WORKING CAPITAL

MANAGEMENT:
A Comparative Analysis
Of
Dabur India Ltd. and
Hindustan Unilever Ltd.

Contents
About Dabur ltd
About The Topic
Research Methodology and
Objective of Study
Analysis & Interpretation
Findings
Conclusion
Suggestions

DABUR India Ltd

Dabur

India Ltd is one of Indias leading FMCG Companies with

Revenues of over Rs 7,073 Cr & Market Capitalization of US $5 Billion
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.
Master

brands:
Dabur- Ayurvedic healthcare products
Vatika- Premium hair care
Hajmola- Tasty digestives
Ral- Fruit juices & beverages
Fem- Fairness bleaches & skin care products

History
1884

- Established by Dr. S K Burman at Kolkata

1930 - Automation and up gradation of
Ayurvedic products manufacturing initiated
1936 - Dabur (Dr. S K Burman) Pvt. Ltd.
Incorporated
1972 - Shifts base to Delhi from Calcutta
1979 - Dabur Research & Development Centre
(DRDC) set up & Commercial production starts
at Sahibabad, the most modern herbal
medicines plant at that time
1996 - Enters foods business with the launch of
Real Fruit Juice
1998 - Burman family hands over management
of the Company to professionals

 2002

- Dabur record sales of Rs 1163.19 crore on

a net profit of Rs 64.4 crore
2005 - The Board also proposed an increase in
the authorized share capital of the Company from
existing Rs 50 crore to Rs 125 crore.
2007 - Celebrating 10 years of Real-Dabur Foods
unveiled the new packaging and design for Real
at the completion of 10 years of the brand.
2008 - Acquires Fem Care Pharma-Dabur India
acquires Fem Care Pharma, a leading player in the
women's skin care market.
2011 - Dabur enters professional skin care
market-Dabur enters professional skin care
market with the launch of OxyLife Professional
Facial Kit, created exclusively for professional use.
2012 - Dabur India Ltd surpassed the BillionDollar Turnover mark during the 2011-12 fiscal to
end the year with Net Sales of Rs 5,283.17 Crore.

Vision & Principal of Dabur ltd

Vision :- "Dedicated to the health and well

being of every

household"

Principal

Ownership

:-This is our company. We accept

personal responsibility, and accountability to
meet business needs.
Passion for winning :-We all are leaders in our
area of responsibility, with a deep commitment to
deliver results. We are determined to be the best
at doing what matters most.
Conuser focus :- We have superior
understanding of consumer needs and develop
products to fulfill them better.
Innovation :- Continuous innovation in products

About The Topic

This

research work carry out a comparative

analysis on working capital management of
Dabur & HUL companies . The study aimed to
examine the cost of working capital and the
effect on firm performance and to take a
critical view of the adopted liquidity measures
.Secondary data were employed in this study
from journals, textbooks and annual reports of
the selected companies. However, ratio
analysis was used to analyze the data
collected which is the best statistical
techniques for working capital management.

RESEARCH METHODOLOGY

The method used in this RESEARCH done by Data

Collection and there are two sources for data collection:
Primary source of data.
Secondary source of data.
The data collected for this project has been taken from
the secondary source. Sources of secondary data are:Annual reports of the company
Ratios of the company.

P&L accounts of the company.

Details of Dabur India Ltd. & Hul Ltd.
We will be doing a comparative study of both the
companies these averages have been manually calculated
for the purpose of this study specifically. The tools used for
analysis the Dabur India Ltd. & Hul Ltd.
SWOT Analysis

PESTLE Analysis

Objective of study
The study aims at analyzing the working
capital management of Dabur India
Limited. The main objectives are:
To discover the relative importance of
various current assets components of
Dabur;
To draw conclusion on the effectiveness
of working capital management at Dabur;
Dabur India Ltd. is analyzed on other
parameters also like SWOT analysis,
PESTLE analysis , Ratio analysis

Analysis and
interpretation
SWOT ANALYSIS
Strengths
Competitive pricing
Strong Brand Image
Strong Financially
Strong Research and Innovation base.
IT base
Weakness
No direct Outlets.
Seasonal Demands
Lack of awareness about Ayurvedic Products
10

Opportunities
Growing Awareness of Ayurveda
Improper and Unhealthy Food habits
Growing Rural Markets
Growing Middle Class Women and
Beauty Sector
Threats
Allopathic Players; Advertising and
Distribution
Growing Substitutes.
Growing Health Tourism of Kerala.
11

PESTEL Analysis: POLITICAL FACTORS:

Government

intervences : Government support the industry to

expand & to export it's products & to grow.
Trading policies : Trading policies are also favourable for dabur
company so it can export it's products & it also help him to
expand & to grow.

ECONOMIC
Consumer

FACTORS :

focus : they are continuously focussing on analysing

the consumer needs &develop products to fulfill there needs.
This is the main reason for the growth of Dabur company.
Living standard : Rise in the living standard of people have
increased their production level, & produce high quality &
variety of products.
National income : National income is important factor as if affect
the growth of the organisation. If per capita income is more the
amount spend will be more & if it will be lower the amount
spent will be less.

SOCIO-CULTURAL FACTORS :
Consumerism : This indicates that a large number
of options are available while purchasing of goods
to consumers, so the choice becomes easy &
quality products can be choose by consumers. So
while purchasing a consumer have different
choices to select product according to his needs.
Education levels : Education is one of the most
important factor which influence the buying power
of consumer, while selecting a particular good a
consumer should know all it's features so it can
differentiate them with another products.
Law affect social behaviour : Different laws are
made by the government to safe guard the rights
of consumers. For example- Consumer protection
act, this law indicates that a consumer can file a
case against a seller if he finds that he is cheated.

TECHNOLOGICAL FACTORS :
Discoveries

& innovation : Continuous innovation in

products & processes is the basis of there services.
They provide consumers with innovative products
within easy reach Build a platform to enable Dabur to
become a global ayurvedic leader.
Advancement in technology : Focus on growing there
core brands across categories, reaching out to new
geographies, within and outside India, and improve
operational efficiencies by leveraging technology.
Automation : Change in technology will leads to
automation, this means that with new technology
labour required is less as machines are automatic. All
the works are done automatically by the machines as
earlier it is labour oriented. Now all the work is
machine oriented.

ENVIRONMENTAL FACTORS :
Environment

regulations : The preferred company to

meet the health and personal grooming needs of there
target consumers with safe, efficacious, natural solutions
by synthesizing the deep knowledge of ayurveda and
herbs with modern science.
Environmental protection : Responsible company to
protect Ecological system & use Eco-friendly products.

LEGAL FACTORS :
Companies

law : The company fulfill all the Company law

requirement so as to grow & develop & to sustain in the
compitative market.
Employment law : Employment law provides equal
opportunities to every citizen to work & earn his
livelihood. It provides equal opportunities to every citizen.
Consumer protection : This law helps to protect the rights
of consumers & he can file a case against seller if he find
that he is cheated.

Ratio Analysis:The various ratios chosen for analysis are as

follows:
1 Liquidity Ratios

Current Ratio

Quick Ratio

Cash Ratio
2 Turnover Ratios

Current Asset Turnover Ratio

Debtors Turnover Ratio

Inventory Turnover Ratio

3 Gearing Ratios

Debt to Equity Ratio

Equity Ratio

Current Ratio
1.4
1.2 1.17
1

1.08

0.8 0.76
0.6

0.74

0.89
0.75DABUR
HUL

0.4
0.2
0
2013

2014

2015

Interpenetration: A current ratio equal or

near to the rule of thumb of 2:1 i.e. current
assets double the current liabilities is
considered to be satisfactory.Then We observe

Quick Ratio
1.2
1 0.97
0.8
0.66

0.6
0.4

0.45

0.44

0.54
0.47

DABUR
HUL

0.2
0
2013

2014

2015

Interpenetration: Observing the data Dabur

has higher quick ratio than HUL which denotes an
edge over HUL and good managerial efficiency of
Dabur. This reflects on the number of operation
cycles of Dabur being more than HUL

Cash Ratio
0.3
0.26

0.25
0.2

0.28

0.22

0.15

DABUR
HUL

0.14

0.1
0.05

0.06

0
2013

0.03
2014

2015

Interpenetration: By comparing the trends of both the

companies it is clearly visible HUL is showing an increasing
trend in growth of cash ratio which indicates a positive sign
for the Company but Dabur is also not lacking behind as the
changes in provision for utilising the cash has been
improvised

Current Asset turnover

Ratio
12
10 9.79
8

9.79
8.62
DABUR
HUL

6
4
2 2.39
0
2013

2.52

2014

2.22
2015

Interpenetration: Observing the data HUL

Company asset turnover is more the Dabur
Company.Higher turnover ratios mean the
Company is using its assets more efficiently

Debtors turnover Ratio

45
40
35 34.13
30
25
20
18.14
15
10
5
0
2013

38.52
33.96

16.84

2014

16.41

DABUR
HUL

2015

Interpenetration: Dabur Company the debtor

turnover ratio is decreasing year to year. This
shows that Company is not utilizing its debtors
efficiency in compression to HUL company

Inventory Turnover Ratio

1.4
1.2 1.17
1
0.8 0.76
0.6
0.4
0.2
0
2013

1.08
0.74

0.89
0.75DABUR
HUL

2014

2015

Interpenetration: Observing the data

HUL Company Inventory turnover is more
the Dabur Company.This shows HUL
Company is efficiency of management to
convert the inventory into cash

Debt to Equity Ratio

0.16
0.14

0.15

0.12
0.1
0.08
0.06

0.06

DABUR
HUL

0.04
0.02
00
2013

0.02
0
2014

0
2015

Interpenetration: Observing the data

that HUL Company higher debt to equity
ratio are considered more risky in
compression to Dabur Company

Equity Ratio
0.09
0.08 0.08
0.07
0.06
0.05
0.04 0.04
0.03
0.02
0.01
0
2013

0.07

0.03

2014

0.06

0.03

DABUR
HUL

2015

Interpenetration:In general, higher equity

ratios are typically favorable for companies so

equity

ratio of HUL company

more
favorable in compression to Dabur company

Long Term Debt Ratio to Equity Ratio

1
0.8
0.6

DABUR
HUL

0.4
0.2
00
2013

0
2014

0
2015

Interpretation: -Observing the data Dabur & HUL

that Long Term Debt Ratio to Equity Ratio is similar
both the company means both the company not
used long term debt

Findings
SWOT Analysis
Dabur is a FMCG company that
manufactures and markets ayurvedic and
natural
healthcare
products.
The
company is one of the largest Indian
consumer goods company. Strong market
position imparts distinct competitive
advantage to Dabur and facilitates
revenue and business expansion growth
prospects for the company.

PESTEL Analysis: Dabur India Limited has marked its presence

with significant achievements and today
commands a market leadership status. There
story of success is based on dedication to
nature, corporate and process hygiene,
dynamic leadership and commitment to their
partners and stakeholders. The results of their
policies and initiatives speak for them.
The company has kept an eye on new
generations of customers with a range of
products that cater to a modern lifestyle, while
managing not to alienate earlier generations of
loyal customers

Ratio Analysis:As analyzed Daburs performance in

comparison with HUL is much better as Dabur
is able to utilize its working capital in a much
efficient manner and therefore is reducing the
cycle time and increasing the number of cycles
throughout the year. The Lead Time for Dabur
is less and therefore the profits are high. There
is no doubt that both companies are
performing really close to each other, but all
the financials and the analysis put together,
Daburs efficiency speaks
for itself.

CONCLUSION

After analyzing the financial statements of the Dabur

by the help of various ratios, I observed that the trend
of growth is positive.

Dabur has strong performance with robust top line

growth and high quality earnings in all business
segments. The performance is more satisfying when
viewed in the light of the challenging business
environment of the Ayurvedic industry, Pharma, FMCG,
Food in the export and domestic markets.

Current ratio has continuously increased but the

Company needs to raise more of its current assets and
quick assets so that it can fulfill all its obligations and
can raise the amount of working capital for short- term
investment. Earnings per share have increased which

Suggestions
In my opinion and to the best of my
knowledge, it can be said that although the
Company has fared up well on basis of operations
in the current but the financial status of the
Company is not well. So in order to increase the
performance of the Company there should be an
adequate internal control system commensurate
with the size of the Company and the nature of
its business with regard to purchases of inventory
and fixed assets and the sale of goods and
services. However the working capital of the
Company is in a positive which is a good sign and
the only weak link of the Company as a result of
increase in short term loans.

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