Financial Reporting Assignment

Mohammed Sameer

BCOM AF A

21BAF020
Hindustan Unilever Limited (HUL)
Hindustan Unilever Limited (HUL) is one of the largest consumer goods companies in India
and a subsidiary of Unilever, a British-Dutch multinational company. HUL has a long and
rich history in India, dating back to 1931 when it was established as Hindustan Vanaspati
Manufacturing Company. Over the years, it has grown and evolved into a diversified
consumer goods company with a wide range of products in various categories.

HUL operates in multiple sectors such as:

1. Home and Personal Care: This segment includes products like soaps, detergents, skincare
products, hair care products, and oral care products. Brands like Lux, Dove, Lifebuoy, Surf
Excel, Rin, and Pepsodent fall under this category.

2. Foods and Beverages: HUL produces and markets various food and beverage products,
including tea, coffee, ice creams, and culinary products. Popular brands include Brooke
Bond, Bru, Knorr, and Kwality Wall's.

3. Water Purification: HUL also operates in the water purification sector with its brand Pureit,
offering a range of water purifiers.

4. Health and Wellness: This segment includes nutrition and wellness products. HUL offers
products like Horlicks, Boost, and other nutritional supplements.

HUL's business strategy focuses on innovation, sustainable practices, and reaching out to the
diverse consumer base in India. The company has a strong distribution network that spans
urban and rural areas, allowing it to reach a large portion of the Indian population.

Over the years, HUL has gained a reputation for its commitment to social and environmental
responsibility. It has been involved in various initiatives related to water conservation,
sanitation, and rural development.

HUL's success can be attributed to its wide portfolio of well-known brands, its understanding
of the Indian consumer market, and its ability to adapt to changing consumer preferences and
market dynamics. The company has played a significant role in shaping the FMCG (Fast-
Moving Consumer Goods) landscape in India.
CASH FLOW STATEMENT OF UNILEVER GROUP IN ACCORDANCE TO
INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
INCOME STATEMENT
COMPARISON BETWEEN IFRS AND IND AS OF
UNILEVER GROUP

DIRECT VS. INDIRECT METHOD FOR OPERATING CASH FLOWS:

IFRS: IFRS allows entities to use either the direct method or the indirect
method to present operating cash flows. The direct method presents major
classes of gross cash receipts and payments, while the indirect method starts
with net profit and adjusts for non-cash items and changes in working capital.
Ind AS: Similar to IFRS, Ind AS allows the direct or indirect method for
presenting operating cash flows.

BANK OVERDRAFTS
IFRS
Bank overdrafts are to be treated as cash/cash equivalents if they form
an integral part of an entity’s cash management.
Ind AS-
AS 3 is silent. They are generally considered in cash flow from
financing activity.

CLASSIFICATION OF INCOME TAX PAID:

IFRS: Income tax paid can be classified as an operating or financing
cash flow under IFRS.
Ind AS: Ind AS requires income tax paid to be classified as an
operating cash flow.

EXTRAORDINARY ITEMS
IFRS-
Presentation of an item as extraordinary is not permitted under these
standards, hence separate disclosure of extraordinary items in cash
flow statements is not required.
Ind AS-
AS 3 requires disclosure of extraordinary items classified as arising
from operating, investing and financing activities.

INTEREST AND DIVIDEND PAID

IFRS-
AS 7 requires interest and dividend paid to be classified either under operating
activities or financing activities. In deciding the classification IAS 8 is to be
applied and a classification is chosen so that it reflects the economic transaction.
Ind AS-
AS3 mandates disclosure of interest and dividend paid under financial activities
only. In case of financing company, it would be operating activity.
CONSOLIDATION
IFRS-
AS 7 deals with issues relating to disclosure in cash flow statement in
consolidated financial statements, viz. undistributed profits of
associate and minority interests, forex cash flows of foreign
subsidiary etc.
Ind AS-
AS 3 does not deal with cash flows relating to consolidated financial
statements.

CASH PAYMENTS UNDER FINANCE LEASE

IFRS-
AS 7 requires additional disclosure of cash payments by a lessee relating to
finance lease under financing activities.

Ind AS-
No such disclosure required

ACQUISITION OF SUBSIDIARY
IFRS-
In case of acquisition of subsidiary, IAS 7 requires two additional disclosures on
acquisitions, viz. Cash/ cash equivalents of acquired subsidiary and all other
assets acquired.
Ind AS-
No such disclosure required

CONCLUSION

While there are some differences in the classification and presentation of

specific items within the cash flow statement between IFRS and Ind AS, the
core structure and objectives of the cash flow statement remain consistent. It's
important for companies to follow the requirements of the applicable standard
based on their reporting jurisdiction (IFRS or Ind AS) to ensure accurate and
compliant financial reporting.