A

Project Report

On

Financial Analysis

Of

Presented to

Miss Mansi Arora Faculty Member

SIn the partial fulfillment of the requirements for

Management Course By:

Vaishally Agarwal

(Roll No.Fa11058)

Preface

As a part of our syllabus of PGDM Programme , I have assigned some practical and

theoretical project work. In partial fulfillment of the Management , course i have

prepared a comprehensive project report in Financial Analysis of the company.

Study of management will be immaterial if it is not coupled with study of financial aspect

of the business. It gives the student an opportunity to learn the connection between

comparison & execution to test & verify application of theories & help in the comparison

of management theories and practice. The study gives a chance to know about the

profitability and financial position of the firm.I have chosen Wipro Limited which is a

$7.30 Billion Global company in Information Technology Services ,R&D Services,

Business Process Outsourcing.

This report contains the analysis of the 5 years data of the company. The Financial

statements of the report are analyzed in three different ways such as

Trend Analysis

Horizontal Analysis

Ratio Analysis

Cash flow Analysis

The ratio analysis of the company has been derived for 23 ratios which help to determine

the company’s performance. In the Scenario Analysis of the company we have included

the company’s industrial GDP, its Market Share, Market Capitalization, Market Growth

etc.

Acknowledgement

With a sense of gratitude and respect, I would like to extend our heartiest thanks

to all of those who provided help and guidance to make this project a big success. No

Project is ever the outcome of single individual’s talent or effort. This work is no

exception. This project would not have been possible without the whole hearted

encouragement, support and co-operation of our guide, friends and well-wishers.

Although it is not possible for us to name and thank them all individually, we must make

special mention of some of the personalities and acknowledge our sincere indebtness to

them.

The successful completion of this project rests on the shoulder of many persons who have

helped us directly or indirectly. We wish to take this opportunity to express to all those,

without whose help, completion of this project would have been difficult. We are

indebted and thankful to all the individuals who have guided, advised, inspired and

supported us in making this project a success.

Our gratitude to our honorable guide Miss .Mansi Arora for giving methe

opportunity for developing the project and his able guidance, inestimable motivation and

constant encouragement throughout our project. Without her help this project would

never have been realized in its entirety.

Executive Summary

It is Summarize tin of all report in one or two pages so as to provide an overview of the

company. it is also called synopsis or Abstract. As a partials fulfillment of the

requirement for the Management Course. We have completed a project report on

financial Analysis of Wipro Ltd.

Sales Figure is increasing at a handsome rate. it is at Rs. 26401 Million. in 2010-

11 and it is increased to Rs. 31803 Million. So Sales is increased 75.05% because

of aggressive Selling Policy.

Net worth of the company is increased in this year because of increase in Reserve

& Surplus

Current Ratio of Wipro limited is showing good position. It is 1.26 Times in

2003-04 then it is increased to 2.13 Times in 2007-08 this shows Company has

achieved standard Ratio.

The returns on the investment is some what decline in current year.

Company’s Total Assets are increased and it trying to expand its business on the

other hand debt are also increased it shows that company trying to Trading on

Equity.

After analyzing all aspect Company’s performance is good.

CONTENT

PrefaceAcknowledgementExecutive Summary

1. INTRODUCTION1.1 Introduction to company1.2 Group of companies1.3 History1.4 Company Profile1.5 Registered office address1.6 Auditor

2. ANALYSIS OF BALANCE SHEET

2.1 Trend analysis of Balance sheet2.1.1 Trend analysis of fixed assets2.1.2 Trend analysis of total current assets2.1.3 Trend analysis of share holders equity2.1.4 Trend analysis of total current assets2.1.5 Share holder’s fund2.1.6 Sources of fund2.1.7 Investment 2.1.8 Application of funds

2.2 Horizontal analysis of Balance sheet 2.2.1 Sources of fund 2008 2.2.2 Application of fund 2008 2.2.3 Sources of fund for five years 2.2.4 Application of fund for five years

3. ANALYSIS OF P & L ACCOUNT3.1 Trend analysis of P & L

3.1.1 Trend analysis of total income 3.1.2 Profit after tax

3.1.3 Transfer to general reserve 3.1.4 Net sales and services 3.2 Horizontal analysis of P & L 3.2.1 Comparison of PBT and Income with expenditure

4. CASH FLOW ANALYSIS4.1 Introduction4.2 Cash flow statement

4.3 Interpretation of Cash flow statement

5. RATIO ANALYSIS5.1 Introduction of the ratio analysis 5.2 Liquidity ratio

5.2.1 Current ratio5.2.2 Quick ratio5.2.3 Net working capital

5.3 Profitability ratio 5.3.1 Gross profit5.3.2 Operating ratio

5.3.3 Net profit ratio5.3.4 Return on investment5.3.5 Return on equity

5.4 Assets turnover ratio 5.4.1 total asset turn over ratio5.4.2 net fixed asset turn over5.4.3 inventory turn over ratio5.4.4 average age of inventories5.4.5 debtor turn over ratio

5.5 Finance structure ratio 5.5.1 debt ratio5.5.2 debt equity5.5.3 interest coverage ratio

5.6 Valuation ratio5.6.1 earning per share5.6.2 divident pay out ratio5.6.3 P/E ratio5.6.4 Profit margin ratio

5.7 Du-Pont chart

6. SCENARIO ANALYSIS6.1 business unit performance6.2 company analysis

6.2.1 Share holding pattern6.2.2 Market capitalization

7 ANNEXURES8 BIBLIOGRAPHY

.Introduction

Introduction to company

Group Companies

History

Company Profile

Registered Office Address

Board of Directors

Auditors

1. INTRODUCTION

1.1.Introduction of company

Wipro Limited (Wipro), together with its subsidiaries and associates (collectively, the

company or the group) is a leading India based provider of IT Services and Products,

including Business Process Outsourcing (BPO) Services, globally. Further,Wipro has

other business such as India and AsiaPac IT Services and products and Consumer

Care and Lighting. Wipro is headquartered in Bangalore, India.Wipro Technologies is

a global services provider delivering technology-driven business solutions that meet

the strategic objectives clients. Wipro has 40+ ‘Centers of Excellence’ that create

solutions around specific needs of industries. Wipro delivers unmatched business

value to customers through a combination of process excellence, quality frameworks

and service delivery innovation. Wipro is the World's first CMMi Level 5 certified

software services company and the first outside USA to receive the IEEE Software

Process Award.

Wipro is a $7.83billion Global company in Information Technology Services, R&D

Services, Business process outsourcing. Team wipro is 140,000 Strong from 40

nationalities and growing. Wipro is present across 29 counries,36 Development

canters, Investors across 24 countries.

Largest third party R&D Service provider in the world.

Largest Indian Technology Infrastructure management service provider.

A vendor of choice in the middle east

Among the top 3 Indian BPO Service provider by Revenue (* Nasscom)

Among the top 2 Domestic IT Services companies in India (*IDC India)

1.2. Group Companies

Wipro Infrastructure Engineering Ltd. Wipro Inc.

cMango Pte Ltd.

Wipro Japan KK

Wipro Shanghai Ltd.

Wipro Trademarks Holding Ltd.

Wipro Travel Services Ltd.

Wipro Cyprus Private Ltd.

Wipro Consumer Care Ltd.

Wipro Health Care Ltd.

Wipro Chandrika Ltd.(a)

Wipro Holdings (Mauritius) Ltd.

Wipro Australia pty Ltd.

WMNETSERV Ltd.(a)

Quantech Global Service Ltd.

3D Network Pte Ltd.

Planet PSG Pte Ltd.

Spectramind Inc.

1.3. History

Wipro started in 1945 with the setting up of an oil factory in Amalner a small town in

Maharashtra in Jalgaon District. The product Sunflower Vanaspati and 787 laundry

soap (largely made from a bi-product of Vanaspati operations) was sold primarily in

Maharashtra and MP. The company was aptly named Western India Products

Limited.

The Birth of the name Wipro - As the organization grew and diversified into

operations of Hydraulic Cylinders and Infotech, the name of the organization did not

adequately reflect its operations. Azim Premji himself in 1979 selected the name

"Wipro" largely an acronym of Western India Products. Thus was born the Brand

Wipro. The name Wipro was unique and gave the feel of an 'International" company.

So much so that some dealers even sent their cheques favouring Wipro (India)

Limited. Fortunately, the banks accepted them!!By the early 90s, Wipro had grown

into various products and services. The Wipro product basket had soaps called Wipro

Shikakai, Baby products under Wipro Baby Soft, Hydraulic Cylinders branded

Wipro, PCs under the brand name Wipro, a joint venture company with GE named

Wipro GE and software services branded Wipro. The Wipro logo was a 'W", but it

was not consistently used in the products.It was clearly felt that the organization was

not leveraging its brand name across the various businesses. The main issue remained

whether a diverse organization such as Wipro could be branded under a uniform look

and feel and could there be consistent communication about Wipro as an

organization.

1.4.Company Profile

Business-Description

Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT

Services Company globally. Wipro provides comprehensive IT solutions and

services, including systems integration, Information Systems outsourcing, package

implementation, software application development and maintenance, and research

and development services to corporations globally.

The Group's principal activity is to offer information technology services. The

services include integrated business, technology and process solutions including

systems integration, package implementation, software application development and

maintenance and transaction processing. These services also comprise of information

technology consulting, personal computing and enterprise products, information

technology infrastructure management and systems integration services. The Group

also offers products related to personal care, baby care and wellness products. The

operations of the Group are conducted in India, the United States of America and

Other countries. During fiscal 2007, the Group acquired Wipro Cyprus Pvt Ltd,

Retailbox Bv, Enabler Informatica SA, Enabler France SAS, Enabler Uk Ltd, Enabler

Brazil Ltd, Enabler and Retail Consult GmbH, Cmango Inc, Cmango (India) Pvt Ltd,

Saraware Oy, Quantech Global Services and Hydroauto Group AB

Global IT Services and Products

The Company's Global IT Services and Products segment provides IT services to

customers in the Americas, Europe and Japan. The range of its services includes IT

consulting, custom application design, development, re-engineering and maintenance,

systems integration, package implementation, technology infrastructure outsourcing,

BPO services and research and development services in the areas of hardware and

software design. Its service offerings in BPO services include customer interaction

services, finance and accounting services and process improvement services for

repetitive processes.

.

Customized IT solutions

Wipro provides its clients customized IT solutions in the areas of enterprise IT

services, technology infrastructure support services, and research and development

services. The Company provides a range of enterprise solutions primarily to Fortune

1000 and Global 500 companies. Its services extend from enterprise application

services to e-Business solutions. Its enterprise solutions have served clients from a

range of industries, including energy and utilities, finance, telecom, and media and

entertainment. The enterprise solutions division accounted for 63% of its IT Services

and Products revenues for the fiscal 2007.

Technology Infrastructure Service

Wipro offers technology infrastructure support services, such as help desk

management, systems management and migration, network management and

messaging services. The Company provides its IT Services and Products clients with

around-the-clock support services. The technology infrastructure support services

division accounted for 11% of Wipro's IT Services and Products revenues in fiscal

2007.

Research and Development Services

Wipro's research and development services are organized into three areas of focus:

telecommunications and inter-networking, embedded systems and Internet access

devices, and telecommunications and service providers.The Company provides

software and hardware design, development and implementation services in areas,

such as fiber optics communication networks, wireless networks, data networks,

voice switching networks and networking protocols. Wipro's software solution for

embedded systems and Internet access devices is programmed into the hardware

integrated circuit (IC) or application-specific integrated circuit (ASIC) to eliminate

the need for running the software through an external source. The technology is

particularly important to portable computers, hand-held devices, consumer

electronics, computer peripherals, automotive electronics and mobile phones, as well

as other machines, such as process-controlled equipment. The Company provides

software application integration, network integration and maintenance services to

telecommunications service providers, Internet service providers, application service

providers and Internet data centers.

Business Process Outsourcing Service

Wipro BPO's service offerings include customer interaction services, such as IT-

enabled customer services, marketing services, technical support services and IT

helpdesks; finance and accounting services, such as accounts payable and accounts

receivable processing, and process improvement services for repetitive processes,

such as claims processing, mortgage processing and document management. For BPO

projects, the Company has a defined framework to manage the complete BPO process

migration and transition. The Company competes with Accenture, EDS, IBM Global

Services, Cognizant, Infosys, Satyam and Tata Consultancy Services.India and

AsiaPac IT Services and Products

The Company's India and AsiaPac IT Services and Products business segment, which

is referred to as Wipro Infotech, is focused on the Indian, Asia-Pacific and Middle-

East markets, and provides enterprise clients with IT solutions. The India and AsiaPac

IT Services and Products segment accounted for 16% of Wipro's revenue in fiscal

2007. The Company's suite of services and products consists of technology products;

technology integration, IT management and infrastructure outsourcing services;

custom application development, application integration, package implementation

and maintenance, and consulting

Wipro's system integration services

Include integration of computing platforms, networks, storage, data center and

enterprise management software. These services are typically bundled with sales of

the Company's technology products. Wipro's infrastructure management and total

outsourcing services include management and operations of customer's IT

infrastructure on a day-to-day basis. The Company's technology support services

include upgrades, system migrations, messaging, network audits and new system

implementation. Wipro designs, develops and implements enterprise applications for

corporate customers. The Company's solutions include custom application

development, package implementation, sustenance of enterprise applications,

including industry-specific applications, and enterprise application integration. Wipro

also provides consulting services in the areas of business continuity and risk

management, technology, process and strategy.

Consumer Care and Lighting

Wipro's Consumer Care and Lighting business segment accounted for 5% of its

revenue in fiscal 2007. The Company's product lines include hydrogenated cooking

oil, soaps and toiletries, wellness products, light bulbs and fluorescent tubes, and

lighting accessories. Its product lines include soaps and toiletries, as well as baby

products, using ethnic ingredients. Brands include Santoor, Chandrika and Wipro

Active. The Wipro Baby Soft line of infant and child care products includes soap,

talcum powder, oil, diapers and feeding bottles and Wipro Sanjeevani line of wellness

products.

The Company's product line includes incandescent light bulbs, compact fluorescent

lamps and luminaries. It operates both in commercial and retail markets. The

Company has also developed commercial lighting solutions for pharmaceutical

production centers, retail stores, software development centers and other industries.

Its product line consists of hydrogenated cooking oils, a cooking medium used in

homes, and bulk consumption points like bakeries and restaurants. It sells this product

under the brand name Wipro Sunflower.

1.5. Registered Office Address

WIPRO LIMITED

Doddakannelli, Sarjapur Road,

Bangalore – 560 035, India.

Former Chairman Pepsico India Holdings

1.6. Auditors

KPMG

BSR & Co.

Audit committee

N Vaghul - Chairman

P M Sinha - Member

B C Prabhakar - Member

Azim PremjiChairmen & Managing Director

.Analysis of Balance

Sheet

Trend Analysis of Balance Sheet

Horizontal Analysis of Balance Sheet

2. ANALYSIS OF BALANCE SHEET

2.1.Trend Analysis of Balance Sheet

Trend Analysis of Balance Sheet involves calculation of percentage changes in the

Balance Sheet items for a no. of successive years. This is carried out by taking the

items of the past financial year used as base year and items of other years are

expressed as percentage of the base year. Here 2003-04 is taken as base year

Perticular2011-12

2010-2011

2009-2010

2008-2009

2007-08

SOURCES OF FUNDS          

Equity Share Capital  491.70

490.80

293.60 293  100

Share Capital 491.70490.8

0293.6

0 293 100Share application money 0.00 0.70 0.80 1.50 100Reserves & Surplus 23860 20829 17396 12220 100Share holder's Equity 24352 21320 17692 12515Loan Funds        100Secured - - - - 100Unsecured 5242 4744 5530 5013 100

Total debts 5243 4744 55305013

100Total Liabilites 100

100APPLICATION OF FUNDS          Fixed assets          100Gross Block 8807 7779 6761 5743 100Accumulated Depriciation 4158 3542 3105 2563Net Block  4649 4237 3656 3179  100Capital work in progress and advances 490 603 991 1311 100Total Fixed Assets 100Investments 10335 10813 8966 6895 100Inventories 785 724 606 459 100Sundry Debtors 7967 5781 5016 4446 100Cash & Bank Balances 3435 2334 1938 1902 100Loans & Advances  8135 6756 5425 4202  100Total Current Assets 12187 8840 7561 6808 100Fixed Deposits 2797 2869 3726 2507 100

Loan & Advances 8135 6156 5425 4202 100Total CA 12187 8840 7561 6808 100Current Liabilities 5984 5290 4874 5564 100

   1         

Deffered Credit 0 0 0 0 100Provisions 3016 2764 2230 1810 100Total Liabilities& provisions 9000 8054 7105 7375 100Net Current Assets 14120 10411 9608 6142 100

Total Assets 29595 26065 23222 17528 100

Table 2.1.1 Trend Analysis of Balance Sheet

2.1.1 Trend Analysis of Fixed assets

Year 2007-08 2008-09 2009-10 2010-2011 2011-12Total Fixed Assets 100 3179 3656 4237 4649

Table 2.1.2 Trend Analysis of Fixed assets

2007-08 2008-09 2009-10 2010-2011 2011-120

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Total Fixed Assets

Total Fixed Assets

Figure 2.1.1 Trend Analysis of total fixed assets

Interpretation

The fixed assets are increase in current year is good for the company.

Hear fixed assets are increasing as a increasing rate it means the company has

expand it’s business.

Fixed Assets are continuously increasing year by year.

It seems that the company has good future plans and they want to expand their

business so they have invested more and more funds in fixed assets.

Fixed assets are efficiently utilized by the company due to which the profit of the

company is increasing every year.

2.1.2 Trend Analysis of total current assets

Table 2.1.3 Trend Analysis of total current assets

Year 2008-09 200-10 2010-11 2011-2012Total Current Assets 13517 16713 18466 23120

2008-09 2009-10 2010-11 2011-20120

5000

10000

15000

20000

25000

Total Current AssetsSeries2

Figure 2.1.2 Trend Analysis of total current assets

Interpretation

The current assets is shows the cash liquidity of the company.

Hear it is increase it year by year it means the company has sufficient liquidity for

generating the business.

2 Trend Analysis of Fixed Assets 2007-

082008-09

2009-10

2010-2011

2011-12

Total Fixed Assets 100 3179 3656 4237 4649

2008-09 2009-2010 2010-11 2011-120

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Fixed Assets

Fixed Assets

2.1.2 Trend Analysis of total liabilities

Table 2.1.4 Trend Analysis of total Liabilities

Year 2008-09 2009-10 2010-11 2011-12 2007-08Total Liabilities 17528 23222 26065 29595 100

2008-09 2009-2010 2010-11 2011-120

5000

10000

15000

20000

25000

30000

35000

Total Liabilites

Total Liabilites

Figure 2.1.3 Trend Analysis of total Liabilities

Interpretation

The total liabilities is highest in 2011-12.

Liabilities is incressing rate it mean company has to developed business. And

purchase raw material on credit basis.

2.1.3 Trend Analysis of share holder’s equity.

Table 2.1.5 Trend Analysis of share holder’s equity.

Year 2008-09 2009-10 2010-11 2011-12 2007-08Share holder's Equity 12515 17692 21320 24352 100

2008-09 2009-2010 2010-11 2011-120

5000

10000

15000

20000

25000

30000

Shareholder Equity

Shareholder Equity

Figure 2. 4 Trend Analysis of share holder’s equity.

Interpretation

Share holder equity is increase high in 2011-12 because the company has allocated

new share.

Share holder equity is showing high fluctuation.

2.1.4 Trend Analysis of total loan fund.

Table 2.1.6 Trend Analysis of total loan fund.

Year 2008-09 2009-10 2010-11 2011-12

Total Loan Funds 5013 5530 4744 5243

2008-09 2009-2010 2010-11 2011-124200

4400

4600

4800

5000

5200

5400

5600

Total liabiltes

Total liabiltes

Figure 2.1.5 Trend Analysis of total loan funds

Interpretation

The total trend line is slowly increase up to2011-12. And after that it is increase at a

high rate.

From 2008-9onward the loan fund is increase because the company has expanse its

business.

The company has been able to raise its secured loan without shortage of funds.

Increase in secured loan shows that company has very good prestige in Financial

market.

Company increasing loan funds because company want to increase its trading on

equity.

2.1.5 Share Holder’s Funds

2008-09 2009-10 2010-11 2011-12 2007-08Share capital 293 293.60 490.60 491.70 100Share application money pending allotment 1.50 1.80 0.70 0.00 100Reserves and Surplus 12220 17396 20829 23860 100

Table 2.1.7 Trend Analysis of Share Holder's Funds

2008-09 2009-10 2010-11 2011-12 2007-080

5000

10000

15000

20000

25000

30000

Share capitalShare application money pending allotmentReserves and Surplus

Figure 2.1.6 Trend Analysis of Share Holder's Funds

Interpretation

There is highest share capital in 2011-12

The company has issued new shares in the 2005-06.

As a result no. of shares is increased and these funds are implemented for future

plans of the company.

2.1.6 Source of Funds

  Source Of Funds Year 2007-08 2008-09 2009-10 2010-11 2011-12Share holder's Equity 100 12515 17692 21320 24352Total Loan Funds 100 12515 17692 21320 24352

Table 2.1.8 Trend Analysis of Source Of Funds

2007-08 2008-09 2009-10 2010-11 2011-12

100

12515

17692

21320

24352

100

5013 5530 4744 5243

Sources Of FundsShare holder's Equity Total Loan Funds Series3

Figure 2.1.7 Trend Analysis of Sources of Funds

Interpretation

The loan fund is increases six and twelve time in year 2008, 2009 respectively

compare to previous year.

The company has observed an increase in loan funds as compared to the base year

which indicates its growing reputation in the financial market.

Hence the overall sources of funds have shown big increase with respect to the base

year

2.1.7 Investment

  Investment Year 2008-09 2009-10 2010-11 2011-12 2007-08Investments 6895 8966 10813 10315 100

2008-09 2009-10 2010-11 2011-120

2

4

6

8

10

12

Investments Series2 Series3

Figure 2.1.8 Trend Analysis of Investment

Interpretation

Investment figure shows healthy progress of the company.

Investment has increased in 2008, 2009 and after that it has strated decrease in

2011-12 which shows not good growth compared to base year.

As they have invested most of their funds in Indian money market mutual funds.

Shows that the company has not take risk but the company has invested money for

developed it’s own business.

2.1.8 Application Of Funds

  Application of funds Year 2008-09 2009-10 2010-11 2011-12Total Fixed Assets 3179 3656 4237 4649Investments 6895 8966 10813 10315Deferred Tax Assets(Net) 4649 4237 3656 3179Net Current Assets 12187 8840 7561 6808

Table 2. 10 Trend Analysis of Application Of Funds

FInterpretation

Company invested more fund in investments in 2011-12

Company has enough cash in hand so that in any condition company can take

Any Financial decision easily.

2.2 Horizontal Analysis of Balance Sheet

Financial Statement present information for the last five year. Horizontal analysis of

Balance Sheet deals with the amount changes and the percentage changes of the items

of the Balance Sheet.

Financial Statement present comparative information for the current year and the

previous year. Horizontal analysis of Balance Sheet deals with the amount changes

and the percentage changes of the items of the Balance Sheet.

YEAR 2008-09 2009-10 2010-11 2011-12SOURCES OF FUNDS          

Share Capital 293 293.60 490.60 491.70 100Share application money pending allotment 1.50 1.80 0.70 0.00Reserves & Surplus 12220 17396 20829 23860Secured - - - - 1.68

Unsecured 5013 5530 4744 5242

Current Liabilities 5984 5290 4874 5564Provisions 1810 2230 2764 3016TOTALAPPLICATION OF FUNDS          

Total Fixed Assets 3179 3656 4237 4649Investments 6895 8966 10813 10315Deferred Tax Assets(Net) 4649 4237 3656 3179Current Assets, Loans & Advances 12187 8840 7561 6808Inventories 459 606 724 785Sundry Debtors 4446 5016 5781 7967Cash & Bank Balances 1902 1938 2334 3435Loan & Advances 9202 5425 6756 8135TOTAL 100

0

Table 2.2.1 Horizontal Analysis of Balance Sheet

Chapter 3.

Analysis of Profit &

Loss Account

Trend Analysis of Profit & Loss Account

Horizontal Analysis of Profit & Loss Account

3. ANALYSIS OF PROFIT & LOSS ACCOUNT

3.1.Trend Analysis of Profit & Loss Account

Trend Analysis of Profit & Loss Account involves calculation of percentage changes

in the P & L Account items for a no. of successive years. This is carried out by taking

the items of the past financial year used as base year and items of other years are

expressed as percentage of the base year. Here 2004-05 is taken as base year

Profit & Loss account

-- in Rs. Cr. --

 

Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

 

 

12 mths 12 mths 12 mths 12 mths 12 mths

 

Income         Sales Turnover 31,803.40 26,401.2

023,006.30 21,612.8

017,658.10

Excise Duty 120.5 100.7 84.3 105.5 165.5 Net Sales 31,682.90 26,300.5

022,922.00 21,507.3

017,492.60

Other Income 524.9 603.3 866.7 -480.4 326.9 Stock Adjustments -44.9 31.6 111 -3.8 187

Total Income 32,162.90 26,935.40

23,899.70 21,023.10

18,006.50 Expenditure         Raw Materials 4,684.90 3,805.60 3,768.80 3,438.80 3,139.30 Power & Fuel Cost 233.4 199.7 141.4 154 0 Employee Cost 13,223.70 10,937.4

09,062.80 9,249.80 7,409.10

Other Manufacturing Expenses

3,722.90 2,780.20 2,145.30 1,687.80 299.8

Selling and Admin Expenses

2,057.60 1,703.30 1,491.40 1,523.00 557.8

Miscellaneous Expenses

1,495.80 1,145.00 921.8 691.4 2,558.00

Preoperative Exp Capitalised

0 0 0 0 0

Total Expenses 25,418.30 20,571.20

17,531.50 16,744.80

13,964.00

 

Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

 

 

12 mths 12 mths 12 mths 12 mths 12 mths

 

Operating Profit 6,219.70 5,760.90 5,501.50 4,758.70 3,715.60 PBDIT 6,744.60 6,364.20 6,368.20 4,278.30 4,042.50 Interest 79.9 58.6 99.8 196.8 116.8 PBDT 6,664.70 6,305.60 6,268.40 4,081.50 3,925.70 Depreciation 739.5 600.1 579.6 533.6 456 Other Written Off 6.6 0 0 0 0 Profit Before Tax 5,918.60 5,705.50 5,688.80 3,547.90 3,469.70

Extra-ordinary items 0 0 0 0 0

PBT (Post Extra-ord Items)

5,918.60 5,705.50 5,688.80 3,547.90 3,469.70

Tax 1,233.50 861.8 790.8 574.1 406.4 Reported Net Profit 4,685.10 4,843.70 4,898.00 2,973.80 3,063.30 Total Value Addition 20,733.40 16,765.6

013,762.70 13,306.0

010,824.70

Preference Dividend 0 490.8 0 0 0

Equity Dividend 1,475.20 981.8 880.9 586 876.5

Corporate Dividend Tax

239.3 220.4 128.3 99.6 148.9

Per share data (annualised)         Shares in issue (lakhs)

24,587.56 24,544.09

14,682.11 14,649.81

14,615.00

Earning Per Share (Rs)

19.05 17.74 33.36 20.3 20.96

Equity Dividend (%) 300 200 300 200 300

Book Value (Rs) 99.04 86.86 120.49 85.42 79.05

Table 3.1.1 Trend Analysis of Profit & Loss Account

3.1.1 Trend Analysis of Total Income and Total Expenditure

Table 3.1.2 Trend Analysis of Total Income and Total Expenditure

Trend analysis of total income & expenditure  2008-09 2009-10 2010-11 2011-12Total Income 100 21023 23899 26935Total Expenditure 16744 17531 20571 25418

2008-09 2009-10 2010-11 2011-120

5000

10000

15000

20000

25000

30000

Total IncomeTotal Expenditure

Figure 3.1.1 Trend Analysis of Total Income and Total Expenditure

Interpretation

Though the sales has been continuously increased from past 3 years but the

proportionate expenditure is also rising so overall not making any huge effect on net

profit of this company.

In 2006-07 Income from mutual fund dividend increased by 93.57 % and Interest

on debt instrument 567 % increased in 2005-06 compare to previous year.

Percentage Expenditures increasing year by year little more than Income increased,

so that Profit margin Decrease year by year.

3.1.2 Profit After Tax

Profit after taxYear 2007-08 2008-09 2009-10 2010-11 2011-12

Profit after tax 100 574 790 861 1233

Table 3.1.3Trend Analysis of Profit After Tax

2007-08 2008-09 2009-10 2010-11 2011-120

200

400

600

800

1000

1200

1400

Profit after tax

Profit after tax

Figure 3.1.2 Trend Analysis of Profit After Tax`

Interpretation

PAT has been rising over the years when we compare with the expenditure which

has been incurred to earn this profit is also rising

PAT has been increased all the years because of increasing in sales.

3.1.4 Trend Analysis of net sales and services

Year 2007-08 2008-09 2009-10 2010-11 2011-12Net Sales and Services 100 21807 22922 26300 31682

Table 3.1.5 Trend Analysis of net sales and services

2007-08 2008-09 2009-10 2010-11 2011-120

5000

10000

15000

20000

25000

30000

35000

Net Sales and Services

Net Sales and Services

Figure 3.1.4 Trend Analysis of net sales and services

Interpretation

Net sales and services are incresing from 2004 to 2005.

From 2005 onward the net sales incresing at a stret line so hear company should

tray to increse net sales.

Chapter 5.

Ratio Analysis

Introduction To The Ratio Analysis

Liquidity Ratios

Profitability Ratios

Finance Structure Ratios

Valuation Ratios

The Du-Pont Chart

4. RATIO ANALYSIS

5.1.Introduction Of The Ratio Analysis

Ratio analysis involves establishing a comparative relationship between the

components of financial statements. It presents the financial statements into various

functional areas, which highlight various aspects of the business like liquidity,

profitability and assets turnover, financial structure. It is a powerful tool of financial

analysis, which recognizes a company’s strengths as well as its potential trouble

spots.

It can be further classified as in different categories of Ratio.

Liquidity Ratios

Profitability Ratios

Asset Turnover Ratios

Finance Structure Ratios

Valuation Ratios

5.2.Liquidity Ratio

Liquidity refers to the existence of the assets in the cash or near cash form. This ratio

indicates the ability of the company to discharge the liabilities as and when they

mature. The financial resources contributed by owners or supplemented by outside

debt primarily come in the cash form as under in the balance sheet form.

The following Liquidity Ratios are calculated for the company.

Current Ratio

Quick Ratio

Net Working Capital

5.2.1. Current Ratio

This ratio shows the proportion of Current Assets to Current Liabilities. It is also

known as “Working Capital Ratio” as it is a measure of working capital available at a

particular time. It’s a measure of short term financial strength of the business. The

ideal current ratio is 2:1 i.e. Current Assets should be equal to Current Liabilities.

Current Ratio = Current Assets

Current Liabilities

    Current Ratio    Year 2007-08 2008-09 2009-10 2010-11 2011-12Ratios 100 2 1.6 1.55 2.3

Table 5. 1 Current Ratio Analysis

2008-09 2009-10 2010-11 2011-120

0.5

1

1.5

2

2.5

RatiosSeries2

Figure 5. 1 Current Ratio Analysis

Interpretation

Current ratio is always 2:1 it means the current assets two time of current liability.

After observing the figure the current ratio is fluctuating.

In the year 2008 ratio is showing good shine.

Hear ratio is increase as a increasing rate from 2004 to 2008.

Company is no where near the ideal ratio in every year but every company can not

achieve this ratio.

Current ratio is increased in 2007-08 as compared to 2003-04 because of increase in

Inventories 100.96% and 123.77 % increased in Cash and Bank balance.

Current ratio is decreased in 2005-06 as compared to the last year because of

increase in liabilities by 45.39% and 93.19% in increasing in Provision.

5.2.2 Quick Ratio

This ratio is designed to show the amount of cash available to meet immediate

payments. It is obtained by dividing the quick assets by quick liabilities. Quick Assets

are obtained by deducting stocks from current assets. Quick liabilities are obtained by

deducting bank over draft from current liabilities.

Quick Ratio = Quick Assets

Current Liabilities

    Quick Ratio    Year 2007-08 2008-09 2009-10 2010-11 2011-12Ratios 1.14 1.42 1.53 1.90

Table 5. 2 Quick Ratio Analysis

2008-09 2009-10 2010-11 2011-120

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

Ratios

Ratios

Figure 5. 2 Quick Ratio Analysis

Interpretation

Standard Ratio is 1:1

Company’s Quick Assets is more than Quick Liabilities for all these 5 years.

In 2007-08 the ratio is increasing because of increase in bank and cash balance.

So all the years has quick ratio exceeding 1, the firm is in position to meet its

immediate obligation in all the years.

In 2005-06 quick ratio is decreased because the increase in quick assets is less

proportionate to the increased quick liabilities.

The Quick ratio was at its peak in 2007-08, while was lowest in the 2004-05.

5.2.3 Networking Captial

Networking capital = Current Assets – Current Liabilities

    Net working capital  Year 2007-08 2008-09 2009-10 2010-11 2011-12Trend 100 1244 2687 3550 6203

Table 5.3 Networking Capital

2008-09 2009-10 2010-11 2011-120

1000

2000

3000

4000

5000

6000

7000

TrendSeries2

Figure 5.3 Networking capital

Interpretation

This ratio represents that part of the long term funds represented by the net

worth and long term debt, which are permanently blocked in the current

assets.

It is Increasing Double than year by year because of assets increasing fast than

liabilities.

5.3 Profitability Ratios

A company should earn profits to survive and grow over a long period of time. It

would be wrong to assume that every action initiated by management of company

should be aimed at maximizing profits, irrespective of social as well as economical

consequences. It is a fact that sufficient must be earned to sustain the operation of the

business to be able to obtain funds from investors for expansion and growth and to

contribute towards the responsibility for the welfare of the society in business

environment and globalization.

The profitability ratios are calculated to measure the operating efficiency of the

company.

The following Profitability Ratios are calculated for the company.

Gross Profit Ratio

Operating Profit Ratio

Net Profit Ratio

Rate Of Return On Investment

Rate Of Return On Equity

5.3.1 Gross Profit Ratio

This is the ratio expressing relationship between gross profit earned to net sales. It is a

useful indication of the profitability of business. This ratio is usually expressed as

percentage. The ratio shows whether the mark-up obtained on cost of production is

sufficient however it must cover its operating expenses.

Gross Profit Ratio = Gross Profit X 100

Sales

    Gross profit ratio analysisYear 2007-08 2008-09 2009-10 2010-11 2011-12Trend 9.7 10.4 10.2 10.1

Table 5.4 Gross Profit Ratio Analysis

2003-04 2004-05 2005--06 2006-07 2007-0827.0

28.0

29.0

30.0

31.0

32.0

33.0

34.0

35.0

29.8

31.7

32.6

33.7

33.0

Gross profit ratio analysis

Trend

Figure 5.4 Gross Profit Ratio Analysis

Interpretation

GP Ratio shows how much efficient company is in Production.

GP is decreasing 2007-08 due to higher production cost.

Gross sales and services are increasing year by year so in effect Gross profit ratio is

icreasing year by year up to 2007.

5.3.2 Operating Profit Ratio

This ratio shows the relation between Cost of Goods Sold + Operating Expenses and

Net Sales. It shows the efficiency of the company in managing the operating costs

base with respect to Sales. The higher the ratio, the less will be the margin available

to proprietors.

Operating Profit Ratio = COGS+Operating expences X 100

Sales

    Operating ratio    Year 2007-08 2008-09 2009-10 2010-11 2011-12Trend 22.1 23.9 21.90 19.6

Table 5.5 Operating Profit Ratio Analysis

2007-08 2008-09 2009-10 2010-11 2011-120

5

10

15

20

25

30

Figure 5.5 Operating Profit Ratio Analysis

Interpretation

Operating ratio is lowest during current 2007.

This shows that the expenses incurred to earn profit were less compared to the

previous two years.

Operating ratio is decreses feom 2004 to anward decreasing rate.

From the graph conclusion is made that company is not on the right track by

efficiently cutting down manufacturing, administrative and selling distribution

expenses.

5.3.3 Net Profit Ratio

= Net profit x 100

Net sales

    Net profit ratio    

Year 2011-12 2010-11 2009-20102008-09

Trend 14.7 18.4 21.3 13.8

Table 5.6 Net Profit Ratio Analysis

2011-12 2010-11 2009-2010 2008-090

5

10

15

20

25

Figure 5.6 Net Profit Ratio Analysis

Interpretation

After observing the figure the ratio is fluctuating.

Company has rise in its net profit in 2006-07 as compared to the previous year

because the company has increased its sales 41.45% .

Though the company’s sale is continuously rising but the net profit is not so much

increased so management should take some steps to decrease its expenses.

Sales is decrease in 2008 compare to 2007

The overall ratio is showing good position of the company.

5.3.4 Return On Investment

Rate of Return on Investment indicates the profitability of business and is very much

in use among financial analysts.

ROI= EBIT X 100

Total Assets

    Return On Investment  Year 2011-12 2010-11 2009-2010 2008-09Trend 22.7 24.4 27.4 24.4

Table 5.7 Rate of Return on Investment Ratio Analysis

Figure 5.7 Rate of Return on Investment Ratio Analysis

Interpretation

From the above observation it can be seen that ratio is fluctuating.

In the year 2005-06 Rate of Return on Investment is slightly increase as compared

to previous year

Ratio is decreasing after 2005 at adecreasing rate because of asseets increase

compare to sales.

The company’s Total Assets is increased to 86.51%, so ROI is decreased so

conclusion made that company is not utilizing its assets and investment efficiently.

5.3.5 Rate of Return on Equity

Rate of Return on Equity shows what percentage of profit is earned on the capital

invested by ordinary share holders.

Rate of Return on Equity = Profit for the Equity

Net worth

    Rate of return on equity    Year 2007-08 2008-09 2009-10 2010-11 2011-12Ratio 100 3 2 3

2

Table 5.8 Rate of Return on Equity Ratio Analysis

2008-09 2009-10 2010-11 2011-120

0.5

1

1.5

2

2.5

3

3.5

RatioSeries2

Figure 5.8 Rate of Return on Equity Analysis

Interpretation

ROE is remaining almost same Between 2005 to 2007, but it is decrease in2008

because the the company has increase share capital but profit not getting that much

increase.

Company is getting same return on equity.

As a result the share holders are getting higher return every year and investment

portfolio scheme selection was a judicious decision taken by the company.

This happens because Profit and Share Capital both increasing same way.

5.4 Asset Turnover Ratios

Asset Turnover Ratio are basically productivity ratios which measure the output

produced from the given input deployed. This relationship is shown as under

Productivity = Output

Input

Assets are inputs which are deployed to generate production (or sales). The same set

of assets when used intensively produces more output or sales. If the asset turnover is

high, it shows efficient or productive use of input.

The following Assets Turnover Ratios are calculated for the company.

Total Assets Turnover

Net Fixed Assets Turnover

Net Working Capital Turnover

Inventory Turnover Ratio

Debtor Turnover (in times)

5.4.1 Total Asset Turnover Ratio

The amounts invested in business are invested in all assets jointly and sales are

affected through them to earn profits. Thus it is the ratio of Sales to Total Assets. .It is

the ratio which measures the efficiency with which assets were turned over a period.

Total Asset Turnover Ratio = Sales

Total Assets

    Total assets turnover ratioYear 2007-08 2008-09 2009-10 2010-11 2011-12Trend 100 1.23 0.98 1.012 1.07

Table 5.9 Total Asset Turnover Ratio Analysis

2008-09 2009-10 2010-11 2011-120

0.2

0.4

0.6

0.8

1

1.2

1.4

RatioSeries2Series3

Figure 5.9 Total Asset Turnover Ratio Analysis

Interpretation

The total assets turnover ratio is almost same in all years.

The Assets turnover Ratio is near by 1.5 in all 5 years which shows effective

utilization of assets from the company’s view point.

In the year 2005-06 ratio is increased because of company’s total assets is

increased by 24.52%, but sales is increased by 29.92%.So the ratio is increased but

in current year it is decreased because sale increasing by 41.45% and Assets

increasing by 49.28%.

5.4.2 Net Fixed Assets Turnover

To ascertain the efficiency & profitability of business the total fixed assets are compared

to sales. The more the sales in relation to the amount invested in fixed assets, the more

efficient is the use of fixed assets. It indicates higher efficiency. If the sales are less as

compared to investment in fixed assets it means that fixed assets are not adequately

utilized in business. Of course excessive sale is an indication of over trading and is

dangerous.

Net Fixed Assets Turnover Ratio = Sales

Net Fixed Assets

  Total fixed assets turnover ratioYear 2008-09 2009-10 2010-11 2011-12Time 6.79 6.29 6.15 6.8

Table 5.10 Net Fixed Asset Turnover Ratio Analysis

2008-09 2009-10 2010-11 2011-12Total fixed assets turnover ratio

5.8

6

6.2

6.4

6.6

6.8

7

Figure 5.10 Net Fixed Assets Turnover Ratio Analysis

Interpretation

Here the ratio of Net Fixed Asset Turnover is continuously increasing up to 2006

and after that it has strated decline.Because sales as wellas assets boths are equally

increase.

Net Fixed Assets Turnover Ratio is increasing year by year because of Sale is

increasing continuously.

It indicates that the company maximizes the use of its fixed assets to earn profit in

the business so that whatever amount is invested by company in fixed asset, gives

maximum productivity which helps to increase sales as well as profit.

5.4.3 Inventory Turnover Ratio

Inventory Turnover Ratio: The no. of times the average stock is turned over during the

year is known as stock turnover ratio.

Inventory Turnover Ratio = COGS

Average stock

    Total Inventory turnover ratio

Year 2007-08 2008-092009-

102010-11 2011-12Time

Table 5. 11 Inventory Turnover Ratio Analysis

2003-04 2004-05 2005--06 2006-07 2007-080.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0 30.3

22.624.3

19.8

16.0

Total Inventory turnover ratio

Time

Figure 5. 11 Inventory Turnover Ratio Analysis

Interpretation

From the above calculation we can say that the ratio is decreasing. It mens

inventory is not spdly convert in to sales. So that it is bad for the company.

In 2003-04 ratio is increased as compared to after that all year so management

should take care about good efficiency of stock management.

But in 2006 onward ratio is decreasing because of increase in COGS. So company

should devise a systematic operational plan for inventory control.

5.4.4 Average age of Inventories

This ratio indicates the waiting period of the investments in inventories and is measured

in days, weeks or months. Inventory turnover and average age of inventories are

inversely related.

Average age of Inventories Ratio = 360 days

Inventory Turnover

    Average age of InventoriesYear 2007-08 2008-09 2009-10 2010-11 2011-12Days 100

Table 5. 12 Average age of Inventories Ratio Analysis

2003-042004-05

2005--062006-07

2007-08

0.0

5.0

10.0

15.0

20.0

25.0

11.9

15.914.8

18.2

22.4

Average age of Inventories

Days

Figure 5. 12 Average age of Inventories Ratio Analysis

Interpretation

This graph shows that inventory convert into cash in short time period.

Inventory turnover ratio is low in 2003-04 So In this year inventory is converted in

cash 11.9 days.

The inventory conversation in to cash time duration is increases from 2004 to every

year so the management should tray to efficient inventory conversation,so it will It

shows that company effectiveness utilizing its Inventories in quickly.

5.4.5 Debtor Turnover Ratio

Debtor turnover ratio: The debtor turnovers suggest the no. of times the amount of

credit sale is collected during the year.

Debtor’s Turnover Ratio = Sales

Average Debtors

    Debtors turn over in (times)  Year 2007-08 2008-09 2009-10 2010-11 2011-12Time 100

Table 5. 13 Debtor Turnover Ratio Analysis

2003-04 2004-05 2005--06 2006-07 2007-080.0

1.0

2.0

3.0

4.0

5.0

6.0

4.9

3.8 3.7 3.7

1.5

Debtor turnover ratio

Time

Figure 5.13 Debtor Turnover Ratio Analysis

Interpretation

Debtor turnover indicates how quickly the company can collect its credit sales

revenue.

Here the ratio is continuously decreasing, so that the company’s collection of credit

sales is efficient management is improved its collection period every year so it

shows that the management have an ability to collect its money from his debtors. So

they can invest that money on Assets, HRD and other investments.

5.5 Finance Structure Ratios

Finance Structure Ratios indicate the relative mix or blending of owner’s funds and

outsiders’ debt funds in the total capital employed in the business. It should be noted that

equity funds are the prime fund which increase progressively through reinvestment of

profits, while outside debt funds are supplementary funds and are added at the discretion

of the management.

The following Finance Ratios are calculated for the company.

Debt Ratio

Debt-Equity Ratio

Interest Coverage Ratio

5.5.1 Debt Ratio

Debt ratio indicates the long term debt out of the total capital employed.

Debt Ratio = Long Term Debt

Total Capital Employed

Table 5. 14 Debt Ratio Analysis

Debt Ratio2007-08 2008-09 2009-10 2010-11 2011-12

Trend

2003-04 2004-05 2005-06 2006-07 2007-080

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

Debt Ratio

Trend

Figure 5. 14 Debt Ratio Analysis

Interpretation

From the above calculation it seems that the ratio is fluctuating.

In 2007-08 the ratio is increased as compared to the previous year because the total

loan funds are increased by 661.56%.

In 2005-06 Company has issued equity Share and also loan is decreased.

Its means that now company trying to increasing Trading on equity.

5.5.2 Debt-Equity Ratio

This ratio is only another form proprietary ratio and establishes relation between the

outside long term liabilities and owner funds. It shows the proportion of long term

external equity & internal Equities.

Debt Equity Ratio = Total Long Term debt

Share holder equity

Table 5.15 Debt - Equity Ratio AnalysisDebt- Equity Ratio

Year 2007-08 2008-09 2009-10 2010-11 2011-12Trend 100

2003-04 2004-05 2005-06 2006-07 2007-080

0.050.1

0.150.2

0.250.3

0.350.4

0.027 0.012 0.011 0.03

0.376

Debt equity ratio

Trend

Figure 5. 15 Debt-Equity Ratio Analysis

Interpretation

It shows companies accumulated more equity than required company has to refocus

to its strategic policies and plans and try to accumulate more debt funds in future so

as to make the balance between debt and equity.

There is only current year ratio is some what sufficient.

5.5.3 Interest Coverage Ratio

Interest Coverage Ratio: The ratio indicates as to how many times the profit covers

the payment of interest on debentures and other long term loans hence it is also

known as times interest earned ratio. It measures the debt service capacity of the firm

in respect of fixed interest on long term debts.

Interest Coverage Ratio = EBIT

Interest

  Interest coverage ratio  Year 2008-09 2009-10 2010-11 2011-12Trend 24.2 58.3 99.3 78.9

Table 5. 16 Interest Coverage Ratio Analysis

2008-09 2009-10 2010-11 2011-12Interest coverage ratio

0

20

40

60

80

100

120

Trend

Trend

Figure 5. 16 Interest Coverage Ratio Analysis

Interpretation

After observing the figure it shows that the ratio has mix trend up to 2006.

In the year 2007-08 company has not much debt compare to EBIT so interest

coverage ratio is high but in 2007-08 company increasing its external debt so

company have pay more interest among its earnings so interest coverage ratio

falling down compare to previous year.

5.6 Valuation Ratios

Valuation ratios are the result of the management of above four categories of the

functional ratios. Valuation ratios are generally presented on a per share basis and

thus are more useful to the equity investors.

The following Valuation Ratios are calculated for the company.

Earnings Per Share

Dividend pay-out Ratio

P/E Ratio

Profit Margin

5.6.1 Earnings Per Share

This ratio measures profit available to equity share holders on per share basis. It is not

the actual amount paid to the share holders as dividend but is the maximum that can

be paid to them.

Earnings per Share = Net Profits for Equity Shares

No. of Equity Shares

Table 5.17 Earnings per Share

Earnings Per ShareYear 2008-09 2009-10 2010-11 2011-12Trend(Rs.) 20.30 33.36 17.74 19.05

Figure 5.17 Earnings per Share Ratio Analysis

2008-09 2009-10 2010-11 2011-12Earnings Per Share

0

5

10

15

20

25

30

35

Trend(Rs.)Series2

Interpretation

Earninig per share is increasing as a increasing rate it is good for invester and share

holder.

In 2007-08 Profit is increasing by 42.30% and No Equity share Holder increased by

2.03%, Due to that EPS Ratio is increasing in Current year.

5.6.2 Dividend Pay-out Ratio

This ratio indicate split of EPS between Cash Dividends and reinvestment of Profit. If

the Company has Profitable projects than it will prefer to keep dividend pay out ratio

lower.

Dividend pay-out Ratio = Dividend per Share in Rs.

Earnings per share in Rupees

Table 5. 18 Dividend Pay-out Ratio AnalysisDividend pay-out Ratio

Year 2007-08 2008-09 2009-10 2010-11 2011-12Trend(Rs.) 100

2003-04 2004-05 2005-06 2006-07 2007-080

0.51

1.52

2.53

3.54

4.55

1.54

4.68

2.94

3.773.43

Dividend pay out ratio

Trend(Rs.)

Figure 5. 18 Dividend Pay-out Ratio Analysis

Interpretation

In all years there is fluctuation in ratio.

If the company wants to prosper in future with flying colors then ideally more

amounts should be reinvested in the business rather than distributing as dividend.

In 2005-06 company has reinvested in business for expansion.

5.6.3 P/E Ratio

P/E Ratio is computed by dividing the current market price of a share by earning per

share. This is Popular measure extensively used in Investment analysis.

P/E Ratio = Current Market Price of Share

Earnings per Share

Table 5. 19 P/E Ratio Analysis

    P/E Ratio  

YearTrend

20003-04 2004-05 2005-06 2006-07 2007080

5

10

15

20

25

30

35 31.36

19.91

15.85

11.3 10.3

PE ratio

Trend

Figure 5. 19 P/E Ratio Analysis

Interpretation

In 2004-05 P/E Ratios is high means Share price of company is Stable and Share

holder are interested to invest in the company’s share.

But in 2006-07 P/E Ratio is Falling down word So company share price is not as

stable as compare to previous year.

5.6.4 Profit margin ratio

Profit margin ratio= PAT/Sales*100

 Year 2008-09 2009-10 2010-11 2011-12Net Sales and Services 21507 22922 26300 31682PAT 2973 4898 4843 4685Ratio 13.8 21.3 18.4 14.7

Table 5. 20 Profit margin ratio

2008-09 2009-10 2010-11 2011-120

5000

10000

15000

20000

25000

30000

35000

Net Sales and ServicesPATRatio

Figure 5. 20 Profit margin ratio

Interpretation

The ratio is shows equal for middle three year it means the company has maintain

the equal ratio for year 2005 to 2007.

The ratio shows decline in current year it is bad sign for the company.

Sales

2007-08 199575

2006-07 1497512005-06 1061642004-05 815962003-04 58648

Assets turn over(in Rs.)

2007-08 1.93

2006-07 2.652005-06 3.322004-05 3.392003-04 4.20

Profit margin (in %)

2007-08 0.16

2006-07 0.202005-06 0.192004-05 0.202003-04 0.18

Profit after tax

2007-08 32829

2006-07 294212005-06 206742004-05 162852003-04 10315

Sales

2007-08 199575

2006-07 1497512005-06 1061642004-05 815962003-04 58648

Asset

2007-08 103160

2006-07 565352005-06 319512004-05 240492003-04 13969

5.7 The Du-Pont Chart

Table 5.20 Do-Pont chart

ROA (IN %)

2007-08 30.88 2006-07 532005-06 63.082004-05 67.82003-04 75.6

Interpretation

DuPont chart shows that how profitability is there in the business. When profit

margin is multiplied by total Assets turnover ratio that gives ROA. Profit Margin is

obtained by dividing PAT by Total sales. Total Asset Turnover is obtained by the

sales divided total assets.

It is like a Tree having various braches connected to each other.

It show company’s efficiency in making right decision of Investment

Total Assets turnover is decreasing in current year because of huge increase in net fix

assets and net current asset which is more than double compare to previous year.

The Chart shows the total assets turnover that indicate the company’s efficiency in

utilizing its assets.

So overall it can be interpreted that the company’s ROA is good .

Company should try its best to increase sales and profit.

The Du point chart Shows the complete picture of company’s performance.

Chapter 6.

Scenario Analysis

Company Analysis

Share Holding Pattern

Chapter 6.

Scenario Analysis

Company Analysis

Share Holding Pattern

6. SCENARIO ANALYSIS

6.1.Business Unit Performance

6.2.Company Analysis

6.2.1. Share Holding Pattern

FINDINGS

Though the sales has been continuously increased from past 3 years but the

proportionate expenditure is also rising so overall not making any huge effect on net

profit of this company.

Hear the in 2005 company has reinvest profit for business expansion it is good

shine for the company.

The total expenditure is near by 80% of total income in every year.

Every year PBT is near by 20% of total income.

Fixed assets are efficiently utilized by the company due to which the profit of the

company is increasing every year.

Liabilities is incressing rate it mean company has to developed business. And

purchase raw material on credit basis.

Company has enough cash in hand so that in any condition company can take

Any Financial decision easily.

All the years has quick ratio exceeding 1, the firm is in position to meet its

immediate obligation in all the years.

GP Ratio shows how much efficient company is in Production.

SUGGESTION

The company’s future plans for expansion seem clear due to increased

investment in Fixed Assets .Efficient use of these Assets has enabled the

company to observe an increased profit.

Though the company’s sale is continuously rising but the net profit is not so

much increased so management should take some steps to decrease its

expenses.

Company should try its best to increase sales and profit.

The profit margin ratio shows decline in current year so that company should

tray to increase profit after tax

Current ratio is very good it is 2.13:1 so company has fully utilize cash

liquidity for business development.

Bibliography

BIBLIOGRAPHY

Books:

Annual Report of Wipro Limited for Financial Year 2004-05, 2006-07,2007-08.

Narayanaswamy R., (1998): “Financial Accounting”: A Managerial Perspective,

Prentice-Hall of India Private Ltd, New Delhi., Third Edition, Reprint 2003

Khan M.Y. and Jain P.K., (1992):”Financial Management”, Tata McGraw-Hill

Publishing Co Ltd., New Delhi., Third Edition.

.

Websites

http://www .wipro.com

http://www.bseindia.com//shareholding/shareholding_new.asp

http://www.cmie.com//indutries//gdp.asp

http://www.wipro.com/investors/annual_reports.htm http://www.wipro.com/investors/pdf_files/AR07_08_first_book_final.pdf http://www.wipro.com/investors/pdf_files/AR07_08_second_book_final.pdf http://www.wipro.com/investors/pdf_files/Wipro_AR_2006_07_Part_1.pdf http://www.wipro.com/investors/pdf_files/Wipro_AR_2006_07_Part_2.pdf http://www.wipro.com/investors/pdf_files/Wipro_annual%20report_2005-06.pdf http://www.wipro.com/investors/pdf_files/Wipro_Annual_Report_2004_2005.pdf