To the Members,
The Company''s Directors are pleased to present the 79th Annual Report
of the Company, along with Audited Accounts for the financial year
ended 31st March, 2012.
1. FINANCIAL PERFORMANCE (STANDALONE)
1.1 Results (see para 1.4)
for the year ended for the year ended
31st March, 2012 31st March, 2011
Revenue from operations,
net of excise 22,116.37 19,735.51
Profit before exceptional
items and tax 3,350.16 2,730.20
Profit for the year 2,691.40 2,305.99
Dividend (including tax on
distributed profits) (1,883.90) (1,641.96)
Transfer to General Reserve (269.14) (230.60)
Profit & Loss Account
balance carried forward 1,773.96 1,235.60
1.2 Category wise Turnover (see para 1.4)
for the year ended for the year ended
31st March, 2012 31st March, 2011
Sales Others* Sales Others*
Soaps and Detergents 10,488.38 147.90 8,683.88 117.18
Personal Products 6,746.95 98.91 5,750.68 99.71
Beverages 2,577.02 40.41 2,309.23 37.27
Packaged Foods 1,341.93 17.53 1,162.28 16.15
Water etc.) 581.32 55.04 1,474.94 64.37
Total 21,735.60 359.79 19,381.01 334.68
* Others represent service income from operations, relevant to the
1.3 Summarised Profit and Loss Account (see para 1.4)
For the year ended For the year ended
31st March, 2012 31st March, 2011
Sale of products less
excise duty 21,735.60 19,381.01
Other operational income 380.77 354.50
Total Revenue 22,116.37 19,735.51
Operating Costs (18,825.03) (17,057.12)
PBDIT 3,291.34 2,678.39
Depreciation (218.25) (220.83)
PBIT 3,073.09 2,457.56
Other Income (net) 277.07 272.64
exceptional item 3,350.16 2,730.20
Exceptional Item 118.87 206.83
PBT 3,469.03 2,937.03
Taxation (777.63) (631.04)
Profit for the year 2,691.40 2,305.99
Basic EPS (Rs.) 12.46 10.58
1.4 Demerger of FMCG Exports Business
In order to fully exploit the opportunity in exports market and to
provide necessary focus, flexibility and speed to the business, the
Board of Directors had approved in-principle a Scheme of Arrangement
for transfer of the FMCG Exports Business Division (demerged business
undertaking) of the Company into its wholly owned subsidiary, Unilever
India Exports Limited (UIEL''), on 9th May, 2011 which subsequently was
approved by the shareholders on 28th July, 2011. The Hon''ble High Court
of Bombay sanctioned the said Scheme with the appointed date of 1st
April, 2011. Accordingly, the financial results of the demerged
business undertaking do not form part of the audited results of the
Company for the year ended 31st March, 2012. However, the audited
results of the Company for the year ended 31st March, 2011 included the
results of the said demerged business undertaking and hence, to that
extent, previous year figures are not comparable with the current year
figures. The results of the Company excluding the results of the
demerged business undertaking for both the years are given below:
for the for the
year ended year ended
31st March, 31st March,
Revenue from operations,
net of excise 22,116.37 18,796.24
Profit before exceptional items
and tax 3,350.16 2,654.48
Profit for the year 2,691.40 2,246.19
Your Directors are pleased to recommend final dividend of Rs. 4.00 per
equity share of face value of Re.1/- each for the year ended 31st
March, 2012. The interim dividend of Rs. 3.50 per equity share was paid
on 22nd November, 2011.
The final dividend, subject to approval of shareholders at the Annual
General Meeting on 23rd July, 2012, will be paid to the shareholders
whose names appear in the Register of Members as on the date of book
closure i.e. from Friday, 6th July, 2012 to Friday, 20th July, 2012
(inclusive of both dates).
The total dividend for the financial year including the proposed final
dividend amounts to Rs. 7.50 per equity share and will absorb Rs.
1,883.90 Crores including Dividend Distribution Tax of Rs. 262.96
3. CHANGE Of THE REGISTERED Office
In January 2010, your Company inaugurated the new Corporate Office
named ''Campus'' at Andheri, Mumbai. The Board of Directors at their
meeting held on 31st October, 2011, approved the change of Registered
Office of the Company to Unilever House, B. D. Sawant Marg, Chakala,
Andheri East, Mumbai 400 099 from the earlier office at 165/166 Backbay
Reclamation, with effect from 1st January, 2012.
4. RESPONSIBILITY STATEMENT The Directors confirm that:
- in the preparation of the annual accounts, the applicable
accounting standards have been followed and that no material departures
have been made from the same;
- they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profits of the
Company for that period;
- they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
- they have prepared the annual accounts on a going concern basis.
5. CUSTOMER MANAGEMENT
In 2011-12, your Company has built on the initiatives of the previous
years and has further strengthened its reputation as an execution and
distribution powerhouse. One of the key thrusts during the year was
coverage expansion in the rural markets. The Shakti network has been
leveraged to enroll 30,000 Shaktimaan who distribute in 100,000 new
villages. The Company has added a million stores over the last two
years to its coverage, thus doubling its direct coverage and tripling
its rural coverage. Your Company has now built a clear distribution
advantage with a direct reach of more than 2 million outlets.
The Perfect Store programme aimed at improving availability and
visibility of Company''s products at the point of purchase continued
making good progress with over a million retail outlets being enrolled
under this programme across urban and rural India. With a single minded
focus on the Perfect Store programme, your Company converted 500,000
enrolled outlets into Perfect Stores during the year. It is now
established that stores which are consistently Perfect grew sales well
ahead of average retail growth and had higher market share growth for
your Company''s overall portfolio compared to overall share growth.
Your Company believes that the end consumer can be better served if the
capabilities of the front-end resources on the ground get enhanced.
With this objective in mind, work on a project to build a Human
Resource Information System (HRIS) for 20,000 plus third party
associates, who work in the market, was completed. This project is in
the direction of improving the systems and processes and the
capabilities of our associates and reaffirms your Company''s commitment
towards its customers and consumers.
The year also saw greater focus on customers to drive growth and ensure
seamless working relationship with the partners. cross functional
''Customer Care'' teams were deployed for the Modern Trade customers to
drive higher levels of customer service and engagement, which resulted
in overall customer delight. This initiative has given very good
results and your Company was awarded the best supplier by almost all
leading Modern Trade customers in this year. Your Company also
developed Best-in-Class'' sustainability initiatives with Wal-Mart and
Metro that helped bring alive the Unilever Sustainable Living Plan
(USLP). The learning''s of Modern Trade were extended to General Trade
and a Joint Business Planning process with top customer was
institutionalized under the umbrella of Unistar'', a comprehensive
customer reward and recognition program.
Your Company launched Customer Credo'' across 2300 plus distributors to
further improve customer connect and faster resolution of issues.
Under this initiative, the Company proactively engaged with
distributors and trade to get into the shoes of the customer and
experience issues from their lens. This was supported with a resolution
mechanism using Levercare'', the customer helpline, taking customer
centricity to the next level. The programme was christened Happy 2
Help'' and is planned to be repeated once every quarter.
During the year, your Company piloted an alliance with Tata
Teleservices Limited (TTSL) for the distribution of telecom products,
leveraging its rural distribution footprint. The Company has scaled the
distribution alliance with TTSL to four states covering over 150
channel partners. This distribution arrangement is aimed at
accelerating rural growth by enabling the Company to go deeper into
rural India due to improved viability for channel partners. This
initiative not only helps the Company build more stable Shakti
entrepreneurs but also enables it to increase rural investments thereby
unlocking growth in this channel.
6.1 Project Shakti
During the year, your Company further strengthened the Shakti
initiative by extending the relationship with Shakti Amma to her
family, through project Shaktimaan. Project Shaktimaan enrols the
unemployed / under employed male members of the family to sell your
Company''s products into the satellite villages of Shakti. The
initiative serves two convergent purposes - enhances the livelihood
opportunity of the Shakti family and improves the quality and depth of
your Company''s distribution network. This initiative strengthens the
philosophy behind Shakti, which comprises of:
- Leading market development
- Establish a suitable livelihood for the underprivileged
- Creating a self-sustaining business model
- Accessing markets beyond the reach of traditional distribution
By the end of this year, the Shakti network has been leveraged to
enroll 30,000 Shaktimaan who distribute in 100,000 new villages and the
Shakti programme had spread to 500,000 outlets, adding another
dimension to your Company''s distribution and contributing to tripling
the rural footprint.
7. SUPPLY CHAIN
During the year, your Company has made significant progress towards its
vision of delivering outstanding customer service and enabling
sustainable growth. The service delivery standards showed steady
improvement with CCFOT (Customer Case Fill on Time) maintained at 90%
and loss reduction by 20% in comparison to last year. The Customer
Satisfaction (eQ) survey scores have been encouraging and suggest that
the actions taken by the Company are in the right direction. With the
help of a sustained improvement program, the Modern Trade OSA (On-Shelf
Availability) has seen further improvement with a loss reduction of 25%
in comparison to last year. Your Company has embedded Sales and
Operation Planning Process (S&OP) ways of working as part of the
organization culture and this is adding value to the business.
The Quality performance measured as CCPMU (Consumer Complaints Per
Million Units) has shown 12% reduction over last year. Quality
continues to be a focus area with thrust on design quality improvement
and new quality standard implementation for warehousing and
Your Company has a robust Supply Chain savings programme with
continuous focus on end-to-end Supply Chain cost reduction with new
technologies, processes and methods. During the year, your Company has
delivered 6% saving in Supply Chain cost with factories delivering more
than 8% saving with quantum improvement in technical efficiencies,
wastage reduction and yield improvement.
The renewed focus on TPM (Total Productivity Management) and visible
leadership commitment toward turbo charging TPM, through strong focus
on autonomous maintenance, strong circle engagement, loss analysis and
reduced losses to improve PQCDSM (Productivity, Quality, Cost,
Delivery, Safety and Morale), have helped the Company to improve
employee engagement, efficiency and derive competitive advantage.
In order to support the volume growth, your Company has progressed on
the long-term plan to create capacities in line with demand so as to
enable growth while managing costs. Your Company has successfully
executed all capacity creation projects on time to ensure smooth
delivery during the year. A number of projects on sustainable energy
(bio-mass boilers), rain water harvesting and waste reduction projects
like sludge digesters and vermi-composting have been initiated and
commissioned across manufacturing sites.
There has been significant improvement in Innovation OTIF (On Time in
Full) with more than 100 innovation networks being executed during the
year. This ability of execution powerhouse is supporting business to
delight consumers and customers and catering to growth.
The Procurement function of the Company has focused on Partner to Win''
programme with supplier and business partners to reduce lead time,
procurement cost, improving reliability and working on new innovation.
Your Company also leverages benefits of scale and synergy through
Unilever''s global buying network.
8. RESEARCH, DEVELOPMENT AND INNOVATION
Your Company continues to benefit from the strong foundation and long
tradition of Research & Development (R&D) which differentiates us from
many others. These benefits flow not only from work done in Research
Centres in India, but also from the centres of Unilever''s global
research work. With the world class facilities and a superior science
and technology culture, we are able to attract the best of talent to
provide significant technology differentiation to our products and
The R&D labs in Mumbai and Bangalore are aligned significantly to
Unilever''s global R&D. Many of the projects which are run out of these
centers are of global relevance and with a strong focus on needs of
this region and the overall Developing & Emerging (D&E) world.
The R&D programmes of your Company are focused on development of
breakthrough and proprietary technologies with innovative consumer
propositions. The R&D team of over 750 people comprises highly
qualified scientists and technologists working in the areas of Health
and Hygiene, Laundry, Household Care, Skin Care, Water Purification,
Beverages, Frozen Dessert and Naturals. The R&D group also comprises
critical functional capability teams in the areas of Regulatory,
Clinical, Patents, Information Technology, Safety and Open Innovation
On the back of strong R&D inventions, close to hundred new products
were launched successfully in the market in 2011-12. In Skin Care,
Vaseline Men range products with improved moisturizing and skin
lightening benefits were re-launched with distinctive packaging and
formats. Fair & Lovely Spot Corrector Pen, Ponds White Beauty daily
spot-less lightening cream with proprietary photo protection technology
delivering SPF 20 PA and Fair & Lovely Anti-Marks were also
introduced during the year. In Skin Cleansing, improved Lux and Hamam
soaps, including a new variant on Lux (Lux Fresh) were launched with
improved consumer benefits. Luxliquid hand wash and body wash were also
introduced in the market along with a range of facial cleansing
products of Pond''s, Fair & Lovely, Vaseline and Dove.
New variants of Dove hair care range, including shampoo, conditioner
and other post wash formats, were launched to meet the needs of
different segments of the hair care market.
Clear shampoo was re-launched with a superior formula and a separate
range for men and women. Pepsodent Germicheck was re-launched with
improved formulation during the year. Peps dent Gumcare strengthened
its position by highlighting the mechanism of action in communication.
Fire-Freeze, the new dual-sensation extra-freshness variant of Closeup
was introduced during the year.
During the year, Surf and Wheel range of detergents were re-launched
with improved product propositions. New designs of Pureit, developed by
R&D to the cater to needs of the mass market and premium consumers,
were also launched during the year.
Foods R&D made significant contribution in 2011-12 to the Company''s
Foods & Beverages portfolio by delivering several innovations in the
market. Among them were an exciting range of instant soups under
Knorrwith the great taste of soups and crunch of croutons. In the
Instant Coffee segment, R&D delivered two major product and packaging
innovations - Bru Gold, a premium agglomerated 100% instant coffee and
Bru Exotica, a range of single origin freeze dried coffee, both packed
in an innovative triangular glass bottle design. R&D contributed
towards the re-launched formulation and packaging of Kssan tomato
ketchups and Jams. In the Frozen Dessert segment, Unilever''s flagship
brand Fruttare made with real fruits was launched. A premium range of
Selection Tubs was launched with a global packaging design and 3 new
flavors''. R&D made a significant contribution in developing a premium
range of flavored tea bags under the Taj Mahal brand and a range of
ready to drink and ready to prepare ice tea under the Lipton brand.
R&D has further contributed to the sustainability agenda of the Company
by enabling significant reduction in packaging material consumption
through several material efficiency initiatives.
The continuous stream of innovative and technically advanced products
launched in the market was a result of significant R&D investments and
the scientific talent that the Company can attract and retain. With its
strong scientific expertise and potential to deliver high value
technologies, India continues to occupy a premier position in Unilever
R&D. With the strong support from R&D as well as the brand development
capabilities, your Company is well placed to meet the challenges
arising from the increased competition intensity and the opportunities
to drive faster growth. Your Company is working towards further
strengthening the in-house scientific capabilities of the Indian R&D
function and building new expertise bases to retain the competitive
edge in the market place.
The details of expenditure on scientific research and development at
the Company''s in-house R&D facilities eligible for a weighted deduction
under Section 35(2AB) of the Income Tax Act, 1961 for the year ended
31st March, 2012 are as under:
- Capital Expenditure : Rs. 1.88 Crores
- Revenue Expenditure : Rs. 22.91 Crores
9. ENVIRONMENT, Safety, HEALTH AND ENERGY CONSERVATION
Your Company continues to focus on the vision of being an ''Injury
Free'' and ''Zero Environment Incident'' organization. The behavioral
safety programme is in place for more than seven years now. With
increased focus on road safety campaigns, defensive driving training,
hand in machine and other campaigns across units your Company has
reduced accidents, measured as Total Recordable Frequency Rate (TRFR),
significantly over the last 4 year period. The TRFR has come down by
46% in 2011 (in comparison to 2008 baseline) with 10.8% reduction in
2011 (in comparison to the previous year).
In line with targets of the Unilever Sustainable Living Plan (USLP),
where Unilever''s vision is to double the size of its business while
reducing the overall impact on environment, your Company has steadily
taken steps to reduce CO2 emissions. In 2011, the CO2 emission in
Company units has reduced by 9.9% over 2010 and 14.7% over 2008
baseline. With respect to energy consumption, the Company''s operations
achieved 12% improvement over 2010 and 21.7% improvement over 2008
baseline. Your Company has also increased the use of renewable
resources like bio-mass fuel. The renewable energy proportion has
reached 13.7% of total energy consumption in 2011. With respect to
water usage, your Company''s operations achieved reduction of 10.1% over
2010 and by 21.5% over 2008 baseline. Rain Water Harvesting (RWH) has
been implemented in more than 50% of the manufacturing units and 5
units of your Company have created the RWH potential to return more
water to the ground than their water consumption and 33 manufacturing
sites have been made zero discharge sites.
Your Company pursues a three pronged approach in waste management;
Reduce, Reuse and Recycle.
- Reduce waste generation through technical interventions and
optimization of processes like CIP (Cleaning in Place), sludge digester
and filter press at Effluent Treatment Plants.
- Reuse waste using new technologies of co-processing with cement
manufacturers and generating fuel from waste.
- Recycle waste through initiative like vermi-composting project.
This has been initiated at three sites to treat the Effluent Treatment
Plant waste into manure. The manure is being used as fertilizer in the
garden which is effective in disposing waste in a sustainable manner.
In 2011, over 96% of waste generated was liquidated through sustainable
The information required under Section 217(1 )(e) of the Companies Act,
1956, read with the Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988 with respect to energy
conservation is appended hereto and forms part of this Report.
10. HUMAN RESOURCES
Your Company''s Human Resource agenda for the year was focused on
strengthening four key areas: building a robust and diverse talent
pipeline, enhancing individual and organizational capabilities for
future readiness, driving greater employee engagement and strengthening
employee relations further through progressive people practices at the
Your Company''s employer brand has been built with high levels of rigor
and thoroughness that has gone into making its consumer brands and
reaching out to its customers. Your Company is widely acclaimed for its
people development practices and has reinforced its position in this
area in 2011-12. This, coupled with its ability to attract the best
talent, gives a competitive edge to the organization. Your Company,
once again, retained its position as the No. 1 Employer Brand with
campus students of top business schools in 2011 and was voted to this
position from a mix of FMCG, Consulting, Financial Services
Your Company has a vision to improve its Gender Balance, which requires
an overhaul of your Company''s policies and programmes to ensure
alignment and support to our Gender Balance agenda. The roadmap
involves a combination of bringing in women in adequate numbers and
creating enablers to ensure a culture of inclusion. These enablers
could be as varied as flexi time to agile working, to more open and
visible leadership models. ''Career by Choice'' is one such initiative
which is a unique re-hire programme that will provide a platform for
women looking for real opportunities to work flexibly and part time for
live business projects.
The initial part of the journey for Talent and Organization Assessment
was undertaken successfully in 2010. Keeping in mind the needs and
requirements of the current talent pool and also enhancing the
Company''s preparedness for the future, your Company has now
institutionalized the next phase of the Talent and Organization
Assessment charters by charting out the best practices for each stream.
Your Company has identified Beauty, Foods, Modern Trade, Rural and
Water as key capabilities in order to win in the future and our
investment in capability building is focused on these in addition to
our core capabilities in Marketing, Sales and Distribution. Your
Company has also launched a programme in mid 2011 with an aim to build
capability, manage performance and augment the levels of engagement for
3P sales associates to enable active presence at the Point of Purchase
(PoP), which will be a source of sustainable competitive advantage in
the long run. Your Company undertook intensive training programmes
through a combination of face-to-face and virtual learning approaches.
Over 35,000 e-learning registrations took place indicating that the
spirit of ''learn where you are'' is imbibed in employees of the
Company. Your company is also investing in building capability in
digital and social media to find new platforms for brands to engage
with consumers in India more effectively.
The Global People Survey is a part of the Unilever Employee Insight
Programme which aims to give a voice to the Company''s people throughout
the organization and provide a vehicle to make the views of everybody
heard, as also to provide leaders with regular, meaningful and
actionable feedback. It has 112 questions spread across 20 dimensions
in the area of Strategic Leadership at Unilever level, Strategic
Leadership at Organisation level, Immediate Boss Effectiveness and
Engagement. Feedback from this survey forms the basis of holistic
engagement plans which are reviewed consistently. Global People Pulse
Survey (2011) confirmed that India scores featured in the top 25
countries across Unilever. An extremely favorable 94% of employees said
that they were proud to work for your Company. This was on account of a
number of proactive and innovative initiatives to engage our employees,
the most significant being continuous and consistent business linked
engagement, a vision for the future of the business and clarity and
transparency to individuals on their own careers. This is also in
recognition of your Company''s Performance Management and Reward
processes which are geared towards building a performance and execution
Your Company has been investing in progressive employee relations
practices to ensure that it invests in capability at the grass root
level. ''Sparkle'' is a centrally hosted intranet based tool that
supports skill mapping, skill assessment, performance assessment, gap
analysis and enables training plan identification which is customized
to each workman basis priority areas. The tool has been a pioneering
tool in the area of workmen capability development and promotes higher
transparency, focused training intervention linked to individual and
business needs. The tool has delivered results for over a year now and
your Company has successfully completed appraisals thereby identifying
top performers and completed skill gap analysis of over 10,000 workmen
online. Business Linked Engagement and TPM Edge programmes continued
with full focus and rigout during the year and delivered significant
improvement in factory operations.
Information as per Section 217 (2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975, forms part
of this Report. However, as per the provisions of Section 219(1)(b)(iv)
of the Act, the Report and Accounts are being sent excluding the
statement containing the particulars to be provided under Section
217(2A) of the Act. Any member interested in obtaining such particulars
may inspect the same at the Registered Office of the Company or write
to the Company Secretary for a copy thereof.
11. INFORMATION TECHNOLOGY
Your Company continues to invest in Information Technology, leveraging
it as a source of competitive advantage.
The enterprise wide SAP platform forms the backbone of IT and
encompasses all core business processes in the Company and also
provides a comprehensive data warehouse with analytics capability that
helps in better and speedier decisions. SAP is now used for
collaboration with the suppliers and customers. Integrating systems
with the key customers has allowed your Company to partner much more
closely, leading to better customer service. Supply Chain optimization,
enabled by the IT capability, remains a source of significant value.
Your Company has institutionalized an extensive IT capability for
customer development function to support execution in the front-end.
All distributors run a standard distributor management system. The
distributors'' salesmen use handheld devices for accepting retail orders
which enable faster tracking and real time sales information. Your
Company has used analytics and the existing IT infrastructure to build
a capability for an intelligent sales call. This gives your Company,
the ability to customize the sales call for each outlet on a scientific
basis. This has helped improve the effectiveness and efficiency of the
sales process significantly.
Your Company is further enhancing IT capabilities built for rural
expansion to equip Shakti Ammas using low cost mobile technology in
order to make their market working more controlled and efficient. This
is one of the key enablers that will allow to leverage our rural
distribution to other partnerships in the future.
Your Company continues to invest in IT infrastructure to support
business applications and has made use of India''s expanded telecom
footprint to provide high bandwidth terrestrial links to all operating
units. Your Company also used software as a service to provide agile,
cost effective IT capabilities in select areas.
As the IT systems and related processes get embedded into the ways of
working of the organization, there is a continuous focus on IT security
and reliable disaster recovery management processes to ensure all
critical systems are always available. These are periodically reviewed
and tested for efficacy and adequacy.
12. FINANCE AND ACCOUNTS
Your Company''s continued focus on cash generation resulted in a strong
operating cash flow during the year; driven by good business
performance, efficiencies and cost savings across the Supply Chain and
continued focus on working capital management. Your Company managed
investments prudently by deploying cash surplus in a balanced portfolio
of safe and liquid instruments. Capital Expenditure during the year was
at Rs. 310.01 Crores (last year - Rs. 311.31 Crores). This was
primarily in the areas of capacity expansion, consolidation of
operations, information technology, energy and other cost savings.
The finance team of your Company has undertaken a programme to
strengthen the processes across transactions, accounting, reporting and
information to support the Company''s growth plans. One of the
significant projects that has been implemented during the financial
year is Project Parivartan'' which was aimed at transforming the payment
process. This project, aimed at simplifying the payments process and
improving payment efficiency, has been implemented and rolled out
across all units of the Company and has shown a significant improvement
in efficiency levels. Similar projects are underway in the area of
accounting, reporting and information management which will move the
Company''s processes to world class levels and support the growth plans
of the Company. These programmes are aligned with the overall finance
programme within Unilever.
The Company has not accepted any fixed deposits during the year. There
was no outstanding towards unclaimed deposit payable to depositors as
on 31st March, 2012.
In terms of the provisions of Investor Education and Protection Fund
(Awareness and Protection of Investors) Rules, 2001, Rs. 7.76 Crores of
unpaid / unclaimed dividends and interest / redemption of debentures
were transferred during the year to the Investor Education and
Return on Net Worth, Return on Capital Employed and Earnings Per Share
(EPS) for the last four years and for the year ended 31st March, 2012
are given below:
2007 31st March,2009 2009-10 2010-11 2011- 12
Return on Net
Worth (%) 80.1 103.6* 88.2 74.0 77.7
Return on Capital
Employed (%) 78.0 107.5* 103.8 87.5 96.8
Basic EPS (after
(Rs.) 8.73 11.46** 10.10 10.58 12.46
* Annualised numbers for proportionate period ** for fifteen month
Your Company has identified five business segments in line with the
Accounting Standard on Segment Reporting (AS-17), which comprise: (i)
Soaps and Detergents, (ii) Personal Products, (iii) Beverages, (iv)
Packaged Foods, including culinary, branded staples and frozen dessert
and (v) Others, including Exports, Chemicals and Water. The audited
financial results of these segments are given as part of financial
12.1 Risk and Internal Adequacy
Your Company manages cash and cash flow processes assiduously involving
all parts of the business. There was a net cash surplus of Rs. 1,830.04
Crores as on 31st March, 2012. The Company''s debt equity ratio is very
low which provides ample scope for gearing the Balance Sheet, should
that need arise. Foreign Exchange transactions are fully covered with
strict limits placed on the amount of uncovered exposure, if any, at
any point in time. There are no materially significant uncovered
exchange rate risks in the context of Company''s imports and exports.
Company accounts for mark-to-market gains or losses every quarter end
in line with the requirements of AS-11.
The Company''s internal control systems are commensurate with the nature
of its business and the size and complexity of its operations. These
are routinely tested and certified by Statutory as well as Internal
Auditors and cover all offices, factories and key areas of business.
Significant audit observations and follow up actions thereon are
reported to the Audit Committee. The Audit Committee reviews adequacy
and effectiveness of the Company''s internal control environment and
monitors the implementation of audit recommendations including those
relating to strengthening of the Company''s risk management policies and
Your Company has an elaborate process for Risk Management. This rests
on the three pillars of Business Risk Assessment, Operational Controls
Assessment and Policy Compliance processes. Major risks identified by
the businesses and functions are systematically addressed through
mitigating actions on a continuing basis. These are discussed with both
Management Committee and Audit Committee. Some of the risks relate to
competitive intensity and cost volatility.
Consequent to the approval of the Members in the Court Convened Meeting
held on 28th July, 2011 and approval of the Hon''ble High Court at
Bombay, the Scheme of Arrangement for transfer of certain assets,
liabilities and properties of FMCG Exports Business Division of the
Company to its wholly owned subsidiary, Unilever India Exports Limited
was made effective 1st January 2012.
14. CORPORATE SOCIAL RESPONSIBILITY
Sustainability has always been integral to your Company''s way of doing
business. In November 2010, Unilever launched the Sustainable Living
Plan, which puts sustainability at the heart of its business strategy.
The central objective of the Unilever Sustainable Living Plan is to
decouple growth from environmental footprint, while at the same time
increasing your Company''s positive social impacts. The Unilever
Sustainable Living Plan (USLP) has three significant outcomes by 2020:
- Help more than a billion people to improve their health and
- Halve the environmental footprint of our products
- Source 100% of our agricultural raw materials sustainably
Underpinning these three broad goals are around 60 time bound targets
spanning our social, economic and environmental performance across the
value chain - from the sourcing of raw materials all the way through to
the use of products in the home.
The Unilever Sustainable Living Plan represents a long term goal and
progress in 2010-11 has already been encouraging. By the end of 2011,
for example, almost two-thirds of the palm oil used in products
globally was being purchased from certified sources. In India, 60% of
tomatoes are sourced sustainably.
Pure it in-home water purifier delivers safe water, without requiring
running water or electricity, and at a low cost, to over 30 million
people in India. In 2010-11, Lifebuoy'' shygiene programme reached more
than 30 million people in India, spreading hygiene awareness and
encouraging behavior change.
Your Company has taken steps to ensure that the food brands have a
better nutritional profile. Around 60% of the major food and beverage
brands, viz. Brooke Bond, Bru, Knorr, Kissan and Kwality Wall''s, comply
with the ''Healthy Choice'' guidelines as on date.
In 2011, your Company reduced CO2 emissions by 14.7% (per tonne of
production over 2008 baseline); water use by 21.5%; and waste by 52.8%
in factories in India. Your Company has improved CO2 efficiency in
transportation by 17.8% despite significant increase in volumes. During
the year, the Frozen Dessert business has deployed over 23,775
environment friendly HC-based freezers in its fleet.
Your Company has extended the Shakti initiative by adding 30,000
Shaktimaan (male family members of existing Shakti entrepreneurs who
have enrolled for the programme), to sell the products by visiting
the surrounding villages on bicycles.
Even though the Company is making changes across the length and breadth
of its business, much remains to be done. The Company has to develop
products and processes that enable growth in a resource stressed world,
and encourage behavior and habits that help people live sustainably.
While your Company has an ambitious and challenging agenda, it
certainly doesn''t have all the answers. What it knows, is that it
requires all of us to work together for achieving a sustainable future.
Your Company is also working in partnership with governments and NGOs
to implement water conservation projects in more than 180 villages in
17 districts of India. By 2015, your Company aims to create water
conservation capacity of a hundred billion liters to enable a better
future for a million people.
In April 2012, your Company has released India progress report on
Unilever Sustainable Living Plan as well as a report on your Company''s
community water conservation projects.
15. EMPLOYEE STOCK OPTION PLAN (ESOP)
Details of the shares issued under ESOP, as also the disclosures in
compliance with Clause 12 of the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 are set out in the Annexure to this Report.
No employee has been issued share options, during the year, equal to or
exceeding 1% of the issued capital of the Company at the time of grant.
Pursuant to the approval of the Members at the Annual General Meeting
held on 29th May, 2006, the Company adopted the ''2006 HLL Performance
Share Scheme''. The Scheme has been registered with the Income Tax
authorities in compliance with the relevant provisions of SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999. As per the terms of the Performance Share Plan,
employees are eligible for the award of conditional rights to receive
equity shares of the Company at the face value of Re. 1/- per share.
These awards will vest only on the achievement of certain performance
criteria measured over a period of 3 years. During the year 168
employees, including Whole time Directors, were awarded conditional
rights to receive a total of 4,12,633 equity shares at the face value
of Re. 1/- each. The above mentioned comprises of conditional grants
made to eligible managers covering performance period 2012-14.
The ''2006 HLL Performance Share Scheme'' was introduced as a measure
to reward and motivate employees as also to attract the talent and
retain the key employees. On a review of the operating experience of
the said scheme and bearing in mind the charges in the global trends on
management rewards, it is proposed to revise the approach of award of
share options under the scheme by adopting a revised 2012 HUL
Performance Share Scheme''.
16. CORPORATE GOVERNANCE
Your Company is renowned for exemplary governance standards since
inception and continues to lay a strong emphasis on transparency,
accountability and integrity. In the year 2011 your Company received
the ICSI National Award for Excellence in Corporate Governance, in
recognition of its Corporate Governance practices.
A separate report on Corporate Governance is provided at page no. 50 of
this annual report together with a Certificate from the Auditors of the
Company regarding compliance of conditions of Corporate Governance as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchange(s). A certificate of the CEO and CFO of the Company in terms
of sub-clause (v) of Clause 49 of Listing Agreement, inter alia,
confirming the correctness of the financial statements, adequacy of the
internal control measures and reporting of matters to the Audit
Committee is also annexed.
The Ministry of Corporate Affairs, Government of India introduced the
Corporate Governance Voluntary Guidelines, 2009. These guidelines have
been issued with the view to provide Corporate India a framework to
govern themselves voluntarily as per the highest standards of ethical
and responsible conduct of business. The recommendation of the
Voluntary Guidelines pertaining to separation of offices of the
Chairman and the CEO, constitution of Audit Committee and Remuneration
Committee, Risk Management framework, are already practiced by your
Company. Your Company has been in substantial compliance of these
During the year Secretarial Audit and Secretarial Standards Audit were
carried out. The detailed reports on the same are given at page nos. 67
to 69 of this annual report.
The fiscal year 2011-12 witnessed slowdown of economic activities
particularly industrial output. Inflation also remained at elevated
level throughout the fiscal year. Private investment has declined in
its pace of growth considerably affecting the growth rate of the
economy. Higher spending on subsidies on account of oil and fertilizers
widened the fiscal deficit of the centre more than the budget
The RBI has projected a GDP growth of 7.2% for 2012-13 whereas the
Economic Survey 2011-12 projected a GDP growth of 7.6%. All these
projections point to continuation or improvement over the pace of
economic activity of the previous year. Combined with a lower inflation
rate, the prognosis for the new financial year is one of improved
performance on growth front. Stable external conditions and a
favorable monsoon would be critical to the realization of these
projections. The growth prospects for agriculture in 2012-13 will hinge
on the performance of monsoon.
FMCG markets are expected to grow, however uncertain global economic
environment, inflation and adverse impact of rupee depreciation and
competitive intensity continue to pose challenges for the future. While
the near term conditions pose a challenge for the economy, the medium
to longer term trends based on rising incomes, aspirations, low
consumption levels, etc. are positive and an opportunity for the
17.1 Cautionary Statement
Statements in this report, particularly those which relate to
Management Discussion and Analysis, describing the Company''s
objectives, projections, estimates and expectations, may constitute
''forward looking statements'' within the meaning of applicable laws
and regulations and actual results might differ materially from those
either expressed or implied.
18. SUBSIDIARY COMPANIES
A statement pursuant to Section 212 of the Companies Act, 1956 relating
to Subsidiary Companies is attached to the accounts.
In terms of General Exemption, under Section 212(8) of the Companies
Act, 1956, granted by Ministry of Corporate Affairs vide its circular
no. 02/201 1 dated 8th February, 2011 and in compliance with the
conditions enlisted therein, the Audited Statement of Accounts,
Auditors'' Reports thereon and the Reports of the Board of Directors of
the Company''s subsidiaries for the financial year ended 31st March,
2012 have not been annexed. The Annual Accounts and related documents
of the Subsidiary Companies shall be kept open for inspection at the
Registered Office of the Company. The Company will also make available
these documents upon request by any Member of the Company interested in
obtaining the same. However, as directed by the said circular, the
financial data of the Subsidiaries have been furnished under
''Subsidiary Companies Particulars'' forming part of the Annual Report
(refer page no. 150). Further, pursuant to Accounting Standard AS-21
issued by the Institute of Chartered Accountants of India, Consolidated
Financial Statements presented by the Company in this Annual Report
includes the financial information of its subsidiaries.
19. BOARD OF DIRECTORS
Mr. Deepak Parekh, Independent Director and Chairman of the Audit
Committee of the Company, stepped down from the Board of the Company
with effect from 27th December, 2011, after a tenure lasting more than
14 years. The Board acknowledges and places on record its deep
appreciation for the contribution made by Mr. Deepak Parekh as an
Independent Director and the Chairman of the Audit Committee of the
Mr. Gopal Vittal, Executive Director, Home & Personal Care resigned
from the Board of the Company with effect from 20th January, 2012, to
pursue opportunities outside Unilever. The Board acknowledges and
places on record its appreciation for the contribution made by Mr.
Gopal Vittal as a Whole time Director on the Board of the Company.
Mr. O. P. Bhatt was appointed as an Additional Director on the Board of
the Company with effect from 20th December, 2011, in accordance with
Section 260 and Articles of Association of the Company. Notices have
been received from Members pursuant to Section 257 of the Companies
Act, 1956 together with necessary deposits proposing the appointment of
Mr. O. P. Bhatt as Non-Executive Independent Director on the Board of
The Members of the Company in the Extraordinary General Meeting held on
4th April, 2008 had appointed Mr. Nitin Paranjpe as a Managing Director
and Chief Executive Officer (CEO) of the Company for a period of five
years, with effect from 4th April, 2008. The current term of office of
Mr. Nitin Paranjpe as a Managing Director and CEO of the Company is due
to expire on 3rd April, 2013. It is proposed to re-appoint Mr. Nitin
Paranjpe as the Managing Director and CEO for a further period of five
years commencing from 4th April, 2013.
In accordance with the Articles of Association of the Company, all
other Directors, except for Managing Director, will retire at the
ensuing Annual General Meeting and being eligible offer themselves for
20. MANAGEMENT COMMITTEE
The day-to-day management affairs of the Company are vested with the
Management Committee, which is subjected to the overall superintendence
and control of the Board. The Management Committee is headed by Mr.
Nitin Paranjpe, as the Chief Executive Officer, and has Functional /
Business Heads as its members.
During the year, Ms. Geetu Verma joined the Management Committee of the
Company as Executive Director - Foods to succeed of Mr. Shrijeet
Mishra, who resigned from the services of the Company.
Mr. Hemant Bakshi, who earlier held the position of Executive Director
- Sales and Customer Development, was appointed as Executive Director -
Home & Personal Care of the Company. Mr. Hemant Bakshi has succeeded
Mr. Gopal Vittal, Executive Director - Home & Personal Care, who ceased
to be the member of the Management Committee consequent to his
Mr. Manish Tiwary was appointed as a member of the Management Committee
as Executive Director - Sales and Customer Development. Before being
appointed to the Management Committee, Mr. Manish Tiwary was Vice
President, Modern Trade of the Company.
M/s. Lovelock & Lewes, Statutory Auditors of the Company retire and
offer themselves for re-appointment as the Statutory Auditor of the
Company pursuant to Section 224 of the Companies Act, 1956.
22. APPRECIATIONS AND ACKNOLLEDGEMENTS
Your Directors place on record their deep appreciation to employees at
all levels for their hard work, dedication and commitment. The
enthusiasm and unstinting efforts of the employees have enabled the
Company to remain at the forefront of the Industry.
Your Directors would also like to acknowledge the excellent
contribution by Unilever to your Company in providing with the latest
innovations, technological improvements and marketing inputs across
almost all categories in which it operates. This has enabled the
Company to provide higher levels of consumer delight through continuous
improvement in existing products and introduction of new products.
The Board places on record their appreciation for the support and
co-operation your Company has been receiving from its suppliers,
redistribution stockists, retailers, business partners and others
associated with the Company as its trading partners. Your Company
looks upon them as partners in its progress and has shared with them
the rewards of growth. It will be Company''s endeavor to build and
nurture strong links with the trade based on mutuality of benefits,
respect to and co-operation with each other, consistent with consumer
The Directors also take this opportunity to thank all investors,
clients, vendors, banks, regulatory and government authorities and
stock exchanges, for their continued support.
On behalf of the Board
1st May, 2012 Harish Manwani