Common Size Statement Analysis: Cippla

Year End Y201803 Y201703 Y201603

No of Months 12 12 12
Gross Sales 100.42 101.64 101.44
Less: Excise 0.42 1.64 1.44
Net Sales 100 100 100
EXPENDITURE :
Increase/Decrease in Stock -1.54 0.77 0.47
Raw Materials Consumed 37.42 36.17 36.97
Power & Fuel Cost 1.97 1.75 1.81
Employee Cost 17.75 18.3 17.9
Other Manufacturing Expenses 8.05 8.29 11.75
General and Administration
Expenses 6.61 6.03 6.22
Selling and Distribution Expenses 7.15 7.01 6.02
Miscellaneous Expenses 6.39 7.62 0.62
Less: Pre-operative Expenses
Capitalised 0 0 0
Total Expenditure 83.81 85.94 81.76
PBIDT (Excl OI) 16.19 14.06 18.24
Other Income 2.36 1.59 1.53
Operating Profit 18.55 15.65 19.77
Interest 0.75 1.11 1.52
PBDT 17.79 14.54 18.25
Depreciation 6.27 6.05 5.55
Profit Before Taxation & Exceptional
Items 11.53 8.49 12.7
Exceptional Income / Expenses -0.51 0 0
Profit Before Tax 11.02 8.49 12.7
Provision for Tax 1.65 1.25 2.44
PAT 9.37 7.24 10.26
PAT 0 0 0
Extra items 0 0 0
Minority Interest -0.04 -0.2 -0.17
Appropriations 60.62 55.35 52.54
Report on common size statement analysis

Cipla ltd
By looking at the above income statement for three financial years, we can see
that cost of raw materials consumed has gone up in year 2018 as a percentage
of Net sales to 37.42% as compared to 2017 and 2016, this indicates that
company has acquired raw materials at a higher cost in 2018 because Gross
sales has come down in 2018 to 100.42% of net sales where as it was 101.64%
and 101.44% as a percentage of net sales, In the year 2017 and 2016
respectively.

Next important item to look at is total expenditure, in 2018 total expenditure is

83.81% of net sales, in 2017 its 85.94% of net sales and in 2016 its 81.76% of
net sales, from this we observe that company has managed to generate more
revenue at lesser expenditure in 2016 as compared to 2017 and 2018. Except
changes in inventory, other expenses like power and fuel, in 2018 and 2017 are
same. In 2018 and 2017 company has incurred more miscellaneous expenses
might be because company has spent on donations more and might be one of
the reason why miscellaneous expenses are high.

Next important thing in the above statement is PBIDT which is a income from
core business of the company. In 2016 PBIDT was high at 18.24% of net sales
mainly because of lesser miscellaneous expenses, again in year 2017 it
dropped to 14.06% and went up in 2018 to 16.19% mainly because of negative
inventory, which is still lower than 2016.

Interest paid on borrowings has come down in 2018 which is a good sign,
might be the case that company’s some of the loans are paid gradually.
Depreciation has gone up in 2018 might be company has bought additional
machinery in 2018 because power and fuel cost has also gone up as a
percentage of net sales in 2018.