Financial analysis of aanjaneya life care ltd

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FINANCIAL ANALYSIS OF AANJANEYA LIFE CARE

Made by:-Swapnil chavan(26)

Shreyash Pimparkar(28)

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• Company profile

• Approvals

• Financial Analysis

(1) Balance Sheet

(2) Profit/Loss A/c

• Ratio Analysis

Contents

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Company Profile

The company was founded in 2006 by

K Vishwanath & Chandulal Shah and his friends

and is based in Mumbai , India

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• AANJANEYA LIFE SCIENCE IS RESEARCH DRIVEN PHARMACEUTICAL COMPANY BASED IN INDIA.

• COMPANY MANUFACTURES FINISHED DOSAGE FORMS (BRANDED AND GENERIC) AS WELL AS THEIR RAW MATERIALS (API). 

• AANJANEYA LIFE SCIENCE IS THIRD-LARGEST QUININE SALTS MANUFACTURER IN THE WORLD.

• AANJANEYA LIFE SCIENCE ORGANISES MAIN THERAPEUTIC AREAS—DIABETOLOGY, CARDIOLOGY, NEPHROLOGY AND ONCOLOGY.

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APPROVALS World Health Organization (WHO)

United states Food and Drug Administration (USFDA)

Medicines and Healthcare Regulatory Agency(MHRA)

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GROWTH INDICATIVE

CAGR12.5

13

13.5

14

14.5

15

15.5

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Pharma Industry (13.5)

Aanjaneya Ltd (15.4)

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Financial Analysis

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What is Financial analysis ?

Financial Analysis is the process of determining the operating & financial characteristics of a firm from accounting data & financial statement.

The goal of such analysis is to determine efficiency & performance of the firm management

Its main aim is to measure the firm‟s liquidity, profitability and other indications that business is conducted in a rational way.

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How to do Financial Analysis

Balance sheet

Profit and Loss A/C

Ratio Analysis

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Balance Sheet of Aanjaneya Life science

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Ratio Analysis

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Ratio Analysis

Types of ratio:

1.Current ratio

2.Liquid ratio

3.Debt Equity ratio

4.Total assets to debt ratio

5.Proprietory ratio

6.Capital gearing ratio

7.Interest coverage ratio

8.Fixed assets turnover ratio

9.Current assets turnover ratio

10.Net profit ratio

Current Ratio15

Also known as working capital ratio It is used to evaluate short term financial position of the

business concern. It indicates the ability of the firm to meet its short term obligations

Current ratio = current assets

current liabilities

Ideal current ratio is 2:1. A very high ratio indicates availability of idle cash and is not

a good sign

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Current Ratio

2012 20130

0.20.40.60.8

11.21.41.6 Current ratio = current asset

current liabilities

Current ratio(2012)

=50.6054 /56.86

=0.89

Current ratio(2013)

=156.14/110.0

=1.41

Ideal current ratio should be 2:1. So, we can say that the company’s financial position is not satisfactory but as compared to 2012, the current ratio of 2013 is more.Which means , Curent assets are less than current liabilities

Quick Ratio17

It is very useful in measuring liquidity position of a firm.

Quick ratio = liquid asset

current liabilities

Liquid ratio of 1:1 is considered satisfactory. If quick assets

are equal to current liabilities, then the firm maybe able to

meet its short term obligations

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Quick/Liquid ratio Quick ratio = liquid assets

current liabilities

Quick ratio(2012)

= 485.0/110

= 4.41

Quick ratio(2013)

=359.09/110

= 3.19

2012 20130

0.51

1.52

2.53

3.54

4.5

Interpretation:

Ideally, it should be 1:1. So, it can be concluded that company’s financial position in 2012 was more sound compared to 2013.

Debt-Equity Ratio19

shows a relationship between long term debt and shareholder’s

fund.

Also called external internal equity ratio

Debt equity ratio = debt or long term debt

equity shareholder’s fund

A ratio of 1:1 is usually considered to be satisfactory. This ratio is

calculated to know about the organization’s repayment capacity of

long term debts

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Debt-Equity Ratio

• Debt equity ratio=

long term debts/equity or

share holder funds

• Debt equity ratio(2012)

=138.85/134.39

=1.03

• Debt equity ratio (2013)

=298.58/351.27

=0.85

2012 20130

0.2

0.4

0.6

0.8

1

1.2

Ideally, it should be 1:1. So, it can be said that the organization’s repayment capacity of long-term debts has increased for the year 2013 as compared to 2012

Proprietory Ratio21

this establishes the relationship between shareholder’s funds to

assets of the firm.

Also known as equity ratio or net worth to total assets ratio

Proprietary ratio = equity

total assets

Higher the ratio, financial condition of the organization will be

sound

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Proprietary Ratio

• Formula =

Equity / total assets

• For 2012

=117.48/273.21 =0.43

• For 2013

=188.05/648.46 =0.29

2012 20130

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

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Interpretation:

Since Ratio for the year 2013 is decreased, it can be concluded that the financial condition of the company is not sound.

Capital gearing Ratio24

It shows relationship between equity capital ( including reserves

and undistributed profits) and fixed cost bearing capital

( preference sharing capital, fixed interest bearing loans)

Capital gearing ratio= eq. share capital+reserves+P&L balance

fixed cost bearing capital

A high gearing will be beneficial to equity shareholders

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Capital Gearing Ratio

• Formula

=Equity share capital + reserves + P&L Balance /Fixed cost bearing capital.

• For 2012

=134.39/127.65 =1.05

• For 2013

= 348.8/210.53 =1.662012 2013

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

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Interpretation:

A low gearing is not beneficial to equity shareholders when rate of interest/dividend payable on fixed cost bearing capital is higher than the rate of return on investment in business.

Total assets to debt ratio27

shows a relationship between total assets and the long-term

debts

Total asset to debt ratio= total assets

long term debts

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Total asset to Debt ratio

• Formula

=Total asset / Long term debt

• Total asset to debt ratio (2012) =273.21/138.85

=1.96

• Total asset to debt ratio(2013) • 648.4/298.5

= 2.17

2012 20131.85

1.9

1.95

2

2.05

2.1

2.15

2.2

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Interpretation:

Total assets in both the years is more than sufficient to repay in cash the total debts.

Fixed assets turnover Ratio30

This ratio indicates relationship between cost of goods sold

and fixed assets during a year

Fixed assets turnover ratio= cost of goods sold

Net fixed assets

If there is increase in ratio, it indicates that there is better

utilization of fixed assets and vice versa

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Fixed Asset turnover Ratio

• Formula – Cost of goods sold/Net

fixed assets.

• For 2013 =

479.96/358.87 =1.33

• For 2012 =320.26/117.07 =2.73

2012 20130

0.5

1

1.5

2

2.5

3

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Interpretation:

It can be concluded that the fixed assets are not being utilized properly as the ratio remain intact.

Net Profit Ratio33

This ratio indicates relationship between net profit and net

sales

Net profit ratio= Net profit X 100

Net sales

Decrease in the ratio indicates managerial inefficiency and

excessive selling and distribution expenses.

Increase in it shows better performance

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Net Profit Ratio

• Net profit ratio=

net profit*100/net sales

• Net profit ratio(2013)

= 41.03/479.96*100

= 8.54

• Net profit ratio(2012)

=36.01 /320.26*100

=11.24

2012 20130

2

4

6

8

10

12

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Interpretation:

The decrease in ratio in 2013 implies managerial efficiency shows less efficient performnce.

Interest coverage Ratio36

Also known as debt service ratio

Interest coverage ratio= net profit before interest and income

tax

‘fixed interest charges’

This shows how many times the interest charges are covered

by profits available to pay interest charges.

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Interest coverage ratio

• Formula=

Net profit before charging interest and tax /Fixed interest charges.

• For 2012

=54.63 / 13.65 =4

• For 2013

=63.06 / 29.05 =2.17

2012 20130

0.5

1

1.5

2

2.5

3

3.5

4

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Interpretation:

From the findings, it can be said that the business won’t earn sufficiently.

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Current assets turnover ratio

Formula –

Cost of goods sold/Net current assets.

.

For 2012

=320.26/156.14

= 2.04

For 2013

= 479.96/289.53

= 1.65

2012 20130

0.5

1

1.5

2

2.5

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Interpretation:

Since there is decrease in the ratio in 2013, it can be said that the working capital has not been utilized efficiently in making sales.

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Conclusions

In balance sheet:- Net worth has increase substantially Total debt decreases following year. Total liabilities increase with relation to 2012. Current liabilities decreases. Current assets and Total assets both increases .

In Profit/Loss a/c:- Total Income increases. Total expenses increases. Net profit increases. Net sales increases.

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Thank You