Project On Dabur.

DABUR INDIA LTD.
KHALID H. SAIYAD
A PROJECT REPORT UNDERGONE AT DABUR INDIA LIMITED GUJARAT ON FINANCIAL ANALYSIS OF ANNUAL REPORT ACADAMIC YEAR 2011-2012
PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT FOR M.B.A.OF M.B.A DEPARTMENT
SUBMITTED BY: KHALID H. SAIYAD ROLL NO: - 11
SUBMITTED TO:UTKARSH TRIVEDI FACULTY (LECTURER)
SAHAJANAND INSTITUTE OF MANAGEMENT
M .B.A. SEM-1
SHREE SAHAJANAND INSTITUT OF MANAGEMENT 1
DABUR INDIA LTD.
KHALID H. SAIYAD
PREFACE
Practical studies are the part of a M.B.A. Programme.During this practical training student learns and gets practical knowledge which is not given in classroom. The aim of this programmed is to develop not only theoretical knowledge but also to give practical knowledge and by this study one can improve own marketing skills which is helpful to every field of marketing.
Being a student of M.B.A.
Programmed, I have the honor of having a practical training in the DABUR INDIA LIMITED" In respect to the requirement of the course prescribed by SIM College. I have finished my assignment to undertake the practical study of marketing.
This report is prepared for the purpose of the study and not theoretical matter but practical matter.
Sincerely, I have tried my level best for precise and meaningful report construction.
DABUR INDIA LTD.
KHALID H. SAIYAD
Acknowledgement
While writing this project every effort has been made to keep in view the objective set out in the MBA programme. I am feeling great to present our experience of studying the DABUR INDIA LIMITED.
My sincerely thanks to our Principal for providing me this opportunity. I am also thankful to my professors for the support given to me during the preparation of my report.
Finally, I am also thankful to DABUR INDIA LIMITED for permitting me to carry out the study bearing the object to fulfill the social responsibility.
Last but not list I owe to my respected and dear parents family members, friends professors, senior students, project partners, concerned officers and directors of the company without their blessings and moral support this study of mine might not be possible. This project report has been prepared under the subject, practical study for the academic year 2011-2012 M.B.A.
DABUR INDIA LTD.
KHALID H. SAIYAD
DECLARATION
KHALID H. SAIYAD Student of S.I.M.Collage (BHAVNAGAR) and studying in M.B.A.I am thankful to my principal and my guide Utkarsh who had given me nice guidance and co-operation preparing this project report.
I am also thankful to DABUR INDIA LIMITED for providing me the opportunity to prepare this project report and to giving all the information of the company and guiding me through this research by the supervisor and the concerned officer of DABUR INDIA LIMITED. DATE: -
PLACE: - BHAVNAGAR
Signature
(KHALID H. SAIYAD)
DABUR INDIA LTD.
KHALID H. SAIYAD
INDEX
CHAPTER NO. 1. 2. Introduction CHAPTER-2 Enclosure on the Operating Performance of the Company 3. 4. CHAPTER-3 Financial Analysis I: Analysis of Balance Sheet and Profit And Loss Account CHAPTER-4 Financial Analysis II: Analysis of Profitability 5. 6. CHAPTER-5 Financial Analysis III: Ratio Analysis CHAPTER-6 Financial Analysis IV: Analysis of Crucial Notes to Accounts 7. CHAPTER-7 48 43 30 24 15 9
PARTICULARS
PREFACE AKNOWLEDGEMENT DECLARATION CHAPTER-1
PAGE NO.
2 3 4 7
DABUR INDIA LTD.
KHALID H. SAIYAD
Financial Analysis V: Analysis of Auditors Report CHAPTER-8
Financial Analysis VI: Analysis of Dividend Policy
49
9.
CHAPTER-9 Financial Analysis VII: Analysis of Cash Flow Statement
50
10. 11. 12. 13.
CHAPTER - 10
54
Financial Analysis VIII: Analysis of Capital Market Valuation

CHAPTER-11 Analysis of Corporate Governance Report CHAPTER-12 Analysis of Directors Report CHAPTER -13 Brief Write-Up on the Sector and Future prospects of the Company 57
59
64
DABUR INDIA LTD.
KHALID H. SAIYAD
Chapter 1 Introduction
Dr. S.K. Burman set up Dabur India Limited in 1884 to produce and dispense Ayurvedic medicines. In 1956 Dabur India (Dr. S.K. Burman) Pvt. Ltd became a full fledged company. It is s a leading consumer goods company in India with a turnover of Rs. 2834.11 Crores (FY09) which markets its products in over 60 countries. It has many major products like the Dabur Chyawanprash which enjoys 65% market share, Hajmola tablets which enjoys 75% market share, Dabur honey occupying 75% market share. It has many product lines and many famous brands in each product line. The companys roots in the traditional Ayurvedic medicines give it a very Indian flavor in terms of the products that it launches.
The major groups and subsidiaries of Dabur are: Major strategic business units (SBU) Subsidiary Group companies Dabur International Fem Care Pharma Newu Step down subsidiaries Dabur Nepal Pvt Ltd (Nepal) Dabur Egypt Ltd (Egypt) Asian Consumer Care (Pakistan) African Consumer Care (Nigeria) Naturelle LLC (Ras Al Khaimah-UAE) Weikfield International (UAE) Jaquline Inc. (USA) Asian Consumer Care (Bangladesh)
Consumer Care Division (CCD) Consumer Health Division (CHD) International Business Division (IBD)
DABUR INDIA LTD.
KHALID H. SAIYAD
Timeline of major milestones in the history of Dabur

1884 Dr. Burman set up Dabur in 1884 to produce and dispense Ayurvedic medicines. 1936 Dabur India (Dr. S.K. Burman) Pvt. Ltd. : It became a full fledged company 1986 Public Limited Company 1996 3 separate divisions 2000 Turnover of Rs.1,000 crore 2008 Acquires Fem Care Pharma
Key Product Lines

Health Care Dabur Chyawanprash Dabur ChyawanPrakash Dabur Chyawan Junior Dabur Honey Dabur Glucose-D Personal Care Hair Care Oil Amla Hair Oil Amla Flower Magic Vatika Enriched Coconut Hair Oil Vatika Enriched Almond Hair Oil Hair Care Shampoo Vatika Smooth and Silky Shampoo Vatika Root Strengthening Shampoo Vatica Black Shine Shampoo Vatika Dandruff Control Shampoo Dabur Total Protect Shampoo Vatika Smooth & Silky Conditioner Vatika Root Strengthening Conditioner Consumer Health Pudin Hara Active Antacid Honitus Cough Syrup Honitus Lozenges Dabur Badam Oil Super Thanda Oil Foods Real Real Activ Burrst Hommade Lemoneez Capsico Oral Care Dabur Red Toothpaste Babool Toothpaste Meswak Toothpaste Promise Toothpaste Babool Mint Fresh Gel
Skin Care Uveda Complete Fairness Cream Uveda Moisturising Face Wash Uveda Clarifying Face Wash
Home Care Dazzl Sanifresh Shine Odomos Odonil Odopic
DABUR INDIA LTD.

Gulabari Rose Water Gulabari Face Freshener Gulabari Moisturising Cream Gulabari Moisturising Lotion Shilajit Gold Dabur Lal Tail Dabur Janma Ghunti Dabur Gripe Water Active Blood Purifier Dabur Balm Strong
KHALID H. SAIYAD
List of people in board of directors

Chairman: Vice Chairman: Whole Time Directors Independent Directors Non Whole Time Promoters, directors Dr. Anand Burman Mr. Amit Burman Mr. P.D. Narang, Mr. Sunil Duggal and Mr. Pradip Burman Mr. Bert Paterson, Mr. P. N. Vijay, Mr. R C Bhargava, Dr. S. Narayan and Mr. Analjit Singh Mr. Mohit Burman
Shareholding Pattern The Details of the shareholding pattern are as under:

As on March 31, 2009 Particulars Directors, promoters and family members FIIs Mutual Funds Insurance companies NRIs Corporates Individuals Total No. of share Holders 28 118 64 27 2764 1303 100492 104796 % of Share Holders 0.03% 0.11% 0.06% 0.03% 2.64% 1.24% 95.89% 100% No. of Shares % ofShare Held Holding 611834473 74278471 31121682 88968460 4260203 5011529 49601431 865076249 70.73% 8.59% 3.60% 10.28% 0.49% 0.58% 5.73% 100.00%
DABUR INDIA LTD.
KHALID H. SAIYAD
Chapter 2 Enclosure on the Operating Performance of the Company

Market Share
The below mentioned brands contribute a value close to $8Bn to Dabur.
Brands Honey Chyawanprash Hajmola Real Vatika hair Oil herbal Digestives
Market Share 75% 65% 75% 40% 8.5% 90%
Vatika Shampoo has been the fastest selling shampoo brand in India for three years in a row. About 2.5 crore Hajmola tablets are consumed in India every day
Key Raw Materials

2008Raw material Sugar & Molasses Herbs,Jari Booti Madhu Vegetables Oils Chemicals & Compounds Perfumery 164.2 149.56 110.51 84.79 & Raw 140.17 122.52 111.12 95.95 72.69 83.88 71.45 52.94 2009 31.1 20072008 23.88 20062007 28.21 20052006 26.11
DABUR INDIA LTD.
KHALID H. SAIYAD
Key raw materials being used are Herbs, Jari booti and Raw Madhu that signifies the fact that most of the Dabur products are naturally made and are good for skin and health. Chemicals and perfumeries also form a vital part of the raw materials. The consumption of raw material has increased over the past four years signifying the increased sales and hence the increased profits of the products and the company.
Sales Mix
Segment Hair Oils Tooth Powders & Paste Chywanprash Honey. Hajmola. Fruits/Nector/Drinks Asava-Arishta Vegetable Pastes Important Inferences: All the segments have been showing constant growth over the past 4 years. The main highlight has been the Tooth Powder and paste segment which has shown a growth of 422% in the past 4 years. This has been the mainstay of the Overall sales. Major Contributor to Dabur sales has been Hair Oils. Real Juice and vegetable pastes- These have been the newest ventures wherein the company has invested and the segment has been doing well since its formation. 2009 504.84 329.7 194.3 116.88 90.51 76.13 56.4 6 2008 375.7 300.73 179.47 106.61 71.49 66.34 48.97 5.15 2007 306.76 195.75 171.91 85.56 78.08 Nil 46.95 Nil 2006 268.1 63.19 150.07 78.14 72.65 Nil 53.16 Nil
DABUR INDIA LTD.
KHALID H. SAIYAD
Sales- Domestic or Export

Year 2006 2007 2008 2009 Domestic Sales 132,454.64 170,549.27 201,293.09 230,162.64 Export Sales 4,513.65 7,253.16 10,485.77 12,205.25
Most of the consumption of Dabur is in-house, that is Domestic and only around 4.3% of the produce is exported. The average growth rate over the four years is more for exports (41%) as compared to domestic (20%). So the company is steadily increasing its exports but there is still a long way to go before Dabur can make a name for itself in the international market. The domestic growth rate of sales has reduced from 29% in FY2006 to 14% in FY2008. This may be due to the tough competition in the domestic market and the economic downturn.
Peer Comparison
RONW
RONW Dabur HUL ITC Nestle 2009 51.2% 116.7% 25.9% 112.8% 2008 61.6% 115.5% 25.9% 98.9% 2007 65.8% 56.5% 25.2% 81.0% 2006 45.4% 58.7% 23.3% 87.4%
The net worth of Dabur is increasing at a faster rate as compared to the net profit and therefore the decline in the past few years. That is, the company is giving lesser returns with the increase in capital investment by the owners of the company.
DABUR INDIA LTD.
KHALID H. SAIYAD
Profit Margins
Profit Margins Dabur HUL ITC Nestle 2009 15.6% 12.2% 22.4% 12.4% 2008 15.2% 12.6% 22.2% 11.8% 2007 14.2% 12.7% 23.3% 11.2% 2006 13.8% 12.2% 24.0% 12.5%
Dabur is doing better than most peers as far as the Profit margins are concerned. Dabur has shown a steady upward trend in the past 4 years where its peers have shown a reduction in at least one of the four years.
Return on Assets
Return on Assets Dabur HUL ITC Nestle 2009 41.2% 96.7% 24.3% 104.5% 2008 55.3% 107.8% 24.3% 92.0% 2007 56.5% 55.1% 24.0% 77.8% 2006 38.9% 57.3% 21.6% 84.0%
The figures may be misleading. It shows a downward trend over the years. That is because the company is investing more in the long term assets rather than going for short term investment. It can be said that the results will reflect the same in the next few yearTrend Analysis
Yearly figures at a Glance (2000-2006)

Sales & Other Income Index PBDT Index 2000 1044. 48 1.00 102.5 9 1.00 2001 1130.4 3 1.08 107.62 1.05 2002 1119. 32 1.07 96.50 0.94 2003 1168. 54 1.12 117.5 8 1.15 2004 1094. 31 1.05 129.1 9 1.26 2005 1238. 20 1.19 182.1 1 1.78 2006 1365. 13 1.31 233.9 1 2.28
DABUR INDIA LTD.
KHALID H. SAIYAD
113.4 4 1.40 101.2 0 1.30 28.52 1.00 268.1 6 0.75 24.30 -0.08 219.8 9 0.53 244.1 9 2.26 546.0 6 0.77 268.6 5 0.84 308.4 6 0.51 9.39 0.84 2251. 75 0.96 3.28 1.26 200.0 0 60.99 38.26 34.65 2006 1757 165.0 1 2.03 148.0 1 1.91 28.51 1.00 317.4 6 0.88 81.66 -0.27 253.3 5 0.61 335.0 1 3.10 715.9 0 1.01 338.0 7 1.06 386.7 0 0.63 11.80 1.05 3179. 04 1.36 4.83 1.85 250.0 0 51.79 29.31 25.84 2007 2080 214.8 6 2.64 189.0 8 2.43 28.51 1.00 328.2 3 0.91 38.35 -0.13 285.6 8 0.69 324.0 3 2.99 759.6 0 1.07 447.8 7 1.40 468.4 4 0.77 7.81 0.70 7106. 05 3.04 3.05 1.17 250.0 0 57.32 23.00 32.48
PBT Index PAT Index Equity Paid-Up Index Gross Block Index Net Working Capital ( Incl. Def. Tax) Index Current Assets ( Incl. Def. Tax) Index Current Liabilities and Provisions ( Incl. Def. Tax) Index Total Assets/Liabilities (excl Reval & W.off) Index Net Worth Index Capital Employed Index Book Value (Unit Curr) Index Market Capitalisation Index EPS (annualised) (Unit Curr) Index Dividend (annualised%) Payout (%) Payout (%) ROG-Net Worth (%) Year Sales 2000 982 2001 1100
81.29 1.00 77.66 1.00 28.52 1.00 359.2 1 1.00 304.0 1 1.00 412.2 3 1.00 108.2 2 1.00 710.2 4 1.00 320.0 4 1.00 609.0 6 1.00 11.22 1.00 2336. 50 1.00 2.61 1.00 100.0 0 38.26 60.99 22.38 2002 1200
85.16 1.05 77.63 1.00 28.52 1.00 362.12 1.01 235.32 0.77 392.85 0.95 157.53 1.46 708.45 1.00 362.20 1.13 558.30 0.92 12.70 1.13 1736.8 7 0.74 2.62 1.00 100.00 38.17 49.01 13.17 2003 1285
75.51 0.93 65.03 0.84 28.56 1.00 376.5 0 1.05 242.3 2 0.80 407.6 7 0.99 165.3 5 1.53 775.4 1 1.09 400.3 7 1.25 613.5 4 1.01 14.02 1.25 1587. 94 0.68 2.23 0.85 50.00 22.45 22.45 10.54 2004 1236
95.54 1.18 84.92 1.09 28.52 1.00 297.1 8 0.83 190.3 1 0.63 406.4 5 0.99 216.1 4 2.00 734.8 5 1.03 411.1 0 1.28 521.1 1 0.86 14.38 1.28 1026. 02 0.44 2.86 1.09 140.0 0 49.01 38.17 2.68 2005 1417
DABUR INDIA LTD.
KHALID H. SAIYAD
PBT (Profit before Tax)

PBT has shown an upward growth over the past 10 years. It has grown by almost 450%, much more than compared to sales growth. So we can infer that there are major sources of non-operating income.
PAT (Profit after Tax)

PAT has also shown an upward trend as it directly follows the PBT figures.
EPS and Dividend

We can see in the figure that the dividend is dependent on the earnings per share (EPS) of the company. i.e. when EPS increases, the company pays a higher dividend and vice-versa. Initially from 2000 to 2002 the dividend decreased. This was due to a share split in 2000. Then there was an increase till 2005, when it again started to decline. This was because the earnings per share had reduced. This year both EPS and Dividend increased. The dividend paid this year was 175% as compared to 150% paid last year.
DABUR INDIA LTD.
KHALID H. SAIYAD
Chapter 3 Financial Analysis I: Analysis of Balance Sheet and Profit And Loss Account
Analysis of Balance Sheet Horizontal Balance Sheet (Comparison 2008 and 2009)
2009 (Rs. In lakhs) SOURCES OF FUNDS : Shareholder's Funds Share Capital Reserves Total Total Shareholder's Funds Loan Funds: Secured Loans Unsecured Loans Deferred tax Liability Total Liabilities APPLICATION OF FUNDS : Fixed Assets Gross Block Less : Accumulated Depreciation Net Block Investments Deferred Tax Assets Current Assets, Loans and Advances: Inventories Sundry Debtors Cash and Bank 2008 (Rs. In lakhs) Increase/ Decrease over 2008 (Rs. In lakhs)
%age
8,650.76 65,168.91 73,819.67 825.56 13,071.69 3,048.50 90,765.42
8,640.23 44,192.11 52,832.34 1,644.72 88.97 2,727.97 57,294.00
10.53 20,976.80 20,987.3 3 (819.16) 12,982.72 320.53 33,471.4 2
0.12 47.47 39.72 (49.81) 14,592. 24 11.75 58.42
57,048.09 21,044.98 36,003.11 43,689.59 2,353.09
48,419.78 18,976.77 29,443.01 27,037.13 2,400.74
8,628.31 2,068.21 6,560.10 16,652.46 (47.65)
17.82 10.90 22.28 61.59 (1.98)
26,171.64 11,236.01 14,368.48
20,114.69 10,046.43 6,826.46
6,056.95 1,189.58 7,542.02
30.11 11.84 110.48
DABUR INDIA LTD.

Loans and Advances Total Current Assets Less : Current Liabilities and Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets Miscellaneous Expenses not written off TOTAL 22,728.33 74,504.46
KHALID H. SAIYAD
18,293.75 55,281.33 4,434.58 19,223.1 3 24.24 34.77
35,138.71 31,510.20 66,648.91 7,855.55 864.08 90,765.42
31,722.51 26,540.97 58,263.48 (2,982.15) 1,395.27 57,294.00
3,416.20 4,969.23 8,385.43 10,837.70 (531.19) 33,471.4 2
10.77 18.72 14.39 (363.42 ) (38.07) 58.42
Application of Funds
Fixed assets of Dabur

Dabur owns fixed assets worth 360.03 crores at depreciated value compared to last years 294.43 crores . Within the fixed assets plant and machinery, that is, assets directly needed for production stands at 133.75 crores i.e. 37% of the total fixed assets. Next is the amount invested in buildings i.e. 117.17 crores. The company has invested substantially higher in buildings. The advance against capital goods worth 591.77 lakhs has been
included in the total fixed assets. However this have not been received yet. It may be observed that no depreciation has been provided on freehold land and livestock. The company has almost negligibly increased leasehold land while substantially increasing the freehold land from last year.
Investments FY 08-
270 crores, FY 09- 437 Crores
Daburs investments are more than its fixed assets by almost 76 crores totaling to 436 crores. The total investment is a substantial figure compared to the total asset size. It has invested almost 117 crores in mutual funds while it has invested 21.5 crores in government bonds. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 17
DABUR INDIA LTD.
KHALID H. SAIYAD
Thus it can be said that the co. carries surplus cash in business which it utilizes in investing. The co. believes in investments. The co has also invested almost 87 crores in its subsidiaries. Finally the main reason for the 62% increase in its investments from last year is the advance paid against the equity shares of Fem Care Pharma Ltd which Dabur has proposed to acquire. It totals to almost 205 cores. Thus the company has taken a significant step towards expanding its business by taking the decision to acquire to FEM.
Current Assets, loans and advances

The company has reported debtors of 236 cores while the total sales are around 2400 cores. So comparatively it is a smaller picture. Also the debts which are considered doubtful is around 12 cores, which is a small figure compared to total debtors. Also it can be seen that the co. has invested around 100 cores in fixed deposits. Dabur has around 31.5 cores in cash balances. They constitute an insignificant part of the current assets, although they play a crucial role in operations. Loans and advances of Dabur is around 227 crores which includes security deposits with various authorities and advance payment of tax as a major constituent. The debtors which are outstanding for a period exceeding six months are mostly considered doubtful, hence a provision has been made for them. No provision has been made for the debtors for a period of less than six months. In the notes to accounts it has also been stated that In the opinion of Board, the Current Assets, Loans and Advances have realizable value at least equal to the amount at which they are stated. It has also been stated that the Debts due from director/officer of the company is nil.
DABUR INDIA LTD.
KHALID H. SAIYAD
Miscellaneous Expenditure
It has come down from 13.95 crores to 8.64 crores on account of writing off. The technical knowhow fees has been fully amortised, while the deferred employee compensation under ESOP has also been amortised expenditure. substantially, therefore bringing down the misc.
Current Liabilities and Provisions

In current liabilities, out of 351 crores the sundry creditors for expense forms a major part of 194 crores. The sundry creditors for goods is 108 crores which is very minimum figure compared to purchases and is almost half the amount of debtors. Hence it can be said that the co. likes to make payments to the creditors at the earliest. Out of 315 crores of provisions, 159 crores is for taxation while 86.5 crores is for the dividend proposed. The co also has provisions for corporate tax on proposed dividend, liabilities disputed, Gratuity, Leave Salary. Thus the company has a net asset or net working capital of 78.5 crores which means the company can continue its day to day functions in an efficient manner.
Deferred tax assets and liabilities

The company has shown the deferred tax liability as an independent figure in the sources of funds which amounts to 30.48 crores while it has shown the deferred tax assets in the application of funds which amounts to 23.53 crores. The net deferred tax liability is 6.95 crores.
Sources of Funds
Share Capital(in lacs)

The authorized share capital of the company was 12500 lack equity shares@1 each till 2007. During the year 2007 the authorized share SHREE SAHAJANAND INSTITUT OF MANAGEMENT 19
DABUR INDIA LTD.
KHALID H. SAIYAD
capital of the company has been increased by Rs. 2000 lakhs, pursuant to merger of Dabur Foods Limited. Thereafter the authorized share capital of the company continues to be 14500 lakhs @1each.
Change in Capital Structure and Listing of shares

The equity share capital has gone up in the year 2007 because of the following reasons. 2472137 equity shares allotted under Employees Stock Option Scheme 63,336 shares allotted under Merger scheme with erstwhile Balsara Hygiene Products 28,70,45,551 equity shares allotted on 12th February, 2007 as bonus shares by way of capitalization of the free reserves (469066351 shares) and from share premium account (286651392 shares) The issuance of bonus shares had an impact on the Reserve and surplus which has come down from last year .one of the reasons was because of the issue. In the year FY07 and FY08 there has not a significant change in share capital.
Reserve and Surplus: (in lakhs)

The increase in reserves and surplus in 2009 is mainly because of the increase in general reserves and profit and loss account balance. Capital reserves: The Company has kept on increasing the capital
reserves throughout the 4 years and has not utilized any amount from it. The increase has come mainly from transfer from P/L acc, while in 2007 the company has transferred some amount from the merged Entities.
DABUR INDIA LTD.
KHALID H. SAIYAD
Share premium Account: Has come down significantly in 07 from 06 because of utilization in merger. In 08 and 09 the account has increased slightly because of premium on issue of shares. General Reserve: Large amount has been utilized for merger and also for the issuance of bonus shares. So it has come down in 07 and has been rising thereafter because there has not been anymore issue of bonus shares or merger. It is also seen that the company has steadily increased the transfer from P/L acc to general reserve throughout the years. Profit and loss acc: The transfer of the remaining profits from the P/L account has risen steadily over the years. This indicates that the profit of the company has been rising over the years.
Secured Loans
Secured loans of Dabur have come down from 16.44 crores to 8.25 crores. The company has taken term loans and short term loans from banks. The company has repaid almost half of the loans in the year, thus the figure for secured loans has come down. The proportion of secured loans to other sources of funds is very small, suggesting that the company does not depend much on loan funds. However this year the co has taken some unsecured loans which we will analyze in the next heading
Unsecured Loans
The companys unsecured loans have risen from less than 1 crores to 130.7 crores. The co has taken short term loan from bank to the tune of 110 crores and that the company
Horizontal Profit & Loss Account (Comparison 2008 and DABUR INDIA LTD. 2009)
2009
KHALID H. SAIYAD
Increase/D ecrease over 2008 (Rs. In lakhs) (687.76) 31,276.79 1,515.18 32,791.97
2008
(Rs. In lakhs) (Rs. In lakhs) Less Excise Duty Net Sales Other Income Total Income EXPENDITURE : Cost of Materials Manufacturing Expenses Payments to and Provisions for Employees Selling and Administrative Expenses Financial Expenses Miscellaneous Expenditure Written Off Depreciation Total Expenditure 2,751.50 239,616.39 4,306.04 243,922.43 3,439.26 208,339.60 2,790.86 211,130.46
%age (20.00 ) 15.01 54.29 15.53
122,243.11 7,076.13 16,732.46 50,901.37 1,333.55 394.18 2,742.04 201,422.84
102,833.54 6,985.57 14,969.23 45,827.98 854.50 566.79 2,575.26 174,612.87
19,409.57 90.56 1,763.23 5,073.39 479.05 (172.61) 166.78 26,809.97
18.87 1.30 11.78 11.07 56.06 (30.45 ) 6.48 15.35
Balance being Operating Net Profit before Taxation 42,499.59 36,517.59 5,982.00 16.38 Provision for Taxation : Current 4,748.45 4,057.25 691.20 17.04 D (438.6 eferred (255.09) 75.32 (330.41) 7) Fr inge B enefit 650.97 707.81 (56.84) (8.03) Net Profit after Taxation and before Extraordinary Items 37,355.26 31,677.21 5,678.05 17.92 Credit Balance Transferred from (100.0 Merged Entity 0.00 18.58 (18.58) 0) Net Profit after Taxation and Extraordinary Item 37,355.26 31,695.79 5,659.47 17.86 Balance Brought Forward 32,322.99 22,915.65 9,407.34 41.05 Provision for Taxation of earlier (99.84 years written back 0.11 (68.44) ) SHREE SAHAJANAND 68.55 INSTITUT OF Provision for Taxation for MANAGEMENT 22 earlier (53.51 year 71.68 154.19 (82.51) )
DABUR INDIA LTD.
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has taken almost negligible unsecured loans. The company might be looking to fund some project so it has taken an unsecured loan this time.
Overall Comment
If we look at the balance sheet we will find that the company is not highly leveraged. It depends more on internal sources of funds than external sources. The reserves and surplus of the co has become very high as compared to share cap, thus there is a possibility of bonus shares.
DABUR INDIA LTD.
KHALID H. SAIYAD
Analysis of Profit and Loss Account

Sales and other income
The sales figure of the company has risen from 201,293.09 lacs to 230,162.64 lacs, thereby registering a growth rate of 14%. Also the exports of the company has risen from 10,485.77 to 12,205.25 lacs thereby registering a growth rate of 16%. The other income of the company has increased from 2,790.86 lacs to 4,306.04 lacs. The other income of the company includes Export Subsidy, Rent Realised, Sale of Scrap, Royalty, Miscellaneous Receipts, Profit on sale of long term investment, Profit on sale of current investments, Profit on sale of Fixed Assets. If we look at the figures of the sales and other incomes we find that the figure of other incomes is very less compared to the sales figure which indicates sources. that the company is completely dependent on the operational activities and does not derive much income from other
Expenditure
The cost of materials has risen from 102,833.54 lacs to 122,243.11 lacs . The cost of materials includes Raw Materials Consumed, Packing Materials Consumed, purchase of Finished Products and Adjustment of Stocks in process and Finished Goods. The Raw Materials Consumed contributes to almost 45 % to the cost of materials. The packaging materials also constitute a significant portion which shows that FMCG companies spend more on packaging than other sector companies. There has been a good growth rate in the purchases of raw materials and packaging materials.
DABUR INDIA LTD.
KHALID H. SAIYAD
The manufacturing and other expenses have risen from 6,985.57 lacs to 7,076.13 lacs. The manufacturing and other expenses of the company as compared to the sales figure is not significant The next item is Payments to and Provisions for Employees. It has also gone up slightly from last year. It includes Salaries, Wages and Bonus, Contribution to Provident and other Funds , Workmen and Staff Welfare, Directors remuneration. The next item is the selling and administration expenses. Rent, advertising and publicity, freight are some of the components of the it. It includes directors fees and also freight expenses and some research and development. The financial expenses of the company have also risen from last year. It includes interest paid on fixed loans, bank charges etc. The company has charged depreciation to the tune of 2742 lacs. Thus the total expenditure of the company is 201422 lacs, thereby giving Operating Net Profit before Taxation at 42499 lacs. After providing for taxation the PAT figure has been obtained. The PAT of the company has risen from 31695 lacs to 37,355 lakhs. The profit which has been brought from last year has been added. Thereby giving a total amount available for appropriation as 69,606 lacs. The company paid an interim dividend @ 75% and Final dividend @ 100% and transferred 9000 lacs to general reserve. Thus the remaining is carried over to the balance sheet. The EPS of the company is 4.32 increasing from 3.66 last year. The company has not paid a huge amount as dividend, instead it has kept back the profits. This is an indication that the company wants to take some expansion project in future.
DABUR INDIA LTD.
KHALID H. SAIYAD
Chapter 4 Financial Analysis II: Analysis of Profitability

Multi-Step Profit Margin to Sales Ratios of Dabur India Ltd (common sized)
MULTISTEP PROFIT MARGIN TO SALES RATIOS OF DABUR INDIA LTD
Year ended March 31, 2009 Indian Rupees in lacs Domestic Sales Less Returns Exports Gross Sales Less Returns Less: Excise Duty Net Sales Cost of Materials Manufacturing Expenses Cost of Goods Sold(COGS) Gross Profit Payments to and Provisions for Employees Selling and Administrative Expenses Miscellaneous Expenditure Written Off Other Income Profit before Depreciation, interest and tax- PBDIT Depreciation Operating Profit -OP/PBIT Financial Expenses 230,162.64 12,205.25 242,367.89 2,751.50 239,616.39 122,243.11 7,076.13 129,319.24 110,297.15 16,732.46 50,901.37 394.18 4,306.04 46,575.18 2,742.04 43,833.14 1,333.55 Ratio 96.05 5.09 101.1 5 1.15 100.0 0 51.02 2.95 53.97 46.03 6.98 21.24 0.16 1.80 19.44 1.14 18.29 0.56 Year ended March 31, 2008 Indian Rupees in lacs 201,293.0 9 10,485.77 211,778.86 3,439.26 208,339.6 0 101,391.5 4 6,985.57 108,377.11 99,962.49 14,969.23 47,269.98 566.79 2,790.86 39,947.35 2,575.26 37,372.09 854.50 Year ended March 31, 2007 Indian Rupees in lacs 196,537.0 5 26,834.73 223,371.7 8 3,711.03 219,660.7 5 97,108.28 7,425.54 104,533.8 2 115,126.93 16,666.83 63,486.20 649.36 2,591.23 36,915.77 3,429.05 33,486.72 1,537.50 Year ended March 31, 2006 Indian Rupees in lacs 171,140.5 0 18,816.50 189,957.0 0 3,372.14 186,584.8 6 80,772.30 5,711.24 86,483.54 100,101.3 2 14,495.75 56,522.85 426.24 1,336.68 29,993.16 2,692.46 27,300.70 1,638.73
Particulars
Ratio 96.62 5.03 101.6 5 1.65 100.0 0 48.67 100.0 0 52.02 47.98 7.19 22.69 0.27 1.34 19.17 1.24 17.94 0.41
Ratio 89.47 12.22 101.6 9 1.69 100.0 0 44.21 3.38 47.59 52.41 7.59 28.90 0.30 1.18 16.81 1.56 15.24 0.70
Ratio 91.72 10.08 101.81 1.81 100.00 43.29 3.06 46.35 53.65 7.77 30.29 0.23 0.72 16.07 1.44 14.63 0.88
DABUR INDIA LTD.

Profit before tax and extraordinary items PBTEOT Extraordinary Expenses : Credit Balance Transferred from Merged Entity Extraordinary Item (Profit/ (Loss) on Long Term Trades Investments Profit before Tax for the year Provision for Taxation : Current D eferred Fr inge Benefit Provision for Taxation of earlier years written back Provision for Taxation for earlier year Total tax
KHALID H. SAIYAD
42,499.59
17.74 0.00
36,517.59
17.53 0.00
31,949.22
14.54 0.00
25,661.97
13.75 0.00
0.00 0.00 42,499.59 4,748.45 -255.09 650.97 0.11 71.68 5,216.12
0.00 0.00 17.74 1.98 -0.11 0.27 0.00 0.03 2.18
18.58 0.00 36,499.01 4,057.25 75.32 707.81 68.55 154.19 5,063.12
0.01 0.00 17.52 1.95 0.04 0.34 0.03 0.07 2.43
0.00 0.00 31,949.22 3,494.04 -136.86 374.68 22.82 -155.37 3,599.31
0.00 0.00 14.54 1.59 -0.06 0.17 0.01 -0.07 1.64
0.00 -1,274.05 26,936.02 2,185.80 353.04 463.31 148.53 -51.83 3,098.85
0.00 -0.68 14.44 1.17 0.19 0.25 0.08 -0.03 1.66
Common-Sized Statement Showing Ratio of Expenses to Net Sales

COMMON SIZED STATEMENT SHOWING RATIO OF EXPENSES TO NET SALES Particulars 2008 Figures(Rs lacs) Net Sales Materials Cost Raw Materials Consumed : i)Opening Stock ii) Add : Purchases Total iii) Less : Closing Stock Total Raw material Consumed Packing Materials Consumed i)Opening Stock ii) Add : Purchases Total iii) Less : Closing Stock Total packaging material Consumed Purchase of Finished Products Adjustment of Stocks in process and Finished Goods 3,120.33 33,199.91 36,320.24 3,901.49 32,418.75 36,918.57 1.30 13.86 15.16 1.63 13.53 15.41 3,074.17 28,450.87 31,525.04 3,120.33 28,404.71 29,417.23 1.48 13.66 15.13 1.50 13.63 14.12 5,749.47 58,172.12 63,921.59 7,126.96 56,794.63 2.40 24.28 26.68 2.97 23.70 4,692.06 46,372.97 51,065.03 5,749.47 45,315.56 2.25 22.26 24.51 2.76 21.75 239616.39 % 100 2007 Figures(Rs lacs) 208339.60 % 100
DABUR INDIA LTD.
KHALID H. SAIYAD
Opening Stock : Stock in Process Finished Products Total Closing Stock : Stock-in-process Finished Products Total Increase(-)/Decrease in Stock in Process and Finished Goods Total Material Cost Manufacturing and Other Expenses Manufacturing and Operating Expenses Power and Fuel Stores & Spares Consumed Repairs & Maintenance Building Plant & Machinery Others Processing Charges Total Manufacturing and Operating Expenses Payments to and Provisions for Employees Salaries, Wages and Bonus Contribution to Provident and other Funds Workmen and Staff Welfare Directors remuneration (including perquisites Rs. 287.12, Previous year Rs. 297.31 under ESOP) Total Payments to and Provisions for Employees Selling and Adminstrative Expenses Rent Rates and Taxes Insurance Sales Tax Freight and Forwarding Charges Commission, Discount and Rebate Advertising and Publicity Travel & Conveyance 1,409.78 266.72 228.08 101.01 5,007.01 2,274.61 28,492.76 2,082.48 0.59 0.11 0.10 0.04 2.09 0.95 11.89 0.87 1,067.30 184.93 272.74 135.79 5,241.76 2,139.73 24,809.68 1,919.92 0.51 0.09 0.13 0.07 2.52 1.03 11.91 0.92 223.94 373.81 388.76 1,385.24 7,076.13 0.09 0.16 0.16 0.58 2.95 219.90 387.51 361.65 1,171.87 6,985.57 0.11 0.19 0.17 0.56 3.35 3,662.56 1,041.82 1.53 0.43 3,842.27 1,002.37 1.84 0.48 5,311.26 9,819.66 15,130.92 -3,888.84 122243.11 2.22 4.10 6.31 -1.62 51.02 3,350.14 7,891.94 11,242.08 -303.96 102833.54 1.61 3.79 5.40 -0.15 49.36 3,350.14 7,891.94 11,242.08 1.40 3.29 4.69 3,173.25 7,764.87 10,938.12 1.52 3.73 5.25
13,253.51 1,690.69 525.85 1,262.41 16,732.46
5.53 0.71 0.22 0.53 6.98
12,071.12 1,262.36 482.63 1,153.12 14,969.23
5.79 0.61 0.23 0.55 7.19
DABUR INDIA LTD.

Legal & Professional Telephone, Fax Expenses Security Expenses General Expenses Directors Fees Auditors Remuneration: - Audit Fee - Branch Auditors Fee - Reimbursement of Expenses - Provident Fund and Certificates Total Audit Fee Donation Contribution for Scientific Research Expenses Bad Debts Written Off Provision for Doubtful Debts (Net of Excess Provision written Back Rs 19.63, Previous year Nil) Loss on Sale of Fixed Assets Provision for Contingent Liability Fixed Assets Written Down Total Selling and Adminstrative Expenses Financial Expenses Interest paid on : Fixed Period Loan Others (Net of Int. received Rs. 112.97 TDS thereon Rs. 7.74 Previous year Rs. 237.94 TDS thereon Rs 12.90) Bank Charges Total Financial Expenses Total Manufacturing and other expense 666.58 318.15 21.51 0.00 13.45 19.09 54.05 363.01 165.98 977.88 291.93 299.53 7,853.37 10.20
KHALID H. SAIYAD
0.41 0.12 0.13 3.28 0.00 1,429.18 307.28 268.01 6,896.20 11.13 0.69 0.15 0.13 3.31 0.01
0.01 0.00 0.01 0.01 0.02 0.15 0.07
18.53 0.00 13.41 19.14 51.08 458.29 75.00 39.30
0.01 0.00 0.01 0.01 0.02 0.22 0.04 0.02
737.82 13.67 13.22 258.26 50,901.37
0.31 0.01 0.01 0.11 21.24
257.71 165.77 73.38 23.80 45,827.98
0.12 0.08 0.04 0.01 22.00
0.28 0.13
336.74 211.61
0.16 0.10
984.73 348.82 1,333.55 76,043.51
0.41 0.15 0.56 31.74
548.35 306.15 854.50 68,637.28
0.26 0.15 0.41 32.94
Comparative Analysis of Profitability

Growth in sales value : Domestic Sales : 14.34 % Export Sales : 16.39 % SHREE SAHAJANAND INSTITUT OF MANAGEMENT 29
DABUR INDIA LTD. Total Sales : 14,44 % Net Sales : 15.01%
KHALID H. SAIYAD
Volume of all the products groups except chyawanprash and Hajmola has increased in absolute terms.
Total value growth is 15.21 whereas total volume growth is 13.49 only . This shows an overall higher selling price realization. Tooth powder & paste and Fruits, Nectar & Drinks registered a negative volume-value growth. A particularly sharp decline of 25.03% in the price realization of Fruits, Nectar & Drinks is accounted for 3.79% of sales value in 2008.
Average selling price of all the products put together is up by 1.51% which basically comes due to the rise in selling price of Hajmola , which in turn compensate the loss in average selling price of Fruits, Nectar & Drinks
Materials Cost and Manufacturing and Other Expenses Manufacturing and Other Expenses have decreased from 32.94% to 31.74 % of net sales, i.e an increase in growth rate of 10.79%.
Within the material cost, packing materials consumed has come down from 13.63 % to 13.53%, whereas cost of raw materials consumed has increased from21.75% to 23.70%.
Cost of raw materials has increased in all types of raw materials. Within the various raw materials Herbs, Jari Booti & Raw Madhu and Chemicals & Perfumery Compounds together account for
DABUR INDIA LTD.
KHALID H. SAIYAD
maximum share both in quantity as well as value. And it is here major cost efficiencies have been achieved. PBITD PBITD thus registered a decline of 27 basis points having increased from 19.17% of net sales in 2007-2008 to 19.44% in 2008-2009. PBIT PBIT or operating profit has registered a growth of 35 basis points from 17.94 % of net sales in 2007-2008 to 18.29% in 2008-2009. Interest Interest cost increases signifying that debt has increased this year. Other Income In comparison to net sales being just 1.80 % and 1.34% for 2008-2009 and 2007-2008 respectively. As a percentage of PBT also, it is less signifying that most of the income of Dabur is from main recurring and productive operations. PBT There is an overall improvement of basis points in PBT during 20082009. It has risen from 17.52 % of net sales to 17.54 %. PAT Ultimately PAT improved from 15.09 % of net sales against 15.56% in 2007-2008, registering a growth of 47 basis points. In absolute terms PAT has risen by 18.6 %.
DABUR INDIA LTD.
KHALID H. SAIYAD
Chapter 5 Financial Analysis III: Ratio Analysis

Ratio analysis helps to measure and establish cause and affect relationship between either two items of balance sheet or of profit and loss account or both balance sheet and profit and loss account. Ratio analysis is a relative and more focused analysis of financial statements. Ratios are classified according to their functions and objectives. We have classified the ratios under the following categories: Solvency Ratios Liquidity Ratios Profitability Ratios Du Pont Analysis Capital Market Ratios
Solvency Ratios
We have analyzed the following solvency ratios Proprietary Ratio Debt Equity Ratio or External-Internal Equity Ratio Long-Term Debt Equity Ratio or Gearing Ratio Interest Coverage Ratio
Proprietary Ratio
This ratio relates the share holders fund to total assets. The formula for calculating the proprietary ratio is given by: Proprietary Ratio = Shareholders Funds Total Assets
DABUR INDIA LTD.

Proprietary Ratio Year Total Shareholders Equity Total Assets Proprietary Ratio 2005-2006 96386.87 45234.31 2.130835421
KHALID H. SAIYAD
2006-2007 40318.92 42608.98 0.946254
2007-2008 52832.34 55898.73 0.945144
2008-2009 73819.67 89901.7 0.8211154
The higher the proprietary ratio, the better is the long term solvency of the company and the more satisfied the creditors will be. Here, we see that the proprietary ratio of Dabur India limited has been showing a decreasing trend over the years.
Debt Equity Ratio

This ratio tells how much does the company depend upon its borrowings. A smaller ratio is better as it indicates that the company can raise large sums as borrowings.
The formula for calculating the debt-equity ratio is given by:
Debt Equity Ratio =
Total Debts Shareholders Funds
Debt-Equity Ratio or External-Internal Equity Ratio Year Total Debt Net Worth Debt-Equity Ratio 2005-2006 2057.52 96386.87 0.021346476 2006-2007 2007.99 40318.92 0.049803 2007-2008 1733.69 52832.34 0.032815 2008-2009 13898.25 73819.67 0.188273
DABUR INDIA LTD.
KHALID H. SAIYAD
This ratio is very small which shows that in future, the company can do a high leveraging. It presently relies mostly on owners funds and very less on the loans. As such, financial institutions and lenders will be ready to give loans to the company. The ratio has been increasing over the years showing that Dabur India Limited has now started taking loans both secured and unsecured, but the proportion of these loans is very less as compared to its proprietors funds.
Long Term Debt to Equity Ratio or Gearing Ratio

This ratio measures the extent of assets financed through long term borrowings. A high ratio indicates that the company is highly leveraged and creditors will not be very sure in lending to the company. The formula for calculating the long term debt-to-equity ratio is given by: Long Term Debt to Equity Ratio or Gearing Ratio = Debts Net Worth
Long Term Debt to Equity Ratio or Gearing Ratio Year Total Long term Loans Net Worth Long-Term Debt-Equity Ratio 2005-2006 764.22 96386.87 0.007928673 2006-2007 433.9 40318.92 0.010762 2007-2008 611.29 52832.34 0.01157 2008-2009 288.94 73819.67 0.003914
Long term
This ratio tells whether the company is relying more on its debts or on its capital in order to finance its operations. We see that this ratio is declining over the years and is very less. This shows that the company as a policy, doesnot goes for loans and is a very cash rich company. It also has high reserves and surplus. When we see the trend over the past few years, we see
DABUR INDIA LTD.
KHALID H. SAIYAD
that the company has now started taking loans but Is still dependent on capital only. Thus, the company can raise huge sums as loans in the future.Interest Coverage Ratio
This ratio measures the capacity of a company to py the interest liability it has incurred on its long term borrowings, out of its cash profits. The formula for calculating the interest coverage ratio is given by: Interest Coverage Ratio = PAT + Interest on Long Term Debt + Depreciation Interest on Long Term Debt
Interest Coverage Ratio Year Interest On Long Term Debt PAT + Interest on Long Term Debt + Depreciation Interest Coverage Ratio 2005-2006 565.87 21379.29 37.78127485 2006-2007 443.01 27848.44 62.86188 2007-2008 845.5 35097.97 41.5115 2008-2009 1333.55 41430.86 31.0681
This ratio measures the capacity of a company to pay off its interest liability in long term debts out of its profits. As we see from the above, this ratio, although decreasing over the years, is quite high. Thus, we can say that Dabur India limited is making sufficient operating profits in order to be able to cover its interest costs.
Overall Analysis of Solvency Ratios
Over-all Analysis (Solvency Ratios)

Year 20052006 20062007 20072008 20082009
DABUR INDIA LTD.
KHALID H. SAIYAD
Proprietary Ratio Debt-Equity Ratio Long-Term Debt-Equity Ratio Interest Coverage Ratio
2.130835421 0.021346476 0.007928673 37.78127485
0.946254 0.049803 0.010762 62.86188
0.945144 0.032815 0.01157 41.5115
0.8211154 0.188273 0.003914 31.0681
From all these ratios, we see that Dabur India Limited mainly depends upon its proprietary funds. It has very small amount of debts, both long term and short term, as compared to its capital. As such, the company is highly solvent and can do a very good leveraging in future.
Liquidity Ratios
We have analyzed the following Liquidity ratios Current Ratio Liquid/Quick Ratio Net Working Capital Operating cash Flow Ratios
Current Ratios
A Current ratio measures the ability of a company to discharge its dayto-day bills, or current liabilities as and when they fall due, out of the cash or near cash, or current assets that it possesses. It is an important indicator of a companys current and prospective liquidity position. Formula for calculation of current ratio is given by: Current Ratio = Current Assets Current Liabilities
Current Ratio Year
2008-
2007-
2006-
2005-
DABUR INDIA LTD. 2009 Current Assets, loans and advances 74,504.46 Current Liabilities and
KHALID H. SAIYAD 2008 55,281.33 2007 39,641.22 2006 28,436.22
Provisions 66,648.91 58,263.48 35,608.47 30,731.00 Current Ratio 1.12 0.95 1.11 0.93 Generally, a low current ratio indicates the potential for a strained liquidity position. However FMCG companies normally do not have a high current ratio because of the ready and fast conversion of ready and fast conversion of inventory into cash. Therefore the Current Ratio of Dabur is less than normal. Another reason for the low ratios is that the company is very conservative and has high provisions (almost 50% of the liabilities) hence increasing the liabilities and decreasing the ratio. The company has also invested in long term ventures and mutual funds rather than going for short term investments. Infact, over the past 10 years, it has invested in 27 different mutual funds.
Liquid Ratio
It measures as to how quick is the ability of a company to discharge its current liabilities net of working limits, as and when they fall due,out of cash or current assets net of inventories that it possesses. Formula for calculation of liquid ratio is given by: Liquid Ratio = Current Assets Inventories Prepaid Expenses Current Liabilities
Liquid Ratio Year
2009
2008
2007
2006
DABUR INDIA LTD.
KHALID H. SAIYAD 25,604.4 16,872.8 11,122.6
Liquid Assets Current Liabilities and Provisions Liquid ratio
9 9 2 6,498.66 66,648.9 58,263.4 35,608.4 30,731.0 1 0.38 8 0.29 7 0.31 0 0.21
Inventory in case of Dabur forms a significant part of current Assets, hence quick ratio is low. A low liquid ratio indicates the potential for a strained liquidity position. However, a low liquid ratio does not necessarily mean a bad liquidity position as inventories are not absolutely non-liquid.
Net Working Capital

Formula for calculation of net working capital is given by: Net Working Capital = Current Assets Current Liabilities
Net Working Capital Year Current Assets, loans and advances Current Liabilities and Provisions
2009 74,504. 46 66,648. 91 7,855.5
2008 55,281. 33 58,263. 48 2,982.1 5
2007 39,641. 22 35,608. 47 4,032.7 5
2006 28,436.2 2 30,731.0 0 2,294.7 8
Net Working Capital
Net working capital has been up and down in the past 4 years. This is because of the varied bank balance of the company. However, the low net working capital is also because of the high provisions the company has created.
DABUR INDIA LTD.
KHALID H. SAIYAD
Operating cash Flow Ratio

This ratio signifies how well a company can cover its liabilities though the cash generated from operations. Formula for calculation of operating cash flow ratio is given by: Operating Cash Flow Ratio = Cash Flow from Operations Current Liabilities Operating Cash Flow Ratio Year Cash Flow to Operations Current Liabilities and Provisions Operating Cash Flow Ratio
2009 2008 2007 32,357.3 31,329.0 23,442.7 1 1 5 66,648.9 58,263.4 35,608.4 1 0.49 8 0.54 7 0.66
2006 19,434.4 9 30,731.0 0 0.63
We can again see a downward trend again due to the perishable inventory and high provisions
Overall Analysis of Liquidity Ratios
Over-all Analysis (Liquidity Ratios)

Year Current Ratio Liquid ratio Net Working Capital Operating Cash Flow Ratio 2009 1.12 0.38 7,855.55 0.49 2008 0.95 0.29 -2,982.15 0.54 2007 1.11 0.31 4,032.75 0.66 2006 0.93 0.21 -2,294.78 0.63
A major parameter for all the liquidity ratios is the Liabilities that the company has. We can see above that all the ratios are coming out to be less than normal. This is because the company has high provisions hence increasing the total liability for the company.
DABUR INDIA LTD.
KHALID H. SAIYAD
Also the Liquid ratios above are extremely low when compared to the Current ratios. This is because the inventory forms a significant part of the current assets and we know that the inventories are not as liquid. Low net-working capital follows the low current ratios. Also, the low operating cash flow ratios doesnt mean that there isnt enough cash flowing through operations. It is because of the high value of the denominator i.e. Liabilities. These unusually low ratios are not just confined to Dabur. This is a general trend all across the FMCG sector.
TURNOVER RATIOS
Financial ratios related to sales or volume, i.e, those ratios which signifies the resources efficiency comes under Turnover Ratios. For example, accounts receivable turnover, also known as efficiency ratios and assets turnover, conversion of receivables into cash comes under this category. These measure efficiency of converting assets into cash. The efficiency with which the assets and resources of a company are utilized in generating operational revenue has a direct bearing on the top line. It is therefore important for analysts to study the turnover ratios. Five major ratios under this category are: Fixed Asset Turnover Ratio Net worth Turnover Ratio Inventory Turnover Ratio Debtors Turnover Ratio Creditors Turnover Ratio
Fixed Asset Turnover Ratio

The Ratio measures the extent of turnover or volume of gross income generated by the fixed assets of a company or in other words the efficiency in their utilization. Fixed Asset Turnover Ratio = Net Sales Formula for calculation of fixed asset turnover ratio is given by: Net Block of Fixed Assets
DABUR INDIA LTD.
KHALID H. SAIYAD
Fixed Asset Turnover Ratio 2008Year Net Sales Net Block of Fixed Assets Fixed Asset Turnover 2007200620052009 2008 2007 2006 2,39,616. 2,08,339. 1,60,042. 1,34,278. 39 36,003.1 1 60 29,443.0 1 90 23,904.0 5 81 19,883.6 8
Ratio 6.65 7.08 6.70 6.75 The ratio has come down marginally from the last year due to a larger increase in the net block of fixed assets compared to the increase in the net sales. This indicates that the company is not utilizing its fixed assets well. This is an area of concern for the company as the growth is not very significant.
Net Worth Turnover Ratio

The ratio measures the extend of turn over or volume of gross income generated by the net worth of a company. In other words, it is the efficiency in the resource utilization from the angle of the residual interest, ie. the equity shareholders. Sales to receivables (or turnover ratio): Net Sales / Accounts Receivablemeasure the annual turnover of accounts receivable. A high number reflects a short lapse of time between sales and the collection of cash, while a low number means collections take longer. It is best to use average Accounts receivable to avoid seasonality effects. Formula for calculation of net worth turnover ratio is given by: Net Worth Turnover Ratio = Net Sales Equity Shareholders Funds Net Worth Turnover Ratio 2008Year Net Sales Equity Shareholders fund MANAGEMENT 2007200620052009 2008 2007 2006 2,39,616. 2,08,339. 1,60,042. 1,34,278. 39 72,955.5 60 51,437.0 90 38,337 81 41,499.3 41
SHREE SAHAJANAND INSTITUT OF
DABUR INDIA LTD. or Net Worth Net Worth Turnover Ratio 9 3.28 7
KHALID H. SAIYAD 9 3.23
4.05
4.17
There is a decrease in net asset turnover ratio this year compared to last year which shows that the company has not been able to utilize all its net worth appropriately. This is again an area of concern for the company as overall profitability can be increased by utilizing net worth properly.
Inventory Turnover Ratio

Formula for calculation of fixed asset turnover ratio is given by: Inventory Holding Period=Inventory Cost of goods sold*365
Inventory holding period: 365 / Annual Inventory Turnovercalculate the number of days, on average, that elapse between finished goods production and sale of product.
Inventory Holding Period Year Inventory Cost of goods sold Inventory Holding Period
2009 26,171.6
2008 20,114.6
2007 15,736. 94 82,192. 38 69.88
2006 11,560. 90 61,256. 77 68.88
4 9 1,29,319. 1,09,819. 24 73.86 11 66.85
Inventory holding period has increased by 7 during the last year. This shows poor inventory management during this period. Also the holding period is increasing over the years from the past data. So the company has to take care its inventory operation.
DABUR INDIA LTD.
KHALID H. SAIYAD
Collection Period and Credit Period Debtors Turnover Ratio

Sometimes referred to as a collection ratio, the average collection period has to do with the relationship between Accounts Receivable and the time frame in which those outstanding payments are received. Essentially, the average collection period is a calculation of the average Period it takes for outstanding invoices to be paid in full after issuance the advantage of understanding average collection periods is that the information allows the company to anticipate cash flow generated by services rendered. Formula for calculation of debtors turnover ratio is given by: Collection Period=RecievablesTotal Sales*365
Collection Period 2005 2008Year Recievables 2009 11,236.0 1 20072008 10,046.4 3 20062007 6,097.87 2006 2,694 .25 1,36, 968.2 9 7.17
2,42,367. 2,11,778. 1,63,736. Total Sales Collection period allowed to Customers 89 16.92 86 17.31 12 13.60
Though there was a considerable increase in the Collection period allowed to the customers for the past years, the trend changed in the present year and collection period has decreased from 17.31 days last year to 16.92 days. Still the ratio is low which suggests that the company has managed its debtors well. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 43
DABUR INDIA LTD.
KHALID H. SAIYAD
Creditors Turnover Ratio

Creditors turnover ratio gives the funding requirements for imports of machinery/ stocks covered by Letters of Credits arranged for up to 180 days. Formula for calculation of credit period is given by: Credit Period=PayablesPurchases*365
Creditors Turnover Ratio Year Payables Purchases Suppliers Credit Period
2009 35,138.7 1 1,22,243. 11 104.91
2008 31,722.5 1 1,02,833. 54 112.60
2007 27,770. 31 76,798. 44 131.98
2006 19,342. 06 57,511. 22 122.75
Suppliers credit days has increased from 112.60 days last year to 104.91 days this year. The collection period is less as compared to the credit period enjoyed by the company which is in favor of the company. This means that the company has managed its debtors well and the suppliers are having a high degree of faith in it, it also enjoys a good reputation with the creditors.
Moreover, taking a general trend, collection period is on an increase except for the present year whereas credit period has decreased as compared to the last year. But since there is a larger difference between both the periods, the company will only have to take care of it in the long-run.
Du Pont Analysis With Reference To Return on Net Worth
DABUR INDIA LTD.

Du Pont Analysis with Reference to RONW Year Net Profit Margin Net Worth Turnover RONW 2007-2008 15.20% 4.61 times 70.10%
KHALID H. SAIYAD
2008-2009 15.58% 3.83 times 59.79%
The RONW has worsened from last year. The reason is because of the worsened Net worth Turnover. Reserves and Surplus have gone up substantially but the profit has not grown with the same proportion. Thus the company has to focus more on improving the Resource Efficiency than the operating margin. With Reference To Return on Total Assets
Du Pont Analysis with Reference to ROTA Year Net Profit Margin Total Asset Turnover ROTA 2007-2008 15.20% 4.61 times 55.28% 2008-2009 15.58% 3.63 times 41.15%
The ROTA has worsened from last year. The reason is because of the worsened Total Assets Turnover. Total Assets have gone up substantially but the profit has not grown with the same proportion. Thus the company has to focus more on improving the Efficiency of assets than the operating margin. They have made a major investment in assets that are yet to generate sales. Thus in the coming years ROTA is expected to increase.
DABUR INDIA LTD.
KHALID H. SAIYAD
Chapter 6 Financial Analysis IV: Analysis of Crucial Notes to Accounts

Note 16 regarding Earnings per Share under Accounting Standard 20
Earnings per Share has been computed as under Profit after Tax Weighted average number of shares outstanding Basic Diluted Earning per Share (face value Re. 1 per share) Basic Diluted 2008-2009 37355.27 2007-2008 31677.21
864907642 869156259
863635509 869063210
4.32 4.3
3.66 3.64
Disclosure of BEPS and DEPS on the face of the profit and loss account with equal prominence for both the years is presented in accordance with para 8 of the AS-20.
BEPS is calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year in accordance with para 10 and 11.
DEPS is calculated after adjusting all the effects of all dilutive potential equity shares in accordance with para 26 and 29.
Analysis of EPS Information Disclosed

In case of Dabur, as the weighted average number of shares outstanding is different for both dilute and basic, therefore we are
DABUR INDIA LTD.
KHALID H. SAIYAD
having different value of BEPS and DEPS even after having the same net profit figure.
Notes 12 and 8 regarding Related Party Disclosures under Accounting Standard 18

Managerial Remuneration under section 198 of the Companies Act, 1956 paid or payable during the year, to the Directors: Salary Commission (as computed below) Contribution to Provident Fund Residential Accommodation Medical & Leave Travel Benefit Contribution to Superannuation Fund Others (Including Rs. 287.12 Previous year Rs. 297.31 under stock option Scheme) Computation of net profit in accordance with Section 198 and section 309 (5) of the Companies Act,1956 and calculation of Directors commission Profit for the year before tax as per Profit & Loss Account Add: Managerial remuneration Directors fees Provision for doubt full debts Less: Capital Profit Adjusted net profit Maximum permissible remuneration Maximum commission payable: Actual commission (To one non whole-time Director) 31.03.20 31.03.20 09 08 232.9 219.2 0 27.79 27.95 29.66 139.74 131.55 3.47 4.19 34.95 43.41 780.14 1219.15 683.07 1138.87
42499.59 1219.15 10.2 737.82 0.95 44465.81 4891.23 444.65 NIL
36517.59 1138.87 11.12 257.71 40 37885.29 4167.38 378.85 27.79
Analysis of Disclosures and Managerial Remuneration

The operating results and financial position of a company may be affected by a related party relationship, such as holding, subsidiary company, associates, joint ventures etc as related parties may enter into transactions which unrelated parties would not. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 47
DABUR INDIA LTD.
KHALID H. SAIYAD
Disclosure of the names of holding companies and fellow subsidiaries in accordance with para 3(a) and 21 of As-18 Disclosure of the names of whole-time directors in accordance with para 3(d),14 and 21 of AS-18 Disclosure of the nature of transactions separately with holding companies and with fellow subsidiaries as per details furnished in the note in accordance with para 23.
1.3% of Total Sales to fellow subsidiaries is quite a materialrelated party transaction. An equity contribution of Rs. 1,950 lacs is stuck with the subsidiaries. In comparison to last year loan repayment of Rs. (2,272.28 lacs this year there is nil repayment. Guarantees & collateral given to subsidiaries is increased by 48.57% to Rs. 5,860.35 this year. Employee stock option scheme has increased by 35.41% to Rs. 44.24 lacs this year. The idea is to prevent excessive withdrawal by way of remuneration to whole-time directors, out of the profits generated by the company.
AS 18 also requires a specific disclosure of transactions with the key management personnel which includes disclosure of the amount of managerial remuneration as well.
The users of financial statements, by reviewing this amount may reach a conclusion regarding its reasonableness in regard to net profits earned by the company.
The total remuneration paid by Dabur as per note 8 is a figure of 1219.15 lacs against a huge net profit figure of Rs. 42499.59 lacs after charging such remuneration. This is less than reasonable withdrawal out of the net profits. SHREE SAHAJANAND INSTITUT OF
MANAGEMENT
48
DABUR INDIA LTD.
KHALID H. SAIYAD
Mr. Pradip Burman, a whole time director, voluntarily has foregone his salary and part of service benefits w.e.f. 1st October 2008. Amount foregone on account of salary and service benefits work out to Rs.37.60 and Rs.7.49 respectively.
Note 22 regarding Segment Reporting under Accounting Standard 17

Based on the guiding principles given in Accounting Standard on Segment Reporting, the companys primary business segment is Consumer Care Division(CCD). It addresses consumer needs across the entire FMCG spectrum through four distinct business portfolios of Personal Care, Health Care, Home Care & Foods. Disclosure of types of products in the CCD segment is in conformity with para 58 of the AS. Disclosure of segment revenue, result assets, liabilities, capital, expenditure, depreciation and other non cash charges on account of provision for pension and gratuity in conformity with para 40 of the AS. Segment liabilities disclosed include net deferred tax liabilities despite the requirement of specific exclusion as per the definition of segment liabilities as given in para 5 of the AS.
The companys corporate strategy aims at creating multiple drivers of growth anchored on its core competencies. The company is currently focused on following business ie Consumer Care business, Consumer Health business and food.
Segment Analysis for the year ended 31-03-09

Segments Capital Employed Rs. in lacs 33,451.00 6,295.00 8,840.00 % of Total 45.85 8.63 12.12 PAT Rs. in lacs 52,099.00 5,593.00 5,326.00 % of Total 139.47 14.97 14.26
1 2 3
Consumer Care Business Consumer Health Business Food
DABUR INDIA LTD. 4 5 Others Unallocated Company as a whole 3,298.00 21,071.00 72,955.0 0
KHALID H. SAIYAD 4.52 131.00 28.88 -25,793.00 100.00 37,356.0 0 0.35 -69.05 100.00
45.85% of capital employed in Consumer Care Business segment contributing an astronomically high 139.47% of PBT. The performance of this segment is affected badly by Unallocated segment, which has returned a loss on 28.88% of capital employed therein.
As against this, a high 28.88% of capital employed in Unallocated segment, higher than the Consumer Health Business segment, but it contributes a loss of 69.05% of PBT.
8.63% of capital employed in Consumer health Business segment is contributing a good figure of 14.97% to PBT. Reasons are very clear both in terms of capital turnover efficiency as well as profitability on capital employed all other segments analyzed are lagging far behind the Consumer Care Business segment.
DABUR INDIA LTD.
KHALID H. SAIYAD
DABUR INDIA LTD.
KHALID H. SAIYAD
Chapter 7 Financial Analysis V: Analysis of Auditors Report

Analysis of the Auditors Report is a Comment on how the auditors report acts as a catalyst towards ensuring a better quality of financial performance and position and reporting thereof and financial discipline. The auditors report is divided into 2 parts: first part expressing the auditors view on true and fairness or otherwise of the state of affairs of the company in the case of the balance sheet and profit in the case of profit and loss account.
Second part comments on fixed assets, inventories, related party transactions, internal audit and control system and outstanding undisputed statutory liabilities.
The examination of the issues mentioned in these 2 parts and their implications for determining a true and fair profitability and state of affairs of the company clearly reveal that the auditors report acts as a catalyst towards ensuring a better quality of financial performance reporting. Let us look at each one of them in detail: First part: Obtaining information and explanation necessary for audit. Opinion on maintaining proper books of account. Assertion about agreement of financial statements with the books of account. Opinion on the compliance of mandatory accounting standards.
DABUR INDIA LTD.
KHALID H. SAIYAD
Comment on whether any director of the company is disqualified from being appointed as such as per the norms of the Companies Act.
Second part: Fixed assets: Comment on records of fixed assets. Comment on fixed assets adjustments between physical verification and records in the accounts and extent thereof. Comment on fixed assets disposed off during the year.
Inventories: Comment on inventories adjustments between physical verification and records in the accounts and extent thereof. Comment on the procedures used for the verification of inventories. Comment on records of inventories.
Related party transactions Comment on loans granted to/taken from companies, firms or other parties in which directors are interested to determine whether they are prejudicial to the interests of the company or not. Comment on the internal control system commensurate with the size of the company and nature of business. Comment on contracts or arrangements in the register maintained under section 301 of the Act 1956. Comment on the deposits accepted from public. Comment on the documents and records maintained for the loans and advances granted. Comment on the preferential allotment of shares.
DABUR INDIA LTD.
KHALID H. SAIYAD
Comment on creation of securities / charges in respect of debentures issued and outstanding. Comments on the companys regularity in repayment of dues to any financial institution, bank or debenture holder. Comments on the absence of disputed due on account of wealth tax and cess. Comment on money raised by public issues. Comment on the preferential allotment of shares under their ESOP Scheme.
Internal audit: Comment on the internal control system commensurate with the size of the company and nature of business.
Outstanding undisputed statutory liabilities Comment on the deposits undisputed statutory dues including provident fund, fund, investor education and protection fund, service tax etc. with appropriate authorities.
DABUR INDIA LTD.
KHALID H. SAIYAD
Chapter 8 Financial Analysis VI: Analysis of Dividend Policy

The company has been very non-uniform and inconsistent in paying dividends to its stakeholders. The Dividend ranges from 50% in 2002 to 250% in 2005. From 2003 onwards Dabur has been paying a dividend over 100% consistently. In 2009, the company paid an interim dividend of 75% (Re. 0.75 per share) on February 10, 2009 and has recommended a final dividend of 100% (Re. 1 per share). So the aggregate dividend for the year comes our to be 175%, an improvement over the previous financial year (150%).
DABUR INDIA LTD.
KHALID H. SAIYAD
Chapter 9 Financial Analysis VII: Analysis of Cash Flow Statement

Compliance with Accounting Standards
The given cash flow statement is for the year ended 31-Mar-09. AS-3 deals with the cash flow statement. The following disclosures for the same are met by Dabur India Limited: The cash flow statement is presented for the same period for which the balance sheet is given. (as at 31-Mar-09) The cash flow statement clearly classifies the cash flow from operating, investing and financing activities. The disclosure of cash flow from operating activity is done through indirect method. All Accounting Policies followed by the company abide by the GAAP and thus are permissible.
Features of Cash Flow Statement

Features of the Cash Flow Statement as presented by the Dabur India Limited are: The cash flow statement has been prepared for the year ended 31-Mar-09 and thus it covers the effects of all cash transactions of the previous accounting year. Comparative Statement Dabur India Limited has disclosed a comparative position of each element of cash flow statement. Vertical form of cash flow statement has been used by Dabur India Limited. This model provides following benefits: Disclosures for cash inflows and outflows for the different activities: operating, investing and financing at one place.
DABUR INDIA LTD.
KHALID H. SAIYAD
Information is available at a glance, enabling quick review and analysis
Dabur India Limited has used indirect method for working out the cash flow from operating activities. The statement starts with Net profit before tax and extraordinary items which has been adjusted for non-cash charges and interest received to arrive at Operating profit before working capital changes. This is adjusted with Working capital changes to obtain Cash generated from operating activities. After deducting interest paid, tax paid and corporate tax on dividend, Net Cash from Operating Activities is obtained. The Net Cash from Investing Activities is obtained by analyzing the Sale and Purchase of Assets and purchase and sale of investments in subsidiaries. The cash flow from financing activities includes proceeds of share capital and premium, repayment/proceeds of Net Cash of from loans and liabilities, dividend to arrive at Net Cash generated in Financing Activities. The summation Operating Activities(A), Net Cash from Investing Activities(B) and Net Cash generated in Financial Activities(C) with the opening balance gives the closing balance of cash and cash equivalents.
At the bottom of the cash flow statement it has been mentioned that the report is prepared as per our (the Board of Directors) report of event date attached. The names of Chairman, two Whole Time Directors, GM (Finance) and Company Secretary are also written.
DABUR INDIA LTD.
KHALID H. SAIYAD
Activity Wise Analysis

Operating Activities
All of the cash inflows of Dabur India Limited during 2009 have been contributed by operating activities indicating a strong cash position.
Dabur India Limited had a net cash outflow in respect of working capital which is an indicator of inefficient management of working capital.
Net cash from operation up by 3 % indicating strong operational financial performance.
Investing Activities
Dabur India Limited has spent huge sums on purchase of fixed assets which indicate that the company is undergoing expansion and is likely to produce higher future revenues
It also shows considerable amount of inflow form the sale of fixed assets compared to last year indicating that the company is disposing off its worn out fixed assets.
Dabur India Limited had significant increase in outflow towards investments in its subsidiaries (up by 34%) indicating that the companys future prospects are expected to grow.
For investing activities Dabur India Limited has had a net cash outflow indicating a favorable cash position.
Financial Activities
There has been a decrease in money generated by issuance of shares as compared to last year to the extent of 7.5% Dabur India Limited has had substantial net outflow in respect of repayment of borrowings indicating its strong cash position.
DABUR INDIA LTD.
KHALID H. SAIYAD
It has also shown huge sums of borrowings and keeping in account the strong financial position if the company, it is not clear why the company has engaged into borrowings.
Dividend payment has increased by 95% in the year indicating a very strong desire to maintain the goodwill of the company in the market. It also shows that the company is making huge profits.
Quality of Cash Position

The information provided by the cash flow statements of Dabur India Limited appears to indicate a high quality of cash position. The reasons are simple and more than clear. It has been generating cash from operating activities and utilizing this money in expanding its business and in paying dividends. However, nearly 50% of the cash flow from operations is as a result of profit from sale of fixed assets and FCCB currency fluctuation profits which is unsustainable income. Dependence on this income can prove detrimental for the company.
Ability to Generate Positive Cash Flows from Operations in Future

Dabur India Limited has generated cash from operations in both the years. The amount, though increased this year, is marginally higher than last year. Information provided by its profit and loss account establishes that almost all of the cash flow form operations in the current year is as a result of sale of finished goods. This indicates that the company has a good ability to generate cash in the future also. Given the huge amounts of money spend on expanding the business, its revenues are only expected to increase in future.
DABUR INDIA LTD.
KHALID H. SAIYAD
Chapter 10 Financial Analysis VIII: Analysis of Capital Market Valuation

To analyze the capital market valuation of Dabur India Limited, we have considered the following ratios: Earnings Per Share(EPS) Price Earnings Ratio(P/E Ratio) Market Capitalization
Earnings per Share (EPS)

In the FY 07 the PAT has gone from 18,908.37 lacs to 25,207.63 lacs. But the EPS has gone down because there has been an issue of bonus shares by the company. The company issued bonus shares in the ratio 1:2, thus the no of Equity shares of the co has increased from 573302784 to 862883808 in FY07. Thus the Reserves and Surplus have also gone down. The bonus issue also resulted in the market price of a Dabur India Limited share come down during that year from 140 to 95(appx). The company wanted to boost the confidence of the investors towards the company and indicating to the market that the company has strong fundamentals. However even after one year in Dec 07 the share price of the company could reach 110, even when the markets were in a bullish run. One of the reasons of the damp reaction by the market could be the stagnant dividend the co. issued to the shareholders compared to its peers like HUL. The EPS for 2009 shows that the EPS of Colgate is very high compared to Dabur and HUL. But the PAT of Dabur is more than Colgate. One of the main reasons is that the no of issued shares of Colgate is very less compared to Dabur.
DABUR INDIA LTD.
KHALID H. SAIYAD
Price Earnings Ratio (P/E Ratio)

PE ratio of these companies is dated 25th Aug, 09. The PE ratio changes every day as the stock price fluctuates. PE is a much better comparison of the value of a stock than the price. For example P & G has a stock price of 1170 while Dabur has a stock price of 140. However since the PE of Dabur is more than P & G it can be considered a more expensive stock. Since Dabur has a higher PE than P&G it can be expected to grow and have higher earnings in the future. Daburs PE is larger than HUL which is a bigger company by market Cap, Pat etc but the PE indicates that comparatively investors confidence in Dabur is no less than HUL. The industry PE is 26.70. This means Dabur is outperforming the industry PE and is a higher valued stock than most of the other companies in the same industry. The PE ratio of a company may also become low if it reports higher earnings. However in the long run the PE ratio will rise as the higher earnings will increase the market sentiment, thereby increasing the market share eventually.
Market Capitalization
Market capitalization is an important indicator because it may happen that the share price of a company is low compared to its peers. However it might so happen that the company has issued a very large number of equity shares compared to the other company. Thus market capitalization gives us an idea of the size of the company which is decided by the public trust and investments in the company. The share price of Dabur is around 140 while the share price of colgate is around 600. But the no of shares issued of Dabur is 8650.76 lacs and the no of shares issued of colgate is 1360 lacs, thus we see that there is a huge difference in the no of shares issued by both the company. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 61
DABUR INDIA LTD. Therefore market capitalization gives
KHALID H. SAIYAD a more realistic idea of
comparison of the companies rather than only share price. HUL has issued around 21800 lacs equity shares and its share price is around 280, thus it has a very high market capitalization. It comes in large caps companies while Dabur is comparatively a smaller company.
Yield to Investors
Following is the formula used to calculate the yield to investors: Yield to investors = Divident Per Share + Market Appreciation Initial Investment Yield to investors Year Divident Per Share Market Appreciation Yield to Investors
2008-2009 1.75 8.50 6.83%
Thus we see that there has been a negative yield to investors. The main reason is because of the crash in the stock markets due to the global recession. Daburs share has fallen almost by 9%. . During the same period the sensex has fallen from 15626 points to 9708 points which means it has fallen almost 38%. Therefore we can conclude that the Dabur Share has shown strong resilience even when the markets were not performing well.
DABUR INDIA LTD.
KHALID H. SAIYAD
Chapter 11 Analysis of Corporate Governance Report

Compliance with clause 49 of the Listing agreement
It Dabur India has technically complied with all the requirements mentioned in the clause. Its adherence to the standard practices and following of the laid down rules is welcome and desirable for a company which is 150 years old.
The company should have furnished more information about the qualifications of the board of directors. Should have given more information about the management principles that are followed by company management apart from the code of conduct. The key skill area needed for the directors have been mentioned which gives an idea of the desired qualification but the company should have mentioned the qualifications as well.
The roles and scope of the board of directors and various committees are clearly spelt out.
Analysis of the Management Discussion and Analysis Report requirements
The company has given clear data of the related party transactions and for the last 3 years complied with the all the disclosure norms as needed by SEBI The Section on Management Discussion and Analysis could have been precise giving point to point information in the same or in a separate section. A separate heading mentioning the noncompliance of the company has been given which shows the companys intent to openly accept the short falls if any. SHREE SAHAJANAND INSTITUT OF MANAGEMENT 63
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KHALID H. SAIYAD
The company has adequate internal control system wherein the compliance of various standards can be enforced effectively. This is reflected in the roles assigned to various board committees and its risk management structure.
Analysis of the implications of the information provided
Bringing transparency in the corporate affairs particularly at the board level. There are zero shareholders grievances in 2009 which indicates the fast resolution of complaints by the company. Shareholders are kept updated about companys performance and related matters regularly and the necessary data is available easily. The companys sincerity towards ethics is reflected clearly in the section where whistle blower policy and the policy for prevention of insider trading have been mentioned. It shows companys low tolerance for malpractices. The company has strived to be a responsible citizen as mentioned in the section for the policy for environment control and reduction of pollution, and policy for occupational health & safety. The frequency of the AGM which in this case if 1per year, is a good indication of the companys overall health. The company has given a section I the report where it specifically points out the point tot point compliance with the requirements of the clause 49. The company strives to boost investor confidence.
Recommendations to the management n the strategic issues
DABUR INDIA LTD.
KHALID H. SAIYAD
The company must enforce all the non-mandatory requirements apart from the mandatory ones.
DABUR INDIA LTD.
KHALID H. SAIYAD
Chapter 12 Analysis of Directors Report

The reports content are summarized hereunder: Financial Results Dividend Acquisitions Corporate Governance Directors Directors Responsibility Statement Change in capital structure and listing of shares Auditors and their report Cost auditors Consolidated financial statements Internal control system Fixed Deposits Nature of business Subsidiaries Employee Stock option plan Conservation of Energy, Technology, Exchange Earnings and Outgo Group for interse transfer of shares Health Safety and Environmental Review Quality Review Awards & Recognitions Industrial Relations Absorption, Foreign
DABUR INDIA LTD. Acknowledgements
KHALID H. SAIYAD
Dabur has complied with all the requirements under section 217 of the companies act. Some useful additional information, for example, Health Safety and Environmental Review and Quality Review has also been provided.
SWOT ANALYSIS
Strengths
Financials: Turnover increased 15.5%, PAT increased by 18%, dividend raised to 175% to 150% last year, proposed acquisition of FEM Care Pharma Limited (FEM), a FMCG Company listed on Bombay Stock Exchange, well placed, proper and adequate internal control system. Successful introduction of a host of a new product. Good communication strategies with a host of brand ambassadors. 40% increase in revenue in international business. Good rate of growth of health division. 20% growth rate in consumer health division. Dabur red toothpaste became a 100 cr. Brand
Weakness
Loss on newly launched retail venture NEWU Oral care segment reported a growth rate of only 4.8%
Opportunities
High demand growth in FMCG sector Increased penetration of FMCG products in rural market New opportunities in overseas market SHREE SAHAJANAND INSTITUT OF MANAGEMENT 67
DABUR INDIA LTD.
KHALID H. SAIYAD
Threats
Slowdown in economy Mounting cost pressure Sharp currency fluctuations
Chapter 13 Brief Write-Up on the Sector and Future prospects of the Company
The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well established distribution network, intense competition between the organized and unorganized segments and low operational cost. Availability of key raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage. There is a huge growth opportunities for companies like Dabur, HUL. Indian rural markets present huge opportunities. The rising rural and semi-urban income levels coupled with massive advertisement of FMCG products in the electronic media will spread so much of awakening in the rural and semi-urban folks towards fast moving consumer goods products so much that these will enlarge their affordability for them. However, apart from all the opportunities there are various risk involved in the sector. Dabur must foresee all the risks and plan its operations accordingly. The rural and semi-urban demand of FMCG products will grow larger and higher, it will put a severe pressure on
DABUR INDIA LTD.
KHALID H. SAIYAD
the margins of manufacturers of FMCG products because of cut-throat competition. One of the risks faced by companies in FMCG is continued economic slowdown and worsening of macro economic indicators which can impact the spending power of consumers and put pressure on their incomes and consumption. A poor monsoon if it happens can impact rural incomes and dampen rural consumption and spends. Increase of imitation/fake product can hamper Daburs growth. Any unexpected change in regulatory framework which may impact parts of the business of Dabur is also one of the risks faced by the company. In view of the Swot analysis done we conclude that Dabur has managed its operations very efficiently and has shown high growth rate despite of being faced an economic slow down situation. The companys new products have shown immense potential to do well in the market while the Daburs management is also committed to pursue higher growth rates in future. The company has maintained a Risk register which is reviewed periodically by senior management. Thus the risks can be minimized if action is taken immediately. The companies segments like consumer care division, health division, and international division are also showing good signs of growth. The company is also marketing its products in the rural sector which gives the company an added advantage. However the company needs to shell out more dividends or issue bonus shares to make the share more attractive for investors. This along with the improving Indian consumer market also presents immense opportunities to Dabur to increase its operations and compete wit HuL and try to bridge the gap between them.
DABUR INDIA LTD.
KHALID H. SAIYAD

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DABUR INDIA LTD.

PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT FOR M.B.A.OF M.B.A DEPARTMENT

SUBMITTED BY: KHALID H. SAIYAD ROLL NO: - 11

SUBMITTED TO:UTKARSH TRIVEDI FACULTY (LECTURER)

SAHAJANAND INSTITUTE OF MANAGEMENT

SHREE SAHAJANAND INSTITUT OF MANAGEMENT 1

DABUR INDIA LTD.

Being a student of M.B.A.

SHREE SAHAJANAND INSTITUT OF MANAGEMENT 2

DABUR INDIA LTD.

SHREE SAHAJANAND INSTITUT OF MANAGEMENT 3

DABUR INDIA LTD.

SHREE SAHAJANAND INSTITUT OF MANAGEMENT 4

DABUR INDIA LTD.

SHREE SAHAJANAND INSTITUT OF MANAGEMENT 5

DABUR INDIA LTD.

Financial Analysis V: Analysis of Auditors Report CHAPTER-8

Financial Analysis VI: Analysis of Dividend Policy

CHAPTER-9 Financial Analysis VII: Analysis of Cash Flow Statement

10. 11. 12. 13.

Financial Analysis VIII: Analysis of Capital Market Valuation

SHREE SAHAJANAND INSTITUT OF MANAGEMENT 6

DABUR INDIA LTD.

SHREE SAHAJANAND INSTITUT OF MANAGEMENT 7

DABUR INDIA LTD.

Timeline of major milestones in the history of Dabur

Key Product Lines

Home Care Dazzl Sanifresh Shine Odomos Odonil Odopic

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DABUR INDIA LTD.

List of people in board of directors

Shareholding Pattern The Details of the shareholding pattern are as under:

SHREE SAHAJANAND INSTITUT OF MANAGEMENT 9

DABUR INDIA LTD.

Chapter 2 Enclosure on the Operating Performance of the Company

Market Share 75% 65% 75% 40% 8.5% 90%

Key Raw Materials

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DABUR INDIA LTD.

SHREE SAHAJANAND INSTITUT OF MANAGEMENT 11

DABUR INDIA LTD.

Sales- Domestic or Export

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DABUR INDIA LTD.

Yearly figures at a Glance (2000-2006)

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DABUR INDIA LTD.

SHREE SAHAJANAND INSTITUT OF MANAGEMENT 14

DABUR INDIA LTD.

PBT (Profit before Tax)

PAT (Profit after Tax)

EPS and Dividend

SHREE SAHAJANAND INSTITUT OF MANAGEMENT 15

DABUR INDIA LTD.

8,650.76 65,168.91 73,819.67 825.56 13,071.69 3,048.50 90,765.42

8,640.23 44,192.11 52,832.34 1,644.72 88.97 2,727.97 57,294.00

10.53 20,976.80 20,987.3 3 (819.16) 12,982.72 320.53 33,471.4 2

0.12 47.47 39.72 (49.81) 14,592. 24 11.75 58.42

57,048.09 21,044.98 36,003.11 43,689.59 2,353.09

48,419.78 18,976.77 29,443.01 27,037.13 2,400.74

8,628.31 2,068.21 6,560.10 16,652.46 (47.65)

17.82 10.90 22.28 61.59 (1.98)