University of Liberal Arts Bangladesh

Course Title- Security Analysis and Portfolio Management Course Code- BUS422

Term Project

Topic- Financial Analysis on Renata

Submitted toName Shubhankar Shil Designation-Course Teacher

Submitted BySirajum Munira -081011047 Amzadur Rahaman -091011110 Firoz Nakib -091011108

Type Industry Founded Headquarters Key people Website

Limited Company Pharmaceutical 1993 Mirpur, Dhaka, Bangladesh Syed S Kaiser Kabir - CEO www.renata-ltd.com

Renata Limited (formerly Pfizer Laboratories (Bangladesh) Limited), also known as Renata, is one of the top ten (in terms of revenue) pharmaceutical manufacturers in Bangladesh. Renata is engaged in the manufacture and marketing of human pharmaceutical and animal health products. The company also manufactures animal therapeutics and nutrition products. Renata currently employs about 2300 people in its head office in Mirpur, Dhaka and its two production facilities in Mirpur, Dhaka and Rajendrapur, Dhaka.

History
The company began its operations as Pfizer (Bangladesh) Limited in 1972. For the next two decades it continued as a subsidiary of Pfizer Corporation. However, by the late 1990s the focus of Pfizer had shifted from formulations to research. In accordance with this transformation, Pfizer divested its interests in many countries, including Bangladesh. Specifically, in 1993 Pfizer transferred the ownership of its Bangladesh operations to local shareholders, and the name of the company was changed to Renata Limited. At present, Renata manufactures about 300 generic pharmaceutical products including hormones, contraceptives, anti-cancer drugs, oral preparations, cephalosporins, parenteral preparations as well as other conventional drugs. In addition, they also offer about 95 animal therapeutics and nutrition products.

Financial Data
Renata is a publicly traded company on the Dhaka Stock Exchange (ticker: RENATA). In 2009, the companys annual turnover was about US $56 million, with an annual growth of about 35%.

Production Facilities
Recently, Renata Limited has received the UK MHRA approval for its Potent Product Facility . This facility currently manufactures hormone, steroid and cytotoxic drugs, and is exporting prednisolone to the UK. The company also operates four other manufacturing units the original Pfizer facility for general products, a UNICEF-approved SFF (Sachet Filling Facility), a Cephalosporin facility, and a Penicillin facility.

Partnerships
Recently, GAIN (The Global Alliance for Improved Nutrition) provided US$ 2.9 million to Renata Limited and BRAC, one of the biggest NGOs in the developing world, to build and operate an innovative business model to produce and deliver multi-nutrient powders to vulnerable infants in Bangladesh.

Export Markets
As of the third quarter of 2010, Renata exports its products to the UK, Afghanistan, Cambodia, Hong Kong, the Philippines, Jordan, Sri Lanka, Vietnam, Myanmar, Kenya, Belize, Nepal, Malaysia, and Guyana, with registration ongoing in 23 other countries. Customer Focus Customer satisfaction is the main

Values
Integrity- We conform to the highest ethical standards. Social Responsibility- We make active efforts to improve the welfare of our community. Building Leaders- Renata cannot grow without leadership in all spheres of our activities. Therefore creating leaders is a key priority. The Corporate Family- We recognize that people are the cornerstone of Renatas success. We are one big family where each of us expects to be treated fairly and with dignity.

Mission
To provide maximum value to our customers, and communities where we live and work.

Vision
To establish Renata permanently among the best of innovative branded generic companies.

Aproach to Quality
The endurance of a companys reputation depends upon the quality of work it does rather than the quantity. Hence, the appreciation of quality must be instinctive, and our commitment to quality must be total.

RENATA LIMITED BALANCE SHEET AS AT 31 DECEMBER 2009

Figures in Taka

ASSETS Non-current assets Property, plant and equipment Capital work-in-progress Investment in subsidiary Other investment Total non-current assets Current assets Inventories Trade and other receivables Advances, deposits and prepayments Cash and cash equivalents Total current assets Total assets EQUITY AND LIABILITIES Share capital Revaluation surplus Tax holiday reserve Retained earnings Total equity attributable to equity holders of the company Non-current liabilities Deferred liability-staff gratuity Deferred tax liabilities Total non-current liabilities Current liabilities Bank overdraft Creditors for goods Accrued expenses Other payables Unclaimed dividend Provision for taxation Total current liabilities Total liabilities Total equity and liabilities The annexed notes 1 to 34 form an integral part of these financial statements.

Notes
4 5 6 7

2009

2008

1,396,300,867 1,014,435,834 736,960,533 570,277,998 63,070,376 63,070,376 11,931,079 8,377,754 2,208,262,855 1,656,161,962

8 9 10 11

1,075,310,581 959,414,590 343,870,341 344,226,933 80,677,337 79,281,411 143,248,172 123,148,038 1,643,106,431 1,506,070,972 3,851,369,286 3,162,232,934

12 13 14

144,598,400 115,678,700 154,596,958 155,075,461 83,346,636 52,862,514 1,824,737,962 1,338,456,682 2,207,279,956 1,662,073,357

15 16

124,183,595 110,179,135 234,362,730

105,224,160 81,542,581 186,766,741

17

18 19

794,424,620 823,163,615 27,896,925 127,107,689 171,928,847 133,013,604 237,310,646 79,902,838 3,961,604 3,173,467 174,203,958 147,031,623 1,409,726,600 1,313,392,836 1,644,089,330 1,500,159,577 3,851,369,286 3,162,232,934

RENATA LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2009

Figures in Taka

2009
Note Turnover Cost of sales Gross profit Other income 22 20 21 Non-tax holiday Unit 1 2 & 3 3,675,744,434 (1,751,040,817) 1,924,703,617 8,050,515 1,932,754,132 Operating expenses: Administrative, selling and distribution expenses Operating profit Gain on disposal of property, plant and equipment Interest on over draft Other expenses Contribution to WPPF Profit before tax Tax expenses Current tax Deferred tax 19 16 (190,711,707) (28,793,936) (219,505,643) Net Profit after tax for the year Basic earnings per share (par value of Tk 100) 24 417.38 527,314,148 76,210,304 (190,711,707) (28,793,936) (219,505,643) 603,524,452 4.5 23 (1,049,389,251) 883,364,881 930,500 (93,771,701) (6,362,900) (37,340,989) 746,819,791 (69,379,544) 86,152,376 (5,741,937) (389,620) (3,810,515) 76,210,304 (1,118,768,795) 969,517,257 930,500 (99,513,638) (6,752,520) (41,151,504) 823,030,095 Tax holiday Unit 4 224,987,880 (69,455,960) 155,531,920 155,531,920 Total 3,900,732,314 (1,820,496,777) 2,080,235,537 8,050,515 2,088,286,052

2008
Total 3,089,746,417 (1,526,514,685) 1,563,231,732 15,420,344 1,578,652,076

(845,169,923) 733,482,153 118,000 (87,270,665) (5,913,520) (30,496,000) 609,919,968

(166,444,936) (10,329,228) (176,774,164) 433,145,804

299.55

RENATA LIMITED FINANCIAL HIGHLIGHT(Figures in Taka. 000)

Particulars
SUMMARY BALANCE SHEET
Shareholders Equity Share Capital Proposed stock dividend Proposed cash dividend Revaluation surplus Tax holiday reserve Unappropriated profit Shareholders Fund Long term & deferred liabilities Total Application of Funds Property, plant and equipment -WDV Investment & Non-current assets Current Assets Current Liabilities Total 180,748 45,187 108,449 154,118 124,166 2,358,802 2,971,470 291,256 3,262,726 2,928,571 122,035 2,063,325 (1,851,205) 3,262,726 144,598 36,150 86,759 154,597 83,347 1,701,829 2,207,280 234,362 2,441,642 2,133,261 75,001 1,643,107 (1,409,727) 2,441,642 115,679 28,920 57,839 155,075 52,862 1,251,698 1,662,073 186,767 1,848,840 1,584,714 71,448 1,506,071 (1,313,393) 1,848,840 96,399 19,280 48,199 155,554 46,862 911,311 1,277,605 160,319 1,437,924 1,102,830 64,070 988,093 (717,069) 1,437,924 80,332 16,067 40,166 156,018 47,451 642,278 982,312 135,318 1,117,630 733,187 64,070 979,255 (658,882) 1,117,630

2010

2009

2008

2007

2006

FINANCIAL RESULTS
Turnover (Gross) Turnover (Net) Gross profit EBITDA Profit before taxation Profit after taxation Dividend 5,816,777 5,090,318 2,684,956 1,404,686 1,129,603 851,428 153,636 4,476,976 3,900,732 2,088,286 1,016,462 823,030 603,524 122,909 3,536,667 3,089,746 1,578,652 764,811 609,920 433,146 86,759 2,884,122 2,534,175 1,246,998 572,035 466,619 335,923 67,479 2,192,638 1,927,732 982,210 417,730 347,222 242,132 56,233

FINANCIAL PERFORMANCE
Number of shares Earning per share (Taka) Dividend per Share adjusted (Taka) Dividend payout % Effective Dividend Rate % Price Earning Ratio - (PER) Market price per share on 31 December Price/Equity Ratio (Times) Return on Shareholders Fund % Current Ratio-(Times) Net operating cash flow per share (Taka) Net assets value per share (Taka) 1,807,480 471.06 85.00 18.04 0.66 27.48 12,942.75 129.43 28.65 1.11 434.89 1,643.99 1,445,984 333.90 85.00 25.46 0.71 36.09 12,051.50 120.52 27.34 1.17 415.54 1,221.19 1,156,787 239.64 75.00 31.30 0.96 32.50 7,789.25 77.89 26.06 1.15 120.32 919.55 963,989 185.85 70.00 37.66 0.93 40.31 7,491.25 74.91 26.29 1.38 239.64 706.84 803,324 133.96 70.00 52.25 2.26 23.14 3,099.25 30.99 24.65 1.49 38.28 543.47

Number of employees

3,115

2,667

2,213

1,726

1,596

RENATA LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2010 2010
Non-tax holiday Unit 1, 2 & 3 Tax holiday units Potent products facility Cepha plant (up to August)

2009

Notes

Total

Total

Turnover Cost of sales Gross profit Other income

20 21 22

4,217,380,255 (2,009,299,409) 2,208,080,846 5,945,247 2,214,026,093

209,145,593 663,792,265 5,090,318,113 (64,546,715) (331,515,852) (2,405,361,976) 144,598,878 332,276,413 46,870 144,645,748 332,276,413 2,684,956,137 5,992,117 2,690,948,254

3,900,732,314 (1,820,496,777) 2,080,235,537 8,050,515 2,088,286,052

Operating expenses: Administrative, selling and distribution expenses 23 Operating profit Gain on disposal of property, 4.5 plant and equipment Interest on over draft Other expenses Contribution to WPPF Profit before tax Tax expenses Current tax Deferred tax 19 16

(1,153,003,182) 1,061,022,911 593,908 (97,040,717) (8,658,113) (45,519,904) 910,398,085

(60,666,545) (164,960,893) (1,378,630,620) 83,979,203 167,315,520 1,312,317,634 593,908 (4,082,000) (16,350,958) (117,473,675) (340,800) (355,223) (9,354,136) (3,788,400) (7,171,873) (56,480,177) 75,768,003 143,437,466 1,129,603,554

(1,118,768,795) 969,517,257 930,500 (99,513,638) (6,752,520) (41,151,504) 823,030,095

Net Profit after tax for the year Basic earning per share (par value of Tk 100)

(235,480,759) (42,694,263) (278,175,022) 632,223,063

75,768,003

143,437,466

(235,480,759) (42,694,263) (278,175,022) 851,428,532

(190,711,707) (28,793,936) (219,505,643) 603,524,452

24

471.06

333.90

The annexed notes 1 to 35 form an integral part of these financial statements.

RENATA LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2010
Share capital Revaluation surplus Tax holiday reserve Retained earnings Total equity

Balance as at 01 January 2009 Stock dividend issued Cash dividend paid Deferred tax on revaluation surplus

115,678,700 28,919,700 144,598,400

155,075,461 157,382 (635,885) 154,596,958

52,862,514 1,338,456,682 30,484,122 (28,919,700) (57,839,350) 603,524,452 (30,484,122)

1,662,073,357 (57,839,350) 157,382 (635,885) 603,524,452 2,207,279,956

Depreciation adjustment on revaluation surplus Net profit after tax for the year Tax holiday reserve Balance at 31 December 2009

83,346,636 1,824,737,962

Balance at 01 January 2010 Stock dividend issued Cash dividend paid Deferred tax on revaluation surplus

144,598,400 36,149,600 -

154,596,958 157,382 (635,885) -

83,346,636 1,824,737,962 87,682,188 (36,149,600) (86,759,041) 851,428,532 (87,682,188)

2,207,279,956 (86,759,041) 157,382 (635,885) 851,428,532

Depreciation adjustment on revaluation sur-plus Net profit after tax for the year Tax holiday reserve -

Tax holiday reserve reversed Balance at 31 December 2010 180,748,000

(46,862,514)

46,862,514 2,971,470,944

154,118,455 124,166,310 2,512,438,179

RENATA LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 SEPTEMBER 2011
2011 ( Taka in 000's 2010 Taka in 000's

ASSETS Non-current assets Property, plant and equipment (WDV) Capital work-in-progress Long term Investment, loans and advances Total non-current assets Current assets Inventories Debtors Advance, deposits and prepayments Cash and cash equivalent Total current assets Total assets EQUITY AND LIABILITIES Equity attributable to equity holders of the company Share capital Tax holiday reserve 225,935 124,166 180,748 124,166 1,600,164 547,503 116,375 512,667 2,776,709 7,129,187 1,295,855 478,365 110,722 178,384 2,063,326 5,113,932 2,839,068 1,423,482 89,928 4,352,478 2,564,572 363,998 122,036 3,050,606

Revaluation surplus Retained earnings Total equity attributable to equity holders of the company Non-current liabilities Deferred liability-staff gratuity Deferred tax liability Total non-current liabilities Current liabilities Bank overdraft Creditors and accruals Total current liabilities Total equity and liabilities

154,118 3,219,695 3,723,914

154,118 2,512,438 2,971,470

173,569 152,716 326,285

138,540 152,716 291,256

1,873,049 1,205,939 3,078,988 7,129,187

1,129,414 721,792 1,851,206 5,113,932

Statement of Comprehensive Income for the period January-September 2011 Unaudited

2011 (JanuarySeptember) Taka ( in 000's Turnover and other income Cost and Expenses: Cost of goods sold Administrative expenses Selling and distribution expenses Interest expenses and non operating expenses Allocation to WPPF Total Cost and Expenses Net Profit before tax Provision for income tax Net profit after tax 2,219,942 159,874 1,315,646 143,060 57,307 3,895,829 1,146,149 285,256 860,893 5,041,978

2010 JanuarySeptember)

2011 (JulySeptember)

2010 (JulySeptember)

Taka in 000's Taka in 000's Taka in 000's 3,921,518 1,558,866 1,432,390

1,773,046 102,926 1,044,077 94,727 43,178 3,057,954 863,564 233,162 630,402

624,661 46,945 428,122 37,892 19,846 1,157,466 401,400 97,671 303,729

649,756 38,749 372,156 27,547 16,815 1,105,023 327,367 89,108 238,259

Basic earnings per share i.e.EPS (par value of Tk 100)

381.04

279.02

134.43

105.45

Particulars

2013
SUMMARY BALANCE SHEET

2012

2011

Estimated
Shareholders Equity Share Capital Proposed stock dividend Proposed cash dividend Revaluation surplus Tax holiday reserve Unappropriated profit Shareholders Fund Long term & deferred liabilities Total Application of Funds

Estimated 305464.1 76366.03 183278.8 260459.4 209840.5 3986375 5021784 492222.6 5514007 0 4949285 206239.2 3487019 -3128536 5514007 0 0 9830353 8602637 4537576 2373919 1909029 1438913 259644.8 0 0 234972.4 58743.1 140983.7 200353.4 161415.8 3066443 3862911 378632.8 4241544 0 3807142 158645.5 2682323 -2406567 4241544 0 0 7561810 6617413 3490443 1826092 1468484 1106856 199726.8 0

397103.4 99275.84 238262.5 338597.2 272792.7 5182288 6528320 639889.4 7168209 0

Property, plant and equipment -WDV Investment & Non-current assets Current Assets Current Liabilities Total

6434070 268110.9 4533125 -4067097 7168209 0 0 12779459 11183429 5898848 3086095 2481738 1870587 337538.3 0

FINANCIAL RESULTS
Turnover (Gross) Turnover (Net) Gross profit EBITDA Profit before taxation Profit after taxation Dividend

FINANCIAL PERFORMANCE
Number of shares Earning per share (Taka) Dividend per Share adjusted (Taka) Dividend payout % Effective Dividend Rate % Price Earning Ratio - (PER)

3971034 1034.919 186.745 39.63388 1.45002 60.37356

3054641 796.0914 143.65 30.4876 1.1154 46.4412

2349724 612.378 110.5 23.452 0.858 35.724

Market price per share on 31 December

28435.22
Price/Equity Ratio (Times) Return on Shareholders Fund % Current Ratio-(Times) Net operating cash flow per share (Taka)

21873.25 218.7367 48.4185 1.8759 734.9641 2778.343 5264.35

16825.58 168.259 37.245 1.443 565.357 2137.187 4049.5

284.3577 62.94405 2.43867 955.4533

Net assets value per share (Taka)

3611.846
Number of employees

6843.655

From figures found on the income statement and the balance sheet, one can calculate the following types of financial ratios: 1. Profitability ratios 2. Activity ratios 3. Leverage ratios 4. Liquidity ratios

1. Profitability Ratios: How Profitable is the Company? Profitability is a necessity over the long run, for the level of profitability strongly influence (1) the companys access to debt finance, (2) the valuation of the companys common stock, (3) the companys willingness to issue common stock, and (4) the companys sustainable growth rate. One measure of the profitability of a business is profit as a percentage of sales, as determined by the profitability ratio equation: in 2011.

Net profit after taxes 1438913 = 8602637 = 16.7 percent Net Sales

The information necessary to determine a companys profit as a percentage of sales can be found in the companys Chairmans Statement.

1. Renata profit as a percentage of sales for 2011 was $1438913 divided by $8602637, or 16.7%. 2. This represented an increase/decrease from 25.5% in 2012. 3. The deterioration in profitability resulted from an increase/decrease in cost of goods sold as a percentage of sales, and from an increase/decrease in operating expenses as a percentage of sales. The only favorable factor was the decrease in the expenses. 4. Renata had a total of $4241544of capital at year-end 2011 and earned before interest but after taxes (EBIAT) $1106856 during 2011. Its return on invested capital is calculated as follows:

Earnings before interest but after taxes (EBIAT) 1106856 = 3862911 = 28.65% Owner's equity plus interest-bearing debt

In 2011 this figure was 30%, which represented an increase (approximately) from the 300% earned in 2006.

From the viewpoint of the shareholders, an equally important figure is the companys return on equity. Return on equity is calculated by dividing profit after tax by the owners equity. Profit after taxes 1438413 = = 28.6% Owners' equity 5021784

Return on equity =

Return on equity indicates how profitably the company is utilizing shareholders funds.

5. Renata had $3362911 of owners equity and earned $1106856 after taxes in 2011. Its return on equity was 28.65%, an improvement/ deterioration from the 24.64% earned in 2006. Net Income Sales Assets Salest Assets Equity 1106350 6017413 4241544 = 6017413 4241544 3862411 = 33.55%

ROE =

2. Activity Ratios: How Well Does a Company Employ Its Assets? The second basic type of financial ratio is the activity ratio. Activity ratios indicate how well a company employs its assets. Ineffective utilization of assets results in the need for more finance, unnecessary interest costs, and a correspondingly lower return on capital employed. Furthermore, low activity ratios or a deterioration in the activity ratios may indicate uncollectible accounts receivables or obsolete inventory or equipment.

Total asset turnover measures the companys effectiveness in utilizing its total assets and is calculated by dividing total assets into sales:

Net sales 6617413 = 4241544 = 1.56 time. Total assets

1. Total asset turnover for Renata in 2011 can be calculated by dividing $ 6617413 into $ 4241544. The turnover improved/deteriorated from 1.6 times in 2006 to 1.5 times in 2011.

2. A fourth and final activity ratio is the fixed asset turnover ratio, which measures the effectiveness of the company in utilizing its plant and equipment: Net sales 6617413 = 158645 = 41.711 times. Net fixed assets

3. Renata had net fixed asets of $ 158645 and sales of $ 6617413 in 2011. Its fixed asset turnover ratio in 2011 was 41.711 times, an improvement/deterioration from 30.08 times in 2006.

4. The deterioration in Renata operating profits as a percentage of total assets between 2006 and 2011 resulted primarily from companys activities is so good that we can see that the fixed asset turnover increase 41.7 from 30.08 with in 5 year.

3. Leverage Ratios: How Soundly Is the Company Financed? The third basic type of financial ratio is the leverage ratio. The various leverage ratios measure the relationship of funds supplied by creditors and the funds supplied by the owners. The use of borrowed funds by profitable companies will improve the return on equity. However, it increases the riskiness of the business and, if used in excessive amounts, can results in financial embarrassment.

On leverage ratio, the debt ratio, measures the total funds provided by creditors as a percentage of total assets: Total liabilities Total assets

2011= 3078988000/7129187000=0.43 2006= 794199946/1776512741=0.44

Total liabilities include both current and long-term liabilites.

1. The total liabilities of Renata as of December 31, 2011 were 44% of total assets. This represented an increase from 1% as of december 31, 2006.

4. Liquidity Ratios: How Liquid Is the Company? The fourth basic type of financial ratio is the liquidity ratio. These ratios measure a companys ability to meet financial obligations as they become current. The current ratio, defined as current assets divided by current liabilities. Current assets 2682323 = 2406567 = 1.11 Current liabilities

Assumes that current assets are much more readily and certainly convertible into cash than other assets. It relates these fairly liquid assets to the claims that are due within one year the current liabilities.

1. Renata held $ 2682323 of current assets at year-end 2011 and owed $ 1 to creditors due to be paid within one year. Its current ratio was 1.11, an improvement/deterioration from the ratio of 1.4 at year-end.