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Introduction

Hindustan Unilever Limited (HUL) is India’s largest fast moving consumer goods company, with leadership in Home & Personal Care Products and Foods & Beverages. HUL's brands, spread across 20 distinct consumer categories, touch the lives of two out of three Indians. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of Rs.13,718 crores.

The mission that inspires HUL's over 15,000 employees is to "add vitality to life". With 35 Power Brands, HUL meets everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life.

It is a mission HUL shares with its parent company, Unilever, which holds 52.10% of the equity. A Fortune 500 transnational, Unilever sells Foods and Home and Personal Care brands in about 100 countries worldwide.

MissionUnilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life.

Company profile

Past MilestonesIn year 1888, visitors to the Kolkata harbour noticed crates full of Sunlight soap bars, embossed with the words "Made in England by Lever Brothers". With it, began an era of marketing branded Fast Moving Consumer Goods (FMCG).Soon after followed Lifebuoy in 1895 and other famous brands like Pears, Lux and Vim. Vanaspati was launched in 1918 and the famous Dalda brand came to the market in 1937. In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers India Limited (1933) and United Traders Limited (1935). These three companies merged to form HUL in November 1956; HUL offered 10% of its equity to the Indian public, being the first among the foreign subsidiaries to do so. Unilever now holds 52 .10% equity in the company. The rest of the shareholding is distributed among about 360,675 individual shareholders and financial institutions. The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903, the company had launched Red Label tea in the country. In 1912, Brooke Bond & Co. India Limited was formed. Brooke Bond joined the Unilever fold in 1984 through an international acquisition. The erstwhile Lipton's links with India were forged in 1898. Unilever acquired Lipton in 1972, and in 1977 Lipton Tea (India) Limited was incorporated. Pond's (India) Limited had been present in India since 1947. It joined the Unilever fold through an international acquisition of Chesebrough Pond's USA in 1986. Since the very early years, HUL has vigorously responded to the stimulus of economic growth. The growth process has been accompanied by judicious diversification, always in line with Indian

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opinions and aspirations. The liberalisation of the Indian economy, started in 1991, clearly marked an inflexion in HUL's and the Group's growth curve. Removal of the regulatory framework allowed the company to explore every single product and opportunity segment, without any constraints on production capacity. Simultaneously, deregulation permitted alliances, acquisitions and mergers. In one of the most visible and talked about events of India's corporate history, the erstwhile Tata Oil Mills Company (TOMCO) merged with HUL, effective from April 1, 1993. In 1995, HUL and yet another Tata company, Lakme Limited, formed a 50:50 joint venture, Lakme Unilever Limited, to market Lakme's market-leading cosmetics and other appropriate products of both the companies. Subsequently in 1998, Lakme Limited sold its brands to HUL and divested its 50% stake in the joint venture to the company.

HUL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in 1994, Kimberly-Clark Lever Ltd, which markets Huggies Diapers and Kotex Sanitary Pads. HUL has also set up a subsidiary in Nepal, Unilever Nepal Limited (UNL), and its factory represents the largest manufacturing investment in the Himalayan kingdom. The UNL factory manufactures HUL's products like Soaps, Detergents and Personal Products both for the domestic market and exports to India. The 1990s also witnessed a string of crucial mergers, acquisitions and alliances on the Foods and Beverages front. In 1992, the erstwhile Brooke Bond acquired Kothari General Foods, with significant interests in Instant Coffee. In 1993, it acquired the Kissan business from the UB Group and the Dollops Icecream business from Cadbury India. As a measure of backward integration, Tea Estates and Doom Dooma, two plantation companies of Unilever, were merged with Brooke Bond. Then in July 1993, Brooke Bond India and Lipton India merged to form Brooke Bond Lipton India Limited (BBLIL), enabling greater focus and ensuring synergy in the traditional Beverages business. 1994 witnessed BBLIL launching the Wall's range of Frozen Desserts. By the end of the year, the company entered into a strategic alliance with the Kwality Icecream Group families and in 1995 the Milkfood 100% Icecream marketing and distribution rights too were acquired. Finally, BBLIL merged with HUL, with effect from January 1, 1996. The internal restructuring culminated in the merger of Pond's (India) Limited (PIL) with HUL in 1998. The two companies had significant overlaps in Personal Products, Speciality Chemicals and Exports businesses, besides a common distribution system since 1993 for Personal Products. The two also had a common management pool and a technology base. The amalgamation was done to ensure for the Group, benefits from scale economies both in domestic and export markets and enable it to fund investments required for aggressively building new categories. In January 2000, in a historic step, the government decided to award 74 per cent equity in Modern Foods to HUL, thereby beginning the divestment of government equity in public sector undertakings (PSU) to private sector partners. HUL's entry into Bread is a strategic extension of the company's wheat business. In 2002, HUL acquired the government's remaining stake in Modern Foods. In 2003, HUL acquired the Cooked Shrimp and Pasteurised Crabmeat business of the Amalgam Group of Companies, a leader in value added Marine Products exports

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Present Stature Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company, touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of nearly Rs.13718 crores. HUL is also one of the country's largest exporters; it has been recognised as a Golden Super Star Trading House by the Government of India. The mission that inspires HUL's over 15,000 employees, including over 1,300 managers, is to "add vitality to life." HUL meets everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life. It is a mission HUL shares with its parent company, Unilever, which holds 52.10% of the equity. The rest of the shareholding is distributed among 360,675 individual shareholders and financial institutions. HUL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna, Kwality Wall's – are household names across the country and span many categories - soaps, detergents, personal products, tea, coffee, branded staples, ice cream and culinary products. They are manufactured over 40 factories across India. The operations involve over 2,000 suppliers and associates. HUL's distribution network, comprising about 4,000 redistribution stockists, covering 6.3 million retail outlets reaching the entire urban population, and about 250 million rural consumers. HUL has traditionally been a company, which incorporates latest technology in all its operations. The Hindustan Unilever Research Centre (HURC) was set up in 1958, and now has facilities in Mumbai and Bangalore. HURC and the Global Technology Centres in India have over 200 highly qualified scientists and technologists, many with post-doctoral experience acquired in the US and Europe. HUL believes that an organisation's worth is also in the service it renders to the community. HUL is focusing on health & hygiene education, women empowerment, and water management. It is also involved in education and rehabilitation of special or underprivileged children, care for the destitute and HIV-positive, and rural development. HUL has also responded in case of national calamities / adversities and contributes through various welfare measures, most recent being the village built by HUL in earthquake affected Gujarat, and relief & rehabilitation after the Tsunami caused devastation in South India. In 2001, the company embarked on an ambitious programme, Shakti. Through Shakti, HUL is creating micro-enterprise opportunities for rural women, thereby improving their livelihood and the standard of living in rural communities. Shakti also includes health and hygiene education through the Shakti Vani Programme, and creating access to relevant information through the iShakti community portal. The program now covers 15 states in India and has over 45,000 women entrepreneurs in its fold, reaching out to 100,000 plus villages and directly reaching to 150 million rural consumers. By the end of 2010, Shakti aims to have 100,000 Shakti entrepreneurs covering 500,000 villages, touching the lives of over 600 million people. HUL is also running a rural health programme – Lifebuoy Swasthya Chetana. The programme endeavours to induce adoption of hygienic practices among rural Indians and aims to bring down the incidence of diarrhoea. It has already touched 84.6 million people in approximately 43890 villages of 8 states. The vision is to make a billion Indians feel safe and secure.

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If Hindustan Unilever straddles the Indian corporate world, it is because of being single-minded in identifying itself with Indian aspirations and needs in every walk of life.

Board of Directors arish Manwani

Chairman A distinguished alumnus in statistics & economics and MBA from Mumbai University, Mr. Manwani joined HUL in 1976. Following several Sales and Marketing assignments, he became Divisional Vice President - Marketing. Mr. Manwani joined the Board of HUL in 1995, responsible for the Personal Products business. In addition, he held regional responsibility as the Category Leader for Personal Products for the then Central Asia and Middle East (CAME) Business Group. Mr. Manwani then moved to the UK as Senior Vice President for the Global Hair Care and Oral Care Categories and in early 2001 was appointed President of the Home & Personal Care (HPC) - Latin America Business Group. In 2004, he was appointed President and Chief Executive Officer of the HPC - North America Business Group. In April 2005, he was elevated to the Unilever Executive as President – Asia & Africa. Mr. Manwani has attended the Advanced Management Programme (AMP) at Harvard Business School. Nitin Paranjpe

CEO and Managing Director Mr. Nitin Paranjpe joined the Company as a Management Trainee in 1987 after obtaining a degree in BE (Mech) and MBA in Marketing (JBIMS) from Mumbai. In his early years in the Company, Mr. Paranjpe worked as an Area Sales Manager – Detergents, in Delhi Branch and then as a Brand Manager in the Household Cleaning Category.In April 1996, he became the Branch Manager, Chennai and in February 1999 was appointed a member of the Project Millennium team. In 2000, he moved to Unilever, London and was involved in a review of the Organisation Structure. During 2001, he became the Personal Assistant to the Unilever Chairman in London. On his return to India in 2002, he became the Category Head – Fabric Wash & Regional Brand Director (Asia) for some Laundry and Household Cleaning (HHC) Brands. In 2004, he became Vice President – Home Care (Laundry & HHC) India, responsible for the top and bottom-line of the Homecare business and in March 2006, he was appointed as the

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Executive Director for the Home & Personal Care business. Mr. Paranjpe was appointed as the CEO and Managing Director of the Company in February 2008. D. Sundaram

Vice Chairman and CFO Mr D. Sundaram joined HUL in 1975 as Management Trainee and worked in various capacities in HUL as Corporate Accountant, Commercial Manager and Treasurer till 1990. He was seconded to Unilever, London as Commercial Officer for Africa and Middle East Group between 1990 and 1993 and on return was the Financial Member of TOMCO Integration team from 1993 to 1994. He became the Finance Director of Brooke Bond Lipton India Limited in March 1994 when the two companies were merged. He was again seconded to Unilever in August 1996 as Senior Vice President – Finance Central Asia and Middle East Group with responsibility for Finance, IT and business strategies for Unilever companies in the Indian sub-continent, North Africa and the Middle East countries. He returned to India in May 1999 as Finance & IT Director of HUL. Mr Sundaram was elevated as Vice Chairman of the Company in April 2008. Sanjiv Kakkar

Director Mr. Sanjiv Kakkar is BA (Economics) and PGDM from IIM Ahmedabad with 23 years work experience. Mr. Kakkar joined the Company in June 1984 and has worked in various Sales and Marketing assignments. His marketing experience spans across categories including Beverages, Personal Products and Oral & Hair Care. He has also had key stints as Category Head of Oral and General Manager – Sales & Customer Management of Personal Products. He was appointed Vice President – Oral & Hair Care in May 2004. In March 2006, Mr. Kakkar was appointed as Executive Director - Foods and joined the Management Committee on 1st January 2007. Sanjiv was appointed as the Executive Director - Sales and Customer Development in May 2007. Dhaval Buch

Director Mr. Dhaval Buch joined HUL as a Management Trainee in June 1984. He has held a series of assignments in Manufacturing, Household Care category and New Ventures including a stint with Unilever in U.K. during 1993-95. He was a member of Project Millennium, a key organisational

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initiative. In June 2005, he was appointed as Vice President - Technical (HPC) and in 2006 was appointed as Executive Director Supply Chain. He was appointed to the Board of Directors of the Company in April 2008. D. S. Parekh

Director Mr. D. S. Parekh holds a FCA degree from England & Wales. Mr. Parekh has held senior positions in Grindlays and Chase Manhattan. He is the Executive Chairman of Housing Development Finance Corporation. Mr. Parekh joined the Board as Independent Non-Executive Director in 1997. C. K. Prahalad

Director Professor C. K. Prahalad is the Harvey C. Fruehauf Professor of Business Administration at the University of Michigan at Ann Arbor, the US. His contribution to business strategy is globally recognised. He joined the Board as Independent Non-Executive Director in 2000. A. Narayan

Director Mr. A. Narayan is the Managing Director and CEO of ICI India Limited. He is also the Chairman of ICI India Research & Technology Centre. Mr. Narayan joined the Board as Independent Non-Executive Director in 2001. S. Ramadorai

Director Mr. S. Ramadorai is the Chief Executive Officer of Tata Consultancy Services. Mr. Ramadorai is also Chairman of Tata Technologies Ltd. and Chairman of CMC Ltd. He joined the Board as Independent Non-Executive Director in 2002.

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R. A. Mashelkar

Director Dr. R.A. Mashelkar, a Ph. D in Chemical Engineering is an eminent scientist. He has served as the Director General of Council of Scientific and Industrial Research ( CSIR) for over 11 years and is presently the President of Indian National Science Academy and President of Global Research Alliance, a network of publicly funded R&D institutes from Asia-Pacific, Europe and USA with over 60,000 scientists.He is also the President of National Innovation Foundation and Institution of Chemical Engineers (IChemE), UK. Dr. Mashelkar has won over 50 awards and medals in the field of science and technology and was honoured by the President of India with Padmashri (1991) and with Padmabhushan (2000), in recognition of his contribution to nation building.

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CORPORATE GOVERNANCE Hindustan Unilever Limited believes that for a Company to be successful, it must maintain global standards of Corporate Conduct towards all its stakeholders. The Company's foundation has therefore been rooted to stringent Corporate Governance principles. At Hindustan Unilever, we believe that the principles of fairness, transparency and accountability are the cornerstones for good governance. The HUL Code of Business Principles reflects the Company's commitment to these principles. It is the Company's endeavour to continue to achieve highest governance levels.

As regards the compliance with the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges, the Company is in full compliance with the norms and disclosures. Hindustan Unilever Limited believes that for a Company to be successful, it must maintain global standards of Corporate Conduct towards all its stakeholders. The Company's foundation has therefore been rooted to stringent Corporate Governance principles. At Hindustan Unilever, we believe that the principles of fairness, transparency and accountability are the cornerstones for good governance. The HUL Code of Business Principles reflects the Company's commitment to these principles. It is the Company's endeavour to continue to achieve highest governance levels.

As regards the compliance with the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges, the Company is in full compliance with the norms and disclosures.

BOARD OF DIRECTORS

The Board of Directors of the Company represents an optimum mix of professionalism, knowledge and experience. The total strength of the Board of Directors of the Company is 10 Directors comprising a Non-Executive Chairman, four Executive Directors and five Non-Executive Independent Directors.

COMMITTEES OF THE BOARD

Audit Committee

The Audit Committee of the Company is entrusted with the responsibility to supervise the Company’s internal control and financial reporting process. The Audit Committee also looks into controls and security of the Company’s critical IT applications,

Remuneration and Compensation Committee

The Remuneration Committee is vested with all the necessary powers and authority to ensure appropriate disclosure on the remuneration of whole-time Directors and to deal with all the elements of remuneration package of all such Directors within the limits approved by the members of the Company. The Compensation Committee administers the stock option plan of the Company.

Shareholder/Investor Grievances Committee

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The Committee specifically looks into redressing of investors’ complaints with respect to transfer of shares, non-receipt of shares, non-receipt of declared dividends and ensure expeditious share transfer process. The Committee also monitors and reviews the performance and service standards of the Registrar and Share Transfer Agents of the Company and provides continuous guidance to improve the service levels for investors..

Other Functional Committees

Apart from the above statutory committees, the Board of Directors have constituted other functional committees such as committee for approving disposal of surplus assets of the Company, committee for allotment of shares under ESOP to raise the level of governance as also to meet the specific business needs.

Corporate Information

Registered Office

Hindustan Unilever Limited,165/166, Backbay Reclamation Mumbai – 400 020Tel : +91 – 22 – 39830000Fax no. : +91 – 22 - 22026712

Executive Director (Legal) and Company Secretary

Ashok.K.Gupta,Email : hllshare.cmpt@unilever.comTel nos. : +91-22-39832567/ 39832358 / 39832557

Statutory Auditors

Lovelock & Lewes,Chartered Accountants252, Veer Savarkar MargDadar, Mumbai- 400 028

Solicitors

Crawford Bayley & Co.State Bank BuildingN.G.N. Vaidya MargMumbai – 400 023

Registrar and Share Transfer Agents

Karvy Computershare Private LimitedUnit : HINDUSTAN UNILEVER LIMITEDPlot No. 17 to 24, Vittalrao Nagar,Madhapur, Hyderabad – 500 081.Phone : +91- 40 23420818-823Fax : +91- 40 23420814Email : igkcpl@karvy.comWebsite : www.karvy.com

Subsidiary Companies Unilever India Exports LimitedBon Limited

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Unilever Nepal LimitedPond’s Exports LimitedDaverashola Estates Private Limited Jamnagar Properties Private LimitedShamnagar Estates Private LimitedBrooke Bond Real Estates Private LimitedHindustan Unilever Field Services Private LimitedLevers Associated Trust LimitedLevindra Trust LimitedHindlever Trust Limited

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10 YEARS RECORD

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Listing Details of Equity SharesName of Stock Exchange Stock CodeBombay Stock Exchange Limited 500696National Stock Exchange of India Limited HINDUNILVRThe listing fee for the fi nancial year 2007-2008 has been paid to the above stock exchanges. The ISIN Number allottedto the Company’s equity shares of face value of Re. 1/- each under the depository system is INE030A01027.

Share Price DataThe monthly high and low prices and volumes of Hindustan Unilever share at the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE) for the year ended 31st December, 2007 are as under:

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Ratio Analysis

Ratio analysis is one of the techniques of financial analysis where ratios are used as a yardstick for evaluating the financial condition and performance of a firm. Analysis and interpretation of various accounting ratios gives skilled and experienced analyst a better understanding of the financial condition and performance of the firm than what he could have obtained only through a perusal of financial statements.

Types of ratio’s

1. Profitability ratio2. Leverage ratio / Capital structure ratio 3. Turn over ratio 4. Liquidity or Short term solvency ratio’s

Profitability ratio : Profitability ratio measures profitability of a concern firm or company

Net profit ratio: Net profit ratio is the ratio between net profits after taxes and net sales it indicates what portion of sales is left to the owners after operation expenses.

Net profit ratio = (Net profit after taxes / Net sales )x 100

Operating ratio : Operating ratio is the ratio between cost of goods sold plus operating expenses and the net sales

Operation ratio = {(operating expenses + cost of goods sold )/ net sales )}x 100 Cost of goods sold = sales – gross profit

Leverage ratio :Leverage ratio indicates the relative interest of owner and creditors in a business.

Debt equity ratio : Debt equity ratio is the ratio is reflect the relative claim of creditors and share holders against the assets of the business.

Debt equity ratio = Long term liabilities / share holders funds

Long term liabilities = long term loan + Debentures + Other long term loans

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Shares holders funds = equity share capital + Preference share capital + Reserves and Surplus + Undistributed profits – fictitious assets

Turn over ratio (activity ratio ) : Turn over ratio measures the efficiency or effectiveness with which a firm manages with its resources or assets.

Inventory turn over ratio : Inventory turn over ratio is the ratio measures numbers of times on an average stock is sold during the year. Inventory turn over ratio = Cost of goods sold /Aerage inventory

Cost of goods sold = sales – gross profit

Average inventory = (Opening stock + Closing stock ) / 2

Working capital turn over ratio : Working capital turn over ratio is the ratio is express the relation between cost of goods sold and working capital.

Working capital turn over ratio = Cost of goods sold / working capital

Working capital = Current assets – Current liabilities

Cost of goods sold = sales – gross profit

Liquidity ratio : liquidity ratio measures the short time solvency of the firm.

Current ratio : Current ratio is the ratio is a relationship between current assets and current liabilities.

Current ratio = Current assets / Current liabilities

Quick ratio : Quick ratio is the ratio is the relations between quick assets and current liabilities.

Quick ratio = Quick assets / Current liabilities.

Quick assets = Current assets – Stock + Loans and Advances

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Years 2007 2006 2005 2004CURRENT RATIO current assets 341957.79 318969.22 290942.92 353194.46current liabilities 389767.27 328067.59 308130.3 274608.99current ratio 0.877338392 0.972266782 0.944220416 1.286172241

QUICK RATIO Quick assets 208573.02 220678.82 201546.08 209360.87Current liabilities 389767.27 328069.59 308130.3 274608.99Quick ratio 0.535121946 0.672658566 0.654093674 0.762396271

INVENTORY TURN OVER RATIO Cost of goods sold 1391340.28 1241097.61 1156582.6 1059820.01Average inventory 180407.175 149806.765 147529.68 152432.9Inventory turn over ratio 7.712222532 8.284656638 7.839660467 6.952698597

NET PROFIT RATIO Net profit after tax 176767.28 152314.89 132282.6 146181.48 sales 1391340.28 1241097.61 1156582.6 1059820.01Net profit ratio 12.70482013 12.27259555 11.43736729 13.79304775

WORKING CAPITAL TURN OVER RATIO Cost of goods sold 1391340.28 1241097.61 1156582.6 1059820.01Working capital -47809.48 -9098.37 -17187.38 78585.47

Working capital turn over ratio -29.1017655

9 -136.4087864 -67.29254837 13.4862082

EARNING PER SHARE (EPS) Net profit after taxes Number of shares out standing EPS 8.69 8.57 6.61 5.49

OPERATING RATIO Operating expenses 1200917.07 1079890.83 1012946.14 910806.71Sales 1391340.28 1241097.61 1156582.6 1059820.1Operating ratio 86.31368525 87.01095073 87.58095963 85.93974676

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