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Financial Statement analysis

report on Hindustan Unilever


limited, dabur and marico.
SUBMITTED BY:
Keshav Singhal
(B.S)
Sandeep Swain
(INFRA)
Anuradha Bist
(INFRA)
Priya Ranjan
(INFRA)

SUBMITTED TO:
Dr. Manipadma Datta

PREFACE

As students of management, practical knowledge is a must with


full theoretical concepts. Therefore in` order to acquire the knowledge
we were given this assignment as prime concepts to include in our
assimilation of topic which is financial statement analysis from an
industrial &corporate perspective. So for this said purpose we have
made this assignment report in which we have compared the three
FMCG companies .Hindustan Unilever Limited, Dabur and Marico.

I hope that our sincere efforts in this field of study would be


considered and accepted by our respected faculty.

EXPERIENCE IS THE BEST

TEACHER

This Proverbs plays a guiding role in the curriculum of the


subject Corporate Accounting & Reporting. As only theoretical
knowledge does not impart complete education, it is necessary that
practical exposure being accompanied to add meaning to education.

We have prepared this project on HUL, dabur and marico as a


part of the practical studies. We have tried to discuss the firms
financial information details in a comprehensive manner.
Through this acknowledgement, we express our sincere
gratitude and opportunities given to us analyze the companies
standing, in an overall perspective.

A Student is always incomplete without the


guidance of his teacher
INDEX

PREFACE
ACKNOWLEDGMENT
INTRODUCTION
EXECUTIVE SUMMARY
HISTORY OF HUL, DABUR & MARICO.
BALANCE SHEET OF HUL
BALANCE SHEET OF DABUR
BALANCE SHEET OF MARICO
RATIO ANALYASIS
MEANING OF RATIO ANALYASIS
OBJECTIVE OF RATIO ANALYSIS
CLASSIFICATION OF RATIO
CURRENT RATIO
DEBT EQUTY RATIO
PRICE EARNING RATIO
IMPORTANCE OF RATIO ANALYSIS
PURPOSE OF RATIO ANALYSIS
INVESTOR PERSPECTIVE
OUR RECOMENDATION
CONCLUSION

INTRODUCTION

To understand the information contained in financial statements with a view to


know the strength or weaknesses of the firm and to make forecast about the
future prospects of the firm and thereby enabling the financial analyst to take
different decisions regarding the operations of the firm.

EXECUTIVE SUMMARY:
Indias consumer market is riding the crest of the countrys economic boom.
Indias fast moving consumer goods (FMCG) sector is the fourth largest sector
in the economy of India with a total market size in excess of US$ 13.1 billion. If
we go by statistics, roughly around 73% of the Indian population lives in the
rural areas- thats a very large market. Many giant players, both foreign as well
as domestic, are competing in the market with a view to capture it. The growing
consumerism in India shows the rapid increase in Indian consumer purchasing
power, it shows strengths and opportunity that lies in rural Indian markets
especially for FMCG products. As a result of it we have opted to undergo
analyzing the financial statements and on basis of it, we shall do a peer to peer
analysis and compare their market position (HUL DABUR & MARICO)in Indian
FMCG Company having excellent distribution channel and deep rural reach in
India
As the major part of the market is yet to be extracted completely, one needs to
evolve a set of strategies and plans to tap the potential Indian consumer
market.
To capture such a great opportunity, only good product and brand awareness
will not be sufficient but proper distribution channel must be present in
holistic approach. Thereby sufficing the need to assimilate the objectives of
these companies as the objective of financial statements would be to provide
information about the financial position, performance and changes in financial
position of an enterprise that is useful to a wide range of users in making
economic decisions. Financial statements should be understandable, relevant,
reliable and comparable as it gives a correlation about reported assets,
liabilities, equity, income and expenses which are directly related to an
organization's financial position.

Therefore, financial statements are intended to be understandable by readers


who have "a reasonable knowledge of business and economic activities and
accounting and who are willing to study the information diligently."

HISTORY OF HUL DABUR & MARICO


HUL
HUL works to create a better future every day and helps people feel good, look
good and get more out of life with brands and services that are good for them
and good for others.
With over 35 brands spanning 20 distinct categories such as soaps, detergents,
shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged
foods, ice cream, and water purifiers, the Company is a part of the everyday life
of millions of consumers across India. Its portfolio includes leading household
brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Ponds,
Vaseline, Lakm, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke
Bond, Bru, Knorr, Kissan, Kwality Walls and Pureit.
The Company has over 16,000 employees and has an annual turnover of
around Rs.19, 401 crores (financial year 2010 - 2011). HUL is a subsidiary of
Unilever, one of the worlds leading suppliers of fast moving consumer goods
with strong local roots in more than 100 countries across the globe with
annual sales of about 44 billion in 2011. Unilever has about 52%
shareholding in HUL. Hindustan Unilever Limited (HUL) formerly Hindustan
Lever Limited (it was renamedin late June 2007 as HUL) is India's largest Fast
Moving Consumer Goods company,touching the lives of two out of three
Indians with over 20 distinct categories in Home &Personal Care Products and
Foods & Beverages.
These products endow the companywith a scale of combined volumes of about
4 million tones and sales of nearly Rs. 13718crores. touching the lives of two
out of three Indians with over 20 distinct categories inHome & Personal Care
Products and Foods & Beverages. The companys Turnover isRs. 20, 239
crores (for the 15 month period January 1, 2008 to March 31, 2009).

HULis also one of the country's largest exporters; it has been recognized as a
Golden Super Star Trading House by the Government of India. The mission
that inspires HUL's over 15,000 employees, including over 1,300 managers, is
to "add vitality to life." HUL meetsevery day needs for nutrition, hygiene, and
personal care with brands that help peoplefeel good, look good and get more
out of life. It is a mission HUL shares with its parentcompany, Unilever, which
holds 52.10% of the equity. The rest of the shareholding isdistributed among
360,675 individual shareholders and financial institutions.

HUL's brands
like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's,Sunsilk,
Clinic, Pepsodent, Close
up, Lakme, Brooke Bond, Kissan, Knorr
Annapurna,Kwality Wall's are household names across the country and span
many categories
soaps, detergents, personal products, tea, coffee, branded staples, ice cream
and culinary products. These products are manufactured over 40 factories
across India. The operationsinvolve over 2,000 suppliers and associates. HUL's
distribution network comprises about4,000 redistribution stocks, covering 6.3
million retail outlets reaching the entire urban population, and about 250
million rural consumers
DABUR:
Dabur India Limited is the fourth largest FMCG Company in India and has a
turnover of approximately US$ 750 Million (Rs. 3417.1 Crore FY 2010) &
Market Capitalization of over US$ 3.5 Billion (Rs 15500 Crore), with brands
like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola and Real. The
company was started by a doctor Dr. S.K. Burman in 1884. The brand name

Dabur is derived from the words Da for Daktar or Doctor and bur from
Burman. From those humble beginnings, the company has grown into Indias
leading manufacturer of consumer healthcare, personal care and food
products. Over its 125 years of existence, the Dabur brand has stood for
goodness through a natural lifestyle. An umbrella name for a variety of
products, ranging from hair care to honey, Dabur is consistently ranked among
Indias top brands. Its brands are built on the foundation of trust that a Dabur
offering will never cause sdanyone slightest of harm. The trust levels that this
brand enjoys are phenomenally high.
In early 1900s, the next generation of Burmans took a conscious decision to
enter the Ayurvedic medicines market and that led to the commercial start of
Dabur. They set up a R&D center which paved way for the growth. In 1940
Dabur diversified into personal care products with the launch of its Dabur
Amla Hair Oil which was a hit with Indian consumers. In 1949 it launched
Dabur Chyawanprash and by 1970 launched Dabur Lal Dant Manjan. Dabur
shifted its base to Delhi in 1972.
Hajmola was launched in 1978 and the candy version came in 1989 (another
brand Swad had created the new market of digestive candies at that time) and
soon became a huge success. In 1996 it entered processed foods market
with Real Fruit Juice. The brand went on to become the biggest success of the
company and in 1997 the Foods division was created, comprising of Real Fruit
Juice and Homemade cooking pastes to form the core of this divisions product
portfolio.

OVERVIEW OF DABUR

One of the largest FMCG company has a turnover of approximately US$


750 Million (Rs. 3417.1 Crore FY 2010)
Differentiated products-strong herbal and natural products and more
than 120 year of experience.
Wide distribution network-covering 1.9 retail outlets and high
penetration in urban and rural areas.
Brand strength-various strong brand in diverse categories. Mother brand
Dabur has a strong image in customers mind.
Leading brand of Dabur India Ltd. Is vatika, anmol sarsono amla, dabur
hajmola, dabur amla, dabur chyanprash and lal dant manjan, each
brand having 100 crore turnovers.
Vatika hair oil and shampoo is the high growth brand of the company.
Dabur honey is the market leader with over 40% market share in
branded honey market.
Dabur chayanprash is the largest selling ayuravedic medicine with over
65% market share.
In digestive tablets category hajmola is the leader with 75% market
share.
Dabur lal dant manjan has 35% of market share having top position in
baby massage oil market.

% of Dabur products in the market


Baby oil & skin care=7%
Home care=6%
Hair care=32%
Digestive & candies=9%
Health supplements=24%
Oral care=22%

SALES STRATEGY
Accenture proposed that Dabur improve its supply chain management, sales
and distribution capabilities and use IT as a strategic enabler for its business
strategy. From an IT perspective, Accenture recommended a two-pronged

strategy: migration to a nimbler outsourcing model that would generate value


through agility and support business initiatives and maintenance of its SAP
enterprise resource planning (ERP) system. To bring these initiatives to life,
Accenture assembled a team of highly skilled industry experts, as well as
professionals with extensive SAP design and implementation experience.
Working closely with Dabur, the Accenture team initiated a number of highimpact projects, including:-

MARICO:
Marico is a leading Indian Group in Consumer Products and Services in the
Global Beauty and Wellness space. Maricos Products and Services in Hair
care, Skin Care and Healthy Foods generated a Turnover of about Rs.13.6
billion (about USD 380 Million) during 2006-07. Marico markets well-known
brands such as Parachute, Saffola, Sweekar, Hair & Care, Nihar, Shanti,
Mediker, Revive, Manjal, Kaya, Sundari, Aromatic, Camelia, Fiancee and
HairCode. Maricos brands and their extensions occupy leadership positions
with significant market shares in most categories- Coconut Oil, Hair Oils,
Post Wash Hair Care, Anti-lice Treatment, Premium Refined Edible Oils,
niche Fabric Care etc. Marico is present in the Skin Care Solutions segment
through Kaya Skin Clinics (31 in India and the Middle East), the Sundari
range of Spa skin care products (in the USA & other countries) and its soap
franchise (in India and Bangladesh).
Marico's branded products are also present in Bangladesh, other SAARC
countries, the Middle East and Egypt. The Overseas Sales franchise of
Maricos Consumer Products (whether as exports from India or as local
operations in a foreign country) is one of the largest amongst Indian
Companies and is entirely in branded products and services. Marico was
selected as one of the eight Indian companies in S & P's list of Challenger
Companies from various nations, compiled globally by Standard & Poor's in
June 2007.

Marico has also won various other Awards such as the following:
3 top Awards instituted by CNBC-TV18, U21 Global and Watson Wyatt
Worldwide, in following categories: Indias Employer of Choice for 2007 ,
Award for HR Excellence & Award for Best Employer in the Consumer
Products and Healthcare Sector.
Gold Effie (2007) for its Corporate campaign and a Bronze Effie (2007) for
Saffola.
Kaya - Best Retailer in the Beauty and Fitness category, India retail
Forum (September 2007)
NDTV Profit - Business Leadership Award, FMCG Personal Hygiene
Category (July 2007).
One of India's 10 best marketers (Business Today September 2006).
Brand Leadership Award at the India Brand Summit 2006 (September
2006).
Kaya - Retailer of The Year Award (for the 2nd consecutive Year) at India
Retail Summit 2006.

The Gulf Marketing Review Award in the Middle East 2006.


Every month, over 70 Million consumer packs from Marico reach
approximately 130 Million consumers in about 23 Million households,
through a widespread distribution network of more than 2.3 Million
outlets in India and overseas.
Maricos focus on sustainable profitable growth is manifest through its
consistent financial performance a CAGR of 19% in Turnover and 19%
in Profits over the past 3 years- while setting a record of several
consecutive quarters of year on year growth- 32 for Profits and 28 for
Sales.
VALUES OF MARICO INDUSTRY

Opportunity seeking

Bias for Action

Consumer Centric

Excellence

Innovation

openness & transparency

Global outlook

Boundary lessness
Marico has a set of articulated values that were created at the inception of

the organization, revisited and modified once in the year 1997 and lately in
2003, through the collective wisdom of Mariconians. The values since then
have been an integral part of the working of all Mariconians.
Our values are preferred practices that are employed in pursuit of our
Business Direction. They sum up the philosophy that will build the culture to
drive business growth.

Why Dabur and Marico has chosen as peers for Financial comparison with
HUL
Dabur and Marico has chosen as their sales revenue is very close to HUL

Vitality of Company's financial performance through Financial Ratios


Financial Statement Analysis will help business owners and other interested
people to analyse the data in financial statements to provide them with better
information about such key factors for decision making and ultimate business
survival

To use financial statements to evaluate an organisations

Financial performance

Financial position.

To have a means of comparative analysis across time in terms of:

Intracompany basis (within the company itself)

Intercompany basis (between companies)

Industry Averages (against that particular industrys averages)

To apply analytical tools and techniques to financial statements to obtain


useful information to aid decision making.

The commonly used tools for financial statement analysis is: Financial Ratio
Analysis
BALANCE SHEET OF HUL:

BALANCE SHEET OF DABUR:

BALANCE SHEET OF MARICO

RATIO ANALYSIS:

Fundamental Analysis has a very broad scope. One aspect looks at the
general (qualitative) factors of a company. The other side considers tangible and
measurable factors (quantitative). This means crunching and analyzing numbers
from the financial statements. If used in conjunction with other methods,
quantitative analysis can produce excellent results.
Ratio analysis isn't just comparing different numbers from the balance
sheet, income statement, and cash flow statement. It's comparing the number
against previous years, other companies, the industry, or even the economy in
general. Ratios look at the relationships between individual values and relate
them to how a company has performed in the past, and might perform in the
future.

MEANING OF RATIO:
A ratio is one figure express in terms of another figure. It is a mathematical
yardstick that measures the relationship two figures, which are related to each
other and mutually interdependent. Ratio is express by dividing one figure by the
other related figure. Thus a ratio is an expression relating one number to another.
It is simply the quotient of two numbers. It can be expressed as a fraction or as a
decimal or as a pure ratio or in absolute figures as so many times. As
accounting ratio is an expression relating two figures or accounts or two sets of
account heads or group contain in the financial statements.
MEANING OF RATIO ANALYSIS:

Ratio analysis is the method or process by which the relationship of items


or group of items in the financial statement are computed, determined and
presented.

Ratio analysis is an attempt to derive quantitative measure or guides


concerning the financial health and profitability of business enterprises. Ratio
analysis can be used both in trend and static analysis. There are several ratios

at the disposal of an analyst but their group of ratio he would prefer depends on
the purpose and the objective of analysis.
While a detailed explanation of ratio analysis is beyond the scope of this
section, we will focus on a technique, which is easy to use. It can provide you
with a valuable investment analysis tool.
This technique is called cross-sectional analysis. Cross-sectional analysis
compares financial ratios of several companies from the same industry. Ratio
analysis can provide valuable information about a company's financial health. A
financial ratio measures a company's performance in a specific area. For
example, you could use a ratio of a company's debt to its equity to measure a
company's leverage. By comparing the leverage ratios of two companies, you can
determine which company uses greater debt in the conduct of its business.
A company whose leverage ratio is higher than a competitor's has more
debt per equity. You can use this information to make a judgment as to which
company is a better investment risk.
However, you must be careful not to place too much importance on one
ratio. You obtain a better indication of the direction in which a company is
moving when several ratios are taken as a group.

OBJECTIVE OF RATIOS

Ratio is work out to analyze the following aspects of business organizationA) Solvency1) Long term
2) Short term
3) Immediate

B) Stability
C) Profitability
D) Operational efficiency
E) Credit standing
F) Structural analysis
G) Effective utilization of resources

Classification of Ratio
Profitabilit
y

Liqudity
Ratio

Leverage
Ratio

Activity
Ratio

Coverage
Ratio

Gross Profit
Rattio

Current ratio

Debt Equity
Ratio

Stock Turn
Over Ratio

Debentures
Service
Coverage
Ratio

Net Profit
Ratio

Liquid Ratio

Profitability
Ratio

Total Assets
Turn Over
Ratio

Interest
Coverage
Ratio

Return on
Capital
Employed
Ratio

Capital
Gearing
Ratio

Debtors
Ratio

Return on
Shareholder
s Fund

Long Term
Funds to
Fixed
Assets

Creditors
Ratio

Return on
Equity Ratio

Book Value
Per Share

Operating
Ratio

Working
Capital Turn
Over Ratio

Expenses
Ratio

Earning Per
Share Ratio

Dividend
Per Ratio

Prise
Earning
Ratio

CURRENT RATIO: Liquidity refers to the ability of a firm to meet its short-term (usually up to 1 year)
obligations. The ratios, which indicate the liquidity of a company, are Current
ratio, Quick/Acid-Test ratio, and Cash ratio. These ratios are discuss

This ratio compares the current assets with the current liabilities. It is also
known as working capital ratio or solvency ratio. It is expressed in the form of
pure ratio.

Formula:

CURRENT RATIO = CURRENT ASSET


CURRENT LIABILITY

The current assets of a firm represents those assets which can be, in the
ordinary course of business, converted into cash within a short period time,
normally not exceeding one year. The current liabilities defined as liabilities
which are short term maturing obligations to be met, as originally contemplated,
within a year. Current ratio (CR) is the ratio of total current assets (CA) to total
current liabilities (CL). Current assets include cash and bank balances; inventory
of raw materials, semi-finished and finished goods; marketable securities;
debtors (net of provision for bad and doubtful debts); bills receivable; and
prepaid expenses. Current liabilities consist of trade creditors, bills payable,
bank credit, and provision for taxation, dividends payable and outstanding
expenses. This ratio measures the liquidity of the current assets and the ability
of a company to meet its short-term debt obligation.CR measures the ability of
the company to meet its CL, i.e., CA gets converted into cash in the operating
cycle of the firm and provides the funds needed to pay for CL. The higher the
current ratio, the greater the short-term solvency. This compares assets, which
will become liquid within approximately twelve months with liabilities, which will
be due for payment in the same period and is intended to indicate whether there
are sufficient short-term assets to meet the short- term liabilities. Recommended
current ratio is 2: 1. Any ratio below indicates that the entity may face liquidity
problem but also Ratio over 2: 1 as above indicates over trading, that is the entity
is under utilizing its current assets
DEBT EQUTY RATIO

Formula:
DEBT EQUTY RATIO = TOTAL LONG TERM DEBT
OWNERS FUND
Debt equity ratio is also called as leverage ratio. Leverage means the
process of the increasing the equity shareholders return through the use of debt.
Leverage is also known as gearing or trading on equity. Debt equity ratio
shows the margin of safety for long-term creditors & the balance between debt &
equity.

PRICE EARNING RATIO

It saws the relationship between the market price of share and earnings per
share .it significance the price that is currently ruling in the market for each
rupee of earnings being made by company per share. As general rule, the higher
this ratio, the better it is for owners. This ratio is widely used by the analysts to
the value of firms performance as exempted by investor . The higher the P/E
ratio, the better is for owners.
Formula:

PRICE EARNING RATIO = MARKET VALUE OF SHARE


EARNING PER SHARE

IMPORTANCE OF RATIO ANALYSIS:

As a tool of financial management, ratios are of crucial significance. The


importance of ratio analysis lies in the fact that it presents facts on a
comparative basis & enables the drawing of interference regarding the
performance of a firm. Ratio analysis is relevant in assessing the performance of
a firm in respect of the following aspects:
1] Liquidity position,
2] Long-term solvency,
3] Operating efficiency,
4] Overall profitability,
5] Inter firm comparison
6] Trend analysis.

PURPOSE OF RATIO ANLYSIS:


1] To identify aspects of a businesses performance to aid decision making

2] Quantitative process may need to be supplemented by qualitative


Factors to get a complete picture.
3] 5 main areas: Liquidity the ability of the firm to pay its way
Investment/shareholders information to enable decisions to be made on
the extent of the risk and the earning potential of a business investment
Gearing information on the relationship between the exposure of the
business to loans as opposed to share capital
Profitability how effective the firm is at generating profits given sales and
or its capital assets
Financial the rate at which the company sells its stock and the efficiency
with which it uses its assets

ANALYZING COMPANY STATUS WITH CHARTS:

Sales

25000

20000

Dabur

HUL

HUL.
And
its
competitors
from
2006-2010

Column1

15000

Marico
Column2

10000

5000

0
2006 2007 2008 2009

2010

Net
Profit

2500

2000

HUL.
And
its
competitors
from
2006-2010

Dabur

1500

HUL

Column1
Marico

1000

Column2
500

0
2006

2007

2008

2009

2010

Share
Capital
HUL.
And
its
competitors
from
2005-2009

250

200

Dabur

150

HUL
Column1
Marico

100

Column2

50

0
2006 2007 2008 2009 2008

Fixed Assets in Crores


800
700
600
Dabur

500

HUL

400

Column1

300

Marico
Column2

200
100
0
2006

2007

2008

2009

2010

RATIOS DESCRIPTION:

HUL:
------------------- in Rs. Cr. -------------------

Key Financial Ratios of


Hindustan Unilever

Mar '11

Mar '10

Face Value

1.00

1.00

Dividend Per Share

6.50

6.50

Operating Profit Per Share (Rs)

12.34

12.82

Net Operating Profit Per Share


(Rs)

91.18

81.45

Free Reserves Per Share (Rs)

11.04

10.70

Bonus in Equity Capital

60.98

60.36

Operating Profit Margin(%)

13.53

15.74

Profit Before Interest And Tax


Margin(%)

12.25

14.59

Gross Profit Margin(%)

12.41

14.70

Cash Profit Margin(%)

11.75

12.76

Adjusted Cash Margin(%)

11.75

12.76

Net Profit Margin(%)

11.56

12.29

Adjusted Net Profit Margin(%)

11.56

12.29

102.47

106.78

Investment Valuation Ratios

Profitability Ratios

Return On Capital

Employed(%)
Return On Net Worth(%)

87.57

85.25

Adjusted Return on Net


Worth(%)

80.67

81.40

Return on Assets Excluding


Revaluations

12.19

11.84

Return on Assets Including


Revaluations

12.20

11.84

102.47

106.78

Current Ratio

0.86

0.84

Quick Ratio

0.43

0.46

Debt Equity Ratio

--

--

Long Term Debt Equity Ratio

--

--

11,243.63

395.13

Total Debt to Owners Fund

--

--

Financial Charges Coverage


Ratio

12,163.75

421.50

Financial Charges Coverage


Ratio Post Tax

10,529.33

342.84

7.91

8.99

24.28

29.24

Investments Turnover Ratio

7.91

8.99

Fixed Assets Turnover Ratio

5.63

5.35

Return on Long Term Funds(%)


Liquidity And Solvency Ratios

Debt Coverage Ratios


Interest Cover

Management Efficiency Ratios


Inventory Turnover Ratio
Debtors Turnover Ratio

Total Assets Turnover Ratio

8.31

7.66

Asset Turnover Ratio

5.63

5.35

Average Raw Material Holding

61.54

51.08

Average Finished Goods Held

35.15

32.05

-20.02

-22.62

Material Cost Composition

53.29

50.67

Imported Composition of Raw


Materials Consumed

19.20

18.61

Selling Distribution Cost


Composition

19.35

18.35

7.25

7.31

Dividend Payout Ratio Net


Profit

71.20

75.20

Dividend Payout Ratio Cash


Profit

64.98

69.40

Earning Retention Ratio

22.71

21.25

Cash Earning Retention Ratio

29.99

27.59

--

--

Mar '11

Mar '10

Earnings Per Share

10.68

10.09

Book Value

12.19

11.84

Number of Days In Working


Capital
Profit & Loss Account Ratios

Expenses as Composition of
Total Sales
Cash Flow Indicator Ratios

AdjustedCash Flow Times

DABUR:

------------------- in Rs. Cr. -------------------

Key Financial Ratios of Dabur


India

Mar
'11

Mar '10

Face Value

1.00

1.00

Dividend Per Share

1.15

2.00

Operating Profit Per Share (Rs)

3.59

6.34

Net Operating Profit Per Share


18.81
(Rs)

33.05

Investment Valuation Ratios

Free Reserves Per Share (Rs)

4.02

7.14

93.41

87.10

Operating Profit Margin(%)

19.06

19.17

Profit Before Interest And Tax


Margin(%)

17.76

17.97

Gross Profit Margin(%)

17.91

18.06

Cash Profit Margin(%)

15.58

15.88

Adjusted Cash Margin(%)

15.58

15.88

Net Profit Margin(%)

14.27

15.03

Adjusted Net Profit Margin(%)

14.27

15.03

Return On Capital Employed(%) 44.16

61.62

Bonus in Equity Capital


Profitability Ratios

Return On Net Worth(%)

46.29

58.04

Adjusted Return on Net


Worth(%)

45.21

56.29

Return on Assets Excluding


Revaluations

5.85

8.60

Return on Assets Including


Revaluations

5.85

8.60

Return on Long Term Funds(%) 53.79

68.96

Liquidity And Solvency Ratios


Current Ratio

0.99

0.93

Quick Ratio

0.78

0.68

Debt Equity Ratio

0.23

0.14

Long Term Debt Equity Ratio

0.01

0.02

56.06

52.35

0.23

0.14

Financial Charges Coverage


Ratio

50.47

42.53

Financial Charges Coverage


Ratio Post Tax

41.66

36.46

8.65

11.31

19.67

23.62

Investments Turnover Ratio

8.65

11.31

Fixed Assets Turnover Ratio

4.39

4.31

Total Assets Turnover Ratio

2.46

3.44

Debt Coverage Ratios


Interest Cover
Total Debt to Owners Fund

Management Efficiency Ratios


Inventory Turnover Ratio
Debtors Turnover Ratio

Asset Turnover Ratio

4.39

4.31

Average Raw Material Holding

63.26

52.96

Average Finished Goods Held

29.32

22.08

Number of Days In Working


Capital

26.70

3.76

53.15

48.61

0.93

1.22

14.89

16.55

4.09

4.31

Dividend Payout Ratio Net Profit49.42

46.86

Dividend Payout Ratio Cash


Profit

44.32

43.13

Earning Retention Ratio

49.40

51.67

Cash Earning Retention Ratio

54.74

55.64

0.49

0.23

Mar
'11

Mar '10

Earnings Per Share

2.71

4.99

Book Value

6.33

8.64

Profit & Loss Account Ratios


Material Cost Composition
Imported Composition of Raw
Materials Consumed
Selling Distribution Cost
Composition
Expenses as Composition of
Total Sales
Cash Flow Indicator Ratios

AdjustedCash Flow Times

MARICO:
------------------- in Rs. Cr. -------------------

Key Financial Ratios of Marico

Mar
'11

Mar '10

Face Value

1.00

1.00

Dividend Per Share

0.66

0.66

Operating Profit Per Share (Rs)

5.59

5.47

Net Operating Profit Per Share


(Rs)

38.20

32.85

Free Reserves Per Share (Rs)

12.52

8.03

Bonus in Equity Capital

90.33

91.08

Operating Profit Margin(%)

14.62

16.63

Profit Before Interest And Tax


Margin(%)

13.30

15.26

Gross Profit Margin(%)

13.44

15.37

Cash Profit Margin(%)

11.75

13.51

Adjusted Cash Margin(%)

11.75

13.51

Net Profit Margin(%)

13.29

11.65

Adjusted Net Profit Margin(%)

13.29

11.65

Return On Capital Employed(%) 23.87

34.07

Investment Valuation Ratios

Profitability Ratios

Return On Net Worth(%)

36.11

41.11

Adjusted Return on Net


Worth(%)

28.77

43.26

Return on Assets Excluding


Revaluations

14.21

9.38

Return on Assets Including


Revaluations

14.21

9.38

Return on Long Term Funds(%) 34.31

48.71

Liquidity And Solvency Ratios


Current Ratio

0.99

1.35

Quick Ratio

1.70

1.23

Debt Equity Ratio

0.63

0.66

Long Term Debt Equity Ratio

0.14

0.16

18.77

21.49

0.63

0.66

Financial Charges Coverage


Ratio

12.30

19.04

Financial Charges Coverage


Ratio Post Tax

12.46

15.22

5.98

6.36

21.99

25.73

Investments Turnover Ratio

5.98

6.36

Fixed Assets Turnover Ratio

6.18

7.88

Total Assets Turnover Ratio

1.70

2.20

Debt Coverage Ratios


Interest Cover
Total Debt to Owners Fund

Management Efficiency Ratios


Inventory Turnover Ratio
Debtors Turnover Ratio

Asset Turnover Ratio

6.18

7.88

Average Raw Material Holding

52.83

69.98

Average Finished Goods Held

32.20

25.89

105.42

89.85

61.29

54.78

5.26

9.96

14.30

16.18

6.58

7.30

Dividend Payout Ratio Net


Profit

14.96

20.01

Dividend Payout Ratio Cash


Profit

13.75

18.07

Earning Retention Ratio

81.23

80.99

Cash Earning Retention Ratio

83.09

82.75

1.98

1.38

Mar
'11

Mar '10

5.13

3.86

14.21

9.38

Number of Days In Working


Capital
Profit & Loss Account Ratios
Material Cost Composition
Imported Composition of Raw
Materials Consumed
Selling Distribution Cost
Composition
Expenses as Composition of
Total Sales
Cash Flow Indicator Ratios

AdjustedCash Flow Times

Earnings Per Share


Book Value

Comparison with Competitors


Balance Sheet

------------------- in Rs. Cr. ------------------HUL

Dabur India

Marico

Mar '11

Mar '11

Mar '11

Total Share Capital

215.95

174.07

61.44

Equity Share Capital

215.95

174.07

61.44

Share Application Money

0.00

0.00

0.00

Preference Share Capital

0.00

0.00

0.00

2,417.30

927.09

811.68

0.67

0.00

0.00

2,633.92

1,101.16

873.12

Secured Loans

0.00

17.57

332.42

Unsecured Loans

0.00

235.78

220.07

Total Debt

0.00

253.35

552.49

2,633.92

1,354.51

1,425.61

HUL

Dabur India

Marico

Mar '11

Mar '11

Sources Of Funds

Reserves
Revaluation Reserves
Networth

Total Liabilities

Mar '11

Application Of Funds
Gross Block

3,759.62

766.88

421.20

Less: Accum. Depreciation

1,590.46

269.32

198.74

Net Block

2,169.16

497.56

222.46

299.08

11.92

45.52

Investments

1,260.68

519.23

470.36

Inventories

2,811.26

460.58

454.22

Sundry Debtors

943.20

202.46

118.98

Cash and Bank Balance

281.91

26.08

13.95

Total Current Assets

4,036.37

689.12

587.15

Loans and Advances

1,099.72

461.81

369.93

Fixed Deposits

1,358.10

166.33

4.22

Total CA, Loans & Advances

6,494.19

1,317.26

961.30

0.00

0.00

0.00

Current Liabilities

6,264.21

539.05

242.07

Provisions

1,324.98

535.36

31.96

Total CL & Provisions

7,589.19

1,074.41

274.03

Net Current Assets

1,095.00

242.85

687.27

0.00

82.95

0.00

2,633.92

1,354.51

1,425.61

Capital Work in Progress

Deffered Credit

Miscellaneous Expenses
Total Assets

INTERPRETAION FROM ABOVE RATIOS:


PROFITABILITY RATIOS:
Profitability Measures assess the firm's ability to operate efficiently and are of
concern to owners, creditors, and management

Return on Asset (ROA)


ROA gives an idea as to how efficient management is at using its assets to
generate earnings.
Calculated by dividing a company's annual earnings by its total assets, ROA is
displayed as a percentage.
(Net Profit / Avg. Total Asset) * 100
Return on assets measures a companys earnings in relation to all of the
resources it had at its disposal (the shareholders capital plus short and longterm borrowed funds). Thus, it is the most stringent and excessive test of
return to shareholders. If a company has no debt, the return on assets and
return on equity figures will be the same.
Return on Equity (ROE)
The amount of net income returned as a percentage of shareholders
equity. Return on equity measures a corporation's profitability by revealing how
much profit a company generates with the money shareholders have invested.
(Net Earnings/Shares holder Equity) * 100
Gross Profit Margin (GPM)
It gives a good indication of financial health. A financial metric used to assess a
firm's financial health by revealing the proportion of money left over from
revenues after accounting for the cost of goods sold. Gross profit margin serves
as the source for paying additional expenses and future savings.
(Gross Profit/ Net Sales) * 100

Net Profit Margin (NPM)


This number is an indication of how effective a company is at cost control. The
higher the net profit margin is, the more effective the company is at converting
revenue into actual profit. The net profit margin is a good way of comparing
companies in the same industry, since such companies are generally subject to
similar business conditions.
(Net Profit/ Net Sales) * 100

Inferences Drawn:
100
90
80
70
60

ROA(%)

50

ROE(%)

40

Gross Profit Margin(%)

30

Net Profit Margin(%)

20
10
0
HUL 2010 HUL 2009

Marico
2010

Marico
2009

Dabur
2010

Dabur
2009

ROA and ROE


The ROA value gives investors an idea of how effectively the company is
converting the money it has to invest into net income. In case of HUL it is
always more if last 2 years then Marico and Dabur. In 2010, ROA was around
87% for HUL, It clearly signifies that for every Rs.1/- of investment as asset,
HUL earning 87paise where it is quite low in case of Dabur and Marico.
Now, assets comprise of share holder equity and long term borrowed funds. In
case of HUL, Debt to equity ratio is zero implies HUL as a No debt company.
Hence ROE is same as ROA for HUL,
In case of Dabur and Marico, ROE is lying around 45% to 60% which suggests
companys pay back as per investment made by share holder. On the other
hand if we look at ROA of these two companies, it is fluctuating near to 20 % in
the last two years. As we know, ROA tells about company performance while
keeping all the assets into consideration and not only shareholder equity alone.
ROE is certainly a hint that management is giving shareholders more for their
money. On the other hand, if ROA is low or the company is carrying a lot of
debt, a high ROE can give investors a false impression about the company's
fortunes. Hence it is necessary to analyse the different ratio in one picture
frame rather than looking at them simultaneously.
One other important prospective, as HUL is a zero debt company (ROE=ROA)
while other two are not. Implies HUL is not using debt financing. From investor
point of view, I might appreciate the fact the company has zero debt but debt is
cheaper then equity. If the company have taken care of debt financing it could
have increased up its operations and revenues. However for companies which
have very large market capitalization like HUL, not using debt financing
signifies the low risk and self dependency in investors eye.
Discussing about NPM and GPM, the different between NPM and GPM is
Net Profit (NP) = Gross Profit (GP) overhead
The profit margin tells you how much profit a company makes for every Rs.1/it generates in revenue or sales. Eg. NPM = 20% means for every Rs.1/Hence higher the NPM and GPM, indicates better financial health of a
company.

Mathematically GPM will always be greater than or equal to NPM as there will
some overhead expenses. Practically, overheads are not zero hence GPM >
NPM.
The lower the difference between NPM and GPM, the better. If the difference is
more that signifies the operational efficiency of the company. This difference is
less in case of HUL as compare to other peers considered relatively. Hence we
can comment on good operational efficiency of HUL with respect to Dabur and
Marico.

LIQUIDITY RATIOS:
Liquidity Ratio:
The higher the current ratio, the more capable the company is of paying its
obligations. In case of HUL the ratio is lying between 0.8 to 0 .9 whereas for
Dabur its .9 to 1.2. At the same time for Marico, it is above 1.2. By looking at
Current ratio only we can say Marico has the highest ability to meet short-term
debt obligations.
However, the current assets also include inventory of a company. Generally
inventories are not readily converted into cash hence we need another ratio
that does not includes inventory in current asset to give a more precise picture
of any firms liquidity. That ratio is quick ratio. For HUL the difference between
quick ratio and current ratio is very significant as compare Marico and Dabur
which implies heavy inventory in HUL. The difference is least in Marico and
then Dabur studied for last two years. Hence we have concluded on liquidity
parameter Marico is on top followed by Dabur and then HUL.
Inventory Turnover Ratio:
Keeping more inventory is not a false behaviour(as in case of HUL), one might
argue having enough inventory can guard you against various un-favourable
situation like in-ability to produce the goods due to any factor, excess demand
due to factors like season, natural calamity etc. The excess inventory gives
enough confidence to firm to act in future. However with no doubt this
inventory should be in rotation i.e. inventory turnover ratio should be good. So
that the same amount of goods will present in ware house but it will keep
rotating. The inventory turn ratio of Dabur is quite high comparatively to
Marico and HUL. In-fact Marico has the lowest inventory ratio. Thus analysing
quick ratio and inventory ratio in single frame, Marico has highest quick ratio

but lowest inventory turn ratio implies Marico maintaining high inventories but
its sitting period of good in inventory is more comparison to HUL and Dabur
which are maintaining low inventory but quickly converting it into revenues.
Apart from Inventory turnover ratio, we will be discussing on fixed asset and
Total Asset turnover ratio to comment on operational efficiency.
Fixed Asset Turnover Ratio
A higher fixed-asset turnover ratio shows that the company has been more
effective in using the investment in fixed assets to generate revenues.
Investments made on Plant, Property and Equipments (PPE). The fixed turnover
ratio is decreasing in case of all the three companies. However the decrease in
ratio is due to investments made in PPE by HUL and Marico where as in case of
Dabur it is disinvestment in fixed asset. To analyse fixed turnover ratio, one
must analyse at least four five years of patterns as investment made on PPE
would yield higher production in significant amount of time. As per our scope
of analysis we have concluded Marico is utilizing its fixed assets in the way
resulting addition to sales revenue to maximum followed by HUL and then
Dabur.

P/E Ratio
In general, a high P/E suggests that investors are expecting higher earnings
growth in the future compared to companies with a lower P/E. If market price
of any firms stock is raising and proportionately dividend is not increasing
resulting increase in P/E ratio, yet as an investor I might be interested as in
the hope the currently market price of share is high and increasing over time
being receiver of low dividend (targeting for long term). P/E ratio noticed high
in last year for HUL, implies higher expectation of earning/willingness to pay to
earn per unit of income. The difference in ratio is not much in the three
companies considered to comment on financial health comparison but P/E
directly affected by market situation also.
D/E Ratio
A high debt/equity ratio generally means that a company has been aggressive
in financing its growth with debt. Higher D/E ratio can facilitate company to
use the benefits of debt financing as Debt is not always bad and Debt is always

cheaper then equity. But very high D/E creates serious troubles in decision
making process and affects the flexibility of top management in any firm. On
the contrary low D/E implies a company is not enough using the debt.
Discussing about D/E of HUL it is zero means it is a no debt company. D/E is
quite high in case of Marico and comparatively very less in Dabur. This implies
the risk factor in HUL is very less and financial leverage is least in comparison
of Dabur and Marico. Also in case of Dabur and Marico, the ratio has
decreased in the last two years indicating lowering of risk.

INVESTOR PERSPECTIVE & OUR RECOMMENDATION:


FOR HINDUSTAN UNILEVER:
A look at the 2 years closing chart pattern of Hindustan Unilever should
convince investors of different experiences and propensities why this is a musthave stock among the several thousand being traded on the BSE and NSE.

There is an old saying: You cant keep a good man down. That expression
could just as well describe the HUL stock. Note that when the stock dropped to
its new closing low of 220 in Mar 10, all four technical indicators reached
higher bottoms (marked by blue arrows). The positive divergences signaled the
end of the bear period.
The stock embarked on a fresh bull rally within an upward-sloping channel
that is still intact. From Sep 10 through Jan 11, the stock reached three
closing tops each a little higher than the previous one. This time, the
technical indicators all touched lower tops. The negative divergences led to a
sharp drop below the 200 day EMA, followed by a triple-bottom reversal pattern
from Feb to May 11.
Once again, positive divergences from all four technical indicators that touched
higher bottoms, hinted at a resumption of the rally. The stock reached a new
closing high of 343 in Jun 11 at the upper-end of the upward-sloping channel.
Negative divergences in the technical indicators warned of a correction.
There are two points of interest here. The first is that the stocks price
movements provide long-term trading opportunities, as it swings up and down
within the upward-sloping channel. The second, more important one, is that
between Nov 10 and Sep 11 the stock has gone up to touch new highs, and is
in a bull market - even as the Sensex and Nifty are in clear down trends.
All three EMAs are rising and the stock is trading above them a sign of a bull
market. The strategy should be to use dips towards the lower end of the
upward-sloping channel to add. All four technical indicators MACD, ROC, RSI
and slow stochastic are correcting an overbought situation. The correction from
the new closing high of 353 may continue a bit longer.
Bottomline? The stock chart pattern of Hindustan Unilever is in a bull market,
making steady rather than spectacular progress. Growth and margins are back
on the upswing. Valuations are not cheap, but the stock is worth its weight in
gold. Regular dividends are an added attraction.

FOR DABUR:
Dabur India

The stock investing tip to buy stocks of Dabur India for short term time frame
can be considered as an option. The target price could get achieved in one to
two months. Dabur is one of the good FMCG stock as everyone knows. This tip
is purely based on analytical indications.
Dabur India touched its 52 week high recently at Rs 218.95. 52 week low was

at Rs 121. Current EPS is Rs 4.87 and P/E stands at 41.37. Although P/E
ratio looks high, FMCG stocks have always been considered as safe stocks in
stocks markets and so command a higher P/E.
If you look at the 6 months chart, support line is around Rs. 195 which could
be considered as stop loss. The target once again could be near to its 52 week
high i.e. 218. This level provides moderate amount of returns in short term i.e.
1 - 2 months.

MARICO:
Recently, management of Marico Industries, a good FMCG company, talked
about their stock from investor's perspective. They actually guided the
investors with a warning that investors should not be too optimistic about
Marico stock for may be couple of quarters due to various business reasons.
One of the reason they sight for slow growth/no growth is rise of input cost of
raw
material
at
almost
80%.
Another reason is political unrest in Africa and Middle east where company has
been doing business which is almost zero now. And the third reason is in
anticipation of domestic economic slowdown. With ever rising high inflation,
purchasing power of people is bound to be less and people would be willing to
spend less on FMCG products.
Sighting all three reasons, company management wants it's stock investors to
not to expect high growth from company for next may be 2-3 quarters. It is an
appreciable effort from management compared to most of the managements
who keep misguiding small investors with artificial high growth promises!
As a result, stock has corrected more than 10% in a day. It may slip down up
to 120 range where it could be a good stock to buy for long term.

CONCLUSION

As we have given the project work to compare the three well known FMCG
companies i.e. HUL DABUR and MARICO .We came to know about the financial
condition of the three companies relatively good with HUL being in ideal
condition for investment. They are able to generate customer and these
companies are providing new services and products with latest innovation to
customers. At the end I can say that Hindustan Unilever Ltd. Is in good
financial position and marico & dabur can be titled as the market followers and
can promptly become the challengers in near future.

REFERENCES:
1)
2)
3)
4)
5)

[1]. http://www.investopedia.com
[2]. http://www.investorwords.com
[3]. http://www.hul.co.in
[4]. http://www.marico.com
[5]. http://www.dabur.com
6) http://investmentsfordummieslikeme.blogspot.com