Program & Batch: PGDM 2014-2016

Term: Term-I
Course Name: FINANCIAL REPORTING AND ANALYSIS
Name of the faculty: SACHIN CHOUDHRY
Topic/ Title : FINANCIAL ANALYSIS OF
GlaxoSmithKline Pharma Ltd. and Sanofi India Ltd.
Original
or Revised Write-up:
ORIGINAL
Group Number: 4
Contact No. and email of Group
Coordinator:
9717711008, deepti.tripathi16@gmail.com
Group Members: Sl. Roll No. Name
1 1401-01049 DeeptiTripathi
2 1401-01017 AmruthPavanDavuluri
3 1401-01131 ChaitanyaRenduchintala
4 1401-02067 Kumar Aniket
5 1401-03048 Chandan Kumar Jha
6 1401-03108 Neha Kasana
7 1401-03146 SaptadipSaha










FINANCIAL ANALYSIS OF
GlaxoSmithKline Pharma Ltd.
and
Sanofi India Ltd.
















Table of Contents

INTRODUCTION
BALANCE SHEETS AND PROFIT & LOSS STATEMENTS
KEY RATIO ANALYSIS
CONCLUSION
REFERENCES
















INTRODUCTION

GlaxoSmithKline Pharma Ltd is the Indian subsidiary of Glaxosmithkline Plc., a leading
pharmaceutical and healthcare company. It is headed by Deepak Parekh. The share price as on
August 12, 2014 is Rs.2513.45.

Sanofi India Ltd. Is the Indian subsidiary of Sanofi S.A. headquartered in Paris, France and is a
leading pharmaceutical company. It is headed by Vijay Mallya. The share price as on August 12,
2014 is Rs.3048.85.














Sanofi India Ltd.
(Profit and loss statement)
INCOME : 0.00 0.00 0.00 0.00 0.00 0.00
Sales Turnover 1854.85 1612.82 1330.20 1107.26 995.79 1029.45
Excise Duty 45.99 39.78 28.86 22.31 21.38 34.08
Net Sales 1808.86 1573.04 1301.34 1084.95 974.41 995.37
Other Income 83.24 41.17 155.61 267.42 167.35 125.43
Stock Adjustments 9.47 8.93 10.12 12.03 23.46 -22.36
Total Income 1901.57 1623.14 1467.07 1364.40 1165.22 1098.44
EXPENDITURE : 0.00 0.00 0.00 0.00 0.00 0.00
Raw Materials 828.90 744.42 626.93 551.02 505.42 465.99
Power & Fuel Cost 41.83 34.15 27.08 21.08 19.50 20.42
Employee Cost 242.13 213.78 176.42 161.25 141.03 116.37
Other Manufacturing Expenses 51.26 49.43 45.81 46.90 39.71 54.17
Selling and Administration Expenses 306.76 280.89 235.20 214.16 180.61 144.29
Miscellaneous Expenses -50.45 -52.51 40.08 37.62 20.07 19.10
Less: Pre-operative Expenses Capitalised 0.00 0.00 0.00 0.00 0.00 0.00
Total Expenditure 1420.43 1270.16 1151.52 1032.03 906.34 820.34
Operating Profit 481.14 352.98 315.55 332.37 258.88 278.10
Interest 0.42 1.40 0.42 2.89 0.07 0.34
Gross Profit 480.72 351.58 315.13 329.48 258.81 277.76
Depreciation 92.26 89.87 31.15 19.74 17.34 18.21
Profit Before Tax 388.46 261.71 283.98 309.74 241.47 259.55
Tax 107.87 72.23 74.32 74.27 81.24 90.44
Fringe Benefit tax 0.00 0.00 0.00 0.00 2.07 5.61
Deferred Tax 15.41 12.82 18.48 4.72 0.74 -2.70
Reported Net Profit 265.18 176.66 191.18 230.75 157.42 166.20
Extraordinary Items 25.22 -0.05 -0.01 75.53 -0.16 -0.37
Adjusted Net Profit 239.96 176.71 191.19 155.22 157.58 166.57
Adjst. below Net Profit 0.00 0.00 0.00 0.00 0.00 0.00
P & L Balance brought forward 913.32 842.65 758.45 698.34 610.55 504.09
Statutory Appropriations 0.00 0.00 0.00 0.00 0.00 0.00
Appropriations 148.28 105.99 106.98 170.64 69.63 59.74
P & L Balance carried down 1030.22 913.32 842.65 758.45 698.34 610.55
Dividend 103.64 76.00 76.00 126.67 46.06 36.85
Preference Dividend 0.00 0.00 0.00 0.00 0.00 0.00
Equity Dividend % 450.00 330.00 330.00 550.00 200.00 160.00
Dividend Per Share(Rs) 45.00 33.00 33.00 55.00 20.00 16.00
Earnings Per Share-Unit Curr 107.28 71.36 77.86 91.12 64.95 69.44
Earnings Per Share(Adj)-Unit Curr 107.28 71.36 77.86 91.12 64.95 69.44
Book Value-Unit Curr 580.30 518.02 479.67 434.81 398.68 353.73
Book Value(Adj)-Unit Curr 580.30 518.02 479.67 434.81 398.68 353.73



(Balance sheet)

Particulars Dec-2013 Dec-2012 Dec-2011 Dec-2010 Dec-2009 Dec-2008
SOURCES OF FUNDS :
Share Capital 23.03 23.03 23.03 23.03 23.03 23.03
Reserves Total 1,323.67 1,181.09 1,093.59 991.12 908.76 806.07
Equity Share Warrants 0 0 0 0 0 0
Equity Application Money 0 0 0 0 0 0
Total Shareholders Funds 1,346.70 1,204.12 1,116.62 1,014.15 931.79 829.10
Secured Loans 0 0 0 0 0 0
Unsecured Loans 0 0 0 0 0 0
Total Debt 0 0 0 0 0 0
Other Liabilities 26.02 19.28 20.56 0 0 0
Total Liabilities 1,372.72 1,223.40 1,137.18 1,014.15 931.79 829.10
APPLICATION OF FUNDS :
Gross Block 1,102.18 1,014.38 967.92 375.50 334.57 320.92
Less : Accumulated Depreciation 403.63 315.02 230.95 204.45 189.68 178.09
Less:Impairment of Assets 0 0 0 0 0 0
Net Block 698.55 699.36 736.97 171.05 144.89 142.83
Lease Adjustment 0 0 0 0 0 0
Capital Work in Progress 136.20 43.47 22.86 13.30 27.14 6.25
Producing Properties 0 0 0 0 0 0
Investments 0.24 0.36 0.36 0.36 5.19 5.19
Current Assets, Loans & Advances
Inventories 340 272.45 254.27 238.47 231.14 172.55
Sundry Debtors 118.31 98.90 104.09 60.44 52.73 89.50
Cash and Bank 264.40 430.20 234.23 655.35 585.95 497.37
Loans and Advances 224.43 27.10 74.15 259.59 143.72 136.32
Total Current Assets 947.14 828.65 666.74 1,213.85 1,013.54 895.74
Less : Current Liabilities and
Provisions

Current Liabilities 277.03 238.16 218.54 173.70 158.17 138.44
Provisions 158.35 148.47 138.36 220.56 115.37 97.79
Total Current Liabilities 435.38 386.63 356.90 394.26 273.54 236.23
Net Current Assets 511.76 442.02 309.84 819.59 740 659.51
Miscellaneous Expenses not written off 0 0 0 0 0 0
Deferred Tax Assets 28.47 26.19 22.81 25.32 29.80 28.21
Deferred Tax Liability 65.16 47.47 31.27 15.47 15.23 12.89
Net Deferred Tax -36.69 -21.28 -8.46 9.85 14.57 15.32
Other Assets 62.66 59.47 75.61 0 0 0
Total Assets 1,372.72 1,223.40 1,137.18 1,014.15 931.79 829.10
Contingent Liabilities 147.75 119.44 143.58 115.36 140.51 145.83





GlaxoSmithKline Pharma Ltd.
(Profit and loss statement)
Particulars Dec-2013 Dec-2012 Dec-2011 Dec-2010 Dec-2009 Dec-2008
INCOME : 0.00 0.00 0.00 0.00 0.00 0.00
Sales Turnover 2636.81 2717.66 2468.99 2195.16 1950.39 1787.00
Excise Duty 74.12 70.98 54.59 44.10 40.46 87.98
Net Sales 2562.69 2646.68 2414.40 2151.06 1909.93 1699.02
Other Income 205.29 178.18 145.61 131.22 136.07 309.98
Stock Adjustments 51.10 -53.46 56.04 19.92 32.87 2.21
Total Income 2819.08 2771.40 2616.05 2302.20 2078.87 2011.21
EXPENDITURE : 0.00 0.00 0.00 0.00 0.00 0.00
Raw Materials 1214.85 1050.85 975.37 808.07 735.05 658.00
Power & Fuel Cost 23.85 22.50 26.70 26.75 24.66 24.75
Employee Cost 362.09 393.57 287.49 234.53 203.98 168.36
Other Manufacturing Expenses 90.70 64.49 74.63 65.10 60.08 52.64
Selling and Administration Expenses 321.58 286.84 269.93 247.46 220.60 183.42
Miscellaneous Expenses 74.68 100.94 356.39 56.93 41.81 83.79
Less: Pre-operative Expenses Capitalised 0.00 0.00 0.00 0.00 0.00 0.00
Total Expenditure 2087.75 1919.19 1990.51 1438.84 1286.18 1170.96
Operating Profit 731.33 852.20 625.54 863.36 792.69 840.25
Interest 0.00 0.00 0.33 0.62 0.37 0.53
Gross Profit 731.33 852.20 625.21 862.74 792.32 839.72
Depreciation 19.88 17.84 20.41 17.63 16.37 16.34
Minority Interest (before tax) 0.00 0.00 0.00 0.00 0.00 0.00
Profit Before Taxk 711.45 834.36 604.80 845.11 775.95 823.38
Taxk 235.35 297.56 188.41 296.24 281.35 234.60
Fringe Benefit Tax 0.00 0.00 -7.15 0.00 1.85 7.15
Deferred Tax -5.57 -25.08 -5.05 -11.70 -15.11 -9.45
Net Profit 481.67 561.88 428.59 560.57 507.86 591.08
Minority Interest (after tax) 0.00 0.00 0.00 0.00 0.00 0.00
Profit/Loss of Associate Company 0.00 0.00 0.00 0.00 0.00 0.00
Net Profit after Minority Interest & P/L Asso.Co. 481.67 561.88 428.59 560.57 507.86 591.08
Extraordinary Items 18.67 -95.24 -158.02 -16.86 9.66 87.82
Adjusted Net Profit 463.00 657.12 586.61 577.43 498.20 503.26
Adjst. below Net Profit 0.00 0.00 0.00 0.00 0.00 0.00
P & L Balance brought forward 1152.42 1139.68 1200.22 1092.59 934.61 797.58
Statutory Appropriations 0.00 0.00 0.00 0.00 0.00 0.00
Appropriationsk 549.43 549.14 489.13 452.94 349.88 454.05
P & L Balance carried down 1084.66 1152.42 1139.68 1200.22 1092.59 934.61
Dividend 423.52 423.52 381.16 338.81 254.11 338.81
Preference Dividend 0.00 0.00 0.00 0.00 0.00 0.00
Equity Dividend (%) 500.00 500.00 450.00 400.00 300.00 400.00
Dividend Per Share(Rs) 50.00 50.00 45.00 40.00 30.00 40.00
EPS before Minority Interest (Unit Curr.) 47.98 58.40 43.13 59.54 54.86 62.99
EPS before Minority Interest (Adj) (Unit Curr.) 47.98 58.40 43.13 59.54 54.86 62.99
EPS after Minority Interest (Unit Curr.) 47.98 58.40 43.13 59.54 54.86 62.99
EPS after Minority Interest (Adj) (Unit Curr.) 47.98 58.40 43.13 59.54 54.86 62.99
Book Value (Unit Curr.) 234.91 236.93 228.54 230.41 210.87 186.01
Book Value (Adj) (Unit Curr.) 234.91 236.93 228.54 230.41 210.87 186.01

(Balance sheet)
Particulars Dec-2013 Dec-2012 Dec-2011 Dec-2010 Dec-2009 Dec-2008
SOURCES OF FUNDS :
Share Capital 84.70 84.70 84.70 84.70 84.70 84.70
Reserves Total 1,932.49 1,925.31 1,835.23 1,846.11 1,674.45 1,456.39
Equity Share Warrants 0 0 0 0 0 0
Equity Application Money 0 0 0 0 0 0
Total Shareholders Funds 2,017.19 2,010.01 1,919.93 1,930.81 1,759.15 1,541.09
Secured Loans 0 0 0 0 0 0
Unsecured Loans 4.14 4.59 4.90 5.16 5.42 5.65
Total Debt 4.14 4.59 4.90 5.16 5.42 5.65
Other Liabilities 246.01 239.76 228.56 0 0 0
Total Liabilities 2,267.34 2,254.36 2,153.39 1,935.97 1,764.57 1,546.74
APPLICATION OF FUNDS :
Gross Block 299.08 272.04 271.66 318.40 289.18 282.15
Less : Accumulated Depreciation 199.01 182.63 172.53 209.47 196.37 191.75
Less:Impairment of Assets 0 0 0 0 0 0
Net Block 100.07 89.41 99.13 108.93 92.81 90.40
Lease Adjustment 0 0 0 0 0 0
Capital Work in Progress 61.86 43.79 16.19 8.72 21.36 9.95
Producing Properties 0 0 0 0 0 0
Investments 57.67 102.58 159.80 160.35 190.91 751.87
Current Assets, Loans & Advances
Inventories 342.40 282.04 330.14 281.54 253.02 228.38
Sundry Debtors 96.39 115.90 85.31 47.02 53.73 57.94
Cash and Bank 2,027.14 2,038.78 1,984.09 1,948.08 1,672.60 906.54
Loans and Advances 125.80 130.77 112.73 171.69 135.07 198.17
Total Current Assets 2,591.73 2,567.49 2,512.27 2,448.33 2,114.42 1,391.03
Less : Current Liabilities and
Provisions

Current Liabilities 363.70 323.09 266.40 346.22 316.66 271.60
Provisions 518.83 512.21 591.27 500.54 382.96 454.50
Total Current Liabilities 882.53 835.30 857.67 846.76 699.62 726.10
Net Current Assets 1,709.20 1,732.19 1,654.60 1,601.57 1,414.80 664.93
Miscellaneous Expenses not written off 0 0 0 0 0 0
Deferred Tax Assets 96.90 89.75 67.43 65.14 52.28 38.70
Deferred Tax Liability 4.79 3.21 5.96 8.74 7.59 9.11
Net Deferred Tax 92.11 86.54 61.47 56.40 44.69 29.59
Other Assets 246.43 199.87 162.20 0 0 0
Total Assets 2,267.34 2,254.37 2,153.39 1,935.97 1,764.57 1,546.74
Contingent Liabilities 327.50 228.40 277.32 214.51 204.66 183.64


Key ratios and analysis
Current Ratio:

GlaxoSmithKline Pharma Ltd: 3.1
Sanofi India Ltd: 2.0

Current ratio for both the companies have value more than 1 which indicates that both
the companies have sufficient short term assets to pay back its short term liabilities. As
GlaxoSmithKline has higher current ratio value, it is in a better position in paying its
obligations when compared to Sanofi India Ltd.

Inventory Turnover Ratio:

GlaxoSmithKline Pharma Ltd: 8.4
Sanofi India Ltd: 6.1

As Sanofi India ltd has less invent turnover ratio as compared to GlaxoSmithKline, Sanofi
has less sales compared to GSK and this results in more inventory holding period for
Sanofi than that of GSK. It means that Sanofi is blocking more funds in inventory
handling which could have been raised through interest compared to GSK

Debtors Turnover Ratio:

GlaxoSmithKline Pharma Ltd: 24.7
Sanofi India Ltd: 17.1

Sanofi India Ltd. has lower Receivables or Debtors turnover ratio indicates that the
company takes longer time in collection of its credit than the time taken by GSK which
further implies that GSK has a better credit policy than Sanofi.

Fixed Assets Turnover Ratio:

GlaxoSmithKline Pharma Ltd: 9.2
Sanofi India Ltd: 1.8

GSK has very high Fixed Asset Turnover ratio than Sanofi which means that GSK has
been using the investment in fixed assets more effectively in generating the revenues as
compared to Sanofi India ltd.

Interest coverage ratio:

GlaxoSmithKline Pharma Ltd: 0
Sanofi India Ltd: 925.9

Sanofi India Ltd. has interest coverage ratio of 925.9 indicates that it is in a good
position in paying interest on its outstanding debt whereas GSK has ratio value as 0
which means that no interest money is to be paid by the company.

Dividend Yield ratio:

GlaxoSmithKline Pharma Ltd: 1.7
Sanofi India Ltd: 1.6

GSK has the dividend Yield ratio of 1.7 while Sanofi India Ltd has the Dividend yield ratio
of 1.6. It says that GSK is giving higher dividends relative to its share price to
shareholders than Sanofi India Ltd

Price Earnings ratio (PE):

GlaxoSmithKline Pharma Ltd: 58.9
Sanofi India Ltd: 25.8

GSK is having higher P/E ratio compared to Sanofi which states that the investors of the
company are expecting higher earnings in the future when compared to that of Sanofi
India Ltd. It also tells us that the investors are inclined to spend more in stocks of GSK
than in Sanofi.

Price/ Book value ratio (P/BV):

GlaxoSmithKline Pharma Ltd: 12.6
Sanofi India Ltd: 4.8

Higher Price/Book value ratio of GSK indicates that the shareholders of it are paying
higher amount for the net assets of GSK than the amount Sanofi shareholders are
paying.

Earnings per share (EPS):

GlaxoSmithKline Pharma Ltd: 50.9
Sanofi India Ltd: 107.3

Earnings per Share for Sanofi India Ltd is higher than GSK which means that GSK can
allocate Rs. 50.9 and Sanofi can allocate Rs. 107.3 from its profit for one equity share.
This Implies that Sanofi India Ltd allocates larger portion of its profits to one equity
share than GSK.

Return on Capital Employed (ROCE):

GlaxoSmithKline Pharma Ltd: 32.3
Sanofi India Ltd: 30.2

ROCE ratio for GSK is better than Sanofi India Ltd which means that for every Rs.100
capital employed by GSK and Sanofi gives a return or profit before interest and tax of
Rs.32.3 and Rs.30.2 respectively. GSK is using capital more efficiently and is generating a
higher shareholder value compared to Sanofi.

Profit before Interest and Tax Margin:
GlaxoSmithKline Pharma Ltd: 27.8%
Sanofi India Ltd.: 21.0%

This term is used to check the profit of a company before interest payments and
income taxes. Since this excludes both interests and profits, this figure gives a fair
picture of the ability of a company to make profits. Here between Glaxosmithkline and
Sanofi, since GlaxoSmithKline has more percentage, GlaxoSmithKline has the ability to
make more profits.



Cash Flow Margin:
GlaxoSmithKline Pharma Ltd: 19.9%
Sanofi: 19.3%

This is used to measure how much the company is converting its sales into dollar. This
gives an idea to the investor about what are the long term trends of the company. If the
company is getting a negative value, it is dependent on outside funds. Companies
usually make use of internally generated cash. Since both the companies are almost the
same or if comparison needs to be done then Glaxosmithkline has a slight edge over
Sanofi in this regard.

Return on Net Worth:
GlaxoSmithKline Pharma Ltd: 24.9%
Sanofi: 21.0%

Also known as return of equity, this is defined as the amount of net income returned as
a percentage of shareholders equity. This is actually used to determine the profits
generated by the company on the shareholders money. If new shareholders are added,
then the weighted average of the number of shares is taken. High growth companies
generally have high Return on Net worth. Taking into consideration the above figures of
both the companies Glaxosmithkline is generating more profits from the shareholders
money.

Quick Ratio:
GlaxoSmithKline Pharma Ltd: 2.21
Sanofi: 1.34

This ratio is used to determine the companys short term liquidity. This is an indicator
about how much a company can meet its short term liabilities with its cash and cash
equivalents or liquid assets. Based on the figures, Glaxosmithkline has more liquid assets
than Sanofi India Ltd.



Net profit margin:
GlaxoSmithKline Pharma Ltd: 18.26%
Sanofi: 14.20%

This is the ratio of profitability which is calculated by dividing net income by
revenues/sales. A higher NPM indicates that it is a profitable company and has better
control over its costs. Here Glaxosmithkline has more profitability than Sanofi.

Dividend per share:
GlaxoSmithKline Pharma Ltd: 50
Sanofi: 45

This is nothing but the total dividends paid by the company divided by the total number
of outstanding ordinary shares. Special dividends are not included in this ratio.
Glaxosmithkline has a higher DPS than Sanofi.

















CONCLUSION

Depending on the above considered ratios, GlaxoSmithKline Pharma Ltd has more capital, sales
and revenue as compared to Sanofi India Ltd. Except some ratios like earnings per share and
interest coverage ratio which indicates that Sanofi India allocates larger chunk of its profits to
shareholders and is in a good position to pay debts. GlaxoSmithKline Pharma Ltd. Excels in
almost all ratios and hence is a good prospect for the investors if they are looking for a long
term earnings.











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REFERENCES
http://www.gsk-india.com/investor-annualreports.html
Accessed on 10
th
August 2013
http://www.sanofiindialtd.com/l/pw/en/layout.jsp?scat=51D31B1D-BEF1-4EBF-A3F2-
5EB988AC72C5
Accessed on 10
th
August 2013
http://www.indiainfoline.com/company/glaxosmithkline-pharma-ltd/195
Accessed on 10
th
August 2013
http://www.indiainfoline.com/company/sanofi-india-ltd/256
Accessed on 10
th
August 2013