FINANCIAL MANAGEMENT ASSIGNEMENT

COMPANY NAME: MARICO LTD.

Submitted By:
 (Section: Kautilya-1)

Name : Avijit Dinda

University Roll No. Roll:PG/VUOAP02/MBA-IS No:187

Name : Akshay Albert Baptist

University Roll No. Roll:PG/VUOAP02/MBA-IS No:021

Name : Imon Paul

University Roll No. Roll:PG/VUOAP02/MBA-IS No:386

Name : Nand Kumar Jha

University Roll No. Roll:PG/VUOAP02/MBA-IS No:004

Name : Neha Soni

University Roll No. Roll:PG/VUOAP02/MBA-IS No:313

Name : Pritha Patra

University Roll No. Roll:PG/VUOAP02/MBA-IS No:035

Name : Saptarsree Banerjee

University Roll No. Roll:PG/VUOAP02/MBA-IS No:551

Name : Subha Bhaskar

University Roll No. Roll:PG/VUOAP02/MBA-IS No:037

INTRODUCTION:

COMPANY OVERVIEW:

Marico Limited is one of India's leading consumer products companies operating in the beauty and
wellness space. Currently present in 25 countries across emerging markets of Asia and Africa, Marico
has nurtured multiple brands in the categories of hair care, skin care, edible oils, health foods, male
grooming, and fabric care. Marico's India business markets household brands such as Parachute,
Parachute Advanced, Saffola, Hair & Care, Nihar, Nihar Naturals, Livon, Set Wet, Mediker and Revive
among others. The International business offers unique brands such as Parachute, HairCode, Caivil,
Hercules, Black Chic, Isoplus, Code 10, Ingwe, X-Men and Thuan Phat that are localized to fulfil the
lifestyle needs of international consumers.
Marico acquired the consumer division of Enaleni Pharmaceuticals, through purchase of 100% shares
in Enaleni Pharmaceuticals Consumer Division (EPCD), an Enaleni subsidiary. ML had divested of its
processed foods business, Sil' to a Danish business house, Good Food Group in March of the year 2008.
The transaction, for an undisclosed consideration envisages a sale of Mario's Sil business to the Indian
subsidiary of Good Food Group A/S, Scandic Food India (Scandic).

INDUSTRY OVERVIEW:
During the FY2019, the company Shareholders' Agreement and share subscription agreement with
Revolutionary Fitness Pvt Ltd (Revofit) and acquired 22.46% of its equity stake. Consequently, Revofit
became an associate company of Marico. During the FY2020, the company spent Rs 194 crore towards
capital expenditure(CAPEX) for capacity expansion and maintenance of existing manufacturing
facilities.

The Ministry of Home Affairs vide order No.40-3/2020 dated 24.03.2020 notified first ever nationwide
lockdown in India to contain the outbreak of COVID 19. As a result, the operations were temporarily
disrupted at manufacturing, warehouse and distribution locations of Marico India. Further,
International businesses were also temporarily disrupted with many of the territories experiencing
partial or complete lockdown in the last week of March 2020.

On 30 June 2020, the Company has acquired the remaining 55% stake in ZED Lifestyle Private Limited
(which was earlier a Joint Venture) and converted it into a wholly owned subsidiary.
During the quarter ended 30 September 2020, the Company has sold its entire stake in 'Revolutionary
Fitness Private Limited' and 'Hello Green Private Limited' (Joint Ventures). The National Company Law
Tribunal at Mumbai Bench has, vide order dated December 2, 2020 sanctioned Scheme of Arrangement
(the Scheme') of Marico Consumer Care Ltd (MCCL) (Subsidiary of Marico Ltd) with effective date as
April 1, 2020 with the holding company.
WORKING CAPITAL:
Working capital is a measure of a company's liquidity, operational efficiency and its
short- term financial health. If a company has substantial positive working capital, then it
should have the potential to invest and grow. If a company's current assets do not
exceed its current liabilities, then it may have trouble growing or paying back creditors,
or even go bankrupt. Working capital can be divided into two parts:

Gross working capital = all current assets

Net working capital = current assets – current liabilities

LIQUIDITY RATIOS:
The most common ratios which indicate the extent of liquidity and lack of it are:
 Current ratio
 Quick ratio

1) Current ratio:
Current ratio is calculated by dividing current assets by current liabilities.

Current Ratio= Current Assets/ Current Liabilities

2) Quick ratio:
Quick Ratio= (Current Assets – Inventories) / Current Liabilities

ASSETS MANAGEMENT RATIO:

Inventory Turnover Ratio = Cost of Goods Sold/ Average inventory

Total Assets Turnover Ratio =Cost of Goods Sold / Total Assets

PROFITABILITY RATIO:
1) Return on Assets = Net profit after taxes / Total Assets *100
2) Return on Equity = Net income available to common stock holder / Common equity *100
3)Debt to Equity = Total debt capital / Total equity capital

LEVERAGE RATIO:
1) Operating Leverage = % change in EBIT / % change in total revenue
2) Financial Leverage = EBIT / PBT
3) Combine Leverage = Operating leverage * Financial leverage

EARNINGS PER SHARE (EPS):

Earnings per share ratio= (Net pat –gross preference dividend)/No. Of equity shares
outstanding
ANALYSIS AND INTERPRETATION:

 Gross working capital (Cr.) (table: A)

CURRENT ASSETS 2019 2020 2021

Current Investments 380.00 628.00 628.00

Inventories 1234.00 1165.00 873.00

Trade Receivables 430.00 465.00 310.00

Cash and Cash Equivalents 339.00 80.00 711.00

Short Term Loans and Advances 3.00 3.00 62.00

Other Current Assets 328.00 307.00 225.00

GROSS WORKING CAPITAL 2714.00 2648.00 2809.00

 A company needs just the right amount of working capital to function optimally. With too much
working capital, some current assets would be better put to other uses. With too little working
capital, a company may not be able to meet its day-to-day cash requirements.

 Net working capital (Crores) (table-B)

CURRENT LIABILITIES 2019 2020 2021

Short Term Borrowings 131.00 110.00 142.00

Trade Payables 715.00 702.00 841.00

Other Current Liabilities 250.00 261.00 333.00

Short Term Provisions 57.00 58.00 16

TOTAL CURRENT LIABILITIES 1153.00 1131.00 1332.00

NET WORKING CAPITAL (A-B) 1561.00 1517.00 1477.00

 Net working capital is the amount of money a business has available to spend on daily
operations, such as paying short term bills and purchasing inventory. Net working capital
involves looking at a company's total current assets and total current liabilities. Current assets
are considered a company’s financial resources, such as cash and accounts receivables.
 LIQUIDITY RATIOS
CURRENT RATIO:
2019 2020 2021
2.35 2.34 2.11
 The current ratio is one of the most useful ratios in financial analysis as it helps to gauge the
liquidity position of the business. In simple words, it shows a company’s ability to convert its assets
into cash to pay off its short-term liabilities.

QUICK RATIO:
2019 2020 2021
1.28 1.31 1.45

ASSETS MANAGEMENT RATIO

TOTAL ASSETS TURNOVER RATIO:

2019 2020 2021
1.66 1.97 2.01

 The asset turnover ratio measures the value of a company's sales or revenues relative to the value
of its assets. The asset turnover ratio can be used as an indicator of the efficiency with which a
company is using its assets to generate revenue. He higher the asset turnover ratio, the more
efficient a company.

INVENTORY TURNOVER RATIO:

2019 2020 2021
4.84 5.02 7.26
INVENTORY OPERATING CYCLE (IN DAYS) :

2019 2020 2021

81.47 72.7 50.19
 The higher the inventory turnover ratio, the more efficient and profitable the firm. A high ratio
means that the firm is holding a low level of average inventory in relation to sales. Holding
inventory means money tied up in stock. The inventory turnover ratio is decreased from 4.84 to
7.26 that mean the firm is efficient and profitable.
 PROFITABILITY RATIO
RETURN ON ASSETS :

2019 2020 2021

23.72 24.34 24.67
 Return on assets measures profit against the assets a company used to generate revenue. It is
an important indicator of the asset intensity of a company. A lower ratio means a company is
more asset-intensive, and vice versa.

RETURN ON EQUITY :

2019 2020 2021

32.35 34.86 36.44

 Return on Equity is an important measure for a company because it compares it against its
peers. With return on equity, it measures performance and generally the higher the better.
Some industries have a high ROE as they require little or no assets while others require large
infrastructure builds before they generate profit. For this reason, ROE is best used to compare
companies in the same industry. Performance ratios like ROE, concentrate on past performance
to get a gauge on future expectation.

LEVERAGE RATIO
OPERATING LEVERAGE:

2019 2020 2021

1.74 1.26 0.27
FINANCIAL LEVERAGE :

2019 2020 2021

1.018 1.024 1.015
COMBINE LEVERAGE:

2019 2020 2021

1.77 1.29 0.274
DEBT TO EQUITY :

2019 2020 2021

0.04 0.04 0.05
 The debt to equity ratio is a measure of a company's financial leverage, and it represents the
amount of debt and equity being used to finance a company's assets. It's calculated by dividing
a firm's total liabilities by total shareholders' equity. It indicates the stability of a company and its
ability to raise additional capital to grow.

CAPITAL STRUCTURE RATIOS

EARNINGS PER SHARE (EPS)

2019 2020 2021

8.75 7.80 8.56
 EPS is an important factor used in valuing a company because it breaks down a firm's profits on a
per share basis. It is a term that is of much importance to investors and people who trade in the
stock market. The higher the earnings per share of a company, the better are its profitability.

FINDINGS:

 Liquidity ratios: Current ratio and liquid ratio both are in good position.

 Leverage ratios: Debt equity ratio has increased but interest coverage
ratio has decreased.

 Turnover ratios: Asset turnover and inventory turnover ratio both have
decreased.

 Profitability ratios: Return on assets and return on equity both have

increased.
  Capital structure ratios: Earn per share and dividend payout ratio both
has increased.

 Gross working capital: Gross working capital of this company has

gradually increased in three years.

 Net working capital: Net working capital of this company has

gradually increased in three years

CONCLUSION:
Liquidity ratios: Current ratio and liquid ratio both are in good
position. It also means that the short-term financial strength of the
company is very good.
Leverage ratios: Debt equity ratio has gone up but interest coverage
ratio has decreased. That means the long-term financial strength of the
company is in average position.
Turnover ratios: Asset turnover and inventory turnover ratio both
have decreased. That means the short-term investment utilization of the
company is very not good.
Profitability ratios: Return on assets and return on equity both have
increased. That means the long-term earning power is very good.
Capital structure ratios: Earn per share and dividend payout ratio
both has increased. It means the long-term solvency position of the
company is very stable.
Gross working capital: Gross working capital of this company has
gradually increased in three years. That means the company is in good
position to pay its short-term liabilities.
Net working capital: Net working capital of this company has
gradually increased in three years. That means the company is very
efficient to bear its short-term expenses and liabilities.
BIBLIOGRAPHY:

WEBSITES:

1. www.moneycontrol.com
2. www.economictime.indiatime.com
ANNEXURE:
Balance Sheet of Marico Limited
Profit & Loss account
THANK YOU