FINANCIAL MANAGEMENT

J COMPONENT
REVIEW-1
TOPIC: FINANCIAL MANAGEMENT
TECHNIQUES OF HINDUSTAN UNILEVER LTD

SLOT: D1
TEAM MEMBERS:
Monashree - 19BB0047
Ashish Khanna - 19BBA0087
Santhoshini V - 19BBA0091
Sujeeth raj.P - 19BBA0031
Supreetha. J.S- 18BBA0089
FINANCIAL MANAGEMENT:

 Financial Management means planning, organizing, directing and controlling

the financial activities such as procurement and utilization of funds of the
enterprise.

 It means applying general management principles to financial resources of

the enterprise.

In a nutshell, financial management –

 Endeavours to reduce the cost of finance.

 Ensures sufficient availability of funds.

 Deals with the planning, organizing, and controlling of financial activities like
the procurement and utilization of funds.
TECHNIQUES OF FINANCIAL
MANAGEMENT:
 Comparative Statement or Comparative Financial and Operating Statements.

 Common Size Statements.

 Trend Ratios or Trend Analysis.

 Average Analysis.

 Statement of Changes in Working Capital.

 Fund Flow Analysis.

 Cash Flow Analysis.

 Ratio Analysis.

 Cost Volume Profit Analysis

INTRODUCTION TO FMCG INDUSTRIES:

Fast-moving consumer goods (FMCG) sector is India’s fourth largest sector with
household and personal care accounting for 50 per cent of FMCG sales in
India. Growing awareness, easier access and changing lifestyles have been
the key growth drivers for the sector. The urban segment (accounts for a
revenue share of around 55 per cent) is the largest contributor to the overall
revenue generated by the FMCG sector in India. However, in the last few
years, the FMCG market has grown at a faster pace in rural India compared to
urban India. Semi-urban and rural segments are growing at a rapid pace and
FMCG products account for 50 per cent of the total rural spending.
WHY WE CHOSE HINDUSTAN UNILEVER LTD
 For six decades, Hindustan Unilever (HUL) has been among the top five most
valuable companies of India.

 In addition from being at the top of the business game, HUL is an enormously
influential company.
 HUL is a perfect Indian middle class company. It starts with the people it recruits:
middle-class young men and women who have made it through the demanding
Indian education system. As a result, the HUL way of working is all about being
hard-working, saving, aspiring and humble.
 It identifies, picks and builds a leadership pipeline based on performance and
persists with these leaders when they face difficult circumstances.
 HUL abides by the values of action, caring, courage and truth that have been
passed down by senior leadership through generations of employees.
HINDUSTAN UNILEVER LIMITED:
INTRODUCTION:

 Hindustan Unilever Limited (HUL) is the Indian subsidiary of Unilever which is a British-
Dutch multinational company. It is headquartered in Mumbai, India. Its products
include foods, beverages, cleaning agents, personal care products, water purifiers
and Fast-moving consumer goods.

 HUL was established in 1933 as Lever Brothers of United Kingdom and following a
merger of constituent groups in 1956, it was renamed 'Hindustan Lever Limited'. The
company was renamed in June 2007 as 'Hindustan Unilever Limited'.

 As of 2019 Hindustan Unilever's portfolio had 35 product brands in 20 categories. The

company has 18,000 employees and clocked sales of ₹34,619 crores in FY2017–18
 Since the very early years, HUL has vigorously responded to the stimulus of
economic growth. The growth process has been accompanied by judicious
diversification, always in line with Indian opinions and aspirations.

 The liberalisation of the Indian economy, started in 1991, which allowed the
company to explore every single product and opportunity segment, without
any constraints on production capacity.

VISION AND MISSION:

 Their vision is to grow their business, while separating their environmental

footprint from their growth and increasing their positive social impact.

 Their mission is to add liveliness to life. They meet everyday needs for nutrition,
hygiene and personal care with brands that help people feel good, look good and
get more out of life.
 BOARD OF DIRECTORS:

Name Designation
Sanjiv Mehta Chairman & Managing Director
Dev Bajpai Executive Director
O P Bhatt Independent Director

Kalpana Morparia Independent Director

Name Designation
Srinivas Phatak Executive Director & CFO
Willem Uijen Executive Director
Leo Puri Independent Director
Sanjiv Misra Independent Director
Aditya Narayan Independent Director
CONCEPTUAL ASSESSMENT AND ITS NEED:
MARKET SHARE:
 Hindustan Unilever Limited was the leader of Indian market of consumer products,
house 35 famous product brands in 20 categories.
 But, the country's biggest consumer goods firm, lost over 340 basis points in skin
cleansing category over the past two years dragged by sharp decline in two of its
largest brands— Lux and Lifebuoy — that together accounts for a quarter of the
market.
 HUL, the largest soaps maker, has seen its market share fall from 42.3% in the year
ended December 2017 to 38.9% last calendar year, according to industry officials
quoting Nielsen data. In the ₹22,000 crore soap segment that is roughly ₹800
crore eroded in a market which is increasingly getting competitive.
 To be sure, HUL controlled more than half the soap market a decade ago, has
seen consistent share loss in the segment but the latest decline has been the
steepest.
DECLINE IN MARKET GROWTH:

 Hindustan Unilever Limited (HUL) witnessed its March quarter domestic sales
decline by almost 9.5%, one of its worst-ever quarterly performances.

 Further, volume growth, which denotes the actual number of products that
consumers purchased, registered a decline of 7%.

 Among the segment-wise businesses of HUL, beauty and personal care, the
largest segment, fell 14% while the food and refreshment vertical declined
6.7%. The homecare segment declined 4.34%.

 Incidentally, the impact of COVID-19 was clearly visible as the company saw
a jump of almost 60 times in the sales of hand sanitizers.
MARKET
SHARE OF
HUL
SWOT ANALYSIS OF HUL:
PESTLE ANALYSIS OF HUL:
STEPS TAKEN TO OVERCOME THIS CRISIS:

 As the country braces to tackle the coronavirus outbreak, Hindustan Unilever

on March 20 announced that it is reducing the prices of Lifebuoy sanitizers,
Lifebuoy Liquid handwash and Domex floor cleaners by 15 percent.

 HUL said it will partner with medical institutions that are providing testing and
care facilities to affected people and provide them free supplies of sanitation
and hygiene products.

 India’s largest fast moving consumer goods firm Hindustan Unilever chairman
Sanjiv Mehta said consumers would be more averse to stepping out after the
pandemic and would like to place the order from home and receive it at
home. “So this should definitely give a fillip to ecommerce, and we would be
ready for that,” he said.
RISE IN MARKET CAPITALISATION:

 A sharp rise in the stock price in 2020 so far has helped Hindustan Unilever
(HUL) enter the list of top 15 global consumer staple stocks by market
capitalisation as flight to safety prompts investors to scout for defensive bets.

 HUL NSE -1.13 %, India’s largest consumer company, has surpassed the
market cap of global peers like Altria Group, Colgate-Palmolive and Reckitt
Benckiser, according to data from Bloomberg.

 At $71 billion, HUL’s market capitalisation is more than half of its parent
Unilever’s market value. Their market cap ratio of 0.54 is at a record high.

 HUL’s stock has gained 33 per cent since the beginning of the current year,
making it the second-best performing consumer staple stock after China’s
Muyuan Foodstuff.
CONCLUSION:
 After analysing the strength and weakness of HUL they have evaluated the
opportunities available to them and have used it to overcome the threats faced
by them in the market.
 Financial stability and quality leadership has helped HUL to overcome the
decline in sales and profit.
 The domestic mutual funds increased their holding in HUL to 2.6 per cent in
December 2019 from 1.9 per cent a year.
 In the medium term, acquisition benefit from GSK Consumer merger, lower
crude oil prices and lower ad spends has supported HUL’s profitability.
 Brand equity and wide distribution system has helped HUL to increase its sales
during this pandemic condition.
 Innovation in products, sustainable living, effective quality policy, environment
policy and accounting policy are some of the factors that has helped HUL to
become the LEADER of FMCG prouducts once again.