ANALYSIS OF FINANCIAL RATIO, TREND

AND COMMON SIZE STATEMENT OF

“PRABHAT DAIRY”

(2010-11 to 2019-20)
 A. Short-term Liquidity Ratios: Short-term liquidity ratios measure adequacy
of company’s current assets to meet its current obligations. The suppliers of short-term credit
to an enterprise are interested in assessing the ability of the enterprise to repay their dues.
i. Current Ratio: The current ratio measures the adequacy of short-term obligation
of the enterprise. the current assets are expected to be converted into cash shortly-within a
period of 12 months and current liabilities are expected to be paid within a period of 12
months.

Current Assets
Current Liability
2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Total Current
1,540.22 744.47 185.3 232.86 101.76 146.89 116.94 66.26 88.48 86.18
Liabilities
Total Current
1,963.70 1,287.07 286.37 379.55 374.25 184.31 71.26 53.76 71.48 75.7
Assets
Current Ratio 1.27 1.73 1.55 1.63 3.68 1.25 0.61 0.81 0.81 0.88

Interpretation: The current ratio of the company shows the liquidity position, that indicates its
capacity to repay short-term obligations. Since the average current ratio is above 1, it may be stated
that the company has a healthy payout capability to pay its short-term obligations.

ii. Quick Ratio: Quick ratio is often used as a supplementary measure of short-term
liquidity. Out of the current assets, inventories & PPE are not considered to be liquid
enough. Somewhat more strict measure of liquidity called quick ratio or acid test ratio is
often used
Current assets – Inventories-PPE
Current liabilities
2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Total Current
1,540.22 744.47 185.3 232.86 101.76 146.89 116.94 66.26 88.48 86.18
Liabilities
Total
0.85 0.24 48.09 47.37 30.3 24.04 18.96 15.33 12.17 12.42
Inventory
Total Current
1,963.70 1,287.07 286.37 379.55 374.25 184.31 71.26 53.76 71.48 75.7
Assets
Current Ratio 1.27 1.73 1.29 1.43 3.38 1.09 0.45 0.58 0.67 0.73

Interpretation: The quick ratio is considered a more conventional measure than the current ratio, that
includes all current assets as coverage for current liabilities. Higher the better it is for company's
liquidity and financial health. Here, the quick ratio of the company is appeared to be promising to
payout in short term needs.

Profitability Ratio: Profitability ratios-expressing various measures of profits in

relation to the sales or income for the accounting period. We know various measures of
profits-gross profit, operating profit, net profit etc

i. Gross Profit Ratio: Gross profit ratio, also called gross margin, is the ratio of
gross profit made by the enterprise during an accounting period to the sales. It is an

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 indicator of the inherent profitability of the enterprise and pricing power that the enterprise
enjoys in the market before considering other expenses and income.

Sales - Cost of goods sold * 100

Sales
2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Sales 491.6 71.54 27.47 1131.16 1000.08 874.63 779.78 561.09 465.58 286.57
COGS 516.78 66.98 25.93 1020.91 884.84 750.9 686.95 506.17 409.89 247.27
GP
Ratio -5.12 6.37 5.61 9.75 11.52 14.15 11.90 9.79 11.96 13.71

Interpretation: The gross profit margin ratio shows the financial health of the company. However,
the GP Ratio is declining year on year which is not a good sign for the company. Higher gross profit
margin indicates that the company is controlling their overhead cost very well. There was a loss in
2019-20 since there was nationwide lockdown imposed across India.

ii. Operating Profit Ratio: The operating profit ratio or operating margin is
the ratio of operating profit to sales. Operating profit is commonly defined either as EBIT.
Or Cash operating profit is EBITDA
a. Cash operating margin: is the ratio of EBITDA to sales. It captures the
profitability of the enterprise before charging depreciation and amortization and non-
operating expenses of interest and tax, whereas operating margin, that is, the ratio of
EBIT to sales, indicate the performance of the enterprise at the operating level.

Earnings before interest, Tax, Depreciation and amortization * 100

Sales

2019- 2018- 2017- 2014-

20 19 18 2016-17 2015-16 15 2013-14 2012-13 2011-12 2010-11
Total Income 522.43 75.78 45.91 1163.54 1006.92 874.88 779.96 561.29 464.42 286.82
PBDIT -111.69 7.63 19.34 60.8 47.12 38.86 32.49 17.28 20.77 18.55
Cash
Operating
Margine -21.38 10.07 42.13 5.23 4.68 4.44 4.17 3.08 4.47 6.47

Interpretation: The Operating cash flow margin represents the profitability, efficiency and earnings
from its operations before depreciation, interest and tax. Prabhat Dairy was consistently maintaining
operating cash margins till 2018-19. However, in the year 2019-20, company has declined its
operating cash margin.

b. Operating margin: Operating margin measures how much profit a company

makes by paying for variable costs of production, such as wages and raw materials, but
before paying interest or tax

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 Earnings before Interest, Tax * 100
Sales
2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Total Income 522.43 75.78 45.91 1163.54 1006.92 874.88 779.96 561.29 464.42 286.82
Profit Before
Tax -112.19 7.63 19.34 30.08 14.46 3.28 2.58 0.36 4.59 9.16
Operating
Margine -21.47 10.07 42.13 2.59 1.44 0.37 0.33 0.06 0.99 3.19

Interpretation: The operating profit margin ratio indicates that Prabhat Dairy is able to generate
operating profit after making all variable costs of production. However, in 2019-20 the company has
incurred operating loss which means the company has paid more overheads as compared to its
revenue.

iii. Net Profit Ratio or Net Margin: The net margin is the final measure of
profitability. It is the margin left for the shareholders after all the expenses - operating and
non-operating, depreciation and tax has been provided for.

Profit after tax * 100

Sales

2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Net Sales 491.6 71.54 27.47 1131.16 999.7 874.32 779.58 561 465.54 286.57
Net Profit -120.11 6.65 18.9 27.3 9.39 3.89 2.54 2.94 3.07 9.48
Net Margine -24.43 9.30 68.80 2.41 0.94 0.44 0.33 0.52 0.66 3.31

Interpretation: The Net margin ratio indicates that Prabhat Dairy is generating considerable profits
providing all the fixed and variable overheads. Profit was increasing year on year basis except 2019-
20 where company had incurred huge loss.

iv. Operating Expenses Ratio:

Operating Expenses/Sales

2019- 2018- 2017- 2016- 2015- 2013- 2012- 2011- 2010-

20 19 18 17 16 2014-15 14 13 12 11
Net Sales 491.6 71.54 27.47 1131.16 999.7 874.32 779.58 561 465.54 286.57
Employee
Cost 5.29 1.16 0.64 25.96 21.25 21.63 15.44 7.67 6.63 2.83
Selling and
Admin
Expenses 0 0 0 17.13 9.33
Miscellaneous
Expenses 112.05 0.01 0 38.74 44.38 63.49 45.08 30.17 27.13 18.17

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 Operating Exp
Ratio 23.87% 1.64% 2.33% 7.23% 7.50% 9.74% 7.76% 6.75% 7.25% 7.33%

Interpretation: The operating expense ratio of Prabhat Dairy is increasing year on year as compared
to its revenue, represents company is not able to manage its overhead efficiently.

B. Return on Equity: The Return On Shareholders’ Funds (ROSF) ratio is a measure

of the profit for the period which is available to the ordinary shareholders with the ordinary
shareholders' stake in a business.

PAT
Shareholders’ funds

2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Reported Net
-120.11 6.65 18.9 27.3 9.39 3.89 2.54 2.94 3.07 9.48
Profit
Total
Shareholders 458.37 578.51 571.59 557.37 523.41 235.31 232 166.17 53.46 50.73
Funds
Return On
-26.20% 1.15% 3.31% 4.90% 1.79% 1.65% 1.09% 1.77% 5.74% 18.69%
Equity
Interpretation: The return on equity of the company was moderate as the investors were getting
their average returns. The return on equity shows the company able to payout its investors a fair
amount of return on their investment in the company.

Assets Utilisation Ratio.

A. Return on Assets (ROA): Ratio is used to measure the amount of profit a
company made for each Rs.1 of assets owned.

• Return on Assets = (Net Profit / Average Total Assets) * 100

2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11

Reported Net Profit -120.11 6.65 18.9 27.3 9.39 3.89 2.54 2.94 3.07 9.48

Total Assets 1,998.59 1,322.98 792.87 832.82 670.13 473.84 396.98 254.91 230.66 161.7

Return On Assets -6.01% 0.50% 2.38% 3.28% 1.40% 0.82% 0.64% 1.15% 1.33% 5.86%

Interpretation: The return on assets of the company show that it is earning return on its investment
in assets and it shows how efficiently Prabhat Dairy has convert money invested in assets into net
income. Higher the positive ROA ratio better it is.

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 B. Earnings Per Share (EPS): EPS is the most widely tracked indicator of
profitability from shareholders point of view. It represents the profit made by the enterprise
during an accounting period for each share.
The EPS is calculated as follows

Profit after tax

Number of shares

2018- 2017- 2016- 2015- 2014- 2013- 2012- 2011- 2010-

2019-20 19 18 17 16 15 14 13 12 11
Reported Net
Profit -120.11 6.65 18.9 27.3 9.39 3.89 2.54 2.94 3.07 9.48
Shares in issue
(lakhs) 976.76 976.76 976.76 976.76 976.76 714.29 300 300 29.9 29.9
Earning per
Share -12.30% 0.68% 1.93% 2.79% 0.96% 0.54% 0.85% 0.98% 10.27% 31.71%

Interpretation: EPS shows that the investors in Prabhat Dairy is generating return on money
invested in the company. A higher EPS indicates that investors will invest more in the companies to
generate more profit in future. However, there were substantial decrease in return on equity year on
year basis.

C. Price Earnings Ratio (P/E) : is calculated by dividing the market price of a

stock by its most recent Earnings Per Share (EPS) value. It indicates how long the earnings
will take to recover the cost of the shares.
Price Earnings Ratio = Market price per share / Earnings per share

2016- 2013- 2012- 2011- 2010-

2019-20 2018-19 2017-18 17 2015-16 2014-15 14 13 12 11
Share
Price 55.1 74.55 154.05 121.65 109.55
Earning -
per Share 12.30% 0.68% 1.93% 2.79% 0.96% 0.54% 0.85% 0.98% 10.27% 31.71%
PE Ratio -448.08 10949.99 7961.37 4352.49 11395.53 0.00 0.00 0.00 0.00 0.00

Interpretation: The P/E ratio helps investors find the market value of a stock as compared to the
company's earnings. The stock P/E of Prabhat Dairy is very high that means the stock prices are
overvalued. Henceforth, investing in these stock could be very risky.

D. Return on capital employed (ROCE): The return on capital

employed shows how much operating income is generated for each dollar of capital invested.

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 EBIT (1 − Tax rate)/( Borrowed funds + Shareholders’
funds)
2017- 2016- 2015- 2014- 2010-
2019-20 2018-19 2013-14 2012-13 2011-12
18 17 16 15 11
PAT -120.11 6.65 18.90 27.30 9.39 3.89 2.54 2.94 3.07 9.48
Total Shareholders
458.37 578.51 571.59 557.37 523.41 235.31 232.00 166.17 53.46 50.73
Funds
Return on Capital
-26.20% 1.15% 3.31% 4.90% 1.79% 1.65% 1.09% 1.77% 5.74% 18.69%
Employed

Interpretation: The return on capital states that Prabhat Dairy is generating much operating income
from the capital invested. A higher ROCE is always more favorable which indicates that it has the
potential to make more profits from capital employed. Except 2019-20 Prabhat Dairy was
maintaining positive ROCE as compared to previous years.

II. Solvency Ratio: The term ‘solvency’ means ability of an enterprise to meet its long-
term indebtedness. Solvency ratios are computed to assess the ability of the enterprise to meet its
long-term obligations.

a. Debt to Equity Ratio: Debt to Equity Ratio expresses relationship between

borrowings (debts) (external borrowings) and the equity (internal equities).

Long-term Debt
Debt to Equity Ratio = Equity Shareholders’ Funds

2019- 2018- 2017- 2016- 2015-

2014-15 2013-14 2012-13 2011-12 2010-11
20 19 18 17 16
Long Term
0.00 0 33.5 38.38 38.39 84.44 40.97 18.01 84.15 19.97
Borrowings
Long Term
0.00 0 0.74 1.08 1.02 0.92 0.57 0.38 0.16 0.1
Provisions
Total Shareholders
458.37 578.51 571.59 557.37 523.41 235.31 232 166.17 53.46 50.73
Funds
Debt to Equity 0.00% 0.00% 5.99% 7.08% 7.53% 36.28% 17.91% 11.07% 157.71% 39.56%

Interpretation: Lower the better it is. The Debt Equity Ratio of Prabhat Dairy reflects the ability of
shareholder to cover all debts in the event of a business downturn except FY 2011-12 where there
was a high debt on equity. It shows the company was able to meet the working capital requirement
without taking much loans.

b. Proprietary Ratio: Proprietary Ratio establishes the relationship between

proprietors’ funds and total assets. Proprietors’ funds mean share capital (both Equity and
Preference) plus Reserves and Surplus. This ratio shows the extent to which the shareholders
own the business.

Shareholders’ Funds/Equity
Total Assets

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 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Total Shareholders
458.37 578.51 571.59 557.37 523.41 235.31 232 166.17 53.46 50.73
Funds
Total Assets 1,998.59 1,322.98 792.87 832.82 670.13 473.84 396.98 254.91 230.66 161.7
Proprietary Ratio 22.93% 43.73% 72.09% 66.93% 78.11% 49.66% 58.44% 65.19% 23.18% 31.37%

Interpretation: Higher the better it is. The proprietary ratio of Prabhat Dairy shows that it has a
healthy financial position. As high proprietary ratio, indicates a strong financial position who are
able to payout the creditors. Hence the creditors are secured.

c. Total Assets to Debt Ratio: Total Assets to Debt Ratio Establishes

relationship between total assets and total long-term borrowings or debt.

Total Assets
Total Assets to Debt Ratio = Debt
2017- 2016- 2015- 2014- 2013- 2012- 2011- 2010-
2019-20 2018-19
18 17 16 15 14 13 12 11
Total Assets 1,998.59 1322.98 792.87 832.82 670.13 473.84 396.98 254.91 230.66 161.7
Long Term
0.00 0.00 33.5 38.38 38.39 84.44 40.97 18.01 84.15 19.97
Borrowings
Long Term Provisions 0.00 0.00 0.74 1.08 1.02 0.92 0.57 0.38 0.16 0.1
Total Assets to Debt
0 0 23.16 21.11 17.00 5.55 9.56 13.86 2.74 8.06
Ratio

Interpretation: The total-debt-to-total-assets ratio represents how the company has used the
borrowings/debts to finance its assets. It stats that Prabhat Dairy is not much dependent on outside
finance, instead they are funded by owners (shareholders) equity.

d. Fixed Assets to Long Term Debt: Fixed Assets to Long Term Debt states
to what extent the long-term liabilities can be covered with its fixed assets.
Fixed Assets/ Long term debts

2017- 2016- 2015- 2014- 2013- 2012- 2010-

2019-20 2018-19 2011-12
18 17 16 15 14 13 11
Fixed Assets 2.31 0 156.38 134.76 117.83 127.99 137.01 51.92 76.26 61.57
Long Term Borrowings 0.00 0.00 33.5 38.38 38.39 84.44 40.97 18.01 84.15 19.97
Fixed Assets to Long
#DIV/0! #DIV/0! 467% 351% 307% 152% 334% 288% 91% 308%
Term Debt

Interpretation: The greater the ratio better it is. This shows Prabhat Dairy’s ability to manage to
cover the long-term liabilities. It implies Prabhat Dairy is in a healthy financial position to cover its
long term debts.

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 e. Financial leverage ratio: Financial Leverage Ratio state that the ratio that
measures companies earning as a result of change in capital structure is an indicator of
volatile earning.

Total assets/Shareholders’ funds

2017- 2016- 2015- 2014- 2013- 2012- 2011- 2010-

2019-20 2018-19
18 17 16 15 14 13 12 11
Total Assets 1,998.59 1322.98 792.87 832.82 670.13 473.84 396.98 254.91 230.66 161.7
Total Shareholders
458.37 578.51 571.59 557.37 523.41 235.31 232 166.17 53.46 50.73
Funds
Financial leverage
4.36 2.29 1.39 1.49 1.28 2.01 1.71 1.53 4.31 3.19
ratio

Interpretation: The greater the ratio better it is. This shows Prabhat Dairy’s financial leverage is a
healthy one as it is consistently increasing at an increasing rate.

f. Interest Coverage Ratio: Interest Coverage Ratio establishes the relationship between net profit
before interest and tax and interest payable on long-term debts. Since, interest is a charge on profit,
net profit before interest and tax is taken to calculate the ratio.

2019- 2018- 2017- 2016- 2015- 2014- 2013- 2012- 2011- 2010-
20 19 18 17 16 15 14 13 12 11
-
PBDIT 111.69 7.63 19.34 60.8 47.12 38.86 32.49 17.28 20.77 18.55
Depreciation 0.2 0 0 16.05 15.13 16.53 15.6 6.84 5.74 3.64
Interest 0.3 0 0 14.67 17.53 19.05 14.31 10.08 10.44 5.75
Interest Coverage -
Ratio 372.97 0 0 3.05 1.82 1.17 1.18 1.04 1.44 2.59

Interpretation: The interest coverage ratio of Prabhat Dairy indicates that its inefficiency to cover
its current interest payment with its available earnings. Lower the ratio, more the company is
burdened by debt expense.

a. Average Payment Period: Average payment period represents the payout period
of a company to its creditors from whom goods are purchased on credit.

(365 x Trade Payables) / Purchase

2017- 2016- 2015- 2014- 2010-

2019-20 2018-19 2013-14 2012-13 2011-12
18 17 16 15 11
Days 365.00 365.00 365.00 365.00 365.00 365.00 365.00 365.00 365.00 365.00
Trade Payables 83.15 2.61 48.33 36.68 35.68 49.66 38.40 19.58 31.13 38.03
Raw Materials 516.57 66.98 25.93 1013.6 876.99 750.9 686.95 506.17 409.89 247.27
Average Payment
58.75 14.22 680.31 13.21 14.85 24.14 20.40 14.12 27.72 56.14
period

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Interpretation: Average Payment Period of Prabhat Dairy is appears to be efficient as it is paying to
its creditors in time. However it may be noted that in the year 2017-18, the average payment period
of the company exceeds the normal payout period.

iii. Activity Ratio: In calculating Activity Ratios and Profitability Ratios, the terms
‘Revenue from Operations’, ‘Credit Revenue from Operations’ and “Cost of Revenue from
Operations’ are used.
b. Trade Receivables (Debtors’) Turnover Ratio: Enterprises sell
goods and services on credit. The enterprises to whom goods and services are sold on credit
are known as debtors and the bills received in lieu of credit sales are known as bills receivable.
The debtors and bills receivable together are known as Trade receivables The debtors and
bills receivable together are known as trade receivables.

Trade Receivables Turnover Ratio

= Credit Revenue from Operations
Average Trade Receivables (Debtors + Bills
Receivable)
2017- 2016- 2015- 2014- 2013- 2012- 2010-
2019-20 2018-19 2011-12
18 17 16 15 14 13 11
Net Sales 491.60 71.54 27.47 1131.2 999.7 874.32 779.58 561 465.54 286.57
Trade Receivables 92.38 0.50 92.57 109.11 114.8 75.5 33.34 30.94 30.79 26.27
Debtor Turnover Ratio 5.32 143.08 0.30 10.37 8.71 11.58 23.38 18.13 15.12 10.91
Interpretation: The receivables turnover ratio of Prabhat Dairy states its efficiency on collecting its
receivables from its customers. Lower the ration better it is, hence we can say that Prabhat Dairy is
managing to recover its receivables in time.

c. Working Capital Turnover Ratio: Working Capital Turnover Ratio

establishes the relationship between Working Capital and Revenue from Operations. It shows
the number of times a unit of Rupee invested in working capital produces Revenue from
Operations, i.e., Net Sales

Revenue from Operations

Working Capital
2017- 2016- 2015- 2014- 2013- 2012- 2011- 2010-
2019-20 2018-19
18 17 16 15 14 13 12 11
Net Sales 491.60 71.54 27.47 1131.2 999.7 874.32 779.58 561 465.54 286.57
Total Current Assets 1,963.70 1287.07 286.37 379.55 374.25 184.31 71.26 53.76 71.48 75.7
Total Current
1,540.22 744.47 185.3 232.86 101.76 146.89 116.94 66.26 88.48 86.18
Liabilities
Working Capital Ratio 1.16 0.13 0.27 7.71 3.67 23.37 -17.07 -44.88 -27.38 -27.34
Interpretation: The working capital ratio of Prabhat Dairy indicates how it was meeting its current
financial obligations. It shows, at initial stage the company was not able to generate working capital
efficiently till 2013-14. However, beyond 2014-15, the company is generating healthy working capital
to meet out the financials to meet the day to day operations of business.
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 d. Inventory (Stock ) Turnover Ratio: Inventory Turnover Ratio
established relationship between Cost of Revenue from Operations or Cost of Goods Sold
during a period and average inventory carried during that period.

Cost of Revenue from Operations or Cost of Goods sold

Average Inventory

2017- 2016- 2015- 2014- 2013- 2012- 2010-

2019-20 2018-19 2011-12
18 17 16 15 14 13 11
Raw Materials 516.57 66.98 25.93 1013.6 876.99 750.9 686.95 506.17 409.89 247.27
Power & Fuel Cost 0.21 0 0 7.27 7.85
Inventories 0.85 0.24 48.09 47.37 30.3 24.04 18.96 15.33 12.17 12.42
Inventory Turnover
607.98 279.08 0.54 21.55 29.20 31.24 36.23 33.02 33.68 19.91
Ratio
Interpretation: Inventory turnover ratio of the company states that how fast it was mobilising its
inventories. Higher the ratio better it is. It shows company is doing their sales operation efficiently.

e. Assets turnover ratio: The asset turnover ratio represents how efficiently a company
is generating sales or revenues relative to the value of its assets.

Sales/Total assets

2017-
2019-20 2018-19 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
18
Net Sales 491.60 71.54 27.47 1131.2 999.7 874.32 779.58 561 465.54 286.57
Total Assets 1,998.59 1,322.98 792.87 832.82 670.13 473.84 396.98 254.91 230.66 161.7
Assets
24.60% 5.41% 3.46% 135.82% 149.18% 184.52% 196.38% 220.08% 201.83% 177.22%
Turnover Ratio

Interpretation: The Assets turn over ratio of the company stats that it is efficiently generating
revenues from its assets. However, it is noteworthy to mentioned that the turn over ratio is decreasing
year on year basis since 2012-13.

f. Fixed assets turnover ratio: The fixed asset turnover ratio (FAT) is useful in
measuring the operating performance of a company.
Sales/Fixed assets

2017-
2019-20 2018-19 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
18
Net Sales 491.60 71.54 27.47 1131.2 999.7 874.32 779.58 561 465.54 286.57
Fixed
2.31 0.00 156.38 134.76 117.83 127.99 137.01 51.92 76.26 61.57
Assets
Fixed
21281.39% #DIV/0! 17.57% 839.39% 848.43% 683.12% 568.99% 1080.51% 610.46% 465.44%
assets

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 turnover
ratio
Interpretation: A higher fixed asset turnover ratio indicates that a company has effectively used
investments in fixed assets to generate sales. Prabhat Dairy is constantly generating good return on
its investment made in Fixed Assets.

g. Current Asset turnover ratio: Current Assets Turnover Ratio indicates that the
current assets are turned over in the form of sales more number of times.

Sales/Current assets

2017-
2019-20 2018-19 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
18
Net Sales 491.60 71.54 27.47 1131.2 999.7 874.32 779.58 561 465.54 286.57
Total
Current 1,963.70 1,287.07 286.37 379.55 374.25 184.31 71.26 53.76 71.48 75.7
Assets
Current
assets
25.03% 5.56% 9.59% 298.03% 267.12% 474.37% 1093.99% 1043.53% 651.29% 378.56%
turnover
ratio
Interpretation: High current assets turnover ratio of Prabhat Dairy indicates its capability to achieve
maximum sales with the minimum investment in current assets. However, the rate is in decreasing
trend which is not a good sign for the company.

h. Average collection period: Average collection period shows in how many days
a company is able to collect its receivables. Following formula helps in determining the
average collection period of a company.

365/Receivable turnover ratio

2018- 2016- 2015- 2014- 2010-

2019-20 2017-18 2013-14 2012-13 2011-12
19 17 16 15 11
Days 365.00 365.00 365.00 365.00 365.00 365.00 365.00 365.00 365.00 365.00
Receivable turnover
5.32 143.08 0.2967 10.367 8.7082 11.58 23.38272 18.13187 15.1198 10.909
ratio
Average collection
68.59 2.55 1,230.00 35.21 41.91 31.52 15.61 20.13 24.14 33.46
period
Interpretation: Here it shows that Prabhat dairy is efficiently maintaining its average collection period
except 2017-18 where the average collection period is too high. Lower the period better it is for the
company.

i. Average Holding period: The Average inventory holding period shows a

companies Inventory management on average how many number of days a business holds its
inventories. To calculate the inventory holding period we divide inventory by cost of sales and
multiply the answer by 365 for the holding period in days, or by 12 for the holding period in
months

365/Inventory turnover ratio

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 2018- 2017- 2016- 2015- 2014- 2010-
2019-20 2013-14 2012-13 2011-12
19 18 17 16 15 11
Days 365.00 365.00 365.00 365.00 365.00 365.00 365.00 365.00 365.00 365.00
Inventory turnover
607.98 279.08 0.5392 21.552 29.203 31.235 36.23154 33.01826 33.6804 19.909
ratio
Average Holding
0.60 1.31 676.93 16.94 12.50 11.69 10.07 11.05 10.84 18.33
period
Interpretation: It shows Prabhat Dairy is efficiently maintaining is stock turnover except 2017-18
since it is showing abruptly high.

IV. Growth Ratio:

a. Compound Annual Growth Rate (CAGR): Compound annual growth rate
represents the growth rate of Company in terms of rate of investment over a specified period of time longer than
one year.

((AC/AB)^1/n)-1

2019- 2018- 2017- 2016- 2015- 2014- 2013- 2012- 2011- 2010-
20 19 18 17 16 15 14 13 12 11
Net Sales 491.6 71.54 27.47 1131.16 999.7 874.32 779.58 561 465.54 286.57
- -
CAGR 5.55% 12.96% 20.90% 14.72% 13.31% 11.80% 10.53% 6.95% 4.97% 0.00%

Interpretation: It shows that Prabhat Dairy is efficiently maintaining the growth rate year on year.
However, in the year 2019-20, there is a major fallback in CAGR 5.55% due to COVID 19.

b. Year on Year Growth: Year-over-year (YOY) is a way of measuring the company’s

growth in terms sales year after year.

(Current year - Previous year)/ Previous year sales

2018- 2017- 2016- 2015- 2014- 2013- 2012- 2011-

2019-20 19 18 17 16 15 14 13 12 2010-11
Net Sales 491.6 71.54 27.47 1131.16 999.7 874.32 779.58 561 465.54 286.57
YoY Growth 587% 160% -98% 13% 14% 12% 39% 21% 62% #DIV/0!

Interpretation: It shows that Prabhat Dairy is efficiently maintaining the growth rate year on year.
However, in the year 2019-20, there is a major fallback in CAGR 5.55% due to COVID 19.

c. Dividend per Share: Dividend per share is the amount of profit distributed to its
shareholders for the number of shares hold over a period of time.

Total Dividend/ Numbers of equity shares

12
 2018- 2017- 2016- 2015- 2014- 2013- 2012- 2011- 2010-
2019-20 19 18 17 16 15 14 13 12 11
Equity
Dividend 0 0 3.91 3.91 4.7 0.48 0 0 0 0
Shares in issue 976.76 976.76 976.76 976.76 976.76 714.29 300 300 29.9 29.9
Divident per
Share 0 0 0.004 0.004 0.00481 0.00067 0 0 0 0

Interpretation: It shows that Prabhat Dairy is not paying a fair dividend even if they are making
profits.

d. Dividend Rate: Dividend rate represents the rate at which a company provides a part
of their profit to its share holders each year.
Total Dividend/ Paid up capital

2018- 2017- 2016- 2015- 2014- 2013- 2012- 2011- 2010-

2019-20 19 18 17 16 15 14 13 12 11
Equity
Dividend 0 0 3.91 3.91 4.7 0.48 0 0 0 0
Equity Share
Capital 97.68 97.68 97.68 97.68 97.68 71.43 3 3 0.3 29.9
Dividend Rate 0 0 0.04003 0.04003 0.04812 0.00672 0 0 0 0

Interpretation: It shows that Prabhat Dairy is not paying a fair dividend even if they are
making profits. Hence the dividend rate is negligible.

e. Dividend payout ratio: The dividend pay-out ratio is the ratio dividends paid to its
shareholders against the number of shares held. These dividends are paid out of profits that the
company has earned.

(Dividend + Dividend distribution tax)/ Profit after tax

2018- 2017- 2016- 2015- 2014- 2013- 2012- 2011- 2010-

2019-20 19 18 17 16 15 14 13 12 11
Equity Dividend 0 0 3.91 3.91 4.7 0.48 0 0 0 0
Corporate
Dividend Tax 0 0 0.82 0.8 0 0.1 0 0 0 0
Reported Net
Profit -120.11 6.65 18.9 27.3 9.39 3.89 2.54 2.94 3.07 9.48
Dividend Payout
Ratio 0 0 0.25026 0.17253 0.50053 0.1491 0 0 0 0

Interpretation: The dividend payout ratio of Prabhat Dairy very minimal. The company has paid
dividend only for 4 year since 2010-11.

f. Retention Ratio: The retention ratio represents the percentage of net income which is retained for
expansion of business by not paying out the dividend and plowing it back into the business.

13
 1 - Dividend pay out ratio

2018- 2017- 2016- 2015- 2014- 2013- 2012- 2011- 2010-

2019-20 19 18 17 16 15 14 13 12 11
1 1 1 1 1 1 1 1 1 1
Dividend Payout
Ratio 0 0 0.25026 0.17253 0.50053 0.1491 0 0 0 0
Retention Ratio 1 1 0.74974 0.82747 0.49947 0.8509 1 1 1 1

Interpretation: We can say that Prabhat Dairy is plowing back its share of profit into the business
since they did not paid much dividend to its shareholders.

g. Dividend Yield Ratio: The dividend yield is the ratio that a percentage of a company's share price
which pays out in dividends each year.

Dividend per share (DPS)/ Current market value share

2018- 2017- 2016- 2015- 2014- 2013- 2012- 2011- 2010-

2019-20 19 18 17 16 15 14 13 12 11
Divident per 0.0048
Share 0 0 0.004 0.004 1 0.00067 0 0 0 0
154.0 121.6
Share Price 55.1 74.55 5 5 109.55
Divident Yield 2.6E- 3.3E- 4.4E- #DIV/0 #DIV/0 #DIV/0 #DIV/0 #DIV/0
Ratio 0 0 05 05 05 ! ! ! ! !

Interpretation: Since Prabhat Dairy had paid dividend for 4 years only with a negligible rate, hence
the dividend yield ratio is not attractive to the new shareholders.

h. Length of Cash Cycle: The length of cash cycle represents financial liberty of a firm for meeting its
payouts to its creditors, borrowings etc.

Average Holding Period + Average collection period - Average payment period

2015- 2014- 2011- 2010-

2019-20 2018-19 2017-18 2016-17 16 15 2013-14 2012-13 12 11
Average Holding
period 0.6003522 1.30785 676.93 16.936 12.499 11.685 10.0741 11.05449 10.8372 18.333
Average
collection period 68.589707 2.55102 1230 35.207 41.915 31.519 15.60982 20.1303 24.1405 33.46
Average Payment
Period 58.752444 14.2229 680.31 13.208 14.85 24.139 20.40323 14.11917 27.7207 56.137
Length of Cash -
Cycle 10.437615 -10.364 1226.6 38.935 39.564 19.065 5.28068 17.06562 7.25691 4.3437

Interpretation: The length of the cash cycle for the company appears to be very attractive. It shows
how efficiently Prabhat Dairy is maintaining the cash cycle to run its business. From here we can
conclude that the company is in a better position of paying out its borrowing, creditors in time.

i. Price to book Value: Price to book value ratio is the way of measuring stocks/shares fair price whether
it is valued at right price or undervalued.
14
 Current market price/ Book value per share

2018- 2017- 2016- 2015- 2014- 2013- 2012- 2011- 2010-

2019-20 19 18 17 16 15 14 13 12 11
Share Price 55.1 74.55 154.05 121.65 109.55
Book Value per
share 50.1 50.1 50.1 50.1 50.1 50.1 50.1 50.1 50.1 50.1
Price to Book
Value 1.0998004 1.48802 3.07485 2.42814 2.18663 0 0 0 0 0
Interpretation: The higher the ratio, the higher the premium that the market is willing to pay for the
company. Below 1 represents decline in business. Hence, it may be noted that the share value of Prabhat Dairy
is valued at right price.

j. Book Value per share: Book value per share is the ratio at which a firm's Equity is divided by its number
of shares outstanding. Book value of equity per share states a firm's net asset value per-share basis.

Shareholders’ funds/Number of shares

2012-
2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 13 2011-12 2010-11
Total Shareholders
Funds 458.37 578.51 571.59 557.37 523.41 235.31 232 166.17 53.46 50.73
Shares in issue (lakhs) 976.76 976.76 976.76 976.76 976.76 714.29 300 300 29.9 29.9
Book Value per share 0.469276 0.59227 0.58519 0.57063 0.53586 0.32943 0.77333 0.5539 1.78796 1.69666
Interpretation: Here we can see the book value per share has been declining year on year. Hence, we may
anticipate the net assets value is also declining at a diminishing rate.

k. Market Capitalization: Market capitalization refers to the market value of a company's outstanding
shares which can be ascertained by multiplying the shares by the current market price of one share.

No. of shares × Current market price

2010-
2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 11

Shares in issue
(lakhs) 976.76 976.76 976.76 976.76 976.76 714.29 300 300 29.9 29.9

Share Price 55.1 74.55 154.05 121.65 109.55

Market
Capitalisation 53819.476 72817.5 150470 118823 107004 0 0 0 0 0
Interpretation: Here we can see that the market capitalisation of Prabhat Dairy has been declining year on
year basis, which means that the investors are losing their trust on Prabhat Dairy in terms of generating future
profit & growth.

15
Trend Analysis of Profit and Loss Account:

Prabhat Dairy Profit & Loss Accounts Trend Analysis

------------------- in Rs. Cr. -------------------
Mar Mar Mar Mar Mar Mar Mar Mar Mar
Standalone Profit & Loss account Mar '20 '19 '18 '17 '16 '15 '14 '13 '12 '11
Sales Turnover 172% 25% 10% 395% 349% 305% 272% 196% 162% 100%
Excise Duty 0% 0% 0% 0% 950% 775% 500% 225% 100%
Net Sales 172% 25% 10% 395% 349% 305% 272% 196% 162% 100%
Other Income 12088% 1912% 7232% 6848% 196% 224% 152% 116% 140% 100%
-
Stock Adjustments -41% 37% -24% 1038% -458% 0% 0% 0% 100%
Total Income 182% 26% 16% 406% 351% 305% 272% 196% 162% 100%

Raw Materials 209% 27% 10% 410% 355% 304% 278% 205% 166% 100%
Power & Fuel Cost 3% 0% 0% 93% 100%
Employee Cost 187% 41% 23% 917% 751% 764% 546% 271% 234% 100%
Selling and Admin Expenses 0% 0% 0% 184% 100%
Miscellaneous Expenses 617% 0% 0% 213% 244% 349% 248% 166% 149% 100%
Total Expenses 236% 25% 10% 411% 358% 312% 279% 203% 165% 100%

COGS 209% 27% 10% 413% 358% 304% 278% 205% 166% 100%
Gross Profit -64% 12% 4% 281% 292% 314% 236% 140% 142% 100%

Operating Profit -775% 16% 7% 239% 255% 209% 175% 93% 112% 100%
PBDIT -602% 41% 104% 328% 254% 209% 175% 93% 112% 100%
Interest 5% 0% 0% 255% 305% 331% 249% 175% 182% 100%
PBDT -875% 60% 151% 360% 231% 155% 142% 56% 81% 100%
Depreciation 5% 0% 0% 441% 416% 454% 429% 188% 158% 100%
Profit Before Tax -1225% 83% 211% 328% 158% 36% 28% 4% 50% 100%
PBT (Post Extra-ord Items) -1225% 83% 211% 328% 158% 36% 28% 4% 50% 100%
Tax 317% 38% 18% 111% 203% 126% 60% 63% 61% 100%
Reported Net Profit -1267% 70% 199% 288% 99% 41% 27% 31% 32% 100%
Total Value Addition 560% 6% 3% 424% 394% 405% 288% 180% 161% 100%
Equity Dividend 0% 0% 815% 815% 979% 100%
Corporate Dividend Tax 0% 0% 820% 800% 0% 100%

Shares in issue (lakhs) 100% 100% 100% 100% 137% 238% 100% 1003% 100% 100%
Share Price 50% 68% 141% 111% 100%
Earning Per Share (Rs) -39% 2% 6% 9% 3% 2% 3% 3% 32% 100%
Equity Dividend (%) 0% 0% 0% 40% 40% 100%
Book Value (Rs) 28% 35% 35% 34% 32% 19% 41% 30% 105% 100%

16
 Trend Analysis of Balance Sheet:

Prabhat Dairy

Mar 12- 11-

Mar 20 19-Mar 18-Mar 17-Mar 16-Mar 14-Mar 13-Mar
15 Mar Mar
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 327% 327% 327% 327% 327% 239% 10% 10% 1% 100%
0% 0% 0% 0% 0% 0% 40233% 22983% 0% 100%
Total Share Capital 326% 326% 326% 326% 326% 238% 91% 56% 1% 100%
Reserves and Surplus 1737% 2315% 2282% 2213% 2050% 789% 986% 719% 256% 100%
Total Reserves and Surplus 1737% 2315% 2282% 2213% 2050% 789% 986% 719% 256% 100%
Total Shareholders Funds 904% 1140% 1127% 1099% 1032% 464% 457% 328% 105% 100%
0% 0% 0% 0% 0% 0% 0% 0% 0% 100%
NON-CURRENT
LIABILITIES
Long Term Borrowings 0% 0% 168% 192% 192% 423% 205% 90% 421% 100%
Deferred Tax Liabilities [Net] 0% 0% 48% 87% 154% 174% 180% 113% 122% 100%
Long Term Provisions 0% 0% 740% 1080% 1020% 920% 570% 380% 160% 100%
Total Non-Current Liabilities 0% 0% 152% 180% 190% 387% 203% 95% 375% 100%
CURRENT LIABILITIES
Short Term Borrowings 0% 0% 285% 427% 185% 185% 178% 128% 135% 100%
Trade Payables 219% 7% 127% 96% 94% 131% 101% 51% 82% 100%
Other Current Liabilities 9088% 4627% 321% 427% 32% 257% 157% 47% 103% 100%
Short Term Provisions 10% 10% 22% 19% 255% 45% 10% 40% 22% 100%
Total Current Liabilities 1787% 864% 215% 270% 118% 170% 136% 77% 103% 100%
Total Capital And Liabilities 1236% 818% 490% 515% 414% 293% 246% 158% 143% 100%
ASSETS
NON-CURRENT ASSETS
Tangible Assets 5% 0% 317% 264% 237% 258% 280% 106% 111% 100%
Intangible Assets 75% 0% 825% 1775% 2425% 2250% 425% 800% 900% 100%
Capital Work-In-Progress 0% 0% 13% 41% 12% 10% 4% 0% 172% 100%
Fixed Assets 4% 0% 254% 219% 191% 208% 223% 84% 124% 100%
Non-Current Investments 8574% 8574% 86087% 45782% 42539% 45% 45% 4632% 100%
Deferred Tax Assets [Net]
Long Term Loans And
Advances 0% 0% 0% 473% 67% 659% 772% 539% 333% 100%
Other Non-Current Assets 0% 253% 2053% 2591% 3% 42% 0% 0% 100%
Total Non-Current Assets 41% 42% 589% 527% 344% 337% 379% 234% 185% 100%
CURRENT ASSETS
Inventories 7% 2% 387% 381% 244% 194% 153% 123% 98% 100%
Trade Receivables 352% 2% 352% 415% 437% 287% 127% 118% 117% 100%
Cash And Cash Equivalents 225436% 3641% 44045% 60214% 2436% 9023% 1073% 977% 295% 100%
Short Term Loans And
Advances 194% 16% 1% 82% 605% 163% 44% 11% 67% 100%
Other Current Assets 38901% 37980% 1448% 1800% 34% 143% 10% 37% 100%
Total Current Assets 2594% 1700% 378% 501% 494% 243% 94% 71% 94% 100%
Total Assets 1236% 818% 490% 515% 414% 293% 246% 158% 143% 100%

17
 Common Size statement of Profit and Loss Account:

in Rs.
Prabhat Dairy Standalone Profit & Loss account Cr.
Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar
'20 '19 '18 '17 '16 '15 '14 '13 '12 '11
Sales Turnover
Excise Duty
Net Sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Other Income 6% 7% 66% 2% 0% 0% 0% 0% 0% 0%
Stock Adjustments 0% -1% 1% 1% 1% 0% 0% 0% 0% 0%
Total Income 106% 106% 167% 103% 101% 100% 100% 100% 100% 100%

Raw Materials 105% 94% 94% 90% 88% 86% 88% 90% 88% 86%
Power & Fuel Cost 0% 0% 0% 1% 1% 0% 0% 0% 0% 0%
Employee Cost 1% 2% 2% 2% 2% 2% 2% 1% 1% 1%
Selling and Admin Expenses 0% 0% 0% 2% 1% 0% 0% 0% 0% 0%
Miscellaneous Expenses 23% 0% 0% 3% 4% 7% 6% 5% 6% 6%
Total Expenses 129% 95% 97% 97% 96% 96% 96% 97% 95% 94%

COGS 105% 94% 94% 90% 89% 86% 88% 90% 88% 86%
Gross Profit -5% 6% 6% 10% 11% 14% 12% 10% 12% 14%

Operating Profit -29% 4% 5% 4% 5% 4% 4% 3% 4% 6%

PBDIT -23% 11% 70% 5% 5% 4% 4% 3% 4% 6%
Interest 0% 0% 0% 1% 2% 2% 2% 2% 2% 2%
PBDT -23% 11% 70% 4% 3% 2% 2% 1% 2% 4%
Depreciation 0% 0% 0% 1% 2% 2% 2% 1% 1% 1%
Profit Before Tax -23% 11% 70% 3% 1% 0% 0% 0% 1% 3%
PBT (Post Extra-ord Items) -23% 11% 70% 3% 1% 0% 0% 0% 1% 3%
Tax 2% 1% 2% 0% 1% 0% 0% 0% 0% 1%
Reported Net Profit -24% 9% 69% 2% 1% 0% 0% 1% 1% 3%
Total Value Addition 24% 2% 2% 8% 8% 10% 8% 7% 7% 7%
Equity Dividend 0% 0% 14% 0% 0% 0% 0% 0% 0% 0%
Corporate Dividend Tax 0% 0% 3% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Shares in issue (lakhs) 199% 1365% 3556% 86% 98% 82% 38% 53% 6% 10%
Share Price 11% 104% 561% 11% 11% 0% 0% 0% 0% 0%
Earning Per Share (Rs) -3% 1% 7% 0% 0% 0% 0% 0% 2% 11%
Equity Dividend (%) 0% 0% 0% 0% 0% 1% 0% 0% 0% 0%
Book Value (Rs) 10% 83% 213% 5% 5% 4% 9% 9% 38% 59%

18
 Common Size statement of Balance Sheet:

Prabhat Dairy Balance Sheet Common Size Statement

------------------- in Rs. Cr. ------------------
Standalone Balance Sheet -
Mar 20 19-Mar 18-Mar 17-Mar 16-Mar Mar 15 14-Mar 13-Mar 12-Mar 11-Mar
Equity Share Capital 5% 7% 12% 12% 15% 15% 1% 1% 0% 18%
0% 0% 0% 0% 0% 0% 6% 5% 0% 0%
Total Share Capital 5% 7% 12% 12% 15% 15% 7% 7% 0% 19%
Reserves and Surplus 18% 36% 60% 55% 64% 35% 52% 59% 23% 13%
Total Reserves and Surplus 18% 36% 60% 55% 64% 35% 52% 59% 23% 13%
Total Shareholders Funds 23% 44% 72% 67% 78% 50% 58% 65% 23% 31%
0% 0% 0% 0% 0% 0% 0% 0% 0% 1%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Long Term Borrowings 0% 0% 4% 5% 6% 18% 10% 7% 36% 12%
Deferred Tax Liabilities [Net] 0% 0% 0% 0% 1% 1% 2% 2% 2% 2%
Long Term Provisions 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Total Non-Current Liabilities 0% 0% 5% 5% 7% 19% 12% 9% 38% 15%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Short Term Borrowings 0% 0% 11% 15% 8% 12% 13% 15% 18% 18%
Trade Payables 4% 0% 6% 4% 5% 10% 10% 8% 13% 24%
Other Current Liabilities 73% 56% 6% 8% 1% 9% 6% 3% 7% 10%
Short Term Provisions 0% 0% 0% 0% 1% 0% 0% 0% 0% 1%
Total Current Liabilities 77% 56% 23% 28% 15% 31% 29% 26% 38% 53%
Total Capital And Liabilities 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Tangible Assets 0% 0% 19% 15% 17% 27% 34% 20% 23% 30%
Intangible Assets 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Capital Work-In-Progress 0% 0% 0% 1% 0% 0% 0% 0% 9% 8%
Fixed Assets 0% 0% 20% 16% 18% 27% 35% 20% 33% 38%
Non-Current Investments 2% 2% 41% 21% 24% 0% 0% 7% 0% 0%
Deferred Tax Assets [Net] 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Long Term Loans And Advances 0% 0% 0% 14% 2% 34% 47% 52% 35% 15%
Other Non-Current Assets 0% 0% 3% 3% 0% 0% 0% 0% 0% 0%
Total Non-Current Assets 2% 3% 64% 54% 44% 61% 82% 79% 69% 53%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Inventories 0% 0% 6% 6% 5% 5% 5% 6% 5% 8%
Trade Receivables 5% 0% 12% 13% 17% 16% 8% 12% 13% 16%
Cash And Cash Equivalents 25% 1% 12% 16% 1% 4% 1% 1% 0% 0%
Short Term Loans And Advances 4% 0% 0% 4% 33% 13% 4% 2% 11% 23%
Other Current Assets 65% 96% 6% 7% 0% 1% 0% 0% 1% 0%
Total Current Assets 98% 97% 36% 46% 56% 39% 18% 21% 31% 47%
Total Assets 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

19
 Conclusion
Prabhat Dairy Limited and its subsidiaries are engaged in the business of procurement and processing
of milk and sale of milk and milk products like Ghee, Flavored Milk, Skimmed Milk Powder, Whole
Milk Powder, Cheese, Paneer and Sweetened Condensed Milk etc. catering to the needs of retail as
well as the industrial trade sector. It is an integrated milk and dairy products company in India catering
to institutional as well as retail customers. The company sells products under its` retail consumer
brands as well as ingredient products or as co-manufactured products to a number of institutional and
multinational companies. The equity shares of the Company got listed on BSE Ltd. and the National
Stock Exchange of India Limited on September 21, 2015.

As per the above observation, it may be noted that the company was able to generate good amount of
operating profit till 2016-2017, however, beyond 2017 the profitability of the company has been
declined to a great extent and the COGS of the company has also increased year on year and the
operating expenses of the company has also increased abruptly. However, it is noteworthy to be
mentioned that the company has increased the CAGR continuously except the FY 2019-20. And the
interest coverage ratio is below the margin which means the company does not need to take the burden
of extra borrowings from the bank and other financial institutions. The working capital ratio of the
company is well maintained; hence they did not need to depend on the external source of fund, they
were well managing the working capital requirement.

The company needs have a critical approach since they are losing their grip from the market and the
investors of the company are not getting fair amount of return from their investment. As per the
fundamental analysis we may presume that Prabhat Dairy has so much potentials for future expansion
and growth. Keeping in view of the vision of the company they can easily plan out to execute their
plan for Growth of the company. They may seek for extra funding from the stock market by laying out
rolling out fresh IPO to increase the market capitalization so that they can execute their plans for
expansion. The Dairy business in India is very competitive to sustain in the market hence they need to
focus on the Product diversification and Plant expansion for maximizing their profits as well as
growths of the company. In this was the investors will also regain their confidence towards the
company which may in turn beneficial to the company to compete in the competitive market.

20
 Bibliography

1. Annual Reports of Prabhat Dairy Limited. – 2010-2020

2. Moneycontrol.com.
3. Imarc Reports on National & International Scenario.
4. IFCN Reports.
5. FAO Reports.

21