Company analysis of HUL and ITC

The Industry I choose to make my survey is the FMCG industry and the two companies are HUL ( Hindustan Unilever Limited ) , which is the market leader in FMCG industry, and ITC ( Indian Tobacco Company ) .

Ratios:

Liquidity Ratios/Solvency Ratio ‘s:

Current ratio:

It is the ratio of entire current assets to the entire current liabilities. When Current assets are divided by current liabilities give current ratio.

Current ratio = current assets ? current liabilities.

Current ratio

2010

2009

HUL

0.84

0.92

ITC

0.92

1.42

Acid trial ratio/quick ratio:

Acid-test ratio = Quick assets / Current liabilities.

Quick Ratio

2010

2009

HUL

0.46

0.51

ITC

0.39

0.61

Inventory bend over ratio:

Inventory turnover ratio = Cost of goods sold / mean stock list.

Inventory turnover ratio

2010

2009

HUL

8.99

8.26

ITC

6.04

5.26

Debtors turnover ratio:

Debtors turnover ratio = net recognition gross revenues / mean debitors

Debtors Turnover Ratio

2010

2009

HUL

29.24

41.83

ITC

24.31

21.32

Debt equity ratios:

D/E ratio = Total debt / Shareholder ‘s equity

Debt Equity Ratio

2010

2009

HUL

0.18

0.20

ITC

0.01

0.01

Profitability ratios:

– & gt ; Gross net income border = gross net income / gross revenues * 100

Gross Profit Margin

2010

2009

HUL

14.70

13.50

ITC

29.74

29.17

Net net income border:

Net net income ratio = net incomes after involvements and revenue enhancements / net gross revenues.

Net Net income Margin

2010

2009

HUL

12.29

12.09

ITC

21.30

21.18

Operating net income ratio:

Operating Net income Ratio

2010

2009

HUL

15.74

14.46

ITC

33.22

32.84

Operating net income ratio = EBIT / net gross revenues.

Tax return on capital employed ( ROCE ) :

ROCE = EBIT / mean entire capital employed * 100

ROCE

2010

2009

HUL

106.78

118.59

ITC

42.64

SWOT analysis of HUL:

1. Strengths

Market leader

Strong finance

Good acid ratios

Very less bend over period

Efficient direction accomplishment

2. Menaces

Cut – pharynx competition

Competition from face merchandises

Excise responsibilities and revenue enhancements imposed by the authorities

3. Opportunities

Huge untapped markets

Exports potency

Addition in per capita income of the people

Demographics tendencies across the universe

4. Failings

Inflexibility in engineering degrees

Operational costs

Less current ratios

SWOT Analysis of ITC:

1. Strengths

ITC used traditional concern for new sections to develop new trade names.

ITC is a umbrella company which involved in different concern sectors.

2. Failing

The ITC Company is still dependent upon baccy grosss.

The ITC ‘s chief concern is baccy. ITC stands for Imperial Tobacco Company of India LTD. The stigmatization continues to utilize its original name, the negative connexion of baccy with premature decease and hapless wellness.

Opportunities

Indian consumers use personal attention merchandises is lowest in the universe offering an chance for ITC aromas, soaps and shampoos.

The ITC Company researches more to cognize the consumer gustatory sensations in North, West and East of India.

4. Menace

The ITC ‘s menace is from competition both from domestic and international. The Torahs of economic sciences dictate if rivals see that solid net income to be made in emerging consumer society finally new merchandises and services will be made available.

Net income and Loss history of HUL Company in the old ages 2009 & A ; 2010 Rs in crore:

Debit

2009

2010

Recognition

2009

2010

Outgo

Natural stuffs

Depreciation

Interest

Equity Dividend

Preference Dividend

Power and fuel

Corporate Dividend Tax

Reported Net Net incomes

Transportation to capital history

To Net net income

11,380.05

195.30

25.32

1634.51

0

301.37

277.79

2500.71

28250.28

44565.33

9003.97

184.03

6.98

1417.94

0

244.34

283.03

2202.03

23801.56

37143.88

Income:

Gross saless turnover

Excise responsibility

Net gross revenues

Other income

Stock accommodation

21927.23

1422.95

20504.28

276.54

434.33

44565.33

18462.34

693.22

17769.12

199.73

19.47

37143.88

Balance sheet of HUL Company in the old ages 2009 & A ; 2010 Rs in crore:

Liabilitiess

2009

2010

Assetss

2009

2010

Beginnings of financess:

Entire portion capital

Share application money

Preference portion capital

Militias

Revalution militias

Securied Loans

Unsecuried loans

Current Liabilitiess:

Commissariats

Entire

217.99

0

0

1842.85

0.67

144.65

277.30

4440.08

1527.98

8451.52

218.17

0

0

2364.68

0.67

0

0

5493.97

1441.55

9515.04

Gross Block

Less: Collector Depreciation

Investings

Current Assetss:

Inventories

Sundary Deters

Cash & A ; Bank balance

Loans & A ; progresss

Fixed sedimentations

Assorted disbursals

Capital working advancement

2881.73

1274.95

332.62

2528.86

536.89

190.59

1196.95

1586.76

0

472.07

8451.52

3581.96

1419.85

1264.08

2179.33

678.44

231.37

1068.31

1660.84

0

273.96

9515.04

Cash Flows of Britannia Company for old ages 2009 & A ; 2010 Rs in Crore:

Beginnings

2009

2010

Applications

2009

2010

Cash Opening Balance

Cash from Operationss

Net Cash from Investment activities

Net Cash from Financing activities

Entire

200.86

8028.65

878.19

-1330.36

7777.35

1777.62

3432.37

-1137.46

-2180.32

1892.21

Closing Cash Equivalent

7777.35

7777.35

1892.21

1892.21

Net income and loss history of ITC Company in twelvemonth 2009 & A ; 2010 Rs in crore:

Debit

2009

2010

Recognition

2009

2010

Outgo

Natural stuffs

Depreciation

Interest

Equity Dividend

Preference Dividend

Power and fuel

Corporate Dividend Tax

Reported Net Net incomes

Transportation to capital history

To Net Net income

6864.96

549.41

47.65

0

0

394.12

237.34

3263.59

36218.82

47575.89

7140.69

608.71

90.28

0

0

387.34

634.15

4061.00

39974.6

52896.77

Income:

Gross saless turnover

Excise responsibility

Net gross revenues

Other income

Stock accommodation

23247.84

8262.03

14,985.81

426.21

630.00

47575.89

26,399.63

7832.18

18,567.45

545.05

-447.54

52896.77

Balance Sheet of ITC Company in twelvemonth 2009 & A ; 2010 Rs in crore:

Liabilites

2009

2010

Assetss

2009

2010

Beginnings of Fundss:

Entire portion capital

Share application money

Preference portion capital

Militias

Revalution militias

Securied loans

Unsecuried loans

Current liabilities

Commissariats

Entire

377.44

0

0

13,302.55

55.09

11.63

165.92

4121.59

1740.49

19774.71

381.82

0

0

13,628.17

54.39

0

107.71

4619.54

4549.94

23341.57

Gross Block

Less:

Collector

Depreciation

Investing

Current Assetss:

Inventories

Sundary Deters

Cash & A ; Bank balance

Loans & A ; progresss

Fixed sedimentations

Micellaneous disbursals

Capital working advancement

10,558.65

3286.74

2837.75

4599.72

668.67

68.73

2150.21

963.66

0

1214.06

19774.71

11,967.86

3825.46

5726.87

4549.07

858.80

120.16

1929.16

1006.12

0

1008.99

23341.57

Cash flows of ITC Company in old ages 2009 & A ; 2010 Rs in crore:

Beginnings

2009

2010

Applications

2009

2010

Cash Opening Balance

Cash from Operationss

Net Cash from Investment activities

Net Cash from Financing activities

Entire

570.25

3279.03

-1260.74

-1556.15

1032.39

993.70

4630.65

-3531.56

-1009.86

1082.93

Closing Cash Equivalent

1032.39

1032.39

1082.93

1082.93

Vertical Analysis:

Net income & A ; Loss history of HUL in old ages 2009 & A ; 2010 Rs in crore:

2009 2010

Income

SalesA Turnover

21,927.23

18,462.34

Excise Duty

1,422.95

693.22

Net Gross saless

20,504.28

17,769.12

Other Income

276.54

199.73

Stock Adjustments

434.33

19.47

Entire Income

21,215.15

17,988.32

Outgo

Natural Materials

11,380.05

9,003.97

Power & A ; Fuel Cost

301.37

244.34

Employee Cost

1,152.12

936.30

Other Fabrication Expenses

297.34

254.40

Selling and Admin Expenses

3,857.48

3,737.52

Assorted Expenses

985.31

814.36

Preoperative Exp Capitalised

0.00

0.00

Entire Expenses

17,973.67

14,990.89

Mar ’09

Mar ’10

Operating Net income

2,964.94

2,797.70

PBDIT

3,241.48

2,997.43

Interest

25.32

6.98

PBDT

3,216.16

2,990.45

Depreciation

195.30

184.03

Other Written Off

0.00

0.00

Net income Before Tax

3,020.86

2,806.42

Extra-ordinary points

48.53

43.97

PBT ( Post Extra-ord Items )

3,069.39

2,850.39

Tax

572.94

648.36

Reported Net Net income

2,500.71

2,202.03

Entire Value Addition

6,593.62

5,986.92

Preference Dividend

0.00

0.00

Equity Dividend

1,634.51

1,417.94

Corporate Dividend Tax

277.79

238.03

Per portion informations ( annualised )

Shares in issue ( hundred thousand )

21,798.76

21,816.87

Gaining Per Share ( Rs )

11.47

10.09

Equity Dividend ( % )

750.00

650.00

Book ValueA ( Rs )

9.45

11.84

Balance sheet of HUL Company in old ages 2009 & A ; 2010 Rs in crore:

2009 2010

Beginnings Of Fundss

TotalA ShareA Capital

217.99

218.17

EquityA ShareA Capital

217.99

218.17

ShareA Application Money

0.00

0.00

PreferenceA ShareA Capital

0.00

0.00

Militias

1,842.85

2,364.68

Reappraisal Militias

0.67

0.67

Networth

2,061.51

2,583.52

Secured Loans

144.65

0.00

Unbarred Loans

277.30

0.00

Entire Debt

421.95

0.00

Entire Liabilitiess

2,483.46

2,583.52

Gross Block

2,881.73

3,581.96

Less: Accum. Depreciation

1,274.95

1,419.85

Net Block

1,606.78

2,162.11

Capital Work in Advancement

472.07

273.96

Investings

332.62

1,264.08

Inventories

2,528.86

2,179.93

Assorted Debtors

536.89

678.44

Cash and Bank Balance

190.59

231.37

Entire CurrentA Assetss

3,256.34

3,089.74

Loans and Progresss

1,196.95

1,068.31

Fixed Deposits

1,586.76

1,660.84

Entire CA, Loans & A ; Progresss

6,040.05

5,818.89

Deffered Recognition

0.00

0.00

Current Liabilitiess

4,440.08

5,493.97

Commissariats

1,527.98

1,441.55

Entire CL & A ; Commissariats

5,968.06

6,935.52

Net CurrentA Assetss

71.99

-1,116.63

Assorted Expenses

0.00

0.00

TotalA Assetss

2,483.46

2,583.52

Contingent Liabilitiess

417.26

468.49

Book ValueA ( Rs )

9.45

11.84

Cash flows of HUL Company in old ages 2009 & A ; 2010 Rs in crore:

2009 2010

Net Net income Before Tax

3025.12

2707.07

Net Cash From Operating Activities

2028.65

3432.37

Net Cash ( used in ) /from

Investing Activities

878.19

-1137.46

Net Cash ( used in ) /from Financing Activities

-1330.36

-2180.32

Internet ( lessening ) /increase In Cash andA Cash Equivalents

1576.49

114.59

Opening Cash & A ; A Cash Equivalents

200.86

1777.62

Closing CashA & A ; A Cash Equivalents

1777.35

1892.21

Net income & A ; Loss history of ITC Company in twelvemonth 2009 & A ; 2010 Rs in crore:

2009 2010

Income

Gross saless Employee turnover

23,247.84

26,399.63

Excise Duty

8,262.03

7,832.18

Net Gross saless

14,985.81

18,567.45

Other Income

426.21

545.05

Stock Adjustments

630.30

-447.54

Entire Income

16,042.32

18,664.96

Outgo

Natural Materials

6,864.96

7,140.69

Power & A ; Fuel Cost

394.12

387.34

Employee Cost

903.37

1,014.87

Other Fabrication Expenses

402.88

413.79

Selling and Admin Expenses

1,684.41

2,093.87

Assorted Expenses

516.90

1,008.91

Preoperative Exp Capitalised

-72.55

-71.88

Entire Expenses

10,694.09

11,987.59

Mar ’09

Mar ’10

Operating Net income

4,922.02

6,132.32

PBDIT

5,348.23

6,677.37

Interest

47.65

90.28

PBDT

5,300.58

6,587.09

Depreciation

549.41

608.71

Other Written Off

0.00

0.00

Net income Before Tax

4,751.17

5,978.38

Extra-ordinary points

81.52

48.65

PBT ( Post Extra-ord Items )

4,832.69

6,027.03

Tax

1,565.13

1,965.43

Reported Net Net income

3,263.59

4,061.00

Entire Value Addition

3,829.13

4,846.90

Preference Dividend

0.00

0.00

EquityA Dividend

1,396.53

3,818.18

Corporate Dividend Tax

237.34

634.15

Per portion informations ( annualised )

Shares in issue ( hundred thousand )

37,744.00

38,181.77

Gaining Per Share ( Rs )

8.65

10.64

EquityA Dividend ( % )

370.00

1,000.00

Book ValueA ( Rs )

36.24

36.69

BALANCE SHEET OF ITC COMPANY IN YEAR 2009 & A ; 2010 Rs in Crore:

2009 2010

Beginnings Of Fundss

Entire Share Capital

377.44

381.82

Equity Share Capital

377.44

381.82

ShareA ApplicationA Money

0.00

0.00

Preference Share Capital

0.00

0.00

Militias

13,302.55

13,628.17

Reappraisal Militias

55.09

54.39

Networth

13,735.08

14,064.38

Secured Loans

11.63

0.00

Unbarred Loans

165.92

107.71

Entire Debt

177.55

107.71

Entire Liabilitiess

13,912.63

14,172.09

ApplicationA Of Fundss

Gross Block

10,558.65

11,967.86

Less: Accum. Depreciation

3,286.74

3,825.46

Net Block

7,271.91

8,142.40

Capital Work in Advancement

1,214.06

1,008.99

Investings

2,837.75

5,726.87

Inventories

4,599.72

4,549.07

Assorted Debtors

668.67

858.80

Cash and Bank Balance

68.73

120.16

Entire Current Assets

5,337.12

5,528.03

Loans and Progresss

2,150.21

1,929.16

Fixed Deposits

963.66

1,006.12

Entire CA, Loans & A ; Progresss

8,450.99

8,463.31

Deffered Recognition

0.00

0.00

Current Liabilitiess

4,121.59

4,619.54

Commissariats

1,740.49

4,549.94

Entire CL & A ; Commissariats

5,862.08

9,169.48

Net Current Assetss

2,588.91

-706.17

Assorted Expenses

0.00

0.00

Entire Assetss

13,912.63

14,172.09

Contingent Liabilitiess

261.36

258.73

Book ValueA ( Rs )

36.24

36.6

Cash Flows of ITC Company in twelvemonth 2009 & A ; 2010 Rs in crore:

2009 2010

Net ProfitA BeforeA Tax

4825.74

6015.31

Net Cash From Operating Activities

3279.03

4630.65

Net Cash ( used in ) /from

Investing Activities

-1260.74

-3531.56

Net Cash ( used in ) /from Financing Activities

-1556.15

-1009.86

Internet ( lessening ) /increase In Cash and Cash Equivalents

462.14

89.23

Opening Cash & A ; Cash Equivalents

570.25

993.70

Closing Cash & A ; Cash Equivalents

1032.39

1082.93

Decision:

HUL has high liquidness in 2009 when compared to 2010, that means HUL had higher ability to unclutter of its liabilities and was able to give assurance for the short term investors in twelvemonth 2009 and its somewhat decreased in 2010. However the criterion ratio that is desirable is 2.0 and when compared with the criterions HUL had really less liquidness ratio in both the old ages. ITC has a current ratio of 1.42 is really good and it attracts many little term investors. With high capableness of glade of the liabilities acts as really good mark for the company. But in the recent 2010 ITC ‘s current ratio has fallen really drastically to 0.92, which is of class non desirable and acts as a negative mark for the investors.

Acid ratio of HUL shows that big portion of the current assets of HUL is tied up in slow moving and unsaleable stock lists and decelerate paying debts. In a manner it is besides good for HUL more that half of the liabilities can be easy over come from the speedy assets and that is reasonably good for an FMCG company, because in FMCG companies stock lists play a major function in its current assets. However the criterion ratio that is required for any company is 1.0. In 2009 ITC had a really strong acid ratio that means ITC was no really dependent on its stock lists to unclutter off its liabilities this is really good mark for investors to put in ITC. In 2010 the acid ratio does n’t look good and nevertheless ITC falls short from the criterion ratio 1.0.

The inventory-holding period of HUL for twelvemonth 2010 and 2009 are 1.33 months and 1.29 months. This specifies that the company holds its stock list or the buffer period of the company is 1.3 months appox. The inventory-holding period of ITC for twelvemonth 2010 and 2009 are 2 months and 2.28 months. When compared with HUL ITC has really less buff period. The debitors ‘ aggregation period is 0.41 months and 0.28 months for the old ages 2010 and 2009. These figures show that the company is really acute in roll uping its money. The debitors ‘ aggregation periods are 0.49 months and 0.56 months for the old ages 2010 and 2009 severally.

This ratio shows that creditors money is really less when compared to the proprietors equity or stockholder ‘s capital. The debt equity ratios of ITC are 0.01 and 0.01 for the old ages 2010 and 2009 severally. I think this is a enormous accomplishment for the company this clearly shows that ITC has zero dependence on its creditors. This besides shows the company is self-sufficing. Gross net income borders of ITC shows that company earns a just sum of money to run into its operational disbursals and ensures good sum of returns for the stockholders. HUL does non bask a just gross net income border. However being really effectual at operations HUL enjoys a considerable sum of net income border.

The net net income ratios of ITC shows it has a high net net income border it would guarantee equal return to the proprietors every bit good as enable a house to defy inauspicious economic conditions when selling monetary values worsening, cost of production is lifting and demand for the merchandise is falling.

When compared to ITC, HUL enjoys a low net net income border, which indirectly does non promote investors. Its is apparent that HUL has a higher ROCE ratio than of ITC and this clearly shows that HUL is more efficient in the usage of capital employment.