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FINANCIAL ANALYSIS ON HLL
Avnish Tyagi (11) Naman Ajitsaria (31) Rashima Mittal (40) Samir Kapur (43) Siddharth Gandhi (47)
Hindustan Lever Ltd
TABLE OF CONTENTS
ACKNOWLEDGEMENTS EXECUTIVE SUMMARY ENVIROMENTAL ANALYSIS INDIAN FMCG INDUSTRY HLL COMPANY OVERVIEW . 1 ... 2 .3 ......4 9 15
FINANCIAL STATEMENT ANALYSIS o Interpretation (Ratio Analysis overview) DUPONT ANALYSIS......... ANALYSIS OF CASH FLOWS ACCOUNTING POLICIES ACCOUNTING TRANSACTIONS .. APPENDIX o Financial statements
..28 ....31 .......33 35
We wish to put to record the heartfelt gratitude and immense respect to Prof D.V.Ramana (Faculty, Financial Accounting). We wish to thank him for the valuable time he gave us and the immense patience he had, in answering even the seemingly trivial queries we had to ask. He had explained the concepts so minutely to us that even while analyzing the annual reports of companies we encountered very few problems.
Hindustan Lever Ltd
The project assigned to us is to study the financial health of Hindustan Lever Limited. The main purpose of the project is to analyze the Environment in which HLL is operating. EIC - Environment Industry and Company analysis is done thoroughly to understand the external factors influencing the company. All various ratios are calculated and analyzed in length to appreciate their impact on company s performance. Dupont analysis is done to check the credibility of company as per shareholders, financial analysts and other mutual funds. The three financial statements of last three years are identified, studied and interpreted in light of company s performance. Critical decisions of distributing dividends, Issue of bonus Debentures and other current news are analyzed and their impact on the bottom line of the company is assessed. Accounting policy of the company is also studied with respect to valuation of Fixed Assets, Inventory, Investments and Employee related liabilities.
companies that are able to spot trends early and those that are committed to continuous innovation and those that endeavor to delight the consumer by meeting her changing needs will lead and prosper in the future. and teenagers among them numbered about 160 million. Over the long term. As the retail environment changes and organized retail takes shape. in-shop and market level presence and thereby improve presence and availability. they wielded INR 14000 Cr worth of discretionary income. rails. Exemplar companies that have used distribution and availability differentially will achieve sustainable business growths. At the firm level. the efforts on the infrastructure front (roads. 3 Hindustan Lever Ltd . Even in the much-penetrated categories like soaps/detergents companies are focusing on getting the consumer up the value chain. companies that are able to influence and excite such consumers would be those that win in the market place. By 2015. approximately 47 per cent of India's one billion people were under the age of 20. the evolution of the FMCG industry would continue to be driven by a number of factors. Indians under 20 are estimated to make up 55% of the population . and river linking) are likely to enhance the living standards across India. Changes in demographic composition of the population and thus the market would also continue to impact the FMCG industry. India's per capita consumption of most FMCG products is much below world averages. Till date. firms would need to take a leadership stance and invest in upgraded in-store infrastructure. This is the latent potential that most FMCG companies are looking at. Obviously. (Indian economy is poised to remained buoyant and grow at more than 7 %. much of the battle will be fought on sophisticated distribution strengths.ENVIRONMENTAL ANALYSIS At the macro level. Together. Going forward. With an eye on the future. the second potential opportunity for value creation is in the area of distribution & availability. and their families spent an additional INR 18500 Cr on them every year. Product superiority married with a favourable price-value equation will form the basis of winning initiatives in the coming years. For example: In a recent survey conducted by a leading business weekly.) which would impact large proportions of the population thus leading to more money in the hands of the consumer. power.and wield proportionately higher spending power. These include economic growth.
HLL. This can be further sub-divided into oral care. and tea and beverages. the journey seems to have just now begun for the players as the majority of the rural populace are yet to get access to the items of daily usage like toothpastes. Another reason which has led to rise in this trend is the saturation in urban markets in most of the consumer non-durable goods categories. therefore. develop.So far. Major Indian consumer product companies (like Britannia. But.INDIAN FMCG INDUSTRY Background The FMCG sector has been the cornerstone of the Indian economy. Consequently.) have a very strong presence through their strong brands. The FMCG sector consists mainly of sub segments viz. Post-reforms. oral care and household products. It has taken tremendous consumer insight and market savviness for the FMCG players to reach where they are today. the sector has been in existence for quite a long time. P&G. food and dairy-based products. cigarettes. hair care products. Diversified portfolios. personal care. Brand equity. the rural markets have been witnessing intense competition in almost all the consumer product classes. Though. soaps and detergents. This has led to the industry players scrambling for greater rural penetration as a future growth vehicle. Perhaps. is an extremely important factor in FMCG industry. soaps and shampoos. The sector touches every aspect of human life. beauty cosmetics. it has been a chequered graph for the MNCs operating in the Indian FMCG industry. defining an industry whose scope is so vast is not easy. the industry's growth has been hinging around a burgeoning rural population which has witnessed significant rise in disposable incomes. Health and Hygiene products. etc. and maintain a robust distribution network. it began to take shape only during the last fifty-odd years. Domestic companies are only beginning to make their presence felt in the industry. One of the other most critical factors is the ability to build. 4 Hindustan Lever Ltd . the area which accounts for 70% of the total Indian household s . from looks to hygiene to palate. wide distribution networks and scale economies of these companies deter new players from entering.
beverages. unorganized players with local presence to flourish include the following: 2. 5. Competition 1. Brand switching is often induced by heavy advertisement. family management. The sector covers a wide gamut of products such as detergents. Significant Presence of Unorganized Sector . 5 Hindustan Lever Ltd . The small-scale sector in India enjoys exemption/ lower rates of excise duty. and cigarettes. He seldom ever looks at the technical specifications. Individual items are of small value (small SKU's) although all FMCG products put together account for a significant part of the consumer's budget. 4. recommendation of the retailer or word of mouth. as and when required. They meet the demands of the entire cross section of population. Brand loyalties or recommendations of reliable retailer/ dealer drive purchase decisions. The consumer spends little time on the purchase decision.Industry Characteristics Typically.Factors that enable small. a consumer buys these goods at least once a month. 5. Limited inventory of these products (many of which are perishable) are kept by consumer and prefers to purchase them frequently. Basic technology for most products is fairly simple and easily available. Low brand awareness enables local players to market their spurious look-alike brands. toothpaste. Lower overheads due to limited geography. sales tax etc. focused product lines and minimal expenditure on marketing. creams. 2. 4. 3. food products. Typical characteristics of FMCG products are: 1. toilet soaps. Price and income elasticity of demand varies across products and consumers. comfort. luxury. confectioneries. The products often cater to 3 very distinct but usually wanted for aspects necessity. A highly scattered market and poor transport infrastructure limits the ability of MNCs and national players to reach out to remote rural areas and small towns. 3. powders. This makes them more price competitive vis-à-vis the organized sector. shampoos. 6.
These FMCG companies embarked upon major restructuring and cost rationalization exercises as business continued to become fiercely competitive. Price cuts became inevitable to keep the market share from shrinking. Value for money Ever since the global recession of 1991-94. Sometimes. which was witnessing a major change in its aspiration and lifestyles and even had an income that translated into increasing volumes. marketed effectively and sold at the right price Who says rural is not rich! Economic recession hit the urban pockets badly and forced companies to train their guns on rural India. With small product portfolios like theirs.A general assessment of this would lead to the conclusion that FMCG is not a Structurally Attractive Industry to Enter. There was a paradigm shift towards value-for-money products and. Rural India accounts for as much as 70 per cent of the nation s population. value-formoney has become the buzzword for FMCG companies globally. towards the rural market. India s agrarian economy is fundamentally strong. the intensity of competition from branded and unbranded goods and the power of retailers make the FMCG a structurally unattractive industry in which to enter and difficult industry in which to remain a competitive player. Entry barriers are high due the nightmare logistics associated with distributing a FMCG and the limited mass media options available to build a brand. Colgate and Britannia 6 Hindustan Lever Ltd . they have been able to achieve what others could not and proved that what you need is a good product. nonetheless. Companies such as HLL. are interesting cases. to some extent. What Nirma did all these years suddenly become the buzzword for many FMCG players. That means rural India can bring in the much needed volumes and help FMCG companies to log in volume-driven growth. Likewise. P&G and Smith Kline Beecham. the cuts touched ridiculous levels. Several packaging innovations were also resorted to. India was no different. which hit consumer spending hard.
True. while Colgate went about wooing the rural masses by offering low-priced products in convenient packaging. there has been a phenomenal improvement in rural incomes and rural spending power.who already had a strong rural focus. Marico Industries. Britannia pushed its Tiger biscuits to every nook and corner of the country. What started as 20-25% growth rate in year 1994-96. it is growing richer by the day. Year 2004 brought signs of relief for the FMCG industry. HLL unleashed its "Operation Bharat". ColgatePalmolive and Britannia Industries are only a few of the FMCG majors who have been gung-ho about rural marketing. FM CG se ct or pe r for m a nce in la st de ca de The FMCG sector in India showed a constant decline in the last decade. Certainly. had reached a negative growth rate of -2. This growth was majorly due to the price cuts initiated by P&G. The FMCG sector is now mockingly called SMCG or slow moving consumer goods. stepped up the gas further. Rural marketing has become the latest marketing mantra of most FMCG majors. with over 6% growth in Q4 04. which are desperate to find ways out to gain deeper penetration. which led to increase in volumes. rural marketing holds the key to success of FMCG companies. Not just the rural population is numerically large. In this year the industry experienced average growth of over 1. Of late. chose to leverage Marico's retail reach. rural India is vast with unlimited opportunities all waiting to be tapped by FMCGs. Among the FMCG majors. 7 Hindustan Lever Ltd . Hindustan Lever. Not surprising that the Indian FMCG sector is busy putting in place a parallel rural marketing strategy. whose distribution is largely urban. P&G. Those who could not do it on their own went piggyback on somebody else.8% in Q1 04.52%.
as their manufacturing Alternatively. Resurgent economic numbers in FY04 did nothing to change the scenario. Sri Lanka and the Middle East among others. In times of weakened consumer demand such menaces continue to nightmares to large companies. Owing to India's cost advantage. ports. As growth has shown signs of Weakness in the economy has led to a slowdown in demand for FMCG products. will increase FMCG penetration in the long term. the fall in agricultural output continues to cast on FMCG sector's prospects in the short term. cost efficiencies and rural markets. The infrastructure for free transport of goods is not adequate in the country. railways and airports. Post this. Also. A large part of the branded market continues to be threatened by spurious goods and illegal foreign imports. only about 7-8% of the total food production is consumed in processed form (US$ 75 bn). slackening companies are increasingly focusing on key products and brands. The planned development of roads. highlighting the scope for growth. declined. many MNC companies have started using their Indian operations base. The proposed introduction of VAT at the start of FY06 is a long term positive for the FMCG sector. The top line growth of many FMCG majors has thus. benefiting the sector. Also. This is a sign of market sophistication. This had been a long pending demand of the FMCG sector. putting pressure on profitability. according to estimates. 8 Hindustan Lever Ltd . both from the manufacturer's point of view as well as the consumer's point of view. some Indian companies have tested foreign shores like Bangladesh. the tax ambiguity will get reduced. New entrants in the sector have heightened competition in key segments like soaps and detergents.Key Positives Key Negatives Rural penetration levels are still low. This speaks for itself.
1888 Sunlight soap introduced in India. The Economic Times has rated Hindustan Lever as the best consumer household products company. and Ice cream. branded Wheat Flour.10. best managed Indian company & most respected company. Skin Care Products. with leadership in Home & Personal Care Products and Foods & Beverages. leading in Shampoos. 9 Hindustan Lever Ltd . Processed Coffee. HLL is also driving 1913 Vim scouring powder introduced. Jams and Squashes. HLL INTRODUCTION 1895 Hindustan Lever Limited (HLL) is India's largest fast moving consumer goods company. Soups. HLL is India's largest exporter of branded fast moving consumer goods. Personal Products. Tea and Coffee. touch the lives of two out of three Indians. HLL's brands. Home Care Products. it is a net foreign exchange earner. Colour Cosmetics and Deodorants. The company's Exports portfolio includes HLL's brands of Soaps and Detergents. Detergents and Home Care products. spread across 20 distinct consumer categories. HLL is also the market leader in Tea.000 crores. Lifebuoy soap launched 1902 Pears soap introduced in India Various leading business publications. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of Rs. 1903 Brooke Bond Red Label tea launched. HLL is India's largest marketer of Soaps. 1905 Lux flakes introduced HLL is also one of the country's biggest exporters and has been recognized as a Golden Super Star Trading House by the Government of India. Tomato Products. Asia money. It has the country s largest Personal Products business. like Forbes Global. Far Eastern Economic Review.
Lux.1930 Unilever is formed on January 1 exports in chosen areas where India has a competitive advantage Marine Products. the largest selling Skin Care Product in India. the key brands are Rexona. the portfolio comprises Close-up and Pepsodent toothpastes and toothbrushes. HLL's Hair Care franchises are Clinic. HLL also markets the Vim and Domex range of Home Care Products. & Wheel (all detergents). The other major Skin Care franchises are Pond s. Rexona & Dove. HLL markets the Lakme and Elle-18 ranges. 1932 Vanaspati manufacture starts at Sewri Some of the big brands in Soaps and Detergents are Lifebuoy. It has been extended as an Ayurvedic cream. Sunsilk and Lux shampoos. Rin. 1939 Garden Reach Factory purchased outright In the Personal Products business. Liril. Castor Oil and its Derivatives.1000 crores in the foreseeable future. Lakme and Pears. In Deodorants. 1943 Personal Products manufacture begins in India at Garden Reach Factory 1947 Pond's Cold Cream launched. It is India's largest exporter of Marine products. In Colour Cosmetics. Axe. a brand developed in India. Vaseline. an under-eye cream. Surf Excel. 10 Hindustan Lever Ltd .3000 crores. company s strategy is to concentrate its resources on 35 national power brands. Chennai. Pears. in line with the strategy to take brands across relevant categories. Hamam. it is now exported to over 30 countries. The top five brands together account for sales of over Rs. while the Talc brands are Pond's. soap and talc. In Oral Care. In Skin Care. and 10 other brands which are strong in certain regions. HLL markets Fair & Lovely Skin Cream and Lotion. The 1931 Hindustan Vanaspati Manufacturing Company registered on November 27 Mumbai. Basmati Rice. Market leading brands HLL s brands have become household names. Each of these mega brands has a potential scale of Rs. Denim and Pond's. Surf. and one of the largest global players in castor. (all soaps). Liril.
The coffee business comprises Bru Instant Coffee and Deluxe Green Label Roast & Ground Coffee. a diverse range of about 5000 branded and unbranded products. Animal feeds plant at Ghaziabad. besides Thane. 1969 Rin bar launched The company has also begun an e-tailing service. . 1995 HLL enters branded staples business with salt HLL is one of the world s largest packet Tea marketers. Surf Excel launched 11 Hindustan Lever Ltd 2002 HLL enters Ayurvedic health & beauty centre. which can home-deliver on order by phone or through the Net. The service is now available in select areas of Mumbai and Navi Mumbai. HLL has started franchised Lakme Beauty Salons. 1996 HLL introduces branded atta. HLL and Pepsi have formed an alliance to distribute a full range of tea and coffee and soft beverages through vending machines. called Sangam. Red Label. Headache Naashak Rollon. offering standardized services. Taaza.1959 Surf launched. Its Tea brands Taj Mahal. Sunsilk shampoo launched. Hair Rakshak Oil and Body Rakshak Soap. Dandruff Naashak Shampoo. Fair & Lovely. it also markets Lipton Ice Tea.are among the top brands in the country. Vaseline and Lifebuoy. HLL has recently launched Lever Ayush Ayurvedic Health & Personal Care Products. Anik ghee launched. 1964 Etah dairy set up. Axe and Denim are HLL s franchises for Men s toiletries. Health Care is among the new businesses HLL has chosen to enter. . in line with the strategy to add a service dimension to relevant brands. The product range comprises Cough Naashak Syrup.
it has reduced prices to make the brands more affordable.1750 crores as in 1999. The company had disengaged from all non-FMCG or commodity businesses. Vitality through nutrition. which has returned the company to growth and reversed the trend of down trading in the FMCG industry Focussed FMCG Company: HLL is now a focussed FMCG company with branded businesses accounting for over 90% of sales. And to ensure that Lever would not lose sales. Once again. This is known as HLL s Power Brand strategy. To identify these power brands. is already growing at 15-20 per cent and will continue that way for a long time. Instead of different sales teams servicing the same retailer. backed by appropriate technology. and launched several low unit size and price packs to make them more accessible. As a result. For one. it was decided to migrate these brand users to the designated power brands. and play a bigger role in consumers lives. They have been strengthened by ensuring that they offer better value. This gave each division the advantage of enormous scale. over the next three years. 35 brands with better value & bigger role in consumers lives: HLL. it reckons. Wherever necessary. By bulking up the businesses. as a company. its large portfolio range helps Lever to use the power of customer relationships to corner greater shelf space and a disproportionately higher share of the branded segment. these retailers do not have to maintain high inventory levels. profit delivery and the size of the opportunity. The company decided to whittle its brands down from 110 to 35. it is possible for Lever to service these modern trade outlets on a daily business. covering all consumer appeal and price segments. Foods building blocks in place: The Foods business which was fragmented and lacked scale. Hindustan Lever Limited (HLL) has undergone a complete transformation in the last five years. while deriving excellent value for these divestments. consisting of 35 brands across 20 categories. Modern trade. The Foods business will now invest for growth through relevant innovation. The supply chain has been cleared of all old stock and geared up for fresh availability on shelf. Consumers 12 Hindustan Lever Ltd . the company has integrated both HPC and Foods portfolios for modern trade chains like Margin Free. is now focussed on 35 powerful brands. with sales of Rs. managers were asked to consider their growth potential. has been consolidated and gross margins have been improved by over 13% through product mix and cost reduction. HLL is already combining its scale advantage to offer retailers a bigger basket of products and better service.Hindustan lever took the decision to simplify the company it merged all the different business units into two large divisions: home and personal care (HPC) and foods and beverages (F&B). the drastic slimming down of the brand portfolio which threw up huge problems in execution is now over. The company had to move from selling a soap or a detergent to something far more important and central to the consumer s life. hygiene & personal care: The most significant challenge has been to move the brands beyond merely making functional claims to playing a bigger and deeper role in the lives of consumers.
There is greater openness and transparency. 13 Hindustan Lever Ltd . Today the company is far more youthful in attitude and spirit.40. who are now being serviced on continuous replenishment. leaner. The portfolio of 35 brands is uniquely positioned to offer nutrition. In rural India. The entry into water purifiers. it is providing a sustainable source of income to underprivileged rural women.000 crores. Acorns for the future: HLL has also begun to nurture some acorns new businesses and new ways of engaging with consumers -. empowered organization: The Company. Simpler. consumers are seeking Vitality in their lives. This has eliminated complexity and speeded up decision making.100. with Pureit. HLL s partners in this initiative. . as a whole. complements HLL s rural reach. Its eight Profit Centers have been integrated into two Divisions of Home & Personal Care and Foods. with opportunities to catalyse penetration. hygiene and personal care benefits and thereby deliver Vitality. Investment in the future: To ensure HLL s competitiveness in the long-term. increase usage. Hindustan Lever Network. in the last three years. and upgrade consumers. Project Shakti. which has already reached 1. IT tools have been deployed for connectivity across the extended supply chain of about 2. Over the next 10 years.Distribution & customer management reinvented: The Company has also reinvented the management of distribution channels and customers. or 5% of sales.400 crores. pricing and marketing. it has made significant investments in product quality. India s per capita income is likely to double.000 villages of 12 states. the FMCG market is expected to grow to over Rs. As a result. 80 factories and 7.today are looking for ways to look good and feel good so that they can get much more out of life. The result is a simpler and leaner organization. in the face of recent competition action.000 crores from its current base of Rs. The sales force has been delayered to improve response times and service levels.400 towns with over 3 lakhs consultants. is HLL s direct selling initiative. The investment in product quality alone has been over Rs. shows great promise.for the future.000 suppliers. This is in addition to the cost of defending market position. In short. Simultaneously. Backend processes have been combined into a common Shared Service infrastructure. less hierarchical with fewer levels and greater empowerment. It is leveraging scale and building expertise to service Modern Trade and Rural Markets. In urban India. has been restructured.000 stockists. already touching 75 million people in 60.
S. M. Parekh Mr. S. Arun Adhikari Mr. A. K. Ravindranathan Mr. Prahlad BOARD OF DIRECTORS Non Executive chairman Vice Chairman Managing Director (Home & Personal Care) Managing Director (Foods) Finance & IT Director Director Director Director Director 14 Hindustan Lever Ltd . D. V. C. Narayan Mr. Harish Manwani Mr. K.HINDUSTAN LEVER LIMITED --Mr. D. Sharma Mr. Narayan Mr. Sundaram Mr.
55 15 Hindustan Lever Ltd .36 2600.17 171.927.595.83 1.024.734.837.410.454.227.CURRENT YEAR DEFERRED TAX Taxation adjustment of previous year PROFIT AFTER TAX AND BEFORE EXCEPTIONAL ITEMS Exceptional items 163.995.80 (95.088.916.033.841.957.50 918.675.62) 1.179.65 (193.883.694.818.38 1.64 Other Income 31.00 180.168.96 175.15 1.109.00 1.75 (26.766.43 12.494.046.711.00) 4.860.69 (96.405.22 2004 2003 2002 1.601.96 (42.17 296.90 150.56) 799.63 252.00) (5.971.815.27 816.37 81.844.90 12.74 177.059.997.40 13.161.899.676.86 219.06 814.095.736.578.894.473.02 EXPENDITURE 1.00 2.40 119.568.96 224.90 PBIT PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS TAXATION FOR THE YEAR .998.982.11 2421.19 1754.478.45 12.48) 1.56 3.531.30 38.73) 995.143.56 BALANCE AVAILABLE FOR APPROPRIATIONS Interest on non trade inv 201.03 (99.32 45.769.46 75.336.013.52 119.471.56 45.600.52 Operating Expenses Interest & Finance Charges Depreciation 848.254.76 227.089.43 822.96 (3.31 6.28) NET PROFIT Balance brought forward from Previous 119.485.433.00) (6.94 874.091.835.05) 992.85 224.469.094.Financial Statements All figures in Rs lakhs Income and Expense statement of HLL INCOME Sales Less: Excise Duty 1.726.939.
555.436.277.09 120.346.81 76.268.546.84 9.84 37.111.085.58 LOAN FUNDS Secured Loans Unsecured Loans 145.54 84.686.60 36.178.608.268.305.785.23 1.089. LOANS & ADVANCES Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loans.71 -36.01 80.106.455.97 69.263.41 -77.495.51 -40.889.60 4.258.111.50 3868.44 191.367.01 255.887.474.27 214.77 16 Hindustan Lever Ltd .64 121.Balance Sheet of Hindustan Lever Ltd ALL figures in rs lakhs 2004 2003 2002 SOURCES OF FUNDS SHAREHOLDERS FUNDS Share Capital Reserves & Surplus 22012.88 132.984.926.61 383.79 170.873.08 199.421. Advances & Deposits Less : CURRENT LIABILITIES AND PROVISIONS Liabilities Provisions NET CURRENT ASSETS 147.709.06 36.14 365.946.534.730.07 142.39 387.384.948.555.49 383.62 350.425.982.26 5.78 1.367.872.79 330.61 370.82 259.11 6.83 DEFERRED TAX LIABILITY TOTAL APPLICATION OF FUNDS FIXED ASSETS Gross Block Less : Depreciation Net Block Capital Work-in-Progress 231.19 395.961.171.37 371.249.756.829.262.805.10 DEFERRED TAX ASSET INVESTMENTS CURRENT ASSETS.956.43 -23.442.932.804.00 94.44 343.44 10.313.23 246.63 236.96 129.91 89.493.16 213.65 10.929.369.060.34 47.58 7.60 22012.44 187.98 370.22 151.40 343.76 11.441.82 395.430.270.738.648.079.562.965.22 79.51 209.71 59.34 367.044.14 112.65 38.108.77 10.875.32 131.89 127.860.455.80 5.66 222.233.630.67 147.95 22012.26 48.880.13 257.584.53 139.059.01 160.45 13.26 136.
55% 17 Hindustan Lever Ltd .45% Dec 2003 22. There are two types of profitability ratios: Profit Margin ratios o Operating Profit Margin ratio o Net Profit Margin ratio Rate of Return ratios o Return on Total Assets (ROTA) o Return on Capital Employed (ROCE) o Return on Net Worth (RONW) A) Profit Margin ratios measure how much a company earns relative to its sales. i) Operating Profit Margin ratio measures the earnings before Interest and Tax. falling prices or declining sales in the future. The Profit Margin of a company determines its ability to withstand competition and adverse conditions like rising costs. A company with a higher profit margin than its competitor is more efficient.48% Dec 2002 22. and is calculated as Profit before Interest and Tax (PBIT) / Net Sales x 100 % Particulars Operating Profit Margin Dec 2004 16. The ratio measures the percentage of profits earned per rupee of sales and is thus a measure of efficiency of the company. the Profitability ratios speak about the profitability of the company.Ratio Analysis of HLL Profitability Ratios: Profitability Ratios show how successful a company is in terms of generating returns or profits on the Investment that it has made in the business i.e. The higher these ratios the better it is for the company.
568.31 848957.30 175.64 119.5 Operating Expenses 860000 840000 Value 820000 800000 780000 760000 2002 YEARS 2003 2004 799899.694.48% Dec 2002 995.64% Profit margin Operating profit margin(%) ratios profit margin(%) Net 25 22.06% Dec 2003 1.ii) Net Profit Margin ratio measures the earnings after Interest and Tax.734.179.48 16.32 177.37 12.06 22.835. and is calculated as Profit after Tax (PAT) / Net Sales x 100 % Particulars Sales PAT Net Profit Margin Ratio (%) Dec 2004 992.64 % age 15 10 5 0 2002 2003 years 2004 17.40 17.45 12.9 Operating Expenses 18 Hindustan Lever Ltd .485.46 17.013.55 20 17.5 816168.
PBIT Total assets ROTA (%) Dec 2004 163. increased interest burden and high indirect taxes.06 paisa on every Re. B) Rate of Return ratios i) Return on Total Assets (ROTA) ratio tells us how well management is performing on all the firm's resources.336.48 % in 2003 to 12.83 63.471.The efficiency has certainly decreased over the last few years mainly owing to high operating expenses .62% 19 Hindustan Lever Ltd . We can see that the operating margin has decreased considerable in the last year.85 395.367.This is mainly due to increase in the interest burden because of a debenture issue by the Company to the tune of Rs 132074 lacs in the middle of 2003. However.87% Dec 2003 227.86 383. The Net Profit Margin has also decreased from 17.45 paisa on every Re. it does not tell how well they are performing for the stockholders.Interpretation: For the year ended 2004 HLL earns 16.01 49.The interests costs have increased by approximately 95% which has reduced the company s Net profit. The ratio measures the percentage of profits earned per Rupee of Asset and thus is a measure of efficiency of the company in generating profits on its Assets.90 370.06% in 2004.25% Dec 2002 224.916. The ROTA of a company determines its ability to utilize the Assets employed in the company efficiently and effectively to earn a good return. It is calculated as -Profit before Interest and Tax (PBIT) / Total Assets x 100 % Particulars.23 63.455. 1 of Sale after Interest and Taxes.268. Moreover the company s operating expenses have increased by almost 4% in the year 2004.8% in 2004 over the last year. It is visible that Hindustan Lever Ltd has not been able to increase its Operating Profit margin constantly over the years. This is mainly due to the fact that the Sales have dropped by almost 1. 1 of Sale before Interest and Taxes It ultimately makes 12.
Dupont Analysis. Interpretation: Clearly. ROTA = PBIT / Sales (Profit Margin) x Sales / Total Assets (Asset Turnover) For HLL.Interpretation: HLL generates 49. increase in Operating Expenses . Looking at ROTA from another angle in order to do.87% return on the Total Assets (ROTA) that it employs in its operations in the year ended 2004.e. increase in expenses like Carriage and freight by almost 8 % etc. debentures and long-term loans. we have. Capital Employed means the long-term funds employed in the business and includes the shareholder s fund. ROTA has decreased in the last year mainly due to the fact that its profit margin has decreased. HLL is a company which survives more on volume of sales than the profit margins on its products. Capital Employed = Owner s Fund (Share Capital plus Reserves & Surplus) + Long-term Debt 20 Hindustan Lever Ltd . It says how much profits we earn from the amount invested by the Shareholders. Decrease in sales . Profit Margin ratio is 16.03 for the year ended 2004.45 % & Asset Turnover ratio is 3. Profit before Interest and Tax is considered for computation of this ratio to make numerator and denominator consistent. It is calculated as -Profit before Interest and Tax (PBIT) / Capital Employed x 100 % Where. ii) Return on Capital Employed (ROCE) ratio explains the overall utilization of funds by a business enterprise. We have already discussed the underlying reasons for decrease in profitability i.
85 189.53% Dec 2002 224.38% The Return on Net worth ratio states how much profit a company earned in comparison to total amount of shareholders equity on the balance sheet of the company.e.179. Moreover the underlying reason for such a huge ROCE is that the company has high amount of Non. 2003 and the Net worth has also decreased by 48% in comparison to the year 2002.428.Trade investments which are not a part of Capital employed.29% Dec 2002 175.336.62 81. also we do see that the PAT of the company has fallen by about 32%as compared to the previous year i. Though the ROCE has seen a considerable change even now the company is getting good enough returns and can pay good enough dividends to the shareholders as we saw the case in the year 2004 where the rate of dividend was 250%.04 273.23% is considered to be very good.07% Dec 2003 227.002. The company is earning a return of 105.734.36% Particulars.86 347.63 153.54% As we can see that the ROCE for HLL has decreased considerably in the last year mainly due to lower profit margins.130.919.428. we see that the RONW of HLL has increased in comparison to the year 2002 but this cant be concluded as a favourable situation for the company as looking at the figures in detail we can notice that there has been a near to 30% decrease in RONW in comparison to the year 2003 .002.919.04 48.04 190.Even now an RONW of about 66.04 93.46 347.07% on the funds employed by it.40 189. iii) Return on Networth = PAT________ Net worth Dec 2004 119. Here.63 66.63 105.90 180. PAT Net worth Return on Net worth (%) Dec 2003 177. The primary reason for Net worth going down from 2002 is the Bonus Debenture issued by the Company which has been capitalized from the General reserve. We have excluded interest income received from such non trade investments which was minimal and therefore had little impact on the PBIT. 21 Hindustan Lever Ltd .154.088.54 118.Particulars PBIT Net worth Capital Employed ROCE Dec 2004 163.471.916.37 180.568.
Rate of Return Ratios Dec-04 Dec-03 Dec-02 93. It s more reliable then current ratio because it considers only the most liquid assets and does not include the hidden factors like window dressing that may skew the actual scenario. It involves constant monitoring of cash flow position. Current Ratio: Current Ratio = Current Assets / Current Liabilities Quick ratio: Quick ratio = (Current assets term loans + provisions Inventories.53 81.doubtful debtors) / Current Liabilities+ short Also known as the acid test ratio. It is similar but a more strenuous version of the "working capital" ratio. It s the responsibility of the treasury manager to maintain the right balance between investments and liabilities to get the maximum liquidity.25 63. 22 Hindustan Lever Ltd .6 Liquidity Ratios Ability of the firm to meet short term obligation comes from holding of liquid assets which are readily convertible into cash.87 63.07 118.6 Return on Capital Employed(%) Return On Total Assets(%) 105. indicating whether liabilities could be paid without selling inventory.54 49.36 50. We will analyze the two popular measures of the liquidity of the company. it is a stringent test that indicates if a firm has enough short-term assets (without selling inventory) to cover its immediate liabilities.3 Return on NetWorth(%) 66.
25 204498.178. Similarly we can see that the Absolute Cash ratio is much lesser than the Quick ratio Amount of Debtors constitutes a sizeable portion of the current assets.8 0.2 0. .51 0.231.495.88 0.92 0.51 0.7 0. The reason is that since the company is using long term sources of finance to fund its short term obligations therefore the interest burden has increased and as a result the cash balance has gone down by 13.6 0.47 0.5 % in the last year. It implies that the company would have problems in managing its short term liabilities and liquidity requirements.106.82 176365. 1 0.53 Dec 2003 397.18 330.57 ratio 0.25 It can be seen from the above table that the current ratio for all the years is less than 1. Liquid Ratio is much lesser than the current ratio which signifies that inventory forms a major part of the Current Assets.1 0 0.89 0.120.89 0.69 343.92 0.51 350.9 0. The company might resort to financing its short term liquidity requirements by long term sources of finance.5 0.78 0.92 Liquidity Ratios 0.88 0.957.47 2002 Current Ratio Quick Ratio 2003 years 2004 23 Hindustan Lever Ltd .89 Dec 2002 370.4 0. We can observe that the current assets have decreased by 14 % and at the same time the current liabilities have decreased by just 6 % in the last year. This signifies that HLL has short term liabilities greater than the short term assets.3 0.8 0.20 211557.57 0.Particulars Current liabilities & provisions +Short term loans Current assets Current assets InventoriesDoubtful Drs Current Ratio Quick Ratio Absolute Cash Ratio Dec 2004 373.
Though the debt equity ratio of 0.Solvency Ratios It s the company s ability to meet long term liability.428. A proper mix of equity and debt is said to be always beneficial for the company rather than pure equity.However the Shareholders equity has gone down from 2002 mainly because the issue of Bonus Debentures has been adjusted with the General Reserve.81 is not good enough as compared to industry norms of 2:1 but the company is moving towards a favourable debt equity mix.0056 The company was highly unleveraged in the years 2001 and 2002.369. 24 Hindustan Lever Ltd .002.65 Dec 2002 347. DER: Debt to Equity Ratio DER = Long-term debt / Shareholders Equity Particulars. Also called the capital structure it is one of the major financing decisions for the company. It has realized the importance of trading on equity . We will have a look at few of the solvency ratios for HLL.78 Dec 2003 189.The Company has increased its debt burden by 1470% in the last 4 years which is mainly on account of issuing Debentures of the amount of Rs1320 cr in the middle of 2003. However in the last 2 years the company has changed its policy and is leveraging the advantage of debt along with equity.50 0. Shareholders Equity Long term Debt Debt Equity Ratio Dec 2004 180.04 160.81 0. Existence of debts disciplines management to some extent.04 1.961.919. It was risky as the company had invested a huge amount of its own funds as compared to debt.305.63 145.84 0.
how effectively the firm is paying suppliers.916. of Debtors/Total Sales)* 365 This ratio actually indicates the no.42 2000 0 Interest Coverage ratio basically signifies the ability of a firm to service its interest burden through the profits generated . As a result the Interest Coverage ratio is very high gradually the company has employed more debt and as a result of which the interest s burden has increased significantly.90 Dec 2003 227.4 lacs to Rs 12998.43 Particulars PBIT Interest Interest Coverage Ratio Dec 2004 163. This ratio is expressed in no. As a result the ICR has reduced from 244.40 244.43 lacs This is on account of the Bonus Debentures issued by the company to the tune of Rs 1320 cr by the company.Interest Coverage Ratio: ICR = (PBIT) / Interest Interest charges 12998.45 34. 25 Hindustan Lever Ltd . of days of sales that are on the balance sheet of the company as debtors. and whether the business is overtrading or under trading on its equity (using borrowed funds).In the initial years when the firm had not employed debt its interest burden was very low.676.43 12.4 Interest charges 2002 2003 years 2004 6676.14 918.42 to 12.85 Dec 2002 224471.57 6. PBIT has gone down 28% in 2004 as compared to 2003.86 14000 12000 10000 8000 value 6000 4000 918. Efficiency ratios: It measures the quality of a business' receivables and how efficiently it uses and controls its assets.45 12. Debtor Days: (Total No.57 in the last 3 years. We can see from the chart above that the interest burden has gone up considerably from Rs 918. Moreover due to high competition and operating inefficiency the earnings of the company have declined.998. A higher debtor day s ratio signifies general problems in the collection of funds faced by the company or the financial position of the debtors.336. of days.
00 Dec 2003 195631.74 704127.09 days in the year 2004.The Debtors have increased by about 14.09 Dec 2003 41935 1.41 Dec 2002 210787. Expressed as no.15 706253.013. However the Company is improving its payables management and it could be mainly because of reduction in the cost of purchases by making cash payments to the suppliers.25 days in the year 2002 to 100 days in the year 2004. we can say that the payment policy followed by the company is not very liberal and the payment made by the company to its creditors is pretty late.32 15.5% where as the sales have seen a decline of 1.The reason could be poor receivables management by the company .53 The Debtor days for the company have seen an increase from 14.53 days in 2002 to 16.Particulars Avg Debtors Sales Debtor days Dec 2004 48006 992. The Creditor Days for the company has seen a slight decrease from 111.87%. we see that the creditor days which the company enjoys from its suppliers are pretty high throughout the time period under consideration.65 101. of Creditors/Total Purchases)*365 This ratio indicates the no. Particulars.694. 26 Hindustan Lever Ltd . Avg Creditors COGS Creditor days Dec 2004 193494. Hence. Creditor Days: (Total No.75 995.64 100.485. This helps the company to avail of cash discounts which significantly reduce the cost of production and hence improve profitability in a high competition intensified industry.25 Here.57 691572.64 16. of days of purchases that are on the balance sheet of the company as creditors.7 111.30 14. a lower creditor day s ratio signifies that the company is liberal in paying its creditors and follows a policy of paying them at a faster rate.835. of days.10 Dec 2002 39631.
485. We see an increase in the turnover ratio in the year 2004 because of a combined effect of a decrease in Total Assets and increase in miscellaneous expenses simultaneously.013. 27 Hindustan Lever Ltd .01 Dec 2003 1.75 2.56 30624.455.32 395.23 Dec 2002 995.694.03 34918.835.30 383.268.60 Total Assets turnover ratio signifies how efficiently the company is utilizing its assets to generate returns.367.Total Assets Turnover Ratio = ______ Net Sales___________ Total Assets. The company has maintained a constant turnover ratio in the years 2002 and 2003.64 370.93 3.83 42826. It indicates efficient usage of assets by the company to generate constant sales.Misc Expenses Particulars Sales Total assets MISC EXP Total assets turnover ratio Dec 2004 992.03 2.
48% 2002 48. and the company s use of leverage referred to as Equity Multiplier also.05 28 Hindustan Lever Ltd .56 2.08 2. This formula shows the relationship of profit margin and turnover how these two complement each other.38% 17. This analysis provides an insight into the importance of asset turnover as well as sales to overall return.60 1.29% 17. It combines the financial ratios of both the Income Statement as well as the Balance Sheet in order to assess either the Return on Equity or the Return on Investment.03 1.36% 12. We shall now see the decomposition of RoNW / RoE to do the Dupont Analysis. One of the Plus points of this method is that it provides a clear understanding of how the company generates its return.06% 2003 93. The Du-Pont ratio divides the Return on equity into three parts: Net Profit Margin.64% 3. total asset turnover. RoNW = PAT / Net Worth RoNW = PAT / Sales * Sales / Assets * Assets / Net Worth DUPONT RONW Profit Margin Asset Turnover Equity Multiplier 2004 66.81 2.DU PONT RATIO ANALYSIS: The Du-Pont ratio analysis is a combination of financial ratios in a series in order to assess the investment returns of the company.
36% PAT / SALES = 12. ROCE as seen above can be decomposed further into Net profit margin.28. Asset turnover and Asset Leverage.54 as compared to using its Current Assets. .75 SALES / CASH = 14. It also shows that the company has managed to use its assets efficiently to generate sales.28 SALES / STOCK = 6.DUPONT Analysis of RONW for the year 2004 PAT/NW = 66. We can see that the Sales / Debtors ratio of the company is very high at 20. 29 Hindustan Lever Ltd . This could be attributed to the fact that the company is operating in negative working capital scenario and it has also a high interest burden.54 SALES / CA = 3 SALES / DEBTORS = 20.03 TA/NW = 1. We can see that the company is utilizing its fixed Assets very efficiently which is evident by a high sales / FA ratio of 6. The Sales/ Cash ratio is very high which shows that the company has a deficit of cash.81 SALES / FA = 6.22 Implications: There has been huge erosion in the profit margin in the recent years but the company has increased the leverage and maintained its Return on Net Worth. This shows that the company is operating at high volumes and low margin.06% SALES/TA = 3.
22% General exp / Sales =31% Cost of raw mat/ Sales =54% Asset Leverage TA/CE =2.07% 2003 118.03 Depreciation/Sales =1.39 ROCE PBIT/CE =105 % Profit Margin PBIT/SALES =16.DUPONT Analysis of ROCE DUPONT ROCE Profit Margin Asset Turnover Asset Leverage 2004 105.45% 22. The company has however tamed the buck by increasing the asset turnover to arrive at a better overall ROCE.05 2. This has reduced profitability for the company and it must look to reduce the operating expenses and administration charges. The Company has high percentage of Operating expenses to that of sales.45% Asset Turnover Sales/TA =3.54% 16.48% 22. This was largely due to decline in Profit Margins.1 Implications: The ROCE shows an increasing trend except for the last year. The ROCE is very high because the company has invested a huge amount in non trade Investments and as a result it has been excluded from Capital Employed.53% 2002 81.1 2. 30 Hindustan Lever Ltd .60 1.03 2. The company has also been efficiently utilizing its assets over the previous years thus increasing the ROCE.56 2.55% 3.
This is in synchronization with the fact that the company has identified investment opportunities that would increase the ROCE.50% 53% 0. The Company 31 Hindustan Lever Ltd .04% 19. for payment to investors and payment of income tax . However in the previous 2 years the company had resorted to more purchase of investments than sales. This is mainly because the company has paid dividend on Bonus Debentures issued by it in the middle of 2003.4% of cash flow from operating activities . It was 10.27% 7. Investment in Fixed Investments has been increasing over the last 3 years.45% 21.57% 2003 7% 2002 2. This basically is again in consonance with the operating results of the company.15% are presented Investment in Working Capital (%) Investment ( net of sales) in Fixed Assets(%) including trade marks Dividend Including tax paid Interest paid Income tax paid 18% 85% 7.70% 10. In the year 2004 the sale of investments (net of purchases) was 26.30% 9% 150% 0.Those used as a percentage of cash flow from operating activities before working capital changes below : 2004 5. 2003.ANALYSIS OF CASH FLOWS OF HLL FOR 2002.94% in 2003 and 44 % in 2002. This is depicted by the trends in ROCE which has increased significantly over the last 3 years.40% Dividend payment consumed most of the cash flow from operating activities before working capital changes and it showed a huge increase in 2003. and 2004 Cash flow from operating activities before working capital changes for all the three years was higher than the use of cash for investment in fixed assets and working capital .
The major underlying reason for this is tracking of growth opportunities and expansion of business as well. We can safely conclude that the company has managed its cash position very efficiently and utilized cash to generate future returns and as well as reward the shareholders. This might have also resulted in poor liquidity position for the company.had resulted in lower operating and net profit margins in the last year. Another underlying reason for selling investments could be that the company had declared dividends and also paid interests on the debentures issued by it of the amount of Rs 1320 crores. 32 Hindustan Lever Ltd . This had reduced the liquidity of the company. It is evident from the investment in Fixed Assets and dividend paid to the shareholders. Therefore the decision of selling the investments could be a resort to finance the liquidity requirements of the company. We can say that the company has utilized the cash generated from Operating activities and Investing activities and invested in long term Fixed assets. As a result of these actions the cash flow from investing activities has increased substantially in 2004 over the last year and cash flow from financing activities has decreased. Owing to all this reasons the company would have sold investments to improve its liquidity position.
-Certain assets of the cold chain are depreciated over four / seven years and . 33 Hindustan Lever Ltd . However.Motor vehicles are depreciated over six years Assets identified and evaluated technically as obsolete and held for disposal are stated at their estimated net realizable values. Fixed Assets Fixed assets are stated at cost less depreciation except in the case of certain Land and Development in the Tea Estates Division shown at revalued amount. Depreciation is provided (except in the case of leasehold land which is being amortized over the period of the lease) on the straight line method and at the rates and in the manner specified in Schedule XIV of the Companies Act. the period of the Perquisite scheme. .Certain employee perquisite-related assets are depreciated over four to six years.Accounting Policies Analysis Basis for preparation of accounts The accounts have been prepared to comply in all material aspects with applicable accounting principles in India. the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act. 1956. Goodwill and other Intangible Assets Goodwill and other Intangible assets are amortized over the assets useful life not exceeding. In Tea / Coffee estates. -Computers and related assets are depreciated over four years. the cost of extension planting of cultivable land including cost of development is capitalized. 1956.
Long-term investments are stated at cost. leave encashment and medical. and estimated net realisable value. as at the balance sheet date. Employee related Liabilities Contributions to defined contribution schemes such as Provident Fund and Family Pension Fund are charged to the profit and loss account as incurred. Such benefits are provided for based on valuations. A provision for diminution is made to recognize a decline.Investments Investments are classified into current and long-term investments. made by independent actuaries. computed on a weighted average basis. Inventories Inventories are valued at the lower of cost. The Company also provides retirement / post-retirement benefits in the form of gratuity. Current investments are stated at the lower of cost and fair value. wherever considered necessary. other than temporary. after providing for cost of obsolescence and other anticipated losses. 34 Hindustan Lever Ltd . Finished goods and work-in progress include costs of conversion and other costs incurred in bringing the inventories to their present location and condition. pensions. in the value of long-term investments.
584.277.44 187.26 48.441.52 35 Hindustan Lever Ltd .52 Transaction 2 Sale of Finished goods on Credit .992.926.71 59.277.044.584.97 80.12.441.805.80 5.61 752.956.52 SOURCE Share Capital Reserves and Surplus Secured Loans Unsecured Loans Current Liabilities and Provisions Deferred Tax Liability TOTAL USES Fixed Assets Investments Inventories Debtors Cash and Bank balance Other current assets Loans and Advances DEFERRED TAX ASSET TOTAL Amount ( Rs lakhs) 151.51 145.78 1.66 741.06 222.06 222.1000 Lakhs at 20% Profit Amount ( Rs lakhs) 32012.80 5.44 188.984.756.258.97 69.441.27 146.425.78 1.26 48.2004 SOURCE Share Capital Reserves and Surplus Secured Loans Unsecured Loans Current Liabilities and Provisions Deferred Tax Liability TOTAL Amount ( Rs lakhs) 22012.956.67 371.71 59.044.992.06 222.756.67 371.51 13.258.425.78 1.66 752.425.804.277.61 752.51 13.305.44 188.Rs.67 371.97 82.51 13.756.792.52 Transaction 1 Issued Capital for Rs.044.27 147.984.804.926.305.52 USES Fixed Assets Investments Inventories Debtors Cash and Bank balance Other current assets Loans and Advances DEFERRED TAX ASSET TOTAL Amount ( Rs lakhs) 151.79 36.10000 lakhs million at a premium of 10% Amount ( Rs lakhs) 32012.Accounting Transactions Balance Sheet of Hindustan Lever Ltd as on 31.792.805.66 752.004.51 145.805.80 5.61 741.52 SOURCE Share Capital Reserves and Surplus Secured Loans Unsecured Loans Current Liabilities and Provisions Deferred Tax Liability TOTAL USES Fixed Assets Investments Inventories Debtors Cash and Bank balance Other current assets Loans and Advances DEFERRED TAX ASSET TOTAL Amount ( Rs lakhs) 151.792.584.926.792.79 36.305.71 59.458.956.79 36.26 48.984.51 145.27 147.
504.06 222.80 5.44 188.27 146.992.441.992.06 224.044.992.52 SOURCE Share Capital Reserves and Surplus Secured Loans Unsecured Loans Current Liabilities and Provisions Deferred Tax Liability TOTAL Amount ( Rs lakhs) 32012.805.044.52 Transaction 4 Investment made in ABC co.441.584.584.52 SOURCE Share Capital Reserves and Surplus Secured Loans Unsecured Loans Current Liabilities and Provisions Deferred Tax Liability TOTAL Transaction 5 Drs of 2000 lakhs turned bad USES Fixed Assets Investments Inventories Debtors Cash and Bank balance Other current assets Loans and Advances DEFERRED TAX ASSET TOTAL Amount ( Rs lakhs) 151.044.71 59.67 371.992.984.1000 Lakhs at 20% Profit Amount ( Rs lakhs) 32012.984.06 224.458.66 752.71 59.805.926.61 752.27 146. ltd of Rs 1500 lakhs Amount ( Rs lakhs) 32012.992.277.425.61 752.504.27 146.425.926.67 371.992.51 13.926.984.305.305.456.277.44 188.425.52 USES Fixed Assets Investments Inventories Debtors Cash and Bank balance Other current assets Loans and Advances DEFERRED TAX ASSET TOTAL Amount ( Rs lakhs) 151.71 59.97 82.51 13.66 750.956.61 750.97 80.44 186.80 5.26 46.305.51 13.78 1.756.441.80 5.584.51 145.458.26 48.805.51 145.67 371.97 80.756.52 36 Hindustan Lever Ltd .004.79 36.79 36.79 36.51 145.456.26 48.Rs.78 1.Transaction 3 Sale of Finished goods on Credit .78 1.756.52 SOURCE Share Capital Reserves and Surplus Secured Loans Unsecured Loans Current Liabilities and Provisions Deferred Tax Liability TOTAL USES Fixed Assets Investments Inventories Debtors Cash and Bank balance Other current assets Loans and Advances DEFERRED TAX ASSET TOTAL Amount ( Rs lakhs) 151.277.458.66 752.
100 lakhs Amount ( Rs lakhs) 31912.26 46.984.27 146.926.792.792.277.67 371.67 371.100 lakhs at a premium of Rs.61 740.51 145.71 59.97 70.805.756.44 186.805.97 70.304.358.805.27 146.304.792.044.26 46.66 740.71 59.80 5.52 SOURCE Share Capital Reserves and Surplus Secured Loans Unsecured Loans Current Liabilities and Provisions Deferred Tax Liability TOTAL USES Fixed Assets Investments Inventories Debtors Cash and Bank balance Other current assets Loans and Advances DEFERRED TAX ASSET TOTAL Amount ( Rs lakhs) 151.358.044.Transaction 6 Buyback of Shares having face value Rs.277.61 750.926.584.51 135.277.06 224.52 Transaction 8 Issued Bonus shares having a face value of 1500 lakhs Amount ( Rs lakhs) 33412.305.425.425.792.926.78 1.584.756.78 1.79 36.51 13.305.44 186.456.06 224.305.304.756.858.80 5.441.52 SOURCE Share Capital Reserves and Surplus Secured Loans Unsecured Loans Current Liabilities and Provisions Deferred Tax Liability TOTAL USES Fixed Assets Investments Inventories Debtors Cash and Bank balance Other current assets Loans and Advances DEFERRED TAX ASSET TOTAL Amount ( Rs lakhs) 151.456.51 135.97 80.71 59.984.78 1.984.66 740.61 740.52 Transaction 7 Redeemed Bonus Debentures of amount 10000 lakhs to equity share holders Amount ( Rs lakhs) 31912.441.52 37 Hindustan Lever Ltd .80 5.52 SOURCE Share Capital Reserves and Surplus Secured Loans Unsecured Loans Current Liabilities and Provisions Deferred Tax Liability TOTAL USES Fixed Assets Investments Inventories Debtors Cash and Bank balance Other current assets Loans and Advances DEFERRED TAX ASSET TOTAL Amount ( Rs lakhs) 151.26 46.27 146.044.06 224.79 36.79 36.792.66 750.51 13.44 184.441.425.792.584.456.67 371.51 13.
792.425.44 184.425.756.305.277.51 135.044.80 5.441.66 741.79 36.51 135.80 5.277.52 38 Hindustan Lever Ltd .926.61 739.61 737.67 369.79 36.584.304.51 13.78 805.51 13.52 Transaction 10 Received 2000 lakhs from Creditors Amount ( Rs lakhs) 33412.Transaction 9 Repaid short term loans to the tune of 1000 lakhs Amount ( Rs lakhs) 33412.52 SOURCE Share Capital Reserves and Surplus Secured Loans Unsecured Loans Current Liabilities and Provisions Deferred Tax Liability TOTAL USES Fixed Assets Investments Inventories Debtors Cash and Bank balance Other current assets Loans and Advances DEFERRED TAX ASSET TOTAL Amount ( Rs lakhs) 151.78 805.305.97 71.792.792.756.52 SOURCE Share Capital Reserves and Surplus Secured Loans Unsecured Loans Current Liabilities and Provisions Deferred Tax Liability TOTAL USES Fixed Assets Investments Inventories Debtors Cash and Bank balance Other current assets Loans and Advances DEFERRED TAX ASSET TOTAL Amount ( Rs lakhs) 151.67 371.06 224.26 46.984.984.584.06 224.926.44 184.71 59.858.456.441.304.97 69.66 739.858.26 46.27 146.792.044.71 59.27 146.456.
24% PBIT/Sales Net Profit/ Sales Expenses other than Interest.53% 93.APPENDIX 2004 Liquidity CR 0.48% 17.36% 5.25 66.00 0.Misc expenses PBIT-Interest on non trade inv/Net Worth + Long term loans.56% 244.92 CA /CL+short term loans + prov CA-Stock.60% 7.13% 22.88 0.25 81% 12.23 15.44 118.51 0.48% 99.89 0.87% 63.10 101.06% 97.25 74.09 100.non trade investments PAT/Networth PAT/No. of shares 39 Hindustan Lever Ltd .41 0.47 0.Drs doubtful of recovery /CL+ short term loans + prov Cash and near cash items / Cl + short term loans + prov Avg Inventory / cogs per day AVG Debtors / sales per day AVG Creditors /COGS per day 2003 2002 Description LR Absolute Cash Ratio Inventory Days Debtors Days Creditors Days Solvency Debt-Equity Ratio ICR Profitability General Operating Proft Margin Net Profit Margin Operating Expenses Overall ROTA 0.29% 8.07% 66.05 81.17 16.50 14.20 69.53 111.64% 98.57 0.42 Debt/Equity PBIT/Interest 16. Dep and Tax/Sales 49.19% 22.45% 12.57 84% 34.25% 63.14 0.98 PBIT / TA.55% 17.62% ROCE RONW EPS 105.54% 50.
40 Hindustan Lever Ltd .
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