Critical Analysis of Financial Statements of

Hindustan Unilever Company

A Project Submitted to
University of Mumbai for partial completion of the degree of
Bachelor in Commerce (Accounting and Finance)
Under the Faculty of Commerce
By
Ms. Aparna Appa Mokashi
Roll No.860

Under the Guidance of

Ms. Jyoti Chindarkar

Chikitsak Samuha’s
S. S. & L. S. Patkar College of Arts & Science, and
V. P. Varde College of Commerce & Economics
S. V. Road, Goregaon (West), Mumbai-400 104

March-2019
Critical Analysis of Financial Statements of
Hindustan Unilever Company

A Project Submitted to
University of Mumbai for partial completion of the degree
of Bachelor in Commerce (Accounting and Finance)
Under the Faculty of Commerce
By
Ms. Aparna Appa Mokashi
Roll No.860

Under the Guidance of

Ms. Jyoti Chindarkar

Chikitsak Samuha’s
S. S. & L. S. Patkar College of Arts & Science, and
V. P. Varde College of Commerce & Economics
S. V. Road, Goregaon (West), Mumbai-400 104

March-2019

I
 INDEX

Chapter Page
Title of Chapter
No. No.

1. Introduction 1
1.1 History 4
1.2 Company Profile 8
1.2.1 Company Information 10
1.2.2 Company's Vision 11
1.2.3 Company's Mission 11
1.2.4 Purpose of the Company 12
1.2.5 Company's Principles 13
1.2.6 Brands and the Products 15
1.2.7 Strategies of Hindustan Unilever Company 17
1.2.8 SWOT Analysis 18
1.2.9 PESTLE analysis 19
1.2.10 Main Competitors of HUL Ltd. 21
1.2.11 Awards and Recognitions 22

2. Research Methodology 26
2.1 Objectives of the study 26
2.2 Hypothesis 27
2.3 Scope of the study 27
2.4 Need for the study 27
2.5 Tools used for the study 28
2.6 Limitations of the study 28

3. Literature Review 29

4. Data Analysis, Interpretation and Presentation 31

4.1 Statement of profit and loss 31
4.2 Interpretation of P&L 33
4.3 Balance sheet 34
4.4 Interpretation of Balance sheet 36
4.5 Statement of cash flow 37
4.6 Interpretation of cash flow 40
4.7 Ratio analysis 41
4.7.1 Per share ratio 42
1 Dividend per Share 42
2 Net Profit Per Share 43
4.7.2 Profitability ratios 44
1 Net Profit Margin 44
2 Return on Net Worth/ Equity 45
3 Return on Capital Employed 46
4 Return on Assets 47
5 Asset Turnover Ratio 48
II
 4.7.3 Liquidity ratio 49
1 Current ratio 49
2 Quick Ratio 50
3 Inventory Turnover Ratio 51
4.7.4 Cash flow indicator ratio 52
1 Dividend Payout Ratio (Net profit) 52
2 Dividend Payout Ratio (Cash profit) 53
3 Earning Retention Ratio 54
4.8 Share Price Data 55
Current valuation for Hindustan Unilever Company
4.9 Limited 57
4.10 Market Capitalization 58
4.11 HUL’S Performance 59
4.11.1. Segment Performance 59
1 Segmental Revenue 59
2 Segmental Profit 60
4.11.2. Financial Performance 61
4.11.3. Non-Financial Performance (Mfg) 62

5. Conclusions & Suggestions 63

5.1 Conclusion 63
5.2 Suggestions 64

6. Bibliography 65

III
 Chikitsak Samuha’s
S. S. & L. S. Patkar College of Arts & Science,and
V. P. Varde College of Commerce & Economics, S.V. Road
Goregaon West, Mumbai, Maharashtra 400104.

CERTIFICATE
This is to certify that Ms. Aparna Appa Mokashi has worked and duly
completed her Project Work for the degree of Bachelor in Commerce (Accounting &
Finance) under the Faculty of Commerce and her project is entitled, “Critical
Analysis of Financial Statements of Hindustan Unilever Company under my
supervision. I further certify that the entire work has been done by the learner under
my guidance and that no part of it has been submitted previously for any Degree or
Diploma of any University.

It is her own work and facts reported by her personal findings and investigations.

______________________________
Ms. Jyoti Chindarkar
(Internal Guide)

____________________________
Ms. Zeba Khan
(Course Coordinator)

______________________________
Signature of External Guide

Date of Submission:

IV
 DECLARATION

I the undersigned Ms. Aparna Appa Mokashi here by, declare that the work
embodied in this project work titled “Critical Analysis of Financial Statements
of Hindustan Unilever Company”, forms my own contribution to the research work
carried out under the guidance of Ms. Jyoti Chindarkar is a result of my own
research work and has not been previously submitted to any other University for any
other Degree/ Diploma to this or any other University.

Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

____________________
Aparna Appa Mokashi
Roll No. (860)

Certified by,

_____________________________
Mrs. Jyoti Chindarkar

V
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth
is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.

I would like to thank my Principal, Dr. Sharmishtha Matkar for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator Ms. Zeba Khan, for her moral
support and guidance.

I would also like to express my sincere gratitude towards my Project guide Ms. Jyoti
Chindarkar whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference
books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported
me throughout my project.

___________________

Aparna Appa Mokashi

Roll No. 860

VI
 EXECUTIVE SUMMARY

Hindustan Unilever Limited is the Indian arm of the Anglo-Dutch company–

Unilever. Both Unilever and HUL have established themselves well in the Fast
Moving Consumer Goods (FMCG) category. The company’s Turnover is Rs.34, 619
cr. Hindustan Unilever was recently rated among the top four companies globally in
the list of “Global Top Companies for Leaders”.

In this project I have followed descriptive method of study. Detailed analysis of data
is made by plotting different graphs and tables which can be easily understandable.
These financial data are edited, classified and tabulated as per the requirements of the
study. This study has covered 2 years data. Secondary data are pre published and
research data collected from different websites, journals, newspaper, and company
research paper.

Study is been conducted to assess profitability, liquidity, solvency of the company.

This study has helped to understand financial health of the company. For the study
Balance sheet, P& L Account and Cash flow statements and the ratios are used.

At the end it is concluded that HUL will be able to secure its number one position in
FMCG product as it is still expanding in India and so we can safely conclude that the
future of the company is also looking bright as FMCG market.

VII
 CHAPTER NO.1: INTRODUCTION

Hindustan Unilever Limited is the Indian arm of the Anglo-Dutch company –

Unilever. Both Unilever and HUL have established themselves well in the Fast
Moving Consumer Goods (FMCG) category.

Hindustan Unilever limited (HUL) is India’s largest fast-moving consumer goods

company with a heritage of over 80 year. Nine out of ten Indian households use their
products.

Hindustan Unilever Limited (abbreviated to HUL), formerly Hindustan Lever

Limited, is INDIAs largest consumer products company and was formed in 1933 as
Lever Brother India Limited. It is currently headquartered in Mumbai, India and its
41,000 employees are headed by Harish Manwani, the non-executive chairman of the
board. The campus is spread over 12.5 acres of land and houses over 1,600 employees

HUL is the market leader in Indian products such as tea, soaps, detergents, as its
products have become daily household name in India. The Anglo-Dutch company
Unilever owns a majority stake in Hindustan Unilever Limited.

The company was renamed in late June 2007 as “Hindustan Unilever Limited"

HUL Works to create a better future everyday and helps people to feel good, look
good and get more out of life with the brands and services that are good for them and
good for other.

With over 40 brands spanning 20 distinct categories including soaps, detergents,

shampoos, skincare, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods,
ice cream, frozen desserts, water and air purifier, the Company is part of the daily life
of millions of consumers.

It’s portfolio includes leading brands such as Lux, Lifebuoy, Surf excel, Rin, Wheel,
Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent,
Closeup, Axe, Brooke Bond, BRU, Knorr, Kissan, Kwality Wall’s and Pureit. Their
products are available in over seven million outlets across India. Some of its efforts
were also rewarded when four of HUL brands found place in the ‘Top 10 brands’ list
for the year 2008 published in The Economic Times.

1
The Company has about 18,000 employees and has a sales of INR 34619 crores
(financial year 2017-18). 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 €53.7 billion in 2017. Unilever has
over 67% shareholding in HUL.

Today, HUL is one of India’s largest exporters of branded Fast Moving Consumer
Goods. It has been recognized by the Government of India as a Golden Super Star
Trading House.

Over time HUL has developed into a viable & competitive sourcing base for Unilever
worldwide in Home and Personal Care & Foods & Beverages category of products.
HUL is also a global marketing arm for select licensed Unilever brands and also
works on building categories with core country.

HUL Exports offer high level of service with flexibility and responsiveness thorough
out the supply chain. It has a dedicated organization structure to support this endeavor
and this has helped in growth of these businesses in particular.

Intrinsic cost competitiveness in the end to end Supply chain with appropriate
technology and competitive capital investment operations while delivering best in
class quality enables HUL to position itself as a key sourcing hub for Unilever and
also become a preferred partners for Global customer in categories we operate.

HUL’s key focus in the exports business is on two broad categories. It is a sourcing
base for Unilever brands in Home & Personal Care (HPC) and Food and Beverages
(F&B) for supplies to other Unilever companies.

It also focuses on becoming a preferred supplier to both non-Unilever and Unilever

clients in three categories in which India, as a country, has competitive advantage –
Branded Rice, Marine Products and Castor and its Derivatives. HUL enjoys
international recognition within Unilever and outside for its quality, reliability and
speed of customer service.

2
HUL's Exports geography comprises, at present, countries in Europe, Asia, Middle
East, Africa, Australia, and North America etc.

 HUL’s products touches two out of three Indian everyday

 Reach 80% Households

 Direct Coverage of 1mln outlets

 2000 Supplier and Associates

 71 Manufacturing locations

 15000 Employees

 1100 manage

 Shelf availability 84% outlets in India

3
1.1HISTORY

In the summer of 1888, visitor to the Kolkata harbor noticed crates full of Sunlight
soap bar, embossed with the words "Made in England by Lever Brother". With it,
began an era of marketing branded Fast Moving Consumer Goods (FMCG).

Soon after followed Lifebuoy in 1895 and other famous brands like Pears, Lux and
Vim. Vanaspati was launched in 1918 and the famous Dalda brand came to the
market in 1937.

In 1931, Unilever set up its fit Indian subsidiary, Hindustan Vanaspati Manufacturing
Company, followed by Lever Brother India Limited (1933) and United Trade Limited
(1935). These three companies merged to form HUL in November 1956; HUL offered
10% of its equity to the Indian public, being the fit among the foreign subsidiaries to
do so. Unilever now holds 67.25% equity in the company. The rest of the
shareholding is distributed among about three lakhs individual shareholders and
financial institutions.

The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903, the
company had launched Red Label tea in the country. In 1912, Brooke Bond & Co.
India Limited was formed. Brooke Bond joined the Unilever fold in 1984 through an
international acquisition. The erstwhile Lipton's links with India were forged in 1898.
Unilever acquired Lipton in 1972, and in 1977 Lipton Tea (India) Limited was
incorporated.

Pond's (India) Limited had been present in India since 1947. It joined the Unilever
fold through an international acquisition of Chesebrough Pond's USA in 1986.

Since the very early yea, HUL has vigorously responded to the stimulus of economic
growth. The growth process has been accompanied by judicious diversification,
always in line with Indian opinions and aspirations.

The liberalization of the Indian economy, started in 1991, clearly marked an inflexion
in HUL's and the Group's growth curve. Removal of the regulatory framework
allowed the company to explore every single product and opportunity segment,
without any constraints on production capacity.

4
Simultaneously, deregulation permitted alliances, acquisitions and merge. In one of
the most visible and talked about events of India's corporate history, the erstwhile
Tata Oil Mills Company (TOMCO) merged with HUL, effective from April 1, 1993.
In 1996, HUL and yet another Tata company, Lakme Limited, formed a 50:50 joint
venture, Lakme Unilever Limited, to market Lakme's market-leading cosmetics and
other appropriate products of both the companies. Subsequently in 1998, Lakme
Limited sold its brands to HUL and divested its 50% stake in the joint venture to the
company.

HUL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in
1994, Kimberly-Clark Lever Ltd, which markets Huggies Diaper and Kotex Sanitary
Pads. HUL has also set up a subsidiary in Nepal, Unilever Nepal Limited (UNL), and
its factory represents the largest manufacturing investment in the Himalayan
kingdom. The UNL factory manufactures HUL's products like Soaps, Detergents and
Personal Products both for the domestic market and exports to India.

The 1990s also witnessed a string of crucial merge, acquisitions and alliances on the
Foods and Beverages front. In 1992, the erstwhile Brooke Bond acquired Kothari
General Foods, with significant interests in Instant Coffee. In 1993, it acquired the
Kissan business from the UB Group and the Dollops Ice-cream business from
Cadbury India.

As a measure of backward integration, Tea Estates and Doom Dooma, two plantation
companies of Unilever, were merged with Brooke Bond. Then in 1994, Brooke Bond
India and Lipton India merged to form Brooke Bond Lipton India Limited (BBLIL),
enabling greater focus and ensuring synergy in the traditional Beverages business.
1994 witnessed BBLIL launching the Wall's range of Frozen Desserts. By the end of
the year, the company entered into a strategic alliance with the Kwality Ice-cream
Group families and in 1995 the Milk food 100% Ice-cream marketing and distribution
rights too were acquired.

Finally, BBLIL merged with HUL, with effect from January 1, 1996. The internal
restructuring culminated in the merger of Pond's (India) Limited (PIL) with HUL in
1998. The two companies had significant overlaps in Personal Products, Specialty
Chemicals and Exports businesses, besides a common distribution system since 1993
for Personal Products. The two also had a common management pool and a

5
technology base. The amalgamation was done to ensure for the Group, benefits from
scale economies both in domestic and export markets and enable it to fund
investments required for aggressively building new categories.

In January 2000, in a historic step, the government decided to award 74 per cent
equity in Modern Foods to HUL, thereby beginning the divestment of government
equity in public sector undertakings (PSU) to private sector partnersr. HUL's entry
into Bread is a strategic extension of the company's wheat business. In 2002, HUL
acquired the government's remaining stake in Modern Foods.

In 2003, HUL acquired the Cooked Shrimp and Pasteurized Crabmeat business of the
Amalgam Group of Companies, a leader in value added Marine Products exports.

HUL launched a slew of new business initiatives in the early part of 2000’s. Project
Shakti was started in 2001. It is a rural initiative that targets small villages populated
by less than 5000 individuals. It is a unique win-win initiative that catalyses rural
affluence even as it benefits business. Currently, there are over 45,000 Shakti
entrepreneurs covering over 100,000 villages across 15 states and reaching to over 3
million homes.

In 2002, HUL made its foray into Ayurvedic health & beauty centre category with the
Ayush product range and Ayush Therapy Centres. Hindustan Unilever Network,
Direct to home business was launched in 2003 and this was followed by the launch of
‘Pureit’ water purifier in 2004.

In 2007, the Company name was formally changed to Hindustan Unilever Limited
after receiving the approval of share holders during the 74th AGM on 18 May 2007.
Brooke Bond and Surf Excel breached the the 1,000 crore sales mark the same year
followed by Wheel which crossed the .2, 000 crore sales milestone in 2008.

On 17th October 2008, HUL completed 75 yea of corporate existence in India. In

January 2010, the HUL head office shifted from the landmark Lever House, at Back
Bay Reclamation, Mumbai to the new campus in Andheri (E), Mumbai.

On 15th November, 2010, the Unilever Sustainable Living Plan was officially
launched in India at New Delhi.

6
In March, 2012 HUL’s state of the art Learning Centre was inaugurated at the
Hindustan Unilever campus at Andheri, Mumbai.

In April, 2012, the Customer Insight & Innovation Centre (CiiC) was inaugurated at
the Hindustan Unilever campus at Andheri, Mumbai

HUL completed 80 years of corporate existence in India on October 17th, 2013.

7
1.2 COMPANY PROFILE

Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods
Company, touching the lives of two out of three Indians with over 20 distinct
categories in Home & Personal Care Products and Foods & Beverages. The
company’s Turnover is Rs.34, 619 cr.

HUL is a subsidiary of Unilever, one of the world’s leading suppliers of fast moving
consumer goods with strong local roots in more than 100 countries across the globe
with annual sales of €40.5 billion in2008. Unilever has about 52% shareholding in
HUL.

Hindustan Unilever was recently rated among the top four companies globally in the
list of “Global Top Companies for Leaders” by a study sponsored by Hewitt
Associates, in partnership with Fortune magazine and the RBL Group. The company
was ranked number one in the Asia-Pacific region and in India.

The mission that inspires HUL's more than 15,000 employees, including over 1,300
manage, is to “add vitality to life". The company meets every day needs for nutrition,
hygiene, and personal care, with brands that help people feel good, look good and get
more out of life. It is a mission HUL shares with its parent company, Unilever, which
holds 52.10% of the equity.

HUL’s heritage dates back to 1888, when the fit Unilever product, Sunlight, was
introduced in India. Local manufacturing began in the 1930s with the establishment of
subsidiary companies. They merged in1956 to form Hindustan Lever Limited (The
company was renamed Hindustan Unilever Limited on June25, 2007). The company
created history when it offered equity to Indian shareholders, becoming fit foreign
subsidiary company to do so. Today, the company has more than 360675 resident
shareholders.

They are manufactured in over 35 factories, several of them in backward areas of the
country. The operations involve over 2,000 suppliers and associates. HUL’s
distribution network cove 6.3 million retail outlets including direct reach to over 1
million. HUL has traditionally been a company, which incorporates latest technology

8
in all its operations. The HUL’s research centre was set up in 1958. HUL believes that
an organization’s worth is also in the service it renders to the community.

Hindustan Unilever limited has a clear purpose – “to make sustainable living
commonplace. We believe this is the best way to deliver long-term sustainable
growth.”

9
1.2.1 HINDUSTAN UNILEVER – COMPANY INFORMATION

1. Chairman Mr. Harish Manwani

2. Managing Director and Chief Executive Officer Mr. Sanjiv Mehta
Executive Director, Finance & IT and Chief Financial
3. Mr. Srinivas Phatak
Officer
4. Executive Director, Supply Chain Mr. Pradeep Banerjee
Executive Director, Legal & Corporate Affairs &
5. Mr. Dev Bajpai
Company Secretary
6. Independent Director Mr. Aditya Narayan
7. Independent Director Mr. S. Ramadorai
8. Independent Director Mr. O. P. Bhatt
9. Independent Director Dr. Sanjiv Misra
10.Independent Director Ms. Kalpana Morparia
11.AUDITOR BSR & Co LLP
12.IND NAME Personal Care -Multinational
13.HOUSE NAME MNC Associate -Unilever

10
1.2.2 Company’s Vision

Company’s vision is to grow their business, while decoupling their environmental

footprint from their growth and increasing their positive social impact.

Company meet everyday needs for nutrition; hygiene and personal care with brands
that help people feel good, look good and get more out of life. Sustainability is at the
heart of our business, and through their brands, they seek to inspire people to take
small everyday actions that can add up to a big difference for the world

Company’s deep roots in local cultures and markets around the world give them their
strong relationship with consume and are the foundation for their future growth.
Company is will bring their wealth of knowledge and international expertise to the
service of local consume – a truly multi-local multinational

HUL’s long-term success requires a total commitment to exceptional standards of

performance and productivity, to working together effectively, and to a willingness to
embrace new ideas and learn continuously

To succeed also requires, they believe, the highest standards of corporate behavior
towards everyone they work with, the communities they touch, and the environment
on which they have an impact

This is company’s road to sustainable, profitable growth, creating long-term value for
their shareholders, their people, and their business partners.

1.2.3 Company’s Mission

 Adding vitality to life

 Meeting everyday needs for nutrition, hygiene, and personal care

 Helping people feel good, look good, and get more out of life

11
1.2.4 Purpose of the Company

“The drive to serve consumers in a unique and effective way is at the heart of our
corporate purpose.”

Company’ Corporate Purpose states that to succeed requires "the highest standards of
corporate behavior towards everyone we work with, the communities we touch, and
the environment on which we have an impact."

1.Always working with integrity

Conducting their operations with integrity and with respect for the many people,
organizations and environments their business touches has always been at the heart
of their corporate responsibility.

2.Positive impact
Company aim to make a positive impact in many ways: through their brands, their
commercial operations and relationships, through voluntary contributions, and
through the various other ways in which they engage with society.

3.Continuous commitment
HUL is also committed to continuously improving the way they manage their
environmental impacts and are working towards their longer-term goal of developing
a sustainable business.

4.Setting out our aspirations

Their Corporate Purpose sets out their aspirations in running their business. It's
underpinned by their Code of Business Principles which describes the operational
standards that everyone at Unilever follows, wherever they are in the world. The
Code also supports their approach to governance and corporate responsibility.

5.Working with others

HUL want to work with suppliers who have values similar to their own and work to
the same standards they do. Their Supplier Code, aligned to their own Code of
Business Principles, comprises eleven principles covering business integrity and
responsibilities relating to employees, consume and the environment.

12
 1.2.5 Company’s Principles

“Our code of business principles describes the operational standards we follow.

It also supports our approach to governance and corporate responsibility.”
-Hindustan Unilever Company

1. Standard Of Conduct

Company conducts their operations with honesty, integrity and openness, and with
respect for the human rights and interests of their employees. They shall similarly
respect the legitimate interests of those with whom they have relationships.

2. Obeying The Law

Unilever companies and employees are required to comply with the laws and
regulations of the countries in which they operate.

3. Employees

I. Unilever is committed to a working environment that promotes diveity and equal

opportunity and where there is mutual trust, respect for human rights and no
discrimination.
II. They will recruit, employ and promote employees on the sole basis of the
qualifications and abilities needed for the work to be performed.
III. They are committed to safe and healthy working conditions for all employees.
IV. They will provide employees with a total remuneration package that meets or
exceeds the legal minimum standards or appropriate prevailing industry standards.
V. They will not use any form of forced, compulsory, trafficked or child labor.
VI. They Will Ensure Transparent, Fair And Confidential Procedures For Employees To
Raise Concerns.

13
4. Consumers

Unilever Is Committed To Providing Branded Products And Services Which

Consistently Offer Value In Terms Of Price And Quality, And Which Are Safe For
Their Intended Use. Products And Services Will Be Accurately And Properly
Labeled, Advertised And Communicated.

5. Shareholders

Unilever Will Conduct Its Operations In Accordance With Internationally Accepted

Principles Of Good Corporate Governance. They Will Provide Timely, Regular and
Reliable Information on their Activities, Structure, financial Situation and
Performance to All Shareholders.

14
1.2.6 BRANDS AND PRODUCTS

A FOOD

 Annapurna salt and atta (formerly known as kissan annapurna)

 Bru coffee
 Brooke bond (3 roses, taj mahal, taaza, red label) tea
 Kissan squashes, ketchups, juices and jams
 Lipton ice tea
 Knorr soups & meal make and soupy noodles
 Kwality wall's frozen dessert
 Modern bread, ready to eat chapattis and other bakery items
 Magnum (ice cream)

B HOMECARE BRANDS

 Active Wheel detergent

 Cif Cream Cleaner
 Comfort fabric softener
 Domex disinfectant/toilet cleaner
 Rin detergents and bleach
 Sunlight detergent and colour care
 Surf Excel detergent and gentle wash
 Vim dishwash
 Magic – Water Saver

C WATER PURIFIER BRAND

 The Pure it Water Purifier

15
D PERSONAL CARE BRANDS

 Axe deodorant and after shaving lotion and soap

 LEVER Ayush Therapy ayurvedic health care and Personal care products
 International breeze
 Brylcreem hair cream and hair gel
 Clear anti-dandruff hair products
 Clinic Plus shampoo and oil
 Close Up toothpaste
 Dove skin cleansing & hair care range: bar, lotions, creams and anti-pepirant
deodorants
 Denim shaving products
 Fair and lovely, skin lightening cream
 Hamam
 Indulekha ayurvedic hair oil
 Lakmé beauty products and salons
 Lifebuoy soaps and handwash range
 Liril 2000 soap
 Lux soap, body wash and deodorant
 Pears soap, body wash
 Pepsodent toothpaste
 Pond's talcs and creams
 Rexona
 Sunsilk shampoo
 Vaseline petroleum jelly, skin care lotions
 TRESemmé

16
 1.2.7 STRATEGIES OF HINDUSTAN UNILEVER COMPANY

“Growing the core, evolving the portfolio and developing channels are at the heart
of our strategy to deliver long-term, compounding growth and sustainable value
creation”.
-Hindustan Unilever Company
Binding strategy together are company’s Compass pillars which define how they win
with consumers.

 Winning with Brands and Innovation

Consumer preferences are changing. They are taking newer paths for purchasing brands
and increasingly seeking brands that are purpose-driven and which they can trust.
HUL’s Sustainable Living brands are a key differentiator in this regard. Company is
continuously building brands with purpose.

 Winning in the Marketplace

To win in the marketplace, Company has a robust Customer Development agenda. HUL
works with customers to understand consumer demand focus on fulfilling the demand
and tirelessly create new demand through market development. This is driven by the
‘Winning in Many India’s’ (WiMi) strategy that allows Company to get closer to
customers and consumers by providing tailor-made products across categories and
geographies.

 Winning through Continuous Improvement

HUL is constantly aligning their products, processes and strategies to the changing
market conditions to stay ahead of competition. They focus on business competitiveness
through consumer and customer centricity, a robust savings programmed and service
excellence to ensure availability of our products.

 Winning with People

HUL Thinks that People are their biggest strength. They are driven by purpose and are
fully empowered to excel in their fast-changing market. Company continuously strive
to develop the right capabilities and skills needed for different ways of working and
new entrepreneurial leadership qualities.

17
1.2.8 SWOT ANALYSIS

 Strengths

 Brand Visibility
 Market leader in consumer goods
 Variety of products
 Distribution network
 Brand image
 Quality management
 Innovative FMCG Company

 Weakness

 Decreasing Market share

 Large number of brands in different product categories
 Unable to compete with the locals in Rural Market
 Pricing policy is not good
 Inability to transform its strategies at right time

 Opportunities

 Huge market
 Increasing income level
 Increasing consumption pattern
 Introducing new technology. e.g. Water purifier
 Market Development

 Threats

 Competition in the market

 Price of commodities
 Buyer’s power

18
1.2.9 PESTLE ANALYSIS

The PESTLE analysis of HUL has made easy for the company to enjoy great ranks in
the market. This analysis has helped identify the external forces that impact its
operations. The PESTLE analysis is a vital strategic tool for understanding the market
growth or decline that the HUL has relied on invariably. The mainstay aspects of
PESTLE analysis include the following:

 Political aspects

Political factors are known to impact company’s ways of operation. Political factors
can easily build opportunities and advantages for any company. Legislation, voluntary
codes, market regulations and trade agreements are factors that have influenced
operations of HUL. Tax levies and tax breaks have controlled the market in one way
or another.

 Economic factors

Global interest rates and fiscal policy are all agreed around economic conditions. The
climate of the Indian economy controls how HUL consumers, suppliers and many
stakeholders conduct themselves. A growing economy will have effects on HUL
operations as it will increase unemployment, lower stakeholders’ confidence and high
spending power.

 Social factors

In the business world, it is wise for any entrepreneur or enterprise to pay attention to
societies and the media. Social factors impact consumers’ attitude, interests and
opinions. Social factors shape consumers, the way they behave and what they are
willing to purchase. Population changes in India have influenced the way HUL
operates especially supply and demand of goods and services within an economy.

19
  Technological factors

Technological infrastructures like internet and other ways to share information have
impacted the operations of HUL and many other companies. It has also become easy
for many companies to manage their operations and for consumers to expect instant
results. Faster exchange of information has become the in-thing for stakeholders and
consumers.

 Legal factors

These factors come with both external and internal factors. Certain laws affect the
business environment while others have certain policies that any company can
maintain. HUL has been impacted by consumer laws, safety standards and labor laws
among other rules.

 Environmental aspects

These are factors that are determined by surrounding environment and they have
influence on other areas that go hand on hand with business environment. Factors of a
business environmental analysis like that of HUL or any other company include
climate, weather, global changes in climate and geographical location.

20
1.2.10 MAIN COMPETITORS OF HUL LTD.

1 Marico

2 L’Oreal

3 Nirma Ltd

4 ITC limited

5 Colgate- Palmolive

6 Procter and Gamble

7 Dabur India

21
1.2.11 AWARDS AND RECOGNITIONS

1. WINNING WITH BRANDS AND INNOVATION

 HUL’s purpose-driven brand Surf excel bagged a Gold at the ‘WARC Prize for
Asian Strategy 2017’ for the Ramadan campaign ‘Madad Ek Ibadat’

 HUL’s brand, Surf excel’s Ramadan 2017 campaign, ‘Neki Ek Ibadat’ won a Gold
at the Indian Effies 2018, in the ‘Consumer Product’ category

 HUL’s local jewel, Hamam bagged a Silver at Effies 2018 for the #GoSafeOutside
campaign

 HUL’s Brooke Bond Red Label bagged a Silver at Effies 2018 for the brand’s
journey of #SwadApnepanka

 HUL’s Brooke Bond Red Label recognised at the Abby Awards for the purpose-
driven web-series ‘Breaking Barrie’

 HUL’s purpose-driven brands Lux, Lifebuoy, Rin, Clinic Plus, Fair & Lovely,
Dove, Closeup, Pepsodent, Vim, Surf excel, Pond’s, Sunsilk, Vaseline, Wheel and
Taj Mahal tea featured in the Economic Times Brand Equity’s list of India’s Most
Trusted brands 2017

 HUL won two Gold and two Silver medals and bagged the title of ‘Advertiser of
the Year’ at the Prime Time Awards 2017. In this year’s edition, our ‘RIN KBC’
campaign won Gold under two categories i.e. ‘Best use of entertainment Channel’
and ‘Best branded content on TV’. The ‘LUX Golden Rose Awards’ bagged Silver
under the ‘Best integrated TV campaign’ and ‘Best use of entertainment Channel’
categories.

22
2. WINNING IN THE MARKETPLACE

 HUL adjudged the Most Innovative Company in India, in Forbes’ list of The
World’s Most Innovative Companies, 2017

 HUL bagged ‘Exemplary Leadership Award in Cold Chain Industry’ at the 3rd
edition of the Cold Chain Industry Awards

 HUL recognized as the winner in the FMCG sector at the Dun & Bradstreet
Corporate Awards 2017. We won this award for the fourth consecutive year

3. WINNING THROUGH CONTINUOUS IMPROVEMENT

 HUL’s beverage factory in Kolkata received the prestigious CII National Food
Safety Award 2017 for outstanding achievements in food safety

 HUL’s Puducherry Home & Personal Care (HPC) factory secured the second place
at the Southern Region Environment, Health & Safety (EHS) Excellence Awards
2017 in the ‘Manufacturing - Others’ category organized by Confederation of India
Industry (CII)

 HUL’s Amli Factory was felicitated with the Platinum Award in the large-scale
manufacturing category, at the 6th FICCI Quality Systems Excellence Awards for
Industry

 HUL’s five factories won an award in the area of Safety and Environment from
National Safety Council

 HUL won an award for excellence in Energy Conservation and Management from
Maharashtra Energy Development Agency (MEDA), Confederation of Indian
Industry, Green Tech

23
4. WINNING WITH PEOPLE

 HUL retained the ‘No.1 Employer of Choice’ title amongst key business schools
for the seventh year in a row

 HUL emerged as the Aon Best Employer of 2018

 HUL emerged winner at the Business Today’s Best Companies to Work for awards
in the Manufacturing sector

 HUL CEO Sanjiv Mehta declared the winner in the ‘CA Business Leader’ category
at the 11th ICAI (The Institute of Chartered Accountants of India) Awards 2017

 The Institute of Company Secretaries of India (ICSI) conferred the Certificate of

Recognition to HUL for Excellence in Corporate Governance at its 17th National
Awards

 HUL’s Pondicherry HPC factory conferred with the FAME Excellence Award
2017 for excellence in promoting safety, health & environment practices and
initiatives towards employees and stakeholders

 HUL honored with the National Award for ‘Excellence in Employee Relations’ at
the EFI Summit organized by the Employer’ Federation of India (EFI)

5. UNILEVER SUSTAINABLE LIVING PLAN

 HUL Mumbai Office felicitated with the ‘Platinum’ rating, and the IGBC Green
Existing Building - PLATINUM award by The Indian Green Building Council
(IGBC)

 HUL received a Certificate of Appreciation for project Prabhat, for ‘HUL’s

responsible contribution to the society in 2016-17’, at ASSOCHAM’s 9th Global
CSR Summit

 HUL’s Project Prabhat declared the winner under ‘Community Development’

category at the ‘Social Change Awards’

24
 HUL adjudged the winner of The Confederation of Indian Industry(CII) – National
Award for Excellence in Water Management 2017 under the ‘Beyond the Fence’
category

 HUL won the ‘Green Marketer’ Award at the ‘Marquee Awards. Vim and
Lifebuoy adjudged winner in Home Care and Personal Care categories,
respectively

 HUL’s factory units – Kolkata Beverages Factory and Etah Factory recognised for
their sustainability achievements by New Frontie in Engineering, Science, and
Technology (NFEST) at its fit International Conference

25
 CHAPTER NO.2: RESEARCH METHODOLOGY

In this project I have followed descriptive method of study. Here project analysis is
made by collecting secondary data from different websites, journals, etc.

 Secondary data are pre published and research data’s collected from different
websites, journals, newspaper, and company research paper.

 These financial data are edited, classified and tabulated as per the
requirements of the study. This study has covered 2 years data.

 These documents and data are very useful for the theoretical, conceptual and
organizational background analysis.

 Detailed analysis of data is made by plotting different graphs and tables which
can be easily understandable.

 Conclusion is drawn by observing the graphs which are based on the data
collected.

2.1 OBJECTIVES OF THE STUDY

 To do Company analysis based on Balance sheet, P& L Account.

 To assess profitability, liquidity, solvency.

 To understand financial health of the company.

 To analyze the financial performance of the company.

 To provide useful suggestion to improve the financial performance of the

companies.

26
2.2 HYPOTHESIS

H0: Very few products of HUL are known by the rural people

H1: Variety of products Helps HUL to get More Customer which results growth of
the turnover.

2.3 SCOPE OF THE STUDY

This study “Financial Performance Analysis of Hindustan Unilever Limited” is vital

because just earning profit is not enough, a business should earn sufficient profit to
cover its cost of capital and create surplus to grow. So finding the surplus profit is
made essential.

This Study aim to analyze the liquidity, profitability, solvency position of the firm
and efficiency which it converts its resources into service.

2.4 NEED FOR THE STUDY

 Financial performance analysis is an important tool for measuring the financial

performance of the company.

 The main aspect of financial management is working capital management and

it should be done on day-to-day basis.

 This study helps to review the financial performance of the company.

 To understand the meaning, significance and limitation of financial statement

analysis.

 To calculate liquidity, solvency, profitability and activity ratios of the

organization.

27
 2.5 TOOLS USED FOR THE STUDY

 Annual report of Hindustan Unilever Company

 Balance sheet
 Profit & Loss Account
 Cash Flow Statements
 Ratios

2.6 LIMITATIONS OF THE STUDY

 The study covers only 2 years period i.e. 2016-2017 to 2017-2018 for the financial
analysis of HUL Ltd.

 The secondary data’s used in this study have been taken from published annual
reports and through Company’s authorized website only.

 As per the requirement and necessarily some data’s have been grouped and sub-
grouped.

 For making the analysis of HUL Ltd, some ratio analysis techniques of financial
management have been used.

28
 CHAPTER NO.3: LITERATURE REVIEW

 Mr. S. Venkatesh (2005) made “A study on Brand preference towards surf excels
with special reference to Erode town”. The objective of the study was to know
about the advertisement effect of surf excel and find out the satisfaction level of the
consumer out of 100 customers, 50% felt the price is high and the most effective
media of advertisement was found to be television.

 Ho and Zhu (2004) have reported that the evaluation of a company’s performance
has been focusing the operational effectiveness and efficiency, which might
influence the company’s survival directly.

 Furthermore, Gopinathan (2009) has presented that the financial ratios analysis
can spot better investment options for investors as the ratio analysis measures
various aspects of the performance and analyzes fundamentals of a company or an
institution.

 Shukla Priteshkumar (2013) research paper titled, “A study on Rural Marketing

Strategy – with Special Emphasis on Selected Customer Preferences for Hindustan
Unilever Limited’s (HUL) selected products in Valsad District.” The author has
concluded that, there are different factors like Price of the product, variety in size
of the product, main sources of the product knowledge, advertisement, which plays
an important role in rural buying decision. Moreover that it can be said that
majority of the respondents are happy with the selected products of HUL.
According to the author it can be said that advertisement plays an important role
against spurious products available in the market. And they preferred more extra
quantity in the same price as favourable promotional scheme.

 Hitchings (1999), in his study realized that ratio analysis is a sensitive and
valuable tool in credit assessment which is to forecast the ability of a borrower to
meet its debt obligations.

29
 Delsapratim Purkayastha (2009) found that HUL’S strategy for growing two
mature brands with mass appeal Life buoy and Sun silk by targeting new segments
in innovative ways. With India being waived as a test market for emerging markets
strategies analysts felt that the learning from these initiatives would help Uni Lever
develop a strong presence in other emerging markets strategies as well. The study
tries to dispel the myth that emerging markets were only about devising strategies
to target the huge BOP segment Analysts are of the opinion that HUL'S success in
India was due to its ability to cater to all segments by adapting products, prices and
promotion to each of them.

 Mohankumar and Shivaraj(2010) found that Hindustan Unilever soaps and

detergents brand were available in all levels of the market i.e. upper end, mid
segment and lower end of the market, where as Proctor and Gamble brands were
mainly focusing on higher end of the market. Quality was the major purchase
determinant of soaps and detergent among the higher income group respondents,
where as price was the most important factor in the lower end of the market. The
factors influence in purchasing detergent included price, size of the soap, quality,
lather, fragrance, skin care, durability, promotional scheme whereas the factors
influencing in purchasing bathing soap were price, size of the soap, quality, lather,
fragrance, skin care, durability and promotional scheme.

 Andrew and Schmidgall (1993) in their study classified financial ratios into five
categories “liquidity ratios, solvency ratios, activity ratios, profitability ratios, and
operating ratios”. They indicated that financial ratios themselves do not provide
valuable information about a firm’s performance, Andrew (1993) in his study
conducted on automobile industry investigated the leverage ratio of companies and
suggested that a value-maximizing capital structure.

30
 CHAPTER NO. 4: DATA ANALYSIS, INTERPRETATION AND
PRESENTATION

4.1 STATEMENT OF PROFIT AND LOSS

(All amounts in ‘crores, unless otherwise stated)

Year ended Year ended

Particulars 31st March, 31st March,
2018 2017

INCOME
Revenue from operations 35,218 34,487
Other income 569 526
TOTAL INCOME 35,787 35,013

EXPENSES
Cost of materials consumed 12,491 11,363
Purchases of stock-in-trade 3,812 4,166
Changes in inventories of finished goods
-71 156
(including stock-in-trade) and work-in-progress
Excise duty 693 2,597
Employee benefits expenses 1,745 1,620
Finance costs 20 22
Depreciation and amortization expenses 478 396
Other expenses 9,272 8,538
TOTAL EXPENSES 28,440 28,858
Profit before exceptional items and tax 7,347 6,155
Exceptional items -62 241
Profit before tax 7,285 6,396

Tax expenses
Current tax -2,148 -1,865
Deferred tax credit/(charge) 100 -41
PROFIT FOR THE YEAR (A) 5,237 4,490

31
 (All amounts in ‘crores, unless otherwise stated)

Year
Year ended
ended 31st
Particulars 31st March,
March,
2017
2018

OTHER COMPREHENSIVE INCOME

Items that will not be reclassified subsequently to profit or

loss
Remeasurements of the net defined benefit plans -16 -32

Income tax relating to items that will not be reclassified

subsequently to profit or loss
Remeasurements of the net defined benefit plans 5 11

Items that will be reclassified subsequently to profit or loss

Fair value of debt instruments through other comprehensive
income -2 1

Income tax relating to items that will be reclassified

subsequently to profit or loss
Fair value of debt instruments through other comprehensive
income 1 0

Other Comprehensive Income For The Year (B) -12 -20

Total Comprehensive Income For The Year (A+B) 5,225 4,470

Earnings per equity share

Basic (Face value of Rs. 1 each) Rs.24.2 Rs.20.75

Diluted (Face value of Rs.1 each) Rs.24.19 Rs.20.74

32
4.2 Interpretation of Profit or Loss

 The Net profit of the year 2018 is Rs.5237 which is more than the net profit of
the year 2017 (Rs.4490)

 Earnings per Equity Share have been increased from Rs.20.75 to Rs.24.2.

 Operating income during the year rose 7.2% on a year-on-year (YoY) basis.

 The company's operating profit increased by 18.3% YoY during the fiscal.
Operating profit margins witnessed a fall and down at 21.1% in FY18 as
against 19.1% in FY17.

 Depreciation charges and finance costs increased by 20.4% YoY and 25.7%
YoY, respectively.

 Other income grew by 4.1% YoY.

 Net profit for the year grew by 16.1% YoY.

 Net profit margins during the year grew from 13.4% in FY17 to 14.5% in
FY18.

33
 4.3 BALANCE SHEET

(All amounts in ‘crores, unless otherwise stated)

Particulars March 2018 March 2017

A. EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 216 216
Total Share Capital 216 216
Reserves and Surplus 6,859.00 6,274.00
Total Reserves and Surplus 6,859.00 6,274.00
Total Shareholders’ Funds 7,075.00 6,490.00
NON-CURRENT LIABILITIES
Other Long Term Liabilities 666 574
Long Term Provisions 772 485
Total Non-Current Liabilities 1,438.00 1,059.00
CURRENT LIABILITIES
Trade Payables 7,013.00 6,006.00
Other Current Liabilities 972 809
Short Term Provisions 651 387
Total Current Liabilities 8,636.00 7,202.00
Total Capital And Liabilities 17,149.00 14,751.00

B. ASSETS
NON-CURRENT ASSETS
Tangible Assets 3,776.00 3,654.00
Intangible Assets 366 370
Capital Work-In-Progress 430 203
Fixed Assets 4,572.00 4,227.00
Non-Current Investments 256 260
Deferred Tax Assets [Net] 255 160
Long Term Loans And Advances 404 352
Other Non-Current Assets 523 387
Total Non-Current Assets 6,010.00 5,386.00
34
 BALANCE SHEET (Cont.)

(All amounts in ‘crores, unless otherwise stated)

March 2018 March 2017

CURRENT ASSETS
Current Investments 2,855.00 3,519.00
Inventories 2,359.00 2,362.00
Trade Receivables 1,147.00 928
Cash And Cash Equivalents 3,373.00 1,671.00
Short Term Loans And Advances - -
Other Current Assets 1,405.00 885
Total Current Assets 11,139.00 9,365.00

Total Assets 17,149.00 14,751.00

35
4.4 Interpretation of Balance sheet:

 The above statement shows company’s balance sheet which consist of

liabilities and assets of two years which is 2017 and 2018.

 Equity share capital remains constant in two years and the reserves and surplus
has been increased from 2017 to 2018 which indicates increase in keeping
reserve for the future.

 The company's current liabilities during FY18 stood at Rs 89 billion as

compared to Rs 77 billion in FY17, thereby witnessing an increase of 15.2%.

 Current assets rose 15% and stood at Rs 117 billion, while fixed assets rose
7% and stood at Rs 50 billion in FY18.

 Overall, the total assets and liabilities for FY18 stood at Rs 179 billion as
against Rs 157 billion during FY17, thereby witnessing a growth of 14%.

36
 4.5 STATEMENT OF CASH FLOWS

(All amounts in ‘crores, unless otherwise stated)

Year Ended Year Ended

Particulars 31st March, 31st March,
2018 2017
A. CASH FLOW FROM OPERATING
ACTIVITIES:
Profit before exceptional items and tax 7,347 6,155
Adjustments for:
Depreciation and amortization expenses 478 396
(Profit) / loss on sale of property, plant and equipment 26 13
Government grant accrued -172 -
Interest income -266 -262
Dividend income -190 -178
Fair value (gain)/loss on investments -113 -86
Net (gain)/loss on sale of investments - 0
Interest expense 20 22
Provision for expenses on employee stock options 11 4
Impairment of non-current investments - 8
Provision/(write back) for Inventory (net) 41 27
Inventory written off 124 101
Provision/(write back) for doubtful debts and advances
2 4
(net)
Bad debts/assets written off 3 2
Mark-to-market (gain)/loss on derivative financial
-4 13
instruments
Cash Generated from operations before working
7,307 6,219
capital changes
Adjustments for:
(Increase)/decrease in Non current loans (Security
-24 -46
deposits and Others)
(Increase)/decrease in other non-current financial
0 20
assets
(Increase)/decrease in other current financial assets -285 -58

(Increase)/decrease in other non-current assets -20 -10

(Increase)/decrease in other current assets -53 -42

(Increase)/decrease in trade receivables -224 131

(Increase)/decrease in inventories -162 38

37
 STATEMENT OF CASH FLOWS (CONT.)

(All amounts in ‘crores, unless otherwise stated)

Year ended Year Ended
31st March, 31st March,
2018 2017
Increase/(decrease) in trade payables 1,007 508
Increase/(decrease) in other non-current financial
-4 52
liabilities
Increase/(decrease) in other current financial liabilities 2 -71
Increase/(decrease) in non-current provisions 271 -37
Increase/(decrease) in current provisions 219 61
Increase/(decrease) in other non-current liabilities -49 -9
Increase/(decrease) in other current liabilities 141 1
Cash generated from operations 8,126 6,757
Taxes paid (net of refunds) -2,194 -1,783
Cash flow before exceptional items 5,932 4,974
Exceptional items:
Amounts paid for other restructuring activities -25 -21
Taxes paid for exceptional items 9
Net cash (used in) / generated from operating
5,916 4,953
activities - [A]

B. CASH FLOW FROM INVESTING

ACTIVITIES:
Purchase of property, plant and equipment -847 -1,024
Sale proceeds of property, plant and equipment 16 5
Purchase of Intangibles -6 -348
Sale proceeds of non-current investments 4 0
Purchase of current investments -47,755 -26,230
Sale of current investments 48,530 25,260
Loans given to subsidiaries -183 -84
Loans repaid by subsidiaries 154 48
Redemption/maturity of bank deposits (having original
1,135 2,590
maturity of more than 3 months)
Investment in bank deposits (having original maturity
-2,811 -1,555
of more than 3 months)
Investment in non-current deposits with banks 0 -1
Interest received 229 266
Dividend received from subsidiaries 188 167
Dividend received from others 2 11
Cash flow before exceptional items -1,344 -895

38
 STATEMENT OF CASH FLOWS (CONT.)

(All amounts in ‘crores, unless otherwise stated)

Year ended Year Ended

31st March, 31st March,
2018 2017
Exceptional items:
Consideration received on disposal of surplus
10 167
properties

Consideration received on disposal of joint venture 73 20

Taxes paid for exceptional items -3 -44
Net cash (used in) / generated from investing
-1,264 -752
activities - [B]

C. CASH FLOW FROM FINANCING

ACTIVITIES:
Dividends paid -3,872 -3,561
Dividend distribution tax paid -755 -693
Amounts deposited in bank accounts towards unpaid
-24 -10
dividends
Interest paid 0 0
Proceeds from share allotment under employee stock
0 0
options/ performance share schemes
Net cash (used in) / generated financing activities -
-4,651 -4,264
[C]
Net increase/(decrease) in cash and cash equivalents
1 -63
- [A+B+C]
Add: Cash and cash equivalents at the beginning of
572 635
the year (refer note 13)

Cash and cash equivalents at the end of the year 573 572

39
4.6 Interpretation:

 HIND. UNILEVER's cash flow from operating activities (CFO) during FY18
stood at Rs 61 billion, an improvement of 17.0% on a YoY basis.

 Cash flow from investing activities (CFI) during FY18 stood at Rs -11 billion
on a YoY basis.

 Cash flow from financial activities (CFF) during FY18 stood at Rs -50 billion
on a YoY basis.

 Overall, net cash flows for the company during FY18 stood at Rs 210 million
from the Rs -2 billion net cash flows seen during FY17.

40
4.7 Ratio Analysis

Ratio analysis plays an important role in the corporate world. It is a widely used tool
of financial analysis. Ratio analysis is revenant in assessing the performance of a firm
in respect of liquidity position, Long-term solvency, Operating efficiency, overall
profitability, inter-firm comparison and trend analysis.

With the help of ratio analysis, one can determine:

 The ability of firm to meet its current obligations;

 The extent to which the firm has used its long term solvency by barrowing
funds;

 The efficiency with the firm is utilizing its assets in generating sales revenue,
and

 The overall operating efficiency and performance of the firm

41
 4.7.1 Per share Ratio

1 Dividend per Share (Rs.)

Year Dividend Per Share (Rs.)

March 2017 17
March 2018 20

20.5
20
19.5
19
18.5
18
17.5
17
16.5
16
15.5
2017 2018
Dividend Per Share

Interpretation:

 The above graph shows there is increase in divined profit per share from Rs.17 to Rs.
20.
 During the financial year 2018, the boards of director recommended a Final
Dividend of Rs. 12/- per equity share of face value of Rs. 1/- each, for the financial
year ended 31st March, 2018.
 Together with the Interim Dividend of RS. 8/- per equity share ,the total dividend
for the year works out to Rs. 20/- per equity share of face value of Rs. 1/- each.

42
 2 Net Profit Per Share (Rs.)

Year Net Profit Per Share (Rs.)

March 2017 20.79
March 2018 24.25

25

24

23

22

21

20

19
2017 2018
Net Profit Per Share

Interpretation:
 The above graph shows there is increase in net operating profit per share from
Rs.20.79 to 24.25
 During the financial year 2018, the boards of director are pleased to declare a net
operating profit of Rs.20.79 per equity share of Rs. 1/- each.

43
 4.7.2 Profitability Ratios

1 Net Profit Margin (%)

Year Net Profit Margin

March 2017 14.07%
March 2018 15.16%

15.40%
15.20%
15.00%
14.80%
14.60%
14.40%
14.20%
14.00%
13.80%
13.60%
13.40%
2017 2018
Net Profit Margin

Interpretation:
 The above graph shows there is increase in net profit margin per share from 14.07%
to 15.16%.
 During the financial year 2018,net profit margin of the company has been increased
as compared to the 2017 as reduction in management expenses leads to the increased
in net operating profit which in turn leads to rise in net gross profit and finally which
leads to increased in the net profit margin of the company.

44
 2 Return on Net Worth/ Equity (%)

Year Return on Net worth

March 2017 69.18 %
March 2018 74.02 %

75.00%
74.00%
73.00%
72.00%
71.00%
70.00%
69.00%
68.00%
67.00%
66.00%
2017 2018
Return on Net worth

Interpretation:

 The ROE measures the ability of a firm to generate profits from its shareholders
capital in the company.
 The ROE for the company improved and stood at 71.8% during FY18, from 66.8%
during FY18.

45
 3 Return on Capital Employed (%)

Year Return on Capital Employed

March 2017 81.82%
March 2018 86.53%

87.00%

86.00%

85.00%

84.00%

83.00%

82.00%

81.00%

80.00%

79.00%
2017 2018
Return on Capital Employed

Interpretation:

 The ROCE measures the ability of a firm to generate profits from its total capital
(shareholder capital plus debt capital) employed in the company.
 The ROCE for the company improved and stood at 100.7% during FY18, from
92.8% during FY17.

46
 4 Return on Assets (%)

Year Return on Assets

March 2017 30.43%
March 2018 30.53%

30.54%

30.52%

30.50%

30.48%

30.46%

30.44%

30.42%

30.40%

30.38%
2017 2018
Return on Asset

Interpretation:

 The ROA measures how efficiently the company uses its assets to generate earnings.
 The ROA of the company improved and stood at 29.4% during FY18, from 28.9%
during FY17.

47
 5 Asset Turnover Ratio (%)

Year Asset Turnover Ratio

March 2017 201.32 %
March 2018 216.18%

220.00%

215.00%

210.00%

205.00%

200.00%

195.00%

190.00%
2017 2018
Asset Turnover Ratio

Interpretation:

 The asset turnover ratio measures the ability of a company to use its assets to
efficiently generate sales.
 The higher the ratio indicates that the company is utilizing all its assets efficiently to
generate sales.
 Companies with low profit margins tend to have high asset turnover.
 The company indicates asset turnover ratio of 201.32% in the FY 2017 which is
increased in FY 2018 to 216.18%.

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 4.7.3 Liquidity Ratio

1 Current ratio

Year Current Ratio

March 2017 1.3
March 2018 1.29

1.302
1.3
1.298
1.296
1.294
1.292
1.29
1.288
1.286
1.284
2017 2018
Current Ratio

Interpretation:
 Current ratio is also known as Working Capital Ratio or Short Term Solvency Ratio
 Measures of company’s current assets against current liabilities are shown by using
Current ratio
 2:1 is said as Ideal Current Ratio for the companies. Company should have current
ratio greater than 1.5
 In year 2017 & 2018 company shows the current ratio 0f 1.30 & 1.29 respectively.
Even though the current ratios are below 1.5, the company is comfortable to pay for
its short term obligations. As it is said that there are exceptions for ideal rule as many
companies receive faster money from customers than they have to pay to their
vendors.

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 2 Quick Ratio

Year Quick Ratio

March 2017 0.97
March 2018 1.02

1.03

1.02

1.01

0.99

0.98

0.97

0.96

0.95

0.94
2017 2018
Quick Ratio

Interpretation:

 1:1 is said as Ideal Quick Ratio for the companies.

 This ratio is considered to be much better and reliable as a tool for assessment of
liquidity position of the companies.
 In year 2017 & 2018 company shows the current ratio 0f 0.97 & 1.02 respectively.
 Here company in 2018 is more capable of covering its short term liabilities than in
2017.

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 3 Inventory Turnover Ratio

Year Inventory Turnover Ratio

March 2017 13.5
March 2018 14.64

14.8
14.6
14.4
14.2
14
13.8
13.6
13.4
13.2
13
12.8
2017 2018
Inventory Turnover Ratio

Interpretation:

 In accounting, the Inventory turnover is a measure of the number of times inventory

is sold or used in a time period such as a year.
 The above graph shows increase in Inventory Turnover Ratio from 13.5 in FY 2017
to 14.64 in FY 2018.
 It is calculated to measure of how well a company generates sales from its inventory.
 So the above graph shows that company is selling goods very quickly and that
demand for their product exists.

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 4.7.4 Cash Flow Indicator Ratio

1 Dividend Payout Ratio (Net profit) (%)

Year Dividend Payout Ratio (NP)

March 2017 79.53 %
March 2018 74.39 %

80.00%

79.00%

78.00%

77.00%

76.00%

75.00%

74.00%

73.00%

72.00%

71.00%
2017 2018
Dividend Payout Ratio (NP)

Interpretation:

 The dividend payout ratio is the proportion of earnings paid out as dividends to
shareholders
 The above graph shows there is decrease in Dividend Payout Ratio (NP) from
79.53% to 74.39%.
 During the financial year 2018,Dividend Payout Ratio (NP) of the company has been
decreased as compared to the 2017

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 2 Dividend Payout Ratio (Cash profit) (%)

Year Dividend Payout Ratio (CP)

March 2017 73.08 %
March 2018 68.17 %

74.00%

73.00%

72.00%

71.00%

70.00%

69.00%

68.00%

67.00%

66.00%

65.00%
2017 2018
Dividend Payout Ratio (CP)

Interpretation:

 The above graph shows there is decrease in Dividend Payout Ratio (CP) from
73.08% to 68017%.
 During the financial year 2018,Dividend Payout Ratio (CP) of the company has been
decreased as compared to the 2017
 A low Dividend Payout Ratio means that the company is reinvesting more money
back into expanding its business.

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 3 Earning Retention Ratio (%)

Year Earning Retention Ratio (%)

March 17 20.47%
March 18 25.61%

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2017 2018
Earning Retention Ratio (%)

Interpretation:
 The retention ratio is the proportion of earnings kept back in the business as retained
earnings.
 The above graph shows that the retained earnings in 2017 is been increased in FY
2018 from 20.47% to 25.61%.
 Retained earnings are the amount of net income left over for the business after it has
paid out dividends to its shareholders.

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 4.8 SHARE PRICE DATA:

The monthly high and low prices and volumes of shares of the Company at BSE
Limited (BSE) and the National Stock Exchange of India Limited (NSE) for the year
ended 31st March, 2018 are as under:

BSE NSE
High Low Volume High Low Volume
Apr'17 950.00 899.10 13,62,772 951.00 898.55 2,27,09,237
May'17 1080.00 923.50 40,69,169 1.077.00 922.60 3,54,69,354
June'17 1128.00 1052.40 35,40,911 1.129.00 1.046.10 2,79,85,760
July'17 1,195.10 1082.00 23,30,354 1.195.05 1081.10 2,99,20,274
Aug'17 1,221.00 1144.05 9,40,018 1.222.80 1143.55 1,97,34,055
Sept'17 1,286.00 1169.00 22,76,969 1.287.60 1169.00 2,46,54,473
Oct'17 1,288.00 1173.00 15,42,582 1.288.65 1171.00 2,25,35,108
Nov'17 1,314.50 1227.00 16,35,283 1.315.00 1226.35 2,30,65,722
Dec'17 1,384.10 1241.30 13,56,665 1.382.80 1241.20 2,03,57,621
Jan'18 1,410.65 1331.05 17,84,654 1.410.00 1328.55 2,54,76,315
Feb'18 1,415.15 1305.00 22,22,723 1.384.80 1299.00 2,38,15,135
Mar'18 1,344.05 1281.60 28,09,940 1.340.00 1281.10 2,17,94,188

BSE Sensex Vs HUL Share Price (Indexed)

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 NSE Sensex Vs HUL Share Price (Indexed)

HINDUSTAN UNILEVER Share Price Performance

 Over the last one year, HIND. UNILEVER share price has moved up from Rs
1,183.7 to Rs 1,751.1, registering a gain of Rs 567.4 or around 47.9%.

 Meanwhile, the S&P BSE FMCG Index is trading at Rs 12,176.0 (up 0.4%). Over
the last one year it has moved up from 9,862.7 to 12,176.0, a gain of 2,313 points (up
23.5%).

 Overall, the S&P BSE SENSEX is up 18.8% over the year.

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 4.9 Current valuation for Hindustan Unilever Company Limited

No. Of Months Year Ending 2017 2018

Sales Per Share (Unadj.) Rs. 153.20 164.20
Ttm Earnings Per Share RS. 20.80 24.10
Diluted Earnings Per Share RS. 20.80 24.10
Price To Cash Flow X 76.80 66.00
TTM P/E Ratio X 69.10 69.10
Price /Book Value Ratio X 27.90 34.40
Rs.
Market Capital M 37,89,885.00 37,89,752.00
Dividend Per Share(Unadj.) Rs. 17.00 20.00

Interpretation:

 The trailing twelve-month earnings per share (EPS) of the company stands at
Rs 24.1, an improvement from the EPS of Rs 20.8 recorded last year.

 The price to earnings (P/E) ratio, at the current price of Rs 1,751.1, stands at
69.1 times its trailing twelve months earnings.

 The price to book value (P/BV) ratio at current price levels stands at 34.4
times, while the price to sales ratio stands at 7.0 times.

 The company's price to cash flow (P/CF) ratio stood at 66.0 times its end-of-
year operating cash flow earnings.

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 4.10 Market Capitalization

The Market Capitalization of the Company based on year-end closing prices quoted in
the BSE Limited is given below:

Rs. in Cr.

Interpretation:

HUL’s net sales grew over 7 % in financial year 2017-18 aided by a double-digit
volume growth in the last two quarters. This was led by key brands like Lux, Dove
and Wheel.

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4.11 HUL’S PERFORMANCE

“The Benefits That Our Strategy Delivers, Translate Into Growth-Oriented

Performance for Shareholders and Society At Large”

4.11.1 .SEGMENT PERFORMANCE

1. Segmental Revenue (%)

Segmental Revenue(%)

15% 3%
33%
2%

47%

Personal Care Home care Refreshment Foods others

Interpretation

Company has earned highest segmental revenue from personal care i.e.47%. Home
care segment helps company to earn revenue of 33%. Revenue from Refreshments,
Foods and Other segments are 15%, 3% & 2% respectively.

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 2. Segmental Profits (%)

Segmental Profits (%)

1%
13%
25%

61%

Personal care Home Care Refreshment Foods Others

Interpretation

Company has earned highest segmental Profits from Personal care i.e.61%. Home
care segment helps company to earn profit of 25%. Profits from Refreshments &
Foods segments are 13%& 1% respectively.

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4.11.2 Financial Performance

1. Revenue From Operations2017-18

 Rs. 35,218 crores
 Comparable Domestic Consumer business grew 12% with 6% underlying
volume growth in a challenging environment

2. EBITDA2017-18
 Rs. 7,276 crores
 Comparable Earnings Before Interest Tax Depreciation and Amortization
(EBITDA) improved by 155 bps

3. EPS (BASIC)2017-18
 Rs.24.20
 Last year’s basic EPS: Rs. 20.75 per share

4. Cash from operations 2017 -18

 Rs. 8,000+ crores
 Cash from operations was up ` 1,369 crores over the previous year

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4.11.3 NON-FINANCIAL (Manufacturing)
1. 2017
 Reduction in CO2 emissions (kg/tonne of production) in our manufacturing
operations compared to 2008 baseline.
 2017- 54%
 2016- 49%

2. 2017
 Reduction in water consumption (m3/tonne of production) in our
manufacturing operations compared to 2008 baseline
 2017- 55%
 2016- 53%

3. 2017
 Reduction in total waste (kg/tonne of production) generated from factories
compared to 2008 baseline
 2017- 54%
 2016- 45%

4. Better Livelihoods 2017

 ~80,000
 2016: 72,000
 Shakti Entrepreneurs empowered

5. SUSTAINABLE SOURCING 2017

 Tea sourced from sustainable sources for Unilever brands.
 2017- 52%
 2016- 46%

6. HEALTH AND WELL-BEING2017

 2017- >140 Million
 2016- >130Million
 People reached through our Water, Sanitation and Hygiene(WASH) initiatives

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 CHAPTER NO. 5: CONCLUSION & SUGGESTIONS

5.1.CONCLUSION

Hindustan Unilever ltd. Is a leading FMCG company in India and from last three
consecutive years has shown accelerated growth in FMCG portfolio. Customers in
India are also spending more in FMCG as their standard of living is growing. HUL
has placed itself successfully in the position of market leader in FMCG products.
Though there was some downfall in sales and profit of the company in the beginning
of this decade but after that HUL has shown considerable rise in both sales and profit.

Over the years, HUL has grown substantially by acquiring landmark brands and has
managed to maintain its dominant market position in various categories.

Hindustan Unilever’s average current ratio over the last 5 financial years has been
1.11 times which indicates that the Company is comfortably placed to pay for its short
term obligations. The trailing twelve-month earnings per share (EPS) of the company
stands at Rs 24.1, an improvement from the EPS of Rs 20.8 recorded last year.

The future of the company is also looking bright as FMCG market in India is still
expanding and so we can safely conclude that HUL will be able to secure its number
one position in FMCG product.

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5.2.SUGGESTIONS

 HUL should take more efforts to create their brand awareness in the Rural
Area.

 HUL should improve their pricing strategy.

 Company should avoid the clash of similar products under different name as it
may affect the turnover of respective brand.

 For betterment of current products and to innovate new products HUL should
take more efforts for R & D.

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 Chapter No.6: BIBLIOGRAPHY

 Annual Report of Hindustan Unilever ltd.

 https://www.hul.co.in

 https://www.moneycontrol.com

 https://www.equitymaster.com

 https://www.slideshare.net

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