DABUR INDIA LIMITED

Team Name: SYNERGY

Team Members:

Chandru. J (13UTB06)

Devi. S (13UTB07)

Dinesh Kumar. N. G (13UTB09)

Elakkiya.K (13UTB10)

Ishwarya. S (13UTB11)

Saravanan. R (13UTB30)

Sujatha. N (13UTB36)

PART I: GENERAL INFORMATION

1. Name of the corporation Dabur India Ltd.

2. Main corporate web page http://www.dabur.com/

3. Stock exchange where the

firm’s stock is traded and its

ticker symbol

Dabur stocks are traded in two major stock

exchanges. At present, the equity shares of the

Company are listed at Bombay Stock Exchange Ltd.

(BSE), and National Stock Exchange of India Ltd.

(NSE). The Company has also filed application with

MCX Stock Exchange limited (MCX) for listing of

shares.

Bombay Stock Exchange (BSE) Code: 500096

National Stock Exchange (NSE) Code: DABUR

4. What is the company’s

primary product or service?

Hair Oils

Hair Serums

Shampoos

Conditioners

Hair Styling

Moisturizing Skin Cream & Lotion

Face Cleanser

Skin Serums

Face Pack

Depilatory

Herbal Toothpastes

Personal Wash

Massage Oils

Foods & Supplements

5. From the President or CEO’s

letter to the stockholders:

a. How well did the firm

perform this year?

Dabur's net sales in Q4, 2013-14 surged 15.53% to

Rs 1,769.02 crores.

b. What issues was the

President or CEO

optimistic about?

NA

c. What issues was the

President or CEO

concerned about?

NA

d. What predictions or goals

were stated in the letter?

Dabur extended its direct distribution network

to villages of 3,000 population and also used

information technology as the big enabler for

this growth strategy. This initiative has been

rolled out across 10 states that account for about

70% of the rural FMCG potential in India.

This initiative has not just helped us report

higher growth for the staple consumer products,

but also capture demand for some aspirational

and high value products like packaged juices

under the brand Real and Fem fairness

bleaches. This also reflects the changing mindset

of the rural consumer and i am happy to state

that we are well placed to cater to emerging

demand for branded consumer products from

the hinterland.

6. From Management’s

Discussion and Analysis:

a. What financial highlights

were mentioned?

Dabur showed 20.46% rise in its retail business

at Rs 19.07 crores while its other businesses

were seen declining marginally by 0.24% to Rs

32.82 crores.

Strong performance in the FMCG segment

helped Dabur to report 17.32% increase in

consolidated net profit at Rs 235.29 crores

b. What non-financial

highlights were

mentioned?

The Most Trusted Healthcare and Ayurveda

brand for the second year in running by Brand

Trust Advisory.

Dabur has also earned the distinction of being

the first company to be listed on MCX–SX, the

new equity exchange.

c. What risks were

mentioned?

Health, Safety and Environment management

system Dabur aims to effectively control risks

and prevent people from being injured or

harmed during the course of their work.

7. About the auditor:

a. What firm audited the G.Basu & Co.

company’s financial

statements?

Chartered Accountants

Firms registration number: 301174E

b. What type of opinion was

issued on the financial

statements?

In our opinion and to the best of our information

and according to the explanations given to us, the

financial statements give the information required

by the Act 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 the balance sheet, of the state of

affairs of the Company as at 31 March 2013;

(b) In the case of the statement of profit and loss, of

the profit for the year ended on that date; and

(c) In the case of the cash flow statement, of the cash

flows for the year ended on that date.

c. What type of opinion was

issued on the internal

controls?

Based on our examination of the records and

evaluations of the related internal controls, we are

of the opinion that proper records have been

maintained of the transactions and contracts

relating to shares, securities, debentures and other

investments dealt in by `the company and timely

entries have been made in the records. We also

report that `the company has held the shares,

securities, debentures and other investments in its

own name except for those pending transfer in

company name.

d. Did the auditor mention

anything unusual in their

audit report?

Nothing was mentioned unusual in their audit

report.

e. How much were the audit

fees?

2011-2012 2012-2013

55 lakhs 56 lakhs

f. How much were the audit

fees as a percentage of net

income?

2011-12 2012-13

Net Income 463.24 crores 590.98 crores

Percentage 0.11% 0.09%

PART II: FINANCIAL STATEMENTS

1

.

Generally Accepted Accounting

Principles

a. How does the firm describe

its revenue recognition

policy?

Revenue is recognized upon delivery of products and

customer acceptance.

b. Which depreciation method

does the firm use for property,

plant and equipment?

Depreciation on Fixed Assets has been provided on

straight line method

c. Which inventory method does

the firm use? Moving weighted Average method

d. Did the firm change any

accounting principles in the

current year?

Yes, there is a change in accounting practice.

Change in Accounting Practice: -

Pursuant to withdrawal of mandatory status of AS-30,

31 & 32, the applicability of the same have been

withdrawn from the current period (2014). As a

result, investments held for sale in non-current

category have been accounted for at cost and current

investments at lower of cost and market value. This

contributed to reduction in profit (shown under extra-

ordinary item) and value of current investment by

Rs.0.09 each and increase in non-current investment

by Rs.3.38 and net worth by Rs.3.29.

e. Does the firm anticipate any

accounting changes that will

impact the financial

statements?

NA

2

.

What are the major sources of

revenue?

a) AYURVEDIC TONICS –67% share with brand

Dabur Chyawanprash

b) DIGESTIVES – 56% share with brand Hajmola.

c) FRUIT JUICES – 52% market share with brands Real

& Real Active

d) HONEY – 50% share with brand Dabur Honey

e) SKIN CARE (BLEACHES) – 50% share with brand

Fem

f) AIR FRESHENER – 40% share with brand Odonil

g) GLUCOSE – 25% share with brand Dabur Glucose

h) ORAL CARE – 13% share with brands Red

Toothpaste & Toothpowder, Babool & Meswak.

i) HAIR CARE – 12% market share with brands Dabur

Amla Hair Oil, Vatika Hair oil & Shampoos, Dabur

Almond Hair Oil

3

.

What are the major expenses? Out of all the expenses,

a) 64.75%- Material Consumed expenses

b) 26.09%- Administrative expenses

c) 7.82%- Personal expenses

d) 1.34%- Manufacturing expenses

4

.

Earnings per share for the current

year and the prior year:

a. Basic EPS Rs. 3.39

b. Diluted EPS Rs.3.37

5

.

Identify the classes of stock that

the firm has and the number of

shares issued and outstanding in

each class.

Common Stock- Rs.1744000 ( no. of shares is issued

not available)

Preferred stock - Not issued

Class A stock:

Total shareholding of Promoter and Promoter Group-

1,197,019,150( total no of shares issued)

Class B stock:

Public Shareholding- 546,793,923 (total no. of shares

issued)

Class C stock: Not issued

Outstanding shares are not available.

6

.

Did the company pay dividends?

If so, how much? Yes, the company pays dividend every year. Interim

Dividend – Paid Rs. 113.29 crores (2012-2013) &

Final Dividend – Proposed Rs. 148.15 crores (2012-

2013)

7

.

Did the firm buyback shares of its

own stock? If so, how much was

spent?

No, the firm does not repurchase shares, preferring to

hold cash as power to fund future acquisitions.

8

.

Questions about the statement of

cash flows:

a. Did the firm use the direct or

indirect method for preparing

the statement of cash flows?

Indirect Method

b. How much cash did the

company generate from:

i. Operations 8695.4 (in millions of INR)

ii. Investing -5411.4 (in millions of INR)

iii. Financing -2340.1(in millions of INR)

c. Which investing activities

were the largest uses of cash? Capital Expenditures (-2409.8) ( In Millions of INR )

d. Which investing activities

were the largest sources of

cash?

No

e. Which financing activities

were the largest uses of cash? Cash Dividends Paid (-2434.3) (In millions of INR)

f. Which financing activities

were the largest sources of

cash?

Issuance (Retirement) of Debt (831) (In millions of

INR)

PART 3:

1) HORIZONTAL ANALYSIS

A) Net Sales

Net Sales/ Revenue is increasing year after year. This is a good sign since revenue generated

increases.

B) Total Expenditure

Total Expenditure is increasing year after year. It shows that the company is growing by

spending more to increase its sales (expansion).

0

20

40

60

80

100

120

140

160

180

200

2009 2010 2011 2012 2013

NET SALES (%)

NET SALES (%)

0

20

40

60

80

100

120

140

160

180

200

2009 2010 2011 2012 2013

TOTAL EXPENDITURE (%)

TOTAL EXPENDITURE (%)

C) Profit/Loss

Profit at the end of each year keeps increasing and it is steady. It is a good sign for the

company's growth.

D) Total Liabilities and Equity/ Total Assets

There is steady increase in Total Assets/Total Liabilities and Equity (Balance Sheet Final

Value). This indicates the growth of the company (expansion). This is a good sign.

0

20

40

60

80

100

120

140

160

180

2009 2010 2011 2012 2013

PROFIT/LOSS(%)

PROFIT/LOSS(%)

0

50

100

150

200

250

2009 2010 2011 2012 2013

TOTAL LIABILITIES AND EQUITY/TOTAL ASSETS (%)

TOTAL LIABILITIES AND EQUITY/TOTAL ASSETS (%)

2) VERTICAL ANALYSIS:

A) Total Expenditure

Total Expenditure is becoming the most accounted value of the Total Revenue generated

since it is increasing over the years. This is a bad sign. They must try to reduce the expenses.

B) Profit/Loss

Profit is accounted less year after year which indicates that the profits are not good enough

compared to the amount of revenue generated. In 2013, Dabur has increased it a little bit.

This is a good sign.

78.5

79

79.5

80

80.5

81

81.5

82

82.5

83

2009 2010 2011 2012 2013

Total Expenditure (%)

Total Expenditure (%)

12.5

13

13.5

14

14.5

15

2009 2010 2011 2012 2013

PROFIT/LOSS(%)

PROFIT/LOSS(%)

C) Net Equity

There is no significant trend in Net Equity.

D) Total Liability

The Total Liabilities is decreasing year after year. This is a good sign for Dabur. They are

borrowing less money from outside sources.

78

79

80

81

82

83

84

85

86

87

88

89

2009 2010 2011 2012 2013

NET EQUITY(%)

NET EQUITY(%)

0

2

4

6

8

10

12

14

16

18

20

2009 2010 2011 2012 2013

TOTAL LIABILITY(%)

TOTAL LIABILITY(%)

E) Total Current Assets

Total Current assets has accounted less among the Total Assets over the years. This value

should keep increasing.

F) Total Current Liabilities

Total Current Liabilities has accounted less year after year and it is good for the company.

Lesser the liabilities, the better it is for the company.

0

20

40

60

80

100

120

2009 2010 2011 2012 2013

TOTAL CURRENT ASSETS (%)

TOTAL CURRENT ASSETS (%)

0

20

40

60

80

100

120

2009 2010 2011 2012 2013

TOTAL CURRENT LIABILITIES (%)

TOTAL CURRENT LIABILITIES (%)

3) RATIO ANAYSIS

1) LIQUIDITY RATIOS:

A) Current Ratio

Since Current ratio lies within the range (<2), the company is said to have good short-term

financial strength. It shows that the company had used the current assets efficiently.

B) Quick Ratio

DABUR INDIA, which has a quick ratio of less than 1 cannot pay their current Liabilities

(CL). It also means that it does not have enough cash in hand to pay bills.

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2009 2010 2011 2012 2013

CURRENT RATIO

CURRENT RATIO

0

0.2

0.4

0.6

0.8

1

1.2

2009 2010 2011 2012 2013

QUICK RATIO

QUICK RATIO

C) Cash Flow Liquidity

Since cash flow liquidity is high during the recent years, it means that the company is able to

convert the assets to cash to pay its short-term debts.

D) Average Collection Period

The company has a low average collection period which indicates that it does not have

trouble while transferring the outstanding credit to accounts receivable.

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2009 2010 2011 2012 2013

CASH FLOW LIQUIDITY

CASH FLOW LIQUIDITY

0

10

20

30

40

50

60

70

80

2009 2010 2011 2012 2013

AVERAGE COLLECTION PERIOD

AVERAGE COLLECTION PERIOD

2) EFFICIENCY RATIOS:

A) Accounts Receivable Turnover

Since the company has a high accounts receivable turnover ratio, it simply means that the

company has efficient credit policy which ensures faster collection of receivables.

B) Fixed Asset Turnover

The graph shows that the company uses its fixed assets efficiently to generate revenues.

0

1

2

3

4

5

6

7

8

9

10

2009 2010 2011 2012 2013

ACCOUNTS RECEIVABLE TURNOVER

ACCOUNTS RECEIVABLE TURNOVER

4.35

4.4

4.45

4.5

4.55

4.6

4.65

4.7

4.75

4.8

4.85

2009 2010 2011 2012 2013

FIXED ASSET TURNOVER

FIXED ASSET TURNOVER

C) Total Asset Turnover

Overall, the company has a stable total asset turnover ratio which means that, it is using all

the types of assets efficiently to promote sales.

3) LEVERAGE RATIOS:

A) Debt To Equity

The graph tells that the company has less Debt-equity ratio in the year 2013, which means

that the company uses less of leverage & holds high equity position.

0

0.5

1

1.5

2

2.5

3

3.5

2009 2010 2011 2012 2013

TOTAL ASSET TURNOVER

TOTAL ASSET TURNOVER

0

0.05

0.1

0.15

0.2

0.25

2009 2010 2011 2012 2013

DEBT TO EQUITY

DEBT TO EQUITY

B) Financial Leverage Index

The graph indicates that the company uses debts & other type of liabilities to finance its

assets.

4) PROFITABILITY RATIOS:

A) Operating Margin

Operating Margin says how much money a company makes for each dollar (rupee) of sales.

A high operating margin is desirable. Dabur's ratios indicate that it is decreasing in the recent

years.

0

1

2

3

4

5

6

7

8

9

10

2009 2010 2011 2012 2013

FINANCIAL LEVERAGE INDEX

FINANCIAL LEVERAGE INDEX

0.184

0.186

0.188

0.19

0.192

0.194

0.196

0.198

0.2

0.202

2009 2010 2011 2012 2013

OPERATING MARGIN

OPERATING MARGIN

B) Net Profit Margin

Net Profit Margin indicates margin of safety. It tells how much of each rupee earned by

Dabur is converted into profits. Dabur's ratios indicate that initially it was decreasing but in

2013 it has increased a little bit.

C) Return on Equity (ROE)

ROE measures how much the shareholders earned by investing in Dabur. It shows how

profitable the company is. For Dabur, it has recently increased after a decrease in the years

prior to that.

0.12

0.125

0.13

0.135

0.14

0.145

0.15

0.155

2009 2010 2011 2012 2013

NET PROFIT MARGIN

NET PROFIT MARGIN

0

1

2

3

4

5

6

2009 2010 2011 2012 2013

ROE

ROE

5) MARKET RATIOS:

A) EPS

EPS measures how many rupees of net income have been earned by each share of common

stock. It is increasing for Dabur in recent years.

B) P/E (Price to Earnings) Ratio

P/E ratio shows how much investors are willing to pay per rupee of earnings. It decreased in

2013 after an increase in the years prior to that.

0

1

2

3

4

5

6

2009 2010 2011 2012 2013

EPS

EPS

0

5

10

15

20

25

30

35

40

45

2009 2010 2011 2012 2013

P/E RATIO

P/E RATIO

C) Dividend Payout Ratio

The dividend payout ratio measures the percentage of a company's net income that is given

to shareholders in the form of dividends. In 2013 it has declined a little bit.

4) PORTER’S FIVE FORCES

0

0.1

0.2

0.3

0.4

0.5

0.6

2009 2010 2011 2012 2013

DIVIDEND PAYOUT RATIO

DIVIDEND PAYOUT RATIO

PORTER'S FIVE FORCES FOR DABUR

INDIA

Threat of New Entrants

LOW

Threat of Substitute Products

HIGH

Bargaining Power of Buyers

LOW

Bargaining Power of Suppliers

HIGH

Threat of competitors

HIGH

A) Threat of competitors

The threat of competitors is high for Dabur India Ltd. because there are a lot of

players in the industry.

Premium personal care products face competition from international brands as well.

Competition increases further if existing players enter new segments.

B) Threat of New Entrants

Since, the cost to set up a manufacturing facility is not very high in the Home Care

segment, the entry and exit barriers are low for Dabur.

But the entry barriers in terms of building a national brand is high and so is the exit

barrier.

C) Threat of Substitute Products

Substitutability is highest in Food category followed by Personal care category,

where product innovation is high.

Home-grown and traditional substitutes to Home care products are also one of the

threats. ( e.g. traditional insect repellents)

Dabur, therefore has to constantly re-invent its existing product lines in order to cope

up with the innovations of its competitors.

D) Bargaining Power of Buyers

The buyer’s bargaining power is low since they cannot influence the prices to such a

great deal because price sensitivity is high especially in the Food and Home Care

category.

E) Bargaining Power of Suppliers

The number of suppliers is low for the Home Care category e.g. Certain oils are not

available easily, which increases supplier’s bargaining power when negotiating the

price with Godrej etc. Hence, Bargaining Power of Suppliers is high.