Financial Analysis of Financial Analysis of NovartisNovartis

Analysed by:

Vipul Patil (20)Poonam Mahajan (13)Nilesh Visave (10)Jaimy Shah (07)Deepali Jukar (03)

COMPANY PROFILECOMPANY PROFILE

Novartis has been in India since 1947.

Its operates in India through four entities namely Novartis India Limited, listed on the Mumbai Stock Exchange, Novartis Healthcare Private Limited, Sandoz Pvt. Ltd and Chiron-Behring Vaccine Pvt. Ltd .

Nearly 4500 people are working at Novartis.

In India Novartis has a presence in pharmaceuticals, generics, Vaccines, OTC, eye care and Animal Health.

CURRENT RATIOCURRENT RATIO

3.5

4

4.5

5

2009 2010 2011

4.124.4

4.83

CR

• The ratio shows satisfactory ability of the firm to meet its current liabilities.

•A firm has liquidity and its current assets in form of cash and debtors is more

than inventories.

•Also Loans and advances given were eventually high in the year 2010 and 2011

QUICK RATIOQUICK RATIO

3.62

4.094.25

3.23.43.63.8

44.24.4

2009 2010 2011

QR

•Quick ratio seems satisfactory.

•Significant increase in 2011 due to increase in cash and bank balance

DEBT EQUITY RATIODEBT EQUITY RATIO

•Dependence on outsiders funds has decreased in 2011 by unsecured loans.

•Unsecured loans decreased, reserves and surplus was high than 2009-2010.

•Interest gain due to inter-corporate deposits were made in 2009 and 2010.

•Received tax free dividends

•Thus the company has as lesser risk.

PROPRIETARY RATIOPROPRIETARY RATIO

•Share holders funds have been increasing showing a good hold on share

holders.

•In 2011, large % of total assets were financed by the share holders funds.

•As company was growing Reserves & surplus were increased throughout.

•HSBC mutual fund sold (all)---- results into decrease in TA in 2011

GROSS PROFIT GROSS PROFIT MARGIN RMARGIN R

18.28%

20.33% 20.66%

17.00%

18.00%

19.00%

20.00%

21.00%

2009 2010 2011

GROSS PROFIT

Gross Profit Margin:

•In 2010-2011, gross profit had increased due to increase in sales.

•Serves for paying additional expenses and future savings.

NET PROFITNET PROFIT

•It show the profitability in the business.

•Management working efficiently.

RETURN ON CAPTIAL RETURN ON CAPTIAL EMPLOYEDEMPLOYED

24.59%29.93% 30.86%

0.00%

10.00%

20.00%

30.00%

40.00%

2009 2010 2011

ROCE

A higher value of return on capital employed is favourable indicating that the

company generates more earnings per rupee of capital employed.

Fringe benefit tax (employment benefit tax) was nil in 2010

EARNING PER SHARE EARNING PER SHARE

32.4536.29

45.89

0

10

20

30

40

50

2009 2010 2011

EPS

The EPS of Novartis India is increasing which indicates it is increasing its

profitability .

TOTAL AND FIXED ASSEST TOTAL AND FIXED ASSEST TURNOVER RATIOTURNOVER RATIO

In 2011, loans and advances increase (CA).

Investments (FA) were less in 2011 as compare to 2010.

2009 2010 2011

Shareholders’ Funds 5,147,405 5,934,6067,029,87

6Capital 159,804 159,804 159,804

Reserves and Surplus 4,987,601 5,774,8026,870,07

2Unsecured Loans 2,980 2,690 1,971fixed asset 2009 2010 2011Gross Block 227,999 233,475 241,529Less: Depreciation/Amortisation 141,758 155,522 161,963Net Block 86,241 77,953 79,566Capital Work-in-Progress 672 7,552 7,319

86,913 85,505 86,885Investments 233,929 157,505 412Deferred Taxation 138,886 154,959 157,645

Current Assets, Loans and Advances 6,233,433 7,207,4568,595,82

8Inventories 501,026 513,750 536,116Sundry Debtors 454,854 463,228 603,824Cash and Bank Balances 537,536 571,888 884,656

Loans and Advances 4,740,017 5,658,5906,571,23

2

Less: C urrent Liabilities and Provisions 1,542,776 1,668,1291,808,92

3Liabilities 892,400 1,144,632 996,914Provisions 650,376 664,291 671,215

Net Current Assets 4,690,657 5,539,3276,786,90

5

NET SALES 5,994,802 6,241,0307,086,42

6

Balance Sheet as at 31st March 2011

2009 2010 2011

Inventories 501,026 513,750 536,116

Sundry Debtors 454,854 463,228 603,824

Cash and Bank Balances 537,536 571,888 884,656

Loans and Advances 4,740,017 5,658,590 6,571,232

Current Assets, Loans and Advances 6,233,433 7,207,456 8,595,828

Buildings 25,200 24,217 22,429

Plant and Machinery 35,348 29,383 33,527

Furniture and Fittings 15,056 14,087 16,414

Trade Marks@ 1,929 1,492 1,121

Vehicles 8,708 8,774 6,075

Capital Workin- 672 7,552 7,319

Progress (including

advances for capital

expenditure) Total fixedassets 86,913 85,505 86,885

Total asset 6,320,346 7,292,961 8,682,713

COMMON SIZE STATEMENT B/S (ASSETS)

2009 2010 2011Inventories 7.93 7.04 6.17Sundry Debtors 7.20 6.35 6.95Cash and Bank Balances 8.50 7.84 10.19Loans and Advances 75.00 77.59 75.68Current Assets, Loans and Advances 98.62 98.83 99.00

Buildings 0.40 0.33 0.26Plant and Machinery 0.56 0.40 0.39Furniture and Fittings 0.24 0.19 0.19Trade Marks@ 0.03 0.02 0.01Vehicles 0.14 0.12 0.07Capital Workin- 1.36 0.10 0.08Progress (includingadvances for capitalexpenditure) Total fixedassets 1.38 1.17 1.00Total asset 100.00 100.00 100.00

COMMON SIZE STATEMENT B/S (ASSETS)

Packaging material,WIP,RM FG.

Deposit A/C high

Advances for capital expenditure were high 2011

Depreciation and Amortisation on assets

Common size statement Common size statement B/S (2)B/S (2)

2009 2010 2011

Total current liabilities 27.32 25.36 23.09

Long term debt 0.05 0.04 0.03

Total liability 27.38 25.40 23.09

Retained earnings 42.42 46.78 51.76

Shareholders equity 2.83 2.43 2.04Total liability and shareholders Equity 100.00 100.00 100.00

Balance Sheet as at 31st March 2011

2009 2010 2011

Shareholders’ Funds 5,147,405 5,934,606 7,029,876Capital 159,804 159,804 159,804

Reserves and Surplus 4,987,601 5,774,802 6,870,072Unsecured Loans 2,980 2,690 1,971fixed asset 2009 2010 2011Gross Block 227,999 233,475 241,529Less: Depreciation/Amortisation 141,758 155,522 161,963Net Block 86,241 77,953 79,566Capital Work-in-Progress 672 7,552 7,319

86,913 85,505 86,885Investments 233,929 157,505 412Deferred Taxation 138,886 154,959 157,645

Current Assets, Loans and Advances 6,233,433 7,207,456 8,595,828Inventories 501,026 513,750 536,116Sundry Debtors 454,854 463,228 603,824Cash and Bank Balances 537,536 571,888 884,656

Loans and Advances 4,740,017 5,658,590 6,571,232

Less: Current Liabilities and Provisions 1,542,776 1,668,129 1,808,923Liabilities 892,400 1,144,632 996,914Provisions 650,376 664,291 671,215

Net Current Assets 4,690,657 5,539,327 6,786,905

NET SALES 5,994,802 6,241,030 7,086,426

Trend analysis B/STrend analysis B/S2009 2010 2011

Shareholders’ Funds 100 115.29 136.57Capital 100 100.00 100.00

Reserves and Surplus 100 115.78 137.74Unsecured Loans 100 90.27 66.14fixed asset 100 100.05 100.10Gross Block 100 102.40 105.93Less: Depreciation/Amortisation 100 109.71 114.25Net Block 100 90.39 92.26Capital Work-in-Progress 100 1123.81 1089.14

100 98.38 99.97Investments 100 67.33 0.18Deferred Taxation 100 111.57 113.51Current Assets, Loans and Advances 100 115.63 137.90Inventories 100 102.54 107.00Sundry Debtors 100 101.84 132.75Cash and Bank Balances 100 106.39 164.58Loans and Advances 100 119.38 138.63Less: C urrent Liabilities and Provisions 100 108.13 117.25Liabilities 100 128.26 111.71Provisions 100 102.14 103.20Net Current Assets 100 118.09 144.69NET SALES 100 104.11 118.21

Advances for capital expenditure were high 2011

P & L Account 2009 2010 2011Income      gross sales 6,025,230 6,252,303 7,100,668Excise Duty on Sales 30,428 11,273 14,242Net Sales 5,994,802 6,241,030 7,086,426Other Income 659,985 779,584 1,005,879Income 6,654,787 7,020,614 8,092,305Expenditure      Materials Cost 6,654,787 2,506,749 2,733,088Personnel Cost 704,855 2,506,749 2,733,088Other Expenses 1,756,234 1,848,265 2,081,584Interest 7,059 3,179 2,802Depreciation/Amortisation 26,884 22,513 23,823Less: Cost of services shared 46,759 5,956 1,873Expenditure 4,972,428 5,228,565 5,905,061       Profit before Taxation 1,729,118 1,798,005 2,189,117Provision for Taxation 692,021 638,113 722,391Profit afterTaxation 1,037,097 1,159,892 1,466,726previous year balance 1,357,829 1,917,291 2,588,503  2,394,926 3,077,183 4,055,229Appropriations 477,635 488,680 518,129       Balance carried to Balance Sheet 1917291.00 2588503.00 3537100.00Earnings per Share 32.45 36.29 45.89

P&L STATEMENT 2009-2011

2010 2011

gross sales 103.7687026 117.848912

Excise Duty on Sales 37.04811358 46.80557381

Net Sales 104.1073583 118.2095088

Other Income 118.1214725 152.4093729

Income 105.4972007 121.6013

Materials Cost 37.66835813 41.0695038

Personnel Cost 355.6403799 387.7518071Other Expenses 105.240247 118.5254357

Interest 45.03470747 39.69400765

Depreciation/Amortisation 83.74125874 88.61404553

Less: Cost of services shared 12.73765478 4.005645972

Expenditure 105.1511455 118.7560886

Profit before Taxation 103.9839386 126.6031005

Provision for Taxation 92.21006299 104.3885951

Profit after Taxation 111.8402618 141.4261154

previous year balance 141.2026846 190.6354187

128.4876025 169.3258581

Appropriations 102.3124352 108.4780219

Balance carried to Balance Sheet 135.0083529 184.4842541

Earnings per Share 111.8335901 141.4175655

Trend Analysis P/L (1)2009-2011

COMMON SIZE STATMENT P/LCOMMON SIZE STATMENT P/L2009 2010 2011

Gross sales 100.51 100.18 100.20Excise Duty on Sales 0.51 0.18 0.20Net Sales 100.00 100.00 100.00Other Income 11.01 12.49 14.19Income 111.01 112.49 114.19

2009 2010 0.00Materials Cost 111.01 40.17 38.57Personnel Cost 11.76 40.17 38.57Other Expenses 29.30 29.61 29.37Interest 0.12 0.05 0.04Depreciation/Amortisation 0.45 0.36 0.34Less: Cost of services shared 0.78 0.10 0.03Expenditure 82.95 83.78 83.33

2009 2010 0.00Profit before Taxation 28.84 28.81 30.89Provision for Taxation 11.54 10.22 10.19Profit after Taxation 17.30 18.58 20.70previous year balance 22.65 30.72 36.53

2009 2010 57.23Appropriations 7.97 7.83 7.31

0.00Balance carried to Balance Sheet 31.98 41.48 49.91

Material cost decreased

Share holding

Share holding pattern as on :

30/06/2013

31/05/2013

31/03/2013

Face value 5 5 5

No. Of Shares % HoldingNo. Of Shares

% Holdin

gNo. Of Shares

% Holdin

gPromoter's holding

Foreign Promoters 23970597 75 23970597 75244248

02 76.42

Sub total 23970597 75 23970597 75244248

02 76.42Non promoter's holdingInstitutional investorsBanks Fin. Inst. and Insurance 296745 0.93 296745 0.93 296745 0.93FII's 746256 2.33 705368 2.21 658549 2.06Sub total 1088899 3.41 1002986 3.14 973479 3.05Other investorsPrivate Corporate Bodies 1020645 3.19 1235778 3.87 739435 2.31NRI's/OCB's/Foreign Others 171734 0.54 162184 0.51 162217 0.51Others 1444 - 1444 - 1444 -Sub total 1193613 3.73 1399196 4.38 902886 2.82

General public 5707478 17.86 5587808 17.48565942

0 17.71

Grand total 31960587 100 31960587 100319605

87 100