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A

Summer Training Project Report on

STUDY OF FINANCIAL STATEMENT

ANALYSIS OF DABUR INDIA LTD.

Submitted towards the partial fulfillment of requirement of

MASTER OF BUSINESS ADMINISTRATION

Mahamaya Technical University, Noida.

2012-2014

SUBMITTED TO:

Mrs. Preeti

Assist. Prof.

Management Department

SUBMITTED TO:

VENKATESHWARA INSTITUTE OF TECHNOLOGY, MEERUT

MAHAMAYA TECHNICAL UNIVERSITY, NOIDA

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To Whom So Ever It May Concern

This is to certify that Rohit Tyagi has prepared a summer training based project

report on the title ‘STUDY OF PROMOTIONAL AND MARKETING

STRATEGY OF AIRTEL LTD.’ for the partialfulfillment of Post Graduate

Diploma In Marketing Management approved from Mahamaya Technical

University, Noida.

To the best of our knowledge the matter presented in project report is satisfactory

and we wish her success in her future endeavor.

(Head of the Department) (Project Supervisor)

Mr. Anurag Mrs. Preeti

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DECLARATION

I, hereby declare that the research work presented in the summer training based

project report entitled, ‘STUDY OF PROMOTIONAL AND MARKETING

STRATEGY OF AIRTEL LTD.’ for the partial fulfillment for the award of

MBA from MahamayaTechnical University is based on my original research work.

The project report embodies the result of original work and studies carried out by

me and the content of the project do not from the basis for the award of any other

degree to me or to anybody else.

Date………….

Place

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SR. NO PARTICULAR

PAGE NO

1. INTRODUCTION OF FINANCIAL MANAGEMENT. 6.

2. CONCEPTUAL FRAMEWORK OF WORKING CAPITAL MANAGEMENT.

20.

3. LITTERARURE REVIEW. 51.

4. RESEARCH METHODOLOGY. 56.

5. ABOUT THE GEAR INDUSTRY. 65.

6. INFORMATION ABOUT THE POWER BUILD LIMITED.

75.

7. ANALYSIS OF OPERATING CYCLE OF POWER BUILD LIMITED.

91.

8. ANALYSIS OF WORKING CAPITAL MANAGEMENT OF POWER BUILD LIMITED

98.

9. FINDINGS. 122.10. CONCLUSION. 123.

11. BIBLIOGRAPHY. 125.

12. ANNEXURES 127.

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Chapter 1

INTRODUCTION

Brief Background

Dr. S.K. Burm an set up Dabur India Limited in 1884 to produce and dispense Ayurvedic

medicines. In 1956 Dabur India (Dr. S.K. Burman) Pvt. Ltd became a full fledged company. It is

s a leading consumer goods company in India with a turnover of Rs. 2834.11 Crores (FY09)

which markets its products in over 60 countries.

It has many major products like the Dabur Chyawanprash which enjoys 65% market share,

Hajmola tablets which enjoys 75% market share, Dabur honey occupying 75% market share. It

has many product lines and many famous brands in each product line. The company’s roots in

the traditional Ayurvedic medicines give it a very Indian flavor in terms of the products that it

launches.

The major groups and subsidiaries of Dabur are:

Major strategic business units (SBU)

Subsidiary Group companies Step down subsidiaries

Consumer Care Division (CCD)Consumer Health Division (CHD)International Business Division (IBD)

Dabur International

Fem Care Pharma

Newu

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. (USA)Asian Consumer Care (Bangladesh)

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INTRODUCTION TO DABUR INDIA LIMITED

Dabur India Limited is the fourth largest FMCG Company in India with interests in Health care, Personal

care and Food products. Building on a legacy of quality and experience for over 100 years, today Dabur

has a turnover of Rs.1536.95 Cr. with powerful brands like Dabur Chyawanprash, Dabur Amla, Vatika,

Hajmola and Real.

ORIGIN & GROWTH

The brief history and growth of Dabur India Ltd. in chronological order:

1884 - The birth of Dabur in a small Calcutta pharmacy, where Dr. S. K. Burman launches his mission

of making health care products.

1896 - Setting up a manufacturing plant: With the growing popularity of Dabur products, Dr. Burman

expands his operations by setting up a manufacturing plant for mass productions of formulations.

Early 1900s - Dabur enters the specialized area of Nature based Ayurvedic Medicines, for which

standardized drugs are not available in the market. 1919-The need to develop scientific processes and

quality checks for mass production of traditional Ayurvedic medicines leads to establishment of

research laboratories.

1920- Dabur expands further with new manufacturing units at Daburgram and Narendrapur. The

distribution of Dabur products spreads to other states like Bihar and the North-East.

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1936- Dabur becomes a full-fledged company- Dabur India (Dr. S. K. Burman) Pvt. Ltd.

1972- Dabur’s operations shift to Delhi. A new manufacturing is set up in temporary premises in

Faridabad, on the outskirts of Delhi.

1979- Commercial production starts in the Sahibabad factory of Dabur, one of the largest and best

equipped production facilities for Ayurvedic medicines. Launch of full fledged research operations the

pioneering areas of healthcare with establishment of the Dabur Research Foundation.

1986- Dabur becomes a Public Limited Company. Dabur India comes into being after reverse merger

with Vidogum Limited.

1992- Beginning a new chapter of strategic partnerships with international businesses, Dabur enters into a

joint venture with Agrolimen of Spain. This new venture is to manufacture and market confectionary

items in India.

1993- Dabur enters a specialized health care area of cancer treatment with its oncology formulation

plant at Baddi in Himachal Pradesh.

1994- Dabur India Ltd. raises its first public issue. Due to market confidence in the Company, shares

issued at a high premium are over subscribed 21 times.

1995- Extending its global partnerships, Dabur enters into joint ventures with Osem of Israel for food

and Bongrain of France for cheese and other dairy products.

1996- For better operation and management, 3 separate divisions created according to their product mix-

Health Care Products Division, Family Products Division and Dabur Ayurvedic Specialties Limited.

1997- Dabur enters full scale in the nascent processed foods market with the creation of the Foods

Division. Project STARS (Strive to Achieve Record Successes) is initiated to give a jump start to the

company and accelerate its growth.

1998- With changing demands of business and to inculcate a spirit of corporate governance, the Burman

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family induct professionals to manage the company. For the first tome in the history of Dabur, a non-

family professional CEO sits at the helm of the Company.

2000- Dabur establishes its market leadership status with a turnover of 1,000 Crores. From a small

beginning and upholding the values of its founder, Dabur now enters the august league of large corporate

businesses.

2005- Dabur acquires Balsara’s hygiene and home product businesses in an Rs 143 crore all-cash deal.

DABUR AT PRESENT

Leading consumer goods company in India with 4th largest turnover of Rs.1536 Crores

(FY04).

2 major strategic business units (SBU) - Consumer Care Division (CCD) and Consumer

Health Division (CHD).

3 Subsidiary Group companies - Dabur Foods, Dabur Nepal and Dabur International and

3 step down subsidiaries of Dabur International - Asian Consumer Care in Bangladesh,

African Consumer Care in Nigeria and Dabur Egypt.

13 ultra-modern manufacturing units spread around the globe.

Products marketed in over 50 countries.

Wide and deep market penetration with 47 C&F agents, more than 5000 distributors and

over 1.5 million retail outlets all over India

Consumer Care Division: dealing with FMCG Products relating to Personal Care and Health Care.

Leading brands -

Dabur - The Health Care Brand

Vatika-Personal Care Brand

Anmol- Value for Money Brand

Hajmola- Tasty Digestive Brand

and Dabur Amla, Chyawanprash and Lal Dant Manjan with Rs.100

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Crore turnover each

Vatika Hair Oil & Shampoo the high growth brand

Strategic positioning of Honey as food product, leading to market leadership

(over 40%) in branded honey market

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

Leader in herbal digestives with 90% market share

Hajmola tablets in command with 75% market share of digestive tablets

category

Dabur Lal Tail tops baby massage oil market with 35% of total share

Real juices enjoy a market share of over 55% in fruit juice category.

Consumer Health Division: dealing with classical Ayurvedic medicines.

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Dabur Segments / Brands:

Hair oils

Dabur Amla Vatika Health supplements

Chyawanprash Honey Glucose Foods

Real Activ Twist Toothpastes

Red Babool Meswak Promise

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Toothpowders

Lal Dant Manjan

Digestives

Hajmola Pudin Hara

Baby & skin care

Lal Tail Gulabari

Board of Directors :

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Dr. Anand BurmanChairman

Mr. Amit Burman Vice-Chairman

Mr. P D. Narang Director

Mr. Sunil Duggal Director

Mr. Pradip Burman Director

Mr. Mohit BurmanDirector

Mr. Bert PetersonDirector

Dr. S. NarayanDirector

Mr. Analjit SinghDirector

Mr. R C Bhargava Director

Mr. P N Vijay Director

Mr A K Jain Addl. GM (Finance) & Company Secretary Auditors M/s G. Basu & Co. Chartered Accountants

Internal Auditors Price Waterhouse Coopers Pvt. Ltd.

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Timeline of major milestones in the history of Dabur

1884 Dr. Burman set up Dabur in 1884 to produce and dispense Ayurvedic medicines.

1936 Dabur India (Dr. S.K. Burman) Pvt. Ltd. : It became a full fledged company

1986 Public Limited Company

1996 3 separate divisions

2000 Turnover of Rs.1,000 crore

2009 Acquires Fem Care Pharma

Key Product Lines

Health Care Personal Care Oral CareDabur Chyawanprash Dabur ChyawanPrakash Dabur Chyawan Junior Dabur Honey Dabur Glucose-D

Hair Care Oil Amla Hair Oil Amla Flower Magic Vatika Enriched Coconut Hair Oil Vatika Enriched Almond Hair OilHair 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

Dabur Red Toothpaste Babool Toothpaste Meswak Toothpaste Promise ToothpasteBabool Mint Fresh Gel

Skin Care Consumer Health Foods Home CareUveda Complete Fairness CreamUveda Moisturising Face WashUveda Clarifying Face WashGulabari Rose WaterGulabari Face FreshenerGulabari Moisturising CreamGulabari Moisturising Lotion

Pudin HaraActive AntacidHonitus Cough SyrupHonitus LozengesDabur Badam OilSuper Thanda OilShilajit Gold Dabur Lal TailDabur Janma GhuntiDabur Gripe WaterActive Blood PurifierDabur Balm Strong

RealReal ActivBurrstHommadeLemoneezCapsico

DazzlSanifresh ShineOdomosOdonil Odopic

List of people in board of directors

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Shareholding Pattern

The Details of the shareholding pattern are as under:

As on March 31, 2010 Particulars No. of

share Holders

% of Share Holders

No. of Shares Held

% ofShare Holding

Directors, promoters and family members

28 0.03% 611834473 70.73%

FIIs 118 0.11% 74278471 8.59%Mutual Funds 64 0.06% 31121682 3.60%Insurance companies 27 0.03% 88968460 10.28%NRIs 2764 2.64% 4260203 0.49%Corporates 1303 1.24% 5011529 0.58%Individuals 100492 95.89% 49601431 5.73%Total 104796 100% 865076249 100.00%

Chairman: Dr. Anand Burman

Vice Chairman: Mr. Amit Burman Whole Time Directors Mr. P.D. Narang, Mr. Sunil Duggal and Mr. Pradip Burman

Independent Directors Mr. Bert Paterson, Mr. P. N. Vijay, Mr. R C Bhargava, Dr. S. Narayan and Mr. Analjit Singh

Non Whole Time Promoters, directors

Mr. Mohit Burman

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ENCLOSURE ON THE OPERATING PERFORMANCE OF THE COMPANY

Market Share

The below mentioned brands contribute a value close to $8Bn to Dabur.

Brands Market Share

Honey 75%

Chyawanprash 65%

Hajmola 75%

Real 40%

Vatika hair Oil 8.5%

herbal Digestives 90%

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

in a row.

About 2.5 crore Hajmola tablets are consumed in India every day

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Key Raw Materials

Raw material 2010-11 2009-10 2008-09 2007-08

Sugar & Molasses 31.1 23.88 28.21 26.11

Herbs,Jari Booti & Raw Madhu 140.17 111.12 72.69 71.45

Vegetables Oils 122.52 95.95 83.88 52.94

Chemicals & Perfumery

Compounds 164.2 149.56 110.51 84.79

Key raw materials being used are Herbs, 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. Chemicals and

perfumeries also form a vital part of the raw materials. 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.

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Sales Mix

Segment 2010 2009 2008 2007

Hair Oils 504.84 375.7 306.76 268.1

Tooth Powders & Paste 329.7 300.73 195.75 63.19

Chywanprash 194.3 179.47 171.91 150.07

Honey. 116.88 106.61 85.56 78.14

Hajmola. 90.51 71.49 78.08 72.65

Fruits/Nector/Drinks 76.13 66.34 Nil Nil

Asava-Arishta 56.4 48.97 46.95 53.16

Vegetable Pastes 6 5.15 Nil Nil

Important Inferences:

All the segments have been showing constant growth over the past 4 years.

The main highlight has been the Tooth Powder and paste segment which has shown a

growth of 422% in the past 4 years. This has been the mainstay of the Overall sales.

Major Contributor to Dabur sales has been Hair Oils.

Real Juice and vegetable pastes- These have been the newest ventures wherein the

company has invested and the segment has been doing well since its formation.

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Sales- Domestic or Export

Year Domestic Sales Export Sales

2007 132,454.64 4,513.65

2008 170,549.27 7,253.16

2009 201,293.09 10,485.77

2010 230,162.64 12,205.25

Most of the consumption of Dabur is in-house, that is Domestic and only around 4.3% of the

produce is exported.

The average growth rate over the four years is more for exports (41%) as compared to domestic

(20%). 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.

The domestic growth rate of sales has reduced from 29% in FY2006 to 14% in FY2008. This

may be due to the tough competition in the domestic market and the economic downturn.

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Peer Comparison

RONW

RONW

  2010 2009 2008 2007Dabur 51.2% 61.6% 65.8% 45.4%HUL 116.7% 115.5% 56.5% 58.7%ITC 25.9% 25.9% 25.2% 23.3%

Nestle 112.8% 98.9% 81.0% 87.4%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

DaburHULITCNestle

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. That is, the company is giving lesser returns with the increase

in capital investment by the owners of the company.

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Profit Margins

Profit Margins

  2010 2009 2008 2007Dabur 15.6% 15.2% 14.2% 13.8%HUL 12.2% 12.6% 12.7% 12.2%ITC 22.4% 22.2% 23.3% 24.0%

Nestle 12.4% 11.8% 11.2% 12.5%

Dabur is doing better than most peers as far as the Profit margins are concerned. Dabur has

shown a steady upward trend in the past 4 years where its peers have shown a reduction in atleast

one of the four years.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

DaburHULITCNestle

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Return on Assets

Return on Assets  2010 2009 2008 2007

Dabur 41.2% 55.3% 56.5% 38.9%HUL 96.7% 107.8% 55.1% 57.3%ITC 24.3% 24.3% 24.0% 21.6%

Nestle 104.5% 92.0% 77.8% 84.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

DaburHULITCNestle

The figures may be misleading. It shows a downward trend over the years. That is because the

company is investing more in the long term assets rather than going for short term investment. It

can be said that the results will reflect the same in the next few year

Trend Analysis

(On Next Page)

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Ten Year figures at a Glance (2000-2010)  2000 2001 2002 2003 2004 2005 2006 2007 2009 2010Sales & Other Income 1044.48 1130.43 1119.32 1168.54 1094.31 1238.20 1365.13 1619.74 2112.76 2439.22Index 1.00 1.08 1.07 1.12 1.05 1.19 1.31 1.55 2.02 2.34PBDT 102.59 107.62 96.50 117.58 129.19 182.11 233.91 306.20 390.92 452.42Index 1.00 1.05 0.94 1.15 1.26 1.78 2.28 2.98 3.81 4.41PBT 81.29 85.16 75.51 95.54 113.44 165.01 214.86 284.22 365.17 425.00Index 1.00 1.05 0.93 1.18 1.40 2.03 2.64 3.50 4.49 5.23PAT 77.66 77.63 65.03 84.92 101.20 148.01 189.08 252.08 316.77 373.55Index 1.00 1.00 0.84 1.09 1.30 1.91 2.43 3.25 4.08 4.81Equity Paid-Up 28.52 28.52 28.56 28.52 28.52 28.51 28.51 28.51 28.50 28.48Index 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00Gross Block 359.21 362.12 376.50 297.18 268.16 317.46 328.23 404.30 467.94 518.77Index 1.00 1.01 1.05 0.83 0.75 0.88 0.91 1.13 1.30 1.44Net Working Capital ( Incl. Def. Tax) 304.01 235.32 242.32 190.31 -24.30 -81.66 -38.35 19.06 -33.09 71.61Index 1.00 0.77 0.80 0.63 -0.08 -0.27 -0.13 0.06 -0.11 0.24Current Assets ( Incl. Def. Tax) 412.23 392.85 407.67 406.45 219.89 253.35 285.68 397.78 576.82 768.57Index 1.00 0.95 0.99 0.99 0.53 0.61 0.69 0.96 1.40 1.86Current Liabilities and Provisions ( Incl. Def. Tax) 108.22 157.53 165.35 216.14 244.19 335.01 324.03 378.72 609.91 696.96Index 1.00 1.46 1.53 2.00 2.26 3.10 2.99 3.50 5.64 6.44Total Assets/Liabilities (excl Reval & W.off) 710.24 708.45 775.41 734.85 546.06 715.90 759.60 782.17 1141.62 1565.50Index 1.00 1.00 1.09 1.03 0.77 1.01 1.07 1.10 1.61 2.20Net Worth 320.04 362.20 400.37 411.10 268.65 338.07 447.87 403.19 528.32 738.20Index 1.00 1.13 1.25 1.28 0.84 1.06 1.40 1.26 1.65 2.31Capital Employed 609.06 558.30 613.54 521.11 308.46 386.70 468.44 423.27 545.66 877.18Index 1.00 0.92 1.01 0.86 0.51 0.63 0.77 0.69 0.90 1.44Book Value (Unit Curr) 11.22 12.70 14.02 14.38 9.39 11.80 7.81 4.67 6.11 8.53Index 1.00 1.13 1.25 1.28 0.84 1.05 0.70 0.42 0.54 0.76Market Capitalisation 2336.50 1736.87 1587.94 1026.02 2251.75 3179.04 7106.05 8193.24 9495.36 8538.54Index 1.00 0.74 0.68 0.44 0.96 1.36 3.04 3.51 4.06 3.65

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EPS (annualised) (Unit Curr) 2.61 2.62 2.23 2.86 3.28 4.83 3.05 2.72 3.41 4.02Index 1.00 1.00 0.85 1.09 1.26 1.85 1.17 1.04 1.31 1.54Dividend (annualised%) 100.00 100.00 50.00 140.00 200.00 250.00 250.00 175.00 150.00 175.00Payout (%) 38.26 38.17 22.45 49.01 60.99 51.79 57.32 51.98 43.97 43.53Payout (%) 60.99 49.01 22.45 38.17 38.26 29.31 23.00 19.93 24.85 35.83ROG-Net Worth (%) 22.38 13.17 10.54 2.68 -34.65 25.84 32.48 -9.98 31.04 39.73

ROG-Net Sales (%) 13.97 10.67 -0.41 5.11 -6.59 13.27 9.51 19.19 30.18 15.01

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Trend in Sales

Over the past 10 years the sales figures have increased by 189%. The growth has been uniform

with an exception of one year (2003-04) where the sales dipped. This year also, the sales have

increased by 18.3%.

0

500

1000

1500

2000

2500

3000

Sales

Sales

PBT (Profit before Tax)

PBT has shown an upward growth over the past 10 years. It has grown by almost 450%, much

more than compared to sales growth. So we can infer that there are major sources of non-

operating income.

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0

50

100

150

200

250

300

350

400

450

500

PBT

PBT

PAT (Profit after Tax)

PAT has also shown an upward trend as it directly follows the PBT figures.

0

50

100

150

200

250

300

350

400

450

PAT

PAT

EPS and Dividend

We can see in the figure that the dividend is dependent on the earnings per share (EPS) of the

company. i.e. when EPS increases, the company pays a higher dividend and vice-versa. Initially

from 2000 to 2002 the dividend decreased. This was due to a share split in 2000. Then there was

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an increase till 2005, when it again started to decline. This was because the earnings per share

had reduced. This year both EPS and Dividend increased. The dividend paid this year was 175%

as compared to 150% paid last year.

0

1

2

3

4

5

6

EPSDividend Index

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OBJECTIVES

The objective of my report is to analyze of financial statements focusing on ratios in Dabur India

Ltd. as well as to analyze comparison of financial ratios w.r.t. its competitors for three years. The

nature of my research is EXPLORATORY. Its goal is to shed light on the real nature of process.

It involves a number of steps: -

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RESEARCH METHODOLOGY

SOURCES OF DATA:

1. Primary Data: Primary data for constructing the research instrument was collected through

a customer survey.

2. Secondary data: Resources like Business magazines, Internet and Prowess database were

utilized for gathering secondary information. The study was based on data collected from

secondary sources. These data comprises of the financial reports of Dabur India Ltd., 2007 TO

2011.

These data were obtained from annual reports as well as from the website. Secondary

sources consist of: -

Company’s balance sheets of the last three years.

Company’s income statements of last three years.

The methodologies adopted for calculating different ratios are as per the standard suggested by

different cost as well as financial management book.

3. Research methodology

Data source:

Collection of data from the annual reports of and by the portals and magazines.

Research approach:

Data can be collected in many ways and I have used the following steps to analyze the data .

Collection of information:

After the above steps, I have collected all informations from different sources i.e. Annual

reports and from the other sources provided by Dabur India Ltd.,

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4. Analysis of Information:

This step involves the extractions of findings from the collected data. I drew some facts after

analyzing the information.

5. Conclusion and suggestion:

As the last step I have mentioned the conclusion and suggestions that are relevant to make the

financial statements of Dabur India Ltd.

The objective of my report is to analyze of financial statements focusing on ratios in Dabur India

Ltd. as well as to analyze comparison of financial ratios w.r.t. its competitors for three years. The

nature of my research is EXPLORATORY. Its goal is to shed light on the real nature of process.

It involves a number of steps: -

Define the process and research objective.

Develop the research plan: - The second stage of research calls for developing the most efficient

plan for gathering the needed information. Designing the research plan calls for decision on data

sources and research approach

Data Analysis: - I have used tool i.e. MS EXCEL to analyze the data and draw relevant

inferences.

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DATA ANALYSIS

FINANCIAL ANALYSIS I: ANALYSIS OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

Analysis of Balance Sheet

Horizontal Balance Sheet (Comparison 2009 and 2010)

  2010 2009Increase/Decrease over

2009

 (Rs. In lakhs)

(Rs. In lakhs)

(Rs. In lakhs) %age

SOURCES OF FUNDS :        Shareholder's Funds         Share Capital 8,650.76 8,640.23 10.53 0.12 Reserves Total 65,168.91 44,192.11 20,976.80 47.47Total Shareholder's Funds 73,819.67 52,832.34 20,987.33 39.72Loan Funds:         Secured Loans 825.56 1,644.72 (819.16) (49.81)

Unsecured Loans 13,071.69 88.97 12,982.7214,592.2

4Deferred tax Liability 3,048.50 2,727.97 320.53 11.75Total Liabilities 90,765.42 57,294.00 33,471.42 58.42         APPLICATION OF FUNDS :        Fixed Assets         Gross Block 57,048.09 48,419.78 8,628.31 17.82 Less : Accumulated Depreciation 21,044.98 18,976.77 2,068.21 10.90 Net Block 36,003.11 29,443.01 6,560.10 22.28Investments 43,689.59 27,037.13 16,652.46 61.59Deferred Tax Assets 2,353.09 2,400.74 (47.65) (1.98)Current Assets, Loans and Advances:         Inventories 26,171.64 20,114.69 6,056.95 30.11 Sundry Debtors 11,236.01 10,046.43 1,189.58 11.84 Cash and Bank 14,368.48 6,826.46 7,542.02 110.48 Loans and Advances 22,728.33 18,293.75 4,434.58 24.24Total Current Assets 74,504.46 55,281.33 19,223.13 34.77Less : Current Liabilities and        

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Provisions Current Liabilities 35,138.71 31,722.51 3,416.20 10.77 Provisions 31,510.20 26,540.97 4,969.23 18.72Total Current Liabilities 66,648.91 58,263.48 8,385.43 14.39Net Current Assets 7,855.55 (2,982.15) 10,837.70 (363.42)

Miscellaneous Expenses not written off 864.08 1,395.27 (531.19) (38.07)

TOTAL 90,765.42 57,294.00 33,471.42 58.42

Application of Funds

Fixed assets of Dabur

Dabur owns fixed assets worth 360.03 crores at depreciated value compared to last year’s

294.43 crores . Within the fixed assets plant and machinery, that is, assets directly needed for

production stands at 133.75 crores i.e. 37% of the total fixed assets. Next is the amount invested

in buildings i.e. 117.17 crores. The company has invested substantially higher in buildings.

The advance against capital goods worth 591.77 lakhs has been included in the total fixed assets.

However this have not been received yet. It may be observed that no depreciation has been

provided on freehold land and livestock. The company has almost negligibly increased leasehold

land while substantially increasing the freehold land from last year.

Investments FY 08- 270 crores, FY 09- 437 Crores

Dabur’s investments are more than its fixed assets by almost 76 crores totaling to 436 crores.

The total investment is a substantial figure compared to the total asset size. It has invested almost

117 crores in mutual funds while it has invested 21.5 crores in government bonds. 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.

Page 32 of 95

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 crores. 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 crores while the total sales is around 2400 crores. So

comparatively it is a smaller picture. Also the debts which are considered doubtful is around 12

crores, which is a small figure compared to total debtors.Also it can be seen that the co. has

invested around 100 crores in fixed deposits.

Dabur has around 31.5 crores 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.

Miscellaneous Expenditure

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 substantially, therefore bringing down the misc. expenditure.

Page 33 of 95

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) 0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

5733.03

8628.84 8640.23000000001 8650.76

Series 1

Page 34 of 95

The authorized share capital of the company was 12500 lack equity shares@1 each till 2007.

During the year 2007 the authorized share 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)

Page 35 of 95

0

10000

20000

30000

40000

50000

60000

70000

39053.84

31690.08

44192.11

65168.91

The increase in reserves and surplus in 2010 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.

Share premium Account: Has come down significantly in 07 from 06 because of utilization in

merger. In 08 and 09 the account has increased slightly because of premium on issue of shares.

General Reserve: Large amount has been utilized for merger and also for the issuance of bonus

shares. So it has come down in 07 and has been rising thereafter because there has not been

anymore issue of bonus shares or merger. It is also seen that the company has steadily increased

the transfer from P/L acc to general reserve throughout the years.

Profit and loss acc: The transfer of the remaining profits from the P/L account has risen steadily

over the years. This indicates that the profit of the company has been rising over the years.

Page 36 of 95

Secured Loans

Secured loans of Dabur have come down from 16.44 crores to 8.25 crores. The company has

taken term loans and short term loans from banks. The company has repaid almost half of the

loans in the year, thus the figure for secured loans has come down. The proportion of secured

loans to other sources of funds is very small, suggesting that the company does not depend much

on loan funds. 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 130.7 crores. The co has

taken short term loan from bank to the tune of 110 crores and that the company has taken almost

negligible unsecured loans. The company might be looking to fund some project so it has taken

an unsecured loan this time.

Overall Comment

If we look at the balance sheet we will find that the company is not highly leveraged. It depends

more on internal sources of funds than external sources. The reserves and surplus of the co has

become very high as compared to share cap, thus there is a possibility of bonus shares being

issued in future. The company has very high investments compared to fixed assets and the co has

positive net current assets. This is a good sign for the company.

Page 37 of 95

Analysis of Profit and Loss Account

Horizontal Profit & Loss Account (Comparison 2009 and 2010)

  2010 2009Increase/Decrease over

2009

  (Rs. In lakhs) (Rs. In lakhs) (Rs. In lakhs) %age Less Excise Duty 2,751.50 3,439.26 (687.76) (20.00) Net Sales 239,616.39 208,339.60 31,276.79 15.01 Other Income 4,306.04 2,790.86 1,515.18 54.29 Total Income 243,922.43 211,130.46 32,791.97 15.53         EXPENDITURE :         Cost of Materials 122,243.11 102,833.54 19,409.57 18.87 Manufacturing Expenses 7,076.13 6,985.57 90.56 1.30

Payments to and Provisions for Employees 16,732.46 14,969.23 1,763.23 11.78 Selling and Administrative Expenses 50,901.37 45,827.98 5,073.39 11.07 Financial Expenses 1,333.55 854.50 479.05 56.06 Miscellaneous Expenditure Written Off 394.18 566.79 (172.61) (30.45) Depreciation 2,742.04 2,575.26 166.78 6.48 Total Expenditure 201,422.84 174,612.87 26,809.97 15.35          Balance being Operating Net Profit before Taxation 42,499.59 36,517.59 5,982.00 16.38 Provision for Taxation : Current 4,748.45 4,057.25 691.20 17.04

Deferred (255.09) 75.32 (330.41)(438.67

) Fringe Benefit 650.97 707.81 (56.84) (8.03) Net Profit after Taxation and before Extraordinary Items 37,355.26 31,677.21 5,678.05 17.92

Credit Balance Transferred from Merged Entity 0.00 18.58 (18.58)

(100.00)

Net Profit after Taxation and Extraordinary Item 37,355.26 31,695.79 5,659.47 17.86 Balance Brought Forward 32,322.99 22,915.65 9,407.34 41.05

Provision for Taxation of earlier years written back 0.11 68.55 (68.44) (99.84) Provision for Taxation for earlier year 71.68 154.19 (82.51) (53.51)

Page 38 of 95

  69,606.68 54,525.80 15,080.88 27.66Appropriations         Interim Dividend 6,488.07 6,480.05 8.02 0.12 Proposed Final Dividend 8,650.76 6,480.17 2,170.59 33.50 Corporate Tax on Interim Dividend 1,102.65 1,101.28 1.37 0.12 Corporate Tax on Proposed Dividend 1,470.20 1,101.31 368.89 33.50 Transferred to Capital Reserve 0.95 40.00 (39.05) (97.63) Transferred to General Reserve 9,000.00 7,000.00 2,000.00 28.57 Balance carried over to Balance Sheet 42,894.05 32,322.99 10,571.06 32.70  69,606.68 54,525.80 15,080.88 27.66

Earning per share (in Rs.) (Face Value Re 1/- each)         Basic 4.32 3.66 0.66 18.03 Diluted 4.31 3.64 0.67 18.41 No of Shares         Basic 864,907,642.00 863,826,759.00 1,080,883.00 0.13

Diluted 869,156,259.00 868,807,461.00 348,798.00 0.04

Sales and other income

The sales figure of the company has risen from 201,293.09 lacs to 230,162.64 lacs, thereby

registering a growth rate of 14%. Also the exports of the company has risen from 10,485.77 to

12,205.25 lacs thereby registering a growth rate of 16%.

The other income of the company has increased from 2,790.86 lacs to 4,306.04 lacs. The other

income of the company includes Export Subsidy, Rent Realised, Sale of Scrap, Royalty,

Miscellaneous Receipts, Profit on sale of long term investment, Profit on sale of current

investments, Profit on sale of Fixed Assets.

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 that the company is completely dependent

on the operational activities and does not derive much income from other sources.

Page 39 of 95

Expenditure

The cost of materials has risen from 102,833.54 lacs to 122,243.11 lacs . The cost of materials

includes Raw Materials Consumed, Packing Materials Consumed, purchase of Finished Products

and Adjustment of Stocks in process and Finished Goods. The Raw Materials Consumed

contributes to almost 45 % to the cost of materials. The packaging materials also constitute a

significant portion which shows that FMCG companies spend more on packaging than other

sector companies. There has been a good growth rate in the purchases of raw materials and

packaging materials.

The manufacturing and other expenses have risen from 6,985.57 lacs to 7,076.13 lacs. 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 has also gone up slightly from last

year. It includes Salaries, Wages and Bonus, Contribution to Provident and other Funds ,

Workmen and Staff Welfare, Directors’ remuneration.

The next item is the selling and administration expenses. Rent, advertising and publicity, freight

are some of the components of the it. It includes director’s fees and also freight expenses and

some research and development.

The financial expenses of the company have also risen from last year. It includes interest paid on

fixed loans, bank charges etc.

The company has charged depreciation to the tune of 2742 lacs.

Thus the total expenditure of the company is 201422 lacs, thereby giving Operating Net Profit

before Taxation at 42499 lacs. After providing for taxation the PAT figure has been obtained.

The PAT of the company has risen from 31695 lacs to 37,355 lakhs. The profit which has been

Page 40 of 95

brought from last year has been added. Thereby giving a total amount available for appropriation

as 69,606 lacs.

The company paid an interim dividend @ 75% and Final dividend @ 100% and transferred 9000

lacs to general reserve. Thus the remaining is carried over to the balance sheet.

The EPS of the company is 4.32 increasing from 3.66 last year.

The company has not paid a huge amount as dividend, instead it has kept back the profits. This is

an indication that the company wants to take some expansion project in future.

Page 41 of 95

FINANCIAL ANALYSIS II: ANALYSIS OF PROFITABLITY

MultiStep Profit Margin to Sales Ratios of Dabur India Ltd(common sized)

MULTISTEP PROFIT MARGIN TO SALES RATIOS OF DABUR INDIA LTD 

Particulars Year ended

March 31, 2010  

Year ended March 31,

2009  

Year ended March 31,

2007  

Year ended March 31,

2006  

  Indian Rupees in lacs Ratio

Indian Rupees in lacs Ratio

Indian Rupees in lacs Ratio

Indian Rupees in lacs Ratio

Domestic Sales Less Returns 230,162.64 96.05 201,293.09 96.62 196,537.05

 89.47 171,140.50

 91.72

Exports 12,205.25 5.09 10,485.77

 5.03 26,834.73

 12.22 18,816.50

 10.08

Gross Sales Less Returns 242,367.89 101.15 211,778.86 101.65 223,371.78 101.69 189,957.00 101.81

Less: Excise Duty 2,751.50 1.15 3,439.26 1.65 3,711.03 1.69 3,372.14 1.81

Net Sales 239,616.39 100.00 208,339.60 100.00 219,660.75 100.00 186,584.86 100.00

Cost of Materials 122,243.11 51.02 101,391.54 48.67 97,108.28 44.21 80,772.30 43.29

Manufacturing Expenses 7,076.13 2.95 6,985.57 100.00 7,425.54 3.38 5,711.24 3.06

Cost of Goods Sold(COGS) 129,319.24 53.97 108,377.11 52.02 104,533.82 47.59 86,483.54 46.35

Gross Profit 110,297.15 46.03 99,962.49 47.98 115,126.93 52.41 100,101.32 53.65

Payments to and Provisions for Employees 16,732.46 6.98 14,969.23 7.19 16,666.83 7.59 14,495.75 7.77

Selling and Administrative Expenses 50,901.37 21.24 47,269.98 22.69 63,486.20 28.90 56,522.85 30.29

Miscellaneous Expenditure Written Off 394.18 0.16 566.79 0.27 649.36 0.30 426.24 0.23

Other Income 4,306.04 1.80 2,790.86 1.34 2,591.23 1.18 1,336.68 0.72

Profit before Depreciation, interest and tax- PBDIT 46,575.18 19.44 39,947.35 19.17 36,915.77 16.81 29,993.16 16.07

Depreciation 2,742.04 1.14 2,575.26 1.24 3,429.05 1.56 2,692.46 1.44

Operating Profit -OP/PBIT 43,833.14 18.29 37,372.09 17.94 33,486.72 15.24 27,300.70 14.63

Financial Expenses 1,333.55 0.56 854.50 0.41 1,537.50 0.70 1,638.73 0.88

Profit before tax and extraordinary items – PBTEOT 42,499.59 17.74 36,517.59 17.53 31,949.22 14.54 25,661.97 13.75

Extraordinary Expenses :   0.00   0.00   0.00   0.00

Credit Balance Transferred from Merged Entity 0.00 0.00 18.58 0.01 0.00 0.00 0.00 0.00

Extraordinary Item (Profit/(Loss) on Long Term Trades Investments 0.00 0.00 0.00 0.00 0.00 0.00 -1,274.05 -0.68

Profit before Tax for the year 42,499.59 17.74 36,499.01 17.52 31,949.22 14.54 26,936.02 14.44

Provision for Taxation : Current 4,748.45 1.98 4,057.25 1.95 3,494.04 1.59 2,185.80 1.17

Page 42 of 95

Deferred -255.09 -0.11 75.32 0.04 -136.86 -0.06 353.04 0.19

Fringe Benefit 650.97 0.27 707.81 0.34 374.68 0.17 463.31 0.25

Provision for Taxation of earlier years written back 0.11 0.00 68.55 0.03 22.82 0.01 148.53 0.08

Provision for Taxation for earlier year 71.68 0.03 154.19 0.07 -155.37 -0.07 -51.83 -0.03

Total tax 5,216.12 2.18 5,063.12 2.43 3,599.31 1.64 3,098.85 1.66

Common-Sized Statement Showing Ratio of Expenses to Net Sales

COMMON SIZED STATEMENT SHOWING RATIO OF EXPENSES TO NET SALES

Particulars 2009 2007

  Figures(Rs lacs) % Figures(Rs lacs) %

Net Sales 239616.39 100 208339.60 100

Materials Cost

Raw Materials Consumed : 

i)Opening Stock 5,749.47 2.40 4,692.06 2.25

ii) Add : Purchases 58,172.12 24.28 46,372.97 22.26

Total 63,921.59 26.68 51,065.03 24.51

iii) Less : Closing Stock 7,126.96 2.97 5,749.47 2.76

Total Raw material Consumed 56,794.63 23.70 45,315.56 21.75

Packing Materials Consumed  

i)Opening Stock 3,120.33 1.30 3,074.17 1.48

ii) Add : Purchases 33,199.91 13.86 28,450.87 13.66

Total 36,320.24 15.16 31,525.04 15.13

iii) Less : Closing Stock 3,901.49 1.63 3,120.33 1.50

Total packaging material Consumed 32,418.75 13.53 28,404.71 13.63

Purchase of Finished Products 36,918.57 15.41 29,417.23 14.12

Adjustment of Stocks in process and Finished Goods 

Opening Stock : 

Stock in Process 3,350.14 1.40 3,173.25 1.52

Finished Products 7,891.94 3.29 7,764.87 3.73

Total 11,242.08 4.69 10,938.12 5.25

Closing Stock : 

Stock-in-process 5,311.26 2.22 3,350.14 1.61

Finished Products 9,819.66 4.10 7,891.94 3.79

Total 15,130.92 6.31 11,242.08 5.40

Increase(-)/Decrease in Stock in Process and Finished Goods -3,888.84 -1.62 -303.96 -0.15

Page 43 of 95

Total Material Cost 122243.11 51.02 102833.54 49.36

Manufacturing and Other Expenses 

Manufacturing and Operating Expenses 

Power and Fuel 3,662.56 1.53 3,842.27 1.84

Stores & Spares Consumed 1,041.82 0.43 1,002.37 0.48

Repairs & Maintenance 

— Building 223.94 0.09 219.90 0.11

— Plant & Machinery 373.81 0.16 387.51 0.19

— Others 388.76 0.16 361.65 0.17

Processing Charges 1,385.24 0.58 1,171.87 0.56

Total Manufacturing and Operating Expenses 7,076.13 2.95 6,985.57 3.35

Payments to and Provisions for Employees 

Salaries, Wages and Bonus 13,253.51 5.53 12,071.12 5.79

Contribution to Provident and other Funds 1,690.69 0.71 1,262.36 0.61

Workmen and Staff Welfare 525.85 0.22 482.63 0.23

Directors’ remuneration (including perquisites Rs. 287.12, Previous year Rs. 297.31 under ESOP) 1,262.41 0.53 1,153.12 0.55

Total Payments to and Provisions for Employees 16,732.46 6.98 14,969.23 7.19

Selling and Adminstrative Expenses        

Rent 1,409.78 0.59 1,067.30 0.51

Rates and Taxes 266.72 0.11 184.93 0.09

Insurance 228.08 0.10 272.74 0.13

Sales Tax 101.01 0.04 135.79 0.07

Freight and Forwarding Charges 5,007.01 2.09 5,241.76 2.52

Commission, Discount and Rebate 2,274.61 0.95 2,139.73 1.03

Advertising and Publicity 28,492.76 11.89 24,809.68 11.91

Travel & Conveyance 2,082.48 0.87 1,919.92 0.92

Legal & Professional 977.88 0.41 1,429.18 0.69

Telephone, Fax Expenses 291.93 0.12 307.28 0.15

Security Expenses 299.53 0.13 268.01 0.13

General Expenses 7,853.37 3.28 6,896.20 3.31

Directors’ Fees 10.20 0.00 11.13 0.01

Auditors’ Remuneration: 

- Audit Fee 21.51 0.01 18.53 0.01

- Branch Auditors’ Fee 0.00 0.00  0.00  0.00 

- Reimbursement of Expenses 13.45 0.01 13.41 0.01

- Provident Fund and Certificates 19.09 0.01 19.14 0.01

Total Audit Fee 54.05 0.02 51.08 0.02

Donation 363.01 0.15 458.29 0.22

Page 44 of 95

Contribution for Scientific Research Expenses 165.98 0.07 75.00 0.04

Bad Debts Written Off -   39.30 0.02

Provision for Doubtful Debts 

(Net of Excess Provision written Back Rs 19.63, Previous year Nil) 737.82 0.31 257.71 0.12

Loss on Sale of Fixed Assets 13.67 0.01 165.77 0.08

Provision for Contingent Liability 13.22 0.01 73.38 0.04

Fixed Assets Written Down 258.26 0.11 23.80 0.01

Total Selling and Adminstrative Expenses 50,901.37 21.24 45,827.98 22.00

Financial Expenses 

Interest paid on : 666.58 0.28 336.74 0.16

Fixed Period Loan 318.15 0.13 211.61 0.10

Others 

(Net of Int. received Rs. 112.97 TDS thereon Rs. 7.74 Previous year Rs. 237.94 TDS thereon Rs 12.90) 984.73 0.41 548.35 0.26

Bank Charges 348.82 0.15 306.15 0.15

Total Financial Expenses 1,333.55 0.56 854.50 0.41

Total Manufacturing and other expense 76,043.51 31.74 68,637.28 32.94

Volume-Value-Price Analysis of Consumption of Raw Materials

Page 45 of 95

Raw materials Volume(MT) & %age to Grand Total Value(Rs. In lacs) & %age to Grand Total Average Purchase Price(Rs. In thousands)

  20092007

  2009 2007 2009

  Volume %age Volume %age Value %age Value %age    

Sugar and Molases 17,641.22 18.94 16,940.81 17.65 3,109.80 5.48 2,388.09 5.27 176.28

Vegetables Oils 18,783.28 20.17 16,050.10 16.72 12,251.85 21.57 9,595.28 21.17 652.27Herbs, Jari Booti & Raw Madhu 34,330.61 36.86 31,487.93 32.81 14,016.73 24.68 11,111.98 24.52 408.29Chemicals & Perfumery Compounds 22,379.55 24.03 31,491.87 32.81 16,419.63 28.91 14,955.62 33.00 733.69

Others Raw Materials         10,996.62 19.36 7,264.59 16.03 - -

Total raw materials 93,134.66 100.00 95,970.71 100.00 56,794.63 100.00 45,315.56 100.00 609.81

Volume-Value-Price Analysis of Finished Goods Sold

Class of Goods Volume(MT) & %age to Grand Total Value(Rs. In lacs) & %age to Grand Total Average Purchase Price(Rs. In

  2009 2007   2008 2007

  Volume %age Volume %age Value %age Value %age  

Hair Oils 22805.2 25.39 20050.58 25.34 50483.72 25.10 37569.58 21.52

Chyawanprash 13741.49 15.30 14048.56 17.75 19430.03 9.66 17947.27 10.28

Honey 5392.81 6.00 5309.69 6.71 11688.11 5.81 10661.54 6.11

Tooth Powder & Paste 20696.63 23.04 18033.69 22.79 32970.01 16.39 30073.05 17.23

Hajmola 4339.95 4.83 4856.23 6.14 9050.61 4.50 7148.57 4.09

Asava – Arishta 6954.02 7.74 6296.02 7.96 5639.95 2.80 4896.81 2.80Fruits,Nector & Drinks 15172.51 16.89 9912.79 12.53 7613.04 3.79 6634.15 3.80

Vegetable Pastes 710.76 0.79 626.79 0.79 600.56 0.30 515.06 0.30

Others         63659.74 31.65 59138.42 33.87

Total 89813.37 100.00 79134.35 100.00 201135.8 100.00 174584.5 100.00

Comparative Analysis of Profitability

Growth in sales value :

Domestic Sales : 14.34 %

Export Sales : 16.39 %

Total Sales : 14,44 %

Net Sales : 15.01%

Volume of all the products groups except chyawanprash and Hajmola has increased in

absolute terms.

Total value growth is 15.21 whereas total volume growth is 13.49 only . This shows an

overall higher selling price realization. Tooth powder & paste and Fruits, Nectar &

Drinks registered a negative volume-value growth. A particularly sharp decline of

25.03% in the price realization of Fruits, Nectar & Drinks is accounted for 3.79% of sales

value in 2009.

Average selling price of all the products put together is up by 1.51% which basically

comes due to the rise in selling price of Hajmola , which in turn compensate the loss in

average selling price of Fruits, Nectar & Drinks

Materials Cost and Manufacturing and Other Expenses

Manufacturing and Other Expenses have decreased from 32.94% to 31.74 % of net sales,

i.e an increase in growth rate of 10.79%.

Within the material cost, packing materials consumed has come down from 13.63 % to

13.53% , whereas cost of raw materials consumed has increased from21.75% to 23.70%

.

Cost of raw materials has increased In all types of raw materials.

Within the various raw materials Herbs, Jari Booti & Raw Madhu and Chemicals &

Perfumery Compounds together account for maximum share both in quantity as well as

value. And it is here major cost efficiencies have been achieved.

PBITD

PBITD thus registered a decline of 27 basis points having increased from 19.17% of net sales in

2009-10 to 19.44% in 2010-11.

47

PBIT

PBIT or operating profit has registered a growth of 35 basis points from 17.94 % of net sales in

2009-10 to 18.29% in 2010-11.

Interest

Interest cost increases signifying that debt has increased this year.

Other Income

In comparison to net sales being just 1.80 % and 1.34% for 2010-11 and 2009-10 respectively.

As a percentage of PBT also, it is less signifying that most of the income of Dabur is from main

recurring and productive operations.

PBT

There is an overall improvement of basis points in PBT during 2010-11. It has risen from 17.52

% of net sales to 17.54 %.

PAT

Ultimately PAT improved from 15.09 % of net sales against 15.56% in 2009-10, registering a

growth of 47 basis points. In absolute terms PAT has risen by 18.6 %.

48

FINANCIAL ANALYSIS III: RATIO ANALYSIS

Ratio analysis helps to measure and establish cause and effect relationship between either two items of

balance sheet or of profit and loss account or both balance sheet and profit and loss account . Ratio

analysis is a relative and more focused analysis of financial statements.

Ratios are classified according to their functions and objectives. 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

49

Proprietary Ratio

This ratio relates the share holders’ fund to total assets.

The formula for calculating the proprietary ratio is given by:

Proprietary Ratio = Shareholders’ Funds

Total Assets

Proprietary Ratio

Year 2007-08 2008-09 2009-10 2010-11

Total Shareholders Equity 96386.87 40318.92 52832.34 73819.67

Total Assets 45234.31 42608.98 55898.73 89901.7

Proprietary Ratio 2.130835421 0.946254 0.945144 0.8211154

The higher the proprietary ratio, the better is the long term solvency of the company and the

more satisfied the creditors will be. Here, we see that the proprietary ratio of Dabur India limited

has been showing a decreasing trend over the years.

50

Debt Equity Ratio

This ratio tells how much does the company depend upon its borrowings. 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 2007-08 2008-09 2009-10 2010-11

Total Debt 2057.52 2007.99 1733.69 13898.25

Net Worth 96386.87 40318.92 52832.34 73819.67

Debt-Equity Ratio 0.021346476 0.049803 0.032815 0.188273

This ratio is very small which shows that in future, the company can do a high leveraging. It

presently relies mostly on owners’ funds and very less on the loans. As such, financial

institutions and lenders will be ready to give loans to the company. Ths ratio has been increasing

over the years showing that Dabur India Limited has now started taking loans – both secured and

unsecured, but the proportion of these loans is very less as compared to its proprietors’ funds.

51

Long Term Debt to Equity Ratio or Gearing Ratio

This ratio measures the extent of assets financed through long term borrowings. 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 = Long term Debts

Net Worth

Long Term Debt to Equity Ratio or Gearing Ratio

Year 2007-08 2008-09 2009-10 2010-11

Total Long term Loans 764.22 433.9 611.29 288.94

Net Worth 96386.87 40318.92 52832.34 73819.67

Long-Term Debt-Equity Ratio 0.007928673 0.010762 0.01157 0.003914

This ratio tells whether the company is relying more on its debts or on its capital in order to

finance its operations. We see that this ratio is declining over the years and is very less. This

shows that the company as a policy, doesnot go for loans and is a very cash rich company. It also

has high reserves and surplus. When we see the trend over the past few years, we see that the

company has now started taking loans but Is still dependent on capital only. Thus, the company

can raise huge sums as loans in the future.

52

Interest Coverage Ratio

This ratio measures the capacity of a company to py the interest liability it has incurred on its

long term borrowings, out of its cash profits.

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 2007-08 2008-09 2009-10 2010-11

Interest On Long Term Debt 565.87 443.01 845.5 1333.55

PAT + Interest on Long Term Debt + Depreciation 21379.29 27848.44 35097.97 41430.86

Interest Coverage Ratio 37.78127485 62.86188 41.5115 31.0681

This ratio measures the capacity of a company to pay off its interest liability in long term debts

out of its profits. As we see from the above, this ratio, although decreasing over the years, is

quite high. Thus, we can say that Dabur India limited is making sufficient operating profits in

order to be able to cover its interest costs.

53

Overall Analysis of Solvency Ratios

Over-all Analysis (Solvency Ratios)

Year 2007-08 2008-09 2009-10 2010-11

Proprietary Ratio 2.130835421 0.946254 0.945144 0.8211154

Debt-Equity Ratio 0.021346476 0.049803 0.032815 0.188273

Long-Term Debt-Equity Ratio 0.007928673 0.010762 0.01157 0.003914

Interest Coverage Ratio 37.78127485 62.86188 41.5115 31.0681

From all these ratios, we see that Dabur India Limited mainly depends upon its proprietary

funds. It has very small amount of debts, both long term and short term, as compared to its

capital. As such, the company is highly solvent and can do a very good leveraging in future.

Liquidity Ratios

We have analyzed the following Liquidity ratios

Current Ratio

Liquid/Quick Ratio

Net Working Capital

Operating cash Flow Ratios

54

Current Ratios

A Current ratio measures the ability of a company to discharge its day-to-day bills, or current

liabilities as and when they fall due, out of the cash or near cash, or current assets that it

possesses. It is an important indicator of a company’s current and prospective liquidity position.

Formula for calculation of current ratio is given by:

Current Ratio = Current Assets

Current Liabilities

Current Ratio

Year 2010-11 2009-10 2008-09 2007-08

Current Assets, loans and

advances 74,504.46 55,281.33 39,641.22 28,436.22

Current Liabilities and

Provisions 66,648.91 58,263.48 35,608.47 30,731.00

Current Ratio 1.12 0.95 1.11 0.93

Generally, a low current ratio indicates the potential for a strained liquidity position.

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. Therefore the Current Ratio

of Dabur is less than normal.

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.

55

The company has also invested in long term ventures and mutual funds rather than going for

short term investments. Infact, over the past 10 years, it has invested in 27 different mutual

funds.

Liquid Ratio

It measures as to how quick is the ability of a company to discharge its current liabilities net of

working limits, as and when they fall due,out of cash or current assets net of inventories that it

possesses.

Formula for calculation of liquid ratio is given by:

Liquid Ratio = Current Assets – Inventories – Prepaid Expenses

Current Liabilities

Liquid Ratio

Year 2010 2009 2007 2006

Liquid Assets 25,604.49 16,872.89 11,122.62 6,498.66

Current Liabilities and Provisions 66,648.91 58,263.48 35,608.47 30,731.00

Liquid ratio 0.38 0.29 0.31 0.21

Inventory in case of Dabur forms a significant part of current Assets, hence quick ratio is low. A

low liquid ratio indicates the potential for a strained liquidity position.

However, a low liquid ratio does not necessarily mean a bad liquidity position as inventories are

not absolutely non-liquid.

56

Net Working Capital

Formula for calculation of net working capital is given by:

Net Working Capital = Current Assets – Current Liabilities

Net Working Capital

Year 2010 2008 2007 2006

Current Assets, loans and advances 74,504.46 55,281.33 39,641.22 28,436.22

Current Liabilities and Provisions 66,648.91 58,263.48 35,608.47 30,731.00

Net Working Capital 7,855.55 -2,982.15 4,032.75 -2,294.78

Net working capital has been up and down in the past 4 years. This is because of the varied bank

balance of the company. However, the low net working capital is also because of the high

provisions the company has created.

2006 2007 2008 2009

-4,000.00

-2,000.00

0.00

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

Net working Capital

Net working Capital

57

Operating cash Flow Ratio

This ratio signifies how well a company can cover its liabilities though the cash generated from

operations.

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 2010 2009 2007 2006

Cash Flow to Operations 32,357.31 31,329.01 23,442.75 19,434.49

Current Liabilities and Provisions 66,648.91 58,263.48 35,608.47 30,731.00

Operating Cash Flow Ratio 0.49 0.54 0.66 0.63

We can again see a downward trend again due to the perishable inventory and high provisions

58

Overall Analysis of Liquidity Ratios

Over-all Analysis (Liquidity Ratios)

Year 2010 2009 2007 2006

Current Ratio 1.12 0.95 1.11 0.93

Liquid ratio 0.38 0.29 0.31 0.21

Net Working Capital 7,855.55 -2,982.15 4,032.75 -2,294.78

Operating Cash Flow Ratio 0.49 0.54 0.66 0.63

2006 2007 2008 20090.00

0.20

0.40

0.60

0.80

1.00

1.20

Current RatioLiquid RatioOperating Cash Flow Ratio

A major parameter for all the liquidity ratios is the Liabilities that the company has. We can see

above that all the ratios are coming out to be less than normal. This is because the company has

high provisions hence increasing the total liability for the company.

Also the Liquid ratios above are extremely low when compared to the Current ratios. This is

because the inventory forms a significant part of the current assets and we know that the

inventories are not as liquid. Low net-working capital follows the low current ratios.

Also, the low operating cash flow ratios doesn’t mean that there isn’t enough cash flowing

through operations. It is because of the high value of the denominator i.e. Liabilities.

59

These unusually low ratios are not just confined to Dabur. This is a general trend all across the

FMCG sector.

TURNOVER RATIOS

Financial ratios related to sales or volume, i.e, those ratios which signifies the resources

efficiency comes under Turnover Ratios. For example, accounts receivable turnover, also

known as efficiency ratios and assets turnover, conversion of receivables into cash comes under

this category. These measure efficiency of converting assets into cash. 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. It is therefore important for analysts to study the turnover ratios. Five

major ratios under this category are:

Fixed Asset Turnover Ratio

Net worth Turnover Ratio

Inventory Turnover Ratio

Debtors Turnover Ratio

Creditors Turnover Ratio

60

2006 2007 2008 20090

1

2

3

4

5

6

7

8

Fixed Asset Turnover RatioNet Worth 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.

Formula for calculation of fixed asset turnover ratio is given by:

Fixed Asset Turnover Ratio = Net Sales

Net Block of Fixed Assets

Fixed Asset Turnover Ratio

Year 2010-11 2009-10 2008-09 2007-08

Net Sales 2,39,616.39 2,08,339.60 1,60,042.90 1,34,278.81

Net Block of Fixed Assets 36,003.11 29,443.01 23,904.05 19,883.68

Fixed Asset Turnover Ratio 6.65 7.08 6.70 6.75

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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. This indicates that the company is not

utilizing its fixed assets well. This is an area of concern for the company as the growth is not

very significant.

62

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. In other words, it is the efficiency in the resource utilization from the angle of the

residual interest, ie. the equity shareholders.

Sales to receivables (or turnover ratio): Net Sales / Accounts Receivable—measure the annual

turnover of accounts receivable. A high number reflects a short lapse of time between sales and

the collection of cash, while a low number means collections take longer. It is best to use average

accounts receivable to avoid seasonality effects.

Formula for calculation of net worth turnover ratio is given by:

Net Worth Turnover Ratio = Net Sales

Equity Shareholders’ Funds

Net Worth Turnover Ratio

Year 2010-11 2009-10 2008-09 2007-08

Net Sales 2,39,616.39 2,08,339.60 1,60,042.90 1,34,278.81

Equity Shareholders fund or Net

Worth 72,955.59 51,437.07 38,337 41,499.39

Net Worth Turnover Ratio 3.28 4.05 4.17 3.23

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. This is again an area of

concern for the company as overall profitability can be increased by utilizing net worth properly.

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Inventory Turnover Ratio

Formula for calculation of fixed asset turnover ratio is given by:

Inventory Holding Period= InventoryCost of goods sold

∗365

2006 2007 2008 200962

64

66

68

70

72

74

76

Inventory Holding Period

Inventory Holding Period

Inventory holding period: 365 / Annual Inventory Turnover—calculate the number of days, on

average, that elapse between finished goods production and sale of product.

Inventory Holding Period

Year 2010 2009 2008 2007

Inventory 26,171.64 20,114.69 15,736.94 11,560.90

Cost of goods sold

1,29,319.2

4

1,09,819.1

1 82,192.38 61,256.77

Inventory Holding Period 73.86 66.85 69.88 68.88

64

Inventory holding period has increased by 7 during the last year. This shows poor inventory

management during this period. Also the holding period is increasing over the years from the

past data . So the company has to take care its inventory operation.

Collection Period and Credit Period

0

20

40

60

80

100

120

140

Collection period Credit Period

65

Debtors Turnover Ratio

Sometimes referred to as a collection ratio, the average collection period has to do with the

relationship between Accounts Receivable and the time frame in which those outstanding

payments are received. Essentially, 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.

Formula for calculation of debtors turnover ratio is given by:

Collection Period=RecievablesTotal Sales

∗365

Collection Period

Year 2010-11 2009-10 2008-09 2007-08

Recievables 11,236.01 10,046.43 6,097.87 2,694.25

Total Sales

2,42,367.

89

2,11,778.

86

1,63,736.

12

1,36,968.

29

Collection period allowed to

Customers 16.92 17.31 13.60 7.17

Though there was a considerable increase in the Collection period allowed to the customers for

the past years, the trend changed in the present year and collection period has decreased from

17.31 days last year to 16.92 days. Still the ratio is low which suggests that the company has

managed its debtors well.

66

67

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.

Formula for calculation of credit period is given by:

Credit Period= PayablesPurchases

∗365

Creditors Turnover Ratio

Year 2010 2009 2008 2007

Payables 35,138.71 31,722.51 27,770.31 19,342.06

Purchases 1,22,243.11 1,02,833.54 76,798.44 57,511.22

Supplier’s Credit Period 104.91 112.60 131.98 122.75

Supplier’s credit days has increased from 112.60 days last year to 104.91 days this year. The

collection period is less as compared to the credit period enjoyed by the company which is in

favor of the company. This means that the company has managed its debtors well and the

suppliers are having a high degree of faith in it, it also enjoys a good reputation with the

creditors.

Moreover, taking a general trend, collection period is on an increase except for the present year

whereas credit period has decreased as compared to the last year. But since there is a larger

difference between both the periods, the company will only have to take care of it in the long-

run.

68

Du Pont Analysis

With Reference To Return on Net Worth

Du Pont Analysis with Reference to RONW

Year 2009-10 2010-11

Net Profit Margin 15.20% 15.58%

Net Worth Turnover 4.61 times 3.83 times

RONW 70.10% 59.79%

The RONW has worsened from last year. The reason is because of the worsened Net Worth

Turnover. Reserves and Surplus have gone up substantially but the profit has not grown with the

same proportion. Thus the company has to focus more on improving the Resource Efficiency

than the operating margin.

With Reference To Return on Total Assets

Du Pont Analysis with Reference to ROTA

Year 2009-10 2010-11

Net Profit Margin 15.20% 15.58%

Total Asset Turnover 4.61 times 3.63 times

ROTA 55.28% 41.15%

The ROTA has worsened from last year. The reason is because of the worsened Total Assets

Turnover. Total Assets have gone up substantially but the profit has not grown with the same

proportion. Thus the company has to focus more on improving the Efficiency of assets than the

69

operating margin. They have made a major investment in assets that are yet to generate sales.

Thus in the coming years ROTA is expected to increase.

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 2010-11 2009-10Profit after Tax 37355.27 31677.21Weighted average number of shares outstandingBasic 864907642 863635509Diluted 869156259 869063210Earning per Share (face value Re. 1 per share)Basic 4.32 3.66Diluted 4.3 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.

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.

70

Analysis of EPS Information Disclosed

In case of Dabur, as the weighted average number of shares outstanding is different for both

dilute and basic, therefore we are having different value of BEPS and DEPS even after having

the same net profit figure.

Notes 12 and 8 regarding Related Party Disclosures under Accounting Standard 18

Managerial Remuneration under section 198 of the Companies Act, 1956 paid or payable during the year, to the Directors: 31.03.2010 31.03.2009Salary 232.9 219.2Commission (as computed below) 0 27.79Contribution to Provident Fund 27.95 29.66Residential Accommodation 139.74 131.55Medical & Leave Travel Benefit 3.47 4.19Contribution to Superannuation Fund 34.95 43.41Others (Including Rs. 287.12 Previous year Rs. 297.31 under stock option Scheme) 780.14 683.07  1219.15 1138.87Computation of net profit in accordance with Section 198 and section 309 (5) of the Companies Act,1956 and calculation of    Director’s commission    Profit for the year before tax as per Profit & Loss Account 42499.59 36517.59Add: Managerial remuneration 1219.15 1138.87Directors fees 10.2 11.12Provision for doubt full debts 737.82 257.71Less: Capital Profit 0.95 40Adjusted net profit 44465.81 37885.29Maximum permissible remuneration 4891.23 4167.38Maximum commission payable: 444.65 378.85Actual commission (To one non whole-time Director) NIL 27.79

71

Analysis of Disclosures and Managerial Remuneration

The operating results and financial position of a company may be affected by a related

party relationship, such as holding, subsidiary company, associates, joint ventures etc as

related parties may enter into transactions which unrelated parties would not.

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),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.

1.3% of Total Sales to fellow subsidiaries is quite a material-related party transaction.

An equity contribution of Rs. 1,950 lacs is stuck with the subsidiaries.

In comparison to last year loan repayment of Rs. (2,272.28 lacs this year there is nil

repayment.

Guarantees & collateral given to subsidiaries is increased by 48.57% to Rs. 5,860.35 this

year.

Employee stock option scheme has increased by 35.41% to Rs. 44.24 lacs this year.

The idea is to prevent excessive withdrawal by way of remuneration to whole-time

directors, out of the profits generated by the company.

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.

The users of financial statements, by reviewing this amount may reach a conclusion

regarding its reasonableness in regard to net profits earned by the company.

72

The total remuneration paid by Dabur as per note 8 is a figure of 1219.15 lacs against a

huge net profit figure of Rs. 42499.59 lacs after charging such remuneration. This is less

than reasonable withdrawal out of the net profits.

Mr. Pradip Burman, a whole time director, voluntarily has foregone his salary and part of

service benefits w.e.f. 1st October 2009. Amount foregone on account of salary and

service benefits work out to Rs.37.60 and Rs.7.49 respectively.

Note 22 regarding Segment Reporting under Accounting Standard 17

Based on the guiding principles given in Accounting Standard on Segment Reporting, the

company’s primary business segment is Consumer Care Division(CCD). It addresses consumer

needs across the entire FMCG spectrum through four distinct business portfolios of Personal

Care, Health Care, Home Care & Foods.

Disclosure of types of products in the CCD segment is in conformity with para 58 of the AS.

Disclosure of segment revenue, result assets, liabilities, capital, expenditure, depreciation and other non cash charges on account of provision for pension and gratuity in conformity with para 40 of the AS.

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.

The company’s corporate strategy aims at creating multiple drivers of growth anchored on its core competencies. The company is currently focused on following business ie Consumer Care business, Consumer Health business and food.

73

Segment Analysis for the year ended 31-03-09

Segments Capital Employed PAT

Rs. in lacs % of Total Rs. in lacs % of Total

1 Consumer Care Business 33,451.00 45.85 52,099.00 139.472 Consumer Health

Business6,295.00 8.63 5,593.00 14.97

3 Food 8,840.00 12.12 5,326.00 14.264 Others 3,298.00 4.52 131.00 0.355 Unallocated 21,071.00 28.88 -25,793.00 -69.05  Company as a whole 72,955.00 100.00 37,356.00 100.00

45.85% of capital employed in ‘Consumer Care Business’ segment contributing an

astronomically high 139.47% of PBT. The performance of this segment is affected

badly by ‘Unallocated’ segment, which has returned a loss on 28.88% of capital

employed therein.

As against this, a high 28.88% of capital employed in ‘Unallocated’ segment, higher

than the ‘Consumer Health Business’ segment, but it contributes a loss of 69.05% of

PBT.

8.63% of capital employed in ‘Consumer health Business’ segment is contributing a

good figure of 14.97% to PBT.

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.

74

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.

Second part comments on fixed assets, inventories, related party transactions, internal

audit and control system and outstanding undisputed statutory liabilities.

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. Let

us look at each one of them in detail:

First part:

Obtaining information and explanation necessary for audit.

Opinion on maintaining proper books of account.

Assertion about agreement of financial statements with the books of account.

Opinion on the compliance of mandatory accounting standards.

Comment on whether any director of the company is disqualified from being appointed

as such as per the norms of the Companies Act.

75

Assertion about agreement of balance sheet, profit and loss account and cash flow

statement with the accounting principles generally accepted in India.

Second part:

Fixed assets:

Comment on records of fixed assets.

Comment on fixed assets’ adjustments between physical verification and records

in the accounts and extent thereof.

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.

Comment on the procedures used for the verification of inventories.

Comment on records of inventories.

Related party transactions

Comment on loans granted to/taken from companies, firms or other parties in

which directors are interested to determine whether they are prejudicial to the

interests of the company or not.

Comment on the internal control system commensurate with the size of the

company and nature of business.

Comment on contracts or arrangements in the register maintained under section

301 of the Act 1956.

Comment on the deposits accepted from public.

76

Comment on the documents and records maintained for the loans and advances

granted.

Comment on the preferential allotment of shares.

Comment on creation of securities / charges in respect of debentures issued and

outstanding.

Comments on the company’s regularity in repayment of dues to any financial

institution, bank or debenture holder.

Comments on the absence of disputed due on account of wealth tax and cess.

Comment on money raised by public issues.

Comment on the preferential allotment of shares under their ESOP Scheme.

Internal audit:

Comment on the internal control system commensurate with the size of the

company and nature of business.

Outstanding undisputed statutory liabilities

Comment on the deposits undisputed statutory dues including provident fund,

fund, investor education and protection fund, service tax etc. with appropriate

authorities.

77

FINANCIAL ANALYSIS VI: ANALYSIS OF DIVIDENT POLICY

The company has been very non-uniform and inconsistent in paying dividends to its

stakeholders. The Dividend ranges from 50% in 2002 to 250% in 2005. From 2003 onwards

Dabur has been paying a dividend over 100% consistently. In 2010, the company paid an interim

dividend of 75% (Re. 0.75 per share) on February 10, 2010 and has recommended a final

dividend of 100% (Re. 1 per share). So the aggregate dividend for the year comes our to be

175%, an improvement over the previous financial year (150%).

0

1

2

3

4

5

6

EPSDividend Index

78

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. AS-3 deals with the 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. (as at 31-Mar-09)

The cash flow statement clearly classifies the cash flow from operating, investing and

financing activities.

The disclosure of cash flow from operating activity is done through indirect method.

All Accounting Policies followed by the company abide by the GAAP and thus are

permissible.

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.

Comparative Statement –Dabur India Limited has disclosed a comparative position of

each element of cash flow statement.

Vertical form of cash flow statement has been used by Dabur India Limited. This model

provides following benefits:

Disclosures for cash inflows and outflows for the different activities: operating,

investing and financing at one place.

79

Information is available at a glance, enabling quick review and analysis

Dabur India Limited has used indirect method for working out the cash flow from

operating activities. 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’. This is adjusted with ‘Working capital

changes’ to obtain ‘Cash generated from operating activities’. After deducting interest

paid, tax paid and Corporate tax on dividend, ‘Net Cash from Operating Activities’ is

obtained. The ‘Net Cash from Investing Activities’ is obtained by analyzing the Sale and

Purchase of Assets and purchase and sale of investments in subsidiaries. The cash flow

from financing activities includes proceeds of share capital and premium,

repayment/proceeds of loans and liabilities, dividend to arrive at ‘Net Cash generated in

Financing Activities’. The summation of ‘Net Cash from Operating Activities’(A), ‘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.

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. The names of

Chairman, two Whole Time Directors, GM (Finance) and Company Secretary are also

written.

Activity Wise Analysis

Operating Activities

All of the cash inflows of Dabur India Limited during 2010 have been contributed by

operating activities indicating a strong cash position.

80

Dabur India Limited had a net cash outflow in respect of working capital which is an

indicator of inefficient management of working capital.

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 its worn out fixed assets.

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.

For investing activities Dabur India Limited has had a net cash outflow indicating a

favorable cash position.

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.

It has also shown huge sums of borrowings and keeping in account the strong financial position if

the company, it is not clear why the company has engaged into borrowings.

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 also shows that the company is making huge

profits.

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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. The reasons are simple and more than clear. It has been

generating cash from operating activities and utilizing this money in expanding its business and

in paying dividends.

However, 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. Dependence on this

income can prove detrimental for the company.

Ability to Generate Positive Cash Flows from Operations in Future

Dabur India Limited has generated cash from operations in both the years. The amount, though

increased this year, is marginally higher than last year. 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. This indicates that the company has a good ability to generate

cash in the future also. Given the huge amounts of money spend on expanding the business, its

revenues are only expected to increase in future.

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FINANCIAL ANALYSIS VIII: ANALYSIS OF CAPITAL MARKET VALUATION

To analyze the capital market valuation of Dabur India Limited, we have considered the following ratios:

Earnings Per Share(EPS)

Price Earnings Ratio(P/E Ratio)

Market Capitalization

Earnings Per Share(EPS)

2005-06 2006-07 2007-08 2008-090

1

2

3

4

5 4.323.67

2.923.3

Earnings per Share of Dabur

In the FY 07 the PAT has gone from 18,908.37 lacs to 25,207.63 lacs. But the EPS has gone

down because there has been an issue of bonus shares by the company. The company issued

bonus shares in the ratio 1:2, thus the no of Equity shares of the co has increased from

573302784 to 862883808 in FY07. Thus the Reserves and Surplus have also gone down. 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). The company wanted to boost the confidence of the investors

towards the company and indicating to the market that the company has strong fundamentals.

However even after one year in Dec 07 the share price of the company could reach 110, even

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Dabur Hul Colgate Godrej0

5

10

15

20

25

4.32

11.47

21.34

6.29

EPS of peers in 2009

when the markets were in a bullish run. One of the reasons of the damp reaction by the market

could be the stagnant dividend the co. issued to the shareholders compared to its peers like HUL.

The EPS for 2010 shows that the EPS of Colgate is very high compared to Dabur and HUL. But

the PAT of Dabur is more than Colgate. One of the main reasons is that the no of issued shares

of Colgate is very less compared to Dabur.

Price Earnings Ratio (P/E Ratio)

Dabur HUL Godrej P & G Marico Ltd Colgate0

5

10

15

20

25

30

35

40

29.16

23.48

34.6

24.44

37.3234.6

PE Ratio Comparison

Series1

PE ratio of these companies is dated 25th aug,09. The PE ratio changes every day as the stock

price fluctuates. PE is a much better comparison of the value of a stock than the price. For

example P & G has a stock price of 1170 while Dabur has a stock price of 140. However since

the PE of Dabur is more than P & G it can be considered a more expensive stock. Since Dabur

has a higher PE than P&G it can be expected to grow and have higher earnings in the future.

Dabur’s PE is larger than HUL which is a bigger company by market Cap, Pat etc but the PE

indicates that comparatively investors confidence in Dabur is no less than HUL.

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The industry PE is 26.70. 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 PE ratio of a company may also become low if it reports higher earnings. However in the

long run the PE ratio will rise as the higher earnings will increase the market sentiment, thereby

increasing the market share eventually.

Market Capitalization

Dabur Colgate godrej HUL0

10000

20000

30000

40000

50000

60000

70000

Market Cap (in Rs. Cr)

Market capitalization is an important indicator because it may happen that the share price of a

company is low compared to its peers. However it might so happen that the company has issued

a very large number of equity shares compared to the other company. 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. The share price of Dabur is around 140 while the share price of colgate is

around 600. But the no of shares issued of Dabur is 8650.76 lacs and the no of shares issued of

colgate is 1360 lacs, thus we see that there is a huge difference in the no of shares issued by both

the company. Therefore market capitalization gives a more realistic idea of comparison of the

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companies rather than only share price. HUL has issued around 21800 lacs equity shares and its

share price is around 280, thus it has a very high market capitalization. It comes in large caps

companies while Dabur is comparatively a smaller company.

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 2010-11

Divident Per Share 1.75

Market Appreciation 8.50

Yield to Investors 6.83%

Thus we see that there has been a negative yield to investors. The main reason is because of the

crash in the stock markets due to the global recession. Dabur’s share has fallen almost by 9%. .

During the same period the sensex has fallen from 15626 points to 9708 points which means it

has fallen almost 38%. Therefore we can conclude that the Dabur Share has shown strong

resilience even when the markets were not performing well.

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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. 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 should have furnished more information about the qualifications of the

board of directors. should have given more information about the management principles

that are followed by company management apart from the code of conduct. 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.

The roles and scope of the board of directors and various committees are clearly spelt out.

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.

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 company has adequate internal control system wherein the compliance of various

standards can be enforced effectively. This is reflected in the roles assigned to various

board committees and its risk management structure.

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Analysis of the implications of the information provided

Bringing transparency in the corporate affairs particularly at the board level.

There are zero shareholders grievances in 2010 which indicates the fast resolution of

complaints by the company.

Shareholders are kept updated about company’s performance and related matters

regularly and the necessary data is available easily.

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. It

shows company’s low tolerance for malpractices.

The company has strived to be a responsible citizen as mentioned in the section for the

policy for environment control and reduction of pollution, and policy for occupational

health & safety.

The frequency of the AGM which in this case if 1per year, is a good indication of the

company’s overall health.

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.

The company strives to boost investor confidence.

Recommendations to the management n the strategic issues

The company must enforce all the non-mandatory requirements apart from the mandatory ones.

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ANALYSIS OF DIRECTORS’ REPORT

The report’s content are summarized hereunder:

Financial ResultsDividendAcquisitionsCorporate GovernanceDirectorsDirector’s Responsibility StatementChange in capital structure and listing of sharesAuditors and their reportCost auditorsConsolidated financial statementsInternal control systemFixed DepositsNature of businessSubsidiariesEmployee Stock option planConservation of Energy, Technology, Absorption, Foreign Exchange Earnings and OutgoGroup for interse transfer of sharesHealth Safety and Environmental ReviewQuality ReviewAwards & RecognitionsIndustrial RelationsAcknowledgements

Dabur has complied with all the requirements under section 217 of the companies act. Some

useful additional information, for example, ‘Health Safety and Environmental Review’ and

‘Quality Review’ has also been provided.

SWOT ANALYSIS

Strengths

Financials: Turnover increased 15.5%, PAT increased by 18%,dividend risen to 175% to 150% last year, proposed acquisition of FEM Care Pharma Limited (FEM), a FMCG

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Company listed on Bombay Stock Exchange, well placed, proper and adequate internal control system.Successful introduction of a host of a new product.Good communication strategies with a host of brand ambassadors.40% increase in revenue in international business.Good rate of growth of health division.20% growth rate in consumer health division.Dabur red toothpaste became a 100 cr. Brand

Weakness

Loss on newly launched retail venture NEWUOral care segment reported a growth rate of only 4.8%

Opportunities

High demand growth in FMCG sectorIncreased penetration of FMCG products in rural marketNew opportunities in overseas market

Threats

Slowdown in economyMounting cost pressureSharp currency fluctuationsSlowdown in organized retail sectorInflationary environment in the country

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CONCLUSION

After analyzing the financial statements of the Dabur by the help of various ratios, I

observed that the trend of growth is positive.

Dabur has strong performance with robust top line growth and high quality earnings in

all business segments. The performance is more satisfying when viewed in the light of

the challenging business environment of the Ayurvedic industry, Pharma, FMCG, Food

in the export and domestic markets.

Current ratio has continuously increased but the company needs to raise more of its

current assets and quick assets so that it can fulfill all its obligations and can raise the

amount of working capital for short- term investment. Earnings per share have increased

which would surely help the organization in expanding its market share.

Gross income also show the positive trend of growth, net turnover has also increased and

return on net worth has also grown. All these ratios show that the trends of profit are

growing at a rapid rate and thus it helps the company to meet the latent demands of

customer too.

Moreover, after analyzing and comparing the financial statements of Dabur w.r.t. its

competitors I observed that Dabur is itself a big player in Chyawanprash industry as most

of its ratios are far better than Zandu and Emami.

At last I can say from the above study that Emami (Himani Sona-Chandi Chyawanprash)

is also showing positive growth rate and can emerge as a great competitor for Dabur.

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RECOMMENDATIONS

• The Company already had a 65.8% market share in India. It would be difficult to increase the

market share substantially. Hence the company should focus on increasing the market size.

• The company should promote Chyawanprash as an all season product and try to remove the

misconception that it is only to be consumed during the winters to strengthen the immune system

against Winter Infections and Allergies.

• It should occupy the shelf space next to the Health drinks in retail stores so that they can

remind the consumer of its claim of a comprehensive health supplement.

• Now that the company is successfully shedding its image of being associated with middle and

old age people it could also target younger generation to expand its market.

• Since Dabur Chyawanprash is perceived to be a Health supplement that aids in the

enhancement of the Immunity against winter related health problems , hence it should be

promoted strongly in areas where winters have traditionally been harsh and long.

• Chyawanprash is traditionally consumed by the middle class segment, whereas the higher

segment prefers health drinks like Bournvita & Horlicks to health supplements like Dabur

Chyawanprash.However this segment can be penetrated with a promotional focus on Ayurvedic

benefits and traditional Indian measures, which this segment values at a premium.

• The company needs to shift focus from a traditional value system that it projects and add to its

portfolio a contemporary touch that would include Children and youth in the Chyawanprash

segments also. Children are a primary next focus for the company and it needs to channelize

adequate promotion focus through such media as Cartoon Channel and other children related

programmes.

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LIMITATIONS

1. The time duration was less for the project as this project includes both financial and marketing

(survey) portions.

2. Some databases were not available due to the policy of company. So some part of analysis would

have been better if this limitation was not there.

3. Some sorts of problems were involved during marketing survey.

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BIBLIOGRAPHY

Annual report of DIL.

Organizations magazines

Financial Management: I.M.Pandey, M.Y.Khan &P.K.Jain

http://www.moneycontrol.com/

http://www.dabur.com/

http://www.zandu.com/

http://www.emami.com/

http://www.baidyanath.com/

http://www.equitymaster.com/detail.asp?date=5/19/2000&story=6

http://www.oppapers.com/essays/Marketing-Report-Dabur-Chyawanprash/167474

http://www.antya.com/detail/Dabur-Chyawanprash/17246

http://dabur.com/en/products/Health_Care/Health_Supplements/Chyawanprash/

http://www.business-standard.com/india/news/

http://marketingpractice.blogspot.com/2008/01/dabur-chyawanprash-zaroorat-hai.html

http://businesstoday.intoday.in/index.php?option=com_content&task=view&id=9077

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