Hindustan Unilever

1.  We have audited the attached Balance Sheet of Hindustan Unilever
 Limited as at 31st March, 2009 and the related Profit and Loss Account
 and Cash Flow Statement for the period from 1st January, 2008 to 31st
 March, 2009 annexed thereto, which we have signed under reference to
 this report. These financial statements are the responsibility of the
 Company’s management. Our responsibility is to express an opinion on
 these financial statements based on our audit.
 
 2.  We conducted our audit in accordance with the auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor’s Report) Order, 2003 as
 amended by Companies (Auditor’s Report) (Amendment) Order, 2004
 (together ‘the Order’), issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of The Companies Act, 1956’ of
 India (the ‘Act’) and on the basis of such checks of the books and
 records of the Company as we considered appropriate and according to
 the information and explanations given to us, we give in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the said
 Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report that:
 
 a) We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 b) In our opinion, proper books of account as required by law have been
 kept by the Company so far as appears from our examination of those
 books;
 
 c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the accounting
 standards referred to in sub-section (3C) of Section 211 of the Act;
 
 e) On the basis of written representations received from the directors,
 as on 31st March, 2009, and taken on record by the Board of Directors,
 none of the directors is disqualified as on 31st March, 2009 from being
 appointed as a director in terms of clause (g) of sub-section (1) of
 Section 274 of the Act;
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto give in the prescribed
 manner the information required by the Act and give a true and fair
 view in conformity with the accounting principles generally accepted in
 India:
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2009;
 
 ii) in the case of the Profit and Loss Account, of the profit for the
 period ended on that date; and
 
 iii) in the case of the Cash Flow Statement, of the cash flows for the
 period ended on that date.
 
 ANNEXURE TO THE AUDITORS’ REPORT
 
 [Referred to in paragraph 3 of the Auditors’ Report of even date to the
 members of Hindustan Unilever Limited on the financial statements for
 the period ended 31st March, 2009]
 
 1.  (a) The Company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) Fixed assets are physically verified by the management according to
 a phased programme designed to cover all the locations once in two
 years, which in our opinion, is reasonable having regard to the size of
 the Company and the nature of its assets. Pursuant to the programme,
 fixed assets at certain locations were physically verified by the
 management during the period and no material discrepancies between the
 book records and the physical inventory have been noticed.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 off by the Company during the period.
 
 2.  (a) Inventory (excluding stocks with third parties) has been
 physically verified by the management during the period.  In respect of
 inventory lying with third parties, these have substantially been
 confirmed by them. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion, the procedures of physical verification of
 inventory followed by the management are reasonable and adequate in
 relation to the size of the Company and the nature of its business.
 
 (c) On the basis of our examination of the inventory records, in our
 opinion, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3.  The Company has neither granted nor taken any loans, secured or
 unsecured, to/ from companies, firms or other parties covered in the
 register maintained under Section 301 of the Act. Consequently, clauses
 (iii)(b), (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of paragraph 4 of
 the Order are not applicable.
 
 4.  In our opinion and according to the information and explanations
 given to us, having regard to the explanation that certain items
 purchased are of special nature for which suitable alternative sources
 do not exist for obtaining comparative quotations, there is an adequate
 internal control system commensurate with the size of the Company and
 the nature of its business, for the purchase of inventory and fixed
 assets and for the sale of goods and services. Further, on the basis of
 our examination of the books and records of the Company carried out in
 accordance with the auditing standards generally accepted in India and
 according to the information and explanations given to us, we have
 neither come across nor have been informed of any continuing failure to
 correct major weaknesses in the aforesaid internal control system.
 
 5.  (a) In our opinion and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 referred to in Section 301 of the Act have been entered in the register
 required to be maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, there are no transactions made in pursuance of such
 contracts or arrangements and exceeding Rs. five lakhs in respect of
 any party during the period, which have been made at prices which are
 not reasonable having regard to the prevailing market prices at the
 relevant time.
 
 6.  In our opinion and according to the information and explanations
 given to us, no fixed deposits were outstanding or accepted during the
 period to which the provisions of Sections 58A and 58AA or any other
 relevant provisions of the Act and the Companies (Acceptance of
 Deposits) Rules, 1975 apply.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company in respect of products where, pursuant to the Rules made by the
 Central Government of India, the maintenance of cost records has been
 prescribed under clause (d) of sub-section (1) of Section 209 of the
 Act and are of the opinion that prima facie, the prescribed accounts
 and records have been made and maintained.  We have not, however, made
 a detailed examination of the records with a view to determine whether
 they are accurate or complete.
 
 9.  (a) According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion, the Company
 is generally regular in depositing undisputed statutory dues including
 provident fund, investor education and protection fund, employees’
 state insurance, income-tax, sales tax, wealth tax, service tax,
 customs duty, excise duty, cess and other material statutory dues as
 applicable with the appropriate authorities.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, there are no dues of wealth tax
 and cess which have not been deposited on account of any dispute. The
 particulars of excise duty, sales tax, customs duty, income-tax and
 service tax as at 31st March, 2009 which have not been deposited on
 account of a dispute are as follows:
 
 Name of the statute      Nature of dues        Amount under dispute
                                                   not yet deposited
                                                           Rs. Lakhs
 
 The Central Excise Act,  Excise duty including             56,51.40
 1944                     interest and penalty, as
                          applicable
 
                                                            44,59.71
 
                                                               25.53
 
 Central Sales Tax Act    Sales tax including               93,34.02
 and Local Sales Tax      interest and penalty, as
 Acts (including works    applicable                        15,16.98
 contract)                                                  95,21.62
 
 Customs Act, 1962        Customs duty including               56.27
                          interest and penalty, as
                          applicable
 
 Income-tax Act, 1961     Income tax including               4,38.79
                          interest and penalty, as
                          applicable                         1,07.60
 
                                                               31.55
 
 Service Tax              Service tax including                84.45
                          interest and penalty, as
                          applicable
 
 Periods to which the      Forum where the
 amount relates            dispute is pending
 
 1982,1987                 Appellate Authority - upto
 
 1991 to 1995              Commissioner’s level
 
 1997 to 2006
 
 1983 to 1986              Tribunal
 
 1989 to 1991
 
 1994 to 2006
 
 1979 to 1983              Supreme Court
 
 1976, 1977                Appellate Authority - upto
 
 1983 to 2008              Commissioner’s level
 
 1984 to 2004              Tribunal
 
 1983 to 2001              High Courts
 
 1995                      Appellate Authority - upto
                           Commissioner’s level
 
 1979-80                   Appellate Authority - upto
 
 1995-96                   Commissioner’s level
 
 1985-86                   Tribunal
 
 1991-92
 
 1988-89                   High Courts
 
 2004 to 2006              Appellate Authority - upto
                           Commissioner’s level
 
 10.  The Company has no accumulated losses as at 31st March, 2009 and
 has not incurred any cash losses in the period ended on that date or in
 the immediately preceding financial year.
 
 11.  According to the records of the Company examined by us and the
 information and explanations given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders as at the balance sheet date.
 
 12.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund / societies are not applicable to the
 Company.
 
 14.  In our opinion and according to the information and explanations
 given to us, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15.  In our opinion and according to the information and explanations
 given to us, the Company has not given any guarantee for loans taken by
 others from banks or financial institutions during the period.
 
 16. In our opinion, and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained. The unutilised monies are
 lying with bank for further utilisation.
 
 17.  On the basis of an overall examination of the balance sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short-term
 basis which have been used for long-term investment.
 
 18.  The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Act during the period.
 
 19.  The Company has not issued any debentures during the period.
 
 20.  The Company has not raised any money by public issue during the
 period.
 
 21.  During the course of our examination of the books and records of
 the Company, carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given to us, we have neither come across any instance of
 material fraud on or by the Company, noticed or reported during the
 period, nor have we been informed of such case by the management.
 
                                                     Sharmila A. Karve
                                                               Partner
                                                  Membership No: 43229
 
                                                  For and on behalf of
                                                      Lovelock & Lewes
                                                 Chartered Accountants
 Mumbai, 10th May, 2009