Trend analysis of four FMCG companies in India

This 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.

Declaration

I, Abhay Adil, student of MIB at Department of Commerce and Business, Delhi School of Economics, 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 couldnt be 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 1.1 Executive Summary..Page 1 1.2 General PreviewPage 1 1.3 Preview of Industry...Page 3 CHAPTER 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. Burman in 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

FMCG or Fast-Moving Consumer Goods 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 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

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 Assets Total 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 Dabur India Ltd. Emami Ltd. Godrej Consumer Products Ltd. Hindustan Unilever Ltd. Mar 13 1.17 1.57 1.29 0.75 Mar 12 1.15 1.28 1.37 0.83 Mar 11 0.99 1.5 1.37 0.85 Mar 10 0.92 1.33 1.38 0.83 Mar 09 1.19 0.72 2.19 1.01

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

2.5

Dabur India Ltd. Emami Ltd. Godrej Consumer Products Ltd. Hindustan Unilever Ltd.

1.5

0.5

0 9-Mar 10-Mar 11-Mar 12-Mar 13-Mar

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 is at 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.

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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 Dabur India Ltd. Emami Ltd. Godrej Consumer Products Ltd. Hindustan Unilever Ltd. Mar 13 0.97 1.38 0.78 0.44 Mar 12 0.85 1.36 0.84 0.44 Mar 11 0.77 2.59 0.81 0.43 Mar 10 0.67 1.93 0.95 0.45 Mar 09 0.98 0.82 1.72 0.51

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

3 2.5 Dabur India Ltd. 2 Emami Ltd. 1.5 1 0.5 0 9-Mar 10-Mar 11-Mar 12-Mar 13-Mar Godrej Consumer Products Ltd. Hindustan Unilever 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 Dabur India Ltd. Emami Ltd. Godrej Consumer Products Ltd. Hindustan Unilever Ltd. Mar 13 8.8 14.8 7.06 10.8 Mar 12 7.19 17.01 7.26 9.93 Mar 11 8.65 12.39 8.2 7.91 Mar 10 11.31 13 7.93 8.99 Mar 09 10.94 10.2 9.25 9.26

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Chart 3: Inventory Turnover Ratios of the four companies for five years
18 16 14 12 10 8 6 4 2 0 9-Mar 10-Mar 11-Mar 12-Mar 13-Mar Emami Ltd. Godrej Consumer Products Ltd. Hindustan Unilever Ltd. Dabur India Ltd.

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.

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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 Dabur India Ltd. Emami Ltd. Godrej Consumer Products Ltd. Hindustan Unilever Ltd. Mar 13 0.15 0.05 0.09 0 Mar 12 0.2 0.15 0.09 0 Mar 11 0.23 0.32 0.17 0 Mar 10 0.14 0.4 0.01 0 Mar 09 0.18 1.49 0.11 0.2

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

1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 9-Mar 10-Mar 11-Mar 12-Mar 13-Mar Godrej Consumer Products Ltd. Hindustan Unilever Ltd. Dabur India Ltd. Emami 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 Dabur India Ltd. Emami Ltd. Godrej Consumer Products Ltd. Hindustan Unilever Ltd. Mar 13 4.4 20.8 24.84 17.56 Mar 12 3.7 17.11 22.08 12.45 Mar 11 3.3 15.12 15.91 10.68 Mar 10 5.8 11.63 11.02 9.92 Mar 09 4.5 7.23 6.74 11.51

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

30 25 Dabur India Ltd. 20 Emami Ltd. 15 10 5 0 9-Mar 10-Mar 11-Mar 12-Mar 13-Mar Godrej Consumer Products Ltd. Hindustan Unilever Ltd.

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.

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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 Dabur India Ltd. Emami Ltd. Godrej Consumer Products Ltd. Hindustan Unilever Ltd. Mar 13 1.5 9.36 5 18.5 Mar 12 1.3 9.3 4.75 7.5 Mar 11 1.15 4.08 4.5 6.5 Mar 10 2 3.51 4.25 6.5 Mar 09 1.75 3.13 4 7.5

Chart 6: Dividend Per Share of the four companies for five years
20 18 16 14 12 10 8 6 4 2 0 9-Mar 10-Mar 11-Mar 12-Mar 13-Mar Godrej Consumer Products Ltd. Hindustan Unilever Ltd. Dabur India Ltd. Emami 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 Dabur India Ltd. Emami Ltd. Godrej Consumer Products Ltd. Hindustan Unilever Ltd. 12 to 13 16% 17% 32% 17% 11 to 12 30% 17% 32% 12% 10 to 11 20% 22% 80% 11% 09 to 10 21% 36% 47% -16%

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

100% 80% 60% 40% 20% 0% 12 to 13 -20% -40% 11 to 12 10 to 11 09 to 10 Dabur India Ltd. Emami Ltd. Godrej Consumer Products Ltd. Hindustan Unilever Ltd.

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 and liabilities. Formula: Shareholders Funds = Total Assets Total Liabilities

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

Net Worth Dabur India Ltd. Emami Ltd. Godrej Consumer Products Ltd. Hindustan Unilever Ltd. Mar 13 2124 777.47 3313.04 2674.02 Mar 12 1717 706.63 2815.18 3512.93 Mar 11 1391 689.84 1725.16 2633.92 Mar 10 935 625.38 954.69 2583.52 Mar 09 819 301.12 566.85 2061.51

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

4000 3500 3000 2500 2000 1500 1000 500 0 9-Mar 10-Mar 11-Mar 12-Mar 13-Mar Godrej Consumer Products Ltd. Hindustan Unilever Ltd. Dabur India Ltd. Emami Ltd.

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.

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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. Godrej is showing a downward trend but is still >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. While it is a refined form of current ratio its relative observation can vary can estimated healthy ratio can be less than that of current ratio. Dabur in 2013 stands at 0.97 which has been continuously rising since 2010 which at time was 0.67 therefore a positivity can been observed here in the trend. Emami on the other hand has fallen from 2.59 in 2011 to 1.38 in 2013 it is a downward trend but it is still >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 the companies 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 which should 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 companys improving 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 position for expansion. Company maintains a poor current and quick ratio which they should invest in to improve.

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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. In this sense time was a limiting factor and a major constraint to accomplish the given task. Also sometimes the information was not available on time. This caused a lot of pilferage of time unnecessary of duplication of effort.

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

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

Approximation error: From the sources of the data figures approximation has been done 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 their comparability 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 opinion regarding various concepts used to compute the ratios.

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CHAPTER 6 APPENDIX
Data Dabur India Ltd
Dabur India Ltd
Equity Share Capital Reserves & Surplus Secured Loans Unsecured Loans Fixed Assets: Gross Block Less : Revaluation Reserve Less : Accumulated Depreciation Net Block Capital Work-in-progress Investments Net Current Assets: Current Assets, Loans & Advances Less : Current Liabilities & Provisions Total Net Current Assets Contingent liabilities Number of Equity shares outstanding (in Lacs) Sales Income: Operating Income Expenses: Material Consumed Manufacturing Expenses Adminstrative Expenses Cost Of Sales Operating Profit Depreciation Profit After Tax 2327.63 53.88 932.22 3594.97 754.42 73.24 763 2033.54 71.63 245.81 3099.91 659.42 36.81 645 1662.37 67.6 201.65 2650.07 624.36 37.73 569 1384.29 58.17 187.9 2317.49 549.93 31.91 501 1232.85 54.22 153.67 1966.81 441.52 27.42 391 4349.39 3759.33 3274.43 2867.42 2408.33 17429.35 6146 17421.01 5283 17407.24 4077 8675.86 3391 8650.76 2805 1464.83 991.53 473.3 1719.03 1647.64 1288.1 359.54 1337.82 1317.26 1074.41 242.85 1075.89 941.77 911.83 29.94 173.48 973.42 696.97 276.45 174.15 959.11 0 342.53 616.58 17.07 729.41 883.23 0.78 297.9 584.55 25.12 552.72 766.88 0 269.32 497.56 11.92 519.23 687.23 0 236.28 450.95 23.31 348.51 518.77 0 210.45 308.32 51.71 232.05 13-Mar 174.29 1420.49 22.47 219.11 12-Mar 174.21 1128.28 19.12 254.15 11-Mar 174.07 927.09 17.57 235.78 10-Mar 86.76 662.48 24.27 81.8 9-Mar 86.51 651.69 8.26 130.72

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Emami Ltd

Emami Ltd
Equity Share Capital Reserves & Surplus Secured Loans Unsecured Loans Fixed Assets (net block) Capital Work-in-progress Investments Net Current Assets: Current Assets, Loans & Advances Less: Current Liabilities & Provisions Total Net Current Assets Contingent liabilities Number of Equity shares outstanding (in Lacs) Sales Income: Operating Income Expenses: Material Consumed Manufacturing Expenses Adminstrative Expenses Cost Of Sales Operating Profit Depreciation Profit After Tax

13-Mar 15.13 762.18 43.47 0.08 439.65 43.91 163.58

12-Mar 15.13 681.58 107.43 0.1 480.34 80.49 80.8

11-Mar 15.13 667.89 175.64 48.23 490.94 6.48 7.08

10-Mar 15.13 605.65 149.23 104.02 567.29 6.21 62.08

9-Mar 12.43 282.9 373.06 67.02 649.46 36.7 39.89

569.79 331.11 238.68 91.93

598.42 356.46 241.95 29.25

588.88 178 410.88 129.95

417.77 172.87 244.9 118.67

214.66 167.72 46.95 117.49

1513.12 1699.1

1513.12 1453.51

1513.12 1247.07

756.56 1021.7

621.45 748.93

1627.09

1389.81

1202.38

990.58

722.35

695.27 13.87 471.07 1280.27 346.82 123.29 314.74

612.79 11.54 58.03 1096.81 293 120.75 258.84

512.98 9.94 60.87 948.67 253.71 116.03 228.72

383.39 8.33 43.82 748.58 242 117.49 169.72

309.59 5.16 42.58 586.64 135.71 17.89 91.86

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Godrej Consumer Products Ltd

Godrej Consumer Products Ltd

Equity Share Capital Reserves & Surplus Secured Loans Unsecured Loans Fixed Assets: Gross Block Less : Revaluation Reserve Less : Accumulated Depreciation Net Block Capital Work-in-progress Investments Net Current Assets Current Assets, Loans & Advances Less : Current Liabilities & Provisions Total Net Current Assets Contingent liabilities Number of Equity shares outstanding (in Lacs) Sales Income: Operating Income Expenses: Material Consumed Manufacturing Expenses Adminstrative Expenses Cost Of Sales Operating Profit Depreciation Profit After Tax

13-Mar 34.03 2727.07 0.65 260.17

12-Mar 34.03 2489.89 2.27 235.24

11-Mar 32.36 1501.32 10.06 262.43

10-Mar 30.82 796.65 12.4 0

9-Mar 25.7 511.22 14.89 48

1529.17 0 383.34 1145.83 121.1 1450.05

1482.32 0 300.91 1181.41 77.6 1193.46

1461.06 0 231.35 1229.7 11.88 362.06

273.8 0 108.24 165.56 0.84 521.88

266.54 0 96.75 169.79 2.5 97.89

1371.4 1066.46 304.94 2826.07 3403.27 6390.79

1132.95 823.99 308.96 2396.82 3402.97 4851

754.16 551.64 202.53 64.76 3235.9 3676.3

552.75 401.16 151.59 79.41 3081.9 2041.2

607.24 277.61 329.64 45.42 2569.54 1393

3581.02

2975.07

2394.31

1274.2

1095.87

1707.08 86 992.31 2950.95 630.07 32.27 845.43

1484.62 138.84 91.79 2401.14 573.93 25.83 771.74

1184.76 120.5 87.34 1938.02 456.29 21.98 473.57

567.56 53.29 41.86 1000.6 273.6 13.75 ---

627.65 53.75 40.11 925.47 170.41 14.37 ---

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

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Hindustan Unilever Ltd

Hindustan Unilever Ltd

Equity Share Capital Reserves & Surplus Secured Loans Unsecured Loans Fixed Assets: Gross Block Less : Revaluation Reserve Less : Accumulated Depreciation Net Block Capital Work-in-progress Investments Net Current Assets: Current Assets, Loans & Advances Less : Current Liabilities & Provisions Total Net Current Assets Contingent liabilities Number of Equity shares outstanding (in Lacs) Sales Income: Operating Income Expenses: Material Consumed Manufacturing Expenses Adminstrative Expenses Cost Of Sales Operating Profit Depreciation Profit After Tax

13-Mar 216.25 2457.77 0 0

12-Mar 216.15 3296.11 0 0

11-Mar 215.95 2417.3 0 0

10-Mar 218.17 2364.68 0 0

9-Mar 217.99 1842.85 144.65 277.3

4144.52 0 1841.3 2303.22 205.32 2330.66

3574.67 0.67 1416.88 2157.12 210.89 2438.21

3759.62 0.67 1590.46 2168.49 299.08 1260.68

3581.96 0.67 1419.85 2161.44 273.96 1264.08

2881.73 0.67 1274.95 1606.11 472.07 332.62

6673.27 8838.45 -2165.18 894.21

6340.4 7634.36 -1293.96 1009.23

6494.19 7589.19 -1095 836.96

5818.89 6935.52 -1116.63 468.49

6040.04 5968.06 71.98 417.26

21624.72 26679.76

21615.12 22800.32

21594.72 20285.44

21816.87 18220.27

21798.76 21649.51

25805.04

22118.64

19689.91

17769.12

20504.28

13597.49 402.05 6483.41 21801.29 4003.75 236.02 3314.35

11832.45 922.37 1237.8 18793.44 3325.2 218.25 2599.23

10199.25 825.99 1227.36 17025.42 2664.49 220.83 2153.25

8984.5 656.53 1131.97 14971.42 2797.7 184.03 2102.68

10945.71 598.71 1565.05 17539.33 2964.95 195.3 2500.71

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