Financial Analysis of Annual Report for

Dabur

Submitted By:-
Sahil Gupta 221122
Shruti Pal 221122
Srishti Narang 221149
Varun Tripathi 221163
Vidit Garg 221164
Vipul Sachdeva 221170
Himalaya Tarani 221173
DABUR INDIA
COMPANY PROFILE

Dabur India Limited is the fourth largest FMCG Company in India with Revenues of over US$1 Billion (Rs 5,283 Crore) and Market Capitalization
of US$4 Billion (Rs 20,000 Crore). Building on a legacy of quality and experience of over 127 years, Dabur is today Indias most trusted name
and the worlds largest Ayurvedic and Natural Health Care Company. Dabur today operates in key consumer products categories like Hair Care,
Oral Care, Health Care, Skin Care, Home Care and Foods. The company has a wide distribution network, covering over 3.4 million retail outlets
with a high penetration in both urban and rural markets. Daburs products also have a huge presence in the overseas markets and are today
available in over 60 countries across the globe. Its brands are highly popular in the Middle East, Africa, SAARC countries and the US. Daburs
overseas revenues account for over 30% of the total turnover.Dabur India is also a world leader in Ayurveda with a portfolio of over 250
Herbal/Ayurvedic products. Daburs FMCG portfolio today includes five flagship brands with distinct brand identities.

Dabur India Limited has marked its presence with significant achievements and today commands a market leadership status. Our story of success
is based on dedication to nature, corporate and process hygiene, dynamic leadership and commitment to our partners and stakeholders. The
results of our policies and initiatives speak for themselves

Leading consumer goods company in India with a turnover of Rs. 2834.11 Crore (FY09)

3 major strategic business units (SBU) - Consumer Care Division (CCD), Consumer Health Division (CHD) and International Business Division (IBD)

3 Subsidiary Group companies - Dabur International, Fem Care Pharmaand newu.

17 ultra-modern manufacturing units spread around the globe

Products marketed in over 60 countries

Wide and deep market penetration with 50 C&F agents, more than 5000 distributors and over 2.8 million retail outlets all over India
Short Description of Three Major Strategic Business Units (SBUs)
a) Consumer Care Division (CCD):-
Consumer Care Business, which incorporates the entire FMCG business of Dabur comprising Health care and Home & Personal care verticals
accounts for 56% of the Companys consolidated revenues International Business Division (IBD), which includes Daburs organic overseas
business as well as the acquired entities, Hobi Group and Namaste Laboratories LLC, accounts for 30.3% of Dabursconsolidated revenues.
The Consumer Care Business is the largest segment, contributing to 56% of consolidated sales and grew by 11.4% during fiscal 2011-12.
The segment is divided into the key verticals of Health care and Home and Personal care.

Master Brands:
Dabur - Ayurvedic healthcare products
Vatika - Premium hair care
Hajmola - Tasty digestives
Ral - Fruit juices & beverages
Fem - Fairness bleaches & skin care products
9 Billion-Rupee brands: DaburAmla, DaburChyawanprash, Vatika, Ral, Dabur Red Toothpaste, DaburLalDantManjan, Babool, Hajmola and Dabur Honey
Strategic positioning of Honey as food product, leading to market leadership (over 75%) in branded honey market
DaburChyawanprash the largest selling Ayurvedic medicine with over 65% market share.
Vatika Shampoo has been the fastest selling shampoo brand in India for three years in a row
Hajmola tablets in command with 60% market share of digestive tablets category. About 2.5 croreHajmola tablets are consumed in India every day
Leader in herbal digestives with 90% market share

Foods Division, consisting of fruit-based beverages and
culinary pastes business, contributes 10.1% of total
sales.
Daburs Foods Business emerged as the star performer
of 2011-12 as the category crossed Rs. 500 crores in
sales. This marks a 10-fold jump in its sales in nine
years, a big achievement given the fact that this
business is driven purely by packaged fruit juices -- a
category that was almost nonexistent a decade ago and
was pioneered by Dabur. The Foods business at present
includes fruit juices and nectars under the brands Ral
and RalActiv and culinary pastes under the brand
Hommade.
Foods Division:-

Daburs International Business continued on a strong growth trajectory with sales growing by 78.3% to Rs. 1,616 crores. The International Business
now contributes 30.3% to consolidated sales. Fiscal 2011-12 was the first full year of the two overseas acquisitions Hobi Group and Namaste
Laboratories, LLC under the Dabur fold.
During the year, these acquisitions were ssimilated and integrated with the existing organic overseas business. If we were to look at the growth in
sales of the organic business excluding acquisitions, nthe business grew by 27.1% to Rs. 929.9 crores. Our key geographies by total overseas
revenues now are: Middle East, Africa, Asia and U.S.

International Business Division
(IBD):-

Financial Statement Analysis

Solvency Ratios
The long-term solvency of a business is affected
by the extent of debt used to finance the assets of
the company. The presence of heavy debt in a
companys capital structure is thought to reduce
the companys solvency because debt is more
risky than equity. Important indicators of a firms
solvency are discussed below:-
1.) Debt-Equity Ratio
2.) Debt Assets Ratio
3.) Interest Coverage Ratio


Debt-Equity Ratio
Debt-Equity Ratio
Year 2010 2011 2012 2013
Total Debt 14,137 10,997 25,201 27,781
Shareholder
Fund
73,820 74,938 1,10,116 1,30,327
Debt-Equity
Ratio
0.19 0.14 0.22 0.21
It measures the relationship of the capital provided by creditors to the amount provided by shareholders. Debt includes interest-bearing liabilities,
both short-term & long-term, but excludes operating liabilities. A lower Debt-Equity Ratio is better for the company.
Debt-Equity Ratio = Total Debt / Total Shareholder Funds
(All Figures in Rs. Lacs)

These ratios are very low which indicates that in the coming future, the company can easily increase the amount of leverage in its capital structure. Over the
years, the company has been increasing its shareholders funds. The debt has also increased except for one year when the company repaid some part of its
debt. Over the years the ratio has been increasing showing indicating that the company has started relying more on external borrowings.
(both long-term &short-term). However, the proportion of the Debt still is very low in comparison to the Equity of the company. This also indicates that its
fixed charges i.e. interest on debt is low indicating good financial position of the company.
Debt-Assets Ratio
Debt-Assets Ratio
Year 2010 2011 2012 2013
Total Debt 14,137 10,997 25,201 27,781
Total Assets 1,55,062 1,74,346 2,40,791 2,84,071
Debt-Assets
Ratio
0.09 0.06 0.10 0.09
(All Figures in Rs. Lacs)

A lower Debt-Asset Ratio indicated that most of the assets of the company are financed through its Equity Funds. Also, the ratio has decreased
from the years 10-11 & 12-13 which signify an increasing dependence of the company on equity funds for the purpose of financing its assets &
less dependence on its Debt. This is a good sign for the company, as it reduces the chances of default of payment.
Interest Coverage Ratio
Interest Coverage Ratio
Year 2010 2011 2012 2013
EBITA 46,974 57,020 67,709 66,701
Interest
Payments
1,338 560 1,293 1,410
Interest
Coverage Ratio
35.1 101.82 52.36 47.30
This is the measure of protection available to the creditors for payment of interest charges by the company. It shows whether the company has
sufficient income to cover its interest requirements by a wide margin.It is calculated by dividing the profit before interest, tax and depreciation
by the interest expense.
Interest Coverage Ratio = Earnings before Interest, Tax & Depreciation / Interest Payments to Borrowers
(All Figures in Rs. Lacs)

A high Interest Coverage Ratio implies that there is adequate safety for payment of interest even if there was a drop in the companys earnings.
Although the ratio initially increased & then decreased, it is still maintained at a healthy level.The ratio increased in the year 2011 because of the fact
that the company decreased its debt from Rs.14,137 in the year 2010 to Rs. 10,997 in 2011 and, therefore, its expenses on interest on debt fell. Further, the
ratio increased in the years 2012 and 2013 because of increase in debt and the subsequent increase in interest charges.
Liquidity Ratios
Liquidity is the ability of a business to meet its short-term
obligations when they fall due. An enterprise should have
enough liquid and other current assets which can be
converted into cash so that it can pay its suppliers & lenders
on time. For evaluating Daburs liquidity, we examine the
following ratios
1.) Current Ratio
2.) Quick Ratio
3.) Net Working Capital

Current Ratio
Current Ratio
Year 2010 2011 2012 2013
Current Assets 74,505 91,795 1,39,732 1,63,062
Current Liabilities 66,410 87,216 92,384 1,07,742
Current Ratio 1.12 1.05 1.34 1.32
It is a widely used indicator of a companys ability to pay its debts in the short-term, and shows the amount of current assets a
company has per rupee of current liabilities. Here, current assets include loans &advances and current liabilities include provisions. It is an
important indicator of a companys current and prospective liquidity position.
Current Ratio = Current Assets / Current Liabilities
(All Figures in Rs. Lacs)

A low Current Ratio implies a strained liquidity position for the company. However, FMCG companies usually do not have a high current ratio
because of fast conversion of inventory into cash. Therefore the Current Ratio of Dabur is less than normal. Another reason for the low ratio is
that the company follows a conservative policy and has high provisions (almost 50% of the liabilities) which increases the liabilities and decreases
this ratio. Still a gradual increase in the ratio indicates favourable conditions for the company. Ideal current ratio is 2:1, and we have seen an
increasing trend in their current ratio.
Quick Ratio
Quick Ratio
Year 2010 2011 2012 2013
Quick Assets 48,333 61,951 93,673 1,10,205
Current Liabilities 66,410 87,216 92,384 1,07,742
Quick Ratio 0.72 0.71 1.01 1.02
The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio, the better
is the position of the company.
Quick Ratio = (Current Assets Inventory) / Current Liabilities
(All Figures in Rs. Lacs)

Inventory in case of Dabur forms a significant part of current Assets, hence quick ratio is low. However, the ratio has improved over the past two
years, indicating that the ability of the firm to meet its short-term obligations using its quick assets has improved. Ideal quick ratio is 1:1 and Dabur
lately has achieved it.
Net Working Capital
Net Working Capital
Year 2010 2011 2012 2013
Current Assets 74,505 91,795 1,39,732 1,63,062
Current Liabilities 66,410 87,216 92,384 1,07,742
Net Working
Capital
8,095 4,579 47,348 55,320
It represents operating liquidity available to a business.
Net working capital is calculated as: Current Assets - Current Liabilities.
(All Figures in Rs. Lacs)

The NWC shot up from a modest 4,579 in 11 to a healthy 47,348 in 12. This was mainly because the current assets of the company grew due to
an increase in investments, inventory and cash balances whereas the current liabilities remained stable.
Inventory Turnover Ratio
Year 2010 2011 2012 2013
Cost of Goods
Sold
1,22,243 1,37,393 1,27,405 1,48,370
Average
Inventory
24,586 28,008 37,952 46,061
Inventory
Turnover Ratio
4.97 4.90 3.35 3.22
This ratio shows the number of times a companys inventory is turned into sales. Investment in inventory represents idle cash. The lesser the
inventory, the greater the cash available for meeting operating needs. Besides, lean, fast-moving inventory runs a lower risk of obsolescence and
reduces interest, insurance & storage charges.
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
(All Figures in Rs. Lacs)

Inventory Turnover Ratio is usually high for an FMCG company. However, in the case of Dabur the company has accumulated huge amounts of inventory
over the years. This has led to a gradual decrease in the Inventory Turnover Ratio of the company. Such high levels of inventory strain the companys liquidity
& availability of cash within a short time frame. This typically suggests the opportunity cost of Dabur, the amount of inventory that is idle typically means the
cash they are just wasting.
Debtor Turnover Ratio
Year 2010 2011 2012 2013
Net Avg. Credit
Sales
2,42,368 2,65,206 3,08,053 3,51,997
Average Debtors 11,236 12,142 16,647 21,332
Debtor Turnover
Ratio
21.57 21.84 18.50 16.50
A companys ability to collect from its customers in a prompt manner enhances its liquidity. The Debtor Turnover Ratio measures the efficacy
of the firms credit policy and collection mechanism and shows the number of times each year the debtors turn into cash. High DTR indicates that
debtors are being converted rapidly into cash and the quality of the companys portfolio of debtors is good.
Debtor Turnover Ratio = Net Average Credit Sales / Average Debtors
(All Figures in Rs. Lacs)

Although the DTR of the company has decreased over the previous years, it still was able to maintain a healthy Debtor Turnover Ratio of 16.50 in the
year 2013. This indicates a favourable debtor portfolio of the company. But Dabur should stop this declining trend as Debtor Turnover Ratio directly affects
the liquidity of your company and low DTR would mean your debtors are not that credible and would thus increase the chances of bad debts.
Creditor Turnover Ratio
Year 2010 2011 2012 2013
Net Avg. Credit
Purchases
1,22,243 1,29,818 1,32,399 1,37,888
Average
Creditors
28,143 31,522 42,194 53,998
Creditor
Turnover Ratio
4.34 4.11 3.13 2.55
It compares creditors with the total credit purchases & signifies the credit period enjoyed by the firm in paying creditors. Accounts payable include
both sundry creditors and bills payable.The Credit Turnover Ratio represents the number of days used by the firm to repay its creditors. A high
creditor turnover ratio signifies that the creditors are being paid promptly. This situation enhances the credit worthiness of the company. However
a very favourable ratio to this effect also shows that the business is not taking the full advantage of credit facilities allowed by the creditors.
Creditor Turnover Ratio = Net Average Credit Purchases / Average Creditors
(All Figures in Rs. Lacs)

Over the years the amount of Creditors has increased whereas the Net Purchases have remained stable. This has been a major factor contributing
to the decrease in the creditor turnover ratio. Although CTR is decreasing it is still maintained at a level which is favourable for the creditors of
the company.
Collection Period vs. Credit Period

The collection period is less as compared to the credit period enjoyed by the company which is in favour 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.
This right here is a very solid advantage for a company, as it has reduced the chances of possible bad debts by maintaining a low collection period , which
makes the debtors comply to quick returning of money.
On the other hand the credit period is high which signifies that the Dabur has more time to pay to its creditors.
Profitability Ratios
Profitability ratios measure the degree of operating success of the
company. The only reason why investors are interested in a company is
that they think they will earn a reasonable return in the form of capital
gain and dividends on their investment. Therefore, they are keen to learn
about the ability of the company to earn revenues in excess of its
expenses. Failure to earn an adequate rate of profit over a period will
also drain the companys cash and impair its liquidity.
The Profitability ratios are :
1.) Gross Profit Margin
2.) Net Profit Margin
3.) Return on Capital Employed
Gross Profit Margin
Year 2010 2011 2012 2013
Gross Profit 1,13,049 1,43,034 2,00,656 2,27,563
Net Sales 2,42,368 2,88,045 3,28,061 3,75,933
Gross Profit
Margin
46.64 49.65 61.16 60.53
It is used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of
goods sold. Gross profit margin serves as the source for paying additional expenses and future savings.
It is also known as "gross margin".
Gross Profit Margin = Gross ProfitNet Sales X 100
(All Figures in Rs. Lacs)

Over the years the GPM has increased for Dabur. Although, for the year 2013 the margin decreased, it is still maintained at an attractive level.
Increasing gross profit margin can mean two things for the company. First, the company has a favourable pricing power. When a firm raise price
due to overwhelming demand, gross profit margin will increase. Secondly, increasing gross profit margin may mean that a firm is
getting more efficient in production. When price per unit stays the same while the cost of variable unit drops, gross profit margin will increase.
Net Profit Margin
Year 2010 2011 2012 2013
Net Profit 37,356 43,333 47,141 46,324
Net Sales 2,42,368 2,88,045 3,28,061 3,75,933
Net Profit
Margin
15.41 15.04 14.36 12.32
A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every
dollar of sales a company actually keeps in earnings.
A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors.

Net Profit Margin = Net ProfitNet Sales X 100
(All Figures in Rs. Lacs)

The Net Profit Margin has decreased over the years. This decreasing trend is because of an increase in the operating costs by Dabur. The firm
will have to reallocate its resources & ensure efficient working so as to improve its Net Profit Margin.
Return on Capital Employed
Year 2010 2011 2012 2013
PAT + Interest 38,694 43,893 48,434 47,734
Capital Employed 1,55,062 1,74,346 2,40,791 2,84,071
ROCE 24.95 25.17 20.11 16.80
It is a ratio that indicates the efficiency and profitability of a company's capital investments, By comparing net income to the sum of a company's
debt and equity capital, investors can get a clear picture of how the use of leverage impacts a company's profitability. Financial analysts consider
the ROCE measurement to be a more comprehensive profitability indicator because it gauges management's ability to generate earnings from a
company's total pool of capital.
Return on Capital Employed = PAT + InterestCapital Employed X 100
(All Figures in Rs. Lacs)

As indicated earlier the operating costs of the firm have been on a rise for the past few years. This has led to a decrease in its Net Profit of the
company. Therefore, a proportionate increase in the Capital Employed has yielded a less proportionate increase in the Net Profit of the company.
This has been a major reason for a decreasing ROCE.
TREND ANALYSIS
Sales
EBITDA
Profit after Tax (PAT)
Earnings Per Share And Dividend Per Share



Net sales
0
1,000
2,000
3,000
4,000
5,000
6,000
FY10 FY11 FY12 FY13
Net Sales
Net Sales
Net sales have shown an increasing trend over the four years. Sales have increased
by 88% from FY10 to FY13.


EBITDA

The EBITDA in absolute amount has increased over the four years from 517 crores to
948 crores representing a increase of 83% over four years.
The EBITDA Margin, however has declined for FY13 to 18% from 20% in FY12. So,
even though EBITDA has increased by 14% over the previous year, the sales have
increased by 30% over the previous year due to which the EBITDA Margin has
declined. EBITDA Margin remained stable from FY11 to FY12 at 20%.
Profit after Tax (PAT)

PAT has increased significantly over the years for Dabur. PAT has increased by 65%
over the four year period.
Earnings Per Share And Dividend
Per Share

The above chart indicates that both EPS and DPS have not been stable for Dabur
over the four year period. Also it is evident that there exists a relation between EPS
and DPS, that is when the company has a higher EPS then its DPS is also higher and
vice versa