Glenmark - Copy

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FINANCIAL STATEMENTANALYSIS WITH RATIO

ANALYSIS

on

Glenmark Pharmaceutical Limited


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Company Profile

Glenmark Pharmaceuticals Ltd. (GPL) is a research-driven, global,integrated pharmaceutical company headquartered at Mumbai,

India.

It is a leading player in the discovery of new molecules both NCEs

(new chemical entity) and NBEs (new biological entity).

The company has a significant presence in branded generics

markets across emerging economies including India.

GPL along with its subsidiary has twelve manufacturing facilities

in four countries and has five R&D centres.


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PROFITABILITY RATIOS

Profitability reflects the final result of business operations. Types of ratios----

Profit Margin Ratios

i. Gross Profit Margin

ii. Operating Profit Margin / EBITDA Margin

iii. Net Profit Margin

Rate Of Return Ratios

i. Operating profit to operating assets

ii. Net income to total assets

iii. Return On Equity


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Profitability Ratios

Efficiency

Total Asset Turnover

Operating Asset Turnover

Working Capital Turnover

Shareholder Equity Turnover

Return Per Share Equity Earning per Share

Dividend per share


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Gross Profit Margin Gross profit is obtained by subtracting cost of Goods

sold from the net sales.

Gross Profit Margin (Gross Profit/ Net Sales)* 100

Gross Profit margin is generally used to analyze

efficiency of a company to use its raw materials labor

and manufacturing related fixed assets to generate

profits.

A higher margin is a favorable profit indicator.


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The company has shown a good gross profit in the year 2009 as comapred

to the industry standards. The gross profits dropped drastically in the year 2010

In 2011 there was a marginal increase in gross profits.

Year 2009 2010 2011

GlenMark

31.03 13.92 22.62

Pharma Industry

23.79 74.89 65.05

020

40

60

80

2009 2010 2011

Glenmark

Pharma . Indus


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Operating Profit Margin

Operating Expenses are mostly fixed cost of operations such asgeneral, marketing and administrative expenses

Operating Profit Margin= (Operating Profit/ Net Sales)* 100

Operating Profit margin is generally used to analyze efficiency of

a company to use its Operations to generate profits.

Management has much more control over its Operating expenses.


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Year 2009 2010 2011

Glenmark 42.12 23.67 29.76

Pharma Industry26.2 76.72 68.2

0

20

40

60

80

100

2009 2010 2011

Glenmark

Pharma Industry


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Profit Before Tax Margin

Profit Before tax is the profit left after deductingthe interest from the operating profit

Profit before Tax Margin=(Operating Profit/ NetSales)*100

A Company has access to variety of taxmanagement techniques to manipulate the timingand magnitude of the taxable income.


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Year 2009 2010 2011

GlenmarkPharma 28.79 11.84 20.88

Pharma.

Industry 20.01 71.24 61.3

0

2040

60

80

2009 2010 2011

Glenmark Pharma

Pharma Industry


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Net Profit Margin

Net Profit is the earnings left for the shareholders after deduction of tax

from PBT.

This ratio shows the earnings left for shareholders (equity & preference)

as a % of net sales.

Gross profit & net profit ratios provide a valuable understanding of the

cost & profit structure of the firm & enables us to identify sources of biz

efficiency/ inefficiency.


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Year 2009 2010 2011Glenmark

Pharma

25.5 12.57 17.66

Pharma

Industry 15.95 56.91 48.43

0

10

20

30

40

50

60

2009 2010 2011

Glenmark

industry

NET INCOME TO TOTAL ASSETS


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Return on Equity

Return On Equity=Net Income/ Average shareholdersEquity

This ratio indicates how profitable a company is by

comparing its net income to its average shareholders'equity.

The return on equity ratio (ROE) measures how much

the shareholders earned for their investment in thecompany.

The higher the ratio percentage, the more efficient

management is in utilizing its equity base and the better


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RETURN ON EQUITYYEAR 2009 2010 2011

GLENMARK 0.1312009 0.0773371 0.1277392

0

0.02

0.04

0.06

0.08

0.10.12

0.14

2009 2010 2011

GLENMARK

GLENMARK


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Return on total Asset

This ratio indicates how profitable a company is relative to itstotal assets. The return on assets (ROA) ratio illustrates howwell management is employing the company's total assets tomake a profit.

Return on Total Assets = Net Income/ Avg. Total Assets.

As a rule of thumb, investment professionals like to see acompany's ROA come in at no less than 5%. Of course, thereare exceptions to this rule. An important one would apply tobanks, which strive to record an ROA of 1.5% or above.


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RETURN ON TOTAL ASSETSYEAR 2009 2010 2011

GLENMARK 0.0947654 0.0509954 0.0678857

0

0.02

0.04

0.06

0.08

0.1

2009 2010 2011

GLENMARK

GLENMARK


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Total asset turnover

This ratio measures sales per rupee ofinvestment in total assets. It also measures the

efficiency with which total assets are employed.

Total Asset Turnover= Net Sales/ Total Assets

Higher total asset turnover ratio shows that the

company has been more effective in using the

investment in the total asset to generate revenue.


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TOTAL ASSETS TURNOVERYEAR 2009 2010 2011

GLENMARK 0.3222712 0.3854538 0.4530524

0

0.05

0.10.15

0.2

0.25

0.3

0.350.4

0.45

0.5

2009 2010 2011

GLENMARK

GLENMARK


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WORKING CAPITAL

TURNOVER A measurement comparing the depletion of

working capital to the generation of sales over a

given period. This provides some useful

information as to how effectively a company is

using its working capital to generate sales.

Working Capital Turnover=Net Sales/ Working

Capital

Higher the working capital turnover, the better


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WORKING CAPITAL TURNOVER

YEAR 2009 2010 2011

GLENMARK 0.5071262 0.6065503 0.7129236

0

0.1

0.2

0.3

0.4

0.5

0.60.7

0.8

2009 2010 2011

GLENMARK

GLENMARK


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Earning per share

The portion of a company's profit allocated toeach outstanding share of common stock.Earnings per share serves as an indicator of acompany's profitability.

Earning Per Share=Profit After Tax/Number ofOrdinary Shares


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EARNING PER SHARE

YEAR 2009 2010 2011

GLENMARK 8.71 4.75 7.85

0

1

2

34

5

6

7

8

910

2009 2010 2011

GLENMARK

GLENMARK


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Dividend per share

The sum of declared dividends for everyordinary share issued. Dividend per share (DPS)is the total dividends paid out over an entire year(including interim dividends but not includingspecial dividends) divided by the number ofoutstanding ordinary shares issued.

Dividend per share= Dividend/ no of ordinaryshares


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DIVIDEND PER SHAREYEAR 2009 2010 2011

GLENMARK 0.4 0.39 0.39

0.385

0.390.395

0.4

0.405

0.41

0.415

0.420.425

0.43

0.435

2009 2010 2011

GLENMARK

GLENMARK


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Solvency Ratios

Short Term Solvency

Current Ratio

Quick Ratio

Inventory Turnover Ratio

Accounts Receivable Turnover Ratio

Long Term Solvency

Debt Equity Ratio Interest Cover Ratio


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Current Ratio

Current ratio is a popular ratio used to ascertain whether acompany's short-term assets are readily available to pay offits short-term liabilities.

Current Ratio=Current Assets/ Current Liabilities.

A high current ratio is a sign of financial strength, co hasmore money than it can efficiently use.

a high current ratio is not necessarily good, and a low currentratio is not necessarily bad (see chart below).


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CURRENT RATIOYEAR 2009 2010 2011

GLENMARK 1.85 2.47 2.52

0

0.5

1

1.5

2

2.5

3

2009 2010 2011

GLENMARK

GLENMARK


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Quick Ratio

The quick ratio - aka the quick assets ratio or the acid-test ratio - is a liquidity indicator that further refines the

current ratio by measuring the amount of the most liquid

current assets there are to cover current liabilities.

Quick Ratio = (Current AssetsInventories)/ Current

Liabilities .

An indicator of a company's short-term liquidity. Thequick ratio measures a company's ability to meet its

short-term obligations with its most liquid assets.


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QUICK RATIO

YEAR 2009 2010 2011

GLENMARK 1.263587 1.5913493 1.5071685

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2009 2010 2011

GLENMARK

GLENMARK


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Accounts Receivable Turnover

Debtors turnover ratio indicates therelationship between Net Credit Sales and

Average Accounts Receivable

Debtors Turnover =Net Credit Sales/Avg.

Accounts Receivable

The higher the ratio, the greater the

efficiency of credit management.


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ACCOUNTS RECIEVABLE TURNOVER

YEAR 2009 2010 2011GLENMARK 2.8 3.3 3.9

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

2009 2010 2011

GLENMARK

GLENMARK


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INVENTORY TURNOVER

Inventory Turnover Ratio = Net Sales/Inventory

This ratio shows how many times a companysinventory is sold & replaced over a period

However it may be also calculated as Cost of goodssold/ Average Inventory.

It reflects the efficiency of inventory management.The higher the ratio the more efficient theinventory management & vice versa.


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INVENTORY TURNOVERYEAR 2009 2010 2011

GLENMARK 4.29 7.34 7.89

0

1

23

4

5

6

78

9

2009 2010 2011

GLENMARK

GLENMARK


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Debt equity ratio

The debt equity ratio compares a company's totalliabilities to its total shareholders equity.

Debt Equity Ratio= Total Liabilities/ Shareholders

Equity.If ratio >1=> assets are mainly financed with debt

Unfavorable for the company

If Ratio more money comes out from equity

Favorable for the company

If ratio = 1; there is no liability


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Year 2009 2010 2011

GlENMARK 0.71 0.61 0.51

INDUSTRY 0.34 0.26 0.25

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2009 2010 2011

GLENMARK

INDUSRTY

DEBT EQUITY RATIO


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Interest Cover Ratio

Ratio used to determine how easily the companycan pay interest on outstanding debts

Interest Coverage Ratio= Earnings Beforeinterest & Taxes/ Interest Expenses.

The lower ratio, the more the company is

burdened by debt expenses


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Year 2009 2010 2011

GLENMARK 3.6 2.2 3.9INDUSTRY 6.42 7.31 41.81

0

5

10

15

20

25

30

35

40

45

2009 2010 2011

GLENMARK

INDUSTRY

INTREST COVER RATIO


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Directors Report

Value patent expiration

Increased Costs of Drug Development

Scope for Expansion


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Auditors Report

Regular Payment of Interest

No amount Overdue


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Notes to Account

SIGNIFICANT ACCOUNTING POLICIES:

i) Basis of Accountings

ii) Fixed Assets (including Intangibles),

Depreciation and Amortizationiii) Borrowing Costs

iv) Impairment of Assets

v) Foreign Currency Transactions


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