MANAGING BOTTOM LINE IN THE FAST CHANGING BUSINESS

MANAGING BOTTOM LINE IN THE FAST CHANGING BUSINESS SITUATION 11 th JANUARY, 2015 PPL Plant Reservoir RK Nanda, CFO, PPL 1

BOTTOM LINE v Total Revenue Less Operation Expenses, Interest, Depreciation and Taxes. v Profit Before Tax (PBT) v Profit After Tax (PAT) 2

DERIVATION OF BOTTOM LINE Revenue from Sales xxxxxx Other Income xxxxxx Total Revenue Less: Cost of sales : - xxxxxx Cost of Raw Materials xxxxxx Conversion Cost xxxxxx Ex-Factory cost xxxxxx General overheads xxxxxx Interest xxxxxx Depreciation xxxxxx Profit Before Tax xxxxxx Taxes xxxxxx Profit After Tax xxxxxx 3

Financial Data for Last 5 years (Rs. / crore) Particulars 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 Turn Over 2994 3526 4736 5315 4328 EBIDT 215 334 357 273 47 PBT 112 213 259 132 (134) PAT 84 151 178 104 (126) Interest 73 96 73 115 156 (79) 18 56 80 121 - 5 17 78 172 518 1551 2766 1770 Exchange Impact Marketing Rebate on Sales Sundry Debtors 601 4

TAX PLANNING Section Particulars 32 AC Investment Allowance - @ 15% for investment exceeding Rs. 25 crore , allowed upto 31 st March, 2018 35 (2) AB R&D Expenses - Relief varies from 100% to 200% for the in-house R&D – both in Revenue & Capital Expenditures 35 AD Capacity Expansion - Relief of 150% of Expenses for Fertilizer Sector & 100% for other Specified Sectors 35 CCC Agriculture Extension program – Relief of 150% on the related expenses 35 CCB Skilled Development – Relief of 50% on expenditure incurred 5

Some Operational Tools a) Capacity Management b) Lead –Time and Supply Chain Management c) Funds Management and relationship with Banker / Lender d) E-Procurement / Sales 6

Favourite Sectors 1. Mining 2. Beverages 3. Oil & Gas Distribution 4. Dairy & Milk Products 5. Micro Finance / Banking Difficult Sectors 1. Power 2. Sugar 3. Fertilizer 7

v Free Market – it is a Laissez Faire economic concept, where Commercial decisions like buying and selling of product and services are made without any regulation / restriction. v All market players get equal opportunity [level playing field] in making Commercial decisions. v Globalization. 8

RUPEE DOLLAR EXCHANGE RATE Rate (Rs. /USD) Month April 2013 54. 22 May ” 56. 50 June ” 59. 70 July ” 61. 12 Mean 60. 94 August ” 66. 27 Median 61. 65 September ” 62. 78 Mode 62. 43 October ” 61. 41 Standard Deviation 3. 15 November ” 62. 39 22. 79% December ” 61. 90 % difference between low and high January 2014 62. 48 February ” 62. 07 March ” 60. 10 9

We are passing through “VUCA” time v Volatility - Commodity price, Currency Rate v Uncertainty - Climate condition, Economic Environment v Complexity - Regulatory condition v Ambiguity - Government Rules, Tax Laws 10

Sales - Top Line Market Share - Vanity Profit - Sanity To conduct business in sensible manner - Liquidity (known as Reality) 11

Important factors having the impact on Bottom Line : v Revenue Recognition v Stock Valuation v Interest v Exchange Rate v View on the Liabilities 12

Good Profit - Earned with satisfaction of customer & other stakeholders Bad Profit - Earned with dissatisfaction of customer and other stakeholders 13