ANNUAL REPORT 2017-18 MAKING SUSTAINABLE LIVING COMMONPLACE THIS ANNUAL REPORT 2017-18 OF HINDUSTAN UNILEVER LIMITED (HUL) IS MADE UP OF THE STRATEGIC REPORT, WHICH INCLUDES REPORT OF BOARD OF DIRECTORS, MANAGEMENT DISCUSSION AND ANALYSIS; AND THE CORPORATE GOVERNANCE REPORT, THE FINANCIAL STATEMENTS; NOTES AND ADDITIONAL INFORMATION AS REQUIRED UNDER THE COMPANIES ACT, 2013 (‘THE ACT’) AND THE SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 (‘LISTING REGULATIONS’). The terms ‘HUL’, ‘the Company’, ‘we’, ‘our’ and ‘us’ refer to Our Corporate Governance Report, which forms part of Report of Hindustan Unilever Limited. Our Strategic Report, pages 1 to Board of Directors, pages 46 to 65, contains an analysis of steps 65, contains information about us, how we create value for our taken in the area of Corporate Governance including information as stakeholders and how we run our business. It includes our strategy, required under the Listing Regulations. Our Financial Statements business model, market outlook and key performance indicators. and Notes are on pages 66 to 169. The Strategic Report and The Report of Board of Directors and Management Discussion and Financial Statements have been approved by the Board of Directors Analysis; includes details of our performance under each of the of the Company. strategic pillar as well as our approach to sustainability and risk. CAUTIONARY STATEMENT Statements in this Annual Report, particularly those that 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. Although the expectations are based on reasonable assumptions, the actual results might differ. ONLINE You can find more information about Hindustan Unilever Limited online at www.hul.co.in For further information on the Unilever Sustainable Living Plan (USLP) visit www.hul.co.in/sustainable-living Annual Report 2017-18 along with other related documents can be downloaded at https://www.hul.co.in/investor-relations/annual-reports/hul-annual-report-related-documents.html CONTENTS OVERVIEW FINANCIAL STATEMENTS – About us ..................................................................................... 1 Standalone Financial Statements – Chairman’s Statement .............................................................. 2 – Economic Value Added .............................................................66 – Board of Directors ...................................................................... 3 – Independent Auditors’ Report ................................................. 68 – Management Committee .......................................................... 4 – Balance Sheet .......................................................................... 74 – Our Performance ....................................................................... 5 – Statement of Profit and Loss .................................................. 76 Financial Performance .......................................................... 6 – Statement of Changes in Equity .............................................. 78 Unilever Sustainable Living Plan ........................................... 7 – Statement of Cash Flows ........................................................ 79 – The Changing World .................................................................. 8 – Notes ........................................................................................ 81 – Our Value Creation Model ......................................................... 9 – Our Strategy ............................................................................. 10 Consolidated Financial Statements REPORTS – Independent Auditors’ Report ............................................... 121 – Consolidated Balance Sheet ................................................. 124 – Report of Board of Directors and Management Discussion – Statement of Consolidated Profit and Loss ......................... 126 and Analysis ................................................................................... 11 – Consolidated Statement of Changes in Equity ..................... 128 Annual Report on Corporate Social Responsibility ............. 32 – Consolidated Statement of Cash Flows ............................... 130 Business Responsibility Report ........................................... 37 – Notes ...................................................................................... 132 – Corporate Governance Report ................................................ 46 – Form AOC-1 ............................................................................ 169 – Secretarial Audit Report .......................................................... 64 Others – Awards and Recognition ........................................................ 170 – Corporate Information .......................................................... 171 Notice of Annual General Meeting ................................... 172 Profile of Directors (seeking re-appointment) ............. 177 Proxy Form Overview Reports Financial Statements 1 ABOUT US AT A GLANCE OUR PURPOSE HINDUSTAN UNILEVER LIMITED (HUL) IS INDIA’S HINDUSTAN UNILEVER LIMITED HAS A CLEAR LARGEST FAST-MOVING CONSUMER GOODS COMPANY PURPOSE – TO MAKE SUSTAINABLE LIVING WITH A HERITAGE OF OVER 80 YEARS. NINE OUT OF COMMONPLACE. WE BELIEVE THIS IS THE BEST WAY TEN INDIAN HOUSEHOLDS USE OUR PRODUCTS TO DELIVER LONG-TERM SUSTAINABLE GROWTH. EVERYDAY TO FEEL GOOD, LOOK GOOD AND GET MORE OUT OF LIFE; GIVING US A UNIQUE OPPORTUNITY TO As the pace of change accelerates, we are creating a stronger, BUILD A BRIGHTER FUTURE. simpler and more agile business. However volatile and uncertain the world becomes, we believe managing for the long-term is the Each of our categories – Home Care, Personal Care, Foods best way for us to grow. We are well placed to deliver long-term and Refreshments – includes a portfolio of brands that serves value through our strategy and the USLP. These are supported by a consumers across the length and breadth of India. With over 40 transformational change agenda, which combines our own actions brands spanning 20 distinct categories including soaps, detergents, with a stakeholder approach to external advocacy and public policy. shampoos, skincare, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, frozen desserts, water and The USLP is a value driver in its own right. Our commitment air purifiers, the Company is part of the daily life of millions of to the USLP’s three big global goals of improving health and consumers. Our portfolio includes leading brands such as Lux, well-being of more than 1 billion people globally by 2020, halving Lifebuoy, Surf excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, our environmental footprint by 2030, and enhancing livelihoods Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke for millions across the globe by 2020 has delivered growth for the Bond, BRU, Knorr, Kissan, Kwality Wall’s and Pureit. Our products business. The success of our sustainable living brands is driven are available in over seven million outlets across India. by the growing consumer demand for brands that have purpose at their core. Nearly 900 suppliers work with our supply chain that spans 28 of our own factories and several others that manufacture on our The USLP also drives cost efficiency through reduced waste, energy behalf. Our products are stocked in warehouses dotted across the and packaging. It lowers risks in our supply chain by securing a country and delivered to 3,500 customers. sustainable flow of critical raw materials. It also increases trust in our business particularly among consumers, employees, investors HUL has around 18,000 employees working across 28 factories and regulators. and 9 offices and creates employment opportunities for several thousand more across its value chain – from smallholder farmers, In India, to address the challenge of depleting water resources, who provide raw materials to the distribution partners who take the in 2010 we created a not-for-profit organisation, Hindustan products to customers and consumers. Unilever Foundation, which along with its partners creates water conservation potential and enhances water-dependent livelihoods. Your Company has a clear and compelling strategy that focuses on Winning with Brands and Innovation, Winning in the Marketplace, We work in partnership with the Government and other Winning through Continuous Improvement and Winning with organisations to drive transformational change across society People. This is underpinned by the Unilever Sustainable Living Plan with initiatives to help realise the USLP goals, thus creating more (USLP) that sets our vision to increase the size of the business, opportunities for women and enhancing livelihoods, promoting whilst decoupling it with our environmental footprint and increasing health and well-being, and championing sustainable agriculture. our positive social impact. These are opportunities to grow our business by addressing unmet challenges while alleviating major social and environmental issues. Over the years, HUL has been driving the virtuous cycle of growth, Find out more about our performance under the USLP on pages 7 and 32 to 36. which has been resulting in consistent, competitive, profitable and responsible growth for us. Our continuous effort