A

FINANCIAL MANAGEMENT
AND
ITS IMPACT ON SHAREHOLDERS' WEALTH
(An empirical analysis)

Submitted by:
GROUP 7
Ankur Kumar Srivastava | 20PGPIB069
Aravind S | 20PGPIB070
Himanshu Jain | 20PGPIB080
Venkata Sai Pavan K | 20PGPIB089
Prerna Garg | 20PGPIB090
Syed Osama Aftab | 20PGPIB104
TABLE OF CONTENTS

ABBREVIATIONS
Summary
1. Introduction

2. Problem definition/ Research question/Hypothesis (whichever is

applicable)

3. Sample and time period of study

4. Literature survey/review
5. Methodology to address the problem/research
question/hypothesis

6. Analysis

6.1. TATA MOTORS

6.2. MARUTI SUZUKI

6.3. MAHINDRA & MAHINDRA

6.4. HUL

Hindustan Unilever Limited is the largest fast moving consumer goods company in India,
established in 1933 and is based out of Mumbai. The company is known for its presence
across almost all categories of consumer products. It has a variety of products in each of the
categories targeted at almost all the customer segments, majorly Food & Drink, Personal
care, Home care and Water purifier serving over 700 million customers across the country
and is undoubtedly the market leader in the FMCG sector.
 Year 2019-20 2019-18 2018-17 2017-16 2016-15
Operational & Financial Ratios  
Earnings Per Share (Rs) 31.19 27.94 24.25 20.79 19.15
Dividend Pay Out Ratio(%) 80.14 78.73 82.49 81.78 83.54
Margin Ratios  
EBIT Margin(%) 20.57 19.67 20.74 18.61 17.8
PAT Margin (%) 15.07 13.89 14.87 13.02 12.35
Performance Ratios  
ROA (%) 36.55 35.07 33.27 31.68 30.43
ROE (%) 86.11 82.24 77.56 70.73 83.43
ROCE (%) 117.25 116.06 107.7 100.52 119.18
Asset Turnover(x) 2.43 2.53 2.24 2.43 2.46
Inventory Turnover(x) 17.68 18.18 14.92 14.11 13.06
Debtors Turnover(x) 32.89 30.83 33.95 34.63 36.27

Investment Decision Analysis

Year Decision Analysis
2019-20  Accelerating growth was HUL’s top priority.
 Evolved their portfolio of brands to higher growth segments.
 Renovated their existing brands to meet emerging trends, bringing new
brands into market (such as Love & Care, Love Beauty and Planet), and
made acquisitions in fast-growing segments like Health Food Drinks (HFD)
and Intimate Hygiene category.
 Recently entered into an agreement to acquire the intimate hygiene brand
VWash from Glenmark Pharmaceuticals. They have also successfully
completed the merger of GSK CH with the Company.
 Their recent acquisitions are performing well, including Indulekha and
Adityaa Milk which shows that the company has been making sound
investment decisions to facilitate the growth of shareholder’s wealth.
 HUL uses their savings to invest in growth areas of the future and in better
 products and brands which increases the margins.
 Their three main savings programmes – ZBB, 5S and Change Programme
– have delivered over 7% of sales as gross savings last year.

2018-19
2017-18
2016-17
2015-16

Financial Decision Analysis

Dividend Policy Analysis

6.5. ITC

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of
India Limited. As the Company's ownership progressively Indianized, the name of the
Company was changed to India Tobacco Company Limited in 1970 and then to I.T.C.
Limited in 1974. In recognition of the ITC's multi-business portfolio encompassing a wide
range of businesses, the full stops in the Company's name were removed effective
September 18, 2001. The company now stands rechristened ‘ITC Limited’ where 'ITC' is
today no longer an acronym or an initialised form.

ITC has a diversified presence in FMCG, Hotels, Packaging, Paperboards & Specialty
Papers and Agri-Business. ITC's aspiration to be an exemplar in sustainability practices is
manifest in its status as the only company in the world, of its size and diversity, to be carbon,
water and solid waste recycling positive. In addition, ITC's businesses and value chains
create sustainable livelihoods for many people, a majority of whom represent the poorest in
rural India.

ITC is the country's leading FMCG marketer, the clear market leader in the Indian
Paperboard and Packaging industry, a globally acknowledged pioneer in farmer
empowerment through its wide-reaching Agri Business, a pre-eminent hotel chain in India
that is a trailblazer in 'Responsible Luxury'. ITC's wholly-owned subsidiary, ITC Infotech, is a
specialized global digital solutions provider

In Rs crores
 EVA/YR
18000.00
16000.00
14000.00
12000.00
10000.00
EVA

8000.00 16538.39
6000.00 11951.07
4000.00 7527.13 8818.00 9677.64 8944.12 9762.58 10420.27
6096.70
2000.00 4998.06
0.00
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
FY

Figure as per IND AS

Year 2019-20 2019-18 2018-17 2017-16 2016-15

Operational & Financial
 
Ratios
Earnings Per Share (Rs) 12.31 10.17 9.2 8.4 11.59
Dividend Pay Out Ratio(%) 82.43 56.55 56 56.56 73.33
Margin Ratios  
EBIT Margin(%) 41.12 40.41 38.26 28.04 27.93
PAT Margin (%) 32.34 27.22 25.32 18.4 17.96
Performance Ratios  
ROA (%) 20.87 18.86 19.25 19.57 19.8
ROE (%) 25.66 23.63 24.07 24.23 26.23
ROCE (%) 31.55 33.83 35.05 35.72 40.05
Asset Turnover(x) 0.65 0.69 0.76 1.06 1.1
Inventory Turnover(x) 5.99 6.18 5.87 6.77 6.35
Debtors Turnover(x) 16.31 15.25 19.42 28.48 30.48

Investment Decision Analysis

 Year Decision Analysis
2019-20  Focussed on Launching new product to enhance sales and excel in the
industry.
 Subscribed to Make in India and “Country first” missions, empowered 4
million farmers.
 Products such as Ashirwad Atta, yippie, Bingo contributed to highest part of
revenue.
 New FMCG products like Deodorants, perfumes and Soaps are not very
accepted in market
2018-19  Focussed on Creating world class asset
 An investment outlay of 25,000 crore envisaged to support creation of
several Integrated Consumer Goods Manufacturing & Logistics facilities for
its FMCG businesses, in building iconic luxury hotels and in strengthening
distribution and agri-backend.
 Continues to expand the paper boards and packaging business to enhance
market standing e Cyber XLPac, décor papers, HSMT, Indiabowl are new
paperboards Brand of ITC
 10 PPPs signed during the year
 Partnership with NITI Aayog, the policy thinks tank of the Government of
India, to progressively train 2 million farmers in 25 districts under the
Aspirational Districts Programme
 Partnership with National Bank for Agriculture and Rural Development
(NABARD) and several State Governments
 24 technical collaborations with national & global organisations
 Enduring partnerships with 86 best-in-class NGOs
2017-18  Growing Contribution Across Agriculture, Manufacturing and Services
 The Investor Service Centre of ITC (‘ISC’), registered with Securities and
Exchange Board of India as Category II Share Transfer Agent for providing
in-house share registration and related services, maintains its position as an
exemplar in investor servicing.
 e ISO 9001:2008 Quality Management System certification for investor
servicing by ISC was renewed by Messrs
 Targeting, enlarging domestic market aligned with ‘Let us Put India First’
credo anchored on the core values of Trusteeship, Transparency,
Empowerment, Accountability and Ethical Citizenship
2016-17  Consistent EVA growth, reflect the company is intending SVA.
 Strives to provide a consistent Dividend to shareholders by introducing
DIVIDEND DISTRIBUTION POLICY. Dividend Distribution shall take into
account the distributable surplus available under law as well as the need to
retain earnings. The surplus would be returned to Shareholders enhancing
shareholders value.
 Total Shareholder Return As in March 2017 outperforming the Sensex
growth of 10.9%. The industry’s SVA=23.6%
 Among top three in exchequer

2015-16  Investing in Game-changing R&D

 Apart from ITC’s e-Choupal that has helped raise farm productivity and
incomes, the Company’s social investment programmes have created large-
scale sustainable livelihoods along with environmental replenishment
 The Company meets over 47% of its total energy requirement from
renewable sources enforcing sustainability
 6.6. NESTLE

7. Findings and conclusions