|
Financial Review
|
|
|
|
|
|
Results
|
|
|
|
(? in crores)
|
| |
|
|
For the year ended
|
For the year ended
|
| |
|
|
31st March, 2023
|
31st March, 2022
|
|
Turnover
|
58,154
|
50,336
|
|
EBITDA
|
13,632
|
12,503
|
|
Profit before exceptional items and tax
|
13,141
|
11,773
|
|
Profit for the year
|
9,962
|
8,818
|
|
Division Wise Turnover
|
|
|
|
(? in crores)
|
| |
For the year ended 31st March, 2023
|
For the year ended 31st March, 2022
|
| |
Sales
|
Others*
|
Sales
|
Others*
|
|
Home Care
|
21,103
|
127
|
16,470
|
108
|
|
Beauty & Personal Care
|
21,498
|
333
|
19,157
|
303
|
|
Foods and Refreshments
|
14,744
|
132
|
14,020
|
85
|
|
Others (including Exports and consignment sales)
|
810
|
397
|
689
|
361
|
|
Total
|
58,154
|
990
|
50,336
|
857
|
|
* Others include service income from operations, relevant to the respective businesses.
|
|
|
|
|
Summarised Profit and Loss Account
|
|
|
|
(? in crores)
|
| |
|
|
For the year ended
|
For the year ended
|
| |
|
|
31st March, 2023
|
31st March, 2022
|
|
Turnover
|
58,154
|
50,336
|
|
Other operational income
|
990
|
857
|
|
Total Revenue from operations
|
59,144
|
51,193
|
|
Operating Costs
|
45,512
|
38,690
|
|
Profit Before Depreciation, Interest, Tax (PBDIT)
|
13,632
|
12,503
|
|
Depreciation
|
1,030
|
1,025
|
|
Profit Before Interest & Tax (PBIT)
|
12,602
|
11,478
|
|
Other Income (net)
|
539
|
295
|
|
Profit before exceptional items
|
13,141
|
11,773
|
|
Exceptional items
|
(62)
|
(34)
|
|
Profit Before Tax (PBT)
|
13,079
|
11,739
|
|
Taxation
|
3,117
|
2,921
|
|
Profit for the year
|
9,962
|
8,818
|
|
Basic EPS (?)
|
42.40
|
37.53
|
|
Key Financial Ratios
|
|
|
2022-23
|
2021-22
|
|
Return on Net Worth (%)
|
20.1
|
18.6
|
|
Return on Capital Employed (%)
|
101.9
|
107.8
|
|
Basic Earnings Per Share (EPS) (?)
|
42.40
|
37.53
|
|
Debtors Turnover (no. of times)
|
24.9
|
28.1
|
|
Inventory Turnover (no. of times)
|
14.7
|
13.8
|
|
Interest Coverage Ratio
|
143.9
|
129.2
|
|
Debt Service Coverage Ratio
|
21.8
|
21.4
|
|
Current Ratio
|
1.4
|
1.3
|
|
Debt Equity Ratio
|
0.0
|
0.0
|
|
Operating Profit Margin (%)
|
21.7
|
22.8
|
|
Net Profit Margin (%)
|
17.1
|
17.5
|
|
Increase in Return on Net Worth is led by PAT growth
|
|
|
|
|
|
There is no significant change (i.e. change of 25% or more as compared to the FY 2021 -22)
|
in the other key financial ratios.
|
|
What does EVA show?
EVA is residual income after charging the company for the cost of capital provided by lenders and Shareholders. It represents the value added to the Shareholders by generating operating profits in excess of the cost of capital employed in the business.
When will EVA increase?
EVA will increase if:
a. Operating profits can be made to grow without employing more capital, i.e. greater efficiency.
b. Additional capital's invested in projects that return more than the cost of obtaining new capital, i.e. profitable growth.
c. Capital is curtailed in activities that do not cover the cost of capital, i.e liquidate unproductive capital.
EVA in practice at Hindustan Unilever Limited (HUL)
In Hindustan Unilever Limited, the goal of sustainable long term value creation for our shareholders is well understood by all the business groups. Measures to evaluate business performance and to set targets take into account this concept of value creation.
Other Financial Disclosures
There were no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year (FY) to which this financial statement relates on the date of this Integrated Annual Report.
During the Financial Year, there was no amount proposed to be transferred to the Reserves.
Capital Expenditure (including Intangible Assets) during the financial year was at ?1,042 crores (?919 crores in the previous financial year).
Explanation to Key Financial Ratios
(i) Return on Net Worth (%)
Return on Net Worth is a measure of profitability of a company expressed in percentage. It is calculated by dividing total comprehensive income by average shareholder's equity.
(ii) Return on Capital Employed (%)
Return on Capital Employed indicates the ability of a company's management to generate returns for both the debt holders and the equity holders. It measures a Company's profitability and the efficiency with which its capital is used. It is calculated by dividing profit before exceptional items, interest and tax by capital employed. Capital Employed = tangible net worth total debt deferred tax liability.
(iii) Basic EPS
EPS is the portion of a company's profit allocated to each share. It serves as an indicator of a Company's profitability. It is calculated by dividing profit for the year by weighted average number of shares outstanding during the year.
(iv) Debtors Turnover
Debtors Turnover measures the efficiency at which the firm is managing the receivables. The ratio shows how well a company uses and manages the credit it extends to customers and how quickly that short-term debt is collected or is paid. It is calculated by dividing turnover by average trade receivables.
(v) Inventory Turnover
Inventory Turnover measures the efficiency with which a company utilises or manages its inventory. It establishes the relationship between sales and average inventory held during the period. It is calculated by dividing turnover by average inventory.
(vi) Interest Coverage Ratio
Interest Coverage Ratio measures how many times a company can cover its current interest payment with its available earnings. It is calculated by dividing earnings available for debt service by interest payments.
(vii) Debt Service Coverage Ratio
Debt Service Coverage Ratio is used to analyse the firm's ability to pay-off current interest and instalments. It is calculated by dividing earnings available for debt service by debt service.
(viii) Current Ratio
The Current Ratio indicates a company's overall liquidity position. It measures a company's ability to pay short-term obligations or those due within one year. It is calculated by dividing the current assets by current liabilities.
(ix) Debt Equity Ratio
Debt Equity ratio is used to evaluate a company's financial leverage. It is a measure of the degree to which a company is financing its operations through debt versus wholly owned funds. It is calculated by dividing total debt by shareholder's equity.
(x) Operating Profit Margin (%)
Operating Profit Margin is used to calculate the percentage of profit a company produces from its operations. It is calculated by dividing earnings before interest and tax by turnover.
(xi) Net Profit Margin (%)
The Net Profit Margin is equal to how much net profit is generated as a percentage of revenue. It is calculated by dividing net profit by turnover.
Economic Value Added (EVA)
What is EVA ?
Traditional approaches to measuring Shareholder's Value Creation have used parameters such as earnings capitalisation, market capitalisation and present value of estimated future cash flows. Extensive equity research has established that it is not earnings per se, but VALUE that is important. A measure called 'Economic Value Added' (EVA) is increasingly being applied to understand and evaluate financial performance.
EVA = Net Operating Profit after Taxes (NOPAT) - Cost of Capital Employed (COCE), where
NOPAT = Profits after depreciation and taxes but before interest costs. NOPAT thus represents the total pool of profits available on an ungeared basis to provide a return to lenders and shareholders
COCE = Weighted Average Cost of Capital (WACC) x Average Capital Employed.
Cost of Debt is taken at the effective rate of interest applicable to an 'AAA' rated Company like HUL for a short-term debt, net of taxes. We have considered a pre tax rate of 7.85%.
Cost of Equity is the return expected by the investors to compensate them for the variability in returns caused by fluctuating earnings and share prices.
Cost of Equity = Risk free return equivalent to yield on long term Government Bonds Market risk premium (x) Beta variant for the Company, where Beta is a relative measure of risk associated with the Company's shares as against the market as a whole. Thus HUL's cost of equity = 10.90%.
| |
|
IGAAP
|
|
|
|
IND AS
|
|
(? in crores)
|
|
2013
14
|
2014
15
|
2015
16
|
2016
17
|
2017
18
|
2018
19
|
2019
20
|
2020
21
|
2021
22
|
2022-23
|
|
Cost of Capital Employed (COCE)
|
|
|
1.
|
Average Debt
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
2.
|
Average Equity
|
3,715
|
4,338
|
5,664
|
5,831
|
6,181
|
6,668
|
7,227
|
46,890
|
47,156
|
48,486
|
|
3.
|
Average Capital Employed : (1) (2)
|
3,715
|
4,338
|
5,664
|
5,831
|
6,181
|
6,668
|
7,227
|
46,890
|
47,156
|
48,486
|
|
4.
|
Cost of Debt, post-tax %
|
6.36
|
5.56
|
5.43
|
4.90
|
5.21
|
5.77
|
5.25
|
4.70
|
4.81
|
5.87
|
|
5.
|
Cost of Equity %
|
11.62
|
10.91
|
11.98
|
12.25
|
14.19
|
11.84
|
9.11
|
8.86
|
9.09
|
10.90
|
|
6.
|
Weighted Average Cost of Capital % (WACC)
|
11.62
|
10.91
|
11.98
|
12.25
|
14.19
|
11.84
|
9.11
|
8.86
|
9.09
|
10.90
|
|
7.
|
COCE : (3) x (6)
|
432
|
474
|
679
|
714
|
877
|
789
|
658
|
4,153
|
4,289
|
5,285
|
|
Economic Value Added (EVA)
|
|
|
8.
|
Profit after tax, before exceptional items
|
3,555
|
3,843
|
4,116
|
4,247
|
5,135
|
6,080
|
6,743
|
7,963
|
8,724
|
9,720
|
|
9.
|
Add : Interest, after taxes
|
24
|
11
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
10.
|
Net Operating Profits After Taxes (NOPAT)
|
3,579
|
3,854
|
4,117
|
4,247
|
5,135
|
6,080
|
6,743
|
7,963
|
8,724
|
9,720
|
|
11.
|
COCE, as per (7) above
|
432
|
474
|
679
|
714
|
877
|
789
|
658
|
4,153
|
4,289
|
5,285
|
|
12.
|
EVA : (10) - (11)
|
3,147
|
3,380
|
3,438
|
3,533
|
4,258
|
5,291
|
6,085
|
3,810
|
4,435
|
4,435
|
During the Financial Year, the Company did not accept any public deposits as defined under Chapter V of the Companies Act, 2013 (the Act).
The Company manages cash and cash flow processes assiduously, involving all parts of the business. There was cash and bank balance of ?4,422 crores (FY 2021-22: ?3,618 crores), as on 31st March, 2023. The Company's low debt equity ratio provides ample scope for gearing the Balance Sheet, should the 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. The Company accounts for mark-to-market
gains or Losses every quarter end, are in Line with the requirements of Ind AS 21.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of Foreign Exchange Earnings and Outgo as required under Section 134 of the Act and Rule 8(3) of Companies (Accounts) Rules, 2014 are mentioned below:
| |
Forthe
|
in crores) For the
|
| |
year ended
|
year ended
|
| |
31st March, 2023
|
31st March, 2022
|
|
Foreign Exchange Earnings
|
1,574
|
1,527
|
|
Foreign Exchange Outgo
|
3,695
|
3,131
|
Includes all Indian subsidiaries, excludes Unilever NepaL Limited.
PERFORMANCE OF SUBSIDIARIES
The summary of performance of subsidiaries is provided beLow:
Unilever India Exports Limited
Unilever India Exports Limited is a wholly owned subsidiary of the Company and is engaged in Fast Moving Consumer Goods (FMCG) exports business. The focus of the FMCG exports operation is two-fold: to expand global presence of brands, such as Vaseline, Dove, Pears, Bru, Red Label, Lakme, HorLicks and Boost, and to effectively provide cross-border sourcing of FMCG products to other Unilever companies across the world.
The top Line growth of the company was driven by growth in Skin Care, Health Food Drinks, Instant Tea and Personal Wash Brands Like Dove, HorLicks, Vaseline, Pears, SunsiLk, Glow and LoveLy, Ponds, Lipton Hot Instant Tea, Lakme and Lifebuoy. These brands have registered heaLthy growth in the focused markets.
Lakme Lever Private Limited
Lakme Lever Private Limited is a whoLLy owned subsidiary of the Company and is engaged in SaLon business and aLso operates a manufacturing unit at Gandhidham which carries out job work operations for the Company by manufacturing toiLet soaps, bathing bars and detergent bars.
The company deLivered robust top Line and bottom Line growth Led by recovery in the saLon business. With focus on safety, quaLity of operations, expert treatments and prudent cost optimisation, the saLon business continues to perform weLL in the beauty services category. Job work business continued to do weLL.
The company has over 450 owned / managed and franchisee saLons. At Lakme SaLon, safety and weLLbeing of our consumers and experts have aLways been the topmost priority. The company has emerged stronger post the pandemic by strengthening safety, quaLity and expertise across aLL touch points in our customer journey. The extended team comprising the housekeeping staff, experts,
saLon managers and business partners have been trained and audited continuousLy to ensure compLete adherence to protocoLs. The company aLso diaLed up expertise by continued investment in training. This has heLped maintain the company's Net Promoter Score at 90% pLus by ensuring safety and keeping customer satisfaction as focus.
Innovations Like QuintessentiaL bridaL Looks, Luxury body treatments, Cappuccino pedicure/manicure spa and our signature Beautysutra range added excitement to our comprehensive Runway secrets portfoLio. Thematic campaigns - Good Hair Day, Happy New You and Skin Investment PLan heLped gain new cLients and sustain existing ones. Lakme SaLon continues to be a highLy preferred option for franchisees in the beauty and weLLness category attracting severaL professionaLs and entrepreneurs to own their Lakme SaLon.
Hindustan Unilever Foundation
Hindustan UniLever Foundation (HUF) is a not-for-profit company that anchors water management reLated community deveLopment and sustainabiLity initiatives of the Company.
The company operates the 'Water for PubLic Good' programme, with a specific focus on water conservation, buiLding LocaL community institutions to govern water resources and enhancing farm-based LiveLihoods through adoption of judicious water practices. It aims to cataLyse effective soLutions to India's water chaLLenges through a partnership approach invoLving the Government, communities, experts and mission-based organisations.
The company partners with non-profit organisations in water-stressed regions across the country to support ruraL communities with water conservation and regenerative agricuLturaL practices amongst farmers. The initiative has deLivered a cumuLative and coLLective water potentiaL of over 2.6 triLLion Litres through improved suppLy and demand water management, over 1.7 miLLion tonnes of additionaL agricuLturaL and biomass production, and over 110 miLLion person-days of empLoyment due to project interventions.” TiLL now, HUF's programmes have reached more than 14,000 viLLages in 13 States and 2 Union Territories.
Unilever Nepal Limited
UniLever NepaL Limited is a subsidiary of the Company and is engaged in marketing and manufacturing detergents, toiLet soaps, personaL products and Laundry soaps in NepaL.
The company deLivered strong doubLe-digit growth with high singLe digit voLume growth. Growth was competitive, supported by LocaLisation and a step up in brand and marketing investments. Recovering from the impact caused by the pandemic, the NepaL economy condition remained chaLLenging with acute Liquidity, rising infLation and pressure on foreign reserves. Despite a chaLLenging environment, the company has demonstrated resiLience and agiLity to deLiver a strong aLL-round performance. The company continue to manage our business dynamicaLLy by driving savings harder across aLL Lines of P&L, ensuring right
price-vaLue equation and investing competitiveLy behind our brands Leading to a heaLthy growth in profit margins.
Unilever India Limited
UniLever India Limited is a whoLLy owned subsidiary of the Company that was incorporated to Leverage the growth opportunities in a fast-changing business environment. In JuLy 2022, UniLever India Limited's new Home Care factory was inaugurated in Sumerpur, Uttar Pradesh.
The new unit, a state-of-the-art spray dried detergent factory manufactures Home Care products for the Company. It is designed to make the best use of digitaL 4th industriaL revoLution has to offer, guaranteeing worLd cLass performance in peopLe safety, product quaLity, innovation Lead times and environmentaL performance. The site's integrated design aLLows for an ecosystem of materiaL suppLiers, Logistic operators, and manufacturing partners to be Located at the site for optimaL integration of the suppLy chain.
This unit is firmLy on its path to be UniLever's first gender-baLanced factory in South Asia and currentLy has 170 femaLe empLoyees. It is an inspiring exampLe of the path breaking work being done to increase femaLe representation in our shop fLoors through Project Samavesh.
Zywie Ventures Private Limited
Zywie Ventures Private Limited (ZVPL) is a subsidiary of the Company engaged in the business of HeaLth and WeLLbeing products under the brand name of 'OZiva'. The Company acquired 53.34% stake (51.00% on a fuLLy diLuted basis) in ZVPL on 10th January, 2023.
OZiva is a pLant-based and cLean LabeL consumer weLLness brand focused on the need spaces such as LifestyLe Protein, Hair & Beauty SuppLements and Women's HeaLth. OZiva is a digitaL-first brand with an omnichanneL approach, avaiLabLe on its D2C website, digitaL marketpLaces and a growing offLine presence. The company has a strong inhouse R&D team comprising Ph.D.s, Phyto-chemists and BiotechnoLogists.
The investment is in Line with the Company's strategy to enter fast evoLving growth space of HeaLth and WeLLbeing.
Other Subsidiaries
Pond's Exports Limited is a subsidiary of the Company which was engaged in Leather business and has currentLy discontinued operations.
Bhavishya Alliance Child Nutrition Initiatives is a
not-for-profit subsidiary of the Company and is under voLuntary Liquidation.
Daverashola Estates Private Limited is a subsidiary of the Company which currentLy has no business activity. There is an ongoing Litigation on the property owned by the company in TamiL Nadu.
Jamnagar Properties Private Limited is a subsidiary of the Company and currentLy has no business activity.
Levers Associated Trust Limited, Levindra Trust Limited and Hindlever Trust Limited, subsidiaries of the Company, act as trustees of the empLoyee benefits trusts of the Company.
The Scheme for Merger of Pond's Exports Limited and Jamnagar Properties Private Limited into UniLever India Exports Limited was fiLed with the Hon'bLe NationaL Company Law TribunaL, Mumbai on 1st JuLy, 2021. As on date, the finaL order on the company petition for merger is awaited.
During the year, the Company has obtained a certificate from the Statutory Auditors certifying that the Company is in compLiance with the FEMA ReguLations with respect to the downstream investment made in Zywie Ventures Private Limited and NutritionaLab Private Limited.
OTHER STATUTORY INFORMATION Audit & Auditors Statutory Auditors
In terms of provisions of Section 139 of the Act, M/s. B S R & Co. LLP, Chartered Accountants (Firm Registration No.: 101248W/W-100022) were re-appointed as Statutory Auditors of the Company at the 86th AnnuaL GeneraL Meeting (AGM) heLd on 29th June, 2019, to hoLd office tiLL the concLusion of 91st AGM of the Company.
The Report given by the Statutory Auditors on the financiaL statements of the Company is part of this Integrated AnnuaL Report. There has been no quaLification, reservation, adverse remark or discLaimer given by the Auditors in their Report. During the year under review, the Auditors have not reported any fraud under Section 143(12) of the Act.
Secretarial Auditors
In terms of provisions of Section 204 of the Act, read with the Companies (Appointment and Remuneration of ManageriaL PersonneL) RuLes, 2014, the Board, at its Meeting heLd on 27th ApriL, 2022 had appointed M/s. S. N. Ananthasubramanian & Co., Company Secretaries (COP No. 1774) to conduct SecretariaL Audit for the FY 2022-23.
The SecretariaL Audit Report forms part of this Integrated AnnuaL Report and does not contain any quaLification, reservation or adverse remark. During the year under review, the SecretariaL Auditor has not reported any fraud under Section 143(12) of the Act.
Cost Records and Cost Audit
In terms of provisions of Section 148 of the Act read with the Companies (Accounts) RuLes, 2014, Cost Audit is appLicabLe for foLLowing businesses such as Coffee, Drugs and PharmaceuticaLs, Insecticides, MiLk Powder, Organic ChemicaLs, Other Machinery, PetroLeum Products and Tea, etc. The accounts and records for the above appLicabLe businesses are made and maintained by the Company as specified by the CentraL Government under Section 148(1) of the Act.
and salt carried out under the brands of 'Annapurna' and 'Captain Cook' to Uma Global Foods Pte Limited and Uma Consumer Products Private Limited, affiliates/nominees of CSAW Aqbator Pte Limited.
Particulars of Loan, Guarantee or Investments
Details of loans, guarantee or investments made by the Company under Section 186 of the Companies Act, 2013, during FY 2022-23 are appended as an Annexure to this Integrated Annual Report.
GOVERNANCE, COMPLIANCE AND BUSINESS INTEGRITY
The Legal function of the Company continues to be a valued business partner that provides solutions to protect the Company and enable it to win in the brittle, anxious, non-linear and incomprehensible environment. Through its focus on creating 'value with values', the function provides strategic business partnership in the areas including product claims, mergers and acquisitions, legislative changes, combatting unfair competition, business integrity and governance. The function works with the growth enabler mindset.
As the markets continue to be disrupted with newer technologies and ever-evolving consumer preferences, the need to have a framework around data security and privacy is paramount. The Company continues to ensure it has an appropriate framework and safeguards for data privacy of its stakeholders with enhanced legal and security standards. The legal function of the Company continues to embrace newer technologies to make the function future ready to support the growth agenda of the business.
We are of the view that the menace of counterfeits can be effectively addressed if enforcement actions are supplemented with building awareness amongst the consumers of tomorrow. The Company continued to engage with various stakeholders including e-Commerce Channel Partners, Industry Bodies and Regulators to curb the menace of counterfeiting across channels and markets, including through the import route to the country.
The Legal function of the Company works with leading industry associations, national and regional regulators and key opinion formers to develop a progressive regulatory environment in the best interest of all stakeholders.
Business Integrity
Our principles and values apply to all our employees through our Code of Business Principles (CoBP) and Code Policies. Our employees undertake mandatory annual training on these Policies via online learning modules and sign an annual Business Integrity Pledge. Our Business Integrity governance framework includes clear processes for dealing with CoBP breaches.
During the financial year, 79 incidents were reported across all areas of our CoBP and Code Policies, with 36 confirmed breaches. During the year, we terminated employment
M/s. RA & Co., Cost Accountants (Firm Registration No. 000242) have carried out the Cost Audit for applicable businesses during the year. During the year under review, the Cost Auditor has not reported any fraud under Section 143(12) of the Act.
The Board of Directors, based on the recommendation of the Audit Committee, have appointed M/s. RA & Co., Cost Accountants as Cost Auditors for the FY 2023-24. M/s. RA & Co., being eligible, have consented to act as the Cost Auditors of the Company for the FY 2023-24. The remuneration of ?14 lakhs (Rupees Fourteen lakhs only) exclusive of taxes and out-of-pocket expenses incurred in connection with the aforesaid audit, is proposed to be paid to the Cost Auditors, subject to ratification by the Members of the Company at the ensuing AGM.
Internal Financial Controls
The Company has a robust Internal Financial Control framework which is established in accordance with the Committee of Sponsoring Organisation (COSO) framework. The details of Internal Financial Control framework, form a part of the Corporate Governance Report of this Integrated Annual Report.
Employee Stock Option Plan (ESOP)
Pursuant to the approval of the Members at the AGM held on 23rd July, 2012, the Company adopted the '2012 HUL Performance Share Scheme'. In accordance with the terms of the Performance Share Scheme, employees are eligible for award of conditional rights to receive equity shares of the Company at the face value of ?1/- each. These awards will vest only on the achievement of certain performance criteria measured over a period of three years. The Company confirms that the 2012 HUL Performance Share Scheme complies with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014.
No shares were awarded to employees under the '2012 HUL Performance Share Scheme' during the FY 2022-23.”
The employees of the Company are eligible for Unilever share award plans, namely Performance Share Plan (PSP) and the SHARES plan. Through PSP, all managers are eligible to receive a conditional grant of Unilever shares on an annual basis. The Target PSP share award is equivalent to 50% of the Target Bonus for Managers and 100% of the Target Bonus for Senior Leaders. The actual share grant is determined by the line manager basis the employees' sustained impact, leadership and future-fit talent profile. These shares vest after a 3 year period with vesting being determined by Company performance against metrics.
Under the SHARES Plan, eligible employees can invest in the shares of Unilever PLC (Holding Company) up to a specified amount and after three years, one share is granted to the employees for every three shares invested, subject to the fulfilment of conditions of the plan. The Holding Company charges the Company for the grant of shares to the Company's employees based on the market value of the shares on the exercise date.
Particulars of Employees and Related Disclosures
Disclosures with respect to the remuneration of Directors and employees as required under Section 197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (Rules) have been appended as an Annexure to this Integrated Annual Report.
The statement containing particulars of employee remuneration as required under provisions of Section 197(12) of the Act and Rule 5(2) and 5(3) of the Rules are available on the Company's website at https://www.hul. co.in/investor-relations/annual-reports/.
Dividend
The Directors are pleased to recommend a Final Dividend of ?22/- per equity share of face value of ?1/- each for the FY ended 31st March, 2023. The Interim Dividend of ?17/- per equity share was paid on Thursday, 17th November, 2022.
The Final Dividend, subject to the approval of Members at the AGM on Monday, 26th June, 2023, will be paid on or after Thursday, 29th June, 2023, to the Members whose names appear in the Register of Members, as on the Book Closure date, i.e. from Tuesday, 20th June, 2023, to Monday, 26th June, 2023, (both days inclusive). The Total Dividend for the financial year, including the proposed Final Dividend, amounts to ?39/- per equity share and will absorb ?9,163 crores. In view of the changes made under the Income-tax Act, 1961, by the Finance Act, 2020, dividends paid or distributed by the Company shall be taxable in the hands of the Shareholders. The Company shall, accordingly, make the payment of the Final Dividend after deduction of tax at source.
Unpaid/Unclaimed Dividend
In terms of the provisions of Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 and Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, ^13.64 crores of unpaid/unclaimed dividends were transferred during the year to the Investor Education and Protection Fund.
Mergers, Acquisitions & Divestment Strategic investments in Zywie Ventures Private Limited and Nutritionalab Private Limited
During the year, the Company entered the 'Health & Wellbeing' category with strategic investments completed in Zywie Ventures Private Limited and Nutritionalab Private Limited. These investments strongly align with our mission to improve the health and wellbeing of consumers and empower people to take charge of their health through solutions that they can trust.
Sale of atta and salt business carried out under the brands of 'Annapurna' and 'Captain Cook'
Given the strategic priorities and portfolio choices, during the year, the Company sold the non-core businesses of atta of 16 employees and issued 16 warning letters as a consequence of such breaches.
The CoBP and Code Policies reflect our desire to fight corruption in all its forms. We are committed to eradicating any practices or behaviours though our zero-tolerance approach to such practices. The CoBP is periodically refreshed and updated so that it provides a current reflection of the way we do business at Unilever. Our CoBP and Code Policies have been reviewed to align them with the changes in the internal and the external environment.
Our Responsible Partner Policy help to give us visibility of our third parties to ensure their business principles are consistent with our own.
Corporate Governance
Maintaining high standards of Corporate Governance has been fundamental to the business of our Company since its inception. A separate report on Corporate Governance is provided together with a Certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations). A Certificate of the Chief Executive Officer and Chief Financial Officer of the Company in terms of Listing Regulations, inter-alia, confirming the correctness of the financial statements and cash flow statements, adequacy of the internal control measures and reporting of matters to the Audit Committee, is also annexed to this Integrated Annual Report.
Prevention of Sexual Harassment at Workplace
As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (POSH Act) and Rules made thereunder, the Company has constituted Internal Committees (IC). Our POSH Policy is now inclusive and gender neutral, detailing the governance mechanisms for prevention of sexual harassment issues relating to employees across genders including employees who identify themselves with LGBTQI community.
While maintaining the highest governance norms, the Company has appointed external independent persons who have prior experience in the areas of women empowerment and prevention of sexual harassment, as Chairpersons of each of the Internal Committees. During the year, 7 complaints with allegations of sexual harassment were received by the Company and of which 5 complaints were investigated and resolved as per the provisions of the POSH Act”. To build awareness in this area, the Company has been conducting induction/ refresher programmes in the organisation on a continuous basis. During the year, your Company organised offline training sessions on the topics of Gender Sensitisation and Code Policies including POSH for all office and factory-based employees.
Related Party Transactions
In Line with the requirements of the Act and the Listing Regulations, the Company has formulated a Policy on Materiality of Related Party Transaction (RPT) & Dealing with RPT which is also available on the Company's website at https://www.hul.co.in/investor-relations/corporate-governance/. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and its Related Parties.
All Related Party Transactions and subsequent material modifications are placed before the Audit Committee for its review and approval. Prior omnibus approval is obtained for RPTs on a quarterly basis for transactions which are of repetitive nature and/or entered in the ordinary course of business and are at arm's length. All RPTs are subjected to independent review by a reputed accounting firm to establish compliance with the requirements of RPTs under the Act, and Listing Regulations.
All RPTs entered during the year were in ordinary course of the business and at arm's length basis. No Material RPTs, as per the materiality threshold adopted by the Board of Directors, were entered during the year by the Company. Accordingly, the disclosure of RPTs as required under Section 134(3)(h) of the Act, in Form AOC-2 is not applicable.
Annual Return
Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return of the Company in Form MGT-7 for FY 2022-23, is available on the Company's website at https:// www.huL.co.in/investor-reLations/annuaL-reports/.
BOARD OF DIRECTORS AND KEY MANAGERIALPERSONNELChange in Directorate
During the year, Mr. Wilhelmus Uijen (DIN: 08614686) stepped down as the Whole-time Director and Member of Management Committee of the Company with effect from 31st August, 2022, consequent to his elevation as the Chief Procurement Officer for Unilever, globally.
The Board places on record its appreciation for the leadership and invaluable contribution made by Mr. Wilhelmus Uijen during his tenure as a Whole-time Director and Member of Management Committee of the Company.
Further, the Board of Directors at its meeting held on 10th March, 2023, based on the recommendation of the Nomination and Remuneration Committee of the Company, approved the following appointments to the Board:
(a) the appointment of Mr. Rohit Jawa (DIN: 10063590) as an Additional Director - Whole-time Director of the Company with effect from 1st April, 2023 upto 26th June, 2023 and as the Managing Director & Chief Executive Officer (CEO & MD) of the Company for a term of five consecutive years with effect from 27th June, 2023.
(b) the appointment of Mr. Ranjay Gulati (DIN: 10053369) as an Additional Director - Independent Director of the Company for a term of five consecutive years with effect from 1st April, 2023.
The above-mentioned appointments are subject to approval of the Members at the ensuing AGM of the Company.
Mr. Rohit Jawa will succeed Mr. Sanjiv Mehta (DIN: 06699923) as the CEO & MD and as the head of the Management Committee of the Company with effect from 27th June, 2023. Since, Mr. Rohit Jawa is a Singapore National and has a non-residential status, his appointment as the Wholetime Director and as a CEO & MD of the Company shall also be subject to Central Government approval.
Mr. Sanjiv Mehta will step down as the CEO & MD of the Company with effect from the close of business hours on 26th June, 2023 after a transformational tenure of 10 years at the helm of the Company. During his tenure, the business more than doubled its turnover, significantly improved its profitability and the market capitalisation of the Company increased more than four times from US$17 billion to US$75 billion.
The Board places on record its deep sense of appreciation and gratitude to Mr. Sanjiv Mehta for his immense and sustainable contribution to the business as the CEO & MD of the Company, that led in reinforcing HUL as one of India's most valuable businesses.
Retirement by rotation and subsequent re-appointment
Mr. Nitin Paranjpe (DIN: 00045204), Mr. Ritesh Tiwari (DIN: 05349994) and Mr. Dev Bajpai (DIN: 00050516), are liable to retire by rotation at the ensuing AGM and being eligible have offered their candidature for re-appointment.
As per the provisions of the Act, the Independent Directors are not liable to retire by rotation.
Brief resume, nature of expertise, disclosure of relationship between directors inter-se, details of directorships and committee membership held in other companies of the Directors proposed to be appointed/re-appointed, along with their shareholding in the Company, as stipulated under Secretarial Standard-2 and Regulation 36 of the Listing Regulations, is appended as an Annexure to the Notice of the ensuing AGM.
Key Managerial Personnel
Mr. Sanjiv Mehta, CEO & MD, Mr. Ritesh Tiwari, Chief Financial Officer and Mr. Dev Bajpai, Company Secretary are the Key Managerial Personnel of the Company as on 31st March, 2023. During the FY 2022-23, there were no changes to the Key Managerial Personnel of the Company.
Management Committee
The day-to-day management of the Company is vested with the Management Committee, which is subjected to the overall superintendence and control of the Board. The Management Committee is headed by the CEO & MD and has Functional/Business Heads as its members.
During the year, the Board of Directors approved the appointment of Mr. Yogesh Mishra as Executive Director, Supply Chain and a Member of the Management Committee in succession to Mr. Wilhelmus Uijen.
Declaration from Independent Directors
The Company has, inter alia, received the following declarations from all the Independent Directors confirming that:
• they meet the criteria of independence as prescribed under the provisions of the Act, read with the Rules made thereunder and Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company;
• they have complied with the Code for Independent Directors prescribed under Schedule IV to the Act; and
• they have registered themselves with the Independent Director's Database maintained by the Indian Institute of Corporate Affairs.
In the opinion of the Board, all Independent Directors possess requisite qualifications, experience, expertise and hold high standards of integrity required to discharge their duties with an objective independent judgment and without any external influence. List of key skills, expertise and core competencies of the Board, including the Independent Directors, forms a part of the Corporate Governance Report of this Integrated Annual Report.
Meetings of the Board, Board Evaluation, Training and Familiarisation Programme & Vigil Mechanism
During the year, eight meetings of the Board of Directors were held.
The details of meetings held and Director's attendance, training and familiarisation programme and Annual Board Evaluation process for Directors, policy on Director's appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Director and also remuneration for Key Managerial Personnel and other employees, composition of Audit Committee, establishment of Vigil Mechanism for Directors and employees, form a part of the Corporate Governance Report of this Integrated Annual Report.
TECHNOLOGY ABSORPTION
The Company continues to derive sustainable benefit from the strong foundation and long tradition of Research & Development (R&D) at Unilever. New products, technologies, and processes flow to the Company from R&D work done across Unilever's 8 Global R&D Centres of excellence and 10 multi-market R&D hubs, including three in India located at Mumbai, Bengaluru (both Global R&D Centres), and Gurugram. The Unilever R&D labs in India work closely with the HUL business to create exciting innovations that help us win with our consumers every day. We have access to over 20,000 active patents that Unilever holds. With world-class facilities, and a superior science and technology culture, Unilever attracts the best of R&D talent globally to develop breakthrough
and proprietary technologies with innovative consumer propositions. The global R&D team comprises of more than 5,000 highly qualified scientists and technologists working in the areas of Home Care, Beauty & Personal Care, Foods & Refreshment, along with critical R&D functional capability teams in the areas of Regulatory, Clinicals & Digital R&D. We also directly benefit from the Unilever's Safety and Environmental Assurance Centre (SEAC), which assess all our products from the lens of safety impact of our products on People and Environment. Our scientists at SEAC partnering with Unilever R&D Scientists and use internationally recognised safety approaches, and authoritative scientific evidence, to ensure that people are safe when using our products and environmental safety of the ingredients we use is assured. Further, we continue to develop new scientific methods and enhance our approaches, working closely with other external experts to ensure that our products are safe for people and environment. We also derive exceptional benefits and advantage of scale from Unilever R&D's extensive global ecosystem of academia, technology experts and long-term collaborations with large suppliers for material and technologies.
We have a Technical Collaboration Agreement (TCA) and a Trademark License Agreement (TMLA) with Unilever since 2013. We are enjoying the benefits of an increasing stream of new products and innovations, backed by technology and know-how from Unilever. The pace of innovations and the scope of services have expanded over the years. Unilever's global resources are providing greater expertise and superior innovations. This has helped in bringing to the Indian consumers, bigger, better, and faster innovations. The TCA provides for payment of royalty on net sales of specific products manufactured by the Company, with technical know-how provided by Unilever. The TMLA provides for the payment of trademark royalty as a percentage of net sales on specific brands where Unilever owns the trademark in India including use of 'Unilever Corporate logo'.
The Company maintains strong and healthy interactions with Unilever through a well-coordinated management exchange programme, which includes setting out governing guidelines pertaining to identifying areas of research, agreeing timelines, resource requirements, scientific research based on hypothesis testing and experimentation. This leads to new, improved, and alternative technologies, supporting the development of launch-ready product formulations based on research, and introducing them to markets. The Company continuously imports technology from Unilever under the TCA, which is fully absorbed. Some of the examples of cutting-edge science technologies that have been absorbed include Human Microbiome & Human Biology led technology platforms which cut across Beauty & Personal Care product ranges delivering multitude of consumer benefits, including hygiene, skin glow and protection against sun, pollution, odour among many others.
Similarly for Foods & Refreshment portfolio, set of technologies include fortification, novel processing routes, flavour modulation, plant-based protein delivery, sugar & salt reduction without compromise on taste etc. Lastly, in
the space of Homecare, Beauty & Personal care a suite of technologies including sustainable palm and Eco-Boost technologies help reduce our environmental footprint while delivering superior product experience at an affordable price for our consumers.
The Company has also benefited from continued global R&D capital investments into critical R&D capabilities and infrastructure in India, including setting up of Agile Innovation Hub and Advanced Manufacturing Centre, product testing & validation capabilities to help unlock speed in innovation by deploying cutting edge data science, technology & automation. These capabilities allow us to identify and lead consumer trends, rapidly design, prototype and test new ideas, products as well as digitally scale up new technologies and products leading to more impactful innovations, faster speed to market as well as significant cost savings for the Company.
The Company also receives continuous support and guidance from Unilever to drive functional excellence in marketing, supply management, media buying and IT, among others, which helps us build capabilities, remain competitive and further step-up its overall business performance. Unilever is committed to ensuring that the support in terms of new products, innovations, technologies, and services is commensurate with the needs of the Company and enables us to win in the marketplace.
CONSERVATION OF ENERGY
For details on the steps taken by the Company on conservation of energy, water and reduction of waste, please refer to the Business Responsibility and Sustainability Report, which forms part of this Integrated Annual Report.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company has generally complied with all the applicable provisions of Secretarial Standard on Meetings of Board of Directors (SS-1) and Secretarial Standard on General Meetings (SS-2), respectively issued by Institute of Company Secretaries of India.
STAKEHOLDER ENGAGEMENT
Our multi-stakeholder model aims to respect the interests of and be responsive towards all stakeholders. Stakeholder engagement and partnership are essential to grow our business and to reach the ambitious targets set out in the HUL Compass ESG goals. The Code of Business Principles (CoBP), which is the statement of values and represents the standard of conduct for everyone associated with the Company, and the Code Policies guide how we interact with our partners, suppliers, customers, employees, shareholders, Government, Non-Governmental Organisations (NGOs), trade associations and industry bodies. Through the underlying standards set in CoBP and Code Policies, we are committed to transparency, honesty, integrity and openness in all our engagements with the various stakeholders. Details on stakeholder engagement is provided in the Stakeholder engagement and review section on pages 53 to 77.
OUTLOOK
In the backdrop of a challenging operating environment, we delivered another strong all-round performance led by our focus on growing consumer franchise and protecting our business model.
In the near term, the operating environment is expected to remain volatile with global slowdown risks and weather-related uncertainty. While inflation has moderated, commodities remain elevated vis-a-vis longer-term averages. Looking forward, we expect that the price-volume growth will rebalance. Price growth will tail off due to lapping of higher prices in the base and sequential easing of inflation. Market volumes is expected to recover gradually as consumption habits readjust with a lag.
We remain focused on managing our business with agility and growing our consumer franchise whilst maintaining margins in a healthy range. We stay confident of the medium to long term potential of Indian FMCG sector and HUL's ability to deliver a Consistent, Competitive, Profitable and Responsible growth.
RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Act, the Board of Directors confirm that:
• In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and there are no material departures from the same;
• They have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs 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 Act and for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
• They have prepared the Annual Accounts on a going concern basis;
• They have laid down internal financial controls for the Company and such internal financial controls are adequate and operating effectively; and
• They have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
OTHER DISCLOSURES
During the year under review:
• no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status of the Company and or it's operations in future;
• no proceedings are made or pending under the Insolvency and Bankruptcy Code, 2016 and there is no instance of one-time settlement with any Bank or Financial Institution;
• no shares with differential voting rights and sweat equity shares have been issued;
• no public deposits as defined under Chapter V of the Act have been accepted by the Company;
• there has been no change in the nature of business of the Company.
APPRECIATIONS AND ACKNOWLEDGMENTS
The Board places on record its deep appreciation to all employees for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain an industry leader.
The Board would also like to acknowledge the excellent contribution by Unilever to the Company in providing 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 its appreciation for the support and co-operation the Company has been receiving from its suppliers, distributors, retailers, business partners and others associated with it as its trading partners. The Company looks upon them as partners in its progress and has shared with them the rewards of growth. It will be our endeavour to build and nurture strong links with the trade based on mutuality of benefits, respect for and co-operation with each other, consistent with consumer interests.
The Board also take this opportunity to thank all Shareholders, Business Partners, Government and Regulatory Authorities and Stock Exchanges, for their continued support.
On behalf of the Board
Nitin Paranjpe
Chairman
Mumbai, 27th April, 2023 (DIN: 00045204)
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