Chapter 1

Introduction to the Report

1.1 background of the Study
The largest Multinational Fast Moving Consumer Goods company in Pakistan that
have six operating companies inside the company in different areas of the country.
Unilever serve the day by day needs of the consumers for foods, hygiene and good
looks through well-known products and services that deliver to their consumers
best worth and value. The quality of products and services maintain the interest of
their consumers. Unilever Pakistan has developed the Research and Development
department to maintain and improve the quality of goods. They always ready to
accept the challenge and established excellent competent environment in the
market that develop my interest to do internship with them.
1.2 Purpose of the Study
Purpose of doing internship is requirement of degree program for BBA, where
students are supposed to do the practical analysis of what they studied in their
specialization subjects and all these analysis are then supposed to submit in the
form of report. Finance is an important field to study, because it deals with the
supervision of the money, a subject of central concern to every business,
government agencies, or nonprofit & non government organizations and indeed
every individual, knowing how the financial world and Businesses operates.
1.3 Scope of the Study
Internship time allowed me to join Unilever Pakistan is of six weeks. During this
short period, I deeply studied how to manage financial records within different
departments. Financial records are very important for any multinational company.
Having idea to manage the different departments financial records provide me the
best opportunity to learn and made me able to join any company with experience
of Unilever Pakistan.

1.4 Limitations of the Report

Lack of time is the biggest limitation, because 6 weeks are not enough to analysis
big organization like Unilever, employees are much engaged with their work,
much work load on them its difficult to extract information from them in limited
time. As a student internee lack of knowledge in technical field is another big
constraint to tackle with the professional. Another big problem for me in my time
period of internship is that they are transforming their system from MFG to SAP;
it creates more difficulties for me. Internship students are not allowed to retrieve
and used any confidential material for any purpose, as it is against the company
policy. The study may not include the broad experience of facts and figures due to
the nature of the study.
1.5 Merits of the Report
This report consist of financial analysis of Unilever Pakistan, inside financial
analysis the horizontal and vertical analysis are done along with analysis of ratios
that makes the report helpful for any student to study. Financial analyses show the
vertical and horizontal analyses. In the vertical analyses each asset is shown as the
percentage of the total assets and liabilities.
Horizontal analysis provides with a way to judge against numbers from one period
to the next, using financial statements from at least three different periods. Each
line item has an entry in a existing period column and a period column. Those
three entries are comparing to show both the dollar differentiation and gain change
between the three periods. At the end of the report the details is compiled and give
some recommendations.
1.6 Methodology of the Report
1.6.1 Secondary Sources
In secondary source, I have taken information for report writing from annual
reports of Unilever Pakistan and other information from the following;

Annual Reports
2011, 2012, 2013
Interne

1.7 Scheme of the Report

This internship report Contain five chapters as;

Chapter one includes backdrop, function, range, boundaries and tactic

of the Report.
Chapter two includes background and the past of Unilever Pakistan,

roles, functions, branches and the goods create by the company.

Chapter three includes myself as an internee in Unilever Pakistan
Chapter four includes the financial analysis and the SWOT analysis of

the company.
Chapter five includes the conclusion and recommendation section of
the study based on the analysis in previous chapters.

Chapter 2
Introduction to Unilever Pakistan
The Unilever Pakistan Limited was established in Pakistan in 1948, in the
township of Rahim Yar khan was the site chosen for setting up a vegetable oil
factory. The company is devoted to assembly the everyday needs of people all
over in Pakistan. Around the world Unilever foods and home personal care
brands and other goods are chosen by many millions of entity clients every
day. Earning their belief and collecting their daily needs are the domestic tasks
of Unilever local branches. They bring to the service of their consumers, the
best in brands and both Unilevers local and worldwide knowledge. The
3

Unilever head office was shifted to Karachi from the Rahim Yar khan site in
the mid 60s. The company keeps the top position in most of its core home and
personal care and food items. The company operates throughout five area
offices, four wholly owned and one third party developed sites across
Pakistan.
2.1 Historical Background of Unilever
Unilever Pakistan limited is the member of Unilever PLC London. It was
formed in 1930; when the Dutch margarine company margarine Unie merged
with British soap make Lever brothers. Companies were opposing for the
same raw material, both were concerned in large scale advertising of
household products and both use similar supply channels. Margarine Unie
grew through mergers with other margarine companies in the 1920s.
Company established soap factories around the world in 1917, began to
expand into foods, acquiring fish, ice cream and canned foods dealing.
Unilever Pakistan Limited was built-in in 1948 under the name of Sadiq
vegetable oil and Allied industries in the state of Bahawalpur, Rahim Yar khan.
The factory begun to work in 1949. The first cotton seed was made in 1951.
The production of Banaspati Ghee and Lux toilet soap was started in 1952 and
1954 correspondingly.
Being a worldwide company, it is listed in all three stock exchanges Karachi,
Lahore and Islamabad. The 69% shares of the company are detained by the
mother Unilever and the remaining 31% are owned by financial institutions.
The company has more than 3000 employees in Pakistan and a high
professional administration that leads the company unbeaten in Pakistan.
2.1.1 Present Status
Unilever brands are trusted all over and by listening the people who buy them,
they are grown into one of the world most successful consumers goods
company around the world. In fact, 150 million times a day, somebody
someplace chooses a Unilever product. Unilever creates the marketplace and

give out the product that people choose to provide for their families and keep
themselves and their homes clean and bright.
The company aim to help people in their daily lives, so they keep developing
new products and keep changing and updating their products improving tried
and experienced brands and promoting better, more professional ways of
working. Unilever has a collection of brands that are popular around the globe;
as well as local products and local varieties of famous name goods and
services. This diversity of the company in their products comes from two of
their key strengths;

Strong family tree in the local market and first hand knowledge of the

local culture and understanding the local needs.

World class expertise applied and one of the best supply chains to
serve consumers everywhere in the world.

Focusing on routine and output, Unilever persuade their people to develop

new ideas and put fresh ways into practice. The company work hard to
conduct their business with honesty, regarding employees, consumers and the
surroundings around the company.
2.2 Management of the Company
In the management line up of Unilever, the company led by the Chairman who
is follows up by a team of seven members known as the Managing Committee
(MC), which is accountable for initiating policies and on the whole planning.
Reporting to Managing Committee are the departmental heads that are
answerable for advising the Managing Committee for arrangement,
accomplishment of policies and for ensuring that goals are properly achieved.
The administration of Unilever is collected of mix international and Pakistans
business professionals. In Pakistan, the company management includes Mr.
Ehsan A Malik as a chairman and CEO, who is involved in many other
sections like correspondence and other industries. One member from each
territory of Pakistan attends the annual meeting. The top management of the
company is fully professional and experienced specially marketing department
5

that is leaded by Mr. Jeff Lee, who has the wide experience in the field of
marketing.
2.3 Vision and Mission Statements
2.3.1 The Mission Statement
We have some of the worlds best known and more trusted brands, with
leadership positions in many of the fast moving consumer goods categories in
which we struggle. Dedicated to attractive the quality of life of the people of
Pakistan, we aim to offer a broad range that appeal to diverse consumers year
on year.
2.3.2 The Vision Statement
We work to create a better future every day

2.4 Company Information

Board of Directors
Mr. Ehsan A Malik

Chairman & CEO

Mr. Ali Tariq

Executive Director/CFO

Mr. Faheem Ahmad Khan

Executive Director

Mr. Amir R Paracha

Executive Director

Mr. Fariyha Subhani

Executive Director

Mr. Zaffar A Khan

Non-Executive Director

Mr. Khalid Raffi

Non-Executive Director

Audit Committee
Mr. Zaffar A Khan

Chairman

Mr. Khalid Rafi

Member

Mr. Faheem Ahmad Khan

Member

Mr. Azhar Shahid

Secretary & Head of Internal Audit

Company Secretary

Auditors

Mr. Amar Naser

Messrs A.F. Ferguson & Co.

Registered Office

Chartered Accountants

Avari Plaza Fatima Jinnah Road

State Life Building Chandigarh Road

Karachi

Karachi -75530
Share Registration Office

Company Registration No:

C/o Famco Associates (Pvt) Limited

0000140

State life Building No. 1-A I.I

Chandigarh Road Karachi

Website

NTN No: 0912725-9

www.unileverpakistan.com.pk

2.5 Unilever Branches in Pakistan

Different undergrowth and factories of Unilever are working in different
regions of Pakistan.
2.5.1 Rahim Yar Khan
The major and one of the oldest components of Unilever are located in Rahim
Yar khan. In this factory special products like Soap, glycerin and other
products are artificial in this factory.
2.5.2 Karachi Tea Factory
This factory was recognized in 1950 in Karachi, and it is situated in west
wharf area. in earlier times it was owned and managed by Lipton Pakistan Ltd.
In the last 43 years many changes and modifications are made and the factory
has stretched by a long way. In this unit of Unilever Pakistan only Tea is
formed and packaged.
2.5.3 Ice Cream Factory
This factory is recently established on Multan road in district Kasur. The plant
was made to order in 1994 having the most modern and latest machines
installed. Walls Ice Cream is being made up in this plant.

2.5.4 Best Foods Faisalabad

In recent times Unilever has acquired Rafhan Maize products from best Foods
International. In this plan it was packaged and delivers to the different regions
of the country. It is also one of the old plat of the Unilever Pakistan.
2.5.5 Tea Processing Plant Mansehra
The new Lever Black Tea dealing out plant has been set up in Dhodial, 12 Km
north of Mansehra on the core Karakorum Highway on 2.5 acres of land with
8

the dealing out plant built-in area of 11,800 sq ft. The plant is expected to
process 50 kg per hour or approximately a ton of made tea a day. This plant
has charge eleven million whereas Rs. Twelve Million has been spent on the
building and infrastructure. The plant has been inaugurated on 7 th of
September, 2001.

2.6 Strategies
2.6.1 Product Development
Unilever constantly work on humanizing product behavior and facial
appearance to detain the market. They evaluate the demand to check whether
the product is gainful or not, so that if the product is not, it should be modify
or discontinued. The Research and Development sector keep an eye on the
opponent products in organize to grow to be the market leader of definite
product.
2.6.2 Corporate Strategies
Unilever is the chief in end user market. It manages regime relationships to
control duty on import of raw material and countering smuggling competitors
consignment.
2.6.3 Human Resource Strategies
Unilever managing the employee staffing and position to put the accurate
person for the accurate place. in the interior, the company and the employee
regular change in the departments and give their employee regular promotion
and keep his enthusiasm to the job. Employees are educated in a way that they
are conscious of their culture and give them a proper training in the company
about their culture.
2.6.4 Finance Strategies
The most successful strategy of Unilever is that, they maintain the finance
operations within the resources. Keeping stock debtors low and strictly adhere
ICAP accounting practices and laws. The other strategy of Unilever is that, the
9

tax management to gain legitimate advantage and Lessing the burden. The
company has the internal audit committee that ensures that every thing is
going well and on the track.

2.6.5 Acquisitions & Mergers

Unilever has fruitfully completed an achievement of Pakistan Industrial
Promotional (Pvt) Limited, manufactures of Polka in 1999. They also
completed a joining with Brooke Band (BB) Pakistan last year, where each
Brooke Band shareholder expected to receive one share for every 4.3 Brooke
Band shares. The merger has result in consolidation of division channel, thus
dropping in commission cost for the company.
2.7 Accountable to Stakeholders
In view of the fact that the moment Unilever begun its operations and starting
in Pakistan, the company has been strongly associated to the Pakistani people
and its brands have been an fundamental feature in their daily lives. In fact, the
nature of the business enables company brands to be the thump and heartbeat
of the 164 million people in Pakistan. This is a huge promise which makes the
management accountable and responsible to all their stakeholders and the
general public as a whole and strengthens them to determination to;

Create new opportunity for growth

Makes a positive difference to the lives of the low income people
Improve the overall quality by promoting education, health and
hygiene

2.8 Unilever Management Activities

2.8.1 Path to Growth
Path to growth is Unilevers commercial planned agenda which aims to twice
the size of the business in seven years and to grow profit faster than the
10

competitors, by this means ensuring that they are the Leader in similar type
companies in given that top value. This agenda introduced in the year 2007.

2.8.2 Six Strategic Thrusts

Reconnect with Consumer

By having accurate insights into consumer desires, partiality and potential
needs. This means meaningful and considerate consumers way of life,

routine, attitudes and productively adapting brands to their varying needs.

Brand Focus
Grow their foremost international brands by focused wealth behind them,
while still at the bottom of golden local brands and local charms. Improvement
will be the milestone to ensuring brands is used to to consumers prospect

needs.
Pioneer New Channels
Broaden their means of going to market i.e. reaching clients and consumers.
This means to develop new channels such as direct selling, home-vending,
fashion outlets, travel, and food service and out of home services to catch
customers.

World Class Supply Chain

To close up the gap to global world class within three years by establishing
product synergies, finer logistics and supply chain and by establishing a world

class program of supply chain to reach product on time in the market.

Simplify
The whole thing Unilever do to dropping difficulty, doubling and by making

the best use of IT to provide high quality information once to the people.
Enterprise Culture
By creating a culture which shapes the frame of mind and procedures among
all staff towards engaging in the market place by structure an organization fit
for growth.

11

2.9 Unilever Pakistan Sustainable Living Plan Highlights

The Unilever sustainable living plan sets out to decouple the growth from
environmental impact. While at the same time increasing positive social
impact, In order to realize sustainable growth, Unilever integrated
sustainability into strategy. Unilever working with their customers and
suppliers engaging employees and fostering new partnerships. Unilever
Pakistan works with UNICEF, United Nation world food programme, save the
children and Oxfam in order to execute its sustainability agenda.
Improving Health and Well Being

Lifebuoy inculcated hand washing habit in more than 610,000 consumers.

Over 33,000 households reached through brush day and night campaign.
Communicated health benefits to tea to 13,690 doctors and 47,000 households.
Knoors healthy snacking programme benefited 200,000 children.
Blue Band school programme impacted 600,000 children.

Reducing Environmental Impact

7.7% less CO2 emitted through manufacturing initiatives.

Office energy consumption reduced by 8.6%.
11% reduction in water consumption during the manufacturing

process.
55% reduction in waste through more efficient manufacturing
processes.

Enhancing Livelihoods

More than 900 women in 85 villages benefited from the Guddi Baji

programme.
500 small salon owners trained.

12

2.10 Products and services of Unilever Pakistan

From the business point of view, the company is divided into the following
groups;

Beverages
Ice Cream
Home & Personal care
Blue Band (BB)

2.10.1 Beverages
Lipton Yellow Label is the leading and most famous brand in Pakistan and is
number one by all who want to enjoy a good tea. The demand of Lipton in the
market proves to the facts that the Pakistan is very quality conscious and a
very good judge of Tea. To create to this growing awareness of quality,
Unilever Pakistan Limited always lived up its quality No.1.
To keep the tea fresh and appetizing, key initiatives have been taken by
introducing hermetically sales packs. This has been valued extremely by
consumers and the company sales are continuing to grow up. For every Lipton
Yellow Label consumer, the brand offers a rich, bright and fresh cup of Tea
that re mind the sign of good tea.
2.10.2 Ice Cream
Unilever introducing Walls Ice Cream in the market that creates a new bench
mark for successful Unilever FMCG products that launches in Pakistan in
1995. On august 14, 1995 Walls came to Karachi and the city by storm. The
success has now been continual across the country and consumers now ask for
Cornetto, feast max and other brands not simply for Ice Cream products, but
branded products.
In July 1996, Polka a well-known local name representing the only national
Ice Cream business was owned by Unilever. In broad term Walls will come
into view as the desire brands, while the Polka from Walls brand will offer a
new level of superiority in take home or desert Ice Cream.
2.10.3 Home & Personal Wash
13

In this section of Unilever products include; wide range of products, vim bar
and vim scourer that offer Pakistani peoples quality dish washing in line with
global principles. Over the past and now, vim has made strong fairness with its
consumers by given that powerful cleaning at reasonably priced prices.
In the beginning, Unilever has entered the NSD bar market with Rin that
becomes an instant achievement in a tiny period of time. However, in order o
correspond and build up the collection of the brand, the name of Rin was
altered to Vim in 1996. Now Vim stands for better quality dish washing brand
that is environmentally responsive and in line with global standards. On the
other hand Surf prefers the washing powder marker in Pakistan for four
decades; it has been unbroken to change according to consumer needs. There
has been no chance to look back since the brand has undergone several
product quality improvements to propose best cleaning outcome.

2.10.4 Blue Band

By introducing margarine in the market in 1985, Unilever comes in the
market, beneath the name of Blue Band. There are several changes made in the
Blue Band in the past fourteen years and the product is now very much
popular across the different regions in Pakistan. Blue band give consumer a
final taste and the people are switching from butter to the branded quality
products. During the 1988, Blue Band reached to the highest market share in
the industry and people are more linked with it.

14

Chapter 3
Inside the Unilever Pakistan
Learning as a student intern
3.1

Main Responsibilities
Main responsibilities during the whole period of internship are to maintain and
keep updated financial record of Finance Share Services department under the
supervision of Mr. Ashraf Baig.

Following are the main responsibilities

Dealing indirect payment

Dealing with Advertisement and promotion activities
Issues of direct payment

3.2

Branch Payments

3.2.1

Supplier invoices
Supplier invoices for branch are directly received by CPD Shafi Courts for
scanning SOA attached. Scanned images of specimen signatures received.

3.2.2

Cash Sheets
Cash sheets from all branches except Karachi branch are received on a weekly
basis. Cash sheets are sent to CG for JV preparation, it must be ensured that all
cash sheets are received and forwarded to CG. Last week's cash sheets are
recorded in next month.

3.2.3

Utility Bills
Utility bills are paid by branches in MCB bank during the month. Detail of
payment of utility bills is sent to HO by branches on a monthly basis. MCB
bank also provides detail of utility bills payments to the company via Treasury.
Information comprises of customer code # and date, amount, name and nature
etc. Both the information are sent to CG for comparison and JV preparation.

15

3.3

Manual pay order

Sometimes pay order is to be prepared for onetime payment of supplier not
opened. Permission is to be taken from line manager. Letter format is received.

3.4

Withholding Tax payments

Request with detail is received from concerned person/ department and duly
approved by SSD Manager which is bar-coded and scanned for payment
process by CG Payment shall be made in the name of State Bank.

3.4.1

3.5

WHT Rates
Services

6%

Goods

3.50%

Transportation

2%

Advance Income Tax

Email is received from Legal department with CC to responsible staff
members. Signed hard copy of that email is required for bar coding and
payment processing by CG.

3.6

Monthly Rent/Lease ISL BR

On the first day of the month payment shall be processed. Schedule with detail
of rent proportion is signed by SSD manager and scanned for CG to process
payment. Detail already kept with concern staff member who updated the data
on monthly basis. Three prints of excel file were taken for three barcodes,
these printout of CRG distribution were attached with the request sign, and get
it signed by concern staff member and scan for payment process.

3.7

Monthly Rent/Lease Other BR and Guest Houses

Advance payment is made as per agreement which is adjusted in a schedule on
a monthly basis. When any advance is fully utilized then a fresh request must
be received from Legal duly authorized by DH.

16

3.8

Car Lease Payment

Request received from Treasury with copy of agreement attached to it.
Payment is made on term as per agreement. It is also adjusted in the lease/rent
schedule by treasury officer.

3.9

Inter Unit Activity

Payment is done on a daily basis on CRGs, whenever any factory payment is
involved Respective inter unit CBT is charged. Email is received from Jawad
(GFA) for outstanding debit notes detail to be sent to Fact. List attached with
email contains JV # to extract information for DN/CN Some payments
initiated from entity 10 but relates to entity 50, these payments are charges to
IU CBT account at entity 10 then it is journalized in CBT account at entity 50
and charge to respective expense accounts at entity 50, all done by CG. If any
such payment relates to entity 55 then it is charged to IU CBT account at
entity 50 after formalization.

3.10 Salary Payment

Salary request received from Salary admin (permanent / contractual) once in
month with complete detail. Manual cheques are prepared and the number is
to be taken from cashier and written on the request sheet before scanning.
Supplier codes of all banks to be written on the request page to save time as
this is an urgent payment. Salary payment requests from employment
providers are received from HR and buying. Supply codes are to be written on
the request before scanning. Salary request from contractual consultants will
be received from individuals with detail and supplier code.

3.11 Online Authorization

Online authorization means system based approval of SRC/GRIR from the
initiator. In this system invoices are directly received by CPD from the
supplier for scanning to CG. CG will enter the invoice detail in software and
forward it to the person responsible to enter the required data. Then it will go
to the respective authorized at initiator's stage after whose authorization it will
17

go to CG for payment process. Both amounts entered by CG and initiator

should match otherwise it won't process payment.

3.12 Employee Rent/Lease Clearance

For employees final settlement an email from salary admin is received for
verification of any amount due from the employee. In indirect only rent
advance is verified and confirmation send to JM employee payments for
compilation and send to sale admin

3.13 Rent Adjustment

Detail received from salary admin and scanned copy is sent to CG with the
email for rent adjustment. CG takes the adjustment in schedule.

3.14 Dividend Account

After six months of dividend issuance all outstanding amount is transferred to
CBT account. After expiry of dividend warrants claims are coming in for
payment' Request is received from Legal department with cancelled/
misplaces/undelivered dividend warrants that are paid from this CBT and that
particular name and amount is removed from the schedule. At the end of the
month reconciliation is prepared for third CBT. This is on shore activity only
for reconciliation preparation. Take printout at month end and identify the
particulars of each entry by searching on omniflow and note down dividend
number, name and warrant number. Then adjust it from the schedule on the
sheet of that particular dividend number. Then adjust the totals of each
dividend number from the list to match with GL. In UPFL "1" or "1st" means
interim and "2" or "2nd" means final dividend.

3.15 Month end Accruals

At month end a list is received from Admin for travel and hired cars payment
due but not paid. List is to be forwarded to CG for accrual to be raised in CBT
account and debit respective expense. Next month this whole accrual is

18

reversed to nullify the balance. For hired cars email is received from Transport
which is sent to CG for further action.

Chapter 4
Analysis of Unilever Pakistan
Financial Analysis
19

Financial investigation refers to an evaluation of the possibility, solidity and

prosperity of a business. The balance sheet analysis, profit & Loss and cash
flow analysis simplify the business actions weather the business is on the rise
or on the way out. This analysis is based on earlier period performance of the
firm and help for taking decisions for prospect plans and other Investors.
4.1 Financial Highlights
2013

2012

Sales

60,535

59,741

Gross profit

24,422

21,673

Profit from operations

9,223

8,495

Profit before tax

8,905

8,065

Profit after tax

6,117

5,502

Earning per Share (Rs.)

120.88

88.91

4.1.1 Horizontal Analysis of Balance Sheet

The horizontal analyses technique is on the other means of comparative
analyses. It shows by giving the balance sheet, income statement and reviews
the cash flow statement and give us the changes made in the previous and the
current year. It conducts the assessment on the multi or three year basis. The
horizontal financial analysis tells us the current and the previous year
20

difference and exact ratio of the multiyear analysis of the balance sheet,
income statement or cash flow statement. It is done by restating the amount of
each or group item as percentage. The percentages are calculated by selecting
a base year and assign a weight of 100 to the amount of each item in the base
year performance.

Horizontal Analysis of Balance Sheet

Table 4.1

21

Assets

2013(%)
2013(%)

2012(%)
2012(%)

2011(%)
2011(%)

Sales plant & equipment

Property,

100
164.39

100
104.61

100
100

Cost of sales
Intangible
assets

11.59
100

20.40
100

20.33
100

Gross
profit
Long
term
loans

30.36
72.43

15.88
87.72

25.40
100

Distribution
Stores
& sparescost

24.25
133.10

16.92
101.69

8.06
100

Administrative
Loans
& advancesexpanses

5.09
87.08

6.97
65.48

170.04
100

Otherreceivables
operating expenses
Other

42.48
68.73

14.91
280.30

36.50
100

Other
income
Sales
taxoperating
refundable

(1.72)
-

(10.61)
-

250.28
-

Cash and bank balances

36.35
304.41

14.03
216.60

41.71
100

Restricting
Total
Assets cost

126.56

(100.00)
115.50

197.58
100

36.35
2013(%)

17.80
2012(%)

39.30
2011(%)

Financetaxation
cost
Deferred

12.11
131.70

17.53
131.05

(44.87)
100

Profitand
before
Trade
othertaxation
payables

36.53
166.57

17.80
117.73

40.92
100

Taxation
Provision

33.77
61.75

16.96
29.08

40.81
100

Profit
taxation
Sales
taxafter
payable

37.83
-

18.21
22.93

40.97
100

Other
comprehensive
Short
term
borrowing cost

(230.85)
26.61

100.00
68.65

100-

TotalLiabilities
comprehensive cost
Total

37.50
126.73

18.35
115.43

40.97
100

Profit from operations

Liabilities

4.1.2 Horizontal Analysis of Profit & Loss Statement

Table 4.2

4.1.3 Vertical Analysis of Balance Sheet

22

In the vertical analyses of the balance sheet, income statement or cash flow
statement each item in the table calculated as a percentage of a total. The tem
vertical means that the analysis should be conducted vertically and each item
in the columns listed vertically on a financial statement. The total in the
income statement is used the term or the value of the sales revenue, while on
the other hand in the balance sheet, it is total assets. This approach that is used
in the vertical analysis is known as component percentage that produces
common size financial statements
The vertical analysis is the technique to find out the relationships between
statements in the same financial terms by expressing all amounts as the
percentage of the total amount taken as 100.

Vertical Analysis of Balance Sheet

23

Assets

2013(%)

2012(%)

2011(%)

Property, plant & equipment

43.87

32.38

100

Intangible assets

3.51

4.07

100

Long term loans

0.80

1.12

100

Stores & spares

0.96

0.85

100

Loans & advances

0.73

0.63

100

Other receivables

0.85

4.03

20

Cash and bank balances

12.20

10.07

100

Total Assets

126.56

115.50

100

2013(%)

2012(%)

2011(%)

Deferred taxation

4.63

5.14

100

Trade and other payables

73.79

60.49

100

Provision

0.69

7,508

100

Sales tax payable

-1.08

4,640

100

64,897

100

126.73

115.43

100

Sales tax refundable

Liabilities

Short term borrowing

Total Liabilities
Table 4.3

4.1.4 Vertical Analysis of Income Statement

Table 4.4
2013(%)

2012(%)

2011(%)

Sales

100.00

100.00

100.00

Cost of sales

(58.22)

(61.94)

(61.04)

24

Gross profit

41.78

38.06

38.96

Distribution cost

(17.75)

(16.96)

(17.21)

Administrative expanses

(2.25)

(2.54)

(2.82)

Other operating expenses

(1.66)

(1.39)

(1.43)

1.04

1.26

1.67

Other operating income

21.17

18.43

19.18
Restricting cost

(0.61)

Profit from operations

21.17

18.43

18.56

Finance cost

(0.13)

(0.14)

(0.14)

Profit before taxation

21.04

18.29

18.42

Taxation

(6.60)

(5.86)

5.94)

Profit after taxation

14.44

12.44

12.48

Other comprehensive cost

(0.02)

0.02

Total comprehensive cost

14.42

12.45

12.48

4.2 Ratio Analysis

The same kind of two magnitudes and the relationship between them is called
ratio analysis. In the ratio analyses the competitors ratio is compared with the
company ratio and the result between them finds the difference between the
company and its competitors. The major operating differences detect the
comparison of two companies. On the other hand the second analyses are the
comparison of the financial ratio with the industry averages. The main theme of
the ratio analyses is to guide the management decision of the company.
25

4.3 Profitability Ratio

Table 4.5
Unit

2013

2012

Gross profit margin

40

36

Net profit to sales

10

EBIT margin to sales

16

15

Operating leverage ratio

Times

8.55

2.36

Pre tax return on equity

291

153

Post tax return on equity

200

104

Return on capital employed

147

117

4.4 Liquidity Ratio

Table 4.6

Current ratio

Unit

2013

2012

Times

0.67

0.82

26

Quick/acid test ratio

Times

0.30

0.30

Cash to current liabilities

Times

0.25

0.05

Cash flow from operations to sales

Times

0.18

0.11

4.5 Activity/Operating Performance Ratio

Table 4.7

Inventor turnover ratio

Unit
Days

2013
61

2012
68

Debtor turnover ratio

Days

10

Creditor turnover ratio

Days

132

113

Total asset turn over ratio

Times

Fixed asset turnover ratio

Times

Operating cycle

Days

(163)

(35)

4.6 Future Outlook

In the end, a brief summary of the above all analyses and the future outlook of the
Unilever in Pakistan soil. The above analyses shows that there is not much a big
profit or the big way for the company in the country because of the poor economic
environment, inflation and other security issues inside the country. But after all the
overall perspective is very positive and the company makes their way to reach
consumers and fulfill their needs. The company is beating competitors in the
market and made significant achievements towards stable growth.

27

4.7 SWOT Analysis

4.7.1 Strengths of Unilever
Large variety of consumer goods in the market
Enjoying Economies of scale
Strong brand names in the marketplace
Heavy financial position in the market.
Market principal in Tea production with Lipton & Brooke Band
Wide product line in home wash
Strong distribution channel in Pakistan
Sound and experience management
Strong financial support from parent Unilever
4.7.2

Weaknesses of Unilever
28

High charge of covering care goods

New products are not much popular in the market
Huge inventory stocks of raw material and finished goods
Low liquidity of stocks due to high pricing
About 80% of the raw material is outsourced for the built-up consumer goods
out of control smuggling of Tea and detergent has critically affected Unilever
sales and wages

4.7.3

Opportunities Of Unilever
Capturing food industry by acquiring Raffan Best Foods
Wide scope of confectionery business for Unilever
Unilever is looking to get hold of Tapal Tea
Rapid getting higher urban residents is the key chance
Rural areas are educated and aware of the branded products

4.7.4

Threats for Unilever

In the market of Ice Cream, facing competitors more
P&G is the big competitor in the market of personal care products.
High competition in the soap and detergent market
Inflation rate affect the cost of raw material
People purchasing power affect by depressed in inflation

29

Chapter 5
Conclusion and Recommendation
5.1.

Conclusion
At present Unilever Pakistan is one of leading company among other
multinational companies producing edibles and other products and promote their
services and products quality at a sustainable way. It is one of the best
multinational company accommodating more than 3000 employees. The products
of Unilever is operating all over the contry. Present report is the requirement of
the degree program and as a finance student; I was conducted three years financial
analysis of the company. As concern with financial analysis the short term debt
paying ability is Days sales inventory in 2010 is 46 days, in 2009 to 58 days. It
means that inventory sold out quickly day by day which is very fast it also helps to
pay their current obligations. Current ratio is lower than 1 but it does not affect
their performance. Long term debt analysis is currently debt ratio is 2% its means
the organizations 98% investment is depends on equity and also debt to equity
ratio is below 1%. In Profitability ratios the average gross profit margin of
company is 33%. its means company is very highly profitable profit is 1/3 of its
sales. Sales are three times of the total assets, Average return on assets is 23%.and
30

return on equity is 92%. In Investor analysis earnings per share increased by Rs.81
in 2009 and price of share is increasing day by day and demand of shares is very
high due to high return. On the whole the financial record is maintained properly
by the finance share service department.

5.2.

Recommendation:

Cost Reduction Strategy

Set up a cost fall board

This board draws its members and they take the decisions about the cost fall
strategy and they have the support of the senior management.

Build up a cost fall structure

Make a cost fall structure in the way that it is profitable for the company as well
as for the parent Unilever, so the committee needs the methodology to evaluate the
cost fall alternatives to ensure the organization best result in the limited time.

Keep the process wide-ranging

The stakeholders must provide the initiative and give their input to reduce the cost
fall strategy better and make profit more than the previous.

Ask your suppliers for ideas

Your existing suppliers can be a great source of ideas for process and other
improvements that can have a significant impact on your costs.

31

Prioritize your initiatives

Get the first priority to the better idea, so that the idea will work better and give
back the measurable results to the company.

1. Up-to-Date Intelligence
Company will benefit from up-to-date market intelligence and global supplier
network; because employees work with literally hundreds of clients locally,
nationally, and internationally, Up to date intelligence provide the latest market trends
and supplier developments.
2. Find the cheapest raw material
The first remedy is to find which country has the lowest price in the raw material
you are seeking. High inflation rate is increasing the cost of imported raw material
day by day. Company should be reducing international purchases of raw material as
Unilever purchases 90% raw material from international suppliers.
3. Packaging Design/Redesign:
Review new and existing product packaging styles, sizes, and labor and shipping
cost savings opportunities.

4. Technology:
Evaluate

and

recommend

technology

and

equipment

process/production improvements and savings can be realized.

32

upgrades

where

References
1. http://www.unileverpakistan.com.pk/aboutus/introductiontounilever/UnileverP
akistanLtd/
2. http://www.unileverpakistan.com.pk/aboutus/introductiontounilever/
3. http://www.unilever.pk/Images/Unilever%20Pakistan%20Limited
%20Unconsolitaded_tcm96-215205.pdf
4. http://www.amcy5.com/Reports/internship/amcy43.htm
5. http://www.scribd.com/doc/43103863/Unilever-Internship-Report
6. http://www.scribd.com/doc/13137660/UniLever-Pakistan

33

34