Financial Statement Analysis of Dabur

Financial Management
Project On
Financial statement analysis
of
DABUR INDIA LIMITED
Submitted by:
Dr. P.R. Wilson Nimisha.M.N
Professor MBA (FT), S2
SMS, CUSAT Roll no.:23
DABUR INDIA LIMITED Page 1

Table of Contents
1. INTRODUCTION...............................................................................................................................3
1.2 ABOUT DABUR INDIA LIMITED ..................................................................................................4
1.3 FINANCIAL ANALYSIS.................................................................................................................... 6
I. SWOT ANALYSIS................................................................................................................................16
CASH FLOW AND FUND FLOW 27
II. WORKING CAPITAL ANALYSIS.....................................................................................................28
III. BREAK- EVEN ANALYSIS...............................................................................................................29
IV. INVESTMENT DECISION ANALYSIS……………………………………………….…………….31
1.5 CONCLUSION………………………………………………………………………………………. 33
1.4 REFERENCES…………………………………………………………………………………………………………………………….. 35

1. INTRODUCTION
Financial management is that management activity which is concerned with the planning
and controlling of the firm’s financial resources. Finance is the lifeblood of business. Wealth
maximization is the objective of financial management in the new era. Other objective of
financial management is to arrange sufficient finances for meeting short-term and long-term
needs, these funds are procured at minimum cost and so that profitability of the business is
maximized.
The functional areas covered by financial management are:
1. Determining financial needs

2. Selecting the sources of funds
3. Financial analysis and interpretation.
4. Cost-volume profit analysis.
5. Capital budgeting.
6. Working capital management
7. Profit planning and control, and
8. Dividend policy.
In addition to raising funds, financial management is directly concerned with production,

marketing and other functions within an organization whenever decisions are made about the
acquisition or distribution of assets.
Objective :
The objective of this project is to analyze the financial statement of DABUR INDIA LIMITED
for the five consecutive years (2007-2011) and find out whether there was shareholders wealth
maximization. Here the balance sheet and profit and loss account of the firm has been analyzed
by computing various financial ratios, working capital, break-even analysis and the investment
decision .So the study has been conducted in four phases.

1.2 About Dabur India Limited
Dabur India Limited is a leading Indian consumer goods company with interests
in health care, Personal care and foods. Over more than 100 years we have been dedicated to
providing nature-based solutions for a healthy and holistic lifestyle. The original logo of the
company was the Banyan Tree.
The new Dabur identity modernizes the 100-year old equity of the Dabur
brand by subtly transforming the tree. While it retains the essence of the
banyan tree, it now projects a contemporary image, in consonance with
today's lifestyle. The tree, a symbol of nature, is indelibly regarded as a
provider of shelter, food and protection. If you observe closely, you will see
that the tree trunk mirrors the form for three people with their arms raised
conveying exultation in achievement. The broad trunk represents stability
and its multiple branches represent growth.
Dabur At-a-Glance
Dabur India Limited has marked its presence with 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 stakeholders. The results of our policies and initiatives speak for themselves.
 Leading consumer goods company in India with a turnover of Rs. 2834.11 Crore (FY09)
 3 major strategic business units (SBU) - Consumer Care Division (CCD), Consumer
Health Division (CHD) and International Business Division (IBD)
 3 Subsidiary Group companies - Dabur International, Fem Care
Pharma and newu and 8 step down subsidiaries: Dabur Nepal Pvt Ltd (Nepal), Dabur
Egypt Ltd (Egypt), Asian Consumer Care (Bangladesh), Asian Consumer Care
(Pakistan), African Consumer Care (Nigeria), Naturelle LLC (Ras Al Khaimah-
UAE), Weikfield International (UAE) and Jaquline Inc. (USA).

 17 ultra-modern manufacturing units spread around the globe
 Products marketed in over 60 countries
 Wide and deep market penetration with 50 C&F agents, more than 5000
distributors and over2.8 million retail outlets all over India
Dabur India Ltd. - Corporate Profile
Dabur India Ltd is one of India’s leading FMCG Companies with Revenues of US$1
Billion (over Rs 5,000 Crore) & Market Capitalisation of US$4 Billion (Rs 20,000 Crore).
Building on a legacy of quality and experience of over 127 years, Dabur is today India’s most
trusted name and the world’s largest Ayurvedic and Natural Health Care Company.
Dabur India is also a world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic
products. Dabur's FMCG portfolio today includes five flagship brands with distinct brand
identities -- Dabur as the master brand for natural healthcare products, Vatika for premium
personal care,Hajmola for digestives, Réal for fruit juices and beverages and Fem for fairness
bleaches and skin care products.
Dabur today operates in key consumer products categories like Hair Care, Oral Care, Health
Care, Skin Care, Home Care and Foods. The company has a wide distribution network,
covering over 2.8 million retail outlets with a high penetration in both urban and rural markets.
Dabur's products also have a huge presence in the overseas markets and are today available in
over 60 countries across the globe. Its brands are highly popular in the Middle East, SAARC
countries, Africa, US, Europe and Russia. Dabur's overseas revenue today accounts for over
30% of the total turnover..
The 125-year-old company, promoted by the Barman family, had started operations in 1884 as an
Ayurvedic medicines company. From its humble beginnings in the by lanes of Calcutta, Dabur
India Ltd has come a long way today to become one of the biggest Indian-owned consumer
goods companies with the largest herbal and natural product portfolio in the world.
Overall, Dabur has successfully transformed itself from being a family-run business to
become a professionally managed enterprise. What sets Dabur apart from the crowd is its
ability to change ahead of others and to always set new standards in corporate governance &
innovation.
WORKING CAPITAL AND COST MANAGEMENT:

After running as a family business for over 100 years, when in late 1990s, the management of the
Dabur was handed over to a team of professional managers, the new management faced a
gigantic task of improving performance in several critical areas. In particular, working capital
and cost management required urgent attention as the company's performance in these areas had
been far from satisfactory. The then prevailing current ratio of 3:2 and quick ratio of 2:4 were
considered too high and indicative of heavy unnecessary investments in working capital that
would have a negative effect on company's profitability.
Efforts to improve the working capital efficiency were met with stiff resistance from various
quarters, but finally yielded results. The case study discusses the measures taken to improve the
working capital and cost management performance, and how with concerted efforts the
management turned around a highly inefficient working capital management into one of the most
efficient in the FMCG sector of the Indian industry. In fact, the company seemed to have taken
the matter to the other extreme of negative working capital, with the current ratio declining to 0:8
and the quick ratio to just 0.4 in 2008–09.
In 2010- 2011 as the company was ready to launch itself into the next phase of fast growth,
several critical issues related to the liquidity and solvency of the company.
Financial Analysis
Financial analysis is the process of identifying the financial strengths and weaknesses of the firm
by properly establishing relationship between the items of the balance sheet and the profit and
loss account. The nature of the analysis differ depending on the purpose of the analyst.
 Trade creditors are interested in firm’s ability to meet their claims over a very short
period of time .They are interested in evaluating the firms' liquidity position.
 Suppliers of the long term debt are concerned with the firm’s long term solvency and
survival. They analyze the firm’s profitability over time, its ability to generate cash to be
able to pay interest and repay principal and relationship between various sources of
fund. The firm’s future profitability and the solvency are the prime concern.
 Investors are more concerned about the firm’s earnings.
 Management of the firm is interested in every aspect of the financial analysis. They see
that the resources of the firm are most effectively and efficiently utilized and that the
firm’s financial condition is sound.
Dabur India Limited (Dabur) is a consumer care and health care products company.
Product portfolio offered by the company includes personal care products, health care
products, home care products and foods. Dabur also offers ayurveda-based healthcare
products. It markets its products in India as well as in International markets as Middle
East, South-East Asia, Africa, the European Union and America.

TEN YEAR HIGHLIGHTS
in Rs. Crores FY02* FY03 FY04** FY05 FY06# FY07^ FY08 FY09 FY10 FY11^^
Operating Results:
Sales 1,200 1,285 1,236 1,417 1,757 2,080 2,396 2,834 3,416 4,110
Other Income 12 7 9 9 13 26 34 47 48 65
EBITDA 144 162 164 217 300 376 443 517 667 820
EBITDA Margins (%) 12.0 12.6 13.3 15.3 17.1 18.1 18.5 18.3 19.8 19.9
Profit Before Tax

82 106 124 176 257 319 384 445 601 708
(PBT)
Taxes 14 14 15 19 30 39 52 54 100 139
Tax Rate (%) 16.6 13.3 12.0 10.8 11.7 12.1 13.4 12.1 16.7 19.6
Profit After Tax (PAT) 64 85 107 156 214 282 333 391 501 569
PAT Margins (%) 5.4 6.6 8.6 11 12.2 13.5 13.9 13.8 14.7 13.8
Financial Position:
Fixed Assets (Net) 371 257 250 295 512 379 465 559 677 1542
Current Assets, Loans

504 522 340 408 471 640 774 951 1106 1853
& Advances
Current Liabilities &

183 241 294 400 436 452 732 805 920 1458
Provisions
Net Working Capital 322 281 46 8 35 189 42 146 186 395
Total Assets 705 640 433 543 624 670 749 1060 1129 2465
Share Capital 29 29 29 29 57 86 86 87 87 174
Reserves & Surplus 365 388 257 335 440 393 531 732 848 1217
Shareholders Funds 393 417 286 364 497 480 618 819 935 1391
Loan Funds 304 964 132 164 121 160 99 230 179 1051
Total Capital
705 640 433 543 624 670 749 1060 1129 2465
Employed
Return Ratios:
ROCE (%) 12.6 16.1 28.6 31.3 39 45.7 47.6 39.4 45.7 33.2
RONW (%) 16.6 20.6 38.1 43.5 46.1 61.3 55.3 47.7 53.5 48.9
Equity Share Data:
Earnings Per Share

2.3 3 3.7 5.4 3.7 3.3 3.9 4.5 5.8 3.3
(Rs)
Dividend Per Share

0.5 1.4 2 2.5 1.8 1.4 1.5 1.8 2 1.3
(Rs)
No of Shares (In Crs) 28.6 28.6 28.6 28.6 57.3 86.3 86.4 86.5 86.9 174.1

FINANCIAL RATIO ANALYSIS
Ratio analysis is a powerful tool of financial analysis. In financial analysis, a ratio is used as a
bench mark for evaluating the financial position and performance of a firm. The relationship
between the two accounting figures, expressed mathematically, is known as a financial ratio .they
help summarize large quantities of financial data and to make qualitative judgments about the
firm’s financial performance.
Types of ratios:
A. Liquidity ratio: Liquidity ratios are used to measure the liquidity position or the
short term financial position of a firm. They measure the ability of the firm to meet its
current obligation .The failure to meet its current obligation will result in poor credit-
worthiness, loss of creditors, confidence etc.
1. Current ratio
Current ratio = current asset
Current liabilities
The ratio is used to assess the short term financial position of the business concern. It is an
indicator of the fi rm’s ability to meet its short-term obligations. As a
conventional, rule a current ratio of 2:1 is considered ideal. The company don’t have a
sufficient funds to pay its liabilities on time and meet other day to day expenses
Year Current Current Current

asset in liability ratios
crores in
crores
2008 774 732 1.057

2009 1106 920 1.181
2010 951 805 1.202
2011 1853 1458 1.270
2.Quick ratio
Quick ratio = quick asset
current liabilities
Where, Quick assets = Current assets – Inventory
Year Quick asset in crores Current liability in Quick ratio

crores
2008 570.96 732 .78
2009 547.4 805 .68
2010 533.6 920 .58
2011 918.54 1458 .63
A quick ratio of 1:1 is considered to be satisfied. Here, in this company it is not possible to meet
the current liabilities with the quick assets. The values indicate that the inventories of the firm do
not sell. None of the years indicate a satisfactory quick ratio except 2008 which shows a ratio of
0.78:1.The liquidity position of the company is not satisfactory.
Debt equity ratio= Debt / Equity
Year Debt equity Debt-equity ratio
2008 342.41 396.89 .23
2009 312 412.77 .14
2010 204 262.06 .19
2011 284 332.26 03
B) Leverage ratio:

These are calculated to judge the long term financial position of the firm. These ratios indicate the extent
to which the firm has relation on debt in financing assets. These help measure the financial risk and the
firm’s ability of using debt to shareholders advantage. These are also calculated from profit and loss
items. A company can finance its assets either with equity or debt.
1. Debt ratio:
The debt ratio shows the amount the lenders have financed in the company. It measures the long term
solvency of the firm the amount of the funded debt in the capital structure. It is given by:
Debt ratio = Total Debt
Capital employed
Long term debt = Secured loans + Unsecured loans and
Capital employed =Share capital + Reserve and Surplus+ Secured loan + Unsecured loan
Debt –Equity Ratio: The debt-equity ratio is an important tool of fi nance analysis to
appraise the fi nancial structure of the firm. It has important from the viewpoint of
creditors, owner and the firm itself. T h e r a t i o re fl e c t s t h e
r e l a t i v e c o n t r i b u t i o n o f c re d i t o r s a n d o w n e r s
o f t h e b u s i n e s s i n i t s financing.A high ratio shows a large share of fi nancing by
the creditors of the fi rm; a low ratioimplies a small claim of creditors. The debt-
equity ratio indicates the margin of safety to the creditors. The shareholders of the
firm would, however stand to gain in two ways: (i) with a limited s t a ke , t h e y w o u l d b e
a b l e t o r e t a i n c o n t ro l o f t h e fi r m a n d ( i i ) t h e re t u r n t o t h e m w o u l d b e
magnifi ed. With a larger proportion of debt in the fi nancial structure, the
earnings available to the owner would increase more than proportionately with the
increase in the operating profits of the firm.
Debt equity ratio = Total Debt
Net worth
2. Capital Employed to Net Worth:
3. Proprietary ratio:
Proprietary ratio= Share holders equity
Total assets

C) Activity / turnover ratios
These ratios are employed to evaluate the efficiency with which the firm manages and utilizes its
assets. They are so called because they indicate the speed with which assets are being converted or
turned over into sales.A proper balance indicate that the assets are being managed well. It also ties into
the ability of a company to meet both its short term and long term obligations. It measures how well
assets are used. The greater the turnover, the more effectively the company is at producing a benefit
from its investment in assets.
a) Inventory turnover ratio is regarded as a test of efficiency and indicates efficiency of the firm in
producing and selling its product. This is given by:
Inventory turnover ratio = Cost of the goods sold

Average Inventory
Average Inventory= opening +closing stock of finished goods
2
Days of inventory holding= 365/inventory turnover ratio

Inventory turnover ratio = Sales / Avg. stock
Year Sales Avg. stock Ratio

2008 1163.19 148.89 7.81
2009 1370.85 168.59 7.30
2010 1147.97 145.07 7.91
2011 1268.71 118.77 10.68
b) Debtors turnover ratio indicates how many times in the period credit sales have been credited and
collected on.
Debtors turnover ratio = Credit sales

Average Debtors
Collection period = 365/ Debtors turnover ratio
c) Current asset turnover ratio indicates the extent that the investment in current assets result in sales.
Current Asset turnover ratio = Sales

Current asset

d) Fixed asset turnover ratio indicates the ability of the company’s management to put the fixed assets
to work to generate sales.
Fixed asset turnover ratio = Sales/ fixed asset
Year Inventory Debtors turnover Investment Asset turnover

turnover ratio ratio turnover ratio ratio
2008 11.31 23.62 11.31 4.31
2009 10.94 22.63 10.94 4.84
2010 12.52 25.94 12.52 4.67
2011 11.11 39.70 13.44 4.50
Cost ratios
Cost ratios are computed to indicate the trend of the cost elements. It is calculated by dividing any
item of expenditures from trading and profit and loss account by net sales of the company. Different
cost ratios include:
a)
Material cost to sales ratio = Materials consumed x 100
Net Sales
It measures the material usage efficiency. If ratio is computed it would indicate the material cost
part in sales of the company.

b)
Labour cost to sales ratio = Labour cost x 100
Net sales
This ratio show the trend in labour efficiency if it is computed over a period of time from this ratio
the extent of the labour cost in the total cost could be assessed.

c)
Factory Overheads to sales ratio = Factory overhead x 100
Net sales
This ratio show the extent of factory overhead in sales and its total efficiency. Factory overhead is
directly related to production and hence due weightage should be given to the quantity produced.
Administration overhead seldom forms a major cost element. Ratio computed over a period of time
show the efficiency level and the extent of its dominance in cost elements.
GROSS PROFIT RATIO:
Change in the gross margin can be brought about by changes in any of these
factors. The gross margin represents the limit beyond which fall in sales prices are
outside the tolerance limit. Further, the gross profi t ratio can also be used to
determining the extent of loss caused by theft, spoilage, damage, and so on in the
case of those firms which follow the policy of fixed gross profit ratio in pricing their
products.A v e r y h i g h a n d r i s i n g g r o s s m a r g i n m a y b e t h e r e s u l t o f u n
s a t i s f a c t o r y b a s i s o f evaluation of stock, that is, overvalued of closing stock and
undervalued of opening stock. But a low gross margin is also a danger signal,
warranting a careful, detailed analysis of the factors responsible For it.
Gross profit ratio = Gross profit / sales *100
Year Gross profit Sales Ratio
2008 560.05 1163.19 48.1%
2009 682.01 1370.85 49.7%
2010 553.91 1147.97 48.2%
2011 653.39 1268.71 51.5%

EARNING PER SHARE:
Earning per share = Profit after tax / Number of shares
Year Profit after Tax Number of shares EPS
2008 64.4 285366429 2.25
2009 93.03 285662514 3.25
2010 101.20 285987220 3.53
2011 148.01 286336927 5.16
Every business needs adequate liquid resources in order to maintain day to day cash flows.
It needs enough cash to by wages and salaries as they fall due and to pay creditors if it is to
keep its workforce and ensure its supplies. Maintaining adequate working capital; is not just
important in the short term .Sufficient liquidity must be maintained in order to ensure the
survival of business in the long term as well. Even a profitable business may fail if it does not
have adequate cash flows to
meet its liabilities as they fall a due. Therefore when business make investment decisions
they must not only consider the financial outlay involved with acquiring the new machine
or the new building etc, but must also take account of the additional current assets that
are usually involved with any expansion of activity .Increase production tends to engender a
need to hold additional stocks of raw material & work in progress.Increased sales usually
mean that the level of debtor will increase. A general increase in the firm’s scales
of operation tends to imply a need for greater level of cash.

D) Profitability ratios
These are calculated to measure the operating efficiency of the firm.
Profitability ratios related to sales:

a) Gross profit margin:
The gross profit indicates the efficiency by which the management produces each unit of product. This
given by:
Gross profit margin = Sales – cost of the goods sold
Sales
b) Net profit margin is the ratio of net profit to sales, and indicates how much of each rupee of sales is
left over after all expenses. It indicates managements efficiency in manufacturing, administering and
selling the products. Its an overall measure of the firm’s ability to turn each rupee sales into net
profit. If net margin is inadequate, the firm will fail to achieve satisfactory return on shareholder’s
funds.
Net profit ratio = Net profit x 100

Sales
Profitability ratios in relation to the investment:
c) Return on Equity (ROE) is calculated to see the profitability of owners investment. It indicates how
well the firm has used the resources of the owners.
ROE = Net profit x 100

Equity
Where , Equity = Share capital + Reserves & surplus
d) Return on Investment (ROI) analysis is one of several commonly used approaches for evaluating
the financial consequences of business investments, decisions, or actions. ROI analysis compares
the magnitude and timing of investment gains directly with the magnitude and timing of investment
costs. A high ROI means that investment gains compare favorably to investment costs.
ROI = Net profit x 100

Capital employed
Where , Capital employed = Total liabilities

e)
Earning per share (EPS) indicate whether or not the firm’s earnings power on per share basis has
changed over that period.
EPS = Profit after tax
Number of common shares outstanding

f)
Dividend per share(DPS) indicates whether or not to declare dividend after making profit.
2008-09 09-10 10-11

Gross profit ratio 11.25 14.35 15.64
Net profit 8.82 11.67 13.80
Return on capital 29.50 49.79 49.47
employed
Return on net worth 29.78 48.79 82.47
Debts turnover ratio 14.46 27.78 50.83
Fixed asset turnover 4.06 4.33 6.88
SWOT Analysis of Dabur India
SWOT stands for Strengths, Weaknesses, Opportunities and Threats, and is

an important tool often used to highlight where a business or organisation is,
and where it could be in the future. It looks at internal factors, the strengths
and weaknesses of a business, and external factors, the opportunities and
threats facing the business. The process can give you on overview of where
the business, and the environment it operates in, is strategically. This is an
important, yet to simple to understand, tool used by many
students, businesses and organisations for analysis . The SWOT analysis will
give you a clear picture of the business environment Dabur india is
operating in at the present time . Strengths :The strengths of a business or
organisation are positive elements, something they do well and is under their
control . The strengths of a company or group and value to it, and can be
what gives itthe edge in some areas over the competitors.
STRENGTH
 Having alliances with other strong and popular businesses is a major

plus point for Dabur india as it helps bring in new customers and make
business more effective.
 Being a market leader, as Dabur india is, is key to their success as it

boosts reputation, profit and market share.
 competitive pricing is a vital element of Dabur india’s overall success,
as this keeps the minimum line with their rivals, if not above them.
 Riding high in the niche market in FMCG industry has helped boost
Dabur india and raise dreputation and turnover.
 Keeping costs lower than their competitors and keeping the cost
advantages helps Dabur india pass on some of the benefits to
consumers.
 The services/products offered by Dabur india are original, meaning

many people will return to Dabur india to obtain them.
 Dabur india’s marketing strategy has proved to be effective, helping to

raise profiles and profits and standing out as a major strength.
 Dabur india’s innovation keeps it a front-runner in FMCG as it is

regularly turning out new patents/proprietary technology.
 Experienced employees are key to the success of Dabur india helping

to drive them forward with expertise and knowledge.
 High quality machinery, staff, offices and equipment ensure the job is
done to the utmost standard, and is a strength of Dabur india.

 Dabur india has an extensive customer base, which is a major
strength regarding sales and profit.
 Dabur india’s reputation is strong and popular, meaning people view it

with respect and believe in it.
 Being financially strong helps Dabur India deal with any problems, ride
any dip in profit sand out perform their rivals.
 A strong brand is an essential strength of Dabur India as it is

recognized and respected.
 Dabur India has a high percentage of the market share, meaning it is

ahead of many competitors
 Dabur India’s distribution chain can be listed as one of their strengths

and links to success.
 High quality products/services is a vital strength, helping to ensure

customers return to Dabur India.
 Dabur India’s international operations mean a wider customer base, a

stronger brand and a bigger chunk of the global market.
 Development and innovation are high at Dabur India with regard to

their products/services, which is a sure strength in its overall
performance.
 Dabur India’s position in the market is high and strong – a major

strength in this industry’s they are ahead of many rivals.
 Having little competition, being one of very few companies providing

thisservice/product is a major factor in Dabur India’s performance.
 The online presence of Dabur India is strong, meaning it is ahead of

many competitors.

 The lucrative location of Dabur India adds to its strengths due to its
accessibility (road, rail, air etc).
Supplier relationships are strong at dabur india, which can only be seen
as strength intheir overall performance.
WEAKNESS
Weaknesses of a company or organization are things that need to

be improved or perform better, which are under their control.
Weaknesses are also things that place you behind competitors, or stop
you being able to meet objectives.
 Reputation is important, and a damaged one like Dabur India’s is a

major weakness as consumers will not trust the firm enough to
spend money with them.
 A serious weakness for Dabur India is the fact their products/services

are of low quality, meaning people will have better-quality substitutes.
 Not reducing costs in the same way as their competitors means Dabur
india is outlaying more of their profits. Having higher costs than
competitors is a major weakness.
 Dabur India’s R&D work is low and insignificant, which is a major

weakness in FMCG as it is constantly creating new products.
 The lack of staff experience is a major downfall for Dabur india as it

could lead to mistakes or negligence.
 Old and outdated technologies hold Dabur india back and limits
success, as other firm sare making use of better and more reliable
technologies.
 Not having an effective marketing strategy seriously hampers the

success of dabur india.
 Over pricing, setting too high prices for dabur india products/services
makes themuncompetitive, which is a major weakness.

 The lack of business alliances is a major weakness for Dabur india, as
they will struggle to get deals, favours and partnerships.
Dabur india is in a poor financial position which makes it weaker than

its competitors.
 Dabur india’s lack of innovation limits its success, as there is no

forward thinking.
 Good companies need loyal employees, but Dabur India has a poor
relationship with staff which affects performance.
 Dabur India does not function internationally, which has an effect on

success, as they do not reach consumers in overseas markets.
 Problems with stock are a weakness for Dabur India as they need to
keep up with demand.
 Online presence is vital for success these days, and lack of one is
a limitation for Dabur India.
 Dabur India underdeveloped distribution chain has a marked effect on

performance as it affects the distribution of their products/services.

 The lack of original products/services is a major flaw in Dabur India’s
future success, as it shows a blinkered outlook.
 Dabur India's location is weakness for the firm, as it means they miss
out on many opportunities.
 Dabur India’s lack of patents proprietary technology puts it behind its

rivals and is deemed as one of their weaknesses.
 The weak brand name compromises success for Dabur India as it

doesn't inspire people to buy their products/services.
 A limited customer base is a major weakness for Dabur

India as it means they have less people to sell or market to.
 The weak market position of Dabur India is a limitation to their overall

success, as they are well behind their rivals.
 Dabur India’s limited product line is a major weakness.
 Dabur India’s weak supplier relationships also have an adverse effect

on success, as it cut stability to negotiate.
 Dabur
India is behind its competitors with a low share of the market, which
in turn leads to lower turnover.
Opportunities are external changes, trends or needs that could

enhance the business or organization’s strategic position, or which
could be of a benefit to them.
OPPORTUNITIES
 Dabur India could benefit from Governmental support, in the form of

grants, allowances, training etc.
 Looking at export opportunities is a way for Dabur India to raise profits.
Changes in technology could give Dabur India an opportunity to bolster

future success.
 Dabur India could benefit from expanding their online presence and
making more money from online shoppers/internet users.
 The changes in the way consumers spend and what they buy provides
a big opportunity for Dabur India to explore.

 Dabur India is in good financial position, which is an opportunity for
them to explore in terms of investment in new projects.
 Decrease in taxation gives an opportunity for Dabur India to reduce

prices or increase profits.
 The growth of the FMCG industry is an opportunity for Dabur India to

grasp.
 New market opportunities could be a way to push Dabur India forward.
 As the economic climate improves, so do the opportunities for Dabur

India.
 Dabur India has the opportunity to enter a niche market, gain leading
position and therefore boost financial performance.
 Reaching out into other markets is a possibility for Dabur India, and a
big opportunity.
 Grasping the opportunity to expand the customer base is something

Dabur India can aim for, either geographically or through new
products.
 Takeover and merger opportunities could be explored for Dabur India

and used to acquire new customers, new resources and enter new
markets.
 Expanding the product/service lines by Dabur India could help them

raise sales and increase their product portfolio.
 Reduction in interest rates could benefit Dabur India as business costs

would come down.
 Expanding into other markets could be a possibility for Dabur India.
 Forming strategic alliances and joint ventures is an opportunity for

Dabur India to maximize profit and gain new business.

 Dabur India has a number of highly skilled staff, which is an
opportunity for them to explore as expertise of their staff can
help Dabur India to bring the business forward.
 Structural changes in the industry open other doors and opportunities

for dabur india.
THREATS
Threats are factors which may restrict, damage or put areas of the
business or organization at risk. They are factors which are outside of
the company's control. Being aware of the threats and being able to
prepare for them makes this section valuable when considering
contingency plans and strategies. This section will outline main threats
Dabur India is currently facing.
 Consumer lifestyle changes could lead to less of a demand for

Dabur India products/services.
 Tax increases placing additional financial burdens on Dabur India

could be a threat.
 The financial burden of increasing interest rates could be a threat

to Dabur India.
 Regulations requiring money to be spent or measures to be taken

could put financial or other pressure on Dabur India.
 New products/services from rival firms could lead to Dabur

India's products/services being less in demand.
 Changes in the way consumers shop and spend and other

changing consumer patterns could be a threat to dabur India’s
performance.
 Being undercut by low-cost imports is a major threat for dabur

India.
 Not keeping up with changes in technology could be detrimental

to the future of dabur india as they could slip behind their rivals.

 Slow growth and decline of the fmcg market is a threat to
dabur India.
 Increased competition from overseas is another threat to dabur

India as it could lead to lack of interest in their products/services.
 Extra competition and new competitors entering the market

could unsteady dabur India and be a threat.
 The actions of a competitor could be a major threat against

dabur India, for instance, if they bring in new technology or
increase their workforce to meet demand.
 Price wars between competitors, price cuts and so on could

damage profits for dabur India.
 A slow economy or financial slowdown could have a major impact

on dabur India business and profits.
 A decline in demand for dabur India products, with no likelihood

of resurgence could pose a threat.
The rise and/or fall of the foreign exchange rate could

threaten dabur India with regard to importing and exporting.
 Rising costs could be a major downfall for dabur India as it would

eat into profit.
 Dabur India could be threatened by the growing power

customers have to set the price of their products/services.
 Structural changes in the industry could be a threat for dabur

india
 Dabur India could be threatened by the growing power
their suppliers have to set their prices.
 Substitute products available on the market present a major

threat to dabur india

2011 2010 2009 2008 2007
Profitability ratio
Operating Profit
Margin(%)
19.06 19.17 18.33 18.6 17.45
Profit Before
Interest And Tax
Margin(%) 17.76 17.97 17.11 17.29 16.16
Gross Profit
Margin(%) 17.91 18.06 17.19 17.37 17.49
Cash Profit
Margin(%) 15.58 15.88 15.97 16.16 15.67
Adjusted Cash
Margin(%) 15.58 15.88 15.97 16.16 15.51
Net Profit
Margin(%) 14.27 15.03 15.44 15.06 14.41
Adjusted Net
Profit Margin(%) 14.27 15.03 15.44 15.06 13.88
Return On
Capital
Employed(%) 44.16 61.62 47.98 67.51 66.07
Return On Net
Worth(%) 46.29 58.04 51.2 61.58 62.52
Adjusted Return
on Net Worth(%) 45.21 56.29 48.65 59.99 63.32
Return on Assets
Excluding
Revaluations 5.85 8.6 8.43 5.95 4.44
Return on Assets
Including
Revaluations 5.85 8.6 8.43 5.95 4.44

Return on Long
Term Funds(%) 53.79 68.96 55.29 68.93 68.63
Liquidity And Solvency
Ratios
Current Ratio 0.99 0.93 1.19 0.91 0.97
Quick Ratio 0.78 0.68 0.99 0.58 0.63
Debt Equity
Ratio 0.23 0.14 0.19 0.03 0.05
Long Term Debt

Equity Ratio 0.01 0.02 0.03 0.01 0.01
Debt Coverage Ratios
Interest Cover 56.06 52.35 38.34 46.79 140.69
Total Debt to
Owners Fund 0.23 0.14 0.19 0.03 0.05
Financial
Charges
Coverage Ratio 50.47 42.53 31.26 36.56 69.48
Financial
Charges
Coverage Ratio
Post Tax 41.66 36.46 28.99 32.87 64.33
Management Efficiency
Ratios
Inventory
Turnover Ratio 8.65 11.31 10.94 12.52 11.11
Debtors Turnover
Ratio 19.67 23.62 22.63 25.94 39.7
Investments
Turnover Ratio 8.65 11.31 10.94 12.52 13.44
Fixed Assets 4.39 4.31 4.84 4.67 8.51

Turnover Ratio

Total Assets
Turnover Ratio 2.46 3.44 2.81 3.98 4.3
Asset Turnover
Ratio 4.39 4.31 4.84 4.67 4.5
Average Raw
Material Holding 63.26 52.96 45.18 45.68 40.91
Average Finished
Goods Held 29.32 22.08 21.28 20.13 22.21
Number of Days
In Working
Capital 26.7 3.76 41.32 -5.8 3.82
Profit & Loss Account
Ratios
Material Cost
Composition 53.15 48.61 52.8 49.05 45.86
Imported
Composition of
Raw Materials
Consumed 0.93 1.22 1.06 0.97 1.22
Selling
Distribution Cost
Composition 14.89 16.55 14.89 16.12 23.11
Expenses as
Composition of
Total Sales 4.09 4.31 4.56 4.49 3.96
Cash Flow Indicator
Ratios
Dividend Payout
Ratio Net Profit 49.42 46.86 47.41 47.86 55.24

Dividend Payout
Ratio Cash Profit 44.32 43.13 43.74 43.54 49.63
Earning
Retention Ratio 49.4 51.67 50.11 50.87 42.64
Cash Earning
Retention Ratio 54.74 55.64 54.16 55.41 48.66
AdjustedCash
Flow Times 0.49 0.23 0.36 0.05 0.07
Mar Mar Mar Mar Mar

'11 '10 '09 '08 '07
Earnings Per
Share 2.71 4.99 4.32 3.67 2.92
Book Value 6.33 8.64 8.53 6.11 4.67
(Rs crore)
Cash flow and fund flow
In financial accounting, a cash flow statement, also known as statement of cash flows or funds flow statement is
a financial statement that shows how changes in balance sheet accounts and income affect cash and cash
equivalents, and breaks the analysis down to operating, investing, and financing activities. Essentially, the cash flow
statement is concerned with the flow of cash in and cash out of the business. The statement captures both the
current operating results and the accompanying changes in the balance sheet.[As an analytical tool, the statement of
cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills.
International Accounting Standard 7 (IAS 7), is the International Accounting Standard that deals with cash flow
statements.
People and groups interested in cash flow statements include:
 Accounting personnel, who need to know whether the organization will be able to cover payroll and other
immediate expenses
 Potential lenders or creditors, who want a clear picture of a company's ability to repay
 Potential investors, who need to judge whether the company is financially sound
 Potential employees or contractors, who need to know whether the company will be able to afford
compensation

 Shareholders of the business.
Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07
Profit before tax 596.26 527.03 425.00 365.18 284.22
Net cash flow-operating activity 338.61 481.49 323.57 313.29 234.43
Net cash used in investing activity -222.22 -267.54 -238.38 -179.77 -60.57
Net cash used in fin. activity -87.89 -201.88 -9.77 -119.30 -168.06
Net inc/dec in cash and equivalent 28.50 12.07 75.42 14.22 5.79
Cash and equivalent begin of year 163.91 151.84 68.26 54.04 44.45
Cash and equivalent end of year 192.41 163.91 143.68 68.26 50.25
WORKING CAPITAL ANALYSIS

Working capital is the difference between the current assets and the current liabilities.net working capital
may be positive or negative. When the current asset exceed the current liabilities there will be positive
net working capital. A negative value occurs when the current liabilities exceed the current asset and
liability.
WORKING
Year CAPITAL CURRENT RATIO
2008 42 1.051
2009 146 1.181

2010 186 1.202
2011 395 1.270
As working capital increases current ratio also increases.
III . BREAK- EVEN ANALYSIS
This is a specific way of presenting the relationship between the cost, volume and profit. As an
ultimate objective it helps management to seek the most profitable combination of cost and volume.
The break even indicates the level of the sales at which the cost and revenues in equilibrium. The
equilibrium point is called the breakeven point. It is a no profit no loss point. Total variable and fixed
costs are compared with sales revenue in order to determine the level of sales volume, sales value or
production at which the business makes neither a profit nor a loss (the "break-even point").
Dabur India expects its loss-making retail business to break even in the next fiscal as it aims to cut costs through a revenue-sharing
model under which it would give a percentage of its revenues to landowners, instead of rent.
“Increasingly we are going for a revenue-sharing model in retail. So, instead of giving rent, we give a percentage of our revenues,”
chief executive officer Sunil Duggal said.
That model ensures faster break-even and is less risky, he said, adding some landlords have already begun to accept the new
model.
“Even this year the loss would be less than half of last year,” Duggal said. The retail arm had posted a loss of around Rs 24 crore in
FY09.
Dabur operates its retail business through its subsidiary H&B Stores Ltd and and operates a chain of beauty, health & wellness retail
outlets under the brand name ‘’newu’’.
The personal care and food products maker currently has 12 retail outlets across India. Any further expansion plans in retail would
depend on the sucess of the revenue-sharing model, he said.
Dabur is not keen on a price hike though it is concerned about rising material costs.
Break even point can be calculated by the following formula:
BEP = Fixed cost
P/V ratio
Where P/V ratio = (Contribution / Sales) x 100

Contribution = Sales – Variable cost
Margin of safety = Actual sales – Break even sales
Assumption of Break-Even Analysis;
1. All cost can be classified into fixed and variable costs.
2. Selling price does not change with the sales volume.
3. There is only one product or one constant sales mix.
4. All units produced are sold
The company had been confronting with huge accumulated losses so the break even point is hard to find.
Due to the high cost of the material, firm was not able to meet the cost for the sales made so it was not
able to make a profit out of it. And, thus to the firm more turnover will only incur more and more loss.
The company is making a huge loss so it is better to abandon it. Dabur Foods Ltd, a fully owned subsidiary of Dabur

India Ltd, will break even by the end of the current financial year. The company had reported a loss of Rs 8.3 crore on a turnover of
Rs 37.12 crore in 2000-01. The company has projected to wipe out its accumulated losses in another three years' time.
IV. INVESTMENT DECISION ANALYSIS

The investment decisions of a firm can also be called as the capital budgeting, or capital expenditure
decisions. It is a decision defined as the firm’s decision to invest its current funds most efficiently in the
long-term assets in anticipation of an expected flow of benefits over a series of years. This is the most
important decision to be made by the management in planning as it involves a high risk of the uncertainty
in gaining the profit in the future. Ones made it cannot be reversed. The company, which signed an
agreement with the Board of Investment of Sri Lanka for this venture, said in a statement that the
investment marks its entry into the island nation.
Dabur has set up Dabur Lanka Pvt Ltd, to be incorporated under its wholly-owned unit Dabur
International, which handles overseas operations.
"The demand for fruit-based juices and beverages under the Real brand has been reporting strong
growth month-on-month. Dabur's food business had reported an over 28 percent growth in 2010/11
despite supply constraints," Chief Executive Sunil Duggal said.
"As continued high growth is expected in the future too, we are setting up this new facility to
augment our production capacity for fruit-based beverages and meet the growing demand." Duggal
added.
The new plant, which will be set up at Gampaha, north of Colombo, will have a monthly capacity of
280,000 cases and will be commissioned in Aug-Sept 2012.
Dabur has manufacturing plants in Nepal, Bangladesh, Dubai, Nigeria, Egypt and Turkey among
others.
About 22 per cent of Dabur's sales come from international markets, including African nations, Nepal
and Bangladesh.
"Building manufacturing facility in Sri Lanka was an important strategic decision for Dabur as
manufacturing presence here gives us a competitive edge that we intend to utilize in full," Duggal
said.
shares of the company were up 0.94 percent at 102.55 rupees in a firm Mumbai market.
($1=49.195 rupees)
Net Present Value (NPV) method is an economic method of evaluating the investment
Proposals. It recognizes the time value of money.
NPV = Present value of cash inflow – Present value of cash outflow
Table 1.9
Profitability index (PI)= present value of the cash inflow / outflow
Calculation of the weighted average:
Cost of Debt = Interest and financial charges x 100
Long term debts
In the table above the weights are given and the weighted average is calculated . The sum of the Debt and
equity weighted average is taken and the this is found to be (3.07+.051= 3.12%). The PV values at 3% are
taken for the five years and the inflow is discounted with the respective values\ as shown in the table
Thus, NPV= -513199060 - 996777770.8
= -609976831.7
Here, the NPV is negative so it is not feasible to invest in the project.
PI= PV of cash inflow = -0.529
Outflow
Average rate of return= Average profit after tax = - 0.533
Average b/v of investment

CONCLUSION AND RECOMMENDATION
The financial statements of the firm for the five consecutive years(2010-2011) were analyzed
and various ratios and analysis were done.
 Through the ratio analysis of seven admired companies in the same sector.
The various positive and negative results came out, on the basis of these
results I would like to recommend that-
 The company should try to increase the duration of the average collection period to
compete with its competitors, by off ering the customer high cost in credit
sales.
 The company should try to maintain its net worth for having satisfactory fund
for equity share holders.
 The company should give more emphasis to sufficient 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 reduce its variable cost to increase gross

p r o fi t m a r g i n which is very low relatively other FMCG
FINDINGS
 On the basis of data and available information. Certain findings arrived that relates
the Ratio Analysis of the company.
 It is observe that the Dabur India Ltd. has good profi t margin and
company’s l i q u i d i t y i s a l s o g o o d . I t h a s i m p o r t a n t f r o m t h e v i e w p o i n t
o f c re d i t o r s a n d shareholders’ that company have sufficient fund to pay them.
 In the comparison of profitability ratio in Dabur India Ltd. the gross profit ratio14.35%
and net profit ratio 11.67% both are increases in the year 2010-2011 in compare to
last two year.
 The current ratio 1.47% is also increase in the year 2010-2011 in compare to last two
year. It shows that current assets increase over current liabilities.
 The debt equity ratio 0.45% is also increase in the year 2010-20011 in compare to
l a s t t w o y e a r . I t s h o w s t h a t a l a r g e s h a r e o f fi n a n c i n g b y
c r e d i t o r s i n t h e company, which is positive sign for the company.
 The return on capital employed 49.47% is having little bit of decrease in 2005-2006
in compare to last year. But then also its better than some other FMCG
companies. It shows that Dabur India Ltd. have suffi cient sources of the
long term funds.
 The fi xed assets turnover ratio 6.88% has increases in 2010-2011 compare
to last two years. It shows the efficiency of Dabur India Ltd. in utilizing the fixed
assets of the company, comparing with the previous period. It also shows
that company has increases its investment in fixed assets.
 The debtors’ turnover ratio 50.83% has increases in 2010-2011 in compare

to last two years, which shows that Dabur India Ltd. is managing its credit very well.
 The average collection period is decreases to 10.16% in compare to last

two years. This low average collection period shows a low cost in extending credit to
LIMITATIONS
Although it has been my endeavor to take all necessary precautions to ensure

that the i n f o r m a t i o n g a t h e r e d i s a u t h e n t i c a n d m a x i m u m f a c t s a r e
p r e s e n t e d b u t I f a c e d c e r t a i n constraints while doing so. The constraints and
limitations faced are as mentioned below:
1. Time:
 The nature of the report required detailed and meticulous information gathering. In
this sense time was a limiting factor and a major constraint to accomplish the given
task. Also sometimes the information was not available on time. This caused a lot of
pilferage of time unnecessary of duplication of effort.
2.Human error:
 The feedback provided by the company executives, consumers and others

 approached has been assumed to be correct. But there might have been wrong
and biased facts given. The opinion of few cannot be generalized in any manner.
3.Non cooperation:
 While by and large the people approached were helpful some people were
non-cooperative. Also a lot of information was withheld due to its sensitive nature.
4.Calculation error:
 The report required calculation of figures and at last have to analysis them also, so
mistake can be arises during calculations.
REFERENCES
 Financial Management BY Pandey , Vikas Publishing House Pvt. Ltd, New Delhi.
 Financial Management theory and practice by Prasanna Chandra
 www.dabur.com
 www.google.com


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Financial Management

DABUR INDIA LIMITED Page 1

1.2 ABOUT DABUR INDIA LIMITED ..................................................................................................4

1.3 FINANCIAL ANALYSIS.................................................................................................................... 6

II. WORKING CAPITAL ANALYSIS.....................................................................................................28

III. BREAK- EVEN ANALYSIS...............................................................................................................29

IV. INVESTMENT DECISION ANALYSIS……………………………………………….…………….31

DABUR INDIA LIMITED Page 2

The functional areas covered by financial management are:

1. Determining financial needs

In addition to raising funds, financial management is directly concerned with production,

DABUR INDIA LIMITED Page 3

DABUR INDIA LIMITED Page 4

Dabur India Ltd. - Corporate Profile

WORKING CAPITAL AND COST MANAGEMENT:

DABUR INDIA LIMITED Page 6

Profit Before Tax

Taxes 14 14 15 19 30 39 52 54 100 139

Current Assets, Loans

Current Liabilities &

Net Working Capital 322 281 46 8 35 189 42 146 186 395

Share Capital 29 29 29 29 57 86 86 87 87 174

Equity Share Data:

Earnings Per Share

Dividend Per Share

DABUR INDIA LIMITED Page 7

Current ratio = current asset

Year Current Current Current

DABUR INDIA LIMITED Page 8

2010 951 805 1.202

2011 1853 1458 1.270

Where, Quick assets = Current assets – Inventory

Year Quick asset in crores Current liability in Quick ratio

Year Debt equity Debt-equity ratio

2008 342.41 396.89 .23

2009 312 412.77 .14

2010 204 262.06 .19

2011 284 332.26 03

DABUR INDIA LIMITED Page 9

Debt ratio = Total Debt

Debt equity ratio = Total Debt

2. Capital Employed to Net Worth:

Proprietary ratio= Share holders equity

DABUR INDIA LIMITED Page 10

Inventory turnover ratio = Cost of the goods sold

Days of inventory holding= 365/inventory turnover ratio

Year Sales Avg. stock Ratio

Debtors turnover ratio = Credit sales

Current Asset turnover ratio = Sales

DABUR INDIA LIMITED Page 11

Fixed asset turnover ratio = Sales/ fixed asset

Year Inventory Debtors turnover Investment Asset turnover

cost ratios include:

part in sales of the company.

DABUR INDIA LIMITED Page 12

GROSS PROFIT RATIO:

Gross profit ratio = Gross profit / sales *100

Year Gross profit Sales Ratio

2008 560.05 1163.19 48.1%

2009 682.01 1370.85 49.7%

2010 553.91 1147.97 48.2%

2011 653.39 1268.71 51.5%

Earning per share = Profit after tax / Number of shares