December 13

FINANCI
AL
200
REPORT
9
DABUR INDIA LTD.
 SNAPSHOT

Name – Ayush Bansal

Roll Number – 09BSB0000507

Company Name – Dabur India Ltd.

Industry – FMCG

Graph Of the share price from June,2009 to Dec,2009 :

Important Ratios: (Year ending March, 2009)

P/E Ratio : 38.29 (as on 11/12/2009)

Debt/Equity Ratio : 0.18

Interest Coverage Ratio: 31.26

EV/EBITDA : 20.4

Dividend/Share : 1.75

RONW: 48.65

Important News :

05/12/2009 – Dabur drags Godrej to court.

11/12/2009 - Dabur India - Disclosures under Reg.13(6) of SEBI (Prohibition of Insider Trading)
Regulations, 1992.

05/11/2009 – FMCG companies buy more ad space

25/06/2009 – Dabur India ltd. Completes acquisition of FEM CARE.

Required Rate Of Return : (CAPM Model)

Required Rate Of Return = 4.68% + 0.47(-3.85% – 4.68 %) = 0.67 %

 INDUSTRY ANALYSIS

In a clear defiance of the economic slowdown of the past 12 months, India‘s Fast Moving
Consumer Goods (FMCG) sector has grown consistently during the last three to four years,
reaching a size of US$ 25 billion (Rs. 120,000 crore) at retail sales in 2008. The industry is
poised to grow at 10-12% for the next 10 years to reach US$ 43 billion (Rs. 206,000 crore) by
2013 and US$ 74 billion (Rs. 355,000 crore) by 2018. The implementation of the proposed
Goods and Services Tax (GST) and opening up of Foreign Direct Investment (FDI) are
expected to fuel growth further to raise the industry’s size to US$ 47 billion (Rs. 225,000 crore)
by 2013 and US$ 95 billion (Rs. 456,000 crore) by 2018, according to a FICCI-Technopak
report.

Key Drivers : Rural penetration, high disposable income, urban demographic story, lower input
cost, innovation, high technology.

Concerns : Price cuts, high inflation rate, consumer downtrading, globalization, foreign
companies investments.

Valuation Ratio :

P/E Ratio : 38.22 ( as on 11/12/2009) This is a good number showing good confidence by the
investors in the company, it means investors are ready to pay 38.22 rupee for 1 rupee earning
in the company. Its also shows high investors expectations and market appraisal of the firm. But
the high number may also show that the firm is overvalued, by the speculation.

Competitors :

Net Profit Market Cap. Sales

COMPANY Turnover
(Rs. cr.)

HUL 2,496.45 59,318.65 20,601.56

Dabur India 373.56 14,285.10 2,417.91

Colgate 290.22 9,312.11 1,770.82

Godrej Consumer 161.55 8,632.40 1,088.01

Godrej Ind 19.33 6,682.83 880.97

Marico 142.12 6,512.98 1,921.85

P and G 178.85 5,730.78 772.81

Gillette India 113.13 4,352.73 661.51

FINANCIAL SUMMARY

BALANCE SHEET (Rs in Cr.) PROFIT & LOSS A/C

Income : Mar ' Mar ' Mar ' 09 Mar ' 08
09 08
Operating
SOURCES Income
OF 2,408.33 2,093.63
FUNDS
Owner's
ExpensesFund
Equity Share
Material Consumed 86.5 1,232.85 1,023.94
86.40
Capital 1
Manufacturing
Share ApplicationExpenses 54.22 54.02
0.00 0.00
Money
Personnel Expenses 167.32 149.69
Preference Share
Selling
Capital Expenses
0.00 0.00 358.75 337.69
Adminstrative
Reserves & Expenses
651. 441.9 153.67 138.69
Surplus 69 2
Expenses Capitalised 0.00 0.00
Loan Funds
Secured Loans 8.26 16.45
Cost Of Sales 1,966.81 1,704.03
130.
Unsecured Loans 0.24
72
Operating Profit 877. 545.0 441.52 389.60
Total
18 1
Other Recurring Income 10.72 9.76
USES OF
FUNDS
Adjusted PBDIT
Fixed Assets 452.24 399.36
518. 467.9
Gross Block
Financial Expenses 77 3 14.47 10.92
Less : Revaluation
Depreciation
Reserve
0.00 0.00 27.42 25.75
Other: Write offs 210. 189.7
Less 3.94 5.67
Accumulated
45 7
Depreciation
Adjusted PBT 308. 278.1 406.41 357.01
Net Block
32 7
Capital Work-in- 51.7
Tax Charges 51.44 48.40
16.26
progress 1

Adjusted PAT 232. 270.3 354.97 308.61

Investments
Non Recurring Items 18.58 8.16
05 7
Other Non Cash adjustments -0.72 -0.86
Net Current
Assets
Reported Net Profit
Current Assets, 373.55 316.77
973. 576.8
Loans &
42 2
Advances
Earnigs Before Appropriation 696.07 545.07
Less : Current
696. 610.5
Liabilities &
97 7
Provisions
Equity Dividend 151.39 129.60
Total Net Current 276.
Preference
Assets Dividend
45
-33.75 0.00 0.00
Dividend Tax
Miscellaneous 25.73 22.03
expenses
Retainednot Earnings8.64 13.95 518.95 393.44
written
877. 545.0
Total
17 0
Note :
Book Value of
319.
Unquoted 67.99
12
Investments
Market Value of
118. 205.1
Quoted
48 9
Investments
Contingent 174. 171.2
liabilities 15 4
Number of Equity
8,65 8,640.
shares outstanding
0.76 23
(in Lacs)

CASH FLOW STATEMENT

Profit Before Tax 425.00 365.18

Net CashFlow-Operating Activity 323.57 313.29
Net Cash Used In Investing Activity -238.38 -179.77
NetCash Used in Fin. Activity -9.77 -119.30
Net Inc/Dec In Cash And Equivlnt 75.42 14.22
Cash And Equivalnt Begin of Year 68.26 54.04
Cash And Equivalnt End Of Year 143.68 68.26

Ratio Calculation :

1> Debt/Equity

= 138.98 / (86.51+651.69) = 0.18

2> P/E Ratio: (as on 11/12/2009)

= MPS/EPS

= 165.05/4.31 = 38.29

(where EPS = 373.55/86.50 = 4.31)

3> Interest Coverage Ratio:

= EBIT/Interest

= (452.24+27.42)/15.34 = 31.26

4> Dividend Payout Ratio:

= DPS/EPS

= 1.75/4.31 = 0.40 = 40%

( where DPS = 151.39/86.50 = 1.75 )

:
DUBAI JITTERS: ITS EFFECT ON INDIA AND EMERGING MARKET CAPITAL FLOWS???

It all started with the troubles of Dubai World, a Dubai government owned company frizzed with
the repayment of its debts, which reminded of the fact that the global economic slowdown is not
yet over when at the time the world was thinking that it is left behind. The fundamental causes
for what happened a year ago in U.S economic meltdown is not different; excessive
consumption and highly-leveraged real estate bets. What is different is that the Dubai
government chose to wash its hands of what was seen as quasi-sovereign debt(debt owned by
wholly owned government corporate) though not explicitly guaranteed by the owner. This has
important implications to emerging market capital flows.

The total debt of the Dubai government and other government owned entities is estimated to be
in excess of $100 billion, much beyond their estimated GDP.

Being not endowed with oil resources, Dubai has relied heavily on borrowings to build up an
economy reliant on trade, tourism, and realty. In addition Dubai invested heavily in foreign
assets- casinos, hotels, commercial property etc substantially financed by international
borrowings.

The global financial meltdown in 2007 hit the pillars of its growth strategy – trade and tourism –
very hard, resulting in near empty commercial buildings, and abandoned construction projects
leading to property prices tumbling to less than half the peak levels.

Dubai’s oil rich neighbors may consider extending a helping hand at least to prevent lasting
damage to the region. A year ago, the travails of Dubai world would have been easily absorbed
by the market without demur because debt restricting was going on a massive scale across the
globe. It is only because the global markets had , in effect, assumed that the worst of the global
meltdown was behind us that the Dubai came as a shocker.

The International Banks that have lent some $59 billions to Dubai are in no financial position to
take even a partial writedown on these assets, having barely survived the harsh condition.
Being on of the largest trading partners of Dubai, India’s trade of some $20 billion per annum,
including re-exports, could be at considerable risk if the uncertainty over the economic future of
Dubai is not quickly resolved. In addition, the likely reduced level of economic activity is certain
to lead to unemployment and repatriation of at least some of the half a million NRIs employed in
the country, thus putting to risk about a tenth or more of the annual $50 billion worth of work
remittances to India. Moreover, at least $1 billion worth of investments of Indian companies in
several business ventures in Dubai, especially in real estate sector (companies like Omaxe) ,
would mark down if the crisis remain unresolved.

The Larger impact however is a question mark on very concept of quasi- sovereign debt paper.
Government own corporate have traditionally enjoyed quasi sovereign status in the credit
markets, commanding a very fine pricing on their debt paper. India has often used this route in
the absence of an international sovereign debt programme by encouraging government owned
institutions to borrow from the international credit markets. Post the Dubai World travails, the
international credit market are unlikely to offer the quasi sovereign status and fine pricing to
government-owned corporate without an explicit sovereign guarantee. The damage to the
concept of quasi sovereign debt issued by emerging markets has already been done and likely
fallout of this is the potential hike in risk on the capital flow to emerging markets post the Dubai
debacle.