A Study On Financial Ratios On Selected FMCG Companies

A Dissertation report on
“A Study on Financial Ratio Analysis of selected FMCG companies

in India”
Submitted by
SHOAIB AHMED
(Enrollment no.: 2019-502-109)
in partial fulfillment for the award of the degree of

MBA
(MASTERS IN BUSINESS ADMINISTRATION)
Under the supervision of

MR. KAPIL MATTA
Department of Management
School of Management and Business Studies(SMBS)
JAMIA HAMDARD
(Deemed to be University)
New Delhi- 110062
(2021)
DECLARATION
Certified that this Dissertation is my original work and that I have not taken or borrowed any
material from others work nor I have presented this partly or fully to any other Institution /College/
University.
I have complied with all the formalities prescribed in this regard.
Date:
(SHOAIB AHMED)
ACKNOWLEDGEMENT
I am using this opportunity to express my gratitude to everyone who supported me throughout the
course of this project at Jamia Hamdard. I am thankful for their aspiring guidance, invaluably
constructive criticism and friendly advice during the project work. I am sincerely grateful to them
for sharing their truthful and illuminating views on a number of issues related to the project.
I would like to express my gratitude to my project mentor KAPIL MATTA for her co-operation
and guidance at Jamia Hamdard without which this project would never have been a success.
I am indebted to all the respondent for their valuable support and cooperation during the entire
tenure of the project. Not to forget, all those who have kept our spirits surging and helped me in
delivering the best.
The Acknowledgement would not be complete with a vote of thanks to all other people who helped
me in one way or the other in completing of this project.
EXECUTIVE SUMMARY
Nowadays, Financial Management is getting more significant for the business, because people and
their knowledge are most important aspects affecting the output of the company as well as the
profitability of the company. Financial management is the one of the key aspects to measure of
profitability and liquidity positions of a companies.
Equity analysis: The process of analyzing sector and companies, to give advice to professional
fund manager and private clients on which share to buy. Sell-side analysts work for brokers who
sell share to the investors.
Equity research primarily means analyzing company’s financials, perform ratio analysis, forecast
the financial in excel (financial models) and explore scenarios with an objective of making
BUY/SELL stock investment recommendation.
The main purpose of the equity research is to provide investors with detailed financial analysis and
recommendations on whether to buy, hold or sell a particular investment. Banks often use equity
research as a way of “supporting” their investment banking and sales & trading clients, by
providing timely, high-quality information and analysis.
Fast moving consumer goods (FMCG) sector is the 4th largest sector in the Indian economy with
the household and personal care accounting for 50 percent of FMCG sales in India. Growing
awareness, easier access and changing lifestyles have been the key growth drivers for the sector.
The urban segment 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 with urban India. Semi-urban and rural segments are growing at a rapid pace and FMCG
products accounts for 50 percent of total rural spending.
The Indian FMCG sectors is the fourth largest sector in the economy with a total market size in
excess of US$ 52.75 billion. FMCG Market is expected to rise to US$ 220 billion till 2025.
In this report five FMCG company “Hindustan Unilever Limited (HUL), ITC Limited, Marico
Limited, Dabur, Britannia Industries” is analyzed.
Objective of the study:
FMCG companies hold great importance for economy as well as social development of the
country. The present study is conducted to evaluate the financial performance of the five leading
FMCG companies, over a period of 5 years (2016-17 to 2020-21).
The specific objectives of the study are:
✓ To study the profitability and liquidity trend of the selected FMCG companies.
✓ To make comparative analysis of the selected units based on the various ratios.
TABLE OF CONTENT
S.no. Topics Page no.

Chapter- 01 ✓ Introduction
Chapter- 02 ✓ Review of literature
Chapter- 03 ✓ Research Methodology
Chapter- 04 ✓ Data Analysis and Interpretation
Chapter- 05 ✓ Conclusion
✓ Findings and Limitation
✓ Appendices
CHAPTER- 01
INTRODUCTION
The FMCG industry, also known as the CPG (Consumer package goods) is very active in the
production, distribution and marketing of consumer integrated consumer goods. Fast Moving
Consumer Goods (FMCG) are those consumables that are commonly used by consumers from
time to time. Some of the key activities of the FMCG sector are marketing, marketing, funding,
procurement, etc.
Fast Moving Consumer Goods (FMCG) is the fourth biggest area in the Indian economy with
Household and Personal Care representing 50% of FMCG deals in India. The development of
mindfulness, simple access, and changing ways of life have been the main considerations in the
development of the business. The metropolitan area (representing about 55% of the spending plan)
is the biggest supporter of the pay of the FMCG area in India However, in the course of recent
years, the FMCG market has filled quickly in India's country territories contrasted with
metropolitan India. Metropolitan and provincial areas are developing quickly, and FMCG items
represent 50% of complete rustic consumption.
The Fast Moving Consumer Goods (FMCG) sector is the key contributor to the Indian economy.
This fourth largest sector f the Indian economy employs around 3 million people, accounting for
approximately 5% of the total factory employment in the country. These products are daily
consumed by each society's stratum irrespective of social class, income group, age group, etc.
FMCG sector is more lucrative because of low penetration levels, well-established distribution
network, low operating cost, lower per capita consumption, large consumer base, and simple
manufacturing processes for most of the products resulting in fairly low capital investments.
Fast Moving Consumer Goods (FMCG) goods, popularly named as consumer packaged goods,
play a vital role as a necessity and as an inelastic product. Rural India accounts for 70% of India's
population, 56% of National Income, 64% of total expenditure, and one-third of the total savings.
The Indian FMCG sector is the fourth largest sector of the economy with a total market size of Rs.
167,100crs.
The market is estimated to grow to USS 100 billion by 2025, according to market research firm
Nielsen. In the last decade the FMCG sector has grown at an average of 11% a year; in the last
five years, annual growth accelerated to 17%. The FMCG Industry is characterized by a well-
established distribution network, low penetration levels, low operating cost, lower per capita
consumption and intense competition between the organized and unorganized segments.
FMCGs are slowly and gradually positioning and deeply penetrating in the fast growing rural
market. The FMCG sector in India continues on a strong growth path with both Urban and Rural
India contributing to its growth. Rural India contributes one third of FMCG sales in India.
Growth driven by increasing consumption led by rise in incomes, changing lifestyles and favorable
demographics.
The industry is highly competitive due to presence of multi-national companies, domestic

companies and unorganized sector. A major portion of the market is captured by unorganized
players selling unbranded and unpackaged products. More than 50 per cent of the total revenues
of FMCG companies come from products worth Rs 10 or less! This has made the proliferation of
localized brands which are offered in loose form in small towns and rural part where brand
awareness is low. In last 10 years domestic players are giving tough com-petition to multinationals,
infect they have outstripped many MNCs in growth and market cap. Between 2005-2014 the profit
of domestic companies increased by 24% against 14% increase of multinational companies.
Urban India accounts for 66% of total FMCG consumption, while rural India accounts for the
remaining 34% However, rural India accounts for more than 40% of the consumption in major
FMCG categories such as personal care, fabric care and hot beverages. As per the analysis by
ASSOCHAM, companies like Hindustan Unilever Ltd and Dabur India generate half of their sales
from rural India while Colgate Palmolive India and Marico constitute nearly 37% respectively.
Many fast-moving consumer goods have a short shelf life, either as a result of high consumer
demand or as the result of fast deterioration. Some FMCGs, such meats, fruits, vegetables, dairy
products, and baked goods are highly perishable. Other goods, such as pre-packaged foods, soft
drinks, candies, and toiletries have high turnover rates. Sales are sometimes influenced by holiday
and or seasonal periods and also by the discounts offered.
Packaging is critical for FMCGs. To become successful in the highly dynamic and innovative
FMCG segment, a company not only has to be acquainted with the consumer, brands, and logistics,
but also, it has to have a sound understanding of packaging and product promotion. The packaging
has to be both hygienic and customer attracting. Logistics and distribution systems often require
secondary and tertiary packaging to maximize efficiency. Unit or primary packaging protects
products and extends shelf life while providing product information to consumers.
The profit margin on FMCG products can be relatively small, but they are generally sold in large
quantities; thus, the cumulative profit on such products can be substantial. According to BASES,
84% of professionals working for fast-moving consumer goods are under more pressure to quickly
bring new products to the market than they were five or ten years ago. With this in mind, 47% of
those surveyed confessed that product testing suffers most when deadlines are accelerated.
The fast moving consumer goods (FMCG) segment in India is already the fourth largest sector of
the Indian economy. The retail market for FMCG products was S840bn 2017 and is expected to
scale $1.Itn by the year 2020. What is unique about the FMCG sector is the strong contribution of
rural demand: urban contributes 55% and rural segment contributes the balance 45%. The overall
FMCG segment is dominated by the household and personal care segment, which accounts for
50% of the overall sector. (Kenton, Fast-Moving Consumer Goods (FMCG), 2021)
FMCG Industry in India

With demonetization came the squeeze but it also brought about a greater acceptance of alternate
digital payment methods. That is paying off. Some of the key triggers for the FMCG sector are as
under:
The launch of GST takes away the advantage the unorganized sector enjoyed and that is leading
to a greater shift towards the organized sector. This trend could become sharper in the coming
months.
FMCG sales stood at $53bn as of financial year 2018 but are expected to grow at an annualized
rate of 35% to touch S$104bn by 2020. That is a big boost to the top-line of FMCG companies.
The GST Council has reduced rates on most food items to the range of 0-5% and even hygiene
products of mass consumption have been brought into the 12-18% bracket. GST cuts have been
passed on to the consumers; opening up the market.
Specific initiatives in the last few years like farm loan waivers, spending on rural infrastructure
and the direct benefit transfer (DBT) scheme has helped. The minimum income guarantee scheme
is also likely to be a boost to FMCG demand.
The big growth is expected to come from the rural areas. On an average, rural and semi urban
consumers spend 50-55% of their disposable income on FMCG products. Any income accretion
will have a multiplier impact on rural demand.
Finally, the government has also done its bit. It has permitted 100% FDI in food processing and
single brand retail and 51% in multi brand retail. In addition, it has increased mega food parks
from 2 to 13; food preservation and processing capacity from 3.08 lakhs to 1.41mm; and number
of food labs from 31 to 42. All these are likely to be major supportive triggers for the FMCG
segment growth. (Group, 2019)
The Fast-Moving Consumer Goods (FMCG) sector is the fourth largest sector in India.
The FMCG sector has grown from USS 31.6 billion in 2011 to US$ 52.8 billion in 2017-18. The
sector is further expected to grow at a Compound Annual Growth Rate (CAGR) of 27.9% to reach
USS 103.7 billion by 2020. The sector witnessed growth of 16.5% in value terms between June-
September 2018; supported by moderate inflation, increase in private consumption and rural
income.
It is forecasted to grow at 12-13% between September December 2018. FMCG's urban segment is
expected to have a steady revenue growth at 8% in FY19 and the rural segment is forecasted to
contribute 15-16% of total income in FY19.
Accounting for a revenue share of around 4%, rural segment is a large contributor to the overall
revenue generated by the FMCG sector in India. Urban segment accounted for a revenue share of
55% in the overall revenues recorded by FMCG sector in India.
Reveries of FMCG sector reached Rs 3.4 trillion (USS 52.8 billion) in FY18 and are estimated to
reach USS 103.7 billion in 2020.
Growing awareness, easier access, and changing lifestyles are the key growth drivers for the
consumer market. The focus on agriculture, MSMEs, education, healthcare, infrastructure and
employment under the Union Budget 2018-19 is expected to directly impact the FMCG sector.
These initiatives are expected to increase the disposable income in the hands of the common
people, especially in the rural area, which will be beneficial for the sector.
Fast moving consumer goods (FMCG) industry stood at USD 57.4 billion 2017 vis-à vis USD 49
billion in 2016, registering a sharp growth of over 17% during the year (as per IBEF). Household
and personal care continue to be the leading segment-accounting for 50% of the overall market
followed by Healthcare and Food & beverages segment that account for 31% and 19%
respectively.
Fast-moving consumer goods (FMCG) are products that are sold quickly and at relatively low cost.
Examples include non-durable goods and soft drinks, toiletries, over-the-counter drugs, processed
foods and other consumables.
In 2017, urban area was the largest contributor to the overall revenue generated by the FMCG
sector in India with about 55% share while the rest came from semi-urban and rural areas. The
share of rural segment in the overall revenue contribution has been consistently growing over the
past few years.
Also, with Indian retail market being estimated to reach USD 1.15 trillion by 2020 from USD 840
billion in 2017 by CARE Ratings and modern trade projected to grow at about 20-22% per annum,
it is expected to give an impetus revenues of FMCG companies going forward.
Opportunities abound in India's FMCG market given the high annual growth rates and low
penetration levels, across categories. For some categories, such as home care and personal care
products, urban and rural consumers will have the same purchase drivers. Personal care: "It makes
me feel good wear this lipstick," "I buy skin cream to have soft skin, etc.
Home care: "It's important to keep my home clean," "I like to have a clean home since I am house-
proud," etc.
That said, while FMCG marketers see the importance of strengthening their presence in urban
areas, many are turning to rural markets for the next wave of growth. FMCG marketers need to
keep the following aspects in mind when serving rural consumers:
What are the right products that will appeal to this target group?
How can the products be better marketed using the right communication platforms
Which channels are the best to move products quickly?
Our thought leadership report DNA model for inclusive financial services: Driving profitability
indicates that in order to build a model for a profitable business, banks have to become more
inclusive in their approach towards consumers using the DNA model. We feel that this perspective
is also valuable and applicable to India's FMCG industry as consumer goods companies step up
their efforts to serve this group of large and under-served consumers. (India, 2013)
Growth prospects of FMCG in Rural India

With the presence of 12.2% of the world population in the villages of India, the Indian rural FMCG
market is something no one can overlook Increased focus on farm sector will boost rural incomes,
hence providing better growth prospects to the FMCG companies. Better infrastructure facilities
will improve their supply chain.
The Accenture report goes on to state that rural incomes have been growing at more than 7% over
the past few years, helping to account for almost 40% of India's total consumption of goods and
services.
FMCG sector is also likely to benefit from growing demand in the market. Because of the low per
capita consumption for almost all the products in the country, FMCG companies have immense
possibilities for growth. And if the companies are able change the mind-set of the consumers, ie.
if they are able to take the consumers to branded products and offer new generation products, they
would be able to generate higher growth in the near future.
It is expected that the rural income will rise in future, boosting purchasing power in the
countryside. However, the demand in urban areas would be the key growth driver over the long
term. Also, increase in the urban population, along with increase in income levels and the
availability of new categories, would help the urban areas maintain their position in terms of
consumption.
At present, urban India accounts for 66% of total FMCG consumption, with rural India accounting
for the remaining 34%. However, rural India accounts for more than 40% consumption in major
FMCG categories such as personal care, fabric care, and hot beverages.
In urban areas, home and personal care category, including skin care, household care and feminine
hygiene, will keep growing at relatively attractive rates. Within the foods segment, it is estimated
that processed foods, bakery, and dairy are long-term growth categories in both and urban areas.
(Bais, Exploring rural markets: Be innovative, 2014)
Impact of FMCG sector in India

Employment
Direct employment is estimated approximately 6% of turnover, i.e. USS 1.5 billion4 (Rs. 7,000
crores). Approximately 12-13 million retail stores in India, out of which 9 million are FMCG
kirana stores. Thus the sector is responsible for the livelihood of almost 13 million people.
Fiscal Contribution
Cascading Multiple Taxes by the FMCG sector(import duty, service tax, CST, income tax). 30%
revenue of the sector goes into both direct and indirect taxes, estimated size of $25 billion (Rs.
120,000 crores), that would constitute a contribution to the exchequer of approximately USS 6.5
billion (Rs. 31,000 crores).
Social Contribution
Create employment for people with lower educational qualifications. FMCG firms have also
undertaken some specific projects to integrate with upcountry and rural areas for both inputs and
for distribution as well as to fulfil CSR.
Market size of FMCG industry
Fast Moving Consumer Goods (FMCG)- alternatively known as consumer packaged goods (CPG)
are products that are sold quickly and generally consumed at a regular basis, as opposed to durable
goods such as kitchen appliances that are replaced over a longer period of time. The FMCG
industry primarily engages in the production. distribution and marketing operation of consumer
packaged goods. This category is comprised of food and dairy products, pharmaceuticals,
consumer electronics, household products, packaged food products and many others.
The fast-moving consumer goods sector is an important contributor to India's GDP. India's FMCG
sector is the fourth largest sector in the economy and creates employment for more than three
million people. Its principal constituents are household care, personal care and food and beverages.
The market is expected to maintain a high growth rate as the population (particularly the middle
class and rural segments) converts to branded products. In 2016, retail e-commerce sales in India
generated over 16 billion U.S. dollars. That figure is expected to increase to over 45 billion U.S.
dollars by 2021.
Some of the merits of FMCG industry, which made this industry as a potential one are low
operational cost, strong distribution networks, presence of renowned FMCG companies.
Population growth is another factor which is responsible behind the success of this industry.
The Retail market in India is estimated to reach USS 1.1 trillion by 2020 from USS 840 billion in
2017, with modern trade expected to grow at 20 per cent 25 per cent per annum, which is likely to
boost revenues of FMCG companies. Revenues of FMCG sector reached Rs 3.4 lakh crore (USS
52.75 billion) in FY18 and are estimated to reach USS 103.7 billion in 2020. The sector witnessed
growth of 16.5 per cent in value terms between July-September 2018; supported by moderate
inflation, increase in private consumption and rural income. (Assocham, 2017)
FMCG goods are popularly known as consumer packaged goods. Items in this category include
all consumables (other than groceries/pulses) people buy at regular intervals. The most common
in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish,
packaged foodstuff, and household accessories and extends to certain electronic goods. These
items are meant for daily of frequent consumption and have a high return.
Rural areas expected to be the major driver for FMCG, as growth continues to be high in these
regions. Rural areas saw a 16 per cent, as against 12 per cent rise in urban areas. Most companies
rushed to capitalize on this, as they quickly went about increasing direct distribution and providing
better infrastructure. Companies are also working towards creating specific products specially
targeted for the rural market.
The Government of India has also been supporting the rural population with higher minimum
support prices (MSPs), loan waivers, and disbursements through the National Rural Employment
Guarantee Act (NREGA) programmed. These measures have helped i in reducing poverty in rural
India and given a boost to rural purchasing power.
Hence rural demand is set to rise with rising incomes and greater awareness of brands.
With rise in disposable incomes, mid- and high-income consumers in urban areas have shifted
their purchasing trend from essential to premium products. In response, firms have started
enhancing their premium products portfolio. Indian and multinational FMCG players are
leveraging India as a strategic sourcing hub for cost-competitive product development and
manufacturing to cater to international markets. (Muramalla, 2020)
Top FMCG Companies:

According to the study conducted by AC Nielsen, 62 of the top 100 brands are owned by MNCs,
and the balance by Indian companies. Fifteen companies own these 62 brands, and 27 of these are
owned by Hindustan Unilever.
The top ten India FMCG brands are:
1. Hindustan Unilever Ltd.
2. ITC (Indian Tobacco Company)

3. Nestlé India
4. Dabur India
5. Britannia Industries
6. GCMMF (AMUL)
7. Asian Paints (India)
8. Cadbury India
9. Procter & Gamble Hygiene and Health Care
10. Marico Industries
Some common FMCG product categories include food and dairy products, glassware, paper
products, pharmaceuticals, consumer electronics, packaged food products, plastic goods, printing
and stationery, household products, photography, drinks etc. and some of the examples of FMCG
products are coffee, tea, dry cells, greeting cards, gifts, detergents, tobacco and cigarettes, watches,
soups etc.
FMCG industry Economy:

FMCG industry provides a wide range of consumables and accordingly the amount of money
circulated against FMCG products is also very high. The competition among FMCG manufacturers
is also growing and as a result of this, investment in FMCG industry is also increasing, specifically
in India, where FMCG industry is regarded as the fourth largest sector with total market size of
US$13.1 billion, FMCG Sector in India is estimated to grow 60% by 2010. FMCG industry is
regarded as the largest sector in New Zealand which accounts for 5% of Gross Domestic Product
(GDP). (Steiner, 2010)
FMCG industry provides a wide range of consumables and accordingly the amount of money
circulated against F.M.C.G. products is also very high. The competition among F.M.C.G.
manufacturers is also growing and as a result of this, investment in F.M.C.G. industry is also
increasing, specifically in India, where F.M.C.G. industry is regarded as the fourth largest sector
with total market size of US$20.1 billion. F.M.C.G. Sector in India is estimated to grow 60% by
2011. F.M.C.G. industry is regarded as the largest sector in New Zealand which accounts for 5%
of Gross Domestic Product (GDP).
The FMCG sector has grown from USS 31.6 billion in 2011 to USS 52.75 billion in 2017-18. The
sector is further expected to grow at a Compound Annual Growth Rate (CAGR) of 27.86 per cent
to reach USS 103.7 billion by 2020. The sector is projected to grow 11-12 per cent in 2019. It
witnessed growth of 16.5 per cent in value terms between June September 2018, supported by
moderate inflation, increase in private consumption and rural income. It is forecasted to grow at
12-13 per cent between September December 2018. FMCG's urban segment is expected to have a
steady revenue growth at 8 per cent in FY19 and the rural segment is forecasted to contribute 15-
16 per cent of total income in FY19, Post GST and demonetization, modern trade share grew to
10 per cent of the overall FMCG revenue, as of August 2018.
Accounting for a revenue share of around 45 per cent, rural segment is a large contributor to the
overall revenue general the FMC sector India. Demand for quality goods and services have been
going up in rural areas of India, on the back of improved distribution channels of manufacturing
and FMCG companies. Urban segment accounted for a revenue share of 55 per cent in the overall
revenues recorded by FMCG sector in India.
FMCG Companies are looking to invest in energy efficient plants to benefit the society and lower
costs in the long term. Patanjali will spend USS 743.72 million in various food parks in
Maharashtra, Madhya Pradesh, Assam, Andhra Pradesh and Uttar Pradesh. Dabur is planning to
invest Rs 250-300 crore (USS 38.79-46.55 million) in FY19 for capacity expansion and is also
looking for acquisitions in the domestic market. Investment intentions, related to FMCG sector,
arising from paper pulp, sugar, fermentation, food processing, vegetable oils and vanaspati, soaps,
cosmetics and toiletries industries, worth Rs 916.13 billion (USS 15.55 billion) were implemented
between January-December 2018.
Growing awareness, easier access, and changing lifestyles are the key growth drivers for the
consumer market. The focus on agriculture, MSMEs, education, healthcare, infrastructure and tax
rebate under the Union Budget 2019-20 is expected to directly impact the FMCG sector. These
initiatives are expected to increase the disposable income in the hands of the common people,
especially the rural area, which will be beneficial for the sector.
Government Initiatives
Some of the major initiatives taken by the government to promote the FMCG sector in India are
as follows:
The minimum capitalization for foreign FMCG companies invest in India is USS100
million.
The Government of India has approved 100 per cent Foreign Direct Investment (FDI) in the cash
and carry segment and in single-brand retail along with 51 per cent FDI in multi-brand retail.
The Government of India has drafted a new Consumer Protection Bill with special emphasis on
setting up an extensive mechanism to ensure simple, speedy, accessible, affordable and timely
delivery of justice to consumers.
The Goods and Services Tax (GST) is beneficial for the FMCG industry as many of the FMCG
products such as Soap, Toothpaste and Hair oil now come under 18 per cent tax bracket against
the previous 23-24 per cent rate.
The GST is expected to transform logistics in the FMCG sector into a modern and efficient model
as all major corporations are remodeling their operations into larger logistics and warehousing.
Advantages to this Sector

Governmental Policy:
Indian Government has enacted policies aimed at attaining international competitiveness through
lifting of the quantitative restrictions, reducing excise duties, automatic foreign investment and
food laws resulting in an environment that fosters growth. 100% export oriented units can be set
up by government approval and use of foreign brand names is now freely permitted.
Central & State Initiatives:

Recently Government has announced a cut of 4% in excise duty to fight with the slowdown of the
Economy. This announcement has a positive impact on the industry. But the benefit from the 4%
reduction in excise duty is not likely to be uniform across F.M.C.G. categories or players. The
changes in excise duty do not impact cigarettes. (ITC, Godfrey Phillips), biscuits (Britannia
Industries, ITC) or ready-to-cat foods, as these products are either subject to specific duty or are
exempt from excise. Even players with manufacturing facilities located mainly in tax-free zones
will also not see material excise duty savings. Only large F.M.C.G.-makers may be the key ones
to bet and gain on excise cut.
Foreign Direct Investment (FDI):

Automatic investment approval (including foreign technology agreements within specified
norms), up to 100% foreign equity or 100% for NRI and Overseas Corporate Bodies (OCBS)
investment, is allowed for most of the food processing sector except malted food, alcoholic
beverages and those reserved for small scale industries (SSI). There is a continuous growth in net
FDI Inflow. There is an increase of about 150% in Net Inflow for Vegetable Oils & Vanaspati.
FMCG Sector History

FMCG are products that have a quick shelf turnover, at relatively low cost and don't require a lot
of thought, time and financial investment to purchase. Everything from toothpaste to processed
foods and health drinks to body care products comes from FMCG or alternatively called as
consumer packed goods. Three of the largest and best known examples of Fast-moving Consumer
Goods companies are Nestle, Unilever and Procter & Gamble
The Indian FMCG sector is an important contributor to the country's GDP. It is the fourth largest
sector in the economy and is responsible for 5% of the total factory employment in India and
captures a market capitalization of around 60,000 crore rupees. This has been due to liberalization,
urbanization and increase in the disposable incomes and altered lifestyle of the people. The lower-
middle income group accounts for over 60% of the sector's sales and rural markets account for
56% of the total domestic FMCG demand. FMCG sector is expected to grow by over 60% by 2011
and by 2015, the sector is predicted to scale up toUSS33.4 billion.
In India, companies like ITC, H.U.L., Colgate, Cadbury and Nestle have been a dominant force in
the F.M.C.G. sector well supported by relatively less competition and high entry harriers (import
duty was high). These companies were, therefore, able to charge a premium for their products. In
this context, the margins were also on the higher side. With the gradual opening up of the economy
over the last decade, F.M.C.G. companies have been forced to fight for a market share. In the
process, margins have been compromised.
Road Ahead
Rural consumption has increased, led by a combination of increasing incomes and higher
aspiration levels; there is an increased demand for branded products in rural India. The rural FMCG
market in India is expected to grow to USS 220 billion by 2025 from US$ 23.6 billion in FY18. In
FY18, FMCG's rural segment contributed an estimated 10 per cent of the total income and it is
forecasted to contribute 15-16 per cent in FY 19. FMCG sector is forecasted to grow at 12-13 per
cent between September December 2018.
On the other hand, with the share of unorganized market in the FMCG sector falling, the organized
sector growth is expected to rise with increased level of brand consciousness. also augmented by
the growth in modern retail.
Another major factor propelling the demand for food services in India is the growing youth
population, primarily in the country's urban regions. India has a large base of young consumers
who form the majority of the workforce and, due to time constraints, barely get time for cooking.
Online portals are expected to play a key role for companies trying enter the hinterlands. The
Internet has contributed in a big way, facilitating a cheaper and more convenient means to increase
a company's reach. It is estimated that 40 per cent of all FMCG consumption in India will be online
by 2020. The online FMCG market is forecasted to reach USS 45 billion in 2020 from USS 20
billion in 2017.
It is estimated that India will gain USS 15 billion a year by implementing the Goods and Services
Tax. GST and demonetization are expected to drive demand, both in the rural and urban areas, and
economic growth in a structured manner in the long term and improve performance of companies
within the sector. (Bhutoria, 2021)
Research Problem
The FMCG industry in India has gained in popularity over the last 3-4 years, mainly
because of changing lifestyles and eating habits of people. The present study focus on Equity
analysis of selected FMCG companies. The profitability and liquidity trend associated with those
companies share price were measured with relevant tools. We have many no of studies in this
perspective but they are in different periods and different sectors. The present study is only
considering top five FMCG companies based on their market capitalization.
Need of the Study

To start any business capital plays major role. Capital can be acquired in two ways by issuing
shares or by taking debt from financial institutions or borrowing money from financial institutions.
The owners of the company have to pay regular interest and principal amount at the end. Stock is
ownership in a company, with each share of stock representing a tiny piece of ownership. The
more shares you own, the more of the company you own. The more shares you own, the more
dividends you earn when the company makes a profit.
Objective of the Study

FMCG companies hold great importance for economy as well as social development of the
country. The present study is conducted to evaluate the financial performance of the five leading
FMCG companies, over a period of 5 years (2014-15 to 20118-19).
The specific objectives of the study are:
• To study the profitability and liquidity trend of the selected FMCG companies.
• To make comparative analysis of the selected units based on the various ratios.
CHAPTER – 02
REVIEW OF LITERATURE
The review of literature guides then researcher for getting better understanding of methodology
used, limitations of various available estimation procedures and database, and lucid interpretation
and reconciliation of the conflicting results. Besides this, the review of empirical studies explores
the avenue for future and present research efforts related to the subject matters. In case of
conflicting and unexpected results, the research can take the advantages of knowledge of their
researchers simply through the medium of their published works.
Literature review
An article authored by Sahu (2002) shows that for the successful functioning of a firm, the role
of management is required to focus on maintaining short term liquidity in a scientific manner. The
study revealed that the short financial position of the companies in FMCG sector was not
satisfactory. An empirical study was conducted by Vishnani and Shah (2007) covering the Indian
Consumer Electronics Industry from 1994-95 to 2004-05. From the results of regression analysis
it was concluded that working capital management plays an important role in the profitability of
an any company. Higher investments in current assets could not yield proper return for the firm
which hampered the liquidity and profitability, because huge amount of fund became idle, which
thus could not generate any return.
Bhunia(2010) In his study on paper producing companies suggested that improper liquidity is
major threat for the survival of the firm. Payment of short term obligations reflects the liquidity
position of any company.
According to Marimuthu(2012), The ratio analysis technique gives a clear picture about the
financial position of any firm. He has suggested in his study that the sample companies reflect up
to the mark the current and quick ratios except the interest coverage ratio. His study concluded
that the firms should focus on their working capital management properly and maintain
receivables, liquidity and payables accordingly.
Panigrahi(2013) has suggested that small firms maintain their liquidity more properly than big
firms. He has covered a period of ten years in his study. He has focused mainly on the short term
financial position of the firms.
R. Amsaveni and S. Gomathi. (2013) found that through economic analysis the GNP, Interest
Rate, Exchange rate, FER, Agriculture Production, Govt Receipts and Expenses has a growth rate
during the study period. The co. analysis done with the help of ratio analysis indicates that Colgate
and HUL Companies are financially in satisfactory position during the study period.
Ranjit Kumar Paswan, (2013) found that ITC, Emami. Dabur, and Colgate has been able to repay
its debt during the study period. DTR of Nestle and Colgate show the efficiency of debt
management Debt to Total Asset Ratio of Emami and Dabur shows that more asset of the co. is
financed through debt.
A study was carried by Hetalgaglani and Smita Rao (2015) on financial health of Sun
Pharmaceutical Industry Ltd by observing the liquidity and profitability through the application of
Altman's Z-score test which depicted a moderate correlation between liquidity and profitability
and the sample firms were in green zone.
Ms. J. Hema and V. Ariram. (2016) found that Indian Pharmaceutical industry has a high growth
rate and its sales and net profit also shows increasing trend and the company analysis revealed that
its financial performance through the financial ratio. which indicates that Lupin and Torrent
Pharma are financially in satisfactory position during the study period.
Dhanabhakyam and Saroja (2016), "Financial performance of select FMCG companies using z
score model, the study was based on the objective, to analyses the performance of FMCG company
in India and predict the solvency of model which is based on discriminate analysis. It also proposes
to identify the company's financial indicators like working capital management, retained earnings,
BIT and total assets would be used. The trends will help the company and initiate steps to avoid
financial distress and bankruptcy. Therefore the study of financial ratios and observing trends will
help the management in evaluating the performance of the company.
Dr. Amit Kumar Singh, Preeti Bansal (2016) conducted a study on Impact of Financial Leverage
on Firm's Performance and Valuation: a Panel Data Analysis. To assess empirically (from 2007 to
2016) the impact of financial leverage on the performance and valuation of firms in the selected
58 BSE FMCG firms that constitute the S&P BSE FMCG Index. The results showed that financial
leverage has significant and negative impact on performance and valuation when firm's financial
performance indicators are ROA and EVA and valuation indicator is Tobin's Q. Out of the control
variables, R&D spending, size, growth in sales and WACC significantly impact the firm's
performance and valuation. Remaining control variables like tangibility and profitability are found
to have insignificant impact on firm's financial performance and valuation.
CHAPTER- 03
RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. It may be understood
as a science of studying now research is done systematically. In that various steps, those are
generally adopted by a researcher in studying his problem along with the logic behind them.
The procedure by which researcher go about their work of describing, explaining, and predicting
phenomenon are called methodology".
Research is often described as an active, diligent and systematic process of inquiry aimed at
discovering, interpreting and revising facts. This intellectual investigation produces a greater
understanding of events, behavior or theories and makes practical applications through laws and
theories. The term research is also used to describe a collection of information about a particular
subject, and is usually associated with science and scientific method.
Research design or research methodology is the procedure of collecting, analyzing and interpreting
the data to diagnose the problem and react to the opportunity in such a way where the costs can be
minimized and the desired level of accuracy can be achieved to arrive at a particular conclusion.
The methodology used in the study for the completion of the project and the fulfillment of the
project objectives.
Sources of Research Data

There are mainly two sources through which the data required for the research is
collected.
1. Primary Data
This consists of original information, which is collected first hand, and for first time which is
original in nature. It can be collected in following ways:
❖ Observation
❖ Focus group
❖ Survey
2. Secondary Data
Researchers usually start by gathering secondary data through the company's internal data base,
which provides a good starting point. However, the company can also tap at wide assortment of
external information sources ranging from company public and libraries to government business
and publications.
The secondary data are those which have already collected and stored. Secondary data easily get
those secondary data from record, annual report of the company etc.
Data Collection:
The study is completely based on the secondary data and the data is being collected from
company's annual report, websites, journals and by the use of various of search engines.
Period of the Study

Present study conducted to evaluate Equity Analysis of five leading FMCG Companies of India.
The study is conducted for a period of 5 years from 2013-14 to 2017-18.
Tools used for analysis

For the Data Analysis. Ratios like Profitability Ratios, Liquidity Ratios and KRUSKAL WALLIS
test have been used.
Ratio Analysis:
Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational
efficiency, and profitability by comparing information contained in its financial statements.
The present study took two main ratios for evaluating performance. First one is profitability and
second one is liquidity ratio.
1. Profitability Ratio:
A profitability ratio is a measure of profitability, which is a way to measure a company's
performance. Profitability is simply the capacity to make a profit, and a profit is what is left over
from income earned after you have deducted all costs and expenses related to earning the income.
The formulas you are about to learn can be used to judge company's performance and to compare
its performance against other similarly-situated companies.
For this present study some important Profitability Ratios are:
a) Net profit ratio:

Net profit ratio (NP ratio) expresses the relationship between net profit after taxes and sales. This
ratio is a measure of the overall profitability net profit is arrived at after taking into accounts both
the operating and non-operating items of incomes and expenses. The ratio is overall measure of
firm's profitability.
Following formula is used to calculate net profit ratio:
Net Profit Ratio = Net Profit After Tax

X 100
Net Sales
It is expressed in percentage. Higher the net profit ratio, higher is the profitability of the
business.
b) Return on Assets Ratio (ROA):

Return on assets is a profitability ratio that provides how much profit a company is able to generate
from its assets. In other words, return on assets (ROA) measures how efficient a company's
management is in generating earnings from their economic resources assets on their balance sheet.
Following formula is used to calculate Return on Assets Ratio:

Return on Assets Ratio = Net Profit After Tax
Average Total
Assets
The average total assets can be calculated by adding the total assets of the current year to the total
assets of the previous year and divide by two.
c) Return on Net Worth Ratio

It is the ratio of net profit to shareholder’s investment. It is the relationship between net profit (after
interest & tax) and shareholder’s fund. The two basic component of this ratio are net profit and
shareholder’s fund. Shareholder’s fund includes equity share capital, preference share capital, free
reserve and surplus.
Following formula is used to calculate Return on Net Worth Ratio:
Return on Net Worth Ratio = Net Profit After Tax & Interest
Shareholder’s Fund
Where, Shareholder’s fund = Equity + Reserves
2. Liquidity Ratio:
A liquidity ratio is a financial ratio that indicates whether a company's current assets will be
sufficient to meet the company's obligations when they become due. Liquidity ratios analyze the
ability of a company to pay off both its current liabilities as they become due as well as their long-
term liabilities as they become current. In other words, these ratios show the cash levels of a
company and the ability to turn other assets into cash to pay off liabilities and other current
obligations.
a) Current Ratio:
Current ratio may be defined as the relationship between current assets and current liabilities. This
ratio, also known as working capital ratio, is a measure of general liquidity and is most widely
used to make the analysis of a short-term financial position or liquidity of firm.
It is calculated by dividing the total of current assets by total of the current liabilities.
Current Ratio = Current Assets
Current Liabilities
b) Quick Assets:
Quick ratio may be defined as the relationship between quick/liquid assets and current quick
liabilities. This ratio, also known as Liquid ratio, is a more rigorous test of liquidity than the current
ratio.
It is calculated by dividing the total of quick assets by total of the current liabilities.
Quick Ratio = Quick Assets
Current Liabilities
Quick Assets = Current Assets - (Inventories + Prepaid Expenses)
c) Inventory Turnover Ratio:

Inventory turnover ratio may be defined as the relationship between cost of goods sold and the
amount of average inventory. This ratio, also known stock turnover ratio, it indicates the firm
efficiency of the firm in producing and selling its product. It is calculated by dividing the net sales
by inventories.
,cInventory
r Turnover Ratio = Net Sales
Inventories
CHAPTER- 04
DATA ANALYSIS & INTERPRETATION
Data analysis is a process of inspecting, cleansing, transforming, and modelling data with the goal
of discovering useful information, informing conclusions, and supporting decision-making. Data
analysis has multiple facts and approaches, encompassing diverse techniques under a variety of
names, and is used in different business, science, and social science domains. In today's business
world, data analysis plays a role in making decisions more scientific and helping businesses
operate more effectively.
Data analysis is considered to be important step and heart of the research work. After collection of
data with the help of relevant tools and techniques, the next logical step, is to analyze and interpret
data with a view to arriving at empirical solution to the problem. The data analysis for the present
research was done quantitatively with the help of both ratio analysis & KRUSKAL WALLIS test.
A. Profitability Ratio Analysis with Kruskal Wallis Test

1. Net Profit:
Following formula is used to calculate net profit ratio:
Net Profit Ratio = Net Profit After Tax

X 100
Net Sales
Years HUL ITC Ltd. Marico Ltd. Dabur Britannia Ltd.

2019-20 15.16 27.62 13.89 19.17 10.18
2018-19 14.07 25.44 17.37 18.86 10.02
2017-18 13.31 26.72 14.18 16.33 9.42
2016-17 14 26.31 11.64 14.04 8.67
2015-16 13.8 26.43 15.67 13.8 5.86
Net Profit Ratio
30
25
20
15
10
0
2019-20 2018-19 2017-18 2016-17 2015-16
HUL ITC Ltd. Marico Ltd. Dabur Britannia Ltd.
Hypothesis Testing
For the test of hypothesis Kruskal Wallis test has been calculated as under.
Hypothesis Test Summary

Null Hypothesis Test Sig. Decision
1 The distribution of NPR is the same Independent-Samples Kruskal- .001 Reject the null hypothesis.
across categories of Groups. Wallis Test
Asymptotic significances are displayed. The significance level is .050.
Analysis
From Above Kruskal Wallis table, it can be analyze that the significant value is .050 and the
calculated significant value for this ratio is .001. So null hypothesis is rejected and alternative
hypothesis is accepted, it means there is significant difference in net profit ratio of selected FMCG
units during the study period.
2. Return on Assets Ratio:
Following Formula is used to calculate Return on Assets Ratio:
Return on Assets Ratio = Net Profit After Tax
Average Total
Assets
Marico Britannia
Years HUL ITC Ltd. Dabur
Ltd. Ltd.
2019-20 32.83 19.25 18.45 19.43 22.77
2018-19 31.05 19.66 23.22 20.64 24.94
2017-18 29.76 21.01 20.87 23.07 27.09
2016-17 32.4 27.27 17.1 22.39 28.9
2015-16 31.51 36.18 18.29 22.7 20.96
Return on Assets
40
35
30
25
20
15
10
5
0
2019-20 2018-19 2017-18 2016-17 2015-16

1 The distribution of ROA is the same Independent-Samples Kruskal- .009 Reject the null hypothesis.
Analysis
hypothesis is accepted, it means there is significant difference in return on assets ratio of selected
FMCG units during the study period.
3. Return on Net Worth Ratio:
Following formula is used to calculated Return on Net Worth Ratio:
Return on Net Worth Ratio = Net Profit After Tax & Interest
Shareholders’ Fund
Marico Britannia
Ltd. Ltd.
2019-20 74.02 21.83 23.61 25.36 29.29
2018-19 69.18 22.49 28.81 27.29 31.67
2017-18 112.19 29.89 27.01 32.71 44.05
2016-17 115.85 31.25 23.26 32.64 50.37
2015-16 118.01 33.51 29.25 35.33 43.33
Return on Net Worth

140
120
100
80
60
40
20
0
2019-20 2018-19 2017-18 2016-17 2015-16
Hypothesis Testing

1 The distribution of RONW is the Independent-Samples Kruskal- .002 Reject the null hypothesis.
same across categories of Groups. Wallis Test
Analysis
hypothesis is accepted, it means there is significant difference in return on net worth ratio of
selected FMCG units during the study period.
B. Liquidity Ratio Analysis with KRUSKAL WALLIS test

1. Current Ratio:
It is calculated by dividing the total of current assets by total of the current liabilities.
Current Ratio = Current Assets
Current Liabilities
Marico Britannia
Ltd. Ltd.
2019-20 1.28 2.76 2.45 1.58 2.02
2018-19 1.3 3.59 2.45 1.47 1.84
2017-18 1.02 1.65 1.9 1.32 1.05
2016-17 1.05 2.05 2.02 1.26 1.18
2015-16 1.02 1.81 1.42 1.73 0.89
Current Ratio
4
3.5
3
2.5
2
1.5
1
0.5
0
2019-20 2018-19 2017-18 2016-17 2015-16

Hypothesis Testing

1 The distribution of CR is the same Independent-Samples Kruskal- .006 Reject the null hypothesis.
Analysis
hypothesis is accepted, it means there is significant difference in current ratio of selected FMCG
2. Quick Ratio
It is calculated by dividing the total of quick assets by total of the current liabilities.
Quick Ratio = Quick Assets

Current Liabilities
Marico Britannia
Ltd. Ltd.
2019-20 1.01 1.94 1.07 1.01 1.59
2018-19 0.97 2.44 1.12 0.98 1.28
2017-18 0.75 1.07 1.03 0.9 0.76
2016-17 0.75 1.37 0.09 0.82 0.9
2015-16 0.7 1.17 0.69 1.24 0.51
Quick Ratio
3
2.5
1.5
0.5
0
2019-20 2018-19 2017-18 2016-17 2015-16
Hypothesis Testing

1 The distribution of QR is the same Independent-Samples Kruskal- .054 Retain the null hypothesis.
Analysis
calculated significant value for this ratio is .054. So null hypothesis is accepted. It means there is
no significant difference in return on quick ratio of selected FMCG units during the study period.
3. Inventory Turnover Ratio
It is calculated by dividing the net sales by inventories.
Inventory Turnover Ratio = Net Sales

Inventories
Marico Britannia
Ltd. Ltd.
2019-20 14.63 5.61 3.93 7.93 15.64
2018-19 13.5 5.09 4.47 8.82 13.96
2017-18 12.28 4.32 6.44 9.34 20.69
2016-17 11.83 4.65 5.91 9.36 20.75
2015-16 10.56 4.51 5.54 8.72 17.19
Inventory Turnover Ratio

25
20
15
10
0
2019-20 2018-19 2017-18 2016-17 2015-16
Hypothesis Testing

1 The distribution of ITR is the same Independent-Samples Kruskal- .000 Reject the null hypothesis.
Analysis
hypothesis is accepted, it means there is significant difference in current ratio of selected FMCG
Summary Findings
1. Net Profit of ITC Ltd. shows increasing trend while net profit of Britannia Industries is less
fluctuating.
2. Return of Assets Ratio is highly decreasing of ITC Ltd. Other companies shows less
fluctuating trend.
3. Return of Net Worth Ratio of Hindustan Unilever Ltd. is highly decreasing from the year
2015-16 to 2018-19 and slightly increased in 2019-20.
4. Current Ratio trend of Hindustan Unilever Ltd. shows vary less while ITC Ltd. have
fluctuating trend.
5. Quick Ratio of Hindustan Unilever Ltd. shows increasing trend year by year.
6. Inventory Turnover Ratio of Hindustan Unilever Ltd. is slightly increasing while ITC Ltd.
trend shows vary less as well as less fluctuating.
CHAPTER- 05
CONCLUSION
Conclusion:
Ratio analysis is the most important measurable technique used to measure the profitability and
liquidity position of the respective companies in the market.
It can be conclude that, there is significant difference in the profitability as well as Liquidity of
performance of the selected FMCG units during the study period. Means every company has
different profitability among the selected companies. Form this analysis it is found that ITC
Limited shows more liquidity compared with other FMCG companies taken for the study.
Limitations & Findings of the study:
The major limitations of the study are as under:
1. The study is mainly based on secondary data derived from the annual reports of the selected
units. The reliability and the findings are contingent upon the data published in annual
report.
2. The study is limited to 5 years only.
3. There are many approaches for evaluation of financial performance. There are no some
common views among experts.
4. Accounting ratios have its own limitations, which also applied to the study.
5. As the study is purely based on 5 leading FMCG companies, so the results of the study are
only indicative and not conclusive.
APPENDICES
Bibliography
Books & Journals
1. Kenton, W. (2021, 05 15). Fast-Moving Consumer Goods (FMCG). Retrieved from

investopedia: https://www.investopedia.com/terms/f/fastmoving-consumer-goods-
fmcg.asp
2. Group, I. (2019, 03 16). FMCG Sector - Steady growth. Retrieved from IIFL
SECURITIES: https://www.indiainfoline.com/article/general-blog/fmcg-sector-steady-
growth-on-the-cards-119031500246_1.html
3. India, P. (2013). The Indian FMCG sector. The innovation imperative.
4. Assocham. (2017, 11 15). Indian retail market expected to reach $1 trillion by 2020.
Retrieved from The Economic Times:
https://economictimes.indiatimes.com/industry/services/retail/indian-retail-market-
expected-to-reach-1-trillion-by-2020/articleshow/61662729.cms
5. Bais, D. S. (2014). Exploring rural markets: Be innovative. Karnataka: IJSR -
INTERNATIONAL JOURNAL OF SCIENTIFIC RESEARCH.
6. Bhutoria, P. (2021, 03 26). India’s booming FMCG industry. Retrieved from Making
Smalltalk: https://blog.smallcase.com/indias-booming-fmcg-industry/
7. Muramalla, V. S. (2020). Breakthrough Opportunities and Competitive Advantages of
FMCG Markets in India: An Overview. Business Sciences International Research
Journal, Volume 1, Issue 2, 2013.
8. Steiner, A. (2010, 06 30). FMCG Industry. Retrieved from Economy Watch:
https://www.economywatch.com/fmcg-industry
9. I.M Pandey, Financial management, Ninth Edition, Vikas Publishing house pvt Ltd.
10. R.K. Sharma & Gupta, Management Accounting, Kalyani Publisher.
11. Bollerslev. T (1986) “Generalized Autoregressive Conditional Hetero skedasticity”,
Journal of Econometrics, Volume 31, P.No-307-327.
12. Graham Benjamin, and Dodd, David. Security Analysis, 2nd Edition, New York: McGraw-
Hill Book Co., 1940.
13. Guide to Analyzing Companies/ Bob Vause HD30,28, V38 2005
Reports
1. Annual Reports of Hindustan Unilever Limited 2019-20

6. Annual Report of ITC Limited 2019-20
11. Annual Reports of Marico Limited 2019-20
16. Annual Reports of Dabur 2019-20
21. Annual Reports of Britannia Industries 2019-20
Websites
1. www.investopedia.com
2. www.Wikipedia.com
3. https://www.financetalking.com/popup-financial-glossary.php?id=372
4. https://www.academia.edu/32505100/A_STUDY_ON_EQUITY_ANALYSIS_OF_SEL
ECTED_FMCG_COMPANIE_LISTED_ON_NSE
5. https://www.socsistatistics.com/tests/Kruskal Wallis/default2.aspx
6. https://www.moneycontrol.com/personal-finance/
7. https://www.researchgate.net/post/What_is_the_importance_of_df_and_F_in_one_way_
ANNOVA_analysis
8. https://www.nseindia.com/
9. https://www.hul.co.in/
10. https://www.itcportal.com/sab-saath-badhein/default.html
11. https://www.dabir.com/
12. https://www.britannia.co.in/
13. https://www.statisticshowto.datasciencecentral.com/probability-and-statistics/f-statistics-
value-test/

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A Dissertation report on

“A Study on Financial Ratio Analysis of selected FMCG companies

in partial fulfillment for the award of the degree of

Under the supervision of

I have complied with all the formalities prescribed in this regard.

Objective of the study:

The specific objectives of the study are:

S.no. Topics Page no.

Chapter- 02 ✓ Review of literature

Chapter- 03 ✓ Research Methodology

Chapter- 04 ✓ Data Analysis and Interpretation

The industry is highly competitive due to presence of multi-national companies, domestic

FMCG Industry in India

Growth prospects of FMCG in Rural India

Impact of FMCG sector in India

Top FMCG Companies:

The top ten India FMCG brands are:

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)

7. Asian Paints (India)

9. Procter & Gamble Hygiene and Health Care

10. Marico Industries

FMCG industry Economy:

Advantages to this Sector

Central & State Initiatives:

Foreign Direct Investment (FDI):

FMCG Sector History

Need of the Study

Objective of the Study

Sources of Research Data

Period of the Study

Tools used for analysis

For this present study some important Profitability Ratios are:

a) Net profit ratio:

Following formula is used to calculate net profit ratio:

Net Profit Ratio = Net Profit After Tax

b) Return on Assets Ratio (ROA):

Following formula is used to calculate Return on Assets Ratio:

c) Return on Net Worth Ratio

Following formula is used to calculate Return on Net Worth Ratio:

Where, Shareholder’s fund = Equity + Reserves

Quick Assets = Current Assets - (Inventories + Prepaid Expenses)

c) Inventory Turnover Ratio:

DATA ANALYSIS & INTERPRETATION

A. Profitability Ratio Analysis with Kruskal Wallis Test

Net Profit Ratio = Net Profit After Tax

Years HUL ITC Ltd. Marico Ltd. Dabur Britannia Ltd.

HUL ITC Ltd. Marico Ltd. Dabur Britannia Ltd.

Hypothesis Test Summary

2. Return on Assets Ratio:

Following Formula is used to calculate Return on Assets Ratio:

Return on Assets Ratio = Net Profit After Tax

HUL ITC Ltd. Marico Ltd. Dabur Britannia Ltd.

Hypothesis Test Summary

Return on Net Worth

HUL ITC Ltd. Marico Ltd. Dabur Britannia Ltd.

Hypothesis Test Summary

B. Liquidity Ratio Analysis with KRUSKAL WALLIS test

Current Ratio = Current Assets

HUL ITC Ltd. Marico Ltd. Dabur Britannia Ltd.

Hypothesis Test Summary

Quick Ratio = Quick Assets

HUL ITC Ltd. Marico Ltd. Dabur Britannia Ltd.