EXECUTIVE SUMMARY

The project Ratio Analysis: A Case Study of Dabur. Aims to interpret the financial statement so
that the strengths and weaknesses of a firm as well as its historical performance and current
financial condition can be determined.
For the purpose the data has been used, which was collected from the past financial records of
the company i.e., balance sheet and profit and loss account, for three financial years(20013-14,
2014-15, 2015-16). The data collected broadly relate to the current assets and current liabilities
of the company.
The technique used to analyze the financial condition of the company is Ratio Analysis. For this
purpose three years (2013-2014, 2014-2015 &2015-2016) ratios have been calculated of Dabur
and out of them two years (2013-2014 &2014-2015) ratios have compare with other FMCG
companies. The method of trend ratios has been adopted. The analysis process has been
undertaken in two stages:
a) Calculation of ratios
b) Their interpretation
The following ratios have been calculated:
a) Liquidity Ratios
The liquidity ratios represent excess of current assets over current liabilities. It is the ability of a
firm to satisfy its short-term obligations as they become due.
b) Leverage Ratios
The leverage ratios measure the ratios of long-term or total debt to shareholders equity.

c)

Profitability Ratios

The profitability ratios use to measures operating efficiency of a firm and its ability to ensure
adequate returns to its shareholders depends ultimately on the profits earned by it.
d)

Activity Ratios
The activity ratios measure the speed with which various accounts/assets are converted into sales
or cash.
After making all the calculations each ratio has been interpreted and this can be summarized as
follows:
The net working capital of the company shows an increasing trend. The analysis also reveals a
rising inventory turnover ratio and debtors turnover ratio and an improved debt collection
period. At the same time the company also has a high current asset and quick ratio, which
represents high liquidity.
The project also gives information about the practices presently being followed in Dabur to
manage their ratios. After making a thorough analysis of the various aspects related to the ratios
the company conclusion has been drawn. The company has sufficient funds to meet its shortterm obligations as they become due.
Finally on the basis of the analysis and the conclusions drawn a SWOT analysis has been done
and recommendations given.
Therefore, a financial analysis of the working capital of Dabur reveals that the company has been
able to manage its working capital efficiently thereby strengthening its short-term financial
position.

CHAPTER -1
INTRODUCTION

Fast Moving Consumer Goods is the booming industry in India. After all, it is an industry which
touches every aspect of human life, from looks to hygiene to palate. Though the market scenario
was very different before the liberalization of Indian economy the product quality as well as the
competitiveness has immensely increased. After the liberalization the players like Pepsi and
Coke has changed the rules of the game in the industry. One reason for the lagging behind of this
industry was the spending power of people, the other reasons were like lack of innovation
because of the closed market having high import duties, and the minuscule level of competition
as their were not many players in the market. Earlier it was the sales era but at present customer
has the final call.
Categorization of FMCG Products
Category

Products

Household Care

Fabric wash (laundry soaps and synthetic

detergents), household cleaners (dish/utensil
cleaners, floor cleaners, toilet cleaners, air
fresheners, insecticides and mosquito repellents,
Metal polish and furniture polish).

Food and
Beverages

Health beverages, soft drinks, staples/cereals,

bakery products (biscuits, bread, cakes), snack
food, chocolates, ice cream, tea, coffee, soft
drinks, processed fruits, vegetables, dairy
Products, bottled water, branded flour, branded
rice, branded sugar, juices etc.

Personal Care

Oral care, hair care, skin care, personal wash

(soaps), cosmetics and toiletries, deodorants,
Perfumes, feminine hygiene, paper products

Industry Segments
The main segments of the FMCG sector are:

Personal Care: oral care; hair care; skin care; personal wash (soaps); cosmetics and
toiletries; deodorants; perfumes; paper products (tissues, diapers, sanitary); shoe care.
Major companies active in this segment include Hindustan Lever; Godrej Soaps, ColgatePalmolive, Marico, Dabur and Procter & Gamble.

Household Care: fabric wash (laundry soaps and synthetic detergents); household
cleaners (dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides
and mosquito repellants, metal polish and furniture polish).
Major companies active in this segment include Hindustan Lever, Nirma and Reckitt &
Colman.

Branded and Packaged Food and Beverages: health beverages; soft drinks;
staples/cereals; bakery products (biscuits, bread, cakes); snack food; chocolates; ice
cream; tea; coffee; processed fruits, vegetables and meat; dairy products; bottled water;
branded flour; branded rice; branded sugar; juices etc.
Major companies active in this segment include Hindustan Lever, Nestle, Cadbury and
Dabur.

Spirits and Tobacco Major companies active in this segment include ITC, Godfrey
Philips, UB and Shaw Wallace.
An exact product-wise sales break up for each of the items is difficult.

HISTORY OF FMCG INDUSTRY

Fast moving consumer goods (FMCG) industry has a long history. However, the Indian FMCG
industry began to take shape only during the last fifty-odd years. To date, the Indian FMCG
industry continues to suffer from a definitional dilemma. In fact, the industry is yet to crystallize
in terms of definition and market size, among others.
The definitional confusion that has marked the Indian FMCG industry is getting confounded.
Some call it the FMCG industry, some others call it the CPG industry and some even call it the
PMCG (Packaged Mass Consumption Goods) industry. The Indian FMCG industry has suffered
because of this confusion.
It was Dabur, which kick started in India what's today known as the fast moving consumer
goods (FMCG) industry. It was some 115 years ago, much before Hindustan Lever (HLL)
materialized on the scene. How has the FMCG industry metamorphosed in India?
The dramatic nineties
Things however began to change post-reforms during the nineties. The floodgates were opened.
And MNCs with saturating home-markets who were hungrily looking for markets elsewhere
rushed in. Categories within categories were created in products such as hair-oil and skincare,
and many new product categories were also created. Untouched facets of the Indian consumer
were explored. The FMCG players had in front of them not only a vast untapped market but also
a market that was fast growing. Income-levels were rising. A new class of upwardly mobile was
emerging. Television and, satellite and cable television were helping the market to grow further
in rural areas by changing aspirations and lifestyles.
The canvas did widen for the FMCG players, but so did the challenges. Rules of the game
changed. Strategies, in their true sense, came to the fore. Quite unlike in the past, companies
began looking for ways to expand their product-portfolios and distribution reach. Acquisition of
brands became the order of the day as it gave the players easy options of attaining growth in the
FMCG sector. That is true of the MNCs who are known for their deep pockets.
Dabur, for instance unleashed brands in a way it had never done earlier. Just in a span of ten
years, it gobbled up Food products, Health Care Products, was bought in the market. Dabur plan
to increase the distribution channel although it already have good distribution channel.
Current Scenario in FMCG
At present the industry is on a roll. Following are some industry stats which prove it:
The FMCG sector is the fourth-largest sector in the Indian economy
At present the size of the industry is US $13.1 billion

 The industry is expected to grow at compounded rate of 9 % per annum

The growth in the urban sector is 7% and in rural sector is 4%
The top five companies HLL, ITC, Dabur, Britannia and Nestle of FMCG industry has
grown at the rate of 15% this year.
The combined performance chart for the year 2014 and 2015 of these companies is as
following:
(Rs m)

Sept'14

Sept'15

Change

Net Sales

58,822

67,813

15.3%

Expenditure

45,316

52,632

16.1%

Operating Profit (EBDIT)

13,506

15,181

12.4%

Operating Profit Margin (%)

23.0%

22.4%

Other Income

1,940

1,931

-0.5%

Interest

782

297

-62.0%

Depreciation

1,370

1,545

12.8%

Profit before Tax

13,294

15,270

14.9%

Tax

3,714

4,066

9.5%

Extraordinary items

427

(62)

Profit after Tax

10,007

11,142

11.3%

Future of the Industry

Looking at the steps taken by the government to improve the picture of Indian industry we can
say that there are immense growth opportunities for this sector. Following are some of the facts
related to the bright future of this industry:
The industry is expected to grow up to the size of US $33.4 billion. by the year 2025
The demand for FMCG products is expected to boom by 60% in 2020 and 100% by 2025
In the next few decades the production of foods by PMCG is expected to rise up to 70%
from its current share of 11%
Opening up of the retail sector for FDI. Currently the FDI in retail is 24% it may be
further increased as looking at the growth rate of the industry in 2010 the industry is
expected to need an investment of US $28 billion
Government encouraging the export of FMCG products by reducing the export duty
The per capita disposable income in India is expected to rise from US $556 in 2014 to US
$1150 in 2025, which means the increase in purchasing power. It will lead to the growth
in the sales of products like health care.

 India is the worlds largest producer of milk still only 15% of the milk is processed, a
huge potential of growth lies in this segment of the industry.
Currently the size of semi processed and ready to eat packaged food market is $70 billion
which is the 15% of its potential, this part of FMCG also have an immense growth
potential.
By 2010, 200 million people are expected to shift to packaged and processed food
There is only 45% penetration in the health care market and 55% of the market is still to
be covered in this market.
If we look at the distribution of Indian population around 47% of Indian population is
below 20 years of age by 2025 which is expected to grow to 55% which means the
consumer base of FMCG products like healthcare, hygiene, beverages etc will increase
The rural market in India was not well penetrated by the FMCG industry till now but with
the projects like HLL Shakti and ITC E-Chaupal the penetration has increased and this
will lead to faster growth of this industry
The emergence of the concept of ECR (Efficient Consumer Response) will the FMCG
industry operate more efficiently by filling up the demand supply gap which coming up a
major problem in this industry.
Environmental Factors affecting the Industry
There are various factors at Micro as well Macro level which influences the FMCG industry. The
factors at micro level can be costs incurred in production, efficiency of the various departments
in the companies of FMCG industry. At macro level following are the factors influencing FMCG
industry:
Economic Growth as it will lead to increase in the income of the people and so the
expenditure on FMCG products
Changes in demographic profile of people
Government policies like :
o Tax
o FDI policies
o Export Duties
Entry of new players in the market as it rises the competition and leads to various
changes in the way business is done
The competition faced from unorganized sector as they get away without paying taxes
and can have the competency at the price level
Role of Dabur in this Industry
Dabur Foods Limited (DFL) posted a record 53% sales growth for the financial year
2015-16 . This outstanding performance has resulted in DFL closing the year at Rs.190 crores
(balance sheet figure) and this strong growth is reflected in the incremental turnover of Rs. 12.1
crores over budget and Rs. 61.5 crores over last year.
The company recorded a PAT of Rs. 12.1 crores, which is 130.2% growth over LY and as a result
PAT % to sales moved from 4.5% to 6.8%.

Some of the key Highlights of the Year are:

Company earned additional revenue to the tune of Rs. 15 crores through its export operations,
which is a 260% growth over LY and achieved the recognition of a Star Export House in 2 years.

New products launches have contributed to 20% of the turnover and contributed to 24%
of our growth.

Real and Activ Brands together have clocked a turnover of Rs. 150 crores.

Replant of Activ has resulted in value sales of Rs 3040 lakhs resulting in a stupendous growth of
99% over last year and increased contribution from 13% to 17% of SBU sales.
Dabur Foods Limited (DFL) a wholly owned subsidiary of Dabur India Limited (DIL), operates
on the naturals platform with a product portfolio consisting mainly of packaged fruit juices,
cooking pastes, sauces and items for institutional food purchases
The business registered another year of fantastic performance in 2015-16 by growing sales by
48% and growing its profit by more than two times. This is the second year in a row that the
business has grown over 48% in sales growth. The business recorded a turnover of Rs.192.53
crores registering a growth of 48% and profit after tax of Rs.12.1 crores. In line with the strategic
path laid down, the following are the key highlights of performance:

Beverage portfolio growth at 50% driven by its segmentation strategy under Real.

Strong growth from new product launches and new channels which contributed to 24%
of our total growth.

The line extensions of Home made also continued to drive the growth.

Exports grew by over 100%.

The primary growth driver of your business was its fruit beverage portfolio. The segmentation
strategy put into place by Sanjay and his team to differentiate the 3 brands has been successfully
implemented. Real, Activ and Coolers are now differentiated in terms of appeal, benefit, variants
and packaging. Real continued to grow by over 35%. The major success of the year was Real
Activ which doubled it's sales over last year. The extension to the innovative fruit and vegetable
variants has been widely accepted by the Indian consumers. Both these brand have firmly
strengthen Dabur Foods leadership in the fruit juices market coupled with the excellent retail
distribution by KG and his team.

"Coolers" - The range of drinks is based on traditional Indian formulations, which have a
cooling effect on the body - grew by 58%. It added 3 new flavors - Muskmelon, Lemon Barley
and Jamun.
The Home made brand grew by 28 per cent in 2015-16. These growth rates were possible by the
excellent performance of Coconut Milk & Tomato Pure.
Besides the retails channel, the product is extensively distributed in the food services channel.
In view of the growing size of this channel a dedicated structure headed by Jyotiroop has been
set up to service the customer. The company continued to dominate this channel by making it
available in the best hotels, restaurants, airlines and several institutions like business houses to
Indian army.

CHAPTER-2
COMPANIES PROFILE

10

Dabur India Limited established in 1884 by Dr. S. K. Burman, physician of vision and limitless
compassion Brought Ayurvedic medicines to the ailing mass of Bengal. It is one of the leading
FMCG Company in India. The company was formed by way of amalgamation in Oct.'86. Prior
to this, the company was operating under the name Dabur (S K Burman) Pvt Ltd, since 1930.
The FMCG industry in India is very unpredictable which ultimately affects the profitability of
any company in the sector.
The success of Dabur is based on dedication to nature, corporate, and process hygiene, dynamic
leadership and commitment to the partners and stakeholders. It provides differentiated products
with strong Herbal and Nature profile. Over more than 100 years it is dedicated to providing
nature based solution for a healthy and holistic lifestyle through Ayurveda.
Leading consumer goods Company in India, holding position among the large turnover
companies:

3 major strategies business units (SBU) - Family Product Division (FPD), Health Care
Products Division (HCPD), and Dabur Ayurvedic Specialties limited (DASL).
5 Subsidiary Group Companies Dabur Foods, Dabur Nepal, Dabur Oncology, Dabur
Pharma and Dabur Egypt.
Production market in over 50 countries.
Dabur became the first Ayurvedic products company to get ISO 9002 certification for its
superior quality standards.
Dabur Nepal, a subsidiary of Dabur India, has set up fully automated greenhouses in
Nepal. This helps to produce saplings of rare medicinal plants that are under threat of
extinction due to ecological degradation.

The company has various brand leaders in different market segments -- Dabur Chyawanprash, a
health tonic and Hajmola, a digestive tablet,. Two new brands, Real and Home made, launched
during 1996-97 have also carved out a niche in the market. Dabur added a new variant to its

11

Pudin Hara range. Its key pharmaceutical brand New Livfit recorded a growth of more than
100%.
To compete in the market and to retain its position, company is focusing on different strategies
and taking initiative for efficiency:

12

OBJECTIVES OF THE PROJECT

OBJECTIVES:
Finding out the ground realities of the competitors of Dabur
India Limited.
Analyzing the superiority of Dabur over its competitors.
Analyzing the position of Dabur in the minds of customers.
Finding out the Ratio Analysis and procedures of calculation.
DELIVERABLES:
Identified the competitors in the market.
Identified opportunities: new segment and consumer needs.

Identified the problem faced by Dabur India Limited

consumers.
Identified the rules and regulation.
Recommendation

13

CHAPTER-3
RESEARCH METHODOLOGY

14

The project work has done in two parts:

1) Calculation of ratios
2) Explain with graph
3) Their interpretations

1) Calculation of Ratio- To analysizing the financial condition of the

company, Dabur India Limited, different ratios has been calculated
of different FMCG companies on the basis of available data. The
ratios has been calculated on yearly basis, of three years (2013-2014,
2014-2015 & 2015-2016).
2) Explain with graph- After calculating the ratios, the data has shown
in graphs, in order to explain it.
3) Interpretations- After calculating the ratios and showing it in
graphs, the interpretation has been made of each and every ratios.
This helps to analysizing the financial condition of the company.

15

RATIO ANALYSIS
Ratio analysis is an excellent method for determining the overall financial condition of a
business. It puts the information from a financial statement into perspective, helping to spot
financial patterns that may threaten the health of a company.
Ratios are also very useful for making comparisons between our business and other businesses in
same industry. For example, comparing ratios can indicate whether a business is holding too
much inventory or collecting receivable too slowly. This comparison provides a window into
ways in which our business can improve its operations.
The Balance Sheet and the Statement of Income are essential, but they are only the starting point
for successful financial management. Apply Ratio Analysis to Financial Statements to analyze
the success, failure, and progress of our business.
Ratio Analysis enables the business owner/manager to spot trends in a business and to compare
its performance and condition with the average performance of similar businesses in the same
industry. To do this compare your ratios with the average of businesses similar to yours and
compare your own ratios for several successive years, watching especially for any unfavorable
trends that may be starting. Ratio analysis may provide the all-important early warning
indications that allow you to solve your business problems before your business is destroyed by
them.
It is also a tool possesses several important features. The data, which are provided by financial
statements, are readily available. The computation of ratios facilitates the comparison of firms
which differ in size. Ratios can be used to compare a firm's financial performance with industry
averages. In addition, ratios can be used in a form of trend analysis to identify areas where
performance has improved or deteriorated over time.
It is based upon accounting information, its effectiveness is limited by the distortions which arise
in financial statements due to such things as Historical Cost Accounting and inflation. Therefore,
Ratio Analysis should only be used as a first step in financial analysis, to obtain a quick
indication of a firm's performance and to identify areas which need to be investigated further.

16

Conditional Use of Financial Ratio Analysis: Financial ratio analysis is frequently used to
measure the performance of various sectors of a business. If properly used (its limitations
understood), it can be a very useful management aid. Following are a few reasons why ratio
analysis is being used so extensively:
a) Ratios are easy to calculate - Most ratios compare two statistics which are normally
provided in the income statement or the balance sheet. Because these data are readily
available at a more-or- less fixed cost, not much time or expense is required to
compute a ratio.
b) Ratios allow easy comparison - They allow comparison of a firms past with its
present performance, as well as comparisons between similar firms at one time.
c) Ratios are easily understood - Not all members of the management team are financial
sophisticates and ratios provide simple overview information to all types of
management personnel.
d) Ratios communicate a firms financial position- The ratios communicate a firms financial
position to interested parties outside of management - for example, financial authorities may
rely on ratios to determine a firms credit worthiness.

17

CHAPTER-4
DATA INTERPRETATION

18

Liquidity Ratios

19

STATEMENT SHOWING CURRENT RATIO AS ON 31ST MARCH 2014

Companies

Dabur

HLL

Nestle

Current
Ratio

1.27

0.90

0.67

Godrej
0.68

Cadbury
1.24

Britannia
0.89

Colgate

P&G

1.12

1.71

Current Ratio= Current Assets/Current Liabilities

INTERPRETATION:
The ratio is used to assess the short term financial position of the business concern. It is an
indicator of the firms ability to meet its short-term obligations. As a conventional, rule a current
ratio of 2:1 is considered ideal.
Dabur has a current ratio is 1.27 which is an average ratio that the company current assets are
more then current liabilities in year 2013-14 increase in current assets and decrease in current
liabilities. The company has a sufficient fund to pay its liabilities on time and meet other day to
day expenses.

20

STATEMENT SHOWING CURRENT RATIO AS ON 31ST MARCH 2015

Companie
s
Current
Ratio

Dabur
0.79

HLL

Nestle

Godrej

0.82

0.65

0.66

Cadbur
y
0.91

Britannia
0.86

Colgate
1.29

P&G
1.52

Current Ratio= Current Assets/Current Liabilities

INTERPRETATION:
The ratio is used to assess the short term financial position of the business concern. It is
an indicator of the firms ability to meet its short-term obligations. As a conventional, rule a
current ratio of 2:1 is considered ideal.
Dabur has a current ratio is 0.79 which is far away from the ideal ratio that the company current
assets are very less then current liabilities in year 2014-15 decrease in current assets and
increase in current liabilities.The company dont have a sufficient funds to pay its liabilities on
time and meet other day to day expenses.

21

Criteria for Analyzing Liquidity Ratios

The liquidity ratios measure the ability of the company to meet its current obligations. The
liquidity ratios by establishing a relationship between cash and other current assets to current
obligation provide a quick measure of liquidity.
Current Ratio: - The current ratio of 2:1 or more is considered satisfaction. Dabur India limited
has the current ratio 1.27 in the year 2013-20114 and 0.79 in the year 2014-20115 therefore it
may be interpreted to be sufficiently liquid. But among all the companies Dabur has secured 2 nd
rank in the year 2013-20114 and 6th rank in the year 2014-20115 . The current ratio represents a
margin of safety for creditors. The higher the current ratio, the greater the margin of safety.

22

Leverage Ratios

23

STATEMENT SHOWING DEBT EQUITY RATIO AS ON 31ST MARCH 2014

Companies

Dabur

HLL

Nestle

Debt Equity
Ratio

0.22

0.75

0.02

Godrej
0.48

Cadbury
0.03

Britannia

Colgate

P&G

0.24

0.02

0.20

Debt Equity Ratio = Long-term Loans\ Shareholders Fund

INTERPRETATION:
The debt-equity ratio is an important tool of finance analysis to appraise the financial structure of
the firm. It has important from the viewpoint of creditors, owner and the firm itself. The ratio
reflects the relative contribution of creditors and owners of the business in its financing.
A high ratio shows a large share of financing by the creditors of the firm; a low ratio implies 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 stake,
they would be able to retain control of the firm and (ii) the return to them would be magnified.
With a larger proportion of debt in the financial structure, the earnings available to the owner
would increase more than proportionately with the increase in the operating profits of the firm.

24

STATEMENT SHOWING DEBT EQUITY RATIO AS ON 31ST MARCH 2015

Companie Dabur
s
Debt Equity 0.15
Ratio

HLL

Nestle

Godrej

0.35

0.03

0.33

Cadbur
y
0.02

Britanni
a
0.05

Colgate

P&G

0.03

0.19

Debt Equity Ratio = Long-term Loans\ Shareholders Fund

INTERPRETATION:
The debt-equity ratio is an important tool of finance analysis to appraise the financial structure of
the firm. It has important from the viewpoint of creditors, owner and the firm itself. The ratio
reflects the relative contribution of creditors and owners of the business in its financing.
A high ratio shows a large share of financing by the creditors of the firm; a low ratio implies 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 stake,
they would be able to retain control of the firm and (ii) the return to them would be magnified.
With a larger proportion of debt in the financial structure, the earnings available to the owner
would increase more than proportionately with the increase in the operating profits of the firm.

25

STATEMENT SHOWING LONG TERM DEBT EQUITY RATIO AS ON 31ST MARCH 2014
Companie
s
LLong Term
Debt Equity
Ratio

Dabur

HLL

Nestle

Godrej

0.17

0.63

0.00

0.35

Cadbur
y
0.01

Britanni
a
0.06

Colgate

P&G

0.01

0.85

Long Term Debt Equity Ratio=

Long Term Debt
Long Term Debt + Shareholders Equity

INTERPRETATION:
The long term debt-equity ratio is also an important tool of finance analysis to appraise the
financial structure of the firm. Its again important from the viewpoint of creditors, owner and
the firm itself. The ratio reflects the relative contribution of creditors and owners of the business
in its financing, but this time it has done for long term financing.
A high ratio shows a large share of financing by the creditors of the firm; a low ratio implies a
small claim of creditors. The long term debt equity ratio provides large number of debts for the
company. It increases the operating profit of a company.

26

STATEMENT SHOWING LONG TERM DEBT EQUITY RATIO AS ON 31ST MARCH 2015
Companies Dabur

HLL

Nestle

Godrej

Long Term
Debt Equity
Ratio

0.30

0.00

0.17

0.11

Cadbur
y
0.01

Britanni
a
_

Colgate

P&G

0.02

0.16

Long Term Debt Equity Ratio=

Long Term Debt
Long Term Debt + Shareholders Equity

INTERPRETATION:
The long term debt-equity ratio is also an important tool of finance analysis to appraise the
financial structure of the firm. Its again important from the viewpoint of creditors, owner and
the firm itself. The ratio reflects the relative contribution of creditors and owners of the business
in its financing, but this time it has done for long term financing.
A high ratio shows a large share of financing by the creditors of the firm; a low ratio implies a
small claim of creditors. The long term debt equity ratio provides large number of debts for the
company. It increases the operating profit of a company.

27

Criteria for Analyzing Leverage Ratios

The second category of ratios is Leverage Ratios; the solvency of a company can be examined by
using leverage ratios. Debt- equity ratio measure the ratio of long-term or total debt to shareholders
equity.
Debt Equity Ratio: - The relationship of lenders and owner describe the lenders and owners
contribution for each rupee of the owners contribution is called Debt equity ratio. The Dabur India
ltd. has debt equity ratio of 0.22 in the year 2013-20114 and 0.15 in the year 2014-20115 and by
this it has secured 4th rank in both years.
Long Term Debt Equity Ratio:- The long term debt-equity ratio is a important tool for financial
structure of the company. The percentage of this ratio shows the share of financing by the creditors
of the company. The dabur India ltd. has long term debt equity ratio of 0.17 in the year 2013-20114
and 0.11 in the year 2014-20115 and by this it has secured 4th rank in both years.
.

28

Profitability Ratios

29

STATEMENT SHOWING GROSS PROFIT MARGIN AS ON 31ST MARCH 2014

Companie Dabur
s
Gross Profit 11.25
Margin

HLL

Nestle

Godrej

14.94

18.36

15.67

Cadbur
y
11.01

Britanni
a
12.24

Colgate

P&G

24.54

29.73

Gross Profit Ratio= Gross Profit* 100

Net Sales

INTERPRETATION:
Gross profit is the result of the relation between prices, sales volume and cost. A 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 profit 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 very high and rising gross margin may be the result of unsatisfactory basis of 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.

30

STATEMENT SHOWING GROSS PROFIT MARGIN AS ON 31ST MARCH 2015

Companies

Dabur

HLL

Nestle

Gross Profit
Margin

14.35

14.90

19.89

Godrej Cadbur
y
17.30
12.55

Britanni
a
12.57

Colgat
e
25.82

P&G
26.21

Gross Profit Ratio= Gross Profit* 100

Net Sales

INTERPRETATION:
Gross profit is the result of the relation between prices, sales volume and cost. A 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 profit 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 very high and rising gross margin may be the result of unsatisfactory basis of 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.

31

STATEMENT SHOWING PROFIT BEFORE INTEREST & TAX MARGIN AS ON 31ST

MARCH 2014
Companies

Dabur

Profit Before 10.54

Interest & Tax
Margin

HLL
15.02

Nestle
16.32

Godrej Cadbur
y
14.43
7.45

Britanni
a
11.13

Colgat
e
14.02

P&G
13.66

Profit Before Interest & Tax Margin= Gross Profit Margin Depreciation

INTERPRETATION:
The profit which comes out after subtracting the depreciation from total profit is called profit
before interest & tax (PBIT). It shows the real position of a company, because interest & tax is
included in this figure which subtract later on.

32

STATEMENT SHOWING PROFIT BEFORE INTEREST & TAX MARGIN AS ON 31ST

MARCH 2015
Companies

Dabur

Profit Before
Interest &
Tax Margin

13.37

HLL
14.02

Nestle
17.75

Godrej Cadbur
y
16.05
9.33

Britanni
a
11.53

Colgat
e
15.12

P&G
13.97

Profit Before Interest & Tax Margin= Gross Profit Margin Depreciation

INTERPRETATION:
The profit which comes out after subtracting the depreciation from total profit is called profit
before interest & tax (PBIT). It shows the real position of a company, because interest & tax is
included in this figure which subtract later on.

33

Criteria for Analyzing Profitability Ratios

Gross Profit Margin: - The gross profit margin reflects the efficiency with which
management product each unit of product. The gross profit margin relative to the
industry average implies that the company is able to product at relatively lower
cost. Dabur India Ltd. have secured 7th & 6th ranks in the ending year 2013-20114
and in 2014-20115 so Dabur should reduce the variable costs.
Net Profit Margin: - The net ratio shows the earning left for shareholders (both
equity & preference) as a % of net sales. It measures the overall efficiency of
production, administration, selling, financing, pricing and tax management. It
provides a valuable understanding of the cost and profit structure of the cost and
profit structure of the company. In dabur India ltd. has 8.82% net profit margins in
the year 2013-20114 and 11.67 in the year 2014-20115 which is very low in
comparison to the other companies.
Profit Before Tax & Interest Margin: - Its calculated by subtracting the
depreciation from gross profit margin. Dabur India has secured 7 th and 6th rank in
these two financial years.

34

Activity Ratios

35

STATEMENT SHOWING DEBTORS TURNOVER RATIO AS ON 31ST MARCH 2014

Companies

Dabur

Debtors
14.46
Turnover Ratio

HLL
22.65

Nestle
82.01

Godrej Cadbur
y
31.25
36.35

Britanni
a
60.93

Colgat
e
28.79

P&G
47.36

Debtors Turnover Ratio =

Total Sales
Debtors + Bill Receivable

INTERPRETATION:
A company can sell its goods on credit also. It is used as a marketing tool by a number of
companies. When the company extends credits to its customers, it will increase more debtors.
Debtors turnover ratio indicates the number of time debtors turnover each year. Generally the
higher the value of debtors turnover, the more efficient is the management of credit.

36

STATEMENT SHOWING DEBTORS TURNOVER RATIO AS ON 31ST MARCH 2015

Companies

Dabur

Debtors
27.78
Turnover Ratio

HLL
23.64

Nestle
93.28

Godrej Cadbur
y
65.49
57.06

Britanni
a
52.20

Colgat
e
55.20

P&G
53.72

Debtors Turnover Ratio=

Total Sales
Debtors + Bill Receivable

INTERPRETATION:
A company can sell its goods on credit also. It is used as a marketing tool by a number of
companies. When the company extends credits to its customers, it will increase more debtors.
Debtors turnover ratio indicates the number of time debtors turnover each year. Generally the
higher the value of debtors turnover, the more efficient is the management of credit.

37

STATEMENT SHOWING FIXED ASSETS TURNOVER RATIO AS ON 31ST MARCH 2014

Companies

Dabur

Fixed Assets
4.06
Turnover Ratio

HLL
4.88

Nestle
2.92

Godrej Cadbur
y
12.68
2.61

Britanni
a
5.34

Colgat
e
8.10

P&G
7.04

Fixed Assets Turnover Ratio= Sales

Fixed Assets

INTERPRETATION:
The company may wish to know its efficiency of utilizing fixed assets. This ratio indicates the
extent to which the investment in fixed assets contributes towards sales. If compared with the
previous period, it indicates whether the investment in fixed assets has been judicious or not.

38

STATEMENT SHOWING FIXED ASSETS TURNOVER RATIO AS ON 31ST MARCH 2015

Companies

Dabur

Fixed Assets
4.33
Turnover Ratio

HLL
5.10

Nestle
2.96

Godrej Cadbur
y
9.81
2.61

Britanni
a
6.17

Colgat
e
7.84

P&G
7.66

Fixed Assets Turnover Ratio= Sales

Fixed Assets

INTERPRETATION:
The company may wish to know its efficiency of utilizing fixed assets. This ratio
indicates the extent to which the investment in fixed assets contributes towards sales. If
compared with the previous period, it indicates whether the investment in fixed assets has been
judicious or not.

39

Criteria of Analyzing the Activity Ratios

Inventory Turnover Ratio: - The inventory turnover ratio measure how fast the inventory is
moving through the company and generating sales. It reflects the efficiency of inventory
management. The higher the ratio, the more efficient but this may not always true. The high
inventory turnover may be caused by a low level of inventory which may result in frequent stock
outs. So its ranking is very difficult. Dabur India Ltd has secured 7th and 5th rank in 2013-20114
and in 2014-20115 .
Debtors Turnover Ratio: - The debtors turnover ratio shows how quickly receivables or
debtors are converted into cash. It is a test of the liquidity of the debtors of a company. It shows
the relationship between credit sales and debtors of a company. Dabur India Ltd has secured 8 th
and 7th rank in 2013-20114 and in 2014-20115 which is very low in compare to other FMCG
companies.
Fixed Assets Turnover Ratio: - The fixed assets turnover ratio measures the efficiency with
which fixed assets are employed- a high ratio indicates a high degree of efficiency in assets
utilization. For improve the fixed assets turnover Dabur should fully utilize all the assets. It has
secured 6th rank in both the financial year.
Total Assets Turnover Ratio: - The total assets turnover ratio shows the companys ability in
generating sales from all financial resources committed to total assets. Dabur India Ltd has
secured 6th rank in both the financial year.

40

CHAPTER-5
FINDINGS AND CONCLUSIONS

41

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 profit margin and companys
liquidity is also good. It has important from the viewpoint of creditors and
shareholders that company have sufficient fund to pay them.

In the comparison of profitability ratio in Dabur India Ltd. the gross profit ratio
14.35% and net profit ratio 11.67% both are increases in the year 2015-2016 in
compare to last two year.

The current ratio 1.47% is also increase in the year 2015-2016 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 2015-2016 in compare
to last two year. It shows that a large share of financing by creditors in the
company, which is positive sign for the company.

The return on capital employed 49.47% is having little bit of decrease in 20152016 in compare to last year. But then also its better then some other FMCG
companies. It shows that Dabur India Ltd. have sufficient sources of the long
term funds.

The fixed assets turnover ratio 6.88% has increases in 2015-2016 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 2015-2016 in compare to

last two years, which shows that Dabur India Ltd. is managing its management
of 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
customers from Dabur India Ltd.

42

COMPARATIVE ANALYSIS OF DABUR

STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST 3 YEARS
Years
Current Ratio

2013-2014
1.27

2014-2015
0.79

2015-2016
1.47

Current Ratio
1.6
1.4
1.2

Current Ratio

1
0.8
0.6
0.4
0.2
0
2013-2014

2014-2015

2015-2016

INTERPRETATION:
Current ratio comes under the liquidity ratios which means the
ability of the
company to meet its current obligations. This year(20052006) current ratio has increased in compare to the last two years which
means that company have sufficient money for its current obligation. It is
1.47% this year.

43

STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST 3YEARS

Years
Debt Equity Ratio

2013-2014
0.22

2014-2015
0.15

2015-2016
0.45

Debt Equity Ratio

0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0

Debt Equity Ratio

2013-2014

2014-2015

2015-2016

INTERPRETATION:
Debt equity ratio comes under the leverage ratios and shows the relationship between
creditors and owners of the company. This year (2005-2006) ratio goes very high, which is
0.45% in compare to the last two years. This shows a large share of financing by the creditors of
the firm. This ratio also indicates the margin of safety to the creditors.

44

STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST 3YEARS

Years
Long Term Debt
Equity Ratio

2013-2014
0.17

Long Term Debt

2014-2015
0.11

2015-2016
0.31

Equity Ratio

0.35
0.3
0.25

Long Term Debt

Equity Ratio

0.2
0.15
0.1
0.05
0
2013-2014

2014-2015

2015-2016

INTERPRETATION:
Long term debt equity ratio also comes under the leverage ratios and shows the
relationship between creditors and owners of the company. This year (2005-2006) goes very
high, which is 0.31% in compare to the last two years. This shows a large share of financing by
the creditors of the firm. This ratio also indicates the margin of safety to the creditors.

45

STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST 3YEARS

Years
Gross Profit Ratio

2013-2014
11.25

2014-2015
14.35

2015-2016
15.64

Gross Profit Ratio

16
14
12

Gross Profit Ratio

10
8
6
4
2
0
2013-2014

2014-2015

2015-2016

INTERPRETATION:
The gross profit ratio comes under the profitability ratios and this year (2005-2006) it
has increase in compare to last two years. It is 15.64% this year. It represents the limit beyond
which fall in sales prices are outside the tolerance limits.

46

STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST 3YEARS

Years
Net Profit Ratio

2013-2014
8.82

2014-2015
11.67

2015-2016
13.80

Net Profit Ratio

14
12
10

Net Profit Ratio

8
6
4
2
0
2013-2014

2014-2015

2015-2016

INTERPRETATION:
The net profit ratio also comes under the profitability ratios and this year (2005-2006) it
has increase in compare to last two years. It is 13.80% this year . This high net profit margin
would ensure adequate return to the owner as well as enable a firm to withstand adverse
economic condition when selling price is declining.

47

STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST 3YEARS

Years
Return on Capital
Employed

2013-2014
29.50

2014-2015
49.70

2015-2016
49.47

Return on Capital Employed

50
40
Return on Capital Employed

30
20
10
0
2013-2014

2014-2015

2015-2016

INTERPRETATION:
The return on capital employed also comes under the profitability ratios and this year
(2005-2006) there is little bit of decrease in compare to last years. It is 49.47% this year . It refers
to the long term funds supplied by the lenders and owner of the firm. It is equal to non-current
liabilities plus owners equity. So it shows that Dabur have sufficient sources of the long term
funds.

48

STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST 3YEARS

Years
Debtors Turnover Ratio

2013-2014
14.46

2014-2015
27.78

2015-2016
50.83

Debtors Turnover Ratio

60
50
40

Debtors Turnover Ratio

30
20
10
0
2013-2014

2014-2015

2015-2016

INTERPRETATION:
Debtors turnover ratio comes under the activity ratios and this year (2005-2006) it has increases
in compare to last two years. It is 50.83% this year . The debtors turnover ratio take place when
company sell its goods on credit also. It is used as a marketing tool by a number of companies.
This high Debtors turnover ratio indicates the number of time debtors turnover of last year in
Dabur India Ltd. So it shows that Dabur India Ltd is very efficient in its management of credit.

49

STATEMENT SHOWING THE RATIO CAMPARISON OF DABUR OF LAST 3YEARS

Years
Fixed Assets Turnover
Ratio

2013-2014
4.06

2014-2015
4.33

2015-2016
6.88

Fixed Assets Turnover Ratio

7
6
5

Fixed Assets Turnover Ratio

4
3
2
1
0
2013-2014

2014-2015

2015-2016

INTERPRETATION:
Fixed assets turnover ratio comes under the activity ratios and this year (2005-2006) it
has increases in compare to last two years. It is 6.88% this year. This ratio shows the efficiency
of utilizing fixed assets of the company. Comparing with the previous period, it indicates that the
investment in fixed assets has been made by the company, Dabur India Limited.

50

CHAPTER-6
RECOMMENDATIONS
AND
SUGGESTIONS

51

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 offering 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 profit margin
which is very low relatively other FMCG companies.

52

SWOT ANALYSIS
STRENGTHS

A trusted, successful & globally known brand

Maintain its quality (achieved ISO 9000 certificate and other quality related awards)

Old brand recognition

Wide R & D department

WEAKNESSES

Less Economies of scale

Poor Advertising of Dabur Nature Care

OPPORTUNITIES

Increasing health consciousness among people

Increasing Market share

Brand Loyalty among people

Entry in international retail chain through FDI

THREATS

Well-established Competitors

Brands like Colgate, Pepsodent &Close up has

High brand image & Consumer Awareness

To accelerate growth and maintain margins

53

LIMITATIONS
Although it has been my endeavor to take all necessary precautions to ensure that the
information gathered is authentic and maximum facts are presented but I faced certain
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.
5) Difficulty in comparison: One serious limitation of ratio analysis arises out of the
difficulty associated with their comparability. Such comparisons are vitiated by different
procedures adopted by various companies. The difference may relate to:
Difference in the basis of inventory valuation (eg. Last in first out, first in first
out and average cost)
Different depreciation methods (eg. Straight line v/s written down basis)
Estimated working life of assets, particularly of plant and assets.
Treatment of extraordinary items of income and expenditure, and so on.
6) Conceptual Diversity: The other limitation of ratio analysis is that there is different of
opinion regarding the various concepts used to compute the ratios. There is always room
for diversity of opinion as to what constitutes shareholders equity, debt, assets, profit and
so on. Different companies may be use these terms in different senses or the same
company may use them to mean different things at different times.

54

ANNEXURES

55

Balance Sheet As At 31st March 2014

56

AS AT 31st MARCH, 2014

(Rs. lac)

SCHEDULE
SOURCES OF FUNDS:
SHAREHOLDERS FUNDS
A) SHARE CAPITAL
B) RESERVES AND SURPLUS
LOAN FUNDS:
A) SECURED LOANS
B) UNSECURED LOANS

2,862.49
24,003.32

26,865.81

1,909.37
2,071.91

3,981.28
796.95

DEFERRED TAX LIABILITY

TOTAL
APPLICATION OF FUNDS:

31,644.04

FIXED ASSETS
A) GROSS BLOCK
B) LESS: DEPRECIATION
C) NET BLOCK

27,450.18
-11,955.85

15,494.33
17,122.67

INVESTMENTS

57.01

DEFERRED TAX ASSETS

CURRENT ASSETS, LOANS AND ADVANCES:
A) INVENTORIES
B) SUNDRY DEBTORS
C) CASH & BANK BALANCES
D) LOANS & ADVANCES

10,951.93
4,207.22
1,188.72
5,584.34
21,932.21

LESS: CURRENT LIABITIES AND PROVISION

A) LIABILITIES
B) PROVISIONS

16,452.07
7,169.81
23,621.88
(1,689.67)
659.70

NET CURRENT ASSETS

MISCELLANEOUS EXPENDITURE
(To the extent not written off or adjusted)

31,644.04

TOTAL

Balance Sheet As At 31st March 2015

57

AS AT 31st MARCH, 2015

(Rs. lac)

SCHEDULE
SOURCES OF FUNDS:
SHAREHOLDERS FUNDS
C) SHARE CAPITAL
D) RESERVES AND SURPLUS
LOAN FUNDS:
C) SECURED LOANS
D) UNSECURED LOANS

2,864.20
30,943.15

33,807.35

1570.38
3,292.60

4,862.98

DEFERRED TAX LIABILITY

1,277.51

TOTAL
APPLICATION OF FUNDS:

39,947.84

FIXED ASSETS
D) GROSS BLOCK
E) LESS: DEPRECIATION
F) NET BLOCK

32,672.44
-13,511.83

19,160.61
27, 094.25

INVESTMENTS

131.75

DEFERRED TAX ASSETS

CURRENT ASSETS, LOANS AND ADVANCES:
E) INVENTORIES
F) SUNDRY DEBTORS
G) CASH & BANK BALANCES
H) LOANS & ADVANCES

12,802.57
4,928.27
1,065.38
6,400.96
25,197.18

LESS: CURRENT LIABITIES AND PROVISION

C) LIABILITIES
D) PROVISIONS

23,838.05
8,384.94
32,222.99
(7,025.81)
581.04

NET CURRENT ASSETS

MISCELLANEOUS EXPENDITURE
(To the extent not written off or adjusted)

TOTAL

39,947.84

Balance Sheet As At 31st March 2016

58

59

AS AT 31st MARCH, 2016

(Rs. lac)

SCHEDULE
SOURCES OF FUNDS:
SHAREHOLDERS FUNDS
E) SHARE CAPITAL
F) RESERVES AND SURPLUS
LOAN FUNDS:
E) SECURED LOANS
F) UNSECURED LOANS

5,733.03
39,053.84

44,786.87

1,923.23
134.29

2,057.52
1,671.50

DEFERRED TAX LIABILITY

TOTAL
APPLICATION OF FUNDS:

48515.89

FIXED ASSETS
G) GROSS BLOCK
H) LESS: DEPRECIATION
I) NET BLOCK

34,129.37
-14,245.69

INVESTMENTS

19,883.37
27,
507.77

DEFERRED TAX ASSETS

CURRENT ASSETS, LOANS AND ADVANCES:
I) INVENTORIES
J) SUNDRY DEBTORS
K) CASH & BANK BALANCES
L) LOANS & ADVANCES

131.74
11,560,90
2,694,25

LESS: CURRENT LIABITIES AND PROVISION

E) LIABILITIES
F) PROVISIONS

3,804,41
10,376.66

NET CURRENT ASSETS

MISCELLANEOUS EXPENDITURE
(To the extent not written off or adjusted)

28,436.22

TOTAL
19,342.06
11,388.94
60

30,731.00

48,515.89

(2,294.78)
3,287.48

BIBLIOGRAPHY
ZIPSIP.COM
Google.COM
Investopedia.COM
Moneycontrol.COM
DABUR.COM
SBIMF.com
Book on Portfolio Management by ICFAI Press
Business world
investmart.com
61

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