International Journal of Scientific Research and Engineering Development

Inventory management is a crucial factor in determining operational efficiency and profitability. This study focuses on Hindustan Unilever Limited (HUL), India’s largest FMCG company, and examines how inventory practices influence financial performance. The research is based on secondary data collected from annual reports of HUL for the period 2021–2025. Analytical tools such as ABC Analysis, Economic Order Quantity (EOQ), Profitability Ratios, and Regression were applied to evaluate efficiency. The ABC analysis identified Caustic Soda as a consistently critical Category A item requiring close monitoring. EOQ analysis highlighted that Caustic Soda carried the highest order quantity, making it essential for cost and inventory control. Profitability ratios indicated that while HUL remains profitable, margins showed slight declines due to rising costs. Return on Assets and Return on Equity, however, reflected an overall positive trend, showcasing efficient use of resources. Regression analysis demonstrated a strong positive correlation between inventory management and profitability, though moderately significant at the 10% level. The findings emphasize that effective inventory management reduces costs, optimizes working capital, and strengthens financial performance. The study concludes that aligning inventory strategies with profitability objectives enables sustainable growth and competitiveness in the FMCG sector.