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Assignment On Financial Analysis of Marico PVT LTD
Assignment On Financial Analysis of Marico PVT LTD
ON
In Partial Fulfillment Of
Requirement For The Award Of The
Degree
Of
2020-2021
CERTIFICATE
Certified that the project work with the title “Financial analysis of
Marico Pvt. Ltd.”, undertaken by PREETI BAI, 1802ACOMM068,
was conducted under my guidance and supervision. He has designed the
research, collected the data, analysed the results, interpreted the findings
and observations and prepared the report.
I hereby declare that the project report with the title “Financial analysis of Marico
Pvt. Ltd.”, being submitted to TALCHER AUTONOMOUS COLLEGE,
TALCHER in partial fulfilment of the requirements for award of the degree of
Bachelor of Commerce, is an original piece of research work carried out by me. It
has not been published/awarded elsewhere, nor has it been submitted in full or part
for any other degree.
Date:17/07/21
PREETI BAI
+3 3Rd YEAR COMMERCE
SEMESTER ROLL NO: 1802ACOMM068
ACKNOWLEDGEMENT
PREETI BAI
+3 3Rd YEAR COMMERCE
SEMESTER ROLL NO: 1802ACOMM068
CONTENTS
Chapter 1: Introduction
Interpretation
Chapter 3: Findings
Chapter 4: Recommendation
Chapter 5: Conclusion
Chapter 6: Bibliography
CHAPTER -1
INTRODUCTION
Company Profile
The Company made the join venture between a Lever group company and Nissin
of Japan in the year 1998, and its products were distributed through HLL's
channels. During the year 2000, the company made a tie up with the International
Association of Trichologists (IAT), a non-profit organisation based in Australia. In
the identical year, ML had launched Parachute Dandruff Solution Coconut Hair Oil
in Calcutta, the first oil to combine coconut oil with antidandruff properties in
single hair oil. After a year, in 2001, the company had introduced the Revive Anti-
Bacteria starch. Marico had acquired a controlling equity interest in Sundari LLC
during the period of 2003. High Court of Judicature at Bombay approves the
Scheme of Amalgamation of Anandita Arnav Trading & Investment Private Ltd,
Madhav Nandini Trading & Investment Private Ltd, Rajvi Rishabh Trading &
Investment Private Ltd and Rishabh Harsh Trading & Investment Private Ltd with
the company on 12th February 2004. In the same year of 2004, the company had
forayed into the beauty products segment with the launch of Silk-n-Shine, a post-
wash hair care product. During the year 2006, Marico had acquired Hindustan
Lever Limited's Nihar for the consideration of Rs 216 crores.
Type Public
Traded as BSE: 531642
NSE: MARICO
Industry Consumer goods
Predecessor Bombay Oil Industries Limited (BOIL)[1]
Founded 2 April 1990; 31 years ago
Founder Harsh Mariwala
Headquarters Santacruz, Mumbai, Maharashtra, India
Area served Worldwide
Key people Harsh Mariwala (Chairman)[2]
Saugata Gupta (MD & CEO)[3]
Products Personal care
Skin care
Convenience food
Revenue ₹7,439 crore (US$1.0 billion) (2020)[4]
Operating ₹1,424 crore (US$200 million) (2020)[4]
income
Net income ₹1,043 crore (US$150 million) (2020)[4]
Total assets ₹5,002 crore (US$700 million) (2020)[4]
Total equity ₹2,869 crore (US$400 million) (2020)[4]
Website www.marico.com
History of Marico Pvt. Ltd.
2017– Marico acquires South Africa's leading hair styling business
– Isoplus; launches Saffola Active Slimming Nutri-shake (marking
entry into nutraceuticals category) and makes a strategic
investment in Zed Lifestyle (Beardo)
Research Design
Research design is a comprehensive plan of the sequence of operation that a
researcher intends to carryout to achieve the objective of a research study and
provides the blueprint of the entire process involved in conducting a research. This
research is descriptive to determine the various process of Financial Analysis.
Data Collection
Data collection means collection of information, facts or figure for the problem.
Because of the uniqueness of research, the researcher collected secondary sources
of data for the study.
Secondary data is collected by others already and the researcher is using that
information for his own research purpose. In this study, data was collected through
online survey..
Sampling
In the present study purposive sampling was adopted. So that four berths were
chosen out of nineteen berths presently actively running for the operation purpose
by consulting with the Financial department of Marico Pvt. Ltd.
Data Analysis
Data analysis is a significant function of the study. After collection of data, the
researcher focused in his attention on analysis and interpretation. For analyzing
data, it involves data processing and data analysis. The study used simple
tabulation and cross tabulation for presenting findings. Also suitable charts were
used to present the data graphically.
Objective of study
Based on the inputs from the various literature studies, a research study was carried
out with the following objectives:
The main objective of the study is to find out the financial Statement Analysis of
Marico Pvt. Ltd.
Also know about the Balance Sheet, Profit & Loss account & also know the Asset
& Liability of the Marico Pvt. Ltd.
.
Literature review
The Literature review of this study will emphasis on the related studies on
comparing and analyzing financial statements to make an investment.
The basis of financial planning analysis and decision making is the financial
information (Statements). Financial statements are needed to predict, compare and
evaluate a firm’s earning ability. It is also required to aid in economic decision
making investment and financing decision making. The use of financial statement
analysis in investment decision has been addressed by a series of authors.
If the inflation rate is relatively high, the amounts associated with assets and
liabilities in the balance sheet will appear inordinately low, since they are not
being adjusted for inflation. This mostly applies to long-term assets.
Analysis
&
interpretation
Marico Limited is one of India's leading consumer goods companies providing
consumer products and services in the areas of health, beauty and wellness. With
its headquarters in Mumbai, Maharashtra, India, Marico is present in over 25
countries across Asia and Africa. Harsh Mariwala is the Chairman and Saugata
Gupta assumed the role of the Managing Director in March 2014 and is currently
the MD and CEO of this organisation. Marico Limited was established on 13th
October 1988 under the name of Marico Foods Limited. Later in 1989 the name of
the company was changed from Marico Foods Limited to Marico Industries
Limited. The first International office for Marico was set up in Dubai in year 1992.
Marico was first listed on Indian stock exchange in 1996.
Value added
CONSUMERS
The wealth of the Company is created by the patronage of consumers. The primary
focus of our efforts will be to understand what adds greatest value to them. We will
understand and respond to changing needs and desires of the consumer; and
translate these into marketable products and an ever–expanding base of loyal
consumers, with speed and a quality of response that surpasses the competition.
MEMBERSHIP
Wholesome membership is when a person brings his or her entire being into the
organisation. We will allow space for diversity and encourage genuine expression
of feelings, opinions and viewpoints. Equally important is the ability to listen
without bias and alter one’s view based on soundness. Interpersonal transactions
will be characterised by trust, empathy, faith, fairness and respect. Membership
gives each member a role in articulating and shaping the destiny of the
organisation which in turn builds commitment and ownership. We will encourage
teamwork and a shared approach to results as it promotes synergy, removes
communication barriers and improves the overall quality of decisions and
performance. Public acknowledgement creates recognition and also spurs others.
We will spontaneously recognise and appreciate both individuals and teams for
their contributions reflected in rising standards of performance.
EXCELLENCE
We will focus on policies and practices where people produce consistently superior
performance and where people are encouraged to discover their untapped potential.
Competent members will be careered through increased and varied role
responsibilities. They will be attractively compensated based on personal and
collective accomplishment.
WEALTH
All our efforts must culminate in the creation of wealth. We will do so by
continuously adding value in everything we do through a variety of methods. We
will use resources productively, eliminate waste, reduce cycle times and costs and
enhance the consumer base.
INNOVATION
The future of our organization rests on our willingness to experiment, push in new
and untested directions, think in uncommon ways and take calculated risks.
Continuous improvement should be a part of everyday work. We must also
innovate to achieve dramatic results. Members will be encouraged to experiment
and take calculated risks where necessary. We acknowledge that failure is inherent
in any new initiative. We will commit resources for experimentation and invest in
processes for reviewing and sharing of learning.
Brands:-
INDIA:-
Coconut Oil
Hair Oil
Anti Hairfall
Skincare
△ Parachute Advansed
Men Aftershower Hair
Cream
Healthy Foods
BANGLADESH:-
Coconut Oil
Hair Care
Skincare
Male Grooming/Styling
Foods
SOUTH AFRICA :-
Hair Care
△ Caivil
△ Black Chic
△ IsoPlus Healthcare
△ Hercules
△ Ingwe
VIETNAM :-
Male Grooming
△ X-Men Range
△ Thuan Phat
MALAYSIA
Male Grooming
△ Code 10
MYANMAR
Male Grooming
Hair Care
Financial Stement:-
The term ‘financial analysis’, also known as analysis and interpretation of financial
statements’, refers to the process of determining financial strengths and
weaknesses of the firm by establishing strategic relationship between the items of
the balance sheet, profit and loss account and other operative data.
Financial Analysis
Horizontal Analysis
Vertical Analysis
Trend Analysis
Liquidity Analysis
Leverage Analysis
Profitability Analysis
Scenario & Sensitivity Analysis
Variance Analysis
Valuation Analysis
Horizontal Analysis
Pros – It helps to analyze the growth of the company from year on year or quarter
on quarter with the increase in operations of the company.
Cons – The company operates in the industrial cycle, and if the industry is
downgrading in spite of the company is performing better, due to specified factors
that affect the industry, trend analysis will
show negative growth in the company.
Vertical Analysis
For example, in Income Statement, to disclose all the line items in percentage form
by taking base as Net sales. Likewise, in the Balance sheet on the asset side to
disclose all the line items in the percentage form of total assets.
Pros – The vertical analysis helps in comparing the entities of different sizes, as it
presents the financial statements in absolute form.
Cons – It represents the data of a single period only, so miss comparison across
different time phase
Trend Analysis
Cons
Trend analysis helps the analyst to make a proper comparison between the two or
more firms over a period of time. It can also be compared with industry average.
That is, it helps to understand the strength or weakness of a particular firm in
comparison with other related firm in the industry.
Pros
It is not so easy to select the base year. Usually, a normal year is taken as the base
year. But it is very difficult to select such a base year for the propose of
ascertaining the trend. Otherwise, comparison or trend analyses will be of no value.
Liquidity Analysis
Liquidity Ratios consist of Current Ratio (Also known as Working Capital Ratio),
Quick Ratio (Also known as Acid Test), Operating Cash Flow Ratios, and
solvency ratio. The current ratio tells a company’s ability to pay off the debt
obligations. The quick ratio, also known as the acid test, is used for the same
purpose as the current ratio. The key difference is that Quick Ratio does not take
inventories into account. That means, it only takes cash and cash equivalent assets
like short-term investment securities to calculate Quick Ratio. Operating Cash
Flow Ratio shows how much strength a company has to cover all of its current
liabilities by the cash flow generated by the company’s operations.
The short-term analysis is carried out using the technique of ratio analysis, which
uses various ratios like liquidity ratio, current ratio, quick ratio, etc
Pros
Cons
The value of inventories changes over time, so ratio may change as well.
Leverage Analysis
Leverage ratios are one of the most common methods analysts use to evaluate
company performance. A single financial metric, like total debt, may not be that
insightful on its own, so it’s helpful to compare it to a company’s total equity to get
a full picture of the capital structure. The result is the debt/equity ratio.
Debt/equity
Debt/EBITDA
EBIT/interest (interest coverage)
Dupont analysis – a combination of ratios, often referred to as the pyramid
of ratios, including leverage and liquidity analysis
Profitability Analysis
Gross margin
EBITDA margin
EBIT margin
Net profit margin
Scenario & Sensitivity Analysis
Building scenarios and performing sensitivity analysis can help determine what the
worst-case or best-case future for a company could look like. Managers of
businesses working in financial planning and analysis (FP&A) will often prepare
these scenarios to help a company prepare its budgets and forecasts.
Variance Analysis
Valuation Analysis
2012 2011
PROFIT & LOSS OF MARICO PVT. LTD.(2 YEARS) 2011- 2012
2012 2011
HORIZONTAL ANALYSIS
In general if current ratio is greater than its industry average then it is good for the
company.
Current ratio shows a firm’s ability to cover its current liabilities with its current
assets.
From the analysis, we can see that in 2012 the current ratio is 2.39 times of the
Marico Ltd whereas the Industry average is 2.01 times. It indicates that company
current ratio is in a
stronger position and the company has sufficient cash liquidity to meet its short-
term liquidity. This shows that Marico current ass ets are rising faster than current
liabilities. A higher current ratio is preferable.
VERTICAL ANALYSIS
In general, higher quick ratio is preferable than lower ratio. From the data above
, the industry‟saverage quick ratio is 0.9 times whereas the Marico‟s quick ratio is
1.26 times.
The comparison between the years 2011 and 2012 reveals that their quick ratio has
substantially decreased during the year. An in-depth analysis into the financial
statement shows that inventory has increased substantially and in contrast to the
current ratio, there is an overall reduction in the quick ratio.
So it indicates that if the quick ratio is lower that means the industry’s profit
margin was not so high that they can make some investments paying off the
liabilities that could result in an increase in assets and decrease in liabilities to
make the liquidity position far better.
Inventory Turnover Ratio
In general higher turnover ratio is better than lower. Inventory Turnover indicates
thee effectiveness of the inventory management practices of the firm.
From the analysis, it has clearly shows that Marico has relatively lower inventory
turnover ratio than industry. It indicates that the inventory level is higher that may
point to over stocking or deficiencies in the product line or marketing effort. High
inventory levels are unhealthy because they represent an investment with a zero
rate of return in addition to the increased cost associated with maintaining those
inventories. It also opens the company up to trouble should prices begin to fall.
The comparison with the past years projects a significant reduction in this ratio.
However further analysis shows that they have increased levels of inventory with
increased cost of which in turn decreases the overall ratio. An assumption can be
suggested, that increase prices in the commodities of especially raw materials
may be the cause of this increase
FIXED ASSET TURNOVER RATIO
The fixed asset turnover ratio indicates how efficiently the fixed assets are used to
generate sales. In contrast to the performance of the previous year it can be seen
that the fixed asset turnover ratio of Marico Bangladesh Limited has reduced.
A deeper analysis of the financial statements shows that the company has
purchased many fixed assets in 2012
and there also has been substantial addition during the year. In contrast to the
industry average the figures seem appropriate but it must increase its revenue to
increase this ratio
DEBT RATIO ANALYSIS
The debt ratio of Marico is 0.38, which suggests that 38 percent of their total assets
are their total liabilities. In contrast to their previous year’s ratio of 0.46, this is a
very positive sign for the company.
Their ratio is also better than the industry average which is also good for the
overall image of the company as this attribute increases the shareholder’s
confidence.
RETURN EQUITY RATIO
In general return on equity is the rate of return on the share holder equity. Higher
return on Equity is better than lower and vice versa. From the analysis, it shows
that Marico’s has higher return on equity than industry.
However in contrast to the previous year the ROE has drastically decreased and
the possible cause of this occurrence is the lower net income of 2012
Calculations
CHAPTER-3
FINDINGS
Current assets Ratio are decreased in two years.
Marico Bangladesh Limited must control costs and increase their efficiency. The
distribution expenses must be decreased and some of their product lines must be
scrutinized for improvement. They should spend more efficiently in their
marketing in order to increase their customer base. They should focus more on the
products which have a declining market.
Their products compete in a highly competitive market and hence a slight loss of
market share can cause massive damages to their financial statements. In order to
cope up in the FMCG segment of the market Marico must spend more on their
marketing and promotion activities.
CHAPTER-5
CONCLUSION
The data analysis reveals some valuable findings pertinent to the financial
statements of Marico Limited. It can be observed that overall the ratios may have
declined to some
extent but they can surely be improved. The liquidity ratios have decreased in gene
ral but the currentratio has improved due to decrease in current assets. The
efficiency ratios have decreased as well due to the increase in fixed assets and the
profitability ratios has declined overall due to increased expenditures in the
plant and distribution expenses. Hence is can be stated that high turnover does not
generally indicate a good financial position.
CHAPTER-6
BIBILOGRAPHY
https://marico.com/
https://en.wikipedia.org/wiki/Marico
https://www.capitalmarket.com/Company-Information/Information/About-
Company/Marico-Ltd/12585
https://www.moneycontrol.com/financials/marico/ratiosVI/M13
https://byjus.com/commerce/5-limitations-of-financial-analysis/
https://economictimes.indiatimes.com/marico-ltd/stocks/companyid-5886.cms
https://www.business-standard.com/company/marico-12585/information/company-
history