Hindustan Unilever Limited

Projections for Balance Sheet, Profit and Loss and Cash Flow Statement

Overall assumptions:

1 The projections have been prepared on the basis of the consolidated financial statements of HUL India
2 The financial statements for the period 2016-17 (2017), 2017-18 (2018) and 2018-19 (2019) are considered as the basis for the pre
for the next 5 years. Similarly, all averages are computed as the simple average of the three-year figures unless otherwise stated.
3 All amounts are in INR crores, unless otherwise stated
4 Detailed assumptions for the projections of the balance sheet, profit and loss and cash flow statement are outlined in the Notes to

Particulars Link
Profit and Loss P&L
Balance Sheet BS
Cash Flow Statement CFS
re considered as the basis for the preparation of projections
ear figures unless otherwise stated.

atement are outlined in the Notes to Accounts

 Hindustan Unilever Limited
Balance Sheet

Particulars 2017 2018

Revenue from Operations 35,759 36,238

Operating Costs (29,419) (28,739)
EBITDA 6,340 7,499
Depreciation (432) (520)
EBIT 5,908 6,979
Finance Cost (35) (26)
Other Income 369 384
Profit before tax (EBT) 6,242 7,337
Exceptional items 237 (33)
Taxation (1,977) (2,079)
Profit after tax (PAT) 4,502 5,225
Profit from discontinued operations (12) 2
Other comprehensive income - (11)
Total comprehensive income 4,490 5,216
Earnings per share (EPS), in INR 21 24

Note* : Profit from discontinued operations, other comprehensive income and exceptional items are assumed to be nil for the pr

Notes:

1 Revenue Segmentation

2017 2018
Homecare 11,346 11,626
Beauty and Personal Care 16,432 16,588
Food & Refreshment 5,972 6,476
Others 2,009 1,538
35,759 36,228

Growth Rate: (CAGR) 2018

Homecare 2%
Beauty and Personal Care 1%
Food & Refreshment 8%
Others -23%
Overall 1.3%

Note: We have used a Compounded Annual Growth Rate (CAGR) since the growth across the two years are erratic. Alternatively,
Further as per Nielsen market research, food categories are expected to grow at 10% whereas personal and homecare are expected
However, we have taken conservative growth estimates based on historical trends and as well as the future industry outlook

2 Operating Expenses
2017 2018
Material and Inventory Costs 18,910 17,423
Employee Benefit Expenses 1,743 1,860
Royalty expenses 691 651
COGS 21,344 19,934
 Promotion Expenses 3,542 4153
Rental expenses 267 285
Carriage and Freight 1,516 1547
Others 2,750 2,820
SG&A expenses 8,075 8,805

Total expenses 29,419 28,739

COGS ratio 60% 55%

SG&A ratio 23% 24%

Payroll to revenue ratio 5% 5%

Rental expense to SG&A ratio 3% 3%

Note: Expenses are assumed to directly move in line with revenue, i.e inherent assumption is that increase in revenue is on accou
The changes in prices are not factored in the estimation.

3 Profit Segmentation
2017 2018
Homecare 1,275 1,702
Beauty and Personal Care 3,889 4,205
Food & Refreshment 845 996
Others 200 145
Unallocted expenses (301) (69)
Total profit 5,908 6,979
- -

4 Fixed Asset and Depreciation Projections

A Property, Plant and Equipment

2017 2018
Opening Balance (net block) 3,165 3,968
Add: Additions 1,248 670
Less: Disposals (net) (25) (48)
Less: Depreciation (420) (510)

Closing Balance (net block) 3,968 4,080

Capital work-in-progress 229 406

Addition - % of sales 3.5% 1.8%

Disposals - % of sales 0.1% 0.1%
Depreciation - % of opening block 13.3% 12.9%
CWIP - % of sales 1% 1%

B Intangibles
2017 2018

Opening Balance (net block) 12 370

Add: Additions 1 7
Add: Business combination 370 -
Less: Disposals (net) (1) -
Less: Amortisation (12) (10)

Closing Balance (net block) 370 367

 Goodwill on consolidation and acquisiton

Addition - % of sales 0.0% 0.0%

Disposals - % of sales 0.0% 0.0%
Amortisation - % of opening block 3% 3%

Note: Additions through business combinations are not considered for projections since these are not recurring items
Note: Goodwill on consolidation and business combination is assumed to be constant till perpetuity

5 Other Income

Other income are assumed to be a function of the investment balances as at the end of each year

2017 2018
Other Income 369 384
Investments 3,794 2,873
Term deposits (part of cash and bank) 1,200 2,836
Total investment 4,994 5,709

Other income - % of investments 7% 7%

6 Taxation
2017 2018
Current and deferred tax (1,977) (2,079)
Profit before tax (after exceptional item) 6,479 7,304
Rate of tax 31% 28%

7 Finance costs
Finance costs are considered to be negligible and hence are assumed to continue at the same rate as 2019 figures
 Projections
2019 2020 2021 2022 2023 2024

39,310 41,335 43,532 45,909 48,474 51,236

(30,430) (32,928) (34,679) (36,572) (38,616) (40,816)
8,880 8,407 8,853 9,337 9,859 10,420
(565) (566) (617) (668) (719) (771)
8,315 7,840 8,236 8,669 9,140 9,650
(33) (33) (33) (33) (33) (33)
550 504 555 610 671 738
8,832 8,312 8,758 9,247 9,778 10,355
(228) - - - - -
(2,544) (2,453) (2,585) (2,729) (2,886) (3,056)
6,060 5,858 6,173 6,517 6,892 7,299
- - - - - -
(4) - - - - -
6,056 5,858 6,173 6,517 6,892 7,299
28 27 29 30 32 34

ceptional items are assumed to be nil for the projections in the absence of sufficient information

Projections
2019 2020 2021 2022 2023 2024
12,874 13,714 14,608 15,560 16,575 17,656
17,800 18,526 19,282 20,068 20,887 21,739
7,131 7,792 8,515 9,305 10,167 11,110
1,505 1,303 1,127 976 845 731
39,310 41,335 43,532 45,909 48,474 51,236

Average Q1 2019-20
2019 growth results
11% 7% 10%
7% 4% 4%
10% 9% 8%
-2% -13%
8.5% 5%

h across the two years are erratic. Alternatively, simple average could be used.
0% whereas personal and homecare are expected to grow at 8%
and as well as the future industry outlook

2019
18,474
1,875
690
21,039
 4,607
315
1,599
2,870
9,391

30,430 Projections
Average 2020 2021 2022
54% 56% 23,177 24,410 25,742
24% 24% 9,751 10,269 10,830
32,928 34,679 36,572

5% 5% 2,036 2,144 2,261

3% 3% 322 339 357

sumption is that increase in revenue is on account of increase in volume only.

2019 Average Profitability

2,156 1,711 14%
4,751 4,282 25%
1,230 1,024 16%
178 174 10%
-
8,315
-

Projections
2019 2020 2021 2022
4,080 4,192 4,578 4,964
702 982 1,034 1,090
(40) (42) (44) (47)
(550) (553) (604) (655)

4,192 4,578 4,964 5,352

461

Average
1.8% 2.4%
0.1% 0.1%
13.5% 13.2%
1% 1.0% 404 426 449

Projections
2019 2020 2021 2022

367 406 399 392

8 6 6 6
46 - - -
- (0) (0) (0)
(15) (13) (13) (12)

406 399 392 386

 117 117 117 117
Average
0.0% 0.0%
0.0% 0.0%
4% 3.2%

s since these are not recurring items

stant till perpetuity

nd of each year

2019
550
2,716
3,136
5,852
Average
9% 8%

2019
(2,544)
8,604 Average
30% 30%

at the same rate as 2019 figures

Comments

Refer Note 1 below

Refer Note 2 below

Refer Note 4 below

Refer Note 7 below

Refer Note 5 below

Refer Note *
Refer Note 6 below

Refer Note *
Refer Note *
 2023 2024
27,181 28,730
11,435 12,087
38,616 40,816

2,388 2,524
377 399

2023 2024
5,352 5,748
1,151 1,217
(49) (52)
(707) (759)

5,748 6,154

474 501

2023 2024

386 380
7 7
- -
(0) (0)
(12) (12)

380 375
117 117
 Hindustan Unilever Limited
Statement of Profit and Loss

Particulars 2017 2018 2019

ASSETS
Non-Current Assets
Property, plant and equipment (incl CWIP) 4,197 4,541 4,598
Intangibles 451 448 523
Net tax assets 631 937 1,208
Financial assets
- Investments 6 2 2
- Loans 168 184 215
- Others 6 6 11
Other non-current assets 75 84 158
Current Assets
Inventories 2,541 2,513 2,574
Financial Assets
- Investments 3,788 2,871 2,714
- Loans - 4 4
- Trade Receivables 1,085 1,310 1,816
- Bank balances (deposits) 1200 2836 3136
- Cash and cash equivalents 628 649 621
- Others 331 805 577
Other current assets 599 672 472

Total 15,706 17,862 18,629

EQUITY & LIABILITIES

Equity
Equity share capital 216 216 216
Other Equity 6,528 7,065 7,651
Non-controlling interest 22 20 18
Non-Current Liabilities
Financial liabilities 73 119 177
Provisions 514 800 1,082
Net tax liabilities 432 558 601
Other non-current liabilities 207 197 217
Current Liabilities
Financial liabilities
- Borrowings 277 - 99
- Trade Payables 6,186 7,170 7,206
- Others 195 214 286
Provisions 392 688 523
Other current liabilities 664 815 553

Total 15,706 17,862 18,629

Notes

1 Tax assets and liabilities

 Net tax assets and liabilities are assumed to be a function of the profits of the company
2017 2018 2019
Tax assets 631 937 1,208
Tax liabilities 432 558 601
Net tax assets / (liabilities) 199 379 607
Profit before tax 6,479 7,304 8,604
Net tax assets - % of profits 3% 5% 7%

2 Inventory

Inventories are projected based on the average turover days of the preceeding 3 years.
For the computation of turnover ratio, closing balance is used. Alternatively average balances may be used
2017 2018 2019
Inventory 2,541 2,513 2,574
Cost of Goods Sold (COGS) 21,344 19,934 21,039
Inventory Turnover ratio 0.12 0.13 0.12
43.00 45.00 44.00

3 Receivables

Receivables are projected based on the average turover days of the preceeding 3 years.
For the computation of turnover ratio, closing balance is used. Alternatively average balances may be used
2017 2018 2019
Receivables 1,085 1,310 1,816
Revenue from Operations 35,759 36,238 39,310
Receivable Turnover ratio 0.03 0.04 0.05
Receivable Turnover days (360 days) 11.00 13.00 17.00

4 Other Assets
2017 2018 2019
Other Current Assets 599 672 472
(mainly consist of prepaid expenses and GST credit)
Thus, these expenses are expected to move in line with SG&A expense

SG&A expenses 8,075 8,805 9,391

Ratio 7% 8% 5%

Other Financial Assets - Current 331 805 577

(mainly consist of group company and other receivables)
Thus, these expenses are expected to move in line with revenue

Revenue 35,759 36,238 39,310

Ratio 1% 2% 1%

Other Financial Assets - Non-Current

These are considered to be negligible and hence straight-lined over the period.

Other Non-Current Assets

These are considered to be negligible and hence straight-lined over the period.

5 Loans
Non-current
These mainly consist of security deposits and employee loans given. These are assumed to be in line with
rental expenses and payroll costs respectively
 2017 2018 2019
Security deposits 122 118 131
% of rental expenses 38% 35% 37%

Others (mainly employee loans) 46 66 84

% of payroll costs 2% 3% 4%

Current
These are considered negligible and hence straight lined over the five year period

6 Investment and bank balances

Current
It is assumed the company invests a portion of its profits in treasury bills and term deposits
Hence, investments are assumed to grow based on the growth rates of profits
Although profits are growing at 16%, we have assumed on a conservative basis that investments will grow at 10%.

2017 2018 2019

Profit after tax 4,502 5,225 6,060
Growth 16% 16%

Growth of investments (assumed) 10%

Non-Current
These are considered negligible and hence straight lined over the period

7 Cash and cash equivalents

Cash and cash equivalents are assumed to be the balancing figure in the balance sheet projections, i.e. the remaining profits are
assumed to be cash profits

8 Other liabilities and provisions

a Provisions mainly consist of two aspects; employee benefit related and provision related to legal cases, restructuring etc.
Employee benefit provisions are assumed to be in line with payroll costs
Other provisions are assumed to constant due to the absence of further information.

2017 2018 2019

Non-current
Employee benefit related 106 101 118
Ratio to payroll costs 6% 5% 6%

Other provisions 408 699 964

514 800 1,082
Current
Employee benefit related 41 93 47
Ratio to payroll costs 2% 5% 3%

Other provisions 351 595 476

392 688 523

b Other non-current liabilities consists of solely employee benefit obligations.

Hence these are assumed to move in line with payroll costs
2017 2018 2019
Other non-current liabilities 207 197 217
Ratio to payroll costs 12% 11% 12%
 c Other current liabilities mainly consists of salaries/bonus payable and statutory dues such as provident fund,
tax deducted at source etc.
Hence, these are assumed to be in line with payroll costs
2017 2018 2019
Other current liabilities 664 815 553
Ratio to payroll costs 38% 44% 29%

d Other financial liabilities:

These mainly consist of contingent consideration on business combination, unpaid dividend and other payables

(i) Contingent consideration

HUL acquired Indulekha and Vayodha brand in 2016.
The contingent consideration is to the extent of 10% of the domestic turnover for a period of 5 years starting 2018-19
This is estimated based on the present value of the future expected payouts, revised annually
We have assumed that the there are no estimation changes after 2018-19 and equal payouts are made for 5 years
(The interest unwinding is not considered due to the absence of further information)

2017 2018 2019

Non-current 49 91 145
Current - 13 31

(ii) Unpaid dividend

Unpaid dividends are assumed to be in line with the dividends paid during a year
Based on the trends below, the dividends are assumed to 20 per share for the next 5 years

2017 2018 2019

Unpaid dividend 116 140 136
Dividend paid 3,583 3,911 4,554
Dividend per share 17.00 18.00 21.00
Unpaid dividend - % of dividend 3% 4% 3%
Average rate 3%

(iii) Other payables

In the absence of other information other payables are assumed to be the same as 2019 figures
2019
Non-current 32
Current 119
Check - -

9 Payables

Payables are projected based on the average turover days of the preceeding 3 years.
For the computation of turnover ratio, closing balance is used. Alternatively average balances may be used
2017 2018 2019
Payables 6,186 7,170 7,206
Cost of Goods Sold (COGS) 21,344 19,934 21,039
Payables Turnover ratio 0.290 0.360 0.343
Payables Turnover days (360 days) 104 129 123

10 Other equity movement

2018 2019
Opening balance 6,550 7,085
Add: Profits 5,216 6,056
Less: Dividend (3,911) (4,554)
Less: Distribution tax (781) (928)
Share based payment credit 11 10
 Total 7,085 7,669
Less: Non-controlling interest (20) (18)
Owner's equity 7,065 7,651
- -

Note: Share-based payment credit and non-controlling interest are negligible and hence assumed to be the same as 2019 figures

11 Share Captial
Equity share capital and non-controlling interest are assumed to be constant over the forecast period i.e it is assumed that there w

12 Current borrowings
Current borrowings are considered to be negligible and hence assumed to be constant for the forecast period based on the 2019 fi
Projections
2020 2021 2022 2023 2024 Comments

4,983 5,389 5,801 6,222 6,655 Refer Note 4 in 'P&L' tab

516 509 503 497 492 Refer Note 4 in 'P&L' tab
424 447 472 499 529 Refer Note 1 below

2 2 2 2 2 Refer Note 6 below

179 188 199 210 222 Refer Note 5 below
11 11 11 11 11 Refer Note 4 below
158 158 158 158 158 Refer Note 4 below

2,833 2,983 3,146 3,322 3,511 Refer Note 2 below

2,985 3,284 3,612 3,974 4,371 Refer Note 6 below

4 4 4 4 4 Refer Note 5 below
1,607 1,693 1,785 1,885 1,993 Refer Note 3 below
3,450 3,795 4,174 4,591 5,051 Refer Note 6 below
912 920 1,196 1,758 2,623 Refer Note 7 below
636 670 706 746 788 Refer Note 4 below
653 687 725 765 809 Refer Note 4 below

19,352 20,741 22,495 24,643 27,217

216 216 216 216 216 Refer Note 11 below

8,311 9,287 10,606 12,300 14,401 Refer Note 10 below
18 18 18 18 18 Refer Note 10 below

141 105 69 32 32 Refer Note 8(d) below

1,085 1,091 1,098 1,106 1,114 Refer Note 8(a) below
- - - - - Refer Note 1 below
231 243 257 271 286 Refer Note 8(b) below

99 99 99 99 99 Refer Note 12 below

7,661 8,069 8,509 8,985 9,497 Refer Note 9 below
296 296 296 297 260 Refer Note 8(d) below
543 546 550 554 559 Refer Note 8(a) below
756 796 840 887 937 Refer Note 8(c) below

19,358 20,767 22,558 24,765 27,419

Average
5%

Average
44.00

Average
14.00

Average
6.7%

Average
1.5%
 Average
36%

Average
3%

ll grow at 10%.

i.e. the remaining profits are

ses, restructuring etc.

Average
6%

Average
3%

Average
11%
 Average
37%

ther payables

s starting 2018-19

ade for 5 years

Projections
2020 2021 2022 2023 2024
109 73 37 - -
36 36 36 37 -

2020 2021 2022 2023 2024

141 141 141 141 141
4,320 4,320 4,320 4,320 4,320
20 20 20 20 20

Total current and non-current liabilities (projections)

2020 2021 2022 2023 2024

141 105 69 32 32
296 296 296 297 260

Average
119

Projections
2020 2021 2022 2023 2024
7,669 8,329 9,305 10,624 12,318
5,858 6,173 6,517 6,892 7,299
(4,320) (4,320) (4,320) (4,320) (4,320)
(888) (888) (888) (888) (888)
10 10 10 10 10
 8,329 9,305 10,624 12,318 14,419
(18) (18) (18) (18) (18)
8,311 9,287 10,606 12,300 14,401

to be the same as 2019 figures

od i.e it is assumed that there will be no issues/buyback of shares

ast period based on the 2019 figures

4 in 'P&L' tab
4 in 'P&L' tab
 Hindustan Unilever Limited
Cash Flow Statement

Particulars 2018 2019

A Cash flow from operating activities:

Profit before tax 7,304 8,604
Add/(Less): Non-cash and non-operating items
Depreciation 520 565
Change in provisions 582 117
Other income (384) (550)
Finance costs 26 33
Add/(Less): Working capital changes
Change in trade receivables (225) (506)
Change in trade payables 984 36
Change in inventories 28 (61)
Change in other current assets (547) 428
Other working capital changes 33 (99)
Cash generated from operations 8,321 8,567
Less: Taxes paid (2,262) (2,767)
Cash flow from / (used in) operating activities 6,059 5,800

B Cash flow from investing activities:

Purchase of fixed assets and intangibles (895) (767)
Sale of fixed assets and intangibles 17 13
Net investments in treasury bills 1,038 326
Net investments in term deposits (1,612) (287)
Other income (interest received etc.) 389 290
Contingent consideration paid - (13)
Cash flow from / (used in) investing activities (1,063) (438)

C Cash flow from financing activities:

Interest expense (6) (7)
Dividend paid (3,911) (4,554)
Dividend distribution tax (781) (928)
Short-term borrowings (277) 99
Cash flow from / (used in) financing activities (4,975) (5,390)

Net increase in cash and cash equivalents 21 (28)

Opening cash and cash equivalents 628 649

Cash and cash equivalents as at the end 649 621

Note:

1 It is assumed that the income tax provision of the previous year is paid out in the relevant year for the forecasted period. The effec
considered here

2 It is assumed that the entire finance cost in the profit and loss is paid in the same year. No adjustment is made for non-cash items

3 The cash flow statement prepared is condensed, only covering major items involved in the cash flow of the company
Cash flow statement is prepared on the basis of the notes to the Balance Sheet and P&L as outlined in the previous two tabs
 Projections
2020 2021 2022 2023 2024

8,312 8,758 9,247 9,778 10,355

566 617 668 719 771

23 10 11 12 13
(504) (555) (610) (671) (738)
33 33 33 33 33

209 (85) (92) (100) (107)

455 407 441 475 512
(259) (151) (163) (176) (189)
(239) (68) (74) (80) (86)
519 (166) (200) (239) (281)
9,115 8,800 9,259 9,752 10,282
(2,544) (2,453) (2,585) (2,729) (2,886) Note 1
6,571 6,347 6,674 7,023 7,395

(982) (1,034) (1,090) (1,151) (1,217)

42 44 47 49 52
(271) (299) (328) (361) (397)
(314) (345) (379) (417) (459)
504 555 610 671 738
(31) (36) (36) (36) (37)
(1,051) (1,114) (1,177) (1,245) (1,320)

(33) (33) (33) (33) (33) Note 2

(4,320) (4,320) (4,320) (4,320) (4,320)
(888) (888) (888) (888) (888)
- - - - -
(5,241) (5,241) (5,241) (5,241) (5,241)

278 (8) 255 536 835

621 912 920 1,196 1,758

912 920 1,196 1,758 2,623

- - - - -

r for the forecasted period. The effects of net tax assets and liabilities are not

ustment is made for non-cash items such as unwinding of discount, notional interest etc.

h flow of the company

lined in the previous two tabs