Dabur

Ratio Analysis

1. A Project Report On Financial
Statement Analysis Of Dabur
India Ltd





Semester-I
Shah And Anchor Kutchhi College Of Engineering,
Department Of Management Studies

3. ABOUT THE COMPANY
 Dabur India Limited is the fourth largest FMCG Company in
India with Revenues of over Rs 6,146 Crore & Market
Capitalization of US $5 Billion. Building on a legacy of quality
and experience of over 127 years, Dabur operates in key
consumer products categories like Hair Care, Oral Care, Health
Care, Skin Care, Home Care & Foods.
 German company Fresenius SE bought a 73.27% equity stake in
Dabur Pharma in June 2008 at Rs76.50 a share. The German
company had also purchased another 17.62% shares from the
market through an open offer at the same price. Dr. Burman
designed Ayurvedic medication for diseases such as cholera and
malaria
 DABUR the name is derived from DAKTAR BURMAN , was
founded by Dr. S.K Burman.
 Dr. S. K. Burman's commitment and ceaseless efforts resulted in
the company growing from a fledgling medicine manufacturer
in a small Calcutta house, to a household name that at once
evokes trust and reliability.
 From its humble beginnings in the bylanes of Calcutta way back
in 1884 as an Ayurvedic medicines company, Dabur India Ltd
has come a long way today to become a leading consumer
products manufacturer in India.
 Dabur's Ayurvedic Specialities Division has over 260 medicines
for treating a range of ailments and body conditions, from
common cold to chronic paralysis. Dabur International, a fully
owned subsidiary of Dabur India formerly held shares in the
UAE based Weikfield International, which it disposed of on 25
June 2012

4. History
1884

Birth of Dabur
1896 Setting up a manufacturing plant
1900 Ayurvedic medicines
1919 Establishment of research laboratories
1920 Expands further
1936 Dabur India (Dr. S.K. Burman) Pvt. Ltd.
1972 Shift to Delhi
1979
Sahibabad factory / Dabur Research & Development Centre
(DRDC)
1986 Public Limited Company
1992 Joint venture with Agrolimen of Spain
1993 Cancer treatment
1994 Public issues
1995 Joint Ventures
1996 3 separate divisions
1997 Foods Division / Project STARS
1998 Professionals to manage the Company
2000 Turnover of Rs.1,000 crores
2003 Dabur demerges Pharma Business
2005 Dabur aquires Balsara
2005 Dabur announces Bonus after 12 years
2006 Dabur crosses $2 Bin market Cap, adopts US GAAP
2006 Approves FCCB/GDR/ADR up to $200 million
2007 Celebrating 10 years of Real
2007 Foray into organised retail
2007 Dabur Foods Merged With Dabur India
2008 Acquires Fem Care Pharma
2009 Dabur Red Toothpaste joins 'Billion Rupee Brand' club
2010 Dabur makes its first overseas acquisition
2011 Dabur enters professional skin care market
2011 Dabur India acquires 30-Plus from Ajanta Pharma
2012 Dabur crosses Billion-Dollar Turnover Mark

5. Various aspects of financial
statement analysis of Dabur India
Ltd
 Reading of Balance Sheet

 Ratio Analysis
a)Liquidity Ratio
- Current Ratio
- Inventory Turnover Ratio
- Debtors Turnover Ratio
- Creditors Turnover Ratio
- Assets Turnover Ratio
- Capital Turnover Ratio
b)Solvency Ratio
- Total Debt Equity Ratio
- Proprietors Ratio
- Interest Coverage Ratio
c)Profitability Ratio
- Gross Profit Ratio
- Net Profit Ratio
- Operating Ratio
- Return on Investment Ratio
- Earning Per Share

6. Profit And Loss Account
Parameters MAR'13
(₹ Cr.)
MAR'12
(₹ Cr.)
MAR'11
(₹ Cr.)
MAR'10
(₹ Cr.)

Gross Sales 4,399.11 3,796.26 3,311.60 2,879.54
Less :Inter divisional transfers 0.00 0.00 0.00 0.00
Less: Sales Returns 0.00 0.00 0.00 0.00
Less: Excise 49.72 38.72 30.99 23.58
Net Sales 4,349.39 3,757.54 3,280.61 2,855.96
EXPENDITURE:
Increase/Decrease in Stock 25.83 -59.33 -78.31 -9.68
Raw Materials Consumed 2,288.34 2,086.64 1,728.96 992.21
Power & Fuel Cost 46.41 46.41 42.39 35.43
Employee Cost 294.34 233.19 208.93 197.62
Other Manufacturing Expenses 59.87 52.43 49.90 432.15
General and Administration
Expenses
280.25 225.21 182.62 187.38
Selling and Distribution Expenses 621.57 505.57 487.61 474.79
Miscellaneous Expenses 9.89 37.81 38.87 15.27
Expenses Capitalised 0.00 0.00 0.00 0.00
Total Expenditure 3,626.50 3,127.93 2,660.97 2,325.17
PBIDT (Excl OI) 722.89 629.61 619.64 530.79
Other Income 94.23 55.14 26.35 41.64
Operating Profit 817.12 684.75 645.99 572.43
Interest 18.40 14.10 12.00 13.49
PBDT 798.72 670.65 633.99 558.94
Depreciation 49.05 38.72 37.73 31.91
Profit Before Taxation &
Exceptional Items
749.67 631.93 596.26 527.03
Exceptional Income / Expenses 0.00 -44.90 0.00 0.00
Profit Before Tax 749.67 587.03 596.26 527.03
Provision for Tax 158.69 123.79 124.85 93.70
PAT 590.98 463.24 471.41 433.33
Extraordinary Items 0.00 0.00 0.00 0.00
Adj to Profit After Tax 0.00 0.00 0.00 -0.19
Profit Balance B/F 864.11 714.22 526.91 428.94
Appropriations 1,455.09 1,177.46 998.32 862.08
Equity Dividend (%) 150.00 130.00 115.00 200.00
Earnings Per Share (in ₹) 3.39 2.66 2.71 4.99
Book Value (in ₹) 8.55 6.56 5.18 8.44

7. Balance Sheet
Parameters MAR'13
(₹ Cr.)
MAR'12
(₹ Cr.)
MAR'11
(₹ Cr.)
MAR'10
(₹ Cr.)

EQUITY AND LIABILITIES
Share Capital 174.29 174.21 174.07 86.76
Share Warrants & Outstandings
Shareholder's Funds 1,565.61 1,303.27 1,101.16 749.38
Long-Term Borrowings 0.00 0.00 0.00 0.00
Secured Loans 0.00 0.00 3.39 24.27
Unsecured Loans 0.84 1.14 2.12 85.70
Deferred Tax Assets / Liabilities 34.18 27.11 17.40 11.95
Other Long Term Liabilities 0.00 0.00 0.00 0.00
Long Term Trade Payables 0.00 0.00 0.00 0.00
Long Term Provisions 312.01 362.84 360.00 0.00
Total Non-Current Liabilities 347.03 391.09 382.91 121.92
Trade Payables 573.61 522.28 494.86 408.51
Current Liabilities
Other Current Liabilities 135.62 122.40 37.77 23.55
Short Term Borrowings 240.74 272.13 246.50 0.00
Short Term Provisions 294.14 230.57 144.71 440.10
Total Current Liabilities 1,244.11 1,147.38 923.84 872.16
Total Liabilities 3,156.75 2,841.74 2,407.91 1,743.46
Non-Current Assets 0.00 0.00 0.00 0.00
ASSETS
Gross Block 959.11 883.23 766.88 687.23
Less: Accumulated Depreciation 342.53 297.90 269.32 236.28
Less: Impairment of Assets 0.00 0.00 0.00 0.00
Net Block 616.58 585.33 497.56 450.95
Lease Adjustment A/c 0.00 0.00 0.00 0.00
Capital Work in Progress 17.07 11.58 4.37 23.31
Intangible assets under
development
0.00 0.00 0.00 0.00
Pre-operative Expenses pending 0.00 0.00 0.00 0.00
Assets in transit 0.00 0.00 0.00 0.00
Non Current Investments 260.70 159.48 102.11 98.65
Long Term Loans & Advances 286.27 340.92 323.61 0.00
Other Non Current Assets 38.00 30.01 82.94 0.00
Total Non-Current Assets 1,218.62 1,127.32 1,010.59 572.91
Total Reserves 1,320.84 1,023.97 810.28 647.93
Current Assets Loans & Advances
Currents Investments 765.45 393.24 417.38 249.86
Inventories 500.32 528.57 460.59 298.44
Cash and Bank 168.39 261.29 192.41 163.91
Other Current Assets 59.25 32.21 21.97 4.68

8. Short Term Loans and
Advances
189.40 221.11 102.51 320.44
Total Current Assets 1,938.13 1,660.59 1,397.32 1,167.81
Net Current Assets (Including
Current Investments)
694.02 513.21 473.48 295.65
Total Current Assets Excluding
Current Investments
1,172.68 1,267.35 979.94 917.95
Miscellaneous Expenses not
written off
0.00 53.83 0.00 2.74
Total Assets 3,156.75 2,841.74 2,407.91 1,743.46
Contingent Liabilities 97.72 102.04 1,013.30 164.29
Total Debt 242.04 277.16 252.01 109.97
Book Value (in ₹) 0.00 6.56 5.65 8.44
Adjusted Book Value (in ₹) 0.00 6.56 5.65 4.22

These are Profit and Loss Account and balance sheet records of
Dabur India Ltd for last 5 years. But, to understand the balance sheet properly,
we will have to find the different ratios from it. For finding the Ratios, We are
considering 2009 data as well.
According to the Balance Sheet, from 2009-2014 Share Capital is
gradually increasing and also shareholders funds are also increasing.
Dabur India Ltd has increased their Investments in the business as
well as their Cash at bank is also increased. But, they have reduced their Loans
and Advances long term as well as Short term.
Though their liabilities, payables and borrowings has increased at the
same time they were able to increase their Gross and Net Profit because they
were increasing their Inventories.
Dabur India Ltd is continuously increasing their assets and their
contingent liabilities and Total debt is continuously fluctuating.

9. Analysis on Cost of Material Consumed

As we can compare last five years data, Cost of Material
Consumed is decreasing gradually from 2009 to 2011 and after that it
remained almost constant till now.

Analysis On Employee Cost Ratio

As we can compare, In 2009 Employee cost ratio was 6.90
and after that in the very next year it is raised to 7.37and after that it
again dropped down to 6.62 and then it remained constant till now.


38.12 39.49 38.84
47.70 50.44
2013 2012 2011 2010 2009
cost of material consumed
6.47 6.48
6.62
7.37
6.90
2013 2012 2011 2010 2009
employee cost ratio

10. Analysis On Finance Cost Ratio

As we can compare, In 2009 it was 0.55and after that in the
very next year it was dropped down to 0.19 and then after that it is
gradually increasing till now.
Analysis On Depreciation Ratio


As we can analysed as per the available records, the
depreciation ratio was 1.13 in 2009 and it remained constant in 2010
as well, but in 2011,it has raised to 2.07 and after that till now it is
gradually decreasing 2.07 to 1.68.
0.42
0.38 0.37
0.19
0.55
2013 2012 2011 2010 2009
finance cost ratio
1.68 1.75
2.07
1.11 1.13
0.00
1.00
2.00
3.00
2013 2012 2011 2010 2009
depriciation ratio

11. Ratio Analysis
a)Liquidity Ratio:-
i)Current Ratio:-
In Liquidity Ratio, the very first one is the Current Ratio.
Current Ratio is defined as the ratio of Current assets to the
Current Liabilities.

 The company could not achieve the standard current ratio i.e
1.33:1 in 2010 but from 2011 onwards it improved on its current
ratio.
 There was increase in inventories and short term advances from
2011.
 And they have used these things very efficiently to increase their
Profits.
 Even the cash position of the company was better after 2011.and
its gradually constant after 2011.

20132012201120102009
1.501.481.51
0.540.56
CURRENT RATIO

12. ii)Inventory Turnover Ratio:-
The Analysis of the Inventory turnover ratio is as follows:-

 In 2010 it is highest as the value of stock was less as compared
to sales.
 In 2011-2012 the ratio declined because there was increase in
inventory.
 And in 2013 it again increased because the inventories came
down.
 Inventory Velocity (In Days):-
The Analysis of the Inventory Velocity is as follows:-
It is defined as the Ratio to the No. Of Days in a year (360) to the
Inventory Turnover Ratio

8.70
7.11 7.12
9.65 9.26
2013 2012 2011 2010 2009
INVENTORY TURNOVER RATIO
41.94
51.34 51.25
33.16
39.41
2013 2012 2011 2010 2009
inventory holding period

13.  Inventory holding period is minimum in 2010 i.e. 33 days, it is
better for the company.
 From 2011-2012, it increased to 51 days as inventory of the
company increased.
 In 2013, the value of inventory came down so as the inventory
holding period.
iii) Debtors Turnover Ratio:-
The Analysis of the Debtors turnover ratio is as follows:-
Debtors Turnover Ratio is defined as the ratio of Credit Sales to
the Total No. Of Debtors

 From the profit and loss account it is clear that sales is
increasing every year, even debtors are also increasing so there
is not much fluctuation in debtors turnover ratio except in 2009-
2010.
 In 2009-2010, the value of debtors was significantly less.


17.04 16.76 16.20
25.64
21.57
2013 2012 2011 2010 2009
Debtors turnover ratio

14.  Debtors Velocity (In Days):-
The Analysis of the Debtors Velocity is as follows:-
It is defined as the Ratio to the No. Of Days in a year (360) to the
Debtors Turnover Ratio

 In 2011, debtors collection period was highest i.e 23 days,
which is not good for the company.
 In 2009-2010 it is 17 days as the average debtors were less as
compared to other years, and thus it is good for the company.

iv) Creditors Turnover Ratio:-
The Analysis of the Creditors turnover ratio is as follows:-
Creditors Turnover Ratio is defined as the ratio of Credit Sales to
the Total No. Of Creditors.

21.43 21.78 22.53
16.53 16.92
2013 2012 2011 2010 2009
debtors collection period
3.79 4.00 3.49 3.18 3.69
2013 2012 2011 2010 2009
creditors turnover ratio

15.  From the graph it is clear that from 2009-2013 there was no
major fluctuation in creditors turnover ratio.
 As over the years both sales and creditors increased in the same
proportion.

 Creditors Velocity (In Days):-
The Analysis of the Debtors Velocity is as follows:-
It is defined as the Ratio to the No. Of Days in a year (360) to the
Creditors Turnover Ratio.

 Except in 2010, the payment period was higher from other years
as creditors of the company was minimum in 2010 as compared
to other years.
 It is highest in 2011, as credit purchase increases and so as the
creditors payment period.


96.36
91.36
104.47
87.99
98.89
2013 2012 2011 2010 2009
creditors payment period

16. v) Assets Turnover Ratio:-
The Analysis of the Assets turnover ratio is as follows:-

 In 2009-2010 the assets turnover ratio is highest which is better
for the company, as assets were efficiently utilized.
 After 2011, it declined as the assets and revenue were not in
proportion to each other.
vi) Capital Turnover Ratio:-
The Analysis of the Capital turnover ratio is as follows:-

 In 2009-2010, it is higher as company had less share capital and
reserves.
 After 2010, share capital and reserves increased so the ratio
declined.
 In 2009-2010 it also shows that the available funds are
efficiently utilized.
1.54 1.53 1.36
2.36 2.49
2013 2012 2011 2010 2009
2.73 2.88 2.96
3.78 3.26
2013 2012 2011 2010 2009
capital turnover ratio

17. vii)Acid Test Ratio:-
It is nothing but the Liquid Ratio and it can be defined as the Ratio of
Liquid Assets to Current Liabilities.


 Except in 2009-2010, company was able to maintain Standard
acid test ratio of 1:1.
 In 2009-2010 it was less because the value of current assests i.e
cash and debtors was less, so after deducting inventory from
current assests the ratio further decreased.
 From 2011 onwards company made some short term
investments, which was not made in 2010,2009 so the acid test
ratio increased from 2011.
Overall Liquidity Ratio Analysis
Overall we can say that the liquidity position of the company was
satisfactory.
The company started making short term investments from 2011 which is
good for the liquidity position of the company.
Inventory turnover ratio and debtors turnover ratio were better in 2009-
2010.
Creditors turnover ratio was more or less the same from 2009-2013.
1.07 0.99 1.01
0.32 0.43
2013 2012 2011 2010 2009
acid test ratio
acid test ratio

18. Assets turnover ratio, capital turnover ratio were highest in 2009-2010
because rate of increase in assets and capital employed was less in 2009-
2010.
Inventory, credit and debtors holding period were unsatisfactory.

b)Solvency Ratio:-
i)Total Debt Equity Ratio –
It is defined as the Ratio of Debt to Assets.
Where, Debt = all liabilities including long term and short term
And Equity = net worth + preference Capital

 overall we can say that company had fair mix of short and long
term loan and equity.
 It is highest in 2009 and continuously fluctuating after that. So,
it shows that company is not relying only on equity or loans.


0.15
0.21 0.23
0.15
0.29
2013 2012 2011 2010 2009
total debt equity ratio

19. ii)Proprietors Ratio:-
This Ratio indicates the proportion of proprietor’s funds to the Total
assets of the firm.

 Except in 2009-2010 the ratio was more or less same.
 In 2009, it is highest because funds and current assets have been
invested appropriately.

iii)Interest Coverage Ratio:-
This Ratio indicates the proportion of Interest to the Earning Before
Interest and Tax

0.56 0.53
0.46
0.61
0.76
2013 2012 2011 2010 2009
proprietory ratio
37.10 38.53 45.94
83.88
32.15
2013 2012 2011 2010 2009
Interest coverage ratio

20.  It is highest in 2010 because the amount of interest paid is
minimum.
 Interest coverage ratio shows drastic fluctuations from 2009-
2010,as interest paid in 2010 was less in as compared to 2009.
 After 2011, it declined as the amount of interest paid rises.
Overall Solvency Ratio Analysis
Total debt equity ratio was unsatisfactory as it couldn’t achieve
the standard rate in any of the years.
Total debt equity ratio and proprietary ratio was good.
Interest coverage ratio showed major fluctuations.
The company didn’t have fair mix of equity and debt.

c)Profitability Ratio:-
i)Gross Profit Ratio:-
This Ratio indicates the efficiency of production and trading
operations and it is expressed in percentage.

46.79 46.05
49.68
41.19 41.19
2013 2012 2011 2010 2009
GROSS PROFIT
GROSS PROFIT

21.  2009-2010: GP remains none or less same as there were
individual increase in inventory, debtors but there was no
overall change.
 2010-2011: There is a 8.49% increase in 2011 because of
increase in inventory and stock. So, Dabur India Ltd used the
inventory and stock very efficiently to increase their Gross
Profit
 But the same trend could not be followed in 2012-13 where it
declined by 3.63% because of increase in current liabilities.
During this fiscal year, company’s current liabilities increased
which resulted into less Gross Profit.

ii)Net Profit Ratio:-
Net Profit Ratio indicates the Ratio of net profit before tax and net
sales which is expressed in terms of percentages.

 In 2009-10 the indirect expenses were less and because of that
the Net Profit Ratio of the company is high
 As compared to 2009, indirect expenses were less so Net Profit
Ratio increased more in 2010
13.59 12.33 14.12
19.11 17.99
2013 2012 2011 2010 2009
NET PROFIT RATIO

22.  Where as in 2011 and 2012, the indirect expenses were
comparatively higher because of that the net profit ratio is less
in the year 2011-2012
 And in 2013, again it is gradually raised back as the expenses
were less.

iii)Operating Ratio:-
This Ratio indicates the proportion of cost of goods sold and
operating expenses to the net sales.

 From 2011 onwards the company incurred more indirect
expenses as compared to previous years so the ratio from 2011
increased as compared to in 2009-2010.
 In 2010-2011 there is increase in finance cost, depreciation, and
other expenses due to which the ratio increased by 6.95.



31.55 30.70
32.31
25.26
23.20
2013 2012 2011 2010 2009
OPERATING COST

23. iv)Return on Investment Ratio:-
The Analysis of the Capital turnover ratio is as follows:-

 In 2009 ROI ratio was highest as compared to other years
because from 2009 onwards the total increase in assets was
more as compared to total increase in profits, so the ratio
decreased after 2010.

v)Earning Per Share:-
This Ration indicates the overall profitability of the firm and it can be
calculated as Ration of Net profit after tax less preference dividend to
the No. Of Equity Shares.

20.90
18.90 19.58
43.19 44.01
2013 2012 2011 2010 2009
ROI ratio
3.39
2.66 2.71
4.98
4.31
2013 2012 2011 2010 2009
EPS

24.  It can be derived from the graph that the amount earned by the
company for the share holders is highest in 2010when it is
compared to other years. So, company’s performance was best
in 2010.


Overall Profitability Ratio Analysis
By looking at all the profitability ratio’s we can conclude that
DABUR limited has good profitability position as the gross
profit and net profit ratios are showing an increasing trend
In 2009-2010, the company is earned exceptionally well on its
investment which was reflected by its ROI ratio
Even Company’s Earning per share is also an average
throughout the 5 years and it was best in 2010
And as the Dabur Ltd were able to maintain their expenses in
2009 and 2010 less they were able to earn more profits during
those years as compared to 2011,2012,2013
So, as per the Profitability Ratios, we can conclude that Dabur
India Ltd is a good company to invest.

25. Conclusion
Overall Analysis Of Dabur India Ltd.
 Company had strong financial position to pay off its current
liabilities.
 After comparing balance sheet and profit and loss account of
Dabur India ltd. From 2009-2013 we can say that 2009-2010
were the most profitable years for the company.
 Major fluctuation were seen in 2011 as company made many
changes in its operations like short term investments and
increase in other operating expense.
 Company didn’t had adequate capital structure i.e. it relied only
on equity share capital rather than debts, a company should have
fair mix of debt and equity both.
 Assets of the company were less in 2009-2010 but still were
most profitable for the company.