COMPARATIVE FINANCIAL ANALYSIS

vs.

CONTENTS

1. 2. 3. 4. 5.

Introduction Company Profiles Ratio Analysis The cost of Capital The working capital Model

1.

Introduction

vs.
Scope of Analysis 1
Analysis of Financial performance of the two firms Understanding their competitive advantage over each other Future performance forecasting Recommendations

2.

Company Profiles

Dabur India Limited is the fourth largest FMCG Company in India. Dabur operates in key consumer products categories like Hair Care, Oral Care, Health Care, Skin Care, Home Care & Foods.
Revenues = US$600 Million (Rs 2834 crore) Market Capitalization = US$2.2 Billion (Rs 10,000 Crore) 9 Billion-Rs. brands: Dabur Amla, Dabur Chyawanprash, Vatika, Ral, Dabur Red Toothpaste, Dabur Lal Dant Manjan, Babool, Hajmola and Dabur Honey

Master brands
Dabur - Ayurvedic healthcare products Vatika - Premium hair care Hajmola - Tasty digestives Ral - Fruit juices & beverages Fem - Fairness bleaches & skin care products

2.

Company Profiles

Godrej Consumer Products (GCPL) is a leader among India's Fast Moving Consumer Goods companies, with Personal and Home Care Products. Their brands, which include Cinthol, No. 1, Expert and Ezee, among others, are household names across the country.
Revenue= 223.199 ( USD in Millions ) Market Cap = 96494.3027764 ( Rs. in Millions ) Total Income =Rs. 11331.484 Million ( year ending Mar 2009) Net Profit = Rs. 1615.468 Million ( year ending Mar 2009)

Master brands
Cinthol Godrej Expert Renew Godrej no. 1 Colour soft

Ratio Analysis
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3.

Ratio Analysis

Current Ratio DABUR GODGEJ

Quick Ratio DABUR GODGEJ

2008-09 2007-08
2006-07 2005-06 2004-05

1.12 0.95
1.11 0.93 0.78

2.04 2.5
1.54 1.24 1.13

0.73 0.6 0.67 0.55 0.38

1.6

2008-09

1.87
0.89 0.71 0.64

2007-08
2006-07

2005-06
2004-05 6

3.

Ratio Analysis

Cash Ratio DABUR GODGEJ

Gross profit Ratio DABUR GODGEJ

2008-09 2007-08
2006-07 2005-06 2004-05

0.22 0.12 0.14 0.12 0.03

0.14 0.93 0.11 0.06 0.06

17.8

0.14

2008-09

17.11
16.91 17.37 45.03

0.93
0.11 0.06 0.06

2007-08
2006-07

2005-06
2004-05 7

3.

Ratio Analysis

Net Profit Ratio DABUR GODGEJ

Debt-equity Ratio DABUR GODGEJ

2008-09 2007-08
2006-07 2005-06 2004-05

15.59

14.22 16.5
15.95 18.28 15.2

0.19 0.03
0.05 0.05 0.14

0.12 0.89
1.02 0.06 0.12

2008-09

15.2
14.18 13.77 11.67

2007-08
2006-07 2005-06 2004-05 8

3.

Ratio Analysis

Inventory-turnover Ratio DABUR GODGEJ

Debtors-Turnover Ratio DABUR GODGEJ

2008-09 2007-08
2006-07 2005-06 2004-05

10.94 12.52
11.11 11.65 9.64

9.25 5.7 6.53 7.54 7.67

22.63

99.37

2008-09

25.94
39.7 35.3 26.95

81.1
93.26 112.08 61.07

2007-08
2006-07 2005-06 2004-05 9

3.

Ratio Analysis

Fixed Assets turnover Ratio DABUR GODGEJ

2008-09 2007-08 2006-07

4.84

4.18

4.67
8.51 7.3 7.41

4.6
9.47 11.82 8.34 10

2005-06
2004-05

The Cost Of Capital

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4.

The cost of capital

Cost Of capital

Cost Of Debt

Cost Of Equity

12

4.

Cost of CAPITAL

Cost Of Debt DABUR GODREJ

10.0%

8.33%

13

4.

Cost of capital

Cost Of Equity

1. CAPM: ks = kRF + (kM - kRF)b = kRF + (RPM)b 2. DCF: ks = D1/P0 + g

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4.

Cost of capital

Cost Of Equity
DABUR
B =0.48

GODREJ
B= 0.39

Risk free return=8.0%

Market Return =15.0% Risk Premium =7.0%

Risk free return =4.91%

Market return = 20%

11.4%

10.79%
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4.

Cost of capital

Weighted Average Cost of Capital

DABUR

11.00%

15

The Working Capital Model

11

5.

The working capital Model

The short term operating activities of the firm & their impact on cash & working capital

15

5.

The working capital Model

THE OPERATING CYCLE & THE CASH CYCLE - Short Term Operating Activities :

1
2

Buying raw-material
Paying cash & purchases

How much inventory to order

To borrow / draw down cash balance

Manufacture the product

Choice of production technology

4 5

Selling the product Collecting cash

Offer cash / credit term to the customer How to collect cash

15

5.

The working capital Model

DABUR
Inventory Beg End A/C Receivables Beg End A/c Payables 10046.43 11236.01 20114.69 26171.64 Beg End

GODGEJ
Inventory 19771.19 9355.62

A/C Receivables
Beg End A/c Payables 14873.23 16099.98

Beg
End Net Sales

17289.1
19384.87 239616.39

Beg End Net Sales Cogs

18.95 47.17 81623.72 86745.94

Cogs

196953.07

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5.

The working capital Model

Avg Inventory Inventory turnover Inventory pd

Dabur 23143.16 8.5 times 42.9

Godrej 14563.4 5.95 times 61.3

Avg Receivables Receivables turnover

10641.22 22.51 times

15486.6 5.27 times

Receivables pd
Avg payables Payables turnover Payables pd

16.21
18336.98 10.7 times 34.11

69.25
33.06 2623 8 times 0.139

13

5.

The working Capital Model

DABUR

Inventory Period 42.9

Operating Cycle 59.11

Receivable Period 16.21

A/c Payable period 34.11 GODREJ

Operating Cycle 59.11 days

Cash Cycle 25 days

Inventory Period 61.3 Operating Cycle 130.55

Receivable Period 69.25 A/c Payable period 0.139

Operating Cycle 130.55 days Cash Cycle 130 days 14

PRESENTED BY: NEHA LUTHRA & SAHINA PURI

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