A REPORT ON

“ANALYSIS OF FINANCIAL PERFORMANCE OF HINDUSTAN UNILEVER LTD

PAST
10 YEARS”

MASTERS OF BUSINESS ADMINISTRATION

(2018-2020)

MB-2203

UNDER THE GUIDANCE OF

Dr Umesh Solanki

Associate Professor
TAPMI School of Business
MANIPAL UNIVERSITY, JAIPUR

SUBMITTED BY:

VIVEK GUPTA

MBA 1ST YEAR

180701034
 ACKNOWLEDGMENT
We want to express our whole hearted thanks to our teacher Dr
Umesh Solanki sir who has given us the oppurtunity to make
management accounting project on “HINDUSTAN UNILEVER LTD”
and under the guidance of whom we are able to successfully complete
the project. We also wanted to express thanks to all people who have
helped us in our making of the project.
 Objective of Hindustan unilever ltd
 To know about the profitability of the Hindustan company by calculating various
profitability ratios
 To interpret the financial information of HINDUSTAN UNILEVER ltd and to
comment on the liquidity and solvency
 To do the management analysis of the company by doing CVP and BEP analysis of
the HINDUSTAN UNILEVER ltd
 To have a review about the performance of the HINDUSTAN UNILEVER ltd by
comparison of previous 5 year data of HINDUSTAN UNILEVER
 To have a review about the strategic decisions of the HINDUSTAN UNILEVER in the
past 5 years and their impact on the performance
 To find out the reasons of the consistency in the performance of the HINDUSTAN
UNILEVER ltd
 To find out the reasons for the fluctuation in the profits of HINDUSTAN UNILEVER
ltd
 TABLE OF CONTENTS

S no Topic

1) Introduction to HINDUSTAN UNILEVER ltd

Objectives of HINDUSTAN UNILEVER ltd

2)
3) Analysis of profit data of HINDUSTAN UNILEVER

4) Analysis of the sales data of HINDUSTAN UNILEVER

Analysis of Cash flow statement
5)
Analysis of profitability ratios of HUL on the basis of
past 5 years
6)
Analysis of liquidity and solvency ratios of HUL on
the basis of past 5 years
7)
Analysis of Debt Service Coverage ratios of HUL on
the basis of past 5 years
8)
Analysis of Management efficiency ratios of HUL on
9) the basis of past 5 years
Analysis of cash flow indicator ratios of hul on the
10) basis of past 5 years
Analysis of Earning per share of past 5 years
11)
Analysis of gross profit margin of past 5 years
12)
13) Analysis of Dividend per share of past 5 years
CVP analysis of HINDUSTAN UNILEVER ltd
14)
Conclusion
15)
 INTRODUCTION
Hindustan Unilever Limited (HUL) is an Indian consumer goods company based
in Mumbai; Maharashtra It is a subsidiary of Unilever, a British-Dutch company. HUL's products
include foods, beverages, cleaning agents, personal care products and water purifiers.
HUL was established in 1933 as Lever Brothers and, in 1956, became known as Hindustan Lever
Limited, as a result of a merger among Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United
Traders Ltd. It employs over 16,000 workers, while it also indirectly helping to facilitate the
employment of over 65,000 people. The company was renamed in June 2007 as "Hindustan Unilever
Limited".

HUL is the market leader in Indian consumer products with presence in over 20 consumer categories
such as soaps, tea, detergents and shampoos amongst others with over 700 million Indian
consumers using its products. The Hindustan Unilever Research Centre (HURC) was set up in 1966
in Mumbai, and Unilever Research India in Bangalore in 1997. Staff at these centers developed many
innovations in products and manufacturing processes.

Hindustan Unilever's corporate headquarters are located at Andheri (E), Mumbai. Unilever
launched Sustainable Living Plan in on 15 November 2010 at London, Rotterdam, New York and New
Delhi
BALANCE SHEET OF HINDUSTAN UNILEVER LTD OF PAST 5 YEARS

Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 216.27 216.35 216 216 216

Total Share Capital 216.27 216.35 216 216 216

Revaluation Reserves 0.67 0.67 0 0 0
Reserves and Surplus 3,060.11 3,507.76 6,063.00 6,274.00 6,859.00
Total Reserves and Surplus 3,060.78 3,508.43 6,063.00 6,274.00 6,859.00
Total Shareholders Funds 3,277.05 3,724.78 6,279.00 6,490.00 7,075.00
NON-CURRENT LIABILITIES
Other Long Term Liabilities 278.82 170.11 395 574 666

Long Term Provisions 838.69 956.35 594 485 772

Total Non-Current Liabilities 1,117.51 1,126.46 989 1,059.00 1,438.00

CURRENT LIABILITIES
Trade Payables 5,793.89 5,288.90 5,498.00 6,006.00 7,013.00
Other Current Liabilities 852.94 908.05 864 809 972
Short Term Provisions 1,957.01 2,585.87 290 387 651
Total Current Liabilities 8,603.84 8,782.82 6,652.00 7,202.00 8,636.00
Total Capital And Liabilities 12,998.40 13,634.06 13,920.00 14,751.00 17,149.00
ASSETS
NON-CURRENT ASSETS
Tangible Assets 2,397.94 2,435.50 2,902.00 3,654.00 3,776.00

Intangible Assets 24.12 22.03 12 370 366

Capital Work-In-Progress 312.08 479.01 386 203 430

Intangible Assets Under Development 7.7 0 0 0 0
Fixed Assets 2,741.84 2,936.54 3,300.00 4,227.00 4,572.00
Non-Current Investments 636.17 654.11 319 260 256
Deferred Tax Assets [Net] 161.73 195.96 168 160 255
Long Term Loans And Advances 605.51 583.46 162 352 404
Other Non-Current Assets 0.68 0.44 419 387 523
Total Non-Current Assets 4,145.93 4,370.51 4,368.00 5,386.00 6,010.00
CURRENT ASSETS
Current Investments 2,457.95 2,623.82 2,461.00 3,519.00 2,855.00
Inventories 2,747.53 2,602.68 2,528.00 2,362.00 2,359.00
Trade Receivables 816.43 782.94 1,064.00 928 1,147.00
Cash And Cash Equivalents 2,220.97 2,537.56 2,759.00 1,671.00 3,373.00
Short Term Loans And Advances 537.68 657.27 0 0 0
OtherCurrentAssets 71.91 59.28 740 885 1,405.00
Total Current Assets 8,852.47 9,263.55 9,530.00 9,365.00 11,139.00
Total Assets 12,998.40 13,634.06 13,920.00 14,751.00 17,149.00

Contingent Liabilities 991.2 1,072.71 1,158.00 1,241.00 1,699.00

 INCOMESTATEMENT OF HINDUSTAN UNILEVERLTD

Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

INCOME

Revenue From Operations [Gross] 28,947.06 32,086.32 32,929.00 33,895.00 34,619.00

Less: Excise/Sevice Tax/Other Levies 1,538.77 1,915.82 2,430.00 2,597.00 693

Revenue From Operations [Net] 27,408.29 30,170.50 30,499.00 31,298.00 33,926.00

Other Operating Revenues 610.84 635.12 562 592 599
Total Operating Revenues 28,019.13 30,805.62 31,061.00 31,890.00 34,525.00
Other Income 621.03 618.39 564 526 569
Total Revenue 28,640.16 31,424.01 31,625.00 32,416.00 35,094.00
EXPENSES
Cost Of Materials Consumed 11,159.81 11,867.31 11,267.00 11,363.00 12,491.00
Purchase Of Stock-In Trade 3,350.19 3,697.96 3,951.00 4,166.00 3,812.00
Changes In Inventories Of FG,WIP And Stock-In Trade -166.38 58.28 87 156 -71
Employee Benefit Expenses 1,435.95 1,578.89 1,573.00 1,620.00 1,745.00
Finance Costs 36.03 16.82 15 22 20
Depreciation And Amortisation Expenses 260.55 286.69 321 396 478
Other Expenses 7,764.30 8,394.94 8,434.00 8,538.00 9,272.00
Total Expenses 23,840.45 25,900.89 25,648.00 26,261.00 27,747.00

Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

12 mths 12 mths 12 mths 12 mths 12 mths

Profit/Loss Before Exceptional, ExtraOrdinary Items
4,799.71 5,523.12 5,977.00 6,155.00 7,347.00
And Tax
Exceptional Items 228.68 664.3 -31 241 -62
Profit/Loss Before Tax 5,028.39 6,187.42 5,946.00 6,396.00 7,285.00
Tax Expenses-Continued Operations
Current Tax 1,293.15 1,871.17 1,816.00 1,865.00 2,148.00
Deferred Tax 24.83 -33.82 -7 41 -100
Tax For Earlier Years -157.08 34.81 0 0 0

Total Tax Expenses 1,160.90 1,872.16 1,809.00 1,906.00 2,048.00

Profit/Loss After Tax And Before ExtraOrdinary Items 3,867.49 4,315.26 4,137.00 4,490.00 5,237.00
Profit/Loss From Continuing Operations 3,867.49 4,315.26 4,137.00 4,490.00 5,237.00
Profit/Loss For The Period 3,867.49 4,315.26 4,137.00 4,490.00 5,237.00
INCOME2018 2017 2016 2015 2014
Revenue From Operations [Gross] 34,619.00 33,895.00 32,929.00 32,086.32 28,947.06
Less: Excise/Sevice Tax/Other Levies 693 2,597.00 2,430.00 1,915.82 1,538.77
Revenue From Operations [Net] 33,926.00 31,298.00 30,499.00 30,170.50 27,408.29
Other Operating Revenues 599 592 562 635.12 610.84
Total Operating Revenues 34,525.00 31,890.00 31,061.00 30,805.62 28,019.13
Other Income 569 526 564 618.39 621.03
Total Revenue 35,094.00 32,416.00 31,625.00 31,424.01 28,640.16
EXPENSES
Cost Of Materials Consumed 12,491.00 11,363.00 11,267.00 11,867.31 11,159.81
Purchase Of Stock-In Trade 3,812.00 4,166.00 3,951.00 3,697.96 3,350.19
Changes In Inventories Of FG,WIP And Stock-In Trade -71 156 87 58.28 -166.38
Employee Benefit Expenses 1,745.00 1,620.00 1,573.00 1,578.89 1,435.95
Finance Costs 20 22 15 16.82 36.03
Depreciation And Amortisation Expenses 478 396 321 286.69 260.55
Other Expenses 9,272.00 8,538.00 8,434.00 8,394.94 7,764.30
Total Expenses 27,747.00 26,261.00 25,648.00 25,900.89 23,840.45
Profit/Loss Before Exceptional, ExtraOrdinary Items
And Tax 7,347.00 6,155.00 5,977.00 5,523.12 4,799.71
Exceptional Items -62 241 -31 664.3 228.68
Profit/Loss Before Tax 7,285.00 6,396.00 5,946.00 6,187.42 5,028.39
Tax Expenses-Continued Operations
Current Tax 2,148.00 1,865.00 1,816.00 1,871.17 1,293.15
Deferred Tax -100 41 -7 -33.82 24.83
Tax For Earlier Years 0 0 0 34.81 -157.08

Total Tax Expenses 2,048.00 1,906.00 1,809.00 1,872.16 1,160.90

Profit/Loss After Tax And Before ExtraOrdinary Items 5,237.00 4,490.00 4,137.00 4,315.26 3,867.49
Profit/Loss From Continuing Operations 5,237.00 4,490.00 4,137.00 4,315.26 3,867.49
Profit/Loss For The Period 5,237.00 4,490.00 4,137.00 4,315.26 3,867.49
 CASH FLOW STATEMENT OF HINDUSTAN UNILEVER LTD

Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

Net Profit/Loss Before Extraordinary Items And

4,799.71 5,523.12 5,977.00 6,155.00 7,347.00
Tax

Net CashFlow From Operating Activities 3,724.15 3,103.76 3,974.00 4,953.00 5,916.00

Net Cash Used In Investing Activities -513.16 448.04 -51 -752 -1,264.00
- - - -
Net Cash Used From Financing Activities -4,651.00
2,916.79 3,450.44 4,008.00 4,264.00
Net Inc/Dec In Cash And Cash Equivalents 294.2 101.36 -85 -63 1
Cash And Cash Equivalents Begin of Year 326.41 620.61 720 635 572
Cash And Cash Equivalents End Of Year 620.61 721.97 635 572 573
Objective - To find out the reasons for fluctuation in one year and consistency in profit
of HINDUSTAN UNILEVER for other years.

ANALYSIS OF THE NET PROFIT OF THE HINDUSTAN UNILEVER OF PAST 10

YEARS

NET profit
6000

5000

4000

3000
NET profit

2000

1000

0
2013-14 2014-15 2015-16 2016-17 2017-2018

From the analysis of the above net profit we found that the net profit of the HINDUSTAN UNILEVER
ltd has been decreased in the year from 2014-15 to 2015-16 by (4315 To 4137) a decline of 178 but
after that there has been consistent increase in the Net profit of the company.

Findings for the decline in the profit due to many reasons:-

(1) The first reason that could be the decline in the profit would be there might have been the
increase in the expenses but the expenses has been decreased from 2014-15 to 2015-16 so there
has been decline in the sales has been the reason for the decline in the profit of the company

(2) The second reason is that could be the noncurrent assets of the company are also decreasing.
Objective To find out the Reasons for consistency in the sale of HINDUSTAN
UNILEVER ltd

Analysis of the Sales of HINDUSTAN UNILEVER ltd

Net Sales
40000
35000
30000
25000
20000
Net Sales
15000
10000
5000
0
2013-14 2014-15 2015-16 2016-17 2017-2018

After the analysis of the sales of the HINDUSTAN UNILEVER ltd it is observed that there has been the
consistent increase in the sales from 2014 to 2018 so it shows that the company has been reporting
a growth in the market shares in term of sales. There is no fluctuation in the terms of the ups and
down in the sales on the basis of the above chart data of the past 5years.

Finding of the reason for the consistency in the sales

1 Because it is one of the most popular companies especially in soap, cosmetics, oral care which has
overall market share of 70 % in terms of revenue is the reason for being consistency in the growth of
Hul.

2 The company spends 18% of its revenue on advertising. The company has stepped up on
advertising which result increase in higher revenue in few quarters.
Objective To find out the reason for how much cash inflow and cash outflow of HINDUSTAN
UNILEVER ltd and how much cash is generated by HINDUSTAN UNILEVER from all operating
activities

To find out what the impact is of negative balance of cash or positive balance of cash on the profit
& automatically on sales of company.

“CASH FLOW ANALYSIS OF HINDUSTAN UNILEVER LTD”

1 Analysis of Cash From Operating Activity

Operating Activity
7000

6000

5000

4000

3000 Operating Activity

2000

1000

0
2013-14 2014-15 2015-16 2016-17 2017-2018

There has been the constant earning in the cash flow from operating activity from the year 2015 to
2018 but after that the company has suddenly show the rise in the graph from the year 2015 to 2018
and before that there is the slight fall from the year 2014 to 2015 and after that it has been falling
completely from 2014- 2015. It means that the company is not able to generate funds from the
operating activities of the business which are the main source of income of the companies’ income.
HINDUSTAN UNILEVER has been reporting a sharp decrease in the cash generated from operating
activity from the year 2014-15 to 2015-16 due to the reason of the inventory and trade receivables
were going up from in the year 2015-16 and they were down in 2014-15. This also lead to the
reporting of the lower net profit in the year 2014-15.
2 Analysis of the cash flow from Investing activity

Investing Activity
600
400
200
0
-200 2013-14 2014-15 2015-16 2016-17 2017-2018
years
-400 Investing Activity
-600
-800
-1000
-1200
-1400

From the above analysis it is clear that the cash generated from the investing activity has been
positive is only in the year 2014-15 but before and after that there has been the negative cash is
used in the investing activity. It means that the HINDUSTAN UNILEVER has been investing more in
the purchase of the fixed assets but the revenue from other investing activities such as interest
received, dividend received has not been enough for the compensating of the loss from the purchase
of the fixed assets.
3 Analysis of Cash flow from Financing Activity

Financing Activity
0
-500 2013-14 2014-15 2015-16 2016-17 2017-2018
years
-1000
-1500
-2000
-2500 Financing Activity
-3000
-3500
-4000
-4500
-5000

There has been the continuous fall in the cash generated from financing activity of the company. The
reason for the negative balance of the cash from financing is the company has not been able to
generate the funds from the issue of the share capital as there has been the small increase in the
share capital of the company over the previous year as from the year 2013-14 &2014-15 they kept
the capital constant of 216 it means they do not issue capital or there are no investors who invested
in the shares of Hindustan limited.

4. Net Cash

Net cash
350
300
250
200
150
100 Net cash
50
0
-50 2013-14 2014-15 2015-16 2016-17 2017-2018
-100
-150
 Calculation of Various Ratios along with other Supportive Working Notes

1 Calculation of Gross profit Ratio Operating profit= Gross profit - operating

expenses

Operating expenses 2018 2017 2016 2015 2014

Employee Cost 1860 1743 1680 1723.87 1575

Selling and Admin Expenses 4153 3542 3656 0 0

Total 6013 5285 5336 1723.87 1575

Gross profit = Operating expenses + Operating profit

2) CALCULATION OF NET PROFIT RATIO

Net Profit/Sales*100 13.50209 13.73154 13.08142 13.85118 14.92278

NET profit 3867 4315 4137 4490 5237

Net Sales 28640 31424 31625 32416 35094

3) CALCULATION OF OPERATING RATIO

Operating ratio = Operating expenses/ Net sales *100

Year 2014 2015 2016 2017 2018

Operating Expense 640.3 587.11 531.28 563.94 172.45
Net Sales 28640 31424 31625 32416 35094
Operating Ratio 2.235684 1.868349 1.679937 1.739696 0.491395
4 CALCULATION OF OPERATING PROFIT RATIO

Operating profit ratio = Operating profit/ Net sales*100

Year 2014 2015 2016 2017 2018

Operating Profit 4475 5208 5749 6047 7276
Net Sales 28640 31424 31625 32416 35094
Operating profit ratio 15.625 16.57332 18.17866 18.65437 20.73289

5) CALCULATION OF OPERATING
PROFIT
Gross profit - Operating
Operating profit = expenses

Year 2014 2015 2016 2017 2018

Gross profit 5096 5826 6313 6573 7845

Operating expenses
Employee Cost 1575 1723.87 1680 1743 1860

Selling and Admin

Expenses 0 0 3656 3542 4153
1575 1723.87 5336 5285 6013
Operating profit (A-B) 3521 4102.13 977 1288 1832
6)CALCULATION OF CURRENT RATIO
CURRENT RATIO= CURRENT ASSETS/ CURRENT LIABILITIES

CURRENT ASSETS Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

Current Investments 2,457.95 2,623.82 2,461.00 3,519.00 2,855.00
Inventories 2,747.53 2,602.68 2,528.00 2,362.00 2,359.00
Trade Receivables 816.43 782.94 1,064.00 928 1,147.00
Cash And Cash Equivalents 2,220.97 2,537.56 2,759.00 1,671.00 3,373.00
Short Term Loans And Advances 537.68 657.27 0 0 0
OtherCurrentAssets 71.91 59.28 740 885 1,405.00
TOTAL CURRENT ASSETS 8,852.47 9,263.55 9,552.00 9,365.00 11,139.00
CURRENT LIABILITIES
Trade Payables 5,793.89 5,288.90 5,498.00 6,006.00 7,013.00
Other Current Liabilities 852.94 908.05 864 809 972
Short Term Provisions 1,957.01 2,585.87 290 387 651
Total Current Liabilities 8,603.84 8,782.82 6,652.00 7,202.00 8,636.00
CURRENT RATIO =(A/B) 1.028898 1.054735 1.435959 1.300333 1.289833

Profitability ratios of the HINDUSTAN UNILEVER ltd of the past 5 Years

If there has been the increase in these ratios then it indicates the growth of the HINDUSTAN
UNILEVER as there is efficiency in the management of the Affairs of the company.

Profitability Ratios 14-Mar 15-Mar 16-Mar 17-Mar 18-Mar

Operating Profit Margin(%) 15.97 16.9 18.5 18.96 21.07
Profit Before Interest And Tax Margin(%) 14.71 15.66 17.16 17.43 19.37
Profit Before Tax Margin (%) 17.94 20.08 19.14 20.05 21.1
Net Profit Margin(%) 13.8 14 13.31 14.07 15.16
Return On Net Worth(%) 118.04 115.87 65.88 69.18 74.02
Return On Capital Employed(%) 147.59 148.75 95.42 95.17 104.12
Return on Assets (%) 29.75 31.65 29.71 30.43 30.53
Asset Turnover Ratio (%) 215.55 225.94 223.13 216.18 201.32
ON THE BASIS OF THE OPERATING MARGIN

Operating margin is a measure of profitability. It indicates how much revenues is left after both cost
of goods sold and operating expenses are considered or if the operating expenses has been
deducted from the gross profit whatever we left with is operating profit. If it is higher than it is
better for the company. There has been constant increase in the rate of operating profit margin as it
shows the growth of the company due to the normal operations of the company from 2014 to 2018.

ON THE BASIS OF NET PROFIT MARGIN

It means how much percentage of net profit the company has been earning after all the expenses
has been deducted from the total revenue of company. From the year 2014 to 2018 there has been
increase in the percentage of net profit on sales means the company has been paying a considerable
portion of the net profit from the total sales.

ON THE BASIS OF RETURN ON NETWORTH

It is also a measure of profitability ratio which indicates how much the rate of return the company is
paying to the shareholders of the company on the capital ivested by them in the company. If the
company is paying good return to the shareholders it means that the company is earning sufficient
amount of profit after paying off all their debts. The company is paying good return in 2014 & 2015
but it decreased in the other 3 years which means the proportion of the net profit in comparison to
sales is decreased.

Liquidity & Solvency Ratios of the HINDUSTAN UNILEVER ltd of the past 5 Years
It means that how much company has the assets in order to pay off the debts as if in future the
company is becoming insolvent then the company has to sale its assets in order to pay debts of
company. If the liquidity ratio of the company is more then the company is financially sound. If the
solvency ratio is high it means that the company is being able to meet debt and other obligations on
time.

Liquidity Ratios 14-Mar 15-Mar 16-Mar 17-Mar 18-Mar

Current Ratio 0.74 0.75 1.03 0.82 0.94
Quick Ratio 0.44 0.47 0.67 0.51 0.68
Debt Equity Ratio -- -- -- -- --
Long Term Debt Equity Ratio -- -- -- -- --
ON THE BASIS OF CURRENT RATIO

Ideal current ratio is 2:1 and in all the years the company current ratio is less than 2:1. It means that
the company does not have enough current assets to meet its current debt obligations. So the
company should try to increase the current assets in order to meet its current obligations.

ON THE BASIS OF QUICK RATIO

Ideal quick ratio is 1:1. It measures the ability of the company to quickly pay off short term debts of
company by using its current assets and other sources such as marketable securities. In all the first 2
years (2014,2015,) the quick ratio is less than 1:1 it means the company do not have enough liquid
assets to pay off debts but in the 2016 and 2017 years the company has able to generate by
maintaining a higher ratio than 1:1

ON THE BASIS OF DEBT EQUITY RATIO

It means that how much proportion of company use its debt and equity in its capital structure in
order to finance company’s assets. The ideal debt equity ratio is 2:1. It means that the company uses
two third the debt in order to finance assets and only uses one third of equity in order to finance its
debts. In all of the years the debt equity ratio of the company is nil so it is a serious matter of
concern for firm and it had to be taken care off.

ANALYSIS

Debt Coverage Ratios of the HINDUSTAN UNILEVER ltd of the past 5 Years
Debt coverage ratio indicates that the company has been generating sufficient amount of income in
order to cover its annual debt and interest payment. An ideal debt service coverage ratio should be
more than 1 as it indicates the good financial position of the company.

Debt Coverage Ratio Mar-14 15-Mar 16-Mar 17-Mar 18-Mar

Interest Cover 134.21 329.37 399.47 280.77 368.35
Total Debt to Owners Fund -- -- -- -- --
Financial Charges Coverage Ratio 141.45 346.41 420.87 298.77 392.25
Financial Charges Coverage Ratio Post
Tax 115.57 274.6 298.2 223.09 286.75
ON THE BASIS OF INTEREST COVERAGE RATIO

It means that the company ability of the earnings before interest and tax in order to cover the
interest expenses for the same period. If the interest coverage ratio is less it means that company
has high debt burden and there is the greater possibility of the company of being bankruptcy. The
ideal interest coverage ratio is 2. In all of the above years the ratio of the company is more than 2 it
means the company has been earning enough EBIT to cover interest expenses due to consistent
revenue earning in given years.

ON THE BASIS OF FINANCIAL CHARGES COVERAGE RATIO

It means that the ability of the company to indicate how many financial charges has been covered by
the Earning before interest and tax. If the ratio of the company is high then the company has been
able to cover the financial charges / fixed charges from its EBIT in proper manner. It is calculated by
dividing the EBIT in which fixed charges have been added divided by the fixed charges. There has
been a very sharp increase in the financial charge coverage ratio from 2014 to 2015 due to increase
in EBIT which has been able to cover the fixed charges more in the year 2014 as compared to
2015.But decrease in year 2017 so company should look upon this.

ON THE BASIS OF TOTAL DEBT TO OWNERS FUND RATIO

Debt-to-Capital Ratio = Interest-bearing Debt / (Interest-bearing Debt + Equity)

It refers to the strategy of the company in which how much proportion of debt have been taken by
company in respect of its capital of equity, the company has to maintain the ratio of debt and equity
in such a way that the company has been able to generate more profit after tax so the company
always try to keep the ratio twice of debt in respect of owner’s capital as they get the tax benefit
from the interest on the debt the company have to pay. Ideal ratio should be 2:1. But in the none of
the years the company has been able to make the ratio 2:1 as the reason for being is low
involvement of debt by the company in their capital structure.
 ANALYSIS

Management Efficiency Ratios of the HINDUSTAN UNILEVER ltd of the past 5 Years
These ratios indicate the efficiency of the management in managing the assets or the ability to
manage the assets in order to generate income for company for longer period of time.

Management Efficiency Ratios Mar-14 15-Mar 16-Mar 17-Mar 18-Mar

Inventory Turnover Ratio 10.76 12.57 13.25 14.6 14.93
Debtors Turnover Ratio 33.96 38.52 33.64 32.02 33.28
Investments Turnover Ratio 10.76 12.57 13.25 14.6 14.93
Fixed Assets Turnover Ratio 6.77 6.99 9.72 7.38 7.09
Total Assets Turnover Ratio 8.62 8.32 4.96 5.21 5.15
Asset Turnover Ratio 9.42 8.8 6.21 4.99 5.09

ON THE BASIS OF INVENTORY TURNOVER RATIO

It measures how efficiently the company has been managing its inventory in terms of Cost of Goods
sold. The ideal inventory turnover ratio is ranges between 4 to 6. It means that if you are purchasing
the higher inventory you have to sell more number of units or higher amounts in order to match
inventory turnover. In all of the years, the inventory turnover is more than 4 and 6 it indicates the
good performance of company.

ON THE BASIS OF DEBTOR TURNOVER RATIO

it indicates the how the company has been extending its credit as well collecting cash from the
customers so that the company can utilize the cash in order to increase the sales of the company. A
higher debtor turnover ratio indicates the company has able to collect cash from customers in a
timely manner and utilizing the cash effectively in order to increase sales. If it is high then it is good.
The ideal debtor turnover depends upon what type of policy the company is following. So from the
above data in all the years it has been considerably high it means that the company has been using
the credit policy well

ON THE BASIS OF FIXED ASSETS TURNOVER RATIO

It means that how well fixed assets has been utilized by the company in order to increase the sales
of the company as if the fixed assets turnover ratio is low it indicates that the company has over
invested in plant, equipment, machinery etc. if it is high then it indicates greater efficiency in
managing assets for increase sales. There are no fixed criteria to analyses but if it is higher than 5
then it means the company has been doing well. In all of the years the company has been doing well.
The reason for this is high being high investments have been made in fixed assets.
ON THE BASIS OF TOTAL ASSETS TURNOVER RATIO
It refers to the ability of the company to generate sales from its assets by comparing net sales with
the total assets of company. If it is more than 5 it means that the company has been doing good. In
the first 3 year only the company has been doing good but in the other 2 years it has been less than
first 3 .The reason for being less is the company has not able to invest in the assets well as
compared to sales of the company.

ANALYSIS

Cash Flow Indicator Ratios of the HINDUSTAN UNILEVER ltd of the past 5 Years
Cash Flow Indicator Ratios Mar-14 15-Mar 16-Mar 17-Mar 18-Mar
Dividend Payout Ratio Net Profit 72.69 75.2 81.07 79.53 74.39
Dividend Payout Ratio Cash Profit 68.1 70.52 75.23 73.08 68.17
Earning Retention Ratio 22.74 11.12 19.53 15.96 26.48
Cash Earning Retention Ratio 27.91 17.59 25.29 23.13 32.57

AdjustedCash Flow Times -- -- -- -- --

ON THE BASIS OF DIVIDEND PAYOUT RATIO (NET PROFIT)

It means that how much the company is paying dividend to the shareholder of the company from
Net income of the company. The company has been paying the highest % of dividend from net profit
in the year 2016.

ONE THE BASIS OF EARNING RETENTION RATIO

It means that the ratio of the earning that have been retained by the company which the company
did not paid to shareholders for paying off debts or reinvest in core operations. If it is higher than
the growth of company also increases. There has been not consistent increase in the earning
retention over the years the reasons for being this inconsistent may be the less sales.

ON THE BASIS OF THE CASH EARNING RETENTION RATIO

It means that how much cash has been retained by the company in the cash instead of paying the
dividend to the shareholders from the earning that has been left out after paying all the expenses.
There has been not consistent increase in the ratio from there has been slight decrease in the ratio
from 2015 to 2017. The reason for decrease is being the company has not been able to issue more
no. of shares to public resulting in not able to generate cash resulting in low income so the earnings
for retention is being low.
ANALYSIS OF EPS OF HINDUSTAN UNILEVER

Earnings Per Share

30

25

20

15
Earnings Per Share

10

0
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

Earnings per share = Total Earning Available for Equity Shareholder

Number of shares outstanding

There has been reduction in the EPS in year 2015-2016 but after that the EPS of the company has
been constantly increasing. The reason for the decline in the 2015-2016 years has been the number
of shares issued by the HINDUSTAN UNILEVER is very less as compared to the other years.

ANALYSIS OF GROSS MARGIN OF HINDUSTAN UNILEVER

Gross Profit Margin(%)

25

20

15

10 Gross Profit Margin(%)

0
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

Gross Margin in % = Gross Margin x100

Net sales
There has been increase in the gross profit from the year 2014 to 2018, there has been sharp
increase in the gross margin due to the sharp increase in the sales by from the year 2014 to
2018.less increase in year 2015-16 to 2016-17 due to less increase in revenue in these years.

ANALYSIS OF DPS OF HINDUSTAN UNILEVER

Dividend Per Share

25

20

15

Dividend Per Share

10

0
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

Dividend per share = Dividend Paid

No of ordinary shares

From the above it is clear that the company has been paying the dividend at constant rate
throughout the years there has been no decline in the (DPS) from the year 2014 to 2018. Because
there has been no increase in the number of shares from the year 2014 to 2018 as they remain same
and also the dividend paid per share is not much reduced.
 CVP ANALYSIS OF THE HINDUSTAN UNILEVER LTD

A CVP ANALYSIS has been used by the firm in order to find out how the profit of the company has
been influenced by the sales volume, selling price per unit, fixed expenses and variable expenses

The overall performance of the company has been judged on the basis of how much profit
company has been earning in comparison to sales and expenses.

The CVP ANALYSIS also helps the firm to find out how much no of units the company has to sell in
future to earn the same amount of profit as the company is earning now and to cover the fixed
cost

It also helps the firm in fixing the selling price per unit for the coming years and to forecast the
number of units to be sold in future.

Particulars FY 2014-15 FY 2015-16

Sales 31424000 31625000
Variable cost 226802.1 231338.1
Contribution 31197197.9 31393662
Fixed cost 51536.9 53082
Profit 31145661 31340580

1)

Calculation of the Contribution

FY 2014-15 FY 2015-16
Contribution= S-V 31197197.9 31393662
PV Ratio = S-V/S*100
C/S*100 ( in %) 99.27 99.26
31145661

Profit= ( Sales *PV ratio) –FC 31340580

2)

Calculation of the Break even sales of the Britannia FY 2014-15 FY 2015-16

51911.57 53473.15822

Break even sales (in Rs) = FC/ PV ratio *100

3)

31372088.43 31571526.84
Calculation of the Margin Of Safety
( MOS)= Actual Sales -Break even sales
99.83480279
99.830912253
Margin Of Safety ( MOS) in % = MOS /Actual sales *100

CONTRIBUTION ANALYSIS

From the above analysis we found that the company has been earning more contribution in the year
2015-16 than 2014-15 because the sales for the year 2015-16 is more than the sales of the 2014-15.

PROFIT ANALYSIS
The profit for the year 2014-15 is less than the profit for the year 2015-16 due to the less
contribution and there has been the difference in the sales of Rs 201000 which is more in the year
2015-16 than 2014-15.

MARGIN OF SAFETY ANALYSIS

The margin of safety means that how much the actual sales exceed the break even sales in the year.
It means that if the margin of the safety is more, then the company has been able to generate the
enough amount of profit even after reduction in sales. So according to the above there has been not
much reduction in the MOS %.
 CONLCUSION

The HUL Company needs to more improve its PV ratio. With the improvement in the PV ratio the
company is able to maintain its trend and economy

There has been continuous increase in the sales from 2015 to 2018 which shows the performance of
the company is good in market.

There also has been improvement in the Margin of safety of the company which helps the Hul to
understand how much revenue should the company has to earn in order to reach to break even and
upto what level the revenue should not fall down reduce the risk of loss.

The total expenditure of the company has been decreased. it includes raw material, selling and
administrative expenses. It is a very good for image of company.

There has been increase in net profit from which shows that the company has been able to cover all
the selling expenses from gross profit earned by him resulting in strong financial position.
 Suggestion
After analysis of financial performance of HINDUSTAN UNILEVER the suggestion which can be given
to HINDUSTAN UNILEVER is that the Hul should make his other sectors as strong as his cosmetic,
soaps manufacturing part making good sales in other products.

Second suggestion that can be given to HINDUSTAN UNILEVER is that improvement in pv ratio can
help the company in earning more contribution for the company results in increase in net profit of
company

Third suggestion that can be given to Hul is that it should invest in fixed assets in a definite
proportion as it results in negative balance of cash used in investing activities.

HUL is spending more in advertisement and sales promotion which has increase the cost of
manufacturing for Hul. So they have to make control on expenditure on sales promotion and
advertisement that help in reduction in cost of production and can make the product of hul cheaper
in terms of other companies’ products.

There should be more distribution centres to be opened up by Hul in order to reduce the distribution
costs of company results in increase in more profitability of company.

To improve the market share of Hul through using various sales promotion scheme in ahead of its
competitor.

Hul pruned its reporting layers to make divisional head report directly to their resepective golobal
function heads to drive quick decision making and cut rollout time of its innovations across markets.
 REFERENCES

www.moneycontrol.com

www. Investopedia.com

www. wikepedia.com

www. Slide share