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.

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 Consumer Goods (FMCG) industry which continues to be one of the biggest long-term sustainable business opportunities that our country offers. Despite being one of the fastest growing markets globally for FMCG products, India's per capita FMCG consumption is still amongst the lowest in the world, giving the industry a long runway for growth.

2020 was a highly volatile and challenging year. Covid-19 changed almost every aspect of human lives in ways never imagined. The economic toll from the pandemic was unprecedented. Operational challenges mounted due to restricted movement and disrupted supply lines. As the Covid-19 cases continued to rise exponentially, the economy declined sharply. Our focus was on our people's health & safety, ensuring uninterrupted supplies of Covid-19 relevant portfolio, meeting the demand of consumers arising out of changed behaviour and needs, caring for the communities in which we operate, preserving cash and protecting our business model.

As the country navigated through the crisis, the Government and the Reserve Bank of India took effective measures to support a robust economic recovery. The Union Budget 2021 focused on regaining the growth momentum in the economy through several measures including keeping tax rates stable and enhancing investments in infrastructure. The agriculture sector performed well, leading to a strong performance by rural markets. The impact of Covid-19 was more pronounced in metros and bigger towns, resulting in a slower recovery in urban markets. Global trade dynamics, volatile commodity cycles and climate concerns continue to create challenges and uncertainties for companies and categories across the spectrum. New technologies are changing the landscape of the consumer goods market, bringing opportunities for brands and consumers alike. Consumers are shopping through more diverse channels and smaller local brands as well as digital-first brands are increasingly entering the market. In these times, as the consumer and channel landscapes rapidly evolve, we continue to be agile and responsive to leverage market opportunities and deftly navigate through the challenges. By staying close to the consumers and their needs, we ensure that our business continues to grow, while having a positive impact on people and the planet. Our strategy is constantly evolving to adapt to the trends and forces shaping our markets and impacting our multi stakeholders.

A. STAKEHOLDER REVIEW

The Unilever Compass and our business model are designed to create value for our stakeholders. Understanding their changing needs helps us to make informed strategic decisions.

Our multi-stakeholder model

We have identified six stakeholder groups critical to our future success: consumers, our people, customers, suppliers & business partners, planet & society, and shareholders. The stakeholder review on pages 19 to 36 explains how we have worked to create value for each of our stakeholders in 2020-21 as well as how our business benefits from these vital relationships.

In light of our purpose and our strategy to create long-term value as set out on page no. 12, we take steps to understand the needs and priorities of each stakeholder group through a number of mediums, including by direct engagement or via their delegated committees and forums. Here, we provide a high-level summary of the concerns of our stakeholders and how we engaged with them and had regard to their interests when setting our strategy and taking decisions concerning the business in the last year.

People's concerns around health & hygiene, as well as the planet, continued to grow this year

As the pandemic unfolded, it reshaped how people lived, worked and shopped. Almost overnight, people's immediate concerns – health, hygiene and immunity became a priority as people sought to protect themselves and their near-ones from Covid-19. With the country going into a lockdown, daily habits changed dramatically: from eating out to eating at home, from shopping in stores to shopping online and from working in offices to working from home. While the immediate focus for many people was to deal with the crisis, however, concerns around waste, water, climate change, social inequality remained relevant for people. People continued to look for convenient, eco-friendly, natural and chemical free products.

Our three Divisions worked to meet these changing consumer needs in a variety of ways viz. serving through product innovations, creating awareness through contextual communication, shifting to new distribution models and connecting with consumers through their brand's purpose-led initiatives.

We believe in beauty that cares for people, society, and our planet

In the Beauty & Personal Care (BPC) division, we operate in categories that play a significant role in consumers' lives and touch a vast majority of Indian households. The categories manifest an excellent opportunity to boost penetration, consumption, and premiumisation, presenting a healthy long-term potential. Leveraging our Winning in Many Indias strategy we offer an extensive portfolio with many products tailored to specific regional preferences. With a product portfolio straddling the price-benefit pyramid, we ensure that our brands are accessible and aspirational for all consumers across the country.

Exhibiting resilience and portfolio strength during Covid–19

Covid-19 has had a varied impact on our categories. The humble bar of soap became people's first line of defence against the risk of catching the infection resulting in an unprecedented demand for Skin Cleansing, especially hand hygiene products. In contrast, categories like

Skin Care, Colour Cosmetics, and Deodorants witnessed a sharp decline as people stayed at home.

We swiftly pivoted to ser vice consumers' needs by expanding our range of hygiene products, focused on supplying essential products, drove relevant innovation designed for channels like e-Commerce and communicated with contextually relevant messaging. Within a short span of 30 days, we launched 15 new SKUs in hand hygiene portfolio primarily through our brand Lifebuoy to ensure the accessibility and availability of our products. During the year, LUX was re-launched with a superior product formulation. In line with our strategic intent to enter fast-growing segments of the future in the premium Beauty & Personal Care category, we completed the acquisition of female intimate hygiene brand VWash and were off to a good start.

In Hair Care, we continued to drive focus on the core brands and drive salience with impactful communication while innovating to meet the emerging consumer needs. TRESemm launched a successful campaign, "salon at home" to address the beauty-at-home trend while driving innovation with its sulfate-free range and new offerings on serums and masks. Dove brand launched a new campaign highlighting its proposition on hair damage repair.

In Oral Care, Closeup has always stood for confidence to get close, superior freshness and white teeth. The brand has upheld good oral hygiene that helps in building confidence in the youth and it continued to do so with a very relevant in-home contextual messaging during the lockdown. We continue to strengthen our ‘naturals' strategy through the three-pronged approach. While LEVER Ayush, the master brand maintained focus on its key market in southern India, we continued to build specialist brands like Indulekha and Hamam. Your Company expanded the Indulekha franchise with the launch of a new variant-Indulekha Neemraj Oil and Shampoo. Your Company also introduced one of Unilever's brand, Love, Beauty and Planet in India and it has been on its journey of making people more beautiful while giving love to our planet. The third leg of our naturals strategy involves natural variants of our existing brands like TRESemm Botanique, Glow & Lovely Ayurvedic Care, Lifebuoy Neem and Turmeric, Pears Naturale etc.

Building purpose-led brands

Our brands responded to Covid-19 through product donations, innovations, and communications supporting people's hygiene and wellbeing. Lifebuoy was the first to launch a public service campaign to use any soap for combating Covid-19. Lifebuoy also launched a new campaign ‘H for handwashing' when teaching alphabet to children to highlight the importance of hand hygiene. Across our Beauty & Personal Care portfolio, we are removing the word ‘normal' from advertising and packaging. It's one of several commitments your Company is making as part of the new Positive Beauty vision that aims to usher in a new era of beauty that is inclusive, equitable and sustainable. In Skin Care, having successfully changed the proposition of Fair & Lovely to ‘HD Glow' at the time of its relaunch in 2019, your Company took the decisive and logical step towards inclusive beauty by renaming this iconic brand to Glow & Lovely in 2020. This was accompanied by purposeful communication, and a massive media outreach to ensure each consumer of the brand is touched. Furthering our commitment towards promoting inclusion, Dove through its #StopTheBeautyTest campaign, is challenging the societal stereotypes and urging people to adopt a more inclusive lens of beauty for women.

Celebrating International Women's Day, our brand Clinic Plus, that reaches 85% Indian households, launched a film under its inspiring #MeriBetiStrong campaign to educate mothers about domestic violence and ignite meaningful conversations around the lessons of strength that need to be imparted to daughters in their developmental years. Your Company has taken an audacious goal to reach over 100,000 women across our ecosystem and educate them on their rights as well as provide resources to speak up against domestic violence.

For more on sustainability refer to Planet & Society on pages 31 to 33

Winning in channels of the future e-Commerce has gained unprecedented relevance in these times and has been the go-to channel for many of our consumers during physical lockdowns. Your Company has set up the Premium Beauty Business Unit within Beauty & Personal Care organisation to strengthen its play in ‘Mass-tige' beauty segment. The unit will work closely with our e-Commerce sales team and lead our entry into niche premium formats like serums, sheet masks, hair masks etc. through existing and new brands.

Technology-driven commerce will continue to grow disproportionately, and we aim to invest in it ahead of the curve. With new channels, new benefit segments and new brands, we are also focusing on the new marketing models to take our innovations and activations to consumers. We continue to strengthen the content creation with platforms such as ‘Be Beautiful' which educates consumers on their Beauty & Personal Care needs. While the pandemic impacted our Colours and Deodorants categories, it also presented an opportunity to leverage technology to get closer to our consumers. The Lakm Direct to Consumer (D2C) site (www.lakmeindia.com) is a great example of our agility and intent to continue to drive growth.

We continue to strengthen our core by making our bigger brands better, with consistent support and sustained innovation. Given our wide portfolio, we aim to play it to our advantage by reaching up as well as reaching down the pyramid to serve our consumers. Besides designing for e-Commerce, each of our big brands is also ensuring availability in access/recruiter packs in the right channels to continue to grow penetration and increase usage. We are energised with the opportunity of leading market development across categories with very low penetration, through education, sampling and targeted communication.

We want to make people's homes a better world, and to make our world a better home.

In financial year 2020-21, the need for a better home further got highlighted due to Covid-19. As people stayed inside their homes more to avoid infection and there was lesser outdoor activity, we witnessed differential impact on our categories. Parts of the business like dish washing and surface cleaning became extremely relevant overnight and on the other side category like laundry got impacted due to reduced usage.

Exhibiting resilience and portfolio strength during Covid–19

Fabric cleaning became less frequent during the year due to reduced mobility. Reverse migration and drop in income levels caused downtrading. With hygiene becoming the topmost concern, consumers are looking for germ-free wash for their clothes. Our biggest brand Surf quickly innovated and launched ‘Surf excel Active Hygiene'. We also launched the first Home Care product under Lifebuoy brand the ‘Lifebuoy Laundry Sanitiser' and stepped up our focus behind Anti Bac variants of Rin and Comfort. Surf excel introduced smart spray with stain lifting technology, a smart and convenient way to remove stains. Premium portfolio of liquid detergents and fabric conditioner was more resilient during these times, delivering strong performance, and driving our premiumisation journey ahead.

Our dishwash portfolio benefitted from in-home cooking trend and the need for clean, germ-free dishes. Serving the consumers' needs, Vim launched anti-bacterial variants of dishwash bars and liquids. Premiumisation opportunity on dishwash continues to be strong and we are well placed to lead this trend with Vim liquid which pioneers the format upgradation in the country through its large-scale direct contact programme. During the year Vim launched its Vim Matic range targeting dishwasher users. In floor cleaners, we launched Domex with a formulation containing sodium hypochlorite that is proven to destroy Coronavirus in 60 seconds. Domex also rolled out surface cleaner spray and wipes to extend the brand usage.

We also launched Nature Protect, our new brand that caters to the soft hygiene needs of consumers. A neem-based portfolio with the proposition of "Kill germs with nature's superpower", it comprises of surface cleaners, laundry, fruit-and-veggie cleaners and on-the-go cleaner. Life Essentials category faced severe disruption during the lockdown in the first half of the year. However, during the second half of the year water purifier business picked up momentum to win consumers through value-added innovations and channel differentiating products in e-Commerce. Our Pureit Copper+, innovation inspired by the age-old tradition of storing water in copper vessels, continues to garner consumer appreciation.

Building purpose-led brands

Putting purpose at the heart of every action and communication, our brands continue to drive salience. Domex donated toilet and surface cleaners to community toilets and also partnered with the Municipal Corporation of Greater Mumbai to offer disinfection services for strategic places including public toilets. Domex also partnered Mumbai railways to help disinfect key stations, as train services opened up for general public.

We continued our unabated journey of brand love through purpose filled proposition. Surf excel has been spreading its philosophy of ‘Daag Acche Hain' or ‘Dirt is Good', on the occasion of Holi this year, Surf excel joined hands with HelpAge India to bring colours of joy to the elderly. Wheel has always valued the husband-wife relationship and has been acknowledging the evolution of this relationship towards a more progressive outlook, given that today's woman performs multiple responsibilities and is the anchor of the family. Through its new social media campaign Vim resolved to bust stereotype and communicated gender equality in performing household chores like dishwashing.

Towards a Clean Future: With a purpose of ‘Cleaning up Cleaning'

We know that consumers want sustainable products that perform just as well as conventional ones. In September, Unilever announced Clean Future, an ambitious blueprint for reinventing cleaning and laundry products to give people affordable, high-performing products that are kinder to both them and the environment.

Unilever, globally will be investing €1 billion over ten years in researching and developing new technologies to reduce the carbon footprint, plastic waste and water use, and increase the biodegradable and sustainable ingredients associated with our products. For example, we will be replacing the crude oil and other fossil fuels used to make some of our chemicals with renewable and recycled carbon. We will achieve all of this through partnerships and cutting-edge innovation – applying the latest science and biotechnology at scale to create cleaner, more sustainable products that clean, remove stains, and disinfect at least as well as conventional products. Our aim is to continue to deliver superior products which are better for the planet at affordable costs.

Winning in channels of the future

We continue our journey of growth in e-Commerce and modern trade. We have a strong portfolio of products with the right pack price architecture, exclusively designed for these channels such as Surf excel Matic value pack offers value to the consumers and is economically viable from a last-mile delivery perspective. We are using e-Commerce channel to drive new benefit segments and new formats such as Vim Matic dishwash range. We are also seeding e-Commerce first brands like Nature Protect to expand our portfolio in this channel.

Cleanipedia, our online platform for housekeeping and cleaning tips, stepped up to create meaningful content to ease consumers' worries around the pandemic and the lockdown. This helped our brands to engage with their consumers while resolving their queries.

We have a responsibility to make brands that not only taste and feel good, but that are a force for good

Our country faces the challenge of insufficient calories for the poor, unsafe eating out and a diet excessive in carbohydrates but deficient in protein and micronutrients. As one of India's largest Foods & Refreshment businesses, we will help lead the country's processed food revolution by making food healthier, safer, and have less wastage.

Exhibiting resilience and portfolio strength during Covid–19

The need for healthy eating and strong immunity got further accentuated this year as the pandemic enveloped the country. In response to this, we focused on providing healthy in-home eating options through our portfolio of brands.

During 2020-21, we have made significant gains in both market share as well as household penetration of our Tea business. The year saw unprecedented inflation on account of the loss of tea crop led by Covid-19 induced lockdowns and a natural calamity in India's eastern region. We took judicious price increases to partly offset this inflation while maintaining market competitiveness of our brands. In Coffee, we continue to perform well and have launched natural variant of our brand ‘BRU Veda'.

Riding on the in-home consumption trends our foods portfolio which includes soups, ketchups, sauces and noodles, performed well. Expanding our portfolio of fortified foods, Hellmann's mayonnaise, a source of good fats was launched nationally. We also launched Kissan Peanut Butter that is made from 100% real peanuts and is an excellent source of protein and zinc.

Our out-of-home portfolio comprising of Ice Cream and Unilever Food Solutions professional business that caters to institutional buyers like hotels and office catering had a challenging year on account of lockdowns. We collaborated with last-mile delivery partners like Swiggy & Zomato to provide home-delivery solution for Ice Creams. In food solutions, we extended our range of products directly to consumers via e-Commerce. As more people stepped out of their homes, we witnessed sequential recovery in our Out-of-home categories quarter on quarter and are well poised for the coming year.

Nutrition – Our journey towards becoming one of India's largest Foods & Refreshment businesses

This year we integrated the Nutrition portfolio which was acquired from GSK CH. The category has low penetration levels and offers huge headroom for growth. We have a clear strategy of improving accessibility and reach, landing impactful innovations, increasing profitability through synergies and investing behind the brands to drive growth. To make our brands more accessible to the consumers your Company introduced new pouch packs and Rs 2 sachets for Horlicks and Boost. Your Company has also expanded Boost across India.

We continued to invest in building a future-fit portfolio, looking at the immunity needs of consumers we launched Horlicks with added zinc which is known to boost immunity. We also relaunched "Plus" range from the house of Horlicks making our entry into the high sciences space of Nutrition. Horlicks in its new campaign "When did you grow up" is celebrating the confidence that empowers children.

Purpose-led Brands

As India's largest hot beverages business, we continue to lead the expansion of tea and coffee as a carrier of nutrition and as a beacon of sustainable agriculture practices. Brooke Bond Red Label which has very firmly embedded the brand purpose of "Taste of Togetherness" continued to drive the #unstereotype agenda. It emphasised the importance of compassion during lockdown with a lovely message that ‘we can be socially connected even when we are physically distant'. Horlicks led the purpose agenda by donating 2 lakh kilograms of Horlicks' products to essential workers and vulnerable children. In this challenging period, Kwality Wall's went out of its way to support people in the extended value chain.

When we take care of our people, our people take care of the business.

2020 was an unusually challenging year for our people. We were all affected by the pandemic in different ways. Even as the national lockdown hit us, the tremendous efforts of our people across our sites enabled us to continue to work safely, whether on factory sites, in the market, in our research & development labs, or from a home office. We quickly scaled up new ways of working – rethinking and reshaping our business.

As we worked with speed and agility to respond to the unexpected events this year, we continued to nurture a culture in which our people can thrive and to prepare our people for the future of work.

Going above and beyond

Consumers across the country were relying on us to produce the household necessities they needed most during the pandemic, so it was essential that we kept our factories and distribution centres operating. We are grateful to our employees and to everyone in our extended value chain at our distributor points, depots and third-party manufacturing sites, who made this happen. We saw many heroes coming to the fore–our people in our factories and frontline sales, going above and beyond their jobs to grow our business, our medical & occupational health teams working very hard to keep our people safe, and many inspiring stories of our people volunteering their time to help communities around our sites.

Working safely and at speed

In the midst of Covid-19, we concentrated on business continuity, making it safe for essential staff, such as factory workers and sales teams, to return to workplace. We did so with extremely strict protocols to protect everyone's safety, such as protective equipment, social distancing regulations and frequent health checks, including on people's mental health.

We seamlessly transitioned to 100% remote working for all our office-based employees. Each person needed the right equipment and systems to perform their roles and the Company provided the necessary support. We rolled out guidelines on working from home and our teams swiftly found their own rhythm and cadence of working effectively.

People presence has been a key unlock to stabilising our operations. Our frontline leadership teams ensured this through focused interventions, dynamically adapting to the challenges. In our factories, each employee's family was mapped to a member of the factory leadership team to support them through this journey. 100% employees were touched with individual connect through this Care to Connect Programme. For our sales teams, we followed a robust tier system to monitor high risk areas supported by standard operating procedures for market work, thereby reducing risk to our people.

HUL has always had a best-in-class medical policy that includes medical cover for our employees and their dependents, extensive tie-ups with hospitals and doctors in all locations, and cashless facilities. Early in the pandemic, we reviewed our medical readiness and resilience, particularly at our factories in remote locations, and ramped up our medical infrastructure with observation and testing facilities and engaged more doctors and medical staff. We also extended a Covid-19 medical insurance to people in our extended value chain. We are providing_ support to our employees and their families to accelerate the coverage of the national vaccination programme.

Wellbeing for all

During Covid-19, wellbeing emerged as a key priority for our people and their families. Through the year, we built a systemic approach on wellbeing with customised interventions for various employee segments. We provided our people a range of tools to help them to focus on their wellbeing. In a wider focus on mental health across the business, we are building a network of Mental Health Champions (MHCs) and till now we have more than 500 MHCs in place.

Becoming more agile

We are transforming how we work at HUL by introducing more flexible and agile ways of working. This year has highlighted our agility in many ways, most notably in our response to Covid-19. With the dual objective of protecting livelihoods & resourcing business growth imperatives, we embarked on a holistic programme of redeployment. In a short span of time, we redeployed a number of people from business areas that were slowing, such as our out-of-home food business, to teams experiencing high demand like those producing personal and home hygiene products.

Preparing for the future of work

We have extensive online learning programmes not only to enable our people to upskill and reskill for their roles at Unilever but also to help them prepare for the changing landscape of work.

a) Building Capabilities for the Future

We continue to build organisational capabilities with clear focus on functional learning priorities to make our people future-fit and purpose-led. Our ambition is to make sure all our people can reskill, upskill, work more flexibly and adapt to the changing world of work.

To prepare our end-to-end value chain for technology-led consumption models, we are investing significantly in our digital transformation programme – ‘Reimagine HUL'. A Digital Council comprising cross functional leaders is the Steering Committee for this initiative.

b) Managing Talent and Strengthening our Employer Brand

We continued to build meaningful and deep engagements with students, digitally as well as on campus, to strengthen our brand amongst them and attract the best talent for the Company. Our purpose-led and future-fit vision and culture ensured that we continue to hold our title of ‘No. 1 Employer of Choice' for the 12th year in a row.

c) Nurturing our Growth Culture

Our endeavour is to shape a Growth Culture based on three tenets: Human, Purposeful and Accountable. We remain committed to listening to our employees and build these insights into actions. Our annual employee survey ‘UniVoice' conducted during the year garnered a participation from 84% of our office-based employees. The survey showed improvements across all dimensions. Overall engagement stood at 90%, pride to work in HUL at 96%, and 94% of our employees said that they believe we have the right strategy to win. The employee voice through these encouraging scores is testimony to our actions and how our employees experience our Company every day.

d) A Beacon for Diversity

We strive continually to be a diverse and inclusive organisation, thereby enabling our people to bring their real selves to work. Apart from enabling infrastructure such as creche across 19 of our factories, we are making some of our large manufacturing sites accessible for persons with disabilities. In our endeavour to #Unstereotype the workplace, in 2020, we started an inclusive leaders training programme and are kick-starting conversations to sensitise employees on unconscious biases and helping them break limiting stereotypes. We are committed to be gender balanced in our managerial team in the next few years. Another small but important step in our diversity journey has been the recent induction of female shop-floor employees at our Haldia and Kidderpore factories. We want to make sure that people's experience of Unilever is fair for everyone and that we are fully including members of LGBTQI+ communities, persons with disability and other minority groups.

With the alarming rise in domestic violence cases during the lockdown we took the baton to be the first employer in India to formally launch a holistic, gender-neutral policy for survivors of domestic and other abuse. On the occasion of International Women's day, 2021, HUL launched the campaign #UNMUTE, where we are committed to encourage employees to speak up against domestic violence and to support all employees and their families with the education, awareness, and resources around safety. We have taken an audacious aim to reach over 100,000 women across our ecosystem and educate them on their rights as well as access to resources.

We are supporting our customers, from e-Commerce partners to small family-owned stores, as they respond to people's rapidly changing ways of shopping.

We sell our products through 8 million retail outlets spread across the country. Through our network of distributors, we reach a diverse universe of retailers from small family-owned shops and value shops to large ‘brick & mortar' store partners, online-only retail. As the route to reach consumers, our customers are critical to our business success and our primary aim is to help them grow sustainably alongside HUL. With Covid-19 affecting retailers of all types in unexpected and often very challenging ways, we worked closely with our customers to navigate the challenges and opportunities.

Protecting people in our extended value chain

Our people are our biggest asset and protecting their lives and livelihoods is paramount to us during Covid-19. As the infection started spreading, we implemented strict safety protocols based on global best practices, WHO guidelines, and Government requirements. We setup supply lines to ensure availability of personal protective equipment (PPE) for not only our employees but also for employees of our business partners and customers. We were one of the first companies to provide Covid-19 medical insurance for all the front-end manpower including that of our distributors. Your Company also launched life cover policy for workforce working in the market, to ensure their family's financial needs and children's education is taken care of in case of an unfortunate event.

HUL has proactively partnered with Ministry of Consumer Affairs to drive Suraksha Stores Programme in key states in India. This included providing training to the stores on key safety practices like sanitising the stores at regular interval, social distancing markers, the use of Aarogya Setu app, etc. Our sales team was trained to cascade safety practices to these stores.

Adapting to the changing world of shopping

People's behaviour changed everywhere in response to Covid-19, and this created a surge in demand in some product categories. As retailers worked to keep stocks of household necessities such as hygiene and cleaning items, we supported them in a variety of ways. We offered cash flow relief to our most vulnerable customers. We also acted quickly to bring in new protective protocols when visiting customers during the months of lockdown, so that we could continue to deliver products and keep shelves stocked. This also meant finding new ways and entering new partnerships with front end logistics specialists to get products to customers. We came up with innovative last mile logistics solutions viz. direct store delivery, hub & spoke model to increase the availability of our products. We remain focused on competitive growth through actions on execution, coverage, assortment, and high line fill to drive distribution for all our brands. Channelling the robust ‘Winning In Many Indias' (WiMI) structure, your Company pin-pointed demand shifts induced by reverse migration, resurgence of neighbourhood stores and growth of e-Commerce. We maximised growth by prioritising these focus areas and ramped up availability of products and brand presence across categories and population strata. Rural economy has become the driver of growth and we have doubled down to capture this opportunity. We continue to empower our Shakti entrepreneurs and now have a network of nearly 1,36,000 covering 18 states across India.

E-everything

During the lockdown in 2020, a large part of people's lives moved online – learning, socialising and most certainly shopping. This increase in online shopping led to emergence of Omni channel and e-Commerce as the fastest growing channels. The digitisation of shopping also brings new opportunities to understand shoppers' preferences and to help our customers meet them. We have renewed our focus on shopper insights to give our customers an edge, expanding the focus of our People Data Centre from helping our brands connect with consumers to helping our customers serve their shoppers better. We are also engaging with our customers to co-create products suitable to the channel. Our focus on building perfect store online and driving everyday great execution has ensured best-in-class online availability and discoverability of our products.

Modern trade stores inside shopping malls were non-operational for a large part of the year, thus posing massive challenges for the retailers. Retailers dialled up their omni-channel initiatives and your Company replicated the learnings from e-Commerce to assist the retailers in this initiative. Besides, key retailers adopted new models to reach out to shoppers viz. grocery-on-wheels, tele-calling etc. and your Company has partnered in these initiatives to help retailers fulfil shopper demand.

Resurgence of neighbourhood grocer

As mobility was restricted due to lockdowns, people relied on their neighbourhood grocer to fulfil their needs of daily essentials. This led to an unexpected increase in footfalls in the small grocery stores and pharma chains. We engaged with the retailers to help them with the right assortment and in ensuring availability of stocks by taking orders through tele-calling. We also partnered with State Bank of India, to make affordable credit accessible for these small stores.

Digitising our customer experience

The events of 2020 fast-forwarded the shift towards digital ordering and fulfilment. Small retail stores are now more convinced to adopt technology and are looking to us to provide digital solutions. The true strength of your Company's prowess in technology and data-driven decision making came to fore during the pandemic, when digital journeys managed to mitigate many of the challenges faced due to physical restrictions amidst strict lockdowns across India. Shikhar our eB2B ordering app enabled hundreds of thousands of retailers to place contactless orders safely and provided them visibility into the fulfilment of these orders through logistics tie-ups and intuitive interfaces. Furthering our journey to create a digital customer ecosystem of connected stores, we have piloted ‘Samadhan' our direct-to-trade order-fulfilment platform in Chennai. ‘Samadhan' is fully integrated with our digital order capturing platform and aims to deliver speedier and reliable service to the retail outlets through warehouse automation and optimised last mile logistics.

In supporting the resilience and growth of our suppliers and partners around the world, we are helping our business succeed.

Our supplier ecosystem involves lakhs of people in India as well as around the world–from large multinationals to small local producers. We also work with a wide range of business partners to help unlock growth and solve issues for the benefit of our stakeholders. Without our suppliers and partners we can't run our business. And it's through our direct suppliers, who provide us with goods and services such as raw materials, logistics, advertising, professional services and much more, that we can most influence change and help our business grow. We partner with around 1,150 suppliers to innovate our products and support mutual and sustainable growth.

An agile pandemic response

The events of 2020 highlighted the strength and agility of our supply chain. The pandemic resulted in material, and workforce shortages, disruption of supply lines, unanticipated surges and drops in demand for product categories. To ensure business continuity our supply chain team acted fast by prioritising critical portfolio, securing material supplies, onboarding dozens of new suppliers, and flexing formulations. We were able to restore operations with speed after the disruption due to nationwide lockdown. We operated in a dynamic manner, shortening our planning horizon to ensure we responded quickly to the changing environment. We focused on secondary service by dialling up our collaboration with partner ecosystem (Transporters, C&FAs & RSs) to not only normalise our transportation performance but also improve the forecast accuracy at our distributor level by stepping up on digital capabilities.

Our suppliers provided critical operational support as we responded to extraordinary surges in demand – increasing production volumes multiple times for some personal hygiene products such as hand sanitiser. To meet the spike in demand, we re-purposed existing HUL sites and added new capacities with our third-party manufacturers. With both state and national borders shut due to lockdown, we also joined forces with suppliers to ensure supplies of essential goods such as food, hygiene and cleaning products. Our strong relationships with suppliers meant that we were able to quickly shift our procurement of essential materials in response to temporary sourcing issues. We carved out a ‘Together We Can' programme with our suppliers and business partners to ensure continuity of supplies and land savings opportunities. We offered cash flow relief to our smallest and most vulnerable suppliers to help them cope with financial liabilities and maintain livelihoods. We protected employment by, for example, continuing to pay service suppliers – such as cleaners, loaders, canteen staff etc.–for three months despite offices and some operations being closed. We helped to keep our suppliers functioning by providing them with PPE and sharing information on hygiene protocols and guidelines for safe practices in light of Covid-19. Under the ‘HUL stands with the Nation' programme, we worked with our suppliers to provide food relief as well as distribute key hygiene products such as our Lifebuoy soap to migrant labour and other affected communities.

Our long-established Safety & Environmental Assurance Centre (SEAC) works with teams across the business to ensure the safety and environmental sustainability of our products, and the processes used to manufacture them. We have responded to the challenge of Covid-19 by introducing more effective ways of working. Onboarding of new materials, supplier partners and manufacturers was done collaboratively through digital change management processes. We also adapted new tools to continuously monitor consumer feedback to respond quickly on issues if any.

Intelligent growth

The need to react quickly to the unexpected, particularly during the early stages of the pandemic, highlighted the increasing importance of technology for an agile and future-fit supplier ecosystem. As we worked alongside suppliers to respond to the surges and falls in demand across different product categories, the value of data insights, smarter sourcing and more real-time visibility of goods and logistics became very clear. This is a critical focus for us–we are using increasingly sophisticated digital tools to identify new potential innovation partners, bring new suppliers on board, audit suppliers virtually, and monitor logistics and supply risk in real time.

Partnering with purpose

The support of our direct suppliers, who are the gateway to the lakhs of people in our wider supply chain, is critical to our progress towards key aims such as reducing carbon emissions, stopping deforestation and improving diversity and inclusion. We can only achieve our ambitious goals by bringing our supply partners with us – in doing so, we believe we are positioning both our business and theirs for growth. Our relaunched Partner for Purpose programme aims to create an open, inclusive ecosystem of supply partners to deliver our innovation, growth and sustainability priorities.

Without natural resources and the hundreds of thousands of people who source, make and sell our products, our business simply can't grow.

The interconnection between a healthy natural world and a thriving society was thrown into sharp focus in 2020. By protecting nature and improving health and livelihoods, the Company will have a positive impact on the planet, on people and, ultimately, on its own business.

Tackling climate change and social inequality have long been at the heart of the Company's sustainability agenda. It was codified by its Unilever Sustainable Living Plan, which set out the Company's ambition of decoupling its growth from its environmental impact, while increasing its positive social impact. Your Company is convinced that the USLP made it a better business for the long-term. Unilever has now set ambitious new targets for improving the health of the planet and contributing to a fairer and more socially inclusive world, with aggressive timelines. The Company is also encouraging others – such as its suppliers and industry peers – to take bold steps, since only through working together can we make sustainable living commonplace.

Improving the health of the planet

The damaging effects of climate change and nature loss are becoming more obvious each year. As one of India's largest Fast Moving Consumer Goods Company with a vision to be the leader in sustainable business, the Company has an opportunity to not just reduce impact on the environment but to also have a more positive one.

Net Zero Emissions

There's no doubt that the world needs to decarbonise, and quickly. Your Company intends to lead this transformation and this year Unilever announced a new target to achieve net zero emissions from sourcing to point of sale, by 2039. This means removing as much carbon from its operations and supply chain as it can, and only offsetting the remaining emissions as a last resort.

In your Company's own manufacturing operations, it has ^{reduced CO}2 emissions per tonne of its production by 91% compared to 2008 baseline. The Company is continuously looking for ways to replace fossil fuel energy with renewable sources and in 2020 it operated its factories with 100% renewable grid electricity.

In September 2020, Unilever announced a transformational Clean Future programme for its cleaning and laundry products that will globally invest an additional €1 billion over the next ten years to remove all fossil-fuel derived carbon from products by moving to 100% renewable or recycled carbon. The Clean Future strategy has inspired enhanced use of plant-based surfactants (green carbon) in laundry powders and liquids, to reduce our dependence on fossil carbon. The Company will continue to innovate and partner in the area of fossil carbon reduction, water and plastic sustainability for a Clean Future.

A Waste-Free World

Your Company maintained its long-held commitment to send zero non-hazardous waste to landfill from its factories. Total waste generated from its factories reduced by 59% against the 2008 baseline and 100% of the non-hazardous waste generated at its factories was recycled or reused or sent for energy recovery in environment friendly ways.

Your Company has made clear commitments to make 100% of its plastic packaging reusable, recyclable or compostable by 2025. Your Company is working to reduce plastic pollution through targets focused on an absolute reduction, using more recycled and less virgin plastic, improving the recyclability of its plastic and collecting more plastic than it sells. The Company has done significant work in this area and has collected and safely disposed more than 1 lakh tonnes of post- consumer use plastic waste in aggregate since 2018, through collection and disposal partners.

Along with collection and processing, your Company is also progressing towards making plastics packaging circular by eliminating unwanted plastics, using post-consumer recycled plastics (PCR) and recycle ready structures. Working along with partners such as Banyan Nation, your Company's purpose-driven brands such as Surf excel laundry liquid, Sunsilk and TRESemm are using 25% r-HDPE (High Density Polyethylene). Vim is using 50% r-PET in its liquid bottles. The Company has also eliminated ~1 kilo tonne of plastic by eliminating plastics coating from soap cartons (Dove, Lux, Liril) and Lifebuoy's soap stiffeners and moved shampoo sachet, soap wrapper and Vim bar flow-wrap to recycle ready structure.

Your Company recognises that the plastics problem cannot be solved alone. It is working closely with the Government and other partners such as United Nations Development

Programme (UNDP) for end-to-end pilot projects for plastic waste management. So far, the project has reached out to more than 40,000 households, collected more than 4,000 tonnes of plastic waste and onboarded more than 800 Safai Saathis (sanitation workers) in the project.

To advocate and create awareness in the area of waste management, your Company partnered with Xynteo India Private Limited and has developed a curriculum called ‘Waste No More' to create awareness and drive behaviour change on waste segregation and recycling among school children and people in housing societies. The programme has reached out to more than 1 lakh students. In partnership with State Bank of India (SBI) and Municipal Corporation of Greater Mumbai, your Company has initiated and operationalised a Dry Waste Collection and Segregation Centre in Mumbai.

Protecting and Regenerating Nature

With a high agricultural footprint, your Company has a responsibility to preserve land for future generations. It is aiming to achieve this through sustainable sourcing of our key commodities, regenerative agriculture practices and a deforestation-free supply chain, enabled by greater transparency.

This year, Unilever announced its aim to reach a deforestation-free supply chain by 2023. Over the years, the Company has made significant progress in sustainable sourcing. In 2020, 93% of tomatoes used in Kissan ketchup continued to be sourced sustainably and over 67% of Tea in India procured for Unilever brands was sourced from sustainable sources. By the end of 2020, 100% of the chicory was sourced sustainably as all the Unilever chicory farmers in India were covered under the Unilever Sustainable Agriculture Code providing farmers knowledge and expertise in sustainable agriculture practices.

Protecting Water

Access to safe water is a basic human right. It's become even more critical this year, with the importance of good hygiene in protecting against Covid-19. And water scarcity and climate change are, of course, inextricably linked. Your Company has made good progress in reducing the water usage (cubic meter per tonne of production) in its manufacturing operations by 54% since 2008.

Your Company is also working to promote good water management, particularly in water-stressed areas. Hindustan Unilever Foundation (HUF) was set up in 2010 to support and amplify scalable solutions that can help address India's water challenges – specifically for rural communities that intersect with agriculture. HUF established its ‘Water for Public Good' programme, anchored in the belief that water is a common good and must be governed by citizen communities. The aim was to catalyse effective solutions to India's water challenges involving government, communities, experts, and mission-based organisations.

Through HUF's initiatives, the cumulative and collective achievements delivered in 2019-20 include a water potential of over 1.3 trillion litres through improved supply and demand water management, over 1 million tonnes of agricultural and biomass production, and over 30 million person-days of employment. To underscore the importance of the water potential created by HUF; one billion litres of water can meet the drinking water needs of over 8 lakh adults for an entire year.

A fairer and more-inclusive world

Your Company's business relies on the hundreds of thousands of people who work in its value chain – including farmers, factory workers, small shop owners, waste recyclers and others. The Company can only create widescale change by giving people opportunities to improve their livelihoods. So, it is working to improve people's health, confidence and wellbeing; to create opportunities for all; and to respect and promote human rights.

Raising Living Standards

Payingallworkersfairlyfortheworktheydoisafundamental human right. In January 2021, Unilever announced a goal that everyone who directly provides goods and services to Unilever will earn at least a living wage or a living income by 2030. Your Company will specifically focus on the most vulnerable workers in manufacturing and agriculture, working with stakeholders to raise living standards through supplier selection practices, collaboration and advocacy wherever it operates.

Opportunities for All

To be a truly inclusive business, your Company needs to make sure women, especially women from under-represented groups, have the same access as men to opportunities. The Company continues to invest in women's livelihoods to benefit families and communities, and to grow its business.

Project Shakti, your Company's initiative is aimed at financially empowering and providing livelihood opportunities to women in rural India. The initiative has reached nearly 1,36,000 Shakti Entrepreneurs across 18 States.

Your Company's purpose driven brands such as Glow & Lovely and Dove have developed their brand purpose around skills and confidence building, particularly focused on women. Glow & Lovely Careers is a mobile platform designed to help women create an identity for themselves by providing them career guidance, skill-based courses and information on job opportunities.

Better health and hygiene

Your Company's purpose driven brands Lifebuoy and Domex have worked extensively to improve hygiene and sanitation of people over the years. The Lifebuoy handwashing behaviour change initiative helps in promoting the benefits of handwashing with soap at key times during the day and encouraging people to adopt and sustain good handwashing behaviour. In fact, from 2010 to end of 2020 it has reached out to over 73 million people in India through the handwashing behaviour change initiatives with life-saving health information.

Swachh Aadat, Swachh Bharat

Your Company's ‘Swachh Aadat, Swachh Bharat' (SASB) programme is in line with the Government of India's Swachh Bharat Abhiyan (Clean India Mission) to promote good health and hygiene practices. The Swachh Aadat Curriculum teaches children in classes 1-5 the importance of adopting three clean habits – washing hands with soap, safe drinking water practices and using clean toilets over a 21-day period.

The textbook version of the curriculum has been rolled out in government schools in Bihar, Gujarat, Maharashtra, Uttarakhand and Haryana with a total reach of 2.1 million children. In the absence of in school learning in 2020, and to ensure that learning didn't stop, the Company pivoted its existing model to digital and adapted the WASH curriculum into 21 interactive animated videos.

The Community Hygiene Centre – ‘Suvidha' is another important project that ensures health, hygiene and sanitation in urban slums. ‘Suvidha' a first-of-its-kind urban water, hygiene and sanitation community centre was first set up at Chiragnagar, Ghatkopar, one of the largest slums in Mumbai. Your Company has now opened four more Suvidha centres in Mumbai in partnership with HSBC to give people access to clean water, sanitation and laundry facilities. This project has saved over 25 million litres of water, via the five existing centres in Mumbai.

Healthier Eating

Your Company continuously works to improve the taste and nutritional quality of its products using globally recognised dietary standards, which are also compliant with applicable Indian regulations.

Your Company's response to Covid-19

As a responsible Company, we took several actions through product donations, supporting healthcare infrastructure, donating food to migrant workers and promoting Covid-19 appropriate behaviour through public awareness campaigns.

Your Company donated over 2 crores soaps and sanitisers, bottles of Domex and packs of Horlicks and other products to the frontline medical professionals, police officials, sanitation workers, migrant population, and vulnerable people of the country, in partnership with the Government and various NGOs. We partnered medical institutions to provide almost 75,000 test kits and medical equipment including over 40 ventilators to hospitals. We had partnered Apollo Hospitals, State Bank of India and others to create isolation facilities. We also created isolation facilities near some of our factory locations for the community. Our factory teams along with Prabhat partners, donated 2 weeks' food ration to close to 1.2 lakh migrant workers' families in over 200 locations. To educate people about Covid-19 appropriate behaviour, your Company created #VirusKiKadiTodo campaign in association with UNICEF that reached 600 million people across small towns and rural India through television and digital platforms.

In order to fight the second wave of the pandemic, your Company is procuring medical equipments including oxygen concentrators that will be distributed in the most affected areas across the country. We will be partnering with Portea Medical and KVN Foundation to make oxygen concentrators available to Covid-19 patients at home through a borrow-use-return mechanism in some of the most impacted cities. In addition to this, to augment the medical infrastructure we are making available ventilators to various hospitals.

Central to our fight against Covid-19 is vaccinating our people. Your Company will be facilitating and covering the cost of Covid-19 vaccinations for 3,00,000 people in our extended ecosystem including suppliers, distributors, salesmen and Shakti Ammas. We will also be organising vaccination camps for our employees and their dependants. Your Company is also working towards amplifying awareness to reduce vaccine hesitancy.

For more information on your Company's response to Covid-19, go to https://w w w.hul .co.in/news/ n e w s - a n d - f e a t u r e s / 2 0 2 1/ c o v i d -1 9 - r e s p o n s e -hulstandswiththenation.html Detailed information on the progress of your Company's USLP initiatives and CSR activities is available in the Annual Report on CSR and Business Responsibility Report which is appended as Annexure to this Report.

In a volatile and unpredictable year, we have demonstrated our resilience and agility while delivering a strong competitive performance.

This year, we drew on our clear and compelling strategy and our five growth fundamentals to navigate the uncertainty and volatility of the Covid-19 pandemic. Our immediate response to the pandemic was to focus on protecting our people, restoring supplies, responding to new patterns of demand, supporting our communities, and preserving our cash and balance sheet strength.

We demonstrated the resilience of our business and unlocked new levels of agility in responding to the unprecedented fluctuations in demand, coupled with complex challenges in the supply chain. Our focus on execution excellence, repurposing our brands, and portfolio interventions delivered an improvement in competitiveness.

Our Performance in 2020-21

In the early days of the pandemic, we decided the best way to manage our business was to focus on competitive growth and protect our business model by looking at absolute profits and focusing on cash delivery. We have performed well against these objectives with 84% of our business winning volume share in the year ending March 2021 as per Kantar Worldpanel. Our reported turnover growth stood at 18%, domestic consumer business (excluding the impact of the merger of GSK CH and acquisition of ‘VWash') grew at 6% led by volume growth of 3%. From a portfolio lens, c.80% of our business addressed the consumer needs of Health, Hygiene and Nutrition, which grew strongly at 12%. Discretionary categories like Skin Care, Deodorants and Colour Cosmetics forming c.15% of our portfolio registered a decline of 15% owing to pressure on household budgets and limited mobility. Out-of-home categories like Ice Cream, Food Solutions which contribute c.5% to our turnover, were disproportionately impacted, thus declining by 26%.

In our divisions, Beauty & Personal Care grew by 4% led by robust double-digit growth in Skin Cleansing, Oral Care and Hair Care. Home Care grew by 2% led by double-digit growth in Household Care and a marginal growth in Fabric Wash due to slowdown in laundry consumption owing to limited mobility. Foods & Refreshment outperformed, delivering 17% growth with a strong performance in Tea. Horlicks and Boost have also performed well, led by strong fundamentals.

Our EBITDA margin at 25% remained healthy, Profit after tax of Rs 7,954 crores increased by 18% and our cashflow from operations (after taxes) are up by 23% to ` 8,957 crores. Tea and Palm Oil prices surged to their multi-year highs during 2020, putting significant pressure on our margins. However, a strong savings programme, sharp focus on generating synergies from GSK CH merger and judicious pricing actions helped us navigate these headwinds and deliver profitable growth. Your Directors are pleased to recommend a final Dividend of Rs 17 per equity share of face value of ` 1/- for the year ended 31st March, 2021. The interim Dividend of ` 14.00 per share was paid on 12th November, 2020. The total Dividend for the financial year ended 31st March, 2021 amounts to Rs 31.00 per share of face value of Rs 1/- each. During the year, special Dividend of Rs 9.50 per share was also paid on 17th August, 2020.

Our strategic choices for future success

In early 2021, we set out in detail the Compass strategy to deliver our vision. It guides our decisions and actions in five key areas: portfolio, brands, channels, structure & capabilities, and culture. All of this is underpinned by our focus on creating value through our 4G growth model.

1. Developing our portfolio

We hold leadership position in most categories we operate in. As we strengthen our foundation to deliver long-term superior value, accelerating growth is our top priority.

We are building a future-fit portfolio by strengthening our core brands, creating categories of the future through market development, and driving premiumisation by straddling the price-benefit pyramid. Our focus is to make our bigger brands better by capturing emerging trends and landing impactful innovations to fuel growth. In the underpenetrated categories, we are driving consumer education and recruitment through targeted sampling and by making our products more accessible.

We continue to work towards making our brands more aspirational by understanding the needs of the consumer and scaling new benefit spaces. We have carved out a separate premium beauty business within Beauty & Personal Care division to foster our play in the fast-growing ‘Mass-tige' beauty segment.

2. Winning with our brands as a force for good, powered by purpose and innovation

We have a long track record as a leader in sustainability. We are continuing to lead the way in sustainable business–ramping up our commitments on climate, nature and creating a fairer world (see pages 31 to 33 for more). We are embedding these commitments at the heart of our divisional, category, and brand agendas. Our purposeful brands are key to delivering our sustainability ambitions, and they are starting to cut through. Consumers see our brands as purposeful, taking meaningful, tangible action on issues they care deeply about. We are innovating to ensure our brands also excel through their quality and efficacy. See the consumer review on pages 22 to 25 for more examples of brands with purpose and innovation.

3. Leading in the channels of the future

We are designing for growth channels like e-Commerce through focused channel teams working to create the right portfolio and execution with strategies based on deep shopper insights. Our e-Commerce focused innovations include smart packaging solutions and right pack price architecture to suit last mile logistics. The right portfolio for e-Commerce must be supported by operations built for this channel, from demand-anticipating algorithms to fast order fulfilment, and we are becoming more agile throughout our supply chain and operations.

Traditional distributive trade is the predominant channel in India with an estimated 10 million outlets contributing to c.80% of the total FMCG market. e-Commerce explosion is also leading to the transformation of traditional trade and bringing new opportunities for our eB2B programmes. Shikhar our eB2B retailer app has now been adopted by more than 5 lakh stores enabling them to place order at their convenience without waiting for the salesmen to visit their stores. We are looking to scale this up and at the same time work at the back end to build next day delivery systems. We are also working to solve capital issues for our retailers through our partnership with State Bank of India (SBI) which will enable easy access to affordable credit.

4. Build differentiated structures and capabilities

India is a diverse country with multi-cultural, multi-lingual, and multi-regional ethos. The Indian consumers are also increasingly becoming more diverse. At one end we see the emergence of the more digitally connected, metro, higher socio-economic class consumers; then we have the middle-class consumers trickling from the semi-urban and tier 1-3 cities; to the consumers in rurban and rural hinterlands. Within that, your Company operates a complex business with a portfolio that spans across the price pyramid from Rs 1 sachet to ` 1,150 and sold through 8 million small and large retail outlets. In keeping with the heterogenous nature of our country, we have de-averaged India into 15 consumer clusters as part of our Winning in Many Indias (WiMI) strategy and are driving distinctive actions across these clusters to accelerate growth. We have created 16 Country Category business teams (CCBT) which act as mini boards led by young general managers. These nimble and empowered teams have made us more consumer and customer-centric helping us move with speed and agility.

‘Reimagine HUL' is our multi-year transformation programme that aims to transform your Company by leveraging the power of data & technology, to thrive in this increasingly heterogenous consumer group and a complex business environment. The vision is to create an ‘Intelligent Enterprise' that helps power growth for the next decade in this new India.

As an ‘Intelligent Enterprise', we are moving from the traditional linear value chain model to an ecosystem approach. We continue to transform the core by building distinctive capabilities across the value chain, where we are making the core business become smarter and more efficient by being data led and machine augmented. At the same time, we are creating bespoke platforms & digital ecosystems that create differentiated consumer & customer value. The work is organised around four ecosystems:

• Consumer Ecosystem: Focusing on building superior experiences and products through: Agile Innovation Hub, a virtual hub with always-on trend spotting sizing, prototyping, and validating; Next Gen Media, real time data & analytics for media attribution to growth, and Interconnected Consumer Platforms, on engagement, trial, and commerce.

• Customer Ecosystem: A Connected Store programme which entails Demand Capture through Shikhar (our eB2B App), Demand Fulfilment (including building next day delivery for stores) and a ‘My Kirana' and 'Ushop' portal as a B2C for

Demand Generation.

• Operations Ecosystem: An ecosystem across the verticals of Plan, Source, Make and Deliver underpinned by digital capabilities for E2E manufacturing & distribution network transformation.

• Data, Tech and Analytics Ecosystem: Data is core to our business operations, and we continue to manage it like an enterprise asset. In 2020 we increased the leverage of (external) ecosystem data, and this has helped to optimise operations during lockdowns. We continue to make progress to augment all key decisions with Artificial Intelligence & Machine Learning.

Building a purpose-led, future-fit organisation and growth culture

Our people are key to delivering our strategy, so we are focusing on our capacity, capability and culture. Agile ways of working and digital transformation are enabling us to find new capacity and refocus our people on the highest value work. We are equipping our employees with the skills they'll need to adapt to a changing world of work and continue growing our business.

We strive to be a beacon for diversity, inclusion, and value-based leadership. Apart from our commitment to be gender balanced in the next few years, we are working towards ensuring a fair and inclusive environment for everyone including members of LGBTQI+ communities, person with disability and other minority groups. See pages 26 to 27 for more on our people.

We will continue to demonstrate how sustainable business drives superior performance – building on our strengths that position us well for the consumer and demographic trends of the future, and delivering on our strategic choices to create long-term value for all our stakeholders.

Technology Absorption

Your Company continues to derive sustainable benefit from the strong foundation and long tradition of R&D at Unilever, which differentiates it from others. New products, processes and benefits flow from work done in various Unilever R&D centres across the globe, including in India. The Unilever R&D labs in Mumbai and Bengaluru work closely with the business to create exciting innovations that help us win with our consumers. Effective 1st April, 2020, your Company added a new R&D facility for the Nutrition business based at Gurgaon, consequent to the merger of GSK CH with the Company. With world-class facilities, and a superior science and technology culture, Unilever attracts the best talent to provide a significant technology differentiation to its products and processes.

The R&D programmes, undertaken by Unilever globally, are focused on the development of breakthrough and proprietary technologies with innovative consumer propositions. The global R&D team comprises highly qualified scientists and technologists working in the areas of Home Care, Beauty & Personal Care, Foods & Refreshment and Water Purification and critical functional capability teams in the areas of Regulatory, Clinicals, Digital R&D, Product & Environment Safety and Open Innovation.

Your Company has an existing Technical Collaboration Agreement (TCA) and a Trade Mark License Agreement (TMLA) with Unilever which were entered into in 2013. Your Company is 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 your 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'.

Your 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.

Your Company continuously imports technology from Unilever under the TCA, which is fully absorbed. Your Company also receives continuous support and guidance from Unilever to drive functional excellence in marketing, supply management, media buying and IT, among others, which help your Company 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 your Company and enables it to win in the marketplace.

Our risk appetite and approach to risk management

Risk management is integral to your Company's strategy and to the achievement of HUL's long-term goals. Our success as an organisation depends on our ability to identify and exploit the opportunities generated by our business and the markets we operate in. In doing this we take an embedded approach to risk management which puts risk and opportunity assessment at the core of the Board's agenda, which is where we believe it should be. HUL's appetite for risk is driven by the following:

• Our growth should be consistent, competitive, profitable, and responsible.

• Our actions on issues such as plastic and climate change must reflect their urgency, and not be constrained by the uncertainty of potential impacts.

• Our behaviours must be in line with our Code of Business Principles and Code Policies.

• Our ambition to continuously improve our operational efficiency and effectiveness.

Our approach to risk management is designed to provide reasonable, but not absolute, assurance that our assets are safeguarded, the risks facing the business are being assessed and mitigated and all information that may be required to be disclosed is reported to HUL's senior management including, where appropriate, the Managing Director and Chief Financial Officer and the Audit Committee and the Board.

For each of our principal risks, we have a risk management framework detailing the controls we have in place and who is responsible for managing both the overall risk and the individual controls mitigating that risk. Our assessment of risk considers both short and long-term risks, including how these risks are changing, together with emerging risk areas. These are reviewed on an ongoing basis, and formally by Risk Management Committee and the Board at least once a year.

Processes

HUL engages in a wide range of processes and activities across all its operations covering strategy, planning, execution and performance management . Risk management is integrated into every stage of this business cycle. These procedures are formalised and documented and are increasingly being centralised and automated into transactional and other information technology systems.

Risk and Internal Adequacy

The Board advised by the Risk Management Committee, where appropriate, regularly reviews the significant risks and decisions that could have a material impact on HUL. These reviews consider the level of risk that HUL is prepared to take in pursuit of the business strategy and the effectiveness of the management controls in place to mitigate the risk exposure.

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 business areas. 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 controls environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company's risk management policies and systems.

Principal Risks

In the following pages we have identified the risks that we regard as the most relevant to our business. These are the risks that we see as most material to HUL's business and performance at this time. There may be other risks that could emerge in the future.

Our principal risks have not changed this year. Albeit the Covid-19 pandemic has increased the potential impact and likelihood of some of these risks. Much of our risk mitigation focus during the year has been on managing these risks The Covid-19 impact was felt in the following risk areas –

1. People health & wellbeing concerns

To ensure, safety and wellbeing of our employees, we acted quickly and took relevant actions such as working from home for office based staff, restrictions on travel, provision of protective equipment for factory workers and changes in working practices to facilitate social distancing. The safety of those who continue to operate in our workplaces as well as the mental and physical wellbeing of employees facing an extended period of working from home continues to be of paramount importance. We also have stringent return to office criteria and revised hygiene protocols to ensure a safe return to the office when possible.

2. Future-fit portfolio transformation

As the pandemic evolves, there have been significant shifts in demand across product categories on account of changing consumer behaviours. The heightened concerns on health and safety are reflecting in consumer demand trends in the space of protection and hygiene. We need to continue to develop and deliver consumer relevant innovations.

3. Channel transformation

Social distancing requirements and restriction on individual movements have driven rapid increase in e-everything and online shopping. We continue to invest in developing our capabilities in this area rapidly

4. Supply chain agility

Rapidly changing global landscape required reconfiguration of supply chains and adherence to changing regulations which entails significant management. Operation of logistics network to maintain sources of supply will continue to require ongoing focus and flexibility.

5. IT availability, capability and resilience

The pandemic led change in ways of working has led to increased online transactions. Reliance on IT resilience for conduct of business operations requires keeping the IT infrastructure operating effectively while managing heightened vulnerability to malicious disruptions & information leakages.

While the pandemic has significantly impacted the business this year, it also has characteristics of an emerging risk with uncertainty around how it will unfold in 2021. We regularly review our risk areas and the Company leadership retains the responsibility for determining the nature and extent of significant risks and drawing out commensurate mitigation plans.

As well as identifying the most relevant risks for our business we reflect on whether we think the level of risk associated with each of our principal risks is increasing or decreasing.

We set out below our principal risks, certain mitigating actions that we believe help us to manage our risks and the increase/decrease corresponding to each of the these.

Future-fit Portfolio

HUL's strategic investment choices in keeping with Our strategy and our business plans are designed to ensure that resources changing consumer demographics, aspirations and are prioritised towards high growth segments. As on outcome of Covid-19 spending power will bring about an opportunity for there has been an upswing in categories like health, hygiene and nutrition. growth and improved margins. There is a huge headroom We have a strong pipeline of relevant innovations and are staying close to to grow through building our product portfolio in high consumers by proactively spotting consumer insights & capturing potential growth masstige and prestige segments/high potential trends to adapt to the emerging demand patterns in the short-term and white spaces. prepare for any structural changes in the medium term. We are also focused on making brands aspirational and driving premiumisation across the breadth of the product portfolio. HUL has significantly enhanced brand propositions and marketing investments to increase adoption in under-penetrated categories.

Growing in Channels of the Future

With advent of technology enabled distribution models While HUL continues to drive growth in the traditional trade and route to there has been a hyper fragmentation of channels. market, it is also critical to increase its footprint in emerging channels. Accelerated growth of e-Commerce and Modern Trade Covid-19 has accelerated the shift of consumers to online with the trend has brought about a huge opportunity to tap into these of e-everything becoming highly discernible. Your Company is working on channels and drive business growth. The Covid-19 rapid proliferation of technology enabled distribution models to engage key pandemic has driven rapid increase in online shopping customers and consumers strategically. which require us to accelerate development of our Several new initiatives have been piloted which include digitisation of e-Commerce and eRTM capabilities. general trade-fast track POS activations, smart demand capture along-with Strategically designed and flawlessly executed capturing opportunities in Omni channel and B2B2C and collaborating with transformation would open up a huge opportunity to tap key players in e-Commerce. into the new age channels and drive business growth.

Digital Transformation

Opportunities arising from rapidly emerging digital HUL has been a leader in using big data and analytics as a tool to drive technologies, analytics and big data present a chance to sustainable growth. We continue to drive organisation wide digital make meaningful interventions and develop capabilities transformation agenda under the umbrella of "Reimagine HUL" to capture across the value chain redefining the way we do business. the digital opportunity. Pre-empting the imminent disruption, we have established a sharp digital innovation portfolio in each Function and The ability to keep our operations future fit through continue investments in Innovation. These innovations include those around building digital capabilities in systems, workforce and our core ERP platform using Cloud, Artificial Intelligence and other digital business models will help us stay agile and respond in technologies. Each day we build new capabilities in Systems, Workforce and time to evolving consumer, channel, market requirements.

Business Models with strong focus on external orientation and partnership across large IT Companies/Industry Bodies. We are also invested to make sure that our talent is digitally enabled and future fit to ride the digital transformation wave.

Results

Division Wise Turnover

(Rs crores)

* Others include service income from operations, relevant to the respective businesses.

Summarised Profit and Loss Account

*Opening balances adjusted for GSK CH merger

Return on Net Worth, Return on Capital Employed and Debt Equity ratio have dropped in financial year 2020-21 on account of increase in shareholders' equity pursuant to the merger of GSK CH.

There is no significant change (i.e. change of 25% or more as compared to the financial year 2019-20) in the Key Financial Ratios except the ones mentioned above.

(i) Return on Net Worth

Return on Net Worth (RoNW) is a measure of profitability of a Company expressed in percentage. It is calculated by dividing total comprehensive income for the year by average capital employed during the year.

(ii) Return on Capital Employed

Return on Capital Employed (RoCE) is a financial ratio that measures a Company's profitability and the efficiency with which its capital is used. In other words, the ratio measures how well a Company is generating profits from its capital. It is calculated by dividing profit before exceptional items and tax by average capital employed during the year.

(iii) Basic EPS

Earnings Per Share (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

The above ratio is used to quantify a Company's effectiveness in collecting its receivables or money owed by customers. 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 is the number of times a Company sells and replaces its inventory during a period. It is calculated by dividing turnover by average inventory.

(vi) Interest Coverage Ratio

The Interest Coverage Ratio measures how many times a Company can cover its current interest payment with its available earnings. It is calculated by dividing PBIT by finance cost.

(vii) Current Ratio

The Current Ratio is a liquidity ratio that 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.

(viii) Debt Equity Ratio

The 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 a Company's total liabilities by its shareholder's equity.

(ix) Operating Profit Margin (%)

Operating Profit Margin is a profitability or performance ratio used to calculate the percentage of profit a Company produces from its operations. It is calculated by dividing the EBIT by turnover.

(x) Net Profit Margin (%)

The net profit margin is equal to how much net income or profit is generated as a percentage of revenue. It is calculated by dividing the profit for the year by turnover.

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 to which this financial statement relates on the date of this Report During the financial year, there was no amount proposed to be transferred to the Reserves. Capital Expenditure during the year was at Rs 4,051 crores ( Rs 765 crores in the previous year).

During the year, your Company did not accept any public deposits under Chapter V of the Companies Act, 2013. Your Company manages cash and cash flow processes assiduously, involving all parts of the business. There was a net cash surplus of Rs 4,321 crores (financial year 2019-20: Rs 5,017 crores), as on 31st March, 2021. 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. The details of foreign exchange earnings and outgo as required under Section 134 of the Companies Act, 2013 and Rule 8(3) of Companies (Accounts) Rules, 2014 are mentioned below:

Performance of Subsidiaries

The summary of performance of the Subsidiaries of your Company is provided as below:

Unilever India Exports Limited

The Company is a 100% subsidiary of Hindustan Unilever Limited and is engaged in FMCG exports business. The focus of the FMCG exports operation is two-fold: to develop overseas markets by driving distribution of brands, such as Vaseline, Dove, Pears, BRU, Red Label, Lakm, Horlicks, Boost and to effectively provide cross-border sourcing of FMCG products to other Unilever companies across the world.

The topline growth of the Company was driven by robust growth in Personal Wash, Tea and newly added Nutrition portfolio. Brands like Pears, Dove, Lux, Taj Mahal, Lipton, Brooke Bond have registered healthy growth in the focused markets.

Lakme Lever Private Limited

The Company is a 100% subsidiary of Hindustan Unilever Limited. The Company is engaged in Salons business and also operates a manufacturing unit at Gandhidham which carries out job work operations for your Company by manufacturing toilet soaps, bathing bars and detergent bars.

The Company has over 485 owned/managed and franchisee salons. At Lakm Salon, safety and wellbeing of our experts and consumers have always been the topmost priority. This is assured by detailed Lakm SOPs, rigorous training and high-quality products. In order to further enhance hygiene and safety in the post-Covid, the Company modified operations and service protocols to be compliant with the applicable Government guidelines and in collaboration with medical professionals. The extended team comprising the housekeeping staff, experts, salon managers and business partners have been trained in these new methods to ensure complete adherence to protocols. The salons were re-opened after thorough audit and review by an expert team who was responsible to ensure best in class safety standards.

A compelling campaign with client testimonials leveraging social media led to an increase in new customers. This has improved Company's Net Promoter Score significantly to 84% post Covid from 58% pre Covid time. In a study conducted with 2,000 clients, 96.7% found Lakm Salon was SAFER THAN HOME. Dermalogica, the world's leading professional skincare brand was scaled up to 200 salons and innovations like Face Fit and Eye treatment helped grow the brand.

The profitability for the year has been largely impacted on account of Covid outbreak. After a stringent lock down which disrupted operations in the first half, the Company in the second half of the year has sequentially improved performance to almost previous periods revenue backed by the relaunch of the Runway Rewards programme and a stronger focus on products. With strong focus on safety and quality of operations, better consultation through ‘expert' treatments and prudent cost optimisation, the Company continues to be in the attractive beauty services category. Post the second wave of Covid starting March 2021, salon operations are affected due to lock downs as per government guidelines. The Company is leveraging the digital medium to train our experts and to stay in touch with our clients.

Hindustan Unilever Foundation

The Company is a not-for-profit Company that anchors water management related community development and sustainability initiatives of Hindustan Unilever Limited. 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. The Company's programmes currently reach 11,300 villages* in 59 districts in 10 states and 2 union territories across India in partnership with 19 NGO partners and multiple co-funders. The Company also supports several knowledge initiatives in water conservation, governance and behaviour change. During the financial year 2020-21, over 400 billion litres^# of water saving potential created through improved supply and demand management of water resources. By the end of 2020, the cumulative and collective achievements through partnered programmes of the Company (independently assured up to financial year 2019-20) include: Water Conservation: Water conservation estimate stood at 1.3 trillion litres cumulatively.

Crop Yield: Additional agriculture production of over 1 million tonnes has been generated.

Livelihoods: Over 30 million person days of employment have been created though water conservation and increased agriculture production.

*The significant reach and livelihood impact are on account of the Company's support to an MGNREGS programme partnership in West Bengal with PRADAN, a reputed non-profit organisation. This programme reaches out to over 7,000 villages across 54 blocks in 6 districts.

 ^#subject to independent assurance

Unilever Nepal Limited

Unilever Nepal Limited (UNL), a subsidiary of your Company had a very challenging year. It was a tale of 2 halves where UNL delivered strong growth in the first 6 months (pre Covid) and a resilient performance in the last 6 months (post Covid). In line with the 4G Growth strategy, UNL grew its revenue from operations during the pre Covid period. This was led by a robust localisation, innovation and distribution plans and the growth was broad based across. With the onset of Covid-19, operations of UNL's factories, vendors as well as customers were severely disrupted. During these difficult times, UNL ensured protection of everyone in the value chain. Safety and wellbeing of their staff and workers remain top priority during these difficult times. Despite slowdown, UNL's market presence continues to be strong reflecting the competitive growth of its brands. UNL brands continue to be the market leader in all the categories it operates in.

Unilever India Limited

The Company is a 100% subsidiary of Hindustan Unilever Limited incorporated on 7th June, 2020 to leverage the growth opportunities in a fast-changing business in this new environment. Presently, the Company is in the process of setting up its manufacturing facility at Sumerpur, Uttar Pradesh. It is proposed to manufacture spray drying washing powders at this factory.

Pond's Exports Limited is a subsidiary of your Company which was engaged in leather business and has currently discontinued operations.

Bhavishya Alliance Child Nutrition Initiatives is a not-for-profit subsidiary of your Company and had launched a hand washing behaviour change programme in the state of Bihar that aims to reduce diarrhoea and pneumonia in children under the age of five years. It discontinued operations & a similar handwashing programme is now being driven by your Company directly.

Daverashola Estates Private Limited is a subsidiary of your 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 your Company. The litigation over the land of the Company is now over and accordingly the land has been surrendered to the Government and a Deed of Surrender was signed to this effect.

Levers Associated Trust Limited, Levindra Trust Limited and Hindlever Trust Limited, subsidiaries of your Company, act as trustees of the employee benefits trusts of your Company.

During the year, scheme of merger of Ponds Exports Limited and Jamnagar Properties Private Limited into Unilever India Exports Limited was filed for which the hearing before National Company Law Tribunal (NCLT), Mumbai was held on 1st March, 2021 and the order has been reserved. During the year, your 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 its subsidiary company i.e. Unilever India Limited.

Cost Audit

In terms of the Section 148 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the cost audit is applicable for following businesses such as Coffee, Drugs and Pharmaceuticals, Insecticides, Milk Powder, Organic Chemicals, Other Machinery, Petroleum Products and Tea. The accounts and records for the above applicable businesses are made and maintained by the Company as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013.

Employee Stock Option Plan (ESOP)

Details of the shares issued under Employee Stock Option Plan (ESOP), as also the disclosures in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014, are uploaded on the website of the Company www.hul. co.in/investor-relations/annual-reports/hul-annual-report-related-documents.html. No employee has been issued share options during the year equal to or exceeding one per cent 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 23rd July, 2012, the Company adopted the ‘2012 HUL Performance Share Scheme'. In accordance with the terms of the Performance Share Plan, employees are eligible for award of conditional rights to receive equity shares of the Company at the face value of Rs 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' in the financial year 2020-21. 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 the 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 scheme. 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.

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Companies Act, 2013 and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (‘Rules') have been appended as Annexure to this Report. Details of employee remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) and 5(3) of the Rules are available to any shareholder for inspection on request. Such details are also available on your Company's website at www.hul.co.in/investor-relations/annual-reports/hul-annual-report-related-documents.html.

Dividend

Your Directors are pleased to recommend a final Dividend of ` 17 per equity share of face value of ` 1/- for the year ended 31st March, 2021. The interim Dividend of Rs 14.00 per share was paid on 12th November, 2020. The total Dividend for the financial year ended 31st March, 2021 amounts to ` 31.00 per share of face value of ` 1/- each. During the year, special Dividend of ` 9.50 per share was also paid on 17th August, 2020. The final Dividend, subject to the approval of Members at the Annual General Meeting on Tuesday, 22nd June, 2021, will be paid on or after Friday, 25th June, 2021, to the Members whose names appear in the Register of Members, as on the Book Closure date i.e. Wednesday, 16th June, 2021 to Tuesday, 22nd June, 2021 (both days inclusive). The total dividend for the financial year, including the proposed final dividend and the special dividend amounts to Rs 40.50/- per equity share and will absorb Rs 9,516 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. Your 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/Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, Rs 10.42 crores of unpaid/unclaimed dividends were transferred during the year to the Investor Education and Protection Fund.

Mergers and Acquisitions

The merger with GSK CH has been in line with the Company's strategy to build a sustainable and profitable Foods & Refreshment (F&R) business in India by leveraging the megatrend of health and wellness. The merger has allowed significant value creation for all stakeholders and enabled us to drive better salience in a local context. Your Company seamlessly executed one of the largest FMCG acquisitions in India virtually, amidst lockdown in the country. Through the merger, we have successfully integrated large base of vendors, onboarded distributors. We are designing our Go-To-Market plan to ensure that the combined strength of erstwhile GSK CH and HUL is leveraged in the market-place. During the year we also completed the integration of the acquired business into the HUL SAP-ERP platform.

We continue to collaborate with GSK under the consignment selling model to accelerate the growth momentum of the Over the Counter (OTC) – Oral Health Care (OH) business and leverage on HUL's Go-To-Market capabilities. The merger also brought with it a great opportunity for the HUL business to leverage the learnings of medical marketing and engaging with chemist channel for the larger HUL portfolio.

Acquisition of female intimate hygiene wash brand ‘VWash'

During the year, your Company completed the acquisition of female intimate hygiene brand VWash. The addition of this brand has further strengthened our position in the fast growing ‘health and hygiene' segment. The brand is now fully integrated into our Beauty & Personal Care portfolio and is performing well.

Particulars of Loan, Guarantee or Investments

Details of loans, guarantee or investments made by your Company under Section 186 of the Companies Act, 2013, during financial year 2020-21 are appended as an Annexure to this Report.

Governance, Compliance and Business Integrity

The Legal function of the Company continues to be a valued business partner that provides solutions to protect your Company and enable it to win in the volatile, uncertain, complex and ambiguous 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. 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. Your 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 your Company continues to embrace newer technologies to the make the function future ready to support the growth agenda of the business. Your Company is 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. Your Company continued to engage with various stakeholders including e-Commerce Channel Partners, Industry Bodies and Regulators to curb the menace of counterfeiting on the e-Commerce platforms.

One of the key activities undertaken by your Company in this direction is propagating intellectual property awareness, particularly among school students. Your Company believes it is important to educate students on intellectual property and build awareness and understanding of the subject so that students start respecting intellectual property rights from a young age. During the year, we launched a digital version of our intellectual property awareness programme for school students, to enhance reach of the programme.

The Legal function of your 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 and Code Policies. The focus of your Company is very much on growth in line with our values, not on growth at any cost. During the year, the Code of Business Principles were refreshed to include the provisions of living wage to our employees, ethical data use, transparency and a greater focus on safety and mental wellbeing. Our employees undertake mandatory annual training on these Policies via online training modules and an annual Business Integrity Pledge. During the year, your Company organised offline training sessions for all blue collared employees across the Company. Our Business Integrity governance framework includes clear processes for dealing with Code breaches.

During the financial year, we closed 66 incidents across all areas of our Code and Code Policies, with 45 confirmed breaches. During the year, we terminated the employment of 10 employees as a consequence of such breaches. Our data around code breaches provides increasing insights into exactly what the issues are, and where-and we are focusing on understanding how to prevent behaviours that lead to such breaches. The Code and Code Policies reflect our desire to fight corruption in all its forms. We are committed to eradicate any practices or behaviours that are not in line with our Code and Code Policies though our zero-tolerance approach to such practices.

Our Responsible Sourcing & Business Partnering Policy helps 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 your 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 Listing Regulations. A Certificate of the CEO and CFO 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. Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on 31st March, 2021 is available on the Company's website on https://www.hul.co.in/ investor-relations/annual-reports/hul-annual-report-related-documents.html.

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, your Company has constituted Internal Committees (IC). During the year, we expanded the scope of our POSH Policy to make it more 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 LGBTQ+ community.

While maintaining the highest governance norms, the Company has appointed external independent persons who have prior experience of in the areas of women empowerment and prevention of sexual harassment, as Chairpersons of each of the Internal Committees. During the year, 5 complaints with allegations of sexual harassment were received by the Company and they 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 for all blue collared employees across the Company which included POSH as one of the topics of training.

Related Party Transactions

In line with the requirements of the Companies Act, 2013 and the Listing Regulations, your Company has formulated a Policy on Related Party Transactions which is also available on the Company's website at https://www.hul. co.in/Images/policy-on-materiality-of-rpt-and-dealing-with-rpt_tcm1255-547442_1_en.pdf. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.

All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for Related Party Transactions 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 Related Party Transactions are subjected to independent review by a reputed accounting firm to establish compliance with the requirements of Related Party Transactions under the Companies Act, 2013, and Listing Regulations.

All Related Party Transactions entered during the year were in Ordinary Course of the Business and at Arm's Length basis. No Material Related Party Transactions, i.e. transactions exceeding 10% of the annual consolidated turnover as per the last audited financial statement, were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013, in Form AOC-2 is not applicable.

Board of Directors and Key Mangerial Personnel

Mr. Srinivas Phatak, currently Executive Director, Finance & IT and Chief Financial Officer of the Company has been elevated to the position of Executive Vice President, Global Financial Control and Risk Management, Unilever and will be a part of the Unilever's Finance Leadership Executive Team. Based on the recommendation of Nomination and Remuneration Committee and Audit Committee, the Board of the Directors have approved the appointment of Mr. Ritesh Tiwari as an Executive Director, Finance and Chief Financial Officer of the Company. Mr. Ritesh Tiwari will join the Board of Directors of the Company with effect from 1st May, 2021, subject to necessary statutory approvals. The Board places on record its appreciation for the leadership and invaluable contribution made by Mr. Phatak during his tenure as Executive Director, Finance and IT and Chief Financial Officer of the Company.

The Company has sought approval of the Members of the Company through Postal Ballot for appointment of Mr. Ritesh Tiwari as a Whole-time Director of the Company, designated as an Executive Director, Finance and Chief Financial Officer for a period of 5 (five) years with effect from 1st May, 2021, liable to retire by rotation. As per the provisions of the Act, the Independent Directors are not liable to retire by rotation. The Independent Directors of your Company have given the certificate of independence to your Company stating that they meet the criteria of independence as mentioned under Section 149(6) of the Companies Act, 2013 and the Listing Regulations. All other Directors, except the Managing Director, will retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-election.

The details of training and familiarisation programme and Annual Board Evaluation process for Directors have been provided in the Corporate Governance Report. The 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, forms part of the Corporate Governance Report of this Annual Report.

During the year, eight meetings of the Board of Directors were held. The details of meetings held and attended by each Director are detailed in the Corporate Governance Report, which forms part of this Annual Report.

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 Chairman and Managing Director and has Functional/Business Heads as its members.

During the year, the Board of Directors approved the appointment of Mr. Ritesh Tiwari as an Executive Director, Finance and Chief Financial Officer and a member of Management Committee with effect from 1st May, 2021, in succession to Mr. Srinivas Phatak, who will cease to be a member of Management Committee, consequent to his elevation to the position of Executive Vice President, Global Financial Control and Risk Management, Unilever.

Auditors

M/s. B S R & Co. LLP, Chartered Accountants were re-appointed as Statutory Auditors of your Company at the Annual General Meeting held on 29th June, 2019, for the second term of five consecutive years. The Auditors have confirmed that they are not disqualified from being re-appointed as Auditors of the Company.

The Report given by the Auditors on the financial statement of the Company is part of this 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 had not reported any matter under Section 143 (12) of the Companies Act, 2013.

M/s. R A & Co., Cost Accountants carried out the cost audit for applicable businesses during the year. The Board of Directors have appointed M/s. R A & Co., Cost Accountants as Cost Auditors for the financial year 2021-22.

The Board of Directors had appointed M/s. S. N. Ananthasubramanian & Co., Company Secretaries to conduct Secretarial Audit for the financial year 2020-21. The Secretarial Audit Report forms part of this Integrated Annual Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Disclosure

The details in relation to the composition of Audit Committee, establishment of Vigil Mechanism for Directors and employees, Internal Financial Controls and Director's

Remuneration Policy of the Company have been given in the Corporate Governance Report forming part of this Annual Report.

No significant or material orders were passed by the Regulators or Courts or Tribunals which impacts the going concern status and Company's operations in future.

Compliance with Secretarial Standards

The Company has complied with all the applicable provisions of Secretarial Standard on Meetings of Board of Directors (SS-1), Revised Secretarial Standard on General Meetings (SS-2), Secretarial Standard on Dividend (SS-3) Secretarial Standard on Report of the Board of Directors (SS-4) 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 your Company's business and to reach the ambitious targets set out in the Compass sustainability commitments. The CoBP, which is the statement of values and represents the standard of conduct for everyone associated with your 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, your Company is committed to transparency, honesty, integrity and openness in all its engagements with the various stakeholders.

Outlook

The year 2020-21 saw unprecedented disruption to lives and livelihoods across the world and India was no exception. The economy declined sharply during first half of the fiscal year as the country grappled with the pandemic, however, effective measures taken by the Government of India and the Reserve Bank of India helped the Indian economy to recover. Rapid rollout of vaccines coupled with Government's efforts on stimulating growth improved consumer sentiments. Notwithstanding these encouraging developments, the Covid-19 pandemic is far from over. The trajectory of the pandemic still remains unpredictable to a very large extent, with country already witnessing a second wave of Covid-19. Our overriding priority remains, therefore, to protect lives and livelihoods. We have already demonstrated our ability to navigate through such a volatile and uncertain external environment and being well placed to deliver to the needs of our multiple stakeholders. We remain watchful of the situation while focusing on driving volume led competitive growth.

Even though conditions will remain unpredictable and we will be living with the effects of Covid-19 for some time, we remain confident of the medium to long-term growth prospects of the FMCG sector. Our people have shown their resilience and commitment to rise in the most difficult circumstances. With our strong portfolio of trusted brands, industry leading capabilities, resilient workforce and a clear Compass strategy guiding our decisions, we are well placed to deliver consistent, competitive, profitable, and responsible growth.

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 judgements 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, 2013, 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.

Appreciations and Acknowledgements

Your Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment, in particular during this unprecedented year. The Directors place on record their special gratitude toward the front line employees who were working in our factories and in the market to ensure that the Company's products reach to the consumers. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain an industry leader.

Your Directors would also like to acknowledge the excellent contribution by Unilever to your 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 your Company has been receiving from its suppliers, distributors, retailers, business partners and others associated with it 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 your Company's 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.

Your Directors also take this opportunity to thank all Shareholders, Clients, Vendors, Banks, Stock Exchanges, Government and Regulatory Authorities, both at the Central and State level for their continued support. The co-operation extended by the Government and Regulatory Authorities across the country during this year enabled the Company to serve the consumers with health and hygiene essential products.