Hindustan Unilever Ltd

#MDStart#

Management Discussion and Analysis

Your Board of Directors is pleased to share with you the Business Performance along with the Audited Financial Statements for the financial year ended 31st March, 2024.

ABOUT US

Hindustan Unilever Limited is India's largest FMCG Company with a 90-year heritage in the country. We are a Company of brands and people driven by our purpose of making sustainable living commonplace.

Nine out of ten Indian households use one or more of our brands to feel good and get more out of their lives. We have a wide and resilient portfolio of 50+ brands, spanning over 16 FMCG categories, which are a part of everyday life of millions of consumers across India.

In a rapidly evolving world, where digitisation and sustainability have taken centre stage, we are steadfastly progressing on our purpose-led and future-fit journey.

ECONOMIC OVERVIEW Global

Global economy continues to present a mixed picture. Multiple factors like the on-going geopolitical conflicts, wide-spread elevation of debt, extreme weather conditions and elections in many parts of the world continue to contribute to the uncertainty of the Global Economic Outlook. Encouragingly, inflation has softened over the highs of the previous year and is expected to continue to moderate. Global GDP growth is expected to remain low at 3% for 20241. Country variations will continue, with different parts of the world growing at varied pace.

India

Amidst these conditions, Indian economy has continued to grow with resilience. With a GDP growth of 7.8% in Calendar Year 20231, the fifth- largest economy was the fastest growing major economy. The biggest contribution to the GDP growth has come in the form of capital expenditure by the Government. At 3% of GDP, ^10 lakh crore2 was allocated towards capital expenditure, a record high. The Government's strengthened thrust on capex will augur well for the economy in mid to long term with the creation of employment opportunities, improved infrastructure, and elevated ease of doing business in the country.

Consumption has remained subdued in the year. This weak consumption is primarily on account of a muted agricultural growth. Agricultural production was disrupted during the year due to erratic weather patterns, triggered by El Nino. With agricultural outputs impacted, rural consumption has been weaker than usual, evident in sluggish FMCG volume recovery trends. Consumption patterns remain uneven with mass consumption showing sluggish growth and upper-end consumption driving growth.

This trend is further amplified by a growing preference for premium products across all consumer categories.

India's digital transformation is surging ahead, fuelled by booming broadband access, affordable data plans, and a government push for digital infrastructure. The India Stack, is a one-of-its-kind digital scalable public infrastructure, based on identity, payments and consent-based data sharing. It is a global benchmark for most countries today. We have more than 130 crores Aadhar Card holders. In the years to come, applications based on this digital infrastructure, such as ONDC for digital commerce, Unified Logistics interface Platform (ULIP) for logistics, Ayushman Bharat for electronic health records among others, will spur innovations and new growth. Democratisation of Unified Payments Interface (UPI) or digital payments have enabled formalisation of the digital economy. This has resulted in the rise of the start-up economy in India with the country becoming the third largest ecosystem for ventures globally.

Despite a subdued consumption in the economy this year, economic activity indicators suggest underlying strength that will bode well for the economy in the medium term.

The consumer confidence levels, which look at consumer perceptions, current and for one year ahead, on general economic situation, employment scenario, overall price situation, income and spending, has returned to pre-covid levels3. The future perception scores have also registered a new peak suggesting high consumer confidence on the economic outlook. Inflation, which was a primary concern in the economy last year, has softened this financial year. Inflation has significantly moderated from the highs of 2022 with CPI inflation for FY 2023-24 projected at 5.3%1.

When it comes to Beauty and Wellbeing, as the largest beauty company in India, HUL is in a unique position to take advantage of its deep strengths and emerge stronger through this journey. We have large masterbrands that have great equity and salience amongst consumers and can be expanded to play in new demand spaces and formats. At the same time, through our Premium Beauty Business Unit, we have the proven capability of launching digital first brands much faster. With our strong distribution moat, scaling up these successful digital first brands is an area we have competitive advantage in. We also have a rich stable of premium & masstige brands in Unilever that we will dip into when we believe the time is right.

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

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.

Opportunities

Results

(Rs crores)

Division Wise Turnover

Summarised Profit and Loss Account

Key Financial Ratios

Increase in Debt Equity ratio is on account of higher lease liabilities during the year

There is no significant change (i.e. change of 25% or more as compared to the FY 2022-23) in the other key financial ratios.

(i) Return on Net Worth (%)

Return on Net Worth is a measure of profitability of a Company expressed in percentage. It is calculated by dividing total comprehensive income by average shareholder's equity.

(ii) Return on Capital Employed (%)

Return on Capital Employed indicates the ability of a Company's management to generate returns for both the debt holders and the equity holders. It measures a Company's profitability and the efficiency with which its capital is used. It is calculated by dividing profit before exceptional items, interest and tax by capital employed. Capital Employed = Tangible net worth + Total debt + Deferred tax liabilities.

(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

Debtors Turnover measures the efficiency at which the Company is managing the receivables. The ratio shows how well a Company uses and manages the credit it extends to customers and how quickly short- term debt is collected or is paid. It is calculated by dividing turnover by average trade receivables.

(v) Inventory Turnover

I nventory Turnover measures the efficiency with which a Company utilises or manages its inventory. It establishes the relationship between sales and average inventory held during the period. It is calculated by dividing turnover by average inventory.

(vi) Interest Coverage Ratio

Interest Coverage Ratio measures how many times a Company can cover its current interest payment with its available earnings. It is calculated by dividing earnings available for debt service by interest payments.

(vii) Debt Service Coverage Ratio

Debt Service coverage ratio is used to analyse the firm's ability to pay-off current interest and instalments. It is calculated by dividing earnings available for debt service by debt service.

(viii) Current Ratio

Current Ratio indicates a Company's overall liquidity position. It measures a Company's ability to pay short-term obligations or those due within one year. It is calculated by dividing the current assets by current liabilities.

(ix) Debt Equity Ratio

Debt Equity ratio is used to evaluate a Company's financial leverage. It is a measure of the degree to which a Company is financing its operations through debt versus wholly owned funds. It is calculated by dividing total debt by shareholder's equity.

(x) Operating Profit Margin (%)

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

(xi) Net Profit Margin (%)

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

Economic Value Added What is EVARs

Traditional approaches to measuring Shareholder's Value Creation have used parameters such as earnings capitalisation, market capitalisation and present value of estimated future cash flows. Extensive equity research has established that it is not earnings per se, but VALUE that is important. A measure called 'Economic Value Added' (EVA) is increasingly being applied to understand and evaluate financial performance.

*EVA = Net Operating Profit after Taxes (NOPAT) - Cost of Capital Employed (COCE), where

NOPAT = Profits after depreciation and taxes but before interest costs. NOPAT thus represents the total pool of profits available on an ungeared basis to provide a return to lenders and shareholders.

COCE = Weighted Average Cost of Capital (WACC) x Average Capital employed.

Cost of debt is taken at the effective rate of interest applicable to an 'AAA' rated Company like HUL for a short term debt, net of taxes. We have considered a pre tax rate of 7.69%.

Cost of Equity is the return expected by the investors to compensate them for the variability in returns caused by fluctuating earnings and share prices.

Cost of Equity = Risk free return equivalent to yield on long term Government Bonds + Market risk premium (x) Beta variant for the Company, where Beta is a relative measure of risk associated with the Company's shares as against the market as a whole. Thus, HUL's cost of equity = 10.70%.

What does EVA showRs

EVA is residual income after charging the Company for the cost of capital provided by lenders and Shareholders. It represents the value added to the Shareholders by generating operating profits in excess of the cost of capital employed in the business.

When will EVA increaseRs

EVA will increase if:

a Operating profits can be made to grow without employing more capital, i.e. greater efficiency.

b Additional capital invested in projects that return more than the cost of obtaining new capital, i.e. profitable growth.

c Capital is curtailed in activities that do not cover the cost of capital, i.e. liquidate unproductive capital.

EVA in practice at Hindustan Unilever Limited

At Hindustan Unilever Limited, the goal of sustainable long term value creation for our Shareholders is well understood by all the business groups. Measures to evaluate business performance and to set targets take into account this concept of value creation.

(Rs crores)

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 Integrated Annual Report.

During the Financial Year, there was no amount proposed to be transferred to Reserves.

Capital Expenditure (including Intangible Assets) during the financial year was at Rs1,318 crores (Rs1,042 crores in the previous financial year).

During the Financial Year, the Company did not accept any public deposits as defined under Chapter V of the Companies Act, 2013 (the Act).

The Company manages cash and cash flow processes assiduously, involving all parts of the business. There was cash and bank balance of Rs7,216 crores (FY 2022-23: Rs4,422 crores), as on 31st March, 2024. 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 in line with the requirements of Ind AS 21.

Foreign Exchange Earnings and Outgo

The details of foreign exchange earnings and outgo as required under Section 134 of the Act and Rule 8(3) of Companies (Accounts) Rules, 2014 are mentioned below:

(Rs crores)

Includes all Indian subsidiaries, except Unilever Nepal Limited

Performance of Subsidiaries

The summary of performance of the Company's subsidiaries is provided as below:

Unilever India Exports Limited

Unilever India Exports Limited (UIEL) is a wholly owned subsidiary of the Company and is engaged in Fast Moving Consumer Goods (FMCG) exports business. The focus of the FMCG exports operation is two-fold: to expand global presence of brands, such as Vaseline, Dove, Pears, Bru, Lakme, Sunsilk, Horlicks and Boost and to effectively provide cross-border sourcing of FMCG products to other Unilever companies across the world.

The turnover of UIEL was driven by products in Skin Care, Nutrition Drinks, Hair Care and Personal Wash. Brands like Dove, Horlicks, Vaseline, Pears, Bru, Sunsilk, Glow and Lovely, Pond's, Lakme, Lifebuoy have contributed in the focused markets.

Lakme Lever Private Limited

Lakme Lever Private Limited (LLPL) is a wholly owned subsidiary of the Company. LLPL is engaged in Salon business and also operates a manufacturing unit at Gandhidham, Gujarat which carries out job work operations for HUL.

LLPL delivered resilient top line growth. With focus on quality of operations, expert treatments and prudent cost optimisation, the salon business continued to perform well in the beauty services category. Job work business continued to do well.

LLPL has over 450 owned and managed & franchisee Salons. The extended team comprising the housekeeping staff, experts, salon managers and business partners were trained and audited continuously to ensure complete adherence to protocols. LLPL has also dialled up expertise by enhancing training and launching its flagship Salon at Powai, Mumbai. By ensuring safety and keeping customer satisfaction as focus, LLPL's Net Promoter Score continued to be above 90%. Lakme Salons continued to improve quality and expertise across all touch points in customer journey with trendsetting look & #UnapologeticallyME campaign.

Innovations like Quintessential bridal looks, Tressplex Collagen Treatment for normal & curly hair, Cappuccino Spa added excitement to Lakme Salon's comprehensive Runway Secrets portfolio. Thematic campaigns - Good Hair Day and Happy New You continued helping gain new clients and sustain existing ones. Lakme Salon continues to be the preferred option for franchisees in the beauty and wellness category attracting several professionals and entrepreneurs.

Hindustan Unilever Foundation

Hindustan Unilever Foundation (HUF) is a not-for-profit company that anchors water management related community development and sustainability initiatives of the Company.

HUF operates the 'Water for Public Good' programme, with a specific focus on water conservation, building local community institutions to govern water resources and enhancing farm-based livelihoods through adoption of judicious water practices. It aims to catalyse effective solutions to India's water challenges through a partnership approach involving the Government, communities, experts and mission-based organisations.

HUF partners with non-profit organisations in water- stressed regions across the country to support rural communities with water conservation and regenerative agricultural practices amongst farmers. The initiative has delivered a cumulative and collective water potential of over 3.2 trillion litres through improved supply and demand water management, over 2.1 million tonnes of additional agricultural and biomass production, and over 114 million person-days of employment due to project interventions*. Till now, HUF's programmes have reached more than 15,000 villages across India.

*Assured by an independent external firm.

Unilever Nepal Limited

Unilever Nepal Limited (UNL) is a subsidiary of the Company listed on Nepal Stock Exchange and is engaged in marketing and manufacturing products related to Beauty & Wellbeing, Personal Care and Home Care in Nepal for the past 30 years.

Despite a challenging business environment in Nepal, (impacted by national liquidity crunch, low foreign reserves and rising migration), UNL has demonstrated resilient performance with flat growth for this year and held its profitability on par with past years performance. To boost consumer franchise, UNL has invested in advertising and promotion spends across various mediums in Nepal.

Unilever India Limited

Unilever India Limited (UIL) is a wholly owned subsidiary of the Company incorporated to leverage the growth opportunities in a fast-changing business environment. UIL has a Home Care factory in Sumerpur, Uttar Pradesh.

The state-of-the-art spray dried detergent factory manufactures Home Care products for Company. It is designed to make the best use of digital 4th industrial revolution, guaranteeing world class performance in people safety, product quality, innovation lead times and environmental performance. The site's integrated design allows for an ecosystem of material suppliers, logistic operators and manufacturing partners to be located at the site for optimal supply chain integration.

This unit is firmly on its path to be Unilever's first gender balanced factory in South Asia and currently has 170+ female employees. It is an inspiring example of the path breaking work being done to increase female representation in our shop floors through Project Samavesh.

In the current Financial Year, UIL has ramped up its operations and has delivered robust volume growth. The top-line and bottom-line growth is in line with the growth in volumes.

Zywie Ventures Private Limited

Zywie Ventures Private Limited (ZVPL) is a subsidiary of the Company engaged in the business of Health and Well-being products under the brand name of 'OZiva'. The Company acquired 53.34% stake (51.00% on a fully diluted basis) in ZVPL on 10th January, 2023.

OZiva is a plant-based and clean label consumer wellness brand focused on need spaces such as Lifestyle Protein, Hair & Beauty Supplements and Women's Health. OZiva is a digital-first brand with an omnichannel approach, available on its D2C website, digital marketplaces and a growing offline presence. ZVPL has a strong inhouse R&D team comprising Ph.D.s, Phyto-chemists and Biotechnologists.

This investment is in Line with the Company's strategy to enter fast evolving growth space of Health and WeLL-being.

Daverashola Estates Private Limited is a subsidiary of the Company which currently has no business activity. There is an ongoing litigation on the property owned by the company in Tamil Nadu.

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

The National Company Law Tribunal, Mumbai Bench (Tribunal) vide its order dated 18th December 2023, approved the voluntary liquidation of Bhavishya Alliance Child Nutrition Initiatives (BACNI) a not-for-profit subsidiary of the Company. BACNI was liquidated with effect from 27th December, 2023.

Further, vide its order dated 16th January, 2024, the Tribunal approved the Scheme for merger of Pond's Exports Limited and Jamnagar Properties Private Limited into Unilever India Exports Limited. The amalgamation was effective from 13th February, 2024.

Audit & Auditors Statutory Auditors

In terms of provisions of Section 139 of the Act, M/s. B S R & Co. LLP, Chartered Accountants (Firm Registration No.: 101248W/W-100022) were re- appointed as Statutory Auditors of the Company at the 86th Annual General Meeting (AGM) held on 29th June, 2019, to hold office till the conclusion of 91st AGM of the Company. The Report given by M/s. BSR & Co. LLP, on the financial statements of the Company for the FY 2023-24 is part of this Integrated Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report. During the year under review, M/s. BSR & Co. LLP has filed a report under Section 143(12) of the Act in Form ADT-4 as prescribed under RuLe 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government. However, they have not reported any instances of frauds committed in the Company by its officers or employees involving an amount of Less than Rs1 crores to the Audit Committee or Board under Section 143(12) of the Act. Therefore, no detail is required to be disclosed in the Director's Report under Section 134(3)(ca) of the Act.

As the term of M/s. B S R & Co. LLP as the Statutory Auditors of the Company expires at the conclusion of 91st AGM, the Board of Directors of the Company at their meeting held on 24th April, 2024, based on the recommendation of the Audit Committee, has recommended to the Members the appointment of M/s. Walker Chandiok & Co. LLP, Chartered Accountants (Firm Registration No. 001076N/ N500013), as Statutory Auditors of the Company, for a term of 5 (five) consecutive years from the conclusion of 91st AGM tiLL the conclusion of the 96th AGM. AccordingLy, an Ordinary ResoLution, proposing appointment of M/s. WaLker Chandiok & Co. LLP, as the Statutory Auditors of the Company for a term of five consecutive years pursuant to Section 139 of the Act, forms part of the Notice of the 91st AGM of the Company. The Company has received the written consent and a certificate that M/s. WaLker Chandiok & Co. LLP satisfy the criteria provided under Section 141 of the Act and that the appointment, if made, shaLL be in accordance with the appLicabLe provisions of the Act and ruLes framed thereunder.

M/s. WaLker Chandiok & Co. LLP, is a firm of Chartered Accountants registered with the Institute of Chartered Accountants of India. It was estabLished in the year 1935 and is a Limited Li a b i Li ty Partnership Firm incorporated in India. It has its registered office at L-41, Connaught Circus, New DeLhi - 110001 apart from 15 other branch offices in various cities in India. It is primariLy engaged in providing audit and assurance services to its cLients.

Secretarial Auditors

The Board, at its meeting heLd on 27th ApriL, 2023 had appointed M/s. S. N. Ananthasubramanian & Co., (ICSI Unique Code: P1991MH040400) Company Secretaries to conduct SecretariaL Audit for the FY 2023-24. The SecretariaL Audit Report forms part of this Integrated AnnuaL Report and does not contain any quaLification, reservation or adverse remark. During the year under review, the SecretariaL Auditor has not reported any fraud under Section 143(12) of the Act.

In Line with the best governance practices codified under our Corporate Governance Code, the SecretariaL Auditor must be rotated every ten years and a cooLing off period of three years must have eLapsed to be re-appointed by the Company. AccordingLy, in terms of provisions of Section 204 of the Act, read with the Companies (Appointment and Remuneration of ManageriaL PersonneL) RuLes, 2014, the Board, at its meeting heLd on 19th January, 2024 had appointed M/s. Parikh & Associates, Company Secretaries (ICSI Unique Code: P1988MH009800) to conduct SecretariaL Audit for the FY 2024-25.

M/s. Parikh & Associates is a firm of Practising Company Secretaries founded in 1987. The firm provides professionaL services in the fieLd of Corporate Laws, SEBI ReguLations, FEMA ReguLations incLuding carrying out SecretariaL Audits, Due DiLigence Audits and CompLiance Audits. The firm is Peer Reviewed and QuaLity Reviewed by the Institute of the Company Secretaries of India.

Cost Records and Cost Audit

In terms of provisions of Section 148 of the Act read with the Companies (Accounts) RuLes, 2014, Cost Audit is appLicabLe for foLLowing businesses such as Coffee, Drugs and PharmaceuticaLs, Insecticides, MiLk Powder, Organic ChemicaLs, Other Machinery, PetroLeum Products, Tea, etc. The accounts and records for the above appLicabLe businesses are made and maintained by the Company as specified by the CentraL Government under Section 148 (1) of the Act.

The Board, at its meeting heLd on 27th ApriL, 2023 had appointed M/s. R A & Co., Cost Accountants (Firm Registration No. 000242) to conduct Cost Audit for the FY 2023-24. During the year under review, M/s. R A & Co. has not reported any fraud under Section 143(12) of the Act.

During the year, due to a casuaL vacancy in the office of the Cost Auditors, pursuant to disquaLification incurred by M/s. R A & Co., Cost Accountants, the Board, at its meeting heLd on 24th ApriL, 2024, based on the recommendation of the Audit Committee, has appointed M/s. R Nanabhoy & Co., Cost Accountants (Firm Registration No. 000010) as the Cost Auditors of the Company for FY 2023-24 and FY 2024-25. M/s. R Nanabhoy & Co., Cost Accountants, being eLigibLe, have consented to act as the Cost Auditors of the Company for FY 2023-24 and FY 2024-25 and are in the process of carrying out the cost audit for appLicabLe products for the FY 2023-24. The foLLowing remuneration is proposed to be paid to the Cost Auditors, subject to ratification by the Members of the Company at the ensuing AnnuaL GeneraL Meeting:

* ExcLusive of taxes and re-imbursement of out-of-pocket expenses incurred by the Cost Auditors in connection with the aforesaid audit.

M/s. R. Nanabhoy & Co, Cost Accountants was estabLished in the year 1948. It has its registered office at 1st FLoor, Sadhana Rayon House, 221, Dadabhai Naoraji Road, Borabazar Precinct, Fort , Mumbai - 400001. It is primariLy engaged in providing wide spectrum of services in the areas of Cost and Management Accounting.

Internal Financial Controls

The Company has a robust InternaL FinanciaL ControL framework which is estabLished in accordance with the Committee of Sponsoring Organisation (COSO) framework. The detaiLs of InternaL FinanciaL ControL framework, form a part of the Corporate Governance Report of this Integrated AnnuaL Report.

Material Developments In Human Resource Front

The Company recognises that buiLding a cuLture that prioritises weLL-being and empowers peopLe to Learn and deveLop is criticaL to its Long- term success.

During the year, the Company has continued to invest in peopLe through Learning and deveLopment sessions of over 1,00,000+ hrs. Through weLL-defined poLicies, we foster a cuLture of positive work environment enabLing empLoyees to perform at their highest potentiaL and consistency deLiver resuLts. The Company continues to make inroads in incLusion through muLtipLe pioneering programmes and poLicies. As a resuLt of our Leading practices, the Company has continued to retain its position as #1 EmpLoyer of Choice across sectors in top Business schooLs as weLL as

the preferred empLoyer of women titLe. For further detaiLs pLease refer page 84.

Employee Stock Option Plan (ESOP)

The empLoyees of the Company are eLigibLe for UniLever share award pLans, nameLy AnnuaL Share PLan (ASP), Performance Share PLan (PSP) and the SHARES pLan.

Starting 2024, UniLever is moving away from Performance Share PLan to AnnuaL Share PLan for its junior and middLe management taLent. Under the scheme eLigibLe empLoyees wiLL receive shares of the hoLding company. For 2024 PersonaL Differentiation Factor wiLL be awarded for the impact, Leadership and future fitness of an individuaL with a range of 0 - 200%. Vesting period wouLd be 3 years with no business performance conditions being appLied at the time of vesting. The Target ASP share award is equivaLent to 50% of the Target Bonus for junior management and 100% of the Target Bonus for middLe management.

The Senior Management are eLigibLe to receive a conditionaL grant of UniLever shares under the Performance Share PLan (PSP) on an annuaL basis. 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. The performance measures for PSP for grants being made effective 2024 are UnderLying SaLe Growth, ReLative TotaL SharehoLder Return, UnderLying Return on Invested CapitaL and SustainabiLity Progress Index. The awards under PSP pLans wiLL vest after 3 years between 0% and 200% of grant LeveL, depending on the achievement against the performance metrics.

During the year under review, the Company has introduced the Hindustan UniLever Limited Performance Share PLan Scheme, 2024 (Scheme). Under the Scheme eLigibLe empLoyees wouLd receive 62% of their ASP Award or PSP Award denominated in UniLever PLC Shares and the remaining 38% of the award vaLue wouLd be denominated in HUL Shares. Other terms and conditions on determination of vaLue of grants for the award and vesting conditions continue to remain the same as under the UniLever AnnuaL Share PLan and Performance Share PLan Scheme. The Scheme was considered and duLy approved by the SharehoLders on 5th March, 2024 vide PostaL BaLLot. The grants under the Scheme are further subject to necessary statutory approvaLs and wouLd be made in conformity with the appLicabLe Laws. No shares were awarded to empLoyees under the Scheme during the FY 2023-24.1

Further, under the SHARES PLan, eLigibLe empLoyees can invest in the shares of UniLever PLC (hoLding company) up to a specified amount and after three years, one share is granted to the empLoyees for every three shares invested, subject to the fuLfiLment of conditions of the pLan. The hoLding company charges the Company for the grant of shares to the Company's empLoyees based on the market vaLue of the shares on the exercise date.

Disclosures in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014, are uploaded on the website of the Company at www.hul.co.in.

Particulars of Employees and Related Disclosures

Disclosures with respect to the remuneration of Directors and employees as required under Section 197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (Rules) have been appended as an Annexure to this Integrated Annual Report.

The statement containing particulars of employee remuneration as required under provisions of Section 197(12) of the Act and Rule 5(2) and 5(3) of the Rules are available on the Company's website at www.hul.co.in.

Dividend

Your Directors are pleased to recommend a Final Dividend of Rs24/- per equity share of face value of Rs1/- each for the year ended 31st March, 2024. The Interim Dividend of Rs18/- per equity share was paid on Thursday, 16th November, 2023.

The Final Dividend, subject to the approval of Members at the Annual General Meeting on Friday, 21st June, 2024, will be paid on or after 25th June, 2024, to the Members whose names appear in the Register of Members, as on the Book Closure date, i.e. from Saturday, 15th June, 2024 to Friday, 21st June, 2024 (both days inclusive). The total dividend for the financial year, including the proposed Final Dividend, amounts to Rs42/- per equity share and will absorb Rs9,868 crores. In view of the changes made under the Income Tax Act, 1961, by the Finance Act, 2020, dividend paid or distributed by the Company shall be taxable in the hands of the Shareholders. The Company shall, accordingly, make the payment of the Final Dividend after deduction of tax at source.

Unpaid / Unclaimed Dividend

In terms of the provisions of Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 / Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, ^13.77 crores of unpaid / unclaimed dividends were transferred during the year to the Investor Education and Protection Fund.

Mergers, Acquisitions & Divestments

During the year under review, the Company has entered into a strategic partnership with Brookfield to set up a solar energy park with 45 MW capacity in Rajasthan. This will help the Company in its journey towards Net zero commitment. The project is being developed at the site of Brookfield's solar park, being undertaken as a part of Brookfield Global Transition Fund (Brookfield). The Board, at its meeting held on 1st December, 2023, approved an equity investment of up to 27.73% in Transition Sustainable Energy Services One Private Limited, a Special Purpose Vehicle (SPV) incorporated by Brookfield, a leading global alternative asset manager with one of the world's largest renewable power platforms. The SPV is formed under the Government's Group Captive Open Access Renewable Energy Scheme. This is seen as a transformative partnership that aligns with environmental and economic sustainability and will help stakeholders across the value chain. As on the date of this Integrated Annual Report, the Company has completed the acquisition of 22.33% of equity share capital of the SPV.

The Company has obtained a certificate from the Statutory Auditors certifying that the Company is in compliance with the FEMA Regulations with respect to the downstream investment made in the SPV.

Particulars of Loan, Guarantee or Investments

Details of loans, guarantee or investments made by the Company under Section 186 of the Act, during FY 2023-24 are appended as an Annexure to this Integrated Annual Report.

Governance, Compliance and Business Integrity

The Legal function of the Company continues to be a valued business partner that provides solutions to protect the Company and enable it to win in the brittle, anxious, non-linear and incomprehensible environment. Through its focus on creating 'Value with Values', the function provides strategic business partnership in the areas including product claims, mergers and acquisitions, legislative changes, combatting unfair competition, business integrity and governance. The function works with the growth enabler mindset.

As the markets continue to be disrupted with newer technologies and ever-evolving consumer preferences, the need to have a framework around data security and privacy is paramount. The Company continues to ensure it has appropriate framework and safeguards for data privacy of its stakeholders with enhanced legal and security standards. The legal function of the Company continues to embrace newer technologies to make the function future ready to support the growth agenda of the business.

The 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. We continued to engage with various stakeholders including e-Commerce Channel Partners, Industry Bodies and Regulators to curb the menace of counterfeiting across channels and markets, including through the import route to the country.

The Legal function of the Company works with leading Industry Associations, National and Regional Regulators and Key Opinion Formers to develop a progressive regulatory environment in the best interest of all stakeholders.

Business Integrity

Our principles and values apply to all our employees through our Code of Business Principles (CoBP) and Code Policies. Our employees undertake mandatory annual training on these Policies via online learning modules and sign an annual Business Integrity Pledge. Our Business Integrity governance framework includes clear processes for dealing with CoBP breaches.

During the year under review, 87 incidents were reported across all areas of our CoBP and Code Policies, with 41 confirmed breaches. During the year, we terminated employment of 16 employees and issued 20 warning letters as a consequence of such breaches.

The CoBP and Code Policies reflect our desire to fight corruption in all its forms. We are committed to eradicating any practices or behaviours though our zero-tolerance approach to such practices. The CoBP is periodically refreshed and updated so that it provides a current reflection of the way we do business at Unilever. The Code Policies have also been reviewed to align them with the changes in the internal and the external environment.

Our Responsible Partner 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 the 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.

Prevention of Sexual Harassment at Workplace

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (POSH Act) and Rules made thereunder, the Company has constituted Internal Committees (IC). Our POSH Policy is inclusive and gender neutral, detailing the governance mechanisms for prevention of sexual harassment issues relating to employees across genders including employees who identify themselves with LGBTQI+ community.

During the year, 7 (seven) complaints with allegations of sexual harassment were received by the Company, all of which 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 on a continuous basis. During the year, the Company organised offline training sessions on the topics of Gender Sensitisation and Code Policies including POSH for all office and factory based employees.

Related Party Transactions

In line with the requirements of the Act and the Listing Regulations, the Company has formulated a Policy on Materiality of Related Party Transaction (RPT) & Dealing with Related Party Transactions which is also available on the Company's website at www.hul.co.in. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and its Related Parties.

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

All RPTs entered during the year were in ordinary course of the business and at arm's length basis. No Material RPTs were entered during the year by the Company. Accordingly, the disclosure of RPTs as required under Section 134(3)(h) of the Act, in Form AOC-2 is not applicable.

Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return of the Company in Form MGT-7 for FY 2023-24, is available on the Company's website at www.hul.co.in.

Board of Directors and Key Managerial Personnel Change in Directorate

During the year, Dr. Ashish Gupta (DIN: 00521511), tendered his resignation as the Independent Director of the Company, with effect from close of business hours on 26th June, 2023, citing pre-occupation and other personal commitments.

The Board places on record its appreciation for the leadership and invaluable contribution made by Dr. Gupta whose extensive knowledge and understanding of the digital ecosystem, coupled with his entrepreneurial experience played an important role in the Company's transformation journey.

The Board, at its meetings held on 20th July, 2023 and 1st December, 2023, based on the recommendation of the Nomination and Remuneration Committee of the Company, approved the following appointments / re-appointment to the Board:

(a) the appointment of Ms. Neelam Dhawan (DIN: 00871445) as an Additional Director - Independent Director of the Company for a term of 5 (five) consecutive years with effect from 1st August, 2023.

(b) the re-appointment of Mr. Leo Puri (DIN: 01764813) as an Independent Director of the Company for a further term of 5 (five) consecutive years with effect from 12th October, 2023.

(c) the appointment of Mr. Tarun Bajaj (DIN: 02026219) as an Additional Director - Independent Director of the Company for a term of 5 (five) consecutive years with effect from 1st December, 2023.

The above-mentioned appointments / re-appointment were duly approved by the Members of the Company vide Postal Ballot(s) on 7th September, 2023 and 9th January, 2024, respectively.

Further, at its meeting held on 24th April, 2024, the Board approved the appointment of Mr. Biddappa Bittianda Ponnappa (Mr. Biddappa) (DIN: 06586886) as an Additional Director - Whole-time Director of the Company for a term of 5 (five) consecutive years with effect from 1st June, 2024. The appointment is subject to approval of the Shareholders at the ensuing AGM.

Retirement by rotation and subsequent re-appointment

Mr. Nitin Paranjpe (DIN: 00045204), Mr. Ritesh Tiwari (DIN: 05349994) and Mr. Dev Bajpai (DIN: 00050516), are liable to retire by rotation at the ensuing AGM and being eligible have offered their candidature for re-appointment.

As per the provisions of the Act, the Independent Directors are not liable to retire by rotation.

Brief resume, nature of expertise, disclosure of relationship between directors inter-se, details of directorships and committee membership held in other companies of the Directors proposed to be appointed / re-appointed, along with their shareholding in the Company, as stipulated under Secretarial Standard 2 and Regulation 36 of the Listing Regulations, is appended as an Annexure to the Notice of the ensuing AGM.

Key Managerial Personnel

Mr. Rohit Jawa (DIN: 10063590), Chief Executive Officer and Managing Director (CEO & MD), Mr. Ritesh Tiwari, Chief Financial Officer and Mr. Dev Bajpai, Company Secretary are the Key Managerial Personnel of the Company as on 31st March, 2024. During the year, Mr. Rohit Jawa succeeded Mr. Sanjiv Mehta (DIN: 06699923) as the CEO & MD and as the head of the Management Committee of the Company with effect from 27th June, 2023.

Management Committee

The day-to-day management of the Company is vested with the Management Committee, which is subjected to the overall superintendence and control of the Board. The Management Committee is headed by the CEO & MD and has Functional and Business Heads as its members.

During the year, the Board of Directors, based on the recommendation of the Nomination and Remuneration Committee, approved the following changes to the Management Committee:

(a) the appointment of Mr. Arun Neelakantan as the Chief Digital Officer with effect from 1st January, 2024.

(b) the appointment of Ms. Harman Dhillon as the Executive Director, Beauty & Well-being, in succession to Mr. Madhusudhan Rao, with effect from 1st April, 2024.

(c) the appointment Mr. Srinandan Sundaram as the Executive Director, Home Care in succession to Mr. Deepak Subramanian with effect from 1st April, 2024.

(d) the appointment of Mr. Shiva Krishnamurthy as the Executive Director, Foods and Refreshment in succession to Mr. Srinandan Sundaram with effect from 1st April, 2024.

Further, Mr. Biddappa will succeed Ms. Anuradha Razdan as Executive Director, Human Resources and Member of Management Committee of the Company with effect from 1st June, 2024.

Declaration from Independent Directors

The Company has, inter alia, received the following declarations from all the Independent Directors confirming that:

• they meet the criteria of independence as prescribed under the provisions of the Act, read with the Rules made thereunder, and the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company;

• they have complied with the Code for Independent Directors prescribed under Schedule IV to the Act; and

• they have registered themselves with the Independent Director's Database maintained by the Indian Institute of Corporate Affairs

In the opinion of the Board, all Independent Directors possess requisite qualifications, experience, expertise and hold high standards of integrity required to discharge their duties with an objective independent judgment and without any external influence. List of key skills, expertise and core competencies of the Board, including the Independent Directors, forms a part of the Corporate Governance Report of this Integrated Annual Report.

Meetings of the Board, Board Evaluation, Training and Familiarisation Programme & Vigil Mechanism

During the year, seven meetings of the Board of Directors were held.

The details of meetings held and Director's attendance, training and familiarisation programme and Annual Board Evaluation process for Directors, policy on Director's appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Director, and also remuneration for key managerial personnel and other employees, composition of Audit Committee, establishment of Vigil Mechanism for Directors and employees, form a part of the Corporate Governance Report of this Integrated Annual Report.

Technology Absorption

HUL has a long tradition of being a responsible and pioneering business. Innovations for our great brands powered by deep consumer understanding combined with Science & Technology expertise are at the heart of HUL's ambition of sustainable growth.

Unilever R&D is known for innovating boldly for people and planet. It has 6 global R&D labs and 10 regional R&D hubs including 3 in India located at Mumbai, Bengaluru (both global R&D Centres), and Gurugram (Regional Hub). Through these, HUL business has access to more than 20,000 international patents, and more than 5,000 leading edge scientists and technology experts working across all business groups and critical R&D capabilities of Regulatory, Clinicals & Digital R&D. HUL business benefits from constant flow of new products designs, novel product & processing technologies from the work done across the global R&D centres.

Our commitment towards 'Ending Animal Testing Globally' is a great example of how Unilever R&D uses new age science, not animals, to assure safety of our products and ingredients. HUL business directly benefits from the Unilever's Safety and Environmental Assurance Centre (SEAC), which assess all our products from the lens of safety impact on People and Environment. Scientists at SEAC partner with Unilever R&D Scientists and use internationally recognised safety approaches, and authoritative scientific evidence, to ensure that people are safe when they use our products and we do not negatively impact the environment. SEAC team have world leaders who are advocating elimination of animal testing for product evaluation and have been able to develop animal testing alternatives to influence regulatory agencies across the globe and bring in regulation changes.

HUL derives exceptional benefits and advantage of scale from Unilever R&D's extensive global ecosystem of academia, technology experts and long-term collaborations with large suppliers for material and technologies. Through these partners HUL is working on developing next generation sustainable materials and products with lower Carbon Footprint that will enable us to achieve our Net zero goal by 2039.

HUL also benefits from Unilever's continued capital investments into critical R&D capabilities and infrastructure in India, including setting up of 'Agile Innovation Hub' and 'Advanced Manufacturing Centre', robotics led high throughput technology screening and product validation capabilities to step up innovation, speed & impact by leveraging data science, technology & automation.

The above flow of benefits to HUL have been enabled through a Technical Collaboration Agreement (TCA) and a Trademark License Agreement (TMLA) between HUL & Unilever since 2013. The TCA provides for payment of royalty on net sales of specific products manufactured by the Company, with technical know-how provided by Unilever. The TMLA provides for the payment of trademark royalty as a percentage of net sales on specific brands where Unilever owns the trademark in India including use of 'Unilever Corporate logo'. With the aid of these agreements HUL business has been able to bring in bigger, better, and faster innovations to Indian consumers from the global R&D teams.

The Company continuously imports technology from Unilever under the TCA, which is fully absorbed in our products. One such recent example among many others includes Novology Hyper Pigmentation Serum that was launched in 2023 with triple action technology. This technology has been clinically proven to act on multiple pathways of melanogenesis to reduce hyper pigmentation. Similarly, Novology Acne Range was launched in 2023 which was clinically proven technology to reduce acne and restore skin microbiome. We have adopted multiple technologies containing natural, nature identical and naturally cultivated molecules in our beauty

and personal care products that provide skin benefits like better hygiene, naturally glowing skin, etc.

In 2023, our Home Care category has adopted various polymer technologies for superior cleaning, foam, and whitening benefits as well as functional materials for improved processing of fabric care formulations. We have also adopted biosurfactant technologies to design new variant of dishwash liquid.

In line with our global commitments on plastic waste reduction, we have adopted technologies that allow us to use less, better and no plastic in our packaging e.g., 20% to 70% PCR in various Home Care, Beauty and Personal Care products under Vim, Surf excel, Comfort, Lux, Pears, Lifebuoy, Dove, etc.

The Company leverages Unilever R&D's digital capabilities to fast-track innovations. For instance, in our Foods and Refreshment category we have adopted digital tools like MINERVA and PHAROS for fast-tracking product design and safety assessment.

We also receive continuous support and guidance from Unilever to drive functional excellence in marketing, supply management, media buying and IT, among others, which helps us build capabilities, remain competitive and further step-up our 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 HUL and enables us to win in the marketplace.

Conservation of Energy

For details on the steps taken by the Company on conservation of energy, water and reduction of waste, please refer to the Business Responsibility and Sustainability Report, which forms part of this Integrated Annual Report.

Compliance with Secretarial Standards

The Company has generally complied with all the applicable provisions of Secretarial Standard on Meetings of Board of Directors (SS-1) and Secretarial Standard on General Meetings (SS-2), respectively issued by Institute of Company Secretaries of India.

Stakeholder Engagement

Our multi-stakeholder model aims to respect the interests of and be responsive towards all stakeholders. Stakeholder engagement and partnership are essential to grow the Company's business and to reach the ambitious targets set out in the ESG Goals. The CoBP, which is the statement of values and represents the standard of conduct for everyone associated with the Company, and the Code Policies guide how we interact with our partners, suppliers, customers, employees, shareholders, Government, Non- Governmental Organisations (NGOs), trade associations and industry bodies. Through the underlying standards set in CoBP and Code policies, the Company is committed to transparency, honesty, integrity and openness in all its engagements with the various stakeholders.

Outlook

In FY 2023-24, we delivered a resilient performance led by our focus on providing the right consumer value, excellence in execution, increased investments behind brands and capabilities, premiumisation and market development.

In the near term, we expect FMCG demand to continue improving gradually. Forecast of above normal monsoons and improving macro-economic indicators augur well. In this context, our focus remains on driving competitive volume led growth across our business. We will continue to generate savings through our productivity programme and re-invest it behind our brands and long-term strategic capabilities while maintaining EBITDA margin at the current levels.

We remain confident of the mid to long term potential of Indian FMCG sector given rising affluence, under-indexed FMCG consumption and a strong digital infrastructure. To serve the evolving aspirations of Indian consumers, we have embarked on a journey of 'Transform to Outperform'. Our key thrusts of Growing our Core through Unmissable Brand Superiority, Market making and Premiumisation, Re-shaping our portfolio to high growth spaces and Leadership in Channels of the future, backed by our distinctive capabilities will enable us to continue winning competitively in the Indian FMCG sector.

Responsibility Statement

Pursuant to Section 134 of the Act, the Board of Directors confirms that:

• In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and there are no material departures from the same;

• They have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs and of the profits of the Company for that period;

• They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act and for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

• They have prepared the Annual Accounts on a going concern basis;

• They have laid down internal financial controls for the Company and such internal financial controls are adequate and operating effectively; and

• They have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

Other Disclosures

During the year under review:

• no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status of the Company and or it's operations in future;

• no proceedings are made or pending under the Insolvency and Bankruptcy Code, 2016 and there is no instance of one-time settlement with any Bank or Financial Institution;

• no shares with differential voting rights and sweat equity shares have been issued;

• no public deposits as defined under Chapter V of the Act have been accepted by the Company;

• there has been no change in the nature of business of the Company.

Appreciations and Acknowledgment

Your Directors place on record their deep appreciation to all employees for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled your 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 your Company to provide higher levels of consumer delight through continuous improvement in existing products, and introduction of new products.

Your 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, Business Partners, Government and Regulatory Authorities and Stock Exchanges, for their continued support.