Summer Internship Project

Equity Research in Chemical Industry

Submitted to:

Mr. Rajat Gupta

Submitted by:

Name: Tushar Soni

Institute of Management, Nirma University

Batch: MBA – FT (2019-2021)

Date of Submission:
 ACKNOWLEDGEMENT

I take this opportunity to thank Institute of Management, Nirma University, who has kept this very much

necessary summer internship training program for the benefits of the students.

Secondly I express my sincere gratitude to Mr. Rajat Gupta (Our Internship Mentor), who at each moment
has given me valuable guidelines and without his constant support, this training program would not have
been as rich a learning experience as it is now.

I would also like to thank Prof. Tirthank Shah for constantly supporting me and providing valuable
guidelines through the journey of my summer internship program.

Last but not the least; I would like to thank all my colleagues at Aditya Birla Sunlife Insurance Limited.,
who had given motivation and right direction throughout my internship program.
 EXECUTIVE SUMMARY
The Project on ‘Equity Research on Paint Sector’ is based on the Economic analysis of the country i.e. India.
Then the sector analysis of the paint sector based on Porter’s five forces model, government initiatives for
the sector. Lastly, the company analysis which focuses on its vision, top management team and it’s financial
analysis.

It also includes valuation of the share prices of the selected companies from chemical industry which are:

1. India Galetine Ltd.

2. Fine Organic Industries Ltd.

The valuation is based on the expected growth in the sector and adjusting the shortcoming of the sector.
Historical PE’s has been used to value and estimate the company’s future market share price.

The main idea behind conducting equity research is to find out the overall condition and trend of Chemical
sector and to find out promising scripts and paint sector companies to invest .It involves predicting the future
prices. The financial analysis includes comparing data in terms of ratio analysis. Various types of valuation
ratios have been calculated.

On the basis of financial analysis and valuation the findings of the study is that Fine Organic as well as India
Gelatine both seems to be a good option for investment. Both are in a positive trend with almost all macro
factors and political factors in their favor. On the valuation analysis part Fine organic seem to be a better
avenue to invest.

TABLE OF CONTENTS
COMPANY INFORMATION...............................................................................................................................................7
Aditya Birla Sun Life Insurance..................................................................................................................................7
Aditya Birla Capital.....................................................................................................................................................8
SunLife Financial........................................................................................................................................................8
PRODUCTS................................................................................................................................................................9
CUSTOMER PROFILING...........................................................................................................................................13
Segmentation of Markets Covered............................................................................................................................13
How a service of ABSLI does reaches to its customers.............................................................................................13
MAJOR COMPETITORS.............................................................................................................................................14
FINANCIAL PERFORMANCE...................................................................................................................................16
EQUITY RESEARCH.........................................................................................................................................................18
Meaning:................................................................................................................................................................... 18
Purpose:.................................................................................................................................................................... 18
Equity Research Process:...........................................................................................................................................19
Project allotted:.............................................................................................................................................................19
Presentation of Data.................................................................................................................................................20
For specialty Chemical sector....................................................................................................................................20
.................................................................................................................................................................................. 20
Analysis & Discussion................................................................................................................................................21
Specialty Chemicals sector:...................................................................................................................................21
Cost drivers in the industry:...................................................................................................................................23
Major Challenges in the Sector:....................................................................................................................................23
India Gelatine and chemical limited:............................................................................................................................24
Company Background...............................................................................................................................................24
Analysis of Cost drivers of the company....................................................................................................................25
Seasonality Identification..........................................................................................................................................26
Capital for the company:...........................................................................................................................................27
Financial Analysis of India Gelatine and chemical limited:............................................................................................28
RATIO ANALYSIS............................................................................................................................................................29
Peer comparison with India Gelatine & Chemical limited.........................................................................................29
PE Band Analysis for India Gelatine and chemical limited.........................................................................................30
Conclusion..................................................................................................................................................................... 30
For and Against for India Gelatine and Chemical Limited..........................................................................................31
Recommendation..........................................................................................................................................................31
‘Fine Organic Industries Ltd’..........................................................................................................................................32
Company Background...............................................................................................................................................32
LEADERSHIP...............................................................................................................................................................33
SHAREHOLDING PATTERN.............................................................................................................................................34
SEGEMENT REVENUE....................................................................................................................................................35
REVENUE CLASSIFICATION......................................................................................................................................35
MANUFACTURING FACILITIES........................................................................................................................................36
RATIOS........................................................................................................................................................................... 37
KEY HIGHLIGHTS............................................................................................................................................................38
PRODUCT PORTFOLIO....................................................................................................................................................39
Raw Materials Used:..................................................................................................................................................39
Competitor Comparison................................................................................................................................................40
Key Fundamentals.....................................................................................................................................................40
Balance Sheet............................................................................................................................................................40
Profit & Loss..............................................................................................................................................................42
Cash Flow.................................................................................................................................................................. 43
Share Holding Pattern (% of Shares Held).................................................................................................................43
Fundamental & technical analysis:................................................................................................................................45
Qualitative Analysis:..................................................................................................................................................45
Quantitative analysis.................................................................................................................................................46
CONCLUSION................................................................................................................................................................. 48
COMPANY INFORMATION
Aditya Birla Sun Life Insurance
Aditya Birla Sun Life Insurance Limited is a life insurance company that was established on August 4 th 2000
and commenced its operations on January 17th, 2001. ABSLI is a subsidiary of the Aditya Birla Capital
Limited (ABCL). The company is 51:49 joint venture between the Aditya Birla Group of India and Sun Life
Financial Inc. of Canada.

The company is one of the country's leading life insurance companies, and has contributed significantly to
the life insurance industry's growth and development. It also has a host of firsts to its credit. It is the first
Indian insurance firm to implement the 'Free Look Period' concept and the same has been made compulsory
by India's Insurance Regulatory Development Authority (IRDAI). ABSLI was the first company to
introduce Unit Linked Life Insurance Plan amongst all the private players in India. The company was also
the originator of practice to disclose portfolio on monthly basis.

The current MD & CEO of the Aditya Birla Sun Life Insurance Limited is Mr. Kamlesh Rao. The company
has more than 420 branches and has more than 16.6 lakh active customers. It also has a claim settlement
ratio of 97.15%. It has a wide range of products that caters to the varied needs of the customers.

During the FY 2018-19, while the industry grew at around 10-12%, the company grew by more than 60%.
The company is an ISO 22301 certified organization. ABSLI has also won various awards some of which
are as under-

 The Golden Peacock Global Award by the Golden Peacock Global Awards Secretariat in 2011.
 Kamikaze Customer Experience & Loyalty Award for Best Customer Service Initiative Award to
Salhakaar, an initiative by Revenue Assurance Team.
 The company’s risk management team won the Best Risk Management Team 2017 in the insurance
business conferred by the Legal Era Risk Award 2017.
 Insurance India Summit & Awards 2018 for best fraud intelligence company of the year.
Aditya Birla Capital
Aditya Birla Capital Limited (ABCL) is the holding company of the Aditya Birla Group, which manages the
financial services business. It was founded in 2007 and is amongst top 5 private diversified NBFC in India.
It has a diversified portfolio of 12 lines of business to cater the different financial requirements of the
clients. The company has a strong credit rating for the lending business (AAA) by ICRA and CARE
RATINGS. The company has more than 10 million active customers and the Asset under Management stood
at more than Rs. 3000 plus billion as of June 30, 2019.

The financial services businesses of Aditya Birla Capital Limited are as under-

 Aditya Birla Finance Limited

 Aditya Birla Health Insurance Limited
 Aditya Birla Housing Finance Limited
 Aditya Birla Insurance Brokers Limited
 Aditya Birla Money
 Aditya Birla MyUniverse Limited
 Aditya Birla PE Advisors Limited
 Aditya Birla Sun Life AMC
 Aditya Birla Sun Life Insurance
 Aditya Birla Sun Life Mutual Fund
 Aditya Birla Sun Life Pension Management Limited
 Aditya Birla Sun Life Asset Reconstruction Construction Company Limited

SunLife Financial
Sun life Financial is a Canadian Financial Services company which was founded in 1865. It is one of the
largest life insurance companies in the world and ranks 273 on the Forbes Global list 2000 list for 2019. It is
also recognized as one of the world’s 100 most sustainable corporations by Corporate Knights and is voted
as “most trusted brand of Life Insurance Company” according to 2019 Reader’s Digest trusted brand in
Canada.

The company trades on the Toronto (TSX), Philippine (PSE) and New York (NYSE) stock exchanges under
the name SLF.
PRODUCTS
The life insurance Products are divided under various heads namely-

 Protection
 Wealth with Protection
 Children’s Future
 Health
 Retirement
 Saving with Protection

1. Protection

ABSLI offers the Term Insurance under the head Protection. The term insurance provides a financial
security for the family. In case the insured person dies during the policy term, the death benefit is paid to the
nominee.

The company offers two types of term insurances-

 ABSLI Life Shield Plan

This term insurance has been designed with multiple options to meet the different needs of the client. The
plan has 8 different options to choose from and also has the option of Returning of Premium and Waiver of
Premium. The minimum sum assured is Rs.25,00,000 and the maximum being with no limit.

 ABSLI Income Shield Plan

This term plan provides financial support to the family members and the loved ones in case of unforeseen
death of the insured person. It provides a regular income to family to protect them. The minimum sum
assured is Rs.5,00,000 maximum being with no limit.
 2. Wealth with Protection Plans

This plan provides protection as well as helps one save money regularly for the future. The company offers
5 products under this head.

 ABSLI Wealth Assure Plan

This plan empowers one to grow his money over time and also gives protection to the person. The minimum
premium for this product starts from Rs.24000p.a.

 ABSLI Wealth Max Plan

This is a single premium life insurance plan. It also has the option to do the top-ups in case there is
additional savings. The minimum premium is Rs.100000 for the policy term of 5 & 10 years or a minimum
INR. 2,00,000 for a policy term of 15 & 20 years.

 ABSLI Wealth Secure Plan

This premium involves paying premium for limited term and having a protection for whole life. The
minimum premium is Rs.30000p.a. if paid annually or semi-annually and Rs.60000 if paid monthly or
quarterly.

 ABSLI Fortune Elite Plan

This plan enables the person to decide how to invest the premium paid amongst the three investment
options-Systematic Transfer Option, Return optimizer Option or the Self-Managed Option.

 ABSLI Wealth Aspire Plan

This plan enables you to accumulate significant amount of money by providing flexibility to pick plan
choices, premium paying terms, policy terms and 4 investment options. The minimu premium for this plan is
Rs.40000 p.a. if paid annually.
 3. Child Future Plan

This investment plan is intended to help your kid with regards to financing their foreign education, raising
cash-flow to set up a little locally situated business or meeting wedding costs.

 ABSLI Vision Star Plan

The ABSLI Vision Star Plan is planned remembering of the changing objectives and desires of your kid.
Subsequently, all through the term, you have the flexibility to get the advantages of your payouts according
to your kid's need, and conceding the payouts whenever required. The minimum sum assured in this
premium is Rs.100000.

4. Health Plans

This plan helps one get quality treatment without worrying about organizing of funds. It provides adequate
sum to cover significant sicknesses, hospitalization etc.

 ABSLI Cancer Shield Plan

This plan covers all stages of the cancer and has waiver of premium for diagnosis of early stage of cancer.
The minimum sum assured is Rs.10 lakh and the maximum being Rs.50 lakh.

 ABSLI Critishield Plan

This plan helps one protect from the expenses of certain diseases such as heart and kidney ailments. The
minimum sum assured is Rs.10 lakh and the maximum is limited to Rs. 50 lakh.

5. Retirement

A retirement pension plan helps one face all the expenses and financial obligation that might arise after
retirement. The company has three plans under this head.

 ABSLI Empower Pension Plan

This plan is a unit linked non-participating individual pension plan that helps accumulate premium and offer
returns at the time of retirement. The minimum premium is Rs.18000 p.a. if paid annually and Rs.36000p.a.
if paid monthly.

 ABSLI Immediate annuity plan

This plan involves one time lump sum payment of premium and generates regular income after retirement.
  ABSLI Empower Pension-SP Plan

This is a single pay premium plan with minimum premium of Rs.1 lakh and maximum with no limit.

6. Saving with Protection Plan

These plans offer one the opportunity to set aside money in small quantities with advantages of having life
cover and tax exempted returns.

 ABSLI Secure Plus Plan

It is back-up income opportunity plan that guarantees more than just income. The minimum premium is

‘ABSLI Vision Money back Plan

It is a plan which provides one with liquidity by providing them with regular income and also life cover to
meet unforeseen circumstances. The minimum sum assured is Rs.100000.

 ABSLI Vision Life Income Plan

It is an ideal mix of income and money related assurance for you and your family with survival benefits
payable consistently from the end of the premium paying term till the age of 100.

 ABSLI Savings Plan

This plan empowers one to save regularly and develop savings over a period of time. The minimum sum
assured is Rs.30000 and the maximum being Rs.10,00,000.

 ABSLI Vision Life Secure Plan

It is a whole life insurance plan where the insured receives the sum assured, accrued regular bonuses and
terminal bonus (if any). The minimum sum assured is Rs.2 lakhs and minimum premium payable is
Rs.12000 p.a.
CUSTOMER PROFILING
Aditya Birla Sunlife Insurance mainly target urban & rural investors within the age group of 25-50 years. As
awareness regarding various investment opportunities is increasing, leading to increase in demand for various policies.

With various and diversified policies Aditya Birla Sunlife Insurance is targeting income groups from lower-middle to
high income groups. ABSLI has both corporate as well as private individuals as their customers.

With the increase in population of India the demand for various policies related to retirement, savings, protection etc.
is expected to increase.

Insurance Industry as a whole is expected to grow significantly because of the rise in India’s. working age population.
This increase in working age population gives ABSLI an opportunity to target more people and to widen its coverage.
ABSLI is further trying to increase its penetration in rural markets.

Segmentation of Markets Covered

Aditya Birla Sunlife Insurance apart from protection provides various investing and financial solutions to its
customers.

Their main market segment is asset management of private individuals as well as group.

They provide various policies related to protection, children’s future, retirement, health & wellness, saving with
protection, group protection and various additional riders.

Apart from life insurance, they also provide various plans like term insurance, ULIP plans, retirement plans etc., hence
they have a strong presence in the insurance industry, covering most of the market segments.

How a service of ABSLI does reaches to its customers

Bancassurance is selling of life insurance and other insurance products and services by banking institutions. Banc
assurance is the primary channel of distribution for various insurance companies.

Banc assurance constitutes more than 50% of share in distribution mix of Aditya Birla Sunlife Insurance. So, these tie-
ups with various banks is helping insurance companies to distribute their products and services to various people at
large.

ABSLI is also focusing on distributing its products and services directly via digital channels. Many insurance
companies are trying to exploit the digital resources that are available to their benefit and trying to reach a wide
audience by getting their products listed on various aggregator portals.

Also, with 425 branches all over India and having an agent and broker base of 81,000 employees, ABSLI is able to
deliver its products and services to various corners of the country.
MAJOR COMPETITORS
 Life Insurance Corporation of India (LIC)

When the Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the
Life Insurance Corporation of India was created on 1st September, 1956. It is the only public sector Life
Insurance Company in India.

It was formed with the merger of more than 200 insurance companies and provident societies. Since then
they have been among the most trusted brands in India providing insurance solutions to even the remotest
corners of India through their huge network of agents and distributors.

LIC functions with 2048 fully computerized branch offices, 113 divisional offices, 8 zonal offices, 1381
satellite offices and the corporate office. LIC’s Wide Area Network covers 113divisional offices and
connects all the branches through a Metro Area Network. LIC has maintained its dominant leadership status
with a market share of 70% even with the presence of 24 other life insurance companies.

 SBI Life Insurance

SBI Life Insurance is a joint venture life insurance company between State Bank of India (SBI), the largest
state-owned banking and financial services company in India, and BNP Paribas Cardif. It was started in
2001. BNP Paribas is a French multinational bank and financial services company with global headquarters
in Paris. SBI owns 62.1% of the total capital and BNP Paribas Cardif holds 5.2 % of the capital. Rest of the
capital is owned by other institutions. Assets under management (AuM) has grown by 14% to Rs 1,60,360
crore as on 31 March 2020 with debt-equity mix of 79:21..

SBI Life extensively leverages the State Bank Group relationship as a platform for cross-selling insurance
products along with its numerous banking product packages such as housing loans and personal loans. SBI’s
access to over 100 million accounts across the country provides a vibrant base for insurance penetration
across every region and economic strata in the country, thus ensuring true financial inclusion.

 HDFC Life

HDFC Life was founded in 2000. It is a joint venture between Housing Development Finance Corporation
(HDFC) and Standard Life Aberdeen, a global investment company. Established in 2000, HDFC Life is a
leading long-term life insurance solutions provider in India, offering a range of individual and group
insurance solutions that meet various customer needs such as Protection, Pension, Savings, Investment,
Annuity and Health. As on March 31, 2020 the Company had 37 individual and 11 group products in its
portfolio, along with 6 optional rider benefits, catering to a diverse range of customer needs.
  ICICI Prudential Life Insurance

ICICI Prudential Life Insurance Company Limited (ICICI Prudential Life) is promoted by ICICI Bank
Limited and Prudential Corporation Holdings Limited a leading international financial services group
headquartered in United Kingdom. ICICI Prudential Life was first private player to begin its operations in
fiscal year 2001 and has consistently been amongst the top players in the Indian life insurance sector.
Prudential Corp holds 22.11 per cent stake in the company while ICICI Bank owns 52.87 per cent.

The company has signed a pact with Airtel Payments Bank to allow Airtel Payments Bank customers to
access life insurance and saving plans within the app.

 MAX Life Insurance

Max Life Insurance is a joint venture between max India Ltd. and Mitsui Sumitomo Insurance Company.
The former owns 68% of the company while the latter owns 26%. After forming the joint venture
partnership with Mitsui Sumitomo, Max Life changed its name from Max New York Life in 2012. In
February 2016, Axis Bank held a 6% share in Max Life.

Max Life's distribution channels include banks, individual agents, brokers, and corporate agents, among
others. It provides linked, participating and non-participating products. Apart from life coverage, it also
covers health, pension, and annuity. It offers child, protection, retirement, savings, and growth plans to

Market share of life Insurance

companies in India in 2019
LIC
10%
3% HDFC Life
5% SBI Life
ICICI Prudential Life
6% Max Life
Aditya Birla sun Life
53%
9% Others

14%
FINANCIAL PERFORMANCE
The company is performing financially positive and reporting constant profits. Some of the indicators of the
good performance of the company have been highlighted below.

The total insurance premium collected over the year has not seen major fluctuations and recently in the year
2018-19 it has seen a jump of 27%. It was mainly due to strong growth it witnessed due to kicked started its
operations with HDFC Bank Branch Banking.

Total Premium Collected

Total Premium Collected

72860
58853 55797 56792 57210
52162 52332
48330

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

But the Profit after Tax has seen a decline over the years. The major decline of profits from Rs.2854 cr. to
Rs.1399 cr. is mainly due to adverse claims in the year and decrease in the in force book.

PAT
PAT

4607 5415
3707
2854
1399 1228 1668
1256

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

The following chart shows Earning per share and Book value per share since FY 2011-12

EPS Book Value Per share

11 11.04

8.8 9.49
8.1

6.3
6.6
5.4

2.34 2.75
1.95 0.88
1.5 0.74 0.65
0.66
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

New business premium received by the company for the FY 2018-19 was Rs. 3917 Crore as compared to
Rs.2663 Crore in FY 2017-18. It was a 47% growth.

Renewal premium also increased to Rs 3594 Crore as compared to Rs.3240 Crore. Total increase in
premium was by 27% in FY 2018-19.

Group Business grew by 40% with first year premium of ₹ 2,119 Crore in FY 2018-19. AUM of Group
business grew by 13% to ₹ 10,138 Crore in FY 2018-19 from ₹ 8,961 Crore in FY 2017-18.

The Company’s AUM grew by 9.7% to ₹ 40,442 Crore in FY 2018-19.

There was cash inflow from operating activities in FY 2018-19 to be Rs. 3,577,071 as compared to the cash
outflow of Rs. 6,442,805 in FY 207-18. It was due to increase in total premium in the year. The tremendous
growth of the company led to inflow of cash in the year.

But there is also was outflow from investing activities as the company invested in huge amount to purchase
the same.

There is no Dividend distributed by the company to the public as it is not a listed company but an owned
subsidiary of Aditya Birla Capital.
EQUITY RESEARCH
Meaning:
Equity research helps determine the attractiveness of an investment which will help make smart decisions
for a private as well as a corporate investor. The career in equity research has become quite lucrative, thanks
to the growing number of investors and also an increase in the number of foreign Investments. Equity
research studies the financial statements, industry trends, competitors, economic conditions, etc., which
enables the investors to make a wise and informed decision. Of course, studying these trends is extremely
difficult for any investor and it also requires knowledge of how to work in the stock market. Therefore,
equity research analysts come into the picture. The work is quite challenging and demanding as the analyst
needs to be vigilant about the current happenings.

Purpose:
The main purpose of equity research is to provide investors with detailed financial analysis and
recommendations on whether to buy, hold, or sell a particular investment. Banks often use equity research as
a way of “supporting” their investment banking and sales & trading clients, by providing timely, high-
quality information and analysis.
Equity Research Process:
The team of analysts conducts through research. They collect comprehensive information and critical data.
They conduct a rigorous research and analysis to provide us with details such as the company financial
reputation, history, about their market shares and company news and other useful information. This also
includes sector reports and market estimates. Due to vast geographical reach, they have good knowledge of
the various industries and the market.

A high quality research report of the equity research will be provided to us that also suggest Future
beneficial investments. This report captures the returns and the risks involved making us more confident
about our present investment decisions. Companies globally are adopting equity research before taking
critical decisions of investment. They find out all the highs and lows and the future growth rate of a
company which we are investing in. The equity research combined with the awareness of the strengths and
weaknesses of the company is highly beneficial. It provides us with a clear picture for investments.

Project allotted:
The project allotted to me in the organization is an equity research project for any two companies from any
sector in India, so I chose chemical sector for the equity research and for which I analyzed the equity
structures of 2 companies:

1. ‘India Gelantine and chemical limited’

2. ‘Fine Organic Industries Ltd’

based in Ahmedabad which comes under specialty chemical sector. Equity research is a method of
analyzing a company's financial performance and predicting the scenarios of buying and selling a company's
listed assets. It is an extensive method of research to analyze the assets and liabilities of a company that
attracts investors to invest in the company. Equity researchers use problem solving, data interpretation, and
various other tools to understand and predict aspects of security behavior. This often involves quantitative
analysis of the latest stock market statistics. Finally, equity researchers could be appointed in developing
investment models and filtering tools that identify trading strategies that help manage portfolio risk.

To bridge this gap of knowledge one must know sectors where he or she can invest in. Hence, this report
gives a detailed analysis of specialty chemical sector and also provides potential investment options for the
same. The main objective of this project is to understand untouched and not so talked sector which is
specialty chemical in detail so the readers are well verse with the sector and know about potential
investments where they can invest in.
Presentation of Data

For specialty Chemical sector

Global Market size India’s Share

850 US Billion $ 3%

Growth Rate Global India’s Growth Rate

4-6% 12-13%

100% 22% of all the

chemicals are
FDI specialty chemicals

India’s Market size More than 50% is

37 Billion $ exported
 Analysis & Discussion

Specialty Chemicals sector:

Specialty chemicals are unique chemicals that help provide different effects in different sectors of their
operations, such as textiles, ink additives, construction, oil and gas, cosmetics and food. Specialty chemicals
can be used in preparations of various chemicals whose composition greatly affects the performance of
customer’s final products. These chemicals are used based on their function and performance. These
chemicals are majorly intermediary products required in manufacturing of end products.

Global specialty chemical market-

YEAR MARKET SIZE

FY 2012 577
FY 2017 745
FY 2022F 900-1000

Market Size
1000
900
800
700
600 Market Size
500
400
300
200
100
0
FY 2012 FY 2017 FY 2022F

The global specialty chemical size has growth rate of 5% per year from 2012 to 2017 where the size
increased from 577 US Billion $ to 745 US Billion $ and after that the growth rate increased from 5% to 6%
and expected to reach more than 900 US billion $ market.

Region-wise share

Region Share
China 25%
North America 24%
Western Europe 17%
Japan 7%
India 3%
Other Asia 11%
Others 13%
 Share
China
North America
Western Europe
Japan
India
Other Asia
Others

The half of the share across globe is contributed by china and North America region. India is in growing
stage for the specialty chemical sector and as of now contributing 3% to the global share of the industry.

India’s Specialty chemical Market

% export % domestic
out of total sales out of
Top companies of INDIA in specialty chemical sector sales total sales
Revenue(in inr
Company Exports Domestic
lakhs)
Aarti Ind 4706 1977 2729 42.01% 57.99%
Atul 3947 1908.2 2038.8 48.35% 51.65%
Vinati
Organics 1158.09 845.4057 312.6843 73.00% 27.00%
Navin
Fluorine 990 513 477 51.82% 48.18%
Alkyl
Amines 955.57 147.37 808.2 15.42% 84.58%
Fairchem
Spec 249.87 169.9116 79.9584 68.00% 32.00%

The top players in the industry are mentioned above. We can see from above data that most of the business
comes from exports of the products to various counties across the globe. On an average around half of the
business is done by exporting the products.
Cost drivers in the industry:
In the business of specialty chemical, the major cost drivers that the company needs to incur are given in
below pie chart. The data is taken from one of the annual report of the company Aarti industries which is
market leader in this sector shows that more than half of the cost is incurred due to the raw materials used
for making the end product in this industry and after that the second major cost driver is manufacturing
expense.

Consumption of Raw Materials

Consumption of Packing
Materials
Consumption of Fuel
Consumption of Stores & Spares
Employee Benefits
Depreciation and Amortisation
Expenses
Finance Costs
Selling & Distribution Expenses
Office Administrative Expenses
Manufacturing Expenses

Major Challenges in the Sector:

 All the transactions are exposed to fluctuations in the external value of rupee largely against US
dollar because much of the transactions in the business is held internationally and major raw material
is procured from other countries. Exposure to other currency risk is minimal.
 Innovation exposes sector to the risk of redundancy and losing out to competition on account of poor
R&D.
 Sector operations are in multiple global markets exposes them to risks of changes in regulations in
various part of globe.
 Unavailability of raw materials and fluctuation in raw material prices is a major threat to the sector
business.
India Gelatine and chemical limited:

Company Background
The Company is engaged in the manufacturing of Ossein, Gelatine and DCP. The raw material that the
company uses are Crushed Bones, being of natural origin, is at many times in short supply which adversely
affects company's production. The company faces severe competition from various domestic companies and
therefore focuses on exports market which has inherent foreign exchange risk.

Broadly there are 4 product lines in the company which are:

1 .Edible Gelatine and Di-Calcium Phosphate

2. Photographic Gelatine

3. Technical Gelatine

4. Pharmaceutical gelatine

They also sell ossein which is used in making Gelatine.

The Company deals with following sub-sectors-

 Food sector
 Photographic industry
 Cosmetic industry
 Pharma industry
 Plastic industry

Percentage share to turnover of

company
Ossein Gelatine
Di Calcium Phosphate

Gelatine is major contributor in the revenues of the company

Analysis of Cost drivers of the company
General Expenses Travelling and conveyance expenses
Stationery and Printing expenses Repairs
Rates and Taxes Power and fuel
Postage & Telegram Loss on sale / Revaluation of Investment
Loss due to Fire Legal & Professional Fees
Labour Charges Insurance
Freight & Cartage & Colliage Export Expense
Donation Directors' Sitting Fees
C.S.R. Expenses Consumption of stores
Packing material Consumed Commission and Discount On Sales
CETP, Water & Effluent Treatment Charges Buy Back Expenses
Audit Fees Advertisement & Sales Promotion Exps
Depreciation and amortization expense Finance costs
Employee benefits expense Excise on Sales
Stock-in -Trade and work-in-progress Changes in inventories of finished goods

The detailed tabular presentation of above table is attached with the annexures provided at the end of the
report, from this grape we can understand the major cost of the company is due to raw material and power
and fuel cost.
Seasonality Identification
The seasonality of the company depicts in which season or quarter the company is able to generate high
amount of revenue. It shows at which point of time the demand in the market for their products gets
increased.

Seasonal Identification
4000
3000
Seasonal Identification
2000
1000
0
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

Percentage of revenue
35.00%
30.00%
25.00% Percentage of revenue
20.00%
15.00%
10.00%
5.00%
0.00%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

The above data is from 2015 to 2020 which is taken from the quarterly results of the company. We can see
from the bar chart there is not any repeating trend in the revenue generation in each quarter, however every
year the third quarter is contributing most of the revenue.

The other financials of the analysis are attached at the end of the report in annexures such as balance sheet,
cash flow statements, income statement, quarterly results and ratio analysis.
Capital for the company:

The company has 709.2 Lakhs rupees of shareholders equity and operates with other reserves of the
company. It has zero debt policy and do have any major long term debt and borrowings.

The Major shareholders of the company are as follows:

Major shareholders of the company

No. of
Name of the shareholder Shares % of shareholdings
Olive Speciality Services Pvt. Ltd 1708099 24.08%
Viren· C. Mirani 1262459 17.80%
Shefali V. Mirani 820113 11.56%
Divyaprabha C. Mirani 549534 7.75%
Others     38.8100%

Major shareholders of company

Olive Speciality Services Pvt. Ltd Viren· C. Mirani
Shefali V. Mirani Divyaprabha C. Mirani
24%
Others
39%

18%

8%
12%

More than 60 percent of the shareholdings is with the promoters of the company and Olive specialty services
Pvt. Ltd is also the company of same promoters.
Financial Analysis of India Gelatine and chemical limited:

Here from the company’s annual reports given in the website of the company, I made the financial reports
like balance sheet, profit and loss statement, Cash flow statement and Ratio analysis. With the use of these
reports, I forecasted the balance sheet, profit and loss statement and cash flow statement for the year F.Y.
19-20, 20-21 and 21-22.

From the profit and loss statement which is in the attached annexure at the end of the report, we can see that
the profit of the company has been declining since 2014 till 2018 then it again increased from last two years.
The reason of the fall in the revenue is due to the difficulty in procuring raw material which is crushed bone
here and consumer are not preferring this and are taking synthetic material as a substitute. The other reason
is change is the policies of government for importing raw material and fluctuation in currencies.

Now looking at the balance sheet of the company which is also in the annexure, the company do not have
any long term borrowings but have large amount of deferred tax liabilities which is adding to the noncurrent
liabilities of the company suggesting that the company is not able to pay its taxes in time. The major portion
of company’s capital is allotted in the Property, Plant and Equipment.

The cash flow statement of the company is created from the scratch using the income statement and balance sheet to
understand the liquidity of the company. The major chunk of cash inflows are company from operating activities
making net cash flow from operating as positive value and overall cash from investing and financing activities is
coming to be negative which suggests that the majorly the cash is going out from business due to buying of more
assets and making an investments on behalf of the organization.
RATIO ANALYSIS

The EBITDA margin for the company has been reducing from 2015 to 2019 which means the operating
profit of the company is reduced compared to the revenue of the company; the reason behind this fall was
the increased cost of raw material expenses which were due to shortage in the availability of raw material
across our country.

Looking at the DuPont Analysis which tells us the operating efficiency, asset turnover ratio and financial
turnover ratio of the company, from the annexure of ratio analysis in Dupont analysis we can see that the
company is not able to utilize its asset so well to generate overall comparable revenue and as the value of
total asset to equity or equity multiplier is near about one which suggest that the company is dependent on
equity for major portion of assets and is debt free company.

For the Debt to equity and Debt to asset ratios, the company has managed to reduced and maintain it to
lowest possible level and are managing the operations via shareholder’s equity and reserves & surpluses.

Looking at the liquidity ratio which gives the ability of the company to fulfil the short term obligations of
the organization. The company has sufficient short term assets to fulfil short term liabilities. The most of the
current assets are in the form of short term investments in the form of securities.

Peer comparison with India Gelatine & Chemical limited

The performance of the company is up to mark or not is only understood when we compare it with certain
bench mark. As our company is in manufacturing of gelatine, so I have chosen three others players in the
industry than follow same products and business model.

The Peers that I selected are:

 CJ gelatine products ltd

 Nitta Gelatine India Ltd
 Narmada gelatines limited

The comparison of the India Gelatine and chemical limited with other peers in the market suggest that the
performance of gross margin are somewhat similar in the industry while this company in better than its peers
as it follows debt free policy and other companies also have falling CAGR as industry is facing similar
problems of shortages of raw materials.

The detailed analysis is attached in the annexures at the end of the report.
PE Band Analysis for India Gelatine and chemical limited

The price to earning band chart is used to track the change in price of the stocks of company and the
earnings they are offering.

300
250
200
Price
150
5X
100 10X
50 20X
25X
0 30X

We have taken data for last five years to make PE band which says that the PE ratio of the company has
moved from around 10 times to 30 times and after that has again touched back to 10 times which suggests
that during 2017 and 2018 the company was overvalued for some time and then got back to its position as it
was in 2016.

Conclusion

After doing top to bottom approach analysis for India Gelatine and Chemical limited we can conclude
following:

 Looking at the whole Specialty Chemical sector which has a huge potential to grow in our country
with expected growth rate of 12 to 13%.
 The substitute of synthetic gelatine is Major problem as people will prefer using synthetic material
then animal made product.
 The major problem for the gelatine firm is the raw material availability as in India slaughtering of
animal is issue in the recent time.
For and Against for India Gelatine and Chemical Limited
FORS

 The company is debt-free company

 The company had provided good dividend yield is past time as 3.7%
 The stock is been traded at the rate of .64 times of the book value of the company
 The dividend pay-out percent were as good as 44%

AGAINSTS

 Tax paid seems to be low

 The growth rate of the company is as poor as -1.4% from over the last five years
 A good portion of earning is coming from earing from other sources
 Promoters holdings are reduced from last three years
 Return on equity is low for the company

Recommendation

As per the whole analysis of specialty chemical sector, in this uncertain time of COVID-19, the people can
think of investing into it as pharma is under the growing stage and specialty chemical has same sub-divided
sectors of pharma in itself which has huge potential to grow at this time and even in future also.

As the company analysis of India gelatine and chemical limited which is facing poor growth for last five
years and facing serious issues in terms of the raw material and depending on other countries for procuring
raw materials? The India Gelatine and chemical limited should look into other product lines in the same
business or can adopt synthetic gelatine which in demand these days. The adoption of change is very
important in this competitive era.
 ‘Fine Organic Industries Ltd’

Company Background

 Founded in 1970, Fine Organics was the brainchild of Mr. Ramesh Shah, a Mumbai- based
businessman with experience in chemical trading and Mr. Prakash Kamat, a skilled technocrat from
Institution of Chemical Technology. Together, they envisioned the potential of oleochemical
derivatives and created an organization founded on the pillars of innovation and passion. Fine
Organics introduced the Indian market to high-quality additives for specialty applications with raw
materials from locally-grown plant sources and quality levels on par with international standards.

 A technology and customer-driven company, Fine Organics enjoys a privileged position

in the specialty additives industry globally. Fine Organics owes its growth and success
to its expertise on oleo chemistry, in-house manufacturing technology, customer-centric
research and development and a techno-commercial mindset. Fine organics have highly
qualified technocrats in marketing, production and quality control that provide
exceptional support to our customers, suppliers and distributors.

 Fine Organics has four manufacturing facilities in Maharashtra - two at Ambernath, and
one each at Badlapur and Dombivili. These plants have a combined capacity of
69,300tpa. Until 2000, Fine Organics catered only to the domestic market, but has
emerged as a key global player thereafter. Globally, FOIL caters to 650+ direct
customers (end users) and 130+ distributors (selling to 5,000+ customers) in more than
70 countries across Asia (including India), Middle-east, North America, South America
and Europe.

COMPANY DATA

CMP: Rs 2130 (20-Apr 2020)

Market Cap: Rs 6,531 Crore
Free Float: 25.40%
 52 Week High: 2550 (10-Feb-
2020)
 52 Week Low: 1300 (22-Apr-
2019)
 Face Value: Rs 5
 Liquidity: High
 Shares 3,06,59,9
 Outstanding: 76

LEADERSHIP

Name Designation Insight

Mr. Prakash Damodar Kamat, the Chairman of Fine Organics

Group, holds a master’s degree in science and technology (oils)
Mr. Prakash Executive from Institute of Chemical Technology, University of Bombay.
Damodar Director and He has a total experience of more than 40 years with the group.
Kamat Chairman He was appointed as Director since inception 24th May, 2002
with having experience in product development, process
technology and R&D.
Mr. Mukesh Maganlal Shah, the Managing Director of Fine
Mr. Mukesh Managing Director Organic Group, holds a bachelor’s degree in science from the
Maganlal University of Bombay. He has a total experience of more than
Shah 40 years with the Group. He was appointed as Director of the
Group since inception 24th May, 2002. He played key role in
establishing quality control and marketing.
Mr. Jayen Ramesh Shah, the Executive Director and CEO of
Mr. Jayen Executive Fine Organic Group, holds a master’s degree in science from
Ramesh Director and the University of Bombay. He has a total experience of more
Shah CEO than 30 years with the Group. He was appointed as Director
since inception 24th May, 2002. He played a key role in
creating a strong vendor-partner network.
Mr. Tushar Ramesh Shah, the Executive Director and CFO of
Fine Organic Group has completed second year while pursuing
for bachelors’ in science from the University of Mumbai. He
Mr. Tushar Executuve
has a total experience of more than 27 years with the Group. He
Ramesh Director and CFO
was appointed as Director since inception 24th May, 2002. He
Shah
played a key role in the development of the first slip additive
facility.
SHAREHOLDING PATTERN

Shareholder’s Q1 Q2 Q3
% FY20 FY20 FY20

Promoters 74.60 74.60 74.60

DIIs 15.90 16.29 15.59
FIIs 5.26 5.32 5.34
Others 3.84 3.39 4.07
Pledge - - -

80
70
60
50
40
30
20
10
0

PromotersDIIsFIIsOthers

Q1 FY20 Q2 FY20 Q3 FY20

SEGEMENT REVENUE

Consolidated Q3 FY Q2 FY Q1 FY Q4 FY Q3 FY Q2 FY Q1 FY Q4 FY
Revenue (Rs. In 2019- 2019- 2019- 2018- 2018- 2018- 2018- 2017-
20 20 20 19 19 19 19 18
Crores)
Revenue from 265.90 274.01 243.50 278.67 259.60 260.91 240.11 270.57
Operations
Other Income 5.49 5.82 4.46 7.04 7.71 3.32 8.48 7.19
Total 271.40 279.84 247.96 279.38 267.32 264.24 248.60 277.77

Notes:-

 72% of their revenues comes from Additives for Plastic products and Food Products

REVENUE CLASSIFICATION
Consolidated Revenue FY 2017 – 18 FY 2018 - 19 Growth
(Rs. In Crores) Amount Share Amount Share %
Sales - Specialty 851.80 96.73% 1050.04 97.21% 23.27%
Chemicals
Sales - Other 12.84 1.46% 10.28 0.95% -19.93%

Sales - Scrap 0.01 - - - -

Interest Income 0.46 0.05% 1.67 0.15% 263.04%

Other Non-Operating 15.51 1.76% 18.15 1.68% 17.02%

Income
Total 880.63 100% 1080.15 100% 22.65%

Notes-

 Exports Sales is 55% of total revenue for the FY 2018-19

 Domestic Sales is 45% of total revenue for FY 2018-19
MANUFACTURING FACILITIES

Current Capacity Remarks

Facilities (TPA)
Ambernath 49,500 -
Badlapur 6,400 -
Dombivli 8,400 Acquired on Sub-
lease basis
Total 64,300

Explansion Plan Capacity Estimated Remarks

(TPA) Completion
Time
Ambernath (2nd 5,000 Q2 FY19 Commenced Operations
Facility)
Ambernath (3rd 32,000 Q1 FY20 Commenced Operations
Facility)
Fine Zeelandia 10,000 - Commenced Operations
(Patalganga)
Patalganga Facility 10,000 Q2 FY21 Subject to Regulatory
Approval
Germany Facility 10,000 FY22 Subject to Regulatory
Approval
Total 67,000
RATIOS

Particulars FY 2016-17 FY 2017-18 FY 2018-19

(Rs. In Crores)

Sales 819.89 880.63 1080.15

Sales Growth (YoY) - 7.40% 22.65%

Gross Profit 313.14 316.45 412.50

Gross Profit Margin 38.19% 35.93% 38.18%
Gross Proft Margin Growth (YoY) - 1.05% 30.35%

EBITDA 148.88 174.37 250.05

EBITDA Margin 18.15% 19.80% 23.14%
EBITDA Margin Growth (YoY) - 17.12% 43.40%

EBIT 125.11 154.33 232.60

EBIT Margin 15.25% 17.52% 21.53%
EBIT Margin Growth (YoY) - 23.35% 50.71%

PAT 77.87 95.32 136.25

PAT Margin 9.49% 10.82% 12.61%
PAT Margin Growth (YoY) 22.40% 42.93%

Dividend Paid - 22.99 22.99

Dividend Payout Ratio - 24.11% 16.87%
Basic EPS 25.40 31.09 44.44

Total Debt to Equity 0.35 0.33 0.40

Net Debt to Equity 0.31 0.31 0.18
Net Debt to EBITDA 0.68 0.70 0.37

ROE 23.71% 24.09% 27.23%

ROCE 38.10% 39.01% 38.96%
ROA 17.51% 17.99% 19.39%

Cash Flow from Operations 45.20 51.80 98.50

CapEx 15.20 40.30 81.90
FCFF 29.92 11.54 16.62
Growth FCFF - -61.43% 44.03%

KEY HIGHLIGHTS
 Projected growth as stated by CFO Tushar Shah is around 12-15% in India and 6% globally.

 Gross Margins are in range of 30-35% for our specialty additives products.

 30 New specialty additives product were introduced, FY 18-19.

 In Q2 FY20, expanded its capacity by 32,000 TPA at Ambernath 3rd Facility

 Operating at peak capacity utilisation, Q3 FY 18-19

 Prices of Raw Materials to remain soft around the year, Q1 FY 19-20

 Optimistic about the global opputunities, Q2 FY 18-19

 There has been growth in R&D during the FY 18-19

 Added capacity and Joint Ventures would help company to grow in Indian markets.
PRODUCT PORTFOLIO

Additives No. of
Products
Additives for Plastic 112
Additives for Food 33
Additives for Rubber 22
Additives for Cosmetics 44
and Pharma
Additives for Paints & Inks 17
Additives for Textiles 23
Additives for Speciality 14 Plastic Food
Rubber Cosmetics & Pharma
Applications
Paints & InksTextiles
TOTAL 265 Speciality Applications

Notes-

 The major selling products are Food Additives and Plastic Additives.

Raw Materials Used:

 The company manufactures green additives from oleo chemicals (chemicals
derived from vegetable oils), which are primarily used in the food, plastic,
cosmetics, paint and other industries.
 Oils used by the company for the production of various products:
Rapseed Oil, Palm kernel oil, Sunflower oil, Castor oil, Soyabean oil, Rice bran oil.

Notes:

 45% of their Raw Materials come from two Vendors.

 28% of their Raw Materials are imported, primarily from Indonesia & Malaysia.
Competitor Comparison

Key Fundamentals
Company Name Fine Organic Industries Ltd. Nitta Gelatin India Ltd.

Market Cap (₹ Cr.) 0.00 0.55

Earnings Per Share (EPS) 33.05 16.05

Dividend per share (DPS) 7.00 2.50

P/E Ratio ) 0.00 12.41

BV/share 133.22 164.43

P/B Ratio 0.00 1.21

PAT Growth 26.71 -29.87

Debt/Equity Ratio 0.13 0.50

Return on Assets (ROA) 20.60 5.34

Return on Equity (ROE) 27.27 10.10

Return on Capital Employed

38.30 11.89
(ROCE)

Balance Sheet
Company Name Fine Organic Nitta
Industries Ltd. Gelatin
India
Ltd.

Liabilities

Share Capital (₹ Cr.) 15.33 9.08

Company Name Fine Organic Nitta
Industries Ltd. Gelatin
India
Ltd.

Total Reserve (₹ Cr.) 393.12 140.21

Shareholder's Funds (₹ Cr.) 408.45 149.29

Total Non-Current Liabilities (₹ Cr.) 0.00 0.00

Total Current Liabilities (₹ Cr.) 126.35 82.69

Total Liabilities (₹ Cr.) 408.45 170.29

Assets

Gross Block (₹ Cr.) 239.93 97.53

Accumulated Depreciation (₹ Cr.) 151.62 18.35

Impairment of Assets (₹ Cr.) 0.00 0.00

Net Block (₹ Cr.) 88.32 79.17

Other Non-current Assets (₹ Cr.) 0.00 0.00

Total Current Assets (₹ Cr.) 0.00 0.00

Total Assets (₹ Cr.) 408.45 170.29

Contingent Liabilities (₹ Cr.) 7.57 47.11

Total Debt (₹ Cr.) 0.00 21.00

Profit & Loss

Company Name Fine Organic Industries Ltd. Nitta Gelatin India Ltd.

Gross Sales (₹ Cr.) 852.04 326.44

Operating Expenses (₹ Cr.) 0.00 0.00

PBIDT (₹ Cr.) 865.30 326.56

Other Income (₹ Cr.) 16.38 4.37

Operating Profit (₹ Cr.) 180.36 38.51

Interest Expended (₹ Cr.) 3.12 4.26

Depreciation (₹ Cr.) 20.04 11.91

Profit Before Tax (₹ Cr.) 865.30 326.56

Provision for Tax (₹ Cr.) 0.00 0.00

PAT (₹ Cr.) 101.33 14.57

Equity Dividend (%) 1,40,00,000.00 25.00

Earnings Per Share (₹) 33,05,000.00 15.27

Cash Flow
Company Name Fine Organic Nitta
Industries Gelatin
Ltd. India Ltd.

Cash Flow from operating activities (₹ Cr.) 50.80 22.04

Cash Flow from investing activities (₹ Cr.) -53.02 -8.34

Cash Flow from financing activities (₹ Cr.) -4.67 -16.00

Net increase/(decrease) in cash and cash equivalents (₹ Cr.) -5.90 -2.30

Closing Cash & Cash Equivalent (₹ Cr.) 5.38 1.80

Share Holding Pattern (% of Shares Held)

Company Name Fine Organic Industries Ltd. Nitta Gelatin India Ltd.

Total Promoter 75.00 74.48

Indian Promoter 74.60 31.53

Foreign Promoter 0.40 42.96

Institutions 21.39 0.12

Mutual Funds / UTI 14.35 0.05

FI/Bank/Insurance 0.01 0.07

Govt 0.00 0.00

FII 0.00 0.00

Other 7.03 0.00

Non-Institution 3.61 25.40

 Company Name Fine Organic Industries Ltd. Nitta Gelatin India Ltd.

Bodies Corporate 1.20 3.22

Individuals (upto Rs. 1 Lakh) 2.33 18.66

Individuals (in excess of Rs. 1 Lakh) 0.00 1.39

NRIs/OCBs 0.07 0.36

Others 2.34 21.82

Total Non-Promoter 25.00 25.52

Depository Receipts 0.00 0.00

Fundamental & technical analysis:

Fundamental Analysis

Fundamental analysis is a method of analysing a stock or any type of security by measuring its intrinsic
value. This is done by studying all the things that can influence this value such as the company’s financial
and management condition, that of the industry, and the overall economic conditions. The key objective of
doing this kind of analysis is to produce a value which can be compared against the current price so that an
investor can figure out if he or she is going to buy or sell the security.

Fundamental Analysis is divided into 2 categories–

 Quantitative analysis
 Qualitative analysis

Qualitative Analysis:
Qualitative analysis is done using EIC analysis i.e. Economy, Industry, Company. It is a top down approach,
in this we move from macro to micro aspects

 Economy – we look at the economic health of the country which includes GDP data, FII’s/DII’s,
Forex Reserves, Monetary and Fiscal policy, Political scenario, Union Budget, Monsoon Forecast
etc.

 Industry – in this we look at the potential of the industry in the economy. The government support
given to the industry e.g. Bharat Mala Project Finalized by the Hon’ Prime Minister Narendra Modi.

 Company – in this we look at the competitive advantage of the company with respect to its peers,
management team & CEO track record, the future prospect of the company and the range of products
and services provided by the company.

Quantitative analysis
Quantitative analysis is done by analysing the Financials of the company i.e. Profit & Loss A/c, Balance
Sheet & Cash Flow Statement & Financial Ratios of the company. For a broader view we also look at the
previous year’s statements.
 Financial Ratios – it includes the following ratios

1. Price to Earnings Ratio- P/E ratio is the ratio of the market price per share to earnings per
share. It tells how much the market is willing to pay a company’s earnings. A higher P/E ratio
means that the market is more willing to pay for the earning of the company vice versa.
Industry P/E – it refers to the average P/E of all the companies in that Industry. If company P/E
is higher than the Industry P/E, then that company is overvalued which means it requires more
fund to earn 1 rupee against the industry requirements. If company P/E Lower, then the industry
P/E then that company is undervalued which means it requires less funds to earn 1 rupee against
the industry requirements.

2. Price to Book Ratio – P/B ratio is an investment valuation ratio used to compare market
value of a company’s share to its book value. This ratio indicates how much shareholders are
paying for a company’s net assets. Low ratio represents a good sign for the company.

3. Earnings per Share – EPS are the portion of a company’s profit allocated to each
outstanding share. EPS serves as an indicator of a company’s profitability. Earnings per share is
a major component used to calculate the price-to-earnings valuation ratio. The higher the EPS
the better are the growth prospect of the company. Two companies could generate the same EPS,
but the company having less investment will be considered as a better performer.

4. Return on Equity ratio (ROE) – The return on equity ratio is a profitability ratio that
measures the ability of a firm to generate profits from its shareholder investments in the
company. The higher the ratio percentage, the more efficient management is in utilizing its
equity base and the better return it to investors.

5. Return on Assets (ROA) – It is a profitability ratio that measures how efficiently a company
can manage its assets to produce profits during a period. Higher ratio is favoured to investors
because it shows that the company its more effectively managing its assets to produce greater
amount of net income. A positive ROA ratio usually indicates an upward trend as well.

6. Return on Capital Employed (ROCE) – it measures how efficiently a company can

generate profits from its capital employed by comparing net operating profit to capital employed.
A higher ratio would be more favourable because it means that more rupees of profits are
generated by each rupee of capital employed.
 7. Total Debt to Equity Ratio (D/E) – it measures a company’s financial leverage is typically
called Debt/Equity ratio. The D/E Ratio indicates how much debt a company is using to finance
its assets. A high debt/equity ratio generally means that a company has been aggressive in
financing its growth with debt which indicates high level of risk.

8. Current Ratio – the ability of a firm to pay short-term and long-term obligations is called
current ratio. The higher the current ratio, the more capable the company is of paying its
obligations. Value under 1 indicates that a company’s liabilities are greater than its assets and
indicates that the company may be unable to pay off its obligations if they came due at that
point.

9. Financial Statements
 Profit & Loss Statement
 Balance Sheet
 Cash flow statement

CONCLUSION
Using all the above tools of analysis it can be concluded that Fine Organic is dominating the market
since its establishment and this can be witnesses by analysing all the financials of the company and
the company seems in a very stable position with constant return of profit. In most of the
accounting measures Fine Organic is leading and that is the reason it is the third largest chemical
company in India and is also globally sold.

Although India Galetine Ltd. is also not very far behind then Fine Organic as the company is also a
major competitor in chemical industry of the country.

Apart from this there are high chances that this industry will grow further because of various
upcoming plans of the government including Atmanirbhar Bharat. This will also help in the growth
of the companies like Fine Organic and India Galetine Ltd.

Hence, both the companies seem viable option for investment as both the companies are generating
brilliant results.