FINANCIAL STATEMENT ANALYSIS OF SUNPHARMA INDUSTRIES

Presented By:PadmarajPratheeshGouravPrakashAbhishek

INTRODUCTION

• No. 1 Pharma Company in India & Ranked 5th in the US (Market Size)

• Largest Indian Pharma Company in Emerging Markets• Presence in more than 150 countries across Branded and

Generic markets• Segment - Specialty products, branded generics, complex

generics, pure generics & APIs

FY11 FY12 FY13 FY14 FY1568%

70%

72%

74%

76%

78%

80%

82%

84%

74%

80%

82%83%

75%

Gross Margin

FY11 FY12 FY13 FY14 FY150%

5%

10%

15%

20%

25%

30%

35%

40%

32% 32% 32%

35%

17%

Net Margin

Profitability Ratios

Profitability RatiosRatio 2013 2014 2015 Industry Average

ROE 24% 31% 19% 25%

Net Margin 32% 35% 18% 14%

2013 2014 20150%

5%

10%

15%

20%

25%

30%

35%

ROE

ROE

Dupont Analysis

Return on Equity

Operating Efficiency

Asset use Efficiency

Financial Leverage

Dupont Analysis

Return on Equity

Operating Efficiency

Asset use Efficiency

Financial Leverage

Ratio 2013 2014 2015 Industry Average

ROE 24% 31% 19% 25%

Net Margin 32% 35% 18% 14%

2013 2014 20150%

5%

10%

15%

20%

25%

30%

35%

Net Margin

Net Margin

Operating Efficiency

Dupont AnalysisReturn on Equity

Operating Efficiency Asset use Efficiency Financial Leverage

Dupont Analysis

Return on Equity

Operating Efficiency

Asset use Efficiency

Financial Leverage

Asset Efficiency RatioRatio 2013 2014 2015 Industry Average

Assets Turnover

0.56 0.64 0.69 1.29

Fixed Assets Turnover

2.21 2.75 2.48 2.33

2013 2014 20150.53

0.5350.54

0.5450.55

0.5550.56

0.565

Assets Turnover Ratio

Assets Turnover Ratio

Ratio 2013 2014 2015 Industry Average

Assets Turnover

0.54 0.64 0.69 1.29

Fixed Assets Turnover

2.21 2.75 2.48 2.33

2013 2014 20150

0.51

1.52

2.53

Fixed Assets Turnover Ratio

Fixed Assets Turnover Ratio

Asset Efficiency Ratio

Assets

Fixed Assets Current Assets

Assets

Fixed Assets Current Assets

Assets

Fixed AssetsCurrent Assets

Fixed Asset efficiency seems to be fine but not the Current Assets Efficiency

Liquidity Ratios2013 2014 2015 Industry Average

Current Ratio

2.6 3.4 2.3 1.4

Quick Ratio

3.4 2.6 1.7 1.3

2013 2014 20150

1

2

3

4

Chart Title

Current Ratio

Liquidity Ratios2013 2014 2015 Industry Average

Current Ratio

2.6 3.4 2.3 1.4

Quick Ratio

3.4 2.6 1.7 1.3

2013 2014 20150

1

2

3

4

Quick Ratio

Quick Ratio

Ratio 2013 2014 2015 Industry Average

Inventory Turnover

4.36 5.12 4.81 4.64

Receivables Turnover

4.66 7.27 5.14 5.11

Collection Period 78 50 71 -Payables Turnover

10.62 12.04 8.65 -

2013 2014 20153.8

4.2

4.6

5

Inventory Turnover Ratio

Inventory Turnover Ra-tio

Efficiency Ratios

2013 2014 20150

2

4

6

8

Receivables Turnover

Inventory Receivables Ratio

Ratio 2013 2014 2015 Industry Average

Inventory Turnover

4.36 5.12 4.81 4.64

Receivables Turnover

4.66 7.27 5.14 5.11

Collection Period 78 50 71 -Payables Turnover

10.62 12.04 8.65 -

Efficiency Ratios

2013 2014 20150

20406080

100

Collection Period

Collection Period

Efficiency RatiosRatio 2013 2014 2015 Industry Average

Inventory Turnover

4.36 5.12 4.81 4.64

Receivables Turnover

4.66 7.27 5.14 5.11

Collection Period 78 50 71 -Payables Turnover

10.62 12.04 8.65 -

2013 2014 20150

4

8

12

Payables Turnover Ratio

Payables Turnover Ra-tio

Efficiency RatiosRatio 2013 2014 2015 Industry Average

Inventory Turnover

4.36 5.12 4.81 4.64

Receivables Turnover

4.66 7.27 5.14 5.11

Collection Period 78 50 71 -Payables Turnover

10.62 12.04 8.65 -

DuPont Analysis

Return on Equity

Operating Efficiency

Asset use Efficiency

Financial Leverage

DuPont Analysis

Return on Equity

Operating Efficiency

Asset use Efficiency

Financial Leverage

Debt Coverage RatiosRatio 2013 2014 2015 Industry Average

Debt/Equity 1.3% 13% 30% 38%

Interest Cover 110.8 161.3 13.5 84.94

2013 2014 20150.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%

Debt/Equity Ratio

Debt/Equity Ratio

Ratio 2013 2014 2015 Industry Average

Debt/Equity 1.3% 13% 30% 38%

Interest Cover 110.8 161.3 13.5 84.94

2013 2014 20150

20406080

100120140160180

Interest Cover Ratio

Interest Cover Ratio

Debt Coverage Ratios

Diagnosis

Poor Management of Current Assets

High debt and Interest costs

Solutions

Reducing the Operating Cycle, (Payback period,

Payable turnover), Collection period)

Reducing Interest costs and Debt

Reasons

Integration costs and Costs incurred on

Ranbaxy

Increase in borrowing (Ranbaxy debts taken

on books)

Increase in R&D expenditure