Analysis of Intangible Assets 10 Sectors, 10 Companies each

Pharma Chemical Media Software Food Proc. Hotels Cement Power Telecom Transport

SWATI MEHRA IMSURENLA LONGKUMER SOUVIK KUMAR SAHA VAIBHAV BINDROO AMANDEEP SINGH

Key Findings
Common Intangible assets and useful life:

Computer Software 5 to 6 years IP Rights 5 years Trademarks, Patents, Licenses 5 to 6 years Non-compete Fee terms of agreement

Software is a key Intangible Asset across sectors Intangible Assets highly variable between sectors

Highest: Telecom and Pharmaceuticals ~ 30% Lowest: Hotels and Cement ~ 5% Highest: Sugar and Food Processing ~ 8.17 Lowest: Cement ~1.47

P/B ratio varies between sectors

Statistics
40 30 20 10 0
Intangible Assets/ Fixed Assets

Sector
2011-2012 2010-2011 2009-2010

P/B Ratio 8.17 5.08 4.51 4.13 4.11 3.25 2.71 2.13 2.04 1.47

Sugar and Food Transport Chemicals Pharmaceuticals Software/IT Telecom Media Power Hotels Cement

100 80 60 40 20 0
Goodwill/ Intangible Assets

Analysis
Where goodwill is recognized as an intangible asset,

it forms a major part of total intangible assets Price to book ratio varies across industries; industries requiring more infrastructure like cement and Power have lower P/B ratios Since all intangible assets are not included in the book value; it is not an appropriate measure for some industries like Sugar & Food Processing Greater P/B ratio means that market is capturing a higher value of intangibles

Implications
Intangibles provide strategic competitive advantage

to companies even when not captured in the companys book value If intangibles are not recognized by the company, the market still captures their value. For example, Sugar and Food Processing

Sectors and Companies

Pharma Abbott Biocon Cadila Cipla Dr.Reddys Fortis Piramal Ranbaxy Torrent Wockhardt

Chemical IOCL GAIL

IGL
Asian Paints

Media Zee Sun TV

Reliance Media

Software Wipro Infosys Mindtree HCL

Tech Mahindra

Food Proc. Agro Tech Britannia

Renuka Sugars

Hotels EIH Leela

Royal Orchid

Cement ACC Ambuja Birla Chetinad Heidelberg

India Cements

Power Adani CESC GMR GVK NTPC Power Grid

Reliance Infra

Telecom Tata Com Airtel

Reliace Comm

Transport
Tata Motors

Bajaj Auto Hero

Bharat Forge

TV 18 NDTV PVR Sahara 1 Tips

Ashtavinaya k

EID Parry
B Chini Mills

Tulip
Indian Hotels

Idea Sasken GTL Tulip Gemini HFCL Onmobile

Castrol Tata Chem ONGC BASF UPL Cairn

ALL GESCL M&M Adani SCIL Essar

NIIT TCS Geometric Oracle Aptech

Nestle Rei Agro Kwality Bajaj Hind GSK

Mahindra

Oriental Kamat Taj GVK Sterling

JK JK Laxmi KCP Mangalam

Tata Power KSK

Reliance Power

Mukta Arts