Financial Analysis M/s Aditya Birla Nuvo Ltd And M/s Raymonds Ltd

The Presentation contains the following: 1)A brief Overview of Aditya Birla Nuvo Ltd and Raymond's Ltd. 2)Inter Firm Analysis - Aditya Birla Nuvo Ltd. 3) Comparative Ratio Analysis of both the Organizations. 4)Conclusions and Suggestions on the basis of the analysis.

1) Overview of M/s Aditya Birla Nuvo Ltd Aditya Birla Nuvo Ltd (erstwhile Indian Rayon and Industries Ltd) is a diversified conglomerate within Aditya Birla Group Aditya Birla Nuvo Ltd (erstwhile Indian Rayon and Industries Ltd) is a diversified conglomerate within Aditya Birla Group It is a leading player in most of its business segments, including Viscose Filament Yarn (VFY),Carbon Black,Branded Garments, Fertilisers, Textiles and Insulators It is a leading player in most of its business segments, including Viscose Filament Yarn (VFY),Carbon Black,Branded Garments, Fertilisers, Textiles and Insulators

Aditya Birla Nuvo, through its subsidiaries and joint ventures, has made successful forays into Life Insurance, Telecom, Business Process Outsourcing (BPO), IT services, Asset Management and other Financial Services. Aditya Birla Nuvo, through its subsidiaries and joint ventures, has made successful forays into Life Insurance, Telecom, Business Process Outsourcing (BPO), IT services, Asset Management and other Financial Services.

Overview of M/s Raymonds Ltd Years ago, the Singhania family was building, consolidating and expanding its various businesses in Kanpur. Years ago, the Singhania family was building, consolidating and expanding its various businesses in Kanpur. At the same time Mr. Wadia was in a similar manner setting up a small woolen mill in the area around Thane creek, 40 kms away from Bombay. The Sassoons, a well-known industrialist family of Bombay, soon acquired this mill and renamed it as The Raymond Woolen Mills. At the same time Mr. Wadia was in a similar manner setting up a small woolen mill in the area around Thane creek, 40 kms away from Bombay. The Sassoons, a well-known industrialist family of Bombay, soon acquired this mill and renamed it as The Raymond Woolen Mills.

Soon the Singhanias aimed to broaden their business horizons. The family's sharp business foresight led to the acquisition of The Raymond Woolen Mills. Soon the Singhanias aimed to broaden their business horizons. The family's sharp business foresight led to the acquisition of The Raymond Woolen Mills. Gradually the mill became a world-class factory and the Raymond brand became synonymous with fine quality woolen Fabrics. Gradually the mill became a world-class factory and the Raymond brand became synonymous with fine quality woolen Fabrics.

Today, with a 33 million-meter capacity in wool & wool-blended fabrics, Raymond commands an over 60% market share in worsted suiting in India and ranks amongst the first three fully integrated manufacturers of worsted suiting in the world. Today, with a 33 million-meter capacity in wool & wool-blended fabrics, Raymond commands an over 60% market share in worsted suiting in India and ranks amongst the first three fully integrated manufacturers of worsted suiting in the world. A 100% subsidiary of Raymond Ltd., Raymond Apparel Ltd. (RAL) ranks amongst India's largest apparel brand company. It has prestigious brands like Park Avenue, Manzoni, Color Plus and many more. A 100% subsidiary of Raymond Ltd., Raymond Apparel Ltd. (RAL) ranks amongst India's largest apparel brand company. It has prestigious brands like Park Avenue, Manzoni, Color Plus and many more.

2) Inter Firm Analysis Net sales of the Company have gone up by 29% in Net sales of the Company have gone up by 29% in During the year, Operating Margin (PBIT) has gone up from 11.8 to 13.4%. During the year, Operating Margin (PBIT) has gone up from 11.8 to 13.4%. Though the sales growth in fertilizers is more than 100%, Percentage growth in its profit is 81% almost equivalent to Garment segments where sales growth has been only 13% over last year. Though the sales growth in fertilizers is more than 100%, Percentage growth in its profit is 81% almost equivalent to Garment segments where sales growth has been only 13% over last year.

There is an increase in operating & other expenses by 1% to the total revenues i.e. profit would have been higher by another 37 crores, in case company would have maintained the same level of operating and other expenses. There is an increase in operating & other expenses by 1% to the total revenues i.e. profit would have been higher by another 37 crores, in case company would have maintained the same level of operating and other expenses.

2) Comparative Ratio Analysis Aditya Birla Nuvo Ltd and Raymonds Ltd Each slide will contain one type of ratio after which the comparative analysis for that particular type of ratio will be shown by way of graphs. Each slide will contain one type of ratio after which the comparative analysis for that particular type of ratio will be shown by way of graphs. The Comparative analysis is done in order to analyze which company has an overall better financial position. The Comparative analysis is done in order to analyze which company has an overall better financial position.

Profitability Ratios Operating Margin Gross Profit Margin Ratio Net Profit Margin Ratio Return Average Net Worth

Operating Margin Aditya Birla Nuvo Ltd Raymonds Ltd Operating Profit Margin has increased by 0.46% over last year. It shows that Company is making higher margin on Sales. Operating Profit Margin has decreased by 1.36% over last year. It shows that Company is making lower margin on sales in comparison to last year.

Gross Profit margin Gross Profit margin has been decreased in because of high interest cost during the year. Aditya Birla Nuvo Raymonds Decrease in because of low margin on sales due to increase in selling and general expenses, employment cost etc.

Net profit Margin Aditya Birla Nuvo Raymonds Aditya Birla Nuvo Raymonds Net profit margin reduced in Increased in due to contribution of exceptional items to profit against loss last year.

Return on Average Net Worth Aditya Birla Nuvo Raymonds Aditya Birla Nuvo Raymonds Return on average decreased in Increased due to exceptional income of Rs cr. This year.

Liquidity Ratios Current Ratio Quick Ratio

Current ratio Aditya Birla Nuvo Raymonds Aditya Birla Nuvo Raymonds Current ratio has decreased Current Ratio has decreased marginally

Quick ratio Aditya Birla Nuvo Raymonds Aditya Birla Nuvo Raymonds Quick ratio has also decreased Quick Ratio has increased Marginally

Efficiency Ratios Stock Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio

Stock Turnover Aditya Birla Nuvo Raymonds Aditya Birla Nuvo Raymonds Stock turnover ratio has improved T/o ratio has decreased this year due to lower conversion of stocks.

Fixed Assets Turnover Aditya Birla Nuvo Raymonds Aditya Birla Nuvo Raymonds Fixed assets turnover ratio has shown improvement from in It has decreased this year due to funds invested in fixed assets generated low sales.

Total Assets Turnover Aditya Birla Nuvo Raymonds Aditya Birla Nuvo Raymonds Total assets turnover ratio has decreased due to the huge investment of Rs.2051 cr. Decreased this year due to increase in shareholders funds and loans, also additional net investment.

Leverage Ratios Debt Equity Ratio Interest Coverage Ratio

Debt-Equity Ratio Aditya Birla Nuvo Raymonds Aditya Birla Nuvo Raymonds Has marginally increased from 0.71 to 0.91 It has decreased this year from 0.65 times to shareholders funds to 0.58 times

Interest Coverage ratio Aditya Birla Nuvo Raymonds Aditya Birla Nuvo Raymonds Interest coverage ratio has decreased It decreased this year from 7.97 times to 5.67 times

Other Ratios Earning per share Dividend per share Book value per share Price earning ratio

Earning Per Share Aditya Birla Nuvo Raymonds Aditya Birla Nuvo Raymonds It is marginally higher in from the last year Higher than last year due to exceptional income.

Dividend Per Share Aditya Birla Nuvo Raymonds Aditya Birla Nuvo Raymonds Dividend per share is also higher than last year. Same as in last year.

Book Value of Shares Aditya Birla Nuvo Raymonds Higher in because of retained earnings Book Value of the share is high this year due to retained earnings.

Price Earning ratio Aditya Birla Nuvo Raymonds Increased in Decreased this year from last year to this year.

Conclusion From the comparison of the above ratios it is evident that M/s Aditya Birla Nuvo Ltd (ABNL) is financially better than M/s Raymond Ltd (RL) because: From the comparison of the above ratios it is evident that M/s Aditya Birla Nuvo Ltd (ABNL) is financially better than M/s Raymond Ltd (RL) because: 1) ABNL has posted a Sales growth of 29% with 36% higher operating profit over last year. However, in case of RL, there is de growth with reduction in operating margin. 1) ABNL has posted a Sales growth of 29% with 36% higher operating profit over last year. However, in case of RL, there is de growth with reduction in operating margin. 2) Operating Margin as % to sales has increased by 0.46%in case of ABNL whereas it has gone down during the year in case of RL by 1.36%.Even in absolute terms the operating margin in case of ABNL is 16.35% i.e. higher by 2.61% over RL. 2) Operating Margin as % to sales has increased by 0.46%in case of ABNL whereas it has gone down during the year in case of RL by 1.36%.Even in absolute terms the operating margin in case of ABNL is 16.35% i.e. higher by 2.61% over RL.

3)Lower gross profit margin in case of ABNL due to high Interest Cost appears to be temporary, as strategic Investments of Rs.2051 Crs. made in JVs and Subsidiaries during the year will start providing income in due course of time. 3)Lower gross profit margin in case of ABNL due to high Interest Cost appears to be temporary, as strategic Investments of Rs.2051 Crs. made in JVs and Subsidiaries during the year will start providing income in due course of time. 4) Sharp increase in Net Profit of RL is due to extraordinary income accrued in the current year and may not be recurring. 4) Sharp increase in Net Profit of RL is due to extraordinary income accrued in the current year and may not be recurring. 5) Though both ABNL and RL are financially solvent, Liquidity ratios are better in case of ABNL. 5) Though both ABNL and RL are financially solvent, Liquidity ratios are better in case of ABNL.

6) Funds invested in business are used more efficiently in case of ABNL as evident from Efficiency or Turnover ratios 7) ABNL has a balanced financial structure of Debt and Equity. 7) ABNL has a balanced financial structure of Debt and Equity. 8) Interest coverage ratio is adequate to make timely payment of interest to Creditors. 8) Interest coverage ratio is adequate to make timely payment of interest to Creditors. 9) Book value of share of Rs10 is higher at Rs335 in ABNL than Rs.221 in RL. 9) Book value of share of Rs10 is higher at Rs335 in ABNL than Rs.221 in RL. 10) In case of ABNL the Market Price of the share is increasing faster than multiple of earning per share. 10) In case of ABNL the Market Price of the share is increasing faster than multiple of earning per share.

Suggestions Company either should make efforts to increase the Sales or review to rationalize the costs as portion of the business has been divested during the year. Company either should make efforts to increase the Sales or review to rationalize the costs as portion of the business has been divested during the year. Company’s Funds are not being used in an efficient manner. Stocks, Fixed assets etc are way above the accepted levels. Company has to review productivity of these assets, monitor stock levels as per the industry standards. Company’s Funds are not being used in an efficient manner. Stocks, Fixed assets etc are way above the accepted levels. Company has to review productivity of these assets, monitor stock levels as per the industry standards.

Company’s investment of Rs.985 Crs. in JVs /stocks / Debenture etc. needs to be reviewed to assess the economic feasibility. Company’s investment of Rs.985 Crs. in JVs /stocks / Debenture etc. needs to be reviewed to assess the economic feasibility.

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