Snapshot

Aditya Birla Nuvo Limited
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Aditya Birla Nuvo Limited - Company Capsule Page 1


Fast Facts
Headquarters Address 4th Floor, 'A' Wing, Mumbai, 400 030,India
Telephone + 91 22 24995000
Fax + 91 22 66525821
Website www.adityabirlanuvo.com
Ticker Symbol, Stock Exchange ABRL, National Stock Exchange of India
Number of Employees 19,750
Fiscal Year End March
Revenue (in US$ million) 4,836

Financial Snapshot

Operating Performance

The company reported revenue of US$4,836 million
during the fiscal year 2013 (2013). The company's
revenue grew at a CAGR of 14.16% during 2009
2013, with an annual growth of 16.71% over 2012. In
2013, the company recorded an operating margin of
5.90%, as against 5.54% in 2012.

Revenue and Margins

Liquidity Position

The company reported a current ratio of 1.11 in 2013,
as compared to its peers, Gujarat State Fertilizers &
Chemicals Limited, GHCL Limited and Religare
Enterprises Limited, which recorded current ratios of
1.72, 0.83 and 1.30 respectively. As of March 2013,
the company recorded cash and short-term
investments of worth US$1,276 million, against
US$485 million current debt. The company reported a
debt to equity ratio of 1.99 in 2013 as compared to its
peers, Gujarat State Fertilizers & Chemicals Limited,
GHCL Limited and Religare Enterprises Limited,
which recorded debt to equity ratios of 0.38, 2.75 and
4.25 respectively.


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TABLE OF CONTENTS

1 Business Analysis ................................................................................................................................... 5
1.1 Company Overview ................................................................................................................................................ 5
1.2 Major Products and Services ................................................................................................................................. 6
2 Analysis of Key Performance Indicators ............................................................................................... 7
2.1 Five Year Snapshot: Overview of Financial and Operational Performance Indicators .......................................... 7
2.2 Key Financial Performance Indicators ................................................................................................................. 10
2.2.1 Revenue and Operating Profit ......................................................................................................................... 10
2.2.2 Asset and Liabilities ......................................................................................................................................... 11
2.2.3 Net Debt vs. Gearing Ratio .............................................................................................................................. 12
2.2.4 Operational Efficiency ...................................................................................................................................... 13
2.2.5 Solvency .......................................................................................................................................................... 14
2.2.6 Valuation .......................................................................................................................................................... 15
2.3 Competitive Benchmarking .................................................................................................................................. 16
2.3.1 Market Capitalization ....................................................................................................................................... 17
2.3.2 Efficiency .......................................................................................................................................................... 18
2.3.3 Turnover Inventory and Asset ....................................................................................................................... 19
2.3.4 Liquidity ............................................................................................................................................................ 20
3 Recent Developments ........................................................................................................................... 21
4 Key Employees ...................................................................................................................................... 22
5 Locations and Subsidiaries .................................................................................................................. 23
5.1 Head Office .......................................................................................................................................................... 23
5.2 Other Locations and Subsidiaries ........................................................................................................................ 23
6 Appendix ................................................................................................................................................ 24
6.1 Methodology ......................................................................................................................................................... 24
6.2 Ratio Definitions ................................................................................................................................................... 24
6.3 Disclaimer ............................................................................................................................................................. 28


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List of Tables

Table 1: Major Products and Services.................................................................................................................................... 6
Table 2: Key Ratios - Annual .................................................................................................................................................. 7
Table 3: Key Ratios - Interim .................................................................................................................................................. 9
Table 4: Key Capital Market Indicators .................................................................................................................................. 9
Table 5: Key Employees ....................................................................................................................................................... 22
Table 6: Subsidiaries ............................................................................................................................................................ 23


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List of Figures
Figure 1: Revenue and Operating Profit ............................................................................................................................... 10
Figure 2: Financial Position .................................................................................................................................................. 11
Figure 3: Net Debt vs. Gearing Ratio ................................................................................................................................... 12
Figure 4: Operational Efficiency ........................................................................................................................................... 13
Figure 5: Solvency ................................................................................................................................................................ 14
Figure 6: Valuation ............................................................................................................................................................... 15
Figure 7: Market Capitalization ............................................................................................................................................. 17
Figure 8: Efficiency ............................................................................................................................................................... 18
Figure 9: Turnover Inventory and Asset ............................................................................................................................ 19
Figure 10: Liquidity ............................................................................................................................................................... 20


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1 Business Analysis

1.1 Company Overview

Aditya Birla Nuvo Limited (ABNL) is a diversified company, based in India. The company operates its business in the
areas of financial services, telecom, fashion and lifestyle, IT-ITeS and manufacturing businesses worldwide. Its financial
products include life insurance, wealth insurance, health insurance and retirement plans. In addition, ABNL offers financial
services, such as asset management, private equity transaction, equity and commodity broking service, wealth
management and insurance advisory services. The company markets its products under the rband names of ADITYA
BIRLA Minacs, BIRLA CARBON, Aditya Birla Finance, Aditya Birla Insurance Brokers, Aditya Birla Money and others. It
operates through its joint ventures and subsidiaries such as Birla Sun Life Insurance Company Limited, Birla Sun Life
Asset Management Company Limited, Aditya Birla Capital Advisors Private Limited and Aditya Birla Money Limited,
among others. ABNL is headquartered in Mumbai, Maharashtra, India.


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1.2 Major Products and Services

ABNL is a diversified company. Key products and services offered by the company include the following:

Table 1: Major Products and Services
Products:
Life insurance
Wealth insurance
Health insurance
Retirement plans
Loan
Deposit
Mutual fund
Services:
Asset management
Private equity transaction
Equity and commodity broking service
Wealth management
Insurance advisory services
Marketing
Finance
Accounting
Procurement
IT solutions
Source: World Market Intelligence


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2 Analysis of Key Performance Indicators

2.1 Five Year Snapshot: Overview of Financial and Operational Performance Indicators

The company reported revenue of US$4,836 million during the fiscal year 2013 (2013). The company's revenue grew at a
CAGR of 14.16% during 20092013, with an annual growth of 16.71% over 2012. During 2013, operating margin of the
company was 5.90% in comparison with operating margin of 5.54% in 2012. In 2013, the company recorded a net profit
margin of 4.10% compared to a net profit margin of 4.02% in 2012.

Table 2: Key Ratios - Annual
Key Ratios Unit/Currency 2013 2012 2011 2010 2009
Equity Ratios
EPS (Earnings per Share) INR 91.50 78.36 75.74 14.80 -46.28
Dividend per Share INR 6.50 6.00 5.50 5.00 4.00
Dividend Cover Absolute 14.08 13.06 13.77 2.96 -11.57
Book Value per Share INR 780.60 662.17 586.10 529.00 601.70
Profitability Ratios
Gross Margin % 65.27 68.60 72.90 75.78 76.62
Operating Margin % 5.90 5.54 5.93 1.00 -3.95
Net Profit Margin % 4.10 4.02 4.47 0.98 -3.13
Profit Markup % 203.15 237.49 292.50 349.02 300.52
PBT Margin (Profit Before Tax) % 5.90 5.54 5.93 1.00 -3.95
Return on Equity % 11.28 11.84 12.31 2.82 -7.59
Return on Capital Employed % 3.68 3.68 3.58 0.54 -2.31
Return on Assets % 1.85 1.97 2.08 0.48 -1.62
Return on Fixed Assets % 3.85 3.85 3.81 0.59 -2.59
Return on Working Capital % 85.97 85.34 59.76 7.33 -21.32
Growth Ratios
Sales Growth % 16.62 19.96 17.08 8.25 26.25
Operating Income Growth % 24.43 12.38 592.42 -463.03
EBITDA Growth % 21.68 14.10 98.42 599.63 -78.38
Net Income Growth % 18.96 8.28 431.90 -388.98
EPS Growth % 7.11 2.04 470.71 -391.18
Working Capital Growth % 23.52 -21.31 -15.01 -16.63 14.38
Cost Ratios
Operating Costs (% of Sales) % 94.10 94.46 94.07 99.00 103.95
Administration Costs (% of Sales) % 51.60 49.46 14.98 16.60 19.87
Liquidity Ratios
Current Ratio Absolute 1.11 1.12 1.20 1.64 1.84
Quick Ratio Absolute 1.00 1.01 1.07 1.37 1.57
Cash Ratio Absolute 0.44 0.43 0.57 0.22 0.50
Leverage Ratios
Debt to Equity Ratio Absolute 1.99 1.65 1.39 1.37 1.55
Net Debt to Equity Absolute 2.02 1.73 1.39 1.41 1.63
Debt to Capital Ratio Absolute 0.45 0.37 0.30 0.26 0.38
Efficiency Ratios


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Table 2: Key Ratios - Annual
Key Ratios Unit/Currency 2013 2012 2011 2010 2009
Asset Turnover Absolute 0.45 0.49 0.46 0.49 0.52
Fixed Asset Turnover Absolute 3.09 2.96 2.46 2.26 2.24
Inventory Turnover Absolute 4.58 4.69 3.72 3.79 4.25
Current Asset Turnover Absolute 1.48 1.66 1.68 2.85 2.47
Capital Employed Turnover Absolute 2.75 2.95 2.76 2.88 2.42
Working Capital Turnover Absolute 14.57 15.42 10.08 7.34 5.40
Revenue per Employee INR 13,252,868.00
Net Income per Employee INR 557,311.00
Capex to Sales % 6.42 7.54 15.66 9.30 16.85
R&D to Sales % 0.01 0.01


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Table 3: Key Ratios - Interim
Key Ratios Unit/Currency Jun-2013 Mar-2013 Dec-2012 Sep-2012
Equity Ratios
Interim EPS (Earnings per Share) INR 27.23 13.48 28.45 26.78
Book Value per Share INR 780.60 748.61
Gross Margin % 79.48 69.24 70.12 70.87
Operating Margin % 7.41 3.38 7.17 6.96
Net Profit Margin % 5.67 2.06 5.05 5.00
Profit Markup % 446.78 246.25 256.32 268.41
PBT Margin (Profit Before Tax) % 7.41 3.38 7.17 6.96
Cost Ratios
Operating Costs (% of Sales) % 92.59 96.62 92.83 93.04
Administration Costs (% of Sales) % 32.43 25.17 29.52 27.67
Liquidity Ratios
Current Ratio Absolute 1.11 1.17
Quick Ratio Absolute 1.00 1.02
Leverage Ratios
Debt to Equity Ratio Absolute 1.71 1.51
Net Debt to Equity Absolute 1.80 1.66
Debt to Capital Ratio Absolute 0.39 0.35

Table 4: Key Capital Market Indicators
Key Ratios 30-Oct-2013
P/E (Price/Earnings) Ratio 13.27
EV/EBITDA (Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization) 10.92
Enterprise Value/Sales 1.19
Enterprise Value/Operating Profit 20.19
Enterprise Value/Total Assets 0.54
Dividend Yield 0.01
Note: Above ratios are based on share price as of 30-Oct-2013. The above ratios are absolute numbers.


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2.2 Key Financial Performance Indicators

2.2.1 Revenue and Operating Profit

The consolidated group revenue of the company for 2013 stood at US$4,836 million, which corresponds to a growth rate
of 16.71% over the previous year. The operating margin of the company was 5.90% in 2013, an increase of 36.00 basis
points over the previous year.

Figure 1: Revenue and Operating Profit



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2.2.2 Asset and Liabilities

The company's assets grew 26.45% over the previous year to US$10,681 million in 2013. The company's liabilities grew
26.78% over the previous year to US$8,926 million in 2013. In 2013, the companys asset to liability ratio remained
unchanged at 1.20.

Figure 2: Financial Position



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2.2.3 Net Debt vs. Gearing Ratio

The company recorded higher net debt of US$3,497 million at the end of fiscal year 2013 when compared to the previous
year's net debt of US$2,314 million. The company's gearing ratio for the year 2013 was 0.95, which was higher when
compared to the previous year's gearing ratio of 0.70. The gearing ratio remained higher in 2013 due to higher debt
funding activities over equity.

Figure 3: Net Debt vs. Gearing Ratio



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2.2.4 Operational Efficiency

The company's working capital turnover for 2013 declined to 14.57, from the previous year's working capital turnover of
15.42. In 2013, the company's asset turnover declined to 0.45 from the previous year's asset turnover of 0.49.

Figure 4: Operational Efficiency



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2.2.5 Solvency

In 2013, the company's current ratio declined to 1.11 from the previous year's current ratio of 1.12. The companys quick
ratio declined to 1.00 in 2013 from the previous year's quick ratio of 1.01. In 2013, the companys debt ratio increased to
0.33 from the previous year's debt ratio of 0.27.

Figure 5: Solvency



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2.2.6 Valuation

As of 30-Oct-2013, the company recorded an EV/EBIT of 20.19, EV/Total Assets of 0.54 and EV/Sales of 1.19.

Figure 6: Valuation



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2.3 Competitive Benchmarking

The following companies are the major competitors of Aditya Birla Nuvo Limited:

Canara Bank Limited (Ticker: CANBK)

GHCL Limited (Ticker: GHCH)

Gujarat State Fertilizers & Chemicals Limited (Ticker: GSFC)

Himatsingka Seide Ltd. (Ticker: 514043)

Religare Enterprises Limited (Ticker: RELIGARE)


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For competitive benchmarking, latest financial results are considered. Following are the key performance indicators
against which the companies have been benchmarked:

2.3.1 Market Capitalization

As of 30-Oct-2013, the company recorded a market capitalization of US$3,178 million, higher than its close competitors
GHCL Limited (Ticker: GHCH), Gujarat State Fertilizers & Chemicals Limited (Ticker: GSFC) and Religare Enterprises
Limited (Ticker: RELIGARE) which recorded market capitalizations of US$67 million, US$501 million and US$1,058
million respectively. The company recorded earnings per share of US$1.99 in 2013, which has led to a price/earnings
ratio (P/E ratio) of 13.27. This was higher than the P/E ratios of its peers GHCL Limited (Ticker: GHCH) and Gujarat State
Fertilizers & Chemicals Limited (Ticker: GSFC), which recorded P/E ratio of 4.31 and 4.45 respectively.

Figure 7: Market Capitalization

Note: Company names are represented by ticker symbols
Bubble size represents Market Capitalization US$ Million
For those data points with negative values, bubbles will not be displayed.
Where the market cap is disproportionately smaller, a bubble may not be displayed.


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2.3.2 Efficiency

The company recorded an operating margin of 5.90% in 2013. This was higher than the operating margins of its peers,
GHCL Limited (Ticker: GHCH) and Religare Enterprises Limited (Ticker: RELIGARE), which recorded the margins of
4.24% and -7.39% respectively. In terms of revenues, the company is 11.35 times of GHCL Limited (Ticker: GHCH),
4.04 times of Gujarat State Fertilizers & Chemicals Limited (Ticker: GSFC), and 7.41 times of Religare Enterprises
Limited (Ticker: RELIGARE).

Figure 8: Efficiency



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2.3.3 Turnover Inventory and Asset

In 2013, the company reported an inventory turnover of 4.58, higher than that of its peers: during the same period, GHCL
Limited (Ticker: GHCH) and Religare Enterprises Limited (Ticker: RELIGARE), recorded inventory turnovers of 3.33 and
0.00 respectively. The companys asset turnover in 2013 was 0.45, lower than that of its peers: during the same period,
GHCL Limited (Ticker: GHCH) and Gujarat State Fertilizers & Chemicals Limited (Ticker: GSFC) recorded asset
turnovers of 0.79 and 0.92 respectively.

Figure 9: Turnover Inventory and Asset



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2.3.4 Liquidity

The company reported a current ratio of 1.11 in 2013, lower than that of its peers: during the same period, Gujarat State
Fertilizers & Chemicals Limited (Ticker: GSFC) and Religare Enterprises Limited (Ticker: RELIGARE) recorded current
ratios of 1.72 and 1.30 respectively In 2013, the company's debt to equity ratio was 1.99, lower than that of its peers:
during the same period, GHCL Limited (Ticker: GHCH) and Religare Enterprises Limited (Ticker: RELIGARE) recorded
debt to equity ratios of 2.75 and 4.25 respectively.

Figure 10: Liquidity



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3 Recent Developments

Aditya Birla Nuvo Limited - Van Heusen launches innovative campaign using LinkedIn's APIs to search for the most
fashionable professional

Van Heusen, the countrys numero uno professional fashion-wear brand is now on LinkedIn, the worlds largest professional
networking site.

Published Date : 7/1/2013 12:00:00 AM

Aditya Birla Nuvo reports results for the year ended 31 March 2013

Given the testing macro-economic scenario and earnings pressure in some of its businesses, Aditya Birla Nuvo Limited (ABNL) has
posted strong earnings. The company is competitively well placed in most of its businesses.


Aditya Birla Nuvo Limited-Louis Philippe is the top selling brand at shopping chains

Department chains Shoppers Stop, Pantaloons and Lifestyle International may fiercely compete with each other to court customers,
but they all swear by a common brand as their largest money-spinner.


Aditya Birla Nuvo Limited-Financial services, branded apparel, telecom buoy Aditya Birla Nuvo

Aditya Birla Nuvo Ltd reported growth in profitability for the fourth consecutive quarter on the back of robust growth in the financial
services business, which offset poor performance in the insurance and agricultural business.




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4 Key Employees

Table 5: Key Employees
Name Job Title Board Level Since Age
B. L. Shah Director Non Executive Board
B. R. Gupta Director Non Executive Board
Devendra Bhandari Secretary Senior Management
G. P. Gupta Director Non Executive Board 2005 71
Himanshu Kapania Head - Telecom Senior Management
Kumar Mangalam Birla Chairperson Executive Board 45
Manoj Kedia Deputy Chief Financial Officer Senior Management 46
P. Murari Director Non Executive Board 78
Pranab Barua
Head - Fashion And Lifestyle - Branded
Apparels
Senior Management
Rajashree Birla Director Non Executive Board 66
Rakesh Jain Director, Managing Director Executive Board 2009
S. C. Bhargava Director Non Executive Board 2011 66
Sushil Agarwal Director, Chief Financial Officer Executive Board 2011
Tapasendra
Chattopadhyay
Director Non Executive Board 2011 61
Tarjani Vakil Director Non Executive Board 75
Thomas Varghese Head - Textile Senior Management


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5 Locations and Subsidiaries

5.1 Head Office

4th Floor, 'A' Wing
Mumbai
Zip: 400 030
India
Tel: + 91 22 24995000
Fax: + 91 22 66525821

5.2 Other Locations and Subsidiaries

Table 6: Subsidiaries

Aditya Birla Money Ltd.
India

Aditya Birla Commodities Broking Ltd.
India

Aditya Birla Money Insurance Advisory Services Ltd.
India

Birla Sun Life Insurance Company Limited
5th and 6th Floor G-corp Tech park
Ghodbunder Road
Thane
Zip: 400601
India
Tel: + 91 22 39963800

Aditya Birla Minacs Worldwide Ltd.
180 Duncan Mills Road
Toronto
Zip: M3B 1Z6
Canada
Tel: + 1 416 380 3800
Fax: + 1 416 380 3830

Aditya Birla Financial Shared Services Ltd.
India

Aditya Birla Money Mart Ltd.
India

Aditya Birla Financial Services Pvt. Ltd.
India

Aditya Birla Trustee Company Pvt. Ltd.
India

Aditya Birla Capital Advisors Pvt. Ltd.
India



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6 Appendix

6.1 Methodology

World Market Intelligence company reports are based on a core set of research techniques which ensure the best
possible level of quality and accuracy of data. The key sources used include:
Company Websites
Company Annual Reports
SEC Filings
Press Releases
Proprietary Databases

Notes
Financial information of the company is taken from the most recently published annual reports or SEC filings
The financial and operational data reported for the company is as per the industry defined standards
Revenue converted to US$ at average annual conversion rate as of fiscal year end

6.2 Ratio Definitions

Capital Market Ratios

Capital Market Ratios measure investor response to owning a company's stock and also
the cost of issuing stock.

Price/Earnings Ratio (P/E)

Price/Earnings (P/E) ratio is a measure of the price paid for a share relative to the annual
income earned per share. It is a financial ratio used for valuation: a higher P/E ratio
means that investors are paying more for each unit of income, so the stock is more
expensive compared to one with lower P/E ratio. A high P/E suggests that investors are
expecting higher earnings growth in the future compared to companies with a lower P/E.
Price per share is as of previous business close, and EPS is from latest annual report.

Formula: Price per Share / Earnings per Share
Enterprise Value/Earnings
before Interest, Tax,
Depreciation &
Amortization (EV/EBITDA)

Enterprise Value/EBITDA (EV/EBITDA) is a valuation multiple that is often used in parallel
with, or as an alternative to, the P/E ratio. The main advantage of EV/EBITDA over the PE
ratio is that it is unaffected by a company's capital structure. It compares the value of a
business, free of debt, to earnings before interest. Price per share is as of previous
business close, and shares outstanding last reported. Other items are from latest annual
report.

Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / (Net
Income + Interest + Tax + Depreciation + Amortization)
Enterprise Value/Sales

Enterprise Value/Sales (EV/Sales) is a ratio that provides an idea of how much it costs to
buy the company's sales. EV/Sales is seen as more accurate than Price/Sales because
market capitalization does not take into account the amount of debt a company has, which
needs to be paid back at some point. Price per share is as of previous business close,
and shares outstanding last reported. Other items are from latest annual report.

Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Sales
Enterprise
Value/Operating Profit

Enterprise Value/Operating Profit measures the company's enterprise value to the
operating profit. Price per share is as of previous business close, and shares outstanding
last reported. Other items are from latest annual report.

Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Operating
Income
Enterprise Value/Total


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Assets Enterprise Value/Total Assets measures the company's enterprise value to the total
assets. Price per share is as of previous business close, and shares outstanding last
reported. Other items are from latest annual report.

Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Total
Assets
Dividend Yield

Dividend Yield shows how much a company pays out in dividends each year relative to its
share price. In the absence of any capital gains, the dividend yield is the return on
investment for a stock.

Formula: Annual Dividend per Share / Price per Share
Equity Ratios

These ratios are based on per share value.

Earnings per Share (EPS)

Earnings per share (EPS) is the portion of a company's profit allocated to each
outstanding share of common stock. EPS serves as an indicator of a company's
profitability.

Formula: Net Income / Weighted Average Shares
Dividend per Share

Dividend is the distribution of a portion of a company's earnings, decided by the board of
directors, to a class of its shareholders.

Dividend Cover

Dividend cover is the ratio of company's earnings (net income) over the dividend paid to
shareholders.

Formula: Earnings per share / Dividend per share
Book Value per Share

Book Value per Share measure used by owners of common shares in a firm to determine
the level of safety associated with each individual share after all debts are paid
accordingly.

Formula: (Shareholders Equity - Preferred Equity) / Outstanding Shares
Cash Value per Share

Cash Value per Share is a measure of a company's cash (cash & equivalents on the
balance sheet) that is determined by dividing cash & equivalents by the total shares
outstanding.

Formula: Cash & equivalents / Outstanding Shares

Profitability Ratios are used to assess a company's ability to generate earnings, based on
revenues generated or resources used. For most of these ratios, having a higher value
relative to a competitor's ratio or the same ratio from a previous period is indicative that
the company is doing well.

Gross Margin

Gross margin is the amount of contribution to the business enterprise, after paying for
direct-fixed and direct variable unit costs.

Formula: {(Revenue-Cost of revenue) / Revenue}*100
Operating Margin

Operating Margin is a ratio used to measure a company's pricing strategy and operating
efficiency.

Formula: (Operating Income / Revenues) *100
Net Profit Margin

Net Profit Margin is the ratio of net profits to revenues for a company or business segment
- that shows how much of each dollar earned by the company is translated into profits.

Formula: (Net Profit / Revenues) *100
Profit Markup

Profit Markup measures the company's gross profitability, as compared to the cost of
revenue.

Formula: Gross Income / Cost of Revenue
PBIT Margin (Profit Before
Interest & Tax)

Profit Before Interest & Tax Margin shows the profitability of the company before interest
expense & taxation.


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Formula: {(Net Profit + Interest + Tax) / Revenue} *100
PBT Margin (Profit Before
Tax)

Profit Before Tax Margin measures the pre-tax income over revenues.

Formula: {Income Before Tax / Revenues} *100
Return on Equity

Return on Equity measures the rate of return on the ownership interest (shareholders'
equity) of the common stock owners.

Formula: (Net Income / Shareholders Equity)*100
Return on Capital
Employed

Return on Capital Employed is a ratio that indicates the efficiency and profitability of a
company's capital investments. ROCE should always be higher than the rate at which the
company borrows; otherwise any increase in borrowing will reduce shareholders'
earnings.

Formula: EBIT / (Total Assets Current Liabilities)*100
Return on Assets

Return on Assets is an indicator of how profitable a company is relative to its total assets,
the ratio measures how efficient management is at using its assets to generate earnings.

Formula: (Net Income / Total Assets)*100
Return on Fixed Assets

Return on Fixed Assets measures the company's profitability to its fixed assets (property,
plant & equipment).

Formula: (Net Income / Fixed Assets) *100
Return on Working Capital

Return on Working Capital measures the company's profitability to its working capital.

Formula: (Net Income / Working Capital) *100
Cost Ratios

Cost ratios help to understand the costs the company is incurring as a percentage of
sales.

Operating costs (% of
Sales)

Operating costs as percentage of total revenues measures the operating costs that a
company incurs compared to the revenues.

Formula: (Operating Expenses / Revenues) *100
Administration costs (% of
Sales)

Administration costs as percentage of total revenue measures the selling, general and
administrative expenses that a company incurs compared to the revenues.

Formula: (Administrative Expenses / Revenues) *100
Interest costs (% of Sales)

Interest costs as percentage of total revenues measures the interest expense that a
company incurs compared to the revenues.

Formula: (Interest Expenses / Revenues) *100
Leverage Ratios

Leverage ratios are used to calculate the financial leverage of a company to get an idea of
the company's methods of financing or to measure its ability to meet financial obligations.
There are several different ratios, but the main factors looked at include debt, equity,
assets and interest expenses.

Debt to Equity Ratio

Debt to Equity Ratio is a measure of a company's financial leverage. The debt/equity ratio
also depends on the industry in which the company operates. For example, capital-
intensive industries tend to have a higher debt equity ratio.

Formula: Total Liabilities / Shareholders Equity
Debt to Capital Ratio

Debt to capital ratio gives an idea of a company's financial structure, or how it is financing
its operations, along with some insight into its financial strength. The higher the debt-to-
capital ratio, the more debt the company has compared to its equity. This indicates to
investors whether a company is more prone to using debt financing or equity financing. A
company with high debt-to-capital ratios, compared to a general or industry average, may
show weak financial strength because the cost of these debts may weigh on the company
and increase its default risk.


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Formula: {Total Debt / (Total assets - Current Liabilities)}
Interest Coverage Ratio

Interest Coverage Ratio is used to determine how easily a company can pay interest on
outstanding debt, calculated as earnings before interest & tax by interest expense.

Formula: EBIT / Interest Expense
Liquidity Ratios

Liquidity ratios are used to determine a company's ability to pay off its short-terms debts
obligations. Generally, the higher the value of the ratio, the larger the margin of safety that
the company possesses to cover short-term debts. A company's ability to turn short-term
assets into cash to cover debts is of the utmost importance when creditors are seeking
payment. Bankruptcy analysts and mortgage originators frequently use the liquidity ratios
to determine whether a company will be able to continue as a going concern.

Current Ratio

Current Ratio measures a company's ability to pay its short-term obligations. The ratio
gives an idea of the company's ability to pay back its short-term liabilities (debt and
payables) with its short-term assets (cash, inventory, receivables). The higher the current
ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests
that the company would be unable to pay off its obligations if they came due at that point.

Formula: Current Assets / Current Liabilities
Quick Ratio

Quick ratio measures a company's ability to meet its short-term obligations with its most
liquid assets.

Formula: (Current Assets - Inventories) / Current Liabilities
Cash Ratio

Cash ratio is the most stringent and conservative of the three short-term liquidity ratio. It
only looks at the most liquid short-term assets of the company, which are those that can
be most easily used to pay off current obligations. It also ignores inventory and
receivables, as there are no assurances that these two accounts can be converted to
cash in a timely matter to meet current liabilities.

Formula: {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}
Efficiency Ratios

Efficiency ratios measure a company's effectiveness in various areas of its operations,
essentially looking at maximizing its use of resources.

Fixed Asset Turnover

Fixed Asset Turnover ratio indicates how well the business is using its fixed assets to
generate sales. A higher ratio indicates the business has less money tied up in fixed
assets for each currency unit of sales revenue. A declining ratio may indicate that the
business is over-invested in plant, equipment, or other fixed assets.

Formula: Net Sales / Fixed Assets
Asset Turnover

Asset turnover ratio measures the efficiency of a company's use of its assets in
generating sales revenue to the company. A higher asset turnover ratio shows that the
company has been more effective in using its assets to generate revenues.

Formula: Net Sales / Total Assets
Current Asset Turnover

Current Asset Turnover indicates how efficiently the business uses its current assets to
generate sales.

Formula: Net Sales / Current Assets
Inventory Turnover

Inventory Turnover ratio shows how many times a company's inventory is sold and
replaced over a period. A low turnover implies poor sales and, therefore, excess
inventory. A high ratio implies either strong sales or ineffective buying.

Formula: Cost of Goods Sold / Inventory
Working Capital Turnover

Working Capital Turnover is a measurement to compare the depletion of working capital
to the generation of sales. This provides some useful information as to how effectively a
company is using its working capital to generate sales.

Formula: Net Sales / Working Capital
Capital Employed


__________________________________________________________________________________________

___________________________________________________________________________________________


Turnover Capital employed turnover ratio measures the efficiency of a company's use of its equity
in generating sales revenue to the company.

Formula: Net Sales / Shareholders Equity
Capex to sales

Capex to Sales ratio measures the company's expenditure (investments) on fixed and
related assets' effectiveness when compared to the sales generated.

Formula: (Capital Expenditure / Sales) *100
Net income per Employee

Net income per Employee looks at a company's net income in relation to the number of
employees they have. Ideally, a company wants a higher profit per employee possible, as
it denotes higher productivity.

Formula: Net Income / No. of Employees
Revenue per Employee

Revenue per Employee measures the average revenue generated per employee of a
company. This ratio is most useful when compared against other companies in the same
industry. Generally, a company seeks the highest revenue per employee.

Formula: Revenue / No. of Employees
Efficiency Ratio

Efficiency Ratio is used to calculate a bank's efficiency. An increase means the company
is losing a larger percentage of its income to expenses. If the efficiency ratio is getting
lower, it is good for the bank and its shareholders.

Formula: Non-interest expense / Total Interest Income
Source : World Market Intelligence

6.3 Disclaimer

All Rights Reserved

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means,
electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, World Market
Intelligence.

The data and analysis within this report is driven by World Market Intelligence from its own primary and secondary
research of public and proprietary sources and does not necessarily represent the views of the company profiled.

The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the
findings, conclusions and recommendations that World Market Intelligence delivers will be based on information gathered
in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As
such World Market Intelligence can accept no liability whatever for actions taken based on any information that may
subsequently prove to be incorrect.

Reproduced with permission of the copyright owner. Further reproduction prohibited without
permission.

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