03/08/09 1

FINANCIAL ANALYSIS
OF SATYAM
COMPUTERS LTD
Presented By:-
SABYASACHI TARAI(39)
BINAYAK MAHAPATRA(11)
TRIDEEP SAHU(57)
 Agenda

Satyam is a History and

leading global Overview
business and Highlights
information
Accounting
technology Policies
company,
delivering Income
consulting, Balance Sheet
system
Assets
integration, and
outsourcing Ratio Analysis
solutions.
03/08/09 2
 History
• It was incorporated on 24th June 1987.
• Main Objective-provide software solutions and
consultancy services.
• It started under dept. of electronics of GOVT. OF
INDIA.
• In 1991 it was converted into a public limited
company.
• In 1992 first IPO was issued.
• In 1993 it went into Venture with DUN and
BRADSTREET.
• Satyam Infoways was the second largest service
provider in India.
• In 2006 it achieved ISO certification.
03/08/09 3
 Highlights
(in Rs. crores) 2007 2008

Net revenues 6410.08 8137.28

Net Profit 1423.23 1458.54

Earnings per share 21.73 25.66

Return on net worth 0.24% 0.20%

Cash in Hand 1703.12 1822.6

Total Assets 6777.41 8734.66

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 ACCOUNTING POLICIES
• Satyam continues to prepare its consolidated financial statements
under “Indian GAAP” for its local statutory reporting purposes.
Basis of Presentation:
The financial statements of the Company are prepared under
historical cost convention in accordance with the Indian GAAP and the
provisions of the Indian Companies Act, 1956.
Revenue Recognition:
Revenue from professional services consist primarily of revenue
earned from services performed on a “time and material” basis & the
related revenue is recognized as and when the services are
performed.
Fixed Assets:
Fixed assets are stated at actual cost less accumulated depreciation.
Depreciation: Depreciation on fixed assets is computed on the
straight line method over their estimated useful lives.
 Individual assets acquired for less than Rs.5,000 are entirely
depreciated in the period/year of acquisition.

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Contd..

Investments:
 Current investments are carried at the lower of cost and market
value.

 Long-term investments are carried at cost less provision made to

recognize any decline, other than temporary, in the value of such
investments.

Foreign Currency Transactions:

 Transactions in foreign currency are recorded at exchange rate
prevailing on the date of transaction. Monetary assets and

Taxes on Income:
 Tax expense for the year comprises of current tax and deferred tax.
Current taxes are measured at the amounts expected to be paid using
the applicable tax rates and tax laws.
Earnings per Share:
 The earnings considered in ascertaining the Company’s Earnings Per
Share (EPS) comprises the net profit after tax (and includes the post
tax effect of any extra ordinary items).
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 Income
Net Net Earnings /
Revenues Profit Share

NET REVENUES
NET PROFIT EPS
8000

1470 22
7000

1460 21.5
6000
21
1450
5000
20.5
YEARS 1440
4000 20
1430
3000
19.5
1420 19
2000
1410 18.5
1000
1400 18
0
2007 2008
2007 2008 2007 2008

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 Balance Sheet

SOURCES SOURCES
NW 7269.99 NW 5746
loan 23.67 loan 13.79
CL 1441 CL 1017.62
Total 8734.66 Total 6777.41
ASSETS ASSETS
Fixed Assets 883.12 Fixed Assets 640
Investments 493.8 Investments 201.15
CURRENT ASSETS 7357.74 CURRENT AS 5936.26
SETS
Total 8734.66 Total 6777.41
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 Income Statement
Income Statement For 2007 Income Statement For 2008
Revenue(Ex,D&O)
6410.08
Less COGS 0 Revenue(Ex&D) 8137.28
Less COGS 0
Less OPEX 4706.96
Less OPEX 6314.68

PBDITA 1703.12 PBDITA 1822.6

Less Dep. 129.89 Less Dep. 137.94
Amotisation 0 Amotisation 0
PBIT 1573.23 PBIT 1684.66
Less Int. 0 Less Int. 0
PBT 1573.23 PBT 1684.66
Less PFT 150 Less PFT 226.12
PAT 1423.23 PAT 1458.54

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 Cash flow statement
2007 2008
CFO 996.21 1328.57
CFI (1708.82) ( 538.68)
CFF 70.19 ( 236.76)
Net cash
Flow (642.42) 553.13

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 Ratio Analysis
Liquidity Ratio
Current Ratio-
Current Ratio=Current asset/Current
Liabilities
Quick Ratio/Liquid Ratio
Liquid Ratio=CA-Inventories/CL
Absolute cash Ratio
Absolute Cash Ratio=(CA-Inventories-
Debtors)/CL
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 Liquidity Ratio
2007 2008
CA 5936.26 7357.73
CL 1017.63 1441
Debtors 1650 2223
Inventories 0 0
Current Ratio 5.833 5.105
Liquid Ratio 4.212 3.563

Absolute 4.212 3.563

Cash Ratio
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 Working Capital
• Working 2007 2008
Capital=CA-CL
CA 5936.26 7357.73

CL 1017.63 1441

WC 4918.63 5916.73

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 Solvency Ratio
DER= Debt/Shareholders Equity

2007 2008
Debt 14 24

Equity 5746 7269.9

DER 0.0023 0.0032

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 Interest Coverage Ratio
• ICR=PBIT/Interest
2007 2008

PBIT 1573.23 1684.66

Interest 7.61 5.94

ICR 206.73 283.6

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 Profitability Ratio

• Profitability Ratio
 Return On Total Assets
(ROTA)=PBIT/TA*100
 Return On Capital Employed
(ROCE)=PBIT/CE*100
 Return ON NET worth
(RONW)=PAT/NW

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 ROTA
2007 2008
PBIT 1573.23 1684.66

TA 6777.41 8734.66

ROTA 0.23212 0.19287

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 ROCE
2007 2008
PBIT 1573.23 1684.66

CE(TA-CL) 5759.79 7293.66

ROCE 0.27314 0.230975

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 RONW
2007 2008

PAT 1423.23 1458.54

NW 5746 7269.99

RONW 0.2476 0.2006

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 Earning Per Share(EPS)
• EPS=PAT/No.of Shares
2007 2008
PAT 1423.23 1458.54

No.of 654852959 668673978

Shares
EPS 21.73 25.66

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 Inter Company Analysis
Income Statement (Inter Firm)
2008 Condensed Balance Sheet (Inter Firm)
Rs(in crores) Infosys Satyam Tcs
Sales 16331 8394.48 15656.2
2008
less Rs(in crores) Infosys Satyam Tcs
Expenses 8876 5051.48 8923
GROSS PROFIT 7455 3343 6733.2 Net worth 13,391.00 7270 11004.81
less
Opex 1809 1263.2 1546 LongTermLiab -- 23.67 18.25
PBDITA
Less
5646 2079.8 5187.2 Current Liab 3731 1441 3713
Dep & Amt 546 137.94 458.78 Total 17,122.00 8734.7 15146.43
PBIT 5100 1941.86 4728.42
Less Fixed Assets 3931 883.12 3240.64
Interest
PBT
0 0
5100 1941.86 4728.42
0
Investments 964 493.8 4509.33
Less Current Assets 12227 7357.7 7396.46
Taxes 630 226.12 457.58
PAT 4470 1715.74 4270.84 Total 17,122.00 8734.7 15146.43
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 Ratio Analysis

Ratio Analysis (Inter Firm)

2008 Cash Flow Statement (Inter Firm)
Infosys Satyam Tcs
Current Ratio 3.28 5.1 1.99
2008
Quick Ratio 3.28 5.1 1.98 Rs(in crores) Infosys Satyam TCS
Absolute Cash Ratio2.45 5.76 1.97
DER NA 1.49 0.01 Op CIH 5,470.00 3959.82 557.14
EPS
ICR NA
78.24
NA
25.59
NA
50.76
CFO -777 1412.92 3827.91
WAAC (%) 13.32 12.95 13.12 CFI -978 -641.22 -2404.9
ROCE (%) 38.09 26.09 33.76
RONW (%) 33.38 26.1 29.23 CFF 3,816.00 -227.79 -1424.77
ROTA (%) 31.56 12 28.19 Cl CIH 7,531.00 4503.73 555.38

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 RATIO ANALYSIS
• The current ratio of Satyam is more as compare with
Infosys and TCS.
• The quick ratio or liquid assets of Satyam is more
compare as Infosys and TCS.
• The absolute Cash ratios is more in Satyam.
• The EPS of Infosys is more as compared with others
which
• The profitability ratios are compared for the three
companies. Infosys have greater profitability ratios as
compared with other interfirm companies.
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