2010 HIMALEE

KANDWAL FINANCIAL RATIO ANALYSIS

BIOCON

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BIOCON DRIVING AFFORDABILITY

INNOVATION,

DELIVERING

Over the last decade, Biocon has persisted along the high road to innovation.While pharma and biotech industries were grappling with methods to stem the exorbitant cost of drug development, Biocon had initiated an innovation strategy rooted in affordability.With lower priced drugs in the market, the cost of medical insurance can be driven down, thereby making healthcare coverage affordable and accessible to more. Biocons innovation led strategy focuses on delivering better health care solutions to meet the growing expectations and medical requirements of Indias patient population.

RATIO ANALYSIS OF BIOCON

Ratio Analysis As on Return Related Return on Total Assets (%) Return on Networth (%) Return on Capital Employed (%) Profitability 31-Mar-10 31-Mar-09 31-Mar-08

8.60 14.80 10.90

7.40 14.70 9.20

15.30 16.80 17.80

Profit Margin (%) Asset Turnover(x) Leverage Debt/Equity ratio (x) Interest Coverage (x)

12.40 0.60

52.30 0.60

18.60 0.80

0.10 42.50

0.10 63.10

0.10 27.50
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Liquidity Current Ratio (x) Quick Ratio (x) Inventory Turn Over Ratio

2.18 1.69 4.82

2.29 1.71 4.91

1.91 1.30 5.19

Cash Flow Indicator Operating Cash Flow/Sales (%) Per Share Book Value Per Share (Rs) Earnings Per Share (Rs) Dividend Per Share (Rs) Growth(%) Total Operating Income EBITDA EBIT Net Profit Total Assets

12.80

31.80

13.70

66.80 5.80 3.00

130.00 22.50 5.00

88.90 16.40 3.00

8.58 15.92 21.01 -74.29 4.49

-2.22 -19.33 -32.84 174.66 38.94

23.78 24.58 6.05 18.63 16.25

PROFITABILITY RATIOS: These ratios measure the degree of operating success of a company. 1. PROFIT MARGIN: YEAR Profit Margin MARCH 2010 12.40 MARCH 2009 52.30 MARCH 2008 18.60

This ratio measures the amount of net profit earned by each rupee of revenue.The ratio shows that profit margin decreased from 18.60 in 2008 to 12.40 in 2010.The profit margin ratio
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provides some indication of the cushion available to the company in the event of an increase in costs or a drop in sale prices in the face of a recession or of greater competition.

2.ASSET TURNOVER:

YEAR Asset Turnover

MARCH 2010 0.60

MARCH 2009 0.60

MARCH 2008 0.80

This is a measure of a firms efficiency in utilizing its assets .It indicates how many times the assets were turned over in a period and thereby generated sales. The asset turnover ratio decreased from 0.80 in 2008 to 0.60 in 2010.This indicates that Biocon is not managing its assets efficiently.

3.EARNINGS PER SHARE: YEARS Earnings per share MARCH 2010 5.8 MARCH 2009 22.50 MARCH 2008 16.40

EPS is an important measure of profitability .It is useful in comparing performance over time. Since it has decreased from Rs.16.40 in 2008 to Rs.5.80 in 2010 that means company is not showing an upward trend ad not performing well.

4.RETURN ON ASSETS/RETURN ON INVESTMENTS: YEARS MARCH 2010 MARCH 2009 MARCH 2008
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Return on Assets(%)

8.60

7.40

15.30

This is a measure of profitability from a given level of investment.It is an excellent indicator of companys overall performance..Biocons return on investment decreased from 15.3% in 2008 to 8.6% in 2010 indicating a decreasing trend in overall profitability of the company.

LIQUIDITY RATIOS: Liquidity is the ability of a business to meet its short-term obligations when they fall due. An enterprise should have enough cash and other current assets which can be converted into cash so that it can pay its suppliers and lenders on time. YEARS Current Ratio MARCH 2010 2.18 MARCH 2009 2.29 MARCH 2008 1.91

1.CURRENT RATIO: This ratio is widely used indicator of a companys ability to pay its debts in the short-term. It shows the amount of current assets a company has per rupee of current liabilities. The increase in current ratio of Biocon from 1.91in 2008 to 2.18 in 2010 means that it had more current assets to meet its current liabilities in 2010 when compared to 2008.This is a good news for the companys short term creditors. and shareholders. 2.QUICK RATIO YEARS QUICK RATIO MARCH 2010 1.69 MARCH 2009 1.71 MARCH 2008 1.30
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This ratio relates relatively more liquid current assets, usually current assets less inventories, to current liabilities. Ideally this should be 1:1 which means that the firm must have at least as much liquid assets as its current obligations so that it will have no difficulty in paying those obligations. Clearly we can see that it is more than one and improved from 2008 to 2010.

3.INVENTORY TURN OVER RATIO YEARS Inventory turn over ratio MARCH2010 4.82 MARCH 2009 4.91 MARCH 2008 5.19

This ratio shows the number of times a companys inventory is turned into sales. High inventory turnover is a sign of efficient inventory management. The lower inventory in 2010 as compared to 2008 shows that Biocon is not managing its inventory properly.

SOLVENCY RATIO :The long term solvency of a business is affected by the extent of debt used to finance the assets of company. The presence of heavy debt in a companys capital structure reduces the companys solvency because debt is more risky than equity. YEARS Debt-to-equity ratio MARCH 2010 0.10 MARCH 2009 0.10 MARCH 2008 0.10

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1.DEBT-TO-EQUITY RATIO: This ratio measures the relationship of the capital provided by creditors to the amount provided by shareholders. In this debt includes both short term and long term debts but not operating liabilities .This ratio indicates the extent of use of financial leverage .A high debt- to- equity ratio indicates aggressive use of leverage, and a highly leveraged company is more risky for creditors. A low ratio, on the other hand indicates that the company is making little use of leverage and is too conservative. The debt-to-equity ratio of Biocon is consistent since 2008 till 2010 and company has maintained it as low as possible.

2.INTEREST COVERAGE YEARS Interest Coverage MARCH 2010 42.50 MARCH 2009 63.10 MARCH 2008 27.50

This is a measure of the protection available to creditors for payment of interest charges by the company. The ratio shows whether the company has sufficient income to cover its interest requirements by a wide margin. A high ratio implies adequate safety for payment of interest even if there were to be a drop in the companys earnings. We see that there is an increase in interest cover ratio from 2008 to 2010 which may be due to less amount of interest bearing debt.

PER SHARE RATIO YEARS Dividend per Share MARCH 2010 3.00 MARCH 2009 5.00 MARCH 2008 3.00

1.DIVIDEND PER SHARE: Dividend are a form of profit distribution to the shareholder. Having a growing dividend per share can be a sign that the companys management believes that

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the growth can be sustained. It is the amount of the dividend that shareholder have or will receive for each share that they own. Dividend per share is used to calculate Dividend Yield.

2.BOOK VALUE PER SHARE YEARS Book Value per Share MARCH 2010 66.80 MARCH 2009 130.00 MARCH 2008 88.90

It is a measure used by owners of common shares in firm to determine the level of safety associated with each individual share after all debts are paid accordingly. It gives a fair idea of what a common shareholder can claim from the company because of holding the shares. It lets us to know whether a stock is undervalued or overvalued at any point of time.

OPERATING CASH FLOW/SALES(%): YEARS Operating Cash Flow/Sales(%) MARCH 2010 12.80 MARCH 2009 31.80 MARCH 2008 13.70

Percentage measure of a firms ability to current sales into cash and an important indicator of its credit worthiness and productivity. A high number indicates that the firm is be able to grow because it has sufficient cash flow to finance additional production whereas a low number indicates the opposite. Here we see a declining trend.
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EARNING RETENTION RATIO YEARS Earning Retention Ratio MARCH 2010 69.59 MARCH 2009 65.47 MARCH 2008 69.35

The earning retention ratio (ability to keep profit and pay to shareholders)is a way to calculate what percentage of earnings are returned to shareholders. By comparing with the last year ER Ratio ,the trend will show what the general direction the company is taking in regards to dividends. If trend is declining, it is paying more to shareholders. If trend is growing, it is using more of earnings for companys expenses/expansion. Here we observe that it has grown from last year. REFERENCES: Financial Accounting-A Management Perspective by R.Narayanswamy www.moneycontrol.com www.rediffmoneywiz.com

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