Addressing the issue raised: “I was pretty intrigued going through the presentation which you have prepared on Hindustan Unilever Ltd. Having gone through the presentation I should also share the information that HUL was given the most coveted Corporate Governance award by the Institute for the year 2011. However the grading given by you on all the parameters seems to be far lower than what the Institute felt in awarding Corporate Governance Award.- ICSI Institute Member” Clarification include Letter to PM on how methodology was arrived and how CREAM™ Report can be applied for Country Ratings.

1. An IBCM© Research Publication
CREAM™ Report Hindustan Unilever Ltd.,
Why the HUL Ratings are far lower?
CREAM™ Report – Corporate Rating
crème de la crème of India Inc.
Hindustan Unilever Limited

2. An IBCM© Research Publication
CREAM™ Report Hindustan Unilever Ltd.,
The reaction
“I was pretty intrigued going through the presentation which you have
prepared on Hindustan Unilever Ltd. Having gone through the
presentation I should also share the information that HUL was given the
most coveted Corporate Governance award by the Institute for the year
2011. However the grading given by you on all the parameters seems to
be far lower than what the Institute felt in awarding Corporate
Governance Award.- ICSI Institute Member”
CREAM™ Report is a comprehensive analysis of a company including
Corporate Governance deriving a single rating for the whole and the
parts.
Each of the issue areas of CREAM™ Report i.e. Corporate Governance,
Risk Management, Earnings, Accounting Quality and Management
Quality, is in a slot of its own. Each slot is rated independently.
Corporate Governance spins around Management Quality and

3. An IBCM© Research Publication
CREAM™ Report Hindustan Unilever Ltd.,
CREAM™ Report Structure

4. An IBCM© Research Publication
CREAM™ Report Hindustan Unilever Ltd.,
The reaction - 2
Mandatory and Non-mandatory Initiatives
Accounting Quality rests with the mandatory requirements whereas
Management Quality depends on the non-mandatory initiatives such as
CoBP, Code of Conduct etc. for better ratings.
In case of Accounting Quality a number of areas based on performance
in business segments expenditure, assets, revenue recognition pull down
the ratings. In case of Management Quality number of initiatives get
higher ratings and non-starters lower. However in both the cases Ethical
Responsibility being not aligned with Fiscal Responsibility brings down
the ratings. Plus 5-year study shows in many blocks, no energy addition.
Sustainability
1. Sustainability of Value
System - Ratings
Derived from CREAM™ Report
2008-09
2009-10
2010-11
2011-12
2012-13
1. Accounting Quality
0
1
0
2
1
2. Management Quality
2
2
2
2
2

5. An IBCM© Research Publication
CREAM™ Report Hindustan Unilever Ltd.,
The reaction - 3
Ethical Responsibility the Substantive Element
Commenting on an OECD paper Richard M Murphy finds out on
Siemens: “Governance is not compliance and ethics; and disputes
OECD's conclusion that large multinational companies generally have
adequate internal compliance controls. One need only to look at the
record at Siemens (whose code of conduct was described as read,
laughed and filed code, or the long, legalistic and ineffective code
that existed at Enron to see the great danger in such sweeping
conclusions.”
The Companies Bill 2012, is another beautiful document particularly
Schedule IV Code for Independent Directors. It reminds one of the
jurist, Nana Palkhivala who once said India is a second-class
democracy with a first-class Constitution.
CREAM™ Report is based on Ethical Responsibility as the essence of
every Action of the Company that each Process Block is measured by.

6. An IBCM© Research Publication
The reactionCREAM™ Report Hindustan Unilever Ltd.,
-4
Ethical Responsibility and Corporate Governance
CREAM™ Report differentiates between conflicts of interests, conflicts of personal interests,
conflicts of conscience of a whistle blower that Ethical Responsibility makes it feasible to
measure. Ethical Responsibility is a great facilitator.
Out of total of 189 process blocks assessed, only 23 blocks are measured for Corporate
Governance. This is due to less of disclosure of events than more of policies adopted.
Various committees, the Board, the Board Business that are extensively assessed and
measured all fall under Management Quality.
8 Process Blocks measure Internal Controls and Risk Management. Together 31 blocks are
assessed under the category sustainability of efficiency. The factors of Ethical Responsibility
not aligned with Fiscal Responsibility bring down the overall rating. The result for 31 blocks
is 2,2,2,2,2 for each year of the study. Governance is a dynamic function now is in a
suspended animation, for HUL. Action is warranted.
Sustainability
2. Sustainability of Efficiency Ratings
Derived from CREAM™ Report
2008-09
2009-10
2010-11
2011-12
2012-13
3. Risk Management
3
3
3
3
3
4. Corporate Governance
2
2
2
2
2
Net Ratings
2
2
2
2
2

7. An IBCM© Research Publication
CREAM™ Report Hindustan Unilever Ltd.,
The reaction - 5
Earnings Capability
CREAM™ Report converts Quantitative data to Qualitative efficiency ratings with the
criteria of 15% growth under a single rating system. HUL results are poor, cause for
the overall poor ratings of HUL. HUL is not in the 15% club of India Inc. The 5-year
study findings show:
1. Wrong policies were and are pursued. It is not going to be easy for HUL. They have
to go back to the drawing board. CREAM™ Report is the drawing board.
2. Ethical Responsibility being aligned with Fiscal Responsibility is warranted to
address the issues raised above.
3. ICSI can use CREAM™ Report for awarding any segment awards.
Sustainability
2. Sustainability of Profits Ratings
Derived from CREAM™ Report
2008-09
2009-10
2010-11
2011-12
2012-13
5. Profit and Loss Account
0
1
0
1
0
6. Balance Sheet
0
0
0
3
1
Net by 15% growth
0
0
0
2
0

8. An IBCM© Research Publication
CREAM™ Report Hindustan Unilever Ltd.,
Ratings are WYSIWYG
●
●
●
●
●
SEBI in 2007 came out with a mandatory grading for IPOs. Brilliant move. The rating
agencies are to be blamed for its failure.
CREAM™ Report corrects the situation and has made it permanent for companies
to improve their ratings, by providing 1. Governance ratings and 2. Governancedeficit ratings, of Action and Inaction, for each Block by each resource input. HUL
Rating follows this principle.
HUL Ratings are not lower or higher but reflect the status of Object moved or yet
to be moved to a different space. They are as they are subject to change at the
volition of HUL. If you want higher ratings, just MOVE the Object.
Is HUL just Rent Collectors? Find out from the full HUL - CREAM™ Report that is
made available at Amazon [Rs.400] http://www.amazon.com/dp/B00GR6K9UM
most practical and useful report for implementation, by any company. Selfgovernance is crucial.
Undertake the next Budgeting exercise [FM too] by CREAM™ Report.
Pl. see my letter to PM next page on HUL Ratings
Jayaraman Rajah Iyer
jayar.ibcm@gmail.com

9. An IBCM© Research Publication
CREAM™ Report Hindustan Unilever Ltd.,
Letter to PM
The Prime Minister of India
cc Dr. Raghuram Rajan, Governor, RBI, cc Dr. Subramanian Swamy who inspired my
work
Respected Prime Minister,
After your call for reviving Animal Spirits, I did check the original script of Keynes:
“Animal Spirits: – Even apart from the instability due to speculation, there is the
instability due to the characteristic of human nature that a large proportion of our
positive activities depend on spontaneous optimism rather than mathematical
expectations, whether moral or hedonistic or economic. Most, probably, of our
decisions to do something positive, the full consequences of which will be drawn out
over many days to come, can only be taken as the result of animal spirits – a
spontaneous urge to action rather than inaction, and not as the outcome of a weighted
average of quantitative benefits multiplied by quantitative probabilities.” cont'd

10. An IBCM© Research Publication
CREAM™ Report Hindustan Unilever Ltd.,
Letter to PM-2
I worked on the same and in order to satisfy the demands set by the statement I
brought in the 'pole-shift theory of Management'. I created a Subject-Object distinction
of Qualitative and Quantitative elements of Corporate Management. In it the
denominator I changed to the Subject and the numerator the Action or Inaction of the
Subject on an Object.
The Subject is Intangible of pulsating energy. The Object is inert but of non-pulsating
energy. Unless the Subject takes the effort to collide with the Object the inert Object
doesn't move, which is Action. Action or Inaction obtains a binary value of 1 and 0.
Object being inert the common denominator facilitates measuring Action covering a
single Process Block to the entire economy. The common denominator clue I took from
Dr. Subramanian Swamy's statement 'convert n-dimensional problems to n problems of
one dimension'. The common denominator is the spontaneous urge, the intangible, the
pulsating energy.
Continuing, I worked on the n-dimensional problems, the Object. Action process is
unique... Cont'd

11. An IBCM© Research Publication
CREAM™ Report Hindustan Unilever Ltd.,
Letter to PM-3
..Action process is unique to the Quality of the substance created, be it Constitution of
India or manufactured patented goods in infinite succession. If there is a road block on
Action for the created policy it remains insentient, like UNCAC ratified but not
functional.
I brought down n-dimensional problems to two: related to any task, it is of 2
dimensions Creative Process or Action Process.
I created Corporate Atomic Structure consisting of Policies [Protons],
Practices[Electrons] and The Society [Neutrons] where the Society is packed into the
Board forming a nucleus whereas Practices spin around the nucleus. Our Companies
Act with Code for Independent Directors represent the Society, who like Neutrons do
not change the identity but adds mass to it.
Every material event, an event where the pulsating energy collides with a non-pulsating
one creates energy. Shrinking n-dimensional problems to two we focus only on two at a
time in either of the processes - Action or Inaction by 1 dimension [pulsating energy] to
arrive at Return on Intangible, which is either 1 or 0. Adding every cont'd

12. An IBCM© Research Publication
CREAM™ Report Hindustan Unilever Ltd.,
Letter to PM-4
..Adding every Process Block and averaging it, by Integer only as to the stage of
completion, any number of disparate Process Blocks could be grouped under a single
banner. It makes no difference between Agriculture or manufacturing as the criterion is
set, as to know whether the pulsating energy related to the Object has taken Action or
not, be it a potter or a nuclear scientist.
I have done the Corporate Rating of Hindustan Unilever Ltd. on this principle with
Ethical Responsibility being aligned with Fiscal Responsibility as a primary criterion to
arrive at the Rating for 5+ years beginning 2008-09. This principle is valid for entire
economy that we could arrive at a Country Rating.
I am pleased to send this presentation HUL-CREAM™ Report – Corporate Rating, crème
de la crème of India Corporate, a synopsis of measuring an Organisation by SubjectObject distinction of Corporate Management. CREAM stands for Corporate
Governance, Risk Management, Earnings, Accounting Quality and Management
Quality. The main report consisting of 350 pages of 189+ Process Blocks with no one
issue area occupying more than a page, it is an exhaustive analysis for a single company
deriving a single rating for each year. The ratings signify .. cont'd

13. An IBCM© Research Publication
CREAM™ Report Hindustan Unilever Ltd.,
Letter to PM-5
..The ratings signify what is the current status and calculates an Index of Inactivity
based on the optimum level of achievement which is 5 for every Process Block. Index of
Inactivity, which is absence of Intangible or absence of pulsating energy or effort or
inaction, signifies the gap where Action is warranted. Any additional input towards the
optimum is the energy added satisfying the equation e = mc².
Isolating problems is the key element of Subject-Object relationship once established.
For example, control of inflation. Create an Object as a strategy statement for Action
on controlling inflation with any number of process blocks each owned by a team of
individuals. The team consists of 5 – 1[one] member from Ethical Responsibility
Management and 4[four] from Fiscal Responsibility Management that consists of 1.
Managerial Force, 2. Operating Force, 3. Technology and 4. Finance. dT/dT series of
Tasks in Time should be at the speed of 5 by real-time monitoring of the control
measures. Each unit of effort put in creates pure energy and adds mass at the same
time, vice-versa as the Object is moved from one space to the other at the collision
point. The effort status as to the Action taken can be made online whether it is 2 or 3
signifying the governance standards applied for a specific strategy. 5 indicates the
optimum... cont'd

14. An IBCM© Research Publication
CREAM™ Report Hindustan Unilever Ltd.,
Letter to PM-6
..5 indicates the optimum governance standard achieved that is a measure of
confidence the Society in turn reposes on the government.
The principle is valid for all and useful to Planning Commission and RBI, a simple
tracking device for the entire economy.
Please see the presentation HUL- CREAM™ Report – Corporate Rating and the
conclusions derived.I am sure my work in turn brings self-governance, the purpose that
I had stated in CREAM™ Report – Corporate Rating, aligning Ethical Responsibility with
Fiscal Responsibility as National Culture.
Jayaraman Rajah Iyer
Jayar.ibcm@gmail.com
22 Nov. 2013