Hindustan Unilever

Dear Shareholders,
 
 My warm greetings to all of you. In the following pages of Report and
 Accounts, I am pleased to present yet another year of very good
 performance by your Company. You will no doubt appreciate that this
 performance was delivered in a challenging economic context.
 
 The global economy suffered a slowdown; afflictions that started as
 financial sector issues in the US spread fast to the real sectors of
 the economy across the globe. Although India’s domestic economy grew
 strongly for the whole year, many sectors like automotives, capital
 goods, consumer durables and realty decelerated significantly towards
 the second half of the year. The performance of the exports sector was
 well below expectations.
 
 Another major issue we had to contend with during the year was
 unprecedented volatility in the price of commodities, driven largely by
 the swings in petroleum crude prices. Severe and continued rise during
 the year, the precipitous fall towards the later part of the year, and
 the associated uncertainties in material price movements needed very
 careful management. Many public policies were implemented to squarely
 address some of these issues in the economy. FMCG markets generally
 held well although some categories like fabric wash registered a
 slowdown in volume growth.
 
 I am pleased to state that for the financial year 2008-09 (i.e.
 comparable period of 12 months ended March 2009 over that of March
 2008), your Company recorded an overall sales growth of 15.5% with FMCG
 categories growing at 18.3%. Both HPC and Foods contributed to this
 growth. Operating margins expanded by 0.4%, from 14.1% to 14.5%.
 
 Continued drive on excellence in execution both at the front end of
 sales operations and the back end of supply chain and functional
 processes, helped growth and margin. We continued to strengthen our
 brand equities through innovation and appropriate levels of advertising
 and promotional spending.  This is key to delivering consistent and
 profitable growth in the future.
 
 Margin management was a significant challenge in the context of a
 volatile commodity cost environment. The impact of this was managed
 dynamically through a combination of judicious pricing, aggressive cost
 savings programmes and tight control of indirect costs. This allowed us
 to deliver margin improvements while continuing to invest in our
 business.
 
 Your Companys key assets are its brands, people and reputation. HUL is
 known for its powerful brands, formidable talent pool and excellent
 corporate reputation.
 
 An estimated 700 million people in our country use our products. Our
 brands continue to feature high in Indias most trusted brands lists.
 During the year we won many awards for Corporate Social Responsibility,
 Innovation and Human Resource practices. Our people received
 recognition for their outstanding professional contribution in their
 respective fields.
 
 I am always inspired by HULs vision of earning the love and respect of
 India by making a real difference to every Indian. We believe that we
 can contribute through both our business and the manner in which we
 conduct our business. As we call it, Doing Well by Doing Good. It is
 about integrating social good into business good. While delighting the
 consumers and rewarding the investors are very important, these need to
 be delivered with a larger benefit to communities. We have outlined our
 actions in this area in the Directors Report (page no. 41), and this
 balance is an integral part of our corporate values. We have a well
 defined Code of Business Principles (CoBP) that guides our day to day
 actions. These principles are well disseminated across the employees,
 business partners and associates of the Company and drive our behaviour
 - as individuals and as a responsible Corporate.
 
 I am also happy that your Company continued to receive excellent
 support and assistance from Unilever. In the spirit of interdependence,
 HUL enjoys unrestricted access to the repertoire of Unilevers brands,
 technologies, business processes and international best practices. HUL
 is also able to take advantage of Unilevers global scale, particularly
 in the areas of brand marketing and advertising, international supply
 chain, procurement of material and leadership development.
 
 In conclusion, I would like to reiterate that we will remain focused on
 competitive, profitable and sustainable growth. This will be done in
 the context of Doing Well by Doing Good and by upholding the highest
 levels of Corporate Integrity.
 
 I thank you all for your constant support and goodwill for HUL. I am
 sure this will continue in the years ahead.
 
                                               With warm regards,
                                                       H.Manwani