INTRODUCTION

Hindustan Unilever Limited (HUL), a subsidiary of Unilever, has become India's

largest fast-moving consumer goods (FMCG) corporation. Based in Mumbai, HUL can
trace its origins to 1933 and since the early stages of its development has established
itself as a major player in India's consumer products market. HUL operates a diverse
product offering across the three segments of home care, beauty and personal care,
and foods and refreshments and has more than 50 brands that are household
names. These brands include Surf Excel, Lifebuoy, Dove, Lux, Pond's, Vaseline, Clinic
Plus, Brooke Bond, Bru, and Horlicks.

HUL's products reach over 9 of 10 households in India. This has been achieved largely
through one of the strongest and largest distribution networks in the country,
covering both urban and rural dwellers. HUL's business model is to use a unique
combination of intimate understanding of the market and continuous improvement
for innovation and consumer change.

HUL has also achieved brand trust beyond business. In respect to sustainability,
inclusive growth, and development in community health, hygiene, and nutrition, and
reducing the environmental footprint, HUL has unrecognized recognition for its
commitment to improving the livelihood of millions. With its portfolio of brands rich
with legacy, strategy for consumer growth, and spirit with continuous improvement,
HUL is a key driver of lifestyle changes and standards in the FMCG marketplace in
India.
 INCOME STATEMENT OF LAST 5 YEARS:

1)Revenue / Sales Trend

 Net Sales rose from ₹45,996 crores in 2020–21 to ₹61,469 crores in 2024–25.
 This is a healthy growth of 33% over 5 years, indicating steady demand in the
marketplace along with successful sales execution.
 Growth shows consistency which suggests there is a solid consumer base and
the company enjoys a good market position.

2)Cost of Goods Sold (COGS) & Gross Profit

 Gross Profit increased from ₹23,427 crores to ₹30,157 crores.

 Gross Profit Margin across the years remains equal and stable around the
~49–50% mark, which is a reflection of good cost management.
 COGS rose moving directly with sales, from ₹22,569 crores to ₹31,312 crores.
3)Operating Expenses

 Administrative and Selling & Distribution expenses nearly doubled in 5 years'

time.
 An increase is indicative of the company's commitment to spending more
money for branding and marketing, and digital infrastructure.
 It's true that Operating Expenses increased faster than sales did, however, the
margins are not impacted very significantly.

4)Operating Profit (EBIT)

 EBIT increased from ₹10,717 crores (2020–21) to ₹13,878 crores (2024–25).

 EBIT Margin remained stable around the 22–23% mark.
 This increased EBIT indicates effective operation management and good cost
management.

5)Non-Operating Items

 Generally, all non-operating incomes and expenses are in the minor category
when looking at the income statement on a micro level against total operating
activities.
 Interest costs remained very low, which means the company has relied very
little on debt financing.

6)Net Profit (PAT)

 PAT increased from ₹7,954 crores in 2020–21 to ₹10,644 crores in 2024–25

(34% increase).
 Net Profit Margin remained flat at ~17%, which means the company has been
able to assess pricing, manage costs, and remain consistent profitably.

7)Taxation

 Tax-related expenditures increased from ₹2,536 crores for the 2020–21 fiscal
year to ₹3,656 crores in the 2024–25 fiscal year.
 The effective tax rate remained more or less consistent, which means, there is
no significant tax impact in sort resulting from fluctuation in fiscal accounting.
BALANCE SHEET OF LAST 5 YEARS:
1)Sources of Funds

 Shareholder’s Funds remained constant, with Equity Capital unchanged at

₹235 crores.
 Reserves and Surplus saw a gradual increase, moving from ₹47,199 crores
(2020–21) to ₹50,738 crores (2023–24), then a slight fall to ₹48,918 crores in
2024–25, indicating consistent profitability and minimal utilization of reserves.
 Borrowed Funds also increased notably from ₹9,841 crores to ₹13,700 crores
(2023–24) and marginally reduced to ₹13,488 crores in 2024–25, suggesting
further leverage of support for expansion or operation.
 Total Capital Employed advanced from ₹57,275 crores to ₹64,673 crores
(2023–24) before slightly decreasing to ₹62,641 crores (2024–25), indicating
continued growth in utilization of funds and resources.

2)Application of Funds

 Fixed Assets steadily increased from ₹51,650 crores to ₹53,863 crores,

signalling ongoing investment in a long-term asset.
 Investments also increased moderately, from ₹2,826 crores to ₹3,551 crores,
indicating diversification and/or allocation of monies.
  Working Capital fluctuated: Current Assets increased from ₹13,640 crores to
₹20,899 crores (2024–25). Current Liabilities also increased from ₹10,841
crores to ₹15,672 crores. Net Working Capital improved considerably from
₹2,799 crores to ₹7,893 crores (2023–24) before falling to ₹5,227 crores,
indicating erratic management of liquidity.

3)Key Observations

 Capital Structure: Moderate reliance on debt, but leverage was temporarily

increased to finance growth in assets.
 Liquidity: Continued positive and growing net working capital, although a
small decline in 2024–25 may require monitoring.
 Asset Growth: Continued investment in fixed assets to allow for increased
capacity.
 Efficiency: Stable equity and growing reserves indicate efficiency and
profitable operations, while the increasing borrowings indicate increased
financial risk.

Common Size Analysis (Income Statement):

The common-size income statement analysis from 2021 to 2025 indicates steady top-
line growth, effective cost containment, and profitability.

1. Sales Growth:

Net Sales increased from ₹45,996 in 2021 to ₹61,469 in 2025 which indicates overall
sales growth which reflects steady, yet consistent market demand without volatility.

2. Cost of Sales:

COGS stayed at approximately 49-50% of revenue indicating good management of

production and purchase costs/discipline. The company sustained a Gross Margin of
approximately 45-51% indicating sound pricing strategy and effective management
of input cost.

3. Operating Expenses:

Operating expenses (Administrative, Selling and Depreciation) remained at an

average of 6-7% of revenue indicating managing operating expenses with great
discipline. The Operating Profit Ratio remained around ~44-45% which indicates
sound operating efficiency with high levels of resource management.

4. Non-Operating Expenses:

Non-operating expenses (at 19-23%) were a slight depressor to EBIT margins; and
non-operating income was minimal, contributing approximately 1% indicating a
limited cushion for diversification for income.

The EBIT was stable ranging from 22-23% indicating consistency with profitability
generated through the business’ main operating income stream.

5. Leverage:

Interest Expense was below 1%, indicating below levels of leverage and a strong
ability to generate sufficient revenue to cover interest obligations. Specifically,
liquidity indicators illustrate the impact of the low leverage by implying that the EBIT
is more than sufficient to cover interest expense obligations, decreasing financial
risk.

6. Profitability:

Earnings Before Tax (EBT) average was 22-23%, and the Net Profit After Tax (NPAT)
was consistently maintained at 17-18%, which displays a recurring profit generation
discipline, operational effectiveness, and ability to manage expenses and tax
liabilities.

The repeatability is intense with this ratio as the NPAT/Revenue is healthy indicating
return on revenue and effective management performance.

7. General Commentary:

 Strengths: The company has consistent growth in sales, maintained a strong

margin, controlled expenses well, and has limited financial risk.
 Weakness: High non-operating expenses and low other income sources
negatively affect overall margins, but only slightly.
 Common Size Analysis (Balance Sheet):

The Common Size Balance Sheet delineates every item as a proportion of total
assets, facilitating an analysis of the financial structure, liquidity, solvency and
efficiency of asset utilization.

1. Financial Overview:

Total assets of the Company are growing gradually, identifying growth and increased
operational capacity in addition to a strong financial position. The balance between
equity and liabilities is sound, indicating financial stability.

2. Asset Structure:

Non-current assets are a significant contributor of total assets, indication a capital-

intensive structure and a focus on long-term investments. Fixed assets are
generating a good utility and have ensured a constant level of production capacity in
the business. Current assets are accounted for a healthy mix of current assets and
indicates the ability of the company to borrow funds. However, the higher
inventories and receivables indicate moderate levels of working capital efficiency,
impacting cash flow.

3. Capital Structure:

Shareholder funds are the net of equity and liability and the primary source of
financing, indicating solid capitalization for the Company and a modest leverage of
capital. The current low percentage of long-term debt compared to either or
combined with shareholder funds indicates a conservative funding policy to reduce
the financial risk and profitability, solvency. Moreover, there is steady growth year-
on-year of reserves to contribute to retained earnings in the future, indicating the
ability to finance internally.

4. Liability Composition:

The business does have a small amount of non-current liabilities, therefore, the
company's gearing is relitively low. Current liabilities are manageable, which confirms
the ability to efficiently manage short-term funds. Ultimately, the balance supports a
reasonable current and working capital.

5. Liquidity and Solvency:

A favorable current ratio shows short-run solvency. A low level of dependence on

debt supports long-run solvency, whereas stable capital structure indicates financial
independence and sustainability.

6. Efficiency Examination:

The stable asset-equity ratio indicates strong asset efficiency. The increase in
reserves represents the retention of profits for future reinvestment, which aids
future earnings capacity. The ratio of fixed to current assets allows for flexible
operations.

7. Interpretation:
 Strengths-Assets outweigh liabilities, solid asset structure, low debt load, and
compliance with liquidity.
 Weakness- High levels of receivables and inventory levels could indicate
declining liquidity efficiency asset utilization.

Comparative Size Analysis (Income Statement):

1. Revenue Trend:

Net Sales increased slightly from ₹60,469 (2024) to ₹61,469 (2025). The absolute
increase was ₹1,000 (1.65%) indicating reasonably low growth, but stable revenue
and consistent market performance.

2. Cost Structure:

The Cost of Goods Sold increased from ₹30,440 (2024) to ₹31,312 (2025) (+₹872;
2.86%) and grew quicker than sales leading to some slight compressed margin. Gross
Profit however, slightly increased by ₹128 (+0.43%) from ₹30,029 to ₹30,157,
indicating effective management of costs while maintaining a consistent gross
margin.
3. Operating Expenses:

Operating expenses have increased but were controlled. The operating expense
structure compares as follows —

 Office & Administration: ₹1,669 to ₹1,704 (+2.09%).

 Selling & Distribution: ₹1,214 to ₹1,218 (+0.33%).
 Depreciation: ₹1,097 to ₹1,224 (+11.63%).
 Financial Expenses: ₹302 to ₹364 (+20.53%).

These increases indicate some impact from inflation transparency and some capital
investment in assets. In summary, Operating Profit decreased marginally by ₹96 (-
0.36%) to ₹26,865 indicating solid practice efficiency was sustained over the previous
year.

4. Non-Operating Results:

Non-operating expenses fell a slight ₹6 (-0.04%), and non-operating income

increased substantially by ₹204 (+20.97%) indicating improved management non-
core income.

5. Profitability:

EBIT increased from ₹13,764 to ₹13,878 (+₹114; 0.83%) and EBT increased from
₹13,675 to ₹14,300 (+₹625; 4.57%).

The increase in interest expense also jumped from ₹2,546 to ₹3,057 (+₹511) this
was offset by improved non-operating income performance. Provision for tax
increase was slight, at ₹95 (+2.67%). Net Profit After Tax (NPAT) increased from
₹10,114 to ₹10,644, an absolute increase of ₹530 (+5.24%) indicating better
profitability and resource allocation usages.

6. Overall Financial Interpretation:

 Strengths: improved NPAT; good cost control; increase in non-operating

income.
 Weaknesses: increasing COGS and finance expenses may impact margins
moving forward.
Comparative Size Analysis (Balance Sheet):
1. Review of the Comparative Balance Sheet of Financial Situation

For the Years Ending 2024 & 2025

There is a minor deterioration in the overall capital of the firm. Capital Employed has
decreased from ₹64,673 in the 2024 year to ₹62,641 in the 2025 annum, a decline of
₹2,032 (–3.1%). Indeed, they have less long-term resources available.
2. Sources of Funds

(a) Shareholders’ Funds: The amount declined from ₹50,973 to ₹49,153 (–₹1,820; –
3.6%) mostly from a decline in Reserves & Surplus (₹50,738 → ₹48,918). The Equity
Share Capital was the same at ₹235, which indicates no new issue of shares.

(b) Borrowed Funds: The decrease in this line was minor, (–₹212; –1.5%) from
₹13,700 to ₹13,488, showing that the Company was using an even fewer borrowed
funds which also helped the solvency position.

🔹 Interpretation: The capital structure reflects increased dependence on internal

funds and cautious usage of borrowed funds.

3. Application of Funds

(a) Fixed Assets: Increased from ₹53,294 to ₹53,863 (+₹569; +1.1%), suggesting that
there was nothing significant to add in terms in term assets

(b) Investments: Increased slightly from ₹3,486 to ₹3,551 (+₹65; +1.9%). Investment
policies are maintained.

(c) Working Capital: Decreased substantially from ₹7,893 to ₹5,227 (–₹2,666; –

33.8%) suggesting liquidity is constrained and there are more short term pressures.

4. Current Assets and Liabilities

(a) Current Assets: Increased from ₹20,296 to ₹20,899 (+₹603; +3.0%) but was only
mostly due to increased Other Current Assets (₹4,427 → ₹5,028; +13.6) with Quick
Assets remaining steady at ₹15,869 → ₹15,871.

(b) Current Liabilities: Increased dramatically from ₹12,403 to ₹15,672 (+₹3,269;

+26.4%) ultimately causing the decline in Net Working Capital (₹7,893 → ₹5,227).

🔹 Interpretation: what the moves regarding additional current liabilities noted above
has resulted in a liquidity position that is lower than last year, due to increases
current liabilities that have not happened at the same rate for current assets.

5. Understanding (Key Financial Indicators)

 Liquidity: Downturn arises from decline in working capital and increase in

payables.
 Solvency: Slight improvement because of decline in long-term borrowing.
 Profit Retention: Poorer evidenced by reduction in reserves and surpluses.
 Asset Utilization: Consistent. Some increase in fixed and investment assets
means ongoing capacity utilization continues to hold steady.

Trend Analysis (Income Statement):

1. Trend Analysis

For the Years 2021–2025

The Trend Analysis looks at performance changes over time, using 2021 as the base
year (100%) to measure the direction and rate of growth for income and expenses.

2. Revenue Performance

Net Sales grew from ₹45,996 (100%) in 2021 to ₹61,469 (133.6%) in 2025,
demonstrating a growth trend of 33.6% over this five-year period. The steady
upward trajectory of net sales demonstrates a faithful increase in volume and
efficiency of sales; in other words, it is factual, consistent market growth and ongoing
demand for the product, and successful marketing.

3. Cost of Goods Sold (COGS)

COGS increased from ₹22,569 (100%) in 2021 to ₹31,312 (138.7%) in 2025, occurring
at a faster pace compared with net sales. This indicates a trend of increased costs per
unit sold (approx 38.7%). COGS increases may be due to partially or fully inflationary
costs or higher input prices (such as freight) that may or may not be passed to
consumers. Nonetheless, the increase in COGS due to inflation is manageable. The
effective management of cost per unit was ultimately a benefit in achieving these
effective levels of production (Gross Profit) while sustaining gross margin.

4. Gross Profit Trend

Gross Profit grew from ₹23,427 (100%) in 2021 to ₹30,157 (128.7%) in 2025,
experiencing an upward trend consistently over every year. This averages a 28.7%
increase in profitability as compared to the 2021 base year. The Gross Profit
increases result from ongoing efficiencies in production and sales, notwithstanding
the increase in COGS.

5. Operating Expenses

Operating Expenses (Admin, Selling & Distribution, and Financial) have shown
moderate increases:

- Office & Administrative Expenses, ₹1,337 → ₹1,704 (127.4%)

- Financial Expenses, ₹108 → ₹364 (337%); the significant increase occurred due to
higher borrowing costs

- Depreciation, ₹1,012 → ₹1,224 (120.9%); reflects modest addition of capital

Overall, increases in operating expenses reflect controlled increases in expenses.

Operating efficiency remains intact over the same timeframe.

6. Operating profit has grown from ₹20,970 (100%) in 2021 to ₹26,865 (128.1%) in
2025. The increasing trend indicates not only sound cost control but also operational
efficiency even amid rising organizational input costs, suggesting a strong operating
margin trend.

7. Earnings and Profitability

  EBIT - Earnings Before Interest & Tax: ₹10,717 → ₹13,878 (129.5%), an
increase of 29.5%, signalling is an increase in operating leverage.
 EBT - Earnings Before Tax: ₹10,490 → ₹14,300 (136.5%), an increase of 36.5%
due in part to higher non-operating income.
 NPAT - Net Profit After Tax: ₹7,954 → ₹10,644 (133.9%), an increase of 33.9%
overall, denoting sustained growth in bottom-line profitability.

8. Interpretation

 Profitability Ratios: GPM and NPM reveal upward trends confirming healthy
profitability.
 Operating Efficiency: OPR exhibits a steady increase; expenses continue to be
managed and under control.
 Solvency Position: A small affect from higher finance cost on solvency has
been more than compensated by higher EBIT.
 Trend Line: The upward trend in the revenue and profit related variables
signal reliable financial performance and ongoing maintainable business
growth.

Trend Analysis (Balance sheet):

1. Capital Structure (Sources of Funds)

 Shareholders' Funds increased from ₹47,434 crores (2021) to ₹50,973 crores

(2025), resulting in a trend increase of 107.5%, which indicates a sustained
positive trend in retaining funds internally.
 Borrowed Funds, however, spiked from ₹9,841 crores to ₹13,488 crores, with
a trend increase of 137.1%. This relatively higher level indicates an increased
financial leverage used over the years.
 Total Capital Employed increased from ₹57,275 crores (2021) to ₹62,641
crores (2025), which was an overall increase of 9.4% and indicates moderate
overall growth in the financing base of the firm.

2. Application of Funds
  Fixed Assets continued to maintain a dominant position, growing from
₹51,650 crores to ₹53,863 crores or 104.3%, indicating that capital
investments were controlled and asset expansion was restricted.
 Investments exhibited strong upward movement, increasing from ₹2,826
crores to ₹3,587 crores or 125.7%, suggesting the firm was making use of idle
funds strategically to supplement or diversify into investments.
 Working Capital increased significantly: from ₹2,799 crores in 2021 to ₹5,522
crores in 2025 (197%), a reflection of liquidity surplus and increased
operational flexibility.

3. Liquidity Position

 Current Assets increased from ₹13,640 crores to ₹20,899 crores, 153% trend
growth, burgeoning primarily from the growth in Quick Assets—where
Current Assets expanded from ₹7,119 to ₹15,871 in 222.9% growth—
implying enhanced short-term solvency position.
 Current Liabilities also increased from ₹10,841 crores to ₹15,672 crores
(144.6%, trend), but at a slower pace than Current Assets, and as a result
strengthened the Current Ratio and overall liquidity position.
 Net Working Capital also more than doubled (from ₹2,799 to ₹5,227),
suggesting that even operationally the firm matched its financial strength.

4. Principal Interpretations

 Capital structure - Minor shift towards debt financing. Leverage is greater than
before but remains comfortable.
 Solvency - Positive because of reserves that have remained steady and
manageable levels of debt.
 Liquidity - Much improved. Current assets greater than current liabilities.
 Asset use - Fixed assets were relatively stable, indicating steady asset
utilization and no overinvestment.
 Financial flexibility - Much improved. Increased investments and working
capital buffer have positioned the firm for future operations.
 Overall trend - Stable growth phase, liquidity strengthened, limited asset
expansion, and balanced funding mix.
Ratios & Analysis
1. Liquidity Position

 The current ratio increased from 1.26 (2020-21) to a maximum of 1.64 (2023-
24), before dropping slightly to 1.33 (2024-25), reflecting a satisfactory level of
short-term solvency at all times.
 The quick ratio increased from 0.66 in 2020-21 to 1.01, indicating an improved
ability to meet current obligations without the need to rely on inventory.
 The liquidity position remains above the ideal level (1:1), demonstrating
efficient management of working capital.

2. Solvency / Leverage Analysis

 The debt-equity ratio fell steeply from 0.28 in 2020-21 to 0.26 in 2024-25
indicating a decline in overall financial leverage with better equity base.
  The debt service coverage ratio (DSCR) fell from 40.49x to 29.12x but still
remain a high ratio demonstrating adequate additional capacity to repay
debts.
 The interest coverage ratio fell from 47.2x to 32.9x, but remains above the
level showing comfortable solvency with the level of EBIT available to cover
interest obligations.

3. Efficiency (Activity Ratios)

 Operating cycle remained low (0-5 days) illustrating the efficient turnover of
working capital.
 Although the inventory turnover ratio remains stable in the region of ~7.5x
(Inventory holding period ~46 - 50 days), managing stock levels carefully.
 The debtors collection period increased slightly from 10 to 14-16 days but is
still managing debtors within acceptable levels.
 The creditor’s payment period fluctuated between 56 - 63 days and is
indicating payments discipline stable.
 The fixed assets turnover ratio improved from 89.05x to 114.12x indicating
efficient utilization of fixed assets.

4. Profitability Evaluation

 The Gross Profit Margin has steadied at around 50%, which indicates a
consistency in both production and pricing efficiency.
 The EBIT Margin has remained stable at approximately 23%, signaling a
consistent level of operating profitability.
 Net Profit Margin has ranged from 16.7–17.2%, demonstrating sustainable
bottom-line profitability.
 Return on Assets (ROA) has improved from 12.18% to 14.24%, showing
improvement in the efficiency of using the company's assets.
 Return on Capital Employed (ROCE) has improved from 18.71% to 21.56%,
which indicates improved profitability based on the total capital used.
 Return on Equity (ROE) has improved from 18.7% to 21.56%, illustrating
increased value created for shareholders.

5. Market & Comprehensive Ratios

  Earnings per Share (EPS) has steadily improved from ₹33.85 to ₹45.3,
indicating consistent value creation for shareholders in accordance with
earnings.
 The Price-Earnings (P/E) Ratio has decreased from 71.82 to 49.87, which
indicates improved earnings yield and possibly demonstrate an undervalued
stock.
 The DuPont Analysis (5-factor) has improved from 0.1677 to 0.2165, indicating
profitability, asset turnover and leverage efficiency contributed positively to
ROE.
 The DuPont (3-Factor) analysis indicates that return on equity (ROE) improved
from 0.1677 in fiscal year 2020-21 to 0.2165 in fiscal year 2024-25. The
increase was primarily driven by improved asset turnover performance along
with stable profit margins that signify the company was operating more
efficiently and/or had greater sustainable profitability while maintaining
control over their use of leverage.

6. Overall Interpretation

The business demonstrates strong overall financial health, which is shown by:

 Liquidity and solvency being strong,

 Asset utilization that is efficient,
 Stable profitability margins, and
 Rising returns for shareholders.