FINANCIAL ACCOUNTING AND ANALYSIS REPORT

OF

ABBOTT INDIA LTD.

Submitted By: Group- 2

Dhruv Gupta, HRA012

Kareena Billa, HRA013

Simran Mirchandani, HRA014

Priyanshi Gaur, HRA043

Kanchi Singh, HRA061

Kaustubh Agarwal, HRA063

Ananya Mishra, HRA066

MBA-HR, NMIMS Mumbai

Submitted to:
Prof. Sudhanshu Sekhar Pani
10th October, 2020
SOURCES OF INFORMATION

A primary source of data is a company’s annual report, including the financial statements and
notes, and management’s discussion and analysis. In India financial reports are now prepared
and presented under the IND AS principles. However, given that the purpose of the
accounting standards is not the analysis, financial reports do not contain all the information
needed to perform effective financial analysis. Financial statements do contain data about the
past performance of a firm (its income and cash flows) as well as its current financial
condition (assets, liabilities, and owners’ equity). Further information needs to be collected to
add meaning to such data to reach any conclusions or attempt any forecasts. We need to
supplement the information found in a firm’s financial reports with other information,
including information on the economy, industry, comparable companies, and the company
itself. This note describes various techniques used to analyse a company’s financial
statements. We will follow a baseline approach i.e. we shall analyse without any particular
purpose such as valuing the firm’s equity, assessing credit risk, conducting due diligence
related to an M&A transaction, or assessing a subsidiary’s performance.
Equity analysis incorporates an owner’s perspective, either for valuation or performance
evaluation. Credit analysis incorporates a creditor’s (such as a banker or bondholder)
perspective. The focus of analysis varies because of the differing interest of owners and
creditors and the analysts tend to make adaptations of a baseline approach.
Any approach will focus on the ability of the firm to generate and grow earnings, and cash
flow, its efficiency of utilising its resources, its need for resources. As well as any risks that
can impact the firm. Equity analysis usually places a greater emphasis on earnings, whereas
credit analysis places a greater emphasis on risk to the earnings and repayment capability.
It is commonly construed that Financial Statement Analysis == Financial ratio analysis.
Nothing can be far from the truth. There are many relationships between financial accounts
and between expected relationships from one point in time to another. Ratios are a useful way
of expressing these relationships. Ratios express one quantity in relation to another (usually
as a quotient).
The relevance of ratios analysis is that it adds meaning to individual numbers. Thus it creates
additional information using the numbers. So the analyst (who prepares the report for any
stakeholder) needs to decide on what set of numbers he needs to help the particular
stakeholder understand the financial situation and performance of the particular firm in
relation to peer group company or industry or environment. Thus qualitative business
information carries an equally important role in Financial Statement analysis. The ratio is an
indicator of some aspect of a firm’s performance, telling what happened but not why it
happened. Academic research has examined the importance of ratios in predicting stock
returns (Ou and Penman, 1989; Abarbanell and Bushee, 1998) or credit failure (Altman,
1968; Ohlson, 1980; Hopwood et al., 1994). This research has found that financial statement
ratios are effective inselecting investments and in predicting financial distress. Practitioners
use ratios to derive andcommunicate the value of companies and securities. Ratios are,
however, the beginning and not the end of analysis. Especially during times of change ratios
may throw up an outdated picture.

Stakeholders and Objectives

The financial performance of a firm and financial position of a business (firm, its subsidiary
or business unit) has to be evaluated in comparison to its financial goals. These financial
goals will be different for all stakeholders. Hence the analysis becomes a 360-degree
evaluation of the firms situation. The key financial goals of any firm is to firstly provide a
satisfactory return on Investment and Secondly to remain in sound financial position (going
concern). This leads to 4 broad areas under which we can evaluate the firms. These are given
in exhibit 1.

Exhibit 1: Key financial goals of a firm….

Satisfactory return on Investment Sound Financial Position
Profitability Liquidity
Investment utilisation Stability

OBJECTIVE:
In this report, we will analyse the financial position and performance of Abbott India Ltd. and
will analyse the same with GlaxoSmithKline for a peer group analysis.

Exhibit: 2 -
PROFIT AND LOSS A/C OF ABBOTT INDIA LTD. AS ON
For the year ended-
31.03.2020 31.03.2019 31.03.2018
INCOME (All Amt. In INR Lakhs)
Revenue from operations 4093,14.41 3678,60.30 3307,12.17
Other income 114,38.58 113,28.60 116,98.72
TOTAL INCOME 4207,52.99 3791,88.90 3424,10.89
EXPENSES
Cost of materials consumed 451,75.97 40,640.20 295,72.38
Purchases of stock-in-trade 1802,64.23 1,68,437.85 1711,22.00
Changes in inventories of finished goods, stock- 61,24.98 (2,18.48) 8,61.82
in-trade and work-in-progress
Employee benefits expense 476,10.69 435,58.24 393,69.27
Finance costs 8,53.23 2,24.84 3,82.21
Depreciation and amortisation expense 59,60.91 16,92.13 16,18.54
Other expenses 544,93.83 549,68.71 475,56.35
TOTAL EXPENSES 3404,83.84 3093,03.49 2802,62.63
PROFIT BEFORE TAX 802,69.15 698,85.41 621,48.26
TAX EXPENSES
Current tax expense 208,03.56 248,45.92 223,51.00
Tax adjustment for earlier years 24.65 (2,58.43) (1,62.69)
Deferred tax - charge/(credit) 1,47.68 2,64.74 (1,61.83)
TOTAL TAX EXPENSES 209,75.89 248,52.23 220,26.48
PROFIT FOR THE YEAR 592,93.26 450,33.18 401,21.78
Other Comprehensive Income
Items that will not be reclassified subsequently
to profit or loss :
Re-measurement gains/(losses) of defined (5,40.62) (3,20.99) (1,67.72)
benefit plan
Income tax on above 45.27 1,12.17 60.08
 Total Other Comprehensive Income, net of (4,95.35) (2,08.82) (1,07.64)
tax
Total Comprehensive Income for the year, 587,97.91 448,24.36 400,14.14
net of tax
EARNINGS PER EQUITY SHARE
Basic and Diluted - (‘Face value of’ 10 each) 279.04 211.93 188.81

Exhibit: 3
Balance Sheet of Abbott India Ltd. As on:
March 31,2020 March 31,2019 March 31,2018
(All Amt. In INR Lakhs)
Assets
Non- Current Assets
Property, plant and equipment 10021.57 10310.89 7858.56
Capital work in progress 164.21 73.14 216.69
Intangible assets 89.87 185.08 279.6
Right-of-use assets 16871.31 -
Financial assets
Loans 1678.21 1610.7 1502.58
Other financial assets 3626.3 3665.8 2270.67
Deferred tax assets (net) 1444.21 1307.39 1459.96
Other non- current assets 325.19 839.71 1483.65
Total Non-current Assets 34220.87 17992.71 15071.71
Current Assets
Inventories 52716.51 60678.83 58532.72
Financial assets
Trade Receivables 31791.49 27611.43 26344.3
Cash and cash equivalents 14513.79 13700.61 3767.71
Bank balances other than cash and
205223.67 154727.71 99367.32
cash equivalents
Loans 614.13 730.24 20547.81
Other financial assets 7237.56 7334.39 4021.24
Current tax assets (net) 2687.31 697.1 1573.39
Other current assets 5679.53 10618.14 8958.95
320463.99 276098.45 223113.44
Asset held for sale 3433.76
Total Current Assets 320463.99 276098.45 226547.2
TOTAL ASSETS 354684.86 294091.16 241618.91
EQUITY AND LIABILITIES
EQUITY
Equity share capital 2124.93 2124.93 2124.93
Other equity 241045.8 198733.59 167151.12
 Total Equity 243170.73 200858.52 169276.05
Non-current Liabilities
Financial liabilities
Lease liabilities 13920.32
Provisions 8483.75 7543.3 5534.51
Total Non-current Liabilities 22404.07 7543.3 5534.51
Current Liabilities
Financial liabilities
Lease liabilities 3568.45
Trade payables
Due to micro and small enterprises 1832.15 1206.78 583.88
Due to others 63945.03 65144.79 47478.6
Other financial liabilities 5076.93 5198.49 4866.84
Other current liabilities 3178.43 3743.16 3313.15
Provisions 10744.94 9533.36 7746.92
Current tax liabilities (net) 764.13 862.76 2818.96
Total Current Liabilities 89110.06 85689.34 66808.35
TOTAL EQUITY AND
354684.86 294091.16 241618.91
LIABILITIES

Exhibit: 4
Statement of Cash Flows Of Abbott India
For the Year Ended
31.03.2020 31.03.2019 31.03.2018
(All Amt. In INR Lakhs)
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit before tax 802,69.15 698,85.41 621,48.26
Adjustments to reconcile profit before tax
to net cash flows :
Depreciation and amortisation expense 59,60.91 16,92.13 1618.54
Unrealised exchange (gain)/loss (net) 2,32.92 (3,05.09) 1,06.63
Loss on sale/write off of Property, plant and 55.67 14.21 28
equipment (net)
Gain on assignment of trademarks ~ ~ (45,30.26)
Gain on sale of property classified as ‘held ~ (9,78.36) ~
for sale’
Gain on early termination of leases -4.18 ~ ~
Interest income (113,15.20) (101,44.74) (71,39.83)
Finance costs 8,53.23 2,24.84 3,82.21
Amortisation of deferred lease rentals 1,44.04 1,39.02
Allowance for credit impaired debts 38.7 49.6 9 71.44
Allowance/(write back) for credit impaired 62.03 -48.44 81.09
advances and deposits
Provision for likely sales returns, date expiry 15,15.72 7,58.20 7,53.69
and damaged products (net)
Share based compensation expense 8,76.75 8,47.55 7,97.57

Operating Profit before working capital 785,45.70 621,39.44 544,56.36

changes

Working capital changes :

(Increase)/ Decrease in Trade receivables (41,96.32) (13,10.00) (87,85.30)
(Increase)/ Decrease in Inventories 79,62.32 (21,46.11) (84,69.60)
(Increase)/ Decrease in other current and 46,36.38 (26,61.32) (23,29.64)
non-current assets
Increase/ (Decrease) in Trade payables (8,51.02) 185,99.88 4,77.76
Increase/ (Decrease) in current and non- (5,69.10) 9,58.58 4,10.92
current liabilities and provisions
Cash generated from operations 855,27.96 755,80.47 357,60.50

Income tax paid (including TDS) (net) (229,17.05) (256,67.40) (204,90.13)

Net cash flows from operating activities 626,10.91 499,13.07 152,70.37

(A)

INVESTING ACTIVITIES
Purchase of property, plant and equipment (15,73.10) (12,31.35) (16,74.42)
Purchase of intangible assets ~ -17.59 -1.32
Purchase of trademarks ~ ~ (7,50.50)
Proceeds from assignment of trademarks ~ ~ 51,42.28
Proceeds from sale of property classified as ~ 15,59.32 ~
‘held for sale’
Proceeds from sale of property, plant and 17.17 1,35.93 16.9
equipment
Investment in fixed deposits maturing (505,96.52) (554,09.34) (105,12.79)
beyond 3 months (net)
Loan (given to)/repaid by a related party ~ 200,00.00 (200,00.00)
Interest received on deposits (interest 120,33.38 92,62.55 62,96.33
income)
Net cash flows used in investing activities (401,19.07) (257,00.48) (214,83.52)
(B)

FINANCING ACTIVITIES
dividend paid (138,12.05) (116,87.12) (84,99.72)
Interest paid ~ ~ -12.66
 Payment of lease liabilities (50,04.90) ~ ~
Dividend distribution tax (28,39.11) (24,02.32) (17,30.34)
Interest paid, other than on lease liabilities -22.6 (1,90.25) ~
~ ~ ~
Net cash flows used in financing activities (216,78.66) (142,79.69) (102,42.72)
(C)

Net increase/(decrease) in cash and cash 8,13.18 99,32.90 (164,55.87)

equivalents (A+B+C)
Cash and cash equivalents at the beginning 137,00.61 37,6 7.71 202,23.58
of the year
Cash and cash equivalents at the end of 145,13.79 137,00.61 37,67.71
the year

PROFITABILITY RATIOS ANALYSIS

Profitability ratios (exhibits 5 and 7) are used to measure the operating efficiency and overall
financial performance of a business. It is useful to restate income statement in terms of
percentage by taking the Net sales for the year as the base. i.e. 100%. We want to analyse the
entire business basis this number in the background. This is known as a vertical analysis

Exhibit 5: Profitability Ratios 1

Name of Ratio FY 19- FY 18- FY 17- Formula Comments
20 19 18
Cost of Goods sold 42.5 45.8 54.8 Cost of Goods sold*100 What %age of
to sales Net sales sales is left to
cover operating
expenses and to
contribute to
profits after
paying for the
cost of goods
sold

Gross Profit 57.6 46.3 45.9 Gross Profit*100 What %age of

Margin (Gross Net Sales sales is left to
Profit to sales) cover operating
expenses and to
contribute to
profits after
paying for the
cost of goods
sold
 Operating 15.2118 16.350 16.06800 Operating What amount of
Expenses to Sales 2213 48686 258 Expenses*100 Net each sales
Sales rupee is spent
on operating
costs

EBIT to sales 19.8 19.1 18.9 Earnings before Interest What % of each
& Taxes*100 sales Rupee is
Net Sales left to cover
financing costs,
taxes and
profits after
meeting
all operating
expenses

Net income to 14.4 12.2 12.1 Net Income*100 What % of each

sales Net Sales sales rupee is
left as profit for
the firms
owners after
paying for all
products sold,
operating
expenses,
interests and
taxes

Note: the average values for the year 2017-18 is taken as values of 2018 only

With cost of goods sold ratio declining within the years and also a constant rate of
operating expenses with a rise in profit margin for the company, it can be ascertained that the
company might have employed certain new and efficient technology to reduce the cost of
producing the goods.

MANAGEMENT DISCUSSION AND ANALYSIS of the firm in FY 19-20 has the

following comments on the Economic Outlook:

India’s GDP growth has been the most phenomenal in the past decade regularly
achieving an annual growth of 6-7 percent. The rise in GDP is largely credited to factors
including urbanization and improvement in the efficiency and productivity of technologies.
However, growth in India softened in 2019 as economic and regulatory uncertainty, together
with concerns about the health of the non-banking financial sector, weighed on demand. The
GDP growth for financial year 2019-20 touched 4.2% vis-à-vis 6.1% in financial year 2018-
19, the COVID-19 pandemic further aggravating the slowdown from the end of the last
quarter. The Government of India and the Reserve Bank of India (RBI) have acted swiftly to
help offset the pandemic-induced disruptions. Growth in 2020 is expected to remain low due
to a sharp decline in trade, investments and private consumption owing to the COVID-19
crisis. Fiscal incentives announced by the Government as well as liquidity measures may help
the economy to come back on the normal growth trajectory. But the recovery across
economies is expected to be gradual, fragile and susceptible to multiple headwinds.

Exhibit 6: Comparison of Profit Margins

FY 19-20 % FY 18-19 % FY 17-18 %
Gross Profit
Margin
Abbott India Ltd. 57.6 46.3 45.9
GlaxoSmithKline 61.847 59.98 58.167
Net Profit Margin
Abbott India Ltd. 14.4 12.2 12.1
GlaxoSmithKline 3.29 13.421 12.348
Note: the average values for the year 2017-18 is taken as values of 2018 only

Profitability can also be calculated on the basis of the return on investment as given in
Exhibit 7.
The returns on investment has been rising in the last two years. It shows that the company is
able to provide suitable and growing returns to its investors and shareholders. Although with
analysis, it seems that Abbott is efficient in minimizing the operating expenses of the
company whereas GlaxoSmithKline fails to do so.

Exhibit 7: Profitability Ratios 2 – Return on Investment

Name of FY 19- FY 18- FY 17- Formula Comments
Ratio 20 % 19% 18%
Return on 18.3 16.7 16.7 (Net Income + Interest (1-tax rate))*100
Assets Average total assets
Return on 18.54 26.17 25.88 Earnings before Interest & Taxes* 100 Now it would
Assets Average total assets be
comparable to
other
investment
avenues

Return on 22.349 21.579 23.032 (Net Income + Interest (1-tax rate)) Income of
Invested *100 long
Capital Long term liabilities + Shareholders term suppliers
equities of
finance

Return on 0.242 0.203 0.236 Net Income_________ Shareholders’

Equity Shareholders Equities income
Note: tax rate assumed to be 35%. The average values for the year 2017-18 is taken as values
of 2018 only

DuPont Analysis
The Return on Equity (ROE) measures the return a company generates on its equity capital.
To understand what drives a company’s ROE, a useful technique is to decompose ROE into
its component parts. The decomposition of ROE was originally developed as a technique at
DuPont company and hence is sometimes referred to as DuPont analysis. It involves
expressing the basic ratio (i.e., net income divided by average shareholders’ equity) as the
product of component ratios. Each of the component ratios is an indicator of a distinct aspect
of a company’s performance that affects returns on equity. The decomposition thus allows us
to evaluate how these different aspects of performance affected the company’s profitability as
measured by ROE. (a sort of attribution analysis). What are the reasons for changes in ROE
over time for a given company and for differences in ROE for different companies in a given
time period? What should the management do to improve ROE?

𝑅𝑂𝐸 = 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚e________

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟 𝑒𝑞𝑢𝑖𝑡𝑦

= _____Net Income_______ * ___Average Total Assets__

Average Total Assets Average Shareholder equity

ROE = ROA * Financial Leverage

A company can improve its ROE by improving ROA or making more effective use of
leverage. Financial leverage is measured as average total assets divided by average
shareholders’ equity. If a company had no leverage (no liabilities), its leverage ratio would
equal 1.0 and ROE would exactly equal ROA. As a company takes on liabilities, its leverage
increases. As long as a company is able to borrow at a rate lower than the marginal rate it can
earn investing the borrowed money in its business, the company is making an effective use of
leverage and ROE would increase as leverage increases. If a company’s borrowing cost
exceeds the marginal rate it can earn on investing in the business, ROE would decline as
leverage increased when the interest payments on funds borrowed start to depress ROA.

Exhibit 8a gives investigates the decomposition of return on equity for Abbott India Ltd. for 3
years and exhibit 8b compares the return on equity for the 3 firms for FY 19-20. The firm has
been able to constantly grow its Return on assets showing how constantly it is improving and
upgrading on its technology and machinery. With the fall in leverage, the company gets
strong at their finances as financial measurements that look at how much capital comes in the
form of debt (loans) or assesses the ability of a company to meet its financial obligations.

Exhibit 8a: DuPont Analysis for Abbott India Ltd.

ROE for Abbott ROE ROA Leverage
India Ltd.
FY 19-20 0.242 18.3 1.334
FY 18-19 0.203 16.7 1.334
FY 17-18 0.236 16.7 1.427

Exhibit 8b: DuPont Analysis- Companies of 2 firm’s FY 19-20

ROE for 2019-20 ROE ROA Leverage
Abbott India Ltd. 0.242 18.3 1.334
 GlaxoSmithKline 0.06 3.24 1.768
Note: the average values for the year 2017-18 is taken as values of 2018 only

INVESTMENT UTILISATION RATIOS

Exhibit 9: Investment Utilisation Ratios

Name of FY 19-20 FY 18- FY 17- Formula Comments
Ratio 19 18
Inventory 3.627 3.31 3.965 Cost of Goods Sold Times
Turnover Average Inventory How many
times inventory
was sold in the
year
Day’s 100.634 110.22 92.055 Inventory Days
Inventory Cost of Goods In how many
Sold/365 days inventory
was sold
Fixed Asset 15.678 20.445 21.943 Net Sales Times
Turnover Average Net Fixed
Assets
Total Asset 1.262 1.373 1.369 Net Sales Times
Turnover Average Total How many
Assets times assets
were rolled over
Note: the average values for the year 2017-18 is taken as values of 2018 only

There is a constant inventory turnover with minimal trends on either side. But the rise
in day’s inventory is a cause of concern as it implies capital being blocked for more time
period. But the fixed asset turnover is declining. It could be for the reason that the company
might be upgrading on its technology and machinery.

Total Asset Turnover: Asset turnover is the ratio of total sales or revenue to
average assets. This metric helps investors understand how effectively companies are using
their assets to generate sales. Investors use the asset turnover ratio to compare similar
companies in the same sector or group. By this company’s ratio we can see that the ratio of
Abbott has decreased which means the assets as compared to 2020, in 2019, the efficiency
has decreased or it indicates it is not efficiently using its assets to generate sales.
Comparing solely year by year with GlaxoSmithKline, Abbott is doing well from them. But
seeing GlaxoSmithKline as a individual, the growth rate in the ratio is very good and it
indicates that company is using its assets efficiently to generate sales.

Exhibit 10: Peer group comparison – Total Asset Turnover

Name of Ratio FY 17-18 FY 18-19 FY19- Formula Comme
20 nts
Total Asset ____Net Sales____ times
Turnover Average Total Assets
Abbott India Ltd. 1.369 1.373 1.262
GlaxoSmithKline 0.730 0.797 0.918

LIQUIDITY RATIOS
Exhibit 11: Liquidity Ratios
Name of FY 17-18 FY 18-19 FY 19-20 Formula Comments
Ratio
Current 3.617 3.222 3.596 Total Current Assets Times
Ratio Total Current
Liabilities
Acid Test 2.515 2.514 3.004 Monetary Current Times
Ratio Assets___________
Current Liabilities
Working 159738.8 190409.1 231353.9 Current Assets-
Capital 5 1 3 Current Liabilities
Age of 29.076 27.397 28.35 Accounts Days
Accounts Receivable Aging schedule
Receivable Average Daily Sales of inventory is
very
informative
Age of 110.495 131.318 125.481 Ending Inventory Days
inventory Average Daily Cost
of goods sold

Current Ratio and Acid test Ratio are well above the permissible limits of 2 times and
1.5 times respectively, it means the company is blocking its liquidity. It can be witnessed
from the rise in working capital availability as well over the years.

Bank Financing of Working Capital

Whenever the working capital goes negative, short term debt is raised from banks. This is
known as working capital financing. Each bank or lender would have its own prudential
norms to evaluate the proposal from any entity and extend such funding. Typically, any bank
may be more comfortable with the current ratio being 1.25-1.3 (after the funding)

STABILITY RATIOS

Exhibit 12: Long term Financial Stability

Name of FY 17-18 FY 18-19 FY 19-20 Formula Commen
Ratio ts
Net worth 70.06 68.298 68.56 Total Shareholders’
to total Equity*100
assets Total Assets
Total Debt 31.44034 31.701952 29.9408932 Total Liabilities*100
to Total 115 55 9 Total Assets
Assets
Debt to 0.458583 0.4641707 0.42736618 Total Liabilities Times
equity 687 01 7 Total Shareholder’s
equity

Net worth to total assets and Total debt to total assets can be seen declining over the
2 years, it can be because the company is very much pertinent to upgrading its technology
because net worth over the period has increased by around 44% whereas the total assets have
increased by around 47% over the same period. This shows that the company has good future
prospects since it is building on its technology and has a good increase in its net worth
thereby attracting potential investors.

GROWTH RATIOS

Exhibit 13: Growth year on year

Name of Ratio FY 18-19 FY 19-20 Formula
Sales Growth 11.233 11.27 (Yr. 2 sales - Yr. 1 sales)
*100
Yr. 1 sales
Profit Growth 12.241 31.666 (Yr. 2 Profit - Yr. 1 Profit)
*100
Yr. 1 Profit
Asset Growth 21.72 20.604 (Yr. 2 Total Assets – Yr. 1
Total Assets) *100
Yr. 1 Total Assets

Revenue Growth and Profitability – A peer group comparison

Exhibit 15 gives the revenue growth of the two firms in terms of absolute change and annual
rate of growth. Abbott India Ltd. is able to surpass its industry counterpart GlaxoSmithKline
in both Growth in Revenue and Annual Growth Rate by almost 2 times although the both
firms are very near in terms of their net sales.

Exhibit 14: Revenue Growth FY 2017-18 to FY 2019-20

Change in Revenue FY 17- Annual Growth Rate (%)
18 to FY 19-20 (%)
Abbott India Ltd. 23.77 7.367
GlaxoSmithKline 11.354 3.65

Common Size Analysis:

Common-size analysis involves expressing the financial statements, in relation to a single
financial statement item, or base. Items used most frequently as the bases are total assets (in
BS) or revenue (in IS). In essence, common-size analysis creates a ratio between every
financial statement item and the base item. It is the fastest way to recover several ratios we
discussed in the previous section.

Exhibit: 15 – Comparative Balance Sheet of Abbott Ltd. And GlaxoSmithKline as on

Abbott India Ltd. GlaxoSmithKline
Particulars March 31,2020 March 31,2020
(In Percentage %)
ASSETS
Non- Current Assets
Property, plant and equipment 2.83 21.30
Capital work in progress 0.05 3.83
Intangible assets 0.03 1.58
Investment Property 0.05
Right-of-use assets 4.76 1.26
Financial assets
Loans 0.47
Investment 0.78
Other financial assets 1.02 0.13
Deferred tax assets (net) 0.41 3.47
Other non- current assets 0.09 1.47
Total Non-current Assets 9.65
Current Assets
Inventories 14.86 15.41
Financial assets
Trade Receivables 8.96 3.18
Cash and cash equivalents 4.09 3.13
Bank balances other than cash and 57.86 30.90
cash equivalents
Loans 0.17 0.34
Other financial assets 2.04 0.96
Current tax assets (net) 0.76 9.73
Other current assets 1.60 2.44
90.35
Asset held for sale 0.00
Total Current Assets 90.35
TOTAL ASSETS 100.00 100.00
EQUITY AND LIABILITIES
EQUITY
Equity share capital 0.60 5.41
Other equity 67.96 53.31
Total Equity 68.56 58.72
Non-current Liabilities
Financial liabilities 0.00
Lease liabilities 3.92 0.86
Other financial liabilities 0.07
Provisions 2.39 8.31
Total Non-current Liabilities 6.32 9.24
Current Liabilities
Financial liabilities
Lease liabilities 1.01 0.47
Trade payables
Due to micro and small enterprises 0.52 0.17
Due to others 18.03 11.15
Other financial liabilities 1.43 4.74
Other current liabilities 0.90 1.54
Provisions 3.03 8.83
 Current tax liabilities (net) 0.22 5.15
Total Current Liabilities 25.12 41.28
TOTAL EQUITY AND 100.00 100.00
LIABILITIES

Exhibit: 16 - Common Size Balance Sheet of Abbott India Ltd. As on

March March March
31,2020 31,2019 31,2018
(In Percentage %)
ASSETS
Non- Current Assets
Property, plant and equipment 2.83 3.51 3.25
Capital work in progress 0.05 0.02 0.09
Intangible assets 0.03 0.06 0.12
Right-of-use assets 4.76
Financial assets
Loans 0.47 0.55 0.62
Other financial assets 1.02 1.25 0.94
Deferred tax assets (net) 0.41 0.44 0.60
Other non- current assets 0.09 0.29 0.61
Total Non-current Assets 9.65 6.12 6.24
Current Assets
Inventories 14.86 20.63 24.23
Financial assets
Trade Receivables 8.96 9.39 10.90
Cash and cash equivalents 4.09 4.66 1.56
Bank balances other than cash and cash 57.86 52.61 41.13
equivalents
Loans 0.17 0.25 8.50
Other financial assets 2.04 2.49 1.66
Current tax assets (net) 0.76 0.24 0.65
Other current assets 1.60 3.61 3.71
90.35 93.88 92.34
Asset held for sale 1.42
Total Current Assets 90.35 93.88 93.76
TOTAL ASSETS 100.00 100.00 100.00
EQUITY AND LIABILITIES
EQUITY
Equity share capital 0.60 0.72 0.88
Other equity 67.96 67.58 69.18
Total Equity 68.56 68.30 70.06
Non-current Liabilities
Financial liabilities
 Lease liabilities 3.92
Provisions 2.39 2.56 2.29
Total Non-current Liabilities 6.32 2.56 2.29
Current Liabilities
Financial liabilities
Lease liabilities 1.01
Trade payables
Due to micro and small enterprises 0.52 0.41 0.24
Due to others 18.03 22.15 19.65
Other financial liabilities 1.43 1.77 2.01
Other current liabilities 0.90 1.27 1.37
Provisions 3.03 3.24 3.21
Current tax liabilities (net) 0.22 0.29 1.17
Total Current Liabilities 25.12 29.14 27.65
TOTAL EQUITY AND LIABILITIES 100.00 100.00 100.00

Exhibit: 17 - Common Size Profit and Loss of Abbott India Ltd. As on

March March March
Particulars 31,2020 31,2019 31, 2018
(In Percentage %)
INCOME
Revenue from operations 100 100 100
Other income 2.795 3.080 3.537
TOTAL INCOME 102.795 103.080 103.537
EXPENSES
Cost of materials consumed 11.037 11.048 8.942
Purchases of stock-in-trade 44.041 45.789 51.743
Changes in inventories of finished goods,
stock-in-trade and work-in-progress 1.496 -0.059 0.261
Employee benefits expense 11.632 11.841 11.904
Finance costs 0.208 0.061 0.116
Depreciation and amortisation expense 1.456 0.460 0.489
Other expenses 13.313 14.943 14.380
TOTAL EXPENSES 83.184 84.082 84.745
PROFIT BEFORE TAX 19.611 18.998 18.792
TAX EXPENSES
Current tax expense 5.083 6.754 6.758
Tax adjustment for earlier years 0.006 -0.070 -0.049
Deferred tax - charge/(credit) 0.036 0.072 -0.049
TOTAL TAX EXPENSES 5.125 6.756 6.660
PROFIT FOR THE YEAR 14.486 12.242 12.132
Other Comprehensive Income
 Items that will not be reclassified
subsequently to profit or loss :
Re-measurement gains/(losses) of defined
benefit plan -0.132 -0.087 -0.051
Income tax on above 0.011 0.030 0.018
Total Other Comprehensive Income,
net of tax -0.121 -0.057 -0.033
Total Comprehensive Income for the
year, net of tax 14.365 12.185 12.099
EARNINGS PER EQUITY SHARE
Basic and Diluted - ` (Face value of ` 10
each) 0.068 0.058 0.057

With growing investment in modern technology, the company is well on the path of growth
which can be witnessed through a constant rise in net profitability and cash reserves as well
as the fall in the operating expenses of the organisation. But there are areas in which the
company needs improvement. It should keep a watch on its capital being blocked in its
current assets and therefore should efficiently monitor its requirements of working capital.
Even the time taken to recover the accounts receivable should reduce. Overall, the company
is having a strong foothold in the pharmaceutical industry with growth being multiple times
the that of its peer competitors and therefore being favoured by potential investors to invest in
the company.

References:
1. Abbott India Ltd. Annual Reports 2019-20. Available at: https://dam.abbott.com/en-
ind/pdf/financials/2019-20-Annual-Report.pdf
2. Abbott India Ltd. Annual Reports 2018-19. Available at: https://dam.abbott.com/en-
ind/pdf/financials/2018-19-annual-report.pdf
3. GlaxoSmithKline Annual Reports 2019-20. Available at: https://india-
pharma.gsk.com/media/899991/gsk-annual-report-2020.pdf
4. GlaxoSmithKline Annual Reports 2018-19. Available at:
https://www.gsk.com/media/5901/financial-statements-2019.pdf