SEMESTER: 1

SUBJECT:
ACCOUNTING FOR MANAGERS

ASSIGNMENT:
Analysis of the Annual Report of Hindustan Unilever for
the Financial Year 2021

Submitted To: Submitted By:

Prof. Aditya Tripathi Simran Dua (21BSP1088)
Shivam Kumar (21BSP1052)
Shubham Vij (21BSP1079)
Pragya Prajapati (21BSP0949)
Sakshi Agarwal (21BSP1021)
Shivam Verma (21BSP2770)
Objectives of the Report

1. To analyse Income Statement, Balance Sheet and Statement of Cash Flow.

2. To compare the performance of FY2021 with previous years.
3. Ratio analysis of the performance of FY2021.
Research Methodology
1. Source of Data: The data collected is from secondary resources, i.e., information that has already been
collected by other researchers
2. Methods for analysing data: Both Qualitative and Quantitative Methods of Analysing have been used to
analyse the reports.
3. Type of Research: Descriptive research methodology was used for the research.
Description of Facts
Analysis
Income Statement Analysis
 Operating income during the year rose 18.2% on a year-on-year (YoY) basis.
 The company's operating profit increased by 17.9% YoY during the fiscal. Operating
profit margins witnessed a fall and stood at 24.2% in FY21 as against 24.3% in FY20.
 Depreciation charges increased by 7.2% and finance costs decreased by 0.8% YoY,
respectively.
 Other income declined by 35.1% YoY.
 Net profit for the year grew by 18.4% YoY.
 Net profit margins during the year grew from 16.7% in FY20 to 16.9% in FY21.
Balance Sheet Analysis
 The company's current liabilities during FY21 stood at Rs 111 billion as compared to Rs
93 billion in FY20, thereby witnessing an increase of 19.2%.
 Current assets rose 15% and stood at Rs 142 billion, while fixed assets rose 621% and
stood at Rs 545 billion in FY21.
 Overall, the total assets and liabilities for FY21 stood at Rs 687 billion as against Rs 199
billion during FY20, thereby witnessing a growth of 246%.

Cash Flow Statement Analysis

 HUL's cash flow from operating activities (CFO) during FY21 stood at Rs 92 billion, an
improvement of 20.2% on a YoY basis.
 Cash flow from investing activities (CFI) during FY21 stood at Rs -15 billion on a YoY
basis.
 Cash flow from financial activities (CFF) during FY21 stood at Rs -93 billion on a YoY
basis.
 Overall, net cash flows for the company during FY21 stood at Rs -14 billion from the Rs
26 billion net cash flows seen during FY20.

Findings & Observations

Comparative Analysis of Income statement

 Gross profit Gross profit of company has increased by 17% in 2021 as compare to 2020.
 Operating income After deduction of Sales general & deprecation from the gross profit
we will get operating income of 1,09,620 in 2021 which is 24% increase as compared to
2020.

 Profit before tax has increased by 16% in 2021 from 2020.

 Net income: As shown in figure we can see that net income of financial year 20-21 is
increased by 19% as compare to 19-20.
Comparative Analysis of Balance sheet

 Total current assets: In the financial year 2020-2021, total current assets are 142,170 & in
previous year 2019-2020 total current assets was 123,210. So, we can say that Total current
assets of 2021 are increased by 15%.

  Total non-current assets: As compare to last 2-year financial year we can see
that a total non-current asset of 2021 is increased by 596%.
 Total assets: In 2020 the total assets were 201,530 but in 2021 total assets was increased
by 241% that is 687,570.

 Total liabilities HUL total liabilities have been increase by 66% in 2021 as compare to
2020.
 Total current liabilities of HUL have increased by 19% in 2021 as compare to 2020 &
as show in figure if we compare the total current liability of HUL in 2018 & 2019 then
we can say that in 2019 current liability was decrease by 2% as compare to 2018. As
shown in figure we can see that the Total current liabilities have been increase by 12% in
2021 as compare to 2020.
 Noncurrent liabilities As shown in the figure the noncurrent liabilities of HUL has been
increase by 260% in 2021 as compare to 2020 which means it denotes a higher financial
risk of the company.

 Total equity as shown in the figure the total

equity has been increase from 473% in 2021
as compare to 2020.

Comparative Analysis of Statement of Cash Flow

 Cash flow from operating activities (CFO) As shown in the figure the cash flow from
operating activities has been decrease by 11% in 2021 as compared to 2020.

  Cash flow from financing activities: As shown in the figure the cash flow from
financing activities has decreased by 10% in 2021 as compared to 2020.
 Cash flow from investing activities: As shown in the figure the cash flow from
investing activities has drastically decreased in 2021, whereas it grew a lot from 2019 to
2020.

 Free cash flow (FCF): Free cash flow has been decreased by 7% in 2021 of HUL as
compare to 2020.
 Ending Cash: The cash at end of period has been decrease by 375% in 2021.
  Starting cash: The cash at the beginning of the period has been increase by 414% in
2021.
RATIO ANALYSIS
PER SHARE RATIOS:
1) Basic EPS = (Net income - preferred dividends) ÷ weighted average of common shares
outstanding during the period. HUL’s Basic EPS in FY 2020-21 = 33.85 and in FY 2019-20 =
31.13
2) Diluted EPS= (Net Income−Preferred Dividends)/ (Weighted Average Shares Outstanding+
Conversion of dilutive securities). HUL’s Diluted EPS in FY 2020-21 = 33.85 and FY in 2019-
20 = 31.12
3) Cash EPS= Operating Cash Flow / Diluted Shares Outstanding. HUL’s Cash EPS in FY
2020-21 = 38.15 and in FY 2019-20 = 35.54
4) Book Value per Share= Total Equity − Preferred Equity/Total Shares Outstanding. HUL’s
Book value per share in FY 2020-21 = 201.85 and in FY 2019-20 = 37.18
5) Dividend per Share= Sum of dividends over a period − special one-time dividends in the
period / Ordinary shares outstanding for the period. HUL’s DSP in FY 2020-21 = 31 and in FY
2019-20 = 34.50
6) Revenue per share= Revenue per Share = Total revenue/Average total shares outstanding.
HUL’s RPS in FY 2020-21 = 195.73 and in FY 2019-20 = 179.56
7) PBT per Share- PBT per share = (operating profit-interest payable) + interest earned. HUL’s
PBT per share in FY 2020-21 = 44.64 and in FY 2019-20 = 42.09
VALUATION RATIOS:
1) Enterprise Value= Market capitalization (the current stock price x the number of outstanding
stock shares) +Total Debt− Cash and cash equivalents. HUL’s EV in FY 2020-21 = 566,917 and
in FY 2019-20 = 491383.40
2) EV/Net Operating Revenue= Enterprise Value/Net operation Revenue. HUL’s EV/NOR in
FY 2020-21 = 12.33 and in FY 2019-20 = 12.67
3) EV/EBITDA= EV/ earnings before interest, taxes, depreciation, and amortization. HUL’s
EV/BBITDA in FY 2020-21 = 47.89 and in FY 2019-20 = 47.55
4) Retention Ratios= Retained Earnings/ Net Income. HUL’s Retention ratio in FY 2020-21 = -
10.77 and in FY 2019-20 = 22.88
5) Price/BV= Market Price per Share/Book Value per Share. HUL’s Price/ BV in FY 2020-21 =
12.04 and in FY 2019-20 = 61.81
6) Net Operating Revenue= Real estate revenue − Operating expenses. HUL’s Net operation
revenue in FY 2020-21 = 12.42 and in FY 2019-20 = 12.80
8) Earnings Yield= EPS / Price = 1 / (P/E Ratio). HUL’s Earnings Yield in FY 2020-21 = .01
and in FY 2019-20 = .01
PROFITABILITY RATIOS:
1) PBDIT Margin= (Profit before interest and tax + Depreciation and amortization)/revenue
from sales x 100. HUL’s PBDIT Margin in FY- 2020-21 = 25.73% and in FY 2019-20 =
26.64%. It has decreased over the last year which means the company’s operating profit as per
the revenue has decreased.
2) PBIT= (Profit before interest and tax/ revenue from sales) x 100. HUL’s PBIT Margin in FY
2020-21 = 23.53% and in FY 2019-20 = 26.64%. The decrease in the ratio indicates that the
operating profit of the company has decreased.
3) PBT Margin= (Profit before tax/ Revenue from operations) x 100. HUL’s PBT Margin in FY
2020-21 = 22.80% and in FY 2019-2020 = 23.44.
4) Net Profit Margin= (Net Profit/ revenue from operation) x 100. HUL’s Net Profit Margin in
FY 2020-21 = 17.29% and in FY 2019-20 = 17.37.
5) Return on Equity Ratio= (Net Profit/ Shareholders equity) x 100. HUL’s ROE ratio in FY
2020-21= 16.76% and in FY 2019-20= 83.89%. There is a huge decrease in the ROE of HUL
because the total equity of HUL in 2021 was almost 7 times more than in 2020 but its net profit
was almost the same for both the years.
6) Return on capital employed Ratio= (Profit before tax and interest/ overall capital employed
(total assets – current liabilities)) x 100. HUL’s ROCE Ratio in FY 2020-21 = 18.31 and in FY
2019-20 = 89.49%. There is a huge decrease in ROCE because, there was a huge increase in the
total assets of HUL in FY 2020-21 which led to increase in overall capital employed, whereas
there was no significant increase in profit before tax and interest.
7) Return on net assets ratio= (Formula is Net Profit/Total Assets) x 100. HUL’s RONA Ratio
in FY 2020-21 = 11.67% and in FY 2019-20 = 34.37%

LIQUIDATION RATIOS:
1) Current Ratio= (Current assets/Current liabilities). HUL’s Current ratio in FY 2020-21 =
1.26 and in FY 2019-20 = 1.31. The decrease in the current ratio indicates that the ability of
HUL to pay off its current liability in 2020-21 was less than in FY 2019-20.
2) Quick Ratio= (Current assets – Inventory – prepaid expenses)/Current liabilities. HUL’s
Quick Ratio in FY 2020-21 = .95 and in FY 2019-20 =1.02.
3) Inventory turnover ratio= Cost of goods sold/Average inventory ((inventory in begging –
inventory at end)/2). HUL’s Inventory Ratio in FY 2020-21= 13.60 and in FY 2019-20 = 14.71
4) Dividend Payout Ratio= Dividends Paid/ Net Profit. HUL’s Dividend payout ratio in FY
2020-21 = 110.77 and in FY 2019-21 = 77.11
5) Earnings Retention Ratio= (Net Profit/Number of total shares)-(Dividends/share). HUL’s
Earnings retention ratio in FY 2020-21 = -10.77 and in FY 20219-20 = 22.89

Conclusion
Hindustan Unilever’s performance was strong on both the top-line and bottom-line. Despite
challenging times, in FY’21 its business ecosystem has withstood the disruption and
demonstrated agility and resilience across the value chain. HUL had delivered on its multi
stakeholder business model.
Its purpose-led brands and capabilities were further strengthened during the year and this
positions us well to serve our consumers during this turbulent period. HUL’s focus firmly
remains behind delivering volume led competitive growth. The recent surge in COVID cases is
of serious concern and ensuring safety and wellbeing of people remains our top priority.
References
1. HUL Annual Report 2020 - 21

2. ANNUAL REPORT 2019-20 (hul.co.in)

3. Hindustan Unilever Balance Sheet, Hindustan Unilever Financial Statement & Accounts
(moneycontrol.com)