TITLE - COMPARATIVE STUDY OF CAPITAL
STRUCTURE OF ITC CO LTD & HINDUSTAN UNILIVER
ABSTRACT
The purpose of the
research is study COMPARATIVE
STUDY OF CAPITAL STRUCTURE OF ITC CO LTD & Hindustan uniliver and
how these strategies can improve the performance of the company.
The
introduction to the research consists about a description about the background
of the study with an introduction to the ITC Company and the various strategies
for management development. The present policies of the Company have also been
discussed in a summarized form. The various objectives of the study have been
outlined. Further the significance of the study to the company as well as the
significance relating to the general development of the strategies has been
shown. Based on the significances and the objectives, the purpose of the study
is clearly presented.
The
methodology has been utilized to conduct the study. Also the various other
research methodologies have been discussed with an introduction to the type of
methodology used in the study. The qualitative and the explorative cum
descriptive methodology used in the study have been described along with the
data collection measures and their limitations. The various tactics applied to
minimize and counter balance these limitations have also been explained.
The
works of various theories pertaining to the subject has been discussed in this
section. This review was important to gain knowledge about the various
theories, concepts and the strategies that can help to analyze the issue and
the subject of the study.
The
analysis of the various policies and the results and findings of the data
collected through the primary and secondary data sources. The analysis is
followed by a conclusion to the research. The conclusion consists of the
discussion of the various strategies of the company with the literature review
to analyze their relevance and weaknesses. Further the suggestive measures are
also discussed. Thus, providing areas of the future study in the subject and
explains the various applications of the research.
Chapter 01
1.1 Introduction
While studying
the intricacies of the financials of the company, it became more meaningful to
compare the working capital needs and financial structure of COMPANIES With a
corresponding high value company in the same sector. For the purpose, we chose
to analyze the financial health of Hindustan Unilever Ltd and ITC. This happens
to be the largest FMCG Company in the country. A face-to-face analysis of the
two companies gives a better insight into the financial stature.
The Indian FMCG
sector is the fourth largest in the economy with a total market size in excess
of US$13.1 billion. It has a strong MNC presence and is characterized by a well
established distribution network, intense competition between the organized and
unorganized segments and low operational cost. Availability of cheap raw
materials, cheaper labor costs, and presence across the entire value chain
gives India a competitive advantage. The FMCG market is set to treble from US$11.6
billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per
capita consumption in most product categories like jams, toothpaste, skin care,
hair wash etc. in India is low, indicating the untapped market potential.
Burgeoning Indian population, particularly the middle class and the rural
segments, presents an opportunity to makers of branded products to convert
consumers to branded products. Growth is also likely to come from consumer
“upgrading” in the mature product categories. With 200 million people expected
to shift to processed and packaged food by 2010, India needs around US$ 28
billion of investment in the food processing industry.
Global major,
Unilever, sources a major portion of its product requirements from its Indian
subsidiary. HLL. In 2003-04, Unilever outsourced around US$ 218 million of home
and personal care along with food products to leverage on the cost arbitrage
opportunities in the west. To take another case, Proctor and Gamble (P&G)
outsourced the manufacture of Vicks Vaporub to contract manufacturers in
Hyderabad, India. This enables P&G to continue exporting Vicks Vaporub to
Australia, Japan, and other Asian countries, but at more competitive rates,
whilst maintaining its high quality and cost efficiency.
Through a thorough analysis of the
business environment, industry, and the company, we aim to understand the
external factors influencing the company and its decision making. The financial
statements of the last 5 years of ITC ltd are analyzed. As a benchmark, we also
analyze the various components of the company vis-à-vis Hindustan Unilever, a
competitor operating in the same segment. Every business decision is associated
in one way or another with the financial condition of the organization. The
results of a working capital analysis will assist in the determination of the
organization’s ability to remain in a particular line of business. As in all
businesses, including ITC, it must be considered that there is always room for
improvement. ITC Limited (BSE: 500875) or ITC is an Indian public conglomerate company headquartered in Kolkata, West
Bengal, India.[2] Its
diversified business includes four segments: Fast Moving Consumer Goods (FMCG),
Hotels, Paperboards, Paper & Packaging and Agri Business. ITC's annual turnover
stood at $7 billion and market
capitalization of over
$34 billion. The company has its registered office in Kolkata. It started off
as the Imperial Tobacco Company, and shares ancestry with Imperial Tobacco of the United Kingdom, but it is now
fully independent, and was rechristened to India Tobacco Company in 1970 and then to I.T.C. Limited in
1974.
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