FINANCIAL ANALYSIS PROJECT

Financial statement analysis: Marico Bangladesh Limited and ACI Formulation Limited
The objective of this project is to link theory with applications in the real world by requiring students to analyze financial statements of actual companies listed in either the DSE or CSE. This project provides the opportunity to use corporate financial statements of actual companies for the purpose of analyzing the financial condition and trend indicators from the viewpoints of a potential investor, lending institution (bank), and the companys top management.
Developed by Sadek Jake Alam sadekjake@technoflame.com
Marico Bangladesh limited (MBL:Dhaka) and ACI Formulation Ltd (ACIF:Dhaka) are both listed under the category Pharmaceuticals and Chemicals in the Dhaka Stock Exchange. Marico Bangladesh Limited (MBL) holds a leadership position in the FMCG space. MBL recorded a turnover of Tk. 5,358 Million ( USD 73.4 Million) in 12 months ended on 30th September, 2010 and Tk. 2,846 Million ( USD 39 Million) in 6 months ended on 31st March, 2011. MBL is the subsidiary of the Indian multinational company, Marico Limited, India. ACI Formulation Limited (ACIF: Dhaka) is a subsidiary of the Bangladeshi conglomerate ACI limited. ACI FL manufactures majority of the products of ACI Strategic Business Limited except for the pharmaceutical Division. The factory is equipped with the state of the art facilities for product formulations and process innovation. The product range manufactured at ACI FL include Crop Protection Chemicals like Insecticides, herbicides and fungicides in granular, powder and liquid, mosquito pesticides in the forms of aerosols, vaporizers and coils house hold chemicals like toilet cleaners and hand wash. 3. Write a report that comments on the 3 -year trend for each of the relevant ratios and compare the two companies on the following (Please refer to Exhibit 1.0) for the ratios to be included in your three year computations (please use the most current years: 2008, 2009 and 2010): a) Investment opportunity from the viewpoint of a potential investor (emphasize profitability and financial leverage measures) b) Credit worthiness, from the viewpoint of a major bank to which the company has applied for a large loan (emphasize debt equity ratio, liquidity ratios, and refer to the companys ability to generate cash flows from operations).

c) Asset management, from the viewpoint of a critical board of directors (refer to activity measures). 4. Within each section of the report, incorporate a table that shows the relevant computational data and ratios for each of the three years in three adjacent columns, and shows the two companies in two successive rows. e.g. Current ratio: What is this ratio about, provide the formula, tabulate relevant financial data to compute the ratio, interpret the results: For example: Current ratio = Total Current Assets/ Total Current Liabilities

This computation must be followed by appropriate graphs and interpretations. 5. You are encouraged to use additional ratios that you find in the text or the web sites. Include graphs for trends as appropriate. Industry average information is not required but is desirable to be included if available to strengthen your analysis and interpretation of the companies. Be sure to include your interpretation for each financial ratio(s) computed. Please remember: Computations are not enough. You need to interpret the meaning of the ratios and other analyses. 6. Supplement your own financial analysis with relevant comments, graphs, and other data obtained from internet sources, such as www.investing.businessweek.com, www.dse.com.bd, etc. However, do not use information published by the companies themselves, since that information is likely to be biased and is not objective. 7. There is no requirement as to the number of pages; however, the project is expected to include company profiles, computations, analysis, graphs, interpretations etc. Font must be 12, double-spaced. The paper will be graded on the basis of writing quality, presentation, and content.

ACIF Total Current Assets Total Current Liabilities Current Ratio MBL Total Current Assets Total Current Liabilities Current Ratio

2008

2009

2010

2008

2009

2010

EXHIBIT 1.0 Profitability Ratios 1. Return on Assets 2. Return on Equity 3. Return on Capital Margin Analysis 1. Gross Margin 2. Levered Free Cash Flow Margin 3. EBITDA Margin Asset Turnover Analysis 1. Total Asset Turnover

2. Accounts Receivable Turnover 3. Fixed Assets Turnover 4. Inventory Turnover Credit Ratios 1. Current Ratio 2. Quick Ratio Long Term Solvency 1. Total Debt/Equity 2. Total Liabilities/Total Assets

Growth over Prior Year 1. Total Revenue 2. Tangible Book Value 3. EBITDA 4. Gross Profit 5. Receivables 6. Inventory 7. Capital Expenditures 8. Diluted EPS before extra 9. Cash from Operations 10. Levered Free Cash Flow

Financial Statements For ACI Formulation Ltd (ACIF)

Income Statements
Dec 31 2008 As of: BDT Dec 31 2009 Restated BDT Dec 31 2010 BDT

Currency in Millions of Bangladesh Taka

Revenues Total Revenues Cost Of Goods Sold Gross Profit Selling General & Admin Expenses, Total R&D Expenses Depreciation & Amortization, Total Other Operating Expenses Other Operating Expenses, Total Operating Income Interest Expense Interest And Investment Income Net Interest Expense Other Non-Operating Income (Expenses) Ebt, Excluding Unusual Items Other Unusual Items, Total Ebt, Including Unusual Items Income Tax Expense Earnings From Continuing Operations Net Income Net Income To Common Including Extra Items Net Income To Common Excluding Extra Items

2,093.5 2,093.5 1,688.0 405.5 61.2 ---61.2 344.2 -90.6 12.8 -77.8 4.9 271.4 -271.4 68.1 203.3 203.3 203.3 203.3

2,079.9 2,079.9 1,591.5 488.5 208.5 ---208.5 280.0 -74.3 0.2 -74.1 9.0 214.8 -214.8 54.5 160.3 160.3 160.3 160.3

1,924.4 1,924.4 1,482.9 441.5 254.2 1.3 1.9 0.8 258.2 183.2 -70.7 5.1 -65.5 6.4 124.1 -1.3 122.7 31.1 91.6 91.6 91.6 91.6

Financial Statements For ACI Formulation Ltd (ACIF)

Balance Sheets
Currency in Millions of Bangladesh Takas Dec 31 2008 BDT Dec 31 2009 Restated BDT Dec 31 2010 BDT

As of:

Assets Cash And Equivalents Total Cash And Short Term Investments Accounts Receivable Other Receivables Total Receivables Inventory Prepaid Expenses Other Current Assets Total Current Assets Gross Property Plant And Equipment Accumulated Depreciation Net Property Plant And Equipment Long-Term Investments Total Assets liabilities & equity Accounts Payable Accrued Expenses Short-Term Borrowings Current Portion Of Long-Term Debt/Capital Lease Current Income Taxes Payable Other Current Liabilities, Total Total Current Liabilities Long-Term Debt Pension & Other Post-Retirement Benefits Deferred Tax Liability Non-Current Total Liabilities Common Stock Retained Earnings Comprehensive Income And Other Total Common Equity Total Equity Total Liabilities And Equity 39.2 73.6 781.3 5.2 83.5 8.2 991.0 55.9 -57.5 1,104.4 250.0 482.1 76.0 808.0 808.0 1,912.4 85.3 78.2 685.6 21.4 135.8 11.5 1,017.6 59.8 4.9 55.3 1,137.7 300.0 571.9 76.3 948.3 948.3 2,086.0 61.4 79.6 661.0 21.2 96.4 14.1 933.7 48.6 4.8 72.3 1,059.4 300.0 588.6 693.4 1,581.9 1,581.9 2,641.3 4.8 4.8 0.4 703.2 703.6 720.1 0.0 66.3 1,494.8 555.6 -138.0 417.6 -1,912.4 53.2 53.2 758.1 47.1 805.2 602.2 0.0 110.2 1,570.9 685.9 -172.4 513.5 1.6 2,086.0 51.0 51.0 577.8 68.4 646.2 699.8 0.4 109.2 1,506.6 1,137.7 -6.6 1,131.1 3.6 2,641.3

Financial Statements For ACI Formulation Ltd (ACIF)

Cash Flow
Currency in Millions of Bangladesh Takas
Net Income Depreciation & Amortization Depreciation & Amortization, Total Cash From Operations Capital Expenditure Sale Of Property, Plant, And Equipment Investments In Marketable & Equity Securities Cash From Investing Short-Term Debt Issued Long-Term Debt Issued Total Debt Issued Short Term Debt Repaid Long Term Debt Repaid Total Debt Repaid Common Dividends Paid Total Dividend Paid Cash From Financing Net Change In Cash Dec 31 2008 BDT Dec 31 2009 Restated BDT 160.3 31.5 31.5 308.8 -127.3 --1.6 -128.9 -20.1 20.1 -91.5 --91.5 -24.5 -24.5 -95.9 84.0 Dec 31 2010 BDT

As of:

203.3 24.6 24.6 -56.9 -113.1 ---113.1 41.5 61.1 102.6 -----102.6 -67.5

91.6 37.5 37.5 145.2 -32.7 6.1 -2.0 -28.6 ----12.6 -11.3 -24.0 -72.3 -72.3 -96.3 20.4

Financial Statements For Marico Bangladesh Limited (MBL)

Income Statements
Sep 30 2008 Restated BDT Sep 30 2009 Restated BDT Sep 30 2010 Press Release BDT 5,358.3 5,358.3 3,756.6 1,601.7 843.1 843.1 758.6 -33.9 201.6 167.7 -0.0 926.3 926.3 251.2 675.1 675.1 675.1 675.1

Currency in Millions of Bangladesh Takas

As of:

Revenues Total Revenues Cost Of Goods Sold Gross Profit Selling General & Admin Expenses, Total Other Operating Expenses, Total Operating Income Interest Expense Interest And Investment Income Net Interest Expense Currency Exchange Gains (Loss) Other Non-Operating Income (Expenses) Ebt, Excluding Unusual Items Ebt, Including Unusual Items Income Tax Expense Earnings From Continuing Operations Net Income Net Income To Common Including Extra Items Net Income To Common Excluding Extra Items

2,658.9 2,658.9 1,882.6 776.2 363.1 363.1 413.1 -6.0 21.4 15.4 0.2 -428.7 428.7 161.4 267.3 267.3 267.3 267.3

4,056.7 4,056.7 2,984.2 1,072.5 577.5 577.5 495.0 -6.9 91.4 84.5 0.0 -579.5 579.5 108.6 470.9 470.9 470.9 470.9

Financial Statements For Marico Bangladesh Ltd (MBL)

Balance Sheets
Sep 30 2008 Restated BDT Sep 30 2009 Restated BDT Sep 30 2010 Press Release BDT

Currency in Millions of Bangladesh Takas

As of:

Assets Cash And Equivalents Short-Term Investments Total Cash And Short Term Investments Accounts Receivable Notes Receivable Other Receivables Total Receivables Inventory Other Current Assets Total Current Assets Gross Property Plant And Equipment Accumulated Depreciation Net Property Plant And Equipment Deferred Tax Assets, Long Term Deferred Charges, Long Term Other Intangibles Total Assets 164.7 380.0 544.7 4.2 1.9 4.2 10.3 369.8 166.4 1,091.2 370.9 -65.6 305.2 -77.8 15.3 1,489.5 238.7 1,137.3 1,376.1 -3.7 48.4 52.1 634.5 123.8 2,186.5 423.1 -87.2 336.0 0.6 -12.6 2,535.7 106.7 2,692.8 2,799.5 --40.3 40.3 347.8 271.0 3,458.6 --242.5 30.0 -9.0 3,740.0

liabilities & equity Accounts Payable Accrued Expenses Short-Term Borrowings Current Income Taxes Payable Other Current Liabilities, Total Unearned Revenue, Current Total Current Liabilities 190.0 235.6 30.8 172.7 2.0 -631.1 263.1 423.9 77.2 168.3 4.3 21.1 957.9 328.2 535.6 189.6 448.2 35.0 -1,536.7

Pension & Other Post-Retirement Benefits Deferred Tax Liability Non-Current Other Non-Current Liabilities Total Liabilities Common Stock Additional Paid In Capital Retained Earnings Comprehensive Income And Other Total Common Equity Total Equity Total Liabilities And Equity

2.2 8.3 -641.6 90.0 -757.8 -847.8 847.8 1,489.5

7.1 --965.0 315.0 252.0 1,003.7 -1,570.7 1,570.7 2,535.7

8.1 -0.0 1,544.8 315.0 252.0 1,600.1 28.2 2,195.2 2,195.2 3,740.0

Financial Statements For Marico Bangladesh Ltd (MBL)

Cash Flows
Sep 30 2008 Restated BDT Sep 30 2009 Restated BDT Sep 30 2010 Press Release BDT 675.1 ---1,425.7 -53.1 --1,514.7 -1,567.8 112.4 112.4 ----78.7 -78.7 -23.6 10.1 --132.0

Currency in Millions of Bangladesh Takas

As of:

Net Income Depreciation & Amortization Amortization Of Goodwill And Intangible Assets Depreciation & Amortization, Total Cash From Operations Capital Expenditure Divestitures Investments In Marketable & Equity Securities Cash From Investing Short-Term Debt Issued Total Debt Issued Short Term Debt Repaid Total Debt Repaid Issuance Of Common Stock Common Dividends Paid Total Dividend Paid Other Financing Activities Cash From Financing Miscellaneous Cash Flow Adjustments Net Change In Cash

267.3 5.4 2.7 8.1 521.9 -85.7 1.0 -250.0 -334.7 ------26.0 -26.0 --26.0 -161.2

470.9 130.7 4.0 134.7 682.0 -71.9 --757.3 -829.2 ---30.8 -30.8 283.5 -31.5 -31.5 -221.2 -74.0