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

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)

(Project Supervisor)

Mr. Anurag

Mrs. Preeti

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

PARTICULAR

SR. NO
1.

PAGE NO

INTRODUCTION OF FINANCIAL MANAGEMENT.

6.

2.

CONCEPTUAL FRAMEWORK OF WORKING

CAPITAL MANAGEMENT.

20.

3.

LITTERARURE REVIEW.

51.

4.

RESEARCH METHODOLOGY.

56.

5.

ABOUT THE GEAR INDUSTRY.

65.

6.

INFORMATION ABOUT THE POWER BUILD

LIMITED.

75.

7.

ANALYSIS OF OPERATING CYCLE OF POWER BUILD

LIMITED.

91.

8.

98.

9.
10.

ANALYSIS OF WORKING CAPITAL MANAGEMENT

OF POWER BUILD LIMITED
FINDINGS.
CONCLUSION.

122.
123.

11.

BIBLIOGRAPHY.

125.

12.

ANNEXURES

127.

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

Step down subsidiaries

Consumer Care Division

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

Dabur International

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)

Fem Care Pharma

Newu

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
7

distribution of Dabur products spreads to other states like Bihar and the North-East.
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.
8

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

9

Vatika-Personal Care Brand

Anmol- Value for Money Brand

Hajmola- Tasty Digestive Brand

and Dabur Amla, Chyawanprash and Lal Dant Manjan with Rs.100
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.

10

Dabur Segments / Brands:

Hair oils

Dabur Amla

Vatika

Health supplements

Chyawanprash

Honey

Glucose

Foods

Real

Activ

Twist

Toothpastes

11

Red

Babool

Meswak

Promise

Toothpowders

Lal Dant Manjan

Digestives

Hajmola

Pudin Hara

Baby & skin care

Lal Tail

Gulabari

12

Board of Directors:
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.
13

Chartered Accountants
Internal Auditors
Price Waterhouse Coopers Pvt. Ltd.

Timeline of major milestones in the history of Dabur

1884

Dr. Burman set up Dabur in 1884 to produce and dispense Ayurvedic medicines.

1936

Dabur India (Dr. S.K. Burman) Pvt. Ltd. : It became a full fledged company

1986

Public Limited Company

1996

3 separate divisions

2000

Turnover of Rs.1,000 crore

2009

Acquires Fem Care Pharma

Key Product Lines

Health Care
Dabur Chyawanprash
Dabur ChyawanPrakash
Dabur Chyawan Junior
Dabur Honey
Dabur Glucose-D

Skin Care
Uveda Complete
Fairness Cream
Uveda Moisturising Face
Wash
Uveda Clarifying Face

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
Consumer Health
Pudin Hara
Active Antacid
Honitus Cough Syrup
Honitus Lozenges
Dabur Badam Oil

Foods
Real
Real Activ
Burrst
Hommade
Lemoneez
14

Oral Care
Dabur Red Toothpaste
Babool Toothpaste
Meswak Toothpaste
Promise Toothpaste
Babool Mint Fresh Gel

Home Care
Dazzl
Sanifresh Shine
Odomos
Odonil
Odopic

Wash
Gulabari Rose Water
Gulabari Face Freshener
Gulabari Moisturising
Cream
Gulabari Moisturising
Lotion

Super Thanda Oil

Shilajit Gold
Dabur Lal Tail
Dabur Janma Ghunti
Dabur Gripe Water
Active Blood Purifier
Dabur Balm Strong

Capsico

List of people in board of directors

Chairman:

Dr. Anand Burman

Vice Chairman:
Whole Time Directors

Mr. Amit Burman

Mr. P.D. Narang, Mr. Sunil Duggal and Mr. Pradip Burman

Independent Directors

Mr. Bert Paterson, Mr. P. N. Vijay, Mr. R C Bhargava, Dr. S.

Narayan and Mr. Analjit Singh
Mr. Mohit Burman

Non Whole Time Promoters,

directors

Shareholding Pattern
The Details of the shareholding pattern are as under:
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

As on March 31, 2010

% of Share
No. of Shares
Holders
Held

% ofShare
Holding

0.03%

611834473

70.73%

0.11%
0.06%
0.03%
2.64%
1.24%
95.89%
100%

74278471
31121682
88968460
4260203
5011529
49601431
865076249

8.59%
3.60%
10.28%
0.49%
0.58%
5.73%
100.00%

15

16

ENCLOSURE ON THE OPERATING PERFORMANCE OF THE

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

Brands

Market Share

Honey

75%

Chyawanprash

65%

Hajmola

75%

Real

40%

Vatika hair Oil

8.5%

herbal Digestives

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

17

Key Raw Materials

Raw material

2010-11

2009-10

2008-09

2007-08

Sugar & Molasses

31.1

23.88

28.21

26.11

Herbs,Jari Booti & Raw Madhu

140.17

111.12

72.69

71.45

Vegetables Oils
Chemicals
&

122.52

95.95

83.88

52.94

164.2

149.56

110.51

84.79

Perfumery

Compounds

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.

18

Sales Mix
Segment

2010

2009

2008

2007

Hair Oils

504.84

375.7

306.76

268.1

Tooth Powders & Paste

329.7

300.73

195.75

63.19

Chywanprash

194.3

179.47

171.91

150.07

Honey.

116.88

106.61

85.56

78.14

Hajmola.

90.51

71.49

78.08

72.65

Fruits/Nector/Drinks

76.13

66.34

Nil

Nil

Asava-Arishta

56.4

48.97

46.95

53.16

Vegetable Pastes

5.15

Nil

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.

19

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.

20

Peer Comparison
RONW

2010
51.2%
116.7%
25.9%
112.8%

Dabur
HUL
ITC
Nestle

RONW
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%
Dabur

80.0%

HUL
ITC

60.0%

Nestle

40.0%
20.0%
0.0%

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.

21

Profit Margins

2010
15.6%
12.2%
22.4%
12.4%

Dabur
HUL
ITC
Nestle

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%

Dabur
HUL

15.0%

ITC
Nestle

10.0%
5.0%
0.0%

22

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%

Dabur
HUL

60.0%

ITC
Nestle

40.0%
20.0%
0.0%

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)

Ten Year figures at a Glance (2000-2010)

2000
23

2001

2002

2003

2004

2005

2006

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

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
1.00
2.61
1.00
100.00
38.26
60.99
22.38
13.97

24

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
0.74
2.62
1.00
100.00
38.17
49.01
13.17
10.67

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
0.68
2.23
0.85
50.00
22.45
22.45
10.54
-0.41

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
0.44
2.86
1.09
140.00
49.01
38.17
2.68
5.11

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
0.96
3.28
1.26
200.00
60.99
38.26
-34.65
-6.59

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
1.36
4.83
1.85
250.00
51.79
29.31
25.84
13.27

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
3.04
3.05
1.17
250.00
57.32
23.00
32.48
9.51

Page 25 of 113

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

Sales

1500
1000
500
0

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.

Page 26 of 113

PBT
500
450
400
350

PBT

300
250
200
150
100
50
0

PAT (Profit after Tax)

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

PAT
450
400
350
300

PAT

250
200
150
100
50
0

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

Page 27 of 113

from 2000 to 2002 the dividend decreased. This was due to a share split in 2000. Then there was
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

Page 28 of 113

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: -

Page 29 of 113

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.,
4. Analysis of Information:

Page 30 of 113

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.

Page 31 of 113

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)

Increase/Decrease over
2009
(Rs. In
lakhs)
%age

2010
(Rs. In
lakhs)

2009
(Rs. In
lakhs)

SOURCES OF FUNDS :
Shareholder's Funds
Share Capital
Reserves Total
Total Shareholder's Funds
Loan Funds:
Secured Loans

8,650.76
65,168.91
73,819.67

8,640.23
44,192.11
52,832.34

10.53
20,976.80
20,987.33

0.12
47.47
39.72

825.56

1,644.72

(819.16)

Unsecured Loans
Deferred tax Liability
Total Liabilities

13,071.69
3,048.50
90,765.42

88.97
2,727.97
57,294.00

12,982.72
320.53
33,471.42

(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

48,419.78
18,976.77
29,443.01
27,037.13
2,400.74

8,628.31
2,068.21
6,560.10
16,652.46
(47.65)

17.82
10.90
22.28
61.59
(1.98)

26,171.64
11,236.01
14,368.48
22,728.33
74,504.46

20,114.69
10,046.43
6,826.46
18,293.75
55,281.33

6,056.95
1,189.58
7,542.02
4,434.58
19,223.13

30.11
11.84
110.48
24.24
34.77

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

Page 32 of 113
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.

Page 33 of 113

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 34 of 113
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
0

(in lacs)

8628.84
5733.03

8640.23

8650.76

Page 35 of 113

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)
70000

65168.91

60000
50000
40000

44192.11
39053.84
31690.08

30000
20000
10000
0

Page 36 of 113

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.
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

Page 37 of 113

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 38 of 113

Analysis of Profit and Loss Account

Horizontal Profit & Loss Account (Comparison 2009 and 2010)

Less Excise Duty

Net Sales
Other Income
Total Income
EXPENDITURE :
Cost of Materials
Manufacturing Expenses

Increase/Decrease over
2009
(Rs. In lakhs)
%age
(687.76)
(20.00)
31,276.79
15.01
1,515.18
54.29
32,791.97
15.53

2010
(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

122,243.11
7,076.13

102,833.54
6,985.57

19,409.57
90.56

18.87
1.30

16,732.46

14,969.23

1,763.23

11.78

Payments to and Provisions for

Employees
Selling and Administrative
Expenses
Financial Expenses
Miscellaneous Expenditure Written
Off
Depreciation
Total Expenditure

50,901.37
1,333.55

45,827.98
854.50

5,073.39
479.05

11.07
56.06

394.18
2,742.04
201,422.84

566.79
2,575.26
174,612.87

(172.61)
166.78
26,809.97

(30.45)
6.48
15.35

Balance being Operating Net

Profit
before Taxation
Provision for Taxation : Current

42,499.59
4,748.45

36,517.59
4,057.25

5,982.00
691.20

(255.09)

75.32

(330.41)

16.38
17.04
(438.67
)

650.97

707.81

(56.84)

(8.03)

37,355.26

31,677.21

5,678.05

17.92

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

0.00

18.58

(18.58)

(100.00
)

37,355.26
32,322.99

31,695.79
22,915.65

5,659.47
9,407.34

17.86
41.05

0.11

68.55

(68.44)

(99.84)

71.68

154.19

(82.51)

(53.51)

Page 39 of 113
69,606.68

54,525.80

15,080.88

27.66

6,488.07
8,650.76
1,102.65
1,470.20
0.95
9,000.00

6,480.05
6,480.17
1,101.28
1,101.31
40.00
7,000.00

8.02
2,170.59
1.37
368.89
(39.05)
2,000.00

0.12
33.50
0.12
33.50
(97.63)
28.57

42,894.05
69,606.68

32,322.99
54,525.80

10,571.06
15,080.88

32.70
27.66

4.32
4.31

3.66
3.64

0.66
0.67

18.03
18.41

864,907,642.00
869,156,259.00

863,826,759.00
868,807,461.00

1,080,883.00
348,798.00

0.13
0.04

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
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 40 of 113
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 41 of 113

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 42 of 113

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

Particulars

Year ended
March 31, 2010
Indian Rupees
in lacs

Domestic Sales Less Returns

Exports
Gross Sales Less Returns

Ratio

Year ended
March 31,
2009
Indian
Rupees in
lacs

Ratio

Year ended
March 31,
2007
Indian
Rupees in
lacs

Ratio

Year ended
March 31,
2006
Indian
Rupees in
lacs

Ratio

230,162.64

96.05

201,293.09

96.62

196,537.05

89.47

171,140.50

91.72

12,205.25

5.09

10,485.77

5.03

26,834.73

12.22

18,816.50

10.08

242,367.89

101.15

211,778.86

101.65

223,371.78

101.69

189,957.00

101.81

2,751.50

1.15

3,439.26

1.65

3,711.03

1.69

3,372.14

1.81

Net Sales

239,616.39

100.00

208,339.60

100.00

219,660.75

100.00

186,584.86

100.00

Cost of Materials

122,243.11

51.02

101,391.54

48.67

97,108.28

44.21

80,772.30

43.29

7,076.13

2.95

6,985.57

100.00

7,425.54

3.38

5,711.24

3.06

Cost of Goods Sold(COGS)

129,319.24

53.97

108,377.11

52.02

104,533.82

47.59

86,483.54

46.35

Gross Profit
Payments to and Provisions
for Employees
Selling and Administrative
Expenses
Miscellaneous Expenditure
Written Off

110,297.15

46.03

99,962.49

47.98

115,126.93

52.41

100,101.32

53.65

16,732.46

6.98

14,969.23

7.19

16,666.83

7.59

14,495.75

7.77

50,901.37

21.24

47,269.98

22.69

63,486.20

28.90

56,522.85

30.29

394.18

0.16

566.79

0.27

649.36

0.30

426.24

0.23

4,306.04

1.80

2,790.86

1.34

2,591.23

1.18

1,336.68

0.72

46,575.18

19.44

39,947.35

19.17

36,915.77

16.81

29,993.16

16.07

2,742.04

1.14

2,575.26

1.24

3,429.05

1.56

2,692.46

1.44

43,833.14

18.29

37,372.09

17.94

33,486.72

15.24

27,300.70

14.63

1,333.55

0.56

854.50

0.41

1,537.50

0.70

1,638.73

0.88

42,499.59

17.74

36,517.59

17.53

31,949.22

14.54

25,661.97

13.75

Less: Excise Duty

Manufacturing Expenses

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
Provision for Taxation :
Current

0.00

0.00

0.00

0.00

0.00

0.00

18.58

0.01

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-1,274.05

-0.68

42,499.59

17.74

36,499.01

17.52

31,949.22

14.54

26,936.02

14.44

4,748.45

1.98

4,057.25

1.95

3,494.04

1.59

2,185.80

1.17

Page 43 of 113

Deferred
Fringe Benefit
Provision for Taxation of
earlier years written back
Provision for Taxation for
earlier year
Total tax

-255.09

-0.11

75.32

0.04

-136.86

-0.06

353.04

0.19

650.97

0.27

707.81

0.34

374.68

0.17

463.31

0.25

0.11

0.00

68.55

0.03

22.82

0.01

148.53

0.08

71.68

0.03

154.19

0.07

-155.37

-0.07

-51.83

-0.03

5,216.12

2.18

5,063.12

2.43

3,599.31

1.64

3,098.85

1.66

Common-Sized Statement Showing Ratio of Expenses to Net Sales

COMMON SIZED STATEMENT SHOWING RATIO OF EXPENSES TO NET SALES
Particulars

2009
Figures(Rs lacs)

Net Sales

2007
%

239616.39

Figures(Rs lacs)
100

208339.60

%
100

Materials Cost
Raw Materials Consumed :
i)Opening Stock

5,749.47

2.40

4,692.06

2.25

ii) Add : Purchases

58,172.12

24.28

46,372.97

22.26

Total

63,921.59

26.68

51,065.03

24.51

7,126.96

2.97

5,749.47

2.76

56,794.63

23.70

45,315.56

21.75

3,120.33

1.30

3,074.17

1.48

ii) Add : Purchases

33,199.91

13.86

28,450.87

13.66

Total

36,320.24

15.16

31,525.04

15.13

3,901.49

1.63

3,120.33

1.50

Total packaging material Consumed

32,418.75

13.53

28,404.71

13.63

Purchase of Finished Products

36,918.57

15.41

29,417.23

14.12

Stock in Process

3,350.14

1.40

3,173.25

1.52

Finished Products

7,891.94

3.29

7,764.87

3.73

11,242.08

4.69

10,938.12

5.25

Stock-in-process

5,311.26

2.22

3,350.14

1.61

Finished Products

9,819.66

4.10

7,891.94

3.79

15,130.92

6.31

11,242.08

5.40

-3,888.84

-1.62

-303.96

-0.15

iii) Less : Closing Stock

Total Raw material Consumed
Packing Materials Consumed
i)Opening Stock

iii) Less : Closing Stock

Adjustment of Stocks in process and Finished Goods

Opening Stock :

Total
Closing Stock :

Total
Increase(-)/Decrease in Stock in Process and
Finished Goods

Page 44 of 113

Total Material Cost

122243.11

51.02

102833.54

49.36

Power and Fuel

3,662.56

1.53

3,842.27

1.84

Stores & Spares Consumed

1,041.82

0.43

1,002.37

0.48

Building

223.94

0.09

219.90

0.11

Plant & Machinery

373.81

0.16

387.51

0.19

Others

388.76

0.16

361.65

0.17

Processing Charges

1,385.24

0.58

1,171.87

0.56

Total Manufacturing and Operating Expenses

7,076.13

2.95

6,985.57

3.35

13,253.51

5.53

12,071.12

5.79

1,690.69

0.71

1,262.36

0.61

Manufacturing and Other Expenses

Manufacturing and Operating Expenses

Repairs & Maintenance

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)

525.85

0.22

482.63

0.23

1,262.41

0.53

1,153.12

0.55

Total Payments to and Provisions for Employees

16,732.46

6.98

14,969.23

7.19

1,409.78

0.59

1,067.30

0.51

Rates and Taxes

266.72

0.11

184.93

0.09

Insurance

228.08

0.10

272.74

0.13

Sales Tax

101.01

0.04

135.79

0.07

Freight and Forwarding Charges

5,007.01

2.09

5,241.76

2.52

Commission, Discount and Rebate

2,274.61

0.95

2,139.73

1.03

28,492.76

11.89

24,809.68

11.91

Travel & Conveyance

2,082.48

0.87

1,919.92

0.92

Legal & Professional

977.88

0.41

1,429.18

0.69

Telephone, Fax Expenses

291.93

0.12

307.28

0.15

Security Expenses

299.53

0.13

268.01

0.13

General Expenses

7,853.37

3.28

6,896.20

3.31

10.20

0.00

11.13

0.01

21.51

0.01

18.53

0.01

0.00

0.00

0.00

0.00

- Reimbursement of Expenses

13.45

0.01

13.41

0.01

- Provident Fund and Certificates

19.09

0.01

19.14

0.01

Total Audit Fee

54.05

0.02

51.08

0.02

363.01

0.15

458.29

0.22

Selling and Adminstrative Expenses

Rent

Advertising and Publicity

Directors Fees
Auditors Remuneration:
- Audit Fee
- Branch Auditors Fee

Donation

Page 45 of 113

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)

165.98

0.07

75.00

0.04

39.30

0.02

737.82

0.31

257.71

0.12

Loss on Sale of Fixed Assets

13.67

0.01

165.77

0.08

Provision for Contingent Liability

13.22

0.01

73.38

0.04

258.26

0.11

23.80

0.01

50,901.37

21.24

45,827.98

22.00

Interest paid on :

666.58

0.28

336.74

0.16

Fixed Period Loan

318.15

0.13

211.61

0.10

Others
(Net of Int. received Rs. 112.97 TDS thereon Rs.
7.74 Previous year Rs. 237.94 TDS thereon Rs
12.90)

984.73

0.41

548.35

0.26

Bank Charges

348.82

0.15

306.15

0.15

1,333.55

0.56

854.50

0.41

76,043.51

31.74

68,637.28

32.94

Fixed Assets Written Down

Total Selling and Adminstrative Expenses
Financial Expenses

Total Financial Expenses

Total Manufacturing and other expense

Volume-Value-Price Analysis of Consumption of Raw Materials

Page 46 of 113

Raw materials

Volume(MT) & %age to Grand Total

Average Purchase Price(Rs. In thou

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

2007
2009
Volume

%age

Volume

Sugar and Molases

17,641.22

18.94

16,940.81

Vegetables Oils
Herbs, Jari Booti & Raw
Madhu
Chemicals & Perfumery
Compounds

18,783.28

20.17

34,330.61
22,379.55

%age

Value

16,050.10

17.65
16.72

36.86

31,487.93

24.03

31,491.87

%age

2,388.09

12,251.85

32.81

14,016.73

32.81

16,419.63
10,996.62

93,134.66

100.00

95,970.71

Value

5.48
21.57

3,109.80

Others Raw Materials

Total raw materials

2007

2009

100.00

56,794.63

2009
%age

9,595.28

5.27
21.17

176.28
652.27

24.68

11,111.98

24.52

408.29

28.91
19.36
100.00

14,955.62

33.00
16.03
100.00

733.69
609.81

7,264.59
45,315.56

Volume-Value-Price Analysis of Finished Goods Sold

Class of Goods

Volume(MT) & %age to Grand Total

2007

2009
Volume
Hair Oils
Chyawanprash
Honey
Tooth Powder & Paste
Hajmola

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

%age

Volume

22805.2

25.39

20050.58

13741.49

15.30

14048.56

5392.81

6.00

5309.69

20696.63

23.04

18033.69

4339.95

4.83

4856.23

2007

2008
%age

25.34
17.75
6.71
22.79
6.14

Value
50483.72
19430.03
11688.11
32970.01
9050.61

%age

25.10
9.66
5.81
16.39
4.50

Value
37569.58
17947.27
10661.54
30073.05
7148.57

Average Purchase Price(Rs. In

thousands)
2008
2007 Volum

%age

21.52
10.28
6.11
17.23
4.09

2,213.69
1,413.97
2,167.35
1,593.01
2,085.42

1,873.74
1,277.52
2,007.94
1,667.60
1,472.04

13.
-2.
1.
14.
-10.

Page 47 of 113
Asava Arishta
Fruits,Nector &
Drinks
Vegetable Pastes

6954.02

7.74

6296.02

7.96

5639.95

2.80

4896.81

2.80

811.03

777.76

10.

15172.51

16.89

9912.79

7613.04

0.79

626.79

3.79
0.30
31.65
100.00

6634.15

710.76

12.53
0.79

3.80
0.30
33.87
100.00

501.77
844.95

669.25
821.74

53.
13.
13.

Others
Total

600.56
63659.74

89813.37

100.00

79134.35

100.00

201135.8

515.06
59138.42
174584.5

2,239.49

2,206.18

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.

Page 48 of 113

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.
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

Page 49 of 113

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 %.

Page 50 of 113

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

Page 51 of 113

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

2007-08

2008-09

2009-10

2010-11

Total Shareholders Equity

96386.87

40318.92

52832.34

73819.67

Total Assets

45234.31

42608.98

55898.73

89901.7

Proprietary Ratio

2.130835421

0.946254

0.945144

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.

Page 52 of 113

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

2007-08

2008-09

2009-10

2010-11

Total Debt

2057.52

2007.99

1733.69

13898.25

Net Worth

96386.87

40318.92

52832.34

73819.67

Debt-Equity Ratio

0.021346476

0.049803

0.032815

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.

Page 53 of 113

Page 54 of 113

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

2007-08

2008-09

2009-10

2010-11

Total Long term Loans

764.22

433.9

611.29

288.94

Net Worth

96386.87

40318.92

Long-Term Debt-Equity Ratio

0.007928673

0.010762

52832.34
0.01157

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.

Page 55 of 113

Page 56 of 113

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

2007-08

2008-09

2009-10

2010-11

Interest On Long Term Debt

565.87

443.01

845.5

1333.55

PAT + Interest on Long Term Debt +

Depreciation

21379.29

27848.44

35097.97

41430.86

Interest Coverage Ratio

37.78127485

62.86188

41.5115

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.

Page 57 of 113

Overall Analysis of Solvency Ratios

Over-all Analysis (Solvency Ratios)

Year

2007-08

2008-09

2009-10

2010-11

Proprietary Ratio

2.130835421

0.946254

0.945144

0.8211154

Debt-Equity Ratio

0.021346476

0.049803

0.032815

0.188273

Long-Term Debt-Equity Ratio

0.007928673

0.010762

0.01157

0.003914

Interest Coverage Ratio

37.78127485

62.86188

41.5115

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

Page 58 of 113

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

Year
Current Assets, loans and

Current Ratio
2010-11
2009-10

2008-09

2007-08

advances
Current Liabilities and

74,504.46

55,281.33

39,641.22

28,436.22

Provisions
Current Ratio

66,648.91
1.12

58,263.48
0.95

35,608.47
1.11

30,731.00
0.93

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.

Page 59 of 113

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 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
2010
2009
Liquid Assets
25,604.49 16,872.89
Current Liabilities and Provisions
66,648.91 58,263.48
Liquid ratio
0.38
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.

Page 60 of 113

However, a low liquid ratio does not necessarily mean a bad liquidity position as inventories are not absolutely non-liquid.

Page 61 of 113

Net Working Capital

Formula for calculation of net working capital is given by:

Net Working Capital = Current Assets Current Liabilities

Net Working Capital

Year
2010
2008
Current Assets, loans and advances
74,504.46 55,281.33
Current Liabilities and Provisions
66,648.91 58,263.48
Net Working Capital
7,855.55
-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.

Page 62 of 113

Net working Capital

10,000.00
8,000.00
6,000.00
Net working Capital

4,000.00
2,000.00
0.00
2006
-2,000.00

2007

2008

2009

-4,000.00

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

Year

Operating Cash Flow Ratio

2010
2009

2007

2006

Page 63 of 113

Cash Flow to Operations

Current Liabilities and Provisions
Operating Cash Flow Ratio

32,357.31
66,648.91
0.49

31,329.01
58,263.48
0.54

23,442.75
35,608.47
0.66

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

19,434.49
30,731.00
0.63

Page 64 of 113

Overall Analysis of Liquidity Ratios

Over-all Analysis (Liquidity Ratios)

Year

2010

2009

2007

2006

Current Ratio

1.12

0.95

1.11

0.93

Liquid ratio

0.38

0.29

0.31

0.21

Net Working Capital

7,855.55

-2,982.15

4,032.75

-2,294.78

Operating Cash Flow Ratio

0.49

0.54

0.66

0.63

1.20
1.00
0.80

Current Ratio

0.60

Liquid Ratio

0.40

Operating Cash
Flow Ratio

0.20
0.00
2006

2007

2008

2009

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.

Page 65 of 113

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.

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

Page 66 of 113

Creditors Turnover Ratio

8
7
6
5
4

Fixed Asset Turnover

Ratio

Net Worth Turnover

Ratio

2
1
0
2006

2007

2008

2009

Fixed Asset Turnover Ratio

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

assets of a company or in other words

Page 67 of 113

Fixed Asset Turnover Ratio = Net Sales

Net Block of Fixed Assets
Fixed Asset Turnover Ratio
Year
2010-11
2009-10
2008-09
2007-08
Net Sales
2,39,616.39 2,08,339.60 1,60,042.90 1,34,278.81
Net Block of Fixed Assets
36,003.11
29,443.01
23,904.05
19,883.68
Fixed Asset Turnover Ratio
6.65
7.08
6.70
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.

Page 68 of 113

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
2010-11
2009-10
2008-09
2007-08
Net Sales
2,39,616.39 2,08,339.60 1,60,042.90 1,34,278.81
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

Page 69 of 113

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.

Page 70 of 113

Inventory Turnover Ratio

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

Inventory Holding Period=

Inventory
365
Cost of goods sold

Inventory Holding Period

76
74
72

Inventory Holding
Period

70
68
66
64
62
2006

2007

2008

2009

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

Page 71 of 113

Year

Inventory Holding Period

2010
2009

2008
15,736.9

2007

Inventory

26,171.64
1,29,319.2

20,114.69

4
82,192.3

11,560.90

Cost of goods sold

Inventory Holding Period

4
73.86

1,09,819.11
66.85

8
69.88

61,256.77
68.88

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.

Page 72 of 113
Collection Period and Credit Period
140
120
100
80
60
40
20
0

Collection period
Credit Period

Page 73 of 113

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=

Recievables
365
Total Sales

Year
Recievables
Total Sales
Collection period allowed to
Customers

Collection Period
2010-11
2009-10
11,236.01 10,046.43
2,42,367.
2,11,778.
89
16.92

2008-09
6,097.87
1,63,736.

2007-08
2,694.25
1,36,968.

86

12

29

17.31

13.60

7.17

Page 74 of 113

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.

Page 75 of 113

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:
Credit Period=

Payables
365
Purchases

Creditors Turnover Ratio

Year
2010
2009
Payables
35,138.71
31,722.51
Purchases
1,22,243.11 1,02,833.54
Suppliers Credit Period
104.91
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 long-run.

Page 76 of 113

Page 77 of 113

Du Pont Analysis
With Reference To Return on Net Worth
Du Pont Analysis with Reference to RONW
Year

2009-10

Net Profit Margin

15.20%

2010-11
15.58%

Net Worth Turnover

4.61 times

3.83 times

RONW

70.10%

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

2009-10

Net Profit Margin

15.20%

Total Asset Turnover

4.61 times

2010-11
15.58%
3.63 times

Page 78 of 113

ROTA

55.28%

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 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

2009-10
31677.21

864907642
869156259

863635509
869063210

4.32
4.3

3.66
3.64

Page 79 of 113

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.

Page 80 of 113

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

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

683.07
1138.87

42499.59
1219.15
10.2
737.82
0.95

36517.59
1138.87
11.12
257.71
40

Page 81 of 113

Adjusted net profit

Maximum permissible remuneration
Maximum commission payable:
Actual commission (To one non whole-time Director)

44465.81
4891.23
444.65
NIL

37885.29
4167.38
378.85
27.79

Page 82 of 113

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.

Page 83 of 113

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.

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.

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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

Capital Employed
Rs. in lacs

1 Consumer Care Business

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

PAT

% of Total

Rs. in lacs

% of Total

33,451.00
6,295.00

45.85
8.63

52,099.00
5,593.00

139.47
14.97

8,840.00
3,298.00
21,071.00
72,955.00

12.12
4.52
28.88
100.00

5,326.00
131.00
-25,793.00
37,356.00

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.

Page 86 of 113

Page 87 of 113

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.

Page 88 of 113

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.

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.

Page 89 of 113

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.

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.

Page 90 of 113

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.

Page 91 of 113

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

Page 92 of 113

Page 93 of 113

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.

Page 94 of 113

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.

Page 95 of 113

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.

Page 96 of 113

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.

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.

Page 97 of 113

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)

EPS of peers in 2009

25

21.34

20
15

11.47

10
5

6.29

4.32

0
Dabur

Hul

Colgate

Godrej

Page 98 of 113

Earnings per Share of Dabur

5
4
3

4.32
3.67
2.92

3.3

2
1
0
2005-06 2006-07 2007-08 2008-09

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 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.

Page 99 of 113

Price Earnings Ratio (P/E Ratio)

PE Ratio Comparison
40
35
30

37.32

34.6

34.6

29.16
24.44

23.48

25
20
15
10
5
0
Dabur

HUL

Godrej

P&G

Marico Ltd Colgate

PE ratio of these companies is dated 25 th 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.

Page 100 of 113

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

Page 101 of 113

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 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

Page 102 of 113

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.

Page 104 of 113

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.

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.

Page 105 of 113

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.

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

Page 106 of 113

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 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

Page 107 of 113

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

Page 108 of 113

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.

Page 109 of 113

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.

Page 110 of 113

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.

Page 111 of 113

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.

Page 112 of 113

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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