Financial Analysis through, P&L, Balance Sheet, Ratio Analysis and the impact of COVID19 on Aurobindo Pharma in comparison to the industry benchmark as set according to a competitor firm, Lupin.

1. FINANCIAL
ANALYSIS OF
AUROBINDO
PHARMA
Presented By –
Poorvi Kukreja, Prerana Rawat, Radha Gupta,
Riddhima Singh, Riya Malik, Samyak Jain

2. INTRODUCTION
• Mission and Vision Statement
“To build a leading global generic pharma company and become
one of the top10 by 2020.”
• Business Overview
 Founded in 1986 by Mr. P.V. Ramprasad Reddy, Mr. K. Nityananda Reddy and a
small group of highly committed professionals.
 Became a public company in 1992 and listed its shares on the Indian stock exchanges
in 1995.
 A well-integrated pharma company, Aurobindo Pharma features among the top 2
Pharmaceutical companies in India in terms of consolidated revenues.
 Exports to over 150 countries across the globe with around 90% of revenues derived
from international operations.

3. LUPIN
 Lupin is a global pharmaceutical company offering a wide range of
products.
 Manufacturing facilities are spread across India, USA, Mexico and
Brazil.
 Research and Development (R&D) forms an integral part of our
business strategy.
 With a patient-first approach, Lupin is transforming the pharmaceutical
industry to find novel ways of utilizing technology and research to focus
on high-quality and affordable medicines, not just for few but to many
across the globe.

4. BUSINESS MODEL OF THE
COMPANY
(QUALITATIVE ANALYSIS)
 The Company uses foreign currency denominated borrowings and foreign
exchange forward contracts to manage some of its transaction exposures.
 The Company’s board of directors has overall responsibility for the
establishment and oversight of the Company’s risk management framework.
 The Company’s audit committee oversees how management monitors
compliance with the Company’s risk management policies and procedures.
 The Company is exposed primarily to credit risk, liquidity risk and market risk.

5. ALARMING SIGNALS
 The long-term liabilities have increased by 947% in
March 2020 which is quite alarming.
 Minority interest has increased from -12% to 530%.
 Net cash usage for financing activities has decreased
for more than 100% in March 2020

6. PROFIT & LOSS
HORIZONTAL ANALYSIS

7. PROFIT & LOSS ACCOUNT OF
AUROBINDO PHARMA (in Rs. Cr.)
18-Mar 19-Mar
PERCENTAGE
CHANGE
20-Mar
PERCENTAGE
CHANGE
12 mths 12 mths 12 mths
INCOME
REVENUE FROM OPERATIONS [GROSS] 16,232.87 19,225.93 18% 22,737.96 18%
Less: Excise/Service Tax/Other Levies 36.8 0 0
REVENUE FROM OPERATIONS [NET] 16,196.07 19,225.93 19% 22,737.96 18%
TOTAL OPERATING REVENUES 16,463.03 19,563.55 19% 23,098.51 18%
Other Income 101.98 155.32 52% 191.87 24%
TOTAL REVENUE 16,565.01 19,718.87 19% 23,290.38 18%
EXPENSES
Cost Of Materials Consumed 5,629.38 7,444.99 32% 7,724.98 4%
Operating And Direct Expenses 0 0 0
Employee Benefit Expenses 2,130.84 2,584.87 21% 3,219.18 25%
Finance Costs 77.72 262.6 238% 305.13 16%
Depreciation And Amortisation Expenses 557.97 667.95 20% 966.71 45%
Other Expenses 3,810.84 4,314.10 13% 5,279.79 22%
TOTAL EXPENSES 13,326.97 16,542.16 24% 19,506.04 18%

8. PROFIT/LOSS BEFORE EXCEPTIONAL,
EXTRAORDINARY ITEMS AND TAX
3,238.04 3,176.71 -2% 3,784.34 19%
Exceptional Items 0 -88.06 -26.13 -70%
PROFIT/LOSS BEFORE TAX 3,238.04 3,088.65 -5% 3,758.21 22%
TAX EXPENSES-CONTINUED
OPERATIONS
Current Tax 712.3 712.07 0% 956.96 34%
Less: MAT Credit Entitlement 43.32 51 18% 0 -100%
Deferred Tax 149.29 65.78 -56% -43.44 -166%
Other Direct Taxes 0 0 0
TOTAL TAX EXPENSES 818.27 726.85 -11% 913.52 26%
PROFIT/LOSS AFTER TAX AND BEFORE
EXTRAORDINARY ITEMS
2,419.77 2,361.80 -2% 2,844.69 20%
PROFIT/LOSS FROM CONTINUING
OPERATIONS
2,419.77 2,361.80 -2% 2,844.69 20%
PROFIT/LOSS FOR THE PERIOD 2,419.77 2,361.80 -2% 2,844.69 20%
Minority Interest 0.26 0.23 -12% 1.45 530%
CONSOLIDATED PROFIT/LOSS AFTER MI
AND ASSOCIATES
2,423.17 2,364.73 -2% 2,830.97 20%

9. PROFIT & LOSS
VERTICAL ANALYSIS

10. PROFIT & LOSS ACCOUNT OF
AUROBINDO PHARMA (in Rs. Cr.)
18-Mar 19-Mar 20-Mar
12 mths 12 mths 12 mths
INCOME
REVENUE FROM OPERATIONS
[GROSS]
16,232.87 100% 19,225.93 100% 22,737.96 100%
Less: Excise/Sevice Tax/Other Levies 36.8 0 0
REVENUE FROM OPERATIONS
[NET]
16,196.07 99.77% 19,225.93 100% 22,737.96 100%
TOTAL OPERATING REVENUES 16,463.03 19,563.55 23,098.51
Other Income 101.98 155.32 191.87
TOTAL REVENUE 16,565.01 19,718.87 23,290.38
EXPENSES
Cost Of Materials Consumed 5,629.38 7,444.99 7,724.98
Operating And Direct Expenses 0 0 0
Employee Benefit Expenses 2,130.84 2,584.87 3,219.18
Finance Costs 77.72 262.6 305.13
Depreciation And Amortisation
Expenses
557.97 667.95 966.71
Other Expenses 3,810.84 4,314.10 5,279.79
TOTAL EXPENSES 13,326.97 82% 16,542.16 86% 19,506.04 86%

11. PROFIT/LOSS BEFORE
EXCEPTIONAL,
EXTRAORDINARY ITEMS AND
TAX
3,238.04 3,176.71 3,784.34
Exceptional Items 0 -88.06 -26.13
PROFIT/LOSS BEFORE TAX 3,238.04 20% 3,088.65 16% 3,758.21 17%
TAX EXPENSES-CONTINUED
OPERATIONS
Current Tax 712.3 712.07 956.96
Less: MAT Credit Entitlement 43.32 51 0
Deferred Tax 149.29 65.78 -43.44
Other Direct Taxes 0 0 0
TOTAL TAX EXPENSES 818.27 5% 726.85 4% 913.52 4%
PROFIT/LOSS AFTER TAX AND
BEFORE EXTRAORDINARY
ITEMS
2,419.77 15% 2,361.80 12% 2,844.69 13%
PROFIT/LOSS FROM
CONTINUING OPERATIONS
2,419.77 2,361.80 2,844.69
PROFIT/LOSS FOR THE PERIOD 2,419.77 15% 2,361.80 12% 2,844.69 13%
Minority Interest 0.26 0.23 1.45
CONSOLIDATED PROFIT/LOSS
AFTER MI AND ASSOCIATES
2,423.17 15% 2,364.73 12% 2,830.97 12%

12. RATIO ANALYSIS

13. TURNOVER
RATIOS
CAPITAL
TURNOVER
WORKING
CAPITAL
TURNOVER
INVENTORY
DAYS
ACCOUNTS
RECEIVABLE
TURNOVER
RATIO

14. CAPITAL TURNOVER
0.7
0.71
0.72
0.73
0.74
0.75
0.76
0.77
0.78
0.79
0.8
MARCH'18 MARCH'19 MARCH'20
Capital Turnover Ratio
Capital Turnover Ratio

15. WORKING CAPITAL TURNOVER RATIO

16. INVENTORY DAYS

17. ACCOUNTS RECEIVABLE TURNOVER
RATIO
0
2
4
6
8
10
12
MARCH'18 MARCH'19 MARCH'20
Accounts Receivable Turnover Ratio
Accounts Receivable Turnover
Ratio

18. PROFITABILITY
RATIOS
GROSS MARGIN
EBITDA
MARGIN
OPERATING
RATIO
RETURN ON
EQUITY

19. GROSS MARGIN
58.00%
59.00%
60.00%
61.00%
62.00%
63.00%
64.00%
65.00%
66.00%
67.00%
MARCH'18 MARCH'19 MARCH'20
Gross Margin
Gross Margin

20. EBITDA MARGIN
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
MARCH'18 MARCH'19 MARCH'20
EBITDA Margin
EBITDA Margin

21. OPERATING RATIO
31.00%
32.00%
33.00%
34.00%
35.00%
36.00%
37.00%
38.00%
39.00%
40.00%
MARCH'18 MARCH'19 MARCH'20
Operating Ratio
Operating Ratio

22. RETURN ON EQUITY
0
0.05
0.1
0.15
0.2
0.25
MARCH'18 MARCH'19 MARCH'20
Return on Equity
Return on Equity

23. SOLVENCY
RATIOS
EQUITY ON
CAPITAL
INTEREST
COVERAGE
RATIO
DEBT TO
ASSET
RATIO

24. EQUITY ON CAPITAL
0.5
0.51
0.52
0.53
0.54
0.55
0.56
0.57
0.58
0.59
MARCH'18 MARCH'19 MARCH'20
Equity on Capital
Series1

25. INTEREST COVERAGE RATIO
0
5
10
15
20
25
30
35
40
45
MARCH'18 MARCH'19 MARCH'20
Interest coverage ratio
Interest coverage ratio

26. DEBT TO ASSET RATIO
0
0.05
0.1
0.15
0.2
0.25
0.3
MARCH'18 MARCH'19 MARCH'20
Debt to asset ratio
Debt to asset ratio

27. LIQUIDITY
RATIOS
CURRENT
RATIO
QUICK
RATIO

28. CURRENT RATIO
1.2
1.25
1.3
1.35
1.4
1.45
MARCH'18 MARCH'19 MARCH'20
Current Ratio
Current Ratio

29. QUICK RATIO
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
MARCH'18 MARCH'19 MARCH'20
Quick Ratio
Quick Ratio

30. KEY FEATURES OF
ACCOUNTING POLICIES
 Depreciation is provided on the straight-line method, based on the
useful life of the assets as estimated by the Management.
 Inventories Valuation is done by using the FIFO Method. i.e. on
First-IN First-Out basis using Comparative Sales method

31. VALUATIONS FOR
AUROBINDO

32. VALUATION
RATIO
EARNINGS
PER SHARE
PRICE TO
EARNINGS
RATIO
DIVIDEND
PER SHARE

33. EARNINGS PER SHARE

34. PRICE TO EARNINGS RATIO
14.97
19.4
8.5
0
5
10
15
20
25
MARCH'18 MARCH'19 MARCH'20
P/E Ratio
P/E Ratio

35. DIVIDEND PER SHARE

36. IMPACT OF COVID19
 High dependence on the China market for import of Key Starting
Materials (KSMs), Intermediates and Active Pharmaceutical
Ingredients.
 The COVID-19 outbreak could create severe disruption on the
entire supply chain process in terms of sourcing, production,
inventory management and logistics & distribution.

37. REASONS FOR GIVING LOAN
 Financial Health : Profitability Ratios
 Operating Performance : Turnover Ratios
 Solvency Condition : Solvency Ratios
 Liquidity Condition : Liquidity Ratios