ANALYSIS OF FINANCIAL STATEMENT

GILLETTE PAKISTAN LIMITED

INDUSTRY: PERSONAL GOODS (textile)

Sir
Analysis of Financial Statement
Karachi, Pakistan.

Dear Sir,
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under your kind guidance and instruction.
This report has been prepared on the genuinely based factual findings and analysis.
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Sincerely,

ACKNOWLEDGEMENTS
We owe a gratitude to Allah (SWT) whose blessings and kindness has been on us to compile
this document with our commitment and dedication. Then we would like to thank Sir
Attaullah for helping and guiding us throughout the semester in compiling the document and
giving us their precious time. This Analysis of financials of Gillette would not have been
possible without their cooperation and continuous direction.
We would also like to thank our friends for helping us out very efficiently to submit the research
project in time and family for their continuous support and prayers. Without their given strength
and confidence we wouldnt have been able to achieve our goal.

Thank You

INTRODUCTION
Gillette Pakistan Limited markets and sells blades and razors, personal care products, and
beauty care appliances in Pakistan. It operates through Shave Care and Braun Products
segments. Gillette Pakistan Limited is a subsidiary of The Series Acquisition B.V.
PROFILE OF COMPANY
Gillette Pakistan Limited was incorporated on December 9, 1986 as a public limited
company under the Companies Ordinance, 1984 and is listed on Karachi and Lahore
Stock Exchanges in Pakistan. This company is own by Proctor & Gamble.
INVESTOR INFORMATION
As a listed public company, Gillette Pakistan Limited submits comprehensive financial
statements to the Securities and Exchange Commission of Pakistan (SECP) and the
Karachi and Lahore Stock Exchanges.
Market price Rs. 389.9

GOVERNANCE
The Company encourages representation of non-executive directors and directors
representing minority interests on its Board of Directors. The Board has developed a
vision / mission statement, overall corporate strategy and significant policies of the
Company which has been signed by all employees.
INVESTOR RELATIONS
The Company is a subsidiary of Series Acquisition B.V., Netherlands, which is a wholly
owned subsidiary of P&G, USA. The parent company holds 91.4% of the issued share
capital of the Company while rest of the share capital is held by other individuals and
corporate.
INDUSTRY ASSOCIATIONS
The Company is represented on several business associations and key executives of the
company are working on committees of these associations.
CORE VALUES

As they work towards Vision, three core Values define the way they operate:
Achievement
We are dedicated to the highest standards of achievement in all areas of our business. We
strive to consistently exceed the expectations of both external and internal customers.

Integrity
Mutual respect and ethical behavior are the basis for our relationships with colleagues,
customers and the community. Fair practice is the hallmark of the Company.

Collaboration
They work closely together as one team to improve the way we do business every day.
We communicate openly and establish clear accountability for making decisions,
identifying issues and solutions and maximizing business opportunities.

Companys Secrets/ Strengths

No Direct Competitor
Bargain power ( Steel is being supplied by one supplier in this way
company have space to get bulk discounts)
No loans, no long term payables
Greater opportunity for new investors
Greater opportunity for seeking loans from financial institutions.
Overall growth for shareholders in long term.

Gillette accused of taking too big a cut from its customers

As the world's biggest razor manufacturer launched a billion-dollar lawsuit against its
nearest rival, analysts found evidence that it is charging exorbitant prices. Adam Lusher
reports
It might be the best a man can get, but the man seems to need very deep
pockets.
As a court battle loomed last week for control of the world's 3.75 billion razor
market, analysts claimed that Gillette, the world's biggest blade manufacturer, is
charging prices that are allowing it to milk almost unheard-of profit margins from
its customers.
The apparently exorbitant prices, which last week prompted protests from
customers angry about the high cost of shaving, were disclosed in a report
published by Morgan Stanley, the global investment bank, that noted "growing
consumer resistance to paying ever-higher prices for razors and blades".
Javier Escalante, the co-author of the report, said: "There's no place that Gillette
doesn't make money, good money. Gillette averages 37.8 per cent operating
margins on its blades and razors. That is pretty hefty: a healthy, healthy operating
margin. There are very few industries where you can generate that. With most
consumer staples you are talking about margins in the low teens."
The revelations came as Gillette, which controls 72 per cent of the world's wet
shave razor market and takes 90 per cent of the $1.5 billion annual global profits,
filed a billion-dollar lawsuit against its nearest rival.

Is a growing/declining industry?

Gillette is growing company; it is being continuously in the positive sloping graph.

This represent the potential growth of current year, company having the developing and
increasing trend.
Analyzing the three (2011, 2012 & 2013) years, Company had been working at its
optimal. Current assets are being increased along with a certain decrease the current
liabilities.
Profit margins are multiplying every upcoming year, through this we can predict the
companys future would be prospering and will have higher share in the market.

Recommendation a buy/sell/hold on the stock given current stock prices

Stock market price is 389.9

Yes, the investor can invest or buy more shares of Gillette, because it is very apparently clear
from three years of analysis that company will be having a continuous growth in future as well.
It could be considered among one of companies which come under the tag of less risky and high
profit generating company which will be discussed further in report.
Gillettes return on equity is increasing from 0.128 in 2011, 0.14 in 2012 and 0.37 in 2013. It will
clearly give reasons to shareholder to stick to this company because of increasing returns every
year.

GILLETTE PAKISTAN LIMITED

1. COMMONSIZING

INCOME STATEMENT
2011
1,032,76
9

Sales

2012

2013

100. 1,408,30
00 1

100. 1,769,22
00 5

100.
00

74.4 1,071,36
2 2
25.5
8 390,939

76.0 1,143,14
7 5
27.7
6 626,080

64.6
1
35.3
9

218,669

5.03 26,379
21.1
7 253,704

1.87 43,474
18.0
1 257,467

2.46
14.5
5

35,248

3.41 33,056

2.35 47,379

2.68

COGS

768,631

Gross Profit
Other operating
Income
Selling ,M & D
Expense
Administration
Expense
Other operating
Expense

264,138

19,491

1.89 2,691

0.19 29,465

1.67

Bank Charges

311

0.03 314

0.02 50

Profit Before Tax

42,417

4.11 127,571

9.06 335,193

0.00
18.9
5

Income Tax expense

66,982

6.49 65,981

4.69 81,780

Profit after tax

24,565

2.38 61,950

4.40 253,413

51,998

4.62
14.3
2

In Common sizing, we are considering sales as a benchmark (100%).

In 2011, Cost of goods sold were 42.4%, Gross profit were 25.5% to sales.
Profit before tax is 4.1% and net profit is 2.38% to net sales.
In 2012, Cost of goods sold were 76.07%, Gross profit were 27.76% to sales.
Profit before tax is 9.06% and net profit is 4.40% to net sales.
In 2013, Cost of goods sold were 74.61%, Gross profit were 35.39% to sales.
Profit before tax is 18.95% and net profit is 14.32% to net sales.
Here, Cost of Goods Sold is the major contributing factor in the increasing trend of
net profits because each year it had kept on falling. When cost of goods fell, the
selling and Distribution expense has also decreased.

BALANCE SHEET
2011
ASSETS
NON-CURRENT
ASSETS
Property , plant
and Equip
long term loans
Long term deposits
CURRENT ASSETS

5,282
12

0.7317
0.0017

2012

7,335

0.93
8
0.01
8

138

0.0180

138

355,1
82
135,0
32
18,08
6

49.199
1
18.704
4
2.5052

256,8
24
149,6
78
21,66
3

Trade Deposits

307

0.0425

2,462

Interest receivable
Prepayments

869

0.1204

2,820

32.8
55
19.1
48
2.77
1
0.31
5
0.36
1

24,24
5
240,0
00
11,30
7
23,93
1
41,27
9
774,2
09
781,6
82

3.10
2
30.7
03
1.44
6
3.06
1
5.28
1
99.0
44
100.
00

Stock in
Trade Debt
Loans and
advances

Other receivables
Other Financial
Assets
Sales tax
Refundable
Taxation -net
Cash and Bank
balances
Current Assets
Total Asset

21,18
6
120,4
59
31,35
1
32,27
6
1,748
716,4
96
721,9
28

2.9346
16.685
7
4.3427
4.4708
0.2421
99.247
6
100.00

2013

438
450,54
5
144,53
9

0.04
36.99
11.87

169

0.01

1,325

0.11

2,318
2,055

0.19
0.17

13,078
375,42
0

1.07
30.82

44,948

3.69

34,031
149,07
1
1,217,
499
1,217,
937

2.79
12.24
99.96
100.00

EQUITY
Share Capital and
Reserves
Issued and
Subscribed Capital
Un appropriate
Capital
Total Equity
LIABILITIES
CURRENT
LIABLILITIES
Trade and other
payable
Deferred liability
Contingencies
Total Equity and
liabilities

192,0
00
172,7
32
364,7
32

26.595
4
23.926
5
50.521
9

192,0
00
234,3
22
426,3
22

24.5
62
29.9
77
54.5
39

192,00
0
487,73
5
679,73
5

357,1
96

49.853
2

355,3
60

45.4
61

536,65
5
1,547

44.06
0.13

1,217,
937

100.00

15.76
40.05
55.81
-

721,9
28

781,6
82

In common sizing balance, considering total assets as a bench mark (100%) all other
balance sheet items are being compared with it.
In 2011, fixed assets were 0.76% to total assets and current assets were 99.24%
Current liabilities were 49.85% and there is no long term liability.
In 2012, fixed assets were 0.93% and current assets were 99.04% of total assets.
Current liabilities were 45.46% and no long term liabilities.
In 2013, there are no fixed assets and current assets were 99.96% of total assets.
Current liabilities were 44.06% to total assets and long term liabilities 0.13%.

2. INDEX ANALYSIS

INCOME STATEMENT

Sales

COGS

2011

Indexi
ng
2011

2012

Indexi
ng
2012

2013

1,032,76
9

100

1,408,30
1
1,071,36
2

136.361
7
139.385
7

1,769,22
5
1,143,14
5

390,939

148.005
6

626,080

237.02

50.7308

43,474

83.61

116.021
9

257,467

117.74

93.7812
1

47,379

134.42

13.8063
7

29,465

151.17

768,631

100
100

Gross
profit
Other
operating
Income
Selling
,Marketing
and
Distribution
Expense
Administrati
on Expense
Other
operating
Expense

264,138

51,998

100
26,379

Indexi
ng
2013
171.31
148.72

100
253,704

218,669

35,248

19,491

100

33,056

100

2,691

50
Bank
Charges

311

100

314

100.964
6

16.07

Profit
Before Tax

42,417

100

127,571

300.754
4

335,193

790.23

Income Tax
expense

66,982

100

65,981

98.5055
7

81,780

122.09

252.188
1

253,413

1031.6

Profit after
tax

24,565

61,950
100

In Indexing, First year to be considered as base year and every upcoming year is
compared with that base year.
Sales: In 2011, Sales were 100%, in 2012 & 2013 sales had shoot up by 36% and
71% respectively.
COGS: In 2011, COGS were 100%, in 2012 & 2013 COGS increased 39% & 48%
respectively. As the Sales increase the COGS would also increase in order to meet the
current demand company has to increase its raw material and production capacity.
Gross profit: As the sales had increased with higher percentage compare to COGS,
the figures of gross profit had a multiplier impact over the three years.
In 2011, it was 100 % but it kept on increasing in 2012 Gross profit become 148%
and in 2013 it reached to 237%.
Other operating income: Other operating income had reduced to 50% in 2012
because decrease Interest income on term deposits and decreased Duty refund on reexport of products.
Selling, Marketing and Distribution Expense: It also had increase in 2012 & 2013
by 16% and 17% respectively. Selling and distribution expense had increased because
of higher sales company need to increase its distribution in order to maintain the
availability of product on time.
Profit before Tax: In 2011, it was considered as 100% but the company had fully
utilized its capacity and manages to reached increase its profit before tax to 200% and
690% in 2012 and 2013 respectively.
Profit after tax: Net profit kept on growing from 100% to 252% to
1031%. It is because the

Net Sales had increased with high percentage which had helped company
to achieve higher
Net profit.

BALANCE SHEET
2011

2012

2013

Assets
Non-Current Assets
Property , plant and Equip
long term loans
Long term deposits
Current Assets

5,282
12
138

Trade Deposits

307

Interest receivable
Prepayments

869

10
0
10
0
10
0
10
0
10
0

21,18
6
120,4
59

10
0
10
0

Stock in
Trade Debt
Loans and advances

Other receivable
Other Financial Assets

355,1
82
135,0
32
18,08
6

10
0
10
0
10
0

7,335

138.8
7

138

100.0
0

256,82
4
149,67
8

2,820

72.31
110.8
5
119.7
8
801.9
5
324.5
1

24,245
240,00
0

114.4
4
199.2
4

21,663
2,462

438

317.39

450,545

126.85

144,539

107.04

169

0.93

1,325

431.60

2,318
2,055

266.74

13,078

61.73

375,420

311.66

Sales tax Refundable

Taxation -net
Cash and Bank balances
Current Assets

Total Asset
Equity
Share Capital and Reserves
Issued and Subscribed
Capital
Un appropriate Capital
Total Equity

31,35
1
32,27
6
1,748
716,49
6
721,9
28

10
0
10
0
10
0
10
0
10
0

192,0
00
172,7
32
364,7
32

357,1
96

11,307

36.07

44,948

143.37

23,931

34,031

105.44
8,528.
09

774,209
781,68
2

74.14
2361.
50
108.0
5
108.2
8

10
0
10
0
10
0

192,00
0
234,32
2
426,32
2

100.0
00
135.6
56
116.8
86

10
0

355,36
0

99.48
6

41,279

149,071
1,217,49
9
1,217,9
37

169.92
168.71

192,000

100.00

487,735

282.37

679,735

186.37

1,547
536,655

0.43
74.4

1,217,9
37

168.71

Liabilities
Current Liabilities
Trade and other payable
Deferred liability
Contingencies and other
commitments
Total Equity and liabilities

721,9
28

781,68
2

108.2
77

Current Assets to Current liabilities (current ratio): Currents assets are kept on
increasing because of increase of stock in trade in 2013, in the same manner current
liabilities are showing downward trend.
This represent that company is in good liquidity condition with less risk involved and
can easily access loans from the market.
Fixed assets includes only Long term deposits which is increasing
because of Marine
insurance in 2013

3. RATIO ANALYSIS

RATIOS
2011
2012
2013
Current Ratio
2.006
2.27
2.18
The current ratio for the year 2011 shows that the
company has high liquidity and enough working
capital.
It has increased in the year 2012 which shows
improvement
It has slightly declined in the year 2013 which is due
to increase in liabilities.
Quick Ratio
1.012
1.46
1.43
The company has increasing trend in the quick ratio.
It indicates that the company has enough leverage
against liquidity risk.

68084
Working Capital
359300
418849
4
The company has increasing trend in the working
capital.
It shows that the company has enough cash to pay
off its liabilities.
Receivable Turnover
48.74
9.26
12.13
The receivable turnover ratio in the year 2011 was
very high, which indicates that receiving of payments
were very slow.
The ratio has declined in the following year indicating
that receivables are collected more quickly.
Inventory Turnover
2.16
3.96
2.54
Inventory turnover is high in the year 2011 and has
increased in the following years.
It indicates that the firm is selling and managing
inventories efficiently.
191.9974
Fixed asset turnover
195.53
1
In the year 2011 and 2012 the company had high
fixed asset turnover.
The assets were being used efficiently.
In the year 2013 the company sold off its fixed
assets.
143.8
Inventory Turnover in days
168.67
87.50
6
The inventory turnover in days in the year 2011
shows that the company had enough stock but lower
sales.
In the year 2012 the sales increased.
In the year 2013, sales decreased due to which the
company had stock for longer period.
Total Assets Turnover
1.431
1.89
1.45
The total assets turnover of the company indicates
that the company is utilizing and managing its assets
efficiently.
Debt Ratio
49.5
45
44
We can see a declining trend in the debt ratio.
Debt ratio indicates the percentage of assets
financed with debts.

Debt-to-Equity Ratio
0.979
0.83
0.49
Debt to equity ratio is very high in the year 2011. It
indicates that the company is facing huge financial
risks
The ratio has declined in the year 2012 but still it is
facing some risks.
In 2013, the ration has declined and the company is
less risker.
25.5757
Gross Profit Margin
1
35.39
27.75
The gross profit margin has increased in the year
2012. It is due to the fact that the sales increased.
Profit

Margin
2.379
4.40
14.2
The profit margin has increasing trend.
It is due to increase in sales.
As the inventory expenses were lesser in 2013, the
profit margin is high.

Return on Assets
0.0340
0.078
0.21
The company has used its assets efficiently as we
can see from the increasing trend.
The profit generated through the utilization of assets
has been done effectively.
Return on Equity

12.8%

14%

37%

The return on equity indicates the return received on the shareholders investment.
The ROE is having an increasing trend. It shows sustainability.
More investors will be attracted to invest in the shares of the company.

4. INVENTORY VALUATION
FIFO method is used except for the goods in transit which is estimated at actual cost.

5. DEFFERED TAX
Deferred tax is not booked as the majority of the income of the Company falls under
the final Tax Regime of Income Tax Ordinance, 2001.