A

TERM PROJECT REPORT

ON
FINACIAL STATEMENT ANLYSIS OF
HINDUSTAN UNILEVER"

Submitted By

Guided By:

K.Amarnath
Regd no:-1461301037

Dr.Madhuchhanda Mohanty
(Asst. Professor, IBCS)

INSTITUTE OF BUSINESS & COMPUTER STUDIES

Siksha O Anusandhan University

Certificate
This is to certify that Mr.K.Amarnath having regd. No.1461301037 has
done this research project work on FINANCIAL STATEMENT ANALYSIS ON
HINDUSTAN UNILEVER" an submitted the report in partial fulfillment for the
degree Of Master of Business Administration to IBCS, SOA
UNIVERSITY,BBSR.Under my supervision and guidance.
His report is record of original work done by him. To the best of my
knowledge, no part of content of this report has been submitted for any degree by
him or anybody else to any other University or Institute.

Date:
/
/2014
Madhuchhanda Mohanty
Place: Bhubaneswar
Project Guide

Dr.

ACKNOWLEDGEMENT
It is an enriching and learning experience for me to do this project. I would
Like to acknowledge all those people who have continuously guided me
Throughout and helped me in completion of my project FINACIAL
STATEMENT ANALYSIS ON HINDUSTAN UNILEVER. I sincerely
acknowledge them for extending their valuable guidance, support for literature,
critical reviews of project and the report and above All the moral support they had
provided to me with all stages of this project.
I express my sincere obligation and thanks to Dr.Madhuchhanda Mohanty and all
the faculties and staffs for their valuable advice and guiding me in every stage in
bringing out this project report which cannot be seen in the light of the day.
I would also like to express my sincere thanks to all my friends who help me in
finding the information and support for the successful completion of this project.
Last but not the least I am very much thankful to my parents for their support in
each and every stage.

PREFACE

Finance management in India has substantially in scope and

complexity in view of recent government policy. The modern approach
to corporate finance is much more than traditional approach tofinancial
management or with more procurement of funds. In present situational
financial management is real with procurement of funds and maximum
utilization of it. Finance is A Blood Of Any Business Body. Less
capital creates problems in the business and more capital is also creating
problems.In this report, I am trying to explain how we can find outfinanc
ial result with the help of ratio analysis and some more inportent graphs
with the help of Ratio Analysis. We can easilyunderstand the profitabilit
y of the business, efficiency of business, useful in inter comparison. It is
also
useful
for
budgeting
control
anddecisionmaking. Ratio analysis helps interested parties like shareholders,
investors, creditors, government also and analysis to make an evaluation
of a certain aspect of a firms performances.

Table of Contents

Chapter-I (Introduction)
The Prologue
Relevance of the Study
Objectives
Methods of Study
. Limitation
. Advantages of Ratio analysis

Chapter-II (Literature Review / Theoretical Background)

Conceptual Study
Empirical Evidences

Chapter-III (Company / Product Profile)

Current Profile of the Company
Brief Profile of Products / services

Chapter-IV (Data Analysis and Interpretation)

Demographic Analysis (Frequency Tables, Cross Tabulations)

Chapter-V (Summary and Conclusion)

Major Findings
Managerial Implications
Conclusion

CHAPTER-1
INTRODUCTION

INTRODUCTION:-

THE PROLUGE:Financial statement analysis (or financial analysis) is the process of reviewing
and analyzing a company's financial statements to make better economic decisions.
These statements include the income statement, balance sheet, statement of cash
flows, and a statement of retained earnings. Financial statement analysis is a
method or process involving specific techniques for evaluating risks, performance,
financial health, and future prospects of an organization.
RELEVANCE OF THE STUDY:To evaluate the performance of the company by using ratios as a yardstick to
measure the efficiency of the company. To understand the liquidity, profitability
and efficiency positions of the company during the study period. To evaluate and
analyze various facts of the financial performance of the company. To make
comparisons between the ratios during difference
OBJECTIVE OF THE STUDY:The objectives of the study are: To assessment of past performance.
To assessment of current position.
To prediction of profitability and growth prospect.
RESEARCH METHODLOGY:RESEARCH APPORACH:Secondary Data:-Secondary data has been collected from company manual,
house journals, magazines, company CD and web sites.
TOOLS & TECHNIQUES:
Bar Chart
Data Table
LIMITATIONS OF RATIO ANALYSIS

Comparison not possible if different firms adopt different

accounting policies.

Ratio analysis becomes less effective due to price level changes.

Ratio may be misleading in the absence of absolute data.
Limited use of a single data.
Lack of proper standards.
False accounting data gives false ratio.
Ratios alone are not adequate for proper conclusions.

ADVANTAGE OF RATIO ANALYSIS

Helpful in analysis of Financial Statements.

Helpful in comparative Study.
Helpful in locating the weak spots of the business.
Helpful in Forecasting.
Estimate about the trend of the business.
Fixation of ideal Standards.
Effective Control.
Study of Financial Soundness.

OBJECTIVES
To find out firms relative strengths and weaknesses.
Comparisons for a useful interpretation of financial statements

CHAPTER-II
LITERTURE REVIEW

LITERTURE REVIEW
There are four parts to this literature review. First of all, the
objectives of financial reporting and the characteristics of useful reports are
discussed in order to indicate which aspects of financial reports should be
looked at in more detail. The second part establishes a link between the
usefulness of financial reporting and the financial crisis. Key concepts of

complexity and understandability as well as reliability and relevance are

discussed here. The debate on fair value accounting plays a strong part also as
its effect on reliability and relevance has been a fairly controversial subject.
Thirdly, there is a discussion on the implications of financial reporting on
regulation reform. In order to access this discussion, the reactions of several
institutions and regulatory bodies on the financial crisis are studied. Since the
actions of regulatory bodies aim to heal the financial environment and
promote trust in financial markets, it is important to study the areas where
they have found problems and are working to improve standards.
In the final part, issues of transparency and disclosure are discussed.
This is because in the literature reviewed these issues were widely considered
as providing possible solutions to the problems that have surfaced. This
review also exposes gaps in the literature. The unstable environment during
the crisis caused changes in financial reporting of banks. This raises several
questions as to how this has affected client confidence. The literature does not
address these questions adequately. The review therefore gives a base for the
upcoming survey presented to corporate clients of manufacturing industy.
The purpose of financial reporting is to provide users with useful information
when they make decisions in the market. According to the IFRS Framework
(IAS Plus 2010), there are limitations to financial reporting as other
information is needed in order to form a complete understanding of the
position of a company. There are certain characteristics that make financial
information useful and they are defined in the framework. Understandability
is a component of financial reports, which makes the information accessible
and useful to users as well as affects the achievement of the key
characteristics. The key qualitative characteristics of financial reports,
according to the IFRS framework, are relevance and reliability. Relevance
means the extent to which the information helps in the decision making
process of users through its predictive and confirmatory value. Timeliness is

an issue of relevance as it affects the timeliness of the decisions made.

Reliability, or otherwise referred to as representational faithfulness, is defined
by the informations ability to accurately reflect the underlying economic
phenomenon that it intends to represent. These characteristics are almost
universal as they are also a part of the framework of the Financial Accounting
Standards Board so in addition to including the more than 100 countries that
require or allow the IFRS, the U.S. accounting standards have the same
objectives . If these characteristics are then expected of financial reports, the
perceived faltering of one or more could lead to a loss of confidence from the
user. It has been argued that relevance is favored in new accounting standards
over reliability and fair value accounting has been said to reinforce this
distinction . The timeliness of financial reporting has been brought to question
by Miller and Bahnson , as they would have the reporting frequencies
shortened. The complexity of financial instruments and their valuation has
sparked debate about the understandability of financial reports,7which has
been under discussion by standard-setters for a while. When so many of the
characteristics have been questioned in the last few years, a change in the
perceived usefulness of financial reports is certainly possible.

CHAPTER-III
COMPANY PROFILE

INTRODUCTION
Hindustan Unilever Limited (abbreviated to HUL), formerly
Hindustan Lever Limited, is INDIAs largest consumer products
company and was formed in 1933 as Lever Brothers 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. 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".
Some of its brands include Kwality Wall's ice cream, Lifebuoy, Lux,
Breeze, Liril, Rexona, Hamam, Moti soaps, Pureit Water Purifier,
Lipton tea, Brooke Bond tea, Bru Coffee, Pepsodent and Close Up
toothpaste and brushes, and Surf, Rin and Wheel laundry
detergents, Kissan squashes and jams, Annapurna salt and atta,
Pond's talcs and creams, Vaseline lotions, Fair & Lovely creams,
Lakme beauty products, Clinic Plus, Clinic All Clear, Sunsilk and
Dove shampoos, Vim dish wash, Ala bleach and Domex dis
infectant, Rexona, Modern Bread and Axe deospray.HUL has
produced many business leaders for corporate India. It is referred
to as a CEO Factory' in the Indian press for the same reasons. Its
leadership building potential was recognized when it was ranked
4th in the HewiitGlobal Leadership Survey 2007 with only GE, P&G
and Nokia ranking ahead of HUL in the ability to produce leaders
with such regularity
Today, HUL is one of Indias largest exporters of branded Fast
Moving Consumer Goods. It has been recognized by the
Government of India as a Golden SuperStarTradingHouse.
Over time HUL has developed into a viable & competitive sourcing
base for Unilever world wide 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
advantage
such
as
brandedbasmatirice.
HUL Exports offers 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
partner for Global customers in categories we operate.
HULs 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.
HUL's Exports geography comprises, at present, countries in
Europe, Asia, Middle East, Africa, Australia, and North America
etc.

HULs products touches two out of three Indian everyday

Reach 80% Households
Direct Coverage of 1mln outlets
2000 Suppliers and Associates
71 Manufacturing locations
15000 Employees
1100 managers
Shelf availability 84% outlets in India

CHAPTER-IV
DATA ANALYSIS
&INTERPRETATION

RATIO ANALYSIS
CURRENT RATIO:Current Ratio= Current Asset/Current Liability

YEAR
2014

CURRENT
ASSET
8852.47

CURRENT
LIABILITY
8603.84

CURRENT
RATIO
1.03

2013

7569.99

6655.86

1.18

2012

7798.58

6445.77

1.21

BAR CHART OF CURRENT RATIO:-

Series 1
1.25
1.2
1.15
1.1
1.05
1
0.95
0.9

Series 1
1.21

1.14
1.03

2012

2013

2014

INTERPRETATION:- The current ratio of Hindustan Unilever ltd is 1.21:1 in

2012,1.18:1 in 2013,then 1.03:1 in 2014.above this interpretation it is found that
the current ratio of company is decreasing in 2013 so that in 2013 the company
liquidity position is not good.So they need to do something to boost their sales.

LIQUID RATIO:Liquid Ratio= Liquid Asset/ Current Liability

YEAR

LIQUID ASSET

LIQUID RATIO

8852.47

CURRENT
LIABILITY
8603.84

2014
2013

7569.99

6655.86

1.18

2012

7798.58

6445.77

1.21

1.03

BAR CHART OF LIQUID RATIO:-

Series 1
1.25
1.2
1.15
1.1

Series 1
1.21
1.14

1.05
1

1.03

0.95
0.9
2012

2013

2014

INTERPRETATION:- The liquid ratio of company in 2012 is 1.21:1,in 2013 it is

1.18:1,in 2014 it is 1.21:1.so in 2013 the company liquidity position is not
good.company should not able to pay the current liabilities.

ABSOLUTE LIQUIDITY RATIO:Absolute Liquidity Ratio= Absolute Liquid Asset/ Current Liabilities
YEAR

ABSOLUTE
LIQUID ASSET

CURRENT
LIABILITES

2012

1830.04

6445.77

ABSOLUTE
LIQUDITY
RATIO
.28

2013

1707.89

6655.86

.26

2014

2220.97

8603.84

.28

BAR CHART OF ALR:-

Series 1
0.28
0.28
0.27

Series 1

0.28
0.27
0.27
0.26
0.26
0.26
0.25
2012

2013

2014

INTERPRETATION:- Above this chat the absolute liquid ratio of Hindustan

Unilever ltd in 2012 it is 028:1,in 2013 it is 0.26:1 and in 2014 it is 0.27:1.So it is
decreasing year to year,the company liquid ratio is not good..cash balance of
company is not wellthe company can not able to pay the current liabilities..

INVENTORY TO WORKING CAPITAL RATIO:IWCR= Stock/ Working Capital

YEAR

STOCK

IWCR

2516.65

WORKING
CAPITAL
1352.88

2012
2013

2526.99

914.13

2.76

2014

2516.65

248.63

10.14

1.86

BAR CHART OF INVENTORY TO WORKING CAPITAL RATIO:

Series 1
3.5
3
2.5

Series 1

2
1.5
1
0.5
0
2012

2013

2014

INTERPRETATION:-

ACID-TEST RATIO:Acid Test Ratio= Quick Assets/ Current Liabilities

YEAR

QUICK ASSETS

CURRENT
LIABILITIES

ACID TEST
RATIO

2012

5281.93

6445.77

.82

2013

5043

2526.99

1.99

2014

6101.94

8603.84

.71

BAR CHART OF DEBT EQUITY RATIO:-

Series 1
2
1.8
1.6
1.4

Series 1

1.2
1
0.8
0.6
0.4
0.2
0
2012

2013

2014

INTERPRETATION:-

FIXED ASEET RATIO:Fixed Asset Ratio= Fixed Asset/ Capital Employed

YEAR

FIXED ASSET
2362.92

CAPITAL
EMPLOYED
3296.78

FIXED ASSET
RATIO
.71

2012
2013

2508.94

2673.45

.93

2014

2734.14

3060.78

.89

BAR CHART OF FIXED ASSET RATIO:-

Series 1
1
0.9
0.8
0.7

Series 1

0.6
0.5
0.4
0.3
0.2
0.1
0
2012

2013

2014

INTERPRETATION:- The fixed ratio of Hindustan Unilever ltd in 2012 is .71,in

2013 it is .93 and in 2014 it is 0.89 that means there is minor increase in fixed
asset..so there is slow in operating activityblock of amount is there..a high ratio
means high rate of efficiency of utilization of fixed asset and low ratio means
improper use of asset.

PROPITORY RATIO:Proprietary Ratio= Shareholders Fund/ Total Tangible Asset

YEAR

SHAREHOLDER
FUNDS

2012

3512.56

TOTAL
TANGIBLE
ASSET
2117.53

WOPRITATRY
RATIO
1.66

2013

2674.02

2256.79

1.19

2014

3276.78

2397.94

1.37

BAR CHART OF WROPRITATRY RATIO:-

Series 1
1.8
1.6
1.4
1.2

Series 1

1
0.8
0.6
0.4
0.2
0
2012

2013

2014

INTERPRETATION:- The above table and graph shows that the relationship
between share holder fund and net tangible asset. It is gradually decreasing from
the year of 2012 to 2014.

GROSS PROFIT RATIO:Gross Profit Ratio= Gross Profit/ Net Sales *100
YEAR

GROSS PROFIT

NET SALES

GP RATIO

2012

3469.03

22116.37

15.68

2013

4957.88

25810.21

19.21

2014

5028.39

28019.13

17.94

CHART OF GROSS PROFIT RATIO:-

Series 1
20
18
16
14

Series 1

12
10
8
6
4
2
0
2012

2013

2014

AR
INTERPRETATION:- The above table and chart shows the relationship between
gross profit and net sales. It is gradually increasing year by year. It is profitable for
the organization.

INVENTORY TURNOVER RATIO:Inventory Turnover Ratio= Sale/ Inventories

YEAR

SALE

INVENTORIES

ITR

2014

28019.13

2747.53

10.19

2013

25810.21

2526.99

10.21

2012

22116.37

2519.65

8.69

BAR CHART OF INVENTORY TURNOVER RATIO:-

Series 1
10.5
10
9.5

Series 1

9
8.5
8
7.5
2012

2013

2014

INTERPRETATION:-

NET PROFIT RATIO:Net Profit Ratio= Net Profit after tax / Net sales* 100

YEAR

SALES

NPR

2012

NET PROFIT
AFTER TAX
2691.40

22394.68

12.01

2013

3796.67

26417.11

14.36

2014

3867.49

28640.16

13.40

BAR CHART OF NET PROFIT RATIO:-

Series 1
14.5
14
13.5
Series 1

13
12.5
12
11.5
11
10.5
2012

2013

2014

INTERPRETATION- The above table and chart it is interpretated that net profit of
the organization is gradually increase.so it is good for organization.

DEBTOR TURNOVER RATIO:Debtor Turnover Ratio= Net Credit sale/ Average account Receivable

YEAR

NET CREDIT
SALE

AVG. A/C
RECEIVABLE

DTR

2012

22116.37

2663.17

8.30

2013

25810.21

2521.82

10.23

2014

28019.13

2521.82

11.11

BAR CHART OF DTR:

Series 1
12
10
8

Series 1

6
4
2
0
2012

2013

2014

INTERPRETATION:-

RETURN ON ASSET:Return on Asset= Annual Net Income/ Avg. Total Asset

YEAR

AVG. TOTAL
ASSET
10958.27

ROA

2012

ANNUAL NET
INCOME
22116.37

2013

25810.21

11512.47

2.24

2014

28019.13

12998.40

2.15

2.01

BAR CHART OF ROA:-

Series 1
2.25
2.2
2.15
Series 1

2.1
2.05
2
1.95
1.9
1.85
2012

INTERPRETATION:-

2013

2014