We analyzed HUL's finances!

1. CORPORATE
FINANCE PROJECT
Section – B PGDM
By Group 2- Section B
Shreyansh Singh – 19DM206
Tanveer Ahmed – 19DM225
Romani Banerjee - 19DM167
Ashish Dhand – 19DM245
Pulkita Vyas – 19DM147
Saurabh Kumar – 19DM187
Olivia Mukherjee – 19DM129

2. 1
ACKNOWLEDGEMENT
This project is a combined effort of not only 7 individuals but also,
Prof. Dr. L. Ramani Sir, whose continuous guidance and reviews kept our morals
high and that led to the fruition of the project.
We would like to take this opportunity to thank Prof. Dr. L. Ramani Sir forgiving
us a chance to study the relevant market, and FMCG industry as a whole with
Hindustan Uni Lever as our pivot and complete a proper research leading to this
document with our insights.
Thank You, Sir.

3. 2
EXECUTIVE SUMMARY
This project entails an in depth research study and an outcome report of the following points
studied in the FMCG industry. considering HUL as our point of research and reference.
We have covered the following-
1. We made an in depth analysis of the corporate governance structure of HUL, under
which we have identified-
1) If the governance structure in HUL is differentiating between two separate groups –
controlling group and ownership
2) The other potential conflicts of interest in HUL
3) The ways in which HUL interacts with financial markets and vice versa
4) The ways in which HUL views its social obligations and manage its image in society
5) Breakdown of stockholders in the firm in to- insiders, individuals and institutional
2. Risk and Return Profile of the Company. The model measures the risk from the
institutional perspective and translate in to expected rate of return. We calculated-
a. Cost of equity
b. Cost of debt
c. Current cost of capital?
3. Capital Structure
We identified-
a) What are the different kinds or types of financing that the company has used to raise
funds?
b) Where do they fall in the continuum between debt and equity over the last five years?
c) How large are the advantages to this company from using debt?
d) How large are the disadvantages to this company from using debt?
e) From the qualitative trade off, does this firm look like it has too much or too little
debt?

4. 3
4. Reward to Shareholders
We identified-
a) How has HUL returned cash to its owners over the last five years? Has it paid
dividends or bought back stock?
b) How much cash has the firm accumulated over time?
c) Justified the spikes (upward or down ward) in the stock prices of the company over
the last five years by plotting month-end stock prices on a graph
5. We considered the significant developments relating to any of the first four items
stated above since 1st June 2019 by referring to Mint Newspaper and identified the
same.

5. 4
INDEX
S.NO. PARTICULARS PAGE
1. ACKNOWLEDGEMENT 1
2. EXECUTIVE SUMMARY 2
3. INTRODUCTION 5
4. CORPORATE GOVERNANCE 6
5. RISK AND RETURN PROFILE 17
6. CAPITAL STRUCTURE 19
7. REWARD TO SHAREHOLDERS 20
8. RECENT DEVELOPMENTS 23
9. CONCLUSION 24

6. 5
INTRODUCTION
Hindustan Unilever Limited is the largest FMCG (Fast Moving Consumer Goods) firm in
India. It has its presence in India since the last 80 years. Headquartered in Mumbai, HUL
began its operations in India in the year 1933. Since then it has constantly evolved and
developed as a successful FMCG entity. The company successfully operates 40 brands across
12 categories of products. These 12 categories include:
 Skin Care
 Hair Care
 Colour Cosmetics
 Household Care
 Purifiers
 Fabric Wash
 Personal Wash
 Oral Care
 Deodorants
 Beverages
 Ice Cream and Frozen Desserts
 Foods
As per the Annual Report 2018-19, HUL employs over 18,000 employees across 28 HUL
owned factories and 9 offices stretching its presence Pan India. Around 1000 suppliers are
part of the robust supply chain of HUL serving inputs for HUL and its customers. The
company serves its customers through its network of 3500 distributors.
The company operates on the philosophy of competitive, consistent, profitable and
responsible growth. All its operations revolve around sustainability which reflects in the
production and marketing activities of the company. The Vision of the company is:

7. 6
CORPORATE GOVERNANCE
What is Corporate Governance?
Corporate Governance is the way through which frameworks, policies, procedures and
guidelines are framed through which dealings of the company are controlled. It comprises of
sets of systems and principles through which operations and management of the company is
defined and its interactions with its stakeholders are governed. The aim of this framework is
to promote transparency, ethics, honesty and integrity in the workings of corporates and
avoid conflict of interest between management and owners of the companies.
Why Corporate Governance is Important?
Risk Reduction and Compliance
Governance, risk mitigation and compliance have a direct relation. When a company is
regulated on the basis of sound principles, it can of course operate effectively and ensure
compliance with all relevant laws and guidelines. Being on board with the policies and
legislation means the organization is well positioned for any confusion and therefore has risk
mitigation mechanisms in place. A company which is more disciplined in its operations, the
better it is positioned to face any risks or disruptions arising from political, technological and
economic disruptive events.
Amplify Value for Shareholders
While there is no established relationship between a company's corporate governance and
market value, it does increase the satisfaction of shareholders in the working of company.
Corporate Governance in India plays a key role in protecting a company's valuations, because
the ultimate goal of good governance is to maximize all stakeholders ' interests. The goodwill
that the business has accumulated over the years can be washed off by a single illegal event,
so internal controls set at the right place is necessary.
Boosting Efficiency of Organization
Corporate Governance is an important determinant of productivity in industry. There are a lot
of questions posed today about how a business is controlled. Better governance ensures
greater organizational efficiency and better economic performance. Corporate governance
lays the groundwork for the company's behaviour, resource utilization, product / service
creativity and overall organizational strategies.
Corporate Governance Framework in India
The regulatory framework regarding Corporate Governance in India is in line with the
international best practices. The following clearly summarises the legal/regulatory framework
in the country:
 The Companies Act, 2013
 Security and Exchange Board of India (SEBI) guidelines
 Standard listing Agreements of Stock Exchanges

8. 7
 Accounting Standards issued by the Institute of Chartered Accountants of India
(ICAI)
 Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI)
Corporate Governance structure of HUL
It is necessary to get an overview of the shareholding pattern of HUL to determine
ownership. The shareholding pattern is as follows:
67% of the company is owned by foreign promoters. The following is the promoter’s
shareholding patterns:

9. 8
From here we can clearly see that Unilever PLC is the controlling group and HUL is a
subsidiary of Unilever PLC as per the ownership is concerned.
Boardof Directors

10. 9
The Board of Directors of the company has the responsibility of managing affairs of the
company. It involves giving directions, supervising control, measuring performance and
long-term interest of the company. The Board of Directors have given the task of operational
management of the company to the Management Committee headed by Chairman and
Managing Director of the company who look after the day to day conduct of the company.
The independent directors are a mix of professionals from both corporate world as well as
public sector. Overall the profile of its independent directors indicates that the directors are
not going to be easily influenced in their decisions by company which indicates robust
governance practice followed by HUL. The interest of directors are as follows:

11. 10
The company has a clear policy in place when it comes to conflict of interest resolution. HUL
in its Code of Business Principles document has iterated the importance of avoiding personal
and financial interest in the best interest of the company. Employees are reinforced in this
behavioural aspect and the various committees in place under the supervision of Board of
Directors ensure that which comprises of :
 Audit Committee
 Nomination and Remuneration Committee
 Stakeholders Relationship Committee
 Corporate Social Responsibility Committee
 Risk Management Committee
How does the firm interact with the financial markets? How do markets get
information on the firm?
The various sources via which the firm interacts with the financial markets are the following
disclosure documents such as:
 Annual information forms
 Annual and quarterly financial statements
 Management’s discussion and analysis (MD&A)
 Management information circulars
 Material change reports
 Prospectuses.
These disclosure documents contain information that can help you to assess a company’s
management, products, services, finances, prospects and risks.
The other sources of information include the following:
1. Annual reports:
 Whether the company is making or losing money and why
 Information about the company’s operations and financial statements
 Comments from the president or chief executive officer on how the company did over
the past year, as well as industry trends and events that may have affected stock
performance.

12. 11
2. News releases
 Information about what the company considers important enough news to release to the
public. Examples: new contracts, mergers and acquisitions, management changes and
earnings releases.
3. Company website
 Current news, annual reports, quarterly statements and past news releases
 Speeches and presentations by executives and analysts’ reports
 Industry reports
 Webcasts of conference calls with analysts
 Telephone conference calls available to the public
How does this firm view its social obligations and manage its image in society?
HUL as a company basically works on the idea of making HUL a “Sustainable living
commonplace”.
This is governed/achieved by considering 9 working principles and they are as follows:
Principle 1: Ethics, Transparency and Accountability
Principle 2: Products Lifecycle Sustainability
Principle 3: Employees’ Well-Being
Principle 4: Stakeholder Engagement
Principle 5: Human Rights
Principle 6: Environment
Principle 7: Policy Advocacy
Principle 8: Inclusive Growth
Principle 9: Customer Value
To achieve this purpose your Company embraced the Unilever Sustainable Living Plan
(USLP) which is its blueprint for sustainable business. The Plan has three goals of improving
health and well-being, reducing environmental impact and enhancing livelihoods. The USLP
is helping your Company to decouple its growth from the environmental impact while
increasing the positive social impact, driving profitable growth for your Company’s brands,
saving costs and fuelling innovation. USLP provides the bedrock on which the sustainability
initiatives of your Company are built around the three goals mentioned above. USLP also
contributes to activities listed in the ‘National Voluntary Guidelines on Social, Environmental
& Economic Responsibilities of Business (NVGs)’ notified by the Ministry of Corporate
Affairs, Government of India as well as activities listed in Schedule VII of Section 135 of the
Companies Act, 2013.

13. 12
PRINCIPLE 1: Business should conduct and govern themselves with Ethics, Transparency
and Accountability.
HUL has always believed in doing well by doing good. Company’s founders were
businessmen with social conscience addressing the social issues of their days. They laid a
strong corporate governance foundation for your Company. The Company has always lived
up to this legacy and is committed to achieve the highest standards of corporate behaviour
towards everyone the company works with, the communities it touches and the environment
on which it has an impact.
Principle 2: Business should provide Goods and Services that are safe and contribute to
sustainability throughout their lifecycle. Lifecycle assessment is one of the techniques used
by the company to understand the impact of the product on its environment.
This technique involves 3 stages:
1. New product design
2. Existing product assessment
3. Science and methodological assessment
Principle 3: Business should promote the well-being of all the employees.
HUL encourages employees to live healthy and work safely, both at work and outside it. The
aim is to create a working environment supportive of employees’ personal lives, while
meeting the Company’s business needs. Healthier employees are motivated and more
productive.
This is achieved with the help of various programs such as:
 OCCUPATIONAL HEALTH, SAFETY AND WELL-BEING
 LAMPLIGHTER – THE FLAGSHIP HEALTH AND WELL-BEING
PROGRAMME
 GROOMING A TEAM FIT FOR GROWTH
Principle 4: Businesses should respect the interests of, and be responsive to all stakeholders,
especially who are disadvantaged, vulnerable and marginalised.
Stakeholder engagement helps the Company in decision making, in delivering USLP
commitments, in strengthening relationships and succeeding in the business. The company
actively engages with governments, inter-governmental organisations, regulators, customers,
suppliers, investors, civil society organizations and the consumers to create an environment
that is supportive of solutions.
Principle 5: Business and promote and respect human rights.
The Company’s CoBP upholds the principles of human rights and fair treatment. The Code
describes the operational standards the Company follows and supports the approach to
governance and corporate responsibility. It provides that the Company conducts its operations

14. 13
with honesty, integrity and openness and with respect for human rights and interests of
employees.
Principle 6: Business should respect protect and make efforts to restore environment. By
2020 your Company’s goal is to halve the environmental footprint of the making and use of
its products while growing its business. It makes business sense to reduce the business risk by
securing sustainable sources of supply for raw materials, to cut costs through reducing
packaging materials and higher manufacturing efficiencies, and to appeal to more consumers
with sustainable brands.
Principle 7: Business, when engaged in influencing public and regulatory policy should do
so in a responsible manner.
Company has set out to make a transformational difference to those big issues that matter
most to its business. By combining its own actions with external advocacy on public policy
and jointly working with partners, Company is seeking to create a transformational change,
this change is fundamental change to whole systems, not simply incremental improvements.
The three focus areas where your Company has the scale, influence and resources to make a
big difference are:
 Eliminating deforestation.
 Making sustainable agriculture
 Working towards safe drinking water, sanitation and hygiene
Principle 8: Business should support inclusive growth and equitable development.
Inclusive business for the Company means creating economic well-being through
employment, skill improvement and access to markets for the community we operate in. An
inclusive approach makes sense for your Company’s business. It expands the markets for the
products and increases the resilience of the Company’s business model.
The initiatives taken are as follows:
 EDUCATING THE YOUTH THROUGH RIN CAREER ACADEMY
 EMPOWERING COMMUNITIES THROUGH PRABHAT
 IMPROVING LIVELIHOODS OF SMALLHOLDER FARMERS
 SUPPORTING SMALL-SCALE RETAILERS
 EMPOWERING WOMEN MICROENTREPRENEURS
Principle 9: Business should engage with and provide value to their customers and
consumers in a responsible manner.
Company’s business partners and suppliers are extremely important for the Company’s
operations. They ensure that the Company units can manufacture, market and continuously
improve the products it sells every day. The Company’s strong distribution network
comprises millions of outlets serviced by over 2,500 stockists and associates who helped

15. 14
deliver Company’s products. Company has undertaken some important initiatives to become
more customer centric and win in the marketplace. These initiatives include:
Call centres: Establishing dedicated call centres for distributors as well as retailers to reach
out to the Company.
Partner of choice: Company saw strong growth across all key modern trade retail partners,
driven by strong joint business plans. The e-commerce opportunity is evident and growing
exponentially in India.
Responsible marketing and communication: Company constantly tries to provide value to its
customers and engage with its consumers in a responsible way. One way it ensures
responsible communication to its consumers is by clearly defining marketing and
communication guidelines to all forms of advertising.
OMBUDSMAN: Company has appointed five retired Judges of different High Courts, one in
each branch, to act as Ombudsman to hear the Company’s consumers and customers in a bid
to resolve issues that come up with customers, consumers, service provider etc.,
LABELS AND PACK INFORMATION: All Company products comply with the applicable
regulations such as the Drugs and Cosmetics Act, Legal Metrology Act, Bureau of Indian
Standards Specifications, Trademark Act and Copyright Act, Food Safety and Standards Act,
Tea Act, Tea Board Regulations, for Labels and Pack Information.
Breakdown of stockholders in the firm in to- insiders, individuals and institutional?
NSE: HINDUNILVR
BSE: 500696
ISIN: INE030A01027
INDUSTRY: Personal Products
The latest shareholder pattern for Hindustan Unilever Ltd. Is as follows:

16. 15
The above pie chart and bar chart and bar graph depicts the shareholding changes, pledges,
historical increases and decreases of shareholding for HUL of Foreign institutional investor,
Domestic institutional investors, Institutional, Promotor and individuals in the latest quarter.
Institutional holding of HUL:
The historical trend has shown a decreasing percentage in the percentage of institutional
holdings including both FII and DII since Dec 2018.
During the period Dec 2018, the percentage of institutional holding in HUL was 19.4 which
has dropped to 19% in the year 2019, December. The below bar chart gives us a clear picture
of how the institutional holding has changed during the period between Dec 2018 and Dec
2019.
Fig. 3
Of the 19% of institutional stockholders,
2.58% is of Mutual funds
12.32% is of foreign portfolio investors
0.36% is of Financial institutions and banks
And 3.71% is of insurance companies.

17. 16
Name
Percentage
% Shares No of holders
Mutual Funds 2.58 55,826,861 325
Foreign Portfolio
Investors
12.32 * 266,726,476 1,149
Financial Institutions /
Banks
0.36 7,797,558 125
Insurance Companies 3.71 80,276,199 18
Tab.1
Public Non institutional holding:
Name
Percentage
% Shares
No of
holders
Individual share capital in excess of Rs. 2 Lacs 0.09 2,028,865 6
Individual share capital up to Rs. 2 Lacs 10.98 237,713,369 403,207
Others 2.74 59420448 13621
Tab.3
In the public institutional holdings, the maximum percentage of shares are contributed by
Individual share capital up to Rs. 2 Lacs and the minimum share percentage is held by
Individual share capital in excess of Rs. 2 Lacs

18. 17
RISK AND RETURN PROFILE OF
THE COMPANY
Return on investment in the company is calculated by geometric mean of returns of five years
of the company and annualised return of market for five years has been calculated by
geometric mean of the returns.
Risk in the investment in the company is calculated by ascertaining the standard deviation of
the returns of this stock
CAPITAL STRUCTURE OF THE COMPANY
Capital Structure
Equity 6,667
Debt 0
Preference Share
Total Capital
Weighted Average Cost of Capital
Cost of Equity 11.84
Cost of Debt 5.77
WACC 11.84
PART A: CALCULATION OF COST OF EQUITY
Cost of equity refers to returns expected by the shareholders on their investment. In order to calculate
the cost of equity, we have taken company’s last 5 years share prices and Industry index (NIFTY 50)
for the same time period.
E(R) = RFR + β [E(Rm) - RFR]
Where,
RFR is the Risk Free Rate. The risk-free rate of return is the theoretical rate of return of an investment
with zero risk. The realrisk-free rate can be calculated by subtracting the current inflation rate from
the yield of the Treasury bond matching the investment duration.
We have taken the risk-free rate from the given source which is

19. 18
The beta (β)of an investment security (i.e. a stock) is a measurementof its volatility of returns relative
to the entire market. It is used as a measure of risk. Beta value HUL is -0.368728168
E(Rm) = Market rate of return is
Beta -0.368728168
RFR
India 10 Year Bond Yield Historical Data 6.655%
Cost of Equity/Expected Return 6.65%
PART B: CALCULATION OF COST OF DEBT
The cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as
bonds and loans, among others. The cost of debt often refers to after-tax cost of debt, which is the
company's cost of debt before taking taxes into account. So, its formula is following-
TOTAL DEBT * INTERST RATE (1-TAX RATE)
PART C: CALCULATE COST OF CAPITAL
WACC is calculated by multiplying the cost of each capital source (debt and equity) by its relevant
weight, and then adding the products together to determine the value. So,its formula is-
Weight of Equity * cost of equity + Weight of debt * Cost of Debt
W1: W2 = Weight of Equity: Weight of Debt
The weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each
categoryof capital is proportionately weighted. Afirm’s WACCincreases asthe beta and rate of return
on equity increase because an increase in WACC denotes a decrease in valuation and an increase in
risk. Thus, as on this period, the weighted average cost of capital of HUL is 11.84% under Capital
Asset Pricing Model.
HUL’s cost ofequity = 7.47%+ 6.29%(x) 0.694 = 11.84%
Cost ofDebt, post-tax % 3.95 5.36 6.20 6.02 6.36 5.56 5.43 4.90 5.21 5.77
Average Equity 2,497 3,118 3,462 4,018 3,715 4,338 5,664 5,831 6,181 6,667
Weighted Average Cost of
Capital % (WACC)
12.12 12.92 10.10 10.07 11.62 10.91 11.98 12.85 14.19 11.84

20. 19
CAPITAL STRUCTURE
What are the different kinds or types of financing that the company has used to raise
funds?
The Company has not raised any moneys by way of initial public offer, further public offer
(including debt instruments) or term loans during the year.
Since the company does not has any kind of debt over the last 5 years, the company has used
its equity to raise funds. The funds have been majorly held under general reserve and retained
earnings*.
 General Reserve: The Company had transferred a portion of the net profit of the
Company before declaring dividend to general reserve pursuant to the earlier
provisions of Companies Act, 1956. Mandatory transfer to general reserve is not
required under the Companies Act, 2013. During the year the Company has
reclassified the amount standing to the credit of the General Reserves to the Retained
Earnings subsequent to approval by Hon’ble National Company Law Tribunal on
Scheme of arrangement.
 Retained Earnings: Retained earnings are the profits that the Company has earned till
date, less any transfers to general reserve, dividends or other distributions paid to
shareholders.
2014-15 2015-16 2016-17 2017-18 2018-19
DEBT TO
EQUITY
RATIO
1.3 1.4 1.3
SHARE
CAPITAL
216 216 216 216 216
OTHER
EQUITY
5928 6063 6274 6859 7443
DEBT 0 0 0 0 0
EQUITY 4338 5664 5831 6181 6667
Where do they fall in the continuum between debt and equity over the last five years?
HUL strives to become a zero-debt company. And since last six years, HUL has managed to
have zero debt, channelling all its major finances and investments through its profits and
other equity. The equity share capital remains consistent over the last five years at 216, but
the equity and other equity keeps on increasing from 2014 to 2018, showing a significant
increase in market capitalisation, sales increase and profit generation with a significant
margin over the previous years.
“The D/E ratio is an important metric used in corporate finance. It is a measure of the
degree to which a company is financing its operations through debt versus wholly-owned
funds.” Since the company is debt free, over the last five years, the debt to equity ratio
indicates that the company has raised all its capital investments and finances through its own
equity.

21. 20
REWARDS TO SHAREHOLDERS
How has this company returned cash to its owners over the last five years? Has it paid
dividends or bought back stock?
HUL generates about INR 5,000 crore cash annually and it pays large sums as dividends, but
still ends up in excess cash. The company’s net worth as of September, 2016 was INR 5,754
crore. Any additional benefits depend on the pay-out instrument. The company has not
disclosed its instrument of choice for the actual pay out, which could be a special dividend or
a buy-back or other means.
In the year 2016, HUL was seeking permission to divert funds from its general reserves to
pay bonus dividends to its owners as according to Company’s Act mandated a 10% accretion
from profits to general reserves. Since the new Companies Act has no such requirement,
HUL adopted this scheme to pay its owners.
Most such exercises are used to put cash to better use and improve asset utilization ratios.
Bonus debentures act on the liabilities side. Money moves from reserves that belong to equity
holders to debt belonging to debenture holders. The debentures could be sold, giving its
owners an immediate cash inflow.
The debentures would remain on the issuer’s books, with a tax-deductible interest pay out.
Return on equity would improve since the net worth shrinks after every pay out. Thus,
economic value added improves, since debt is cheaper than equity. Eight issuances of bonus
debentures have happened since 2001 up to 2015.
The following table depicts how HUL has paid dividends to its shareholders.
PAYMENT OF DIVIDENDS OVER LAST 5 YEARS- (2015-2019)
Year Dividend Type Dividend rate per
share
2018-19 63-I Interim 9.00
2017-18 62-F Final 12.00
62-I Interim 8.00
2016-17 61-F Final 10.00
61-I Interim 7.00
2015-16 60-F Final 9.50

22. 21
60-I Interim 6.50
2014-15 59-F Final 9.00
59-I Interim 6.00
How much cash has the firm accumulated over time?
The following chart depicts the Net Cash Flow statements of HUL in the last 5 years. To
understand the amount of cash accumulated by the firm we should look at the net increase/
decrease in cash and cash equivalents.
As stated below, the net change in CCE in FY 2015 is inflow of INR 101.36 Crore followed
by INR 85 Crore Outflow in FY 2016, Outflow of INR 63 Crore in FY 2017 and Inflows of
INR 1 Crore and INR 2 Crore in FY 18 and FY 19, respectively.
Therefore, we can conclude that there has been a net decrease of INR 44 Crore in CCE of
HUL in the last 5 years.
Justify the spikes (upward or down ward) in the stock prices of the company over the
last five years by plotting month-end stock prices on a graph
The graph depicts the spikes in the month end stock prices of HUL in the last 5 years.

23. 22
Justification-
FMCG sector suffered severely due to demonetisation and so did HUL till Quarter 1 of 2018
when HUL stocks picked up slightly from a 3-year long slump. This increase in stock prices
is due to increase in standalone sales of HUL to over INR 9000 Crore in 2018 increasing the
EPS from INR 5.90 to INR 7.04 from September 2017 to September 2018.
There is a sharp increase in the stock prices again in September 2019 due to increase of EPS
to INR 8.38.
0.00
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Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4
2015 2016 2017 2018 2019
Spikes in Stock Prices of HUL
Closing Stock
Adjusted Closing Stock

24. 23
RECENT DEVELOPMENTS
• HUL reports steady growth in Q3, though smaller FMCG players are struggling (2nd
Feb,2020)- Analysts seem to be pleased with the results of HUL despite the fact that
revenues at 9,808 crore lagged Street estimates marginally The home care business was the
star performer in all segments of HUL, recording nearly 10 per cent growth in revenues. In
the dreary landscape of sales, December quarter earnings by Hindustan Unilever Ltd (HUL)
seem like a ray of sunshine. For the third quarter, the fast-moving consumer goods (FMCG)
behemoth clocked an underlying volume rise of 5 per cent higher than the forecasts of many
analysts. This is stable as compared to this financial year's first half volume growth results.
The home care business was the star performer among HUL’s segments, registering almost
10% revenue growth. Food and refreshment saw a revenue growth of 8%. Overall, the pre-tax
and onetime earnings of HUL increased by nearly 16 percent to some 2,328 crores. Basedon
Bloomberg data, stock valuations at 51.6 times the estimated earnings for the financial year
2021 capture a good portion of optimism.
• India could become the biggest market for Unilever, says Mehta of HUL (16th oct,2019)-
According to the chairman of the local unit For Unilever, India is the largest market in terms
of volume and the second largest in terms of value. “For Unilever, India is the largest market
in volume terms and the second largest in value terms. We clearly see a day when we would
become the largest market for Unilever in the world," Mehta said. India is also a large general
trade market, which means that households still visit local stores to buy their daily needs.
HUL's revenue for the September quarter rose 6.7 per cent from a year earlier to just about
9,852 crores. In the period, sales volume increased just 5 per cent as demand cooled,
particularly in rural India. "The downturn has arisen more in rural areas than in urban areas
on the overall market base. Rural development used to be 1-1.5 times the urban growth of the
last four-five years. Now it has come down to half of the urban growth," he said. Given the
difficult market environment, HUL has provided solid results and sustainable margin growth,
Mehta said, adding that the short-term demand outlook in rural India remains challenging.
• HUL tells investors it continues to focus on technology and data as drivers of growth- At an
annual meeting of creditors, the firm said it has been harnessing data over the past few years
to better predict, monitor and satisfy consumer demand HUL said net sales have more than
doubled over the past decade to about € 37,660

25. 24
CONCLUSION
After analysing the company in great detail, we could identify a lot of factors
which explain why HUL remains one of the most profitable FMCG companies
even when the market has been in the ditch since past few financial years.
HUL runs on zero debt but that is not the key reason for its success story. The
key reason for HUL’s dominance in the FMCG sector is its impeccable
distribution network and extremely loyal channel partners.
We also understood the capital structure in great detail and the way it rewards is
stakeholders explains a lot about the company’s success.
The only plunge in its shares occurred during the period ofdemonetization which
shook the entire market to the core, hence, HUL stood no exception to that.
Compiling this report was a great learning experience for the group.