Ratio Analysis

1. FINANCIAL
STATEMENT
ANALYSIS
ZYDUS WELLNESS
SUBMITTED BY:- SUBMITTED TO:-
RAJESH KUMAR GUPTA DR.ARCHANA SINGH
(2K19/MC/104)

2. Introduction
 Zydus Wellness Limited is a part of Zydus Cadila Group Headquartered in Ahmedabad.
 It is founded in 1952 by Mr.Raman Bhai Patel and Mr. Indravan Modi in Ahmedabad.
 First product –Sugar free launched in 1988.
 Zydus wellness come into existence in 2008-09 when cadila Healthcare Ltd. Decided to
demerge its consumer division.
 It’s Holding Company is cadila Healthcare itd with 63.55% share holding.
 It’s present chairman is Dr.sharvil Patel.
 It has Market Capitalization of Rs. 7,521.13 crores as on 31.03.2019.
 It is listed on BSE and NSE.

3. Introduction(contd..)

4. Acquisition of Heinz India Pvt Itd
 Acquired Heinz India Pvt. Itd on 30th January 2019.
 Valued at $666mn(approx. Rs 4,667 cr including cash and
working capital).
 It added four products to the portfolio of zydus wellness :-
1. Glucose
2. Complan
3. Nycil
4. Sampriti Ghree
Its result in addition of two additional manufacturing facilities –
one at Aligarh and the other at Sitaganj.
Its added a network of more than 800 distributors and 20,000
wholeshale in 29 states.

5. Introduction of Industry Sector
 Consumer Market:-
 Market for products and servious like Toothpaste , Icecream ,Shampoo,Car,Led TV,
Refrigerators etc.
 It can be classified as Fast-moving consumer goods (FMCG).
 Fast-moving consumer goods (FMCG), also known as consumer packaged
goods (CPG), are products that are sold quickly and at a relatively low cost. Examples
include non-durable household goods such as packaged foods, beverages, toiletries,
candies, cosmetics, over-the-counter drugs, dry goods, and other consumables.

6. Characteristics of FMCG
 From the consumer perspective
Frequent purchases
Low engagement (little or no effort to choose the item)
Low prices
Short shelf life
Rapid consumption
Price comparison over online purchase by customer

7. Characteristics of FMCG(contd..)
 From the marketer perspective
High volumes
Low contribution margins
Extensive distribution
High inventory turnover

8. Income StateMent
12 Mar-18* 12 Mar-19*
Net Sales Rs m 5,126 8,428
Other
income
Rs m 351 389
Total
Revenues
Rs m 5,477 8,817
Gross profit Rs m 1,253 1,744
Depreciation Rs m 89 125
Interest Rs m 17 301
Profit before
tax
Rs m 1,497 1,706
Tax Rs m 132 -6
Profit after
tax
Rs m 1,365 1,712

9. FINANCIAL STATEMENT ANALYSIS

10. Liquidity Ratio
Liquidity Ratios MAR 2020 MAR 2019 MAR 2018 MAR 2017 MAR 2016
Current Ratio
(X)=Current
Asset/Current
liability
1.29 1.28 5.32 4.55 5.74
Quick Ratio
(X)=Quick
asset/Current
liability
0.80 0.85 5.03 4.27 5.42

11. Interpreting the Current Ratio.
Analysis of liquidity
 higher the current ratio, the more capable
a company is of paying its obligations
because it has a larger proportion
of short-term asset value relative to the
value of its short-term liabilities.
 But, while a current ratio say over 3,
could indicate the company can cover its
current liabilities three times, it may
indicate that it's not using its current
assets efficiently, is not securing
financing very well, or is not managing
its working capital.
 In past five years , Zydus
Wellness’ current ratio has always
been greater than one . This
indicate a good sign that it is
more capable of paying their
obligations .but from 2016-2018
their current ratio is too high this
indicate that management of
Zydus Wellness didn’t put their
cash in productive use.

12. Quick Ratio
 If Quick Ratio is Greater than 1 it indicates that the company can easily meets its
current liability in very short term.
 If Quick Ratio is very high (>2.5) this indicates that short term funds are not
being utilized effectively or locked up in receivable.

13. Debt to Equity Ratio
Leverage
Ratios
MAR 2020 MAR 2019 MAR 2018 MAR 2017 MAR 2016
Debt to
Equity (x)
Debt to
Equity (x)=
Long term
Liability/
S.H.F
0.44 0.46 0.04 0.04 0.00

14. • The debt-to-equity (D/E) ratio compares a company’s total liabilities to its
shareholder equity and can be used to evaluate how much leverage a company is
using.
• Higher leverage ratios tend to indicate a company or stock with higher risk to
shareholders.
 In Zydus Wellness, From year 2016 to 2018 , debt to equity ratio is too low , but
In year 2019 due to Acquisition of Heinz , this ratio has increased.

15. Inventory Turnover Ratio
formulae MAR
2020
MAR
2019
MAR 2018 MAR 2017 MAR 2016
Inventory
Turnover
Ratio (X)
Cost of good
sold/Average
inventory
6.04 3.62 14.62 13.51 16.53

16. Inventory Turnover Ratio
• Inventory turnover shows how many times a company has
sold and replaced inventory during a given period.
• This helps businesses make better decisions on pricing,
manufacturing, marketing, and purchasing new inventory.
• A low turnover implies weak sales and possibly excess
inventory, while a high ratio implies either strong sales or
insufficient inventory.

17. Profitability Ratio
Margin Ratios MAR
2020
MAR 2019 MAR 2018 MAR 2017 MAR 2016
Gross Profit
Margin
(%)=Gross
Profit/Net Sale
18.77 26.53 31.27 30.58 31.19
Operating
Margin
(%)=Operating
P/Net Sale
17.28 25.05 29.54 28.92 29.47
Net Profit
Margin
(%)=Net
Profit/Net Sale
8.02 20.31 26.62 25.84 26.53

18. • Gross profit margin is often shown as the gross profit as a
percentage of net sales.
• The gross profit margin shows the amount of profit made before
deducting selling, general, and administrative costs,
• Operating margin is a profitability ratio that shows how much profit
a company makes from its core operations in relation to the total
revenues it brings in.
• Net profit margin is one of the most important indicators of a
company's financial health.

19. Vertical Analysis (Balance Sheet)
PARTICULARS ABSOLUTE
AMOUNT
%AGE AMOUNT
2019 2018
ASSETS
Non Current
Assets
4,85,569 4,527 98.02 6.12
Current Assets 9,847 69,389 1.98 93.88
Total 4,95,416 73,916 100 100
Equity &
Liabilities
Equity 3,32,524 69,119 67.13 93.51
Non Current
Liabilities
1,50,106 108 30.29 00.15
Current
Liabilities
12,786 4,689 2.58 6.34
4,95,416 73,916 100 100

20. Vertical Analysis (P & L Sheet)
PARTICULARS ABSOLUTE AMOUNT (Rs in Lacs) %AGE AMOUNT
2019 2018 2019 2018
Total Income 31,516 29,242 100 100
Total Expenses 21,800 15,830 69.17 54.13
Profit Before Tax 9,716 13,412 30.82 45.86
Tax Expense 86 32 00.27 00.12
Profit After Tax 9,630 13,380 30.55 45.75

21. Horizontal Analysis(Balance Sheet)
PARTICULARS ABSOLUTE
AMOUNT
AMOUNT
DIFFERENCE
%AGE CHANGE
2019 2018
ASSETS
Non Current
Assets
4,85,569 4,527 4,81,042 10,526.06
Current Assets 9,847 69,389 -59,542 85.80
Total 4,95,416 73,916 4,21,500 570.24
Equity &
Liabilities
Equity 3,32,524 69,119 2,63,405 381.11
Non Current
Liabilities
1,50,106 108 1,49,998 1,38,887.04
Current
Liabilities
12,786 4,689 8,097 172.68
4,95,416 73,916 4,21,500 570.24

22. Horizontal Analysis(P &L Sheet)
PARTICUL
RS
ABSOLUTE AMOUNT (in
Lacs)
AMOUNT
DIFFERENC
E
%AGE CHANGE
2019 2018
Total
Income
31,51
6
29,242 2,274 7.78
Total
Expenses
21,80
0
15,830 5,970 37.71
Profit
Before Tax
9,716 13,412 3,696 27.55
Tax Expense 86 32 54 168.75
Profit After
Tax
9,630 13,380 3,750 28.03

23. Risk faced by
Zydus
Risk of
litigation
related to
quality of
products,intell
ectual
properties and
other
Risk of
competitions
and price
pressure
A slowdown
in economy
could impact
the industry.
Risk of
price
fluctuation
of the key
inputs