COMPARATIVE FINANCIAL ANALYSIS

vs.

1.1. Introduction

2.2. Company Profiles

3.3. Ratio Analysis

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4.4. The cost of Capital

5.5. The working capital Model

CONTENTS

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1.1. Introduction

The Objective of our

project is to analyze the

financial performance in

the last 5 years; of two

competing firms in the

same field of business.

• Analysis of Financial performance of the two firms

• Understanding their competitive advantage over each other

• Future performance forecasting

• Recommendations

Scope of Analysis

vs.

11

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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.

2.2. Company Profiles

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, Réal, Dabur Red Toothpaste, Dabur Lal Dant Manjan, Babool, Hajmola and Dabur Honey

• Dabur - Ayurvedic healthcare products

• Vatika - Premium hair care• Hajmola - Tasty digestives• Réal - Fruit juices &

beverages • Fem - Fairness bleaches &

skin care products

Master brands

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2.2. Company Profiles

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)

• Cinthol• Godrej Expert• Renew• Godrej no. 1• Colour soft

Master brands

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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.

Ratio Analysis

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3.3. Ratio Analysis

1.12

0.95

1.11

0.93

0.78

2.04

2.5

1.54

1.24

1.13

2008-09

2007-08

2006-07

2005-06

2004-05

DABUR GODGEJ

2008-09

2007-08

2006-07

2005-06

2004-05

DABUR GODGEJ

Current Ratio Quick Ratio

0.73

0.6

0.67

0.55

0.38

1.6

1.87

0.89

0.71

0.64

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3.3. Ratio Analysis

2008-09

2007-08

2006-07

2005-06

2004-05

DABUR GODGEJ

2008-09

2007-08

2006-07

2005-06

2004-05

DABUR GODGEJ

Cash Ratio Gross profit Ratio

0.22

0.12

0.14

0.12

0.03

0.14

0.93

0.11

0.06

0.06

17.8

17.11

16.91

17.37

45.03

0.14

0.93

0.11

0.06

0.06

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3.3. Ratio Analysis

2008-09

2007-08

2006-07

2005-06

2004-05

DABUR GODGEJ

2008-09

2007-08

2006-07

2005-06

2004-05

DABUR GODGEJ

Net Profit Ratio Debt-equity Ratio

15.59

15.2

14.18

13.77

11.67

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

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3.3. Ratio Analysis

2008-09

2007-08

2006-07

2005-06

2004-05

DABUR GODGEJ

2008-09

2007-08

2006-07

2005-06

2004-05

DABUR GODGEJ

Inventory-turnover Ratio Debtors-Turnover Ratio

10.94

12.52

11.11

11.65

9.64

9.25

5.7

6.53

7.54

7.67

22.63

25.94

39.7

35.3

26.95

99.37

81.1

93.26

112.08

61.07

3.3. Ratio Analysis

2008-09

2007-08

2006-07

2005-06

2004-05

DABUR GODGEJ

Fixed Assets turnover Ratio

4.84

4.67

8.51

7.3

7.41

4.18

4.6

9.47

11.82

8.34

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The Cost Of Capital

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4.4. The cost of capital

Cost Of EquityCost Of Equity

Cost Of capitalCost Of capital

Cost Of DebtCost Of Debt

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DABUR GODREJ

10.0% 8.33%

Cost Of DebtCost Of Debt

4.4. Cost of CAPITAL

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Cost Of EquityCost Of Equity

1. CAPM: ks= kRF + (kM -

kRF)b

= kRF + (RPM)b

2. DCF: ks = D1/P0 + g

4.4. Cost of capital

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Cost Of EquityCost Of Equity

DABUR GODREJ

B =0.48

Risk free return=8.0%

Market Return =15.0%

Risk Premium =7.0%

11.4%

B= 0.39

Risk free return =4.91%

Market return = 20%

10.79%

4.4. Cost of capital

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Weighted Average Cost of CapitalWeighted Average Cost of Capital

4.4. Cost of capital

DABUR 11.00%

The Working Capital Model

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5.5. The working capital Model

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

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5.5. The working capital Model

THE OPERATING CYCLE & THE CASH CYCLE

- Short Term Operating Activities :

1 Buying raw-material How much inventory to order

2 Paying cash & purchases To borrow / draw down cash balance

3 Manufacture the product Choice of production technology

4 Selling the product Offer cash / credit term to the customer

5 Collecting cash How to collect cash

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Inventory  

Beg 20114.69

End 26171.64

   

A/C Receivables  

Beg 10046.43

End 11236.01

   

A/c Payables  

Beg 17289.1

End 19384.87

   

Net Sales 239616.39

   

Cogs 196953.07

Inventory  

Beg 19771.19

End 9355.62

   

A/C Receivables  

Beg 14873.23

End 16099.98

   

A/c Payables  

Beg 18.95

End 47.17

   

Net Sales 81623.72

   

Cogs 86745.94

DABUR GODGEJ

5.5. The working capital Model

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  Dabur Godrej

Avg Inventory 23143.16 14563.4

Inventory turnover 8.5 times 5.95 times

Inventory pd 42.9 61.3

     

Avg Receivables 10641.22 15486.6

Receivables turnover 22.51 times 5.27 times

Receivables pd 16.21 69.25

     

Avg payables 18336.98 33.06

Payables turnover 10.7 times 2623 8 times

Payables pd 34.11 0.139

5.5. The working capital Model

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Inventory Period42.9

Inventory Period42.9

Receivable Period16.21

Receivable Period16.21

Operating Cycle59.11 days

Operating Cycle59.11 days

Operating Cycle59.11

Operating Cycle59.11

A/c Payable period34.11

A/c Payable period34.11

Cash Cycle25 days

Cash Cycle25 days

Inventory Period61.3

Inventory Period61.3

Receivable Period69.25

Receivable Period69.25

Operating Cycle130.55 days

Operating Cycle130.55 days

Operating Cycle130.55

Operating Cycle130.55

A/c Payable period0.139

A/c Payable period0.139

Cash Cycle130 days

Cash Cycle130 days

DABUR

GODREJ

5.5. The working Capital Model

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PRESENTED BY: NEHA LUTHRA & SAHINA PURI