1

CH: 1

Company profile
1) Name of the Company

Dabur India limited 2)Regd. Address of the Company 8/3,Asaf ali road, New Delhi-110002, Tel: 011-23253488. 3)Brief introduction of the activities of the business Dabur India Limited is India's leading FMCG company with interests in health care, personal care and foods. Dabur has a history of more than 100 years and the company has carved a niche for it self in the field of Ayurvedic medicines. The products of Dabur are marketed in more than 50 countries worldwide. The company has 2 major strategic business units (SBU) - Consumer Care Division (CCD) & Consumer Health Division (CHD), and 3 Subsidiary Group companies - Dabur Foods, Dabur Nepal and Dabur International. Dabur International has 3 step down subsidiaries - Asian Consumer Care in Bangladesh, African Consumer Care in Nigeria The origin of Dabur can be traced back to 1884 when Dr. S.K. Burman started a health care products manufacturing facility in a small Calcutta pharmacy. In 1896, as a result of growing popularity of Dabur products, Dr. Burman set up a manufacturing plant for mass production of formulations. In early 1900s, Dabur entered the specialized area of nature based Ayurvedic medicines. In 1919, Dabur established research laboratories to develop scientific processes and quality checks. In 1936, Dabur became a full-fledged company with the name Dabur India (Dr. S.K. Burman) Pvt Ltd. Dabur shifted its operations to Delhi in 1972. Dabur became a Public Limited Company in 1986 and Dabur India Limited came into existence after reverse merger with Vidogum Limited.

In 1992, Dabur entered into a joint venture with Agrolimen of Spain to manufacture and market confectionary items in India. In 1994, Dabur raised its first IPO. In 1998, day to day running of the company was handed over to professionals. In 2000, Dabur achieved a turnover of Rs 1000 crores. In 2005, Dabur acquired Balsara. Dabur crossed $ 2 billion market cap in 2006.Some of the well-known brands of Dabur are: Amla Chyawanprash, Hajmola, Lal Dantmanjan, Nature Care, Pudin Hara, Babool Toothpaste, Hingoli, Dabur Honey, Lemoneez, Meswak, Odonil, Real, RealActiv and Vatika. 4)Status in the Market Dabur has continued to maintain its leadership position in the fast moving consumer goods market [FMCG] in India. During the last 5 years, company has recorded compound annual growth at the rate of 18% in net Revenues and at the rate of 33% in PAT[Profit after tax].Dabur is the leading consumer goods company in India with a turnover of Rs 2233.72 crore for the year 2007.In the market of FMCG products relating to health care and personal care Dabur is leader in the true sense. We can understand that with following data. *Dabur chyawanprash is the largest selling ayurvedic medicine with market share of over 65% *Dabur is also a leader in herbal digestives with market share of 90% *Hajmola tablets alone share the 75% of the total digestive tablets *Dabur Lal tail tops the baby oil market with a market share of 35%. 5) Special achievement. 1) In the year 07-08 Dabur has been ranked among Indias most trusted brands of 2007 by Economic Times-Brand Equity Dabur moves Up 20 places In Indias 100 Most Valuable Brands listed and prepared by 4Ps

.
2

3 2) In the year 06-07

Dabur was on the 3rd rank in INDIAS MOST RESPECTED FMCG COMPANIES prepared by the Magazine Business World. Dabur Real won the award of Most Trusted Brand given by a very popular Magazine Readers Digest 3) In the year 05-06 Dabur won the ICSI National Award for Excellence in Corporate Governance. Dabur India was ranked 53rd most valuable Indian company by Business Today Dabur India was amongst the top 20 best under a billion companies Recognized by FORBES. 6) Financial Highlights Year Profit Sales EPS 05-06 18857.17 134278.81 3.29 06-07 25207.63 174108.78 2.92 07-08 31677.21 208339.6 3.67

7) Meaning of analysis and objective of study Meaning of Analysis Analysis means a detailed examination of elements or structure of something .Here the subject is Financial and use of Finance of the company .Examination of each and every financial aspect of the firm is necessary in order to know the profitability of the firm. There by such type of analysis is necessary.

Objective of study. As a part of course Curriculum, the second year B.B.A students are required to prepare this report. This report is to relate the management studies taught in the classroom to their practical application. In this project a deep study of company is made in order to know the financial position of the company. It is very helpful for the students as they have to study the annual report on their own and prepare various financial statements like cash flow statement and common- size statement.

CH:2 Result of operations 2.1 Profit of 3 years

Profit/Year G.P N.P EBIT EBT EAT 07-08 84993.26 31677.21 37065.94 36517.59 34315 07-06 80050.52 25207.63 28620.84 28422.3 26709.49 06-05 63191.26 18857.17 21740.6 21435.53 20028.5

2.2 Importance of cash profit

The cash profit is important for the organization in the following ways

1) Efficient cash management

Cash resources can be efficiently managed, if the finance manager has a clear understanding about the cash receipts and cash payment. It is possible to run business with minimum working capital, if cash payments are planned at a time when there is enough cash inflow. and excess cash can be invested. profitably.

2) Useful for Internal Financial Management

5

If the management has a clear idea about the timings when there will be enough cash on hand, it can plan out payment of dividend, repayment of long term loans, purchase of machines or equipments. Thus can avoid the possibility of borrowing funds at high rate of interest.

3) Information Payments

about

the

Cash

Receipts

and

Cash profit can give information about the trend of cash receipts and payments. The management can use such information in meeting any future liabilities and grabbing any profitable opportunity.

4) Useful for Control

Cash profit helps in comparing the figures of current profit with the figures of last year in order to find out the differences. so that the management can control is efficiently.

PARTICULARS A.CASH INFLOW FROM OPERATING ACTIVITIES NET PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS B.CASH FLOW FROM INVESTING ACTIVITIES

AMOUNT

AMOUNT

36517.59

ADD: PURCHASE OF FIXED ASSETS DEPRICIATION 2575.26 SALE OF FIXED ASSETS FIXED ASSSETS IMPAIRMENT LOSS PURCHASE OF INVESTMENT INCLUDING INVESTMENT IN MISCELLENOUS EXP.WRITTEN OFF 566.79 SUBSIDIARIES MISCELLENOUS EXP.WRITTEN OFF(INC DIR..REM) 328.39 SALE OF INVESTMENT INTEREST 854.50 DIVIDEND RECEIVED

CASH FLOW STATEMENT FOR THE YEAR 07-08

40842.53 CASH USED(-)(+)GENERATED FOR INVESTING LESS ACTIVITIES(B) DIVIDEND RECEIVED PROFIT ON SALE OF INVESTMENT 981.92 C.CASH FLOW FROM FINANCING ACTIVITIES PROFIT ON SALE OF SHARE CAPITAL AND PREMIUM 47.55 PROCEEDS FROM ASSETS REPAYMENT OF LONG TERM SECURED LIABLITIES REPAYMENT FROM SHORT TERM LOANS 1029.47 REPAYMENT FROM OTHER UNSECURED LOANS OPERATING PROFIT BEFORE WORKING CAPITAL PAYMENTS OF OTHER ADVANCES OF THE NATURE OF CHANGES LOANS WORKING CAPITAL CHANGES PAYMENT OF DIVIDEND INCREASE IN INVENTORIES 1405.37 INCREASE IN DEBTORS 1989.74 CASH USED (-)(+)(GENERATED) DECREASE IN TRADE PAYABLES IN FINANCING (1680.73) ACTIVITY INCREASE IN WORKING CAPITAL CASH EQUIVALENTS (A+B+C) CASH AND CASH EQUIVALENTS OPENING BALANCE CASH GENERATED FROM OPERATING ACTIVITIES CASH AND CASH EQUIVALENTS CLOSING BALANCE INTEREST PAID TAX PAID CORPORATE TAX ON DIVIDEND 870.12 4798.27 1101.28

39813.06

1714.38 38098.68

6769.67 CASH USED (-)(+)GENERATED FOR OPERATING ACTIVITIES (A) 31329.01

(4707.42) 250 (297539.4 9) 284019.5 -

17976.78
11.39 (1308.47) (1282.75) (3519.37) 816.90 (6647.47)

1422.46 5404.00 6826.46

11929.77

Meaning of cash flow

A statement showing Inflow of cash and Outflow of cash during the last year and as a result of balance of cash at the end of the year, is known as Cash flow statement.
]

Interpretation of cash-flow statement

1) Here we can see from the cash flow that the highest amount which have been earned is from operating activity which is 31329.01.and cash flow from both the other activities is less as compare to operating inflow. 2) In operating activities, depreciation and profit on sale of investment shares the highest part. Their amount is respectively 2575.26 and 981.92rs 3)while looking into the investing activity, major potion is shared by investments mostly in subsidiaries and fixed assets and other items share very short portion the total cash inflow of investing activity 4) and finally about financing activity, major portion of inflow is share by repayment of loans and liabilities such as repayment of long term loans and unsecured loans. Other portion is share by payment of dividend. There by to conclude we can say that from the cash flow statement that all the cash inflows and outflows are in proper manner.

10

CH:3 Ratio Analysis

3.1 meaning of ratio
The relationship between two related items of financial statement is known as ratios

3.1(a) importance ratios 1) Profitability

Useful information about the trend of profitability is available from profitability ratios. The gross-profit ratio, net profit ratio, and ratio of return on investment give a good idea about the profitability of the business. On the basis of these ratios, investors get an idea about the overall efficiency of business, the management gets an idea about the efficiency of managers and blank as well as other creditors draw useful conclusions about repaying capacity of the borrowers.

2)

Liquidity

In fact, the use of ratios was made initially to ascertain the liquidity of business. The current ratio, liquid ratio and acid-test ratio will tell whether the business will be able to meet its current liabilities as and when they mature, banks and other lenders will be able to conclude from these ratios whether the firm will be able to pay regularly the interest and loan installments

3)

Efficiency

The turnover ratios are excellent guides to measure the efficiency of managers. the stock turnover will indicate how efficiently the sale is being
10

11

made, the debtors turnover will indicate the efficiency of collection department and assets turnover shows the efficiency with which the assets are used in business. all such ratios related to sales present a good picture of the success or otherwise of the business

4)

Inter-firm comparison

The absolute ratios of a firm are not of much use, useless they are compared with similar ratios of other firms belonging to the same industry. this is inter-firm comparison, which shows the strength and weakness of the firm as compared to other firms and will indicate corrective measures

5)

Indicate Trend

The ratios of the last three to five years will indicate the trend in the respective fields. for example, the current ratios of a firm is lower than the industry average, but if the ratios of last five years show an improving trend, it is an encouraging trend. Reverse may also be true. A particular ratio of a company for one year may compare favorably with industry average but, if its trend shows a deteriorating position, it is not desirable. Only ratio analysis will provide this information.

6)

Useful for budgetary control

Regular budgetary reports are prepared in a business where the system of budgetary control is in use. if various ratios are presented in these reports, it will give a fairly good idea about various aspects of financial position

11

12

7)useful in decision making

Ratios guide the management in making some of the important decision. Suppose the liquidity ratios show an unsatisfactory position, the management may decide to get additional liquid funds. Even for capital expenditure decisions, the ratio of return on investment will guide the management .The efficiency of various departments can be judged on the basis of their profitability ratios and efficiency of cash department can thus be determined.

12

13

Classification of ratios

Traditional Classification 1) Balance sheet ratios 2) Revenue statement ratios 3) Composite ratios

functional Classification 1) liquidity ratios 2) profitability ratio 3) leverage ratios 4) Activity ratios

1)

Traditional ratios
These ratios are classified on the basis of the financial statements from which the figures are taken for computing the ratios.

a)

Balance sheet ratios

When two items of balance sheet are compared and ratios are found. The so obtained ratios are known as balance sheet ratios

b)

Revenue sheet ratios

These ratios are found on the basis of items taken from revenue statements such as P.N.L account,

13

14

c) Composite ratios
A ratio showing relationship between one item taken from balance sheet and anther item taken from profit and loss Account.

2)

Functional ratios

These ratios are also grouped in accordance with certain test. On this basis there are four categories of ratios

3.2 profitability ratios 3.2.1 Gross Profit Ratio a)Meaning

It is the basic measure of profitability of business. It expresses relationship between gross profit earned and net sales. in other words, Gross profit shows the difference between sales and cost of sales..

b)Implication
A high ratio implies that cost of Production is relatively low or That purchases are made at low Prices.. A low ratio implies that cost of Production is not under control or the firm is not able to buy at reasonable prices.

14

15

c) Formula
= G.P *100 SALES

d)Table of ratios for 3 years

Year G.p Sales G.p ratio

07-08 84993.26 208339.6 40.80%

07-06 80050.52 174108.78 45.98%

06-05 63191.26 134278.81 47.06%

e) Interpretation
In the year 07-08 the G.p ratio is lowest while in the year 05-06 it is highest. We can see an increasing trend during these three years. which implies that the selling price has increased as compare to previous year, without corresponding increase in cost. Or the cost of production has gone down, but selling price has not been reduced.

15

16

3.2.2 Net profit ratio a)Meaning This ratio measures the relation between the net profit and sales of the firm. Or we can say that the net profit is obtained after charging operating expenses, interest, depreciation, and taxes to the gross profit.

b)Implication
The high ratio implies that the Business will withstand adverse Economic conditions, when selling prices are declining, cost of production is rising and demand for the product is falling. While the low ratio implies that The business will not be able to Withstand the adverse economic Condition.

c) Formula
.N.P *100 SALES

d) Tables of ratios for 3 years

Year N.p 07-08 31677.21 06-07 25207.63 05-06 18857.17
16

17

Sales N.p ratio

208339.6 15.20%

174108.78 14.48%

134278.81 14.04%

e) Interpretation
In the year 07-08 N.p ratio is highest, while in the year 05-06 it is lowest, we can see a decreasing trend during these three years. During these three years the ratios are reasonable which ensures adequate return to the owners.

3.2.3 Expense Ratio A)Meaning

The purpose of expense ratio is to ascertain relationship between various expenses and sales. These ratios are very important in order to know the profitability of the firm..

B)Implication
These ratios over the years reveal the extent to which the expenses either increase in relation to sales. The high ratio implies that very small part of sales revenue is available to meet the financial liabilities like interest, tax, dividend.. The low ratio implies that large part of the sales revenue is available to meet the financial liabilities like interest, tax, and dividend.

c) Formula
Expenses *100 Sales

17

18

d) Table of ratios for three years

Years Expenses Sales Ex. ratio 07-08 69802.43 208339.6 33.50% 06-07 68242.34 174108.78 39.20% 05-06 54076.01 134278.81 40.27%

e)

Interpretation

In the year 07-08, Expense ratio is lowest while in the year 05-06 it is highest. We can see an increasing trend during these three years. Which suggests that there has been continues increase in the expenses in relation to sales during these three years. Which is not a very good sign for the company.

3.2.4 Operating ratio a)Meaning

Operating ratio is a yardstick of operating efficiency. Operating ratio shows relationship between cost of goods sold plus operating expenses to sales. It includes administrative and selling and distribution expenses. They do not include financial expenses like interest and tax and income

b) Implication
The high ratio implies that high % of the sales revenue are consumed by operating expenses and low% are left to cover taxes and earning to the owner

18

19

The low ratio implies that low % of the sales revenue are consumed by operating expenses and high% are left to cover taxes and earning to the owner.

c) Formula
=Cost of sales + operating expenses*100 Net sales

d) Table of ratios for three years

Years Cogs Operating Exp. Net sales 08-07 123346.34 64319.22 208339.6 07-06 94058.26 63705.46 174108.78 90.61% 06-05 71087.55 50575.83 134278.81 90.61%

Operating ratio 90.08%

e)Interpretation
In the year 07-08 operating ratio is lowest, while in the year 05-06 as well as in the year 06-07 it is highest. We can also see an increasing trend during three years but in the year 06-07 and 05-06, the ratios are similar. Here during these three years ratios are very high which implies that round about 90% of the sales revenue is consumed by operating expenses and only 10% is left to cover taxes and earning to the owner.

19

20

3.2.5 Return on investment/capital employed a)Meaning

The capital employed can be calculated by adding fixed assets to net working assets. Or we can say that capital employed includes share capital, reserves and profit retained and long term loans. It is the most widely used ratio for measuring the profitability of any enterprise. This ratio is useful in measuring the managerial efficiency of the operating business

b)Implication
The high ratio implies that funds entrusted have been properly used. Hence gives higher return to both the owners and the creditors The low ratio implies that funds entrusted have been not been properly used. Hence gives lower return to both owners and creditors.

c) Formula
= E.B.I.T *100 Capital employed

d) Table of ratios for three years

Year E.B.I.T Capital employed Ratio 07-08 37065.94 53378.44 69.44% 06-07 28620.84 40698.49 70.32% 06-05 21740.6 45542.09 47.74%

20

21

e)Interpretation
In the year 05-06 ratio is lowest, while In the year 06-07, it is highest. And we can not project a trend in these three years because the ratios during these three years are neither in increasing order nor in decreasing order. Here during first two years 07-08 and 06-07, the funds are utilized properly there by gives higher return, but during the third year the funds are not being utilized there by return is not higher.

3.2.6 Return on shareholders fund a)Meaning

Here, share holders fund includes total funds belonging to the share holders. It includes equity share capital, Preference share capital, Reserves and Surplus. This ratio measures the profitability in relation to only share holders fund. So it is known as Return on proprietors fund.

b)Implication
The high ratio implies that the funds provided by the owners are properly used. Hence gives higher return only to the owners not to the creditors. The low ratio implies that the funds provided by the owners are not properly used. Hence gives lower return only to the owners not to the creditors.

c) Formula
= Net profit *100 share holders fund

21

22

d) Table of ratios for three years

Year 07-08 N.P 31677.21 Share holders 52832.34 fund Ratio 59.96% 07-06 25207.63 40318.92 62.52% 05-06 18857.17 44786.87 42.10%

e)Interpretation
In the year 05-06 ratio is lowest, while In the year 06-07, it is highest. And we can not project a trend in these three years because the ratios during these three years are neither in increasing order nor in decreasing order. Here during years 07-08 and 07-06, owners are getting higher returns which show that their funds are properly utilized. But the case is not the same with the third year where ratio is far lower than earlier two years.

3.2.7 Return on Equity share capital a)Meaning

This ratio shows the profit available to only equity share holders in relation to capital invested by them. This ratio is important as it shows the profitability of a firm from the view point of the real owners who are ordinary shareholders.

b) Implication
The high ratio implies that return on capital invested by the equity share holders is high. This is good sign from the view point of the ordinary share holder. The low ratio implies that return on capital invested by the equity share holders is low. This is not a good sign from the view point of the ordinary share holder.

c) Formula
22

23

=Net profit after tax-Preference dividend*100 Equity share capital

d) Table of ratios for three years

Years N.P<PAT> Preference share div Equity capital ratio 07-08 31677.21 0 8640.23 3.67% 06-07 25207.63 0 8628.84 2.92% 05-06 18857.17 0 5733.03 3.29%

e)Interpretation
In the year 07-08 ratio is highest, while in the year 05-06 it is lowest. And we can not project a trend in these three years because the ratios during. these three years are neither in increasing order nor in decreasing order. Here the return is comparatively very low for the equity share holders .

3.2.8

Return on

Equity share holders fund

a)Meaning
The equity share holders funds include not only paid up equity share capital but also all reserves and net profit available to equity shareholders. This ratio shows profit available to only equity shareholders in relation to capital invested by them.

b)Implication
The high ratio implies that return on equity share holders fund is high.
23

24

The low ratio implies that return on equity share holders fund is low

c) Formula
=Net profit after tax- Preference Dividend*100 Equity share holders fund

d) Table of ratios for three years

Year N.P Pref.div Equity share holders fund Ratio 07-08 31677.21 0 52832.34 06-07 25207.63 0 40318.92 05-06 18857.17 0 44786.87

59.96%

62.52%

42.10%

e)Interpretation
In the year 05-06 ratio is lowest, while In the year 06-07, it is highest. And we can not project a trend in these three years because the ratios during these three years are neither in increasing order nor in decreasing order. Here there is only equity share capital. But there is not preference share capital there by the return on equity share holders fund will remain same as the return on share holders fund.

3.2.9 Earning per share a)Meaning

This ratio measures the profit available to equity shareholders on per share basis. It is not the actual amount paid to shareholders as dividend but is the maximum that can be paid to them.

b)Implication
24

25

The high ratio implies that the profit earned by equity shareholders on per share basis is high. This is a good sign for the equity share holders. The low ratio implies that the profit earned by equity shareholders on per share basis is low. This is not a very good sign as far as the equity share holders are concern.

c) Formula
= Profit after tax- preference dividend No. of equity shares

d) Table of ratios for three years

Year N.P<pat> Preference div No.of equity shares Ratio 07-08 31677.21 0 8640 3.67Rs 06-07 25207.63 0 8628 2.92Rs 06-05 18857.17 0 5733 3.29Rs

e)Interpretation
In the year 07-08 equity share holders earns highest return per share that is 3.67rs while in the year o6-07 they earns the lowest return per share that is 2.92rs..There by we can say that the maximum amount which can be paid to equity share holders as dividend can be 3.67 rs in the year o7-08 and rs 2.92 in the year 06-07.

3.2.10 Dividend per share a)Meaning

This ratio shows the actual amount received by the shareholder as a dividend on every share held by his or her.

b)Implication
25

26

The high ratio implies that the shareholder receives high amount as dividend on every share held by him. This is a sign that the firm is paying good dividend out of their earnings. The low ratio implies that the share holder receives low amount as dividend on every share held by him. This shows that the firm is paying fewer dividends out of their earnings and retaining more as reserve

c) Formula
= Total dividend declared No.of.shares

d) Table of ratios for three years

Year Total div No. of share ratio 07-08 12960.22 8640 1.5rs 06-07 12212.54 8628 1.48rs 05-06 10032.32 5733 1.75rs

e)Interpretation
Here, in the year 07-06, share holders earns 1.48 Rs as dividend per share which is lowest amongst three years and in the year 05-06 the share holder earns 1.75Rs as dividend per share which is highest amongst three years. This shows that for the year 07-08 the total earning per share is 3.67 Rs out of which 1.5 Rs have been paid by company as dividend.

3.2.11 Price earning ratio a)Meaning

26

27

This ratio shows the significant relationship between the market price per of the share and earning per share. This ratio is widely used by the analysts to value firms performance as expected by investors.

b)Implication
The high ratio implies the price that is currently ruling in the market for each rupee of earning being made by the company per share. is higher this is better for the owners. The low ratio implies the price that is currently ruling the market for each rupee of earning being made by the company per share is lower. This is not good for the owners.

c) Formula
=Market value per share Earning per share

d) Table of ratios for three years

Year 07-08 Market value 102.65 per share EPS 3.67 Ratio 28 times 07-06 91.15 2.92 31.2 times 06-05 95.33 3.29 28.98 times

e)Interpretation
In the year 07-08 ratio is lowest while in the year 07-06 it is highest. And we can not project a trend in these three years because the ratios during these three years are neither in increasing order nor in decreasing order.

27

28

But the ratios during these three years are higher which a good sign is for the owners.

3.2.12 Dividend yield ratio a)Meaning

Dividend yield ratio is the percentage of dividend actually received to the market value per equity share. It shows the actual return on the amount invested by him.

b)Implication
The high ratio implies that the equity share holders have received high % of dividend to the market value of the shares The low ratio implies that the equity share holders have received low % of dividend to the market value of the shares

c) Formula
= Dividend per share Market value per share

d) Table of ratios for three years

Year Div.per share Market value per share Ratio 07-08 1.5 102.65 0.01% 07-06 1.42 91.15 0.02% 06-05 1.75 95.33 0.02%
28

29

e)Interpretation
In the year 07-08 dividend yield ratio is 0.01%, which increases up to 0.02 in the year o7-06 and remains constant in the year 06-05. This shows that the return is very less.

3.2.13 Interest coverage ratio a)Meaning

This ratio indicates as to how many times the profit covers the payment of interest on debentures and other long term loans. Hence it is also known as times-interest- earned ratio.

b)Implication
The high ratio implies that companys financial position is very strong. Because the higher the ability of the firm to pay interest, the better it is for the firm The low ratio implies that companys financial position is not that strong. Because the lower the ability of the firm to pay interest, the worst it is for the firm.

c) Formula
=Earning before depreciation, interest, and tax Interest

d) Table of ratios for three years

Years EBITD Interest ratio 07-08 39641.2 548.35 72 times 07-06 30818.65 198.54 155 times 06-05 23645.19 305.07 77 times

e)Interpretation
29

30

In the year 07-08, profit covers 72 times the interest of debentures and loans. This is lowest amongst three years. And in the year 07-06 profit covers the interest of debentures and loans 155times. This is highest amongst three years. from the ratios of these three years we can say that firms position is strong in order to pay fixed interest on debentures and long term loan. As the ratios are comparatively higher.

3.3 Activity /Turnover ratio 3.3.1 Overall turnover ratio a)Meaning

It shows the relationship between net sales and capital employed

b)Implication
The high ratio implies that more times The low ratio implies that net sales are lower than capital employed

c)Formula
=Net sales Capital employed

d) Table of ratios for three years

Year Net sales Capital employed Ratio 07-08 208339.6 53378.44 3.9 times 07-06 174108.78 40698.49 4.28 times 06-05 134278.81 45542.09 2.95 times

e)Interpretation
30

31

In the year 07-08, this ratio is 3.9 which increases up to 4.28 in the year 07-06 but in the year 06-05 it decreases down to 2.95

3.3.2 Fixed assets turnover ratio a)Meaning

To ascertain the efficiency and profitability of business, the total fixed assets are compared to sales. This ratio is computed by dividing sales by fixed assets.

b)Implication

If the ratio is found to be higher, It means the fixed assets are being used effectively to earn profits in the business. If the ratio is found to be low, it indicates that investments in fixed assets are more than what is necessary and must be reduced..

c) Formula
= sales Fixed assets

d) Table of ratios for three years

Year Net sales Fixed assets Ratio 07-08 208339.6 29443.01 7.08 06-07 174108.78 23904.05 7.28 06-05 134278.81 19883.68 6.75

e)Interpretation
31

32

In the year 06-05, ratio is lowest which is 6.75, while in the year 06-07, ratio is highest which is 7.28.here we can see during three of these years, fixed assets are more or less used efficiently and there is not much of a difference in the efficiency during these three years.

3.3.3 Debtors ratio a)Meaning

The ratio shows the number of days taken to collect the dues of credit sales. It shows the efficiency or otherwise of collection policy of an enterprise. This ratio is computed by dividing debtors and bills receivable by the average daily sales. And average daily sales are obtained by dividing the total annual sales by 365. b)Implication The high ratio suggests that the credit and collection policy is weak and companys position is more unsatisfactory which finally result into unsatisfactory state of working capital and weak liquid position. The low ratio suggests that the credit and collection policy is strict. And companys position is satisfactory which result into sufficient working capital and strong liquid position.

c) Formula
= Credit sales Avg.daily sales

d) Table of ratios for three years

Years Debtors B.R Credit sales Ratio 07-08 10046.43 0 208339.6 17 Days 06-07 6097.87 0 174108.78 13 Days 05-06 2694.25 0 134278.81 7 Days

32

33

e)Interpretation
In the year 07-08, the ratio is highest while 05-06, the ratio is lowest. and we can see a decreasing trend during these three year. This shows that year by year daburs credit and collection policy is getting stricter. This puts them into strong position as far as the working capital and liquidity position is concern.

3.3.4 Creditors ratio a)Meaning

This ratio shows us the number of days within which awe makes payments to our creditors for credit purchase.

b)Implication
high ratio implies that the ability of the firm to make payment to its creditors is weak. This puts them into unsatisfactory position and effects adversely on the goodwill of the firm. Low ratio implies that the ability of the firm to make payment to its creditors is strong. This puts them into strong position and may increase their goodwill in the market and might earn them some discount for paying early then the time.

c) Formula
= Creditor+B/P Ave.Daily purchase

d) Table of ratios for three years

33

34

Year Creditors B.P Purchase Ratio

07-08 24963.16 0 101391.54 88 Days

06-07 19158.79 0 76798.44 89 Days

06-05 13169.08 0 57511.23 82 Days

e)Interpretation
In the year 06-07,we make payments to our creditors in 89 days, which are highest days amongst three years and In the year 05-06,it is lowest which is 82 days. Here in Dabur, there credit and collection policy is strict but payment policy is too weak. They are not able to pay to their creditors in short time. This is not a good sign from the outside view.

3.3.5 Creditors turnover ratio a)Meaning

The creditors turnover suggests the number of times the amount of credit purchase is made during the year.

b)Implication The high ratio implies high payment ability of the firm. This ratio is directly connected with creditors ratio, if creditors ratio is higher than turn over is low.. The ratio can be high when the firm has made payment in short time The low ratio implies low payment ability of the firm. because when there is low turnover, the creditors ratio must be high. c) Formula
=No. of days in a year Creditors ratio

d) Table of ratios for three years

34

35

Year No.of days in a year Creditors ratio Ans

07-08 360 88.63 4.06 times

07-06 360 89.81 4 times

06-05 360 82.43 4.37 times

e)Interpretation
During these three years, creditors turnover is low which implies that firms ability to make payment is very low. During these three years, there is not much of a difference in the turnover. We have also seen in the earlier ratio that firms ability to make payment is weak. This ratio proves it again.

3.3.5 Stock turnover ratio a)Meaning

This ratio shows the number of times the average stock is turned during the year. It is computed by dividing the cost of goods sold by the average stock of the year. This ratio signifies the efficiency of sales .

b)Implication
The higher turnover, the more profitable the business would be because it shows that that the average stock can be turned over more time. And the efficiency of the sales is higher. The low turnover indicates over investment in stock which may result in locking up capital, rent of the space. Here, too high turnover is also not good and too low turnover is also not good.

c)Formula
=cost of sales Average stock

d) Table of ratios for three years

35

36

Year Cost of sales Ave.stock Ans.

07-08 123346.34 17925.815 6.9 times

06-07 94058.24 13648.92 7 times

06-05 71087.55 11560.9 6.times

e)Interpretation
In the year 07-08, stock turnover ratio is 6.9 which increases up to 7 in the year 06-07 and which decreases up to 6 again in the year 05-06. Here during these three years turnover is relatively high which shows that efficiency of sales is higher.

36

37

3.4 liquidity ratios 3.4.1 Current ratio a)Meaning

This most widely used ratio shows the proportion of current assets to current liabilities. It is also known as Working capital ratio. This ratio is obtained by dividing current assets by current liabilities.

b)Implication
A high current ratio shows that the company is financing a large proportion of its current assets from long term sources. thus it makes it costlier A low current ratio shows that the company is financing short proportion of its current assets from long term sources. thus it makes it cheaper.

c) Formula
= Current assets Current liabilities

d) Table of ratios for three years

Years 07-08 07-06 06-05
37

38

Current assets Current liability Ans

55281.33 58263.48 0.9:1

39641.22 35608.47 1.11:1

28436.22 30731 0.93:1

e)Interpretation
During the year 07-08 and 06-05 the ratios remains similar but it increases up to 1.11 in the year 07-06. This indicates that the firm has current assets of Rs 1.11 against the current liability of Rs1.ideally current assets should be double of current liability. But the situation is bad in the years 07-08 and 05-06 when the current assets of the firm are lower than the current liability.

3.4.2 Liquid ratio a)Meaning

This is obtained by dividing the liquid assets by liquid liabilities. It is a variant of current which is designed to show the amount of funds available to meet immediate payment.

b)Implication
The high ratio implies that the firm is able to meet his liquid liabilities speedily. Because lt shows that the liquid assets are higher than that liquid liability which makes the payment of liquid liability speedily. The low ratio implies that the firm is not able to meet his liquid liabilities speedily. Because when ratio is low It shows that the current assets are lower than the current liability there by the firm is not able to meet its liability.

c) Formula
= liquid assets Liquid liabilities
38

39

d) Table of ratios for three years

Years Liquid assets Liquid liabilities Ans. 07-08 35166.64 58263.48 0.60:1 07-06 23904.28 35608.47 0.67:1 06-05 16875.32 30731 0.55:1

e)Interpretation
During the year 07-08 ratio is 0.60 which increases up to 0.67 in the year 07-06 and which than decreases up to 0.55 in the year 06-05. Ideally the ratio should be 1:1. which means liquid assets should at least equal liquid liability in order to make the payment easier but here during three years liquid ratio is not satisfactory because liquid assets are less than liquid liability.

3.4.3 Quick ratio a)Meaning

This is obtained by dividing the quick assets by liquid liabilities. quick assets include only cash or bank. Here in this ratio, quick assets include only cash and bank.

b)Implication
The high ratio implies that cash and bank are higher than the liquid liabilities. This makes the payment quicker. The low ratio implies that cash and bank are lower than the liquid liabilities. This delays the payment.

c) Formula

39

40

=Quick assets Liquid liabilities

d) Table of ratios for three years

Years Liquid assets Liquid liabilities Ans. 07-08 6826.42 58263.48 0.12:1 07-06 5024.75 35608.47 0.14:1 06-05 3804.41 30731 0.12:1

e)Interpretation
During the year 07-08 and 06-05,the ratio is 0.12 which increases up to 0.14 in the year 06-07. Ideally cash and bank should be half of the liquid liability. Hence the ideal ratio should be 05:1. but during these three years. Cash and bank is not even 20% of the total liquid liability. This makes this ratio unsatisfactory.

40

41

3.5 Leverage ratios 3.5.1 Proprietary ratio a)Meaning

This ratio shows the proportion of proprietors funds to the total assets employed in the business. The proprietary fund or shareholders equity consists of share capital and reserves.

b)Implication
The higher the ratio, the stronger the financial position of the firm. As it signifies that the proprietors have provided larger funds to purchase the assets. The lower the ratio, the weaker the financial position of the firm as it signifies tat the proprietors have provided lesser funds to purchase the assets

c) Formula
= Proprietors fund*100 Net assets

d) Table of ratios for three years

Year Proprietors fund Net assets Answer 07-08 52832.34 55898.73 94.51% 07-06 40318.92 42608.98 94.63% 06-05 44786.87 45228.41 99.02%

e)Interpretation

41

42

Here during these three years there is an increasing trend in the ratio which signifies that company is decreasing outside borrowing each year. It is a very good sign as far as the company is concern, as the proprietors have provided around 97% of the fund throughout three years in order to purchase assets. And very less funds are borrowed from outside.

3.5.2 Debt-equity ratio a)Meaning

This ratio is only another form of proprietary ratio and establishes relationship between the outside long term liabilities and owners funds.

b)Implication
A higher ratio implies that outside creditors have a larger claim than the owners of the business. This leads to several effects such as the company has to accept stricter condition from lenders, while borrowing money. And have to pay higher interest. But high ratio is beneficial as far as the share holders are concern because with limited investment, they can keep control on the company and their returns will be higher. A lower ratio implies that outside creditors have a lower claim than the owners of the business. With this situation the company is in beneficial position. They can keep control on the management of the firm and can avoid unnecessary interference of shareholders. But as far as the share holders are concern. This is not a desirable situation for them.

c) Formula
=Long term liabilities *100 Share holders fun

42

43

d) Table of ratios for three years

Year Long term liabilities Share holders fund Answers 07-08 635.37 52832.34 1.20% 06-07 459.85 42608.98 1.08% 06-05 889.51 49817.97 1.79%

e)Interpretation
In the year 07-08 ratio is 1.20%which decreases up to 1.08 in the year 06-07 and which further increases up to 1.79% in the year 05-06. from the above two ratios proprietary and debt- equity we can clearly say one thing that in Dabur owners hold a very good control over the company .here in this ratios, we can also see that the part of creditors is very less with proportion of the owners funds

3.5.3 Capital gearing ratio a)Meaning

It is the ratio of fixed interest and dividend bearing capital to ordinary capital. This ratio expresses the proportion of preference capital+ debenture and ordinary capital

b)Implication
The higher this ratio, the more unstable will be the ordinary share because major share of the profit will be absorbed by debenture interest and preference dividend and there will be greater fluctuation in the rate of equity dividend. Low ratio shows the stable condition for the equity share holders because a very minor part of the profit will be absorbed by the debenture

43

44

interest and preference dividend and there will be less fluctuation in the rate of equity dividend.

c) Formula
=Fixed interest on baring capital*100 Ordinary capital

d) Table of ratios for three years Year Fixed interest on baring cap Ordinary capital Answer 07-08 548.35 8640.23 6.35% 07-06 198.54 8628.84 2.30% 06-05 305.07 5733.03 5.32%

e)Interpretation
In the year 07-08, the ratio is 6.35%which decreases up to 2.30% in the year 07-06 and which again increases up to 5.32 % in the year 06-05. during these three years, debenture interest absorb very less portion of the profit which puts equity share holders in strong position. In Dabur there are no preference shares.

44

45

3.6 others 3.6 Long term funds to fixed assets. a)Meaning

This ratio shows the relationship between fixed capital and fixed assets. Fixed capital includes share capital, reserves and long term liability.

b)Implication
The high ratio implies that the fixed capital is more than the fixed assets The low ratio implies that the fixed capital is less than the fixed assets. It would mean that short term funds have been used in purchasing fixed assets.

c) Formula
=Long term funds Fixed assets

d) Table of ratios for three years

Year Long term funds Fixed assets Answer. 07-08 54566.03 29443.01 1.85:1 07-06 42326.91 23904.05 1.77:1 06-05 46844.39 19883.68 2.35:1

e)Interpretation
In the year 07-08 ratio is 1.85which decreases up to 1.77in the year 07-06 which further increases up to 2.35 in the year 05-06. Here during these three years ratio is more than 1:1 which is minimum.
45

46

Thereby we can say that even after using long term funds to buy fixed assets, there are some long term funds left in the business.

CH:4 Accounting policies and notes 1) Notes of accounts

a) Building constructed on leasehold land included in the value of building shown in Fixed Assets Schedule b) Loan and Advances include Rs.48.64(Previous year 48.64)paid by the company to excise authorities on behalf of Sharda Boiron Laboratories Limited, now known as SBL Limited, in respect of excise duty demand of Rs.68.13 raised by the District Excise Officer, against the company and Sharda Boiron Laboratories. c) Company has assessed recoverable value of cash generating units based on value-in-use method which for each CGU(cash generating unit) worked out to be higher than corresponding book value of net fixed assets thereby not warranting further exercise of arriving at their non-selling-price. CGUs include all the plants belonging to FMCG segment. d) Pursuant to merger of Dabur food Limited with effect from April 01 2007 the company has inherited assets and liabilities of the entity in terms of scheme of merger approved by the high court. The certified copy of the order was filed with the Registrar of company. The merger company was engaged in FMCG business. e) Managerial remuneration under section 198 of the companies act, 1956 Paid or payable during the year to the Directors f) Companies free hold land situated at Sahibabad measuring about 7.58 Acres was acquired by U.P Government under Land Acquisition

46

47

g) Employee related dues:

Act And the State Government had allotted and given possession of about 4.72 acres of land on lease to the company in lieu of acquired land. The Company has filed a claim for compensation of Rs. 572.42 before the Office.

A) Defined Benefit Plan 1) Expenses recognized during the year. 2) Reconciliation of fair value of plan assets & present value of defined Benefit obligations 3) Reconciliation of opening and closing balances of obligations 4) Reconciliation of opening and closing balances of plan assets. 5) Investment details of plan assets as on 31-3-08 6) Effect of increase/decrease of % in assumed medical cost trend in Respect of post separation benefit schemes of directors 7) The basis used for determination of expected rate of return is average Return on long term investment in government bonds. B) Defined contribution plan Companys contribution to different Particulars Provident fund Employee state Insurance Employee Superannuation plan defined contribution plan:2007-2008 2006-07 562.56 458.95 55.98 43.71 261.82 213.38

h) Exchange loss works out to Rs.236.42 (Previous Year Rs81.05)-net of exchange gain Rs.40.92 (Previous year Nil) which has been debited to Profit and Loss Accounts. i) Sundry Creditors include Rs.164.82 (previous year 387.88) being dues to subsidiaries j) A) pension to relative of deceased director Rs.31.50 (previous year Rs.31.50) paid during the year B) Pension to retired director Rs. 99.46 (previous year Rs.58.74)paid during the year.
47

48

C) Exgratia paid to a retired director Rs.160.20 (previous year Nil) during the year. k) Due to amortization of deferred employees compensation under ESOP derived under intrinsic value method instead of blackscholes option model, profit of the year is understated by Rs. 24.90
I)

Figures for the previous year have been rearranged/regrouped as and where necessary in terms of current years grouping.

2) Main policies pertaining the unit a) Accounting convention:

The accounts have been prepared in accordance with the historical cost convention.

b)

Fixed assets and Depreciation

1) Fixed assets are stated at carrying amount 2) Cost include inward Freight, duties, taxes and other expenses incidental to acquisition and installation 3) Patents are being amortized over the period of ten years on straight line basis, and Software are being amortized over the period of five years on straight line basis. 4) Depreciation on Fixed assets have been provided on written down value method at rates specified in schedule XIV of the companies act Except for Baddi,alwar,and many other where depreciation have been provided for on straight line methods at the rates specified in the aforesaid Schedule 5) For New Projects, all direct expenses and direct overheads are capitalized.

48

49

c)

Impairment of Assets

The company identifies impairable fixed assets based on cash On cash generating unit concept at the year-end in term of Para 5 to 13 of AS-28 issued by ICAI for the purpose of arriving at Impairment loss thereon, if any being the difference between the book value and recoverable value of relevant assets. When crystallized, is charged against revenue of the year.

d)Investment
Current investments are held at lower of cost and NAV/Market value. Long term investments are held at cost less diminution, if any, in carrying cost of investments other than temporary in nature

e) Deferred Entitlement on LTC:

In terms of the opinion of the Expert Advisory Committee of the ICAI, the company has provided liabilities accruing on account of differed entitlement towards LTC in the year in which the employees concerned render their services.

f) Inventories
Stocks are valued at lower of cost or net realizable value. Basis of determination of cost remains as follow: .Raw materials, Packing material, store & spares Basis .Work-In-Process .Finished goods . -Weighted Average

g) Research and Development Expenses

49

50

Contributions towards scientific research expenses are charged to the profit & loss account in the year in which the contribution is made.

h) Retirement benefits
A) Defined benefit plans B) Defined contribution plans C) VRS, if paid, is charged to revenue in the year of payment

I) Recognition of income and expenses

A) Sales and purchases are accounted for on the basis of passing of title to the goods. B) Sales comprise of sale price of goods including excise duty but exclude trade discount and sales tax /VAT. C) All the items of income and expenses have been accounted for on accrual basis except for those incomes stipulated for recognition on realization basis on the ground of uncertainty under AS-09 issued by ICAI

j) Income tax and & Deferred Taxation:

The liability of company on account of income tax is estimated considering the provisions of the Income tax Act, 1961.Deferred tax is recognized, subject to the consideration of prudence, on time differences being the difference between taxable income and accounting income that originate in one year and capable of reversal in one or more subsequent years. k) Contingent Liabilities: Disputed liabilities and claims against the company including claims raised by fiscal authorities (sales tax, income tax).pending in appeal /court for which no reliable estimate can be made of the amount of the obligation or which are remotely poised for crystallization are not provided for in accounts but disclosed in the notes of accounts.

l) Foreign currency Translation

50

51

A) Transaction in foreign currencies are recognized at rate of overseas Currency ruling on the date of transactions. Gain/loss arising on Account of rise or fall in overseas currencies vis--vis reporting Between the date of transaction and that of payment is charged to Profit and loss account. B) Receivables/payables (excluding for fixed assets) in foreign currencies are translated at the exchange rate ruling at the year end date and the Resultant gain or loss, is accounted for in the Profit and loss account. C) Increase/decrease in foreign currency loan on account of exchange Fluctuation are debited /credited to profit and loss account. D) Impact of exchange fluctuation is separately disclosed in notes to Account. M) Employee stock option purchase (ESOP) Aggregate of quantum of option granted under the scheme in monetary term (net of consideration of issue to be paid in cash).in term of intrinsic value has been shown as Employees Stock Option Scheme outstanding in Reserve and surplus head of the balance sheet by way of debiting deferred Employee Compensation under ESOP as per guideline to the effect issued by SEBI. . With the exercise of option and consequent issue of equity share, corresponding ESOP outstanding is transferred to share premium account. .Employees contribution for the nominal value of share in respect to option granted to employees of subsidiary company is being reimbursed by subsidiary companies to holding company.

n) Miscellaneous Expenditure:
.Technical know-how fee paid to technical Collaborators up to 31.3.04 are being amortized equally over a period of six years. Subsequently expenses are charged to revenue in the year of incurrence.

51

52

.Deferred Employees Compensation under ESOP are being amortized on straight line basis over vesting year.

CH5Directors report
Financial results
(in crore)

2007-08 Turnover (including other income) Profit Before Tax Add: provisions of earlier years written back Less: Provision of Taxation current Provision of Taxation-Deferred Provision of Taxation-Fringe Benefit Provision of Taxation for earlier year Profit After Tax Add: Balance in Profit and Loss Account Brought Forward from the previous Year Profit available for appropriation Appropriation to: General Reserve Capital Reserve Interim Dividend-paid Final Dividend-Proposed Corporate Tax on Dividend Transferred from merged entities Balance carried over to Balance Sheet Total 2111.31 365.18 0.68 365.86 40.57 0.75 7.08 1.54 315.92 229.15 545.07 70.00 0.40 64.80 64.80. 22.02 0 323.05 545.07

2007-06 1616.94 284.22 0.23 284.45 31.52 -2.66 3.28 0.36 251.95 175 426.95 30.00 3.35 122.13 0 17.13 25.19 229.15 426.95

52

53

Dividend
The company had paid an interim dividend of 75 %( Rs 0.75 per share) on 7th November, 2007.We are pleased to recommend a final dividend of 75% (Rs 0.75 per share) for the financial year 07-08.Aggregate dividend for the year will amount 150%(Rs 1.50 per share). As against 175% (Rs 1.75 per share) on pre bonus share capital declared last year. The dividend payout ratio for the current year, inclusive of corporate tax on dividend distribution, is at 47.87%.

Amalgamation of wholly owned subsidiary company with the company During the year under review a wholly owned subsidiary company, Dabur food limited was amalgamated with the company with effect from 1st April, 2007 on filling of the Order of Honble High Court of Delhi with the office of registrar of companies on 3rd March, 2008 .The financial results of the erstwhile Dabur Food Limited for the year 200708 are included in the financial results of the company for the current year.

Change in the capital structure and listing of shares

53

54

The companys shares are listed on the National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) and actively traded. In the year under review, the following shares were admitted for trading in NSE and BSE:1) Equity shares allotted against the option exercised by employees pursuant to Employees Stock Option Scheme of the company: *1014953 equity shares allotted on 24th May, 2007. *108027 equity shares allotted on 10th August, 2007. *16185 equity shares allotted on 14th November,2007. Further, pursuant to merger of Dabur Food Limited with the company.w.e.f.3rd March, 2008, the authorized share capital of Dabur Food Limited, being Rs 20 crore, has added with the authorized share capital of the company as per Orders of Honble High Court of Delhi and subsequently the Company has applied to the Registrar of Companies, NTC of Delhi and Haryana to give effect to the increase in the authorized share capital of the company from Rs 125.crore to Rs.145 crore. Consolidated Financial Statements In compliance with the accounting standard 21 on Consolidated Financial Statements, this Annual Reports also includes Consolidated Financial Statements for the financial year 200708.Consolidated sales grew by 15.76% to Rs 2395.08 crore as compare to Rs 2069.05 crore in previous year. Similarly, net profit after tax and after minority interest for the year at Rs 333.92 crore is higher by Rs. 50.88 crore as compare to Rs.283.04 crore in the previous year.
54

55

Subsidiaries In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copy of Balance-Sheet, Profit and Loss Account, Report of the Auditors of the subsidiary companies have not attached with the Balance-Sheet of the company. The company will make available these documents /details upon request by any Shareholder of the Company or Subsidiary interested in obtaining the same. The Annual accounts of the Subsidiary Companies are also available for inspection by the Shareholders at registered Office of the Company and also that of its respective Subsidiaries. However, pursuant to Accounting Standard AS-21 issued by the Institute of Charted Accountants of India, Consolidated Financial Statements preserited by the Company includes financial Information of its Subsidiaries. The Financial Statements of each subsidiary shall be available on companys website The following information in aggregate for each Subsidiary are also being disclosed (a) capital (b) reserves (c) total assets (d)total liabilities (e)details of investment(f) turnover (g) profit before taxation (h)provision of taxation(i)profit after taxation (j) proposed dividend . Acknowledgement Your Directors place on record their gratitude to the Central Government, State governments, and Companies Bankers for the assistance, co-operation, and encouragement they extended to the Company. Your Directors also wish to place on record their sincere thanks and appreciation for the continuing support and unstinting

55

56

efforts of Investors, Dealers, Business Associates and Employees in ensuring an excellent all over operational performance For and on behalf of the board (DR.ANAND BURMAN) CHAIRMAN New Delhi 30th April, 2008.

56

57

CH:6 Auditors report Name of the auditors

M/s G.BASU & CO. Charted Accountants

Internal Auditors
Price Waterhouse Coopers Pvt. Ltd.

Qualified/Unqualified
This report has been audited in accordance with auditing standards generally accepted in India. This is why this report is unqualified.

Implications
1) As required by the companies (Auditors report)Order 2003 issued by the central government in terms of section 227 (4A), of the Companies Act,1956,we enclose herewith in the annexure a statement of the matter specified therein. 2) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of audit. 3) In our opinion, proper books of accounts , as required by law have been kept by the Company so far as appears from our examination of books of accounts.
57

58

4) The balance-Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts. 5) Balance-Sheet and Profit and Loss Account have been prepared in due compliances of Accounting Standards referred to sub section (3C) of section 211 of Companies Act, 1956.
6) On the basis of written representations received from the directors

as on 31st March ,2008 and taken on record by the Board Of Directors, we report that none of the directors of the company is disqualified for the office of the director within the meaning of section 274(1)(g) of the companies Act,1956. 7) In our opinion and according to the information and explanations given to us, the said accounts read with other notes appearing in schedule p give the information required by the Companys Act,1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India. a) In the case of Balance-Sheet, of the State of Affairs of the company as at 31st March 2008, and b) In the case of Profit and Loss Account, of the Profit for the year ended on that date; and c) In the case of cash flow statement, of the cash flows for the year ended on that date.

58

59

CH:7Common-size statement P.N.L .Account

Particulars Income Sales less return Less: Excise duty Net sales Other income Total income Expenditure Cost of Materials Manufacturing Exp Payment to and Provisions for employee Selling and administrative Expenses Financial Expenses Mis.Expen.Written.of f Depreciation 174612.87 147338.08 113378.3 Total expenditure 36517.59 Net profit before Taxation Provision for taxation 28422.3 21435.53 17.53 16.32 15.96 83.81 84.62 84.43 07-08 211778.86 3439.26 208339.6 2790.86 211130.46 07-06 177802.43 3693.22 174109.21 1651.17 175760.38 06-05 136968.29 2689.48 134278.81 535.02 134813.83 57511.22 3745.55 9830.78 % 101.65 1.65 100 1.33 101.33 48.67 3.35 7.19 % 102.12 2.12 100 0.95 100.95 44.11 3.09 6.82 % 102 2 100 0.40 100.40 42.83 2.79 7.32

101391.54 76798.44 6985.57 5393.94 14969.23 11865.88

47269.98 854.50 566.79 2575.26

49989.64 443.01 649.36 2197.81

39394.05 565.87 426.24 1904.59

22.68 0.41 0.27 1.23

28.71 0.25 0.37 1.26

29.33 0.42 0.32 1.42

59

60 4057.25 75.32 707.81 31677.21 Net profit ater Taxation and before 0 31677.21 0 25207.63 51.20 18908.37 0 15.20 0 14.48 0.04 14.08 3152.16 (265.64) 328.15 25207.63 1808.11 400 370.25 18857.17 1.95 0.04 0.34 15.20 1.81 0.15 0.19 14.48 1.35 0.30 0.28 14.04

Current Deferred Fringe Benefit

22915.65 68.55

17500.64 22.82

12522.97 28.61

11 0.03

10.05 0.01

9.33 0.02

154.19

36.22

7.62

0.07

0.02

0.0056

0 54507.22

0 42694.87

56.93 31509.26

0 26.16

0 24.52

0.04 23.47

6480.05 6480.17 1101.28 1101.31 40

12212.54 0 1712.81 0 334.82

4299.29 5733.03 602.97 804.06 19.27

3.11 3.11 0.52 0.52 0.019

7.01 0 0.98 0 0.19

3.20 4.27 0.45 0.60. 0.01

60

61

7000 32304.41 54507.22

3000 25434.71 42694.87

2550 17500.64 31509.26

3.36 15.51 26.16

1.72 14.61 24.52

1.90 13.03 23.47

61

62

1) Meaning of common size-statement Common size is a financial statement in which all the items are compared with one common item, which is significant. Such as in P.N.L account sales have been taken as 100 and other items are compared with it. When financial statements are presented in this way, they are called common-size statements or 100 per cent statements.

Comparison Common size P.N.L 1)

P.N.L with Absolute

Total Expenditure

In the year 07-08, the amount of total Expenditure is 174612.87.This is 83.81% of the net sales. In the year 07-06, the amount of total Expenditure decreases down to 143338.08 as compare to earlier year .but the percentage of total expenditure against net sales increases from 83.81% of earlier year to 84.62 % in 07-06. In the year 06-05, the amount of total Expenditure further decreases down to 113378.3 as compare to earlier two years. This amount is lowest amongst three years. But when we compare the percentage change between two years. There is not much of the difference in percentage. Here total Expenditure comprise of cost of material, Manufacturing Expenses, Payment to and provision for employees, Selling and Administrative Expenses, Financial Expenses, Depreciation

2)Net profit After Tax and Before Extra Ordinary Item

62

63

In the year 07-08, the amount of Net profit after tax and extra ordinary item is 31677.21.This is highest amongst three years in percentage as well as in amount. This is 15.20 % of the net sales. In the year 07-06, the amount of Net profit after tax and extra ordinary item decreases down to 25207.63 as compare to earlier year.. And the percentage of profit after tax and extra ordinary item also decreases from 15.20% to 14.48 %. In the year 06-05, the amount of Net profit after tax and extra ordinary item further decreases down to 18857.17. This is 14.04% of the net sales. This is lowest amongst three year. We can see a decreasing trend during these three years with respect to amount as well as in percentage.

63

64

Common sized Statement (Balance-sheet)

Liability Particulars Shareholders fund (A)Share capital (B)Reserve and Surplus Loan fund (A)Secured Loan (B)Unsecured Loan Differed Tax Liability Assets Application of Funds Fixed Assets: (A)Gross Block (B)Less:Depriciation (C) Net Block Investment Deferred Tax Assets Current Assets Loan and Advances (A)Inventories (B)Sundry Debtors (C) Cash and Bank Balances (D)Loans and Advances Current Liabilities and Provision (A)Liabilities (B)Provisions Net Current Assets Miscellaneous

07-08 8640.23 44192.11 52832.34 1644.72 88.97 1733.69 2727.97 57294

07-06

06-05

% 15.08 77.13 92.21 2.87 0.16 3.03 4.76 100

% 19.35 71.07 90.42 4.32 0.18 4.50 5.07 100

% 11.82 80.50 92.31 3.96 0.28 4.24 3.45 100

8628.84 5733.03 31690.08 39053.84 40318.92 44786.87 1927.71 80.28 2007.99 2263.99 44590.90 1923.23 134.29 2057.52 1671.50 48515.89

48419.78 18976.77 29443.01 27037.13 2400.74 20114.69 10046.43 6826.46 18293.75 55281.33 31722.51 26540.97 58263.48 (2982.15) 1395.27

40801.12 34129.37 16897.07 14245.69 23904.05 19883.68 14535.08 27507.77 137.10 131.74 15736.94 11560.90 6097.87 2694.25 5024.75 3804.41 12781.66 10376.66 39641.22 28436.22 27859.39 7749.08 35608.47 4032.75 1981.92 19342.06 11388.94 30731 (2294.78) 3287.48

84.51 33.12 51.4 47.19 4.19 35.10 17.53 11.91 31.93 96.49 55.37 46.32 101.69 (5.20) 2.43

91.50 37.89 53.61 32.60 0.31 35.29 13.67 11.27 28.66 88.90 62.48 17.38 79.85 9.05 4.44

70.35 29.36 40.98 56.70 0.27 23.83 5.55 7.84 21.39 58.61 39.87 23.47 63.34 (4.73) 6.78 64

65 Expenditure Total

57294

44590.90 48515.89

100

100

100

Comparison of Common-size Balance-sheet with Absolute Balance-sheet 1) Share-Holders fund

In the year 07-08, the amount of share holders fund is 52832.34; this is 92.21% of the total assets. In the year 06-07, this further decreases down to 90.42% where total assets are 44590.90. In the year 05-06 shareholders fund further increases up to 44786.87, this is 92.31 % of the total assets. This is highest amongst three years 2) Loan Fund In the year 07-08, the amount of loan fund (secured+ unsecured) is 1733.60; this is 3.03 % of the total assets In the year 06-07, the amount of loan fund further increases up to 2007.99 this is 4.5% of the total assets. In the year 05-06, the amount of loan fund increases as compare to the amount of earlier year but percentage of loan fund against the total assets decreases as compare to earlier year. This is 4.24. 3) Net Fixed assets

In the year 07-08 the amount of net fixed assets is 29443.01; this is 51.4% of the total assets.
65

66

In the year 06-07 the amount of net fixed assets is less than the previous year but the percentage of net fixed assets against the total assets is higher than the previous year. This is 53.61%. In the year 05-06 the amount of net fixed assets is 19883.68.this is lowest amongst three year in amount as well as in the percentage.

4)

Net Current assets

In the year 07-08 the amount of net current assets is negative as current liability is more than current assets .The amount is 2982.15. This is 5.20% of the total assets. In the year 07-06, there is vast increase in the amount as compare to earlier year. The amount is 4042.75.This is 9.05 % of the total assets. In the year 06-05, the position of net current assets is similar to 0708 .the amount of net current assets is negative as current liability is more than current assets. The amount is 2294.78.This is 4.73% of the total assets.

5)

Miscellaneous Expenditure

In the year 07-08, the amount of Miscellaneous Expenditure is 1395.27. This is 2.43 % of the total assets. In the year 07-06, the amount of Miscellaneous Expenditure increases up to 1981.92. And the percentage of Miscellaneous Expenditure against the total assets also increases from 2.43% of earlier year to 4.44 % this year. In the year 05-06, the amount of Miscellaneous Expenditure further increases up to 3287.48.During these three years, there is an

66

67

increasing trend with respect to amount as well as percentage of Miscellaneous Expenditure to total assets.

CH:8- Conclusion 1) Findings

In this report, we tried to examine each and every financial aspect of the firm starting from the ratios to common size statement of the company. All these financial statements are authentic as they are based on the annual report of the company. During the making of this report we tried to cover not only the financial aspect of the firm but also the basic history and basic out line of the main business of the firm. But major financial results of the three years as stated below.

List of ratios

67

68

Name of the ratio 1) G.P ratio 2) N.P ratio 3) Expenses ratio 4) operating ratio 5) return on capital employed 6) return on shareholders funds 7) return on equity share capital 8) return on equity shareholders fund 9) Earning per share 10) Dividend per share 11) price earning ratio 12) dividend yield ratio 13) interest coverage ratio 14) overall turnover ratio 15) fixed assets turnover ratio 16) debtors ratio 17) creditors ratio 18) creditors turnover 19) stock turnover ratio 20) current ratio 21) liquid ratio 22) quick ratio 23) proprietary ratio 24) debt-equity ratio 25) capital gearing ratio 26) long term funds to fixed assets

05-06 47.06% 14.04% 40.27% 90.61% 47.74% 42.10% 3.29% 42.10% 3.29rs 1.75rs 28.98 times 0.02% 77 times 2.95 times 6.75 7 days 82 days 4.37 times 6 times 0.93:1 0.55:1 0.12:1 99.02% 1.79%

06-07 45.98% 14.48% 39.20% 90.61% 70.32% 62.52% 2.92% 62.52% 2.92rs 1.48rs 31.2 times 0.02% 155 times 4.28 times 7.28 13 days 89 days 4 times 7 times 1.11:1 0.67:1 0.14:1 94.63% 1.08%

07-08 40.80% 15.20% 33.50% 90.08% 69.44% 59.96% 3.67% 59.96% 3.67rs 1.5rs 28 times 0.01% 72 times 3.9 times 7.08 17 days 88 days 4.06 times 6.9 times 0.9:1 0.60:1 0.12:1 94.51% 1.20%

5.32% 2.35:1

2.30% 1.77:1

6.35% 1.85:1

2 Conclusion

68

69

. To conclude, i can say that the company is in very good financial position but to comment on the overall financial situation of the company. i have to specifically look in to the three aspect of the firm that is profitability, liquidity and solvency. 1) Profitability the overall profitability of the Dabur India limited can be find out from the ratios like 1) G.P. Ratio 2) N.P.Ratio 3) Operating ratio 4) Expenses ratio Here, Dabur India limited is earning reasonable profit. And from operating ratio we can say that in order to increase profit they need to Decrease operating expenses. As far as the share holders are concern they are getting nice returns that can be seen from the ratios like return on equity shareholders fund and return on capital employed. We can see from the EPS that company is paying half of its earned amount to its shareholders as dividend that is a good sign. And half are kept as reserves to meet the future uncertainty 2) Liquidity Liquidity of the firm can be found out from the ratios like liquid ratio, current ratio and acid-test ratio or quick ratio Here in Dabur, the liquidity of the firm is not so good. We can se that from ratios like current ratio, that it is not satisfactory. Which shows that Dabur needs to improve its liquidity. We can even see that from liquid and quick ratios. They are not even at ideal stage. There by I think Dabur should take necessary steps to increase their liquidity 3) Solvency Solvency of the firm can be found out from the ratios like proprietary ratio and capital gearing ratio and debt-equity ratio.

69

70

Here in Dabur, these three ratios indicates that proprietors hold very good hold on the company and out side borrowing is very less that can be seen from the proprietary ratio. Around 90% of the total funds are supplied by the owners themselves .this saves the higher interest which the company would have to pay in the situation of higher outside borrowing.

70