Case Study 2: Lakme Cosmetics [7.5 Marks]

The following financial data relate to Lakme, a cosmetic and toiletries company in the Tata Group of Companies for the period ending on 31 March 20X6 and 20X7.

Lakme Financial Data for the year ending on 31 March

(Rs. In lakh)

Particulars	20X6	20X7
Revenue	6561	9773
Operating profit (EBDIT)	625	839
Depreciation	88	115
EBIT	537	724
Interest	216	376
Tax	0	65
PAT	321	283
Share Capital	316	316
Reserve and Surplus	1130	1264
Borrowings	1473	1530
Capital Employed	2919	3110
Gross Fixed Assets	1339	1589
Earnings per Share (EPS)	10.7	8.97
Dividend per share (DPS)	5.00	5.00

Discussion Questions

1. Comment on Lakmes performance. Show computation to support your answer.
2. How effectively has Lakme used its assets in generating sales?
3. Do you think there is appropriate balance between equity and borrowed funds? Show relevant ratios.
4. Critically evaluate Lakmes profitability?
5. Does Lakme have sufficient liquidity?