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“March Quarter & Full Year 2012-13 Conference Call of Hindustan Unilever” April 29th, 2013

SPEAKER: Management of Hindustan Unilever Limited.

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March Quarter and Full Year 2012-13 Conference Call 29th April 2013

Moderator:

Good day, ladies and gentlemen. I am Sourodip Sarkar, the moderator of this call. Thank you for standing by and welcome to the Hindustan Unilever Limited March Quarter and full-year 2012 and 2013 Earnings Call. For the duration of presentation, all participants’ line will be in the listeningonly mode; and we will have a Q&A session after the presentation. I would like to now hand over the conference to Mr. Dinesh Thapar, General Manger, Investor Relations. Over to you, sir. Thank you, Sourodip. Good evening and welcome to the March Quarter 2013 Results Conference Call of Hindustan Unilever Limited. As always, we have this evening with us Mr. Nitin Paranjpe, CEO and Mr. R. Sridhar, CFO on the call from the HUL end. As a customary we will start the presentation from Sridhar where he shares aspects of our performance in March Quarter, and then hand over to Nitin for him to share his perspectives on the business performance. Before we start the presentation and I hand over to Sridhar, I would like to draw your attention to the safe harbour statement included in the presentation for good orders sake. With that, thank you. And over to you, Sridhar. Thank you, Dinesh. And welcome everyone to our results call for March Quarter as well as the financial year which ended 31st of March. Before I move forward, just to set the strategy, as you know, the strategy of the company is enshrined in what we call Compass which is the strategic framework. Our business philosophy, business model is outlined in the sustainable living plan, and our goals remain unchanged which is about delivering growth that is Competitive, Consistent, Profitable and Responsive. So no change in our strategy, no change in the goals that we are trying to deliver. Before we go into the performance of March Quarter, a few words around the business environment in March Quarter. FMCG markets continue to grow in March Quarter; however, we did see moderation in both volume and value growth across several FMCG categories. This was particularly pronounced in the Modern Trade channel as well as in discretionary categories overall. Further, price growth in the Soaps and Detergents categories has been Page 2 of 29

Dinesh Thapar:

R. Sridhar:

March Quarter and Full Year 2012-13 Conference Call 29th April 2013

fading in the market. The environment related to input cost was overall fairly benign; however, competitive intensity remained high during the quarter. To give you a flavour of the input cost environment, the four key drivers that are shown in this chart, you will see that while brent crude remained broadly at the same level sequentially versus December Quarter and slightly lower compared to March Quarter, North Indian Tea continued to show an inflationary trend. On the other hand, Palm oil was distinctly weaker and softer both relative to the prior quarter and the prior year. Exchange rates have clearly stabilized though on a one-year basis there seems to be a depreciation of about 8 odd percent. So overall input cost both fairly benign. In this environment I think we have delivered growth that is consistent, that’s broad-based, that’s competitive and delivered an improvement in margins. Our Domestic Consumer Business grew by 13% with Underlying Volume growth at about 6%. The reported Underlying Volume growth includes the impact of the up-stocking at end of March in preparation for the transport strike. Stripped off this, the Underlying Volume growth in March Quarter would be around 5.5%. Our Home and Personal Care categories grew at 13% in the quarter, while our Foods and Beverages categories grew by 15%. Operating margin expanded by a further 60 basis points. This is after taking into account a step-up of 90 basis...
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