Submitted By:

Group 2Section A
Anuj Sohani 19010
Hemanth S 19022
Mridul Jain19031
Navyashree P 19032
Rishabh Sanghi 19043

Submitted To
Dr. Sriram M
 Introduction

• P&G is one of the largest and among the fastest-growing consumer goods companies in India
• Procter & Gamble Health Limited was set up in India in 1967
• First Merck Group Company to go public in the year 1981
• Procter & Gamble Health Limited is one of India’s largest VMS Companies manufacturing and
marketing over-the-counter products, vitamins, minerals, and supplements products for a healthy
lifestyle and improved quality of life.
• P&G portfolio includes 13 leading and trusted brands in India including Vicks, Ariel, Tide, Whisper,
Olay, Gillette, AmbiPur, Pampers, Pantene, Oral-B, Head & Shoulders, Herbal Essences and Old
Spice.
• P&G India's 2500+ employees across 6 manufacturing sites
 Cost of Capital(CAPM)
2019 2018
Rf 6.10% Rf 7.90%
beta 0.2825 beta 0.2825
Rm-Rf 5.50% Rm-Rf 3.70%
Ke 7.65375% Ke 8.94525%

WACC
2019 Cost of capital (k) Weights (w) w*k
equity 32.46 7.65375% 0.035707214 0.002732941
retained earnings 876.6 7.65375% 0.964292786 0.073804559
Total 909.06 7.65%
 Cost of Capital

• The cost of retained earnings is same as COE. Hence, WACC is the same
• Although the risk for investors has reduced in 2019, the return has also
reduced simultaneously
• This will discourage the investors
 Capital Structure
2019(in cr) 2018 (in cr)
Particulars Unleverd (Actual) levered(assumption) Unleverd (Actual) levered (assumption)
Capitalisation
Equity(32460736 shares@Rs10each) 32.46 22.722 32.46 22.722
Debt 14%(assumed) 0 9.738 0 9.738
Retained earnings 876.6 876.6 773.04 773.04
Total 909.06 909.06 805.5 805.5

EBIT 612.81 612.81 587.09 587.09

Interest 0 1.36332 0 1.36332
EBT 612.81 611.44668 587.09 585.72668
tax(32%) 196.0992 195.6629376 187.8688 187.4325376
EAT/PAT 416.7108 415.7837424 399.2212 398.2941424
EPS 128.3767098 182.9872997 122.988663 175.29009
ROE 45.84% 46.23% 49.59% 50.05%
 Capital Structure

• Follows an unlevered Capital Structure

• Major part of earnings is retained
• ROE can be improved
• EPS can be improved substantially
 Particular 2019 2018
Gross Profit 657.11 634.14
EBIT 612.81 587.09
Operating Leverage 1.072 1.080

Operating Leverage
 Operating Leverage

• Operating leverage shows a downfall in 2019

• This means fixed costs incurred in production have come down
within a year
• More variable cost leads to reduced profits
• But, including more fixed cost will make company vulnerable if
sales fall
 Working Capital
Working Capital
2019 2018
Inventory 203.42 123.61
Sales 2946.5 2455.29
Days Inventory 25.19881215 18.37569086

Debtors 180.66 148.47

Sales 2946.5 2455.29
DSO 22.37939929 22.07134391

Operating cycle 47.57821144 40.44703477

Creditors 547.67 406.22

Purchases 3219.5 3422.2
Days Payable Period 62.09024693 43.32601835
Cash Conversion cycle -14.5120355 -2.878983581
 Working Capital

• Days Inventory increased by 7 days

• But significant increase in days payable shows more credit period has been
allowed
• Negative cash conversion cycle is a good sign
 Conclusion

• Earnings for the company has shown growth over the years
• Operating Cycle is favourable
• The only concern is lack of debt in the capital structure
• Increasing the use of fixed cost in operating expenses will help in increasing
net profit
Thank You!