Balance sheet

(Rs crore)
Mar ' 12 Mar ' Mar ' Mar ' Mar '
11 10 09 08
Sources of funds
Owner's fund
Equity share capital 77.01 77.01 77.01 77.01 77.01
Share application money - - - - -
Preference share capital - - - - -
Reserves & surplus 2,158.80 1,973.12 1,706.21 1,202.48 919.53
Loan funds
Secured loans 922.62 770.64 518.20 219.40 206.01
Unsecured loans 201.71 174.77 132.36 8.36 21.49
Total 3,360.14 2,995.54 2,433.78 1,507.25 1,224.04
Uses of funds
Fixed assets
Gross block 2,201.11 1,751.32 1,430.02 1,354.20 1,173.44
Less : revaluation reserve 7.79 7.79 8.00 8.22 8.44
Less : accumulated 848.58 775.91 731.33 694.15 672.64
depreciation
Net block 1,344.75 967.62 690.68 651.82 492.36
Capital work-in-progress 509.62 488.94 327.77 141.86 149.11
Investments 1,044.81 1,169.21 1,141.65 552.29 634.00
Net current assets
Current assets, loans & 1,199.20 1,092.60 870.69 708.33 737.06
advances
Less : current liabilities & 738.24 722.84 597.01 547.05 788.49
provisions
Total net current assets 460.96 369.76 273.68 161.28 -51.44
Miscellaneous expenses not - - - - -
written
Total 3,360.14 2,995.54 2,433.78 1,507.25 1,224.04
Notes:
Book value of unquoted 294.26 424.05 775.03 462.06 618.82
investments
Market value of quoted 755.73 790.48 448.95 117.81 136.94
investments
Contingent liabilities 243.51 392.50 331.60 237.54 92.46
Number of equity shares 770.05 770.05 770.05 770.05 770.05
outstanding (Lacs)
Profit loss account
(Rs crore)
Mar ' 12 Mar ' 11 Mar ' 10 Mar ' Mar '
09 08
Income
Operating income 2,289.46 2,146.37 2,164.44 1,802.82 1,724.91
Expenses
Material consumed 681.53 598.60 473.74 455.51 314.69
Manufacturing expenses 610.28 541.21 469.18 432.74 421.33
Personnel expenses 213.80 174.26 146.27 148.59 141.45
Selling expenses 350.03 326.80 288.40 258.54 214.53
Adminstrative expenses 71.39 66.58 65.72 61.84 57.07
Expenses capitalised -56.01 -9.32 - - -
Cost of sales 1,871.02 1,698.13 1,443.31 1,357.23 1,149.07
Operating profit 418.43 448.23 721.13 445.59 575.84
Other recurring income 94.45 97.97 73.23 26.03 27.98
Adjusted PBDIT 512.89 546.20 794.36 471.61 603.81
Financial expenses 108.09 61.95 26.97 22.05 21.05
Depreciation 80.00 64.83 55.64 43.42 41.44
Other write offs - - - - -
Adjusted PBT 324.80 419.41 711.75 406.15 541.32
Tax charges 106.84 117.78 203.63 112.95 157.61
Adjusted PAT 217.95 301.63 508.12 293.19 383.71
Non recurring items 13.97 13.83 35.33 24.51 6.05
Other non cash adjustments 7.28 4.42 13.73 5.81 3.81
Reported net profit 239.21 319.88 557.18 323.51 393.57
Earnigs before 429.71 510.77 658.10 491.46 553.99
appropriation
Equity dividend 46.20 46.20 46.20 34.65 30.80
Preference dividend - - - - -
Dividend tax 7.50 7.57 7.75 5.89 5.23
Retained earnings 376.01 457.00 604.15 450.92 517.95
Ratios
(Rs crore)
Mar ' 12 Mar ' Mar ' Mar ' Mar '
11 10 09 08
Per share ratios
Adjusted EPS (Rs) 28.30 39.17 65.98 38.07 49.83
Adjusted cash EPS (Rs) 38.69 47.59 73.21 43.71 55.21
Reported EPS (Rs) 31.06 41.54 72.36 42.01 51.11
Reported cash EPS (Rs) 41.45 49.96 79.58 47.65 56.49
Dividend per share 6.00 6.00 6.00 4.50 4.00
Operating profit per share 54.34 58.21 93.65 57.86 74.78
(Rs)
Book value (excl rev res) 290.34 266.23 231.57 166.16 129.41
per share EPS (Rs)
Book value (incl rev res) 291.36 267.24 232.61 167.22 130.51
per share EPS (Rs)
Net operating income per 297.31 278.73 281.08 234.12 224.00
share EPS (Rs)
Free reserves per share EPS 273.94 252.00 219.58 155.95 119.21
(Rs)
Profitability ratios
Operating margin (%) 18.27 20.88 33.31 24.71 33.38
Gross profit margin (%) 14.78 17.86 30.74 22.30 30.98
Net profit margin (%) 10.03 14.25 24.90 17.68 22.45
Adjusted cash margin (%) 12.49 16.32 25.19 18.40 24.25
Adjusted return on net 9.74 14.71 28.49 22.91 38.50
worth (%)
Reported return on net 10.69 15.60 31.24 25.28 39.49
worth (%)
Return on long term funds 14.48 18.08 33.66 30.24 51.08
(%)
Leverage ratios
Long term debt / Equity 0.33 0.29 0.23 0.10 0.10
Total debt/equity 0.50 0.46 0.36 0.17 0.22
Owners fund as % of total 66.53 68.43 73.26 84.88 81.41
source
Fixed assets turnover ratio 0.71 1.23 1.51 1.33 1.47
Liquidity ratios
Current ratio 1.62 1.51 1.46 1.29 0.93
Current ratio (inc. st loans) 0.93 0.89 0.92 0.97 0.72
Quick ratio 0.99 0.96 0.93 0.89 0.65
Inventory turnover ratio 19.77 15.87 18.37 26.19 20.17
Payout ratios
Dividend payout ratio (net 22.44 16.81 9.68 12.53 9.15
profit)
Dividend payout ratio (cash 16.82 13.97 8.80 11.04 8.28
profit)
Earning retention ratio 75.37 82.18 89.39 86.18 90.61
Cash earnings retention 81.98 85.33 90.44 87.96 91.53
ratio
Coverage ratios
Adjusted cash flow time 3.77 2.58 1.15 0.67 0.53
total debt
Financial charges coverage 4.75 8.82 29.45 21.39 28.68
ratio
Fin. charges cov.ratio (post 3.95 7.21 23.72 17.64 21.66
tax)
Component ratios
Material cost component (% 28.00 29.56 23.47 24.41 19.95
earnings)
Selling cost Component 15.28 15.22 13.32 14.34 12.43
Exports as percent of total 3.36 4.63 3.28 5.01 4.06
sales
Import comp. in raw mat. 8.47 15.83 33.31 5.34 23.44
consumed
Long term assets / total 0.70 0.70 0.71 0.65 0.63
Assets
Bonus component in equity 35.90 35.90 35.90 35.90 35.90
capital (%)
STUDY OF BALANCE SHEET
The balance sheet is a financial snapshot of a company's condition at a single point in
time. A balance sheet contains a listing of the company's asset, liability and Capital
accounts. When someone, whether a creditor or investor, asks you how your company
is doing, you'll want to have the answer ready and documented. The way to show off
the success of your company is a balance sheet. A balance sheet is a documented
report of your company's assets and obligations, as well as the residual ownership
claims against your equity at any given point in time. It is a cumulative record that
reflects the result of all recorded accounting transactions since your enterprise was
formed. You need a balance sheet to specifically know what your company's net
worth is on any given date. With a properly prepared balance sheet, you can look at a
balance sheet at the end of each accounting period and know if your business has
more or less value, if your debts are higher or lower, and if your working capital is
higher or lower. By analyzing your balance sheet, investors, creditors and others can
assess your ability to meet short-term obligations and solvency, as well as your ability
to pay all current and long-term debts as they come due. The balance sheet also shows
the composition of assets and liabilities, the relative proportions of debt and equity
financing and the amount of earnings that you have had to retain. Collectively,
external parties to help assess your company’s financial status, which is required by
both lending institutions and investors before they will allot any money toward your
business, will use this information.

FINANCIAL STATEMENT ANALYSIS

Financial statement analysis is the process of examining relationships among financial

statement elements and making comparisons with relevant information. It is a
valuable tool used by investors and creditors, financial analysts, and others in their
decision-making processes related to stocks, bonds, and other financial instruments.
With a great understanding of the balance sheet & p&l account and how it is
constructed, we can look at some techniques to analyze the information contained
within the balance sheet & p&l account.
PURPOSE: The main purpose of analyzing the financial statement are the following:-
 To assess past performance and current financial position.
 To make predictions about the future performance of a company.

TOOLS FOR ANALYSING

1. PERCENTAGE CALCULATION
There are two popular methods by which we can analyze the financial statement
by calculating percentage as taking a common base.
 Horizontal Analysis
When an analyst compares financial information for two or more years for a
single company, the process is referred to as horizontal analysis, since the analyst
is reading across the page to compare any single line item, such as sales revenues.
In addition to comparing dollar amounts, the analyst computes percentage
changes from year to year for all financial statement balances, such as cash and
 inventory. Alternatively, in comparing financial statements for a number of years,
the analyst may prefer to use a variation of horizontal analysis called trend
analysis. Trend analysis involves calculating each year's financial statement
balances as percentages of the first year, also known as the base year. When
expressed as percentages, the base year figures are always 100 percent, and
percentage changes from the base year can be determined.
If we want to calculate % change in sales then we apply the following formula:
Percentage=change in sales /Base Year Sales*100

 Vertical Analysis
When using vertical analysis, the analyst calculates each item on a single financial
statement as a percentage of a total. The term vertical analysis applies because
each year's figures are listed vertically on a financial statement. The total used by
the analyst on the income statement is net sales revenue, while on the balance
sheet it is total assets. This approach to financial statement analysis, also known as
component percentages, produces common-size financial statements. Common-
size balance sheets and income statements can be more easily compared,
whether across the years for a single company or across different companies.
If we want to calculate % change of current assets then we apply the following
formula:
Percentage: current assets/total assets*100

2. RATIO ANALYSIS
Financial ratio analysis uses formulas to gain insight into the company and its
operations. For the balance sheet, using financial ratios (like the debt-to-equity
ratio) can show you a better idea of the company’s financial condition along with
its operational efficiency. It is important to note that some ratios will need
information from more than one financial statement, such as from the balance
sheet and the income statement. Ratio analysis facilitates inter-firm and intra-firm
comparison.

Ratios are often classified using the following terms:

 Liquidity Ratio
Liquidity ratios are measures of the short-term ability of the company to pay its
debts when they come due and to meet unexpected needs for cash.
 Current Ratio:
The current ratio is a rough indication of a firm ability to service its current
obligations. Generally, the higher the current ratio, the greater the cushion
between current obligations and a firm ability to pay them. The stronger ratio
reflects a numerical superiority of current assets over current liabilities Current
ratio is calculated as follows: Current ratio=
Current Assets/Current Liabilities
 Quick Ratio:
It is also known as the “acid test” ratio, this is a refinement of the current ratio
and is a more conservative measure of liquidity. The quick ratio expresses the
degree to which a company’s current liabilities are recovered by the most liquid
current assets. quick ratio is calculated as follows:
Quick ratio= (cash + marketable securities + Receivables)/current
liabilities
 Solvency Ratio
Solvency ratios indicate the ability of the company to meet its long-term
obligations on a continuing basis and thus to survive over a long period of time.
 Debt/Worth Ratio: This ratio expresses the relationship between capital
contributed by creditors and that contributed by owners. It expresses the degree of
protection provided by the owners for the creditors. The higher the ratio, the
greater the risk being assumed by creditors. The lower the ratio, the greater the
long-term financial safety. A firm with a low debt/worth ratio usually has a greater
flexibility to borrow in the future. A more highly leveraged company has a more
limited debt capacity.
 Debt/worth ratio=Total Liabilities / Tangible Net Worth
 Profitability Ratio
Profitability ratios are gauges of the company's operating success for a given
period of time.
 Return On Assets: Return on assets is a measure of how effectively the firm’s
assets are being used to generate profit. It is calculated as follows: Return On
Assets= Net Income/Total Assets
 Return On Equity: Return on equity is the bottom line measure for the
shareholders, measuring for the profits earned for each rupee invested in business.
It is calculated as follows: Return on Equity= Net income/shareholder’s equity

 Fixed/Worth Ratio: This ratio measures the extent to which owner’s equity
(capital) has been invested in plant and equipment (fixed assets). A lower ratio
indicates a proportionately smaller investment in fixed assets in relation to net
worth and a better cushion for creditors in case of liquidation. Similarly, a higher
ratio would indicate the opposite situation. The presence of substantial leased
fixed assets (not shown on the balance-sheet ) may deceptively lower this ratio.
Fixed Worth Ratio=Net Fixed Assets/ Tangible Net Worth