sip 2013 15 main report-kiran mankumbre 110914

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Chapter 1

Executive Summary

The project is associated with Corporate Bridge Pvt. Ltd. on “Objective” The aim of the

project to develop a Financial Model of Dabur Pvt. Ltd.

For the purpose of this project it is suggested to take in consideration the Webinar of

Corporate Bridge where they help the student learning through videos. There are 700+

Videos on the Website of Corporate Bridge to which only subscribers can access.

The lessons learnt from Corporate Bridge evaluation and of Dabur India Pvt Ltd

Performance which are helped in studying their Financial Position and can estimate the

Future risk and Potential through Ratio Analysis.

Awareness of Financial Modeling and Ratio Analysis were the key learning through this

project.

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Chapter 2

Introduction

2.1 Introduction to the Ratio Analysis

Financial statement analysis is the process of reviewing and evaluating a

company’s financial statements thereby gaining an understanding the financial

health of the company and enabling Effective decision making for owners and

managers, prospective and present investors, financial institutions, government

entities etc. It involves analysis of past, current and projected Performance of the

company.

Financial Statements are released by companies not only for acceding to the

norms set up by the exchanges on which they are listed and to follow the rules

put down by the regulator of that country but also to provide prospective

investors and financial institutions a brief insight into the company. It helps them

take decision to make investment or give loan, both long term and short term to

the company.

Financial statements are normally available in company’s website, prospectus as

also the Annual and the quarterly results declared by the company. These

statements by themselves contain a lot of numbers which are in comprehensible

unless a proper analysis of such documents is carried out to arrive at a

conclusion on the company's financial health. The pages that follow, aim to

provide a simplified explanation of some of the basic analysis company for

different objectives of the investor/lender. The objectives include Short term and

long term investment, short term and long term lending and future strategy.

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Classification of Ratios

Accounting Ratios are classified on the basis of the different parties interested in

making use of the ratios. A very large number of accounting ratios are used for

the purpose of determining the financial position of a concern for different

purposes. Ratios may be broadly classified in to:

Classification of Ratios on the basis of Balance Sheet.

Classification of Ratios on the basis of Profit and Loss Account.

Classification of Ratios on the basis of Mixed Statement.

This classification further grouped in to:

A. Liquidity Ratio

B. Profitability Ratios

C. Turnover Ratios

D. Solvency Ratios

E. Overall Profitability Ratios

A chart for classification of ratios by statement is given below showing clearly

the types of ratios may be broadly classified on the basis of Income Statement

and Balance

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1. Liquidity Ratios

Liquidity Ratios are also termed as Short-Term Solvency Ratios. The term

liquidity means the extent of quick convertibility of assets in to money for

paying obligation of short-term nature. Accordingly, liquidity ratios are

useful in obtaining an indication of a firm's ability to meet its current

liabilities, but it does not reveal h0w effectively the cash resources can be

managed. To measure the liquidity of a firm, the following ratios are

commonly used:

a) Current Ratio.

b) Quick Ratio (or) Acid Test or Liquid Ratio.

c) Absolute Liquid Ratio (or) Cash Position Ratio.

a) Current Ratio

Current Ratio establishes the relationship between current Assets and

current Liabilities. It attempts to measure the ability of a firm to meet its

current obligations. In order to compute this ratio, the following Formula

is used:

Current Assets

Current ratio= ----------------------------------

Current Liabilities

The two basic components of this ratio are current assets and current

liabilities. Current asset normally means assets which can be easily

converted in to cash within a year's time. On the other hand, current

liabilities represent those liabilities which are payable within a year.

b) Quick Ratio

Quick Ratio also termed as Acid Test or Liquid Ratio. The acid test ratio is

a more severe and stringent test of a firm's ability to pay its short-term

obligations 'as and when they become due. Quick Ratio establishes the

relationship between the quick assets and current liabilities. In order to

compute this ratio, the below presented formula is used:

Liquid Assets

Liquid Ratio = --------------------------

Current Liabilities

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Current liabilities represent those liabilities which are payable within a

year. The ideal Quick Ratio of 1: 1 is considered to be satisfactory. High

Acid Test Ratio is an indication that the firm has relatively better position

to meet its current obligation in time. On the other hand, a low value of

quick ratio exhibiting that the firm's liquidity position is not good.

c) Absolute Liquid Ratio

Absolute Liquid Ratio is also called as Cash Position Ratio (or) Over Due

Liability Ratio. This ratio established the relationship between the

absolute liquid assets and current inabilities. Absolute Liquid Assets

include cash in hand, cash at bank, and marketable securities or

temporary investments. The optimum value for this ratio should be one,

i.e., 1: 2. It indicates that 50% worth absolute liquid assets are considered

adequate to pay the 100% worth current liabilities in time. If the ratio is

relatively lower than one, it represents that the company's day-to-day

cash management is poor. If the ratio is considerably more than one, the

absolute liquid ratio represents enough funds in the form of cash to meet

its short-term obligations in time. The Absolute Liquid ratio Can be

calculated by dividing the total of the Absolute Liquid Assets by Total

Current Liabilities.

Liquid Ratio

Absolute Liquid Assets = ----------------------------

Current Liabilities

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2. Profitability Ratio

The term profitability means the profit earning capacity of any business

activity. Thus, profit earning may be judged on the volume of profit margin of

any activity and is calculated by subtracting costs from the total revenue

accruing to a firm during a particular period. Profitability Ratio is used to

measure the overall efficiency or performance of a business. Generally, a

large number of ratios can also be used for determining the profitability as

the same is related to sales or investments. The following important

profitability ratios are:

a) Gross Profit Ratio

Gross Profit Ratio established the relationship between gross profit and

net sales. This ratio is calculated by dividing the Gross Profit by Sales. It is

usually indicated as percentage.

Net Sales

Gross Profit= ------------------------ x 100

Gross Profit

Higher Gross Profit Ratio is an indication that the firm has higher

profitability. It also reflects the effective standard of performance of firm's

business.

b) Operating Ratio

Operating Ratio is calculated to measure the relationship between total

operating expenses and sales. The total operating expenses is the sum

total of cost of goods sold, office and administrative expenses and selling

and distribution expenses. In other words, this ratio indicates a firm's

ability to cover total operating expenses. In order to compute this ratio,

the following formula is used:

Operating Cost

Operating Ratio = -------------------- *100

Net sales

Operating Cost = Cost of goods sold + Administrative Expenses+ Selling

and Distribution Expenses.

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c) Operating Profit Ratio

Operating Profit Ratio indicates the operational efficiency of the firm and

is a measure of the firm's ability to cover the total operating expenses.

Operating Profit Ratio can be calculated as:

Operating Profit

Operating Profit Ratio = --------------------------- x 100

Net Sales

d) Net Profit Ratio

Net Profit Ratio is also termed as Sales Margin Ratio (or) Profit Margin

Ratio (or) Net Profit to Sales Ratio. This ratio reveals the firm's overall

efficiency in operating the business. Net profit Ratio is used to measure

the relationship between net profit (either before or after taxes) and

sales. This ratio can be calculated by the following formula:

Net Profit after Tax

Net Profit Ratio = -------------------------- X 100

Net Sales

Net profit includes non-operating incomes and profits. Non-Operating

Incomes such as dividend received, interest on investment, profit on sales

of fixed assets, commission received, discount received etc. Profit or Sale

Margin indicates margin available after deduction cost of production,

other operating expenses, and income tax from the sales revenue. Higher

Net Profit Ratio indicates the standard performance of the business

concern..

e) Return on Investment Ratio.

This ratio is also called as ROL This ratio measures a return on the

owner's or shareholders’ investment. This ratio establishes the

relationship between net profit after interest and taxes and the owner's

investment. Usually this is calculated in percentage. This ratio can be

calculated as :

Net Profit (after interest and tax

Return on Investment Ratio = ------------------------------------------ X l00

Shareholders' Fund

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f) Return on Capital Employed Ratio.

Return on Capital Employed Ratio measures a relationship between profit

and capital employed. This ratio is also called as Return on Investment

Ratio. The term return means Profits or Net Profits. The term Capital

Employed refers to total investments made in the business. The concept

of capital employed can be considered further into the following ways:

(1) Gross Capital Employed

(2) Net Capital Employed

(3) Average Capital Employed

(4) Proprietor's Net Capital Employed

Operating profit

Return on Capital Employed Ratio= ------------------------------------

Proprietors Fund

g) Earnings Per Share Ratio

Earnings per Share Ratio (EPS) measures the earning capacity of the

concern from the owner's point of view and it is helpful in determining

the price of the equity share in the market place. Earnings Per Share Ratio

can be calculated as:

Net Profit after Tax and Preference Dividend

Earnings per Share Ratio = ---------------------------------------------------------

No. of Equity Shares

h) Dividend Pay-out Ratio.

This ratio highlights the relationship between payment of dividend on

equity share capital and the profits available after meeting tax and

preference dividend. This ratio indicates the dividend policy adopted by

the top management about utilization of divisible profit to pay dividend

or to retain or both. The ratio, thus, can be calculated as:

Equity Dividend

Dividend Pay-out Ratio = --------------------------------------------------------

Net Profit after Tax and Preference Dividend

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i) Dividend Yield Ratio

Dividend Yield Ratio indicates the relationship is established between

dividend per share and market value per share. This ratio is a major

factor that determines the dividend income from the investors' point of

view. It can be calculated by the following formula:

Dividend Per Share

Dividend Yield Ratio = -------------------------------- X 100

Market Value per Share

j) Price Earnings Ratio.

This ratio highlights the earning per share reflected by market share.

Price Earnings Ratio establishes the relationship between the market

price of an equity share and the earning per equity share. This ratio helps

to find out whether the equity shares of a company are undervalued or

not. This ratio is also useful in financial forecasting. This ratio is calculated

as:

Market Price Per Equity Share

Price Earnings Ratio = ----------------------------------------------

EarningsPer Share

k) Net Profit to Net worth Ratio.

This ratio measures the profit return on investment. This ratio indicates

the established relationship between net profit and shareholders' net

worth. It is a reward for the assumption of ownership risk. This ratio is

calculated as:

Net Profit after Taxes

Net Profit to Net Worth = ------------------------------------------------- X 100

Shareholders' Net Worth

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3. Turnover Ratio

Turnover Ratios may be also termed as Efficiency Ratios or Performance

Ratios or Activity Ratios. Turnover Ratios highlight the different aspect of

financial statement to satisfy the requirements of different parties interested

in the business. It also indicates the effectiveness with which different assets

are vitalized in a business. Turnover means the number of times assets are

converted or turned over into sales. The activity ratios indicate the rate at

which different assets are turned over. Depending upon the purpose, the

following activities or turnover ratios can be calculated:

a) Inventory Ratio

This ratio is also called as Inventory Ratio or Stock Velocity Ratio.

Inventory means stock of raw materials, working in progress and finished

goods. This ratio is used to measure whether the investment in stock in

trade is effectively utilized or not. It reveals the relationship between sales

and cost of goods sold or average inventory at selling price. Stock

Turnover Ratio indicates the number of times the stock has been turned

over in business during a particular period. Supply condition etc. In order

to compute this ratio, the following formulae are used:

Cost of Goods Sold

Stock Turnover Ratio = ------------------------------------------

Average Inventory at Cost

b) Debtor's Turnover Ratio or Receivable Turnover Ratio

Debtor's Turnover Ratio is also termed as Receivable Turnover Ratio.

Receivables and Debtors represent the uncollected portion of credit

sales. Debtor's Velocity indicates the number of times the

receivables are turned over in business during a particular period. In

other words, it represents how quickly the debtors are converted into

cash. It is used to measure the liquidity position of a concern. This ratio

establishes the relationship between receivables and sales. Two kinds of

ratios can be used to judge a firm's liquidity position on the basis of

efficiency of credit collection and credit policy. They are Debtor's

Turnover Ratio and Debt Collection Period. These ratios may be

computed as:

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Net Credit Sales

Debtor's Turnover Ratio = -------------------------------------

Accounts Receivable

Months (or) Days in a year

Debt Collection Period Ratio = --------------------------------------

Debtor's Turnover

c) Creditor's Turnover Ratio

Creditor's Turnover Ratio is also called as Payable Turnover Ratio or

Creditor's Velocity. The credit purchases are recorded in the accounts of

the buying companies as Creditors to Accounts Payable. The Term

Accounts Payable or Trade Creditors include sundry creditors and bills

payable. This ratio establishes the relationship between the net credit

purchases and the average trade creditors. Creditor's velocity ratio

indicates the number of times with which the payment is made to the

supplier in respect of credit purchases. Two kinds of ratios can be used

for measuring the efficiency of payable of a business concern relating to

credit purchases. They are: (1) Creditor's Turnover Ratio (2) Creditor's

Payment, Period or Average Payment Period. The ratios can be calculated

by the following formulas

Credit Purchases Net

Creditors turnover ratio= -------------------------------------

Average Account Payable

d) Working Capital Turnover Ratio

This ratio highlights the effective utilization of working capital with

regard to sales. This ratio represents the firm's liquidity position. It

establishes relationship between cost of sales and networking capital.

This ratio is calculated as follows:

Net Sales

Working Capital Turnover Ratio = ----------------------------

Working Capital

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e) Fixed Assets Turnover Ratio

This ratio indicates the efficiency of assets management. Fixed Assets

Turnover Ratio is used to measure the utilization of fixed assets. This

ratio establishes the relationship between cost of goods sold and total

fixed assets. Higher the ratio highlights a firm has successfully utilized the

fixed assets. If the ratio is depressed, it indicates the underutilization of

fixed assets. The ratio may also be calculated as

Cost of Goods Sold

Fixed Assets Turnover Ratio = ---------------------------------------

Total Fixed Assets

f) Capital Turnover Ratio.

This ratio measures the efficiency of capital utilization in the business.

This ratio establishes the relationship between cost of sales or sales and

capital employed or shareholders' fund. This ratio may also be calculated

as:

Cost of Sale

Capital Turnover Ratio= ---------------------------------

Capital Employed

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4. Solvency Ratio

The term 'Solvency' generally refers to the capacity of the business to meet

its short-term and long term obligations. Short-term obligations include

cre++ditors, bank loans and bills payable etc. A long-term obligation consists

of debenture, long-term loans and long-term creditors etc. Solvency Ratio

indicates the sound financial position of a concern to carry on its business

smoothly and meet its all obligations. Liquidity Ratios and Turnover Ratios

concentrate on evaluating the short-term solvency of the concern have

already been explained. Now under this part of the chapter only the long-

term solvency ratios are dealt with. Some of the important ratios which are

given below in order to determine the solvency of the Concern:

a) Debt - Equity Ratio

This ratio also termed as External - Internal Equity Ratio. This ratio is

calculated to ascertain the firm's obligations to creditors in relation to

funds invested by the owners. The ideal Debt Equity Ratio is 2:1. This

ratio also indicates all external liabilities to owner recorded claims. It may

be calculated as

External Equities

Debt - Equity Ratio= ------------------------------

Internal Equities

b) Proprietary Ratio

Proprietary Ratio is also known as Capital Ratio or Net Worth to Total

Asset Ratio. This is one of the variant of Debt-Equity Ratio. The term

proprietary fund is called Net Worth. This ratio shows the relationship

between shareholders' fund and total assets. It may be calculated as:

Shareholders’ Fund

Proprietary Ratio =--------------------------------------

Total Assets

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c) Capital Gearing Ratio

This ratio also called as Capitalization or Leverage Ratio. This is one of the

Solvency Ratios. The term capital gearing refers to describe the

relationship between fixed interest and/or fixed dividend bearing

securities and the equity shareholders' fund. It can be calculated as shown

below:

Equity Share Capital

Capital Gearing Ratio = -----------------------------------------

Fixed Interest Bearing Funds

d) Debt Service Ratio or Interest Coverage Ratio

Debt Service Ratio is also termed as Interest Coverage Ratio or Fixed

Charges Cover Ratio. This ratio establishes the relationship between

the amount of net profit before deduction of interest and tax and

the fixed interest charges. It is used as a yardstick for the lenders to

know the business concern will be able to pay its interest periodically.

Debt Service Ratio is calculated with the help of the following

formula:

Net Profit before Interest and Income Tax

Interest Coverage Ratio= --------------------------------------------

Fixed Interest Charges

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2.2 Introduction to the Industry: Fast Moving Consumer Goodsin

India (FMCG)

Introduction

Products which have a quick turnover, and relatively low cost are known as Fast

Moving Consumer Goods (FMCG). FMCG products are those that get replaced

within a year. These products are purchased by the customers in small quantity

as per the need of individual or family. These items are purchased repeatedly as

these are daily use products. The price or value of the products is not very high.

These products are having short life also. It may include perishable and non-

perishable products, durable and non-durable goods. Examples of FMCG

generally include a wide range of frequently purchased consumer products such

as toiletries, soap, cosmetics, tooth cleaning products, shaving products and

detergents, as well as other non-durables such as glassware, bulbs, batteries,

paper products, and plastic goods. FMCG may also include pharmaceuticals;

consumer electronics, packaged food products, soft drinks, tissue paper, and

chocolate bars. Subsets of FMCGs are Fast Moving Consumer Electronics which

include innovative electronic products such as mobile phones, MP3 players,

digital cameras, GPS Systems and Laptops. These are replaced more frequently

than other electronic products. White goods in FMCG refer to household

electronic items such as Refrigerators, T.Vs, Music Systems, etc.

The Indian FMCG sector is explained below in detail:

A. Fast Growing Sector

In 2005, the Rs. 48,000-crore FMCG segment was one of the fast growing

industries in India. According to the AC Nielsen India study, the industry

grew 5.3% in value between 2004 and 2005. The Indian FMCG sector is

the fourth largest in the economy and has a market size of US$13.1 billion.

Well-established distribution networks, as well as intense competition

between the organized and unorganized segments are the characteristics

of this sector. FMCG in India has a strong and competitive MNC presence

across the entire value chain. The middle class and the rural segments of

the Indian population are the most promising market for FMCG, and give

brand makers the opportunity to convert them to branded products.

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Most of the product categories like jams, toothpaste, skin care,

shampoos, etc, in India, have low per capita consumption as well as low

penetration level, but the potential for growth is huge.

The Indian Economy is surging ahead by leaps and bounds, keeping pace

with rapid urbanization, increased literacy levels, and rising per capita

income. The big firms are growing bigger and small-time companies are

catching up as well. According to the study conducted by AC Nielsen, 62 of

the top 100 brands are owned by MNCs, and the balance by Indian

companies. Fifteen companies own these 62 brands, and 27 of these are

owned by Hindustan Lever. Pepsi is at number three followed by Thumps

Up. Britannia takes the fifth place, followed by Colgate,Nirma, Coca-Cola

and Parle. These are figures the soft drink and cigarette companies have

always shied away from revealing. Personal care, cigarettes, and soft

drinks are the three biggest categories in FMCG. Between them, they

account for 35 of the top 100 brands.

Top 10 Companies in FMCG Sector

A. Hindustan Unilever Ltd.

B. ITC (Indian Tobacco Company)

C. Nestle India

D. GCMMF (AMUL)

E. Dabur India

F. Asian Paints (India)

G. Cadbury India

H. Britannia Industries

I. Procter & Gamble Hygiene and Health Care

J. Marico Industries

The companies mentioned in Exhibit I, are the leaders in their respective

sectors. The personal care category has the largest number of brands, i.e.,

21, inclusive of Lux, Lifebuoy, Fair and Lovely, Vicks, and Ponds. There are

11 HUL brands in the 21, aggregating Rs. 3,799 core or 54% of the

personal care category. Cigarettes account for 17% of the top 100 FMCG

sales, and just below the personal care category. ITC alone accounts for

60% volume market share and 70% by value of all filter cigarettes in

India.

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The foods category in FMCG is gaining popularity with a swing of launches

by HUL, ITC, Godrej, and others. This category has 18 major brands,

aggregating Rs. 4,637 crore.

Nestle and Amul slug it out in the powders segment. The food category

has also seen innovations like softies in ice creams, Chapattis by HUL,

ready-to-eat rice by HUL and pizzas by both GCMMF and Godrej Pillsbury.

This category seems to have faster development than the Stagnating

personal care category. Amul, India's largest foods company has a good

presence in the food category with its ice-creams, curd, milk, butter,

cheese, and soon. Britannia also ranks in the top 100 FMCG brands,

dominates the biscuits category and has launched a series of products at

various prices.

In the household care category (like mosquito repellents), Godrej and

Reckitt are two players. Good knight from Godrej is worth above Rs 217

crore, followed by Reckitt's Mortein at Rs 149 crore. In the shampoo

category, HUL's Clinic and Sunsilk make it to the top 100, although P&G's

Head and Shoulders and Pantene are also trying hard to be positioned on

top. Clinic is nearly double the size of Sunsilk. Dabur is among the top five

FMCG companies in India and is a herbal specialist. With a turnover of Rs.

19 billion (approx. US$ 420 million) in 2005-2006, Dabur has brands like

Dabur Amul, Dabur Chyawanprash, Vatika, Hajmola and Real. Asian Paints

is enjoying a formidable presence in the Indian sub-continent, Southeast

Asia, Far East, Middle East, South Pacific Caribbean, Africa and Europe.

Asian Paints is India's largest paint company, with a turnover of Rs.22.6

billion (around USD 513 million). Forbes Global magazine, USA, ranked

Asian Paints among the 200 Best Small Companies in the World. Cadbury

India is the market leader in the chocolate confectionery market with a

70% market share and is ranked number two in the total food drinks

market. Its popular brands include Cadbury's Dairy Milk, 5 Star, Eclairs,

and Gems. The Rs.15.6 billion (USD 380 Million) Marico is a leading Indian

group in consumer products and services in the Global Beauty and

Wellness space.

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There is a huge growth potential for all the FMCG companies as the per

capita consumption of almost all products in the country is amongst the

lowest in the world. Again the demand or prospect could be increased

further if these companies can change the consumer's mindset and offer

new generation products.

Earlier, consumers were using non-branded apparel, but today, clothes of

different brands are available and the same consumers are willing to pay

more.

B. Scope of the Sector

The Indian FMCG sector with a market size of US$13.1 billion is the fourth

largest sector in the economy. A well-established distribution network,

intense competition between the organized and unorganized segments

characterizes the sector. FMCG Sector is expected to grow by over 60% by

2010. That will translate into an annual growth of 10% over a 5-year

period. It has been estimated that FMCG sector will rise from around Rs

56,500 crore in 2005 to Rs 92,100 crores in 2010. Hair care, household

care, male grooming, female hygiene, and the chocolates and

confectionery categories are estimated to be the fastest growing

segments, says an HSBC report. Though the sector witnessed a slower

growth in 2002-2004, it has been able to make a fine recovery since then.

For example, Hindustan Unilever Limited (HUL) has shown a healthy

growth in the last quarter.

C. Growth Prospects

With the presence of 12.2% of the world population in the villages of

India, the Indian rural FMCG market is something no one can overlook.

Increased focus on farm sector will boost rural incomes, hence providing

better growth prospects to the FMCG companies. Better infrastructure

facilities will improve their supply chain. FMCG sector is also likely to

benefit from growing demand in the market. Because of the low per capita

consumption for almost all the products in the country, FMCG companies

have immense possibilities for growth. And if the companies are able to

change the mindset of the consumers, i.e. if they are able to take the

consumers to branded products and offer new generation products, they

would be able to generate higher growth in the near future.

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It is expected that the rural income will rise in 2007, boosting purchasing

power in the countryside. However, the demand in urban areas would be

the key growth driver over the long term. Also, increase in the urban

population, along with increase in income levels and the availability of

new categories, would help the urban areas maintain their position in

terms of consumption.

At present, urban India accounts for 66% of total FMCG consumption,

with rural India accounting for the remaining 34%. However, rural India

accounts for more than 40% consumption in major FMCG categories such

as personal care, fabric care, and hot beverages. In urban areas, home and

personal care category, including skin care, household care and feminine

hygiene, will keep growing at relatively attractive rates.

D. Factors favoring India to Get Competitive Edge

The following factors make India a competitive player in FMCG sector

i. Availability of Raw Material: Because of the diverse agro-climatic

conditions in India, there is a large raw material base suitable for food

processing industries. India is the largest producer of livestock, milk,

sugarcane, coconut, spices and cashew and is the second largest

producer of rice, wheat and fruits & vegetables. India also produces

caustic soda and soda ash, which are required for the production of

soaps and detergents. The availability of these raw materials gives

India the location advantage

ii. Labour Cost Comparison: Low cost labor gives India a competitive

advantage. India's labor cost is amongst the lowest the world, after

China & Indonesia. Low labor costs give the advantage of low cost of

production. Many MNC's have established their plants in India to

outsource for domestic and export markets.

iii. Presence across Value Chain: Indian companies have their presence

across the value chain of FMCG sector, right from the supply of raw

materials to packaged goods in the food-processing sector. This brings

India a more cost competitive advantage. For example, Amul supplies

milk as well as dairy products like cheese, butter, etc.

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Analysis of FMCG Sector in India

The analysis of the FMCG sector of India is carried out on the basis of following:

A) Pest Analysis

Pest analysis of FMCG sector in India is carried out on political, economical,

social and technological aspects. It is explained below:

Political

• Tax exemption in sales and excise duty for small scale industries.

• Transportation and infrastructure development in rural areas helps in

distribution network.

• Restrictions in import policies.

• Help for agricultural sector.

Economic

• The GDP rate of Indian economy is increasing every year. It is expected in

future it would-be better only in comparison with other counters.

• Inflation rate is increasing across the world and India is also no exception.

The Government and Reserve Bank of India both are trying to control the

inflation rate with the help of different measures.

• Increase in disposable income has taken place due to higher GDP rate. The

per capital income is increasing so the customers are having more income

to spent for various reasons.

• Indian FMCG sector recorded 16% sales growth in last fiscal year and it is

expected it would further improve in the forthcoming years.

• The FMCG sector is a 4th largest sector of Indian economy with market

size of more than 60,000crore. The Indian Territory is very large and

number of customers is also very high.

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Social

• The Indian culture, social & life styles are changing drastically. The total

population is nearly 115 crores and population includes rich, poor, middle

class, male, female, located in rural, urban and sub urban areas, different

level of education etc.

Technology

• Technology has been simplified and available in the industry. Where

technology is not available then it is brought from foreign countries to

meet FMCG sector requirements.

• Foreign players help in high technological development. With research

and Development facilities the new technologies are developed alone or

with the help of foreign players.

B) Industry Analysis of FMCG Sector

• The FMCG sector in India is expected grow at a compound annual growth

rate at 9% to assize of 1, 43,000 cars by 2010 from Rs93000 cars at

present.

• The industry is growing double digit growth in last 2 yrs.

• Annual revenues of us $14.74 billion.

• Market growth rate – Rural -40%, urban -25%

C) Main Competitors

• The FMCG sector is developing fast and at present there is high level of

competition in this sector. The main competitors are HUL, Britannia,

Nestle, Cadbury, Colgate, Amul, ITC, Dabur, Emami, Nirma and Marico.

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D) SWOT Analysis

SWOT analysis of this sector is carried as follows:

Strengths

• Well-established distribution network extending to rural areas.

• Strong brands in the FMCG sector.

• Low cost operations

Weaknesses

• Low export levels.

• Small scale sector reservations limit ability to invest in technology and

achieve

• Economies of scale.

• Several "me-too’’ products.

Opportunities

• Large domestic market.

• Export potential

• Increasing income levels will result in faster revenue growth.

Threats

• Imports

• Tax and regulatory structure

• Slowdown in rural demand

E) Factors Affecting the Growth

Over the years, demand for consumer durables has increased with rising

income levels, double-income families, changing lifestyles, availability of

credit, increasing consumer awareness and introduction of new models.

Products like air conditioners are no longer perceived as luxury products.

The biggest attraction for MNCs is the growing Indian middleclass. This

market is characterized with low penetration levels. MNCs hold an edge over

their Indian counterparts in terms of superior technology combined with

steady flow of capital, while domestic companies compete on the basis of

their well-acknowledged brands, an extensive distribution network and an

insight in local market conditions.

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With companies opting for information technology a reduction in inventory

levels and an improvement in the working capital cycle is likely. This will

benefit companies by controlling costs and improving margins.

F) Major Government Policies/Changes:

In the context of the positives and the negatives, investing in FMCG stocks is

a tricky prospect. Given this, one has to be active with FMCG stocks and

should book profits as soon as the targeted returns are reached. Unlike

earlier times, nowadays, one cannot afford to buy an FMCG stock and forget

about it for a long time.

It is unlikely that the government's initiatives will boost the sector overnight.

The ongoing price wars mean that company earnings will continue to be

volatile. Hence, in the short-term, one should look at individual companies'

prospects rather than the overall sector’s prospects.

This means that it is better to leave mutual funds that concentrate on FMCG

companies and instead buy shares depending upon the company. It is not

necessary that an MNC will be better than an Indian company.

One should look at company’s profile and analysis its prospects before

investing in its shares. It is not that you will lose out by buying FMCG stocks.

But, in buying an FMCG stock, it will be ideal to cash in during short bursts of

activity.

G) Major Mergers nod Acquisitions in the Past

Vijay Mallya's United Breweries Group (through Group entities Mc

Dowell &Co,Phipson Distillery, United Spirits & United Breweries

Holdings) acquired a controlling stake in Jumbo Group's Shaw Wallace &

Company for a total deal value of Rs 16.2billion ($371.6 million).

The other Jumbo Group Company to be sold was Shaw Wallace

Breweries. SAB Miller increased its stake by 50 percentage points to 99

per cent in the company through its Indian subsidiary, Mysore

Breweries. The stake was held by Shaw Wallace & Company and, hence,

had SAB Miller not undertaken this acquisition, Shaw Wallace Breweries

would effectively have been a joint venture between two rivals — UB

and SAB Miller.

24

H) Expected Future Trends

Following trends are expected in future:

Huge investments in promoting brands, setting up distribution networks and

intense competition are what FMCG companies face. Creating strong brands

is important formic companies and they will have to devote considerable

money and effort in developing brands. Given the fragmented nature of the

Indian retailing industry and the problems of Infrastructure, FMCG

companies also need to develop extensive distribution networks to achieve a

high level of penetration in both the urban and rural markets.

This will require allot of resources. The unorganized sector has a presence in

most product categories of the FMCG sector. Small companies from this

sector have used their vocational advantages and regional presence to reach

out to remote areas where large consumer products have only limited

presence. Their low cost structure also gives them an advantage. And this

will only lead to price wars, which, though good for consumers, will affect the

bottom lines of companies.

Key Players

Here are many domestic and MNCs in Indian FMCG sector and they are

mentioned in the list:

01. Hindustan Unilever Ltd.

02. ITC (Indian Tobacco Company)

03. Nestlé India

04. GCMMF (AMUL)

05. Dabur India Ltd.

06. Asian Paints (India)

07. Cadbury India

08. Britannia Industries

09. Procter & Gamble Hygiene and Health Care

10. Marico Industries

11. Britannia Industries Ltd.

25

2.3 Introduction to the Corporate Bridge

Corporate Bridge Group is formed by graduates from leading institutes (IITs,

IIMs & AIM). "Corporate Bridge" as the name suggest, helps in bridging the gap

between the aspiring entrant and the corporate world. Corporate Bridge is

globally recognized training firm, providing blend of instructor-led and online

financial training programs along with e-learning services. With Corporate

Bridge's entrepreneurial spirit coupled with unparalleled experience (CLSA

India, KPMG, YES Bank, JPMorgan, SBI Capital Markets, CRISIL etc) and

comprehensive capabilities (MBA, CFA, FRM, CAs) across all industries and

business functions, we commit to deliver a world class professional training and

learning services that continues improving knowledge efficiency.

Corporate Bridge Group; has two verticals "Educorporatebridge" and

"Elearninglabz"

Educorporatebridge deals with Online and Instructor Lead Training Programs in

various financial courses viz. Equity Research, Wealth Management, Technical

Analysis Investment banking, Private Equity, Fundamental Analysis, Investment

Research, Credit Research etc and preparatory courses like CFA Level I & II and

FRM Level I & II, Campus Placement Trainings

26

Elearninglabz solution portfolio consists of custom e-content development for

training and learning needs in collaboration with our clients and subject matter

specialist, custom Learning Management System (LMS) suite, Test & Assessment

solutions.

27

Dabur India Pvt. Ltd

Dabur (Dabur India Ltd. Derived from Daktar Burman) is India's

largest Ayurvedik medicine manufacturer. Dabur was founded by Dr. SK Burman,

a physician in West Bengal. He founded Dabur in 1884 to produce and dispense

Ayurvedic medicines. His initial goal was to successfully produce and market

effective medicine for ordinary villagers. Dr. Burman designed Ayurvedic

medication for diseases such as cholera and malaria. Soon the news of his

medicines travelled, and he came to be known as the trusted 'Daktar' or Doctor

who came up with effective cures. That is how Dabur got its name - derived from

the Devanagri rendition of Daktar Burman.

Dabur's Ayurvedic Specialties Division has over 260 medicines for treating a

range of ailments and body conditions-from common cold to chronic paralysis.

Dabur International, a fully owned subsidiary of Dabur India formerly held

shares in the UAE based Weikfield International, which it disposed of on 25 June

2012.

Future Prospects of Dabur India

Favorable Economic Development: Bright Industry prospects

The Indian FMCG industry has benefitted majorly by favorable economic

development and change in consumer lifestyle over the last decade. Major

economic developments like growth in GDP, higher disposable income, growing

urbanization, rural expansion, infrastructure development, increased

participation of women in the workforce etc. have helped the industry record

growth even in recessionary periods. Therefore, FMCG industry has grown by

around 14% and 11% in FY 08 and FY 09 (economic slowdown period),

respectively.

Considering favorable economic development and change in consumer lifestyle

(willingness to spend more on better quality products), the industry is expected

to grow around 12-17% in next decade. The FMCG industry has now shifted its

focus to rural areas and low income groups. These segments present an

enormous growth opportunity for the FMCG sector as a whole.

28

Strong Brand Image: A Competitive Advantage

Dabur India has created a strong brand image in Indian as well as global markets.

It has five flagship brands with distinct brand identities – Dabur Chawanprash as

the master brand for natural healthcare products, Vatika for premium personal

care, Hajmola for digestives, Real for fruit juices and beverages and Fem for

fairness bleaches and skin care products.

With this brand image, Dabur India can pass on the increased raw material prices

and would also help to successfully launch a new product in the market.

Geographical Expansion through Acquisition: A Key Growth Driver

Dabur India has made its presence across 60 countries and 4 continents (Asia,

Africa, North America and Middle East). Therefore, the export contributes

around 30% to total revenue of the Dabur India Pvt.Ltd. The Dabur India Pvt.Ltd

has been expanding globally through acquisition in the overseas markets. In FY

11-12, Dabur India has acquired Hobi Group in Turkey and Namaste

Laboratories in USA. These acquisitions have given access to a new market as

well as to a wide range of high margin personal care products. Thus, overseas

expansion is helping the Dabur India Pvt.Ltd to diversify its product mix as well

as its global reach. Table, given below, lists the companies acquired by Dabur

India.

29

Entering into High Margin Products category: Strong Product-mix

Dabur’s core product portfolio comprises categories like Ayurvedic tonics and

oral care which are mature categories and hence the growth has been stagnant

over the last few years. Therefore, it has been increasing its presence in other

traditional categories like hair care, household care and foods. For example-

Dabur's acquisition of Fem Care in June 2009 has given it a strategic presence in

the high potential and high margin skin-care segment. Fem Care has helped

Dabur to become the third largest player in the skincare market. The growth in

these high-margin categories will increase its revenue as well as earnings of the

Dabur India Pvt.Ltd.

Intense Competition in Domestic market: A key Cause for Concern

Dabur India will continue to face tough competition in some of its key products

category such as toothpaste, hair oil, shampoo and skin care. This is because of

the entry of MNCs (like P&G entering into toothpaste), aggressive marketing by

leaders (like Marico in hair oil and HUL in shampoo) and innovative launches by

major competitors (like Garnier in skin care). Considering the increasing

competition, we feel that it might slow down margins in future.

30

2.4 Introduction to the Financial Statement Analysis

Financial statement analysis is defined as the process of identifying financial

strengths and weaknesses of the firm by properly establishing relationship

between the items of the balance sheet and the profit and loss account. There are

various methods or techniques that are used in analyzing financial statements,

such as comparative statements, schedule of changes in working capital, common

size percentages, funds analysis, trend analysis, and ratios analysis.

The objective of financial statements is to provide information about the

financial position, performance and changes in financial position of an enterprise

that is useful to a wide range of users in making economic decisions. Financial

statements should be understandable, relevant , reliable and comparable.

Reported assets, liabilities and equity are directly related to an organization's

financial position. Reported income and expenses are directly related to an

organization's financial performance

Financial statement analysis helps the business owners and with other

interested people to analyze the data in financial statement to provide them

with better information about such key factors for decision making and ultimate

business survival. Financial statement analysis involves analyzing the

information provided in financial statement to provides information about the

organization past performance , it’s present condition & how the organization

will perform in its future. It also helps to access the organization earnings in

term of power , persistence , quality &growth along with its solvency.

31

Types of Financial Statements

There are three types of financial statement:

1. Income Statement

The income statement shows all items of income and expense of any business.

It reflects a specific time period. So, an income statement for the quarter

ending March 31, shows revenue and expenses for January, February and

March; if the income statement is for the calendar year ending December 31, it

would contain all your information from January 1 to December 31.Income

statements are also known as statements of profit and loss or P&Ls. The

bottom line on an income statement is income less expenses. If income is more

than expense, then there happen to be a net profit. And if Expense more

than income then there is a net loss.

2. Balance Sheet

Accounting is based upon a double entry system - for every entry into the

books there has to be an opposite and equal entry. The net effect of the entries

is zero, which results your books being balanced. The proof of this balancing

act is shown in the balance sheet when Assets =Liabilities + Equity. The

balance sheet shows the health of a business from day one to the date on the

balance sheet. Balance Sheets are always dated on the late day of the reporting

period. If you’ve been in business since 2009and the balance sheet is dated as

on December 31 of the current year, the balance sheet will show the results of

your operations from 2009 to December 31

3. Statement of Cash Flows

The statement of cash flows shows the ins and outs of cash during the

reporting period. The statement of cash flows takes aspects of the income

statement and balance sheet and kind of crams them together to show cash

sources and uses for the period.

32

Chapter 3

Project Details

3.1 Objective

To evaluate the liquidity, Solvency & profitability position of Dabur India Pvt Ltd

33

3.2 Study Methodology

To carry out the present study, Dabur India limited has been selected

purposively based on secondary data. It is one of the leading companies in

India.

Data Source

The data required for the study has been collected from the published annual

reports of the selected company.

Study Period

The study period ranges from 2009 to 2013.

Tools & Techniques of Data Analysis

The data collected from the published annual reports of the selected company

for the five years period have been suitably arranged, classified and tabulated

as per requirement for the study.

Secondary Data: Internet, Books, videos and Data of Dabur India Pvt. Ltd

Sample Frame: Oone company ( Dabur India Pvt. Ltd)

34

3.3 Limitations of the Report

1. The study has been conducted over a limited period of five years only which

doesn’t forecast the vital valuation of firm.

2. The study is mainly based on secondary data which limits the information

collects by others so there is a lack of evidence for the data.

3. The study is based on consolidated financial statement, which may lead to

some errors and assumptions.

4. The present study is limited to a single Dabur India Pvt.Ltd and based on

many assumptions.

35

Chapter 4

Analysis & Findings

A. Solvency Ratios

A1. Current Ratio

Current Ratio = Current Asset/Current Liability

Particulars Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

Current Assets

Inventories 499.74 528.57 460.58 298.44 261.72

Sundry Debtors 255.32 224.17 202.46 130.48 112.36

Cash and Bank Balance 319.4 261.2 26.08 48.8 32.16

Total Current Assets 1074.46 1013.94 689.12 477.72 406.24

Current Liabilities 771.96 695.7 539.05 471.73 381.87

Ratio 1.39 1.46 1.28 1.01 1.06

Interpretation

The above chart indicates that current ratio is higher in the mar 12 as 1.46:1

followed by the mar 13 as 1.13:1.

From the above it clears that the current ratios are below the standard ratio

hence liquidity position Dabur India ltd is lower. It may find difficult to meet

its obligation as and hence they become due, though its working capital may

be higher.

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

36

A2. Quick Ratio

Quick Ratio = Quick Asset/Quick Liability

Interpretation

Quick ratio indicates immediate ability of as Dabur India Pvt. Ltd to pay off its

current obligation.

From the above chart it is clear that in past five year the liquidity are not

satisfactory since they are below the standard ratio i.e. 1:1.

Step should be taken to improve their liquidity position.


0.740.85 0.78

0.68

0.99


Quick Assets

Debtor 255.32 224.17 202.46 130.48 112.36

Cash & bank balance 319.4 261.2 26.08 48.8 32.16

Total quick assets 574.72 485.37 228.54 179.28 144.52

Quick liabilities 771.96 695.7 539.05 471.73 381.87

Quick ratio 0.74 0.70 0.42 0.38 0.38

37

A3. Cash Ratio

Cash Ratio = Cash &Bank Balance/Current Liability


Cash & Bank Balance 319.4 261.2 26.08 48.8 32.16


Cash Ratio 0.41 0.38 0.05 0.10 0.08

Interpretation

From the above chart indicates that:

In the year 2013 the cash ratio was higher as compare to others.

The position of the Dabur India Pvt. Ltd is unsatisfactory it means the Dabur

India Pvt. Ltd having low cash and cash equivalents to pay its short term debt.

0.41 0.38

0.050.10 0.08


38

B. Solvency Ratios

B1. Capital Gearing Ratio

Capital Gearing Ratio = Interest Bearing Securities/Equity Shareholder

Fund


Debt fund 241.58 273.27 253.35 106.07 138.98

Equity shareholder fund 1594.78 1303.27 1101.16 749.38 738.2

Ratio 0.15 0.21 0.23 0.14 0.19

Interpretation

The above chart indicates that:

Above ratio are below the standard ratio i.e. 0.25 hence it’s showed that:

Capital structure of the Dabur India Pvt. Ltd is low geared.

The Dabur India Pvt .Ltd depends on equity to a greater extent.

The Burdon of interest will be lower.

0.130.15 0.14

0.060.08


39

B2. Debt to Equity Ratio

Debt Equity Ratio = Total liabilities / Net Worth


Debt fund 241.58 273.27 253.35 106.07 138.98

Equity shareholder fund 1594.78 1303.27 1101.16 749.38 738.2

Ratio 0.15 0.21 0.23 0.14 0.19

Interpretation

The above chart it indicates that:

Above ratios are the below the standard ratio i.e. 2:1

Dabur India Pvt. Ltd has satisfactory margin of safety for its loan creditors.

Dabur India Pvt. Ltd depends on equity to greater extent.

There will be lesser burden of interest,

Dabur India Pvt. Ltd can raise additional capital without any difficulty.


0.130.15 0.14

0.060.08

40

B3. Interest Gearing Ratio

Interest Gearing Ratio = PBIT/ Interest


PBDT 822.91 653.41 650.61 566.19 458.93

Interest 18.4 13.4 12.93 13.28 14.47

Interest Coverage Ratio 44.72 48.76 50.32 42.63 31.72

Interpretation


In March 2011 the interest coverage ratio is greater than the rest of the year,

i.e. the Dabur India ltd is 50.32 times the interest is covered by earning of the

Dabur India Pvt. Ltd.

The overall interest coverage ratio is greater than the standard ratio. Its

shown that:

The Dabur India Pvt. Ltd has the capacity to pay interest.

Larger amount of profit is available for dividend.

There is a good scope for attraction of fresh loan.

There may be less debt and the higher equity in financing the assets.

44.7248.76 50.32

42.63

31.72


41

C. Profitability Ratio

C1. Net Profit Ratio

Net Profit Ratio = Net Profit / Net Sales


Net Profit 590.98 463.24 471.41 433.33 373.55

Net Sales 4349.39 3759.33 3274.43 2867.42 2408.33

Ratio 14% 12% 14% 15% 16%

Interpretation


The management is insufficient in management of all the actions.

It has unsatisfactory control on operating and non-operating coast.

It has leas margin available for appropriation.

There will be fewer increases in net worth.

14%

12%

14%15%

16%


42

C2. Earnings Per Share

Earnings per share = Net Profit / Number of Equity Shares


Net Profit 590.98 463.24 471.41 433.33 373.55

Shares in Issue 174.2935 174.2101 174.0724 86.7586 86.5076

Earnings per share 3.39 2.66 2.71 4.99 4.32

Interpretation


In the year 2010 the EPS was higher i.e. Rs4.99/ share. In March.

The above ratio are greater than the standard ratio i.e. 1:4 of equity shares,

this showing that:

Large amount is available for dividend, and transfer to reserve etc.

These will be greater increase in net worth.

There is greater scope for fresh fund from the equity shareholders.

Overall profitability position of the Dabur India Pvt.Ltd is quite satisfactory.

3.39

2.66 2.71

4.99

4.32


43

C3. Operating Profit Margin

Gross profit margin (%) = (gross profit/income)*100


Operating Profit 754.42 659.92 624.38 551.52 444.1

Net Sales 4349.39 3759.33 3274.43 2867.42 2408.33

Ratio 17.35 17.55 19.07 19.23 18.44

Interpretation


The above ratio are lower than the standard ratio i.e. 20%

In the year 2010 the operating profits margin was higher a compare to the

other.

There is decreasing trend after March 2010.

Operating efficiency of the Dabur India Pvt. Ltd is lower.

The management has the unsatisfactory control over operating cost.

Operating profitability is lower.

Small margin is available to meet the non-operating expenses.

17.3417.54

19.06 19.17

18.33


44

C4. Return on Capital Employed

ROCE = EBIT / Total Capital Employed



Proprietors Equity 1594.78 1303.27 1101.16 749.38 738.2

Ratio 47% 51% 57% 74% 60%

Interpretation

The above chart it indicates that:

In the year 2010 the Dabur India Pvt.Ltd getting higher rate of return i.e.74%

From the past five year Dabur India Pvt.Ltd having higher overall profitability.

The rate of productivity is higher.

There will be increase in net worth.

Capital employed is used more effectively.

These are more as cope of attraction of fresh fund.

0%

10%

20%

30%

40%

50%

60%

70%

80%


45

C5. Return on Proprietor’s Fund

Return in Proprietors Fund=Net Profits /Proprietary Equity Fund


Net Profit 590.98 463.24 471.41 433.33 373.55

Owners’ Equity 1594.78 1303.27 1101.16 749.38 738.2

Ratio 37% 36% 43% 58% 51%

Interpretation


There is the greater scope is available for attraction of fresh capitals from

proprietors.

The overall profitability position of the Dabur India Pvt.Ltd is quite as

satisfactory.

Large amount is available for the payment of dividend, transfer to reserve etc.

Proprietor’s funds are utilized effectively.

0%

10%

20%

30%

40%

50%

60%

70%


46

Chapter 5

Conclusions & Recommendations

5.1 Conclusions

In case of Long term investment, Dabur India Pvt.Ltd seems to be an

attractive investment because the variables of Long Term Investment like

Net Profit, Operating Profit, and EPS are in favor of Dabur India Pvt. Ltd.

The Dabur India Pvt.Ltd having low current ratio which indicates that, It may

have problems in meeting its short term obligation.

In case of Long term lending, Dabur India Pvt.Ltd shows very attractive

interest coverage ratio which indicates that the Dabur India Pvt.Ltd have

enough cash to payout their debt holders.

Dabur India Pvt.Ltd has high EPS for over 5 years which indicates that it has

ability to attract more and more investment through equity.

Dabur India ltd has a low gearing capital structure which indicates that it

depends on the equity capital at a greater extent.

Dabur has insufficient cash and cash equivalents to pay its short term debt.

47

5.2 Recommendations

Dabur India Pvt. Ltd should try to maintain its net worth for having

satisfactory fund for equity share holders.

Dabur India Pvt. Ltd should give more emphasis to optimum utilization of

the resources and funds.

The company should improve the return on capital employed, as a source of

long term fund.

The company should improve their cash ratio by recovering their

outstanding amount from their debtors as early as possible.

The company needs to improve their profit margin to attract the new

investors.

48

ANNEXURES

A. Extra Tables

A1. Vertical Profit and Loss A/c of Dabur India Pvt Ltd Particulars Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

Sales Turnover 4349.39 3798.05 3305.42 2891 2435.85

(-)Excise Duty 0 38.72 30.99 23.58 27.52

Net Sales 4349.39 3759.33 3274.43 2867.42 2408.33

Other Income 86.89 6.89 39.16 27.95 29.3

Stock Adjustments -25.83 59.33 78.31 9.68 38.89

Total Income 4410.45 3825.55 3391.9 2905.05 2476.52

Raw Materials 2301.8 2092.87 1740.68 1393.97 1271.74

Power & Fuel Cost 48.12 46.41 42.39 35.43 36.63

Employee Cost 281.24 243.36 230.84 212.34 167.32

Other Expenses 0 25.22 25.21 22.74 17.59

Selling and Admin

Expenses

0 605.84 589.09 557.26 425.16

Miscellaneous Expenses 937.98 145.04 100.15 103.84 84.68

Total Expenses 3569.14 3158.74 2728.36 2325.58 2003.12


PBDIT 841.31 666.81 663.54 579.47 473.4

Interest 18.4 13.4 12.93 13.28 14.47

PBDT 822.91 653.41 650.61 566.19 458.93

Depreciation 73.24 36.81 37.73 31.91 27.42

Other Written Off 0 29.07 16.6 5.66 3.94

Profit Before Tax 749.67 587.53 596.28 528.62 427.57

Extra-ordinary items 0 0 0.25 -0.19 -0.72

PBT 749.67 587.53 596.53 528.43 426.85

Tax 158.69 123.79 124.85 93.7 51.44

Reported Net Profit 590.98 463.24 471.41 433.33 373.55

Total Value Addition 1267.34 1065.87 987.68 931.61 731.38

Preference Dividend 0 0 0 0 0

Equity Dividend 261.44 226.47 200.19 173.6 151.39

Corporate Dividend Tax 43.56 36.74 32.82 29.5 25.73

Shares in issue (lakh) 17429.35 17421.01 17407.24 8675.86 8650.76

Earnings Per Share (Rs) 3.39 2.66 2.71 4.99 4.32

Equity Dividend (%) 150 130 115 200 175

Book Value (Rs) 9.15 7.48 6.33 8.64 8.53

49

A2. Balance Sheet of Dabur India Pvt Ltd Particulars Mar ‘13 Mar ‘12 Mar '11 Mar '10 Mar '09

Sources Of Funds

Total Share Capital 174.29 174.21 174.07 86.76 86.51

Equity Share Capital 174.29 174.21 174.07 86.76 86.51

Share Application Money 0 0 0 0.14 0

Preference Share Capital 0 0 0 0 0

Reserves 1420.49 1128.28 927.09 662.48 651.69

Revaluation Reserves 0 0.78 0 0 0

Net worth 1594.78 1303.27 1101.16 749.38 738.2

Secured Loans 22.47 19.12 17.57 24.27 8.26

Unsecured Loans 219.11 254.15 235.78 81.8 130.72

Total Debt 241.58 273.27 253.35 106.07 138.98

Total Liabilities 1836.36 1576.54 1354.51 855.45 877.18

Application Of Funds

Gross Block 937.7 883.23 766.88 687.23 518.77

Less: Accum. Depreciation 321.12 297.9 269.32 236.28 210.45

Net Block 616.58 585.33 497.56 450.95 308.32

Capital Work in Progress 17.07 25.12 11.92 23.31 51.71

Investments 729.41 552.72 519.23 348.51 232.05

Inventories 499.74 528.57 460.58 298.44 261.72

Sundry Debtors 255.32 224.17 202.46 130.48 112.36

Cash and Bank Balance 319.4 261.2 26.08 48.8 32.16

Total Current Assets 1074.46 1013.94 689.12 477.72 406.24

Loans and Advances 390.37 603.61 461.81 348.94 455.65

Fixed Deposits 0 30.09 166.33 115.11 111.53

Total CA, Loans &

Advances

1464.83 1647.64 1317.26 941.77 973.42

Deferred Credit 0 0 0 0 0


Provisions 219.57 592.4 535.36 440.1 315.1

Total CL & Provisions 991.53 1288.1 1074.41 911.83 696.97

Net Current Assets 473.3 359.54 242.85 29.94 276.45

Miscellaneous Expenses 0 53.83 82.95 2.74 8.64

Total Assets 1836.36 1576.54 1354.51 855.45 877.17

Contingent Liabilities 1719.07 1337.82 1075.89 173.48 174.15

Book Value (Rs) 9.15 7.48 6.33 8.64 8.53

50

B. Bibliography

Books Referred

“Financial Management”, I M Pandey; 10th edition; Vikas Publishing House

Private Limited New Delhi

“Management Accounting”, Arvind A Dhond; 2nd edition; Vipul Prakashan

“Management Accounting”, Chaudhari and Chopde; 1st Edition ;Sheth

Publication

“Research Methodology”, C R Kothari; 2nd revised edition; New Ege-

International Publisher.

“Business statistics”, C.C Beri ,2nd edition ,Tata Mc–Grow Hill Publication

Company ltd

Websites/Portals Referred

http://www.moneycontrol.com

http://www.investopedia.com

http://www.wikipedia.com

http://www.moneycontrol.com/annual-report/dabur

http://money.rediff.com

http://www.kotaksecurities.com/stock-market-news/equity/5013/Dabur-

India-Ltd.-ratios/12540103.00

sip 2013 15 main report-kiran mankumbre 110914

Data & Analytics