The project Ratio Analysis: A Case Study of Dabur. Aims to interpret the financial statement so
that the strengths and weaknesses of a firm as well as its historical performance and current
financial condition can be determined.
For the purpose the data has been used, which was collected from the past financial records of
the company i.e., balance sheet and profit and loss account, for three financial years(20013-14,
2014-15, 2015-16). The data collected broadly relate to the current assets and current liabilities
of the company.
The technique used to analyze the financial condition of the company is Ratio Analysis. For this
purpose three years (2013-2014, 2014-2015 &2015-2016) ratios have been calculated of Dabur
and out of them two years (2013-2014 &2014-2015) ratios have compare with other FMCG
companies. The method of trend ratios has been adopted. The analysis process has been
undertaken in two stages:
a) Calculation of ratios
b) Their interpretation
The following ratios have been calculated:
a) Liquidity Ratios
The liquidity ratios represent excess of current assets over current liabilities. It is the ability of a
firm to satisfy its short-term obligations as they become due.
b) Leverage Ratios
The leverage ratios measure the ratios of long-term or total debt to shareholders equity.
c)
Profitability Ratios
The profitability ratios use to measures operating efficiency of a firm and its ability to ensure
adequate returns to its shareholders depends ultimately on the profits earned by it.
d)
Activity Ratios
The activity ratios measure the speed with which various accounts/assets are converted into sales
or cash.
After making all the calculations each ratio has been interpreted and this can be summarized as
follows:
The net working capital of the company shows an increasing trend. The analysis also reveals a
rising inventory turnover ratio and debtors turnover ratio and an improved debt collection
period. At the same time the company also has a high current asset and quick ratio, which
represents high liquidity.
The project also gives information about the practices presently being followed in Dabur to
manage their ratios. After making a thorough analysis of the various aspects related to the ratios
the company conclusion has been drawn. The company has sufficient funds to meet its shortterm obligations as they become due.
Finally on the basis of the analysis and the conclusions drawn a SWOT analysis has been done
and recommendations given.
Therefore, a financial analysis of the working capital of Dabur reveals that the company has been
able to manage its working capital efficiently thereby strengthening its short-term financial
position.
CHAPTER -1
INTRODUCTION
Fast Moving Consumer Goods is the booming industry in India. After all, it is an industry which
touches every aspect of human life, from looks to hygiene to palate. Though the market scenario
was very different before the liberalization of Indian economy the product quality as well as the
competitiveness has immensely increased. After the liberalization the players like Pepsi and
Coke has changed the rules of the game in the industry. One reason for the lagging behind of this
industry was the spending power of people, the other reasons were like lack of innovation
because of the closed market having high import duties, and the minuscule level of competition
as their were not many players in the market. Earlier it was the sales era but at present customer
has the final call.
Categorization of FMCG Products
Category
Products
Household Care
Food and
Beverages
Personal Care
Industry Segments
The main segments of the FMCG sector are:
Personal Care: oral care; hair care; skin care; personal wash (soaps); cosmetics and
toiletries; deodorants; perfumes; paper products (tissues, diapers, sanitary); shoe care.
Major companies active in this segment include Hindustan Lever; Godrej Soaps, ColgatePalmolive, Marico, Dabur and Procter & Gamble.
Household Care: fabric wash (laundry soaps and synthetic detergents); household
cleaners (dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides
and mosquito repellants, metal polish and furniture polish).
Major companies active in this segment include Hindustan Lever, Nirma and Reckitt &
Colman.
Branded and Packaged Food and Beverages: health beverages; soft drinks;
staples/cereals; bakery products (biscuits, bread, cakes); snack food; chocolates; ice
cream; tea; coffee; processed fruits, vegetables and meat; dairy products; bottled water;
branded flour; branded rice; branded sugar; juices etc.
Major companies active in this segment include Hindustan Lever, Nestle, Cadbury and
Dabur.
Spirits and Tobacco Major companies active in this segment include ITC, Godfrey
Philips, UB and Shaw Wallace.
An exact product-wise sales break up for each of the items is difficult.
Sept'14
Sept'15
Change
Net Sales
58,822
67,813
15.3%
Expenditure
45,316
52,632
16.1%
13,506
15,181
12.4%
23.0%
22.4%
Other Income
1,940
1,931
-0.5%
Interest
782
297
-62.0%
Depreciation
1,370
1,545
12.8%
13,294
15,270
14.9%
Tax
3,714
4,066
9.5%
Extraordinary items
427
(62)
10,007
11,142
11.3%
India is the worlds largest producer of milk still only 15% of the milk is processed, a
huge potential of growth lies in this segment of the industry.
Currently the size of semi processed and ready to eat packaged food market is $70 billion
which is the 15% of its potential, this part of FMCG also have an immense growth
potential.
By 2010, 200 million people are expected to shift to packaged and processed food
There is only 45% penetration in the health care market and 55% of the market is still to
be covered in this market.
If we look at the distribution of Indian population around 47% of Indian population is
below 20 years of age by 2025 which is expected to grow to 55% which means the
consumer base of FMCG products like healthcare, hygiene, beverages etc will increase
The rural market in India was not well penetrated by the FMCG industry till now but with
the projects like HLL Shakti and ITC E-Chaupal the penetration has increased and this
will lead to faster growth of this industry
The emergence of the concept of ECR (Efficient Consumer Response) will the FMCG
industry operate more efficiently by filling up the demand supply gap which coming up a
major problem in this industry.
Environmental Factors affecting the Industry
There are various factors at Micro as well Macro level which influences the FMCG industry. The
factors at micro level can be costs incurred in production, efficiency of the various departments
in the companies of FMCG industry. At macro level following are the factors influencing FMCG
industry:
Economic Growth as it will lead to increase in the income of the people and so the
expenditure on FMCG products
Changes in demographic profile of people
Government policies like :
o Tax
o FDI policies
o Export Duties
Entry of new players in the market as it rises the competition and leads to various
changes in the way business is done
The competition faced from unorganized sector as they get away without paying taxes
and can have the competency at the price level
Role of Dabur in this Industry
Dabur Foods Limited (DFL) posted a record 53% sales growth for the financial year
2015-16 . This outstanding performance has resulted in DFL closing the year at Rs.190 crores
(balance sheet figure) and this strong growth is reflected in the incremental turnover of Rs. 12.1
crores over budget and Rs. 61.5 crores over last year.
The company recorded a PAT of Rs. 12.1 crores, which is 130.2% growth over LY and as a result
PAT % to sales moved from 4.5% to 6.8%.
Company earned additional revenue to the tune of Rs. 15 crores through its export operations,
which is a 260% growth over LY and achieved the recognition of a Star Export House in 2 years.
New products launches have contributed to 20% of the turnover and contributed to 24%
of our growth.
Real and Activ Brands together have clocked a turnover of Rs. 150 crores.
Replant of Activ has resulted in value sales of Rs 3040 lakhs resulting in a stupendous growth of
99% over last year and increased contribution from 13% to 17% of SBU sales.
Dabur Foods Limited (DFL) a wholly owned subsidiary of Dabur India Limited (DIL), operates
on the naturals platform with a product portfolio consisting mainly of packaged fruit juices,
cooking pastes, sauces and items for institutional food purchases
The business registered another year of fantastic performance in 2015-16 by growing sales by
48% and growing its profit by more than two times. This is the second year in a row that the
business has grown over 48% in sales growth. The business recorded a turnover of Rs.192.53
crores registering a growth of 48% and profit after tax of Rs.12.1 crores. In line with the strategic
path laid down, the following are the key highlights of performance:
Beverage portfolio growth at 50% driven by its segmentation strategy under Real.
Strong growth from new product launches and new channels which contributed to 24%
of our total growth.
The line extensions of Home made also continued to drive the growth.
The primary growth driver of your business was its fruit beverage portfolio. The segmentation
strategy put into place by Sanjay and his team to differentiate the 3 brands has been successfully
implemented. Real, Activ and Coolers are now differentiated in terms of appeal, benefit, variants
and packaging. Real continued to grow by over 35%. The major success of the year was Real
Activ which doubled it's sales over last year. The extension to the innovative fruit and vegetable
variants has been widely accepted by the Indian consumers. Both these brand have firmly
strengthen Dabur Foods leadership in the fruit juices market coupled with the excellent retail
distribution by KG and his team.
"Coolers" - The range of drinks is based on traditional Indian formulations, which have a
cooling effect on the body - grew by 58%. It added 3 new flavors - Muskmelon, Lemon Barley
and Jamun.
The Home made brand grew by 28 per cent in 2015-16. These growth rates were possible by the
excellent performance of Coconut Milk & Tomato Pure.
Besides the retails channel, the product is extensively distributed in the food services channel.
In view of the growing size of this channel a dedicated structure headed by Jyotiroop has been
set up to service the customer. The company continued to dominate this channel by making it
available in the best hotels, restaurants, airlines and several institutions like business houses to
Indian army.
CHAPTER-2
COMPANIES PROFILE
10
Dabur India Limited established in 1884 by Dr. S. K. Burman, physician of vision and limitless
compassion Brought Ayurvedic medicines to the ailing mass of Bengal. It is one of the leading
FMCG Company in India. The company was formed by way of amalgamation in Oct.'86. Prior
to this, the company was operating under the name Dabur (S K Burman) Pvt Ltd, since 1930.
The FMCG industry in India is very unpredictable which ultimately affects the profitability of
any company in the sector.
The success of Dabur is based on dedication to nature, corporate, and process hygiene, dynamic
leadership and commitment to the partners and stakeholders. It provides differentiated products
with strong Herbal and Nature profile. Over more than 100 years it is dedicated to providing
nature based solution for a healthy and holistic lifestyle through Ayurveda.
Leading consumer goods Company in India, holding position among the large turnover
companies:
3 major strategies business units (SBU) - Family Product Division (FPD), Health Care
Products Division (HCPD), and Dabur Ayurvedic Specialties limited (DASL).
5 Subsidiary Group Companies Dabur Foods, Dabur Nepal, Dabur Oncology, Dabur
Pharma and Dabur Egypt.
Production market in over 50 countries.
Dabur became the first Ayurvedic products company to get ISO 9002 certification for its
superior quality standards.
Dabur Nepal, a subsidiary of Dabur India, has set up fully automated greenhouses in
Nepal. This helps to produce saplings of rare medicinal plants that are under threat of
extinction due to ecological degradation.
The company has various brand leaders in different market segments -- Dabur Chyawanprash, a
health tonic and Hajmola, a digestive tablet,. Two new brands, Real and Home made, launched
during 1996-97 have also carved out a niche in the market. Dabur added a new variant to its
11
Pudin Hara range. Its key pharmaceutical brand New Livfit recorded a growth of more than
100%.
To compete in the market and to retain its position, company is focusing on different strategies
and taking initiative for efficiency:
12
13
CHAPTER-3
RESEARCH METHODOLOGY
14
15
RATIO ANALYSIS
Ratio analysis is an excellent method for determining the overall financial condition of a
business. It puts the information from a financial statement into perspective, helping to spot
financial patterns that may threaten the health of a company.
Ratios are also very useful for making comparisons between our business and other businesses in
same industry. For example, comparing ratios can indicate whether a business is holding too
much inventory or collecting receivable too slowly. This comparison provides a window into
ways in which our business can improve its operations.
The Balance Sheet and the Statement of Income are essential, but they are only the starting point
for successful financial management. Apply Ratio Analysis to Financial Statements to analyze
the success, failure, and progress of our business.
Ratio Analysis enables the business owner/manager to spot trends in a business and to compare
its performance and condition with the average performance of similar businesses in the same
industry. To do this compare your ratios with the average of businesses similar to yours and
compare your own ratios for several successive years, watching especially for any unfavorable
trends that may be starting. Ratio analysis may provide the all-important early warning
indications that allow you to solve your business problems before your business is destroyed by
them.
It is also a tool possesses several important features. The data, which are provided by financial
statements, are readily available. The computation of ratios facilitates the comparison of firms
which differ in size. Ratios can be used to compare a firm's financial performance with industry
averages. In addition, ratios can be used in a form of trend analysis to identify areas where
performance has improved or deteriorated over time.
It is based upon accounting information, its effectiveness is limited by the distortions which arise
in financial statements due to such things as Historical Cost Accounting and inflation. Therefore,
Ratio Analysis should only be used as a first step in financial analysis, to obtain a quick
indication of a firm's performance and to identify areas which need to be investigated further.
16
Conditional Use of Financial Ratio Analysis: Financial ratio analysis is frequently used to
measure the performance of various sectors of a business. If properly used (its limitations
understood), it can be a very useful management aid. Following are a few reasons why ratio
analysis is being used so extensively:
a) Ratios are easy to calculate - Most ratios compare two statistics which are normally
provided in the income statement or the balance sheet. Because these data are readily
available at a more-or- less fixed cost, not much time or expense is required to
compute a ratio.
b) Ratios allow easy comparison - They allow comparison of a firms past with its
present performance, as well as comparisons between similar firms at one time.
c) Ratios are easily understood - Not all members of the management team are financial
sophisticates and ratios provide simple overview information to all types of
management personnel.
d) Ratios communicate a firms financial position- The ratios communicate a firms financial
position to interested parties outside of management - for example, financial authorities may
rely on ratios to determine a firms credit worthiness.
17
CHAPTER-4
DATA INTERPRETATION
18
Liquidity Ratios
19
Dabur
HLL
Nestle
Current
Ratio
1.27
0.90
0.67
Godrej
0.68
Cadbury
1.24
Britannia
0.89
Colgate
P&G
1.12
1.71
INTERPRETATION:
The ratio is used to assess the short term financial position of the business concern. It is an
indicator of the firms ability to meet its short-term obligations. As a conventional, rule a current
ratio of 2:1 is considered ideal.
Dabur has a current ratio is 1.27 which is an average ratio that the company current assets are
more then current liabilities in year 2013-14 increase in current assets and decrease in current
liabilities. The company has a sufficient fund to pay its liabilities on time and meet other day to
day expenses.
20
Dabur
0.79
HLL
Nestle
Godrej
0.82
0.65
0.66
Cadbur
y
0.91
Britannia
0.86
Colgate
1.29
P&G
1.52
INTERPRETATION:
The ratio is used to assess the short term financial position of the business concern. It is
an indicator of the firms ability to meet its short-term obligations. As a conventional, rule a
current ratio of 2:1 is considered ideal.
Dabur has a current ratio is 0.79 which is far away from the ideal ratio that the company current
assets are very less then current liabilities in year 2014-15 decrease in current assets and
increase in current liabilities.The company dont have a sufficient funds to pay its liabilities on
time and meet other day to day expenses.
21
22
Leverage Ratios
23
Dabur
HLL
Nestle
Debt Equity
Ratio
0.22
0.75
0.02
Godrej
0.48
Cadbury
0.03
Britannia
Colgate
P&G
0.24
0.02
0.20
INTERPRETATION:
The debt-equity ratio is an important tool of finance analysis to appraise the financial structure of
the firm. It has important from the viewpoint of creditors, owner and the firm itself. The ratio
reflects the relative contribution of creditors and owners of the business in its financing.
A high ratio shows a large share of financing by the creditors of the firm; a low ratio implies a
small claim of creditors. The debt-equity ratio indicates the margin of safety to the creditors.
The shareholders of the firm would, however stand to gain in two ways: (i) with a limited stake,
they would be able to retain control of the firm and (ii) the return to them would be magnified.
With a larger proportion of debt in the financial structure, the earnings available to the owner
would increase more than proportionately with the increase in the operating profits of the firm.
24
HLL
Nestle
Godrej
0.35
0.03
0.33
Cadbur
y
0.02
Britanni
a
0.05
Colgate
P&G
0.03
0.19
INTERPRETATION:
The debt-equity ratio is an important tool of finance analysis to appraise the financial structure of
the firm. It has important from the viewpoint of creditors, owner and the firm itself. The ratio
reflects the relative contribution of creditors and owners of the business in its financing.
A high ratio shows a large share of financing by the creditors of the firm; a low ratio implies a
small claim of creditors. The debt-equity ratio indicates the margin of safety to the creditors.
The shareholders of the firm would, however stand to gain in two ways: (i) with a limited stake,
they would be able to retain control of the firm and (ii) the return to them would be magnified.
With a larger proportion of debt in the financial structure, the earnings available to the owner
would increase more than proportionately with the increase in the operating profits of the firm.
25
STATEMENT SHOWING LONG TERM DEBT EQUITY RATIO AS ON 31ST MARCH 2014
Companie
s
LLong Term
Debt Equity
Ratio
Dabur
HLL
Nestle
Godrej
0.17
0.63
0.00
0.35
Cadbur
y
0.01
Britanni
a
0.06
Colgate
P&G
0.01
0.85
INTERPRETATION:
The long term debt-equity ratio is also an important tool of finance analysis to appraise the
financial structure of the firm. Its again important from the viewpoint of creditors, owner and
the firm itself. The ratio reflects the relative contribution of creditors and owners of the business
in its financing, but this time it has done for long term financing.
A high ratio shows a large share of financing by the creditors of the firm; a low ratio implies a
small claim of creditors. The long term debt equity ratio provides large number of debts for the
company. It increases the operating profit of a company.
26
STATEMENT SHOWING LONG TERM DEBT EQUITY RATIO AS ON 31ST MARCH 2015
Companies Dabur
HLL
Nestle
Godrej
Long Term
Debt Equity
Ratio
0.30
0.00
0.17
0.11
Cadbur
y
0.01
Britanni
a
_
Colgate
P&G
0.02
0.16
INTERPRETATION:
The long term debt-equity ratio is also an important tool of finance analysis to appraise the
financial structure of the firm. Its again important from the viewpoint of creditors, owner and
the firm itself. The ratio reflects the relative contribution of creditors and owners of the business
in its financing, but this time it has done for long term financing.
A high ratio shows a large share of financing by the creditors of the firm; a low ratio implies a
small claim of creditors. The long term debt equity ratio provides large number of debts for the
company. It increases the operating profit of a company.
27
28
Profitability Ratios
29
HLL
Nestle
Godrej
14.94
18.36
15.67
Cadbur
y
11.01
Britanni
a
12.24
Colgate
P&G
24.54
29.73
INTERPRETATION:
Gross profit is the result of the relation between prices, sales volume and cost. A change in the
gross margin can be brought about by changes in any of these factors. The gross margin
represents the limit beyond which fall in sales prices are outside the tolerance limit. Further, the
gross profit ratio can also be used to determining the extent of loss caused by theft, spoilage,
damage, and so on in the case of those firms which follow the policy of fixed gross profit ratio in
pricing their products.
A very high and rising gross margin may be the result of unsatisfactory basis of evaluation of
stock, that is, overvalued of closing stock and undervalued of opening stock. But a low gross
margin is also a danger signal, warranting a careful, detailed analysis of the factors responsible
for it.
30
Dabur
HLL
Nestle
Gross Profit
Margin
14.35
14.90
19.89
Godrej Cadbur
y
17.30
12.55
Britanni
a
12.57
Colgat
e
25.82
P&G
26.21
INTERPRETATION:
Gross profit is the result of the relation between prices, sales volume and cost. A change in the
gross margin can be brought about by changes in any of these factors. The gross margin
represents the limit beyond which fall in sales prices are outside the tolerance limit. Further, the
gross profit ratio can also be used to determining the extent of loss caused by theft, spoilage,
damage, and so on in the case of those firms which follow the policy of fixed gross profit ratio in
pricing their products.
A very high and rising gross margin may be the result of unsatisfactory basis of evaluation of
stock, that is, overvalued of closing stock and undervalued of opening stock. But a low gross
margin is also a danger signal, warranting a careful, detailed analysis of the factors responsible
for it.
31
Dabur
HLL
15.02
Nestle
16.32
Godrej Cadbur
y
14.43
7.45
Britanni
a
11.13
Colgat
e
14.02
P&G
13.66
Profit Before Interest & Tax Margin= Gross Profit Margin Depreciation
INTERPRETATION:
The profit which comes out after subtracting the depreciation from total profit is called profit
before interest & tax (PBIT). It shows the real position of a company, because interest & tax is
included in this figure which subtract later on.
32
Dabur
Profit Before
Interest &
Tax Margin
13.37
HLL
14.02
Nestle
17.75
Godrej Cadbur
y
16.05
9.33
Britanni
a
11.53
Colgat
e
15.12
P&G
13.97
Profit Before Interest & Tax Margin= Gross Profit Margin Depreciation
INTERPRETATION:
The profit which comes out after subtracting the depreciation from total profit is called profit
before interest & tax (PBIT). It shows the real position of a company, because interest & tax is
included in this figure which subtract later on.
33
34
Activity Ratios
35
Dabur
Debtors
14.46
Turnover Ratio
HLL
22.65
Nestle
82.01
Godrej Cadbur
y
31.25
36.35
Britanni
a
60.93
Colgat
e
28.79
P&G
47.36
INTERPRETATION:
A company can sell its goods on credit also. It is used as a marketing tool by a number of
companies. When the company extends credits to its customers, it will increase more debtors.
Debtors turnover ratio indicates the number of time debtors turnover each year. Generally the
higher the value of debtors turnover, the more efficient is the management of credit.
36
Dabur
Debtors
27.78
Turnover Ratio
HLL
23.64
Nestle
93.28
Godrej Cadbur
y
65.49
57.06
Britanni
a
52.20
Colgat
e
55.20
P&G
53.72
INTERPRETATION:
A company can sell its goods on credit also. It is used as a marketing tool by a number of
companies. When the company extends credits to its customers, it will increase more debtors.
Debtors turnover ratio indicates the number of time debtors turnover each year. Generally the
higher the value of debtors turnover, the more efficient is the management of credit.
37
Dabur
Fixed Assets
4.06
Turnover Ratio
HLL
4.88
Nestle
2.92
Godrej Cadbur
y
12.68
2.61
Britanni
a
5.34
Colgat
e
8.10
P&G
7.04
INTERPRETATION:
The company may wish to know its efficiency of utilizing fixed assets. This ratio indicates the
extent to which the investment in fixed assets contributes towards sales. If compared with the
previous period, it indicates whether the investment in fixed assets has been judicious or not.
38
Dabur
Fixed Assets
4.33
Turnover Ratio
HLL
5.10
Nestle
2.96
Godrej Cadbur
y
9.81
2.61
Britanni
a
6.17
Colgat
e
7.84
P&G
7.66
INTERPRETATION:
The company may wish to know its efficiency of utilizing fixed assets. This ratio
indicates the extent to which the investment in fixed assets contributes towards sales. If
compared with the previous period, it indicates whether the investment in fixed assets has been
judicious or not.
39
40
CHAPTER-5
FINDINGS AND CONCLUSIONS
41
On the basis of data and available information. Certain findings arrived that relates the
Ratio Analysis of the company.
It is observe that the Dabur India Ltd. has good profit margin and companys
liquidity is also good. It has important from the viewpoint of creditors and
shareholders that company have sufficient fund to pay them.
In the comparison of profitability ratio in Dabur India Ltd. the gross profit ratio
14.35% and net profit ratio 11.67% both are increases in the year 2015-2016 in
compare to last two year.
The current ratio 1.47% is also increase in the year 2015-2016 in compare to
last two year. It shows that current assets increase over current liabilities.
The debt equity ratio 0.45% is also increase in the year 2015-2016 in compare
to last two year. It shows that a large share of financing by creditors in the
company, which is positive sign for the company.
The return on capital employed 49.47% is having little bit of decrease in 20152016 in compare to last year. But then also its better then some other FMCG
companies. It shows that Dabur India Ltd. have sufficient sources of the long
term funds.
The fixed assets turnover ratio 6.88% has increases in 2015-2016 compare to
last two years. It shows the efficiency of Dabur India Ltd. in utilizing the fixed
assets of the company, comparing with the previous period. It also shows that
company has increases its investment in fixed assets.
42
2013-2014
1.27
2014-2015
0.79
2015-2016
1.47
Current Ratio
1.6
1.4
1.2
Current Ratio
1
0.8
0.6
0.4
0.2
0
2013-2014
2014-2015
2015-2016
INTERPRETATION:
Current ratio comes under the liquidity ratios which means the
ability of the
company to meet its current obligations. This year(20052006) current ratio has increased in compare to the last two years which
means that company have sufficient money for its current obligation. It is
1.47% this year.
43
2013-2014
0.22
2014-2015
0.15
2015-2016
0.45
2013-2014
2014-2015
2015-2016
INTERPRETATION:
Debt equity ratio comes under the leverage ratios and shows the relationship between
creditors and owners of the company. This year (2005-2006) ratio goes very high, which is
0.45% in compare to the last two years. This shows a large share of financing by the creditors of
the firm. This ratio also indicates the margin of safety to the creditors.
44
2013-2014
0.17
2014-2015
0.11
2015-2016
0.31
Equity Ratio
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2013-2014
2014-2015
2015-2016
INTERPRETATION:
Long term debt equity ratio also comes under the leverage ratios and shows the
relationship between creditors and owners of the company. This year (2005-2006) goes very
high, which is 0.31% in compare to the last two years. This shows a large share of financing by
the creditors of the firm. This ratio also indicates the margin of safety to the creditors.
45
2013-2014
11.25
2014-2015
14.35
2015-2016
15.64
10
8
6
4
2
0
2013-2014
2014-2015
2015-2016
INTERPRETATION:
The gross profit ratio comes under the profitability ratios and this year (2005-2006) it
has increase in compare to last two years. It is 15.64% this year. It represents the limit beyond
which fall in sales prices are outside the tolerance limits.
46
2013-2014
8.82
2014-2015
11.67
2015-2016
13.80
8
6
4
2
0
2013-2014
2014-2015
2015-2016
INTERPRETATION:
The net profit ratio also comes under the profitability ratios and this year (2005-2006) it
has increase in compare to last two years. It is 13.80% this year . This high net profit margin
would ensure adequate return to the owner as well as enable a firm to withstand adverse
economic condition when selling price is declining.
47
2013-2014
29.50
2014-2015
49.70
2015-2016
49.47
30
20
10
0
2013-2014
2014-2015
2015-2016
INTERPRETATION:
The return on capital employed also comes under the profitability ratios and this year
(2005-2006) there is little bit of decrease in compare to last years. It is 49.47% this year . It refers
to the long term funds supplied by the lenders and owner of the firm. It is equal to non-current
liabilities plus owners equity. So it shows that Dabur have sufficient sources of the long term
funds.
48
2013-2014
14.46
2014-2015
27.78
2015-2016
50.83
30
20
10
0
2013-2014
2014-2015
2015-2016
INTERPRETATION:
Debtors turnover ratio comes under the activity ratios and this year (2005-2006) it has increases
in compare to last two years. It is 50.83% this year . The debtors turnover ratio take place when
company sell its goods on credit also. It is used as a marketing tool by a number of companies.
This high Debtors turnover ratio indicates the number of time debtors turnover of last year in
Dabur India Ltd. So it shows that Dabur India Ltd is very efficient in its management of credit.
49
2013-2014
4.06
2014-2015
4.33
2015-2016
6.88
4
3
2
1
0
2013-2014
2014-2015
2015-2016
INTERPRETATION:
Fixed assets turnover ratio comes under the activity ratios and this year (2005-2006) it
has increases in compare to last two years. It is 6.88% this year. This ratio shows the efficiency
of utilizing fixed assets of the company. Comparing with the previous period, it indicates that the
investment in fixed assets has been made by the company, Dabur India Limited.
50
CHAPTER-6
RECOMMENDATIONS
AND
SUGGESTIONS
51
Through the ratio analysis of seven admired companies in the same sector. The various positive
and negative results came out, on the basis of these results I would like to recommend that
The company should try to increase the duration of the average collection period
to compete with its competitors, by offering the customer high cost in credit
sales.
The company should try to maintain its net worth for having satisfactory fund for
equity share holders.
The company should give more emphasis to sufficient utilization of the resources
and funds.
The company should improve the return on capital employed, as a source of long
term fund.
The company should reduce its variable cost to increase gross profit margin
which is very low relatively other FMCG companies.
52
SWOT ANALYSIS
STRENGTHS
Maintain its quality (achieved ISO 9000 certificate and other quality related awards)
WEAKNESSES
OPPORTUNITIES
THREATS
Well-established Competitors
53
LIMITATIONS
Although it has been my endeavor to take all necessary precautions to ensure that the
information gathered is authentic and maximum facts are presented but I faced certain
constraints while doing so. The constraints and limitations faced are as mentioned below:
1) Time: The nature of the report required detailed and meticulous information gathering. In
this sense time was a limiting factor and a major constraint to accomplish the given task.
Also sometimes the information was not available on time. This caused a lot of pilferage
of time unnecessary of duplication of effort.
2) Human error: The feedback provided by the company executives, consumers and
others approached has been assumed to be correct. But there might have been wrong and
biased facts given. The opinion of few cannot be generalized in any manner.
3) Non cooperation: While by and large the people approached were helpful some people
were non-cooperative. Also a lot of information was withheld due to its sensitive nature.
4) Calculation error: The report required calculation of figures and at last have to analysis
them also, so mistake can be arises during calculations.
5) Difficulty in comparison: One serious limitation of ratio analysis arises out of the
difficulty associated with their comparability. Such comparisons are vitiated by different
procedures adopted by various companies. The difference may relate to:
Difference in the basis of inventory valuation (eg. Last in first out, first in first
out and average cost)
Different depreciation methods (eg. Straight line v/s written down basis)
Estimated working life of assets, particularly of plant and assets.
Treatment of extraordinary items of income and expenditure, and so on.
6) Conceptual Diversity: The other limitation of ratio analysis is that there is different of
opinion regarding the various concepts used to compute the ratios. There is always room
for diversity of opinion as to what constitutes shareholders equity, debt, assets, profit and
so on. Different companies may be use these terms in different senses or the same
company may use them to mean different things at different times.
54
ANNEXURES
55
56
SCHEDULE
SOURCES OF FUNDS:
SHAREHOLDERS FUNDS
A) SHARE CAPITAL
B) RESERVES AND SURPLUS
LOAN FUNDS:
A) SECURED LOANS
B) UNSECURED LOANS
2,862.49
24,003.32
26,865.81
1,909.37
2,071.91
3,981.28
796.95
TOTAL
APPLICATION OF FUNDS:
31,644.04
FIXED ASSETS
A) GROSS BLOCK
B) LESS: DEPRECIATION
C) NET BLOCK
27,450.18
-11,955.85
15,494.33
17,122.67
INVESTMENTS
57.01
10,951.93
4,207.22
1,188.72
5,584.34
21,932.21
16,452.07
7,169.81
23,621.88
(1,689.67)
659.70
31,644.04
TOTAL
SCHEDULE
SOURCES OF FUNDS:
SHAREHOLDERS FUNDS
C) SHARE CAPITAL
D) RESERVES AND SURPLUS
LOAN FUNDS:
C) SECURED LOANS
D) UNSECURED LOANS
2,864.20
30,943.15
33,807.35
1570.38
3,292.60
4,862.98
1,277.51
TOTAL
APPLICATION OF FUNDS:
39,947.84
FIXED ASSETS
D) GROSS BLOCK
E) LESS: DEPRECIATION
F) NET BLOCK
32,672.44
-13,511.83
19,160.61
27, 094.25
INVESTMENTS
131.75
12,802.57
4,928.27
1,065.38
6,400.96
25,197.18
23,838.05
8,384.94
32,222.99
(7,025.81)
581.04
TOTAL
39,947.84
59
SCHEDULE
SOURCES OF FUNDS:
SHAREHOLDERS FUNDS
E) SHARE CAPITAL
F) RESERVES AND SURPLUS
LOAN FUNDS:
E) SECURED LOANS
F) UNSECURED LOANS
5,733.03
39,053.84
44,786.87
1,923.23
134.29
2,057.52
1,671.50
TOTAL
APPLICATION OF FUNDS:
48515.89
FIXED ASSETS
G) GROSS BLOCK
H) LESS: DEPRECIATION
I) NET BLOCK
34,129.37
-14,245.69
INVESTMENTS
19,883.37
27,
507.77
131.74
11,560,90
2,694,25
3,804,41
10,376.66
28,436.22
TOTAL
19,342.06
11,388.94
60
30,731.00
48,515.89
(2,294.78)
3,287.48
BIBLIOGRAPHY
ZIPSIP.COM
Google.COM
Investopedia.COM
Moneycontrol.COM
DABUR.COM
SBIMF.com
Book on Portfolio Management by ICFAI Press
Business world
investmart.com
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