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A Summer Training Project Report on


STUDY OF FINANCIAL STATEMENT ANALYSIS OF DABUR INDIA LTD.
Submitted towards the partial fulfillment of requirement of MASTER OF BUSINESS ADMINISTRATION Mahamaya Technical University, Noida.

2012-2014

SUBMITTED TO: Mrs. Preeti Assist. Prof. Management Department

SUBMITTED TO:

VENKATESHWARA INSTITUTE OF TECHNOLOGY, MEERUT MAHAMAYA TECHNICAL UNIVERSITY, NOIDA

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To Whom So Ever It May Concern


This is to certify that Rohit Tyagi has prepared a summer training based project report on the title STUDY OF PROMOTIONAL AND MARKETING STRATEGY OF AIRTEL LTD. for the partialfulfillment of Post Graduate Diploma In Marketing Management approved from Mahamaya Technical University, Noida. To the best of our knowledge the matter presented in project report is satisfactory and we wish her success in her future endeavor.

(Head of the Department) Mr. Anurag

(Project Supervisor) Mrs. Preeti

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DECLARATION

I, hereby declare that the research work presented in the summer training based project report entitled, STUDY OF PROMOTIONAL AND MARKETING STRATEGY OF AIRTEL LTD. for the partial fulfillment for the award of MBA from MahamayaTechnical University is based on my original research work. The project report embodies the result of original work and studies carried out by me and the content of the project do not from the basis for the award of any other degree to me or to anybody else.

Date. Place

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SR. NO
1.

PARTICULAR
INTRODUCTION OF FINANCIAL MANAGEMENT.

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6.

2.

CONCEPTUAL FRAMEWORK OF WORKING CAPITAL MANAGEMENT. LITTERARURE REVIEW. RESEARCH METHODOLOGY. ABOUT THE GEAR INDUSTRY. INFORMATION ABOUT THE POWER BUILD LIMITED. ANALYSIS OF OPERATING CYCLE OF POWER BUILD LIMITED. ANALYSIS OF WORKING CAPITAL MANAGEMENT OF POWER BUILD LIMITED FINDINGS. CONCLUSION. BIBLIOGRAPHY. ANNEXURES

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3. 4. 5. 6.

51. 56. 65. 75.

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98. 122. 123. 125. 127.

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Chapter 1

INTRODUCTION
Brief Background
Dr. S.K. Burm an set up Dabur India Limited in 1884 to produce and dispense Ayurvedic medicines. In 1956 Dabur India (Dr. S.K. Burman) Pvt. Ltd became a full fledged company. It is s a leading consumer goods company in India with a turnover of Rs. 2834.11 Crores (FY09) which markets its products in over 60 countries. It has many major products like the Dabur Chyawanprash which enjoys 65% market share, Hajmola tablets which enjoys 75% market share, Dabur honey occupying 75% market share. It has many product lines and many famous brands in each product line. The companys roots in the traditional Ayurvedic medicines give it a very Indian flavor in terms of the products that it launches.
The major groups and subsidiaries of Dabur are: Major strategic business units (SBU) Subsidiary Group companies Dabur International Fem Care Pharma Newu Step down subsidiaries Dabur Nepal Pvt Ltd (Nepal) Dabur Egypt Ltd (Egypt) Asian Consumer Care (Pakistan) African Consumer Care (Nigeria) Naturelle LLC (Ras Al KhaimahUAE) Weikfield International (UAE) Jaquline Inc. (USA) Asian Consumer Care (Bangladesh)

Consumer Care Division (CCD) Consumer Health Division (CHD) International Business Division (IBD)

Page 6 of 93 INTRODUCTION TO DABUR INDIA LIMITED

Dabur India Limited is the fourth largest FMCG Company in India with interests in Health care, Personal care and Food products. Building on a legacy of quality and experience for over 100 years, today Dabur has a turnover of Rs.1536.95 Cr. with powerful brands like Dabur Chyawanprash, Dabur Amla, Vatika, Hajmola and Real.

ORIGIN & GROWTH

The brief history and growth of Dabur India Ltd. in chronological order:

1884 - The birth of Dabur in a small Calcutta pharmacy, where Dr. S. K. Burman launches his mission of making health care products.

1896 - Setting up a manufacturing plant: With the growing popularity of Dabur products, Dr. Burman expands his operations by setting up a manufacturing plant for mass productions of formulations.

Early 1900s - Dabur enters the specialized area of Nature based Ayurvedic Medicines, for which standardized drugs are not available in the market. 1919-The need to develop scientific processes and quality checks for mass production of traditional Ayurvedic medicines leads to establishment of research laboratories.

1920- Dabur expands further with new manufacturing units at Daburgram and Narendrapur. The distribution of Dabur products spreads to other states like Bihar and the North-East.

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1936- Dabur becomes a full-fledged company- Dabur India (Dr. S. K. Burman) Pvt. Ltd. 1972- Daburs operations shift to Delhi. A new manufacturing is set up in temporary premises in Faridabad, on the outskirts of Delhi.

1979- Commercial production starts in the Sahibabad factory of Dabur, one of the largest and best equipped production facilities for Ayurvedic medicines. Launch of full fledged research operations the pioneering areas of healthcare with establishment of the Dabur Research Foundation.

1986- Dabur becomes a Public Limited Company. Dabur India comes into being after reverse merger with Vidogum Limited.

1992- Beginning a new chapter of strategic partnerships with international businesses, Dabur enters into a joint venture with Agrolimen of Spain. This new venture is to manufacture and market confectionary items in India.

1993- Dabur enters a specialized health care area of cancer treatment with its oncology formulation plant at Baddi in Himachal Pradesh.

1994- Dabur India Ltd. raises its first public issue. Due to market confidence in the Company, shares issued at a high premium are over subscribed 21 times.

1995- Extending its global partnerships, Dabur enters into joint ventures with Osem of Israel for food and Bongrain of France for cheese and other dairy products.

1996- For better operation and management, 3 separate divisions created according to their product mixHealth Care Products Division, Family Products Division and Dabur Ayurvedic Specialties Limited.

1997- Dabur enters full scale in the nascent processed foods market with the creation of the Foods Division. Project STARS (Strive to Achieve Record Successes) is initiated to give a jump start to the company and accelerate its growth.

1998- With changing demands of business and to inculcate a spirit of corporate governance, the Burman

Page 8 of 93 family induct professionals to manage the company. For the first tome in the history of Dabur, a nonfamily professional CEO sits at the helm of the Company.

2000- Dabur establishes its market leadership status with a turnover of 1,000 Crores. From a small beginning and upholding the values of its founder, Dabur now enters the august league of large corporate businesses. 2005- Dabur acquires Balsaras hygiene and home product businesses in an Rs 143 crore all-cash deal.

DABUR AT PRESENT

Leading consumer goods company in India with 4th largest turnover of Rs.1536 Crores (FY04). 2 major strategic business units (SBU) - Consumer Care Division (CCD) and Consumer Health Division (CHD). 3 Subsidiary Group companies - Dabur Foods, Dabur Nepal and Dabur International and 3 step down subsidiaries of Dabur International - Asian Consumer Care in Bangladesh, African Consumer Care in Nigeria and Dabur Egypt.

13 ultra-modern manufacturing units spread around the globe. Products marketed in over 50 countries. Wide and deep market penetration with 47 C&F agents, more than 5000 distributors and over 1.5 million retail outlets all over India

Consumer Care Division: dealing with FMCG Products relating to Personal Care and Health Care. Leading brands Dabur - The Health Care Brand Vatika-Personal Care Brand Anmol- Value for Money Brand Hajmola- Tasty Digestive Brand and Dabur Amla, Chyawanprash and Lal Dant Manjan with Rs.100

Page 9 of 93 Crore turnover each Vatika Hair Oil & Shampoo the high growth brand Strategic positioning of Honey as food product, leading to market leadership (over 40%) in branded honey market Dabur Chyawanprash the largest selling Ayurvedic medicine with over 65% market share. Leader in herbal digestives with 90% market share Hajmola tablets in command with 75% market share of digestive tablets category Dabur Lal Tail tops baby massage oil market with 35% of total share Real juices enjoy a market share of over 55% in fruit juice category.

Consumer Health Division: dealing with classical Ayurvedic medicines.

Page 10 of 93 Dabur Segments / Brands: Hair oils

Dabur Amla

Vatika

Health supplements

Chyawanprash

Honey

Glucose

Foods

Real

Activ

Twist

Toothpastes

Red

Babool

Meswak

Promise

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Toothpowders

Lal Dant Manjan

Digestives

Hajmola

Pudin Hara

Baby & skin care

Lal Tail

Gulabari

Board of Directors:

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Dr. Anand Burman Chairman Mr. Amit Burman Vice-Chairman Mr. P D. Narang Director Mr. Sunil Duggal Director Mr. Pradip Burman Director Mr. Mohit Burman Director Mr. Bert Peterson Director Dr. S. Narayan Director Mr. Analjit Singh Director Mr. R C Bhargava Director Mr. P N Vijay Director Mr A K Jain Addl. GM (Finance) & Company Secretary Auditors M/s G. Basu & Co. Chartered Accountants Internal Auditors Price Waterhouse Coopers Pvt. Ltd.

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Timeline of major milestones in the history of Dabur


1884 1936 1986 1996 2000 2009 Dr. Burman set up Dabur in 1884 to produce and dispense Ayurvedic medicines. Dabur India (Dr. S.K. Burman) Pvt. Ltd. : It became a full fledged company Public Limited Company 3 separate divisions Turnover of Rs.1,000 crore Acquires Fem Care Pharma

Key Product Lines


Health Care Dabur Chyawanprash Dabur ChyawanPrakash Dabur Chyawan Junior Dabur Honey Dabur Glucose-D Personal Care Hair Care Oil Amla Hair Oil Amla Flower Magic Vatika Enriched Coconut Hair Oil Vatika Enriched Almond Hair Oil Hair Care Shampoo Vatika Smooth and Silky Shampoo Vatika Root Strengthening Shampoo Vatica Black Shine Shampoo Vatika Dandruff Control Shampoo Dabur Total Protect Shampoo Vatika Smooth & Silky Conditioner Vatika Root Strengthening Conditioner Oral Care Dabur Red Toothpaste Babool Toothpaste Meswak Toothpaste Promise Toothpaste Babool Mint Fresh Gel

Skin Care Uveda Complete Fairness Cream Uveda Moisturising Face Wash Uveda Clarifying Face Wash Gulabari Rose Water Gulabari Face Freshener Gulabari Moisturising Cream Gulabari Moisturising Lotion

Consumer Health Pudin Hara Active Antacid Honitus Cough Syrup Honitus Lozenges Dabur Badam Oil Super Thanda Oil Shilajit Gold Dabur Lal Tail Dabur Janma Ghunti Dabur Gripe Water Active Blood Purifier Dabur Balm Strong

Foods Real Real Activ Burrst Hommade Lemoneez Capsico

Home Care Dazzl Sanifresh Shine Odomos Odonil Odopic

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List of people in board of directors


Chairman: Vice Chairman: Whole Time Directors Independent Directors Non Whole Time Promoters, directors Dr. Anand Burman Mr. Amit Burman Mr. P.D. Narang, Mr. Sunil Duggal and Mr. Pradip Burman Mr. Bert Paterson, Mr. P. N. Vijay, Mr. R C Bhargava, Dr. S. Narayan and Mr. Analjit Singh Mr. Mohit Burman

Shareholding Pattern
The Details of the shareholding pattern are as under: As on March 31, 2010 % of Share No. of Shares Holders Held 0.03% 0.11% 0.06% 0.03% 2.64% 1.24% 95.89% 100% 611834473 74278471 31121682 88968460 4260203 5011529 49601431 865076249

Particulars

Directors, promoters and family members FIIs Mutual Funds Insurance companies NRIs Corporates Individuals Total

No. of share Holders 28 118 64 27 2764 1303 100492 104796

% ofShare Holding 70.73% 8.59% 3.60% 10.28% 0.49% 0.58% 5.73% 100.00%

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ENCLOSURE ON THE OPERATING PERFORMANCE OF THE COMPANY


Market Share
The below mentioned brands contribute a value close to $8Bn to Dabur.

Brands Honey Chyawanprash Hajmola Real Vatika hair Oil herbal Digestives

Market Share 75% 65% 75% 40% 8.5% 90%

Vatika Shampoo has been the fastest selling shampoo brand in India for three years in a row. About 2.5 crore Hajmola tablets are consumed in India every day

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Key Raw Materials


Raw material Sugar & Molasses Herbs,Jari Booti & Raw Madhu Vegetables Oils Chemicals Compounds & Perfumery 164.2 149.56 110.51 84.79 2010-11 31.1 140.17 122.52 2009-10 23.88 111.12 95.95 2008-09 28.21 72.69 83.88 2007-08 26.11 71.45 52.94

Key raw materials being used are Herbs, Jari booti and Raw Madhu that signifies the fact that most of the Dabur products are naturally made and are good for skin and health. Chemicals and perfumeries also form a vital part of the raw materials. The consumption of raw material has increased over the past four years signifying the increased sales and hence the increased profits of the products and the company.

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Sales Mix
Segment Hair Oils Tooth Powders & Paste Chywanprash Honey. Hajmola. Fruits/Nector/Drinks Asava-Arishta Vegetable Pastes 2010 504.84 329.7 194.3 116.88 90.51 76.13 56.4 6 2009 375.7 300.73 179.47 106.61 71.49 66.34 48.97 5.15 2008 306.76 195.75 171.91 85.56 78.08 Nil 46.95 Nil 2007 268.1 63.19 150.07 78.14 72.65 Nil 53.16 Nil

Important Inferences: All the segments have been showing constant growth over the past 4 years. The main highlight has been the Tooth Powder and paste segment which has shown a growth of 422% in the past 4 years. This has been the mainstay of the Overall sales. Major Contributor to Dabur sales has been Hair Oils. Real Juice and vegetable pastes- These have been the newest ventures wherein the company has invested and the segment has been doing well since its formation.

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Sales- Domestic or Export


Year 2007 2008 2009 2010 Domestic Sales 132,454.64 170,549.27 201,293.09 230,162.64 Export Sales 4,513.65 7,253.16 10,485.77 12,205.25

Most of the consumption of Dabur is in-house, that is Domestic and only around 4.3% of the produce is exported. The average growth rate over the four years is more for exports (41%) as compared to domestic (20%). So the company is steadily increasing its exports but there is still a long way to go before Dabur can make a name for itself in the international market. The domestic growth rate of sales has reduced from 29% in FY2006 to 14% in FY2008. This may be due to the tough competition in the domestic market and the economic downturn.

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Peer Comparison
RONW

RONW Dabur HUL ITC Nestle 2010 51.2% 116.7% 25.9% 112.8% 2009 61.6% 115.5% 25.9% 98.9% 2008 65.8% 56.5% 25.2% 81.0% 2007 45.4% 58.7% 23.3% 87.4%

140.0% 120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Dabur HUL ITC Nestle

The net worth of Dabur is increasing at a faster rate as compared to the net profit and therefore the decline in the past few years. That is, the company is giving lesser returns with the increase in capital investment by the owners of the company.

Page 20 of 93 Profit Margins

Dabur HUL ITC Nestle

2010 15.6% 12.2% 22.4% 12.4%

Profit Margins 2009 15.2% 12.6% 22.2% 11.8%

2008 14.2% 12.7% 23.3% 11.2%

2007 13.8% 12.2% 24.0% 12.5%

Dabur is doing better than most peers as far as the Profit margins are concerned. Dabur has shown a steady upward trend in the past 4 years where its peers have shown a reduction in atleast one of the four years.
30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0%

Dabur HUL ITC Nestle

Page 21 of 93 Return on Assets

Dabur HUL ITC Nestle

2010 41.2% 96.7% 24.3% 104.5%

Return on Assets 2009 55.3% 107.8% 24.3% 92.0%

2008 56.5% 55.1% 24.0% 77.8%

2007 38.9% 57.3% 21.6% 84.0%

120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0%

Dabur HUL ITC Nestle

The figures may be misleading. It shows a downward trend over the years. That is because the company is investing more in the long term assets rather than going for short term investment. It can be said that the results will reflect the same in the next few year

Trend Analysis

(On Next Page)

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Ten Year figures at a Glance (2000-2010)


Sales & Other Income Index PBDT Index PBT Index PAT Index Equity Paid-Up Index Gross Block Index Net Working Capital ( Incl. Def. Tax) Index Current Assets ( Incl. Def. Tax) Index Current Liabilities and Provisions ( Incl. Def. Tax) Index Total Assets/Liabilities (excl Reval & W.off) Index Net Worth Index Capital Employed Index Book Value (Unit Curr) Index Market Capitalisation 2000 1044.48 1.00 102.59 1.00 81.29 1.00 77.66 1.00 28.52 1.00 359.21 1.00 304.01 1.00 412.23 1.00 108.22 1.00 710.24 1.00 320.04 1.00 609.06 1.00 11.22 1.00 2336.50 2001 1130.43 1.08 107.62 1.05 85.16 1.05 77.63 1.00 28.52 1.00 362.12 1.01 235.32 0.77 392.85 0.95 157.53 1.46 708.45 1.00 362.20 1.13 558.30 0.92 12.70 1.13 1736.87 2002 1119.32 1.07 96.50 0.94 75.51 0.93 65.03 0.84 28.56 1.00 376.50 1.05 242.32 0.80 407.67 0.99 165.35 1.53 775.41 1.09 400.37 1.25 613.54 1.01 14.02 1.25 1587.94 2003 1168.54 1.12 117.58 1.15 95.54 1.18 84.92 1.09 28.52 1.00 297.18 0.83 190.31 0.63 406.45 0.99 216.14 2.00 734.85 1.03 411.10 1.28 521.11 0.86 14.38 1.28 1026.02 2004 1094.31 1.05 129.19 1.26 113.44 1.40 101.20 1.30 28.52 1.00 268.16 0.75 -24.30 -0.08 219.89 0.53 244.19 2.26 546.06 0.77 268.65 0.84 308.46 0.51 9.39 0.84 2251.75 2005 1238.20 1.19 182.11 1.78 165.01 2.03 148.01 1.91 28.51 1.00 317.46 0.88 -81.66 -0.27 253.35 0.61 335.01 3.10 715.90 1.01 338.07 1.06 386.70 0.63 11.80 1.05 3179.04 2006 1365.13 1.31 233.91 2.28 214.86 2.64 189.08 2.43 28.51 1.00 328.23 0.91 -38.35 -0.13 285.68 0.69 324.03 2.99 759.60 1.07 447.87 1.40 468.44 0.77 7.81 0.70 7106.05 2007 1619.74 1.55 306.20 2.98 284.22 3.50 252.08 3.25 28.51 1.00 404.30 1.13 19.06 0.06 397.78 0.96 378.72 3.50 782.17 1.10 403.19 1.26 423.27 0.69 4.67 0.42 8193.24 2009 2112.76 2.02 390.92 3.81 365.17 4.49 316.77 4.08 28.50 1.00 467.94 1.30 -33.09 -0.11 576.82 1.40 609.91 5.64 1141.62 1.61 528.32 1.65 545.66 0.90 6.11 0.54 9495.36 2010 2439.22 2.34 452.42 4.41 425.00 5.23 373.55 4.81 28.48 1.00 518.77 1.44 71.61 0.24 768.57 1.86 696.96 6.44 1565.50 2.20 738.20 2.31 877.18 1.44 8.53 0.76 8538.54

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Index EPS (annualised) (Unit Curr) Index Dividend (annualised%) Payout (%) Payout (%) ROG-Net Worth (%) ROG-Net Sales (%)

1.00 2.61 1.00 100.00 38.26 60.99 22.38 13.97

0.74 2.62 1.00 100.00 38.17 49.01 13.17 10.67

0.68 2.23 0.85 50.00 22.45 22.45 10.54 -0.41

0.44 2.86 1.09 140.00 49.01 38.17 2.68 5.11

0.96 3.28 1.26 200.00 60.99 38.26 -34.65 -6.59

1.36 4.83 1.85 250.00 51.79 29.31 25.84 13.27

3.04 3.05 1.17 250.00 57.32 23.00 32.48 9.51

3.51 2.72 1.04 175.00 51.98 19.93 -9.98 19.19

4.06 3.41 1.31 150.00 43.97 24.85 31.04 30.18

3.65 4.02 1.54 175.00 43.53 35.83 39.73 15.01

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Trend in Sales
Over the past 10 years the sales figures have increased by 189%. The growth has been uniform with an exception of one year (2003-04) where the sales dipped. This year also, the sales have increased by 18.3%.

Sales
3000 2500 2000 1500 1000 500 0 Sales

PBT (Profit before Tax)


PBT has shown an upward growth over the past 10 years. It has grown by almost 450%, much more than compared to sales growth. So we can infer that there are major sources of nonoperating income.

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PBT
500 450 400 350 300 250 200 150 100 50 0 PBT

PAT (Profit after Tax)


PAT has also shown an upward trend as it directly follows the PBT figures.

PAT
450 400 350 300 250 200 150 100 50 0 PAT

EPS and Dividend

We can see in the figure that the dividend is dependent on the earnings per share (EPS) of the company. i.e. when EPS increases, the company pays a higher dividend and vice-versa. Initially from 2000 to 2002 the dividend decreased. This was due to a share split in 2000. Then there was

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an increase till 2005, when it again started to decline. This was because the earnings per share had reduced. This year both EPS and Dividend increased. The dividend paid this year was 175% as compared to 150% paid last year.

6 5 4 3 2 1 0 EPS Dividend Index

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OBJECTIVES

The objective of my report is to analyze of financial statements focusing on ratios in Dabur India Ltd. as well as to analyze comparison of financial ratios w.r.t. its competitors for three years. The nature of my research is EXPLORATORY. Its goal is to shed light on the real nature of process. It involves a number of steps: -

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RESEARCH METHODOLOGY
SOURCES OF DATA:

1. Primary Data: Primary data for constructing the research instrument was collected through a customer survey.

2. Secondary data: Resources like Business magazines, Internet and Prowess database were utilized for gathering secondary information. The study was based on data collected from secondary sources. These data comprises of the financial reports of Dabur India Ltd., 2007 TO 2011. These data were obtained from annual reports as well as from the website. Secondary sources consist of: Companys balance sheets of the last three years. Companys income statements of last three years.

The methodologies adopted for calculating different ratios are as per the standard suggested by different cost as well as financial management book.

3. Research methodology Data source: Collection of data from the annual reports of and by the portals and magazines. Research approach: Data can be collected in many ways and I have used the following steps to analyze the data . Collection of information: After the above steps, I have collected all informations from different sources i.e. Annual reports and from the other sources provided by Dabur India Ltd.,

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4. Analysis of Information: This step involves the extractions of findings from the collected data. I drew some facts after analyzing the information. 5. Conclusion and suggestion: As the last step I have mentioned the conclusion and suggestions that are relevant to make the financial statements of Dabur India Ltd. The objective of my report is to analyze of financial statements focusing on ratios in Dabur India Ltd. as well as to analyze comparison of financial ratios w.r.t. its competitors for three years. The nature of my research is EXPLORATORY. Its goal is to shed light on the real nature of process. It involves a number of steps: Define the process and research objective. Develop the research plan: - The second stage of research calls for developing the most efficient plan for gathering the needed information. Designing the research plan calls for decision on data sources and research approach

Data Analysis: - I have used tool i.e. MS EXCEL to analyze the data and draw relevant inferences.

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DATA ANALYSIS FINANCIAL ANALYSIS I: ANALYSIS OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
Analysis of Balance Sheet

Horizontal Balance Sheet (Comparison 2009 and 2010)


2010 (Rs. In lakhs) SOURCES OF FUNDS : Shareholder's Funds Share Capital Reserves Total Total Shareholder's Funds Loan Funds: Secured Loans Unsecured Loans Deferred tax Liability Total Liabilities APPLICATION OF FUNDS : Fixed Assets Gross Block Less : Accumulated Depreciation Net Block Investments Deferred Tax Assets Current Assets, Loans and Advances: Inventories Sundry Debtors Cash and Bank Loans and Advances Total Current Assets 2009 (Rs. In lakhs) Increase/Decrease over 2009 (Rs. In lakhs) %age

8,650.76 65,168.91 73,819.67 825.56 13,071.69 3,048.50 90,765.42

8,640.23 44,192.11 52,832.34 1,644.72 88.97 2,727.97 57,294.00

10.53 20,976.80 20,987.33 (819.16) 12,982.72 320.53 33,471.42

0.12 47.47 39.72 (49.81) 14,592.2 4 11.75 58.42

57,048.09 21,044.98 36,003.11 43,689.59 2,353.09 26,171.64 11,236.01 14,368.48 22,728.33 74,504.46

48,419.78 18,976.77 29,443.01 27,037.13 2,400.74 20,114.69 10,046.43 6,826.46 18,293.75 55,281.33

8,628.31 2,068.21 6,560.10 16,652.46 (47.65) 6,056.95 1,189.58 7,542.02 4,434.58 19,223.13

17.82 10.90 22.28 61.59 (1.98) 30.11 11.84 110.48 24.24 34.77

Page 31 of 93 Less : Current Liabilities and Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets Miscellaneous Expenses not written off TOTAL

35,138.71 31,510.20 66,648.91 7,855.55 864.08 90,765.42

31,722.51 26,540.97 58,263.48 (2,982.15) 1,395.27 57,294.00

3,416.20 4,969.23 8,385.43 10,837.70 (531.19) 33,471.42

10.77 18.72 14.39 (363.42) (38.07) 58.42

Application of Funds Fixed assets of Dabur

Dabur owns fixed assets worth 360.03 crores at depreciated value compared to last years 294.43 crores . Within the fixed assets plant and machinery, that is, assets directly needed for production stands at 133.75 crores i.e. 37% of the total fixed assets. Next is the amount invested in buildings i.e. 117.17 crores. The company has invested substantially higher in buildings. The advance against capital goods worth 591.77 lakhs has been included in the total fixed assets. However this have not been received yet. It may be observed that no depreciation has been provided on freehold land and livestock. The company has almost negligibly increased leasehold land while substantially increasing the freehold land from last year.
Investments FY 08- 270 crores, FY 09- 437 Crores

Daburs investments are more than its fixed assets by almost 76 crores totaling to 436 crores. The total investment is a substantial figure compared to the total asset size. It has invested almost 117 crores in mutual funds while it has invested 21.5 crores in government bonds. Thus it can be said that the co. carries surplus cash in business which it utilizes in investing. The co. believes in investments. The co has also invested almost 87 crores in its subsidiaries.

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Finally the main reason for the 62% increase in its investments from last year is the advance paid against the equity shares of Fem Care Pharma Ltd which Dabur has proposed to acquire. It totals to almost 205 crores. Thus the company has taken a significant step towards expanding its business by taking the decision to acquire to FEM.
Current Assets, loans and advances

The company has reported debtors of 236 crores while the total sales is around 2400 crores. So comparatively it is a smaller picture. Also the debts which are considered doubtful is around 12 crores, which is a small figure compared to total debtors.Also it can be seen that the co. has invested around 100 crores in fixed deposits. Dabur has around 31.5 crores in cash balances. They constitute an insignificant part of the current assets,although they play a crucial role in operations. Loans and advances of Dabur is around 227 crores which includes security deposits with various authorities and advance payment of tax as a major constituent. The debtors which are outstanding for a period exceeding six months are mostly considered doubtful, hence a provision has been made for them. No provision has been made for the debtors for a period of less than six months. In the notes to accounts it has also been stated that In the opinion of Board, the Current Assets, Loans and Advances have realizable value at least equal to the amount at which they are stated. It has also been stated that the Debts due from director/officer of the company is nil.
Miscellaneous Expenditure

It has come down from 13.95 crores to 8.64 crores on account of writing off. The technical knowhow fees has been fully amortised, while the deferred employee compensation under ESOP has also been amortised substantially, therefore bringing down the misc. expenditure.

Page 33 of 93 Current Liabilities and Provisions

In current liabilities, out of 351 crores the sundry creditors for expense forms a major part of 194 crores. The sundry creditors for goods is 108 crores which is very minimum figure compared to purchases and is almost half the amount of debtors. Hence it can be said that the co. likes to make payments to the creditors at the earliest. Out of 315 crores of provisions, 159 crores is for taxation while 86.5 crores is for the dividend proposed. The co also has provisions for corporate tax on proposed dividend, liabilities disputed, Gratuity, Leave Salary. Thus the company has a net asset or net working capital of 78.5 crores which means the company can continue its day to day functions in an efficient manner.
Deferred tax assets and liabilities

The company has shown the deferred tax liability as an independent figure in the sources of funds which amounts to 30.48 crores while it has shown the deferred tax assets in the application of funds which amounts to 23.53 crores. The net deferred tax liability is 6.95 crores.
Sources of Funds Share Capital

Series 1
10000 8000 6000 4000 2000 5733.03 8628.84 8640.23 8650.76

(in lacs)

Page 34 of 93

The authorized share capital of the company was 12500 lack equity shares@1 each till 2007. During the year 2007 the authorized share capital of the company has been increased by Rs. 2000 lakhs, pursuant to merger of Dabur Foods Limited. Thereafter the authorized share capital of the company continues to be 14500 lakhs @1each.
Change in Capital Structure and Listing of shares

The equity share capital has gone up in the year 2007 because of the following reasons. 2472137 equity shares allotted under Employees Stock Option Scheme 63,336 shares allotted under Merger scheme with erstwhile Balsara Hygiene Products 28,70,45,551 equity shares allotted on 12th February, 2007 as bonus shares by way of capitalization of the free reserves (469066351 shares) and from share premium account (286651392 shares) The issuance of bonus shares had an impact on the Reserve and surplus which has come down from last year .one of the reasons was because of the issue. In the year FY07 and FY08 there has not a significant change in share capital.
Reserve and Surplus:

(in lakhs)

Page 35 of 93

70000 60000 50000 40000 30000 20000 10000 0 39053.84 31690.08 44192.11

65168.91

The increase in reserves and surplus in 2010 is mainly because of the increase in general reserves and profit and loss account balance. Capital reserves: The Company has kept on increasing the capital reserves throughout the 4 years and has not utilized any amount from it. The increase has come mainly from transfer from P/L acc, while in 2007 the company has transferred some amount from the merged Entities. Share premium Account: Has come down significantly in 07 from 06 because of utilization in merger. In 08 and 09 the account has increased slightly because of premium on issue of shares. General Reserve: Large amount has been utilized for merger and also for the issuance of bonus shares. So it has come down in 07 and has been rising thereafter because there has not been anymore issue of bonus shares or merger. It is also seen that the company has steadily increased the transfer from P/L acc to general reserve throughout the years. Profit and loss acc: The transfer of the remaining profits from the P/L account has risen steadily over the years. This indicates that the profit of the company has been rising over the years.

Page 36 of 93 Secured Loans

Secured loans of Dabur have come down from 16.44 crores to 8.25 crores. The company has taken term loans and short term loans from banks. The company has repaid almost half of the loans in the year, thus the figure for secured loans has come down. The proportion of secured loans to other sources of funds is very small, suggesting that the company does not depend much on loan funds. However this year the co has taken some unsecured loans which we will analyze in the next heading
Unsecured Loans

The companys unsecured loans have risen from less than 1 crores to 130.7 crores. The co has taken short term loan from bank to the tune of 110 crores and that the company has taken almost negligible unsecured loans. The company might be looking to fund some project so it has taken an unsecured loan this time.
Overall Comment

If we look at the balance sheet we will find that the company is not highly leveraged. It depends more on internal sources of funds than external sources. The reserves and surplus of the co has become very high as compared to share cap, thus there is a possibility of bonus shares being issued in future. The company has very high investments compared to fixed assets and the co has positive net current assets. This is a good sign for the company.

Page 37 of 93

Analysis of Profit and Loss Account

Horizontal Profit & Loss Account (Comparison 2009 and 2010)


2010 Less Excise Duty Net Sales Other Income Total Income EXPENDITURE : Cost of Materials Manufacturing Expenses Payments to and Provisions for Employees Selling and Administrative Expenses Financial Expenses Miscellaneous Expenditure Written Off Depreciation Total Expenditure Balance being Operating Net Profit before Taxation Provision for Taxation : Current Deferred Fringe Benefit Net Profit after Taxation and before Extraordinary Items Credit Balance Transferred from Merged Entity Net Profit after Taxation and Extraordinary Item Balance Brought Forward Provision for Taxation of earlier years written back Provision for Taxation for earlier year (Rs. In lakhs) 2,751.50 239,616.39 4,306.04 243,922.43 2009 (Rs. In lakhs) 3,439.26 208,339.60 2,790.86 211,130.46 Increase/Decrease over 2009 (Rs. In lakhs) (687.76) 31,276.79 1,515.18 32,791.97 %age (20.00) 15.01 54.29 15.53

122,243.11 7,076.13 16,732.46 50,901.37 1,333.55 394.18 2,742.04 201,422.84

102,833.54 6,985.57 14,969.23 45,827.98 854.50 566.79 2,575.26 174,612.87

19,409.57 90.56 1,763.23 5,073.39 479.05 (172.61) 166.78 26,809.97

18.87 1.30 11.78 11.07 56.06 (30.45) 6.48 15.35

42,499.59 4,748.45 (255.09) 650.97

36,517.59 4,057.25 75.32 707.81

5,982.00 691.20 (330.41) (56.84)

16.38 17.04 (438.67) (8.03)

37,355.26 0.00 37,355.26 32,322.99 0.11 71.68

31,677.21 18.58 31,695.79 22,915.65 68.55 154.19

5,678.05 (18.58) 5,659.47 9,407.34 (68.44) (82.51)

17.92 (100.00) 17.86 41.05 (99.84) (53.51)

Page 38 of 93

69,606.68 Appropriations Interim Dividend Proposed Final Dividend Corporate Tax on Interim Dividend Corporate Tax on Proposed Dividend Transferred to Capital Reserve Transferred to General Reserve Balance carried over to Balance Sheet Earning per share (in Rs.) (Face Value Re 1/- each) Basic Diluted No of Shares Basic Diluted 6,488.07 8,650.76 1,102.65 1,470.20 0.95 9,000.00 42,894.05 69,606.68

54,525.80 6,480.05 6,480.17 1,101.28 1,101.31 40.00 7,000.00 32,322.99 54,525.80

15,080.88 8.02 2,170.59 1.37 368.89 (39.05) 2,000.00 10,571.06 15,080.88

27.66 0.12 33.50 0.12 33.50 (97.63) 28.57 32.70 27.66

4.32 4.31 864,907,642.00 869,156,259.00

3.66 3.64 863,826,759.00 868,807,461.00

0.66 0.67 1,080,883.00 348,798.00

18.03 18.41 0.13 0.04

Sales and other income

The sales figure of the company has risen from 201,293.09 lacs to 230,162.64 lacs, thereby registering a growth rate of 14%. Also the exports of the company has risen from 10,485.77 to 12,205.25 lacs thereby registering a growth rate of 16%. The other income of the company has increased from 2,790.86 lacs to 4,306.04 lacs. The other income of the company includes Export Subsidy, Rent Realised, Sale of Scrap, Royalty, Miscellaneous Receipts, Profit on sale of long term investment, Profit on sale of current investments, Profit on sale of Fixed Assets. If we look at the figures of the sales and other incomes we find that the figure of other incomes is very less compared to the sales figure which indicates that the company is completely dependent on the operational activities and does not derive much income from other sources.

Page 39 of 93 Expenditure

The cost of materials has risen from 102,833.54 lacs to 122,243.11 lacs . The cost of materials includes Raw Materials Consumed, Packing Materials Consumed, purchase of Finished Products and Adjustment of Stocks in process and Finished Goods. The Raw Materials Consumed contributes to almost 45 % to the cost of materials. The packaging materials also constitute a significant portion which shows that FMCG companies spend more on packaging than other sector companies. There has been a good growth rate in the purchases of raw materials and packaging materials. The manufacturing and other expenses have risen from 6,985.57 lacs to 7,076.13 lacs. The manufacturing and other expenses of the company as compared to the sales figure is not significant The next item is Payments to and Provisions for Employees. It has also gone up slightly from last year. It includes Salaries, Wages and Bonus, Contribution to Provident and other Funds , Workmen and Staff Welfare, Directors remuneration. The next item is the selling and administration expenses. Rent, advertising and publicity, freight are some of the components of the it. It includes directors fees and also freight expenses and some research and development. The financial expenses of the company have also risen from last year. It includes interest paid on fixed loans, bank charges etc. The company has charged depreciation to the tune of 2742 lacs. Thus the total expenditure of the company is 201422 lacs, thereby giving Operating Net Profit before Taxation at 42499 lacs. After providing for taxation the PAT figure has been obtained. The PAT of the company has risen from 31695 lacs to 37,355 lakhs. The profit which has been

Page 40 of 93

brought from last year has been added. Thereby giving a total amount available for appropriation as 69,606 lacs. The company paid an interim dividend @ 75% and Final dividend @ 100% and transferred 9000 lacs to general reserve. Thus the remaining is carried over to the balance sheet. The EPS of the company is 4.32 increasing from 3.66 last year. The company has not paid a huge amount as dividend, instead it has kept back the profits. This is an indication that the company wants to take some expansion project in future.

Page 41 of 93

FINANCIAL ANALYSIS II: ANALYSIS OF PROFITABLITY


MultiStep Profit Margin to Sales Ratios of Dabur India Ltd(common sized)
MULTISTEP PROFIT MARGIN TO SALES RATIOS OF DABUR INDIA LTD
Year ended March 31, 2010 Indian Rupees in lacs Domestic Sales Less Returns Exports Gross Sales Less Returns Less: Excise Duty Net Sales Cost of Materials Manufacturing Expenses Cost of Goods Sold(COGS) Gross Profit Payments to and Provisions for Employees Selling and Administrative Expenses Miscellaneous Expenditure Written Off Other Income Profit before Depreciation, interest and tax- PBDIT Depreciation Operating Profit -OP/PBIT Financial Expenses Profit before tax and extraordinary items PBTEOT Extraordinary Expenses : Credit Balance Transferred from Merged Entity Extraordinary Item (Profit/(Loss) on Long Term Trades Investments Profit before Tax for the year 230,162.64 12,205.25 242,367.89 2,751.50 239,616.39 122,243.11 7,076.13 129,319.24 110,297.15 16,732.46 50,901.37 394.18 4,306.04 46,575.18 2,742.04 43,833.14 1,333.55 Year ended March 31, 2009 Indian Rupees in lacs 201,293.09 10,485.77 211,778.86 3,439.26 208,339.60 101,391.54 6,985.57 108,377.11 99,962.49 14,969.23 47,269.98 566.79 2,790.86 39,947.35 2,575.26 37,372.09 854.50 Year ended March 31, 2007 Indian Rupees in lacs 196,537.05 26,834.73 223,371.78 3,711.03 219,660.75 97,108.28 7,425.54 104,533.82 115,126.93 16,666.83 63,486.20 649.36 2,591.23 36,915.77 3,429.05 33,486.72 1,537.50 Year ended March 31, 2006 Indian Rupees in lacs 171,140.50 18,816.50 189,957.00 3,372.14 186,584.86 80,772.30 5,711.24 86,483.54 100,101.32 14,495.75 56,522.85 426.24 1,336.68 29,993.16 2,692.46 27,300.70 1,638.73

Particulars

Ratio 96.05 5.09 101.15 1.15 100.00 51.02 2.95 53.97 46.03 6.98 21.24 0.16 1.80 19.44 1.14 18.29 0.56

Ratio 96.62 5.03 101.65 1.65 100.00 48.67 100.00 52.02 47.98 7.19 22.69 0.27 1.34 19.17 1.24 17.94 0.41

Ratio 89.47 12.22 101.69 1.69 100.00 44.21 3.38 47.59 52.41 7.59 28.90 0.30 1.18 16.81 1.56 15.24 0.70

Ratio 91.72 10.08 101.81 1.81 100.00 43.29 3.06 46.35 53.65 7.77 30.29 0.23 0.72 16.07 1.44 14.63 0.88

42,499.59

17.74 0.00

36,517.59

17.53 0.00

31,949.22

14.54 0.00

25,661.97

13.75 0.00

0.00

0.00

18.58

0.01

0.00

0.00

0.00

0.00

0.00 42,499.59

0.00 17.74

0.00 36,499.01

0.00 17.52

0.00 31,949.22

0.00 14.54

-1,274.05 26,936.02

-0.68 14.44

Page 42 of 93
Provision for Taxation : Current Deferred Fringe Benefit Provision for Taxation of earlier years written back Provision for Taxation for earlier year Total tax

4,748.45 -255.09 650.97 0.11 71.68 5,216.12

1.98 -0.11 0.27 0.00 0.03 2.18

4,057.25 75.32 707.81 68.55 154.19 5,063.12

1.95 0.04 0.34 0.03 0.07 2.43

3,494.04 -136.86 374.68 22.82 -155.37 3,599.31

1.59 -0.06 0.17 0.01 -0.07 1.64

2,185.80 353.04 463.31 148.53 -51.83 3,098.85

1.17 0.19 0.25 0.08 -0.03 1.66

Common-Sized Statement Showing Ratio of Expenses to Net Sales


COMMON SIZED STATEMENT SHOWING RATIO OF EXPENSES TO NET SALES Particulars Figures(Rs lacs) Net Sales Materials Cost Raw Materials Consumed : i)Opening Stock ii) Add : Purchases Total iii) Less : Closing Stock Total Raw material Consumed Packing Materials Consumed i)Opening Stock ii) Add : Purchases Total iii) Less : Closing Stock Total packaging material Consumed Purchase of Finished Products Adjustment of Stocks in process and Finished Goods Opening Stock : Stock in Process Finished Products Total Closing Stock : 3,350.14 7,891.94 11,242.08 1.40 3.29 4.69 3,173.25 7,764.87 10,938.12 1.52 3.73 5.25 3,120.33 33,199.91 36,320.24 3,901.49 32,418.75 36,918.57 1.30 13.86 15.16 1.63 13.53 15.41 3,074.17 28,450.87 31,525.04 3,120.33 28,404.71 29,417.23 1.48 13.66 15.13 1.50 13.63 14.12 5,749.47 58,172.12 63,921.59 7,126.96 56,794.63 2.40 24.28 26.68 2.97 23.70 4,692.06 46,372.97 51,065.03 5,749.47 45,315.56 2.25 22.26 24.51 2.76 21.75 239616.39 2009 % 100 Figures(Rs lacs) 208339.60 2007 % 100

Page 43 of 93

Stock-in-process Finished Products Total Increase(-)/Decrease in Stock in Process and Finished Goods Total Material Cost Manufacturing and Other Expenses Manufacturing and Operating Expenses Power and Fuel Stores & Spares Consumed Repairs & Maintenance Building Plant & Machinery Others Processing Charges Total Manufacturing and Operating Expenses Payments to and Provisions for Employees Salaries, Wages and Bonus Contribution to Provident and other Funds Workmen and Staff Welfare Directors remuneration (including perquisites Rs. 287.12, Previous year Rs. 297.31 under ESOP) Total Payments to and Provisions for Employees Selling and Adminstrative Expenses Rent Rates and Taxes Insurance Sales Tax Freight and Forwarding Charges Commission, Discount and Rebate Advertising and Publicity Travel & Conveyance Legal & Professional Telephone, Fax Expenses Security Expenses

5,311.26 9,819.66 15,130.92 -3,888.84 122243.11

2.22 4.10 6.31 -1.62 51.02

3,350.14 7,891.94 11,242.08 -303.96 102833.54

1.61 3.79 5.40 -0.15 49.36

3,662.56 1,041.82

1.53 0.43

3,842.27 1,002.37

1.84 0.48

223.94 373.81 388.76 1,385.24 7,076.13

0.09 0.16 0.16 0.58 2.95

219.90 387.51 361.65 1,171.87 6,985.57

0.11 0.19 0.17 0.56 3.35

13,253.51 1,690.69 525.85 1,262.41 16,732.46

5.53 0.71 0.22 0.53 6.98

12,071.12 1,262.36 482.63 1,153.12 14,969.23

5.79 0.61 0.23 0.55 7.19

1,409.78 266.72 228.08 101.01 5,007.01 2,274.61 28,492.76 2,082.48 977.88 291.93 299.53

0.59 0.11 0.10 0.04 2.09 0.95 11.89 0.87 0.41 0.12 0.13

1,067.30 184.93 272.74 135.79 5,241.76 2,139.73 24,809.68 1,919.92 1,429.18 307.28 268.01

0.51 0.09 0.13 0.07 2.52 1.03 11.91 0.92 0.69 0.15 0.13

Page 44 of 93

General Expenses Directors Fees Auditors Remuneration: - Audit Fee - Branch Auditors Fee - Reimbursement of Expenses - Provident Fund and Certificates Total Audit Fee Donation Contribution for Scientific Research Expenses Bad Debts Written Off Provision for Doubtful Debts (Net of Excess Provision written Back Rs 19.63, Previous year Nil) Loss on Sale of Fixed Assets Provision for Contingent Liability Fixed Assets Written Down Total Selling and Adminstrative Expenses Financial Expenses Interest paid on : Fixed Period Loan Others (Net of Int. received Rs. 112.97 TDS thereon Rs. 7.74 Previous year Rs. 237.94 TDS thereon Rs 12.90) Bank Charges Total Financial Expenses Total Manufacturing and other expense

7,853.37 10.20

3.28 0.00

6,896.20 11.13

3.31 0.01

21.51 0.00 13.45 19.09 54.05 363.01 165.98 -

0.01 0.00 0.01 0.01 0.02 0.15 0.07

18.53 0.00 13.41 19.14 51.08 458.29 75.00 39.30

0.01 0.00 0.01 0.01 0.02 0.22 0.04 0.02

737.82 13.67 13.22 258.26 50,901.37

0.31 0.01 0.01 0.11 21.24

257.71 165.77 73.38 23.80 45,827.98

0.12 0.08 0.04 0.01 22.00

666.58 318.15

0.28 0.13

336.74 211.61

0.16 0.10

984.73 348.82 1,333.55 76,043.51

0.41 0.15 0.56 31.74

548.35 306.15 854.50 68,637.28

0.26 0.15 0.41 32.94

Volume-Value-Price Analysis of Consumption of Raw Materials

Page 45 of 93

Raw materials

Volume(MT) & %age to Grand Total

Value(Rs. In lacs) & %age to Grand Total

Average Purchase Price(Rs. In thou 2009

2007
2009 Volume Sugar and Molases Vegetables Oils Herbs, Jari Booti & Raw Madhu Chemicals & Perfumery Compounds Others Raw Materials Total raw materials 17,641.22 18,783.28 34,330.61 22,379.55 %age 18.94 20.17 36.86 24.03 Volume %age Value 3,109.80 12,251.85 14,016.73 16,419.63 10,996.62 2009 %age Value 2,388.09 9,595.28 11,111.98 14,955.62 7,264.59 45,315.56

2007
%age

16,940.81
16,050.10 31,487.93 31,491.87

17.65 16.72 32.81 32.81

5.48 21.57 24.68 28.91 19.36 100.00

5.27 21.17 24.52 33.00 16.03 100.00

176.28 652.27 408.29 733.69 609.81 -

93,134.66

100.00

95,970.71

100.00

56,794.63

Volume-Value-Price Analysis of Finished Goods Sold

Av
Class of Goods Volume(MT) & %age to Grand Total 2009 Volume Hair Oils Chyawanprash Honey Tooth Powder & Paste Hajmola Asava Arishta Fruits,Nector & Drinks Vegetable Pastes Others Total 22805.2 13741.49 5392.81 20696.63 4339.95 6954.02 15172.51 710.76 %age 25.39 15.30 6.00 23.04 4.83 7.74 16.89 0.79 Value(Rs. In lacs) & %age to Grand Total 2008 %age Value 50483.72 19430.03 11688.11 32970.01 9050.61 5639.95 7613.04 600.56 63659.74 %age Value 37569.58 17947.27 10661.54 30073.05 7148.57 4896.81 6634.15 515.06 59138.42 174584.5

2007
Volume 20050.58 14048.56 5309.69 18033.69 4856.23 6296.02 9912.79 626.79

2007
%age

25.34 17.75 6.71 22.79 6.14 7.96 12.53 0.79 100.00

25.10 9.66 5.81 16.39 4.50 2.80 3.79 0.30 31.65 100.00

21.52 10.28 6.11 17.23 4.09 2.80 3.80 0.30 33.87 100.00

89813.37

100.00

79134.35

201135.8

Comparative Analysis of Profitability


Growth in sales value : Domestic Sales : 14.34 % Export Sales : 16.39 % Total Sales : 14,44 % Net Sales : 15.01% Volume of all the products groups except chyawanprash and Hajmola has increased in absolute terms.

Total value growth is 15.21 whereas total volume growth is 13.49 only . This shows an overall higher selling price realization. Tooth powder & paste and Fruits, Nectar & Drinks registered a negative volume-value growth. A particularly sharp decline of

25.03% in the price realization of Fruits, Nectar & Drinks is accounted for 3.79% of sales value in 2009. Average selling price of all the products put together is up by 1.51% which basically comes due to the rise in selling price of Hajmola , which in turn compensate the loss in average selling price of Fruits, Nectar & Drinks Materials Cost and Manufacturing and Other Expenses Manufacturing and Other Expenses have decreased from 32.94% to 31.74 % of net sales, i.e an increase in growth rate of 10.79%. Within the material cost, packing materials consumed has come down from 13.63 % to 13.53% , whereas cost of raw materials consumed has increased from21.75% to 23.70% . Cost of raw materials has increased In all types of raw materials. Within the various raw materials Herbs, Jari Booti & Raw Madhu and Chemicals & Perfumery Compounds together account for maximum share both in quantity as well as value. And it is here major cost efficiencies have been achieved. PBITD PBITD thus registered a decline of 27 basis points having increased from 19.17% of net sales in 2009-10 to 19.44% in 2010-11.

47

PBIT PBIT or operating profit has registered a growth of 35 basis points from 17.94 % of net sales in 2009-10 to 18.29% in 2010-11. Interest Interest cost increases signifying that debt has increased this year. Other Income In comparison to net sales being just 1.80 % and 1.34% for 2010-11 and 2009-10 respectively. As a percentage of PBT also, it is less signifying that most of the income of Dabur is from main recurring and productive operations. PBT There is an overall improvement of basis points in PBT during 2010-11. It has risen from 17.52 % of net sales to 17.54 %. PAT Ultimately PAT improved from 15.09 % of net sales against 15.56% in 2009-10, registering a growth of 47 basis points. In absolute terms PAT has risen by 18.6 %.

48

FINANCIAL ANALYSIS III: RATIO ANALYSIS


Ratio analysis helps to measure and establish cause and effect relationship between either two items of balance sheet or of profit and loss account or both balance sheet and profit and loss account . Ratio analysis is a relative and more focused analysis of financial statements. Ratios are classified according to their functions and objectives. We have classified the ratios under the following categories: Solvency Ratios Liquidity Ratios Profitability Ratios Du Pont Analysis Capital Market Ratios

Solvency Ratios
We have analyzed the following solvency ratios Proprietary Ratio Debt Equity Ratio or External-Internal Equity Ratio Long-Term Debt Equity Ratio or Gearing Ratio Interest Coverage Ratio

49

Proprietary Ratio

This ratio relates the share holders fund to total assets. The formula for calculating the proprietary ratio is given by:

Proprietary Ratio = Shareholders Funds Total Assets

Proprietary Ratio Year Total Shareholders Equity Total Assets Proprietary Ratio 2007-08 96386.87 45234.31 2.130835421 2008-09 40318.92 42608.98 0.946254 2009-10 52832.34 55898.73 0.945144 2010-11 73819.67 89901.7 0.8211154

The higher the proprietary ratio, the better is the long term solvency of the company and the more satisfied the creditors will be. Here, we see that the proprietary ratio of Dabur India limited has been showing a decreasing trend over the years.

50

Debt Equity Ratio

This ratio tells how much does the company depend upon its borrowings. A smaller ratio is better as it indicates that the company can raise large sums as borrowings. The formula for calculating the debt-equity ratio is given by:

Debt Equity Ratio =

Total Debts

Shareholders Funds

Debt-Equity Ratio or External-Internal Equity Ratio Year Total Debt Net Worth Debt-Equity Ratio 2007-08 2057.52 96386.87 0.021346476 2008-09 2007.99 40318.92 0.049803 2009-10 1733.69 52832.34 0.032815 2010-11 13898.25 73819.67 0.188273

This ratio is very small which shows that in future, the company can do a high leveraging. It presently relies mostly on owners funds and very less on the loans. As such, financial institutions and lenders will be ready to give loans to the company. Ths ratio has been increasing over the years showing that Dabur India Limited has now started taking loans both secured and unsecured, but the proportion of these loans is very less as compared to its proprietors funds.

51

Long Term Debt to Equity Ratio or Gearing Ratio

This ratio measures the extent of assets financed through long term borrowings. A high ratio indicates that the company is highly leveraged and creditors will not be very sure in lending to the company. The formula for calculating the long term debt-to-equity ratio is given by:

Long Term Debt to Equity Ratio or Gearing Ratio =

Long term Debts Net Worth

Long Term Debt to Equity Ratio or Gearing Ratio Year Total Long term Loans Net Worth Long-Term Debt-Equity Ratio 2007-08 764.22 96386.87 0.007928673 2008-09 433.9 40318.92 0.010762 2009-10 611.29 52832.34 0.01157 2010-11 288.94 73819.67 0.003914

This ratio tells whether the company is relying more on its debts or on its capital in order to finance its operations. We see that this ratio is declining over the years and is very less. This shows that the company as a policy, doesnot go for loans and is a very cash rich company. It also has high reserves and surplus. When we see the trend over the past few years, we see that the company has now started taking loans but Is still dependent on capital only. Thus, the company can raise huge sums as loans in the future.

52

Interest Coverage Ratio

This ratio measures the capacity of a company to py the interest liability it has incurred on its long term borrowings, out of its cash profits. The formula for calculating the interest coverage ratio is given by:

Interest Coverage Ratio = PAT + Interest on Long Term Debt + Depreciation Interest on Long Term Debt

Interest Coverage Ratio Year Interest On Long Term Debt PAT + Interest on Long Term Debt + Depreciation Interest Coverage Ratio 2007-08 565.87 21379.29 37.78127485 2008-09 443.01 27848.44 62.86188 2009-10 845.5 35097.97 41.5115 2010-11 1333.55 41430.86 31.0681

This ratio measures the capacity of a company to pay off its interest liability in long term debts out of its profits. As we see from the above, this ratio, although decreasing over the years, is quite high. Thus, we can say that Dabur India limited is making sufficient operating profits in order to be able to cover its interest costs.

53

Overall Analysis of Solvency Ratios

Over-all Analysis (Solvency Ratios)


Year
Proprietary Ratio Debt-Equity Ratio Long-Term Debt-Equity Ratio Interest Coverage Ratio

2007-08
2.130835421 0.021346476 0.007928673 37.78127485

2008-09
0.946254 0.049803 0.010762 62.86188

2009-10
0.945144 0.032815 0.01157 41.5115

2010-11
0.8211154 0.188273 0.003914 31.0681

From all these ratios, we see that Dabur India Limited mainly depends upon its proprietary funds. It has very small amount of debts, both long term and short term, as compared to its capital. As such, the company is highly solvent and can do a very good leveraging in future.

Liquidity Ratios
We have analyzed the following Liquidity ratios Current Ratio Liquid/Quick Ratio Net Working Capital Operating cash Flow Ratios

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Current Ratios

A Current ratio measures the ability of a company to discharge its day-to-day bills, or current liabilities as and when they fall due, out of the cash or near cash, or current assets that it possesses. It is an important indicator of a companys current and prospective liquidity position. Formula for calculation of current ratio is given by: Current Ratio = Current Assets Current Liabilities

Current Ratio Year Current Assets, loans and advances Current Liabilities and Provisions Current Ratio 66,648.91 1.12 58,263.48 0.95 35,608.47 1.11 30,731.00 0.93 74,504.46 55,281.33 39,641.22 28,436.22 2010-11 2009-10 2008-09 2007-08

Generally, a low current ratio indicates the potential for a strained liquidity position. However FMCG companies normally do not have a high current ratio because of the ready and fast conversion of ready and fast conversion of inventory into cash. Therefore the Current Ratio of Dabur is less than normal. Another reason for the low ratios is that the company is very conservative and has high provisions (almost 50% of the liabilities) hence increasing the liabilities and decreasing the ratio. The company has also invested in long term ventures and mutual funds rather than going for
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short term investments. Infact, over the past 10 years, it has invested in 27 different mutual funds.
Liquid Ratio

It measures as to how quick is the ability of a company to discharge its current liabilities net of working limits, as and when they fall due,out of cash or current assets net of inventories that it possesses. Formula for calculation of liquid ratio is given by: Liquid Ratio = Current Assets Inventories Prepaid Expenses Current Liabilities

Liquid Ratio Year Liquid Assets Current Liabilities and Provisions Liquid ratio 2010 25,604.49 66,648.91 0.38 2009 16,872.89 58,263.48 0.29 2007 11,122.62 35,608.47 0.31 2006 6,498.66 30,731.00 0.21

Inventory in case of Dabur forms a significant part of current Assets, hence quick ratio is low. A low liquid ratio indicates the potential for a strained liquidity position. However, a low liquid ratio does not necessarily mean a bad liquidity position as inventories are not absolutely non-liquid.

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Net Working Capital

Formula for calculation of net working capital is given by: Net Working Capital = Current Assets Current Liabilities

Net Working Capital Year Current Assets, loans and advances Current Liabilities and Provisions Net Working Capital 2010 74,504.46 66,648.91 7,855.55 2008 55,281.33 58,263.48 -2,982.15 2007 39,641.22 35,608.47 4,032.75 2006 28,436.22 30,731.00 -2,294.78

Net working capital has been up and down in the past 4 years. This is because of the varied bank balance of the company. However, the low net working capital is also because of the high provisions the company has created.

Net working Capital


10,000.00 8,000.00 6,000.00 4,000.00 Net working Capital 2,000.00 0.00 2006 -2,000.00 -4,000.00 2007 2008 2009

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Operating cash Flow Ratio

This ratio signifies how well a company can cover its liabilities though the cash generated from operations. Formula for calculation of operating cash flow ratio is given by: Operating Cash Flow Ratio = Cash Flow from Operations Current Liabilities

Operating Cash Flow Ratio Year Cash Flow to Operations Current Liabilities and Provisions Operating Cash Flow Ratio 2010 32,357.31 66,648.91 0.49 2009 31,329.01 58,263.48 0.54 2007 23,442.75 35,608.47 0.66 2006 19,434.49 30,731.00 0.63

We can again see a downward trend again due to the perishable inventory and high provisions

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Overall Analysis of Liquidity Ratios

Over-all Analysis (Liquidity Ratios)


Year Current Ratio Liquid ratio Net Working Capital Operating Cash Flow Ratio 2010 1.12 0.38 7,855.55 0.49 2009 0.95 0.29 -2,982.15 0.54 2007 1.11 0.31 4,032.75 0.66 2006 0.93 0.21 -2,294.78 0.63

1.20 1.00 0.80 0.60 0.40 0.20 0.00 2006 2007 2008 2009 Operating Cash Flow Ratio Current Ratio Liquid Ratio

A major parameter for all the liquidity ratios is the Liabilities that the company has. We can see above that all the ratios are coming out to be less than normal. This is because the company has high provisions hence increasing the total liability for the company. Also the Liquid ratios above are extremely low when compared to the Current ratios. This is because the inventory forms a significant part of the current assets and we know that the inventories are not as liquid. Low net-working capital follows the low current ratios. Also, the low operating cash flow ratios doesnt mean that there isnt enough cash flowing through operations. It is because of the high value of the denominator i.e. Liabilities. These unusually low ratios are not just confined to Dabur. This is a general trend all across the FMCG sector.
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TURNOVER RATIOS
Financial ratios related to sales or volume, i.e, those ratios which signifies the resources efficiency comes under Turnover Ratios. For example, accounts receivable turnover, also known as efficiency ratios and assets turnover, conversion of receivables into cash comes under this category. These measure efficiency of converting assets into cash. The efficiency with which the assets and resources of a company are utilized in generating operational revenue has a direct bearing on the top line. It is therefore important for analysts to study the turnover ratios. Five major ratios under this category are: Fixed Asset Turnover Ratio Net worth Turnover Ratio Inventory Turnover Ratio Debtors Turnover Ratio Creditors Turnover Ratio

8 7 6 5 4 3 2 1 0 2006 2007 2008 2009 Fixed Asset Turnover Ratio Net Worth Turnover Ratio

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Fixed Asset Turnover Ratio

The Ratio measures the extent of turnover or volume of gross income generated by the fixed assets of a company or in other words the efficiency in their utilization. Formula for calculation of fixed asset turnover ratio is given by:

Fixed Asset Turnover Ratio = Net Sales Net Block of Fixed Assets Fixed Asset Turnover Ratio Year Net Sales Net Block of Fixed Assets Fixed Asset Turnover Ratio 2010-11 2009-10 2008-09 2007-08

2,39,616.39 2,08,339.60 1,60,042.90 1,34,278.81 36,003.11 6.65 29,443.01 7.08 23,904.05 6.70 19,883.68 6.75

The ratio has come down marginally from the last year due to a larger increase in the net block of fixed assets compared to the increase in the net sales. This indicates that the company is not utilizing its fixed assets well. This is an area of concern for the company as the growth is not very significant.

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Net Worth Turnover Ratio

The ratio measures the extend of turn over or volume of gross income generated by the net worth of a company. In other words, it is the efficiency in the resource utilization from the angle of the residual interest, ie. the equity shareholders. Sales to receivables (or turnover ratio): Net Sales / Accounts Receivablemeasure the annual turnover of accounts receivable. A high number reflects a short lapse of time between sales and the collection of cash, while a low number means collections take longer. It is best to use average accounts receivable to avoid seasonality effects. Formula for calculation of net worth turnover ratio is given by: Net Worth Turnover Ratio = Net Sales Equity Shareholders Funds

Net Worth Turnover Ratio Year Net Sales Equity Shareholders fund or Net Worth Net Worth Turnover Ratio 72,955.59 3.28 51,437.07 4.05 38,337 4.17 41,499.39 3.23 2010-11 2009-10 2008-09 2007-08

2,39,616.39 2,08,339.60 1,60,042.90 1,34,278.81

There is a decrease in net asset turnover ratio this year compared to last year which shows that the company has not been able to utilize all its net worth appropriately. This is again an area of concern for the company as overall profitability can be increased by utilizing net worth properly.

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Inventory Turnover Ratio

Formula for calculation of fixed asset turnover ratio is given by:

Inventory Holding Period


76 74 72 70 68 66 64 62 2006 2007 2008 2009 Inventory Holding Period

Inventory holding period: 365 / Annual Inventory Turnovercalculate the number of days, on average, that elapse between finished goods production and sale of product.

Inventory Holding Period Year Inventory Cost of goods sold Inventory Holding Period 2010 26,171.64 2009 20,114.69 2008 2007

15,736.94 11,560.90

1,29,319.24 1,09,819.11 82,192.38 61,256.77 73.86 66.85 69.88 68.88

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Inventory holding period has increased by 7 during the last year. This shows poor inventory management during this period. Also the holding period is increasing over the years from the past data . So the company has to take care its inventory operation.
Collection Period and Credit Period
140 120 100 80 60 40 20 0 Collection period Credit Period

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Debtors Turnover Ratio

Sometimes referred to as a collection ratio, the average collection period has to do with the relationship between Accounts Receivable and the time frame in which those outstanding payments are received. Essentially, the average collection period is a calculation of the average period it takes for outstanding invoices to be paid in full after issuance The advantage of understanding average collection periods is that the information allows the company to anticipate cash flow generated by services rendered. Formula for calculation of debtors turnover ratio is given by:

Collection Period Year Recievables Total Sales Collection period allowed to Customers 16.92 17.31 13.60 7.17 2010-11 11,236.01 2009-10 10,046.43 2008-09 6,097.87 2007-08 2,694.25

2,42,367.89 2,11,778.86 1,63,736.12 1,36,968.29

Though there was a considerable increase in the Collection period allowed to the customers for the past years, the trend changed in the present year and collection period has decreased from 17.31 days last year to 16.92 days. Still the ratio is low which suggests that the company has managed its debtors well.

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Creditors Turnover Ratio

Creditors turnover ratio gives the funding requirements for imports of machinery/ stocks covered by Letters of Credits arranged for up to 180 days. Formula for calculation of credit period is given by:

Creditors Turnover Ratio Year Payables Purchases Suppliers Credit Period 2010 35,138.71 1,22,243.11 104.91 2009 31,722.51 1,02,833.54 112.60 2008 27,770.31 76,798.44 131.98 2007 19,342.06 57,511.22 122.75

Suppliers credit days has increased from 112.60 days last year to 104.91 days this year. The collection period is less as compared to the credit period enjoyed by the company which is in favor of the company. This means that the company has managed its debtors well and the suppliers are having a high degree of faith in it, it also enjoys a good reputation with the creditors. Moreover, taking a general trend, collection period is on an increase except for the present year whereas credit period has decreased as compared to the last year. But since there is a larger difference between both the periods, the company will only have to take care of it in the longrun.

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Du Pont Analysis
With Reference To Return on Net Worth
Du Pont Analysis with Reference to RONW Year Net Profit Margin Net Worth Turnover RONW 2009-10 15.20% 4.61 times 70.10% 2010-11 15.58% 3.83 times 59.79%

The RONW has worsened from last year. The reason is because of the worsened Net Worth Turnover. Reserves and Surplus have gone up substantially but the profit has not grown with the same proportion. Thus the company has to focus more on improving the Resource Efficiency than the operating margin. With Reference To Return on Total Assets

Du Pont Analysis with Reference to ROTA Year Net Profit Margin Total Asset Turnover ROTA 2009-10 15.20% 4.61 times 55.28% 2010-11 15.58% 3.63 times 41.15%

The ROTA has worsened from last year. The reason is because of the worsened Total Assets Turnover. Total Assets have gone up substantially but the profit has not grown with the same proportion. Thus the company has to focus more on improving the Efficiency of assets than the

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operating margin. They have made a major investment in assets that are yet to generate sales. Thus in the coming years ROTA is expected to increase.
Financial Analysis IV: Analysis of Crucial Notes to Accounts

Note 16 regarding Earnings Per Share under Accounting Standard 20


Earnings per Share has been computed as under Profit after Tax Weighted average number of shares outstanding Basic Diluted Earning per Share (face value Re. 1 per share) Basic Diluted 2010-11 37355.27 864907642 869156259 4.32 4.3 2009-10 31677.21 863635509 869063210 3.66 3.64

Disclosure of BEPS and DEPS on the face of the profit and loss account with equal prominence for both the years is presented in accordance with para 8 of the AS-20. BEPS is calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year in accordance with para 10 and 11. DEPS is calculated after adjusting all the effects of all dilutive potential equity shares in accordance with para 26 and 29.

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Analysis of EPS Information Disclosed

In case of Dabur, as the weighted average number of shares outstanding is different for both dilute and basic, therefore we are having different value of BEPS and DEPS even after having the same net profit figure.

Notes 12 and 8 regarding Related Party Disclosures under Accounting Standard 18


Managerial Remuneration under section 198 of the Companies Act, 1956 paid or payable during the year, to the Directors: Salary Commission (as computed below) Contribution to Provident Fund Residential Accommodation Medical & Leave Travel Benefit Contribution to Superannuation Fund Others (Including Rs. 287.12 Previous year Rs. 297.31 under stock option Scheme) Computation of net profit in accordance with Section 198 and section 309 (5) of the Companies Act,1956 and calculation of Directors commission Profit for the year before tax as per Profit & Loss Account Add: Managerial remuneration Directors fees Provision for doubt full debts Less: Capital Profit Adjusted net profit Maximum permissible remuneration Maximum commission payable: Actual commission (To one non whole-time Director)

31.03.2010 31.03.2009 219.2 232.9 27.79 0 29.66 27.95 131.55 139.74 4.19 3.47 43.41 34.95 780.14 1219.15 683.07 1138.87

42499.59 1219.15 10.2 737.82 0.95 44465.81 4891.23 444.65 NIL

36517.59 1138.87 11.12 257.71 40 37885.29 4167.38 378.85 27.79

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Analysis of Disclosures and Managerial Remuneration

The operating results and financial position of a company may be affected by a related party relationship, such as holding, subsidiary company, associates, joint ventures etc as related parties may enter into transactions which unrelated parties would not. Disclosure of the names of holding companies and fellow subsidiaries in accordance with para 3(a) and 21 of As-18 Disclosure of the names of whole-time directors in accordance with para 3(d),14 and 21 of AS-18 Disclosure of the nature of transactions separately with holding companies and with fellow subsidiaries as per details furnished in the note in accordance with para 23. 1.3% of Total Sales to fellow subsidiaries is quite a material-related party transaction. An equity contribution of Rs. 1,950 lacs is stuck with the subsidiaries. In comparison to last year loan repayment of Rs. (2,272.28 lacs this year there is nil repayment. Guarantees & collateral given to subsidiaries is increased by 48.57% to Rs. 5,860.35 this year. Employee stock option scheme has increased by 35.41% to Rs. 44.24 lacs this year. The idea is to prevent excessive withdrawal by way of remuneration to whole-time directors, out of the profits generated by the company. AS 18 also requires a specific disclosure of transactions with the key management personnel which includes disclosure of the amount of managerial remuneration as well. The users of financial statements, by reviewing this amount may reach a conclusion regarding its reasonableness in regard to net profits earned by the company.

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The total remuneration paid by Dabur as per note 8 is a figure of 1219.15 lacs against a huge net profit figure of Rs. 42499.59 lacs after charging such remuneration. This is less than reasonable withdrawal out of the net profits. Mr. Pradip Burman, a whole time director, voluntarily has foregone his salary and part of service benefits w.e.f. 1st October 2009. Amount foregone on account of salary and service benefits work out to Rs.37.60 and Rs.7.49 respectively.

Note 22 regarding Segment Reporting under Accounting Standard 17


Based on the guiding principles given in Accounting Standard on Segment Reporting, the companys primary business segment is Consumer Care Division(CCD). It addresses consumer needs across the entire FMCG spectrum through four distinct business portfolios of Personal Care, Health Care, Home Care & Foods. Disclosure of types of products in the CCD segment is in conformity with para 58 of the AS. Disclosure of segment revenue, result assets, liabilities, capital, expenditure, depreciation and other non cash charges on account of provision for pension and gratuity in conformity with para 40 of the AS. Segment liabilities disclosed include net deferred tax liabilities despite the requirement of specific exclusion as per the definition of segment liabilities as given in para 5 of the AS. The companys corporate strategy aims at creating multiple drivers of growth anchored on its core competencies. The company is currently focused on following business ie Consumer Care business, Consumer Health business and food.

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Segment Analysis for the year ended 31-03-09

Segments 1 Consumer Care Business 2 Consumer Health Business 3 Food 4 Others 5 Unallocated Company as a whole

Capital Employed Rs. in lacs 33,451.00 6,295.00 8,840.00 3,298.00 21,071.00 72,955.00 % of Total 45.85 8.63 12.12 4.52 28.88 100.00

PAT Rs. in lacs 52,099.00 5,593.00 5,326.00 131.00 -25,793.00 37,356.00 % of Total 139.47 14.97 14.26 0.35 -69.05 100.00

45.85% of capital employed in Consumer Care Business segment contributing an astronomically high 139.47% of PBT. The performance of this segment is affected badly by Unallocated segment, which has returned a loss on 28.88% of capital employed therein. As against this, a high 28.88% of capital employed in Unallocated segment, higher than the Consumer Health Business segment, but it contributes a loss of 69.05% of PBT. 8.63% of capital employed in Consumer health Business segment is contributing a good figure of 14.97% to PBT. Reasons are very clear both in terms of capital turnover efficiency as well as profitability on capital employed all other segments analyzed are lagging far behind the Consumer Care Business segment.

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FINANCIAL ANALYSIS V: ANALYSIS OF AUDITORS REPORT


Analysis of the Auditors Report is a Comment on how the auditors report acts as a catalyst towards ensuring a better quality of financial performance and position and reporting thereof and financial discipline. The auditors report is divided into 2 parts: first part expressing the auditors view on true and fairness or otherwise of the state of affairs of the company in the case of the balance sheet and profit in the case of profit and loss account. Second part comments on fixed assets, inventories, related party transactions, internal audit and control system and outstanding undisputed statutory liabilities. The examination of the issues mentioned in these 2 parts and their implications for determining a true and fair profitability and state of affairs of the company clearly reveal that the auditors report acts as a catalyst towards ensuring a better quality of financial performance reporting. Let us look at each one of them in detail: First part: Obtaining information and explanation necessary for audit. Opinion on maintaining proper books of account. Assertion about agreement of financial statements with the books of account. Opinion on the compliance of mandatory accounting standards. Comment on whether any director of the company is disqualified from being appointed as such as per the norms of the Companies Act.

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Assertion about agreement of balance sheet, profit and loss account and cash flow statement with the accounting principles generally accepted in India. Second part: Fixed assets: Comment on records of fixed assets. Comment on fixed assets adjustments between physical verification and records in the accounts and extent thereof. Comment on fixed assets disposed off during the year.

Inventories: Comment on inventories adjustments between physical verification and records in the accounts and extent thereof. Comment on the procedures used for the verification of inventories. Comment on records of inventories.

Related party transactions Comment on loans granted to/taken from companies, firms or other parties in which directors are interested to determine whether they are prejudicial to the interests of the company or not. Comment on the internal control system commensurate with the size of the company and nature of business. Comment on contracts or arrangements in the register maintained under section 301 of the Act 1956. Comment on the deposits accepted from public.

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Comment on the documents and records maintained for the loans and advances granted.

Comment on the preferential allotment of shares. Comment on creation of securities / charges in respect of debentures issued and outstanding.

Comments on the companys regularity in repayment of dues to any financial institution, bank or debenture holder.

Comments on the absence of disputed due on account of wealth tax and cess. Comment on money raised by public issues. Comment on the preferential allotment of shares under their ESOP Scheme.

Internal audit: Comment on the internal control system commensurate with the size of the company and nature of business. Outstanding undisputed statutory liabilities Comment on the deposits undisputed statutory dues including provident fund, fund, investor education and protection fund, service tax etc. with appropriate authorities.

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FINANCIAL ANALYSIS VI: ANALYSIS OF DIVIDENT POLICY


The company has been very non-uniform and inconsistent in paying dividends to its stakeholders. The Dividend ranges from 50% in 2002 to 250% in 2005. From 2003 onwards Dabur has been paying a dividend over 100% consistently. In 2010, the company paid an interim dividend of 75% (Re. 0.75 per share) on February 10, 2010 and has recommended a final dividend of 100% (Re. 1 per share). So the aggregate dividend for the year comes our to be 175%, an improvement over the previous financial year (150%).

6 5 4 3 2 1 0 EPS Dividend Index

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FINANCIAL ANALYSIS VII: ANALYSIS OF CASH FLOW STATEMENT


Compliance with Accounting Standards
The given cash flow statement is for the year ended 31-Mar-09. AS-3 deals with the cash flow statement. The following disclosures for the same are met by Dabur India Limited: The cash flow statement is presented for the same period for which the balance sheet is given. (as at 31-Mar-09) The cash flow statement clearly classifies the cash flow from operating, investing and financing activities. The disclosure of cash flow from operating activity is done through indirect method. All Accounting Policies followed by the company abide by the GAAP and thus are permissible.

Features of Cash Flow Statement


Features of the Cash Flow Statement as presented by the Dabur India Limited are: The cash flow statement has been prepared for the year ended 31-Mar-09 and thus it covers the effects of all cash transactions of the previous accounting year. Comparative Statement Dabur India Limited has disclosed a comparative position of each element of cash flow statement. Vertical form of cash flow statement has been used by Dabur India Limited. This model provides following benefits: Disclosures for cash inflows and outflows for the different activities: operating, investing and financing at one place.
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Information is available at a glance, enabling quick review and analysis

Dabur India Limited has used indirect method for working out the cash flow from operating activities. The statement starts with Net profit before tax and extraordinary items which has been adjusted for non-cash charges and interest received to arrive at Operating profit before working capital changes. This is adjusted with Working capital changes to obtain Cash generated from operating activities. After deducting interest paid, tax paid and Corporate tax on dividend, Net Cash from Operating Activities is obtained. The Net Cash from Investing Activities is obtained by analyzing the Sale and Purchase of Assets and purchase and sale of investments in subsidiaries. The cash flow from financing activities includes proceeds of share capital and premium, repayment/proceeds of loans and liabilities, dividend to arrive at Net Cash generated in Financing Activities. The summation of Net Cash from Operating Activities(A), Net Cash from Investing Activities(B) and Net Cash generated in Financial Activities(C) with the opening balance gives the closing balance of cash and cash equivalents. At the bottom of the cash flow statement it has been mentioned that the report is prepared as per our (the Board of Directors) report of event date attached. The names of Chairman, two Whole Time Directors, GM (Finance) and Company Secretary are also written.

Activity Wise Analysis


Operating Activities

All of the cash inflows of Dabur India Limited during 2010 have been contributed by operating activities indicating a strong cash position.

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Dabur India Limited had a net cash outflow in respect of working capital which is an indicator of inefficient management of working capital. Net cash from operation up by 3 % indicating strong operational financial performance.
Investing Activities

Dabur India Limited has spent huge sums on purchase of fixed assets which indicate that the company is undergoing expansion and is likely to produce higher future revenues It also shows considerable amount of inflow form the sale of fixed assets compared to last year indicating that the company is disposing off its worn out fixed assets. Dabur India Limited had significant increase in outflow towards investments in its subsidiaries (up by 34%) indicating that the companys future prospects are expected to grow. For investing activities Dabur India Limited has had a net cash outflow indicating a favorable cash position.
Financial Activities There has been a decrease in money generated by issuance of shares as compared to last year to the extent of 7.5% Dabur India Limited has had substantial net outflow in respect of repayment of borrowings indicating its strong cash position. It has also shown huge sums of borrowings and keeping in account the strong financial position if the company, it is not clear why the company has engaged into borrowings. Dividend payment has increased by 95% in the year indicating a very strong desire to maintain the goodwill of the company in the market. It also shows that the company is making huge profits.

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Quality of Cash Position

The information provided by the cash flow statements of Dabur India Limited appears to indicate a high quality of cash position. The reasons are simple and more than clear. It has been generating cash from operating activities and utilizing this money in expanding its business and in paying dividends. However, nearly 50% of the cash flow from operations is as a result of profit from sale of fixed assets and FCCB currency fluctuation profits which is unsustainable income. Dependence on this income can prove detrimental for the company.
Ability to Generate Positive Cash Flows from Operations in Future

Dabur India Limited has generated cash from operations in both the years. The amount, though increased this year, is marginally higher than last year. Information provided by its profit and loss account establishes that almost all of the cash flow form operations in the current year is as a result of sale of finished goods. This indicates that the company has a good ability to generate cash in the future also. Given the huge amounts of money spend on expanding the business, its revenues are only expected to increase in future.

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FINANCIAL ANALYSIS VIII: ANALYSIS OF CAPITAL MARKET VALUATION


To analyze the capital market valuation of Dabur India Limited, we have considered the following ratios: Earnings Per Share(EPS) Price Earnings Ratio(P/E Ratio) Market Capitalization

Earnings Per Share(EPS)

Earnings per Share of Dabur


5 4 3 2 1 0 2005-06 2006-07 2007-08 2008-09 4.32 3.67 2.92 3.3

EPS of peers in 2009


25 20 15 10 5 0 Dabur Hul Colgate Godrej 4.32 11.47 6.29 21.34

In the FY 07 the PAT has gone from 18,908.37 lacs to 25,207.63 lacs. But the EPS has gone down because there has been an issue of bonus shares by the company. The company issued bonus shares in the ratio 1:2, thus the no of Equity shares of the co has increased from 573302784 to 862883808 in FY07. Thus the Reserves and Surplus have also gone down. The bonus issue also resulted in the market price of a Dabur India Limited share come down during that year from 140 to 95(appx). The company wanted to boost the confidence of the investors towards the company and indicating to the market that the company has strong fundamentals. However even after one year in Dec 07 the share price of the company could reach 110, even
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when the markets were in a bullish run. One of the reasons of the damp reaction by the market could be the stagnant dividend the co. issued to the shareholders compared to its peers like HUL. The EPS for 2010 shows that the EPS of Colgate is very high compared to Dabur and HUL. But the PAT of Dabur is more than Colgate. One of the main reasons is that the no of issued shares of Colgate is very less compared to Dabur.

Price Earnings Ratio (P/E Ratio)

PE Ratio Comparison
40 35 30 25 20 15 10 5 0 Dabur HUL Godrej P&G Marico Ltd Colgate 29.16 23.48 24.44 Series1 34.6 37.32 34.6

PE ratio of these companies is dated 25th aug,09. The PE ratio changes every day as the stock price fluctuates. PE is a much better comparison of the value of a stock than the price. For example P & G has a stock price of 1170 while Dabur has a stock price of 140. However since the PE of Dabur is more than P & G it can be considered a more expensive stock. Since Dabur has a higher PE than P&G it can be expected to grow and have higher earnings in the future. Daburs PE is larger than HUL which is a bigger company by market Cap, Pat etc but the PE indicates that comparatively investors confidence in Dabur is no less than HUL.

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The industry PE is 26.70. This means Dabur is outperforming the industry PE and is a higher valued stock than most of the other companies in the same industry. The PE ratio of a company may also become low if it reports higher earnings. However in the long run the PE ratio will rise as the higher earnings will increase the market sentiment, thereby increasing the market share eventually.

Market Capitalization

Market Cap (in Rs. Cr)


70000 60000 50000 40000 30000 20000 10000 0 Dabur Colgate godrej HUL

Market capitalization is an important indicator because it may happen that the share price of a company is low compared to its peers. However it might so happen that the company has issued a very large number of equity shares compared to the other company. Thus market capitalization gives us an idea of the size of the company which is decided by the public trust and investments in the company. The share price of Dabur is around 140 while the share price of colgate is around 600. But the no of shares issued of Dabur is 8650.76 lacs and the no of shares issued of colgate is 1360 lacs, thus we see that there is a huge difference in the no of shares issued by both the company. Therefore market capitalization gives a more realistic idea of comparison of the
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companies rather than only share price. HUL has issued around 21800 lacs equity shares and its share price is around 280, thus it has a very high market capitalization. It comes in large caps companies while Dabur is comparatively a smaller company.

Yield to Investors
Following is the formula used to calculate the yield to investors: Yield to investors = Divident Per Share + Market Appreciation Initial Investment Yield to investors Year Divident Per Share Market Appreciation Yield to Investors 2010-11 1.75 8.50 6.83%

Thus we see that there has been a negative yield to investors. The main reason is because of the crash in the stock markets due to the global recession. Daburs share has fallen almost by 9%. . During the same period the sensex has fallen from 15626 points to 9708 points which means it has fallen almost 38%. Therefore we can conclude that the Dabur Share has shown strong resilience even when the markets were not performing well.

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ANALYSIS OF CORPORATE GOVERNANCE REPORT


Compliance with clause 49 of the Listing agreement
It Dabur India has technically complied with all the requirements mentioned in the clause. Its adherence to the standard practices and following of the laid down rules is welcome and desirable for a company which is 150 years old. The company should have furnished more information about the qualifications of the board of directors. should have given more information about the management principles that are followed by company management apart from the code of conduct. The key skill area needed for the directors have been mentioned which gives an idea of the desired qualification but the company should have mentioned the qualifications as well. The roles and scope of the board of directors and various committees are clearly spelt out.

Analysis of the Management Discussion and Analysis Report requirements


The company has given clear data of the related party transactions and for the last 3 years complied with the all the disclosure norms as needed by SEBI The Section on Management Discussion and Analysis could have been precise giving point to point information in the same or in a separate section. A separate heading mentioning the noncompliance of the company has been given which shows the companys intent to openly accept the short falls if any. The company has adequate internal control system wherein the compliance of various standards can be enforced effectively. This is reflected in the roles assigned to various board committees and its risk management structure.

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Analysis of the implications of the information provided


Bringing transparency in the corporate affairs particularly at the board level. There are zero shareholders grievances in 2010 which indicates the fast resolution of complaints by the company. Shareholders are kept updated about companys performance and related matters regularly and the necessary data is available easily. The companys sincerity towards ethics is reflected clearly in the section where whistle blower policy and the policy for prevention of insider trading have been mentioned. It shows companys low tolerance for malpractices. The company has strived to be a responsible citizen as mentioned in the section for the policy for environment control and reduction of pollution, and policy for occupational health & safety. The frequency of the AGM which in this case if 1per year, is a good indication of the companys overall health. The company has given a section I the report where it specifically points out the point tot point compliance with the requirements of the clause 49. The company strives to boost investor confidence.

Recommendations to the management n the strategic issues


The company must enforce all the non-mandatory requirements apart from the mandatory ones.

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ANALYSIS OF DIRECTORS REPORT


The reports content are summarized hereunder: Financial Results Dividend Acquisitions Corporate Governance Directors Directors Responsibility Statement Change in capital structure and listing of shares Auditors and their report Cost auditors Consolidated financial statements Internal control system Fixed Deposits Nature of business Subsidiaries Employee Stock option plan Conservation of Energy, Technology, Absorption, Foreign Exchange Earnings and Outgo Group for interse transfer of shares Health Safety and Environmental Review Quality Review Awards & Recognitions Industrial Relations Acknowledgements Dabur has complied with all the requirements under section 217 of the companies act. Some useful additional information, for example, Health Safety and Environmental Review and Quality Review has also been provided.

SWOT ANALYSIS
Strengths

Financials: Turnover increased 15.5%, PAT increased by 18%,dividend risen to 175% to 150% last year, proposed acquisition of FEM Care Pharma Limited (FEM), a FMCG
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Company listed on Bombay Stock Exchange, well placed, proper and adequate internal control system. Successful introduction of a host of a new product. Good communication strategies with a host of brand ambassadors. 40% increase in revenue in international business. Good rate of growth of health division. 20% growth rate in consumer health division. Dabur red toothpaste became a 100 cr. Brand
Weakness

Loss on newly launched retail venture NEWU Oral care segment reported a growth rate of only 4.8%
Opportunities

High demand growth in FMCG sector Increased penetration of FMCG products in rural market New opportunities in overseas market
Threats

Slowdown in economy Mounting cost pressure Sharp currency fluctuations Slowdown in organized retail sector Inflationary environment in the country

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CONCLUSION

After analyzing the financial statements of the Dabur by the help of various ratios, I observed that the trend of growth is positive.

Dabur has strong performance with robust top line growth and high quality earnings in all business segments. The performance is more satisfying when viewed in the light of the challenging business environment of the Ayurvedic industry, Pharma, FMCG, Food in the export and domestic markets.

Current ratio has continuously increased but the company needs to raise more of its current assets and quick assets so that it can fulfill all its obligations and can raise the amount of working capital for short- term investment. Earnings per share have increased which would surely help the organization in expanding its market share.

Gross income also show the positive trend of growth, net turnover has also increased and return on net worth has also grown. All these ratios show that the trends of profit are growing at a rapid rate and thus it helps the company to meet the latent demands of customer too.

Moreover, after analyzing and comparing the financial statements of Dabur w.r.t. its competitors I observed that Dabur is itself a big player in Chyawanprash industry as most of its ratios are far better than Zandu and Emami.

At last I can say from the above study that Emami (Himani Sona-Chandi Chyawanprash) is also showing positive growth rate and can emerge as a great competitor for Dabur.

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RECOMMENDATIONS The Company already had a 65.8% market share in India. It would be difficult to increase the market share substantially. Hence the company should focus on increasing the market size. The company should promote Chyawanprash as an all season product and try to remove the misconception that it is only to be consumed during the winters to strengthen the immune system against Winter Infections and Allergies. It should occupy the shelf space next to the Health drinks in retail stores so that they can remind the consumer of its claim of a comprehensive health supplement. Now that the company is successfully shedding its image of being associated with middle and old age people it could also target younger generation to expand its market. Since Dabur Chyawanprash is perceived to be a Health supplement that aids in the enhancement of the Immunity against winter related health problems , hence it should be promoted strongly in areas where winters have traditionally been harsh and long. Chyawanprash is traditionally consumed by the middle class segment, whereas the higher segment prefers health drinks like Bournvita & Horlicks to health supplements like Dabur Chyawanprash.However this segment can be penetrated with a promotional focus on Ayurvedic benefits and traditional Indian measures, which this segment values at a premium. The company needs to shift focus from a traditional value system that it projects and add to its portfolio a contemporary touch that would include Children and youth in the Chyawanprash segments also. Children are a primary next focus for the company and it needs to channelize adequate promotion focus through such media as Cartoon Channel and other children related programmes.

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LIMITATIONS

1. The time duration was less for the project as this project includes both financial and marketing (survey) portions.

2. Some databases were not available due to the policy of company. So some part of analysis would have been better if this limitation was not there.

3. Some sorts of problems were involved during marketing survey.

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BIBLIOGRAPHY

Annual report of DIL. Organizations magazines Financial Management: I.M.Pandey, M.Y.Khan &P.K.Jain

http://www.moneycontrol.com/ http://www.dabur.com/ http://www.zandu.com/ http://www.emami.com/ http://www.baidyanath.com/ http://www.equitymaster.com/detail.asp?date=5/19/2000&story=6 http://www.oppapers.com/essays/Marketing-Report-Dabur-Chyawanprash/167474 http://www.antya.com/detail/Dabur-Chyawanprash/17246 http://dabur.com/en/products/Health_Care/Health_Supplements/Chyawanprash/ http://www.business-standard.com/india/news/ http://marketingpractice.blogspot.com/2008/01/dabur-chyawanprash-zaroorat-hai.html http://businesstoday.intoday.in/index.php?option=com_content&task=view&id=9077

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