Professional Documents
Culture Documents
Acknowledgement
Nothing concrete can be achieved without an optimal combination inspiration and perspiration.
No work can be accompanied without taken the guidance of experts. It is only critics from
ingenious that help transform a product into a quality product.
For this, I am grateful to MISS. BUSHRA KHAN
invaluable critical suggestions given during the review meetings. His timely advice and help
proved his commitment and welfare of his students and the institute as a whole.
Last but not the least, our sincere thanks to all the members who were a vital thrust to our
thoughts and needs throughout the functions assigned to group to get done and prove our best.
Finally thanks to others at KCMT, who put in numerous hours to make the intangible tangible
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PREFACE
This report tries to outline idea of professional world and helps in understanding the pragmatic
aspect of management function. Own observations are significant towards the contribution in
learning the subject. The report is therefore designed as a reference of organization functioning
rather than copy down instrument.
THE PURPOSE OF PROJECT IS TO MAKE ME FAMILIAR WITH DAY TO DAY
FUNCTIONING OF BUSINESS. THE PRESENT REPORT IS AN EFFORT IN THIS
DIRECTION.
My humble endeavor and motive in presenting the project report is to impart a balanced
introduction and knowledge of Financial Analysis, which is an important integral part of
financial management.
It is hoped that this project will serve as supportive document to research worker as efforts has
been tired to make this report an informative, stimulating, and self-explanatory.
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INDEX
Declaration
Acknowledgement
Preface
Index
1. INTRODUCTION
` 4
a) About DABUR
b) Overview of Financial Analysis
2. OBJECTIVE OF STUDY
3. VISION
16
5. RESEARCH METHODOLOGY
41
42
a) Data at a glance
b) Data Interpretation and analysis
6. RECOMMENDATIONS
67
7. CONCLUSION
68
8. BIBLIOGRAPHY
69
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COMPANY PROFILE
Dabur India Limited came into existence over 100 years ago in 1884 in Calcutta. The
founder of Dabur India Limited-Dr.S.K.Burman (1856-1907) was a physician who brought
Ayurvedic medicines for the masses of Bengal. His off quoted dictum is the guiding spirit
behind Dabur even today:
"What is the life worth which cannot bring comfort to others"
And the Vision of DIL is:
"Dedicated to the health and well being of every household"
Dabur India Limited came into existence over 100 years ago in 1884 at Calcutta. The founder,
Dr.S.K.Burman, was a practicing allopathic doctor. At that time Malaria, Cholera and Plague
were the common diseases. He was a physician who brought ayurvedic medicines to the
masses of Bengal. Initially established as a proprietary firm for the manufacture of chemicals
and ayurvedic drugs it was later on 19th November 1930 incorporated as private limited
company. Late Shri C.L.Burman, son of late Dr S.K. Burman and his son late Shri P.C.Burman
in the name of Dr S.K.Burman Pvt.Ltd. to expand the operations by setting up production
facilities at Garia and Narendrapur, West Bengal and Daburgram, Bihar.
Dabur (Dr.S.K.Burman) Pvt. Ltd. was merged with Vidogum and Chemicals Ltd. w.e.f. 1st
July1985 and the amalgamated company was renamed DABUR INDIA LIMITED and a fresh
certificate of incorporation was issued to that effect. In 1970,the bulk of manufacturing facilities
were shifted from West Bengal to Faridabad in Haryana.
In 1975,vidogum and chemicals were incorporated in technical collaboration with Unipekin
AG (Switzerland) for the manufacture of edible grade and industrial grade Guargum powder at
Alwar in Rajasthan.
In 1977,a modern automated plant was set up in Sahibabad (U.P.) for the manufacture of
Chyawanprash, Asavrishthas, Hair oil, Tooth powders, Hajmola, and other Ayurvedic
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specialties. Certification for production of toiletries and food grade products was issued on
13th October 1986 by the registrar of Delhi and Haryana to the company, Dabur Private
Limited, a closely held Public Limited Company.
It was incorporated as a Private Ltd. Company in the name of Dabur (Dr. S.K. Burman)
Pvt. Ltd. From a humble beginning in 1884, a manufacture of traditional medicine in Calcutta,
Dabur has come a long way to become a multifaceted multinational, multi-product, modern
Indian corporation with a global presence. It now enjoys the distinction of being the 2nd
largest FMCG Company and is praised to become a true Indian Multinational.
The main plant was set up in Sahibabad (U.P.) in 1977 for manufacturing of
Chyawanprash, hair oil, tooth powder, hajmola and other ayurvedic medicines and food
products etc. Dabur's main line of business is in the sphere of Health care, Personal care and
Beauty care. Its strength lies in natural and herbal preparations.
Dabur's corporate philosophy has always been ahead of its time. The founder's initial
success was mainly due to his direct main campaigns- a technique that became very popular
nearly a century later. The company was one of the earlier Indian companies to have fully
equipped R & D lab as early as in 1919. Today, the company has its own mainframes and
computers are a way of life here.
Dabur is also an ISO 9002 certified company. The certification was obtained in 1995 by
SGS YARSLEY international services Limited U.K. Dabur's revenue today exceed Rs.800
crores with plans to achieve Rs.2, 000 crores by year 2003. Dabur has 34,000 shareholders
with market capitalization of over Rs.1, 400 crores.
Dabur has 11 manufacturing plants in India and Nepal and a licensee in the Middle East.
It has manufacturing base in Egypt also. The company has over 4,000 employees with around
1,500 looking after sales and marketing functions.
The Indian market is being served through a transactional network of sales offices and
carrying and forwarding agents. The company has its offices in London, New York and
Moscow. Dabur products are being exported to around 50 countries. Dabur portfolio is
exceeding 500 products of FMCG and health care products.
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The Board of Directors of Dabur India Limited (DIL) met on July 23, 2003 to consider
the unaudited financials of the company for the first quarter that ended on June 30, 2003.
Company has recorded a growth of 36 per cent in its net profit per cent growth in its turnover
during April-June 2003.
The turnover of DIL, during the three-month period, has increased to Rs 266 crore to
Rs 300 crore while the net profit has increased 11.5 crore to Rs 16 crore during the same
period.
The first quarter results should not be annualized as sales usually improve in
subsequent quarters.
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OBJECTIVE OF STUDY
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VISION
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PRINCIPLES
OWNERSHIP:
This is our company. We accept responsibility and accountability to meet business needs.
We all are leaders in our responsibility, with a deep commitment to deliver the results. We are
determined to be the best at doing what matters the most.
PEOPLE DEVELOPMENT:
People are our most important asset. We add value through result- driven training and we
encourage rewards and excellence.
CONSUMER FOCUS:
We have superior understanding of consumer needs and develop products to fulfill their
demands.
TEAM WORK:
We work together on the principle of mutual trust and transparency in a boundary less
organization.
INNOVATION:
Continuous innovation in products and processes and is the base of our success.
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1884: Dr.S.K.Burman lays the foundation of what is known as Dabur India Limited. Started
from a small shop at Calcutta, he began a direct mailing system to send his medicines to even
the smallest of villages in Bengal. The brand name Dabur is derived from the words "DA" for
Daktar or doctor and "BUR" from Burman.
1896: As the demand for Dabur products grows, Dr. Burman felt the need for mass production
for some of his medicines. He set up a small manufacturing plant at Garhai near Calcutta.
Early 1900s: The next generation of Burman's take a conscious decision to enter the
Ayurvedic medicines market, as they believe that it is only through ayurveda that the
healthcare needs of poor Indians can be met.
1919: The search for processes to suit mass production of ayurvedic medicines without
compromising on basic ayurvedic principles lead to the setting up of the first Research and
Development laboratory at Dabur. This initiate a pain staking study of ayurvedic medicines as
mentioned in age old scriptures, their manufacturing processes and how to utilize modern
equipment to manufacture these medicines without reducing the efficacy to manufacture these
medicines without reducing the efficacy of these drugs.
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1940: Dabur diversifiers into personal care products with the launch of its Dabur Amla Hair
Oil. This perfumed hair oil catches the imagination of the common man and film stars alike
and becomes the largest hair oil brand in India.
1949: Dabur Chyawanprash is launched in a tin pack and becomes the first branded
Chyawanprash of India.
1956: Dabur buys its first computer. Accounts and stock keeping are one of the first
operations to be computerized.
1970: Dabur expands its personal care portfolio by adding oral care products. Dabur Lal Dant
Manjan is launched and captures the Indian rural market.
1972: Dabur shifts base to Delhi from Calcutta. Starts production from a hired manufacturing
facility at Faridabad.
1978: Dabur launches the Hajmola tablets. This is the first time that a classical ayurvedic
medicine is branded from Shudhabardhak bati to Hajmola tablets.
1979: The Dabur Research Foundation (DRF), an independent company is set up to spearhead
Dabur's multi-faceted research. Commercial production starts at Sahibabad. This is one of the
largest and most modern production facilities for ayurvedic medicines in India at this time.
1984: The Dabur brand turns 100 but is still young enough to experiment with new offerings
in the market.
1986: Dabur becomes a public Limited company through reverse merger with Vidogum
Limited, and is re-christened Dabur India Limited.
1989: Hajmola Candy is launched and captures the imagination of children and establishes a
large market share.
1992: Dabur enters into a joint venture with Agrolimen of Spain far manufacturing and
marketing confectionery items such as bubble gums in India.
1993: Dabur set up the oncology formulation plant at Baddi, Himachal Pradesh.
1994: Dabur India Limited comes out with its first public issued at a premium of Rs.85 per
share. The issue is subscribed over 21 times.
1994: Dabur enters the oncology (anti-cancer) market with the launch of Intaxel (Pacitaxel).
Dabur becomes only the second company in the world to launch this product. The Dabur
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Research Foundation develops the unique eco-friendly process of extracting the drug from the
leaves of the Asian Yew Tree.
1995: Dabur enters into a joint venture with Osem of Israel for food and Bongrain
of France for cheese other dairy products.
1996: Dabur launches Real fruit juices, which heralds the company's entry into the processed
food market.
1997: The foods division is created, compromising of real fruit juices and Homemade
cooking paste to form the core of this division's product portfolio.
1998: Project STARS (Strive To Achieve Record Successes) is initiated by the company to
achieve accelerated growth in the coming years. The scope of this project is strategic,
structural and operational changes to enables efficiencies and improves growth rates.
1998: The Burman family hands over the reins of the company to a professional, Mr. Ninu
Khanna joins Dabur, as the Chief Executive Officer.
2001-2002: Launched Amla Light, new flavors in Real Juices-grapes, guava, apple active,
orange active, homemade pappad, Vatika- an anti-dandruff shampoo.
2002: New launches homemade coconut milk (in south), Tang, Tomato puree, Vatika light.
2003: Dabur achieves Rs.1,232 crores turnover mark with an increase of 6 per cent. Turnover
of FMCG reaches to Rs l048.5crores, which shows a profit of Rs. 72 crores. Turnover of
pharmaceuticals reaches to Rs 184 crores with a profit of Rs.13 crores.
2008: Growth rate of company is 12.4% to Rs. 1378.85 crores from Rs. 1226.58 crores a year
earlier.
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CORPORATE PHILOSOPHY
Knowledge is the key to growth in today's world. Whatever be the industry, it is the
knowledge, which provides cutting edge to individual and organisations. For more than a century
nature has been a rich source of knowledge for DABUR. Nature has not only gives it the
ingredients for all its products but also has taught it how to create a harmony within and outside
the organisation. Nature has inspired DABUR in all its acts. Ayurveda - the science of life is
based on principles of nature. All ayurvedic preparation has their ingredients derived from nature.
Dabur has converted the healing properties of natural ingredients and the age-old knowledge of
ayurveda into contemporary health care to eliminate health problems of its consumers.
Dabur is committed to expand the reach of its age-old knowledge of ayurveda and Nature
through web. Through web the aim is to overcome the physical boundaries to take ayurvedic way
of life to global frontiers. Dabur India limited understands its responsibility as a corporate house.
It has not only set a sight on increasing turnover and profitability of the company but also on
propagating Ayurveda - The Indian System of Medicine.
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LOCATION OF OPERATIONS
Head office
Regd. Office
Corporate office
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Work in Progress
Finished Goods
Trade Debtors
Prepayments
Cash Balances
Trade Creditors
Accruals
Taxation Payable
Dividends Payable
Every business needs adequate liquid resources in order to maintain day to day cash flows. It
needs enough cash to by wages and salaries as they fall due and to pay creditors if it is to keep
its workforce and ensure its supplies. Maintaining adequate working capital; is not just
important in the short term.
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Sufficient liquidity must be maintained in order to ensure the survival of business in the
long term as well. Even a profitable business may fail if it does not have adequate cash flows to
meet its liabilities as tyhey fall a due. Therefore when business make investment decisions they
must not only consider the financial outlay involved with acquiring the new machine or the
new building etc, but must also take account of the additional current assets that are usually
involved with any expansion of activity .
Increase production tends to engender a need to hold additional stocks of raw material & work
in progress.
Increased sales usually mean that the level of debtor will increase. A general increase in the
firms scales of operation tends to imply a need for greater level of cash.
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Capital required for a business can be classifies under two main categories:
Fixed Capital
Working Capital
Every business needs funds for two purposes for its establishments and to carry out day to day
operations. Long term funds are required to create production facilities through purchase of fixed
assets such as plant and machinery, land and building, furniture etc. Investments in these assets
are representing that part of firms capital which is blocked on a permanent or fixed basis and is
called fixed capital. Funds are also needed for short term purposes for the purchasing of raw
materials, payments of wages and other day to day expenses etc. These funds are known as
working capital. In simple words, Working capital refers to that part of the firms capital which is
required for financing short term or current assets such as cash, marketable securities, debtors
and inventories.
CONCEPTS OF WORKING CAPITAL:
There are two concepts of working capital:
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The term working capital refers to the Gross working capital and represents the amount of funds
invested in current assets . Thus, the gross working capital is the capital invested in total current
assets of the enterprises. Current assets are those assets which are converted into cash within
short periods of normally one accounting year. Example of current assets is:
Constituents of Current Assets:
Bills Receivable
Sundry Debtors
Raw Materials
Work in Process
Finished Goods
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Prepaid Expenses
Accrued Incomes
The term working capital refers to the net working capital. Net working capital is the excess of
current assets over current liabilities or say:
Net Working Capital = Current Assets Current Liabilities.
NET WORKING CAPITAL MAY BE NEGATIVE OR POSITIVE:
When the current assets exceed the current liabilities, the working capital is positive and the
negative working capital results when the current liabilities are more than the current assets.
Current liabilities are those liabilities which are intended to be paid in the ordinary course of
business within a short period of normally one accounting year of the current assets or the
income of the business. Examples of current liabilities are:
CONSTITUENTS OF CURRENT LIBILITIES:
Bills Payable
Dividends Payable
Bank Overdraft
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The gross working capital concept is financial or going concern concept whereas net working
capital is an accounting concept of working capital.
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(RCP)
Sales of finished
Raw materials
Goods
Finished Goods
Produced
Work in process
Conversion period
(WIPCP)
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The gross operating cycle of a firm is equal to the length of the inventories and receivables
conversion periods. Thus,
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Average Payable
Net Credit Purchase per day
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Om the basis of concept, working capital is classified as gross working capital and net working capital.
The classification is important from the point of view of the financial manager.
On the basis of time, working capital may be classified as:
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Kinds of Working
Capital
Gross
Working
Net
Working
Capital
On the basis of
time
Permanent
or
Fixed
Working
Temporary or
Variable
Working
Capital
Regular
Working
Reserve
Working
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Seasonal
Working
Special
Working
Capital
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Working capital is the life blood and nerve centre of a business . just a circulation of a blood is
essential in the human body for maintaining life, working capital is very essential to maintain the
smooth running of a business. No business can run successfully without an adequate amount of
working capital. The main advantages of maintaining adequate amount of working capital are as
follows:
Goodwill
Easy Loans
Cash discounts
Ability of crisis
High morals
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The need for working capital cannot be emphasized. Every business needs some amount of
working capital. The need of working capital arises due to the time gap between production and
realization of cash from sales. There is an operating cycle involved in the sales and realization of
cash. There are time gaps in purchase of raw materials and production, production and sales,
And sales, and realization of cash, thus , working capital is needed for the following purposes:
For the purchase of raw materials , components and spaces
To pay wages and salaries
To incur day to day expenses and overhead costs such as fuel, power and office expenses
etc.
To meet the selling costs as packing, advertising etc.
To provide credit facilities to the customers.
To maintain the inventories of raw materials, work in- progress, stores and spares and
finished stock.
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OPERATIONS:
The requirement of working capital fluctuates for seasonal business. The working capital
needs of such business may increase considerably during the busy season and decrease
during.
MARKET CONDITION:
If there is a high competition in the chosen project category then one shall need to offer
sops like credit, immediate delivery of goods etc for which the working capital
requirement will be high. Otherwise if there is no competition or less competition in the
market then the working capital requirements will be low.
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MANAFACTURING CYCLE:
The manufacturing cycle starts with the purchase of raw material and is completed with
the production of finished goods. If the manufacturing cycle involves a longer period the
need for working capital would be more. At time business needs to estimate the
requirement of working capital in advance for proper control and management. The
factors discussed above influence the quantum of working capital in the business. The
assessment of the working capital requirement is made keeping this factor in view. Each
constituents of the working capital retains it form for a certain period and that holding
period is determined by the factors discussed above. So for correct assessment of the
working capital requirement the duration at various stages of the working capital cycle is
estimated. Thereafter proper value is assigned to the respective current assets, depending
on its level of completion. The basis for assigning value to each component is given
below:
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BASIS OF VALUATION
Cost of Production
Debtors
Cah
Working Expenses
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The following are the general principles of a sound working capital management policy:
PRINCIPLES OF WORKING CAPITAL MANAGEMNT POLICY
PRINCIPLES OF
RISK
PRINCIPLES OF
COST OF
PRINCIPLES OF
EQUITY
PRINCIPLES
OF MATURITY
OF
relationship between the risk and profitability. A conservative management prefers to minimize
risk by maintaining a higher level of current assets or working capital while a liberal
management assumes greater risk by reducing working capital. However, the goal of
management should be to establish a suitable trade off between profitability and risk.
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Growth may be stunted. It may become difficult for the enterprises to undertake
profitable projects due to non availability of working capital.
Implementations of operating plans may brome difficult and consequently the profit goals
may not be achieved.
Cash crisis may emerge due to paucity of working funds.
Optimum capacity utilization of fixed assets may not be achieved due to non availability
of the working capital.
The business may fail to honour its commitment in time thereby adversely affecting its
creditability. This situation may lead to business closure.
The business may be compelled to by raw materials on credit and sell finished goods on cash. In
the process it may end up with increasing cost of purchase and reducing selling price by offering
discounts . both the situation would affect profitable adversely.
Now avaibility of stocks due to non availability of funds may result in production stoppage.
While underassessment of working capital has disastrous implications on business
overassesments of working capital also has its own dangerous.
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level reorder level of ordering quantity so that the inventory costs is reduced and outs
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Thus the objective of any management policy pertaining to accounts receivables would be to
ensure the benefits arising due to the receivables are more then the costs incurred for the
receivables and the gap between benefit and costs increased resulting in increase profits. An
effective control of receivables
Help a great deal in properly managing it. Each business should therefore try to find out
coverage credit extends to its clients using the below given formula:
Average Credit =
(Extend in days)
Each business should project expected sales and expected investments in receivable based on
various factor, which influence the working capital requirement. From this it would be
possible to find out the average credit days using the above given formula. A business should
continuously try to monitor the credit days and see that the average. Credit offer to clients is
not crossing the budgeted period otherwise the requirement of investment in the working
capital would increase and as a result, activities may get squeezed. This may lead to cash
crisis.
CASH BUDGET: Cash budget basically incorporates estimates of future inflow and
outflows of cash cover a projected short period of time which may usually be a year, a half or
a quarter year . effective cash management is facilated if the cash budget is further broken
down into months, weeks or even a daily basis.
There are two components of cash budget are:
1. Cash inflows
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2. Cash outflows
The main source for thses flows are given here under:
1. Cash Sales
2. Cash received from debtors
3. Cash received from Loans, deposits etc.
4. Cash receipts other revenue income
5. Cash received from sale of investment or assets.
CASH OUTFLOWS:
1. Cash Purchase
2. Cash payments to Creditors
3. Cash payment for other revenue expenditure
4. Cash payment for assets creation
5. Cash payments for withdrawals, taxes.
6. Repayments of Loan etc.
A suggestive for, at for cash budget is given below:
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MONTHS
PARTICULARS
JANUARY
FERBUARY
MARCH
.
I. Total cash inflows
Estimated cash outflows
..
..
II. Total cash outflows
III. Opening cash balances
IV. Add/deduct surplus/deflictduring the month ( I-II)
V. Closing cash balances (III -IV)
VI. Minimum level of cash balance
VII. Estimated excess or short fall of cash (V-VI)
RESEARCH METHODOLOGY
Secondary Data:
Any data, which have been gathered earlier for some other purpose, are secondary data in the
hands of researcher. Those data collected first hand, either by the researcher or by someone
else, especially for the purpose of the study is known as primary data.
The data collected for this project has been taken from the secondary source. Sources of
secondary data are:-
Internet
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Magazines
Publications
Newspapers
Broachers
DATA ANALYSIS
ssssssz
FY 05-06
FY 06-07
FY 07-08
Currents assets
Inventories
stock in trade
223.94
662.87
1176.85
work in progress
2528.4
4563.76
8714.56
7224.96
8145.37
9242.58
1131.8
1463.13
1810.73
raw materials
stores and spare parts
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11109.1
14835.13
20944.72
Debtors
5516.14
7402.6
14211.12
1027.1
8042.12
5225.01
-6910.46
-5272.52
3249.1
7529.5
8647.1
20901.44
30898.89
43755.43
FY 05-06
FY06-07
FY 07-08
Sundry Creditors
1476.37
1589.57
3748.82
1456.05
365.64
258.4
342.26
645.34
621.04
21.33
31.66
35.29
sundry deposits
174.14
229.23
321.66
217.21
362.59
73.55
7.04
20.05
32.12
3694.404
3244.08
5090.88
other liabilities
unclaimed dividend
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INVENTORIES
In the context of DABUR the major increase in the present three financial years has been of the
inventor
Reasons:
The pile up of inventory that is used in trial run, before hand to be used in the checking
the machinery & the newly installed production capacity.
The increased inventory to produce more goods so as to utilize the new plant set up .
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CURRENT ASSETS Current Assets includes cash & those assets which can be easily
converted into cash within a short period generally one year such as marketable securities , bills
receivables, sundry debtors, inventories, work in progress, prepaid expenses etc .The total
current assets are the sum of below contingency i.e.
Current Assets = Stock/ Inventory + Sundry Debtors + Advances + Cash and bank balances
+ other current assets
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Conclusions: The trend of the current assets in DABURthroughout the period from 2005-08
are shown in the pie-chart .it is evident from the table that the current assets in DABURhas
increased except in year 2006-07.
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CURRENT LAIBILITIES
These are those obligations which are payable within a short period of generally one year and
includes outstanding expenses, bills payable, sundry creditors, accrued expenses, bank overdraft,
short term advances, income tax payable.
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Conclusion: The trend of Current Liabilities of DABURthroughout the period from 20052008 are shown in the table. It is evident from the table that it shows increasing trends in the year
2005 to 2008. It shows that the DABURhas stability in trends of Current Liabilities.
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RATIO ANALYSIS
FY 05-06
FY 06-07
FY 07-08
29843.52
47163.72
61410.49
7611.44
6597.95
7459.4
12759.32
14530.46
20880.64
7611.44
6597.95
7459.4
45503
52527.1
81786.93
working capital
22232.08
40565.77
53951.09
8594.615
14476.465
22666.83
37398
47018.31
67855.4
total assets
87666
124436.12
138465.6
37313.16
27364.06
23898.65
97754.89
63633.37
51858
5998
8120.16
14612.92
Total interest
747.8
2653.75
5214.77
4115
3893.37
7383.56
89529.68
106917.71
111772.7
investment (FA+CA)
97141.12
113515.66
119232.1
67297.6
66351.94
57821.59
Current assets
current liabilities
quick assets
quick liabilities
Net turnover (sales)
Fixed assets
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LIQUIDITY RATIOS
CURRENT RATIO
Current ratio is defined as the relationship between current assets and current liabilities. It is a
measure of general liquidity & is most widely used to make the analysis of short term financial
position of a firm. Current ratio is the ratio of current assets to current liabilities. A relatively
higher ratio is an indication that the firm is liquid and has the ability to pay its current obligations
on time. On the other hand a low current ratio indicates that the
Liquidity position of the firm is not good and shall not be able to pay its current liabilities in
time. Current Ratio:
The Current ratio is calculated by dividing current assets by current liabilities:
Current ratio: Current Assets
Current Liabilities
FIANANCIAL
YEAR
CURRENT
ASSETS
CURRENT
LAIBILITIES
CURRENT RATIO
FY 2005-2006
29843.52
7611.44
3.92
FY 2006-2007
47163.72
6597.95
7.14
FY2007-2008
61410.49
7459.4
8.23
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FIANANCIAL YEAR
QUICK ASSETS
QUICK
LIABILITITES
CURRENT LAIBILITIES
QUICK RATIO
FY 2005-2006
12759.32
7611.44
1.67
FY 2006-2007
14530.46
6597.95
2.2
FY2007-2008
20880.64
7459.4
2.78
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QUICK RATIO: Quick ratio or liquid ratio is a more rigorous test of liquidity than the
current ratio. The term liquidity refers to the ability of the firm to pay short term obligations as
and when they become due. Quick ratio may be defined as ration of quick assets to quick
liabilities. Liquid assets include all the current assets excluding inventories & prepaid expenses.
Liquid liabilities mean all liabilities excluding bank overdraft. Inventories & prepaid expenses
are not termed as liquid assets because they cannot be converted into cash immediately without a
loss of value.
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EFFICIENCY RATIO
From the perspective of working capital management we would be discussing three important
ratios they are.
Sales to working capital ratio
Inventory turnover ratio
Current assets turnover ratio.\
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Financial Year
Sales to working capital ratio
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FY 05-06
2.046727
FY 06-07
1.294863
FY 07-08
1.51595
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Financial Year
inventory turnover ratio/ stock velocity
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FY 05-06
4.351329
FY 06-07
3.2479138
FY07-08
2.9936
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Financial Year
current assets turnover ratio
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FY 05-06
1.52472
FY 06-07
1.11371834
FY07-08
1.331807
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OPERATING RATIOS
Working ratio
Interest coverage ratios
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WORKING RATIO
A ratio used to measure a company's ability to recover operating costs from annual revenue.
This ratio is calculated by taking the company's total annual expenses (excluding
depreciation and debt-related expenses) and dividing it by the annual gross income. A
working ratio below 1 implies that the company is able to recover operating costs, whereas a
ratio above 1 reflects the company's inability to do so.
Financial Year
working ratio
MAYANK AGARWAL
FY 05-06
0.381701
FY 06-07
0.43002689
FY07-08
0.460848
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RECMONDATION
Making available just adequate quantum of working capital. Some of the existing
machinery is new with absolute equipments requiring modernization and rebuilding.
The company should administrate their credit on the basis of certain well recognized and
established principle of credit administration.
The company should maintain an optimum level of cash in the business in order to
maintain a proper liquidity in the business.
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COCLUSION
Working capital management is an important aspect of any business. Every business concern
should have adequate working capital to run its business operation. Every concern should have
neither redundant of excess working capital nor inadequate or shortage of working capital. Both
excess as well as short working capital positions are bad for any business.
The three elements of working capital management are cash management receivable
management and inventory management. If a finance manager maintains these three elements of
working capital management properly means the concern will get dramatic improvement in their
sales volume and also in business. Working capital policies of a firm have a great effect on its
profitability, liquidity and structured health of the organization.
Every concern should adopt some new tread management strategies that will help in greater
productivity, inventory optimization and also better working capital management. So, it is noted
that working capital is a means to run business smoothly and profitability. Thus, the concept of
working capital has its own important in a going concern.Good management of working capital
is part of good finance management effective use of working capital will contribute to the
operational efficiency of a department; optimum use will help to generate maximum return.
DABURis also using SAP 6.0 versions which is very advanced to do every transaction of any
organization. SAP 6.0 also applicable for e-transaction.
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BIBLOGRAPHY
www.dabur.com
www.moneycontrol.com
www.google.com
Financial Management theory and practice by Prassanna Chandra
Financial Management theory and practice by Shashi .K. Gupta & R.K.
Sharma
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