financial analysis of idea

NSVKMS, MBA COLLAGE.

1.1 INDIAN TELECOMMUNICATIONS INDUSTRY

The Indian telecommunications market is currently among the fastest growing

telecommunication markets in the world. India’s current mobile subscriber base is

approximately 126.72 million as at September 30, 2007 as compared with 3.6 million in

2001, according to COAI and AUSPI. There has been rapid growth inthe industry

following several initiatives undertaken by TRAI and DoT.

In addition, the tele-density of mobile (CDMA and GSM) and fixed-line subscribers, or

the number oftelephone connections in use for every 100 individuals in an area, in India

has increased significantly since 2001.

The Mobile Landscape in India

The Indian telecommunications market has been separate into 23 areas referred to as

“Circles”. There are four metropolitan Circles (Mumbai, Delhi, Kolkata and Chennai)

and 19 regional Circles which are classified into three categories – ‘A’, ‘B’ and ‘C’.

There are five categories ‘A’ Circles, eight categories ‘B’ Circles and six category ‘C’

Circles.

Although the metropolitan Circles currently account for only 5% of the total population

of India, they account for approximately 27.04 million, 21.3%, of the total number of

subscribers in India, as atSeptember 30, 2006. The category ‘A’, category ‘B’ and

category ‘C’ Circles, by comparison, currently account for approximately 31%, 44% and

19% of the total population of India and account forapproximately 35.5%, 34.3% and

8.7% of the total number of subscribers, respectively. A detailedbreakdown of the total

number of subscribers, as at September 30, 2006, in each of these Circles is givenbelow.

The chart below excludes CDMA subscribers of BSNL and MTNL:

History and evolution of the telecommunications sector in India

Growth in the telecom industry in India can be divided into three phases: Phase I from

financial year 1997 to financial year 2001; Phase II – from financial year 2001 (later half)

to financial year 2004; Phase III –from financial year 2004 onwards.


Phase I – Take off Phase

Prior to 1991, the telecommunications industry in India was state-owned. In December

1991, the DoTbegan the process of introducing private sector participation in the

telecommunications sector by inviting bids from Indian companies with no more than

49% foreign ownership for non-exclusive licenses to provide cellular services in the four

metropolitan Circles.

Phase II – High Growth Phase

In January 2001, the Government published guidelines concerning the fourth license to

be awarded for each Circle. The guidelines called for a non-exclusive license for a period

of 20 years (thereafter extendable by 10 years) in the 1,800 MHz frequency range.. The

guidelines further provided that for the entire duration of the license, total foreign held

equity in the licensee company should not exceed 49% of the paid-up capital and that

management control should vest with an Indian promoter.

Phase III – Recent Phase

In November 2005, the Government, through Press Note 5 of 2005, dated November 3,

2005 raised theforeign direct investment limit applicable to the telecommunications

sector from 49% to 74% (held directlyor indirectly), subject to compliance with certain

conditions, including that the majority of the directors and selective key senior

management personnel of a company operating in the telecommunications sector be

resident Indian citizens, any shareholder agreements and the memorandum and articles of

association of the company be amended to ensure compliance with the conditions of the

relevant license agreement, and a resident Indian promoter holds at least 10% equity of

the company. Companies affected by this legislative change originally were given four

months from the date of notification to comply with the specified conditions although this

time period has since been extended by Press Note 7 of 2006 to January 2, 2007.


1.2 HISTORY & DEVELOPMENT OF THE COMPANY

We were incorporated as Birla Communications Limited on March 14, 1995 and granted

a certificate of commencement of business on August 11, 1995. Our registered office was

in Mumbai, Maharashtra. Our name was changed to Birla AT&T Communications

Limited on May 30, 1996 following the execution of a joint venture agreement dated

December 5, 1995 between AT&T Corporation and Grasim Industries Limited pursuant

to which the Aditya Birla Group held 51% of our Equity Share capital and AWS Group

held 49% of our Equity Share capital.

Our registered office was transferred from Industry House, 1st Floor, 159 Church Gate

Reclamation, Mumbai 400 020, Maharashtra to Suman Tower, Plot No. 18, Sector 11,

Gandhinagar 382011 Gujarat on October 22, 1996. With effect from January 1, 2001

following our merger with Tata Cellular Limited the joint venture agreement between

AT&T Corporation and Grasim Industries Limited dated December 5, 1995 was replaced

by a shareholders agreement dated December 15, 2000 entered into between Grasim

Industries Limited on behalf of the Aditya Birla Group, Tata Industries Limited on behalf

of the Tata Group and AT&T Wireless Services Inc. on behalf of the AWS Group

following which our name was changed to Birla Tata AT&T Limited on November 6,

2001.

Consequent to the introduction of the “Idea” brand, our name was changed to Idea

Cellular Limited on May 1, 2002. The AWS Group exited from the Company on

September 28, 2005 by selling 371,780,740 Equity Shares of the Company, which

constituted 50% of the holding of AT&T Cellular Private Limited in our equity share

capital, to ABNL and by transferring the remaining 371,780,750 Equity Shares to Tata

Industries Limited. The Tata Group ceased to be a shareholder of the Company on June

20, 2006 when Tata Industries limited and Apex Investments (Mauritius) Holding Private

Limited (formerly known as AT&T Cellular Private Limited) sold all their shares in the

Company to the Aditya Birla Group


1.3 COMPANY PROFILE

CORPORATE OFFICE

IDEA CELLULAR LIMITED

Windsor, 5th floor,

Off CST Road, Near Vidya Nagari,

Kalian, Santacruz (East),

Mumbai - 400098.

REGISTERED OFFICEIDEA CELLULAR LIMITED

Sunflower Tower,

Plot no. 18, sector 11,

Gandhingar – 382011, Gujarat

AUDITORSDeloitte Haskins and sellsChartered accountants706, B Wing, ICC Trade Tower,Senapati Bapat road,Pune - 411016

WEBSITEhttp://www.ideacellular.com


1.4 OBJECTIVE

Our main objects, as set forth in our Memorandum of Association,

are:

1. To provide all or any of the following services namely: basic

telephone services, cellular telephone services, unified access services

(basic and cellular services), international long distance calling

services, national long distance calling services, public mobile radio

trunked services (PMRTS), global mobile personal communications

services (GMPCS), V-SAT, electronic mail services, video text, voice

mail services, data communication services, paging services, private

switching network services, transmission network of all types,

computer networks i.e. local area network, wide area network,

multimedia services, intelligent network and other value-added

services and all such activities which are incidental to the provision of

such services like excavation, construction, infrastructure fabrication,

installation, commissioning and testing of equipment, marketing and

selling.

2. To carry on the business of manufacture, assemble, buy, sell,

import, export, service, repair or otherwise deal in all types of

electronics equipment viz, electronic communication, teletext,

televideo, microwave and facsimile equipment, telecommunication and

telematics equipment, network switching equipment, network

communication equipment, all sorts of electrical and electronic


wireless sets, high frequency apparatus, radar equipment, sonars,

oscilloscopes of all kinds and description, electronic and electrical

products, industrial electronics, software procedures, peripheral

products, modules, instruments, hardware and software system, all

kinds of solid state devices, control system and allied equipment,

aerospace and defense electronics, entertainment electronics,

household electronics and such other electronic equipment gadget

items which may be developed and introduced in India and elsewhere.

3. To carry on the business of manufacture, improve, assemble,

prepare, design, develop and install equipment, fabrication repair,

anything and everything in electronics, telephone networks, cellular

mobile networks systems, paging systems, electronic mail, voice mail,

data communications, electric gadgets and appliances, measuring and

testing instruments, components, accessories and spares for control

engineering, communication, defense and computer data processing

applicationthat may be developed by invention, experiment and

research.

MISSION

Our Mission


1.5 PROMOTERS OF IDEA CELLULAR LIMITED

The Aditya Birla Group is India's first truly multinational corporation. Global in vision,

rooted in Indian values, the Group is driven by a performance ethic pegged on value

creation for its multiple stakeholders

The Group's footprint extends to 20 countries and is a Â US$ 24 billion conglomerate,

with a market capitalisation of US$ 31.5 billion. Over 50 per cent of its revenues flow

from its overseas operations. The Group Â is anchored by an extraordinary force of

1,00,000 employees belonging to over 25 different nationalities and has been adjudge All

The Best Employer in India and among the top 20 in Asiaâ€ by the Hewitt-Economic

Times and Wall Street Journal Study 2007..

A premium corporation, the Aditya Birla Group is a leader in envelop of products A-

viscose staple fibre, aluminium, cement, copper, carbon black, insulators, garments.

The Group has also made successful forays into financial services, telecom, software, and

BPO and retail sectors. Today, the Group is India's most diversified business house.

Currently around 57 percent of our Equity Shares are held by our Promoter companies

belonging to the Aditya Birla Group.


Promoters

1. Aditya Birla Nuvo Limited2. Grasim Industries Limited 3. Hindalco Industries Limited and

4. Birla TMT Holdings Private Limited

1.6 PARTNERS OF THE IDEA CELLULAR LIMITED

IDEA welcomes all businesses and individuals interested in partnering with us to enhance

and strengthen the IDEA products & services portfolio.

To explore such potential partnerships, kindly get in touch with us by submitting the

Partners Form.

Some of our Technology and Content Partners:

Onmobile Asia Pacific Ltd

Cellebrum India Ltd

Siddhivinayak Astro Services Ltd.

Kodiak Ltd


http://www.onmobile.com/

http://www.ganeshaspeaks.com/index.jsp

http://www.kodiaknetworks.com/

Mauj

Net4nuts India Ltd

Yahoo

Rediff

Indiatimes

Mobile2win

Sify

NDTV

ROAMING

Roamware.inc

Starhome

Bharti Telesoft

MARKETING COMMUNICATIONS

Lowe India Pvt Ltd

Insight Media Ltd

NETWORK

Nokia - Siemens

Ericsson

BILLING

Atos Origin


http://www.mauj.com/

http://www.net4nuts.com/main/index.htm

http://in.yahoo.com/

http://www.rediff.com/

http://www.mobile2win.com/

http://sify.com/

http://www.ndtv.com/

http://www.roamware.com/

http://www.starhome.com/

http://www.bhartitelesoft.com/

http://www.loweworldwide.com/

http://www.insight.com/site/index.cfm

http://www.nokia.co.in/

http://www.siemens.com/

http://www.ericsson.com/in/

http://www.atosorigin.com/

1.7 EXISTING MANAGEMENT BOBY

The company is a professionally managed organization. The company functions under

the control of a board consisting of professional directors. The day-to-day matters are

looked after by qualified key personnel, under the supervision of Mr. Kumar

Mangalam Birla, (chairman) and Mr. Sanjeev aga, (M.D.)

Mr. Kumar Mangalam Birla Mr. Sanjeev Aga

Chairman Managing Director

BOARD OF DIRECTORS

NAME DESIGNATION

Mr. Kumar Mangalam Birla Chairman

Mrs. Rajashree Birla Non-Executive Director


Mr. Arun Thiagarajan Independent Director

Mr. Gian prakash Gupta Independent Director

Mr. Mohan Gyani Independent Director

Ms. Tarjani Vakkil Independent Director

Mr. Biswajit A. Subramnjan Non-Executive Director

Mr.m.r. Prasanna Non-Executive Director

Mr. Saurabh Misra Non-Executive Director

Mr. Sanjeev Aga Managing Director

1.8 BUSINESS STRATEGY

OUR GROWTH STRATEGIES

We believe that we are well positioned to grow in the rapidly expanding Indian

telecommunications industry. We believe our growth strategies have and will continue to

enable us to:

● Build on our strong position in the Established Circles

As at September 30, 2006, the footprint of our Established Circles alone covered

approximately 47% of India’s subscriber base. We enjoy a strong market position,

distribution strengths, brand recognition and the use of the 900 MHz band in seven of the

eight Established Circles. This platform, now leveraged through increased investment in

our network and our brand, has delivered growth in market share upon which we believe

we can build to strengthen our position in our Established Circles. For our New Circles

and the Bihar Circle, and for the licenses for which we have applied in category B and C

Circles, mobile penetration as at September 30, 2006 is 6.5%, which is lower than the

12.5% in the Established Circles. This should mean that the entry barriers are less

formidable and the market opportunities greater. Additionally, our strong position in our

Established Circles should provide us with advantages in additional Circles. For example,


when we launched in the Uttar Pradesh (East) Circle we benefited from our strong market

position in the neighboring Circles of Uttar Pradesh (West) and Madhya Pradesh.

● Derive synergies and economies of scale from an expanding operation

Since our incorporation in 2002, we have grown both organically and through

acquisitions and takeovers. In January 2004, we operated in only 5 Circles whereas now

we have operations in 11 of India’s 23 Circles. We believe that standardizing and

centralizing our operations, wherever appropriate, will help eliminate duplication and

improve operational efficiencies. We have, for example, standardized our approach to

customer care. We have successfully centralized several applications; including

Enterprise Resource Planning using Oracle Financials, interconnect billing using

customized software, a call management system and a fraud management system.

.

● Build a meritocratic organization with a strong focus on people

We are an equal opportunity employer and encourage diversity. The values we embrace

are integrity, commitment, passion, seamlessness and speed. We place emphasis on

employee development and we have, for example, committed ourselves to an average of

10 days training per employee this financial year. As part of the Aditya Birla Group, we

make full use of the facilities of Gyanodaya, the Aditya Birla Group’s renowned

management institute located outside Mumbai, to ensure adequate training and team

building. We regularly evaluate our employees’ engagement levels to help ensure that

subscribers’ experiences exceed expectations. It is with this objective that we are

optimizing and standardizing our processes across the organization using the “6 SIGMA”

approach which is designed to minimize human error and enhance revenue and

productivity. The Aditya Birla Group offers career opportunities to high performing

talent across its locations world-wide, which contributes to its attractiveness as an

employer.

● Focus on customer service to enhance brand appeal


We place significant emphasis upon delivering an efficient and friendly experience at all

contact points in the subscriber life cycle. Our tariffs are designed to be transparent and

easy to understand. We have developed call centers to focus on our subscribers’ needs for

service and to cross-sell our various products.

We have consistently focused on innovative products that address existing and latent

needs of our subscribers. For example, we have recently promoted a free one-year life

insurance cover of Rs. 10,000 to a section of customers who subscribe to our “Dialler

Tone” VAS. The simplicity of application for and the security provided by the cover

matched the profile of the segment of customers to which it was targeted. At present,

approximately 46% of our employees serve in customer-facing roles.

1.9 SWOT ANALYSIS

STRENGTHS OF THE COMPANY

Attractive existing footprint

Original licensee in seven of the Established Circles providing incumbency

advantages

Market leader in two of, and established positions in the remainder of, the

Established

Circles.

Critical mass of 10.36 million subscribers

Strong distribution channels

High quality network structure

A national brand

Part of the Aditya Birla Group


1.10 COMPETITION AND MAJOR COMPETITOR

Competition in the Indian telecommunications industry is intense. We

believe that the principal parameters for competition are price,

network coverage, distribution channels, brand recognition, service

quality and customer care. Our ability to compete successfully

depends, in part, on our ability to anticipate and respond to

competitive factors affecting the Indian telecommunications industry.

MAJOR COMPETITOR AND ITS MARKET SHARE

1)Bharti Airtel (21.6%)

2)Vodafone-Essar Company Limited (15.9)

3)MTNL(1.7)

4)Bharat Sanchar Nigam Limited (BSNL) (16.4)

5)Tata Telecommunication Limited (9.9)


6)Reliance Communication Limited (20.4)

1.11PRODUCTS AND SERVICES OF THE COMPANY

We offer pre-paid and post-paid mobile services in our 11 Circles under the brand names

of “Idea Chit Chat” and “Idea”, respectively. We seek to identify new business

opportunities and be the first mover amongst our competitors for value added services

(“VAS”). We were the first mobile operator to offer an extended validity post-paid

product, which now forms a sizeable percentage of our post-paid base. In addition to our

core mobile voice services, we offer our subscribers features such as:

• Easy to use missed call alerts;

• GPRS enabled entertainment services like MMS, Video Tones, WAP, wallpapers, Java

games and Mobile Magazine;

• GPRS enabled information services like internet browsing, data cards and mobile email;


• Voice and SMS based entertainme nt services like Ring Back Tones, background

Music, voice and SMS chat, ringtones, horoscopes, expert advise and subscription

services;

• Call-forwarding (allowing a subscriber to divert incoming calls to another telephone

number);

• call conferencing (allowing a subscriber to speak to two or more persons

simultaneously);

• Voice mail (allowing callers to leave voice messages for the subscriber);

• Regional, on-net, national and international roaming options for the subscribers;

• GPRS roaming available with key national and international operators; and

• Fixed Cellular Terminal for corporate needs, GSM gateways, vehicle tracking; and

Automatic Meter Reading.

Our Service Areas

The Indian telecommunications market for mobile services is divided into 22 "Service

Areas" classified into "Metropolitan", Category "A", Category "B" and Category "C"

service areas by the Government of India. These classifications are based principally on a

Service Area’s revenue generating potential. Our operational 13 Service Areas are broken

up into established and New Service Areas.

Established Service Areas

The established service areas are Delhi, Andhra Pradesh, Gujarat and Maharashtra,

Haryana, Kerala, Madhya Pradesh and Uttar Pradesh (West).

New Service Areas

The New Service Areas are Uttar Pradesh (East), Rajasthan and Himachal Pradesh

Licenses for these New Service Areas were acquired through the acquisition of Escotel

(Escorts Telecommunications Limited).


2.1 INTRODUCUION OF FINANCE

The position of finance in business can be match with the position of blood in the human

body. Finance is the life blood of the business. Finance, today is not only limited up to

function that circulate business but also extended its boundries. Today success or failure

of any business concerned heavily depends upon how effective finance management a

firm has. It is the portfolio that gives maximum return at minimum cost. Furter different

parties, both inside and outside of the firm are intrested in financial position of firm and

fixed interval they often evaluate financial position by assessing financial statement of

firm.


FINANCIAL STUDY

This chapter deals with the following issues related to research study

1. Project objective

2. Project methodology

PROJECT OBJECTIVE

The aim of the project is to study working procedure and financial analysis of DYNEMIC

PRODUCTS LIMITED in comparision with industry average. The study will highlight

the following objective.

1. Study the ratio analysis of DPL with industry average.

2. Study the cash flow analysis of DPL.

3. Study the cost of production and leverage of DPL.

PROJECT METHODOLOGY

FINANCIAL ANALYSIS & TECHNIQUE.

As stated earlier success or failure of any firm heavily depends on its financial

management. The function of financial management is to manage the inflow and outflow

of firm in such a way so that firm can carry out its objective easily.for earning out the

objective management also have to be familiar with the financial position of firm time by

time. So for knowing of financial position management has to go for financial analysis.

Management can analyse fiorm’s financial position by evaluating and analyzing financial

statement of the firm.

Here we define some techniques of analyzing financial statements are as follows.


1. Comparative statement.

2. Commonsize statement

3. Trend analysis

4. Ratio analysis

5. Cash flow statement

By using this techniques management or any person who knows these techniques can

analyze the financial position with adequate data and interpret it and also deriving

conclusion from it.

2.2 COMPARATIVE STATEMENT

Horizontal analysis is also one f the techniques of the financial statement analysis.

Financial statement presents comparative information for the current year and the

previous year. A simple approach to financial statement analysis, known as horizontal

analysis, is to calculate amount changes and percentage changes from the previous years

to the current year.

While an amount change in itself may mean something, converting amount changes to

percentages is more useful in appreciating the order of magnitude of the change.


Horizontal analysis of the financial statements of IDEA CELLULAR LIMITED is

presented below:

(1) PROFIT & LOSSPARTICULAR 2005-06

( in million)2006-07( in million

Increase/decrease

% (inc. /dec.)

(A) Income

Service revenue 20,070.68 43500.16 23,429.48 116.73

Sales of trading goods - 163.84 163.84 -

Other income 105.70 209.29 103.59 98

TOTAL INCOME 20,176.38 43873.29 23,696.91 117.45

(B)operating Expenditure

Cost of trading goods sold - 51.73 51.73 -


personnel expenses 1,184.84 2608.46 1,423.82 120.15

Network operating expenditure

2,174.46 5335.72 3,161.26 145.38

Licence & WPC charge 2,208.19 4487.01 2,278.82 103.20

roaming and access charges 3,459.11 7320.96 3,861.26 111.64

Subscriber acqui.& service exp.

2,258.00 5643.27 3,385.27 149.92

Add. & business Promotion exp.

850.68 2006.20 1,115.52 135.83

administration & other exp. 780.58 1560.31 779.73 99.89

TOTAL OPERATING EXP. 12,915.86 29013.66 16,097.80 124.63

(D) PBFC,D,A&T 7,260.52 14859.63 7,599.11 104.66

depreciation 2,628.80 5636.66 3,007.86 114.42

finance and treasury charges (net)

2,500.10 3051.06 550.96 22.04

Amortization of intangible assets

846.57 1081.39 234.82 27.74

PBT 1,285.05 5090.52 3,805.47 296.13

Provision for taxation 29.02 69.81 40.89 104.54

PAT 1,256.03 5020.61 3,764.58 299.72

EPS 0.36 2.19 1.83 508.33

PARTICULARS GROWTH IN PERCENTAGE ( % )

Income 117.45Expenditure 124.63Profit before depreciation financial. Charges, amortizationexp. and tax

104.66

profit before tax 296.13Profit(loss) After tax 299.72Earning per share 508.33


(1) PROFIT & LOSSPARTICULAR 2006-07

( in million)2007-08( in million

Increase/decrease

% (inc. /dec.)

(A) Income

Service revenue 43500.16 67,199.83 23,699.67 54.48

Sales of trading goods 163.84 0.07 -163.77 -99.96

Other income 209.29 174.55 -34.74 -16.60

TOTAL INCOME 43873.29 67,374.45 23,501.16 53.56



Cost of trading goods sold 51.73 0.06 -51.67 -99.88

personnel expenses 2608.46 3,417.82 809.36 31.03

Network operating expenditure

5335.72 10,469.53 5,133.81 96.22

Licence & WPC charge 4487.01 6,851.03 2,364.02 52.68

roaming and access charges 7320.96 11,334.41 4,013.45 54.82

Subscriber acqui.& service exp.

5643.27 6,469.63 826.36 14.64

Add. & business Promotion exp.

2006.20 3,224.29 1,218.09 60.72

administration & other exp. 1560.31 2,895.03 1,334.72 85.54

TOTAL OPERATING EXP. 29013.66 44,661.80 15.648.14 53.93

(D) PBFC,D,A&T 14859.63 22,712.65 7,853.02 52.85

depreciation 5636.66 7,568.52 -275.18 -9.10

finance and treasury charges (net)

3051.06 2,776.42 1,931.86 34.27

Amortization of intangible assets

1081.39 1,199.10 117.71 10.88

PBT 5090.52 11,168.61 6,078.09 119.40

Provision for taxation 69.81 714.99 -645.18

PAT 5020.61 10,443.62 5,423.01 108.01

EPS 2.19 3.96 1.77 80.82

PARTICULARS GROWTH IN PERCENTAGE ( % )

Income 53.56%Expenditure 53.93%Profit before depreciation, financial. Charges, amortizationexp. and tax

52.85%

Profit before tax 119.40%Profit(loss) After tax 108.01%Earning per share 80.82%


(2) BALANCE SHEETPARTICULAR 2005-06

(in million)2006-07( in million)

Increase/decrease

% (inc./dec.)

[A] Source Of Funds

(1) share holders fund

(a) share capital 27425.25 25928.6 -1496.67 -5.46

(b) reserves & surplus 998.41 20371.49 19373.08 1940.39

Outstanding employee stock option -

TOTAL 28423.68 46300.09 17876.41 62.89

(2) loan fund


(a)secured loan 14707.53 35397.68 20690.15 140.68

(b)un secured loan 14448.54 7107.36 -7341 -50.81

TOTAL 29156.07 42505.04 13348.97 45.78

(3) differed tax liability - 10.55 10.55

TOTAL ( 1+2+3) 57579.75 88815.68 31235.93 54.25

[B] Application Of Funds

(1) fixed assets

(a) gross block 31663.73 70169.64 38955.91 123.03

(b) depreciation (11576.31) (-26371.75) 14795.44 127.81

(c) net block 20087.42 44247.89 24160.47 120.28

Intangible asset (net) 8087.39 11676.42 3589.03 44.38

Capital work in progress 959.05 5065.15 4106.1 428.14

(2) Investment 3070.31 138.31 -2932 -95.49

(3) Current Assets, Loans& Advances(a) inventories 88.11 179.1 90.99 103.27

(b) sundry debtors 908.18 1524.77 616.59 67.89

(c) cash & bank balance 1290.91 18197.28 16906.37 1309.65

(d)Other current assets 451.35 757.40 306.05 67.81

(e) loans & advances 13634.95 4040.57 -9594.38 -70.37

Total current assets 16373.50 24699.12 8325.62 50.85

Less(3-): Current Lianilities & Provisions)

(-7736.31) (-21519.77) 13783.46 178.16

Net current assets 8637.19 3179.35 -5457.84 -63.19

P&L account 16378.39 24508.56 7770.17 46.42

TOTAL RS. 57579.75 88815.68 31235.93 54.25

(2) BALANCE SHEET

PARTICULAR 2006-07( in million)

2007-08( in million

Increase/decrease

% (inc./dec.)

[A] Source Of Funds


(a) share capital 25928.6 26353.61 425.01 1.64

(b) reserves & surplus 20371.49 23134 2762.51 13.56

Outstanding employee stock option 37.59 37.59

TOTAL 46300.09 49525.20 3225.11 6.965

(2) loan fund


(a)secured loan 35397.68 54544.33 19164.65 54.09

(b)un secured loan 7107.36 10603.26 3495.90 49.19

TOTAL 42505.04 65147.59 22642.55 53.27

(3) differed tax liability 10.55 661.85 651.3 6173.45

TOTAL ( 1+2+3) 88815.68 115334.64 26518.96 29.86


(1) fixed assets

(a) gross block 70169.64 110119.82 39653.61 56.27

(b) depreciation (-26371.75) -31238.26 4932.78 18.75

(c) net block 44247.89 78881.56 34720.83 78.62

Intangible asset (net) 11676.42 17792.38 6028.80 51.25

Capital work in progress 5065.15 9411.27 4346.12 85.80

(2) Investment 138.31 5699.31 5561 4020.68

(3) Current Assets, Loans& Advances(a) inventories 179.1 276.15 97.05 54.19

(b) sundry debtors 1524.77 1985.93 461.16 30.24

(c) cash & bank balance 18197.28 4970.55 -13226.73 -72.68

(d)Other current assets 757.40 520.66 -236.74 -31.26

(e) loans & advances 4040.57 7986.73 3946.16 97.66

Total current assets 24699.12 15740.02 -8959.10 -36.27

Less(3-): Current Lianilities & Provisions)

(-21519.77) -26254.84 4735.07 22

Net current assets 3179.35 -10514.82

P&L account 24508.56 14064.94 -10443.62 -42.61

TOTAL RS. 88815.68 115334.64 26518.96 29.86

2.3 TREND ANALYSIS

Trend analysis involves calculation of percentage changes in financial statement items for

a number of successive years. It is an extension of horizontal analysis to several years.

Trend analysis is carried out by first assigning a value of 100 to the financial statements

items in a past financial year used as the base year and then expressing financial

statements items in the following years as percentages of the base year value.


Trend analysis over longer periods helps in identifying certain basic changes in the nature

of the business. Since many large corporations publish a summary of operating results

and selected financial indicators for five years or more, it is possible to perform trend

analysis using published reports.

2.3 TREND ANALYSIS

(1) PROFIT & LOSS ACCOUNT (In %)

PARTICULAR 2005-06 2006-07 2007-08

(A) Income

Service revenue 100 216.79 334.82

Sales of trading goods 100 0.043


Other income 198 165.14

TOTAL INCOME 100 217.45 333.93


Cost of trading goods sold - 100 0.12

personnel expenses 100 220.15 288.46

Network operating expenditure 100 245.38 481.78

Licence & WPC charge 100 203.2 310.26

roaming and access charges 100 211.64 327.67

Subscriber acqui.& service exp. 100 249.92 286.52

Add. & business Promotion exp. 100 235.83 379.03

administration & other exp. 100 199.89 370.88

TOTAL OPERATING EXP. 100 224.65 345.79

(D) PBFC,D,A&T 100 204.66 312.82

depreciation 100 214.42 287.91

PBFCA&T 100 199.13 326.52

finance and treasury charges (net) 100 122.04 111.05

Amortization of intangible assets 100 127.74 141.64

PBT 100 396.13 869.12

Provision for taxation 100 240.9 2498.24

PAT 100 399.72 831.48

EPS 100 663.89 1100


TREND ANALYSIS

0

500

1000

1500

PE

RC

EN

TA

GE

2005-06

2006-07

2007-08

2005-06 100 100 100 100 100 100

2006-07 217.45 224.65 199.13 396.13 399.72 663.89

2007-08 333.93 345.79 326.52 869.12 831.48 1100

TOTAL INCOM

EXPENSES

PBFCA&T

PBT PAT EPS

INTERPRETATION:

Here, I have taken the base year as 2005-06.

SALES:-

The sales of the company is continuously increase from the 100% to 334.82% in the last

three years.

TOTAL INCOME:-

The total income of the company is continuously increased from 100% to 333.93% in the

last three years from 2005-06 to 2007-08 because of hihly increase in the service revenue.

The total income is less increased because of decrease in the other income from209.29

million to 174.55 million.

EXPENSES:-

Theoperating expenses of the company is increasing in last 3 years from 100% to

345.79% because of the highly increase in the network operating expenses from

2208.19milion to 10469.53 million, advertisement and business promotion expense and

administrative expenses from 1684.24million to 6019.32million.it was comparatively

highly incease than the total inome so it inversely affects the profit margin of the

company.

PBFCT:-


The profi before financial charges, amortization expenses and taxes increases from 100%

to 326.52% but it increases less than seles increases because of highly increase in the

operating expenses.

PBT:-

The PBT of the company was continuously increased in last three yearsfrom 2005-06 to

2007-08 because of the comparatively less increased in the financial charges and the

amortization expenditures. The profit before tax is increased in the 2007-08 than 2006-07

because of decrease in the financial charges from 3051.06mn.to 2776.42mn.

PAT:-

The PAT of the company is increasing from 100% to 831.48% because of continuously

increase in the profit before tax. It expresses the satisfactory situation for the company

and one can say that company has high ability to operate the business efficiently.


(2) BALANCE SHEET (In %)

PARTICULAR 2005-06 2006-07 2007-08

[A] Source Of Funds


(a) share capital 100 94.54 96.09

(b) reserves & surplus 100 2430.39 2317.08

Outstanding employee stock option - - 3759

TOTAL 100 162.89 174.24

(2) loan fund

(a)secured loan 100 240.68 370.86

(b)un secured loan 100 49.19 73.39

TOTAL 100 145.78 223.44

(3) differed tax liability 100 100 6273.46

TOTAL ( 1+2+3) 100 154.25 200.30


(1) fixed assets

(a) gross block 100 223.03 347.78

(b) depreciation 100 227.81 269.84

(c) net block 100 220.28 392.69

Intangible asset (net) 100 144.38 220

Capital work in progress 100 528.14 981.31

(2) Investment 100 4.5 185.63

(3) Current Assets, Loans& Advances

(a) inventories 100. 203.27 313.42

(b) sundry debtors 100 167.89 218.67

(c) cash & bank balance 100 1409.65 385.04

(d)Other current assets 100 167.81 115.36

(e) loans & advances 100 29.63 58.58

Less(3-): Current Lianilities & Provisions) 100 278.17 339.37

Net current assets 100 36.81 (121.74)

P&L account 100 146.42 84.03

TOTAL RS. [NET WORTH] 100 154.25 200.30


TREND ANALYSIS

0

40

80

120

160

200

240

YEAR

PE

RC

EN

TA

GE

SHARE HOLDER'SFUND

100 162.89 174.24

LOAN FUND 100 145.78 223.44

TOTAL 100 154.25 200.304

2005-06 2006-07 2007-08

INTERPRETATION:-

1) SHARE HOLDER’S FUND:-The share holders’fund of the company increases from 100% to 492.72% in the last five yearsthe share holders’ fund was increased because the company had issued bonus share 1:1 in 2004-05. And also issues the additional shares of 44, 21,000 in 2005-06.

2) LOAN FUNDS:-The loan fund of the company increases fromv100% to 208.12% (including secured & unsecured loan) the company has increased in the secured loan but drcreased in the unsecured loan.

3) DIFFERED LIABILITIES:-The differed liabilities of the company increased from 100%to128.85 upto 2004-05but drcreased from 132.74% to 123.12% upto 2006-07.TOTALThe net worth of the company increased from 100% to 340.3% because highly increased in the shareholdre’s fund.


APPLICATION OF FUNDS

-200

0

200

400

600

YEAR

PE

RC

EN

TA

GE

NET FIXED ASSETS 100 220.28 392.69

INVESTMENTS 100 4.5 185.63

NET CURRENTASSTS

100 36.81 -121.74

2005-06 2006-07 207-08

APPLICATION OF FUND:-1) FIXED ASSETSCompany’s fixed assets increased from 100% in the year 2005-06 to 392.69% in 2007-08.

2) CAPITAL WORK IN PROGRESS:-The capital work in progress increased from 100% in 2005-06 to 1681%in 2006-07. There is no capital work in progress from 2002-03 to 2004-05. the capital work in progress increased in 2006-07 because the company had invest its capital in two plants 2&3 in 2005-06 &2006-07.

3) INVESTMENT:-The invest ment of the company increased from 100% to 41393.41% in 2005-06 and 32601.2% in 200-07 because of the company has invested its capital in stock market, mutual fund & subsidiary compny.

4) CURRENT ASSETS, LOANS & ADVANCES:The current asasets, loans and advances of the company increased because of highly increased in the cash& bank balance.

5) CURRENT LIABILITIES:-


The current liabilities and provisions of the company decreased because of decreased in the short term loan and in creditors.

2.4 COMMON SIZE STATEMENT OR VERTICAL ANALYSIS

Ratio analysis apart, another useful way of analyzing financial statement is to convert

them in to commansize statement by expressing absolute rupee amount in to percentage.

When this method is pursued, the income statement exhibits each expense item or group

of expense items as a percentage of net sales, and net sales are taken at 100 percent.

Similarly, each individual asset and liability classification is shown as percentage of total

assets and liabilities respectively. Statements prepared in this way are referred to as

common size statements.

Common size statement prepared for one firm over the yeas would highlight the relative

changes in each group of expenses, assets and liabilities. This statement can be equally

used for inter-firm comparisions, given the facts that absolute figures of two firms of the

same industry are not comparable.


2.4 VERTICA LANALYSIS

(1) PROFIT & LOSS ACCOUNT (In %)

PARTICULAR 2005-06 2006-07 2007-08

(A) Income

Service revenue 99.48 99.15 99.74

Sales of trading goods - 0.37 0.00004

Other income 0.52 0.48 0.25996

TOTAL INCOME 100 100 100


Cost of trading goods sold - 0.12 0.00004

personnel expenses 5.87 5.95 5.07

Network operating expenditure 10.78 12.16 15.54

Licence & WPC charge 10.94 10.23 10.17

roaming and access charges 17.14 16.69 16.82

Subscriber acqui.& service exp. 11.19 12.86 9.6

Add. & business Promotion exp. 4.22 4.57 4.79

administration & other exp. 3.87 3.56 4.3

TOTAL OPERATING EXP. 64.01 66.13 66.29

(D) PBFC,D,A&T 35.99 33.87 33.71

Depreciation 13.03 12.85 11.23

PBFCA&T 22.96 21.02 22.48

finance and treasury charges (net) 12.39 6.95 4.12

Amortization of intangible assets 4.2 2.46 1.78

PBT 6.37 11.61 16.58

Provision for taxation 0.14 0.16 1.08

PAT 6.23 11.44 15.5

Bal. of loss brought forward from prev. year (89.18) (38.15) (36.38)

Accumulated losses acquired on amalgamation

- (28.87) -

Leave enhancement provision for earlier year - (2.52) -


Bal. of loss carried forward to balance sheet (82.96) (55.86) (20.88)

PROFIT AND LOSS ACCOUNT

0

20

40

60

80

YEAR

PE

RC

EN

TA

GE

OPERATING. EXP. 64.01 66.13 66.29

PBFDAT 35.99 33.87 33.71

PBT 6.37 11.6 16.58

2005-06 2006-07 207-08


(2) BALANCE SHEET

PARTICULAR 2005-06 2006-07 2007-08

[A] Source Of Funds


(a) share capital 47.63 29.19 22.85

(b) reserves & surplus 20.06

Outstanding employee stock option - - 0.03

TOTAL 1.73 22.94 42.94

(2) loan fund

(a)secured loan 25.54 39.85 47.29

(b)un secured loan 25.09 8 9.19

TOTAL 50.64 47.85 56.49

(3) differed tax liability - 0.02 0.57

TOTAL ( 1+2+3) 100 100 100


(1) fixed assets

(a) gross block 54.99 79.34 95.48

(b) depreciation 20.1 29.62 27.08

(c) net block 34.89 49.72 68.4

Intangible asset (net) 14.05 13.24 15.42

Capital work in progress 1.67 5.70 8.16

(2) Investment 5.33 0.16 4.94

(3) Current Assets, Loans& Advances

(a) inventories 0.15 0.2 0.8

(b) sundry debtors 1.58 1.72 0.24

(c) cash & bank balance 2.24 20.49 4.31

(d)Other current assets 0.78 0.85 0.45

(e) loans & advances 23.68 4.55 6.92

Total currnt assets 28.44 27.81 13.64

Less(3-): Current Lianilities & Provisions) (13.44) (24.23) (22.76)


Net current assets 15 3.58 (9.12)

P&L account 29.07 27.59 12.19

TOTAL RS. [NET WORTH] 100 100 100

2005-06

47.63

1.7325.54

25.090

SHARECAPITAL

RESEVE ANDSURPLUS

SECURED LOAN

UNSECUREDLOAN

DEFFERED TAXLIABILITY

2006-07

29.19

22.94

39.85

80.02 SHARECAPITAL

RESEVE ANDSURPLUS

SECURED LOAN

UNSECUREDLOAN


2007-08

22.85

20.0647.29

9.19 0.57 SHARECAPITAL

RESEVE AND SURPLUS

SECURED LOAN

UNSECUREDLOAN


SOURCE OF FUND

0

10

20

30

40

50

60

2005-06 47.63 1.73 25.54 25.09 0

2006-07 29.19 22.94 39.85 8 0.02

2007-08 22.85 20.06 47.29 9.19 0.57

SHARECA

PITAL

RESEVE

AND

SECURED

LOAN

UNSECUR

EDLOAN

DEFFERE

D TAX

INTERPRETATION:

1) SHARE HOLDER’S FUND:-

Share capital:

The proportion of share capital of the company is 47.63 % in 2005-2006, 29.19% in

2006-2007 and 22.85% in 2007-2008. The proportion of share capital decreases because

of increase in the use of loan funds and increase in the Reserve and surplus from 1.73%

to 20.06% in 2005-2006 share capital increases 8.39% preference share capital to 39.24

% of equity capital.

Total:-

The total share holder’s fund is 49.36%, 52.13% and 42.94% in 2006-2007 or

respectively. The proportion of shareholder’s fund increases despite decrease in share


capital in 2007 because increase in proportion of R&S from 1.73% to 22.94 % .It was

decreased in 2008 but lesser proportion than share capital because increase in reserve

&surplus from 1.73 to 20.06 %.

Loan Funds:-

The loan fund is decreased in 2007 from from 2006 (50.64% to 47.85%) because of

proportionate decrease in unsecured loans (25.09% to 8%) and increased in 2008 from

2006 from 50.64% to 56.49% despite decrease in unsecured loan from 25.09% to 9.19%

because of increase in secured loan from 25.54% to 47.29%.

3) Differed Tax Liabilities:-

The differed lauilitues of the company was 0%, 0.02%, 0.57% in the year 2005-06,

2006-07 and in 2007-08 respectively.in 2005-06 in 2005-06 the differed liabilities of the

company was zero because of the deffered tax assets (605.98) is equal to the deffered

tax liability (605.98)

APPLICATION OF FUND:-2005-06

34.89

5.3314.051.67

15

29

NET FIXED ASSETS

INVESTMENT

INTENGIBLE ASSETS

CAPITAL WORKINPROGESS

NET CURRENTASSETS

P&L ACCOUNT

2006-07

49.72

0.1613.24

5.7

3.58

28

NET FIXED ASSETS

INVESTMENT

INTENGIBLE ASSETS


NET CURRENTASSETS

P&L ACCOUNT


2005-06

34.89

5.3314.051.67

15

29

NET FIXED ASSETS

INVESTMENT

INTENGIBLE ASSETS


NET CURRENTASSETS

P&L ACCOUNT

-20

-10

0

10

20

30

40

50

60

70

80

2005-06 34.89 5.33 14.05 1.67 15 29

2006-07 49.72 0.16 13.24 5.7 3.58 28

2007-08 68.4 4.94 15.42 8.16 -9.12 0.13

NET

FIXED

ASSET

INVEST

MENT

INTENGI

BLE

ASSET

CAPITA

L

WORKI

NET

CURRE

NT

P&L

ACCOU

NT

1) FIXED ASSETS

The fixed assets of the company are 34.89%, 49.72%, 68.40%. In 2005-06 to 2007-08

respectively. It was because of the continuously highly increase in the Plant and

Machinery from19647.36mn in 2005-06 to 77396.05mn.in 2007-08.

Investment


2.6 RATIO ANALYSIS OF IDEA CELLULAR LIMITED

Ratio, broadly speaking, is the numerical relationship between to numbers, and hence

ratio analysis of statement stands for the process of determining and presenting the

relationship of items and groups of items in the statement

The ratio analysis is one of the most powerful tools of the financial analysis. It is used as

a device to analysis and interpret the financial statements can be analyse more clearly and

decision made from such analysis.

The use of ratio is not confined to financial manager only. There are different parties in

ratio analysis for knowing the financial position of the firm for different purposes. The

supplier of goods on credit, banks, financial institution, investors, shareholders and

management make use of ratio analysis as a tool in evaluating the financial position and

performance of a firm for granting credit, providing loans for making investments in the

firm. Thus, ratios have wide applications and are of immergence use today.


2.6.1 PROFITABILITY RATIO

A number of ratios designs to indicate the profitability of the business and grouped in to

the category of profitability ratio. For ex. Gross profit ratio

1. GROSS PROFIT RATIO

This ratio is important for knowing the results of the business during the year. We can

come to know by this ratio that what is the ratio of gross profit is to sales. These shows

inter relationship between sales and cost of goods sold. This ratio can be finding out by

dividing gross profit with sales. By this ratio we can find the percentage of profit on cost

of goods sold. At which level this ratio is satisfactory is not specified clearly. But it is

sufficient enough to pay operating expenses depreciation interest and for payment of

dividend.

G.P. Ratio = Gross Profit * 100

Sales


YEAR 2005-06 2006-07 2007-08

Gross profit (in million) 7704.9 16139.8 24913.3

Sales (in million) 20070.68 43664 67199.9

Gross Profit Ratio (in %) 38.38 36.96 37.07

GROSS PROFIT RATIO

36

36.5

37

37.5

38

38.5

YEAR

PE

RC

EN

TA

GE

G.P.RATIO

G.P.RATIO 38.38 36.96 37.07

2005-06 2006-07 2007-08

INTERPRETATION:-

Gross profit is the result of relation between prices, sales volume and cost. A change in

gross profit ratio can be brought by change in any of these factors.

-Gross profit ratio indicates total cost of goods sold to the revenue.

-It reflects the efficiency of the of the usage of direct inputs at given price.

-The gross profit ratio of the company is 38.38 % . but it has decreased in 2007-2008

upto 36.39 % it means that it has decreased by 4% than previous year because of great

hike in network operating charges. It was increased by 145% than previous year also

highly increase in the liecence upc chareges and roaming access charges .


-The gross profit ratio of the than somewhat increases in the year 2007-2008 because of

high increase in sales revenue from 4366.40 to 6719.99 crore it means risen by 54 % and

manufacturing expenses by 53.65 %.

2. EBIT/ OPERATING PROFIT RATIO

Operating profit ratio can be found out after excluding all non-operating expenses like

interest and taxes that means earning before interest and tax.

YEAR 2005-06 2006-07 2007-08

EBIT (in million) 5076.1 8141.58 13945.03

Sales (in million) 20070.68 43664 67199.9

EBIT Ratio (in %) 18.86 18.65 20.75

INTERPRETATION:-


EBIT RATIO

17

18

19

20

21

YEAR

PE

RC

EN

TAG

E

EBIT RATIO 18.86 18.65 20.75

2005-06 2006-07 2007-08

This ratio is giving the overall picture of the firm. As the profit are high, the firm’s ability

to pay dividend, interest, reserves for debts etc. is sufficient and the returns on their

investments. While low profit or losses shows inefficiency of the firm to sustain the

operations of the business.

-E.B.I.T ratio is decreased in the 2006-2007 than 2005-06 from 18.86% to 18.65%

because of decrease in the Gross profit ratio.

-E.B.I.T. ratio than increase in 2007-2008 upto 20.75 % because of less proportionate

increase in the depreciation as compared to 2005-06 to 2006-07 .

-The depreciation and amortization expenses increases in 2005-06 by 93 % while in the

year 2007-08 . It will increase only bt 30.50 % so the E.B.I.T. increases in the 2007-08 as

compared to 2006-07.

2. NET PROFIT RATIO

This ratio measures the ralationship between net profitsand sales of the firm. It is also

known as net margin. Net profit ratio measures the percentage of each rupee remaining

after all costs and expences including interests and taxes have been deducted. The net

profit ratio is indicative of management’s ability to operate the business with sufficient

success not only to recover from revenues of the period, the cost of mercandies or

services, the expences of operating the business and the cost of the borrowed funds, but

also to leave a margin of reasonable compensation to the owners for providing their

capital at risk.the ratio of net profit to sales essentially express the cost price effectiveness

of the operation.

N.P. Ratio = Net Profit * 100

Net Sales

YEAR 2005-06 2006-07 2007-08

Net Profit (In Million) 1256.03 5020.61 10443.62


Sales (in million) 20070.68 43664 67199.9

Net Profit Ratio (In %) 6.25 11.5 15.54

N.P.RATIO

0

5

10

15

20

YEAR

PE

RC

EN

TA

GE

N.P.RATIO

N.P.RATIO 6.25 11.5 15.54

2005-06 2006-07 2007-08

INTERPRETATION:-

Net profit ratio indicates the management ability to operate the business efficiency. It

also expressed the cost price effectiveness of the operation.

Net profit ratio was 6.25 % in 2005-2006

Net profit ratio is constantly rising from 6.25 % to 15.54% from 2005-06 to 2007-

2008.

Net profit ratio increases in 2006-2007 upto 11.50 % from 6.25 % in 2005-06 because

of less proportionate increase in financial and treasure expenses as compared to service

sales revenue increase by 2007-08 to 117.55 % while the financial and treasure

expenses increases by 2500.1 mn to 3651.06 (22.03 %)


Net profit ratio also increases in 2007-08 than 2006-2007 from 11.50% to 15.54%

because of the decrease in the financial treasury expenditure (from 3051.06 to 2776.42

mn ) and increased in the E.B.I.T

3. EXPENSES RATIO

Another profitability ratio related to sales is the expenses ratio. It is computed by

deviding expenses by sales the term ‘expenses’ includes (1) cost of goods sold, (2)

administrative expenses,(3) selling & distribution expenses,(4) financial expenses, but

exludes taxes, dividends and extraordinary losssesdue to theft, goods destroyed by fire

and so on.the expenses ratio is therefore, very important for analyzing the profitability of

the firm. It should compared over a periodof time with the industry average as well as

firmsof similar type.as a working position low ratio is favourable, while high one is un

favourable.

Expenses Ratio = Expenses * 100 Net Sales

YEAR 2005-06 2006-07 2007-08

Expenses (in million)

Sales (in million) 20070.68 43664 67199.9

Expenses Ratio (in %)

INTERPRETATION:-

The expenses ratio is closely related to the profit margin, gross as well as net.

From the above data we can say that the expenses ratio of the DPL was contiously decline from 2002-03 to 2004-2005, from 98.21% to 93.13% respectively then it was increase in the year up to 95.52% in 2005-06 because of increase in the staff expenses & financial expense. Then it was decrease in the year of 2006-07 up to the 89.15% because


of decrease in the financial expenses % increased in the sales volume compare to other expenses.

The expenses of theindustry are also declining from 137.61% to 113.31%. But the expenses ratio of the company (DPL) is low so it good situation for the company. A decline in expenses shows the increased in the profitability of the company and also shows the efficiency of the management.

4. RETURN ON CAPITAL EMPLOYED/ INVESTMENT (ROCE)

Here the profits are related to the capital employed. The term capital employed refers to

the total longterm funds supplied by the lenders and owners of the firm.thus the capital

employed basis provides a test of profitability related to sources of longterm funds.

Acomparision of this ratio with similar firms, with the industry average and over

timewould provide sufficient insight into how efficient the long-termfunds of owners and

lenders are being used.the higher the ratio, the more efficient is the use of capital

employed.

Return on capital employed

= Net Profit (PBIT) * 100 Capital Employed

YEAR 2005-06 2006-07 2007-08

EBIT (in million) 3785.15 8148.58 13945.03

Capital employed (in million) 57579.75 88815.68 115334.64

ROI or ROCE (in %) 6.57 9.17 12.09


RETURN ON INVESTMENT

0

5

10

15

YEAR

PE

RC

EN

TAG

E

ROI

ROI 6.57 9.17 12.09

2005-06 2006-07 2007-08

INTERPRETATION:-

The ROI increased from 6.57 % in 2005-06 to 9.17 % in 2006-07 because of the less

proportionately increases in the total assets on capital employed of the company as

compared to in the E.B.I.T. the E.B.I.T. increased from 3785.15 to 8148.58 mn while

total capital employed increase from 57579.75 to 88815.68 (only by 54.25 %)

The same thing happens in 2007-08. it was increased upto the 12.09 % in 2007-08 that

was 9.17 % in 2006-07 .

The ROI is increased year by year that means the company is mere efficient in using of

the capital employed.


5. RETURN ON EQUITY SHAREHOLDER’S FUND (NETWORTH)

Where there is no doubt that the preference share hordes are also owners of a firm. The

real owner are the equity shareholders who bear all the risk, participate in management

and are entiteled to all the profits remaining after all outside claims including

preferencedividends are met in full. The profitability of a firm from the owners’ point of

view should therefore, in the fitness of things be assessed in terms of the return to the

ordinrry shareholders. The ratio under reference serves this purpose.

It is calculated by dividing the profits after taxes and preference dividend by the average

equity of the equity shareholders.

Return on shareholders fund (Net Worth)

= Net Profit (Pat)—Preference Dividend * 100

Shareholders’ fund (Net Worth)

YEAR 2005-06 2006-07 2007-08

PAT – pref. div (in million) 821.07 5020.61 10443.62

Net worth (in million) 28423.68 46300.09 49525.2

ROI or ROCE (in %) 2.89 10.84 21.09

RETURN ON NETWORTH

0

5

10

15

20

25

YEAR

PE

RC

EN

TA

GE

RON

RON 2.89 10.84 21.09

2005-06 2006-07 2007-08


INTERPRETATION:-

The Return on networth is constantly is increased by year from 4.42% to 21.09 %

The Return on networh (RON) of the company is highly increasing because of increase in

the Net Profit as compared to the network of the company and there is also decreased in

the share capital of the from 27425.27 mn to 25928.6 mn .As the net profit increased

from 821.07 mn to 5020.61 (by 299.72) while networth increased only by (62.90%).

The Return on networth of the company is increased from 10.84% to 21.09% because of

high increase I net profit by 108% from 5020.61 to 10443.62 in less increase in the

networh. It was increased by 7% only.

6. EARNING PER SHARE (EPS)

EPS measures the profit available to the equity shareholder on a per share basis, that is,

the amount they can get on every share held. It is calculated by deviding the profits

available to the equity share holders by the numbers of the outstanding shares. Earning

per share is the widely used ratio.yet, EPS as a measure of profitability of a firm from the

owner’s point of view, should be used cautiously as it does not recognize the effect of

increase in equity capital as a result of retention of earnings. The another limitation of the

EPS is that it does not reveal how much is paid to the owners as dividend, nor how

belong to the ordinary shareholders (per share basis)

As a profitability ratio, the EPS can be used to draw inferences on the basis of (1) its

trends over a period of time, (2) comparision with the EPS of other firms, and (3)

comparision with the industry average.

Earning per share

= Net Profit (PAT)

No. Of equity shares


YEAR 2005-06 2006-07 2007-08

PAT Available To Eq.Share

Holder(in million)

821.07 5020.61 10443.62

No.of equity shares (in million) 2259.527206 2291.992960 2634.896058

EPS 0.36 2.19 3.96

EARNING PER SHARE

0

1

2

3

4

5

YEAR

RU

PE

ES

EARNING PER SHARE

EARNINGPERSHARE

0.36 2.19 3.96

2005-06 200-07 2007-08

INTERPRETATION:-

This yield can be used by a Share holder while making decisions about the investment

on comparison to other alternative investments.

The E.P.S. when compared to the current market price of the share ,gives measure of

the rate of yield .

The E.P.S. of the company is currently increasing because of the increasing in the

networth.

The earning per share of the IDEA CELLULAR LIMITED is continuousl increased in

the year 2006-07 from 2005-06 ( from 0.36rs. to 2.19 rs.) because of highly increased

in the net profit as well as decreasing in the no. of equity share in the year 2006-07


Then it was also increased in the year 2007-08 because of the increased in the net profit

and relatively less percentage increase in the no.of equity share.

The EPS is continuously increase which express that the compay is effectively uses its

capital and also efficiently uses the loan funds instead of the owner’s fund.it was good

for the share holder’s of the company and they get the satisfactory return.

8. BOOK VALUE PER SHARE (BVPS)

BVPS represents the equity/claim of the equity shareholder on per share basis. It is

computed dividing net worth by the no. of equity shares outstanding. The ratio is

sometimes used as a benchmark for comparision with the market price per share.

However, the book value per share has a serious limitation as a valuation tool as it is

based on the historical costs of the firm. There may be a significant difference between

the market value of assets from the book value of assets. Besides, there may be hidden

assets or other intangible assets of uncertain value.

Book Value per Share

= Net Worth

No. Of equity shares

YEAR 2005-06 2006-07 2007-08

Networth (in million) 23593.68 46300.09 49525.2

No.of equity shares (in million) 2259.527206 2592.860539 2634.896058

Book value per share 10.44 20.20 18.80


BOOK VALUE PER SHARE

0

5

10

15

20

YEAR

RU

PE

ES

BOOK VALUE PERSHARE

10.44 17.86 18.8

2005-06 200-07 2007-08

INTERPRETATION:-

The book value per share of theIDEA cellular limited is continuously increased from

rs.1044 to rs. 17.86 in 2006-07 from 2005-06 because of the increased in the networth.

It was increased in 2007-08 upto rs.18.80 because of the increased in the reserve and

surplus.

It is good news for the shareholders’ but this ratio has a limitation as a valuation tool as

it is based on historical costs of the firm.


2.6.2 LIQUIDITY RATIO

The importance of adequqte liquidity in the sense of the ability of a firm to current/short

term obligations when they become due for payment can hardly be over stressed. In fact,

liquidity is a pre requisite for the very survival of firm. The liquidity ratios measure the

ability of a firm to meet its short-term obligation and reflect the short-term financial

strength/solvency of a firm.

1.0 CURRENT RATIO:- The current ratio is the ratio of total current assets to total current liabilities. It is

calculated by dividing current assets by current liabilities. The current assets of a firm

represents those assets which can be in the ordinary business, converted into cash with in

a short period of time, normally not exceeding one year and include cash and bank

balance etc. The current liabilities defined as liabilities which are short-term maturing

obligations to met, as originally contemplated, with in a year. Thus, the current ratio in a

way measures the margin of safety to the creditors.

The TONDON committee appointed by the RBI.had recommended a current ratio of 2:1.

But later on the view of CHORE committee appointed by the RBI.Recommended a

satisfactory current ratio of 1.33:1.

The formula of calculating current ratio is as under:

Current Ratio

= Current Assets

Current Liabilities

YEAR 2005-06 2006-07 2007-08

Current assets 16373.5 24699.12 15740.02

Current liabilities 7736.31 21519.77 26254.84

Current ratio 2.12:1 1.15:1 0.6:1


CURRENT RATIO

0

0.5

1

1.5

2

2.5

YEAR

TIM

ES

CURRENT RATIO 2.12 1.15 0.6

2005-06 2006-07 2007-08

INTERPRETATION:-

The Current Ratio of the Company decreased from 2.12:1 to 0.6:1 The Current Ratio

of the Company decreased in 2006-07 from 2.12:1 to 1.15:1 because of decrease in the

loans and advances from 13634.95mn to 4040.57mn and increase in sundry creditors

from 5433.94 to 16108.74mn.

The Current Ratio of the Company decreases in 2007-08 up to 0.6:1 because of the

decrease in Cash and Bank Balance from 18197.28 to 4970.55.

The Chore Committee appointed by the R.B.I recommended a satisfaction current

ratio is 1.33:1 but here the company’s current ratio is goes down continuously so it is

not satisfactory.


2. QUICK/ ACID-TEST RATIO As observed above, one defect of the current ratio is that it fails to convey any

information on the composition of the current assets of a firm. A rupee of cash considered

equivalent to a rupee of inventory or recievables. But it is not so. The rupee of cash is

readily available to meet current obligation than a rupee of say, inventory.

The term quick ratio refers to current assets which can be converted into cash

immediately or at a short notice without diminution of value. Thus current assets exludes

the prepaid expenses & inventory.the formula of quick ratio is as follow:

Quick Ratio = quick assets Quick liability

YEAR 2005-06 2006-07 2007-08

Quick assets 16285.39 24520.02 15463.83

Quick liabilities 7362.02 20854.74 23180.92

Quick ratio 2.21:1 1.17:1 0.67:1


QUICK RATIO

0

0.5

1

1.5

2

2.5

YEAR

TIM

ES

QUICK RATIO 2.21 1.17 0.67

2005-06 2006-07 2007-08

INTERPRETATION:-

As the standered ratio the quick ratio of 1:1 is satisfactory.

The quick ratio of the company is decreasing faster from 2.21:1 to 1.17:1 in 2006-07

because of increase in sundry creditors and decrease in the loans and advances.

The quick ratio of the company is decreasing from 1.17:1 to 0.67:1 because of

decrease in cash bank balance.

This situation express the company’s has less quick assets which are used to meet the

quick liability of the current,thus company may come in trouble for a short period of

time.


2.6.3 ACTIVITY OR EFFICIENCY RATIOS:

These are the ratios showing the effectiveness with which the resources of the business are employed. It signifies the efficiency of the management. For example; stock turnover is an activity ratio, showing the number of times the average stock is turned over during the year. Activity or efficiency ratios are as under:Debtor’s ratioCreditor’s ratioFixed assets turnover ratioTotal assets turnover ratioStock turnover ratio

1. INVENTORY TURNOVER RATIO The number of times, the average stock is turned over during the year is known as stock turnover. It is computed by dividing the cost of goods sold by average stock of opening stock and closing stock of the year.

This ratio is very important in judging the ability of management with which it can move the stock. The higher the stock turnover ratio the more profitable the business would be. A firm in such a case will be able to trade on a smaller margin of gross profit. A lower turnover indicates accumulation of slow moving Obsolete and low-quality goods, which is a signal to the management. The formula to calculate this artio is as under.

Cost of goods sold Inventory turnover Ratio = -------------------

YEAR 2002-03 2003-04 2004-05 2005-06 2006-07

Stock TurnoverRatio Of DPL

5.27 9.67 6.98 5.83 6.91

Stock TurnoverRatio of INDUSTRY

34.63 10.69 11.20 7.91 17.8


Average stock

STOCK TURN OVER RATIO

05

1015

2025

3035

40

2002-03

2003-04

2004-05

2005-06

2006-07

YEAR

DPL

INDUSTRY

INTERPRETATION:-

The equity turnover ratio measures the goe quickly inventory are sold. It is a test of efficient inventory management to judge whether the ratio of a firm is satisfactory or not.

The stock turnover ratio of the company is less than the industry average. In the year 2006-07 the stock turnover ratio of the compny was 6.91 times while the industrial average was 17.80 times.

Thus it will adversely affect the ability to meet customer demand as it may not cope with its requirements that is; there is a danger of the firm being out of stock and incurring high stock out cost.

2. DEBTORS TURNOVER RATIOIt is determined by deviding the net credit sales by average debtors outstanding during the year.Net credit sales consist of growth credit sales minus returns, if any, from customers. Average debtors are the simple average of debtors at the beginning and at the end of the year. The analysis of the debtor’s turnover ratio supplements the information regarding the liquidity of one item of current assets of the firm. The ratio measures how rapidly recievables are collected. The high ratio indicative of shorter time-lag credit sales and cash collection.a low ratio shows that debts are not being collected rapidly.the formula is given below:- Debtors Turnover Ratio = Net Credit Sales Average debtors


Debtors Collection period = 12 months Debtor’s turnover

YEAR 2002-03 2003-04 2004-05 2005-06 2006-07

Debtors TurnoverRatio Of DPL

5.93 4.89 4.25 3.87 4.42

Debtors TurnoverRatio of INDUSTRY

5.55 5.89 11.15 6.29 6.23

DEBTORS TURN OVER RATIO

0

2

4

6

8

10

12

2002-03

2003-04

2004-05

2005-06

2006-07

YEAR

DPL

INDUSTRY

INTERPRETATION:-

This ratio indicates the speed with which debtors / accounts receivable are being collected. Thus, it is indicative of efficiency of trade management. The higher the ratio and shorter the collection period, better is the trade credit management and the better is the liquidity of debtors. And vise a versa.

Debtors’ turnover ratio of the company decreased from last five years. It means company delay in the collection of receivables.

The debtor’s turnover ratio of the company is less than the industry average. It does not satisfactory for the company.


The delay oin coolection of receivables would mean that, apart from the interest cost involved in maintaining a higher level of debtors, the liquidity position of the firm would be adversely affected.

3. FIXED ASSETS TURNOVER RATIO

To ascertain the efficiency and profitability of business the net fixed assets are compare

to sales the more the sales in relation to amount investment in fixed assets, the more

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

compare to investment in fixed assets, it means that fixed assets are not adequately

utilized in business of course expressive sales is an indication of over trading and is

dangerous.

If the ratio is low, it indicates that investment in fixed assets is more than what is

necessary and must be reduced. If this ratio is high it means that the fixed assets are being

used effectively to earn profit in business

Fixed Assets Turnover Ratio = Net Sales YEAR 2005-06 2006-07 2007-08

Sales 20070.68 43664 67199.9

Net fixed assets 20087.42 44247.89 78881.56

Net fixed assets turnover ratio 0.999:1 0.987:1 0.852:1


Fixed Assets

NET FIXED ASSETS TURNOVER RATIO

0.75

0.8

0.85

0.9

0.95

1

1.05

YEAR

TIM

ES

NET FIXED ASSETSTURNOVER RATIO

0.999 0.987 0.852

2005-06 200-07 2007-08

INTERPRETATION:-

The fixed assets turnover ratio measures the efficiency of a firm in managing and

utilizing its assets.

The Net fixed assets Ratio is decreased from 0.999 to 0.987 in 2006-07 and 0.852 in

2007-08 because of increase in the plant & machinery from 44927.65 to 77396.05mn

while sales increase from 43500.16 to 67199.9mn

It means that company’s efficiency to managing & utilizing assets is decreasing so the

company should try maximum utilization of its fixed assets to produce goods.

4. TOTAL ASSETS TURNOVER RATIO

The amount invested in business are invested in all assets jointly and sales are effected through them to earn profits so in order to find out relationship between total assets to sales total assets turnover is calculated.

Total Assets Turnover Ratio = Net Sales

YEAR 2005-06 2006-07 2007-08

Sales 20070.68 43664 67199.9


Total Assets

Total assets 57579.75 88815.68 115334.64

Total assets turnover ratio 0.35:1 0.49:1 0.58:1

TOTAL ASSETS TURNOVER RATIO

0

0.2

0.4

0.6

0.8

YEAR

TIM

ES

TOTAL ASSETSTURNOVER RATIO

0.35 0.49 0.58

2005-06 200-07 2007-08

INTERPRETATION:-

The assets turnover atio how ever measures the efficiency of a firm in managing and

utilizing the assets.

The Total Assets turn over of the company increased from 0.35 to 0.49 in 2006-07 and

0.58:1 in 2007-08 because of the highly increases in the Sales than the assets of the

company.

The Company’s Assets turn over ratio is continuously increases that show that the

company has efficiency to managing and utilizing its assets than the previous year.

2.6.4 LEVERAGE RATIO:


The long-term solvency of a firm can be examined by using leverage or capital structure ratios. The leverage or capital structure ratio can be defined as financial ratios which throw light on the long-term solvency of a firm as reflected in its ability to assure the long-term lenders with rehards to (1) periodic payment of interest during the period of loan, & (2) repayment of principal on maturity or predetermined instalments at due dates.

DEBT-EQUITY RATIO

The relation between borrowed funds and owner’s capital is a popular measure of long-

term financial solvency of a firm. This relationship is shown by debt-equity ratio. This

ratio reflects the relative claims of creditors & shareholdersagainst the assets of the firm.

The D/E Ratio is, thus the ratio of total outside liabilities to owner’s total funds.

Debt- Equity Ratio = Total liabilties * 100 Shareholders fund

YEAR 2005-06 2006-07 2007-08

Total long-term debt 29156.07 42515.59 65809.44

Networth 28423.68 46300.09 49525.2

Debt-equity ratio 1.03:1 0.92:1 1.33:


DEBT-EQUITY RATIO

0

0.2

0.4

0.6

0.8

1

1.2

1.4

YEAR

TIM

ES

DEBT-EQUITY RATIO 1.03 0.92 1.33

2005-06 200-07 2007-08

INTERPRETATION:-

The debt-equity ratio is an important tool of financial analysis to appraise the financial structure of a firm.it has important implication from the view point of the creditors, owners and the firm itself.

The greater is the debt-equity ratio, the greater is the risk to the creditors.

The debt-equity ratio increased from 41% to 58% from 2002-03 to 2004-05, after it decreased to 19% upto 2006-07. The D/E ratio decreased upto 19% means for every rupee of out side liability the firm has four (4) rupee of owner’s capital.therefore, a safety margin of 81 percentage available to creditors of the firm. The debt-equity ratio decreased because of the company hsd issed the additional 44, 21,000 shares in 2005-06.

The D/E ratio of the company is less than the industry averages it implies safety view point of creditors as well as firm.

2. PROPRIETORY RATIO

This ratio shows the proportion of proprietors’ funds to total assets employed in the business. The proprietors’ fund or shareholders equity fund consists of share capital, and reseves and surpluses.


The higher the raito the stronger the the financial position of the company as it signifies that proprietors have provided larger funds to purchase the assets. A very high ratio is not desirable. Because it means that insufficient use is being made of outside funds. There can not be a standered ratio for all type of business, but it can be said that the proprietors’ fund should be enough to cover the fixed assets.

According to study under taken by RBI this ratio was between 36-38% in most of Indian countries. It is obtained by dividing proprietors fund by total assets.the formula of calculating this ratio uis as under:

Proprietory Ratio = Proprietots Fund * 100 Total Assets

(IN %)YEAR 2002-03 2003-04 2004-05 2005-06 2006-07

Proprietory Ratio Of DPL

40.17 45.28 44.45 65.95 70.59

TOTAL ASSETS TURN OVER RATIO

0

1020

30

40

5060

70

80

2002-03 2003-04 2004-05 2005-06 2006-07

YEAR

PE

RC

EN

TA

GE

DPL

INDUSTRY

INTERPRETATION:-

The proprietory ratio increased from 40.17% to 70.59% it means the proprietor has invested larger fund to purchage the assets.

The proprietory ratio of the company is not sufficient because of high ratio; it implies unsufficient use made by out side fund.

The ratio increases because of the company gave the bonus share in the 2004-05 and issued the additional shares in 2005-06 for expansion of the new project.thus the proprietory ratio increased faster than previous year.


Because of higher percentage of ratio other parties has less claim in company but too much higher ratio results we cannot get benefit of trade on equity.

3. FIXED CAPITAL – ASSETS RATIO

Normally, the fixed assets of business must be purchased out of fixed capital only, which includes share capital, reserves and surpluses and long term liabilities. This ratio, there fore shows the relationship between fixed capital and fixed assets. The ratio between 1:1 or more for i.e. the fixed capital must be more than fixed assets or must at least be equal to fixed assets. If fixed caapital is less than fixed assets, it would mean that short term funds have been used in purchasing fixed assets. To calculate this ratio following formula is used:

Fixed Capital- Assets Ratio = fixed capital Fixed assets YEAR 2002-03 2003-04 2004-05 2005-06 2006-07

fixed capital-assets ratio of DPL

0.96 1.01 1.22 3.05 2.59

INTERPRETATION:-

The fixed capital-assets turnover ratio of the company increased from the 0.96 times to 2.59 times.

This ratio implies that company has 2.59 rupee to purchage fixed assets of each rupee.

It implies that it is good for the company.


2.7 CASH FLOW STATEMENTPARTICULAR 2005-06 2006-07 2007-08A] Cash Flow From Operational ActivitiesNet profit after tax 1256.03 5020.61 10443.62Adjustments for:Depreciation 2628.80 5636.66 7568.52Amortization of lntagible assets 846.57 1081.39 1199.10Interest charge and forex 2529.57 3051.06 4592.27Profit on sale of current investment (10.39) (81.25) (431.79)Provision for bad &doubtful debts/advances

194.13 368.17 244.94

Employee stock option cost - 37.59Provision for gratuity, leave incashment 20.84 153.54 53.53Provision for fring benefit tax 29.02 59.36 73.69Provision for deferred tax - 10.55 651.30Liability no longer required written back

(91.23) (174.94) (139.73)

Interest received (22.30) (170.76) (849.52)(profit)/loss on sale of fixed assets/assets discarded

1.19 (1.92) 8.89

6126.20 9931.86 13008.79

Operating profit before working capital changes

7382.23 14,952.47 23452.41

Changes in current assets and curren liabilities(increase)/decrease in sundry bebtors (4.17) (590.08) (706.10)(increase)/decrease in inventories 46.55 (69.97) (97.05)(increase)/decrease in other current assets

(124.86) 27.79 163.33

(increase)/decrease in loans and advances

(179.13) (2,043.67) (3585.68)

Increase/(decrease) in current liabilities 1144.16 3,871.52 6223.50Case generated from operations 8264.78 16,148.06 25450.41

Tax paid (including FBT & TDS) (43.27) (96.97) (428.20)Net cash from operating activities 8221.51 16,051.09 25022.21

B) Cash Flow from Investing Activities

0.00

Purchase of Fixed assets & (2924.95) (22,815.17) (55506.36)


intangible assets (including CWIP)Proceeds from Sale of Fixed assets 23.01 19.12 150.80

Payment for purchase of Shares - (100.00) (1.00)

Sale/ (purchase) of Other Investments

- 81.25 (5128.21)

Interest and Dividend Received 32.69 63.91 922.93

Net cash from/ (used in) investing activities

(2869.40) (22,750.89) (59561.84)

C) Cash Flow from Financing Activities

Proceeds from issue of Share Capital

- 25,000.00 3187.52

Share Issue Expenses - (620.04) -

Repayment of Preference Share Capital

- (4,830.00) -

Premium on redemption of Preference Shares

- (2,733.26) -

Proceeds from Long Term Borrowings

- 35,397.20 14968.89

Repayment of Long Term Borrowing

(2217.75) (15,690.05) (1480.44)

Proceeds from Short Term Loan 16120.00 17,874.66 22120.90

Repayment of Short Term Loan (12702.21) (27,958.54) (18625.00)

Proceeds from Foreign Currency Loan

(4099.41) - 5658.20

Interest Paid (2680.71) (3,039.25) (4517.17)

Net Cash from/(used in) financing activities

(5580.08) 23,400.72 21312.90

Net increase/(decrease) in Cash and Cash equivalent

(227.97) 16,700.92 (13226.73)

Cash and Cash equivalent at the beginning

1518.88 1,290.91 18197.28

Add: Cash and Cash Equivalent acquired on account of amalgamation

- 205.45 -

Cash and Cash equivalent at the end 1290.91 18,197.28 4970.55


A firm basically generates cash & spends cash that from a financial point of view. It generates cash when it issues securities, raises a bank loan, disposes an asset, sells a product so on. It spends cash when it redeems securities puechases materials etc. the aivities that generate cash are called source of cash and the activitie that absorb ash are called use of cash.

INTERPRETATION:-

The statements of cash flows provide a summury of source of cash inflows and uses of out flows during a period of time.

Cash Flow from Operating Activity Here in starting of statement we can clearly see that increase in the net profit after tax & extra ordinary items in last five years, it only decrease in the 2003-04. Here the operating profit before working capital changes is more because of increase in dividend income. And the cash generated from operation decrease because of hige trade payables, and also, net cash generated from operating ativities decreasedbecause of hige direct taxes than previous year.

Cash Flow from Investing Activity

Here, the cash from investing activities is more than previous year because of sales of investment and high dividend income receved while in the previous year the company has purchased the investment.

Cash Flow from Financing Activity

In the previous year cash use from financing activities increases because of preceeds from issuing shares while in the current year the cash flow from financing activities decreases because of high interest and financial charges and dividend ad dividend taxes paid.


2.8 COST OF PRODUCTIONCost of production is depending on the fixed cost and the variable cost incurred in the production. In variable cost include the material use in the production and power, fuel, water and packaging and other manaufacturing expenditure. In fixed expenditure cost includes staff expenses, financial expenses etc. in cost of production, raw material price is mostly affected n the production.PARTICULAR 2006-07 2005-06

A] VARIABLE COST

(a)Raw Material Consumed

Opening stock 101.81 129.51

Purchase 2125.66 1556.05

(-) closing stock 1928.79 101.81

Total rs. 2034.58 1583.75

(b)packaging material consumed


Purchase 63.86 39.40

(-) closing stock 7.38 3.2


Total rs. 59.68 40.88

(c)E.T.P. material consumed


Purchase 17.23 132.55

(-) closing stock 0.26 0.38

Total rs. 17.35 13.67

(d)Power & fuel consumed

Electric power & burning 62.13 63.85

Fuel purchased & consumed 1.4 1.59

Gas consumption charges 80.8 6.41

Total rs. 144.32 129.54

(e) Other mfgs. Expenses

Transportation 27.47 21.97

Conversion charges 61.522 42.98

Factory expenses 5.02 13.83

Labour charges 21.44 20.7

Forwarding & handling charges 62.03 49.94

Pallatisation charges 1.62 3.12

Consumable stores 32.78 0

Total rs. 211.89 152.55

TOTAL MFGS.EXP. 2467.83 1920.39

B] FIXED COST

Salary, Wages & bonus 99.03 83.49

Repairs& maintainance 80.95 84.61

Administrative expenses 156.36 15.34

Interest & financial charges 47.46 50.48

Depreciation 47.94 44.12

Total fixed cost 431.74 416.39


TOTAL COST 2847.10 2333.92

CHART OF TOTAL COST OF PRODUCTION

cost of production comarision

0

10

20

30

40

50

60

70

80

expenses

cost

(in

%)

2005-06

2006-07

INTERPRETATION:-


Raw Material:- Here, raw material increased by 1.98% because of increase in the cost of purchasing raw material than the previous year.

Packaging:-The packaging cost increase by 0.25% inspite of increased in closing stock because of increased in the more than 150% than pprevious year.

E.T.P. Material:-There is a normal increase in the E.T.P. material than the previous yearbecause of increase in the purchasing of material.by more than 180% than previose year and increase in the closing stock.

Other Manufacturing Expences:-The other manufacturing expenses increase by 0.8% because of increase in the consumable stores than previous year.

Salary, Wages and Bonus:-Here, salary and wages includes salary & wages to employees, salary to directors and bonus charges increased than previous year but it decrease in the concept of total cost of production than previous year.

Repairs & Maintenance:-Repairs and maintenance decreased by 0.79% because of decreased in the repairs and maintenance from 8.5 lacs to 8 lacs than previous year.

Interest and Financial Charges:-It decreased because of decreased in the interest on loan from 5, 00,000 to 4, 75,000 as compared to previous year.

Administrative Expenses:-Here the administrative expenses increased, but decreased in the concept of cost of production than previous year.

Depreciation:-The depreciation decreased related with cost of production than previous year by 0.21%


3. FINDING AND RECOMMANDETION

The company is growing fastly in term of sales, net profit, gross profit as compare to industry average, and the company’s second unit is expected to complete latest by Jan.2008 and its commercial production will start from feb.2008.

Company’s gross margin decrease in the current year because of highly increase in the manufacturing cost and decrease in the stock so the company has to try to decrease in the operting cost and try to effective utilization of the rawmaterial.

The company has accounted about 75% export sales out of total sales. India is the second largest food producing country next to the china in the world and the food processing industry is growing fastly in the India, so company has to expand its domestic market, thus company can increase the sales.


The company’s reserve and surplus increae year after year so company has to give more dividend thus company’s reputation increase.

The company’s total assets turnover ratio decreased continuously while increase in the industry average company shall try to effective utilization of its resources.

The company shall try to increase its products quality and productivity and also to make more coustomer to increase the domestis as well as export sales and get the opportunity to grow with the growth of food processing industry.

The company’s debtor’s turnover ratio decline it means that company delays in the receivables so the company shall try to make fast collection of debt for it company shall try to make such offer for ex. Gives discout etc. thus company can increase its networking capital.


4. CONCLUSION

Dynemic product limited is a well-developed company in the dyes & pigment industry India’s one of the manufactures.

The organization wants to expand new project at ankleshwar to produce food colour and lack colour to expand the domestic market.the Dynemic products limited is an enviornmetal oriented unit and also believe in research and development thus they always try to improve their quality and the company also working for the social welfare.

From above financial data we conclude that the company’s profitability is continuous increasing as compare to the industry, but the EPS decreases because of issuing additional shares in 2005-06 and also decrease the assets turn over ratio in terms of both fixed and total assets than industry, because of high Capital work in progress.

To expanding themarket reach as well as product range the company have formed a 100% subsidiary company Dynemic USA Inc in the USA to capture the market of USA.

During the training that I got at this organization was an excellent and it was superb experience for me to undergo this 28 days’ training.


5. BIBLIOGRAPHY

Books and Reports

“Finance Management” by Khan& Jain, Fifth Edition, published by Tata Mc Graw-Hill Publishing Company Limited.Prospectus of the company.Annual Report of Dynemic products limited of 2006-07 & 2005-06

Web sites: -www.dynemic.comwww.google.comwww.bseindia.comwww.asiancerc.com


http://www.asiancerc.com/

http://www.bseindia.com/

6. ANNEXUREDynemic Products Ltd. : Profit and Loss (Rs in Cr.)

0703-(12) 0603-(12) 0503-(12) 0403-(12) 0303-(12) Income :

Operating Income 32.31 28.53 25.98 25.30 19.53

Expenses

Financial Expenses 0.47 0.52 0.46 0.34 0.32

Personnel Expenses 0.99 0.88 0.79 0.61 0.54

Selling Expenses 0.00 0.36 0.81 0.00 0.00

Administrative Expenses 1.56 1.67 1.43 1.96 1.26

Expenses Capitalized 0.00 0.00 0.00 0.00 0.00

Operating Expenditure 3.02 3.43 3.49 2.91 2.12

Operating Profit 29.29 25.10 22.49 22.39 17.41

Other Recurring Income 1.42 0.78 0.76 1.41 0.49

Adjusted PBDIT 30.71 25.88 23.25 23.80 17.90

Provisions Made 0.00 0.00 0.00 0.00 0.00

Depreciation 0.48 0.44 0.42 0.38 0.32

Other Write offs 0.01 0.01 0.01 0.00 0.00

Adjusted PBT 30.22 25.43 22.82 23.42 17.58

Tax Charges 1.02 1.38 1.52 0.76 0.91

Adjusted PAT 29.20 24.05 21.30 22.66 16.67

Non Recurring Items 0.00 -0.07 0.13 0.00 0.00

Other Non Cash adjustments -0.11 0.02 0.03 0.69 -0.80

Reported Net Profit 2.67 2.46 2.05 1.25 1.56

Earnigs Before Appropriation 5.74 4.59 5.85 4.37 3.30

Equity Dividend 1.13 1.13 0.44 0.34 0.62

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Retained Earnings 4.41 3.30 5.36 3.99 2.61

0703-(12) 0603-(12) 0503-(12) 0403-(12) 0303-(12)

CAPITAL & LIABILITIES

Owners' Fund

Equity Share Capital 11.33 11.33 6.91 3.45 3.42

Share Application Money 0.00 0.00 0.00 0.00 0.00

Peference Share Capital 0.00 0.00 0.00 0.00 0.00


Reserves & Surplus 15.19 13.93 2.41 4.31 2.76

Loan Funds

Deposits 0.00 0.00 0.00 0.00 0.00

Borrowings made by the bank 0.00 0.00 0.00 0.00 0.00

Other Liabilities & Provisions 5.80 8.00 6.28 5.78 6.67

Total 32.32 33.26 15.60 13.54 12.85

ASSETS

Cash & Balances with RBI 1.12 1.44 0.19 0.13 0.11

Money at call and Short Notice 0.00 0.00 0.00 0.00 0.00

Investments 10.40 13.20 0.04 0.04 0.03

Advances 0.00 0.00 0.00 0.00 0.00

Fixed Assets

Gross Block 11.16 10.51 9.63 9.25 7.64

Less: Revaluation Reserve 0.00 0.00 0.00 0.00 0.00

Less: Accumulated Depreciation 2.81 2.36 1.97 1.61 1.23

Net Block 8.35 8.15 7.66 7.65 6.41

Capital Work-in-progress 1.88 0.11 0.00 0.00 0.00

Other Assets 16.96 16.89 13.30 9.46 8.94

Miscellaneous Expenses not written off 0.02 0.03 0.04 0.00 0.01

Total 38.73 39.82 21.23 17.28 15.50

Note

Contingent liabilities 1.19 0.26 0.00 0.00 0.00

Book Value of Unqouted Investment 0.00 13.20 0.04 0.00 0.00

Market Value of Qouted Investment 0.00 0.00 0.00 0.00 0.00

Dynemic Products Ltd. : Balance Sheet (Rs in Cr.)


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