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Hindustan Unilever Ltd. ಖಾತೆಯ ಉಪಯುಕ್ತ ಮಾಹಿತಿ

Mar 31, 2023

A. Owned Assets

Property, plant and equipment is stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. Cost of acquisition or construction of property, plant and equipment comprises its purchase price including import duties and non-refundable purchase taxes after deducting trade discounts, rebates and any directly attributable cost of bringing the item to its working condition for its intended use.

Property, plant and equipment acquired in a business combination are recognised at fair value at the acquisition date. When parts of an item of property, plant and equipment having significant cost have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.

Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance cost are charged to the standalone statement of profit and loss during the period in which they are incurred.

Gains or losses arising on retirement or disposal of property, plant and equipment are recognised in the standalone statement of profit and loss.

Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as "Capital work-in-progress".

Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under "Other Non-Current Assets".

Depreciation is calculated on pro rata basis on straight-line method based on estimated useful life prescribed under Schedule II of the Companies Act, 2013. Freehold land is not depreciated.

The Company''s Lease asset classes primarily consist of leases for Land & Buildings, Plant & Equipment, Furniture & Fixtures and Office equipment. The Company assesses whether a contract is or contains a lease, at the inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

(i) the contract involves the use of an identified asset

(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and

(a) The Company incurred ?49 crores for the year ended 31st March, 2023 (31st March, 2022: ?65 crores) towards expenses relating to short-term leases and leases of low-value assets. The total cash outflow for leases is ?556 crores for the year ended 31st March, 2023 (31st March, 2022: ?527 crores), including cash outflow of short-term leases and leases of low-value assets. Interest on lease liabilities is ?76 crores for the year ended 31st March, 2023 (31st March, 2022: ?75 crores).

(b) The Company''s leases mainly comprise of land and buildings, plant, equipment, furniture and fixtures and office equipments. The Company leases land and buildings for manufacturing and warehouse facilities.

(iii) the Company has the right to direct the use of the asset.

The right-of-use asset is a lessee''s right to use an asset over the life of a lease. At the date of commencement of the lease, the Company recognises a right-of-use asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for short-term leases and leases of low value assets. For these, the Company recognises the lease payments as an operating expense.

The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.

The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability and reducing the carrying amount to reflect the lease payments made.

A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the leased assets.

Lease Liability has been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

C Capital work-in-progress

Capital work-in-progress comprises of property, plant and equipment that are not ready for their intended use at the end of reporting period and are carried at cost comprising direct costs, related incidental expenses, other directly attributable costs and borrowing costs.


NOTE 4 GOODWILL AND OTHER INTANGIBLE ASSETS

Intangible assets purchased are initially measured at cost.

The cost of an intangible asset comprises its purchase price including duties and taxes and any costs directly attributable to making the asset ready for their intended use.

Separately purchased intangible assets are initially measured at cost, being the purchase price as at the date of acquisition.

Intangible assets acquired in a business combination are recognised at fair value at the acquisition date. Subsequently, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in standalone statement of profit or loss as incurred.

The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortised on a straight-line basis over the period of their estimated useful lives. Estimated useful lives by major class of finite-life intangible assets are as follows:

Design and Know-how - 10 years

Computer software - 5 years

Trademarks - 5 years

Distribution network - 15 years

The amortisation period and the amortisation method for finite-life intangible assets is reviewed at each financial year end and adjusted prospectively, if appropriate. Indefinite-life intangible assets comprises of trademarks and brands, for which there is no foreseeable limit to the period over which they are expected to generate net cash inflows. These are considered to have an indefinite life, given the strength and durability of the brands and the level of marketing support. For indefinite-life intangible assets, the assessment of indefinite life is reviewed annually to determine whether it continues, if not, it is impaired or changed prospectively basis revised estimates.

Goodwill is initially recognised based on the accounting policy for business combinations and is tested for impairment annually.

The Company has not revalued any of its intangible assets.

Impairment

Assessment for impairment is done at each Balance Sheet date as to whether there is any indication that a non-financial asset may be impaired. Indefinite life intangible assets and goodwill are subject to review for impairment annually or more frequently if events or circumstances indicate that it is necessary. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets is considered as a cash generating unit. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company''s cash generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

If any indication of impairment exists, an estimate of the recoverable amount of the individual asset/cash generating unit is made. Asset/cash generating unit whose carrying value exceeds their recoverable amount are written down to the recoverable amount by recognising the impairment loss as an expense in the standalone statement of profit and loss.

The impairment loss is allocated first to reduce the carrying amount of goodwill (if any) allocated to the cash generating unit and then to the other assets of the unit, pro rata based on the carrying amount of each asset in the unit. Recoverable amount is higher of an asset''s or cash generating unit''s value in use and its fair value less cost of disposal. Value in use is estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are considered. If no such transactions can be identified, an appropriate valuation model is used.

Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased. Basis the assessment a reversal of an impairment loss for an asset other than goodwill is recognised in the standalone statement of profit and loss.

No impairment was identified in FY 2022-23 (FY 2021-22: Nil).

The projections cover a period of five years, as the Company believes this to be the most appropriate timescale over which to review and consider annual performances before applying a terminal value multiple to the final year cash flows. The growth rates and segmental margins used to estimate cash flows for the first five years are based on past performance, and on the Company''s five-year strategic plan.

Weighted Average Cost of Capital % (WACC) for the Company = Risk free return (Market risk premium x Beta).

The Company has performed sensitivity analysis and has concluded that there are no reasonably possible changes to key assumptions that would cause the carrying amount of a CGU to exceed its recoverable amount.

NOTE 5 INVESTMENT IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE

Investments in Subsidiaries, Associates and Joint Venture are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, associates and joint venture, the difference between net disposal proceeds and the carrying amounts are recognised in the standalone statement of profit and loss.

Investment in Associate

The Company holds 24% of equity holdings in Comfund Consulting Limited and 26% equity and preference capital holding in Aquagel Chemicals (Bhavnagar) Private Limited. The Company does not exercise significant influence or control on decisions of the investees. Hence, they are not being construed as associate companies. These investments are included in "Note 6 - Investments" in the standalone financial statements.

2) There are no loans or advances in the nature of loans granted to promoters, Directors, KMPs and their related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, that are:

(a) repayable on demand; or

(b) without specifying any terms or period of repayment

3) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

NOTE 8 OTHER FINANCIAL ASSETS

(Unsecured, considered good unless otherwise stated)

Indemnification Asset Initial recognition

Indemnification asset is recognised at fair value at the time when the seller contractually agrees to indemnify, in whole or in part, for a particular uncertainty. It is initially measured on the same basis as defined in the agreement, subject to collectability.

Subsequent measurement

As at each reporting period, the Company re-assesses the indemnification asset that was recognised initially on the same basis as defined in the contract subject to collectability of such asset. The Company derecognises the indemnification asset only when it collects the asset, sells it or otherwise loses the right to it.

1) In Line with Circular No 04/2015 issued by Ministry of Corporate Affairs dated 10/03/2015, loans given to employees as per the Company''s policy are not considered for the purposes of disclosure under Section 186(4) of the Companies Act, 2013.

NOTE 9 INCOME TAXES

Income tax expense for the year comprises of current tax and deferred tax. It is recognised in the standalone statement of profit and loss except to the extent it relates to a business combination or to an item which is recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable/receivable on the taxable income/loss for the year using applicable tax rates for the relevant period, and any adjustment to taxes in respect of previous years. Interest expenses and penalties, if any, related to income tax are included in finance cost and other expenses respectively. Interest Income, if any, related to income tax is included in other income.

Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and Liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.

A deferred tax liability is recognised based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, by the end of the reporting period. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.

Uncertain Tax position:

Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. The provision is estimated based on one of two methods, the expected value method (the sum of the probability weighted amounts in a range of possible outcomes) or the single most likely amount method, depending on which is expected to better predict the resolution of the uncertainty.

NOTE 11 INVENTORIES

Inventories are valued at the lower of cost and net realisable value. Cost is computed on a weighted average basis.

Cost of raw materials and stores and spares includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. The aforesaid items are valued at net realisable value if the finished products in which they are to be incorporated are expected to be sold at a loss.

NOTE 12 TRADE RECEIVABLES

(Unsecured unless otherwise stated)

Trade receivables are initially recognised at transaction price as they do not contain a significant financing component. This implies that the effective interest rate for these receivables is zero. Subsequently, the Company applies lifetime expected credit loss model for measurement of trade receivables.

Lease liability is initially measured at the present value of future lease payments. Lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. Lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability and reducing the carrying amount to reflect the lease payments made.

(g) Items of Other Comprehensive Income:

i) Fair value of cash flow hedges through Other Comprehensive Income: The effective portion of the fair value change of the cash flow hedges measured at fair value through other comprehensive income is recognised in Cash flow hedges through Other Comprehensive Income. Upon derecognition, if the hedged cash flow relates to a non-financial asset, the amount accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts accumulated in other comprehensive income are taken to the standalone statement of profit and loss at the same time as the related cash flow.

ii) Debt Instruments through Other Comprehensive Income: The fair value change of the debt instruments measured at fair value through other comprehensive income is recognised in Debt instruments through Other Comprehensive Income. Upon derecognition, the cumulative fair value changes on the said instruments are reclassified to the standalone statement of profit and loss.

D. Capital Management

Equity share capital and other equity are considered for the purpose of Company''s capital management.

The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure of the Company is based on management''s judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence.

The management and the Board of Directors monitors the return on capital as well as the level of dividends to shareholders. The Company may take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

a) There are no amounts due for payment to the Investor Education and Protection Fund under Section 125 of the Companies Act, 2013 as 31st March, 2023 (31st March, 2022: Nil).

b) Includes crores of Corporate Social Responsibility (CSR) expense related to ongoing projects as at 31st March, 2023 (31 st March, 2022: ?28 crores). The same was transferred to a special account designated as "Unspent Corporate Social Responsibility Account for the Financial Year 22-23" ("UCSRA - FY 2022-23") of the Company within 30 days from end of financial year. Refer note 33 for more information about Corporate Social Responsibility expense.

NOTE 21 PROVISIONS

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.

If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessment of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

NOTE 24 CONTINGENT LIABILITIES AND COMMITMENTS

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.

A. CONTINGENT LIABILITIES

As at

31st March, 2023

As at

31st March, 2022

Claims against the Company not acknowledged as debts

Income tax matters

1,586

1,248

Indirect Tax matters

710

792

Legal and Other Matters

281

281

(i) It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgements/decisions pending with various forums/authorities.

(ii) The Company does not expect any reimbursements in respect of the above contingent liabilities.

(iii) The Company''s pending litigations comprise of claims against the Company by employees and pertaining to proceedings pending with various direct tax, indirect tax and other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required or disclosed as contingent liabilities where applicable, in its standalone financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its standalone financial statements.

B. COMMITMENTS

i) Lease commitments

Lease commitments are the future cash out flows from the lease contracts which are not recorded in the measurement of lease liabilities. These include potential future payments related to leases of low value assets and leases with term less than twelve months.

The Company has received approval under the Production Linked Incentive Scheme of the Government of India for specific product categories. Incentive under the scheme is subject to meeting certain committed investments and defined incremental sales threshold. Such grants are recognised as other operating revenue when there is a reasonable assurance that the Company will comply with all necessary conditions attached to the grant.

As at

31st March, 2023

As at

31st March, 2022

Not later than one year

69

67

Later than one year and not later than five years

57

66

Later than five years

-

-

ii) Capital commitments

As at

As at

31st March, 2023

31st March, 2022

Estimated value of contracts in capital account remaining to be executed and not provided for (net of capital advances)

434

360

NOTE 25 REVENUE FROM OPERATIONS Sale of products:

Revenue from sale of goods is recognised when control of the products being sold is transferred to our customer and when there are no longer any unfulfilled obligations. The Performance Obligations in our contracts are fulfilled at the time of dispatch, delivery or upon formal customer acceptance depending on terms with customers.

Revenue is measured on the basis of contracted price, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the Government such as Goods and Services Tax, etc. Accumulated experience is used to estimate the provision for such discounts and rebates. Revenue is only recognised to the extent that it is highly probable a significant reversal will not occur.

Our customers have the contractual right to return goods only when authorised by the Company. An estimate is made of goods that will be returned and a liability is recognised for this amount using a best estimate based on accumulated experience.

Income from services rendered:

Income from services rendered is recognised based on agreements/arrangements with the customers as the service is performed and there are no unfulfilled obligations.

Commission income on consignment sales:

Commission income on consignment sales (Consignment selling agency fees) is charged for rendering of services and for the use of the Company''s sales and distribution network. Such revenue is recognised in the accounting period in which the services are rendered in accordance with the agreement with the parties.

Government grants:

The Company is entitled to ''Scheme of budgetary support'' under Goods and Service Tax Regime in respect of eligible manufacturing units located in specified regions. Such grants are measured as amount receivable from the Government and are recognised as other operating revenue when there is a reasonable assurance that the Company will comply with all necessary conditions attached to that.


NOTE 30 EMPLOYEE BENEFITS EXPENSE Short-Term Employee Benefits

Short-term employee benefits including salaries and performance incentives, are charged to standalone statement of profit and loss on an undiscounted, accrual basis during the period of employment.

Defined contribution plans

Contributions to defined contribution schemes such as employees'' state insurance, labour welfare fund, superannuation scheme, employee pension scheme etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. Company''s provident fund contribution, in respect of certain employees, is made to a Government administered fund and charged as an expense to the standalone statement of profit and loss. The above benefits are classified as Defined Contribution Schemes as the Company has no further defined obligations beyond the monthly contributions.

Defined benefit plans

In respect of certain employees, provident fund contributions are made to trusts administered by the Company. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company.

The liability in respect of the shortfall of interest earnings of the Fund is determined on the basis of an actuarial valuation. The Company also provides for retirement/post-retirement benefits in the form of gratuity, pensions (in respect of certain employees), compensated absences (in respect of certain employees) and medical benefits (in respect of certain employees) including to the employees of group companies.

For defined benefit plans, the amount recognised as ''Employee benefit expenses'' in the standalone statement of profit and loss is the cost of defined benefit obligation resulting from employee service in the current period (''current service cost'') and the costs of individual events such as changes in past service benefits and settlements (such events are recognised immediately in the statement of profit and loss). The amount of net interest expense calculated by applying

the liability discount rate to the net defined benefit liability or asset is charged or credited to ''Finance costs'' in the standalone statement of profit and loss. Any differences between the expected interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised immediately in ''Other comprehensive income'' and subsequently not reclassified to the standalone statement of profit and loss.

The defined benefit plan surplus or deficit on the Balance Sheet date comprises fair value of plan assets less the present value of the defined benefit liabilities using a discount rate by reference to market yields on Government bonds at the end of the reporting period.

All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Company''s net obligation into current and non-current is as per the actuarial valuation report.

Termination benefits

Termination benefits, in the nature of voluntary retirement benefits or termination benefits arising from restructuring, are recognised in the standalone statement of profit and loss. The Company recognises termination benefits at the earlier of the following dates:

(a) when the Company can no longer withdraw the offer of those benefits; or

(b) when the Company recognises costs for a restructuring that is within the scope of Ind AS 37: Provisions, Contingent Liabilities and Contingent Assets and involves the payment of termination benefits.

Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

Share-Based Payments

Employees of the Company receive remuneration in the form of share-based payments in consideration of the services rendered. Under the equity settled share based payment, the fair value on the grant date of the awards given to employees is recognised as ''employee benefit expenses'' with a corresponding increase in equity over the vesting period. The fair value of the options at the grant date is calculated by an independent valuer basis Black Scholes model. At the end of each reporting period, apart from the non-market vesting condition, the expense is reviewed and adjusted to reflect changes to the level of options expected to vest. When the options are exercised, the Company issues fresh equity shares.

VII. Nature of CSR activities include promoting education, including special education and employment enhancing vocation skills, ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water, rural development projects and disaster management, including relief, rehabilitation and reconstruction activities.

VIII. Above includes a contribution of ?15 crores (2021-22: ?11 crores) to subsidiary Hindustan Unilever Foundation which is a Section 8 registered Company under Companies Act, 2013. The objectives of Hindustan Unilever Foundation includes working in areas of social, economic and environmental issues such as water harvesting, health and hygiene awareness, women empowerment and enhancing capabilities of the underprivileged segments of society to meet emerging opportunities thus improving their livelihood.

IX. Above includes crores of Corporate Social Responsibility (CSR) expense related to ongoing projects as at 31st March, 2023 (31st March, 2022: ?28 crores). The same was transferred to a special account designated as "Unspent Corporate Social Responsibility Account for the Financial Year 22-23" ("UCSRA - FY 2022-23") of the Company within 30 days from end of financial year.

X. The Company does not wish to carry forward any excess amount spent during the year.

XI. The Company does not carry any provisions for Corporate social responsibility expenses for current year and previous year.

NOTE 35 EARNINGS PER EQUITY SHARE

Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.

NOTE 37 FINANCIAL INSTRUMENTS I. Financial Assets:

Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. On initial recognition, a financial asset is recognised at fair value.

The subsequent measurement of a financial asset depends on the classification of the asset on the basis of business model for managing such assets and the contractual cash flow characteristics of such asset. These classifications are:

- amortised cost

- fair value through profit and loss (FVTPL)

- fair value through other comprehensive income (FVOCI).

Financial assets are not reclassified subsequent to their recognition, except during the period the Company changes its business model for managing financial assets.

In case of financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction cost is recognised in the standalone statement of profit and loss. In other cases, the transaction cost is attributed to the acquisition value of the financial asset.

(a) Debt Instruments:

(i) Measured at amortised cost:

Financial assets that give rise to cash flows on specified dates that are solely the payments of principal and interest; and the financial asset is held within a business model whose objective is solely to collect those cash flows, then the financial asset is classified and measured at amortised cost.

These are measured by applying the effective interest rate method. The effective interest rate method allocates interest income over the relevant period by applying the effective interest rate (that is the interest rate that exactly discounts expected future cash flows to the gross carrying amount of the asset)."

(ii) Measured at fair value through other comprehensive income (FVOCI):

Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognised in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognised in the standalone statement of profit and loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to ''other income'' in the standalone statement of profit and loss.

(iii) Measured at fair value through profit or loss (FVTPL):

A financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised in ''other income'' in the standalone statement of profit and loss.

(b) Equity Instruments:

All investments in equity instruments classified under financial assets are initially measured at fair value, the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL.

The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument is recognised in ''other income'' in the standalone statement of profit and loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognised in OCI. Amounts recognised in OCI are not subsequently reclassified to the standalone statement of profit and loss. Dividend income on the investments in equity instruments are recognised as ''other income'' in the standalone statement of profit and loss.

(c) Derivative Financial Instruments:

The Company uses derivative financial instruments to hedge its foreign currency and commodity risks. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on their use as explained below:

(i) Cash flow hedges:

Derivatives are held to hedge the uncertainty in timing or amount of future forecast cash flows. Such derivatives are classified as being part of cash flow hedge relationships. For an effective hedge, gains and losses from changes in the fair value of derivatives are recognised in other comprehensive income. Any ineffective elements of the hedge are recognised in the standalone statement of profit and loss.

If the hedged cash flow relates to a non-financial asset, the amount accumulated in other comprehensive income is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts accumulated in other comprehensive income are taken to the standalone statement of profit and loss at the same time as the related cash flow.

When a derivative no longer qualifies for hedge accounting, any cumulative gain or loss remains in equity until the related cash flow occurs. When the cash flow takes place, the cumulative gain or loss is taken to the standalone statement of profit and loss. If the hedged cash flow is no longer expected to occur, the cumulative gain or loss is taken to the standalone statement of profit and loss immediately.

(ii) Derivatives for which hedge accounting is not applied

Derivatives not classified as hedges are held in order to hedge certain balance sheet items and commodity exposures. No hedge accounting is applied to these derivatives, which are carried at fair value with changes being recognised in the statement of profit and loss.

Derecognition

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset or has assumed an obligation to pay the received cash flows to one or more recipient.

Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised. Where the entity has neither transferred a financial asset nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle them on a net basis or to realise the assets and settle the liabilities simultaneously.

Impairment of Financial Asset

The Company applies expected credit loss (ECL) model for measurement and recognition of loss allowance on the following:

i. Trade receivables

ii. Financial assets measured at amortised cost (other than trade receivables)

In case of trade receivables, the Company follows a simplified approach wherein an amount equal to lifetime ECL is measured and recognised as loss allowance.

Financial assets classified as amortised cost (listed as ii above), subsequent to initial recognition, are assessed for evidence of impairment at end of each reporting period basis monitoring of whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwardinglooking information.

If the credit risk of such assets has not increased significantly, an amount equal to 12-month ECL is measured and recognised as loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognised as loss allowance.

Subsequently, if the credit quality of the financial asset improves such that there is no longer a significant increase in credit risk since initial recognition, the Company reverts to recognising impairment loss allowance based on 12-month ECL.

ECL allowance recognised (or reversed) during the period is recognised as expense (or income) in the standalone statement of profit and loss under the head ''Other expenses''.

Write - off

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering the financial asset in its entirety or a portion thereof. A write-off constitutes a derecognition event.

II. Financial Liabilities:

Initial recognition and measurement

Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as fair value through profit and loss. In case of trade payables, they are initially recognised at fair value and subsequently, these liabilities are held at amortised cost, using the effective interest rate method.

Subsequent measurement

Financial liabilities are subsequently measured at amortised cost using the EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the standalone statement of profit and loss.

Derecognition

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires. The difference between the carrying value of the financial liability and the consideration paid is recognised in standalone statement of profit and loss.

C. Fair Value Hierarchy

The fair value of financial instruments as referred to in note (A) above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).

The categories used are as follows:

• Level 1: Quoted prices for identical instruments in an active market;

• Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs; and

• Level 3: Inputs which are not based on observable market data.

Calculation of Fair Values

The fair values of the financial assets and liabilities are defined as the price that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended 31st March, 2022.

Financial assets and liabilities measured at fair value as at Balance Sheet date:

1. The fair values of investment in treasury bills and quoted investment in equity shares is based on the bid price of respective investment as at the Balance Sheet date.

2. The fair values of investments in mutual fund units is based on the net asset value (''NAV'') as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.

3. Derivatives are valued using valuation techniques with market observable inputs. The models incorporate various inputs including the credit quality of counter-parties, foreign exchange spot and forward rates, interest rate curves and forward rate curves of the underlying commodities.

NOTE 38 FINANCIAL RISK MANAGEMENT

The Company''s business activities are exposed to a variety of financial risks, namely liquidity risk, market risk, credit risk and commodity risk. The Company''s senior management has the overall responsibility for establishing and governing the Company''s risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.

A. Management of Liquidity Risk

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company''s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.

The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended 31st March, 2023 and 31st March, 2022. Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis.

The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short-term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and other highly marketable debt investments with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.

C. Management of Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations.

Trade receivables

Concentration of credit risk with respect to trade receivables are limited, due to the Company''s customer base being large and diverse. All trade receivables are reviewed and assessed for default on a quarterly basis. Our historical experience of collecting receivables indicate a low credit risk. Hence, trade receivables are considered to be a single class of financial assets.

Refer note 12 for accounting policy on Financial Instruments - trade receivables.

Other financial assets

Credit risk related to the use of treasury instruments arises from transactions with financial institutions involving cash and cash equivalents, term deposits with banks, investments in treasury bills, Government securities, money market liquid mutual funds, overnight mutual funds and derivative instrument. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets as at 31st March, 2023 and 31st March, 2022. To reduce this risk, HUL has concentrated its main activities with a limited number of counter-parties which have secure credit ratings. Individual risk limits are set for each counter-party based on financial position, credit rating and past experience. Credit limits and concentration of exposures are actively monitored by the Company''s Treasury department. The Company has given inter-corporate deposits (ICD) to its subsidiaries amounting ?247 crores (31st March, 2022: ?432 crores).

NOTE 39 EMPLOYEE BENEFIT PLANSI. Defined Contribution Plans

Refer note 30 for accounting policy on Employee Benefits.

Refer Note 30 for the Company''s contribution to the defined contribution plans with respect to employee benefit funds.

II. DEFINED BENEFIT PLANS

Refer note 30 for accounting policy on Employee Benefits.

Description of Plans

Retirement Benefit Plans of the Company include Gratuity, Management Pension, Officer''s Pension and Provident Fund. Other post-employment benefit plans includes post retirement medical benefits.

Gratuity is funded through investments with an insurance service provider & the Company administered trust. Pension (Management Pension and Officer''s Pension) is managed through a Company administered trust and in some instances invested with an insurance service provider. Provident Funds for certain employees are managed through the Company administered trust. Post-retirement medical benefits are managed through the Company administered trust and through insurance policy.

Governance

The trustees of Gratuity, Pension, Post Retirement Medical Benefit and Provident Funds are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. They are tasked with periodic reviews of the solvency of the fund and play a role in the longterm investment, risk management and funding strategy.

Investment Strategy

The Company''s investment strategy in respect of its funded plans is implemented within the framework of the applicable statutory requirements. The plans expose the Company to a number of actuarial risks such as investment risk, interest rate risk, longevity risk and inflation risk. The Company has developed policy guidelines for the allocation of assets to different classes with the objective of controlling risk and maintaining the right balance between risk and long-term returns. To achieve this, investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

The sensitivity analysis above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the year and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognised in the Balance Sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year.

The estimates of future salary increases, considered in actuarial valuation, takes into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Demographic Assumptions

Mortality in Service: Indian Assured Lives Mortality (2012-14) Ultimate table.

Mortality in Retirement: LIC Buy-out Annuity Rates & Published rates under S1PA Mortality table adjusted for Indian Lives.

Compensated absences

Employee Benefit expenses for the year include ^8 crores (FY 2021-22 : ^7 crores) towards compensated absences. Provision for compensated absences as on 31st March, 2023 is ^44 crores (31st March, 2022 : ^43 crores).

Cash Settled Share Based Payments

The employees of the Company are eligible for Unilever Pic. (the ''Holding Company'') share awards namely, the Management Co-Investment Plan (MCIP), the Performance Share Plan (PSP) and the SHARES Plan.

The MCIP allowed eligible employees to invest up to 100% of their annual bonus in the shares of the Holding Company and to receive a corresponding award of performance-related shares. The performance measures for MCIP are underlying sales growth, underlying EPS growth, underlying return on invested capital and sustainability progress index for the Group. The awards under MCIP plans will vest after 4 years between 0% and 200% of grant level, depending on the achievement of the performance metrics.

Under PSP, eligible employees receive annual awards of the Holding Company''s shares. The performance measures for PSP are competitiveness, cumulative free cash flow, underlying return on invested capital and sustainability progress index for the Group. The awards under PSP plans will vest after 3 years between 0% and 200% of grant level, depending on the achievement of the performance metrics.

Under the SHARES Plan, eligible employees can invest upto ^17,246 per month in the shares of the Holding Company and after three years one share is granted free of cost to the employees for every three shares invested, provided they hold the shares bought for three years. The Holding Company charges the Company for the grant of shares to the Company''s employees at the end of the 3/4 years based on the market value of the shares on the exercise date. The Company recognises the fair value of the liability and expense for these plans over the vesting period based on the management''s estimate of the vesting and forfeiture conditions.

Equity Settled Share Based Payments

The members of the Company had approved ''2001 HLL Stock Option Plan'' at the Annual General Meeting held on 22nd June, 2001. The plan envisaged grant of share options to eligible employees at market price as defined in Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

This plan was amended and revised vide ''2006 HLL Performance Share Scheme'' at the Annual General Meeting held on 29th May, 2006. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Compensation Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include group underlying sales growth and free cash flow. The scheme also provided for ''Par'' Awards for the managers at different work levels.

The 2006 scheme was further amended and revised vide ''2012 HUL Performance Share Scheme'' at the Annual General Meeting held on 23rd July, 2012. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Nomination and Remuneration Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include g


Mar 31, 2022

A Owned Assets

Property, plant and equipment is stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. Cost of acquisition or construction of property, plant and equipment comprises its purchase price including import duties and non-refundable purchase taxes after deducting trade discounts,rebates and any directly attributable cost of bringing the item to its working condition for its intended use.

Property, plant and equipment acquired in a business combination are recognised at fair value at the acquisition date. When parts of an item of property, plant and equipment having significant cost have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.

Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance cost are charged to the standalone statement of profit and loss during the period in which they are incurred.

Gains or losses arising on retirement or disposal of property, plant and equipment are recognised in the standalone statement of profit and loss.

Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as "Capital work-in-progress".

Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under "Other Non-Current Assets".

Depreciation is calculated on pro rata basis on straight-line method based on estimated useful life prescribed under Schedule II of the Companies Act, 2013. Freehold land is not depreciated.

B Leased Assets

The Company''s Lease asset classes primarily consist of leases for Land & Buildings, Plant & Equipment, Furniture & Fixtures and Office equipment. The Company assesses whether a contract is or contains a lease, at the inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

(i) the contract involves the use of an identified asset

(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and

(iii) the Company has the right to direct the use of the asset.

The right-of-use asset is a lessee''s right to use an asset over the life of a lease. At the date of commencement of the lease, the Company recognises a right-of-use asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for short-term leases and leases of low value assets. For these, the Company recognises the lease payments as an operating expense.

The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.

The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability and reducing the carrying amount to reflect the lease payments made.

A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the leased assets.

(a) The Company incurred ''65 crores for the year ended 31st March, 2022 (31st March, 2021: ''83 crores) towards expenses relating to short-term leases and leases of low-value assets. The total cash outflow for leases is ''527 crores for the year ended 31st March, 2022 (31st March, 2021: ''547 crores), including cash outflow of short-term leases and leases of low-value assets. Interest on lease liabilities is ''75 crores for the year ended 31st March, 2022 (31st March, 2021: ''81 crores).

(b) The Company''s leases mainly comprise of land and buildings, plant, equipment, furniture and fixtures and office equipments. The Company leases land and buildings for manufacturing and warehouse facilities.

(c) The title deeds of certain Leasehold Land and Building are in the process of perfection of title. Details of such leasehold land and building are as follows:

C Capital work-in-progress

Capital work-in-progress comprises of property, plant and equipment that are not ready for their intended use at the end of reporting period and are carried at cost comprising direct costs, related incidental expenses, other directly attributable costs and borrowing costs.

Temporarily suspended projects do not include those projects where temporary suspension is a necessary part of the process of getting an asset ready for its intended use.

intangible assets purchased are initially measured at cost.

The cost of an intangible asset comprises its purchase price including duties and taxes and any costs directly attributable to making the asset ready for their intended use.

Intangible assets acquired in a business combination are recognised at fair value at the acquisition date. Subsequently, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in standalone statement of profit or loss as incurred.

The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortised on a straight-line basis over the period of their estimated useful lives. Estimated useful lives by major class of finite-life intangible assets are as follows:

Design and Know-how - 10 years

Computer software - 5 years

Trademarks - 5 years

Distribution network - 15 years

The amortisation period and the amortisation method for finite-life intangible assets is reviewed at each financial year end and adjusted prospectively, if appropriate. Indefinite-life intangible assets comprises of trademarks and brands, for which there is no foreseeable limit to the period over which they are expected to generate net cash inflows. These are considered to have an indefinite life, given the strength and durability of the brands and the level of marketing support. For indefinite-life intangible assets, the assessment of indefinite life is reviewed annually to determine whether it continues, if not, it is impaired or changed prospectively basis revised estimates.

Goodwill is initially recognised based on the accounting policy for business combinations and is tested for impairment annually.

Impairment

Assessment for impairment is done at each Balance Sheet date as to whether there is any indication that a non-financial asset may be impaired. Indefinite life intangible assets are subject to review for impairment annually or more frequently if events or circumstances indicate that it is necessary. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets is considered as a cash generating unit. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company''s cash generating units that are expected to benefit

from the synergies of the combination, irrespective of whether other assets or Liabilities of the acquiree are assigned to those units.

If any indication of impairment exists, an estimate of the recoverable amount of the individual asset/cash generating unit is made. Asset/cash generating unit whose carrying value exceeds their recoverable amount are written down to the recoverable amount by recognising the impairment loss as an expense in the standalone statement of profit and loss.

The impairment loss is allocated first to reduce the carrying amount of goodwill (if any) allocated to the cash generating unit and then to the other assets of the unit, pro rata based on the carrying amount of each asset in the unit. Recoverable amount is higher of an asset''s or cash generating unit''s value in use and its fair value less cost of disposal. Value in use is estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are considered. If no such transactions can be identified, an appropriate valuation model is used.

Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased. Basis the assessment a reversal of an impairment loss for an asset other than goodwill is recognised in the standalone statement of profit and loss.

No impairment was identified in FY 2021-22 (FY 2020-21: Nil).

Notes

to the standalone financial statements for the year ended 31st March, 2022

(All amounts in ? crores, unless otherwise stated)

Investment in Associate

The Company holds 24% of equity holdings in Comfund Consulting Limited and 26% equity and preference capital holding in Aquagel Chemicals (Bhavnagar) Private Limited. The Company does not exercise significant influence or control on decisions of the investees. Hence, they are not being construed as associate companies. These investments are included in "Note 6 - Investments" in the standalone financial statements.

Information About Subsidiaries

Proportion (%) of equity interest

Name of the company

Country of incorporation

Principal activities

As at

31st March, 2022

As at

31st March, 2021

Subsidiaries

Unilever India Exports Limited

India

FMCG export business

100

100

Lakme Lever Private Limited

India

(i) Beauty salons

(ii) Job work business

100

100

Unilever India Limited

India

FMCG business

100

100

Unilever Nepal Limited

Nepal

FMCG business

80

80

Pond''s Export Limited

India

Leather products business (discontinued operations)

90*

90*

Jamnagar Properties Private Limited

India

Real estate company

100

100

Daverashola Estates Private Limited

India

Real estate company

100

100

Levindra Trust Limited

India

Discharge trust business as a trustee

100

100

Hind lever Trust Limited

India

Discharge trust business as a trustee

100

100

Levers Associated Trust Limited

India

Discharge trust business as a trustee

100

100

Hindustan Unilever Foundation

India

Not-for-profit company in the field of community development initiatives

76*

76*

Bhavishya Alliance Child Nutrition Initiatives

India

Not-for-profit company that works in the area of social development issues

100

100

*Hindustan Unilever Limited (the Company) indirectly holds remaining percentage of the Equity Share Capital through one of its 100% subsidiary (Unilever India Exports Limited).

The Company has complied with the requirements of the number of layers prescribed under clause (87) of section 2 of the Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017.

NOTE 6 INVESTMENTS

Refer note 37 for accounting policy on financial instruments

As at

31st March, 2022

As at

31st March, 2021

Non-Current Investments

A. Equity instruments

Fair value through profit and loss

Quoted

0

0

Unquoted

1

1

Total (A)

1

1

1) In Line with Circular No 04/2015 issued by Ministry of Corporate Affairs dated 10th March, 2015, loans given to employees as per the Company''s policy are not considered for the purposes of disclosure under Section 186(4) of the Companies Act, 2013.

2) There are no loans or advances in the nature of loans granted to Promoters, Directors, KMPs and their related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, that are:

(a) repayable on demand; or

(b) without specifying any terms or period of repayment

NOTE 8 OTHER FINANCIAL ASSETS

(Unsecured, considered good unless otherwise stated)

Indemnification Asset Initial recognition

Indemnification asset is recognised at fair value at the time when the seller contractually agrees to indemnify, in whole or in part, for a particular uncertainty. It is initially measured on the same basis as defined in the agreement, subject to collectability.

Income tax expense for the year comprises of current tax and deferred tax. It is recognised in the standalone statement of profit and loss except to the extent it relates to a business combination or to an item which is recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable/receivable on the taxable income/loss for the year using applicable tax rates for the relevant period, and any adjustment to taxes in respect of previous years. Interest expenses and penalties, if any, related to income tax are included in finance cost and other expenses respectively. Interest Income, if any, related to income tax is included in other income.

Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.

A deferred tax liability is recognised based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, by the end of the reporting period. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.

Uncertain Tax position:

Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. The provision is estimated based on one of two methods, the expected value method (the sum of the probability weighted amounts in a range of possible outcomes) or the single most likely amount method, depending on which is expected to better predict the resolution of the uncertainty.

(g) Items of Other Comprehensive Income

i) Fair value of cash flow hedges through Other Comprehensive Income: The effective portion of the fair value change of the cash flow hedges measured at fair value through other comprehensive income is recognised in Cash flow hedges through Other Comprehensive Income. Upon derecognition, if the hedged cash flow relates to a non-financial asset, the amount accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts accumulated in other comprehensive income are taken to the standalone statement of profit and loss at the same time as the related cash flow.

ii) Debt Instruments through Other Comprehensive Income: The fair value change of the debt instruments measured at fair value through other comprehensive income is recognised in Debt instruments through Other Comprehensive Income. Upon derecognition, the cumulative fair value changes on the said instruments are reclassified to the standalone statement of profit and loss.

D Capital Management

Equity share capital and other equity are considered for the purpose of Company''s capital management.

The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure of the Company is based on management''s judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence.

The management and the Board of Directors monitor the return on capital as well as the level of dividends to shareholders. The Company may take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

Refer note 44 for information on ratios.

NOTE 19 LEASE LIABILITIES

Lease liability is initially measured at the present value of future lease payments. Lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. Lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability and reducing the carrying amount to reflect the lease payments made.

a) There are no amounts due forpayment to the InvestorEducation and Protection Fund under Section 125 ofthe Companies Act, 2013 as 31st March, 2022 (31st March, 2021: Nil).

b) Includes ''28 crores of Corporate Social Responsibility (CSR) expense related to ongoing projects as at 31st March, 2022 (31st March, 2021: Not Applicable). The same was transferred to a special account designated as "Unspent Corporate Social Responsibility Account for the Financial Year 21-22" ("UCSRA - FY 2021-22") of the Company within 30 days from end of financial year. Refer note 33 for more information about Corporate Social Responsibility expense.

NOTE 21 PROVISIONS

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.

Sale of products:

Revenue from sale of goods is recognised when control of the products being sold is transferred to our customer and when there are no longer any unfulfilled obligations. The Performance Obligations in our contracts are fulfilled at the time of dispatch, delivery or upon formal customer acceptance depending on customer terms.

Revenue is measured on the basis of contracted price, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the Government such as goods and services tax, etc. Accumulated experience is used to estimate the provision for such discounts and rebates. Revenue is only recognised to the extent that it is highly probable a significant reversal will not occur.

Our customers have the contractual right to return goods only when authorised by the Company. An estimate is made of goods that will be returned and a liability is recognised for this amount using a best estimate based on accumulated experience.

Income from services rendered:

Income from services rendered is recognised based on agreements/arrangements with the customers as the service is performed and there are no unfulfilled obligations.

Commission income on consignment sales:

Commission income on consignment sales (Consignment selling agency fees) is charged for rendering of services and for the use of the Company''s sales and distribution network. Such revenue is recognised in the accounting period in which the services are rendered in accordance with the agreement with the parties.

Government grants:

The Company has received approval under the Production Linked Incentive Scheme of the Government of India for specific product categories. Incentive under the scheme is subject to meeting certain committed investments and defined incremental sales threshold. Such grants are recognised as other operating revenue when there is a reasonable assurance that the Company will comply with all necessary conditions attached to that.

Short Term Employee Benefits

Short term employee benefits including salaries and performance incentives, are charged to standalone statement of profit and loss on an undiscounted, accrual basis during the period of employment.

Defined contribution plans

Contributions to defined contribution schemes such as employees'' state insurance, labour welfare fund, superannuation scheme, employee pension scheme etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. Company''s provident fund contribution, in respect of certain employees, is made to a Government administered fund and charged as an expense to the standalone statement of profit and loss. The above benefits are classified as Defined Contribution Schemes as the Company has no further defined obligations beyond the monthly contributions.

Defined benefit plans

In respect of certain employees, provident fund contributions are made to a trust administered by the Company. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. The liability in respect of the shortfall of interest earnings of the Fund is determined on the basis of an actuarial valuation. The Company also provides for retirement/post-retirement benefits in the form of gratuity, pensions (in respect of certain employees), compensated absences (in respect of certain employees) and medical benefits (in respect of certain employees) including to the employees of group companies.

For defined benefit plans, the amount recognised as ''Employee benefit expenses'' in the standalone statement of profit and loss is the cost of accruing employee benefits promised to employees over the year and the costs of individual events such as past/future service benefit changes and settlements (such events are recognised immediately in the Statement of Profit and Loss). The amount of net interest expense calculated by applying the liability discount rate to the net defined benefit liability or asset is charged or credited to ''Finance costs'' in the standalone statement of profit and loss. Any differences between the expected interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised immediately in ''Other comprehensive income'' and subsequently not reclassified to the standalone statement of profit and loss.

The defined benefit plan surplus or deficit on the Balance Sheet date comprises fair value of plan assets less the present value of the defined benefit liabilities using a discount rate by reference to market yields on Government bonds at the end of the reporting period.

All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Company''s net obligation into current and non-current is as per the actuarial valuation report.

Termination benefits

Termination benefits, in the nature of voluntary retirement benefits or termination benefits arising from restructuring, are recognised in the standalone statement of profit and loss. The Company recognises termination benefits at the earlier of the following dates:

(a) when the Company can no longer withdraw the offer of those benefits; or

(b) when the Company recognises costs for a restructuring that is within the scope of Ind AS 37: Provisions, Contingent Liabilities and Contingent Assets and involves the payment of termination benefits.

Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

Share-Based Payments

Employees of the Company receive remuneration in the form of share-based payments in consideration of the services rendered. Under the equity settled share based payment, the fair value on the grant date of the awards given to employees is recognised as ''employee benefit expenses'' with a corresponding increase in equity over the vesting period. The fair value of the options at the grant date is calculated by an independent valuer basis Black Scholes model. At the end of each reporting period, apart from the non-market vesting condition, the expense is reviewed and adjusted to reflect changes to the level of options expected to vest. When the options are exercised, the Company issues fresh equity shares.

VII. Above includes a contribution of ''11 crores (2020-21: ''18 crores) to subsidiary Hindustan Unilever Foundation which is a Section 8 registered Company under Companies Act, 2013. The objectives of Hindustan Unilever Foundation includes working in areas of social, economic and environmental issues such as water harvesting, health and hygiene awareness, women empowerment and enhancing capabilities of the underprivileged segments of society to meet emerging opportunities thus improving their livelihood.

VIII. Above includes ''28 crores of Corporate Social Responsibility (CSR) expense related to ongoing projects as at 31st March, 2022 (31st March, 2021: Not Applicable). The same was transferred to a special account designated as "Unspent Corporate Social Responsibility Account for the Financial Year 21-22" ("UCSRA - FY 2021-22") of the Company within 30 days from end of financial year.

I Financial Assets:

Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument.

On initial recognition, a financial asset is recognised at fair value. In case of financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction cost is recognised in the standalone statement of profit and loss. In other cases, the transaction cost is attributed to the acquisition value of the financial asset.

Financial assets are subsequently classified and measured at

- amortised cost

- fair value through profit and loss (FVTPL)

- fair value through other comprehensive income (FVOCI).

Financial assets are not reclassified subsequent to their recognition, except during the period the Company changes its business model for managing financial assets.

(a) Trade Receivables and Loans:

Trade receivables are initially recognised at fair value. Subsequently, these assets are held at amortised cost, using the effective interest rate (EIR) method net of any expected credit losses. The EIR is the rate that discounts estimated future cash income through the expected life of financial instrument.

(b) Debt Instruments:

Debt instruments are initially measured at amortised cost, fair value through other comprehensive income (''FVOCI'') or fair value through profit or loss (''FVTPL'') till derecognition on the basis of (i) the Company''s business model for managing the financial assets and (ii) the contractual cash flow characteristics of the financial asset.

(i) Measured at amortised cost:

Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortised cost using the ''EIR'' method less impairment, if any. The amortisation of EIR and loss arising from impairment, if any is recognised in the standalone statement of profit and loss.

(ii) Measured at fair value through other comprehensive income (FVOCI):

Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognised in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognised in the standalone statement of profit and loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to ''other income'' in the standalone statement of profit and loss.

(iii) Measured at fair value through profit or loss (FVTPL):

A financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised as ''other income'' in the standalone statement of profit and loss.

(c) Equity Instruments:

All investments in equity instruments classified under financial assets are initially measured at fair value, the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL.

The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument is recognised as ''other income'' in the standalone statement of profit and loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognised in OCI. Amounts recognised in OCI are not subsequently reclassified to the standalone statement of profit and loss. Dividend income on the investments in equity instruments are recognised as ''other income'' in the standalone statement of profit and loss.

(d) Derivative Financial Instruments:

The Company uses derivative financial instruments to hedge its foreign currency and commodity risks. Derivatives are measured at fair value. The treatment of changes in the value of derivative depends on their use as explained below:

(e) Cash flow hedges:

Derivatives are held to hedge the uncertainty in timing or amount of future forecast cash flows. Such derivatives are classified as being part of cash flow hedge relationships. For an effective hedge, gains and losses from changes in the fair value of derivatives are recognised in other comprehensive income. Any ineffective elements of the hedge are recognised in the standalone statement of profit and loss.

If the hedged cash flow relates to a non-financial asset, the amount accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts accumulated in other comprehensive income are taken to the standalone statement of profit and loss at the same time as the related cash flow.

When a derivative no longer qualifies for hedge accounting, any cumulative gain or loss remains in equity until the related cash flow occurs. When the cash flow takes place, the cumulative gain or loss is taken to the standalone statement of profit and loss. If the hedged cash flow is no longer expected to occur, the cumulative gain or loss is taken to the standalone statement of profit and loss immediately.

Derivatives for which hedge accounting is not applied

Derivative financial instruments for which hedge accounting is not applied are initially recognised at fair value on the date on which a derivative contract is entered and are subsequently measured at FVTPL.

Derecognition

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.

Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle them on a net basis or to realise the assets and settle the liabilities simultaneously.

Impairment of Financial Asset

The Company applies expected credit loss (ECL) model for measurement and recognition of loss allowance on the following:

i. Trade receivables

ii. Financial assets measured at amortised cost (other than trade receivables)

In case of trade receivables, the Company follows a simplified approach wherein an amount equal to lifetime ECL is measured and recognised as loss allowance.

In case of other assets (listed as ii above), the Company determines if there has been a significant increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased significantly, an amount equal to 12-month ECL is measured and recognised as loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognised as loss allowance.

Subsequently, if the credit quality of the financial asset improves such that there is no longer a significant increase in credit risk since initial recognition, the Company reverts to recognising impairment loss allowance based on 12-month ECL.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate.

Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial asset. 12-month ECL are a portion of the lifetime ECL which result from default events that are possible within 12 months from the reporting date.

ECL are measured in a manner that they reflect unbiased and probability weighted amounts determined by a range of outcomes, taking into account the time value of money and other reasonable information available as a result of past events, current conditions and forecasts of future economic conditions.

As a practical expedient, the Company uses a provision matrix to measure lifetime ECL on its portfolio of trade receivables. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates. At each reporting date, the historically observed default rates and changes in the forward-looking estimates are updated.

ECL allowance recognised (or reversed) during the period is recognised as income/ expense in the standalone statement of profit and loss under the head ''Other expenses''.

Write - off

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering the financial asset in its entirety or a portion thereof.

II Financial Liabilities:

Initial recognition and measurement

Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as fair value through profit and loss. In case of trade payables, they are initially recognised at fair value and subsequently, these liabilities are held at amortised cost, using the effective interest rate method.

Subsequent measurement

Financial liabilities are subsequently measured at amortised cost using the EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the standalone statement of profit and loss.

Derecognition

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires. The difference between the carrying value of the financial liability and the consideration paid is recognised in standalone statement of profit and loss.

C Fair Value Hierarchy

The fair value of financial instruments as referred to in note (A) above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).

The categories used are as follows:

• Level 1: Quoted prices for identical instruments in an active market;

• Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs; and

• Level 3: Inputs which are not based on observable market data.

Calculation of Fair Values

The fair values of the financial assets and liabilities are defined as the price that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended 31st March, 2021.

Financial assets and liabilities measured at fair value as at Balance Sheet date:

1. The fair values of investment in treasury bills and quoted investment in equity shares is based on the current bid price of respective investment as at the Balance Sheet date.

2. The fair values of investments in mutual fund units is based on the net asset value (''NAV'') as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.

3. The fair values of the derivative financial instruments has been determined using valuation techniques with market observable inputs. The models incorporate various inputs including the credit quality of counterparties, foreign exchange forward rates and commodity prices.

Other financial assets and liabilities

Cash and cash equivalents, trade receivables, investments in term deposits, other financial assets (except derivative financial instruments), consignment receivable, trade payables, consignment payable and other financial liabilities (except derivative financial instruments) have fair values that approximate to their carrying amounts due to their short-term nature.

The Company''s business activities are exposed to a variety of financial risks, namely liquidity risk, market risk, credit risk and commodity risk. The Company''s senior management has the overall responsibility for establishing and governing the Company''s risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.

A Management of Liquidity Risk

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company''s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.

The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended 31st March, 2022 and 31st March, 2021. Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis.

The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short-term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and other highly marketable debt investments with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.

C Management of Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations.

Trade receivables

Concentration of credit risk with respect to trade receivables are limited, due to the Company''s customer base being large and diverse. All trade receivables are reviewed and assessed for default on a quarterly basis.

Our historical experience of collecting receivables indicate a low credit risk.

Hence, trade receivables are considered to be a single class of financial assets.

Refer note 37 for accounting policy on Financial Instruments.

Other financial assets

The Company maintains exposure in cash and cash equivalents, term deposits with banks, investments in treasury bills, Government securities, money market liquid mutual funds, overnight mutual funds and derivative instrument with financial institutions. The Company has set counter-party limits based on multiple factors including financial position, credit rating, etc. The Company has given inter-corporate deposits (ICD) only to its subsidiaries amounting ''432 crores (31st March, 2021: ''280 crores).

The Company''s maximum exposure to credit risk as at 31st March, 2022 and 31st March, 2021 is the carrying value of each class of financial assets.

I Defined Contribution Plans

Refer note 30 for accounting policy on Employee Benefits.

Refer Note 30 for the Company''s contribution to the defined contribution plans with respect to provident fund and other funds.

II Defined Benefit Plans

Refer note 30 for accounting policy on Employee Benefits.

Description of Plans

Retirement Benefit Plans of the Company include Gratuity, Management Pension, Officer''s Pension and Provident Fund. Other post-employment benefit plans includes post retirement medical benefits.

Gratuity is funded through investments with an insurance service provider & the Company administered trust. Pension (Management Pension and Officer''s Pension) is managed through a Company administered trust and in some instances invested with an insurance service provider. Provident Funds are managed through the Company administered trust and Government administered fund. Post-retirement medical benefits are managed through the Company administered trust and through insurance policy.

Governance

The trustees of Gratuity, Pension, Post Retirment Medical Benefit and Provident Funds are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. They are tasked with periodic reviews of the solvency of the fund and play a role in the longterm investment, risk management and funding strategy.

Investment Strategy

The Company''s investment strategy in respect of its funded plans is implemented within the framework of the applicable statutory requirements. The plans expose the Company to a number of actuarial risks such as investment risk, interest rate risk, longevity risk and inflation risk. The Company has developed policy guidelines for the allocation of assets to different classes with the objective of controlling risk and maintaining the right balance between risk and long-term returns. To achieve this, investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

Equity Settled Share Based Payments

The members of the Company had approved ''2001 HLL Stock Option Plan'' at the Annual General Meeting held on 22nd June, 2001. The plan envisaged grant of share options to eligible employees at market price as defined in Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

This plan was amended and revised vide ''2006 HLL Performance Share Scheme'' at the Annual General Meeting held on 29th May, 2006. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Compensation Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include group underlying sales growth and free cash flow. The scheme also provided for ''Par'' Awards for the managers at different work levels.

The 2006 scheme was further amended and revised vide ''2012 HUL Performance Share Scheme'' at the Annual General Meeting held on 23rd July, 2012. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Nomination and Remuneration Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include group underlying sales growth, underlying operating margin, and cumulative operating cash flow.

The number of shares allocated for allotment under the 2006 and 2012 Performance Share Schemes is 2,00,00,000 (two crores) equity shares of ''1/- each. The schemes are monitored and supervised by the Nomination and Remuneration Committee of the Board of Directors in compliance with the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and amendments thereof from time to time.

Cash Settled Share Based Payments

The employees of the Company are eligible for Unilever PLC (the ''Holding Company'') share awards namely, the Management Co-Investment Plan (MCIP), the Performance Share Plan (PSP) and the SHARES Plan. The MCIP allowed eligible employees to invest up to 100% of their annual bonus in the shares of the Holding Company and to receive a corresponding award of performance-related shares. Under PSP, eligible employees receive annual awards of the Holding Company''s shares. The awards under MCIP and PSP plans will vest after 4 & 3 years respectively between 0% and 150% of grant level, depending on the achievement of the performance metrics. The performance metrics of PSP are percentage business winning share, Cumulative Free Cash Flow, Return in Invested Capital and progress made against our sustainability goals. The performance metrics of MCIP are underlying sales growth, underlying EPS growth, return on invested capital and sustainability progress index. Under the SHARES Plan, eligible employees can invest upto ''16,897 per month in the shares of the Holding Company and after three years one share is granted free of cost to the employees for every three shares invested, provided they hold the shares bought for three years. The Holding Company charges the Company for the grant of shares to the Company''s employees at the end of the 3/4 years based on the market value of the shares on the exercise date. The Company recognises the fair value of the liability and expense for these plans over the vesting period based on the management''s estimate of the vesting and forfeiture conditions.

Business combinations are accounted for using the acquisition accounting method as at the date of the acquisition, which is the date at which control is transferred to the Company. The consideration transferred in the acquisition and the identifiable assets acquired and liabilities assumed are recognised at fair values on their acquisition date. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. The Company recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest''s proportionate share of the acquired entity''s net identifiable assets. Consideration transferred does not include amounts related to settlement of pre-existing relationships. Such amounts are recognised in the standalone statement of profit and loss.

Transaction costs are expensed in the standalone statement of profit and loss as incurred, other than those incurred in relation to the issue of debt or equity securities which are directly adjusted in other equity. Any contingent consideration payable is measured at fair value at the acquisition date. Subsequent changes in the fair value of contingent consideration are recognised in the standalone statement of profit and loss.

I Acquisition of Indulekha Brand

On 7th April, 2016, the Company completed the acquisition of the flagship brand ''Indulekha'' from Mosons Extractions Private Limited (''MEPL'') and Mosons Enterprises (collectively referred to as ''Mosons'' and acquisition of the specified intangible assets referred to as the ''Business acquisition''). The deal envisaged the acquisition of the trademarks ''Indulekha'' and ''Vayodha'', intellectual property, design and knowhow for a total cash consideration of ''330 crores and a deferred consideration of 10% of the domestic turnover of the brands each year, payable annually for a 5 year period commencing financial year 2018-19.

Basis the projection of the domestic turnover of the brand, the contingent consideration is subject to revision on a yearly basis. As at 31 st March, 2021, the fair value of the contingent consideration was ''80 crores which was classified as other financial liability.

Deferred contingent consideration

Based on actual performance in financial year 2021-22, contingent consideration paid and current view of future projections forthebrand,the Companyhasreviewedandfairvaluedthedeferredcontingentconsiderationsopayable.As at 31stMarch, 2022, the fairvalue ofthe contingent consideration is''36 croreswhich is classified as otherfinancialliability. The determination of the fair value as at Balance Sheet date is based on discounted cash flow method. The key input used in determining the fair value of deferred contingent consideration were domestic turnover projection of the brand.

II Acquisition of VWash Brand

On 25th June, 2020, the Company completed the acquisition of the brand ''VWash'' from Glenmark Pharmaceuticals Limited. The deal comprised the acquisition of the brand ''VWash'', along with other trademarks, copyrights, know-how and designs associated with the brand (''VWash Business'') and certain packing / product moulds for a cash consideration of ''286 crores including a holdback consideration of ''10 crores; plus a deferred contingent consideration of 5% of net turnover payable annually for a 3 year period commencing financial year 2021-22.

Basis the projection of the domestic turnover of the brand, the contingent consideration is subject to revision on a yearly basis. As at 31st March, 2021, the fair value of the contingent consideration was ''12 crores which was classified as other financial liability.

Deferred contingent consideration

Based on actual performance in financial year 2021-22, contingent consider


Mar 31, 2021

Provisions and Contingent Liabilities:

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.

If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.

(i) Revenue Recognition:

Revenue from sale of goods is recognised when control of the products being sold is transferred to our customer and when there are no longer any unfulfilled obligations. The Performance Obligations in our contracts are fulfilled at the time of dispatch, delivery or upon formal customer acceptance depending on customer terms.

Revenue is measured on the basis of contracted price, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the Government such as goods and services tax, etc. Accumulated experience is used to estimate the provision for such discounts and rebates. Revenue is only recognised to the extent that it is highly probable a significant reversal will not occur.

Our customers have the contractual right to return goods only when authorised by the Company. An estimate is made of goods that will be returned and a liability is recognised for this amount using a best estimate based on accumulated experience.

Income from services rendered is recognised based on agreements/arrangements with the customers as the service is performed and there are no unfulfilled obligations.

Commission income on consignment sales (Consignment selling agency fees) is charged for rendering of services and for the use of the Company''s sales and distribution network. Such revenue is recognised in the accounting period in which the services are rendered in accordance with the agreement with the parties.

I nterest income is recognised using the effective interest rate (EIR) method.

Dividend income on investments is recognised when the right to receive dividend is established.

certain employees) and medical benefits (in respect of certain employees) including to the employees of group companies.

For defined benefit plans, the amount recognised as ''Employee benefit expenses'' in the Statement of Profit and Loss is the cost of accruing employee benefits promised to employees over the year and the costs of individual events such as past/future service benefit changes and settlements (such events are recognised immediately in the Statement of Profit and Loss). The amount of net interest expense calculated by applying the liability discount rate to the net defined benefit liability or asset is charged or credited to ''Finance costs'' in the Statement of Profit and Loss. Any differences between the expected interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised immediately in ''Other comprehensive income'' and subsequently not reclassified to the Statement of Profit and Loss.

The defined benefit plan surplus or deficit on the Balance Sheet date comprises fair value of plan assets less the present value of the defined benefit liabilities using a discount rate by reference to market yields on Government bonds at the end of the reporting period.

All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Company''s net obligation into current and non-current is as per the actuarial valuation report.

Termination benefits

Termination benefits, in the nature of voluntary retirement benefits or termination benefits arising from restructuring, are recognised in the Statement of Profit and Loss. The Company recognises termination benefits at the earlier of the following dates:

(a) when the Company can no longer withdraw the offer of those benefits; or

(b) when the Company recognises costs for a restructuring that is within the scope of Ind AS 37: Provisions, Contingent Liabilities and Contingent Assets and involves the payment of termination benefits.

Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

(j) Government Grant:

The Company is entitled to ''Scheme of budgetary support'' under Goods and Service Tax Regime in respect of eligible manufacturing units located in specified regions. Such grants are measured at amount receivable from the Government and are recognised as other operating revenue when there is a reasonable assurance that the Company will comply with all necessary conditions attached to that.

Income from such grants is recognised on a systematic basis over the periods to which they relate.

(k) Expenditure:

Expenses are accounted on accrual basis.

(l) Employee Benefits:

Short-Term Employee Benefits

Short-term employee benefits including salaries and performance incentives, are charged to standalone statement of profit and loss on an undiscounted, accrual basis during the period of employment.

Defined contribution plans

Contributions to defined contribution schemes such as employees'' state insurance, labour welfare fund, superannuation scheme, employee pension scheme etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. Company''s provident fund contribution, in respect of certain employees, is made to a Government administered fund and charged as an expense to the Statement of Profit and Loss. The above benefits are classified as Defined Contribution Schemes as the Company has no further defined obligations beyond the monthly contributions.

Defined benefit plans

In respect of certain employees, provident fund contributions are made to a trust administered by the Company. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. The liability in respect of the shortfall of interest earnings of the Fund is determined on the basis of an actuarial valuation. The Company also provides for retirement/post-retirement benefits in the form of gratuity, pensions (in respect of certain employees), compensated absences (in respect of

Share-Based Payments

Employees of the Company receive remuneration in the form of share-based payments in consideration of the services rendered. Under the equity settled share based payment, the fair value on the grant date of the awards given to employees is recognised as ''employee benefit expenses'' with a corresponding increase in equity over the vesting period. The fair value of the options at the grant date is calculated by an independent valuer basis Black Scholes model. At the end of each reporting period, apart from the nonmarket vesting condition, the expense is reviewed and adjusted to reflect changes to the level of options expected to vest. When the options are exercised, the Company issues fresh equity shares.

For cash-settled share-based payments, the fair value of the amount payable to employees is recognised as ''employee benefit expenses'' with a corresponding increase in liabilities, over the period of non-market vesting conditions getting fulfilled. The liability is remeasured at each reporting period up to, and including the settlement date, with changes in fair value recognised in employee benefits expenses. Refer Note 39 for details.

(m) Impairment of Non-Financial Assets:

Assessment for impairment is done at each Balance Sheet date as to whether there is any indication that a non-financial asset may be impaired. Indefinite life intangible assets are subject to a review for impairment annually or more frequently if events or circumstances indicate that it is necessary. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets is considered as a cash generating unit. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company''s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

If any indication of impairment exists, an estimate of the recoverable amount of the individual asset/ cash generating unit is made. Asset/cash generating unit whose carrying value exceeds their recoverable amount are written down to the recoverable amount by recognising the impairment loss as an expense in the Statement of Profit and Loss.

The impairment loss is allocated first to reduce the carrying amount of any goodwill (if any) allocated to the cash generating unit and then to the other assets of the unit, pro rata based on the carrying amount of each asset in the unit. Recoverable amount is higher of an asset''s or cash generating unit''s value in use and its fair value less cost of disposal. Value in use is estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are considered. If no such transactions can be identified, an appropriate valuation model is used.

Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased. Basis the assessment a reversal of an impairment loss for an asset other than goodwill is recognised in the Statement of Profit and Loss.

(n) Income Taxes:

Income tax expense for the year comprises of current tax and deferred tax. It is recognised in the Statement of Profit and Loss except to the extent it relates to a business combination or to an item which is recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable/receivable on the taxable income/loss for the year using applicable tax rates for the relevant period, and any adjustment to taxes in respect of previous years. Interest expenses and penalties, if any, related to income tax are included in finance cost and other expenses respectively. Interest Income, if any, related to income tax is included in other income.

Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.

A deferred tax liability is recognised based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, by the end of the reporting period. Deferred tax assets are recognised only to the extent that it is probable that

future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.

Uncertain Tax position

Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. The provision is estimated based on one of two methods, the expected value method (the sum of the probability weighted amounts in a range of possible outcomes) or the single most likely amount method, depending on which is expected to better predict the resolution of the uncertainty.

(o) Leases:

The Company''s lease asset classes primarily consist of leases for Land and Buildings and Plant & Equipment. The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

(i) the contract involves the use of an identified asset

(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and

(iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognises a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (shortterm leases) and leases of low value assets. For

these short-term and leases of low value assets, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.

The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.

The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability and reducing the carrying amount to reflect the lease payments made.

A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the leased assets.

Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

(p) Foreign Currencies:

Foreign currency transactions are translated into the functional currency using exchange rates at the date of the transaction. Foreign exchange gains and losses from settlement of these transactions are recognised in the Statement of Profit and Loss. Foreign currency denominated monetary assets and liabilities are translated into functional currency at exchange rates in effect at the balance sheet date, the gain or loss arising from such translations are recognised in the statement of profit and loss.

(q) Earnings Per Share:

Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity

shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

(r) Business Combination:

Business combinations are accounted for using the acquisition accounting method as at the date of the acquisition, which is the date at which control is transferred to the Company. The consideration transferred in the acquisition and the identifiable assets acquired and liabilities assumed are recognised at fair values on their acquisition date. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. The Company recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest''s proportionate share of the acquired entity''s

net identifiable assets. Consideration transferred does not include amounts related to settlement of pre-existing relationships. Such amounts are recognised in the Statement of Profit and Loss.

Transaction costs are expensed in the standalone statement of profit and loss as incurred, other than those incurred in relation to the issue of debt or equity securities which are directly adjusted in other equity. Any contingent consideration payable is measured at fair value at the acquisition date. Subsequent changes in the fair value of contingent consideration are recognised in the Statement of Profit and Loss.

(s) Indemnification Asset:

Initial recognition

I ndemnification asset is recognised at fair value at the time when the seller contractually agrees to indemnify, in whole or in part, for a particular uncertainty. It is initially measured on the same basis as defined in the agreement, subject to collectability.

Subsequent measurement

As at each reporting period, the Company re-assesses the indemnification asset that was recognised initially on the same basis as defined in the contract subject to collectability of such asset. The Company derecognises the indemnification asset only when it collects the asset, sells it or otherwise loses the right to it.


Mar 31, 2019

Note 1 : COMPANY INFORMATION

Hindustan Unilever Limited (the ‘Company’) is a public limited company domiciled in India with its registered office located at Unilever House, B.D. Sawant Marg, Chakala, Andheri (East), Mumbai 400 099. The Company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Company is in the FMCG business comprising primarily of Home Care, Beauty & Personal Care and Foods & Refreshment segments. The Company has manufacturing facilities across the country and sells primarily in India.

Note 2 : BASIS OF PREPARATION, MEASUREMENT AND SIGNIFICANT ACCOUNTING POLICIES

2.1 BASIS OF PREPARATION AND MEASUREMENT

(a) Basis of preparation

These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time.

The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements. All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

The financial statements are presented in INR, the functional currency of the Company. Items included in the financial statements of the Company are recorded using the currency of the primary economic environment in which the Company operates (the ‘functional currency’).

Transactions and balances with values below the rounding off norm adopted by the Company have been reflected as “0” in the relevant notes to these financial statements.

The financial statements of the Company for the year ended 31st March 2019 were approved for issue in accordance with the resolution of the Board of Directors on 3rd May 2019.

(b) Basis of measurement

These financial statements are prepared under the historical cost convention unless otherwise indicated.

2.2 KEY ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements requires management to make judgments, estimates and assumptions in the application of accounting policies that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Continuous evaluation is done on the estimation and judgments based on historical experience and other factors, including expectations of future events that are believed to be reasonable. Revisions to accounting estimates are recognised prospectively.

Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year, are included in the following notes:

(a) Measurement of defined benefit obligations – Note 40

(b) Measurement and likelihood of occurrence of provisions and contingencies - Note 20 and 24

(c) Recognition of deferred tax assets - Note 9

(d) Key assumptions used in discounted cash flow projections - Note 42

(e) Impairment of Intangible assets - Note 4

2.3 RECENT ACCOUNTING DEVELOPMENTS

Standards issued but not yet effective:

In March 2019, the Ministry of Corporate Affairs (MCA) issued the Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, 2019, notifying Ind AS 116 ‘Leases’ and amendments to certain IND AS. The Standard / amendments are applicable to the Company with effect from 1st April 2019.

i. IND AS 116: Leases

The standard changes the recognition, measurement, presentation and disclosure of leases. It requires:

- Lessees to record all leases on the balance sheet with exemptions available for low value and shortterm leases.

- At the commencement of a lease, a lessee will recognise lease liability and an asset representing the right to use the asset during the lease term (right-of-use asset).

- Lessees will subsequently reduce the lease liability when paid and recognise depreciation on the right-of-use asset.

- A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the right-of-use asset.

- The standard has no impact on the actual cash flows of a Company. However, operating lease payments currently expensed as operating cash outflows will instead be capitalised and presented as financing cash outflows in the statement of cash flows.

The Company has reviewed all relevant contracts to identify leases and preparations for this standard are substantially complete. This review included:

- an assessment about whether the contract depends on a specific asset,

- whether the company obtains substantially all the economic benefits from the use of that asset; and

- whether the Company has the right to direct the use of that asset.

From 1st April 2019 the Company will focus on ensuring that the revised process for identifying and accounting for leases is followed.

The estimated impact of IND AS 116 on the Company’s financial statements at 31st March 2019 is as follows:

Balance sheet:

The Company estimates that the adoption of IND AS 116 will result in an increase in total assets of approximately Rs. 675 crores. Liabilities are expected to increase by approximately Rs. 725 crores.

Statement of Profit and Loss:

The Company estimates that the adoption of IND AS 116 will result in increased depreciation of approximately Rs. 345 crores from the right-of-use assets. This will offset the reduction in operating lease expenses of around Rs. 400 crores per year, resulting in an overall increase in Earnings Before Interest and Tax (EBIT) of Rs. 55 crores. Finance costs are expected to increase by approximately Rs. 60 crores per year due to the interest recognised on lease liabilities.

Statement of Cash Flows:

The Company estimates that the adoption of IND AS 116 will increase cash flows from operating activities by approximately Rs. 400 crores with a related decrease in cash flows used in financing activities of Rs. 400 crores which relates to lease payments.

ii. Other Amendments

The MCA has notified below amendments which are effective 1st April 2019:

- Appendix C to Ind AS 12, Income taxes

- Amendments to Ind AS 103, Business Combinations

- Amendments to Ind AS 109, Financial Instruments

- Amendments to Ind AS 111, Joint Arrangements

- Amendments to Ind AS 19, Employee Benefits

- Amendments to Ind AS 23, Borrowing Costs

- Amendments to Ind AS 28, Investments to Associates and Joint Ventures

Based on Preliminary work, the Company does not expect these amendments to have any significant impact on its Financial statements.

NOTES :

(a) Buildings include Rs. 0 crore (March 31, 2018: Rs. 0 crore) being the value of shares in co-operative housing societies.

(b) The title deeds of Freehold Land aggregating Rs. 0 crore (31st March, 2018: Rs. 0 crores), Leasehold Land, net block aggregating Rs. 1 crore, (31st March, 2018: Rs. 1 crore) are in the process of perfection of title.

(c) Additions in capital expenditure of Rs. 2 crores (2017-18: Rs. 5 crores) and Rs. 0 crores (2017-18: Rs. 0 crores) incurred at Company’s inhouse R&D facilities at Mumbai and Bengaluru respectively are eligible for weighted deduction under section 35(2AB) of the Income Tax Act, 1961.

(d) The Property, Plant and Equipment in 3A includes assets given on lease given in the below table:

IMPAIRMENT CHARGES

The goodwill and indefinite life intangible assets are tested for impairment and accordingly no impairment charges were recognised for FY 2018-19 (FY 2017-18: Nil).

SIGNIFICANT CASH GENERATING UNITS (CGUs)

The Company has identified its reportable segments, i.e. Home Care, Beauty & Personal Care, Foods & Refreshment and Others as the CGUs. The goodwill and brand (with indefinite life) acquired through business combination has been allocated to CGU ‘Beauty & Personal Care’ and “Foods & Refreshment” segment of the Company. The carrying amount of goodwill and brand (with indefinite life) as at March 31, 2019 is Rs. 36 crores and Rs. 311 crores respectively.

The projections cover a period of five years, as the Company believes this to be the most appropriate time scale over which to review and consider annual performances before applying a fixed terminal value multiple to the final year cash flows. The growth rates used to estimate future performance are based on the estimates from past performance. Segmental margins are based on FY 2018-19 performance. Weighted Average Cost of Capital % (WACC) = Risk free return ( Market risk premium x Beta for the Company).

The Company has performed sensitivity analysis around the base assumptions and has concluded that no reasonable change in key assumptions would result in the recoverable amount of the CGU to be less than the carrying value.

INVESTMENT IN ASSOCIATE

The Company holds 24% of equity in Comfund Consulting Limited and 26% equity and preference capital in Aquagel Chemicals (Bhavnagar) Private Limited. The Company does not exercise significant influence or control on decisions of the investee. Hence, they are not being construed as associate companies.

(a) Finished goods includes good purchased for re-sale, as both are stocked together.

(b) During FY 2018-19 an amount of Rs. 132 crores (31st March, 2018: Rs. 165 crores) was charged to the Statement of Profit and Loss on account of damaged and slow moving inventory. The reversal on account of above during the year amounted to Nil (31st March, 2018: Nil).

b) Rights, preferences and restrictions attached to shares

Equity shares: The Company has one class of equity shares having a par value of Rs. 1 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

B. Nature and purpose of reserves

(a) Capital Reserve: During amalgamation, the excess of net assets acquired, over the cost of consideration paid is treated as capital reserve.

(b) Capital Redemption Reserve: The Company has recognised Capital Redemption Reserve on buyback of equity shares from its retained earnings. The amount in Capital Redemption Reserve is equal to nominal amount of the equity shares bought back.

(c) Securities Premium : The amount received in excess of face value of the equity shares is recognised in Securities Premium. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium

(d) Employee Stock Options Outstanding Account: The fair value of the equity-settled share based payment transactions is recognised in Statement of Profit and Loss with corresponding credit to Employee Stock Options Outstanding Account.

(e) General Reserve: The Company had transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013. During the year the Company has reclassified the amount standing to the credit of the General Reserves to the Retained Earnings subsequent to approval by Hon’ble National Company Law Tribunal on Scheme of arrangement.

(f) Retained Earnings: Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.

(g) Other Reserves: The Company has recognised Other Reserves on amalgamation of Brooke Bond Lipton India Limited as per statutory requirements. This reserve is not available for capitalisation/declaration of dividend/ share buy-back. Further it also includes capital subsidy and revaluation reserve.

(h) Items of Other Comprehensive Income

i) Remeasurements of Net Defined Benefit Plans: Differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised in ‘Other comprehensive income’ and subsequently not reclassified to the Statement of Profit and Loss.

ii) Debt Instruments through Other Comprehensive Income: The fair value change of the debt instruments measured at fair value through other comprehensive income is recognised in Debt instruments through Other Comprehensive Income. Upon derecognition, the cumulative fair value changes on the said instruments are reclassified to the Statement of Profit and Loss.

C. Other Comprehensive Income accumulated in Other Equity, net of tax

The disaggregation of changes in other comprehensive income by each type of reserve in equity is shown below:

D Capital Management

Equity share capital and other equity are considered for the purpose of Company’s capital management.

The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure of the Company is based on management’s judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence.

The management and the Board of Directors monitor the return on capital as well as the level of dividends to shareholders. The Company may take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

(i) It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgements/decisions pending with various forums/ authorities.

(ii) The Company does not expect any reimbursements in respect of the above contingent liabilities.

(iii) The Company’s pending litigations comprise of claims against the Company by employees and pertaining to proceedings pending with various direct tax, indirect tax and other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial statements.

(iv) The Company has given Bank Guarantees in respect of certain contingent liabilities included above.

(v) There has been a Supreme Court (SC) judgement dated 28th February 2019, relating to components of salary structure that need to be taken into account while computing the contribution to provident fund under the EPF Act. There are interpretative aspects related to the Judgement including the effective date of application. The Company will continue to assess any further developments in this matter for the implications on financial statements, if any.

B COMMITMENTS

i) Operating lease commitments

The Company’s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godown etc.) and computers. These leasing arrangements which are cancellable (other than those specified below), range between 11 months and 10 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as rent in the Statement of Profit and Loss.

The Company has entered into agreement to take certain land and building on operating lease for warehousing activities from a third party. The lease arrangement is for 10 years, including a non-cancellable term of 9 years. The lease rent of Rs. 13 crores (201718: Rs. 13 crores) on such lease is included in Other expenses.

(c) The Company has spent Rs. 126 crores (2017-18: Rs. 116 crores) towards various schemes of Corporate Social Responsibility as prescribed under section 135 of the Companies Act, 2013. The details are:

I. Gross amount required to be spent by the Company during the year: Rs. 124 crores (2017-18: Rs. 112 crores)

II. Amount spent during the year on:

III. Above includes a contribution of Rs. 8 crores (2017-18: Rs. 32 crores) to Hindustan Unilever Foundation, a subsidiary registered under Section 8 of the Companies Act, 2013, with the main objectives of working in the areas of social, economic and environmental issues such as water harvesting, health and hygiene awareness, women empowerment and enable the less privileged segments of the society to improve their livelihood by enhancing their means and capabilities to meet the emerging opportunities.

IV. The Company does not carry any provisions for Corporate social responsibility expenses for current year and previous year.

Proposed dividend on equity shares is subject to the approval of the shareholders of the Company at the Annual General Meeting and not recognised as liability as at the Balance Sheet date.

“Dividend Distribution Tax (DDT)-net, pertaining to the current year comprises credit in respect of tax paid under section 115 O of the Income-tax Act, 1961 by the Company on dividend received from its subsidiaries.

NOTE 3 : FINANCIAL INSTRUMENTS

Refer Note 2.4 (g) for accounting policy on Financial Instruments.

A ACCOUNTING CLASSIFICATIONS AND FAIR VALUES

The carrying amounts and fair values of financial instruments by class are as follows:

The Company has disclosed financial instruments such as cash and cash equivalents, other bank balances, trade receivables, receivables from group companies, trade payables and unpaid dividends at carrying value because their carrying amounts are a reasonable approximation of the fair values due to their short term nature.

B INCOME, EXPENSES, GAINS OR LOSSES ON FINANCIAL INSTRUMENTS

Interest income and expenses, gains or losses recognised on financial assets and liabilities in the Statement of Profit and Loss are as follows:

C FAIR VALUE HIERARCHY

The fair value of financial instruments as referred to in note (A) above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).

The categories used are as follows:

- Level 1: Quoted prices for identical instruments in an active market;

- Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs; and

CALCULATION OF FAIR VALUES

The fair values of the financial assets and liabilities are defined as the price that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended 31st March, 2018.

Financial assets and liabilities measured at fair value as at Balance Sheet date:

1. The fair values of investment in treasury bills and quoted investment in equity shares is based on the current bid price of respective investment as at the Balance Sheet date.

2. The fair values of investments in mutual fund units is based on the net asset value (‘NAV’) as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.

3. The fair values of the derivative financial instruments has been determined using valuation techniques with market observable inputs. The models incorporate various inputs including the credit quality of counter-parties and foreign exchange forward rates.

Other financial assets and liabilities

- Cash and cash equivalents, trade receivables, investments in term deposits, other financial assets (except derivative financial instruments), trade payables, and other financial liabilities (except derivative financial instruments) have fair values that approximate to their carrying amounts due to their short-term nature.

- Loans have fair values that approximate to their carrying amounts as it is based on the net present value of the anticipated future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

NOTE 4 : FINANCIAL RISK MANAGEMENT

The Company’s business activities are exposed to a variety of financial risks, namely liquidity risk, market risks and credit risk. The Company’s senior management has the overall responsibility for establishing and governing the Company’s risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Company’s risk management policies. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.

A MANAGEMENT OF LIQUIDITY RISK

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company’s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.

The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended 31st March, 2019 and 31st March, 2018. Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis.

The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term surplus cash generated , over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and other highly marketable debt investments with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.

The following table shows the maturity analysis of the Company’s financial liabilities based on contractually agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.

B MANAGEMENT OF MARKET RISK

The Company’s size and operations result in it being exposed to the following market risks that arise from its use of financial instruments::

- current risk;

- price risk; and

- interest rate risk

The above risks may affect the Company’s income and expenses, or the value of its financial instruments. The Company’s exposure to and management of these risks are explained below.

C MANAGEMENT OF CREDIT RISK

Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations.

Trade receivables

Concentration of credit risk with respect to trade receivables are limited, due to the Company’s customer base being large and diverse. All trade receivables are reviewed and assessed for default on a quarterly basis.

Our historical experience of collecting receivables indicate a low credit risk. Hence, trade receivables are considered to be a single class of financial assets.

Refer note 2.4(g) for accounting policy on Financial Instruments.

Other financial assets

The Company maintains exposure in cash and cash equivalents, term deposits with banks, investments in treasury bills, government securities, money market liquid mutual funds and derivative instrument with financial institutions. The Company has set counter-party limits based on multiple factors including financial position, credit rating, etc. The Company has given intercorporate deposits (ICD) only to its subsidiaries amounting Rs. 191 crores (31st March, 2018: Rs. 226 crores).

The Company’s maximum exposure to credit risk as at 31st March, 2019 and 31st March, 2018 is the carrying value of each class of financial assets.

NOTE 5 : DEFINED BENEFIT PLANS

Refer note 2.4(l) for accounting policy on Employee Benefits.

Description of Plans

Retirement Benefit Plans of the Company include Gratuity, Management Pension, Officer’s Pension and Provident Fund. Other post-employment benefit plans includes post retirement medical benefits.

Gratuity is funded through investments mostly with an insurance service provider and partly through direct investment under Hind Lever Gratuity Fund. Pension (Management Pension and Officer’s Pension) for most employees is managed through a trust, investments with an insurance service provider and for some employees investments are managed through Company managed trust. Provident Fund for most of the employees are managed through trust investments and for some employees through government administered fund. Post-retirement medical benefits are managed through investment made under Company managed trust.

Governance

The trustees of the trust fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. They are tasked with periodic reviews of the solvency of the fund and play a role in the long-term investment, risk management and funding strategy.

Investment Strategy

The Company’s investment strategy in respect of its funded plans is implemented within the framework of the applicable statutory requirements. The plans expose the Company to a number of actuarial risks such as investment risk, interest rate risk, longevity risk and inflation risk. The Company has developed policy guidelines for the allocation of assets to different classes with the objective of controlling risk and maintaining the right balance between risk and long-term returns in order to limit the cost to the Company of the benefits provided. To achieve this, investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

A. Balance Sheet

The assets, liabilities and surplus/(deficit) position of the defined benefit plans at the Balance Sheet date were:

None of the plans invest directly in any property occupied by the Company or any financial securities issued by the Company.

E. Assumptions

With the objective of presenting the plan assets and plan obligations of the defined benefits plans at their fair value on the Balance Sheet, assumptions under Ind AS 19 are set by reference to market conditions at the valuation date.

The estimates of future salary increases, considered in actuarial valuation, takes into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Demographic Assumptions

Mortality in Service: Indian Assured Lives Mortality (2012-14) Ultimate table

Mortality in Retirement: LIC Buy-out Annuity Rates & UK published S1PA mortality table adjusted for Indian lives.

F. Sensitivity Analysis

The sensitivity of the overall plan obligations to changes in the weighted key assumptions are:

The above sensitivity analysis have been determined based on reasonable possible changes of the respective assumptions occurring at the end of the year and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the same method is used to calculate the liability recognised in the Balance Sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous year.

NOTE 6 : SHARE BASED PAYMENTS

Refer note 2.4(l) for accounting policy on Share Based Payments.

EQUITY SETTLED SHARE BASED PAYMENTS

The members of the Company had approved Rs. 2001 HLL Stock Option Plan’ at the Annual General Meeting held on 22nd June, 2001. The plan envisaged grant of share options to eligible employees at market price as defined in Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

This plan was amended and revised vide Rs. 2006 HLL Performance Share Scheme’ at the Annual General Meeting held on 29th May, 2006. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Compensation Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include group underlying sales growth and free cash flow. The scheme also provided for ‘Par’ Awards for the managers at different work levels.

The 2006 scheme was further amended and revised vide Rs. 2012 HUL Performance Share Scheme’ at the Annual General Meeting held on 23rd July, 2012. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Nomination and Remuneration Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include group underlying sales growth, core operating margin improvement and operating cash flow.

The number of shares allocated for allotment under the 2006 and 2012 Performance Share Schemes is 2,00,00,000 (two crores) equity shares of Rs. 1/- each. The schemes are monitored and supervised by the Nomination and Remuneration Committee of the Board of Directors in compliance with the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and amendments thereof from time to time.

The Employee Stock Option Plan includes employees of Hindustan Unilever Limited, its subsidiaries and a subsidiary of parent company.

The risk free interest rates are determined based on the zero-coupon sovereign bond yields with maturity equal to the expected term of the option. Volatility calculation is based on historical stock prices using standard deviation of daily change in stock price. The historical period is taken into account to match the expected life of the option. Dividend yield has been calculated taking into account expected rate of dividend on equity share price as on grant date.

CASH SETTLED SHARE BASED PAYMENTS

The employees of the Company are eligible for Unilever PLC (the ‘Holding Company’) share awards namely, the Management CoInvestment Plan (MCIP), the Global Performance Share Plan (GPSP) and the SHARES Plan. The MCIP allows eligible employees to invest up to 100% of their annual bonus in the shares of the Holding Company and to receive a corresponding award of performance-related shares. Under GPSP, eligible employees receive annual awards of the holding company’s shares. The awards under MCIP and GPSP plans will vest after 3-4 years between 0% and 150% of grant level, depending on the acheivement of the performance metrics. The performance metrics of GPSP are underlying sales growth, operating cash flow and core operating margin improvement. The performance metrics of MCIP are underlying sales growth, underlying EPS growth and sustainability progress index. Under the SHARES Plan, eligible employees can invest upto Rs. 16,897 per month in the shares of the Holding Company and after three years one share is granted free of cost to the employees for every three shares invested, provided they hold the shares bought for three years. The Holding Company charges the Company for the grant of shares to the Company’s employees at the end of the 3/4 years based on the market value of the shares on the exercise date. The Company recognises the fair value of the liability and expense for these plans over the vesting period based on the management’s estimate of the vesting and forfeiture conditions.

The Company grants share appreciation rights (SARs) to eligible employees for all cash settled share based plans mentioned above that entitles them to a cash/shares after three years of service. The amount of payment is also determined basis increase in the share price of the Holding Company between grant date and the time of exercise.

NOTE 7 : BUSINESS COMBINATION

Refer note 2.4(r) for accounting policy on Business Combination.

Acquisition of Indulekha Brand

On April 07, 2016, the Company completed the acquisition of the flagship brand ‘Indulekha’ from Mosons Extractions Private Limited (‘MEPL’) and Mosons Enterprises (collectively referred to as ‘Mosons’ and acquisition of the specified intangible assets referred to as the ‘Business acquisition’). The deal envisaged the acquisition of the trademarks ‘Indulekha’ and ‘Vayodha’, intellectual property, design and knowhow for a total cash consideration of Rs. 330 crores and a deferred consideration of 10% of the domestic turnover of the brands each year, payable annually for a 5 year period commencing financial year 2018-19.

Basis the projection of the domestic turnover of the brand, the contingent consideration is subject to revision on a yearly basis. As at 31st March 2018, the fair value of the contingent consideration was Rs. 104 crores which was classified as other financial liability.

Deferred contingent consideration

Based on actual performance in financial year 2018-19 and current view of future projections for the brand, the Company has reviewed and fair valued the deferred contingent consideration so payable. As at 31st March 2019, the fair value of the contingent consideration is Rs. 157 crores which is classified as other financial liability.

The determination of the fair value as at Balance Sheet date is based on discounted cash flow method. The key inputs used in determining the fair value of deferred contingent consideration were domestic turnover projections of the brand and weighted average cost of capital.

Acquistion of Adityaa Milk Brand

On September 26, 2018, the Company completed the acquisition of the brand ‘ Adityaa Milk’ and its front-end distribution network from Vijaykant Dairy and Food Products Limited [VDFPL]. The deal comprised the acquisiton of the brand ‘ Adityaa Milk’, customer relationship, technical know-how, Property, Plant and Equipment, working capital and other intangible assets for a total consideration of Rs. 65 crores and a deferred consideration of Rs. 18 crores. The transaction is accounted as business combination under Ind AS 103

The acquisition is in line with the Company’s strategic intent to strengthen its leadership position in the rapidly growing Ice Cream and Frozen Dessert market in India. ‘Adityaa Milk’ brings to the Company, a premium brand with strong credentials around dairy and dairy-based product that will complement its existing portfolio.

Deferred contingent consideration

The Contingent consideration is payable after 3 year from acquisition date and accrodignly recognised at fair value of Rs. 18 crores. Determination of the fair value as at balance sheet date is based on discounted cash flow method. Contingent consideration is arrived basis weighted average probability approach of achieving various financial and non financial performance targets

Assets acquired and liabilities assumed:

The fair values of identifiable assets acquired and liabilities assumed as at the date of acquisition were:

Acquisition-related costs

In addition to cash consideration mentioned above, acquisition- related costs of Rs. 0 crore paid towards transfer of assets are included in ‘Exceptional items’ in the Statement of Profit and Loss.

Impact of acquisition on the results

The acquired business contributed revenue of Rs. 31 crores and loss (before tax) of Rs. 12 crores for the year ended 31st March, 2019 including one time integration costs.

NOTE 8 : RELATED PARTY DISCLOSURES

A. Enterprises exercising control

(i) Holding Company : Unileer P!c

B. Enterprises where control exists

(i) Subsidiaries : Unilever India Exports Limited (100%)

(Extent of holding) Lakme Lever Private Limited (100%)

Unilever Nepal Limited (80%)

Pond’s Exports Limited (90%)

Daverashola Estates Private Limited (100%)

Jamnagar Properties Private Limited (100%)

Bhavishya Alliance Child Nutrition Initiatives (100%) (Section 8 Company) Hindustan Unilever Foundation (76%) (Section 8 Company)

Hindlever Trust Limited (100%)

Levers Associated Trust Limited (100%)

Levindra Trust Limited (100%)

(ii) Trust : Hindustan Unilever Limited Securitisation of Retirement Benefit Trust (100% control)

(iii) Joint Ventures : Kimberly Clark Lever Private Limited (50% control, ceases to be Joint venture after 29th September, 2017)

Terms and conditions of transactions with related parties

All Related Party Transactions entered during the year were in ordinary course of the business and are on arm’s length basis.

For the year ended 31st March, 2019, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (2017-18: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

NOTE 9:

The Company has a process whereby periodically all long-term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long-term contracts (including derivative contracts) has been made in the books of accounts.

NOTE 10 :

The Company has disclosed segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, in terms of Paragraph 3 of Ind AS 108 ‘Operating Segments’, no disclosures related to segments are presented in this standalone financial statements.


Mar 31, 2018

NOTE 1 : FINANCIAL RISK MANAGEMENT

The Company''s business activities are exposed to a variety of financial risks, namely liquidity risk, market risks and credit risk. The Company''s senior management has the overall responsibility for establishing and governing the Company''s risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.

A. Management of Liquidity Risk

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company''s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.

The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended 31st March, 2018 and 31st March, 2017. Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis.

The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term surplus cash generated , over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and other highly marketable debt investments with appropriate maturities to optimize the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.

The following table shows the maturity analysis of the Company''s financial liabilities based on contractually agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.

B. Management of Market Risk

The Company''s size and operations result in it being exposed to the following market risks that arise from its use of financial instruments:

- currency risk;

- price risk; and

- interest rate risk

NOTE 2 : DEFINED BENEFIT PLANS

Refer note 2.4(l) for accounting policy on Employee Benefits.

Description of Plans

Retirement Benefit Plans of the Company include Gratuity, Management Pension, Officer''s Pension and Provident Fund. Other postemployment benefit plans includes post retirement medical benefits.

Gratuity is funded through investments mostly with an insurance service provider and partly through direct investment under Hind Lever Gratuity Fund. Pension (Management Pension and Officer''s Pension) for most employees is managed through a trust, investments with an insurance service provider and for some employees investments are managed through Company managed trust. Provident Fund for most of the employees are managed through trust investments and for some employees through government administered fund. Post-retirement medical benefits are managed through investment made under Company managed trust.

Governance

The trustees of the trust fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. They are tasked with periodic reviews of the solvency of the fund and play a role in the long-term investment, risk management and funding strategy.

Investment Strategy

The Company''s investment strategy in respect of its funded plans is implemented within the framework of the applicable statutory requirements. The plans expose the Company to a number of actuarial risks such as investment risk, interest rate risk, longevity risk and inflation risk. The Company has developed policy guidelines for the allocation of assets to different classes with the objective of controlling risk and maintaining the right balance between risk and long-term returns in order to limit the cost to the Company of the benefits provided. To achieve this, investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the year and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognized in the Balance Sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year.

NOTE 3: SHARE BASED PAYMENTS

Refer note 2.4(l) for accounting policy on Share Based Payments.

Equity Settled Share Based Payments

The members of the Company had approved ‘2001 HLL Stock Option Plan'' at the Annual General Meeting held on 22nd June, 2001. The plan envisaged grant of share options to eligible employees at market price as defined in Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

This plan was amended and revised vide ‘2006 HLL Performance Share Scheme'' at the Annual General Meeting held on 29th May, 2006. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Compensation Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include group underlying sales growth and free cash flow. The scheme also provided for ‘Par'' Awards for the managers at different work levels.

The 2006 scheme was further amended and revised vide ‘2012 HUL Performance Share Scheme'' at the Annual General Meeting held on 23rd July, 2012. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Nomination and Remuneration Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include group underlying sales growth, core operating margin improvement and operating cash flow.

The number of shares allocated for allotment under the 2006 and 2012 Performance Share Schemes is 2,00,00,000 (two crores) equity shares of '' 1/- each. The schemes are monitored and supervised by the Nomination and Remuneration Committee of the Board of Directors in compliance with the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and amendments thereof from time to time.

* Granted during the year includes additional shares granted upon meeting the vesting conditions (figures in bracket pertain to 2016-17)

Weighted average equity share price at the date of exercise of options during the year was '' 1154 (2016-17: '' 864)

Weighted average remaining contractual life of options as at 31st March, 2018 was 1.23 years (31st March, 2017: 1.68 years)

The risk free interest rates are determined based on the zero-coupon sovereign bond yields with maturity equal to the expected term of the option. Volatility calculation is based on historical stock prices using standard deviation of daily change in stock price. The historical period is taken into account to match the expected life of the option. Dividend yield has been calculated taking into account expected rate of dividend on equity share price as on grant date.

Cash Settled Share Based Payments

The employees of the Company are eligible for Unilever PLC (the ‘Holding Company'') share awards namely, the Management Co-Investment Plan (MCIP), the Global Performance Share Plan (GPSP) and the SHARES Plan. The MCIP allows eligible employees to invest up to 100% of their annual bonus in the shares of the Holding Company and to receive a corresponding award of performance-related shares. Under GPSP, eligible employees receive annual awards of the holding company''s shares. The awards under MCIP and GPSP plans will vest after 3-4 years between 0% and 200% of grant level, depending on the satisfaction of the performance metrics. The performance metrics of GPSP are underlying sales growth, operating cash flow and core operating margin improvement. The performance metrics of MCIP are underlying sales growth, underlying EPS growth and sustainability progress index. Under the SHARES Plan, eligible employees can invest up to EUR 200 per month in the shares of the Holding Company and after three years one share is granted free of cost to the employees for every three shares invested, provided they hold the shares bought for three years. The Holding Company charges the Company for the grant of shares to the Company''s employees at the end of the 3 years based on the market value of the shares on the exercise date. The Company recognises the fair value of the liability and expense for these plans over the vesting period based on the management''s estimate of the vesting and forfeiture conditions.

The Company grants share appreciation rights (SARs) to eligible employees for all cash settled share based plans mentioned above that entitles them to a cash/shares after three years of service. The amount of payment is also determined basis increase in the share price of the Holding Company between grant date and the time of exercise.

NOTE 4 : BUSINESS COMBINATION

Refer note 2.4(r) for accounting policy on Business Combination.

Acquisition of Indulekha Brand

On April 07, 2016, the Company completed the acquisition of the flagship brand ‘Indulekha'' from Mosons Extractions Private Limited (‘MEPL'') and Mosons Enterprises (collectively referred to as ‘Mosons'' and acquisition of the specified intangible assets referred to as the ‘Business acquisition''). The deal envisaged the acquisition of the trademarks ‘Indulekha'' and ‘Vayodha'', intellectual property, design and knowhow for a total cash consideration of '' 330 crores (excluding taxes) and a deferred consideration of 10% of the domestic turnover of the brands each year, payable annually for a 5 year period commencing financial year 2018-19.

Basis the projection of the domestic turnover of the brand, the contingent consideration is subject to revision on a yearly basis. As at 31st March 2017, the fair value of the contingent consideration was Rs, 49 crores which was classified as other financial liability.

Deferred contingent consideration

Based on actual performance in financial year 2017-18 and current view of future projections for the brand, the Company has reviewed and fair valued the deferred contingent consideration so payable. As at 31st March 2018, the fair value of the contingent consideration is Rs, 104 crores which is classified as other financial liability.

The determination of the fair value as at Balance Sheet date is based on discounted cash flow method. The key model inputs used in determining the fair value of deferred contingent consideration were domestic turnover projections of the brand and weighted average cost of capital.

A. Enterprises exercising control

(i) Holding Company : Unilever Plc

B. Enterprises where control exists

(i) Subsidiaries : Daverashola Estates Private Limited (100%)

(Extent of holding) Hindlever Trust Limited (100%)

Jamnagar Properties Private Limited (100%)

Lakme Lever Private Limited (100%)

Levers Associated Trust Limited (100%)

Levindra Trust Limited (100%)

Pond''s Exports Limited (90%)

Unilever India Exports Limited (100%)

Unilever Nepal Limited (80%)

Bhavishya Alliance Child Nutrition Initiatives (100%)

(with effect from March 12, 2015) (Section 8 company)

Hindustan Unilever Foundation (76%) (Section 8 company)

(ii) Trust : Hindustan Unilever Limited Securitisation of Retirement Benefit Trust (100% control)

(iii) Joint Ventures : Kimberly Clark Lever Private Limited (50% control, ceases to be Joint venture after

29th September, 2017)

(iv) Key Management Personnel

(a) Executive directors : Sanjiv Mehta

PB Balaji (up to 13th November, 2017)

Srinivas Phatak (with effect from 1st December, 2017)

Pradeep Banerjee Dev Bajpai Geetu Verma BP Biddappa Priya Nair Sandeep Kohli Sudhir Sitapati Srinandan Sundaram

(b) Non-executive directors Harish Manwani

Aditya Narayan

S. Ramadorai

O. P. Bhatt Sanjiv Misra Kalpana Morparia

(v) Employees'' Benefit Plans where : Hind Lever Gratuity Fund there is significant influence The Hind Lever Pension Fund

__The Union Provident Fund_

‘Note: As the liabilities for defined benefit plans are provided on actuarial basis for the Company as a whole, the amounts pertaining to Key Management Personnel are not included.

Terms and conditions of transactions with related parties

All Related Party Transactions entered during the year were in ordinary course of the business and are on arm''s length basis.

For the year ended 31st March, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (2016-17: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

NOTE 5

The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.

NOTE 6

The Company has presented segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, in terms of Paragraph 3 of Ind AS 108 ‘Operating Segments'', no disclosures related to segments are presented in this standalone financial statements.


Mar 31, 2017

1. FIRST TIME ADOPTION OF IND AS

The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from 1st April, 2016, with a transition date of 1st April, 2015. These financial statements for the year ended 31st March, 2017 are the first financial statements the Company has prepared under Ind AS. For all periods upto and including the year ended 31st March, 2016 , the Company prepared its financial statements in accordance with the accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (‘Previous GAAP'').

The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. Ind AS 101 requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements be applied retrospectively and consistently for all financial years presented. Accordingly, the Company has prepared financial statements which comply with Ind AS for year ended 31st March, 2017, together with the comparative information as at and for the year ended 31st March, 2016 and the opening Ind AS Balance Sheet as at 1st April, 2015, the date of transition to Ind AS.

In preparing these Ind AS financial statements, the Company has availed certain exemptions and exceptions in accordance with Ind AS 101, as explained below. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at the transition date under Ind AS and Previous GAAP have been recognized directly in equity (retained earnings or another appropriate category of equity). This note explains the adjustments made by the Company in restating its financial statements prepared under previous GAAP, including the Balance Sheet as at 1st April, 2015 and the financial statements as at and for the year ended 31st March, 2016.

A. Optional Exemptions from retrospective application

Ind AS 101 permits first-time adopters certain exemptions from retrospective application of certain requirements under Ind AS. The Company has elected to apply the following optional exemptions from retrospective application:

(i) Business combinations

Ind AS 103 Business Combinations has not been applied to acquisitions of subsidiaries, or of interests in associates and joint ventures and transactions which are considered businesses for Ind AS, that occurred before 1st April, 2015. The carrying amounts of assets and liabilities in accordance with Previous GAAP are considered as their deemed cost at the date of acquisition. After the date of the acquisition, measurement is in accordance with Ind AS. The carrying amount of goodwill in the opening Ind AS Balance Sheet is its carrying amount in accordance with the Previous GAAP

(ii) Deemed cost for property, plant and equipment and intangible assets

The Company has elected to measure all its property, plant and equipment and intangible assets at the Previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS.

(iii) Investments in subsidiaries and joint ventures

The Company has elected to measure its investments in subsidiaries and joint ventures at the Previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS.

(iv) Share-based payments

The Company has elected not to apply Ind AS 102 Share-Based Payment, to equity instruments that vested prior to the date of transition to Ind AS.

B. Mandatory Exceptions from retrospective application

The Company has applied the following exceptions to the retrospective application of Ind AS as mandatorily required under Ind AS 101:

(i) Estimates

On assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under Previous GAAP are made by the Company for the relevant reporting dates reflecting conditions existing as at that date.

(ii) Classification and measurement of financial assets

The classification of financial assets to be measured at amortized cost or fair value through other comprehensive income is made on the basis of the facts and circumstances that existed on the date of transition to Ind AS.

C. Transition to Ind AS - Reconciliations

The following reconciliations provide the explanations and quantification of the differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101:

I. Reconciliation of Equity as at 1st April, 2015

II. A. Reconciliation of Equity as at 31st March, 2016

B. Reconciliation of Statement of Profit and Loss for the year ended 31st March, 2016

III. Adjustments to Statement of Cash Flows for the year ended 31st March, 2016

Previous GAAP figures have been reclassified/regrouped wherever necessary to conform with financial statements prepared under Ind AS.

III. Adjustments to Statement of Cash flows

There were no material differences between the Statement of Cash Flows presented under Ind AS and the Previous GAAP

Notes to the Reconciliations (a) Investment in Controlled Trust

Under Previous GAAP, the investment in the Hindustan Unilever Limited Securitization of Retirement Benefit Trust (‘HURB Trust'') did not qualify as plan asset under AS 15 and accordingly presented as non-current investment. Under Ind AS, the HURB Trust qualifies as a plan asset. Accordingly, the plan asset has been fair valued as per actuarial valuation carried in accordance with Ind AS on date of transition to Ind AS and as at each balance sheet date. The plan asset recognized has been netted off against provision for employee benefits. The interest income and remeasurement gain/(loss) on the recognized plan asset has been recognized in Statement of Profit and Loss and Other Comprehensive Income respectively.

(b) Current Investments

i. Investments in treasury bills and government securities - Under Previous GAAP, the investments in treasury bills and government securities were measured at cost or market value, whichever is lower. Under Ind AS, the Company has designated these investments as fair value through other comprehensive income (FVOCI). Accordingly, these investments are required to be measured at fair value. At the date of transition to Ind AS, difference between the fair value of the investments and carrying value under previous GAAP has been recognized in Other equity (Retained earnings for interest income component and Debt instruments through Other Comprehensive Income for fair value change). Interest income and fair value changes are recognized in the Statement of Profit and Loss and Other Comprehensive Income respectively for the year ended 31st March, 2016.

ii. Mutual funds - Under Previous GAAP, the mutual funds were measured at cost or market value, whichever is lower. Under Ind AS, the Company has designated these investments at fair value through profit or loss (FVTPL). Accordingly, these investments are required to be measured at fair value. At the date of transition to Ind AS, difference between the fair value of the instruments and the carrying value under Previous GAAP has been recognized in retained earnings. Fair value changes are recognized in the Statement of Profit and Loss for the year ended 31st March, 2016.

(c) Derivative Instruments - Foreign Exchange Forward Contracts

Under Previous GAAP, unrealized net loss on foreign exchange forward contracts, if any, as at each Balance Sheet date was provided for. Under Ind AS, foreign exchange forward contracts are mark-to-market as at Balance Sheet date and unrealized net gain or loss is recognized in profit and loss statement. Derivative assets and derivative liabilities are presented on gross basis.

(d) Proposed Dividend

Under Previous GAAP, proposed dividends and related dividend distribution tax was recognized as a provision in the year to which they relate, irrespective of when they are declared. Under Ind AS, dividends and related dividend distribution tax are recognized as a liability in the year in which it is approved by the shareholders in the Annual General Meeting of the Company.

(e) Other Non-Current Liabilities

Under Previous GAAP, non-current liabilities were recognized on undiscounted basis. Ind AS requires such liabilities to be recognized at present value (discounted value) where the effect of time value of money is material. This led to a decrease in the value of non-current liabilities on the date of transition which was adjusted against retained earnings. Ind AS also provides that where discounting is used, the carrying amount of the liability increases in each period to reflect the passage of time. This increase is recognized as finance cost. The interest cost on unwinding of discount and impact of change in discount rate are recognized in the Statement of Profit and Loss under ‘Finance costs'' and ‘employee benefit expenses'' respectively for the year ended 31st March, 2016.

(f) Employee Stock Option Plan

Under Previous GAAP, the intrinsic value of the employee stock option plan was recognized as an expense over the vesting period. Under Ind AS, the compensation cost of employee stock option plan is recognized based on the fair value of the options determined using an appropriate pricing model at the date of grant. The reduction in employee compensation cost for the unvested options as on the date of transition based on fair value method has been adjusted against retained earnings. The impact for the year ended 31st March, 2016 has been recognized in ‘Employee benefits expenses'' in the Statement of Profit and Loss.

(g) Deferred Taxes

Under Previous GAAP, deferred taxes were recognized for the tax effect of timing differences between accounting profit and taxable profit for the year using the income statement approach. Under Ind AS, deferred taxes are recognized using the balance sheet for future tax consequences of temporary differences between the carrying value of assets and liabilities and their respective tax bases. The above difference, together with the consequential tax impact of the other Ind AS transitional adjustments lead to temporary differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or through other comprehensive income.

(h) Excise Duty

Under Previous GAAP, excise duty was netted off against sale of goods. However, under Ind AS, excise duty is included in sale of goods and is separately presented as expense on the face of Statement of Profit and Loss. Thus, sale of goods under Ind AS has increased with a corresponding increase in expenses.

(i) Revenue from Sale of Goods

Under Previous GAAP, revenue was recognized net of trade discounts, rebates, sales taxes and excise duties. Under Ind AS, revenue is recognized at the fair value of the consideration received or receivable, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government such as sales tax and value added tax except excise duty. Discounts given include rebates, price reductions and incentives given to customers, promotional couponing and trade communication costs which have been reclassified from ‘advertising and sales promotion'' within other expenses under Previous GAAP and netted from revenue under Ind AS.

(j) Interest on Income Tax Refund

Under Previous GAAP, the interest on income tax refund was recognized as ‘other income''. Under Ind AS, the Company has adopted the accounting policy to recognize interest income/expense related to income tax as part of income tax expense. Accordingly, the interest on income tax refund has been reclassified from ‘other income'' to ‘tax expenses - current tax'' for the year ended 31st March, 2016.

(k) Non-Current Provisions

Under Previous GAAP, non-current provisions were recognized on undiscounted basis. Ind AS requires such provisions to be recognized at present value (discounted value) where the effect of time value of money is material. This led to a decrease in the value of non-current provisions for the year ended 31st March,2016 which was recognized in ‘Exceptional items'' in the Statement of Profit and Loss where the underlying provision was initially recognized. Subsequently, the present value is increased to reflect passage of time by recognizing finance cost.

(l) Defined Benefit Plans

i. Actuarial gain/(loss) - Under Previous GAAP, the actuarial gain/(loss) of defined benefit plans had been recognized in Statement of Profit and Loss as an exceptional item. Under Ind AS, the remeasurement gain/(loss) on net defined benefit plans is recognized in Other Comprehensive Income net of tax.

ii. Net interest cost on defined benefit plans - Under Previous GAAP, the interest cost on defined benefit liability and expected return on plan assets was recognized as employee benefit expenses in the Statement of Profit and Loss. Under Ind AS, the Company has recognized the net interest cost on defined benefit plans as finance cost.

4 PROPERTY, PLANT AND EQUIPMENT

Refer Note 2.4 (a) for accounting policy on Property, Plant and Equipment

The Company has elected to measure all its property, plant and equipment at the previous GAAP carrying amount i.e 31st March 2015 as its deemed cost (Gross Block Value) on the date of transition to Ind AS i.e 1st April 2015. The movement in carrying value of property, plant and equipment as per IGAAP is mentioned below:

NOTES:

(a) Buildings include Rs, 0 crores (31st March, 2016: Rs, 0 crores and 1st April, 2015: Rs, 0 crores) being the value of shares in co-operative housing societies.

(b) The title deeds of Freehold Land aggregating Rs, 0 crores (31st March, 2016: Rs, 1 crores and 1st April, 2015: Rs, 1 crores), Leasehold Land, net block aggregating Rs, 1 crores, (31st March, 2016: Rs, 1 crores and 1st April, 2015: Rs, 1 crores) are in the process of perfection of title.

(c) Additions in capital expenditure of Rs, 1 crores (2015-16: Rs, 1 crores) and Rs, 1 crores (2015-16: Rs, 1 crores) incurred at Company''s inhouse R&D facilities at Mumbai and Bengaluru respectively are eligible for weighted deduction under section 35(2AB) of the Income Tax Act, 1961.

(d) The Property, Plant and Equipment in 4A includes assets given on lease given in the below table:

B Capital work-in-progress

Capital work in progress as at 31st March 2017 is Rs, 203 crores (31st March 2016: Rs, 386 crores and 1st April 2015: Rs, 479 crores) For contractual commitment with respect to property, plant and equipment refer Note 25.B.(ii).

The Company has elected to measure all its intangibles at the previous GAAP carrying amount i.e 31st March 2015 as its deemed cost (Gross Block Value) on the date of transition to Ind AS i.e 1st April 2015. The movement in carrying value of intangible asset as per IGAAP is mentioned below:

IMPAIRMENT Charges

The goodwill and indefinite life intangible assets are tested for impairment and accordingly no impairment charges were identified for FY 2016-17 (Nil for FY2015-16)

SIGNIFICANT CASH GENERATING UNITS (CGUs)

The Company has identified its reportable segments, i.e. Home care, Personal Care, Foods, Refreshments and Others as the CGUs. The goodwill and brand (with indefinite life) acquired through business combination has been entirely allocated to CGU ‘Personal Care'' segment of the Company. The carrying amount of goodwill and brand as at March 31, 2017 is Rs, 0 crores and Rs, 311 crores respectively.

The projections cover a period of five years, as we believe this to be the most appropriate timescale over which to review and consider annual performances before applying a fixed terminal value multiple to the final year cash flows. The growth rates used to estimate future performance are based on the conservative estimates from past performance. Segmental margins are based on FY 2016-17 performance.

Weighted Average Cost of Capital % (WACC) = Risk free return ( Market risk premium x Beta variant for the Company).

We have performed sensitivity analysis around the base assumptions and have concluded that no reasonable changes in key assumptions would cause the recoverable amount of the CGU to be less than the carrying value.

C. INVESTMENT IN ASSOCIATE

The Company holds 24% of equity holdings in Comfund Consulting Limited and 26% equity and preference capital holding in Aquagel Chemicals (Bhavnagar) Private Limited. The Company does not exercise significant influence or control on decisions of the investee. Hence, they are not being construed as associate companies.

b) Rights, preferences and restrictions attached to shares

Equity shares: The Company has one class of equity shares having a par value of Rs, 1 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

B. Nature and purpose of reserves

(a) Capital Reserve: During amalgamation, the excess of net assets taken, over the cost of consideration paid is treated as capital reserve.

(b) Capital Redemption Reserve: The Company has recognized Capital Redemption Reserve on buyback of equity shares from its retained earnings. The amount in Capital Redemption Reserve is equal to nominal amount of the equity shares bought back.

(c) Securities Premium Reserve: The amount received in excess of face value of the equity shares is recognized in Securities Premium Reserve. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium reserve.

(d) Employee Stock Options Outstanding Account: The fair value of the equity-settled share based payment transactions with employees is recognized in Statement of Profit and Loss with corresponding credit to Employee Stock Options Outstanding Account.

(e) General Reserve: The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.

(f) Retained Earnings: Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.

(g) Other Reserves: The Company has recognized Other Reserves on amalgamation of Brooke Bond Lipton India Limited as per statutory requirements. This reserve is not available for capitalisation/declaration of dividend/ share buy-back. Further it also includes capital subsidy and revaluation reserve.

(h) Debt Instruments through Other Comprehensive Income: The fair value change of the debt instruments measured at fair value through other comprehensive income is recognized in Debt instruments through Other Comprehensive Income. Upon derecognition, the cumulative fair value changes on the said instruments are reclassified to the Statement of Profit and Loss.

D. Capital Management

Equity share capital and other equity are considered for the purpose of Company''s capital management.

The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimize returns to shareholders. The capital structure of the Company is based on management''s judgment of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence.

The management and the Board of Directors monitors the return on capital as well as the level of dividends to shareholders. The Company may take appropriate steps iin order to maintain, or if necessary adjust, its capital structure.

a) There are no amounts due for payment to the Investor Education and Protection Fund under Section 125 of the Companies Act, 2013 as 31st March,2017 (31st March 2016: Nil, 1st April 2015: Nil).

(i) I t is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgments/decisions pending with various forums/authorities.

(ii) The Company does not expect any reimbursements in respect of the above contingent liabilities.

(iii) The Company''s pending litigations comprise of claims against the Company by employees and pertaining to proceedings pending with Income Tax, Excise, Custom, Sales/VAT tax and other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.

(iv) The Company has given Bank Guarantees in respect of certain contingent liabilities included above.

B. COMMITMENTS

i) Operating lease commitments

The Company''s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, god own etc.) and computers. These leasing arrangements which are cancellable (other than those specified below), range between 11 months and 10 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as rent in the Statement of Profit and Loss.

The Company has entered into agreement to take certain land and building on operating lease for warehousing activities from a third party. The lease arrangement is for 10 years, including a non-cancellable term of 9 years. The lease rent of Rs, 14 crores (2015-16: '' 13 crores) on such lease is included in Rent.

iii) Other commitments

During the year, the Company has issued letters of undertakings to the bankers of its below mentioned fully owned subsidaries to provide need based financial support :

i) Lakme Lever Private Limited

ii) Daverashola Estates Private Limited

iii) Jamnagar Properties Private Limited

(c) The Company has spent Rs, 104 crores (2015-16: Rs, 92 crores) towards various schemes of Corporate Social Responsibility as prescribed under section 135 of the Companies Act, 2013. The details are:

I. Gross amount required to be spent by the Company during the year: Rs, 102 crores (2015-16: Rs, 92 crores)

III. Above includes a contribution of Rs, 18 crores (2015-16: Rs, 8 crores) to subsidiary Hindustan Unilever Foundation which is a Section 8 registered Company under Companies Act, 2013, with the main objectives of working in the areas of social, economic and environmental issues such as water harvesting, health and hygiene awareness, women empowerment and enable the less privileged segments of the society to improve their livelihood by enhancing their means and capabilities to meet the emerging opportunities.

IV. The Company does not carry any provisions for Corporate social responsibility expenses for current year and previous year.

Proposed dividend on equity shares is subject to the approval of the shareholders of the Company at the Annual General Meeting and not recognized as liability as at the Balance Sheet date.

‘Dividend Distribution Tax (DDTj-net, pertaining to the current year comprises the DDT on interim and proposed final dividend and the credit in respect of tax paid under section 115 O of the Indian Income-tax Act, 1961 by the Company on dividend received from its domestic and foreign subsidiaries during the year.

2. FINANCIAL INSTRUMENTS

Refer Note 2.4 (g) for accounting policy on Financial Instruments.

The Company has disclosed financial instruments such as cash and cash equivalents, other bank balances, trade receivables, current account balances with group companies and joint venture, trade payables and unpaid dividends at carrying value because their carrying amounts are a reasonable approximation of the fair values due to their short term nature.

C. FAIR VALUE HIERARCHY

The fair value of financial instruments as referred to in note (A) above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).

The categories used are as follows:

- Level 1: Quoted prices for identical instruments in an active market;

- Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs; and

- Level 3: Inputs which are not based on observable market data.

There were no significant changes in the classification and no significant movements between the fair value hierarchy classifications of assets and liabilities during FY 2016-17.

CALCULATION OF FAIR VALUES

The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended 31st March, 2016.

Financial assets and liabilities measured at fair value as at Balance Sheet date:

1. The fair values of investment in treasury bills, government securities and quoted investment in equity shares is based on the current bid price of respective investment as at the Balance Sheet date.

2. The fair values of investments in mutual fund units is based on the net asset value (‘NAV'') as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.

3. The fair values of the derivative financial instruments has been determined using valuation techniques with market observable inputs. The models incorporate various inputs including the credit quality of counter-parties and foreign exchange forward rates.

Other financial assets and liabilities

- Cash and cash equivalents (except for investments in mutual funds), trade receivables, investments in term deposits, other financial assets (except derivative financial instruments), trade payables, and other financial liabilities (except derivative financial instruments) have fair values that approximate to their carrying amounts due to their short-term nature.

- Loans have fair values that approximate to their carrying amounts as it is based on the net present value of the anticipated future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

3. FINANCIAL RISK MANAGEMENT

The Company''s business activities are exposed to a variety of financial risks, namely liquidity risk, market risks and credit risk. The Company''s senior management has the overall responsibility for establishing and governing the Company''s risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.

a. management of liquidity risk

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company''s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.

The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended 31st March, 2017 and 31st March, 2016. Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis.

The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and other highly marketable debt investments with appropriate maturities to optimize the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.

The following table shows the maturity analysis of the Company''s financial liabilities based on contractually agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.

B. MANAGEMENT OF MARKET RISK

The Company''s size and operations result in it being exposed to the following market risks that arise from its use of financial instruments:

- currency risk;

- price risk; and

- interest rate risk

The above risks may affect the Company''s income and expenses, or the value of its financial instruments. The Company''s exposure to and management of these risks are explained below.

POTENTIAL IMPACT OF RISK MANAGEMENT POLICY SENSITIVITY TO RISK 1. CURRENCY RISK

The Company is subject to the risk that changes The Company is exposed to foreign exchange A 5% strengthening of the INR against key in foreign currency values impact the Company''s risk arising from various currency exposures, currencies to which the Company is exposed exports revenue and imports of raw material and primarily with respect to US Dollar and Euro. (net of hedge) would have led to approximately prepay, plant and equipment. The Company manages currency exposures an additional Rs, 0 crores gain in the Statement of As at 31st March, 2017, the net unhedged within prescribed limits, through use of Profit and Loss (2015-16: Rs, 0 crores gain). A 5% exposure to the Company on holding financial forward exchange contracts. Foreign exchange weakening of the INR against these currencies assets (trade receivables and capital advances) transactions are covered with strict limits would have led to an equal but opposite effect. and liabilities (trade payables and capital placed on the amount of uncovered exposure, if creditors) other than in their functional currency any, at any point in time. amounted to Rs, 2 crores payale(31st klsur The aim of the Company''s approach to 2016: Rs, 3 crores and 1st April, 2015: Rs, 4 crores). management of currency risk is to leave the

Company with no material residual risk.

4. PRICE RISK

The Company is mainly exposed to the price risk due The Company has laid policies and guidelines A 1% increase in prices would have led to its investment in debt mutual funds. The price risk which it adheres to in order to minimize price risk approximately an additional Rs, 21 crores gain in arises due to uncertainties about the future market arising from investments in debt mutual funds. the Statement of Profit and Loss (2015-16: Rs, 12 values of these investments. crores gain). A 1% decrease in prices would have At 31st March 2017, the investments in debt mutual led to an equal but opposite effect. funds amounts to Rs, 2,060 crores (31st March, 2016: Rs, 1,196 crores and 1st April, 2015: Rs, 925 crores).

These are exposed to price risk.

5. INTEREST RATE RISK

The Company is mainly exposed to the interest The Company has laid policies and guidelines A 0.25% decrease in interest rates would have led rate risk due to its investment in treasury bills including tenure of investment made to approximately an additional Rs, 1 crore gain in the and government securities. The interest rate minimize impact of interest rate risk. Statement of Profit and Loss (2015-16: Rs, 1 crore risk arises due to uncertainties about the future gain). A 0.25% decrease in interest rates would have market interest rate on these investments. led to an equal but opposite effect.

In addition to treasury bills and government securities, the Company invests in term deposits for a period of less than one year. Considering the short-term nature, there is no significant interest rate risk pertaining to these deposits.

As at 31st March 2017, the investments in treasury bill and government securities amounts to Rs, 1,459 (31st March, 2016: Rs, 1,265 crores and 1st April, 2015: Rs, 1,946 crores). These are exposed to interest rate risk.

C. MANAGEMENT OF CREDIT RISK

Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations.

Trade receivables

Concentration of credit risk with respect to trade receivables are limited, due to the Company''s customer base being large and diverse. All trade receivables are reviewed and assessed for default on a quarterly basis.

Our historical experience of collecting receivables is that credit risk is low. Hence, trade receivables are considered to be a single class of financial assets. Refer note 2.4(g) for accounting policy on Financial Instruments.

Other financial assets

The Company maintains exposure in cash and cash equivalents, term deposits with banks, investments in treasury bills, government securities, money market liquid mutual funds and derivative instrument with financial institutions. The Company has set counter-parties limits based on multiple factors including financial position, credit rating, etc. The Company has given inter-corporate deposits (ICD) only to its subsidiaries amounting Rs, 198 crores (31st March, 2016: Rs, 162 crores and 1st April, 2015: Rs, 180 crores).

The Company''s maximum exposure to credit risk as at 31st March, 2017, 2016 and 1st April, 2015 is the carrying value of each class of financial assets.

6. DEFINED BENEFIT PLANS

Refer note 2.4(k) for accounting policy on Employee Benefits.

Description of Plans

Retirement Benefit Plans of the Company include Gratuity, Management Pension, Officer''s Pension and Provident Fund. Other Post-Employment Benefit Plans includes Post-Retirement Medical Benefits.

Gratuity is funded through investments mostly with an insurance service provider and partly through direct investment under Hind Lever Gratuity Fund. Pension (Management Pension and Officer''s Pension) for most employees is managed through a trust, investments with an insurance service provider and for some employees investments are managed through Company managed trust. Provident Fund for most of the employees are managed through trust investments and for some employees through government administered fund. Post-retirement medical benefits are managed through investment made under Company managed trust.

Governance

The trustees of the trust fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and rules in the best interests of the plan participants. They are tasked with periodic reviews of the solvency of the fund and play a role in the long-term investment, risk management and funding strategy.

Investment Strategy

The Company''s investment strategy in respect of its funded plans is implemented within the framework of the applicable statutory requirements. The plans expose the Company to a number of actuarial risks such as investment risk, interest rate risk, longevity risk and inflation risk. The Company has developed policy guidelines for the allocation of assets to different classes with the objective of controlling risk and maintaining the right balance between risk and long-term returns in order to limit the cost to the Company of the benefits provided. To achieve this, investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

During the year the Company has amended its discretionary increase clause with respect to post retirement benefit plan, which has resulted into Rs,115 crores credit to the Statement of Profit and Loss.

The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the year and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognized in the Balance Sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year.

7.Share BASED PAYMENTS

Refer note 2.4(k) for accounting policy on Share Based Payments.

The members of the Company had approved ‘2001 HLL Stock Option Plan'' at the Annual General Meeting held on 22 nd June, 2001. The plan envisaged grant of share options to eligible employees at market price as defined in Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

This plan was amended and revised vide ‘2006 HLL Performance Share Scheme'' at the Annual General Meeting held on 29th May, 2006. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Compensation Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include group underlying sales growth and free cash flow. The scheme also provided for ‘Par'' Awards for the managers at different work levels.

The 2006 scheme was further amended and revised vide ‘2012 HUL Performance Share Scheme'' at the Annual General Meeting held on 23rd July, 2012. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Nomination and Remuneration Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include group underlying sales growth, core operating margin improvement and operating cash flow.

The number of shares allocated for allotment under the 2006 and 2012 Performance Share Schemes is 2,00,00,000 (two crores) equity shares of '' 1/each. The schemes are monitored and supervised by the Nomination and Remuneration Committee of the Board of Directors in compliance with the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and amendments thereof from time to time.

The Employee Stock Option Plan includes employees of Hindustan Unilever Limited, its subsidiaries and a subsidiary of parent Company.

Weighted average equity share price at the date of exercise of options during the year was '' 864 (2015-16: '' 848).

Weighted average remaining contractual life of options as at 31st March, 2017 was 1.68 years (31st March, 2016: 1.34 years and 1st April, 2015: 1.34 years).

The risk free interest rates are determined based on the zero-coupon sovereign bond yields with maturity equal to the expected term of the option. Volatility calculation is based on historical stock prices using standard deviation of daily change in stock price. The historical period is taken into account to match the expected life of the option. Dividend yield has been calculated taking into account expected rate of dividend on equity share price as on grant date.

CASH SETTLED SHARE BASED PAYMENTS

The employees of the Company are eligible for Unilever PLC (the ‘Holding Company'') share awards namely, the Management Co-Investment Plan (MCIP), the Global Performance Share Plan (GPSP) and the SHARES Plan. The MCIP allows eligible employees to invest up to 100% of their annual bonus in the shares of the Holding Company and to receive a corresponding award of performance-related shares. Under GPSP, eligible employees receive annual awards of the Holding Company''s shares. The awards under MCIP and GPSP plans will vest after 3-4 years between 0% and 200% of grant level, depending on the satisfaction of the performance metrics. The performance metrics of both MCIP and GPSP are underlying sales growth, operating cash flow and core operating margin improvement. Under the SHARES Plan, eligible employees can invest up to EUR 200 per month in the shares of the Holding Company and after three years one share is granted free of cost to the employees for every three shares invested, provided they hold the shares bought for three years. The Holding Company charges the Company for the grant of shares to the Company''s employees at the end of the 3 years based on the market value of the shares on the exercise date. The Company recognizes the fair value of the liability and expense for these plans over the vesting period based on the management''s estimate of the vesting and forfeiture conditions.

The Company grants share appreciation rights (SARs) to eligible employees for all cash settled share based plans mentioned above that entitles them to a cash/shares after three years of service. The amount of payment is also determined basis increase in the share price of the Holding Company between grant date and the time of exercise.

8.BUSINESS COMBINATION

Refer note 3.A.(i) for treatment of business combination on first time adoption of Ind AS.

Refer note 2.4(q) for accounting policy on Business Combination.

Acquisition of Indulekha Brand

On April 07, 2016, the Company completed the acquisition of the flagship brand ‘Indulekha'' from Mosons Extractions Private Limited (‘MEPL) and Mosons Enterprises (collectively referred to as ‘Mosons'' and acquisition of the specified intangible assets referred to as the ‘Business acquisition''). The deal envisaged the acquisition of the trademarks ‘Indulekha'' and ‘Vayodha'', intellectual property, design and knowhow for a total cash consideration of '' 330 crores (excluding taxes) and a deferred consideration of 10% of the domestic turnover of the brands each year, payable annually for a 5 year period commencing financial year 2018-19. The transaction is accounted as business combination under Ind AS 103.

The acquisition is in line with the Company''s strategic intent to strengthen its leadership position in Personal Care by providing an impetus to its play in the evolving Premium Naturals segment. Indulekha brings to the Company, a premium brand with strong credentials around Ayurveda that will complement its existing portfolio and strengthen its presence in the Hair Care category.

Deferred contingent consideration

The contingent consideration arrangement requires the Company to pay 10% of the domestic turnover of the brands each year, payable annually for a 5 year period commencing financial year 2018-19. As on the acquisition date, the fair value of contingent consideration was valued at Rs, 44 crores.

The determination of the fair value as at Balance Sheet date is based on discounted cash flow method. Basis the projection of the domestic turnover of the brand, the contingent consideration is subject to revision on a yearly basis. As at 31st March 2017, the fair value of the contingent consideration is Rs, 49 crores which is classified as other financial liability.

Assets acquired and liabilities assumed:

The fair values of identifiable assets acquired and liabilities assumed as at the date of acquisition were:

The deferred tax asset mainly comprises the effect of depreciation on intangible assets deductible for tax purposes.

Acquisition-related costs

In addition to cash consideration mentioned above, acquisition-related costs of Rs, 12 crores paid towards professional and legal fees, stamp duty etc. are included in ‘Exceptional Items'' in the Statement of Profit and Loss.

Impact of acquisition on the results

The acquired business contributed revenues of Rs, 75 crores and profit (before tax) of Rs, 7 crores to the Company for the year ended 31st March, 2017.

46 Related Party Disclosures

A. Enterprises exercising control

(i) Holding Company : Unilever Plc

B. Enterprises where control exists

(i) Subsidiaries : Daverashola Estates Private Limited (100%)

(Extent of holding) Hindlever Trust Limited (100%)

Jamnagar Properties Private Limited (100%)

Lakme Lever Private Limited (100%)

Levers Associated Trust Limited (100%)

Levindra Trust Limited (100%)

Pond''s Exports Limited (90%)

Unilever India Exports Limited (100%)

Unilever Nepal Limited (80%)

Bhavishya Alliance Child Nutrition Initiatives (100%)

(with effect from March 12, 2015) (Section 8 Company)

Hindustan Unilever Foundation (76%) (Section 8 Company)

(ii) Trust : Hindustan Unilever Limited Securitization of Retirement Benefit

Trust (100%)

(iii) Joint Ventures : Kimberly Clark Lever Private Limited (50% control)

(iv) Key Management Personnel

(a) Executive directors : Sanjiv Mehta

PB Balaji

Pradeep Banerjee Dev Bajpai Geetu Verma BP Biddappa Priya Nair

Sandeep Kohli (with effect from 1st June, 2016)

Sudhir Sitapati (with effect from 1st July, 2016)

Srinandan Sundaram (with effect from 1st September, 2016) Samir Singh (up to 31st May, 2016)

Punit Misra (up to 30th September, 2016)

(b) Non-executive directors : Harish Manwani

Aditya Narayan S. Ramadorai O. P Bhatt Sanjiv Misra Kalpana Morparia

(v) Employees'' Benefit Plans where there is significant influence : Hind Lever Gratuity Fund

The Hind Lever Pension Fund The Union Provident Fund

Terms and conditions of transactions with related parties

All Related Party Transactions entered during the year were in ordinary course of the business and are on arm''s length basis.

For the year ended 31st March, 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (201516: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

9. The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.

10. The Company has presented segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, in terms of Paragraph 3 of Ind AS 108 ‘Operating Segments'', no disclosures related to segments are presented in this standalone financial statements.


Mar 31, 2015

1) COMPANY INFORMATION

Hindustan Unilever Limited (the ''Company'') is a public limited company domiciled in India and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Company is a market leader in the FMCG business comprising Home and Personal Care (HPC), Foods and Refreshments. The Company has manufacturing facilities across the country and Research and Development centres in Mumbai and Bangalore and sells primarily in India through independent distributors and modern trade.

b) Rights, preferences and restrictions attached to shares

Equity shares: The Company has one class of equity shares having a par value of Re. 1 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

2) DUES TO MICRO AND SMALL ENTERPRISES

Disclosure of payable to vendors as defined under the "Micro, Small and Medium Enterprise Development Act, 2006" is based on the information available with the Company regarding the status of registration of such vendors under the said Act, as per the intimation received from them on requests made by the Company. There are no overdue principal amounts/interest payable amounts for delayed payments to such vendors at the Balance Sheet date. There are no delays in payment made to such suppliers during the year or for any earlier years and accordingly there is no interest paid or outstanding interest in this regard in respect of payments made during the year or brought forward from previous years.

3) OTHER CURRENT LIABILITIES

a) There are no amounts due for payment to the Investor Education and Protection Fund Under Section 125 of the Companies Act, 2013 as at the year end.

4) MOVEMENT IN OTHER PROVISIONS (SHORT TERM AND LONG TERM) (REFER NOTES 6 AND 10)

Other Provisions (in Short Term and Long Term includes provision for tax disputes, employee related disputes, restructuring and other provisions)

It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above, pending resolution.

5) CONTINGENT LIABILITIES

As at As at 31st March, 2015 31st March, 2014

Claims against the Company not acknowledged as debts

Income tax matters 558.99 545.90

Sales tax matters - Rs. 40.54 crores (March 31, 2014 - Rs. 52.84 crores) net of tax 61.42 80.05

Excise duty, service tax and customs duty matters - Rs. 134.23 crores (March 203.35 200.89 31,2014 - Rs. 132.61 crores) net of tax

Other matters including claims related to employees/ex-employees, property 78.20 69.29 related demands, etc - Rs. 51.62 crores (March 31,2014 - Rs. 45.74 crores) net of tax

(i) It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgements/decisions pending with various forums/authorities.

(ii) The Company does not expect any reimbursements in respect of the above contingent liabilities.

(iii) The Company''s pending litigations comprise of claims against the Company by employees and pertaining to proceedings pending with Income Tax, Excise, Custom, Sales/VAT tax and other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.

(iv) The Company has given Bank Guarantees in respect of certain matters of above contingent liabilities.

Corporate Guarantee given 8.20 -

(b) Total revenue expenditure (net of recoveries) on Research and Development (R&D) included in Note 35, eligible for weighted deduction under section 35(2AB) of the Income Tax Act, 1961 aggregates to Rs. 29.60 crores (2013-14 -Rs. 31.22 crores). The details are:

(c) The Company''s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godown etc.) and computers. These leasing arrangements which are not non-cancellable (other than those specified in note below), range between 11 months and 10 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as rent in the Statement of Profit and Loss.

The Company has also given certain land and building on operating lease to a third party which has been disposed during the year. The lease arrangement was for a period of 5 years, including a non-cancellable term of 3 years. The license fee of Rs. 23.35 crores (2013-14 - Rs. 30.90 crores) on such lease is included in other operating revenue (Refer Note 27).

(d) Miscellaneous expenses include provision for other than temporary diminution in the value of investment in joint venture Rs. Nil crores (2013-14 - Rs. 13.46 crores) - Refer note 14(B)(b) and the net foreign exchange loss (i.e. exchange differences on settlement/restatement of all monetary items and mark to market valuation of outstanding forward contracts on account of firm commitments) Rs. 24.41 crores (2013-14 - Rs. 19.40 crores).

(e) Other expenses include Rs.82.35 crores spent towards various schemes of Corporate Social Responsibility as prescribed under section 135 of the Companies Act, 2013.

6) DEFINED BENEFIT PLANS

Gratuity is funded through investment mostly with an insurance service provider and partly through direct investment under Hind Lever Gratuity Fund.

Pension for most employees are managed through a trust, investments with an insurance service provider and for some employees investments are managed through Company managed trust.

Post-retirement medical benefits are managed through investment made under Company managed trust.

Provident Fund for most of the employees are managed through trust investments and for some employees through government administered fund.

The Guidance Note on Implementing AS 15, ''Employee Benefits'' issued by the Accounting Standard Board (ASB) of the Institute of Chartered Accountants of India states that Provident Funds set up by employers that guarantee a specified rate of return and which require interest shortfall to be met by the employer would be defined benefit plans in accordance with the requirements of paragraph 26(b) of AS 15. The year 2012-13 was the first year in which the actuary had given the detailed disclosures in the actuarial valuation report, in view of the issuance of the Guidance Note by the Institute of Actuaries of India. Accordingly the compliance with the disclosure requirements of paragraph 120(n) of AS 15: Employee Benefits in respect of Provident Fund has been done prospectively from 2012-13.

7) EMPLOYEE STOCK OPTION PLAN

The members of the Company had approved ''2001 HLL Stock Option Plan'' at the Annual General Meeting held on 22nd June, 2001. The plan envisaged grant of share options to eligible employees at market price as defined in SEBI (Employee Stock Option Scheme And Employee Stock Purchase Scheme) Guidelines, 1999.

This plan was amended and revised vide ''2006 HLL Performance Share Scheme'' at the Annual General Meeting held on 29th May, 2006. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Compensation Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include group underlying sales growth and free cash flow. The scheme also provided for Par'' Awards for the managers at different work levels.

The 2006 scheme was further amended and revised vide ''2012 HUL Performance Share Scheme'' at the Annual General Meeting held on 23rd July, 2012. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Nomination and Remuneration Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include group underlying sales growth, core operating margin improvement and operating cash flow.

The number of shares allocated for allotment under the 2006 and 2012 Performance Share Schemes is 2,00,00,000 (two crores) equity shares of Re. 1/- each. The schemes are monitored and supervised by the Nomination and Remuneration Committee of the Board of Directors in compliance with the provisions of SEBI (Employee Stock Option Scheme And Employee Stock Purchase Scheme) Guidelines, 1999 and amendments thereof from time to time.

The risk free interest rates are determined based on the zero-coupon sovereign bond yields with maturity equal to the expected term of the option. Volatility calculation is based on historical stock prices using standard deviation of daily change in stock price. The historical period is taken into account to match the expected life of the option. Dividend yield has been calculated taking into account expected rate of dividend on equity share price as on grant date.

8) The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.

9) PREVIOUS YEAR FIGURES

Previous year''s figures have been regrouped/restated wherever necessary to conform with this year''s classification. Previous year''s financial statements were audited by a firm of Chartered Accountants other than B S R & Co. LLP.

10) RELATED PARTY DISCLOSURES

A. Enterprises where control exists

(i) Holding Company : Unilever PLC

(ii) Subsidiaries!

(Extent of holding)

Aquagel Chemicals Private Limited (100%) (Amalgamated with Lakme Lever Private Limited with effect from April 01, 2014) [Refer Note 14(i)]

Brooke Bond Real Estates Private Limited (100%) (upto March 23, 2015)

Daverashola Estates Private Limited (100%)

Hindlever Trust Limited (100%)

Jamnagar Properties Private Limited (100%)

Lakme Lever Private Limited (100%)

Levers Associated Trust Limited (100%)

Levindra Trust Limited (100%)

Pond''s Exports Limited (90%)

Unilever India Exports Limited (100%)

Unilever Nepal Limited (80%)

Bhavishya Alliance Child Nutrition Initiatives (100%) (with effect from March 12, 2015) (Section 8 company) Hindustan Unilever Foundation (76%) (Section 8 company)

(iii) Trust

: Hindustan Unilever Limited Securitisation of Retirement

Benefit Trust (100% control)

B. Other Related Parties with whom the Company had transactions during the year (i) Fellow Subsidiaries

: Brooke Bond Assam Estates Limited

Brooke Bond Group Limited Brooke Bond South India Estates Limited Conopco, Inc.

Corporativo Unilever de Mexico, S.de R.L. de C.V. (merged)

Glidat Strauss Limited

Unilever Europe Business Center BV

Lipton Soft Drinks Ireland

Mascolo Brothers Limited

OOO Unilever Russia

P.T. Unilever Indonesia, Tbk.

Tigi Holdings Limited

Tigi Linea International B.V.

UL Research & Development Vlaard

Unilever (Malaysia) Holdings Sdn Bhd

Unilever ASCC AG

Unilever Asia Private Limited

Unilever Australia Limited

Unilever Bangladesh Limited

Unilever Brasil Limited

Unilever Business and Marketing Support AG

Unilever Canada-Food Solutions

Unilever De Argentina SA

Unilever Employment Services B.V.

Unilever Europe IT Services

Unilever Gulf Free Zone Establishment, Arabia

Unilever Industries Private Limited

Unilever Italy Holdings Srl

Unilever Japan

Unilever Lipton Ceylon Limited Unilever N.V.

Unilever Overseas Holdings AG Unilever Overseas Holdings BV Unilever Pakistan Limited Unilever Philippines , Inc.

Unilever Research and Development Vlaardingen B.V. Unilever Sanayi ve Ticaret Turk A.S.

Unilever Singapore PTE LTD Unilever SNG

Unilever South Africa (Pty) Limited Unilever South Central Europe S.R.L Unilever Sri Lanka Limited

Unilever Supply Chain Company AG

Unilever Thai Services Limited Unilever Thai Trading Limited Unilever U.K. Central Resources Limited Unilever UK & CN Holdings Limited Unilever United States, Inc.

Unilever Ventures India Advisory Private Ltd

Unilever Zimbabwe (Pvt) Limited

Walls (China) Co. Limited

Unilever Kenya Ltd

Unilever Andina Ecuador

Unilever Market Development (pty) Limited

USUP Spolka z ograniczona odpo

Lever International Marine Supplies (LIMS) BV

Toni&Guy Product Limited

Unilever Belgium BVBA

Unilever Technology Ventures Advisory Company LLC Unilever Iran Unilever UK Limited

(ii) Joint Ventures : Kimberly Clark Lever Private Limited

(iii) Associates

: Aquagel Chemicals (Bhavnagar) Pvt. Ltd.

Hi Tech Surfactants Pvt Ltd

Comfund Financial Services India Limited

Hindustan Field Services Private Limited (up to March 10, 2015)

(iv) Key Management Personnel

: BP Biddappa Dev Bajpai Geetu Verma Hemant Bakshi

Manish Tiwary (up to November 30, 2014)

Nitin Paranjpe (up to October 09, 2013)

PB Balaji (with effect from July 01, 2014) Pradeep Banerjee

Priya Nair (with effect from October 01, 2014) Punit Misra (with effect from November 01, 2014) Sanjiv Mehta

Samir Singh (with effect from October 01, 2014) Sridhar Ramamurthy (up to June 30, 2014)

(v) Other (Non Executive Chairman) : Harish Manwani (upto December 31, 2014)

(vi) Employees'' Benefit Plans where there is significant influence : Hind Lever Gratuity Fund

The Hind Lever Pension Fund

The Union Provident Fund


Mar 31, 2013

1) COMPANY INFORMATION

Hindustan Unilever Limited (the ''company'') is a public limited company domiciled in India and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The company is a market leader in the FMCG business comprising Home and Personal Care (HPC) and Foods and Refreshments. The company has manufacturing facilities across the country and Research and Development centres in Mumbai and Bangalore and sells primarily in India through independent distributors and modern trade.

2) DUES TO MICRO AND SMALL ENTERPRISES

There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2013. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

3) EMPLOYEE STOCK OPTION PLAN

The members of the Company had approved ''2001 HLL Stock Option Plan'' at the Annual General Meeting held on 22nd June, 2001. The plan envisaged grant of share options to eligible employees at market price as defined in SEBI (Employee Stock Option Scheme And Employee Stock Purchase Scheme) Guidelines, 1999.

This plan was amended and revised vide ''2006 HLL Performance Share Scheme'' at the Annual General Meeting held on 29th May, 2006. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Compensation Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include group underlying sales growth and free cash flow. The scheme also provided for ''Par'' Awards for the managers at different work levels.

The 2006 scheme was further amended and revised vide ''2012 HUL Performance Share Scheme'' at the Annual General Meeting held on 23rd July, 2012. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Nomination and Remuneration Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include group underlying sales growth, core operating margin improvement and operating cash flow.

The number of shares allocated for allotment under the 2006 and 2012 Performance Share Schemes is 2,00,00,000 (two crores) equity shares of Re. 1/- each. The schemes are monitored and supervised by the Nomination and Remuneration Committee of the Board of Directors in compliance with the provisions of SEBI (Employee Stock Option Scheme And Employee Stock Purchase Scheme) Guidelines, 1999 and amendments thereof from time to time.

4) PREVIOUS YEAR FIGURES

Previous year''s figures have been regrouped/ restated wherever necessary to conform with this year''s classification.

5) RELATED PARTY DISCLOSURES

A. Enterprises where control exists

(i) Holding Company : Unilever PLC

(ii) Subsidiaries

(Extent of holding)

: Brooke Bond Real Estates Private Limited (100%) Daverashola Estates Private Limited (100%) Hindlever Trust Limited (100%)

Jamnagar Properties Private Limited (100%) Lakme Lever Private Limited (100%)

Levers Associated Trust Limited (100%)

Levindra Trust Limited (100%)

Pond''s Exports Limited (90%)

Unilever India Exports Limited (100%)

Unilever Nepal Limited (80%)

Hindustan Unilever Foundation (76%) (with effect from December, 2012)

(iii) Trust : Hindustan Unilever Limited Securitisation of Retirement Benefit Trust

(100% control) (from October, 2012)

B. Other Related Parties with whom the company had transactions during the year

(i) Fellow Subsidiaries : Besan-Besin Sanayi ve Ticaret A.S.

Brooke Bond Assam Estates Limited Brooke Bond Group Limited Brooke Bond South India Estates Ltd.

Conopco, Inc.

Corporativo Unilever de Mexico, S. de R.L. de C.V. (merged)

Digital Securities Private Limited Glidat Strauss Ltd.

Unilever Chile SA

Lipton Soft Drinks Ireland Limited

Mascolo Brothers Limited

OOO Unilever Rus

P.T. Unilever Indonesia, Tbk.

Tigi Linea International B.V.

Unilever - Zimbabwe (Pvt) Limited Unilever (China) Investing Company Unilever (China) Ltd.

Unilever (Malaysia) Holdings Sdn Bhd Unilever ASCC AG Unilever Asia Private Limited Unilever Australia Ltd.

Unilever Bangladesh Ltd Unilever Brasil Limited Unilever Canada Inc Unilever Cote d''Ivoire Unilever De Argentina SA

Unilever Deutschland Produktions GmbH & Co. OHG Unilever Employment Services B.V.

Unilever Gulf Free Zone Establishment, Arabia Unilever Industries Pvt. Ltd.

Unilever Iran (Private Joint Stock Company)

Unilever Italy Holdings Srl Unilever Japan Unilever Lipton Ceylon Ltd.

Unilever Maghreb Export SA Unilever Mashreq International Company Unilever N.V.

Unilever Nigeria Plc Unilever Overseas Holdings AG

Unilever Pakistan Limited

UNILEVER PHILIPPINES, INC Unilever Research and Development Vlaardingen B.V Unilever Research Laboratory, Colworth House Unilever Sanayi ve Ticaret Turk A.S.

Unilever SNG

Unilever South Africa (Pty) Limited Unilever South Central Europe S.R.L.

Unilever Sri Lanka Limited Unilever Supply Chain Company AG Unilever Thai Services Limited Unilever Thai Trading Limited Unilever U.K. Central Resources Limited Unilever UK & CN Holdings Limited Unilever United States, Inc.

Unilever Ventures India Advisory Private Ltd Unilever Vietnam International Company Limited Lever Brothers, Port Sunlight, Limited

(ii) Joint Ventures : Kimberly Clark Lever Private Limited

(iii) Key Management Personnel : Dev Bajpai

Geetu Verma (from November, 2011)

Harish Manwani Hemant Bakshi

Leena Nair (upto December 2012)

Manish Tiwary (from February, 2012)

Nitin Paranjpe Pradeep Banerjee Sridhar Ramamurthy Shrijeet Mishra (upto July, 2011)

BP Biddappa (from February 2013)

Gopal Vittal (upto January, 2012)

(iv) Employees'' Benefit Plans where there is

significant influence

: Hind Lever Gratuity Fund The Hind Lever Pension Fund The Union Provident Fund

6. Business Segments

The Company has considered business segments as the primary segments for disclosure. The products included in each of the reported domestic business segments are as follows:

a) Soaps and Detergents include soaps, detergent bars, detergent powders, detergent liquids, scourers, etc.

b) Personal Products include products in the categories of Oral Care, Skin Care (excluding soaps), Hair Care, Deodorants, Talcum Powder, Colour Cosmetics, Ayush services, etc.

c) Beverages include tea and coffee.

d) Packaged foods include Branded Staples (Atta, Salt, Bread, etc.), Culinary Products (tomato based products, fruit based products, soups, etc.) and Frozen deserts

e) Others include Exports, Chemicals, Water business, infant Care Products etc.

Segment Revenue relating to each of the above domestic business segments includes Income from Services provided to group companies, where applicable

The above business segments have been identified considering :

a) the nature of products and services

b) the differing risks and returns

c) the internal organisation and management structure, and

d) the internal financial reporting systems

7. Geographical Segments

The geographical segments considered for disclosure are as follows :

a) Sales within India includes sales to customers located within India.

b) Sales outside India includes sales to customers located outside India.

c) The carrying amount of segment assets in India and Outside India is based on geographical location of assets.

8. Previous year''s figures have been regrouped wherever necessary to conform with this year''s classification.


Mar 31, 2012

1) COMPANY INFORMATION

Hindustan Unilever Limited (the 'Company') is a public limited company domiciled in India and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The company is a market leader in the FMCG business comprising home and personal care (HPC) and foods. The Company has manufacturing facilities across the country and Research and Development centres in Mumbai and Bangalore and sells primarily in India through independent distributors and modern trade. The Company has demerged its FMCG exports business to Unilever India Exports Limited, its wholly owned subsidiary effective 1 April 2011 (Refer note 52).

a) Rights, preferences and restrictions attached to shares

Equity shares: The company has one class of equity shares having a par value of Re. 1 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

b) Shares reserved for issue under options

Refer note 48 for details of shares to be issued under the Employee Stock Option Plan

Note:

During the previous year, pursuant to the shareholders' approval for buy back of equity shares under section 77A of the Companies Act, 1956, the Company has bought back 22,883,204 equity shares through open market transactions for an aggregate amount of Rs. 625.30 crores, by utilizing Share Premium and General Reserve to the extent of Rs. 82.16 Crores and 540.85 Crores respectively. Capital redemption reserve has been created out of general reserve for Rs 2.29 crores being the nominal value of shares bought back in terms of section 77AA of the Companies Act, 1956.

Notes :

(a) Buildings include Rs. 0.02crores (2010-11 - Rs.0.02 crores) being the value of shares in co-operative housing societies.

(b) The title deeds of Freehold Land aggregating Rs. 7.77 crores (2010-11 - Rs. 8.77 crores), acquired on transfer of business/undertakings are in the process of being transferred in the name of the Company.

(c) Transfers include ) Assets held for sale shown under 'Other Current Assets' (Refer note 22) : Gross block Rs.11.27 crores, Accumulated depreciation Rs.1.63 crores and Net block Rs. 9.64 crores (2010-11 - Rs. 3.58 crores) and ii) Investment Property shown under 'Non-Current Investments' (Refer note 14): Gross block Rs. 27.62 crores, Accumulated depreciation Rs.6.36 crores and Net block Rs. 21.26 crores.

(d) Additions in capital expenditure of Rs.0.40 crores (2010-11 - Rs. 0.77 crores) and Rs.1.48 crores (2010-11 - Rs. 1.07 crores) incurred at Company's inhouse R&D Facilities at Mumbai and Bangalore respectively are eligible for weighted deduction under section 35 (2AB) of the Income Tax Act, 1961

(e) Impairment charge of Rs. 7.20 crores (2010-11 - Rs. 9.37 crores) on plant and equipment has been included in Miscellaneous Expenses in the Statement of Profit and Loss.

(f) Refer note 52 relating to demerger.

1) CONTINGENT LIABILITIES

As at As at 31st March, 2012 31st March, 2011

Claims against the company not acknow ledged as debts.

Income-tax matters 499.82 490.61 Sales tax matters - Rs. 60.28 Crores (2010-11 - Rs. 83.34 Crores) net of tax 89.24 124.89 A Excise and Customs duty matters - Rs 58.52 Crores (2010-11 - Rs. 51.64 Crores) 86.62 77.39 net of tax

Other matters including claims related to employees/ex-employees, property 67.99 56.07 related demands, etc - Rs. 45.93 Crores (2010-11 - Rs. 37.41 Crores) net of tax

a) It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings

b) The Company does not expect any reimbursements in respect of the above contingent liabilities.

c) Future cash outflows in respect of the above are determinable only on receipt of judgments / decisions pending with various forums / authorities

c) The Company's significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, go down etc.) and computers. These leasing arrangements which are not non-cancellable range between 11 months and 10 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as Rent in the profit and loss account (Refer Note 34).

The company has also given certain land and building on operating lease to a third party. The lease arrangement is for a period of 5 years, including a non-cancellable term of 3 years. The rent income on such lease is included in miscellaneous income (Refer note 27)

Notes :

a) Branded staple foods includes breads, wheat flour, iodized salt and rice in consumer packs

b) Specialty Chemicals comprises Glycerine and Fine Chemicals

c) Others includes Coffee, Scourers, Marine products, Agri commodities, Water, Ayush services etc.

The Guidance Note on Implementing AS 15, 'Employee Benefits' issued by the Accounting Standard Board (ASB) of the Institute of Chartered Accountants of India states that Provident Funds set up by employers that guarantee a specified rate of return and which require interest shortfall to be met by the employer would be defined benefit plans in accordance with the requirements of paragraph 26(b) of AS 15. Pursuant to the Guidance Note, the liability in respect of the shortfall of interest earnings of Fund is Nil determined on the basis of an actuarial valuation carried out as at 31st March, 2012. As per the actuarial valuation report, the interest shortfall liability being "Other Long Term Employee Benefits", detailed disclosures are not required.

2) DEMERGER OF FMCG EXPORTS BUSINESS

In order to fully exploit the opportunity in exports market and to provide necessary focus, flexibility and speed to the business, the Board of Directors approved a Scheme of Arrangement (the 'Scheme') for transfer of the FMCG Exports Business Division (the 'demerged business undertaking') of the Company into its wholly owned subsidiary Unilever India Exports Limited (UIEL') on 9th May, 2011 which was subsequently approved by the shareholders on 28th July, 2011.The Hon'ble High Court of Bombay sanctioned the Scheme with the appointed date of 1st April, 2011 vide an order dated 18th November, 2011. The Scheme became effective from 1st January, 2012 (the 'effective date') upon filing of the said order with the Registrar of Companies of Mumbai. In accordance with the Scheme, the above transfer of demerged business undertaking has been accounted by the company by recording the transfer of the relevant assets and liabilities of the demerged business undertaking at their book values as of the appointed date and the corresponding consideration received aggregating to Rs 70.12 Crores in the form of investment in the shares issued by UIEL (465,000 shares of Rs 10/- each issued at a premium of Rs 1,498/- per share) resulting in no gain or loss to the company. Accordingly, the financial results of the demerged business undertaking do not form part of the audited financial results of the company for the year ended 31st March, 2012 and hence the same are not comparable with the financial results for the year ended 31st March, 2011.

3) PREVIOUS YEAR FIGURES

The financial statements for the year ended 31st March, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31st March,2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

4) SEGMENT INFORMATION (Contd.)

Information about Secondary Business Segments NOTES : 1. Business Segments

The Company has considered business segment as the primary segment for disclosure. The products included in each of the reported domestic business segments are as follows:

a) Soaps and Detergents include soaps, detergent bars, detergent powders, detergent liquids, scourers, etc.

b) Personal Products include products in the categories of Oral Care, Skin Care (excluding soaps), Hair Care, Deodorants, Talcum Powder, Colour Cosmetics, Ayush services, etc.

c) Beverages include tea and coffee.

d) Packaged foods include Branded Staples (Atta, Salt, Bread, etc.), Culinary Products (tomato based products, fruit based products, soups, etc.), Ice Creams and Frozen deserts

e) Others include Exports, Chemicals, Water business, etc.

Segment Revenue relating to each of the above domestic business segments includes Income from Services provided to group companies, where applicable

The above business segments have been identified considering :

a) the nature of products and services

b) the differing risks and returns

c) the internal organization and management structure, and

d) the internal financial reporting systems

2. Geographical Segments

The geographical segments considered for disclosure are as follows :

a) Sales within India includes sales to customers located within India.

b) Sales outside India includes sales to customers located outside India.

c) The carrying amount of segment assets in India and Outside India is based on geographical location of assets.

5. Previous year's figures have been regrouped wherever necessary to conform to this year's classification.


Mar 31, 2011

Rs. Crores

As at As at 31st March, 2011 31st March, 2010

1 CONTINGENT LIABILITIES

Claims made against the Company not acknowledged as debts Income-tax matters 490.61 295.29

Sales tax matters-gross Rs. 124.89 Crores (2009-10: Rs. 178.25 Crores) net of tax 83.34 119.04

Excise and Customs duty matters-gross Rs. 77.39 Crores (2009-10: Rs. 67.69 51.64 45.20 Crores) net of tax

Other matters-gross Rs.56.07 Crores (2009-10: Rs. 13.42 Crores) net of tax 37.41 8.96

Note: Future cash outflows in respect of the above are determinable only on receipt of judgements/decisions pending with various forums/ authorities.

2 MICRO AND SMALL SCALE BUSINESS ENTITIES

There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2011. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

3 Previous years figures have been regrouped wherever necessary to conform to this years classification.


Mar 31, 2010

Rs. Crores

As at As at 31st March, 2010 31 st March, 2009

1 CONTINGENT LIABILITIES

Claims made against the Company not acknowledged as debts

Income-tax matters 295.29 274.46

Sales tax matters-gross Rs. 178.25 Crores (2009- Rs. 202.91 Crores) net of tax 119.04 133.94

Excise and Customs duty matters-gross Rs. 67.69 Crores (2009-Rs. 86.33 Crores) net of tax 45.20 56.99

Other matters-gross Rs. 13.42 Crores (2009 - Rs. 12.61 Crores) net of tax 8.96 8.32

Note: Future cash outflows in respect of (a) above are determinable only on receipt of judgements/decisions pending with various forums/authorities.

2 MICROAND SMALL SCALE BUSINESS ENTITIES

There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days asat31stMarch, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

3 Previous years figures have been regrouped wherever necessary to conform to this years classification.

4 Previous years figures have been regrouped wherever necessary to conform to this years classification.

NOTES TO THE CASH FLOWSTATEMENTFORTHEYEAR ENDED 31ST MARCH, 2010

1. The cash flow statement has been prepared in accordance with the requirements of Accounting Standard - 3 "Cash Flow Statement" notified under section 211 (3C)oftheCompaniesAct, 1956.

2. Figures in brackets indicate Cash Outgo.

3. The previous years figures have been regrouped / restated wherever necessary to conform to this periods classification.

4. In view of note 17.1 to the profit and loss account, the current years figures are not comparable with that of the previous periods figures.

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