FINSOC CAP TASK 3: PRIYA SINGH

Dabur India Ltd. Is one of the industry leaders for FMCG industry. The key consumer product
categories that Dabur operates in are Hair Care, Oral Care, Health Care, Skin Care, Home Care, and
Foods. Dabur, the master brand, is the portfolio for natural healthcare products. Other important
brand names under Dabur are Hajmola, Fem, Vatika.

Health Care Category:

Net Sales in FY 2017-18 = Rs. 1667 Crore (31.7% of Domestic FMCG sales)

Net Sales in FY 2018-19 = Rs. 1894 Crore (32.3% of Domestic FMCG Sales)

Home & Personal Care Category:

Net Sales in FY 2017-18 = Rs. 2650 Crore (50.4% of Domestic FMCG sales)

Net Sales in FY 2018-19 = Rs. 2965 Crore (50.6% of Domestic FMCG Sales)

CEO – Mr. Mohit Malhotra

Health Care Health Supplements Chyawanprash, Honey,

Glucose
Digestives Hajmola, Pudin Hara, Natural
Care
OTC and Ethicals Honitus, Ashokarishta Asav,
Shilajit, Dashmularistha Asav,
Dabur Lal Tel, GlycoDab
Home & Personal Care Hair Care Hair Oils, Hair Creams, Vatika,
Almond Hair oil, Shampoos,
Oral Care Dabur Red Paste, Babool, Lal
Dant Manjan, Meswak, Dabur
Herbal Toothpaste
Skin Care Gulabari, Fem Bleach,
Dermoviva, Oxylife, Vatika
range
Foods Foods & Beverages Real and Activ Juices and fruit-
based beverages, Homemade
culinary paste

Definitions:
Capital Structure –

Capital Structure is one of the most important components in evaluating the strength of a
company’s balance sheet which further affects company’s investment quality. Capital structure is the
mix of long-term capital i.e. sum of debt and equity.

Capital structure = Debt obligations + Total shareholder’s equity

Equity is the invested capital which is written in shareholder’s equity section

Debt used to calculate the capital structure consists of debt liabilities. It is the long-term debt on the
balance sheet of the company. A low debt-equity ratio is good for the company.
Debt to equity ratio = Debt / Equity

If the debt-to-equity ratio increases, it implies increasing interest expenses which then impact the
credit rating.

Debt to Assets Ratio is the percentage of a company’s assets that are a result of debt (short-term
and long-term).

Debt-to-Assets Ratio = Total debt / Total assets

Operating Performance:

Fixed Asset Turnover is the ratio that compares revenue to net fixed assets.

Fixed Asset Turnover = Net sales / Net fixed assets

A high inventory turnover ratio is the indicator of the company’s ability to rotate its inventory in a
cycle of distribution

Inventory Turnover Ratio = COGS / Average inventory at start and end of the year

Asset Turnover Ratio = Sales / Net fixed assets at the end of the year

Financial performance:

Liquidity – Liquidity is the ability to pay off current debt obligations without using external capital.

It is also used to benchmark the performance against that of the competitors.

Liquidity Crisis can arise if the short-term obligations are difficult to be repaid by the company.

Current Ratio– It measures the ability to pay current liabilities within its current assets like cash and
receivables.

Current Ratio = Current Asset / current Liabilities

Quick Ratio = It measures the company’s ability to pay its short-term obligations with the most liquid
asset.

Quick Ratio = (C + MS + AR)/ CL

Days Sales Outstanding:

It is the number of days in which a company receives the account receivables.

Days Sales Outstanding: Average Accounts Receivable / Revenue per Day

Solvency – Solvency refers to the ability to meet its long-term financial commitments. A solvent
company is one that owns more than it owes.

Interest Coverage Ratio = Operating Income (EBIT)/ Interesting Expense

The higher the Interest Coverage Ratio, the higher is the company’s ability to pay its interest.
 Non-Current 26.05 Cr
Liabilities:
Borrowings
Current Liabilities: 498.23 Cr
Borrowings
Debt 524.28 Cr
Total Equity 5663.06 Cr
Total Capital 6187.34 Cr

Debt / Equity Ratio = 524.28/5663.06 = 0.0925: Dabur has very low debt-equity ratio. This implies
that it is not fully utilizing the option of debt that can finance its operations. The FMCG industry does
not have such a high volatility that debt must be ignored. According to me, Dabur can venture into
financing its operations through loans or borrowings.

Debt as a component of capital (%) = 524.28/6187.34 * 100 = 8.4734%

Equity as a component of capital (%) = 5663.06/6187.34 * 100 = 91.5266%

Fixed Asset Turnover = 8533.05/1547.97 = 5.512

Inventory Turnover Ratio = 4309.03/ (1300.53+1256.18)/2 = 3.37 = The inventory turnover ratio is
higher in comparison to its competitors like Patanjali (4.212)

Asset Turnover Ratio = 8533.05/1547.97 = 6.675 = The asset turnover ratio is higher in comparison
to its competitor Patanjali

Cost of Goods Sold = 4309. 03

Total sales = 8533.05

Current Ratio = 3856.23/2660.31 = 1.45

Investments = 725.41

Cash & Cash Equivalents = 107.69

Bank Balances other than Cash & Cash Equivalents = 220.47

Accounts Receivables = 833.56

Quick Ratio = (725.41 + 107.69 + 220.47) / 833.56 = 1.263

Average Accounts Receivable = 833.56

Revenue per day = 8533.05/365 = 23.378

Days Sales Outstanding = 833.56*365/8533.05 = 35.65 days = 35 days

Debt / Equity Ratio = 524.28/5663.06 = 0.0925

Total debt = 524.28

Total Assets = 8436.64

Debt- to- Assets Ratio = 0.062

EBIT = 1724.87

Accrual v. Cash Profits –

Net profits = 1446.25

Cash profits = 1091.50

Accrual profit / Cash profit = 1.325