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CHAPTER 11.1-INTRODUCTIONHINDUSTAN UNILEVER LIMITED started its journey before 75 years in 1933, when the company was incorporated. Today, HUL is pre-eminent and its brands are household names across the country. HUL produced all the products which are daily needs of the human being. All the products of the company are for the personal care like bath soap, washing powder, tooth paste, tea, mineral water, hair care, deodorant, color cosmetics, ayurvedic and health care, skin care etc. so HUL is there for take care of you HUL always seen its roll beyond just profit curves as it endeavor to earn the love and respect of every Indian. This is why social innovation remains at the center of our brands and business strategy. And it is with your continued support that HUL have progressed on the path of sustainable and profitable growth. After all, doing well and doing well are two sides of the same coin.

1.2-BASIC DETAILNAME BUSINESS GROUP INDUSTRY BSE CODE NSE CODE LTP (Rs.) ISIN No INCORPORATION Public issue date HINDUSTAN UNILEVER LIMITEDMNC Associate Personal care 500696 HINDUNILVR 229.50 (3.49%) [NSE] INE030A01027 17/10/1933 17/11/1956

1. 3 FACTORY LOCATIONS OF HULS.No. 1 Location Address Type Shares Department

Investors Service Department, Dakshna, 3rd Floor, Plot No 2, Sector 11, New Mumbai , Maharashtra - India Pin Code :400614 Phone :22827285,22827557/361,22827227/452, Fax :22026712, Barotiwala Khasra No .94-96,355-409, Village Balyana Solan District , Himachal Pradesh - India Pin Code :174103 BASTI. Khalitabad Factory . Plot No D34-D38. Basti District , Uttar Pradesh - India Pin Code :272175 ETAH- BEVERAGES. G T Road Etah , Uttar Pradesh - India Pin Code :207001 ETAH-INSTANT,TEA EXPORTS. Kasgani Road Etah , Uttar Pradesh - India HARIDWAR Plot No 1.Sector1A, Integrated Industrial Estate, Haridwar , Uttaranchal - India Pin Code :249403 NALAGARH, Hudbust No 143. Khasra No 182.183.187/1. Solan District , Himachal Pradesh - India ORAI A-1 Industrial area . UPSIDC Orai, Jalaun District , Uttar Pradesh - India RAJPURA A-5. Phase 2-B, Focal Point

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Rajpura , Punjab - India Pin Code :140401 10 Factory/plant SUMERPUR A-1 UPSIDC, Industrial area Bharua, Hamirpur , Uttar Pradesh - India Pin Code :210502 COCHIN, Tatapuram PO Cochin , Kerala - India Pin Code :682014 COCHIN, Edapally Cochin , Kerala - India Pin Code :682024 DHARWAD Plot No 125/126. KIADB Indl Area Dharwad , Karnataka - India Pin Code :580011 HYDERABAD Uptal Kalan Hyderabad , Andhra Pradesh - India Pin Code :500039 TAMIL NADU Plot No 50 & 51. SIPCOT Industrial Complex. Hosur , Tamil Nadu - India Pin Code :635109 MANGALORE Sultan Batter Road, Boloor Mangalore , Karnataka - India Pin Code :575003 MYSORE Plot No 424. HebbalIndl.Area Mysore , Karnataka - India Pin Code :570016 PONDICHERRY OFF NH45-A Vadamangalam Pondicherry , Pondicherry - India Pin Code :605102 PONDICHERRY No 3. Cuddalore Road, Kirumambakkam Pondicherry , Pondicherry - India Pin Code :607402 PONDICHERRY NH45-A Vadamangalam Pondicherry , Pondicherry - India Pin Code :605102 ASSAM Personal Products Factory Dag No 21 of 122 Fs Grants Tinsukia , Assam - India Pin Code :786151 HALDIA Haldia Factory PO Durgachak. Haldia , West Bengal - India PinCode :721602 Phone :,,, Fax :, JALPAIGURI Dabgram Factory.1, Plot 21-23 WDIIDC Growth Centre Jalpaiguri , West Bengal - India Pin Code :734435 KOLKATA kidderpore Factory 63 Garden Reach Kolkata , West Bengal - India Pin Code :700024 KOLKATA ICE CREAM Factory DHR 74. Dimand Harbour Road Kolkata , West Bengal - India PinCode :700023 Phone :,,, Fax :, KOLKATA Kidderpore Factory 1 Transport Depot Road Kolkata , West Bengal - India Pin Code :700088 2

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KOLKATA Modern Food Industries (india) Ltd P10 Taratola Road Kolkata , West Bengal - India Pin Code :700088 BULDHANA Khamgaon Factory C-9 MIDC Khamgaon Buldhana District , Maharashtra - India Pin Code :444303 CHHINDWARA Chhindwara Fasctory., 5/6 K M Stone Chhindwara District , Madhya Pradesh - India Pin Code :480002 CHIPLUN Plot No B-7, Lote Parshuram MIDC Post Box 6(Lote) Chiplun , Maharashtra - India Pin Code :415722 DAMAN Detergents Factory Plot No 34. Bhimpore Village, Daman , Daman & Diu - India Pin Code :396210 DAMAN Industrial Hygiene Unit Survey No 56/2 Plot No 17 Daman , Daman & Diu - India Pin Code :396210 Detergents Factory Plot No 132-139, Kundaim Industrial Estate Kundaim Goa , Goa - India Pin Code :403115 KALWA Bestfoods Divisions Plot No 7& 7A Kalwa , Maharashtra - India KANDLA Shed Nos 177 & 178 Sector-1, Plot Nos 253-257 Sector 4 , Kandla , Gujarat - India Pin Code :370230 KANDLA Shed Nos 42/47. Sector2, Kandla Free Trade Zone Kandla , Gujarat - India Pin Code :370230 NASIK Kwality Walls Ice Cream Division Plot A8/9. Nasik , Maharashtra - India Pin Code :422103 PUNE Tea Export Unit Nutan Wearhousing Complex Pune , Maharashtra - India Pin Code :412308 SILVASSA Detergents Factory Survey No 151/1/1, Village Dapada Silvassa , Dadra & Nagar Haveli - India Pin Code :396230 SILVASSA Personal Products Factory Plot No 84/2, Demni Village Silvassa , Dadra & Nagar Haveli - India SILVASSA Personal Products Factory Survey No 907. Kilwati Road Silvassa , Dadra & Nagar Haveli - India SILVASSA Beverages Factory Orient Press Complex Silvassa , Dadra & Nagar Haveli - India Pin Code :396230

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1.4 - BOARD OF DIRECTORS OF HULSr. No1 2 3 4 5 6 7 8 9 10 11 12 13

NAME

DESIGNATION

Harish Manwani Nitin Paranjpe D. Sundaram Gopal vittal

Chairman CEO and Managing Director Vice Chairman and CFO Executive Director, Home & Personal Care Director

Dhaval Buch

D. S. Parekh

Director

A. Narayan

Director

S. Ramadorai

Director

R. A. Mashelkar

Director

Mr. Shrijeet Mishra Mr. Ashok K Gupta Ms. Leena Nair Mr. C K Prahalad

Executive Director Executive Director Executive Director Independent Director

KEY EXECUTIVESS.No1 2 3

NameMr.D Sundaram Mr.Ashok K Gupta Mr.Raju Thomas

DesignationChief Financial Officer Co.Secretary & Compl. Officer Vice President - Finance

1.5 - REGISTERED OFFICEHindustan Lever House, 165/166,Backbay Reclamation, Mumbai, Maharashtra - 400020

1.6- REGISTAR & SHARE TRANSFER AGENTKarvy Computershare Private Ltd Plot No. 17-24, Vittal Rao Nagar Madhapur, Hyderabad - 500081, Andhra Pradesh

4

1.7 - BANKER

Bankers

Auditors Registrar

Bank of America HDFC Bank Ltd. Citibank NA. Deutsche Bank AG Hongkong & Shanghai Banking Corporation Ltd. Standard Chartered Bank State Bank of India ABN Amro Bank N.V. Punjab National Bank Corporation Bank ICICI Bank Ltd. Union Bank of India LoveLock & Lewes Karvy Computershare Private Ltd

1.8 Capital structureFrom Year To Year Class Of Share Authorized Capital (Crores) 225.00 225.00 225.00 225.00 225.00 225.00 225.00 225.00 225.00 225.00 150.00 150.00 140.00 100.00 100.00 100.00 50.00 35.00 35.00 25.00 16.85 14.45 11.56 9.25 9.09 Issued Capital (Crores) 217.75 220.68 220.12 220.12 220.12 220.12 220.12 220.06 199.17 145.84 145.84 139.99 139.99 93.32 93.32 93.32 46.66 29.16 21.87 18.36 16.85 14.45 11.56 9.25 8.24 Paid Up Shares (Nos) 2177463355 2206776097 2201243793 2201243793 2201243793 2201243793 2201243793 2200595070 199167286 145838573 145838573 139986912 139986912 93324608 93324608 93324608 46662304 29163940 21872955 16852955 16852955 14445390 11556312 9141332 8243600 Paid Up Face Value Paid Up Capital (Crores) 217.75 220.68 220.12 220.12 220.12 220.12 220.12 220.06 199.17 145.84 145.84 139.99 139.99 93.32 93.32 93.32 46.66 29.16 21.87 16.85 16.85 14.45 11.56 9.14 8.24

2007 2006 2005 2004 2003 2002 2001 1999 1996 1994 1993 1992 1990 1987 1983 1981 1979 1978 1977 1974 1970 1966 1965 1962 1956

2007 2006 2005 2004 2003 2002 2001 2000 1998 1996 1994 1993 1992 1990 1987 1983 1981 1979 1978 1977 1974 1970 1966 1965 1962

Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share

1 1 1 1 1 1 1 1 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10

5

1952 1937 1933

1956 1952 1937

Equity Share Equity Share Equity Share

5.57 2.00 2.80

5.57 2.00 0.28

5570000 2000000 280000

10 10 10

5.57 2.00 0.28

1.9 Accounting policyBasis for preparation of accounts The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956. Revenue Recognition Sales are recognized when goods are supplied and are recorded net of trade discounts, rebates, sales taxes and excise duties (on goods manufactured and outsourced) but include, where applicable, export incentives such as duty drawbacks and premiums on sale of import licenses. It does not include inter-divisional transfers. Income from Property Development Activity is recognized in terms of arrangements with developers, where applicable. Income from services rendered is booked based on agreements/ arrangements with the concerned parties. Interest on investments is booked on a time proportion basis taking into account the amounts invested and the rate of interest. Dividend income on investments is accounted for when the right to receive the payment is established. Expenditure Expenses are accounted for on accrual basis and provision is made for all known losses and liabilities. Advertising expenses are charged against the profit of the year to which the activities relate. Revenue expenditure on research and development is charged against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as an addition to fixed assets. Fixed Assets Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided (except in the case of leasehold land which is being amortized over the period of the lease) on the straight line method and at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956. However, - certain employee perquisite-related assets are depreciated over four to six years, the period of the perquisite scheme - computers and related assets are depreciated over four years - certain assets of the cold chain are depreciated over four/seven years and - motor vehicles are depreciated over six years. Assets identified and evaluated technically as obsolete and held for disposal are stated at their estimated net realizable values. Goodwill and other Intangible Assets Intangible assets are stated at cost of acquisition less accumulated amortization. Goodwill and other Intangible assets (except computer software) are amortized over the assets useful life not exceeding 10 years. Computer software is amortized over a period of 5 years on the straight line method. Impairment of Assets Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable amount. Recoverable amount is higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Investments Investments are classified into current and long-term investments. Current investments are stated at the lower of cost and fair value. Long-term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long-term investments. Inventories

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Inventories are valued at the lower of cost, computed on a weighted average basis, and estimated net realizable value, after providing for cost of obsolescence and other anticipated losses, wherever considered necessary. Finished goods and work-inprogress include costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Sundry Debtors and Loans and Advances Sundry debtors and Loans and Advances are stated after making adequate provisions for doubtful balances. Provisions A provision is recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. Provision is not discounted to its present value and is determined based on the best estimate required to settle the obligation at the year end date. These are reviewed at each year end date and adjusted to reflect the best current estimate. Retirement/Post-Retirement Benefits Contributions to Defined Contribution schemes such as Provident Fund, etc. are charged to the Profit and Loss account as incurred. In respect of certain employees, Provident Fund contributions are made to a Trust administered by the Company. The interest rate payable to the members of the Trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. The remaining contributions are made to a government administered Provident Fund towards which the Company has no further obligations beyond its monthly contributions. The Company also provides for retirement / post-retirement benefits in the form of gratuity, pensions, leave encashment and medical. Such benefits are provided for based on valuations, as at the balance sheet date, made by independent actuaries. Termination benefits are recognized as an expense as and when incurred. Taxes on Income Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not recognized on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Foreign Currency Translations Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the profit and loss account. Segment Reporting The accounting policies adopted for segment reporting are in line with the accounting policies of the Company with the following additional policies for segment reporting: a) Inter segment revenue have been accounted for based on the transaction price agreed to between segments which is primarily market led. b) Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis, have been included under "Unallocated corporate expenses".

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1.10 - PRODUCT PROFILEBrooke Bond Lipton Kissan Annapurna Knorr Lux Lifebuoy Liril Hamam Surf Excel Rin Wheel Brooke Bond Bru

Kwality Wall's

Breeze Dove Pears Rexona Fair & Lovely Pond's Vaseline Aviance Pepsodent Closeup Lakme

Sunsilk Naturals Clinic Axe Rexona Ayush

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CHAPTER-22.1-COMPARATIVE PROFIT & LOSS A/CFigures in brackets represent deduction (Rs. In lakhs)

2003INCOME Sales Other income Total EXPENDITURE Operating Exp. Depreciation Interest Total 1013835.32 45982.83 1059818.15

2002

%CHANGE

(A)

995485.30 38454.22 1033939.52

1.84 19.58 2.5

(B)

(816168.31) (12478.43) (6676.45) (835323.19)

(799899.50) (13410.06) (918.40) (814227.96)

2.03 -6.95 626.96 2.56

PROFIT BEFORE TAX & EXEPTIONAL ITEMS (A-B)

224494.26 (42736.00) (6094.00) 4769.00 (44061)

219711.56 (45894.00) (2091.00) 1405.17 (46579.83)

21.77 -6.88 191.43 239.39 -5.41

Tax for the year

-Current tax-Deferred tax

Taxation adjustment of previous year Total

(C)

PROFIT AFTER TAXATION AND BEFORE EXCEPTIONAL ITEMS (A-B-C) = (D) Exceptional items (net of tax) (E)

180433.96

173131.73

4.22

(3254.56)

3841.90

15.29

NET PROFIT

(D-E)

177179.40

176973.63

0.12

In 2003, the sales registered a growth of 1.84% over 2002 Profit of year 2003increase by 0.12%, which is less than the last year.Increase in the other income by 19.28% is due to one-time gain earned from sale of shares of Indus Ind Bank during 2002-03.

Expenditure increased by 2.56%, which is, grater than increase in sales by 1.84%.

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Growth in year 2003Figures in %Particulars INCOME EXPENDITURE PROFIT\(LOSS) FOR THE YEAR (PBT) PROFIT\(LOSS) FOR THE YEAR (PAT) 2003 2.5 2.56 21.77 4.22

Growth in percentage of the year 200325 20 15 10 5 0 INC O ME E XP E NDIR UR E PBT P AT

10

2.2-PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON 31st DECEMBER, 2004Figures in brackets represent deduction (Rs. In lakhs)

2004INCOME Sales Other income Total EXPENDITURE Operating Exp. Depreciation Interest Total 992694.64 31889.38 1024578.02 (848957.9) (12089.94) (12998.43) (874046.27) 15031.75 (26600.00) (5473.62) 1469.52 (30604.1)

2003

%CHAN GE

(A)

1013835.32 45982.83 1059818.15 (816168.31) (12478.43) (6676.45) (835323.19) 224494.26 (42736.00) (6094.00) 4769.00 (44061)

-2.09 -30.66 -3.325 4.02 -3.11 94.7 4.64 -32.95 -37.76 -10.18 -69.19

(B)

PROFIT BEFORE TAX & EXEPTIONAL ITEMS (A-B)

Tax for the year

-Current tax-Deferred tax

Taxation adjustment of previous year Total

(C)

PROFIT AFTER TAXATION AND BEFORE EXCEPTIONAL ITEMS (A-B-C) = (D) Exceptional items (net of tax) (E)

119927.65 (193.28) 119734.37

180433.96 (3254.56) 177179.40

-33.53 -94.06 -32.47

NET PROFIT

(D-E)

In 2004, the sales registered a decline of 2.09% over 2003. Profit of year 2004 decrease by 32.47%, because of decrease in sale and increase in exp. Other income of the company is also decrease by 30.66%,which also affect the profit of the firm Expenditure increased by 2.56%, which is, grater than increase in sales by 1.84%. In 2003 company sold some fixed assets, that income increase the profit of the company

11

Growth in year 2004Figures in %Particulars INCOME EXPENDITURE PROFIT\(LOSS) FOR THE YEAR (PBT) PROFIT\(LOSS) FOR THE YEAR (PAT) 2004 -3.325 4.64 -32.95 -32.47

Growth in percentage of the year 2004

10 0 -10 -20 -30 -40 INC O ME E XP E NDIT UR E P BT P AT

12

2.3-PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON 31st DECEMBER, 2005Figures in brackets represent deduction (Rs. In lakhs)

2005INCOME Sales Other income Total EXPENDITURE Operating Exp. Depreciation Interest Total 1106054.62 30478.65 1136533.27 (961721.5) (12445.32) (1919.31) (976086.13) 160447.14 (22300.00) (4100.00) (3000.00) 4403.67 (24996.33)

2004

%CHAN GE

(A)

992694.64 31889.38 1024578.02 (848957.9) (12089.94) (12998.43) (874046.27) 15031.75 (26600.00) (5473.62) --1469.52 (30604.1)

11.42 -4.41 10.93 13.28 2.94 -85.23 11.67 6.59 -16.67 -25.01 ---12.94 -18.32

(B)

PROFIT BEFORE TAX & EXEPTIONAL ITEMS (A-B)

Tax for the year

-Current tax-Deferred tax

-Fringe benefit tax Taxation adjustment of previous year Total (C)

PROFIT AFTER TAXATION AND BEFORE EXCEPTIONAL ITEMS (A-B-C) = (D) Exceptional items (net of tax) (E)

135450.81 5359.63 140810.44

119927.65 (193.28) 119734.37

12.94

NET PROFIT

(D-E)

17.60

In 2005, the sales registered a growth of 11.42% over 2004. Profit of year 2005 increase by 17.60%, because of increase in sale and decrease in exp. In this year interest paid is too much. Expenditure increased by 2.56%, which is, grater than increase in sales by 1.84%.

13

Growth in year 2005Figures in %Particulars INCOME EXPENDITURE PROFIT\(LOSS) FOR THE YEAR (PBT) PROFIT\(LOSS) FOR THE YEAR (PAT) 2005 10.93 11.67 6.59 17.60

Growth in percentage of the year 2005

20 18 16 14 12 10 8 6 4 2 0 INC O ME E XP E NDITUR E PBT P AT

14

2.4-PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON 31st DECEMBER, 2006Figures in brackets represent deduction (Rs. In lakhs)

2006INCOME Sales Other income Total EXPENDITURE Operating Exp. Depreciation Interest Total 1210338.62 35451.49 1245790.11 (1045532.32) (13016.35) (1073.35) (1059622.02)

2005

%CHANGE

(A)

1106054.62 30478.65 1136533.27 (961721.5) (12445.32) (1919.31) (976086.13)

9.42 16.32 9.61 8.71 4.59 -44.08 8.56

(B)

PROFIT BEFORE TAX & EXEPTIONAL ITEMS (A-B)

186168.09 (26000.00) (2680.00) (3500.00) (21.00) (32201.00)

160447.14 (22300.00) (4100.00) (3000.00) 4403.67 (24996.33)

16.03 16.59 -34.63 16.67 82.82

Tax for the year

-Current tax-Deferred tax

-Fringe benefit tax Taxation adjustment of previous year Total (C)

PROFIT AFTER TAXATION AND BEFORE EXCEPTIONAL ITEMS (A-B-C) = (D) Exceptional items (net of tax) (E)

153967.09

135450.81

13.67

31570.25 185537.34

5359.63 140810.44

489.03 31.76

NET PROFIT

(D-E)

In 2006, the sales registered a growth of 9.42% over 2005. Profit of year 2006 increase by 31.76%, because of increase in other income is much higher as compare to the last year Expenditure increased by 8.56%, which is, less than increase in sales. Deferred tax is also low as compare to the 2005.

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Growth in year 2006Figures in %Particulars INCOME EXPENDITURE PROFIT\(LOSS) FOR THE YEAR (PBT) PROFIT\(LOSS) FOR THE YEAR (PAT) 2006 9.61 8.56 16.03 31.76

Growth in percentage of the year 2006

35

30

25

20

15

10

5

0 INC O ME E XP E NDITUR E PBT P AT

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2.5-PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON 31st DECEMBER, 2007Figures in brackets represent deduction (Rs. In lakhs)

2007INCOME Sales Other income Total EXPENDITURE Operating Exp. Depreciation Interest Total 1371775.37 46268.11 1418043.48 (1183205.25) (3835.90) (2549.66) (1199590.81)

2006

%CHANGE

(A)

1210338.62 35451.49 1245790.11 (1045532.32) (13016.35) (1073.35) (1059622.02)

13.33 30.51 13.83 13.17 6.3 137 13.21

(B)

PROFIT BEFORE TAX & EXEPTIONAL ITEMS (A-B)

218452.67 (33821.00) (3893.00) (4000.00) (167.11) 41546.89

186168.09 (26000.00) (2680.00) (3500.00) (21.00) 32201.00

17.34 30.08 45.26 14.28 695.7

Tax for the year

-Current tax-Deferred tax

-Fringe benefit tax Taxation adjustment of previous year Total (C)

PROFIT AFTER TAXATION AND BEFORE EXCEPTIONAL ITEMS (A-B-C) = (D) Exceptional items (net of tax) (E)

176905.78 15641.2 192546.98

153967.09 31570.25 185537.34

14.09 50.46 3.78

NET PROFIT

(D-E)

In 2007, the sales registered a growth of 13.33% over 2006. Profit of year 2006 increase by 3.78%, Expenditure and income both are increase in nearly same ratio. Expenditure increased by 13.21%. This year tax liability is higher as compare to the last year, so profit after tax is low.

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Growth in year 2007Figures in %Particulars INCOME EXPENDITURE PROFIT\(LOSS) FOR THE YEAR (PBT) PROFIT\(LOSS) FOR THE YEAR (PAT) 2007 13.83 13.21 17.34 3.78

Growth in percentage of the year 2007

20 18 16 14 12 10 8 6 4 2 0 INC O ME E XP E NDITUR E PBT P AT

18

2.6 - COMPARATIVE GROWTH OF LAST FIVE YEARSGrowth in percent (%) Particulars INCOME EXPENDITURE PROFIT BEFORE TAX PROFIT AFTER TAX 2003 2.5 2.56 21.77 4.22 2004 -3.325 4.64 -32.95 -32.47 2005 10.93 11.67 6.59 17.60 2006 9.61 8.56 16.03 31.76 2007 13.83 13.21 17.34 3.78

COMPARATIVE GROWTH OF LAST FIVE YEARS

40

30

20

10

2003 2004

0 INC O ME -10 E XP E NDITUR E PBT P AT

2005 2006 2007

-20

-30

-40

The growth of HUL is mutually increased every year. Profit is decrease in 2004 as compare to 2003, because in 2003 sale of fixed assets is high. Compared % profit is highest in 2006, because of highest sale is also registered in that year. Tax payment is also less as compare to other years, and exp. On interest is also less.

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2.7 - STATUS OF INCOME, EXPENDITURE AND PROFIT OF LAST FIVE YEARSRs. In lakhs

Particulars INCOME EXPENDITURE PROFIT(PAT)

2003 1059818.15 835323.19 17719.40

2004 1024578.02 874046.27 119734.37

2005 1136533.27 976086.13 140810.44

2006 1245790.11 1059622.02 185537.34

2007 1418043.48 1199590.81 192546.98

1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 INC O ME E XP E NDITUR E P AT 2003 2004 2005 2006 2007

The above diagram shows that the profit of the company is increases every year. It shows very progressive status of the company.

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2.8 - SALES OF LAST FIVE YEARSRs in lakhs

Particulars SALES

2003 1013835.32

2004 992694.64

2005 1106054.62

2006 1210338.62

2007 1371775.37

1600000 1400000 1200000 1000000 800000 sales 600000 400000 200000 0 2003 2004 2005 2006 2007

From the above graph, we can see that the sale of the company is some what constant in 2003 and 2004. After that sale is increase at higher rate and it would also help the company to gain maximum profit. In 2004, the net sale of the company is 992694.64 lakh Rs. And after that it bounces to 1106054.62 lakh Rs. In 2005 at the growth rateof 11.42%.

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CHAPTER 33.1 - COMPARATIVE BALANCE SHEET BALANCE SHEET AS ON 31ST DECEMBER, 2003Figures in brackets represent deduction (Rs. in lakhs)

SOURCES OF FUNDShareholders funds Capital Reserves & surplus 22012.44 191860.16 160369.65 10060.79

200322012.44 343875.14 1961.50 3868.26

2002

%CHNGE

213872.60

365887.58

0 -44.2 8075.8 160.08 3.39

Loan funds Secured loan Unsecured loan

170430.44 384303.04

5829.76 371717.34

APPLICATION OF FUNDFixed assets Gross block Depri.& impairment loss Net block Capital work in progress INVESTMENTS Deferred tax Deferred tax Assets Deferred tax liabilities Current assets, loans and advances Inventories Sundry debtors Cash and bank balances Other current assets Loans and advances 214171.54 (84608.96) 129562.58 7384.26 199436.41 (77889.64) 121546.77 10686.88 7.39 8.63 6.59 -30.9 8.89 -2.64 6.59

136946.84 257493.08

132233.65 236474.10

37709.13 (10965.19)

26743.94

38730.63 (11738.49)

26992.14

139263.34 47085.01 80648.11 6249.81 76932.62 350178.89

127873.62 36785.04 94262.60 4630.22 79555.40 343106.88

8.91 28 14.44 34.98 -3.3 2.06

Current liabilities and provisions Liabilities Provisions Net current assets

(255948.3) (131111.3) (387059.7) 36880.82 384303.04

(246534.1) (120555.3) (367089.4) 23982.55 371717.34

3.82 8.76 5.44 53.78 3.39

The Reserve & Surplus has been decreased by 42.2% The deferred tax liability net is increased by 6.59%. The total fund of HUL has been decreased by 3.39%. The Fixed asset increased by 3.56% because of the addition in fixed assets this year is very less. Inventories have gone up to Rs. 139263.34 lakh Rs. compared to Rs. 127873.62 lakh Rs. as at 31st December, 2003. The increase is in line with the activity increase. The high level of cash and bank balance is due to substantial collections from Debtors / Bill Discounting during the last few days of the financial year.

22

3.2-BALANCE SHEET AS ON 31ST DECEMBER, 2004Figures in brackets represent deduction (Rs. In lakh)

SOURCES OF FUNDShareholders funds Capital Reserves & surplus 22012.44 187258.5 145305.7 1805.67

200422012.44 191860.1 160369.6 10060.79

2003

%CHNGE

209270.95

213872.6

0 2.4 9.39 82.05 7.27

Loan funds Secured loan Unsecured loan

147111.45 356382.40

170430.4 384303.0

APPLICATION OF FUNDFixed assets Gross block Depri.& impairment loss Net block Capital work in progress INVESTMENTS Deferred tax Deferred tax Assets Deferred tax liabilities Current assets, loans and advances Inventories Sundry debtors Cash and bank balances Other current assets Loans and advances Current liabilities and provisions Liabilities Provisions Net current assets 231421.9 (89108.0) 142313.8 9422.22 214171.54 (84608.9) 129562.5 7384.26 8.05 5.32 9.84 27.67 13.41 2.98 27.54

151756.06 222956.27

136946.8 257493.1

36584.66 (13984.6)

22600.05

37709.13 (10965.1)

26743.94

147044.2 48926.97 69804.80 5277.71 59441.79 330495.5

139263.3 47085.01 80648.11 6249.81 76932.62 350178.8

5.59 3.9 -13.45 -15.55 -22.74 -5.62

(259079) (112346) (371425) (40929.9) 356382.4

(255948) (131111) (387059) 36880.82 384303.0

1.22 14.31 4.04 10.98 7.27

In 2004, capital of the company remains constant, but the Reserve & Surplus has been increased by 2.4% The deferred tax liability net is increased by 27.54%. The total fund of HUL has been decreased by 7.27%. The Fixed assets increased by 2.24% because of the addition in fixed assets. Net Current Assets as on 31.12.2004 stood at Rs. 356382 lakh Rs. as against the previous year level of Rs. 384303.04 Inventories have gone up to Rs. 147044.36 lakh compared to Rs139263.34 lakh Rs. as at December 2004.

23

3.3-BALANCE SHEET AS ON 31ST DECEMBER, 2005Figures in brackets represent deduction (Rs. In lakh)

SOURCES OF FUNDShareholders funds Capital Reserves & surplus 22012.44 208550.16

200522012.44 187258.5 230562.6

2004

%CHNGE

209270.9 145305. 8 1805.67

0 13.37 10.17 -98.31 79.66 -33.68

Loan funds Secured loan Unsecured loan

2449.96 3244.11

5694.07 236256.6

147111.4 356382.4

APPLICATION OF FUNDFixed assets Gross block Depri.& impairment loss Net block Capital work in progress INVESTMENTS Deferred tax Deferred tax Assets Deferred tax liabilities Current assets, loans and advances Inventories Sundry debtors Cash and bank balances Other current assets Loans and advances Current liabilities and provisions Liabilities Provisions Net current assets 237511.02 (98961.28) 138549.74 9803.29 231421.9 (89108.7) 142313.8 9422.22 26.31 10.98 -2.64 -3.82 -9.65 7.43 -2.59

148353.0 201419.8

151756.1 222956.3

33868.17 (11853.71)

22014.46

36584.66 (13984.6)

22600.05

132176.91 52282.85 35503.19 2389.08 54949.65 277301.68

147044.3 48926.97 69804.80 5277.71 59441.79 330495.5

-10.11 6.86 -49.13 -54.73 -7.56 -16.1

(296945.4) (115886.8) (412832.3) (135531) 236256.7

(259079) (112346) (371425) (40930) 356382.4

14.62 3.15 11.15 231.13 -33.68

Again in 2005, capital of the company remains constant, but the Reserve & Surplus has been increased by 13.27% The deferred tax liability net is decreased by 2.59%. The total fund of HUL has been decreased by 33.68% because of big decline in secured loan, cash and bank balance. The Fixed assets decreased by 3.32% Net Current Assets as on 31.12.2004 stood at Rs. 236256.67 lakh Rs. as against the previous year level of Rs. 356382.4 lakh Inventories have gone down to Rs. 132176.91 lakh compared to 147044.26 lakh Rs. as at December 2005.

24

3.4-BALANCE SHEET AS ON 31ST DECEMBER, 2006Figures in brackets represent deduction (Rs. In lakhs)

SOURCES OF FUNDShareholders funds Capital Reserves & surplus 22067.76 250280.5

200622012.44 208550.2 272348.27

2005

%CHNGE

230562.60 2449.96 3244.11

0.2 20 18.12 51.55 9.35 18.31

Loan funds Secured loan Unsecured loan

3712.90 3547.40

7260.30 279608.57

5694.07 236256.67

APPLICATION OF FUNDFixed assets Gross block Depri.& impairment loss Net block Capital work in progress INVESTMENTS Deferred tax Deferred tax Assets Deferred tax liabilities Current assets, loans and advances Inventories Sundry debtors Cash and bank balances Other current assets Loans and advances Current liabilities and provisions Liabilities Provisions Net current assets 246268.8 (106194) 140074.8 11026.03 237511.0 (98961.3) 138549.7 9803.29 3.69 7.31 1.1 12.47 19.85 13.8 36.69

151100.89 241393.15

148353.03 201419.84

38542.59 (16087.8)

22454.7

33868.17 (11853.7)

22014.46

154771.1 44037.10 41694.30 2173.23 74289.38 316965.5

132176.9 52282.85 35503.19 2389.08 54949.65 277301.68

17.09 -15.77 17.44 -9.03 25.8 14.30

(320164) (132141) (132141) (135340.1) 279608.57

(296945.) (115886) (412832) (135531) 236256.67

7.82 14.02 9.56 -0.14 18.31

In 2006, capital of the company increase by just 0.2%, and the Reserve & Surplus has been increased by 20% The deferred tax liability net is increased by 36.69%. The total fund of HUL has been increased by 18.31%. The Fixed assets increased by 12.47% because of the addition in fixed assets. Net Current Assets as on 31.12.2006 stood at Rs. 279608.57 lakh Rs. as against the previous year level of Rs. 236256.67 Inventories have gone up to Rs. 154771.1 lakh compared to 132176.96 lakh Rs. as at December 2006.

25

3.5-BALANCE SHEET AS ON 31ST DECEMBER, 2007Figures in brackets represent deduction (Rs. In lakhs)

SOURCES OF FUNDShareholders funds Capital Reserves & surplus 21774.63 122148.78

2007 22067.76 250280.5 143923.41

2006

%CHNGE

272348.3 3712.90 3547.40

-1.33 -51.2 -47.55 -31.27 77.63 -45.36

Loan funds Secured loan Unsecured loan

2551.86 6301.17

8853.03 152776.44

7260.30 279608.5

APPLICATION OF FUNDFixed assets Gross block Depri.& impairment loss Net block Capital work in progress INVESTMENTS Deferred tax Deferred tax Assets Deferred tax liabilities Current assets, loans and advances Inventories Sundry debtors Cash and bank balances Other current assets Loans and advances 266907.72 (114657) 152250.33 18563.75 246268.8 (106194) 140074.8 11026.03 8.38 7.97 8.69 13.05 -40.31

170814.08 144080.74

151100.9 241393.2

40371.06 (19132.3)

21238.75

38542.59 (16087.8)

22454.7

-5.4

195359.86 44337.46 20089.21 1239.25 66718.17 327740.95

154771.1 44037.10 41694.30 2173.23 74289.38 316965.5

26.23 0.68 -51.83 -42.98 -10.2 3.4

Current liabilities and provisions Liabilities Provisions Net current assets

(383708.5) (127389.5) (511098.0) (183357) 152776.44

(320164) (132141) (132141) (135340) 279608.7

19.85 -3.6 13 35.48 -45.36

In 2007, capital of the decrease by 1.33%, the Reserve & Surplus has been decreased by 51.2% The deferred tax liability net is decreased by5.4%. The total fund of HUL has been decreased by 45.36%. The Fixed assets increased by 13.05% because of the heavy purchase in fixed assets. Net Current Assets as on 31.12.2004 stood at Rs. 152776.44 lakhs Rs. as against the previous year level of Rs. 279608.57 Inventories have gone up to Rs. 195359.86 lakh compared to 154771.1 lakhs Rs. as at December 2007.

26

3.6 - COMPOSITION OF SHAREHOLDERS FUNDS & LIABILITIES IN DIFFERENT YEARSFIGURES ARE IN %SHAREHOLDERS FUND & LIABILITIES SHARE CAPITAL RESERVE & SURPLUS SECURED LOANS UNSECURED LOANS DEFERRED TAX LIABILITY CURRENT LIABILITIES PROVISIONS TOTAL 2003 2.8 24.52 20.5 1.29 1.4 32.72 16.77 100.00 2004 2.97 25.24 19.59 0.23 1.89 34.93 15.15 100.00 2005 3.33 31.55 0.37 0.49 1.79 44.93 17.54 100.00 2006 2.95 33.46 0.42 0.47 2.2 42.8 17.7 100.00 2007 3.19 17.88 0.38 0.92 2.8 56.18 18.65 100.00

60 50 40 30 20 10 0 2003 2004 2005 2006 2007SHARE CAPITAL RESERVE & SURPLUS SECURED LOANS UNSECURED LOANS DEFERRED TAX LIABILITY CURRENT LIABILITIES PROVISIONS

27

3.7 - COMPOSITION OF ASSETS IN DIFFERENT YEARSFIGURES ARE IN % APPLICATION OF FUND FIXED ASSETS CAPITAL WIP INVESTMENTS INVERTORIES SUNDRY DEBTORS CASH & BANK BALANCE OTHER CURRENT ASSETS LOANS & ADVANCES TOTAL ASSETS 2003 17.4 1.0 34.58 18.71 6.32 10.83 0.83 10.33 100.00 2004 20.18 1.34 31.62 20.85 6.93 9.9 0.75 8.43 100.00 2005 22.09 1.5 32.1 21.4 8.3 5.6 0.31 8.7 100.00 2006 19.74 1.56 34.0 21.82 6.2 5.88 0.31 10.47 100.00 2007 23.69 2.89 22.42 30.4 6.9 3.13 0.19 10.38 100.00

35 30 25 20 15 10 5 0 2003 2004 2005 2006 2007

FIXED ASSETS CAPITAL WIP INVESTMENTS INVERTORIES SUNDRY DEBTORS CASH & BANK BALANCE OTHER CURRENT ASSETS

28

CHAPTER:-4COMMON SIZE STATEMENTS Common size statement for PROFIT & LOSS ACCOUNT OF HUL.

ParticularsSales &other income Expenditure. Operating Exp. Depreciation Interest Total Profit before Tax Less: Tax for year Profit after Tax EXCETIONAL ITEMS Net profit

2007100

2006100

2005100

2004100

2003100

83.44

83.93

84.62

82.86

77.01

0.98 0.18 84.6 15.4 2.94 12.45 1.1 13.58

1.04 0.086 85.06 14.94 2.585 12.36 2.53 14.89

1.095 0.169 85.88 14.12 2.59 11.92 .472 12.39

1.18 1.27 85.31 14.69 3.13 11.71 .02 11.69

1.18 .63 78.82 21.18 4.61 17.02 .31 16.71

2003 0.31 Operating 4.61 Exp. Depreciation Interest 21.18 77.01 1.18 0.63 Profit before Tax Tax for year Profit after Tax EXCETIONAL ITEMS

17.02

2004 11.69 0.02 11.71 3.13

Operating Exp. Depreciation Interest Profit before Tax Tax for year 82.86 Profit after Tax EXCETIONAL ITEMS Net profit

14.69 1.27 1.18

29

200512.39 0.472 11.92 2.59 14.12 1.095 0.169 84.62

Operating Exp. Depreciation Interest Profit before Tax Tax for year Profit after Tax EXCETIONAL ITEMS Net profit

200614.89 2.53 12.36 2.585 14.94 1.04 0.086Operating Exp. Depreciation Interest Profit before Tax Tax for year Profit after Tax EXCETIONAL ITEMS Net profit

83.93

200713.58 1.1 12.45 Operating Exp. Depreciation 2.94 15.4 0.18 0.98 83.44 Interest Profit before Tax Tax for year Profit after Tax EXCETIONAL ITEMS Net profit

30

Common size statement for Balance sheet OFHUL ParticularsShare holder fund Capital Reserves & surplus Loans. Secured loan Unsecured loan Current liabilities & Provisions. Deferred Tax liabilities Total fund ASSETS Fix assets Investments Inventories Sundry debtors Cash & bank balance Other current assets Loans &Advances Deferred tax assets Total assets 9.78 5.92 100 9.93 5.15 100 8.31 5.12 100 8.00 4.93 100 9.83 4.82 100 25.01 21.1 28.6 6.5 2.9 .18 20.2 32.27 20.09 5.89 5.57 .29 22045 30.47 30.47 7.91 5.37 .36 20.46 30.06 30.06 6.6 9.41 .71 17.51 32.91 32.91 6.02 10.31 .8 100 100 100 100 100 .374 .923 74.83 2.8 .5 .47 60.47 2.15 .37 .49 62.46 1.79 19.59 .24 50.07 1.89 20.50 1.29 49.48 1.4 3.188 17.88 2.95 33.46 3.33 31.55 2.97 25.24 2.81 24.52

2007

2006

2005

2004

2003

SOURCES OF FUND FOR THE YEAR 2003 SHARE CAPITAL

2.77 5.57 2.55

40.57

48.54

RESERVE & SURPLUS SECURED LOANS UNSECURED LOANS DEFERRED TAX LIABILITY

31

SOURCES OF FUND FOR THE YEAR 2004SHARE CAPITAL RESERVE & SURPLUS SECURED LOANS50.56

3.79 0.48 39.25

5.92

UNSECURED LOANS DEFERRED TAX LIABILITY

SORCES OF FUND FOR THE YEAR 20054.78 1.3 0.99 8.87

SHARE CAPITAL RESERVE & SURPLUS SECURED LOANS UNSECURED LOANS

84.06

DEFERRED TAX LIABILITY

SOURCES OF FUND FOR THE YEAR 2006SHARE CAPITAL RESERVE & SURPLUS SECURED LOANS UNSECURED LOANS84.64

1.2 1.26 5.44

7.46

DEFERRED TAX LIABILITY

SOURCES OF FUND FOR THE YEAR 2007SHARE CAPITAL11.13 1.48 3.67 12.67

RESERVE & SURPLUS SECURED LOANS UNSECURED LOANS

71.05

DEFERRED TAX LIABILITY

APPLICATION OF FUND FOR THE YEAR 2003

18.39 47.03

FIXED ASSETS INVESTMENTS NET CURRENT ASSETS

34.58

32

APPLICATION OF FUND FOR THE YEAR2004

18.39 47.03

FIXED ASSETS INVESTMENTS NET CURRENT ASSETS

34.58

APPLICATION OF FUND FOR THE YEAR2005

23.66 44.22 FIXED ASSETS INVESTMENTS NET CURRENT ASSETS 32.12

APPLICATION OF FUND FOR THE YEAR2006

FIXED ASSETS INVESTMENTS NET CURRENT ASSETS

APPLICATION OF FUND FOR THE YEAR2007

26.58

FIXED ASSETS INVESTMENTS

51 22.42 NET CURRENT ASSETS

33

CHAPTER:-5TREND ANALYSISFor studying the trend of various items of financial statements, figures of a single year are not enough. Comparative figures of some more years are significant. Such comparative figures may be either absolute figure or may be presented in % form. If the item of one year, which called base year, is compared with similar items of one year in the form of Percentage This method is known as trend percentage method or trend ratio method.

(1) Trend analysis of sales:- (Taken 2003 as base year)

EXHIBIT 5.1.AParticulars sales 2003 100 2004 97.91 2005 109.09 2006 119.38 2007 135.31

GRAPH 5.1.Asales

160 140 120 PERCENTAGE 109.1 100 80 60 40 20 0 2003 2004 2005 2006 2007 YEARS 100 97.9sales

135.3 119.4

The graph shows little fluctuation in sales. From the table it is found that the there is Down ward trend in sales in year 2004.From 2005 on wards there is an up ward trend. In year 2007, the sale is increased by 35.3%as compared to year 2003. In year 2003 the sales was of RS.(IN Lakhs) 1013835.32, while in year 2007 it increase to RS (IN Lakhs) 1371775.37. Constant increase in sales is good for company & also shows a favorable situation for company.

34

(2)

Trend analysis of Expenses:(Taken year 2003 as base year)

EXHIBIT 5.1.B

Particulars Expenses

2003 100

2004 104.6

2005 116.9

2006 126.9

2007 143.6

GRAPH5.1.BExpences 200 Percentages 150 100 50 0 1 2003 2 2004 3 2005 years 4 2006 5 2007 100 104.6 116.9 126.9 143.6 Expences

From this table & graph it is found that there is constant increase in the expenses of company from year 2003. The expenses were increase in 2007 by 39.37% as compare to expenses in year 2003, which is due to increase in sales & manufacturing activities. Here the sales is increase in year 2007 by 35.30% as compare to year 2003, which shows that the companys cost management is not effective. The companys expenses are RS.(IN lakhs) 835323.19 in year 2003, which increased to RS ( In lakhs) 1199590.81, in year 2007. It is not good for company as it increased at high rate & negatively affect to the profit of company.

35

(3) Trend analysis of Profit after tax:- (take 2003 as a base year) EXHIBIT 5.1.C

Particulars Profit after tax

2003 100

2004 66.47

2005 75.07

2006 85.3

2007 98.05

GRAPH 5.1.C

Profit after tax

Profit after tax

120 100 80 60 40 20 0 1 2003 22004] 2005 3 years 2006 4 2007 5

The table & graph shows that there is continuous increase in the PAT from year 2005. As increase in expenses is high then increase in sales, any additional profit in relation to sales is not there. In year 2007, the PAT is decrease by 2% as compared to year 2003. The profit after tax in year 2003 is RS ( In lakhs)177179.40, Which is Rs. (In lakhs) 176905.78 in year 2007, which is due to high increase in expenses, are more then that of sales.

Percentages

36

5.2. TREND FOR BALANCE SHEET

Particulars Share holder fund Capital Reserves & surplus Loans. Secured loan Unsecured loan Total fund ASSETS Fix assets Investments Inventories Sundry debtors Cash & bank balance Other current assets Loans &Advances Deferred tax assets Total assets

2003

2004

2005

2006

2007

100 100

100 97.6

100 108.7

100.25 130.4

98.9 63.7

100 100 100

90.6 17.95 94.8

1.53 32.24 84.9

2.31 35.3 95.6

1.59 62.6 87.3

100 100 100 100 100 100

110.8 86.6 105.6 103.9 86.6 84.5

108.3 78.2 94.9 111.04 44.02 38.23

110.3 93.8 111.1 93.5 51.7 34.8

124.8 55.96 140.3 94.2 24.9 19.83

100 100 100

77.3 97.02 94.82

33.4 89.81 84.5

96.6 102.2 95.6

86.7 107.1 87.3

37

5.2 TREND ANALYSIS FOR BALANCE SHEET:(1)Trend analysis of Inventories: - (Taken year 2003 as a base year)

EXHIBIT 5.2.A

Particulars Inventories

2003 100

2004 105.6

2005 94.9

2006 111.2

2007 140.3

GRAPH5.2.AInventories 160 140 120 100 80 60 40 20 0

PERCENTAGE

140.3 100 105.6 111.2 94.9 Inventories

2003

2004

2005 YEARS

2006

2007

Here table & graph shows the fluctuating trend of inventories. It increase in year 2004 & falls in year 2005 & again shows an upward trend in year 2006 & 2007. Here the inventories is increased by 40.3% in year 2007 as compare to year 2003 which shows that more cash is blocked in the inventories & it also affect to operating cycle negatively. In year 2003 the inventories are of RS. (in lakhs)139263.34, which is increased to RS.(in lakhs)195359.86 in year 2007, which is not good for company as more cash is blocked in that.

38

(2) Trend analysis of debtors :-( Taken year 2003 as a base year)

EXHIBIT 5.2.B

Particulars Debtors

2003 100

2004 103.9

2005 111.1

2006 93.5

2007 94.2

GRAPH5.2.B

Debtors 115 110 PERCENTAGE 105 100 95 90 85 80 2003 2004 2005 YEARS 2006 2007 100 93.5 94.2 103.9 111.1 Debtors

Here the table & graph shows that there is fluctuation in the debtors. In year 2004 & 2005 due to loss credit collection policy, while in past 2 years it declines due to strict credit collection policy. As compare to year 2003 the debtors are decline by 5.8% in year 2007. In the year 2003 the debtors are of RS. (in lakhs)47085.01, which are decrease to RS. (in lakhs) 44337.46 in year 2007, which shows that the companys credit collection is become efficient compare to previous , which shows favorable situation for company.

39

(3) Trend analysis of Cash & bank balance :-( Taken 2003 as a base year)EXHIBIT 5.2.C

Particulars cash & bank balance

2003 100

2004 86.6

2005 44.02

2006 51.7

2007 24.9

GRAPH5.2.C

CASH & BANK BALANCE120 PERCENTAGE 100 80 60 40 20 0 2003 2004 2005 YEARS 2006 2007 44.02 100 86.6 cash & bank 51.7 24.9 balance

Here table & graph shows that the fluctuating trend in cash & bank balance. In year 2007 it falls by 75% as compared to 2003. In year 2003 the cash & bank balance was of RS.( in lakhs) 86048.11, which is decreased to RS.(in lakhs)20086.21 in year 2007, which is not good for company. The decline in cash & bank balance over a period of time is due to 3reasons: More cash is remain blocked in the inventory. More credit with the debtors. Due to less growth in sales compare to growth of expenses.

1. 2. 3.

40

(4) Trend analysis of Loans & advances :- (Taken year 2003 as a base year)EXHIBIT 5.2.D Particulars Loans & advances 2003 100 2004 77.3 2005 71.4 2006 96.6 2007 86.7

GRAPH 5.2.DLOANS & ADVANCES 120 PERCENTAGE 100 80 60 40 20 0 2003 2004 2005 YEARS 2006 2007 100 77.3 71.4 96.6 86.7LOANS & ADVANCE S

Here the table & graph shows fluctuating trend over a period of time. In year 2004 & 2005 it is decline, in year 2006 it is increase & again in year 2007 it is increase. As compare to year 2003 the loans & advances are falls by 13.3% in year 2007, which is due to continuous decrease in cash balance of company. In year 2003 the loans & advances are of RS. (in lakhs) 76932.62, which is decrease to RS (ion lakhs)66718.17 in year 2007, which is decrease companys current assets.

41

(5) Trend analysis of Investment :-( Taken year 2003 as a base year)EXHIBIT 5.2.E Particulars Investment 2003 100 2004 86.6 2005 78.2 2006 93.8 2007 55.6

GRAPH5.2.EInvestment Investment 120 PERCENTAGE 100 80 60 40 20 0 2003 2004 2005 YEARS 2006 2007 100 86.6 78.2 55.6 93.8

Here the graph & table shows the fluctuation in investment. In year 2004 & 2005 it falls, in year 2006 increase & again in year 2007 it falls. In year 2003 investment are of RS. (in lakhs)257493.08, which will increased to RS.( in lakhs)144080.74 in year 2007, which is not good for company as the company dose not able to earn return on investment as it earns previously. The investment is falls due to less availability of cash because of:1. 2. 3. More cash is blocked in the inventory. More credit with the debtors Due to less growth in sales compare to growth of expenses.

42

(6) Trend analysis for Capital :- (taken year 2003 as a base year)

EXHIBIT5.2.F

Particulars Capital

2003 100

2004 100

2005 100

2006 100.25

2007 98.9

GRAPH5.2.F

Capital Capital 100.5 PERCENTAGE 100.25 100 99.5 99 98.5 98 2003 2004 2005 YEARS 2006 2007 98.9 100 100 100

Here the graph & table shows that mostly the capital is remain constant; no any significant change is there in the capital. For first three years it remain constant & increase in year 2006 & decrease in year 2007. The capital in year 2007 is decreased by 1.1% as compared to year 2003, which is very minor. In year 2003 the capital is of RS.(In lakhs)22012.44,which is decreased to RS (in lakhs) 21774.63, in year 2007,which shows that the company is more depend on external sources to fulfill its long term finance need.

43

(7)Trend analysis of Reserves & surplus: - (Taken year 2003 as abase year)

EXHIBIT5.1.G

Particulars Reserves & surplus

2003 100

2004 97.6

2005 108.7

2006 130.4

2007 63.7

GRAPH5.1.G

Reserves & surplus Reserves & surplus 140 120 100 80 60 40 20 0 130.4 100 97.6 108.7 63.7

PERCENTAGE

2003

2004

2005 YEARS

2006

2007

Here there is a fluctuation in Reserve & surplus over a period of time. It falls in year 2004& increase in 2005 & 2006,while again decrease in year 2007, which is 36.33% as compared to year 2003. Here it is found that the company is going for trading on equity in year 2007 to increase return on equity , where it increase to 85% from 61.3% of previous year. In year 2003 the Reserve & surplus is of RS.(In lakhs) 191860.16, which are decreased to RS.(In lakhs) 122148.78 in year 2007, which is not good for company.

44

(8) Trend analysis of Fixed assets:- (Taken year 2003 as a base year)EXHIBIT5.2.H

Particulars Fixed assets

2003 100

2004 110.8

2005 108.3

2006 110.3

2007 124.7

GRAPH5.2.G

Fixed assets Fixed assets 140 120 100 80 60 40 20 0

PERCENTAGE

124.7 100 110.8 108.3 110.3

2003

2004

2005 YEARS

2006

2007

From this table & graph it can be said that the fixed assets shows fluctuation with increase in year 2004 , falls in year 2005 & increase in last 2 years. In Year 2007 it increased by 24.7% as compare to year 2003. The increase in fixed assets is due to increase in sales of company, which need more machinery, space & transportation tools. In year 2003 fixed assets are of RS. (in lakhs)129562.58, which increased to RS. (in lakhs)170814.08 in year 2007, which is favorable for company.

45

(9) Trend analysis of Share holders Fund:- ( Taken year 2003 as a base year)EXHIBIT5.2.I

Particulars Share holders fund

2003 100

2004 97.9

2005 107.8

2006 127.3

2007 67.3

GRAPH5.2.I

Share holders fund Share holders fund 140 120 100 80 60 40 20 0

PERCENTAGE

127.3 100 97.9 107.8 67.3

2003

2004

2005 YEARS

2006

2007

The table & graph shows the fluctuate trend in the share holders fund, as it falls in year 2004, in year 2005 & 2006 it increase & again falls in year 2007. Year 2007 shows decrease in share holders fund by 32.7% compare to year 2003. In year 2003 the share holders fund is RS.(in lakhs) 213872.60, which is increased to RS.(in lakhs)143923.41 in year 2007 due to falls in Reserve & surplus, which is not favorable for company.

46

(10) Trend analysis of Loans:- (Taken year 2003 as a base year)

EXHIBIT 5.2.J

Particulars Loans

2003 100

2004 86.3

2005 33.4

2006 42.6

2007 51.9

GRAPH5.2.J

Loans Loans 120 PERCENTAGE 100 80 60 40 20 0 2003 2004 2005 YEARS 2006 2007

A High fluctuation is found in loans over a period of time. It decreased in year 2004 & 2005, and increase in year 2006 & 2007. Year 2007 shows a decrease in Loans by 48% as compare to year 2003, which shows that company reduce the use of debt. In year 2003 the loans are of RS. (in lakhs)170430.44, which are decreased to RS.(in lakhs)8853.03.

47

(11) Trend analysis of Current Liability & Provisions:- (Taken year 2003 as a base year )

EXHIBIT 5.2.K

Particulars Current liability & Provisions

2003 100

2004 95.96

2005 106.7

2006 116.9

2007 132.05

GRAPH5.2.K

Current liability & Provisions Current liability & Provisions 140 120 100 80 60 40 20 0 132.05

PERCENTAGE

100

95.96

106.7

116.9

2003

2004

2005 YEARS

2006

2007

The current liabilities & provisions are continuously increased from year 2005. In year 2007 the current liabilities & provisions are increase by 32.05% as compare to year 2003. In year 2003 the Current liabilities of company are of RS. (In lakhs) 387059.71, which is increase to RS. (in lakhs) 511098.08 in year 2007, which is not good for company.

48

CHAPTER: 6 Analysis of cash flow statement

6.1. CASH FLOW STATMEANT FOR YEAR 2003 (A)CASH FLOW FROM OPERATING ACTIVITIES Profit before tax Adjustment for: Depreciation Foreign exchange Loss/(gain)on sale of fixed assets held for disposal Provision/(reversal of provision)for diminution in value on investment, net of cost over fair value of current investment Deficit/(surplus) on disposal of fixed assets Surplus on disposal of investment(net) Interest income Provision for loss on disposal of fixed assets Dividend income Interest expenses Operating profit before w.c. charges Adjustment for: Trade & other receivables inventories Trade payable & other liabilities Cash generated from operations Taxes paid Cash flow before exceptional items Purchase of annuities in discharge of amount payable to certain non-magt. Employees Compensation under v.r.s. Amt. paid for ice cream restructuring included in exceptional itmes Consideration recd. from nihar & cococare brand Sales tax Net cash from operating activities A (B) cash flow from investing activities: Purchase of F.A. Sales off F.A. Capital subsidy recd. Purchase of investment Sale of investment interest recd. Dividend recd Sale proceeds of land included in exceptional items Consideration received on disposal of subsidiary companies Consideration received on disposal of L.T. Investments

224494.96 12478.43 5.00 (18.70) (2128.46)

(1076.15) (4638.19) (13872.27) --(8930.52) 6676.45 212990.55 (4468.29) (14620.17) 3345.79 197247.88 (41044.65) 156203.23 (5718.20) (2442.00) (394.83) ----147648.20 (23360.39) 4039.52 9.00 (1121971.00) 1105815.67 12965.53 8700.59 ---------

49

Consideration received on disposal of 51% Shares in a subsidiary companies Consideration received on sale of functionalized bio-polymers business Consideration received on transfer of sewri undertaking to bon LTD. Net cash from investing activities B (c) cash flow from financing activities: Dividend paid Tax on distributed profit Interest paid Bank over draft Borrowings Repayment of debentures Proceeds from share allotment under E.S.O. Scheme Repayment of borrowing Net cash used in financing activities Net increase in cash & cash equipment(A+B+C) OPENING BALANCE CLOSING BALANCE

------(5269.56) (284057.99) (36459.48) (81.34) 3221.47 55776.58 132074.63 --(26472.00) (155998.13) (13619.49) 94265.87 80646.4

Operating activities:

The company has good cash flow from operating activities of RS. (in lakhs) 147648.20,where the surplus on disposal of investment, interest income & dividend income & the cash from operational activities are major contributors.

The interest expenses of company are also low & payment of income tax by company is very high. Investing activities: The company has invested highly in investment during year 2003 , with high sale of investment & purchase of fixed assets is also high. The company received good income from interest & dividend, but the company has a negative cash flow from investing activities of RS.(in lakhs) 5269.56 Financing activities: Company pays high amount of dividend & tax on distributed profit with borrowings. Company has good income from debentures, but as payment is more it gives company a negative cash flow of RS.(in lakhs)155998.13 Because of negative cash flow in investing & Financing activities the company has final negative cash flow of RS.(13619.49), which is not good for company, which reduce the closing balance to RS ( In lakhs) 80646.38.

50

6.2. CASH FLOW STATMEANT FOR YEAR 2004

(A)CASH FLOW FROM OPERATING ACTIVITIES Profit before tax Adjustment for: Depreciation Foreign exchange Surplus on disposable of fixes assets Provision/(reversal of provision)for diminution in value on investment, net of cost over fair value of current investment Deficit/(surplus) on disposal of fixed assets Surplus on disposal of investment(net) Interest income Dividend income Interest expenses Operating profit before w.c. charges Adjustment for: Trade & other receivables inventories Trade payable & other liabilities Cash generated from operations Taxes paid Cash flow before exceptional items Compensation under v.r.s. Purchase of annuities in discharge of amounts payable to certain erstwhile Amt. paid for ice cream included in exceptional items

150531.75 12089.94 (1.79) 21.64 (129.15)

2675.49 (2450.29) (9353.73) (6238.49) 12998.43 160143.80 12058.50 (10125.92) (10860.34) 151216.04 (16440.98) 134775.06 (4386.29) --(228.75)

Net cash from operating activities A (B) cash flow from investing activities: Purchase of F.A. Sales off F.A. Capital subsidy recd. Purchase of investment Sale of investment interest recd. Dividend recd Sale of land included in exceptional items Consideration received on disposal of subsidiary companies Consideration received on disposal of L.T. Investments Consideration received on disposal of 51% Shares in a subsidiary companies

130160.02 (32377.55) 3549.11 4.50 (820318.31) 854664.78 10422.46 6073.89 9485.19 -------

51

Consideration received on sale of functionalized bio-polymers business Consideration received on transfer of sewri undertaking to bon LTD. Net cash from investing activities B (c) cash flow from financing activities: Dividend paid Tax on distributed profit Interest paid Bank over draft Borrowings Repayment of debentures Proceeds from share allotment under E.S.O. Scheme Repayment of borrowing Net cash used in financing activities Net increase in cash & cash equipment(A+B+C) OPENING BALANCE Foods products ltd. & Lipton ltd. Cash as on 1-4-05 of lever India export ltd. Cash as on1-4-2006 of vashisti detergent LTD. CLOSING BALANCE

----31504.07 (120867.58) (15992.02) (12327.02) 923.01 58363.00 ----(82805.00) (172505.61) (10841.52) 80646.38 ------69804.86

Operating activities:- Here, for HUL. In year2004 it is found that the profit before tax of company is high then the net cash from operating activities, which shows that the cash is not fully released. The positive items here are Depreciation of RS.(in lakhs)12089.94 & interest expenditure of RS.(in lakhs)12998.43

Operating activities:The HULs net cash flow from operations of130160.02 (Rs in Millions) is less than the sum of accrual based profit & depreciation that equals Rs.150531.75, showing that the profit has not been fully realized in cash. From the cash flow statements, the main positive item is the depreciation charge of Rs. 12089.94.

Investing Activities:Form the Investing Activities section; hul; payments for assets acquisition of Rs. (in lakhs) 32377.55 the expenditure financed partly by:

a) b) c)

Realizing Rs. (in lakhs) 9485.19 from the Sales of land Realizing Rs. (in lakhs) 854664.78 from the Sale Of Investments, against purchase of RS.(820318.31). Interest Revenue Rs. 48.95 & dividend 56.93. This has left a gap of Rs. 1335.85 to be financed from other sources.

Financing Activities:It is seen from the Financing Activities section that the HUL raised long-term borrowing Rs. 186.69 & repaid long term borrowing Rs. 1162.88. Interest paid and dividend paid 166.96 & 1356.10 that carried out finance activities Rs. 2576.04.

Net Cash Flow:

It is clear that the expansion in the plant & machinery during the period was major drain on cash. The net cash out flow from investing activities of Rs. 691.72 was met from three sources: 1. Cash Flow from Operations, Rs. 3220.17 2. Proceeds from Issuance of Share Capital, Rs. 1335.85 (after repaying loans & disturbing interest and dividend). 3. Withdrawal from Cash Balance, Rs. 691.72. That is Cash in Flow, which is good sign for company.

52

6.3 CASH FLOW STATMEANT FOR YEAR 2005

(A)CASH FLOW FROM OPERATING ACTIVITIES Profit before tax Adjustment for: Depreciation Surplus on disposable of investment Provision/(reversal of provision)for diminution in value on investment, net of cost over fair value of current investment Deficiton disposal of fixed assets Discounting charges for employee stock option Interest income Provision for loss on disposal of fixed assets Dividend income Interest expenses Operating profit before w.c. charges Adjustment for: Trade & other receivables inventories Trade payable & other liabilities Cash generated from operations Taxes paid Cash flow before exceptional items Compensation under v.r.s. Amt. recd. From LIC. under v.r.s. Amt. paid for t.s.a Consideration received on sale of nihar & cococare brand Sales tax Net cash from operating activities A (B) cash flow from investing activities: Purchase of F.A. Sales off F.A. Capital subsidy recd. (17746.5) 2606.4 5.00 2380.8 14762.6 33901.4 209896.0 (11721.4) 198174.6 (929.7) --(500.00) ----196744.9 12445.3 (2779.3) (110.9) 160447.1

(465.7) 38.4

(5303.9) (192.8) (7146.3) 1919.3 15885.12

53

Purchase of investment Sale of investment interest recd. Dividend recd Cash flow from exceptional items Consideration received on disposal of subsidiary companies Consideration received on disposal of L.T. Investments Consideration received on disposal of 51% Shares in a subsidiary companies Consideration received on sale functionalized bio-polymers business of

(752374.0) 79012.55 7138.4 7606.6 37361.4 6.2 5068.5 --415.0

Consideration received on transfer of sewri undertaking to bon LTD. Net cash from investing activities B (c) cash flow from financing activities: Dividend paid Tax on distributed profit Interest paid Bank over draft Borrowings Repayment of debentures Proceeds from share allotment under E.S.O. Scheme Repayment of borrowing Net cash used in financing activities C Net increase in cash & cash equipment(A+B+C) OPENING BALANCE Foods products ltd. & Lipton ltd. Cash as on 1-4-05 of lever India export ltd. Cash as on1-4-2006 of vashisti detergent LTD. CLOSING BALANCE

833.7 43684.8

(109999.1) (15436.2) (7830.1) (435.8) 56386.6 (132074.6) --(65436.2) (274825.4) (34395.7) 69804.8 28.7 65.3 ---

35503.10

54

Interpretation:

Operating activities:

The HUL net cash flow from operations of the sum of accrual based profit before taxation & exceptional items is Rs.160447.1, showing that the profit has not been fully realized in cash. From the cash flow statements, the main positive item is the depreciation charge of Rs. 12445.3 Thus the companys earning cannot be said to be of high quality. Increase in Inventories to Rs.132176.9 and increase in debtors is to Rs. 52282.9 resulted in strain on the cash generated from generation.

Investing Activities:

Form the Investing Activities section; HUL Was made for acquisition of fix assets by Rs.17746.5, against sale of RS (in lakhs)2606.4. The expenditure financed partly by:

a) Realizing Rs. 790125.5 from the Sale Of Investments, against purchase of RS(in lakhs) 752374.00 b) Interest Revenue Rs. 7138.4 & dividend 7606.6 c) Consideration received on disposal of L.T. Investments is of RS(in lakhs) 5068.5 Financing Activities:

It is seen from the Financing Activities section that the HUL has repaid long term borrowing Rs. 132074.6. Interest paid and dividend paid 7830.1 & 109999.1 that carried out the net cash used in finance activities Rs. 27482.52, due to high payment of high dividend & debenture during year.

Net Cash Flow: Net Cash Flow from Operations, is of Rs. (in lakhs) 196744.9 Net Cash Flow from investing activities is of, Rs. (in lakhs) 43684.8 Net Cash used in financing activities, is of Rs. (in lakhs) (274825.4), which finally shows a decrease in closing balance by RS.(In lakhs) 34395.7 to RS.(In lakhs) 35503.1

55

6.4 CASH FLOW STATMEANT FOR YEAR 2006

(A)CASH FLOW FROM OPERATING ACTIVITIES Profit before tax Adjustment for: Depreciation Surplus on disposable of investment Provision/(reversal of provision)for diminution in value on investment, net of cost over fair value of current investment Deficit/(surplus) on disposal of fixed assets Discounting charges for employee stock option Interest income Provision for loss on disposal of fixed assets Dividend income Interest expenses Operating profit before w.c. charges Adjustment for: Trade & other receivables inventories Trade payable & other liabilities Cash generated from operations Taxes paid Cash flow before exceptional items Compensation under v.r.s. Amt. recd. From LIC. under v.r.s. Amt. paid for t.s.a Consideration received on sale of nihar & coco care brand Sales tax Net cash from operating activities A (B) cash flow from investing activities: Purchase of F.A. Sales off F.A. Capital subsidy recd. (15419.7) 4734.2 139.6 (16441.3) (22430.1) 37562.2 181035.5 (43730.7) 137304.8 (1947.5) 2025.9 --22902.4 (803.4) 159482.2 13016.4 (1598.9) (174.8) 186168.00

(1736.2) 303.8 (6563.6) --(8143.4) 1073.4 182344.7

56

Purchase of investment Sale of investment interest recd. Dividend recd Cash flow from exceptional items Consideration received on disposal of subsidiary companies Consideration received on disposal of L.T. Investments Consideration received on disposal of 51% Shares in a subsidiary companies Consideration received on sale of functionalized bio-polymers business Consideration received on transfer of sewri undertaking to bon LTD. Net cash from investing activities B (c) cash flow from financing activities: Dividend paid Tax on distributed profit Interest paid Bank over draft Borrowings Repayment of debentures Proceeds from share allotment under E.S.O. Scheme Repayment of borrowing Net cash used in financing activities Net increase in cash & cash equipment(A+B+C) OPENING BALANCE Foods products ltd. & Lipton ltd. Cash as on 1-4-05 of lever India export ltd. Cash as on1-4-2006 of vashisti detergent LTD.

(973183.4) 913737.6 6790.4 8143.4 (55057.9) 10624.6 19429.3 5209.5 ---

--(19794.5)

(121070.1) (17022.9) (1338.2) 1824.2 28138.5 --3392.2 (28396.5) (134472.8) 5214.9 35503.1 ----976.3

CLOSING BALANCE

41694.3

57

Interpretation:

Operating activities:The HUL net cash flow from operations of the sum of accrual based profit before taxation & exceptional items are Rs186168.00.showing that the profit has not been fully realized in cash. From the cash flow statements, the main positive item is again the depreciation charge of Rs. 13016.4 Thus the companys earning cannot be said to be of high quality. Increase in Inventories to Rs.154771.10 resulted in strain on the cash generated from generation.

Investing Activities:Form the Investing Activities section; HUL Was made for acquisition of fix assets by Rs.15419.7, against sale of RS (in lakhs)4734.2 The expenditure financed are:

a) Realizing Rs. 913737.6 from the Sale Of Investments, against purchase of RS(in lakhs) 973183.4 b) Interest Revenue Rs. 6790.4 & dividend 8143.4, which is good revenue generation for company. c) Consideration received on disposal of L.T. Investments is of RS(in lakhs) 19429.3

Financing Activities:It is seen from the Financing Activities section that the HUL has Interest paid and dividend paid 1338.2 & 121070.1 that carried out the net cash used in finance activities Rs. 134772.8, due to high payment of high dividend & during year.

Net Cash Flow:Net Cash Flow from Operations, is of Rs. (in lakhs) 196744.9 Net Cash Flow from investing activities is of, Rs. (in lakhs) 43684.8 Net Cash used in financing activities, is of Rs. (in lakhs) (274825.4), which finally shows a decrease in closing balance by RS.(In lakhs) 34395.7 to RS.(In lakhs) 35503.1

58

6.5. CASH FLOW STATMEANT FOR YEAR 2007

(A)CASH FLOW FROM OPERATING ACTIVITIES Profit before tax Adjustment for: Depreciation Surplus on disposable of investment net Provision/(reversal of provision)for diminution in value on investment, net of cost over fair value of current investment Deficit/(surplus) on disposal of fixed assets Discounting charges for employee stock option Interest income Dividend income Interest expenses Operating profit before w.c. charges Adjustment for: Trade & other receivables inventories Trade payable & other liabilities Cash generated from operations Taxes paid Cash flow before exceptional items Compensation under v.r.s. Amt. recd. From LIC. under v.r.s. Amt. paid for t.s.a Consideration received on sale of sangam brand Sales tax Net cash from operating activities A (B) cash flow from investing activities: Purchase of Fixed assets Sales off Fixed assets Capital subsidy recd. Purchase of investment Sale of investment interest recd. Dividend recd Cash flow from exceptional items Consideration received on disposal of subsidiary companies Consideration received on disposal of unused land & building Net cash from investing activities B (c) cash flow from financing activities: Dividend paid Tax on distributed profit Interest paid Bank over draft Borrowings Buy back of equity share

218452.67 13835.90 (7065.17) 149.76

(3115.46) --(6422.87) (10298.49) 2549.66 208086.00 (3983.77) (39925.98) 56131.88 220308.13 (49259.87) 171048.26 (1579.96) ----500.00 --168011.42 (32928.17) 8041.81 --(1415055.48) 1514867.36 7025.89 102983.49 92247.90 --10128.37 102376.27 (195447.12) (33747.00) (2553.96) 1531.65 65128.80 (62627.25)59

Cost in relation to buyback of share Proceeds from share allotment under employee stock option scheme Repayment of borrowing Net cash used in financing activities Net increase in cash & cash equipment(A+B+C) OPENING BALANCE Cash and cash equivalents as at 1-1-07 of Modern food industries ltd. Cash and cash equivalents as at 28-2-2007 of Daverashola Estates Ltd. Cash and cash equivalents as at 31st December (Closing cash balance)

(526.54) 1236.30 (65128.80) (292134.32) (21746.63) 41694.30 110.42

28.12 20086.21

60

Interpretation:

Operating activities:The huls net cash flow from operations of 168011.42 (Rs in Millions) is less than the profit before taxation & exceptional items Rs. 218452.67, showing that the profit has not been fully realized in cash. From the cash flow statements, the main positive item is the depreciation charge of Rs. 13835.90.Increase in Inventories was Rs. 3477.99 and increase in debtors is Rs. resulted in strain on the cash generated from generation.

Investing Activities:Form the Investing Activities section; HUL has payments for assets acquisition of Rs. 32928.17 & sale of assets is of RS.(In lakhs)8041.81 The expenditure financed are:

a) Realizing Rs. 1514867.36 from the Sale Of Investments, against purchase of RS .(In lakhs)1415055.48 b) Interest Revenue Rs. 7025.89 & dividend of RS.(in lakhs)10298.49

Financing Activities:It is seen from the Financing Activities section that the HUL has repaid long term borrowing Rs. 65128.80. Interest paid and dividend paid 2553.96 & 195447.12 , which take out major part of opening cash balance & reduce the closing cash balance at RS.(in lakhs) 20086.21

Net Cash Flow:1 Net Cash Flow from Operations, Rs.168011.42; 2 Net cash Flow from the investing activities is of RS102376.27, 3 Net Cash used to in financing activities is of RS.(292134.22), Which leads to falls in closing balance.

61

CHAPTER:7RATIO ANALYSIS &COMMON SIZE ANALYSISThe relationship of one item to another expressed in a simple mathematical form is known as the RATIO. A ratio is a quotient to two numbers. It must be interpreted against some standard. In assessing the financial stability of a firm, a management should, part form profitability, be interested in relative figures. A ratio is of major importance for financial analysis; it engages qualitative measurement & shows precisely how adequate is one key item in relation to another. To evaluate the financial condition & the purpose of the firm the financial analyst needs certain yardsticks. The yardsticks frequently used in ratio or an index relating two pieces of financial data to each others.

UTILITY OF RATIO ANALYSIS:1. 2. 3. 4. 5. 6. 7. Probability. Liquidity. Efficiency. Inter Firm Comparison. Indicates Trend. Useful of Budgetary Controls. Useful for Decision Making. This ratio analysis contains seven types of ratio as below: 1 Profitability Ratios. 2 Liquidity Ratios. 3 Solvency Ratio 4 Market valuation Ratios 5 Capitalization Ratio 6 Financial Ratio 7 Growth Ratio

1)1. 2.

Profitability Ratios:Profitability ratio measures the degree of operating success of a company in an accounting period. Two types of profitability ratios are there.

Profit Margin Ratios. Rate of Return Ratios.A profit margin ratio shows the relationship between profit & sales. Three popular profits margin ratios are:

Gross Profit Margin Ratios. Net Profit Margin Ratios. Operating Profit Ratios.

62

(1)Gross profit margin ratio:It shows the margin left after meeting manufacturing costs. It measures the efficiency of production as well as pricing. Gross Profit Margin Ratio = Gross Profit/ Sales X 100 EXHIBIT 7.1.A Particular 2003 2004 2005 2006 2007

Net Sales

1015188.58

992694.64

1106054.6

1210338.62

1371775.37

Cost of Goods Sold

828646.70 185188.58 18.27%

861047.84 131646.8 13.26%

974166.80 131887.80 11.92%

1058548.7 151789.92 12.54%

1197041.15 174734.22 12.74%

Gross Profit. Gross Profit Ratios.

GRAPH7.1.A

Gross profit ratio20 15 10 5 0 2003 2004 2005 years 2006 2007 18.27 13.26 12.74

Series1

Here the Gross profit ratio is decrease in year 2004, 2005 & a small increase is in past 2 years, which is also not at satisfactory level. In year 2007 it is only 12.74 % which low & it is because of high cost of good sold.

Compare to year 2003 there is 5.53 % decrease in the ratio which is not good for company & the company should take necessary steps to increase to it.

percentage

11.92

12.54

63

(2) Net Profit Margin Ratios:It is most significant of all revenue ratios as it indicates the ultimate profitability of the firm. This ratio is useful to the shareholders for knowing the EPS and to investors in judging the prospects of return on their investments higher ratio indicated higher profitability.

Net Profit Margin Ratio = Net Profit / Sales x 100. EXHIBIT 7.1.B(Rs in Millions)

Particular Net Profit. Sales. Net Profit Ratio.

2003 177179.4 1013835.32 17.48%

2004 119734.37 992694.64 12.06%

2005 140810.30 1106054.60 12.73%

2006 185537.40 1210338.62 15.33%

2007 192546.98 1371775.37 14.04%

Chart7.1.B

net profit ratio20 15 percentage 10 5 0 2003 2004 2005 years 2006 17.5 15.33 12.06 12.73

Series1

14.04

2007

Here, The Table shoes that Net profit ratio fluctuating. In year 2003 it is at 17.48% but in 2004, at 12.06%From 2005 on wards, it is a start to increase which is shows better Profitability & satisfactory level.

64

(3)Operating Profit Ratio: This ratio indicate the portion that the cost of sales bears to sales cost of sales includes direct cost of good sold as well as operating expenses, administrative, selling & distribution expenses which, have matching relationship with sales. It is calculated as:

Operating Profit ratio = Operating Profit / Sales X 100.EXHIBIT 7.1.C(Rs. In lakh)

Particular

2003

2004

2005

2006

2007

Operating Profit. Sales. Operating Profit Ratio.

185188.58

131646.80

131887.80

151789.90

188570.12

1013835.32 18.27%

992694.64 13.26%

1106054.60 11.92%

1210338.62 12.54%

1371775.37 13.75%

EXHIBIT 7.1.C

Operating Profit Ratio. Operating Profit Ratio.

20.00% PR E T G E CNA E 15.00% 10.00% 5.00% 0.00%

18.27% 13.26% 11.92% 12.54% 13.75%

2003

2004

2005 YEARS

2006

2007

Here the operating ratio is fluctuated over a period of time. In year 2004 it comes to13.26% from 18.27% of year 2003. Again falls in 2005 & from year 2006 it starts to increase. The fluctuation is due to fluctuated expenses, which the company is needed to control as after year 2003 the operating profit dose not show satisfactory level of performance.

Rate of return ratios reflects the relationship between Profit & Investments. Important rate of return ratios measures are: Return on assets or Return on investments. Return on equity. Profit margin. Assets turn over. Earning per share.

65

(4) Return on Assets:-It Measures firms efficiency to use assets.It indicates how many times the assets were turned over in a period &generated sales.

RETURN ON ASSETS = PROFIT AFTER TAX / AVERAGE TOTAL ASSETS

EXHIBIT7.1.DParticular 2003 2004 2005 2006 2007

Profit After Tax. P Y Total Assets CY Total Assets Average Total Assets. Return on Assets Ratio

180433.96 750545.26 782327.94 766436.6 23.54%

119927.65 782327.94 741792.5 762060.2 15.74%

135450.8 741792.5 660942.7 701368.0 19.31%

153967.10 660942.7 74800.22 704472.45 21.86%

176905.78 748002.2 683007.4 715504.8 24.72%

GRAPH 7.1.D

RETURN ON INVESTMENTRETURN ON INVESTMENT

0.3 0.25 0.2 0.15 0.1 0.05 0

PERCENTAGE

23.54% 15.74% 19.31%

21.86%

24.72%

0 2003 2004 2005 2006 2007

YEARS

Here, the table saws that asset turn over are high, which shoes that company manage its asset efficiently. There is a continuous increase in return on asset, from 2005 onwards, which means that the firm uses its asset efficiently. In year 2003 the assets turn over ratio of company is 23.54%, which in year 2007 with some increase came at 24.72% , which is good for company. The company can further go for high turn over of assets & can increase the sales turn over.

66

(5) Return on Equity:It measures the profitability from a general level of investment. It is indicator of overall performance of company.

Return on Equity = Profit after Tax / Average Shareholders Equity x 100 EXHIBIT 7.1.E(Rs. in Millions)

Particular PAT P Y Shareholders Equity CY Shareholders Equity Average Shareholders Equity Return on Equity Ratio

2003 180433.96 365887.58 213872.6 289880.09 62.24%

2004 119927.65 213872.6 209270.1 211571.35 56.70%

2005 135450.8 209270.1 270562.6 219916.35 61.6%

2006 153967.10 270562.6 272348.3 271455.45 61.23%

2007 176905.78 272348.3 143923.41 208135.855 85%

GHAPH7.1.EReturn on Equity Ratio Return on Equity Ratio

100.00% PERCENTAGE 80.00% 60.00% 40.00% 20.00% 0.00% 2003 2004 2005 YEARS 2006 62.24% 56.70% 61.60% 61.23%

85%

2007

Table shoes the fluctuating Return on equity. Return on equity in year2007, indicates that the company earned more per rupee of share holders fund than rupee of assets. In year 2003 the ratio is at 62.24% which reach to 85% in year 2007, with increase of 22.76% due to decrease in equity. Here; the company used more debt & reduce equity capital in 2007, which increase return on investment from 61% to 85%, which is done by trading on equity & the company should go further for it.

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(6)Asset turn over:-Asset turn over measures the companys efficiency to utilize its assets. Asset turn over = sales/average total assets.EXHIBIT-7.1.FParticulars Sales P.Y.Assets C.Y.assets Average total assets Assets Turn over 1.32 times 1.3 times 1.58times 1.72 times 1.92times 2003 1013835.32 750545.26 782327.94 766436.6 2004 992694.64 782327.94 741792.50 762060.22 2005 110605.46 741792.5 660942.7 70136.8 2006 1210338.62 660942.7 74802.70 70447.25 2007 1371775.37 748002.7 683007.4 71550.5

GRAPH 7.1.F

ASSETS TURN OVER2.5 2 1.5 1 0.5 0 1.72 1.92

TIMES

1.32

1.3

1.58

2003

2004

2005 YEARS

2006

2007

After2003, only in 2004 there is a down ward trend. But from 2005 on wards, there is continuous improvement in assets turn over. In 2007, the asset turn over is increased by 45.5% compare to 2003, which shows that the company is manage its assets efficiently. Compare to year 2003 , the assets turn over become fast in year 2007, which indicates that the company is efficiently use its assets & the company can also go further for it.

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(7) Earnings per share: Financial analysts regard the EPS as an important measure of profitability.It is helpful in comparing performance over time period. EPS=Profit after tax/weighted average no. of equity shares.

EXHIBIT7.1.GParticulars Profit after tax Weighted avg. no. of equity shares EPS 2003 180433.96 22022.44 Shares 2004 119927.65 22012.44 shares 2005 135450.70 22012.44 shares 2006 153967.09 22067.80 shares 2007 176905.78 21774.63 shares

RS.8.19

RS.5.45

RS.6.15

RS.6.98

RS.8.12

GRAPH7.1.GEarning per share9 8 7 6 5 4 3 2 1 0 8.19 6.98 5.45 6.15 8.12

RS.

2003

2004

2005 years

2006

2007

In 2003, EPS is RS.8.19, while in year 2004 it decline by 33.5% as compare to year 2003. From year 2005, the EPS shows a continuous increase but it is not at a satisfactory level. As compare to year 2003 there is minor decrease in EPS in year 2007, from year 2004 it shows continuous increase in it, which shows that the profitability of firm is increased. Here, firms profitability is not remaining stable over a period of 5 years & it is fluctuated.

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2. Liquidity ratio:Liquidity is the ability of a business to meet its short term obligations when they fall due. A firm should have enough cash & current assets which can be converted into cash so that it can pay its suppliers. For evaluating HULs liquidity we take following four ratios.

1. 2. 3.

4.

Current ratio Quick ratio Debtor turn over Inventory turn over.

(1)Current ratio: It indicates companys ability to pay its debts in short term.It shows the amount of current assets a company has per rupee of current liability.

Current ratio= Current assets/ Current liability EXHIBIT7.2.A Particulars Current assets Current Liability Current ratio 0.91 0.89 0.67 0.71 0.64 2003 350178.89 387059.71 2004 330495.53 371425.51 2005 277301.70 412832.30 2006 316965.50 452305.70 2007 327740.95 511098.08

GRAPH7.2.ACurrent ratio1 0.8 p ercen tage 0.6 0.4 0.2 0 2003 2004 2005 years 2006 2007 0.905 0.89 0.67 0.7 0.64

The current ratio is declines from 2003, continuously; only in 2006 it shows up ward trend. As compare to year 2003, it falls by 29.67% in year 2007, which is due to decline in current assets & increase in current liability. Decline in current ratio indicates in present the company has fewer current assets to meet current liabilities, which is not good for short term creditors.

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(2) Quick ratio:-Current ratio is not satisfactory measure liquidity as it includes Inventories.Quick ratio is also known as Acid test ratio. This ratio relates more liquid current assets, to current liability.

EXHIBIT7.2.BParticulars Quick assets Current Liability Quick ratio 0.55 0.49 0.35 0.36 0.26 2003 210915.55 387059.71 2004 183451.27 371425.51 2005 145124.8 412832.3 2006 162194.40 452305.70 2007 132381.09 511098.08

GRAPH7.2.BQuick ratio Quick ratio

0.6 0.5 0.4 Rs. 0.3 0.2 0.1 0

0.55 0.49 0.35 0.36 0.26

2003

2004

2005 YEARS

2006

2007

Here, Quick ratio is decrease continuously, only on year 2006 it shows up ward trend. As compare to year 2003 the ratio become less than half in year 2007 which shows that the inventory consist major part of current assets & the company has very less liquid assets as compare to current liabilities . Decline continuously in Quick ratio shows that the firm dose not has much liquid assets as its current obligations, So that the company may have difficulty in paying those obligations.

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(3)Debtor turn over:It is the ability of a company to collect credit from its customers. It measures the efficiency of credit & collection of firm. It shows the no. of times each year Debtors turned into cash.

EXHIBIT7.2.CParticulars Sales P.Y.Debtors C.Y.Debtors Average Debtors Debtor turn over 24.18 20.68 21.86 25.13 31.04 2003 1013835.32 36785.04 47085.01 41935.025 2004 992694.64 47085.01 48927.0 48006.005 2005 1106054.6 48927.0 52282.9 50605.3 2006 1210338.6 52282.9 44037.1 48160.0 2007 1371775.37 44037.10 44337.46 44187.28

GRAPH7.2.CDebtors turn over ratio35 30 25 Days 20 15 10 5 0 2003 2004 2005 years 2006 2007 24.2 20.7 25.1 21.9 31.01

Here, the table shows that in year 2004 only there is down ward trend, while from year 2005 it starts to increase. As compare to year 2003, it is increase by 28.37% in year 2007, which shows that the companys credit collection policy is improved. A high debtor turn over ratio of company is indicates that, Debtors are being converted rapidly into cash & quality of the companys portfolio of debtors is good. Higher debtor turn over indicates better management of Receivables.

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Average debt collection period: It shows the time period of collection from debtors.

EXHIBIT7.2.DParticulars Days Debtor turn over ratio Avg. debt Collection period 2003 360 Days 24.18 14.90 2004 360Days 20.68 17.41 2005 360Days 21.86 16.47 2006 360Days 25.13 14.33 2007 360Days 31.04 11.60

GRAPH7.2.D

Average debt collection period20 14.9 15 Days 10 5 0 2003 2004 2005 Years 2006 2007 17.4 16.5 14.3 11.6

Only in year 2004, it shows high debt collection period. From year 2005 on wards, it starts to decline which indicates that the company is improving in credit collection & the cash is released quickly. As compare to year 2003 the average debt collection period in year 2007 is falls by 3.3 days , which shows that the company has better credit collection & if the company go for further they w