PROJECT REPORT

(Submitted for the Degree of B.Com Honours in Accounting and Finance

under the University of Calcutta)

Study on working capital of India

(With special reference to Dabur India Ltd)

SUBMITTED BY

NAME- Komal Sonthalia

REGISTRATION NO: - 235-1211-0237-17

ROLL NO: - 171235-11-0092

NAME OF THE COLLEGE: - T.H.K. JAIN COLLEGE

SUPERVISED BY

NAME OF THE SUPERVISOR- PROF. MS. JAYASHREE DAS

NAME OF THE COLLEGE- T.H.K. JAIN COLLEGE

(SUBMITTED ON THE MONTH OF JUNE OF THE YEAR 2020)

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 ACKNOWLEDGEMENT

I take this opportunity to thank the T.H.K. JAIN COLLEGE for the three amazing
years of my College life and being the best institution for pursuing the degree of
B.com Honors’. Special thanks to my supervisor in charge Prof. Ms. Jayashree
Das for guiding me in making the Project whole and complete and also in
supporting me throughout the process. Also I would like to thank my friends and
family members who were supportive and helpful in preparing this project work
at various stages. I will always remember making this project work and the
knowledge I gained while during so. Concluding this with the heartiest thanks to
my college and its faculty members for always being there when the students
needed it. Thank you.

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 Index

TABLE OF CONTENTS

CHAPTER -1

INTRODUCTION...............................................................................................4-5

BACKGROUND.................................................................................................5-6

IMPORTANCE....................................................................................................6-7

LITERATURE REVIEW........................................................................................7

OBJECTIVES........................................................................................................8

METHODOLOGY................................................................................................8

LIMITATIONS.....................................................................................................8

CONCEPTUAL FRAMEWORK...................................................................9-11

PRESENTATION OF DATA, ANALYSIS & FINDINGS...............................12-18

CONCLUSION & RECOMMENDATIONS................................................19

BIBLIOGRAPHY..............................................................................................20

ANNEXURE.....................................................................................20-23
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 INTRODUCTION

The term Working Capital refers to the capital required for day-to-day operations of a
business enterprise. It is represented by excess of Current assets over Current Liabilities
. It is necessary for any organization to run successfully its affairs, to provide for adequate
working capital. Too large investment in Current Assets means blocking the capital that can
be used productively elsewhere. On the other hand too little investment can be expensive. For
example, insufficient inventory may cause loss of sales to Customers.
All this indicates that proper estimation of the working capital requirements is a must for
running the business efficiently and profitably.

Working capital = Current Assets – Current Liabilities

The importance of having Working Capital is best understood as “costs expended before
payment received for goods/ services provided to the customers”. Therefore, no capital means
no production and no customers, which means no capital….

There are basically 2 concepts of working capital:

➢ Gross working capital:

Gross working capital is the sum of a company's current assets (assets that are
convertible to cash within a year or less). Gross working capital includes assets such
as cash, accounts receivable, inventory, short-term investments, and marketable
securities.
➢ Net working capital:

Working capital, also known as net working capital (NWC), is the difference
between a company’s current assets, such as cash, accounts receivable (customers’
unpaid bills) and inventories of raw materials and finished goods, and its current
liabilities, such as accounts payable.

Current Assets:

Current Assets, sometimes called liquid assets, are those resources of a firm, which are held
in the form of cash or are expected to be converted in cash within the accounting period in
one year duration. The operating cycle is the time to convert the raw materials into finished
goods and convert receivables into cash. Examples: cash in hand, bank balances, bills
receivables, sundry debtors(less bad debts), prepaid expenses, etc.

Current Liabilities:
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Current Liabilities are debt payable within an accounting period. Current assets are converted
into cash to pay current liabilities. Examples: Bills payable, sundry creditors, outstanding
expenses etc.

FACTORS INFLUENCING WORKING CAPITAL

REQUIREMENTS

There are no set rules or formula to determine the working capital requirements of the firms.
A large number of factors influence the working capital need of the firms. All factors are of
different importance and also importance change for the firm over time. Therefore, an analysis
of the relevant factors should be made in order to determine the total investment in working
capital. Generally the following factors influence the working capital requirements of the firm:

1. Nature and size of the business

2. Seasonal fluctuations
3. Production policy
4. Taxation
5. Depreciation policy
6. Reserve policy
7. Profit margin and Dividend policy
8. Credit policy
9. Growth and expansion
10. Price level changes
11. Operating efficiency

BACKGROUND

This project deals with the Working Capital Management of Dabur India
Limited. Dabur India Limited is the Fourth Largest FMCG Company. The basic meaning
of Working Capital in a simple language is CURRENT ASSETS less CURRENT
LIABILITIES. Cash is the lifeline of every b u s i n e s s a n d h e n c e w o r k i n g
c a p i t a l m a n a g e m e n t p l a y s a n i m p o r t a n t r o l e i n f u n c t i o n i n g o f a business.
Working capital comprises a number of different items and its management is
difficult since these are often linked. Hence altering one item may impact adversely upon
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other areas of the business. Management must ensure that a business has sufficient
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working capital. Too little will result in cash flow problems highlighted by an
organization exceeding its agreed overdraft limit, failing to pay suppliers on time, and
being unable to claim discounts for prompt payment. In the long run, a business
with insufficient working capital will be unable to meet its current obligations and will be
forced to cease trading even if it remains profitable.

On the other hand, if an organization ties up too much of its resources in

working capital it will e a r n a l o w e r t h a n e x p e c t e d r a t e o f r e t u r n o n c a p i t a l
e m p l o y e d w h i c h i s n o t a t a l l a d e s i r a b l e situation. The primary objective of
working capital management is to ensure that sufficient cash is available to-Meet day-to-
day cash flow needs; Pay wages and salaries when they fall due; Pay creditors to
ensure continued supplies of goods and services; Pay government taxation and providers of
capital – dividends; and Ensure the long-term survival of the business entity. I n t e r f i r m
comparison can be done with the help of ratio analysis as ratio analysis
a l l o w s comparison of one industry/firm to another. Since financial ratio
analysis looks at relationships i n s i d e t h e i n d u s t r y / f i r m , a n i n d u s t r y / f i r m o f
o n e s i z e c a n b e d i r e c t l y c o m p a r e d t o a s e c o n d industry/firm (or a
collection of industries/firms), which may be larger or smaller or even in a
different business.

IMPORTANCE OF THE STUDY-

Working capital may be regarded as the lifeblood of the business. Without insufficient
working capital, any business organization cannot run smoothly or successfully.

In the business the Working capital is comparable to the blood of the human body. Therefore
the study of working capital is of major importance to the internal and external analysis because
of its close relationship with the current day to day operations of a business. The inadequacy
or mismanagement of working capital is the leading cause of business failures.

To meet the current requirements of a business enterprise such as the purchases of services,
raw materials etc. working capital is essential. It is also pointed out that working capital is
nothing but one segment of the capital structure of a business.

LITERATURE REVIEW-

Experts (William 1939) determined the factors of working capital and pointed out that working
capital is an element to be considered in fixing the rate-base. Inventory, receivables, cash and
working finance are the four problem areas of working capital management (Mishra 1975).
Inventory represents more than 61% of the total cost of the firm (Swamy1987). Due to lack of
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a proper plan for working capital requirements most firms often experience excess working
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capital or shortage of working capital (Agarwal 1977). Adequate working capital is an essential
condition for efficient financial management (Mohan 1991). The major reason for slow
progress of an undertaking is shortage or wrong management of working (Siddhartha and Das
1993). Firms may have an optimal level of working capital that maximizes their value. Large
inventory and a generous trade credit policy may lead to high sales. Trade credit may stimulate
sales because it allows customers to assess product quality before paying (Long, Maltiz and
Ravid, 1993, and Deloof and Jegers, 1996). Excessive levels of current assets can easily result
in a firm’s realizing a substandard return on investment. However firms with too few current
assets may incur shortages and difficulties in maintaining smooth operations (Horne and
Wachowicz, 2000). Due to lack of a Firms are able to reduce financing costs/or increase the
funds available for expansion by minimizing the amount of funds tied up in cost. There is a
significant difference among industries in working capital measures across time (Krueger
2002). (Deloof, 2003) discussed that most firms had a large amount of cash invested in working
capital. It can therefore be expected that the way in which working capital is managed will have
a significant impact on profitability of those firms. On basis of these results he suggested that
managers could create value for their shareholders by reducing the number of days’ accounts
receivable and inventories to a reasonable minimum. (Ghosh and Maji, 2003) in this paper
made an attempt to examine the efficiency of working capitalmanagement of the Indian cement
companies during 1992 – 1993 to 2001 – 2002. By using some common working capital
management ratios this paper tested the speed of achieving that target level of efficiency by an
individual firm during the period of study. Efficient working capital management involves
planning and controlling of current assets and current liabilities in a manner that eliminates the
risk of inability to meet due short term obligations on the one hand and avoid excessive
investment in these assets on the other hand (Eljelly, 2004). Lazaridis and Tryfonidis (2006)
conducted a cross sectional study by using a sample of 131firms listed on the Athens Stock
Exchange for the period of 2001-2004 and found statistically significant relationship between
profitability, measured through gross operating profit and cash conversion cycle and its
components. Garcia- Terual (2007) collected a panel of 8872 small to medium-sized enterprises
from Spain covering the period 1996-2002. They tested the effects of working capital
management on SME profitability using the panel data methodology. Mathuva (2009)
examined the influence of working capital management components on corporate profitability
by using a sample of 30 firms listed on Nairobi Stock Exchange for the periods 1993-2008.By
using Pearson and Spearman’s correlations it was found that there exists a highly significant
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negative relationship between the time it takes for firms to collect cash from their customers
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and profitability, there exists a highly significant positive relationship between the period taken
to convert inventories to sales and profitability and there exists a highly significant positive
relationship between the time it takes for firms to pay its creditors and profitability.

OBJECTIVE OF THE STUDY-

Following are the objective of the study on working capital management:

1. To assess the significance of working capital in Dabur Ltd by selecting few important
yardsticks as current ratio, acid test ratio, inventory to sales ratio, age of inventory and
age of debtors, current assets to total asset etc
2. To make detailed analysis of various components of working capital in Dabur Ltd to
know the items responsible for changes in working capital.
3. To study liquidity position of Dabur Ltd by comparing relationship of various
components like inventory, cash, debtors, loans and advances to total working capital
employed.
4. To study the shifts in operating cycle of Dabur Ltd in detail.

METHODOLOGY-

Secondary data of Dabur India Ltd has been used in the study ranges the period from (2016-
2020).collected data has been classified ,edited and tabulated as per the requirement The
collected data have been analyzed with the help of liquidity ratios, efficiency ratios, component
of working capital and through operating cycle. For assessing the behavior of data statistical
tools like mean, standard deviation and coefficient of variation have been used.

LIMITATIONS OF THE STUDY-

Financial statements suffer from the following limitations: -

1. Financial statements do not given a final picture of the concern. The data given in these
statements is only approximate. The actual value can only be determined when the business is
sold or liquidated.
2. Financial statements have been prepared for different accounting periods, generally one year,
during the life of a concern. The costs and incomes are apportioned to different periods with a
view to determine profits etc. So financial statement are at the most interim reports rather than
the final picture of the firm.
3. The financial statements are expressed in monetary value, so they appear to give final and
accurate position. The value of fixed assets in the balance sheet neither represent the value for
which fixed assets can be sold nor the amount which will be required to replace these assets.
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The balance sheet is prepared on the presumption of a going concern. The concern is expected
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to continue in future. So fixed assets are shown at cost less accumulated deprecation.
4. The financial statements are prepared on the basis of historical costs Or original costs. The
value of assets decreases with the passage of time current price changes are not taken into
account. The statement are not prepared with the keeping in view the economic conditions. the
balance sheet loses the significance of being an index of current economics realities. Similarly,
the profitability shown by the income statements may be represent the earning capacity of the
concern.

CHAPTER PLANNING:

Chapter-1: Introduction

Chapter-2: Conceptual framework

Chapter-3: Presentation and Analysis

Chapter-4: Conclusion and Recommendations

Chapter-2: CONCEPTUAL FRAMEWORK

Dabur is one of the largest Ayurveda and natural health company in the world with the range
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of over 250 Ayurveda & herbal products. While majority of its products are mass products
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there are other products that use demographic or behavioral basis for segmentation (Like
the brand Nature’s Best was developed to target institutional sales like hotels, airlines etc.).
Such type of segmentation is used to make the product affordable to every income strata of the
society. Dabur products are targeted to every household but majority of its customers are
middle class people.

Dabur initially have ambiguous positioning. It was unclear to the public reason being that
although they are in Health care, personal care, foods & home care but it was shedding its old-
age umbrella brand strategy, where its entire product portfolio was under one roof. They
realised this mistake & repositioned its brands on the basis of benefits. Also they separated
their FMCG & pharmaceuticals business.

Competitive advantage in the Marketing strategy of Dabur –

Extensive distribution channel covering Rural & urban market through their 600+ distributors
& network of 2.8 million retailers has helped Dabur to reach every nook & corner of India. Use
of IT as a strategic enabler for its business strategy & also optimizing the company’s internal
logistics and distribution processes for mega retail customers, and put metrics and incentives
in place to drive specific goals such as consistency of sales in grocery stores, improved service
to drug stores and increased sales via wholesale channels has helped Dabur to have competitive
edge over other well established players like HUL, P&G, & ITC etc. It has manufacturing
facilities in India & outside nations through subsidiaries which is helping the company to use
the shared resources to emerge as a global player.

BCG Matrix in the Marketing strategy of Dabur –

When we plot Dabur’s products in BCG matrix we can see that-

Real fruit juice, Gulabari Jal, Health supplements, Hair oil & foods business are stars with
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high market share but equally high competition.

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Home care,personal care products are question marks due to the presence of large giants in the
market.

Hajmola, chawanprakash, Glucose-D & Pudinhara are Cash Cows.

Distribution strategy in the Marketing strategy of Dabur –

In FMCG industry, distribution plays a critical role. So as to make the products available to
every nook & Corner Company has to choose the proper strategy.

Dabur is making the products available in the grocery/ pops & mums, departmental stores etc.
through 3 tier distribution system i.e. from C&F ( Carried & forwarding agent) -to stockist-to
wholesalers –to Retail outlets –to final consumers. In case of supermarket stores the products
is made available to Institutions through C& F.

Brand equity in the Marketing strategy of Dabur-

It has a strong brand recall. It enjoys good reputation both in rural as well as in urban areas. It
follows an umbrella branding strategy. The logo of Dabur is an old banyan tree which conveys
Dabur’s heritage, commitment and stability. It also conveys that the brand stands for wellness
across age groups. The brand portfolio of Dabur consists of five power brands. Dabur is the
umbrella brand for all healthcare products such as chawanprakash and honey, vatika for herbal
beauty brand for slightly upcoming market image. Anmol is offered as Value for
money segment for personal care market. Real is the master brand for foods and Hajmola for
digestives. Similarly there are other products within the brand tree.

Competitive analysis in the Marketing strategy of Dabur –

Dabur cannot afford to have one single policy for competing effectively against its competitors.
It is operating in the highly competitive FMCG market which consists of big MNC’s Like
HUL, P&G, Pepsico etc. It cannot afford to go for purely offensive strategies which direct
affect the bottom line.

Moreover the basic nature of marketplace is dynamic. So the company cannot remain static in
following any particular strategy. At times it follows offensive strategies and at times it
adopts defensive strategies, & they got restructured and repositioned their individual brands in
2010 in order to create clear brand image.

The deciding criteria for any policy adoption is that it should be based on the companies
strength and clear sustainable competitive advantage, the geneses of which invariably lies in
the firm’s value chain and that’s what helped Dabur in the transition.

Market analysis in the Marketing strategy of Dabur –

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FMCG & pharma industry is already overcrowded with local & national players but penetration
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to the untapped market is what driving the industry to further growth. Dabur has many brands
which don’t have strong hold in the market like Home care & personal care products while it
is market leader in some of the product categories chawanprakash, Health supplements,
Glucose-D & Real Fruit juice.

Customer analysis in the Marketing strategy of Dabur-

Just like any other FMCG company Dabur products are used by all the sections of the society,
but middle class mass customers forms the major group of buyers.

PRESENTATION OF DATA ANALYSIS AND FINDINGS

Rural Marketing is all about rural development in terms of serving a customer with extra
attentiveness, better quality of products. Rural Marketing strategies are considered to be very
effective in order to attract large number of rural consumers. Dabur India and Godrej Consumer
have placed a well trained sales team in rural areas who is well aware about the behaviour and
tendency of rural people. Day by day the competency among the FMCG companies is
increasing rapidly, which has compelled these companies to innovate new products and ways
to cater the specific needs of the rural customer.

Rural consumers and even channel members in rural Rajasthan believe that in-store advertising
or shelf display affects the purchase decision of a consumer and even it affects the buying
behaviour of rural consumers. In-store advertising includes placement of a product in visible
locations in a store, such as at eye level, at the ends of aisles and near checkout counters (i.e
POP-Point of Purchase display), eye-catching displays promoting a specific product, and
advertisements in such places as shopping carts and in-store video displays. They both believe
in the universal mantra which works in rural India “Jo Dikhta Hai Woh Bikta Hai”.

Table I: Selected liquidity ratios of Dabur India Ltd. (From 2016-17 to 2019-20)

Yea Curre Aci Absolu Invento Age of Debto Age of Worki Curre
r nt d te ry to invento rs to debto ng nt
ratio test liquid sales ry ratio sales rs capital assets
rati ratio ratio (days) ratio (days) turnov to
o er ratio sales
ratio

201 1.74 1.1 0.53 10 35 20 18 8.84 0.27

6-17
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 201 2.12 1.3 0.72 9 39 21 17 6.08 0.31
7-18 7

201 2.12 1.4 0.68 9 39 21 17 5.87 0.32

8-19 3

201 2.61 1.6 0.79 7 51 16 23 4.08 0.39

9-20 8

Table II: Liquidity position of Dabur India Ltd. (From 2016-17 to 2019-20)

Year Current Liquid Absolute Current Working Increase /

assets ratio Liquid Asset liabilities capital decrease
(cash+debtors) in W.C
2016-17 552.81 351.66 168.72 317.22 235.59 +117.77

2017-18 745.04 483.32 256.04 351.38 393.65 +158.06

2018-19 917.95 619.51 294.39 432.06 485.89 +92.24
2019-20 1295.98 835.4 394.87 496.28 799.7 +313.81

Table III: Component of working capital with % of Dabur India Ltd.

Year Inventory to Debtors to Cash & bank Loans+advances

gross working gross working to gross to gross working
capital (%) capital (%) working capital (%)
capital
2016-17 36.38 18.17 12.34 33.09
2017-18 35.12 15.08 19.28 30.50
2018-19 32.51 14.21 17.85 35.41
2019-20 35.53 15.62 14.84 33.91
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Table IV: Statement of Operating cycle Of Dabur India Ltd.

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Components 2016-17 2017-18 2018-19 2019-20

Raw material 40 41 49 53
conversion
Period
Work-in- 21 17 28 25
progress
conversion
period
Finished 27 29 41 41
Goods
conversion
period
Debtor's 18 17 17 23
conversion
period
Total 106 104 135 142
operating
cycle
Lecc 60 68 59 86
Creditor's
Conversion
Period
Operating 46 36 76 56
Cycle
(Days)

Operating 7.93 10.13 4.80 6.51

Cycle
(Times)

Finding
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Current Ratio: The Current ratio may be defined as the relationship between current
assets and current liabilities. This ratio is also known as "working capital ratio". It is calculated
by dividing the total of the current assets by total of the current liabilities. Current assets
include cash and those assets which can be easily converted into cash within one year, such as
marketable securities, bills receivables, sundry debtors, (excluding bad debts or provisions),
inventories, work in progress, Prepaid expenses etc. Current liabilities are those obligations
which are payable within one year and include outstanding expenses, bills payable, sundry
creditors, bank overdraft, accrued expenses, short term advances, income tax payable, dividend
payable, etc. It is a measure of general liquidity and is most widely used to make the analysis
for short term financial position or liquidity of a firm Ideal of current ratio is 2:1 in normal
condition.

As per table 1 current ratio of the company in year 2016-17, 1.74 times, 2.12 times in
2017-18, 2.12 times in 2018-19, 2.61 times in 2019-20. The average shows that liquidity
position of the company is near ideal point i.e. 2:1.In last few years it is more than the
standard so company is improving its liquidity position to be stronger.

Liquid Ratio: Liquid ratio is also termed as “Liquidity Ratio”, “Acid Test Ratio” or
“Quick Ratio”. It is the ratio of liquid assets to current liabilities. The true liquidity refers to
the ability of a firm to pay its short term obligations as and when they become due.
The two components of liquid ratio are liquid assets and liquid liabilities. Liquid assets
normally include cash, bank, sundry debtors, bills receivable and marketable securities or
temporary investments. In other words they are current assets minus inventories (stock) and
prepaid expenses because it cannot be converted into cash immediately without a loss of
value. Similarly, Liquid liabilities mean current liabilities as used in current ratio. The quick
ratio/acid test ratio is very useful in measuring the liquidity position of a firm. It measures
the firm's capacity to pay off current obligations immediately and is more rigorous test of
liquidity than the current ratio. It is used as a complementary ratio to the current ratio.
Standard liquid ratio is 1:1. As per table 1 in the year 2016 ratio is 1.1 times, In 2017, 1.37
times. In 2018-19, 1.43 times. In 2019-20, 0.51 times.
Absolute liquid ratio: Absolute liquid ratio indicates the relationship between cash,
bank and marketable securities to the current liabilities. Common liquidity ratios include
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the current ratio and the quick ratio but Different analysts consider different assets to be
relevant in calculating liquidity. Some analysts will calculate only the sum of cash and
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equivalents divided by current liabilities because they feel that they are the most liquid
assets, and would be the most likely to be used to cover short-term debts in an emergency.
A company's ability to turn short-term assets into cash to cover debts is of the utmost
importance when creditors are seeking payment. As per standard absolute liquid assets
worth one half of the value of current liabilities are sufficient for satisfactory liquid position
of a business. As per table I Absolute liquid ratio is in satisfactory position. In the year
2016-17ratio is 0.53 times, in the year 2017-18 ratio 0.72 times, in the year 2018-19 the
ratio is 0.68 times, in the year 2019-20 the ratio is .79 times. in the year 2006 the ratio is
.33 times, in the year 2007 the ratio is .39 times, in the year 2008 the ratio is .53 times.

Inventory turnover ratio: Inventory turnover ratio measures the velocity of

conversion of stock into sales. Inventory turnover ratio is a relationship between the cost of
goods sold\sales during a particular period of time and the cost of average inventory\closing
stock during a particular period. It is expressed in number of times. It indicates the number
of time the stock has been turned over during the period and evaluates the efficiency with
which a firm is able to manage its inventory. This ratio indicates whether investment in
stock is within proper limit or not. Usually a high stock velocity indicates efficient
management of inventory because more frequently the stocks are sold, the lesser amount
of money is required to finance the inventory. A low inventory turnover ratio indicates an
inefficient management of inventory. A low inventory turnover implies over-investment in
inventories, dull business, poor quality of goods, stock accumulation, accumulation of
obsolete and slow moving goods and low profits as compared to total investment. The
inventory turnover ratio is also an index of profitability, where a high ratio signifies more
profit a low ratio signifies low profit. Sometimes, a high inventory turnover ratio may not
be accompanied by relatively high profits. Similarly a high turnover ratio may be due to
under-investment in inventories. There is no rule of thumb or standard for interpreting the
inventory turnover ratio. The norms may be different for different firms depending upon
the nature of industry and business conditions.
As per table 1 inventory turnover ratio is 7 times in the year 2016 and 2017,then it increases
to 10 times in the year 2017 and 2018,12 times in 2018,10 times in 2018 and 2019, 9 times
in the year 2019 and 2020.
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Age of inventory ratio: The Age of Inventory shows the number of days that
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 inventory is held prior to being sold. It shows the moving position of inventory during the
year. As a general rule, the longer inventory is held, the greater is its risk of not being sold
at full value. This ratio is crucial in the case of inventory that is perishable or prone to
obsolescence, such as high technology and fashion items. Inventory also involves an
opportunity cost of funds. Days to sell inventory is one of the components in determining
a company's operating cycle. A high average age of inventory can indicate that a firm is not
properly managing its inventory or that it has a substantial amount of goods that are proving
difficult to sell. Average age of inventory can help purchasing agents make buying
decisions and help managers make pricing decisions. As per table 1 age of inventory
increase from 35 days to 39 days during 2016-17 to 2017-18 but after it increases from 35
days to 51 days between 2018-19 to 2019-20 with over all average of 42 days. Above
calculated data shows that company maintains their inventory during last years of the study
which is a positive sign for working capital position.

Debtors turnover ratio: Debtors turnover ratio or accounts receivable turnover ratio
indicates the velocity of debt collection of a firm. In simple words it indicates the number of
times average debtors (receivable) are turned over during a year. The two basic components
of accounts receivable turnover ratio are net credit annual sales and closing balance of trade
debtors. The trade debtors for the purpose of this ratio include the amount of Trade Debtors
& Bills. The higher the value of debtors turnover, the more efficient is the management of
debtors or more liquid the debtors are. Similarly, low debtors turnover ratio implies
inefficient management of debtors or less liquid debtors. It is the reliable measure of the time
of cash flow from credit sales. There is no rule of thumb which may be used as a norm to
interpret the ratio as it may be different from firm to firm. As per table 1 debtors turnover
ratio in the year 2016 and 2017 the ratio is 10 times, in the year 2017-18 the ratio increases
to 26 times, in the year 2018-19 ratio is 24 times, in the year 2019-20 ratio is 52 times.

Age of debtors’ ratio: The average collection period ratio represents the average number
of days for which a firm has to wait before its debtors are converted into cash. The
Debtors/Receivable Turnover ratio when calculated in terms of days is known as Average
Collection Period or Debtors Collection Period Ratio. This ratio measures the quality of
debtors. A short collection period implies prompt payment by debtors. It reduces the chances
of bad debts. Similarly, a longer collection period implies too liberal and inefficient credit
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collection performance. It is difficult to provide a standard collection period of debtors. This

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ratio reflects how easily the company can collect on its customers. It also can be used as a
gauge of how loose or tight the company maintains its credit policies. A particular thing to
watch out for is if the Average Collection Period is rising over time. This could be an
indicator that the company's customers are in trouble, which could spell trouble ahead. This
could also indicate the company has loosened its credit policies with customers, meaning that
they may have been extending credit to companies where they normally would not have. This
could temporarily boost sales, but could also result in an increase in sales revenue that cannot
be recovered, as shown in the Allowance for Doubtful Account As per table 1 age of debtors
in the year 2016 to 2017, then it decreases from 37 to15 days in 2017-18 and decrease further
to 7 days in 2018-19, then it increases from 14 days to 17 days during 2019-20, with overall
average of 20 days.

Working capital turnover ratio: Working capital ratio indicates the velocity of the
utilization of net working capital. This ratio represents the number of times the working
capital is turned over in the course of year. The two components of the ratio are sales and the
net working capital.. Net working capital is found by deduction from the total of the current
assets the total of the current liabilities. This ratio indicates the number of times utilization
of working capital in the process of business. The higher the ratio, the lower is investment in
working capital. And greater are the profits. However a very high turnover indicates
overtrading and put the firm in financial difficulties. A low working capital turnover indicates
that working capital has not been used efficiently. As per table 1 working capital turnover
ratio fluctuated during the study period. In the year 2016-17 ratios is 3.95 times i.e minimum
ratio during study period and maximum ratio is 90.23 times during 2017-18 which is not
good for the concern. Then it shows a declining trend at 1.76 times in 2018-19 and decreases
till 4.08 in 2019-20 with an overall average of 17.21.

Current assets to sales ratio: This ratio indicates the velocity of conversion of working
capital into sales. This ratio represents the number of times the gross working capital is turned
over in the course of year the two components of the ratio are current assets and the sales. A
lower ratio implies large use and efficient use of funds and high ratio indicates blockage of
fund. As per table 1 current assets to sales in the year 2016 is .37 times, 35 times in the year
2017, then it remain .21 times till the year 2018 in the year 2019 it is .25 times, .27 times in
18

2020.
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LConclusion & Recommendations

Hence it can be concluded that if the Indian organizations want to reach out to the rural India
in an efficient and more effective manner, they have to re-strategize their policies and should
consider rural perceptions, values and traditions. It has to immerse itself in rural colours,
customs, traditions and modes of communication so that they can satisfy the needs and desires
of rural society. The companies has to gain the popularity among rural masses and the trust of
the masses by weakening its own excessive dependency on western styles of advertising on
one hand and on its use of deceptive and manipulative claims on the other, so that it can bring
about the desired behavioural changes. All the different aspects of rural marketing were studied
for this study; Dabur India Ltd were selected as two FMCG companies for the study. Their
rural marketing strategies including pricing, promotional strategies and channel of distribution
were studied in the rural regions of 2 districts of Rajasthan i.e. Jaipur and Alwar. During the
interview it was found that channel partners have similar opinion as that of rural consumers.
According to channel partners, Dabur India Ltd is more aggressive in rural regions of Rajasthan
as Consumer Products Ltd. It is a part of their business strategies. Similarly the products of
Dabur India are more popular among rural masses in the district of Jaipur and Alwar. Hence,
the rural marketing strategies of Dabur India Limited were found to be more aggressive and
result oriented in the rural district of Jaipur and Alwar. They were timely announcing different
promotional activities and their advertising was found to be more influencing and effective.
19
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BIBLIOGRAPHY

1. https://docs.google.com/file/d/0B-m6MnjBklfAeG1ZenZxSGFvZVE/view
2. https://www.slideshare.net/ChandraMohanty/project-on-working-capital-management
3. http://www.gcbe.us/6th_GCBE/data/Dabur%20India%20-
%20Working%20Capital%20and%20Cost%20Management.pdf
4. https://studymoose.com/project-report-on-dabur-company-essay
5. https://shodhganga.inflibnet.ac.in/bitstream/10603/74309/10/10_chapter%207.pdf
6. http://www.allprojectreports.com/MBA-Projects/Finance-Project-
Report/working_capital_management/working_capital_management.htm
7. https://www.topstockresearch.com/INDIAN_STOCKS/PERSONAL_CARE/Dabur_I
ndia_Ltd.html
8. https://www.goodreturns.in/company/dabur-india/history.html
9. https://www.moneycontrol.com/company-facts/daburindia/history/DI

20
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Annexure-IA

Supervisor's Certificate

This is to certify that Ms. Komal Sonthalia a studentof B.Com. Honours in Accounting &
Finance / Marketing / Taxation / Computer Applications in

Business of T.H.K JAIN COLLEGE (Name of the College) under the University of Calcutta
has worked under my supervision and guidance for his/her Project Work and prepared a Project
Report with the title which he/she is submitting, is his/her genuine and original work to the best
of my knowledge.

Place: Signature

Date: Name:

Designation:

Name of the college:

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Annexure- IB

Student's Declaration

I hereby declare that the Project Work with the title (in block letters) WORKING CAPITAL
OF DABUR INDIA LTD. submitted by me for the partial fulfilment of the degree of B.Com.
Honours in Accounting &Finance / Marketing / Taxation / Computer Applications in Business
under the University of Calcutta is my original work and has not been submitted earlier to any
other University/Institution for the fulfilment of the requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part has been incorporated in
this report from any earlier work done by others or by me. However, extracts of any literature
which has been used for this report has been duly acknowledged providing details of such
literature in the references.

Name: Komal Sonthalia

Address: Kolkata

Registration No:- 235-1211-0237-17

Date: 19-06-2020
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