SHREE CHANAKYA EDUCATION SOCIETY’S

INDIRA INSTITUTE OF MANAGEMENT PGDM

SEMESTER II
BATCH (2022-24)

Subject Name – FINANCIAL MANAGEMENT

Submitted By
Name of the Student
Prasad Parekar Sanket Padwal

Prathmesh Tawre Shubham Sahane

Pratik Rawte Soumya Soni

Prasanna Belokar Pushkar Chavan

Topic Name – Comparing Ratios Between Nestle And Hindustan

Uniliver Limited.

Brief history of the companies.

Hindustan Unilever Limited (HUL)-

 is a British-owned Indian consumer goods company headquartered in Mumbai. It is a subsidiary
of the British company Unilever. Its products include foods, beverages, cleaning agents, personal
care products, water purifiers and other fast-moving consumer goods (FMCGs).
HUL was established in 1931 as Hindustan Vanaspati Manufacturing Co. Following a merger of
constituent groups in 1956, it was renamed Hindustan Lever Limited. The company was renamed
again in June 2007 as Hindustan Unilever Limited.
Hindustan Unilever has been at the helm of a lot of controversies, such as dumping highly
toxic mercury-contaminated waste in regular dumps, contaminating the land and water of Kodaikanal.
(See: Kodaikanal mercury poisoning). The British company also faced major flak for an advertising
campaign attacking the Hindu pilgrimage site at Kumbh Mela, calling it a "place where old people get
abandoned, a move that was termed racist and insensitive.
As of 2019, Hindustan Unilever's portfolio had 50+ product brands in 14 categories. The company
has 21,000 employees and clocked sales of ₹34,619 crores in FY2017–18.
In December 2018, HUL announced its acquisition of GlaxoSmithKline's India's consumer business
for $3.8 billion in an all equity merger deal with a 1:4.39 ratio. However the integration of GSK's 3,800
employees remained uncertain as HUL stated there was no clause for retention of employees in the
deal.In April 2020, HUL completed its merger with GlaxoSmithKline Consumer Healthcare (GSKCH
India) after completing all legal procedures.In December 2022, HUL's market cap was Rs. 638548.42
crore.

Nestle-

In 2016, Nestlé, one of Switzerland’s iconic brands, celebrated its 150th anniversary. Delve into the
history of the brand and find out about its origins.

The story begins with the Anglo-Swiss Condensed Milk Company’s Milkmaid brand. In 1866, the
Company started supplying condensed milk as an alternative to fresh milk. Henri Nestlé, not to be
outdone, developed his own ‘farine lactée’ and launched it in Vevey, Switzerland. Nestlé’s products
included milk-based baby food and infant formulas. In 1875, Nestlé supplied Swiss chocolatier Daniel
Peter with condensed milk, which he used to blend the first milk chocolate. However, it would be
another 20 years before Nestlé would become involved in the chocolate industry.
In the meantime, the competition between Nestlé and the Anglo-Swiss company heated up.
Eventually in 1905, when Anglo-Swiss’ plans to expand to the U.S. flounder, the company merged
with Nestlé. At the same time, Nestlé launched its own milk chocolate, produced by Peter & Kohler

Nestlé’s first chocolate products were produced at the start of the twentieth century | © Evan-
Amos /WikiCommons

By this point, Nestlé owned factories across Europe, the U.S., Australia and warehouses in
Singapore, Hong Kong and Bombay. When World War I began, things became difficult for the
company as demand for condensed milk rocketed but supplies plummeted. As a result, Nestlé’s
focus shifted to the U.S. and Australia, where new factories were opened. The shift was so
successful that production doubled by the end of the war.

The next 30 years were a series of ups and downs for the company. As for so many other
businesses, the Wall Street Crash of 1929 hit hard. But in the 1920s Nestlé bought Peter-Cailler-
Kohler, Switzerland’s oldest chocolate company. The next decade brought further success with the
malt chocolate drink Milo hitting markets in Australia.

Soon after, in 1938, came a momentous occasion, the fruits of which are probably sitting in your
kitchen cupboard today. Nescafé, the first mass market instant coffee, was launched. It came about
after the Brazilian government asked Nestlé to do something with the masses of excess coffee they
were producing at the time.

After World War II, Nestlé expanded its range of products again, purchasing fellow Swiss firm
Alimentana, which produces Maggi soups. In the 1950s, Nestea hit markets in the US, quickly
followed by Nesquik, which became a roaring success, both of them becoming best-sellers. At this
time, Nestlé continued its march forward, buying up frozen food firms and diversifying into
pharmaceuticals and cosmetics, all the while expanding its food and drink products.

But in 1977 the steady expansion was shaken when a boycott of Nestlé was called for by consumers
who raise questions about the company’s ‘aggressive’ marketing of its breast milk substitutes. The
boycott led to the World Health Assembly adopting the International Code of Marketing of Breast-milk
Substitutes, which Nestlé signed on to in 1984, bringing an end to the boycott. The year after the
boycott ended, Nestlé buys the Carnation Company for $3 billion, in what is one of the largest
corporate take overs at the time. One year later, Nespresso capsules first hit the shelves, advertising
the full barista experience.

In the 21st century, Nestlé continues its growth. It built upon its mineral water interests by snapping
up French and Italian firms, launched Nestlé Purina Petcare in 2002, becoming a force in the pet-
food sector in the process, and in 2010, Kraft Foods’ frozen pizza comes under the company’s
umbrella.

Many other enterprises have been launched by the company, but we can trace its roots all the way
back to the town of Vevey in Switzerland, where one man sought to provide a healthy option for
mothers who were unable to breastfeed, and make some money in the process. Today, Nestlé is the
biggest food and drink company in the world, operating in 194 countries and producing everything
from face cream to dog food; truly a far-cry from Henri Nestlé’s first venture into condensed milk 150
years ago.
RATIOS

1. Current ratio=C.A/C.L

HUL=15522/11280=1.37 Nestle=2738/2603=1.051

 The current ratio is a liquidity ratio that measures a company’s ability to pay short-term
obligations or those due within one year.
 The current ratio helps investors and creditors understand the liquidity of a company and
how easily that company will be able to pay off its current liabilities.

o Ideal current ratio is 2:1

2. Quick Ratio=Total C.A-Total Inventory/Total Iiability

HUL=20.37-537.6061/1480.51=1.01 Nestle=21301/45841.063=0.46

 The quick ratio measures a company's capacity to pay its current liabilities without

 needing to sell its inventory or obtain additional financing.

 This ratio serve asupplement to current ratio in analyzing liquidity position of company

3. Inventory Turnover ratio=COGS/AVG.Inventory             

HUL=3489.58/514.54=6.78 Nestle-55544.224/14565.749=3.81

 A considerable amount of company capital tied up in financing of raw material

 It measures how many times companys inventory is sold.

 The higher ratio better it is

4. Total asset turnover ratio=Total sales/total asset

HUL=15597/71936=0.216 Nestle=14709/8209=1.791

 The asset turnover ratio measures the efficiency of a company's assets in

generating revenue or sales.
  0.25 to 0.5 is good ratio

5. Working capital turnover ratio=sales/ W.I.C

HUL=15597/4242=3.676 Nestle=4591/1522=3.016

 Working capital turnover is a ratio that measures how efficiently a company is using its

 working capital to support sales and growth

 A low ratio could indicate that a company is investing too much on accounts receivable

 and inventory to support sales.

 This could result in a high number of bad debts or obsolete inventory.

6. P.E Ratio=Current price of equity share/earning per share

HUL=2637/37.53=70.26 Nestle=19004/162.870=116.68

 Price to Earnings Ratio or Price to Earnings Multiple is the ratio of share price of a stock

 to its earnings per share (EPS)

It indicates whether a stock is costly or inexpensive at its present market price.

7. Dividend payout ratio=Dividend per share/earning per share

HUL=1.37/37.53=0.036 Nestle=200/222.46=0.90

 The dividend payout ratio shows how much of a company's earnings after tax (EAT) are

 paid to shareholders.
  It is the amount of dividends paid to shareholders relative to the total net income of a

 company.

8. Proprietary ratio=Shareholder networth/Total assets

HUL= 16.11 Nestle= 0.040

 The proprietary ratio is the proportion of shareholders’ equity to total assets, and as
such

 provides a rough estimate of the amount of capitalization currently used to support a

 business

 The proprietary ratio is the inverse of debt ratio

 Proprietary ratio is a type of solvency ratio that is useful for determining the amount or

 contribution of shareholders or proprietors towards the total assets of the business

9. Dividend yeild ratio=D.P.S/market price per share

HUL=36/2648.75=1.36 Nestle=2.967/120.73=2.46

 The dividend payout ratio shows how much of a company's earnings after tax (EAT) are

 paid to shareholders.

 It is the amount of dividends paid to shareholders relative to the total net income of a

company.

10. Debt to equity= longterm detor/shareholder fund

HUL=136.89/6439.33=0.02 Nestle=55686.4/45814.26=1.22
  The debt-to-equity ratio (D/E ratio) shows how much debt a company has compared to

 its assets

 It is found by dividing a company’s total debt by total shareholder equity

 A higher D/E ratio means the company may have a harder time covering its liabilities

BAR GRAPH/CHART:

16
12
8
4
0

NESTLE
HUL