2021PBM5027| SUMIT KUMAR SINGH | AFM ASSIGNMENT

Accounting for Managers (AFM)

Assignment 2

SUBMITTED BY: SUBMITED TO:

SUMIT KUMAR SINGH DR. SHRIDEV DEVJI
2021PBM5027 DMS MNIT
2021PBM5027| SUMIT KUMAR SINGH | AFM ASSIGNMENT
 2021PBM5027| SUMIT KUMAR SINGH | AFM ASSIGNMENT

Annual Report Analysis

1. What is the company’s business? Which industry does it belong to (use GICS
industry classification).
Ans: Dabur India Ltd is an Indian multinational consumer goods company, founded by S.K.
Burman and headquartered in Ghaziabad, Uttar Pradesh. It manufactures Ayurvedic medicine
and natural consumer products and is one of the largest fast-moving consumer
goods (FMCG) companies in India.
Under GICS classification, it belongs to consumer staples sector.

2. Identify the competitors of the company you have chosen. Analyze the
competitive position of the company in the industry.
Ans: Top four competitors of Dabur are:
i. Hindustan Uniliver
ii. ITC
iii. Nestle India
iv. Britannia Industries
Based on different financial ratios and market capital, Hindustan Uniliver is the best
performer on the back of its strong fundamentals, followed by Britannia Industries, ITC,
Nestle India and Dabur.

3. What are its main products and services? Name some of the company’s brand.
Ans: The main products and services of Dabur are listed below:
Products Brands
Chyawanprash Dabur Chyawanprash
Honey Dabur Honey
Cough Syrup Dabur Honitus
Medicine for indigestion Dabur Pudin Hara
Massage oil Dabur Lal Tail
Hair Oil Dabur Amla
Tooth Paste Dabur Red Paste
Hair Oil Dabur Vatika
Fruit Juice Réal
Exhaustive list of Dabur products is:
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4. How many employees does it have? Why is this information important?

Ans: The company Dabur India Ltd. has 7617 employees globally.

5. What is the board size of the company? Classify them to Executive,

Independent, Non- executive non-independent directors? What is the
remuneration paid to CEO/Managing Director? What is the remuneration
paid to the Independent directors?
Name of the Designation Independent Remuneration Meetings
Director (Yes/No) Attended
(%)
Mr. Amit Burman Chairman (Non- No Rs. 0 100%
executive director)
Mr. Mohit Vice Chairman No Rs. 0 100%
Burman (Non-executive
director)
Mr. Aditya Director (Non- No Rs. 0 100%
Burman executive director)
Mr. Saket Director (Non- No Rs. 0 100%
Burman executive director)
Mr. P. D. Narang Whole-Time No Rs. 12,72,10,290 100%
Director (executive
director)
Mr. Mohit Whole-Time No Rs. 10,22,02,133 100%
Malhotra Director & CEO
(executive director)
Dr. Ajay Dua Director Yes Rs. 25,60,000 100%
Mr. Ajit Mohan Director Yes Rs. 21,60,000 100%
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Sharan
Mrs. Falguni Director Yes Rs. 10,00,000 100%
Nayar
Mr. Mukesh Director Yes Rs. 4,00,000 100%
Butani
Mr. P. N. Vijay Director Yes Rs. 26,00,000 100%
Mr. R. C. Director Yes Rs. 20,00,000 100%
Bhargava
Dr. S. Narayan Director Yes Rs. 17,60,000 80%

6. Explain what are financial statements and non-financial statements. Read the
‘Contents’ page and mark the items which are financial statements as ‘FS’ and
rest as ‘NFS’.

Contents FS/NFS
Great Growth comes from Greater Good NFS
Our Vision & Mission NFS
7. Identify Corporate Information NFS the
regulatory Dabur At A Glance NFS agencies
affecting 10-Year Highlights NFS the
Power Brands NFS
accounting
Online First NFS
policies of Our Journey from Herbs to Homes NFS the company.
Ans: The Chairman’s Message NFS Company has
followed Q&A with CEO NFS accounting
principles Stakeholder Engagement NFS generally
accepted in Risk Management & Opportunity NFS India,
including the Financial Capital FS Indian
Accounting Manufactured Capital FS Standards
Human Capital NFS
(‘Ind AS’) specified
Natural Capital NFS
under Section 133 of the
Social Capital NFS
Companies Relationship Capital NFS Act, 2013
(‘the Act’) Intellectual Capital NFS and other
relevant Management Discussion & Analysis FS provisions of
the Act. Report on Corporate Governance NFS
Directors’ Report FS
8. Is Standalone Financial Statements FS there any
Consolidated Financial Statements FS difference in
Notice of Annual General Meeting NFS
the reported
amount in the standalone and consolidated financial statements listed below?
- statement of profit and loss,
- the statement of retained earnings,
- the balance sheet, cash flow statement.
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Explain the reason for the difference in the standalone and consolidated
financial statements.
Ans:
a) Statement of profit and loss (For the year ended 31 March, 2021)
 Standalone - 6.95 Cr.
 Consolidated - 6.84 Cr.
b) Statement of retained earnings (For the year ended 31 March, 2021)
 Standalone - 5,214.48 Cr.
 Consolidated - 7,523.48 Cr.
c) Balance sheet (For the year ended 31 March, 2021)
 Standalone – 7,504.16 Cr.
 Consolidated – 10,847.13 Cr.
d) Cash flow statement (For the year ended 31 March, 2021)
 Standalone – 7.01 Cr.
 Consolidated – 188.78 Cr.

There is a difference between the consolidated and standalone figures because

consolidated reports a company's and its subsidiaries' operations as single entity,
whereas standalone financial statements describe same findings as separate entities.

9. How the information in notes to the financial statement is useful? Give five
examples of how notes explain the items in the financial statements.
Ans: The primary objective of the notes to financial statements is to clarify accounting
techniques utilized by a company and to provide information that occurred during and soon
after the accounting period ended.
The notes may also reveal information about underlying concerns affecting the company's
overall financial health. The numbers in the financial statements, as well as the notes to the
financial statements, form the basis for the auditor's audit opinion.
For example, in Dabur’s annual report:
a) Cost of materials consumed is given in note 36. Note 36 states the construction of
COGS, it includes raw materials and packaging material.
b) Employee benefits expenses is given in note 38. Note 38 states the construction of
Employee benefits expenses, it includes salary and wages, Contribution to provident
and other funds, Staff welfare expenses and Share based payment expenses.
c) Dividends is given in note 46. Note 46 states the construction of dividends, it
includes proposed and paid dividends. It gives exhaustive information about the
dividends.
d) Trades Payable is given in note 29. Note 29 states the construction of trades payable
that is necessary to disclose under the MSME act 2006, it includes amount due to
micro and small enterprises and the amount due to others.
e) Cash and cash equivalents is given in note 16. Note 16 states the construction of
Cash and cash equivalents, it includes Balances with banks in current accounts,
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Cheques, drafts on hand, Cash on hand and Term deposit with original maturity less
than 3 months.

10. Identify the matters covered in accounting policies? Are there any changes in the
accounting policies reported in the annual report?
Ans:

11. List the accounting measurement assumptions stated.

Ans:

12. Who is responsible for information in the financial statements?

Ans: Dabur’s management is responsible for preparing the company's financial statements
and related disclosures. Further internal and external auditors audit the statements and then
present the final financial statements.

13. Think of information that you think would be useful but not disclosed in
the financial statements. Why do you think the information is not
disclosed?
Ans:

14. Who are the company’s auditors? How much was the auditor’s remuneration?
Ans: Company’s auditor is Walker Chandiok & Co. LLP and internal auditor is
Pricewaterhouse Coopers Pvt. Ltd (PwC). The remuneration of the auditors is Rs. 80 Lakh.

15. Is auditor’s member of the ‘Big Four Firm’? if yes, which one?
Ans: The internal auditor’s is a member of the “Big Four Firm”, Pricewaterhouse Coopers
Pvt. Ltd. (PwC).

16. To whom auditor’s report is addressed? Why?

Ans: The auditor’s report is addressed to the Members of Dabur India Limited.
The auditor's report must be addressed to the shareholders and the board of directors, or
equivalents for companies not organized as corporations. Auditors address audit reports to
shareholders since they are the company's owners and because they hired him to audit
financial statements submitted by management at the annual general meeting. The auditor is
hired by the shareholders to verify the information in the financial accounts, so the auditor
must report back using the auditor's report.

17. What are company’s major items of revenue? (use consolidated financial
statements for all the further questions)
Items Amount As a % of total revenue
(Rs. in billions)
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2021 2020 2021 2020

Health 22.37 23.4%
Supplements
Revenue from 95.62 87.04 96.71% 96.6%
Operations

18. What are the major items of expenses?

Items Amount As a % of total expense
(Rs. in billions)
2021 2020 2021 2020
Cost of materials 39.99 37.32 51.07% 51.97%
consumed
Employee 10.34 9.48 13.2% 13.2%
benefits expense
Purchases of 9.83 6.75 12.56% 9.4%
stock-in-trade
Other Expenses 9.53 9.53 12.17% 13.27%

19. The statement of profit and loss has more than one ‘profit’ number. Why?
Items Amount As a % of total revenue
(Rs. in billions)
2021 2020 2021 2020
Profit before 20.57 18.28 20.8% 20.3%
share of loss from
joint venture and
exceptional items
Profit before 20.56 18.28 20.79% 20.3%
exceptional items
and tax
Profit before tax 20.56 17.28 20.79% 19.18%
Net profit for the 16.95 14.48 17.14% 16.07%
year

20. Identify beginning and closing inventory.

Items Amount Inventory turnover ratio
(Rs. in billions)
2021 2020 2021 2020
Opening inventory 7.45 6.80 4.71 5.24
Closing inventory 9.52 7.45
Ans: Inventory turnover ratio ratio 4.71 represents inventory to be replenished after every 2.5
months (78 days) and the Inventory turnover ratio ratio 5.24 represents inventory to be
replenished after every 2.3 months (70 days).
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21. When does the company recognizes sales revenue?

Ans: The revenue recognition principle of ASC 606 requires that revenue is recognized when
the delivery of promised goods or services matches the amount expected by the company in
exchange for the goods or services.

22. Does company have dividend income? Why?

Ans: Yes, the company have dividend income.
Items Amount
(Rs. in billions)
2021 2020
Dividend income 5.92 5.12
Dividend income is money distributed to stockholders from a corporation's profits. It is
treated as income rather than a capital gain for that tax year.

23. How much did company spend on advertising? As a percentage of revenue?

Items Amount
(Rs. in billions)
2021 2020
Advertisement Expense or sales 7.84 6.5
and promotional expense (8.2%) (7.5%)
Ans: The company spends around 8% of its revenue on advertisement expenses.

24. Did company provide for doubtful debts? How much receivable did company
write off?
Items Amount
(Rs. in billions)
2021 2020
Provision for doubtful debts - -
Bad debts written-off - -

25. What depreciation method(s) does the company use? Are there any fully
depreciated assets in the company?
2021 2020
Depreciation Method straight-linestraight-line
Asset class 1
Asset class 2 etc
Depreciation (amount Rs. in billion)
Gross Block of assets
Accumulated depreciation
Net block of assets

26. List the company’s intangible assets? (Rs. in billions)

2021 2020
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Software 0.25 0.23

Brands / Trademarks 0.20 0.21
Ans: There are only two intangible assets of Dabur, software and brands/trademarks.

27. How much did company spend on R&D?

2021 2020
R&D Expenditure (Rs. in billions) 0.44 0.39
Ans: R&D is critical for businesses because it delivers valuable knowledge and insights, as
well as enhancements to existing processes that increase efficiency while lowering costs. It
also enables companies to create new products and services in order to survive and grow in
competitive markets.

28. Identify the company’s investments in equity and debt securities.

Investments 2021 2020

29. Identify the company’s subsidiaries.

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30. Does the company have any associates/joint ventures? If yes, name it.
Ans: The company has one joint venture.
Proportion of ownership
(%)
Associates/joint ventures 2021 2020
Forum 1 Aviation Private Limited 20% 20%

31. List the company’s contingent liabilities?

Ans: (Amount in crores)

32. List the cash-flows of the company. Comment on the cash flows of the company.
Amount Rs. in billions
2017 2018 2019 2020 2021
Cash flow from operating activities 12.26 10.92 14.99 16.14 21.15
Cash flow from investing activities (8.07) (5.40) 3.37 (5.17) (14.06)
Cash flow from financing activities (3.39) (5.77) (18.88) (10.43) (6.13)
Cash flows during the year 0.81 (0.26) (0.52) 0.54 0.96
Opening balance of cash 0.35 1.16 0.89 0.92 0.38
Closing balance of cash 1.16 0.89 0.38 0.92 1.89
Free cash flows

33. What is the face value of the company’s shares?

Ans: The face value of Dabur’s shares is Rs. 559.40 (as on December 21, 2021).

34. What is the market price of the share as on the balance sheet date?
Ans:

35. Compute profitability ratios listed below and comment on the

profitability of the company.
2017 2018 2019 2020 2021 Industry
average
Operating profit margin
EBITDA margin
EBIT margin
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EAT margin
Return on capital employed
(ROCE)
Return on equity (ROE)
Basic EPS
Diluted EPS
Effective tax rate

36. Compute the liquidity ratios listed below and comment on the liquidity of the
company.
2017 2018 2019 2020 2021 Dabur Industry
average average
Current ratio 1.40005 1.41295 1.34805 1.98072 1.62769 1.553892 2
Quick ratio 0.90084 0.88262 0.85504 1.4155 1.0317 1.01714 1
Ans: Over the years, the current ratio of Dabur is 1.56:1, which is less than the industry
average but its quick ratio is near to ideal. This means that Dabur has more liquid assets such
as cash and cash equivalents, accounts receivables and marketable securities rather than
inventory and prepaid expenses. This shows that Dabur has comparatively less inventory and
prepaid expenses but more of quick assets. Hence, on the basis of these two ratios we can
conclude that Dabur is capable of paying its short-term obligations i.e., it is in a good
liquidity position.

37. Compute some of the important solvency ratios and comment on the
solvency of the company.
2017 2018 2019 2020 2021 Dabur Industry
average average
Debt equity ratio 0.58703 0.5178 0.48977 0.40827 0.40868 0.482308
Debt to total asset ratio 0.36989 0.34115 0.32875 0.28991 0.29011 0.323964
Interest coverage ratio 28.8057 31.1845 29.1989 35.8924 65.765 38.1693
Debt service coverage ratio
Bloomberg 1-year default risk
Bloomberg 5-year default risk

38. Compute some of the important activity ratios and comment on the
efficiency of the company.
2017 2018 2019 2020 2021 Industry
average
Inventory turnover ratio 3.56742 4.9385 4.83463 4.83997 4.15804 4.467711
Receivables turnover ratio
Payables turnover ratio
Receivables in days
Payables in days
Inventory turnover in days
Cash cycle in days
Fixed assets turnover ratio
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39. Compute some of the important market standing ratios and comment on the
stock market performance of the company.
2017 2018 2019 2020 2021 Industry
average
P/E ratio
Beta
One-year stock return
Three-year stock return
Five-year stock return
Dividend yield
Market capitalization
Economic value added