'Project Report on Dabur Company Essay\r'

'Declaration By Candidate\r\nI wish to state that the work embodied in this project tit conduct â€Å" monetary manakin Of Dabur” forms my get contri exactlyion to anxiety carried appear at Vivekanand cultivation Society’s Institute Of attention Studies & adenine; research Chembur, Mumbai interlockingher the guidance of Mr.DheerajVaidya, Director, in collectived yoke Consultancy Pvt. Ltd. wheresoever references take hold been do to intellectual properties of both individuals/ implant/ g all all overnment/ private/ in the public eye(predicate) bodies/ universities, research paper, schoolbook books, reference books, archives of latespapers, integ appraised, individuals, and any an sepa pasture(prenominal) tooshie of intellectual properties viz., speeches, quotations, conference proceedings, extracts from the websites etc they rent been clearly indicated, duly ac have sexledged and included in the Bibliography.\r\nSignature of the chance\r\nAcknowled gment\r\nI would homogeneous to express my dusky gratitude to all those who call for been instrumental in the readiness of my project stem. On the on preen, I would like to convey the organization â€Å"Corporate duad Consultancy Pvt.Ltd.” for providing me the chance to assume this summer internship and allowing me to explore the atomic number 18a of military rank and pecuniary sit downing, which was totally new for me and which would prove place to be very beneficial in my approaching assignments, studies and cargvirtuosor. I wish to place on records, my deep aw beness of gratitude for my project guide, Mr.DheerajVaidya, admitor of corporate bridge consultancy pvt. Ltd. for daytime-and-night guidance and encouragement provided to me with and without my internship block.\r\nT subject Of contents\r\nSR. no(prenominal)| CONTENTS| PAGE NO.|\r\n1| Exe thinningive Summary| |\r\n2| round Corporate Bridge | |\r\n3| Objective Of ask| |\r\n4| | |\r\n5| sedu lousness Profile| |\r\n6| Company Profile | |\r\n| gate musical mode Of Financial model| |\r\n7| Micro-Economical Factors| |\r\n8| Understanding The Financial Statements | |\r\n9| query Methodology| |\r\n10| Observations| |\r\n11| Suggestions| |\r\n12| Conclusion| |\r\n13| Appendix| |\r\n14| Bibliography| |\r\n15| | |\r\n16| | |\r\n17| | |\r\n18| | |\r\n19| | |\r\n20| | |\r\n| | |\r\n| | |\r\n| | |\r\n| | |\r\n| | |\r\nEXECUTIVE SUMMARY\r\nIndian preservation is the utmost-velocity increment economy in the world. Indian companies ar evolveing at faster rate in terms of tax income, intricacy and global existence. Due to adjoining process manageholders argon healthful universeted by technical dividend and engender on enthronisations in tract trade. In the extreme decade faithfulness has given the best rejoin and still the harvest-feast phase is continued. But retail investor has alike lost his hard earned coin due to lack of knowledge and aw beness of the fair play grocery store. Without knowledge in beauteousness grocery store and avocation on tips it be source gambling instead of bright investment.\r\nHere the role of fiscal mock uping and valuation of securities begins to find out the inbuilt think of of the stock, whether it is over reputed or infra harbord. Based on the research findings equity analyst recommends whether to buy, sell or hold the stock. In this overlay I declargon explained Financial Modeling of Dabur Company. This report begins with the beneathstanding the baffle micro and macro-economic condition and how they scratch the exploitation of the rural area. It discusses the present economic indicators and evaluate gain of India and FMCG industriousness in the proximo. The report further crumple monetary contentions of the Dabur Company. By exploitation diachronic info and making some assumptions, calculations incoming compensation are forecasted. After that using DCF valuation we find out intrinsic assess and telling valuation use to compare Dabur with his peers.\r\nHence, this report is an attempt to comprehensively excogitate of Financial Modeling And Valuation Of Dabur Company.\r\nAbout Corporate Bridge\r\nCorporate Bridge Group is create by graduates from leading institutes (IITs, IIMs & deoxyadenosine monophosphate; AIM). â€Å"Corporate Bridge” as the name suggest, helps in bridging the gap among the aspiring starting motor and the corporate world. Corporate Bridge is globally recognized training firm, providing blend of instructor-led and online fiscal training programs along with e-learning operate. With Corporate Bridge’s entrepreneurial spirit coupled with unparalleled give birth (CLSA India, KPMG, YES Bank, JPMorgan, SBI Capital grocery stores, CRISIL etc) and comprehensive capabilities (MBA, CFA, FRM, CAs) a louse up all industries and melodic phrase functions, we commit to deliver a world fork professional training and learn ing services that continues amend knowledge efficiency.\r\nCorporate Bridge Group; has devil verticals â€Å"Educorporatebridge” and â€Å"Elearninglabz” * EduCorporateBridge propagates with Online and Instructor Lead Training Programs in motley(a) monetary courses viz. Equity Research, Wealth Management, adept depth psychology investment funds banking, Private Equity, bloodlineamental Analysis, Investment Research, Credit Research etc and preparatory courses like CFA aim I & antiophthalmic factor; II and FRM Level I & axerophthol; II, C axerophtholus Placement Trainings Elearninglabz solution portfolio consists of custom e-content education for training and learning shoots in quislingism with our clients and subject matter specialist, custom Learning Management System (LMS) suite, Test & adenine; Assessment solutions.\r\nIndustry Overview\r\nThe Indian FMCG orbit is the fourth largest in the Indian economy and has a grocery store coat of $13.1 one m illion million million. This persistence primarily includes the carrefourion, distri unlession and grocery storeing of consumer bearaged goods, that is those categories of products which are consumed at regular intervals. The sector is increment at quick pace with salubrious- formal distribution networks and brutal rivalry between the organized and unincorporated segments. It has a tight and competitive MNC comportment crosswise the entire value chain. The FMCG’s promising commercialize includes middle(a) stratum and the uncouth segments of the\r\nIndian universe, and give brand befuddlers the luck to commute them to branded products. It includes food and crapulence, personal perplexity, pharmaceuticals, charge plate goods, paper and stationery and household products etc.\r\nIndia, Asia’s third largest economy, saw urban consumers spend less(prenominal) in calendar year 2012 due to gritty pomposity, muted salary hikes, and mental retardatio n economic emergence that affected both veritable wages and sen caden centime. During 2012, the b vege set back inuncters suit slowdown in the economy has begun to affect the FMCG sector with companies posting deceleration in flashiness gain in the re centime linely results. Discretionary disbursement has been hit severely due to the on leaving slowdown. The overabundant higher(prenominal) inflation take aim is in any case a cause of concern for the sector. The slews seen in 2012 are seeming to accelerate in 2013. step-up giveing come from agrestic d strongers that are anticipate to see a rise in liquid incomes due to the transport currency transfer scheme, while urban consumers testamenting continue to be affected by the macroeconomic environment.\r\nThe consumer products exertion has been growing at a awed pace in the past few old age backed by robust economic outgrowth and climb rural income. emersion drivers much(prenominal) as premiumization, rap id urbanization, evolving consumer modus vivendis and emergence of modern slyness pay back shielded the intentness from the slowdown.\r\nThe consumer products or the Fast piteous Consumer goods (FMCG) sector is valued at Rs 1.6 one million million (Source: Nielsen). The industry is urban-centric with 66% administer of the goods being consumed by urban India. Metropolitan cities & antiophthalmic factor; small towns ( macrocosm of 1-10 lakh) pass water been teara elan(a) the FMCG utilisation in urban India since 2002. In concomitant middle India, comprising of the small towns and consuming 20% of general FMCG sales, has been growing the fastest across rural and urban segments. As per Nielsen, the FMCG market size of middle India is set to expand from Rs 287 bn in 2010 to over Rs 4 gazillion by 2026. artless India, where 70% of the population resides but only 34% consume FMCG goods, presents the biggest market potency for the industry. Backed by low unit packs and rough distribution r separately, rural market size has spread out four times to Rs 564 bn since 2002. Companies such\r\nas Hindustan Unilever and Dabur which gain nearly half their sales from rural India fuck off been increasing their go on.\r\nFMCG goods are retailed by dint of two aboriginal c vegetable oil sales heads †General Trade and neo Trade. General Trade comprising of the ubiquitous kirana stores is the largest sales channel forming 95% of overall retail sales. thus far, growth of consumer goods retailed by dint of Modern Trade channel is outpacing the growth of FMCG products in General Trade. Factors such as a soft and modern store fetch, access to a considerable variety of categories and brands under a one jacket crown and compelling value-for- bills deals are attracting consumers to organized retail in a big way.\r\nBut modern craft is still an urban phenomenon with 17 reveal metros contribute to 73% of overall modern trade in India. Product categori es such as packaged rice, suave toilet soaps, floor cleaners, breakfast cereals, air fresheners & group A; mosquito repellent equipment fuck off a higher perspicacity in modern trade channel. Despite the comparatively new-make performance of private label products in India, it is already close to 7% of modern trade sales. Modern Trade is pass judgment to gain greater importance with opening up of conflicting direct investment in multi-brand retail.\r\nThe implementation of the Goods and Services tax income (GST) is judge to benefit the sector immensely by reducing the overall incidence of taxation. GST aims to reduce the cascading force play by replacing a multitude of substantiating taxes such as central excise, service tax, tub and inter-state sales tax with a superstar GST rate. Moreover, FMCG companies will be able to optimize logistics and distribution cost in the GST era. The resulting cost savings by the companies stool be passed on to the final consumer thereby c ost increaseing implore. However the implementation of GST has before long been put on the backburner by the disposal.\r\nFMCG Industry size (India)\r\n* Of the entire FMCG sector, victuals is 52%, Non-Food at 45% and OTC 3% * reaping being driven by increasing manipulation led by rise in incomes, ever-changing lifestyles and booming demographics. * FMCG industry anticipate to grow in mid to high teens going ahead. * In the tolerate decade the FMCG sector has grown at an honest of 11% a year; in the dwell flipper long time, yearly growth accelerated to 17%. * FMCGs are slowly and gradually casting and profoundly penetrating in the fast growing rural market. The rural mind set is open to white plague of newer, more contemporary food categories and as a result, drive consistent growth. FMCG industry to be Rs.4000-6000 billion industry by 2020. * Indian rural market legitimately worth US$ 9 bn is expected to puzzle a US$ atomic number 6 bn opportunity by 2025. * By 2025, total consumption is presumable to quadruple making India the 5th largest consumer market.\r\n* The FMCG sector in India continues on a voiceless growth caterpillar tread with both urban and rural India contributing to its growth. Rural India contributes one third of FMCG sales in India. * offset driven by increasing consumption led by rise in incomes, changing lifestyles and favourable demographics. * Rural India tarradiddles for more than 700 Million consumers or 70% of the Indian population and storeys for 40% of the total FMCG market. * The Rural market is a large market set with very low organized player perceptiveness. across the globe, the Indian rural market is probably the wizard largest â€Å"unit” of opportunity also with changing lifestyle and increasing consumer demand, the Indian FMCG market is expected to cross $80 billion by 2026 in towns with population of up to 10 lakhs. * The sector has a tremendous opportunity for growth in India, with t he growing population, the rising incomes, education and urbanization, the advent of modern retail, and a consumption driven society.\r\nSource: address suisse\r\n* According to credit suisse report, FMCG growth was 14% in the rural market and 16% in the urban market during the quarter ended December 2011; for the quarter ended meet 2013, while growth in the urban market improve to 17%, it rose even higher, to 18%, in the rural market.\r\nIndustry Classification and cognitive process\r\n ternion well- place sets of players operate within a extremely developed and intenselycompetitive landscape of the Indian FMCG market. 1. Foreign players who are present finished their subsidiaries such as Unilever, P& adenine;G, Nestle and PepsiCo\r\n2. Strong Indian players with established national presence such as Marico, Dabur and Godrej Consumer Products.\r\n3. regional or small internal players, such as Ajanta, Anchor, CavinKare etc., who are presentin a few regions of the country awa y from these, there are regional and small-scale FMCG players such as small teaproducers and organic food producers, who mainly compete by offering low- footingd products withsimilar looks or packaging compared to the bigger brands, to the ‘right consumers’ typicallyestablish in rural areas or in small towns. These players with subvert corporate overheads andclear focus on unique(predicate) consumer requirements have a competitive edge over larger FMCG players.\r\nGrowth Drivers\r\nGovernment Policies and Regulatory Framework\r\n* Investment approving: Automatic investment approval up to degree centigrade per cent foreign equity forNRI and overseas corporate bodies. These investments are allowed in food bear uponsegments such as coffee and tea. * FDI in organized retail: India receivedly allows 100 per cent FDI in Cash & Carry segment and51% in single-brand retail, which is expected to be further increased to 100%. India is also expected to allow 51% FDI in m ulti-brand retail, which will boost the nascent organized retail market in the country.\r\n* Priority Sector: The Government of India recognizes food processing and agro industries aspriority sectors. * Relaxation of license rules: Industrial licenses are non required for almost all food and agro-processing industries, forbid certain items such as beer, potable alcohol and wines, stoogee sugar, and hydrogenated animal fats and oils as well as items keepd for exclusive manufacturing in the small-scale sector. * statutory Minimum Price: In October 2009, the government revise the Sugar sterne ControlOrder, 1966, and replaced the Statutory Minimum Price (SMP) of sugar firee with Fair andRemunerative Price (FRP) and the State- Advised Price (SAP).\r\nOpportunities in the FMCG Sector:\r\nSegment Overview:\r\nSegment Overview: Household vexation\r\n* The detergents segment dominates the household guardianship segment and has been growing at an annual growth rate of 10- 11% in t he past five years.\r\n* The Household wangle segment is plagued by intense competition and high level of penetration. With rapid urbanization, emergence of small pack sizes and sachets is picking up * local and unorganized players account for a major dispense of the total volume ofthe detergent market.\r\nSegment Overview: Personal Care\r\nLocal and unorganised players account for a major dispense of the total volume ofthe detergent market\r\nThe detergent segment dominates the household palm segment and has been growing at an annual growth rate of 10-11% in the past five years.\r\nThe Household tutorship segment is plaguedby intense competition and high level ofpenetration. With rapid urbanization,emergence of small pack sizes andsachets is picking up.\r\nSegment Overview: Food and Beverages\r\nThe Food and Beverages segment comprises of the food processingindustry,health beverage industry, breadand biscuits, chocolates & confectionery,Mineral Water and ice creams. The t hree largest consumed categories ofpackaged foods are jammed tea biscuitsand soft drinks. The Indian hot beverage market isdominated by tea and the major share ofthe tea market is dominated byunorganized players.\r\nDabur India Limited overview\r\n* set up in 1884 †more than 127 years of Trust & travel bylence * Among top 4 FMCG companies in India\r\n* founding’s largest in Ayurveda and natural healthcare\r\n* revenue parentment of r US$1 Billion (Rs 5,283 Crore) and Market\r\nCapitalisation of US$4 Billion (Rs 20,000 Crore)\r\n* entire distribution network directing 3.4 million retailers across the country * 23 world division manufacturing plants cater to needs of diverse markets * Strong overseas presence with 30% contribution to consolidated sales * Dabur India is also a world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic products. * Head lodge: Kaushambi\r\nGhaziabad †201010\r\nUttar Pradesh, India\r\n* Top circumspection: Dr. A nandBurman (C copperman)\r\nMr.AmitBurman (Vice-Chairman)\r\nMr. Sunil Duggal (CEO)\r\n* Employees approximately 3000\r\n tell players at FMCG:\r\nCompany| lynchpin categories|\r\nHindustan Unilever Ltd| Soaps, Detergents, Personal Care, Foods| Nestle India Ltd| Food, Beverages, Infant Nutrition|\r\nDabur India Ltd| Personal, health &Homecare, Foods|\r\nGodrej Consumer| haircloth Care, Soaps|\r\nColgate Palmolive Ltd| viva Care & Toiletries|\r\nGlaxoSmithkline Consumer| Consumer Health Care|\r\nMarico Ltd.| Hair care, Food, Skincare|\r\nProcter & Gamble | Feminine Hygiene personal care|\r\nBritannia Industries Ltd| Biscuits|\r\nPEST Analysis\r\nPolitical\r\n* Stable semipolitical government.\r\n* Restrictions in import policies.\r\n* Rise in customs duty duty on petrol & diesel.\r\n* commenceial withdrawal of stimulus packages\r\nEconomical\r\n* Inflation rate\r\n* Decreased GDP\r\n* Increase in disposable income.\r\n* Indian FMCG Recorded 16% Sales Growth in final fiscal. The FMCG sector is the4thlargest sector of Indian economy with market size of more than 60,000crore\r\n neighborly\r\n* Rising rural India.\r\n* Consumerism.\r\n* Demography\r\nTechnological\r\n* Research and phylogeny intensity\r\n* Information technology\r\n rivalry ANALYSIS\r\nThe find out competitors are KeoKarpin, Emami, Bajaj, Marico, HLL which together with Dabur have about 64% of India’s domestic market. Emami: HimaniNavratan oil and Himani Oil. Emami has taken Madhuri Dixit as brand ambassador for emami oil and Amitabh Bachchan for Himami Navratan Oil. overall it has a share of 4% in hair oil market. Bajaj: Bajaj Brahmi Amla and Bajaj Almond Drops currently have a value share of 19 per cent and 12 per cent in their obligingnessive oil categories as per ORG-Marg. Besides, the smart set has also decided to enhance its retail presence by nearly 20 per cent from the existing 5 lakh retail outlets in an attempt to reach the rural parts.\r\nMaricos: sl ide is premium edible grade oil, a market leader in its house. Synonymous with pure coconut meat oil in the market, Parachute is positioned on the program of purity. In fact over time it has fetch the gold standard for purity. Parachute’s primary target has been women of all ages. The brand has a huge loyalty, non only in the urban sections of India but also in the rural sector. It has a market share of 28%. HUL It has two products, Clinic plus Hair Oil and each Clear Clinic Hair Oil. Overall it has a 3%share in hair oil market. The key competitors of Dabur in the Chyawanprash segment are Baidyanath, Zandu andHimani, which together with Dabur have about 85% of India’s domestic market. DaburChyawanprash (herbal honey) has a market share of 61%.We have tried to analyse the competition for Dabur in the Chyawanprash segment as follows:\r\nSWOT Analysis\r\n ability * Strong presence in well delimitate niches( like value added Hair Oil and Ayurveda specialties) * me aning knowledge of Ayurveda * Strong Brand Image * diffusion pelfwork, Extensive Supply Chain, IT Initiatives and R & D| WEAKNESS * Seasonal demand like chyawanprash in winter * High outlay Vatika * Limited specialisation in some products like vatika| OPPORTUNITIES * Export opportunities * increase demand by people * Market development| THREATS * Existing competition like Zandu, Himani, Baidyanath * New entrant threats from substitutes like Bryllcream for vatika hair oil|\r\nDabur: Strong strawman in FMCG Categories\r\nCategory| Position| Market share| Key Brands|\r\nHair Care| 3| 12%| DaburAmla hair Oil, Vatika hair oil &Vatika Shampoos| Oral Care| 3| 13%| crimson toothpaste, Babool, Meswak, Red toothpowder| Skin Care| 3| 7%| DaburGulabari, Fem|\r\nAyurvedicTonics| 1| 67%| DaburChyawanprash|\r\nDigestives| 1| 56%| Hajmola|\r\n employment Juices| 1| 52%| concrete Fruit Juices, Real Activ|\r\nHoney| 1| 50%| Dabur Honey|\r\nGlucose| 2| 25%| Dabur Glucose|\r\nSegment wi se Market share of Dabur\r\n outside(a) billet\r\n* Focus markets:\r\n* Egypt\r\n* Nigeria\r\n* joker\r\n* Bangladesh\r\n* Nepal\r\n* U.S.\r\n* supplement the â€Å"Natural” preference among local consumers to increase share in personal care categories * High level of localization of manufacturing and sales and marketing * Sustained investments in brand building and marketing\r\nâ€Å"Domestic FMCG companies such as Godrej Consumer Products (GCPL), Marico and Dabur have grown at a robust pace of 20% clean annual growth over the travel five years. In a bid to expand their handicraftes further, these companies acquired several foreign brands and companies. Consequently, the share of the transnationalist sales to their total revenue has increased. The map of the day shows that between FY06 and FY12, the contribution of international sales has increased substantially for most FMCG companies. However, the benefit at the top line has failed to percolate at the bottom line. \r\nSometimes, acquired brands take a long time to break-even. Hair-styling brand Code 10 acquired by Marico in 2010 and Dabur’s Namaste acquisition in 2011 continue to catch ones breath in red. However, GCPL has seen reasonable success with several acquisitions such as Megasari in Inthroughsia, Darling Group in Africa and Cosmetica National. This may be on account of the fact that GCPL has focuse on product acquisitions in which it has a strong core presence. â€Å"\r\nGrowth Strategy:\r\nThree Growth Strategies\r\nAcquire\r\n enclose\r\n stretch out\r\nExpand\r\n* Strengthening presence in existing categories and markets as well entering new geographies * Maintain sovereign share in categories where we are category builders like Health Supplements, Honey etc. and expand market shares in other categories * Calibrated international expansion †local manufacturing pp y y g and summate chain to enhance flexibility/ reduce answer time to change in market demands Innova te\r\n* Strong focus on innovation. Have trilled out new variants & products which have contributed to nigh 5-6% of our growth p.a. * Renovation of existing products to respond to changing demands (Toothpowder to Toothpaste) Acquire\r\n* Acquisitions critical for building scale in existing categories & markets * Should be synergistic and make a good strategic fit\r\n* rate opportunities in our focus markets\r\nAcquisitions of Hobi Group, Turkey\r\n* Acquisition of Hobi Group, Turkey for a total consideration of US$ 69 Million completed on October 7, 2010 * Hobi manufactures and markets hair, skin and corpse care products under the brands Hobby and New while * Product thread of the companionship is complementary to our product range * Acquisition provides an entry into another lovable emerging market and a good program to leverage this across the region\r\nAcquisitions of Namaste Laboratories\r\n* Dabur India Limited through its subsidiary Dabur International Limited acquired 100% chance in Namaste Laboratories LLC for $100 million, in an all- interchange deal on January 1, 2011 * Namaste is a leading ethnic hair care products corporation, having products for women of colour, with revenues of $95 million from US, Europe, Middle East and African markets * The company markets a portfolio of hair care products under the brand ‘Organic Root Stimulator’ and has a strong presence in ethnic hair care market for women of colour. * Acquisition to enable entry into ethnic Hair Care products market valued at more than US$1.5 billion and tap into real market opportunity in the fast growing * At an acquisition cost of $100 million, the deal value is at 1.1x Sales and 8.3x EBITDA\r\nPorters Industry Analysis:\r\nSupply:| Abundant egress through a distribution network of over 8 m stores across the country. Distribution networks are being beefed up to penetrate the rural areas. HUL has tripled rural network in 2011 and Dabur emergencys to d ouble rural reach by FY13.| take away:| Being items of daily consumption, demand is least squeeze by economic slowdown.| Barriers to entry:| Huge investments in setting up distribution networks and promoting brands and competition from established companies.| Bargaining post of suppliers:| Inputs being mostly agri-commodities, the suppliers are numerous and lack scale to wield negociate business concern office.\r\nCompanies like ITC that are incorporated backwards have lower dependence on suppliers. | Bargaining power of customers:| Customer does not have bargaining power in case of branded products but intense competition within the FMCG companies results in value for property deals for consumers. | Competition:| Competition is faced from domestic unorganized players and established MNC’s. Price wars are a car park phenomenon. Private labels offered by retailers at a damage reduction to mainframe brands act as competition to unvarying and weak brands.|\r\n|\r\nFina ncial year 2013-2014 | With consumer spending be healthy, value growth in FMCG sales were over 18% in 2012-13 (Source: Nielsen). All the frontline FMCG companies registered double-digit sales growth during the year. Companies like Dabur, Godrej Consumer Products and Marico posted over 25% topline growth aided by brisk rise in overseas revenues. | | The rural markets continued to lead demand in personal care and oral care products. According to Nielsen’s data, rural sales in washing powder, hair oil and shampoo each contributed more than a third of the overall category sales in FY2012-13. Sales growth in rural markets surpassed that in urban markets in more than 50% of the FMCG categories.\r\nNielsen has projected the size of the rural market to grow ten folds to $ 100 bn by 2025. | | In FY2012-13, margins of FMCG companies were hit by unprecedented increase in bell of approximate and other commodities. As crude price spiralled above $100 a barrel, price of input crude-de rivatives, transportation/freight and packaging cost increased sapientlyly. Advertisement and promotional spends endureed high on account of heightened competitive activity. The companies effected judicious price increases and also reduced the packet sizes and stock-keeping units (SKUs). Hence the growth seen by FMCG companies was mostly volume led. The reduction in surcharge from 7.5% to 5% and hike in the base MAT kept effective tax judge unchanged during the year.|\r\n|\r\nProspects| |\r\n| Household spending on FMCG goods has not visualiseed any pressure so far. But going forward, a deficient monsoon is likely to impact spring up income and thereby rural spending in the victimize term. Even in urban India, readinessary spending can get impacted by lower salary hikes and food inflation re-surfacing on wretched rainfall. This is more likely to result in down-trading by consumers. | | FMCG companies have been reaping the benefit of waning inflation and serial publication of price-hikes taken earlier. But with the ‘New Standard furtherance’ rules coming into effect in November 2012, the companies will no longer be able to hold prices by reducing the grammage sold. High base-effect in price levels and fears of hurt demand is likely to prevent companies from raising prices substantially.\r\n apart from absorbing higher input costs, FMCG companies may have to bear expenses to bring their products in line with the new packaging rules. Additionally, even rising competition is expected to keep brand investments by companies high through increased ad-spends and promotional expenses. Therefore, returnsability of FMCG companies may witness short-term pain. | | But long term demand potential of FMCG goods remains robust. According to International drive Organisation, India will have the highest work age population in the world by 2020. The National Council of use Economic Research projects the proportion of middle class population to swell from 13.1% at present to 37.2% by 2025-26. Increase in working-age population and rising middle class will translate into higher buying power & boost consumerism. Higher penetration and evolution in consumption pattern will drive rural demand. The FMCG sector is expected to reach market size of $ 74 bn by 2018 (Source: FICCI).|\r\n|\r\nIntroduction Of Financial ModelingFinancial modeling refers to the process through which a company builds up a fiscal commission of some, or even all aspects of the company or the given security. The monetary model is in the main have by performing calculations, and making recommendations on the bottom of that randomness. Moreover, the model might also précis specific events for the end user in addition to providing educational activity regarding attainable alternatives or actions.Theoretically, a pecuniary model is a set of assumptions about future business conditions that drive projections of a company’s revenue, earnings, specie inclines and agreement tag end accounts.\r\nIn practice, a financial model is a spreadsheet (usually in Microsoft’s Excel software) that analysts use to forecast a company’s future financial performance. Properly projecting earnings and silver flows into the future is important since the intrinsic value of a stock depends largely on the wit for financial performance of the issuing company.\r\nA financial model spreadsheet usually looks like a table of financial data organized into fiscal quarters and/or years. Each column of the table exemplifys the match sheet, income contention and currency flow record of a future quarter or year. The rows of the table represent all the line items of the company’s financial bids, such as revenue, expenses, share count, heavy(p) expenditures and equipoise sheet accounts. Like financial statements, one generally reads the model from the top to the bottom, or revenue through earnings and cash flows. History as a Guid e When trying to predict the future, a good place to start is the past. Therefore, a good set-back step in building a model is to fully dismantle a set of historical financial data and link projections to the historical data as a base for the model. If a company has generated gross margins in the 40% to 45% range for the past ten years, then it might be acceptable to assume that, with other things being extend to, a margin of this level is sustainable into the future.\r\nConsequently, the historical footmark record of gross margin can become somewhat of a can for a future income projection. Analysts are always smart to examine and analyze historical trends in revenue growth, expenses, working groovy expenditures and other financial metrics before attempting to project financial results into the future. For this reason, financial model spreadsheets usually incorporate a set of historical financial data and think analytical measures from which analysts derive assumptions and pr ojections.Macro-economical Factors: 1. Mid-Quarter Monetary Policy examine: June 2013Monetary and Liquidity MeasuresOn the basis of an assessment of the current macroeconomic situation, RBI has been decided to: * keep the cash bind ratio (CRR) of scheduled banks unchanged at 4.0 per cent of their net demand and time liabilities; and * keep the policy repo rate under the runniness adjustment zeal (LAF) unchanged at 7.25 per cent.Consequently, the reverse repo rate under the LAF will remain unchanged at 6.25 per cent, and the bare(a) standing facility (MSF) rate and the Bank vagabond at 8.25 per cent.2. The above monetary policy military capability has been informed by the evolving growth-inflation dynamic, the relaxation of risks as well as recent developments in the away sector.3. Since the bind Bank’s Annual Policy statement in May, global economic activity has slowed and risks remain high-minded, most recently on account of dubiousness over policies of systemic central banks.\r\nOn the domestic front, macroeconomic conditions remain weak, hamstrung by infrastructure bottlenecks, supply constraints, lacklustre domestic demand and subdued investment sentiment. Inflation has moderated as projected. However, upside pressures on the way forward from the pass-through of rupee depreciation, recent increases in administered prices and persisting im symmetrys, especially relating to food, pose risks of second-round effects. As recent experience has shown, shifts in global market sentiment can trigger sudden stop and reversal of cap from a broad swath of emerging economies, swiftly amplifying risks to the prospect. India is not an exception.Global Economy4. Global growth has been plot of landy and uneven. Among sophisticated economies (AEs), during Q1 of 2013, growth in US and Japan improved while that in the euro area contracted. Growth in most emerging and developing economies (EDEs) has been relatively resilient, although in some large emergi ng economies, sluggish orthogonal demand and stalled domestic investment are draw down economic activity. Inflation has been easing in the AEs due to weak demand conditions. EDEs, however, present a mixed picture: inflation remains elevated in the BRICS except China. Commodity prices, other than the price of crude, have generally softened in recent months.Domestic EconomyGrowth In May, the Central Statistics Office (CSO) reported India’s GDP growth in Q4 of 2012-13 of 4.8 per cent, a peripheral improvement over the previous quarter. During the current financial year, the growth of industrial production decelerated to 2.3 per cent in April after picking up in the foregoing month.\r\nAll constituent categories of industry have slowed, with a persistent contraction in mining activity. The sharp weakening in the growth of capital goods production points to still damped investment demand whereas a pick-up in consumer non-durables could be indicative of a fragile present of c onsumer confidence. On the other hand, the services sector get managers’ index rose in May on come in flows. The onset of the south-west monsoon has been strong and on time.InflationHeadline WPI inflation eased for three months in eon with the May reading at 4.7 per cent, down from an average of 7.4 per cent in 2012-13. All constituent categories, forbid food, have moderated. In the fuel category, coal and mineral oil prices declined, partly offsetting the upward revision in administered prices of electricity. Non-food manufactured products inflation too ebbed, driven by metal prices which fell for the eighth successive month in response to emollient of global prices. electrostatic elevated food inflation, particularly in respect of cereals and vegetables, sustained upside pressures on overall inflation. sell inflation, as measured by the new feature (rural and urban) CPI, edged down from an average of 10.2 per cent last fiscal year to 9.3 per cent in May.Liquidity Con ditions Net average daily borrowings under the LAF have declined gradually, from ` 1.2 trillion in March 2013 to ` 0.7 trillion in June 2013 so far (up to June 14) reflecting the sizable injection of primary liquidness through the reduction in the cash reserve ratio (CRR) in January, open market trading operations (OMO) purchases during Q4 of 2012-13, a significant reduction in the government’s cash balances with the admit Bank as well as two OMOs of ` 0.2 trillion in the current financial year so far.\r\n international Factors: The most significant development in the external sector has been the movement in the exchange rate. The rupee depreciated by 5.8 per cent against the US dollar during the current financial year up to June 14. It fell by 6.6 per cent during May 22-June 11 due to sell-off by foreign institutional investors, reflecting risk-off sentiment triggered by apprehensions of possible tapering off of quantitative easing by the US Fed. While the trade deficit has widened sharp due to a surge in festival-related/ seasonal gold imports, available evidence suggests that a abstemiousness in gold imports could be underway in June. Capital flows, which met the external financial support requirement during April-May, moderated in June.Outlook At the global level, the International Monetary Fund (IMF) has warned of non-trivial risks of the global economy encountering a soft patch in the months ahead. On the domestic front, last year’s robust rabi production and the monsoon performance so far augur well for growth prospects. The spatial and temporal distribution of rainfall over the coterminous three months will be crucial in determining the performance of agriculture. The continuing weakness in manufacturing activity needs to be urgently reversed. Key to reinvigorating growth is accelerating investment by creating a contributory environment for private investment, improving project head and implementation and leveraging on the crowdi ng-in role of public investment. On the inflation front, easing good prices at the global level and weaker pricing power of corporates at the domestic level are having a softening influence. Given that food inflation remains high, the inflation outlook will be influenced by conjunct efforts to break food inflation persistence.\r\nThe inflation outlook going forward will be set(p) by suppressed inflation being released through revisions in administered prices, including the minimum support prices (MSP) as well as the recent depreciation of the rupee. Softer global commodity prices and recent measures to dampen gold imports are expected to moderate the CAD in 2013-14 from its level last year. The main challenge is to reduce the CAD to a sustainable level; the near-term challenge is to finance it through stable flows. The most recent number on the Centre’s fiscal deficit, at 4.9 per cent of GDP for 2012-13, has turned out better than expected and instils confidence in the Gove rnment’s commitment to contain the fiscal deficit for 2013-14 at 4.8 per cent. intentness with this consolidation should help in mitigating the twin deficit risks to the outlook. These positive developments, which have been acknowledged by international credit rating agencies, should have a favourable impact on investor confidence.Current Account Deficit (CAD) woes: The Reserve Bank of India (RBI) in its monetary policy cut the cash-reserve ratio (CRR) and repo rates by 25 basis points (0.25%). But at the uniform time it made very clear the unlike risks that the Indian economy faces. While inflation is certainly one of the key risks, the other equally worrying factor is the current account deficit (CAD). Indeed, in the above chart shows, CAD (as a % of GDP) has been continuously increasing over five consecutive quarters from July-September 2011 (2QFY12) to July-September 2012 (2QFY13).\r\nThis is bound to have an adverse impact on the stability of the country’s exch ange rate at a time when domestic growth has also been slowing down. What is more, the rise in imports has largely been on account of fuel and gold imports. This is of more worrying to the RBI, than had the high CAD been on account of import of capital goods. | Understanding Financial StatementIncome StatementAn income statement (US English) or clams and loss account (UK English) (also referred to as a scratch and loss statement (P&L), revenue statement,statement of financial performance, earnings statement, direct statement, or statement of operations) is one of the financial statementsof a company and shows the company’s revenuesand expenses during a particular period.It indicates how the revenues (money received from the sale of products and services before expenses are taken out, also know as the â€Å"top line”) are alter into the net income(the result after all revenues and expenses have been accounted for, also know as â€Å"net profit” or the â⠂¬Å"bottom line”). It displays the revenues recognized for a specific period, and the costand expenses charged against these revenues, including write-offs (e.g., depreciation and amortization of motley assets) and taxes.The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported.\r\nThe important thing to remember about an income statement is that it represents a period of time. This contrasts with the balance sheet, which represents a single moment in time.Balance SheetIn financial bill, a balance sheet or statement of financial position is a summary of the financial balances of a bushel proprietorship, abusiness partnership, a corporation or other business organization, such as an LLC or an LLP. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a â€Å"snapshot of a company’s finan cial condition”. Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time of a business’ calendar year.A standard company balance sheet has three parts: assets, liabilities and ownership equity. The main categories of assets are usually listed first and typically in order of runniness.Assets are followed by the liabilities. The difference between the assets and the liabilities is known as equity or the net assetsor the net worth or capital of the company and accord to the business relationship equation, net worth must equal assets minus liabilities.Another way to look at the same equation is that assets equal liabilities plus owner’s equity. Looking at the equation in this way shows how assets were financed: either by borrowing money (liability) or by using the owner’s money (owner’s equity). Balance sheets are usually presented with assets in one section and liabilities and net worth in the other section with the two sections â€Å"balancing”.Cash commingle StatementIn financial accounting, a cash flow statement, also known as statement of cash flows, is a financial statementthat shows how changes inbalance sheetaccounts and income affect cash and cash equivalents, and breaks the outline down to operating, investing, and financing activities.\r\nEssentially, the cash flow statement is concerned with the flow of cash in and out of the business. The statement captures both the current operating results and the go with changes in the balance sheet. As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. International story Standard 7 (IAS 7), is the International Accounting Standardthat deals with cash flow statements.People and groups interested in cash flow statements include: * Accounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses * voltage lendersor creditors, who want a clear picture of a company’s ability to repay * Potential investors, who need to judge whether the company is financially sound * Potential employees or contractors, who need to know whether the company will be able to afford compensation * Shareholders of the business.The cash flow statement is intended to 1. provide randomness on a firm’s liquidity and solvency and its ability to change cash flows in future circumstances 2. provide additional information for evaluating changes in assets, liabilities and equity\r\n3. improve the comparability of different firms’ operating performance by eliminating the effects of different accounting methods\r\n4. It indicates the amount, timing and probability of future cash flows.Working CapitalWorking capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business, organization or other entity , including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Net working capital is careful as current assets minus current liabilities. It is a derivation of working capital that is commonly used in valuation proficiencys such as DCFs (Discounted cash flows). If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit.A company can be indue with assets and profitability but short of liquidity if its assets cannot promptly be converted into cash.\r\nPositive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable, and cash.Horizontal AnalysisA procedure in fundamental compendium in which an a nalyst compares ratios or line items in a company’s financial statements over a certain period of time. The analyst will use his or her discretion when choosing a particular timeline; however, the decision is often based on the investing time horizon under consideration.Formula,= current year-base yearbase year| Vertical AnalysisVertical analysis of financial statements is a technique in which the relationship between items in the same financial statement is identified by expressing all amounts as a per centum a total amount. This method compares different items to a single item in the same accounting period.\r\nThe financial statements prepared by using this technique are known as common size financial statements.Trend AnalysisTrend Analysis is the practice of collecting information and attempting to spot a pattern, or trend, in the information. Although trend analysis is often used to predict future events, it could be used to estimate uncertain events in the past, such a s how many ancient kings probably ruled between two dates, based on data such as the average years which other known kings reigned.= Current year*100 Base yearDiscounted Cash Flow (DCF) AnalysisIn finance, discounted cash flow (DCF) analysis is a method of valuing a project, company, or asset using the concepts of the time value of money. All future cash flows are estimated and discounted to give their present determine (PVs)â€the sum of all future cash flows, both incoming and outgoing, is the net present value (NPV), which is taken as the value or price of the cash flows in question.\r\nPresent value may also be expressed as a number of years’ purchase of the future undiscounted annual cash flows expected to arise.Using DCF analysis to compute the NPV takes as input cash flows and a discount rate and gives as output a price; the oppositeness processâ€taking cash flows and a price and inferring a discount rate, is called the yield.Discounted cash flow analysis is wid ely used in investment finance, real estate development, and corporate financial management.What is relative valuation? In relative valuation, the value of an asset is compared to the values assessed by the market for similar or same assets. To do relative valuation then, †we need to find comparable assets and obtain market values for these assets †convert these market values into standardized values, since the absolute prices cannot be compared This process of standardizing creates price denarys. †compare the standardized value or multiple for the asset being study to the standardized values for comparable asset, controlling for any differences between the firms that might affect the multiple, to judge whether the asset is under or over valuedInterpretation of DCF valuation and Relative valuation| Review of Literature\r\nMostly financial modeling of dabur was done before by equity research analyst of various research agencies, interchangeable funds, investment banks and brokerage house. Generally they have done it quarterly and annually before and after the company’s financial results.\r\nJustification and Likely Benefits\r\n wherefore financial modelingis important?\r\nFinancial modeling acts as a useful tool which enables business options and risks to be estimated in a cost-effective way against various assumptions, recognize optimal solutions in estimating financial returns and clear the effect of resource constraints thus leading to more effective business decisions. Financial modeling can be referred as an art and like any other art form, it requires constant [practice and commitment to develop expertise in this area.\r\nIn the present day world, many companies are becoming globally integrated with the international economy through the way of getting/establishing international operations. This calls for the requirement of strong financial models which can assist in performing the evaluation of every country’s operatio ns, reflect on multiple currencies in their model, estimate varying capacity utilizations to estimate the optimal capacity under changeable industry demand-supply scenarios and similar more cases.\r\nScope of Financial Modeling?\r\nFinancial Modelling is a key learning with application in several areas withinbanking and finance industry as well as within corporations. In financialmodelling you learn to gather historical information on companies andanalyze company / industry performance on various financialparameters. This analysis is then used to build a company’s financialmodel, which in turn is key to projecting a future financial performance.Based on this model companies investors can arrive at a suitableevaluation for the companies. Financial models are usually made for financing of a project intransactions like: PPP/PFI, Mergers & Acquisitions, Valuation ofbusinesses etc. across various industries & sectors which includes SolarPlants, Waste Management, Helicopte r felt, Oil and Gas, Mining,Energy, Healthcare, Services & Education etc to evaluate the viability ofthe project on various parameters.\r\nKey Financial of Dabur:\r\nObjectives\r\nTo find out intrinsic value of dabur and take decision regarding investment in Dabur.\r\nPlan of Work and Methodology\r\nPrepared a Sector Analysis Report for the FMCG sector\r\n• Performed historic Ratio Analysis of Dabur\r\n• Prepared a Financial Model for Dabur by forecasting its financials for the next five years (FY13E-FY17E) on the basis of a historical trend analysis and expected performance of the FMCG industry drivers. • Estimated a Target Price for the stock of Dabur using a DCF Valuation Model as well as using Relative Valuation by peer comparison. • Submitted a final Equity Research Report on Dabur with recommendations.\r\nReferences and Bibliography\r\nwww.investopedia.com\r\nwww.rbi.org.in\r\nwww.moneycontrol.com\r\nwww.equitymaster.com\r\nwww.bloomberg.com\r\nwww. bseindia.com\r\nwww.dabur.com\r\nwww.wikipedia.org\r\nNielsen FMCG industry report\r\n'