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KHALID H. SAIYAD
A PROJECT REPORT UNDERGONE AT DABUR INDIA LIMITED GUJARAT ON “FINANCIAL ANALYSIS OF ANNUAL REPORT” ACADAMIC YEAR 2011-2012
PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT FOR M.B.A.OF M.B.A DEPARTMENT
SUBMITTED BY: KHALID H. SAIYAD ROLL NO: - 11
SUBMITTED TO:UTKARSH TRIVEDI FACULTY (LECTURER)
SAHAJANAND INSTITUTE OF MANAGEMENT
M .B.A. SEM-1
SHREE SAHAJANAND INSTITUT OF MANAGEMENT 1
DABUR INDIA LTD.
KHALID H. SAIYAD
Practical studies are the part of a M.B.A. Programme.During this practical training student learns and gets practical knowledge which is not given in classroom. The aim of this programmed is to develop not only theoretical knowledge but also to give practical knowledge and by this study one can improve own marketing skills which is helpful to every field of marketing.
Being a student of M.B.A.
Programmed, I have the honor of having a practical training in the “DABUR INDIA LIMITED" In respect to the requirement of the course prescribed by SIM College. I have finished my assignment to undertake the practical study of marketing.
This report is prepared for the purpose of the study and not theoretical matter but practical matter.
Sincerely, I have tried my level best for precise and meaningful report construction.
SHREE SAHAJANAND INSTITUT OF MANAGEMENT 2
DABUR INDIA LTD.
KHALID H. SAIYAD
While writing this project every effort has been made to keep in view the objective set out in the MBA programme. I am feeling great to present our experience of studying the DABUR INDIA LIMITED.
My sincerely thanks to our Principal for providing me this opportunity. I am also thankful to my professors for the support given to me during the preparation of my report.
Finally, I am also thankful to “DABUR INDIA LIMITED” for permitting me to carry out the study bearing the object to fulfill the social responsibility.
Last but not list I owe to my respected and dear parents family members, friends professors, senior students, project partners, concerned officers and directors of the company without their blessings and moral support this study of mine might not be possible. This project report has been prepared under the subject, practical study for the academic year 2011-2012 M.B.A.
SHREE SAHAJANAND INSTITUT OF MANAGEMENT 3
M. I am also thankful to DABUR INDIA LIMITED for providing me the opportunity to prepare this project report and to giving all the information of the company and guiding me through this research by the supervisor and the concerned officer of DABUR INDIA LIMITED.I. SAIYAD) SHREE SAHAJANAND INSTITUT OF MANAGEMENT 4 .Collage (BHAVNAGAR) and studying in M.B.BHAVNAGAR Signature (KHALID H. SAIYAD DECLARATION KHALID H. KHALID H. DATE: - PLACE: .A. SAIYAD Student of S.I am thankful to my principal and my guide Utkarsh who had given me nice guidance and co-operation preparing this project report.DABUR INDIA LTD.
2 3 4 7 SHREE SAHAJANAND INSTITUT OF MANAGEMENT 5 . 6. 2. 4. Introduction CHAPTER-2 Enclosure on the Operating Performance of the Company 3.DABUR INDIA LTD. CHAPTER-5 Financial Analysis III: Ratio Analysis CHAPTER-6 Financial Analysis IV: Analysis of Crucial Notes to Accounts 7. SAIYAD INDEX CHAPTER NO. 1. CHAPTER-3 Financial Analysis I: Analysis of Balance Sheet and Profit And Loss Account CHAPTER-4 Financial Analysis II: Analysis of Profitability 5. CHAPTER-7 48 43 30 24 15 9 PARTICULARS PREFACE AKNOWLEDGEMENT DECLARATION CHAPTER-1 PAGE NO. KHALID H.
CHAPTER-9 Financial Analysis VII: Analysis of Cash Flow Statement 50 10. 11. SAIYAD Financial Analysis V: Analysis of Auditors’ Report CHAPTER-8 Financial Analysis VI: Analysis of Dividend Policy 49 9. KHALID H.DABUR INDIA LTD. 13. 12.10 54 Financial Analysis VIII: Analysis of Capital Market Valuation CHAPTER-11 Analysis of Corporate Governance Report CHAPTER-12 Analysis of Directors’ Report CHAPTER -13 Brief Write-Up on the Sector and Future prospects of the Company 57 59 64 SHREE SAHAJANAND INSTITUT OF MANAGEMENT 6 . CHAPTER .
K. In 1956 Dabur India (Dr. SAIYAD Chapter 1 Introduction Dr. (USA) Asian Consumer Care (Bangladesh) Consumer Care Division (CCD) Consumer Health Division (CHD) International Business Division (IBD) SHREE SAHAJANAND INSTITUT OF MANAGEMENT 7 . The major groups and subsidiaries of Dabur are: Major strategic business units (SBU) Subsidiary Group companies Dabur International Fem Care Pharma Newu Step down subsidiaries Dabur Nepal Pvt Ltd (Nepal) Dabur Egypt Ltd (Egypt) Asian Consumer Care (Pakistan) African Consumer Care (Nigeria) Naturelle LLC (Ras Al Khaimah-UAE) Weikfield International (UAE) Jaquline Inc.DABUR INDIA LTD. Burman) Pvt. It is s a leading consumer goods company in India with a turnover of Rs. 2834. The company’s roots in the traditional Ayurvedic medicines give it a very Indian flavor in terms of the products that it launches. It has many major products like the Dabur Chyawanprash which enjoys 65% market share. S. Dabur honey occupying 75% market share.11 Crores (FY09) which markets its products in over 60 countries. Ltd became a full fledged company. Hajmola tablets which enjoys 75% market share. It has many product lines and many famous brands in each product line. S. Burman set up Dabur India Limited in 1884 to produce and dispense Ayurvedic medicines. KHALID H.K.
KHALID H. : It became a full fledged company 1986 Public Limited Company 1996 3 separate divisions 2000 Turnover of Rs.DABUR INDIA LTD.1. S. SAIYAD Timeline of major milestones in the history of Dabur 1884 Dr. Ltd.K. Burman set up Dabur in 1884 to produce and dispense Ayurvedic medicines.000 crore 2008 Acquires Fem Care Pharma Key Product Lines Health Care Dabur Chyawanprash Dabur ChyawanPrakash Dabur Chyawan Junior Dabur Honey Dabur Glucose-D Personal Care Hair Care Oil Amla Hair Oil Amla Flower Magic Vatika Enriched Coconut Hair Oil Vatika Enriched Almond Hair Oil Hair Care Shampoo Vatika Smooth and Silky Shampoo Vatika Root Strengthening Shampoo Vatica Black Shine Shampoo Vatika Dandruff Control Shampoo Dabur Total Protect Shampoo Vatika Smooth & Silky Conditioner Vatika Root Strengthening Conditioner Consumer Health Pudin Hara Active Antacid Honitus Cough Syrup Honitus Lozenges Dabur Badam Oil Super Thanda Oil Foods Real Real Activ Burrst Hommade Lemoneez Capsico Oral Care Dabur Red Toothpaste Babool Toothpaste Meswak Toothpaste Promise Toothpaste Babool Mint Fresh Gel Skin Care Uveda Complete Fairness Cream Uveda Moisturising Face Wash Uveda Clarifying Face Wash Home Care Dazzl Sanifresh Shine Odomos Odonil Odopic SHREE SAHAJANAND INSTITUT OF MANAGEMENT 8 . Burman) Pvt. 1936 Dabur India (Dr.
Gulabari Rose Water Gulabari Face Freshener Gulabari Moisturising Cream Gulabari Moisturising Lotion Shilajit Gold Dabur Lal Tail Dabur Janma Ghunti Dabur Gripe Water Active Blood Purifier Dabur Balm Strong KHALID H.11% 0. P.00% SHREE SAHAJANAND INSTITUT OF MANAGEMENT 9 .73% 8. P. SAIYAD List of people in board of directors Chairman: Vice Chairman: Whole Time Directors Independent Directors Non Whole Time Promoters.73% 100. Mr. S. Narayan and Mr.DABUR INDIA LTD. Amit Burman Mr.60% 10. Analjit Singh Mr.06% 0. Mr.59% 3. Mohit Burman Shareholding Pattern The Details of the shareholding pattern are as under: As on March 31.03% 2.89% 100% No. directors Dr. Pradip Burman Mr. Sunil Duggal and Mr. Vijay.24% 95.49% 0.03% 0.28% 0.64% 1. promoters and family members FIIs Mutual Funds Insurance companies NRIs Corporates Individuals Total No. of Shares % ofShare Held Holding 611834473 74278471 31121682 88968460 4260203 5011529 49601431 865076249 70. Anand Burman Mr.58% 5. 2009 Particulars Directors. of share Holders 28 118 64 27 2764 1303 100492 104796 % of Share Holders 0. N. Bert Paterson. Mr. Dr. Narang. R C Bhargava.D.
Jari Booti Madhu Vegetables Oils Chemicals & Compounds Perfumery 164.11 SHREE SAHAJANAND INSTITUT OF MANAGEMENT 10 .17 122.12 95.95 72.88 20062007 28.5 crore Hajmola tablets are consumed in India every day • Key Raw Materials 2008Raw material Sugar & Molasses Herbs.94 2009 31.5% 90% Vatika Shampoo has been the fastest selling shampoo brand in India for three years in a row.2 149. KHALID H. SAIYAD Chapter 2 Enclosure on the Operating Performance of the Company Market Share The below mentioned brands contribute a value close to $8Bn to Dabur.21 20052006 26.88 71.1 20072008 23.51 84.52 111.DABUR INDIA LTD.45 52.56 110.79 & Raw 140. Brands Honey Chyawanprash Hajmola Real Vatika hair Oil herbal Digestives • Market Share 75% 65% 75% 40% 8. About 2.69 83.
14 72.07 78. KHALID H.34 48.13 56.95 Nil 2006 268.47 106. Jari booti and Raw Madhu that signifies the fact that most of the Dabur products are naturally made and are good for skin and health.15 2007 306. SAIYAD Key raw materials being used are Herbs.08 Nil 46.73 179. Chemicals and perfumeries also form a vital part of the raw materials.16 Nil SHREE SAHAJANAND INSTITUT OF MANAGEMENT 11 .19 150.DABUR INDIA LTD. Hajmola. The main highlight has been the Tooth Powder and paste segment which has shown a growth of 422% in the past 4 years.4 6 2008 375.These have been the newest ventures wherein the company has invested and the segment has been doing well since its formation. Real Juice and vegetable pastes.97 5.61 71.75 171.1 63. Fruits/Nector/Drinks Asava-Arishta Vegetable Pastes Important Inferences: • • All the segments have been showing constant growth over the past 4 years.3 116. 2009 504. Sales Mix Segment Hair Oils Tooth Powders & Paste Chywanprash Honey.91 85. The consumption of raw material has increased over the past four years signifying the increased sales and hence the increased profits of the products and the company.49 66. This has been the mainstay of the Overall sales.88 90.65 Nil 53.51 76.56 78. • • Major Contributor to Dabur sales has been Hair Oils.7 300.84 329.7 194.76 195.
SHREE SAHAJANAND INSTITUT OF MANAGEMENT 12 .5% 25.0% 2006 45. that is Domestic and only around 4.9% 2007 65. KHALID H.65 7.7% 25.64 170.253. This may be due to the tough competition in the domestic market and the economic downturn.27 201.4% The net worth of Dabur is increasing at a faster rate as compared to the net profit and therefore the decline in the past few years.205.513.162.2% 116.9% 98.293.25 Most of the consumption of Dabur is in-house.64 Export Sales 4.8% 56.09 230.9% 112.16 10.3% 87.485. the company is giving lesser returns with the increase in capital investment by the owners of the company.6% 115.3% of the produce is exported.Domestic or Export Year 2006 2007 2008 2009 Domestic Sales 132. That is.8% 2008 61.5% 25.DABUR INDIA LTD. Peer Comparison RONW RONW Dabur HUL ITC Nestle 2009 51.77 12.7% 23. The domestic growth rate of sales has reduced from 29% in FY2006 to 14% in FY2008. SAIYAD Sales.549. The average growth rate over the four years is more for exports (41%) as compared to domestic (20%).2% 81.454. So the company is steadily increasing its exports but there is still a long way to go before Dabur can make a name for itself in the international market.4% 58.
05 129.2% 11.5% 2008 55.8% 2007 14.3% 92.6% 84.05 2002 1119.3% 21.0% 77.5 9 1.5% Dabur is doing better than most peers as far as the Profit margins are concerned.2% 12.DABUR INDIA LTD.07 96. 31 1.00 2001 1130.50 0.0% 12.4% 2008 15. It shows a downward trend over the years.5 8 1.08 107.94 2003 1168.2% 96.4% 12.31 233.8% 2006 38. 54 1. Return on Assets Return on Assets Dabur HUL ITC Nestle 2009 41.3% 107. Dabur has shown a steady upward trend in the past 4 years where its peers have shown a reduction in at least one of the four years.2% 24.3% 11.9% 57.2% 22. 20 1.6% 22. 13 1.8% 12.1 9 1. It can be said that the results will reflect the same in the next few yearTrend Analysis Yearly figures at a Glance (2000-2006) Sales & Other Income Index PBDT Index 2000 1044.3% 104.62 1.8% 24.1 1 1. SAIYAD Profit Margins Profit Margins Dabur HUL ITC Nestle 2009 15.2% 2006 13.7% 24.26 2005 1238.0% The figures may be misleading.15 2004 1094.00 102. KHALID H.78 2006 1365.6% 12. 32 1.1% 24.5% 55.9 1 2. That is because the company is investing more in the long term assets rather than going for short term investment.0% 2007 56. 48 1.7% 23.2% 12.19 182.28 SHREE SAHAJANAND INSTITUT OF MANAGEMENT 13 .4 3 1.12 117.
00 11.91 38.88 81.99 22.03 0.04 3.56 1.2 0 1.0 0 49.00 609.63 1.30 0.0 0 51.28 1026.85 0.00 362.27 253.0 0 38.35 -0.06 386. 02 0.22 1.0 3 2. Def.44 2.91 28.8 6 2.3 5 0.4 6 0.0 7 1. Def.0 1 1.63 11.77 392.01 14.00 362.86 14.83 190.51 9.00 412.6 7 0.53 775.0 6 1. Tax) Index Current Assets ( Incl.79 29.4 5 0.00 2.17 250. Def.45 22.85 250.5 4 1.08 219.2 4 1.39 0.01 235.26 546.00 2336.00 268.52 1.32 23.46 708.83 1.1 4 2.03 148.80 1.4 4 0.96 3.81 0.45 10.0 4 1.0 6 0.25 613.2 3 1.0 0 57.43 28.17 2003 1285 75.31 25.26 200. KHALID H.52 1.38 2002 1200 85.07 447.0 1 3. SAIYAD 113.1 0 1.3 5 1.00 304. Tax) Index Current Liabilities and Provisions ( Incl.77 7.18 84.8 7 0.48 PBT Index PAT Index Equity Paid-Up Index Gross Block Index Net Working Capital ( Incl.54 2004 1236 95.00 22.40 468.01 38.30 -0.01 338.68 2005 1417 SHREE SAHAJANAND INSTITUT OF MANAGEMENT 14 .26 34.00 108.8 9 0.61 1.05 3179.7 0 0.99 165.1 9 2.00 28.77 268.16 1.99 216.86 1.40 101.53 244.10 715.70 7106.0 1 2.6 8 0.off) Index Net Worth Index Capital Employed Index Book Value (Unit Curr) Index Market Capitalisation Index EPS (annualised) (Unit Curr) Index Dividend (annualised%) Payout (%) Payout (%) ROG-Net Worth (%) Year Sales 2000 982 2001 1100 81.17 2.13 558.52 1.00 317.03 411.8 5 1.28 1.95 157.00 32.13 285.0 0 60.38 1.25 1587.74 2.45 1.4 6 0.8 7 1.28 521.1 6 0.00 297.2 3 0.9 0 1.53 1.0 1 1.3 1 0.61 335.00 328.92 12. Tax) Index Total Assets/Liabilities (excl Reval & W. 75 0.75 24.3 7 1.4 4 1.2 2 1.20 1.65 2006 1757 165.00 28.29 1.85 50. 94 0.66 -0.26 60.05 1.51 0.12 1.3 2 0.6 0 1.DABUR INDIA LTD.52 1.84 28.00 100.09 140.1 1 0.09 28.00 100.84 308. 04 1.51 1.92 1.13 1736.00 38.99 38.2 1 1.30 28.02 1.70 1.00 710.23 0.68 2.01 13.17 49. 05 3.32 0.84 2251.0 8 2.05 77.64 189.93 65.00 359.00 376.6 5 0.51 1.5 0 1.36 4.1 8 0.62 1.09 400.4 1 1.99 759.63 406.80 407.66 1.00 77. 50 1.69 324.05 242.54 1.00 734.00 320.84 2007 2080 214.
This was due to a share split in 2000. The dividend paid this year was 175% as compared to 150% paid last year. the company pays a higher dividend and vice-versa.e. when it again started to decline. PAT (Profit after Tax) PAT has also shown an upward trend as it directly follows the PBT figures. i. KHALID H. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 15 . So we can infer that there are major sources of non-operating income. EPS and Dividend We can see in the figure that the dividend is dependent on the earnings per share (EPS) of the company.DABUR INDIA LTD. This was because the earnings per share had reduced. Then there was an increase till 2005. It has grown by almost 450%. much more than compared to sales growth. This year both EPS and Dividend increased. when EPS increases. SAIYAD PBT (Profit before Tax) PBT has shown an upward growth over the past 10 years. Initially from 2000 to 2002 the dividend decreased.
765.4 2 0.91 73.43 6.00 10.13 2.28 61. 24 11. KHALID H.34 1.81) 14.10 16.84 110.640.071.31 2.294.69 10.628.98 36.689.02 30.65) 17.46 6.982.171.037.97 2.11 43.443.82 10.819.01 27.189.12 47.80 20.048.72 (49. In lakhs) Increase/ Decrease over 2008 (Rs.832.652.21 6.76 65.47 39.69 3.976.542.114.09 48.53 33.976.58 7.77 29.003. In lakhs) %age 8.59 (1.23 44.72 88.592.400.97 57.56 13.75 58.192.DABUR INDIA LTD.826.068.236.368. Loans and Advances: Inventories Sundry Debtors Cash and Bank 2008 (Rs.353.53 20.90 22.11 11.48 SHREE SAHAJANAND INSTITUT OF MANAGEMENT 16 .16) 12.046.056.42 57.3 3 (819.67 825.727.01 14.11 52. In lakhs) SOURCES OF FUNDS : Shareholder's Funds Share Capital Reserves Total Total Shareholder's Funds Loan Funds: Secured Loans Unsecured Loans Deferred tax Liability Total Liabilities APPLICATION OF FUNDS : Fixed Assets Gross Block Less : Accumulated Depreciation Net Block Investments Deferred Tax Assets Current Assets.59 2.74 8. SAIYAD Chapter 3 Financial Analysis I: Analysis of Balance Sheet and Profit And Loss Account Analysis of Balance Sheet Horizontal Balance Sheet (Comparison 2008 and 2009) 2009 (Rs.650.48 20.09 21.42 8.50 90.64 11.168.987.95 1.78 18.644.471.048.419.46 (47.044.72 320.98) 26.560.
23 8.17 crores.DABUR INDIA LTD. However this have not been received yet. Investments FY 08- 270 crores.20 66.4 2 10.07) 58.138.70 (531.42 31. It may be observed that no depreciation has been provided on freehold land and livestock. It has invested almost 117 crores in mutual funds while it has invested 21. Next is the amount invested in buildings i.722.39 (363. Within the fixed assets plant and machinery.20 4.504.982.42 ) (38.91 7.385.58 19.71 31.97 58.5 crores in government bonds. The company has almost negligibly increased leasehold land while substantially increasing the freehold land from last year.434. FY 09.55 864.77 18.471. The advance against capital goods worth 591. The company has invested substantially higher in buildings.e.281.51 26.765.395.43 crores .437 Crores Dabur’s investments are more than its fixed assets by almost 76 crores totaling to 436 crores.728. assets directly needed for production stands at 133.43 10.03 crores at depreciated value compared to last year’s 294.19) 33. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 17 . Loans and Advances Total Current Assets Less : Current Liabilities and Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets Miscellaneous Expenses not written off TOTAL 22.15) 1.293. 117.77 35.77 lakhs has been included in the total fixed assets.510.00 3.08 90.42 Application of Funds Fixed assets of Dabur Dabur owns fixed assets worth 360.24 34.969.72 14.75 crores i.27 57.837.48 (2. that is. SAIYAD 18.223.416.263.1 3 24. 37% of the total fixed assets.33 74.33 4.46 KHALID H.294.75 55.855. The total investment is a substantial figure compared to the total asset size.648.e.540.
DABUR INDIA LTD.
KHALID H. SAIYAD
Thus it can be said that the co. carries surplus cash in business which it utilizes in investing. The co. believes in investments. The co has also invested almost 87 crores in its subsidiaries. Finally the main reason for the 62% increase in its investments from last year is the advance paid against the equity shares of Fem Care Pharma Ltd which Dabur has proposed to acquire. It totals to almost 205 cores. Thus the company has taken a significant step towards expanding its business by taking the decision to acquire to FEM.
Current Assets, loans and advances
The company has reported debtors of 236 cores while the total sales are around 2400 cores. So comparatively it is a smaller picture. Also the debts which are considered doubtful is around 12 cores, which is a small figure compared to total debtors. Also it can be seen that the co. has invested around 100 cores in fixed deposits. Dabur has around 31.5 cores in cash balances. They constitute an insignificant part of the current assets, although they play a crucial role in operations. Loans and advances of Dabur is around 227 crores which includes security deposits with various authorities and advance payment of tax as a major constituent. The debtors which are outstanding for a period exceeding six months are mostly considered doubtful, hence a provision has been made for them. No provision has been made for the debtors for a period of less than six months. In the notes to accounts it has also been stated that In the opinion of Board, the Current Assets, Loans and Advances have realizable value at least equal to the amount at which they are stated. It has also been stated that the Debts due from director/officer of the company is nil.
SHREE SAHAJANAND INSTITUT OF MANAGEMENT 18
DABUR INDIA LTD.
KHALID H. SAIYAD
It has come down from 13.95 crores to 8.64 crores on account of writing off. The technical knowhow fees has been fully amortised, while the deferred employee compensation under ESOP has also been amortised expenditure. substantially, therefore bringing down the misc.
Current Liabilities and Provisions
In current liabilities, out of 351 crores the sundry creditors for expense forms a major part of 194 crores. The sundry creditors for goods is 108 crores which is very minimum figure compared to purchases and is almost half the amount of debtors. Hence it can be said that the co. likes to make payments to the creditors at the earliest. Out of 315 crores of provisions, 159 crores is for taxation while 86.5 crores is for the dividend proposed. The co also has provisions for corporate tax on proposed dividend, liabilities disputed, Gratuity, Leave Salary. Thus the company has a net asset or net working capital of 78.5 crores which means the company can continue its day to day functions in an efficient manner.
Deferred tax assets and liabilities
The company has shown the deferred tax liability as an independent figure in the sources of funds which amounts to 30.48 crores while it has shown the deferred tax assets in the application of funds which amounts to 23.53 crores. The net deferred tax liability is 6.95 crores.
Sources of Funds
Share Capital(in lacs)
The authorized share capital of the company was 12500 lack equity shares@1 each till 2007. During the year 2007 the authorized share SHREE SAHAJANAND INSTITUT OF MANAGEMENT 19
DABUR INDIA LTD.
KHALID H. SAIYAD
capital of the company has been increased by Rs. 2000 lakhs, pursuant to merger of Dabur Foods Limited. Thereafter the authorized share capital of the company continues to be 14500 lakhs @1each.
Change in Capital Structure and Listing of shares
The equity share capital has gone up in the year 2007 because of the following reasons. • • • 2472137 equity shares allotted under Employees Stock Option Scheme 63,336 shares allotted under Merger scheme with erstwhile Balsara Hygiene Products 28,70,45,551 equity shares allotted on 12th February, 2007 as bonus shares by way of capitalization of the free reserves (469066351 shares) and from share premium account (286651392 shares) The issuance of bonus shares had an impact on the Reserve and surplus which has come down from last year .one of the reasons was because of the issue. In the year FY07 and FY08 there has not a significant change in share capital.
Reserve and Surplus: (in lakhs)
The increase in reserves and surplus in 2009 is mainly because of the increase in general reserves and profit and loss account balance. Capital reserves: The Company has kept on increasing the capital
reserves throughout the 4 years and has not utilized any amount from it. The increase has come mainly from transfer from P/L acc, while in 2007 the company has transferred some amount from the merged Entities.
SHREE SAHAJANAND INSTITUT OF MANAGEMENT 20
44 crores to 8. thus the figure for secured loans has come down. However this year the co has taken some unsecured loans which we will analyze in the next heading Unsecured Loans The company’s unsecured loans have risen from less than 1 crores to 130. It is also seen that the company has steadily increased the transfer from P/L acc to general reserve throughout the years. KHALID H. General Reserve: Large amount has been utilized for merger and also for the issuance of bonus shares.25 crores. The co has taken short term loan from bank to the tune of 110 crores and that the company SHREE SAHAJANAND INSTITUT OF MANAGEMENT 21 . SAIYAD Share premium Account: Has come down significantly in 07 from 06 because of utilization in merger.DABUR INDIA LTD. In 08 and 09 the account has increased slightly because of premium on issue of shares. Profit and loss acc: The transfer of the remaining profits from the P/L account has risen steadily over the years. The company has taken term loans and short term loans from banks. suggesting that the company does not depend much on loan funds. So it has come down in 07 and has been rising thereafter because there has not been anymore issue of bonus shares or merger. The proportion of secured loans to other sources of funds is very small. This indicates that the profit of the company has been rising over the years. The company has repaid almost half of the loans in the year.7 crores. Secured Loans Secured loans of Dabur have come down from 16.
575.45 ) 6.81 (56.Horizontal Profit & Loss Account (Comparison 2008 and DABUR INDIA LTD.86 211.46 50.969.355.54 6.37 1.333. In lakhs) (Rs.678.23 45.97 18.922.616.84) (8.355.01 54.339.915.20 17.276. 2009) 2009 KHALID H.29 15.23 5.98 854.57 14.05 17.732.79 5.53 122.06 (30.322.38 Provision for Taxation : Current 4.04 243.44) ) SHREE SAHAJANAND 68.46 %age (20.78 26.87 19.18 2.04 201.833.6 eferred (255. SAIYAD Increase/D ecrease over 2008 (Rs.50 566.515.11 7.791.09) 75.790.306.58) 0) Net Profit after Taxation and Extraordinary Item 37.00 16.26 208.51) ) .79 2.409.742.05 (172.47 17.18 32.35 Balance being Operating Net Profit before Taxation 42.499.11 (68. In lakhs) (687.60 2.03) Net Profit after Taxation and before Extraordinary Items 37.55 INSTITUT OF Provision for Taxation for MANAGEMENT 22 earlier (53.073.982.39 4.659.21 5.68 154.7126.96.36.199 Balance Brought Forward 32.13 16.057.84 102.26 31.51 year 71.43 3.79 1.97 707.78 11.41) 7) Fr inge B enefit 650.92 Credit Balance Transferred from (100. In lakhs) Less Excise Duty Net Sales Other Income Total Income EXPENDITURE : Cost of Materials Manufacturing Expenses Payments to and Provisions for Employees Selling and Administrative Expenses Financial Expenses Miscellaneous Expenditure Written Off Depreciation Total Expenditure 2.827.612.55 394.05 Provision for Taxation of earlier (99.84 years written back 0.04 D (438.985.26 174.76) 31.30 11.07 56.34 41.48 15.39 479.57 90.99 22.58 (18.59 36.677.748.32 (330.87 1.439.422.25 691.076.50 239.56 1.0 Merged Entity 0.517.26 31.00 ) 15.19 (82.45 4.00 18.751.65 9.61) 166.695.407.59 5.809.901.97 2008 (Rs.
SAIYAD has taken almost negligible unsecured loans. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 23 . It depends more on internal sources of funds than external sources. The company might be looking to fund some project so it has taken an unsecured loan this time.DABUR INDIA LTD. KHALID H. The reserves and surplus of the co has become very high as compared to share cap. thus there is a possibility of bonus shares. Overall Comment If we look at the balance sheet we will find that the company is not highly leveraged.
64 lacs. Profit on sale of Fixed Assets. Rent Realised. Also the exports of the company has risen from 10. If we look at the figures of the sales and other incomes we find that the figure of other incomes is very less compared to the sales figure which indicates sources.205.54 lacs to 122.11 lacs .306.77 to 12.86 lacs to 4. Profit on sale of long term investment.293. thereby registering a growth rate of 14%. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 24 .485.790.09 lacs to 230. Royalty. The cost of materials includes Raw Materials Consumed.162.04 lacs. purchase of Finished Products and Adjustment of Stocks in process and Finished Goods. Profit on sale of current investments. The Raw Materials Consumed contributes to almost 45 % to the cost of materials.25 lacs thereby registering a growth rate of 16%. The other income of the company has increased from 2.DABUR INDIA LTD. Sale of Scrap. that the company is completely dependent on the operational activities and does not derive much income from other Expenditure The cost of materials has risen from 102. SAIYAD Analysis of Profit and Loss Account Sales and other income The sales figure of the company has risen from 201. KHALID H.243. There has been a good growth rate in the purchases of raw materials and packaging materials. Packing Materials Consumed.833. The other income of the company includes Export Subsidy. The packaging materials also constitute a significant portion which shows that FMCG companies spend more on packaging than other sector companies. Miscellaneous Receipts.
Workmen and Staff Welfare.355 lakhs. The EPS of the company is 4. The manufacturing and other expenses of the company as compared to the sales figure is not significant The next item is Payments to and Provisions for Employees. It includes interest paid on fixed loans. SAIYAD The manufacturing and other expenses have risen from 6.DABUR INDIA LTD. freight are some of the components of the it. This is an indication that the company wants to take some expansion project in future. After providing for taxation the PAT figure has been obtained. The company paid an interim dividend @ 75% and Final dividend @ 100% and transferred 9000 lacs to general reserve. It includes director’s fees and also freight expenses and some research and development. It has also gone up slightly from last year. The company has not paid a huge amount as dividend.076. The PAT of the company has risen from 31695 lacs to 37.32 increasing from 3. KHALID H. instead it has kept back the profits. thereby giving Operating Net Profit before Taxation at 42499 lacs. Thereby giving a total amount available for appropriation as 69. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 25 .985. advertising and publicity. bank charges etc. The profit which has been brought from last year has been added. Thus the remaining is carried over to the balance sheet.66 last year. Contribution to Provident and other Funds . The financial expenses of the company have also risen from last year. The next item is the selling and administration expenses. Thus the total expenditure of the company is 201422 lacs. It includes Salaries.57 lacs to 7. Directors’ remuneration. Rent.13 lacs.606 lacs. Wages and Bonus. The company has charged depreciation to the tune of 2742 lacs.
95 53.23 47.77 30.0 0 44. 2007 Indian Rupees in lacs 196.03 101.47 12.56 Year ended March 31.72 1.485.962.162.20 649.50 Year ended March 31.35 2.03 219.732.07 1.50 189.584.05 33.306.39 122.7 8 3.09 101.24 17.64 12.483.19 22.297.30 5.36 2.81 1.37 394.969.616.68 29.24 1.98 7.293.495.86 39.243.73 Particulars Ratio 96.24 110.09 854.367.076.0 0 3.8 6 80.24 0.75 56.0 0 48.41 Ratio 89.575. 2009 Indian Rupees in lacs Domestic Sales Less Returns Exports Gross Sales Less Returns Less: Excise Duty Net Sales Cost of Materials Manufacturing Expenses Cost of Goods Sold(COGS) Gross Profit Payments to and Provisions for Employees Selling and Administrative Expenses Miscellaneous Expenditure Written Off Other Income Profit before Depreciation.86 3.13 129.27 1.28 7.319.126.PBDIT Depreciation Operating Profit -OP/PBIT Financial Expenses 230.04 43.17 1.55 Ratio 96.816.575.25 242.16 1.14 186.24 86.638.54 100.49 14.21 3.50 239.711.751.834.486.16 2.81 1.11 99.0 5 26.04 46.72 10.29 3.985.29 0.02 47.24 0.15 16.0 0 52.901.269.65 7.5 0 18.429. SAIYAD Chapter 4 Financial Analysis II: Analysis of Profitability Multi-Step Profit Margin to Sales Ratios of Dabur India Ltd (common sized) MULTISTEP PROFIT MARGIN TO SALES RATIOS OF DABUR INDIA LTD Year ended March 31.522.1 5 1.486.372.14 1.97 46.947.81 100.44 14.94 0.333.41 7.790.660.72 16.26 37.5 4 6.101.6 9 1.6 0 101.300.77 3.83 63.26 208.772.98 566.833.57 108.54 104.666.15 100.537.98 21.44 1.993.46 50.88 SHREE SAHAJANAND INSTITUT OF MANAGEMENT 26 .79 2.711.3 2 14.14 18.537.65 100.439.62 5.371.18 2.533.77 211.205.02 2.7 5 97.391.915.23 0. 2008 Indian Rupees in lacs 201.8 2 115.69 0.46 27.0 0 51.377.63 0. interest and tax.05 5.38 47.34 19.372.DABUR INDIA LTD.67 100.03 6.00 43.778.90 0.6 5 1.11 7.18 4. 2006 Indian Rupees in lacs 171.0 9 10.08 101.70 1.336.29 0.06 46. KHALID H.742.35 53.70 Ratio 91.59 28.73 223.591.23 36.30 1.56 15.339.89 2.18 16.140.59 52.692.22 101.85 426.108.957.50 Year ended March 31.425.80 19.69 100.93 16.
18 18.599.098.81 68.75 36.00 17.00 0.01 4.33 28.57 1.82 -155.44 1.60 % 100 SHREE SAHAJANAND INSTITUT OF MANAGEMENT 27 .52 1.97 23.63 2.00 25.59 17.53 -51.30 13.66 Common-Sized Statement Showing Ratio of Expenses to Net Sales COMMON SIZED STATEMENT SHOWING RATIO OF EXPENSES TO NET SALES Particulars 2008 Figures(Rs lacs) Net Sales Materials Cost Raw Materials Consumed : i)Opening Stock ii) Add : Purchases Total iii) Less : Closing Stock Total Raw material Consumed Packing Materials Consumed i)Opening Stock ii) Add : Purchases Total iii) Less : Closing Stock Total packaging material Consumed Purchase of Finished Products Adjustment of Stocks in process and Finished Goods 3.68 22.03 1.24 3.749.065.47 58.27 0.185.172.70 4.85 0.19 0.74 1.126.75 239616.31 148.74 0.96 56.17 0.53 0.87 31.16 1.949.97 13.12 0.00 0.00 0.794.25 0.661.55 154.00 0.404.274.17 0.199.499.320.12 63.08 -0.057.76 21.47 45.00 42.11 0.499.53 15.00 36.748.68 2.48 13.71 29.59 -0.51 2.07 2. Profit before tax and extraordinary items – PBTEOT Extraordinary Expenses : Credit Balance Transferred from Merged Entity Extraordinary Item (Profit/ (Loss) on Long Term Trades Investments Profit before Tax for the year Provision for Taxation : Current D eferred Fr inge Benefit Provision for Taxation of earlier years written back Provision for Taxation for earlier year Total tax KHALID H.40 24. SAIYAD 42.97 51.04 3.936.56 2.39 % 100 2007 Figures(Rs lacs) 208339.00 0.75 0.918.25 22.01 0.86 374.450.01 -0.04 463.12 5.901.315.37 3.91 36.216.372.00 0.43 0.063.517.09 650.97 0.00 31.06 0.95 0.54 1.25 75.31 0.DABUR INDIA LTD.66 15.22 3.63 14.13 1.00 17.692.45 -255.04 0.59 7.074.120.86 15.04 -136.32 707.921.00 -1.68 5.00 -0.26 24.54 0.06 46.12 0.19 5.59 4.28 26.00 31.63 13.34 0.03 2.50 13.749.02 2.05 26.120.949.03 5.41 3.00 14.68 14.59 17.23 1.80 353.417.22 14.03 0.83 3.58 0.00 36.64 0.98 -0.494.07 1.418.17 28.11 71.49 32.525.499.33 33.
01 2.36 482.71 0.891.26 9.85 1.274.076. 287.08 101.92 0.09 0.81 388.87 6.11 0.08 -303.25 7.969.56 3.98 12.68 1.55 7.14 7.27 1.690.19 0.173.241.40 3.16 0.31 -1.12 1.72 228.139.809.662.92 223.17 0.79 5.53 6.09 0.53 0.19 SHREE SAHAJANAND INSTITUT OF MANAGEMENT 28 .09 0.041.130.409.938. Previous year Rs.11 0.071.90 387.002.92 -3.242.764.02 3.13 0.73 24.819.067.30 184.76 1.14 7.DABUR INDIA LTD.66 15.94 11. Discount and Rebate Advertising and Publicity Travel & Conveyance 1.31 under ESOP) Total Payments to and Provisions for Employees Selling and Adminstrative Expenses Rent Rates and Taxes Insurance Sales Tax Freight and Forwarding Charges Commission. SAIYAD Opening Stock : Stock in Process Finished Products Total Closing Stock : Stock-in-process Finished Products Total Increase(-)/Decrease in Stock in Process and Finished Goods Total Material Cost Manufacturing and Other Expenses Manufacturing and Operating Expenses Power and Fuel Stores & Spares Consumed Repairs & Maintenance — Building — Plant & Machinery — Others Processing Charges Total Manufacturing and Operating Expenses Payments to and Provisions for Employees Salaries.65 1.385.93 272.37 1.74 135.40 -0.53 0.61 0.95 219.16 0.888.76 2.62 51. KHALID H.52 3. Wages and Bonus Contribution to Provident and other Funds Workmen and Staff Welfare Directors’ remuneration (including perquisites Rs.11 2.76 2.48 0.36 3.54 1.311.171.842.84 0.03 11.59 0.35 3.10 6.96 102833.79 5.89 0.732.43 3.48 5.007.41 16. 297.94 373.253.61 3.29 4.082.13 0.69 525.52 1.23 5.73 5.46 5.95 11.350.01 5.07 2.78 266.891.23 0.51 1.153.94 11.57 0.87 1.24 7.58 2.919.56 1.63 1.04 2.242.12 1.25 13.262.12 14.22 0.51 0.350.985.262.69 3.87 10.82 1.61 28.10 0.91 0.492.12.79 0.15 49.84 122243.51 361.08 1.22 4.
22 0.56 31.00 0.901.15 0.429.01 22.DABUR INDIA LTD.30 0.15 0.02 0.67 13.043.39 % SHREE SAHAJANAND INSTITUT OF MANAGEMENT 29 .20 11.74 211.20 KHALID H.07 18.41 32.53 0.896.01 6.28 0.01 0.00 0.15 0.02 737.16 0.26 0.13 336.Branch Auditors’ Fee .00 13.88 291. 7.37 10. 112.01 0.93 299.73 348.09 54.00 1.41 0.29 75.26 50.45 19.10 984.01 0.01 0.827.04 0.69 0.08 0.22 258.94 Comparative Analysis of Profitability • Growth in sales value : Domestic Sales : 14.24 257.08 458.15 21.61 0.13 3.35 306.74 Previous year Rs.01 0.90) Bank Charges Total Financial Expenses Total Manufacturing and other expense 666.01 165.31 0. SAIYAD 0.01 0.05 363.51 0.12 0.98 977.Audit Fee .12 0.50 68.53 7.28 268.63. 237. Previous year Nil) Loss on Sale of Fixed Assets Provision for Contingent Liability Fixed Assets Written Down Total Selling and Adminstrative Expenses Financial Expenses Interest paid on : Fixed Period Loan Others (Net of Int.01 0.80 45.71 165. Fax Expenses Security Expenses General Expenses Directors’ Fees Auditors’ Remuneration: .02 0.11 21.13 0.51 0.37 0.41 0.853.28 0.31 0.01 0.34 % Export Sales : 16.38 23.333.00 0. Legal & Professional Telephone.74 548.77 73.58 318.55 76.94 TDS thereon Rs 12.41 19.82 1.15 0.Provident Fund and Certificates Total Audit Fee Donation Contribution for Scientific Research Expenses Bad Debts Written Off Provision for Doubtful Debts (Net of Excess Provision written Back Rs 19.Reimbursement of Expenses .01 0. received Rs.18 307.04 0.14 51.00 13.82 13.28 0.15 854.00 39.97 TDS thereon Rs.98 0.637.13 3.
e an increase in growth rate of 10. Total Sales : 14.51% which basically comes due to the rise in selling price of Hajmola .DABUR INDIA LTD. which in turn compensate the loss in average selling price of Fruits. • Within the material cost.63 % to 13. Nectar & Drinks is accounted for 3. packing materials consumed has come down from 13. • Cost of raw materials has increased in all types of raw materials. • Total value growth is 15.79% of sales value in 2008.79%. Nectar & Drinks Materials Cost and Manufacturing and Other Expenses • Manufacturing and Other Expenses have decreased from 32. Jari Booti & Raw Madhu and Chemicals & Perfumery Compounds together account for • SHREE SAHAJANAND INSTITUT OF MANAGEMENT 30 .94% to 31.03% in the price realization of Fruits.74 % of net sales.44 % Net Sales : 15. • Average selling price of all the products put together is up by 1.01% • KHALID H. i. Nectar & Drinks registered a negative volume-value growth.21 whereas total volume growth is 13. whereas cost of raw materials consumed has increased from21.75% to 23.70%. A particularly sharp decline of 25.49 only .53%. Tooth powder & paste and Fruits. SAIYAD Volume of all the products groups except chyawanprash and Hajmola has increased in absolute terms. This shows an overall higher selling price realization. Within the various raw materials Herbs.
54 %. Interest Interest cost increases signifying that debt has increased this year.DABUR INDIA LTD.09 % of net sales against 15. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 31 .17% of net sales in 2007-2008 to 19. Other Income In comparison to net sales being just 1. SAIYAD maximum share both in quantity as well as value. PBT There is an overall improvement of basis points in PBT during 20082009.6 %. PAT Ultimately PAT improved from 15. registering a growth of 47 basis points. As a percentage of PBT also.34% for 2008-2009 and 2007-2008 respectively. it is less signifying that most of the income of Dabur is from main recurring and productive operations. KHALID H.44% in 2008-2009. In absolute terms PAT has risen by 18. PBIT PBIT or operating profit has registered a growth of 35 basis points from 17.94 % of net sales in 2007-2008 to 18.56% in 2007-2008.80 % and 1. It has risen from 17. And it is here major cost efficiencies have been achieved. PBITD PBITD thus registered a decline of 27 basis points having increased from 19.52 % of net sales to 17.29% in 2008-2009.
Ratios are classified according to their functions and objectives. Ratio analysis is a relative and more focused analysis of financial statements. SAIYAD Chapter 5 Financial Analysis III: Ratio Analysis Ratio analysis helps to measure and establish cause and affect relationship between either two items of balance sheet or of profit and loss account or both balance sheet and profit and loss account.DABUR INDIA LTD. The formula for calculating the proprietary ratio is given by: Proprietary Ratio = Shareholders’ Funds Total Assets SHREE SAHAJANAND INSTITUT OF MANAGEMENT 32 . We have classified the ratios under the following categories: • • • • • Solvency Ratios Liquidity Ratios Profitability Ratios Du Pont Analysis Capital Market Ratios Solvency Ratios We have analyzed the following solvency ratios • • • • Proprietary Ratio Debt Equity Ratio or External-Internal Equity Ratio Long-Term Debt Equity Ratio or Gearing Ratio Interest Coverage Ratio Proprietary Ratio This ratio relates the share holders’ fund to total assets. KHALID H.
52 96386.92 42608.87 45234.73 0. the better is the long term solvency of the company and the more satisfied the creditors will be. A smaller ratio is better as it indicates that the company can raise large sums as borrowings. The formula for calculating the debt-equity ratio is given by: Debt Equity Ratio = Total Debts Shareholders’ Funds Debt-Equity Ratio or External-Internal Equity Ratio Year Total Debt Net Worth Debt-Equity Ratio 2005-2006 2057. Here.DABUR INDIA LTD.69 52832. Proprietary Ratio Year Total Shareholders Equity Total Assets Proprietary Ratio 2005-2006 96386.049803 2007-2008 1733.34 0.67 89901. Debt Equity Ratio This ratio tells how much does the company depend upon its borrowings.032815 2008-2009 13898. we see that the proprietary ratio of Dabur India limited has been showing a decreasing trend over the years.67 0.945144 2008-2009 73819.8211154 The higher the proprietary ratio.021346476 2006-2007 2007.7 0.87 0. SAIYAD 2006-2007 40318.92 0.99 40318.25 73819.34 55898.31 2.946254 2007-2008 52832.188273 SHREE SAHAJANAND INSTITUT OF MANAGEMENT 33 .98 0.130835421 KHALID H.
It also has high reserves and surplus. The ratio has been increasing over the years showing that Dabur India Limited has now started taking loans – both secured and unsecured. KHALID H. doesnot goes for loans and is a very cash rich company.94 73819.010762 2007-2008 611.29 52832.92 0.01157 2008-2009 288. financial institutions and lenders will be ready to give loans to the company.DABUR INDIA LTD. A high ratio indicates that the company is highly leveraged and creditors will not be very sure in lending to the company. The formula for calculating the long term debt-to-equity ratio is given by: Long Term Debt to Equity Ratio or Gearing Ratio = Debts Net Worth Long Term Debt to Equity Ratio or Gearing Ratio Year Total Long term Loans Net Worth Long-Term Debt-Equity Ratio 2005-2006 764. we see SHREE SAHAJANAND INSTITUT OF MANAGEMENT 34 . the company can do a high leveraging. As such.87 0.9 40318. It presently relies mostly on owners’ funds and very less on the loans.34 0. We see that this ratio is declining over the years and is very less. This shows that the company as a policy.007928673 2006-2007 433. Long Term Debt to Equity Ratio or Gearing Ratio This ratio measures the extent of assets financed through long term borrowings.003914 Long term This ratio tells whether the company is relying more on its debts or on its capital in order to finance its operations.67 0. but the proportion of these loans is very less as compared to its proprietors’ funds.22 96386. SAIYAD This ratio is very small which shows that in future. When we see the trend over the past few years.
the company can raise huge sums as loans in the future. KHALID H. The formula for calculating the interest coverage ratio is given by: Interest Coverage Ratio = PAT + Interest on Long Term Debt + Depreciation Interest on Long Term Debt Interest Coverage Ratio Year Interest On Long Term Debt PAT + Interest on Long Term Debt + Depreciation Interest Coverage Ratio 2005-2006 565.5 35097. out of its cash profits. we can say that Dabur India limited is making sufficient operating profits in order to be able to cover its interest costs. although decreasing over the years. Overall Analysis of Solvency Ratios Over-all Analysis (Solvency Ratios) Year 20052006 20062007 20072008 20082009 SHREE SAHAJANAND INSTITUT OF MANAGEMENT 35 .5115 2008-2009 1333.86188 2007-2008 845.29 37. Thus.DABUR INDIA LTD. As we see from the above. is quite high.78127485 2006-2007 443. this ratio.97 41. SAIYAD that the company has now started taking loans but Is still dependent on capital only.86 31.87 21379.44 62.0681 This ratio measures the capacity of a company to pay off its interest liability in long term debts out of its profits.Interest Coverage Ratio This ratio measures the capacity of a company to py the interest liability it has incurred on its long term borrowings.01 27848. Thus.55 41430.
007928673 37. or current liabilities as and when they fall due.049803 0.032815 0.8211154 0. It is an important indicator of a company’s current and prospective liquidity position. both long term and short term.188273 0.003914 31. or current assets that it possesses. out of the cash or near cash.5115 0. Liquidity Ratios We have analyzed the following Liquidity ratios • • • • Current Ratio Liquid/Quick Ratio Net Working Capital Operating cash Flow Ratios Current Ratios A Current ratio measures the ability of a company to discharge its dayto-day bills.DABUR INDIA LTD. the company is highly solvent and can do a very good leveraging in future.130835421 0. we see that Dabur India Limited mainly depends upon its proprietary funds. It has very small amount of debts.010762 62.0681 From all these ratios.945144 0. KHALID H. SAIYAD Proprietary Ratio Debt-Equity Ratio Long-Term Debt-Equity Ratio Interest Coverage Ratio 2. Formula for calculation of current ratio is given by: Current Ratio = Current Assets Current Liabilities Current Ratio Year 2008- 2007- 2006- 2005- SHREE SAHAJANAND INSTITUT OF MANAGEMENT 36 . as compared to its capital.021346476 0.01157 41.946254 0.86188 0. As such.78127485 0.
263. as and when they fall due.504. The company has also invested in long term ventures and mutual funds rather than going for short term investments.91 58.48 35.47 30. Liquid Ratio It measures as to how quick is the ability of a company to discharge its current liabilities net of working limits.DABUR INDIA LTD.11 0. However FMCG companies normally do not have a high current ratio because of the ready and fast conversion of ready and fast conversion of inventory into cash.648. loans and advances 74.12 0.93 Generally.641.95 1. 2009 Current Assets.22 2006 28. Therefore the Current Ratio of Dabur is less than normal.281. Formula for calculation of liquid ratio is given by: Liquid Ratio = Current Assets – Inventories – Prepaid Expenses Current Liabilities Liquid Ratio Year 2009 2008 2007 2006 SHREE SAHAJANAND INSTITUT OF MANAGEMENT 37 . a low current ratio indicates the potential for a strained liquidity position.22 Provisions 66.00 Current Ratio 1.46 Current Liabilities and KHALID H. over the past 10 years.436. it has invested in 27 different mutual funds.608. SAIYAD 2008 55. Another reason for the low ratios is that the company is very conservative and has high provisions (almost 50% of the liabilities) hence increasing the liabilities and decreasing the ratio.out of cash or current assets net of inventories that it possesses.731.33 2007 39. Infact.
4 30.122.855.872.2 2 30. KHALID H.66 66.6 Liquid Assets Current Liabilities and Provisions Liquid ratio 9 9 2 6. 91 7.38 8 0.4 35.498.31 0 0.1 5 2007 39. 33 58. This is because of the varied bank balance of the company. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 38 .608.0 1 0. SAIYAD 25.648. 22 35.982.731.604.032.7 5 2006 28.29 7 0. However.608.263.731.DABUR INDIA LTD.641.436.4 16.281.504.8 11.5 2008 55. hence quick ratio is low. However. A low liquid ratio indicates the potential for a strained liquidity position.648.263.7 8 Net Working Capital 5 Net working capital has been up and down in the past 4 years. 46 66.0 0 2. a low liquid ratio does not necessarily mean a bad liquidity position as inventories are not absolutely non-liquid. the low net working capital is also because of the high provisions the company has created.21 Inventory in case of Dabur forms a significant part of current Assets. 48 2.9 58. loans and advances Current Liabilities and Provisions 2009 74. 47 4. Net Working Capital Formula for calculation of net working capital is given by: Net Working Capital = Current Assets – Current Liabilities Net Working Capital Year Current Assets.294.
294.75 0.55 0.31 4.21 -2.731.95 0.66 2006 19.11 0.442. KHALID H.263.7 1 1 5 66.49 8 0.63 A major parameter for all the liquidity ratios is the Liabilities that the company has.329.0 0 0.38 7.66 2006 0.3 31.4 1 0. We can see above that all the ratios are coming out to be less than normal.54 7 0.9 58.15 0. SAIYAD Operating cash Flow Ratio This ratio signifies how well a company can cover its liabilities though the cash generated from operations.54 2007 1.357.DABUR INDIA LTD.4 9 30.855.78 0.4 35.648.0 23.29 -2. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 39 .434.93 0.032. Formula for calculation of operating cash flow ratio is given by: Operating Cash Flow Ratio = Cash Flow from Operations Current Liabilities Operating Cash Flow Ratio Year Cash Flow to Operations Current Liabilities and Provisions Operating Cash Flow Ratio 2009 2008 2007 32.49 2008 0.12 0.982.63 We can again see a downward trend again due to the perishable inventory and high provisions Overall Analysis of Liquidity Ratios Over-all Analysis (Liquidity Ratios) Year Current Ratio Liquid ratio Net Working Capital Operating Cash Flow Ratio 2009 1. This is because the company has high provisions hence increasing the total liability for the company.608.
TURNOVER RATIOS Financial ratios related to sales or volume. For example. This is a general trend all across the FMCG sector. This is because the inventory forms a significant part of the current assets and we know that the inventories are not as liquid. The efficiency with which the assets and resources of a company are utilized in generating operational revenue has a direct bearing on the top line. These measure efficiency of converting assets into cash. accounts receivable turnover. These unusually low ratios are not just confined to Dabur. Liabilities. Low net-working capital follows the low current ratios. those ratios which signifies the resources efficiency comes under Turnover Ratios. i. Fixed Asset Turnover Ratio = Net Sales Formula for calculation of fixed asset turnover ratio is given by: Net Block of Fixed Assets SHREE SAHAJANAND INSTITUT OF MANAGEMENT 40 . Five major ratios under this category are: • Fixed Asset Turnover Ratio • Net worth Turnover Ratio • Inventory Turnover Ratio • Debtors Turnover Ratio • Creditors Turnover Ratio Fixed Asset Turnover Ratio The Ratio measures the extent of turnover or volume of gross income generated by the fixed assets of a company or in other words the efficiency in their utilization.e. It is therefore important for analysts to study the turnover ratios. SAIYAD Also the Liquid ratios above are extremely low when compared to the Current ratios. It is because of the high value of the denominator i. the low operating cash flow ratios doesn’t mean that there isn’t enough cash flowing through operations.DABUR INDIA LTD. KHALID H.e. conversion of receivables into cash comes under this category. Also. also known as efficiency ratios and assets turnover.
it is the efficiency in the resource utilization from the angle of the residual interest. Formula for calculation of net worth turnover ratio is given by: Net Worth Turnover Ratio = Net Sales Equity Shareholders’ Funds Net Worth Turnover Ratio 2008Year Net Sales Equity Shareholders fund MANAGEMENT 2007200620052009 2008 2007 2006 2.278.3 41 SHREE SAHAJANAND INSTITUT OF .437.0 5 81 19.39. ie.5 60 51. 1.1 1 60 29.904.60.337 81 41. It is best to use average Accounts receivable to avoid seasonality effects. Net Worth Turnover Ratio The ratio measures the extend of turn over or volume of gross income generated by the net worth of a company.003.65 7.70 6.042.616.08.0 1 90 23.499.955.042.60. SAIYAD Fixed Asset Turnover Ratio 2008Year Net Sales Net Block of Fixed Assets Fixed Asset Turnover 2007200620052009 2008 2007 2006 2.08 6. 1.339.6 8 Ratio 6. while a low number means collections take longer.39. In other words.616. the equity shareholders. 39 72. 2.34. This is an area of concern for the company as the growth is not very significant. KHALID H.443.34.0 90 38. 1. 2.883. 1.08.DABUR INDIA LTD.278. Sales to receivables (or turnover ratio): Net Sales / Accounts Receivable—measure the annual turnover of accounts receivable.339. This indicates that the company is not utilizing its fixed assets well. 39 36.75 The ratio has come down marginally from the last year due to a larger increase in the net block of fixed assets compared to the increase in the net sales. A high number reflects a short lapse of time between sales and the collection of cash.
SAIYAD 9 3.736. This is again an area of concern for the company as overall profitability can be increased by utilizing net worth properly.29. 1. This shows poor inventory management during this period.192.88 2006 11. on average. or Net Worth Net Worth Turnover Ratio 9 3. 94 82.560.256. 77 68.6 2007 15. Inventory Holding Period Year Inventory Cost of goods sold Inventory Holding Period 2009 26.819.86 11 66. that elapse between finished goods production and sale of product.114. Also the holding period is increasing over the years from the past data. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 42 .17 There is a decrease in net asset turnover ratio this year compared to last year which shows that the company has not been able to utilize all its net worth appropriately.DABUR INDIA LTD.09. So the company has to take care its inventory operation.23 4. Inventory Turnover Ratio Formula for calculation of fixed asset turnover ratio is given by: Inventory Holding Period=Inventory Cost of goods sold*365 Inventory holding period: 365 / Annual Inventory Turnover—calculate the number of days.171.05 4. 38 69.6 2008 20.85 Inventory holding period has increased by 7 during the last year. 90 61.28 7 KHALID H.88 4 9 1. 24 73.319.
046.17 2.31 days last year to 16.2 9 7. the average collection period is a calculation of the average Period it takes for outstanding invoices to be paid in full after issuance the advantage of understanding average collection periods is that the information allows the company to anticipate cash flow generated by services rendered. 968.60 Though there was a considerable increase in the Collection period allowed to the customers for the past years.36.63.0 1 20072008 10. Still the ratio is low which suggests that the company has managed its debtors well.236.31 12 13.92 days.DABUR INDIA LTD.367. 1.778.87 2006 2.42.25 1. the trend changed in the present year and collection period has decreased from 17.097. Formula for calculation of debtor’s turnover ratio is given by: Collection Period=RecievablesTotal Sales*365 Collection Period 2005 2008Year Recievables 2009 11. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 43 . KHALID H.92 86 17.694 . SAIYAD Collection Period and Credit Period Debtors Turnover Ratio Sometimes referred to as a collection ratio.11. Total Sales Collection period allowed to Customers 89 16.4 3 20062007 6. Essentially.736. the average collection period has to do with the relationship between Accounts Receivable and the time frame in which those outstanding payments are received. 2.
SAIYAD Creditors Turnover Ratio Creditors turnover ratio gives the funding requirements for imports of machinery/ stocks covered by Letters of Credits arranged for up to 180 days. But since there is a larger difference between both the periods. Moreover.833.60 2007 27. The collection period is less as compared to the credit period enjoyed by the company which is in favor of the company. Formula for calculation of credit period is given by: Credit Period=PayablesPurchases*365 Creditors Turnover Ratio Year Payables Purchases Supplier’s Credit Period 2009 35.02.5 1 1.DABUR INDIA LTD.243. 06 57. 22 122. the company will only have to take care of it in the long-run.91 days this year.75 Supplier’s credit days has increased from 112.798. 31 76.22.342.7 1 1. 11 104. 54 112. collection period is on an increase except for the present year whereas credit period has decreased as compared to the last year. This means that the company has managed its debtors well and the suppliers are having a high degree of faith in it. taking a general trend. KHALID H.511. 44 131.138.91 2008 31. Du Pont Analysis With Reference To Return on Net Worth SHREE SAHAJANAND INSTITUT OF MANAGEMENT 44 .770.60 days last year to 104.722. it also enjoys a good reputation with the creditors.98 2006 19.
SAIYAD 2008-2009 15. With Reference To Return on Total Assets Du Pont Analysis with Reference to ROTA Year Net Profit Margin Total Asset Turnover ROTA 2007-2008 15.61 times 55.10% KHALID H.58% 3. Du Pont Analysis with Reference to RONW Year Net Profit Margin Net Worth Turnover RONW 2007-2008 15.DABUR INDIA LTD.58% 3. They have made a major investment in assets that are yet to generate sales.20% 4.83 times 59.15% The ROTA has worsened from last year. Thus the company has to focus more on improving the Resource Efficiency than the operating margin. Reserves and Surplus have gone up substantially but the profit has not grown with the same proportion. Total Assets have gone up substantially but the profit has not grown with the same proportion.79% The RONW has worsened from last year. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 45 . The reason is because of the worsened Total Assets Turnover.28% 2008-2009 15.63 times 41. Thus the company has to focus more on improving the Efficiency of assets than the operating margin.20% 4.61 times 70. The reason is because of the worsened Net worth Turnover. Thus in the coming years ROTA is expected to increase.
DABUR INDIA LTD. 1 per share) Basic Diluted • 2008-2009 37355. therefore we are SHREE SAHAJANAND INSTITUT OF MANAGEMENT 46 . • BEPS is calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year in accordance with para 10 and 11. • DEPS is calculated after adjusting all the effects of all dilutive potential equity shares in accordance with para 26 and 29.66 3.64 Disclosure of BEPS and DEPS on the face of the profit and loss account with equal prominence for both the years is presented in accordance with para 8 of the AS-20. KHALID H.3 3.27 2007-2008 31677. Analysis of EPS Information Disclosed In case of Dabur.32 4. SAIYAD Chapter 6 Financial Analysis IV: Analysis of Crucial Notes to Accounts Note 16 regarding Earnings per Share under Accounting Standard 20 Earnings per Share has been computed as under Profit after Tax Weighted average number of shares outstanding Basic Diluted Earning per Share (face value Re. as the weighted average number of shares outstanding is different for both dilute and basic.21 864907642 869156259 863635509 869063210 4.
85 27.95 44465.82 0.65 NIL 36517.2 0 27.71 40 37885.14 1219.55 3.19 34. 287.41 780.03.15 683.1956 and calculation of Director’s commission Profit for the year before tax as per Profit & Loss Account Add: Managerial remuneration Directors fees Provision for doubt full debts Less: Capital Profit Adjusted net profit Maximum permissible remuneration Maximum commission payable: Actual commission (To one non whole-time Director) 31.87 42499. Notes 12 and 8 regarding Related Party Disclosures under Accounting Standard 18 Managerial Remuneration under section 198 of the Companies Act. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 47 .20 09 08 232.DABUR INDIA LTD.12 257. such as holding.9 219.47 4.79 Analysis of Disclosures and Managerial Remuneration • The operating results and financial position of a company may be affected by a related party relationship.07 1138. joint ventures etc as related parties may enter into transactions which unrelated parties would not.59 1138.2 737. KHALID H.03. to the Directors: Salary Commission (as computed below) Contribution to Provident Fund Residential Accommodation Medical & Leave Travel Benefit Contribution to Superannuation Fund Others (Including Rs. SAIYAD having different value of BEPS and DEPS even after having the same net profit figure.81 4891.87 11.66 139.95 29.38 378.29 4167. 297.74 131.20 31.79 27.31 under stock option Scheme) Computation of net profit in accordance with Section 198 and section 309 (5) of the Companies Act. subsidiary company.59 1219. associates.12 Previous year Rs.23 444. 1956 paid or payable during the year.95 43.15 10.
272. In comparison to last year loan repayment of Rs.14 and 21 of AS-18 Disclosure of the nature of transactions separately with holding companies and with fellow subsidiaries as per details furnished in the note in accordance with para 23.950 lacs is stuck with the subsidiaries. • • • • • • 1.35 this year.59 lacs after charging such remuneration.DABUR INDIA LTD. SAIYAD Disclosure of the names of holding companies and fellow subsidiaries in accordance with para 3(a) and 21 of As-18 Disclosure of the names of whole-time directors in accordance with para 3(d). • • • KHALID H. 42499. Guarantees & collateral given to subsidiaries is increased by 48. Employee stock option scheme has increased by 35.57% to Rs. • The users of financial statements.24 lacs this year.15 lacs against a huge net profit figure of Rs. The idea is to prevent excessive withdrawal by way of remuneration to whole-time directors. by reviewing this amount may reach a conclusion regarding its reasonableness in regard to net profits earned by the company. 5. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 48 . • The total remuneration paid by Dabur as per note 8 is a figure of 1219.28 lacs this year there is nil repayment. 44. 1. out of the profits generated by the company. An equity contribution of Rs. • AS 18 also requires a specific disclosure of transactions with the key management personnel which includes disclosure of the amount of managerial remuneration as well.41% to Rs.860.3% of Total Sales to fellow subsidiaries is quite a materialrelated party transaction. (2. This is less than reasonable withdrawal out of the net profits.
26 1 2 3 Consumer Care Business Consumer Health Business Food SHREE SAHAJANAND INSTITUT OF MANAGEMENT 49 .295.451. capital. in lacs 33.63 12. Segment liabilities disclosed include net deferred tax liabilities despite the requirement of specific exclusion as per the definition of segment liabilities as given in para 5 of the AS.37. the company’s primary business segment is Consumer Care Division(CCD). result assets. expenditure. voluntarily has foregone his salary and part of service benefits w.00 8.593. 1st October 2008.47 14.00 5.7. Health Care.00 5. • KHALID H.12 PAT Rs. Pradip Burman.840. depreciation and other non cash charges on account of provision for pension and gratuity in conformity with para 40 of the AS.326. • • Segment Analysis for the year ended 31-03-09 Segments Capital Employed Rs. • • Disclosure of types of products in the CCD segment is in conformity with para 58 of the AS.00 6. liabilities. in lacs 52. a whole time director.f.49 respectively. The company’s corporate strategy aims at creating multiple drivers of growth anchored on its core competencies. Consumer Health business and food. The company is currently focused on following business ie Consumer Care business.60 and Rs. Amount foregone on account of salary and service benefits work out to Rs.DABUR INDIA LTD. Disclosure of segment revenue. Note 22 regarding Segment Reporting under Accounting Standard 17 Based on the guiding principles given in Accounting Standard on Segment Reporting.97 14. SAIYAD Mr. Home Care & Foods.00 % of Total 139.00 % of Total 45.e.099.85 8. It addresses consumer needs across the entire FMCG spectrum through four distinct business portfolios of Personal Care.
35 -69.DABUR INDIA LTD.47% of PBT.356.00 45.52 131. Reasons are very clear – both in terms of capital turnover efficiency as well as profitability on capital employed – all other segments analyzed are lagging far behind the ‘Consumer Care Business’ segment.85% of capital employed in ‘Consumer Care Business’ segment contributing an astronomically high 139.63% of capital employed in ‘Consumer health Business’ segment is contributing a good figure of 14. a high 28. which has returned a loss on 28.298.071.88% of capital employed therein. The performance of this segment is affected badly by ‘Unallocated’ segment.97% to PBT.00 37.00 28. 4 5 Others Unallocated Company as a whole • 3.0 0 KHALID H.88 -25.0 0 0.05% of PBT. • • 8.88% of capital employed in ‘Unallocated’ segment.00 100.793.05 100. SAIYAD 4. higher than the ‘Consumer Health Business’ segment. but it contributes a loss of 69.00 21.00 72. • As against this.955. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 50 .
KHALID H.DABUR INDIA LTD. SAIYAD SHREE SAHAJANAND INSTITUT OF MANAGEMENT 51 .
internal audit and control system and outstanding undisputed statutory liabilities. • Second part comments on fixed assets. SAIYAD Chapter 7 Financial Analysis V: Analysis of Auditors’ Report Analysis of the Auditors’ Report is a Comment on how the auditors’ report acts as a catalyst towards ensuring a better quality of financial performance and position and reporting thereof and financial discipline. The auditors’ report is divided into 2 parts: • first part expressing the auditors’ view on true and fairness or otherwise of the state of affairs of the company in the case of the balance sheet and profit in the case of profit and loss account. KHALID H. Opinion on maintaining proper books of account. inventories. related party transactions. The examination of the issues mentioned in these 2 parts and their implications for determining a true and fair profitability and state of affairs of the company clearly reveal that the auditors’ report acts as a catalyst towards ensuring a better quality of financial performance reporting. Assertion about agreement of financial statements with the books of account. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 52 .DABUR INDIA LTD. Let us look at each one of them in detail: First part: • • • • Obtaining information and explanation necessary for audit. Opinion on the compliance of mandatory accounting standards.
DABUR INDIA LTD. Comment on the deposits accepted from public. Comment on records of inventories. firms or other parties in which directors are interested to determine whether they are prejudicial to the interests of the company or not. Related party transactions Comment on loans granted to/taken from companies. Comment on fixed assets’ adjustments between physical verification and records in the accounts and extent thereof. Second part: Fixed assets: • • • • • • • • • Comment on records of fixed assets. Comment on the documents and records maintained for the loans and advances granted. Comment on contracts or arrangements in the register maintained under section 301 of the Act 1956. • • • • • Comment on the internal control system commensurate with the size of the company and nature of business. Comment on the procedures used for the verification of inventories. Comment on the preferential allotment of shares. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 53 . SAIYAD Comment on whether any director of the company is disqualified from being appointed as such as per the norms of the Companies Act. • KHALID H. Comment on fixed assets disposed off during the year. Inventories: Comment on inventories’ adjustments between physical verification and records in the accounts and extent thereof.
Comments on the absence of disputed due on account of wealth tax and cess. • • • • • • KHALID H. Internal audit: • Comment on the internal control system commensurate with the size of the company and nature of business. bank or debenture holder. SAIYAD Comment on creation of securities / charges in respect of debentures issued and outstanding. investor education and protection fund. service tax etc. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 54 . with appropriate authorities. Comment on money raised by public issues. Comments on the company’s regularity in repayment of dues to any financial institution.DABUR INDIA LTD. Comment on the preferential allotment of shares under their ESOP Scheme. • Outstanding undisputed statutory liabilities • Comment on the deposits undisputed statutory dues including provident fund. fund.
From 2003 onwards Dabur has been paying a dividend over 100% consistently. 2009 and has recommended a final dividend of 100% (Re.DABUR INDIA LTD. the company paid an interim dividend of 75% (Re. 0. 1 per share). SAIYAD Chapter 8 Financial Analysis VI: Analysis of Dividend Policy The company has been very non-uniform and inconsistent in paying dividends to its stakeholders. KHALID H. In 2009. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 55 . So the aggregate dividend for the year comes our to be 175%. The Dividend ranges from 50% in 2002 to 250% in 2005.75 per share) on February 10. an improvement over the previous financial year (150%).
SAIYAD Chapter 9 Financial Analysis VII: Analysis of Cash Flow Statement Compliance with Accounting Standards The given cash flow statement is for the year ended 31-Mar-09. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 56 . Features of Cash Flow Statement Features of the Cash Flow Statement as presented by the Dabur India Limited are: • The cash flow statement has been prepared for the year ended 31-Mar-09 and thus it covers the effects of all cash transactions of the previous accounting year. AS-3 deals with the cash flow statement. KHALID H. This model provides following benefits: • Disclosures for cash inflows and outflows for the different activities: operating. investing and financing at one place. All Accounting Policies followed by the company abide by the GAAP and thus are permissible. (as at 31-Mar-09) The cash flow statement clearly classifies the cash flow from operating.DABUR INDIA LTD. investing and financing activities. The disclosure of cash flow from operating activity is done through indirect method. Vertical form of cash flow statement has been used by Dabur India Limited. • • Comparative Statement –Dabur India Limited has disclosed a comparative position of each element of cash flow statement. The following disclosures for the same are met by Dabur India Limited: • • • • The cash flow statement is presented for the same period for which the balance sheet is given.
GM (Finance) and Company Secretary are also written.DABUR INDIA LTD. tax paid and corporate tax on dividend. repayment/proceeds of ‘Net Cash of from loans and liabilities. ‘Net Cash from Operating Activities’ is obtained. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 57 . • • KHALID H. ‘Net Cash from Investing Activities’(B) and ‘Net Cash generated in Financial Activities’(C) with the opening balance gives the closing balance of cash and cash equivalents. The cash flow from financing activities includes proceeds of share capital and premium. two Whole Time Directors. • At the bottom of the cash flow statement it has been mentioned that the report is prepared as per our (the Board of Director’s) report of event date attached. SAIYAD Information is available at a glance. The statement starts with ‘Net profit before tax and extraordinary items’ which has been adjusted for non-cash charges and interest received to arrive at ‘Operating profit before working capital changes’. The ‘Net Cash from Investing Activities’ is obtained by analyzing the Sale and Purchase of Assets and purchase and sale of investments in subsidiaries. This is adjusted with ‘Working capital changes’ to obtain ‘Cash generated from operating activities’. After deducting interest paid. The summation Operating Activities’(A). enabling quick review and analysis Dabur India Limited has used indirect method for working out the cash flow from operating activities. The names of Chairman. dividend to arrive at ‘Net Cash generated in Financing Activities’.
• Net cash from operation up by 3 % indicating strong operational financial performance. Investing Activities • Dabur India Limited has spent huge sums on purchase of fixed assets which indicate that the company is undergoing expansion and is likely to produce higher future revenues • It also shows considerable amount of inflow form the sale of fixed assets compared to last year indicating that the company is disposing off it’s worn out fixed assets. Financial Activities • • There has been a decrease in money generated by issuance of shares as compared to last year to the extent of 7.5% Dabur India Limited has had substantial net outflow in respect of repayment of borrowings indicating its strong cash position. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 58 . SAIYAD Activity Wise Analysis Operating Activities • All of the cash inflows of Dabur India Limited during 2009 have been contributed by operating activities indicating a strong cash position. KHALID H. • Dabur India Limited had a net cash outflow in respect of working capital which is an indicator of inefficient management of working capital. • For investing activities Dabur India Limited has had a net cash outflow indicating a favorable cash position.DABUR INDIA LTD. • Dabur India Limited had significant increase in outflow towards investments in its subsidiaries (up by 34%) indicating that the company’s future prospects are expected to grow.
However. its revenues are only expected to increase in future. though increased this year. Dependence on this income can prove detrimental for the company. • KHALID H. The amount. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 59 . is marginally higher than last year. Ability to Generate Positive Cash Flows from Operations in Future Dabur India Limited has generated cash from operations in both the years. It also shows that the company is making huge profits. nearly 50% of the cash flow from operations is as a result of profit from sale of fixed assets and FCCB currency fluctuation profits which is unsustainable income. SAIYAD It has also shown huge sums of borrowings and keeping in account the strong financial position if the company. Given the huge amounts of money spend on expanding the business. The reasons are simple and more than clear.DABUR INDIA LTD. • Dividend payment has increased by 95% in the year indicating a very strong desire to maintain the goodwill of the company in the market. It has been generating cash from operating activities and utilizing this money in expanding its business and in paying dividends. Information provided by its profit and loss account establishes that almost all of the cash flow form operations in the current year is as a result of sale of finished goods. Quality of Cash Position The information provided by the cash flow statements of Dabur India Limited appears to indicate a high quality of cash position. This indicates that the company has a good ability to generate cash in the future also. it is not clear why the company has engaged into borrowings.
207. But the PAT of Dabur is more than Colgate. The EPS for 2009 shows that the EPS of Colgate is very high compared to Dabur and HUL.908. However even after one year in Dec 07 the share price of the company could reach 110. The bonus issue also resulted in the market price of a Dabur India Limited share come down during that year from 140 to 95(appx). Thus the Reserves and Surplus have also gone down.63 lacs. The company wanted to boost the confidence of the investors towards the company and indicating to the market that the company has strong fundamentals. But the EPS has gone down because there has been an issue of bonus shares by the company. thus the no of Equity shares of the co has increased from 573302784 to 862883808 in FY07. issued to the shareholders compared to its peers like HUL. KHALID H.DABUR INDIA LTD. SAIYAD Chapter 10 Financial Analysis VIII: Analysis of Capital Market Valuation To analyze the capital market valuation of Dabur India Limited. One of the main reasons is that the no of issued shares of Colgate is very less compared to Dabur. even when the markets were in a bullish run.37 lacs to 25. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 60 . The company issued bonus shares in the ratio 1:2. we have considered the following ratios: • • • Earnings Per Share(EPS) Price Earnings Ratio(P/E Ratio) Market Capitalization Earnings per Share (EPS) In the FY 07 the PAT has gone from 18. One of the reasons of the damp reaction by the market could be the stagnant dividend the co.
PE is a much better comparison of the value of a stock than the price. Thus market capitalization gives us an idea of the size of the company which is decided by the public trust and investments in the company. Market Capitalization Market capitalization is an important indicator because it may happen that the share price of a company is low compared to its peers. 09. However it might so happen that the company has issued a very large number of equity shares compared to the other company. The PE ratio of a company may also become low if it reports higher earnings. thereby increasing the market share eventually. Dabur’s PE is larger than HUL which is a bigger company by market Cap. KHALID H. SAIYAD Price Earnings Ratio (P/E Ratio) PE ratio of these companies is dated 25th Aug. However in the long run the PE ratio will rise as the higher earnings will increase the market sentiment. Since Dabur has a higher PE than P&G it can be expected to grow and have higher earnings in the future. thus we see that there is a huge difference in the no of shares issued by both the company. The PE ratio changes every day as the stock price fluctuates. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 61 . This means Dabur is outperforming the industry PE and is a higher valued stock than most of the other companies in the same industry. The industry PE is 26. Pat etc but the PE indicates that comparatively investors confidence in Dabur is no less than HUL.70.76 lacs and the no of shares issued of colgate is 1360 lacs. However since the PE of Dabur is more than P & G it can be considered a more expensive stock.DABUR INDIA LTD. For example P & G has a stock price of 1170 while Dabur has a stock price of 140. But the no of shares issued of Dabur is 8650. The share price of Dabur is around 140 while the share price of colgate is around 600.
During the same period the sensex has fallen from 15626 points to 9708 points which means it has fallen almost 38%. SAIYAD a more realistic idea of comparison of the companies rather than only share price. Therefore market capitalization gives KHALID H. Dabur’s share has fallen almost by 9%. . SHREE SAHAJANAND INSTITUT OF MANAGEMENT 62 . thus it has a very high market capitalization. Therefore we can conclude that the Dabur Share has shown strong resilience even when the markets were not performing well. It comes in large caps companies while Dabur is comparatively a smaller company.50 6. Yield to Investors Following is the formula used to calculate the yield to investors: Yield to investors = Divident Per Share + Market Appreciation Initial Investment Yield to investors Year Divident Per Share Market Appreciation Yield to Investors 2008-2009 1. The main reason is because of the crash in the stock markets due to the global recession.75 8.DABUR INDIA LTD. HUL has issued around 21800 lacs equity shares and its share price is around 280.83% Thus we see that there has been a negative yield to investors.
SHREE SAHAJANAND INSTITUT OF MANAGEMENT 63 . The key skill area needed for the directors have been mentioned which gives an idea of the desired qualification but the company should have mentioned the qualifications as well. • A separate heading mentioning the noncompliance of the company has been given which shows the company’s intent to openly accept the short falls if any. • The roles and scope of the board of directors and various committees are clearly spelt out. KHALID H.DABUR INDIA LTD. Should have given more information about the management principles that are followed by company management apart from the code of conduct. SAIYAD Chapter 11 Analysis of Corporate Governance Report Compliance with clause 49 of the Listing agreement • It Dabur India has technically complied with all the requirements mentioned in the clause. Analysis of the Management Discussion and Analysis Report requirements The company has given clear data of the related party transactions and for the last 3 years complied with the all the disclosure norms as needed by SEBI • The Section on Management Discussion and Analysis could have been precise giving point to point information in the same or in a separate section. • The company should have furnished more information about the qualifications of the board of directors. Its adherence to the standard practices and following of the laid down rules is welcome and desirable for a company which is 150 years old.
• The company has strived to be a responsible citizen as mentioned in the section for the policy for environment control and reduction of pollution. • • The frequency of the AGM which in this case if 1per year. • The company strives to boost investor confidence. • The company’s sincerity towards ethics is reflected clearly in the section where whistle blower policy and the policy for prevention of insider trading have been mentioned. Analysis of the implications of the information provided Bringing transparency in the corporate affairs particularly at the board level. and policy for occupational health & safety.DABUR INDIA LTD. Shareholders are kept updated about company’s performance and related matters regularly and the necessary data is available easily. is a good indication of the company’s overall health. KHALID H. This is reflected in the roles assigned to various board committees and its risk management structure. • • There are zero shareholders grievances in 2009 which indicates the fast resolution of complaints by the company. The company has given a section I the report where it specifically points out the point tot point compliance with the requirements of the clause 49. SAIYAD • The company has adequate internal control system wherein the compliance of various standards can be enforced effectively. It shows company’s low tolerance for malpractices. Recommendations to the management n the strategic issues SHREE SAHAJANAND INSTITUT OF MANAGEMENT 64 .
DABUR INDIA LTD. SAIYAD The company must enforce all the non-mandatory requirements apart from the mandatory ones. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 65 . KHALID H.
Technology. SAIYAD Chapter 12 Analysis of Directors’ Report The report’s content are summarized hereunder: • • • • • • • • • • • • • • • • • • • • • Financial Results Dividend Acquisitions Corporate Governance Directors Director’s Responsibility Statement Change in capital structure and listing of shares Auditors and their report Cost auditors Consolidated financial statements Internal control system Fixed Deposits Nature of business Subsidiaries Employee Stock option plan Conservation of Energy. Exchange Earnings and Outgo Group for interse transfer of shares Health Safety and Environmental Review Quality Review Awards & Recognitions Industrial Relations Absorption. KHALID H. Foreign SHREE SAHAJANAND INSTITUT OF MANAGEMENT 66 .DABUR INDIA LTD.
SAIYAD Dabur has complied with all the requirements under section 217 of the companies act. • Acknowledgements KHALID H. dividend raised to 175% to 150% last year. a FMCG Company listed on Bombay Stock Exchange. Good rate of growth of health division. Brand • • • • • • Weakness • • Loss on newly launched retail venture NEWU Oral care segment reported a growth rate of only 4.5%. 20% growth rate in consumer health division. Some useful additional information. PAT increased by 18%. Dabur red toothpaste became a 100 cr. 40% increase in revenue in international business.8% Opportunities • • • High demand growth in FMCG sector Increased penetration of FMCG products in rural market New opportunities in overseas market SHREE SAHAJANAND INSTITUT OF MANAGEMENT 67 . Successful introduction of a host of a new product. Good communication strategies with a host of brand ambassadors. proper and adequate internal control system. proposed acquisition of FEM Care Pharma Limited (FEM). for example. well placed. ‘Health Safety and Environmental Review’ and ‘Quality Review’ has also been provided.DABUR INDIA LTD. SWOT ANALYSIS Strengths • Financials: Turnover increased 15.
It has a strong MNC presence and is characterized by a well established distribution network. it will put a severe pressure on SHREE SAHAJANAND INSTITUT OF MANAGEMENT 68 . There is a huge growth opportunities for companies like Dabur.DABUR INDIA LTD. apart from all the opportunities there are various risk involved in the sector. Availability of key raw materials. cheaper labor costs and presence across the entire value chain gives India a competitive advantage. HUL.1 billion. Indian rural markets present huge opportunities. Dabur must foresee all the risks and plan its operations accordingly. SAIYAD Threats • • • Slowdown in economy Mounting cost pressure Sharp currency fluctuations Chapter 13 Brief Write-Up on the Sector and Future prospects of the Company The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13. intense competition between the organized and unorganized segments and low operational cost. KHALID H. The rural and semi-urban demand of FMCG products will grow larger and higher. The rising rural and semi-urban income levels coupled with massive advertisement of FMCG products in the electronic media will spread so much of awakening in the rural and semi-urban folks towards fast moving consumer goods products so much that these will enlarge their affordability for them. However.
In view of the Swot analysis done we conclude that Dabur has managed its operations very efficiently and has shown high growth rate despite of being faced an economic slow down situation.DABUR INDIA LTD. One of the risks faced by companies in FMCG is continued economic slowdown and worsening of macro economic indicators which can impact the spending power of consumers and put pressure on their incomes and consumption. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 69 . This along with the improving Indian consumer market also presents immense opportunities to Dabur to increase its operations and compete wit HuL and try to bridge the gap between them. Increase of imitation/fake product can hamper Dabur’s growth. However the company needs to shell out more dividends or issue bonus shares to make the share more attractive for investors. A poor monsoon if it happens can impact rural incomes and dampen rural consumption and spends. The companies segments like consumer care division. The company is also marketing its products in the rural sector which gives the company an added advantage. health division. KHALID H. and international division are also showing good signs of growth. The company has maintained a Risk register which is reviewed periodically by senior management. The company’s new products have shown immense potential to do well in the market while the Dabur’s management is also committed to pursue higher growth rates in future. Any unexpected change in regulatory framework which may impact parts of the business of Dabur is also one of the risks faced by the company. Thus the risks can be minimized if action is taken immediately. SAIYAD the margins of manufacturers of FMCG products because of cut-throat competition.
SAIYAD SHREE SAHAJANAND INSTITUT OF MANAGEMENT 70 . KHALID H.DABUR INDIA LTD.
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