Table of Contents

Objectives ............................................................................................................................................... 2 Introduction to HUL ............................................................................................................................... 2 Accounting Policies ................................................................................................................................ 3 Fixed Assets ............................................................................................................................................ 6 Liabilities ................................................................................................................................................ 7 Depreciation ............................................................................................................................................ 7 Inventories............................................................................................................................................... 8 Dividends ................................................................................................................................................ 8 Reserves and Surplus .............................................................................................................................. 9 Secured and Unsecured Loans .............................................................................................................. 10 Income Statement.................................................................................................................................. 11 Balance Sheet ........................................................................................................................................ 12 SOURCES OF FUNDS .................................................................................................................... 12 APPLICATION OF FUNDS ............................................................................................................ 12 Cash flow statement .............................................................................................................................. 13 Notes to Accounts ................................................................................................................................. 13 Directors Report................................................................................................................................... 14 Corporate Governance .......................................................................................................................... 15 Auditors Report ................................................................................................................................... 16 CONCLUSION......................................................................................................................................... 17 References ............................................................................................................................................ 17

Objectives
The objectives of studying the Annual Report of HINDUSTAN UNILEVER are the following a) To study and understand the Balance sheet, outflow and inflow of cash for two accounting periods. b) To develop a detailed report after analysis. c) To understand different frame works. d) To study different concepts involved in preparation of Annual Report.

Introduction to HUL
Hindustan Unilever Limited is Indias largest Fast Moving Consumer Goods Company. HUL meets the needs of millions of Indians, right from the morning cup of tea to brushing at bedtime. HUL touches lives of more than 700 million Indians. HUL is subsidiary of Unilever. Unilever has about 52% share holding in HUL. Hindustan Unilever distribution covers over 1 million retails outlets across India directly 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 out of three Indians use the companys products and HUL products have the largest consumer reach being available in over 80 per cent of consumer homes across India. The Anglo-Dutch company Unilever owns a majority stake (52%) in Hindustan Unilever Limited. HUL was one of the eight Indian companies to be featured on the Forbes list of Worlds Most Reputed companies in 2007. HUL was formed in 1933 as Lever Brothers India Limited. In 1956 it became Hindustan Lever Limited through a merger of Lever Brothers, Hindustan Vanaspathi Mfg. Co. Ltd. and United Traders Ltd. It is Headquartered in Mumbai, India Employee strength of 15,000 Harish Manwani is the Chairman Nitin Paranjpe is the CEO and the Managing Director. PRODUCTS AND SERVICES OF HUL HUL brands include Kwality Walls ice cream, lifebuoy, Lux, Breeze, Rexona, Hamam, Moti soaps, Puriet water purifier, Lipton Brooke Bond tea, Bru Coffee, Pepsodent and CloseUp toothpaste and brushes, and Surf, Rin and Wheel laundry detergents, Kissan squashes and jams, Annapurna salt and Atta, Pond's talcs and creams, Vaseline lotions, Fair & Lovely creams, Lakm beauty products, Clinic Plus, Clinic All Clear, Sunsilk and Dove shampoos, Vim dishwash, Ala bleach and Domex disinfectant. Rexona, Modern Bread and Axe deosprays.

Accounting Policies
Accounting policies are the Principles, rules and procedures selected, and consistently followed, by the management of an organization (the accounting entity) in preparing and reporting the financial statements are called as accounting policies. Accounting policies deal specifically with matters such as consolidation of accounts, depreciation methods, goodwill, inventory pricing, and research and development costs. These policies must be disclosed in the annual financial statements. Basis for preparation of accountsThe accounts have been prepared to comply in all material aspects with applicable accounting principles in India and the Applicable Accounting Standards notified u/s 211 (3C) of the Companies Act, 1956. Revenue RecognitionSales are recognised when goods are supplied and are recorded net of trade discounts, rebates, sales taxes and excise duties (on goods manufactured and outsourced) but include, where applicable, export incentives such as duty drawbacks and premiums on sale of import licences. It does not include inter-divisional transfers. Income from Property Development Activity is recognised in terms of arrangements with developers, where applicable. Incomes from services rendered are booked based on agreements/arrangements with the concerned parties. Interest on investments are booked on a time proportion basis taking into account the amounts invested and the rate of interest. Dividend incomes on investments are accounted for when the right to receive the payment is established. ExpenditureExpenses are accounted for on accrual basis and provision is made for all known losses and liabilities. Advertising expenses are charged against the profit of the year to which the activities relate. Revenue expenditure on research and development is charged against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as an addition to fixed assets. Goodwill and other Intangible AssetsIntangible assets are stated at cost of acquisition less accumulated amortization. Goodwill and other intangible assets (except computer software) are amortized over the assets useful life not exceeding 10 years. Computer software is amortized over a period of 5 years on the straight line method. Goodwill arising on consolidation in accordance with AS-21 is amortized over 4 years at quarterly rests commencing from the quarter of recognition of goodwill.
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Impairment of AssetsImpairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable amount. Recoverable amount is higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Fixed AssetsFixed assets are stated at cost less depreciation. Depreciation is provided (except in the case of leasehold land which is being amortized over the period of the lease) on the Straight Line Method (SLM) and at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956. However, Certain employee perquisite-related assets are depreciated over four to six years, the period of the perquisite scheme. Computers and related assets are depreciated over four years. Certain assets of the cold chain are depreciated over four / seven years. Motor vehicles are depreciated over six years and assets of certain subsidiaries are depreciated on the Written down Value Method (WDV). The difference between the SLM basis and WDV basis is not significant. Assets identified and evaluated technically as obsolete and held for disposal are stated at their estimated net realisable values. InvestmentsInvestments are classified into current and long-term investments. Current investments are stated at the lower of cost and fair value. Long-term investments, other than in Associates, are stated at cost. A provision for diminution is made to recognise a decline, other than temporary, in the value of long-term investments. Investments in Associates are accounted for using the equity method. InventoriesInventories are valued at the lower of cost, computed on a weighted average basis, and estimated net realisable value, after providing for cost of obsolescence work-in-progress include costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Sundry Debtors and Loans and AdvancesSundry debtors and Loans and Advances are stated after making adequate provisions for doubtful balances. Provisions A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. Provision is not discounted to its present value and is
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determined based on the best estimate required to settle the obligation at the year end date. These are reviewed at each year end date and adjusted to reflect the best current estimate. Retirement / Post Retirement BenefitsContributions to Defined Contribution schemes such as Provident Fund, etc. are charged to the Profit and Loss account as incurred. 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 remaining contributions are made to a government administered Provident Fund towards which the Company has no further obligations beyond its monthly contributions. The Company also provides for retirement / post-retirement benefits in the form of gratuity, pensions, leave encashment and medical. Such benefits are provided for based on valuations, as at the balance sheet date, made by independent actuaries. Termination benefits are recognised as an expense as and when incurred. Taxes on IncomeCurrent tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Foreign Currency TranslationsForeign currency transactions are accounted at the exchange rates prevailing at the date of the transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the profit and loss account. Forward exchange contracts outstanding as at the period end on account of firm commitment/highly probable forecast transactions are marked to market and the resultant gain/loss is dealt in the profit and loss account. Segment ReportingThe accounting policies adopted for segment reporting are in line with the accounting policies adopted in consolidated financial statements with the following additional policies being considered for segment reporting: a) Inter segment revenue has been accounted for based on the transaction price agreed to between segments which is primarily market led. b) Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the
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enterprise as a whole and are not allocable to segments on a reasonable basis, have been included under Unallocated corporate expenses.

Fixed Assets
Fixed assets are those assets which are of permanent in nature and are held by the firm on a long term basis, such as land, buildings, plant and machinery, furniture and fixtures, etc. These assets help in earning revenue and cannot be easily converted into cash. Fixed assets can be of two types: 1. Tangible assets. 2. Intangible assets. Assets having physical existence like land, building, machinery, etc. are called tangible assets. Intangible assets do not have physical existence like goodwill, patents, etc. The following are the fixed assets of HUL 2010 Particulars Amt Crs 2009 in Amt crs in

Fixed Assets: Land (freehold+leasehold) Buildings Plant & Machinery Furniture & Fixtures & Office Equipments Trade Marks Goodwill Software Motor Vehicles 104.96 738.52 1,179.31 83.99 55.22 0.11 84.09 504.40 891.25 56.80 69.97 0.27

Observations: The fixed asset of HUL consists of Land, Buildings, Plant and Machinery, Furniture and Fixtures, Trade Marks, Goodwill, Software and Motor Vehicles. The fixed assets have been depreciated and to this Capital Work In Progress is added which amounted to Rs.2,436.07/crores for the year 2010 and Rs.2,078.84/- crores for 2009. The Tangible Assets for 2010 amounted to Rs. 2,106.78/- crores and for 2009 it is Rs.1,536.54/- crores and the intangible
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assets for 2010 amounted to Rs.55.33 crores and for 2009 it is Rs.70.24/- crores. The fixed assets have increased in 2010.

Liabilities
Liabilities are debts or obligations of a company. Liabilities are of two types 1. Long term liabilities 2. Current liabilities 1. Long term liabilities: Long term liabilities are those liabilities that are carried over a number of years or atleast more than one accounting cycle. Examples: bank loan, bonds payable, mortgage payable etc. 2. Current liabilities: Current liabilities are those liabilities that are due to others in a short period of time. These liabilities are paid off using current assets .Examples: bills payable, outstanding expenses, incomes received in advance etc. Particulars 2010 in crs 218.17 2,365.35 5,291.66 1,441.55 amt 2009 amt in crs 217.99 1,843.52 4,255.82 1,527.98

Share Capital Reserves and Surplus Current Liabilities Provisions

Observations: The Share Capital has increased a little in 2010 when compared with 2009. The Reserves and Surplus have increased a lot in 2010 and also the Current Liabilities have also increased in 2010 but the provisions have decreased in 2010.

Depreciation
Depreciation is a non-cash expense that reduces the value of an asset as a result of wear and tear, age or obsolescence. Most assets lose their value over time and this loss in value is called depreciation. Since it is a non-cash expenditure it reduces the reported earnings of a firm and increases the free cash flow in a firm. The following are the various methods used to value depreciation :
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1. 2. 3. 4.

Straight line method Written down value method Production units method Sum of digits method

Observations: Depreciation on fixed assets is provided on straight line method based on useful lives of assets as estimated by the management. Depreciation for the assets purchased or sold during the period is proportionately charged. Intangible assets are amortized over the respective estimated useful lives on straight line basis. Depreciation in 2010 is 1,419.85 crores which includes depreciation on plant & machinery 943.01 crores, on buildings 170.39crores.

Inventories
Inventories include raw materials, work in progress goods and completely finished goods which are a part of a businesss assets that are ready or will be ready for sale. Turnover of inventory is one of the primary sources of revenue generation and subsequent earnings for the company. Possessing too high inventory or too little inventory isnt good because high inventory poses a risk of storage, obsolescence, and spoilage costs and too little inventory poses a risk of losing out on potential sales and potential market share. Particulars 2010 amt in Crs 2009 amt in Crs

Stores and Spare Parts Raw Materials Packing Materials Work-in-progress Processed Chemicals Finished Goods Property Development Activity

45.74 745.31 81.51 247.82 1,059.42 0.49

38.97 1,080.02 121.61 186.56 1.75 1,099.46 0.49

Dividends
Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained
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earnings), or it can be paid to the shareholders as a dividend. Many corporations retain a portion of their earnings and pay the remainder as a dividend. For a joint stock company, a dividend is allocated as a fixed amount per share. Therefore, a shareholder receives a dividend in proportion to their shareholding. For the joint stock company, paying dividends is not an expense; rather, it is the division of an asset among shareholders. Public companies usually pay dividends on a fixed schedule, but may declare a dividend at any time, sometimes called a special dividend to distinguish it from a regular one. Cooperatives, on the other hand, allocate dividends according to members' activity, so their dividends are often considered to be a pre-tax expense. Dividends are usually settled on a cash basis, as a payment from the company to the shareholder. They can take other forms, such as store credits (common among retail consumers' cooperatives) and shares in the company (either newly-created shares or existing shares bought in the market.) Further, many public companies offer dividend reinvestment plans, which automatically use the cash dividend to purchase additional shares for the shareholder. Particulars Interim Dividends Paid Final Dividends Paid Total Dividends Paid Observations: Dividends paid in 2010 were less when compared to 2009 As On 31st March 2010 654.35 763.59 1408.93 As on 31st March 2009 762.56 871.95 1634.51

Reserves and Surplus

Reserves represent retained profit. These reserves are created for different purposes, they are appropriations to net profit. Some examples of reserves are general reserve, capital reserve, debenture redemption reserve etc. These reserves are maintained to meet some future losses. Surplus is defined as the profit which is set aside after paying expenses and other necessary deductions such as rents paid, interest paid, dividends paid etc (1) Net worth of a firm over the amount realized from issuance of stock and arising from retained profits, revaluation of assets, and other surplus sums. (2) Part of retained earnings set aside for a specified purpose and, hence, unavailable for disbursement as dividends

Surplus generally means any excess amount, but in finance it is the remainder of a fund appropriated for a particular purpose. In a corporation, surplus means assets left after liabilities and debt, including capital stock, has been subtracted. PARTICULARS Capital reserve Share premium Total capital reserves General reserve Profit and loss(surplus) Total OBSERVATION Capital reserve: As at march 31st 2010, capital reserve amounted to Rs 4.22cr which is the same as the previous year. Share premium: The increase in share premium is on account of premium received on issue of equity shares under 1998-99 stock option plans. An amount of Rs 31.99 r was credited to share premium on account of tax benefits for using ESOP (employee stock option plans). General Reserve: An amount of Rs 220.20cr representing 10% of the profits for the year ended march 31st 2010 was transferred to general reserve account from profit and loss account. Profit and Loss account : The surplus transferred to reserves and surplus has also increased from Rs 531.66cr in 2009 to Rs 802.19cr in 2010 . The companies reserve and surplus of 2009 is 1843.52 and of 2010 is 2365.38cores. AMOUNT (2010) 4.22 71.18 90.95 1459.72 802.19 2365.35 AMOUNT(2009) 4.22 39.19 59.85 1239.52 531.66 1843.52

Secured and Unsecured Loans

A secured loan is a loan in which the borrower pledges some asset as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. Loans under different categories are available against certain assets, property, equipment and other immovable property, inventories and receivable of the parent company or concerned subsidiary. The secured loans are the loans taken from the bank by the company. The securities kept by the firm for getting loan are reduced as the secured loans are decreased. Unsecured loans are those which are to be paid back within one year and are mostly the short term loans which do not require any security. These appear on the liability side of the balance sheet. This increases the liability of the firm but is better than the secured loans. The increase in loans is however a bad sign for the company. OBSERVATIONS: HUL is a debt free company, which does not have any secured and unsecured loans. It has a nil balance with respect to long term liabilities.
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Income Statement
A financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs. This statement is also known as a "statement of profit and loss", or "income statement" or an "income and expense statement". This statement includes both operating and non-operating items. This includes selling and distribution expenses, administrative expenses, operating expenses, operating incomes. Every loss or profit made is shown in this account. This is very useful for payment of taxes and dividends, so there is a need for calculation of profit as the tax has to be paid on that and the dividends are declared only if profit is made. Net Income is the amount of revenue that was not spent on operations, it represents the amount of the increase in overall value. The Income Statement splits the accounts with the Balance Sheet and so the total debits and total credits on each of these statements will not be equal, but the debits and credits of their combined accounts are equal. So, lets take a look at the Accounts that are not listed on the Income Statement. The difference between the balances of the Income Statement Accounts, is equal to the difference between the Balance Sheet Account balance

Particulars Sales Other Income Operating Expenses Depreciation Interest Profit Before Tax Current Tax Deferred Tax Fringe Benefit Tax Profit After Tax Exceptional items Net Profit

2010 17,523.80 349.64 (14,975.36) (184.03) (6.98) 2,707.07 (626.23) (22.13) 2,102.68 99.35 2,202.03 20,239.33 589.72 (17,583.31) (195.30) (25.32) 3,025.12 (535.86) (0.02) (37.06) 2,500.71 (4.26) 2,496.45

2009

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Observation: The net sales for the year 2010 are 17,523.80 crores and it is 20,239.33 crores for the year2009. Other income for the year 2010 is 349.64 crores and 589.72 crores. Operating expenses of HUL is 14,975.36 crores and 17,583.31 crores for 2009. The profit of HUL after deducting the Tax it is 2,202.03 crores for the year 2010 and it is 2,496.45 crores for the year 2009.

Balance Sheet
The balance sheet is one of the main financial statements reported by business. The balance sheet lists assets, liabilities and owners equity of the business, thereby presenting a snapshot of the financial position of the business as of a particular point in time. The balance sheet balances the listed accounts with the accounting equation; ASSETS = LIABILITIES + OWNERS EQUITY (CAPITAL) Observation: HUL prepares its balance sheet in the vertical format. It comprises of sources and application of funds. Sources of funds include share holders funds and reserves and surplus. Application of funds includes fixed assets (both tangible and intangible), investments, deferred tax assets and net current assets (current assets - current liabilities). The balance sheet tallies at Rs 2583.52 cr. SOURCES OF FUNDS SHARE HOLDERS FUNDS: The authorized share capital is Rs 225cr divided into 225cr equity shares of Rs 1/- each. The issued, subscribed and fully paid up capital 218.17cr as at March 31st 2010. Above share held by unilever plc itself. RESERVES AND SURPLUS: Reserves and surplus has increased to Rs 2365.35cr from Rs 1843.52cr in 2009. APPLICATION OF FUNDS FIXED ASSETS: The block in tangible assets increased from Rs 2078.84cr to Rs 2436.07cr and intangible assets increased from Rs. INVESTMENTS: Investments was Rs 332.62cr in 2009 and it is Rs1264.08 balance in 2010. Thereby decreasing cash balance. DEFERRED TAX ASSET: Deferred tax asset has increased from Rs 439.09cr to Rs 451.13 cr. NET CURRENT ASSETS: Net currents assets are the difference between current assets and current liabilities. Debtors have increased from Rs 536.89cr to Rs 678.44cr implying a increase in credit sales. Cash balances have also increased. There is an overall increase in both current assets and current liabilities resulting in the increase in net current assets (Rs 2483.45cr in 2009 to Rs 2583.52cr in 2010)

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Cash flow statement

Cash flow statement is one of the main financial statements that show actual cash inflows and cash outflows from operating activities, investing activities and financing activities. This statement does not include non-cash incomes and expenses and outstanding expenses and accrued incomes. As the name suggests it includes only those transactions which result in cash inflow or cash outflow. Observation: The net cash flows generated from operating activities is Rs. 3432.37cr. The net cash flows used in investing activities are Rs.1137.46 and the net cash flows used in financing activities are Rs. 2180.32. The cash and cash equivalent at the end of the period is Rs cr.1892.21. Notes to Accounts The financial statement that records revenues, expenses, and net income throughout the given period. Because of the various methods used to record transactions, the monetary values shown on an income statement often can be misleading. It is also called earnings report, earnings statement, operating statement, profit and loss statement. ANALYSIS: SALES: There is a drop in sales in the year ended 2010 compared to the year ended 2009. The current year sales are 22.12 crores whereas the previous year sales are 34.20. OTHER INCOME: Other incomes have decreased in the year ended 2010 when compared to the year ended 2009 from 589.72 crores to 349.64 crores; this is mainly due to the decrease in miscellaneous income OPERATING EXPENSES: The observations in the operating expenses are as follows: The operating expenses include materials consumed and purchase of goods, general expenditure and stocks, there is a decrease in the operating expenses by 2607.95 crores in the year ended 2010 as compared to the year ended 2009. The operating expenses also include Auditors remuneration and expenses; payments to cost auditors and research and development expenses. This got increased in the current year by about 7 crores.
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MISCELLANEOUS EXPENSES: It is the net of credit for write back of charge in respect of excess cost over fair value of current investments; it is reported as nil crores for the current year. EXCEPTIONAL ITEMS: The exceptional have increased in the year ended 2010 when compares to the previous year, the total exceptional income for year ended 2010 is 237.67 crores and the total income for year ended 2009 is 186.49 crores and the total exceptional expenditure is (182.22) and for year ended 2009 is (202.79). EXTRAORDINARY ITEMS: The extraordinary have increased in the current year when compares to the previous year, the total extraordinary income for year ended 2010 is 56.99 crores and the total income for year ended 2009 is 1.50 crores and the total extraordinary expenditure is 56.99 and for year ended 2009 is (8.30).

Directors Report
1. Financial Performance Turnover for the year 2010 is 17,523.80 crores and in 2009 it is 20,239.33 crores. Profit before tax for the 2010 is 2,707.07 crores against 3,025.12 crores in 2009. The net profit is 2,202.03 crores against 2,496.45 crores in 2009. The dividends in the year 2010 are 1,655.97 crores and in 2009 is 1912.29 crores. The transfer to General Reserve is 220.20 crores in 2010 and in the year 2009 it is 250.00 crores. The Profit and Loss Account Balance carried forward for the year 2010 is 802.19 crores and for the year 2009 it is 531.66 crores. For the year 2009 it is calculated for 15 months and for 2010 it is calculated for 12 months. 2 .Profit and Loss Account For the year 2010 the period considered is 12 months were as for the year 2009 it is 15 months, the net sales for the year 2010 is 17,523.80 crores and for 2009 it is 20,239.33 crores. The operational income is 201.53 crores for 2010 and 384.17 crores for 2009. The operating cost and expenses is 14,975.36 crores for 2010 and 17,583.31 crores in 2009. The depreciation charged for the year 2010 is 184.03 crores and 195.30 crores for 2009. The tax charged for the year 2010 is 604.39 crores and it is 524.41 for the year 2009. The total profit made in the year 2010 is 2,202.03 crores and it is 2,496.45 crores for the year 2009. On the comparing the results for the financial year ended 31st March 2010 with the unaudited results for the 12 months period ended 31st March 2009, the Company registered an overall turnover growth of 6.4%. 3. Corporate Office and Research Centre: The need to consolidate the multiple office locations burgeoned across Mumbai to accommodate growing teams and businesses of your Company and in order to drive synergies, the new Corporate Office of your Company was inaugurated in January, 2010.
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The new Corporate Office named as 'Campus' is located at Andheri; and has marked the completion of the journey of bringing together your Company, physically and culturally under one roof. A journey which started with the Brooke fields, Bangalore office merging into the office at Backbay Reclamation, Mumbai in the last quarter of 2006 and ending with five other locations in Mumbai coming together at Andheri in January, 2010.The 'Campus' not only physically brought together different teams that were sitting apart, but also created an environment of oneness towards the goal of performing better and seeing the organisation soar to newer heights. The 'Campus' aims to create a flexible, open and vibrant work space, which enables every employee to perform better. It leverages technology and progressive workplace practices to meet the needs of today's business environment.

Corporate Governance
Corporate governance is about commitment to values and ethical business conduct. It is a set of laws, regulations, processes and customs affecting the way a company is directed, administered, controlled or managed. Transparency and accountability are the two basic tenets of Corporate Governance. The Board of Directors of the Company is responsible for and committed to sound principles of Corporate Governance in the Company. The Board plays a critical role in overseeing how the management serves the short and long term interests of shareholders and other stakeholders. This belief is reflected in companys governance practices, under which they strive to maintain an active, informed and independent Board. They keep the companys governance practices under continuous review and benchmark ourselves to the best governed companies across the globe. The companys foundation has therefore been rooted to stringent corporate governance principles. BOARD OF DIRECTORSThe board of directors of the company represents an optimum mix of professionalism, knowledge and experience .As on 31st DECEMBER 2007 the otal strength of the Board of Directors of the company is ten directors comprising a Non executive chairman, four executive directors and five nonexecutive independent directors. CODE OF CONDUCT The company adopted a code of conduct for the members of the board and the management committee compliance of the listing agreement. The code is in addition to the code of business principles of the company. Dividend The Board of Directors at their meeting held on25th May, 2010 recommended a final dividend of Rs.3.50per share on equity share of face value of Re.1/- each, for the financial year ended 31st March, 2010, subject to the approval of the shareholders at the Annual
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General Meeting. Together with the interim dividend of Rs. 3.00 per share on equity share of face value of Re. 1/- each, paid on23rd November, 2009, the total dividend for the year works out to Rs.6.50 per share on equity share of face value of Re.1/- each. Final dividend, if approved by shareholders, will be paid on or after 30th July, 2010.

Auditors Report
This is the section of an annual report containing an accountants opinion about the accuracy of its financial statements. Balance Sheet of HINDUSTAN UNILEVER LIMITED as at March 31, 2010, is being audited and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date both annexed thereto. These financial statements are the responsibility of the Companys Management. The responsibility is to express an opinion on these financial statements based on audit. 1) The auditing was done in accordance with the auditing standards generally accepted in India. Those Standards require proper planning and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. The main aim was that the audit provides a reasonable basis. 2) Further to the comments in the Annexure referred it is reported that: All the information and explanations, which to the best of knowledge and belief are necessary for the purposes of the audit. Proper books of account as required by law have been kept by the Company so far as appears from our examination of those books. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards. On the basis of written representations received from the directors, as on 31st March, 2009, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2009 from being appointed as a director.

Further based on the annexure to the auditors report the following conclusions are drawn: 1 The company has no accumulated losses as at March 31, 2010 and has not incurred any cash losses in the financial year ended on the date or in the immediately preceding financial year.
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2 The company has not defaulted in repayment of dues to any financial institutions or bank or debenture holders. 3 The company did not any loans and advances on the basis of security by way of pledge of shares debentures and other securities. 4 The company is not a dealer or trader in shares, debentures, securities and other investments. 5 The company did not give any guarantee for loans taken by others from banks or financial institutions. 6 No short term funds are taken which have been used for long term investment. 7 The company has not raised any money by public issue during this financial year 8 The company did not issue any debentures during this financial year. During the course of examinations by the auditors the books and records are in accordance with the generally accepted auditing practices in India, and there is no instance of material fraud on or by the company noticed or reported during the year .

CONCLUSION
The analysis of HUL annual report with regard to the assigned fifteen terms helped us to analyze the financial position of the company. For analyzing a companys financial report if one year annual report is looked, no good analysis can be made .To make critically good analysis one should look into more than one year annual report for which it has to be consecutively listed. Reading the financial analysis of annual report is important for an investor so as to see how the company is making profits or losses. It can give them an idea whether to invest in the company or not.

References
HUL annual report 2009-10.

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