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A A Comparitive AnalysisComparitive Analysis

Of Of Working Capital Working Capital

Of Of



STATEMENT OF PURPOSE :

The purpose behind this report is to compare the working capital of

Dabur with various other leading FMCG Companies.

OBJECTIVES :

This project have been undertaken with the following objectives :-

To determine the various sources of working capital and financing

available to Dabur India Ltd.

To determine the liquidity position of Dabur India Ltd. amongst the

debtors, creditors, share holders etc.

To make comparative study with few leading FMCG companies like HLL,Nestle & Cadbury.

PLACE OF RESEARCH :

The place of research in this project is limited to Dabur India Ltd.

Sahibabad, Ghaziabad (U.P.).

EXECUTIVE SUMMARYEXECUTIVE SUMMARY



RESEARCH METHODLOGY USEDRESEARCH METHODLOGY USED

The data source for this project has basically been the

secondary data taken from following data sources :-

Annual Report of Dabur

Annual Report of Nestle

Annual Report of HLL

Internet

TIME FRAME :

The duration of this project was approximately 4 to 5

weeks.



OVER 100 YEARS OF CARINGOVER 100 YEARS OF CARING Dabur commenced operations in 1884 and is today a multi-

locational, multi ± product enterprise. The company has

major interests in hewalth and beauty care.

Dabur is a leader in Ayurveda ± the traditional Indian

health care system.

The company manufactures and markets a range of

oncologicals. Dabur is one of the companies in the worldto produce PACLITAXEL ± AN ANTI CANCER DRUG. The

company has developed its own eco-friendly process to

manufacture this drug from raw material stage.

The company has 12 manufacturing plants in India, Nepal

and Egypt. Dabur products are also manufactured inDubai.

Dabur has a transactional network of 19 offices servicing

both rural and urban markets in India.

The company has sales and marketing offices in Dubai and

London. Dabur products are available in over 50 countries.



INTRODUCTION TOINTRODUCTION TO

WORKING CAPITALWORKING CAPITAL The term working capital refers to the capital required for day to day

operations of a business enterprise. It is represented by excess of current assets over current liabilities. It is necessary for anyorganisaton to run successfully its affairs,to provide for adequateworking capital. Too large an investment in current assets meansblocking the capital that can be used productively elsewhere.on theother hand, too little investment can also be expensive. For example,insufficient inventory may cause loss of sales to customer.

There are basically two concepts of working capital- gross and net.

Gross Working Capital :

This refers to the firm¶s investment in current assets. Current assetsare the assets which can be converted into cash within an accountingyear(or operating cycle) and include cash, debtors(accountsreceivable or book debts), bills receivable and stock(inventory).

Net Working Capital : It refers to the difference between net current assets and current

liabilities. Current liabilities are those claims of outsiders which areexpected to mature for payment within an accounting year. Networking capital can be positive or negative.

A positive net working capital will arise when current assets exceedcurrent liabilities. A negative net working capital occurs when current

liabilities are in excess of current assets.



SOURCES OF WORKINGSOURCES OF WORKING

CAPITALCAPITAL Dabur India Limited as a successful company in FMCG sector has the

following sources available for the fulfillment of its working capitalcapital requirements in order to carry onS its operations smoothly.

BANKS

These include the following banks :

Punjab national bank

Standard Chartered Bank Ltd Hong Kong andShanGhai Banking Corpn Ltd

State Bank of India

HDFC Bank Ltd

IDBI Bank Ltd

Citibank

COMMERCIAL PAPERS Commercial Papers have become an important tool for financing theworking capital requirements of a company.

Commercial Paper is an unsecured promissory note issued by thecompany to raise short-term funds . The buyers of Commercial Papersinclude banks,insurance companies,unit trusts and companies withsurplus funds to invest for a short period with minimum risk.



BALANCE SHEET OF DABUR INDIA LTD.

AS AT MARCH 31, 2004

(ALL AMOUNTS IN LACS)

SCHEDULE AS ON 31st MARCH 2004

SOURCES OF FUNDS :

SHARE HOLDER¶S FUNDS:

A) SHARE CAPITAL A 2862.49

24003.32

B) RESERVES & SURPLUS B 26865.81

LOAN FUNDS: A) SECURED LOANS C 1909.37

2071.91 3981.28

DEFFERED TAX LIABILITY EB 796.95

TOTAL 31644.04

APPLICATION OF FUNDS:

FIXED ASSETS:GROSS BLOCK F 27450.18

B) LESS: DEPRECIATION 11955.85

NET BLOCK 15494.33

INVESTMENTS G 17122 .67

DEFFERED TAX ASSETS EB 57.01



CURRENT ASSETS, LOANS

& ADVANCES:

INVENTORIES 11149.78

SUNDRY DEBTORS 4207.22

CASH & BANK BALANCES 1188.72LOANS & ADVANCES 5386.49

21932.21

LESS : CURRENT LIABILITIES EA

& PROVISIONS

A)LIABILITIES 16452.07

B)PROVISIONS 7169.81

23621.88

NET CURRENT ASSETS (1689.70)

MISCELLANEOUS IA 659.70

EXPENDITURE

(to the extent not written off or

adjusted)

TOTAL 31644.04



COMPARISON OF W ORKING CAPITAL (R s. C rores)

COMPANY DATE CURRENT

ASSETS

CURRENT

LIABILITIES

W ORKING

CAPITAL

DABUR 31-03-04 219.32 236 .21 (16 .8 9 )

31-03-03 406 .11 212 .24 193.87

H LL 31-12-03 3878.88 398 0 .25 (101.37)

31-12-02 38 18.38 3788.2 8 30 .10

CADBURY 31-12-03 217.6 135 .26 8 2 .34

31-12-02 26 8.54 137.77 130 .77

NESTLE 31-12-03 412 .39 551.24 (138.8 5 )

31-12-02 406 .91 48 1.29 ( 7 4.38)



Comparitive AnalysisComparitive Analysis

Current Ratio

This ratio shows the extent of working capital

available. It also shows the relationship between

current assets.

The following table shows the current ratio for

Dabur and few other leading FMCG Company :-

Liquidity Analysis

Dabur

(2003-04)

HLL

(2002-03)

Cadbury

(2002-03)

Nestle

(2002-03)

Current

Ratio1.41% 1.27% 2.41% 0.88%



Debt-Equity Ratio

This ratio indicates the relationship betweenDebt and Equity.

The following table shows the Debt-Equity ratios

for Dabur and few other FMCG companies :-

Dabur

(2003-04)

HLL

(2002-03)

Cadbury

(2002-03)

Nestle

(2002-03)

Debt-Equity

Ratio

0.10% 0.62% 0.01% 0.00%



304 01

235 32261 28

112 30

81 60

-16 90

-50

0

50

100

150

200

250

300

350

N RK N C N

Rs CR R

R

N RK N C

Series1 304.01 235.32 261.28

Series2 112.30 -16.90

Series3 81.60

1999-00 2000-01 2001-02 2002-03 2003-04



Profitability Analysis

ROCE This is the companies Return On Capital

Employed, which shows the relationshipbetween profit earn by the company and its

capital employed. The following table shows the ROCE ratios for

Dabur and few other leading FMCG companies:-

Dabur

(2003-04)

HLL

(2002-03)

Cadbury

(2002-03)

Nestle

(2002-03)

ROCE Ratio 34.90% 49.00% 21.85% 78.00%



1 4.30

1 8 .7 0

1 4 .5 0

2 7 .2 0

3 4 .9 0

0 . 0 0

5 . 0 0

1 0 . 0 0

1 5 . 0 0

2 0 . 0 0

2 5 . 0 0

3 0 . 0 0

3 5 . 0 0

R O C E ( % )

Y E A R S

RETURN ON CA PITAL EM PLOYED

Ser i es1 1 4. 30 1 8. 70 1 4. 50

Ser i es2 27. 20 34. 90

1 999-00 2000-01 2001 -02 2002-03 2003- 04



RONW

Which is known as the Return On Networth. Its states the profit earned by the company on

share holders funds.

The following table gives the ratio of RONW for

Dabur and few other leading FMCG companies :-

Dabur

(2003-04)

HLL

(2002-03)

Cadbury

(2002-03)

Nestle

(2002-03)

RONW Ratio 38.60% 83.18% 12.81% 78.53%



24 7022 00

16 20

32 30

38 60

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

R N N

R

R URN N N R H

Series1 24.70 22.00 16.20

Series2 32.30 38.60

1999-00 2000-01 2001-02 2002-03 2003-04



77. 43 77. 92

6 4 .4 4

7 2 .0 0

1 3.1 0

1 01 .20

0

2 0

4 0

6 0

8 0

1 0 0

1 2 0

P A T ( I N R s .

C R O R E S )

Y E A R S

PA T

Ser i es1 77. 43 77. 92 64. 44

Ser i es2 72. 00 1 01 . 20

Ser i es3 1 3.1 0

1 999-00 2000-01 2001 -02 2002-03 2003-04



ConclusionConclusion

The project report reveals Dabur¶s Working

Capital position for the past few years.

On the basis of the liquidity analysis the liquidity

position of Dabur as compared to few other leading FMCG companies is not good enough to

cover its short term and long term liabilities.

As seen in the balance sheet for 2003-04 the

working capital status of Dabur is negative,which might not be favourable in terms of its

position amongst it creditors.



Dabur should improve on its liquidity

position to cover its liabilities. On the basis of the analysis done the

company has good future prospects inthe concerned industry, as it is

increasing its profits gradually. Thus, Dabur contributes in a colossal

way in terms of providing goods, servingthe society & maintaining the

enviornment.

dabur presentation1

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