A Summer Training Report ON FINANCIAL ANALYSIS OF HINDUSTAN UNILEVER LIMITED & INDIAN TOBACCO COMPANY

Submitted to GURUKUL KANGRI UNIVERSITY,HARIDWAR

In partial fulfillment of the requirement for the two years full time post graduate degree in

MASTER OF BUSINESS ADMINISTRATION(MBA)

Supervised by: Dr. Bindu Arora

Submitted by: Akansha Tyagi(MBA)

Department of Management Studies Kanya Gurukul Mahavidyalaya, Dehradun 2nd Campus, Gurukul kangri University, Haridwar 2009-2011

ACKNOWLEDGEMENT
I wish to thank Indian Tobacco Company Limited, Sidcul and its employees, who gave me their precious time to make me learn some important aspects of the Organization, its Structure, about its functioning. I express my sincere thanks to Mr. Arun Raghav(DGM - HR) for giving me an opportunity to work with them through this summer project. I am very pleased that, I got the opportunity to work under and thank Mr.Kapil(Manager in Finance & Accounts,Sidcul) for his invaluable guidance, constant encouragement & practical suggestions based on the experience to focus my efforts because of which this work has come to the presentable form. Gracious help from Dr. Surekha Rana, have contributed tremendously to the completion of this project work. I offer my sincere thanks to , Dr. Bindu Arora who guided me in the completion of the project.

CONTENTS
PREFACE…………………………………………………... OBJECTIVES OF STUDY…………………………………. RESEARCH METHODOLOGY……………………………. COMPANY PROFILE • The Indian FMCG sector…………………………. • ITC profile………………………………………... • HUL profile………………………………………. INTRODUCTION • Financial Analysis………………………………... • Ratio Analysis……………………………………. ANALYSIS & INTERPRETATION Inter Company Analysis…………………………… FINDINGS & CONCLUSION…………………………... RECOMMENDATIONS……………………………………. .. BIBLIOGRAPHY………………………………………...

I decided to choose one of India’s biggest companies in a sector that has rapidly grown over the last few years and a company where leaders like Mr. The financial statements of last three years are identified. Critical decisions of distributing dividends. Later. . or rather. along with analysis of various components of the company vis-à-vis other competitors in the same segment. I try and evaluate the various ratios to appreciate their impact on company’s performance over the last three years.C. Inventory. Investments and Employee related liabilities for the FY 2010.PREFACE The project assigned to me was to study the financial health of any organization in the country. Deweshwar are made. I Finally. I also study the accounting policy of the company is also studied with respect to valuation of Fixed Assets. Deweshwar. Through a thorough industry and company analysis. a company that has been made by Mr. Y. I aim to understand the external factors influencing the company and its decision making. As a benchmark. Issue of bonus Debentures and other current news are analyzed and their impact on the bottom line of the company is assessed.

OBJECTIVES OF STUDY • To have a deeper insight into the comparative study of Hindustan Unilever Limited & Indian Tobacco Company using ratios. To know about the past and present trends as well as predict about the future. • .

.e. primary and secondary sources. Research design: Research design is a best plan or a model for the collection of formal information.This method involves the study of various documents available in the organisation which may contain information required for the study. Collection of data: Basically there are two sources through which data is collected i. The study will help us to know about the past and present trends as well as predict about the future. Research objective: The main objective of this project is to have a deeper insight into the financial position of the company and make comparative analysis of balance sheet and profit and loss account of the company with the major competitor of the market i. Secondary data: Secondary data means data that is already available i. HUL..RESEARCH METHODOLOGY Research problem: To access the comparative financial position of the company and suggest remedial measure to improve the financial position in future. Descriptive type of research has been used.e. it is concerned with describing the characteristics of a particular individual or a group. It includes the following documents: • Annual report and financial statement of the company. they refer to that data which have alreadt been collected. . But in my project report only secondary data is used.e.

have low per capita consumption as well as low penetration level. It has been predicted that the FMCG market will reach to US$ 33. According to the study conducted by AC Nielsen. The big firms are growing bigger and small-time companies are catching up as well. Most of the product categories like jams. These are figures the soft drink and cigarette companies have always shied away from revealing. etc. Personal care. Britannia takes the fifth place.4 billion in 2015 from US $ billion 11. keeping pace with rapid urbanization. and rising per capita income. Fifteen companies own these 62 brands.1 billion. The Indian Economy is surging ahead by leaps and bounds.6 in 2003. toothpaste. in India. Coca-Cola (8) and Parle (9). and soft drinks are the three biggest categories in FMCG. Well-established distribution networks. followed by Colgate (6). . and the balance by Indian companies. cigarettes. and 27 of these are owned by Hindustan Lever. but the potential for growth is huge. FMCG in India has a strong and competitive MNC presence across the entire value chain. Nirma (7). as well as intense competition between the organised and unorganised segments are the characteristics of this sector.THE INDIAN FMCG INDUSTRY The Indian FMCG sector is the fourth largest in the economy and has a market size of US$13. skin care. increased literacy levels. The middle class and the rural segments of the Indian population are the most promising market for FMCG. they account for 35 of the top 100 brands. shampoos. 62 of the top 100 brands are owned by MNCs. Between them. Pepsi is at number three followed by Thums Up. and give brand makers the opportunity to convert them to branded products.

Procter & Gamble Hygiene and Health Care 10.500 crore. Nestle India 4. According CII figures for 2005.THE TOP 10 COMPANIES IN FMCG SECTOR 1.000 crore.000 crore.100 crore. The sector accounts for barely 2% of India's GD . GCMMF (AMUL) 5. 2. of bread and biscuits to be Rs 8. Britannia Industries 9. Asian Paints (India) 7. of hair care and oral care products to be Rs 2.600 crore each.100 crore. CONTRIBUTION TO GDP. of personal wash products to be Rs 4. Hindustan Unilever Ltd. of chocolates to be Rs 350 crore and of ice cream to be Rs 900 crore.000 crore. ITC (Indian Tobacco Company) 3. of health beverages to be Rs 1. Dabur India 6. The FMCG sector is the fourth largest sector in the Indian economy with a total market size of around Rs 45. Cadbury India 8. of household cleaners to be Rs 1. the size of the fabric wash market is estimated to be Rs 4.Marico Industries Size of The Sector: IN TERMS OF MONEY.

which illegally mimic the labels of the established brands. These products narrow the scope of FMCG products in rural and semi-urban market.e. • Export potential • High consumer goods spending Threats: • Removal of import restrictions resulting in replacing of domestic brands • Slowdown in rural demand • Tax and regulatory structure .SWOT Analysis of FMCG sector Strengths: • Low operational costs • Presence of established distribution networks in both urban and rural areas • Presence of well-known brands in FMCG sector Weaknesses: • Lower scope of investing in technology and achieving economies of scale. i. Opportunities: • Untapped rural market • Rising income levels.a population of over one billion. especially in small sectors • Low exports levels • "Me-too products. increase in purchasing power of consumers • Large domestic market.

There is an upward trend in urban as well as rural market and also an increase in spending in organ-ized retail sector. FMCG Industry which is directly related to the population is expected to maintain a robust growth rate. According to the estimates.GROWTH PROSPECT Large Market India has a population of more than 1. . has leads to growth rate in FMCG goods. An increase in disposable income. of household mainly because of in-crease in nuclear family where both the husband and wife are earning.450 Billion and will surpass China to become the World largest in terms of population. Spending Pattern An increase is spending pattern has been witnessed in Indian FMCG market. by 2030 India population will be around 1.150 Billions which is just behind China.

. There is a change in the mind set of the Consumer and now looking at “Money for Value” rather than “Value for Money”. We have seen willingness in consumers to move to evolved products/ brands. The biggest attraction for MNCs is the growing Indian middle class. With companies opting for information technology a reduction in inventory levels and an improvement in the working capital cycle is likely. because of changing lifestyles. double-income families. an extensive distribution network and an insight in local market conditions. This market is characterised with low penetration levels. FACTORS AFFECTING THE GROWTH Over the years. Findings according to a recent survey by A. This will benefit companies by controlling costs and improving margins. rising disposable income etc. changing lifestyles. while domestic companies compete on the basis of their well-acknowledged brands. Nielsen shows about 71 per cent of Indian take notice of packaged goods labels containing nutritional information compared to two years ago which was only 59 per cent.Changing Profile And Mind Set Of Consumer People are becoming conscious about health and hygienic. Products like air conditioners are no longer perceived as luxury products. increasing consumer awareness and introduction of new models. availability of credit. C. Consumers are switching from economy to premium product even we have witnessed a sharp increase in the sales of packaged water and water purifier. demand for consumer durables has increased with rising income levels. MNCs hold an edge over their Indian counterparts in terms of superior technology combined with a steady flow of capital.

ITC ITC is one of India's foremost private sector companies with a market capitalisation of nearly US $ 19 billion and a turnover of over US $ 5 billion. Hotels. Agri-Business. Packaging. ITC ranks among India's `10 Most Valuable (Company) Brands'. Paperboards. among India's Most Respected Companies by BusinessWorld and among India's Most Valuable Companies by Business Today. it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery. in a study conducted by Brand Finance and published by the Economic Times. Paperboards & Specialty Papers. While ITC is an outstanding market leader in its traditional businesses of Cigarettes. ITC also ranks among Asia's 50 best performing companies compiled by Business Week. Branded Apparel. Packaging and Agri-Exports. ITC has a diversified presence in Cigarettes. Personal Care. Packaged Foods & Confectionery. Branded Apparel. Chairman Y C Deveshwar calls this source of inspiration "a commitment beyond the market". ITC is rated among the World's Best Big Companies. As one of India's most valuable and respected corporations. Hotels. Stationery. Personal Care and Stationery. Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine. ITC practises this philosophy by not only driving each of its businesses towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part.COMPANY PROFILE. Information Technology. In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value. ITC is widely perceived to be dedicatedly nation-oriented. Safety Matches and other FMCG products." .

which accorded it the second highest rating.2 billion in the last decade). an associate of Moody's Investors Service. safety and environment management systems. fulfill the aspirations of its stakeholders and meet societal expectations. ITC's Agri-Business is one of India's largest exporters of agricultural products. the strategic forays into new businesses are expected to garner a significant share of these emerging high-growth markets in India. This over-arching vision of the company is expressively captured in its corporate positioning statement: "Enduring . ITC was the first company in India to be rated for Corporate Governance by ICRA." ITC employs over 26. is aggressively pursuing emerging opportunities in providing end-to-end IT solutions. which has already become the subject matter of a case study at Harvard Business School.000 people at more than 60 locations across India. Ranked among India's most valuable companies by the 'Business Today' magazine. ITC's wholly owned Information Technology subsidiary. effective supply chain management and acknowledged service skills in hoteliering. productivity. This transformational strategy. is expected to progressively create for ITC a huge rural distribution infrastructure. including e-enabled services and business process outsourcing ITC's production facilities and hotels have won numerous national and international awards for quality. signifying "a high level of assurance on the quality of corporate governance. ITC Infotech India Limited. Over time. superior brand-building capabilities. (US $ 3. The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. significantly enhancing the Company's marketing reach. ITC continuously endeavors to enhance its wealth generating capabilities in a globalising environment to consistently reward all its shareholders. ITC is one of the country's biggest foreign exchange earners.ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach.

. Hindustan Unilever was rated as the most respected company in India for the past 25 years by Businessworld. touching the lives of two out of three Indians with over 20 distinct categories in home & personal care products and food & beverages. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of over Rs.000 employees and contributes for indirect employment of over 52. one of India’s leading business magazines. HUL is the market leader in Indian consumer products with presence in over 20 consumer categories such as soaps. detergents and shampoos amongst others with over 700 million Indian consumers using its products. It has over 35 brands. and United Traders Ltd. HUL is also one of the country's largest exporters. HUL was formed in 1933 as Lever Brothers India Limited and came into being in 1956 as Hindustan Lever Limited through a merger of Lever Brothers. It is headquartered in Mumbai. Sixteen of HUL’s brands featured in the ACNielsen Brand Equity . Ltd. In 2007.COMPANY PROFILE-HUL Hindustan Unilever Limited (HUL) (BSE: 500696) is India's largest fast moving consumer goods company. tea. The AngloDutch company Unilever owns a majority stake (52%) in Hindustan Unilever Limited. 13. India and has an employee strength of over 15.[2] The rating was based on a compilation of the magazines annual survey of India’s Most Reputed Companies over the past 25 years. Hindustan Vanaspati Mfg. Co.000 crores. The company was renamed in June 2007 to “Hindustan Unilever Limited”.000 people. it has been recognised as a Golden Super Star Trading House by the Government of India.

Two out of three Indians use the company’s products and HUL products have the largest consumer reach being available in over 80 per cent of consumer homes across India. Domex disinfectant. Rexona. Taj Mahal. Lipton tea. Pepsodent and Close Up toothpaste and brushes. Taaza. Knorr soups & meal makers.. Modern Bread.e. Clinic Plus. Lifebuoy. Fair and Lovely creams. Clinic All Clear. HUL has the largest number of brands in the Most Trusted Brands List. HUL is also one of the country's largest exporters. Kissan squashes and jams.list of 100 Most Trusted Brands Annual Survey (2008). Lakmé beauty products. it has been recognised as a Golden Super Star Trading House by the Government of India. nearly 80% of the retail outlets in India.3 million outlets and owns 35 major Indian brands. Some of its brands include Kwality Wall's ice cream. Clear. Vim dishwash. Pond's talcs and creams. Annapurna salt and atta. Pureit water purifier. Hindustan Unilever's distribution covers over 1 million retails outlets across India directly and its products are available in over 6. and Axe deosprays. and Surf. i. Comfort fabric softners. HUL was one of the eight Indian companies to be featured on the Forbes list of World’s Most Reputed companies in 2007 The company has a distribution channel of 6. Rin and Wheel laundry detergents. According to Brand Equity. Brooke Bond(3 Roses. Vaseline lotions. Ala bleach. Hamam and Moti soaps. Bru coffee. Red Label) tea. Breeze. Sunsilk and Dove shampoos. Liril. Lux. It has 39 factories in the country. It’s a company that has consistently had the largest number of brands in the Top 50 and in the Top 10 (with 4 brands). Pears. .3 million outlets in India.

which now covers 15 states in India with over 45. The programme endeavours to induce adoption of hygienic practices among rural Indians and aims to bring down the incidence of diarrhoea. focusing on health & hygiene education.000 women entrepreneurs in 135. In 2006. through which it creates micro-enterprises for rural women. So far it has reached 120 million people in over 50. HUL is also running a rural health programme. Staff at these centres developed many innovations in products and manufacturing processes.000 villages. the company's research facilities were brought together at a single site in Bangalore. HUL also renders services to the community. HUL has also responded to national calamities.000 villages . and rural development. the company embarked on a programme called Shakti. and Unilever Research India in Bangalore in 1997. and water management. Shakti also includes health and hygiene education through the Shakti Vani Programme. empowerment of women.000 Shakti entrepreneurs covering 500.000 villages. It is also involved in education and rehabilitation of underprivileged children. for instance with relief and rehabilitation after the 2004 tsunami caused devastation in South India.The Hindustan Unilever Research Centre (HURC) was set up in 1967 in Mumbai. care for the destitute and HIV-positive. Lifebuoy Swasthya Chetana. Shakti aims to have 100. touching the lives of over 600 million people. By the end of 2010. In 2001.

These reports are usually presented to top management as one of their bases in making business decisions. It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. • • • .FINANCIAL ANALYSIS Financial analysis refers to an assessment of the viability. Based on these reports. stability and profitability of a business sub-business or project. Make decisions regarding investing or lending capital. Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business. management may: • • • Continue or discontinue its main operation or part of its business. Make or purchase certain materials in the manufacture of its product. Issue stocks or negotiate for a bank loan to increase its working capital. Acquire or rent/lease certain machineries and equipment in the production of its goods.

Stability. without having to sustain significant losses in the conduct of its business. Profitability . as well as other financial and non-financial indicators. 2. Future Performance . This extrapolation method is the main source of errors in financial analysis as past statistics can be poor predictors of future prospects. profitability. Both 2 and 3 are based on the company's balance sheet. • . which reports on the company's results of operations. Methods Financial analysts often compare financial ratios (of solvency. Solvency .its ability to pay its obligation to creditors and other third parties in the long-term.its ability to earn income and sustain growth in both shortterm and long-term. while satisfying immediate obligations. A company's degree of profitability is usually based on the income statement. 3. including present and future values. which indicates the financial condition of a business as of a given point in time.): • Past Performance . etc.its ability to maintain positive cash flow. Liquidity .Goals Financial analysts often assess the firm's: 1.Across historical time periods for the same firm (the last 5 years for example).Using historical figures and certain mathematical and statistical techniques. Assessing a company's stability requires the use of both the income statement and the balance sheet.the firm's ability to remain in business in the long run. 4. growth.

One ratio holds little meaning. by another.Comparison between similar firms.• Comparative Performance . • • • • . for example : Net income / equity = return on equity (ROE) Net income / total assets = return on assets (ROA) Stock price / earnings per share = P/E ratio Comparing financial ratios is merely one way of conducting financial analysis. A ratio's values may be distorted as account balances change from the beginning to the end of an accounting period. Use average values for such accounts whenever possible. taken from the balance sheet and / or the income statement. Seasonal factors may prevent year-end values from being representative. Financial ratios are no more objective than the accounting methods employed. These ratios are calculated by dividing a (group of) account balance(s). Their insights about relative performance require a reference point from other time periods or similar firms. ratios can be logically interpreted in at least two ways. Changes in accounting policies or choices can yield drastically different ratio values. As indicators. One can partially overcome this problem by combining several related ratios to paint a more comprehensive picture of the firm's performance. They fail to account for exogenous factors like investor behavior that are not based upon economic fundamentals of the firm or the general economy (fundamental analysis) . Financial ratios face several theoretical challenges: • They say little about the firm's prospects in an absolute sense.

a group of items can be expressed as a percentage of net income. For example. This provides a better way to determine trends. Another method is comparative analysis. reduces all items on a statement to a “common size” as a percentage of some base value which assists in comparability with other companies of different sizes .Financial analysts can also use percentage analysis which involves reducing a series of figures as a percentage of some base amount. When proportionate changes in the same figure over a given time period expressed as a percentage is known as horizontal analysis. Vertical or common-size analysis. Comparative analysis presents the same information for two or more time periods and is presented side-by-side to allow for easy analysis. .

results related to the progress or failure of a business concern can be easily obtained. estimation can be made regarding the financial position of a business concern. may make no sense but if two related items are studied in comparison to the others may suggest something significant. IMPORTANCE OF RATIO ANALYSIS . Relative study: The facts and figures expressed in financial statements if studied in isolation. The way. Analysis of business activities: On the basis of the comparative study of ratios. in which we estimate the health of our body through heart beats. large figures or group of figures are presented precisely so as to make them understandable. similarly through the technique of ratio analysis. The main objectives of ratio analysis are: 1. 3.RATIO ANALYSIS Meaning Ratio is an expression of relationship of one figure with another it may be defined as the relationships or proportion that one amount bears to other financial ratios express arithmetical relationships between two figures or two groups of figures which are related to other. It can be called as the heart of financial analysis. Conciseness: With the help of Ratio. OBJECTIVE OF RATIO ANALYSIS Ratio analysis is the important technique of financial analysis. 2.

In this way ratio analysis is considered to be the essential part of budgetary control and standard costing. co-ordination. 5. . the standard can be fixed. Helpful in communication: Through ratio analysis it is possible to know the changes that had taken place in business between two periods. This is effected through the use of trend analysis. 4. 3. by establishing standards the effective control can be exercised upon the activity of the firm. whether the financial position of a firm is showing any improvement or deterioration over years.e. Helpful in effective control: On the basis of ratios. 2. Helpful in determining the standards: Keeping in mind the old ratios and present operating efficiency. Helpful in trend analysis: The ratio analysis facilitates a firm to consider the time dimension into account. Helpful to management: The ratio analysis is proves to be of significant value to the management in the process of discharge of its elementary functions such as planning. i. It helps to make an inter-firm comparison either between the different departments of a firm or between two firms employed in the identical types of business or between the same firms on two different dates. communication and control.Ratio analysis is the most important tool of financial analysis: 1. Useful in comparative study: Ratio analysis is also helps in comparative study. 6. With the help of the financial analysis one can ascertain whether the trend is favorable or unfavorable.

a number of financial statements. Hence. In other words. solvency. . Ignores Qualitative Factors: The ratio facilitates wholly quantitative analysis only. Helpful in evaluation of financial soundness: With the help of liquidity. Only a part of the information needed in the process of decision taking: It should also be remembered that ratio analysis helps in providing only a part of the information needed in the process of decision making. to test the Liquidity. For example. 2. one single ratio used without reference to other ratios may produce misleading results. 3. Limited Use of a Single Ratio: A single ratio in itself is meaningless. For example. whatever conclusion drawn may get distorted. LIMITATIONS OF RATIO ANALYSIS 1. the grant of credit to an enterprise may depend more upon the character and capacity of the owner than on the conclusion drawn from the so called Ratio analysis. profitability and capital gearing ratios is detailed information can be gathered related to financial soundness of any institution. The qualitative factors which are so important for the successful functioning of the organisation are completely ignored and hence. it does not furnish a complete picture. 7.On the comparison of standard ratios with actual ratios adverse financial position can be found out and corrective measures can be taken. make use of all the Liquidity ratios.

4. 5. the correct picture cannot be drawn up by the ratio analysis. But in most cases. Historical Analysis: Ratios delve in the past as they are obtaining from the financial statements which are considered to be historical documents. . Variations in Accounting Policies: Comparison between two variables proves worth provided their basis of valuation is identical but in reality it is not possible. Difficulty in Evolving Standard Ratio: It is very difficult to ascertain the normal or standard ratio in order to make proper comparison. 3. Different meaning to accounting terms Comparisons are also made difficult due to differences in definition of various terms used in computing ratios. A financial analyst is more concerned the probable happenings in the future rather than those in the past. Possibility of window-dressing: Ratio depends on figures of the financial statements. 4. Personal bias: Ratios are only means of financial analysis and not end in itself. the figures are window dressed. 1. Effect of price changes are not taken into account: A change in the price level can seriously affect the validity of comparisons of ratios computed for different time periods. 2. They can be affected with the personal ability and bias of the analyst. As a result.

Liquidity Ratios Capital Structure Ratios Activity or Turnover Ratios Profitability or Profit Earning Capacity Ratio. 3. 2. 4. .CLASSIFICATION OF FINANCIAL RATIOS 1.

it is believed that.INTER COMPANY ANALYSIS & INTERPRETATION Key Ratios: 1) Current Ratio: Current ratio is defined as an indicator of short-term debt paying ability of a company.5 1. Current Ratio 3 1.968 0. Here we observe that the current ratio of ITC increases over the FY 2007-2008 and 2008-2009 but decreases in the last year.641 Ratios 2 1.58 1. This is evident from the graph given below. The higher the ratio.73 2. the more liquid the company.009 ITC HUL 0. It is determined by dividing current assets by current liabilities.797 0.5 0 2007-2008 2008-2009 2009-2010 0.5 1 Years .

.The ideal current ratio is 2:1 2) Return On Net Worth The ratio of net income after taxes to total end of the year net-worth of the company is called the RONW for that company. Clearly.The graph above also shows the comparison of ITC visà-vis the competitor chosen in the market. While HUL maintains its high return on the networth but in the FY 2009-2010 it has decreased yet it fares well as compared to ITC. This ratio indicates the return on stockholder's total equity that is invested in the business. We observe that in all the three years HUL have lower current ratio than ITC in the sector. from the diagram below. it is evident that HUL is better performers in terms of RONW.

28 0.03 1 0.On the other hand HUL shows a sharp increase and then a sharp decrease which shows high fluctuation which shows some instability in this area.ITC shows a steady increase which is a positive sign for future growth. Return On Total Assets .25 0.23 0 2007-2008 2008-2009 2009-2010 Years 3) Return on Total Assets (ROTA): The return on Total Assets is yet another method of calculating the return of the company.This is presented in the diagram below.2 0.2 1.8 Ratio 0.8 0. This is calculated by taking the ratio between the PBIT (Profit before Interest and Taxes) to the Total Assets of the company. When considered on the basis of ROTA. ITC fares well in the year 2009-2010 as compared to HUL.Return On Net Worth 1.6 HUL ITC 0.88 0.4 0.

2 1. as it is called.4 0. This therefore results in an increment in the earnings when considered in per share terms.6 HUL 0.1.05 2009-2010 0.2 0 2007-2008 2008-2009 0.327 0.435 0.8 0. The EPS of ITC has increased over the last three years. EPS serves as an indicator of a company's profitability. It is therefore measured as the portion of a company's profit allocated to each outstanding share of common stock. is a company's profit after tax (PAT) divided by its number of outstanding (equity) shares.096 1 0. this is because the number of shares of ITC in the market remains steady and the earnings (PAT) increases every year.405 ITC Ratio Years 4) Earnings per share: (EPS): Earnings per share. .357 0.

Declaration of this is dependent solely on the decision of the management.This could be because of the changing face values of the share in the market.62 10. the actual owners of the company.46 8. The total interim dividend divided by the number of equity shares of the company measures the dividend per share in our case.The effect of decrease in EPS will be reflected in the DPS.2 8. 5) Dividend per share: Dividend is defined as the amount of profit that is distributed among the shareholders of the company.Earning Per Share 14 12 11.73 8.1 Rs. in Crores 10 8 6 4 2 0 HUL ITC 2007-2008 2008-2009 2009-2010 Years On the other hand HUL shows an increase and then a slight decrease in the EPS in the last FY. whether they want to retain it for reinvestment or distribute to the shareholders.64 10. .

in Crores 7 6 5 4 3 2 1 0 2007-2008 2008-2009 3.5 ITC 2009-2010 Years ITC Limited over the last few years have experienced a steady increase in the dividend distributed per share because of reasons mentioned above owing to the increasing dividend paid by the managemen to the shareholders. The earnings per share for HUL.7 HUL 4. shows an increase and then a decrease hence there is a decrese in the dividend distributed per share.Dividend Per Share 10 9 8 9 7.5 Rs. .5 6.5 3. the market capitalization has shown a net increase representing a good growth component in the sector and the confidence of the buyers who continue to buy the stocks of such companies. 6) Market Capitalization: The market capitalization of the company is defined as the market value of the number of equity shares being traded in the market at that point of time. Across companies too.

in Crores 80000 60000 69751 52077 HUL ITC 40000 46575 51770 20000 0 2007-2008 2008-2009 2009-2010 Years 7) Price Book Ratio The Price Book ratio is defined as the ratio between the market capitalizations to the networth of the company at any given point of time.Market Capitalisation 120000 100000 100476 77765 Rs. .

Price Book Ratio 25 21.07 0 2007-2008 2008-2009 2009-2010 Years Across companies. HUL reports a steady increase in PB ratio and manages to hold its position pushing ITC to the lowest figure in the industry.4 5.44 21. . ITC Limited rates poorly for the Price Book Ratio.14 5 6.84 15 Ratios 10 HUL ITC 7.4 20 21.

641 NET 0.5 77765 6.64 3.73 PER 9 46575 MARKET CAPITALISATION PRICE RATIO BOOK 21.5 51770 21.4 2009-10 0.5 52077 21.405 10.25 0.05 10.7 69751 5.23 0.1 4.096 11.327 8.96 1.79 0.009 0.62 6.8 NET 0.88 0.4 ITC 2008-09 1.357 8.FINDINGS & CONCLUSION COMPARATIVE CHART KEY RATIOS HUL 2007-08 2008-09 0.43 PER 8.14 CURRENT RETURN WORTH RETURN ASSETS EARNING SHARE DIVIDEND SHARE RATIO ON ON 0.28 0.2 3.03 1.5 100476 7.07 2009-10 1.46 7.4 .58 0.8 2007-08 1.73 0.

Uban retail-Wills Lifestyle).FINDINGS • The liquidity position of the company is quite stable as compared to HUL. • There is a good growth component in both the companies indicated by the increasing market capitalization. . CONCLUSION HUL have been an established legend in FMCG space since decades and ITC is relatively a new player. • Earning per share of ITC has increased over the last three years which indicates pretty good profit allocation to each stock. From the above comparative study it is concluded that though HUL is posing a very strong competition for ITC but ITC also has responded well by performing reasonably good by diversifying/de-risking their business by venturing into new spaces like Retail(Rural retail-eChoupals.Home & Personal Care.Foods. • The net worth of ITC has shown a steady increase over the last three years.etc .Hospitality. • HUL fares well as compared to ITC in producing return on net worth.

• To improve the net worth.ITC should scout for acquisitions in premium hospitality space . • To strenghthen their Agri-commodity business they can plan for venturing into cold-storage spaces through public –private partnership. .also they can plan for venturing into budget hotels space(which is growing very fast).RECOMMENDATIONS • Need improvement in distribution network for the FMCG products mainly for home & personal care.

LIMITATIONS • It took a lot of time in collection of data as the data available in the annual report is so wide and covers great deal of extensive information. . • The organisation is so wide that’s why the employees do not have much time to teach the trainees and there is no separate section for the training of the students. • The employee cannot provide the whole financial data to the trainees because it is so much confidential and they are not allowed to disclose that.

BIBLIOGRAPHY 1.G.hul. Gupta 2.com www. www.com www.wikipedia. “Management Accounting” by: K.com . 5.itcportal. Aggarwal 3. “Financial Accounting” by: M.L. 4.

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