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A REPORT ON FINANCIAL ANALYSIS OF DABUR AND BRITANNIA
1. Final Project Report
ON
A REPORT ON FINANCIAL ANALYSIS OF DABUR AND
BRITANNIA
Submitted in partial fulfillment of requirement of Bachelor of
Commerce (Hons.) (B.COM(H))
B.COM(H) VIth Semester (Morning)
Batch 2016-2019
Submitted to: Submitted by:
JASLEEN RANA RAGINI GUPTA
(Associate Professor) (02414188816)
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2. JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL KALKAJI
STUDENT UNDERTAKING
I, RAGINI GUPTA being a student of BCOM(HONS.) ,Sixth Semester of
JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL hereby declare that the
project report undertitle. “A REPORT ON FINANCIAL ANALYSIS OF DABUR AND
BRITANNIA is written and submitted by me under guidance of Miss. JASLEEN
RANA, is my original work. All care has been taken to keep this report error free and
I sincerely regret for any unintended discrepancies that might have crept into this
report. I shall be highly obliged if errors (if any) be brought to my attention. The
matter embodied in this report has not been submitted by me forward of any other
degree.
RAGINI GUPTA
02414188816
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3. Certificate from faculty guide
This is to certify that Miss. Ragini Gupta of B.Com (Hons) has completed her
project on A Report on Financial analysis of DABUR AND BRITANNIA by her
own. Her work is up to my satisfaction.
Ms. JASLEEN RANA
(ASSOCIATE PROFESSOR)
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4. ACKNOWLEDGEMENT
I would like to give my sincere thanks to my college for providing me with the
golden opportunity to learn about working of an organization. They have teach me
like their own child and answered to my doubts which I raised during the internship
and also asked some questions to check whether I got the vision or not.
They have shown me the work of front office, middle office and back office as well to
get the idea of the execution of whole organization.
They provided me the tools for searching and learning about the companies and
their stock values..
I am greatly indebted to the organization for providing their valuable guidance at all
stages of the study, their advice, constructive suggestions, positive and supportive
attitude and continuous encouragement, without which it would have not been
possible to complete the project. I would also like to thanks Ms. JASLEEN RANA
who is in spite of busy schedule has co-operated with me continuously and indeed,
his valuable contribution and guidance have been certainly indispensable.
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5. CONTENTS
Description Page No.
Acknowledgement 3
Contents 5
List of tables 6
Executive Summary 7
CHAPTER 1:
Introduction to topic
9 – 13
CHAPTER 2:
Literature review
15 – 37
CHAPTER 3:
Company Profile
• DABUR
• BRITANNIA
39 – 45
46 – 49
CHAPTER 4:
Research Methodology
50 – 55
CHAPTER 5:
Analysis & Interpretation
57 – 73
CHAPTER 6:
Recommendations and Conclusion
75 – 85
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6. Bibliography & Appendices 92 – 95
LIST OF EXHIBITS
S.NO FIGURE NAME PAGE NO.
Exhibit.1.1 Current Ratio 57
Exhibit.1.2 Quick Ratio 59
Exhibit.1.3 Debt Equity Ratio 61
Exhibit.1.4 Gross Profit Ratio 63
Exhibit.1.5 Net Profit Ratio 65
Exhibit.1.6 Return on Ratio 67
Exhibit.1.7 Return on Equity 69
Exhibit.1.8 Earnings Per Share 71
EXECUTIVE SUMMARY
As a part of academic requirement, I Ragini gupta, having enrolment number
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7. 02414188816 a student of Jagannath International Management School, Kalkaji
affiliated to Guru Gobind Singh Indraprastha University has completed this
project.Theory and practice are the two eyes of the management education. The
training prescribed by the Jagannath International Management School student
have
various objectives like helping the student to acquire knowledge, give an opportunity
to know the difference between theory and practice, enable the student to interact
with experienced and knowledgeable persons of business world.
As a student of B.com (hons), I got an opportunity to undergo on research. The
Research Project title is ― A REPORT ON FINANCIAL ANALYSIS OF DABUR
AND BRITANNIA.
I successfully completed my project report within the specified time. The satisfaction
of completion of any successful task is incomplete without mentioning the name of
people who made it encouragement crowned our efforts with success. I have done
my project report on DABUR AND BRITANNIA under Ms, Jasleen Rana was my
faculty mentor. It was an experience of enjoyment through hard work and
dedication. Through this finding of this report, I hope that the Industry in India as
well as outside the country will benefit.
I have a pleasure in submitting the project report & I take this opportunity to
express my sincere gratitude to all those who have helped me in this completion of
this project report.
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9. INTRODUCTION
Analysis of Financial Statements (AFS) refers to the progress of critical examination
of the financial information contained in the financial statements in order to
understand & make decisions regarding the operations of the company. The AFS is
basically a study of the relationship among various financial facts & figures as given
in a set of financial statements.
The basic financial statements i.e., the Balance Sheet & the Income Statement
contained a whole lot of financial data. The complex figures as given in these
financial statements are dissected into simple & valuable elements, & significant
relationships are established between the elements of the same dissection,
establishing relationships & interpretation thereof to understand the working &
financial position of a firm is called AFS.
Thus, AFS is the process of establishing & identifying the financial weakness &
strengths of the company.
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10. OBJECTIVES OF FINANCIAL ANALYSIS
The following are the objectives of financial analysis: -
1. Judging The Earning Capacity Or Profitability::
On the basis of financial statements, the earning capacity of the business
concerned may be computed. In addition to this the future earning capacity of
the concerned may be forecasted. All the external users of accounts,
especially the investors are interested in this.
2. Judging The Short & Long- Term Solvency Of The Concern::
On the basis of financial statements, the solvency of the concern may be
judged. Debenture holders & lenders judge the ability of the company to pay
the Principal & Interest, as most of the companies raise a portion of their
capital requirements by issuing debentures & raising long-term loans. Trade
creditors are mainly interested in assessing the short-term solvency of the
business as they want to know that the business is in a position to pay debts
as & when they fall due.
3. Making Forecasts & Preparing Budgets::
Past financial Analysis helps a great deal in assessing developments in the
future, specially the next year. For example, given a certain investment, it
may be possible to forecast the next year’s profit on the basis of earning
capacity shown in the past. Analysis thus helps in preparing budgets.
TYPES OF COMPARISION
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11. Comparison is the second step in RA. The ratio can be compared in three different
ways:
A.) Cross Section Analysis: - In this, the Ratios of a firm are compared with the
ratios of some other selected firm in the same industry at the same point of
time. The Cross Section Analysis helps the Analyst to find out as to how a
particular firm has performed in relation to its competitors. The firm’s
performance may be compared with the performance of the leader in the
industry in order to uncover the major operational inefficiencies.
B.) Time Series Analysis (TSA): - In this, the performance of the firm is
evaluated over a period of time. By comparing the present performance of a
firm with the performance of the same firm over the last few years, an
assessment can be made about the trend progress of the firm, about the
direction of progress of the firm. The information generated by the T.S.A can
be of immense help to the firm to make planning for future operations. The
T.S.A can also help the firm to assess whether the firm is approaching long-
term goals or not.
C.) Combined Analysis: - In this cross section and time series analysis are
combined to study the behavior and pattern of ratios so that meaningful.
The basis of our comparison shall be limited to time series analysis since the
basic objective of our analysis is to compare the present performance of BEL
with its performance over last two years.
OBJECTIVE OF THE STUDY
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12. The objective of the study during 4 weeks training was to analyse the financial
statements so as:
• To evaluate the financial position of the Companies.
• To know the profitability of the companies.
• To examine the financial soundness of the companies.
• To know the shareholders pattern of the companies.
• Past Three Year Performance of the Shares of Dabur and Britannia.
SIGNIFICANCE OF THE STUDY
The project also aims at providing details regarding:-
• Income & Expenditure of the Company, which is given in the form
of P&L Account.
• Assets & Liabilities of the Company in form of Balance Sheet.
• Shareholding Pattern and Distribution of shareholding with the
share performance of the share of Financial Year .
LIMITATIONS
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13. The main limitations of the project undertaken are as under:-
• Time: The time of around two months was too short to study as wide subject like
Financial Analysis.
• Confidential information: The executives were hesitant to reveal complete
information since it was confidential.
• Busy Schedule of Concerned Executives: The concerned executives were not
having very busy schedule because of which they were reluctant to give appointment.
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15. LITERATURE REVIEW
A literature review is the summary and critical evaluation of previous published and
unpublished researches made by various scholars and researchers.
The source of literature review may be newspapers, articles, journals, magazines, books,
thesis, reports etc. It may also include discussions, methodological issues and suggestions for
future research.
INTRODUCTION TO RATIO ANALYSIS (RA)
The RA has emerged as a principal technique of the AFS. A ratio is the relationship
expressed in mathematical term between two individual and group of figures connected with
each other in some logical manner.
The RA is based on the premise that a single accounting figure by itself may not
communicate any meaningful information but when expressed as a relative to some other
figure, it may definitely give some significant information. The relationship between 2 or
more accounting figures/groups is called a Financial Ratio.
A Financial Ratio helps to summarize a large mass of financial data into a concise form &
to make meaningful interpretations & conclusions about the performance & position of the
firm.
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16. STEPS IN RATIO ANALYSIS
The RA requires two steps as follows:
• Calculations of the Ratios.
• Comparing the ratios with some predetermined standards. The standard ratio may
be the last ratio of the same firm or a projected ratio or the ratio of the most
successful firm in the industry.
• In interpreting the ratio of a particular firm, the analyst cannot reach any fruitful
conclusion unless the calculated ratio is compared with some predetermined
standards.
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17. CLASSIFICATION OF RATIOS
Broadly speaking, the operations and financial positions of the firms can be described by
studying its profitability, its long term and short-term liquidity position and its operational
activities. Therefore the ratios can be studied by classifying into the following groups:
• The Liquidity Ratios
• The Activity Ratios
• The Leverage Ratios
• The Profitability Ratios
The Liquidity Ratios
The term ‘Liquidity’ refers to the maintenance of cash, bank balance and those assets which
are easily convertible into cash in order to meet the liabilities as and when arising. The terms
‘Liquidity ratios’ study the firm’s short-term solvency and its ability to pay off the liabilities.
The day-to-day problems of financial management consist of the highly important task of
finding sufficient cash to meet current obligations. The short-term liquidity risk arises
primarily.
The liquidity ratios provide a quick measure of liquidity of the firm by establishing the
relationship between its current assets and current liquidities. If the firm does not have
sufficient liquidity, it may not be in a position to meet its commitments and thereby may lose
its credit worthiness. The liquidity ratios are also called Balance Sheet Ratio because the
information required for the calculation of liquidity ratios is available in the balance sheet
only. Some of common liquidity ratios are:
A.) CURRENT RATIO: - It is the most common & popular measure of studying the
liquidity of a firm. It is an indicator of the firm’s ability to meet its short-term
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18. obligations. It matches the total current assets of the firm against its current
liabilities. It s calculated as follows: -
CURRENT RATIO = Current Assets / Current Liabilities
The Current Assets include those assets, which are in the form of cash or convertible into
cash within a period of one year. The term current assets also include Prepaid Expenses &
Short-term investments, if any. The current liabilities all types of liabilities, which will
mature for payment within the period of one year.
SIGNIFICANCE:
The Current Ratio shows the extent to which the current assets are quickly convertible in to
cash exceeds the liabilities that will be shortly payable. The current ratio, so calculated is
compared with a standard ratio. Generally, a current ratio of 2:1 is considered to be
satisfactory. A higher ratio indicates poor investment policies of the management & poor
inventory control while a low ratio indicates lack of liquidity & shortage of working capital.
B.) QUICK RATIO: - It is also called ‘Acid test or Liquid Ratio’. Quick Ratio is
worked out to test the short-term liquidity of the firm in its current form. This ratio
establishes the relationship between liquid Current Assets & the Current liabilities. A
currents asset is considered to be liquid if it is convertible into cash without loss of
time & value. On the basis of this definition of liquid assets, the inventory is singled
out of total Current Assets as the inventory is considered to be potentially liquid. The
reason for keeping inventories out is that it may become obsolete, unsaleable or out
of fashion & always require time for releasing into cash.
Moreover, the inventories have tendencies to fluctuate in value. Another item, which is
generally kept out, is the Prepaid Expenses because by nature these Prepaid Expenses are not
realizable in cash. It is calculated as:
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19. QUICK RATIO = Liquid Assets / Current Liabilities
SIGNIFICANCE:
Quick ratio is an indicator of short-term solvency of the firm. In fact, it is a better indicator
of liquidity as it involves computation of Liquid Assets, which means the illiquid portion of
the current assets is eliminated. Quick ratio is considered as a further refinement of current
ratio. Generally a quick ratio of 1:1 is considered to be satisfactory because this means that
the Quick Assets of the firm are just equal to the current liabilities & there does not seem to
be a possibility of default in payment by the firm.
THE ACTIVITY RATIOS
The activity ratios are also called the ‘Turnover Ratios or Performance Ratios’. An activity
ratio is a measure of movement & thus indicates as to how frequently an account has
moved/turned over during a period. It shows as to how efficiently & effectively the assets of
the firm are being utilized. These Ratios are usually calculated with reference to sales/cost of
goods sold & are expressed in terms of rate or times. Activity ratios for each type of assets
are calculated separately. Following are the important Activities Ratios.
A. Capital Turnover Ratio (CTR): - Capital Turnover indicates the speed or rate
with which Capital Employed is rotated in the process of doing business. Efficient
Rotation of capital would lead to higher profitability. The Resultant Ratio would
show the number of times the capital has been rotated in the process of doing
business.
The Ratio is calculated as follows: -
Capital Turnover Ratio = Net sales / Capital Employed
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20. CTR establishes the relationship between sales & capital employed. The objective of
working out this ratio is to determine how efficiently the Capital Employed is being used.
Higher the ratio, greater is the sales made per rupee of Capital Employed in the firm & hence
higher is the profit. A low CTR refers to low sales generated in relation to Capital Employed
or excessive Capital being used in the firm.
B. Fixed Assets Turnover Ratio: - This Ratio shows how to well the fixed assets are
being utilized. If compared with a previous period, it indicates whether the
investment in fixed assets has been judicious or not.
The Ratio is calculated as follows: -
Fixed Assets Turnover Ratio = Net sales / Fixed Assets
In computing Fixed Assets Turnover Ratio, the fixed assets are generally taken at written
down value at the end of the year.
Fixed Assets Turnover Ratio indicates how efficiently the fixed assets are used. If there is an
increase in the ratio, it will indicate that there is improvement in the utilization of fixed
assets. If there is a fall in the ratio, it is a case for the management to investigate the fall; if
fixed assets remain idle for any reason, the Turnover Ratio will decrease.
C. Net Working Capital Turnover Ratio: - This Ratio indicates the number of times
a unit invested in working capital produces sale. In other words, this ratio indicates
the efficiency in the utilization of short-term funds in making the sales. Net
working capital means excess of current assets over current liabilities careful
handling of short-term funds will mean a reduction in the amount of capital
employed thereby improving turnover.
The Ratio is calculated as follows: -
20NWC Turnover Ratio = Net sales / Net Working Capital
21. SIGNIFICANCE:
This ratio indicates whether or not Working Capital has been effectively utilized in making
sales. It shows the number of times a unit invested in a working capital produces sale.
D. Stock Turnover Ratio or Inventory Turnover Ratio:- This ratio establishes the
relationship between the cost of goods sold during a given period & the average
amount of inventory carried during that period. It indicates whether stock has been
efficiently utilized or not, the purpose being to check whether only the required
minimum has been locked up in stocks.
The Ratio is calculated as follows: -
Stock Turnover Ratio = Cost of goods sold / Average Stock or Inventory
Cost Of Goods Sold = Opening Stock + Purchases + Direct Expenses
– Closing Stock.
OR
Cost of Goods Sold = Net Sales – Gross Profit.
Average Stock = (Opening Stock + Closing Stock)/2.
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22. SIGNIFICANCE:
Stock turnover Ratio indicates whether stock has been efficiently used or not. The purpose of
this ratio is to check whether only the required minimum amount has been invested in stock.
Higher the ratio, better it is, since it indicates that more sales are being produced by a rupee
of investment in stocks. A low Stock turnover may reflect a dull business, over investment in
stocks, accumulation of stock at the end of the period in anticipation of higher prices or
unsaleable goods etc.
E. Debtors Turnover Ratio or Accounts Receivable Turnover Ratio: - In case the
firm sells the goods on credit, the realization of sales revenue is delayed & the
receivables (Debtors &/or Bills) are credited. The cash is realized from these
receivables at a later stage. The speed with which these receivable are collected
affects the liquidity position of the firm. The receivable turnover ratio revels the
velocity of receivable collection by matching the annual credit sales to the average
receivables as follows:
Receivable Turnover Ratio = Annual net Credit Sale / Average Receivables
In case details regarding opening & closing Receivables & credit sales are not given, the
ratio may be worked out as follows:
Debtors Turnover Ratio = Total Sales / Account Receivables
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23. SIGNIFICANCE:
Debtor’s turnover ratio indicates the efficiency with which the amounts due from debtors are
collected. The higher the ratio, the better it is, since it would indicate that debts are being
collected more quickly. Prompt collection of book debts will release funds, which may then
be put to some other use.
F. Average Collection Period or Debtor’s Day: - This ratio shows the number of
days, for which sales remain uncollected.
The Ratio is calculated as follows: -
Average Collection Period = Days in a year / Debtors Turnover
SIGNIFICANCE:
Debt collection period do the customer enjoy a measure of the average credit period? It
indicates the average time leg between sales & collection thereof. A shorter collection period
indicates prompt payment by debtors, which reduces the chances of bed debts. A longer
collection period indicates the risk of collection of debts & increase in the cost of collection,
also loss of interest on the money due from the debtors.
G. Creditors Turnover Ratio or Accounts Payable Ratio: - This ratio indicates the
velocity with which payment for credit purchases are made to creditors. The term
‘Accounts Payable’ includes Creditors & Bills Payable.
The Ratio is calculated as follows: -
Creditors Turnover Ratio = Total Credit Purchase / Average Accounts Payable
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24. In case the details regarding the credit Purchases, opening & closing accounts payable are
not given, the ratio may be worked out as follows:
Creditors Turnover Ratio = Total Purchase / Accounts Payable
SIGNIFICANCE:
Creditor’s turnover ratio indicates whether the firm is actually enjoying the credit promised
by suppliers. If the firm enjoy lower credit period, it means creditors are being promptly &
the firm is not taking the full advantage of credit facilitieS.
H. Average Payment Period or Age of Purchases or Credit Enjoyed (APP): - The
Purpose of computing average payment period is to indicate the speeds with which
the payments for credit purchases are made to creditors.
The Ratio is calculated as follows: -
Average Payment Period = Days in a Year/Creditors Turnover
SIGNIFICANCE:
The Average payment period can be meaningfully evaluated by comparing it with the credit
period allowed by the suppliers. To the extent possible, a firm should try to maintain the
APP, which I approximately equal to the credit terms of the supplier. This will help
improving the goodwill & credit worthiness of the firm in the market. The suppliers are
primarily concerned with APP since it provides with an idea of the payment pattern of the
firm. On the other hand, if a firm is unable to maintain the APP as required by the supplier, it
indicates that the facilities given by the creditors are not being fully utilized or that the firm
is unnecessarily damaging its credit in the market.
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25. THE LEVERAGE RATIOS
The leverage ratios are also called as ‘Solvency Ratios’. The term ‘Solvency’ implies ability
of a concern to meet its long-term indebtedness. Some important solvency ratios are:
a) Debt Equity Ratio (DE Ratio): - The DE Ratio is worked out to ascertain soundness
of the long-term financial policies of the firm. The DE Ratio is based on the
assumption that the extent to which a firm should employ the debt should be viewed
in terms of the size of the cushion provided by the shareholders funds.
The Ratio is calculated as follows: -
DE Ratio = Debt (Long Term Loans)/Equity (Shareholders Funds)
Debt means long term loans i.e. debentures, loan from long-term financial institution. Equity
means shareholders i.e. preference share capital, equity share capital, reserves; Accumulated
profits less losses & fictitious assets like preliminary expenses.
SIGNIFICANCE:
Since the debt involves firm’s commitment to pay interest over the long run & eventually to
repay the principal amount, the financial analyst, the debt lender, the preference
shareholders, the equity shareholders & the management pay close attention to the degree of
indebtedness & capacity of the firm to serve the debts. The more the debt a firm uses, the
higher is the probability that the firm may be unable to fulfill its commitments towards its
debt lender. The DE Ratio throws light on the margin of safety available to the debt lenders
of the firm. If a firm with a high DE Ratio fails then a chunk of the financial loss may have
to be borne by the debt holder of the firm. The greater the DE Ratio, higher would be the risk
of lenders. Also the term of credit will become unfavorable to the firm. On the other hand a
low DE Ratio implies a low risk to lenders & creditors of the firm.
A question that now arises is that what should be the ideal DE Ratio. The answer to the
above question is that a balance between the proportions of debt equity should be maintained
so as to take care of the interest of lenders, shareholders & the firm as a whole. In India, this
ratio is taken as acceptable as 2:1.
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26. b) Interest Coverage Ratio: When a business borrows money, the lender is interested
in finding out whether the business would earn sufficient profits to pay periodically
the interest charges. A ratio, which expresses this, is called Interest Coverage Ratio
or Debt Service Ratio or Fixed Charges Cover.
The Ratio is calculated as follows: -
Interest Coverage Ratio = Net Profit Before Interest & Tax
Interest on Fixed (Long Term)
Loans or Debentures
SIGNIFICANCE:
This ratio indicates how many times the profit covers fixed interest. It measures margin of
safety for the lenders. If profit just equals interest, it is a bad position for the company as
nothing will be left for shareholders & lenders. Higher the ratio, more secure will be the
lender in respect of his periodical interest income.
c) Total Debt Ratio: The total Debt Ratio compares the total Debts (Long Term as well
as Short Term) with the total assets.
The Ratio is calculated as follows: -
Total Debt Ratio = Total Debts / Total Assets
Total Debt Ratio = (Long Term Debts + Current Liabilities)
(Total Debts + Net Worth)
SIGNIFICANCE:
The total debt ratio depicts the proportion of total assets financed by the total liabilities. The
remaining assets are financed by the shareholders funds. Higher the total debt ratio, the more
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27. risky is the solution because all liabilities are to be repaid sooner or later. Moreover, higher
liabilities imply greater financial risk also.
d) Fixed Assets Ratio: It must be known that fixed assets should be financed only out
of long-term funds. The ratio will be 1, if long-term funds are equal to fixed assets. If
the ratio is less than 1, it means that the firm has adopted the imprudent policy of
using short-term funds for acquiring fixed assets; on the other hand, a very high ratio
would indicate that long-term funds are being used for short-term purposes i.e. for
financing working capital. It is not good from the firm’s point of view because it is
usually more difficult to raise long-term funds.
The Ratio is calculated as follows: -
Fixed Assets Ratio = Net Fixed Assets
Shareholders fund + Long Term Loans
SIGNIFICANCE:
This ratio is important to ascertain the proper investments of funds from the point o view of
long-term financial soundness. It indicates as to what extent fixed assets are financed out of
long term funds. This ratio should normally be more then 1. If it is less then 1, it means that
the firm has followed the wrong policy of using short-term funds for long term needs.
e) Proprietary Ratio: This ratio establishes the relationship between the proprietor’s &
shareholders funds & the total assets. It is expressed as:
Proprietary Ratio = Proprietors funds or Shareholders / Total Assets
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28. SIGNIFICANCE:
The ratio is of particular importance to the creditors who can find out the proportion of
shareholders funds in the total assets employed in the business. A high proprietary ratio will
indicate a relatively little danger to creditors etc., in the event of forced reorganization or
winding up of the company. A low proprietary ratio indicates greater risk to the creditors
since in the event of loss a part of their money may be lost besides loss to the proprietors of
the business. A ratio below 50% may be alarming for the creditors since they may have to
loose heavily in the event of company’s liquidation on the account of heavy losses.
The Profitability Ratios
The Profitability Ratios measures the profitability or the operational efficiency of the firm.
There are two groups of persons who may be specifically interested in the analysis of the
profitability of the firm. These are:
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29. • The management, which is interested in the overall profitability & operational
efficiency of the firm.
• The equity shareholders who are interested in the ultimate returns available to
them.
Both of these parties and any other party such as creditors can measure the profitability of
the firm in terms of the profitability ratios, broadly, the profitability ratios are calculated by
relating the returns with the: -
• Sales of the firm
• Assets of the firm
• Owner’s contribution
Profitability Ratios Based On Sales Of The Firm: -Profit is a factor of sales & is
earned indirectly as a part of the sales revenue. So, whenever a firm makes sale, it
earns profit (in general). But How Much? How the Total Sales Revenue is going to
be used for meeting the cost o goods sold, deprecation, indirect expenses, tax liability
& return to shareholders etc. All this & other aspects can be analyzed with the help of
profitability ratios.
The profitability ratios based on sales can be further divided into:
PROFIT MARGIN RATIOS
The profit margin refers to the profit contributed by per rupee of sales revenue & therefore,
the profit margin ratios measure the relationship between the profit & the sales.
Different profit margin ratios have been suggested as follows:
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30. 1) Gross Profit Ratios (GP Ratio): The GP ratio is calculated by comparing GP of the
firm with the net sales as follows:
Gross Profit Ratio = (Gross Profit / Net Sales)*100
For e.g., if the GP Ratio of a firm comes out to be 30% this means that on every 1-rupee
sale, the firm is earning a gross profit of 30 paise.
SIGNIFICANCE:
GP Ratio is a reliable guide to the adequacy of selling prices & efficiency of trading
activities. This ratio should be adequate to cover the Administrative & Marketing expenses
& to provide for fixed charges, dividends & building up of reserves. Higher the GP Ratio,
the better it is. When GP Ratio is studied as a time series, it may give the increasing or
decreasing trend & hence an idea of the level of operating efficiency of the firm. For a single
year, the GP Ratio may not indicate much about the efficiency level of the firm.
2) Net Profit Ratio (NP Ratio):- The NP Ratio establishes the relationship between the
net profit (after tax) of the firm & the net sales & may be calculated as follows:
Net Profit Ratio = {Profit (after tax) / Net Sales}*100
The NP Ratio measures the efficiency of the management in generating additional revenue
over & above the total cost of operations, the NP Ratio shows the overall efficiency in
Manufacturing, Administrative, Selling & distributing the product.
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31. SIGNIFICANCE:
The NP Ratio is worked out to determine the overall efficiency of the business. Higher the
NP Ratio, the better the business. An increase in the ratio over the previous period shows
improvement in the operational efficiency.
3) Operating Profit Ratio (OP Ratio): The operating profit refers to the pure
operating profit of the firm i.e. the profit generated by the operation of the firm &
hence is calculated before considering any financial charge (such as interest
payment), non operating income / loss & tax liabilities etc.
The Ratio is calculated as follows: -
OP Ratio = (Operating Profit / Net Sales)*100
SIGNIFICANCE:
The OP Ratio shows the percentage of pure profit earned on every 1rupee of sales made. The
OP Ratio will be less then the GP Ratio as the indirect expenses such as general &
administrative expenses; selling expenses & depreciation charge etc. are deducted from the
GP to arrive at the operating profits.
4) Operating Ratio:- This ratio measures the extent of cost incurred for making the
sale.
The Ratio is calculated as follows:
Operating Ratio = (Cost Of Goods Sold + Operating Expenses / Net Sales)*100
Operating Ratio plus net profit ratio is 100 i.e. the two ratios are interrelated. For e.g. if the
NP Ratio is 15%, it means that the Operating ratio is 85%. A rise in operating ratio indicates
decline in efficiency. Lower the ratio, the better it is.
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32. SIGNIFICANCE:
Operating ratio is the test of operational efficiency of the business. It shows the percentage
of sales that is absorbed by the cost of sales & operating expenses, lower the operating ratio,
the better it is, because it would leave higher margin to meet interest, dividend etc. thus,
operating ratio helps us to determine whether the cost content has increased or decreased in
the figure of sales & also helps us to determine which element of the cost has gone up or
down.
EXPENSE RATIOS
Expense ratios are calculated to ascertain the relationship that exists between operating
expense &volume of sales. The ratios are calculated by dividing the sales into each
individual operating expense. It indicates the portion of sales, which is consumed by the
various operating expenses.
Some of the important expense ratios are calculated as follows:
I. Ratio of Material Used To Sale: -
Direct Material Cost To Sales = (Direct Material Cost / Net Sales)*100
II. Ratio Of Labour To Sales: -
Direct Labour Cost To Sales = (Direct Labour Cost / Net Sales)*100
III. Ratio Of Factory Expenses To Sale: -
Factory Expenses To Sales = (Factory Expenses / Net Sales)*100
32
33. IV. Ratio Of Office & Administration Expenses To Sales: -
Office & Administration Expenses To Sales = (O & Expenses / Net Sales)*100
V. Ratio Of Selling & Distribution Expenses To Sales: -
S & D Expenses To Sales = (S & D Expenses / Net Sales)*100
SIGNIFICANCE:
The expense ratios are the measure of cost control. If the expense ratios of a business
continue to increase over a period of successive years, then it is a cause for the management
to have deeper look into that matter, lower the ratio the better it is for the firm.
PROFITABILITY RATIOS BASED ON INVESTMENTS / ASSETS.
The profitability of the firm can be analyzed with reference to assets employed to earn a
return. It can also be analyzed with reference to profit earned per rupee of investment made
in the firm. There are two important profitability ratios based on assets / investment of the
firm.
33
34. Return on Assets: - The ROA measures the profitability of the firm in terms of
assets employed in the firm. The ROA is calculated by establishing the relationship
between the profits & the assets employed to earn the profits.
The Ratio is calculated as follows: -
ROA = (Net Profit after Tax / Total Assets)*100
The ROA shows as to how much is the profit earned by the firm per rupee of assets used.
SIGNIFICANCE:
The ROA measures the overall efficiency of the management in generating profits, given a
given level of assets at its disposal. The ROA essentially relates the profit to the size of the
firm (which is measured in terms of the assets). If a firm increases its size but is unable to
increase its profits proportionately, then the ROA will decrease. In such a case increasing the
size of assets i.e. the size of the firm will not by itself advance the financial welfare of the
owners.
Return On Capital Or Return On Investment (ROI): - The sources used by the
business consist of both proprietors (shareholders) funds and loans. The overall
performance can be judged by working out a ratio between profit earned and capital
employed. The resultant ratio usually expressed as a percentage is called ROI. The
purpose is to ascertain how much income the use of Rs.100 of capital generates.
The Ratio is calculated as follows: -
34
35. ROI = (Profit Before interest Tax and dividend /Capital Employed)*100
SIGNIFICANCE:
ROI judges the overall performance of the concern. It measures how efficiently the sources
entrusted to the business are being used. In other words what is the earning power of the net
assets of the business? The ROI is a fair measure of the profitability of any concern with the
result that even the results of dissimilar industries may be compare.
PROFITABILITY ANALYSIS FROM THE POINT OF VIEW OF OWNERS.
Ultimately the profit of the firm belongs to the owners who have invested their funds in the
form of equity share capital or preference share capital or retained earning. Therefore, the
profits of the firm should be analyzed from the point of view of the owners. As a matter of
fact, the net profit after tax belongs to the shareholders. The profitability of the firm can be
analyzed from the point of view of owner’s funds in different prospective as follows:
35
36. Return on equity (ROE): The ROE examines profitability from the perspective of
the equity investors by relating profit available for the equity shareholders with the
book value of equity investment.
The Ratio is calculated as follows: -
ROE ={(Net Profit – Preference dividend) / Equity Shareholder’s Fund}*100
SIGNIFICANCE:
The ROE relates the profit available to equity shareholders. This ratio is used to compare the
performance of the company’s equity capital with that of other companies, which are alike in
equity. The investor will favor the company with higher ROE.
Earning Per Share (EPS): - The profitability of the firm can also be measured in
terms of number of equity shares. This is known as EPS and is calculated as follows:
EPS = (Net Profit – Preference dividend) / No. Of Equity Share
The EPS calculation in a time series analysis indicates whether the firms EPS is increasing
or decreasing.
SIGNIFICANCE:
The more the earning per share better are the performance and the prospects profit of the
company.
36
37. Dividend Per Share (DPS): Sometimes the equity shareholders may not be
interested in the EPS but in the return which they are actually receiving from the firm
in the form of dividends. The amount of profit distributed to shareholders per share is
known as DPS and is calculated as follows:
DPS = (Total Profit Distributed) / No. Of Equity Share
Dividend Pay Out Ratio (DP Ratio): The DP Ratio is the ratio between the DPS
and EPS of the firm i.e. it refers to the proportion to the EPS which has been
distributed by the company as dividends.
37
39. Introduction To Dabur
Dabur ( Dabur India Ltd.) is one of the India's largest Ayurvedic medicine & natural
consumer products manufacturer.
Dabur's Healthcare Division has over 260 products for treating a range of ailments
and body conditions, from common cold to chronic paralysis. Dabur International, a
fully owned subsidiary of Dabur India formerly held shares in the UAE based
Weikfield International, which it sold in June 2012.
Dabur India Ltd is one of the leading FMCG Companies in India. The company is
also a world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic
products. They operate in key consumer products categories like Hair Care, Oral
Care, Health Care, Skin Care, Home Care and Foods. The company's FMCG
portfolio includes five flagship brands with distinct brand identities, Dabur as the
master brand for natural healthcare products, Vatika for premium personal care,
Hajmola for digestives, Real for fruit juices .
The company has 20 state-of-the-art manufacturing facilities spread across the
globe. Of these, 12 production facilities are located in India with key manufacturing
locations being Baddi (Himachal Pradesh) and Pantnagar (Uttaranchal) besides
seven factories located at Sahibabad (Uttar Pradesh), Jammu, Silvassa, Alwar,
Katni, Narendrapur, Pithampur and Nasik.
The company has a wide distribution network, covering 6 million retail outlets with a
high penetration in both urban and rural markets. Their products also have a huge
presence in the overseas markets and are available in over 120 countries across
the globe. Their brands are highly popular in the Middle East, SAARC countries,
Africa, US, Europe and Russia. Dabur's overseas revenue accounts for over 30% of
the total turnover.
39
40. HISTORY
Dabur India Ltd was incorporated on September 16, 1975 for manufacture of high-
grade edible & industrial guargum powder and its sophisticated derivatives. In the
year 1978, the company launched Hajmola tablet, an Ayurvedic medicine used as a
digestive aid. In the year 1979, they set Dabur Research Foundation. Also, they
commenced commercial production at the most modern herbal medicines plant in
Sahibabad. In the year 1986, the company was converted into a public limited
company. In the year 1988, they launched the pharmaceutical medicines.
In the year 1989, the company converted the Ayurvedic digestive formulation into a
children's fun product with the launch of Hajmola Candy. In the year 1992, they
launched a new range of coconut oil under the brand name 'Anmol'. Also, they
developed Dab 10, an intermediate for anti-cancer drug namely Taxol. The
company entered into a joint venture agreement with Guldenhorst BV Netherland to
form a company for manufacture and marketing of all types of bubble gum, chewing
gum, toffees, chocolate, cocoa related products and sugar based spreading creams
etc. .
In the year 1998, Burman family handed over management of the company to
professionals. The company signed a joint venture with Bongrain International SA of
France to form a new company under the name of Dabon International Ltd.
In the year 2003, the company demerged their pharmaceuticals business from the
FMCG business into a separate company as part of plans to provider greater focus
to both the businesses. With this, the company now largely comprises of the FMCG
business that include personal care products, healthcare products and Ayurvedic
Specialities, while the Pharmaceuticals business would include Allopathic, Oncology
formulations and Bulk Drugs. Dabur Oncology Plc, a subsidiary of Dabur India,
would also be part of the Pharmaceutical business.
In the year 2005, the company acquired Balsara's Hygiene and Home products
40
41. businesses, a leading provider of Oral Care and Household Care products in the
Indian market for the consideration of Rs 143-crore all-cash deal. In the year 2006,
Besta Cosmetics Ltd was amalgamated with the company with effect from April 1,
2006.
During the year 2010-11, the company acquired Turkey's leading personal care
products maker Hobi Kosmetik Group through Dabur International Ltd, a wholly
owned subsidiary of the company for USD 69 million. In January 2011, they
acquired 100% equity in Namaste Laboratories LLC of the US, a leading ethnic hair
care group based in Chicago with operations in US, Europe and Africa, through
Dermoviva Skin Essentials Inc, a wholly owned subsidiary of the Company for USD
100 million. They launched India's first fruit-flavoured Chyawanprash. Dabur
Chyawanprash was launched in Orange and Mango flavoured variants.
In the year 2011, the company launched their first-ever online shopping portal
www.daburuveda.com. With this, the company is the first Indian FMCG company to
launch a dedicated online shopping portal for its beauty products range.
In 2015 Dabur India Ltd inked an agreement with Starcom MediaVest Group (SMG).
The company has introduced an array of professional salon facial products for men
and women under the Oxlife brand. The company also introduced the sugar-free
version of its popular ayurvedic product Chyawanprash named Ratnaprash
SugarFree.
On 12 October 2015, Dabur India announced its entry into the Jasmine Hair Oil
category with the launch of Vatika Jasmine Non-Sticky Coconut Hair Oil.
On 24 February 2016, Dabur India announced that it has inked a license agreement
with the Government of India to commercially produce two new Ayurvedic drugs viz.
Ayush-64 for treatment of Malaria and Ayush-82 for management of Diabetes.
Dabur India also signed a Memorandum of Understanding (MoU) with the Central
41
42. Council of Research in Ayurvedic Sciences (CCRAS), an apex research body under
the Ministry of AYUSH, Government of India, for collaboration and co-operation in
pharmaceutical R&D for different novel dosage forms and drug development in
Ayurveda.
On 1 November 2016, Dabur South Africa (Pty) Ltd announced an agreement with
South Africa's CTL Group of Companies to acquire its Personal Care, Hair Care &
Creams businesses for 18.8 million ZAR (around USD 1.5 million).
On 7 February 2017, Dabur India's pure-play beauty retail venture NewU
announced the launch of Sri Lanka's Ayurvedic beauty brand Spice Island in India.
On 14 March 2017, Dabur India announced the launch of first-ever Mobile Honey-
Testing Lab in India. This unique on-the-go lab has been designed specially to
check raw Honey at source to reduce adulteration in honey and ensure that purity is
maintained.
On 29 March 2017, Dabur India announced the commissioning of its new
manufacturing facility in Tezpur, Assam. The plant, set up with an investment of Rs
250 crore, is the most modern and environment friendly manufacturing facility in the
consumer goods industry in India. The manufacturing facility, located in Balipara
Industrial area, will manufacture the entire range of Dabur's Ayurvedic Medicines,
Health Supplements, Hair Oils, Shampoos, Toothpastes, Skin Care and Home Care
products.
On 26 September 2017, Dabur India announced its alliance with Amazon to take its
products global. Dabur's collaboration with Amazon will help it expand and increase
its product penetration into the US market. Under this collaboration, Amazon will
help Dabur take around 30 products from its popular range such as, Vatika hair oil,
Meswak toothpaste, Red toothpaste, Chyawanprash to name a few, to consumers
in the US. Along with the existing wide range, Dabur will also offer an exclusive
range of products specially created for Amazon's global customers. As part of this
association, Amazon through its Global Selling Program will provide an avenue to
42
43. Dabur to take its vast range of well-known and sough-after ayurvedic and natural
products to millions of global customers on Amazon.com in the US and eventually
across other Amazon marketplaces.
43
46. Introduction to Britannia
Britannia Industries Limited is an Indian food-products corporation headquartered
in Kolkata, West Bengal. It sells its Britannia and Tiger brands of biscuits, breads
and dairy products throughout India and in more than 60 countries across the globe.
[2]
Britannia has an estimated market share of 38%.
The company's principal activity is the manufacture and sale of biscuits, bread, rusk,
cakes and dairy products.
The company was established in 1892, with an investment of 265. Initially, biscuits
were manufactured in a small house in central Kolkata. Later, the enterprise was
acquired by the Gupta brothers mainly Nalin Chandra Gupta, an attorney, and
operated under V.K Brothers." In 1918, C.H. Holmes, an English businessman in
Kolkata, was taken on as a partner and The Britannia Biscuit Company Limited
(BBCo) was launched.
The Mumbai factory was set up in 1924 and Peek Freans UK, acquired a controlling
interest in BBCo. Biscuits were in high demand during World War II, which gave a
boost to the company’s sales. The company name was changed to the current
"Britannia Industries Limited" in 1979. In 1982 the American company Nabisco
Brands, Inc. acquired the parent of Peek Freansand became a major foreign
shareholder.
Between 1998 and 2001, the company's sales grew at a compound annual rate of
16% against the market, and operating profits reached 18%.
More recently, the company has been growing at 27% a year, compared to the
industry's growth rate of 20%. At present, 90% of Britannia's annual revenue
of Rs22 billion comes from biscuits. Bhavya chugh became a millionaire at that time.
And the changes were worth waiting. Britannia is one of India's 100 Most Trusted
brands listed in The Brand Trust Report.
46
47. HISTORY
The Wadias' Kalabakan Investments and Group Danone had two equal joint venture
companies, Wadia BSN and United Kingdom registered Associated Biscuits
International Holdings Ltd., which together held a 51 percent stake in Britannia. The
ABIH tranche was acquired in 1992, while the controlling stake held by Wadia BSN
was acquired in 1995. It was agreed that, in case of a deadlock between the
partners, Danone was obliged to buy the Wadia BSN stake at a "fair market value".
ABIH had a separate agreement signed in 1992 and was subject to British law.
Wadia was to be Danone's wife's partner in the food and dairy business, and
product launches from Groupe Danone's were expected but never materialised
despite the JV being in existence for over 11 years in India. Under the 1995 joint
venture agreement, Danone is prohibited from launching food brands within India
without the consent of the Wadias. In addition, the partners agreed there would be
the right of first refusal to buy out the remaining partner in the event of the other
wishing to sell its holding.
In May 2007, Nusli Wadia told the Ministry of Commerce and Industry that Danone
invested in a Bangalore-based bio nutrition company, Avesthagen, in October 2006
in violation of the government's Press Note 1, 2005, which requires a foreign
company to obtain the consent of its Indian joint venture partner before pursuing an
independent business in a similar area, including joint ventures based purely on
technical collaboration. Danone argued that Press Note 1 did not apply to it as it did
not have a formal technology transfer or trademark agreement with Avesthagen,
and that its 25% holding in Britannia was indirect. Wadia also filed a case in the
Bombay High Court for a breach of a non-competition clause in that connection. The
court ordered Danone not to alienate, encumber or sell shares of Avesthagen.
In September 2007, the Foreign Investment Promotion Board of India rejected
Danone's claims that it did not need a non-compete waiver from the Wadias to enter
into business in India alone.
.
47
48. Growth and profitability
Between 1998 and 2001, the company's sales grew at a compound annual rate of
16% against the market, and operating profits reached 18%. More recently, the
company has been growing at 27% a year, compared to the industry's growth rate
of 20%.At present, 90% of Britannia's annual revenue of Rs22 billion comes from
biscuits. Bhavya chugh became a millionaire at that time. And the changes were
worth waiting. Britannia is one of India's 100 Most Trusted brands listed in The
Brand Trust Report.
Business
Dairy products
Dairy products contribute close to 10% to Britannia's revenue. Britannia trades and
markets dairy products, and its dairy portfolio grew to 47% in 2000-01 and by 30%
in 2001-02. Britannia holds an equity stake in Dynamix Dairy and outsources the
bulk of its dairy products from its associate. Its main competitors are Nestlé India,
the National Dairy Development Board (NDDB), and Amul (GCMMF).
Joint venture with New Zealand Dairy
On 27 October 2001, Britannia announced a joint venture with Fonterra Co-
operative Group of New Zealand, an integrated dairy company from procurement of
milk to making value-added products such as cheese and buttermilk. Britannia
planned to source most of the products from New Zealand, which they would market
in India.[17]
The joint venture will allow technology transfer to Britannia. Britannia and
New Zealand Dairy each hold 49% of the JV, and the remaining 2 percent will be
held by a strategic investor. Britannia has also tentatively announced that its dairy
business would be transferred and run by the joint venture.
The authorities' approval to the joint venture obliged the company to start
manufacturing facilities of its own. It would not be allowed to trade, except at the
wholesale level, thus pitching it in competition with Danone, which had recently
established its own dairy business.
The company's factories have an annual capacity of 433,000 tonnes The brand
48
49. names of biscuits include VitaMarieGold, Tiger, Nutrichoice Junior, Good day, 50
50, Treat, PureMagic, MilkBikis, Good Morning, Bourbon, Thin
Arrowroot, Nice, Little Hearts among others.
Tiger, the mass market brand, realised $150.75 million in sales including exports to
countries including the U.S. and Australia, or 20% of Britannia revenues in 2006.
In a separate dispute from the shareholder matters, the company alleged in 2006
that Danone had violated its intellectual property rights in the Tiger brand by
registering and using Tiger in several countries without its consent. Britannia
claimed the company found out that Danone had launched the Tiger brand in
Indonesia in 1998, and later in Malaysia, Singapore, Pakistan and Egypt, when it
attempted to register the Tiger trademark in some of these countries in 2004. Whilst
it was initially reported in December 2006 that agreement had been reached, was
reported in September 2007 that a solution remained elusive. In the meantime since
Danone's biscuit business has been taken over by Kraft, the Tiger brand of biscuits
in Malaysia was renamed Kraft Tiger Biscuits in September 2008.
Britannia initiated legal action against Danone in Singapore in September 2007. The
dispute was resolved in 2009 with Britannia securing rights to the Tiger brand
worldwide, and Danone paying Rs220 million to utilise the brand.
49
51. Primary Methods
Primary sources are original materials on which research is based. They are
firsthand testimony or direct evidence concerning a topic under consideration. They
present information in its original form, neither interpreted nor condensed nor
evaluated by other writers. These are the data which are collected from some
primary sources i.e., a source of origin where the data generate.
These are collected for the first time by an investigator or an agency for any
statistical analysis.
“Data which are gathered originally for a certain purpose are known as primary
data.” — Horace Secrist
Primary data means original data that has been collected specially for the purpose
in mind. It means someone collected the data from the original source first hand.
Data collected this way is called primary data.
The people who gather primary data may be an authorized organization,
investigator, enumerator or they may be just someone with a clipboard. Those who
gather primary data may have knowledge of the study and may be motivated to
make the study a success. These people are acting as a witness so primary data is
only considered as reliable as the people who gathered it.
Whether a source if primary can be determined by the way it is being used by the
researcher. For example, a speech about the Declaration of Independence that was
delivered by a noted statesman on its hundredth anniversary would be secondary
source for a scholar studying the document’s philosophical origins. But it would be a
primary source for a scholar studying how the Declaration’s meaning has changed
for Americans over time.
Examples:
• Newspaper articles (reporting events)
• Photographs
• Interviews (legal proceedings, personal, telephone, e-mail)
● Correspondence
51
52. ● Trial transcripts
● Fiction, poems, music
● Experimental results
● Autobiographies, personal narratives, memoirs
● Diaries
● Manuscripts
● Data
Secondary Methods:
Secondary sources offer interpretation or analysis based on primary sources. They
may explain primary sources and often uses them to support a specific thesis or
argument or to persuade the reader to accept a certain point of view. Such works
are one or more steps removed from the event—being written with the benefit of
hindsight. There are several types of secondary data. They can include information
from the national population census and other government information collected by
Statistics Canada. One type of secondary data that’s used increasingly is
administrative data. This term refers to data that is collected routinely as part of the
day-to-day operations of an organization, institution or agency. There are any
number of examples: motor vehicle registrations, hospital intake and discharge
records, workers’ compensation claims records, and more.
Compared to primary data, secondary data tends to be readily available and
inexpensive to obtain. In addition, administrative data tends to have large samples,
because the data collection is comprehensive and routine. What’s more,
administrative data (and many types of secondary data) are collected over a long
period. That allows researchers to detect change over time.
Going back to the return-to-work study mentioned above, the researchers could also
examine secondary data in addition to the information provided by their primary data
(i.e. survey results). They could look at workers’ compensation lost-time claims data
to determine the amount of time workers were receiving wage replacement benefits.
With a combination of these two data sources, the researchers may be able to
52
53. determine which factors predict a shorter work absence among injured workers.
This information could then help improve return to work for other injured workers.
The type of data researchers choose can depend on many things including the
research question, their budget, their skills and available resources. Based on these
and other factors, they may choose to use primary data, secondary data–or both.
Examples:
● Monographs
● Journal articles
● Biography
● Encyclopedias
● Dissertations
● Research analysis
● Works of criticism and interpretation
● Newspaper articles (analyzing news)
Type of Data Used
Primary Data
53
54. It refers to the statistical material which the investigator originates for him for the
purpose of the enquiry in hand. In other words, it is one which is collected by the
investigator for the first time. When we use primary data, it is called raw material.
According to Wessel, "Data originally collected in the process of investigation are
known as primary data."
Secondary Data
It refers to the statistical material which is not originated by the investigator himself
but obtained from someone else's records, or when Primary data is utilised for any
other purpose at some subsequent enquiry it is termed as Secondary data. This
type of data is generally taken from newspapers, magazines, bulletins, reports,
journals etc. "Secondary data are those already in existence for some other purpose
than the answering of the question in hand."
I have collected and studied the data from various internet sites and journals and
their books of accounts.
Information Regarding the organization’s Profitability, Financial Position and
Shareholding Pattern with past Year Performance of the Share of BEL.
Secondary Sources
• Annual Report (From 2014 to 2017)
• Internet
O Based on the Information obtained from the above sources concepts have
developed on which analysis could be made.
O Other sources including consulting with the employees.
STANDARDS OF COMPARISON
54
55. Ratio analysis involves comparison for useful interpretation of financial statements.
A single ratio in itself does not indicate favorable or unfavorable conditions. It should
be compared with some standards. Standards of comparison may consist of:
1. PAST RATIOS: - Ratios calculated from past financial statements of some
firm.
2. COMPETITORS RATIOS: - Ratio of some selected firm, especially the most
progressive & successful competitors at some point in time.
3. PROJECTED RATIOS: - Ratios developed using the projector or pro-forma
financial Statements.
55
59. ANALYSIS AND INTERPRETATION:
The current ratio of the dabur measures the short term solvency. It indicates the
rupees of current asset available for each rupee of current liabilities.
The above chart shows that dabur has 1.41 current ratio and Britannia has more
current ratio that is 1.91, there is increased ratio of Britannia. There was continuous
decline in the current ratio which is not good sign for the dabur.
QUICK RATIO
59
60. (Rs IN CRORES)
0
5000
10000
15000
20000
25000
30000
DABUR BRITANNIA
QUICK ASSETS
CURRENT
LIABILITIES
(Ex 1.2)
ANALYSIS AND INTERPRETATION:
The above chart indicates there is increase trend of Britannia ratio than dabur the
F.Y. 2017 to F.Y. 2018. In the F.Y. 2017 and F.Y. 2018 the quick ratio of the
company was below standard that means large part of current asset of the firm is tie
60
COMPANY DABUR BRITANNIA
QUICK ASSETS 26535.7 27569.7
CURRENT LIABILITIES 24344 16480
QUICK RATIO 3.70 3.95
61. up in slow moving and unsellable investment of Finish goods and also slow moving
of debts, but, the overall trend shows declining which is not a positive sign.
DEBT EQUTIY RATIO
(Rs. IN CRORES)
COMPANY DABUR BRITANNIA
DEBT 3643 846
61
62. EQUITY 1762 240
RATIO 0.1 0
0
500
1000
1500
2000
2500
3000
3500
4000
DABUR BRITANNIA
DEBT
EQUITY
(Ex 1.3)
ANALYSIS AND INTERPRETATION:
This ratio is useful to judge long term financial solvency of a firm. This ratio reflects
the relative claim of creditor and shareholder against the assets of the firm.
From the above chart the debt equity ratio of the dabur was consistently
declining.The low debt equity ratio in FY 2017-18 indicates the firm had less claims
from outsiders as compared to those of owner.
The debt equity ratio of Britannia is better than that of dabur.
62
63. GROSS PROFIT RATIO
(Rs. IN CRORES)
COMPANY DABUR BRITANNIA
GROSS PROFIT 16117 15017
NET SALES 77219 99140
63
64. G. P. RATIO 20.9 15.1
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
DABUR BRITANNIA
GROSS PROFIT
NET SALES
(Ex 1.4)
ANALYSIS AND INTERPRETATION:
The above chart indicates the Gross Profit Ratio of dabur was 20.19 % and
Britannia was 15.1%. The GPR of dabur is more than that of Britannia. That means
company suffers the profits. In FY 2017-18 the net profit was high to increase in the
sales of the company.
64
65. NET PROFIT RATIO
COMPANY DABUR BRITANNIA
NET PROFIT 13577 10400
NET SALES 77126 99140
N.P. RATIO 17.6 10.1
65
66. 0
20000
40000
60000
80000
100000
DABUR BRITANNIA
NET PROFIT
NET SALES
(Ex1.5)
ANALYSIS AND INTERPRETATION:
The above chart indicates the Net Profit Ratio of Dabur was 17.6 % and net profit
ratio of Britannia was 10.1. That means company suffers the profits after the FY
2014-15. In FY 2017-18 the net profit was high to increase in the sales of the
company.
66
67. RETURN ON ASSETS
(Rs.IN
CRORES)
COMPANY DABUR BRITANNIA
NET PROFIT 13577 10040
TOTAL ASSETS 87061 51879
RATIO 16.2 19.5
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
DABUR BRITANNIA
NET PROFIT
TOTAL ASSETS
(Ex1.6)
67
68. ANALYSIS AND INTERPRETATION:
The above chart indicates the Return on Asset Ratio in 2014-15 was 12.50% which
further declined to 11.34% in FY 2015-16. Further it had increase to 12.37% in FY
2016-17. That means company the profits after the FY 2014-15. In FY 2015-16
Return on assest was high to increase in the position of the company.
68
69. RETURN ON EQUITY
(Rs. IN CRORES)
COMPANY DABUR BRITANNIA
NET PROFIT 13577 10500
EQUITY SHAREHOLDERS`S FUND 1762 240
RATIO 23.8 29.5
0
2000
4000
6000
8000
10000
12000
14000
DABUR BRITANNIA
NET PROFIT
EQUITY SHAREHOLDER
FUND
(Ex1.7)
ANALYSIS AND INTERPRETATION:
69
70. The dividend per share ratio of the dabur was almost equal to that of Britannia i.e.
Rs. 23.8 in the FY 2017 to FY 2018.But if we compared earning per share with
Dividend per share it shows that Earning per share is more than Dividend per share.
In this case of Earning per share, adjustment of bonus or right issue should be
made while calculating Dividend per share over the year.
EARNING PER SHARE
70
71. (Rs. IN CRORES)
COMPANY DABUR BRITANNIA
NET PROFIT 13577 10500
NO. OF EQUITY
SHARES 32.4 283.7
EPS 419 37
0
2000
4000
6000
8000
10000
12000
14000
DABUR BRITANNIA
NET PROFIT
NO. OF EQUITY
SHARES
(Ex 1.8)
ANALYSIS AND INTERPRETATION:
71
72. From the above chart the EARNING PER SHARE of the Dabur was high in FY
2017-18 i.e. Rs.419. This means that as compare to the other FY there has been
increase in wealth per shareholder.
FINDINGS
72
73. 1. The current ratio of dabur (1.4) is less than Britannia (1.9).
2. The ideal liquid ratio is 1:1, without selling its inventory, has enough short-term
assets to cover its immediate liabilities.
3. The net profit ratio shows fluctuating trend, it shows that more or less the dabur
is successful to maintained efficiency in sales value and operating expenses.
4. The operating profit ratio of the dabur and britannia is in fluctuating manner as
12.02%, 11.97%, and 12.22%
5. The britannia is maintaining the proper record of inventory. Management is
successful to manage the cost involved in inventory, because of increasing ratio of
inventory.
6. The fixed asset turnover ratio of the dabur is in increasing trend from Britannia
,means that the company is efficiently utilizing the fixed assets.
7. The proprietary ratio of the firm shows increasing trend, means that the long term
solvency of the firm is increased.
8. The dabur is successful to manage its long term debt.
9. Dabur is far better in covering its fixed cost with the interest coverage ratio.
10. The sales, profit before tax, profit after tax shows the increasing trend during the
period under review. It depicts that the company is working with more efficiency.
73
75. RECOMMENDATIONS
After analyzing the Financial Statement of the company, following suggestions are
recommended to improve the Financial Position:-
● Sales of the companies are increasing which indicates an increase in the
demand of the company’s product. Thus the company can increase the
selling price of its product marginally.
● The companies should take adequate steps to reduce the cost of goods sold.
● An increase in the provision of doubtful debts indicates in appropriate
collection measure, which should be take care off.
● The companies can employee effective people to think about the file
management system.
● The companies should give employment to new candidates.
75
76. CONCLUSION
After studying & analyzing the Financial Statement of Dabur and Britannia, the
following results can be concluded:-
Intra firm comparison
On analyzing the Financial Statements of the companies the following thing can be
concluded about the company’s Financial Position:-
● The increase in the cost of goods sold has minor effect by the growth of the
profit but not to a great extent.
● Inventory turnover ratio depicts a fluctuating trend indicating an accumulation
of inventory from time to time causing lass to the company by a way of
deterioration of stock, interest loss & blockage stock etc.
● The ratios used for analysis liquidity position are quick & current ratio which
revels that company has a strong liquidity position.
● Although the sales are increasing, a decrease in G.P. Ratio is indicative of
the firm’s inability to purchase raw material at favorable terms & its turnover
time /insufficient utilization of plant & machinery.
● Increase in the ROCE indicates that funds are being that funds are being
utilized in such a way that they incur immediate return & hence increase in
profitability of the firm.
76
79. Mar 18 Mar 17 Mar 16 Mar 15 Mar 14
12 mths 12 mths 12 mths 12 mths 12 mths
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 176.15 176.15 175.91 175.65 174.38
Total Share Capital 176.15 176.15 175.91 175.65 174.38
Reserves and Surplus 5,530.37 4,671.24 3,994.70 3,178.49 2,481.58
Total Reserves and Surplus 5,530.37 4,671.24 3,994.70 3,178.49 2,481.58
Total Shareholders Funds 5,706.52 4,847.39 4,170.61 3,354.14 2,655.96
Minority Interest 26.53 24.77 21.71 18.16 15.91
NON-CURRENT LIABILITIES
Long Term Borrowings 364.34 470.39 342.42 210.57 260.40
Deferred Tax Liabilities [Net] 109.05 108.04 88.24 58.71 44.83
Other Long Term Liabilities 4.25 3.71 4.96 0.00 0.00
Long Term Provisions 56.50 53.40 50.88 46.21 40.89
Total Non-Current Liabilities 534.14 635.54 486.50 315.49 346.12
CURRENT LIABILITIES
Short Term Borrowings 464.49 440.33 449.74 522.99 447.74
Trade Payables 1,410.32 1,310.03 1,330.12 1,095.84 1,096.53
Other Current Liabilities 452.16 382.29 383.08 543.64 479.42
Short Term Provisions 107.47 91.89 90.54 256.02 270.10
Total Current Liabilities 2,434.44 2,224.54 2,253.48 2,418.49 2,293.79
Total Capital And Liabilities 8,701.63 7,732.24 6,932.30 6,106.28 5,311.78
ASSETS
NON-CURRENT ASSETS
79
80. Tangible Assets 1,606.26 1,534.01 1,299.37 1,234.36 1,132.99
Intangible Assets 10.31 13.86 18.10 642.77 633.91
Capital Work-In-Progress 41.51 42.10 44.80 50.30 21.71
Fixed Assets 1,658.08 1,589.97 1,362.27 1,927.43 1,788.61
Non-Current Investments 3,091.78 2,499.41 1,880.91 1,407.40 424.69
Long Term Loans And Advances 13.14 11.86 0.00 20.75 24.54
Other Non-Current Assets 87.34 106.00 62.93 20.13 18.07
Total Non-Current Assets 5,261.88 4,617.77 3,716.64 3,375.71 2,255.91
CURRENT ASSETS
Current Investments 713.39 740.75 749.23 405.97 651.78
Inventories 1,256.18 1,106.71 1,096.50 973.27 972.29
Trade Receivables 706.08 650.42 809.20 710.84 675.30
Cash And Cash Equivalents 306.06 304.81 219.82 276.04 519.38
Short Term Loans And Advances 34.88 3.80 0.00 278.87 132.01
OtherCurrentAssets 423.16 307.98 340.91 85.58 105.11
Total Current Assets 3,439.75 3,114.47 3,215.66 2,730.57 3,055.87
Total Assets 8,701.63 7,732.24 6,932.30 6,106.28 5,311.78
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities 283.34 341.49 343.23 392.81 392.19
BONUS DETAILS
Bonus Equity Share Capital 163.23 163.23 163.23 163.13 162.60
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted Market
Value
2,595.93 2,195.27 1,217.74 1,177.89 0.00
Non-Current Investments Unquoted Book
Value
495.85 304.14 663.17 230.76 188.85
CURRENT INVESTMENTS
80
81. Current Investments Quoted Market Value 646.64 643.24 334.70 164.27 0.00
Current Investments Unquoted Book Value 66.75 97.51 414.53 242.99 564.38
81
83. 12 mths 12 mths 12 mths 12 mths 12 mths
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 24.01 24.00 24.00 23.99 23.99
Total Share Capital 24.01 24.00 24.00 23.99 23.99
Reserves and Surplus 3,382.22 2,672.42 2,067.68 1,217.55 769.84
Total Reserves and Surplus 3,382.22 2,672.42 2,067.68 1,217.55 769.84
Total Shareholders Funds 3,406.23 2,696.42 2,091.68 1,241.54 793.83
Government/Other Grants 0.00 0.00 0.00 3.57 4.28
Minority Interest 13.14 2.60 2.46 2.43 2.38
NON-CURRENT LIABILITIES
Long Term Borrowings 84.57 31.40 37.68 43.33 28.42
Deferred Tax Liabilities [Net] 0.00 0.00 0.00 0.00 8.88
Other Long Term Liabilities 27.14 25.36 25.42 19.96 19.03
Long Term Provisions 8.87 7.62 6.83 5.65 3.93
Total Non-Current Liabilities 120.58 64.38 69.93 68.94 60.26
CURRENT LIABILITIES
Short Term Borrowings 93.65 84.31 86.13 96.88 119.76
Trade Payables 994.09 757.31 769.08 703.42 556.69
Other Current Liabilities 381.26 321.32 299.60 259.45 241.53
Short Term Provisions 178.97 182.46 175.03 417.12 328.14
Total Current Liabilities 1,647.97 1,345.40 1,329.84 1,476.87 1,246.12
Total Capital And Liabilities 5,187.92 4,108.80 3,493.91 2,793.35 2,106.87
ASSETS
NON-CURRENT ASSETS
83
84. Tangible Assets 1,209.43 1,020.54 821.00 720.63 724.65
Intangible Assets 7.97 11.61 13.33 12.76 15.93
Capital Work-In-Progress 202.82 30.07 90.07 48.37 107.09
Fixed Assets 1,420.22 1,062.22 924.40 781.76 847.67
Non-Current Investments 222.48 312.00 372.64 77.06 35.02
Deferred Tax Assets [Net] 22.57 23.11 44.40 23.35 0.00
Long Term Loans And Advances 134.24 45.92 195.22 90.35 58.95
Other Non-Current Assets 108.93 198.47 117.22 37.17 12.12
Total Non-Current Assets 2,036.64 1,769.56 1,769.79 1,120.37 1,060.77
CURRENT ASSETS
Current Investments 856.80 174.85 415.74 440.88 162.85
Inventories 652.79 661.45 440.65 404.04 420.27
Trade Receivables 304.60 179.16 170.61 135.81 108.70
Cash And Cash Equivalents 186.42 120.76 87.65 226.33 109.07
Short Term Loans And Advances 844.34 829.10 459.28 465.92 245.21
OtherCurrentAssets 306.33 373.92 150.19 0.00 0.00
Total Current Assets 3,151.28 2,339.24 1,724.12 1,672.98 1,046.10
Total Assets 5,187.92 4,108.80 3,493.91 2,793.35 2,106.87
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities 242.47 303.84 314.34 192.05 75.29
BONUS DETAILS
Bonus Equity Share Capital 21.94 21.94 21.94 21.94 21.94
BIBLIOGRAPHY
84
85. o MAHESHWARI, S. N., MANAGEMENT ACCOUNTING “PRINCIPLES &
PROCTICE” SHREE MAHAVIR BOOK DEPORT (PUBLISHERS), NEW
DELHI
o https://www.equitymaster.com/stock-research/compare/BRIT-
DABR/Compare-BRITANNIA-DABUR?utm_source=annual-analysis-
report&utm_medium=website&utm_campaign=rightband&utm_content=comp
are-company.
o https://www.moneycontrol.com/financials/britanniaindustries/consolidated-
balance-sheetVI/BI
o https://www.moneycontrol.com/financials/daburindia/balance-sheet/DI
85