Hindustan Unilever Ltd. CREAM™ Report – Corporate Rating

Hindustan Unilever Ltd. CREAM™ Report – Corporate Rating

Synopsis of CREAM™ Report – Corporate Rating
crème de la crème of India Inc. of Hindustan Unilever Ltd.

The Methodology

Keynes on Animal Spirits: “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.

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 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. Intangible being 1 binary value for deciding on spontaneous urge related to any Object is either 1 or 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 the 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.

The Object is not an Object unless it is created, our Constitution or IPRs, patents etc. So it goes through a process of being created. Any Object whether man-made or Natural has identical Creative Process, a child or a diamond or a an IPR. Creative Process moves linearly in 6 stages to be called a substance. Parliament is more of Creative Process than Action Process bringing out Policies enabling Action on the created Policy.

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 is 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 no change the identity but adds mass.

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 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 HULCREAM™ Report – Corporate Rating, crème de la crème of India Corporate, a synopsis of measuring an Organisation by Subject-Object 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 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 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.
Corporate Rating of Hindustan Unilever, India including Code of Business Principles (CoBP) of both Unilever and HUL India. 340 pages of analysis of a single company, a rating system covering 189 Process Blocks. Unique in presenting Return on Intangible for each Process Block that Rating Agencies would surely follow – Rating of Corporate as well as Governments.

The methodology adopted reverses the denominator, from Return on Investment to Return on Intangible, a pole shift theory of management. Useful for companies that want to know and understand the meaning of Capitalism and how best that could be applied. That’s it, capitalism the denominator is human spirits, an enthusiasm of spontaneous action, rather than inaction, and certainly not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities, as Keynes describes Animal Spirits in its right perspective.
This analysis of a major organization should interest the world over, corporate as well as Government. What is crucial is to know that a material event is the collision point of Ethical and Fiscal Responsibility bringing the abstractions into reality, acknowledge value where value is due, and deconstruct what is valueless.

The CREAM™ Report – Corporate Rating, crème de la crème of India Corporate rates Hindustan Unilever on
1.Corporate Governance,
2. Risk Management
3. Earnings
4. Accounting Quality
5. Management Quality.

What CREAM™ Report – Corporate Rating does is to shrink the quantitative data to merge with Qualitative elements of Corporate Management by Subject-Object distinction. It is a beauty and simple. This unique rendering of aligning Ethical Responsibility with Fiscal Responsibility is made possible by Subject-Object Distinction of Qualitative and Quantitative Elements of Corporate management. If CoBP is rated, so are the Balance Sheet and Profitability statement, merging all to a single rating system for the Company.

The Subject is the pulsating energy and the Object the non-pulsating ones. The Subject either moves the Object or he/she does not, i.e., Action and Inaction. The denominator is Intangible the pulsating energy, the numerator Action or Inaction for an Object. By doing so CREAM strategy converts n-dimensional problems to n-problems of one dimension.

Secondly there are only two processes – Creative Process or Action process – relative to an Object. Either you create an Object or make use of it. During the creative process every man-made or Nature substance follow an identical pattern till it becomes tangible.
Hence n-dimensional problems are brought to a single dimension of binary value, either you are in the process of creation or moving the inanimate object from one space to the other. There are only two processes for Corporate management – of Policies and Practices. Nothing more to add.

Jayaraman Rajah Iyer

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2 thoughts on “Hindustan Unilever Ltd. CREAM™ Report – Corporate Rating

    • Just completed Hindustan Unilever Ltd. Tough as I have to sit alone and complete the whole exercise. I have started on Reliance Industries. I am on to Country Rating. Reliance Industries [RIL} coming out better particularly on growth. HUL is pretty bad and is very likely they are on the way out unless they take immediate effective action by CREAM report – HUL.

      Thanks for your interest. I should appreciate if any US organisation commission CREAM Reports. For themselves, for their clients, for investing in India.

      Thanks

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