Ruff Draft1

8/2/2019 Ruff Draft1

1/70

CH: 1

Company profile

1) Name of the Company

Dabur India limited

2)Regd. Address of the Company

8/3,Asaf ali road,New Delhi-110002,Tel: 011-23253488.

3)Brief introduction of the activities of the business

Dabur India Limited is India's leading FMCG company with interestsin health care, personal care and foods. Dabur has a history of more than100 years and the company has carved a niche for it self in the field of

Ayurvedic medicines. The products of Dabur are marketed in more than50 countries worldwide. The company has 2 major strategic businessunits (SBU) - Consumer Care Division (CCD) & Consumer Health Division

(CHD), and 3 Subsidiary Group companies - Dabur Foods, Dabur Nepaland Dabur International. Dabur International has 3 step down subsidiaries- Asian Consumer Care in Bangladesh, African Consumer Care in Nigeria

The origin of Dabur can be traced back to 1884 when Dr. S.K. Burmanstarted a health care products manufacturing facility in a small Calcuttapharmacy. In 1896, as a result of growing popularity of Dabur products,Dr. Burman set up a manufacturing plant for mass production offormulations. In early 1900s, Dabur entered the specialized area of naturebased Ayurvedic medicines. In 1919, Dabur established researchlaboratories to develop scientific processes and quality checks. In 1936,Dabur became a full-fledged company with the name Dabur India (Dr.S.K. Burman) Pvt Ltd. Dabur shifted its operations to Delhi in 1972. Daburbecame a Public Limited Company in 1986 and Dabur India Limited cameinto existence after reverse merger with Vidogum Limited.

1

1


2/70

In 1992, Dabur entered into a joint venture with Agrolimen of Spain tomanufacture and market confectionary items in India. In 1994, Daburraised its first IPO. In 1998, day to day running of the company washanded over to professionals. In 2000, Dabur achieved a turnover of Rs1000 crores. In 2005, Dabur acquired Balsara. Dabur crossed $ 2 billionmarket cap in 2006.Some of the well-known brands of Dabur are: AmlaChyawanprash, Hajmola, Lal Dantmanjan, Nature Care, Pudin Hara,Babool Toothpaste, Hingoli, Dabur Honey, Lemoneez, Meswak, Odonil,Real, RealActiv and Vatika.

4)Status in the Market

Dabur has continued to maintain its leadership position in thefast moving consumer goods market [FMCG] in India. During the last 5

years, company has recorded compound annual growth at the rate of 18%in net Revenues and at the rate of 33% in PAT[Profit after tax].Dabur is theleading consumer goods company in India with a turnover of Rs 2233.72crore for the year 2007.In the market of FMCG products relating to healthcare and personal care Dabur is leader in the true sense. We canunderstand that with following data.

*Dabur chyawanprash is the largest selling ayurvedic medicine withmarket share of over 65%*Dabur is also a leader in herbal digestives with market share of 90%*Hajmola tablets alone share the 75% of the total digestive tablets*Dabur Lal tail tops the baby oil market with a market share of 35%.

5) Special achievement.

1)In the year 07-08

Dabur has been ranked among Indias most trusted brands of

2007 by Economic Times-Brand EquityDabur moves Up 20 places In Indias 100 Most Valuable

Brands listed and prepared by 4Ps

.

2

2


3/70

2) In the year 06-07

Dabur was on the 3rd rank in INDIAS MOST RESPECTED FMCGCOMPANIES prepared by the Magazine Business World.

Dabur Real won the award of Most Trusted Brand given bya very popular Magazine Readers Digest

3) In the year 05-06

Dabur won the ICSI National Award for Excellence in CorporateGovernance.

Dabur India was ranked 53rd most valuable Indian company byBusiness Today

Dabur India was amongst the top 20 best under a billion companiesRecognized by FORBES.

6) Financial Highlights

Year 05-06 06-07 07-08Profit 18857.17 25207.63 31677.21

Sales 134278.81 174108.78 208339.6EPS 3.29 2.92 3.67

7) Meaning of analysis and objective of study

Meaning of Analysis

Analysis means a detailed examination of elements or structure of

something .Here the subject is Financial and use of Finance of thecompany .Examination of each and every financial aspect of the firm isnecessary in order to know the profitability of the firm. There by such type ofanalysis is necessary.

3

3


4/70

Objective of study.

As a part of course Curriculum, the second year B.B.A students arerequired to prepare this report. This report is to relate the managementstudies taught in the classroom to their practical application. In this projecta deep study of company is made in order to know the financial position ofthe company. It is very helpful for the students as they have to study theannual report on their own and prepare various financial statements likecash flow statement and common- size statement.

4

4


5/70

CH:2

Result of operations

2.1 Profit of 3 years

2.2 Importance of cash profit

The cash profit is important for the organization in the following ways

1) Efficient cash management

Cash resources can be efficiently managed, if the finance

manager has a clear understanding about the cash receipts and cashpayment. It is possible to run business with minimum working capital, ifcash payments are planned at a time when there is enough cash inflow.

and excess cash can be invested. profitably.

2) Useful for Internal Financial Management

Profit/Year 07-08 07-06 06-05G.P 84993.26 80050.52 63191.26N.P 31677.21 25207.63 18857.17EBIT 37065.94 28620.84 21740.6EBT 36517.59 28422.3 21435.53EAT 34315 26709.49 20028.5

5

5


6/70

If the management has a clear idea about the timings when therewill be enough cash on hand, it can plan out payment of dividend,repayment of long term loans, purchase of machines or equipments. Thus

can avoid the possibility of borrowing funds at high rate of interest.

3) Information about the Cash Receipts andPayments

Cash profit can give information about the trend of cash receiptsand payments. The management can use such information in meeting

any future liabilities and grabbing any profitable opportunity.

4) Useful for Control

Cash profit helps in comparing the figures of current profit with thefigures of last year in order to find out the differences. so that the

management can control is efficiently.

6

6


7/70

CASH FLOW STATEMENT FOR THEYEAR 07-08

B.CASH FLOW FROM INVESTING ACTIVITIES

PURCHASE OF FIXED ASSETS

SALE OF FIXED ASSETS

PURCHASE OF INVESTMENT INCLUDING INVESTMENT IN

SUBSIDIARIESSALE OF INVESTMENT

DIVIDEND RECEIVED

CASH USED(-)(+)GENERATED FOR INVESTING

ACTIVITIES(B)

C.CASH FLOW FROM FINANCING ACTIVITIES

PROCEEDS FROM SHARE CAPITAL AND PREMIUMREPAYMENT OF LONG TERM SECURED LIABLITIES

REPAYMENT FROM SHORT TERM LOANSREPAYMENT FROM OTHER UNSECURED LOANS

PAYMENTS OF OTHER ADVANCES OF THE NATURE OFLOANS

PAYMENT OF DIVIDEND

CASH USED (-)(+)(GENERATED) IN FINANCING

ACTIVITY

CASH EQUIVALENTS (A+B+C)CASH AND CASH EQUIVALENTS OPENING BALANCE

CASH AND CASH EQUIVALENTS CLOSING BALANCE

7

7

PARTICULARS

A.CASH INFLOW FROM OPERATING ACTIVITIES

NET PROFIT BEFORE TAX AND EXTRAORDINARY

ITEMS

ADD:

DEPRICIATIONFIXED ASSSETS IMPAIRMENT LOSS

MISCELLENOUS EXP.WRITTEN OFF

MISCELLENOUS EXP.WRITTEN OFF(INC DIR..REM)INTEREST

LESS

DIVIDEND RECEIVED

PROFIT ON SALE OF INVESTMENT

PROFIT ON SALE OF ASSETS

OPERATING PROFIT BEFORE WORKING CAPITAL

CHANGESWORKING CAPITAL CHANGES

INCREASE IN INVENTORIESINCREASE IN DEBTORS

DECREASE IN TRADE PAYABLES

INCREASE IN WORKING CAPITAL

CASH GENERATED FROM OPERATING ACTIVITIES

INTEREST PAIDTAX PAID

CORPORATE TAX ON DIVIDEND

CASH USED (-)(+)GENERATED FOR OPERATING

ACTIVITIES (A)

AMOUNT

36517.59

2575.26-

566.79

328.39854.50

40842.53

981.92

47.55

1029.47

1405.371989.74

(1680.73)

870.124798.27

1101.28

AMOUNT

39813.06

1714.38

38098.68

6769.67

31329.01


8/70

]

(4707.42)250

(297539.49)

284019.5

-

11.39

(1308.47)

(1282.75)

(3519.37)816.90

(6647.47)

1422.46

5404.00

6826.46

17976.78

11929.77

8

8


9/70

Meaning of cash flow

A statement showing Inflow of cash and Outflow of cash duringthe last year and as a result of balance of cash at the end of the year, is

known as Cash flow statement.

Interpretation of cash-flow statement

1) Here we can see from the cash flow that the highest amount whichhave been earned is from operating activity which is 31329.01.and cashflow from both the other activities is less as compare to operating inflow.

2) In operating activities, depreciation and profit on sale of investment

shares the highest part. Their amount is respectively 2575.26 and981.92rs

3)while looking into the investing activity, major potion is shared byinvestments mostly in subsidiaries and fixed assets and other items sharevery short portion the total cash inflow of investing activity

4) and finally about financing activity, major portion of inflow is share by

repayment of loans and liabilities such as repayment of long term loansand unsecured loans. Other portion is share by payment of dividend.

There by to conclude we can say that from the cash flowstatement that all the cash inflows and outflows are in proper manner.

]

9

9


10/70

CH:3 Ratio Analysis

3.1 meaning of ratio

The relationship between two related items of financial statement isknown as ratios

3.1(a) importance ratios

1) Profitability

Useful information about the trend of profitability is available fromprofitability ratios. The gross-profit ratio, net profit ratio, and ratio of returnon investment give a good idea about the profitability of the business. Onthe basis of these ratios, investors get an idea about the overall efficiencyof business, the management gets an idea about the efficiency ofmanagers and blank as well as other creditors draw useful conclusions

about repaying capacity of the borrowers.

2) Liquidity

In fact, the use of ratios was made initially to ascertain the liquidity ofbusiness. The current ratio, liquid ratio and acid-test ratio will tellwhether the business will be able to meet its current liabilities as andwhen they mature, banks and other lenders will be able to concludefrom these ratios whether the firm will be able to pay regularly theinterest and loan installments

3) Efficiency

The turnover ratios are excellent guides to measure the efficiency ofmanagers. the stock turnover will indicate how efficiently the sale is being

10

10


11/70

made, the debtors turnover will indicate the efficiency of collectiondepartment and assets turnover shows the efficiency with which theassets are used in business. all such ratios related to sales present agood picture of the success or otherwise of the business

4) Inter-firm comparison

The absolute ratios of a firm are not of much use, useless they arecompared with similar ratios of other firms belonging to the sameindustry. this is inter-firm comparison, which shows the strength andweakness of the firm as compared to other firms and will indicatecorrective measures

5) Indicate Trend

The ratios of the last three to five years will indicate the trend in therespective fields. for example, the current ratios of a firm is lower thanthe industry average, but if the ratios of last five years show animproving trend, it is an encouraging trend. Reverse may also be true.

A particular ratio of a company for one year may compare favorablywith industry average but, if its trend shows a deteriorating position, it

is not desirable. Only ratio analysis will provide this information.

6) Useful for budgetary control

Regular budgetary reports are prepared in a business where thesystem of budgetary control is in use. if various ratios are presented inthese reports, it will give a fairly good idea about various aspects offinancial position

11

11


12/70

7)useful in decision making

Ratios guide the management in making some of the importantdecision. Suppose the liquidity ratios show an unsatisfactory position,the management may decide to get additional liquid funds. Even forcapital expenditure decisions, the ratio of return on investment willguide the management .The efficiency of various departments can be

judged on the basis of their profitability ratios and efficiency of cashdepartment can thus be determined.

12

12


13/70

Classification of ratios

Traditional functionalClassification Classification

1) Balance sheet ratios 1) liquidity ratios

2) Revenue statement ratios 2) profitability ratio3) Composite ratios 3) leverage ratios4) Activity ratios

1) Traditional ratios

These ratios are classified on the basis of the financialstatements from which the figures are taken for computing the

ratios.

a) Balance sheet ratios

When two items of balance sheet are compared and ratios arefound. The so obtained ratios are known as balance sheet ratios

b) Revenue sheet ratios

These ratios are found on the basis of items taken fromrevenue statements such as P.N.L account,

13

13


14/70

c) Composite ratios

A ratio showing relationship between one item taken from balance

sheet and anther item taken from profit and loss Account.

2) Functional ratios

These ratios are also grouped in accordance with certain test.On this basis there are four categories of ratios

3.2 profitability ratios3.2.1 Gross Profit Ratio

a)Meaning

It is the basic measure of profitability of business. It expressesrelationship between gross profit earned and net sales. in other words,

Gross profit shows the difference between sales and cost of sales..

b)Implication

A high ratio implies that cost of Production is relatively low or Thatpurchases are made at low Prices..

A low ratio implies that cost of Production is not under control or the

firm is not able to buy at reasonable prices.

14

14


15/70

c) Formula

= G.P *100SALES

d)Table of ratios for 3 years

Year 07-08 07-06 06-05G.p 84993.26 80050.52 63191.26Sales 208339.6 174108.78 134278.81G.p ratio 40.80% 45.98% 47.06%

e) Interpretation

In the year 07-08 the G.p ratio is lowest while in the year 05-06 it is

highest. We can see an increasing trend during these three years. whichimplies that the selling price has increased as compare to previous year,

without corresponding increase in cost. Or the cost of production hasgone down, but selling price has not been reduced.

15

15


16/70

3.2.2 Net profit ratio

a)Meaning

This ratio measures the relation between the net profit and salesof the firm. Or we can say that the net profit is obtained aftercharging operating expenses, interest, depreciation, and taxes tothe gross profit.

b)Implication

The high ratio implies that the Business will withstand adverse Economicconditions, when selling prices are declining, cost of production is risingand demand for the product is falling.

While the low ratio implies that The business will not be able to

Withstand the adverse economic Condition.

c) Formula

.N.P *100

SALES

d) Tables of ratios for 3 years

Year 07-08 06-07 05-06N.p 31677.21 25207.63 18857.17

16

16


17/70

Sales 208339.6 174108.78 134278.81N.p ratio 15.20% 14.48% 14.04%

e) Interpretation

In the year 07-08 N.p ratio is highest, while in the year 05-06 it islowest, we can see a decreasing trend during these three years.During these three years the ratios are reasonable which ensuresadequate return to the owners.

3.2.3 Expense Ratio

A)Meaning

The purpose of expense ratio is to ascertain relationshipbetween various expenses and sales. These ratios are very important inorder to know the profitability of the firm..

B)Implication These ratios over the years reveal the extent to which the expenseseither increase in relation to sales.

The high ratio implies that very small part of sales revenue is available tomeet the financial liabilities like interest, tax, dividend..

The low ratio implies that large part of the sales revenue is available to

meet the financial liabilities like interest, tax, and dividend.

c) Formula

Expenses *100Sales

17

17


18/70

d) Table of ratios for three years

Years 07-08 06-07 05-06Expenses 69802.43 68242.34 54076.01Sales 208339.6 174108.78 134278.81Ex. ratio 33.50% 39.20% 40.27%

e) Interpretation

In the year 07-08, Expense ratio is lowest while in the year 05-06 it ishighest. We can see an increasing trend during these three years.Which suggests that there has been continues increase in theexpenses in relation to sales during these three years. Which is not avery good sign for the company.

3.2.4 Operating ratio

a)Meaning

Operating ratio is a yardstick of operating efficiency. Operatingratio shows relationship between cost of goods sold plus operatingexpenses to sales. It includes administrative and selling and distributionexpenses. They do not include financial expenses like interest and taxand income

b) Implication

The high ratio implies that high % of the sales revenue are consumed byoperating expenses and low% are left to cover taxes and earning to theowner

18

18


19/70

The low ratio implies that low % of the sales revenue are consumed byoperating expenses and high% are left to cover taxes and earning to theowner.

c) Formula

=Cost of sales + operating expenses*100

Net sales

d) Table of ratios for three yearsYears 08-07 07-06 06-05

Cogs 123346.34 94058.26 71087.55

Operating Exp. 64319.22 63705.46 50575.83

Net sales 208339.6 174108.78 134278.81

Operating ratio 90.08% 90.61% 90.61%

e)Interpretation

In the year 07-08 operating ratio is lowest, while in the year 05-06 as well

as in the year 06-07 it is highest. We can also see an increasing trend

during three years but in the year 06-07 and 05-06, the ratios are similar.Here during these three years ratios are very high which implies thatround about 90% of the sales revenue is consumed by operatingexpenses and only 10% is left to cover taxes and earning to the owner.

.

19

19


20/70

3.2.5 Return on investment/capital employed

a)MeaningThe capital employed can be calculated by adding fixed assets to net

working assets. Or we can say that capital employed includes sharecapital, reserves and profit retained and long term loans. It is the mostwidely used ratio for measuring the profitability of any enterprise. Thisratio is useful in measuring the managerial efficiency of the operatingbusiness

b)Implication

The high ratio implies that funds entrusted have been properly used.Hence gives higher return to both the owners and the creditorsThe low ratio implies that funds entrusted have been not been properlyused. Hence gives lower return to both owners and creditors.

c) Formula

= E.B.I.T *100Capital employed


Year 07-08 06-07 06-05E.B.I.T 37065.94 28620.84 21740.6Capitalemployed

53378.44 40698.49 45542.09

Ratio 69.44% 70.32% 47.74%

20

20


21/70

e)Interpretation

In the year 05-06 ratio is lowest, while In the year 06-07, it is highest. Andwe can not project a trend in these three years because the ratios duringthese three years are neither in increasing order nor in decreasing order.Here during first two years 07-08 and 06-07, the funds are utilizedproperly there by gives higher return, but during the third year the funds

are not being utilized there by return is not higher.

3.2.6 Return on shareholders fund

a)MeaningHere, share holders fund includes total funds belonging to the share

holders. It includes equity share capital, Preference share capital,Reserves and Surplus. This ratio measures the profitability in relation to

only share holders fund. So it is known as Return on proprietors fund.

b)ImplicationThe high ratio implies that the funds provided by the owners are

properly used. Hence gives higher return only to the owners not to thecreditors. The low ratio implies that the funds provided by the ownersare not properly used. Hence gives lower return only to the owners not tothe creditors.

c) Formula

= Net profit *100share holders fund

21

21


22/70


Year 07-08 07-06 05-06N.P 31677.21 25207.63 18857.17

Share holdersfund

52832.34 40318.92 44786.87

Ratio 59.96% 62.52% 42.10%

e)Interpretation

In the year 05-06 ratio is lowest, while In the year 06-07, it is highest. Andwe can not project a trend in these three years because the ratios duringthese threeyears are neither in increasing order nor in decreasing order.

Here during years 07-08 and 07-06, owners are getting higher returnswhich show that their funds are properly utilized. But the case is not thesame with the third year where ratio is far lower than earlier two years.

3.2.7 Return on Equity share capital

a)Meaning

This ratio shows the profit available to only equity share holders in relationto capital invested by them. This ratio is important as it shows theprofitability of a firm from the view point of the real owners who areordinary shareholders.

b) Implication

The high ratio implies that return on capital invested by the equity shareholders is high. This is good sign from the view point of the ordinary share

holder.

The low ratio implies that return on capital invested by the equity shareholders is low. This is not a good sign from the view point of the ordinaryshare holder.

c) Formula

22

22


23/70

=Net profit after tax-Preference dividend*100Equity share capital


Years 07-08 06-07 05-06N.P 31677.21 25207.63 18857.17Preferenceshare div

0 0 0

Equity capital 8640.23 8628.84 5733.03ratio 3.67% 2.92% 3.29%

e)InterpretationIn the year 07-08 ratio is highest, while in the year 05-06 it is lowest. And

we can not project a trend in these three years because the ratios during.these three years are neither in increasing order nor in decreasing order.Here the return is comparatively very low for the equity share holders .

3.2.8 Return on Equity share holders fund

a)MeaningThe equity share holders funds include not only paid up equity sharecapital but also all reserves and net profit available to equity

shareholders. This ratio shows profit available to only equity shareholdersin relation to capital invested by them.

b)Implication The high ratio implies that return on equity share holders fundis high.

23

23


24/70

The low ratio implies that return on equity share holders fund islow

c) Formula

=Net profit after tax- Preference Dividend*100

Equity share holders fund


Year 07-08 06-07 05-06N.P 31677.21 25207.63 18857.17Pref.div 0 0 0Equity shareholders fund

52832.34 40318.92 44786.87

Ratio 59.96% 62.52% 42.10%

e)Interpretation

In the year 05-06 ratio is lowest, while In the year 06-07, it is highest.

And we can not project a trend in these three years because the ratiosduring these three years are neither in increasing order nor in decreasingorder. Here there is only equity share capital. But there is not preferenceshare capital there by the return on equity share holders fund will remainsame as the return on share holders fund.

3.2.9 Earning per share

a)Meaning

This ratio measures the profit available to equity shareholders on per

share basis. It is not the actual amount paid to shareholders as dividendbut is the maximum that can be paid to them.

b)Implication

24

24


25/70

The high ratio implies that the profit earned by equity shareholderson per share basis is high. This is a good sign for the equity shareholders. The low ratio implies that the profit earned by equity shareholderson per share basis is low. This is not a very good sign as far as the equityshare holders are concern.

c) Formula

= Profit after tax- preference dividendNo. of equity shares


Year 07-08 06-07 06-05N.P 31677.21 25207.63 18857.17Preference div 0 0 0No.of equityshares

8640 8628 5733

Ratio 3.67Rs 2.92Rs 3.29Rs

e)Interpretation

In the year 07-08 equity share holders earns highest return per sharethat is 3.67rs while in the year o6-07 they earns the lowest return pershare that is 2.92rs..There by we can say that the maximum amountwhich can be paid to equity share holders as dividend can be 3.67 rs inthe year o7-08 and rs 2.92 in the year 06-07.

3.2.10 Dividend per share

a)Meaning

This ratio shows the actual amount received by the shareholder as adividend on every share held by his or her.

b)Implication

25

25


26/70

The high ratio implies that the shareholder receives high amount asdividend on every share held by him. This is a sign that the firm is payinggood dividend out of their earnings.

The low ratio implies that the share holder receives low amount asdividend on every share held by him. This shows that the firm is payingfewer dividends out of their earnings and retaining more as reserve

c) Formula

= Total dividend declaredNo.of.shares


Year 07-08 06-07 05-06Total div 12960.22 12212.54 10032.32No. of share 8640 8628 5733ratio 1.5rs 1.48rs 1.75rs

e)Interpretation

Here, in the year 07-06, share holders earns 1.48 Rs as dividend per

share which is lowest amongst three years and in the year 05-06 theshare holder earns 1.75Rs as dividend per share which is highestamongst three years. This shows that for the year 07-08 the total earningper share is 3.67 Rs out of which 1.5 Rs have been paid by company asdividend.

3.2.11 Price earning ratio

a)Meaning

26

26


27/70

This ratio shows the significant relationship between the market price perof the share and earning per share. This ratio is widely used by theanalysts to value firms performance as expected by investors.

b)Implication

The high ratio implies the price that is currently ruling in the market for

each rupee of earning being made by the company per share. is higherthis is better for the owners.

The low ratio implies the price that is currently ruling the market for eachrupee of earning being made by the company per share is lower. This isnot good for the owners.

c) Formula

=Market value per shareEarning per share


Year 07-08 07-06 06-05Market valueper share

102.65 91.15 95.33

EPS 3.67 2.92 3.29Ratio 28 times 31.2 times 28.98 times

e)InterpretationIn the year 07-08 ratio is lowest while in the year 07-06 it is highest. And

we can not project a trend in these three years because the ratios duringthese three years are neither in increasing order nor in decreasing order.

27

27


28/70

But the ratios during these three years are higher which a good sign is forthe owners.

3.2.12 Dividend yield ratio

a)Meaning

Dividend yield ratio is the percentage of dividend actually received to the

market value per equity share. It shows the actual return on the amountinvested by him.

b)ImplicationThe high ratio implies that the equity share holders have received high %

of dividend to the market value of the shares

The low ratio implies that the equity share holders have received low %

of dividend to the market value of the shares

c) Formula

= Dividend per shareMarket value per share


Year 07-08 07-06 06-05Div.per share 1.5 1.42 1.75Market valueper share

102.65 91.15 95.33

Ratio 0.01% 0.02% 0.02%

28

28


29/70

e)Interpretation

In the year 07-08 dividend yield ratio is 0.01%, which increases up to 0.02 inthe year o7-06 and remains constant in the year 06-05. This shows that the return

is very less.

3.2.13 Interest coverage ratio

a)Meaning This ratio indicates as to how many times the profit covers thepayment of interest on debentures and other long term loans. Hence it isalso known as times-interest- earned ratio.

b)ImplicationThe high ratio implies that companys financial position is very

strong. Because the higher the ability of the firm to pay interest, the betterit is for the firmThe low ratio implies that companys financial position is not that strong.

Because the lower the ability of the firm to pay interest, the worst it is for

the firm.

c) Formula

=Earning before depreciation, interest, and taxInterest


Years 07-08 07-06 06-05EBITD 39641.2 30818.65 23645.19Interest 548.35 198.54 305.07ratio 72 times 155 times 77 times

e)Interpretation

29

29


30/70

In the year 07-08, profit covers 72 times the interest ofdebentures and loans. This is lowest amongst three years. And in theyear 07-06 profit covers the interest of debentures and loans 155times.This is highest amongst three years. from the ratios of these three yearswe can say that firms position is strong in order to pay fixed interest ondebentures and long term loan. As the ratios are comparatively higher.

3.3 Activity /Turnover ratio

3.3.1 Overall turnover ratio

a)Meaning

It shows the relationship between net sales and capital employed

b)ImplicationThe high ratio implies that more times

The low ratio implies that net sales are lower than capital employed

c)Formula

=Net salesCapital employed


Year 07-08 07-06 06-05Net sales 208339.6 174108.78 134278.81Capitalemployed

53378.44 40698.49 45542.09

Ratio 3.9 times 4.28 times 2.95 times

e)Interpretation

30

30


31/70

In the year 07-08, this ratio is 3.9 which increases up to 4.28 in the year07-06 but in the year 06-05 it decreases down to 2.95

3.3.2 Fixed assets turnover ratio

a)MeaningTo ascertain the efficiency and profitability of business, the total

fixed assets are compared to sales. This ratio is computed by dividingsales by fixed assets.

b)Implication

If the ratio is found to be higher, It means the fixed assets arebeing used effectively to earn profits in the business.

If the ratio is found to be low, it indicates that investments in fixed

assets are more than what is necessary and must be reduced..

c) Formula

= salesFixed assets


Year 07-08 06-07 06-05Net sales 208339.6 174108.78 134278.81Fixed assets 29443.01 23904.05 19883.68Ratio 7.08 7.28 6.75

e)Interpretation

31

31


32/70

In the year 06-05, ratio is lowest which is 6.75, while in theyear 06-07, ratio is highest which is 7.28.here we can see during three ofthese years, fixed assets are more or less used efficiently and there is not

much of a difference in the efficiency during these three years.

3.3.3 Debtors ratio

a)Meaning The ratio shows the number of days taken to collect the duesof credit sales. It shows the efficiency or otherwise of collection policy ofan enterprise. This ratio is computed by dividing debtors and bills

receivable by the average daily sales. And average daily sales areobtained by dividing the total annual sales by 365.

b)Implication

The high ratio suggests that the credit and collection policy is weak andcompanys position is more unsatisfactory which finally result intounsatisfactory state of working capital and weak liquid position.

The low ratio suggests that the credit and collection policy is strict. Andcompanys position is satisfactory which result into sufficient working

capital and strong liquid position.

c) Formula

= Credit salesAvg.daily sales


Years 07-08 06-07 05-06Debtors 10046.43 6097.87 2694.25B.R 0 0 0Credit sales 208339.6 174108.78 134278.81Ratio 17 Days 13 Days 7 Days

32

32


33/70

e)Interpretation

In the year 07-08, the ratio is highest while 05-06, the ratio is lowest. and

we can see a decreasing trend during these three year. This shows thatyear by year daburs credit and collection policy is getting stricter. Thisputs them into strong position as far as the working capital and liquidityposition is concern.

3.3.4 Creditors ratio

a)Meaning

This ratio shows us the number of days within which awe makes

payments to our creditors for credit purchase.

b)Implicationhigh ratio implies that the ability of the firm to make payment to its

creditors is weak. This puts them into unsatisfactory position and effectsadversely on the goodwill of the firm.

Low ratio implies that the ability of the firm to make payment to itscreditors is strong. This puts them into strong position and may increasetheir goodwill in the market and might earn them some discount for payingearly then the time.

c) Formula

= Creditor+B/PAve.Daily purchase


33

33


34/70

Year 07-08 06-07 06-05Creditors 24963.16 19158.79 13169.08B.P 0 0 0Purchase 101391.54 76798.44 57511.23

Ratio 88 Days 89 Days 82 Days

e)Interpretation

In the year 06-07,we make payments to our creditors in 89 days,which are highest days amongst three years and In the year 05-06,it islowest which is 82 days. Here in Dabur, there credit and collection policyis strict but payment policy is too weak. They are not able to pay to theircreditors in short time. This is not a good sign from the outside view.

3.3.5 Creditors turnover ratio

a)Meaning

The creditors turnover suggests the number of times the amount ofcredit purchase is made during the year.

b)Implication

The high ratio implies high payment ability of the firm. This ratio is

directly connected with creditors ratio, if creditors ratio is higher than

turn over is low.. The ratio can be high when the firm has made payment

in short time

The low ratio implies low payment ability of the firm. because when

there is low turnover, the creditors ratio must be high.

c) Formula

=No. of days in a yearCreditors ratio


34

34


35/70

Year 07-08 07-06 06-05No.of days in ayear

360 360 360

Creditors ratio 88.63 89.81 82.43Ans 4.06 times 4 times 4.37 times

e)InterpretationDuring these three years, creditors turnover is low which implies

that firms ability to make payment is very low. During these three years,there is not much of a difference in the turnover. We have also seen in theearlier ratio that firms ability to make payment is weak. This ratio proves itagain.

3.3.5 Stock turnover ratio

a)Meaning

This ratio shows the number of times the average stock is turnedduring the year. It is computed by dividing the cost of goods sold by theaverage stock of the year. This ratio signifies the efficiency of sales .

b)ImplicationThe higher turnover, the more profitable the business would bebecause it shows that that the average stock can be turned over moretime. And the efficiency of the sales is higher.

The low turnover indicates over investment in stock which mayresult in locking up capital, rent of the space. Here, too high turnover isalso not good and too low turnover is also not good.

c)Formula

=cost of sales

Average stock


35

35


36/70

Year 07-08 06-07 06-05Cost of sales 123346.34 94058.24 71087.55

Ave.stock 17925.815 13648.92 11560.9Ans. 6.9 times 7 times 6.times

e)InterpretationIn the year 07-08, stock turnover ratio is 6.9 which increases up to 7 in

the year 06-07 and which decreases up to 6 again in the year 05-06. Hereduring these three years turnover is relatively high which shows thatefficiency of sales is higher.

36

36


37/70

3.4 liquidity ratios

3.4.1 Current ratio

a)Meaning

This most widely used ratio shows the proportion of currentassets to current liabilities. It is also known as Working capital ratio. Thisratio is obtained by dividing current assets by current liabilities.

b)Implication

A high current ratio shows that the company is financing a largeproportion of its current assets from long term sources. thus it makes itcostlier A low current ratio shows that the company is financing shortproportion of its current assets from long term sources. thus it makes itcheaper.

c) Formula

= Current assetsCurrent liabilities


Years 07-08 07-06 06-05

37

37


38/70

Current assets 55281.33 39641.22 28436.22Current liability 58263.48 35608.47 30731

Ans 0.9:1 1.11:1 0.93:1

e)Interpretation

During the year 07-08 and 06-05 the ratios remains similar but itincreases up to 1.11 in the year 07-06. This indicates that the firm hascurrent assets of Rs 1.11 against the current liability of Rs1.ideallycurrent assets should be double of current liability. But the situation is badin the years 07-08 and 05-06 when the current assets of the firm arelower than the current liability.

3.4.2 Liquid ratio

a)Meaning

This is obtained by dividing the liquid assets by liquid liabilities. Itis a variant of current which is designed to show the amount of fundsavailable to meet immediate payment.

b)Implication The high ratio implies that the firm is able to meet his liquidliabilities speedily. Because lt shows that the liquid assets are higher thanthat liquid liability which makes the payment of liquid liability speedily.

The low ratio implies that the firm is not able to meet hisliquid liabilities speedily. Because when ratio is low It shows that thecurrent assets are lower than the current liability there by the firm is notable to meet its liability.

c) Formula

= liquid assetsLiquid liabilities

38

38


39/70


Years 07-08 07-06 06-05Liquid assets 35166.64 23904.28 16875.32Liquid liabilities 58263.48 35608.47 30731

Ans. 0.60:1 0.67:1 0.55:1

e)Interpretation

During the year 07-08 ratio is 0.60 which increases up to 0.67 in theyear 07-06 and which than decreases up to 0.55 in the year 06-05. Ideallythe ratio should be 1:1. which means liquid assets should at least equalliquid liability in order to make the payment easier but here during threeyears liquid ratio is not satisfactory because liquid assets are less thanliquid liability.

3.4.3 Quick ratio

a)Meaning This is obtained by dividing the quick assets by liquid liabilities.quick assets include only cash or bank. Here in this ratio, quick assetsinclude only cash and bank.

b)ImplicationThe high ratio implies that cash and bank are higher than the

liquid liabilities. This makes the payment quicker.The low ratio implies that cash and bank are lower than the liquid

liabilities. This delays the payment.

c) Formula

39

39


40/70

=Quick assetsLiquid liabilities


Years 07-08 07-06 06-05Liquid assets 6826.42 5024.75 3804.41Liquid liabilities 58263.48 35608.47 30731

Ans. 0.12:1 0.14:1 0.12:1

e)Interpretation

During the year 07-08 and 06-05,the ratio is 0.12 which increasesup to 0.14 in the year 06-07. Ideally cash and bank should be half of theliquid liability. Hence the ideal ratio should be 05:1. but during these threeyears. Cash and bank is not even 20% of the total liquid liability. Thismakes this ratio unsatisfactory.

40

40


41/70

3.5 Leverage ratios

3.5.1 Proprietary ratio

a)Meaning This ratio shows the proportion of proprietors funds to the totalassets employed in the business. The proprietary fund or shareholdersequity consists of share capital and reserves.

b)ImplicationThe higher the ratio, the stronger the financial position of the firm. As itsignifies that the proprietors have provided larger funds to purchase theassets. The lower the ratio, the weaker the financial position of the firm asit signifies tat the proprietors have provided lesser funds to purchase theassets

c) Formula

= Proprietors fund*100Net assets


Year 07-08 07-06 06-05

Proprietors fund 52832.34 40318.92 44786.87Net assets 55898.73 42608.98 45228.41

Answer 94.51% 94.63% 99.02%

e)Interpretation

41

41


42/70

Here during these three years there is an increasing trend in the ratiowhich signifies that company is decreasing outside borrowing each year.It is a very good sign as far as the company is concern, as the proprietorshave provided around 97% of the fund throughout three years in order topurchase assets. And very less funds are borrowed from outside.

3.5.2 Debt-equity ratio

a)MeaningThis ratio is only another form of proprietary ratio and

establishes relationship between the outside long term liabilities andowners funds.

b)Implication

A higher ratio implies that outside creditors have a larger claimthan the owners of the business. This leads to several effects such asthe company has to accept stricter condition from lenders, whileborrowing money. And have to pay higher interest. But high ratio isbeneficial as far as the share holders are concern because with limitedinvestment, they can keep control on the company and their returns willbe higher.

A lower ratio implies that outside creditors have a lower claim thanthe owners of the business. With this situation the company is inbeneficial position. They can keep control on the management of the firmand can avoid unnecessary interference of shareholders. But as far as theshare holders are concern. This is not a desirable situation for them.

c) Formula

=Long term liabilities *100Share holders fun

42

42


43/70


Year 07-08 06-07 06-05Long termliabilities

635.37 459.85 889.51

Share holdersfund

52832.34 42608.98 49817.97

Answers 1.20% 1.08% 1.79%

e)InterpretationIn the year 07-08 ratio is 1.20%which decreases up to 1.08 in

the year 06-07 and which further increases up to 1.79% in the year 05-06.from the above two ratios proprietary and debt- equity we can clearly sayone thing that in Dabur owners hold a very good control over thecompany .here in this ratios, we can also see that the part of creditors isvery less with proportion of the owners funds

3.5.3 Capital gearing ratio

a)Meaning It is the ratio of fixed interest and dividend bearing capital toordinary capital. This ratio expresses the proportion of preference capital+debenture and ordinary capital

b)ImplicationThe higher this ratio, the more unstable will be the ordinary share

because major share of the profit will be absorbed by debenture interestand preference dividend and there will be greater fluctuation in the rate ofequity dividend.

Low ratio shows the stable condition for the equity share holdersbecause a very minor part of the profit will be absorbed by the debenture

43

43


44/70

interest and preference dividend and there will be less fluctuation in therate of equity dividend.

c) Formula

=Fixed interest on baring capital*100Ordinary capital


Year 07-08 07-06 06-05Fixed intereston baring cap

548.35 198.54 305.07

Ordinarycapital

8640.23 8628.84 5733.03

Answer 6.35% 2.30% 5.32%

e)InterpretationIn the year 07-08, the ratio is 6.35%which decreases up to

2.30% in the year 07-06 and which again increases up to 5.32 % in theyear 06-05. during these three years, debenture interest absorb very lessportion of the profit which puts equity share holders in strong position. InDabur there are no preference shares.

44

44


45/70

3.6 others

3.6 Long term funds to fixed assets.

a)Meaning This ratio shows the relationship between fixed capital andfixed assets. Fixed capital includes share capital, reserves and long termliability.

b)ImplicationThe high ratio implies that the fixed capital is more than the

fixed assetsThe low ratio implies that the fixed capital is less than the

fixed assets. It would mean that short term funds have been used inpurchasing fixed assets.

c) Formula

=Long term fundsFixed assets


Year 07-08 07-06 06-05Long termfunds

54566.03 42326.91 46844.39

Fixed assets 29443.01 23904.05 19883.68Answer. 1.85:1 1.77:1 2.35:1

e)InterpretationIn the year 07-08 ratio is 1.85which decreases up to 1.77in the

year 07-06 which further increases up to 2.35 in the year 05-06. Hereduring these three years ratio is more than 1:1 which is minimum.

45

45


46/70

Thereby we can say that even after using long term funds to buy fixedassets, there are some long term funds left in the business.

CH:4 Accounting policies and notes

1) Notes of accounts

a) Building constructed on leasehold land included in the value ofbuilding shown in Fixed Assets Schedule

b) Loan and Advances include Rs.48.64(Previous year 48.64)paid bythe company to excise authorities on behalf of Sharda Boiron

Laboratories Limited, now known as SBL Limited, in respect ofexcise duty demand of Rs.68.13 raised by the District ExciseOfficer, against the company and Sharda Boiron Laboratories.

c) Company has assessed recoverable value of cash generating unitsbased on value-in-use method which for each CGU(cashgenerating unit) worked out to be higher than corresponding bookvalue of net fixed assets thereby not warranting further exercise of

arriving at their non-selling-price. CGUs include all the plantsbelonging to FMCG segment.

d) Pursuant to merger of Dabur food Limited with effect from April 012007 the company has inherited assets and liabilities of the entity interms of scheme of merger approved by the high court. The certifiedcopy of the order was filed with the Registrar of company. Themerger company was engaged in FMCG business.

e) Managerial remuneration under section 198 of the companies act,1956 Paid or payable during the year to the Directors

f) Companies free hold land situated at Sahibabad measuring about

7.58 Acres was acquired by U.P Government under Land Acquisition

46

46


47/70

Act And the State Government had allotted and given possession ofabout 4.72 acres of land on lease to the company in lieu of acquiredland. The Company has filed a claim for compensation of Rs. 572.42before the Office.

g) Employee related dues:A) Defined Benefit Plan1) Expenses recognized during the year.

2) Reconciliation of fair value of plan assets & present value ofdefined Benefit obligations

3) Reconciliation of opening and closing balances of obligations4) Reconciliation of opening and closing balances of plan assets.5) Investment details of plan assets as on 31-3-086) Effect of increase/decrease of % in assumed medical cost trend in

Respect of post separation benefit schemes of directors

7) The basis used for determination of expected rate of return isaverage

Return on long term investment in government bonds.

B) Defined contribution planCompanys contribution to different defined contribution plan:-Particulars 2007-2008 2006-07

Provident fund 562.56 458.95Employee state Insurance 55.98 43.71

Employee Superannuation plan 261.82 213.38

h) Exchange loss works out to Rs.236.42 (Previous Year Rs81.05)-netof exchange gain Rs.40.92 (Previous year Nil) which has beendebited to Profit and Loss Accounts.

i) Sundry Creditors include Rs.164.82 (previous year 387.88) beingdues to subsidiaries

j) A) pension to relative of deceased director Rs.31.50 (previous yearRs.31.50) paid during the year

B) Pension to retired director Rs. 99.46 (previous yearRs.58.74)paid during the year.

47

47


48/70

C) Exgratia paid to a retired director Rs.160.20 (previous year Nil)during the year.

k) Due to amortization of deferred employees compensation underESOP derived under intrinsic value method instead of blackscholesoption model, profit of the year is understated by Rs. 24.90

I) Figures for the previous year have been rearranged/regroupedas and where necessary in terms of current years grouping.

2) Main policies pertaining the unit

a) Accounting convention:

The accounts have been prepared in accordance with the historical costconvention.

b) Fixed assets and Depreciation

1) Fixed assets are stated at carrying amount

2) Cost include inward Freight, duties, taxes and other expensesincidental to acquisition and installation

3) Patents are being amortized over the period of ten years onstraight line basis, and Software are being amortized over theperiod of five years on straight line basis.

4) Depreciation on Fixed assets have been provided on writtendown value method at rates specified in schedule XIV of thecompanies act Except for Baddi,alwar,and many other wheredepreciation have been provided for on straight line methods at therates specified in the aforesaid Schedule

5) For New Projects, all direct expenses and direct overheads arecapitalized.

48

48


49/70

c) Impairment of Assets

The company identifies impairable fixed assets based oncash On cash generating unit concept at the year-end in term of Para5 to 13 of AS-28 issued by ICAI for the purpose of arriving atImpairment loss thereon, if any being the difference between the bookvalue and recoverable value of relevant assets. When crystallized, ischarged against revenue of the year.

d)Investment

Current investments are held at lower of cost and NAV/Marketvalue.Long term investments are held at cost less diminution, if any, in carryingcost of investments other than temporary in nature

e) Deferred Entitlement on LTC:

In terms of the opinion of the Expert Advisory Committee of the

ICAI, the company has provided liabilities accruing on account of differedentitlement towards LTC in the year in which the employees concernedrender their services.

f) Inventories

Stocks are valued at lower of cost or net realizable value. Basis ofdetermination of cost remains as follow:

.Raw materials, Packing material, store & spares -Weighted AverageBasis

.Work-In-Process

.Finished goods

.g) Research and Development Expenses

49

49


50/70

Contributions towards scientific research expenses are charged to theprofit & loss account in the year in which the contribution is made.

h) Retirement benefits

A) Defined benefit plansB) Defined contribution plansC) VRS, if paid, is charged to revenue in the year of payment

I) Recognition of income and expensesA) Sales and purchases are accounted for on the basis of passing of title

to the goods.

B) Sales comprise of sale price of goods including excise duty butexclude trade discount and sales tax /VAT.

C) All the items of income and expenses have been accounted for onaccrual basis except for those incomes stipulated for recognition onrealization basis on the ground of uncertainty under AS-09 issued by ICAI

j) Income tax and & Deferred Taxation:

The liability of company on account of income tax is estimated

considering the provisions of the Income tax Act, 1961.Deferred tax isrecognized, subject to the consideration of prudence, on time differencesbeing the difference between taxable income and accounting income thatoriginate in one year and capable of reversal in one or more subsequentyears.

k) Contingent Liabilities:

Disputed liabilities and claims against the company includingclaims raised by fiscal authorities (sales tax, income tax).pending inappeal /court for which no reliable estimate can be made of the amountof the obligation or which are remotely poised for crystallization are notprovided for in accounts but disclosed in the notes of accounts.

l) Foreign currency Translation

50

50


51/70

A) Transaction in foreign currencies are recognized at rate ofoverseas

Currency ruling on the date of transactions. Gain/loss arising onAccount of rise or fall in overseas currencies vis--vis reportingBetween the date of transaction and that of payment is charged toProfit and loss account.

B) Receivables/payables (excluding for fixed assets) in foreigncurrencies are translated at the exchange rate ruling at the year enddate and the Resultant gain or loss, is accounted for in the Profit and lossaccount.

C) Increase/decrease in foreign currency loan on account of exchangeFluctuation are debited /credited to profit and loss account.

D) Impact of exchange fluctuation is separately disclosed in notes toAccount.

M) Employee stock option purchase (ESOP)

Aggregate of quantum of option granted under the scheme inmonetary term (net of consideration of issue to be paid in cash).in term ofintrinsic value has been shown as Employees Stock Option Schemeoutstanding in Reserve and surplus head of the balance sheet by way ofdebiting deferred Employee Compensation under ESOP as per guidelineto the effect issued by SEBI.

. With the exercise of option and consequent issue of equity share,corresponding ESOP outstanding is transferred to share premiumaccount.

.Employees contribution for the nominal value of share in respect tooption granted to employees of subsidiary company is being reimbursedby subsidiary companies to holding company.

n) Miscellaneous Expenditure:

.Technical know-how fee paid to technical Collaborators up to31.3.04 are being amortized equally over a period of six years.Subsequently expenses are charged to revenue in the year of incurrence.

51

51


52/70

.Deferred Employees Compensation under ESOP are beingamortized on straight line basis over vesting year.

CH5Directors report

Financial results(in crore)

Turnover (including other income)Profit Before Tax

Add: provisions of earlier

years written back

Less: Provision of Taxation currentProvision of Taxation-DeferredProvision of Taxation-Fringe BenefitProvision of Taxation for earlier year

Profit After TaxAdd: Balance in Profit and Loss Account

Brought Forward from the previousYearProfit available for appropriation

Appropriation to:General ReserveCapital ReserveInterim Dividend-paidFinal Dividend-Proposed

Corporate Tax on Dividend

Transferred from merged entitiesBalance carried over to Balance Sheet

Total

2007-08

2111.31365.18

0.68365.8640.570.757.081.54

315.92

229.15

545.07

70.000.4064.8064.80.22.02

0323.05

545.07

2007-06

1616.94284.22

0.23284.4531.52-2.663.280.36

251.95

175

426.95

30.003.35122.13017.13

25.19229.15

426.95

52

52


53/70

Dividend

The company had paid an interim dividend of 75 %( Rs 0.75 per share)on 7th November, 2007.We are pleased to recommend a final dividend of75% (Rs 0.75 per share) for the financial year 07-08.Aggregate dividendfor the year will amount 150%(Rs 1.50 per share). As against 175% (Rs1.75 per share) on pre bonus share capital declared last year. Thedividend payout ratio for the current year, inclusive of corporate tax ondividend distribution, is at 47.87%.

Amalgamation of wholly owned subsidiary companywith the company

During the year under review a wholly owned subsidiary company,

Dabur food limited was amalgamated with the company with effect from

1st April, 2007 on filling of the Order of Honble High Court of Delhi

with the office of registrar of companies on 3rd March, 2008 .The

financial results of the erstwhile Dabur Food Limited for the year 2007-

08 are included in the financial results of the company for the current

year.

Change in the capital structure and listing ofshares

53

53


54/70

The companys shares are listed on the National Stock Exchange of

India Limited (NSE) and Bombay Stock Exchange Limited (BSE) and

actively traded.

In the year under review, the following shares were admitted for tradingin NSE and BSE:-

1) Equity shares allotted against the option exercised by employees

pursuant to Employees Stock Option Scheme of the company:

*1014953 equity shares allotted on 24th May, 2007.

*108027 equity shares allotted on 10th

August, 2007.

*16185 equity shares allotted on 14th November,2007.

Further, pursuant to merger of Dabur Food Limited with the

company.w.e.f.3rd March, 2008, the authorized share capital of

Dabur Food Limited, being Rs 20 crore, has added with the

authorized share capital of the company as per Orders of Honble

High Court of Delhi and subsequently the Company has applied tothe Registrar of Companies, NTC of Delhi and Haryana to give

effect to the increase in the authorized share capital of the company

from Rs 125.crore to Rs.145 crore.

Consolidated Financial Statements

In compliance with the accounting standard 21 on Consolidated

Financial Statements, this Annual Reports also includes

Consolidated Financial Statements for the financial year 2007-08.Consolidated sales grew by 15.76% to Rs 2395.08 crore as

compare to Rs 2069.05 crore in previous year. Similarly, net profit

after tax and after minority interest for the year at Rs 333.92 crore is

higher by Rs. 50.88 crore as compare to Rs.283.04 crore in the

previous year.

54

54


55/70

Subsidiaries

In terms of approval granted by the Central Government under

Section 212(8) of the Companies Act, 1956, copy of Balance-Sheet,

Profit and Loss Account, Report of the Auditors of the subsidiary

companies have not attached with the Balance-Sheet of the company.

The company will make available these documents /details upon

request by any Shareholder of the Company or Subsidiary interested

in obtaining the same. The Annual accounts of the SubsidiaryCompanies are also available for inspection by the Shareholders at

registered Office of the Company and also that of its respective

Subsidiaries. However, pursuant to Accounting

Standard AS-21 issued by the Institute of Charted Accountants of

India, Consolidated Financial Statements preserited by the Company

includes financial Information of its Subsidiaries. The Financial

Statements of each subsidiary shall be available on companys

website

The following information in aggregate for each Subsidiary are also

being disclosed (a) capital (b) reserves (c) total assets (d)total

liabilities (e)details of investment(f) turnover (g) profit before

taxation (h)provision of taxation(i)profit after taxation (j) proposed

dividend .

Acknowledgement

Your Directors place on record their gratitude to the CentralGovernment, State governments, and Companies Bankers for the

assistance, co-operation, and encouragement they extended to the

Company. Your Directors also wish to place on record their sincere

thanks and appreciation for the continuing support and unstinting

55

55


56/70

efforts of Investors, Dealers, Business Associates and Employees in

ensuring an excellent all over operational performance

For and on behalf of the board

(DR.ANAND BURMAN)CHAIRMAN

New Delhi

30th April, 2008.

56

56


57/70

CH:6Auditors report

Name of the auditors

M/s G.BASU & CO.Charted Accountants

Internal Auditors

Price Waterhouse Coopers Pvt. Ltd.

Qualified/UnqualifiedThis report has been audited in accordance with auditing standards

generally accepted in India. This is why this report is unqualified.

Implications

1) As required by the companies (Auditors report)Order 2003 issuedby the central government in terms of section 227 (4A), of theCompanies Act,1956,we enclose herewith in the annexure astatement of the matter specified therein.

2) We have obtained all the information and explanations which to the

best of our knowledge and belief were necessary for the purposeof audit.

3) In our opinion, proper books of accounts , as required by law havebeen kept by the Company so far as appears from ourexamination of books of accounts.

57

57


58/70

4) The balance-Sheet and Profit and Loss Account dealt with by thisreport are in agreement with the books of accounts.

5) Balance-Sheet and Profit and Loss Account have been prepared indue compliances of Accounting Standards referred to sub section(3C) of section 211 of Companies Act, 1956.

6) On the basis of written representations received from the directorsas on 31st March ,2008 and taken on record by the Board OfDirectors, we report that none of the directors of the company is

disqualified for the office of the director within the meaning ofsection 274(1)(g) of the companies Act,1956.

7) In our opinion and according to the information and explanationsgiven to us, the said accounts read with other notes appearing inschedule p give the information required by the Companys

Act,1956, in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in

India.

a) In the case of Balance-Sheet, of the State of Affairs of thecompany as at 31st March 2008, and

b) In the case of Profit and Loss Account, of the Profit for the yearended on that date; and

c) In the case of cash flow statement, of the cash flows for the yearended on that date.

58

58


59/70

CH:7Common-size statement

P.N.L .Account

ParticularsIncome

Sales less returnLess: Excise dutyNet salesOther incomeTotal income

ExpenditureCost of MaterialsManufacturing Exp

Payment to andProvisions for

employee

Selling andadministrativeExpenses

Financial Expenses

Mis.Expen.Written.off

Depreciation

Total expenditure

Net profit beforeTaxation

Provision for taxation

07-08

211778.863439.26208339.62790.86211130.46

101391.546985.57

14969.23

47269.98

854.50

566.79

2575.26

174612.87

36517.59

07-06

177802.433693.22174109.211651.17175760.38

76798.445393.94

11865.88

49989.64

443.01

649.36

2197.81

147338.08

28422.3

06-05

136968.292689.48134278.81535.02134813.83

57511.223745.55

9830.78

39394.05

565.87

426.24

1904.59

113378.3

21435.53

%

101.651.651001.33101.33

48.673.35

7.19

22.68

0.41

0.27

1.23

83.81

17.53

%

102.122.121000.95100.95

44.113.09

6.82

28.71

0.25

0.37

1.26

84.62

16.32

%

10221000.40100.40

42.832.79

7.32

29.33

0.42

0.32

1.42

84.43

15.96

59

59


60/70

CurrentDeferredFringe Benefit

Net profit aterTaxation and before

4057.2575.32707.81

31677.21

0

31677.21

22915.65

68.55

154.19

0

54507.22

6480.05

6480.17

1101.28

1101.31

40

3152.16(265.64)328.15

25207.63

0

25207.63

17500.64

22.82

36.22

0

42694.87

12212.54

0

1712.81

0

334.82

1808.11400370.25

18857.17

51.20

18908.37

12522.97

28.61

7.62

56.93

31509.26

4299.29

5733.03

602.97

804.06

19.27

1.950.040.34

15.20

0

15.20

11

0.03

0.07

0

26.16

3.11

3.11

0.52

0.52

0.019

1.810.150.19

14.48

0

14.48

10.05

0.01

0.02

0

24.52

7.01

0

0.98

0

0.19

1.350.300.28

14.04

0.04

14.08

9.33

0.02

0.0056

0.04

23.47

3.20

4.27

0.45

0.60.

0.01

60

60


61/70

7000

32304.41

54507.22

3000

25434.71

42694.87

2550

17500.64

31509.26

3.36

15.51

26.16

1.72

14.61

24.52

1.90

13.03

23.47

61

61


62/70

1)Meaning of common size-statementCommon size is a financial statement in which all the

items are compared with one common item, which is significant. Such asin P.N.L account sales have been taken as 100 and other items arecompared with it. When financial statements are presented in this way,they are called common-size statements or 100 per cent statements.

Comparison Common size P.N.L with AbsoluteP.N.L

1) Total Expenditure

In the year 07-08, the amount of total Expenditure is 174612.87.This is83.81% of the net sales.

In the year 07-06, the amount of total Expenditure decreases down to143338.08 as compare to earlier year .but the percentage of totalexpenditure against net sales increases from 83.81% of earlier year to

84.62 % in 07-06.

In the year 06-05, the amount of total Expenditure further decreases downto 113378.3 as compare to earlier two years. This amount is lowestamongst three years. But when we compare the percentage changebetween two years. There is not much of the difference in percentage.

Here total Expenditure comprise of cost of material, ManufacturingExpenses, Payment to and provision for employees, Selling and

Administrative Expenses, Financial Expenses, Depreciation

2)Net profit After Tax and Before Extra OrdinaryItem

62

62


63/70

In the year 07-08, the amount of Net profit after tax and extra ordinaryitem is 31677.21.This is highest amongst three years in percentage aswell as in amount. This is 15.20 % of the net sales.

In the year 07-06, the amount of Net profit after tax and extra ordinaryitem decreases down to 25207.63 as compare to earlier year.. And thepercentage of profit after tax and extra ordinary item also decreases from15.20% to 14.48 %.

In the year 06-05, the amount of Net profit after tax and extra ordinaryitem further decreases down to 18857.17. This is 14.04% of the net sales.This is lowest amongst three year.

We can see a decreasing trend during these three years with respect to

amount as well as in percentage.

63

63


64/70

Common sized Statement (Balance-sheet)

Liability

Particulars 07-08 07-06 06-05 % % %

Shareholders fund

(A)Share capital 8640.23 8628.84 5733.03 15.08 19.35 11.82

(B)Reserve and Surplus 44192.11 31690.08 39053.84 77.13 71.07 80.50

52832.34 40318.92 44786.87 92.21 90.42 92.31

Loan fund

(A)Secured Loan 1644.72 1927.71 1923.23 2.87 4.32 3.96

(B)Unsecured Loan 88.97 80.28 134.29 0.16 0.18 0.28

1733.69 2007.99 2057.52 3.03 4.50 4.24Differed Tax Liability 2727.97 2263.99 1671.50 4.76 5.07 3.45

57294 44590.90 48515.89 100 100 100

Assets

Application of Funds

Fixed Assets:

(A)Gross Block 48419.78 40801.12 34129.37 84.51 91.50 70.35

(B)Less:Depriciation 18976.77 16897.07 14245.69 33.12 37.89 29.36

(C) Net Block 29443.01 23904.05 19883.68 51.4 53.61 40.98

Investment 27037.13 14535.08 27507.77 47.19 32.60 56.70

Deferred Tax Assets 2400.74 137.10 131.74 4.19 0.31 0.27

Current Assets Loan and

Advances

(A)Inventories 20114.69 15736.94 11560.90 35.10 35.29 23.83

(B)Sundry Debtors 10046.43 6097.87 2694.25 17.53 13.67 5.55

(C) Cash and Bank

Balances

6826.46 5024.75 3804.41 11.91 11.27 7.84

(D)Loans and Advances 18293.75 12781.66 10376.66 31.93 28.66 21.39

55281.33 39641.22 28436.22 96.49 88.90 58.61Current Liabilities andProvision

(A)Liabilities 31722.51 27859.39 19342.06 55.37 62.48 39.87

(B)Provisions 26540.97 7749.08 11388.94 46.32 17.38 23.47

58263.48 35608.47 30731 101.69 79.85 63.34

Net Current Assets (2982.15) 4032.75 (2294.78) (5.20) 9.05 (4.73)

Miscellaneous 1395.27 1981.92 3287.48 2.43 4.44 6.78

64

64


65/70

Expenditure

Total 57294 44590.90 48515.89 100 100 100

Comparison of Common-size Balance-sheet withAbsolute Balance-sheet

1) Share-Holders fund

In the year 07-08, the amount of share holders fund is52832.34; this is 92.21% of the total assets.

In the year 06-07, this further decreases down to 90.42%where total assets are 44590.90.

In the year 05-06 shareholders fund further increases up to44786.87, this is 92.31 % of the total assets. This is highestamongst three years

2) Loan Fund

In the year 07-08, the amount of loan fund (secured+unsecured) is 1733.60; this is 3.03 % of the total assets

In the year 06-07, the amount of loan fund further increasesup to 2007.99 this is 4.5% of the total assets.

In the year 05-06, the amount of loan fund increases ascompare to the amount of earlier year but percentage of loan

fund against the total assets decreases as compare toearlier year. This is 4.24.

3) Net Fixed assets

In the year 07-08 the amount of net fixed assets is 29443.01; this is51.4% of the total assets.

65

65


66/70

In the year 06-07 the amount of net fixed assets is less than theprevious year but the percentage of net fixed assets against thetotal assets is higher than the previous year. This is 53.61%.

In the year 05-06 the amount of net fixed assets is 19883.68.this islowest amongst three year in amount as well as in the percentage.

4) Net Current assets

In the year 07-08 the amount of net current assets is negative ascurrent liability is more than current assets .The amount is 2982.15.This is 5.20% of the total assets.

In the year 07-06, there is vast increase in the amount as compareto earlier year. The amount is 4042.75.This is 9.05 % of the totalassets.

In the year 06-05, the position of net current assets is similar to 07-08 .the amount of net current assets is negative as current liability ismore than current assets. The amount is 2294.78.This is 4.73% ofthe total assets.

5) Miscellaneous Expenditure

In the year 07-08, the amount of Miscellaneous Expenditure is1395.27. This is 2.43 % of the total assets.

In the year 07-06, the amount of Miscellaneous Expenditureincreases up to 1981.92. And the percentage of Miscellaneous

Expenditure against the total assets also increases from 2.43% ofearlier year to 4.44 % this year.

In the year 05-06, the amount of Miscellaneous Expenditure furtherincreases up to 3287.48.During these three years, there is an

66

66


67/70

increasing trend with respect to amount as well as percentage ofMiscellaneous Expenditure to total assets.

CH:8- Conclusion

1) Findings

In this report, we tried to examine each and everyfinancial aspect of the firm starting from the ratios to common sizestatement of the company. All these financial statements are authentic asthey are based on the annual report of the company. During the making ofthis report we tried to cover not only the financial aspect of the firm butalso the basic history and basic out line of the main business of the firm.But major financial results of the three years as stated below. List of ratios

67

67


68/70

2 Conclusion

Name of the ratio 05-06 06-07 07-081) G.P ratio 47.06% 45.98% 40.80%2) N.P ratio 14.04% 14.48% 15.20%3) Expenses ratio 40.27% 39.20% 33.50%

4) operating ratio 90.61% 90.61% 90.08%5) return on capital

employed47.74% 70.32% 69.44%

6) return on share-holders funds

42.10% 62.52% 59.96%

7) return on equityshare capital

3.29% 2.92% 3.67%

8) return on equityshareholders fund

42.10% 62.52% 59.96%

9) Earning per share 3.29rs 2.92rs 3.67rs10) Dividend per share 1.75rs 1.48rs 1.5rs11) price earning ratio 28.98 times 31.2 times 28 times12) dividend yield ratio 0.02% 0.02% 0.01%13) interest coverage

ratio77 times 155 times 72 times

14) overall turnoverratio

2.95 times 4.28 times 3.9 times

15) fixed assets

turnover ratio

6.75 7.28 7.08

16) debtors ratio 7 days 13 days 17 days17) creditors ratio18) creditors turnover

82 days4.37 times

89 days4 times

88 days4.06 times

19) stock turnover ratio 6 times 7 times 6.9 times20) current ratio 0.93:1 1.11:1 0.9:121) liquid ratio 0.55:1 0.67:1 0.60:122) quick ratio 0.12:1 0.14:1 0.12:123) proprietary ratio 99.02% 94.63% 94.51%24) debt-equity ratio 1.79% 1.08% 1.20%25) capital gearing ratio 5.32% 2.30% 6.35%26) long term funds to

fixed assets2.35:1 1.77:1 1.85:1

68

68


69/70

. To conclude, i can say that the company is in very good financialposition but to comment on the overall financial situation of the company. ihave to specifically look in to the three aspect of the firm that isprofitability, liquidity and solvency.

1) Profitability

the overall profitability of the Dabur India limited can be find outfrom the ratios like

1) G.P. Ratio2) N.P.Ratio3) Operating ratio4) Expenses ratio

Here, Dabur India limited is earning reasonable profit. And fromoperating ratio we can say that in order to increase profit they need to

Decrease operating expenses.

As far as the share holders are concern they are getting nice returnsthat can be seen from the ratios like return on equity shareholders fundand return on capital employed.

We can see from the EPS that company is paying half of its earned

amount to its shareholders as dividend that is a good sign. And half arekept as reserves to meet the future uncertainty

2) LiquidityLiquidity of the firm can be found out from the ratios like liquid ratio,current ratio and acid-test ratio or quick ratio

Here in Dabur, the liquidity of the firm is not so good. We can se that fromratios like current ratio, that it is not satisfactory. Which shows that Daburneeds to improve its liquidity. We can even see that from liquid and quick

ratios. They are not even at ideal stage. There by I think Dabur shouldtake necessary steps to increase their liquidity

3) SolvencySolvency of the firm can be found out from the ratios like proprietary ratio

and capital gearing ratio and debt-equity ratio.

69

69


70/70

Here in Dabur, these three ratios indicates that proprietors hold very goodhold on the company and out side borrowing is very less that can be seenfrom the proprietary ratio. Around 90% of the total funds are supplied bythe owners themselves .this saves the higher interest which the companywould have to pay in the situation of higher outside borrowing.

70

Ruff Draft1

Documents

Transcript of Ruff Draft1