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PROJECT REPORT
ON
TO STUDY THE WORKING CAPITAL MANAGEMENT OF DABURINDIA LTD.
SUBMITTED IN PARTIAL FULFILLMENT FOR THE
AWARD OF THE
DEGREE OF BACHELOR OF BUSINESS
ADMINISTRATION 2009-2012
UNDER THE GUIDANCE OF
MS. SUPRIYA MAHESHWARIFACULTY, MAIMS
SUBMITTED BY:
AAKANSHA PAHLAJANI
Roll no-02414701709BATCH No.2009-2012(BBA SEM 3rd)
Maharaja Agrasen Institute of Management Studies
Affiliated to Guru Gobind Singh Indraprastha University, DelhiPSP Area, Plot No. 1, Sector 22, Rohini Delhi 110086
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Table of CONTENTS
Student declaration..i
Certificate from Guide.ii
Acknowledgementiii
Executive Summary..iv
List of Tables.vi
List of Graphsvii
List of Charts.viii
CHAPTER -1 INTRODUCTION Page no.
1.1 Introduction to Working Capital
1.2 Company Profile
CHAPTER-2 METHODOLOGY
2.1. Purpose of the study..
2.2. Research Objectives of the study..
2.3. Research Methodology of the study.
2.3.1 Research Design.
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2.3.2 Data Collection
2.3.3 Limitation .
CHAPTER -3 Findings and Analysis.
3.1 IT Initiatives
3.2 Financing of Working Capital
3.4 Sources of Working Capital
3.5 SWOT Analysis
3.6 Competitors
3.7 Comparison of working capital
Of different companies
CHAPTER-4 Suggestions.
CHAPTER -5 Conclusions ..
CHAPTER-6 Limitation..
Bibliography
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STUDENT DECLARATION
This is to certify that I have completed the Project titled To Study The Working capital management of
Dabur India Ltd. under the guidance of Ms Supriya Maheshwari in partial fulfillment of the
requirement for the award of degree of Bachelor of Business Administration at Maharaja Agrasen
Institute of Management Studies, Delhi. This is an original piece of work & I have not submitted it
earlier elsewhere.
Date: Signature:
Place: Name: Aakansha Pahlajani
University Enrollment No: 02414701709
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CERTIFICATE FROM THE INSTITUTE GUIDE
This is to certify that the project titled To Study The Working Capital Management of Dabur India
Ltd is an academic work done by AAKANSHA PAHLAJANI submitted in the partial fulfillment of
the requirement for the award of the degree of Bachelor Of Business Administration from Maharaja
Agrasen Institute of Management Studies, Delhi, under my guidance & direction. To the best of my
knowledge and belief the data & information presented by her in the project has not been submitted
earlier.
Signature :
Name of the Faculty: Supriya Maheshwari
Designation : Faculty MAIMS
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ACKNOWLEDGEMENT
I take this opportunity to express my profound sense of gratitude and respect
to all those who helped me throughout the duration of this project. I express
my sincere gratitude towards Dr. N.K. KAKKAR the director of our institute,
for being a continuous source of inspiration and motivation. It gives me
Immense pleasure to knowledge my indebtness and sense of my gratitude to
Ms. Supriya Maheshwari project coordinator for the project undertaken.
I would immensely thank the other faculty members of the institute for providing
me immense support and guidance to complete the project.
Aakansha Pahlajani02414701709
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EXECUTIVE SUMMARY
Dabur India Limited has marked its presence with some very significant achievements and today
commands a market leadership status. Our story of success is based on dedication to nature, corporate
and process hygiene, dynamic leadership and commitment to our partners and stake holders.
Further the project discusses the meaning, objectives, significance of the research, the overall
methodology applied and the also enumerates the sources of data collection. It should be remembered
that the project is prepared using secondary sources of data and no primary sources have been used.
The project gives a brief history of Dabur India Limited, its founders and leaders. It also gives brief
information of the board of directors managing the company.
Dabur India limited has three major strategic units namely Family Products Division, Dabur Ayurvedic
Specialties and Health Care Products. It discusses the principles followed by the company.
The project also gives brief information regarding the products manufactured by Dabur India Limited-
Health Care Products, Personal Care Products, Foods, Ayurvedic Specialties and the International
Range of products.
Dabur India Limited spreads world wide and not only in India. In Dabur India Limited knowledge and
technology are key resources which have helped the Company achieve higher levels of excellence and
efficiency.
The project discusses about the Working Capital Management of Dabur India Limited. A good way to
judge a company's cash flow prospects is to look at its Working Capital Management (WCM). Cash is
the lifeline of a company. If this lifeline deteriorates, so does the company's ability to fund operations,
reinvest, and meet capital requirements and payments. Understanding a Companys cash flow health is
essential to make investment decisions.
The project at this stage began with the research of the financials of Dabur India Limited through the
official website of the company www.dabur.com. Basically the purpose for the research was to
understand as to what exactly is working capital, why do companies require working capital, what is the
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ideal ratio of working capital to be maintained by the Company, etc. After the research data was
collected which was to be analyzed and compared with the data of other companies (Hindustan Lever
Ltd., Cadbury India Ltd., Nestle India Ltd., Britannia Industries and Marico Ltd.) to see how well the
company is handling and managing its finances.
The collected data was sorted out as per the requirements of the project. The data till the year 2004-
2005 has been analyzed and the working capital and ratios for six major FMCG companies that are:
Dabur India Ltd., Hindustan Lever Ltd., Cadbury India Ltd., Nestle India Ltd., Britannia Industries and
Marico Ltd. have been compared.
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PURPOSE OF STUDY
The main emphasis is on Dabur India Ltd. With the overall turnover of Rs 1268.72 crores.
This study will include following objectives:
To study Dabur India Ltd. evolution and why it is so successful.
To study the production function and management of the company and compare the company
with other competitive companies.
To study the future plans financial reports and Daburs strength as business organization.
To study the working capital management of the company and then comparing the working
capital management with its competitors and finding the result.
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COMPANY DABUR INDIA
INTRODUCTION
Dabur India Limited has marked its presence with some very significant achievements and today
commands a market leadership status. Our story of success is based on dedication to nature, corporate
and process hygiene, dynamic leadership and commitment to our partners and stake holders. The results
of our policies and initiatives speak for themselves.
Leading consumer goods company in India with a turnover of Rs.1268.72 Crore(FY04-05)
Three major Strategic Business Units (SBU) Family Products Division (FPD), Health Care
Products (HCPD) and Dabur Ayurvedic Specialties (DASL).
Thirteen Ultra-Modern manufacturing units spread across four Countries.
Products marketed in over 50 Countries.
FPD, dealing with personal care, the largest SBU contributing to 45% sales of Dabur
Products related to hair care, Skin care, Oral care and Foods.
3 Leading brands- Vatika, Amla Hair Oil and Lal Dant Manjan with Rs.100 Crore turnover each.
Vatika Hair oils and Shampoo the high growth brand.
Strategic positioning of honey as food product, leading to market leadership (over 40%) in branded
honey market.
HCPD, dealing with daily health care, Second largest SBU with 28% share in sales
Products related to Health Supplements, Digestive, Baby Care and Natural Cures.
Leadership in Ayurvedic and Herbal products market with highly popular brands.
Dabur Chyawanprash the largest selling Ayurvedic and Herbal products market with highly popularbrands.
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.
DASL, dealing with classical Ayurvedic medicines.
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Has more than 250 products sold through prescriptions, as well as over the counter
Major categories in traditional formulations include:
Asav Arishtas
Ras Rasayanas
Churans
Medicated Oils
Proprietary Ayurvedic medicines developed by Dabur include:
Nature Care Isabgol
Madhuvaani
Trifgol
Division also works for promotion of Ayurveda through organized community of traditional
practitioners and developing fresh batches of students.
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COMPANY PROFILE
COMPANY HISTORY
1884 Birth of Dabur
The birth of Dabur in a small Calcutta pharmacy, where Dr. S.K.Burman
launches his mission of making healthcare products.
1896 Setting up of a manufacturing plant
With growing popularity of Dabur products, Dr. Burman expands his operartions by setting up a
manufacturing plant for mass production of formulation.
Early 1900s Ayurvedic Medicines
Dabur enters the specialized area of nature-based Ayurvedic medicines, for which standardized
drugs are not available in the market.
1919 Establishment of Research Laboratories
The need to develop scientific processes & quality checks for mass production of traditional
Ayurvedic medicines leads to establishment of research laboratories.
1920 Expands further
Dabur expands further with new manufacturing units at Narendrapur & Daburgram. The
distribution of Dabur products spreads to other states like Bihar and the North-East.
1936 Dabur India (Dr.S.K.Burman) Pvt. Ltd.
Dabur becomes a fulfledged company- Dabur India (Dr.S.K.Burman) Private Limited.
1972 Shift to Delhi
Daburs operations shift to Delhi. A new manufacturing plant is set up in temporary premises in
Faridabad, on the outskirts of Delhi.
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1979 Sahibabad factory/Dabur research foundation
Commercial production starts in the new Sahibabad factory of Dabur, one of the largest and best
equipped production facilities for Ayurvedic medicines. Launch of ful-fledged research operations
in pioneering areas of healthcare with establishment of the Dabur Research Foundation.
1986 Public Limited Company
Dabur becomes a public ltd co. Dabur India Ltd comes into being after reverse merger with
Vidogum Ltd.
1992 Joint Venture with Agrolimen of Spain
Beginning a new chapter of strategic partnerships with international businesses, dabur enters into a
joint venture with Agrolimen of Spain. Tis new venture is to manufacture & market confectionery
items in India.
1993 Cancer treatment
Dabur enters into specialized healthcare area of cancer treatment with its oncology formulation
plant at Baddi in Himachal Pradesh.
1995 Joint Ventures
Dabur India Ltd. raises its first issue. Dabur enters into joint ventures with Osem of Israel for food
& Bongrain of France for cheese & other dairy products.
1996 Three separate divisions
For better operations and management, 3 separate divisions are created according to their product
mix- Health Care Products Division, Family Product Division and Dabur Ayurvedic Specialities ltd.
1997 Foods Division / Project STARS
Dabur enters full scale in the nascent processed foods market with the creation of food division.
Project STARS (Strive to Achieve Record Successes) is initiated to give a jump start to the
company and accelerate its growth performance.
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1998 Professionals to manage the Company
With the changing demands of business and to inculcate a spirit of corporate governance, the
Burman family inducts professionals to manage the company. For the first time in the history of
Dabur, a non-family professional CEO sits at the helm of the company.
2000 Turnover of Rs.1,000 crores
Dabur establishes its market leadership status with a turnover of Rs. 1000 Crores. From a small
beginning and upholding the values of its founder, Dabur now enters the august league of large
corporate business.
2003 Demerged its Pharmaceuticals Division
Dabur India approved the damager of its pharmaceuticals business from the FMCG business into a
separate company as a part of plans to provide greater focus of both the businesses. With this,
Dabur India now largely comprises of the FMCG business that include personal care products,
healthcare products & ayurvedic Specialities. While the pharmaceuticals business would include
Allopathic, Oncology formulations and Bulk drugs. Dabur Oncology Plc, a subsidiary of Dabur
India, would also be part of the pharmaceutical business.
2005 Dabur acquires Balsara
As part of its inorganic growth strategy, Dabur India acquires Balsaras Hygienic and Home
products business, a leading provider of oral care and household care products in the Indian market,
in a Rs. 143 crore all-cash deal.
2005 Dabur announces bonus after 12 years
Dabur India announced issue of 1:1 Bonus share to the shareholders of the company, i.e. one sharefor every one share held. The Board also proposed an increase in the authorized share capital of the
company from existing Rs. 50 crore to Rs. 125 crore.
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2006 Dabur crosses $2 Bin market Cap, adopts US GAAP
Dabur India crosses the $2-Billion mark in market capitalization. The company also adopted US
GAAP in line with its commitment to follow global best practices and adopt highest standards of
transparency and governance.
2007 Celebrating 10 years of real
Dabur foods unveiled the new packaging and design for Real at the completion of 10 years of the
brand. The new refined modern look depicts the natural goodness of juice from freshly plucked
fruits.
2007 Foray into organized retail
Dabur India announced its foray into the organized retail business through a wholly owned
subsidiary, H & B Stores Ltd. Dabur will invest Rs. 140 crores by 2010 to establish its presence in
the retail market in India with a chain of stores on the Health & Beauty format.
2007 Dabur foods merged with Dabur India
Dabur India decides to merge its wholly-owned subsidiaryDabur Foods with itself to extract
synergies and unlock operational efficiencies. The integration will also help Dabur sharpen focus on
the high growth business of foods and beverages and enter newer product categories in this space.
OVER HUNDRED YEARS OF CARING
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Dabur commenced operations in 1884 and is today a multi- locational, multi-product enterprise. The
company has major interests in health and beauty care.
Dabur is a leader in Ayurveda the traditional Indian health care system.
The company has 12 manufacturing plants in India, Nepal and Egypt. Dabur products are also
manufactured in Dubai.
Dabur has a transactional network of 19 offices servicing both rural and urban markets in India.
The company has sales and marketing offices in Dubai and London. Dabur products are available in
over 50 countries.
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FOUNDING THOUGHTS
What is that life worth which cannot bring comfort to
others
The doorstepDAKTAR
The story of Dabur began with a small, but visionary endeavor by Dr. S. K. Burman, a physician
tucked away in Bengal. His mission was to provide effective and affordable cure for ordinary people in
far-flung villages. With missionary zeal and fervor, Dr. Burman undertook the task of preparing natural
cures for the killer diseases of those days, like cholera, malaria and plague.
Soon the news of his medicines traveled, and he came to be known as the trusted 'Daktar' or Doctor
who came up with effective cures. And that is how his venture Dabur got its name - derived from the
Devanagri rendition of Daktar Burman. Dr. Burman set up Dabur in 1884 to produce and dispense
Ayurvedic medicines. Reaching out to a wide mass of people who had no access to proper treatment.
Dr. S. K. Burman's commitment and ceaseless efforts resulted in the company growing from a fledgling
medicine manufacturer in a small Calcutta house, to a household name that at once evokes trust and
reliability.
CEO
MR. SUNIL DUGGAL
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BOARD OF DIRECTORS
Dabur has an illustrious Board of Directors who are committed to take the company onto newer levels
of human endeavour in the service of mankind. The Board comprises of:
CHAIRMAN Dr. ANAND BURMAN
VICE-CHAIRMAN
Dr. AMIT BURMAN
CHIEF EXECUTIVE OFFICER
Mr. SUNIL DUGGAL
WHOLE TIME DIRECTORS
MR P.D. NARANG-
P.D. Narang is the Group Director, Corporate Affairs, Dabur India Limited. Born in 1954, Mr.
Narang specialized in finance and started his professional career in 1979 with his own practice.
He joined the Dabur family in 1983 as a management consultant with a mandate to streamline
the finance, accounts and audit functions of the company.
MR. SUNIL DUGGAL
Sunil Duggal took over as the Chief Executive Officer of Dabur India Limited in June 2002,
holding reins of the organization he joined in 1995.
MR. PRADIP BURMAN
Mr. Burman was born on 2 November 1942,.
Chairman of Governing body (Aug86 to june99) PHDCCI- Ruraldevelopment Foundation, Delhi-a non-Profit organization looking
after socio-economic activities of the rural areas. Founder chairman
of Sundesh a non-profit organization involved in the education of
rural women and in other socio-economic activities.
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NON-WHOLE TIME DIRECTORS
MR. MOHIT BURMAN
Mr. Burman was born on July 20, 1968 in Calcutta.
Mohit Burman, son of Mr. Vivek and Mrs Monica Burman, is the
driving force behind the Burman family's foray into several high-
growth and sunrise sectors of Financial Services like Life Insurance,
Pensions, Annuities and Asset Management, besides Agriculture and
Retailing.
INDEPENDENT DIRECTORS
HIS HIGHNESS MAHARAJA GAJ SINGH
Date of Birth- 13.01.1948
MR. P.N. VIJAY
Date of Birth- 10.07.1951
MR R.C.BHARGAVA
DR. S NARAYAN
Date of Birth- 20.06.1943
DABURS MAJOR STRATEGIC BUSINESS UNITS
Dabur has three major Strategic Business Units (SBUs) namely:
Family Products Division with a share of 45% in its total sales.
Dabur Ayurvedic Specialities having a share of 27% in its total sales.
Health Care Products with a share of 28% in the total sales.
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D a b u r s S B U s A n d T heir S ha r
F a m il
P rod uc
D ivis io
4 5 %
He a lth C
P r o d u c t
2 8 %
D ab ur
Ayurved
S pe c ia lit i
2 7 %
F a m ily P ro d
D iv is io n
H ea lth C a re
P rodu c ts
D ab ur Ayu rv
S p e c ial it ies
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DABURS CORE VALUES
VISION
Dedicated to the health and well being of every household.
PRINCIPLES
OWNERSHIP
This is our company. We accept personal responsibility, and accountability to meet business needs.
PASSION FOR WINNING
We all are the leaders in our area of responsibility, with a deep commitment to deliver the results. We
are determined to be the best at doing what matters the most.
PEOPLE DEVELOPMENT
People are our most important asset. We add value through result driven training, and we encourage and
award excellence.
CONSUMER FOCUS
We have superior understanding of consumer needs and develop products to fulfill them better.
TEAM WORK
We work together on the principle of mutual trust and transparency in a boundary less organization. We
are intellectually honest in advocating proposals, including recognizing risks.
INNOVATIONContinuous innovation in products & processes is the basis of our success.
INTEGRITY
We are committed to the achievement of business success with integrity. We are honest with the consumers, with
business partners and with each other.
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PRODUCTS
HEALTH SUPPLEMENTS:
Dabur Chyawanprash
Dabur Glucose D
DIGESTIVES:
Hajmola Mast Masala
Anardana
Hajmola
Hajmola Candy
Hajmola Candy Fun2
Pudin Hara(Liquid and Pearls)
Pudin Hara G
Dabur Hingoli
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BABY CARE:
Dabur Lal Tail
Dabur Baby Olive Oil
Dabur Janma Ghunti
NATURAL CURES:
Shilajit Gold
Nature Care
Sat Isabgol
Shilajit
Ring Ring
Itch Care
Back-Aid
Shankha Pushpi
Dabur Balm
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HAIR CARE OIL:
Amla Hair Oil
Amla Lite Hair Oil
Vatika Hair Oil
Anmol Sarson Amla
HAIR CARE SHAMPOO:
Vatika Henna Conditioning Shampoo
Vatika Anti Dandruff Shampoo
Anmol Natural Shine Shampoo
SKIN CARE:
Gulabari
Vatika Fairness Face Pack
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ORAL CARE:
Dabur Red Gel
Dabur Red Toothpaste
Dabur Lal Dant Manjan
Dabur Binaca Toothbrush
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REAL:
Real Fruit Juice
Real Activ
HOMMADE:
Cooking Pastes
Coconut Milk
Tomato puree
Dashmularishta
Ashokarishta
Lauhasava
Mahanarayan Tail
Juritap
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Madhuvani
Lavan Bhaskar Churna
HEALTH CARE:
Dabur Chyawanprash
Pudinhara
Hajmola Tablets
Dabur Honey
Shilajit
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SKIN CARE:
Natural Soaps
ORAL CARE:
Herbal Tooth Paste
HAIR CARE:
Vatika Shampoos and Conditioners
Dabur Amla Hair Oil
FOODS:
Real Juices
Homemade Food Products
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DR.BURMAN (RUSSIA)
Health Supplements
Ayurvedic Toothpastes
DABUR MANUFACTURING FACILITIES IN INDIA
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DABUR WORLD WIDE
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Dabur's mission of popularizing a natural lifestyle transcends national boundaries. Today there is
global awareness of alternative medicine, nature-based and holistic lifestyles and an interest in herbal
products. Dabur has been in the forefront of popularizing this alternative way of life, marketing itsproducts in more than 50 countries all over the world.
DABURproducts World Wide
Dabur has spread widely and deeply to be in close touch with overseas consumers.
Offices and representatives in Europe, America and Africa;
A special herbal health care and personal care range successfully selling in markets of the
Middle East, Far East and several European countries.
Inroads into European and American markets that have good potential due to resurgence of the
back-to-nature movement.
Export of Active Pharmaceutical Ingredients (APIs), manufactured under strict international
quality benchmarks, to Europe, Latin America, Africa, and other Asian countries.
Export of food and textile grade natural gums, extracted from traditional plant sources.
RE-ENGINEERING FOR VALUE CREATION
DABUR has re-organized two of its biggest SBUs- THE FAMILY PRODUCTS DIDVISION
(Personal Care Products) and the Health Care Division into single SBUs. This initiative will eliminate
overlaps and reduce costs by leveraging synergies of scale.
Re-engineering internal operations to leverage strengths and synergies, improve scale, reduce cost and
optimize efficiencies are key for improved value creation. To derive maximum values on these
parameters, Dabur has emerged its erstwhile Subs- The Family Product Division and Health Care
Products Division into one.
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The common arrangement will eliminate any overlaps in the distribution and retail network, provide
economies of scale and help the Company be more responsive to market needs. Focus will be on
product categories and resources will be pooled to strengthen individual categories with aggressive
sales and marketing initiatives.
This move will inject a new impulse in Dabur and also boost the Companys sales efforts.
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DEMERGING FOR VALUE CREATION
The demerger of Daburs FMCG and Pharmaceutical businesses is a value-enhancing move
representing a win-win situation for both these businesses. A clear line of sight and focused growth
strategies would provide exponential growth opportunities and greater value for shareholders.
This demerger of Daburs FMCG and Pharmaceutical business is a major restructuring move
undertaken by the Company to provide greater focus and independence to the two businesses.
The FMCG business, which will be the main business of Dabur India, will concentrate on
strengthening its core competencies in Personal Care, Health Care and Ayurveda.
The new Pharmaceutical Company- Dabur Pharma Ltd.- will focus on its expertise in Allopathy,
Oncology Formulations and Bulk drugs. The Company is already a leader in the Oncology segment in
India and will follow aggressive strategies to pursue its global ambitions.
Both these companies will have dedicated management teams, with the freedom and resources to
pursue their independent growth strategies.
Dabur believes that the sum of parts will far exceed the value of the single entity.
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INTRODUCTION TO WORKING CAPITAL
Working Capital is the Life-Blood And Controlling Nerve Center of a Business
The term Working Capital refers to the capital required for day-to-day operations of a business
enterprise. It is represented by excess of Current assets over Current Liabilities. It is necessary for
any organization to run successfully its affairs, to provide for adequate working capital. Too large
investment in Current Assets means blocking the capital that can be used productively elsewhere. On
the other hand too little investment can be expensive. For example, insufficient inventory may cause
loss of sales to Customers.
Current Liabilities:
Current Liabilities are debts payable within an accounting period. Current assets are converted intocash to pay current liabilities.
Current Liabilities include:
Bills Payable
Sundry creditors or Accounts Payable
Accrued or Outstanding expenses
Short term loans, Advances or deposits.
Dividends Payable
Bank Overdraft
Provision for taxation, if it does not amount to appropriation of profits.
It is a conventional rule to maintain the level of current assets twice the level of current liabilities. A
weak liquidity position poses a threat to the solvency of the company and makes it unsafe and
unsound. A negative working capital means a negative liquidity and at times it may prove to be
harmful for the companys reputation. Excessive liquidity is also bad. It may be due to
mismanagement of current assets. Therefore prompt and timely action should be taken by the
management to improve and correct the imbalances in the liquidity position of the firm.
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Gross Working Capital is a Going Concern/Financial Conceptwhere as the Net Working Capital
is anAccounting Conceptof working capital.
Working capital is therefore:-
WORKING CAPITAL =
Current Assets
||
stock+ debtors + cash
- Current liabilities
The importance of having working capital is best understood as 'costs expended before payment
received for goods/service provided to the customer'. Therefore, no capital means no production and no
customers, which means no capital...
There are basically two concepts of working capital-
Gross Working Capital:
It is the amount of capital invested in the total Current assets of the enterprise. Current assets are
those assets, which in ordinary course of business can be converted into cash within a short period
of normally one accounting year.
Net Working Capital:It refers to the difference between net current assets and liabilities. Current liabilities are those
claims of outsiders, which are expected to mature for payment within an accounting year. Net
working capital can be positive or negative. A positive net working capital will arise when current
assets increase current liabilities. A negative working capital will arise when current liabilities are
in excess of current assets.
Current Assets:
Current assets, sometimes called liquid assets, are those resources of a firm, which are either held in the
form of cash or are expected to be converted in cash within the accounting period in one-year duration.
The operating cycle is the time taken to convert the raw materials into finished goods and convert
receivables (goods sold on credit) into cash.
Current Assets include:
Cash in hand
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Bank balances
Bills Receivables
Sundry Debtors (less provision for bad debts)
Short term loans and advances
Inventories of stocks, as:
Raw material
Work in progress
Stores and spares
Finished Goods
Temporary Investments of surplus funds
Prepaid expenses
Accrued Incomes.
Current Liabilities:
Current Liabilities are debts payable within an accounting period. Current assets are converted into
cash to pay current liabilities.
Current Liabilities include:
Bills Payable
Sundry creditors or Accounts Payable
Accrued or Outstanding expenses
Short term loans, Advances or deposits.
Dividends Payable
Bank Overdraft
Provision for taxation, if it does not amount to appropriation of profits.
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It is a conventional rule to maintain the level of current assets twice the level of current liabilities. A
weak liquidity position poses a threat to the solvency of the company and makes it unsafe and
unsound. A negative working capital means a negative liquidity and at times it may prove to be
harmful for the companys reputation. Excessive liquidity is also bad. It may be due to
mismanagement of current assets. Therefore prompt and timely action should be taken by the
management to improve and correct the imbalances in the liquidity position of the firm.
Gross Working Capital is a Going Concern/Financial Conceptwhere as the Net Working Capital is an
Accounting Conceptof working capital.
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IMPORTANCE OF WORKING CAPITAL
Working capital constitutes part of the Crown's investment in a department. Associated with this is an
opportunity cost to the Crown. (Money invested in one area may "cost" opportunities for investment in
other areas.) If a department is operating with more working capital than is necessary, this over-
investment represents an unnecessary cost to the Crown.
OBJECTIVE:
The objective of working capital management is to maintain the optimum balance of each of the
working capital components. This includes making sure that funds are held as cash in bank deposits for
as long as and in the largest amounts possible, thereby maximizing the interest earned. However, such
cash may more appropriately be "invested" in other assets or in reducing other liabilities. Other
objectives of working capital management are as follows: -
To identify cash flow cycles of the firm.
To maintain the level of current assets twice the level of current liabilities.
To help the company to maintain good business relations.
To determine the future capital, liquidity position and other requirements of
the company.
Working capital management takes place at two levels:
Ratio analysis can be used to monitor overall trends in working capital and to identify
areas requiring closer management.
The individual components of working capital can be effectively managed by using
various techniques and strategies.
When considering these techniques and strategies, departments need to recognize that each department
has a unique mix of working capital components. The emphasis that needs to be placed on each
component varies according to department. For example, some departments have significant inventory
levels; others have little if any inventory.
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Furthermore, working capital management is not an end in itself. It is an integral part of the
department's overall management. The needs of efficient
Working capital management must be considered in relation to other aspects of the department's
financial and non-financial performance.
FACTORS DETERMINING THE WORKING
CAPITAL REQUIREMENTS
Nature or Characteristics of Business-The working capital requirements of an enterprise arebasically related to the conduct of the business. Every company according to their nature of
business has to maintain a certain level of working capital.
Production Policy-The production policies pursued by the management has a significant
effect on the requirements of working capital of the business. The production schedule has a
great influence on the level of inventories. The decision of the management regarding
automation, etc., will also have its effect on working capital requirements.
Seasonal Variations-Most firms experience seasonal and cyclical fluctuations in the demand
for their products and services. These business variations effect the working capital
requirement, specially the temporary working capital requirement of the firm. When there is
an upward swing in the economy, sales will increase; correspondingly, the firms
investment in inventories and book debts will also increase. Under boom, additional
investment in fixed assets may be made by some firms to increase their productive capacity.
This act of the firm will require further additions of working capital. When there is a
decline in the economy sales will fall and consequently, levels of inventories and book
debts will also fall.
Credit policy-A company which allows liberal credits to its customers, may have higher
sales but will need more working capital as compared to a company which has an efficient
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debt collection machinery and observing strict terms. The working capital requirements can
also be affected by the credit facilities enjoyed by the company.
Rate of growth of Business-As a company grows; it is logical to expect that a large amount
of working capital will be required. It is, of course, difficult to determine precisely therelationship between the growth in the volume of business of a company and the increase in
its working capital. The composition of working capital in a growing company also shifts
with economic circumstances and corporate practices.
Business cycle-Different phases of business cycle i.e., boom, recession, recovery etc. also
affect the working capital requirement. In case of boom condition business activities expand
.As a result, the need for cash, inventories etc. increases resulting in more and more funds
blocked in these current assets. In case of recession period, there is usually dullness in
business activities and there will be an opposite effect on the level of working capital
requirement. There will be a fall in inventories and cash requirements etc.
Manufacturing Process/ Length of product cycle-The manufacturing process comprises of
the purchase and use of raw materials and the production of finished goods. Longer the
manufacturing cycle, larger will be the firms working capital requirements
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RESEARCH METHODOLOGY
Meaning of Research
Redman and Mory define research as a systemized effort to gain new knowledge. Some people
consider research as a movement, a movement from the known to the unknown.
Research is an academic activity and as such the term should be used in a technical sense. According to
Clifford Woody, research comprises defining and redefining problems, formulating hypothesis or
suggested solutions; collecting, organizing and evaluating data; making deductions and reaching
conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating
hypothesis.
Objectives of Research
i) The purpose of research is to discover answers to questions through the application
of scientific procedures. The main aim of research is to find out the truth which is hidden and
which has not been discovered as yet. To safeguard the interest of consumer and organization
by securing the highest level of mutual understanding and goodwill among all those sections in
the industry which participate in the process of achieving organizational objective.ii) To avoid consumer conflict and develop harmonious relations, which are an
essential factor to growth of any company.
iii) To establish harmonious relationship between operative staff and management by
providing safeguard to their respective interests and developing understanding and goodwill
between them.
Dabur India Ltds objective is to always attain, maintain and exceed standards in Quality and
Customer Satisfaction. No compromise with quality is the major objective of Dabur Pharma Ltd..
Dabur Pharma Ltd. focus mainly on the following
To focus on quality
To promote team work
Employee commitment to quality is encouraged, valued and rewarded.
Employee training programs on quality measurement and improvements.
Providing services to the customer with exactly what they want at the right time.
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Maintaining the long term benefit.
Significance of Research
All process is born of inquiry. Doubt is often better than overconfidence, for it leads to inquiry and
inquiry leads to invention. Is a famous Hudson Maxim in context of which the significance of
research can well be understood. Increased amounts of research make progress possible.
Research inculcates scientific and inductive thinking and it promotes the development of logical
habits of thinking and organization.The role of research in several fields of applied economics,
whether related to business or to the economy as a whole, has greatly increased in modern times. The
increasing complex nature of business and government has focused attention on the use of research in
solving operational problems. Research, as an aid to economic policy, has gained added importance,
both for government and business.
Research Methodology
Research methodology is a way to systematically solve the research problem. It may be
understood as a science of studying how research is done scientifically. In it we study the various steps
that are generally adopted by a researcher in studying his research problem along with the logic behind
them. It is necessary for the researcher to know not only the research methods or techniques but also the
methodology.There are two main categories of research methods.Secondary research uses research
that has already been done by someone else. For example, marketers often find information compiled
by the U.S. Census very useful. However, in some cases, information specific enough to satisfy a firms
needs is not publicly available. For example, a firm will have to run its own research to find out
whether consumers would prefer that more vanilla taste be added to its soft drink brand. Original
research that a firm does for it is known asprimary research.
There is no one perfect primary research method. Each has strengths and weaknesses, and thus
the appropriate method must be selected based on research needs.
Surveys are useful for getting a great deal of specific information. Surveys can contain open-
ended questions (e.g., "In which city and state were you born?") or closed-ended, where the
respondent is asked to select answers from a brief list (e.g., "__Male ___ Female.") Open ended
questions have the advantage that the respondent is not limited to the options listed, and that the
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respondent is not being influenced by seeing a list of responses. However, open-ended questions are
often skipped by respondents, and coding them can be quite a challenge. In general, for surveys to yield
meaningful responses, sample sizes of over 100 are usually required because precision is essential. For
example, if a market share of twenty percent would result in a loss while thirty percent would be
profitable, a confidence interval of 20-35% is too wide to be useful.
Surveys come in several different forms. Mail surveys are relatively inexpensive, but response
rates are typically quite lowtypically from 5-20%. Phone-surveys get somewhat higher response
rates, but not many questions can be asked because many answer options have to be repeated and few
people are willing to stay on the phone for more than five minutes. Mall intercepts are a convenient
way to reach consumers, but respondents may be reluctant to discuss anything sensitive face-to-face
with an interviewer.
Surveys, as any kind of research, are vulnerable to bias. The wording of a question can
influence the outcome a great deal. For example, more people answered no to the question "Should
speeches against democracy be allowed?" than answered yes to "Should speeches against democracy be
forbidden?" For face-to-face interviews, interviewer bias is a danger, too. Interviewer bias occurs when
the interviewer influences the way the respondent answers. For example, unconsciously an interviewer
that works for the firm manufacturing the product in question may smile a little when something good
is being said about the product and frown a little when something negative is being said. The
respondent may catch on and say something more positive than his or her real opinion. Finally, a
response bias may occurif only part of the sample responds to a survey, the respondents answers
may not be representative of the population.
Experiments are used when the researcher wants to rule out all but one explanation for a
particular observation. Suppose, for example, that we observe that sales of our brand increase when we
send out coupons. However, retailers may also give us better shelf space when the coupon is out; thus,
we cant tell if it was the coupon or the shelf-placement that caused sales to increasethe two variables
are confounded. In an experiment, we carefully control what varies. In this case, we invite in one
hundred people and ask them to shop in a simulated store. Half of the respondents are randomly
selected and get a coupon; the others do not. Since the only difference here was whether the subjects
got a coupon or not, we can be more confident that differences in brand choice were due to the coupon.
Experiments do, however, have a serious drawback in that the consumer is removed from his or her
natural surroundings. For example, if we pay some consumers to come into a lab and watch TV "as you
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normally would," these consumers, figuring that they are being paid, may give more attention to the
advertisements than they would at home.
Focus groups involve getting a group of 6-12 consumers together to discuss product usage.
Focus groups are especially useful if we do not have specific questions to ask yet, since we dont know
what consumers concerns might be. We start out talking broadly about the need that a product might
serve, and only gradually move toward the product itself. For example, a firm considering the
marketing of sugar free cookies might start out its group talking about snackswhy people consume
them and the benefits they expect. Gradually, we then move toward concerns people have about snacks.
Eventually, we address sugar content and concerns that consumers have about that. Only toward the end
of the session do we show consumers the actual product we are considering and ask for feedback. We
postpone our consideration of the actual product toward the end because we want to be sure that we
find out about the consumers needs and desires rather than what he or she thinks about the specific
product we have on the drawing board right now (that product can be changed, and it can be
repositioned). Drawbacks of focus groups include high costs and the fact that generalization toward the
entire population is difficult for such small sample sizes. The fact that focus groups involve social
interaction also means that participants may say what they think will make themselves look good rather
than what they really believe (the social desirability bias).
Personal interviews involve in-depth questioning of an individual about his or her interest in
or experiences with a product. The benefit here is that we can get really into depth (when the
respondent says something interesting, we can ask him or her to elaborate), but this method of research
is costly and can be extremely vulnerable to interviewer bias.
Projective techniques are used when a consumer may feel embarrassed to admit to certain
opinions, feelings, or preferences. For example, many older executives may not be comfortable
admitting to being intimidated by computers. It has been found that in such cases, people will tend to
respond more openly about "someone else." Thus, we may ask them to explain reasons why a friend
has not yet bought a computer, or to tell a story about a person in a picture who is or is not using a
product. The main problem with this method is that it is difficult to analyze responses.
Observation of consumers is often a powerful tool. Looking at how consumers select products
may yield insights into how they make decisions and what they look for. For example, some American
manufacturers were concerned about low sales of their products in Japan. Observing Japanese
consumers, it was found that many of these Japanese consumers scrutinized packages looking for a
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name of a major manufacturerthe product specific-brands that are common in the U.S. (e.g., Tide)
were not impressive to the Japanese, who wanted a name of a major firm like Mitsubishi or Proctor &
Gamble. Observation may help us determine how much time consumers spend comparing prices, or
whether nutritional labels are being consulted.
Physiological measures are occasionally used to examine consumer response. For example,
advertisers may want to measure a consumers level of arousal during various parts of an
advertisement.
Segmentation
Although the text makes references to segmentation, this issue is not discussed explicitly in
much detail. However, segmentation is important in consumer analysis because understanding the
consumer will allow us segment the market more meaningfully.
Segmentation basically involves dividing consumers into groups such that members of a
group (1) are as similar as possible to members of that same group but (2) differ as much as
possible from members other segments. This enables us then to "treat" each segment differently
e.g., by:
Providing different products (e.g., some consumers like cola taste, while others prefer lime)
Offering different prices (some consumers will take the cheapest product available, while others
will pay for desired features)
Distributing the products where they are likely to be bought by the targeted segment.
Useful segment structure includes:-
Each segment must have an identityi.e., it must contain members that can be described in
some way (e.g., price sensitive) that behave differently from another segment.
Each segment must engage in systematic psychologys (e.g., a price sensitive segment should
consistently prefer the low price item rather than randomly switching between high and low
priced brands).
Each segment must offer marketing mix efficiency potentiali.e., it must be profitable to
serve. For example, a large segment may be profitable even though the competition it attracts
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tends to keep prices down. A smaller segment may be profitable if, for example, it is price
insensitive or can be targeted efficiently. Some segments are not cost effective.
Data Source
The data can be collected from two sources, i.e. Primary and Secondary. I have collected entire data of
this project on ITC Ltd. from SECONDARY SOURCES like websites i.e. www.daburindia.com,
www.wikipedia.com, www.google.com, books like India today, outlook, business week, newspapers
and magazines.
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FINDINGS
IT INITIATIVES
In Dabur India Limited knowledge and technology are key resources which have helped the Company
achieve higher levels of excellence and efficiency. Towards this overall goal of technology-driven
performance, Dabur is utilizing Information Technology in a big way. This will help in integrating a
vast distribution system spread all over India and across the world. It will also cut down costs and
increase profitability.
Our major IT Initiatives
Migration from Baan and Mfg ERP Systems to centralized SAP ERP system from 1st April
2006 for all business units.
Implementation of a country wide new WAN Infrastructure for running centralized ERP
system.
Setting up of new Data Centre at KCO Head Office.
Extension of Reach System to distributors for capturing Secondary Sales Data.
Roll out of IT services to new plants and CFAs.
Future Challenges
Forward Integration of SAP with Distributors and Stockists.
Backward Integration of SAP with Suppliers.
Implementation of new POS system at Stockist point and integration with SAP-ERP.
Implementation of SAP HR and payroll.
SAP Roll-out to DNPL and other new businesses.
FINANCING OF WORKING CAPITAL
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There are two types of working capital requirements in a company-
i) Permanent or Fixed Working Capital Requirements
ii) Temporary or Variable Working Capital Requirements
Depending on the above mentioned requirements following are the sources of financing working
capital-
SOURCES
Long Term Sources Short Term Sources
Shares Commercial Banks
Debentures Commercial paper
Public Deposits Trade Creditors
Loans from Financial inst. Installment credit
Accounts payables
Accrued Expenses
SOURCES OF WORKING CAPITAL
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DABURIndia Limited as a successful Company in FMCG sector has the following sources available
for the fulfillment of its working capital requirements in order to carry on its operations smoothly.
BANKS:
THESE INCLUDE THE FOLLOWING BANKS:
Punjab National Bank
Standard Chartered Bank Ltd.
Hong Kong and Shanghai Banking Corp. Ltd.
State Bank Of India
HDFC Bank Ltd.
IDBI Bank Ltd.
Citibank
COMMERCIAL PAPERS:
Commercial Papers have become an important tool for financing working capital requirements of a
company.
Commercial Paper is an unsecured promissory note issued by the company to raise short- term funds.
The buyers of the Commercial Papers include banks, insurance companies, unit trusts and companies
with surplus funds to invest for a short period with minimum risk.
Dabur India Limited issues Commercial Papers and had commercial worth Rs. 1000 lacs in the year
2002-03.
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SWOT ANALYSIS
(Strengths, Opportunities, Weaknesses, and Threats)
In any organization, strength and weaknesses indicate the capability and preparedness of the
organization to respond to the business opportunities likely to be available in the environment and the
extent to which it is able to use its strengths to neutralize the threats, SWOT analysis is done for thepurpose of generating a corporate plan. It is a macro level process which has to be interpreted at
different micro level like technical, financial, human resource etc.
Strengths:-
1. Dabur India is the one of the famous consumer goods company in India
2. Dabur has completed almost 160 years.
3. One of the fastest growing company in ayurvedic and other personal care products
4. Maintaining good Customer Relationship globally.
5. Dabur India Ltd. is selling the many imported ayurvedic and life saving drugs which increases
the image of the company.
6. Strong foundation laid by top management.
7. Well developed R&D team
8. Organization improves the quality of product and service continuously.
9. Proper motivation programme for employees
10. Proper strategic decision.
11. Salary structure is good enough as compare to other pharmaceutical companies.
Weaknesses:-
1. Company does not give enough focus on existing product.2. No grievance handling programme for employees.
3. No strong pressure on Employees.
4. Inventory management is poor.
Opportunities:-
1. Dabur India ltd. is introducing more ayurvedic and other personal products so in this segment
growth is very high.
2. R & D is bringing lots of new molecules which can grave market share.
3. 49 patent applications after getting approved will make Dabur patent holder.
4. Can remove the paper work and can start online paper work.
Threats:-
1. Employee turnover.
2. New Technology.
3. Government Policies.
4. Quality of products.
5. Natural calamities
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COMPETITORS
MARICO LTD.
Marico groups history can be traced back to 1862 when Kanji Morarji, started a small trading business
in Mumbai. The family set up the Bombay Oil Industries Ltd (BOIL) in 1948 with manufacturing
facilities in Mumbai for coconut oil extraction plant, vegetable oil refinery and a chemical plant. Marico
was incorporated in 1988 to take over the then 40-year old consumer products business of BOIL. The
division was engaged in marketing of coconut oil, edible oil, instant starch, fruit jams etc Earlier the
brands of Saffola and Parachute were owned by Bombay Oil Industries Limited and Marico was given
access to use these brands for perpetuity. In FY00, the brands were transferred to the company for a
consideration of Rs300mn.Marico has 5 factories, located at Sewree in Mumbai, Jalgaon in
Maharashtra, Palakkad in Kerala, Saswad in Pune and Ponda in Goa.
Marico is the market leader in the hair oil segment, with its Parachute and Hair & Care brands. It is also
one of the leading players in the branded edible oil segment with strong brands like Saffola and
Sweekar. Besides hair and edible oil, the company has a presence in niche segments like Instant Starch
(Revive), Anti lice shampoo (Mediker) and food products like jams and sauces (Sil). Marico also has a
fee based marketing arrangement with Procter & Gamble (P&G) for marketing a few P&G brands
through its own network. Parachute, Saffola and Sweeker are the key earnings drivers, contributing to
almost 80% of Maricos turnover.
Fast moving consumer goods (FMCG) business is built on the two pillars of brand equity and
distribution network. Brand equities are built over a period of time by consistent high quality and
aggressive advertisement and marketing. Availability near the consumer through a wide distribution
channel is another crucial success factor, as products are small value, frequently purchased, daily use
items. Competition is intense, and players have to remain cost effective and provide value for money to
consumers to retain market shares. The company is, at present, highly dependent on its three main
brands -- Parachute, Saffola and Sweekar. The growth in this category will be difficult to sustain in the
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longer run due to increasing competition. Recently, Hindustan Lever acquired Cococare (it already has
Nihar under its fold), which will see an intensification of competition in the coconut oil category.
Marico has maintained Parachute market share despite severe competition. New edible oil products are
launched with 'Good for Health' positioning under the Saffola brand and catering to regional taste
requirements through the Sweekar franchise. In the hair oil segment, the company has successfully
launched value added Parachute variants. A new brand Shanti Amla, in the amla hair oil category
dominated by Dabur, has been launched during FY02 and has been extremely successful.
HINDUSTAN LEVER LTD.
Three Unilever companies were merged in 1956 to form HLL. These companies were Hindustan
Vanaspati Manufacturing Company -edible oil (established in 1931), Lever Brothers India Limited-
soaps (1933) and United Traders-personal products (1935). Ponds joined the Unilver fold through a
global acquisition in 1986. In the last decade, HLL has expanded its operations by the merger and
takeover route. It acquired TOMCO a Tata group company (1993), merged Unilever group companies
Brooke Bond Limited (1996) and Ponds' India (1998), and has acquired cosmetic business of another
Tata group company Lakme (1998).
Hindustan Lever Limited is the largest FMCG Company in the country, with a turnover of Rs118bn.
The companys business sprawls from personal and household care products to foods, beverages and
specialty chemicals. The company has a dominating market share in most categories that it operates in
such as toilet soaps, detergents, skincare, hair care, color cosmetics, etc. It is also the leading player infood products.
HLL is the market leader in the detergent and toilet soap industry with market share of 60% and 40%
respectively. HLLs turnover has now grown to Rs118bn, with soaps and personal products
contributing 57% to turnover and beverages and food products contributing to 29% of turnover.
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In 2001, soaps business (Rs21bn) grew by 1% and detergent sales (Rs20bn) grew by 7%. Other
personal products (household care, oral acre, skin care, hair care, color cosmetics) registered a 14%
growth to Rs24.6bn. Expansion of the foods business, which has been identified as a major growth area,
has not been as fast as anticipated. Beverage sales move largely with commodity price trends, which
have remained on a downtrend.
Britannia Industries Ltd.
Britannia was incorporated in 1918 as Britannia Biscuits Co Ltd in Calcutta. In 1924, Pea Frean UK
acquired a controlling stake, which later passed on to the Associated Biscuits International (ABI) a UK
based company. During the 50s and 60s, Britannia expanded operations to Mumbai, Delhi and
Chennai. In 1987, Nabisco, a well known European food company, acquired ABI. In 1989, J M Pillai,
a Singapore based NRI businessman along with the Groupe Danone acquired Asian operations of
Nabisco, thus acquiring controlling stake in Britannia. In 1977, the Government reserved the industry
for small scale sector, which constrained Britannia's growth.
Britannia's controlling stake is jointly with Groupe Danone and Nusli Wadia. Groupe Danone is one of
the leading players in the world in bakery products business. It acquired interest in Britannia Industries
in 1989 and acquired controlling stake in 1993.Nusli Wadia group is one of the leading industrial
houses in the country, with interests mainly in textiles and petrochemicals.
Britannia's plants are located in the 4 major metro cities - Kolkatta, Mumbai, Delhi and Chennai. A
large part of products are also outsourced from third party producers. Dairy products are out sourced
from three producers - Dynamix Dairy based in Baramati, Maharashtra, Modern Dairy at Karnal in
Haryana) and Thacker Dairy Products at Howrah in West Bengal.Britannia is the market leader in the
organized biscuit and bakery product market in India. Biscuits contribute to more than 80% of
Britannia's total turnover. Other products include bread and cakes. Britannia diversified into dairy
products in 1997 with processed cheese.
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The entry of new MNCs has not posed a direct threat to Britannia, as these MNCs have positioned
their brands in the premium/health segment. Britannia has maintained market leadership with a 40%
volume share and 48% value market share in the organized sector. FMCG major HLL is expected to
venture into the segment. Britannia has been aggressive in new launches and marketing during the last 2
years anticipating the competition. It has also recently acquired Kwality Biscuits, gaining a strong
foothold in the southern market.
Nestle India Ltd.
Nestle was promoted by Nestle Alimentana, Switzerland, a wholly owned subsidiary of Nestle
Holdings Ltd., Nassau, Bahama Islands. Nestle is one of the oldest food MNC operating in India, with a
presence of over a century. For a long time, Nestle Indias operations were restricted to importing and
trading of condensed milk and infant food. Over the years, the Company expanded its product range
with new products in instant coffee, noodles, sauces, pickles, culinary aids, chocolates and
confectionery, dairy products and mineral water.
Nestle was incorporated as a limited company in 1959. Nestle S A Switzerland, is one of the leading
companies in the global foods industry. The principal activities of the group encompass beverages (with
Nescafe as the flagship brand), milk products, processed foods, cooking aids, bakery products,
chocolates, confectioneries, pharmaceutical products (ophthalmic, surgical instruments etc).
Nestle has a presence in 83 countries worldwide. It has a total number of 509 factories out of which 220
are located in Europe, 153 in America and 136 in Africa, Asia and Oceania. Nestle started its
manufacturing operations with Milkmaid in 1962 at Moga factory. Manufacturing of Nescafe started in
1964 at the same factory. The company set up another factory at Cherambadi in Tamil Nadu, for
manufacture of infant foods, coffee etc. The company set up its Nanjangad (Karnataka) factory in 1989
and the Samlakha (Haryana) factory in 1992. The Ponda (Goa) factory started operations in 1995.
The Company set up its sixth manufacturing unit in 1997 at Bicholim in Goa.
http://rds.yahoo.com/S=96062857/K=logo+of++nestle/v=2/SID=w/TID=I045_80/l=II/R=1/SS=i/OID=aee7eb8ed10f675a/SIG=1gocir6hj/EXP=1121401406/*-http%3A/images.search.yahoo.com/search/images/view?back=http%3A%2F%2Fimages.search.yahoo.com%2Fsearch%2Fimages%3Fp%3Dlogo%2Bof%2B%2Bnestle%2B%26ei%3DUTF-8%26fr%3Dsfp%26fl%3D0%26x%3Dwrt&h=152&w=213&imgcurl=www.news.ch%2Fimg%2Farticle%2F51945-Nestle_Logo.jpg&imgurl=www.news.ch%2Fimg%2Farticle%2F51945-Nestle_Logo.jpg&size=5.6kB&name=51945-Nestle_Logo.jpg&rcurl=http%3A%2F%2Fwww.news.ch%2Fdetail.asp%3FID%3D129660&rurl=http%3A%2F%2Fwww.news.ch%2Fdetail.asp%3FID%3D129660&p=logo+of++nestle&type=jpeg&no=1&tt=679&ei=UTF-88/2/2019 Final Project-Aakansha Rough
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Nestl India manufactures products of truly International quality under brand names such as
MILKMAID, EVERYDAY, CERELAC, LACTOGEN, MAGGI, NESCAFE, NESCAFE SUNRISE,
NESTEA, MILO, KITKAT, MILKY BAR, MUNCH, POLO, NESTLE MILK, NESTLE DAHI,
NESTLE FRUIT N MILK and NESTLE FRUIT N DAHI.Nestle registered robust profit growth of
46% to Rs1.73bn in 2001. Profit would have been higher but for the additional costs associated with the
new businesses of water, liquid milk and chilled dairy products. Sales rose by 14.5% to Rs19.21bn.
Domestic sales grew by 14.1% to Rs16.11bn. Exports, contributing 16% to turnover, increased by
16.7% to Rs3.1bn. 74% of the exports continue to be to its key market Russia. The company
has also reported a strong 55% growth in net profit in 2001.Sales have registered a 17.4% growth
mainly driven by higher domestic sales in the chocolate and culinary product segments.
Cadbury India Ltd.
Cadbury was originally incorporated as a wholly owned subsidiary of Cadbury Schweppes Overseas
Ltd (CSOL) in 1948. The companys original name was Cadbury Fry (India) Ltd.In 1982; the name was
changed to Hindustan Cocoa Products. The current name was restored in Dec 89. In 1986, Cadbury
forayed into biscuits with Cadbury Butter, Glucose and Bournvita brands. The business however, could
not take off and was discontinued 3-4 years later. In 1989, Cadbury diversified into ice creams with
Dollops and Lopstop brands, which were sold off to Brooke Bond in 1994.
Cadburys manufacturing operations started in Mumbai in 1946, which was subsequently transferred to
Thane. The company, way back in 1964, pioneered cocoa farming in India to reduce dependence on
imported cocoa beans. In 1977, the company also took steps to promote higher production of milk . In
1995, Cadbury expanded Malanpur plant in a major way. The Malanpur plant has modernized facilities
for Gems, Eclairs, and Perk etc.
http://rds.yahoo.com/S=96062857/K=logo+of+cadbury/v=2/SID=w/TID=I045_80/l=II/R=7/SS=i/OID=0db75a77799f48d2/SIG=1j9bsc18e/EXP=1121401593/*-http%3A/images.search.yahoo.com/search/images/view?back=http%3A%2F%2Fimages.search.yahoo.com%2Fsearch%2Fimages%3Fp%3Dlogo%2Bof%2Bcadbury%26ei%3DUTF-8%26fr%3Dsfp%26fl%3D0%26x%3Dwrt&h=75&w=120&imgcurl=www.poshpic.com%2Fdavidwardfilms%2Fimages%2Ffilm_of_the_film%2Fcadbury_logo.jpg&imgurl=www.poshpic.com%2Fdavidwardfilms%2Fimages%2Ffilm_of_the_film%2Fcadbury_logo.jpg&size=2.9kB&name=cadbury_logo.jpg&rcurl=http%3A%2F%2Fwww.poshpic.com%2Fdavidwardfilms%2Ffilm_of_the_film.html&rurl=http%3A%2F%2Fwww.poshpic.com%2Fdavidwardfilms%2Ffilm_of_the_film.html&p=logo+of+cadbury&type=jpeg&no=7&tt=113&ei=UTF-88/2/2019 Final Project-Aakansha Rough
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Cadbury has been losing market share, but continues to dominate the chocolate market with about 65%
market share. Nestle has emerged as a significant competitor with about 24% market share Cadbury
reported sales of Rs6.26bn in 2001.
The Cadbury management has been unable to achieve the volume growth targets set during the last two
years. The company remains dependent on a single category Chocolates to drive growth.
COMPARISON OF WORKING CAPITALS OF DIFFERENT COMPANIES
(Amt In Rs. Millions)
Company Name F/Y Current
Assets
Current
Liabilities
Net Working
Capital
Dabur India Ltd. 2005-06 251.971 322.222 -70.25
Britannia Industries Ltd. 2005-06 2399.61 2356.68 42.93
Hindustan Lever Ltd. 2005-06 38788.80 39802.49 -1013.69
Marico Industries Ltd. 2005-06 1917.21 1066.10 851.11
Cadbury India Ltd. 2005-06 2175.90 1352.40 823.50
Nestle India Ltd. 2005-06 5512.44 8100.8 -2588.36
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WORKING CAPITAL GRAPHS
The above chart displays the working capital scenario at Dabur
IndiaLtd. Dabur has been constantly reducing its working capital and in the year
2003-2004 a steep decline has taken place in the companys working capital,
reducing it to a negative of Rs.-243.99 millions. This has proved the managerial
efficiency at Dabur in its Finances.
The company has reduced its payment period from 39 days to a negative of 5 days,
which shows that the company has enough of funds available on credit from its
suppliers, and is collecting money from its debtors at a faster pace to avoid much of
the bad debts.
- 2 4 3 . 9
1 8 6 7 . 3
2 3 8 4 . 9 2 3 0 0 . 7
2 9 7 5 . 9
- 1 0 0 0
0
1 0 0 0
2 0 0 0
3 0 0 0
2 0 0 8 2 0 0 7 2 0 0 6 2 0 0 5 2 0 0 4
W o r k in g C a p ita l O f D a b u r I
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The above graph displays the working capital for various years of Cadbury
IndiaLtd.
The working capital of this company has been constantly increasing except for the
year 2002-2003 where it has declined. This shows that Cadbury India Ltd. has
lots of cash blocked in the form of current assets. Hence because of it the working
capital of the company is positive and high.
The company needs to strengthen its cash policies and reduce its money being
blocked in the current assets. Also by decreasing the payment period the company
can improve upon the working capital.
823.5
1307.7
1079.83941.34
638.47
0
500
1000
1500
2007 2006 2005 2004 2003
Working Capital Of Cadbury India Ltd.
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The above graph displays the working capital scenario ofHindustanLeverLimited
the largest FMCG Company in the world. The company has been having an enormous
cash reserves for planning out its future investments. The working capital has been
almost nil and negative since the past few years, showing that the company has an
excellent and well planned finances.
A company with a negative working capital has a faster collection period and a
slower payment period.
Through this managerial efficiency the company is able to generate good profits and
pay off good dividends to its shareholders, thereby keeping them happy.
-1,013.69
300.96
1,714.39
-3,733.77
1,872.48
-4,000.00
-3,000.00
-2,000.00
-1,000.00
0.00
1,000.002,000.00
2007 2006 2005 2004 2003
Working Capital Of Hindustan Lev
Ltd.
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BritanniaIndustriesLtd. working capital was on an increasing step since 2000
till 2003, when finally the company realized it had to do something to control its
blockage of free cash in the current assets. Thereby through its managerial skills
and efficient functioning the company reduced its working capital from Rs 746.65
crores in 2002-2003 to Rs 42.93 crores in financial year 2003-2004, a decline of
almost 94%.
42.93
746.65
592.21
256.96
51.57
0
200
400
600
800
2008 2007 2006 2005 2004
Working Capital Britannia Indust
Ltd.
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The above graph displays the working capital of NestleIndiaLtd., which has
been negative sine the year 2000-2001.
In the financial year 2003-2004 the working capital of the company was Rs
1388.53 millions and in the year it 2003-2004 it further declined to Rs 2588.56
millions, i.e. its working capital almost doubled from 2003 to year 2004.
A brilliant and efficient; working and managerial scenario is depicted through the
working capital of the company.
851.11 827.67
594.86466.88 494.22
0
200
400
600
800
1000
2008 2007 2006 2005 2004
Working Capital Of Marico Industries
Ltd.
Working Capital Of Nestle India Ltd.
-2588.36
-1388.53
-743.81
-317.74
-745.12
-3000
-2500
-2000
-1500
-1000
-500
0
2004 2003 2002 2001 2000
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The graph shown depicts the working capital from year 2000-2004 for Marico
IndustriesLtd. another renowned FMCG Company.
The working capital of the company has been increasing continuously, showing that
the company is blocking its cash available in the current assets or is incurring large
bad debts. The management of the company needs to look into the matter andimprove upon the working capital.
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Analysis
Dabur India Ltd- the company has enough of funds available on credit from its
suppliers, and is collecting money from its debtors at a faster pace to avoid much of the bad
debts. All the data show that how the company manages its funds to secure top position in the
world. This is what Dabur India has done. By bringing down its working capital to a negative
figure and through an efficient management it has become the FOURTH LARGEST FMCG
Company.
Cadbury India Ltd- This shows that Cadbury India Ltd. has lots of cash
blocked in the form of current assets. Hence because of it the working capital of the company
is positive and high.
Hindustan Lever Ltd -The working capital has been almost nil and negative
since the past few years, showing that the company has an excellent and well planned
finances. A company with a negative working capital has a faster collection period and a
slower payment period. Through this managerial efficiency the company is able to generate
good profits and pay off good dividends to its shareholders, thereby keeping them happy.
Nestle India Ltd- A brilliant and efficient; working and managerial scenario is
depicted through the working capital of the company.
Marico Industries Ltd - The working capital of the company has been
increasing continuously, showing that the company is blocking its cash available in the
current assets or is incurring large bad debts. The management of the company needs to look
into the matter and improve upon the working capital.
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SUGGESTIONS
The suggestion that the company should follow is as follows:
The company should put more emphasis on high society by providing them with high endproducts rather than concentrating on rural areas as the company provides lot of products to
rural people which are concerned with them.
The company should have stability in the profits of their products and should keep their product
at maturity stage in product life cycle. They can earn maximum profits at this stage.
If it leads to decline stage then the company has to end the product and the sales will decline
gradually.
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CONCLUSION
Profitability Position-Profitability refers to the ability of the business to earn profit. It
shows the efficiency of the business. Profitability position of a company can be judged by
the profitability ratios of the company as these ratios measure the profit earning capacity of
the company. The inter firm comparison shows that HLL is the company which is having
the best profitability position among all the companies with the help of which we can
conclude that HLL is having a good profit earning capacity .
Liquidity or short term financial position-liquidity shows the financial soundness of the
business and also whether the current assets of the company are sufficient to meet its short
term liabilities. Inter firm comparison shows that all the companies are having current ratio
less than 2:1 which shows that the short term financial position of the is not supposed to be
very sound. In the same way, standard liquid ratio sis 1:1 ,the inter firm comparison shows
that only Cadbury is the company which has better capacity to meet its current obligations
and along with Cadbury , Marico is also having a better liquidity position than other
companies.
Solvency or long term financial position- Solvency means the ability of the business to
meet its outside liabilities and by solvency position we mean the long term financial
position of the company. Inter firm comparison shows that all the companies are having a
good solvency position which can be determined by the different ratios used to calculate the
solvency position.
Turnover position-Turnover means sales which has direct relationship with the
performance of the business. More sales means the business is more active and has better
performance, lesser sales shows inactivity of the business, poor performance and lesser
productivity. The inter firm comparison shows that all the companies have a good turnover
which shows that all the companies are performing well, but among all the companies
Nestls turnover is more than other companies.
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LIMITATIONS
Although the project has been worked out at its best yet there are some limitations, which cannot be
overlooked. Had these limitations been overcome, the findings would be accurate.
Some of the limitations are:
1) Time constraint:
Time was really a limiting factoring the project. Its really difficult to work out such a large project
between two months time.
2) Data constraint:
All the data that has been collected for this project, has been taken from secondary sources like
websites, magazines, newspapers and book.
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BIBLIOGAPHY
The following sources have been sought for the preparation of this report.
Khan and Jain, Financial Management, 4th edition, Dhanpat Rai and Sons publications ltd, NewDelhi.
Philip Kotler, Marketing Management, 9th edition,
OTHER SOURCES-Other sources include annual report of Dabur India ltd. ,Hindustan lever
ltd., articles from news papers like Economic times, Business world, Times of India(business
section),magazines like Business India, Business world, Business today.
WEBSITES
www.indiainfoline.com
www.dabur.com
Documentary sources
www.daburpharma.com
www.google.com
www.knowthis.com
www.consumerpsychologist.com
www.icicidirect.com
www.studyfinance.com
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DEPARTMENT OF MANAGEMENTMAHARAJA AGRASEN INSTITUTE OF MANAGEMENT STUDIES
Attendance Sheet
Name of the Student : Aakansha PahlajaniUniversity Enrollment No. : 02414701709Name of the Supervisor from the Industry : Ms. Supriya Maheshwari (Faculty MAIMS)
S.No. Date Time ProgressReport
Signature ofthe student
Signature ofSupervisor(Institute)
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