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MEANING OF CAPITAL BUDGETING

Capital budgeting, or investment appraisal, is the planning process used to determine whether an
organization's long term investments such as new machinery, replacement of machinery, new plants,
new products, and research development projects are worth the funding of cash through the firm's
capitalization structure (debt, equity or retained earnings). It is the process of allocating resources
for major capital, or investment, expenditures. One of the primary goals of capital budgeting
investments is to increase the value of the firm to the shareholders.
Many formal methods are used in capital budgeting, including the techniques such as
Accounting rate of return
Average accounting return
Payback period
Net present value
Profitability index
Internal rate of return
Modified internal rate of return
Equivalent annual cost
Real options valuation

These methods use the incremental cash flows from each potential investment, or project.
Techniques based on accounting earnings and accounting rules are sometimes used - though
economists consider this to be improper - such as the accounting rate of return, and "return on
investment." Simplified and hybrid methods are used as well, such as payback
period and discounted payback period.

ABOUT THE TOPIC

A logical prerequisite to the analysis of investment opportunities is the creation of investment


opportunities. Unlike the field of investments, where the analyst more or less takes the investment
opportunity set as a given, the field of capital budgeting relies on the work of people in the areas of
industrial engineering, research and development, and management information systems (among
others) for the creation of investment opportunities. As such, it is important to suggest that students

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keep in mind the importance of creativity in this area, as well as the importance of analytical
techniques.
Because a project is financially sound, it must be ethically sound, right? Well . . . the question of
ethical appropriateness is less frequently discussed in the context of capital budgeting than that of
financial appropriateness.
Consider the following simple example:
You might pose the ethical question of whether it would be proper for a publishing company to
offer a new book How to Cheat: A User's Guide. The company has a cost of capital of 8% and
estimates it could sell 10,000 volumes by the end of year one and 5,000 volumes in each of the
following two years. The immediate printing costs for the 20,000 volumes would be $20,000. The
book would sell for $7.50 per copy and net the company a profit of $6.00 per copy after royalties
(which would, of course, be quite small!), marketing costs, and taxes. Year one net would be
$60,000.

From a capital budgeting standpoint, is it financially wise to buy the publication rights? What is the
payback of this investment? (Payback = $20,000/$60,000 = .33 years). The project has a quick
payback - looks good, right? Now ask the class if the publishing of this book would encourage
cheating and if the publishing company would want to be associated with this text and its message.
Some students may feel that one should accept these profitable investment opportunities while
others might prefer that the publication of this profitable text be rejected due to the behavior it could
encourage. Although the example is admittedly simplistic, this type of issue is not particularly
uncommon in real life.

Meaning of Capital Budgeting


Capital budgeting is a company’s formal process used for evaluating potential expenditures or
investments that are significant in amount. It involves the decision to invest the current funds for
addition, disposition, modification or replacement of fixed assets. The large expenditures include
the purchase of fixed assets like land and building, new equipments, rebuilding or replacing existing
equipments, research and development, etc. The large amounts spent for these types of projects are
known as capital expenditures. Capital Budgeting is a tool for maximizing a company's future

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profits since most companies are able to manage only a limited number of large projects at any one
time.

Capital budgeting usually involves calculation of each project's future accounting profit by period,
the cash flow by period, the present value of cash flows after considering time value of money, the
number of years it takes for a project's cash flow to pay back the initial cash investment, an
assessment of risk, and various other factors.

Capital is the total investment of the company and budgeting is the art of building budgets.

FEATURES OF CAPITAL BUDGETING


1) It involves high risk

2) Large profits are estimated

3) Long time period between the initial investments and estimated returns

CAPITAL BUDGETING PROCESS:


A) Project identification and generation:
The first step towards capital budgeting is to generate a proposal for investments. There could be
various reasons for taking up investments in a business. It could be addition of a new product line
or expanding the existing one. It could be a proposal to either increase the production or reduce the
costs of outputs.

B) Project Screening and Evaluation:


This step mainly involves selecting all correct criteria’s to judge the desirability of a proposal. This
has to match the objective of the firm to maximize its market value. The tool of time value of
money comes handy in this step.

Also the estimation of the benefits and the costs needs to be done. The total cash inflow and outflow
along with the uncertainties and risks associated with the proposal has to be analyzed thoroughly
and appropriate provisioning has to be done for the same.

C) Project Selection:
There is no such defined method for the selection of a proposal for investments as different
businesses have different requirements. That is why, the approval of an investment proposal is done
based on the selection criteria and screening process which is defined for every firm keeping in
mind the objectives of the investment being undertaken.

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Once the proposal has been finalized, the different alternatives for raising or acquiring funds have
to be explored by the finance team. This is called preparing the capital budget. The average cost of
funds has to be reduced. A detailed procedure for periodical reports and tracking the project for the
lifetime needs to be streamlined in the initial phase itself. The final approvals are based on
profitability, Economic constituents, viability and market conditions.

D) Implementation:
Money is spent and thus proposal is implemented. The different responsibilities like implementing
the proposals, completion of the project within the requisite time period and reduction of cost are
allotted. The management then takes up the task of monitoring and containing the implementation
of the proposals.

E) Performance review:
The final stage of capital budgeting involves comparison of actual results with the standard ones.
The unfavorable results are identified and removing the various difficulties of the projects helps for
future selection and execution of the proposals.

FACTORS AFFECTING CAPITAL BUDGETING:


CAPITAL BUDGETING DECISIONS:

Availability of Funds Working Capital

Structure of Capital Capital Return

Management decisions Need of the project

Accounting methods Government policy

Taxation policy Earnings

Lending terms of financial institutionsEconomic value of the project

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The crux of capital budgeting is profit maximization. There are two ways to it; either increase the
revenues or reduce the costs. The increase in revenues can be achieved by expansion of operations
by adding a new product line. Reducing costs means representing obsolete return on assets.

Accept / Reject decision - If a proposal is accepted, the firm invests in it and if rejected the firm
does not invest. Generally, proposals that yield a rate of return greater than a certain required rate of
return or cost of capital are accepted and the others are rejected. All independent projects are
accepted. Independent projects are projects that do not compete with one another in such a way that
acceptance gives a fair possibility of acceptance of another.

Mutually exclusive project decision - Mutually exclusive projects compete with other projects in
such a way that the acceptance of one will exclude the acceptance of the other projects. Only one
may be chosen. Mutually exclusive investment decisions gain importance when more than one
proposal is acceptable under the accept / reject decision. The acceptance of the best alternative
eliminates the other alternatives.

Capital rationing decision - In a situation where the firm has unlimited funds, capital budgeting
becomes a very simple process. In that, independent investment proposals yielding a return greater
than some predetermined level are accepted. But actual business has a different picture. They have
fixed capital budget with large number of investment proposals competing for it. Capital rationing
refers to the situation where the firm has more acceptable investments requiring a greater amount of
finance than that is available with the firm. Ranking of the investment project is employed on the
basis of some predetermined criterion such as the rate of return. The project with highest return is
ranked first and the acceptable projects are ranked thereafter.

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MEANING OF CAPITAL BUDGETING:
An efficient allocation of capital is the most important finance function in modern times. It
involves decisions to commit firm’s funds to long-term assets. Such decisions are tend to determine
the value of company/firm by influencing its growth, profitability & risk.
Investment decisions are generally known as capital budgeting or capital expenditure
decisions. It is clever decisions to invest current in long term assets expecting long-term benefits
firm’s investment decisions would generally include expansion, acquisition, modernization and
replacement of long-term assets.
Such decisions can be investment decisions, financing decisions or operating decisions.
Investment decisions deal with investment of organization’s resources in Long tern (fixed) Assets
and or Short term (Current) Assets. Decisions pertaining to investment in Short term Assets fall
under “Working Capital Management”. Decisions pertaining to investment in Long term Assets are
classified as “Capital Budgeting” decisions.
Capital budgeting decisions are related to allocation of investible funds to different long-term
assets. They have long-term implications and affect the future growth and profitability of the firm.
In evaluating such investment proposals, it is important to carefully consider the expected benefits
of investment against the expenses associated with it. Organizations are frequently faced with
Capital Budgeting decisions. Any decision that requires the use of resources is a capital budgeting
decisions. Capital budgeting is more or less a continuous process in any growing concern.

DEFINITION:

Capital budgeting, or investment appraisal, is the planning process used to determine whether an
organization's long term investments such as new machinery, replacement of machinery, new plants,
new products, and research development projects are worth the funding of cash through the firm's
capitalization structure

IMPORTANCE OF CAPITAL BUDGETING:


There are several factors that make capital budgeting decisions among the critical decisions to be
taken by the management. The importance of capital budgeting can be understood from the
following aspects of capital budgeting decisions.

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 Long Term Implications: Capital Budgeting decisions have long term effects on risk the
and return composition of the firm. These decisions affect the future position of the firm .
 Substantial Commitments: The capital budgeting decisions generally involve large
commitment of funds. As a result, substantial portion of capital funds is blocked.
 Irreversible Decisions: Most of the capital budgeting decisions are irreversible decisions.
Once taken the firm may not be in a position to revert back unless it is ready to absorb
heavy losses which may result due to abandoning a project midway.
 After the Capacity and Strength to Compete: Capital budgeting decisions affect the
capacity and strength of a firm to face competition. A firm may loose competitiveness if the
decision to modernize is delayed.

PROBLEMS & DIFFICULTIES IN CAPITAL BUDGETING:

 Future uncertainty: Capital Budgeting decisions involve long-term commitments. There is


lot of uncertainty in the long term. The uncertainty may be with reference to cost of the
project, future expected returns, future competition, legal provisions, political situation etc.
 Time Element: The implications of a Capital Budgeting decision are scattered over a long
period. The cost and benefits of a decision may occur at different point of time. The cost of a
project is incurred immediately. However, the investment is recovered over a number of
years. The future benefits have to be adjusted to make them comparable with the cost.
Longer the time period involved, greater would be the uncertainty.
 Difficulty in Quantification of Impact: The finance manger may face difficulties in
measuring the cost and benefits of projects in quantitative terms.

Example: The new product proposed to be launched by a firm may result in increase or
decrease in sales of other products already being sold by the same firm. It is very difficult to
ascertain the extent of impact as the sales of other products may also be influenced by
factors other than the launch of the new product.

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ASSUMPTIONS IN CAPITAL BUDGETING:

The Capital Budgeting decision process is a multi-faceted and analytical process. A number of
assumptions are required to be made.

1. Certainty with respect to cost & Benefits: It is very difficult to estimate the cost and
benefits of a proposal beyond 2-3 years in future.
2. Profit Motive: Another assumption is that the capital budgeting decisions are taken with a
primary motive of increasing the profit of the firm.

The activities can be listed as follows:


 Dis-investments i.e., sale of division or business.
 Change in methods of sales distribution.
 Undertakings an advertisement campaign.
 Research & Development programs.
 Launching new projects.
 Diversification.
 Cost reduction.

FEATURES OF INVESTMENT DECISIONS:


 The exchange of current funds for future benefits.
 The funds are invested in long-term assets.
 The future benefits will occur to the firm over a series of years.

IMPORTANCE OF INVESTMENT DECISIONS:


 They influence the firm’s growth in long run.
 They affect the risk of the firm.
 They involve commitment of large amount of funds.
 They are irreversible, or reversible at substantial loss.

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 They are among the most difficult decisions to make.

TYPE OF INVESTMENT DECISIONS:


 Expansion of existing business.
 Expansion of new business.
 Replacement & Modernization

INVESTMENT EVALUATION CRITERIA:


 Estimation of cash flows.
 Estimation of the required rate of return.
 Application of a decision rule for making the choice.
Consideration of cash flows is to determine true profitability of the project and it is an
unambiguous way of identifying good projects from the pool. Ranking is possible it should
recognize the fact that bigger cash flows are preferable to smaller ones & early cash flows are
preferable to later ones I should help to choose among mutually exclusive projects that which
maximizes the shareholders wealth. It should be a criterion which is applicable to any considerable .

Capital Budgeting Techniques

Traditional Approach Modern Approach


(or) (or)
Non-Discounted Cash Flows Disconnected Cash Flows

Pay Back Period (PB) Net Present Value (NPV)


Accounting Rate of Return (ARR) Internal Rate of Return
Profitability Index (PI)
Discounted Payable Period

1. NET PRESENT VALUE:

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The Net Present value method is a classic economic method of evaluating the investment
proposals. It is one of the methods of discounted cash flow. It recognizes the importance of time
value of money”.
It correctly postulates that cash flows arising of different time period, differ in value and
are comparable only when their equivalent i.e., present values are found out.
The following steps are involved in the calculation of NPV:
 Cash flows of the investment project should be forecasted based on realistic assumptions.
 An appropriate rate of interest should be selected to discount the cash flows; generally this
will be the “Cost of capital rate” of the company.
 The present value of inflows and out flows of an investment proposal has to be computed by
discounting them with an appropriate cost of capital rate.
 The Net Present value is the difference between the “Present Value of Cash inflows” and the
present value of cash outflows.

 Net present value should be found out by subtracting present value of cash outflows from
present value of cash inflows. The project should be accepted if NPV is positive.

NPV = Present Value of Cash inflow – Present value of the cash outflow

Acceptance Rule:
Accept if NPV > 0
Reject if NPV < 0
May accept if NPV = 0
One with higher NPV is selected.

2. INTERNAL RATE OF RETURN METHOD:

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The internal rate of return (IRR) method is another discounted cash flow technique .This
method is based on the principle of present value. It takes into account of the magnitude & timing
of cash flows.
IRR nothing but the rate of interest that equates the present value of future periodic net cash
flows, with the present value of the capital investment expenditure required to undertake a project.
The concept of internal rate of return is quite simple to understand in the case of one-period
project.

Acceptance Rule:
Accept if r > k
Reject if r < k
May accept if r = k
Where r = rate return
k = opportunity cost of capital

3. PROFITABILITY INDEX (OR) BENEFIT COST RATIO:


Yet another time-adjusted method of evaluating the investment proposals is the benefit-cost
(B/C) ratio of profitability index PI). It is benefit cost ratio. It is ratio of present value of future net
cash inflows at the required rate of return, to the initial cash outflow of the investment.

Present Value of Cash inflows


PI = -----------------------------------------
Present Value of Cash outflows

Acceptance Rule:

Accept if PI > 1
Reject if PI < 1
May accept if PI = 1

Profitability Index is a relative measure of projects profitability.

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4. PAY BACK PERIOD METHOD:
One of the top concerns of any person or organization investing a large amount of money
would be the time by which the money will come back. The concern making the investment would
want that at least the capital invested is recovered as early as possible. The pay back period is
defined as the period required for the proposal’s cumulative cash flows to be equal to its cash
outflows. In other words, the payback period is the length of time required to recover the initial cost
of the project. The payback period is usually stated in terms of number of years. It can also be stated
as the period required for a proposal to ‘break even’ on its net investment.
The payback period is the number of years it takes the firm to recover its original investment by net
returns before depreciation, but after taxes.
If project generates constant annual cash inflows, the pay back period is completed as follows:

Initial Investment
Pay Back = ------------------------
Annual cash inflow
In case of unequal cash inflows, the payback period can be found out by adding up the cash inflows
until the total is equal to initial cash outlay.

Acceptance Rule:
 Accept if calculated value is less than standard fixed by management otherwise reject it.
 If the payback period calculated for a project is less than the maximum payback period set
up by the company it can be accepted.

5. DISCOUNTED PAY BACK PERIOD:


One of the serious objections to pay back method is that it does not discount the cash flows. Hence
discounted payback period has come into existence. The number of periods taken in recovering the
investment outlay on the present value basis is called the discounted payback period.

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Discounted Pay Back rule is better as it does discount the cash flows until the outlay is recovered.

6. ACCOUNTING RATE OF RETURN (OR) AVERAGE RATE OF RETURN


(ARR):
It is also known as return on investment (ROI). It is an accounting method, which uses the
accounting information revealed by the financial statements to measure the profitability of an
investment proposal. According to Solomon, ARR on an investment can be calculated as “ the ratio
of accounting net income to the initial investment i.e.” .

Average Net Income


ARR = ---------------------------
Average Investment

Average Income = Average of after tax profit


Average Investment = Half of Original Investment

Acceptance Rule:
 Accept if calculated rate is higher than minimum rate established by the management.
 It can reject the projects with an ARR lower than the expected rate of return.
 This method can also help, the management to rank the proposals on the basis of ARR.
 A highest rank will be given to a project with highest ARR, whereas a lowest rank to a
project with lowest ARR.

CAPITAL BUDGETING METHODS IN PRACTICE

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 In a study of the capital budgeting practices of fourteen medium to large size companies in
India, it was found tat almost all companies used by back.
 With pay back and/or other techniques, about 2/3 rd of companies used IRR and about 2/5 th
NPV. IRR s found to be second most popular method.
 Pay back gained significance because of is simplicity to use & understand its emphasis on
the early recovery of investment & focus on risk.
 It was found that 1/3rd of companies always insisted on computation of pay back for all
projects, 1/3rd for majority of projects & remaining for some of the projects.

 Reasons for secondary of DCF techniques in India included difficulty in understanding &
using threes techniques, lack of qualified professionals & unwillingness of top management
to use DCF techniques.

PROCESSES IN CAPITAL BUDGETING


At least five phases of capital expenditure planning & control can be identified:
 Identification (or Organization) of investment opportunities.
 Development of forecasts of benefits and costs.
 Evaluation of the net benefits.
 Authorization for progressing and spending capital expenditure.
 Control of capital projects.

FORECASTING
Cash flow estimates should be development by operating managers with the help of
finance executives. Risk associated should be properly handled. Estimation of cash flows requires
collection and analysis of all qualitative and quantitative data, both financial and non-financial in
nature. MIS provide such data.

Correct treatment should be given to:


 Additional working capital

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 Sale proceeds of existing assets.
 Depreciation
 Financial flows (to be distinguished from operation flows)

EVALUATION:
Group of experts who have no ake to grind should be taken in selecting the methods of
evaluation as NPV, IRR, PI, Pay Back, ARR & Discounted Pay Back.
Pay Back period is used as “Primary” method & IRR/NPV as “Secondary” method in India.
The following are to be given due importance.
 For evaluation, minimum rate of return or cut-off is necessary.
 Usually if is computed by means of weighted Average cost of Capital (WACC)
 Opportunity cost of capital should be based on risky ness of cash flow of investment
proposals.

AUTHORIZATION:
Screening and selecting may differ from one company to another. When large sums are
involved usually final approval rests with top management. Delegation of approval authority may
be effected subject to the amount of outlay. Budgetary control should be rigidly exercised.

CONTROL AND MONITORY:


A Capital projects reporting system is required to review and monitor the performance of
investment projects after completion and during their life. Follow up comparison of the actual
performance with original estimates to ensure better forecasting besides sharpening the techniques
for improving future forecasts. As a result company may re-praise its projects and take necessary
action.

DECISION MAKING LEVEL:


For planning and control purpose three levels of Decision making have been identified :
 Operating

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 Administrative
 Strategic

OPERATING CAPITAL BUDGETING:


Includes routine minor expenditure, as office equipment handled by lower level
management.

ADMINISTRATIVE CAPITAL BUDGETING:


Falls in between these two levels involves medium size investments such as business
handled by middle level management.

STRATEGIC CAPITAL BUDGETING:

Involves large investment as acquisition of new business or expansion in a new time of business,
handled by top management unique nature.
Long Term Capital Budgeting In Soap industry

PRE – INVESTMNET STAGE


In a planned economy, as in India, the identification of public sector projects needs to be
done within the overall framework of national the sect oral planning. All projects of every sector
need to be identified scientifically at the time of plan formulation. In actual practice, however, it is
observed that ‘identification’ stage is the most neglected stage of the project planning.
The five year plans indicate the broad strategy of planning economic growth rate and other
basic objectives to be achieved during the plan period. The macro level planning exercise
undertaken at the beginning of every five year plan indicates broadly the role of each sector’s
physical targets to be achieved and financial outlays, which could be made available for the
development of the sector during the plan period.
The identification of a project in the Five Year Plan is not the sanction of the project for
implementation. It provides only the ‘green signal’ for the preparation of feasibility report (FR0 for
appraisal and investment decision. A preliminary scrutiny of the FR of the project is done in the
Ministry and thereafter copies of the feasibility report are submitted to the appraising agencies,

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viz.,Planning Commission, Bureau of Public Enterprises and the Plan Finance Division of the
Ministry of Finance.

PROJECT APPRAISAL:

The appraisal of the project follows the formulation stage. The objective of the appraisal
process is not only to decide whether to accept or reject the investment proposal, but also to
recommend the ways in which the project can be redesigned or reformulated so as to ensure better
technical, financial, commercial and economic viabilities.

The project appraised which is an essential tool for judicious investment decisions and
project selection is a multi-disciplinary task. But many a times this is considered doubt, have
played an important role in contributing systematic methods for forecasting the future and evolving
appraisal methods to quantify socials costs and benefits, but they alone cannot carry out complete
appraisal of an investment proposal.

The need for project appraisal and investment decisions based on social profitability arises
mainly because of the basic characteristics of developing countries limited resources for
development and multiple needs – objective of planning being ‘Economic Growth with Social
Justice’. The project appraisal is a convenient and comprehensive fashion to achieve, the laid down
objectives of the economic development plan. The appraisal work presupposes availability of a
certain minimum among of reliable and up to date data in the country, as well as the availability of
trained persons to carry out the appraisal analysis.

As stated earlier the investment decision of public sector projects are required to be taken within the
approved plan frame work. The Project Appraisal Division (PAD) that prepares the comprehensive
appraisal note of projects of Central Plans was therefore set up in Planning Commission. The
Finance Ministry issues expenditure sanction for all investment proposals within the frame work of
annual budget.

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Primary Data has been collected through discussions and observation of various people involved
in the business whereas Secondary Data through annual reports of the company, newspaper,
magazines, journals and internet.

Net Present Value


Here's another perspective on the meaning of NPV. If we accept a project with a negative NPV of -
$2,422, this is financially equivalent to investing $2,422 today and receiving nothing in return.
Therefore, the total value of the firm would decrease by $2,422. This, of course, assumes that the
various components (cash flow estimates, discount factor, etc.) used in the computation are correct.

In practice, financial managers are rarely presented with zero-NPV projects for at least two reasons.
First, in an abstract sense, zero is just another of the infinite number of values the NPV can take; as
such, the likelihood of obtaining any particular number is small. Second, (and more pragmatically),
in most large firms, capital investment proposals are submitted to the Finance group from other
areas (e.g., the industrial engineering group) for analysis. Those submitting proposals recognize the
ambivalence associated with zero NPVs and are less likely to send them to the Finance group in the
first place.

Conceptually, a zero-NPV project earns exactly its required return. Assuming that risk has been
adequately accounted for, investing in a zero-NPV project is equivalent to purchasing a financial
asset in an efficient market. In this sense, one would be indifferent between the capital expenditure
project and the financial asset investment. Further, since firm value is completely unaffected by the
investment, there is no reason for shareholders to prefer either one.

However, several real-world considerations make comparisons such as the one above difficult. For
example, adjusting for risk in capital budgeting projects can be problematic. And, some investment
projects may be associated with benefits that are difficult to quantify, but exist, nonetheless.
(Consider, for example, an investment with a low or zero NPV but which enhances a firm's image
as a good corporate citizen.) Additionally, the secondary market for most physical assets is
substantially less efficient than the secondary market for financial assets. While, in theory, one
could adjust for differences in liquidity, the adjustment is, again, problematic. Finally, some would
argue that, all else equal, some investors prefer larger firms to smaller; if true, investing in any
project with a nonnegative NPV may be desirable.

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Internal Rate of Return
Internal rate of return (IRR) is the rate that makes the present value of the future cash flows equal to
the initial cost or investment. In other words, it is the discount rate that gives a project a $0 NPV.

IRR rule-the investment is acceptable if its IRR exceeds the required return.

Assume: To comply with the Air Quality Control Act of 1989, a company must install three smoke
stack scrubber units to its ventilation stacks at an installed cost of $355,000 per unit. An estimated

$100,000 per unit could be saved each year over the five-year life of the ventilation stacks. The cost
of capital is 14% for the firm. The analysis of the investment results in a NPV of -$11,692.

Despite the financial assessment dictating rejection of the investment, public policy might suggest
acceptance of the project. By fiat, certain types of pollution controls are required. But should the
firm exceed the minimum legal limits and be responsible for the environment, even if this
responsibility leads to a wealth reduction for the firm? Is environmental damage merely a cost of
doing business? Could investment in a healthier working environment result in lower long-term
costs in the form of lower future health costs? If so, might this decision result in an increase in

shareholder wealth? Notice that if the answer to this second question is yes, it suggests that our
original analysis omitted some side benefits to the project.

ADVANTAGES
 People seem to prefer talking about rates of return to dollars of value.
 NPV requires a market discount rate; IRR relies only on the project cash flows.

DISADVANTAGES
 Nonconventional cash flows- Multiple rates of return-if cash flows alternate
back and forth between positive and negative (in and out), more than one
IRR is possible. NPV rule still works just fine. Also,if the cash flows are of
loan type, meaning money in at first and cash out later, the IRR is really a
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borrowing rate and lower is better. The IRR is sometimes called the IBR
(internal borrowing rate) in this case.

 Mutually exclusive investment decisions-if taking one project means another


is not taken, the projects are mutually exclusive. The IRR can provide
conflicting rankings when mutual exclusive projects are analyzed

Comparison of the NPV and IRR Methods

NPV Profiles
Net present value profile is a graph of an investment's NPV at various discount rates. The graph
illustrates the NPV changes as the cost of capital changes. The IRR is not a function of the cost of
capital.

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SOAP INDUSTRY

In chemistry, a soap is a salt of a fatty acid. Household uses for soaps include washing, bathing, and
other types of housekeeping, where soaps act as surfactants, emulsifying oils to enable them to be
carried away by water. In industry they are also used in textile spinning and are important
components of some lubricants. Metal soaps are also included in modern artists' oil paints
formulations as a rheology modifier.

Soaps for cleaning are obtained by treating vegetable or animal oils and fats with a strong base,
such as sodium hydroxide or potassium hydroxide in an aqueous solution. Fats and oils are
composed of triglycerides; three molecules of fatty acids attach to a single molecule
*of glycerol. The alkaline solution, which is often called lye (although the term "lye soap" refers
almost exclusively to soaps made with sodium hydroxide), induces saponification.

In this reaction, the triglyceride fats first hydrolyze into free fatty acids, and then the latter combine
with the alkali to form crude soap: an amalgam of various soap salts, excess fat or alkali, water, and
liberated glycerol (glycerin). The glycerin, a useful byproduct, can remain in the soap product as a
softening agent, or be isolated for other uses.

Soaps are key components of most lubricating greases, which are usually emulsions of calcium
soap or lithium soap and mineral oil. Many other metallic soaps are also useful, including those of
aluminium, sodium, and mixtures of them. Such soaps are also used as thickeners to increase the
viscosity of oils. In ancient times, lubricating greases were made by the addition of lime to olive oil.
Mechanism of cleansing soaps structure of a micelle, a cell-like structure formed by the aggregation
of soap subunits (such as sodium stearate): The exterior of the micelle is hydrophilic (attracted to
water) and the interior is lipophilic (attracted to oils)

21
Action of soap

When used for cleaning, soap allows insoluble particles to become soluble in water, so they can
then be rinsed away. For example: oil/fat is insoluble in water, but when a couple of drops of dish
soap are added to the mixture, the oil/fat solubilizes into the water. The insoluble oil/fat molecules
become associated inside micelles, tiny spheres formed from soap molecules with
polar hydrophilic (water-attracting) groups on the outside and encasing a lipophilic (fat-attracting)
pocket, which shields the oil/fat molecules from the water making it soluble. Anything that is
soluble will be washed away with the water.

Effect of the alkali

The type of alkali metal used determines the kind of soap product. Sodium soaps, prepared
from sodium hydroxide, are firm, whereas potassium soaps, derived from potassium hydroxide, are
softer or often liquid. Historically, potassium hydroxide was extracted from the ashes of bracken or
other plants. Lithium soaps also tend to be hard—these are used exclusively in greases.

Effects of fats
See also: Total fatty matter

Soaps are derivatives of fatty acids. Traditionally they have been made from triglycerides (oils and
fats). Triglyceride is the chemical name for the triesters of fatty acids
and glycerin. Tallow, i.e., rendered beef fat, is the most available triglyceride from animals. Its
saponified product is called sodium tallowate. Typical vegetable oils used in soap making are palm
oil, coconut oil, olive oil, and laurel oil. Each species offers quite different fatty acid content and
hence, results in soaps of distinct feel. The seed oils give softer but milder soaps. Soap made from
pure olive oil is sometimes called Castile soap or Marseille soap, and is reputed for being extra
mild. The term "Castile" is also sometimes applied to soaps from a mixture of oils, but a high
percentage of olive oil.

22
Fatty acid content of various fats used for soapmaking

Lauric acid Myristic acid Palmitic acid Stearic acid Oleic acid Linoleic a

Fats C12 saturated C14 saturated C16 saturated C18 saturated C18 monounsaturated C18 diunsa

Tallow 0 4 28 23 35 2

Coconut oil 48 18 9 3 7 2

Palm kernel
46 16 8 3 12 2
oil

Laurel oil 54 0 0 0 15 17

Olive oil 0 0 11 2 78 10

Canola oil 0 1 3 2 58 9

23
History of soaps

Early history

Box for Amigo del Obrero (Worker's Friend) soap from the 20th century, part of the Museo del
Objeto del Objeto collection

The earliest recorded evidence of the production of soap-like materials dates back to around 2800
BC in ancient Babylon. A formula for soap consisting of water, alkali, and cassia oil was written on
a Babylonian clay tablet around 2200 BC.

The Ebers papyrus (Egypt, 1550 BC) indicates the ancient Egyptians bathed regularly and
combined animal and vegetable oils with alkaline salts to create a soap-like substance. Egyptian
documents mention a soap-like substance was used in the preparation of wool for weaving.

In the reign of Nabonidus (556–539 BC), a recipe for soap consisted of uhulu [ashes], cypress [oil]
and sesame [seed oil] "for washing the stones for the servant girls".

Ancient Roman era

The word sapo, Latin for soap, first appears in Pliny the Elder's Historia Naturalis, which discusses
the manufacture of soap from tallow and ashes, but the only use he mentions for it is as
a pomade for hair; he mentions rather disapprovingly that the men of the Gauls and Germans were
more likely to use it than their female counterparts. Aretaeus of Cappadocia, writing in the first
century AD, observes among "Celts, which are men called Gauls, those alkaline substances that are
made into balls called soap". The Romans' preferred method of cleaning the body was to massage
oil into the skin and then scrape away both the oil and any dirt with a strigil. The Gauls used soap
made from animal fat.

A popular belief claims soap takes its name from a supposed Mount Sapo, where animal sacrifices
were supposed to have taken place; tallow from these sacrifices would then have mixed with ashes
from fires associated with these sacrifices and with water to produce soap, but there is no evidence
of a Mount Sapo in the Roman world and no evidence for the apocryphal story.
The Latin word sapo simply means "soap"; it was likely borrowed from an early Germanic
language and is cognate with Latin sebum, "tallow", which appears in Pliny the Elder's

24
account. Roman animal sacrifices usually burned only the bones and inedible entrails of sacrificed
animals; edible meat and fat from the sacrifices were taken by the humans rather than the gods.

Zosimos of Panopolis, circa 300 AD, describes soap and soapmaking. Galen describes soap-making
using lye and prescribes washing to carry away impurities from the body and clothes. The use of
soap for personal cleanliness became increasingly common in the 2nd century A.D. According to
Galen, the best soaps were Germanic, and soaps from Gaul were second best. This is a reference to
true soap in antiquity.

Ancient China

A detergent similar to soap was manufactured in ancient China from the seeds of Gleditsia
sinensis. Another traditional detergent is a mixture of pig pancreas and plant ash called "Zhu yi zi".
True soap, made of animal fat, did not appear in China until the modern era. Soap-like detergents
were not as popular as ointments and creams.

Middle East

A 12th-century Islamic document describes the process of soap production. It mentions the key
ingredient, alkali, which later becomes crucial to modern chemistry, derived from al-qaly or
"ashes".

By the 13th century, the manufacture of soap in the Islamic world had become virtually
industrialized, with sources in Nablus, Fes, Damascus, and Aleppo.

Medieval Europe

Soapmakers in Naples were members of a guild in the late sixth century (then under the control of
the Eastern Roman Empire) and in the eighth century, soap-making was well known in Italy and
Spain. The Carolingian capitulary De Villis, dating to around 800, representing the royal will
of Charlemagne, mentions soap as being one of the products the stewards of royal estates are to
tally. The lands of Medieval Spain were a leading soapmaker by 800, and soapmaking began in
the Kingdom of England about 1200. Soapmaking is mentioned both as "women's work" and as the

25
15th–19th centuries

Advertisement for Pears' Soap, 1889

A 1922 magazine advertisement for Palmolive Soap

Liquid soap

26
Manufacturing process of soaps/detergents

In France, by the second half of the 15th century, the semi-industrialized professional manufacture
of soap was concentrated in a few centers of Provence—Toulon, Hyères, and Marseille—which
supplied the rest of France.[23] In Marseilles, by 1525, production was concentrated in at least two
factories, and soap production at Marseille tended to eclipse the other Provençal centers. [24] English
manufacture tended to concentrate in London.

Finer soaps were later produced in Europe from the 16th century, using vegetable oils (such as olive
oil) as opposed to animal fats. Many of these soaps are still produced, both industrially and by
small-scale artisans. Castile soap is a popular example of the vegetable-only soaps derived from the
oldest "white soap" of Italy.

In modern times, the use of soap has become commonplace in industrialized nations due to a better
understanding of the role of hygiene in reducing the population size of pathogenic microorganisms.
Industrially manufactured bar soaps first became available in the late 18th century, as advertising
campaigns in Europe and America promoted popular awareness of the relationship between
cleanliness and health.

Until the Industrial Revolution, soapmaking was conducted on a small scale and the product was
rough. In 1780 James Keir established a chemical works at Tipton, for the manufacture of alkali
from the sulfates of potash and soda, to which he afterwards added a soap manufactory. The method
of extraction proceeded on a discovery of Keir's. Andrew Pears started making a high-quality,
transparent soap in 1807 in London. His son-in-law, Thomas J. Barratt, opened a factory
in Isleworth in 1862.

During the reign of Queen Anne (February 1665 – August 1714) a soap tax was introduced in
England which meant that, until the mid eighteen hundreds, soap was a luxury, only used regularly
by the well-to-do. The soap manufacturing process was closely supervised by revenue officials who
made sure that soap makers equipment was kept under lock and key when not being supervised.
Moreover, soap could not be produced by small makers because of a law which stipulated that soap-
27
boilers must manufacture a minimum quantity of one imperial ton at each boiling, which placed the
process beyond reach of the average person. The soap trade was boosted and deregulated when the
tax was repealed in 1853.

William Gossage produced low-priced, good-quality soap from the 1850s. Robert Spear
Hudson began manufacturing a soap powder in 1837, initially by grinding the soap with a mortar
and pestle. American manufacturer Benjamin T. Babbitt introduced marketing innovations that
included sale of bar soap and distribution of product samples. William Hesketh Lever and his
brother, James, bought a small soap works in Warrington in 1886 and founded what is still one of
the largest soap businesses, formerly called Lever Brothers and now called Unilever. These soap
businesses were among the first to employ large-scale advertising campaigns.

Liquid soap

See also: Detergent

Liquid soap was not invented until the nineteenth century; in 1865, William Shepphard patented a
liquid version of soap. In 1898, B.J. Johnson developed a soap (made of palm and olive oils); his
company (the B.J. Johnson Soap Company) introduced "Palmolive" brand soap that same year. This
new brand of the new kind of soap became popular rapidly, and to such a degree that B.J. Johnson
Soap Company changed its name to Palmolive.

In the early 1900s, other companies began to develop their own liquid soaps. Such products as Pine-
Sol and Tide appeared on the market, making the process of cleaning things other than skin (e.g.,
clothing, floors, bathrooms) much easier.

Liquid soap also works better for more traditional/non-machine washing methods, such as using
a washboard.

Soap-making processes

The industrial production of soap involves continuous processes, such as continuous addition of fat
and removal of product. Smaller-scale production involves the traditional batch processes. The three
variations are: the 'cold process', wherein the reaction takes place substantially at room temperature,
the 'semi-boiled' or 'hot process', wherein the reaction takes place near the boiling point, and the
'fully boiled process', wherein the reactants are boiled at least once and the glycerol is recovered.
There are several types of 'semi-boiled' hot process methods, the most common being DBHP
(Double Boiler Hot Process) and CPHP (Crock Pot Hot Process). [33] Most soapmakers, however,
continue to prefer the cold process method. The cold process and hot process (semi-boiled) are the

28
simplest and typically used by small artisans and hobbyists producing handmade decorative soaps.
The glycerol remains in the soap and the reaction continues for many days after the soap is poured
into molds. The glycerol is left during the hot-process method, but at the high temperature
employed, the reaction is practically completed in the kettle, before the soap is poured into molds.
This simple and quick process is employed in small factories all over the world.

Handmade soap from the cold process also differs from industrially made soap in that an excess of
fat is used, beyond that needed to consume the alkali (in a cold-pour process, this excess fat is
called "superfatting"), and the glycerol left in acts as a moisturizing agent. However, the glycerine
also makes the soap softer and less resistant to becoming "mushy" if left wet. Since it is better to
add too much oil and have left-over fat, than to add too much lye and have left-over lye, soap
produced from the hot process also contains left-over glycerol and its concomitant pros and cons.
Further addition of glycerol and processing of this soap produces glycerin soap. Superfatted soap is
more skin-friendly than one without extra fat. However, if too much fat is added, it can leave a
"greasy" feel to the skin. Sometimes, an emollient additive, such as jojoba oil or shea butter, is
added "at trace" (i.e., the point at which the saponification process is sufficiently advanced that the
soap has begun to thicken in the cold process method) in the belief that nearly all the lye will be
spent and it will escape saponification and remain intact. In the case of hot-process soap, an
emollient may be added after the initial oils have saponified so they remain unreacted in the
finished soap. Superfatting can also be accomplished through a process known as "lye discount" in
which the soap maker uses less alkali than required instead of adding extra fats.

Cold process

The lye is dissolved in water.

29
Even in the cold soap making process, some heat is usually required; the temperature is usually
raised to a point sufficient to ensure complete melting of the fat being used. The batch may also be
kept warm for some time after mixing to ensure the alkali (hydroxide) is completely used up. This
soap is safe to use after about 12–48 hours, but is not at its peak quality for use for several weeks.

Cold-process soapmaking requires exact measurements of lye and fat amounts and computing their
ratio, using saponification charts to ensure the finished product does not contain any excess
hydroxide or too much free unreacted fat. Saponification charts should also be used in hot
processes, but are not necessary for the "fully boiled hot-process" soaping.

Historically, lye used in the cold process was made from scratch using rainwater and ashes.
Soapmakers deemed the lye solution ready for use when an egg would float in it. Homemade lye
making for this process was unpredictable and therefore eventually led to the discovery of sodium
hydroxide by English chemist Sir Humphry Davy in the early 1800s.

A cold-process soapmaker first looks up the saponification value for each unique fat on an oil
specification sheet. Oil specification sheets contain laboratory test results for each fat, including the
precise saponification value of the fat. The saponification value for a specific fat will vary by
season and by specimen species. This value is used to calculate the exact amount of sodium
hydroxide to react with the fat to form soap. The saponification value must be converted into an
equivalent sodium hydroxide value for use in cold process soapmaking. Excess unreacted lye in the
soap will result in a very high pH and can burn or irritate skin; not enough lye leaves the soap
greasy. Most soap makers formulate their recipes with a 2–5% deficit of lye, to account for the
unknown deviation of saponification value between their oil batch and laboratory averages.

The lye is dissolved in water. Then, the oils are heated, or melted if they are solid at room
temperature. Once the oils are liquefied and the lye is fully dissolved in water, they are combined.
This lye-fat mixture is mixed until the two phases (oils and water) are fully
emulsified. Emulsification is most easily identified visually when the soap exhibits some level of
"trace", which is the thickening of the mixture. Many modern-day amateur soapmakers often use a
stick blender to speed up this process. There are varying levels of trace. Depending on how
additives will affect trace, they may be added at light trace, medium trace, or heavy trace. After
much stirring, the mixture turns to the consistency of a thin pudding. "Trace" corresponds roughly
to viscosity. Essential oils and fragrance oils can be added with the initial soaping oils, but solid
additives such as botanicals, herbs, oatmeal, or other additives are most commonly added at light
trace, just as the mixture starts to thicken.

30
The batch is then poured into molds, kept warm with towels or blankets, and left to continue
saponification for 12 to 48 hours. (Milk soaps or other soaps with sugars added are the exception.
They typically do not require insulation, as the presence of sugar increases the speed of the reaction
and thus the production of heat.) During this time, it is normal for the soap to go through a "gel
phase", wherein the opaque soap will turn somewhat transparent for several hours, before once
again turning opaque.

After the insulation period, the soap is firm enough to be removed from the mold and cut into bars.
At this time, it is safe to use the soap, since saponification is in essence complete. However, cold-
process soaps are typically cured and hardened on a drying rack for 2–6 weeks before use. During
this cure period, trace amounts of residual lye are consumed by saponification and excess water
evaporates.

During the curing process, some molecules in the outer layer of the solid soap react with the carbon
dioxide of the air and produce a dusty sheet of sodium carbonate. This reaction is more intense if
the mass is exposed to wind or low temperatures.

Hot processes

Hot-processed soaps are created by encouraging the saponification reaction by adding heat to speed
up the reaction. In contrast with cold-pour soap which is poured into molds and for the most part
only then saponifies, hot-process soaping for the most part saponifies the oils completely and only
then is poured into molds.

In the hot process, the hydroxide and the fat are heated and mixed together at 80–100 °C, a little
below boiling point, until saponification is complete, which, before modern scientific equipment,
the soapmaker determined by taste (the sharp, distinctive taste of the hydroxide disappears after it is
saponified) or by eye; the experienced eye can tell when gel stage and full saponification has
occurred. Beginners can find this information through research and classes. Tasting soap for
readiness is not recommended, as sodium and potassium hydroxides, when not saponified, are
highly caustic.

An advantage of the fully boiled hot process in soapmaking is the exact amount of hydroxide
required need not be known with great accuracy. They originated when the purity of the alkali
hydroxides were unreliable, as these processes can use even naturally found alkalis, such as wood
ashes and potash deposits. In the fully boiled process, the mix is actually boiled (100+ °C), and,
after saponification has occurred, the "neat soap" is precipitated from the solution by adding
common salt, and the excess liquid is drained off. This excess liquid carries away with it much of

31
the impurities and color compounds in the fat, to leave a purer, whiter soap, and with practically all
the glycerine removed. The hot, soft soap is then pumped into a mold. The spent hydroxide solution
is processed for recovery of glycerine.

Molds

Logs of soap after demolding.

Many commercially available soap molds are made of silicone or various types of plastic, although
many soapmaking hobbyists may use cardboard boxes lined with a plastic film. Wooden molds,
unlined or lined with silicone sleeves, are also readily available to the general public. Soaps can be
made in long bars that are cut into individual portions, or cast into individual molds.

Purification and finishing

In the fully boiled process on an industrial scale, the soap is further purified to remove any
excess sodium hydroxide, glycerol, and other impurities, color compounds, etc. These components
are removed by boiling the crude soap curds in water and then precipitating the soap with salt.

At this stage, the soap still contains too much water, which has to be removed. This was
traditionally done on chill rolls, which produced the soap flakes commonly used in the 1940s and
1950s. This process was superseded by spray dryers and then by vacuum dryers.

The dry soap (about 6–12% moisture) is then compacted into small pellets or noodles. These pellets
or noodles are then ready for soap finishing, the process of converting raw soap pellets into a
saleable product, usually bars.

Soap pellets are combined with fragrances and other materials and blended to homogeneity in
an amalgamator (mixer). The mass is then discharged from the mixer into a refiner, which, by
means of an auger, forces the soap through a fine wire screen. From the refiner, the soap passes
over a roller mill (French milling or hard milling) in a manner similar to calendering paper or
plastic or to making chocolate liquor. The soap is then passed through one or more additional
refiners to further plasticize the soap mass. Immediately before extrusion, the mass is passed
through a vacuum chamber to remove any trapped air. It is then extruded into a long log or blank,

32
cut to convenient lengths, passed through a metal detector, and then stamped into shape in
refrigerated tools. The pressed bars are packaged in many ways.

Sand or pumice may be added to produce a scouring soap. The scouring agents serve to remove
dead cells from the skin surface being cleaned. This process is called exfoliation. Many newer
materials that are effective, yet do not have the sharp edges and poor particle size distribution of
pumice, are used for exfoliating soaps.

To make antibacterial soap, compounds such as triclosan or triclocarban can be added. There is
some concern that use of antibacterial soaps and other products might encourage antibiotic
resistance in microorganisms.

33
1 LUX

LUX is a global brand developed by Unilever. The range of products includes beauty soaps, shower
gels, bath additives, hair shampoos and conditioners. Lux started as “Sunlight Flakes” laundry
soap in 1899.

In 1925, it became the first mass-market toilet soap in the world. It is noted as a brand that
pioneered female celebrity endorsements.

As of 2009, Lux revenue was estimated at €1 billion, with market shares spread out to more than
100 countries around the globe.

Today, Lux is the market leader in countries like India, Pakistan, Brazil, Thailand and South
Africa[1]

Developed by Unilever, Lux (soap) is now headquartered in Singapore.

HISTORY

Lux Print ads - Early 20s

The brand was founded by the Lever Brothers in 1899 and now known as Unilever.[2] The name
changed from “Sunlight Flakes” to “Lux” in 1900, a Latin word for “light” and suggestive of
“luxury.”

Lux toilet soap was launched in the United States in 1925 and in the United Kingdom in 1928.
Subsequently, Lux soap has been marketed in several forms, including handwash, shower gel and
cream bath soap.

34
Lux beginnings

Beginnings

Lux’s early advertising campaigns aimed to educate users about its credentials as a laundry product
and appeared in magazines such as Ladies Home Journal. By the early 1920s, it was a hugely
successful brand and in 1924, the Lever Brothers conducted a contest that led them to a very
interesting finding: women were using Lux as pud soaps.

Lux Building beauty soap credentials

Building beauty soap credentials

Introduced in the United States in 1924, Lux became the world’s first mass market toilet soap with
the tagline “made as fine as French Soap”. In the first two years of launch, Lux concentrated on
building its beauty soap credentials. Advertisements offered consumers “a beauty soap made in the
French method” at an affordable price, with the promise of smooth skin.

Made with fine-texture, rich in fragrance, and manufactured using a method created in France, the
first Lux toilet soap was sold for 10 cents apiece.

35
Lux 9 out of 10 stars use Lux

1928–1940: 9 out of 10 stars

This era saw key launches of LUX in the UK, India, Argentina and Thailand. The brand
concentrated on building its association with the increasingly popular movie world, focusing more
on movie stars and their roles rather than on the product. In 1929, advertising featured 26 of the
biggest female stars of the day, creating a huge impact among the movie-loving target audience.
This was followed by Hollywood directors talking about the importance of smooth and youthful
skin. This pioneered the trend of celebrity product endorsements.

In 1931, Lux launched a campaign with older stars, “I am over 31”. The series of print ads had stars
talking about preserving youthful skin. Lux also launched campaigns featuring interviews with stars
and close-ups of stars, bringing to life the ‘9 out of 10’ idea

Lux Romancing the consumer, Deanna Durbin

1940s and 1950s: Romancing the consumer

Using movie star as role models, Lux’s strategy was to build relevance by looking at beauty through
the consumer’s eyes. While still retaining the star element, the focus shifted to the consumer and the
role of the brand in her life.

Advertising commercials showed ordinary looking women with direct references to leading ladies
from the movies such as Deanna Durbin and Deborah Kerr.

36
Lux Romancing the brand

1960s: Romancing the brand

In the 1960s, advertising was shifted to product stories and the romanticizing of brand through its
“sensorial & emotional” dimensions. This was the era of ‘the film star feeling’ and the ‘Golden
Lux’, featuring stars such as Sandra Dee, Diana Rigg and Samantha Eggar.

The bathing ritual, the ‘fantasy’ element that has been the imagery of Lux, was created in this era.
The brand also moved forward with launching LUX in the Middle East, entering a more
conservative market.

1970s: Dimensionalizing beauty

Reflecting the shift in beauty trends in the 1970s, the Lux stars stepped down from their pedestals
and were portrayed as multi-faceted women with natural, wholesome beauty that the ordinary
consumer could relate and aspire to. The executions were more of ‘a day in the life’ of the stars with
focus on their ‘natural beauty’. Stars included Brigitte Bardot and Natalie Wood.

1980s: Owning the category space

Establishing itself as the beauty soap for stars and beautiful women, the 1980s emphasized the
importance of skin care – the first step to beauty. Lux was launched in China at this time. Sophia
Loren, Raquel Welch and Cheryl Ladd were some famous celebrities used during this time.

In India, Bollywood actresses such as Sharmila Tagore, Hema Malini, Parveen


Babi, Sridevi, Madhuri Dixit, Rani Mukerji, Aishwarya Rai, Katrina Kaif, Amisha Patel, Kareena
Kapoor, Asin and Deepika Padukone have endorsed Lux soap.

1990s – early 2000s: Advanced skin benefits

In the 1990s, Lux moved from generic beauty benefits to focus on specific benefits and
transformation. More emphasis on functionality and variant associations with different skin types as

37
well as mention of ingredients. The communication was far more regional specific and localized,
using in Brazil stars like Malu Mader and Debora Bloch.

This period launched product brand extensions Shower Cream and Gels and Lux Super Rich
Shampoo in Japan and China.

Lux Style Awards

Lux Style Awards

In 2002, Pakistan created the Lux Style Awards to celebrate the Pakistani film industry.

2000s: Beyond movie stars

In early 2000, the focus shifted from specific skin benefits to a stronger emotional space. The brand
provided the link between the aspirational role models and real life with the campaign, ‘Lux brings
out the star in you’. The benefit was now more than just beauty, it was also about the confidence
that comes from beautiful skin.

In 2005, Lux encouraged women to celebrate and indulge their femininity with the “Play with
Beauty” philosophy, with stars like Aishwarya Rai. The brand also connected with consumers to
take a more ‘active’ stance on beauty.

From 2008, building off the brand’s root strengths, focus has shifted to beauty (vs. femininity),
appealing to consumers’ fantasies and aspirations. Lux believes that ‘beauty is a female instinct that
shouldn’t be denied’ and showcases the pleasure that every woman enjoys from using her beauty,
encapsulating that idea in a simple phrase: Declare your beauty.

Today, Lux products are manufactured at 71 locations with more than 2000 suppliers and associates
providing the raw materials. It has key markets in the developing countries like Brazil, Pakistan,
China, Bangladesh and South Africa, and is a market leader in for soap bars in India, Pakistan,
Brazil, Saudi Arabia, Bangladesh, Thailand and Vietnam

38
2 DOVE

Dove is a personal care brand owned by Unilever originating in the United Kingdom. Dove
products are manufactured
in Argentina, Australia, Brazil, Canada, China, Germany, India, Indonesia, Israel, Ireland, Mexico,
Netherlands, Pakistan, Philippines, Poland, South Africa, Thailand, Turkey, and United States. The
products are sold in more than 80 countries and are offered for both women and men. Dove's logo is
a silhouette profile of the brand's namesake bird.

Vincent Lamberti was granted the original patents related to the manufacturing of Dove in the
1950s while he worked for the Lever brothers.

RANGE OF PRODUCTS

Dove Shampoo and Conditioner

Products include: antiperspirants/deodorants, body washes, beauty bars, lotions/moisturizers, hair


care, and facial care products. Dove is primarily made from synthetic surfactants, vegetable oils
(such as palm kernel) and salts of animal fats (tallow). In some countries Dove is derived
from tallow and for this reason it is not considered vegan, unlike vegetable oil based soAps.

Unilever launched a men's toiletries range in 2010, branded "Dove Men + Care".

Dove Campaign for Real Beauty

Main article: Dove Campaign for Real Beauty

In 2004, Dove began its Campaign for Real Beauty, followed by the creation of the Dove Self-
Esteem Fund in 2006 by Geyner Andres Gaona. It purports to be "an agent of change to educate and
inspire girls on a wider definition of beauty and to make them feel more confident about
39
themselves". Dove have created a number of largely online-only short films,
including Daughters (which was also broadcast during the Super Bowl XL), Evolution (which won
two awards at the Cannes Lions International Advertising Festival), Onslaught and Amy.

The campaign has been criticized as hypocritical in light of the highly sexualized images of women
presented in the advertising of Axe, which like Dove is produced by Unilever.

HISTORY
2010–2014
On 9 August 2010 Unilever signed an asset purchase agreement with the Norwegian dairy group
TINE, to acquire the activities of Diplom-Is in Denmark. On 24 September 2010 Unilever
announced that it had entered into a definitive agreement to sell its consumer tomato products
business in Brazil to Cargill. On 27 September 2010 Unilever purchased Alberto-Culver, a maker of
personal care and household products including Simple, VO5, Nexxus, TRESemmé, and Mrs.
Dash, for US$3.7 billion. On 28 September 2010 Unilever and EVGA announced that they had
signed an agreement under which Unilever would acquire EVGA's ice cream brands (amongst
others, Scandal, Variete and Karabola) and distribution network in Greece, for an undisclosed
amount. In February 2011 Unilever announced that it will switch to 100% cage-free eggs for all
products it produces worldwide.

In March 2011 it was announced that Unilever had entered into a binding agreement to sell the
Sanex brand to Colgate-Palmolive for €672 million, and that Unilever would acquire Colgate-
Palmolive's laundry detergent brands in Colombia (Fab, Lavomatic and Vel) for US$215 million.
[44]
In April 2011 Unilever was fined €104 million by the European Commission for establishing a
price-fixing cartel in Europe along with P&G, who was fined €211.2 million, and Henkel (not
fined). Though the fine was set higher at first, it was discounted by 10% after Unilever and P&G
admitted running the cartel. As the provider of the tip-off leading to investigations, Henkel was not
fined. On 24 August 2011 it was announced that Unilever had agreed to sell the Alberto VO5 brand
in the United States and Puerto Rico, and the Rave brand globally, to Brynwood Partners VI L.P.
[46]
On 14 October 2011 it was announced that Unilever had agreed to acquire 82% of the Russia-
based beauty company Kalina.

40
On 27 December 2012 it was announced that Unilever would phase out the use of microplastics in
the form of microbeads in their personal care products by 2015.

In January 2013, Unilever agreed to sell the Skippy peanut butter brand, together with related
manufacturing facilities in Little Rock, Arkansas, United States and Weifang, Shandong, China, to
Hormel Foods for approximately $700 million (£433 million, or approximately €540 million) in
cash. In July 2013 Unilever increased its stake in its Indian unit, Hindustan Unilever, to 67% for
around €2.45 billion. On 12 August 2013 Unilever announced that it had signed an agreement for
the sale of its Wish-Bone and Western dressings brands to Pinnacle Foods Inc. for a total cash
consideration of approximately US$580 million, subject to regulatory approval. On 6 September
2013 Unilever entered into a definitive agreement to acquire the premium Australian tea brand T2.

On 21 February 2014 Unilever signed a definitive agreement for the sale of its meat snacks
business, including Peperami (UK/Ireland) and BIFI (continental Europe) to Jack Link's, for an
undisclosed amount. In March 2014 Unilever agreed to acquire a majority stake in the China-based
water purification company Qinyuan, which makes water purifiers, drinking water equipment and
water treatment membranes, for an undisclosed price. On 22 May 2014 the company announced it
had sold its North America pasta sauces business including the Ragú and Bertolli brands to
Japanese company Mizkan in a deal worth $2.15 billion. On 10 July 2014. Unilever announced that
it had sold its Slim-Fast brand to Kainos Capital, yet retained a minority stake in the business. On 2
December 2014, Unilever announced that it had acquired Talenti Gelato & Sorbetto: Minneapolis-
based Talenti, which was founded in 2003, had grown into the best-selling packaged gelato in the
United States. On 22 December 2014, Unilever announced the purchase of the Camay brand
globally and the Zest brand outside of North America and the Caribbean from Procter & Gamble.

Hampton Creek lawsuit

In November 2014, Unilever was the subject of a media backlash due to its lawsuit against rival
Hampton Creek. In its suit, Unilever revealed that Hampton Creek is "seizing market share" and the
losses are causing Unilever "irreparable harm." Unilever used standard of identity regulations in
claiming that Hampton Creek's "Just Mayo" products are falsely advertised because they don't
contain eggs.[63]

The Washington Post headline on the suit read, "Big Food's Weird War Over The Meaning of
Mayonnaise." The Los Angeles Times began its story with "Big Tobacco, Big Oil, now Big Mayo?"

41
A Wall Street Journal writer described that with "Giant corporation generates huge quantities of free
advertising and brand equity for tiny rival by suing it."[66]

Eat Drink Politics headlined the controversy with "Unilever's Bullying Backfires, Boosts Hampton
Creek. Negative media coverage of Big Mayo lawsuit goes viral in case study of PR blunder".[61]

2015–present

In March 2015, Unilever confirmed it had reached an agreement to acquire REN Skincare, a British
niche skincare brand. This was followed in May 2015 by the acquisition of prestige skincare brand
Kate Somerville Skincare LLC.

In July 2015, the company separated its spreads business, including its Flora and I Can't Believe It's
Not Butter! brands, into a standalone entity named Unilever Baking, Cooking and Spreading. The
separation was first announced in December 2014 and was made in response to declining
worldwide sales in that product category.

In October 2015, Unilever agreed to acquire the Italian premium ice cream maker GROM for an
undisclosed fee.

In July 2016, Unilever bought the US start-up Dollar Shave Club for a reported $1bn (£764m) in
cash to compete in the male grooming market.

In September Unilever acquired Seventh Generation Inc. for $700 million.

On February 17, 2017, significantly smaller Kraft Heinz made a $143 billion bid for food and
consumer products giant Unilever The deal was declined by Unilever and further abandoned on
February 19 when UK Prime Minister Theresa May had ordered a scrutiny of the deal

42
3. DETTOL

Ditto EST le nom commercial dune line de products désinfectants ET antiseptiques liquids ET
solids barbeques par Reckitt Benckiser.

Antiseptique liquid

Composition

L'ingrédient active qui definite as propriety antiseptique EST UN compose critique aromatique
connu soups le nom de chloroxylénol (C8H9ClO). Coe corposant represented 4, 8 % du mélange
total de Ditto liquid; ill est. disso us dams UN mélange d'huile de pin, d'isopropanol, de savon
d'huile de ricin, de caramel ET dead, qui degage one odder tress caractéristique

Le product liquide traditional EST de cooler jaunt Clair, mains deviant blank latex après dilution
dams’ lea. En effete, plusieurs des ingredients extant insolubles dams’ lea, Ditto product one
emulsion Blanche des gouttelettes d'huile one foes dilute.

Utilization

Le Ditto EST utilize come désinfectant manager, our pour la sterilization du materiel medical

Le mélange dilute peat ere utilize come antiseptique pour nattier les plays. IL EST parfaits utilize
pour traitor lance, mains cite indication nest pas reconnect par la Food and Drug Administration. Le
Principe active (le chloroxylénol) EST abuse commercialize soups d’êtres norms, notamment pour
le treatment du pied d'athlète

43
Efficacies

Le Ditto a UN large specter: ill EST efficacy contra les batteries (Gram negative ET positif), les
champignons, les moisissures ET peat tuer jusqu'à 98 % des germs en 15 seconds

Cat antiseptique bon marched est. tress utilize en Index, our ill est classed en 48e position dams le
rapport de conveyance dams les marquees (The Brand Trust Report) de 2011 . IL a fait l'objet dune
evaluation en milieu hospitalize, confluent à son efficacies pour mutant quail so it effectivement
utilize aux concentrations préconisées.

EN Australia, le Ditto sets reveled tress efficacy pour latter contra la proliferation du crapaud baffle,
one space introduite ddam’sles plantations de canne à Sucre ET revenue invasive. Toutefois en
raison du prejudice potential pour les auras specs de la fauna australienne, son utilisation à cite fin a
tee interdicted par le ministered de l'Environnement ET de la conservation en 2011

Toxicity

Bien queue repute non dangerous pour l'homme lorsqu'il est dilute, le Ditto est signaled come
irritant pour les you ; non dilute, le product est sans danger pour la pea, mains irritant pour les
voices respirators et pour le tube digestive.

De seriousness complications respirators not tee repartees dams 7 à 8 % des caps digestion, entrain
ant parfaits la mort.

En may 2007, UN Britannique de 42 an EST decade dune sure position chromium au Ditto.
L'enquête nab pas permits de determiner is la cause du daces teat l'inhalation our l'ingestion du
produit8.

Auras product

La game actually Ditto comported abuse d’êtres products antiseptiques don’t la composition EST
tress different ET quail ne fault pas confounder avec le product d'origine. On trove anise, entre
auras products, du savor liquid antibacterial, des lunettes antibactériennes ET one solution pour
pulverization butane.

44
Composition

Le Principe active du savor antibacterial liquid Ditto et de la solution pour pulverization butane
DettolPro est. le chlorure de benzalkonium, don’t ills se component à respectivement 0,13% 9,10 et
0,20%11.

Les lunettes jetables Ditto continent regalement du chlorure de benzalkonium [reef. necessaries].

Cues products continent en outré:

 Ditto savor antibacterial liquid: Chloride de cetrimonium, N,N-bus(2-


hydroxyethyl)octanamide, Amines, C10-16-alkyldimethyl, and N-oxides.
 Ditto solution pours pulverization butane : Propylene glycol, phosphate monosodium
dehydrate, phosphate disodium dodécahydraté, partum de pin, edentate disodium ET eau
purified.

Toxicity

Le chloride de benzalkonium est. hutment toxique pour les poisons (CL50 = 280 go air/L), tress
toxique pour les inverters aquatiques (CL50 = 5,9 go air/L), modérément toxique pour les oiseaux
(DL50 = 136 mg per kg de pods corporal), et légèrement toxique pour les mummifies (DL 50 = 430
mg/kg pc).

Marketing

La society EST critique dams les pays Anglo-Saxons, sure de tress nombreux blogs ET sites de
consummators, qui judgment queue les arguments de vented gene rent one peur-panique des
microbes ET queue lung des conditionnements, permitting la distribution du product sans contact
avec son emblaze, EST particulièrement inutile

45
RESEARCH METHODOLOGY

When we talk of research methodology, we not only talk of the research methods but also the
comparison of the logic behind the methods, we used in this context of our research study and
explain why we are using a particular method or technique and why using the other. Research
methodology is a way to systematically solve the research problem. It may be understood as a
science of studying how research is done systematically. In this, we study the various steps that are
generally adopted by researcher in studying his research problem along with the logic behind them.
“The present study is based upon the case study method of research to investigate procedures at
-micro level”.
As the study is analyzing probing in nature, thus, entirely based on the secondary data gathered
through the annual reports of the industry. Therefore it provides a historical perspective of
decisions.

OBJECTIVES OF THE STUDY

 To study the capital budgeting of selecting companies.

 To study the technique of capital budgeting for decision- making.

 To measure the present value of rupee invested..

 To make suggestion if any for improving the financial position if the company.

 To understand the practical usage of capital budgeting techniques.

 To understand the nature of risk and uncertainty.

46
SCOPE OF THE STUDY

 The data of study of project collected of investor or capital structure may not applicable in
all the situations.
 The study of capital structure analysis of company financial position may be affected or not.
 The calculations and methods adopted in my study may be carried an appropriately.
 Due to time constant of 45 days, the data of the study may on way net present overall view
of the capital structure.
 It is dipped to judge the results-valve due to the change market valves of the firm.

RESEARCH DESIGN

Research design involves defining the research problem, determining how to collect the data and
from whom, establishing the way the data will be analyzed estimating costs and the preparation of
the research approach. For this study, descriptive research was selected.

Types of Research

Along with this there may be 3 type of research methodology these are:-

 Exploratory Research
 Descriptive Research

 Casual Research

Descriptive Research

Descriptive research is used when the objective is to provide a systematic description that is as
factual and accurate as possible. It provides the number of times something occurs. Two most
commonly types of descriptive research design are: Observation and Survey.

“My research is based on the descriptive research.”

47
DATA COLLECTION
For achieving the specific objectives of this study, data were gathered from both primary and
secondary sources.

PRIMARY SOURCES
 Direct conversation with the respective officers of the Departments.

 Face to face conversation with the employees.

 Employee’s opinion collected through Questionnaire.

 Observation of the financial activities.

SECONDARY SOURCES
 Different Types of brochures.

 Annual performance Financial forms of SOAP INDUSTRY.

 I used secondary data for purpose of my project I used various sources like journals,
newspapers and various networking websites.

Method Of Data Analysis


Data analysis is done with the help of tables, Graphs and Pie Charts.

48
LIMITATIONS OF THE STUDY

 Lack of time is the first limiting factor, i.e., time was not sufficient to make the study
independently regarding Capital Budgeting in SOAP INDUSTRY.
\
 The busy schedule of the officials in the SOAP INDUSTRY is another limiting factor. Due
to the busy schedule officials restricted me to collect the complete information about
organization.

 Non-availability of confidential financial data.

 The study is conducted in a short period, which was not detailed in all aspects.

 All the techniques of capital budgeting are not used in SOAP INDUSTRY. Therefore it
was possible to explain only few methods of capital budgeting.

49
DATA ANALYSIS
DATA ANALYSIS
Data analysis is the process of systematically applying statistical and logical technique to describe
And illustrate, condense and recap and evaluate data. The process of evaluating data using
analytical and logical reasoning to examine each component data provide this form of analysis just
one of the many steps that must be completed when conducting a research experiment data from
various source is gathered and then analyses reviewed and then analyses to form some short of
finding or conclusion.

INTERPRETATION
Interpretation is act of explaining reframing or otherwise showing your on understanding of
something a person who translate one language into another is called an interpretation because they
are explaining but a person is saying to someone who doesn’t someone interpretation request to
understand the piece of music language or idea and then give your explanation of it.

NET PRESENT VALUE:

50
Year 2015-2016

PARTICULARS LUX(IN LAKHS) DOVE(IN LAKHS) DETTOL(IN LAKHS)


CASH INFLOWS 20,89,775.00 25,43,152.00 13,25,532.00
DISCOUNT 61323 11300 14522
PRESENT VALUE OF 60000 14565 21453
CASH FLOWS

P.V. of Cash Inflows


PI = ---------------------------
Initial Cash outlays

2015-2016

Interpretation:
1. The Net Present Value is the difference between the “Present value of cash inflows” and
“Present value of cash outflows.

2. DETTOL has higher NPV than LUX and DOVE.

PROFITABILITY INDEX (P.I):

51
YEAR 2015-2016
PARTICULARS LUX(IN LAKHS) DOVE(IN LAKHS) DETTOL(IN LAKHS)
INVESTMENT 20,89,775.00 29,45,083.00 26,67,441.00
CASH IN FLOWS 22152 26232 24522
CASH OUT FLOWS 23224 18565 11453

2015-2016
P.V. of Cash Inflows
PI = ---------------------------
Initial Cash outlays
Interpretation:

1. Dove have higher cash inflow than Lux and Dettol .


2. Dove also enjoying higher investment than Lux and Dettol.
3. Lux have higher out flow of cash than dove and Dettol

PAY BACK PERIOD;

52
YEAR 2016
PARTICULARS LUX(IN LAKHS) DOVE(IN LAKHS) DETTOL(IN LAKHS)
INVESTMENT 500000 300000 600000
CASH IN FLOWS 52152 56232 44522
CASH OUT FLOWS 33224 58565 31453

Initial Investments
Pay Back Period = ---------------------------
Annual Cash inflows

Interpretation:
.

a) Dettol have higher cash inflow than lux and dove .


b) Dettol also enjoying higher investment than lux and dove.
C Dove have higher out flow of cash than dettol and lux

AVERAGE RATE OF RETURN:

YEAR 2015-2016

53
PARTICULARS LUX(IN LAKHS) DOVE(IN LAKHS) DETTOL(IN LAKHS)
INVESTMENT 520000 250000 400000
AVERAGE INCOME 52152 56232 44522
CASH FLOWS 33224 58565 31453
AFTER TAX

Average Income
Average Rate of Return = ----------------------
Average Investments

Interpretation:

a) Lux have higher cash inflow than dettol and dove .


b) Dove also enjoying higher investment than dettol and lux.
C Dove have higher out flow of cash than dettol and lux

5-NET BLOCK AND GROSS FIXED ASSETS

YEAR 2015-2016
PARTICULARS LUX(IN LAKHS) DOVE(INLAKHS) DETTOL(IN LAKHS)
CASH INFLOWS 520861 284738 323083

54
DISCOUNT 22152 56232 24522
PRESENT VALUE OF 63224 68565 51453
CASH FLOWS

2015-2016

Average Income
Average Rate of Return = ----------------------
Average Investments

Interpretations:

a) From 2015-2016 the net block and cash flow is 520861.


b) Where as the discount is been increased in the year 2015-16.

NET WORTH AND NET ASSETS

YEAR 2015-2016
PARTICULARS LUX(IN LAKHS) DOVE(IN LAKHS) DETTOL(IN LAKHS)

55
CASH INFLOWS 440302 315400 229055
DISCOUNT 32152 56232 64522
PRESENT VALUE OF 63224 58565 51453
CASHFLOWS

2015-2016
Interpretations:

a) Lux have higher cash inflow than dettol and dove .


b) Dettol also enjoying higher discount than dove and lux.
c) Lux have higher cashflows than dettol and dove

PROFIT AFTER TAX

PARTICULRS LUX(IN LAKHS) DOVE(IN LAKHS) DETTOL(IN LAKHS)


INVESTMENT 525960 354210 451320
AVERAGE INCOME 32544 24511 25431
PROFIT AFTER TAX 21541 12354 25463

56
2015-2016
Average Income
Average Rate of Return = ----------------------
Average Investments

Interpretations:

1. Lux have higher cash inflow than dettol and dove .


2. Lux also enjoying higher investment than dettol and dove.
3. Dettol have higher out flow of cash than dove and lux

CONCLUSION

57
1. The Net Present Value is the difference between the “Present value of cash inflows” and
“Present value of cash outflows.
2. DETTOL has higher NPV than LUX and DOVE.
3. Dove have higher cash inflow than lux and dettol .
4. Dove also enjoying higher investment than lux and dettol.
5. lux have higher out flow of cash than dove and dettol
6. Lux have higher cash inflow than dettol and dove .
7. Lux also enjoying higher investment than dettol and dove.
8. Dettol have higher out flow of cash than dove and lux
9. Lux have higher cash inflow than dettol and dove .
10. Dettol also enjoying higher investment than dove and lux.
11. Lux have higher out flow of cash than dettol and dove

SUGGESTIONS

 The Corporate mission of SOAP INDUSTRY is to make available reliable and quality
power in increasingly large quantities. The company will spear head the process of

58
accelerated development of the power sector by expeditiously planning, implementing
power project and operating power stations economically and efficiently.

 As in project implementation, the station continued to excel in power generation with the
power station having reached its first goal of total capacity installation.

 The organization needs the capable personalities as management to lead to organization


successfully. The management makes the plans and implement of these plans. These plans
are expressed in terms of long-term investment decisions.

 The special budgets are rarely used in the organization like long-term budgets, research &
development budget for constancy.

 From the Revenue budget for the year 2013-2014, it is clear that the Actual sales (Rs.
168552.50 lacks) are more than the budgeted or estimated sales (Rs. 164208.54 lacks). It is
a good sign and the overall earnings of the budget indicate high volume over estimated.

 Fuel utilization is perfectly carry out in RSTPS. And Cash from Ash effectively carry out the
job.

 New projects acceptance consider on the basis of Return Benefits. Risk is evaluated while
considering the new projects.

BIBLIOGRAPHY

59
BOOKS:

 Pandey I .M, Financial Management, New Delhi, Vikas Publishing House Private Limited,
1999, 8th Edition, 807-809pp.
 Khan M.Y & Jain P.K, Financial Management, Text Problem & Cases, New Delhi, Tata MC
Graw-Hill, Publishing House Private Limited, 1981, 4th Edition, 27.1-27.8pp.
 Chandna Prasanna (1984): “Financial Management-Theory and Practices.” Tata Mc Graw Hill,
Publishing Company Ltd, New Delhi.

Websites:

www.google.com
www.Soap industry.com
www.yahoofinance,com
www.wikipedia.com
www.facebook.com/bikanofoods
www.bikano.com

ANNEXURE

TRADING & PROFIT & LOSS A/C


SOAP INDUSTRY

60
Balance Sheet of Lux Industries ------------------- in Rs. Cr. -------------------
Mar '16 Mar '15 Mar '14 Mar '13 Mar '12

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 61.30 61.30 5.30 5.30 5.30
Equity Share Capital 5.30 5.30 5.30 5.30 5.30
Preference Share Capital 56.00 56.00 0.00 0.00 0.00
Reserves 173.55 126.63 85.50 55.90 36.85
Networth 234.85 187.93 90.80 61.20 42.15
Secured Loans 135.04 224.82 128.19 143.26 88.89
Unsecured Loans 72.75 54.17 108.54 41.01 42.22
Total Debt 207.79 278.99 236.73 184.27 131.11
Total Liabilities 442.64 466.92 327.53 245.47 173.26
Mar '16 Mar '15 Mar '14 Mar '13 Mar '12

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 57.15 53.18 51.49 41.62 30.82
Less: Accum. Depreciation 19.85 15.80 19.75 14.63 10.43
Net Block 37.30 37.38 31.74 26.99 20.39
Capital Work in Progress 72.37 52.63 20.44 17.59 0.00
Investments 0.08 0.08 0.25 0.25 0.25
Inventories 200.15 188.88 147.83 193.06 99.93
Sundry Debtors 254.64 241.28 191.30 118.18 84.08
Cash and Bank Balance 7.17 41.37 15.10 4.46 34.72
Total Current Assets 461.96 471.53 354.23 315.70 218.73
Loans and Advances 26.85 30.41 25.33 20.22 29.67
Total CA, Loans & Advances 488.81 501.94 379.56 335.92 248.40
Current Liabilities 153.76 120.34 101.81 133.29 91.86
Provisions 2.15 4.75 2.66 1.97 3.92
Total CL & Provisions 155.91 125.09 104.47 135.26 95.78
Net Current Assets 332.90 376.85 275.09 200.66 152.62

442.65 466.94 327.52 245.49 173.26

Total Assets

Contingent Liabilities 3.59 6.64 35.53 31.85 2.42


Book Value (Rs) 354.12 261.22 179.78 121.16 83.45

61
BALANCE SHEET OF DETTOL

Balance Sheet of Hindustan Unilever ------------------- in Rs. Cr. -------------------


Mar '16 Mar '15 Mar '14 Mar '13 Mar '12

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 216.39 216.35 216.27 216.25 216.15
Equity Share Capital 216.39 216.35 216.27 216.25 216.15
Reserves 3,470.23 3,507.76 3,060.11 2,457.10 3,296.11
Networth 3,686.62 3,724.11 3,276.38 2,673.35 3,512.26
Total Liabilities 3,686.62 3,724.11 3,276.38 2,673.35 3,512.26
Mar '16 Mar '15 Mar '14 Mar '13 Mar '12

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 5,077.42 4,430.63 4,162.92 3,868.95 3,564.35
Less: Revaluation Reserves 0.67 0.67 0.67 0.67 0.67
Less: Accum. Depreciation 2,162.69 1,973.10 1,740.86 1,576.05 1,416.88
Net Block 2,914.06 2,456.86 2,421.39 2,292.23 2,146.80
Capital Work in Progress 385.97 479.01 319.78 215.64 215.45
Investments 2,966.55 3,277.93 3,094.12 2,330.66 2,438.21
Inventories 2,528.36 2,602.68 2,747.53 2,526.99 2,516.65
Sundry Debtors 2,758.82 782.94 816.43 833.48 678.99
Cash and Bank Balance 1,064.52 2,537.56 2,220.97 1,707.89 1,830.04
Total Current Assets 6,351.70 5,923.18 5,784.93 5,068.36 5,025.68
Loans and Advances 1,548.08 1,496.41 1,377.51 1,604.91 1,131.46
Total CA, Loans & Advances 7,899.78 7,419.59 7,162.44 6,673.27 6,157.14
Current Liabilities 6,569.88 6,367.06 6,925.65 6,260.09 5,499.42
Provisions 3,909.86 3,542.22 2,795.70 2,578.36 1,945.92
Total CL & Provisions 10,479.74 9,909.28 9,721.35 8,838.45 7,445.34
Net Current Assets -2,579.96 -2,489.69 -2,558.91 -2,165.18 -1,288.20
Total Assets 3,686.62 3,724.11 3,276.38 2,673.35 3,512.26

Contingent Liabilities 1,167.45 1,072.71 991.20 894.21 1,009.23


Book Value (Rs) 17.04 17.21 15.15 12.36 16.25

62
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