Final Report FIN440

NORTH SOUTH UNIVERSITY Group Project FIN 440 Section: 02 Submitted to: Mirza M Ferdous Submitted by: Name Sazzadul karim chowdhury

ID 1621595630

Fariha Tabassum Chowdhury

1811323630

Anika Farzana Chowdhury

1822130630

Rehana kabir

1821446630

Mashfica Tazreen

1831850630

Shafayet Ahmed Shahathat Hosan Shanto

1911652630 1911108630

Date of Submission: 17/04/2021

Introduction:

Marico Bangladesh Limited is a beauty brand in Bangladesh. It is among the top 3 of the FMCG MNC companies. It has 790,000 outlets in the country and has impacted the lives of 1 in 2 Bangladeshis. Marico has products in various segments such as hair nourishment, edible oil and male grooming. The brand has been regarded as the top 10 most trusted brands for the past decade. In 2011, Marico received the title of "Best Brand" by Bangladesh Brand Forum and Nielsen. Marico’s main objective is to create industry-leading value with brands and products that consumers would prefer. The company makes active effort conserving resources, protecting the environment, and improving social conditions for those who need it most. The company has strengthened its portfolio, most notably through its Hair Oil products. The company continued to diversify its portfolio with a wide variety of products. The company’s motto is to “Make A Difference”. The Marico Innovation Foundation has enabled social organizations to significantly scale up operations to increase their social impact. They use innovation because they want to have an impact in the lives of people. 18,000 unemployed youths were given training by the NGO Yuva Parivartan, to provide them with a bright future. The Marico Innovation Foundation believed that by empowering Yuva Parivartan to scale up its operations, it could have an impact on many more. Using its Social Acceleration Programme, innovative thinking and patented processes, the lives of 100,000 youths was changed within a year. They see social responsibility as a moral and ethical duty rather than an obligation. They truly “Make a difference” using their initiatives that enhance the lives in their immediate neighbourhoods and programs that have a significant impact on the economy. Marico stands out unique because of the level of impact they have on the lives of the people of Bangladesh. The company is making a significant difference to our society and our economy. It stands out from others as rather than just focusing on portfolio diversity and profits, it also thinks about the environment and its consumers.

Sales Growth:

year

sales

growth

2015-2016

7065895334

2016-2017

6916109929

-2.17%

2017-2018

7814663479

11.50%

2018-2019

8768160138

10.87%

2019-2020

9795911357

10.49%

Average=

7.67%

Sales growth rate: 10.17% Justification: In the near future, Marico's revenue growth has been estimated at 10,17% per annum after 2020.We have used several techniques to calculate the sales growth rate. First of all, we have calculated the growth of the company for each of the year from 2016-2020 using the following formula, new−old new We have made an average of these 4 years sales growth rate. The average was 7.67%

Percentage of Sales (POS):

Calculatio Cash Inventory

Pro-Forma:

Cash/Sales = Inventory/Sales =

Sales 0.2591891343 Cash 0.1666105649 Inventory

pro forma sales forecast

10,792,155,540

partial pro forma calculations Cash (Cash%)(Sales Forecast) =463,162,407 Inventory (Inventory%)(Sales Forecast) = 16.6%(10,792,155,540) =1791497820 Costs (Costs%)(Sales Forecast) = 51510396 3007529583 AP

Balance Sheet Assets Current Assets Cash Accounts Receivable other financial assets assets held for sale Inventory Total Current Assets   Fixed Assets Net Fixed Assests       Total Assets

Income Statement   Sales Cost of Goods Sold Taxable Income Taxes Net Income dividends

2020  

  420,407,014 601,458,728 1,423,654,628 35,865,465 1,632,102,325 4,113,488,160

   

    894,507,126

     

  5,007,995,286

2020 9,795,911,357 4,124,374,537 3,572,083,739 925,845,292 193,245,424

2021 Liabilities and Owners' Equity Current Liabilities 463,162,407 Accounts Payable 662,627,080 employee benefit obligation 1,568,440,303 current tax liabilities 35,865,465 lease liabilities 1,791,497,820 Total Current Liabilities 4,521,593,075 Long-Term Liabilities Long-Term Debt Total Long-Term Liabilities 985,478,500 Owners' Equity share capital share premium Retained Earnings Total Owners' Equity 5,507,071,575 Total Liab. and Owners' Equity

2021 10,792,155,540 4,518,561,614 3935364655 2,797,208,002.00 212,898,483.00

-

-

Addition to Retained Earning-

-

EFN = 5507071575 – 5303595610 = 203475965

2020  

2021  

2,711,929,259 6,516,576 605,442,847 42,836,393 3,366,725,075  

3007529583 6,516,576 605,442,847 42,836,393 3,662,325,399

  253,589,979 253,589,979

 

253,589,979 253,589,979  

315,000,000 252,000,000 820,680,232 1,387,680,232 5,007,995,286

315,000,000 252,000,000 820,680,232 1,387,680,232 5,303,595,610

Current Ratio Current ratio = Current assets /Current liabilities 1.35 1.32 1.3 1.25

1.25 1.2 1.15

1.13

1.1 1.05 1 2018

2019

2020

Interpretation: The Company has been maintaining the current ratio more than 1.0 which reflects a healthy liability state. Considering 2018, 2019 and 2020 the ratio has been downward sloping because of other payables. Debt Ratio Debt Ratio = Total Debt / Total Asset 73% 0.72

72%

0.72

71% 70% 69% 68% 67%

0.67

66% 65% 64% 2018

2019

2020

Interpretation: In 2018 debt ratio was 67% but 2019 and 2020 reached to 72%. It shows that, the company is slightly deteriorating its asset to cover the debt. The company increased in last year which is not good sign at all. Earning Per Share Earning Per Share = Net Income / Shares Outstanding 90

84.01

80 70

64.23

60 52.15 50 40 30 20 10 0 2018 (TK)

2019 (TK)

2020 (TK)

Interpretation: EPS ratio represents the income against each share. Here considering year 2018 the company’s EPS ratio was 52.15 ,2019 was 64.23 and 2020 was 84.01so it shows god position and their investment was worthy for their company. Profit Margin Profit Margin = Net Income / Sales 300 264.62 250 202.34 200 164.26 150

100

50

0 2018

2019

2020

Interpretation: From the graph we can see that, the company is not generating good profit at all. Because the graph is not upward sloping. Debt Equity Ratio Debt Equity Ratio = Total Liability / Total Equity 3 2.5

2.5

2

2.6

1.98

1.5

1

0.5

0 2018

Decision for budgeting:

2019

2020

• As revenues rise, all assets will rise as well. • We expected that only the revaluation reserve and non-controlling interest would rise as revenues increased in the equity section. The amount of common stock and surplus would remain constant. • Businesses will use LTD as a plug vector for EFN, causing long-term debt to shift.

• With the exception of short-term borrowing, all existing liabilities would rise as a result of the transaction.

The company has a positive EFN for the forecasted years. This means that in order to finance its revenue growth, the business would need to raise funds from outside sources. In this case, we'll assume that the company is generating sales by using the asset's fuII power. To fit the balance sheet gap, we thought the company would use Long Term Debt as the plug component. This is due to the fact that financing LTD is less expensive than issuing new stock. The company's interest cost will rise over the year due to the increase in LTD.