Report of Board of Directors

18 Hindustan Unilever Limited Report of Board of Directors and Management Discussion and Analysis Your Board of Directors is pleased to share with you the Business Performance along with the Audited Financial Statements for the financial year ended 31st March, 2021. THE CHANGING WORLD We operate in a complex and volatile world. Our strategy is constantly evolving to adapt to the trends and forces shaping our markets and impacting our stakeholders. Hindustan Unilever Limited is part of the Fast-Moving through more diverse channels and smaller local brands Consumer Goods (FMCG) industry which continues to as well as digital-first brands are increasingly entering be one of the biggest long-term sustainable business the market. In these times, as the consumer and channel opportunities that our country offers. Despite being landscapes rapidly evolve, we continue to be agile and one of the fastest growing markets globally for FMCG responsive to leverage market opportunities and deftly products, India’s per capita FMCG consumption is still navigate through the challenges. By staying close to the amongst the lowest in the world, giving the industry a long consumers and their needs, we ensure that our business runway for growth. continues to grow, while having a positive impact on 2020 was a highly volatile and challenging year. Covid-19 people and the planet. Our strategy is constantly evolving changed almost every aspect of human lives in ways to adapt to the trends and forces shaping our markets and never imagined. The economic toll from the pandemic impacting our multi stakeholders. was unprecedented. Operational challenges mounted due to restricted movement and disrupted supply lines. A. STAKEHOLDER REVIEW As the Covid-19 cases continued to rise exponentially, the economy declined sharply. Our focus was on our The Unilever Compass and our business model people’s health & safety, ensuring uninterrupted supplies are designed to create value for our stakeholders. of Covid-19 relevant portfolio, meeting the demand of Understanding their changing needs helps us to make consumers arising out of changed behaviour and needs, informed strategic decisions. caring for the communities in which we operate, preserving cash and protecting our business model. Our multi-stakeholder model We have identified six stakeholder groups critical to As the country navigated through the crisis, the Government our future success: consumers, our people, customers, and the Reserve Bank of India took effective measures to support a robust economic recovery. The Union Budget suppliers & business partners, planet & society, and 2021 focused on regaining the growth momentum in the shareholders. The stakeholder review on pages 19 to 36 economy through several measures including keeping tax explains how we have worked to create value for each of rates stable and enhancing investments in infrastructure. our stakeholders in 2020-21 as well as how our business benefits from these vital relationships. The agriculture sector performed well, leading to a strong performance by rural markets. The impact of Covid-19 was In light of our purpose and our strategy to create long-term more pronounced in metros and bigger towns, resulting in value as set out on page no. 12, we take steps to understand a slower recovery in urban markets. the needs and priorities of each stakeholder group through Global trade dynamics, volatile commodity cycles and a number of mediums, including by direct engagement climate concerns continue to create challenges and or via their delegated committees and forums. Here, uncertainties for companies and categories across the we provide a high-level summary of the concerns of our spectrum. New technologies are changing the landscape stakeholders and how we engaged with them and had of the consumer goods market, bringing opportunities regard to their interests when setting our strategy and for brands and consumers alike. Consumers are shopping taking decisions concerning the business in the last year. Integrated Annual Report 2020-21 19 Stakeholder Interests and concerns How we engaged in FY 2020-21 Considerations and outcomes The pandemic has impacted We have many direct and indirect Our Board and Management consumer spending habits, touchpoints with our consumers. Our Committee members regularly particularly for discretionary People Data Centre combines social review consumer trends, their Consumers purchases. Consumers have listening with traditional consumer concerns and consider these when Changes in become more conscious about research while our Consumer Carelines making decisions. Basis insights consumer their health and hygiene as give us rich insights into the experiences on new trends, shaping consumer behaviour have well as being value seeking as of consumers when using our products. choices and behaviours during accelerated, they look to protect themselves We continue to collaborate with the pandemic, the Management leading to new from the consequences of the research agencies and household Committee made changes to insights about pandemic. Digital engagement panels to conduct consumer surveys strategic directions and investments. the way people and online shopping gained and understand on-ground consumer We focused our innovations to serve shop and buy our prominence as people behaviour patterns, their interests health and hygiene needs of our products pivoted to E-everything and a and concerns. We also engaged with consumers and launched more than contactless culture. consumers through our digital platforms 150 Stock Keeping Units (SKU). We such as Cleanipedia and BeBeautiful. also repurposed our brands to make For more on These insights help us in building our them contextually relevant and drive Reports consumers see understanding of consumer trends, salience. pages 22 to 25 including those that are likely to continue in a post-Covid world. Covid-19 has been the Our leadership team members directly Safety and wellbeing of our overriding concern for our engaged with our employees throughout employees is paramount to us. people during the year as the the year on issues of concern. Through We operated with stringent safety Our People pandemic impacted virtually empathetic leadership and always protocols to protect our people in We stepped up every part of their lives, on two-way communication, our line- factories and frontline sales. We engagement especially work arrangements. managers across all levels could provide transitioned to 100% remote working with employees Through our engagement, clarity in the time of crisis and strengthen for all our office-based employees significantly to help we also consistently see that connectedness. With our ‘Care to and as the country opened up we our people through career opportunities, wellbeing, Connect’ programme, factory leadership resumed our office operations the pandemic purpose, sustainability and teams connected individually with all in a calibrated and safe manner being a more simple and agile our factory employees and their families. wherever possible. Through the business remain important for We conducted frequent pulse-check year, we built a systemic approach For more on our people. surveys throughout the year for instant on wellbeing with customised people see feedback. Our annual UniVoice survey interventions for various employee pages 26 to 27 garnered a participation from 84% of our segments. Our UniVoice survey office-based employees. showed improvements across all dimensions, especially remarkable was that 88% employees felt positive and optimistic, 90% believe that their line manager had supported them to be effective during Covid-19 crisis. 20 Hindustan Unilever Limited Report of Board of Directors (continued) Stakeholder Interests and concerns How we engaged in FY 2020-21 Considerations and outcomes Covid-19 has given a huge Our customers play a critical role in our We are investing in building fillip to e-Commerce. Our journey to reach consumers. During the capabilities for channels of the retail partners are working to peak of crisis, we actively engaged with future viz. e-Commerce and Customers become more competitive in our retail partners to build a response modern trade and are co-creating This year a world where shoppers move plan to ensure availability of stocks. We differentiated offerings which are e-Commerce grew seamlessly between online and also imparted training on safety and fit for the channel. We are scaling exponentially, as offline channels. Traditional hygiene practices, to help get shoppers up adoption of Shikhar our eB2B shifting shopping trade also saw a resurgence into the stores. We are collaborating app to create a digitally wired behaviours affected during Covid-19, the small with e-Commerce and modern trade to customer ecosystem which will retailers of all types. retailers we partner with are capture the shopper trends and design help in optimising space and speed General trade also increasingly embracing digital portfolios appropriate for the channel. up restocking. Our partnership saw a resurgence solutions like app-based Shikhar our eB2B ordering app was with the State Bank of India is ordering, to speed up the useful in getting direct feedback from aimed at solving liquidity issues restocking of products. retail stores. for small retailers. We continue to For more on empower women through our Shakti customers see programme which now has nearly pages 28 to 29 1,36,000 Shakti entrepreneurs. This year has been challenging We communicated frequently

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