Date of report Monday, April 07, 2008

Company Marico Limited - Quick & Dirty Analysis

Analyst Dhananjayan J

Contact dhanan12@yahoo.com
Table of Contents (Please enable the macro attached to this file)

Fact Sheet >>

Quick & Dirty Analysis >>

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FACT SHEET

MARICO LIMITED
NSE: MARICO, BSE: 531642, Exchange: BSE & NSE, MCap: 4,168.61 Crore
Marico Limited is a fast moving consumer goods company. Marico has three business segments: Consumer
Products, which includes consumer product business of Marico Limited and Marico Bangladesh Limited along
with its wholly owned subsidiary, MBL Industries Limited; Skin Care, which includes Kaya Skin Care Limited
and skin care business of Marico Limited in Dubai, and Global Ayurvedics (Sundari LLC.). Consumer products
includes coconut oils, other edible oils, hair oils and other hair care products, fabric care products, soaps and
baby care products. Other products include Skin Care and Global Ayurvedics. In October 2007, Shantih LLC
became a wholly owned subsidiary of the Company. In October 2007, the Company acquired the consumer
division of Enaleni Pharmaceuticals Ltd, through purchase of Enaleni Pharmaceuticals Consumer Division (Pty)
Ltd. In March 2008, the Company announced the divestment of its processed foods business under the brand Sil
to Good Food Group.

Website http://www.maricoindia.com

Special situation Divestiture of processed foods business brand called "Sil".

Pro forma valuation

Price ratio
Price to earnings 25.3
Price to free cash flow na
Price to tangible book value 21.7

Enterprise value ratio

EV / Sales 2.3
EV / EBITDA 16.5
EV / EBIT 18.9
EV / (EBITDA-Capex) -138.5

Debt and interest coverage

Net Debt / EBITDA 1.0
EBIT / Interest expense 7.6

Yield Ratio
Dividend yield 1.0%
Earnings yield 4.0%
FCF1 yield na

Return on Assets
Return on operating assets 46.7%
Return on capital invested 94.3%

Operating margins
EBITDA 14.2%
EBIT 12.4%
Net income 8.7%

Depreciation Vs. Capex Capex

The above valuation ratios are computed after assuming business acquired and disposed in the LTM financial numbers
published by the company. (Refer QAD sheet)
The above valuation ratios are computed after assuming business acquired and disposed in the LTM financial numbers
published by the company. (Refer QAD sheet)

Conclusion
Capex is more. The divestiture proceeds was not declared by the company. Moreover it is FMCG business that are direct
conditions of the country. Not enough catalyst to drive the value of the business. Tough business with lot of competition. Hard
overvalued.

Our Verdict: May be overvalued. Not enough catalyst to drive the value of the underlying business. Hence not inte
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 business that are directly related to general economic
h lot of competition. Hard to forecast the growth. May be

business. Hence not interesting.

QUICK & DIRTY ANALYSIS INCOME STATEMENT BALANCE SHEET NOTES
(Amt in crore) CASH FLOW RATIOS

9m 12/06 FY 3/07 9m 12/07 LTM 12/07 Acq of Enaleni

INCOME STATEMENT
Revenue 1,159.96 1,556.92 1,439.16 1,836.12 53.00
Total growth - YTD 24.1%
Cost of materials 597.31 818.43 751.15 972.27
GROSS PROFIT 562.65 738.49 688.01 863.85
Margin 48.5% 47.4% 47.8% 47.0%
Manufacturing & other expenses 404.05 525.77 493.00 614.72
Miscellaneous income 1.46 9.26 8.75 16.55
EBITDA 160.06 221.98 203.76 265.68 3.31
Margin 13.8% 14.3% 14.2% 14.5% 6.3%
Depreciation & Amortization 40.68 52.06 22.84 34.22 0.80
EBIT 119.38 169.92 180.92 231.46 2.52
Margin 10.3% 10.9% 12.6% 12.6% 4.8%
Interest expenses 15.93 23.87 20.40 28.34 2.65
Interest income on loans & deposits 3.26 3.26
EBT 103.45 149.31 160.52 206.38 -0.13
Taxation @ 20% - assumption ** need to check 20.69 29.86 32.10 41.28 -0.03
Net income before MI 82.76 119.45 128.42 165.10 -0.11
Minority interest - - 0.09 0.09
Net income 82.76 119.45 128.33 165.01 -0.11
Margin 7.1% 7.7% 8.9% 9.0% -0.2%
Outstanding shares as reported 60.90 60.90 60.90 60.90
EPS INR 1.36 INR 1.96 INR 2.11 INR 2.71

Other income - non recurring income

Income from current investments
Profit on sale of units of mutual funds 0.81
Dividend 0.09

CASH FLOW
Net profit before tax and MI as reported 150.08
Tax paid -23.46
Net income 126.62
Adjustments
Depreciation, amortization & impairment 52.19
Profit on sale of assets -3.71
Profit on sale of investments -0.81
Dividend income on investments -0.09
Provision for doubtful debts 0.41
(A) 174.61
Changes in working capital
Inventories -89.18
Sundry debtors -13.00
Loans and advances -12.65
Current liabilities & provisions 108.01
(B) -6.82
Cash from operation (A) + (B) 167.79
Capital expenditure
Purchase of fixed assets -301.66
Sale of fixed assets 1.69
Net capital expenditure -299.97 -299.97 -1.00

FCF1 before WC investments -125.36

FCF2 after WC investments -132.18

Other investing activities

Sale (purchase) of investments 19.27

Amt rised/(repaid) to shareholders

Equity share capital issued 151.39
Share issue expense adj against sh premium -6.01
Equity dividend paid -45.57
Preference dividend paid -1.88
Total 97.93

Amount borrowed 11.32

Foreign exchange effect 3.98

BALANCE SHEET
Total assets 561.73 561.73
Investments 0.01
Deferred tax assets 115.15
Cash and bank 42.73
Adv recoverable in cash or in kind 39.64
Operating assets 364.20 364.20
Return on operating assets 46.7% 63.6%

Fixed assets 161.61 161.61

Current assets excl cash 299.91 299.91
Current liabilities excl debt 281.32 281.32
Capital invested 180.20 180.20
Return on capital invested 94.3% 128.4%

Cash 42.74 42.74

Debt 250.97 250.97 53.00
Shareholders equity - book value 192.37 192.37
Tangible book value (TBV) 192.37 192.37
TBV / share INR 3.16 INR 3.16
Notional FCF1 before WC invst -128.46 -100.74

RATIOS
Price INR 68.45 INR 68.45
Mcap 4,168.61 4,168.61
EV 4,376.84 4,376.84 53.00

EV/sales 2.8 2.4

EV/EBITDA 19.7 16.5
EV/EBIT 25.8 18.9
EV/(EBITDA-Capex) -56.1 -127.6

PE 34.9 25.3
P/FCF1 na na
P/TBV 21.7 21.7
Net debt / EBITDA 0.8
EBIT / Interest expenses 8.2

Dividend per share INR 0.66

Dividend yield 1.0%
Earnings yield 4.0%
FCF1 yield na

NOTES
Note 1: Acquisition of Ethnic hair care and health care brands from Enaleni
Date of transaction 31 oct 07
EV - Purchase consideration 53.00
Revenue 53.00
EBITDA 3.31
Pro forma
12/07

1,889.12

268.99
14.2%
35.02
233.98
12.4%
30.99
3.26
206.25
41.25
165.00
0.09
164.91
8.7%
60.90
INR 2.71
 -300.97

42.74
303.97
192.37
192.37
INR 3.16
-101.05

INR 68.45
4,168.61
4,429.84

2.3
16.5
18.9
-138.5

25.3
na
21.7
 1.0
7.6

INR 0.66
1.0%
4.0%
na
SEGMENT

FY 3/05 FY 3/06 FY 3/07 9M 12/06 9M 12/07

REVENUE
Consumer products 980.70 1,089.87 1,473.84 1,101.19 1,360.10
Growth 11.1% 35.2% 23.5%
%age on sale 97.4% 95.3% 94.7% 94.9% 94.5%
Others 26.34 54.07 83.08 58.77 79.06
Growth 105.3% 53.7% 34.5%
%age on sale 2.6% 4.7% 5.3% 5.1% 5.5%
Total 1,007.04 1,143.94 1,556.92 1,159.96 1,439.16
Total growth 13.6% 36.1% 24.1%

EBITDA
Consumer products 100.86 158.54 223.94
Growth 57.2% 41.3%
Margin 10.3% 14.5% 15.2%
Others -10.93 -10.82 -1.18
Growth -1.0% -89.1%
Margin -41.5% -20.0% -1.4%
Corporate overheads - - -
Total 89.93 147.72 222.76
Total growth 64.3% 50.8%
Margin 8.9% 12.9% 14.3%

EBIT
Consumer products 89.41 128.04 181.48 138.42 183.92
Growth 43.2% 41.7% 32.9%
Margin 9.1% 11.7% 12.3% 12.6% 13.5%
Others -14.39 -24.99 -10.78 -5.02 -3.09
Growth 73.7% -56.9% -38.4%
Margin -54.6% -46.2% -13.0% -8.5% -3.9%
Corporate overheads - - -
Total 75.02 103.05 170.70 133.40 180.83
Total growth 37.4% 65.6% 35.6%
Margin 7.4% 9.0% 11.0% 11.5% 12.6%

Depreciation
Consumer products 11.45 30.50 42.46
Others 3.46 14.17 9.60
Corporate assets - - -
Total 14.91 44.67 52.06

Capital expenditure
Consumer products 18.37 245.22 304.82
Others 22.63 23.59 7.09
Corporate assets - - -
Total 41.00 268.81 311.91

Assets
Consumer products 307.14 572.10 505.17
Others 66.90 79.04 70.32
Corporate assets 29.08 28.85 150.30
Total 403.12 679.99 725.79
Liabilities
Consumer products 159.30 382.37 452.27
Others 5.79 8.34 66.40
Corporate liabilities 21.11 27.80 14.74
Total 186.20 418.51 533.41

Capital employed
Consumer products 147.84 189.73 52.90 363.15 110.60
Others 61.11 70.70 3.92 99.92 83.81
Corporate liabilities 7.97 1.05 135.56 110.91
Total 216.92 261.48 192.38 463.07 305.32
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