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RATIO ANALYSIS OF DABUR INDIA LIMITED

Final Project Report

Submitted To

Institute Of Management Technology

In partial fulfillment of the requirement for the degree of

MASTER OF BUSINESS ADMINISTRATION

Under Supervision: Submitted By:


Mr. Pankaj Manocha Sumit
Roll No.: 1221000293

Institute Of Management Technology


Centre for Distance Learning,
Ghaziabad

2014

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RATIO ANALYSIS OF DABUR INDIA
LIMITED

Under Supervision of : Mr.Pankaj Manocha

Submitted By:

Name : SUMIT

Enrollment No. : 1221000293

Area of Specialization : Finance

Title of the Project : Ratio Analysis of Dabur India Limited

Email : : sumitkumar17588@ gmail.com

Contact No. : 9873145787

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ACKNOWLEDGEMENT

A Project usually falls short of its expectations unless guided by the right person at the
right time. The success of the Project is an outcome of the sincere efforts channeled in the
right direction, efficient supervision and most valuable technical assistance. I would like
to take this opportunity to gratefully acknowledge the very kind and patient guidance and
encouragement I have received from my project guide MR. Pankaj Manocha without
his critical evaluation and suggestion at every stage of the Project, this report could never
have reached its present form. He not only guided me throughout the Project but also for
the informal discussion, which helped me gain a broad perspective.

SUMIT

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Table of Contents
S.N Title Page
o No.

1. Chapter 1: Introduction 1

1.1 About the industry

1.2 About the organization

2. Chapter 2 : Topic introduction & Literature review 33

3. Chapter 3 : Research methodology 37

3.1 Purpose of the study

3.2 Managerial usefulness of the study

3.3 Research objective

3.4 Research methodology

3.5 Limitations of the research

4. Chapter 4 : Analysis & Interpretation 40

5. Chapter 5 : Findings 81

Chapter 6 : Recommendations & Conclusion


6. 84
Recommendations
Conclusion

7. Bibliography 87

8. Annexure 89

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EXECUTIVE SUMMARY

The project Ratio Analysis of Dabur India Limited Aims to interpret the
financial statement so that the strengths and weaknesses of a firm as well as its historical
performance and current financial condition can be determined.

For the purpose the data has been used, which was collected from the past
financial records of the company i.e., balance sheet and profit and loss account, for three
financial years(2009-10, 2010-11, 2011-12). The data collected broadly relate to the
current assets and current liabilities of the company.

The technique used to analyze the financial condition of the company is Ratio
Analysis. For this purpose three years (2009-2010, 2010-2011 & 2011-2012) ratios have
been calculated of Dabur and out of them two years (2009-2010 & 2010-2011) ratios
have compare with other FMCG companies. The method of trend ratios has been
adopted. The analysis process has been undertaken in two stages:

a) Calculation of ratios

b) Their interpretation

The following ratios have been calculated:

a) Liquidity Ratios

The liquidity ratios represent excess of current assets over current liabilities. It is
the ability of a firm to satisfy its short-term obligations as they become due.

b) Leverage Ratios

The leverage ratios measure the ratios of long-term or total debt to shareholders
equity.

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c) Profitability Ratios

The profitability ratios use to measures operating efficiency of a firm and its
ability to ensure adequate returns to its shareholders depends ultimately on the profits
earned by it.

d) Activity Ratios

The activity ratios measure the speed with which various accounts/assets are
converted into sales or cash.

After making all the calculations each ratio has been interpreted and this can be
summarized as follows:

The net working capital of the company shows an increasing trend. The analysis
also reveals a rising inventory turnover ratio and debtors turnover ratio and an improved
debt collection period. At the same time the company also has a high current asset and
quick ratio, which represents high liquidity.

The project also gives information about the practices presently being followed in
Dabur to manage their ratios. After making a thorough analysis of the various aspects
related to the ratios the company conclusion has been drawn. The company has sufficient
funds to meet its short-term obligations as they become due.

Finally on the basis of the analysis and the conclusions drawn a SWOT analysis
has been done and recommendations given.

Therefore, a financial analysis of the working capital of Dabur reveals that the
company has been able to manage its working capital efficiently thereby strengthening its
short-term financial position.

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Chapter 1
INTRODUCTION
1.1 OVERVIEW OF THE INDUSTRY

Fast Moving Consumer Goods is the booming industry in India. After all, it is an
industry which touches every aspect of human life, from looks to hygiene to palate.
Though the market scenario was very different before the liberalization of Indian
economy the product quality as well as the competitiveness has immensely increased.
After the liberalization the players like Pepsi and Coke has changed the rules of the game
in the industry. One reason for the lagging behind of this industry was the spending
power of people, the other reasons were like lack of innovation because of the closed
market having high import duties, and the minuscule level of competition as their were
not many players in the market. Earlier it was the sales era but at present customer has the
final call.

Categorization of FMCG Products

Category Products

Household Care Fabric wash (laundry soaps and synthetic

detergents), household cleaners (dish/utensil

cleaners, floor cleaners, toilet cleaners, air

fresheners, insecticides and mosquito repellents,

Metal polish and furniture polish).

Food and Health beverages, soft drinks, staples/cereals,

Beverages bakery products (biscuits, bread, cakes), snack

food, chocolates, ice cream, tea, coffee, soft

drinks, processed fruits, vegetables, dairy

Products, bottled water, branded flour, branded


rice, branded sugar, juices etc.

Personal Care Oral care, hair care, skin care, personal wash
(soaps), cosmetics and toiletries, deodorants,

Perfumes, feminine hygiene, paper products

Industry Segments

The main segments of the FMCG sector are:

Personal Care: oral care; hair care; skin care; personal wash (soaps); cosmetics
and toiletries; deodorants; perfumes; paper products (tissues, diapers, sanitary);
shoe care. Major companies active in this segment include Hindustan Lever;
Godrej Soaps, Colgate- Palmolive, Marico, Dabur and Procter & Gamble.

Household Care: fabric wash (laundry soaps and synthetic detergents); household
cleaners (dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners,
insecticides and mosquito repellants, metal polish and furniture polish).

Major companies active in this segment include Hindustan Lever, Nirma and
Reckitt & Colman.

Branded and Packaged Food and Beverages: health beverages; soft drinks;
staples/cereals; bakery products (biscuits, bread, cakes); snack food; chocolates;
ice cream; tea; coffee; processed fruits, vegetables and meat; dairy products;
bottled water; branded flour; branded rice; branded sugar; juices etc.

Major companies active in this segment include Hindustan Lever, Nestle,


Cadbury and Dabur.

Spirits and Tobacco Major companies active in this segment include ITC, Godfrey
Philips, UB and Shaw Wallace.

An exact product-wise sales break up for each of the items is difficult.

HISTORY OF FMCG INDUSTRY


Fast moving consumer goods (FMCG) industry has a long history. However, the
Indian FMCG industry began to take shape only during the last fifty-odd years. To date,
the Indian FMCG industry continues to suffer from a definitional dilemma. In fact, the
industry is yet to crystallize in terms of definition and market size, among others.

The definitional confusion that has marked the Indian FMCG industry is getting
confounded. Some call it the FMCG industry, some others call it the CPG industry and
some even call it the PMCG (Packaged Mass Consumption Goods) industry. The Indian
FMCG industry has suffered because of this confusion.

It was Dabur, which kick started in India what's today known as the fast moving
consumer goods (FMCG) industry. It was some 115 years ago, much before Hindustan
Lever (HLL) materialized on the scene. How has the FMCG industry metamorphosed in
India?

The dramatic nineties

Things however began to change post-reforms during the nineties. The floodgates
were opened. And MNCs with saturating home-markets who were hungrily looking for
markets elsewhere rushed in. Categories within categories were created in products such
as hair-oil and skincare, and many new product categories were also created. Untouched
facets of the Indian consumer were explored. The FMCG players had in front of them not
only a vast untapped market but also a market that was fast growing. Income-levels were
rising. A new class of upwardly mobile was emerging. Television and, satellite and cable
television were helping the market to grow further in rural areas by changing aspirations
and lifestyles.

The canvas did widen for the FMCG players, but so did the challenges. Rules of
the game changed. Strategies, in their true sense, came to the fore. Quite unlike in the
past, companies began looking for ways to expand their product-portfolios and
distribution reach. Acquisition of brands became the order of the day as it gave the
players easy options of attaining growth in the FMCG sector. That is true of the MNCs
who are known for their deep pockets.
Dabur, for instance unleashed brands in a way it had never done earlier. Just in a
span of ten years, it gobbled up Food products, Health Care Products, was bought in the
market. Dabur plan to increase the distribution channel although it already have good
distribution channel.

Current Scenario in FMCG

At present the industry is on a roll. Following are some industry stats which prove it:

The FMCG sector is the fourth-largest sector in the Indian economy

At present the size of the industry is US $13.1 billion

The industry is expected to grow at compounded rate of 9 % per annum

The growth in the urban sector is 7% and in rural sector is 4%

The top five companies HLL, ITC, Dabur, Britannia and Nestle of FMCG
industry has grown at the rate of 15% this year.

Future of the Industry

Looking at the steps taken by the government to improve the picture of Indian
industry we can say that there are immense growth opportunities for this sector.
Following are some of the facts related to the bright future of this industry:

The industry is expected to grow up to the size of US $33.4 billion. by the year
2015

The demand for FMCG products is expected to boom by 60% in 2012 and 100%
by 2015

In the next few decades the production of foods by PMCG is expected to rise up
to 70% from its current share of 11%

Opening up of the retail sector for FDI. Currently the FDI in retail is 24% it may
be further increased as looking at the growth rate of the industry in 2011 the
industry is expected to need an investment of US $28 billion
Government encouraging the export of FMCG products by reducing the export
duty

The per capita disposable income in India is expected to rise from US $556 in
2009 to US $1150 in 2015, which means the increase in purchasing power. It will
lead to the growth in the sales of products like health care.

India is the worlds largest producer of milk still only 15% of the milk is
processed, a huge potential of growth lies in this segment of the industry.

Currently the size of semi processed and ready to eat packaged food market is $70
billion which is the 15% of its potential, this part of FMCG also have an immense
growth potential.

By 2011, 200 million people are expected to shift to packaged and processed food

There is only 45% penetration in the health care market and 55% of the market is
still to be covered in this market.

If we look at the distribution of Indian population around 47% of Indian


population is below 20 years of age by 2015 which is expected to grow to 55%
which means the consumer base of FMCG products like healthcare, hygiene,
beverages etc will increase

The rural market in India was not well penetrated by the FMCG industry till now
but with the projects like HLL Shakti and ITC E-Chaupal the penetration has
increased and this will lead to faster growth of this industry

The emergence of the concept of ECR (Efficient Consumer Response) will the
FMCG industry operate more efficiently by filling up the demand supply gap
which coming up a major problem in this industry.

Environmental Factors affecting the Industry

There are various factors at Micro as well Macro level which influences the FMCG
industry. The factors at micro level can be costs incurred in production, efficiency of the
various departments in the companies of FMCG industry. At macro level following are
the factors influencing FMCG industry:

Economic Growth as it will lead to increase in the income of the people and so the
expenditure on FMCG products

Changes in demographic profile of people

Government policies like :

o Tax

o FDI policies

o Export Duties

Entry of new players in the market as it rises the competition and leads to various
changes in the way business is done

The competition faced from unorganized sector as they get away without paying
taxes and can have the competency at the price level

Role of Dabur in this Industry

Dabur Foods Limited (DFL) posted a record 53% sales growth for the financial
year 2011-11. This outstanding performance has resulted in DFL closing the year at
Rs.190 crores (balance sheet figure) and this strong growth is reflected in the incremental
turnover of Rs. 12.1 crores over budget and Rs. 61.5 crores over last year.
The company recorded a PAT of Rs. 12.1 crores, which is 130.2% growth over LY and as
a result PAT % to sales moved from 4.5% to 6.8%.

Some of the key Highlights of the Year are:

Company earned additional revenue to the tune of Rs. 15 crores through its export
operations, which is a 260% growth over LY and achieved the recognition of a
Star Export House in 2 years.
New products launches have contributed to 20% of the turnover and contributed
to 24% of our growth.

Real and Activ Brands together have clocked a turnover of Rs. 150 crores.

Replant of Activ has resulted in value sales of Rs 3040 lakhs resulting in a


stupendous growth of 99% over last year and increased contribution from 13% to
17% of SBU sales.

Dabur Foods Limited (DFL) a wholly owned subsidiary of Dabur India Limited
(DIL), operates on the naturals platform with a product portfolio consisting mainly of
packaged fruit juices, cooking pastes, sauces and items for institutional food purchases

The business registered another year of fantastic performance in 2011-12 by


growing sales by 48% and growing its profit by more than two times. This is the second
year in a row that the business has grown over 48% in sales growth. The business
recorded a turnover of Rs.192.53 crores registering a growth of 48% and profit after tax
of Rs.12.1 crores. In line with the strategic path laid down, the following are the key
highlights of performance:

Beverage portfolio growth at 50% driven by its segmentation strategy under


Real.

Strong growth from new product launches and new channels which contributed
to 24% of our total growth.

The line extensions of Home made also continued to drive the growth.

Exports grew by over 100%.

The primary growth driver of your business was its fruit beverage portfolio. The
segmentation strategy put into place by Sanjay and his team to differentiate the 3 brands
has been successfully implemented. Real, Activ and Coolers are now differentiated in
terms of appeal, benefit, variants and packaging. Real continued to grow by over 35%.
The major success of the year was Real Activ which doubled it's sales over last year. The
extension to the innovative fruit and vegetable variants has been widely accepted by the
Indian consumers. Both these brand have firmly strengthen Dabur Foods leadership in
the fruit juices market coupled with the excellent retail distribution by KG and his team.

"Coolers" - The range of drinks is based on traditional Indian formulations, which


have a cooling effect on the body - grew by 58%. It added 3 new flavors - Muskmelon,
Lemon Barley and Jamun.

The Home made brand grew by 28 per cent in 2011-12. These growth rates were
possible by the excellent performance of Coconut Milk & Tomato Pure.

Besides the retails channel, the product is extensively distributed in the food
services channel. In view of the growing size of this channel a dedicated structure headed
by Jyotiroop has been set up to service the customer. The company continued to
dominate this channel by making it available in the best hotels, restaurants, airlines and
several institutions like business houses to Indian army.

1.2 PROFILE OF THE ORGANIZATION

Introduction of Dabur India Limited

The evolution of Dabur is quite interesting and its root takes us back to the 19th century
where it all started in Bengal by a visionary by name Dr. S.K Burman, a physician by
profession. His mission was to provide effective and affordable cure for ordinary people
in far-flung villages. With missionary zeal and fervour, Dr. Burman undertook the task of
preparing natural cures for the killer diseases of those days, like cholera, malaria and
plague. Soon the news of his medicines travelled, and he came to be known as the trusted
'Daktar' or Doctor who came up with effective cures. And that is how his venture Dabur
got its name - derived from the Devanagri rendition of Daktar Burman. Dabur India
Limited is the fourth largest Company in India with interests in Health Care, Personal
Care and Food Products. The name is formed by joining the first half of Daktar and
Burman. Dabur India Ltd. is the co-owner of the IPL team Kings XI Punjab. Some of the
features of Dabur India Ltd are:

Largest Herbal & Natural Portfolio

4000 Distributors in India

Retail Reach 2,500,000

5 Umbrella Brands

350+ products

4000 employees

15 Manufacturing Plants

Dabur India Ltd: Company Profile

The company was founded by Dr. S. K. Burman in 1884 as a small pharmacy in Calcutta
(now Kolkata), West Bengal, India, and is now led by his great-grandson V.C. Burman.
Vatika Hair Oil and Shampoo are the high growth brand. The company, through Dabur
Pharma Ltd. does toxicology tests and markets ayurvedic medicines in a scientific
manner. The company has been around as a corporate entity for the past 35 years having
been brought to life in 1975. It is most famous for Dabur Chyawanprash and Hajmola.
Dabur operates in more than 5 countries and distributes its products worldwide. The
market penetration of Dabur is of about 1.5 million retail outlets all over India with 47
C& F agents and more than 5000 distributors. 17 ultra-modern manufacturing units
spread around the globe. Products are marketed in over 60 countries.Wide and deep
market penetration with 50 C&F agents, more than 5000 distributors and over 2.8 million
retail outlets all over India. Dabur has 13 ultra-modern manufacturing units.
Brand Dabur - In the 125th anniversary of its founding, as brand Dabur, the
management has gone ballistic through its annual report, over its achievements.
But the comparative dates for the purpose of rating its achievements are between
the base year 2000 and the latest completed accounting year. The company has
been around as a corporate entity for the past 35 years having been brought to life
in 1975. It may not be out of place to mention here that the company really got
wings after the promoter management put in place a very professional set up,
which largely included the exit of the family members from active management.

Largest home spun FMGC company - Dabur ltd is today anointed as India's
largest home spun FMCG Company. Its only other visible challenger to this
crown, Nirma, lost the plot years ago. In between the expansion of its product
portfolio, and the launch of new manufacturing capacities both within and without
the country, Dabur has expanded its presence across 60 countries, with 19
manufacturing plants to boot. (However, if the international business division
could crank up a turnover of only Rs 6 bn, then the company must be quite
stretched, figuratively speaking, as its footprint extends to 60 countries around the
globe. And, somehow, the group earned forex of only Rs 1.2 bn). The company is
also busy acquiring brands to rapidly build up both size and competence. It
acquired the Balsara brand in FY06 and the Fem Care brand. So far so good.

Product line - Its current sizeable brand portfolio extends from Real juices, to
Dabur Chyavanprash, Dabur Honey and Glucose D, the Vatika, Uveda and Amla
range, the toothpaste brands Babool, Meswak and Dabur Red, and, Hajmola,
Odomos, Gulabari, and, several over the counter healthcare products. These
products are grouped under 3 strategic business units. The business units being,
the Consumer Care Division, International Business Division, and, the Consumer
Health Division. The three divisions currently account for 68%, 17.6%, and 8%
respectively, of consolidated revenues. But for purposes of segmental results, the
company has grouped its operations under 4 heads. The operations are clubbed
under Consumer Care, Consumer Health, Foods, and others. Why it chooses to
adopt so many convoluted routes to reveal its true colors is difficult to
comprehend.

The HUL saga - This frenetic pace of growth reminds one of a similar mindset
that enveloped the FMCG industry top gun, Hindustan Unilever, especially when
it was operating under the wings of Susim Mukul Datta and then Keki Dadiseth.
The latter went on record to state that the company was in the market to acquire
brands. Today HUL is in the market, and for the second time at that, buying back
its shares in the open market, in a desperate attempt to prop up its share price!
One is not making any inferences here, but merely making a point.

Its sales dissected - For sure, the group's consolidated sales have clocked the
highest percentile growth for the decade. Total revenues excluding other income
growing 43% over that of the preceding year to Rs 34.2 bn. The sales push has
been driven by growth in manufacturing, in traded sales, the value addition from
its 11 subsidiaries, and in the contribution of its brand (Fem Care Pharmacy)
acquired during the year. The subsidiaries collectively rang up sales of Rs 8.4 bn,
but after deducting the inter-se transactions with the parent; their contribution to
overall revenue was Rs 5.4 bn or 16% of total revenues. But the profit margins
generated by the subsidiaries did not keep pace though. The subsidiaries are a
colorful bunchin the manner of their spread of operations that is. The most
interesting revelation is that

Dabur ltd has operations emanating out of Pakistan (which along with its operations in
Nepal is disclosed as 'operations in neighboring countries' in the directors' report).

Dabur ltd must rank as one of the few listed Indian companies brave enough to do so,
and win the approval of the two governments to do so too. This subsidiary is called
Asian Consumer care (Pak) Pvt. Ltd. But this operation accounts for nothing really,
ringing in sales of Rs 181 m and recording a loss before tax of Rs 23 m. It even makes a
tax provision on this book loss, so the loss after provision of tax is 28 m. A few of the
other subsidiaries also appear to making tax provisions on book losses.
The subsidiaries - Collectively, its biggest operations are out of the UAE, where
it has three entities flogging brand Dabur ltd. These three together also account
for close to 50% of total sales generated by all the subsidiaries. But just one of the
three, Dabur International, brings home the bacon with the other two having their
bottom-line seeped in red ink. Individually, it is the Nepalese subsidiary which
contributes the most, at 33% of all sales, but it does not make a dime for its
troubles. The only other company of significance is Dabur Egypt ringing in 10%
of all subsidiary sales and contributing healthily to profits too. The operations
based out of the UK and the USA is an embarrassment to say the least, and they
appear to be around only for cosmetic purposes, and merely to add to the number
of units in operation. All the subsidiaries barring H&B Stores appear to be under
the umbrella control of Dabur International. The parent has grand plans for H&B
Stores, the retail wing, but for the present, it is a gonner, what with losses
exceeding its turnover. This company will most definitely be sucking up a lot of
money before it turns operationally profitable. However, cumulatively its
international operations have been a grand success going by the accumulated
profits of Rs 598 m that the subsidiaries have generated to date.

Reviving up for action - It is in the domestic sector that the company is really
revving up for action. It is expanding manufacturing capacity at a fast clip. So
much so that the fixed asset to turnover ratio is showing signs of strain on the one
hand, and on the other, the market for what it produces is not able to grow fast
enough to cater to the expanded facilities. The company also sees sufficient value
in outsourcing finished goods and then flogging it to customers. So much so that
the re-sale of bought out goods contributed to 17% of overall standalone sales, or
Rs 4.9 bn in rupee terms. It also brought in a gross margin of Rs 972 m or a
percentile return of 20%. The 5 items of traded goods that are bought out and sold
are also produced in house, and then flogged in the markets. The biggest revenue
earner is a Fruits, Nectars and drinks, closely followed by an item called 'Others'.
The most perplexing part of manufactured sales (as is in traded sales) is that the
biggest contributor to income is an item called 'Others' with revenues of Rs 8 bn.
No capacities or production details of this omnibus item is available in the annual
report. (In the segmental results tabulation, the 'Others' category has revenues of
only Rs 827 m and brings in very low margins. It probably does not make any
money at the net level.) But of the 8 other items that are shown as being produced,
the top dog is Hair Oils, ringing in sales of Rs 5.7 bn, followed by toothpaste with
sales of Rs 4 bn. Next in line is Chyawanprash with sales of Rs 2.2 bn. All these 8
items have added substantially to capacity and hence the average utilization of
capacity ranges from a high of 81% In the case of honey to a low of 25% for
vegetable pastes. The capacity utilization of the three biggies averaged between
33% and 42%.

A tightly run ship - In spite of the frantic expansion of capacities and seeking
greater market share, the company is a very tightly run ship alright. Though its
investments in its subsidiaries bring no dividend returns (it also makes do without
any royalties), and its expansion of gross block is yet to bloom, the company was
able to manage its working capital fund flow most admirably. With borrowings
under strict control, interest costs are also minimized. It is also one of the few
companies that I have studied which rolls large sums in the secondary markets
and turns a large profit on the purchase / sale of securities.

Dabur At-a-Glance

Dabur India Limited has marked its presence with significant achievements and today
commands a market leadership status. Our story of success is based on dedication to
nature, corporate and process hygiene, dynamic leadership and commitment to our
partners and stakeholders. The results of our policies and initiatives speak for themselves.
Some of the results are :-

Leading consumer goods company in India with a turnover of Rs. 2834.11 Crore.

3 major Strategic Business Units (SBU)

Consumer Care Division (CCD),

Consumer Health Division (CHD) and


International Business Division (IBD)

3 Subsidiary Group companies

Dabur International, Fem Care Pharma and newu and 8 step down subsidiaries:

Dabur Nepal Pvt Ltd (Nepal), Dabur Egypt Ltd (Egypt), Asian Consumer Care
(Bangladesh), Asian Consumer Care (Pakistan), African Consumer Care (Nigeria),
Naturelle LLC (Ras Al Khaimah-UAE), Weikfield International (UAE) and Jaquline Inc.
(USA).

17 ultra-modern manufacturing units spread around the globe.

Products marketed in over 60 countries.

Wide and deep market penetration with 50 C&F agents, more than 5000
distributors and over 2.8 million retail outlets all over India. Dabur has 13 ultra-
modern manufacturing units. In 2006, Dabur won the ICSI (Institute of Chartered
Secretaries of India) National Award for excellence in Corporate Governance.

History

Journey so far . . .

1884 The birth of Dabur

1972 The company shifts base to Delhi from Kolkata

1986 Registered as Public Limited Company

1994 Listed on the Bombay Stock Exchange

1998 Professional team inducted to run the company

2000 Crosses Rs 1000 Crore Turnover

2003 Pharmaceutical Business de-merged to focus on core FMCG

2004 Profit exceeds Rs.100 Crore

2006 Acquires Balara strengthening Oral care & provided entry into Home care segment
2007 Dabur Figures in Top 10 Great Places To Work

2008 Dabur ranked among 'Asia's best under a Billion' enterprises by Forbes

2010 Acquired Fem Care Pharma entering the mainstream Skin care segment

2011 Strong growth momentum continued in spite of general economic downturn

Founding thoughts

"What is that life worth which cannot bring comfort to others"

The Doorstep 'Daktar' - The story of Dabur began with a small, but visionary
endeavour by Dr. S. K. Burman, a physician tucked away in Bengal. His mission was to
provide effective and affordable cure for ordinary people in far-flung villages. With
missionary zeal and fervour, Dr. Burman undertook the task of preparing natural cures for
the killer diseases of those days, like cholera, malaria and plague.Soon the news of his
medicines traveled, and he came to be known as the trusted 'Daktar' or Doctor who came
up with effective cures. And that is how his venture Dabur got its name - derived from the
Devanagri rendition of Daktar Burman. Dr. Burman set up Dabur in 1884 to produce and
dispense Ayurvedic medicines. Reaching out to a wide mass of

people who had no access to proper treatment. Dr. S. K. Burman's commitment and
ceaseless efforts resulted in the company growing from a fledgling medicine
manufacturer in a small Calcutta house, to a household name that at once evokes trust and
reliability.

1.1.5 Dabur group

With a basket including personal care, health care and food products, Dabur India
Limited has set up subsidiary Group Companies across the world that can manage its
businesses more efficiently. Given the vast range of products, sourcing, production and
marketing have been divested to the group companies that conduct their operations
independently:
Vision "Dedicated to the health and well being of every household"

Principles:

Ownership - This is our company. We accept personal responsibility, and


accountability to meet business needs.

Passion for Winning - We all are leaders in our area of responsibility, with a deep
commitment to deliver results. We are determined to be the best at doing what
matters most.

People Development- People are our most important asset. We add value through
result driven training, and we encourage & reward excellence.

Consumer Focus - We have superior understanding of consumer needs and


develop products to fulfill them better.

Team Work - We work together on the principle of mutual trust & transparency
in a boundary-less organisation. We are intellectually honest in advocating
proposals, including recognizing risks.

Innovation - Continuous innovation in products & processes is the basis of our


success.

Integrity - We are committed to the achievement of business success with


integrity. We are honest with consumers, with business partners and with each
other.

Top 3 brands of Dabur India Ltd:


Sno Brands Turnover Market Share Major Competitors

1 Dabur Amla Oil 300 crores 70 % Maricos Shanti Amla, Bajaj Bramhi
(approx.) Amla

2 Dabur Vatika 110 crores 6.4 % Marico, Keo Karpin, HUL, Bajaj

- (Dabur Vatika
Oil)

(Dabur Vatika 120 crores 6.8 % HUL, P&G

- Shampoo)

3 Dabur Real Juice 200 crores 56.9 % Pepsi Tropicana, Godrej Xs, NDDB
Safal, Parle Appy
Daburs Brand New Architecture

VA5DHR AENA P T J O I W E R
BKMA AURL O A L N D S
RLA
(Umbrella (Naughty & (Mass ( Herbal beauty ( Health

Brand for tasty market, premium care

Juice & digestive) value for image) products)

Other foods money)

Aimed at up

Market consumer)
AWARDS & ACHIEVEMENTS

Dabur India Ltd placed in the Dabur ranked 28th in ET- NDTV profit

List of 20 Stocks you must Brand Equity Most Trusted Business Leadership
own, for FMCG Prepared by
Brands 2010 list awards 2008
Forbes India

STRATEGIC BUSINESS UNITS

Dabur India Ltd. is mainly divided into 3 major strategic business units as under:

Consumer Care Division

Consumer Health Division

International Business Division


Following is the share of each division in the market:-

I CDNC OAOT NBE N RUS S NURU AM M T E IE O R R N H C A EA L A R BL E T U H S I N E S S


I N D D I AV I VID LS I TIS VOD I OI N. S NI O( 7 N( 2 7 . (.8 31 % %8 ). ) 5 % )
CONSUMER CARE DIVISION (CCD)

CCD addresses consumer needs across the entire FMCG spectrum through four distinct
business portfolios of Personal Care, Health Care, Home Care & Foods.

Master brands:

Dabur - Ayurvedic healthcare products

Vatika - Premium hair care

Hajmola - Tasty digestives

Real - Fruit juices & beverages

Fem - Fairness bleaches & skin care products

9 Billion- Rupee brands: Dabur Amla, Dabur Chyawanprash, Vatika, Real, Dabur Red
Toothpaste, Dabur Lal Dant Manjan, Babool, Hajmola and Dabur Honey.

Market Size-33 Billion

abur Brands- 5.6 Billion


Dabur Amla Hair Oil witnessed one of the strongest years reporting 20.4% growth
during the year driven by on ground activations and marketing support. Vatika Hair
Oil had a resurgent year with a growth of 12.2% during 2008 backed by a brand re-
launch, new packaging and communication.

Anmol Coconut Oil recorded a growth of 42.2% for 2008 with gains in key markets.
Dabur Mustard Amla Hair oil grew at 22.7% followed by re-staging under the Dabur
brand. Strategic positioning of Honey as food product, leading to market leadership
(over 75%) in branded honey market. Some of the achievements till date:

Dabur Chyawanprash the largest selling Ayurvedic medicine with over 65%
market share.

Vatika Shampoo has been the fastest selling shampoo brand in India for three
years in a row.

Hajmola tablets in command with 60% market share of digestive tablets category.
About 2.5 crore Hajmola tablets are consumed in India every day.

Leader in herbal digestives with 90% market share.


SHAMPOOS

Market Size - 21 Billion

Dabur Brands - 1.3 Billion

Shampoos continued its strong performance recording 31.5% growth for 2008.
Vatika continues to be fastest growing shampoo brand in the country with volume
growth of 37.5% for 2008 vs. 14.4% for the category as per AC Neilson April-
March, 2008 update. The Vatika range gained market share which went up to
6.8% vs. 5.7% in the previous year.

DIGESTIVES

Market Size-5 Billion

Dabur Brands- 1.5 Billion

The Digestives category witnessed a growth of 11.8% during 2008 resulting from
an excellent growth of 31% witnessed in 2010.
New variants and innovative consumer activations added to the momentum. Pudin
Hara brand has been shifted to CHD for increased focus on distribution through
chemists 2010 onwards.

FOODS

Market Size-5 Billion

Dabur Brands- 2.5 Billion

Foods category growth of 14.4% for 2011.

Brand growth in 2011

Real Fruit Juices: 14.9

Homemade: 19.6%

Real franchise growing at a healthy rate with Ad campaigns establishing its


superiority over competition.

Active Brand received a boost with the No Added Sugar campaign.


CONSUMER HEALTH DIVISION (CHD)

CHD offers a range of classical Ayurvedic medicines and Ayurvedic OTC products that
deliver the age-old benefits of Ayurveda in modern ready-to-use formats. Has more than
300 products sold through prescriptions as well as over the counter.

Major categories in traditional formulations include:


Asav Arishtas
Ras Rasayanas
Churnas
Medicated Oils
Proprietary Ayurvedic medicines developed by
Dabur include:
- Nature Care
- Isabgol
- Madhuvaani
- Trifgol

Division also works for promotion of Ayurveda through organised community of


traditional practitioners and developing fresh batches of students.

CHD STRUCTURE OTC (57%), Generics, Branded Products, ETHICAL (43%), Tonics,
Classical, Branded Ethical

CHD registered strong 19% growth during 2011

Investments in brand building and new OTC launch driving growth


Janma Ghunti, Hingoli, Sat Isabgol & Gripe

Water transferred to CHD from CCD for greater focus.

INTERNATIONAL BUSINESS DIVISION (IBD)

IBD caters to the health and personal care needs of customers across different
international markets, spanning the Middle East, North & West Africa, EU and the US

with its brands Dabur & Vatika.

Growing at a CAGR of 33% in the last 6 years and contributes to about 20% of
total sales.

Leveraging the 'Natural' preference among local consumers to increase share in


personal care categories

Focus markets: GCC, Egypt, Nigeria, Bangladesh,


Nepal, US

High level of localization of manufacturing and sales


& marketing.

DABUR AYURVEDIC PRODUCTS

Dabur India Limited is the fourth largest FMCG (fast moving consumer goods) 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. Dabur's Ayurvedic Specialities
Division has over 260 medicines for treating a range of ailments and body condition from
common cold to chronic paralysis.
DABUR WORLDWIDE

Dabur's mission of popularising a natural lifestyle transcends national boundaries. Today,


there is growing global awareness on alternative medicine, nature-based and holistic
lifestyles and an interest in herbal products. Dabur has been in the forefront of
popularising this alternative way of life, marketing its products in more than 60 countries
all over the world. Over the years, Dabur's overseas business has successfully
transformed from being a small operation into a multi-location business spreading
through the Middle East, North Africa, West Africa and South Asia.
Our Products Worldwide

We have spread ourselves wide and deep to be close to our overseas consumers. Our
overseas product portfolio is tailor-made to suit the needs and aspirations of our growing
consumer base in the international markets.

Offices and representatives in Europe, UK, America and Africa

AA special herbal health care and personal care range successfully selling in
markets ranging from the Middle East, Far East, North Africa and Europe

Inroads into several European and American markets that have good potential due
to resurgence of the back-to-nature movement. Export of Active Pharmaceutical
Ingredients

(APIs), manufactured under strict international quality benchmarks to Europe,


Latin America, Africa, and other Asian Countries.

Export of food and textile grade natural gums, extracted from traditional plant
sources.

Partnerships & Production

Strategic partnerships with leading multinational food and health care companies
to introduce innovations in products and services.

Six modern manufacturing facilities spread across South Asia, Middle East and
Africa to optimise production by utilising local resources and the most modern
technology available.

Strategic Indent

We intend to significantly accelerate profitable growth. To do this, we will:

Focus on growing our core brands across categories, reaching out to new
geographies, within and outside India, and improve operational efficiencies by
leveraging technology.
Be the preferred company to meet the health and personal grooming needs of our
target consumers with safe, efficacious, natural solutions by synthesizing deep
knowledge of ayurvedic and herbs with modern science.

Provide our consumers with innovative products within easy reach.

Build a platform to enable Dabur to become a global ayurvedic leader.

Be a professionally managed employer of choice, attracting, developing and


retaining quality personnel.

Be responsible citizens with a commitment to environmental protection.

Provide superior returns, relative to our peer group, to our shareholders.

BRAND REJUVENATION

With youth forming a major population of India, Dabur decided to revamp its brand
identity. Dabur associated itself with Amitabh Bachchan, Vivek Oberoi, Rani Mukherjee
and Virender Sehwag for endorsements. New packaging and advertising campaign saw
the sales of Chyawanprash grow by 8.5 % in 2003-04.The year 2004-05 saw a whole new
brand identity of Dabur. The old Banyan tree was replaced with a new, fresh Banyan tree.

(THE OLD LOGO) (THE NEW LOGO - YOUNGER


LOOKING BANYAN TREE)
The logo was changed to a tree with a younger look. The leaves suggesting growth,
energy and rejuvenation, twin colors reflecting perfect combination of stability and
freshness, the trunk represented three people raising their hands in joy, the broad trunk
symbolized stability, multiple branches were chosen to convey growth, and warmth and
energy were displayed through the soft orange color. Celebrating Life was chosen as a
new tag that completely summarized the whole essence. The Chairman in his annual
report message said, If I were to summarize your Companys performance during the
year under review (2004-2005), it would be Pursuit of Profitable Growth.

DABUR AND MARKETING MIX - Marketing Mix

PROMOTI ON POS IT IO NING

PL ACE M ARKETI NGM IX

PRI CE PRODUCT
PRODUCT

The product is the physical good or service offered to the consumer. The product is the
most visible element of the marketing mix. When a firm introduces a number of products
over time gradually, its offerings become many. That is, the firm becomes a multi product
firm.Dabur's diverse product range is today manufactured in 9 manufacturing facilities
within India and 5 other worldwide. Dabur's Ayurvedic Specialties Division has over 260
medicines for treating a range of ailments and body conditions-from common cold to
chronic paralysis. Over the past two years, Dabur's product portfolio has been
systematically overhauled through re-launches and brand extensions, even as fresh forays
have been made into new categories such as hair, skin care and home care. Recently two
new products, disinfectant cleaner and kitchen cleaner under Dazzle brand. All these
launches of new kinds of products will help the company to capture the potential market
arising from the growing needs of the fast expanding market, especially the aspiring and
affluent Indian household categories. Dabur has a variety of products in key consumer
products categories like Hair Care, Oral Care, Health Care, Skin Care, and Home Care &
Foods.

PRICE:

As Dabur had different sub-categories, it came out with variable pricing to reach
out to each and every target segment. (E.g. One- litre bottle of Real (juice) was
priced at Rs.50)

Selective Price Reduction to increase Demand (E.g. Dabur came out with Rs.1
sachet of Vatika Shampoo/ Amla Hair Oil to increase market share). Cutting Price
to stand out against competition (E.g. Dabur joined the shampoo price war in Aug
2004 and slashed prices of its Vatika shampoo.)

PLACE:

Dabur constantly kept on increasing its geographic spread to increase its sales
revenues

Entered the South Indian Market


Expanding in the International Market, Presence in over 50 countries.

Subsidiaries established in Nepal, Nigeria, Bangladesh and Pakistan

Focus areas: Asia Pacific, Middle East, West Africa, and North Africa, US

PROMOTION:

Different brands have their own marketing and advertising team

Dabur utilized the popularity of Indian films in the domestic and global markets
to promote its brands. In order to further deepen the brand's penetration in the
rural pockets, the company also announced the launch of special low-priced
packs.

Dabur heavily advertised its products through various contests

Dabur Amla Sunder aur Susheel pratiyogita

Dabur Amla 'Banke Dikhao Rani'- In an attempt to give better exposure to rural
women, 'Dabur Amla' is going to conduct 'Rural Beauty Pageant' across 52
distritcts in Madhya Pradesh, Uttar Pradesh and Bihar, covering 2,000 villages.

Dabur Gulabari Miss U.P. Fresh Face 2010 beauty contest.

POSITIONING:

Dabur through its diversified brands has tapped various target segments like the:

Youth

Health Conscious People

School Children

Mothers

Existing Old age group


Chapter 2
INTRODUCTION
ABOUT THE TOPIC
MEANING :

Ratio Analysis is among the best tool available to analyze the financial performance of a
company. It allows inter company & intra company comparison & analysis. Ratios
also provide a birds eye view of the financial condition of the company.

Our study of accounting so far has been restricted to recording of business transactions on
books of accounts, preparing a trial balance to check the arithmetical accuracy of
accounts & preparing profit & loss account & a balance sheet with a view to ascertaining
trading result of a specified period & financial position of the business on a specified date
respectively. The functions of the accountant do not end at this stage. He should be able
to analyze & interpret the figures as disclosed by this statement to gauge accurately the
financial health of the enterprise.

It is defined as the systematic use of ratio to interpret the financial statements so that the
strengths & weaknesses of a firm as well as its historical performance & current financial
condition can be determined. The term ratio refers to the numerical or quantitative
relationship between two items/variables.
TYPES OF FINANCIAL RATIO :
1. Liquidity Ratios
2. Leverage Ratios
3. Profitability Ratios
4. Activity Ratios
A) Liquidity Ratios :
Liquidity refers to the ability of a firm to meet its short-term (usually up to 1 year)
obligations. Higher liquidity levels indicate that we can easily meet our current
obligations. We can use several types of ratios to monitor liquidity. These are as
follows:

1. Current Ratio

2. Quick Ratio

3. Cash Ratio

B) Financial Leverage (debt) Ratios :


Leverage Ratios measure the use of debt and equity for financing of assets. These
ratios are discussed below:

1. Debt to equity ratio


2. Debt to Total Assets Ratio
3. Interest Coverage Ratio
C) Profitability Ratios :

These ratios help measure the profitability of a firm. A firm, which generates a
substantial amount of profits per rupee of sales, can comfortably meet its
operating expenses and provide more returns to its shareholders. The relationship
between profit and sales is measured by profitability ratios. These ratios are
discussed below:

1. Gross Profit Margin

2. Net Profit Margin


3. Return on Investment / Assets

4. Return on Equity / Net Worth

5. Earning Per Share

6. Price Earning Ratio

D) Activity Ratios :

Activity Ratios measure the ability of assets to generate revenues or earnings.


This ratio tells us how efficiently a company utilizes its assets for generating
sales. These ratios are discussed below:

1. Inventory Turnover Ratio

2. Inventory Turnover in Days

3. Fixed Assets Turnover

4. Debtors Turnover Ratio

5. Collection Period
Chapter 3
OBJECTIVE AND
METHODOLOGY
OBJECTIVE AND METHODOLOGY

3.1 PURPOSE OF THE STUDY

The project titled Financial Analysis of Dabur India Ltd. is the study on the recent trends
and developments happening in the field of finance in Dabur India Limited. This study
tells about the financial statements of Dabur India Limited. To know about the
profitability and efficiency of the company this study was to be undertaken.

3.2 OBJECTIVE OF STUDY

To study the financial position of the company.

To analyze the financial stability and overall performance of Dabur India Limited
in general.

To analyze the profitability and solvency position of the unit with the existing
tools of financial analysis.

To study the changes in the assets, liabilities structure of the company during the
period of study.

3.3 SCOPE OF THE PROJECT

When the project report is prepared it includes all the aspects of projects like companys
product and its market, manufacturing process, operational viability, its financial
projection and various ratios. This helps the management to understand whether the
project is practically possible or not. Ratio analysis gives the idea about the profitability
of the project.

Project report gives projected financial statements and on basis of that ratios are
calculated. Ratio analysis helps in judging the operational efficiency of the managements
ability to repay short and long term loans, doing inter-firm comparison and to assess the
future growth of the company. The ratio analysis of the company is done before investing
or providing credit to the company. This is the reason of selecting the project.
3.4 METHODOLOGY

Research is defined as a systematic, gathering recording and analysis of data about


problem relating to any particular field. It determines strength reliability and accuracy of
the project.

Research Design: Research Design pertains to the great research approach or strategy
adopted for a particular project. A research project has to be the conducted scientifically
making sure that the data is collected adequately and economically.

The study used a descriptive research design for the purpose of getting an insight over
the issue. It is to provide an accurate picture of some aspects of market environment.
Descriptive research is used when the objective is to provide a systematic description that
is as factual and accurate as possible.

Method of Data Collection:

Secondary Data: Through the internet and published data


Chapter 4
DATA ANALYSIS
AND
INTERPRETATION
STATEMENT SHOWING CURRENT RATIO AS ON 31ST MARCH 2010

Companies Dabur HLL Nestle Godrej Cadbury Britannia Colgate P&G


Current 1.27 0.90 0.67 0.68 1.24 0.89 1.12 1.71
Ratio

Current Ratio= Current Assets/Current Liabilities

Object 3

INTERPRETATION:

The ratio is used to assess the short term financial position of the business
Object 5

concern. It is an indicator of the firms ability to meet its short-term obligations. As a


conventional, rule a current ratio of 2:1 is considered ideal.

Dabur has a current ratio is 1.27 which is an average ratio that the company
current assets are more then current liabilities in year 2009-10 increase in current assets
and decrease in current liabilities. The company has a sufficient fund to pay its liabilities
on time and meet other day to day expenses.

STATEMENT SHOWING CURRENT RATIO AS ON 31ST MARCH 2011


Companie Dabu Nestl Godre Cadbur Britanni Colgat
s r HL e j y a e P&
L G
Current 0.79 0.82 0.65 0.66 0.91 0.86 1.29 1.52
Ratio

Current Ratio= Current Assets/Current Liabilities

Object 7

INTERPRETATION:

The ratio is used to assess the short term financial position of the business
concern. It is an indicator of the firms ability to meet its short-term obligations. As a
conventional, rule a current ratio of 2:1 is considered ideal.

Dabur has a current ratio is 0.79 which is far away from the ideal ratio that the
company current assets are very less then current liabilities in year 2010-11 decrease in
current assets and increase in current liabilities.The company dont have a sufficient
funds to pay its liabilities on time and meet other day to day expenses.
Criteria for Analyzing Liquidity Ratios

The liquidity ratios measure the ability of the company to meet its current
obligations. The liquidity ratios by establishing a relationship between cash and other
current assets to current obligation provide a quick measure of liquidity.

Current Ratio: - The current ratio of 2:1 or more is considered satisfaction. Dabur India
limited has the current ratio 1.27 in the year 2009-2010 and 0.79 in the year 2010-2011
therefore it may be interpreted to be sufficiently liquid. But among all the companies
Dabur has secured 2nd rank in the year 2009-2010 and 6th rank in the year 2010-2011. The
current ratio represents a margin of safety for creditors. The higher the current ratio, the
greater the margin of safety.

LEVERAGE RATIOS

STATEMENT SHOWING DEBT EQUITY RATIO AS ON 31ST MARCH 2010

Companies Dabur HLL Nestle Godrej Cadbury Britannia Colgate P&G

Debt Equity 0.22 0.75 0.02 0.48 0.03 0.24 0.02 0.20
Ratio

Debt Equity Ratio = Long-term Loans\ Shareholders Fund

Object 9
INTERPRETATION:

The debt-equity ratio is an important tool of finance analysis to appraise the


financial structure of the firm. It has important from the viewpoint of creditors, owner
and the firm itself. The ratio reflects the relative contribution of creditors and owners of
the business in its financing.

A high ratio shows a large share of financing by the creditors of the firm; a low
ratio implies a small claim of creditors. The debt-equity ratio indicates the margin of
safety to the creditors.

The shareholders of the firm would, however stand to gain in two ways: (i) with a
limited stake, they would be able to retain control of the firm and (ii) the return to them
would be magnified. With a larger proportion of debt in the financial structure, the
earnings available to the owner would increase more than proportionately with the
increase in the operating profits of the firm.
STATEMENT SHOWING DEBT EQUITY RATIO AS ON 31ST MARCH 2011

Companie Dabur HLL Nestle Godrej Cadbur Britanni Colgate P&G


s y a
Debt Equity 0.15 0.35 0.03 0.33 0.02 0.05 0.03 0.19
Ratio
Debt Equity Ratio = Long-term Loans\ Shareholders Fund

Object 11

INTERPRETATION:

The debt-equity ratio is an important tool of finance analysis to appraise the


financial structure of the firm. It has important from the viewpoint of creditors, owner
and the firm itself. The ratio reflects the relative contribution of creditors and owners of
the business in its financing.

A high ratio shows a large share of financing by the creditors of the firm; a low
ratio implies a small claim of creditors. The debt-equity ratio indicates the margin of
safety to the creditors.

The shareholders of the firm would, however stand to gain in two ways: (i) with a
limited stake, they would be able to retain control of the firm and (ii) the return to them
would be magnified. With a larger proportion of debt in the financial structure, the
earnings available to the owner would increase more than proportionately with the
increase in the operating profits of the firm.

STATEMENT SHOWING LONG TERM DEBT EQUITY RATIO AS ON 31ST


MARCH 2010
Companie Dabur HLL Nestle Godrej Cadbur Britanni Colgate P&G
s
y a
LLong Term 0.17 0.63 0.00 0.35 0.01 0.06 0.01 0.85
Debt Equity
Ratio

Long Term Debt Equity Ratio= Long Term Debt


Long Term Debt + Shareholders Equity

Object 13

INTERPRETATION:

The long term debt-equity ratio is also an important tool of finance analysis to
appraise the financial structure of the firm. Its again important from the viewpoint of
creditors, owner and the firm itself. The ratio reflects the relative contribution of creditors
and owners of the business in its financing, but this time it has done for long term
financing.
A high ratio shows a large share of financing by the creditors of the firm; a low
ratio implies a small claim of creditors. The long term debt equity ratio provides large
number of debts for the company. It increases the operating profit of a company.

STATEMENT SHOWING LONG TERM DEBT EQUITY RATIO AS ON 31ST


MARCH 2011
Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgate P&G
y a
Long Term 0.11 0. 0 0.00 0.17 0.01 _ 0.02 0.16
Debt Equity
Ratio

Long Term Debt Equity Ratio= Long Term Debt


Long Term Debt + Shareholders Equity

Object 15

INTERPRETATION:

The long term debt-equity ratio is also an important tool of finance analysis to
appraise the financial structure of the firm. Its again important from the viewpoint of
creditors, owner and the firm itself. The ratio reflects the relative contribution of creditors
and owners of the business in its financing, but this time it has done for long term
financing.
A high ratio shows a large share of financing by the creditors of the firm; a low
ratio implies a small claim of creditors. The long term debt equity ratio provides large
number of debts for the company. It increases the operating profit of a company.

Criteria for Analyzing Leverage Ratios

The second category of ratios is Leverage Ratios; the solvency of a company can be
examined by using leverage ratios. Debt- equity ratio measure the ratio of long-term or total
debt to shareholders equity.

Debt Equity Ratio: - The relationship of lenders and owner describe the lenders and
owners contribution for each rupee of the owners contribution is called Debt equity ratio.
The Dabur India ltd. has debt equity ratio of 0.22 in the year 2009-2010 and 0.15 in the year
2010-2011 and by this it has secured 4th rank in both years.

Long Term Debt Equity Ratio:- The long term debt-equity ratio is a important tool for
financial structure of the company. The percentage of this ratio shows the share of financing
by the creditors of the company. The dabur India ltd. has long term debt equity ratio of 0.17
in the year 2009-2010 and 0.11 in the year 2010-2011 and by this it has secured 4 th rank in
both years.

.
PROFITABILITY RATIOS
STATEMENT SHOWING GROSS PROFIT MARGIN AS ON 31ST MARCH 2010
Companie Dabur HLL Nestle Godrej Cadbur Britanni Colgate P&G
s y a
Gross Profit 11.25 14.94 18.36 15.67 11.01 12.24 24.54 29.73
Margin

Gross Profit Ratio= Gross Profit* 100


Net Sales

Object 17

INTERPRETATION:
Gross profit is the result of the relation between prices, sales volume and cost. A
change in the gross margin can be brought about by changes in any of these factors. The
gross margin represents the limit beyond which fall in sales prices are outside the
tolerance limit. Further, the gross profit ratio can also be used to determining the extent of
loss caused by theft, spoilage, damage, and so on in the case of those firms which follow
the policy of fixed gross profit ratio in pricing their products.
A very high and rising gross margin may be the result of unsatisfactory basis of
evaluation of stock, that is, overvalued of closing stock and undervalued of opening
stock. But a low gross margin is also a danger signal, warranting a careful, detailed
analysis of the factors responsible for it.
STATEMENT SHOWING GROSS PROFIT MARGIN AS ON 31ST MARCH 2011
Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G
y a e
Gross Profit 14.35 14.90 19.89 17.30 12.55 12.57 25.82 26.21
Margin

Gross Profit Ratio= Gross Profit* 100


Net Sales

Object 20

INTERPRETATION:
Gross profit is the result of the relation between prices, sales volume and cost. A
change in the gross margin can be brought about by changes in any of these factors. The
gross margin represents the limit beyond which fall in sales prices are outside the
tolerance limit. Further, the gross profit ratio can also be used to determining the extent of
loss caused by theft, spoilage, damage, and so on in the case of those firms which follow
the policy of fixed gross profit ratio in pricing their products.
A very high and rising gross margin may be the result of unsatisfactory basis of
evaluation of stock, that is, overvalued of closing stock and undervalued of opening
stock. But a low gross margin is also a danger signal, warranting a careful, detailed
analysis of the factors responsible for it.
STATEMENT SHOWING NET PROFIT MARGIN AS ON 31ST MARCH 2010
Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G
y a e
Net Profit 8.82 11.01 10.62 11.82 5.22 6.95 11.50 16.03
Margin

Net Profit Ratio= Profit After Tax* 100


Sales

Object 23

INTERPRETATION:

The net profit margin is indicative of managements ability to operate the


business with sufficient success not only to recover from revenues of the period, the cost
of services, the expenses of operating the business and the cost of borrowed funds, but
also to leave a margin of reasonable compensation to the owner for providing their capital
at risk. The ratio of net profit (after interest & taxes) to sale essentially expresses the cost
price effectiveness of the operation.
A high net profit margin would ensure adequate return to the owner as well as
enable a firm to withstand adverse economic condition when selling price is declining,
cost of production is rising and demand for the product is falling. A low net profit margin
has the opposite implication.
STATEMENT SHOWING NET PROFIT MARGIN AS ON 31ST MARCH
2011
Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G
y a e
Net Profit 11.67 11.77 11.71 14.26 5.19 7.84 11.83 18.27
Margin

Net Profit Ratio= Profit After Tax* 100


Sales

Object 25

INTERPRETATION:

The net profit margin is indicative of managements ability to operate the business
with sufficient success not only to recover from revenues of the period, the cost of
services, the expenses of operating the business and the cost of borrowed funds, but also
to leave a margin of reasonable compensation to the owner for providing their capital at
risk. The ratio of net profit (after interest & taxes) to sale essentially expresses the cost
price effectiveness of the operation.
A high net profit margin would ensure adequate return to the owner as well as
enable a firm to withstand adverse economic condition when selling price is declining,
cost of production is rising and demand for the product is falling. A low net profit margin
has the opposite implication.
STATEMENT SHOWING RETURN ON CAPITAL EMPLOYED AS ON 31ST
MARCH 2010
Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G
y a e
Return on 29.50 44.11 116.05 121.79 17.05 34.69 17.14 92.73
Capital
Employed

Return on Capital Employed = Net Profit (Before Tax & Interest)*100


Average Capital Employed

Object 27

INTERPRETATION:
The term capital employed refers to the long term funds supplied by the lenders
and owner of the firm. It is equal to non-current liabilities plus owners equity.
Alternatively, it is equivalent to net working capital plus fixed assets. Thus, the capital
employed basis provides a test of profitability related to the sources of the long term
funds.
STATEMENT SHOWING RETURN ON CAPITAL EMPLOYED AS ON 31ST
MARCH 2011

Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G


y a e
Return on 49.70 56.62 134.90 158.03 22.95 44.37 37.33 104.52
Capital
Employed

Return on Capital Employed = Net Profit (Before Tax & Interest)*100


Average Capital Employed

Object 30

INTERPRETATION:
The term capital employed refers to the long term funds supplied by the lenders
and owner of the firm. It is equal to non-current liabilities plus owners equity.
Alternatively, it is equivalent to net working capital plus fixed assets. Thus, the capital
employed basis provides a test of profitability related to the sources of the long term
funds.
STATEMENT SHOWING RETURN ON NET WORTH AS ON 31ST MARCH 2010
Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G
y a e
Return on 29.78 56.61 76.99 147.51 12.26 24.85 49.76 191.77
Net Worth
Return on Net Worth= Net Profit After Taxes- PreferenceDividend*100
Average Ordinary Shareholders Equity or Net Worth

Object 32

INTERPRETATION:
This is probably the single most important ratio to judge whether the firm has
earned a satisfactory return for its equity holders or not. Its adequacy can be judged by (i)
comparing it with the past record of the same firm, (ii) inter-firm comparison, and (iii)
comparisons with the overall industry average. The rate of return on ordinary
shareholders equity is of crucial significance in ratio analysis vis--vis from the point of
the owners of the firm.
STATEMENT SHOWING RETURN ON NET WORTH AS ON 31ST MARCH 2011

Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G


y a e
Return on Net 48.79 64.05 91.92 186.66 12.58 28.95 52.31 116.25
Worth

Return on Net Worth= Net Profit After Taxes- Preference Dividend*100


Average Ordinary Shareholders Equity or Net Worth

Object 34

INTERPRETATION:

This is probably the single most important ratio to judge whether the firm has
earned a satisfactory return for its equity holders or not. Its adequacy can be judged by (i)
comparing it with the past record of the same firm, (ii) inter-firm comparison, and (iii)
comparisons with the overall industry average. The rate of return on ordinary
shareholders equity is of crucial significance in ratio analysis vis--vis from the point of
the owners of the firm.
STATEMENT SHOWING OPERATING PROFIT MARGIN AS ON 31ST MARCH
2010
Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G
y a e
Operating 11.91 16.14 18.39 16.14 11.28 12.65 13.37 12.73
Profit Margin

Operating Profit Ratio= Operating Profit * 100


Net sale

Object 36

INTERPRETATION:
Operating profit margin indicates how effective a company is at controlling the
costs and expenses associated with their normal business operations. The operating
margin is another measurement of managements efficiency. It compares the quality of a
companys operations to its competitors. A business that has a higher operating margin
than its industrys average tends to have lower fixed costs and a better gross margin,
which gives management more flexibility in determining prices. This pricing flexibility
provides an added measure of safety during tough economic times.
STATEMENT SHOWING OPERATING PROFIT MARGIN AS ON 31ST MARCH
2011
Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G
y a e
Operating 14.72 15.06 19.90 17.82 12.72 12.70 14.71 13.52
Profit Margin

Operating Profit Ratio= Operating Profit * 100


Net sale

Object 38

INTERPRETATION:

Operating profit margin indicates how effective a company is at controlling the


costs and expenses associated with their normal business operations. The operating
margin is another measurement of managements efficiency. It compares the quality of a
companys operations to its competitors. A business that has a higher operating margin
than its industrys average tends to have lower fixed costs and a better gross margin,
which gives management more flexibility in determining prices. This pricing flexibility
provides an added measure of safety during tough economic times.
STATEMENT SHOWING PROFIT BEFORE INTEREST & TAX MARGIN AS
ON 31ST MARCH 2010

Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G


y a e
Profit Before 10.54 15.02 16.32 14.43 7.45 11.13 14.02 13.66
Interest & Tax
Margin

Profit Before Interest & Tax Margin= Gross Profit Margin Depreciation

Object 40

INTERPRETATION:

The profit which comes out after subtracting the depreciation from total profit is
called profit before interest & tax (PBIT). It shows the real position of a company,
because interest & tax is included in this figure which subtract later on.
STATEMENT SHOWING PROFIT BEFORE INTEREST & TAX MARGIN AS
ON 31ST MARCH 2011

Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G


y a e
Profit Before 13.37 14.02 17.75 16.05 9.33 11.53 15.12 13.97
Interest &
Tax Margin

Profit Before Interest & Tax Margin= Gross Profit Margin Depreciation

Object 42

INTERPRETATION:

The profit which comes out after subtracting the depreciation from total profit is
called profit before interest & tax (PBIT). It shows the real position of a company,
because interest & tax is included in this figure which subtract later on.
CRITERIA FOR ANALYZING PROFITABILITY RATIOS

Gross Profit Margin: - The gross profit margin reflects the efficiency with which
management product each unit of product. The gross profit margin relative to the industry
average implies that the company is able to product at relatively lower cost. Dabur India
Ltd. have secured 7th & 6th ranks in the ending year 2009-2010 and in 2010-2011 so
Dabur should reduce the variable costs.

Net Profit Margin: - The net ratio shows the earning left for shareholders (both equity &
preference) as a % of net sales. It measures the overall efficiency of production,
administration, selling, financing, pricing and tax management. It provides a valuable
understanding of the cost and profit structure of the cost and profit structure of the
company. In dabur India ltd. has 8.82% net profit margins in the year 2009-2010 and
11.67 in the year 2010-2011 which is very low in comparison to the other companies.

Return on Capital Employed: - It indicates the total profitability of the balance sheet
from shareholders point of view. Dabur India Ltd. has secured 6 th rank in both the
financial years.

Return on Net Worth: - It is calculated by measures the return on the total equity funds
of ordinary shareholders. Dabur India Ltd has again secured 6th rank in both the financial
year.

Operating Profit Margin: - It indicates that how much operating cost is involves in
business and how much revenue it is giving in a period. Dabur India Ltd has secured 7 th
and 6th rank in this to financial years.

Profit Before Tax & Interest Margin: - Its calculated by subtracting the depreciation
from gross profit margin. Dabur India has secured 7 th and 6th rank in these two financial
years.
ACTIVITY RATIOS
STATEMENT SHOWING INVENTORY TURNOVER RATIO AS ON 31ST
MARCH 2010
Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G
y a e
Inventory 7.97 7.54 10.88 12.68 9.17 14.40 12.52 11.73
Turnover Ratio

Inventory Turnover Ratio= Cost of Good Sold


Average Stock

Object 44

INTERPRETATION:
The inventory turnover ratio measures how quickly inventory is sold. It is a test of
efficient inventory management. To judge whether the ratio of a firm is satisfactory or
not, it should be compared over a period of time on the basis of trend analysis. It can also
be compared with the level of the firms in that line of business as well as with industry
average.

In general, a high inventory turnover ratio is better than a low ratio. A high ratio
implies good inventory management. Yet, a very high ratio calls for a careful analysis. It
may be indicative of under investment in, or very low level of, inventory. A very low
level of inventory has serious implications. It will adversely affect the ability to meet
customer demand as it may not cope with its requirement.

STATEMENT SHOWING INVENTORY TURNOVER RATIO AS ON 31ST


MARCH 2011
Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G
y a e
Inventory 10.68 8.53 11.26 9.81 10.03 12.60 10.69 11.04
Turnover Ratio

Inventory Turnover Ratio= Cost of Good Sold


Average Stock

Object 46

INTERPRETATION:

The inventory turnover ratio measures how quickly inventory is sold. It is a test of
efficient inventory management. To judge whether the ratio of a firm is satisfactory or
not, it should be compared over a period of time on the basis of trend analysis. It can also
be compared with the level of the firms in that line of business as well as with industry
average.

In general, a high inventory turnover ratio is better than a low ratio. A high ratio
implies good inventory management. Yet, a very high ratio calls for a careful analysis. It
may be indicative of under investment in, or very low level of, inventory. A very low
level of inventory has serious implications. It will adversely affect the ability to meet
customer demand as it may not cope with its requirement.

STATEMENT SHOWING DEBTORS TURNOVER RATIO AS ON


31ST MARCH 2010

Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G


y a e
Debtors 14.46 22.65 82.01 31.25 36.35 60.93 28.79 47.36
Turnover Ratio

Debtors Turnover Ratio = Total Sales


Debtors + Bill Receivable

Object 48

INTERPRETATION:

A company can sell its goods on credit also. It is used as a marketing tool by a
number of companies. When the company extends credits to its customers, it will
increase more debtors. Debtors turnover ratio indicates the number of time debtors
turnover each year. Generally the higher the value of debtors turnover, the more efficient
is the management of credit.
STATEMENT SHOWING DEBTORS TURNOVER RATIO AS ON 31ST MARCH
2011
Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G
y a e
Debtors 27.78 23.64 93.28 65.49 57.06 52.20 55.20 53.72
Turnover Ratio

Debtors Turnover Ratio= Total Sales


Debtors + Bill Receivable

Object 50

INTERPRETATION:

A company can sell its goods on credit also. It is used as a marketing tool by a
number of companies. When the company extends credits to its customers, it will
increase more debtors. Debtors turnover ratio indicates the number of time debtors
turnover each year. Generally the higher the value of debtors turnover, the more efficient
is the management of credit.
STATEMENT SHOWING FIXED ASSETS TURNOVER RATIO AS ON
31ST MARCH 2010
Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G
y a e
Fixed Assets 4.06 4.88 2.92 12.68 2.61 5.34 8.10 7.04
Turnover Ratio

Fixed Assets Turnover Ratio= Sales


Fixed Assets

Object 52

INTERPRETATION:

The company may wish to know its efficiency of utilizing fixed assets. This ratio
indicates the extent to which the investment in fixed assets contributes towards sales. If
compared with the previous period, it indicates whether the investment in fixed assets has
been judicious or not.
STATEMENT SHOWING FIXED ASSETS TURNOVER RATIO AS ON
31ST MARCH 2011

Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G


y a e
Fixed Assets 4.33 5.10 2.96 9.81 2.61 6.17 7.84 7.66
Turnover Ratio

Fixed Assets Turnover Ratio= Sales


Fixed Assets

Object 54

INTERPRETATION:

The company may wish to know its efficiency of utilizing fixed assets. This ratio
indicates the extent to which the investment in fixed assets contributes towards sales. If
compared with the previous period, it indicates whether the investment in fixed assets has
been judicious or not.
STATEMENT SHOWING TOTAL ASSETS TURNOVER RATIO AS ON
31ST MARCH 2010

Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G


y a e
Fixed Assets 2.80 2.94 7.11 8.44 2.29 3.12 5.34 1.09
Turnover Ratio

Total Assets Turnover Ratio= Sales


Total Assets

Object 56

INTERPRETATION:

The total assets turnover in addition to or instead of the net assets turnover. This ratio
show the firms ability in generating sales from all financial resources committed to total
asset turnover ratio. The total assets turnover of 2.8 times implies that Dabur generates a
sale of Rs. 2.8 for one rupee investment in fixed and current assets together.
STATEMENT SHOWING TOTAL ASSETS TURNOVER RATIO AS ON
31ST MARCH 2011

Companies Dabur HLL Nestle Godrej Cadbur Britanni Colgat P&G


y a e
Total Assets 3.72 4.04 7.60 9.85 2.46 3.85 6.08 2.32
Turnover Ratio

Total Assets Turnover Ratio= Sales


Total Assets

Object 58

INTERPRETATION:

The total assets turnover in addition to or instead of the net assets turnover. This ratio
shows the firms ability in generating sales from all financial resources committed to total
assets turnover ratio. The total assets turnover of 3.72 times implies that Dabur generates
a sale of Rs. 3.72 for one rupee investment in fixed and current assets together.
Criteria of Analyzing the Activity Ratios

Inventory Turnover Ratio: - The inventory turnover ratio measure how fast the
inventory is moving through the company and generating sales. It reflects the efficiency
of inventory management. The higher the ratio, the more efficient but this may not
always true. The high inventory turnover may be caused by a low level of inventory
which may result in frequent stock outs. So its ranking is very difficult. Dabur India Ltd
has secured 7th and 5th rank in 2009-2010 and in 2010-2011.

Debtors Turnover Ratio: - The debtors turnover ratio shows how quickly receivables or
debtors are converted into cash. It is a test of the liquidity of the debtors of a company. It
shows the relationship between credit sales and debtors of a company. Dabur India Ltd
has secured 8th and 7th rank in 2009-2010 and in 2010-2011 which is very low in compare
to other FMCG companies.

Fixed Assets Turnover Ratio: - The fixed assets turnover ratio measures the efficiency
with which fixed assets are employed- a high ratio indicates a high degree of efficiency in
assets utilization. For improve the fixed assets turnover Dabur should fully utilize all the
assets. It has secured 6th rank in both the financial year.

Total Assets Turnover Ratio: - The total assets turnover ratio shows the companys
ability in generating sales from all financial resources committed to total assets. Dabur
India Ltd has secured 6th rank in both the financial year.
RATIO COMPARISON OF DABUR

STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST 3


YEARS

Years 2009-2010 2010-2011 2011-2012


Current Ratio 1.27 0.79 1.47

Object 60

INTERPRETATION:

Current ratio comes under the liquidity ratios which means the ability of
the company to meet its current obligations. This year(2011-2012) current ratio has
increased in compare to the last two years which means that company have sufficient
money for its current obligation. It is 1.47% this year.
STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST
3YEARS

Years 2009-2010 2010-2011 2011-2012


Debt Equity Ratio 0.22 0.15 0.45

Object 62

INTERPRETATION:

Debt equity ratio comes under the leverage ratios and shows the relationship
between creditors and owners of the company. This year (2011-2012) ratio goes very
high, which is 0.45% in compare to the last two years. This shows a large share of
financing by the creditors of the firm. This ratio also indicates the margin of safety to the
creditors.
STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST
3YEARS

Years 2009-2010 2010-2011 2011-2012


Long Term Debt 0.17 0.11 0.31
Equity Ratio

Object 64

INTERPRETATION:

Long term debt equity ratio also comes under the leverage ratios and shows the
relationship between creditors and owners of the company. This year (2011-2012) goes
very high, which is 0.31% in compare to the last two years. This shows a large share of
financing by the creditors of the firm. This ratio also indicates the margin of safety to the
creditors.
STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST
3YEARS

Years 2009-2010 2010-2011 2011-2012


Gross Profit Ratio 11.25 14.35 15.64

Object 66

INTERPRETATION:

The gross profit ratio comes under the profitability ratios and this year (2011-
2012) it has increase in compare to last two years. It is 15.64% this year. It represents the
limit beyond which fall in sales prices are outside the tolerance limits.
STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST
3YEARS

Years 2009-2010 2010-2011 2011-2012


Net Profit Ratio 8.82 11.67 13.80

Object 68

INTERPRETATION:

The net profit ratio also comes under the profitability ratios and this year (2011-
2012) it has increase in compare to last two years. It is 13.80% this year. This high net
profit margin would ensure adequate return to the owner as well as enable a firm to
withstand adverse economic condition when selling price is declining.
STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST
3YEARS

Years 2009-2010 2010-2011 2011-2012


Return on Capital 29.50 49.70 49.47
Employed

Object 70

INTERPRETATION:

The return on capital employed also comes under the profitability ratios and this
year (2011-2012) there is little bit of decrease in compare to last years. It is 49.47% this
year. It refers to the long term funds supplied by the lenders and owner of the firm. It is
equal to non-current liabilities plus owners equity. So it shows that Dabur have sufficient
sources of the long term funds.
STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST
3 YEARS

Years 2009-2010 2010-2011 2011-2012


Return on Net Worth 29.78 48.79 82.47

Object 73

INTERPRETATION:

The net worth also comes under the profitability ratios and this year (2011-2012)
it has increase in compare to last two years. It is 82.47% this year. This ratio is most
important ratio to judge whether the firm has earning a satisfactory return for its equity
holders or not. Comparing it with the past record of the company, we can interpret that
company have a fund for its equity holders.
STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST
3YEARS

Years 2009-2010 2010-2011 2011-2012


Debtors Turnover Ratio 14.46 27.78 50.83

Object 75

INTERPRETATION:

Debtors turnover ratio comes under the activity ratios and this year (2011-2012) it
has increases in compare to last two years. It is 50.83% this year. The debtors turnover
ratio take place when company sell its goods on credit also. It is used as a marketing tool
by a number of companies. This high Debtors turnover ratio indicates the number of
time debtors turnover of last year in Dabur India Ltd. So it shows that Dabur India Ltd is
very efficient in its management of credit.
STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST 3
YEARS

Years 2009-2010 2010-2011 2011-2012


Average Collection 25.23 13.14 10.16
Period

Object 77

INTERPRETATION:

The average collection period comes under the activity ratios and this year (2011-
2012) it has decreases in compare to last two years. It is 10.16% this year. This ratio
measures the average number of days customers take to pay their bills,
indicating the effectiveness of credit and collection policies of the business.

The average collection period of Dabur India Ltd. is very low in this year. The
company should try to increase the duration of the average collection period to compete
with its competitors, by offering the customer high cost in credit sales.
STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST
3YEARS

Years 2009-2010 2010-2011 2011-2012


Fixed Assets Turnover 4.06 4.33 6.88
Ratio

Object 79

INTERPRETATION:

Fixed assets turnover ratio comes under the activity ratios and this year (2011-
2012) it has increases in compare to last two years. It is 6.88% this year. This ratio shows
the efficiency of utilizing fixed assets of the company. Comparing with the previous
period, it indicates that the investment in fixed assets has been made by the company,
Dabur India Limited.
Chapter 5

FINDINGS
FINDINGS
On the basis of data and available information. Certain findings arrived that
relates the Financial Analysis of the company.

It is observe that the Dabur India Ltd. has good profit margin and
companys liquidity is also good. It has important from the viewpoint of creditors
and shareholders that company have sufficient fund to pay them.

In the comparison of profitability ratio in Dabur India Ltd. the gross


profit ratio 14.35% and net profit ratio 11.67% both are increases in the year
2011-2012 in compare to last two year.

The current ratio 1.47% is also increase in the year 2011-2012 in


compare to last two year. It shows that current assets increase over current
liabilities.

The debt equity ratio 0.45% is also increase in the year 2011-2012 in
compare to last two year. It shows that a large share of financing by creditors in
the company, which is positive sign for the company.

The return on capital employed 49.47% is having little bit of decrease in


2011-2012 in compare to last year. But then also its better then some other FMCG
companies. It shows that Dabur India Ltd. have sufficient sources of the long term
funds.

The fixed assets turnover ratio 6.88% has increases in 2011-2012


compare to last two years. It shows the efficiency of Dabur India Ltd. in utilizing
the fixed assets of the company, comparing with the previous period. It also
shows that company has increases its investment in fixed assets.

The debtors turnover ratio 50.83% has increases in 2011-2012 in


compare to last two years, which shows that Dabur India Ltd. is managing its
management of credit very well.
The average collection period is decreases to 10.16% in compare to last
two years. This low average collection period shows a low cost in extending
credit to customers from Dabur India Ltd.
Chapter 6

RECOMMENDATIONS

AND

CONCLUSION
RECOMMENDATIONS

Through the ratio analysis of seven admired companies in the same sector. The
various positive and negative results came out, on the basis of these results I would like
to recommend that-

The company should try to increase the duration of the average collection
period to compete with its competitors, by offering the customer high cost in
credit sales.

The company should try to maintain its net worth for having satisfactory
fund for equity share holders.

The company should give more emphasis to sufficient utilization of the


resources and funds.

The company should improve the return on capital employed, as a source


of long term fund.

The company should reduce its variable cost to increase gross profit
margin which is very low relatively other FMCG companies.
CONCLUSION
Financial analysis was considered as the main analytical tool to measure the liquidity
position of the company. It has been a successful tool to measure the growth of the
company.

The overall financial position of the company is good and can improve the same in the
future. It should make use of the shareholders funds effectively rather than using
outsiders funds

The company should effectively make investments in the fixed assets and should make an
improvement in increasing the net profit in future.

The company should keep the cash in liquid form in order to meet its debts. The overall
liquidity position of the company is good.

The organizational study helps to analyze the functioning of the overall organization and
to check out the strengths and weakness of the company. The study gives details about
the departments, its operation, coordination and functioning in detail. The company is
giving major preference to quality in its operation.

From the above financial analysis of the financial statements of the company, it has been
managed to unearth a vast wealth of information. The financial analysis has helped in
understanding the trend of finances of the firm. These trends suggest where the
organization is heading its activities towards and where its lacking.

The analysis has brought to light certain factors which require a greater trust in order to
improve the activities of the company in general and finance department in particular.
BIBLIOGRAPHY
BIBLIOGRAPHY

BIBLIOGRAPHY

Dr. Jawahar Lal, Accounting for Management, Himalaya Publishing House,


Second revised edition-2002
M. Y. Khan & P. K. Jain, Management Accounting, Tata Mc graw Hill Education
Pvt Ltd, Fifth edition

Monilal Das, Practice in Management Accounting, Rabindra library, Third edition

N. Vinayakam, Management Accounting Tools & Techniques, Himalaya


Publishing House- Second revised & enlarged edition-1992

E-REFERENCES:

Google.com

Scribd.com

REPORTS:

Annual reports for the year 2009-2010, 2010-2011 2011-2012 includes balance
sheet and profit and loss account.
ANNEXURE
Balance Sheet As At 31st March 2010

SCHEDULE AS AT 31st MARCH, 2010


(Rs. lac)
SOURCES OF FUNDS:
SHAREHOLDERS FUNDS
A) SHARE CAPITAL 2,862.49
B) RESERVES AND SURPLUS 24,003.32 26,865.81
LOAN FUNDS:
A) SECURED LOANS 1,909.37
B) UNSECURED LOANS 2,071.91 3,981.28
DEFERRED TAX LIABILITY 796.95

TOTAL 31,644.04
APPLICATION OF FUNDS:
FIXED ASSETS
A) GROSS BLOCK 27,450.18
B) LESS: DEPRECIATION -11,955.85
C) NET BLOCK 15,494.33
17,122.67
INVESTMENTS
57.01
DEFERRED TAX ASSETS

CURRENT ASSETS, LOANS AND ADVANCES:


A) INVENTORIES 10,951.93
B) SUNDRY DEBTORS 4,207.22
C) CASH & BANK BALANCES 1,188.72
D) LOANS & ADVANCES
5,584.34

21,932.21

LESS: CURRENT LIABITIES AND PROVISION


A) LIABILITIES 16,452.07
B) PROVISIONS 7,169.81

23,621.88
NET CURRENT ASSETS
(1,689.67)
MISCELLANEOUS EXPENDITURE 659.70
(To the extent not written off or adjusted)
31,644.04
TOTAL
Balance Sheet As At 31st March 2011

SCHEDULE AS AT 31st MARCH, 2011


(Rs. lac)
SOURCES OF FUNDS:
SHAREHOLDERS FUNDS
C) SHARE CAPITAL 2,864.20
D) RESERVES AND SURPLUS 30,943.15 33,807.35
LOAN FUNDS:
C) SECURED LOANS 1570.38
D) UNSECURED LOANS 3,292.60 4,862.98
DEFERRED TAX LIABILITY 1,277.51

TOTAL 39,947.84
APPLICATION OF FUNDS:
FIXED ASSETS
D) GROSS BLOCK 32,672.44
E) LESS: DEPRECIATION -13,511.83
F) NET BLOCK 19,160.61
INVESTMENTS 27, 094.25
131.75
DEFERRED TAX ASSETS

CURRENT ASSETS, LOANS AND ADVANCES: 12,802.57


E) INVENTORIES 4,928.27
F) SUNDRY DEBTORS 1,065.38
G) CASH & BANK BALANCES
H) LOANS & ADVANCES
6,400.96

25,197.18

LESS: CURRENT LIABITIES AND PROVISION


C) LIABILITIES 23,838.05
D) PROVISIONS 8,384.94

32,222.99
(7,025.81)
NET CURRENT ASSETS 581.04
MISCELLANEOUS EXPENDITURE
(To the extent not written off or adjusted)

39,947.84
TOTAL
Balance Sheet As At 31st March 2012

SCHEDULE AS AT 31st MARCH, 2012


(Rs. lac)
SOURCES OF FUNDS:
SHAREHOLDERS FUNDS
E) SHARE CAPITAL 5,733.03
F) RESERVES AND SURPLUS 39,053.84 44,786.87
LOAN FUNDS:
E) SECURED LOANS 1,923.23
F) UNSECURED LOANS 134.29 2,057.52
DEFERRED TAX LIABILITY 1,671.50

TOTAL 48515.89
APPLICATION OF FUNDS:
FIXED ASSETS
G) GROSS BLOCK
34,129.37
H) LESS: DEPRECIATION 19,883.37
I) NET BLOCK -14,245.69

INVESTMENTS 27, 507.77


DEFERRED TAX ASSETS 131.74
CURRENT ASSETS, LOANS AND ADVANCES:
I) INVENTORIES 11,560,90
J) SUNDRY DEBTORS 2,694,25
K) CASH & BANK BALANCES 3,804,41
L) LOANS & ADVANCES 10,376.66

28,436.22
LESS: CURRENT LIABITIES AND PROVISION
A) LIABILITIES
B) PROVISIONS 19,342.06
11,388.94

30,731.00
NET CURRENT ASSETS
MISCELLANEOUS EXPENDITURE (2,294.78)
(To the extent not written off or adjusted) 3,287.48

TOTAL 48,515.89