Trend Analysis

Pr u r a tic la s
Sales EBITDA EBITDA Margins (%) Profit Before Tax (PBT) Profit After Tax (PAT) PAT Margins (%)

2 0 -0 05 6
1757 300 17.1 257 214 12.2

2 0 -0 06 7
2080 376 18.1 319 282 13.5

2 0 -0 07 8
2396 443 18.5 384 333 13.9

2 0 -0 08 9
2384 517 18.3 445 391 13.8

2 0 -1 09 0
3417 669 19.6 601 501 14.7

CG A R 1 .0 8 9 2 .2 2 0 2 .6 3 6 2 .7 3 0

S le as
40 00 30 50 30 00 20 50 20 00 28 00 15 77 29 36 28 34 S le a s 31 47

e o r C n i s R

10 50 10 00 50 0 0

2 0 -0 05 6

2 0 -0 06 7

2 0 -0 07 8

2 0 -0 08 9

2 0 -1 09 0

E IT A P Ta dP TF ue B D , B n A ig r s
80 0 70 0 60 0 50 0 40 0 30 0 20 0 10 0 0

E IT A BD P fitB fo T x ro e re a (P T B) P fitA r T x(P T ro fte a A )

The companys revenue and EBITDA have grown at a CAGR of 18.09% and 22.20% over the last five years. A major part of revenue growth has been driven by the introduction of new products and variants which has ensured that Dabur has not only retained but

e o r C n i s R

enhanced its leadership position in key product categories. Also the growth has been supported by the sector growth which has moved at a healthy pace as consumer spending on everyday use products at popular price points has continued to attract good demand, both from the rural and urban India. Profits before Tax and after Tax also have grown at CAGR of 23.66 and 23.70 over the last 5 years

Profitability Analysis

Profitability Ratios show how successful a company is in terms of generating returnsor profits on the Investment that it has made in the business i.e. the Profitability ratios speak about the profitability of the company. There are two types of profitability ratios: Profit margins measure how much a company earns relative to its sales. The Profit Margin of a company determines its ability to with stand competition and adverse conditions like rising costs, falling prices or declining sales in the future. The ratio measures the percentage of profits earned per rupee of sales and is thus a measure of efficiency of the company. Key profitability ratios are:

EBITDA Margin is used to assess a company's profitability by comparing its revenue with earnings. More specifically, since EBITDA is derived from revenue, this metric would indicate the percentage of a company is remaining after operating expenses

EBITDA Margin= EBITDA/ Sales

Net Profit Margin ratio (Net profit/net sales) or PAT- It the net profit earned by the company after deducting all expenses like interest, depreciation and tax.

PAT= Net Profit/ Sales

E I D a dP TM r in B A n A ag s T
1 .1 7 1 .2 2 1 .1 8 1 .5 3 1 .5 8 1 .9 3 1 .3 8 1 .8 3 1 .6 9 1 .7 4

2 0 -0 05 6

2 0 -0 06 7

2 0 -0 07 8

2 0 -0 08 9 P TM rg s (% A a in )

2 0 -1 09 0

E IT A M rg s(% B D a in )
EBITDA and PAT Margins

EBITDA margin has increased by 15% since 2006, owing to a better input cost environment and a better product-mix (premium product launches like Uveda). PAT margins has increased by 20% since 2006, due to addition in topline and improving gross margins

Liquidity and Solvency ratios Liquidity ratios test the ability of the firm to meet its short-term obligation. The level
of liquidity is determined by the amount of liquid assets that are readily convertible into cash. Its the responsibility of the treasury manager to maintain the right balance between investments and liabilities to get the optimum liquidity. It involves constant monitoring of cash flow position. We will analyze the two popular measures of the liquidity of the company

Current Ratio: This is the ratio of current assets to current liability, represents the ability of the business to meet all its short-term money requirements through its current assets

Current Ratio=Current Asset/Current Liabilities

Quick Ratio/ Acid Test Ratio: This is the ratio of the assets that can be readily converted to cash at a very short notice (cash, bank deposits, short term investments, other cash equivalents). It shows the relationship between cash convertibles and current liabilities.

Qucik Ratio=Current Asset-Inventories/Current Liabilities

L u it R t s iq id y aio
Current Ratio Quick Ratio

2 0 -0 05 6
0.82 0.52

2 0 -0 06 7
0.97 0.63

2 0 -0 07 8
0.91 0.58

2 0 -0 08 9
1.19 0.99

2 0 -1 09 0
1.04 0.7

Current Ratio Daburs current ratio has improved since 2008-09 which suggests that company have sufficient current assets to pay of its short-term liabilities, the firm must have a current ratio of at least 1. This also suggests that the company improved its working capital and well balanced working capital policy since last two years. Quick Ratio This means that the firm cannot meet its current (short-term) debt obligations without selling inventory because the quick ratio is 0.70 in 2009-10, which is less than 1. In order to stay solvent and pay its short-term debt without selling inventory, the quick ratio must be at least 1, which it is not. In this case, however, the firm will have to sell inventory to pay its short-term debt. If we observe the quick ratio for 2008-09, was close to 0.99. This is the only year (2008-09), the firm was in a better condition. A quick ratio great than 1 is better than a quick ratio of less than 1 with regard to maintaining liquidity and not being forced into the position of having to sell inventory.

Solvency

ratio indicates the companys ability to meet its long-term liability. Also called the capital structure ratios, they influence most of the major financing decisions of the company. A proper mix of equity and debt is said to be always beneficial for the company rather than pure equity. Existence of debts disciplines management to some extent Debt to Equity Ratio measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets.

Debt to Equity Ratio=Current AssetInventories/Current Liabilities

Interest Coverage Ratio- A ratio used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) of one period by the company's interest expenses of the same period:

Interest Coverage Ratio-EBIT/Interest Expenses

D b C v r g Rt s e t o ea e aio
Debt Equity Ratio Interest Cover

2 0 -0 05 6
0.05 70.12

2 0 -0 06 7
0.05 140.69

2 0 -0 07 8
0.03 46.79

2 0 -0 08 9
0.19 38.34

2 0 -1 09 0
0.15 95.11

D b t E u y n I t r s C v r g R to e t o q it a d nee t o ea e ai
D b E u Rt e t q ity aio 10 9 4 .6 9 .1 5 1 7 .1 0 2 4 .7 6 9 0 5 .0 2 0 -0 05 6
Debt to Equity Ratio The Debt to Equity ratio is almost negligible implies that most of the liabilities of the company are short term (as should be in a case of FMCG) and company is in fairly good position to meet its long-term liabilities. This means that the creditors of the company face very low risk of losing their money Interest Coverage Ratio The Company was also very comfortable in terms of its interest coverage. However, due to Global recession Dabur faced problem in 2007-8 and 2008-09, which was easily visible in both the years. The lower the ratio, the more the company is burdened by debt expense.

Ine s C v r t re t o e

3 .3 8 4 0 9 .1 2 0 -0 08 9 0 5 .1 2 0 -1 09 0

0 5 .0 2 0 -0 06 7

0 3 .0 2 0 -0 07 8

Higher interest coverage for the year 2009-10 shows that the rate of interest was lower as compared to immediate previous year .For bond holders, the interest coverage ratio is supposed to act as a safety gauge. It gives you a sense of how far a companys earnings can fall before it will start defaulting on its bond payments. For stockholders, the interest coverage ratio is important because it gives a clear picture of the short-term financial health of a business.

Activity Turnover Ratio

This ratio is concerned with measuring the efficiency in asset management with respect to the sales. The efficiency with which the assets are used would be reflected in the speed and the rapidity with which they are used. The greater the rate of return the better it is. Depending on the various types of assets, there are the following types of activities ratios. Inventory turnover ratio: A ratio showing how many times a company's inventory is sold and replaced over a period

Inventory turnover Ratio=Net Sales/Closing Inventory

Average Raw Material Holding: (No. of days in a year (365)/ Inventory turnover ratio). This period indicates, how fast the inventory is sold out, the lesser the number of days , the better for a firm, it is represented in number of days. Average Raw Material Holding =365/Inventory Ratio Debtors Turnover Ratio: This ratio indicates ratio of sales and the average debtors and shows number of times the debtors completes a full cycle which involves sales and realization of sales proceeds. Debtors Turnover Ratio=Net sales/Debtors

At it T r o e Rt s civ y un v r aio
Inventory Turnover Ratio Average Raw M aterial H olding Debtors Turnover Ratio

2 0 -0 05 6
11.65 48.08 35.3

2 0 -0 06 7
11.11 40.91 39.7

2 0 -0 07 8
12.52 45.68 25.94

2 0 -0 08 9
10.94 45.18 22.63

2 0 -1 09 0
9.65 45.38 23.53

Atvt T r o e Rto ci i y un v r ai s
In e t ry u o e Rt v no T rn v r aio D bo T rn v r Rt e t rs u o e aio 4. 8 80 3. 53 1. 5 16 2 0 -0 05 6 A e g Rw ae l H ld g v ra e a M t ria o in

4 .7 0 1 39 9

4. 8 56 2. 4 59

4. 8 51 2. 3 26 1. 4 09 2 0 -0 08 9

4. 8 53 2. 3 35 96 .5 2 0 -1 09 0

1. 1 11 2 0 -0 06 7

1. 2 25 2 0 -0 07 8

Inventory turnover ratio was 9.65 times and it is held for a period of 23 days in the year 2009-10 Debtor turnover ratio remains close to 45 days in the year 2009-10

Rate of Return Ratio

Return on Equity: The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. Return on Equity= PAT/Net Worth

Return on Capital Employed: Capital employed means the long-term funds employed in the business and include the shareholders fund, debentures and long- term loans. This ratio explains the overall utilization of funds by a business enterprise. Profit before Interest and Tax is considered for computation of this ratio to make numerator and denominator consistent. Return on Capital Employed: PBIT/Capital Employed

Earnings per share: The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability. Return on Capital Employed: PBIT/Capital Employed

Price Earnings Ratio: This ratio gives the ratio of market price per share to the earning per share.

Earnings per Share: Market Price per share/EPS

Rt o R t r Rt s ae f eun aio
Return On N W et orth(% ) Return On Capital Em ployed(% ) Earnings Per Share PE Ratio
*PE for 2009-10 has been considered.

2 0 -0 05 6
42.22 46.69 3.3

2 0 -0 06 7
62.52 66.07 2.92

2 0 -0 07 8
61.58 67.51 3.67

2 0 -0 08 9
51.2 47.98 4.32

2 0 -1 09 0
58.03 61.98 4.99 44.61*

R t o R t r R to ae f eun ai s
R t rnO E u y% e u n q it ( ) E rn g P rS a a in s e h re 2 2 .9 3 .3 4 .6 6 9 4 .2 2 2 6 .5 2 2 6 .0 6 7 3 7 .6 6 .5 7 1 6 .5 1 8 4 2 .3 4 .9 7 8 5 .2 1 4 9 .9 6 .9 1 8 5 .0 8 3 R t rnO C p a E p y d% e u n a it l m lo e ( )

2 0 -0 05 6

2 0 -0 06 7

2 0 -0 07 8

2 0 -0 08 9

2 0 -1 09 0

Return on capital employed has increased significantly from about 48% in 2008-09 to 62% in 2009-10. It is the post tax version of earning of earning power. It considers the effect of taxation, but not the capital structure. It is internally consistent. It has considerably increased due to higher profit margins The impact of higher returns on Capital Employed is reflected in the Return on Equity that has increased from about 51% in 2008-09 to about 58% in 2009-10. The EPS of the firm has also risen in the last two years. It has risen from Rs. 4.32 per share in 2008-09 to Rs. 4.99 in 2009-10.. The performance of the company was good in the year 2010, having the highest position during the last 5 years PE is higher than the industry average.

In o e cm S les lessR a eturn L ess: E ise D xc uty Net S les a O ther Inc e om T t l In o e oa c m E P N IT R : XE D U E C of Ma ost teria ls Ma nufa turingE penses c x Pa entsto a provisionsfor E ployees ym nd m S ellinga Adm nd inistra tive expenses Fina ia E nc l xpenses Misc neousE ella xpenditure W ritten off D eprec tion ia T t l E p n it r o a x e d ue B la c b in O e a in N tP o b fo eT x t n a n e e g p r t g e r fit e r a a io P o is nfo T x tio r v io r a a n C urrent D eferred Fring B e enefits

2 0 -1 09 0 284 805 25 38 258 867 38 24 287 891 179 333 71 68 224 13 676 50 50 6 56 6 39 11 266 328 573 20 86 96 44 0 0

Cm o S e o m n iz

10 0 4 .5 7 5 2 4 .6 7 5 .3 2 .7 2 4 0 9 .1 0 0 .2 1 0 .1 8 .7 1 6 1 .2 8 4 3 0 .1 0 4 .1 0 0 .0

Appendix

Pr u r a tic la s
Sales EBITDA EBITDA Margins (%) Profit Before Tax (PBT) Profit After Tax (PAT) PAT Margins (%)

2 0 -0 05 6
1757 300 17.1 257 214 12.2

2 0 -0 06 7
2080 376 18.1 319 282 13.5

2 0 -0 07 8
2396 443 18.5 384 333 13.9

2 0 -0 08 9
2384 517 18.3 445 391 13.8

2 0 -1 09 0
3417 669 19.6 601 501 14.7

CG A R 1 .0 8 9 2 .2 2 0 2 .6 3 6 2 .7 3 0