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Corporate Social Responsibility & Corporate Governance Activities

Undertaken By HUL.

Project Report for Autumn 2010 submitted to the

Department of Management Studies,

Rizvi college of Arts, Science & Comm.

Bandra (W), Mumbai-400050

In Partial Fulfillment of the requirements for the

Degree of Bachelor in Management Studies.

Submitted

by

Arjuman Ansari.

Eram Khan.

Sayeeda Khan.

Shazia Khan.

Shabnam Saboowala.

Sana Shaikh.

Project Head: Prof. Mr.Sameer Virani

Rizvi College Of Arts, Science & Commerce.

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Acknowledgement.

Apart from the efforts of us, the success of this project depends largely on theencouragement and guidelines of many others. I take this opportunity to express

my gratitude to the people who have been instrumental in the successful

completion of this project.

I would like to show my greatest appreciation to Prof. Sameer Virani. I cant say

thank you enough for his tremendous support and help. I feel motivated and

encouraged every time I attend his lecture. Without his encouragement and

guidance this project would not have materialized.

The guidance and support received from the company Hindustan Unilever

Limited who contributed and are contributing to this project, was vital for thesuccess of the project. I am grateful for their constant support and help.

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Certificate.

This is to certify that Eram Khan, Arjuman Ansari, Sayeeda Khan, Shazia Khan, Shabnam Saboowala

& Sana Shaikh ,BMS final year students of Rizvi College Of Arts, Science & Commerce have

completed their project under the guidance of Prof. Sameer Virani towards the partial fulfillment of

the award of TYBMS during the academic year 2010 - 2011

The project work entitled CSR & Corporate Governance Activities of HUL

________________ _________________

Project Guide/HOD Principal / Headmaster

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D eclaration.

We hereby declare that the project work entitled Corporate Social

Resposibility & Corporate Governance Activities of HUL submitted to the Rizvi

College,is record of the original work done by us under the guidance of Prof.

Mr.Sameer Virani, Faculty Member, Rizvi College Of Arts, Science & Comerce.

Name Of The Students Roll Nos. Signatures

Eram Khan 23 ________

Sayeeda Khan 28 ________

Shabnam Saboowala 46 ________

Sana Shaikh 53 ________

Arjuman Ansari 62 ________

Shazia khan. 79 ________

Place : Mumbai.

Date : 18/08/2010

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Introduction.

HULs heritage dates back to 1888, when the first Unilever product, Sunlight, wasintroduced in India. Local manufacturing began in the 1930s with the establishmentof subsidiary companies. They merged in 1956 to form Hindustan Lever Limited(The company was renamed Hindustan Unilever Limited on June 25, 2007). Thecompany created history when it offered equity to Indian shareholders, becomingthe first foreign subsidiary company to do so. Today, the company has more thanthree lakh resident shareholders.

HULs brands -- like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely,Sunsilk, Clinic, Close-up, Pepsodent, Lakme, Brooke Bond, Kissan, Knorr,Annapurna, Kwality- Walls - are household names across the country and spanmany categories - soaps, detergents, personal products, tea, coffee, branded staples,

ice cream and culinary products. They are manufactured in over 35 factories,several of them in backward areas of the country. The operations involve over2,000 suppliers and associates.HUL's distribution network covers 6.3 million retailoutlets including direct reach to over 1 million. HUL has traditionally been acompany, which incorporates latest technology in all its operations.

Hindustan Unilever was recently rated among the top four companies globally inthe list of Global Top Companies for Leaders by a study sponsored by HewittAssociates, in partnership with Fortune magazine and the RBL Group. Thecompany was ranked number one in the Asia-Pacific region and in India.

The mission that inspires HUL's more than 15,000 employees, including over 1,400managers, is to add vitality to life". The company meets everyday needs fornutrition, hygiene, and personal care, with brands that help people feel good, look

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good and get more out of life. It is a mission HUL shares with its parent company,Unilever, which holds about 52 % of the equity.

Hindustan Unilever Limited (HUL) (BSE: HUL) is India's largest fast movingconsumer goods company, touching the lives of two out of three Indians with over20 distinct categories in home & personal care products and food & beverages.They endow the company with a scale of combined volumes of about 4 milliontonnes and sales of over Rs. 13,000 crores. HUL is also one of the country's largestexporters; it has been recognised as a Golden Super Star Trading House by theGovernment of India.

HUL was formed in 1933 as Lever Brothers India Limited and came into being in1956 as Hindustan Lever Limited through a merger ofLever Brothers, HindustanVanaspati Mfg. Co. Ltd. and United Traders Ltd.. It is headquartered in Mumbai,

India and has an employee strength of over 15,000 employees and contributes forsindirect employment of over 52,000 people. The company was renamed in June2007 to Hindustan Unilever Limited.

In 2007, Hindustan Unilever was rated as the most respected company in India forthe past 25 years by Businessworld, one of Indias leading business magazines. Therating was based on a compilation of the magazines annual survey of Indias MostReputed Companies over the past 25 years. HUL is the market leader in Indianconsumer products with presence in over 20 consumer categories such as soaps,

tea, detergents and shampoos amongst others with over 700 million Indianconsumers using its products. It has over 35 brands. Sixteen of HULs brandsfeatured in the ACNielsen Brand Equity list of 100 Most Trusted Brands AnnualSurvey (2008). According to Brand Equity, HUL has the largest number of brandsin the Most Trusted Brands List. Its a company that has consistently had thelargest number of brands in the Top 50 and in the Top 10 (with 4 brands).

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Hindustan Unilever's distribution covers over 1 million retails outlets across Indiadirectly and its products are available in over 6.3 million outlets in India, i.e.,nearly 80% of the retail outlets in India. It has 39 factories in the country. Two outof three Indians use the companys products and HUL products have the largestconsumer reach being available in over 80 per cent of consumer homes acrossIndia.

The Anglo-Dutch company Unileverowns a majority stake (52%) in HindustanUnilever Limited. HUL was one of the eight Indian companies to be featured onthe Forbes list of Worlds Most Reputed companies in 2007

Foods

From yummy ice creams to scrumptious sauces, our food brands can satisfy even

the most discerning palates.

Home care

Whether you want fresh, soft clothes or sparklingly clean bathrooms, our home

care brands can help

Personal care

In need of hair care heroics? Wanting to relax with a luxurious bath? Our personalcare brands have answers to all these questions and more.

They 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.

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Hindustan Unilever Limited

Type Public companyBSE:HUL

Industry Fast Moving Consumer GoodsFMCG)

Founded 1933

Headquarters Mumbai,India

Key people Harish Manwani (Chairman), Nitin Paranjpe (CEO and Managing Director)

Products Home & Personal Care, Foods, Water Purifier

Revenue Rs20,869.57 crore (US$4.45 billion) (2008-2009)[1]

Employees Over 65,000 direct & indirect employees

Parent UnileverPlc

Website www.hul.co.in

Present Stature .

Hindustan Unilever Limited (HUL) is India's largest fast moving consumer goodscompany, and estimates that two out of three Indians use its products. It has over42 factories across India.

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HUL is also one of the country's largest exporters; it has been recognised as aGolden Super Star Trading House by the Government of India.

The Hindustan Unilever Research Centre (HURC) was set up in 1958, and now hasfacilities in Mumbai and Bangalore. HURC and the Global Technology Centres inIndia have over 200 highly qualified scientists and technologists, many with post-doctoral experience acquired in the US and Europe.

HUL also renders services to the community, focusing on health & hygieneeducation, empowerment of women, andwater management. It is also involved ineducation and rehabilitation of underprivileged children, care for the destitute andHIV-positive, and rural development. HUL has also responded to nationalcalamities, for instance with relief and rehabilitation after the 2004 tsunami causeddevastation in South India.

In 2001, the company embarked on a programme called Shakti, through which itcreates micro-enterprises for rural women. Shakti also includes health and hygieneeducation through the Shakti Vani Programme, which now covers 15 states in Indiawith over 45,000 women entrepreneurs in 135,000 villages. 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 induceadoption of hygienic practices among rural Indians and aims to bring down theincidence of diarrhoea. So far it has reached 120 million people in over 50,000

villages.

Corporate Social Responsibility.

A business that makes nothing but money is a poor kind of

business.

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The World Business Council for Sustainable Development in its publication

"Making Good Business Sense" by Lord Holme and Richard Watts, used the

following definition. "Corporate Social Responsibility is the continuing

commitment by business to behave ethically and contribute to economic

development while improving the quality of life of the workforce and their

families as well as of the local community and society at large"

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The same report gave some evidence of the different perceptions of what thisshould mean from a number of different societies across the world. Definitions asdifferent as "CSR is about capacity building for sustainable livelihoods. It respectscultural differences and finds the business opportunities in building the skills ofemployees, the community and the government" from Ghana, through to "CSR isabout business giving back to society" from the Phillipines.

Traditionally in the United States, CSR has been defined much more in terms of a philanphropic model. Companies make profits, unhindered except by fulfillingtheir duty to pay taxes. Then they donate a certain share of the profits to charitablecauses. It is seen as tainting the act for the company to receive any benefit from thegiving.

The European model is much more focused on operating the core business in asocially responsible way, complemented by investment in communities for solidbusiness case reasons. Personally, I believe this model is more sustainable because:

1. Social responsibility becomes an integral part of the wealth creationprocess - which if managed properly should enhance the competitivenessof business and maximise the value of wealth creation to society.2. When times get hard, there is the incentive to practice CSR more and

better - if it is a philanphropic exercise which is peripheral to the mainbusiness, it will always be the first thing to go when push comes to shove.

But as with any process based on the collective activities of communities of humanbeings (as companies are) there is no "one size fits all". In different countries, therewill be different priorities, and values that will shape how business act. And eventhe observations above are changing over time. The US has growing numbers of

people looking towards core business issues.

For instance, the CSR definition used by Business for Social Responsibility is:"Operating a business in a manner that meets or exceeds the ethical, legal,commercial and public expectations that society has of business.

On the other hand, the European Commission hedges its bets with two definitionswrapped into one: "A concept whereby companies decide voluntarily to contributeto a better society and a cleaner environment. A concept whereby companiesintegrate social and environmental concerns in their business operations and intheir interaction with their stakeholders on a voluntary basis".

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CSR is about how companies manage the business processes to

produce an overall positive impact on society.

Take the following illustration:

Companies need to answer to two aspects of their operations. 1. The quality of theirmanagement - both in terms of people and processes (the inner circle). 2. Thenature of, and quantity of their impact on society in the various areas.

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When you review each of these, they broadly agree that the definition now focuseson the impact of how you manage your core business. Some go further than othersin prescribing how far companies go beyond managing their own impact into theterrain of acting specifically outside of that focus to make a contribution to theachievement of broader societal goals. It is a key difference, when many businessleaders feel that their companies are ill equipped to pursue broaders societal goals,and activists argue that companies have no democratic legitimacy to take suchroles. That particular debate will continue.

WHY CSR IS IMPORANT ???

Several factors contribute to the importance of CSR. Most importantly, CSRshould not just be another department in a large corporation or a policy it choosesto pursue some of the time. Companies cannot only employ CSR strategies when

they have the economic means to do so or when business is good and disband CSRpolicies when business is slow, but rather; CSR must be engrained as a centralvalue of a company no matter what the economic times are like.

The most important reason CSR is taking prominence in the corporate world isbecause evidence suggests that companies that pursue CSR strategies are moreprofitable than those who do not. Moreover, CSR has gained prominence becausethe Internet and mass media, empowered by globalization, make it difficult forcompanies to bury or hide detrimental social practices. Preserving and maintaininga healthy company image is one reason for the prevalence of CSR.

Lastly, the awareness of a duty to the communities in which companies operate isemerging. Corporations understand their roles as global citizens and CSR allowsthem to positively facilitate relationships with the communities in which theyoperate. Current World Wild Life CEO Carter Roberts epitomizes this point,Companies still thinking about the environment and the community as socialresponsibilities rather than business imperatives are living in the dark ages.S

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CSR ACTIVITIES.

Sales (2007-2008) = Rs.14000 crores (rounded off)

Net profit after tax = Rs.2000 crores (rounded off)

Community initiatives.HUL believes that an organisations worth beyond its business, is captured by theservice it renders to the community. We focus on nutrition, health and hygieneeducation, empowering livelihoods and eco-efficiency. We are committed to

responsible leadership by positively impacting India on her most challengingissues.

Our Goal.We seek to positively impact India on issues relevant to stakeholders andcommunities.

Our Approach.As a part of our voluntary initiatives, we will respond to natural disaster andsupport relief and welfare measures for vulnerable sections etc.

We will also actively work towards water conservation to benefit communitiesaround our manufacturing sites.

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Social

Providing healthcare

Sanjivani Mobile Medical Facility

HUL started Sanjivani a Mobile Medical Service in the year 2003 to bringeffective medical care to villages surrounding our Doom Dooma factory in Assam.The objective has been to meet basic medical needs of people living in the remotevillages in Assam through a charge-free mobile medical facility. Apart from basicmedical services, it also spreads awareness on issues such as hygiene, childimmunization, family planning etc.

The project covers a radius of 40 kilometers around the factory with two mobilevans equipped with basic medical equipment and specialised team of one maleand one female doctor, two nurses, a medical attendant and drivers.

On an average, 400 Sanjivini medical camps are conducted every year in remotevillages surrounding our factory. The project is run in close co-ordination with thelocal administration and the progress is reviewed every quarter.

The Sanjivani project has provided medical assistance to more than 1,43,364

patients since its inception and in 2007 alone in 344 camps more than 22,395 patients were treated. In 2008 through 437 camps, 31,790 patients have beentreated.

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Disaster relief and rehabilitation

Floods, Bihar, 2008

HUL contributed 10,000 kits worth Rs.60 lakhs as the first installment of material

for immediate relief of the flood affected families of Araria District in Bihar. Thekit contained essential items such as utensils, clothes, blankets and other usefulmaterial. In all, 12 truckloads of material were distributed to the affected familiesunder the guidance of the Araria District Magistrate.

A sum of 84 lakhs was contributed by HUL employees and the company torehabilitate the underprivileged amongst the flood-affected families in the villageof Jorgama, Madhepura District, Bihar.

The Project aims at providing, through a strategic alliance between HUL, ACC &Habitat International, the following facilities to the People in a phased manner:- Construction of 100 disaster proof houses for the purpose of rehabilitation;- Construction and development of a Community Resource Centre for people- Design, development and implementation of livelihood programmes aiming atsustained and increased income for 300 families- Capacity and capability building of villagers for village development- Promoting the concept of Self-Help Groups to develop economically, ecologicallyand viable plans and to mobilize finances for farming and non-farming activities- Creating alternate livelihood opportunities in the areas of manufacturing of concrete

products, sale of hollow brick blocks, fly ash bricks, pavement blocks etc.- Ensuring the involvement of people in non-farming activities and help create afeasible rapport with fair, remunerative and competitive markets- Assist in improving the living condition for at least 300 families- Development of a model village with provisions for safe drinking water & put in

place a mechanism for water resource management, provisions of electricity supply,clinical & sanitation facilities, etc.

Tsunami, South India, 2006

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HUL contributed over Rs. 100 million towards relief and rehabilitation oftsunami affected families by the way of providing relief material, land andconstruction of facilities. The Company distributed nutritional and personal

hygiene products worth Rs. 50 million for immediate relief to the needy at thetime that tsunami had hit the region. Later, pursuant to a request from theGovernment of Tamil Nadu on a more pressing need to provide housing to theaffected families, HUL donated 5.27 acres of land (market value on aconservative basis is Rs. 45 million) at Tondiarpet, Chennai, to the Governmentof Tamil Nadu for rehabilitation.

The complex has 960 permanent houses spread over 5.27 acres of land donated by

HUL. Employees of HUL made a contribution of Rs. 5 million towards theconstruction of the facilities in the complex.

On the day of the disaster, employees from our factories and offices inPondicherry, Tamil Nadu and Kerala had provided necessary relief to theTsunami-hit people. The relief operations included distribution of bread and

biscuits to over 500 families in Pondicherry, 12,000 cooked meals for families inChennai, Nagapattinam, Cuddalore and Andamans. Over 12,000 dry relief packs,

comprising of Company's dry rations and personal hygiene products weredistributed.

Gujarat Earthquake, 2001

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Shakti is HUL's rural initiative, which targets small villages with population of lessthan 2000 people or less. It seeks to empower underprivileged rural women by

providing income-generating opportunities, health and hygiene education throughthe Shakti Vani programme, and creating access to relevant information throughthe iShakti community portal.

In general, rural women in India are underprivileged and need a sustainable sourceof income. NGOs, governmental bodies and other institutions have been working toimprove the status of rural women. Shakti is a pioneering effort in creatinglivelihoods for rural women, organised in Self-Help Groups (SHGs), andimproving living standards in rural India. Shakti provides critically neededadditional income to these women and their families, by equipping and trainingthem to become an extended arm of the company's operation.

Health & Hygiene Education

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Lifebuoy Swastya Chetna (LBSC) is a rural health and hygiene initiative whichwas started in 2002. LBSC was initiated in media dark villages (in UP, MP, Bihar,West Bengal, Maharashtra, Orissa) with the objective of spreading awareness aboutthe importance of washing hands with soap.

The need for a program of this nature arose from the fact that diarrhoeal diseases

are a major cause of death in the world today. It is estimated that diarrhoea claimsthe life of a child every 10 seconds and one third of these deaths are in India.According to a study done by the London School of Hygiene and TropicalMedicine, the simple practice of washing hands with soap and water can reducediarrhoea by as much as 47%. However, ignorance of such basic hygiene practicesleads to high mortality rates in rural India.

Economic Empowerment of Women

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EMPOWERMENT OF WOMEN THROUGH EDUCATION

Fair & Lovely Foundation

Scholarships of up to Rs. 1 lakh awarded to women with aptitude, drive & theambition to carve a place of pride for themselves in society, but do not have thefinancial strength to realise their dreams. Awarded, earlier, for postgraduate studiesthese scholarships have now been extended to graduate studies as well.Since 2003, over 600 scholarships have been awarded to women from across India.

The Fair & Lovely Foundation is HUL's initiative which aims at economicempowerment of women across India. It aims to achieve this through providinginformation, resources, inputs and support in the areas of education, career and

enterprise. It specifically targets women from low-income groups in rural as well asurban India. Fair & Lovely, as a brand, stands on the economic empowerment

platform and the Foundation is an extension of this promise. The Foundation hasrenowned Indian women, from various walks of life, as its advisors. Among themare educationists, NGO activists, physicians. The Foundation is implementing itsactivities in association with state governments.

Special Education & Rehabilitation

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Under the Happy Homes initiative, HUL supports special education andrehabilitation of children with challenges.

Asha Daan:

The initiative began in 1976, when HUL supported Mother Teresa and theMissionaries of Charity to set up Asha Daan, a home in Mumbai for abandoned,challenged children, and the destitute.

The vulnerable

In 1976, HUL provided a 72,500-square feet plot to set up Asha Daan in the heartof Mumbai city. This home is supported by Mother Teresa & the Missonaries of

Charity and cares for abandoned and challenged children, victims of HIV and thedestitute. HUL bears the capital and revenue expenses for maintenance,upkeep and security of the premises. At any point of time, about 370 peoplecomprising boys, girls, men and women live at the Home and their needs for food,clothing and medicines are catered to.

The needs of the abandoned / challenged children are met through special classesof basic skills, physiotherapy, etc. being taken care of by the Sisters of the Home.Wherever necessary, corrective surgery is also arranged for in the city hospitals.

Mother Teresa's desire to open a ward for female HIV positive patientswas made possible by HUL in 1995. Since its inception, the AIDS Ward has takencare of 375 patients. Till date, over 15,750 individuals have benefited fromAshadaan

Ankur:

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In 1993, HUL's Doom Dooma Plantation Division set up Ankur, a centre forspecial education of challenged children. The centre takes care of children withchallenges, aged between 5 and 15 years. Ankur provides educational, vocationaland recreational activities to over 35 children with a range of challenges, includingsight or hearing impairment, polio related disabilities, cerebral palsy and severelearning difficulties. Ankur focuses oneducational, vocational and recreational activities. The children are taught skills,such as cookery, painting, embroidery, bamboo crafts, weaving, candle making,stitching, etc. depending on their aptitudes.

The centre has rehabilitated 10 children, including facilitating self-employment for6 children by providing them with shops, and 3 girls have been providedemployment as crche attendants. It has also helped 18 children in moving them tonormal schools. Since inception it has touched over 80 children. Ankur

received the Lawrie Group's Worldaware Award for Social Progress in 1999 fromHer Royal Highness in London.

Kappagam:Encouraged by Ankur's success, Kappagam ("shelter"), the second centre forspecial education of challenged children, was set up in 1998 on HUL Plantations inSouth India. It has 17 children. The focus of Kappagam is the same as that ofAnkur.

Anbagam:Yet another day care center, Anbagam ("shelter of love"), has been started in 2003also in the South India Plantations. It takes care of 11 children. Besides medicalcare and meals, they too are being taught skills such that they can become self-reliant and elementary studies.

EconomicEmpowering livelihoods

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HUL DHAN FoundationAs a part of our 75th year initiatives, we partnered with DHAN foundation a

professionally managed development organization engaged in enhancing theincomes of 75,000 women from economically poor households in South India.

The objectives of the DHAN programme are to:- ensure a minimum increase of aggregate Rs. 150 million for the selected 75,000poor women- support the federations of self help groups for initiating suitable projects forenhancing the incomes of the selected poor women based on their needs

Vindhya Valley Project

This project aimed at sharing business and marketing skills with people from thevillages. We partnered with rural below the poverty line Self Help Groups (SHG)to build a brand and set up a distribution system to succeed in a highly competitive

urban FMCG market. This project, in partnership with the Government of MadhyaPradesh, seeks to generate sustainable livelihoods in rural areas while cutting outmiddlemenand providing maximum value to the manufacturers.

This project leverages the core strength of the company in the areas of brandbuilding and activation to serve the communities in Vindhya Valley, MP andRudi, Gujarat. This not only protects the SHGs from the exploitation ofmiddlemen, but also empowers them in becoming effective marketeers andsuccessfulentrepreneurs.

HUL provided the technical know-how, business insights and marketing skills tomanufacturers to help put in place an end-to-end system that takes care of allaspects of the business operation. HUL also provided guidance for the execution ofall business plans and review mechanisms. Keys areas where HUL assisted is:- upgrading rural SHG manufacturing units and training them- developing packing design- production processes

- setting up the logistics- sales and distribution systems and- advertising and promotion

Vindhya Valley's portfolio of spices, honey, lentil wafers, pickles, incense sticksand others are manufactured in 12 locations with over 500 direct beneficiaries.

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HUL was awarded the TERI CSR award in 2006 by the President of India inrecognition of its conceptualisation and efforts in the Vindhya Valley Project

Environmental

A responsible corporate citizen

The Pollution Control Committee of D&NH contacted our Silvassa Unit to tackle acritical problem. Drums full of toxic chemicals were dumped into the DamanGanga river by some chemical manufacturer. It was of paramount importance tocontrol the spread of these toxic chemicals before it assumed severe proportions.The task was entrusted to a team headed by our Safety Officer from our SilvassaUnit. They provided safety equipments and neutralising agents which helped todefuse the situation in four hours. Their quick and timely support was appreciated

by the local administration.

Water conservationWater scarcity is one of the biggest crisis facing India. Water management has

been a focus area for HUL, and has been made one of the key performanceindicators of all HUL factories. HUL is also committed to extending its efforts onwater management to the larger community, and has engaged in community

projects in water adjacent to our manufacturing sites. HUL's Khamgaon factory islocated in a dry and arid region of Maharashtra. Around 12 years ago the factorystarted a pilot project on 'Watershed Management' on a five hectare plot to prevent

soil degradation and conserve water. The efforts have resulted in the creation of agreen belt, which is now a veritable forest of about 6,300 trees

Encouraged by the results, HUL extended the model to a neighbouring village,Parkhed, in association with TERI and Bharatiya Agro Industries Foundation. Thecommunity at Parkhed has already constructed 47 percolation bunds, 1,600trenches, 6,000 running metres of continuous contour trenching over 100 hectaresand 5 permanent check dams. Around 350 families have reaped a second crop thisyear which is only possible due to construction of check dams. Total land undercultivation during second crop season is 470 acres.

The annual income of the farmers in the vicinity of 5 check dams increased fromaround an average of Rs. 36,000/- to approx. Rs. 85,000/- per annum per farmer.This has been attributed to the availability of water in the wells during the Rabbiseason and also increase in the level of water in the wells during the Kharif season.

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Hence, along with reaping a rabbi crop, the farmers have also been able to almostdouble the yield of the Kharif crop. The initiative received appreciation at theJohannesburg World Summit on Sustainable Development.

SilvassaKarchond near Silvassa spans 1491 hectares and has a population of 3253consisting of 478 families. The chief occupation of the area is farming for 4 monthswhen water is available. After this the population migrates to Daman Silvassa forlabor/contract jobs. Thus, water conservation was a great necessity. In associationwith Vanarai, an NGO, HUL's Silvassa unit embarked on a long-term project ofwater harvesting, which aimed to dramatically change water availability, taking itup to year-round availability from 4 months.

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Corporate governance

Not to be confused with a corporate state , a corporative government rather than the

government of a corporation

Responsible corporate conduct is integral to the way we do our business. Ouractions are governed by our valuesand principles, which are reinforced at all levels within the Company. We, atHindustan Unilever, are committed todoing things the right way which means taking business decisions and acting in away that is ethical and is in compliance with the applicable legal requirements.

Our Code of Business Principles is an extension of our values and reflectsour continued commitment to ethical business practices and regulatory compliance.We acknowledge our individual and collective responsibilities to manage our

business activities with integrity.To succeed, we believe, requires the highest standards of corporate behavior

towards everyone we workwith, the communities we touch, and the environment on which we have an impact.

This is our road to sustainable, profitable growth and creating long-termvalue for our shareholders, our people, and our business partners. During last 75years of the Companys existence, the above principles have been the guiding force

for whatever we do and shall continue to be so in the coming years.The Board of Directors of your Company are responsible for and committed

to sound principles of Corporate Governance in the Company. The Board plays acritical role in overseeing how the management serves the short and long terminterests of shareholders and other stakeholders. This belief is reflected in ourgovernance practices, under which we strive to maintain an active, informed, and

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independent Board. We keep our governance practices under continuous reviewand benchmark ourselves to the best governed companies across the globe.

The Board of Directors

The Board of Directors (the Board) is entrusted with the ultimate responsibility ofthe management, general affairs,direction and performance of the Company and has been vested with the requisite

powers, authorities and duties. The Management Committee of the Company isheaded by the Managing Director and Chief Executive Officer and has business/

functional heads as its members, which looks after management of the day-to-dayaffairs of the Company.

Appointment and Tenure

The Directors of the Company are appointed by shareholders at General Meetings.All Directors, except forthe Managing Director, step down at the Annual General Meeting each year and, ifeligible, offer themselves forre-election, in accordance with the Articles of Association of the Company.

The Executive Directors on the Board serve in accordance with the terms oftheir contracts of service with the Company. As per the Company policy, theIndependent Directors do not seek re-appointment on attaining the age of 70 years.The Company also follows the policy of having a ceiling of nine years on the termof office of Independent Directors after revised Clause 49 of Listing Agreementhas come into effect in October 2004.

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Composition

The Board consists of 10 Directors comprising four Executive Directors, one Non-Executive Director and five Independent Directors. The Chairman of the Board is a

Non-Executive Director. The Board represents an optimal mix

of professionalism, knowledge and experience. The detailed profiles of themembers of the Board of Directors are

provided on page nos. 18 to 23 of the Annual Report.

Corporate governance is the set ofprocesses, customs, policies, laws, andinstitutions affecting the way a corporation (orcompany) is directed, administeredor controlled. Corporate governance also includes the relationships among themany stakeholders involved and the goals for which the corporation is governed.

The principal stakeholders are the shareholders, theboard of directors, employees,customers, creditors, suppliers, and the community at large.

Corporate governance is a multi-faceted subject. An important theme of corporategovernance is to ensure the accountability of certain individuals in an organizationthrough mechanisms that try to reduce or eliminate the principal-agent problem. Arelated but separate thread of discussions focuses on the impact of a corporategovernance system in economic efficiency, with a strong emphasis on shareholders'welfare. There are yet other aspects to the corporate governance subject, such asthe stakeholder view and the corporate governance models around the world There

has been renewed interest in the corporate governance practices of moderncorporations since 2001, particularly due to the high-profile collapses of a numberof large U.S. firms such as Enron Corporation and MCI Inc. (formerly WorldCom).In 2002, the U.S. federal government passed the Sarbanes-Oxley Act, intending torestore public confidence in corporate governance.

It is believed that nothing can be greater than a business, however small

it may be, that is governed by conscience; and that nothing can be

meaner or more petty than a business, however large, governed without

honesty and without brotherhood.-William Hesketh Lever

Transparency and accountability are the two basic tenets of Corporate

Governance. Hindustan Unilever feels proud to belong to a Company whose

visionary founders had laid the foundation stone for good governance long

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back and made it an integral principle of the business, demonstrated in the

words above.

HULs approach to Corporate Governance

To succeed, they believe, requires the highest standards of corporate behaviourtowards everyone they work with, the communities they touch, and theenvironment on which they have an impact. This is their road to sustainable,

profitable growth and creating long-term value for their shareholders, their people,and their business partners.

Corporate Information

Registered Office

Hindustan Unilever Limited,

165/166, Backbay Reclamation

Mumbai 400 020

Tel : +91 22 39830000

Fax no. : +91 22 22026712

Corporate Office & Research Centre

Hindustan Unilever Limited,

Unilever House,

B. D. Sawant Marg,

Chakala, Andheri (E),Mumbai - 400 099.

Executive Director (Legal) and Company

Secretary

Dev Bajpai,

Email : hllshare.cmpt@unilever.com

Tel nos. : +91-22-398 32557 / 32358

/ 32532 / 32312

Statutory Auditors Lovelock & Lewes,

Chartered Accountants

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252, Veer Savarkar Marg

Dadar, Mumbai- 400 028

Solicitors

Crawford Bayley & Co.

State Bank Building N.G.N. Vaidya Marg

Mumbai 400 023

Registrar and Share Transfer Agents

Karvy Computershare Private

Limited

Unit : HINDUSTAN UNILEVER

LIMITED

Plot No. 17 to 24, Vittalrao Nagar,Madhapur, Hyderabad 500 081.

Phone : +91- 40 23420818-823

Fax : +91- 40 23420814

Email : igkcpl@karvy.com

Website : www.karvy.com

Subsidiary Companies

Unilever India Exports LimitedUnilever Nepal Limited

Ponds Exports LimitedLakme Lever Private LimitedDaverashola Estates Private LimitedJamnagar Properties Private LimitedBrooke Bond Real Estates PrivateLimitedHindustan Field Services PrivateLimitedLevers Associated Trust LimitedLevindra Trust LimitedHindlever Trust Limited

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HUL Policies

Unilever is committed to providing the very best not only to our customers but alsoto the environment. Read up on some Unilever policies that aim to do just that.

Environment Policy

The aim of the Policy is to do all that is reasonably practicable to prevent orminimise, encompassing all available knowledge and information, the risk of anadverse environmental impact arising from processing of the product, its use orforeseeable misuse.

Quality Policy

HULs Quality Policy describes the principles that everyone in Unilever follows,wherever they are in the world, to ensure that they are recognised and trusted forotheir integrity, the quality of their brands and products, and the high standardsthey set.

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Safety & Health Policy

Hindustan Unilever Limited (HUL) supplies high quality goods and services tomeet the daily needs of consumers and customers.

Affirmative Action Policy

HUL is a signatory to the CII Code of Conduct on AffirmativeAction and affirms its recognition.

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