HINDUSTAN UNILEVER LIMITED
I.
ABOUT THE COMPANY:
Hindustan Unilever (HUL) Ltd is India`s largest fast moving consumer goods company, with
leadership in Home & Personal Care Products and Foods & Beverages.HUL`s brands - like
Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond`s, Sunsilk, Clinic, Pepsodent,
Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna, Kwality Walls are household
names across the country and span many categories - soaps, detergents, personal products,
tea, coffee, branded staples, ice cream and culinary products.
The company`s product portfolio includes Home & Personal Care-Personal WashLux, Breeze, Lifebuoy, Dove, Liril, Pears, Hamam & Rexona.Laundry-Surf Excel, Rin,
Wheel& Sunlight. Hair care. Deodorant-Axe &Rexona.Ayurvedic Personal & Health CareAyush. Skin Care-Fair & Lovely, Pond`s, Vaseline, & Aviance. Oral Care-Pepsodent &
Closeup. Colour Cosmetic-Lakme. Foods-Tea-Brooke Bond & Lipton. Coffee-Brooke Bond
Bru. Foods-Kissan, Annapurna & Knorr. Ice Cream-Kwality Wall`s. The company also
engaged in the business of Beverages, Packaged Foods, Other Operations, Personal Products,
Soaps & Detergents.
1
2
3
4
Company Name
Years in existence
Industry details
Competitors
Hindustan Unilever Ltd
87 years 6 months
FMCG
• Marico
• L'Oréal
• Nirma Ltd
• ITC Limited
• Colgate-Palmolive
• Procter and Gamble
• Dabur India
5
6
7
Sales in the last reported full year
Net profit after taxes in the reported full year
Some important ratios
38,785 Cr
6,738 Cr
Per Share Ratio (Rs):31.17
Net Profit Margin (%):16.98
Return on Net worth /
Equity (%):82.00
8
Balance Sheet size (total of either assets or
liabilities)
Total Assets: 8,886 Cr
Total Liabilities: 9,104 Cr
BALANCE SHEET
Previous Years »
Hindustan Unilever
---
Standalone Balance Sheet
Mar 20
in Rs. Cr.
Mar 19
Mar 18
Mar 17
Mar 16
12 mths
12 mths
12 mths
12 mths
12 mths
216.00
216.00
216.00
216.00
216.00
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital
216.00
216.00
Reserves and Surplus
7,815.00
7,443.00
6,859.00
6,274.00
6,063.00
Total Reserves and Surplus
Total Shareholders’ Funds
NON-CURRENT LIABILITIES
7,815.00
7,443.00
6,859.00
6,274.00
6,063.00
8,031.00
7,659.00
7,075.00
6,490.00
6,279.00
Other Long-Term Liabilities
Long Term Provisions
1,269. 00
1,198.00
804.00
1,049. 00
666.00
772.00
574.00
485.00
395.00
594.00
Total Non-Current Liabilities
2,467.00
1,853. 00
1,438.00
1,059.00
989.00
Trade Payables
7,399.00
7,070.00
7,013.00
6,006.00
5,498.00
Other Current Liabilities
1,287.00
782.00
972.00
809.00
864.00
501.00
651.00
387.00
290.00
8,636.00
7,202.00
Total Share Capital
216.00
216.00
216.00
CURRENT LIABILITIES
Short Term Provisions
Total Current Liabilities
Total Capital and Liabilities
418.00
9,104.00
8,353.00
19,602.00
17,865.00 17,149.00 14,751.00 13,920.00
6,652.00
4,625.00
3,907.00
ASSETS
NON-CURRENT ASSETS
Tangible Assets
3,776.00
3,654.00
Intangible Assets
431.00
436.00
366.00
370.00
12.00
Capital Work-ln-Progress
513.00
373.00
430.00
203.00
386.00
4,716.00
4,572.00
4,227.00
3,300.00
Fixed Assets
5,569.00
2,902.00
Non-Current Investments
Deferred Tax Assets [Net]
252.00
261.00
256.00
339.00
256.00
255.00
260.00
160.00
319.00
168.00
Long Term Loans and Advances
453.00
396.00
404.00
352.00
162.00
523.00
387.00
419.00
Other Non-Current Assets
1,159.00
784.00
Total Non-Current Assets
CURRENT ASSETS
7,694.00
6,491.00
6,010.00
5,386.00
4,368.00
Current Investments
1,248.00
2,693.00
2,855.00
3,519.00
2,461.00
Inventories
2,636.00
2,422.00
2,359.00
2,362.00
2,528.00
928.00
1,064.00
Trade Receivables
1,046.00
1,673.00
1,147.00
Cash and Cash Equivalents
5,017.00
3,688.00
3,373.00
Other Current Assets
Total Current Assets
1,961.00
11,908.00
898.00 1,405.00
11,374.00 11,139.00
Total Assets
19,602.00
17,865.00 17,149.00 14,751.00 13,920.00
1 ,671.00 2,759.00
885.00
9,365.00
740.00
9,530.00
1. MANAGING RISK
FINANCIAL RISK MANAGEMENT
The Company’s business activities are exposed to a variety of financial risks, namely liquidity
risk, market risk, credit risk and commodity risk. The Company’s senior management has the
overall responsibility for establishing and governing the Company’s risk management
framework. The Company has constituted a Risk Management Committee, which is
responsible for developing and monitoring the Company’s risk management policies. The
Company’s risk management policies are established to identify and analyse the risks faced
by the Company, to set and monitor appropriate risk limits and controls, periodically review
the changes in market conditions and reflect the changes in the policy accordingly. The key
risks and mitigating actions are also placed before the Audit Committee of the Company.
A. Management of Liquidity Risk: Liquidity risk is the risk that the Company will face in
meeting its obligations associated with its financial liabilities. The Company’s approach in
managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when
due without incurring unacceptable losses. In doing this, management considers both normal
and stressed conditions.
The Company maintained a cautious liquidity strategy, with a positive cash balance
throughout the year ended 31st March, 2020 and 31st March, 2019. Cash flow from
operating activities provides the funds to service the financial liabilities on a day-to-day
basis. The Company regularly monitors the rolling forecasts to ensure it has sufficient cash
on an on-going basis to meet operational needs.
Any short-term surplus cash generated, over and above the amount required for working
capital management and other operational requirements, is retained as cash and cash
equivalents (to the extent required) and any excess is invested in interest bearing term
deposits and other highly marketable debt investments with appropriate maturities to
optimise the cash returns on investments while ensuring sufficient liquidity to meet its
liabilities.
B. Management of Market Risk: The Company’s size and operations result in it being exposed
to the following market risks that arise from its use of financial instruments:
• currency risk;
• price risk;
• interest rate risk; and
• commodity risk
a) Currency Risk: The Company is subject to the risk that changes in foreign currency
values impact the Company’s exports revenue and imports of raw material and
property, plant and equipment. As at 31st March, 2020, the unhedged exposure to the
Company on holding financial assets (trade receivables) and liabilities (trade
payables) other than in their functional currency amounted to ` 5 crores payable (net)
[31st March, 2019: ` 11 crores]
Observation: A 5% strengthening of the INR against key currencies to which the
Company is exposed (net of hedge) would have led to approximately an additional `
0 crore gain in the Statement of Profit and Loss (2018-19: ` 1 crore gain). A 5%
weakening of the INR against these currencies would have led to an equal but
opposite effect.
b) Price Risk: The Company is mainly exposed to the price risk due to its investment in
debt mutual funds. The price risk arises due to uncertainties about the future market
values of these investments. At 31st March, 2020, the investments in debt mutual
funds amounts to ` 1,248 crores (31st March, 2019: ` 1,813 crores). These are
exposed to price risk.
Observation: A 1% increase in prices would have led to approximately an additional
` 12 crores gain in the Statement of Profit and Loss (2018-19: ` 18 crores gain). A
1% decrease in prices would have led to an equal but opposite effect.
c) Interest Rate Risk: The Company is mainly exposed to the interest rate risk due to
its investment in treasury bills. The interest rate risk arises due to uncertainties
about the future market interest rate on these investments. In addition to treasury
bills, the Company invests in term deposits. Considering the short-term nature,
there is no significant interest rate risk pertaining to these deposits. As at 31st
March, 2020, the investments in treasury bill amounts to Nil (31st March, 2019: `
880 crores). These are exposed to interest rate risk.
Observation: A 0.25% decrease in interest rates would have led to approximately
Nil amount in the Statement of Profit and Loss (2018-19: ` 1 crore gain). A 0.25%
increase in interest rates would have led to an equal but opposite effect
d) Commodity Risk: The Company is exposed to the risk of changes in commodity
prices in relation to its purchase of certain raw materials. At 31st March, 2020, the
Company had hedged its exposure to future commodity purchases with commodity
derivatives valued at ` 32 crores (31st March, 2019: Nil). Hedges of future
commodity purchases resulted in cumulative losses of ` 12 crores (31st March,
2019: Nil) being reclassified to the income statement as an adjustment to inventory
purchase.
Observation: A 10% increase in prices of open trades would have led to
approximately ` 21 crores gain in OCI (2018-19: Nil). A 10% decrease in prices would
have led to an equal but opposite effect.
C. Management of Credit Risk: Credit risk is the risk of financial loss to the Company if a
customer or counter-party fails to meet its contractual obligations.
Trade receivables: Concentration of credit risk with respect to trade receivables are limited,
due to the Company’s customer base being large and diverse. All trade receivables are
reviewed and assessed for default on a quarterly basis. Our historical experience of
collecting receivables indicate a low credit risk. Hence, trade receivables are considered to
be a single class of financial assets.
Other financial assets: The Company maintains exposure in cash and cash equivalents, term
deposits with banks, investments in treasury bills, Government securities, money market
liquid mutual funds and derivative instrument with financial institutions. The Company has
set counterparty limits based on multiple factors including financial position, credit rating,
etc. The Company has given inter-corporate deposits (ICD) only to its subsidiaries
amounting ` 226 crores (31st March, 2019: ` 191 crores).
Observation: The Company’s maximum exposure to credit risk as at 31st March, 2020 and
31st March, 2019 is the carrying value of each class of financial assets.
2. DECISION MAKING:
The Administrative Matters Committee has been set up to oversee routine operations that
arise in the normal course of the business, such as decision on banking relations, delegation
of operational powers, appointment of nominees under statutes, etc. The Committee
comprises three Executive Directors of the Board. The Committee reports to the Board and
the minutes of these meetings are placed before the Board for information.
3. RESEARCH & DEVELOPMENT:
HUL continues to derive sustainable benefit from the strong foundation and long
tradition of R&D at Unilever, which differentiates it from others. New products, processes
and benefits flow from work done in various Unilever R&D centres across the globe,
including in India. The Unilever R&D labs in Mumbai and Bengaluru work closely with the
business to create exciting innovations that help us win with our consumers. With worldclass facilities, and a superior science and technology culture, Unilever attracts the best
talent to provide a significant technology differentiation to its products and processes.
Effective 1st April, 2020, HUL added a new R&D facility for the Nutrition business
based at Gurgaon, consequent to the merger of GSK CH with the Company. The R&D
programmes, undertaken by Unilever globally, are focused on the development of
breakthrough and proprietary technologies with innovative consumer propositions.
The global R&D team comprises highly qualified scientists and technologists working in
the areas of Home Care, Beauty & Personal Care, Foods & Refreshment and Water
Purification and critical functional capability teams in the areas of Regulatory, Clinicals,
Digital R&D, Product & Environment Safety and Open Innovation.
4. MINIMIZING MANUFACTURING COST:
Against this challenging backdrop, we are focusing on the long-term health of the business,
keeping our savings ambition unchanged. HUL are driving cost agility, judiciously reviewing
cash flows and reallocating spends with rigorous discipline.
5. RAISING CAPITAL
Equity share capital and other equity are considered for the purpose of Company’s capital
management. The Company manages its capital so as to safeguard its ability to continue as a
going concern and to optimise returns to shareholders. The capital structure of the Company
is based on management’s judgement of its strategic and day-to-day needs with a focus on
total equity so as to maintain investor, creditors and market confidence. The management
and the Board of Directors monitor the return on capital as well as the level of dividends to
shareholders. The Company may take appropriate steps in order to maintain, or if necessary,
adjust, its capital structure.
6. EFFECTIVE FUNCTIONING
Financial Year 2019-20 has been a challenging year with weakening macro-economic
conditions, slowing market growths in FMCG sector and finally, COVID-19 outbreak and
containment measures towards the end of the year. Against this challenging backdrop, we
have delivered competitive and profitable growth. Our financial year 2019-20 performance
was steady at 2% Domestic Consumer Growth supported by 2% Underlying Volume Growth.
This resilient performance is a reflection of the strength of our brands, execution prowess
and rigour and discipline in implementing a consistent strategy. We have grown
competitively overall in the segments in which we operate, in financial year 2019-20.
Its bottom-line performance was good with a healthy 100 bps EBITDA margin expansion on a
comparable basis. Its profit after tax and before exceptional items (PAT bei) grew at 11%.
The margin expansion is a result of our strong savings agenda, scale efficiencies achieved on
the back of healthy volume growth, mix impact given our strong portfolio of premium
brands and market development cells.
7. GROWTH AND DIVERSIFICATION
For the nine months, ended December 2019, Domestic Consumer Growth was at 6%,
reflective of our strong performance delivery. Given the disruptions to supply chain arising
from COVID-19 in March 2020, for the full year 2019-20, Domestic Consumer Growth was
2% with Underlying Volume Growth of 2%. Our EBITDA margin improved by 100 bps on
comparable basis, PAT (bei) *, grew by 11% to ` 6,743 crores and PAT at ` 6,738 crores was
up by 12%. We sustained our track record of strong cash generation. The Board of Directors
have proposed a final dividend of ` 14 per share, subject to the approval of the shareholders
at the AGM. Together with the interim dividend of ` 11 per share, the total dividend for the
financial year ending 31st March 2020 amounts to ` 25 per share; an increase of 14%.
Our endeavour is to shape a Growth Culture based on three tenets: Human, Purposeful and
Accountable. HUL remain committed to listening to our employees and build these insights
into actions. Our annual employee survey, Uni Voice garnered a participation from 94% of
our workforce this year, reaching around 15,000+ employees. The survey showed
improvements across all dimensions. Overall Engagement stood at 90%, 94% of our
employees believe we have the right strategy to win and 90% of employees believe we care
about their well-being. The employee voice through these encouraging scores is testimony
to our actions and how our employees experience your Company every day.
8. SHORT-TERM AND LONG-TERM GOALS
•
•
•
•
•
•
•
•
•
Improve people’s health, confidence and well-being
Improve the health of the planet
Contribute to a fairer and more socially inclusive world
Deliver long-term, superior value
Serve people everywhere
Use our scale for good
Create capability through lifelong learning
Unlock capacity for growth
Deepen our culture of pioneering by driving performance through leadership and
innovation in all we do.
9. MARKETING A COMPANY / PRODUCT
HUL are one of the largest advertisers in the country based on media spend. They create an
increasing amount of tailored digital content themselves to connect with consumers and
make it easy for them to choose their brand.
HUL uses a combination of channels, which includes product labels, websites, careline phone
numbers and leaflets to communicate openly with its consumers.
10. DIVIDEND AND INTEREST
HUL Directors recommend a Final Dividend of ` 14/- per equity share of face value of ` 1/each for the year ended 31st March, 2020. The Interim Dividend of ` 11/- per equity share
was paid on Tuesday, 5th November, 2019. The Final Dividend, subject to the approval of
Members at the Annual General Meeting on Tuesday, 30th June, 2020, will be paid on or
after Friday, 3rd July, 2020, to the Members whose names appear in the Register of
Members, as on the Book Closure date, i.e., from Thursday, 23rd June, 2020, to Tuesday
30th June, 2020, (both days inclusive). The total dividend for the financial year, including the
proposed Final Dividend, amounts to ` 25/- per equity share and will absorb ` 6,141 crores
(including Dividend Distribution Tax of ` 470 crores on Interim Dividend). In view of the
changes made under the Income-tax Act, 1961, by the Finance Act, 2020, dividends paid or
distributed by the Company shall be taxable in the hands of the Shareholders.