Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company with a heritage of over 80 years in India. On any given day, nine out of ten Indian households use their products. In this report we do financial analysis of Balance Sheets and Profit & Loss A/Cs of the company. We also analyze the impact of demonetization and GST on the company and also look at the FMCG sector as a whole.

1. A REPORT ON THE
FINANCIAL
ANALYSIS OF HINDUSTAN
UNILEVER LIMITED (HUL)
By
Navitha Pereira

2. CONTENTS
Particulars Page No.
1. Introduction 1
1.1. HUL History 1
1.2. Brands & Products 4
2. Company Analysis 6
2.1. Comparative Balance Sheets 6
2.2. Common Size Balance Sheets 10
2.3. Ratio Analysis 12
2.4. Trend Analysis 13
2.5. BCG Matrix 19
2.6. Effect of Demonetization and GST 20
2.6.1. Demonetization 20
2.6.2. GST 22
3. Industry Analysis 26
3.1. India's FMCG Industry at a glance 26
3.2. Industry Ratio 26
3.3. Revision of Tax Rates after GST 27
3.4. Porter’s 9-Forces Industry Analysis 28
3.5. Market Breakup 30
3.6. Growth Rates: Past and Future 32
3.7. CAGR 33
4. Conclusion 34
References 35
Annexure A – Balance Sheets 36
Annexure B – Key Indicators 37
Annexure C – Industry Ratios 38

3. LIST OF TABLES & FIGURES
Tab. 2.1: Comparative Balance Sheet of HUL as on 31st March 2013 & 2014 6
Tab. 2.2: Comparative Balance Sheet of HUL as on 31st March 2014 & 2015 7
Tab. 2.3: Comparative Balance Sheet of HUL as on 31st March 2015 & 2016 8
Tab. 2.4: Comparative Balance Sheet of HUL as on 31st March 2016 & 2017 9
Tab. 2.5: Common Size Balance Sheet of HUL as on 31st March 2013 - 2017 10
Tab. 2.6: Ratio Analysis of HUL as on 31st March 2013 - 2017 12
Tab. 2.7: BCG Matrix of HUL 19
Tab. 2.8: Segmental Performance after Demonetization 20
Tab. 2.9: Differential impact on segments 22
Tab. 2.10: Broad based volume led growth across segments 25
Tab. 3.1: Revision of Tax Rates after GST 27
Fig. 2.1: Total Revenue for the years ending 2013 – 2017 13
Fig. 2.2: Gross Sales for the years ending 2013 - 2017 13
Fig. 2.3: Profit before Interest & Tax (PBIT) for the years ending 2013 - 2017 14
Fig. 2.4: Profit for the years ending 2013 - 2017 14
Fig. 2.5: Income Statement values for the years ending 2013 - 2017 15
Fig. 2.6: Reserves & Surplus as on 31st March 2013 – 2017 16
Fig. 2.7: Fixed Assets as on 31st March 2013 – 2017 16
Fig. 2.8: Share Capital as on 31st
March 2013 - 2017 17
Fig. 2.9: Share Indicators as on 31st March 2013 – 2017 17
Fig. 2.10: Balance Sheet values as on 31st March 2013 - 2017 18
Fig. 2.11: Impact of Demonetization on HUL 21
Fig. 2.12: Accounting impact of GST from September Quarter 23
Fig. 2.13: Accounting impact on Growth in September Quarter 23
Fig. 2.14: Accounting impact of GST from October onwards 24
Fig. 2.15: Accounting impact of GST on Growth in December Quarter 24
Fig. 3.1: Urban/Rural Industry Breakup (2016) 30
Fig. 3.2: Market Breakup by Revenue FY-16 31
Fig. 3.3: Rural FMCG market (USD Billion) 31
Fig. 3.4: Trends in FMCG revenues over the years 33

4. 1
1. Introduction
Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company
with a heritage of over 80 years in India. On any given day, nine out of ten Indian households
use their products.
HUL works to create a better future every day and helps people feel good, look good and get
more out of life with brands and services that are good for them and good for others.
With 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, Fair & 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 18,000 employees and has a net sales of INR 33895 crores (financial
year 2016-17). 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 €52.7 billion in 2016. Unilever has over 67% shareholding in HUL.
Hindustan Unilever's corporate headquarters are located at Andheri (E), Mumbai. The
campus is spread over 12.5 acres of land and houses over 1,600 employees. Some of the
facilities available for the employees include a convenience store, a food court, an
occupational health centre, a gym, a sports & recreation centre and a day care centre. The
Campus is designed by Mumbai based architecture firm Kapadia Associates.
The campus received a certification from LEED (Leadership in Energy and Environmental
Design) Gold in 'New Construction' category, by Indian Green Building Council (IGBC),
Hyderabad, under license from the United States Green Building Council (USGBC).
1.1. HUL History
In the summer of 1888, Lever Brothers launched Sunlight soap bars. Soon after followed
Lifebuoy in 1895 and other famous brands like Pears, Lux and Vim. Vanaspati was launched
in 1918 and Dalda brand came to the market in 1937.

5. 2
In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing
Company, followed by Lever Brothers India Limited (1933) and United Traders Limited
(1935). These three companies merged to form HUL in November 1956; HUL offered 10%
of its equity to the Indian public, being the first among the foreign subsidiaries to do so.
Unilever now holds 67.25% equity in the company. The rest of the shareholding is distributed
among about three lakh individual shareholders and financial institutions.
By 1903, the company had launched Red Label tea in the country. In 1912, Brooke Bond &
Co. India Limited was formed. Brooke Bond joined the Unilever fold in 1984 through an
international acquisition. The erstwhile Lipton's links with India were forged in 1898.
Unilever acquired Lipton in 1972, and in 1977 Lipton Tea (India) Limited was incorporated.
Pond's (India) Limited had been present in India since 1947. It joined the Unilever fold
through an international acquisition of Chesebrough Pond's USA in 1986.
The erstwhile Tata Oil Mills Company (TOMCO) merged with HUL, effective from April 1,
1993. In 1996, HUL and yet another Tata company, Lakme Limited, formed a 50:50 joint
venture, Lakme Unilever Limited, to market Lakme's market-leading cosmetics and other
appropriate products of both the companies. Subsequently in 1998, Lakme Limited sold its
brands to HUL and divested its 50% stake in the joint venture to the company.
HUL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in 1994,
Kimberly-Clark Lever Ltd, which markets Huggies Diapers and Kotex Sanitary Pads. In
1992, the erstwhile Brooke Bond acquired Kothari General Foods, with significant interests
in Instant Coffee. In 1993, it acquired the Kissan business from the UB Group and the
Dollops Icecream business from Cadbury India.
As a measure of backward integration, Tea Estates and Doom Dooma, two plantation
companies of Unilever, were merged with Brooke Bond. Then in 1994, Brooke Bond India
and Lipton India merged to form Brooke Bond Lipton India Limited (BBLIL), enabling
greater focus and ensuring synergy in the traditional Beverages business. 1994 witnessed
BBLIL launching the Wall's range of Frozen Desserts. By the end of the year, the company
entered into a strategic alliance with the Kwality Icecream Group families and in 1995 the
Milkfood 100% Icecream marketing and distribution rights too were acquired.
Finally, BBLIL merged with HUL, with effect from January 1, 1996. The internal
restructuring culminated in the merger of Pond's (India) Limited (PIL) with HUL in 1998.

6. 3
The two companies had significant overlaps in Personal Products, Speciality Chemicals and
Exports businesses, besides a common distribution system since 1993 for Personal Products.
The two also had a common management pool and a technology base. The amalgamation was
done to ensure for the Group, benefits from scale economies both in domestic and export
markets and enable it to fund investments required for aggressively building new categories.
In January 2000, in a historic step, the government decided to award 74 per cent equity in
Modern Foods to HUL, thereby beginning the divestment of government equity in public
sector undertakings (PSU) to private sector partners. HUL's entry into Bread is a strategic
extension of the company's wheat business. In 2002, HUL acquired the government's
remaining stake in Modern Foods.
In 2003, HUL acquired the Cooked Shrimp and Pasteurised Crabmeat business of the
Amalgam Group of Companies, a leader in value added Marine Products exports.
HUL launched a slew of new business initiatives in the early part of 2000’s. Project Shakti
was started in 2001. It is a rural initiative that targets small villages populated by less than
5000 individuals. It is a unique win-win initiative that catalyses rural affluence even as it
benefits business. Currently, there are over 45,000 Shakti entrepreneurs covering over
100,000 villages across 15 states and reaching to over 3 million homes.
In 2002, HUL made its foray into Ayurvedic health & beauty centre category with the Ayush
product range and Ayush Therapy Centres. Hindustan Unilever Network, Direct to home
business was launched in 2003 and this was followed by the launch of ‘Pureit’ water purifier
in 2004.
In 2007, the Company name was formally changed to Hindustan Unilever Limited after
receiving the approval of share holders during the 74th AGM on 18 May 2007. Brooke Bond
and Surf Excel breached the the Rs 1,000 crore sales mark the same year followed by Wheel
which crossed the Rs.2,000 crore sales milestone in 2008.
On 17th October 2008 , HUL completed 75 years of corporate existence in India. In January
2010, the HUL head office shifted from the landmark Lever House, at Backbay Reclamation,
Mumbai to the new campus in Andheri (E), Mumbai.
On 15th November, 2010, the Unilever Sustainable Living Plan was officially launched in
India at New Delhi.

7. 4
In March, 2012 HUL’s state of the art Learning Centre was inaugurated at the Hindustan
Unilever campus at Andheri, Mumbai. In April, 2012, the Customer Insight & Innovation
Centre (CiiC) was inaugurated at the Hindustan Unilever campus at Andheri, Mumbai
HUL completed 80 years of corporate existence in India on October 17th, 2013.
1.2. Brands and products
HUL is the market leader in Indian consumer products with presence in over 20 consumer
categories such as soaps, tea, detergents and shampoos amongst others with over 700 million
Indian consumers using its products. Sixteen of HUL's brands featured in the ACNielsen
Brand Equity list of 100 Most Trusted Brands Annual Survey (2014), carried out by Brand
Equity, a supplement of The Economic Times.
Food
 Annapurna salt and spices
 Bru coffee
 Brooke Bond (3 Roses, Taj Mahal, Taaza, Red Label) tea
 Kissan squashes, ketchups, juices and jams
 Lipton tea
 Knorr soups & meal makers and soupy noodles
 Kwality Wall's frozen dessert
 Magnum (ice cream)
Homecare Brands
 Active Wheel detergent
 Cif Cream Cleaner
 Comfort fabric softeners
 Domex disinfectant/toilet cleaner
 Rin detergents and bleach
 Sunlight detergent and colour care
 Surf Excel detergent and gentle wash
 Vim dishwash
 Magic – Water Saver

8. 5
Personal Care Brands
 Aviance Beauty Solutions
 Axe deodorant and aftershaving lotion and soap
 LEVER Ayush Therapy ayurvedic health care and personal care products
 Breeze beauty soap
 Brylcreem hair cream and hair gel
 Clear anti-dandruff hair products
 Clinic Plus shampoo and oil
 Close Up toothpaste
 Dove skin cleansing & hair care range: bar, lotions, creams and anti-perspirant
deodorants
 Denim shaving products
 Fair & Lovely skin-lightening products
 Hamam
 Indulekha ayurvedic hair oil
 Lakmé beauty products and salons
 Lifebuoy soaps and handwash range
 Liril 2000 soap
 Lux soap, body wash and deodorant
 Pears soap, body wash
 Pepsodent toothpaste
 Pond's talcs and creams
 Rexona
 Sunsilk shampoo
 Sure anti-perspirant
 Vaseline petroleum jelly, skin care lotions
 TRESemmé
 TIGI
Water Purifier Brand
 Pureit Water Purifier

9. 6
2. Company Analysis
2.1. Comparative Balance Sheets
Tab. 2.1: Comparative Balance Sheet of HUL as on 31st
March 2013 & 2014
(Crs. INR)
As at 31st
March, 2013
As at 31st
March, 2014
Absolute
Value
Percentage
Change
EQUITY AND LIABILITIES
Shareholders’ funds
Share capital 216.25 216.27 0.02 0.00925
Reserves and surplus 2,457.77 3,060.78 603.01 24.5348
Non-current liabilities
Other long-term liabilities 476.25 278.82 (197.43) (41.455)
Long-term provisions 706.34 838.69 132.35 18.7374
Current liabilities
Trade payables 5,167.69 5,793.89 626.2 12.1176
Other current liabilities 616.15 852.94 236.79 38.4306
Short-term provisions 1,872.02 1,957.01 84.99 4.54002
TOTAL 11,512.47 12,998.40 1,485.93 12.9071
ASSETS
Non-current assets
Fixed Assets
Tangible assets 2,256.79 2,397.94 141.15 6.25446
Intangible assets 36.11 24.12 (11.99) (33.204)
Capital work-in-progress 205.32 312.08 106.76 51.9969
Intangible assets under
development
10.32 7.70 (2.62) (25.388)
Non-current investments 548.03 636.17 88.14 16.0831
Deferred tax assets (net) 204.78 161.73 (43.05) (21.023)
Long-term loans and advances 384.29 605.51 221.22 57.5659
Other non-current assets 296.84 0.68 (296.16) (99.771)
Current assets
Current investments 1,782.63 2,457.95 675.32 37.8834
Inventories 2,526.99 2,747.53 220.54 8.72738
Trade receivables 833.48 816.43 (17.05) (2.0456)
Cash and bank balances 1,707.89 2,220.97 513.08 30.0417
Short-term loans and advances 648.26 537.68 (110.58) (17.058)
Other current assets 70.74 71.91 1.17 1.65394
TOTAL 11,512.47 12,998.40 1485.93 12.9071

10. 7
Tab. 2.2: Comparative Balance Sheet of HUL as on 31st
March 2014 & 2015
(Crs. INR)
As at 31st
March, 2014
As at 31st
March, 2015
Absolute
Value
Percentage
Change
EQUITY AND
LIABILITIES
Shareholders’ funds
Share capital 216.27 216.35 0.08 0.03699
Reserves and surplus 3,060.78 3,508.43 447.65 14.6254
Non-current liabilities
Other long-term liabilities 278.82 170.11 (108.71) (38.989)
Long-term provisions 838.69 956.35 117.66 14.029
Current liabilities
Trade payables 5,793.89 5,288.90 (504.99) (8.7159)
Other current liabilities 852.94 908.05 55.11 6.46118
Short-term provisions 1,957.01 2,585.87 628.86 32.1337
TOTAL 12,998.40 13,634.06 635.66 4.89029
ASSETS
Non-current assets
Fixed Assets
Tangible assets 2,397.94 2,435.50 37.56 1.56634
Intangible assets 24.12 22.03 (2.09) (8.665)
Capital work-in-progress 312.08 479.01 166.93 53.4895
Intangible assets under
development
7.70 -
Non-current investments 636.17 654.11 17.94 2.82
Deferred tax assets (net) 161.73 195.96 34.23 21.1649
Long-term loans and
advances
605.51 583.46 (22.05) (3.6416)
Other non-current assets 0.68 0.44 (0.24) (35.294)
Current assets
Current investments 2,457.95 2,623.82 165.87 6.74831
Inventories 2,747.53 2,602.68 (144.85) (5.272)
Trade receivables 816.43 782.94 (33.49) (4.102)
Cash and bank balances 2,220.97 2,537.56 316.59 14.2546
Short-term loans and
advances
537.68 657.27 119.59 22.2419
Other current assets 71.91 59.28 (12.63) (17.564)
TOTAL 12,998.40 13,634.06 635.66 4.89029

11. 8
Tab. 2.3: Comparative Balance Sheet of HUL as on 31st
March 2015 & 2016
(Crs. INR)
As at 31st
March, 2015
As at 31st
March, 2016
Absolute
Value
Percentage
Change
EQUITY AND
LIABILITIES
Shareholders’ funds
Share capital 216.35 216 (0.35) (0.1618)
Reserves and surplus 3,508.43 6,063 2,554.57 72.8123
Non-current liabilities
Other long-term liabilities 170.11 395 224.89 132.203
Long-term provisions 956.35 594 (362.35) (37.889)
Current liabilities
Trade payables 5,288.90 5,498 209.1 3.95356
Other current liabilities 908.05 864 (44.05) (4.8511)
Short-term provisions 2,585.87 290 (2295.87) (88.785)
TOTAL 13,634.06 13,920 285.94 2.09725
ASSETS
Non-current assets
Fixed Assets
Tangible assets 2,435.50 2,902 466.50 19.1542
Intangible assets 22.03 12 (10.03) (45.529)
Capital work-in-progress 479.01 386 (93.01) (19.417)
Intangible assets under
development
- -
Non-current investments 654.11 319 (335.11) (51.231)
Deferred tax assets (net) 195.96 168 (27.96) (14.268)
Long-term loans and
advances
583.46 540 (43.46) (7.4487)
Other non-current assets 0.44 41 40.56 9218.18
Current assets
Current investments 2,623.82 2,461 (162.82) (6.2055)
Inventories 2,602.68 2,528 (74.68) (2.8694)
Trade receivables 782.94 1,064 281.06 35.898
Cash and bank balances 2,537.56 2,759 221.44 8.72649
Short-term loans and
advances
657.27 275 (382.27) (58.16)
Other current assets 59.28 465 405.72 684.413
TOTAL 13,634.06 13,920 285.94 2.09725

12. 9
Tab. 2.4: Comparative Balance Sheet of HUL as on 31st
March 2016 & 2017
(Crs. INR)
As at 31st
March, 2016
As at 31st
March, 2017
Absolute
Value
Percentage
Change
EQUITY AND
LIABILITIES
Shareholders’ funds
Share capital 216 216 0 0
Reserves and surplus 6,063 6,274 211.00 3.48013
Non-current liabilities
Other long-term liabilities 395 574 179.00 45.3165
Long-term provisions 594 485 (109) (18.35)
Current liabilities
Trade payables 5,498 6,006 508 9.23972
Other current liabilities 864 809 (55.00) (6.3657)
Short-term provisions 290 387 97 33.4483
TOTAL 13,920 14,751 831.00 5.96983
ASSETS
Non-current assets
Fixed Assets
Tangible assets 2,902 3,654 752.00 25.9132
Intangible assets 12 370 358 2983.33
Capital work-in-progress 386 203 (183.00) (47.409)
Intangible assets under
development
- -
Non-current investments 319 260 (59.00) (18.495)
Deferred tax assets (net) 168 160 (8) (4.7619)
Long-term loans and
advances
540 623 83.00 15.3704
Other non-current assets 41 70 29 70.7317
Current assets
Current investments 2,461 3,519 1058 42.9907
Inventories 2,528 2,362 (166.00) (6.5665)
Trade receivables 1,064 928 (136) (12.782)
Cash and bank balances 2,759 1,671 (1,088.00) (39.435)
Short-term loans and
advances
275 378 103 37.4545
Other current assets 465 553 88.00 18.9247
TOTAL 13,920 14,751 831 5.96983

13. 1
2.2. Common Size Balance Sheets
Tab. 2.5: Common Size Balance Sheet of HUL as on 31st
March 2013 - 2017
(Crs. INR) 2013
Propor
tion
2014
Propor
tion
2015
Propor
tion
2016
Propor
tion
2017
Propor
tion
EQUITY
AND
LIABILITIES
Shareholders’
funds
Share capital 216.25 1.88 % 216.27 1.66% 216.35 1.59% 216 1.55% 216 1.46%
Reserves and
surplus
2,457.7
7
21.35
%
3,060.7
8
23.55
%
3,508.4
3
25.73
%
6,063 43.56
%
6,274 42.53
%
Non-current
liabilities
Other long-
term liabilities
476.25 4.14 % 278.82 2.15% 170.11 1.25% 395 2.84% 574 3.89%
Long-term
provisions
706.34 6.14 % 838.69 6.45% 956.35 7.01% 594 4.27% 485 3.29%
Current
liabilities
Trade payables
5,167.6
9
44.89
%
5,793.8
9
44.57
%
5,288.9
0
38.79
%
5,498 39.50
%
6,006 40.72
%
Other current
liabilities
616.15 5.35 % 852.94 6.56% 908.05 6.66% 864 6.21% 809 5.48%
Short-term
provisions
1,872.0
2
16.26
%
1,957.0
1
15.06
%
2,585.8
7
18.97
%
290 2.08% 387 2.62%
TOTAL
11,512.
47
100 %
12,998.
40
100%
13,634.
06
100% 13,920 100% 14,751 100%
ASSETS
Non-current
assets
Fixed Assets
Tangible assets
2,256.7
9
19.60
%
2,397.9
4
18.45
%
2,435.5
0
17.86
%
2,902 20.85
%
3,654 24.77
%
Intangible
assets
36.11 0.31 % 24.12 0.19% 22.03 0.16% 12 0.09% 370 2.51%
Capital work-
in-progress
205.32 1.78 % 312.08 2.40% 479.01 3.51% 386 2.77% 203 1.38%
Intangible
assets under
10.32 0.09 % 7.70 0.06% - - -

14. 2
development
Non-current
investments
548.03 4.76 % 636.17 4.89% 654.11 4.80% 319 2.29% 260 1.76%
Deferred tax
assets (net)
204.78 1.78 % 161.73 1.24% 195.96 1.44% 168 1.21% 160 1.08%
Long-term
loans and
advances
384.29 3.34 % 605.51 4.66% 583.46 4.28% 540 3.88% 623 4.22%
Other non-
current assets
296.84 2.58 % 0.68 0.01% 0.44 0.00% 41 0.29% 70 0.47%
Current assets
Current
investments
1,782.6
3
15.48
%
2,457.9
5
18.91
%
2,623.8
2
19.24
%
2,461
17.68
%
3,519
23.86
%
Inventories
2,526.9
9
21.95
%
2,747.5
3
21.14
%
2,602.6
8
19.09
%
2,528 18.16
%
2,362 16.01
%
Trade
receivables
833.48 7.24 % 816.43 6.28% 782.94 5.74% 1,064 7.64% 928 6.29%
Cash and bank
balances
1,707.8
9
14.84
%
2,220.9
7
17.09
%
2,537.5
6
18.61
%
2,759
19.82
%
1,671
11.33
%
Short-term
loans and
advances
648.26 5.63 % 537.68 4.14% 657.27 4.82% 275 1.98% 378 2.56%
Other current
assets
70.74 0.61 % 71.91 0.55% 59.28 0.43% 465 3.34% 553 3.75%
TOTAL
11,512.
47
100 %
12,998.
40
100%
13,634.
06
100% 13,920 100% 14,751 100%

15. 1
2.3. Ratio Analysis
Tab. 2.6: Ratio Analysis of HUL as on 31st
March 2013 - 2017
As at 31st
March, 2013
As at 31st
March, 2014
As at 31st
March, 2015
As at 31st
March, 2016
As at 31st
March, 2017
Current Assets 7,569.99 8,852.47 9,263.55 9,552 9,411
Current Liabilities 7,655.86 8,603.84 8,782.82 6,652 7,202
Current Ratio 0.99 1.03 1.05 1.44 1.31
Quick Assets 5,043.00 6,104.94 6,660.87 7,024 7,049
Current Liabilities 7,655.86 8,603.84 8,782.82 6,652 7,202
Quick Ratio 0.66 0.71 0.76 1.06 0.98
Total Debt 1182.59 1117.51 1126.46 989 1059
Capital Employed 3,856.61 4,394.56 4,851.24 7,268.00 7,549.00
Total Debt Ratio 0.31 0.25 0.23 0.14 0.14
Total Debt 1182.59 1117.51 1126.46 989 1059
Total Equity 2,674.02 3,277.05 3,724.78 6,279.00 6,490.00
Debt Equity Ratio 0.44 0.34 0.30 0.16 0.16
Capital Employed 3,856.61 4,394.56 4,851.24 7,268.00 7,549.00
Net Worth 2,674.02 3,277.05 3,724.78 6,279.00 6,490.00
Capital Equity Ratio 1.44 1.34 1.30 1.16 1.16
Cost of Goods Sold 26,680 28,947 32,086 32,929 33,895
Average Inventory 2187.16 2637.26 2675.11 2565.34 2445
Stock Turnover 12.20 10.98 11.99 12.84 13.86
Sales 26,680 28,947 32,086 32,929 33,895
Capital Employed 3,856.61 4,394.56 4,851.24 7,268.00 7,549.00
Assets Turnover 6.92 6.59 6.61 4.53 4.49
Profit after Tax 3,314 3,555 3,843 4,137 4,490
Net Worth 2,674.02 3,277.05 3,724.78 6,279.00 6,490.00
Return on Equity 1.24 1.08 1.03 0.66 0.69

16. 2
2.4. Trend Analysis
Fig. 2.1: Total Revenue for the years ending 2013 – 2017
Fig. 2.2: Gross Sales for the years ending 2013 – 2017

17. 3
Fig. 2.3: Profit before Interest & Tax (PBIT) for the years ending 2013 - 2017
Fig. 2.4: Profit for the years ending 2013 - 2017

18. 4
Fig. 2.5: Income Statement values for the years ending 2013 - 2017

19. 5
Fig. 2.6: Reserves & Surplus as on 31st
March 2013 - 2017
Fig. 2.7: Fixed Assets as on 31st
March 2013 – 2017

20. 6
Fig. 2.8: Share Capital as on 31st
March 2013 – 2017
Fig. 2.9: Share Indicators as on 31st
March 2013 – 2017

21. 7
Fig. 2.10: Balance Sheet values as on 31st
March 2013 - 2017

22. 8
2.5. BCG Matrix
Tab. 2.7: BCG Matrix of HUL
Relative Market Share
High Low
MarketGrowth
High
STARS
1. AXE Deodorant
2. Fair & Lovely
3. Lakme Anti Ageing
4. Vim
5. Wheel
6. Surf Excel
7. Lifebuoy
8. Lux
9. Kwality Walls
10. Kissan Jam
11. Knor Soup
QUESTION MARKS
1. Close Up
2. Pepsodent
3. Annapurna
4. Fair & Lovely Menz Active
5. Domex
6. Rin
7. Breeze
8. Taj Mahal Tea Bags
9. Kissan Ketchup
10. Knor Meal Maker
Low
CASH COWS
1. Clinic Plus
2. Sunsilk
3. Vaseline
4. Red Label
DOGS
1. Taaza
2. Brooke Bond Sehatmand
3. Bru

23. 9
2.6. Effect of Demonetization and GST
2.6.1. Demonetization
Due to Uncertain market conditions, the in-quarter market growth of HUL gets adversely
impacted by demonetization and the input costs continue to inflate. Still HUL has a resilient
performance in a challenging business environment.
Domestic Consumer business goes flat. The underlying volume growth becomes -4%. The
performance across categories gets impacted by adverse market conditions. EBITDA is down
by 5%. COGS get higher due to rising input costs. There are continued investments behind
brands and market development. PAT is down by 10% and Net Profit goes up by 7%.
Segmental Performance:
Tab. 2.8: Segmental Performance after Demonetization
Segments Sales Growth (%)
Home Care 1%
Personal Care (3%)
Refreshments 8%
Foods 1%
Impact of Demonetization on HUL’s market:
 Purchase basket size reduces
 Frequency of shop visits increases
 Premiumisation trend sustains
 Recovery correlated to bank density:
 South & West least impacted
 North & Central most impacted
 Urban recovers faster
HUL’s response to market challenges:
 Categories - Continue to land breakthrough innovations
 Distribution - Expand sustainable direct coverage and assortment

24. 10
 Finance - Support trade with extended credit
 Supply Chain - Agile response to volatile demand
Fig. 2.11: Impact of Demonetization on HUL

25. 11
2.6.2. GST
In the run up to GST, there has been a cautious sentiment in trade despite high promotional
intensity. The input costs remain stable. Rural markets remained challenging. HUL delivered
a resilient & profitable growth in a volatile environment.
Domestic Consumer growth becomes 6%, underlying volume growth becomes flat. There is
price growth from actions in previous quarters. Trade spends and stocks are optimized to
manage GST transition. EBITDA goes up by 14%, margin goes up, COGS goes down.
Overall strong savings delivery continues. PAT goes up by 15%, Net Profit goes up by 9%.
Tab. 2.9: Differential impact on segments
Segments Sales Growth (%)
Home Care 6%
Personal Care 3%
Refreshments 11%
Foods 4%
HUL’s transition to GST has been swift and smooth:
 Invoicing to trade
 No disruption in trade servicing
 First GST invoice at 00:08 hrs on 1st July
 Internal systems - HUL systems working normally from Day 1
 Vendors
 In-bound supplies normal
 Payments from the 1st working day

26. 12
Fig. 2.12: Accounting impact of GST from September Quarter
Fig. 2.13: Accounting impact on Growth in September Quarter

27. 13
Fig. 2.14: Accounting impact of GST from October onwards
Fig. 2.15: Accounting impact of GST on Growth in December Quarter

28. 14
GST 15th
NOVEMBER CHANGES:
Immediate steps taken:
Objective: Ensure end consumer gets entire benefit from GST rate reduction with least
disruption in trade
 Trade actions and communication - Modern Trade advised to pass on benefits to
consumers with immediate effect, Implemented quickly
 New Networks – Significant part of the networks already landed in the market.
 Extensive Visibility – In papers and in more than 10 languages.
Transition Impact:
 As mentioned, implementation of this change was initiated immediately
 Due to paucity of time, entire benefit of the 15th
November GST rate reductions on
some of the pipeline stocks could not be passed on to the end consumers.
 Therefore, an estimated value of Rs .119 cr. was proactively disclosed to the CBEC
on this count and HUL offered to pay this amount suo moto to the Government
 This amount is not recognized as revenue and is accounted as a liability as on 31st
December’17.
Tab. 2.10: Broad based volume led growth across segments
Segments Reported Sales Growth (%) Comparable Sales Growth (%)
Home Care 3% 20%
Personal Care 0% 17%
Refreshments 7% 13%
Foods 8% 18%

29. 15
3. Industry Analysis
3.1. India’s FMCG Industry at a glance
 India’s FMCG Market size in 2017 is 51.4 billion $
 Rural FMCG Market size in 2017 is 29.7 billion $
 FMCG market in India is expected to grow at a CAGR of 20.6 per cent and is
expected to reach 103.7 billion $ by 2020.
 FMCG Sector’s Contribution to India’s GDP in 2017 is 3.1
3.2. Industry Ratios
 Current Ratio
 The Current Ratio for HUL is 1.31 : 1
 The Industry average is 1.90 : 1
 Although HUL’s current ratio is below the industry average, it's still deemed
acceptable. It means other businesses within the same industry, on average,
have a greater ability to use their current assets to pay short term debt.
 Quick Ratio
 The Quick Ratio for HUL is 0.98 : 1
 The Industry average is 1.19 : 1
 Therefore Hul’s quick ratio is below the Industry Average
 It means that HUL has a relatively lower liquidity position than other
businesses within the same industry.
 Other businesses within the same industry, on average, have a greater ability
to use their current assets (excluding inventory) to pay or meet their short-term
debt.
 Debt Equity Ratio
 The Debt Equity Ratio for HUL is 0.16 : 1

30. 16
 The Industry average is 0.46 : 1
 Therefore Hul’s debt equity ratio is below the Industry Average
 This indicates that HUL does not heavily rely on its creditors to finance its
operations whereas other businesses in the same industry do.
 Stock Turnover
 The Stock Turnover for HUL is 13.86 times
 The Industry average is 8.49 times
 Therefore Hul’s stock turnover is above the Industry Average
 HUL’s high stock turnover ratio implies either strong sales and/or large
discounts.
3.3. Revision of Tax Rates after GST
Tab. 3.1: Revision of Tax Rates after GST
Product Pre GST Post GST
Soaps 27% 18%
Hair Oil 27% 18%
Sugar Confectionery 21% 18%
Toothpaste 27% 18%
Toothpowder 17% 12%
Wheat 2.5% 0%
Rice 2.75% 0%
Unbranded Flour 3.5% 0%
Mineral Water 27% 18%
Vegetable Oils 6% 5%
Milk Powder 6% 5%
Sugar 6% 5%
Tea 6% 5%
*CST, Octroi, entry tax has not been considered in the pre-GST rate

31. 17
3.4. Porter’s 9-Forces Industry Analysis
1. Threat to/of New Entrant
 The Indian FMCG Industry is characterized with modest entry and exit barriers.
 Huge investments in setting up distribution networks, brand promotion and
competition from established companies restrict new entry.
2. Threat of Substitutes
 Multiple brands positioned with narrow product differentiation. Companies entering a
category try to gain market share and compete on pricing which increases products
substitution.
 Threat of substitute is high in the industry.
3. Buyer’s Bargaining Power
 High brand loyalty for some products, thereby discouraging customers’ product shift.
 Low switching cost and aggressive marketing strategies under intense competition
induce customers to switch between products, thereby driving value for money deals
for consumers.
4. Supplier’s Bargaining Power
 Prices are generally governed by international commodity markets, making most
FMCG companies price takers.
 Due to the long term relationships with suppliers etc., FMCG companies negotiate
better rates during times of high input cost inflation.
5. Industry Competition
 Competitiveness among the Indian FMCG players is high.
 The industry is highly fragmented thus advertising spends continue to grow and
marketing budgets as well as strategies are becoming more aggressive. Private brands
offered by retailers at a discount to mainframe brands act as competition to
undifferentiated and weak brands.

32. 18
6. Political Shift
 Infrastructure Issues: FMCG sector is very much dependent on government
spending on Agricultural, Power, and Transportation Infrastructure.
 Regulatory Factors: Separate permits and licenses for various states, prevailing
labour laws and complex & lengthy export procedures are major factors.
 Policy Framework: FDI into Retail sector, License rules in setting up of Industry,
Changes in Statutory Minimum Price of commodities are barriers for growth of this
sector.
7. Economical Shift
 GDP Growth: Growth of FMCG industry is consistent with the Indian economy. It
has grown over past 5 years which shows good scope for this sector in near future.
 Inflation: Inflation in India has not affected the Indian FMCG sector much.
 Consumer Income: Over the past years, there is an increased economic growth
resulting in increased consumer expenditure.
8. Socio-Cultural Shift
 Change in Consumer Profile: Rapid urbanization, increased literacy, increase in
nuclear families and rising per capita income, have caused rapid growth and change in
demand patterns.
 Change in Lifestyle: There is a change in consumption pattern of Indian consumer
with more spending on luxurious products (52%) than necessities.
 Rural Focus: Market is getting saturated, companies are focusing on rural areas by
providing consumers with small sized or single-use packs such as sachets.
9. Technological Shift
 Technological Advancement: Effective use of technology is seen only in leading
companies like HUL, ITC etc.
 E-Commerce: It’ll boost FMCG sales in future due to cheaper and effective outreach.
 Digitalization: 150 million consumers would be influenced by digital by 2020 and
this will increase the market by more than $45 billion in FMCG categories.

33. 19
3.5. Market Breakup
The FMCG sector has grown from US$ 31.6 billion in 2011 to US$ 49 billion in 2016. The
sector is further expected to grow at a Compound Annual Growth Rate (CAGR) of 20.6 per
cent to reach US$ 103.7 billion by 2020.
In 2016-17, revenue for FMCG sector have reached US$ 49 billion and is expected to grow
at 9-9.5 per cent in FY18 supported by expectations of the total consumption expenditure
reaching nearly US$ 3,600 billion by 2020 from US$ 1,469 billion in 2015.
Fig. 3.1: Urban/Rural Industry Breakup (2016)
From the above figure accounting for revenue share of around 60 percent, urban segment is
the largest contributor to the overall revenue generated by the FMCG sector in India and
recorded a market size of around usd29.4 billion in 2016.rural segments are growing at a
rapid pace and accounted revenue share of 40 percent in overall revenues recorded by the
FMCG sector in India. FMCG products account for 50 percent of total rural spending.
60%
40%
Urban/Rural Industry Breakup(2016)
Urban Rural
USD $49 billion

34. 20
Fig. 3.2: Market Breakup by Revenue FY-16
From the above figure hair care is the leading segment, accounting for 23 percent of the
overall market revenue. Food products is the second leading segment of the sector accounting
for 19 percent followed by the health supplements and oral care which has a market share of
16 percent. OTC & Ethical is accounting 9 percent, home care has a market share of 6
percent and followed by the digestive has a market share of 7 percent of the overall revenue.
Fig. 3.3: Rural FMCG market (USD Billion)
5
23
19
16
15
9
6 7
Market Breakup by Revenue FY-16
Skincare Haircare Food Health Oral care OTC &Ethical Home care Digestive
9
10.4
12.3
12.1
14.8
18.92
29.4
100
1
Rural FMCG market (USD Billion)
2009 2010 2011 2012 2013 2015 2016 2025E

35. 21
From the above figure, the FMCG sector in rural and urban India is estimated to cross 100
billion by 2025.the rural FMCG market is anticipated to expand at a CAGR of 17.41 percent
to USD 100 billion during 2009-25.
3.6. Growth Rates: Past and Future
Growth Rate over Past Years:
 Fast-moving consumer goods (FMCG) sector is the 4th largest sector in the Indian
economy with Household and Personal Care accounting for 50 per cent of FMCG
sales in India.
 The urban segment is the largest contributor to the overall revenue generated by
the FMCG sector in India and recorded a market size of around US$ 29.4 billion
in 2016-17.
 It has grown at an annual average of 15 % over the last decade.
 The past 3 to 5 years has seen fluctuations in the growth rate of FMCG industry
due to inflation, demonetization and GST.
 The latest growth figure was 5.1 % in the urban market and 6.9% in the rural
market.
Expected Growth Rate In Future:
 Amidst implementation of Goods and Services Tax (GST) and demonetisation,
the Indian FMCG industry is managing its way through disruptions post festive
months recording a higher demand led growth.
 Between 2016 – 2020, the Indian FMCG market is expected to grow at a CAGR
of nearly 21%.
 Rise in rural consumption is all set to drive the FMCG market. It is estimated to
grow at a CAGR of 14.6% during the period 2016-2025. A major reason behind
the spurt is explained by an increased disposable income that has grown at a
CAGR of 4.1%.
 Penetration of modern retail is expected to see a substantial rise at a CAGR of
24.6% by 2020.

36. 22
 Modern trade is a big ticket item that is expected to grow at 20% year on year,
likely to boost revenues for FMCG players.
 With the rising adoption of sales technologies and increased mobility usage, the
FMCG distribution system has become more transparent, structured and easily
compliable.
3.7. CAGR
COMPOUND ANNUAL GROWTH RATE (CAGR) in FMCG Sector over the years:
The FMCG sector in India generated revenues worth US$ 49 billion in 2016. Over 2007-
2016, the FMCG Sector posted a CAGR of 11.9% in revenues. In 2016-17, revenues for
FMCG sector have reached US$ 49 billion and are expected to grow at 9-9.5% in FY2018.
According to the report of IBEF (India Brand Equity Foundation), in the long run, with the
system becoming more transparent and easily compliable, Demonetization is expected to
benefit organized players in the FMCG Industry.
Fig. 3.4: Trends in FMCG revenues over the years

37. 23
4. Conclusion
This sector will continue to see growth as it depends on an ever-increasing internal market for
consumption, and demand for these goods remains more or less constant, irrespective of
recession or inflation.
Availability of key raw materials, cheaper labor costs and presence across the entire value
chain gives Indian FMCG industry a competitive advantage.
Penetration level as well as per capita consumption in most product categories like jams,
toothpaste, skin care, hair wash etc. in India is low, indicating the untapped market potential.
Increasing Indian population, particularly the middle class and the rural segments, presents an
opportunity to makers of branded products to convert consumers to branded products.

38. 24
References
https://www.hul.co.in/
https://www.ibef.org/industry/fmcg.aspx
https://en.wikipedia.org/wiki/Hindustan_Unilever
http://www.careratings.com/upload/NewsFiles/SplAnalysis/FMCG_July%202017.pdf
https://www.ibef.org/download/FMCG-July-2017.pdf
https://www.ibef.org/archives/detail/cHJlc2VudGF0aW9ucyYzNjM4MCY0NDQ=
https://www.ibef.org/industry/fmcg.aspx
http://info.shine.com/industry/fmcg/6.html
http://ideasmakemarket.com/2013/09/aug-entry9-analysis-of-fmcg-sector.html
https://www.ibef.org/download/FMCG-February-2017.pdf
http://bcgmatrixanalysis.com/bcg-matrix-of-hul/

39. 1
Annexure A – Balance Sheets
As at 31st
March, 2013
As at 31st
March, 2014
As at 31st
March, 2015
As at 31st
March, 2016
As at 31st
March, 2017
EQUITY AND
LIABILITIES
Shareholders’ funds
Share capital 216.25 216.27 216.35 216 216
Reserves and surplus 2,457.77 3,060.78 3,508.43 6,063 6,274
Non-current liabilities
Other long-term
liabilities
476.25 278.82 170.11 395 574
Long-term provisions 706.34 838.69 956.35 594 485
Current liabilities
Trade payables 5,167.69 5,793.89 5,288.90 5,498 6,006
Other current liabilities 616.15 852.94 908.05 864 809
Short-term provisions 1,872.02 1,957.01 2,585.87 290 387
TOTAL 11,512.47 12,998.40 13,634.06 13,920 14,751
ASSETS
Non-current assets
Fixed Assets
Tangible assets 2,256.79 2,397.94 2,435.50 2,902 3,654
Intangible assets 36.11 24.12 22.03 12 370
Capital work-in-progress 205.32 312.08 479.01 386 203
Intangible assets under
development
10.32 7.70 - - -
Non-current
investments
548.03 636.17 654.11 319 260
Deferred tax assets (net) 204.78 161.73 195.96 168 160
Long-term loans and
advances
384.29 605.51 583.46 540 623
Other non-current
assets
296.84 0.68 0.44 41 70
Current assets
Current investments 1,782.63 2,457.95 2,623.82 2,461 3,519
Inventories 2,526.99 2,747.53 2,602.68 2,528 2,362
Trade receivables 833.48 816.43 782.94 1,064 928
Cash and bank balances 1,707.89 2,220.97 2,537.56 2,759 1,671
Short-term loans and
advances
648.26 537.68 657.27 275 378
Other current assets 70.74 71.91 59.28 465 553
TOTAL 11,512.47 12,998.40 13,634.06 13,920 14,751

40. 2
Annexure B – Key Indicators
Income Statement 2012-13 2013-14 2014-15 2015-16 2016-17
Gross Sales Crs INR 26,680 28,947 32,086 32,929 33,895
Total Revenue Crs INR 25,206 27,408 30,171 33,491 34,487
Profit Before Interest & Tax
(PBIT)
Crs INR 3,768 4,215 4,922 5,428 5,651
Profit Before Interest & Tax
(PBIT) - % of Total
Revenue
% 14.9 15.4 16.3 16.2 16.4
Profit Before Tax (PBT) Crs INR 4,349 4,800 5,523 5,946 6,396
Profit Before Tax (PBT) - %
of Total Revenue
% 17.3 17.5 18.3 17.8 18.5
Profit for the year Crs INR 3,314 3,555 3,843 4,137 4,490
Net result - % of Total
Revenue
% 13.1 13.0 12.7 12.4 13.0
Balance Sheet 2012-13 2013-14 2014-15 2015-16 2016-17
Fixed Assets Crs INR 2,509 2,742 2,937 3,300 4,227
Investments Crs INR 2,330 3,094 3,278 2,780 3,779
Net Deferred Tax Crs INR 205 162 196 168 160
Net Assets (Current and
Non-current)
Crs INR -2,370 -2,721 -2,686 31 -1,676
Share Capital Crs INR 216 216 216 216 216
Reserves & Surplus Crs INR 2,458 3,061 3,509 6,063 6,274
Loan Funds Crs INR N/A N/A N/A N/A N/A
Key indicators 2012-13 2013-14 2014-15 2015-16 2016-17
Fixed asset Turnover (No.
of Turnover)
Times 10.6 10.6 10.9 10.0 8.0
PAT / Gross Sales % 12.4 12.3 12.0 12.5 12.5
ROCE % 109.1 130.2 127.7 105.8 105.9
RONW % 94.7 104.1 99.5 72.8 76.6
Economic Value Added
(EVA)
Rs Crs 2,926 3,147 3,380 3,438 3,498
Share indicators 2012-13 2013-14 2014-15 2015-16 2016-17
Earnings Per Share Rs 17.56 17.88 19.95 19.12 20.75
Dividend Per Share Rs 18.50 13.00 15.00 16.00 17.00

41. 3
Annexure C – Industry Ratios
Companies Current Ratio Quick Ratio
Debt Equity
Ratio
Stock Turnover
(times)
Pidilite 3.07 2.36 0.03 7.79
Nestle India 2.01 1.43 0.72 9.71
Dabur 1.48 0.98 0.43 8.83
HUL 1.31 0.98 0.16 13.86
Britannia 1.06 0.48 1.8 13.96
ITC 3.59 2.44 0.01 5.1
Himalaya Int. 1.53 0.69 1.13 1.85
Emami 0.52 0.26 0.1 13.6
Asian Paints 1.89 1.13 0.07 5.76
Marico 2.52 1.15 0.1 4.48
Industry Avg. 1.90 1.19 0.46 8.49