ACCOUNTING FOR MANAGERS

FINANCIAL STATEMENT ANALYSIS OF

HINDUSTAN UNILEVER LIMITED

ELAKYA K - 21AD09
HARIESH KUMAR T - 21AD13
KRITHIKA S - 21AD18
PRABHAKARAN A - 21AD25
SWETHA GOWRI K - 21AD40

1
 TABLE OF CONTENTS

S. NO PARTICULARS PAGE
NO
1 Company Profile
1.1 Overview 3
1.2 Market share 4
1.3 Products 5
1.4 Key People of Hindustan Unilever Ltd. 5
1.5 ESG Recognition 6
1.6 Key Competitors 6
2 Horizontal and Vertical Analysis

2.1 Income Statement – Horizontal analysis 7

2.2 Income Statement – Vertical analysis 8
2.3 Balance Sheet – Horizontal analysis 9
2.4 Balance Sheet – Vertical analysis 11
2.5 Interpretation 12

3 Ratio Analysis
Ratios and interpretation 13
4 Cash Flow analysis 19
5 Comparative analysis 21
6 Conclusion 25

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1. COMPANY PROFILE
1.1 HINDUSTAN UNILEVER LIMITED – OVERVIEW
HUL (Hindustan Unilever Limited) is a Mumbai-based consumer goods company. It's a
subsidiary of British conglomerate Unilever. Food, beverages, cleaning supplies, personal care
items, water purifiers, and other fast-moving consumer goods are among its offerings.

Hindustan Lever Limited (HUL) was founded in 1933 named Hindustan Vanaspati
Manufacturing Co., and was renamed Hindustan Lever Limited in 1956 after a merger of
constituent organizations. Hindustan Unilever Limited was the company's new name in June
2007. Hindustan Unilever's portfolio included 44 item marks in 14 categories as of 2019. In
FY2017-18, the business employed 18,000 people and completed 34,619 crores in timed deals.
In April 2020, HUL finished its consolidation with GlaxoSmithKline Consumer Healthcare
(GSKCH India) subsequent to finishing every lawful system.

Hindustan Unilever's corporate base camp is situated at Andheri, Mumbai. The grounds are
spread over 12.5 sections of land and houses north of 1,600 workers. A portion of the offices
accessible for the representatives incorporates an odd and ends shop, a food court, a word
related wellbeing community, a rec center, a games and diversion focus and a daycare center.
The Campus is planned by Mumbai-based engineering firm Kapadia Associates. The grounds
got an affirmation from LEED (Leadership in Energy and Environmental Design) Gold in the
'New Construction' classification, by Indian Green Building Council (IGBC), Hyderabad,
under permit from the United States Green Building Council (USGBC). The organization's past
central command was situated at Backbay Reclamation, Mumbai at the Lever House, where it
was housed for over 46 years.

The Institute of Competitiveness, India, has perceived Hindustan Unilever Limited's Project
Shakti for 'Making Shared Value' and gave to the organization the Porter Prize for 2014. It
positioned number one on the Forbes rundown of 'Most Innovative Companies' across the globe
for 2014 and was positioned number three on Fortune India's rundown of India's most
appreciated organizations in a rundown gathered with the assistance of a worldwide
administration consultancy Hay Group.

It got an honor from Dun and Bradstreet Corporate Awards in 2014 and was Client of the
Year at Effies 2013 - 2014. It additionally got an honor as a 'Cognizant Capitalist of the Year'
at the 2013 Forbes India Leadership Awards.HUL won 12 honors in general with 4 Golds, 4
Silvers and 4 Bronzes at the 2013 Emvies Awards. In 2013, HUL positioned number two on
the on Fortune India's 2013 '50 Most Admired Companies list'. And was announced the fourth
most Respected Company in India in a review led by Business World in 2013.

According to a 2015 Nielsen Campus Track-business college overview, Hindustan

Unilever arose among the top bosses of decision for B-school understudies graduating that year.
It has regularly been known as a 'Fantasy Employer' for application by B-School understudies

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in India. In 2012, HUL was perceived as one of the world's most imaginative organizations by
Forbes. Hindustan Unilever Limited (HUL) won the principal prize at FICCI Water Awards
2012 under the classification of 'local area drives by industry' for Gundar Basin Project, a water
progressive drive. Hindustan Unilever Limited won 13 honors at the Emvies 2012 Media
Awards coordinated by the Advertising Club Bombay in September 2012.

The organization got four honors at the Spikes Asia Awards 2012, held in September. The
honors included one Grand Prix one Gold Award and two Silver Awards. HUL's Chhindwara
Unit won the National Safety Award for extraordinary execution in Industrial Safety. In July
2012 Hindustan Unilever Limited won the Golden Peacock Occupational Health and Safety
Award for 2012 in the FMCG class for its security and wellbeing drives and persistent
enhancement for key measurements. Hindustan Unilever Limited is evaluated as bthe est 3Ci
Company which is enrolled with National Industrial Classification Code 15140.

Lake's Talcum Powder's bundling advancement has gotten a Silver Award at the lofty 24th
DuPont Global Packaging Award, in May 2012. The brand was perceived for cost and waste
decrease. In May 2012, HUL and Star Bazaar got the silver honor for 'Making Consumer Value
through Joint Promotional and Event Forecasting' at the thirteenth ECR Efficient Consumer
Response Asia Pacific Conference.

HUL is the market chief in Indian purchaser items with presence in more than 20 shopper
classifications, for example, cleansers, tea, cleansers and shampoos among others with north
of 700 million Indian customers utilizing its items.

1.2 MARKET SHARE

2,308.50 ◭ 7.10 (0.31%)

Hindustan Unilever Ltd., founded in 1933, is a large-cap company in the FMCG industry
with a market capitalization of Rs 542,790.83 crore. Personal Care is the primary product of
Hindustan Unilever Ltd., and Other Operating Revenue is the primary revenue segments for
the fiscal year ending March 31, 2021.

The company reported a Consolidated Total Income of Rs 13,099.00 Crore for the quarter
ended September 30, 2021, up 6.84 percent from the previous quarter's Total Income of Rs
12,260.00 Crore and up 11.23 percent from the same quarter last year's Total Income of Rs
11,776.00 Crore. In the most recent quarter, the company declared a net profit after tax of Rs
2,185.00 crore.

4
1.3 PRODUCTS

- FOOD PRODUCT - HOMECARE

 Annapurna salt and Atta  Active wheel detergent
 Bru coffee  Cif Cream Cleaner
 Brook bond) tea  Comfort fabric softeners
 Kissan squashes, ketchups, juices, and jams  Domex disinfectant/toilet cleaner
 Lipton ice tea  Rin detergents and bleach
 Knorr soup & meal maker and soup noodle  Sunlight detergent and colour care
 Kwalitywall frozen desert  Surf Excel detergent
 Magnum  Vim dishwash
 Horlicks  Magic – Water Save

- PERSONAL CARE
 Axe deodorant and aftershaving lotion and soap
 LEVER Ayush Therapy ayurvedic health care and personal care products
 Clear anti-dandruff hair products
 Clinic Plus shampoo and oil
 Close up toothpaste
 Dove skin & hair care range
 Glow and lovely, skin lightening cream
 Hamam
 Lakme beauty products and salons
 Lifebuoy soaps and handwash range
 Lux soap, body wash and deodorant
 Pears soap, body wash
 Pepsodant toothpaste
 Pond’s talcs and creams
 Rexona
 Sunsilk shampoo
 Sure anti-perspirant
 Vaseline petroleum jelly, skin care lotions
 TREsemme

1.4 KEY PEOPLE OF HINDUSTAN UNILEVER

 Sanjiv Mehta (Chairman and Managing Director)
 Srinivas Phatak (Executive Director, Finance and It, Chief Finance Officer)
 Dev Bajpai (Executive Director, Legal and Corporate Affairs and CS)
 Wilhelmus Uijen (Supply Chain and Executive Director)
 Aditya Narayan (Independent Director)

5
  O.P.Bhatt(Independent Director

1.5 ESG RECOGNITION

Hindustan Unilever Limited has begun the process of creating a trash-free planet by
minimizing food waste in industries and embracing minimalistic plastic use. This problem has
to do with the sustainable development goals of responsible consumption and production.
HUL has teamed up with the United Nations Development Programme (UNDP) to work
on waste management projects in Mumbai, including collection, separation, and recycling.
They also intend to practice package reduction, recycling, and reuse.

HUL aspires to make sustainability a norm through restoring the planet's health, both
within and outside of our supply chain. The Unilever Sustainable Agriculture Code (SAC) and
Unilever Regenerative Agriculture Principles (RAPs) serve as the foundation for this
sustainable sourcing initiative.

1.6 KEY COMPETITORS

COMPETITOR ITC MARICO CAFÉ COFFEE COCA-COLA

DAY

FOUNDING 1910 1991 1996 1890

DATE

TAG Manufacturin Manufacturing & Manufacturing & Manufacturing &

g & Industrial Industrial Retail Industrial Retail Industrial Retail
Retail (Beauty and fitness) (Food and (food and
(agriculture, beverage) beverage)
health
product)
TYPE PUBLIC PUBLIC PUBLIC PUBLIC

HEAD
QUARTERS KOLKATA GUWAHATI BENGALURU UXBRIDGE

EMPLOYEES 28,115 2,297 3,626 23,500

RATING 5.7/10 6/10 7.7/10 6.6/10

6
2. HORIZONTAL AND VERTICAL ANALYSIS:
2.1 Income Statement Horizontal Analysis:
2018 vs 2017 2019 vs 2018
2017 Increase 2018 Increase 2019
Difference Difference
Income Statement (%) (%)
Total Income 32558 2663 8% 35221 3655 10% 38876

EXPENDITURE:
Raw Materials 13165 694 5% 13859 1571 11% 15430
Power & Fuel Cost 257 2 1% 259 10 4% 269
Employee Cost 1620 125 8% 1745 2 0% 1747
Other Manufacturing
Expenses 2771 187 7% 2958 60 2% 3018
Selling and Admin
Expenses 6508 597 9% 7105 540 8% 7645
Total Expenditure 25744 1694 7% 27438 2364 9% 29802

Operating Profit 6814 969 14% 7783 1291 17% 9074

Interest 22 -2 -9% 20 8 40% 28
Gross Profit 6792 971 14% 7763 1283 17% 9046
Depreciation 396 82 21% 478 46 10% 524
Profit Before Tax 6396 889 14% 7285 1237 17% 8522
Tax 1865 283 15% 2148 417 19% 2565
Deferred Tax 41 -141 -344% -100 21 -21% -79
Net Profit 4490 747 17% 5237 799 15% 6036

Dividend 3679 650 18% 4329 -2381 -55% 1948

2020 vs 2019 2021 vs 2020

2019 Increase 2020 Differenc Increase 2021
Difference
Income Statement (%) e (%)
Total Income 38876 835 2% 39711 7306 18% 47017

EXPENDITURE:
Raw Materials 15430 -52 0% 15378 4406 29% 19784
Power & Fuel Cost 269 -6 -2% 263 41 16% 304
Employee Cost 1747 -56 -3% 1691 538 32% 2229
Other Manufacturing
Expenses 3018 -158 -5% 2860 -13 0% 2847
Selling and Admin
Expenses 7645 -122 -2% 7523 267 4% 7790
Total Expenditure 29802 -227 -1% 29575 5832 20% 35407

Operating Profit 9074 1062 12% 10136 1474 15% 11610

Interest 28 78 279% 106 2 2% 108
Gross Profit 9046 984 11% 10030 1472 15% 11502
Depreciation 524 414 79% 938 74 8% 1012
Profit Before Tax 8522 570 7% 9092 1398 15% 10490

7
Tax 2565 -363 -14% 2202 256 12% 2458
Deferred Tax -79 231 -292% 152 -74 -49% 78
Net Profit 6036 702 12% 6738 1216 18% 7954

Dividend 1948 -1948 -100% 0 0 0% 0

2.2 Income Statement Vertical Analysis:

Vertic Vertica
Vertical Vertical Vertical
al l
2017 analysis 2018 analysis 2019 2020 2021 analysis
analysi analysi
2017 2018 2021
s 2019 s 2020
Total Income 32588 100% 35221 100% 38876 100% 39711 100% 47017 100%

EXPENDITUR
E
Raw Materials 13165 40% 13859 39% 15430 40% 15378 39% 19784 42%
Power & Fuel
Cost 257 1% 259 1% 269 1% 263 1% 304 1%
Employee Cost 1620 5% 1745 5% 1747 4% 1691 4% 2229 5%
Other
Manufacturing
Expenses 2771 9% 2958 8% 3018 8% 2860 7% 2847 6%
Selling and
Admin Expenses 6508 20% 7105 20% 7645 20% 7523 19% 7790 17%
Total
Expenditure 25744 79% 27438 78% 29802 77% 29575 74% 35407 75%

Operating
Profit 6814 21% 7783 22% 9074 23% 10136 26% 11610 25%
Interest 22 0% 20 0% 28 0% 106 0% 108 0%
Gross Profit 6792 21% 7763 22% 9046 23% 10030 25% 11502 24%
Depreciation 396 1% 478 1% 524 1% 938 2% 1012 2%
Profit Before
Tax 6396 20% 7285 21% 8522 22% 9092 23% 10490 22%
Tax 1865 6% 2148 6% 2565 7% 2202 6% 2458 5%
Deferred Tax 41 0% -100 0% -79 0% 152 0% 78 0%
Net Profit 4490 14% 5237 15% 6036 16% 6738 17% 7954 17%

Dividend 3679 11% 4329 12% 1948 5% 0 0% 0 0%

8
CHART:

50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
2016 2017 2018 2019 2020 2021 2022

Total Income Net Profit Operating Profit

2.3 Balance Sheet Horizontal Analysis:

2018 vs 2017 2019 vs 2018

2017 2018 2019
Increase Increase
Difference Difference
(%) (%)
EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS
Equity Share Capital 235 -19 -8% 216 0 0% 216
Reserves and Surplus 47,199 -39384 -83% 7,815 -372 -5% 7,443
Total Shareholder’s
47,434 -39403 -83% 8,031 -372 -5% 7,659
Funds
LIABILITIES
Total Non-Current
9,841 -7374 -75% 2,467 -614 -25% 1,853
Liabilities
Total Current Liabilities 10,841 -1737 -16% 9,104 -751 -8% 8,353
Total Capital And
68,116 -48514 -71% 19,602 -1737 -9% 17,865
Liabilities
ASSETS
NON-CURRENT ASSETS
Tangible Assets 5,786 -1161 -20% 4,625 -718 -16% 3,907
Intangible Assets 45,241 -44810 -99% 431 5 1% 436
Fixed Assets 51,650 -46081 -89% 5,569 -853 -15% 4,716
Other Non-Current Assets 1,994 -835 -42% 1,159 -375 -32% 784
Total Non-Current Assets 54,476 -46782 -86% 7,694 -1203 -16% 6,491
CURRENT ASSETS
Current Investments 2,683 -1435 -53% 1,248 1445 116% 2,693
Inventories 3,383 -747 -22% 2,636 -214 -8% 2,422
Cash And Cash Equivalents 4,321 696 16% 5,017 -1329 -26% 3,688

9
Other Current Assets 1,605 356 22% 1,961 -1063 -54% 898
Total Current Assets 13,640 -1732 -13% 11,908 -534 -4% 11,374
Total Assets 68,116 -48514 -71% 19,602 -1737 -9% 17,865

2020 vs 2019 2021 vs 2020

2019 Increase 2020 Increase 2021
Difference Difference
(%) (%)

EQUITIES AND
LIABILITIES

SHAREHOLDER'S
FUNDS
Equity Share Capital 216 0 0% 216 0 0% 216
Reserves and Surplus 7,443 -584 -8% 6,859 -585 -9% 6,274

Total Shareholder’s
7,659 -584 -8% 7,075 -585 -8% 6,490
Funds
LIABILITIES
Total Non-Current
1,853 -415 -22% 1,438 -379 -26% 1,059
Liabilities

Total Current Liabilities 8,353 283 3% 8,636 -1434 -17% 7,202

Total Capital And

17,865 -716 -4% 17,149 -2398 -14% 14,751
Liabilities

ASSETS
NON-CURRENT
ASSETS
Tangible Assets 3,907 -131 -3% 3,776 -122 -3% 3,654
Intangible Assets 436 -70 -16% 366 4 1% 370
Fixed Assets 4,716 -144 -3% 4,572 -345 -8% 4,227

Other Non-Current Assets 784 -261 -33% 523 -136 -26% 387

Total Non-Current Assets 6,491 -481 -7% 6,010 -624 -10% 5,386

CURRENT ASSETS
Current Investments 2,693 162 6% 2,855 664 23% 3,519
Inventories 2,422 -63 -3% 2,359 3 0% 2,362

Cash And Cash Equivalents 3,688 -315 -9% 3,373 -1702 -50% 1,671

Other Current Assets 898 507 56% 1,405 -520 -37% 885
Total Current Assets 11,374 -235 -2% 11,139 -1774 -16% 9,365
Total Assets 17,865 -716 -4% 17,149 -2398 -14% 14,751

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2.4 Balance Sheet Vertical Analysis:
Vertic Verti Vertic
Vertica Vertica
al cal al
l l
2017 Analy 2018 Anal 2019 Analy 2020 2021
Analysi Analysi
sis ysis sis
s 2020 s 2021
2017 2018 2019
EQUITIES AND
LIABILITIES
SHAREHOLDER' 47,43
70% 8,031 41% 7,659 43% 7,075 41% 6,490 44%
S FUNDS 4
LIABILITIES
Total Non-Current
9,841 14% 2,467 13% 1,853 10% 1,438 8% 1,059 7%
Liabilities
Total Current 10,84
16% 9,104 46% 8,353 47% 8,636 50% 7,202 49%
Liabilities 1
Total Capital And 68,11
100% 19,602 100% 17,865 100% 17,149 100% 14,751 100%
Liabilities 6

ASSETS
NON-CURRENT
ASSETS
Tangible Assets 5,786 8% 4,625 24% 3,907 22% 3,776 22% 3,654 25%
45,24
Intangible Assets 66% 431 2% 436 2% 366 2% 370 3%
1
Other Non-Current
1,994 3% 1,159 6% 784 4% 523 3% 387 3%
Assets
Total Non- 54,47
80% 7,694 39% 6,491 36% 6,010 35% 5,386 37%
Current Assets 6
CURRENT
ASSETS
Current
2,683 4% 1,248 6% 2,693 15% 2,855 17% 3,519 24%
Investments
Inventories 3,383 5% 2,636 13% 2,422 14% 2,359 14% 2,362 16%
Cash And Cash
4,321 6% 5,017 26% 3,688 21% 3,373 20% 1,671 11%
Equivalents
Other Current
1,605 2% 1,961 10% 898 5% 1,405 8% 885 6%
Assets
Total Current 13,64
20% 11,908 61% 11,374 64% 11,139 65% 9,365 63%
Assets 0
68,11
Total Assets 100% 19,602 100% 17,865 100% 17,149 100% 14,751 100%
6

11
CHART:
80.00

Thousands
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
2016 2017 2018 2019 2020 2021 2022

Total Assets Total Shareholders Funds

Total Liabilities

Interpretations from Income statement:

 From the vertical analysis of the income statement, it is noted that HUL steadily
decreases its total expenditure over the period 2017-2021. Thus increasing its operating
profit. The total expenditure consumes 75% of the total income of the company in 2021.
The company seeks to increase the net profit by reducing the expenses over years.
 The dividends paid over the period 2019-2021 has been reduced and in the previous
two years there has been no dividends paid out. Hence in 2020 and 2021 the net profit
is totally taken as a retained earnings for the improvement of the business.
 From the horizontal analysis and graph, it is notable that the total income has been
affected during 2019-2020 and it shows a negative growth during the same. This is
because of the effect of pandemic and reduced sales of HUL products during the period.
 Though the net revenue is reduced the operating profit and net profit shows a steady
growth and it is not affected.

Interpretations from Balance Sheet:

 From the vertical analysis we could see the total shareholder fund decreasing from70%
in 2017 to 44% in 2021. The company has increased its current liabilities significantly
and it stands at 49% of total liabilities and shareholder equity.
 The HUL being a FMCG company, they maintain a high trade payable over years which
contribute a major part of the current liabilities.
 The company has also reduced its non-current liabilities significantly during the period
2017-2021 indicating the growth in their performance.
 The equity share capital constantly contributes 1% towards the total shareholder equity
and liabilities. The reserve and surplus stands at 40% throughout the period of analysis.
 In the past 4 years they maintain their inventories in the range 13%-16% of the total
assets.

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  From the horizontal analysis, it is noted that the total assets over the period 2017-2021
has reduced significantly. There has been significant reduction in the fixed asset during
2017-2018.
 Though there is reduction of current assets, a healthy sum of cash and cash equivalents
has been maintained.

3. RATIO ANALYSIS
3.1 LIQUIDITY RATIO:
a) Current ratio: The current ratio is a liquidity ratio that measures a company's ability to
pay off its short-term debts and obligations, which are typically due within one year.

Particulars 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Current asset 9,365 11,139 11,374 11,908 13,640
Current 7,202 8,636 8,353 9,104 10,841
liabilities
Current ratio 1.30 1.29 1.36 1.30 1.25
Current ratio for HUL (for the year 2020-2021) = 1.25

Analysis: A current ratio greater than one indicates that the company has the financial resources
to remain solvent in the short-term time frame.

3.2 SOLVENCY RATIO

a) Debt to equity ratio: One of the most popular solvency ratios, the debt-to-equity ratio
determines the proportion of debt to that of the equity in a company.

PARTICULARS 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Total liability 8,261 10,074 10,206 11,571 20,682
Total equity 6,490 7,075 7,659 8,031 47,434

Debt-equity ratio 1.28 1.42 1.33 1.44 0.44

Debt to equity ratio of HUL (for the year 2020- 2021) = 0.44

Analysis: The ratio is seen decreasing over the years which is a good thing as it indicates that
a lower amount is financed via lenders, versus funding through equity via shareholders. The
ratio is lower than 1 which signifies equity portion is more than debt and this is better as there
is less risk involved.

13
 b) Debt to asset ratio: This ratio determines the proportion of debt to that of the assets
of a company. The lower the debt to asset ratio the better it is for any company.

PARTICULARS 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Total liability 8,261 10,074 10,206 11,571 20,682
Total asset 14,751 17,149 17,865 19,602 68,116
Total debt to asset 56.00% 58.75% 57.13% 59.02% 30.36%
ratio
Debt to asset ratio of HUL (for the year 2020-2021) in % = 30.36%

Analysis: The debt to asset ratio of 30.36% indicates that around 30.362% of assets owned by
HUL are financed using debt capital. In the past 4 years, this ratio increased and decreased
simultaneously at the same levels but in the year 2021, the ratio is seen decreasing to a greater
level which means that the company owns more assets than its liabilities so any obligations can
be met by the company if needed. This also means that the company is less risky.

3.3 EFFICIENCY RATIOS

a) Fixed assets turnover: The relationship between a company's operating income

(sales) and its fixed assets is established by fixed assets turnover. This ratio is a measure
of efficiency that determines how much revenue a company makes by utilizing its fixed
assets.

PARTICULARS 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Sales 33,895 34,619 37,660 38,273 45,311
Fixed assets 4,227 5,572 4,716 5,569 51,650
Fixed asset 8.02 7.58 7.99 6.87 0.88
turnover ratio

Analysis: The ratio is too low; it indicates that the company is investing more in fixed assets
but not utilizing them efficiently. When a company makes such significant purchases, wise
investors closely monitor this ratio in subsequent years to see if the company's new fixed
assets reward it with increased sales.

b) Working capital turnover: Working capital is a term that refers to the funds that
a firm needs to run its day-to-day operations. The working capital turnover ratio
illustrates how much revenue a company generates per rupee of working capital.

Working capital = current assets - current liabilities

14
 PARTICULARS 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021
Current asset 9,365 11,139 11,374 11,908 13,640
Current liability 7,202 8,636 8,353 9,104 10,841
Working capital 2,163 2,503 3,021 2,804 2,799
Average working 2531.5 2,333 2,762 2,912.5 2,801.5
capital
Operating revenue 34,487 35,218 38,224 38,785 45,996
(sales)
Working Capital 13.63 15.10 13.84 13.32 16.42
turnover ratio

Analysis: A working capital turnover of 16.42 effectively means that HUL generates Rs. 16.42
of revenue for every rupee of working capital. Working capital increased between 2018 and
2019, indicating that the company has either raised current assets (receivables or other current
assets) or lowered current obligations (paying off some short-term creditors, for example), or
a combination of both. However, it has fallen in the last two years, indicating that it has limited
working capital. Low working capital frequently indicates that a company is barely scraping
by and just has enough cash to satisfy its immediate needs.

c) Inventory turnover ratio: The inventory turnover ratio measures how many
times a company's completed stock has been sold and replenished. It's usually
determined for a specified length of time.

PARTICULARS 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Revenue from sales 33,895 34,619 37,660 38,273 45,311

Average inventory 2,445 2,360.5 2,390.5 2,529 3,009.5

Inventory turnover 13.9 times 14.7 times 15.8 times 15.2 times 15 times
ratio
Inventory turnover ratio of HUL = 15 times

Analysis: The inventory turnover ratio has been maintained 15 times for the last 3 years. This
shows that in a single financial year (2020-2021), HUL has managed to sell and replace its
entire stock of finished goods approximately 15 times.

d) Accounts receivable turnover: The accounts receivable turnover determines the

number of times a company collects cash from its debtors. A high accounts receivable turnover
is favorable since it means that a company collects cash frequently.

PARTICULARS 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Sales 33,895 34,619 37,660 38,273 45,311
Average accounts 996 1,037.5 1,410 1,359.5 1347

15
 receivable
Accounts 34.04 33.37 26.71 28.15 33.63
receivable turnover

Analysis: This indicates that HUL has collected cash from its debtors approximately 34 times
in the year 2020-2021.

Average collection period: The average collection period determines the time it takes
for a company to collect cash from its debtors. A lower average collection period is favorable
since it effectively means that the company is able to collect cash quickly.

PARTICULARS 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Accounts 34.04 33.37 26.71 28.15 33.63
receivable
turnover
Average collection 11 days 11 days 13 days 13 days 11 days
period

Analysis: For HUL, the average collection period for the year 2020-2021 is 10.83. This
indicates that the company takes roughly 11 days to collect payments from its debtors.

3.4 PROFITABILITY RATIOS:

a) EBITDA Margin: EBITDA margin is a profitability ratio that measures how much in
earnings a company is generating before interest, taxes, depreciation, and amortization, as a
percentage of revenue. EBITDA Margin = EBITDA / net sales

PARTICULARS 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

EBITDA 6,573 7,845 9,301 10,333 11,837
Net sales 31,890 34,525 38,224 38,785 45,996
EBITDA margin 20.61% 22.72% 24.33% 26.64% 25.73%

Analysis: The EBITDA margin is a measure of a company's cash operating profit margin before
factoring in capital expenditures, taxes, and capital structure. Investors and owners can gain a
sense of how much money is made for every rupee of revenue received, and use the margin as
a benchmark when comparing different businesses.

With a 25.73 percent EBITDA margin, HUL is a low-margin company. This suggests that HUL
is experiencing profitability and cash flow concerns and that it needs to increase its margins in
comparison.

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 b) OPERATING PROFIT RATIO: The operational profit ratio is a
measurement of the relationship between operating profit and net sales. Earnings
before interest and taxes (EBIT) is another term for operating profit, while net sales is
another term for income generated by operations.

PARTICULARS 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Operating profit 6,047 7,276 8,637 9,600 11,324
Net sales 31,890 34,525 38,224 38,785 45,996
Operating profit 18.97% 21.07% 22.59% 24.76% 24.62%
ratio

Analysis: Here the ratio is seen gradually increasing over the years which is good. The
higher operating profit margin means that a company has lower fixed cost and a better gross
margin or increasing sales faster than costs, which gives management more flexibility in
determining prices.

c) Return on assets (ROA): The return on assets ratio establishes how efficient a
company is at using its assets to earn revenue. A high return on assets suggests that a
corporation is good at generating profits from its assets.

PARTICULARS 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Net income 4,490 5,237 6,036 6,738 7,954
Total average 14,335.5 15,950 17,507 18,733.5 43,859
asset
ROA 31.32% 33.39% 34.48% 35.96% 18.13%

The ROA of HUL has reduced for 2020-2021. A low return on investment (ROI) is not a
favorable indication for a company's future success. A low ROA suggests that a corporation is
unable to maximize the value of its assets in order to increase earnings.

3.5 THE DUPONT ANALYSIS:

Profit margin, asset turnover, and leverage are the three components of the DuPont equation,
which divides return on equity into three parts.

Profit margin multiplied by asset turnover multiplied by financial leverage, according to

DuPont analysis, is the return on equity.

1. Net Profit Margin: The net profit margin ratio is measured by dividing profit before
interest tax by revenue from operation (sales). It reflects management effectiveness in

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 terms of product manufacturing, administration, and sales. This ratio is a broad
indicator of a company's capacity to turn each rupee sale into profit.

Particulars 2017 2017-2018 2018-2019 2019-2020 2020-2021

Net profit 4,490 5,237 6,036 6,738 7,954
Revenue from 31,890 34,525 38,224 38,785 45,996
operations
Net profit 14.07% 15.16% 15.79% 17.37% 17.29%
margin

2. Assets Turnover: The asset turnover ratio is a measure of how effectively a

company converts its assets into sales.

Particulars 2016 - 2017 2017-2018 2018-2019 2019-2020 2020-2021

Net sales 31,890 34,525 38,224 38,785 45,996

Total Assets 14,751 17,149 17,865 19,602 68,116
Assets 2.16 2.01 2.14 1.98 0.67
turnover ratio

3. Equity multiplier: A variation of the debt to asset ratio, the equity multiplier
determines the number of assets that are funded by shareholders’ equity. When the
equity multiplier is low, it is better for the company.

Particulars 2016 - 2017 2017-2018 2018-2019 2019-2020 2020-2021

Total Assets 14,751 17,149 17,865 19,602 68,116

Total equity 6,490 7,075 7,659 8,031 47,434

Equity 2.28 2.43 2.34 2.44 1.44

multiplier

Return on equity (ROE)

Return on Equity (ROE) examines the firm's bottom line to evaluate overall profitability for
the firm's owners and investors, using net income as the numerator. After paying mandatory

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commitments and reinvesting in the firm, the income returned to investors is a valuable metric
that shows excess earnings.

PARTICULARS 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Net profit margin 14.07 15.16 15.79 17.37 17.29
Assets turnover 2.16 2.01 2.14 1.98 0.67
ratio
Equity multiplier 2.28 2.43 2.34 2.44 1.44
ROE 69.29% 74.02% 79.1% 83.9% 16.7%
ROE of HUL (for the year 2020-2021) % = 16.7%

The return on equity (ROE) is a metric that assesses a company's capacity to profit from the
money invested by its shareholders. A 16.7% return on equity means that for every hundred
rupees invested by shareholders, the company generated Rs. 16.7 rupees. The company's ROE
fell to 16.8% in FY21, down from 83.9 percent the previous year.

4. CASH FLOW ANALYSIS

Cash flow of Hindustan
2017 2018 2019 2020 2021
Unilever (in RS. Crores)
Net cash used in /
(generated) from operating 4,953 5,916 5,728 7,305 8,957
activities [A]
Net cash used in / generated
(752) (1264) (264) 1,926 (1,367)
from investing activities [B]
Net cash (used in) /
generated from financing (4,264) (4,651) (5,462) (6,676) (9,280)
activities [C]
Net increase / decrease in
cash and cash equivalents - (63) 1 2 2,555 (1,690)
[A+B+C]

OPERATING ACTIVITY ANALYSIS:

 The company has maintained a positive and gradual increase in cash flow from
operating activities which indicates that there is a huge potential and ability to carry
out core business activities effectively and efficiently.
 The positive measure also indicates profitability potential of the company.

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  A huge increase in non-current asset, current asset and trade receivables and decrease
in trade payables, non-current provisions, current provisions and other current
liabilities has accounted for the huge increase in operating cash flow from 2017 to
2018.
 There are no significant changes found between the year 2018 and 2019.
 A massive increase in current assets, non-current assets and notably inventories and a
decrease in non-current liabilities has marked a noteworthy increase in operating
activity cash flows in the year ended, 2020.
 An increase in non-current assets and decrease in current liabilities has led to the
increase in cash flow from operating activities in the year ended, 2021.

INVESTING ACTIVITY ANALYSIS:

 It is evident that the company has adopted and implemented different strategies in
terms of investing activities as there is no linear progress seen in investing activities.
 There is an increase in negative cash flow from investing activity in the year ended,
2018. This is because of the huge investments made in the purchase of current
investments.
 In the year ended, 2019, there is a huge investment in the purchase of current
investments. At the same time, there are massive proceeds from the sale of current
investments. This balance between the purchase and sale has significantly decreased
the cash flow from investing activities while still maintaining a negative figure.
 The purchases and sales in current investments are very less in the year ended, 2020
when compared with 2019. This has resulted in positive cash flow from investing
activities. The positive figures show that the company had made no investments for
the long-term growth and expansion of the business.
 An enormous increase in the intangible asset of the company has proved to be the key
contributor for the negative cash flow from investing activity in the year ended, 2021.

FINANCING ACTIVITY ANALYSIS:

 The company is consistently maintaining negative cash flow from financing activities
which indicates that the company has paid out capital and made dividend payments to
its shareholders.

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  In all the five consecutive years, the company has focused on paying back to its
shareholders which has become the major contributor in cash outflow under financing
activity.
 In the year ended, 2020 and 2021, principal repayment of lease liabilities was also
made which was again a factor for cash outflow in financing activity which further led
to a negative figure in financing activity.

The net change in cash and cash equivalents was increasing but at different rates, till the
year ended, 2020 which shows that the company’s flow of cash was well managed to make
necessary future investments and cover day-to-day expenses.
However, there is a net decrease in cash and cash equivalents in the year ended, 2021.
This is because of the massive investments made in the purchase of an intangible asset that
has resulted in huge cash outflow and has also converted the positive figure to negative figure
in investing activity which is often considered a growth sign in terms of cash flows from
investing activities.

6. COMPARATIVE ANALYSIS
INCOME STATEMENT:

TOTAL REVENUE:
2017 2018 2019 2020 2021
Hindustan Unilever Limited 32,416 35,094 38,888 39,518 46,509
ITC Limited 42,074.59 42,757.38 47,480.19 48,633.36 48,736.10
Britannia Industries 8,559.15 9,459.99 10,672.97 11,322.11 12,671.53
Marico Ltd 5,122.61 5,387.63 6,272.00 6,159.00 6,683.00
Nestle India Ltd 9,373.19 10,186.52 11,551.19 12,615.78 13,475.88

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 2017 2018 2019 2020 2021 Compared with Hindustan Unilever,
ITC stands out to be the close
competitor in terms of total
60,000
50,000 revenue.
40,000 All other companies like Britannia,
30,000
20,000 Marico and nestle have their total
10,000 revenue extremely low, that is not
0
Hindustan ITC Britannia Marico Ltd Nestle even around 20% of Hindustan
Unilever Limited Industries India Ltd Unilever’s total revenue.
Limited

EBITDA:

2017 2018 2019 2020 2021

Hindustan Unilever Limited 6,155 7,347 8,522 9,092 10,490
ITC Limited 15,502.96 16,438.80 18,444.16 19,298.92 17,164.15
Britannia Industries 1,251.16 1,445.20 1,716.11 1,889.26 2,379.44
Maric Ltd 1,141.72 1,057.73 1,183.00 1,280.00 1,371.00
Nestle India Ltd 1,503.68 1,839.30 2,428.95 2,673.49 2,812.79

2017 2018 2019 2020 2021 The earnings before interest, tax,
depreciation, and amortization of
25,000 Hindustan Unilever are high compared
20,000 to Britania, Marico, and Nestle whereas
15,000 it is low compared to ITC.
10,000
This clearly shows that HUL is
5,000
0 incurring huge costs compared with ITC
Hindustan ITC Britannia Maric Ltd Nestle as their total revenue is almost similar.
Unilever Limited Industries India Ltd
Limited
Hence, in terms of EBITDA, ITC is
dominant over HUL.

NET PROFIT:
2017 2018 2019 2020 2021
Hindustan Unilever Limited 4,490 5,237 6,036 6,738 7,954
ITC Limited 10,200.90 11,223.25 12,464.32 15,136.05 13,031.64
Britannia Industries 843.69 947.89 1,122.20 1,484.30 1,760.03

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 Marico Ltd 842.70 718.23 1,129.00 1,007.00 1,106.00
Nestle India Ltd 926.54 1,225.19 1,606.93 1,968.44 2,082.43

2017 2018 2019 2020 2021

It is clear from the about data that ITC is
in the top with highest net profit
16,000
14,000 followed by Hindustan Unilever.
12,000
10,000 Other companies like Britannia, Marico,
8,000
6,000 And Nestle has shown a gradual
4,000
2,000 increase in their net profit over the years
0
Hindustan ITC Britannia Marico Nestle
but continued to remain below ITC and
Unilever Limited Industries Ltd India Ltd HUL.
Limited

BALANCE SHEET:
TOTAL ASSET AND TOTAL CAPITAL AND LIABILITIES:
2017 2018 2019 2020 2021
Hindustan Unilever Limited 14,751 17,149 17,865 19,602 68,116
ITC Limited 54,215.95 62,381.31 69,797.92 75,235.36 71,580.54
Britannia Industries 3,696.14 4,627.30 5,652.97 7,253.34 7,416.01
Marico Ltd 3,763.01 4,019.89 4,758.00 4,136.00 4,482.00
Nestle India Ltd 6,805.97 7,362.59 8,088.08 7,172.94 7,899.73

2017 2018 2019 2020 2021 ITC remains at the top with high values
in assets and liabilities. This shows their
efficiency and ability to manage business
80,000
70,000 while maintaining market power.
60,000 HUL has a relatively low figure
50,000
40,000 compared to ITC. but at the same time,
30,000
20,000 their asset and liability value is decent
10,000
0 enough to maintain and manage the
Hindustan ITC Britannia Marico Nestle business.
Unilever Limited Industries Ltd India Ltd Other companies have extremely low
Limited asset and liability value compared with
HUL, among which Marico stands at the
least position with very low value.

CASH FLOW STATEMENT:

NET CHANGE IN CASH AND CASH EQUIVALENTS:

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 2017 2018 2019 2020 2021
Hindustan Unilever Limited (63) 1 2 2,555 (1,690)
ITC Limited 84.07 (60.24) 66.73 398.60 (330.10)
Britannia Industries 2.65 55.53 (44.71) (2.91) 56.07
Marico Ltd (1.84) (6.33) 2 17 (11)
Nestle India Ltd 671.95 690.61 682.62 (1,223.29) 177.13

2017 2018 2019 2020 2021 The net change in cash and cash
equivalents vary according to
company's targets, strategies and
3000 performance. In general, a company
2500
2000 with positive figure in the net
1500
1000 change in cash and cash equivalents
500 is said to have high liquidity power
0
-500 Hindustan ITC Limited Britannia Marico Ltd Nestle and generates enough cash to meet
-1000
-1500 Unilever Industries India Ltd its operating expenses.
-2000 Limited In this context, Nestle and ITC
seems to maintain high positive
value compared with other
companies.

RATIOS:
CURRENT RATIO:
2017 2018 2019 2020 2021
Hindustan Unilever Limited 1.30 1.29 1.36 1.31 1.26
ITC Limited 3.59 2.77 3.07 4.02 3.13
Britannia Industries 1.84 2.03 1.94 1.45 1.21
Marico Ltd 2.44 2.45 2.35 2.34 2.11
Nestle India Ltd 2.01 2.64 2.55 1.74 1.68

2017 2018 2019 2020 2021 ITC is constantly maintaining a

current ratio figure. This indicates
that there are more than sufficient
4.5
4 current assets to cover up current
3.5
3 liability. Similarly other companies
2.5
2 are also maintaining the standard
1.5
1 ratio prescribed.
0.5 On the contrary, Hindustan Unilever
0
Hindustan ITC Britannia Marico Nestle maintains a low current ratio value
Unilever Limited Industries Ltd India Ltd while ensuring an adequate current
Limited
asset to cover up current liability.

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 8. CONCLUSION
Despite the covid, HINDUSTAN UNILEVER LTD has recorded a turnover of 45,311
crores on the financial year 2020-2021 which has a growth rate of 18% compared to the
previous year. PAT recorded was 7954 crores.

The company has issued a final dividend of ₹17 per share and also provided a special
dividend of ₹9.5per share during the fiscal year. This shows that the company has the capacity
to maintain the growth rate even when the economy of the nation, declines.

Hindustan Unilever limited has never sacrificed the process of sustainability agenda thus
reducing 91% of CO2 Emissions per tonne of production compared to 2008 baseline and also
1 lakh tonnes of post-consumer plastics were collected and disposed of safely. Thus, any
environmental acts do not affect HUL production.

HUL was among the first companies to commit ₹100 crores to the nation in its fight against
coronavirus. The company's first-quarter results were excellent on both the top and bottom
lines. Despite the challenges, the business ecosystem has shown adaptability and resilience
across the value chain in FY'21. They've succeeded in implementing their multi-stakeholder
business strategy. Their purpose-driven brands and competencies were enhanced throughout
the year, putting them in a good position to support customers during this difficult time.

When it comes to fundamental analysis HUL invests a lot of money in advertising. The
value of the assets is seen increasing very well over the past 5 years which also means that
there is an increase in equity of the business. Therefore, the overall values shows that the
company is in a profitable position to pay the dividends well and also has enough equity to pay
off any further debts that may come in future.

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