A

PROJECT REPORT ON

FINANCIAL ANALYSIS OF HINDUSTAN UNILEVER LIMITED

Project submitted in partial fulfillment for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Osmania University, Hyderabad -500007

Submitted by

KUMMARI BHANU PRASAD

H.NO: 2129-22-672-180

MBA II year II semester

Aurora’s PG College (MCA)

Approved by AICTE and Affiliated to Osmania University

Nampally, Hyderabad-50000

www.apgcm.ac.in

Academic Batch: 2022-2024

i
STUDENT DECLARATION

I hereby declare that this Project Report titled FINANCIAL ANLYSIS OF

HINDUSTAN UNILEVER LIMITED submitted by me to the Department of Business

Management, O.U., Hyderabad, is a bonafide work undertaken by me and it is not submitted

to any other University or Institution for the award of any degree diploma / certificate or

published any time before.

K BHANU PRASAD Signature of the Student

Date:

Place: Hyderabad

ii
AURORA’S PG COLLEGE (MCA)

Approved by AICTE and Affiliated to Osmania University

Nampally, Hyderabad- 500001

CERTIFICATE

This is to certify that KUMMARI BHANU PRASAD bearing Hall Ticket No: 2129-

22-672-180 is a bonafide student of the college in Master of Business Administration.

This project titled HINDUSTAN UNILEVER LIMITED (HUL) which is being

submitted in partial fulfillment of the requirements for the award of MBA program of

Department of Business Management of Osmania University, Hyderabad was carried

out under my guidance. This has not been submitted to any other University/Institution

for the award of any Degree/Diploma.

Internal Guide External Examiner

Head of the Department Principal

iii
Head office:
Hindustan Unilever Limited
Unilever House
B D Sawant Marg, chakala,
Andheri East, Mumbai 400099
Tel: +91 (22) 50433000
Web: www.hul.co.in

CERTIFICATE

This is to certify that Mr. K. BHANU PRASAD MBA (FINANCE) Bearing Roll.no:

212922672180 from Aurora's PG College, he has successfully completed his project with

HUL. he has selected titled on "A STUDY ON FINANCIAL ANALYISIS OF

HINDUSTAN UNILEVER LIMITED" was undertaken by her under the guidance of Raj

Unadkat the period of his project was 45 days.

We wish her all the best for future endeavors.

For: - Hindustan Unilever limited

Raj Unadkat

iv
ACKNOWLEDGEMENT

I take this opportunity to extend my profound thanks and deep sense of gratitude to the

authorities of Aurora’s PG College (MCA) Nampally, Hyderabad for giving me the

opportunities to undertake this project work in their esteemed organization.

My sincere thanks to Dr. Pradosh Chandra Patnaik, Dr. G. Deepika and P.Vasavi my project

guide for the kind encouragement and constant support extended in completion of this project

work.

I am also thankful to all those who have incidentally helped me, through their valued

guidance, co-operation and unstinted support during the course of my project.

KUMMARI BHANU PRASAD

(2129-22-672-180)

v
TABLE OF CONTENTS

Sl.No.No CONTENTS PAGE.NO

Lists of tables vi

List of figures vii

1 Chapter 1: INTRODUCTION 1-6

1.1 Introduction to Study 1-2

1.2 Need of the Study 3

1.3 Objectives of the Study 4

1.4 Scope of the Study 5

1.5 Limitations of the Study 6

2 Chapter 2: REVIEW OF LITERATURE 7 - 26

2.1 Theoretical Framework 8 - 16

2.2 Literature Review 17 - 26

3 Chapter 3: RESEARCH METHODOLODY 27 - 29

4 Chapter 4: INDUSTRY & COMPANY PROFILE 30 - 46

4.1 Industry Profile 31- 40

4.2 Company Profile 41- 46

5 Chapter 5: DATA ANALYSIS AND FINDINGS 47 - 71

5 Chapter 6: CONCLUSION & SUGGESTIONS 72-74

BIBLIOGRAPHY 75

vi
LIST OF TABLES

Table NAME OF THE TABLE PAGE.NO

No.

4.1 Consolidated Statement of P& L A/C 48

4.2 Profit & Loss A/C 49

4.3 Consolidated Statement of Cash Flow 51-52

4.4 Summarized Cash Flow Statement of HUL 53

4.5 Consolidated Balance sheet 55-56

4.6 Summarized Balance sheet of HUL 57

4.7 Income Statement 59

4.8 Ratio Analysis of HUL 61

4.9 Liquidity Ratio 63

5.0 Solvency Ratio 65

5.1 Debt to Equity Ratio 67

5.2 Fixed Asset Ratio 69

vii
LIST OF FIGURES

Figure NAME OF THE FIGURE PAGE.NO

No.
P&L A/C 50
5.1

Cash Flow Statement 57

5.2

Balance sheet 58
5.3

Income Statement 59
5.4

Ratio Analysis of HUL 60

5.6

Liquidity Ratio 64
5.7

Solvency Ratio 65
5.8

Debt to Equity Ratio 68

5.9

Fixed Asset Ratio 70

6.0

viii
CHAPTER-I

INTRODUCTION

ix
1.1 INTRODUCTION:

Finance is a term for matters regarding the management, creation, and study of money and

investments. Specifically, it deals with the questions of how and why an individual, company

or government acquires the money needed (called capital in the company context) and how

they spend or invest that money.

Finance is then often split per the following major categories: corporate finance, personnel

finance and public finance. At the same time, and correspondingly, finance is about the

overall "system" i.e., the financial markets that allow the flow of money, via investments and

other financial instruments between and within these areas; this "flow" is facilitated by the

financial services sector.

A major focus within finance is thus investment management – called money management

for individuals, and asset management for institutions – and finance then includes the

associated activities of securities trading and stock broking, investment banking, financial

engineering, and risk management. Financial statements

• Financial statements (or financial reports) are formal records of the financial activities and

position of a business, person, or other entity.

• Relevant financial information is presented in a structured manner and in a form which is

easy to understand.

• They typically include four basic financial statements accompanied by a management

discussion and analysis:

1
1) A balance sheet or statement of financial position, reports on a company's assets,

liabilities, and owner’s equity at a given point of time.

2) An income statement or profit and loss report (P&L report), (or statement of

comprehensive income, or statement of revenue & expense) reports on a company’s income,

expenses, and profits over a stated period.

3) These include sales and the various expenses incurred during the stated period. 4) A

statement of change in equity or statement of equity, or statement of retained earnings,

reports on the changes in equity of the company over a stated period.

2
1.2 NEED OF THE STUDY

The need of the study is the important part of the project.

➢ My purpose of doing this study is to find out the current financial position of the company.

➢ Financial Analysis is very essential to maintain the smooth running of a business.

➢ How the business retains their market share as well as the goodwill of the company. So

that company has to maintain its cash to run the business and accomplishing their day-to-day

expenses.

➢ Also, my need of doing this study is to find out where the company stands currently

financially, where the changes needs to be made for better results in future

3
1.3 OBJECTIVES

The objective of this project is:

• To analyze the overall financial performance of Hindustan Unilever Limited.

• To evaluate the profitability of Hindustan Unilever Limited.

• To determine the liquidity position of the company.

• To know about the accounting division & what are the activities basically done by this

department.

• To get knowledge about what are the models basically used by accounting division.

• To give some recommendation regarding the accounting division.

4
1.4 SCOPE

• The scope of study is identified after and during the study is conducted.

• The main scope of the study was to put into practical and theoretical aspect of the study into

real life work experience.

• The study of Financial Analysis is basically based on the tools like balance sheet, P&L

Statement, Bank Reconciliation Statement.

• Further the study is based on the last four years, i.e., 2017-2018 to 2020- 2021 annual report

of Ankit pulps & boards Pvt. Ltd.

• The report has covered mainly the accounting division of the company. Finally, I tried to

give some recommendations regarding company’s financial position

5
1.5 LIMITATIONS OF THE STUDY

• The analysis is limited to just couple of years of data study.

• Limited interaction with the concerned head due to their busy schedule. Very less

information and time spent with company staff.

• The financial data is sensitive in nature the same could not acquire easily.

• Every person has its own preparation to analysis the financial data so maybe it varies

from person to person.

• The company has not provided their financial data properly because of it, confidential in

nature

6
CHAPTER-2

REVIEW OF LITERATURE

7
2.1 THEORITICAL FRAME WORK:

Accounting

Accounting is the system of recording financial transactions with both numbers and text in

the form of financial statements. It provides an essential tool for billing customers, keeping

track of assets and liabilities (debts), determining profitability, and tracking the flow of cash.

The system is largely self-regulated and designed for the users of financial information, who

are referred to a stakeholder’s business owners, lenders, employees, manager, customers, and

others. Stakeholders utilize financial statements to help make business, lending, and

investment decisions.

(bookkeeping) and performing bank reconciliations. Accounting has several specialized fields

and roles. Private (internal) accounting generally refers to 9 accountants who work within a

single business entity. Small business accountants may assume general roles which require

preparing the records professionals are generally divided into three fields: tax, audit, and

advisory. The tax field focuses on federal, state, and local tax filings. Audit roles test the

validity of financial statements and internal controls. Advisory services perform general

financial consulting. Public accounting firms have several different clients, whereas private

accounting refers to working for one specific business entity.

There are five different types of accounts: asset, liability, equity, revenue, and expense. Each

account type includes sub-accounts to record transaction details. For example, cash assets

may include several different cash and savings accounts.

• Asset accounts: Cash and cash equivalents, accounts receivable, inventory, allowance for

doubtful accounts (contra account), prepaid expense, investment, property, plant, and

equipment, accumulated depreciation (contra account), intangible assets, accumulated

amortization (contra account) and other

8
• Equity accounts: Common stock, additional paid-in capital, retained earnings, treasury stock

(contra account)

• Revenue accounts: Sales revenue and others • Expense accounts: Selling, general, and

administrative, interest, repairs, depreciation (non-cash), amortization (non-cash) and others

• Liability accounts: Accounts payable, notes payable, accrued expenses, deferred revenue,

long-term bonds payable and others

Financial Statements

Financial statements are the end results of the completed accounting record. They include the

balance sheet, income statement, statement of shareholders’ equity, statement of cash flows,

and notes to the financial statements. The information provides predictive value, feedback,

and timely data to stakeholders.

The balance sheet reports business assets, liabilities, and equity up to a specific time period.

9
BANK RECONCILIATION

A bank reconciliation is the process of matching the balances in an entity's accounting

records for a cash account to the corresponding information on a bank statement. The goal of

this process is to ascertain the differences between the two, and to book changes to the

accounting records as appropriate. The information on the bank statement is the bank's record

of all transactions impacting the entity's bank account during the past month.

A bank reconciliation should be completed at regular intervals for all bank accounts, to

ensure that a company's cash records are correct. Otherwise, it may find that cash balances are

much lower than expected, resulting in bounced checksor overdraft fees. A bank reconciliation

will also detect some types of fraud after the fact; this information can be used to design better

controls over the receipt andpayment of cash.

10
If there is so little activity in a bank account that there really is no need for a periodic bank

reconciliation, you should question why the account even exists. It may be better to terminate

the account and roll any residual funds into a more active account. By doing so, it may be

easier to invest the residual funds, as well as to monitor the status of the investment.

At a minimum, conduct a bank reconciliation shortly after the end of each month, when the

bank sends the company a bank statement containing the bank's beginning cash balance,

transactions during the month, and ending cash balance. It is even better to conduct a bank

reconciliation every day, based on the bank's month-to-date information, which should be

accessible on the bank's web site. Bycompleting a bank reconciliation every day, you can spot

and correct problems immediately. In particular, a daily reconciliation will highlight any

ACH debits from the account that you did not authorize; you can then install a debit block on

the account to prevent these ACH debits from being used to withdraw funds from the account

without your permission

As the analysis of financial reports also means an understanding of the functioning of business

decision-making which includes observation, assessment, forecasting, and formulation of

diagnosis all the processes that took place in any organization, summarized within the

financial statements.

Financial analysis is an essential part of all commercial operations as it facilitates litigable

insights into the health and capacity of the organization in the future. Alongside providing

imperative data to the lenders and investors that could sway the price of stocks or rate of

interest, this information also enables company managers to measure their performance in

terms of the expectations or growth ofthe industry.

From the perspective of the management, financial analysis is essential for the

advancement of the company as it sheds light on the strengths as well as the weaknesses

which in turn directly impact competitiveness.

11
There are many common ways to analyse financial data like calculating ratios from financial

statements and comparing these financial ratios to historical data of organizations or other

competitor companies.

Types of financial analysis

There are two types of Financial Analysis:

Fundamental analysis and

Technical analysis

1. Fundamental Analysis:

The fundamental analysis gives you the perspective of a company's intrinsic value by

examining related economic and financial factors.

Generally, analysts used this technique to evaluate the major factors that influence security’s

value, either from macroeconomic factors like state policies, environmental factors

supporting particular industries to microeconomic factors like the company’s management.

• It is a technique that gives you a better conviction to identify companies for long

term investment and create wealth.

• Analysts prefer this technique to find stocks that are currently trading at

undervalued or overvalued, and then decide a fair market value of those stocks to help

the investors in their investment decisions.

For example, if a stock is trading higher than its fair market value means the stockis overvalued

in the current market then the sell recommendation is given by analysts.

12
Types of Fundamental Analysis

The various factors of Fundamental Analysis can be divided in two broadcategories:

1. Qualitative analysis

It includes the quality of company’s executives, vision, brand-name recognition, patents and

proprietary information, technology. Generally it is related to the nature of business and

standard of organization rather than sticking to its quantity.

2. Quantitative analysis

Quantitative analysis of financial statements is used to understand a company's financial

performance better before making an investment decision. The three most important financial

statements being used forquantitative analysis are income statements, balance sheets and cash

flow statements.

13
2.Technical Analysis:

On the contrary, In technical analysis analysts evaluate the investment opportunities by

analysing past statistical trends such as volume and price. Technical analysts assume that

prices of the stock are more likely to follow the past trend rather than move strangely.

In the stock market everything is related to market psychology or market emotions, technical

analysts use past data charts to analyse these emotions and market fluctuations to better

understand trends related to stock.

Technical analysts believe the fact that history will repeat itself and we can better understand

the opportunities to invest if we understand the pastpatterns or trends.

However, fundamental analysis and technical analysis both needed to make an effective

market strategy.

Key elements of financial analysis are:

1. Income statement

2. Balance Sheet

3. Cash flow statement

14
Income statement

Income statement basically shows the company’s performance in terms of financial gains or

business profitability for a given period of time. Analysts used this report to predict the

company's future performance and potential future cash flow of business. Income statement

also refers to the P&L statement, statement of earnings, or statement of operations.

In this statement, the top line refers to revenue collection of a business for a particular period

of time and the bottom line represents net profit or a net loss. But there are many business

expenses also called operating expenses that are written in between the top line and bottom

line.

Balance sheet

A balance sheet is a company's financial statement that shows company’s assets and

liabilities, it also shows what a company owns and owes, the amount invested by investors or

shareholders.

Assets- According to balance sheet analysis, assets are written from top to bottom in terms of

their liquidity. If an asset is easy to convert in cash within a year or less then it will be written

under current assets. Cash, marketable securities, accounts receivable, inventories are

considered as current assets. And if an asset cannot be converted into cash within a year are

considered as long-term assets. Land, machinery, equipment, intellectual property are listed

in a company's long-term assets.

Liabilities- Money that company owes to outside parties. The definition of current liabilities

and long-term liabilities are somewhat similar, current liabilities that need to pay within one

year or less listed with their due date. Interest payable, wages payable, rent, dividends, and

accounts payable are considered as current liabilities.

Long term liabilities that are due and need to pay after one year. Forexample - long-

term debt, deferred tax liabilities, etc.

15
Cash Flow Statement

Cash flow statements of any company’s report all kinds of cash inflows and outflows which a

company receives from operations, external investment earnings to spend for business events

and activities, and other investments.

It is the most intuitive statement for any investor because it talks about cash made by business

from various sources. Generally, there are three ways of cash inflows that are - from

operations, investments, and financing. The sum of all these cash inflows is called net cash

flow.

16
2.2 ARTICLES

▪ ARTICLE: 1

▪ TITLE: FINANCIAL ANALYSIS

▪ AUTHOR: Afeen Begam

▪ YEAR: 2021

ABSTRACT: The Indian telecom sector, with 1.17 billion users and the second-largest

market globally, is experiencing exponential growth due to factors like affordable prices,

accessibility, and government initiatives. The introduction of 5G technology has accelerated

this growth, with projections of 920 million mobile users by 2025 and an economic boost of

$450 billion between 2023 and 2040. Financial statement manipulation poses a significant

challenge in the realm of corporate finance, potentially misleading investors and

stakeholders. This study delves into the intricate domain of financial statement analysis,

focusing on five Indian telecom companies, a sector pivotal to the nation's economic growth

with a period of five years from 2018 to 2022. Employing the renowned Beneish M-Score

Model, this research endeavors to detect instances of financial statement manipulation within

the chosen telecom entities

17
▪ ARTICLE: 2

▪ TITLE: FINANCIAL ANALYSIS

▪ AUTHOR: Mohammed Al-Badi

▪ YEAR: 2023

▪ ABSTRACT: Financial statements are essential instruments for comprehending and

assessing corporate performance, with precise analysis playing a pivotal role in strategic

decisionmaking. Analyzing financial statements enables a detailed examination of

financial activity and sustainability by understanding the intricacies of assets, liabilities,

revenues, and expenses.

18
▪ ARTICLE: 3

▪ TITLE: FINANCIAL ANALYSIS

▪ AUTHOR: Weijun Wan1

▪ YEAR: 2023
ABSTRACT: The purpose of this paper is to analyze the capital structure, business risk

(levered vs. unlevered beta β), and financial statements in the U.S. grocery retailers to

determine how their unique capital structure, risks, and financial characteristics explain

the differences in their performance and investment returns. We chose three U.S. grocery

stores: Costco, Walmart, and Target, each with a unique business structure. We conducted

a detailed beta (β) analysis, both leveraged and unleveraged, as well as a dedicate

financial statement analysis focused on ratio analysis. Liquidity, profitability, and

solvency abilities were examined to determine if they depend on each retailer’s specific

capital structure, risks, and characteristics, and how they would affect investors’

investment decisions.

19
▪ ARTICLE: 4

▪ TITLE: IDENTIFYING DECEPTIVE FINANCIAL REPORTING VIA ANALYSIS

OF FINANCIAL STATEMENTS: CASE IN VIETNAM

▪ AUTHOR: Nguyen Ngoc Phong Lan

▪ YEAR: 2023
ABSTRACT: Deceptive financial reporting represents a significant worry for the main

regulatory bodies overseeing Vietnam's capital market. Both regulatory bodies are

continuously enhancing the criteria to ensure thorough monitoring of publicly listed

companies. The objective of the current study is to investigate the link between financial

statement analysis and fraudulent financial reporting. While numerous researchers have

uncovered evidence suggesting the effectiveness of financial ratios in identifying fraudulent

financial reporting, others have reached differing conclusions. The majority of these studies

were conducted beyond the borders of Vietnam. The sample consists of companies listed in

Vietnam, and the data utilized spans from 2011 to 2022. The findings revealed that various

financial ratios, including total debt to total assets and receivables to revenue, emerged as

significant indicators for identifying fraudulent financial reporting. This suggests that

financial ratios could potentially aid in detecting fraudulent activities. These results

contribute to the existing body of literature concerning the efficacy of financial ratios in fraud

detection

20
▪ ARTICLE: 5

▪ TITLE: THE VITAL ROLE OF FORENSIC ACCOUNTING AND AUDITING IN

MODERN BUSINESS PRACTICE

▪ AUTHOR: Tadija Dukic

▪ YEAR: 2023
ABSTRACT: This article explores the critical roles of forensic accounting and auditing in

modern business, focusing on uncovering financial irregularities and promoting transparency.

Through a meticulous literature review and analysis, the study emphasizes the significance of

these practices. The purpose is to underscore their importance, methodologies, and

implications. Methodologically, the article employs a comprehensive literature review and

meticulous analysis of real-world applications. It investigates cases of corporate fraud,

financial statement analysis, and dispute resolution. Ethical and legal considerations are

highlighted, emphasizing the adherence to professional codes and standards. The study

reveals that forensic practices are pivotal in detecting financial misconduct, upholding

financial transparency, and ensuring accountability. Technological advances, such as data

analytics and AI, enhance efficiency and accuracy. The research establishes the need for

continuous development and professional education to tackle the evolving financial

challenges. In summary, this article highlights the central roles of forensic accounting and

auditing in modern business, their methodologies, and ethical considerations. The study

underscores their importance in detecting financial fraud, promoting transparency, and

fostering trust.

21
▪ ARTICLE: 6

▪ TITLE: Financial Statement Analysis Based on RNN-RBM Model

▪ AUTHOR: Fang Liu

▪ YEAR: 2023
ABSTRACT: Financial statement analysis is a critical component of decision-making for

businesses, investors, and financial professionals. To enhance the accuracy and effectiveness

of such analysis, this paper introduces the application of an innovative approach known as the

Intelligent Swarm Regression ARIMA Model. This advanced model combines the power of

swarm intelligence with ARIMA (AutoRegressive Integrated Moving Average) time series

forecasting, offering a robust methodology for predicting and analyzing key financial metrics.

The study begins by providing an overview of the Intelligent Swarm Regression ARIMA

model and its application to financial data. Through a comprehensive analysis of financial

statements, including market capitalization, revenue, net income, and other crucial indicators,

the model's efficacy in predicting future values is evaluated. Additionally, the paper examines

the deviations between predicted and actual financial values, offering insights into the

model's accuracy and areas for potential improvement. The findings of this research are

invaluable for investors, financial analysts, and companies seeking to optimize their financial

performance and strategic decision-making. By leveraging the Intelligent Swarm Regression

ARIMA Model, stakeholders can make well-informed choices that lead to better financial

outcomes and a competitive advantage in a dynamic economic landscape. This paper

represents a significant step forward in the financial analysis, providing a practical

methodology and a pathway to enhanced financial decision-making. As the importance of

financial data continues to grow, this research offers a promising avenue for achieving

financial success and stability.

22
▪ ARTICLE: 7

▪ TITLE: Financial statement analysis and revenue forecast for Apple Inc.

▪ AUTHOR: Yujia Lu

▪ YEAR: 2023
ABSTRACT: Nowadays, technology companies play an indispensable role in transforming

people’s lifestyles and the productivity of the whole society. It is of great significance to

focus on the ability of continuous operation and sustainable development of those high-tech

companies. This paper takes Apple Inc. as an example and presents a financial statement

analysis that combines strategy analysis, accounting standard analysis, common-size analysis,

and ratio analysis. The figures shown in this paper are based on Apple’s past annual reports

and relevant comparisons are made with Apple’s competitors when necessary. All the

analyses in this paper are conducive to revealing the financial condition of Apple Inc. and

forecasting its future revenue. After conducting all the analyses, it is easy to find that

profitability didn’t witness dramatic progress in recent 3 years due to Covid-19. The paper,

therefore, concludes that more efforts are needed to improve Apple’s efficiency and liquidity,

which eventually enables Apple to make wise investments and generate more revenue.

Furthermore, although Covid-19 is largely to blame for Apple’s plain performance in recent 3

years, more elements from the social environment and its competitors should also be

carefully considered in order to make an exact forecast about Apple’s future financial

performance.

23
▪ ARTICLE: 8

▪ TITLE: Tesla's revenue forecast base on business model and financial statement
analysis

▪ AUTHOR: Chenhao Fang

▪ YEAR: 2022
ABSTRACT: With the rapid development of the electric vehicle industry, Tesla, as the

benchmark of this industry, has been studied by many companies in the same industry and

investors outside the industry. Based on Tesla's financial reports in recent years and news

about Tesla, Tesla's assets, liabilities, and owner's equity are analyzed to analyze Tesla's basic

financial situation, from this, it can be concluded that Tesla's asset-liability ratio and other

financial trends have changed in recent years. Then analyze Tesla's business model from the

aspects of corporate positioning, business type, and profit model, so, in recent years, Tesla's

main profit models, income sources, and the changing trend of income sources can be

obtained from the above analysis. Finally, the two aspects are integrated, we can predict

Tesla's future revenue with more certainty. After the analysis obtained: Number of vehicle

sales are expected to reach 1.8 million units in 23 years, approximately +35% y/y.

24
▪ ARTICLE: 9

▪ TITLE: A STUDY ON FINANCIAL PERFORMANCE AND RATIO ANALYSIS

OF YAMAHAMOTORS

▪ AUTHOR: Sharon Dhanabal

▪ YEAR: 2023
ABSTRACT: The purpose of this research is to appraise the financial performance of Yamaha

Motor Co. Ltd during the year 2017-2023.The data for this research has been collected from

official website of Yamaha Motors Co. Ltd and from the other journals. Finance is life blood

of business. Financial statement analysis refers to the process of determining financial

strength and weakness of the firm by properly establishing strategic relationship between the

items of balance sheet and statement of profit and loss account. It is also known as

Accounting Analysis and Analysis of Finance. Financial statements produce a summary of

data from which important analysis and interpretation can be made for Current Ratio, Quick

Ratio, Debt to Equity Ratio, Operating Margin and Net Profit Margin. This study is based on

financial performance of Yamaha Motors Ltd by using a tool ratio analysis for a period of

2017-23. Ratio analysis is used to depict the measure of performance.

25
▪ ARTICLE: 10

▪ TITLE: Detecting Financial Statement Manipulation in Selected Indian Telecom

Companies Using Beneish M-Score Model

▪ AUTHOR: Arshe Azam

▪ YEAR: 2023
ABSTRACT: The Indian telecom sector, with 1.17 billion users and the second-largest market

globally, is experiencing exponential growth due to factors like affordable prices,

accessibility, and government initiatives. The introduction of 5G technology has accelerated

this growth, with projections of 920 million mobile users by 2025 and an economic boost of

$450 billion between 2023 and 2040. Financial statement manipulation poses a significant

challenge in the realm of corporate finance, potentially misleading investors and

stakeholders. This study delves into the intricate domain of financial statement analysis,

focusing on five Indian telecom companies, a sector pivotal to the nation's economic growth

with a period of five years from 2018 to 2022. Employing the renowned Beneish M-Score

Model, this research endeavors to detect instances of financial statement manipulation within

the chosen telecom entities. This paper also explores a quantitative analysis using the Beneish

M-score model was used to investigate earnings manipulation within Indian telecom firms.

The study highlights the complexities of financial statement fraud in the telecom sector and

the need for vigilance for sustainable growth and investor confidence.

26
CHAPTER- III

RESEARCH METHODOLOGY

27
Data Collection
Two form of data collection and information gathering techniques prevail in the research
environment. Both the collection techniques are listed below:
1. Primary Data Collection
2. Secondary Data Collection

1. Primary Data Collection

Primary data is that type of data which is collected for the first time and for the specific
purpose of the research. In simple words this data does not prevail to be Confidential
collected unless the need is desired for it. This type of information is the first hand
information collected exclusively for the purpose of the research.
The main advantage of using primary data is because it can be easily relied upon as the data
is fresh and without any contamination and adulteration. Secondly primary data is collected
as this data is not available anywhere. However the main disadvantage of collecting primary
data is that it takes lot of time to conduct the data.
Secondly it requires lot of effort and cost in conducting the research. Some of the common
tools of conducting primary data are by way of surveys,
• Observation techniques and
• Other form of discussion forums

28
2. Secondary Data Collection.
Secondary data is the form of data which is already present in the market and was
collected by some other person for some different purpose. Any form of data which is
collected and used immediately becomes secondary data for others For example many
researchers carry out research which is primary but for students and academicians this later
becomes secondary which we then refer in journals and confidential magazines. This type of
data has more to do with past rather than the present since it is historical in nature. In simple
words secondary form of data is any form of data which is present in the universe and
collected by someone else for some other purpose.
The main advantage of using secondary form of data is that it is easy to collect.
Secondly the time involved is relatively less than the primary data. Similarly the efforts in
collecting the secondary data are less than primary data collection. Secondary data can be
available to the researcher from multiple modes and source to primary data collection.
However there are a few disadvantages which secondary data has. Firstly the data which is
available might not purely satisfy the needs of the researcher since this data was collected by
someone else for some other purpose. Secondly if there is any error in that secondary data it
would carry the same for the researcher as well. Thus trusting the authenticity of the data is
very important.Some of the common sources of collecting secondary data are with the help of
• Journals,
• Magazines,
• Newspaper articles,
• Books,
• Periodicals,
• Annual reports,
• Company circulars,
• Government publications,
• Government websites,
• Industry association,
• Libraries,
• E-libraries,
• University database and Search engines

29
CHAPTER- IV

INDUSTRY & COMPANY PROFILE

30
4.1 INDUSTY PROFILE

Introduction:

FAST MOVING CONSUMER GOODS COMPANY

Fast-moving consumer goods (FMCG), also known as consumer packaged goods (CPG), are

products that are sold quickly and at a relatively low cost.

Examples include non-durable household goods such as packaged goods, beverages,

toiletries, candies, cosmetics, over the counter drugs, dry goods, and other consumables.

FMCG is the most common acronym in use across most of Europe, Asia, and Oceania, while

CPG is used more frequently in the Americas. The companies those who sell these products

that are needed for the common people regularly are known as FMCG companies.

They are the backbone of an economy as they sales and the contribution to the economy

through the sales are very enormous that they are capable of making very big economic

changes.

FAST MOVING CONSUMER GOODS COMPANY

Top 5 FMCG Companies in India are as follows:

1. Hindustan Unilever Limited

2. India Tobacco Company (ITC) Limited

3. Nestle India Limited

4. Britannia Industries Limited

5. Godrej Consumer Products Limited

These are the companies in India that produces fast moving consumer goods or

goods that are used daily by the people commonly

31
HUL's portfolio includes iconic brands such as Dove, Lux, Lifebuoy, Surf Excel, Rin,

Pepsodent, Knorr, and many others. The company has a rich heritage, dating back to the 19th

century, and has played a pivotal role in shaping the FMCG landscape in India. It is a

subsidiary of Unilever, a global consumer goods company, which provides HUL access to a

vast pool of resources, innovation, and best practices.

The FMCG industry in India is characterized by intense competition, rapid innovation, and a

constant focus on understanding and meeting the evolving needs of the diverse consumer

base. HUL, being a market leader, has maintained its competitive edge through a combination

of product innovation, efficient distribution networks, aggressive marketing strategies, and a

deep understanding of local consumer preferences.

In recent years, there has been a notable shift in consumer preferences towards healthier and

sustainable products, and HUL has adapted to these trends by introducing products that align

with these changing dynamics. The company has also embraced digital technologies and e-

commerce channels to enhance its reach and engage with consumers in new ways.

The FMCG sector is influenced by various factors such as economic conditions, consumer

sentiment, regulatory changes, and technological advancements. HUL, with its diverse

product portfolio, strong brand equity, and market expertise, is well-positioned to navigate

these dynamics and continue its leadership in the Indian FMCG industry. The company's

commitment to sustainability, social responsibility, and ethical business practices further

enhances its standing in the industry, contributing to its long-term success.

MARKET SIZE:

The market size of fast-moving consumer goods (FMCG) can vary significantly depending

on the region, country, and specific product categories within FMCG. FMCG encompasses a

wide range of products that are typically consumed frequently and have a relatively low cost.

32
This includes items like food and beverages, personal care products, household goods, and

over-the-counter drugs.

Globally, the FMCG market is substantial, valued in the trillions of dollars annually.

However, it's important to note that this figure encompasses a broad array of products and

markets, each with its own dynamics and growth rates.

As of my last update in January 2022, the fast-moving consumer goods (FMCG) market in

India was one of the largest in the world, driven by a rapidly growing population, rising

disposable incomes, urbanization, and changing consumer preferences. The market size of

FMCG in India was estimated to be around USD 52 billion in 2020 and was expected to

continue growing at a healthy rate.

Key factors contributing to the growth of the FMCG market in India include:

1. Population Growth: India has a large and growing population, which provides a significant

consumer base for FMCG products.

2. Rising Disposable Incomes: Increasing incomes, especially in urban areas, have led to

higher purchasing power and greater consumer spending on FMCG products.

3. Urbanization: The ongoing trend of urbanization has led to changes in lifestyle and

consumption patterns, with urban consumers showing a preference for convenience and

branded products.

4. Distribution Expansion: FMCG companies have been expanding their distribution

networks to reach rural and semi-urban areas, tapping into previously underserved markets.

5. Brand Awareness and Marketing: FMCG companies invest heavily in advertising and

promotional activities to build brand awareness and drive consumer demand.

6. Product Innovation: FMCG companies continuously introduce new products and variants

to cater to evolving consumer preferences and to stay competitive in the market.

33
Overall, the FMCG sector in India remains highly competitive, with both domestic and

multinational companies vying for market share across various product categories such as

food and beverages, personal care, home care, and healthcare.

Investments:

In India, the fast-moving consumer goods (FMCG) sector is diverse and encompasses various

types of companies catering to different product categories and consumer segments. Here are

some common types of FMCG companies found in India:

➢ ITC LIMITED ITC Limited, an Indian conglomerate, maintains a diversified

investment portfolio spanning various sectors including FMCG (Fast Moving

Consumer Goods), hospitality, paperboards & specialty papers, agri-business, and

information technology.

➢ DABOUR INDIA LIMITED Dabur India Limited, a leading Indian FMCG

company, focuses its investments primarily on herbal and ayurvedic products. The

company has a strong portfolio of health care, personal care, and food products

derived from traditional Indian medicine systems.

Research & Development: Dabur allocates significant investments towards research and

development (R&D) activities aimed at innovation, product development, and improving the

efficacy of its herbal and ayurvedic formulations. These investments help the company stay at

the forefront of natural healthcare solutions.

➢ Godrej Consumer Products Limited (GCPL), a prominent player in the FMCG

sector, invests significantly in product innovation and development. The company

allocates resources to research and development (R&D) initiatives aimed at

introducing new and improved products to meet evolving consumer needs and

preferences.

34
Government Initiatives:

Several government initiatives aim to support the Fast Moving Consumer Goods

(FMCG) sector, fostering growth, innovation, and sustainability. Here are some common

initiatives:

1. Make in India: Launched by the Government of India, Make in India aims to promote

manufacturing within the country. This initiative encourages FMCG companies to

establish manufacturing facilities in India, leading to job creation, technology transfer,

and economic growth.

2. Goods and Services Tax (GST): The implementation of GST in India has streamlined the

taxation system, reducing complexities and improving compliance for FMCG

companies. This unified tax regime has facilitated the movement of goods across states,

promoting efficiency and cost savings.

3. Food Processing Industries Scheme: The Ministry of Food Processing Industries (MoFPI)

in India offers various schemes and incentives to promote investment in food

processing, which includes many FMCG products. These schemes aim to modernize the

food processing sector, enhance infrastructure, and improve food safety standards.

4. Pradhan Mantri Krishi Sinchayee Yojana (PMKSY): This government scheme focuses on

enhancing the irrigation infrastructure in India to improve agricultural productivity.

FMCG companies benefit indirectly from increased agricultural output, as it ensures a

steady supply of raw materials for food and beverage products.

5. Startup India: The Startup India initiative encourages entrepreneurship and innovation

across various sectors, including FMCG. It provides support to startups through funding,

tax incentives, and regulatory simplification, fostering a conducive environment for new

players to enter the FMCG market.

35
6. Investment in Rural Infrastructure: Government investments in rural infrastructure, such

as roads, electrification, and storage facilities, aim to improve connectivity and

accessibility in rural areas. This facilitates the distribution of FMCG products to rural

markets, unlocking growth opportunities for companies.

7. Quality Standards and Regulations: The government sets quality standards and

regulations for FMCG products to ensure consumer safety and product quality.

Compliance with these standards is mandatory for FMCG companies, and the

government provides support through certification processes and quality assurance

programs.

These initiatives play a crucial role in supporting the growth and development of the

FMCG sector, contributing to economic prosperity, employment generation, and the

overall well-being of the population.

Road Ahead:

With the Government of India providing a boost to the FMCG and various companies coming

up in urban as well as rural areas, the FMCG sector has enough scope for development in the

future.

Competition concerns in India:

Competition in the Fast Moving Consumer Goods (FMCG) sector in India is intense due to

several factors:

1. Large Number of Players: The FMCG market in India is highly fragmented, with

numerous local, national, and multinational players competing across various product

categories. This leads to intense competition as companies vie for market share and

consumer loyalty.

2. Brand Loyalty: Established brands often enjoy strong consumer loyalty built over

36
years of consistent quality and marketing efforts. New entrants face challenges in

breaking into the market and capturing market share from well-established brands.

3. Price Sensitivity: Indian consumers are highly price-sensitive, especially in segments

such as personal care, household products, and packaged foods. Price competition is

fierce, with companies constantly innovating to offer value-for-money products while

maintaining profitability.

4. Distribution Networks: Effective distribution networks are crucial for reaching

consumers across India's diverse geography. Companies invest heavily in building and

expanding distribution networks to ensure product availability and visibility,

especially in rural and semi-urban areas.

5. Product Innovation: Continuous product innovation is essential for staying

competitive in the FMCG sector. Companies invest in research and development to

introduce new products, improve existing ones, and cater to changing consumer

preferences and trends.

TYPES OF COMPANIES:

ITC Limited:

a prominent Indian conglomerate, has carved a formidable presence across diverse sectors

since its inception in 1910 as the Imperial Tobacco Company. Over the decades, it has

transcended its tobacco roots to emerge as a multifaceted entity with interests spanning

FMCG (Fast Moving Consumer Goods), hospitality, paperboards & packaging, agri-

business, and information technology. At the core of its operations lies a steadfast

commitment to delivering value to stakeholders while contributing to India's socio-

economic development.

37
In the FMCG domain, ITC has established itself as a frontrunner with a wide array of

products catering to various consumer needs. From cigarettes to personal care, foods, and

homecare, its portfolio boasts household brands renowned for quality and innovation. The

company's emphasis on sustainability and wellness is evident in its foray into herbal and

organic segments, aligning with evolving consumer preferences.

Dabur India Limited: Dabur India Limited stands as one of India's most prominent

consumer goods companies, renowned for its extensive range of natural healthcare, personal

care, and food products. Established in 1884 by Dr. S.K. Burman, Dabur has evolved over the

decades to become a household name, deeply ingrained in the cultural fabric of the nation.

With a steadfast commitment to harnessing the power of Ayurveda, Dabur offers a diverse

portfolio of products that cater to the holistic well-being of its consumers. From flagship

brands like Dabur Chyawanprash, Dabur Honey, and Dabur Red Toothpaste to newer

innovations in skincare, haircare, and digestive health, Dabur continues to innovate and adapt

to the evolving needs of its vast consumer base. Beyond India, Dabur has also expanded its

presence globally, exporting its products to over 100 countries, thus spreading the benefits of

Ayurveda to a wider audience. With a legacy of over a century and a reputation for quality

and reliability, Dabur India Limited remains a trusted name synonymous with wellness and

vitality.

Godrej consumer Products Limited: Godrej Consumer Products Limited (GCPL), a

leading player in the Indian FMCG sector, has established itself as a household name

synonymous with quality and trust. With a rich legacy spanning decades, GCPL has

diversified its portfolio to encompass a wide range of products catering to the diverse

needs of consumers across India and beyond.

At the heart of GCPL's success lies a relentless focus on innovation and consumer-centricity.

The company continuously strives to anticipate and meet evolving consumer preferences,

38
driving product innovation across categories such as personal care, home care, hair care, and

hygiene. Through its extensive research and development initiatives, GCPL introduces

cutting-edge formulations and technologies, ensuring that its brands remain at the forefront of

industry trends.

GCPL's commitment to sustainability and social responsibility is ingrained in its business

ethos. The company actively pursues initiatives aimed at reducing its environmental footprint,

promoting community development, and fostering inclusive growth. From sourcing

responsibly sourced ingredients to implementing eco-friendly manufacturing practices, GCPL

prioritizes sustainability across its value chain, contributing to a more sustainable future.

With a robust distribution network spanning urban and rural markets, GCPL ensures

widespread availability of its products, reaching consumers even in the most remote corners

of the country. The company's strong branding and marketing strategies further reinforce its

market position, building enduring relationships with consumers and driving brand loyalty.

In addition to its domestic presence, GCPL has successfully expanded its footprint in

international markets, leveraging its strong brand equity and product innovation capabilities

to gain a competitive edge. Through strategic partnerships and acquisitions, the company

continues to explore new growth opportunities, consolidating its position as a global FMCG

powerhouse.

Nestle India: Nestlé India, a subsidiary of the Swiss multinational Nestlé Group, has

established itself as a key player in India's food and beverage industry. Since its inception in

1959, Nestlé India has continually expanded its presence, offering a diverse array of products

that cater to the tastes and preferences of Indian consumers. From iconic brands like Maggi

noodles, Nescafé coffee, and KitKat chocolates to a wide range of dairy products, breakfast

cereals, and culinary aids, Nestlé has become a household name synonymous with quality

and taste. With a focus on innovation and sustainability, Nestlé India has embraced

39
technological advancements to enhance its manufacturing processes while also prioritizing

environmental conservation and social responsibility. Through initiatives like the Nestlé

Healthy Kids Program and efforts to empower local communities, Nestlé India remains

committed to fostering healthier and more sustainable lifestyles. As it continues to grow and

evolve, Nestlé India stands as a testament to the enduring success of a company dedicated to

nourishing people's lives with quality products and responsible practices.

40
4.2 COMPANY PROFILE

Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company

with a heritage of over 80 years in India. It’s headquartered in Mumbai, India.

It’s products include foods, beverage, cleaning agents, personal care products, water purifies

and other fast moving consumer goods.

It was founded in the year 1933, 89 years ago. The CEO of the company is Sanjiv Mehta.

On any given day, nine out of ten Indian households use our products to feel good, look good

and get more out of life.

This gives the company a unique opportunity to build a brighter future.

The company has over 35 brands spanning 20 distinct categories such as soaps, detergents,

shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice

cream, and water purifiers, the Company is a part of the everyday life of millions of

consumers across India.

Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin,

Wheel, Glow & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent,

Closeup,Axe, Brooke Bond, Bru, Knorr, Kissan, Quality Wall’s and Pureit.

HINDUSTAN UNILEVER LIMITED

• Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods

company with a heritage of over 80 years in India.

• It’s headquartered in Mumbai, India.

• It’s products include foods, beverage, cleaning agents, personal care products, water

• purifies and other fast moving consumer goods.

• It was founded in the year 1933, 89 years ago.

• The CEO of the company is Sanjiv Mehta.

41
• On any given day, nine out of ten Indian households use our products to feel good,

look good and get more out of life.

• This gives the company a unique opportunity to build a brighter future.

• The company has over 35 brands spanning 20 distinct categories such as soaps,

detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee,

• packaged foods, ice cream, and water purifiers, the Company is a part of the everyday

life of millions of consumers across India.

• Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel,

Rin,

Wheel, Glow & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk,

• Pepsodent, Closeup,Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and

Pureit.

• The Company has about 21,000 employees and has sales of INR 38,273 crores (the

financial year 2019-20).

• HUL is a subsidiary of Unilever, one of the world’s leading suppliers of Food, Home

Care, Personal Care and Refreshment products with sales in over 190 countries and

an annual sales turnover of €52 billion in 2019.

• Unilever has over 67% shareholding in HUL

42
FACT FILE: In the Financial Year 2022-23, your Company Hindustan Unilever Limited

demonstrated a strong and resilient performance. We completed the ninth consecutive quarter

of double-digit Underlying Sales Growth and in the Financial Year, added nearly ₹8,000

crores to our turnover, despite a volatile and high-inflationary external environment. Our

performance has been especially impressive considering the challenges the world faces today.

Economic growth the world over remains low as financial risks rise. Against this backdrop,

India comes out as a bright spot in the global economy. Having completed 75 years of

independence, India is marching ahead at a fast pace to take its place as one of the leading

economies in the world. The nation is undergoing a social and economic transformation that

is unmatched in history. It recently became the 5th largest economy in the world with sights

now set on achieving the US$5 trillion GDP mark. As the leading Fast Moving Consumer

Goods company, with brands that reach 9 out of 10 Indian households, HUL is well placed to

partner the India growth story and is committed to play its role in creating a sustainable and

equitable future.

Our mantra of ‘doing well by doing good’ is ingrained across our business and we have

continued to make strong progress on our sustainability agenda across the pillars of Climate,

Nature and Social. We are decarbonising our operations and have achieved 97% reduction in

CO2 emissions per tonne of production across our manufacturing operations, when compared

to 2008 baseline. We continued to collect more plastic waste from across India than the

plastic we use in the packaging of our products in 2022. Through the Hindustan Unilever

Foundation, a not-for-profit company that was set up in 2010, we support and amplify

scalable solutions that can help address India’s water challenges. Till date, the Foundation

has delivered a cumulative and collective water potential of over 2.6 trillion litres, which is

more than the quantity required to meet the drinking water needs of India’s population for

nearly two years. We are committed to a deforestation free supply chain; in this fiscal, 95%

43
of our paper and board in packaging, 82% of our tomatoes and 69% of tea came from

sustainable sources. HUL Geographic footprint

9/10 households c.9 million

in India use one or more of our brands Retail outlets reached

>3,500 30%
Distributors Digitised demand capture

29 32
Owned factories Depots

44
Board of Directors:

Mr. Nitin Paranjpe Chairman and Non-Executive Director

Mr. Sanjiv Mehta Chief Executive Officer and Managing Director

Mr. Rohit Jawa Whole-time Director and CEO-designate

Mr. Ritesh Tiwari Executive Director, Finance & IT and Chief Financial Officer

Mr. Dev Bajpai Executive Director, Legal & Corporate Affairs and Company Secretary

Mr. O. P. Bhatt Independent Director

Dr. Sanjiv Misra Independent Director

Ms. Kalpana Morparia Independent Director

Mr. Leo Puri Independent Director

Dr. Ashish Gupta Independent Director

Ms. Ashu Suyash Independent Director

Mr. Ranjay Gulati Independent Director

Our vision

Our vision is to deliver winning performance by being the leader in sustainable business. We

will demonstrate how our purpose-led, future-fit business model drives superior performance

delivering consistent, competitive, profitable, and responsible growth.

Awards won

➢ No. 1 Employer of Choice across sectors, based on brand perception study by

InsideIIM at target B-Schools in 2022

➢ Received the Certificate of Recognition at the 22nd ICSI National Awards for

Excellence in Corporate Governance, for adopting and promoting exemplary

corporate governance practices

45
➢ Overall winner across Asia in the ‘Best Supply Chain Solution’ category at the Adam

Smith Treasury Award

➢ Won the Masters of Risk Management award in Supply Chain category at India Risk

Management Awards

➢ Received the Best Company award in ESG practices in the Consumer Products sector

on all three facets of E, S, & G at the KPMG India ESG Excellence Awards 2023

➢ Named Supply Chain Company of the Year by Governing Council of the Institute of

Supply Chain and Management Pvt. Ltd

➢ Doom Dooma and Sonepat factory won at the CII - National Energy Efficiency Circle

Awards

➢ Doom Dooma manufacturing won under the ‘Employment Enhancing Skills’ category
at the Annual Greentech CSR Award 2022

Our strategy

Our strategy is constantly evolving to adapt to the trends and forces shaping our markets and

impacting our stakeholders.

46
CHAPTER-V

DATA ANALYSIS AND FINDINGS

47
4.1 DATA ANALYSIS & INTERPRETATION

Table No: 4.1 - Consolidated Statement of Profit and Loss

for the year ended 31st March, 2023

INCOME
Revenue from operations 27 60,580 52,446
Other income 28 512 258

TOTAL INCOME 61,092 52,704

EXPENSES
Cost of materials consumed 29 20,212 16,446
Purchases of stock-in-trade 30 11,579 9,311
Changes in inventories of finished goods, Stock-in-Trade and work-in-progress 31 (75) (22)
Employee benefits expense 32 2,854 2,545
Finance costs 33 114 106
Depreciation and amortisation expense 34 1,137 1,091
Other expenses 35 11,861 11,309

TOTAL EXPENSES 47,682 40,786

Profit before Exceptional Items and tax and before share of equity accounted investee 13,410 11,918

Share of loss of equity accounted investee net of tax 5 (1) -

Profit before exceptional items and tax 13,409 11,918
Exceptional items (net) 36 (64) (44)
Profit before tax from Continuing Operations 13,345 11,874
Tax expenses
Current tax 9A (3,001) (2,840)
Deferred tax charge 9A (200) (147)
Profit after tax from Continuing Operations (A) 10,144 8,887
Profit/(Loss) from discontinued operations before tax 37A (1) 3
Tax adjustment of discontinued operations 37A - 2
Profit/(Loss) from discontinued operations after tax (B) (1) 5
PROFIT FOR THE YEAR (A+B) 10,143 8,892
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified subsequently to profit or loss
Remeasurements of the net defined benefit plans 42C (17) 41
Income tax relating to items that will not be reclassified subsequently to profit or loss

Remeasurements of the net defined benefit plans 9A 4 (10)

Items that will be reclassified subsequently to profit or loss
Fair value of debt instruments through other comprehensive income 18C (1) (1)
Fair value of cash flow hedges through other comprehensive income 18C (21) 85
Income tax relating to items that will be reclassified subsequently to profit or loss

Fair value of debt instruments through other comprehensive income 9A 0 0

Fair value of cash flow hedges through other comprehensive income 9A 9 (0)
OTHER COMPREHENSIVE INCOME FOR THE YEAR (C) (26) 115
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (A+B+C) 10,117 9,007

Source: Annual Reports.

48
Table No 4.2 - PROFIT AND LOSS A/C

Source: Annual Reports.

49
Figure no 4.1: P&L Account

DATA INTERPRETATION

• In the year the 2020-21 the TURNOVER is 45,311 crores in 2022-23 Turnover
58,154 which shows the
• increase in Turnover after each year. There is a positive result in the HUL.

50
Table no: 4.3 Consolidated Statement of Cash Flows
for the year ended 31st March, 2023 all amt in crores
Year ended 2023 2022
A CASH FLOWS FROM OPERATING ACTIVITIES:
Profit before tax from continuing operations and before share of equity 13,346 11,874
accounted investee
Adjustments for:
Depreciation and amortisation expenses 1,152 1,106
(Profit)/loss on sale of property, plant and equipment (100) (97)
Contingent consideration true up for business combination (2) (9)
Finance Income (411) (198)
Dividend income (2) (1)
Other non operating income – Fair value gain on investments (99) (59)
Interest expense 114 106
Provision for expenses on employee stock options 1 (1)
Profit on sale of brand rights (60) (29)
Payment from Retirement Benefit Scheme Reserve (1) -
Transaction cost from acquisition 2 -
Inventory written off net of Provision/(write back) for Inventory 184 156
Bad debts/assets written off net of Provision/(write back) (27) (15)
Mark-to-market (gain)/ loss on derivative financial instruments (8) (4)
Cash Generated from operations before working capital changes 14,089 12,829
Adjustments for:
(Increase)/decrease in Non-Current Assets (14) 3
(Increase)/decrease in Current Assets (1,111) (480)
(Increase)/decrease in Inventories (339) (758)
Increase/(decrease) in Non-Current Liabilities (116) 86
Increase/(decrease) in Current Liabilities 622 149
Cash flows generated from operations 13,131 11,829
Taxes paid (net of refunds) (3,138) (2,784)
Profit/(Loss) from Joint venture (1) -
Profit/(Loss) from discontinued operations (1) 3
Net cash flows generated from operating activities - [A] 9,991 9,048
B CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1,174) (1,225)
Sale proceeds of property, plant and equipment 121 146
Purchase of intangible assets (18) (3)
Sale proceeds of intangible assets (brand rights) 60 29
Investment in subsidiary (264) -
Transaction cost on acquisition (2) -
Investment in joint venture (70) -
Contingent consideration paid on business combination (40) (41)
Purchase of current investments (22,649) (48,522)
Sale proceeds of current investments 23,462 47,786
Loans given to others (1) (4)
Investment in term deposits (having original maturity of more than 3 months) (3,668) (3,711)
Redemption/maturity of term deposits (having original maturity of more than 3 months) 2,488 3,656
Investment in non-current deposits with banks - (1)
Interest received 259 161
Dividend received from others 2 1
Net cash flows used in investing activities - [B] (1,494) (1,728)

51
2023 2022
C CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (8,474) (7,526)

Amount taken for short term purpose 286 55

Repayment of amount taken for short term purpose (201) (55)

Borrowings repaid (7) -

Principal payment of lease liabilities (467) (407)

Interest paid on lease liabilities (84) (80)

Interest paid other than on lease liabilities (4) (2)

Employee stock options paid (2) -

Proceeds from share allotment under employee stock options/ performance share schemes - 0

Net cash flows used in financing activities - [C] (8,953) (8,015)

Net decrease in cash and cash equivalents - [A+B+C] (456) (695)

Add: Cash and cash equivalents at the beginning of the year 1,147 1,842

Add: Cash acquired under Business Combination (refer note 44) 10 -

Cash and cash equivalents at the end of the year 701 1,147

Components of cash and cash equivalents:

Cash and cash equivalents as per Consolidated Balance Sheet (refer note 12) 714 1,147

Less: Bank overdraft (refer note 23) (13) -

Cash and cash equivalents for Consolidated Statement of Cash Flows 701 1,147

Reconciliation between opening and closing Opening Closing

balance sheet for short term borrowings: balance Cash flows Non-cash movement balance 31st
1st April, March, 2023
2022

Short term borrowings - 85 (0) 85

Source: Annual Reports.

52
Table No: 4.4 Summarized Cash Flow Statement of HUL
IN CR

Increase (Decrease)
Description 2023 2022
Difference %

NET PROFIT/LOSS BEFORE

EXTRAORDINARY ITEMS AND 13,346.00 11,874.00 1472 12.39
TAX 9991.00 9048.00 943 10.42
Cash Flows from Operating Activities

Cash Flows from Investing Activities -1,494.00 -1,728.00 -234 13.54

-8,015.00
Cash Flows from Financing Activities -8,953.00 -938 11.70

Net Increase (Decrease) in Cash

-446.00 -695.00 -249 35.82
Equivalent

Exchange Rate Fluctuation Effect on

0 0 0 0
Cash and Cash Equivalent

Cash and Cash Equivalents at

1147.00 1842.00 -695 -37.730
Beginning of Year

Cash and Cash Equivalent at End of

701.00 1147.00 -446 -38.88
Year

Source: Annual Report HUL (2023)

53
Figure: 4.2 Cash Flow Statement

DATA INTERPRETATION

• In the year the 2020-21 the TOTAL CASH FLOW is 1147 crores in 2022-23

Turnover 701 which shows the

• Decrease in Total cash flow in the year of 2023. There is a negative result in the HUL.

54
Table No: 4.5 Consolidated Balance Sheet
as at 31st March, 2023 March 31 March 31
2023 2022
ASSETS

Non-current assets

Property, plant and equipment 3 6,949 6,169

Capital work-in-progress 3 1,132 1,313

Goodwill 4A 17,316 17,316

Goodwill on consolidation 4B 150 81

Other intangible assets 4A 28,263 27,907

Investments accounted for using the equity method 5 69 -

Financial assets

Investments 6 2 2

Loans 7 98 115

Other financial assets 8 725 729

Deferred tax assets 9C 10 11

Non-current tax assets (net) 9E 1,164 1,158

Other non-current assets 10 211 194

Total – Non-current assets (A) 56,089 54,995

Current assets

Inventories 11 4,251 4,096

Financial assets

Investments 6 2,811 3,519

Trade receivables 12 3,079 2,236

Cash and cash equivalents 13 714 1,147

Bank balances other than cash and cash equivalents mentioned above 14 3,964 2,699

Loans 7 36 35

Other financial assets 8 1,386 1,089

Other current assets 15 745 688

Assets held for sale 16 12 13

Total – Current assets (B) 16,998 15,522

TOTAL ASSETS (A+B) 73,087 70,517

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EQUITY AND LIABILITIES

Equity

Equity share capital 17 235 235

Other equity 18A 50,069 48,826

Non-controlling interests 19 218 26

Total – Equity (A) 50,522 49,087

Liabilities

Non-current liabilities

Financial liabilities

Lease Liabilities 20 807 741

Other financial liabilities 21 860 357

Provisions 22 1,363 1,580

Deferred tax liabilities 9C 6,421 6,141

Non-current tax liabilities (net) 9E 1,086 1,331

Total – Non-current liabilities (B) 10,537 10,150

Current liabilities

Financial liabilities

Borrowings 23 98 -

Lease Liabilities 20 314 302

Trade payables

Total outstanding dues of micro enterprises and small enterprises 24 100 60

Total outstanding dues of creditors other than micro enterprises and small 24 9,474 9,008
enterprises

Other financial liabilities 21 889 899

Other current liabilities 25 764 665

Provisions 22 389 346

Total – Current liabilities (C) 12,028 11,280

TOTAL EQUITY AND LIABILITIES (A+B+C) 73,087 70,517

Basis of preparation, measurement and significant accounting policies 2

Contingent liabilities and commitments 26

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Table No: 4.6 Summarized Balance Sheet of HUL

Balance Sheet 2022-23 2021-22 2020-21

Property, Plant and Equipment 7,209 6,714 6,409

Intangible Assets 45,216 45,221 45,241

Other Assets 19,400 17,802 16,466

Total Assets 71,825 9,737 68,116

Share Capital 235 235 235

Other Equity 49,986 48,525 47,199

Other Liabilities 21,604 20,977 20,682

Total Equity and Liabilities 71,825 69,737 68,116

57
Figure No: 4.3 Balance Sheet

DATA INTERPRETATION

• In the year the 2020-21 the TOTAL ASSETS is 68,116 crores in 2022-23 Turnover

71,825 which shows the

• increase in Total Assets after each year. There is a positive result in the HUL.

• Therefore Total Assets= Total Liabilities and Equity.

58
Table No: 4.7 Income statement
12 Mar-
No. of Mths Year Ending 12 Mar-22* % Change
23*

Net Sales Rs m 524,460 605,800 15.5%

Other income Rs m 2,580 5,120 98.4%

Total Revenues Rs m 527,040 610,920 15.9%

Gross profit Rs m 128,130 140,850 9.9%

Depreciation Rs m 10,910 11,380 4.3%

Interest Rs m 1,060 1,140 7.5%

Profit before tax Rs m 118,740 133,450 12.4%

Tax Rs m 29,870 32,010 7.2%

Profit after tax Rs m 88,870 101,440 14.1%

Gross profit margin % 24.4 23.3

Profit after tax % 25.2 24.0

Profit after tax % 16.9 16.7

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Figure No: 4.4 Income statement

DATA INTERPRETATION

▪ Operating income during the year rose 15.5% on a year-on-year (YoY) basis

▪ The company's operating profit increased by 9.9% YoY during the fiscal.

Operating profit margins witnessed a fall and stood at 23.3% in FY23 as

against 24.4% in FY22.

▪ Depreciation charges increased by 4.3% and finance costs increased by 7.5%

YoY, respectively.

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Table No: 4.8 Ratio Analysis for HUL

No. of Mths Year Ending 12 Mar-22* 12 Mar-23*

Current ratio x 1.4 1.4

Debtors’ Days Days 2 2

Interest coverage x 113.0 118.1

Debt to equity ratio x 0.0 0.0

Return on assets % 12.8 14.0

Return on equity % 18.1 20.2

Return on capital employed % 24.4 26.8

Figure No: 4.5 Ratio Analysis for HUL

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DATA INTERPRETATION

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.4x during FY23, from

1.4x during FY22. The current ratio measures the company's ability to pay short-term and

long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio improved and stood at

118.1x during FY23, from 113.0x during FY22. The interest coverage ratio of a company

states how easily a company can pay its interest expense on outstanding debt. A higher ratio

is preferable.

• Profitability Ratios

Return on Equity: The ROE for the company improved and stood at 20.2% during FY23,

from 18.1% during FY23. The ROE measures the ability of a firm to generate profits from its

shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at

26.8% during FY23, from 24.4% during FY22. The ROCE measures the ability of a firm to

generate profits from its total capital (shareholder capital plus debt capital) employed in the

company.

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1. LIQUIDITY RATIO

I. CURRENT RATIO

Current Ratio = Current Assets

Current Liabilities

Table No: 4.9: Current ratio

YEAR CURRENT CURRENT CURRENT

ASSETS LIABLITIES RATIO

2014-2015 10,242.27 9747.39 1.05

2015-2016 10,218 7714 1.32

2016-2017 11,660 8887 1.31

2018-2019 11,914 8667 1.37

2019-2020 12,321 9317 1.32

Average 1.274

Source: (Company Annual Report)

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Figure No: 4.6 Current Ratio Analysis for HUL

CURRENT RATIO
1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

DATA INTERPRETATION

The current ratio is an indication of a firm's market liquidity and ability to meet creditor's

demands. Acceptable current ratios vary from industry to industry and are generally between

1.5 and 3 for healthy businesses. If a company's current ratio is in this range, then it generally

indicates good short-term financial strength.

The table & graph represents the current ratio for a period of 2015-2020. This ratio is

minimum at

1.05 in the financial year 2015-2016 and maximum at 1.37 in the financial year 2018-2019. If

we compare actual current ratio number s with the standard of 2 times, hul is satisfying the

standard which means that the company have no problem in paying the bills on times. The

current ratio represents a margin of safety for creditors higher the ratio greater will be the

margin of safety and the firms to meet its current obligations.

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2. LEVERAGE RATIO

1.SOLVENCY RATIO

Solvency Ratio = Total Assets

Total Debt

Table No: 5.0: Solvency Ratio

YEAR TOTAL ASSETS TOTAL SOLVENCY

DEBT RATIO
2015- 15,164.85 11,168.09 1.35
2016
2016- 15,706 8940 1.75
2017
2017- 17,862 10,561 1.69
2018
2018- 18,629 10,744 1.73
2019
2019- 20,153 11,907 1.69
2020
(Source: Company Annual Reports)
Figure No: 4.7 Solvency Ratio Analysis of HUL

SOLVENCY RATIO
2

1.8

1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

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DATA INTERPRETATION

Solvency ratio measure the ability of a firm to pay the outside liabilities out of total assets. A

higher solvency ratio indicates that the solvency and financial position are strong and vice-

versa. If the ratio is more than one, the lenders can breathe a free air as their investment is

secured.

From the above table and graph it is understood that the company is solvent because the

assets of the firm is sufficiently more than its liabilities. Also, we can see that solvency ratio

of each year is greater than one, thus the financial position of the firm is very strong and

investments made in this firm is secured.

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2. Debt to Equity Ratio

Total Debt Equity Ratio = Total Debt

Equity

Table No: 5.1: Debt to Equity Ratio

YEAR TOTAL DEBT TOTAL EQUITY DEBT-

EQUITY
RATIO

2015- 11,168.09 6593 0.59

2016

2016- 8940 6766 0.75

2017

2017- 10,561 7301 0.69

2018

2018- 10,744 7885 0.73

2019

2019- 11,907 8246 0.69

2020

(Source; Company Annual Report)

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Figure No: 4.8 Debt to Equity Ratio Analysis of HUL

DEBT EQUITY RATIO

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

DATA INTERPRETATION

The debt equity ratio measure the relative proportion of debt and equity in financing the

assets of a firm. The ideal debt equity ratio is 1:1 that the funds provided by outsiders and

shareholders must be equal. Debt equity ratio indicates the degree of protection the creditors

have. A high ratio indicates higher proportion of debt content in the capital structure. A high

ratio shows that the claims of creditors are greater those of owners. A very high ratio is

unfavorable from the point of view of the firm. A low debt equity ratio is implies a greater

claim of owners than creditors.

From the above table and graph it can be inferred that the total debt equity ratio increases and

decreases every year. The optimal debt-to-equity ratio will tend to vary widely by industry

but here it doesn’t gone above a level of 1.0 and we can conclude that long term solvency

position of the firm is good.

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3. FIXED ASSET RATIO

FIXED ASSET RATIO = FIXED ASSET

CAPITAL EMPLOYED

Table No: 5.2: Fixed Asset Ratio

YEAR FIXED CAPITAL FIXED ASSET

ASSET EMPLOYED RATIO

2015-2016 4922.58 5417.46 0.91

2016-2017 5488 7992 0.69

2017-2018 6202 8995 0.69

2018-2019 6415 9962 0.64

2019-2020 7832 10,836 0.72

(Source: Company Annual Reports)

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Figure No: 4.9 Fixed Asset Ratio Analysis of HUL

FIXED ASSET RATIO

1

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

DATA INTERPRETATION

Fixed asset ratio is calculated to know whether the fundamental principle of sound financial

policy that all fixed assets must be financed out of capital employed is followed or not. The

ratio helps in ascertaining the proportion of long term funds invested in fixed assets. A higher

ratio indicates that the financial position is not sound where as a lower ratio indicates a better

financial position.

Ratio of less than 1 indicates long-term funds of the company are more than its net fixed

assets. From the graph we can conclude that it is desirable to some extent as it means that the

company has sufficient long-term funds to cover its fixed assets.

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5 : FINDINGS

• The revenues of HUL stood at Rs 610,920 m in FY23, which was up 15.9% compared
to Rs 527,040 m reported in FY22.

• HUL's revenue has grown from Rs 398,600 m in FY19 to Rs 610,920 m in FY23.

• Over the past 5 years, the revenue of HUL has grown at a CAGR of 11.3%.

• The net profit of HUL stood at Rs 101,440 m in FY23, which was up 14.1%
compared to Rs 88,870 m reported in FY22.

• This compares to a net profit of Rs 80,000 m in FY21 and a net profit of Rs 67,640 m
in FY20.

• Over the past 5 years, HUL net profit has grown at a CAGR of 13.7%.

• Cash flow from operations increased in FY23 and stood at Rs 99,910 m as

compared to Rs 90,480 m in FY22.

• Cash flow from investments increased in FY23 and stood at Rs -14,940 m as

compared to Rs -17,280 m in FY22.

• Cash flow from financial activity decreased in FY23 and stood at Rs -89,530 m as
compared to Rs -80,150 m in FY22.

• The company has maintained its financial position in recent years very well.

• The company’s Balance sheet also looks strong, in year 2022-23 it was high, from
2020- 21 it was continuous increase in total assets.

• The companies cash flow statement is showing negative result in HUL.

• Overall company’s financial position seems to be decent enough.

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CHAPTER- VI

CUNCLUSIONS & SUGGESTIONS

72
5: CONCLUSION

HUL is largest fast-moving consumer goods in India. And on any day, nine out of ten Indian

consumers use HUL products which give us unique and bright opportunity to have better

future.

Every day, HUL continuously improve the product quality to fulfil the objective and increase

the productivity for the growth of organization and make the best out of it. Has high brand

visibility HUL has consumer goods in more than twenty categories.

HUL has high brand awareness by endorsing celebrities for advertising of the products. Also,

it has high market share in all the product and high market penetration in all product

categories.

HUL has taken a significant step toward encouraging sustainability by inventing vending

machines and smart fill machines for home and personal care goods, which produce a

significant amount of plastic. Long-term goals are likewise prioritised, as are commitment

and fresh ideas.

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5: SUGGESTIONS

HUL need to take strategic steps to improve their performance, involving product and service

innovation, operational efficiency enhancement, exploring new markets, or adapting to

changing regulations and industry trends.

The mechanism of Enterprise Risk Management (ERM) is one of ways that can use to face

future challenges.

The company should maintain the long-term financial position.

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BIBILIOGRAPHY

• Annual Report of HUL

BOOKS:

▪ A. Vinod - Accounting for Management

▪ S.N Maheshwari and S.K Maheshwari – Financial Accounting

WEBSITES:

▪ www.hul.co.in

▪ www.slideshare.net

▪ www.business-standard.com

▪ www.moneycontrol.com

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