Institute of Chartered Financial Analysts of India (ICFAI) University 2006 Certification Finance Security Analysis – II - Question Paper

Outlook

The FMCG sector will continue on to grow the business considering the overall economy of the country. The per capita consumption in India for the FMCG product is amongst the least in the world. This indicates the scope of expansion in India in the FMCG sector. Even if we compare the consumption with the countries like China and Thailand there is enough scope for FMCG sector to grow. Companies are changing the mindset of the people by offering new generation products. Companies are reaching to the rural sector where the penetration is low and thus building up the infrastructure facilities. Companies like HLL and ITC have started Project Shakti and E-Choupal, but still unable to capture significant share in the market. Owing to the vast growth potential, many big corporates are jumping into the sector like Reliance industries, ITC etc. International giants are also viewing India as its retail chain destination like Wal-Mart, etc.

Dabur India Ltd. (DIL)

Background

Dabur India is the country’s 4th largest FMCG Company with interests in Health care, Personal care and Food products. Dabur has a turnover of Rs1240 crores with brands such as Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola & Real. The company has its manufacturing units at Alwar, Rajasthan - Baddi near Solan, Himachal Pradesh - Katni near Jabalpur, Madhya Pradesh - Sahibabad near Ghaziabad, Uttar Pradesh. The company has wide and deep market penetration with 47 C&F agents, more than 5000 distributors and over 1.5 million retail outlets all over India. The company demerged its pharma business w.e.f first April 2003 to unlock value in both pharma & FMCG business. Consequently upon demerger of the pharmaceutical division fixed assets of Rs. 5574 crores, General Reserve Rs.18618, Investment Rs.7652, Secured Loans Rs. 437, Current Assets Rs. 8854, Unsecured Loans Rs. 2394, Loan & Advances Rs. 631, Current Liabilities & Provisions Rs. 1324 and Deferred Tax/Misc Expenditure Rs. 62 has been transferred to Dabur Pharma Ltd.

Business and Products

Dabur is a trusted name in natural health care for over 100 years and is known for providing a range of efficacious products based on the principles of Ayurveda. It has a few famous brands like Vatika, Hajmola, Anmol, Real and Balsara. Vatika is a premium brand and a leader in its category as 1 of the flagship brand with a popular name in the natural personal care products. Hajmola is a tasty fun-filled digestive available in different forms from tablets, traditional churnas to modern formats like center-filler candy appealing to all age groups. Anmol is a relatively new member in the family of Dabur’s key brands, given a range of herbal and natural products across different FMCG categories with a focus on providing quality and affordability. Real is the country’s leading brand of packaged fruit juices, give the largest range of refreshing and health fruit juices that are 100 per cent natural and free of preservatives. Balsara is a leading producer of oral care and household care products in the Indian market and a new member in the Dabur range of products. Company has acquired 3 Balsara group companies – Balsara Hygiene Products, Balsara Home Products and Besta Cosmetics. The company is expecting further strengthening of its oral care portfolio and making its debut in the high-growth home care segment.

Earning:   Approval pending.