trend analysis of four fmcg companies in india

8/12/2019 Trend Analysis of Four FMCG Companies in India

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Trend analysis of four FMCG companies in IndiaThis report provides analysis of the data of the past 5 years, evaluating the general health of the

company and drawing a conclusion, which company is in a better state of health in the market

Abhay Adil

Finance Trainee

Dabur India Ltd.


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Declaration

I, Abhay Adil, student of MIB at Department of Commerce and Business, Delhi School ofEconomics, University of Delhi hereby declare that I have completed my Summer Internship on

Trend analysis of four FMCG companies in India in Dabur India Ltd as part of the

course requirement.

For the completion of this project I have used various sources for reference, to best of my

knowledge I have cross-checked their authenticity however a margin of error may still reside.

Date: 24/07/2013 Abhay Adil

MIB


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Acknowledgement

I would like to express my gratitude to all those who have helped me completing this project. I

would like to thank Mr. R.S. Dani, Mr. R.K. Sharma (Dabur India Ltd) and Mr. Sameer Lama

(Mentor, Delhi School of Economics) without their guidance this project couldntbe completed.

I would like to thank them for taking out time from their busy schedule to help me out in

resolving the problems that I faced during the course of my internship their guidance has been a

vital part in completion of the project.

Abhay Adil

MIB


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List of Tables

Table 1: Current Ratios of the four companies for five years..Page 14

Table 2: Quick Ratios of the four companies for five years.....Page 15

Table 3: Inventory Turnover Ratios of the four companies for five years...Page 16

Table 4: Debt-Equity Ratios of the four companies for five years...Page 18

Table 5: Earning Per Share of the four companies for five yearsPage 20

Table 6: Dividend Per Share of the four companies for five years..Page 21

Table 7: Sales growth of the four companies over five years..Page 22

Table 8: Net Worth of the four companies for five years.Page 24


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List of Charts

Chart 1: Current Ratios of the four companies for five years..Page 14

Chart 2: Quick Ratios of the four companies for five yearsPage 15

Chart 3: Inventory Turnover Ratios of the four companies for five years..Page 17

Chart 4: Debt-Equity Ratios of the four companies for five years..Page 18

Chart 5: Earning Per Share of the four companies for five yearsPage 20

Chart 6: Dividend Per Share of the four companies for five years..Page 21

Chart 7: Sales growth of the four companies over five years..Page 23

Chart 8: Net Worth of the four companies over five years..Page 24


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Index

Declaration..Page ii

Acknowledgement.Page iii

Certificate...Page iv

List of Tables...Page v

List of Charts......Page vi

Index.Page vii

CHAPTER 1

Introduction.Page 1

1.1Executive Summary..Page 11.2

General PreviewPage 1

1.3Preview of Industry...Page 3CHAPTER 2

Review of Literature...Page 5

CHAPTER 3

Data and Research MethodologyPage 7

3.1 Data...Page 7

3.2 Objective of the Project.Page 7

3.3 Methodology of the project...Page 7

3.4 Ratio Analysis...Page 8

3.5 Ratios.Page 9

3.6 FinancialsPage 12

CHAPTER 4

Analysis of DataPage 14

4.1 Ratio ComparisonPage 14

4.2 Comparison of Financials...Page 23

4.3 SWOT Analysis of Dabur...Page 26

CHAPTER 5

Findings and Recommendations...Page 27

5.1 Findings...Page 27


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5.2 Recommendations...Page 29

5.3 Limitations of the ProjectPage 31

CHAPTER 6

Appendix...Page 32


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CHAPTER 1

INTRODUCTION

1.1 Executive Summary

This report aims to analysis the financial trend, the financial health and current position of the

four FMCG companies in India.

The project main focus is to draw a comparison of four companies including Dabur with three

other of the prominent companies in the FMCG sector.

For this purpose a ratio analysis of the last 5 years (2009, 2010, 2011, 2012, 2013) is done for

four companies namely: Dabur India Ltd, Emami Ltd, Godrej Consumer Products Ltd,

Hindustan Unilever Ltd.

1.2 General Preview

Dabur India Ltd was founded by Dr. S. K. Burmanin 1884, he was a physician in Bengal who

intended to manufacture and market effective medicines to villagers and with time the popularity

grew and now Dabur is India's largest Ayurvedic medicine manufacturer. Dabur India Limited is

the fourth largest FMCG Company in India with Revenues of over Rs 6,146 Crore & Market

Capitalisation of US $5 Billion. Building on a legacy of quality and experience of over 127

years, Dabur operates in key consumer products categories like Hair Care, Oral Care, Health

Care, Skin Care, Home Care & Foods.

Dabur's Ayurvedic Specialities Division has over 260 medicines for treating a range of ailments

and body conditions-from common cold to chronic paralysis. Dabur International, a fully owned


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subsidiary of Dabur India formerly held shares in the UAE based Weikfield International, which

it disposed of on 25th June 2012

Dabur currently has 12 plants at:

Sahibabad Baddi Pantnagar Jammu Katni Alwar Pithampur Narendrapur Silvassa Newai Jalpaiguri Nashik

Dabur has its subsidiaries around the world these are:

Dabur Nepal Pvt Ltd (Nepal) Dabur Egypt Ltd (Egypt) Asian Consumer Care (Bangladesh) Asian Consumer Care (Pakistan) African Consumer Care (Nigeria) Naturelle LLC (Ras Al Khaimah-UAE) Weikfield International (UAE) Jaquline Inc. (USA)


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Dabur sells a wide range of products in Health Care, Personal Care, Food Products, Home Care,

Ayurvedic Specialities in many countries. While there is a large product line which Dabur produce, it is

iconically known for its most recognized products.

The most recognized Dabur products are:

Dabur Chyawanprash Dabur Amla Hair Oil Dabur Glucose-D Dabur Hajmola Dabur Real Juice Dabur Vatika Hair Oil Dabur Vatika Shampoo

1.3 Preview of Industry

FMCGor Fast-Moving ConsumerGoods industry is an industry which sells products which

are sold quickly, these product commands small absolute profit since they are relatively low cost

but FMCG companies can make a substantial cumulative profit since the products are generally

sold in large quantities.

FMCG products consist of perishable and non-durable products such as grocery, toiletries.

Categories of FMCG products:

Household Care Personal Care

Food and Beverages

Dabur initiated FMCG industry in India 129 years ago before any of todays big giants even

present on the scene. The Indian FMCG sector is the fourth largest sector the economy with a

total market size of Rs. 167,100crs.


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In November 2011 the central government allowed FDI (Foreign Direct Investment) in for both

multi-brand stores and single-brand stores which paved the way for companies like Walmart

which in turn is to affect the FMCG industry as a whole because with the reforms in retail sector,

the supply chain of the FMCG industry, there will be new advances in the both the industries.

Several studies claim that before 2011 Indias lack of infrastructure and competitive retail

industry is a key cause of high inflation. The Economist forecasts that Indian retail will nearly

double in economic value since the reforms in FDI.


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CHAPTER 2

Review of Literature

Bajkowski(1999) says that ratios are one of the most popular financial analysis tools and that a

ratio expresses a mathematical relationship between two items. According to him comparisons in

order to be useful, the two values must be related in some way. In all ratios a comparison with

other firms in similar industries is useful and comparison of these ratios for the same firm from

period to period is important in pinpointing trends and changes. He advise that it is also

important to keep in mind that these ratios are interrelated and should be examined together

rather than independently.

Drake(2004) according to her financial analysis is the selection, evaluation and interpretation of

financial data along with other pertinent information to assist in investment and financial

decision-making. Financial analysis maybe used internally to evaluate issues such as employee

performance, efficiency of operations, credit policies, evaluating potential investments and

credit-worthiness of borrowers.

Schmidgall and DeFranco(2004) say ratio analysis is one of the core topics in any accounting

curriculum. Ratio analysis expresses a relationship between two figures by dividing one number

by another. It presents financial data in another light and gives controllers and managers another

view of the financial health of their business.

Thomas and Evanson(1987) says from a management perspective, the rationale for use of

financial ratio analysis is that by expressing several figures as ratio, information will be revealed

that is missed when the individual members are observed.


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Lawder(1989) says a financial ratio is a number that expresses the value of one financial

variable relative to another. It is the numeric result gained by dividing one financial number by

another. Calculated this way, financial ratio allows an analyst to assess not only the absolute

value of a relationship but also to quantify the degree of change within the relationship.

Slater and Olson(1996) the concepts of Return on Assets and Return on Equity provide the best

understanding of the drivers of profitability for a business enterprise and the return to its owners.

A return on ratio illustrates the relationship between profits and the investment needed to

generate those profits. However, these concepts are often too far removed from normal

activities to be easily understood and useful to many managers or small business owners.


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CHAPTER 3

DATA AND RESEARCH METHOLOGY

3.1 Data

This project required financial data of the four companies; Dabur India Ltd, Emami Ltd, Godrej

Consumer Products Ltd, Hindustan Unilever Ltd, these are taken from Annual Reports of the

companies for years 2009, 2010, 2011, 2012, 2013.

3.2 Objective of the Project

Objective of this project is to:

Draw a comparison between Dabur and its competitors Analyzing the financial position of the four companies Drawing a ratio analysis of all the four companies

3.3 Methodology of the Project

Methodology used in this project is that of Ratio analysis and financial evaluation, it has been

done for the four companies for a period of five years to draw a comparison and asserting their

individual financial health.

For calculation of ratio and financial evaluation the data of financial year 2009, 2010, 2011,

2012, 2013 is used for all the four companies.

After calculation of ratios an interpretation has been made afterwards which is the determination

of the financial health and the comparison of the companies well-being of the four companies.


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3.4 Ratio Analysis

Ratio analysis is a method used to conduct a quantitative analysis of information in a company's

financial statements determining the overall financial condition of a business.

The massive amount of numbers in a company's financial statements can be intimidating,

financial ratio analysis helps to work out the numbers in an organized fashion.

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 businesses in same industry.

Ratio Analysis enables the business owner/manager to spot trends in the business and compare

the performance and conditions.

For this purpose comparison of ratios for several successive years is done to determine any

unfavorable trends that may be starting to occur. Ratio analysis may provide the early warning

indications that allow businesses to solve problems before they become a threat.

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.


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3.5 Ratios

3.5.1 Liquidity Ratios

Liquidity ratios are financial metrics that is used to determine a company's ability to pay off its

short-terms debts obligations. Generally, the higher the value of the ratio reflects the larger the

margin of safety that the company possesses to cover short-term debts.

The liquidity ratios are a result of dividing cash and other liquid assets by the short term

borrowings and current liabilities. They show the number of times the short term debt obligations

are covered by the cash and liquid assets. If the value is greater than 1, it means the short term

obligations are fully covered.

The ratios used in this report are Current Ratio, Quick Ratio and Inventory Turnover Ratio.

3.5.1.1 Current Ratio

Current ratio is a popular financial ratio used to test a companys liquidity. The concept is to

check whether companys short-term assets are readily available to pay off its short-term

liabilities, thus higher current ratio is favorable. While this shows the company is not in good

financial health, it does not necessarily mean that it will go bankrupt - as there are many ways to

access financing - but it is definitely not a good sign. The current ratio can give a sense of the

efficiency of a company's operating cycle or its ability to turn its product into cash. Companies

that have trouble getting paid on their receivables or have long inventory turnover can run into

liquidity problems because they are unable to alleviate their obligations. Because business

operations differ in each industry, it is always more useful to compare companies within the

same industry.


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Formula: Current Ratio = Current Assets/ Current Liabilities

3.5.1.2 Quick Ratio

An indicator of a companys short-term liquidity, quick ratio or is liquidity indicator that further

refines the current ratio by measuring the most liquid current assets there are to cover current

liabilities, it excludes inventory and other current assets, which are difficult to turn into cash.

Therefore, a higher ratio means a more liquid current position.

Formula: Quick Ratio = (Current Assets - Inventory)/Current Liabilities

3.5.1.3 Inventory Turnover Ratio

Inventory turnover ratio is a measure of the number of times inventory is sold or used in a year.It is used to measure the inventory management efficiency of a business, higher the value of

inventory turnover indicates better performance. It is a ratio showing how many times a

company's inventory is sold and replaced over a period. The days in the period can then be

divided by the inventory turnover formula to calculate the days it takes to sell the inventory on

hand. Lower inventory turnover ratio can be due to over-stocking which may pose risk of

increased inventory holding costs.

Formula: Inventory Turnover Ratio = Sales/Inventory


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3.5.2 Leverage Ratios

Leverage ratios are ratios calculate to measure a companys ability to meet financial obligation

or to get an idea of the company's methods of financing.

To calculate a companys financial leverage, its availability to meet obligations, ratios on debt,

equity, interest coverage are used but in this project I have used only Debt-Equity Ratio.

3.5.2.1 Debt-Equity Ratio

The Debt-Equity ratio is a financial ratio that indicates the relative proportion of the company's

equity and debt used to finance the company's assets.

Formula: Debt-Equity Ratio =Total Debt (Long-Term Debt + Short-Term Debt)/Equity

3.5.3 Investment Valuation Ratios

Investment valuation ratios are the financial ratios which take into account the shares and stocks

of the company into account. These shows investment attractiveness of the company which is

important as it shows how good the company is to investor and more investment will flow in to

aid growth.

Per Share Ratios: Per share ratios take into account the financial number in respect to per share.

The ratios considered in this project are Earning Per Share and Dividend Per Share.


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3.5.3.1 Earnings per Share

Earnings per share or EPS is the calculation of the companys profits allocated to eachoutstanding share. It is considered to be one of the most important variable in determinant of the

companys share health.

Formula: Earnings Per Share = Net Income/Number of Outstanding Shares

3.5.3.2 Dividend per Share

Dividend per share or DPS is the sum of declared dividends for every share. Investors generally

use dividends as a signal. If dividends per share drop, then investors take that as a signal that the

company is not doing well financially. Lead to the drop in the company's market value as

investors sell off the companys share if dividend per share drops.

Formula: Dividend Per Share = Dividends/Number of Outstanding Shares

3.6 Financials

Financial Comparison is done here to draw a comparison between companies in terms of their

size and stature from the yearly financial statements.

This project makes use of two components to draw a comparison that are Sales and Net Worth


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3.6.1 Sales

Sales are the main component of the financial statements it is the main source of earning. There

are two types of sales: gross sales and net sales.

Gross sales are an overall sale that arent adjusted for customer discounts or returns, calculated

and does not include operating expenses, cost of goods sold, payment of taxes, or any other

charge.

Net sales are sales generated by a company after the deduction of returns, allowances for

damaged or missing goods and any discounts allowed.

3.6.2 Net Worth

Net worth or Shareholders fund represents the stockholders' claim to a business' assets after all

creditors and debts have been paid. It is the difference between the companys assets and

liabilities.

Formula: Shareholders Funds = Total AssetsTotal Liabilities


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CHAPTER 4

ANALYSIS OF DATA

4.1Ratio Comparison

From that data of the five years; 2009, 2010, 2011, 2012, 2013 for the four companies; Dabur

India Ltd, Emami Ltd, Godrej Consumer Products Ltd, Hindustan Unilever Ltd a comparision of

financials and ratios is drawn.

4.1.1 Liquidity Ratios

Liquidity ratios are financial metrics that is used to determine a company's ability to pay off its

short-terms debts obligations. Generally, the higher the value of the ratio reflects the larger the

margin of safety that the company possesses to cover short-term debts.

The ratios used in this report are Current Ratio, Quick Ratio and Inventory Turnover Ratio.

4.1.1.1 Current Ratio

Current ratio is a popular financial ratio used to test a companys liquidity. The concept is to

check whether companys short-term assets are readily available to pay off its short-term

liabilities, thus higher current ratio is favorable.

Formula: Current Ratio = Current Assets/ Current Liabilities


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Table 1: Current Ratios of the four companies for five years

Current Ratio Mar 13 Mar 12 Mar 11 Mar 10 Mar 09

Dabur India Ltd. 1.17 1.15 0.99 0.92 1.19

Emami Ltd. 1.57 1.28 1.5 1.33 0.72Godrej Consumer Products Ltd. 1.29 1.37 1.37 1.38 2.19

Hindustan Unilever Ltd. 0.75 0.83 0.85 0.83 1.01

Chart 1: Current Ratios of the four companies for five years

Interpretation: From the above table we can see that Dabur holds 1.17 current ratio which is an

average ratio, while it has been growing from 2010 from 2009 to 2010 we notice a drop from

2009 to 2010 which is yet to covered. Emami stands at 1.57, highest in the focus group, a

positive trend is noticed as it has witnessed a favorable growth in current ratio. While Godrej isat 1.29 which is not a bad ratio but we notice a downward trend has been continues decline.

Hindustan Unilevers ratio is currently 0.75 and is not favorable it is also showing a negative

trend.

0

0.5

1

1.5

2

2.5

9-Mar 10-Mar 11-Mar 12-Mar 13-Mar

Dabur India Ltd.

Emami Ltd.

Godrej Consumer

Products Ltd.



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4.1.1.2 Quick Ratio

Quick ratio or is liquidity indicator that further refines the current ratio by measuring the most

liquid current assets there are to cover current liabilities, it excludes inventory and other current

assets, which are difficult to turn into cash. Therefore, a higher ratio means a more liquid current

position.

Formula: Quick Ratio = (Current Assets - Inventory)/Current Liabilities

Table 2: Quick Ratios of the four companies for five years

Quick Ratio Mar 13 Mar 12 Mar 11 Mar 10 Mar 09

Dabur India Ltd. 0.97 0.85 0.77 0.67 0.98

Emami Ltd. 1.38 1.36 2.59 1.93 0.82

Godrej Consumer Products Ltd. 0.78 0.84 0.81 0.95 1.72


Chart 2: Quick Ratios of the four companies for five years

0

0.5

1

1.5

2

2.5

3


Dabur India Ltd.

Emami Ltd.

Godrej Consumer

Products Ltd.



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Interpretation: From the above table we can see that Dabur holds 0.97 which some-what

favorable but since it is below 1 it means that the liquid assets are slightly less than the debt.

It has been improving gradually rising since 2010 which is a good indicator for the trend to

follow suit. While Godrej has a quick ratio of 0.78 which is not favorable and for Hindustan

Unilever its bad at 0.44. Emami is at a favorable ratio of 1.38.

4.1.1.3 Inventory Turnover Ratio

Inventory turnover ratio is a measure of the number of times inventory is sold or used in a year.

It is used to measure the inventory management efficiency of a business, higher the value of

inventory turnover indicates better performance. Lower inventory turnover ratio can be due to

over-stocking which may pose risk of increased inventory holding costs.

Formula: Inventory Turnover Ratio = Sales/Inventory

Table 3: Inventory Turnover Ratios of the four companies for five years

Inventory Turnover Ratio Mar 13 Mar 12 Mar 11 Mar 10 Mar 09

Dabur India Ltd. 8.8 7.19 8.65 11.31 10.94

Emami Ltd. 14.8 17.01 12.39 13 10.2




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Chart 3: Inventory Turnover Ratios of the four companies for five years

Interpretation: Dabur holds an inventory turnover of 8.8 which we observe from the table

above in comparison with other companies from overview prospective taking into view the

FMCG sector standards an estimated healthiness cannot be accurately determine but a general

idea can be formed. Here as compared to other companies Dabur has a inventory turnover of 8.8

which is moving in an alternating manner, while a general downward trend can be observed.Emami is at 14.8 in 2013 which has fallen from 17.01 in 2012 but shows an upward trend.

Godrej stands at 7.06 and its trending toward decline from 9.25 in 2009. Hindustan Unilever at

10.8 shows a slightly positive trend.

4.1.2 Leverage Ratios

Leverage ratios are ratios calculate to measure a companys ability to meet financial obligation

or to get an idea of the company's methods of financing.

0

2

4

6

8

10

12

14

16

18


Dabur India Ltd.

Emami Ltd.

Godrej Consumer

Products Ltd.



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4.1.2.1 Debt-Equity Ratio

The Debt-Equity ratio is a financial ratio that indicates the relative proportion of the company's

equity and debt used to finance the company's assets.

Formula: Debt-Equity Ratio =Total Debt (Long-Term Debt + Short-Term Debt)/Equity

Table 4: Debt-Equity Ratios of the four companies for five years

Debt-Equity Ratio Mar 13 Mar 12 Mar 11 Mar 10 Mar 09

Dabur India Ltd. 0.15 0.2 0.23 0.14 0.18

Emami Ltd. 0.05 0.15 0.32 0.4 1.49


Hindustan Unilever Ltd. 0 0 0 0 0.2

Chart 4: Debt-Equity Ratios of the four companies for five years

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6


Dabur India Ltd.

Emami Ltd.

Godrej Consumer

Products Ltd.



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Interpretation: From the above table we can see that Dabur hold s 0.15 debt-to-equity ratio

which is highest among the above group in 2013, however it can be considered a low ratio which

is considered good.

While Hindustan Unilever remains debt-free, it is worth-while to note that the Emami in 2009

had a debt-equity ratio 1.49 which they gradually improved over time and now stands at 0.05,

whereas Godrej stands at 0.09.

4.1.3 Investment Valuation Ratios

These shows investment attractiveness of the company which is important as it shows how good

the company is to investor and more investment will flow in to aid growth. Per share ratios take

into account the financial number in respect to per share.

4.1.3.1 Earnings per Share

Earnings per share or EPS is the calculation of the companys profits allocated to each

outstanding share. It is considered to be one of the most important variable in determinant of the

companys share health.

Formula: Earnings per Share = Net Income/Number of Outstanding Shares


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Table 5: Earning Per Share of the four companies for five years

Earnings per Share Mar 13 Mar 12 Mar 11 Mar 10 Mar 09

Dabur India Ltd. 4.4 3.7 3.3 5.8 4.5



Chart 5: Earning Per Share of the four companies for five years

Interpretation: From the above table we can see that Daburs EPS is 4.4 in comparison with

other companies it is significantly low. While Godrej holds a strong EPS of 24.84 in 2013 with

Emami following at 20.8 and Hindustan Unilever at 17.56. The trend in Dabur is not strong

either while trends in others are relatively better.

0

5

10

15

20

25

30


Dabur India Ltd.

Emami Ltd.

Godrej Consumer

Products Ltd.



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4.1.3.2 Dividend per Share

Investors generally use dividends as a signal. If dividends per share drop, then investors take that

as a signal that the company is not doing well financially.

Formula: Dividend Per Share = Dividends/Number of Outstanding Shares

Table 6: Dividend Per Share of the four companies for five years

Dividend per Share Mar 13 Mar 12 Mar 11 Mar 10 Mar 09

Dabur India Ltd. 1.5 1.3 1.15 2 1.75

Emami Ltd. 9.36 9.3 4.08 3.51 3.13

Godrej Consumer Products Ltd. 5 4.75 4.5 4.25 4


Chart 6: Dividend Per Share of the four companies for five years

0

2

46

8

10

12

14

16

18

20


Dabur India Ltd.

Emami Ltd.

Godrej Consumer

Products Ltd.



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Interpretation: It can be observed here that the trend of EPS follows suit id DPS as well, Dabur

is at 1.5 while Hindustan Unilever stands strongest at 18.5 and Hindustan Unilever shows signs

of positive trend. Correspondingly Emami stands at 9.36 and Godrej at 5.

4.2 Comparison of Financials

Financial Comparison is done here to draw a comparison between companies in terms of their

size and stature from the yearly financial statements.

This project makes use of two components to draw a comparison that are Sales and Net Worth

4.2.1 Sales

Sales are the main component of the financial statements it is the main source of earning. There

are two types of sales: gross sales and net sales.

For analysis purpose the sales percentage growth a year compared to previous year is taken for

the four companies is taken into consideration. The sales growth percentage is taken as sales

growth from years 2009-to-10, 2010-to-11, 2011-to-12 and 2012-to-13.

Table 7: Sales growth of the four companies over five years

Sales 12 to 13 11 to 12 10 to 11 09 to 10

Dabur India Ltd. 16% 30% 20% 21%

Emami Ltd. 17% 17% 22% 36%

Godrej Consumer Products Ltd. 32% 32% 80% 47%

Hindustan Unilever Ltd. 17% 12% 11% -16%


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Chart 7: Sales growth of the four companies over five years

Interpretation: in terms of sales it can be seen above that Godrej has shown the most growth

which is 32% while both Emami and Hindustan Unilever shows a growth of 17%, Dabur shows

a growth of 16%.

4.2.2 Net Worth

Net worth or Shareholders fund represents the stockholders' claim to a business' assets after all

creditors and debts have been paid. It is the difference between the companys assets andliabilities.

Formula: Shareholders Funds = Total Assets Total Liabilities

-40%

-20%

0%

20%

40%

60%

80%

100%

12 to 13 11 to 12 10 to 11 09 to 10

Dabur India Ltd.

Emami Ltd.

Godrej Consumer

Products Ltd.



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Table 8: Net Worth of the four companies for five years

Net Worth Mar 13 Mar 12 Mar 11 Mar 10 Mar 09

Dabur India Ltd. 2124 1717 1391 935 819



Chart 8: Net Worth of the four companies over five years

Interpretation: Daburs net worth has been gradually increasing and currently stands at 2124

which is a good indicator of growth. In 2012 it stood at 1717 which is 24% growth. For

Hindustan Unilever there is a decline in the net worth from 3681 to 2674 that is 28% decline.

Whereas Emami grew from 706 in 2012 to 777 in 2013 which is a 10% growth and as for Godrej

it grew from 2815 in 2012 to 3313 in 2013 a 17% growth.

0

500

1000

1500

2000

2500

3000

3500

4000


Dabur India Ltd.

Emami Ltd.

Godrej Consumer

Products Ltd.



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4.3 SWOT ANALYSIS OF DABUR

Strengths

A trusted and well-known brand with 129 years of history. Quality maintenance A good R&D Department A wide advertisement network Competitive prices Large distribution network

Weakness

More debt than competition Lagging technological state Somewhat less impactful advertisements Dabur images mostly being aphorist for its ayurvedic medicines

Opportunities

Increasing market share Health consciousness among people Huge rural market More export potentials Rising purchasing power in domestic country

Threats

Competitors existing and new-comers

Market slowdown Tax regulations


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CHAPTER 5

FINDING AND RECOMMANDATIONS

5.1 Findings

From the trend analysis is can be found that Dabur as a company in terms of sales growth stands

16% slowest and Godrej is currently records the strongest in the focus group. All the companies

enjoy a positive forward trend in sales, Dabur, Emami and Godrej has been continuously

growing since 2009 where-as Hindustan Unilever has experienced a decline in sales growth of

16% from 2009 to 2010 from there onwards there has been a growth in sales.

Net worth indicates that from 2012 to 2013 the growth has been 24% growth for Dabur, 10% for

Emami and 17% for Godrej while Hindustan Unilever fell by 28%.

In terms of returns in investors Dabur has not done very well, from the focus group Dabur had

lowest EPS of 4.4 and lowest DPS of 1.5 in 2013 and this trend follows suit from 2009 to 2013.

It could lead to the company being not being attractive to investors, but the point to take into

consideration is that Dabur had a bonus issue of 1:1 in 2011. Where-as other companies grew

substantially with Godrej recording the highest EPS of 24.84 while Emami stood at 20.8 and

Hindustan Unilever at 17.56 for 2013. Hindustan Unilever records the highest DPS of 18.5 with

others standing at 9.36 for Emami and 5 for Godrej.

From Inventory Turnover prospective a cross-comparison is not justifiable because individual

companies have individual working conditions which vary between them and drawing a

favorable spread of inventory turnover which is not too much nor too less is subject to individual

working conditions and are at the discreet of inventory management.

But to get a general overview it can be observed here that almost all the companies are showing a

changing trend which alternates from year to year. Dabur shows an alternative yet downward

trend while Emami shows more of a forward trend. While both Godrej and Hindustan Unilever

shows a slow forward trend.


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Other liquidity ratios taken in the project, current ratio and quick ratio are indicators of the

liquidity of the companies, it is important to know liquidity to understand that how much can a

firm stand to gain from selling of its assets. Both these ratios give a relative idea of the financial

health of the company.

It is observed that Daburs current ratio presently stands 1.17, which is >1 it means there are

more assets than liabilities to pay them off. While Hindustan Unilever current ratio is presently

0.75, it is the only one to be 1 at 1.29 and

Emami stands strongest at 1.57. Being that Dabur is at a favorable position in comparison to the

competition and is growing strong.

In observation of the quick ratio it is noticed that except Emami rest three companies shows a

ratio of 1. Hindustan Unilever quick remains unchanged from 2012

to 2013 at 0.44 also being the lowest in the focus group, an overall general trend of also negative

falling from 0.51 since 2009. Godrej in 2013 is at 0.78 falling from 1.72 in 2009.

Leverage being calculated here in dept-to-equity ratio has been observed to reveal that Hindustan

Unilever had been debt-free since 2010 while it was merely 0.2 in 2009. This can be the

attributing factor in the companies positive movement, observed above in the ratios above. The

debt-free companies have grown richer which can be cause of the current condition of the

economy. The companies which had high position enjoyed flexibility which helped them in

expansion as opposed to the companies with large debt put more pressure on their cash flows.

While Dabur had a low debt-to-equity of 0.15 it is still highest among the focus group as as

Godrej stands at 0.09 and Emami stands at 0.05.


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5.2 Recommendations

5.2.1 For Dabur

Through the above analysis it can be observed that the company has some positive some

negative point and on the basis of that I would recommend the following:

Company holds a good net worth which it should maintain funds for the shareholders. Company should try to improve its dividend per share in the same suit to improve its

shares market attractiveness.

The conditions of the economy in the country are better than before but still thecompanies like Hindustan Unilever and Procter and Gamble have shown that less debt is

better for the functioning of the company, especially in adverse economic conditions.

Company should further its finance through equity while trying to minimize its debts.

5.2.2 For Emami

Observed through the above analysis Emami is doing well and I recommend the following to

keep the trend:

Company holds a debt-to-equity ratio which they should maintain and lower. Company holds a good EPS and DPS to make them investor attractive which should be a

good thing for company to finance it operations through equity. Company should improve its net worth by expansion and increasing equity in the market.


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5.2.3 For Godrej

Godrej has in terms of financial has a good position as observed from the analysis and to

improve their position further I recommend:

Company has the best sales growth and the most net worth in the focus group whichshould be maintained to enjoy the superior position.

Company should also indulge in improving its quick ratio.

5.2.4 For Hindustan Unilever

Hindustan Unilever enjoys a good position observed from the analysis and I recommend:

Company remains debt-free which is a highly contributing factor in the companysimproving financials which the company should continue to maintain.

Company has a large net worth and good EPS and DPS which make it in a good positionfor expansion.

Company maintains a poor current and quick ratio which they should invest in toimprove.


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5.3 Limitations of the Project

I have made this project taking all necessary precautions to ensure that the information presented

is authentic and free of errors. I faced certain constraints and limitations which have affected this

project. Please take into consideration the constraints and limitations faced by me as mentioned

below:

Time:The nature of the report required detailed and meticulous information gathering. Inthis 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.

Human error:Human error may still persist as approaches and opinion excluding purefinancial are subject to the probability of sometimes being biased.

Calculation error: This report required calculation and analysis of figures and mistakescould have arises

Approximation error: From the sources of the data figures approximation has beendone from the side of the data providers as well as in this project.

Error in comparison:A limitation of ratio analysis is the difficulty associated with theircomparability arising from different bases and estimations adopted by companies such as:

different manner of calculation of depreciation, estimation of assets life, etc.

Conceptual Diversity: Another limitation of ratio analysis is the difference of opinionregarding various concepts used to compute the ratios.


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CHAPTER 6

APPENDIX

Data

Dabur India Ltd

Dabur India Ltd 13-Mar 12-Mar 11-Mar 10-Mar 9-Mar

Equity Share Capital 174.29 174.21 174.07 86.76 86.51

Reserves & Surplus 1420.49 1128.28 927.09 662.48 651.69

Secured Loans 22.47 19.12 17.57 24.27 8.26

Unsecured Loans 219.11 254.15 235.78 81.8 130.72

Fixed Assets:

Gross Block 959.11 883.23 766.88 687.23 518.77

Less : Revaluation Reserve 0 0.78 0 0 0

Less : Accumulated Depreciation 342.53 297.9 269.32 236.28 210.45

Net Block 616.58 584.55 497.56 450.95 308.32

Capital Work-in-progress 17.07 25.12 11.92 23.31 51.71

Investments 729.41 552.72 519.23 348.51 232.05

Net Current Assets:

Current Assets, Loans & Advances 1464.83 1647.64 1317.26 941.77 973.42

Less : Current Liabilities & Provisions 991.53 1288.1 1074.41 911.83 696.97

Total Net Current Assets 473.3 359.54 242.85 29.94 276.45

Contingent liabilities 1719.03 1337.82 1075.89 173.48 174.15

Number of Equity shares outstanding (in

Lacs) 17429.35 17421.01 17407.24 8675.86 8650.76

Sales 6146 5283 4077 3391 2805

Income:

Operating Income 4349.39 3759.33 3274.43 2867.42 2408.33

Expenses:

Material Consumed 2327.63 2033.54 1662.37 1384.29 1232.85

Manufacturing Expenses 53.88 71.63 67.6 58.17 54.22

Adminstrative Expenses 932.22 245.81 201.65 187.9 153.67

Cost Of Sales 3594.97 3099.91 2650.07 2317.49 1966.81

Operating Profit 754.42 659.42 624.36 549.93 441.52

Depreciation 73.24 36.81 37.73 31.91 27.42

Profit After Tax 763 645 569 501 391


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Emami Ltd

Emami Ltd 13-Mar 12-Mar 11-Mar 10-Mar 9-Mar



Secured Loans 43.47 107.43 175.64 149.23 373.06

Unsecured Loans 0.08 0.1 48.23 104.02 67.02

Fixed Assets (net block) 439.65 480.34 490.94 567.29 649.46

Capital Work-in-progress 43.91 80.49 6.48 6.21 36.7

Investments 163.58 80.8 7.08 62.08 39.89

Net Current Assets:


Less: Current Liabilities & Provisions 331.11 356.46 178 172.87 167.72




Lacs) 1513.12 1513.12 1513.12 756.56 621.45

Sales 1699.1 1453.51 1247.07 1021.7 748.93

Income:


Expenses:

Material Consumed 695.27 612.79 512.98 383.39 309.59Manufacturing Expenses 13.87 11.54 9.94 8.33 5.16


Cost Of Sales 1280.27 1096.81 948.67 748.58 586.64

Operating Profit 346.82 293 253.71 242 135.71

Depreciation 123.29 120.75 116.03 117.49 17.89

Profit After Tax 314.74 258.84 228.72 169.72 91.86


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Godrej Consumer Products Ltd

Godrej Consumer Products Ltd 13-Mar 12-Mar 11-Mar 10-Mar 9-Mar



Secured Loans 0.65 2.27 10.06 12.4 14.89

Unsecured Loans 260.17 235.24 262.43 0 48

Fixed Assets:

Gross Block 1529.17 1482.32 1461.06 273.8 266.54

Less : Revaluation Reserve 0 0 0 0 0

Less : Accumulated Depreciation 383.34 300.91 231.35 108.24 96.75

Net Block 1145.83 1181.41 1229.7 165.56 169.79

Capital Work-in-progress 121.1 77.6 11.88 0.84 2.5Investments 1450.05 1193.46 362.06 521.88 97.89

Net Current Assets


Less : Current Liabilities & Provisions 1066.46 823.99 551.64 401.16 277.61




Lacs)3403.27 3402.97 3235.9 3081.9 2569.54

Sales 6390.79 4851 3676.3 2041.2 1393

Income:


Expenses:

Material Consumed 1707.08 1484.62 1184.76 567.56 627.65

Manufacturing Expenses 86 138.84 120.5 53.29 53.75


Cost Of Sales 2950.95 2401.14 1938.02 1000.6 925.47

Operating Profit 630.07 573.93 456.29 273.6 170.41

Depreciation 32.27 25.83 21.98 13.75 14.37

Profit After Tax 845.43 771.74 473.57 --- ---

Note: For year 2009 and 2010 the Profit After Tax is not realized.


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trend analysis of four fmcg companies in india

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