Professional Documents
Culture Documents
ECONOMY ANALYSIS
ECONOMIC FACTORS
1. Interest rates:
Interest rate directly affects the cost of capital, if the interest rate is higher the cost of
capital will increase & if it is lower then cost of capital will be lower. This directly
affect the profit of the organization & its growth.
2. Tax charges:
If the tax charged by the government is lower then it will reduce the product price &
if it is higher then it will increase the prices of the products.
3. Exchange rates:
This shows that what is the exchange rate or foreign currency rate. If exchange rate is
higher more amounts is paid on import of goods & if it lowers less amount is to be
paid & on the other hand if it is higher the amount received will be more & if it is
lower the amount received will be low.
4. National income:
National income is important factor as if affect the growth of the organisation. If per
capita income is more the amount spend will be more & if it will be lower the amount
spent will be less.
5. Economic growth:
Economic growth is important factor in the development of the organization. If
economy grows at a higher speed it will directly affect the growth of the organization.
6. Inflation rate:
Inflation means the rise in the value of the entire product in the economy, if inflation
rate is higher the cost of products will be higher & if inflation rate is lower the cost of
product will be lower. This directly affects the growth of the organization.
INDUSTRY ANALYSIS
INDUSTRY CLASSIFICATION
The FMCG industry is characterized by low margins. The FMCG segment can be
classified under two segments
A: Premium segment:- Premium segment covers mostly to higher / upper class which
is not price sensitive but brand conscious.
B: Popular segment:- The popular or mass segment consists of consumers belonging
to the semi- urban or rural areas who are not brand conscious. Products sold in the
popular segment have lower prices than premium segment.
PESTEL ANALYSIS
Pestel analysis is a tool to understand the environment in which business operates, &
the opportunities & threats that lie within it. By understanding the environment in
which it operates, it can take advantage of the opportunities & minimizing the threats.
Specifically PESTEL analysis is useful tool for understanding risks associated with
markets growth or decline, & directing business to grow.
P Political factors
E Economic factors
S Socio-cultural factors
T Technological factors
E Environment factors
L Legal factors
A PESTEL analysis is a measurement tool, looking at all the external factors of the
organization. It is often used within a strategic SWOT analysis (strength, weaknesses,
opportunities & threats analysis).
Political FactorsPolitical stability: Political stability is one of the important most factors which
influence the growth of business directly. If Political stability is higher, then it leads to
perfection in business & on the other hand if there is instability the business will have
to suffer.
Taxation policy: Tax policy of government will affect the price of inputs & it
ultimately affect the prices of final products & it will directly affect the sale of
product.
Government intervenes : This indicates that at what level the government intervences
in the economy. If the government intervence is more sometimes it helps the
organization at large extent.
Subsidies : The subsidies which are provided by government to different organisation
at different level also help it to grow at faster rate & helps the organisation in reducing
the finance which is to be funded from outside & it directly reduces interest amount
paid in favour of fund raised from outside.
Trading policies : This indicates the policies related to import & export of goods and
services from different nations. If the policies are favourable more goods & services
will be imported & exported, & on the other hand if policies are unfavourable it will
restricts the import & export.
Labour law : Labour law also affect the organisation, for example- child labour, a
child below 14 year of age can not work In factory or any hazardous place.
Economic Factors
Interest rates : Interest rate directly affect the cost of capital, if the interest rate is
higher the cost of capital will increase & if it is lower then cost of capital will be
lower. This directly affect the profit of the organization & its growth.
Tax charges : If the tax charged by the government is lower then it will reduce the
product price & if it is higher then it will increase the prices of the products.
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Exchange rates : This shows that what is the exchange rate or foreign currency rate. If
exchange rate is higher more amount is paid on import of goods & if it lowers less
amount is to be paid & on the other hand if it is higher the amount received will be
more & if it is lower the amount received will be low.
National income : National income is important factor as if affect the growth of the
organisation. If per capita income is more the amount spend will be more & if it will
be lower the amount spent will be less.
Economic growth : Economic growth is important factor in the development of the
organization. If economy grows at a higher speed it will directly affect the growth of
the organization.
Inflation rate : Inflation means the rise in the value of all the product in the economy,
if inflation rate is higher the cost of products will be higher & if inflation rate is lower
the cost of product will be lower. This directly affect the growth of the organization.
Education levels : Education is one of the most important factor which influence the
buying power of consumer, while selecting a particular good a consumer should know
all its features so it can differentiate them with another products.
Law affect social behaviour : Different laws are made by the government to safe
guard the rights of consumers. For example- Consumer protection act, this law
indicates that a consumer can file a case against a seller if he finds that he is cheated.
Technological Factors
Advancement in technology : New technology helps in economising the scale of
production, this means that new technology helps in increasing the level of
production, & reducing the costs of inputs, & maximising the level of profits.
Discoveries & innovation : Advancement in technology will leads to discoveries &
innovations & further improvements in technology so as to improve perfections in the
production process.
Competitive forces : Advancement in technology will also leads to competition in the
markets, more quality products will be provided to consumers to cover a large number
of market.
Automation : Change in technology will leads to automation, this means that with
new technology labour required is less as machines are automatic. All the works are
done automatically by the machines as earlier it is labour oriented. Now all the work
is machine oriented.
Obsolete rate : Day-by-day new inventions are made so the rate of obsolete is higher,
as in Computer LAPTOPS have replaced the PC. This shows that the technology
becomes obsolete very fast.
Research & development : This department plays a vital role in the development of
the organization. As this department always do research that what are the demand of
the markets & how to make advancements so the organization can survive in the
competitive world.
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Environmental Factors
Ecological : The ecological and environment aspects such as weather, climate, &
climate changes, which may especially affect industry such as tourism, farming, &
insurance. In FMCG Air conditioners demand increase in summer season.
Environmental issues : Global warming is one of the major issue now-a-days as
external factor is becoming a significant issue for firms to consider. Many remedies
have been taken to reduce Global warming.
Environmental regulations : Various regulations have been declared by government to
safe guard the environment. For example- no company should through its waste in
rivers.
Legal Factors
Employment law : Employment law provides equal opportunities to every citizen to
work & earn his livelihood. It provides equal opportunities to every citizen.
Consumer protection : This law helps to protect the rights of consumers & he can file
a case against seller if he fined that he is cheated.
Industry-specific regulations : These laws are related to industry for example- no
industry can establish in between cities i.e. it should be outside the cities.
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There are scarce customers because the industry is highly saturated and the
competitors try to snatch their share of market.
Market Players use all sorts of tactics and activities from intensive
advertisement campaigns to promotional stuff and price wars etc. Hence the
intensity of rivalry is very high.
FMCG Industry does not have any measures which can control the entry of
new firms.
The resistance is very low and the structure of the industry is so complex that
new firms can easily enter and also offer tough competition due to cost
effectiveness. Hence potential entry of new firms is highly viable.
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There are complex and never ending consumer needs and no firm can satisfy
all sorts of needs alone. There are plenty of substitute goods available in the
market that can be re-placed if consumers are not satisfied with one.
The wide range of choices and needs give a sufficient room for new product
development that can replace existing goods. This leads to higher consumers
expectation.
There is ample number of substitute suppliers available and the raw materials
are also readily available and most of the raw materials are homogeneous.
There is no monopoly situation in the supplier side because the suppliers are
also competing among themselves.
Customers are never reluctant to buy or try new things off the shelf.
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Mostly in India FMCG products are used by the consumers of 25 age group so
it has large market of domestic products for that age group.
According to the investigation in the largest milk producer in the world still
there is 15 percent of milk is processed only. The organized liquid milk has a
potential that it will grow for long period.
There are also good opportunities available for those people who wants to
invest in business of value added products like desserts , puddings etc.
There are only 10-12 percent of products which are consumed in the packed
form so it shows the strength of FMCG industry.
4) Threats :
In case of FMCG if the product if failed in the market then it is very difficult
to revive it back in the market.
In case of these companies if the company launches the new product in the
market then the other competitive companies also launch the same product in
the market which results in reducing profits and increasing profits.
Rural demand depends upon the monsoon and its cyclical nature of demand.
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MARKET SEGMENT
Baby Care 2%
Fabric Care 12%
Food Products
43%
Hair Care 8%
Household 4%
Here is a list of top 10 FMCG companies in India; these are the best companies in
Fast moving consumer goods sector. And ranking process of companies is frequently
being updated by our expert team.
1 .Hindustan Unilever
Corporate Office Mumbai,
Maharashtra
Turnover 4.0 BillionDollar
Employees 16000+
Business Food, Beverages and
Personal Car
Sector Private Sector |
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2 . Colgate-Palmolive
Corporate Office New York,
USA
Turnover 17.08 Billion Dollar
Employees 37000+
Business Personal Care
Sector Private Sector
3 .ITC Limited
Corporate Office Kolkata, WB
Turnover 7.0 Billion Dollar
Employees 29000+
Business Tobacco, Hotels and
Personal care
Sector Private Sector
4 .Nestl
Corporate
Office
Vevey,
Switzerland
Turnover 87.0 Billion Dollar
Employees 328000+
Business Food, dairy products
and
Sector Private Sector
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Coffee
5 .Parle Agro
Corporate
Office
Mumbai,
Maharashtra
Turnover
Billion
dollar
(Appox)
Employees 2500+
Business
Food
items
and
beverages
Sector Private Sector
7 . Marico Limited
Corporate
Office
Bandra,
Maharastra
Turnover 850 Million Dollar
Employees 1000+
Business Oil and personal Care
Sector Private limited
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9 .Godrej Group
Corporate
Office
Mumbai,
Maharashtra
Turnover
Billion
Dollar
Employees 25000+
Business Personal care, real estate
and Engineering
Sector Private Sector
10 .Amul
Corporate Office Anand, Gujarat
Turnover 2.15 Billion Dollar
Employees 700+
Business Dairy Products
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COMPANY ANALYSIS
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ITCs Vision
Make a significant and growing contribution towards :
mitigating societal challenges
enhancing shareholder rewards
By creating multiple drivers of growth while sustaining leadership in tobacco, and
focusing on Triple Bottom Line Performance
- Financial capital
- Environmental capital
- Social capital
ITCs MISSION
To enhance the wealth generating capability of the enterprise in a globalising
environment, delivering superior and sustainable stakeholder value
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SWOT ANALYSES
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One of the biggest move ITC did go for in its business model is e-chopal. ITC, among
a handful of public Indian companies to adopt triple bottom line reporting, started the
ambitious e-Choupal initiative in 2000 with the dual goal of empowering Indian
farmers and creating a unique source of competitive advantage in agro-sourcing for
the company.
Enter e-Choupal a unique hub-and-spoke intervention model that is causing a
disruption of the trader-mandi-farmer dynamic. Choupal translates to gathering place
(in Hindi). The hub-and-spoke model has two dimensions. The first dimension is the
Internet kiosk (e-Choupal) set up in villages to enable farmers to access daily
wholesale prices of soybean, wheat, tobacco, and coffee, both in the local mandis as
well as the price offered by ITC ABD which processes these crops for its sister
business unit (ITC Foods Division). The second dimension is the hub which
includes warehouses and farmer training centers to support every 40-60 e-Choupals.
About 25 percent of these warehouse hubs are full-service Choupal Sagars which
also include retail stores, fuel stations, soil testing labs, and food court
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Core Principles
ITC's Corporate Governance initiative is based on two core principles. These are :
Management must have the executive freedom to drive the enterprise forward
without undue restraints; and this freedom of management should be exercised
within a framework of effective accountability.
It is ITC's belief that the right balance between freedom of management and
accountability to shareholders can be achieved by segregating strategic supervision
from strategic and executive management. The Board of Directors (Board) as trustees
of the shareholders will exercise strategic supervision through strategic direction and
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control, and seek accountability for effective strategic management from the
Corporate Management Committee (CMC). The CMC will have the freedom, within
Board approved direction and framework, to focus its attention and energies on the
strategic management of the Company. The Divisional Chief Executive, assisted by
the Divisional Management Committee, will have the freedom to focus on the
executive management of the divisional business.
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Nakul Anand
Executive Directors
P V Dhobale
K N Grant
A Baijal
Non-Executive Directors
S Banerjee
A Duggal
A V Girija Kumar
S H Khan
R E Lerwill
S B Mainak
S B Mathur
P B Ramanujam
S S H Rehman
Meera Shankar
K Vaidyanath
Y C DEVESHWAR
Y C Deveshwar (67) joined ITC in 1968 and is an alumnus of the Indian Institute of
Technology, Delhi and Harvard Business School. He was appointed as a Director on
the Board of the Company in 1984 and became the Chief Executive and Chairman of
the Board on January 1, 1996.
Under his leadership, ITC's Sustainability initiatives were given shape by fashioning
corporate strategies that not only enhance shareholder value but add significantly to
the development of natural and social capital. ITC is a global exemplar in sustainable
business practices and is the only company in the world, of comparable dimensions to
be 'carbon positive', 'water positive' and 'solid waste recycling' positive. The
company's businesses generate livelihoods for around 6 million people, many of
whom represent the poorest in Rural India.
The pioneering farmer empowerment initiative, ITC e-Choupal, is today the world's
largest rural digital infrastructure and is a case study at the Harvard Business School
besides receiving several global awards including the inaugural World Business
Award .
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Nakul Anand
Executive Director
Anand Nayak
Human Resources
K S Suresh
Legal
P V Dhobale
Executive Director
T V Ramaswamy
R&D, Projects, EH&S
Rajiv Tandon
Finance
NAKUL ANAND
Nakul Anand (58) was appointed a Director on the Board of ITC effective January 3,
2011. He holds responsibility for the Hospitality, Travel & Tourism businesses of
ITC. In a career that spans over three decades, Anand has been acknowledged for his
vision and commitment. Leveraging the significant learning of sustainable excellence
within ITC, he led the team at ITC Hotels to pioneer the concept of 'Responsible
Luxury' in the hospitality industry, securing LEED Platinum certifications for all ITC
super premium luxury hotels, making it the 'Greenest Luxury Hotel Chain in the
world'. He has formulated value-based strategies to create a unique quality control
model.
P V DHOBALE
P V Dhobale (58), was appointed a Director on the Board of ITC effective January 3,
2011. He holds responsibility for Paperboards, Paper and Packaging businesses of
ITC and also represents the Finance and IT functions on the Board.
Dhobale is credited with the successful turnaround of ITC Bhadrachalam in 2001, and
exponential growth thereafter. He spearheaded the growth involving capital infusion
of over US$ 500 million through brownfield organic growth as well as acquisitions.
Under his leadership, ITC's Bhadrachalam Mill has emerged as the largest singlelocation paper mill in the country producing more than half a million tonnes of papers
& boards.
KURUSH N GRANT
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Kurush N. Grant (57), was appointed a Director on the Board of ITC effective March
20, 2010. He holds responsibility for ITCs FMCG businesses. After completing his
MBA in 1979, he worked with DCM as a Management Trainee before joining ITC in
1980 in the Marketing function.
ANAND NAYAK
Anand Nayak, Head of Human Resource Development for ITC, has been with the
Company for 41 years. He has handled senior HR assignments in the Company's
various Divisions and has been Head of Human Resource Development since 1996.
He is also responsible for overall supervision of ITC's Social Development Initiatives.
A post-graduate in Personnel Management and Industrial Relations from XLRI,
Jamshedpur, Nayak has spent his entire professional career with ITC. He is also a
Director on the Board of ITC Infotech.
RAJIV TANDON
Rajiv Tandon, Chief Financial Officer, is a Fellow Member of The Institute of
Chartered Accountants of India with over 30 years of experience. He has held various
positions in ITC including Executive Vice President - Finance & MIS of the Tobacco
Division, Executive Vice President - Corporate Finance, Finance Advisor and
member of the Management Committee of Agri Business and Tobacco Division.
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D E V E SH W AR
N AK U L
D H O B AL E
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AN AN D
CORPORATE CULTURE
ITC is a board-managed professional company, committed to creating enduring value
for the nation and the shareholder. It has a rich organisational culture rooted in its core
values of respect for people and belief in empowerment. Its philosophy of all-round
value creation is backed by strong corporate governance policies and systems.
ITCs corporate strategies are :
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Shareholder Information
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FINANCIAL ANALYSIS
One of the most common ways of analyzing financial data is to calculate ratios from
the data to compare against those of other companies or against the company's own
historical performance. For example, return on assets is a common ratio used to
determine how efficient a company is at using its assets and as a measure of
profitability. This ratio could be calculated for several similar companies and
compared as part of a larger analysis.
ITC is the Indias most Admired and Valuable company with Market Capitalisation:
over US$ 45 Billion. it is a A USD 8 Billion enterprise by Revenue-54% of Net
Revenue from non-Cigarette segmentsIt is the Leading Fast Moving Consumer Goods
(FMCG) marketer in India and has Established several world-class brands in the last
10 years.10 year Value addition ~ Rs. 1.9 lakh crore (US$ 39 billion) with ~75%
accruing to the Exchequer
- Among the top tax payers in the nation (Private sector)
- Excise payments represent ~7% of Indias total Excise collection
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34
35
36
37
38
Trade creditors
Lenders
Investors
Management
39
Liquidity Ratio
Current Ratio
1.3
1.25
1.2
1.15
liquidity ratio
1.1
1.05
1
0.95
2014
2013
2012
ITC have high liquidity ratios, the higher the margin of safety that the company
possess to meet its current liabilities. Liquidity ratios greater than 1 indicate that the
company is in good financial health and it is less likely fall into financial difficulties.
Seen in all the years above 2014,2013, 2012.
Current ratio indicates Itc's ability to meet short-term debt obligations. The current
ratio measures whether or not a firm has enough resources to pay its debts over the
next 12 month.
40
Profitability Ratio
38
37
36
35
OPERATING PROFIT
MARGIN
34
PBIT MARGIN
33
GP MARGIN
32
31
30
29
2014
2013
1012
Activity Ratio
41
30
25
Inventory
Turnover Ratio
20
Debtors
Turnover Ratio
15
10
Investments
Turnover Ratio
5
0
2014
2013
2012
A high debtor turnover ratio implies either that the company operates on a cash basis
or that its extension of credit and collection of accounts receivable are efficient. Also,
a high ratio reflects a short lapse of time between sales and the collection of cash,
while a low number means collection takes longer.
A low inventory turnover ratio can be seen because of rescission but it is very well
aligned with FMCG industry average.
Market Ratio
16
14
12
Dividend Per Share
10
8
Operating Profit
Per Share (Rs)
6
4
2
0
2014
2013
2012
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P/E
RATIO
11.05
Mar '13
9.39
Mar '12
40
30
Earnings Per
Share
20
Book Value
7.88
33.02
28.21
23.97
0.334646
0.332861
0.328744
10
P/E RATIO
0
Mar '14 Mar '13 Mar '12
Generally, stocks that are expected to grow earnings will have a higher P/E, Itc
companies with high growth have a higher ratio. Itc with the higher P/E is said to be
overvalued by the market. The share price should reflect a firms future value creation
potential, greater value creation can indicate greater future dividends from the
company. A higher P/E ratio should reflect greater expected future gains because of
perceived growth opportunities and/or some competitive advantages and/or lesser
risk, but at the same time it indicates that the share price is relatively more expensive.
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WHAT WE DO
We build our brands and develop our products through extensive consumer insight,
relentless innovation, and crystal-clear design and marketing. This is a powerful blend
that helps us excite and inspire our customers and consumers. We are committed to
making sustainable living commonplace and work to develop new ways of doing
business that will reduce our environmental footprint and increase our positive social
impact.
OPERATIONAL HIGHLIGHTS
Despite a challenging environment, we delivered broad-based growth and margin
improvement by stepping up investment in brands and innovations, while driving cost
savings and operational efficiencies with even greater rigour. We delivered
competitive and profitable growth:
Strong track record of cash generation was sustained with cash from operations at
over Rs. 5,000 crores, upRs. 462 crores over the previous year.
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Total dividend of Rs. 13.00 per share was declared for the Financial Year.
QUALITATIVE FACTORS
BUSINESS MODEL
Our business model is designed to deliver sustainable growth. For us, sustainability is
integral to how we do business. In a world where temperatures are rising, water is
scarce, energy is expensive, sanitation is poor in many areas, and food supplies are
uncertain and expensive, we have both a duty and an opportunity to address these
issues in the way we do business.
The differentiator in our business model is our USLP and the goal of sustainable
living.
The outputs of the model are threefold: sustained growth; lower environmental
impact; and positive social impact.The diagram represents our virtuous circle of
growth. It summarises, simply, how we derive profit from our business model.
SUSTAINABLE LIVING
For us, sustainable, equitable growth is theonly acceptable business model. Business
needs to be a regenerative force in the system that gives it life. For example, by
reducing waste we create efficiencies and reduce costs, helping to improve margins
while reducing risk. Meanwhile, looking at more sustainable ways of developing
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OUR PEOPLE
Sustainable, profitable growth can be achieved with the right people working in an
organisation that has a culture where performance is aligned with values. We are an
agile and diverse business with people motivated by doing good while doing well. We
are building capability and leadership among our people and attracting some of the
best talent in the marketplace.
OUR BRANDS
Strong brands and innovation are central to our ambition to deliver consistent,
competitive, profitable and responsible growth. We are investing in brand
equity,finding and strengthening the connections between consumers and the products
they buy. Strong brand equities enable us tocreate efficiencies by focusing on fewer,
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bigger projects that enhance margins. And we are seeking superior products which
consumers will prefer, driving profitable growth.
OUR OPERATIONS
On any given day 2 billion consumers use Unilever products. We want to reach many
more, by developing innovative products that address different consumer needs at
different price points. To do this, we use our global scale to help deliver sustainable,
profitable growth by seeking to add value at every step in the value chain by
enhancing product quality and customer service and rolling out innovations faster
across markets
MANAGEMENT
MANAGEMENT COMMITTEE
The day-to-day management of affairs of the Company is vested with the
Management Committee which is subjected to the overall superintendence and control
of the Board.
The Management Committee is headed by Mr. Sanjiv Mehta and has functional heads
as its members representing various functions of the Company
1 Mr. Sanjiv Mehta
Managing Director and Chief Executive Officer
2 Mr. Sridhar Ramamurthy
Executive Director, Finance &IT and Chief Financial Officer
3 Mr. Hemant Bakshi
Executive Director, Home and Personal Care
4 Mr. Pradeep Banerjee
Executive Director, Supply Chain
5 Mr. Dev Bajpai
Executive Director, Legal & Corporate Affairs and Company Secretary
6 Ms. Geetu Verma
Executive Director, Foods & Refreshment
7 Mr. Manish Tiwary
Executive Director, Sales and Customer Development
8. Mr. B. P. Biddappa
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CORPORATE GOVERNANCE
I believe that nothing can be greater than a business, however small it may be, that is
governed by conscience; and that nothing can be meaner or more petty than a
business, however large, governed without honesty and without brotherhood.
Transparency and accountability are the two basic tenets of Corporate Governance. At
Hindustan Unilever, we feel proud to belong to a Company whose visionary founders
laid the foundation stone for good governance long back and made it an integral
principle of the business, as demonstrated in the words above.
Responsible corporate conduct is integral to the way we do our business. Our actions
are governed by our values and principles, which are reinforced at all levels within the
Company. At Hindustan Unilever, we are committed to doing things the right way
which means taking business decisions and acting in a way that is ethical and is in
compliance with applicable legislation.
Our Code of Business Principles is an extension of our values and reflects our
continued commitment to ethical business practices across our operations. We
acknowledge our individual and collective responsibilities to manage our business
activities with integrity. Our Code of Business Principles inspires us to set standards
which not only meet applicable legislation but go beyond in many areas of our
functioning.
To succeed, we believe, requires highest standards of corporate behaviour towards
everyone we work with, the communities we touch and the environment on which we
have an impact. This is our road to consistent, competitive, profitable and responsible
growth and creating long term value for our shareholders, our people and our business
partners. The above principles have been the guiding force for whatever we do and
shall continue to be so in the years to come.
The Board of Directors (the Board) is responsible for and committed to sound
principles of Corporate Governance in the Company. The Board plays a crucial role in
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overseeing how the management serves the short and long term interests of
shareholders and other stakeholders. This belief is reflected in our governance
practices, under which we strive to maintain an effective, informed and independent
Board. We keep our governance practices under continuous review and benchmark
ourselves to best practices across the globe.
Officer succeeding Mr. Nitin Paranjpe. Mr. Sanjiv Mehta was appointed as an
Additional Director on the Board with effect from 1st October, 2013 and as the
Managing Director and Chief Executive Officer with effect from 10th October, 2013.
52
Dr. Sanjiv Misra (66) is a retired Indian Administrative Services (IAS) officer and a
former member of the 13th Finance Commission, a constitutional position with the
rank of a Minister of State.
FINANCIAL ANALYSIS
One of the most common ways of analyzing financial data is to calculate ratios from
the data to compare against those of other companies or against the company's own
historical performance. For example, return on assets is a common ratio used to
determine how efficient a company is at using its assets and as a measure of
profitability. This ratio could be calculated for several similar companies and
compared as part of a larger analysis.
Despite the Indian economy witnessing a slowdown, HUL Company delivered
healthy results. HULs domestic consumer business grew by 9% with 4% underlying
volume growth which was ahead of the market. Profit before interest and tax (PBIT)
grew by 12% with PBIT margin improving 40 bps. Profit after tax but before
exceptional items, PAT , grew by 7% to Rs. 3,555 crores with Net Profit at Rs. 3,867
crores growing 2%. Net Profit growth was impacted by the significant property sale in
the previous year. Cash generated from operations at over Rs. 5,000 crores for the
year, was up Rs. 462 crores over the previous year.
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55
56
57
58
59
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Trade creditors
Lenders
Investors
Management
Liquidity Ratio
LIQUIDITY
RATIOS
Current Ratio
2014
2013
2012
0.74
0.76
0.83
Quick Ratio
0.44
0.45
0.46
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Current Ratio
Quick Ratio
2014
2013
2012
61
HUL have low liquidity ratios, the higher the margin of safety that the company
possess to meet its current liabilities. Liquidity ratios less than 1 indicate that the
company is not in good financial health and it is less likely fall into financial
difficulties. Seen in all the years above 2014,2013, 2012.
Current ratio indicates Itc's ability to meet short-term debt obligations. The current
ratio measures whether or not a firm has enough resources to pay its debts over the
next 12 month.
Profitability Ratio
Profitability Ratios
2014
2013
2012
15.97
15.51
14.88
14.71
14.26
13.72
15.04
14.59
13.89
Margin (%)
Gross Profit Margin (%)
16
15.5
Operating Profit
Margin(%)
15
14.5
14
Gross Profit
Margin(%)
13.5
13
12.5
2014
2013
2012
Activity Ratio
62
2013
2012
10.2
10.21
8.79
33.96
34.13
27.27
10.2
10.21
8.79
Inventory Turnover
Ratio
Debtors Turnover Ratio
Investments Turnover
Ratio
35
30
Inventory Turnover
Ratio
25
20
Debtors Turnover
Ratio
15
Investments Turnover
Ratio
10
5
0
2014
2013
2012
A high debtor turnover ratio implies either that the company operates on a cash basis
or that its extension of credit and collection of accounts receivable are efficient. Also,
a high ratio reflects a short lapse of time between sales and the collection of cash,
while a low number means collection takes longer.
A low inventory turnover ratio can be seen because of rescission but it is very well
aligned with FMCG industry average.
Market Ratio
MARKET RATIO
Dividend Per Share
2104
13
2013
18.5
63
2012
7.5
20.69
18.51
15.23
25
20
Dividend Per
Share
15
10
Operating Profit
Per Share (Rs)
5
0
2104
2013
2012
Mar '14
17.88
Mar '13
17.56
Mar '12
12.45
15.15
12.37
16.25
P/E RATIO
18
16
14
12
Earnings Per Share
10
Book Value
P/E RATIO
6
4
2
0
Mar '14
Mar '13
Mar '12
Generally, stocks that are expected to grow earnings will have a higher P/E, HUL
companies with high growth have a higher ratio. HUL with the higher P/E is said to
be overvalued by the market. The share price should reflect a firms future value
creation potential, greater value creation can indicate greater future dividends from
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the company. A higher P/E ratio should reflect greater expected future gains because
of perceived growth opportunities and some competitive advantages or lesser risk, but
at the same time it indicates that the share price is relatively more expensive.
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STRY ANAYSIS
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