Group7 FA Assignment Auto Ancillary Exide v3. 0

7/31/2019 Group7 FA Assignment Auto Ancillary Exide v3. 0

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FINANCIAL PERFORMANCE ANALYSIS

Auto Ancillary IndustryStudy Of Exide Industries

Group 07


2/11

AGENDA

Company Overview

Summary Of BalanceSheet

Summary of Profit & LossAccount

Financial Ratios

Highlights

Competition Opinion &

Recommendation

Industry :Auto Ancillary

Company :Exide Industries

This presentation provides anoverview of financial

performance of ExideIndustries.

Data Analyzed for last 3years(2008-2010)

Source:www.moneycontrol.com


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INDUSTRY & COMPANY OVERVIEW

Auto ancillary companies are suppliers to theauto industry. Parts include Engine Parts,Transmission & Steering parts, Suspension &Braking parts, Electrical, Batteries, Dashboardinstruments, Fan belts, sheet metal parts

The performance of the auto industry has thesingle largest impact on the fortunes of the autoancillary industry. An auto ancillary company cangenerate revenues from two major sources, thefirst is from supplies to OEM (original equipmentmanufacturers) and the second is through aftermarket sales

Production of auto ancillaries was estimated atUS$10 billion in 2005-06 and has been growing at

a 24% per annum since 2000. This growth inexports if sustained for another five years will seeIndias auto components exports will touch US$ 5bn by 2011 from the US$ 2 bn at present

Exide Industries, with operations in more than80 countries and fiscal 2010 net sales ofapproximately $2.7 billion, is one of the world'slargest producers and recyclers of lead-acidbatteries

Key strengths of Exide its products and servicesspan global markets and geographic borders,melding two significant bases of experience andtechnology expertise from its Transportation andIndustrial battery divisions.

Stock price movement of Exide Industries from April 2008

to March 2010Source: www.moneycontrol.com


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BALANCE SHEETExide Industries

2008 2009 2010

Sources Of Funds

Total Share Capital 80 80 85

Equity Share Capital 80 80 85Share Application Money 0 0 0

Preference Share Capital 0 0 0

Reserves 909.45 1,137.75 2,104.51

Revaluation Reserves 36.9 32.6 30.26

Net worth 1,026.35 1,250.35 2,219.77

Secured Loans 272.4 179.62 0.17

Unsecured Loans 77.41 137.56 89.82

Total Debt 349.81 317.18 89.99

Total Liabilities 1,376.16 1,567.53 2,309.76

Application Of Funds

Gross Block 1,097.47 1,256.70 1,336.46

Less: Accum. Depreciation 542.36 588.7 659.78

Net Block 555.11 668 676.68

Capital Work in Progress 46.67 17.31 37.76

Investments 518.28 668.18 1,335.37

Inventories 570.74 438.47 606.77

Sundry Debtors 259.21 231.02 254.58

Cash and Bank Balance 1.68 33.71 2.88

Total Current Assets 831.63 703.2 864.23

Loans and Advances 57.16 62.64 54.96

Fixed Deposits 0 0 0

Total CA, Loans & Advances 888.79 765.84 919.19

Deffered Credit 0 0 0

Current Liabilities 527.29 445.89 560.7

Provisions 105.39 105.91 98.54

Total CL & Provisions 632.68 551.8 659.24

Net Current Assets 256.11 214.04 259.95

Miscellaneous Expenses 0 0 0

Total Assets 1,376.17 1,567.53 2,309.76

Contingent Liabilities 2.03 9.96 2.3Book Value (Rs) 12.37 15.22 25.76


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BALANCE SHEET CONTD..

Snap shot of Company's Health - The balance sheet shows that it has set aside a good amount of money as reserve in 2010 as

compare to earlier which can act as a buffer against future losses/to pay claims.

In FYI 2010 the total debt amount has reduced and investment have increasedsignificantly(around 50%) contributing to a higher net worth of a company. It indicates thecompany can expand further and have a good growth rate.In turn it will attract share holders andprospect buyers.

Around 40% of increase in book value for 2010 indicates theoretically that shareholders wouldreceive more for the total value of the company's assets if a company were liquidated.

Higher value in Net Current asset for 2010 indicates capital is being generated or used up byday-to-day activities in a better way than the last year.

Financial ratio analysis will put more insight on these initial observations..


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PROFIT & LOSS ACCOUNT


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Financial Ratios- Analysis

0.990.94

1.141.08

1.39

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Liquidity & Solvency Ratios

Current Ratio Quick Ratio Debt Equity Ratio

6.49 7.437.92 7.55

12.7

22.25

27.1830.55 31.67

36.16

0

10

20

30

40


Profitability Ratios

OPM(%) GPM(%)

NPM(%) Return On Capital Employed(%)

Significant improvement in the profitability mainly due toreduction in the expense on raw materials. Company

invested in Lead Smelters in 2008. YOY growth of 50% in GPM and 68% NPM speaks plenty

on the operational Efficiencies brought in Total Quality Management System (TQM) implemented

throughout the organization Close to 20% GPM allows the company to invest further in

technology to bring in further Oper. Efficiencies A Favorable economic stimulus lowering the excise duty

also contributed to the sharp rise in the profitability

Profitability Ratios- Inference

A healthy Current Ratio that shows effective usage ofinvestors money

A low quick Ratio eluding to heavy inventory. Also visible inthe low inventory turn over ratio

A very low debt equity ratio which implies company'sappetite for growth and diversification with some borrowedmoney

Liquidity Ratios- Inference


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Financial Ratios- Analysis cont..

The debtors turnover ratio of is significantly higher than theindustrial average

The Company enjoys market share which could be due tothe credit period they provide

The inventory turn over is not in par with other industrypeers causing a dip in profitability

A significantly efficient No of days in working capital is ahealthy sign from the investors point of view

Management Efficiency- Inference

A healthy sign on raw material composition of expensesowing to captive lead smelters

Operational expense s are synchronous with the companyclaims on operational efficiencies

Good spending on the marketing and distribution resultingin market share

P & Ratios- Inference

45.24 47.87 46.59

23.52

42.44

0

20

40

60


Management Efficiency

Inventory Turnover Ratio Debtors Turnover RatioAsset Turnover Ratio Average Raw Material Holding

Number of Days In Working Capital

0

20

40

60

80


P & L Ratios

Material Cost Composition

Imported Composition of Raw Materials ConsumedSelling Distribution Cost Composition

Expenses as Composition of Total Sales


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Automotive industry expected to grow 13%. Has a good market share

Industrial Batteries consumption to grow by 10% owing big telecom consumption

Industry Outlook&

Opportunities

Domestic batteries [UPS] is a big segment to be captured, with heavy power shortage

in many states

Company has a very robust GPM and also a very low Debt Equity ratio. Both theseimplies an growth opportunity

Exides placing

A big advantage of captive raw material sourcing

Larger market share helps achieve economies of scale and reflects on the relationshipswith oems

Outlook & Opinion

Focus on Technology upgrades to heed to international market and prevent the entry ofunorganized sector to these markets Faster realization of sales could further the profit margins


10/11

QUESTIONS


11/11

Group7 FA Assignment Auto Ancillary Exide v3. 0

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