SUMMER TRAINING PROJECT REPORT

ON
Comparative analysis of financial statements of
Two FMCG Company: ITC Limited & HUL Limited

CHRONICLE CLUB
Submitted in partial fulfillment of the requirement
For the award of degree of
INTEGRATED MASTER OF BUSINESS ADMINISTRATION
SESSION (2024-2025)
SUBMITTED BY:
Name: MONU
Class: IMBA 9th SEMESTER
University Roll No.-2002720390023

External Guide- Internal Guide-

(Ms MADHUMITA) (Dr. Rashi Srivastava)

GREATER NOIDA INSTITUTE OF TECHNOLOGY

(MBA Institute)

Greater Noida

(Affiliated to Dr. A.P.J. Abdul Kalam Technical University, Lucknow)

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2
 Director Certificate
This is to certify that the work which is being presented in this
Summer Internship Project report entitled Comparative analysis of
financial statements of Two FMCG Company: ITC Limited &
HUL Limited is an authentic record of the MONU carried out under
supervision of Dr. Rashi Srivastava The statements made by the
candidate are correct to the best of my knowledge.

Dr. Rashi Srivastava Dr. Anshul Sharma

(Mentor) (Director)
GNIOT MBA Institute
Date:16-12-2024

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 DECLARATION

I MONU student of IMBA 9th Semester, studying at Greater Noida Institute of

Technology (MBA Institute), Greater Noida , hereby declare that the summer
training report on Comparative ANALYSIS OF FINANCCIAL STATEMENT
OF TWO FMCG COMPANY: ITC & HUL submitted to DR. A.P.J. ABDUL
KALAM TECHNICAL UNIVERSITY, LUCKNOW in partial fulfillment of
Degree of Master of Business Administration is the original work conducted by
me.

The information and data given in the report is authentic to the best of my
knowledge.

This summer training report is not being submitted to any other University for
award of any other Degree, Diploma and Fellowship.

MONU

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 ACKNOWLEDGEMENT

It is my pleasure to be indebted to various people, who directly or indirectly

contributed in the development of this work and who influenced my thinking,
behavior, and acts during the course of study.

I am thankful to Ms. MADHUMITA for his support, cooperation, and

motivation provided to me during the training for constant inspiration, presence
and blessings.

I also extend my sincere appreciation to Dr. Rashi Srivastava who

provided his valuable suggestions and precious time in accomplishing my project
report.

Lastly, I would like to thank the almighty, parents, Director and HOD
of the institute for their moral support and my friends with whom I shared my
day-to-day experience and received lots of suggestions that improved my quality
of work.

MONU

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 Executive Summary
This report presents a comparative financial analysis of two leading
FMCG (Fast-Moving Consumer Goods) companies in India: ITC Ltd.
and Hindustan Unilever Ltd. (HUL). Both companies are key players in
the Indian consumer goods sector, but their business strategies, market
presence, and financial performances differ significantly. The analysis
focuses on key financial metrics such as revenue growth, profitability,
liquidity, and efficiency to provide an overview of their financial health
and business performance.
1. Horizontal & Vertical analysis of Income Statement & B/S
2. Revenue Growth and Market Position
3. Profitability
4. Liquidity and Financial Stability
5. Market Sentiment and Valuation
6. Ratios
7. SWOT analysis

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 TABLE OF CONTENTS

Page No.
1. INTRODUCTION OF THE TOPIC 8-9

2. OBJECTIVE 10-13

3. SCOPE OF THE STUDY 14-20

4. COMPANY PROFILE 21-28

5. RESEARCH METHODOLOGY USED 29-31

7. INTERPRETATIONS 32-34

8. RESULTS AND FINDINGS 35-36

9. CONCLUSIONS 37-38

10. LIMITATIONS OF THE STUDY 38-40

11. SUGGESTIONS AND RECOMMENDATIONS 41-.46

12. BIBLIOGRAPHY 47-49

13. APPENDIX 50-80

ANNEXURE –I QUESTIONNAIRE

ANNEXURE –II ANNUAL REPORTS etc.

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 INTRODUCTION

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Fast Moving Consumer Goods (FMCG) refer to products that are
consumed frequently and replaced quickly, typically within a year. They
are characterized by their relatively low cost, high demand, and rapid
turnover in the market. FMCG products encompass a wide range of
items, including toiletries, cosmetics, detergents, packaged food,
beverages, and more. The FMCG sector is a significant contributor to
the economy, with India being one of the largest markets for FMCG
products. The FMCG industry is Top Five Largest sector contributing to
the Indian economy. The total market size of the FMCG sector in India
is significant, with billions of dollars in revenue. FMCG products are
consumed and replaced rapidly, often within a short period, typically
less than a year. They are priced relatively lower compared to other
goods, making them affordable for consumers. These products enjoy
consistent and high demand due to their essential nature in daily life.
Consumers buy these products frequently and in small quantities based
on their needs’ items may have a short shelf life due to factors like
perishability or high consumer demand. Examples of FMCG Products
include Toiletries. Household products. Packaged food and beverages,
Cosmetics, Skincare products, Hair care products, Other nondurable
goods, Paper products, Plastic goods etc.
Here is an overview of ITC (Indian Tobacco Company) and HUL
(Hindustan Unilever Limited), two significant FMCG companies in
India.

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 OBJECTIVE

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The objective of conducting a comparative analysis of two FMCG
companies (such as Hindustan Unilever Limited (HUL) and ITC
Limited) is to evaluate and compare their financial, strategic,
operational, and market performance to understand their strengths,
weaknesses, opportunities, and threats. This type of analysis is helpful
for investors, business analysts, and industry stakeholders to make
informed decisions and gain insights into the dynamics of the FMCG
sector.
Here are the key objectives of such a comparative analysis:
1. Financial Performance Comparison
 Revenue and Profitability: To compare the financial health of both
companies, focusing on key metrics like revenue, net profit,
operating margin, and return on equity.
 Growth Trends: To assess the growth rates of both companies in
terms of revenue, profit, and market share over time.
 Cost Structure: To examine the efficiency of both companies in
managing costs (e.g., operating expenses, cost of goods sold, etc.).
2. Market Position and Brand Strength
 Market Share: To compare the market position of each company in
various FMCG sub-segments (e.g., food, personal care, home care,
etc.).
 Brand Portfolio: To evaluate the strength and diversity of the brand
portfolio for each company (such as HUL's Dove, Surf Excel,
Lipton, vs. ITC's Aashirvaad, Sunfeast, Bingo!).
 Consumer Perception: To analyze consumer preference, brand
loyalty, and perception in the market.
3. Product Portfolio and Innovation
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  Diversity of Product Portfolio: To compare the breadth and depth
of product offerings (such as HUL's focus on personal care vs.
ITC's dominance in both FMCG and tobacco products).
 Innovation and R&D: To assess each company’s investment in
product innovation, new launches, and adoption of technology to
meet changing consumer demands.
4. Operational Efficiency
 Supply Chain Management: To compare the efficiency of each
company's supply chain, manufacturing, and distribution systems.
This includes assessing logistics, sourcing strategies, and the cost-
effectiveness of operations.
 Sustainability Practices: To evaluate the sustainability efforts of
both companies, including initiatives related to waste management,
water usage, and sourcing of raw materials.
5. Market Expansion and Geographic Reach
 Domestic vs. International Reach: To compare the domestic
market reach and international presence of both companies. For
example, HUL has a significant global presence through Unilever,
while ITC has a strong foothold in the Indian market.
 Rural vs. Urban Market Penetration: To assess each company’s
strategies for reaching both urban and rural markets, given the
diverse consumer base in India.
6. Regulatory and Social Impact
 Regulatory Environment: To analyze how each company is
affected by regulatory policies, particularly in areas like tobacco
consumption (ITC) or product labeling and sustainability (HUL).

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  Corporate Social Responsibility (CSR): To compare their CSR
initiatives, community outreach programs, and their impact on
society (e.g., ITC’s e-Choupal vs. HUL’s various sustainability
programs).
7. Competitive Strategy and Future Outlook
 Strategic Initiatives: To evaluate each company’s business
strategies, such as market penetration, acquisitions, digital
transformation, and diversification.
 Challenges and Opportunities: To analyze the potential challenges
each company may face (e.g., the decline in tobacco consumption
for ITC or increasing competition for HUL) and their strategies to
overcome them.
 Long-Term Viability: To assess the future growth prospects for
both companies, considering market trends, consumer behavior,
and innovation.

8. Risk Analysis
 Economic Sensitivity: To understand how each company is
impacted by macroeconomic factors such as inflation, changes in
consumer spending, and commodity price fluctuations.
 Tobacco Regulations: For ITC, to evaluate how government
policies on tobacco and smoking bans might affect its core
business.

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 SCOPE

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The scope of study for a comparative analysis of financial statements of
two FMCG companies involves examining and evaluating the financial
health, performance, and strategies of each company based on their
financial reports. This study provides insights into how these companies
perform in various aspects, including profitability, liquidity, solvency,
and efficiency, which are critical to understanding their relative position
in the market. Below is a detailed scope of study for a comparative
analysis of financial statements of two FMCG companies:
1. Financial Statement Overview
 Objective: The primary goal is to analyze and compare the
financial statements (balance sheet, income statement, and cash
flow statement) of the two FMCG companies.
 Key Components:
o Balance Sheet: To compare the companies' assets, liabilities,
and shareholders' equity, providing insights into their
financial position.
o Income Statement: To assess revenue generation,
profitability, and expense management.
o Cash Flow Statement: To evaluate cash inflows and
outflows from operating, investing, and financing activities.
2. Profitability Analysis
 Objective: To assess how efficiently each company generates
profits relative to its revenue, costs, and expenses.
 Key Ratios:
o Gross Profit Margin: Measures the difference between sales
and the cost of goods sold.

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 o Operating Profit Margin: Evaluates the efficiency of core
business operations.
o Net Profit Margin: Examines overall profitability after all
expenses, taxes, and interest.
o Return on Assets (ROA): Assesses how effectively the
companies utilize their assets to generate profits.
o Return on Equity (ROE): Compares net income to
shareholders’ equity, indicating the return on invested capital.
3. Liquidity Analysis
 Objective: To assess each company’s ability to meet short-term
obligations with its most liquid assets.
 Key Ratios:
o Current Ratio: Measures a company’s ability to pay short-
term liabilities with short-term assets.
o Quick Ratio: Similar to the current ratio but excludes
inventory, focusing on more liquid assets.
o Cash Ratio: Provides insight into the company’s ability to
pay short-term debt with its available cash or cash
equivalents.
4. Solvency and Leverage Analysis
 Objective: To analyze the companies’ long-term financial stability
and their ability to meet long-term obligations.
 Key Ratios:
o Debt-to-Equity Ratio: Compares the company’s debt to its
equity, indicating the level of financial leverage used.

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 o Interest Coverage Ratio: Assesses a company's ability to
cover its interest expenses with its operating income.
o Debt Ratio: The proportion of a company’s assets financed
by debt, indicating the financial risk.
5. Efficiency Analysis
 Objective: To evaluate how efficiently each company utilizes its
assets and liabilities to generate sales and maximize profits.
 Key Ratios:
o Asset Turnover Ratio: Measures the efficiency of asset use
in generating revenue.
o Inventory Turnover Ratio: Assesses how efficiently a
company manages and sells its inventory.
o Receivables Turnover Ratio: Examines how effectively the
company collects its receivables.
o Days Sales Outstanding (DSO): Indicates how long it takes
for a company to collect payment after a sale.
6. Revenue and Cost Analysis
 Objective: To examine the revenue generation strategies and cost
structures of both companies.
 Key Areas:
o Revenue Trends: Analysis of the revenue growth over the
years to understand market expansion, new product
introduction, and consumer demand.
o Cost of Goods Sold (COGS): A comparison of how each
company controls its cost of production and distribution.

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 o Operating Expenses: Evaluation of selling, general, and
administrative expenses (SG&A), and how each company
manages its operational costs.
7. Capital Structure Analysis
 Objective: To assess the companies s’ mix of debt and equity
financing.
 Key Considerations:
o Equity Financing: Proportion of financing coming from
shareholders’ equity.
o Debt Financing: Proportion of financing coming from debt,
and its impact on profitability and risk.
o Capital Adequacy: The ability of the company to withstand
economic downturns and financial challenges.
8. Comparative Financial Performance and Ratios
 Objective: To perform side-by-side comparisons of financial
metrics and ratios for both companies.
 Key Aspects to Compare:
o Profitability ratios (gross, operating, and net profit margins)
o Liquidity ratios (current, quick, and cash ratios)
o Solvency ratios (debt-to-equity, interest coverage, and debt
ratios)
o Efficiency ratios (asset turnover, inventory turnover,
receivables turnover)

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9. Trend Analysis
 Objective: To evaluate historical performance and trends in
financial data over multiple years, enabling comparisons in terms
of:
o Revenue and profit growth patterns.
o Cost management efficiency over time.
o Impact of macroeconomic factors on financial performance.
 Key Focus: To understand how each company’s financial health
has evolved and whether they have shown consistent growth or
fluctuations.
10. Investment Potential
 Objective: To assess the attractiveness of each company as an
investment opportunity.
 Key Areas to Assess:
o Dividend Payouts: To evaluate the sustainability and
consistency of dividends offered by the companies.
o Market Valuation: To compare each company's valuation
based on earnings multiples like Price-to-Earnings (P/E)
ratio.
o Risk vs. Return: To determine the risk profile of each
company’s financial performance and expected future
returns.
11. SWOT Analysis Based on Financial Performance
 Objective: To identify each company’s financial strengths,
weaknesses, opportunities, and threats based on the financial data.

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 o Strengths: High profitability, strong liquidity, efficient
operations.
o Weaknesses: High debt, low profitability, or poor cash flow.
o Opportunities: Expanding into new markets, cost-reduction
initiatives, or innovative product launches.
o Threats: Regulatory changes, economic downturns,
increasing competition.
12. Future Outlook Based on Financial Health
 Objective: To assess the companies' potential for future growth
and profitability based on their financial position.
 Key Focus Areas:
o Investment in research and development (R&D).
o Expansion into emerging markets.
o Ability to withstand economic volatility.

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 COMPANY PROFILE

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ITC Limited (India Tobacco Company)

ITC Limited is a diversified conglomerate with a significant presence in

the FMCG sector. It was founded in 1910 and has its headquarters in
Kolkata, West Bengal, India. It is FMCG portfolio includes brands in
categories such as cigarettes, packaged foods, personal care products,
apparel, education, and stationery products, and more. Apart from
FMCG, ITC has interests in hotels, paperboards and packaging,
agribusiness, and information technologist’s flagship brands in the
FMCG segment include Aashirvaad, Sunfeast, Bingo, Classmate, Fiama
Di Wills, Savlon, and Vivel. The company has been focusing on
sustainability initiatives and has made significant investments in
renewable energy and water stewardship.

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ITC is a significant player in the Indian FMCG market with a wide range
of products in various categories such as food, personal care, and home
care.
 Food & Beverages:
o Aashirvaad (flour, spices, and other food products)
o Sunfeast (biscuits, cookies, and snacks)
o Bingo! (snacks)
o Yippee! (noodles)
o Mint-O (mint products)
o Fabelle (premium chocolates)
o Kitchens of India (ready-to-eat meals)
o ITC Master Chef (frozen foods and convenience meals)
 Personal Care & Toiletries:
o Vivel (soaps, shampoos, and personal care)
o Fiama (shampoos, body wash)
o Superia (soaps)
o Engage (deodorants and perfumes)
 Home Care:
o Aerosol (air fresheners)
o Godrej and ITC collaborations (some cleaning products)

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Cigarettes & Tobacco
ITC is one of India’s largest producers of cigarettes, and its cigarette
business remains a significant contributor to the company’s revenue.
Popular brands include:
 Gold Flake
 Navy Cut
 Wills (various sub-brands)
Despite the declining tobacco consumption due to regulatory measures,
ITC has maintained its strong presence in the market.
Hotels
ITC’s hotels business is a leading player in the luxury and premium
hotel segments in India. The company operates under several renowned
brands, including:
 ITC Hotels (premium hotels and resorts)
 WelcomHotel (mid-range hotels)
 Fortune Hotels (budget hotels)
ITC Hotels are recognized for their luxury offerings, eco-friendly
initiatives, and premium services.
Paperboards and Packaging
ITC is also a major producer of paperboards and packaging material,
which caters to both domestic and international markets. This segment
focuses on sustainable packaging solutions.

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  Products:
o Paperboards
o Corrugated boxes and cartons
o Flexible packaging materials
Agribusiness
ITC’s agribusiness division deals with the procurement, processing, and
trading of agricultural commodities such as:
 Leaf Tobacco
 Wheat
 Rice
 Spices
 Vegetables and Fruits
ITC has a strong supply chain network to support its agribusiness
operations and help ensure better incomes for farmers.
Information Technology (IT)
ITC also has a presence in the IT services sector through its subsidiary
ITC Infotech, which provides IT services and solutions to global
customers.
 ITC Infotech: Specializes in providing technology solutions in
areas like enterprise applications, data analytics, and digital
transformation.

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HUL (Hindustan Unilever Limited)

Hindustan Unilever Limited (HUL) is one of India's largest FMCG

companies and a subsidiary of Unilever, a multinational consumer goods
company. It was originated in 1933 and is headquartered in Mumbai,
Maharashtra, India. HUL has a diverse product portfolio spanning
categories such as home care, personal care, foods, and beverages. Some
of HUL's renowned brands include Dove, Lux, Lifebuoy, Surf Excel,
Rin, Wheel, Fair & Lovely, Pond's, Sunsilk, Knorr, Kisan, and Bru.It
has a extensive distribution network that reaches millions of households
across India, making its products easily reachable.
Both ITC and HUL are key players in the FMCG sector in India, each
with its unique strengths and market presence. They compete in various
product categories and strive to innovate and meet the evolving needs of
Indian consumers.

Products & Brands

HUL has a vast portfolio of brands across various segments:
Personal Care
 Dove (soap, shampoo, and skincare products)
 Lux (soap)
 Lifebuoy (soap)
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  Ponds (skincare products)
 Vaseline (personal care products)
 Fair & Lovely (now Glow & Lovely, skin creams)
 Sunsilk (shampoo)
 TRESemmé (hair care)
 Pepsodent (toothpaste)
Home Care
 Surf Excel (detergent)
 Rin (detergent)
 Omo (detergent)
 Comfort (fabric softener)
 Domex (cleaning products)
 Cif (cleaning products)
 Sunlight (laundry products)
Food & Beverages
 Lipton (tea)
 Bru (coffee)
 Knorr (soups, seasonings, and noodles)
 Kissan (ketchup, jams, and sauces)
 Magnum (ice cream)
 Cornetto (ice cream)
 Bovonto (beverages)
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Health & Wellness
 Horlicks (health drink)
 Boost (health drink)
 Sustagen (nutritional drinks)

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 RESEARCH
METHODOLOGY

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The research methodology for the comparative analysis of the financial
statements of Hindustan Unilever Limited (HUL) and ITC Limited over
the last five years is structured to provide a comprehensive
understanding of the financial health, performance, and stability of the
two companies. The methodology adopted includes the following key
components:
1. Research Objective
The primary objective of this study is to conduct a comparative financial
analysis of HUL and ITC over the past five years (2019-2023). This
analysis aims to:
 Assess the financial performance and profitability of both
companies.
 Compare key financial ratios like profit margins, liquidity ratios,
debt levels, capital expenditure, and return on equity (ROE).
 Provide insights into the strategic financial management practices
of both companies.
 Offer recommendations based on the findings to improve future
financial performance.
2. Data Collection
a. Secondary Data Sources
 Annual Reports: Financial statements (Income Statements, Balance
Sheets, Cash Flow Statements) of HUL and ITC for the last five
years (2019-2023) were collected from their official websites and
respective investor relations portals.
 Stock Market Data: Financial performance data, stock prices, and
other market-related information were sourced from platforms like

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 the National Stock Exchange (NSE) and Bombay Stock Exchange
(BSE).
 Industry Reports: Insights from market research reports provided
by IBEF, Statista, and industry-specific publications helped
contextualize the financial data.
 Company Press Releases and News Articles: Official press
releases, announcements, and news articles provided additional
qualitative data on operational activities and market trends.
b. Financial Metrics
 Key financial metrics used for the analysis include:
o Revenue and Growth Rate
o Net Profit and Profit Margins
o Debt-to-Equity Ratio
o Return on Equity (ROE)
o Liquidity Ratios (e.g., Current Ratio, Quick Ratio)
o Dividend Payout Ratios
o Earnings Per Share (EPS)
o Capital Expenditure (CapEx)

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 INTERPRETATION

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A comparative analysis of the financial statements of Hindustan
Unilever Limited (HUL) and ITC Limited is crucial for evaluating and
comparing their financial performance, strategic positioning, and growth
potential. These two companies are giants in the consumer goods and
FMCG sector in India, but they have distinct business models, revenue
streams, and market focuses. Below is a detailed interpretation of such
an analysis, based on typical financial metrics

 In terms of revenue growth, HUL typically outperforms ITC due

to its larger FMCG presence and international exposure. ITC's
heavy reliance on tobacco can create volatility in its sales, as
regulatory and health concerns often lead to periodic declines.
 HUL is likely to show higher overall profitability, with better
operating margins, driven by strong, high-margin product
categories. ITC, while benefiting from the profitability of its
cigarette business, faces pressure in its FMCG and other non-
tobacco segments.
 Both companies are likely to have a strong liquidity position, but
HUL might have slightly better liquidity due to its larger consumer
base and lower dependence on cyclical businesses.
 HUL generally provides better returns on equity and assets,
signaling more effective utilization of capital. ITC's diversified
model, while stable, might offer lower returns due to the high
capital requirements in certain segments like hotels.
 HUL’s lower leverage reflects its conservative capital structure,
while ITC may employ slightly higher leverage to finance its
diverse and capital-intensive businesses.
 HUL has a much stronger market position in FMCG compared to
ITC, which still relies heavily on the tobacco segment. HUL's
diverse product portfolio and international reach allow it to
maintain a leading edge.

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  HUL is expected to have stronger growth prospects, especially as
it capitalizes on global trends in sustainability and health-
consciousness. ITC may see steady growth but could face
challenges in diversifying its revenue away from the tobacco
segment.

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 CONCLUSION

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In a comparative analysis of HUL and ITC, HUL generally performs
better in terms of overall revenue growth, profitability, market share, and
international diversification. ITC, while strong in the tobacco sector,
faces growth challenges in its FMCG business and is exposed to
regulatory risks. However, ITC’s diversification in non-tobacco sectors
offers potential for long-term stability if it continues to grow its FMCG
business effectively.
 HUL has exhibited stronger overall financial performance,
including higher revenue growth, profitability, ROE, and asset
efficiency. Its diversified FMCG portfolio across personal care,
food, and home care segments has provided consistent growth,
making it a more stable and attractive investment for long-term
investors.
 ITC, while showing strong profitability due to its dominant
tobacco business, has a slower pace of revenue growth, especially
in its FMCG sector, which is still not as large or profitable as
HUL's. The company's higher dividend payout is an attraction for
dividend-seeking investors, but it faces regulatory challenges in its
core tobacco business.
 In terms of future growth prospects, HUL’s focus on innovation
and international markets gives it a clear advantage. ITC, while
expanding its non-tobacco FMCG business, may take longer to
reduce its dependence on tobacco and achieve growth comparable
to HUL.

36
For investors: HUL is a more consistent and long-term growth stock
with high profitability and market share. ITC might appeal to investors
looking for higher dividend yields, but its growth potential is constrained
by regulatory risks in the tobacco industry.

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 LIMITATIONS

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While a comparative financial analysis of HUL and ITC can provide
valuable insights, there are several limitations to consider:
1 Industry-Specific Differences:
 HUL and ITC are in the same broad FMCG sector, but their
business models are quite different. HUL is more diversified and
internationally focused, while ITC has a significant reliance on
tobacco, which faces different regulatory and market dynamics.
This difference makes direct comparisons challenging.
2 Impact of External Factors (Regulations):
 ITC's tobacco business faces heavy government regulation, which
can lead to fluctuating revenues and profits. This external risk is
harder to quantify in financial analysis but has a significant impact
on ITC’s performance. HUL, with a more diversified business, is
less exposed to such risks.
3 Cyclicality and Market Sensitivity:
 ITC’s revenue growth in its tobacco business can be cyclical,
influenced by changes in taxes, excise duties, and consumer
behavior. HUL, in contrast, experiences more stable growth across
its segments, but it is still sensitive to economic downturns,
especially in its discretionary categories like personal care and
home care.
4 Non-Standardized Reporting:
 Companies often report financial metrics differently based on their
accounting policies, and the comparison might not always be
apples-to-apples. For example, differences in capitalization of

39
 expenses, tax treatment, or asset depreciation might skew
comparisons.
5 Impact of Non-Financial Factors:
 Factors such as brand strength, market positioning,
management quality, and sustainability initiatives are hard to
quantify but play a crucial role in a company’s long-term
performance. These qualitative aspects might not be fully captured
in a financial statement comparison.
6 Future Growth Prospects:
 The analysis is based on historical performance, but future growth
for both companies depends on how they adapt to changing
consumer preferences (e.g., sustainability, health-conscious
products) and external economic factors. Predicting future
performance based on past trends is always speculative.

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 SUGGESTION

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Suggestions for Both Companies
For HUL:
1. Innovation and Diversification:
o HUL should continue its focus on product innovation,
especially in emerging trends like health and wellness,
sustainability, and digital-first products. This will ensure it
remains competitive and can capitalize on the growing
consumer preference for eco-friendly and health-conscious
products.
o Expanding in emerging markets like Africa, Southeast Asia,
and Latin America can further fuel growth, particularly with
products that cater to local tastes.
2. Rural Market Penetration:
o HUL should further strengthen its presence in rural
markets, where there is significant untapped potential for its
value-for-money product lines. The focus on affordable yet
quality products like Surf Excel and Dove could help tap
into the growing rural consumer base.
3. Sustainability Focus:
o HUL should continue enhancing its sustainability initiatives
by focusing on sustainable sourcing, reducing carbon
emissions, and packaging innovations like recycled
materials. This can improve brand loyalty, especially among
environmentally-conscious consumers.
4. Digital Transformation:
o Expand e-commerce presence and invest in direct-to-
consumer (D2C) models to leverage the digital shift. HUL
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 should focus on building digital marketing campaigns and
partnerships to further drive online sales for its diverse
product range.
For ITC:
1. Accelerate Non-Tobacco FMCG Growth:
o ITC must continue to reduce its dependence on tobacco and
accelerate growth in its non-tobacco FMCG segments, such
as food, personal care, and home products. This will help
mitigate regulatory risks and diversify its revenue streams.
o ITC should focus on building brand equity in these non-
tobacco segments through innovative product offerings and
aggressive marketing strategies.
2. Diversification in Non-Tobacco Segments:
o ITC should further invest in premium food products,
personal care items, and health and wellness offerings to
cater to evolving consumer demands. The company can look
at partnerships or acquisitions in these spaces to speed up
growth.
3. Optimizing Debt Structure:
o ITC should aim to optimize its capital structure by
reducing debt levels over time, especially as it continues to
invest in non-tobacco sectors. A lower debt-to-equity ratio
will reduce financial risk and interest burden, improving
long-term profitability.
4. Enhance Digital Capabilities:
o ITC should significantly expand its digital strategy,
especially in its non-tobacco FMCG and e-commerce
43
 platforms. Digital-first initiatives can help reach a wider,
younger consumer base and capitalize on the growing trend
of online shopping.
5. Sustainability and ESG Focus:
o ITC should strengthen its sustainability initiatives,
particularly in its agribusiness segment and packaging. ITC’s
“Wellness and Green” initiatives can be aligned with
changing consumer preferences toward environmentally-
friendly products, which will enhance brand image.

44
 RECOMMENDATION

45
 1. HUL for Long-Term Growth:
o Investors seeking consistent growth, strong profitability,
and a diversified portfolio should consider HUL. The
company’s focus on innovation, sustainability, and rural
expansion makes it an attractive option for long-term growth
investors. Additionally, its lower debt and higher capital
efficiency make it a safer investment in the FMCG space.
2. ITC for Dividend Investors:
o ITC is more attractive for investors looking for higher
dividend yields and stable cash flow, particularly due to its
strong cash flow from its tobacco business. However,
investors should be mindful of regulatory changes impacting
the tobacco sector and monitor ITC’s progress in diversifying
its FMCG business.
3. Diversified Portfolio Strategy:
o A diversified portfolio that includes both HUL and ITC
could be beneficial. Investors can benefit from HUL’s
growth prospects while enjoying ITC’s higher dividend
payouts. However, it’s crucial to regularly monitor ITC’s
non-tobacco FMCG growth and debt levels.

46
 BIBLIOGRAPHY

47
 1. ITC Limited, (2020-2024). Annual reports
(2020,2021,202,2023,2024) Analysis from ITC Website.
2. Hindustan Unilever Limited (2020-2024) Annual report
(2021,2021,2022,2023,2024). Analysis from HUL Website.
3. Srinivasan, S (2020). How ITC & HUL are adapting to the new
consumer behaviour trend post covid- Economic Times- Examines
the shift in consumer behaviour and how ITC & HUL are adjusting
their strategic post pandemic.
4. Mukherjee, P (2022),” ITC & HUL a market battle of titans”
business standers.- compare the market strategies & performance of
ITC & HLU particular in the FMCG Space.
5. For the vertical & horizontal analysis of the ITC & HUL Company
use the data from the ITC website, HUL website, Moneycontrol
Website.
6. ITC limited (2023) annual report 2022-2023. ITC limited. Providing
a detailed look into the company’s strategic, direction, strength, &
the challenges it faced in the Indian and global market.
7. HUL (2023) Annual report and account 2022-2023. Hindustan
unilever limited. Discusses HUL’s market performance,
opportunities for growth & challenges offering a soild foundation
for a SWOT analysis.
8. Sharma, P (2023). SWOT analysis of ITC diversified Success and
future risks.-- Economic Times
9. Das A (2022). HUL’s Strengths and market challenges: A SWOT
analysis business today.
10. Mehta A, & Gupta S (2021). Porters five force analysis of the
Indian FMCG sector. A Study on ITC & HUL International journal
of management & business studies.---An in depth analysis of how
porters five force affect the competitive landscape of ITC & HUL in
the FMCG sector
11. PwC India (2021), Porter’s Five Force in the Indian FMCG
market. Implications for the ITC & HUL .—A detailed report
analysing how ITC & HUL are position within the five forces
framework in India’s FMCG market.
48
 12. ITC limited (2023) Annual Report 2022-2023, ITC Limited—
Include Information on competitive pressures, Market, Threats, and
industry trends relevant to the five force model.
13. HUL(2023) Annual Report & Account 2022-2023. Hindustan
unilever Limited….offers detailed insights into HUL’s competitive
environment, market challenges & growth strategies that align with
the five forces frameworks.

49
 APPENDIX

50
The following appendix presents detailed financial data for Hindustan
Unilever Limited (HUL) and ITC Limited over the last five years,
covering key metrics such as Revenue, Net Profit, Profit Margins,
Debt-to-Equity Ratios, Liquidity Ratios, and more. This data is
essential for the comparative analysis between the two companies.

INCOME STATEMENT & BALANCE SHEET ANALYSIS:

Income Statement Of ITC Ltd.
An income statement (also known as a profit and loss statement) is one
of the core financial statements used by businesses to assess their
financial performance over a specific period, typically a quarter or a
year. The income statement provides a detailed summary of a company’s
revenues, expenses, and profits or losses, showing how much money the

51
company earned and how much it spent during the Period

Sales Growth:
 ITC has shown consistent Sales growth over the five years,
 The company has successfully expanded its business, especially in
the FMCG and other non-tobacco segments, while the revenue
from tobacco products also remains significant.

52
Gross Profit:
 Gross profit has increased steadily due to the company’s ability to
generate higher revenues while managing its cost of goods sold
(COGS). The growth in gross profit reflects ITC’s efficiency in
managing its production costs and its product mix.
Operating Profit (EBIT):
 ITC's Operating Profit (EBIT) has consistently grown, indicating
strong operational efficiency and its ability to generate profits from
core business activities.
EBITDA:
 EBITDA has consistently increased over the years, which is a
positive indicator of the company’s ability to generate cash flows
from its operations before accounting for interest, taxes, and non-
cash expenses like depreciation.
 The rise in EBITDA also suggests ITC’s improved profit margins.
Profit Before Tax (PBT):
 The company’s PBT shows steady growth, which indicates its
ability to generate profit before accounting for taxes, interest, and
non-operational factors.
 The increase in PBT over five years indicates that ITC has
managed to improve its profitability, despite external economic
factors.
Tax Expenses:
 ITC’s tax expense has also grown, in line with its increased profits.
The tax rate has remained relatively stable, reflecting the
company’s strong performance and consistent earnings.

53
 Net Profit:
 In the Income Statement of the ITC limited company showing the
increase of the sales growth every year. But the gross margin is
decreasing in year of 2020 to 2024 every year.

54
Income Statement Of HUL Ltd.
An income statement (also known as a profit and loss statement) is one
of the core financial statements used by businesses to assess their
financial performance over a specific period, typically a quarter or a
year. The income statement provides a detailed summary of a company’s
revenues, expenses, and profits or losses, showing how much money the
company earned and how much it spent during the Period

55
Sales Growth:
 HUL has shown consistent Sales growth over the five years,
 The company has successfully expanded its business, especially in
the FMCG segments.
Gross Profit:
 Gross profit has increased steadily due to the company’s ability to
generate higher revenues while managing its cost of goods sold
(COGS). The growth in gross profit reflects HUL efficiency in
managing its production costs and its product mix.
Operating Profit (EBIT):
 HUL’s Operating Profit (EBIT) has consistently grown,
indicating strong operational efficiency and its ability to generate
profits from core business activities.
EBITDA:
 EBITDA has consistently increased over the years, which is a
positive indicator of the company’s ability to generate cash flows
from its operations before accounting for interest, taxes, and non-
cash expenses like depreciation.
 The rise in EBITDA also suggests HUL’s improved profit
margins.
Profit Before Tax (PBT):
 The company’s PBT shows steady growth, which indicates its
ability to generate profit before accounting for taxes, interest, and
non-operational factors.

56
  The increase in PBT over five years indicates that ITC has
managed to improve its profitability, despite external economic
factors.
Tax Expenses:
 ITC’s tax expense has also grown, in line with its increased profits.
The tax rate has remained relatively stable, reflecting the
company’s strong performance and consistent earnings.
Net Profit:
 In the Income Statement of the HUL limited company showing the
increase of the sales growth every year. But the gross margin is
decreasing in year of 2020 to 2024 every year.

57
Horizontal Analysis:-
The horizontal analysis evaluates trends Year over Year (YoY) or
Quarter over Quarter (QoQ). If you are an investor considering investing
in a company, only a year-end balance sheet or income statement would
not be enough to judge how a company is doing. It would help if you
looked at a couple of years to be sure. Better yet, you can see many
years of balance sheets and income statements and compare them.

Through horizontal analysis of financial statements, you would be able

to see two actual data for consecutive years and would be able to
compare every item. And based on that, you can forecast the future and
understand the trend.

In the case of the Income statement, ITC has decrease the net profit in
the year of 2021 and the increase in the year of 2022, 2023,2024 as well.
And the year of 2021 EBIDA, EBT & the NET PROFIT is decrease and

58
the year of 2022, 2023, 2024 increase all the EBIDA, EBT & NET
PROFIT.

In the case of the Income statement, ITC has decrease the net profit in
the year of 2020 to 2021 and in the year of the 2022 increase the net
profit and also increase in the year of 2023 & 2024 as well. And the
decrease net sale in the year of 2021, and 23.8 % increase net sale in the
year of 2022, 21.27 % increase net sale in the year of 2023 and the year
of 2024 net sale decrease 1.32%.

59
Its shows the net sales of the company is also increasing yearly as well
net profit is also increase of the HUL company. 18.35% increase Net
profit in the year of 2021, and the 11.77% increase in the year of 2022,
11.07 % Increase net sale in the year of 2023 and the 1.37% increase net
profit in the yer of 2024

60
In the case of the balance sheet, HUL has stability on the asset side and a
clear growth on external financing and the liabilities is also increase
according to the time.
Vertical Analysis:-
A vertical analysis consists of transforming the numbers in percentages
of the total or initial amount of each of the different statements, this way
we will see the weight of each statement over the total amount.
Essentially, a benchmark will be set, that in the case of the income
statement will be sales, and in the case of the balance sheet it will be the
total amount of assets or liabilities and equity. The rest of the financial
statements will be compared to their benchmark, being the result, the
statement divided by the benchmark. In the vertical analysis the
objective is to compare the statements within the same year to see how
much of the total percentage of sales, assets and liabilities and equity.

In the vertical analysis of the ITC company shows the % form of the net
profit, in this the net profit increase from the 2020 to the 2024 In this
21.78% increase in the year of 2020, & 16.71% increase in the year of
61
2021,19.27% increase net profit in the year of 2022, 21.55% increase net
profit in the year of 2023 and the21.37% increase in the year of 2024.

ITC balance sheet shows how the current asses get closer to non-current
assets. Current assets are the stable and rising up and the current
liabilities is also side move up.

62
HUL balance sheet shows how the current asses get closer to non-
current assets. Current assets are the stable and rising up and the current
liabilities is also side move up.

63
HUL income statement shows the increasing net profit yearly.
14.85% increase net profit in the year of 2020,16.29% increase in the
year of 2021, 16.12% increase net profit in the year of 2022, 15.26%
increase net profit in the year of 2023, and in the year of 2024 increase
net profit 13.97%.

64
 RATIOS
:-) Liquidity Ratio
The main objective of liquidity ratio is to evaluate the capacity of
the company to attend its liabilities on the short run, conventionally the
short run is the period up too twelve month so liquidity ratios are
basically evaluating the capacity of the company to pay its debts in the
following twelve. There is not a rule that states that’s a certain liquidity
position is better than another each company will have an optimum level
of liquidity That will depend on how their expenses and earning are
structed. The best way to evaluate the level of liquidity is to Comair the
company ratios to the industries ratios.

 The Current Ratio express the percentage of the working capital as

working capital is a measures used to evaluate a companies
liquidity and short term paying ability. It allows investors to see
how safe it will be to invest in the short term in the company. If the
ratios is not over 1, the company will not be able to meet their shot
term obligations and therefore will have to ask for funding to meet
them or earn profits before they are due to.
Current ratios is calculated by dividing current asset by current
liabilities.

65
 CURRENT RATIO
TIC HUL

1.31

1.26 1.64
1.34 1.38

4.02
3.13 2.84 2.91
2.7

JAN-20 JAN-21 JAN-22 JAN-23 JAN-24

The current ratios indicates that ITC & HUL industry are able to meet
their short term obligations. In This case ITC & HUL are under the
industry overall. This indicates an overall weakness at the time of
paying their short term liabilities.

 The quick ratio is measured the ability of the company to pay

its short term liabilities using the most liquid current assets,
quick ratio interpretation is closer to really than the current
ratio as only assets that could actually be used to pay liabilities
at ant time are used. The higher ratio is the more liquid the
company is, and the less probability that there is of not paying
their debts in the short term. The ratio calculated by
subtracting inventories to the total current assets and the
dividing the result of this operation by current liabilities.

66
 QUICK RATIO
TIC HUL

3.13

2.2

1.98

1.89
1.82

1.33
1.03
1.02

0.98
0.95

JAN-20 JAN-21 JAN-22 JAN-23 JAN-24

In this graph the most liquid companies are ITC & HUL, The industry
is clearly under both companies. This means that ITC & HUL both
have less risk for investors in the short term, in the current ratio
grapg the industry had a higher ratio which leads to think that the
industry current ration & their quick ratio

 Cash ratio The cash ratio is a measurement of a

company's liquidity. It calculates the ratio of a company's
total cash and cash equivalents to its current liabilities. The
metric evaluates a company's ability to repay its short-term
debt, and to pay the current portion of its long term debt
including the principal and interest, with cash or near-cash
resources such as easily marketable securities. This
information is useful to creditors when they decide how much
money, if any, they would be willing to loan to a company and
for what tenor

67
68
0.752883851

JAN-20
0.55107645

0.393311349

JAN-21
0.398579467

0.337855863
TIC

JAN-22

0.330592105
HUL
CASH RATIO

0.308583865
JAN-23

0.380321665

0.500796175
JAN-24

0.581794727
:-) Profitability Ratios
Profitability ratios help determine and evaluate the company’s ability to
generate the income against the expenses it incurs and consider the
different elements of the balance sheet and profit and loss account of the
company for analysing the company’s performance.
It helps stakeholders assess the entity’s ability to earn revenue through
the optimum use of assets, capital investments, cost control, etc. The
gross profit ratio, net profit ratio, operating profit ratio, and return on
investment are some. Any two relevant numerical values are selected
from the financial statement for comparison.

 Net Profit Margin

The net profit, called Profit After Tax (PAT), is calculated by
deducting all the direct and indirect expenses from the sales
revenue. Then the net profit margin is calculated by dividing the
net profit by the sales revenue and is expressed in percentages.

NET PROFIT MARGIN (%)

35 33.17
31.2
30 28.65 28.39
26.72

25

20
17.37 17.29 17.22 16.84 16.72

15

10

0
Jan-20 Jan-21 Jan-22 Jan-23 Jan-24

ITC HUL

69
In this diagram shows the net profit margin (%)of the ITC company is
higher then the HUL. It also show the in the 2020 the net profit margin
of ITC & HUL is 33.17 or 17.37 as well and the 2021 is 28.65 or 17.29
and in the year of 2022 is 26.65 or 17.22, in the year of 2023 is 28.39 or
16.84 and the year of 2024 is 31.2 or 16.72 net profit margin (%) of the
ITC & HUL.

 Return on Asset (%)

Return on assets (ROA) ratio is a metric used to evaluate how
efficiently a company is able to generate profit with the assets it
has available. It measures the percentage of how much income a
company's net operating profit, after taxes, has earned annually on
average over three years from all the business operations and
investments.

RETURN ON ASSET (%)

ITC HUL

34.37

13.86 13.12
12.64
11.67

22.79 23.38
20.11 18.2 20.05

JAN-20 JAN-21 JAN-22 JAN-23 JAN-24

70
In this diagram shows the Return on asset of the ITC & HUL company.
In the year of 2020 return was 20.11 of ITC and the 34.37 of the HUL
and return of the HUL is higher than the ITC company in the year of
2020, in the year of 2021 ITC company higher return in comparison of
HUL, and the year of 2022, 2023 & the 2024 the return of the ITC is
higher then the HUL company.

Return on Equity.
Return on equity (ROE) is a useful metric for calculating a
company's financial performance. It is calculated by dividing net
income by shareholders' equity. It is a profitability ratio that
depicts how well the company makes profits from equity capital.
Let's explore in-depth the meaning of Return on Equity, ROE
formula, calculation, interpretation and more here.
Return on equity is a percentage figure that can help business
owners gauge the performance of their firms. It can also provide an
insight into a firm’s management of equities and investments to
produce returns. Thus, prospective investors often consider the
ROE of an enterprise before putting their money in it.

71
 RETURN ON EQUITY (%)
ITC HUL

83.89

19.83 19.84
18.08
16.76

24.52 27.74 28.27

23.63 22.08

JAN-20 JAN-21 JAN-22 JAN-23 JAN-24

In this diagram shows the data of return on equity (%) of the ITC &
HUL Company. In the year of 2020 return on equity of HUL company is
higher then the ITC company and the year of 2021, 2022, 2023 and the
2024 the return on equity is higher then the HUL company as well. And
both companies are getting good return on the equity.

72
 Asset Turnover Ratio
Asset turnover ratio will measure how efficiency an entity uses its
assets to make a sale. Its use to evaluate the quality of investment
the company has or the quality of the total assets it compares the
sales of a company to its assets base will express the frequency by
which the assets are renewed.
To calculate this ratio sales will be divided by assets.

Asset Turnover Ratio (%)

250

200 197.86

150

100

67.52
60.63
50

0 0.62 0.77
0.74 0.84 0.81
0.77
Jan-20 Jan-21 Jan-22 Jan-23 Jan-24

ITC HUL

In this graph it is easy to see how the ITC has a very low revenue
compared to their assets in the year of 2020 and the 2021, and in the
year of 2022, 2023 and 2024 the turnover ratio of ITC or the HUL is
smiler to each other.
Inventory Turnover ratio
Inventory turnover ratio is a financial ratio showing how many
times a company turned over its inventory in a given period. A
company can then divide the days in the period, typically a fiscal

73
 year, by the inventory turnover ratio to calculate how many days it
takes, on average, to sell its inventory.
Inventory turnover ratio measure the rate at which inventory is
used over a measurement period. In essential how often the
inventory balance is sold during an accounting period. It can be
used to see if a business has an excessive inventory in comparison
to its sales which can be due to low sales or bad inventory
planning.
This ratio is calculated by dividing the COGS by the average
inventory. Inventory days is the number of days in which the
company uses its inventory, and therefore, the range of time in
which they will have to order new merchandise.
Chart Title
16

14.71
14
13.6

12

10

6
5.68
4.86
4.36 4.54
4

2 1.92 1.84
1.55 1.65

0
Jan-20 Jan-21 Jan-22 Jan-23 Jan-24

ITC HUL

74
 :

SWOT ANALYSIS

75
  ITC:-
Strengths
1. Diversified Portfolio: ITC has successfully diversified into FMCG,
hotels, packaging, and agribusiness, reducing reliance on its core
tobacco business.
2. Strong Brand Equity: ITC has a robust portfolio of well-known
brands across various sectors, enhancing customer loyalty and
market presence.
3. Sustainability Initiatives: The company’s commitment to
sustainable practices, including afforestation and water
conservation, improves its public image and long-term viability.
4. Strong Distribution Network: ITC's extensive distribution channels
enable it to reach a wide customer base, facilitating growth in its
non-tobacco segments.
Weaknesses
1. Dependency on Tobacco: Despite diversification, a significant
portion of revenue still comes from the tobacco business, which
faces regulatory pressures and declining consumption.
2. High Operational Costs: Fluctuating raw material prices and high
operational costs can affect profitability, especially in the FMCG
segment.
3. Brand Perception: The tobacco business can negatively impact the
overall brand image, affecting consumer trust in its non-tobacco
products.
Opportunities
1. Growing FMCG Market: The Indian FMCG sector is expanding
rapidly, providing opportunities for ITC to grow its non-tobacco
product lines.
2. Health and Wellness Trends: Increasing consumer focus on health
and wellness opens avenues for ITC to innovate and introduce new
product lines.
76
 3. E-commerce Growth: The rise of e-commerce presents an
opportunity for ITC to enhance its online presence and reach new
consumer segments.
4. International Expansion: There is potential for ITC to explore
markets outside India, especially in emerging economies.
Threats
1. Regulatory Challenges: Stringent regulations on tobacco and
increasing taxation can impact revenue from the tobacco business.
2. Intense Competition: The FMCG market is highly competitive,
with numerous domestic and international players vying for market
share.
3. Economic Uncertainty: Economic downturns can affect consumer
spending patterns, particularly in non-essential categories.
4. Changing Consumer Preferences: Rapid shifts in consumer
preferences, especially towards healthier and organic products, can
pose challenges for ITC's traditional product lines.
HUL:-
Strengths
1. Strong Brand Portfolio: HUL boasts a diverse range of well-
established brands in various categories, including personal care,
home care, and food & beverages.
2. Market Leadership: As one of the leading FMCG companies in
India, HUL has a significant market share and brand loyalty among
consumers.
3. Extensive Distribution Network: The company has a vast
distribution network, ensuring product availability in both urban
and rural areas.
4. Innovation and R&D: HUL invests significantly in research and
development, allowing it to introduce new products and adapt to
changing consumer preferences.
77
 5. Sustainability Initiatives: HUL has been a pioneer in sustainability,
focusing on eco-friendly practices and social responsibility, which
enhances brand image.
Weaknesses
1. High Dependency on the Indian Market: While HUL operates
internationally, a significant portion of its revenue comes from
India, making it vulnerable to regional economic fluctuations.
2. Intense Competition: The FMCG sector is highly competitive, with
both domestic and international players challenging HUL's market
share.
3. Price Sensitivity: Many of HUL's products are priced at a premium
compared to local alternatives, which may limit market penetration
in price-sensitive segments.
Opportunities
1. E-commerce Growth: The rise of online shopping presents
opportunities for HUL to expand its reach and sales channels.
2. Health and Wellness Trends: Increasing consumer focus on health
and wellness can drive demand for HUL's health-oriented
products.
3. Emerging Markets: Expansion into emerging markets can provide
new growth avenues, diversifying revenue streams.
4. Digital Marketing and Engagement: Leveraging digital platforms
for marketing can enhance brand engagement and attract younger
consumers.
5. Sustainability Focus: Growing consumer preference for sustainable
and ethical products can lead to increased sales of HUL’s eco-
friendly offerings.

78
Threats
1. Economic Volatility: Economic downturns can affect consumer
spending and demand for non-essential FMCG products.
2. Regulatory Challenges: Stringent regulations in various markets
can pose compliance challenges and increase operational costs.
3. Supply Chain Disruptions: Global events, such as pandemics or
geopolitical tensions, can disrupt supply chains and affect product
availability.
4. Changing Consumer Preferences: Rapid shifts in consumer
behaviour can make it difficult to predict demand accurately.
5. Rising Input Costs: Fluctuations in raw material prices can squeeze
profit margins, especially in a competitive pricing environment.

79
80
81