Presentation on finance

1. FINANCE
ASSIGNMENT
UMANG PAHAL
ANSH KHANDELWAL
DIVYANSH KHANDELW
AASHU CHOKEN
GAGAN SINGH

2. COMPANY NAME :-
PATANJALI

3. PATANJALI:-
Patanjali Ayurved is an Indian multinational
conglomerate holding company, based in Haridwar, India.
It was founded by Ramdev and Balkrishna in 2006. Its office is
in Delhi, with manufacturing units and headquarters in the
industrial area of Haridwar.
The company manufactures cosmetics, ayurvedic
medicine, personal care and food products.
The CEO of the company, with a 94-percent share hold, is
Balkrishna. Ramdev represents the company and makes
strategic decisions.

4. THE “CUSTODIAN OF AYURVEDA”
According to CLSA and HSBC, Patanjali was one of the fastest-
growing FMCG companies in India in 2016. It was valued
at ₹3,000 crore (equivalent to ₹37 billion or US$460 million in
2020).
Patanjali estimated its annual turnover for the 2016–17 fiscal
year at ₹10,216 crore (US$1.3 billion).
According to a report by India Infoline (IIFL), at least 13 listed
companies would be affected by Patanjali's success; they
included Hindustan Unilever, Colgate, Dabur, ITC, and Godrej
Consumer Products.

5. of

14. COST CLASSIFICATION BASED ON
BEHAVIOUR
VARIABLE
COSTS
A cost is
considered to
be a variable
cost if it
changes with
the change in
the level of
activity.
FIXED COSTS
A cost is
considered to
be a fixed cost
if it is
independent
from the level
of activity.
MIXED COSTS
A cost is
considered
a mixed
cost if it has
elements of
both fixed
and variable
costs.

15. CLASSIFYING AS VARIABLE COST:-
COST OF RAW MATERIAL CONSUMED : because the quantity of
raw material required by a firm varies based on the number of
units the firm is looking forward to produce.
PURCHASE OF STOCK IN TRADE : because the quantity of stock
varies due to changes in demand patterns , prices and level of
supply.
POWER $ FUEL: because the need for power and fuel changes
based on the quantity of goods that the company plans to produce
.
SPARES & CONSUMABLES : need for spare parts varies based on
how much the machines and equipment are being used for
production.
BUILDING & MACHINE REPAIRS : because how much the equipment

16. CLASSIFYING AS VARIABLE COST:-
FREIGHT & CARRIAGE : is considered variable because how
much we pay for carriage is directly inked with how much the
firm is willing to and is planning to produce .
COMMISSIONS TO STAFF & FREIGHT PARTNER: because
commission ( specially mentioned by PATANJALI ) is paid based
on the level of activity.
TRAVEL AND CONVEYENCE : is considered variable because it
will vary based on how much the staff is travelling specifically to
perform company operations.
EMPLOYEE BENEFIT EXPENSES : like salaries to staff and wages to
labor are subject to variability based on the level of operations.

17. VARIABLE COSTS SUMMARY
COST NAME AMT. ’22
(CRORE Rs.)
AMT. ’21
(CRORE Rs.)
COST OF RAW MATERIAL CONSUMED 4,766.12 4,013.63
PURCHASE OF STOCK IN TRADE 882.12 982.53
POWER & FUEL 128.66 104.01
CONSUMPTION OF SPARES AND CONSUMABLES 36.95 32.89
BUILDING MAINTAINENCE 3.85 4.59
MACHINERY REPAIRS 25.12 20.41
MISCELLAENEOUS REPAIRS AND MAINTAINENCE
ECPENDITURE
31.47 29.37
FREIGHT AND ACRRIAGE 288.09 241.97
COMMISION TO FREIGHT AGENTS 43.07 39.80
COMMISION TO NON EXECUTIVE DIRECTORS 0.72 0.70
TRAVEL AND CONVEYANCE CHARGES 61.24 50.10
EMPLOYEE BENEFIT EXPENSE 1,079.95 1,033.46
TOTAL VARIABLE EXPENDITURE INCURRED : 7,347.36 6,553.46

18. VARIABLE COST GRAPH

19. CLASSIFYING AS FIXED COST
FINANCE COST : is considered to be a fixed cost because it involves a
fixed burden over the company that it has to pay no matter how
much the activity is.
COMMUNICATION : is a fixed charge for the company as there a fixed
amount that the company pays to its communication partners ( like
ISPs) no matter how much it uses its sources.
LEGAL & PROFESSIONAL FEES : PATANJALI , just like any other
company also has several legal partners and other professionals that
charge a fixed fee irrespective of how much the company’s
operations vary.
RATES , INTERESTS & TAXES : are some charges that the company has
to pay no matter of its operation levels.

20. CLASSIFYING AS FIXED COST
PROCESSING FEE: PATANJALI pays a fixed amount to its processing
and packaging partners to help them process their products , and is
not subject to variance based on its activity.
DEPRECIATION & AMMORTIZATION : are considered fixed costs
because they will occur no matter the scale of operations.
DIRECTORY OPERATIONS FEE : directors of the organization charge a
fixed fee for each sitting and round of decision making .

21. FIXED COSTS SUMMARY
COST NAME AMT. ’22
(CRORE Rs.)
AMT. ’21
(CRORE Rs.)
FINANCE COST 38.60 30.81
COMMUNICATION 8.05 12.32
LEGAL AND PROFESSIONAL FEE 83.33 78.60
RATES , INTERESTS AND TAXES 14.55 22.31
PROCESSING CHARGES 47.60 28.39
DEPRECIATION AND AMORTIZATION 252.89 240.13
DIRECTORY OPERATIONS FEE 0.72 0.74
INSURANCE 33.68 28.80
TOTAL FIXED COST INCURRED : 479.42 442.10

22. FIXED COST GRAPH
NC

23. MIXED COSTS
COST NAME AMT. ’22
(CRORE Rs.)
AMT. ’21
(CRORE Rs.)
RENT 51.78 42.83
Rent is considered as a Mixed cost as RENTAL CLAUSE 6.1 states that the landlord is legally
capable of increasing the rent of its property every 12 months or on the Anniversary of the
tenancy.
Thus it involves a fixed initial payment that the firm pays followed with increments in the
rent over the period of time.
Since PATANJALI does not declare this separation between the initial value and percentage of
increments , we are forced to assume that they follow the conventional rent structure and
pay increased rent every annum .

24. MIXED COST GRAPH

25. IMPORTANCE OF COST VALUE
PROFIT (CVP)
CVP is a systematic method of examining the relationship between selling
price, sales revenue, production volume, and profits.
Its importance are:-
1. It’s very much useful to management as it provides an insight into the
effects and inter-relationship of factors, which influence the profits of
the firm.
2. It helps to determine the maximum sales volume to avoid losses and the
sales volume at which the profit goal of the firm will be achieved.
3. A Dynamic management uses CVP analysis to predict and evaluate the
implications of its short-run decisions about fixed cost, marginal cost,
sales volume, and selling price for its profit plans on a continuous basis.

26. CONTRIBUTION
CONTRIBUTION= SALES – VARIABLE COST
CONTRIBUTION OF THE YEAR 2021= 9,561.65 - 6,553.46
=3,008.19cr.
CONTRIBUTION FOR THE YEAR 2022= 10,888.68 – 7,347.36
=3,541.32 cr.

27. PROFIT VOLUME RATIO (PVR)
PVR = CONTRIBUTION/SALES X 100
PVR FOR THE YEAR 2021= 3,008.19/ 9,561.65 X 100
=31.46%
PVR FOR THE YEAR 2022= 3,541.32 / 10,888.68 x 100
=32.52%

28. BREAK EVEN SALES IN RUPEES
BREAK EVEN SALES (IN AMOUNT)= FIXED COST/ PVR
BREAK EVEN SALES FOR 2021= 442.10/ 31.46%
= 1,405.27
BREAK EVEN SALES FOR 2022= 479.42/ 32.52%
= 1,474.23

29. MARGIN OF SAFETY
MARGIN OF SAFETY = PROFIT/PVR
PROFIT = CONTRIBUTION- FIXED COST
PROFIT FOR THE YEAR 2021=3,008.19–442.10=2,566.09
PROFIT FOR THE YEAR 2022= 3,541.32 – 479.42 =3,061.9
MARGIN OF SAFETY FOR YEAR 2021= 2,566.09/ 31.46%
=8,156.67
MARGIN OF SAFETY FOR YEAR 2022= 3,061.9 / 32.52%
=9,415.43

30. CONCLUSION
In this project we analyzed the profit and loss statement of PATANJALI.
By using PV ratio we measured the profitability of the company. P/V ratio is
used to measure the level of contribution made at different volumes of sales.
We used the break-even point analysis as it is essential for the business
because it represents the minimum level of sales that must be achieved to
generate a profit
For investors, the margin of safety serves as a cushion against errors in
calculation. Since fair value is difficult to predict accurately, safety margins
protect investors from poor decisions and downturns in the market.

31. THANK YOU …