CG Havells Analysis

8/3/2019 CG Havells Analysis

1/17

Ratio Analysis

Havells vs Crompton GreavesBy,

Anushree Khandalkar SIMSR MMS-25

Sameepya Hora SIMSR MMS-118Saadat Sheikh SIMSR MMS-55

Aniruddha Bhattacharya SIMSR MMS-106


2/17

Electrical Equipment Industry

Rs 21000 Crore Industry

Three Major Players :

ABB

Crompton Greaves

Havells India

ACC

29%

Crompton

Greaves

28%

Havells

13%

Others

30%

Market Share


3/17

1.2 1.24

0.99

1.29 1.28 1.3

Jan/09 Jan/10 Jan/11

Current Ratio

Havells CG

0.81

0.5

0.36

1.12 1.12 1.09


Quick Ratio

Havells CG


4/17

8.47

1210.46

15.17 14.8413.99


Gross Profit Margin

Havells CG

6.57

9.22

8.028.4

11.32 11.33


Net Profit Margin

Havells CG


5/17

Havells Crompton Greaves


6/17

4.47

3.86 3.76

4.254.66

3.93


Asset Turnover Ratio

Havells CG

11.53

7.996.98

17.8818.82

16


Inventory Turnover Ratio

Havells CG


7/17

Return on Capital Employed

HAVELLS CROMPTON GREAVES

21.67 % 38.58%

Efficiency and profitability of companys

capital investments

ROCE should be greater than rate of

borrowing


8/17

Accounts Receivable & Accounts

Payable


88.1 82.8


193.4 99.2

Accounts Receivable in days

Accounts Payable in days


9/17

Raw Material Inventory In days


16.84 17.29

Does not impact much, as both almost same


10/17

WIP Inventory In days

Higher WIP inventory indicates longer cash

cycle. Cash Gap is high

Need to decrease WIP inventory in order to

improve cash flow High WIP for CG could indicate decrease in

Fixed Asset Turnover ratio


5.29 25.8


11/17

WIP Inventory In Days Cont.

4.33

7.43

4.3

5.64

Havells CG

Fixed Asset Turnover Ratio

Mar-10 Mar-11


12/17

Finished Goods Inventory In days

Time taken by company to sell the product itmanufactures

High FG inventory indicates capital tied up.


37.04 4.59

Finished Goods Inventory TurnoverHAVELLS CROMPTON GREAVES

9.85 79.45


13/17

Inventory Cost / Sales


15.43 11.5

89%

11%

Raw Material - HavellsIndigenous Imported

85%

15%

Raw Material - Crompton GreavesIndigenous Imported


14/17

RAWMATERIAL

Ratio Havells CromptonGreaves

RAW MATERIAL

CONSUMED / SALES

53.9 % 43.19 %

Raw Material Consumed to Sales Ratio is very low for Crompton Greaves which

indicates that more raw materials are blocked in Work In Progress. The Ratio forHavells is 54% hence less raw materials are blocked in Work In Progress.

RAW MATERIAL

PURCHASED /

EXPENDITURE

65.17% 51.30%

Raw Material Purchased to Expenditure indicates how much of the total expenditure

is attributed to purchasing raw materials. CromtonGreaves has more efficient

processes in comparison to Havells which lowers raw material cost


15/17

MAINTENANCERatio Havells CromptonGreaves

MAINTENANCE COST /EXPENDITURE

1.34 % 0.59 %

These include parts, supplies, and materials used in or consumed by

routine maintenance and repair of operating equipment, or in support of operations.

Again this cost is high for Havells indicating the scope for reduction.

MANUFACTURING


MANUFACTURING COST /TOTAL EXPENDITURE

86.22 % 86.37%


16/17

SPARESRATIO Havells CromptonGreaves

STORES & SPARESCONSUMED / SALES

0.0082 % 0.0077 %

The Stores & Spares Consumed to Sales ration is approximately same for both the

companies

R&DRatio Havells CromptonGreaves

R&D EXPENSE / SALES 0.24 % 0.95 %

The R&D expense ration is high for Crompton Greaves indicating they put more focus

on innovation & new product development as compared to Havells.


17/17

SCRAP


SCRAP SALE / TOTAL SALES 0.62 % 0.92 %

Havells has 0.62% of sales attributed to selling of scrap which is better as compared

to Crompton Greave as Havells has less scrap which is a undesired result from

manufacturing.

CG Havells Analysis

Documents

Transcript of CG Havells Analysis