Financial Statement analysis report on Hindustan Unilever limited, dabur and marico.

SUBMITTED BY:  Keshav Singhal (B.S)
 Sandeep Swain (INFRA)  Anuradha Bist (INFRA)  Priya Ranjan (INFRA)

SUBMITTED TO:
Dr. Manipadma Datta

PREFACE

As students of management, practical knowledge is a must with full theoretical concepts. Therefore in` order to acquire the knowledge we were given this assignment as prime concepts to include in our assimilation of topic which is financial statement analysis from an industrial &corporate perspective. So for this said purpose we have made this assignment report in which we have compared the three FMCG companies .Hindustan Unilever Limited, Dabur and Marico.

I hope that our sincere efforts in this field of study would be considered and accepted by our respected faculty.

“EXPERIENCE IS THE BEST

TEACHER”

This Proverbs plays a guiding role in the curriculum of the subject Corporate Accounting & Reporting. As only theoretical knowledge does not impart complete education, it is necessary that practical exposure being accompanied to add meaning to education.

We have prepared this project on HUL, dabur and marico as a part of the practical studies. We have tried to discuss the firm’s financial information details in a comprehensive manner. Through this acknowledgement, we express our sincere gratitude and opportunities given to us analyze the companies’ standing, in an overall perspective.

“A Student is always incomplete without the guidance of his teacher”
INDEX

PREFACE ACKNOWLEDGMENT INTRODUCTION EXECUTIVE SUMMARY HISTORY OF HUL, DABUR & MARICO. BALANCE SHEET OF HUL BALANCE SHEET OF DABUR BALANCE SHEET OF MARICO RATIO ANALYASIS MEANING OF RATIO ANALYASIS OBJECTIVE OF RATIO ANALYSIS CLASSIFICATION OF RATIO CURRENT RATIO DEBT EQUTY RATIO PRICE EARNING RATIO IMPORTANCE OF RATIO ANALYSIS PURPOSE OF RATIO ANALYSIS INVESTOR PERSPECTIVE OUR RECOMENDATION CONCLUSION

INTRODUCTION

To understand the information contained in financial statements with a view to know the strength or weaknesses of the firm and to make forecast about the future prospects of the firm and thereby enabling the financial analyst to take different decisions regarding the operations of the firm.

EXECUTIVE SUMMARY: India‟s consumer market is riding the crest of the country‟s economic boom. India‟s fast moving consumer goods (FMCG) sector is the fourth largest sector in the economy of India with a total market size in excess of US$ 13.1 billion. If we go by statistics, roughly around 73% of the Indian population lives in the rural areas- that‟s a very large market. Many giant players, both foreign as well as domestic, are competing in the market with a view to capture it. The growing consumerism in India shows the rapid increase in Indian consumer purchasing power, it shows strengths and opportunity that lies in rural Indian markets especially for FMCG products. As a result of it we have opted to undergo analyzing the financial statements and on basis of it, we shall do a peer to peer analysis and compare their market position (HUL DABUR & MARICO)in Indian FMCG Company having excellent distribution channel and deep rural reach in India As the major part of the market is yet to be extracted completely, one needs to evolve a set of strategies and plans to tap the potential Indian consumer market. To capture such a great opportunity, only good product and brand awareness will not be sufficient but proper distribution channel must be present in holistic approach. Thereby sufficing the need to assimilate the objectives of these companies as the objective of financial statements would be to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions. Financial statements should be understandable, relevant, reliable and comparable as it gives a correlation about reported assets, liabilities, equity, income and expenses which are directly related to an organization's financial position.

skin care. Pepsodent. The company¶s Turnover isRs. ice cream. coffee. Its portfolio includes leading household brands such as Lux. Clinic Plus. Lifebuoy.19. one of the world‟s leading suppliers of fast moving consumer goods with strong local roots in more than 100 countries across the globe with annual sales of about €44 billion in 2011. touching the lives of two out of three Indians with over 20 distinct categories inHome & Personal Care Products and Foods & Beverages. packaged foods. financial statements are intended to be understandable by readers who have "a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently. The Company has over 16. toothpastes. deodorants. cosmetics. the Company is a part of the everyday life of millions of consumers across India." HISTORY OF HUL DABUR & MARICO HUL HUL works to create a better future every day and helps people feel good. 20. Kwality Wall‟s and Pureit. Axe. Dove. Hindustan Unilever Limited (HUL) formerly Hindustan Lever Limited (it was renamedin late June 2007 as HUL) is India's largest Fast Moving Consumer Goods company. These products endow the companywith a scale of combined volumes of about 4 million tones and sales of nearly Rs. Kissan. . Lakmé. 2008 to March 31.touching the lives of two out of three Indians with over 20 distinct categories in Home &Personal Care Products and Foods & Beverages. 13718crores. 2009). Sunsilk. Fair & Lovely. 401 crores (financial year 2010 . Pond‟s. Bru. Rin. Closeup. detergents. HUL is a subsidiary of Unilever. tea. Surf Excel.Therefore. and water purifiers. look good and get more out of life with brands and services that are good for them and good for others. With over 35 brands spanning 20 distinct categories such as soaps. 239 crores (for the 15 month period ± January 1. Knorr. Vaseline. Wheel. Unilever has about 52% shareholding in HUL. Brooke Bond.000 employees and has an annual turnover of around Rs.2011). shampoos.

Hajmola and Real. Fair & Lovely. Clinic. which holds 52. The operationsinvolve over 2. The brand name . 3417.000 redistribution stocks.K.Kwality Wall's ± are household names across the country and span many categories soaps. it has been recognized as a Golden Super Star Trading House by the Government of India. Lakme. Pond's. HUL's distribution network comprises about4. The mission that inspires HUL's over 15. Brooke Bond. detergents. including over 1. S. Surf Excel.10% of the equity.1 Crore – FY 2010) & Market Capitalization of over US$ 3. is to "add vitality to life." HUL meetsevery day needs for nutrition. with brands like Dabur Amla. The company was started by a doctor Dr. Wheel. and about 250 million rural consumers DABUR: Dabur India Limited is the fourth largest FMCG Company in India and has a turnover of approximately US$ 750 Million (Rs.300 managers. These products are manufactured over 40 factories across India. branded staples. hygiene. Pepsodent. It is a mission HUL shares with its parentcompany.HULis also one of the country's largest exporters. Vatika. The rest of the shareholding isdistributed among 360.000 suppliers and associates. covering 6.3 million retail outlets reaching the entire urban population.Sunsilk. Close up. Knorr Annapurna.5 Billion (Rs 15500 Crore). and personal care with brands that help peoplefeel good. tea. coffee. Lux. Unilever. personal products. Burman in 1884.000 employees.675 individual shareholders and financial institutions. Dabur Chyawanprash. look good and get more out of life. ice cream and culinary products. HUL's brands like Lifebuoy. Kissan. Rin.

In 1949 it launched Dabur Chyawanprash and by 1970 launched Dabur Lal Dant Manjan. personal care and food products. The brand went on to become the biggest success of the company and in 1997 the Foods division was created. the next generation of Burmans took a conscious decision to enter the Ayurvedic medicines market and that led to the commercial start of Dabur. In early 1900s. Dabur shifted its base to Delhi in 1972. From those humble beginnings. comprising of Real Fruit Juice and Homemade cooking pastes to form the core of this division‟s product portfolio. Hajmola was launched in 1978 and the candy version came in 1989 (another brand Swad had created the new market of digestive candies at that time) and soon became a huge success.Dabur is derived from the words „Da‟ for „Daktar‟ or „Doctor‟ and „bur‟ from Burman. the Dabur brand has stood for goodness through a natural lifestyle. They set up a R&D center which paved way for the growth. ranging from hair care to honey. the company has grown into India‟s leading manufacturer of consumer healthcare. Over its 125 years of existence. In 1996 it entered processed foods market with Real Fruit Juice. Dabur is consistently ranked among India‟s top brands. Its brands are built on the foundation of trust that a Dabur offering will never cause sdanyone slightest of harm. An umbrella name for a variety of products. OVERVIEW OF DABUR . In 1940 Dabur diversified into personal care products with the launch of its Dabur Amla Hair Oil which was a hit with Indian consumers. The trust levels that this brand enjoys are phenomenally high.

anmol sarsono amla.9 retail outlets and high penetration in urban and rural areas. Mother brand Dabur has a strong image in customers mind. Accenture recommended a two-pronged . sales and distribution capabilities and use IT as a strategic enabler for its business strategy.  Dabur lal dant manjan has 35% of market share having top position in baby massage oil market.  Wide distribution network-covering 1. Is vatika. 3417. dabur amla.  Vatika hair oil and shampoo is the high growth brand of the company. dabur hajmola. each brand having 100 crore turnovers. From an IT perspective. One of the largest FMCG company has a turnover of approximately US$ 750 Million (Rs.  Dabur chayanprash is the largest selling ayuravedic medicine with over 65% market share.1 Crore – FY 2010)  Differentiated products-strong herbal and natural products and more than 120 year of experience.  Brand strength-various strong brand in diverse categories. dabur chyanprash and lal dant manjan.  Dabur honey is the market leader with over 40% market share in branded honey market.  In digestive tablets category hajmola is the leader with 75% market share. % of Dabur products in the market Baby oil & skin care=7% Home care=6% Hair care=32% Digestive & candies=9% Health supplements=24% Oral care=22% SALES STRATEGY Accenture proposed that Dabur improve its supply chain management.  Leading brand of Dabur India Ltd.

6 billion (about USD 380 Million) during 2006-07. Mediker. other SAARC countries. Working closely with Dabur. Skin Care and Healthy Foods generated a Turnover of about Rs. Manjal. Sundari. Marico is present in the Skin Care Solutions segment through Kaya Skin Clinics (31 in India and the Middle East). Aromatic. Accenture assembled a team of highly skilled industry experts. . the Middle East and Egypt.13. Marico‟s brands and their extensions occupy leadership positions with significant market shares in most categories. Anti-lice Treatment. The Overseas Sales franchise of Marico‟s Consumer Products (whether as exports from India or as local operations in a foreign country) is one of the largest amongst Indian Companies and is entirely in branded products and services. the Sundari range of Spa skin care products (in the USA & other countries) and its soap franchise (in India and Bangladesh). Sweekar. Camelia. Hair & Care. To bring these initiatives to life. Marico's branded products are also present in Bangladesh. Marico was selected as one of the eight Indian companies in S & P's list of Challenger Companies from various nations. Shanti. Fiancee and HairCode. compiled globally by Standard & Poor's in June 2007. niche Fabric Care etc.Coconut Oil. Hair Oils. Post Wash Hair Care. Saffola. as well as professionals with extensive SAP design and implementation experience.strategy: migration to a nimbler outsourcing model that would generate value through agility and support business initiatives and maintenance of its SAP enterprise resource planning (ERP) system. Kaya. Revive. Marico markets well-known brands such as Parachute. the Accenture team initiated a number of highimpact projects. including:- MARICO: Marico is a leading Indian Group in Consumer Products and Services in the Global Beauty and Wellness space. Premium Refined Edible Oils. Marico‟s Products and Services in Hair care. Nihar.

India retail Forum (September 2007)  NDTV Profit .  Kaya .  One of India's 10 best marketers (Business Today September 2006). Award for HR Excellence & Award for Best Employer in the Consumer Products and Healthcare Sector.Marico has also won various other Awards such as the following:  3 top Awards instituted by CNBC-TV18.  Gold Effie (2007) for its Corporate campaign and a Bronze Effie (2007) for Saffola.  Kaya . in following categories: India‟s Employer of Choice for 2007 . FMCG Personal Hygiene Category (July 2007).Retailer of The Year Award (for the 2nd consecutive Year) at India Retail Summit 2006.Business Leadership Award. U21 Global and Watson Wyatt Worldwide.  Brand Leadership Award at the India Brand Summit 2006 (September 2006).Best Retailer in the Beauty and Fitness category. .

VALUES OF MARICO INDUSTRY         Opportunity seeking Bias for Action Consumer Centric Excellence Innovation openness & transparency Global outlook Boundary lessness Marico has a set of articulated values that were created at the inception of the organization.32 for Profits and 28 for Sales. over 70 Million consumer packs from Marico reach approximately 130 Million consumers in about 23 Million households.  Marico‟s focus on sustainable profitable growth is manifest through its consistent financial performance – a CAGR of 19% in Turnover and 19% in Profits over the past 3 years.3 Million outlets in India and overseas. through a widespread distribution network of more than 2. The values since then have been an integral part of the working of all Mariconians. The Gulf Marketing Review Award in the Middle East 2006.while setting a record of several consecutive quarters of year on year growth. through the collective wisdom of Mariconians. . revisited and modified once in the year 1997 and lately in 2003. They sum up the philosophy that will build the culture to drive business growth. Our values are preferred practices that are employed in pursuit of our Business Direction.  Every month.

Why Dabur and Marico has chosen as peers for Financial comparison with HUL Dabur and Marico has chosen as their sales revenue is very close to HUL Vitality of Company's financial performance through Financial Ratios Financial Statement Analysis will help business owners and other interested people to analyse the data in financial statements to provide them with better information about such key factors for decision making and ultimate business survival • To use financial statements to evaluate an organisation‟s – – • Financial performance Financial position. The commonly used tools for financial statement analysis is: Financial Ratio Analysis BALANCE SHEET OF HUL: . To have a means of comparative analysis across time in terms of: – – – Intracompany basis (within the company itself) Intercompany basis (between companies) Industry Averages (against that particular industry‟s averages) • To apply analytical tools and techniques to financial statements to obtain useful information to aid decision making.

BALANCE SHEET OF DABUR: .

BALANCE SHEET OF MARICO .

RATIO ANALYSIS: .

the industry. Ratios look at the relationships between individual values and relate them to how a company has performed in the past. It can be expressed as a fraction or as a decimal or as a pure ratio or in absolute figures as “so many times”. Ratio is express by dividing one figure by the other related figure. If used in conjunction with other methods. and cash flow statement. quantitative analysis can produce excellent results. and might perform in the future. Ratio analysis can be used both in trend and static analysis. It is simply the quotient of two numbers.Fundamental Analysis has a very broad scope. There are several ratios . It is a mathematical yardstick that measures the relationship two figures. The other side considers tangible and measurable factors (quantitative). Ratio analysis is an attempt to derive quantitative measure or guides concerning the financial health and profitability of business enterprises. income statement. Ratio analysis isn't just comparing different numbers from the balance sheet. Thus a ratio is an expression relating one number to another. As accounting ratio is an expression relating two figures or accounts or two sets of account heads or group contain in the financial statements. MEANING OF RATIO ANALYSIS: Ratio analysis is the method or process by which the relationship of items or group of items in the financial statement are computed. MEANING OF RATIO: A ratio is one figure express in terms of another figure. or even the economy in general. This means crunching and analyzing numbers from the financial statements. determined and presented. It's comparing the number against previous years. other companies. which are related to each other and mutually interdependent. One aspect looks at the general (qualitative) factors of a company.

you could use a ratio of a company's debt to its equity to measure a company's leverage. A company whose leverage ratio is higher than a competitor's has more debt per equity.at the disposal of an analyst but their group of ratio he would prefer depends on the purpose and the objective of analysis. By comparing the leverage ratios of two companies. Ratio analysis can provide valuable information about a company's financial health. For example. which is easy to use. This technique is called cross-sectional analysis. OBJECTIVE OF RATIOS Ratio is work out to analyze the following aspects of business organizationA) Solvency1) Long term 2) Short term 3) Immediate . You can use this information to make a judgment as to which company is a better investment risk. It can provide you with a valuable investment analysis tool. we will focus on a technique. you must be careful not to place too much importance on one ratio. Cross-sectional analysis compares financial ratios of several companies from the same industry. A financial ratio measures a company's performance in a specific area. However. You obtain a better indication of the direction in which a company is moving when several ratios are taken as a group. While a detailed explanation of ratio analysis is beyond the scope of this section. you can determine which company uses greater debt in the conduct of its business.

B) Stability C) Profitability D) Operational efficiency E) Credit standing F) Structural analysis G) Effective utilization of resources .

Classification of Ratio Profitabilit y Liqudity Ratio Leverage Ratio Activity Ratio Coverage Ratio Gross Profit Rattio Current ratio Debt Equity Ratio Stock Turn Over Ratio Debentures Service Coverage Ratio Interest Coverage Ratio Net Profit Ratio Liquid Ratio Profitability Ratio Total Assets Turn Over Ratio Return on Capital Employed Ratio Return on Shareholder s Fund Capital Gearing Ratio Long Term Funds to Fixed Assets Debtors Ratio Creditors Ratio Return on Equity Ratio Book Value Per Share Operating Ratio Working Capital Turn Over Ratio Expenses Ratio Earning Per Share Ratio Dividend Per Ratio Prise Earning Ratio .

CURRENT RATIO: Liquidity refers to the ability of a firm to meet its short-term (usually up to 1 year) obligations. are Current ratio. These ratios are discuss This ratio compares the current assets with the current liabilities. It is also known as „working capital ratio‟ or „solvency ratio‟. . which indicate the liquidity of a company. and Cash ratio. It is expressed in the form of pure ratio. Quick/Acid-Test ratio. The ratios.

This ratio measures the liquidity of the current assets and the ability of a company to meet its short-term debt obligation.. i. bills receivable. and provision for taxation. This compares assets. and prepaid expenses. as originally contemplated. Recommended current ratio is 2: 1.term liabilities. The higher the current ratio. in the ordinary course of business. debtors (net of provision for bad and doubtful debts). which will become liquid within approximately twelve months with liabilities. Current liabilities consist of trade creditors. which will be due for payment in the same period and is intended to indicate whether there are sufficient short-term assets to meet the short. Current ratio (CR) is the ratio of total current assets (CA) to total current liabilities (CL). converted into cash within a short period time.e. inventory of raw materials. the greater the short-term solvency. CA gets converted into cash in the operating cycle of the firm and provides the funds needed to pay for CL. within a year. bills payable. normally not exceeding one year. bank credit. Current assets include cash and bank balances.Formula: CURRENT RATIO = CURRENT ASSET CURRENT LIABILITY The current assets of a firm represents those assets which can be. Any ratio below indicates that the entity may face liquidity problem but also Ratio over 2: 1 as above indicates over trading. The current liabilities defined as liabilities which are short term maturing obligations to be met. semi-finished and finished goods.CR measures the ability of the company to meet its CL. dividends payable and outstanding expenses. marketable securities. that is the entity is under utilizing its current assets DEBT EQUTY RATIO .

This ratio is widely used by the analysts to the value of firm‟s performance as exempted by investor . Leverage is also known as „gearing‟ or „trading on equity‟. As general rule. Formula: PRICE EARNING RATIO = MARKET VALUE OF SHARE EARNING PER SHARE . the higher this ratio. PRICE EARNING RATIO It saws the relationship between the market price of share and earnings per share . the better it is for owners. Debt equity ratio shows the margin of safety for long-term creditors & the balance between debt & equity.it significance the price that is currently ruling in the market for each rupee of earnings being made by company per share. Leverage means the process of the increasing the equity shareholders return through the use of debt. The higher the P/E ratio.Formula: DEBT EQUTY RATIO = TOTAL LONG TERM DEBT OWNER‟S FUND Debt equity ratio is also called as leverage ratio. the better is for owners.

PURPOSE OF RATIO ANLYSIS: 1] To identify aspects of a businesses performance to aid decision making . ratios are of crucial significance. 3] Operating efficiency. 5] Inter firm comparison 6] Trend analysis. The importance of ratio analysis lies in the fact that it presents facts on a comparative basis & enables the drawing of interference regarding the performance of a firm. 2] Long-term solvency.IMPORTANCE OF RATIO ANALYSIS: As a tool of financial management. 4] Overall profitability. Ratio analysis is relevant in assessing the performance of a firm in respect of the following aspects: 1] Liquidity position.

2] Quantitative process – may need to be supplemented by qualitative Factors to get a complete picture. 3] 5 main areas: Liquidity – the ability of the firm to pay its way  Investment/shareholders – information to enable decisions to be made on the extent of the risk and the earning potential of a business investment  Gearing – information on the relationship between the exposure of the business to loans as opposed to share capital  Profitability – how effective the firm is at generating profits given sales and or its capital assets  Financial – the rate at which the company sells its stock and the efficiency with which it uses its assets ANALYZING COMPANY STATUS WITH CHARTS: .

Sales HUL. And its competitors from 2006-2010 25000 20000 Dabur HUL 15000 Column1 Marico Column2 10000 5000 0 2006 2007 2008 2009 2010 .

And its competitors from 2006-2010 2500 2000 1500 Dabur HUL Column1 1000 Marico Column2 500 0 2006 2007 2008 2009 2010 .Net Profit HUL.

And its competitors from 2005-2009 250 200 150 Dabur HUL Column1 100 Marico Column2 50 0 2006 2007 2008 2009 2008 .Share Capital HUL.

Fixed Assets in Crores 800 700 600 500 400 300 Dabur HUL Column1 Marico Column2 200 100 0 2006 2007 2008 2009 2010 .

56 11.04 60.59 14.34 91.RATIOS DESCRIPTION: HUL: Key Financial Ratios of Hindustan Unilever ------------------.82 81.00 6.in Rs.50 12.47 1.98 Mar '10 1.76 12.41 11.78 .75 11.53 12.70 60.76 12.50 12.45 10.18 11.75 11.29 12.29 106.25 12.56 102.36 15. ------------------- Mar '11 Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital 13.70 12.74 14.00 6. Cr.

63 -12.33 395.78 .91 5.84 11.75 10.Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio 7.67 12.99 5.19 12.99 29.40 11.28 7.163.50 342.91 24.84 0.25 81.20 102.63 8.46 --87.57 80.84 0.243.529.47 85.24 8.43 --0.84 106.13 -421.86 0.35 11.

09 11.61 18.25 50.40 21.25 27.54 35.98 22.62 53.59 -Mar '10 10.19 .20 69.29 19.99 -Mar '11 75.20 64.05 -22.31 5.35 7.71 29.35 7.20 19.15 -20.84 Earnings Per Share Book Value 10.08 32.35 51.68 12.31 71.Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times 8.02 7.66 5.67 18.63 61.

Cr.DABUR: Key Financial Ratios of Dabur India ------------------.16 .41 19.81 (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) 19.91 15.00 2.03 61.88 15.17 17.03 15. ------------------- Mar '11 Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) 1.06 15.58 15.14 87.58 14.27 14.05 7.10 Net Operating Profit Per Share 18.00 6.15 3.88 15.06 17.62 Return On Capital Employed(%) 44.97 18.27 4.in Rs.59 Mar '10 1.34 33.00 1.02 93.76 17.

Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations 46.23 50.44 .14 42.01 0.39 2.79 Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio 8.46 56.29 45.23 0.31 23.93 0.31 4.02 52.04 56.60 8.68 0.65 4.66 0.46 11.53 36.85 5.62 11.85 58.35 0.29 8.31 3.06 0.67 8.96 Return on Long Term Funds(%) 53.14 0.21 5.60 68.65 19.99 0.47 41.78 0.

64 0.99 8.32 26.42 Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times 44.86 43.09 48.70 4.40 54.15 0.96 22.74 0.Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios 4.22 16.08 3.61 1.31 52.55 4.39 63.31 Dividend Payout Ratio Net Profit49.49 46.13 51.89 4.67 55.76 53.71 6.93 14.26 29.23 Mar '11 Earnings Per Share Book Value 2.33 Mar '10 4.64 .32 49.

51 13.33 Mar '10 1.00 0.65 34.51 11.85 8.00 0.30 13.62 13.47 32.52 90. ------------------- Mar '11 Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) 14.66 5.65 11.08 16. Cr.03 91.07 Return On Capital Employed(%) 23.63 15.75 11.26 15.MARICO: Key Financial Ratios of Marico ------------------.87 .75 13.37 13.29 13.44 11.29 1.59 38.in Rs.20 12.66 5.

70 0.46 0.11 28.04 15.71 Return on Long Term Funds(%) 34.23 0.38 48.66 0.49 0.35 1.77 14.63 12.99 1.Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations 36.21 14.20 .36 7.98 6.66 19.73 6.14 1.30 12.11 43.18 1.16 21.38 9.22 6.36 25.77 0.99 5.63 0.31 Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio 5.26 9.88 2.70 18.98 21.21 41.

85 61.07 80.96 13.01 18.18 7.30 6.83 32.75 1.20 105.96 16.98 20.38 .09 1.18 52.30 14.21 Mar '10 3.88 69.13 14.26 14.89 89.78 9.75 81.29 5.58 54.99 82.98 25.23 83.42 7.86 9.38 Mar '11 Earnings Per Share Book Value 5.Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times 6.

00 0.00 873.00 927.07 0.417.425.Comparison with Competitors Balance Sheet HUL ------------------.67 2.51 Dabur India 61.78 253.00 0.633.44 0.16 17.35 1.42 220.92 HUL 174.00 811.09 0.95 0.00 0. Cr.95 215.00 2.633.07 174.00 1.57 235.101.00 2.00 0.07 552.00 0. ------------------Dabur India Marico Mar '11 Mar '11 Mar '11 Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 215.30 0.61 Marico Mar '11 Mar '11 Mar '11 .44 61.in Rs.49 1.354.92 0.68 0.12 332.

08 1.51 421.317.589.46 2.26 0.08 689.58 202.88 269.91 4.095.46 26.00 539.30 0.36 1. Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets 3.20 198.33 1.00 242.494.16 299.93 4.68 2.72 1. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA.354.425.811.37 1.358.22 961.96 274.074.22 118.92 519.19 0.00 2.00 1.00 0.15 369.56 11.590.099.169.20 281.74 222.32 497.19 1.98 7.759.81 166.52 470.05 535.10 6.260.61 .95 1.264.633.00 6.12 461.03 687.36 454.62 1.27 0.98 13.92 766.036.324.23 460.Application Of Funds Gross Block Less: Accum.21 1.41 242.07 31.26 943.85 82.95 587.46 45.

Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. it is the most stringent and excessive test of return to shareholders. Gross profit margin serves as the source for paying additional expenses and future savings. creditors. and management Return on Asset (ROA) ROA gives an idea as to how efficient management is at using its assets to generate earnings. A financial metric used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Calculated by dividing a company's annual earnings by its total assets. (Net Earnings/Share’s holder Equity) * 100 Gross Profit Margin (GPM) It gives a good indication of financial health.INTERPRETAION FROM ABOVE RATIOS: PROFITABILITY RATIOS: Profitability Measures assess the firm's ability to operate efficiently and are of concern to owners. Thus. (Net Profit / Avg. Total Asset) * 100 Return on assets measures a company‟s earnings in relation to all of the resources it had at its disposal (the shareholders‟ capital plus short and longterm borrowed funds). Return on Equity (ROE) The amount of net income returned as a percentage of shareholders equity. ROA is displayed as a percentage. (Gross Profit/ Net Sales) * 100 . If a company has no debt. the return on assets and return on equity figures will be the same.

(Net Profit/ Net Sales) * 100 Inferences Drawn: 100 90 80 70 60 50 40 30 20 10 0 HUL 2010 HUL 2009 Marico 2010 Marico 2009 Dabur 2010 Dabur 2009 ROA(%) ROE(%) Gross Profit Margin(%) Net Profit Margin(%) . The net profit margin is a good way of comparing companies in the same industry. since such companies are generally subject to similar business conditions. The higher the net profit margin is.Net Profit Margin (NPM) This number is an indication of how effective a company is at cost control. the more effective the company is at converting revenue into actual profit.

Hence it is necessary to analyse the different ratio in one picture frame rather than looking at them simultaneously. ROE is lying around 45% to 60% which suggests company‟s pay back as per investment made by share holder. if ROA is low or the company is carrying a lot of debt. the different between NPM and GPM is Net Profit (NP) = Gross Profit (GP) – overhead The profit margin tells you how much profit a company makes for every Rs. ROA tells about company performance while keeping all the assets into consideration and not only shareholder equity alone. In case of HUL it is always more if last 2 years then Marico and Dabur. It clearly signifies that for every Rs. In 2010. I might appreciate the fact the company has zero debt but debt is cheaper then equity. On the other hand if we look at ROA of these two companies. HUL earning 87paise where it is quite low in case of Dabur and Marico. One other important prospective. However for companies which have very large market capitalization like HUL. it is fluctuating near to 20 % in the last two years. Discussing about NPM and GPM. assets comprise of share holder equity and long term borrowed funds. ROA was around 87% for HUL. In case of Dabur and Marico. From investor point of view. as HUL is a zero debt company (ROE=ROA) while other two are not.ROA and ROE The ROA value gives investors an idea of how effectively the company is converting the money it has to invest into net income.1/Hence higher the NPM and GPM. indicates better financial health of a company. NPM = 20% means for every Rs. Debt to equity ratio is zero implies HUL as a No debt company. Eg. Now. Implies HUL is not using debt financing. not using debt financing signifies the low risk and self dependency in investor‟s eye. Hence ROE is same as ROA for HUL. On the other hand. ROE is certainly a “hint” that management is giving shareholders more for their money.1/it generates in revenue or sales. As we know. In case of HUL. a high ROE can give investors a false impression about the company's fortunes. If the company have taken care of debt financing it could have increased up its operations and revenues. .1/.of investment as asset.

However with no doubt this inventory should be in rotation i. overheads are not zero hence GPM > NPM. In-fact Marico has the lowest inventory ratio. The excess inventory gives enough confidence to firm to act in future. inventory turnover ratio should be good. one might argue having enough inventory can guard you against various un-favourable situation like in-ability to produce the goods due to any factor. If the difference is more that signifies the operational efficiency of the company.2. The inventory turn ratio of Dabur is quite high comparatively to Marico and HUL. Hence we can comment on good operational efficiency of HUL with respect to Dabur and Marico.9 to 1. Hence we have concluded on liquidity parameter Marico is on top followed by Dabur and then HUL. Thus analysing quick ratio and inventory ratio in single frame. This difference is less in case of HUL as compare to other peers considered relatively. The lower the difference between NPM and GPM. the more capable the company is of paying its obligations. Marico has highest quick ratio . In case of HUL the ratio is lying between 0.e. excess demand due to factors like season.Mathematically GPM will always be greater than or equal to NPM as there will some overhead expenses. Practically. Inventory Turnover Ratio: Keeping more inventory is not a false behaviour(as in case of HUL). By looking at Current ratio only we can say Marico has the highest ability to meet short-term debt obligations. the better. So that the same amount of goods will present in ware house but it will keep rotating. For HUL the difference between quick ratio and current ratio is very significant as compare Marico and Dabur which implies heavy inventory in HUL. That ratio is quick ratio. The difference is least in Marico and then Dabur studied for last two years. natural calamity etc. At the same time for Marico.9 whereas for Dabur it‟s .2.8 to 0 . it is above 1. Generally inventories are not readily converted into cash hence we need another ratio that does not includes inventory in current asset to give a more precise picture of any firm‟s liquidity. the current assets also include inventory of a company. However. LIQUIDITY RATIOS: Liquidity Ratio: The higher the current ratio.

we will be discussing on fixed asset and Total Asset turnover ratio to comment on operational efficiency. D/E Ratio A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. implies higher expectation of earning/willingness to pay to earn per unit of income.but lowest inventory turn ratio implies Marico maintaining high inventories but its sitting period of good in inventory is more comparison to HUL and Dabur which are maintaining low inventory but quickly converting it into revenues. Property and Equipments (PPE). Fixed Asset Turnover Ratio A higher fixed-asset turnover ratio shows that the company has been more effective in using the investment in fixed assets to generate revenues. Investments made on Plant. P/E ratio noticed high in last year for HUL. yet as an investor I might be interested as in the hope the currently market price of share is high and increasing over time being receiver of low dividend (targeting for long term). However the decrease in ratio is due to investments made in PPE by HUL and Marico where as in case of Dabur it is disinvestment in fixed asset. one must analyse at least four –five years of patterns as investment made on PPE would yield higher production in significant amount of time. To analyse fixed turnover ratio. a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. The difference in ratio is not much in the three companies considered to comment on financial health comparison but P/E directly affected by market situation also. Higher D/E ratio can facilitate company to use the benefits of debt financing as Debt is not always bad and Debt is always . The fixed turnover ratio is decreasing in case of all the three companies. If market price of any firm‟s stock is raising and proportionately dividend is not increasing resulting increase in P/E ratio. As per our scope of analysis we have concluded Marico is utilizing its fixed assets in the way resulting addition to sales revenue to maximum followed by HUL and then Dabur. Apart from Inventory turnover ratio. P/E Ratio In general.

Also in case of Dabur and Marico. the ratio has decreased in the last two years indicating lowering of risk. This implies the risk factor in HUL is very less and financial leverage is least in comparison of Dabur and Marico. On the contrary low D/E implies a company is not enough using the debt. But very high D/E creates serious troubles in decision making process and affects the flexibility of top management in any firm. D/E is quite high in case of Marico and comparatively very less in Dabur. . Discussing about D/E of HUL it is zero means it is a no debt company. INVESTOR PERSPECTIVE & OUR RECOMMENDATION: FOR HINDUSTAN UNILEVER: A look at the 2 years closing chart pattern of Hindustan Unilever should convince investors of different experiences and propensities why this is a musthave stock among the several thousand being traded on the BSE and NSE.cheaper then equity.

hinted at a resumption of the rally. RSI and slow stochastic are correcting an overbought situation. making steady rather than spectacular progress. ROC. Regular dividends are an added attraction. the stock reached three closing tops – each a little higher than the previous one. more important one. positive divergences from all four technical indicators that touched higher bottoms.There is an old saying: “You can‟t keep a good man down. The strategy should be to use dips towards the lower end of the upward-sloping channel to add. The stock reached a new closing high of 343 in Jun „11 at the upper-end of the upward-sloping channel. the technical indicators all touched lower tops. and is in a bull market . Valuations are not cheap.” That expression could just as well describe the HUL stock. Once again. From Sep „10 through Jan „11. The positive divergences signaled the end of the bear period. .even as the Sensex and Nifty are in clear down trends. All three EMAs are rising and the stock is trading above them – a sign of a bull market. This time. The negative divergences led to a sharp drop below the 200 day EMA. The correction from the new closing high of 353 may continue a bit longer. Growth and margins are back on the upswing. all four technical indicators reached higher bottoms (marked by blue arrows). There are two points of interest here. The second. but the stock is worth its weight in gold. The stock embarked on a fresh bull rally within an upward-sloping channel that is still intact. The first is that the stock‟s price movements provide long-term trading opportunities. Note that when the stock dropped to its new closing low of 220 in Mar „10. as it swings up and down within the upward-sloping channel. Bottomline? The stock chart pattern of Hindustan Unilever is in a bull market. followed by a triple-bottom reversal pattern from Feb to May „11. is that between Nov „10 and Sep „11 the stock has gone up to touch new highs. All four technical indicators – MACD. Negative divergences in the technical indicators warned of a correction.

FOR DABUR: Dabur India The stock investing tip to buy stocks of Dabur India for short term time frame can be considered as an option. Dabur is one of the good FMCG stock as everyone knows. 52 week low was . This tip is purely based on analytical indications. The target price could get achieved in one to two months. Dabur India touched its 52 week high recently at Rs 218.95.

management of Marico Industries. Current EPS is Rs 4. If you look at the 6 months chart.37. The target once again could be near to its 52 week high i. And the third reason is in anticipation of domestic economic slowdown.87 and P/E stands at 41. They actually guided the investors with a warning that investors should not be too optimistic about Marico stock for may be couple of quarters due to various business reasons.e. This level provides moderate amount of returns in short term i. 195 which could be considered as stop loss. Although P/E ratio looks high.at Rs 121. FMCG stocks have always been considered as safe stocks in stocks markets and so command a higher P/E. It may slip down up to 120 range where it could be a good stock to buy for long term. MARICO: Recently. 1 . talked about their stock from investor's perspective. stock has corrected more than 10% in a day. 218. One of the reason they sight for slow growth/no growth is rise of input cost of raw material at almost 80%. a good FMCG company. . It is an appreciable effort from management compared to most of the managements who keep misguiding small investors with artificial high growth promises! As a result. company management wants it's stock investors to not to expect high growth from company for next may be 2-3 quarters. Sighting all three reasons.e.2 months. With ever rising high inflation. Another reason is political unrest in Africa and Middle east where company has been doing business which is almost zero now. purchasing power of people is bound to be less and people would be willing to spend less on FMCG products. support line is around Rs.

com [5].hul.e.com 6) http://investmentsfordummieslikeme.investorwords.in [4].blogspot.CONCLUSION As we have given the project work to compare the three well known FMCG companies i.com .com [3]. HUL DABUR and MARICO .marico. At the end I can say that Hindustan Unilever Ltd.We came to know about the financial condition of the three companies‟ relatively good with HUL being in ideal condition for investment. http://www.com [2].investopedia.dabur. REFERENCES: 1) 2) 3) 4) 5) [1]. http://www. http://www. http://www.co. They are able to generate customer and these companies are providing new services and products with latest innovation to customers. Is in good financial position and marico & dabur can be titled as the market followers and can promptly become the challengers in near future. http://www.

e.95. Dabur is one of the good FMCG stock as everyone knows. MARICO: .37. 1 . 195 which could be considered as stop loss.e. Current EPS is Rs 4.2 months. Although P/E ratio looks high. The target price could get achieved in one to two months. 52 week low was at Rs 121.87 and P/E stands at 41. This level provides moderate amount of returns in short term i. FMCG stocks have always been considered as safe stocks in stocks markets and so command a higher P/E. If you look at the 6 months chart. Dabur India touched its 52 week high recently at Rs 218. The target once again could be near to its 52 week high i.The stock investing tip to buy stocks of Dabur India for short term time frame can be considered as an option. This tip is purely based on analytical indications. support line is around Rs. 218.

stock has corrected more than 10% in a day.e. It is an appreciable effort from management compared to most of the managements who keep misguiding small investors with artificial high growth promises! As a result. They are able to generate customer and these companies are providing new services and products with latest innovation to customers. Is . talked about their stock from investor's perspective. They actually guided the investors with a warning that investors should not be too optimistic about Marico stock for may be couple of quarters due to various business reasons. Another reason is political unrest in Africa and Middle east where company has been doing business which is almost zero now. management of Marico Industries. a good FMCG company. Sighting all three reasons. CONCLUSION As we have given the project work to compare the three well known FMCG companies i.We came to know about the financial condition of the three companies’ relatively good with HUL being in ideal condition for investment. HUL DABUR and MARICO . At the end I can say that Hindustan Unilever Ltd.Recently. company management wants it's stock investors to not to expect high growth from company for next may be 2-3 quarters. And the third reason is in anticipation of domestic economic slowdown. With ever rising high inflation. One of the reason they sight for slow growth/no growth is rise of input cost of raw material at almost 80%. purchasing power of people is bound to be less and people would be willing to spend less on FMCG products. It may slip down up to 120 range where it could be a good stock to buy for long term.

http://www.investorwords. REFERENCES: 1) [1]. http://www.com 3) [3].com 2) [2].blogspot.com .in good financial position and marico & dabur can be titled as the market followers and can promptly become the challengers in near future. http://www.in 4) [4]. http://www.com 6) http://investmentsfordummieslikeme.marico.co. http://www.com 5) [5].hul.investopedia.dabur.

Sign up to vote on this title
UsefulNot useful