Financial analysis of cipla ltd

PRESENTATION ON FINANCIAL ANALYSIS OF CIPLA LTD

INDUSTRY ANALYSIS The Indian pharmaceutical sector is highly

fragmented, with more than 20 000 registered companies, with the top 250 companies controlling 70% of the market. These companies can currently meet about 70% of the countries demands for drugs; this is mainly through the Maharashtra and Gujarat regions, which account for 45% of the total number of pharmaceutical manufacturing units in India.

Cont…The Indian pharmaceuticals industry has grown from a mere $0.3billion in 1980, to $12 billion in 2012.

Branded generics dominate the market, making up 70-80% of it.

The price of drugs is very low, due to intense competition. While India is 10th globally in terms of value, it is 3rd in term of volume of drugs produced.

LIQUIDITY RATIOS:

CURRENT RATIO:

Interpretation : The current ratio of Cipla Ltd is above the standard norm of 2:1 for the years 2011 and 2012 i.e 2.43 and 2.61. But for the year 2013 it has come down i.e 1.94. Hence It is adequately liquid from the point of view of its ability to satisfy the claims of short term creditors.

YEAR 2011 2012 2013

CURRENT RATIO 2.43 2.61 1.94

Cont…

INTERPRETATION: The Current ratio of Cipla ltd is showing a decreasing trend. i.e it has decreased from 2.43 to 1.94

2011 2012 20130

0.5

1

1.5

2

2.5

3

2.432.61

1.94

CURRENT RATIO

CURRENT RATIO

QUICK RATIO:

INTERPRETATION: The industry standards say 1:1 ratio is preferable but in case of Cipla Ltd the quick ratio is more than the standard norm therefore the company meets its obligation.

YEAR 2011 2012 2013

QUICK RATIO 1.98 1.56 1.64

Cont…

INTERPRETATION: The quick ratio of cipla Ltd is showing decreasing trend. It has decreased from1.98 to 1.64.

2011 2012 20130

0.5

1

1.5

2

2.5

1.98

1.561.64

QUICK RATIO

QUICK RATIO

SOLVENCY RATIOS:

DEBT EQUITY RATIO:

INTERPRETATION: The debt equity ratio of cipla Ltd is 0.09, 0 and 0.11 for the years 2011, 2012 and 2013 respectively

YEAR 2011 2012 2013DEBT-EQUITY RATIO 0.09 0 0.11

Cont…

interpretation

2011 2012 20130

0.02

0.04

0.06

0.08

0.1

0.12

DEBT-EQUITY RATIO

DEBT-EQUITY RATIO

PROFITABILITY RATIOS:

GROSS PROFIT MARGIN

Interpretation: There are high overheads it should be reduced The processes should be optimized. Higher values indicate that more cents are earned per dollar of

revenue which is favourable because more profit will be available to cover non-production costs.

YEAR 2011 2012 2013

Gross profit margin 17.17 18.8 21.96

Cont…

interpretation2011 2012 20130

5

10

15

20

25

17.1718.8

21.96

Gross profit margin

Gross profit margin

NET PROFIT MARGIN

Interpretation: Percentage of revenue remaining after all operating expense, interest,

taxes and preferred stock dividends (but not common stock dividends) have been deducted from a company's total revenue has increased very highly in the year 2013.

YEAR 2011 2012 2013

Net Profit Margin 15.45 15.98 18.17

Cont…


14.5

15

15.5

16

16.5

17

17.5

18

18.5

Net Profit Margin

Net Profit Margin

RETURN ON ASSETS

Interpretation: The assets gave good return in the year 2013 And the same has maintained constantly in an increasing way This situation is quite good. Shows the assets are giving good returns.

YEAR 2011 2012 2013

RETURN ON ASSETS 82.91 95.14 112.32

Cont…

Interpretation:2011 2012 20130

20

40

60

80

100

120

82.91

95.14

112.32

RETURN ON ASSETS

RETURN ON ASSETS

TURNOVER RATIOS

INVENTORY TURNOVER RATIO

Interpretation: It is an activity ratio measuring the number of times per period. The company doesn’t have retained earnings to reinvest it showing constant

fluctuation from year to year. It has to really work hard to survive in the market.

YEAR 2011 2012 2013INVENTORY TURNOVER RATIO 3.7 3.85 3.47

Cont…


3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

3.7

3.85

3.47



DEBTORS TURNOVER RATIO

Interpretation: It is showing constant increase from year to year. Credit period is very strict.

YEAR 2011 2012 2013DEBTORS TURNOVER RATIO 4.14 4.61 5.14

Cont…

Interpretation: 2011 2012 2013

0

1

2

3

4

5

6

4.14

4.61

5.14



ASSET TURNOVER RATIO

Interpretation: The asset turnover ratio is not maintaining a trend instead its fluctuating This shows that the company has not used its assets more effectively in

order to generate its revenue.

YEAR 2011 2012 2013

ASSETS TURNOVER RATIO 0.96 0.94 0.94

Cont…

Interpretation:2011 2012 2013

0.925

0.93

0.935

0.94

0.945

0.95

0.955

0.96

0.965

0.96

0.94 0.94

ASSETS TURNOVER RATIO

ASSETS TURNOVER RATIO

COMPARATIVE ANALYSIS

CIPLA LTD DR REDDY’S LAB

YEAR 2013 2013

CURRENT RATIO 1.94 1.48

QUICK RATIO 1.64 1.6

DEBT EQUITY RATIO 0.11 0.5

GROSS PROFIT MARGIN 22.55 18.33

NET PROFIT MARGIN 18.17 12.74

RETURN ON ASSETS 112.32 375.01

INVENTORY TURNOVER RATIO 3.47 5.51

DEBTORS TURNOVER RATIO 5.14 4.14

ASSET TURNOVER RATIO 0.94 1.33

COMMON SIZE ANALYSISSources Of Funds Rs crore

Total Share Capital 160.58 1.63%

Equity Share Capital 160.58 1.63%

Share Application Money 0 0.00%

Preference Share Capital 0 0.00%

Reserves 8,708.94 88.55%

Revaluation Reserves 0 0.00%

Networth 8,869.52 90.18%

Secured Loans 9.49 0.10%

Unsecured Loans 956.32 9.72%

Total Debt 965.81 9.82%

Total Liabilities 9,835.33 100.00%

Cont…Application Of Funds Rs crore

Gross Block 4,983.81 50.67%

Less: Accum. Depreciation 1,565.52 15.92%

Net Block 3,418.29 34.76%

Capital Work in Progress 350.34 3.56%

Investments 2,601.82 26.45%

Inventories 2,343.37 23.83%

Sundry Debtors 1,645.22 16.73%

Cash and Bank Balance 105.07 1.07%

Total Current Assets 4,093.66 41.62%

Loans and Advances 1,029.10 10.46%

Fixed Deposits 0 0.00%

Total CA, Loans & Advances 5,122.76 52.09%

Deffered Credit 0 0.00%

Current Liabilities 1,380.91 14.04%

Provisions 276.97 2.82%

Total CL & Provisions 1,657.88 16.86%

Net Current Assets 3,464.88 35.23%

Miscellaneous Expenses 0 0.00%

Total Assets 9,835.33 100.00%

Thank you ROHIT R