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

This acquisition declares Dabur as a prominent FMCG brand which includes like Promise, Babool and Meswak toothpaste and in household care it has Odonil, Odopic and Odomos, which adds Rs.2 billion to its revenues. Oral care products account for 56% of Balsara’s revenues while household products contributes 44%. In addition to its core oral care and household care businesses, Balsara also has export business consists of 15% of its revenue.

In India, 3 divisions — Consumer Care Division (CCD), Consumer Healthcare Division (CHD) and the wholly owned subsidiary Dabur Foods Limited, carry out the company’s business. On a consolidated basis CCD contributes 82 per cent, CHD contributes eight per cent and DFL contributes 10 per cent to the Company’s domestic revenues, while CCD remains the leading division and a focus area. During 2004-05 the Company undertook several initiatives to grow deliberately in smaller divisions — CHD and Foods. These divisions, with relatively smaller sales base, are seen as key drivers of future growth.

International Business

During 2003-04, the Company started giving greater impetus to the international business. The entire international operation was reorganized and an umbrella organization called Dabur International Limited was created to give focus and structure to the international initiatives. This entity has an independent team and operates from Dubai. Overseas sales grow up by 43.4% per cent from Rs.128 crores in 2003-04 to Rs.183.6 crores in 2004-05. The overseas impetus has been maintained and the share of overseas in Dabur’s total sales increased from 9.6 per cent in 2003-04 to11.9 percent in 2004-05. The data of relative domestic and overseas sales and net profit for the consolidated entity is provided in table provided beneath.



Relative share of Sales and Profits of domestic and overseas businesses



Particulars
Domestic
Overseas

2004-05
2003-04
2004-05
2003-04

Sales

% of Total
1353.40

88.10
1201.50

90.40
183.60

11.90
128.00

9.60

Net profit

% of Total
151.7

96.60
100.6

92.00
5.30

3.40
8.70

8.00


latest Developments

The company is intending upon creating a backward integration platform for herbal inputs, especially those on the endangered list. To this end, Dabur has made a foray into contract farming for opted herbs as part of the agro biotechnology initiative. Under this initiative, a number of backward integration programmes have been set up in Andhra Pradesh, Tamil Nadu, Haryana, Uttar Pradesh, Himachal Pradesh, Uttaranchal, Jammu and Kashmir and Nepal to develop sustainable cultivation of these engendered species through contract farming and buy back arrangements. Dabur entered into contract farming agreements with farmers through a local coordinator. The company also arranged quality-planting material with promising genetic potential to farmers on no-profit-no-loss basis and provides additional tech. support. In all, about 2500 acres of land and 29 medicinal herbs have been covered under these programmes, which contribute to environment and adds to the income of farmers in addition to providing a sustainable source of herbal inputs to the company.

Earning:   Approval pending.