“March Quarter and Financial Year 2022 Earnings

Call of Hindustan Unilever Limited”

April 27, 2022

Speakers:
Mr. Sanjiv Mehta, Chief Executive Officer and Managing Director
Mr. Ritesh Tiwari, CFO and Executive Director, Finance and IT
Mr. A Ravishankar, Group Finance Controller and Head of Investor Relations

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Moderator: Ladies and gentlemen, good day and welcome to Hindustan Unilever
Limited Conference Call for the results for the March Quarter and
Financial Year ended 2022.

As a reminder, all participant lines will be in the listen-only mode, and

there will be an opportunity for you to ask questions after the
presentation concludes. Should you need assistance during this
conference call, please signal an operator by pressing “*” then “0” on
your touchtone phone. Please note that this conference is being recorded.

I now hand the conference over to Mr. A. Ravishankar, Group Controller

and Head of Investor Relations. Thank you and over to you, sir.

A. Ravishankar: Thank you Stanford. Good evening, ladies and gentlemen. Welcome to
the conference call of Hindustan Unilever Limited.

We will be covering this evening the results of March quarter and

financial year ended 31st March 2022. On the call with me from HUL is
Mr. Sanjiv Mehta, CEO and Managing Director; and Mr. Ritesh Tiwari,
Chief Financial Officer, HUL.

We hope that you are staying safe and healthy. We will start the
presentation with Sanjiv, talking about our performance in this financial
year, and the progress we have made on our strategic priorities. Then
Ritesh will share deeper insights into our in-quarter performance and
share our future outlook as well.

Before we get started with the presentation, I would like to draw your
attention to the safe harbor statement included in the presentation for
good order sake. With that, over to you, Sanjiv.

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Sanjiv Mehta: Thank you Ravi. Good evening, everyone. Always a pleasure to interact
with you all. And let's first look at the Full Year ‘22 Performance. And
what a year it has been. To begin with, I am absolutely delighted to
report that we have crossed the Rs. 50,000 crore turnover mark in this
fiscal.

Our growth at 11% was significantly ahead of the market. We

consistently grew our consumer franchise and gained both value and
volume market shares. In a large part of our business on L3M as well as
on MAT basis.

Our EBITDA margins for the year were at a healthy 24.8% and almost
flat versus last year, an extremely commendable performance of
balancing growth and profitability.

Profit after Tax and earnings per share grew 11%. In such a challenging
context, robust performance is reflective of our strategic clarity, the
strength of our brands, our execution prowess and our agility and
adaptability. Our belief that sustainable and purposeful business drive
superior performance is clearly reflected in the strong performance that
we have delivered, while also making significant progress on our
sustainability agenda.

In calendar year ’21, we have become plastic neutral, i.e., we have

collected and safely disposed more plastic waste than what we use in
packaging our finished products.

We are building a strong business. Even in such a difficult year, we have

made good progress on our strategic thrust area. This has not only helped
us deliver a solid in year performance but have also made us a much
stronger business, which is much better prepared to win in this fast
changing world. In the next few slides, I am going to talk to you about
each of the thrusts.

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The first is of course winning with our portfolio; you have a wide and
resilient portfolio of more than 50 purposeful brands, spanning 15
FMCG categories. In more than 80% of our business we are strong
market leaders. In such difficult times, consumers tend to stick to large
and trusted brands that offer better price value equation.

Another distinguishing strength of our portfolio is that our brands

straddle the price benefit pyramid, offering consumers the choice at
relevant price points. This ensures that we are able to cater to the needs
of consumers looking to upgrade to products with higher order benefits,
and also to consumers who are trying to manage their household budget
in times of inflation.

While we already have a wide portfolio, we are tapping into new demand
spaces. Our strong marketing and R&D capabilities enable us to quickly
pick up consumer trends and address them. Our ability to do market
development at scale, positions us well to build these categories of the
future.

In the last couple of years through sharp focus on portfolio choices, we

have expanded our play in Premium Beauty and Hair care, Functional
Nutrition, Foods, Detergent, Capsules and Dishwashing products. These
are great products from trusted brands and are already finding good
traction with consumers.

We have 16 brands with turnover of more than Rs. 1000 crore and
together these brands make up more than 75% of our top-line. Surf Excel
and Brooke Bond lead the pack with each contributing more than
Rs. 5,000 crore. Surf Excel has also become the largest fabric solutions
brand in India. Three of our brands, Vim, Rin and Dove joined the
Rs. 2,000 crore club this year. Further Ice Cream brand, Kwality Wall’s
crossed a Rs. 1,000 crore turnover mark.

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Overall, we added a very sizable Rs. 5,000 crore to our top-line this
fiscal year. Importantly, Rs. 900 crore came through innovations, clearly
showing our agility in responding to the evolving consumer trends.

Consumers continue to be increasingly discerning, looking for highly

effective products. To meet the growing consumer needs, we are
creating more superior products; bringing the best of our marketing
insights and R&D together. We now have 2x more superior products
when compared versus 2019. It does not mean that the rest of our
products are inferior, it just means that the others are at par with
competition on functionality.

Bringing alive the magic of marketing, we created impactful campaigns

which not only helped strengthen brand salience, but also won many
external accolades. Dove #StopTheBeautyTest won a Silver Line at the
Cannes Festival of Creativity.

We were the most awarded advertiser at EMVIES, winning a total of 31

awards for various media campaigns. We were also recognized as “The
Best Media Client of the Year”.

Three campaigns from HUL were part of the WARC 2022 World's Most
Awarded Campaign. And we won seven awards at the Festival of Media.

Clearly, we are winning with our brand with a force for good, powered
by purpose and innovation.

Let me now talk about execution:

With 29 factories, 35 depots and over 3500 distributors, we sell our

products to nine million stores. Our operations are spread across the
length and breadth of the country. It is important that despite the massive
size of operations, we remain agile, adaptable and resilient. We are
debottlenecking our capacities and increasing the number of formats,

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manufactured per site, through shorter production runs and smooth

changeover we are able to manufacture 80% of our SKUs every three
days.

Almost our entire production happens locally in India, providing supply

certainty and cost effectiveness. We are manufacturing closer to where
the demand is. As a result, the distance traveled by our products is down
8% on a YoY basis. We have expanded our distribution and assortment,
taking it to 1.15 times of pre-COVID level.

With the increase in footfalls, modern trade stores are bouncing back.
And we are partnering with them for our joint marketing plan and
providing consumers the best shopping experience.

Now this chart summarizes the challenge that we have been facing in
terms of material cost inflation, and how we navigate this with the agility
to grow our consumer franchise and at the same time protect our
business model. These are the two most important imperatives at this
stage. Till now our practice has been to quote market inflation numbers,
which are external numbers before any cost savings that we make.
However, with a dramatic inflation, we thought it will be useful to give
you a sense of material costs increase that we see in the business through
the lens of NMI or Net Material Inflation.

NMI is net absolute inflation after adjusting for the benefit of our buying
efficiencies, hedging, product design or redesign to value and other
savings. NMI that we have seen in March quarter of ‘22 was 4.5 times
of the NMI in June quarter ‘20. In fact, the NMI in full year ‘22 has been
higher than the cumulative NMI we had seen in the last five years.

Despite this unprecedented level of inflation, we have been able to keep

our margins almost flat versus last year and have grown significantly
ahead of the market. In fact, our market share gain this year, is the

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highest YoY market share gain we have seen in more than a decade.
Through Dynamic Financial Management we grew our consumer
franchise and protected our business model. We reduced costs by driving
savings harder, which stood at 7% of our turnover. Using our WiMI
strategy we capture the opportunities to premiumise resulting in 2x
growth for the premium portfolio versus rest of the portfolio.

The strength of our brands enabled us to take calibrated price increase.

We also ensured our brands are well supported by investing competitive
levels of A&P and ensuring that the share of voice remains ahead of
share of market.

Reimagine HUL as all of you know has been a key pillar of our growth
strategy. We have spoken about in detail in our earlier conversations.
And today I just want to give you an overview of the key action that we
have taken in the space.

Let's talk first about Consumer Ecosystem.

As part of our digital first journey on Lakme, we are leading brand

building online, whether it be through Influencer Marketing at scale of
pioneering new initiative, like Influencer Commerce. We are already
India's #1 beauty brand on Instagram with 2.3 million followers. Lakme
is also leading the charge on making beauty shopping easier online,
through Beauty Tech solution like a Virtual Try-On, Foundation Finder
or Skin Analyzer. All of these technologies use Artificial Intelligence to
help consumers find the right products and even try it on virtually
replicating an offline experience. We had more than 2 million unique
trials of our Beauty Tech in the last year, and a conversion and average
order value for these consumers is 2x of average.

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We are scaling up Ecommerce capabilities. Our D2C website already

has 25 million annual website visits. And together with the Ecommerce
platform, our online sales today contribute 30% of our Lakme business.

From a customer ecosystem lens we are leveraging technology and

digital solutions across channels and customer. You have heard from us
about our eB2B app Shikhar, and the work we are doing to digitize
general trade. As of March‘22, we have crossed more than 800,000
stores, adding 1000 stores every day in this fiscal. Our Ecommerce
business continues to grow ahead of rest of the channels. Design for
channel is a key strategic priority for us as we increasingly design our
portfolio to meet the requirements of different channels. We are also
reaching out to consumers directly through our own D2C platforms,
providing them with a unique shopping experience. It is good to see that
our digital initiatives are scaling up fast. In March quarter‘22 digitized
demand capture, across our future ready platform was more than 20%.
This also gives us a unique ability to run our demand generation
activities in a disruptive way.

Talking about digital operations our Home Care factory in Dapada has
joined the World Economic Forum's, Prestigious Lighthouse Network.
It is the first FMCG manufacturing site in India to have received the
status.

The network include sites that have implemented end-to-end digitization

across the value chain, pushing boundaries of technological
advancement. This recognition is testament to our sustained focus on
making our supply chain future fit, as part of our Reimagine HUL
agenda.

Our nano-factories help us to produce niche and on-trend products in

smaller batch sizes. We now have three nano-factories, which can
produce around 100 SKUs. These provide us greater speed and agility.

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Samadhan, our Advanced Fulfillment Center is a classic example of how

we are rethinking about each node in our operation system, to find
efficiencies and optimize the process by integrating data and technology.
Samadhan allows us to reduce our end-to-end fulfillment cycle time.
These are some examples of the significant progress we are making in
our Reimagine HUL journey.

Let me cover a bit more on the progress of our sustainability agenda. We

are decarbonizing operations by using alternative sources of energy such
as wind, biomass, solar. And have completely eliminated the use of coal
across all our manufacturing operations. Further, we are deploying
energy efficient technology, leveraging our load more travel less
strategy to reduce distance traveled by a product. These actions have
helped us achieve a 94% reduction in CO2 emissions across operation,
when compared to our 2008 baseline.

We all know that India is a water scarce country. Through the

Hindustan Unilever Foundation we are supporting and amplifying
scalable solutions to help address India’s water challenges. Till date the
foundation has delivered a cumulative and collective water potential of
over 1.9 trillion liters across thousands of villages. To underscore the
importance of the water potential created by HUF, it is more than the
drinking water needs of India's entire population for a year.

Promoting good health and wellbeing is another focus area for us.
During the year we launched three more Suvidha Centers, and we now
have seven such Community Health and Sanitation Centers in Mumbai.
The recently launched center in Dharavi is one of the largest community
toilets in India, catering to the needs of 50,000 people. These centers
provide a life of dignity to our slum dwellers.

We are further expanding our Shakti Initiative, and now support over
160,000 rural women entrepreneurs. We are creating a larger social

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impact by training them on nutrition awareness, waste recycling, women

empowerment, etc. We are helping them become a beacon of social
change at the village level.

These are only a few examples of the extensive work that we are doing
in the area of sustainability. We will shortly be sharing a full suite of
ESG commitments across the three compass pillars of improving the
health of the planet, improving people's health confidence and
wellbeing, and contributing to a fairer and more socially inclusive world.

Now before handing over to Ritesh, to take you through our financials
in more detail, I would like to say that this has been a remarkable year.
Despite a very challenging external environment we have delivered
strong all-round performance, crossed the Rs. 50,000 crore turnover
mark. I am sure that there is one of the many milestones that we will
continue to craft in our journey.

I am equally happy to report the excellent progress we made on our

strategic thrust areas to build a purpose led and a future-fit organization.
This suits us very well for long-term value creation, for all our
stakeholders. With this over to you Mr. Tiwari.

Ritesh Tiwari: Thank you Sanjiv. Good evening, everyone. I will now walk you
through our in-quarter performance and our future outlook.

We had a strong close to the year with a good all-round delivery in

March quarter. Turnover grew 10% with flat underlying volume growth.
Growth was competitive with more than 75% of our business gaining
value and volume share across both MAT and last three-month basis.

Talking about underlying volume growth:

Let me reiterate the impact of price point packs which we had spoken
during our December quarter results. Almost 30% of our business comes

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from packs that operate at magic price points like Rs. 1, Rs. 5 or Rs. 10.
In these packs our preferred mode of taking price increase is by reducing
grammage. As a result, even the same number of units sold leads to
volume decline. This had a circa 2% to 3% impact on our UVG.

Moving to our bottom line performance:

Sequentially inflation has worsened in the quarter, as we had anticipated

and called out earlier in the DQ results. This has resulted in a 290 BPS
sequential, and 330 BPS year-on-year increase in our cost of goods sold.
In the backdrop of this unprecedented input cost inflation, I am pleased
that we have dynamically managed our business to deliver a healthy
EBITDA margin of 24.6%, a marginal decline of 20 bps year-on-year.
Our laser sharp focus on driving savings across all lines of P&L coupled
with calibrated pricing, while investing behind our brands competitively
has been driver of the strong performance.

Profit after Tax, but before exceptional item was up 9%. Our net profit
at Rs. 2,327 crore increased 9% versus MQ’21.

Now let me give you a breakdown of the growth across the three
divisions:

Home Care sustained it's very strong, double digit growth momentum
growing at 24%. Beauty & Personal Care grew ahead of the market at
4% led by skin cleansing. Foods & Refreshment delivered a strong
performance growing at 5% on back of an exceptionally high base. We
will get down to talk about performance within each of the division in
subsequent slides.

Now let me talk about some of the innovations we landed in the quarter:

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Lifebuoy has launched powder handwash, at a price point of Rs. 10

which makes 200 ml of liquid handwash. It is our country's most
affordable liquid handwash.

Dove’s new Hair Therapy helps prevent hair breakage and is made
without sulfates, that gives gentle nourishing care.

Sunsilk has added Onion and Jojoba oil shampoo to its franchise, while
Lakme Absolute has launched a new eye makeup range that includes
long lasting Explore pencil, range of 10 pencils with matte and metallic
finishes.

Ahead of summer, Kwality Wall’s has launched exciting new ice cream
flavors like Trixy Blueberry Cheesecake, Royal Kulfi, Black Forest
Feast and Cassata Cake.

Talking about a few marketing campaigns this year in IPL, Boost is

celebrating newcomers - emerging superstars of the game for the grit,
determination and relentless perseverance. Dove activated its new
campaign on body wash, while Dove and Comfort activated campaigns
in South India. Surf Excel came up with this new Holi campaign and
Cornetto launched, a delightful film, ‘making the first move’ featuring
Alia Bhatt.

Home Care had another strong quarter of double digit growth enabled
by robust performance in both Fabric Wash and Household Care. Both
categories grew in strong double digits with all part of portfolio
performing well. Home Care grew volumes in mid single digit,
reflecting the strength of our brands to price up in inflationary
conditions.

Liquids and Fabric Conditioners continued its exceptional momentum

and grew handsomely. Further Surf Excel has become the largest fabric
solutions brand in India in this fiscal. With more input cost inflation we

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have continued with our calibrated pricing approach in both fabric wash
and household care.

Beauty & Personal Care grew competitively at 4% amidst slowdown in

market growth due to impact of high inflation on discretionary
[Link] Cleansing delivered double digit growth driven by
pricing and led by strong performance in Lux, Dove and Pears. Hair
Care continued its strong competitive performance in the quarter with
all brands gaining shares. In Skin care, premium portfolio grew and
double digit, Glow & Lovely, Talc and Color Cosmetic had soft quarter
due to COVID wave III and market slowdown.

Let me now turn to Food & Refreshment:

F&R grew 5% on a very high base of 36% in MQ21. Tea continued its
robust performance and grew competitively on an exceptionally high
prior year comparator. We expanded our value and volume market share
in the quarter. Coffee grew in double digits.

In Health Food Drinks, we continued our focused market development

actions to build category relevance and penetration. During the quarter
we did more than 10 million home-to-home connects. We also launched
new persuasive communication in both Horlicks and Boost. In the
context of moderating market growth for the category, due to its
discretionary nature, these actions have helped us continue gaining,
market share and penetration.

Foods delivered a high double digit growth with all parts of the business
doing well. Our recent food innovations, peanut butter and mayonnaise
continue to gain traction with consumers. Ice Creams had a very strong
quarter with high double digit growth. I had spoken earlier about
exciting range of innovation, we launched for this year, summer.

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In summary, our performance has been strong both on top-line and

bottom line. While I have covered most lines, let me give you a quick
highlights on few other items.

We continue to invest competitively in A&P. Sequentially, we stepped

up A&P by Rs. 100 crore or about 60 BPS. Our marker has been to
ensure that our share of voice is ahead of our share of market, and our
brands are well supported. Both employee costs and other expenses, see
the benefit of turnover leverage flowing in apart from benefits of various
savings programs.

Exceptional items include gain from sale of an old factory-line, offset

by normative recession expenditures. Our ETR for the quarter was
25.6% which takes our full year ETR to 24.9%.

Sanjiv has already spoken in detail about our full year delivery. Let me
quickly recap the numbers.

Top-line grew 11% in financial year 2022. Our turnover crossed

Rs. 50,000 crore and we added more than Rs. 5,000 crore during the
year. Underlying volume growth for the year was 3%.

Moving to bottom-line performance, despite unprecedented levels of

inflation through the year, we have dynamically managed the business
and delivered a healthy EBITDA of 24.8%, declining marginally by 20
bps year-on-year. We delivered a net profit of Rs. 8,818 crores
translating to a strong double digit EPS growth. Our track record of
strong cash generation continued, we delivered about Rs. 11,700 crores
of cash from operations.

This chart gives you a snapshot of our segmental performance on a full

year basis. As you can see, growth has been broad-based, and overall
segmental margins also continue to be healthy across the three divisions.

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Considering our strong performance, the Board of Directors have

proposed a final dividend of Rs. 19 per share. Along with interim
dividend of Rs. 15 per share, the total dividend for this year is Rs. 34 per
share. The total dividend amount for the year is Rs. 7,989 crores.

Now before moving to external contexts and our outlook, let me

summarize what we have covered till now. It was a solid all-round
performance in the year, we became a Rs. 50,000 crore turnover
Company grew top line at 11%, significantly ahead of the market. Our
dynamic financial management helped us strike the right balance of
competitive top-line growth and managing healthy margin in the face of
unprecedented input cost inflation. We delivered double digit EPS
growth.

We continue to strengthen our market leadership with highest market

share gains that we have had in more than a decade. It was
comprehensive market beating performance, which share gains in all
three divisions, across price segments, across region, both in urban and
rural. We have made excellent progress on ESG and on our digital
transformation agenda.

Now moving on to external environment and our outlook. Operating

environment remains challenging. Commodity inflation continues to be
a significant headwind for the industry. The recent developments have
added further volatility to commodity markets pushing prices for various
commodities, including Brent Crude, Vegetable Oil, Agri commodity is
even higher.

CPI inflation has also been increasing, has now breached RBI’s
threshold for last three months in a row. Latest inflation survey by RBI
clearly indicates that houses are feeling the pressure of inflation with
71% responded that they are expecting more inflation in the coming
months. This is also influencing consumer behavior as they try to

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manage their household budgets. Consumers are looking for better value
across their purchase basket and food and kitchen items are being
prioritized over discretionary categories. They are titrating volumes and
preferring the trusted brands.

Due to unprecedented inflation, FMCG market value growth has

significantly slowed down and volumes are declining in high single
digit. The impact is more pronounced in rural, where even value growth
has started declining. Consumers are tightening volumes and essentials
are being prioritized over discretionary categories.

Let me spend some time elaborating about the impact of inflation on our
material cost. We use a measure called Net Material Inflation, which is
net absolute inflation after factoring in all savings and efficiencies.

Our NMI in March Quarter‘22 was 4.5x of June Quarter‘20. This does
not take into account the recent surge. If things remain same, we expect
sequentially more inflation in next two to three quarters. We will
continue to dynamically manage the situation in a similar way we have
done in the past several quarters. As you know we have a very robust
savings program. Let me give you a few examples of what we are doing
to bring it alive for you.

We are generating buying efficiency, by leveraging our global scale and

strategic partnerships with suppliers. Our media deployment is sharply
focused on attributing every spend to driving more growth. We are
debottlenecking capacities in our supply chain to drive manufacturing
efficiencies. With better planning and producing closer to the market we
are reducing our distribution costs. We are light weighting our bottles,
which not only reduces packaging costs, but will also be good for the
planet.

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Using our principles of net revenue management, we will continue to

take calibrated pricing actions, whilst ensuring we remain competitive
and provide the right price value equation to the consumers. We are
revisiting our offerings at certain price points, and are adding bridge
packs to provide better value to our consumers while ensuring
affordability. Our WiMI strategy helps us find opportunities for driving
faster growth in premium portfolio.

Looking ahead, in near-term operating environment will remain

challenging. We expect to see more sequential inflation. Growth will be
predominantly price led. We will continue to drive savings harder and
take calibrated pricing actions whilst ensuring we protect and grow our
consumer franchise. Our margins will decline in short term as price
versus cost gap increases.

Strength of our brands, a wide portfolio straddling the price benefit

pyramid, and a robust business model will hold us in good stead. We
remain confident of a) outpacing FMCG market growth and b)
recovering our margins in a phased manner.

Moving to mid to long term perspective, Indian FMCG sector continues

to be very attractive. Favorable macros like large young working
population and rising affluence coupled with low FMCG penetration
and per capita consumption continue to provide huge runway for growth.

For HUL, the drivers of value creation remain the same. We will grow
our top-line ahead of the market by growing core competitively,
premiumising our portfolio and doing market development at scale. We
will deliver modest margin expansion and continue with our track record
for strong capital discipline. At the same time, we will continue to build
a purpose-led future-fit HUL by delivering on our ESG commitments
and leading digital transformation.

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We are focused to deliver 4G growth, growth that is consistent,

competitive, profitable and responsible. With this, let me hand over to
Ravi to begin the Q&A session.

A. Ravishankar: Thank You Sanjiv. Thank You Ritesh. With this we will now move on
to the Q&A section. We request you to kindly restrict the number of
questions to a maximum of two at a time. In case you have further
questions, please rejoin the queue again. In addition to the audio, as
always, our participants have an option to post the questions through the
web. And we will take these questions just before we end.

Moderator: Thank you Sir. Ladies and gentlemen, we will now begin the question-
and-answer session.

The first question is from Abneesh Roy from Edelweiss. Please go

ahead.

Abneesh Roy: Congratulations on good numbers in the current context. My first

question is on palm oil. Yesterday, Indonesian Minister had allowed
CPO, today, it seems that there is a flip-flop, the Chief Economic
Adviser of Indonesia had said that CPO also is likely to be banned. My
question is if the ban is there for say few weeks, in the extreme situation
of that ban, what happens to your soap business, it's a sizable business,
you are the number one player. And secondly, on the smaller player,
what could be the impact smaller soap players, if you could elaborate on
these points?

Ritesh Tiwari: On palm oil, the situation has been volatile. And the conversation which
happened first on restriction of sales, which was later on called out only
to remain localized to the cooking oil component, which is palm olein
part of that, and CPO supplies to continue.

Overall, if I just as a context, if Indonesia produces 100 kg of palm oil,

the country only consumes one-third of it, two-thirds of the volume

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country ends up exporting, and this is one of the largest source of

revenue for the country. So, overall, if I see there might be impact in
short term, but looking at the amount of excess production, compared to
the local needs that Indonesia produces, I do believe that the sales of
palm oil ex-Indonesia will continue.

Number two as you know what we consume and the largest component
of our input ingredient is PFAD. And PFAD gets manufactured the
moment you refine CPO to produce ultimately palm olein or palm
stearin. And the PFAD which get consumed, there are few sources only
where PFAD gets utilized. One of the largest source of that is soap
industry. And hence we do believe that PFAD supplies would continue
for us to get.

Overall vegetable oil market, it is tight in terms of pricing. And as you

have seen the amount of significant inflation this basket has seen over
the last couple of years. So, I do expect the price volatility to continue
as this situation gets completely bottomed out.

Last but not least, as you know, of course, in long term India has leaned
in, in terms of giving more amount of support to what we need to do as
a country, to achieve palm sufficiency in times to come and investments
have gone into in this area.

At HUL, what we are doing is to also look at various other avenues.

There are more than one way to make soap so looking at alternatives,
looking at our own efficiencies, and the mix that we end up using in
terms of producing soap.

So, in summary I don't expect this to be a long-term issue given the

amount of excess palm that Indonesia produces, given continuity of
supplies from other palm producing nations, and given the flexibility
that we do have in our formulations and our alternate methods of

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producing, in my mind this should continue. But what is given in my

mind at this point in time is price volatility which will continue.

We are also in the season as we speak of palm, and palm production, as

you know, starts peaking from April onwards. So, let's see as to where
the season comes out and what kind of volumes are getting produced
that will also be a good determinant of overall demand supply situation,
and the price table of this commodity.

Abneesh Roy: My second and last question is on the recent development in the ad
campaign, HUL not to target children under 16 in ad campaign, how
much relevant this is to India. I understand the Unilever global
relevance, in terms of India relevance, how much is it relevant? What's
the impact on food and ice cream? And doesn't your ad campaigns
become a bit competitively disadvantaged, even your competition
doesn't face this issue? So, how do you overcome that disadvantage?

Sanjiv Mehta: I think, Abneesh this is all about responsible marketing. And it is not
that we are going to stop advertising. And our focus would be on
mothers and fathers, the parents. And we don't see in any way getting
disadvantaged.

Moderator: Thank you. The next question is from Chirag Shah from CLSA. Please
go ahead.

Chirag Shah: Good evening, at the outset congratulations for navigating through such
a tough backdrop so very well. My question is on the BPC segment, can
you just touch upon the progress, on the digital-first business segments
that we have? And staying on BPC if you can just also touch upon the
other two levers which is basically growing the core and premiumization
and market development?

Ritesh Tiwari: Starting with digital-first brands. Overall, we have spoken in last few
quarters of results that on digital-first brands, we have launched our own

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D2C brands - ‘Simple’, ‘Love, Beauty and Planet’ or ‘Baby Dove’. And
as I had called out earlier, there are two very clear objectives out here.
a) A portfolio, which is digital-first brand and b) Set of capabilities,
which help us to drive digital-first brand be it performance marketing,
be it the analytics which go behind generating online revenue. And all
of that is very clearly installed with us.

Along with that, let me, if I talk on digital-first brand, let me also then
go back to talk about our own digital sales footprint, between
Ecommerce, eB2C, eB2B, D2C website and Shikhar where we do
directly sell online, to many of our retailers. All this put together to give
a digital demand capture, it has now in this quarter gone beyond 20%,
so more than 20% of Hindustan Unilever sales gets digitally captured.

In times like this when lot of channel transformation happens one of the
most significant way to look at – whether we are making progress, is to
look at how much amount of sales are getting captured digitally. This
then also provides us platform to do demand generation and demand
fulfillment in a very different manner. So, that's on the digital-first
brand.

Now coming to the portfolio of both core, premium and market

development, our growth algorithm is very clear. First clear focus is to
grow the core. And growing the core comes from various fundamentals
of growth that we have called out, many times, be it designing our
portfolio for channel, be it making innovations in the portfolio, or for
that matter, driving distribution and reach of the products that we have.

Number two for us is very clear focus on making a portfolio more

premium. And in this financial year our premium portfolio has grown at
twice the pace as rest of the portfolio. So, that's the second clear
component of our growth algorithm.

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The third component of growth algorithm exactly to your point is market

development. The categories that we operate in, many of them still have
low penetration and low per capita consumption. And hence, there is a
huge runway for us for growth going forward, which is why we do focus
to-do market development at scale across our portfolio. I hope that gives
you a sense about the kind of approach we have on driving growth and
profitability in the business.

Chirag Shah: And the second question is on the nutrition part of the business. Now
that the integration largely seems to be behind, what is the direct
coverage target that we have for the nutrition business. And also is it
now a good time to start looking at getting into the adjacencies?

Ritesh Tiwari: Yeah, so on nutrition we have now completed the entire transition from
all elements, from people, from factories, from capabilities, from
manufacturing, and also our go-to market operations, across all elements
we have completed our integration.

Where we are today with our direct distribution is twice the number of
outlets now, we reach directly as compared to pre-integration. So, that
objective is also very clearly met.

The single biggest source of growth and value creation, Chirag for us is
to do market development at scale. We had called out that it's a very
attractive category, but low penetration to start with. And which is why
one of the fundamental driver of growth will be market development.
And we are doing market development at scale, sans couple of quarters
where we had very peak of COVID wave-I, and COVID wave-II, we
have continued our job of market development. Even in this quarter,
March Quarter ‘22, we have done more than 10 million consumer
connects.

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Now talking about adjacencies, what we have done with the entire plus
portfolio, which has been activated on high science, be it Protein Plus or
be it Diabetes Plus, that is one clear portfolio that we have activated and
ensured that that starts to do the job of more broadening the offering that
we have under Horlicks.

Equally both Horlicks and Boost, we have launched our media

campaigns, very clearly focused on food equivalence, and driving the
point of how does both Horlicks and Boost ends up doing the job of
fulfilling the gaps in micronutrients for consumers. So, that job for us
absolutely continues. So, the growth strategy for Horlicks is
encompassing all three elements, activity in the core that we have
number one, number two market development and then keep growing
portfolio around it, including the Plus range.

Chirag Shah: If I can just slip one small question on the LUP side, you mentioned that
reducing grammage is the first option for any pricing action. Now
obviously, we have a very large LUP portfolio. And given the
inflationary pressures, I am just wondering how much more leverage do
we have in terms of taking pricing actions through reducing grammages.

Ritesh Tiwari: So, overall, when it comes to pricing, before I come to LUP, as Sanjiv
called out earlier, that the first port of call that we have is always to drive
savings hard, try saving hard across all the lines of the P&L. So, there is
a net cost that you need to deal with is a smaller number, and which is
what then we end up taking calibrated price increases.

Now coming to price point portfolio, we have roughly 30% of our

portfolio, which is price locked. There we have done action, we had
spoken about it earlier as well, that to an extent we can titrate volumes,
we are doing that.

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The second job that we have started to do now is to start developing

bridge packs, and activating that portfolio. Let me give an example of
Lifebuoy, we have a Lifebuoy, a soap at Rs. 10. The next price point in
Lifebuoy is at say Rs. 35 to Rs. 36, the soap bar. And what we have now
done is we launched a price point in-between these two-price point, both
in volume, in terms of grammage, and in terms of price. What this does
the unit economics of this bridge packs, gives A) better value to
consumer and hence the consumer is still able to source good brands at
an affordable price point. And for us it gives us scale. And also, the unit
economics gives us better value as manufacturers and sellers. So, bridge
pack is what is what we are trying now to do across all the commodity
impacted categories.

Moderator: Thank you. The next question is from Latika Chopra from JP Morgan.
Please go ahead.

Latika Chopra: Sanjiv, I just wanted to check your thoughts in the rural growth
trajectory. We saw that the March quarter on an aggregate basis was
lower than the previous quarter. But are you seeing any green shoots
sequentially in the agri economy as you exited the quarter, any thoughts?

Sanjiv Mehta: If we were to look at the hard number, we are clearly seeing that the last
three months, both the value growth and volume growth in urban and
rural has been lower than the MAT growth. While there is you know one
has to understand that there is base period impact, but on a total basis,
we are seeing the decline happening. And if you were to recall, in the
first year of the pandemic rural growth was going ahead, growing much
ahead of urban, because urban movement was curtailed, MT was more
or less closed. And then in the second period, second year, we saw urban
picking up when they came back as things started to open up.

Now your question on rural, are we seeing green shoots, I believe that
there are a few factors which could contribute to rural recovery. First is

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a good harvest, we are seeing that the Rabi harvest should be good from
all counts. Second is the indicators are that the rain fall should be decent.
The third is, with the Agri prices moving up, there would be benefit to
the farmers, what we need to assess whether that will get neutralized by
input price increase, or there would be a net benefit to the farmers. If it
is a net benefit to the farmer, it would be fabulous, because we are seeing
that the government procurement has been much lower because farmers
are selling it in the open market.

And then last, but not the least, is government spending of 7.5 lakh
crores on CAPEX and if that is front ended, which I believe it should be,
then we should start seeing a recovery happening. And if the geopolitical
crisis settles down, then we will definitely see a tapering off the
commodity price increase, which all together could result in the revival
of demand and revival of growth. So, I am hopeful, but very difficult to
put our finger on when this will happen.

Latika Chopra: My second question was, you definitely talked about market share
improvements across 75% plus of your portfolio. But could you tell us,
how are market shares across the three segments behaving for you, on
the Ecommerce front, I remember earlier you used to talk about
Ecommerce market shares are more than modern trade, modern general
trade. But how is the trend now there, particularly on the Ecommerce
front for your key segments?

Sanjiv Mehta: First is, we are growing market share from a Nielsen perspective, in
urban and rural in value and volume. We are increasing market share
across the three divisions, Beauty & Personal Care, Foods &
Refreshments and Home Care. We are increasing our market shares, in
large packs, mid packs and small packs. And we are increasing our
market share across geographies and when you look at it from a lens of
premium, mid-tier and BoP. So, it is a market share gains across

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segments and both from a width perspective and from a depth

perspective, it's been a great story.

Now as far as Ecommerce is concerned, is whatever we measure, we get

information - we are very pleased with the progress that we are doing as
far as Ecommerce is concerned.

Moderator: Thank you. The next question is from Percy Panthaki from IIFL. Please
go ahead.

Percy Panthaki: My first question is generally when there is a lot of pressure on the
consumer wallet, in the past we have seen some amount of down-trading
as in not just the pack size, but the customer goes for sort of slightly
more affordable brand, in the same product category. So, have you seen
that happening because you have brands across price points, so within
your portfolio, have you seen people moving from a brand to a lower
brand within your portfolio or outside your portfolio?

Ritesh Tiwari: India is as you know, not a homogeneous country. And we have seen
more than one shopper behavior and consumer behavior at this point in
time. The overall trend of down-trading where consumers are seeking
value that is very clearly established. With inflation where it is now
extremely significant, and consumer wallet size getting compromised
they are clearly putting more priority to essentials over discretionary.

But when I look at our own sales at Hindustan Unilever, our premium
portfolio in this year of 2021-22 across quarters, has grown at twice the
pace as rest of the portfolio, which means there are still consumers, who
are able to buy and who are spending to buy our products which offer
higher order benefits. And as we called out in the past our premium
products are at price point at 120 plus index. So, we have seen traction
in that space as well.

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Now the advantage of running extremely good WiMI machinery,

‘Winning in Many Indias’ machinery, we are able to surgically find
pockets of opportunities across the country, across channels and across
price segment where we can drive growth disproportionately. And this
is what has really helped us in times like this, to grow not only in
premium, but also in mass and also in popular. So, growth has been
broad based, where we have gone a little differently on different pockets
of growth opportunities. But overall trend does remain at this point in
time that consumers are seeking value, if the small price points are
giving value they are going there, if the large packs are giving more
value they are going there. So, we are seeing value seeking behavior
across categories.

Sanjiv Mehta: It’s absolutely the right question you posed to us. But increasingly, what
we have done, we have also made our premium pack accessible. So, in
the laundry, one of our fastest growing brand remains Surf Excel.

Percy Panthaki: My second question is a continuation of what Latika asked in terms of

market share within sort of the D2C brands. So, some work I have done
on this and rough understanding I have from media articles, etc., is that
if we take the top 7 to 10, BPC D2C brands in India, they are clocking a
turnover of somewhere in the region of about Rs. 2,500 crore plus. This
works out to approximately close to 15% of your BPC ex-Oral care
sales. And these brands were close to zero, five to six years ago.

So, I mean, there is obviously some amount of opportunity in the market,

which is being taken by these brands, and they are no longer small in the
aggregate. So, what are your thoughts in terms of how do you sort of
plan to increase market share in this space? Do you want to, like you
have launched Simple and Love, Beauty & Planet, will it be through
brand proliferation or will it be through launching subcategories within
the existing brands, etc. How do you approach this entire sort of space

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which is really exploding and you need to get your fair share of growth
there?

Sanjiv Mehta: You know, first I think, Percy, people often forget, but it's worth
reminding that we have added Rs. 5,000 crores of turnover this year.
And when we talk about digital landscape, all the growth that you see in
digital is not always incremental. Many of them are a channel shift that
happens. And our ploy today is not just that digital-first brands only
because I think one must remember that we have great mega brands and
you have seen how we have progressed to Rs. 5,000 crore, Rs. 2,000
crore, Rs. 4,000 crore, Rs. 1,000 crore and our first port of call will be,
to have the consumer’s access these brands and what we are doing is,
for us design-for-channel is a very important initiative. How do we
design our products or even existing brand, not just the Simple and Love,
Beauty & Planet, but our existing brand so, that they meet the needs of
the digital consumer. So, that's the first port of call.

The second, the way we look at it is brand extensions of our existing

brands, where we are catering to the needs that we are able to capture,
with speed of many of the digital-first consumers for instance. And then
we are looking at the digital-only brand. So, ours is a multifaceted
strategy that we are going to play. And just like many of the digital
brands, after a while they look at moving to offline, because after that
their footprint gets reduced, if they just remain to digital.

So, for us, the play is going to be multi-channel. And the important bit
is on an aggregate, and in the channels which are growing fast. We
would want to have not only a fair share, but improve our share. And I
think that strategy for us is working pretty well.

Moderator: Thank you. The next question is from Kunal Vora from BNP. Please go
ahead.

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Kunal Vora: My first question is on the digital demand capture which you mentioned,
around 20% now where do you see yourself getting to in next two, three
years? And can you talk about the benefits as these numbers move up?
Would it mean lower employee requirement at distributor level? And
are there any other cost benefit? And how are you ensuring that Shikhar
continues to remain preferred over eB2B competition, which is coming
in?

Sanjiv Mehta: I have always maintained that good competitors keep us on our toes. We
are now into our fourth version of Shikhar. And when we did the
benchmarking study on Shikhar used by retailer, and ease of use and the
functionality, it came in right on top. So, we are very pleased with the
way Shikhar has progressed. And by far it would be the biggest app
adopted by the retailers.

And now our thrust is, how do we customize the assortment for each
store, so that for a store owner, it makes it much easier to navigate, and
we can give them the offering, which we feel rightfully should be sold
through those outlets.

The other important bit, which I want to harness about, for us, it is not
just about demand capture, we want to be very clearly the most
intelligent consumers goods enterprise. So, the way we are harnessing
the three eco-systems of consumers, customers and operations and the
entire idea is that across the value chain, we need to use data technology.
And today, whether it is decision making, whether it is S&OP planning,
whether it is factories, whether it is demand capture, whether it is our
fulfillment centers which are highly automated, across the value chain,
we are bringing in technology. And even the decisions that we make on
pricing, on promotions, on investment, increasingly, we are using
intelligence.

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So, increasingly, we want to ensure that across the value chain, we are
able to use technology. And on every area we are bringing in the
principle of attribution to growth. So, as far as technology and all is
concerned, we are highly focused, and these are what we are creating
would be the new moats around us.

Kunal Vora: Second and last question on the LUPs, you mentioned that you are
introducing some bridge packs, but will you also be vacating some of
the price points and how do you see the net impact of the introduction
of bridge packs versus a vacation of certain LUP price point?

Sanjiv Mehta: First is, you know, let us be very clear, we are not going to lose
consumers. And we are going to do it in a manner where the consumer
gets incentivized to move to a bridge pack, that's what we would do. So,
moving to a bridge pack for the consumer would be creating value.

Moderator: Thank you. The next question is from Harit Kapoor from Investec.
Please go ahead.

Harit Kapoor: My first question is on the margin side, just trying to kind of crystal ball
gazing into the next 12 months, on one hand, you have a challenge of a
weaker demand environment. And you still have to keep, passing on
price increases, albeit calibrated. On the other hand, you also have a
challenge, where some of the discretionary categories are a bit weaker,
as compared to the base category, which again, implies a slightly weaker
mix something that we saw in fiscal year ’21 also, during COVID.

I just wanted to understand, how do you then kind of take pricing

decisions in such context. Is there a kind of a margin band that you look
at, you will look at to kind of maintain based on which you will take a
pricing call. I just wanted to get your sense on, how you will navigate
this environment from a broader perspective, because over the last three
years, you have seen it 24% to 25% margin in the past, it's been even

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lower. So, is there a broad margin band that you look at or it’s going to
be very market related and you have to keep taking a call every month
or two depending on how things are panning out from a demand
perspective.

Ritesh Tiwari: Absolutely a very pertinent question in the times that we are in. So, our
strategy has two components number one is to protect our business
model and number two is to grow our consumer franchise. If these are
the two objectives achieved, we will know that all the work that we have
done has been successful. And this has been done in last several quarters
as we have been in a very challenging atmosphere be it COVID, be it
the latest geopolitical crisis or be it inflation that we have seen
unprecedented. And the number which I had quoted earlier, from JQ’20
of 100 to 4.5 times in MQ’22.

In all this period, what we did, was the first port of call is to keep driving
savings hard across the length and breadth of the P&L. At Hindustan
Unilever, we have a very strong savings culture, where savings is
generated and done by everybody in the organization, be it colleagues
in supply chain, be it colleagues in marketing, or colleagues in sales. So,
all lines of the P&L, we try to bring maximum efficiencies. And I quoted
certain examples earlier to you of supply chain, even on product where
we design to value if there's more amount of weight to a bottle, can we
manufacture a bottle with a little lesser, lightweight, it will help
environment it will also help the cost. Media attribution to growth and
hence the kind of ROI we want to generate. So, that’s the first port of
call.

And after that, as you rightly called on we do and we have taken

calibrated price increases. Now the kind of inflation we have seen in
commodity, as you have seen the very fact we have been able to negate
a good portion of that and hence, we have been able to maintain the
margin in healthy range and do price increase of a scale of 10%, which

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as you can see is much lower compared to the amount of commodity

which has increased.

Number two this is also where portfolio comes into play, where we have
portfolio across price points from mass, from premium, from mid. And
I called out earlier that even in these times, there is a segment of
population in premium where we are able to sell higher order benefit
products, and the growth of that portfolio has been twice the growth of
the rest of the portfolio. So, that is something which has also helped us
in times that we are in today. So, strategy is mix of that, pricing, and
driving cost efficiencies and of course holding our consumer franchise.
But what we are not blinking in times like this is to invest behind our
products, invest behind our brands. One of the example, I quoted earlier
that our products superiority today is twice as much as it was in the base
of 2019. So, two times we have more superior products, compared to
2019. Media we have spent 100 crore more in this quarter to ensure that
our salience and our media reach is not getting compromised. And we
continue to maintain our share of voice ahead of our share of market.
So, that gets very squarely done.

Now, in short term, as I called out, we will see stress in margins and
margins will decline in short term. And why that will happen, because
of the price versus cost gap, when you have sudden huge amount of
inflation in input cost, it takes time for us to then mitigate that through
cost synergies and pass on the incremental impact through calibrated
price increases. And which is why what we mentioned that there will be
short term impact on margin as price versus cost gap increases. But we
are very confident that we will build it back in a phased manner back
into P&L.

But what we are very clear what will not get compromised is our own
will to ensure that we are able to grow our business ahead of FMCG
market growth. So, that's the overall strategy of the business.

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Sanjiv Mehta: I will just add a bit more flesh to the bone, to the comprehensive answer
that Ritesh has given. We also measure the elasticity. How much is the
volume impact that we would have. But we must remember that there is
nothing like a perfect elasticity or perfect inelasticity. The second
important bit is that when your brands are superior, whether from a
mental reach perspective, or brand power, or from a product superiority,
then your capacity to take price increase is much more, because the
consumers don't always look at absolute price they always look at price
value equation. So, that factor also gets into it now.

And then we look at the portfolio from a lens of how do we from a

capacity to pay perspective, how do we protect the low price point packs
and where do we have more capacity with people who would be having
more disposable income, and a wallet to spend on our brand, that’s
where we take it. So, there are many variables that get into it and
increasingly, we are using lot of data and analytics to help take our
decisions.

Harit Kapoor: The second is a much shorter question. Actually, just wanted to get your
sense on, in your view, do you expect, say media intensity over the next
few months also to keep trending downwards? I am not talking about
your share of voice, but from an aggregate perspective given probably,
players who have lower market shares, regional etc, might be even more
stretched than you are, who don't have some of the levers, do you expect
that media intensity impact will also keep coming down progressively,
at least until the inflation impact is severe?

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Sanjiv Mehta: See, it has come down by nearly about 20%, if we look at the GRPs on
a total basis, but let me be emphatic, we have, our share of voice is more
than a share of market. And for us, it is we play for the long term we
don't play for the short term. If we see media intensity goes up, we will
unblinkingly invest more behind our brands.

Moderator: Thank you. The next question is from Shirish Pardeshi from Centrum
Capital. Please go ahead.

Shirish Pardeshi: Two things I am referring Slide #30 and that is the full year performance
I am referring. So when you report a full year Rs. 14,000 odd crore for
food and refreshment. And the growth is about 6.8%. Since we have
completed one year of GSK acquisition, could you, I mean, I don't want
to get into too much detail, but if you can broadly tell me what is the
growth and what is the contribution from GSK portfolio.

Ritesh Tiwari: Yeah, so, overall, as you have seen, that the growth that we have in food
and refreshment is very healthy. And there are two dimensions to that
growth a) The growth is comprehensive in terms of the portfolio that we
have, but more importantly, as we call out earlier that growth is
extremely competitive. And we have gained market share, and we have
further improved penetration.

And I was speaking a little earlier about click down on Horlicks within
that. So, we have successfully integrated Horlicks. Our reach now, direct
distribution is twice what we had pre-merger period. Now when it comes
to growth of Horlicks as I mentioned earlier, the key job to be done out
here is continue to do market development at scale and support the
market growth. Now Horlicks within that is a discretionary category, the
point I was making earlier with significant amount of inflation that
consumers are witnessing in their kitchen, they are putting more priority
at this point in time to essentials against discretionary categories like
HFD categories like skincare. But our job is very clearly cut out which

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is to keep doing market development, fundamentally it is a very

attractive category with a low penetration. And hence, our idea is to
ensure that we are doing the job of building a portfolio, improving
penetration and improving market share.

Within March quarter, and overall, as I have mentioned that our

momentum is very strong there and we have gained market share. While
the category has seen decline in terms of market. We have further gained
penetration as well. So, it's I would say a good set of results, as we
started to see impact of market development in early phase. But this is
not a short one or two quarter journey, we will be at it, because the
runway for growth is much higher and a job of building penetration is
long term.

But overall within F&R, if I can call out certain other categories, we
have seen very good growth across our Foods & Refreshment, Foods
portfolio. Tea, we have seen again, very good competitive growth, we
now have both value and volume leadership in our Tea portfolio. You
heard us speaking about coffee having a double-digit growth in the
quarter. So, it's a pretty broad base performance in the Foods &
Refreshment portfolio.

Shirish Pardeshi: Just one follow up here. You did mention in the beginning that the entire
integration front end and the back end is done for the GSK, full merger
which has happened. And I did see from the margin perspective, the
segmental margin for Food & Refreshment has gone up by 200 basis
point. So, the question here is that with the full integration now behind
do you think this another 200, I mean, I am not saying number, but you
see that further expansion on the segmental margin can happen now
onwards, despite the inflation, that is different.

Ritesh Tiwari: From the cost synergy front, we had mentioned earlier that we made
very significant progress. And since the first year and half, we have

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already achieved over ambition that we had on cost synergy, for the first
three years in the business case. A good portion of that generation that
we did on cost synergy we have invested back in the business to keep
driving market development.

Now, if you ask me, is there a further headroom for us to gain synergies
and grow further in terms of margin headroom for Horlicks portfolio?
The answer is absolutely yes. The areas which will further get savings
will be in the area of supply chain and distribution. What we have now
finished doing is full integration of our go-to-market structure. The point
I was making that our direct outlet coverage is twice what we had earlier.
Areas like media, overhead costs, those synergies we have already
realized, but in terms of distribution, when I say DCs - depots, in terms
of factory manufacturing, there is further headroom that we have to
realize, and we have clear line of sight as well of those, it’s just that we
have been sequencing as to what we should first dial up, and then which
is second and third port of call we should go in terms of driving
synergies.

So, yes, there is further headroom for growth. And we have very clear
line of sight over the next two, three years to keep driving that.

Shirish Pardeshi: And my last question, when I look back, since the time I am tracking
this Company, what I understand you did mention that we are ahead of
share of market in terms of spends and our SOV is much higher. But just
an observation having worked in industry, what I find that when we have
done the activation and the rural penetration and through the access
pack, and you did mention that LUP is also a big number, what I am
trying to say here in the volatile demand condition and last two, three
quarters, Sanjiv did mention that rural is slowing down, so we did pick
up that. But in the context when the demand is not coming and when our
prime goal is to improve the frequency of usage, do we think that to gain
further market share or to maintain ahead of the curve, even if the rural

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is not coming back at some point of time in next four quarter we will
have to up the investments in advertising.

Sanjiv Mehta: Yes, advertising, we look at it from a couple of lenses. One is, of course
competitive. Yes, we want to be ahead of our market share. The second
is we also look at it from a reach perspective. Because let's also accept
that we are not, FMCG doesn't operate in isolation, we operate for the
eyeballs with other industries as well. So, we need to have a minimal
reach to ensure that our brands remain salient. We do that.

The third thing also we must accept that market development when we
invest in it, these are generally first purchased by early adopters. And
early adopters are people who have more disposable income with them.
So, market development, we believe will continue to grow at a pace
faster than the rest of the market, which we have seen over the last
several years and it will continue to be so. And we will not cringe away
from investing in market development.

Yeah so we have very clear portfolio, while overall imperative that

Ritesh articulated remain, and which we have been very consistent, that
in case of this kind of volatile hyperinflation environment, protecting
our consumer franchise not only protecting but growing and protecting
our business model are the two big imperative. But we play for the long
term. And we will not do anything, which in any way will hurt our
business from the long term perspective.

A. Ravishankar: We will take some questions on the web now. I will start with a question
from Avi Mehta from Macquarie. The question is we are traditionally
looked to maintain EBITDA margins in the 24% to 25% range as we
play all lines of P&L to offset inflation. Would it be fair to expect
margins to move to the lower end of this range in the near term? And
move back ahead, ensuring that FY23 margins are in this range?

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Ritesh Tiwari: This is the point I was clarifying and giving more details earlier. We do
expect in next two to three quarters sequentially inflation to further go
up in terms of commodity costs and input cost inflation. As I mentioned
in the strategy is very clear protecting the business model with a very
clear objective to grow our consumer franchise and the point that we
made earlier, we keep investing for getting the job done. Hence in the
next two to three quarters we will see margin to decline. And why that
will happen, because the price versus cost gap - when you have sudden
increase in cost and we continue to do the job in terms of reducing the
cost impact through savings, but the increase which is so substantial in
short term, it will lead to of price versus cost gap. And that's what will
end up impacting margins in short term. But as I mentioned that in our
mind, it's very clear that we will build this margin back in a phased
manner over quarters after that. So, that's our clear strategy from a
margin perspective. I hope that gives a very clear understanding of
where do we see margins for next few quarters.

A. Ravishankar: Sanjiv there is a question on how we assess product superiority?

Sanjiv Mehta: Yes, product superiority, we do blind test. And because if we were to do
branded test, we will have an unfair advantage, so we do very clear,
blind test to test attributes which are most relevant for the consumer.
And that's how we assess the product superiority.

A. Ravishankar: There is a question from Richard Liu. The question is on understanding

the strong spike in other operating income in Q4, that is one part of the
question. The second is for a little bit of color on the CAPEX numbers
and how much of this is PLI related?

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Ritesh Tiwari: There are three reasons why the number is higher compared to periods
earlier. Number one is we announced that we do have now a
participation in PLI scheme. And as part of that this is the first year of
the PLI scheme and the incentive that we get that is recorded in this line
of other income.

Number two OTC income, as you know, we do distribution of GSK

products. And with that business, we do get revenue of OTC income,
which again gets accounted in this line. And hence, with the business
which has happened there it has seen better income compared to same
period in the prior year. That's the second reason.

Third as you know, we host global cost centers and global capabilities,
which we invoice globally to Unilever. That has further increased in the
quarter in terms of investment in those capabilities. And hence, since we
host them, we also invoice them the earned income through markups.
Those are the three reasons why other income is higher compared to last
year.

CAPEX, very clearly we have stepped up investments in few areas. To

start with you have seen UIL, we have blown powder capacity that we
are setting up. And as part of that investment as we had called out a
couple of years back, that is accounted in UIL books and hence also
comes in the consolidated financial statements, there is blown powder
capacity in Sumerpur that we are setting up. With the kind of growth
that we have seen in Home Care, there is no surprise that we are setting
up further capacities to support the growth that we have seen, that’s one.

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But there are also other pockets of investments that we have done be it
our distribution centers, be the Nano factory, which we spoke about, the
way we have digitized that factory and we have invested in those
capabilities or for that matter Ice cream cabinets. This is also the time
for us with a good season for Ice cream, as you know, March quarter we
called out we had pretty good strong growth in ice cream. In fact our
business in ice cream now is higher compared to pre-COVID levels. So,
those are the areas where we have done investment in our CAPEX and
hence we have seen number inching up.

In the COVID period we were measured with our cash expenditure and
our capital discipline and now the growth is coming in and we have
appropriately leaned in to ensure that. The last thing that you want is
growth getting compromised for not having invested. Investment be it
in CAPEX or the investment be it in BMI or for the matter product
superiority across the board, we do ensure that growth in no way gets
compromised. So, that's the reason why you see an increase in CAPEX
expenditure in this financial year.

A. Ravishankar: There is a question from Chirag on what has helped secure the strong
margin in Foods business also what has led to strong performance in
Fabric care and Household care?

Ritesh Tiwari: So in the foods business margins, there are two broad drivers of that,
one, as you know the F&R business includes the nutrition business, and
we gave the narrative of the kind of margin we have driven because of
cost synergies with nutrition that is one clear driver. And of course, tea,
we know that we had very high amount of commodity prices at one point
in time. And as we speak now, though commodity is still elevated over
2019, but year-on-year now the inflation is not as high as you have seen
in the past period. In fact, year-on-year the Tea commodity costs are
coming down.

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So, there are two factors. But I would say the predominant factor is the
kind of work we have done in Horlicks. Beyond Horlicks, beyond Tea,
of course, overall, as I mentioned that the job that we keep doing in
driving cost synergies across the board, by driving various operating
synergies be it distribution, by traveling less kilometers per product
movement, or for that matter, cost synergies of media, or promotions, or
other supply chain elements. So, there is a large amount of work, which
happens in the P&L across the board, that also benefit you see within
F&R, as well. So, those are the three reasons I would say why you are
seeing better profitability, compared to what we have seen in the past.

Sanjiv Mehta: And just to add to what Ritesh has said why Home Care has done so
well, I think first we need to sit back and take a bit of a macro picture,
that in the last about nine years, we have added Rs. 25,000 crores to our
turnover, which is doubling our business and which is more than the
absolute turnover of any other FMCG Company.

The second is we have tripled our EBITDA during this period. And
market cap, you guys monitor more closely than I do, I leave it to you.
And during this period or even if you look at it during the last couple of
years that is the strength of our portfolio not any category will keep
growing at a linear pace that doesn't happen. But if you look at it in
recent times, we have had a great journey with Tea, where we have taken
not only value leadership, but volume leadership and phenomenal
growth.

When you look at our hair care, where we have got record shares right
now, and where we have created markets, an amazing journey we have.
And similarly on home care, it's been a consistent delivery of superior
products with great brand and consistency of engagement platform. Now
dirt is good is something with its improved, different manifestation. We

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have been running this engagement platform for years. And that is how
we have built this great property and product superiority, brand power,
brand salience, distribution prowess and our Reimagine HUL agenda
these are all contributing in different ways to ensure that we have a
rhythm on growth and have ensured that we make such a robust business
model.

And that's the reason I say that many times people talk about niche
brand, they will always be there, but at our scale and size adding 5000
crores as delta turnover in a year that gives a sense of the kind of strong
business that we have created with Hindustan Unilever.

A. Ravishankar: Thank you Sanjiv. With that, we will now come to the end of the Q&A
session. If there are any further unanswered questions, please feel free
to reach out to us in the IR team and we will be happy to clarify.

Before we end let me again remind you that the playback of the event
will be available on the IR website in a short while. A copy of the results
and the presentation if not with you already, it is on the website as well.
With that we would like to draw the call to a close. Thank you everyone
for your participation and have a great evening.

Moderator: Thank you very much Sir. Ladies and gentleman on behalf of Hindustan
Unilever Limited, that concludes this conference. We thank you all for
joining us and you may now disconnect your lines.

Disclaimer: This transcript has been edited to remove and / or correct any grammatical
inaccuracies or inconsistencies of English language that might have occurred inadvertently
while speaking.

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