EMP/14/A/32

PARAG UDAS
Fast moving consumer goods (FMCG)

Inter sector & inter company analysis of financial statements of typical industrial sectors & 2 companies with in each sector

calcualte and analyse all ratio and du pont analysis. U are expcted to comapre the ratios of 2 companies within a sector nad also dra

HLL

Profit and Loss Account

Rs Cr
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03
Income
Sales Turnover 10,903.83 11,372.51 11,755.04 10,928.36 11,082.10
Exice Duty 770.32 788.24 1121.34 976.18 973.73
Net Sales 10,133.51 10,584.27 10,633.70 9,952.18 10,108.37
Other income 332.85 364.92 522.52 475.69 496.73
Stock Adjustment 128.51 -83.84 -4.63 3.84 120.20
Total income 10,594.87 10,865.35 11,151.59 10,431.71 10,725.30

Expenditure
Raw Material 5,931.39 5,748.45 5,398.23 4,533.42 4,652.62
Power & Fuel cost 123.14 139.95 152.77 166.41 167.84
Employee Cost 576.82 606.75 585.55 591.85 570.85
Other Manufacturing Expences 770.91 807.58 895.4 927.05 995.58
Selling & Admin Expences 1,389.43 1,458.12 1,646.75 1,553.47 1,558.92
Miscellaneous Expences 264.09 295.32 276.76 280.69 375.55
Total Expences 9,055.78 9,056.17 8,955.46 8,052.89 8,321.36
approx COGS 7,555.16 7,472.29 7,253.23 6,376.36 6,570.91
PBDIT 1,539.09 1,809.18 2,196.13 2,378.82 2,403.94
Interest 22.39 13.15 7.74 9.18 66.76
PBDT 1,516.70 1,796.03 2,188.39 2,369.64 2,337.18
Depreciation 128.76 130.94 144.66 134.1 124.78
Profit Before Tax 1,387.94 1,665.09 2,043.73 2,235.54 2,212.40
Extre-ordinary items 3.8 17.24 -1.01 56.13 0
PBT (Post Extra-ord items) 1,384.14 1,647.85 2,044.74 2,179.41 2,212.40
Tax 318 355 402.42 465.8 440.61
Net Profit 1,069.94 1,310.09 1,641.31 1,769.74 1,771.79
10% 12% 14% 16% 16%
Equity Dividend 638.18 770.21 1100.62 1210.69 1599.2
Corporate Divident Tax 72.92 172.15 57.69 0 374.14

Balance Sheet
 Rs Cr

Sources of Funds (Liabilities) Dec-99 Dec-00 Dec-01 Dec-02 Dec-03

Total share capital 219.57 220.06 220.12 220.12 220.12
Equity share capital 219.57 220.06 220.12 220.12 220.12
Preferences share capital 0 0 0 0 0
Reserves 1882.53 2267.49 2822.9 3438.08 1917.93
Revaluation Reserves 0.67 0.67 0.67 0.67 0.67
Networth 2102.77 2488.22 3043.69 3658.87 2138.72
Secured Loans 141.3 69.22 43.04 19.62 1603.7
Unsecured Loans 35.97 42.39 40.7 38.68 100.61
Total Debt 177.27 111.61 83.74 58.3 1704.31
Total Liabilities 2280.04 2599.83 3127.43 3717.17 3843.03

Application of Funds (Assets)

Gross block 1481.06 1668.74 1935.88 1994.36 2141.72
Less: Accum. Depreciation 497.87 594.95 726.34 778.9 846.09
Net Block 983.19 1073.79 1209.54 1215.46 1295.63
Capital work in Progress 103.98 129.68 110.52 106.87 73.84

Investment 1006.11 1769.74 1635.93 2364.74 2574.93

Inventories 1310.01 1182.1 1240.04 1278.74 1392.63

Sunday Debtors 233.75 264.51 424.78 367.85 470.85
Cash and Bank Balance 810.45 522.08 913.16 942.63 806.48
Loans and Advances 656.94 792.63 1198.41 1229.16 1208.92
Total CA, Loans & Advances 3011.15 2761.32 3776.39 3818.38 3878.88

Current Liabilities 2143.74 2234.28 2513.55 2582.72 2669.14

Provision 680.65 900.42 1091.4 1205.56 1311.11
Total CL & Provision 2824.39 3134.7 3604.95 3788.28 3980.25
Net Current Assets 186.76 -373.38 171.44 30.1 -101.37
Miscellaneous Expances 0 0 0 0 0
Total Assets 2280.04 2599.83 3127.43 3717.17 3843.03
Contingent Liabilities 231.56 375.73 425 483.2 478.34

Liquidity ratio Dec-99 Dec-00 Dec-01 Dec-02 Dec-03

Current ratio= 1.07 0.88 1.05 1.01 0.97
total current asset/total current liabilities

Acid test 0.56 0.45 0.64 0.61 0.56

Quick asset/quick liabilities.
Return on asset= 47% 50% 52% 48% 46%
 net income/total asset
Dupont
Profitability
Return on sale = 10% 12% 14% 16% 16%
Net income/sales
Efficiency
Asset turnover= 4.78 4.37 3.76 2.94 2.88
sales/total assets
Leverage
Asset to equity ratio 10.38 11.81 14.21 16.89 17.46

Efficiency Ratios
Avg collection period 7.82 8.49 13.19 12.29 15.51
= avg receivables outstanding/avg daily
Sales
Number of days sales in inventories= 63.29 57.74 62.40 73.20 77.36
avg inventory/avg daily cost of goods sold.
Here COGS is calcualted by taking 50% cost
for indirect labours
Debtors turnover ratio = 46.65 42.99 27.67 29.71 23.54
365/no. of days sales in Receivables
Inventory turnover ratio = 5.77 6.32 5.85 4.99 4.72
365/no. of days sales in inventory
Fixed asset turnover 11.09 10.59 9.72 8.99 8.55
=Sales /avg fixed asset.-net block
Total assets turnover ratio 8.56 13.70 7.88 8.08 8.74

Cash (No of Days) = 29.19 18.00 31.34 34.57 29.12

Cash / Sales per Day

LEVERAGE RATIO

Asset to equity ratio 1.08 1.04 1.03 1.02 1.80

Total asset/stock holder's equity
Debt ratio 7.77% 4.29% 2.68% 1.57% 44.35%
Total liabilities/total assets.
Debt to equity ratio 0.08 0.04 0.03 0.02 0.80
Total liabilities/total equities.
Times interest earned 68.74 137.58 283.74 259.13 36.01
=PBDIT/interest expenses.
Debt Service Coverage Ratio (DSCR) = 21.11 41.00 73.25 91.80 4.82
PBDIT - Tax/Interest + Annual Repayment of
Principal 5yrs tenure considered for Loan
Loan period considerd 5 yrs 35.45 22.32 16.75 11.66 340.86

PROFITABILITY
Operating Profit Margin = 15% 17% 21% 24% 24%
 PBDIT / Net Sales
Net Profit Margin = 11% 12% 15% 18% 18%
PAT / Net Sales
Return on Capital Employed (ROCE) = 62% 65% 66% 60% 59%
PBIT / CE=Capital employed=share holder's
equity+debt
Return on equity= 51% 53% 54% 48% 83%
net income/stock holder's equity

VALUATION
EPS=Earing per share= 48.73 59.67 74.75 80.60 80.69
PAT/No of shares(CONSIDER Rs.10 face
value of share
Cash EPS= 54.59 65.48 81.14 86.49 86.16
(PAT+Depn)/No. of eq.shares
Dividend payout= 60% 59% 67% 68% 90%
Dividend/PAT
Dividend per share= 29.06 35.00 50.00 55.00 72.65
dividend / no of share
Book Value per Share = 95.77 113.07 138.27 166.22 97.16
Net Worth / No of Shares
Price-earning ratio= 3.96 3.23 2.58 2.39 2.39
market value of shares/net income
market value of shares/earnings per share
Price to Book Ratio 2.02 1.71 1.40 1.16 1.99
This is an index of Wealth Creation or Wealth
Destruction
Price to Sales= 0.42 0.40 0.40 0.43 0.42
Price/ sales per share

Comments
1 FMCG sector is very competitive sector & also not much fast growing sector. In these sector HLL & P&G is big player
HLL is in this sector from long time & P&G has come after HLL.
2 1.P & G is stronger than HLL liquidity front. Very low debtor turnover in days for P & G means company is trying to ke
the CL at low levels. Earlier P& G was having very high debtor turnover in days. P & G & HLL is having avg inventory
turnover of 4 to 6 days. P&G is cash rich than HLL. It could be asking discounts on early payments to vendors.

2. The industry is growing very slowly. The sales figures of two of the major players in the sector are almost flat at only
0.41% and 0.39%.

3. All solvency ratios are very healthy for both companies for the first 4 years. In fact P & G is a debt free company.
Initially HLL was also a debt free company but HLL has increased the borrowings substantially in year 2002. Both
companies are having very good interest coverage ratio. DCSR shows that both companies were having good debt
coverage ratio specially in 2001 & 2002 years.
4.The profitability ratios indicate that P & G is in a position to charge higher margins and is constantly improving it. In 3
years time it has improved OPM by 50% and NPM also by 33%. HLL is unable to meet the challenge initially but later it
picked up.. Basically HLL looks like catering to lower end (mass market) of market and P & G is catering to premium
segment. This is also confirmed by the sales volume.

5. The HLL success is because of high volumes which it is generating with employed capital. In case of P & G if this
efficiency of capital is improved its' RONW could jump with the same margins. The growth and profits could be
phenomenon. Both companies are having very good ROE ratio.

6. The gap between OPM and NPM for both companies is not so much wide but it can be bridged by adopting some
sound financial management and reducing depreciation, tax and interest burden.

7. the market capitalization of HLL & P&G has almost constant in all periods.

8) Due to high net profit ( due to high sale), HLL is having more earning per share as no of equity share is very high as
compared to P & G.

9) HLL is having low PE as compared to P&G (assuming market price is 200 for both ), may be due to creditability or d
to fluctuate in cycle.

10) P& G has paid very high dividend in 1999 & 2001. But in overall HLL is paying dividend in increasing trend & every
shareholders are getting more money in very year as compared to P&G . Due to this HLL's retained earning is very les
as compared to P&G.

11) Market is giving more or less same values as per individual book value to both companies.

12) Price to sales ratio indicates that HLL is cheaper than P&G.
ach sector

sector nad also draw a comparison between 2 sector

P&G

Profit and Loss Account

Rs Cr

Jun-99 Jun-00 Jun-01 Jun-02 Jun-03

Income
Sales Turnover 468.26 475.14 448.02 449.81 475.6
Exice Duty 65.4 53.5 40.43 40.39 37.37
Net Sales 402.86 421.64 407.59 409.42 438.23
Other income 15.73 16.54 33.13 21.41 14.81
Stock Adjustment 1.21 2.07 -1.16 -2.28 2.09
Total income 419.8 440.25 439.56 428.55 455.13

Expenditure
Raw Material 165.92 170.1 172.44 163.31 183.15
Power & Fuel cost 5.07 5.63 5.7 5.39 4.28
Employee Cost 38.48 30.67 36.81 33.52 34.3
Other Manufacturing Expences 20.12 19.86 16.87 19.49 16.66
Selling & Admin Expences 81.22 86.2 69.47 81.25 97.07
Miscellaneous Expences 16.66 11.63 6.47 3.89 13.41
Total Expences 327.47 324.09 307.76 306.85 348.87

PBDIT 92.33 116.16 131.8 121.7 106.26

Interest 2.92 4.08 0.27 0.05 0.55
PBDT 89.41 112.08 131.53 121.65 105.71
Depreciation 23.05 24.55 29.35 19.65 13.06
Profit Before Tax 66.36 87.53 102.18 102 92.65
Extre-ordinary items 0 0 0 0 3.75
PBT (Post Extra-ord items) 66.36 87.53 102.18 102 88.9
Tax 9.5 12.5 19.5 24.99 24.61
Net Profit 56.86 75.03 82.68 77.01 68.04
12% 16% 18% 17% 14%
Equity Dividend 86.56 16.23 86.56 43.28 43.28
Corporate Divident Tax 9.52 1.78 9.47 0 5.55

Balance Sheet Statement

 Rs Cr

Sources of Funds (Liabilities) Jun-99 Jun-00 Jun-01 Jun-02 Jun-03

Total share capital 21.64 21.64 21.64 21.64 21.64
Equity share capital 21.64 21.64 21.64 21.64 21.64
Preferences share capital 0 0 0 0 0
Reserves 118.5 175.51 162.16 196.22 208.72
Revaluation Reserves 0 0 0 0 0
Networth 140.14 197.15 183.8 217.86 230.36
Secured Loans 13.03 5.81 0 0 0
Unsecured Loans 12.99 0 0 0 0
Total Debt 26.02 5.81 0 0 0
Total Liabilities 166.16 202.96 183.8 217.86 230.36

Application of Funds (Assets)

Gross block 233.93 229.09 215.14 221.53 167.49
Less: Accum. Depreciation 74.95 92.56 99.82 114.86 93.18
Net Block 158.98 136.53 115.32 106.67 74.31
Capital work in Progress 7.39 11.69 9.08 0 2.22

Investment 8.7 8.7 6.53 0.01 0.01

Inventories 47 45.06 39.3 33.38 37.25

Sunday Debtors 5.95 20.72 35.17 23.92 41.84
Cash and Bank Balance 35.47 60.46 48.64 66.16 126.27
Loans and Advances 143.83 66.95 162.43 188.75 149.6
Total CA, Loans & Advances 232.25 193.19 285.54 312.21 354.96

Current Liabilities 229.15 145.58 140.76 152.53 148.36

Provision 12.01 1.57 91.91 48.5 52.78
Total CL & Provision 241.16 147.15 232.67 201.03 201.14
Net Current Assets -8.91 46.04 52.87 111.18 153.82
Miscellaneous Expances 0 0 0 0 0
Total Assets 166.16 202.96 183.8 217.86 230.36
Contingent Liabilities 14.1 15.25 32.46 49.05 57.3

Liquidity ratio Jun-99 Jun-00 Jun-01 Jun-02 Jun-03

Current ratio= 0.96 1.31 1.23 1.55 1.76
total current asset/total current liabilities

Acid test 0.65 0.92 0.92 1.20 1.43

Quick asset/quick liabilities.
Return on asset= 34% 37% 45% 35% 30%
 net income/total asset
Dupont
Profitability
Return on sale = 12% 16% 18% 17% 14%
Net income/sales
Efficiency
Asset turnover= 2.82 2.34 2.44 2.06 2.06
sales/total assets
Leverage
Asset to equity ratio 7.68 9.38 8.49 10.07 10.65

Efficiency Ratios
Avg collection period 4.64 15.92 28.65 19.41 32.11
= avg receivables outstanding/avg daily
Sales
Number of days sales in inventories= 68.83 65.81 59.04 51.24 50.70
avg inventory/avg daily cost of goods sold.
Here COGS is calcualted by taking 50% cost
for indirect labours
Debtors turnover ratio = 78.70 22.93 12.74 18.80 11.37
365/no. of days sales in Receivables
Inventory turnover ratio = 5.30 5.55 6.18 7.12 7.20
365/no. of days sales in inventory
Fixed asset turnover 2.95 3.48 3.89 4.22 6.40
=Sales /avg fixed asset.
Total assets turnover ratio 2.97 2.45 2.53 2.06 2.06
sales/ asset
Cash (No of Days) = 32.14 52.34 43.56 58.98 105.17
Cash / Sales per Day

LEVERAGE RATIO

Asset to equity ratio 1.19 1.03 1.00 1.00 1.00

Total asset/stock holder's equity
Debt ratio 16% 3% 0% 0% 0%
Total liabilities/total assets.
Debt to equity ratio 0.19 0.03 - - -
Total liabilities/total equities.
Times interest earned 31.62 28.47 No loans
=PBDIT/interest expenses.
Debt Service Coverage Ratio (DSCR) =
PBDIT - Tax/Interest + Annual Repayment of 10.20 19.77
Principal No loans
Loan period considerd 5 yrs 5.204 1.162 0 0 0

PROFITABILITY
Operating Profit Margin = 23% 28% 32% 30% 24%
 PBDIT / Net Sales
Net Profit Margin = 14% 18% 20% 19% 16%
PAT / Net Sales
Return on Capital Employed (ROCE) = 42% 45% 56% 47% 40%
PBIT / CE=Capital employed=share holder's
equity+debt
Return on equity= 41% 38% 45% 35% 30%
net income/stock holder's equity

VALUATION
EPS=Earing per share= 26.28 34.67 38.21 35.59 31.44
PAT/No of shares(CONSIDER Rs.10 face
value of share
Cash EPS= 36.93 46.02 51.77 44.67 37.48
(PAT+Depn)/No. of eq.shares
Dividend payout= 152% 22% 105% 56% 64%
Dividend/PAT
Dividend per share= 40 7.5 40 20 20
dividend / no of share
Book Value per Share = 64.76 91.10 84.94 100.67 106.45
Net Worth / No of Shares
Price-earning ratio= 27.06 20.51 18.61 19.98 22.61
market value of shares/net income
market value of shares/earnings per share
Price to Book Ratio 10.98 7.80 8.37 7.06 6.68
This is an index of Wealth Creation or
Wealth Destruction
Price to Sales= 3.82 3.65 3.77 3.76 3.51
Price/ sales per share

&G is big player

any is trying to keep

ng avg inventory
o vendors.

almost flat at only

ree company.
ar 2002. Both
ving good debt
 improving it. In 3
initially but later it
ing to premium

of P & G if this
could be

adopting some

are is very high as

o creditability or due

sing trend & every

earning is very less
165.92 170.1 172.44 163.31 183.15
5.07 5.63 5.7 5.39 4.28
19.24 15.335 18.405 16.76 17.15
10.06 9.93 8.435 9.745 8.33
40.61 43.1 34.735 40.625 48.535
8.33 5.815 3.235 1.945 6.705
249.23 249.91 242.95 237.775 268.15
0.68 0.68 0.67 0.65 0.73
 Pharma Industries

Ranbaxy

Profit and Loss Account

Dec-99 Dec-00 Dec-01 Dec-02

Income
Sales Turnover 1,637.35 1,754.76 2,135.50 3,019.99
Exice Duty 98.88 99.81 88.72 88.86
Net Sales 1,538.47 1,654.95 2,046.78 2,931.13
Other income 126.88 110.19 129.45 202.75
Stock Adjustment 31.88 20.03 28.57 94.99
Total income 1,697.23 1,785.17 2,204.80 3,228.87

Expenditure
Raw Material 822.84 886.49 1,029.95 1,301.03
Power & Fuel cost 38.35 50.12 45.86 51.65
Employee Cost 91.1 135.59 135.85 183.16
Other Manufacturing Expences 33.12 40.88 61.09 68.97
Selling & Admin Expences 305.36 319.14 474.21 742.92
Miscellaneous Expences 68.88 44.77 83.44 98.61
Total Expences 1,359.65 1,476.99 1,830.40 2,446.34

PBDIT 337.58 308.18 374.40 782.53

Interest 81.33 63.47 47.47 20.79
PBDT 256.25 244.71 326.93 761.74
Depreciation 45.87 50.17 49.16 48.37
Profit Before Tax 210.38 194.54 277.77 713.37
Extra-ordinary items -3.3 -1.94 -116.24 -87.96
PBT (Post Extra-ord items) 213.68 196.48 394.01 801.33
Tax 13.5 12.1 25.81 89.79
Net Profit 196.88 182.44 251.96 623.58
12% 10% 12% 21%
Equity Dividend 86.92 86.92 115.9 243.4
Corporate Divident Tax 9.56 8.87 0 23.76

Balance Sheet Statement

 Dec-99 Dec-00 Dec-01 Dec-02
Sources of Funds
Total share capital 115.9 115.9 115.9 185.45
Equity share capital 115.9 115.9 115.9 185.45
Reserves 1382.04 1466.76 1486.3 1686.06
Networth 1497.94 1582.66 1602.2 1871.51
Secured Loans 184.1 125.9 51.14 0.63
Unsecured Loans 138.78 129.91 74.84 6.27
Total Debt 322.88 255.81 125.98 6.9
Total Liabilities 1820.82 1838.47 1728.18 1878.41

Application of Funds
Gross block 779.79 837.22 918.45 1027.71
Less: Accum. Depreciation 237.37 280.85 314.78 369.49
Net Block 542.42 556.37 603.67 658.22
Capital work in Progress 89.48 88 9.38 17.17

Investment 282.77 290.03 342.52 337.5

Inventories 362.63 417.42 459.68 611.02

Sunday Debtors 479.87 411.82 515.72 702.94
Cash and Bank Balance 50.32 15.16 59.38 101.4
Loans and Advances 322.04 477.65 324.5 385.53
Total CA, Loans & Advances 1214.86 1322.05 1359.28 1800.89

Current Liabilities 268.77 405.7 584.35 628.41

Provision 130.34 139.59 167.59 316.31
Total CL & Provision 399.11 545.29 751.94 944.72
Net Current Assets 815.75 776.76 607.34 856.17
Total Assets 1820.82 1838.47 1728.18 1878.41
Contingent Liabilities 98.47 137.84 149.25 138.67

Liquidity ratio Dec-99 Dec-00 Dec-01 Dec-02

Current ratio=
total current asset/total current liabilities 3.04 1.91 1.04 1.36
Acid test
Quick asset/quick liabilities. 1.97 1.48 1.11 1.18
Return on asset= 11% 10% 15% 33%
net income/total asset
Dupont
Profitability 12% 10% 12% 21%
Return on sale =
Net income/sales
Efficiency 0.90 0.95 1.24 1.61
Asset turnover=
sales/total assets
Leverage 15.71 15.86 14.91 10.13
Asset to equity ratio

Efficiency Ratios
Avg collection period
= avg receivables outstanding/avg daily 106.97 85.66 88.15 84.96
Sales
Number of days sales in inventories= 119.20 126.25 115.47 117.41
avg inventory/avg daily cost of goods sold.
Here COGS is calcualted by taking 50% cost
for indirect labours
Debtors turnover ratio = 3.41 4.26 4.14 4.30
365/no. of days sales in Receivables
Inventory turnover ratio = 3.06 2.89 3.16 3.11
365/no. of days sales in inventory
Fixed asset turnover 3.02 3.15 3.54 4.59
=Sales /avg fixed asset.
Total assets turnover ratio 1.12 1.23 1.68 2.38

Cash (No of Days) = 11.22 3.15 10.15 12.26

Cash / Sales per Day

LEVERAGE RATIO

Asset to equity ratio 1.22 1.16 1.08 1.00

Total asset/stock holder's equity
Debt ratio 0.18 0.14 0.07 0.00
Total liabilities/total assets.
Debt to equity ratio 0.22 0.16 0.08 0.00
Total liabilities/total equities.
Times interest earned 4.15 4.86 7.89 37.64
=PBDIT/interest expenses.
Debt Service Coverage Ratio (DSCR) = 2.22 2.58 4.80 31.25
PBDIT - Tax/Interest + Annual Repayment of
Principal 5yrs tenure considered for Loan
Loan period considerd 5 yrs 64.576 51.162 25.196 1.38

PROFITABILITY
Operating Profit Margin = 22% 19% 18% 27%
PBDIT / Net Sales
Net Profit Margin = 13% 11% 12% 21%
PAT / Net Sales
Return on Capital Employed (ROCE) = 16% 14% 19% 39%
PBIT / CE=Capital employed=share holder's
equity+debt
Return on equity= 13% 12% 16% 33%
net income/stock holder's equity

VALUATION
EPS=Earing per share= 16.99 15.74 21.74 33.63
PAT/No of shares(CONSIDER Rs.10 face
value of share
Cash EPS= 20.94 20.07 25.98 36.23
(PAT+Depn)/No. of eq.shares
Dividend payout= 44% 48% 46% 39%
Dividend/PAT
Dividend per share= 7.50 7.50 10.00 13.12
dividend / no of share
Book Value per Share = 129.24 136.55 138.24 100.92
Net Worth / No of Shares
Price-earning ratio= 25.84 27.89 20.19 13.06
market value of shares/net income
market value of shares/earnings per share
Price to Book Ratio 3.40 3.21 3.18 4.35
This is an index of Wealth Creation or Wealth
Destruction
Price to Sales= 3.11 2.90 2.38 2.70
Price/ sales per share
Plz note market price is as on date 5-11-2007 at 2.45pm

Comments
In pharma Ranbaxy & Glaxo is a major player. Pharma needs extensive R&D facility & much of the money is
 spent on it. Analysis of the ratio for these 2 major player is as under
1 Liquidity ratio
Current ratio for Ranbaxy has declined & same for Glaxoc except 01-02.. Ranbxy's asset utilisation is much better than of Glaxo
2 DuPONT
Profitability of glaxo has gone donw. This is due to low return on sales
Asset turn over for Ranbaxu is increaseing whereas Galxo is in decreasing trend.
Leverage : Ranbaxy is more effective in leveraging stock holder money as compared to Glaxo
Overall fro this Ranbaxy is perfmoring well.
3 Glaxo is manaing well on out stading receivables as comapred to Ranbaxy.Inventory is also very less. This is due to the less sa
to ranbaxy. Ranbaxy is perfomring well as it has decreased the inventory slisghlty which may be the requirement for ranbxy & ou
4 DSCR for Glaxo is very good. This is due to less debt. But also this means that Glaxo is not a agrresive in the mkt now a days
As told Pharma companies needs to put lot of money for R&D this what Ranbaxy is doing.Mainly galxo is not in the drug R&D b
5 The profitability ratios indicate that Ranbaxy is in a position to charge higher margins and is constantly improving it. In
3 years time it has improved OPM by 27% and NPM also by 70%. Glaxo initially was good but unable to meet the
challenge & droped down Basically Ranbaxy is looking for patented drugs & Glaxo is for mainly for babys foods This
is also confirmed by the sales volume.

6 The Ranbaxy success is because of high volumes which it is generating with employed capital. In case of Glaxo if this
efficiency of capital is improved its' RONW could jump with the same margins. The growth and profits could be
phenomenon. Ranbaxy companies is having very good ROE ratio but glaxo is not good.

7 Valuation wise since Galxo is MNC company & has got good value for the brand & due to high market capitalisation, Galxo is be
 Glaxo

Rs Cr Rs Cr

Dec-03 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03

3,709.63 793.84 885.50 934.62 1,097.37 1,148.22

72.03 67.32 73.13 83.98 87.06 100.95
3,637.60 726.52 812.37 850.64 1,010.31 1,047.27
339.84 54.28 52.75 55.07 99.17 65.81
24.43 -11.99 7.79 31.88 -10.07 10.33
4,001.87 768.81 872.91 937.59 1,099.41 1,123.41

1,476.64 399.98 478.60 493.11 520.99 513.47 0.5 399.98

57.4 19.87 21.97 24.76 21.8 20.6 19.87
232.96 71.94 83.33 103.62 225.61 160.68 35.97
86.43 40.5 45.76 37.99 32.21 36.42 20.25
1,001.72 56.17 76.71 97.01 126.67 127.71 28.085
126.94 36.88 34.47 44.2 92.68 82.89 18.44
2,982.09 625.34 740.84 800.69 1,019.96 941.77 522.60
1.43
1,019.78 143.47 132.07 136.90 79.45 181.64
8.08 9.25 10.91 12.15 10.49 7.64
1,011.70 134.22 121.16 124.75 68.96 174.00
55.33 14.19 16.21 16.41 25.65 19.47
956.37 120.03 104.95 108.34 43.31 154.53
0 0.01 0 0 0 0
956.37 120.02 104.95 108.34 43.31 154.53
161.59 33.4 27.89 37.8 -0.67 56.47
794.78 86.63 77.06 70.54 43.98 98.06
21% 11% 9% 8% 4% 9%
315.63 29.89 35.87 29.89 35.8 52.13
40.44 2.99 4.24 6.75 0 6.68

Rs Cr Rs Cr
Dec-03 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03

185.54 59.78 59.78 59.78 74.48 74.48

185.54 59.78 59.78 59.78 74.48 74.48
2134.24 263.83 300.78 334.68 486.1 504.8
2319.78 323.61 360.56 394.46 560.58 579.28
30.49 0.84 0 13.38 0.68 0
3.76 19.27 20.7 21.46 9.03 1.98
34.25 20.11 20.7 34.84 9.71 1.98
2354.03 343.72 381.26 429.3 570.29 581.26

1141.79 215.42 239.99 254.8 306.17 270.08

435.27 131.87 143.9 158.46 184.45 159.83
706.52 83.55 96.09 96.34 121.72 110.25
84.27 8.81 8.47 5.03 15.9 5.15

337.5 116.58 115.55 124.87 151.68 162

704.73 127.13 133.26 171.33 180.75 195.6

482.94 74.49 99.29 125.04 109.19 81.93
98.53 28.29 19.77 16.26 56.74 140.56
1185.23 55.24 66.64 57.28 150.48 176.73
2471.43 285.15 318.96 369.91 497.16 594.82

730.24 107.75 102.76 110.75 164.91 219.04

515.45 42.62 55.05 56.1 51.26 71.92
1245.69 150.37 157.81 166.85 216.17 290.96
1225.74 134.78 161.15 203.06 280.99 303.86
2354.03 343.72 381.26 429.3 570.29 581.26
140.9 50.09 68.4 78.44 68.16 51.08

Dec-03 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03

1.68 1.25 1.57 1.83 1.70 1.39

1.23 0.98 1.09 1.12 1.32 1.25

 34% 25% 20% 16% 8% 17%

21% 11% 9% 8% 4% 9%

1.58 2.31 2.32 2.18 1.92 1.98

12.69 5.75 6.38 7.18 7.66 7.80

47.52 34.25 40.93 48.83 36.32 26.04

113.91 88.79 78.36 94.85 84.43 96.75

7.68 10.66 8.92 7.47 10.05 14.01

3.20 4.11 4.66 3.85 4.32 3.77

5.25 9.50 9.22 9.70 9.02 10.41

2.25 3.67 3.57 3.62 2.82 2.98

9.69 13.01 8.15 6.35 18.87 44.68

1.01 1.06 1.06 1.09 1.02 1.00

0.01 0.06 0.05 0.08 0.02 0.00

0.01 0.06 0.06 0.09 0.02 0.00

126.21 15.51 12.11 11.27 7.57 23.77

 57.48 8.29 6.92 5.18 6.44 15.58

6.85 4.022 4.14 6.968 1.942 0.396

28% 20% 16% 16% 8% 17%

22% 12% 9% 8% 4% 9%

41% 38% 30% 28% 9% 28%

34% 27% 21% 18% 8% 17%

42.84 14.49 12.89 11.80 5.90 13.17

45.82 16.87 15.60 14.54 9.35 15.78

40% 35% 47% 42% 81% 53%

17.01 5.00 6.00 5.00 4.81 7.00

125.03 54.13 60.31 65.99 75.27 77.78

10.25 71.42 80.29 87.71 175.28 78.61

3.51 19.12 17.16 15.69 13.75 13.31

2.20 7.79 6.99 6.62 7.02 6.71

of the money is
sation is much better than of Glaxo

very less. This is due to the less sales comapred

be the requirement for ranbxy & out standing hs come down a lot.
a agrresive in the mkt now a days
inly galxo is not in the drug R&D business.
onstantly improving it. In
ut unable to meet the
nly for babys foods This

al. In case of Glaxo if this

d profits could be

h market capitalisation, Galxo is better than of Ranbaxy.

A TYPICAL COGS CALCULATION. APPROXIMATELY
% CAN VARY

478.60 493.11 520.99 513.47

21.97 24.76 21.8 20.6
41.665 51.81 112.805 80.34
22.88 18.995 16.105 18.21
38.355 48.505 63.335 63.855
17.235 22.1 46.34 41.445
620.71 659.28 781.38 737.92
1.70 1.81 2.14 2.02
 FMCG & Pharma
1 FMCG is mainly for day to day houe hold consumes & Pharma is for medicine, Lot of money is to be put in R&D facility for pharm
Overall slaes TO for the FMCG & Pharma has increased since 99
2 FMCG is very fast growing & lots of expasnion are takign place. HLL has investing around 1500 Cr in the 03 as its debt ahs incr
in pharma we do nto see iany expanison or any agrressiveness,
3 Net profit wise both ar at ok. There may be some differences OPM in pharma is avg 19% as compared to FMCG which is 24%
Pharma
4 very big difference in sales. As FMCG are day to day gods & Pharma is mainly medicine.
5 Both the industry is on growth path. But FMCG is better of than Pharma.
6 Pharma due to many govt rules & regualtion moving little bit slow as compared with FMCG sector.
7 Also due to economic boom FMCG sector is having lot of potnetial to grow in India.
8 Except in 99 no big investments is done in the Pharma industry. Whereas HLL has taken loan in 03 may be for expanion Or acq
9
oney is to be put in R&D facility for pharma as comapred to FMCG

nd 1500 Cr in the 03 as its debt ahs increased substantially, where as

% as compared to FMCG which is 24% NPM is also 16% for FMCG & 125 for

n loan in 03 may be for expanion Or acquisition.

 Pharma Industries

Glaxo

Profit and Loss Account Rs Cr

Dec-99 Dec-00 Dec-01 Dec-02 Dec-03

Income
Sales Turnover 793.84 885.50 934.62 1,097.37 1,148.22
Exice Duty 67.32 73.13 83.98 87.06 100.95
Net Sales 726.52 812.37 850.64 1,010.31 1,047.27
Other income 54.28 52.75 55.07 99.17 65.81
Stock Adjustment -11.99 7.79 31.88 -10.07 10.33
Total income 768.81 872.91 937.59 1,099.41 1,123.41

Expenditure
Raw Material 399.98 478.60 493.11 520.99 513.47
Power & Fuel cost 19.87 21.97 24.76 21.8 20.6
Employee Cost 71.94 83.33 103.62 225.61 160.68
Other Manufacturing Expences 40.5 45.76 37.99 32.21 36.42
Selling & Admin Expences 56.17 76.71 97.01 126.67 127.71
Miscellaneous Expences 36.88 34.47 44.2 92.68 82.89
Total Expences 625.34 740.84 800.69 1,019.96 941.77

PEDIT 143.47 132.07 136.90 79.45 181.64

Interest 9.25 10.91 12.15 10.49 7.64
PBDT 134.22 121.16 124.75 68.96 174.00
Depreciation 14.19 16.21 16.41 25.65 19.47
Profit Before Tax 120.03 104.95 108.34 43.31 154.53
Extra-ordinary items 0.01 0 0 0 0
PBT (Post Extra-ord items) 120.02 104.95 108.34 43.31 154.53
Tax 33.4 27.89 37.8 -0.67 56.47
Net Profit 86.63 77.06 70.54 43.98 98.06

Equity Dividend 29.89 35.87 29.89 35.8 52.13

Corporate Divident Tax 2.99 4.24 6.75 0 6.68

Balance Sheet Statement Rs Cr

 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03
Sources of Funds
Total share capital 59.78 59.78 59.78 74.48 74.48
Equity share capital 59.78 59.78 59.78 74.48 74.48
Reserves 263.83 300.78 334.68 486.1 504.8
Networth 323.61 360.56 394.46 560.58 579.28
Secured Loans 0.84 0 13.38 0.68 0
Unsecured Loans 19.27 20.7 21.46 9.03 1.98
Total Debt 20.11 20.7 34.84 9.71 1.98
Total Liabilities 343.72 381.26 429.3 570.29 581.26

Application of Funds
Gross block 215.42 239.99 254.8 306.17 270.08
Less: Accum. Depreciation 131.87 143.9 158.46 184.45 159.83
Net Block 83.55 96.09 96.34 121.72 110.25
Capital work in Progress 8.81 8.47 5.03 15.9 5.15

Investment 116.58 115.55 124.87 151.68 162

Inventories 127.13 133.26 171.33 180.75 195.6

Sunday Debtors 74.49 99.29 125.04 109.19 81.93
Cash and Bank Balance 28.29 19.77 16.26 56.74 140.56
Loans and Advances 55.24 66.64 57.28 150.48 176.73
Total CA, Loans & Advances 285.15 318.96 369.91 497.16 594.82

Current Liabilities 107.75 102.76 110.75 164.91 219.04

Provision 42.62 55.05 56.1 51.26 71.92
Total CL & Provision 150.37 157.81 166.85 216.17 290.96
Net Current Assets 134.78 161.15 203.06 280.99 303.86
Total Assets 343.72 381.26 429.3 570.29 581.26
Contingent Liabilities 50.09 68.4 78.44 68.16 51.08
P&G

Profit and Loss Account

Rs Cr

Jun-99 Jun-00 Jun-01 Jun-02 Jun-03

Income
Sales Turnover 468.26 475.14 448.02 449.81 475.60
Exice Duty 65.4 53.5 40.43 40.39 37.37
Net Sales 402.86 421.64 407.59 409.42 438.23
Other income 15.73 16.54 33.13 21.41 14.81
Stock Adjustment 1.21 2.07 -1.16 -2.28 2.09
Total income 419.80 440.25 439.56 428.55 455.13

Expenditure
Raw Material 165.92 170.10 172.44 163.31 183.15
Power & Fuel cost 5.07 5.63 5.7 5.39 4.28
Employee Cost 38.48 30.67 36.81 33.52 34.3
Other Manufacturing Expences 20.12 19.86 16.87 19.49 16.66
Selling & Admin Expences 81.22 86.20 69.47 81.25 97.07
Miscellaneous Expences 16.66 11.63 6.47 3.89 13.41
Total Expences 327.47 324.09 307.76 306.85 348.87

PEDIT 92.33 116.16 131.80 121.70 106.26

Interest 2.92 4.08 0.27 0.05 0.55
PBDT 89.41 112.08 131.53 121.65 105.71
Depreciation 23.05 24.55 29.35 19.65 13.06
Profit Before Tax 66.36 87.53 102.18 102.00 92.65
Extre-ordinary items 0 0 0 0 3.75
PBT (Post Extra-ord items) 66.36 87.53 102.18 102.00 88.90
Tax 9.5 12.5 19.5 24.99 24.61
Net Profit 56.86 75.03 82.68 77.01 68.04

Equity Dividend 86.56 16.23 86.56 43.28 43.28

Corporate Divident Tax 9.52 1.78 9.47 0 5.55

Balance Sheet Statement

Rs Cr

Jun-99 Jun-00 Jun-01 Jun-02 Jun-03

Sources of Funds
Total share capital 21.64 21.64 21.64 21.64 21.64
Equity share capital 21.64 21.64 21.64 21.64 21.64
Preferences share capital 0 0 0 0 0
Reserves 118.5 175.51 162.16 196.22 208.72
Revaluation Reserves 0 0 0 0 0
Networth 140.14 197.15 183.8 217.86 230.36
Secured Loans 13.03 5.81 0 0 0
Unsecured Loans 12.99 0 0 0 0
Total Debt 26.02 5.81 0 0 0
Total Liabilities 166.16 202.96 183.8 217.86 230.36

Application of Funds
Gross block 233.93 229.09 215.14 221.53 167.49
Less: Accum. Depreciation 74.95 92.56 99.82 114.86 93.18
Net Block 158.98 136.53 115.32 106.67 74.31
Capital work in Progress 7.39 11.69 9.08 0 2.22

Investment 8.7 8.7 6.53 0.01 0.01

Inventories 47 45.06 39.3 33.38 37.25

Sunday Debtors 5.95 20.72 35.17 23.92 41.84
Cash and Bank Balance 35.47 60.46 48.64 66.16 126.27
Loans and Advances 143.83 66.95 162.43 188.75 149.6
Total CA, Loans & Advances 232.25 193.19 285.54 312.21 354.96

Current Liabilities 229.15 145.58 140.76 152.53 148.36

Provision 12.01 1.57 91.91 48.5 52.78
Total CL & Provision 241.16 147.15 232.67 201.03 201.14
Net Current Assets -8.91 46.04 52.87 111.18 153.82
Miscellaneous Expances 0 0 0 0 0
Total Assets 166.16 202.96 183.8 217.86 230.36
Contingent Liabilities 14.1 15.25 32.46 49.05 57.3