A TERM PROJECT REPORT ONFINACIAL STATEMENT ANLYSIS OF HINDUSTAN UNILEVER"

Guided By:Dr.Madhuchhanda Mohanty(Asst. Professor, IBCS)Submitted By K.AmarnathRegd no:-1461301037

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 Dr. Madhuchhanda MohantyPlace: Bhubaneswar Project Guide

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

FinancemanagementinIndiahassubstantiallyinscopeand complexity in view of recent government policy. The modern approach tocorporatefinanceismuchmorethantraditionalapproachtofinancial management or with more procurement of funds. In present situational financial management is real with procurement of funds and maximum utilization ofit. Finance is ABlood Of AnyBusiness Body. Less capital creates problems in the business and more capital is also creating problems.Inthisreport,IamtryingtoexplainhowwecanfindoutfinancialresultwiththehelpofratioanalysisandsomemoreinportentgraphswiththehelpofRatioAnalysis.Wecaneasilyunderstandtheprofitabilityofthebusiness,efficiencyofbusiness, useful in inter comparison. It is also useful for budgeting control anddecision-making.Ratioanalysishelpsinterestedpartieslikeshareholders, investors, creditors, government also and analysis to make an evaluation of a certain aspectof a firms performances.

v 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-1INTRODUCTION

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 theincome 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 thefinancial performanceof the company. To make comparisonsbetweenthe ratiosduring differenceOBJECTIVE 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 usefulinterpretation of financial statements

CHAPTER-IILITERTURE 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-IIICOMPANY 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 regularityToday, 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-IVDATA ANALYSIS &INTERPRETATION

RATIO ANALYSIS

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

YEARCURRENT ASSETCURRENT LIABILITYCURRENT RATIO

20148852.478603.841.03

20137569.996655.861.18

20127798.586445.771.21

BAR CHART OF CURRENT RATIO:-

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 LiabilityYEARLIQUID ASSETCURRENT LIABILITYLIQUID RATIO

20148852.478603.841.03

20137569.996655.861.18

20127798.586445.771.21

BAR CHART OF LIQUID RATIO:-

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 LiabilitiesYEARABSOLUTE LIQUID ASSETCURRENT LIABILITESABSOLUTE LIQUDITY RATIO

20121830.046445.77.28

20131707.896655.86.26

20142220.978603.84.28

BAR CHART OF ALR:-

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 CapitalYEARSTOCKWORKING CAPITALIWCR

20122516.651352.881.86

20132526.99914.132.76

20142516.65248.6310.14

BAR CHART OF INVENTORY TO WORKING CAPITAL RATIO:INTERPRETATION:-

ACID-TEST RATIO:-Acid Test Ratio= Quick Assets/ Current LiabilitiesYEARQUICK ASSETSCURRENT LIABILITIESACID TEST RATIO

20125281.936445.77.82

201350432526.991.99

20146101.948603.84.71

BAR CHART OF DEBT EQUITY RATIO:-

INTERPRETATION:-

FIXED ASEET RATIO:-Fixed Asset Ratio= Fixed Asset/ Capital EmployedYEARFIXED ASSETCAPITAL EMPLOYEDFIXED ASSET RATIO

20122362.923296.78.71

20132508.942673.45.93

20142734.143060.78.89

BAR CHART OF FIXED ASSET RATIO:-

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 AssetYEARSHAREHOLDER FUNDSTOTAL TANGIBLE ASSETWOPRITATRY RATIO

20123512.562117.531.66

20132674.022256.791.19

20143276.782397.941.37

BAR CHART OF WROPRITATRY RATIO:-

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 *100YEARGROSS PROFITNET SALESGP RATIO

20123469.0322116.3715.68

20134957.8825810.2119.21

20145028.3928019.1317.94

CHART OF GROSS PROFIT RATIO:-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/ InventoriesYEARSALEINVENTORIESITR

201428019.132747.5310.19

201325810.212526.9910.21

201222116.372519.658.69

BAR CHART OF INVENTORY TURNOVER RATIO:-

INTERPRETATION:-

NET PROFIT RATIO:- Net Profit Ratio= Net Profit after tax / Net sales* 100YEARNET PROFIT AFTER TAXSALESNPR

20122691.4022394.6812.01

20133796.6726417.1114.36

20143867.4928640.1613.40

BAR CHART OF NET PROFIT RATIO:- 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 ReceivableYEARNET CREDIT SALEAVG. A/C RECEIVABLEDTR

201222116.372663.178.30

201325810.212521.8210.23

201428019.132521.8211.11

BAR CHART OF DTR:

INTERPRETATION:-

RETURN ON ASSET:-Return on Asset= Annual Net Income/ Avg. Total AssetYEARANNUAL NET INCOMEAVG. TOTAL ASSETROA

201222116.3710958.272.01

201325810.2111512.472.24

201428019.1312998.402.15

BAR CHART OF ROA:-

INTERPRETATION:-