Performance Analysis of Hul - v1 27112020

PERFORMANCE ANALYSIS OF HINDUSTAN
UNILEBER LIMITED
(With reference to the financial statements of Hindustan Unilever limited)
A project report submitted

in partial fulfilment for the completion of academic requirements of
MASTER OF BUSINESS ADMINISTRATION
Submitted by
MALLA JAYA CHANDRA
Reg. No.:19L31E0007
Under the guidance of

Dr. CH. HARI GOVINDA RAO
M.Com, MBA, M.Phil, Ph.D
Professor in the department of Management Studies
Vignan’s IIT, Duvvada, Visakhapatnam.
DEPARTMENT OF MANAGEMENT STUDIES

VIGNAN’S INSTITUTE OF INFORMATION TECHNOLOGY [A]
(Recognized by AICTE & Affiliated to JNTUK University, Kakinada)
DUVVADA, VISAKHAPATNAM
2019-20
1
DECLARATION
I hereby declare that this project work entitled “ PERFORMANCE

ANALYSIS OF HINDUSTAN UNILEVER (With reference to Hindustan
unileber private limited, india).Submitted by me to the Department of
Management Studies, Vignan’s Institute of Information Technology(A),
Affiliated to JNTUK, Duvvada, in partial fulfillment for the completion of
academic requirements of degree of MBA is entirely based on my own study is
being submitted for the first time and it has not been submitted to any other
university or institution for any degree or diploma.
Place: Visakhapatnam (M .JAYA CHANDRA)

Date:
2
VIGNAN’S INSTITUTE OF INFROMATON TECHNOLOGY [A]
(Approved by AICTE and Affiliated JNTUK University, Kakinada)
Duvvada, Visakhapatnam-530049
Dt.
CERTIFICATE
This is to certify that the project report entitled “PERFORMANCE

ANALYSIS OF HIMDUSTAN UNILEVER ‘(With reference to HINDUSTAN
UNILEVER LIMITED, INDIA),is being submitted by Mr. M. JAYA
CHANDRA bearing roll number 19L31E0007 in partial fulfilment for the
award of the Degree of Masters in Business Administration has been carried out
by him under my guidance.
Dr CH. Hari Govinda Rao

Project Guide Head of the Department
3
VIGNAN’S INSTITUTE OF INFORMATION TECHNOLOGY [A]
(Approved By AICTE and Affiliated To JNTUK University, Kakinada)
Duvvada, Visakhapatnam, A.P., INDIA
MARKS ASSESMENT SHEET
NAME OF THE STUDENT : MALLA JAYA CHANDRA

ROLL NUMBER : 19L31E0007
TITLE OF THE PROJECT :
“PERFORMANCE ANALYSIS OF HINDUSTAN UNILEVER
LIMITED” (With Special Reference to financial statements of Hindustan
Unilever limited)
MAX MARKS AWARDED MARKS
MINI PROJECT 50
REPORT
SEMINAR ON MINI 50
PROJECT
Project guide HOD-MBA

(Dr. Ch. Hari Govind Rao)
4
ACKNOWLEDGEMENTS
With the exception of my sincere efforts, the successful completion of this project
works depends largely on the encouragement and guidelines of many others. I take this
opportunity to express my gratitude to the concerned that have been instrumental in the
successful completion of this project.
I extended my heartfelt gratitude to my project guide Dr. CH. Hari Govinda Rao for
his consistent encouragement, benevolent criticism, and inseparable suggestions which were
the main reasons to bring the work to present shape.
I spontaneously express my thanks to Dr. B. Arundhati, Principal, and Dr. V.

Madhusudhana Rao, Hon’ble Rector, Vignan’s Institute of Information Technology [A],
Visakhapatnam for their consistent motivation during my research work.
I acknowledge with immense gratitude to all my dear faculty members for extending
all necessary help & continuous support during my research work as and when required.
Finally I would like to express my deep sense of gratitude to my beloved parents and
my family members for their love and blessings to complete the project successfully.
(M.JAYA CHANDRA)
5
ABSTRACT
The main purpose of this project is to study and analyze the financial position of
Hindustan Unilever Limited. To find the liquidity position, solvency of the firm, operational
efficiency of the firm, profitability of the firm and variables of working capital. The results of
the research show that there is a significant impact of the Liquidity on profitability of
company. "Finance" is a broad spectrum that describes two related financing and investing
activities. Since finance function is classified into various core decisions like, investment
Decision, Financial Decision, Dividend Decision, Liquidity Decision, the Financial
Management mainly focused on planning, organizing, directing and controlling the financial
activities such as procurement and utilization of funds of the enterprise. It means applying
general management principles to financial resources of the enterprise.
Working capital is a requirement of funds to meet the day to day working expenses. So a
proper way of management of working capital is highly essential to ensure a dynamic
stability of the financial position of an organization. Profitability is the primary goal of all
business ventures. Without profitability the business will not survive in the long run. So
measuring current and past profitability and projecting future profitability is very important.
Profitability is measured with income and expenses.
Liquidity and profitability is a pre-requisite for the survival of every firm. The finance
manager always faced dilemma of liquidity vs. profitability as these two concepts conflict in
most of the financial decisions. So, financial manager has to watch the relationship between
operating risk and profitability of a company also. Hence, this study has been made an
attempt to know the relationship between liquidity and profitability of selected data. Average,
CAGR, Standard Deviation have been used for analyze the variables.
Key words: Profitability, Liquidity, solvency, operational efficiency.
6
INDEX
Page
SNO CONTENTS
No.
1 Introduction about the project, objectives of the project, scope of 1
the project, significance or importance of the project, reasons
behind the study, Methodologies to study the project, Limitations.
2 Overview of Indian FMCG industry, Hindustan Unilever Company 3
profile.
3 Conceptual framework of the project (financial statement analysis) 19
4 Financial statements analysis of Hindustan Unilever limited 30
5 Conclusion 36
Bibliography
References
7
Chapter 1
INTRODUCTION
In everyday Life we are using different products and services are available in the
market. When coming to the personal care, food ingredients, health care and beauty,
detergents, other essential goods we are using different products belongs to different brands
of different firms. In India there are many companies are there to produce the daily essentials
to satisfy every customer wants and needs.
Hindustan Unilever is one of the oldest and strongest market players in Indian FMCG
industry. It covers various types of products, which are required by the customers in their
daily life. Hindustan Unilever is one of the top FMCG industries in our country. So, we have
to analyse the performance of the firm to know the liquidity position of the company,
solvency of the company, efficiency and working capital management by the company to
meet their short term requirements.
This will helps to understand how the company is able to use their resources optimally
to achieve their goals and objectives satisfying the vision and mission of the
organization .This also help us to understand the future investments of the firm.
Objectives:
 To understand the financial position of the Hindustan Unilever Limited.
 To know the liquidity position of the company.
 To know and understand the solvency of the company.
 To assess the earning capacity and profitability of the company.
 To know the operational efficiency of the company.
 To identify the change in profitability and financial position of the firm.
Scope:
The performance analysis of Hindustan unilever Limited (HUL). Have the scope to take
different types of decisions by the management. The different types of decisions are as follow
 Investment Decisions
 Financing Decisions
 Dividend decisions
Investment Decisions:
The performance analysis of Hindustan Unilever limited. will help the firm to take
various decisions related to investments of the firm. The firm will take the investment
decisions to meet the short-term requirements of the firm like working capital,
inventory,purchase of raw materials, etc.
1
To provide and allocate capital for long term requirements like starting new venture,
upgrading the existing machinery and equipment with new technology to increase the
production capacity of the company, mergers and acquisitions, capital budgeting, etc.
Financing Decisions:
After taking the investment decisions of the company. Finance manager need acquire
the funds required by the company. The company need to design an optimal capital structure,
which means the perfect combination of debt and equity. It includes the following sources
 loans from financial institutions

 Issuing equity shares to the public
 Issuing debentures to the public.
 Issuing other financial instruments like bonds.
 Commercial paper.
 Venture capital
 Trade credit.
2
Dividend Decisions:
Performance analysis of Hindustan unilever Limited will help us to take dividend
decisions. Dividend means the distribution of the profits of the company to the
shareholders. Maximizing the shareholders wealth is very important and essential in
today’s business world to promote the interest of the shareholders to invest more in our
company. This analysis also helps us to keep the retained earnings (undistributed profits)
This will helps the firm to satisfy the short-term requirements of the firm.
Importance of Performance analysis of Hindustan unilever Limited:
 The most important benefit if performance analysis of HUL is that it provides an idea
to the investors about deciding on investing their funds in a particular company.
 Another advantage of performance analysis of HUL is that regulatory authorities like
Ministry of corporate affairs, income tax department, ICAI, etc. can ensure the
company following the required accounting standards.
 Performance analysis of HUL is helpful to the government agencies like income tax
department in analysing the taxation owed to the firm.
 Above all, the company is able to analyse its own performance over a specific time
period.
 It helps us to know the profitability of HUL.
 It also helps the firm to know the solvency of the firm.
 It helps the firm to know the liquidity positon, operational efficiency of the firm.
 It helps to take the decisions like investments in new projects, working capital
management.
Reasons to analyse the performance of HUL:
 To know how the company managing their resources optimally.
 To know about the financial position of the company.
 To take decisions to invest in the company and expect dividends from the
company by the shareholders when the company’s earnings are more.
 To know the solvency position of the company to give more debt by financial
institutions like banks and suppliers to give raw materials on credit to the
company.
 To expect bonus and other benefits by the employees from the company.
Research Methodology
Financial statement analysis: Financial statements presents accounting data in
absolute monetary terms and reveal very little about the liquidity, solvency and profitability
of the business. Financial Analysis is the systematic numerical calculation of the relationship
of one financial fact with the other to measure the profitability, operational efficiency,
solvency and the growth potentiality of the business.
Purpose of financial statement analysis
 The purpose of financial analysis is to diagnose the information content in financial
statements so as to judge the profitability, financial soundness of the firm and chalk
out the ways to improve existing performance.
 Every management is interested in knowing the financial strengths to make their
better use and spot out the weaknesses of the firm to take suitable corrective action, in
time.
 The term ‘Financial Analysis’ is also known as analysis and interpretation of financial
statements.
1
Objectives
Different parties are interested in the financial statements for different purposes and look to
them from their own angle. The objective of the different parties is not the same. Their
requirements are not uniform. So, every one is interested to use them for his own
requirement. A lender is interested for repayment of the money lent and interest, assured at
the time of lending. Shareholder is concerned for earnings and appreciation of the investment,
he has made. It is very clear their objectives are not common so their approach and
information, they look for, would be different.
FEATURES OF FINANCIAL ANALYSIS:
1. To present the complex accounting data in simple and understandable form.
2. To classify the items given in Profit and Loss Account and Balance Sheet in
convenient and related groups.
3. To make comparisons between different groups of information and to interpret
different conclusions.
4. To convert the huge financial data into useful information.
2
Chapter 2
OVERVIEW OF INDUSTRY AND COMPANY
PROFILE
Hindustan Unilever is a market player in Indian FMCG industry. It sells every type of
product in Indian market. It reaches to every type of customer in the country. For example it
sells regular products as well as premium products.
Introduction to Indian FMCG Industry?

Fast-moving consumer goods (FMCG) sector is India’s fourth largest sector with
household and personal care accounting for 50 per cent of FMCG sales in India. Growing
awareness, easier access and changing lifestyles have been the key growth drivers for the
sector. The urban segment (accounts for a revenue share of around 55 per cent) 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 to urban
India. Semi-urban and rural segments are growing at a rapid pace and FMCG products
account for 50 per cent of the total rural spending.
Products comes under FMCG industry:
There are different types of products comes under FMCG sector. They are listed below
1. Home care
2. Personal care
3. Food and beverages
4. Tobacco products sand Alcoholic products
1 Home care: Products like floor cleaners, surface cleaners, fabric wash (laundry wash,
detergent bars, synthetic detergents, fabric conditioners, detergent soaps and powders),
disinfectants, antiseptic liquids, air fresheners, incense sticks, mosquito repellents,
insecticides, pesticides, etc. are categorised into FMCG home care or household care.
2 Personal care:
 Products like oral care (toothpastes, toothbrushes, mouth washes, toothpowders’
etc),
 Bathing products like soaps, bathing bars, bathing gels, etc.
 Hair care products like shampoos, hair gels, conditioners, hair oils, etc.
 Body care products like deodorants, perfumes, cents, suns cream lotions, prickly
heat powders, other hygienic products like sanitary napkins similar products.
 Beauty and skin care products like fairness creams, lotions, facewashes, etc.
3food and beverages
Products like rice, cereals, tea, coffee, sugar, milk products, soft drinks, oats, aata,
biscuits, chocolates, bread, jam, ready to eat mixes, processed foods, fruit juices, packaged
honey, child nutrition foods, milk powder, packaged drinking water and other packaged
foods.
4 tobacco and alcoholic products
Products like cigar, bears and other alcoholic and tobacco products comes under this
category.
Market players in Indian FMCG Industry
There are many firms like Hindustan Unilever, ITC, Dabur, Wipro, TATA consumer products,
Patanjali, etc.
3
Hindustan Unilever Limited
It is a subsidiary of Unilever limited
Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company
with a heritage of over 80 years in India. On any given day, nine out of ten Indian households use our
products to feel good, look good and get more out of life – giving us a unique opportunity to build a
brighter future.
Brands around the world
VIEW OUR BRANDS
HUL works to create a better future every day and helps people feel good, 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, detergents,

shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice
cream, and water purifiers, the Company is a part of the everyday life of millions of
4
consumers across India. Its portfolio includes leading household brands such as Lux,
Lifebuoy, Surf Excel, Rin, Wheel, Glow& Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic
Plus, Sun silk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s
and Pureit.
The Company has about 21,000 employees and has sales of INR 38,273 crores (the
financial year 2019-20). HUL is a subsidiary of Unilever, one of the world’s leading suppliers
of Food, Home Care, Personal Care and Refreshment products with sales in over 190
countries and an annual sales turnover of €52 billion in 2019. Unilever has over 67%
shareholding in HUL.
I T C limited:
ITC is one of India's foremost private sector companies and a diversified

conglomerate with businesses spanning Fast Moving Consumer Goods, Hotels,
Paperboards and Packaging, Agri Business and Information Technology. The Company
is acknowledged as one of India's most valuable business corporations with a market
capitalisation of nearly US$ 50 billion and a gross sales value of US$ 10.8 billion (figures as
on 31.03.2019) . ITC was ranked as India's most admired company, according to a survey
conducted by Fortune India, in association with Hay Group.
Multiple Drivers of Growth

ITC is the country's leading FMCG marketer, the clear market leader in the Indian
Paperboard and Packaging industry, a globally acknowledged pioneer in farmer
empowerment through its wide-reaching Agri Business, a pre-eminent hotel chain in India
that is a trailblazer in 'Responsible Luxury'. ITC's wholly-owned subsidiary, ITC Infotech, is
a specialized global digital solutions provider.
Over the last decade, ITC's new Consumer Goods Businesses have established a
vibrant portfolio of 25 world- class Indian brands that create and retain value in India.
ITC's world class FMCG brands including Aashirvaad, Sunfeast, Yippee!, Bingo!, B Natural,
ITC Master Chef, Fabelle, Sunbean, Fiama, Engage, Vivel, Savlon, Classmate, Paperkraft,
Mangaldeep, Aim and others have garnered encouraging consumer franchise within a short
span of time. While several of these brands are market leaders in their segments, others are
making appreciable progress.
Leveraging Institutional Strengths
The competitiveness of ITC's diverse businesses rest on the strong foundations of
institutional strengths derived from its deep consumer insights, cutting-edge Research &
Development, differentiated product development capacity, brand-building capability, world-
class manufacturing infrastructure, extensive rural linkages, efficient trade marketing and
distribution network and dedicated human resources. ITC's ability to leverage internal
synergies residing across its diverse businesses lends a unique source of competitive
advantage to its products and services.
'Nation First: Sab Saath Badhein'
5
ITC's 'Nation First: Sab Saath Badhein' philosophy underlines its core belief in
building a globally competitive and profitable Indian enterprise that makes an exemplary
contribution to creating larger societal value. As a company deeply rooted in Indian soil, ITC
is inspired by the opportunity to serve larger national priorities. A global exemplar in
Sustainability, ITC is the only enterprise in the world of comparable dimensions to be
carbon-positive, water-positive and solid waste recycling positive for over a decade now.
ITC has created over 6 million sustainable livelihoods. Nearly 41% of the total energy
consumed in ITC is from renewable sources. ITC's premium luxury hotels have the unique
distinction of being LEED Platinum certified.
The Company's large scale social investment programmes, including the celebrated e-
Choupal, Social & Farm Forestry initiatives, Watershed Development, Animal Husbandry,
Women Empowerment, Vocational Training, Primary Education, Health and Sanitation have
had a transformational impact on rural India, winning national and global recognition. ITC's
Well-being Out of Waste programme (WOW) that comprehensively addresses the problem of
solid waste management, of which plastic waste is a significant component, provides an end-
to-end sustainable and scalable solution that has reached out to 89 lakh citizens in the
country.
Together with farmers and local communities, ITC has implemented largescale
interventions in climate-smart and sustainable agriculture that make a meaningful
contribution to the Hon'ble Prime Minister's vision of doubling farmer incomes. Towards
this, ITC has launched an integrated programme titled 'Baareh Mahine
Hariyali' (maximising farm utilisation over 12 months of the year) to give a new dimension
to the complex task of multiplying farmer incomes. ITC is collaborating with NITI Aayog to
progressively build capacity of 2 million farmers in 27 Aspirational Districts to help enhance
rural incomes.
ITC is investing in India's future by building world-class consumer goods factories
and iconic hospitality assets that will contribute to the country's competitive capacity. These
investment projects underpin the Company's support to the Government's "Make in India"
vision.
Brands under ITC limited:
Dabur India Limited:
Dabur India Ltd. is one of India’s leading FMCG Companies with Revenues of
over Rs 8,500 Crore & Market Capitalisation of over Rs 72,500 Crore. Building on a
6
legacy of quality and experience of over 135 years, Dabur is today India’s most trusted
name and the world’s largest Ayurvedic and Natural Health Care Company.
Dabur India is also a world leader in Ayurveda with a portfolio of over 250
Herbal/Ayurvedic products. Dabur's FMCG portfolio today includes five flagship
brands with distinct brand identities -- Dabur as the master brand for natural healthcare
products, Vatika for premium personal care, Hajmola for digestives, Réal for fruit juices
and beverages and Fem for fairness bleaches and skin care products.
Dabur today operates in key consumer product categories like Hair Care, Oral Care,
Health Care, Skin Care, Home Care and Foods. The ayurvedic company has a wide
distribution network, covering 6.7 million retail outlets with a high penetration in both urban
and rural markets.
Dabur's products also have huge presence in the overseas markets and are
today available in over 100 countries across the globe. Its brands are highly popular in the
Middle East, SAARC countries, Africa, US, Europe and Russia. Dabur's overseas revenue
today accounts for over 27% of the total turnover.
The 135-year-old ayurvedic company, promoted by the Burman family, started

operating in 1884 as an Ayurvedic medicines company. From its humble beginnings in the
bylanes of Calcutta, Dabur India Ltd has come a long way today to become one of the biggest
Indian-owned consumer goods companies with the largest herbal and natural product
portfolio in the world. Overall, Dabur has successfully transformed itself from being a
family-run business to become a professionally managed enterprise. What sets Dabur
apart from the crowd is its ability to change ahead of others and to always set new standards
in corporate governance & innovation.
Dabur also recommends various Ayurvedic Home Remedies formulated

using ayurvedic plants & herbs which are natural & chemical free.
Dabur India Ltd. is one of India’s leading FMCG Companies with Revenues of
over Rs 8,500 Crore & Market Capitalization of over Rs 72,500 Crore. Building on a
legacy of quality and experience of over 135 years, Dabur is today India’s most trusted
name and the world’s largest Ayurvedic and Natural Health Care Company.
Brands of Dabur India Limited
7
WIPRO consumer products
Founded in 1945 as a Vegetable Oil Company, Wipro Consumer Care & Lighting is
one of the fastest growing FMCG companies in India, Asia, and Africa. Sales revenue grew
from INR 3.04 Bn to INR 77.4 Bn + (USD 1.09Bn) in 2019-20.
Wipro Consumer Care & Lighting has presence in 20 countries predominantly in

India, Asia, Africa, and the Middle-East. It has 16 manufacturing units in India, Malaysia,
Indonesia, Philippines, Vietnam, China and South Africa. It has state of the art Research &
Development and Innovation Centers in India, Malaysia, China, Philippines, and South
Africa. The company has a talent base of over 10,000+ people from 22 different nationalities.
Women employees constitute nearly 60% of the total work force.
India BusinessWipro Consumer Care has a diverse portfolio of products and operates
both in B2C and B2B space. Leading brands in India in personal and home care category are
Santoor, Hygienix, Maxkleen, Wipro Safewash, Wipro Softtouch, Giffy, Glucovita,
Aramusk, Enhanteur, Chandrika, and Wipro Garnet. In the B2B space, we are a leading
player in Institutional lighting, office furniture, and modular switches. Wipro Lighting and
furniture products have won numerous international awards for design.
International business Wipro Consumer Care established its international footprint

in 2007 with the acquisition of Unza Holdings followed by LD Waxsons (2012) , Zhongshan
Ma Er (2016), Splash Corporation (2019), and Canway Group (2019). With a series of
successful acquisitions, Wipro Consumer Care has a formidable presence in the South East
Asia, East Asia, Africa & the Middle East. In these regions, our product portfolio includes
skin-care, hair-care, and home-care categories. Our leading brands in the region are
Enchanteur, Romano, Safi, Bio Essence, Aiken, Phanli, Zici, Enear, Vcnic, MaxiPeel,
Vitress. Hygenix, Flawlessly U, Kolours, SkinWhite, Stylex, Oh So Heavenly, iWori, DR
SOLE, IQ, Enear, Vcnic, Carrie Junior, Do Re Mi, Izzi, Dashing, new & trendy, Vitalis,
Yardley business Wipro Consumer Care acquired the iconic brand in 2009 which
gave it a significant foot hold in the Indian, Middle East and Asian markets. In 2012, Yardley
UK was acquired which also gave us distribution rights in the European markets. Yardley is
believed to be the oldest living brand and is available in 40+ countries.
8
Brands of WIPRO Consumer Care
TATA CONSUER PRODUCTS
Tata Consumer Products is a focused consumer products company uniting the food
and beverage interests of the Tata Group under one umbrella. It is home to key brands such as
Tata Tea, Tetley, Tata Salt and Tata Sampann. With a combined reach of over 200 million
households in India, it has an unparalleled ability to leverage the Tata brand in consumer
products.
We are on a mission to create a premier diversified consumer products company. Our
strengths lie in our deep understanding of our consumers in India and in international
markets, iconic market leading brands and wide consumer reach. We are committed to
delivering high-quality, innovative, tasty and convenient products with goodness at its core.
Our portfolio of products ranges from tea, coffee, water and ready-to-drink to salt, pulses,
spices, ready-to-eat and more.
In the Beverages business, Tata Consumer Products is the second largest player in
branded tea in the world with over 330 million servings everyday across the world. Our
brands include Tata Tea, Tetley, Vitax, Eight O’Clock Coffee, Himalayan Natural Mineral
Water, Tata Coffee Grand and Joekels.
Beginning with the iconic Tata Salt that pioneered the crusade for iodisation in India,
our Foods business is one of the most trusted food brands in India and we have extended our
portfolio to include salt variants and nourishing food items. With Tata Sampann we bring the
9
traditional wisdom of Indian food in a contemporary package to deliver the best of taste,
nutrition and convenience.
Tata Consumer Products has grown through innovation, strategic alliances and
acquisitions, and organic growth. The Company has a joint venture with Starbucks called
Tata Starbucks Limited, to own and operate Starbucks cafés in India. Since the inauguration
of the flagship store in Mumbai in October 2012, this 50:50 JV has expanded to 10 cities,
with many more Starbucks stores planned across the country.
The Company also has a JV with PepsiCo in India, called NourishCo, which produces
non-carbonated ready-to-drink beverages that focus on health and enhanced wellness.
NourishCo produces and markets Tata Water Plus — India’s first nutrient water, and Tata
Gluco Plus — an energizing, glucose-based flavoured drink. Himalayan water is also
marketed and distributed through NourishCo.
The high-growth contemporary 'single-serve' business is also an important play for
Tata Consumer Products. In the USA we have an agreement with Green Mountain Coffee
Roasters’ Keurig single-serve machines for Eight O'Clock Coffee, with K-Fee for MAP
Coffee in Australia, and with Tassimo in Canada for Tetley tea.
Sustainability is at the heart of our plans for long-term success. As industry leaders, it
is important for us to build a future-ready business that will continue to meaningfully touch
the lives of millions of people. Sustainable sourcing, waste management and climate change
are some of the key focus areas and through our various environment and community
focussed initiatives, we intend to be the consumer’s first choice in sustainable foods and
beverages.
Brands of Tata consumer products
P&G India limited

The Procter & Gamble Company (P&G) is an American multinational consumer
goods corporation headquartered in Cincinnati,Ohio, founded in 1837 by William
Procter and James Gamble. It specializes in a wide range of personal health/consumer health,
10
and personal care and hygiene products; these products are organized into several segments
including Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine, &
Family Care. Before the sale of Pringles to Kellogg's, its product portfolio also included
foods, snacks, and beverages P&G is incorporated in Ohio.
In 2014, P&G recorded $83.1 billion in sales. On August 1, 2014, P&G announced it
was streamlining the company, dropping and selling off around 100 brands from its product
portfolio in order to focus on the remaining 65 brands, which produced 95% of the company's
profits. A. G. Lafley—the company's chairman, and CEO until October 31, 2015—said the
future P&G would be "a much simpler, much less complex company of leading brands that's
easier to manage and operate".
Richardson Hindustan Limited (RHL) was established in 1964, as a public limited
company and obtained an industrial license to manufacture menthol and Vicks range of
products. In 1984, it became an affiliate of Procter and Gamble (P&G), USA.
P&G operates under three entities in India - two listed entities 'Procter & Gamble
Hygiene and Health Care Limited' and 'Gillette India Limited', as well as one 100 per cent
subsidiary of the parent company in the US called 'Procter & Gamble Home Products'.
Today, it serves over 650 million consumers across India and its presence pans across
the beauty and grooming segment, the household care segment, as well as the health and
well-being segment. Some of its most popular brands include Vicks, Ariel, Tide, Whisper,
Olay, Gillette, Ambipur, Pampers, Pantene, Oral-B, Head & Shoulders, Wella and Duracell.
The company has currently invested in the country via its five plants and nine contract
manufacturing sites, as well as through the 26,000 jobs it creates directly and indirectly.
Brands of P&G India limited
These are different market players in Indian FMCG industry. They cover various
products in the entire market but every organization will have their similar products that can
11
satisfy every customer needs in their everyday life to fulfill the requirements of every type of
customer with special and unique products and covers every segment in the market.
Godrej Consumer Products
Godrej Consumer Products Limited (GCPL) is an Indian consumer goods company
based in Mumbai, India. GCPL's products include soap, hair colorants, toiletries and liquid
detergents. Its brands include 'Cinthol', 'Godrej Fair Glow', 'Godrej No.1' and 'Godrej
Shikakai' in soaps, 'Godrej Powder Hair Dye', 'Renew', 'ColourSoft' in hair colourants and
'Ezee' liquid detergent. GCPL operates several manufacturing facilities in India spread over
seven locations and grouped into four operating clusters at Malanpur (Madhya Pradesh),
Guwahati (Assam), Baddi- Thana (Himachal Pradesh), Baddi- Katha (Himachal Pradesh),
Pondicherry, Chennai and Sikkim.
The consumer products business was part of the erstwhile Godrej Soaps Limited
(GSL) and was demerged into Godrej Consumer Products Limited in April 2001, pursuant to
a scheme of demerger approved by the Honorable High Court of Judicature, Mumbai, dated
14 March 2001.
GCPL has bought out foreign companies such as Keyline Brands Limited (United
Kingdom) in 2005, Rapidol (Pty) Limited in 2006, and Godrej Global Mid East FZE in 2007
and Argencos in Argentina, and later acquired Cosmética Nacional, a Chilean company.
In 2015, Godrej announced it had fully acquired a 100% equity stake in South African
hair extensions firm Frika Hair.
12
Organizational profile of Hindustan unilever Limited
It is a subsidiary of Unilever limited
Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods
company with a heritage of over 80 years in India. On any given day, nine out of ten Indian
households use our products to feel good, look good and get more out of life – giving us a
unique opportunity to build a brighter future.
Brands around the world
VIEW OUR BRANDS
HUL works to create a better future every day and helps people feel good, 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, detergents,

shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice
cream, and water purifiers, the Company is a part of the everyday life of millions of
consumers across India. Its portfolio includes leading household brands such as Lux,
Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic
13
Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s
and Pureit.
The Company has about 21,000 employees and has sales of INR 38,273 crores (the
financial year 2019-20). HUL is a subsidiary of Unilever, one of the world’s leading suppliers
of Food, Home Care, Personal Care and Refreshment products with sales in over 190
countries and an annual sales turnover of €52 billion in 2019. Unilever has over 67%
shareholding in HUL.
Awards and honours
The Institute of Competitiveness, India, has recognized Hindustan Unilever Limited's

Project Shakti for ‘Creating Shared Value’ and bestowed upon the company the Porter Prize
for 2014. It ranked number one on the Forbes list of ‘Most Innovative Companies’ across the
globe for 2014and was ranked number three on Fortune India's list of India's most admired
companies in a list compiled with the help of a global management consultancy Hay
Group. It received an award from Dun & Bradstreet Corporate Awards in 2014.and was
Client of the Year at Effie’s 2013 – 2014.It also received an award as a 'Conscious Capitalist
of the Year' at the 2013 Forbes India Leadership Awards. HUL won 12 awards overall with 4
Golds, 4 Silvers and 4 Bronzes at the 2013 Envies Awards. In 2013, HUL ranked number two
on the on Fortune India's 2013 '50 Most Admired Companies list'. and was declared the
fourth most Respected Company in India in a survey conducted by Business World in 2013.
As per a 2015 Nielsen Campus Track-business school survey, Hindustan Unilever

emerged among the top employers of choice for B-school students graduating that year. It has
often been called a 'Dream Employer' for application by B-School students in India.
In 2012, HUL was recognised as one of the world's most innovative companies by
Forbes. With a ranking of number 6, it was the highest ranked FMCG company. Hindustan
Unilever Limited (HUL) won the first prize at FICCI Water Awards 2012 under the category
of 'community initiatives by industry' for Gundar Basin Project, a water conservationist
initiative. Hindustan Unilever Limited won 13 awards at the Emvies 2012 Media Awards
organised by the Advertising Club Bombay in September 2012.
The company received four awards at the Spikes Asia Awards 2012, held in
September. The awards included one Grand Prix one Gold Award and two Silver Awards.
HUL's Chhindwara Unit won the National Safety Award for outstanding performance
in Industrial Safety. These awards were instituted by the Union Ministry of Labour and
Employment in 1965.
HUL was one of the eight Indian companies to be featured on the Forbes list of
World's Most Reputed companies in 2007.
In July 2012 Hindustan Unilever Limited won the Golden Peacock Occupational
Health and Safety Award for 2012 in the FMCG category for its safety and health initiatives
and continuous improvement on key metrics.
Hindustan Unilever Limited is rated as best 3Ci Company which is registered with
National Industrial Classification Code 15140.
14
Pond's Talcum Powder's packaging innovation has secured a Silver Award at the
prestigious 24th DuPont Global Packaging Award, in May 2012. The brand was recognized
for cost and waste reduction.
In May 2012, HUL & Star Bazaar received the silver award for 'Creating Consumer
Value through Joint Promotional and Event Forecasting' at the 13th ECR Efficient Consumer
Response Asia Pacific Conference.
In 2011, HUL was named the most innovative company in India by Forbes and
ranked 6th in the top 10 list of most innovative companies in the world.
Hindustan Unilever Ltd received the National Award for Excellence in Corporate
Governance 2011 of the Institute of Company Secretaries of India (ICSI) for excellence in
corporate governance.
In 2012, Hindustan Unilever emerged as the No. 1 employer of choice for B-School
students who will graduate in 2012. In addition, HUL also retained the 'Dream Employer'
status for the 3rd year running.
Hindustan Unilever ranked No. 2 in Fortune India's Most Admired Companies list,
which was released by Fortune India in partnership with the Hay Group. The company
received the highest scores for endurance and financial soundness.
HUL was ranked 47th in The Brand Trust Report 2014 published by Trust Research
Advisory. 36 HUL brands also featured in the list including Lux, Dove, Lipton, Vim, Kissan,
Bru, Rexona, Close Up, Clinic Plus, Pond's, Knorr, and Pepsodent among others.
HUL emerged as the top 'Dream Employer' as well as the top company considered for
application in the annual B-School Survey conducted by Nielsen in November 2010. This
was the second successive year that HUL has been rated as the top 'Dream Employer' in
India. HUL has also emerged as the top employer of choice among the top six Indian
Institutes of Management (IIMA, B, C, L, K and I).
HUL won three awards at the 'CNBC Awaaz Storyboard Consumer Awards' in 2011 –
Most Recommended FMCG Company of the Year; Most Consumer Conscious Company of
the Year and Digital Marketer of the Year.
The company was felicitated in April 2010 for receiving the highest number of
patents in the year 2009 at Annual Intellectual Property Awards 2010.
In 2007, Hindustan Unilever was rated as the most respected company in India for the
past 25 years by Businessworld, one of India's leading business magazines. The rating was
based on a compilation of the magazine's annual survey of India's most reputed companies
over the past 25 years.
HUL is one of the country's largest exporters. it has been recognised as a Golden
Super Star Trading House by the Government of India.
Financials of Hindustan Unilever
15
Observing the financials of last three years financials of the Hindustan Unilever
limited from the financial year 2018 the company’s financial performance is good and it’s
EBIDTA and revenue is increasing gradually and the share price of the company also
increased since last two years.
We will discuss these in detailed later in this project to know and analyse the financial
position of the company in deeper.
Board of directors
16
17
Product Line and Product Mix
18
Chapter 3
CONCEPTUAL FRAMEWORK
In this chapter we will look at the concepts like financial statement analysis which are
widely applicable for our project to know the financial position of the Hindustan Unilever
limited.
Analysis of financial statement is the process of identifying the financial strength and
weaknesses of the firm by properly establishing relationship between the items of the Balance
Sheet and Income Statement In words of Myers John N., ‘‘Financial Statement analysis is
largely a study of relationships among the various financial factors in a business, as disclosed
by a single set of statements, and a study of the trends of these factors, as shown by a series
of statements.
The basic limitation of the traditional financial statements, comprising balance sheet
and profit and loss account, is they do not give all the relevant and required information for
knowing the
strength and weakness of a firm. Still, they provide extremely useful information to
the extent
that the balance sheet mirrors the financial position on a particular date, in terms of
structure of assets, liabilities and owner’s equity, like a snap shot. The profit and loss account
shows the
operational results during a particular period, in terms of the revenue generated and
costs incurred for achieving them. As the financial information is in absolute terms, every one
may not, readily, understand them. The answer is ‘Analysis of Financial Statements’.
Analysis of financial statements refers to the application of different tools to know the
behaviour of the accounting information.
Purpose of financial statement analysis
 The purpose of financial analysis is to diagnose the information content in financial
statements so as to judge the profitability, financial soundness of the firm and chalk
out the ways to improve existing performance.
 Every management is interested in knowing the financial strengths to make their
better use and spot out the weaknesses of the firm to take suitable corrective action, in
time.
 The term ‘Financial Analysis’ is also known as analysis and interpretation of financial
statements.
Objectives
Different parties are interested in the financial statements for different purposes and
look to them from their own angle. The objective of the different parties is not the same.
Their requirements are not uniform. So, everyone is interested to use them for his own
requirement. A lender is interested for repayment of the money lent and interest, assured at
the time of lending. Shareholder is concerned for earnings and appreciation of the investment,
he has made. It is very clear their objectives are not common so their approach and
information, they look for, would be different.
FEATURES OF FINANCIAL ANALYSIS:
19
5. To present the complex accounting data in simple and understandable form.
6. To classify the items given in Profit and Loss Account and Balance Sheet in
convenient and related groups.
7. To make comparisons between different groups of information and to interpret
different conclusions.
8. To convert the huge financial data into useful information.
SIGNIFICANCE OF FINANCIAL ANALYSIS:
Financial analysis is the process of identifying the financial strengths and weaknesses
of the firm by properly establishing relationships between the various items of the balance
sheet and the profit and loss account. Financial analysis can be undertaken by management of
the firm, or by parties outside the firm, viz. owners, trade creditors, lenders, investors, labour
unions, analysts and others. The nature of analysis will differ depending on the purpose of the
analyst. A technique frequently used by an analyst need not necessarily serve the purpose of
other analysts because of the difference in the interests of the analysts. Financial analysis is
useful and significant to different users in the following ways:
(a) Finance manager:
Financial analysis focusses on the facts and relationships related to managerial
performance, corporate efficiency, financial strengths and weaknesses and creditworthiness
of the company. A finance manager must be well-equipped with the different tools of
analysis to make rational decisions for the firm. The tools for analysis help in studying
accounting data so as to determine the continuity of the operating policies, investment value
of the business, credit ratings and testing the efficiency of operations. The techniques are
equally important in the area of financial control, enabling the finance manager to make
constant reviews of the actual financial operations of the firm to analyse the causes of major
deviations, which may help in corrective action wherever indicated.
(b) Top management:
The importance of financial analysis is not limited to the finance manager alone. Its
scope of importance is quite broad which includes top management in general and the other
functional managers. Management of the firm would be interested in every aspect of the
financial analysis. It is their overall responsibility to see that the resources of the firm are
used most efficiently, and that the firm’s financial condition is sound. Financial analysis
helps the management in measuring the success or otherwise of the company’s operations,
appraising the individual’s performance and evaluating the system of internal control.
(c) Trade creditors:
A trade creditor, through an analysis of financial statements, appraises not only the
urgent ability of the company to meet its obligations, but also judges the probability of its
continued ability to meet all its financial obligations in future. Trade creditors are particularly
interested in the firm’s ability to meet their claims over a very short period of time. Their
analysis will, therefore, confine to the evaluation of the firm’s liquidity position.
(d) Lenders:
Suppliers of long-term debt are concerned with the firm’s longterm solvency and
survival. They analyse the firm’s profitability overtime, its ability to generate cash to be able
to pay interest and repay the principal and the relationship between various sources of funds
(capital structure relationships). Long-term tenders do analyse the historical financial
statements. But they place more emphasis on the firm’s projected financial statements to
make analysis about its future solvency and profitability.
(e) Investors:
Investors, who have invested their money in the firm’s shares, are interested about the
firm’s earnings. As such, they concentrate on the analysis of the firm’s present and future
20
profitability. They are also interested in the firm’s capital structure to ascertain its influences
on
firm’s earning and risk. They also evaluate the efficiency of the management and determine
whether a change is needed or not. However, in some large companies, the shareholders’
interest is limited to decide whether to buy, sell or hold the shares.
(f) Labour unions:
Labour unions analyse the financial statements to assess whether it can presently
afford a wage increase and whether it can absorb a wage increase through increased
productivity or by raising the prices.
(g) Others:
The economists, researchers, etc. analyse the financial statements to study the present
business and economic conditions. The government agencies need it for price regulations,
taxation and other similar purposes.
USES OF FINANCIAL STATEMENT ANALYSIS
Financial analysis can be used in various areas for taking variety of decisions, such as:
1. Security Analysis: It is process wherein the investor comes to know whether the firm is
fulfilling his expectations with regard to payment of dividend, capital appreciations and
security of money.
2. Credit Analysis: the firm does such analysis when it offers credit to a new customer or a
dealer. Such analysis also done by the banks before granting loan to the public.
3. Debt Analysis:the firm to know the borrowing capacity of the firm does such analysis.
4. Dividend Analysis: Financial analysis helps the firm in deciding about the rate of
dividend in future years, which is based on the past performance of the company and the
practice of the industry. Such decisions also affect the behaviour of share prices.
5. General Business Analysis: This analysis deals with identifying the key profitable
opportunities and business risks in order to assess the profit potential of the firm.
6. Regulatory Compliance: Financial analysis can also be used by the Regulatory
authorities such as Registrar of Companies, Department of Company Affairs, Stock
Exchanges, SEBI for analysing the contents to ensure compliance with different rules and
regulations enforced from time to time.
TYPES OF FINANCIAL STATEMENT ANALYSIS:
There are different ways of analysing the financial statements:
(A) On the basis of Process of Analysis
On the basis of process of analysis, financial statements can be analysed in two ways:
(1) Horizontal Analysis: This is used when the financial statements of a number of years
are to be analysed. Such analysis indicates the trends and the increase or decrease in various
items not only in absolute figures but also in percentage form. This analysis indicates the
strengths and weaknesses of the firm. This analysis is also known as Dynamic Analysis.
(2) Vertical Analysis: This is used when financial statements of a particular year or on a
particular date are analysed. For this type of analysis, we generally use common size
statements and the ratio analysis. This type of analysis is a static analysis because this is
based on the financial results of one year. Vertical Analysis is useful when we have to
compare the performance of different departments of the same company.
7.
Among these two types of analysis, horizontal analysis is more useful because it brings out
more clearly the trends of working of a firm. This gives us more concrete bases for future
planning.
(B) On the basis of Information Available
On the basis of information available, financial statements can be analysed in two ways:
21
(1) Internal Analysis: This analysis is based on the information available from the
accounting records and other related information of the company. Internal analysis is made
by the management. Internal analysis is more reliable and helpful for financial decisions.
(2) External Analysis: This analysis is made on the basis of published statements, reports
and information. This analysis is made by the external parties such as creditors, investors,
banks, financial analysts, etc. External analysis is less reliable in comparison to internal
analysis because of limited and often incomplete information.
(C) On the basis of Number of Firms
On the basis of number of firms, financial analysis is of two types:
(1) Inter-firm Analysis: When financial statements of two or more companies or firms
are analysed and compared over a number of accounting period, it is called inter-firm
analysis.
(2) Intra-firm Analysis: Intra-firm analysis is concerned with the analysis of financial
performance of different units or departments or segments of the same enterprise or
company.
TECHNIQUES OR TOOLS OF ANALYSING FINANCIAL STATEMENTS
Different techniques or tools of analysing financial statements are as follows:
1. Comparative Financial Statements: In comparative financial statements, items of
financial statements of two or more periods are shown side by side so that their comparative
study could be done. It helps in making future estimates about sales, purchases, expenses,
assets, liabilities, etc.
2. Common Size Statements: Common Size Statements are such statements in which the
items of financial statements are converted into percentages of some common base.
3. Trend Analysis: Trend analysis is used to analyze financial statements of several years. In
trend analysis, trend values of different items are made on the basis of first year’s figures. It
helps in presenting large figures in a simplified way.
4. Ratio Analysis: Relationship between two figures is called ratio. With the help of ratio
analysis meaningful conclusions can be drawn by relating different figures regarding
liquidity, solvency, profitability, etc.
5. Funds Flow Analysis: Funds Flow Statement is prepared to know changes in funds
between two dates. From this statement it can be known from which sources funds have been
received and on what items the funds have been spent. It shows the changes in the assets,
liabilities and capital of the firm between two Balance Sheet dates.
6. Cash Flow Analysis: Cash Flow Statement is used to show inflows and outflows of cash
funds from operating, investing and financing activities during the year. CFS is useful for
short term financial planning. It is governed by AS-3 (revised).
7. Break Even Point Analysis: Break even point is the point where total costs are equal to
total sales. It can also be termed as ‘No profit - No loss’ point.
It is not necessary that all the above tools of financial analysis are to be used at a time. Tools
of analysis should be selected very carefully and the selection of an appropriate tool depends
on the objective of the analysis.
LIMITATIONS OF FINANCIAL ANALYSIS:

Though financial analysis is quite helpful in determining financial strengths and
weaknesses of a firm, it is based on the information available in financial statements. As
such, the financial analysis also suffers from various limitations of financial statements.
Hence, the analyst must be conscious of the impact of price level changes, window dressing
of financial statements, changes in accounting policies of a firm, accounting concepts and
conventions, personal judgement, etc. Some other limitations of financial analysis are:
1. Financial analysis does not consider price level changes.
22
2. Financial analysis may be misleading without the knowledge of the changes in accounting
procedure followed by a firm.
3. Financial analysis is just a study of interim reports.
4. Monetary information alone is considered in financial analysis while non-monetary aspects
are ignored.
5. The financial statements are prepared on the basis of on-going concept, as such, it does not
reflect the current position.
Ratio Analysis
Financial ratio analysis lets you calculate and compare relationships derived from
information in the financial statements. The current interaction and historic trends of these
ratios can be used to make inferences about a company’s financial condition, its operations,
and its attractiveness as an investment or credit risk. Financial ratio analysis lets you calculate
andcompare relationshipsderived from information inthe financial statements.The current
interaction andhistoric trends of these ratios can be used to make inferencesabout a
company’s financial condition, its operations, and itsattractiveness as an investment or credit
risk.
A ratio draws meaning through comparison with other data and standards. By itself, a
financial ratio is not worth much. In context, a manager or outside analyst can tease out
meaning to develop an understanding of a company’s situation and developing trends.
Ratio analysis is an important and powerful technique or method, generally, used for
analysis of Financial Statements. Ratios are used as a yardstick for evaluating the financial
condition and performance of a firm. Analysis and interpretation of various accounting ratios
gives a better understanding of financial condition and performance of the firm in a better
manner than the perusal of financial statements.
Types of Ratios In financial ratio analysis
There are different types of ratios to perform different type of analysis using different terms
in the financial statements. They are classified as follo
A. Liquidity Ratios: They measure the firm’s ability to meet current obligations.
B. Leverage Ratios: These ratios show the proportion of debt and equity in financing the
firm’s assets.
C. Activity Ratios: They reflect the firm’s efficiency in utilising the assets.
D. Profitability Ratios: These ratios measure overall performance and effectiveness of the
firm.
Liquidity ratios
Liquidity ratios are highly useful to creditors and commercial banks that provide short-term
credit. Short-term refers to a period not exceeding one year. Liquidity ratios measure the
firm’s ability to meet current obligations, as and when they fall due.
Formulas
23
5
Leverage Ratios or Solvency ratios

Leverage ratios indicate the long-term solvency of the firm. Leverage ratios indicate the mix
of debt and owners’ equity in financing the assets of the firm. These ratios measure the extent
of debt financing in a firm.
Solvency is a company’s ability to meet it long-term obligations as they become due.
An analysis of solvency concentrates on the long-term financial and operating structure of the
business. The degree of long-term debt in the capital structure is also considered. Further,
solvency is dependent upon profitability since in the long run a firm will not be able to meet
its debts unless it is profitable.
Debt Ratio. The debt ratio compares total liabilities (total debt) to total assets. It shows the
percentage of total funds obtained from creditors.
Debt/Equity Ratio.The debt/equity ratio is a significant measure of solvency since a high

degree of debt in the capital structure may make it difficult for the company to meet interest
charges and principal payments at maturity.
Times Interest Earned (Interest Coverage) Ratio. The times interest earned ratio reflects
the
number of times before-tax earnings cover interest expense.2 It is a safety margin indicator in
the sense that it shows how much of a decline in earnings a company absorb.
Cash Coverage Ratio. A problem with the times interested earned ratio is that it is based on
EBIT, which it is not really a measure of cash available to pay interest. A more accurate way
is to use earnings before interest, taxes, and depreciation (EBITD). Note: Depreciation, a
noncash expense should not be taken out.
Profitability Ratios
An indication of good financial health and how effectively the firm is being managed is the
company’s ability to earn a satisfactory profit and return on investment. Investors will be
reluctant to associate themselves with an entity that has poor earning potential since the
market price of stock and dividend potential will be adversely affected. Creditors will shy
away from companies with deficient profitability since the amounts owed to them may not be
paid. Absolute dollar profit by itself has little significance unless it is related to its source.
24
1 Gross Profit Margin. The gross profit margin reveals the percentage of each dollar left
over after the business has paid for its goods. The higher the gross profit earned, the better.
Gross profit equals net sales less cost of goods sold.
Profit Margin or net profit ratio.The ratio of net income to net sales is called the profit
margin. It indicates the profitability generated from revenue and hence is an important
measure of operating performance. It also provides clues to a company’s pricing, cost
structure, and production efficiency.
Return on Investment. Return on investment (ROI) is a key, but rough, measure of

performance. Although ROI shows the extent to which earnings are achieved on the
investment made in the business, the actual value is generally somewhat distorted.
There are basically two ratios that evaluate the return on investment. One is the return on
total assets, and the other is the return on owners’ equity.
The return on total assets (ROA) indicates the efficiency with which management has used its
available resources to generate income.
The return on common equity(ROE) measures the rate of return earned on the common
stockholders’ investment.
Activity (Asset Utilization) Ratios

Activity ratios are used to determine how quickly various accounts are converted into sales or
cash. Overall liquidity ratios generally do not give an adequate picture of a company’s real
liquidity, due to differences in the kinds of current assets and liabilities the company holds.
Thus, it is necessary to evaluate the activity or liquidity of specific current accounts. Various
ratios exist to measure the activity of receivables, inventory, and total assets.
Accounts Receivable Ratios. Accounts receivable ratios consist of the accounts receivable
turnover ratio and the average collection period. The accounts receivable turnover ratio gives
the number of times accounts receivable is collected during the year. It is found by dividing
net credit sales (if not available, then total sales) by the average accounts receivable
25
The collection period (days sales in receivables) is the number of days it takes to collect on
Receivables
.
Inventory Ratios. If a company is holding excess inventory, it means that funds which could
be invested elsewhere are being tied up in inventory. In addition, there will be high carrying
cost for storing the goods, as well as the risk of obsolescence. On the other hand, if inventory
is too low, the company may lose customers because it has run out of merchandise. Two
major ratios for evaluating inventory are inventory turnover and average age of inventory.
Market Value Ratios

A final group of ratios relates the firm’s stock price to its earnings (or book value) per share.
It also includes dividend-related ratio
Earnings per Share. Earnings per share indicates the amount of earnings for each common
share held. When preferred stock is included in the capital structure, net income must be
reduced by the preferred dividends to determine the amount applicable to common stock.
Price/Earnings Ratio (Multiple). Some ratios evaluate the enterprise’s relationship with its
stockholders. The often quoted price/earnings (P/E) ratio is equal to the market price per
share of stock divided by the earnings per share.
Book Value per Share.Book value per share is net assets available to common stockholders
divided by shares outstanding, where net assets is stockholders’ equity minus preferred stock.
Comparing book value per share with market price per share gives another indication of how
investors regard the firm.
Market Value Added. The major goal of a firm is to maximize wealth maximization. This
goal is maximized by maximizing the difference between the market value of the firm’s stock
and the amount of equity capital supplied by shareholders. The difference is called the market
value added (MVA).
Dividend Ratios. Many stockholders are primarily interested in receiving dividends. The two
pertinent ratios are dividend yield and dividend pay out.
26
Limitations of Ratio Analysis
1. Many large firms are engaged in multiple lines of business, so that it is difficult to identify
the industry group to which the firm belongs. Comparing their ratios with those of other
corporations may be meaningless.
2. Operating and accounting practices differ from firm to firm, which can distort the ratios
and make comparisons meaningless. For example, the use of different inventory valuation
methods (LIFO versus FIFO) and different depreciation methods would affect inventory and
asset turnover ratios.
3. Published industry average ratios are only approximations. Therefore, the company may
have to look at the ratios of its major competitors, if such ratios are available.
4. Financial statements are based on historical costs and do not take inflation into account.
5. Management may hedge or exaggerate their financial figures; thus, certain ratios will not
be
accurate indicators.
6. A ratio does not describe the quality of its components. For example, the current ratio may
be high but inventory may consist of obsolete goods.
7. Ratios are static and do not consider future trends.
Balance sheet
A balance sheet is a financial statement that reports a company's assets, liabilities and
shareholders' equity at a specific point in time, and provides a basis for computing rates of
return and evaluating its capital structure. It is a financial statement that provides a snapshot
of what a company owns and owes, as well as the amount invested by shareholders.
Formula
Components of balance sheet

Assets
Within the assets segment, accounts are listed from top to bottom in order of their liquidity –
that is, the ease with which they can be converted into cash. They are divided into current
assets, which can be converted to cash in one year or less; and non-current or long-term
assets, which cannot.
Here is the general order of accounts within current assets:
 Cash and cash equivalents are the most liquid assets and can include Treasury bills
and short-term certificates of deposit, as well as hard currency.
 Marketable securities are equity and debt securities for which there is a liquid
market.
 Accounts receivable refers to money that customers owe the company, perhaps
including an allowance for doubtful accounts since a certain proportion of customers
can be expected not to pay.
 Inventory is goods available for sale, valued at the lower of the cost or market price.
 Prepaid expenses represent the value that has already been paid for, such as
insurance, advertising contracts or rent.
Long-term assets include the following:
27
 Long-term investments are securities that will not or cannot be liquidated in the next
year.
 Fixed assets include land, machinery, equipment, buildings and other durable,
generally capital-intensive assets.
 Intangible assets include non-physical (but still valuable) assets such as intellectual
property and goodwill. In general, intangible assets are only listed on the balance
sheet if they are acquired, rather than developed in-house. Their value may thus be
wildly understated – by not including a globally recognized logo, for example – or
just as wildly overstated.
Liabilities
Liabilities are the money that a company owes to outside parties, from bills it has to pay to
suppliers to interest on bonds it has issued to creditors to rent, utilities and salaries. Current
liabilities are those that are due within one year and are listed in order of their due date.
Long-term liabilities are due at any point after one year.
Current liabilities accounts might include:
 current portion of long-term debt
 bank indebtedness
 interest payable
 wages payable
 customer prepayments
 dividends payable and others
 earned and unearned premiums
 accounts payable
Long-term liabilities can include:
 Long-term debt: interest and principal on bonds issued
 Pension fund liability: the money a company is required to pay into its employees'
retirement accounts
 Deferred tax liability: taxes that have been accrued but will not be paid for another
year (Besides timing, this figure reconciles differences between requirements
for financial reporting and the way tax is assessed, such as depreciation calculations.)
Some liabilities are considered off the balance sheet, meaning that they will not appear on the
balance sheet.
Shareholders' Equity
Shareholders' equity is the money attributable to a business' owners, meaning its
shareholders. It is also known as "net assets," since it is equivalent to the total assets of a
company minus its liabilities, that is, the debt it owes to non-shareholders.
Retained earnings are the net earnings a company either reinvests in the business or use to
pay off debt; the rest is distributed to shareholders in the form of dividends.
Treasury stock is the stock a company has repurchased. It can be sold at a later date to raise
cash or reserved to repel a hostile takeover.
Some companies issue preferred stock, which will be listed separately from common
stock under shareholders' equity. Preferred stock is assigned an arbitrary par value – as is
common stock, in some cases – that has no bearing on the market value of the shares (often,
par value is just $0.01). The "common stock" and "preferred stock" accounts are calculated
by multiplying the par value by the number of shares issued.
Additional paid-in capital or capital surplus represents the amount shareholders have invested
in excess of the "common stock" or "preferred stock" accounts, which are based on par value
rather than market price. Shareholders' equity is not directly related to a company's market
capitalization: the latter is based on the current price of a stock, while paid-in capital is the
sum of the equity that has been purchased at any price.
28
Secondary Data
Secondary data refers to data that is collected by someone other than the user. Common
sources of secondary data for social science include censuses, information collected by
government departments, organizational records and data that was originally collected for
other research purposes
Sources of secondary data
Secondary data are basically second-hand pieces of information. They are not gathered from
the source as the primary data. To put it in other words, secondary data are those which are
already collected. So they may be comparatively less reliable than the primary data.
Secondary data is usually used when the time for the enquiry is compact and the exactness of
the enquiry can be settled to an extent. However, secondary data can be gathered from
different sources which can be categorised into 2 categories. Namely:
1. Published sources
2. Unpublished sources
1. Published Sources:
Secondary data is usually gathered from the published (printed) sources. A few major sources
of published information are mentioned below:
 Published articles of local bodies and Central and State Governments.
 Statistical synopses, census records and other reports issued by different departments
of the Government.
 Official statements and publications of the foreign Governments.
 Publications and Reports of chambers of commerce, financial institutions, trade
associations, etc.,
 Magazines, journals and periodicals.
 Publications of Government organizations like the Central Statistical Organization
(CSO), National Sample Survey Organization (NSSO).
 Reports presented by Research Scholars, Bureaus, Economists, etc.,
2. Unpublished Sources:
Statistical data can be obtained from several unpublished references. Some of the major
unpublished sources from which secondary data can be gathered are:
 The research works conducted by teachers, professors and professionals.
 The records that are maintained by private and business enterprises.
 Statistics maintained by different departments and agencies of the Central and State
Governments, Undertakings, Corporations, etc.,
29
Chapter 4
FINANCIAL STATEMENT ANALYSIS OF HINDUSTAN
UNILEVER LIMITED
The below mentioned balance sheet belongs to Hindustan Unilever Limited of the year 2019-
20
Balance Sheet
Hindustan Unilever Limited
Assets
Current assets: 31st March 2020 31st March 2019
3,130. 575.
cash and cash equivalents 00 00
1,248. 2,693.
Investments 00 00
2,636. 2,422.
Inventories 00 00
1,046. 1,673.
Accounts receivable 00 00
1,887. 3,113.
bank balance other than cash and cash equivalents 00 00
1,410. 543.
Other financial assets 00 00
533. 351.
other current assets 00 00
18 4
assets held for sale .00 .00
11,908. 11,374.
Total current assets 00 00
Fixed assets: 31st March 2020 31st March 2019

4,625. 3,907.
Property, plant and equipment 00 00
513. 373.
capital work in progress 00 00
financial assets
250. 254.
investment in subsidaries,associates and joint venture 00 00
2 2
investments .00 .00
453. 396.
loans 00 00
3 11
other financial assets .00 .00
1,016. 619.
non current tax differ 00 00
30
261. 339.
differed tax asset 00 00
140. 154.
other fixed or non current assets 00 00
395. 400.
other intangable assets 00 00
7,658. 6,455.
Total fixed assets 00 00
Other assets: 31st March 2020 31st March 2019

36 36
Goodwill .00 .00
36 36
Total other assets .00 .00
19,602.0 17,865.0
Total assets 0 0
Liabilities and equity

Current liabilities: 31st March 2020 31st March 2019
financial liabilities -
accounts/trades payable - -
total outstaning dues of micro and small enterprises - -

total outstaning dues of creditors other than micro and 7,399. 7,070.
small enterprises 00 00
869. 456.
other financial liabilities 00 00
418. 326.
Other current liabilities 00 00
418. 501.
provisions 00 00
9,104. 8,353.
Total current liabilities 00 00
Non current liabilities: 31st March 2020 31st march 2019

financial liabilities
853. 360.
other financial liabilities 00 00
1,198. 1,049.
provisions 00 00
416. 444.
non current tax liabilities 00 00
2,467. 1,853.
Total long-term liabilities 00 00
31st March
Owner's equity: 31st March 2020 2019+D16
216. 216.
equity share capital 00 00
7,815. 7,443.
other equity 00 00
8,031. 7,659.
Total owner's equity 00 00
31
19,602.0 17,865.0
Total liabilities and equity 0 0
Statement of profit and loss
statement profit and loss Hindustan Unilever 2020 2019

Limited
in crores and rupees only as on 31st march 2020
Particulars year end 31st year ended 31st
march 2020 March 2019
INCOME
Revenue from operations 38785 38224
Other income 733 664
TOTAL INCOME 39518 38,888
EXPENSES
11572 13240
Cost Of materials consumed
Purchases Of stock-in-trade 6,342 4,708
Changes in inventories Of finished goods (including 121 12
stock-in-trade) and work-in-progress
Employee benefits expenses 1,691 1,747
Finance costs 106 28
Depreciation and amortization expenses 938 524
Other expenses 9,701 9,880
TOTAL EXPENSES 30,229 30,139
Profit before exceptional items and tax 9,289 8,749
Exceptional items (net) -197 -227
Profit before tax 9,092 8,522
tax expanses
-2,202 -2,565
Current tax
Deferred tax credit/(charge• -152 79
PROFIT FOR THE YEAR (A) 6,738 6,036
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified subsequently to
profit or loss
Remeasurements of the net defined benefit plans -68 -7
Income tax relating to items that will not be
reclassified subsequently to profit or loss
Remeasurements of the net defined benefit plans 17 3
Items that will be reclassified subsequently to profit
or loss
Fair value of debt instruments through other -1 2
32
comprehensive income
Fair value of cash flow hedges through other -77
Income tax relating to items that will be reclassified
subsequently to profit or loss
Fair value of debt instruments through other 0 -1
Fair value of cash flow hedges through other 40
OTHER COMPREHENSIVE INCOME FOR THE -89 -3
YEAR (B)
TOTAL COMPREHENSIVE INCOME FOR THE 6,649 6,033
YEAR (A+B)
Earnings per equity share
Basic (Face value of ` 1 each) 31.13 27.89
Diluted (Face value of ` 1 each) 31.12 27.88
Basis of preparation, measurement and significant
accounting policies
Analysing the reports of Hindustan Unilever Limited using Ratio analysis:
Liquidity Ratio
33
Leverage Ratios or Solvency ratios
Profitability Ratios
Activity (Asset Utilization) Ratios
Market Value Ratios
34
Interpretation
 After calculating and comparing the ratios of Hindustan Unilever limited. This firm is
maintaining good liquidity ratios comparing to liquidity ratio standards.
 The firm is very good at operating activities and they are maintaining good turnover
of their fixed assets. They are also maintaining good inventory.
 The firm is highly solvent and they have less amount of payables, debtors. They also
maintaining provisions to escape from insolvency position
35
Chapter 5
SUMMARY, FINDINGS, SUGGESTIONS AND CONCLUSION
Summery
In everyday Lisfe we are using different products and services are available in the
market. When coming to the personal care, food ingredients, health care and beauty,
detergents, other essential goods we are using different products belongs to different brands
of different firms. In India there are many companies are there to produce the daily essentials
to satisfy every customer wants and needs.
Hindustan Unilever is one of the oldest and strongest market players in Indian
FMCG industry. It covers various types of products, which are required by the customers in
their daily life. Hindustan Unilever is one of the top FMCG industries in our country. So, we
have to analyse the performance of the firm to know the liquidity position of the company,
solvency of the company, efficiency and working capital management by the company to
meet their short term requirements.
This will helps to understand how the company is able to use their resources
optimally to achieve their goals and objectives satisfying the vision and mission of the
organization .This also help us to understand the future investments of the firm.
Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company
with a heritage of over 80 years in India. On any given day, nine out of ten Indian households use our
products to feel good, look good and get more out of life – giving us a unique opportunity to build a
brighter future.

36
Findings
 The firm is maintaining good liquidity. Position.
 The revenue and other income of the firm are increased compared to the last year.
 The firm is good at their operational activities and they are maintaining high level of
inventories.
 The firm is maintain good debt to equity ratio. It indicates that the firm is largely
depending on equity for the capital.
 The firm also maintaining good turnover of receivables, inventories, assets.
 The value of the firm also good and they are also paying dividends regularly.
 Being a manufacturing firm it should maintain high working capital.
 The firm should try to reduce the inventory costs and other expanses to achieve more
profits
 The firm is maintaining low EPS, so it leads to reduction of market capitalization.
 The dividend pay out of the firm also very low.
 The overall financial performance of the firm is good.
37
Suggestions
 The firm should maintain good working capital. Because it is a manufacturing firm.
 The firm should reduce their expanses to increase the profit.
 The firm should improve the performance to increase the EPS of the firm
 The firms should have proper check on the manufacturing process of the plant.
 The direct material cost of the firm is very high so it’s my advice to the firm that to
decrease the direct material cost by purchasing raw material from the other suppliers.
 The firm high inventory so I suggested that the firm must reduce the stock by increase
sales.
 It should enhance its employee’s efficiency, more training needed to its employees in
order to increase its production capacity and minimize mistakes while performing the
tasks, also more safety precaution need to implement to the employees who directly
working on sugar production process.
38
Conclusion
 This project of Ratio analysis in the production concern is not merely a work of the
project. But a brief knowledge and experience of that how to analyse the financial
performance of the firm.
 The study undertaken has brought in to the light of the following conclusions.
According to this project. I came to know that from the analysis of financial
statements it is clear that Hindustan Unilever Limited. Have been incurring
loss during the period of study. So the firm should focus on getting of profits in the
coming years by taking care internal as well as external factors. And with regard to
resources, the firm is take utilization of the assets properly. And also the firm has a
maintained low inventory.
 A company is solvent when it is able to honour all its commitments by liquidating all
of its assets, i.e. if it ceases its operations and puts all its assets up for sale. Net assets,
i.e. the difference between assets and total liabilities, are the traditional measure of a
company's solvency.
 A company creates value if the return on capital employed (after tax) that it generates
exceeds the cost of the capital (i.e. equity and net debt) that served to finance capital
employed.
 Lastly, we recommend that readers who need to carry out a rapid assessment of an
ailing company where the accounts are not yet available build a cash flow statement
in reverse.
 This reverse approach starts with reduction in net debt and works back towards net
income, thus gauging the scale of losses that put the company's solvency and very
survival in jeopardy.
39
Bibliography
1. Accounting for managers by B. Ram New age international pvt ltd 2009
2. William webster Accounting for managers Mc GrewHill education pvt ltd
2003
3. Shcuam’s outline Financial management Jae k shem, joel g siegel, McGraw
Hill 3rd edition
4. M.Y Khan “financial management “ McGraw hill india
5. Annual report 2019-2020 Hindustan Unilever Limited.
40
References
1 https://www.ibef.org/industry/fmcg.aspx
for knowing about FMCG industry
2 https://shodhganga.inflibnet.ac.in/bitstream/10603/34703/10/10_chapter%202.pdf
History of the industry
3 https://www.ibef.org/download/FMCG_sectoral.pdf
4 tata consumar products
https://www.tata.com/business/tata-consumer
5 Wipro consumer care
https://wiproconsumercare.com/about-us/wipro-consumer-care/
6 dabur consumer care limited
https://www.dabur.com/in/en-us/about
7 hindustan unilever profile
https://www.hul.co.in/about/
8.ITC india limited
https://www.itcportal.com/about-itc/index.aspx
9 P&G
https:// www.wikipedia.org
41
42
43
44
45
46
47

Performance Analysis of Hul - v1 27112020

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Performance Analysis of Hul - v1 27112020

Uploaded by

Copyright:

Available Formats

PERFORMANCE ANALYSIS OF HINDUSTAN

A project report submitted

Under the guidance of

DEPARTMENT OF MANAGEMENT STUDIES

I hereby declare that this project work entitled “ PERFORMANCE

Place: Visakhapatnam (M .JAYA CHANDRA)

This is to certify that the project report entitled “PERFORMANCE

Dr CH. Hari Govinda Rao

MARKS ASSESMENT SHEET

NAME OF THE STUDENT : MALLA JAYA CHANDRA

MAX MARKS AWARDED MARKS

Project guide HOD-MBA

I spontaneously express my thanks to Dr. B. Arundhati, Principal, and Dr. V.

Key words: Profitability, Liquidity, solvency, operational efficiency.

4 Financial statements analysis of Hindustan Unilever limited 30

 loans from financial institutions

Introduction to Indian FMCG Industry?

Brands around the world

VIEW OUR BRANDS

With over 35 brands spanning 20 distinct categories such as soaps, detergents,

ITC is one of India's foremost private sector companies and a diversified

Multiple Drivers of Growth

Dabur India Limited:

The 135-year-old ayurvedic company, promoted by the Burman family, started

Dabur also recommends various Ayurvedic Home Remedies formulated

Brands of Dabur India Limited

Wipro Consumer Care & Lighting has presence in 20 countries predominantly in

International business Wipro Consumer Care established its international footprint

TATA CONSUER PRODUCTS

Brands of Tata consumer products

P&G India limited

Brands of P&G India limited

Brands around the world

VIEW OUR BRANDS

With over 35 brands spanning 20 distinct categories such as soaps, detergents,

Awards and honours

The Institute of Competitiveness, India, has recognized Hindustan Unilever Limited's

As per a 2015 Nielsen Campus Track-business school survey, Hindustan Unilever

Financials of Hindustan Unilever

LIMITATIONS OF FINANCIAL ANALYSIS:

Leverage Ratios or Solvency ratios

Debt/Equity Ratio.The debt/equity ratio is a significant measure of solvency since a high

Return on Investment. Return on investment (ROI) is a key, but rough, measure of

Activity (Asset Utilization) Ratios

Market Value Ratios

Components of balance sheet

Fixed assets: 31st March 2020 31st March 2019

Other assets: 31st March 2020 31st March 2019

Liabilities and equity

total outstaning dues of micro and small enterprises - -

Non current liabilities: 31st March 2020 31st march 2019

Statement of profit and loss

statement profit and loss Hindustan Unilever 2020 2019

Analysing the reports of Hindustan Unilever Limited using Ratio analysis:

Activity (Asset Utilization) Ratios

Market Value Ratios

Financial statement analysis: Financial statements presents accounting data in

You might also like