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Zydus Wellness - Analysis of 2010 Annual Report

Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Annual reports - Reading, Understanding and Discussing.
Forum Discription: Here we can discuss individual company Annual Reports. The idea is to make Annual Report reading easier and comfortable for the Non Finance People at TED
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2864
Printed Date: 26/Jun/2024 at 3:48pm


Topic: Zydus Wellness - Analysis of 2010 Annual Report
Posted By: funkyappu
Subject: Zydus Wellness - Analysis of 2010 Annual Report
Date Posted: 08/Jul/2010 at 9:41pm
                                         Zydus Wellness
Business :

1.    It is a three pillar brand company with Zero Debt.  Net Sales grew by 37% at Rs. 267.5 crores.  Net Profit grew by 90% at Rs. 45.3 crores. The company claims it as a result of focussed promotion & advertising.

2.    Sugar Free has a market share of more than 80%, as claimed by company. Sugar Free Gold is promoted with focus on summer application other than tea & coffee. It has a market share of 65%. Sugar Free Natura – The Diet Sugar is promoted with focus on cooking & baking applications & has a market share of 17%. There were also launchings of flavoured sachets of Sugar Free Natura. Overall, the company seems to concretise this Sugar Free brand with add-on launchings and focussed promotion.

3.    Everyuth has 69.5% share in Scrubs, 98.6% in Peel-Offs, 13% in Face-Washes. They also launched Everyuth Menz.

4.    The company is setting up its own manufacturing plant in Sikkim for increased Sugar Free & Everyuth demands.

5.    Nutralite manufacturing facility is being enhanced in Ahmedabad to meet increasing demand.

6.    The company aims to achieve 500 crore sales by 2013-14.


Financial Analysis :

1.    There is an improvement in Net Profit margin because of reduced raw material prices and better realization across all product categories. Total consumption of materials & finished goods as %age of gross sales reduced to 32.2% from 37.3%.

2.    There was an increase in marketing expenses by 40% due to increase in promotional activities to strengthen brand equity across all segments.

3.    ROCE for 2009-10 is 71.11 vs 54.60 for 2008-09. ROE for 2009-10 is 45 vs 34.1 for 2008-09. ROWC (Return on Working Capital) for 2009-10 is 80.49 vs 79.06 for 2008-09.

4.    Inventory Outstanding Days for 2009-10 is 43.79 vs 26.6 for 2008-09. Account Receivable Days for 2009-10 is 5.17 vs 6.79 for 2008-09. Account Payable Days for 2009-10 is 198.33 vs 115.85 for 2008-09. Cash Conversion Cycle (CCC) for 2009-10 comes to be -149.37 days vs    -82.46 days for 2008-09.

5.    There is an increase of 64.81% in Current Liabilities which has been countered by 77.8% drop in Sundry Debtors and 98.18% rise in Cash & Bank Balances. The management wishes to keep Working Capital negative.

6.    There is an increase of 44.23% in Capital Employed because of an increase of 86.84% in Working Capital  on account of huge Cash and Bank Balances.

7.    Quantitatively, the sales of the products have been categorised into 3 types. In the tons segment (perhaps Sugar Free), there is an increase of 27.9% from 7982 tons to 10210 tons. In K. Ltrs. segment (perhaps Nutralite), there is an increase of 16.5% from 1052 K. Ltrs. to 1226 K.Ltrs. In ML. Nos. Segment (perhaps Everyuth), there is an increase of 24.8% from 2278 ML. Nos. to 2844 ML. Nos.


Replies:
Posted By: nikhil090
Date Posted: 08/Jul/2010 at 10:29am
Thanks for this great effort funkyappuji.
 
Management does not disclose much in the annual report and hence the datapoints are not so many.
 
On point 7, i think the MT figure is for Nutralite, ML No figures is for Sugr free (they sell in pellets, small tablets) and K.ltr is for Everyuth.
 
So the volume growth on an average is around 25% but the value growth was higher so company also increased the prices of some of the products in the last year..

Posted By: bihisello
Date Posted: 08/Jul/2010 at 10:54am
ML may be millilitre in which case abbreviation = ml. (thousandth of a litre).

Maybe expensive lotions?

Posted By: nikhil090
Date Posted: 08/Jul/2010 at 10:56am

No. It is Million Nos

Posted By: rajivsubra
Date Posted: 09/Jul/2010 at 2:00pm
How do companies such as ZW manage an accounts payable of close to 200 days. Do they really get more than six months of credit from their suppliers?

Posted By: dilip.r
Date Posted: 28/Jul/2010 at 6:03pm
The company aims to achieve 500 crore sales by 2013-14. ??
 
268cr in 2009-10 to 500crs in 2013-14
4yrs CAGR of 16.87 topline.??
 
are we looking for much higher CAGR on bottem line ?
 


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