DUPONT ANALYSIS :-

RANBAXY PROFILE;-

Ranbaxy Laboratories Limited (Ranbaxy) is a research based international pharmaceutical company serving customers in over 150 countries. For more than 50 years, we have been providing high quality, affordable medicines trusted by healthcare professionals and patients across geographies.

Ranbaxy is a member of the Daiichi Sankyo Group. Daiichi Sankyo is a leading global pharma innovator, headquartered in Tokyo, Japan.

We have ground operations in 43 countries and 21 manufacturing facilities spread across 8 countries. We cover all the top 25 pharmaceutical markets of the world and have a robust presence across both developed and emerging markets.

DUPONT ANALYSIS :-

DuPont analysis (also known as the dupont identity, DuPont equation, DuPont Model or the DuPont method) is an expression which breaks ROE (Return On Equity) into three parts.

The name comes from the DuPont Corporation that started using this formula in the 1920s.

The Du Pont identity breaks down Return on Equity (that is, the returns that investors receive from the firm) into three distinct elements. This analysis enables the analyst to understand the source of superior (or inferior) return by comparison with companies in similar industries (or between industries).

The Du Pont identity is less useful for industries such as investment banking, in which the underlying elements are not meaningful. Variations of the Du Pont identity have been developed for industries where the elements are weakly meaningful.

Du Pont analysis relies upon the accounting identity, that is, a statement (formula) that is by definition.

ROE = (Profit margin)*(Asset turnover)*(Equity multiplier) = (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)= (Net Profit/Equity)

Profitability (measured by profit margin)

Operating efficiency (measured by asset turnover)

Financial leverage (measured by equity multiplier)

DUPONT ANALYSIS OF RANBAXY LIMITED

Net income of ranbaxy is 2012-2169.42 crore,2011-(23961.88 ).sales is 2012-61124.43crore,2011- 80363.82, assets 2012- 63135.43 crore , 2011- 2226.21,and equity 2012- 2114.57 crore ,2011- 2110.00 crore.High turnover industries

Certain types of retail operations, particularly stores, may have very low profit margins on sales, and relatively moderate leverage. In contrast, though, groceries may have very high turnover, selling a significant multiple of their assets per year. The ROE of such firms may be particularly dependent on performance of this metric, and hence asset turnover may be studied extremely carefully for signs of under-, or, over-performance. Net income /sales is 2012- 2169.42/61124.43 is 0.035

2011-232961.88/80363.82 is 2.89

High margin industries

Other industries, such as fashion, may derive a substantial portion of their competitive advantage from selling at a higher margin, rather than higher sales. For high-end fashion brands, increasing sales without sacrificing margin may be critical. The Du Pont identity allows analysts to determine which of the elements is dominant in any change of ROE. Sales/assets is 2012- 61124.42/63135.43 is 0.968

2011-61124.43/2226.21 is 27.46

High leverage industries

Some sectors, such as the financial sector, rely on high leverage to generate acceptable ROE. Other industries would see high levels of leverage as unacceptably risky. Du Pont analysis enables third parties that rely primarily on the financial statements to compare leverage among similar companies. Assets/equity is 2012- 63135.43/2114.57 is 29.85

2011-2226.21/2110.00 is 1.055

So leverage ratio is highest which contribute more to return on equity for year 2012 and Net margin ratio is highest for year 2011.