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A Comparative Study

on
ITC Pvt Ltd and HUL Pvt Ltd.

By
VISHAL ROY (J)
PGDM 2016-2018
ROLL-33

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Table of Contents
Executive Summary.Page 3
Overview on HUL..Page 3-4
Overview on ITC.Page 4-5
Financial Reports of ITC.Page 5-8
Financial Reports of HUL..Page 8-10
Ratio Analysis of HUL and ITCPage 10-12
Bibliography and Annexures..Page 12

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EXECUTIVE SUMMARY OF THE PROJECT

ITC and HUL are the two most prominent FMCG companies that are still
dominating the Indian market. The main motive of this project is to show
the comparison between these two companies according to their Financial
Reports including the Ratio Analysis Report. The project report will be
showing the report analysis of the year 2015-2016.
This analysis will be done by collecting datas from the Annual Report of
both of the Companies to come to a solution of who is going to be the leader
in the next future phase.

Overview of HUL
HUL, Hindustan Unilever Limited is India's largest Fast Moving Consumer
Goods Company with a heritage of over 80 years in India and touches the
lives of two out of three Indians. 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. Some of the
products of HUL are Vaseline, Surf Excel, Quality walls, Puriet, Sunsilk,
Lifebuoy, etc.
HUL was the market leader for the year 2013 and 2014 with the annual
sales of $74.8 billion and $81.3 billion respectively. They are the worlds
leading suppliers of fast moving consumer goods with strong local roots in
more than 75 countries. At present HUL is capturing 26.08% of the market
share in the world and 42.25% in India.

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OVERVIEW OF ITC

ITC, Indian Tobacco Company ltd is the closest competitor to HUL. Indian
Tobacco Company (ITC) is one of India's foremost private sector
companies with a market capitalisation of US $ 45 billion and a turnover of
US $ 7 billion. ITC is rated among the World's Best Big Companies, Asia's
'Fab 50' and the World's Most Reputable Companies by Forbes magazine
and among India's Most Valuable Companies by Business Today. ITC
ranks among India's '10 Most Valuable (Company) Brands', in a study
conducted by Brand Finance and published by the Economic Times. ITC
also ranks among Asia's 50 best performing companies compiled by
Business Week.

The competitiveness of ITCs diverse businesses rest on the strong


foundations of institutional strengths derived from its deep consumer
insights, cutting-edge Research & Development, differentiated product
development capacity, brand-building capability, world-class
manufacturing infrastructure, extensive rural linkages, efficient trade
marketing and distribution network and dedicated human resources. ITCs
ability to leverage internal synergies residing across its diverse businesses
lends a unique source of competitive advantage to its products and
services.

Some of the Brands of ITC are Vivel, Fiama, ITC Hotels, Wills Lifestyle,
etc. Presently ITC is capturing 27.35% in worlds market share and 48.33%
of Indian market.

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Financial Report Of ITC
Balance Sheet On Mar 15- Mar 16
2016 2015

EQUITIES AND LIABILITIES


SHAREHOLDER'S FUNDS
Equity Share Capital 804.72 801.55
Total Share Capital 804.72 801.55
Revaluation Reserves 52.41 52.41
Reserves and Surplus 32,071.8 29,881.7
Total Reserves and Surplus 32,124.2 29,934.1
Total Shareholders Funds 32,929.0 30,735.6
NON-CURRENT LIABILITIES
Long Term Borrowings 25.83 38.69
Deferred Tax Liabilities
[Net] 1,848.42 1,631.60
Other Long Term Liabilities 15.13 7.05
Long Term Provisions 112.19 100.72
Total Non-Current
Liabilities 2,001.57 1,778.06
CURRENT LIABILITIES
Short Term Borrowings 3.6 0.02
Trade Payables 2,265.59 1,904.62
Other Current Liabilities 4,000.08 3,671.18
Short Term Provisions 8,318.59 6,106.09
Total Current Liabilities 14,587.8 11,681.9
Total Capital And Liabilities 49,518.4 44,195.6
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ASSETS
NON-CURRENT ASSETS
Tangible Assets 13,816.7 13,777.1
Intangible Assets 387.76 401.35
Capital Work-In-Progress 2,470.08 2,085.49
Intangible Assets Under
Development 30.75 28.65
Fixed Assets 16,705.3 16,292.6
Non-Current Investments 6,392.90 2,441.64
Long Term Loans And
Advances 2,285.43 1,506.36
Total Non-Current Assets 25,383.6 20,240.6
CURRENT ASSETS
Current Investments 6,461.34 5,963.82
Inventories 8,519.82 7,836.76
Trade Receivables 1,686.35 1,722.40
Cash And Cash Equivalents 6,563.95 7,588.61
Short Term Loans And
Advances 501.84 549.89
OtherCurrentAssets 401.44 293.55
Total Current Assets 24,134.7 23,955.0
Total Assets 49,518.43 44,195.66
OTHER ADDITIONAL
INFORMATION
CONTINGENT LIABILITIES,
COMMITMENTS
Contingent Liabilities 2,648.78 2,017.06
CIF VALUE OF IMPORTS
Raw Materials 1,247.18 1,429.00
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Stores, Spares And Loose
Tools 61.55 68.92
Trade/Other Goods 15.36 61.63
Capital Goods 211.25 292.56
EXPENDITURE IN FOREIGN
EXCHANGE
Expenditure In Foreign
Currency 136.35 116.64
REMITTANCES IN FOREIGN
CURRENCIES FOR
DIVIDENDS
Dividend Remittance In
Foreign Currency 1,521.26 1,460.90
EARNINGS IN FOREIGN
EXCHANGE
FOB Value Of Goods 3,057.85 4,253.18
Other Earnings 585.89 842.81
BONUS DETAILS
Bonus Equity Share Capital 710.47 710.47
NON-CURRENT
INVESTMENTS
Non-Current Investments
Quoted Market Value 3,253.11 1,045.15
Non-Current Investments
Unquoted Book Value 3,596.03 1,862.47
CURRENT INVESTMENTS
Current Investments
Quoted Market Value 1,363.44 1,224.09

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Current Investments
Unquoted Book Value 5,098.40 4,740.41

Profit and Loss for the Year 2015-2016

INCOME 2016 2015


Revenue From Operations [Gross] 51,582.45 49,964.82
Less: Excise/Sevice Tax/Other
Levies 15,107.18 13,881.61
Revenue From Operations [Net] 36,475.27 36,083.21
Other Operating Revenues 362.12 424.19
Total Operating Revenues 36,837.39 36,507.40
Other Income 1,803.74 1,543.13
Total Revenue 38,641.13 38,050.53
EXPENSES
Cost Of Materials Consumed 11,054.75 10,987.83
Purchase Of Stock-In Trade 2,590.08 3,898.66
Changes In Inventories Of FG,WIP
And Stock-In Trade 58.17 -214.53
Employee Benefit Expenses 1,883.51 1,780.04
Finance Costs 49.13 57.42
Depreciation And Amortisation
Expenses 1,034.45 961.74
Other Expenses 7,012.65 6,581.85
Total Expenses 23,682.74 24,053.01

Mar-16 Mar-15
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Profit/Loss Before Exceptional,
ExtraOrdinary Items And Tax 14,958.39 13,997.52
Profit/Loss Before Tax 14,958.39 13,997.52
Tax Expenses-Continued
Operations
Current Tax 4,948.76 4,043.28
Deferred Tax 166.47 353.15
Tax For Earlier Years -1.55 -6.64
Total Tax Expenses 5,113.68 4,389.79
Profit/Loss After Tax And Before
ExtraOrdinary Items 9,844.71 9,607.73
Profit/Loss From Continuing
Operations 9,844.71 9,607.73
Profit/Loss For The Period 9,844.71 9,607.73

Mar-16 Mar-15

OTHER ADDITIONAL
INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.) 12.26 12
Diluted EPS (Rs.) 12.2 12
VALUE OF IMPORTED AND
INDIGENIOUS RAW MATERIALS
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Imported Raw Materials 1,345.56 1,523.07
Indigenous Raw Materials 9,709.19 9,464.76
STORES, SPARES AND LOOSE
TOOLS
Imported Stores And Spares 69.93 66.13
Indigenous Stores And Spares 178.52 165.2
DIVIDEND AND DIVIDEND
PERCENTAGE
Equity Share Dividend 6,840.12 5,009.70
Tax On Dividend 1,392.48 1,019.86
Equity Dividend Rate (%) 850 625

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Financial Report of HUL
Balance Sheet for the year Mar 15- Mar 16
2016 2015
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 216.39 216.35
Total Share Capital 216.39 216.35
Revaluation Reserves 0.67 0.67
Reserves and Surplus 3,470.23 3,507.76
Total Reserves and Surplus 3,470.90 3,508.43
Total Shareholders Funds 3,687.29 3,724.78
NON-CURRENT LIABILITIES
Other Long Term Liabilities 218.2 170.11
Long Term Provisions 1,124.39 956.35
Total Non-Current Liabilities 1,342.59 1,126.46
CURRENT LIABILITIES
Trade Payables 5,497.89 5,288.90
Other Current Liabilities 853.79 908.05
Short Term Provisions 2,785.47 2,585.87
Total Current Liabilities 9,137.15 8,782.82
Total Capital And Liabilities 14,167.03 13,634.06
ASSETS
NON-CURRENT ASSETS
Tangible Assets 2,902.73 2,435.50
Intangible Assets 12 22.03
Capital Work-In-Progress 385.97 479.01
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Intangible Assets Under
Development 0 0
Fixed Assets 3,300.70 2,936.54
Non-Current Investments 669.03 654.11
Deferred Tax Assets [Net] 230.86 195.96
Long Term Loans And
Advances 581.3 583.46
Other Non-Current Assets 0.17 0.44
Total Non-Current Assets 4,782.06 4,370.51
CURRENT ASSETS
Current Investments 2,297.52 2,623.82
Inventories 2,528.36 2,602.68
Trade Receivables 2,758.82 782.94
Cash And Cash Equivalents 1,064.52 2,537.56
Short Term Loans And
Advances 673.29 657.27
OtherCurrentAssets 62.46 59.28
Total Current Assets 9,384.97 9,263.55
Total Assets 14,167.03 13,634.06
OTHER ADDITIONAL
INFORMATION
CONTINGENT LIABILITIES,
COMMITMENTS
Contingent Liabilities 1,167.45 1,072.71
CIF VALUE OF IMPORTS
Raw Materials 795.65 827.62
Stores, Spares And Loose Tools 13.05 23.93
Capital Goods 140.28 81.88

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EXPENDITURE IN FOREIGN
EXCHANGE
Expenditure In Foreign
Currency 1,084.34 949.61
REMITTANCES IN FOREIGN
CURRENCIES FOR DIVIDENDS
Dividend Remittance In Foreign
Currency 2,254.34 1,963.46
EARNINGS IN FOREIGN
EXCHANGE
FOB Value Of Goods 78.82 81.07
Other Earnings 479.76 492.36
BONUS DETAILS
Bonus Equity Share Capital 131.69 131.69
NON-CURRENT INVESTMENTS
Non-Current Investments
Quoted Market Value 0.02 0.02
Non-Current Investments
Unquoted Book Value 669.02 654.11
CURRENT INVESTMENTS
Current Investments Quoted
Market Value 1,264.17 1,792.03
Current Investments Unquoted
Book Value 1,059.30 856.33

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Profit and Loss for the Year 2015-2016

INCOME
Revenue From Operations [Gross] 33,855.58 32,086.32
Less: Excise/Sevice Tax/Other
Levies 2,430.31 1,915.82
Revenue From Operations [Net] 31,425.27 30,170.50

Other Operating Revenues 561.9 635.12


Total Operating Revenues 31,987.17 30,805.62
Other Income 500.63 618.39
Total Revenue 32,487.80 31,424.01
EXPENSES
Cost Of Materials Consumed 11,274.73 11,867.31
Purchase Of Stock-In Trade 3,951.15 3,697.96
Changes In Inventories Of FG,WIP
And Stock-In Trade 87.11 58.28
Employee Benefit Expenses 1,592.02 1,578.89
Finance Costs 0.18 16.82
Depreciation And Amortisation
Expenses 320.75 286.69
Other Expenses 9,352.24 8,394.94
Total Expenses 26,578.18 25,900.89

Mar-16 Mar-15
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Profit/Loss Before Exceptional,
ExtraOrdinary Items And Tax 5,909.62 5,523.12
Exceptional Items -39.03 664.3
Profit/Loss Before Tax 5,870.59 6,187.42
Tax Expenses-Continued
Operations
Current Tax 1,823.12 1,871.17
Deferred Tax -34.9 -33.82
Tax For Earlier Years 0 34.81
Total Tax Expenses 1,788.22 1,872.16
Profit/Loss After Tax And Before
ExtraOrdinary Items 4,082.37 4,315.26
Profit/Loss From Continuing
Operations 4,082.37 4,315.26
Profit/Loss For The Period 4,082.37 4,315.26

Mar-16 Mar-15

OTHER ADDITIONAL
INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.) 18.87 19.95
Diluted EPS (Rs.) 18.86 19.94
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VALUE OF IMPORTED AND
INDIGENIOUS RAW MATERIALS
Imported Raw Materials 751.04 875.7
Indigenous Raw Materials 8,152.29 8,560.23
STORES, SPARES AND LOOSE
TOOLS
Imported Stores And Spares 8.18 24.69
Indigenous Stores And Spares 50.68 107.41
DIVIDEND AND DIVIDEND
PERCENTAGE
Equity Share Dividend 3,462.25 3,245.32
Tax On Dividend 677.25 635.9
Equity Dividend Rate (%) 1,600.00 1,500.00

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From the Financial Report of both the ITC and HUL , It can be seen that
HULs profit is less in present year than previous year but by very little
margin, whereas ITCs profit increased than in previous year and at a
high margin. Through the financial report it shows that the stock turnover
was more in HUL than in ITC for the year 2015-2016 but the sale turnover
was higher in ITC than HUL. This may be the reason of the way ITC
introduced its large brand variations and wider distribution channel to
capture the market throughout the world.

Ratio Analysis of ITC and HUL


With some of these following ratios the comparison of both the companies
effective position can be measured.
1. Current Ratio- ITCs Current ratio is 1.654 which seems to be good
enough for a company as one company should have to maintain the
current ratio between 1 to 2, otherwise the company is not efficient
enough. Whereas HULs Current ratio is 1.03 which seems to be less
efficient but on a safe position.
2. Quick Ratio- ITCs Quick Ratio is 1.07 whereas HULs Quick Ratio
is 0.75. This shows that ITC have the better liquidity position than HUL
as Higher the quick ratio, the company can cover up for every
particular liquidity asset value.
3. Working Capital Turnover Ratio- ITCs WC T/O ratio is 3.343
which shows that the company is using the short term assets and
liabilities to secure and support sales. Whereas HULs WC T/O ratio
is much higher which indicates that the company does not have
enough capital to support sales which can lead to stage of collapsing.
4. Return on Asset Ratio- ITCs ROA is 77.84% that shows how better
they are converting the money used for purchasing goods into net
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incomes and profits in an efficient way. HULs ROA is 29.08% which
shows less efficiency in calculating net incomes and profit.
5. Earnings Per Share Ratio- ITCs EPS is Rs-12.23 Whereas HULs
EPS is Rs-18.83 and this shows that the HUL is generating good
income through efficient utilising of stocks than ITC. Still the investors
cannot rely only on financial aspect as they expect high return at low
prices per share and according to the latest financial report ITC
stepped over HUL.
6. Inventory Turnover Ratio- ITCs Inventory turnover ratio is 4.46
whereas HULs is 12.26 that implies that HUL is generating sales for
a given amount of inventory. But as per the financial standing ITC
having low inventory turnover ratio still they are generating good sales
from their own amount of inventory.
7. Net Profit Ratio- ITCs NPR is 26.72% whereas HULs is 12.76%
which shows the most efficient company for the year 2015-2016 that
is ITC. It shows how effective they are in managing the financial
system by utilising the capital and budget in a very efficient manner.

BIBLIOGRAPHY
1. Moneycontrol.com
2. Wikipedia
3. NSE India.gov.org
4. Dino solutions on Ratio analysis

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