Costing and Control-

Dabur India Limited

Date of submission: 30
th
Sept,2014
Faculty Name: Latha Ramesh
Submitted by,

Abey John Jacob-1421201(LO 4,5)
Debanuj Mandal-1421211(LO 2,3)
Punit Kumar Singh-1421225(LO 1)
Swati Katyal-1421257(Introduction)


DABUR INDIA LIMITED
I ntroduction
Brief profile of the company
Dabur is a leading FMCG player with a wide portfolio of brands, a robust distribution of
network. With a deep-rooted understanding of consumer preferences and behaviour dabur is
ahead of other companies even in the face of challenging economic environment.To fulfil the
changing needs and aspirations of their consumers dabur take proactive measures to adjust
their profile and portfolios. They are creating newer channels of growth to optimise their
distributed network.
With a portfolio of over 400 products, Dabur is todays Indias largest Natural Health &
Personal Care Company. Innovation has always been the lifeline of our business and Dabur
has, over the past one year, introduced around 30 new products and variants across the globe,
straddling a variety of consumer segments. These new introductions, like their existing range,
are aimed at meeting a single goal Dedicated to the Health & Well-Being of every
Household.

Main products
-Master Brands of Dabur


DABUR CHYAWANPRASH
VATIKA
FEM
REAL
HAJMOLA

-Major Products

i. Personal Care: Dabur presents a range of Herbal & Ayurvedic Personal Care
products, created to make you look and feel good. Bringing together the gentle
touch of nature and Ayurveda's wisdom, the range covers categories like Hair
Care, Skin Care and Baby Care, and is backed by the unfailing quality stamp
of Dabur.

ii. Health Care: Dabur's Health Care range brings for you a wide selection of
Ayurvedic and natural products that offer complete care for varying individual
needs. Products are derived from the time-tested heritage of Ayurveda, and
backed by the most modern scientific test & trials that ensure unfailing
quality and safety in anything you pick.
iii. Food
Home Care: Dabur India Ltd has a portfolio of superior products that help
take care of home. The range of Home Care products have been carefully
developed to ensure that your living space not only looks good, but also smells
good, all day long. And more importantly, they help keep your family healthy.
Odonil keeps your home fresh and smelling great. Odomos protects your family
from disease causing mosquitoes while Odopic leaves your dishes clean and
smelling fresh. Sanifresh Shine keeps your toilet sparkling clean and free from
germs while our latest innovation Dazzl gives a mirror like shine to your floors,
kitchen and glass surfaces, while keeping them germ-free.

iv. Consumer Health-Ethical: For over 125 years, Dabur has mastered the art of
producing Ayurvedic preparations, blending traditional knowledge of drug
manufacturing with scientific update. Today, Dabur's Consumer Health Division -
- which looks after marketing of Ayurvedic medicines and Ayurvedic Over-The-
Counter products -- has redefined the Ayurvedic market and healthcare promotion
activities involving leading Ayurvedic practitioners across the globe. At Dabur,
has more than 350 Shastriya (Classical) Ayurvedic preparations, which form an
important part of every Ayurvedic practitioners daily practice.

v. Professional Range: Dabur is Indias largest natural beauty products company.
Leveraging its expertise in Ayurveda and its over 127 years of natural heritage,
Dabur has now developed a range of highly differentiated and efficacious
products specially for the professional. These products would be available
exclusively to the parlours and salons across India through our 180-member
strong & dedicated parlour professional team.

vi. Guar Gum: Dabur India is one of the foremost companies who started
manufacturing guar gum and other natural gums products in India. The
manufacturing facility was christened as Natural Gums Division. With over 30
years rich experience, Dabur India is supplying its natural gums products under
brand name DABISCO. DABISCO products are well accepted and appreciated
by customers globally for consistent premium quality and rich properties.
I ndustry Group
Household and Personal Products
The household and personal products industry consists of total revenues generated through
the sales of household and personal products. The household products segment includes air
fresheners, bleach, dishwashing products, furniture & floor polish, general purpose cleaners,
insecticides, paper products, scouring products, shoe polish, textile washing products, toilet
care products and others. The personal products segment includes baby personal care,
feminine care, fragrances, hair care, make-up, male toiletries, oral hygiene, OTC healthcare,
personal hygiene, skincare and others. Dabur india sells these kinds of products and so it falls
under this category of Industry group.

Table 1:I nstalled and utilized capacity for the last two years

Product Name Product
Code
Units Installed Production Utilised
%
Year End 2011-03
Others 33059019 0 0 0
Hair Oils 33059010 Kilo
Ltrs.
108419 31075 28.66195
Tooth Powder & Paste 33061010 Tonnes 52882 28276 53.46999
Fruits, Nector & Drinks -
Traded
8000000 0 43721 0
Chyawanprash 30049011 Tonnes 59927 17804 29.70948
Others - Traded 33059019 0 0 0
Honey 4090000 Tonnes 9341 6479 69.36088
Fruits, Nector & Drinks 8000000 Kilo
Ltrs.
35700 22470 62.94118
Hajmola 30049011 Tonnes 12239 5496 44.90563
Asava-Arishta 30049011 Kilo
Ltrs.
11403 8100 71.03394
Tooth Powder & Paste -
Traded
33061010 0 2226 0
Hajmola - Traded 30049011 0 2545 0
Vegetable Pastes 20059000 M.T. 4800 1258 26.20833
Vegetable Pastes - Traded 20059000 0 825 0
Hair Oils - Traded 33059010 0 341 0
Year End 2010-03
Others 33059019 0 0 0
Hair Oils 33059010 Kilo
Ltrs.
84644 28220 33.33963
Tooth Powder & Paste 33061010 Tonnes 56320 23934 42.49645
Fruits, Nector & Drinks -
Traded
8000000 0 36861 0
Chyawanprash 30049011 Tonnes 32700 14898 45.55963
Others - Traded 33059019 0 0 0
Honey 4090000 Tonnes 7121 5789 81.29476
Hajmola 30049011 Tonnes 6154 4557 74.0494
Fruits, Nector & Drinks 8000000 Kilo
Ltrs.
35700 18143 50.82073
Asava-Arishta 30049011 Kilo
Ltrs.
14444 7910 54.76322
Tooth Powder & Paste -
Traded
33061010 0 3553 0
Hajmola - Traded 30049011 0 3489 0
Vegetable Pastes 20059000 M.T. 4080 1023 25.07353
Vegetable Pastes - Traded 20059000 0 871 0
Hair Oils - Traded 33059010 0 33 0

Retrieved from http://www.aceanalyser.com


Location of the plants
Food Supplement Unit,
221, HPSIDC Industrial Area,
City: Baddi
State: Himachal Pradesh
Pincode: 173205

Hajmola Unit,
109, HPSIDC Industrial Area,
City: Baddi
State: Himachal Pradesh
Pincode: 173205

Toothpaste Unit,
Village Billanwali Lavana,
City: Baddi
State: Himachal Pradesh
Pincode: 173205

Glucose Unit:
Plot No .12,
City: Baddi
State: Himachal Pradesh
Pincode: 173205

Sahibabad, Uttar Pradesh
Jammu, Jammu and Kashmir
Birganj, Nepal
Jaipur, Rajasthan
Silvassa, Dadra & Nagar Haveli
Pantnagar, Uttaranchal
Katni, Madhya Pradesh
Narendrapur, West Bengal

Number of units sold for fy14
Sales breakdown



Category wise contribution-consumer care business
Sales
food
international business
retail
consumer care
other





1. Cost categories
a. The classification of the cost are as follows:

EXPENSES FIXED COST VARIABLE COST
PRODUCT
COST PERIOD COST
Depreciation Y N Y N
Rates And Taxes Y N N Y
R&D Y N N Y
Auditor's Remuneration Y N N Y
Security Y N N Y
Insurance Y N N Y
Director's Fee Y N N Y
Telephone and Fax Y N N Y
Legal and Professional Y N N Y
Repair and Maintenance Building Y N N Y
Rent Y N N Y
Advertisement Y N N Y
Sales
skin care
health supplements
digestives
OTC&ethical
hair care
home care
Repairs To Machinery N Y Y N
Direct Labour N Y Y N
Raw Material N Y Y N
Primary Packing Material N Y Y N
Power and Fuel N Y Y N
Stores and Spares N Y Y N
Excise Duty N Y Y N
Sales tax N Y N Y
Freight and forwarding N Y N Y
Travel and Conveyance N Y N Y
Commission and Discount N Y N Y

Retrieved from http://www.aceanalyser.com

b. Table 2: Cost structure as per income statement

Income statement
Industry Average value Company
Year end 2014 2013 2012 2014 2013 2012
Number of companies 174 100 115
Gross Sales
540.3644 758.165 638.3235
4926.2 3796.3 3311.6
Less: Excise
18.66264 27.562 22.4313
56.1 38.7 31
Net Sales
521.6598 730.556 615.8426
4870.1 3757.5 3280.6
EXPENDITURE :
Increase/Decrease in Stock
-5.08563 -4.241 -2.86435
-12.6 -59.3 -78.3
Raw Materials Consumed
248.4701 332.126 286.9087
2575 2086.6 1729
Power & Fuel Cost
7.734483 12.599 15.79217
49.9 46.4 42.4
Employee Cost
23.30747 36.131 28.29304
331.1 233.2 208.9
Other Manufacturing Expenses
36.1046 54.89 44.99217
65.4 52.4 49.9
General and Administration Exp
61.55 76.731 67.76174
302.7 225.2 182.6
Selling and Distribution Expenses
69.40172 105.191 78.89217
718.3 505.6 487.6
Miscellaneous Expenses
14.26897 23.338 17.23478
14.6 37.8 38.9
Less: Pre-operative Expense
0.350575 1.021 0.887826
0 0 0
Total Expenditure
454.7747 635.743 535.1757
4044.4 3127.9 2661
PBIDT (Excl OI)
66.88506 94.813 80.66696
825.7 629.6 619.6
Other Income
11.92701 16.927 10.00261
109.6 55.1 26.4
Operating Profit
78.12356 111.74 89.62783
935.3 684.8 646
Interest
4.774138 4.751 5.014783
19.4 14.1 12
PBDT
73.35057 106.989 84.61478
915.9 670.7 634
Depreciation
8.887356 13.182 12.42348
53.9 38.7 37.7
Profit Before Taxation
64.52471 93.807 72.28435
862.1 631.9 596.3
Exceptional Income / Expenses
1.012069 6.62 1.627826
-0.7 -44.9 0
Profit Before Tax
65.53678 100.427 73.91217
861.3 587 596.3
Provision for Tax
16.64655 25.296 20.35913
189.2 123.8 124.9
PAT
48.89023 75.131 53.55304
672.1 463.2 471.4
Appropriations
90.74425 140.995 98.63739
0 0 0
Dividend(%)
75.50115 125.63 88.41391
1762.1 1177.5 998.3
EPS
8053.621 614.362 282.867
175 130 115
Book Value
15725.75 1968.244 -281.871
3.9 2.7 2.7

Retrieved from http://www.aceanalyser.com

c. Table 3: Income statement analysis of industry and company
Analysing the growth rate of industry and the company for the year 2013-2014,
Income statement
2013-2014
Industry Company
Gross Sales -29% 30%
Less: Excise -32% 45%
Net Sales -29% 30%
EXPENDITURE :
Increase/Decrease in Stock 20% -79%
Raw Materials Consumed -25% 23%
Power & Fuel Cost -39% 8%
Employee Cost -35% 42%
Other Manufacturing Expenses -34% 25%
General and Administration Exp -20% 34%
Selling and Distribution Expenses -34% 42%
Miscellaneous Expenses -39% -61%
Less: Pre-operative Expense -66%
Total Expenditure -28% 29%
PBIDT (Excl OI) -29% 31%
Other Income -30% 99%
Operating Profit -30% 37%
Profit Before Tax -35% 47%
Provision for Tax -34% 53%
PAT -35% 45%
Dividend(%) -40% 50%

Retrieved from http://www.aceanalyser.com

We can see that the growth rate of industry net sales for the fscal year 2013-2014 was
negative, while the company recorded a growth in the net sales by about 30%.
The cost of raw materials consumed were more than the industry average mainly attributing
to the increased sales.


2. Performance Metrics
Dabur India experienced a very strong growth rate in the past year with figures as follows:
Sales increased by 15.1% to 7071 crores, profit increased by 19.7% to 913.9 crores. It has a
market capitalisation of more than 5 billion dollars. The sales and promotion expense for the
last year was 502.4 cr. This year expense is 581.1 cr. So increase in Advertisement expenses
is 15.66%. The companys EBIDTA increased to 1288 crores thus causing an increase of
17.4%. From the annual reports it can be said that demand in rural markets is higher than that
in urban markets. Dabur gives importance to customer requirements, tastes and causes a
metamorphosis of their products and also launch new products.

An initiative on cost cutting involved energy conservation where they managed to reduce fuel
usage at manufacturing plant by 25% despite an increase in production. YSLP(Young Sales
Leadership Programme) has been launched with the objective to let them have a good sales
knowledge by providing them with a 30 months training programme.

Daburs R&D has been successful in producing newer products under various categories.An
efficient internal control system ensures that all assets are safey handled, protected and
transactions are authorised, reported correctly.
The highlights of Dabur India Ltd's performance during fiscal 2013-14 on a consolidated
basis are:
Net Sales grew by 15.1% to Rs. 7,073.2 crores in fiscal 2013-14 from Rs. 7,147.4
crores in fiscal 2012-13
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased
to Rs. 1,287.9 crores in fiscal 2013-14, from Rs. 1,097.7 crores in fiscal 2012-13,
recording a growth of 17.4%
Profit After Tax (PAT) increased to Rs. 913.9 crores in 2013-14, up 19.7% from Rs.
773.4 crores in 2012-13
Earnings Per Share (EPS) increased to Rs. 5.21 in 2013-14 from Rs. 4.35 in 2012-13
Consolidated sales has increased by 13.2%.
International business has contributed to 35% of growth sales.
International business grew by 18%.
The key performance indicators are as follows:
Net Sales (Rs. 7073.2 crores, up by 15.1%)
Net Profit (Rs. 913.9 crores, up by 19.7%)
Market capitalisation (US$ 5 bn+)
International Business contribution (35%)
Retail footprint 5.3 million outlets
Billion - Rupee brands - 14



3. Modern techniques and the industry standards

The challenge faced by the company nowadays while manufacturing and marketing various
products is with a wide range of raw materials that need to be tracked. If an accurate
forecasting of the quantity of raw materials is not maintained, there occurs an ineffectiveness
in capital management as storage cost increases due to accumulation of piles of inventory
accompanied by risk of damage for perishable materials. Thus comes an inventory
management system combining all related departments like manufacturing, marketing, sales
and supply chain. The finance department helps in linking all these operations and controls
information flow through various departments.
Based on the sales forecast for the upcoming period, the sales department makes the product-
wise requirement for the finished goods and sends this information to the production
department which prepares an estimated analysis of raw material requirement to meet
production targets. Thereafter the information on raw material requirement is sent to the
purchase department. The production department with its accurate estimate thus resists excess
purchase of raw materials and contributes to reduction in the storage cost.

Although the company uses JIT(Just-in-Time) approach to procure materials, however this
method is not suitable for agricultural products with materials available at cheaper prices post
cultivation phase. But they should collect the materials on-season in abundance and store
otherwise they have to suffer huge costs in off-season months. Often sufficient stocks are
stored and used for both current(40%) and next year(60%).

Dabur India uses value engineering tool to identify and develop more cost effective
materials.

4. Table 4: Analysis of overheads and identification of overhead drivers
OVERHEAD COST Allocation basis
Depreciation(Equipment) machine hours used
Rates And Taxes prod/unit
R&D divisional sales
Auditor's Remuneration divisional sales
Insurance divisional sales
Director's Fee divisional sales
Telephone and Fax divisional sales
Legal and Professional divisional sales
Repair and Maintenance Building Floor area
Rent Floor area
Advertisement divisional sales
Travel and Conveyance divisional sales
Commission and Discount prod/unit
Sales tax prod/unit
Excise Duty prod/unit
Power and Fuel prod/unit


5. CVP relationship and change in profits
Calculation: (Data taken from annual report 2013-2014)
Total expenses=6089.64
COGS(Variable Cost)=3400.03
TOTAL FIXED COST= Total expenses-COGS
=6089.64-3400.03
=2689.61
NET SALES=7073.2

Contribution=Net sales-COGS
=7073.2-3400.03
=3673.17

P/V RATIO=Contribution
Net sale
=3673.17/7073.2
=0.5193

Expected profit=1000 (assumed considering last years profit)

Expected sales in rupees=((expected profit+total fixed cost)/P/V RATIO )

=((1000+2689.61)/ 0.5193)

=Rs. 7104.85Cr.
Table 5:Sales Estimation
Particulars Amount (in Crores)
Total Expenses 6089.64
Cost of goods sold 3400.03
TOTAL FIXED COST 2689.61
NET SALES 7073.2
CONTRIBUTION 3673.17
P/V RATIO 0.519308093
EXPECTED PROFIT 1000
EXPECTED SALES IN RUPEES 7104.85