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Namit Final Accounts Presentation

This document provides an analysis of the financial statements of Ranbaxy Laboratories Limited over the past 5 years. It summarizes that Ranbaxy has seen a 43% increase in sales and exports over this period. Earnings per share and equity dividends have also increased by over 14% and 30% respectively due to rising global sales and exports. Ranbaxy has also increased research and development expenditures to develop new products and delivery systems. The document then analyzes the company's performance based on various financial ratios and compares them to industry averages. It finds that Ranbaxy's liquidity, leverage, and profitability ratios have generally improved but some ratios, such as inventory turnover, are still below industry averages. The cash flow analysis

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54 views18 pages

Namit Final Accounts Presentation

This document provides an analysis of the financial statements of Ranbaxy Laboratories Limited over the past 5 years. It summarizes that Ranbaxy has seen a 43% increase in sales and exports over this period. Earnings per share and equity dividends have also increased by over 14% and 30% respectively due to rising global sales and exports. Ranbaxy has also increased research and development expenditures to develop new products and delivery systems. The document then analyzes the company's performance based on various financial ratios and compares them to industry averages. It finds that Ranbaxy's liquidity, leverage, and profitability ratios have generally improved but some ratios, such as inventory turnover, are still below industry averages. The cash flow analysis

Uploaded by

meeta_01219695
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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FINANCIAL STATEMENT

ANALYSIS
OF
RANBAXY LABORATORIES
LIMTED

Presented by: -
Amit Jhuraney (02)
Dhruv Tuteja (07)
Namit Gandhi (25 )
Vikas Mann (59 )
Sanjeev Shokeen (44 )
CONTENTS
 Financial Overview

 Ratio Analysis

 Cash Flow Analysis


FINANCIAL OVERVIEW
 INCREASE IN SALES: - Ranbaxy reflected a growth of over
43% over the last 5 years from US $ 764 MN to around US $
1.3 BN.

 INCREASE IN EXPORTS:- Export sales at Rs 27,176 Mn in


2006 up from Rs 18,503 Mn in 2002 an increase of around
43%.

 EARNINGS PER SHARE (Rs) EPS increased by over 14%


over the last 5 years due to increase in sales & exports.

 EQUITY DIVIDEND increase by about 30% up from US


$2434 to US $ 3169. The main reason being highly perforative
global markets .
 INCREASE IN R&D EXPENDITURE:- There has been
increase in R & D expenditure over the last 5 years. The main re son
being the manufacturing of APIs & Dosage forms which forms about 89%
of company’s sales. The other reason being development of “ Platform
techniques” & “Products” in the area of Novel Drugs Delivery System.

 GROWTH IN GLOBAL MARKETS:- During the year company


performance was led by key markets of North America clocking in sales of
US $ 391 Mn reflecting a growth of 18%, Asia garnering US $ 367 Mn
with a growth of 19% & Europe registering US $ 332 Mn reflecting a
growth of 23%. While Rest of the World contributed US $ 133 Mn to the
overall formulations business at US $ 1332 Mn.
RATIO ANALYSIS
One of the important tool of financial statement analysis is financial

ratio analysis

 Financial ratios may be divided into five broad categories:


 Liquidity ratios
 Leverage ratios
 Turnover ratios
 Profitability ratios
 Valuation ratios
TYPES OF FINANCIAL RATIOS
 Liquidity Ratios

 Leverage Ratios

 Turnover Ratios

 Profitability Ratios

 Valuation Ratios
LIQUIDITY RATIOS

 Current Ratio

 Quick Ratio
LEVERAGE RATIOS

 Debt-equity Ratio (or Gearing Ratio)

 Interest Coverage Ratio


PROFITABILITY RATIOS

 Gross Profit Margin Ratio

 Net Profit Margin Ratio


PROFITABILITY RATIOS

 Return on Capital Employed (ROCE)

 Return on Equity
TURNOVER RATIOS

 Inventory Turnover

 Debtors Turnover

 Average Collection Period

 Fixed Assets Turnover

 Total Assets Turnover


VALUATION RATIOS

 Price-earnings Ratio

 Market Value to Book Value Ratio


COMPARISON WITH INDUSTRY AVERAGES
Ratios 2006 2005 INDUSTRY AVG

Liquidity
• Current ratio 2.92 2.65 3.91

• Acid-test ratio 1.60 1.42 2.10

Leverage

• Debt-equity ratio 1.35 0.433 0.60

• Interest coverage ratio 8.57 8.62 25.33

Turnover

• Inventory turnover 4.16 4.006 4.06

• Debtors turnover 3.92 4.42 5.22

• Fixed assets turnover 2.77 2.97 1.12

• Total Assets turnover 1.008 0.94 0.93


Ratios 2006 2005 INDUSTRY AVG

Profitability
• Gross profit margin ratio 12.61% 5.5% 16%

• Net profit margin ratio 9% 6.2% 14%

• ROCE 9% 6% 9.2%

Valuation

• Price earnings ratio 36.99 34.32 29


CASH FLOW ANALYSIS
 Operating profit before working capital change in 2006 has increased by
137% over previous year [Rs. 5687.50 mn against Rs. 2391.77 mn last yr].
This increase in operating profit is against almost 10% increase in sales,
which indicates improvement in operating profit margin in 2006 over last
year.

 The company had invested Rs. 6259 mn in fixed assets during year 2005
and again they have made additions in fixed assets by Rs. 2158 mn during
2006 i.e. Rs. 8417 mn in two years. Even if we exclude capital work in
progress as on Dec 06 out of this of Rs. 3018 mn, the figure of asset put to
use in two years is Rs. 5400 mn. However the increase in sales / income
during 2006 is only by Rs. 3742 mn.

 There is 45% drop in cash balance at the end of 2006 as compared to cash
balance at the beginning of year [Rs. 623 mn against Rs. 1110 mn in
beginning]. This reduction is mainly in deposit which looks ok considering
the fact that the return from business is at a higher rate than the bank
deposit.
 The company has during current year invested Rs. 19171 mn in
subsidiaries and other investments from borrowed funds of FCCBs,
however corresponding returns from this investment are not reflecting
on income side.

 While interest expenses have more than doubled in 2006 mainly due to
increase in borrowings, the depreciation expense has almost remained
same as last year despite substantial increase in fixed assets
Thank you
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