specific functional areas is provided at

page no. 15 of this Report.

In so far as the remuneration of Mr. Pradeep Banerjee as aWholetime Director of the Company is concerned, theshareholders have by a Special Resolution at the AnnualGeneral Meeting held on 4th April, 2008 approved themaximum limits within which the authority has beendelegated to the Board to fix the remuneration of theWholetime and Managing Directors of the Company.

None of the Directors, except Mr. Pradeep Banerjee, areconcerned or interested in the appointment andremuneration payable to him as a Wholetime Directorof the Company. The terms of appointment of

Mr. Pradeep Banerjee, as stated in this notice, may betreated as the abstract of terms and conditions ofappointment and memorandum of interest under Section302 of the Companies Act, 1956.

The copy of relevant resolution of the Board with respect tohis appointment is available for inspection by Members atthe Registered Office of the Company during business hourson any working day till the date of the forthcoming AnnualGeneral Meeting.

EXPLANATORY STATEMENTItem No. 5 and 6

5. The final dividend for the financial year ended31st March, 2010 as recommended by the Board, ifapproved at the meeting, will be paid on or after Friday,30th July, 2010 to those Members whose names appearin the Company's Register of Members as on the book

closure dates.

6. Members holding shares in electronic form are herebyinformed that bank particulars registered against theirrespective depository accounts will be used by theCompany for payment of dividend. The Company or itsRegistrars cannot act on any request received directlyfrom the Members holding shares in electronic form forany change of bank particulars or bank mandates. Suchchanges are to be advised only to the DepositoryParticipant of the Members.

7. Members are requested to note that dividends notencashed or claimed within seven years from thedate of transfer to the Company's Unpaid Dividend

Account, will, as per Section 205A of the CompaniesAct, 1956, be transferred to the Investor Education andProtection Fund (IEPF). After transfer of the saidamount to IEPF, no claims in this respect lie against IEPFor the Company.

The status of the dividends remaining unclaimed/unpaid with the respective due dates of transfer isprovided at page no. 54 to this Report. Members arerequested to contact M/s. Karvy Computershare PrivateLimited/Investors Service Department of the Companyfor encashing the unclaimed dividend standing to thecredit of their account.

8. Members holding shares in electronic form are requested

to intimate immediately any change in their address orbank mandates to their Depository Participants withwhom they are maintaining their demat accounts.Members holding shares in physical form are requestedto advise any change of address immediately tothe Company/ Registrar and Share Transfer Agent,M/s. Karvy Computershare Private Limited.

9. The Securities and Exchange Board of India (SEBI) hasmandated the submission of Permanent AccountNumber (PAN) by every participant in securitiesmarket. Members holding shares in electronic form are,therefore, requested to submit the PAN to theirDepository Participants with whom they aremaintaining their demat accounts. Members holding

shares in physical form can submit their PAN details tothe Company/ Registrar and Share Transfer Agent,M/s. Karvy Computershare Private Limited.

10. For convenience of Members and for proper conduct ofthe meeting, entry to the meeting venue will beregulated by attendance slip, which is enclosed withthe Annual Report. Members are requested to sign atthe place provided on the attendance slip and hand itover at the entrance of the venue.

NoticeOf the Annual General Meeting (Contd.)



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Mr. Harish Manwani

Mr. Nitin Paranjpe

Mr. Sridhar Ramamurthy

Mr. D.S. Parekh

Mr. A. Narayan

Mr. S. Ramadorai

?Indian School of Business

?ING Groep NV

?Bombay Chamber of Commerce &Industry?Kimberly Clark Lever Private Limited?Hindustan Unilever Vitality Foundation

?Unilever India Exports Limited?Pond's Exports Limited?Hindustan Unilever Vitality Foundation

?Housing Development FinanceCorporation Limited?Infrastructure Development Finance

Company Limited?GlaxoSmithKline Pharmaceuticals Limited?HDFC Asset Management Company

Limited?HDFC ERGO General Insurance Company

Limited?HDFC Standard Life Insurance Company

Limited?Siemens Limited?Mahindra & Mahindra Limited?Hindustan Oil Exploration Company

Limited?Castrol India Limited

?The Indian Hotels Company Limited?Airport Authority of India?Borax Morarji Limited?Zodiac Clothing Company Limited?Bharat Bijlee Limited?Exide Industries Limited?WNS Global Services Private Limited?Singapore Telecommunications Limited?Lafarge India Private Limited

?ICI India Limited?Mahle Filter Systems (India) Limited?Degremont Limited

?Tata Industries Limited?Tata Elxsi Limited?Tata Technologies Limited?CMC Limited

-

-

?Pond's Exports Limited

?GlaxoSmithKline Pharmaceuticals Limited

?Mahindra & Mahindra Limited

?Siemens Limited

?The Indian Hotels Company Limited

?Infrastructure Development FinanceCompany Limited

?Castrol India Limited

?ICI India Limited

?

Mahle Filter System (India) Limited

?Tata Technologies Limited

Audit Committee- Chairman

Audit Committee- ChairmanShareholders/Investors GrievanceCommittee- Chairman


Audit Committee- MemberRemuneration Committee- Member

Audit Committee- Member

Remuneration Committee- Member


Shareholders/Investors GrievanceCommittee- Chairman


Audit Committee- ChairmanCompensation and RemunerationCommittee- Chairman

Chairmanship/Membership of theCommittee(s) of the Board of Directorsof other Companies

Name of Director Directorships held inother Companies

Board of DirectorsDirectorships/Committee Membership & Chairmanship



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Board of DirectorsDirectorships/Committee Membership & Chairmanship (Contd.)

Dr. R. A. Mashelkar

Mr. Gopal Vittal

Mr. Pradeep Banerjee

?Piramal Healthcare Limited

?Tata Consultancy Services Limited?Tata America International Corporation?Tata Teleservices (Maharashtra) Limited?Computational Research Laboratories

Limited?Tata Communications Limited?Tata Advanced Systems Limited?Asian Paints Limited?Bombay Stock Exchange Limited?IKP Investment Management Company

Private Limited?Tata Communication International Pte.

Limited?

ACCION Technical Advisors India

?Reliance Industries Limited?Tata Motors Limited?Piramal Life Sciences Limited?KPIT Cummins Infosystems Limited?Sakal Papers Limited?Thermax India Limited?ICICI Knowledge Park?IKP Centre for Technologies in Public

Health

?Kimberly Clark Lever Private Limited?Indian Soap & Toiletry Makers Association

-

?Tata Advanced Systems Limited

-?Computational Research Laboratories

Limited

?Tata Elxsi Limited

?Tata Communication International PteLimited

?Tata Teleservices (Maharashtra) Limite

?Tata Consultancy Services Limited

?Tata Industries Limited

?Piramal Healthcare Limited

?Reliance Industries Limited

?Tata Motors Limited

?Piramal Life Sciences Limited

?KPIT Cummins Infosystems Limited

-

-

Audit Committee- ChairmanRemuneration Committee Chairman

Audit Committee- ChairmanRemuneration Committee- Member

Audit Committee- MemberRemuneration Committee- Member

Compensation Committee- Chairman


Ethics and Compliance Committee-MemberExecutive Committee- Member

Shareholders/Investors GrievanceCommittee- MemberEthics and Compliance Committee-MemberExecutive Committee- MemberRisk Management Committee- MembeRemuneration Committee- Member


Nomination and RemunerationCommittee- Member





Chairmanship/Membership of theCommittee(s) of the Board of Directorof other Companies

Name of Director Directorships held inother Companies



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To the Members,

Your Company's Directors are pleased to present the 77th Annual Report of the Company along with Audited Accounts for thefinancial year ended 31st March, 2010.

1.1 Results

1. FINANCIAL PERFORMANCERs. Crores

Turnover, net of excise 17,523.80 20,239.33

Profit before tax 2,707.07 3,025.12

Net profit 2,202.03 2,496.45

Dividend (including tax on distributed profits) (1,655.97) (1,912.29)

Transfer to General Reserve (220.20) (250.00)

Profit & Loss Account balance carried forward 802.19 531.66

Twelve Monthsperiod ended

31st March, 2010

Fifteen Monthsperiod ended

31st March, 2009

Rs. Crores

Twelve Months period ended31st March, 2010

Fifteen Months period ended31st March, 2009

1.2 Category wise Turnover

Sales Others*Sales Others*

Soaps and Detergents 8,180.29 85.35 9,770.26 114.37

Personal Products 4,969.36 78.54 5,272.31 112.22

Beverages 2,119.44 22.99 2,272.29 27.22

Foods 713.97 16.81 791.25 17.05

Ice creams 228.94 2.06 229.44 5.88

Exports 1,000.15 5.10 1,567.29 8.79

Others 315.50 31.22 344.41 14.13

Less : Inter segment revenue (3.85) (7.92)

Total 17,523.80 242.07 20,239.33 299.66

* Other revenue represents service income from operations, relevant to the respective businesses.

Directors' ReportAnd Management Discussion and Analysis



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Rs. Crores (except

Net sales 17,523.80 20,23

Other operational income 201.53 38

Total 17,725.33 20,62

Operating Costs and expenses (14,975.36) (17,58

PBDIT 2,749.97 3,04

Depreciation (184.03) (19

PBIT 2,565.94 2,84

Interest Income (net) 141.13 18

PBT 2,707.07 3,02

Taxation : (604.39) (524

PAT (before exceptional items) 2,102.68 2,50

Exceptional items (net of tax) 99.35 (4

Net profit 2,202.03 2,49

Basic EPS (Rs.) 10.10 1

Twelve monthsperiod ended

31st March, 2010

Fifteen moperiod e

31st March,

1.3 Summarised Profit and Loss Account

2. DIVIDEND

3. CORPORATE OFFICE & RESEARCH CENTRE

Directors are pleased to recommend a final dividendof Rs.3.50 per equity share of the face value of Re.1/-for the year ended 31st March, 2010. The interimdividend of Rs.3.00 per equity share was paid on 23rdNovember, 2009.

The final dividend, subject to approval at the AGM on 27thJuly, 2010, will be paid to the shareholders whose namesappear in the Register of Members with reference to thebook closure from Saturday, 10th July, 2010 to Monday,26th July, 2010 (inclusive of both dates).

The total dividend for the financial year including theproposed final dividend amounts to Rs. 6.50 per equityshare and will absorb Rs. 1655.88 crores includingDividend Distribution Tax of Rs. 238.02 crores.

With the need to consolidate the multiple office locationsburgeoned across Mumbai to accommodate growing teams

and businesses of your Company and in order to synergies, the new Corporate Office of your Companinaugurated in January, 2010.

The new Corporate Office named as 'Campus' is locaAndheri; and has marked the completion of the jourbringing together your Company, physically and culunder one roof. A journey which started witBrookefields, Bangalore office merging into the offBackbay Reclamation, Mumbai in the last quarter oand ending with five other locations in Mumbai ctogether at Andheri in January, 2010.

The 'Campus' not only physically brought together difteams that were sitting apart, but also createnvironment of oneness towards the goal of perfobetter and seeing the organisation soar to newer heThe 'Campus' aims to create a flexible, open and vwork space, which enables every employee to pebetter. It leverages technology and progrworkplace practices to meet the needs of tbusiness environment.

On a like to like basis i.e. comparing the results for the financial year ended 31st March 2010 with the unaudited rfor the 12 months period ended 31st March 2009, your Company registered an overall turnover growth of 6.4

improved operating margin by 10 bps. Net Profit (after Exceptional Items) grew by 4.1%. Basic Earnings Per Share fperiod 2009-10 was Rs. 10.10.

Directors' ReportAnd Management Discussion and Analysis (Contd.)



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The new Campus is designed keeping in mind thenew trends and emerging needs of today's talent andboosts the employer brand of your Company to attractand retain talent.

As an organisation committed towards sustainability,various energy saving systems and technologies havebeen incorporated in the design of the office to drive100% recycling of water and save energy consumption.In design and spirit, the new Corporate Office trulysymbolises Company's vision to work as one and leveragesits collective strength to win in the market.

The Directors confirm that:

in the preparation of the annual accounts, theapplicable accounting standards have been followedand that no material departures have been made

from same;they have selected such accounting policies and appliedthem consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at theend of the financial year and of the profits of theCompany for that period;

they have taken proper and sufficient care for themaintenance of adequate accounting records inaccordance with the provisions of the Companies Act,1956, for safeguarding the assets of the Company andfor preventing and detecting fraud and otherirregularities; and

they have prepared the annual accounts on a goingconcern basis.

In order to avoid duplication between the Director's Reportand Management Discussion and Analysis, we presentbelow a composite summary of performance of the variousbusinesses and functions of the Company.

5.1 Economy and Markets

Over the last two years, India has limited the impact ofthe global slowdown on its growth. The GDP growth ratein the first three quarters of the financial year 2009-10

has been 6.7%. The downward pressure on GDP growthcame in the form of poor monsoons which impacted the'Kharif' (crops grown in June-September period)agricultural produce this year. While the services sectorhas been growing at a rate of over 7.9%, the industrialgrowth accelerated sharply from 2% to 11.6% over thelast four quarters. Towards the end of the fiscal year,export growth has returned to positive territory onrevival in global demand, after 13 consecutive monthsof de-growth.

4. RESPONSIBILITY STATEMENT

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5. MANAGEMENT DISCUSSION AND ANALYSIS

Though the overall GDP growth rates are encouraging,food price inflation has been a major cause of worry forover a year. Food inflation, along with firming up ofglobal commodity prices, has spilled over into prices ofdomestic commodities and services as well with the

overall consumer inflation rate hovering at over 15%for several months. The wholesale price inflationtouched 9.9% in February 2010, surpassing Reserve Bank'sestimate of 8.5% by March end.

The FMCG markets in India continue to be attractive andhave grown during the year under review. In the contextof the global slowdown, the Indian market has becomeeven more attractive and many new competitive entrieshave been witnessed leading to a significant increase inthe overall competitive intensity. At the same time, theincreased levels of inflation have had a somewhatdampening impact on the market growth of some of thecategories, particularly in the second half of the year.

Commodity prices have also been fairly volatile,particularly in the first half of the year.

Your Company's good performance in the year 2009-2010has to be viewed in the context of the above economicand market environment.

PERFORMANCE OF BUSINESSES AND CATEGORIES

Some highlights are given below in respect of each of thebusiness categories of the Company. Increase/growthpercentages refer to the comparison of the financial yearended 31st March, 2010 with the 12 months period ended31st March, 2009.

5.2 Home & Personal Care Business (HPC)The HPC Business consists of Fabric Wash, HouseholdCare, Personal Wash and Personal Care categorieswhich includes products such as toothpaste, shampoo,skin care, deodorants and colour cosmetics. During theyear, the HPC business delivered sales growth of 6.6%.While the underlying volume growth was higher,aggressive price reductions were effected in themarket place linked to significant reduction incommodity prices over the previous year. Further,competitive intensity increased substantially in mostcategories, especially in the second half of the year,evidenced by many new competitive entries as well as astep up in media spend levels. During the year, your

Company introduced several innovations across theportfolio and stepped up the level of brand investmentsto drive growth. Your Company continued to receivesignificant technology and brand development inputsfrom Unilever which played a key role behind thevarious innovations launched during the year. As aresult of these efforts, the growth momentum of theHPC business accelerated through the year with doubledigit volume growth in the last quarter of the year




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under review. This growth was broad based acrosscategories and was delivered in the context ofsignificant increase in competitive intensity, both fromexisting and new players.

Given the low levels of per capita consumption in India,there is potential for strong growth in all categories ofthe Home and Personal Care market. These favourablemarket conditions have attracted a host of internationaland domestic competitors to participate in the Indianmarket. Your Directors believe that making sustainedinvestments behind the Company's brands, by way oftechnology led innovations, consumer communicationand continued focus on developing the markets, willbenefit the business in creating long term value.

Soaps and Detergents category recorded modestturnover growth of 1.5%. The growth of the Soaps and

Detergents category needs to be viewed in the contextof a very high base in the previous year which saw highprice increases linked to commodity cost inflation.During the year under review, the prices of products,particularly in the Detergents segment, were reducedtaking into account the reduction in commodity prices.The segmental margin of this category was lower by100 bps linked to the volatility in commodity costs inthe initial part of the year and the actions taken todefend the Company's leadership position in the face ofheightened competit ive intensity.

Fabric Wash category had a mixed performance. Thefirst half of the year was impacted by the volatility in

pricing linked to commodity costs while the second halfof the year recorded good volume growth. Theimproved performance in the second half of the year,despite intense competitive activity, was driven bybrand innovations (Wheel) and price corrections acrossthe portfolio. The 'Surf' franchise continued to performwell. The pricing on 'Rin' Powder was strategicallyreduced to drive upgradation from the mass marketswith encouraging initial response. 'Wheel' has been re-launched with better formulation, improved packagingand fresh communication; initial response has beenvery positive. The category witnessed significantcompetition and your Company responded in adetermined manner to defend its market share. The

media spend on the fabric segment was also augmentedto communicate the value proposition to consumersmore effectively. Cost effectiveness programs havebeen stepped up and have yielded good results.

Your Company continues to place particular focus onthe Fabric Wash category as it constitutes a significantproportion of the business volumes, and has beenand will be a significant value creator, despite the

5.2.1 Soaps & Detergents

short term pressures arising from the incompetition in this category.

Household Care category performed well during threcording double digit growth. After the re-laun

2009, the dish washing product, 'Vim' liquid recanother year of stellar growth. The 'Vim' bar vcontinues to perform well, especially after makingcorrections linked to falling input costs. The 'Domecontinued on its journey to provide cleaner andfree toilets to the Indian consumer. A first of its kIndia, the Company also successfully launched the variant of 'Cif' for surface cleaning. It has demonstrhigh degree of relevance and special appeal imarketplace as the product experience has succedemonstrated the product's strong ability to cleanstains and grime.

Personal Wash category recorded good growth d

the year with significant step-up in growth rates latter part of the year. While the competitionexisting players continued to be strong, the Comdeployed its full portfolio effectively with re-lof most of the brands on the back of high qinnovations and intensive consumer activation. Gwas led by the premium segment brands, 'Dove', 'Pears' and 'Liril' registering strong grThe 'Lifebuoy' brand was re-invigorated throure-launch, bolstering its health credentials wistrong ability to kill germs. The 'Lux' franchise ware-launched with improved fragrance and beautfor soft and smooth skin. Furthermore, taactivations and communications strategy have h

the brand improve its image within the target gYour Company is also maintaining its focus on cheregional brands such as 'Hamam' and 'Rexona' ancontinue to promote them aggressively well intfuture. While your Company is the undisputed mleader in this category, it continues to focus ochallenge of winning back its lost market share important category.

The Personal Products category of the Company comof Hair Care, Skin Care, Oral Care, Deodorants and CCosmetics. The Personal Products category grew byoverall with good growth in profits.

Hair Care category continues to be an attr

category given the potential for increase in per

consumption. Despite the significant increa

competitive heat in this category, your Com

improved its leadership position during the

Bolstered by additional variants introduced during

the 'Dove' shampoo and conditioners range contin

deliver high growth momentum with a sizeable g

5.2.2 Personal Products




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market share. In addition to innovation, the growth was

driven by a combination of high quality and compelling

advertising and field activation during the year. During

the year, 'Clinic Plus' was also successfully re-launched

with good results by re-emphasising the value proposition

of being ideal for long hair. 'Clinic Plus' continued to growwell and strengthened its position as the single largest

shampoo brand. The 'Sunsilk' range was also re-launched

in October 2009 with superior product quality and

packaging with the proposition of a shampoo that is

co-created by experts. The product credentials of 'Clinic

All Clear' has been strengthened and was supported

through a high decibel 'Zero Dandruff' campaign in the

last quarter of the year. This is expected to reverse the

trend of falling shares in this brand. The business also

continued to grow in the nascent but emerging hair

conditioners segment, which has a high growth potential

as more and more consumers discover the value of using

conditioners regularly.

Skin care category achieved double digit growth during

2009 despite strong competition and rapid market

fragmentation of this category. In the mass skin lightening

category, 'Fair & Lovely' continued to grow by increasing its

relevance and consumption across a range of price points.

'Ponds White Beauty' witnessed robust growth through the

year due to a highly successful media campaign on

acquiring spot free fairness. 'Vaseline' also grew well on the

back of increased traction in the Vaseline Body Lotion core

as well as the introduction of a new 'Healthy White' variant

that offers protection against skin darkening. Talcum

powders saw good growth during the year and your

Company continues to maintain its leadership position.

In Oral Category, your Company took actions to drive

growth through highly attractive value offerings in the

up-grader packs to bring quality oral care within the reach

of the mass consumers. This strategy has started yielding

positive results and the category has started to see

increased volume growth in the latter part of the year. The

germ kill credentials of 'Pepsodent' were further enhanced

and the freshness credentials of 'Close up' continues to do

well. Your Company has put in place robust plans to

accelerate the growth of its oral care business in the

coming periods through both of its flagship brands 'Close up'

and 'Pepsodent'.

The 'Lakme' range of colour cosmetics achieved stable

growth for the year. New innovations such as the 'lip duo'

attractive summer collections coupled with high quality

advertisement and trade and consumer activations helped

in ensuring growth momentum. 'Lakme Fashion Week' saw

another successful run and continues to be a signature

campaign for the brand.

The Deodorant category continued to witness high growth

momentum with its flagship brand of 'Axe'. This category

has significant potential of future growth and your

Company is well poised to capitalise on its existing strong

presence in this emerging category.

KCLL is a Joint Venture between your Company andKimberly-Clark Corporation, USA. The Infant Care businessof KCLL continued to grow solidly with double digit growthregistered during the year. New packs were introducedacross the portfolio as the business focused on drivingaffordability and building acceptability in this category.The re-launch of 'Huggies Care' and 'Huggies Dry Comfort',supported by a new mix during the year, met with goodresults and has been gaining momentum. In 'FeminineCare', the business rationalised a part of its portfolio andfocused on building an innovation pipeline aligned to its

long term strategic direction for this category. During theyear, your Company received a dividend of Rs. 2.54 Croresfrom the Joint Venture.

5.3 Foods

The Foods portfolio of your Company comprises ofBeverages (Tea and Coffee), Processed Foods (Kissan, Knorrand Annapurna range of products), Ice Creams and Bakeryproducts (Modern Foods).

The business has delivered strong double digit growth. Thisgrowth has been broad based across the portfolio and hasbeen driven through a deep understanding of consumer andcustomer needs translated into relevant innovations. The

growth in the Foods business has been achieved in the faceof some key challenges :

High competitive intensity from national as well as localplayers in many categories. Your Company hasresponded through increased brand investments andvalue enhancing innovations.

Significant food inflation across the spectrum leading tomarket slowdown and downtrading in some categoriesas the year progressed. Your Company has responded tothis challenge through a combination of consumercentric value packs and judicious price increasescombined with aggressive cost saving programmes.

Product freshness continues to receive the highestattention with significant investments made over theyears. This is now showing results and going forward theCompany intends to sustain these investments.

Beverages such as Tea and Coffee are well entrenchedhabits amongst Indian consumers. Your Company is focusingon micro marketing initiatives to increase penetration andconsumption and drive growth across the spectrum.

Kimberly Clark Lever Private Limited (KCLL)

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In addition, your Company is driving upgradation throughthe tea bags packaging concept. Further, your Company hasexpanded its portfolio in packet tea by launching a newbrand to participate in the mass segment withdifferentiated offering.

Processed Foods, Ice Creams and Out of Home consumptionoffer huge potential for growth with LSM 5+ leadingconsumption in top 35 cities. This segment is beingaddressed through developing products which combinetaste, nutrition and provide cooking convenience.

'Annapurna' and 'Modern' range are uniquely positioned tocapture the growing consumption in rural areas andcapture the opportunity at the bottom of the pyramid.

'Kissan' continues to remain one of the most trusted brandsamongst Indian consumers and continues to register solidand sustained growth. Consumer friendly innovations suchas Jams Squeezee tubes and Ketchup plastic bottles havebeen well received in the market and have enhanced theoverall product experience.

Your Company is a clear value leader in the Soups segment.'Knorr' was re-launched during the year with 100% realvegetables and without any MSG. The launch was supportedthrough comprehensive communication and activation inboth Modern and General Trade. This has lead to overallmarket growth and category expansion. The Ready to Cookrange of 'Knorr' launched last year is seeing steady volumeswith strong repeat purchases being experienced.

In February 2010, your Company has entered the highgrowth instant noodles category through its 'Soupy Noodles'portfolio which provides wholesome nutrition to children'ssnacking moments. The product was launched in theModern Trade channel across the country and in allchannels in South India, with excellent consumer response.

The staples business under the brand 'Annapurna' (iodisedsalt and wheat flour) posted good growth during the year withsignificant improvement in profitability.

Your Company continued its focus on foods sales toinstitutions such as restaurants and hotel chains. Althoughat its nascent stage, yet the business is making good

progress by leveraging Supply Chain efficiencies andproduct development capabilities of the Foods Division.

For three consecutive years, inflation in the Teacommodity continues unabated, driven by strong globaldemand and local crop shortages. This has resulted indown trading and the overall growth in the discounted

5.3.1 Processed Foods

5.3.2 Beverages

segment of the market, becoming the major portthe portfolio.

Notwithstanding such a competitive contextbusiness has registered strong turnover growth

maintaining satisfactory volumes. Increasing continued to put pressure on margins but thesemitigated through pricing and Supply Chain cost saMarket shares during the year came under pressuto lack of a strong presence at the discount end market. During the year, your Company has lau'Brooke Bond Sehatmand' at the mass end of the moffering combined benefits of health with immunitTea delivers 50% of RDA of Vitamin B through 3 cupsto lower income families that are otherwise unaafford such nutrition. The brand is poised for nationout in 2010.

'3 Roses' continued to perform exceptionally we

has shown significant growth, maintainincompetitive standing in South India. 'Taaza' has gmarket share, and the brand has strengtheneequity with consumers exceptionally well. 'Taazthe 'Global Brand of the Year Award for Bevewithin Unilever, which is another testimony to its su'Lipton Yellow Label' was re-launched with the 'Stay proposition, with Theanine as the ingredient.delivered commendable results at the premium enregistered good growth in the tea bags segmentbags consumption was encouraged through campaigns and a large sampling initiative carriewith Jet Airways.

During the year under review, Coffee marketsdecelerated significantly in comparison to earlierdue to adverse climatic and weather conditions. Thkey innovations, your Company was able to restrong volume growth in the second half of the The re-launch of 'Bru' was amplified with the Aproposition (through aroma lock) and impsensorials. This was backed by strong media camand trade activation programs. Your Company conto focus on driving growth in the instant coffepremiumisation of the portfolio. In conventional cyour Company re-launched the product with benesecond decoction, which received excellent respomarkets such as Andhra Pradesh.

The Out of Home business was impacted by the ecoslowdown experienced in the early part of the year bsince picked up pace as the year progressed. This chcontinues to hold the promise of high growthappropriate investments are being made to leveraopportunity. 'Lipton' and 'Bru' Caf models were during the year in key locations and results thus fabeen encouraging.




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The year under review has been an excellent year, with

strong growth in both the impulse and take home

segments. Growth has been driven by the three key

platforms 'Cornetto', 'Selection' and 'Paddle Pop'.

Significant inflation in input prices put tremendous

pressure on the margins of the business. Your Company

has been able to maintain the margins by driving

operational efficiencies, improved mix and leveraging

economies of scale.

'Cornetto Black Forest Flirt' launch has been a resounding

success, with the SKU becoming the largest selling

'Cornetto' in the first year itself. In 'Paddle Pop', your

Company launched four exciting flavours, driving growth

in the Kid's range. In the 'Selection' range, three new fruit

flavours were launched in summer 2009 (Strawberry

Currant, Choco Coconut and Litchi Bites), building on the

theme of celebrating weekend family moments. The factthat a scoop of this Ice Cream is less than 99 cal was

successfully communicated in this launch. The 'Selection'

range was received exceedingly well in the market.

Building Ice Cream consumption occasions is a key driver

for growth. The Diwali activation on 'Viennetta' was

implemented with great success. To further drive

in-home consumption, the business also rolled out value

offerings in the west region, producing results

significantly ahead of previous action benchmarks.

Significant investments are being made by your

Company in front end assets and for leveraging IT for

enhanced scalability and asset productivity. Goingforward these are expected to provide the Company a

competitive advantage.

Bakery (bread and cakes) sustained its growth momentum

and continued to deliver strong underlying profits

improved from enhanced scale and better operational

efficiencies. New unified packaging was introduced

during the year which was well received in the markets.

5.4 Exports Business

Following the global recession, international markets

turned adverse during the year with reduced consumerdemand. Despite this, your Company managed to achieve

a turnover of Rs. 1,000 crores with good profits and

strong cash delivery. The non-value adding commodity

exports were rationalised resulting in improved Gross

Margins. Cash generation was significantly enhanced by

placing specific focus on the reduction of Working Capital

through improved inventory management and debtors

reduction, while simultaneously enhancing customer service.

5.3.3 Ice Creams

5.3.4 Bakery (Modern Foods)

In the Home & Personal Care exports segment, despite

the difficult environment, the turnover in existing

product-customer channels was maintained to previous

year levels. The Pears franchise grew handsomely

by double digits, notably in the United Kingdom and

the Emirates.

The ongoing Foods & Beverages exports businessdelivered a growth of 6% in an environment withchallenging market conditions. The packet tea businessgrew strongly by 48% in the US market; as did the bulk teabusiness by 6%. Instant tea sales to Europe registereda strong growth of 32% while Instant coffee sales, primarilyto CIS countries, grew by 31% in the latter half of the yearafter overcoming initial concerns relating to paymentsecurity. The tea bags business presents promisingprospects in the coming years.

The marine exports business remained profitable despite a

tough external environment emanating out of globalrecessionary trends and the strengthening of the IndianRupee. Due to high commodity prices and a poor fish catch,surimi sales were lower by 39%. This was made up by highersales growth in the value added crabstick segment (+19%),which benefited from a regular flow of orders from awidened customer base. This resulted in attaininghighest production of crabstick in our Chorwad factorysince inception. Rice exports were impacted by lowercustomer demand. Significantly, both marine and ricebusinesses added value to the bottomline despite thechallenging environment.

The Leather business returned to operatingprofitability during the year after a focusedrestructuring exercise, despite severe recessionarytrends in the EU. China continues to attract largevolumes from the EU and the USA due to its welldeveloped components market and significant costadvantages compared to India's advantages of goodquality leather and ability to service small/complexorders. In order to drive synergy, both upper and shoesdivisions of the business were successfully combined tofocus on cost competitiveness and provide bettercustomer services.

5.5 Water

'Pureit' is a unique in-home drinking water purificationsolution that offers protection to children and familiesfrom waterborne diseases. 'Pureit' runs with a uniqueGerm Kill Kit that removes all harmful viruses, bacteriaand parasites to give drinking water that is 'as safe asboiled water'. Leading national and internationalmedical, scientific and public health institutions havetested Pureit's performance. Most notably, Pureit meetsthe Germ Kill criteria of the Environmental Protection

Leather (Pond's Exports Limited)




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Agency (EPA), the key drinking water regulatory agencyin the USA. It provides this protection without the needfor boiling, and without electricity or continuous tapwater supply. It has a unique 'End of battery life indicator'and 'Auto shut-off', which ensures that consumers do not

get unsafe water.

In the course of the year, Pureit leveraged its safety

credentials and launched the 'One Crore SafetyChallenge' campaign which educated consumers on thesafety features that they must consider beforepurchasing a water purifier. The brand developed newdistribution capabilities and established a nationallevel presence in the consumer durable outlets. A newmodel, 'Pureit Auto Fill' that connects directly with thetap and offers dual filling option (inline and manual)was launched towards in the second half of the year.

In line with Pureit's mission of protecting lives from

waterborne diseases, your Company believes thatdrinking water with highest safety standard is thefundamental right of every individual. Pureit waslaunched nationally in 2008 at an extremely affordableprice, so that access to safe water does not remainconfined to the affluent sections of society. In the pastfew years, Pureit has helped in creating massawareness about the need for safe drinking water. InJanuary 2010, your Company achieved anothermilestone in its mission of making safe drinking wateravailable to every Indian. Pureit Compact was launchedat a price point of Rs. 1,000. This will enable yourCompany to protect lives in the segment of society

with lower purchasing power, where incidence of

waterborne disease is the highest.

'Pureit' has already protected more than three millionhomes covering 1500 towns and cities across India injust two years of its national launch. The businessreceived a number of awards during the period,

reflecting the continued high regard held by thescientific community and by the public at large. Keyamongst these is the prestigious British Governmentaward for Consumer Product Innovation 2009 - 2010.The business is making good progress in line with plan.

5.6 Hindustan Unilever Network

The strategy of the network was redefined in linewith its vision of empowering modern Indian woman byserving her with superior beauty and health careproducts through customised and professional services.

In the last one year, your Company has succe ssfully

transformed the Network into a Premium Personal-

Care and Health Care channel. However, the key

challenge for the business remains scale which

needs to be enhanced significantly in order to

improve the profi tabi l i ty of the busi

Your Company is evaluating appropriate pla

this regard.

5.7 Beauty & Wellness Division

The growing disposable income and changing lifesturban India has led to a greater awareness about pe

grooming, health and wellness. These trends augur w

the Beauty and Wellness services sector, presenting a

and exciting opportunity. The Company currently op

in the Beauty and Wellness services segment l

through a network of franchised 'Lakme Beauty S

During the year, your Company's own 'Lakme Beauty

were transferred to Lakme Lever Private Limited (LL

subsidiary of your Company. LLPL commenced oper

during the course of the year with the object

achieving excellence in execution by a specialise

dedicated team, passionate about beauty service

with a view to create and nurture a 'service' miThe Company launched the 'Lakme Studio', a pre

salon format commencing with Delhi which has

early signs of success. Similarly, 'Lakme Studio' hav

been recently rolled out in Mumbai, Chennai, Hyde

and Bangalore.

The year under review has been a landmark y

terms of customer management across channel

the roll out of new-age Go to Market model

cities across the country. This model was succes

piloted in the Mumbai metro area featurin

efficient back end; a world class front-end; delivinnovations and activation schemes at a much

pace to the market. Coupled with the Zero Inve

Plan, the Go to Market model has yi

significant dividends in terms of customer servic

satisfaction. Customers today handle your Com

consolidated general trade business, with the a

to leverage scale with high efficiencies.

Your Company has also made great strid

expanding its rural distribution network,

significant investment made in expanding

infrastructure. Across the country, rural ma

were brought under direct coverage, enabling b

servicing and control. The ability to reach ou

the corners of the rural market gives your Comp

distinct competitive advantage. This has allowed

offer the right assortment of packs to rural consu

keeping up with rapidly changing needs and w

The number of distributors in rural markets has

scaled up and rural salesmen are now being equ

with Hand Held Terminals to facilitate the order

process and billing.

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The Company has also deployed next generationtechnology in urban markets, with analytics basedrecommendations making selling campaigns moreintelligent, and through Hand Held Terminal basedapplications, making selling more scientific and

assortments more relevant to an outlet. It is henceforthpossible to customise the range and quantity sold toevery outlet.

Apart from investing in infrastructure and setting up ITenabled processes, your Company has embarked uponan enormous coverage expansion project, in both therural and urban businesses. This expansion has been ascientifically driven process, facilitated by know-howsuch as digital maps to identify potential markets to bebrought under coverage. Commencing with thisinitiative from the end of 2009, the Company expects totriple its rural coverage and improve urban coverageby 15%.

6.1 Project Shakti

'Shakti' is an initiative which focuses on reaching out toconsumers in very small villages that typically have apopulation of less than 5,000 individuals. It is a greatexample of 'Doing Well by Doing Good' as it serves twopurposes simultaneously; it provides livelihoodopportunities to women in rural areas and enhances thequality and depth of your Company's distribution.

The objectives of 'Shakti' as a program are:

leading market development efforts through consumereducation programmes

establishing a suitable livelihood opportunity for

women irrespective of their backgroundcreating a self sustaining business model

accessing markets beyond the reach of traditionaldistribution models

The 'Shakti' programme is essentially built on two pillars:the 'Shakti Entrepreneurship' program and the'Shakti Vani' program. The 'Shakti Entrepreneur'program is a classic case of a win-win model involving avariety of stakeholders - the Company, women seekinglivelihoods, women from Self Help Groups, Micro FinanceInstitutions and NGO's. The win-win model comes alivewhen an investment results in a sustainable businessopportunity with little requirement for advancedbusiness skills. The strength of the model lies in itssimplicity wherein any woman who is interested inearning a livelihood can participate in the programme.Linkages such as microfinance facilitates working capitalto start such businesses. Your Company makes significantinvestments in capability building through on-the-jobtraining and classroom training programmes through alarge and dedicated field force exclusively for ShaktiEntrepreneurs. This helps build confidence and develop

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the business acumen necessary to run a micro-enterprise. Rural consumers also benefit by having accessto some of India's most trusted brands at their doorstep ataffordable prices.

The Pureit pilot under the 'Shakti' programme, which waslaunched in Andhra Pradesh, has been further scaled upto Orissa and Maharashtra. The objective of this initiativewas to enhance the income of the 'Shakti Ammas' enablingthem to offer a high quality water purifying product torural consumers at affordable prices. The Pureit additionis just the first step in increasing the bouquet of productswhich the 'Shakti Ammas' can offer to her customers.

The 'Shakti Vani' program focuses on building awarenessabout health and hygiene in the rural community. Vani'sare trained communicators who target congregationssuch as village schools and mohallas and engage with keyopinion leaders of villages like the sarpanch and the

school teachers.

During the year, your Company piloted a new version ofVani where technology has been used to communicatewith rural consumers. Animated films explaining thestory of health and hygiene using the platform of ourbrands have been made accessible through hand heldDVD players provided to the Vani's. Your Company isdeveloping a model which can be scaled across largergeographies to impact a wider audience.

By the end of the year 2009, the Shakti networkcomprised 45,000 Shakti Ammas covering 1,00,000 plusvillages across 15 states in the country and reaching over3 million households every month.

Your Company has made significant progress in achievingthe vision of delivering outstanding customer servicewhile supporting sustainable growth for the Company.Improving service levels to ensure availability ofproducts at all points in the Supply Chain was a keyfocus area during the year. Supply Chain service levelsas measured by CCFOT (Customer Case Fill On Time)were the highest achieved in the recent past. ITsolutions based on SAP application systems led tosignificant improvements in planning and logisticsefficiencies.

The factories made significant progress in increasingplant and operational efficiencies and helped deliverinnovations on time while working on improving productquality. The Company's initiative 'Levercare', focusing onconnecting with customers and consumers, gave valuableinputs on product performance which helped tounderstand consumer behaviour and to improve thequality of certain products in design and manufacturing.

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Continued focus was maintained through cross functionalteams to drive cost effectiveness throughout the SupplyChain by identifying opportunities for eliminating waste.This helped the business achieve significant Supply Chainsavings. Energy conservation activities through all our

manufacturing sites have helped reduce specific energyconsumption. Use of sustainable alternative bio-fuels hasbecome the norm at many of our major manufacturingsites which has helped reduce fuel costs and carbonemissions. We also executed appropriate capitalexpenditure investments in creating fresh capacity in allcategories. These investments have facilitated growthand de-bottlenecked capacities of existing assets. Theprinciples of Total Productive Maintenance were appliedand progress tracked across all the manufacturing sites.This has resulted in an increase in asset productivity levels.

Our buying function also delivered improved efficienciesand reduction in procurement costs, fully leveraging

benefits of scale and synergy through Unilever's globalbuying network.

This is the 51st year of Research and Development (R&D)of your Company. Your Company has continued to build onthis heritage by further strengthening the R&D Units inBangalore and Mumbai with stronger integration withUnilever Global R&D. The R&D programmes are gearedtowards delivering bigger, better and faster innovationswith a robust pipeline of radically new technologies withinnovative consumer propositions. R&D in India continuesto focus on Water Treatment, Health and Hygiene,

Laundry, Skin Care, Tea, Ice Cream and Ayurveda.

Your Company continues to benefit from the stronglinkages with the Global R&D organization of Unilever.This has become even more critical in the context ofentry of many global players in the attractive IndianFMCG market. These players are keen to get a slice of thelarge and fast growing FMCG market in India. With thestrong support from Unilever R&D as well as the branddevelopment capabilities, your Company is well placedto meet the challenges arising from the increasedcompetition intensity.

Your Company had entered into a Technical Collaboration

Agreement (TCA) in August 1999 with Unilever PLC, whichprovided a non-exclusive license to manufacturespecified products in accordance with and using theTechnical Documentation, Information and Know-how inconsideration of payment of royalty at the rate of 1% (netof tax) both on domestic and export sales of the specifiedproducts. In December 2009, the Board of Directors ofthe Company have approved amendments to the said TCAto include additional product categories where technical

8. RESEARCH AND DEVELOPMENT

inputs are provided by Unilever as well as produspecified categories manufactured by third manufacturers where technical inputs developUnilever are made available to the third manufacturer. In addition, the Board have appro

trademark license agreement with Unilever provides for payment of trademark royalty at the r1% of net sales on specific brands where Unileverthe trade mark and your Company is the licensedBoth these amendments are well within the Goverof India Guidelines for payment of royalty.

On the back of strong R&D initiatives, a number oproducts were launched successfully in the m'Pureit', a breakthrough innovation of your ComR&D, was launched with additional technical fesuch as 'Auto Shut-Off' and 'Auto Fill' that enhansafety and convenience. A winter variant of alightening formulation was developed and launch'Fair & Lovely' Winter Fairness Cream. Also, durinyear 'Lifebuoy' was re-launched with clinically phygiene benefits.

Foods R&D continue to focus on delivering hoptions with superior taste and flavours. In 2009, soups were re-launched with new formulations wMSG and with 100% real vegetables. The Ice Cbusiness grew on the back of several succinnovations such as Cornetto variants - StrawberryCake and Black Forest. During the year, Beveintroduced a premium Green Tea, Lipton Clear Greelaunched a new blend of Lipton Yellow Label with levels of Theanine. Your Company also re-launcsuperior Bru Coffee with improved aroma.

The continuous stream of innovative and techadvanced products launched in the market was a resignificant R&D investments and the scientific talenyour Company can attract and retain.

India continues to occupy a premier position in UniR&D initiatives with a significant share of Programmes backed by strong in-house scieexpertise. Your Company has been

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