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Introduction

Hindustan Unilever Ltd. (HUL) is India’s largest Fast Moving


Consumer Goods (FMCG) Company touching the lives of every two out of
three Indians. HUL mission is to “Add vitality to life” through its presence in
over 20 districts in home, personal care products, food and beverages. HUL
is a 51% owned subsidiary of the Anglo-Dutch giant Unilever. The product
portfolio of the company includes household and personal care products like
soaps, detergents, shampoos, skin care products, color cosmetics,
deodorants and fragrance. It is also the market leader in tea, processed
coffee, branded wheat flour, tomato products, ice cream, Jams and squashes.
Company growth strategy had
been guided by two primary considerations. First HUL prioritized opportunity
which built upon existing Assets and Capabilities. Second they avoided
spreading their management talent to thinly. HUL always had a focus on
innovations, and was proud of many of their accomplishments. Many have
increased living standards in India. As per results declared on 31 July 2008,
HUL has a Market Cap of 522.2 Billion.

(In Billions)

Industry Analysis
The Indian FMCG sector is the fourth largest Fast Moving Consumer
Goods in the economy with a total market size in excess of US$ 13.1
billion. The FMCG market is set to treble from US$ 11.6 billion in 2003 to
US$ 33.4 billion in 2015. Penetration level as well as Per Capita
Consumption in most product categories like jams, toothpaste, skin
care, hair wash etc in India is low indicating the untapped market
potential. With 200 million people expected to shift to processed and
packaged food by 2010, India needs around US$ 28 billion of investment
in the food processing industry.
An average Indian spends around 40% of his
income on grocery and 8% on personal care products. The large share of
FMCG products in total individual spending along with the large
population base is another factor that makes India one of the largest
FMCG markets.

Equity Research (In Millions)

Year to CY CY CY CY CY CAGR
December 03 04 05 06 07 (%)
(CY05-07
Net Sales 11546 12388 13889 16345 18724 16.1%
2 7 1 4 4
Adj. 14181 15898 18800 19461 22020 8.2%
Net Profit 13559 18905 19149 19123 21664 6.4%
Margins (%)
EBITDA 12.3% 12.8% 13.5% 11.9% 11.8%
NPM 11.7% 15.3% 13.8% 11.7% 11.6%
Per Share
Data
Adj. EPS 6.2 8.7 8.8 8.8 8.9

Using Statistical Tools


1.Mean
2.Standard Deviation
3. Co-efficient of Variance
4. Correlation
5.Regression
HUL
Year Income X=(X-Mean X) X2

2003 13559 -4921 24216241

2004 18905 425 180625

2005 19149 669 447561

2006 19123 643 413449

2007 21664 3184 10137856

∑x=92400 ∑x2 =35395732

Mean =92400/5
=18480

Standard Deviation
Mean=∑x/N
=92400/5
=18480
S.D. = (35395732 /5) ½
S.D. =2660.66
C.V= S.D./Mean*100
C.V. =2660.66/18480*100
C.V. = 14.39%

P&G
Year Income X=(X-Mean X) X2
2003 39951 2892.4 8365977.76

2004 39244 3599.4 12955680.36

2005 40238 2605.4 6788109.16

2006 43377 -533.6 284728.96

2007 51407 -8563.6 73335244.96

∑x=214217 ∑x2 =101729741.2

Mean=214217/5
=42843.4
S.D. = (∑x2 / N) ½
S.D. = (101729741.2/5) ½
S.D. = 4510.64
C.V. = S.D./Mean*100
C.V. = 10.53%

Correlation
(
In Billions)

Net X=(X-Mean X2 Net Y=(Y-Mean Y2 XY


sales(X) X) Profit(Y) Y)
115.5 -30.3 918.09 13.6 -4.9 24 148.5

123.9 -21.9 479.61 18.9 0.4 .16 -8.6

138.9 -6.9 47.61 19.2 0.7 .49 -4.83

163.5 17.7 313.29 19.1 0.6 .36 10.62


187.3 41.5 1722.2 21.7 3.2 10.2 132.8
5 4
∑x=729.1 ∑y =92.5 ∑x
y=278.5

Correlation(r) = ∑x y / (∑x2 ∑y2) ½


r= 278.5/ (729.1*92.5) ½
r= 0.79

Regression
Year Profit(Y) X XY X2

2003 13559 -2 27118 4

2004 18905 -1 18905 1

2005 19149 0 0 0

2006 19123 1 19123 1

2007 21664 2 43328 4

∑ y=92400 16428 ∑x2 =10

∑y /N= a
= 92400/5
=18480
∑x y/∑x2= b
=16428/10
=1642.8
Y= a+ b x
So the regression line is in the form of =18480+1642.8(x)
We are calculating profit for the year 2008, so we will be calculating it with
the help of above regression line, so the profit for the year 2008 will be,
For the x= 3
Y= 18480+1642.8(3)
Y=18480+4928.4
Y= 23408.4

Why we have calculated above mentioned techniques:


1. Mean- One of the powerful tools of analysis is to calculate the single
average value that represents the entire mass of data. The objective of
calculating the mean is:
a) To get one single value that describes the characteristics of the
entire data.
b) To facilitate the comparison.
Here we are calculating the mean of profits of the last five years so
that we can get the average of the profits of the P&G earned during
these years.
2. Standard Deviation - The standard deviation measures absolute
variation of distribution of profits. The distribution that has the smallest
standard deviation has the more representative mean. Hence, it is
extremely useful in judging representativeness of mean
3. Variance-Here we are calculating the standard deviation two
companies of same nature and same goods P&G and HUL in terms of
income earned during the period of five years. The coefficient of
variance is being calculated in order to know the variability of the two
companies.

4. Correlation- There is a high degree of positive correlation between


Net Sales and Net Profit. It means that with an increase in Net sales the
increase in Net Profit proportionatelymore. It shows the relationship
between net sales and net profit
5. Regression- With the help regression technique, a company can
estimates their future sales and thus the profit that will be generated
in the future based on their past data.

Conclusion
The field of FMCG market is opening up and the competition is
increasing day by day. Many players like ITC, Nestle etc. are expanding
their business at a large scale. And the use of statistical tools is
becoming very popular in the organization. There are various officers
being appointed in the organizations. Companies are finding various
ways to cope up with the competition within the market. The continuous
research on quantitative scale will help the HUL to review their past
Performance in quantitative terms and helps them to make further important
Decisions.
• The sales of the company are increasing for the past five years so
is the net profits. So the company will follow the same policy
which was followed earlier.
• How much more capital is more to be invested? The solution for
this is the regression lines. We can easily find out the amount
required for earning of any desired revenue.
• By computing correlation we can say that the company is earning
profit at increasing rate. So it is good method of judging the
company before investing.

Than k you