Old Report

Unilever Nepal Limited
DISCLAIMER
This report is a result of analysis of the annual reports of the companies undertaken in the project, informal discussions and interviews
and has been prepared as part of academic program. In producing this report the authors have put in their best efforts, but could have
been limited by the availability of information and transparency in the companies.
Hence, neither the authors of this report nor the Kathmandu University School of Management should be held liable for any views,
comments or misleading results presented in this report.
Unilever aims to meet the everyday needs of Nepali household everywhere, to anticipate the aspiration of consumers and to respond
creatively and competitively with branded products and services to raise their quality of life. Unilever deep roots in local cultures and
markets around the world are our parrallel inheritance and the foundation of our future growth. It has been creating international
expertise to the service of local consumers - a truly multi-local multinational.
ACKNOWLEDGEMENT
We would like to express our gratitude to our Course Instructor, Mr. Bali Deen, for giving us the opportunity to apply our theoretical
concepts. We are also genuinely indebted to our coordinator Mrs. Jyoti Regmi for providing us with the letters required to collect the
research material from companies concerned with our project.
We are thankful to all the people who helped us by filling up the questionnaires and by participating in informal discussions and
interviews. We would also like to extend our gratitude to KUSOM Library for providing us with the required literature.
We would also like to thank Mr Narayan Man singh Basnyat at Dabur Nepal Ltd. And Mr. Bishnu at Unilever Nepal Ltd. For
providing us with the annual reports and also other valuable information regarding our project.
CERTIFICATE
I certify that I have read this report and, in my opinion, it is satisfactory in scope and quality as a project in partial fulfillment for the
course of Accounting for Managers held at the School of Management of Kathmandu University during the Fall of 2009.
Course Instructor: Mr. Bali Deen
Signature:
Date:
COPYRIGHT
All rights reserved. No part of this report may be reproduced, stored in a retrieval system, or transmitted, in any form, or by any
means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of the authors or the Kathmandu
University School of Management. However, part of the report may be used for referencing with due acknowledgement to the
concerned authorities.
Copyright @ 2009,
Group Lamjung (Bikash Shrestha, David Kansakar, Kim Song Guk, Manju Pokharel, Neelam Joshi and Ram Pd Ghimire)
TABLE OF CONTENTS
DISCLAIMER I
ACKNOWLEDEGE II
CERTIFICATE III
COPYRIGHT IV
LIST OF ABBREVIATIONS
OBJECTIVES AND SCOPE
METHODOLOGY
INTRODUCTION TO THE COMPANIES
UNILEVER NEPAL LIMITED
DABUR NEPAL PVT. LTD.
RATIO ANALYSIS
SWOT ANALYSIS
MARKET ANALYSIS
INDUSTRY ANALYSIS
CONCLUSION
RECOMMENDATION
LIST OF ABBREVIATIONS
INTRODUCTION TO THE PROJECT
As a part of the partial fulfillment of the course outline of Accounting for managers, we “The Lamjung Group” have been assigned a
group project.
Under this group project, we are asked to choose any existing business organization as our company and another business organization
as our competitor. So, we chose Unilever Nepal as our company and Dabur Nepal as its competitor. The major objective of this
project is to prepare the financial analysis of two most recent years of Unilever Nepal by applying financial and other relevant ratios
and compare these analysis with that of Dabur Nepal.
In order to observe and analyze the possible weakness and their solutions, we are supposed to contact and interview the management
of the Unilever Nepal so that we get the in depth knowledge of our company.
OBJECTIVES
The major objective of this project is to analyze the financial performance of Unilever Nepal Ltd. in recent years to determine its
financial well being and future prospects. The objectives can be summarized as:
1. To learn more about the performance of Unilever, Nepal Ltd. And Dabur, Nepal Ltd.
2. To be able to reach a conclusion about the above mentioned companies’ market standing.
3. To enhance our relationship with the company so that we could find employment with them in the future.
4. To gain knowledge about how to evaluate companies with the help of their financial statements.
SCOPE AND LIMITATIONS
1. We worked under constraints of a limited time frame and hence we were unable to conduct an exhaustive market survey.
2. We could only find time to analyze their last two years’ annual reports and hence our inferences about the company’s overall
performance could be more inclined to shed light on their recent market performance.
3. Unilever Nepal Ltd not having a website for their subsidiary in Nepal hampered us from acquiring more information on them.
METHODOLOGY
We got our project rolling by acquiring the annual reports from the concerned companies. Then we studied their financial reports and
prepared financial ratio analyses from which we drew inferences on the companies’ performance and how well they are able to
achieve their objectives. We also made frequent phone calls to concerned companies to make inquires to acquire information
regarding our project. Finally, for our market analysis we conducted a market survey involving retailers and customers.
NEPAL UNILEVER LIMITED
Unilever Nepal Ltd, the 80% subsidiary of Hindustan Unilever Ltd, is a manufacturing company which started production of detergent
powder in 1994 and from 1995 started the production of toilet soap and from 1996 it started production of close-up toothpaste. Now
the company is producing soap, toothpaste, detergent, hair care and skincare products.
Unilever Nepal Ltd is a 16 year old Indian Joint venture which was called Nepal Lever Ltd when it started its operation but its name
was changed to Nepal Unilever Ltd on 30th December, 2004. Unilever Nepal ltd meets the everyday needs for hygiene and personal
care with brands that help people feel good, look good and get more out of life.Unilever Nepal Ltd has several product categories,
various brands, numerous variants and pack sizes.
Unilever Nepal has a manufacturing facility at Hetauda, (Dist. Makwanpur)about 250 km from Kathmandu and its corporate office is
at Kamladi.
Unilever Nepal Ltd has an extensive distribution network, from Mechi to Mahakali, from ultra modern urban outlets to the deep rural
outlets. Unilever products are available to meet diverse consumer needs across all socio-economic classes. With mini-packs in
practically every category the company operates in, Unilever Nepal Ltd gives consumers what they want in a form they can afford.
Unilever Nepal ltd’s main markets are North America, South America, Western Europe, Eastern Europe, Eastern Asia, Southeast
Asia, Mid-East Africa.
As at 15th July,2008, Unilever Nepal Ltd had a strength of 152 full time equivalent staff and 22 new employees at different permanent
positions in various functions during a year.
On January 29th 2007, Kamran Bakr, a former supply chain director of Unilever Bangladesh Ltd, has been appointed as managing
director of Unilever Nepal Ltd. As a result of integrated marketing strategies Unilever Nepal brands constituted nearly half of the Top-
20 brands of Nepal 2008 – as per the annual survey by Ac Nielson.
LIST OF PRODUCTS
 Fair & Lovely fairness cream

 Sunsilk shampoo
 Clinic Plus shampoo
 Lux soap
 Close-up toothpaste
 Pepsodent Toothpaste
 Lifebuoy soap
 Clinic All Clear Hair Oil
 Wheel Lemon Fresh detergent powder

 Wheel Shakti detergent powder
 Vim Bar
 Wheel OK Bar
 Liril Soap
 Surf washing powder
DABUR NEPAL PVT. LTD.
The guiding force behind Dabur's growth and success has been the wealth of nature and its limitless capacity to support life. And the
company has constantly taken care to preserve and protect this natural bounty. With this overall vision of eco-sustenance and to,
expand Dabur's resource and production base, Dabur Nepal Private Limited was set up as an independent Group company in 1992.
This company, set amidst the verdant greens and towering mountains of the Himalayan kingdom of Nepal, has established a unique
bond of technology and preservation.
Dabur Nepal Limited is one of the largest FMCG Company in Nepal with interests in Health care, Personal care and Food products.
Building on a legacy of quality and experience for over 100 years, today Dabur has powerful brands like Dabur Amla, Dabur
Chyawanprash, Vatika, Hajmola & Real.
The company believes that people are its important asset. The company adds value through result-driven training, and the company
encourages and rewards excellence. The company also has superior understanding.
LIST OF PRODUCTS
 Dabur Lal Tooth Paste
 Babool Tooth Paste
 Meswak Tooth Paste
 Vatika Hair Oil
 Vatika Sampoo
 Vatika Face Pack
 Vatika Soap
 Amla Hair Oil
 Anmol Coconut Oil
 Anmol Shampoo
 Anmol Sarson Oil
 Special Hair Oil
 Dabur Gulabari
 Hajmola Tablet
 Hajmola Candy
 Chawanprash
 Real Fruit Juice
 Glucose D Powder
 Dabur Honey
 Lal Danta Manjan

RATIO ANALYSIS AND INTERPRETATION

PROFIT RATIOS
Gross Margin Percentage 40
35
The cost of goods includes the cost of materials plus production-related
30
labor. It can also include allowances for breakage or similar expenses. It 25
does not include office expenses or salaries, advertising, or overhead 20 2007
15 2008
expenses like rent and utilities. When pricing goods, a businessperson needs
10
to have a gross margin percentage large enough to cover these other
5
expenses plus a reasonable profit. 0
Unilever DaburNepal
According to this Unilever Nepal Ltd is more profitable that Dabur Nepal
Ltd and Unilever Nepal Ltd show a positive profitability trend.
Fig.1 Gross Margin Percentage of
Unilever and Dabur Nepal
Profit Margin 16
Profit Margin is company's net income expressed as a percentage of its net 14
12
sales revenue. Profit margin is very useful when comparing companies in
10
similar industries. A higher profit margin indicates a more profitable 2007
8
company that has better control over its costs compared to its competitors. 6 2008
Since the profit margin of Unilever Nepal Ltd. is more than 8% which is 4
2
considered to be healthy, it is doing very well in comparison to Dabur
0
Nepal Ltd. Unilever DaburNepal
Fig.2 Profit Margin of Unilever and

Dabur Nepal
Earnings Per Share (EPS)

400
Earnings Per Share are a measurement of the company’s per share
350
performance over a time period. The portion of a company's profit 300
allocated to each outstanding share of common stock. Earnings Per 250
200 2007
Share serves as an indicator of a company's profitability.
150 2008
Unilever Nepal Ltd seems to be doing much better compared to Dabur
100
Nepal Ltd. 50
0
Unilever Dabur Nepal
Fig.3 Earnings per Share of Unilever

and Dabur Nepal
Cash Realization
Cash realization measures how close a company’s net income is to being 10
9
realized in cash. Cash flow from operating activities is taken from the
8
statement of cash flows. The net income figure is taken from the income 7
6
statement. Companies that are less risky have cash realization ratios that 5 2007
exceed 1.0, indicating that income may not be dependent on non-cash 4 2008
3
sources such as mark-to-market accounting valuations, which can be 2
affected by aggressive valuation decisions by management. This ratio is 1
0
considered a good measure of earnings quality. Unilever Dabur Nepal
According to this Dabur Nepal Ltd. is less risky than Unilever Nepal Ltd.
Unilever Nepal Ltd. does show a negative trend in this.
Fig.4 Cash Realization of Unilever
and Dabur Nepal
TEST OF FINANCIAL CONDITION

Financial Leverage Ratio 9
The financial leverage ratio indicates the extent to which the business relies 8
7
on debt financing. Upper acceptable limit of the financial leverage ratio is 6
usually 2:1, with no more than one-third of debt in long term. A high 5
2007
4
financial leverage ratio indicates possible difficulty in paying interest and 2008
3
principal while obtaining more funding. 2
1
0
Fig.5 Financial Leverage ratio of

Debt/Equity Ratio 9
8
Debt/Equity ratio is a measure of a company's financial leverage calculated
7
by dividing its total liabilities by stockholders' equity. It indicates what 6
proportion of equity and debt the company is using to finance its assets. A 5
2007
4
2008
high debt/equity ratio generally means that a company has been aggressive 3
in financing its growth with debt. This can result in volatile earnings as a 2
1
result of the additional interest expense
0
Fig.6 Debt/Equity Ratio for Unilever

and Dabur Nepal
Times Interest Earned 350

A metric used to measure a company's ability to meet its debt 300
obligations. It is calculated by taking a company's earnings before interest 250
and taxes (EBIT) and dividing it by the total interest payable on bonds and 200
2007
other contractual debt. It is usually quoted as a ratio and indicates how 150 2008
many times a company can cover its interest charges on a pretax basis. 100
Failing to meet these obligations could force a company into bankruptcy. 50

0
Fig.7 Times Interest Earned for

TEST OF INVESTMENT UTILIZATION

Assets Turnover 3
Asset turnover measures a firm's efficiency at using its assets in generating 2.5
sales or revenue - the higher the number the better. It also indicates pricing 2
strategy: companies with low profit margins tend to have high asset 1.5 2007
2008
turnover, while those with high profit margins have low asset turnover. 1
From our analysis our company Unilever has assets turnover ratio of 2.84% 0.5
in 2007 and 2.82% in 2008 which is higher than Dabur Nepal which has 0
1.45% in 2007 and 1.35% in 2008.
Fig.8 Asset Turnover Ratio for

Equity Turnover
Equity Turnover is a ratio used to determine efficiency of using 10
9
stockholder's equity to generate revenue. Equity turnover is used to calculate
8
the rate of return on common equity, and is a measure of how well a 7
6
company uses its stockholders' equity to generate revenue. The higher the 5 2007
ratio is, the more efficiently a company is using its capital 4 2008
3
Therefore, from the data presented above we can conclude that our company 2
Unilever has effectively used shareholder’s equity to generate revenue 1
0
comparison to Nepal Dabur limited. Unilever Dabur Nepal
Fig.9 Equity Turnover Ratio for

Days Receivables
The Day’s Receivable is the average length of time required to convert the 27
firm’s receivable into cash that is to collect cash following a sale and it is 26.5
26
also called days sales outstanding(DSO).
25.5
Our company Unilever has days receivable of 27 days in 2007 and 25days 25
2007
24.5
in 2009 whereas Dabur Nepal has days receivable of 26 days in 2007 and 2008
24
24 days in 2008. From this figure we conclude that both the companies 23.5
have lower day’s receivable that means both the companies are receiving 23
22.5
cash for the credit sales within the 24 – 27 days. Unilever DaburNepal
Fig.10 Days receivables of Unilever

and Dabur Nepal
Days Inventory 120
A measure of performance, calculated by average inventory divided by 100
average daily cost of sales. This returns a figure equivalent to the number of 80
days an item is held as inventory before it is sold. The lower the days 60 2007
inventory, the more efficient the company is, all other things being equal. 2008
40
Days inventory is the first step measured in the cash conversion cycle, 20
followed by Days Sales Outstanding and days payable outstanding.
0
Therefore, from the data presented above we can conclude that our Unilever Dabur Nepal
company Unilever has less days inventory and thus is more efficient than
than the Dabur Nepal limited. Fig.11 Days Inventory for Unilever
and Dabur Nepal
Inventory Turnover 4
The ratio of a company's annual sales to its inventory; or equivalently, the 3.5
3
fraction of a year that an average item remains in inventory. Low turnover is
2.5
a sign of inefficiency, since inventory usually has a rate of return of zero. 2 2007
For instance, if a company was able to generate $10 million in sales but 1.5 2008
averaged $5 million in inventory, the inventory turnover would be 10 1

0.5
million / 5 million = 2. This number indicates that there would be 2
0
inventory turns per year, meaning that it would take 6 months to sell all the Unilever DaburNepal
inventory.
Fig.12 Days receivables of Unilever
and Dabur Nepal
Working Capital Turnover 14
A measurement comparing the depletion of working capital to the 12
generation of sales over a given period. It shows how efficient the 10
management is in using its working capital to generate sales revenue. A 8

2007
6 2008
high, or increasing Working Capital Turnover is usually a positive sign,
4
showing the company is better able to generate sales from its Working
2
Capital. Either the company has been able to gain more Net Sales with the
0
same or smaller amount of Working Capital, or it has been able to reduce its Unilever Dabur Nepal
Working Capital while being able to maintain its sales. Efforts to streamline
the operations of the company will often show favorably in this ratio. Fig.13 Working Capital Turnover for
Therefore, from the data presented above we can conclude that our company
Unilever has low working capital turnover in comparison to the Dabur
2.5
Nepal Limited so our company should made effort to increase the working
2
capital turnover.
1.5
2007
Current Ratio 1 2008
An indication of a company's ability to meet short-term debt obligations; the
0.5
higher the ratio, the more liquid the company is. If the current assets of a
company are more than twice the current liabilities, then that company is 0
generally considered to have good short-term financial strength. If current
liablities exceed current assets, then the company may have problems
Fig.13 Working Capital Turnover for
meeting its short-term obligations. Generally, current ratio greater than 1.5 Unilever and Dabur Nepal
is deemed to be safe. However, the ratio varies depending on the industry. It calculates how many dollars in assets are likely to be
converted to cash within one year in order to pay debts that come due during the same year.
Therefore, from the data presented above we can conclude that our company Unilever has more than 1.5 times the current ratio in both
2007 and 2008.
Acid Test Ratio 0.8

0.7
The acid test ratio measures a company's ability to meet its short-term
0.6
obligations with its most liquid assets. The higher the acid test 0.5
ratio, the better the position of the company. The ratio tells creditors how 0.4 2007
0.3 2008
much of the company's short term debt can be met by selling all the
0.2
company's liquid assets at very short notice.
0.1
Therefore, from the data presented above we can conclude that our company 0
Unilever has less acid test ratio than Nepal Dabur Limited in 2007 but it
has more acid test ratio in 2008. So we can say that our company is doing
better than Nepal Dabur Limited. Fig.13 Working Capital Turnover for
SWOT ANALYSIS FOR UNILEVER NEPAL LIMITED
STRENGTH
1. Unilever Nepal Ltd is a joint venture with Hindustan Unilever Ltd so it is one of the largest companies in terms of its capital.
2. Unilever Nepal Ltd believes that investment in the growth of their people in an investment in growth of the company and it
also has self-motivated and dedicated employees,
3. Unilever Nepal Ltd has access to world class resources, research and development constant stream.
4. Unilever Nepal Ltd’s customer development strategy is based on “Customer Service Excellence” and “Win at point of
purchase”.
5. Unilever Nepal Ltd has retail loyalty programs which motivates retailers by rewarding them.
6. Unilever Nepal Ltd has strong regional network scale for sourcing raw materials.
WEAKNESS
1. Unable to explore remote areas

2. Customers perception that local manufactured goods are not good
3. Low price difference of substitute
4. Unable to capitative HLL & Unilever’s name
5. Unavailability of skilled man-power
6. Not able to export products beyond India
7. No local person in managerial level
OPPORTUNITIES
1. Serve additional customer groups

2. Enter new international markets & segments
3. Expand more product lines to meet broader range of customer needs
4. Diversify into related products
5. Explore export opportunities
6. Complacency among rivals
THREATS
1. Energy and fuel shortage

2. Frequent strikes and road blockades
3. Political Instability
4. Soaring and spiraling inflation
5. Rising volumes of counterfeits entering the country and governments indifference attitude in curbing such activities
6. Due to inflation, the competitive landscape is expected to intensify significantly as consumers would be more
discerming
7. Sluggish economic growth
MARKETING ANALYSIS
Scanning the Macro Environment

Within the rapidly changing global environment, lot of factors operates in the environment that shapes opportunities and pose threats
to the environment. These forces represent non controllables and controllables, which the company must monitor and respond to. The
firm must monitor six major forces: demograph, economic, natural , technological, political-legal and socio-cultural. Any of these may
contain the threats to a firm’s success or opportunities for improving a firm’s situation.
Demograhic Environment
The recent population explosion both in India and Nepal has resulted in the accelerated rate of increase in the demand for the FMCG
products. The Unilever Nepal, being one of the largest producers of FMCG in Nepal is directly affected by the population explosion.
As the population increases, demand for FMCG increases.
Also increase in fashion consciousness among the women has increased the demand for skin care products likethe Fair and Lovely, the
Ponds Cold Cream etc.
Economic Environment
Marketers require purchasing power as well as the people. The available purchasing power depends on the current income, prices,
savings, debt, and credit availability. Nepal is an under-developed country and purchasing power remains within few cities like
Kathmandu, Pokhara, Biratnagar etc.
The items of daily use manufactured by Unilever Nepal includes products OK and Wheel Soaps to meet the requirements of the lower
and middle-income group while the Surf Excel is meant for the people who can afford to pay a slightly higher price. Thus the
company has been price sensitive since the products generates high income by covering all income groups.
Natural Environment
and even support the neighboring countries like India. Also, some industrial activity will inevitably damage the natural environment.
No much awareness about the pollution in the general mass in the rural area can be taken as another advantage for the industry.
Technological Environment
The Company always has to be on a look out for the new technology in today’s fast track competitive market before its competitors as
the obsolete technology can be drive the company out of the market. The latest technologies can help the company in producing more
efficiently & therefore can have an edge on its competitors in terms of cost. Therefore, to keep in pace with accelerating technological
changes, Nepal Lever has kept itself updated with the latest improvements and are also constantly hiring R&D staff from the
Hindustan Lever to help them to tap on the new opportunities. Also, affiliated with India’s biggest producer of FMCG, NLL has added
advantage in technological field. They can just get the latest technology from their parent company.
The in-house Research and Development facility of the company constantly tries to find the new variants of the product so as to have
a wide range of products. This helps the company in widen their market base and target a larger market segment, thus having a higher
profit. The Research and Development department is also engaged in finding new uses of the product, which will create a new usage
for the product and thus create new demand for the product.
Political Legal Environment

The marketing decisions is also affected by the political and legal environment composed of laws, government agencies, and present
groups that influence and limit various organizations and individuals. Sometimes these laws also create new oppurtunities for
business. The government has passed the customer protection act in order to ensure the safety of the customers and to control the
unbridled interest of the industrialists. The Nepal Lever has not been adopting any unfair means to reap profits but instead has been
trying to think like customer from the marketing viewpoint. The number and power of the groups of the Moists have increased in the
country, which is always a threat in the destruction and the looting of the industry. The labourers are also awaken to the unsound
interests who try to demand more and this has caused disturbance in the operation.
With the advent of democracy in Nepal, the government has been focusing on economic development through rapid industrial
development by ways of economic liberalization, privatisation of public limited companies and corporation,inducement of foreign
direct investment,delicencing of most of the industries except few categories, deregulation in the financial sector, one window policy,
etc,All these have been designed to accelerate industrial development in the country. Liberalization policy of the government opens
theFMCG market for the other international players also,which is a big threat for NLL.
Socio-Cultural Environment
The socio-cultural values,social consensus and customs cannot be overlooked in the study of business environment.Around 40-50% of
the people are below the poverty level and per capita income is also very low i.e $210. Literacy rate is as low as 39.6%. Custom
beliefs, values, lifestyles, age, geographic distribution and mobility of population are parts of the social component,which determines
the consumption pattern of public.There are many ethic groups and people for whom NLL products is still expensive products and
they would for cheaper substitutes.
Most of the people in urban areas are seen to consume NLL products compared to the people in rural areas and the consumption of
soft drink is high in urban areas with lot for substitutes available. People in rural areas use to prefer stem of plant to brush their teeth
instead on toothpaste.Now, this concept is changing and people have starting using toothpaste,which is another added advantage for
NLL. Also, awreness of cleanliness among the general people has resulted in increased sales of Detergents and Soaps.
THE INDUSTRY ANALYSIS
The second phase involves analyzing the industry in which the firm operates. A framework produced by Michael Porter includes five
competitive forces which need to be considered to do a complete industry analysis. The framework as shown below includes rivalry
among existing competitors, the threat of new entrants, and threat of substitute products. In addition, in this framework buyers and
suppliers are included as competitors since they can threaten the profitability of an industry or firm.
Competitive Forces in an Industry (Porter’s Model)
Rivalry among existing competitors

In order to fully analyserivalry, it is important todetermines which firms are the major competitors and what are their annual
sales,market share , growth profile, and strengths and weeknesses. The firms needs to consider the current competitors in its industry
in order to develop successful strategies.
NLL is the market leader in the detergent and soap industry. Local detergents like GOGO, Puja Soap are close competitor in
detergents.Also, it faces stiff competition from products like Ariel. NLL has slowly been gaining ground in toilet soaps an hair-care
products too.The other significant competitor in toilet soap is Procter and Gamble(P&G) with their products Camay Toilet Soap, Head
& Shoulder, Pantene Shampoo and the Organic. These entire world famous brand has given NLL products like Lux, Clinic etc a tough
competition.
In the oral care segment, NLL has emerged as a strong No 2 player, giving staff competition to the market leader Colgate. In the hair
oil segment, NLL dominates the market. In the skin care market, besides competition from leading global players, like Nivea, FA, Oil
of Ulay. NLL has also been losing share to unbranded products imported from various countries.
Despite supplying global brands, NLL has been unable to achieve a critical mass in Nepal due to premium pricing strategy. Nepal
being a price conscious market, NLL should try to focus of relatively cheaper good s too.
In the advertising battle the “Close Up Lakhpati Scheme” and the “Fair and Lovely Diamond Offer”, the sales promotion offers like
the “Fair and Lovely Soap Free Offer” and the “Close Up Brush Free Offer” has helped NLL to attract more customer.
Threats of New Entrants

It is always possible for firms in other industries to try to compete in new industry. There seems to be not much entry barrier in the
market for the new industries until they have the financial resource and the brand equity for the existing brands.The Nepal Lever may
benefit form the experience curves, that is their cumulative experience in producing and marketing a product thatb has reduced the per
unit costs below those of inexperienced firms.
But as already mentioned, with the advent of democracy in Nepal, the government has been focusing on economic development
through rapid industrial development by ways of economic liberalization, privatization of public limited companies and
corporation,inducement of foreign direct investment,delicensing of most of the industries except few categories,deregulation in the
financial sector,one window policy etc. All these have been designed to accelerate industrial development in the
country.Liberalization policy of the government opens the FMCG market for the other international players also,which is a big threat
for NLL.
Threat of Substitute Products

Threat of availability of substitutes is very high in Unilever‘s products, substitutes of each of the hair care dental care, skin care,
detergents etc. are easily and widely available throughout the country. Some of the brand names like Ariel, puja soap, camay toilet
soap, colgate tooth pasteand brush, head & shoulder shampoo are well acceptable in the market . in the food items, Maggi sauce,
unbranded tea from local farm are big threat for the company.
Substitutes also limits the potential return by placing a ceiling on the prices a firm in the industry can profitably charge. The unilever
has to monitor the price since the price offered by the substitutes of each of the haircare, dental care, skin care beverages,
detergents,etc seem to be attractive.
Bargaining Power of Suppliers

the suppliers can be a competitive threat to the industry by raising the prices of the raw materials or reducing the quality. Powerful
suppliers can reduce the profitability o f the company , if the company does not raise the price to cover price increase by the suppliers.
Unilever has competitive advantages over its other competitiors in case of bargaining power. Due to its large-scale operations and
heavy buying, unilever can always suppress and also threaten to change its supplier in case the supplier is charging them heavily.
Also, economics of scale works in this case, and unilever can get cheaper goods when they buy big quantity. Another advantage that
unilever enjoys is parent company Hindustan lever limited. HLL is the largest manufacturers of FMCG in india. Therefore, unilever
can always get their supplier at cheaper prices from HLL.
Bargaining Power of Buyers

The buyers can compete by forcing prices down and bargaining for higher quality or more services and playing competitors off against
each other. But the bargaining power of buyer is not very high in case of NLL even when many substitutes are available.
CONCLUSION
There isn’t another company to compete with Nepal Unilever that has such strong roots in the domestic market and is acquainted with
international expertise for the service of the local customers. The highest standards of corporate service to the employees and
customers have definitely proved to be an asset for its profound success.
RECOMMENDATION
After carefully analyzing both the internal and external environment in which UNL is working, its competitors, substitute products,
UNL as whole and the marketing strategy, following suggestions are recommended.
1. Although there is no such competitor for UML’s product as whole but there are a lot of competitors in the market when we
categories the company’s products as skin care products, dental products, and hygiene products so the company should keep on
eye on the competitors action.
2. Alternative sources for the raw material should be explored in both local and international markets so that raw materials can be
purchased at cheaper price in order to attract new customers and retain the existing customers by reducing the cost of
production at this crucial point of inflation.
3. Unilever has a varieties of products like hygiene products, nutrition products, skin care products, hair care products, dental care
products etc but Unilever Nepal Ltd is at present producing only a few products. So, the company should try to install other
production units for various other products like its parent company(HUL).
4. Through the use of extensive advertisement and media coverage, the company should try to change to general perception of the
people in Nepal that locally produced goods can also be better than international products. This can be done successfully if
NUL focuses more on quality products and adds more features to its products.
5. Customers are the biggest asset of any company. NUL should also value its existing and potential customers by focusing more
on consumer service activities.
6. The company is trying its level best to supply its products to each and every corner of Nepal with its distribution network in
both urban and rural areas. The company should be able to maintain a regular supply at each of those section of the society.
7. Distribution system should be made more effective for proper distribution and timely availability of the goods to various
retailers to ensure that the competitors do not creep in and attract our customers for their products.
BIBILOGRAPHY
1. Annual Report 2007/08 Unilever Nepal Limited
2. Annual Report 2007/08 Dabur Nepal Private Limited
3. Accounting for Managers
4. http://www.ehow.com/about_4696341_what-gross-margin-percentage.html
5. http://www.yourdictionary.com/finance/cash-realization-ratio
6. http://www.bizwiz.ca/financial_leverage_ratio.html
7. http://www.investopedia.com/terms/t/tie.asp
8. www.investopedia.com/terms/a/assetturnover.asp
9. www.investorwords.com/1258/current_ratio.html
10. www.noviceinvesting.com/CurrentRatio.php
11. http://beginnersinvest.about.com/od/analyzingabalancesheet/a/current-ratio.htm
12. www.investopedia.com/terms/w/workingcapitalturnover.asp
13. www.businessdictionary.com/definition/working-capital-turnover.html
14. www.spireframe.com/docs/financial_ratio_working_capital_turnover.aspx
15. www.investopedia.com/terms/q/quickratio.asp
16. www.investorwords.com/78/acid_test_ratio.html
17.

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Unilever Nepal Limited

Course Instructor: Mr. Bali Deen

INTRODUCTION TO THE PROJECT

SCOPE AND LIMITATIONS

NEPAL UNILEVER LIMITED

 Fair & Lovely fairness cream

 Wheel Lemon Fresh detergent powder

DABUR NEPAL PVT. LTD.

 Dabur Lal Tooth Paste

 Babool Tooth Paste

 Meswak Tooth Paste

 Vatika Hair Oil

 Vatika Face Pack

 Amla Hair Oil

 Anmol Coconut Oil

 Anmol Sarson Oil

 Special Hair Oil

 Real Fruit Juice

 Lal Danta Manjan

RATIO ANALYSIS AND INTERPRETATION

Fig.2 Profit Margin of Unilever and

Earnings Per Share (EPS)

Fig.3 Earnings per Share of Unilever

TEST OF FINANCIAL CONDITION

Fig.5 Financial Leverage ratio of

Fig.6 Debt/Equity Ratio for Unilever

Times Interest Earned 350

Failing to meet these obligations could force a company into bankruptcy. 50

Fig.7 Times Interest Earned for

TEST OF INVESTMENT UTILIZATION

Fig.8 Asset Turnover Ratio for

Fig.9 Equity Turnover Ratio for

Fig.10 Days receivables of Unilever

Days Inventory 120

A measure of performance, calculated by average inventory divided by 100

averaged $5 million in inventory, the inventory turnover would be 10 1

Working Capital Turnover 14

A measurement comparing the depletion of working capital to the 12

generation of sales over a given period. It shows how efficient the 10

management is in using its working capital to generate sales revenue. A 8

Acid Test Ratio 0.8

SWOT ANALYSIS FOR UNILEVER NEPAL LIMITED

1. Unable to explore remote areas

1. Serve additional customer groups

1. Energy and fuel shortage

Scanning the Macro Environment

Political Legal Environment

THE INDUSTRY ANALYSIS

Competitive Forces in an Industry (Porter’s Model)

Rivalry among existing competitors

Threats of New Entrants

Threat of Substitute Products

Bargaining Power of Suppliers

Bargaining Power of Buyers

1. Annual Report 2007/08 Unilever Nepal Limited

2. Annual Report 2007/08 Dabur Nepal Private Limited

3. Accounting for Managers

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