Corporate Finance I

Final Project Report

Sec-A
Group-1

Submitted by
Aman Kumar Jha (19A3HP660)
Aayush Raj (19A1HP069)
Antony Lawrence (19A1HP098)
Arbaz Mohd Ashfaq (19A1HP038)
Manmohan Toshniwal (19A1HP105)
Sushmita Jha (19A1HP051)

Submitted to: Prof. Nikhil Rastogi

Date of Submission: 15th December 2019
FMCG sector in India
Fast-moving consumer goods (FMCG) sector is the 4th largest sector in the Indian economy with
Household and Personal Care accounting for 50 per cent of FMCG sales in India. Growing awareness,
easier access and changing lifestyles have been the key growth drivers for the sector. The urban
segment (accounts for a revenue share of around 55 per cent) is the largest contributor to the overall
revenue generated by the FMCG sector in India However, in the last few years, the FMCG market has
grown at a faster pace in rural India compared with urban India. Semi-urban and rural segments are
growing at a rapid pace and FMCG products account for 50 per cent of total rural spending.

Our group has selected 6 listed FMCG companies of India, researched on each one of them and came
up with the following analysis and observations.
The 7 companies are:

Britannia
Britannia Industries Limited is an Indian food-products company headquartered in Kolkata, West
Bengal. It was established in 1892, with an investment of 265rs. It sells its Britannia and Tiger brands
of biscuits and dairy products across India and in more than 60 countries across the globe. It has an
estimated market share of 38%. The company's main activity is the manufacture and sale of biscuits,
bread, rusk, cakes and dairy products.

Marico
Marico Limited is one of India’s leading consumer goods companies providing consumer products
and services in the areas of health, beauty and wellness. With its headquarters in Mumbai,
Maharashtra, India, Marico is present in over 25 countries across emerging markets of Asia and
Africa. It nurtures multiple brands that expertise in categories of hair care, skin care, edible oils,
health foods, male grooming, and fabric care.

Zydus Wellness
Zydus Wellness is a strong and emerging player in the health and wellness space in India. Their
brands include Nutralite which is a table margarine; Sugar Free which is a low-calorie sweetener and
EverYuth which includes skincare products. They sell their products in India. They have a plant
located in Gujarat. Zydus Wellness Ltd is a subsidiary of Cadila Healthcare Ltd.Zydus Wellness Ltd
was incorporated on November 1 1994 as a public limited company with the name Carnation Health
Foods Ltd.
Hatsun Agro Ltd

Hatsun often called Hatsun Agro Products (HAP) is the largest private sector dairy company in India
based in Chennai. It was founded by R. G. Chandramogan in 1970. It had become a billion-dollar
company by mid-2016. The Company was also awarded "The Fastest Growing Asian Dairy
Company". The Dairy product maker has been bagging the Golden Trophy from the Indian
Government for largest dairy products exporter for the last many years.

Vadilal
From selling sodas in 1907, Vadilal has travelled through four generations of Gandhi. And today,
Vadilal is the country's second-largest ice cream brand by sales. The company is also one of the
largest processed food manufacturers in India with significant exports of frozen vegetables and ready
to eat snacks, curries, and breads. It has the largest range of ice creams in the country, with more than
150 flavours sold in more than 300 packs and forms. Vadilal Industries has been growing at about
30% annually for the last 10 years.

Godfrey Philips
Godfrey Phillips India Ltd. is a tobacco manufacturer headquartered in India. The Company was
originally established as "Godfrey Philips Ltd." in London in 1844. GPI was the first UK company to
mass-produce cigarettes, a part of being one of the founding companies of Imperial Tobacco along
with John Player & Sons.

Beta calculated and interpretation:

COMPANY Size BETA CALCULATED BEHAVIOUR

Britania Large 0.76 Defensive
Marico Large 0.66 Defensive
Zydus Wellness Mid 0.56 Defensive
Hatsun Agro Mid 0.33 Defensive
Vadilal Small 1.31 Aggressive
Godfrey Philips Small 1.99 Aggressive

Inferences

The beta (β) of an investment security or a stock is a measurement of its volatility of returns relative
to the entire market. It is used as a measure of risk.
A company with β value exactly 1, shows that the security’s price moves with the market. A company
with β more than 1 indicates that it is more volatile in the market. This is called aggressive behaviour.
A value less than 1 shows that the company is less volatile than the whole market and is known as
defensive behaviour. A company with a negative β is negatively correlated to the returns of the
market.
According to our observations we see that the large cap and the mid cap companies has a beta of less
than 1, thus they are defensive securities. It means that they are less volatile as compared to the
movement of market. For instance, the beta of Britania is 0.76, which means that if market moves by
10% the Britania stocks will move by 10% x 0.76 = 7.6%.
On the other hand, the stocks of small cap companies are more than 1 i.e. they are aggressive
securities and are more volatile to the movements of the market. For instance, the beta of Vadilal is
1.31, which means that if the market moves by 10% the Vadilal stocks will move by 10% x 1.31 =
13.1%.

Company Name Market price Value of Share (as per PE and EPS) Present
Value
Britania 3054.4 1780.167402 1279.898764
Marico 354.101349 279.7276596 49.94184737
Zydus Wellness 1292.145386 802.6953912 403.2903286
Hatsun Agro 757.005676 342.948676 647.037369
Vadilal 606.152893 1014.638982 17.08109237
Godfrey Philips 1110.793457 840.7788836 586.4936352

Inference
 Britania’s Market Price is overpriced as compared to its Value of Share and present value.
 Marico Market Price is overpriced as compared to its Value of Share and present value.
 Zydus Wellness Market Price is overpriced as compared to its Value of Share and present
value.
 Hatsun Agro Market Price is overpriced as compared to its Value of Share and present value.
 Vadilal market price is under priced as compared to Value of Share but highly overpriced as
compared to present value.
 Godfrey Philips Market Price is overpriced as compared to its Value of Share and present
value

Company Debt Equity Ratio

Britania 0.0022
Marico 0.0068
Zydus Wellness 0.009
Hatsun Agro 0.106
Vadilal 0.094
Godfrey Philips 0.0004

Inference
From the above data we can see that all the companies are majorly dependent on their equity for
financing. The dependence on debt for doing business is very less in Godfrey Philips, Britania and
Marico.

Assumptions Used:
 All the figures are taken from the financial statements of respective companies.
 Debt includes short term and long-term borrowing.
 Categorization of large, mid and small cap companies is done on basis of market cap.
 The amount figures in the excel sheet are in crores.

Data Source
https://www.moneycontrol.com/
https://in.finance.yahoo.com/
https://capitaline.com/
Prowess Database