Financial Analysis

Of

ITC Limited
A
Project Report
Presented to

Dr. Ashwin Modi

Faculty Member
S.K School of Business Management,
Hemachandracharya North Gujarat
University
On
September, 2014
In partial fulfillment of the requirement for the
Managerial
Accouting-1 Course in the Master of Business
Administration Program
By: 1).BAROT RAVI .B 2).PRAJAPATI KULDIP.J
(Roll No.2)

(Roll No.42)
1

EXECUTIVE SUMMERY
Our Financial Analysis project is on ITC Limited Main Object of
this project is to
know the financial strengths and
weaknesses of ITC Limited. For that we had
references the five
conclusive years annual reports from 2010 to 2014. In addition to
these annual report of ITC Ltd. I had also used books and various
web based information to cover the current trends of the
company and its competitors, as well as whole industry. To
analyze the firm, we have used various calculation based ratios
and also study some other statements like Balance Sheet, P &L
Account, DU Pont chart etc.
We are analyzing the annual report of ITC Limited For last five
years. The project presents the details of financial position of
company. We are required to prepare this project report to
develop the financial analysis and interpretation skill. The project
enables us interact with the Real Corporation, real economy and
real words problem.
Mere a study of annual report doesnt provide full information of
firm. Comprehensive study of various financial aspects requires
covering other statement also. The purpose of annual report is to
shareholders, investors and creditors only. It doesnt focus on
internal accounting and situation business.
A prospective managers work is to get data, pit them in to logical
order, analyze and derive correct decision from the data. So a
potential manager must have an ability to analyze, interpret and
derived optimal solution of the problem. To prepare various
statements do not mean we are on path but the task is to decision
making and forward.

PREFACE
We had decided to prepare the project report on ITC
Limited Under the subject of managerial Accounting.
By preparing the project report we can understand the
original scenario. Generally we have prepared this project
report purely based on annual report of company.
The following report by our sincere effort including all the possible
aspect
of
TLC
Limited
Company,
we
invite
helpful
recommendations or suggestions that well further enrich our
knowledge regarding the subject.

S.K SHOOL OF BUSINESS MANAGEMENT,

Hemchandracharya North Gujarat University,
Patan.
Date: September 30,2014
Place: Patan

AKNOWLEDGEMENT
Quality is never as Accident ........... At this moment of us
substantial enhancemant, we hardly inough words to express our
gratitude towards those who were constantly involve with us
during this project. With a sence who provid halp and guidance to
make thi project successfuly.
First of all, our heartfelt thank to Dr.Ashawin Modi, who helped us
in every possible manner .He ensured a proper environment to
work in. He allowed complete freedon to complete our work. He
also ensured that we meet all those people who could make us
understand the systen. We also thanks to all the members for
their selfless co-operation and help for complete this project. The
opportunity to study and work here added a lot of knowledge,
experience and confidence.
From bottom of our heart we thank to all faculty members of S.K.
School of Business Management, Patan for providing
guidance and help to complete this project. We thank for their
active involvement in the project. They always with us when we
needed any type of guidance. Their guidance and inspiration
changed this project into a fruitful and meaning exercise.
At the last but not least,our special thanks also to all those whose
names have noted appeared here but whose contrivutions have
noted gone unnoticed.

CONTENTS
Sub.Poin
Ch.No t
Contents

Page No.

Executive Summary
Preface
Acknowledgement

1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8

introduction of company
History
Nature of Business
Product Profile
Background
Registrar's Directors
Board of Directors
Auditors
Share pattern

1
2
7
8
8
10
11
12
13

2.1
2.2
2.3
2.4

Analysis of Balance Sheet

Balance Sheet
Trend Analysis of Balance Sheet
Vertical Analysis of Balance Sheet
Horizontal Analysis of Balance Sheet

15
16
17
23
28

3.1
3.2
3.3
3.4

Analysis of Profit & Loss Account

Profit & Loss Account
Trend Analysis of Profit & Loss A/c
Vertical Analysis of Profit & Loss A/c
Horizontal Analysis of P&L A/c

30
31
33
37
40

4.1

Analysis of Cash Flow Statement 41

Cash Flow Statement
42

5.1
5.2
5.3
5.4

Ratio Analysis
Liquidity Ratio
Profitability Ratio
Assets Turn Over Ratio
Financial Struchar Ratios

45
47
51
57
65
5

5.5
6
6.1
7
8

Valuation Ration
70
75
Du Point Analysis
76
Du Point Chart
Recommendations & Suggestions 79
90
Technical Analysis

LIST OF TABLE
Sr.No Graps

Graphs

Page
6

No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33

1.8
2.1
2.2
2.3
2.4
3.1
3.2
3.3
3.4
4.1
5.1.1
5.1.2
5.1.3
5.2.1
5.2.2
5.2.3
5.2.4
5.2.5
5.3.1
5.3.2
5.3.3
5.3.4
5.3.5
5.3.5
5.4.1
5.4.2
5.4.3
5.4.4
5.5.1
5.5.2
5.5.3
5.5.4
6.1

No.
share Holding Pattern
Statement of balance Sheet
Tread Statement of Balance Sheet
Vertical Statement of Balance Sheet
Horizontal Analysis
Statement of Profit & loss Account
Tread Statement of Profit & Loss Account
Vertical Statement of Profit & loss
Account
Horizontal Statement of Profit & loss
Account
Cash flow statement
Current Ratio
Quick Ratio
Net Working Capital
Gross Profit ratio
Operating Profit Ratio
Net Profit Ratio
Rate of Return On Investment
Rate of Return On Equity
Total Assets Turn Over Ratio
Net Fixed Assets Turn Over
Inventory turn over
Average Age of Inventories
Debtors Turn Over
Average Age Of Debtors
Equity Ratio
Debt Ratio
Dept Equity Ratio
Interest Coverage Ratio
Earning Per Share(EPC)
Dividend Pay Out Ratio
Dividend Yield ratio
P/E ratio
Du Point Chart

14
16
17
23
28
31
33
37
40
42
47
49
50
51
52
53
54
56
58
59
60
60
62
63
66
67
67
69
71
71
73
74
76

LIST OF GRAPH AND DIAGRAMS

Sr.No.
1
2

Graph No.
1.8
2.1

Graph Name
Share holding pattern
Balance sheet

Page No.
14
16
7

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44

2.2
2.2.1
2.2.2
2.2.3
2.2.4
2.2.6
2.3
2.4
3.1
3.2
3.2.1
3.2.2
3.2.3
3.2.4
3.3
3.3.1
3.3.2
3.3.3
3.3.4
3.4
4.1
5.1
5.1.1
5.1.2
5.1.3
5.2.1
5.2.2
5.2.3
5.2.4
5.2.5
5.3.1
5.3.2
5.3.3
5.4.1
5.4.2
5.4.3
5.4.4
5.5.1
5.5.2
5.5.3
5.5.4
6.1

Trend Analysis of Balance sheet

Share capital
Total reserve
Secure loan
Unsecure loan
Investment
Vertical Analysis of Balance sheet
Horizontal balance sheet analysis
P & L statement
Trend analysis of p & l statement
Income
Total expenditure
Profit before tax
Profit after tax
Vertical analysis of p & l statement
Total revenue
Total expenditure
Profit before tax
Profit available for Appropriation
Horizontal Analysis
Cash flow statement
Liquidity ratio
Current ratio
Quick Ratio
Net working capital
Gross profit ratio
Operating profit ratio
Net profit ratio
Rate of return on investment (ROI)
Rate of return on equity (ROE)
Total assets turn over ratio
Net fixed assets turn over ratio
Debtors turnover ratio
Equity ratio
Debt ratio
Debt-Equity ratio
Interest coverage ratio
Earnings per share
Dividend per share
Dividend Yield ratio
P/E Ratio
Du-Point Chart

17
18
18
19
20
22
23
28
31
33
33
34
35
36
37
37
38
38
39
40
42
47
47
49
50
51
52
53
54
56
58
59
62
66
67
67
69
71
71
73
74
76

CHAPTER: 1.
Introduction of Company
9

1.1 History
1.1.1

General Information

1.1.2

Milestone

1.2

Nature of Business

1.3 Product Profile

1.4 Background
1.5 Registrar Details
1.6 Board of Directors
1.7 Auditors
1.8 Share Pattern

1.1 HISTORY
1.1.1 General information

10

ITC Ltd (ITC) was incorporated on August 24, 1910, under the name
Imperial Tobacco Company of India Ltd. to make cigarettes and
tobacco. In 1975, the company entered the hospitality business with
the acquisition of ITC-Welcome group Hotel Chula. the name of the
Company was changed to I.T.C. Limited in 1974. In recognition of the
Company's multi-business portfolio encompassing a wide range of
businesses - Cigarettes & Tobacco, Hotels, Information Technology,
Packaging, Paperboards & Specialty Papers, Agri-Exports, Foods,
Lifestyle Retailing and Greeting Gifting & Stationery - the full stops in
the Company's name were removed effective September 18, 2001.
The Company now stands rechristened 'ITC Limited'.
ITC is one of India's foremost private sector companies with a market
capitalization of nearly US $ 14 billion and a turnover of over $ 5
billion. ITC is rated among the World's Best Big Companies, Asia's
'Fab 50' and the World's Most Reputable Companies by Forbes
magazine, among India's Most Respected Companies by
BusinessWorld and among India's Most Valuable Companies by
Business Today. ITC ranks among India's `10 Most Valuable
(Company) Brands', in a study conducted by Brand Finance and
published by the Economic Times. ITC also ranks among Asia's 50
best performing companies compiled by Business Week.
ITC has a diversified presence in Cigarettes, Hotels, Paperboards &
Specialty Papers, Packaging, Agri-Business, Packaged Foods &
Confectionery, Information Technology, Branded Apparel, Personal
Care, Stationery, Safety Matches and other FMCG products. While ITC
is an outstanding market leader in its traditional businesses of
Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is
rapidly gaining market share even in its nascent businesses of
Packaged Foods & Confectionery, Branded Apparel, Personal Care and
Stationery. As one of India's most valuable and respected
corporations, ITC is widely perceived to be dedicatedly nationoriented.
ITC's Agri-Business is one of India's largest exporters of agricultural
products. ITC is one of the country's biggest foreign exchange earners
( $ 3.2 billion in the last decade). The Company's 'e-Choupal'
initiative is enabling Indian agriculture significantly enhance its
competitiveness by empowering Indian farmers through the power of
the Internet. This transformational strategy, which has already
11

become the subject matter of a case study at Harvard Business

School, is expected to progressively create for ITC a huge rural
distribution infrastructure, significantly enhancing the Company's
marketing reach.
ITC's wholly owned Information Technology subsidiary, ITC Infotech
India Ltd, provides IT services and solutions to leading global
customers. ITC Infotech has carved a niche for itself by addressing
customer challenges through innovative IT solutions.
Its beginnings were humble. A leased office on Radha Bazar Lane,
Kolkata, was the centre of the Company's existence. The Company
celebrated its 16th birthday on August 24, 1926, by purchasing the
plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru
Road) Kolkata, for the sum of Rs 310,000. This decision of the
Company was historic in more ways than one. It was to mark the
beginning of a long and eventful journey into India's future. The
Company's headquarter building, 'Virginia House', which came up on
that plot of land two years later, would go on to become one of
Kolkata's most venerated landmarks. The Company's ownership
progressively Indianised, and the name of the Company was changed
to I.T.C. Limited in 1974. In recognition of the Company's multibusiness portfolio encompassing a wide range of businesses Cigarettes & Tobacco, Hotels, Information Technology, Packaging,
Paperboards & Specialty Papers, Agri-Exports, Foods, Lifestyle
Retailing and Greeting Gifting & Stationery - the full stops in the
Company's name were removed effective September 18, 2001. The
Company now stands rechristened 'ITC Limited'.
Though the first six decades of the Company's existence were
primarily devoted to the growth and consolidation of the Cigarettes
and Leaf Tobacco businesses, the Seventies witnessed the beginnings
of a corporate transformation that would usher in momentous
changes in the life of the Company.
ITC's Packaging & Printing Business was set up in 1925 as a strategic
backward integration for ITC's Cigarettes business. It is today India's
most sophisticated packaging house.
In 1975 the Company launched its Hotels business with the
acquisition of a hotel in Chennai which was rechristened 'ITCWelcomgroup Hotel Chula'. The objective of ITC's entry into the hotels
business was rooted in the concept of creating value for the nation.
ITC chose the hotels business for its potential to earn high levels of
12

foreign exchange, create tourism infrastructure and generate large

scale direct and indirect employment. Since then ITC's Hotels
business has grown to occupy a position of leadership, with over 100
owned and managed properties spread across India.
ITC's foray into the marketing of Agarbattis (incense sticks) in 2003
marked the manifestation of its partnership with the cottage sector.
ITC's popular agarbattis brands include Spriha and Mangaldeep
across a range of fragrances like Rose, Jasmine, Bouquet,
Sandalwood, Madhur, Sambrani and Nagchampa.
ITC introduced Essenza Di Wills, an exclusive range of fine fragrances
and bath & body care products for men and women in July 2005.
Inizio, the signature range under Essenza Di Wills provides a
comprehensive grooming regimen with distinct lines for men (Inizio
Homme) and women (Inizio Femme). Continuing with its tradition of
bringing world class products to Indian consumers the Company
launched 'Fiama Di Wills', a premium range of Shampoos, Shower
Gels and Soaps in September, October and December 2007
respectively. The Company also launched the 'Superia' range of
Soaps and Shampoos in the mass-market segment at select markets
in October 2007 and Vivel De Wills & Vivel range of soaps in February
and Vivel range of shampoos in June 2008.

1.1.2 Mile Stone

ITC was incorporated on August 24, 1910 under the name of
'Imperial Tobacco Company of India Limited'
In 1975 through its acquisition of a hotel in Chennai , the
company launched its hotel business by the name 'ITCWelcomgroup Hotel Chula'.

13

 In 1979 it entered into manufacturing

packaging & printing business.

paperboards,

In 1985 it set up Surya Tobacco Co. in Nepal, now a

subsidiary of ITC.
In 1990 ITC set up the Agri Business Division for export of
agri-commodities based on partnership with farmers, for
revolutionizing the rural agricultural sector.
In 2000, ITC launched a line of greeting cards under the
brand name Expressions. There has been further extension
in productline with introduction of gift wrappers, autograph
books slam books and stationery.

In 2000, it entered in lifestyle retailing business with the

Wills Sport, a range of international quality wear for men and
women.

ITC InfoTech India was set up in 2000 to provide outsourcing

solutions to manufacturing, BFSI (Banking, Financial Services
& Insurance), CPG&R (Consumer Packaged Goods & Retail),
THT (Travel, Hospitality and Transportation) and media &
entertainment.
ITC entered food business in 2001, its product line in this
segment consist of brands 'Kitchens of India', Aashirvaad
atta, Candyman, Sunfeast & Bingo!.
In 2002 it entered in marketing of matches, ITC now markets
popular safety matches brands like iKno, Mangaldeep, Aim,
Aim Mega and Aim Metro.
In 2003 ITC's forayed into the marketing of Agarbattis
(incense sticks), creating brands like Mangaldeep, Spriha,
Aim Metro and so on.
ITC introduced Essenza Di Wills, an exclusive range of fine
fragrances and bath & body care products for men and
women in July 2005.
The Company also launched the 'Superia' range of Soaps
and Shampoos in the mass-market segment at select
markets in October 2007 and Vivel De Wills & Vivel range of
soaps in February and Vivel range of shampoos in June 2008.
14

 In 2013- ITC Hotels tied up with RP Group Hotels & Resorts

to manage 5 hotels in India and Dubai, under ITC Hotels 5star WelcomHotel brand and the groups mid-market to
upscale Fortune brand.
Chairman Mr. Y C Deveshwar was presented the Lakshmipat
Singhania-IIM Lucknow
National
Leadership Award by Shri M Hamid Ansari, Hon'ble Vice
President of India.
ITCs Chief Financial Officer, Mr Rajiv Tandon, was ranked the
Best Overall CFO at the Business Today-Yes Bank Best CFO
Awards 2013. He was also declared the winner in the
category of Sustained Wealth Creation (large companies).
ITC was ranked 3rd in Corporate Reputation among 40
leading companies in the Nielsen Corporate Image Monitor
2013-14. ITC was also perceived to be the Company most
active in CSR' for the third year in a row.

1.1.3 Future Prospects

As a Company deeply rooted in India's soil, ITC is inspired by the
opportunity to serve a larger national purpose and create
enduring value for its stakeholders. This abiding vision has
spurred innovation, creativity and vitality to ensure a substantial
and growing contribution to the Indian Economy, whilst
simultaneously
contributing
significantly
to
enhancing
environmental capital and sustainable livelihoods.
ITCs unique and multi-faceted enterprise strengths including
deep consumer insights, brand building capability, cutting-edge
Research & Development, globally benchmarked manufacturing
infrastructure, agri-sourcing advantages and extensive rural
linkages, trade marketing & distribution network, committed
and competent human resources, constitute a robust and
formidable foundation that has enabled the Company to create
multiple drivers of growth in its
15

chosen portfolio of businesses that spans FMCG, Hotels,

Paperboards and Packaging, Agri-Business and Information
Technology. These enterprise strengths coupled with the
opportunities arising out of rising disposable incomes,
urbanization, a favorable demographic dividend and growth in
rural areas provide competitiveness to ITCs strategy of creating
enduring value for its stakeholders and the nation. ITC continues
to blend its diverse competencies
residing in various businesses to enhance the competitive power
of the portfolio and position each business to attain leadership on
the strength of
world-class standards in quality and costs. The Company has also
crafted an effective strategy of organization and governance
processes to not only
enable focus on each business but also harness the diversity of its
portfolio to create unique sources of competitive advantage. ITCs
Foods business, for example, gains competitive advantage from
enterprise synergies existing in ITC
e-Chou pals agri-sourcing capabilities, cuisine expertise of its
Hotels business, brand building capabilities, in-house packaging
competencies as well
as an unmatched distribution network

1.2 Nature Of Business

As a Company deeply rooted in India's soil, ITC is inspired by the
opportunity to serve a larger nationalpurpose and create enduring
value for its stakeholders. This abiding vision has spurred
innovation,creativity and vitality to ensure a substantial and
growing contribution to the Indian Economy, whilstsimultaneously
contributing significantly to enhancing environmental capital and
sustainable livelihoods.
The Companys strategic intent to create enduring value by
investing in new engines of growth is powered by its
strong and competitive capabilities in R&D, innovation and
technology and an array of institutional strengths including
deep consumer insights, brand building capability, trade
marketing and distribution infrastructure, focus on quality
16

and world-class manufacturing practices, strong rural linkages

and outstanding human resources.
ITC endeavours to embed the principles of sustainability, as far as
practicable, into the various stages of product or service lifecycle,
including
procurement
of
raw
material/service,
manufacturing of product or delivery of service, transportation of
raw materials and finished goods, and disposal by consumers. The
Board approved policy on Life-cycle Sustainability details the
Companys approach in this respect. Further details on this Policy
can be accessed from the ITC portal www.itcportal.com and will
be available in the ITC Sustainability Report 2014. Delivering bestin-class quality of goods and services forms the bedrock of ITCs
pursuit of sustainable value creation. This commitment to
excellence in quality is manifest in its portfolio of world-class
brands, and is driven by unwavering attention to efficiency of
design, processes, sourcing and distribution in order to provide
superior and differentiated offerings to customers.

1.3 Product Profile

Businesses
Services
FMCG:
Businesses (Bakery and

Products /
Branded Packaged Foods
Confectionery Foods; Snack

Foods; Staples, Spices and

Ready to Eat Foods); Apparel;
Education and Stationery
Products; Personal Care
Products; Safety Matches and
Agarbattis; Cigarettes, Cigars,
Smoking Mixtures etc.

17

Hotels:
Paperboards, Paper & Packaging:
Specialty Papers &

Hoteliering.
Paperboards, Paper including
Packaging including Flexibles.

Agri Business:
spices, coffee and

Agri-commodities such as soya,

leaf tobacco.

Locations where business activities

operations are spread
are undertaken by the Company:
locations, hotels

The Companys businesses and

across the country. Details of plant
owned / operated by the

Company, stores etc. are

provided in the section, Report
on Corporate
Governance, in the Report and
Accounts.
Markets served by the Company:
national presence

ITCs products and services have a

and many products are exported

to a numb countries.

1.4 Background
LISTING DETAILS
Corporate Identity Number (CIN)
L16005WB1910PLC001985
of the Company:
Name of the Company:

ITC Limited
18

Address of the Registered Office:

37 J L Nehru

Virginia House,
Road,

Kolkata 700 071

Website:
www.itcportal.com
E-mail id:

ccd@itc.

BSE Code

500875

NSE Symbol

ITC

ISIN NO
INE154A01025
Face Value

Listing
BSE,NSE,Kolkata
BSE Group
Indices
BSE100, BSE200, BSE500,

A
SENSEX,
BSEFMC,

GREENEX, CARBONEX ,
NIFTY,
CNX500, CNX100,CNXFMCG,
CNXCONSUMP, CNXDIVOPPT,
CNXLOWVOL, NI15

19

Contact details
Address
House,37 Jawaharlal Nehru

Virginia
Road,

Kolkata,West Bengal-700071 .
Phone No
22889371/22886426

91-033/22880034

(Phone)
Fax
22882358 (Fax)
Email ID

[email protected]

Website
www.itcportal.com

1.5 Registers Details

Registrar
Registrar's Office
House,37 Jawaharlal Nehru

ITC Ltd.
Virginia
Road,

,Kolkata 700071
Registrar Phone
9371 / 2288 6426 / 2288

033-2288
0034

(Phone)
Registrar Fax
2358 (Fax)

033-2288

20

Registrar Email Id

[email protected]

Registrar Website
www.itcportal.com

1.6 Board of Directors

Chairman:
Yogesh Chander Deveshwar
Nakul Anand
Pradeep Vasant Dhobale
Kurush Noshir Grant
Executive Directors:
Anil Baijal
Angara Venkata Girija Kumar
Serajul Haq Khan
Robert Earl Lerwill
Suryakant Balkrishna Mainak
Sunil Behari Mathur
Pillappakkam Bahukutumbi Ramanujam
Sahibzada Syed Habib-ur-Rehman
Anthony Ruys
Meera Shankar
Krishnamoorthy Vaidyanath
Non-Executive Directors:
Corporate Management
21

Committee
Executive Directors:
Y C Deveshwar Chairman
N Anand Member
P V Dhobale Member
K N Grant Member
Executives
A Nayak Member
T V Ramaswamy Member
S Sivakumar Member
K S Suresh Member
R Tandon Member
B B Chatterjee Member & Secretary
Chief Financial Officer:
Rajiv Tandon
Executive Vice President & Company Secretary:
Biswa Behari Chatterjee
General Counsel:
Kannadiputhur Sundararaman Suresh

1.7 Auditors
M/s.
Deloittee Haskins & Sells, Chartered Accountant, the
Statutory Auditors of the company retire at the ensuring Annual
General Meeting and ate eligible for re-appointment. They have
furnished a certificate regarding their eligibility for re22

appointment as Statutory Auditors of the Company, pursuant to

Section 224(1B) of the company Act,1956. Observations Made in
the Auditors Report are self-explanatory and therefore, do not call
for any further comment.

1.8 Share Pattern

Tabal1.8No. of %
S

(A)Institutional
Shareholding

No. of Shares held

Financial Institutions,
Insurance Companies,
Mutual Funds and Banks
Foreign Institutional
Investors
Sub-Total (A)
(B)Non-Institutional
Shareholding
Foreign Companies
NRIs, Foreign Nationals
and Qualified Foreign
Investment
Bodies Corporate
Public and Others
Sub-Total (B)
Public Shareholding
(A+ B)
Shares underlying
Global Depository
Receipts
Total

2,75,77,23,494

34.68

1,53,21,06,319

19.26

4,28,98,29,813

53.94

2,41,35,09,216
4,24,31,363

30.35
0.53

35,40,95,975
83,25,34,963
3,64,25,71,517
7,93,24,01,330

4.45
10.47
45.80
99.74

2,07,81,620

0.26

7,95,31,82,950

100.00
23

1.8 Share holding pattern

Institutional Shareholding:-

53.94

Non-Institutional Shareholding:- 45.80

Shares underlying Global Depository Receipts:- 0.26

Interpretation:
As we can see, total Institutional Shareholding has 53.94%
shares out of the companys total share capital and NonInstitutional Shareholding has a 45.80% share and a Shares
24

underlying Global Depository Receipts has a 0.26% share. And we

can says that company is controlling by the their well educated
and specialist management so company giving good dividend on
share.

Chapter:2
Analysis of Balance
Sheet

2.1
2.2
2.3
2.4

Balance Sheet
Trend Analysis
Vertical Analysis
Horizontal Analysis

25

2.1 Balance Sheet

Balance Sheet of Torrent Power Limited From March-2010
toMarch-2014.
Table 2.1
Year End
SOURCE OF FUND
Shareholders Funds
Share capital
Total Reserve

Loan Fund
Secured Loan
Unsecured Loan
Deferred Tax-Net

APPLICATION OF FUNDS
Fixed Assets
Gross Block
Less Depreciation
Net Block
Capital Work in Process

20092010

20102011

20112012

20122013

20132014

381.82
13682.5
6
14064.3
8

773.81
15179.4
6
15953.
27

781.84
18010.0
5
18791.8
9

790.18
21497.6
7
22287.
85

795.32
25466.7
0
26262.0
2

107.71
785.01
14957.1
0

1.94
97.26
801.85
16854.
32

77.32
1.77
872.72
19743.0
7

66.40
1203.72
23557.
97

51.00
0.14
1296.96
27610.1
2

11967.8
6
3825.46
8142.40

12765.8
2
4420.75
8345.07

16072.5
8
4819.66
11252.9
2
2269.26
13522.1
8

18061.1
8
5469.83
9529.83

20448.5
4
6226.91
14221.6
3
2272.94
16494.5
7

1008.99 1333.40
9151.39 9678.4
7

1472.80
11002.
63

26

Investment
Current Assets, Loan and
Advances
Inventories
Sundry Debtors(Debtors)
Cash and Bank
Other Current Assets
Loans and Advances

Less: Current Liabilities and

Provisions
Current Liabilities
Provisions

Net Current Assets

5726.87

5554.66

6316.59

7060.29

8823.43

4549.07
858.80
1126.28
288.39
1304.54
8127.08

5267.53
907.62
2243.24
347.49
1418.09
10183.
97

5637.83
986.02
2818.93
136.89
1694.02
11273.6
9

6600.20
1163.34
3615.00
641.36
2240.11
14260.
01

7359.54
2165.36
3289.37
1019.69
2263.53
16097.4
9

3386.79 3531.73
4411.07 5258.75
7797.86 8790.4
8
3475.83 5469.53
19743.0 23557.
7
97

3636.97
5994.71
9631.68

3498.30 4457.94
4549.94 4104.84
8048.24 8562.7
8
78.84
1621.19
14957.1 16854.
0
32

6465.81
27610.1
2

2.2 TREND ANALYSIS OF BALANCE

SHEET
Table 2.2
Year End

20092010

20102011

20112012

20122013

20132014

Shareholders Funds
Share capital
Total Reserve

100.00
100.00

202.66
110.94
113.43

101.04
118.65
117.79

101.07
119.36
118.60

100.65
118.46
117.83

Loan Fund
Secured Loan
Unsecured Loan
Deferred Tax-Net

100.00
100.00
100.00

90.30
102.15
112.68

3985.57
1.82
108.84
117.14

85.88
137.92
119.32

76.81
0.13
107.74
177.20

APPLICATION OF FUNDS
Fixed Assets
Gross Block
Less Depreciation
Net Block
Capital Work in Process

100.00
100.00
100.00
100.00

106.67
115.56
102.50
132.15

125.90
109.02
134.85
170.19

112.37
113.49
84.69
64.90

113.22
113.84
149.23
154.33

SOURCE OF FUND

27

105.76
96.99

139.71
113.72

81.37
111.77

149.91
124.97

100.00
100.00
100.00
100.00
100.00

115.79
105.68
199.17
120.49
108.70
125.30

107.03
108.63
125.66
39.40
119.46
110.70

117.07
117.98
128.24
456.52
132.23
126.49

111.51
186.13
90.99
158.99
101.05
112.86

Less: Current Liabilities and

Provisions
Current Liabilities
Provisions

100.00
100.00

Net Current Assets

100.00

127.43
90.22
106.39
2056.30

75.97
107.46
91.07
214.40

104.28
119.22
112.73
157.36

102.98
113.99
109.57
118.22

Investment
Current Assets, Loan and
Advances
Inventories
Sundry Debtors(Debtors)
Cash and Bank
Other Current Assets
Loans and Advances

100.00

Tootle

2.2.1 Share Capital

Interpretation:
share capital contribution to the total fund has constant same
from last three year. In only 2011 not same.
company not issuing any more shares to increase share capital
from last three year.
28

So we can say that company should maintain it in a good position

to meet its future requirements.

2.2.2 Total Reserve

Interpretation:
Total Reserve contribution to the total fund has to be constant
increasing from 2009-10 To 2012-13 but 2013-14 decreasing.
company is good in position to expand their business and
Come out companys debts.
WE can see, company has good reserve for surviving in future
situation .

2.2.3 Secured Loan

29

Interpretation:
Secured loan have been increasing in year 2011-12 and then
after it is more decreasing.
It shown to be company used it more in the recession time to
recovers its profit and position.

2.2.4 Unsecured Loan

30

Interpretation:
Hear we can see that from 2009-10 company was decreasing
their Unsecured Loan. And it shown decreasing more in two year.
It shown to be good that the company has decreasing their debts.
But in the current year company decreasing. It is sing not good
credit and financial position but for long run it will good for
company.

2.2.5 Capital Work in Process

Interpretation:
Capital work in Process is increasing or after decreasing and
remain in current year at good level
Capital in process is more it good for company decrease their
capital in compare last four years

31

2.2.6 Investment

Interpretation:
By seeing in the above graph it is Proved to be that the company
invests high in years 2013-14 compared to the all previous years
because of recession time the company need to recover its profit
by outside income .interest achieving it by investing more in the
profitability areas.

32

2.3 Vertical Anal Isis Of BalanceSheet

Table 2.3
Year End
SOURCE OF FUND
Shareholders Funds
Share capital
Total Reserve
Loan Fund
Secured Loan
Unsecured Loan
Deferred Tax-Net
APPLICATION OF FUNDS
Fixed Assets
Gross Block
Less Depreciation
Net Block
Capital Work in Process
Investment
Current Assets, Loan and
Inventories
Sundry Debtors(Debtors)
Cash and Bank
Other Current Assets
Loans and Advances
Less: Current Liabilities and
Current Liabilities

2009-

2010-

2011-

2012-

2013-

2.552767
91.47869
582
94.0314
574
6332
0
0.720126
5.248410
228
454
100

4.59116
90.0627
7131
94.6538
2576
9289
0.01151
0.57706
0402
4.75753
2735
3973
100

3.960073
91.22213
079
95.1822
516
0824
0.391631
0.008965
089
4.420386
171
495
100

3.354193
91.25433
931
94.6085
983
3376
0.281857
902
0
5.109608
341
100

2.880538
92.23683
006
95.1173
2
7001
0.184714
0.000507
88
4.697408
06
052
100

80.01457
25.57621
502
54.43836
464
6.745893
038
61.1842
255
38.28863
5363
884
30.41411
5.741754
771
7.530069
752
1.928114
332
8.721877
407
54.3359
904
341
23.38889
30.41993
223
435

75.7421
26.2291
2427
49.5129
8041
7.91132
4386
57.4242
4812
32.9568
6867
9176
31.2532
5.38508
9292
13.3095
8215
2.06172
8472
8.41380
6608
60.4234
7261
9973
26.4498
24.3548
3601
2416

81.40871
24.41190
708
56.99680
757
11.49395
951
68.4907
712
31.99396
6663
041
28.55599
4.994258
458
14.27807
745
0.693357
327
8.580327
213
57.1020
173
1098
17.15432
22.34237
301
127

76.66696
23.21859
239
40.45267
651
6.251812
907
46.7044
019
29.96985
9109
733
28.01684
4.938201
525
15.34512
382
2.722475
524
9.508926
663
60.5315
278
7382
14.99165
22.32259
675
401

74.06175
22.55299
707
51.50875
868
8.232271
838
59.7410
356
31.95723
2974
162
26.65522
7.842631
642
11.91363
615
3.693174
891
8.198189
821
58.3028
649
6141
13.17259
21.71200
758
27
33

Provisions
Net Current Assets

53.8088
0.527107
2658
528
100

50.8046
9.61883
6017
9562
100

39.4966
17.60531
9428
67
100

37.3142
23.21732
5076
305
100

34.8846
23.41826
0028
113
100

2.3.1 Share Capital

Interpretation:
share capital contribution to the total fund has to be increased in
year 2011 to compare 2010.But after year 2011 Share capital
decreased to year 2014.
The company should maintain it in a good poison to meet its
future requirements and also to recover its loser in the current
depression situation.

2.3.2 Total Reserve

34

Interpretation:
As per the above details we can see here that the reserves are
decreased in year 2011 to compare 2010. Constantly increased in
2012 to 2014.
The Company should maintain it because it will helps to the
company to carry on its business in recession time also.

2.3.3 Secured Loan

35

Interpretation:
Secured loan is increased very more in year 2012 to compare last
2 year. And 2013-14 decreased to compare 2012.
It shows that the company not uses it on the basis of changes
occurred in the market like current position of the market is being
a recession period so, they have to increased its loan by securing
or mortgaging the items.

2.3.4 Unsecured Loan

36

Interpretation:
As shown above chart unsecured loan who high in the year 2010
and after decreging year by year constantly it shows company
better position company should reduce their debts or short turn
loans and create more cash show company in good position to
decrease the unsecured loan

2.3.5 Investment

37

Interpretation:
As seen above Graph an investment who high in 2011 and after
decreasing constantly to 2014 its create bed reputation in market
and company have not more investment so in emergency
company loss his business and it not good sign for the company .

2.4 Horizontal Analysis Of Balance

Sheet.
Table 2.4
Year End

2009-

2010-

2011-

2012-

201338

2010

2011

2012

2013

2014

100
100

102.66
10.94

1.03
18.64

1.06
19.36

0.65
18.46

100

13.43

17.79

18.6

17.83

100
100
100

0
-9.7
2.14

38.85
-98.18
8.83

-14.12
0
37.92

-23.19
0
7.74

100

12.68

17.13

19.32

17.2

SOURCE OF FUND
Shareholders Funds
Share capital
Total Reserve
Loan Fund
Secured Loan
Unsecured Loan
Deferred Tax-Net

Interpretation:
Total reserve contribution to the total fund has to be decreasing in
2013-14 but not decreasing more as compare to last year
We can see, company has good reserve for surviving in future
situation.
Secured loan have been decreased for successive years it shown
to be that company used its capital to recover its profit and
potion.

2.4 Horizontal Analysis Of Balance

sheet
39

Table 2.4.2
20092010

20102011

20112012

20122013

20132014

100
100
100
100

6.66
15.56
2.48
32.15

25.9
9.02
34.84
70.18

12.37
13.48
-15.31
-35.09

13.21
13.84
49.23
54.32

100
100

5.75
-3

39.71
13.71

-18.63
11.77

49.91
24.97

100
100
100
100
100

15.79
5.68
99.17
20.49
8.7

7.02
8.63
25.66
-60.6
19.45

17.06
17.98
28.24
36.85
32.23

11.5
86.13
-0.9
58.98
1.04

100

25.3

10.7

26.48

12.88

Less: Current Liabilities and

Provisions
Current Liabilities
Provisions

100
100

27.43
-9.78

-24.02
7.46

4.27
19.21

2.97
13.99

Net Current Assets

100
100

6.39
19.56

-8.93
114.39

12.72
57.35

9.56
18.21

100

12.68

17.13

19.32

17.2

Year End
APPLICATION OF FUNDS
Fixed Assets
Gross Block
Less Depreciation
Net Block
Capital Work in Process
Investment
Current Assets, Loan and
Advances
Inventories
Sundry Debtors(Debtors)
Cash and Bank
Other Current Assets
Loans and Advances

Interpretation:
Here we can see that in compare of year 2010-11 companys
assets increasing more as compare to last five year. Its means
company is performing well to increasing their assets in currents
year
Company investment decreasing in current year as compare to
last year

40

Chapter: 3
PROFIT AND LOSS STATEMENT

3.1

PROFIT AND LOSS STATEMENT

3.2

TREND ANALYSIS

3.3

VERTICAL ANALYSIS

3.4

HORIZONTAL ANALYSIS

3.1 Profit & Loss Statement

41

P & L Statement of ITC Limited from March-2010 to March-2014.

Table 3.1
Gross Income
Net Income
Gross Sales
Lees:excise Duties and
Taxes on Sales of Services
Net Sales
Other Income

2010
26862.98

2011
31423.23

2012
36072.59

2013
43044.21

2014
48175.8

26259.6
8106.41

30604.39
9436.81

34871.86
10073.43

41809.82
12204.24

46712.62
13830.06

18153.19
603.38
18756.5
7

21167.58
818.84
21986.4
2

24798.43
1174.37
25972.8

29605.58
1234.39
30839.9
7

32882.56
1463.18
34345.7
4

6971.4

8126.5
270.55

7660.91
65.59

8936.21
246.35

10263.28
128.41

5161.15

1140.02
68.38
655.99
4745.52
5935.77

1265.41
77.92
655.99
5427.26
2037.21

1387.01
86.47
795.56
5820.97
3375.92

1608.37
2.95
899.92
6019.05
3021.47

12741.2
6

14718.2
6

17101.6
3

20155.7
9

21686.6
3

6015.31
1954.31
4061
858.14
4919.14

7268.16
2280.55
4987.61
61.31
5048.92

8897.53
2679.66
6217.87
70.87
6288.74

10684.18
2989.06
7695.12
331
8026.12

12659.11
3873.9
8785.21
82.77
8867.98

406.1

498.76

1651.62

2143.24

3340.76

1718.18

2166.68

3518.29

4148.46

4771.91

634.15
-0.6

558.62
-0.6

570.75
(0.59

705.03
(0.61

810.99
28.68

61.31
4919.14

548.67
5048.92

548.67
6288.74

430.07
8026.12

Expenditure
Raw Materials etc.
change in inventories of
finished goods,Work-incapital
Employ benefits Expense
Finance costs
Depreciation
Other Expenses
Manufacturing,Selling
etc.Expenses
Profit
Profit Before Taxation
Provision for Taxation
Profit after Taxation
Profit Brought Forward
Available for appropriation
Appropriations
General Reserve
Proposed Dividend
Ordinary Dividend
Income Tax on Proposed
Dividend
Current Year
Earlier Year's proposed
Dividend
Profit Carried Forward

608.71

8867.98
42

Earnings Per Share

(Face Value Re.1.00
each)
Basic
Diluted

Rs.10.73
Rs.10.62

Rs.6.49
Rs.6.41

Rs7.93
Rs7.84

Rs9.45
Rs9.33

Rs11.09
Rs11.96

3.2 Trend Analysis of P & L Statement

43

Table 3.2
Particulars

2010

2011

2012

2013

2014

Total revenue

100

117.2198328

118.1311009

118.739489

15.6220976
4

Total
expenses

100

115.9276241

115.6027769

136.4584744

146.822548

Profit before
tax

100

120.827688

122.417916

146.9997909

174.172142
6

Profit after
tax

100

122.8172864

123.5535657

148.7363687

175.599335
2

100

102.638266

124.5561427

158.9670662

175.641127
2

Profit
available for
appropriation

3.2.1 Total revenue

Interpretation:

44

Total revenue was increased in year 2011 to year 2014 to

compare base year. But in present year 2014 Total Revue is
decreased very. So, we can see company is performing not well.

3.2.2 Total Expenses

Interpretation:
Hear we can see that Total expenses is increasing constantly from
the 2009-2010 to the 2013-2014.
Company is performing successively decreasing their expenses
and earning not good profit constantly. It is not good for the
company.

3.2.3 Profit Before Tax

45

Interpretation:
Profit before Tax has increased in the current year that in compare
to base year, because optimum utilization of assets in generating
sales revenue reduction in total cost, increase in market size of
the company, etc. so it is good condition of the company.

3.2.4 Profit after tax

46

Interpretation:
Profit After Tax has intended to increase throughout analyzes. In
the presently financial year increase in compare of the base year.
We can see that company is performing well and its Profit After
Tax become a more than in compare of base years.

3.3 Vertical Analysis of P & L Statement

Table 3.3
Particulars

2014

2013

2012

2011

2010
47

Total revenue

15.62

118.73

118.13

117.21

100

Total expenses

146.82

136.45

115.60

115.92

100

Profit before tax

174.17

146.99

122.41

120.82

100

Profit after tax

175.59

148.73

123.55

122.81

100

Profit available for

appropriation

175.64

158.96

124.55

10ase
2.63

100

3.3.1 Total Revenue

Interpretation:
Hear we can see that Total Revenue is increased after year 2010
but in year 2014 Total Revenue is decrease.
Company is performing is good but not very well.

3.3.2 Total Expenses

48

Interpretation:Hear we can see that Total expenses is decreasing constantly

from the 2009-2010 to the 2013-2014.Company is performing
successively decreasing their expenses and earning good profit
constantly. It is good for the company .

3.3.3 Profit before tax

Interpretation:
49

Here during the analyzing the data we can see, in compare to

total income, profit before tax is decreasing constantly in compare
of base year.
In the year 2013-2014 Profit Before Tax is decreased, its not

3.3.4 Profit available for appropriation

Interpretation:
Hear during the analyzing the data we can see, in compare to
total income, Available profit for appropriation in decreasing in
year 2013 and year 2014 to compare last Three year.
It is not good for the company and their investors.

3.4 Horizontal Analysis

50

Particular's

2010

2011

2012

2013

2014

Gross Income

100

16.97

14.79

19.32

11.92

Total Expenses

100

15.51

16.19

17.85

7.59

Profit Before Taxation

100

20.82

22.41

20.08

18.48

Profit after Taxation

100

22.81

24.66

23.75

14.16

Available for appropriation

100

2.63

24.55

27.62

10.48

Proposed Dividend

100

26.1

62.38

17.91

15.03

Interpretation:
Here we can see that total expenditure is decreasing on base of
total income.
Expenses are decreasing more from last 4 year.
So, Company have good potion in financial year.
Here during the analyzing the data we can see , in compare to
total income available profit for appropriation in decreasing in
2009-10 in compare of base year and also in current year.

51

Chapter:4
Analysis of Cash Flow
Statement

4.1 Cash Flow Statement

4.1 Cash Flow Statement

Cash Flow Statement for the year 2010 to 2014.
Table 4.1
52

PARTICULARS
A. Cash Flow from Operating Activities
PROFIT BEFORE TAX
ADJUSTMENTS FOR :
Depreciation and Amortisation Expense
Finance costs
Interest Income
Dividend Income from Long Term
Investments
Dividend Income from Current Investments
Loss on Sale of Fixed Assets Net
Net gain on sale of Current Investments
Gain on sale of Long Term Investments
Doubtful and Bad Debts
Doubtful and Bad Advances, Loans and
Deposits
Excess of Carrying Cost over Fair Value of
Currentof
Investments
- NetInvestments over
Excess
Cost of Current
Fair Value,
reversed
Net
Foreign
Currency
translations
and
transactions -PROFIT
Net
OPERATING
BEFORE WORKING
CAPITAL CHANGES
ADJUSTMENTS
FOR :
Trade Receivables, Loans and Advances and
Other
Assets
Inventories
Trade Payables, Other Liabilities and
Provisions
CASH GENERATED FROM OPERATIONS
Income Tax Paid
NET CASH FROM OPERATING ACTIVITIES
B. Cash Flow from Investing Activities
Purchase of Fixed Assets
Sale of Fixed Assets
Purchase of Current Investments
Sale/Redemption of Current Investments
Purchase of Long Term Investments from
Subsidiary
Investment in Joint Ventures
Investment in Subsidiaries
Sale of Long Term Investments
Dividend Income from Long Term
Investments
Received
Dividend Income
from Current Investments
Received
Interest Received
Investment in bank deposits
Redemption / Maturity of bank deposits
Investment in deposits with financial
institutions

2010

2011

2012

2013

6015.3
1
608.71

7268.16

8897.53

655.99
68.38
(168.58)
(83.75)
(155.53)
24.44
(54.92)
(63.01)
2.28
2.93
(2.57)
(10.21)
7454.78

77.92
(309.41)
(100.51)
(198.40)
11.62
(76.04)
(137.25)
9.63
2.46
5.74
(12.42)
(1.48)
8820.35

(124.96)
(720.10)
918.71
7528.43
(2195.74
)
5332.69

(399.19)
(368.66)
28106
8333.56
(2317.97
)
6015.59

140.26
-

(1349.91
)
8.06
(68486.9
5)
68939.5
-4
(176.59)
(45.47)
(25.00)
103.58
83.75
155.53
141.00

(2303.56
)
55.93
(49434.6
0)
49150.7
2
(297.16)
(37.88)
(82.30)
164.61
100.51
198.40
283.72
698.51

10684.
18
795.56
86.47
(355.48)
(123.96)
(186.54)
23.73
(146.02)
(121.62)
7.49
0.30
(25.80)
7.36
10645.
67
(421.14)
(962.37)
334.08
9596.2
4
(2886.3
5)
6709.8
9
(2097.6
6)
7.73
(69881.
72)
69376.3
1
(9.97)
(50.43)
134.44
123.96
186.54
263.89
(3397.3
9)
2513.02

(65.93)
(77.65)
(135.68)
30.88
(11.24)
(31.70)
12.50
11.28
(0.27)
(36.93)
9.95
6329.2
3
(290.89)
50.65
531.46
6620.4
5
(1989.8
0)
4630.6
5
(1094.4
7)
2.86
(57866.
98)
55449.2
7
(387.31)
(147.00)
66.47
77.65
133.80

2014

12659.
11
899.92
2.95
(412.77
)
(217.27
)(140.15
)
12.95
(329.44
-)
11.17
0.11
3.31
1.76
12491.
65
(1404.1
0)
(759.34
)
431.29
10759.
50
(3797.2
0)
6962.3
0
(2593.4
7)
20.83
(82231.
94)
81327.
47
(1.96)
(1.24)
(85.42)
217.27
140.15
387.33
(2817.8
0)
3125.9
6
(425.00) (750.00
53)

Redemption / Maturity of bank depositswith

financial
institutions
Loans Given
Loans Realised
NET CASH USED IN INVESTING
ACTIVITIES
C.
Cash Flow from Financing Activities
Proceeds from issue of Share Capital
Proceeds from Long Term Borrowings
Repayment of Long Term Borrowings
Net increase / (decrease) in Cash / Export
Credit
Facilities
Interest
Paid
Net increase in Statutory Restricted
Accounts Paid
Balances
Dividend
Income Tax on Dividend Paid
NET CASH USED IN FINANCING
ACTIVITIES
NET
INCREASE IN CASH AND CASH
EQUIVALENTS
CASH AND
OPENING CASHOPENING
AND CASH
EQUIVALENTS
CLOSING
CASH AND CASH EQUIVALENTS

(811.33)
905.22
(3531.5
6)
720.73
1.85
(10.06)
(61.63)
(33.52)
6.04
(1396.5
3)
(236.74)
(1009.8
6)
89.23
993.70
1082.9
3

(239.61)
207.40
(684.67
)
903.82
1.40
(11.85)
1.94
(15.80)
20.58
(3818.18
)
(633.55)
(3551.6
4)
1096.38
1082.54
2178.92

(410.73)
402.15
2210.19
764.99
0.77
(10.68)
(0.17)
(16.79)
16.83
(3443.47
)
558.03
(3246.5
5)
558.85
2178.92
2737.77

(1179.2
0)
854.70
(3580.
78)
922.31
0.35
(10.03)
(1.77)
(70.14)
15.16
(3518.2
9)
(570.14)
(3232.
55)
(103.4
4)
259.34
155.90

425.00
14.26
(2823.
29)
691.08
(11.27)
0.14
(46.35)
17.36
(4148.4
6)
(676.35
)
(4173.
85)
(34.84
)155.90
121.06

Interpretation:
:
As above detail we see that the net cash from operating
activity is increasing year-by-year so companys cash increase its
good shine for the company. cash from operating activity is
increasing because of a profit before tax is increasing.

:
In investing activity increased in 2012 and then decreased
its create increment in cash. Inventory is decreased so the cash
flow is increased and it makes good shine for company. And an
interest income is raised so the cash is increased.

54

: in the financing activity the long term borrowings is decreased

so in cash increment we see. But in income tax or repayment of
borrowings increased so the cash flow is decreased and its not
good shine for the company.

Chapter: 5
55

RATIO ANALYSIS
5.1 Liquidity Ratios
5.2 Profitability Ratios
5.3 Assets Turnover Ratio
5.4 Finance Structure Ratios
5.5

Valuation Ratio

INTRODUCTION:
Ratio Analysis is a widely used tool of Financial Analysis. It is
defined as the systematic Use of Ratio to interpret the financial
statement so that the strength and weakness of a firm as well as
its historical performance and current financial condition can be
determined. The Ratio refers to the numerical or quantitative
56

relationship between two variables\items. Ratio analysis presents

the financial statement into various functional areas which
highlight

various

aspects

of

the

business

like

inequality,

Profitability, assets turn over, financial structure etc., all these

ratios are important to both categories of the suppliers of funds
owners, and outsiders. Whose interest is reflected in various
valuations rations?

Thus, the integrated relationship of various functional

ratios can be presented as under:

5.1 Liquidity Ratios

5.2 Profitability Ratios
5.3 Assets Turnover Ratio
5.4 Finance Structure Ratios
5.5 Valuation Ratio

5.1 Liquidity Ratios:

The importance of adequate Liquidity in the sense of the
ability of a firm to meet the current or short-term obligation
when they become due for payment can hardly be overstressed.
57

In fact Liquidity is a perquisite for the very survival of the firm.

The Liquidity ratio measures the ability of the firm to meet its
short term obligation and reflect the short-term financial
strength\solvency of a firm. This ratio indicates the ability of the
company to discharge the liabilities as and when they mature .
1. Current Ratio
2. Quick Ratio
3. Net Working Capital

5.1.1 Current Ratio

Current ratio is the indication of the firm commitment to
meet its short-term liabilities. It is widely used indicator of a
companys ability to pay its debts in short-term. The Current Ratio
is the ratio of total current assets to total current liabilities

it can

be calculated, by dividing current assets by current liabilities.

Current Ratio =

Total Current Assets

Total Current Liabilities

Where,
The current assets of the firm represent those assets which
can be in the ordinary course of business, converted in to cash
within a short period of time, normally not exceeding one year.
The current liabilities defined as liabilities which are short
maturing obligation.
58

Current Assets = Inventories + Debtors + Bill Receivables +

Marketable Securities + Bank & Cash Balance +
Prepaid Expenses.
Current liability = Creditors + Bill payables + Unpaid expenses +
Provision for tax + dividend Payable + Bank
over
Draft.

Particulars

Year
2009-10

2010-11

Total Current Assets

8127.08

10183.97

Total Current Liabilities

8048.24

8562.78

1.00

1.18

Current Ratio

2012-13 2013-14
14260.01 16097.4
11273.69
9
8790.48 9631.68
7797.86
1.62
1.67
1.44

2011-12

Interpretation:
Current Ratio should be 2:1.
It is measure of companys Liquidity i.e. how
quickly company can convert assets to cash.
Here, it is 2014-1.67 highest and lovest in 2010 it
is constantaly increasing so it is good for the
company.
Company has higher capacity to convert its assets
into cash more than required.

59

5.1.2 Quick Ratio (Liquid Ratio / Acid Test

Ratio)
All Current Assets are not equally liquid. While cash is readily
available to make payments to suppliers .Debtors can be quickly
converted into cash, Inventories are two steps away from
conversion into cash (sales and collection). The quick ratio or acid
test ratio is computed as a supplement to current ratio. Theratio
relates highly liquid current assets usually current assets less
inventories, to current liability.
Acid Test Ratio =

Quick Assets
Quick Liabilities

Where,
Quick Assets = Current Assets Inventories
Quick Liabilities = Current Liabilities-bank overdraft.

Particulars

Year
201011

Quick Liabilities

200920112012201310
12
13
14
3578.0
1
4916.44 5635.86 7659.81 8737.95
8048.2
8790.48 9631.68
4 8562.78 7797.86

Quick Ratio

0.44

Quick Assets

0.57

0.72

0.87

0.90

Interpretation:
60

 If Inventories are as less as possible that is good for the

company. It can be measured by Quick Ratio.

5.1.3

Quick Ratio has decreased from 0.44 to 0.90 that is not

good for the company.

Net Working Capital:

Net Working Capital (NWC) represents the excess of current

assets over current liabilities.
Net Working Capital = Total Current Assets Total
Current Liability

Particulars

Total Current Assets

Total Current Liabilities
Net Working Capital

Year
20102009-10
11
10183.9
8127.08
7
8048.24
78.84

8562.78
1621.19

201112
11273.6
9
7797.86

201213
14260.0
1
8790.48

201314
16097.4
9
9631.68

3475.83

5469.53

6465.81

Interpretation:
Here Working Capital has been increasing compared to the
last years that is good for the company.

5.2

Profitability Ratio:
61

Profitability is measure of earning ability of the business.

Profitability ratios are generally measured in percentage based
on the calculation of absolute profit figures. Profit is a positive
difference between sales and the expenses.
5.2.1 Gross Profit Ratios
5.2.2 Operating Profit Ratios
5.2.3 Net Profit Ratios
5.2.4 Rate of Return on Investment (ROI)
5.2.5 Rate of Return on Equity (ROE)

5.2.1 Gross Profit Ratio:

This Ratio expresses the relationship between gross profit
and net sales. It is a degree to which the sales price of good per
unit may decline without resulting in losses from operations to the
firms.

It

also

helps

in

ascertaining

whether

the

average

percentage of mark-up and the goods in maintained. It can be

calculated as follows:
Gross Profit = Gross Profit *100
Total Sales
Where,
Gross Profit = Sales COGS
COGS = Raw material Consumed + Labor Costs + Factory
Overheads.
62

Particulars

Total Sales

Year
20102009-10
11
21337.8
19288.2
7
30604.3
26259.6 9

Gross Profit Ratio

73.45

Gross Profit

69.72

201112
25945.5
4
34871.8
6

201213
31485.9
41809.8
2

201314
34840.1
7
46712.6
2

74.40

75.31

74.59

Interpretation:
If the ratio is high it indicates Gross Profit is high or the
purchasing is efficient alternating and vice versa.
Here the ratio is increasing from year 2010 to 2013 and
decreasing 0.72 from last yare.
The highest value of the ratio is 75.31% And the lowest
value is 69.72% .This is good for the company

5.2.2

Operating Ratio.

Operating Ratio is a ratio of Total Cost of Goods Sold and Total

Operating Expenses which is divided by net sales. It is calculated
as follows,

Operating Ratio =

Sales- Operating Expenses * 100

Net Sales

Where,
63

Operating Expenses = Manufacturing Expenses + Administration

&
Selling Expenses + Depreciation
Particulars

Year
200910
20489.7
4

Operating Profit
Total Sales
Operating Profit
Ratio

26259.6

2010-11
24012.6
3
30604.3
9

201112
32178.6
6
34871.8
6

201213
37638.3
4
41809.8
2

201314
42791.2
3
46712.6
2

78.02

78.46

92.27

90.02

91.60

Interpretation:
This ratio shows that percentage of Operating profit over
Sales.

Here there is an increase in cost of operating Expenses but

also increase in sales as well as increasing in profit ratio. It
is good for the company

5.2.3

Net Profit Ratio:

It is the indicator of the net margin earned on sale of Rs 100.

It helps in determining the efficiency with which affairs the
business are being managed. It can be calculated as follows.
Net Profit Ratio =

Particulars

Net Profit * 100

Net Sales

Year
64

200910
Net Profit

201011

201112

Total Sales

4061
26259.
6

4987.61 6217.87
30604.3 34871.
9
86

Net Profit Ratio

21.65

22.68

201213

201314

7695.12
41809.
82

8785.21
46712.
62

24.95

25.58

23.94

Interpretation:
It measure a collecting overall profitability of business and
shows efficiency otherwise a operating the expenses over a
sell.
Value of the ratio is highest in year 2013-14 i.e. 25.58%
because of decrease in the value of Net Sale.
In year 2009-10, Net Profit is

21.65%.and after increase

constantaly up to 25.58%
It is not good for the company.

5.2.4

Rate of Return on Investments:

Rate of Return on Investment is term as the profit of the

firm distributed
To its Investor.
Rate of Return on Total Assets =
and Interest)

EBIT (Earnings Before Tax

65

Total Assets
Where,
EBIT = Net Profit + Interest + Tax.
Total Assets = Net Fixed Assets + Investments + Net Working
Capital.
Instead of Total Assets, Total Capital Employed is also
shown as denominator.
Total Capital employed = Owners Fund (Capital + Reserves
Miscellaneous
Expenses) + Long term Debt.
It should be noted that the amount of total assets and
total capital employed would be same.
Particulars

EBIT

Year
20102009-10
11

14878.26

7268.16
15233.1
3

8897.53
19838.7
7

201213
10684.1
8
18062.9
2

40.43

47.71

44.85

59.15

6015.31

Total ASSETS
ROI

201112

201314
12659.1
1
25318.0
0
50.00

Interpretation:
The ratio shows the total profit on total investments of the
company.
66

 This ratio is very important to the shareholder.

As per this table there is an Decrease then increase in the

net profit before interest and taxes but the main important
point is company pays money to its long term loan holders
and companys reserves are more so there is an good point
of the company and they have a retain earnings is more.

5.2.5

Rate of Return on Equity:

Return on Equity = Earnings Available to Equity Shareholder * 100

Net Worth
Where,
Profit for the Equity = Net Profit Preference Dividend
Net Worth = Equity Capital + Reserves Misc. Expenses
Particulars

Profit for Equity

Net Worth
ROE

Year
20102009-10
11

201112

201213

4919.14
18938.5
2

5048.92
21002.1
9

6288.74
25080.6
3

8026.12
30313.9
7

25.97

24.04

25.07

26.48

201314
88867.9
8
35130
25.24

Interpretation:
67

 Through the above calculation we can say that the rate of

return on equity ratio decreased and then increased year to
year it means shareholders earnings will decline then incline.
The main cause to decrease the value of the ratio is the
decrease in the value of the net profit for equity. This is not
good for the company.

5.3

Assets Turnover Ratio.

Assets Turn over Ratios is basically productivity ratio which

measures the output produced from the given input deployed.
This relationship is shown as under:
An asset is Input which is deployed to generate
production (or Sales). The same set of assets when used
intensively (i.e. use of machines for three shift instead of a single
shift), Produces more output or sales. If the assets turnover is
high, it shows efficient or productive use inputs, i.e. assets.
It should be noted that in the turn over ratios, the
numerator is always sales or its variant like total sales, credit
sales, cost of goods sold etc, and denominator is always, the
assets like total assets, group of assets (fixed or current) or
individual assets like inventories or debtors.

5.3.1

Total Assets Turnover

5.3.2

Net Fixed Assets Turnover

68

5.3.3
5.3.4

Net Working Capital Turnover

(A) Inventory Turnover
(B) Average age of Inventories

5.3.5

(A) Debtors Turnover

(B) Average age of Debtors

5.3.1

Total Assets Turnover Ratio:

Total Assets Turnover Ratio is shows Turnover of the company

is how much percentage of total investment. It is calculated
as below,
Total Assets Turnover Ratio =

Total Net Sales

Total Assets

Where
Particulars

Sales
Total Assets
Total Assets Turn
Over Ratio

200910
26259.
6
14878.
26
1.76

Year
20102011201211
12
13
30604.3 34871.8 41809.
9
6
82
15233.1 19838.7 18062.
3
7
92
2.00

1.75

2.31

201314
46712.
62
25318.
00
1.84
69

Total asset = Net Fixed Assets, Investments and Net Working

Capital (i.e. Current assets less current liabilities)

Interpretation:
This is a measure of the efficiency how the assets are
utilized it indicates how many times the assets Were turned
over in period.
The company turnover ratio has decreased in last year it saw
not performing well in 2010. Increased more in 2013 and
then after decreased in current year.
This is not good for the company.

5.3.2

Net Fixed Assets Turnover Ratio:

Net Fixed Assets Turnover Ratio is shows Turnover of the

company is how much percentage of Net Fixed Assets. It is
calculated as below,
Net fixed Turnover= Sales
Net fixed assets
Particulars

Year
20102009-10
11

201112

201213

201314
70

Sales

26259.6

30604.3
9
9678.47

34871.8
6
13522.1
8

41809.8
2
11002.6
3

46712.6
2
16494.5
7

Fixed Assets
Net Fixed Assets Turn
Over Ratio

9151.39
2.86

3.16

2.57

3.80

2.83

Interpretation:
A net fixed asset turnover is indicates that the companys
sales over the total fixed assets.
The net fixed asset is high at 3.80 in the year 2012-13.
Assets are almost same but sales and hence ratio has
increased that is good for the company.

5.3.3 Net Working Capital turnover

Networking Capital Turnover =

Sales
Net Working Assets

Particulars

Year
2009-10

Sales
Net Working Assets

26259.6

Net

1008.99
Working 26.02

Capital

Turnover

2010-11
2011-12
30604.3
34871.86
9
1333.40
2269.26

2012-13

2013-14

41809.82
1472.80

46712.62
2272.94

22.95

28.38

20.55

15.36

Ratio

Interpretation:
71

 A net Working Capital Ratio it saw the Working Capital

Turnover in times.
The net working capital is high at 28.38 in the year 2012-13.

The ratio is decrease in current yare so it not good for

company.

5.3.4

(A) Inventory Turnover Ratios:

This Ratio indicates the number of times inventory is

replaced during the year. It measures the relationship
between the costs of goods sold and inventory level. The
ratio can be calculated in that way,
Inventory Turnover Ratios =

Particulars
200910
COGS
Average Inventories
Inventory Turn Over

6971.4
4549.0
7
1.53

Year
201011

Cost of Goods Sold

Average Inventory

201112

9266.52 8926.32

201213
10323.9
2

201314
11871.6
5

4908.3

5452.68

6119.01

6979.87

1.88

1.63

1.68

1.70

Interpretation:
The Inventory Turnover Ratio indicates the turnover of the
stock in the company.
72

 The high turnover ratio is high profit of the company and the
vice versa.
The ratio is increases for the two consecutive years from
1.63 to 1.70 times. This is good for the company.

5.3.4

(B) Average Age of Inventories

An Average Age of Inventory is shows that after how much

period of time its inventory is replaced and it is calculated as
follow,

Average Age of Inventories =

No. of Days (360)

Inventory Turnover

Ratio

Particulars
200910

Year
201011

201112

201213

201314

No. of Days

360

360

360

360

360

Inventory Turn Over

1.53

1.88

1.63

1.68

1.70

235.29

191.48

220.85

214.28

211.76

Days

Interpretation:

73

 This ratio indicates the waiting period of the investments in

inventories and is measured in days, week or months.
If ratio is less, good for the company and vice versa.
No. days has been decreasing that is good for the company.
But it is almost increasing in 2010 compared to current year
that is good for the company.

5.3.5 (A) Debtors Turnover Ratio:

Debtors Turn

over

Where,
Average Debtors = (Beginning debtors + closing debtors)/2

Particulars

Credit Sales

Year
2009201010
11
30604.3
26259.6 9

2011-12
34871.8
6

201213
41809.8
2

201314
46712.6
2

Average Debtor

858.80

883.21

946.82

1074.68

1664.35

Debtors Turn over

30.57

34.65

36.83

38.90

28.06

Interpretation:
74

 This ratio measures the efficiency of a company credit and

the collection policy. This ratio shows the number of times
each year a companys debtors turn into cash.
Here the ratio increased and then decreased to 28.06.It less
in current yare so it is not good for the company.

5.3.5

(B) Average Age of Debtors:

Average Age of Debtors

Particulars
200910

Year
201011

201112

201213

201314

360

360

360

360

360

Debtors Turn over

30.57

34.65

36.83

38.90

28.06

Days

11.77

10.38

9.77

9.25

12.83

No. of Days

Interpretation:
High average age of debtors is not good because it indicates
poor collections procedure and idle fund blocking in debtors.
The average age of debtors is compared with the credit
period allowed to the customers.

75

 Here, we can see that the Average age has decreased and
then increased in 2013-14 year.
This is not good for the company. It should be less or equal
to Average days in 2012-13.

5.4 Finance Structure Ratios

Finance structure ratio indicates the relative mix or blending
of owners fund and outsiders debt funds in the total capital
employed in the business. It should be noted that equity funds are
the

prime

reinvestment

fund,
of

which
profits,

increases
while

progressively

outside

debt

through

funds

are

supplementary funds and are added at the discretion of the

management. Management prefers to choose debt only when it
helps in enhancing the earning of equity. The debt funds are used
to generate ROI greater than interest costs on debts, the equity
earning is enhanced, but if the interest costs are higher than ROI,
it adversely affects the earning of owner. This ratio is popularly
described as debt equity ratio. Higher debt ratio is (I) good if ROI
76

is greater than interest on debts and it is (II) bad if ROI is less than
interest on debts. Thus, use of debts is considered as a DoubleEdge weapon. Some popular finance structure ratios are as
under:

5.4.1 Equity Ratios

5.4.2 Debt Ratios
5.4.3 Debt-Equity Ratios
5.4.4 Interest Coverage Ratios

5.4.1 Equity Ratios

Where,
Net Worth = Equity Capital + Reserves Misc. Expenses.
Total Capital Employed = Net Worth + Long Term Debts.
Particulars

Year

Net Worth
Total Capital
Employed

20112010-11
12
21002.1 25080.6
9
3
21909.8 26066.6
1
5

2009-10
18938.52
19797.32

201213
30313.9
7
31477.3
1

201314
35130
37295.3
6
77

Equity Ratio

0.95

0.95

0.96

0.96

0.94

Interpretation:
This ratio suggests the proportion of the Net Worth to total
capital employed. Net Worth is share plus reserves and
surplus. The higher the ratio the higher the net worth in total
capital employed and vice versa.
The ratio decreases year by year because of the capital the
total capital employed increased.
It was the highest value is 0.85 in the year 2008-07.
It is decreased by 0.74 in the year 2010-09.This is not good
for company.

5.4.2 Debt Ratios:

Particulars

Year
2009-10 2010-11

Long Term Debt

Total capital Employed
Debt Ratio

201112

201213

201314

858.80
19797.3
2

907.62
21909.8
1

986.02
26066.6
5

1163.34
31477.3
1

1165.36
37295.3
0

0.043

0.041

0.037

0.037

0.058

Debt Ratios = Long Term Debt

Total Capital Employed
78

Analysis:
This ratio suggests the proportion of long-term debt to
Total Capital Employed. Long-term debt is a debt, which is
of more than five years and includes interest thereon. The
higher the long-term the higher the total capital employed
and vice-versa.

The ratio has increased and then decreased. This is good

for the company.

5.4.3

Debt Equity Ratio:

When debt funds are used to generate ROI greater than

interest cost on debt, the equity earning is enhanced, but if the

interest cost is higher than the ROI, adversely affect the earning
owners. This ratio is popularly described as Debt-Equity Ratio.
Higher debt equity ratio is (1) good if ROI is greater than interest
on debt. Thus, use of debt (or leverage) is considered as a
Double Aged weapon.

Particulars

Year
20102009-10
11

201112

201213

201314
79

Total Long Term Debt

Net Worth
Debt-Equity Ratio

858.80
18938.5
2
0.045

907.62
21002.1
9
0.043

986.02
25080.6
3

1163.34
30313.9
7

0.039

0.038

1165.36
35130
0.062

Interpretation:
Debt Equity Ratio is debt to Equity. Debt means long term
fund having maturity of five years or more including interest
thereon.
Equity is paid up share capital plus free reserves. The higher
the debt fund used in capital structure, the greater is the
financial risk. This is also known as leverage ratio.

We can see that the value is increasing and decreasing.

It should be 2:1 but industry ratio is 0.8:1. Still it is higher
than companys ratio. So, company should raise the debt.

5.4.4

Interest Coverage Ratios:

This Ratio indicates the use of interest becoming debt funds in

generating higher operating profits or EBIT. Higher is the Ratio
better is the utilization of the debt funds. Higher interest coverage
ratio enhances the equity earning (i.e. EBIT interest) is passed
over to the equity finance of the capitalization. It can be
concluded as follow:

80

Particulars

EBIT

126569

Year
201011
10684.1
8

Interest
Interest Coverage
Ratio

412.17

355.48

309.41

58.67

54.54

110.29

123.88

28.75

30.05

30.71

200910

201112

201213

201314

8897.53

7268.16

6015.31

Interpretation:
A high ratio implies adequate safety for payment of interest.
It decreased but in the year 2010-09 the ratio increased.
It is clearly indicates by the above calculation that interest
expenses decreases and also PBIT increase and so it implies
that the debt of the company decreases.
Thus in general we can conclude that the growth of the
company is very good

5.5 Valuation Ratios:

Valuation ratios are the result of the management of the 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 investor. The per share valuation are popularly
presented as:
81

5.5.1
5.5.2
5.5.3
5.5.4

Earnings Per Share (EPS)

Dividend Pay-out Ratios (DPS)
Dividend Yield
P/E Ratio

5.5.1 Earning Per Share:

If the company has issued preference share capital then net
profit for equity share = Net Profit - Preference Dividend. In
absence of the preference share capital net profit is taken in the
numerator of the below formula.

Particulars
200910

Year
201011

201112

201213

201314

4061

4987.61

6217.87

7695.12

8785.21

No. of Equity Share

381.82

773.81

781.84

790.18

795.32

EPS

10.64

6.45

7.95

9.74

11.05

Net Profit

Interpretation:
82

It decreased in the year 200-11 to 6.45 this is because

of the no.of equity share increased.
This provides companys future prices. It is increases
gradually and peaks in year 2013-14 at value 11.05 this
is good for the company.

5.5.2 Dividend Pay Out Ratio:

This Ratio indicates the split of EPS between cash dividend and reinvestment of profit. If the company has profitable projects, then
it will prefer to keep D/P Ratio lower, it will re- invest higher
proportion of the profit in the business.

Particulars
200910

Year
201011

201112

201213

201314

Dividend per Share

3.67

4.93

4.40

4.45

5.22

Earnings Per Share

Dividend payout
Ratio.

10.62

6.41

7.84

9.33

11.96

0.56

0.48

0.44

0.35

0.77

83

Interpretation:
This ratio indicates the splits of EPS between cash dividend
and reinvest at profit.
If the company has profitable project then it will keep D/P
ratio lower it will reinvest higher proportion of project in
business.
Here the companys ratio is first increased but decreased in
2011-12 to 2013-14 continuously. That means company is
reinvesting their money.
So it is good for the long term investor but not good for the
short term investor. Company may provide higher profits
after long-term. It is good to invest for long term.

5.5.3 Dividend Yield Ratio:

The dividend yield represents the current cash return to
shareholders. It is computed by dividing the Dividend per Share
by the current market price per share. The investors also earn a
return from a capital gain in shares.

84

Particulars
200910

Year
201011

201112

201213

201314

Dividend per Share

3.67

4.93

4.40

4.45

5.22

Average market price

222

168

133

159

245

Dividend yield Ratio.

2%

2.67%

3.07%

2.79%

2.13%

Interpretation:
The lowest ratio is 2% in the year 2009-10 and it is high in
the year in the 2009-08 and the value is 2.67%.
Higher ratio is good for the short term investor and lower
ratio is good for the long term investor. It is good in 2010-09
for long term investor.

5.5.4 P/E Ratios:

This ratio is a popular measure extensively used in
investment analysis. It is computed by dividing a Current Market
Price of a share by the annual Earning per Share. Many view the
P/E Ratio as an indicator of a firms growth prospects. It is used as
a device to detect mix-priced stocks. A high Price Earnings Ratio
85

indicates the stock markets confidence in the companys future

earning growth.

Particulars

Current Market Price of

Share

200910

Year
201011

201112

201213

201314

290.22

289.55

308.12

324.84

376.65

Earnings Per Share

10.64

6.45

7.95

9.74

11.05

P/E Ratio

27.27

41.17

38.75

33.35

34.08

Interpretation:
This provides companys future price earning.
From the given chart we can see that the lowest value was
achieved in the year 2009-10 It is
With P/E ratio we can determine the price of its share in
future as below.

86

Chapter: 6
DU-PONT ANALYSIS
6.1 DU-PONT Chart:

ROI (in %)
2010:40.43%
2011:47.71%
2012:44.85%
2013:59.15%
2014:50.00%

Total Assets
Turnover
2010:1.76
2011:2.00
2012:1.75
2013:2.31
2014:1.84

87

Profit Margin (%)

2010:22.90
2011:23.74
2012:25.51
2013:22.55
2014:27.09

EBIT

Total Sales

2010:6015.31

2010:26259.6

2011:7268.16

2011:30604.39

2012:8897.53

2012:34871.86

2013:10684.18

2013:41809.82

2014:12659.11

2014:46712.62

Investment
s
2010:5726.87
2011:5554.66
2012:6316.59
2013:7060.29

Sales + Non-operating
Expenses

Operating Expenses
2010:12741.26

2010:18756.57
2011:14718.26
2011:21986.42
2012:17101.63
2012:25972.8
2013:20155.79
2013:30839.97
2014:21686.63
2014:34345.74
Net Fixed Assets
2010:5325.93
2011:5257.72
2012:8702.52
2013:5532.8
2014:10267.66

Net Working
Capital
2010:78.84
2011:4321.19
2012:3475.83
2013:5469.62

88

Total Fixed Assets

Accumulated
Depreciation

2010:9151.39

2010:3825.46

2011:9678.47
2012:13522.18
2013:11002.63
2014:16494.57

2011:4420.75
2012:4819.66
2013:5469.83
2014:6226.91

Total Current
Assets

Current Liability +
Provision

2010:8127.08

2010:8048.24

2011:10183.97

2011:5862.78

2012:11273.69

2012:7797.86

2013:14260.01

2013:8790.48

2014:16097.49

2014:9631.68

Interpretation:
The DU-Pont chart indicates the rate of return on
investments in percentage.
The chart shows the allocation of financial performance of
the company. In the chart profit margin percentage and
89

total assets turnover in times is given. ROI is the

multiplication of the profit margin and total assets
turnover.
We can say from the chart that profit margin decreased
and then increased. But in the last year it increased.
The reason behind the increment of profit margin is that
the EBIT of the company increases year-by-year. And the
denominator, total sales also increase Year-by-year.
The reason behind the increment or decreasing in the
total Assets Turnover ratio is that the minor differences of
Net Working Capital and Investment both are increase and
decrease in simultaneously every year.

Chapter: 7
Recommendations and Suggestions
By analyzing the annual report of the company we can conclude
that,

90

 From the Liquidity Ratio we can recommend that the

Liquidity of the company is Very Good.
The Current ratio increases every year. The Current Assets
should be at least twice the Current Liabilities for a
comfortable liquid position. But here it more than 2 to 3
times, which very good.
By the profitability ratio we can conclude that the profit of
the company decreased and then increased but it is slightly
increment.
But the Operating profit of the company is decreasing, so
company should try to reduce its Operating Cost by
controlling the expenses of Raw material consumption as
well as the selling, Distribution, and Administration and other
expenses.
Here we can see that interest to be paid has been cut very
well, which is good for the company in the future.
Here from the analysis we can say that the company is not
going to spread its business because not considerable
increase in the investment has been found

CHAPTER: 8
91

Technical Analysis
Of
ITC Limited

Technical Analysis and Charts of ITC Ltd

Sector

Share
Price

Price
Change

Previous
Close

Beta

Average
Volume

NSE
Code

BSE
Code

BSE
Index

NSE
Index

Futures
and
options

Itc limited

364.10

-7.60 /
-2.04%

371.70

0.46

5919.60
K

ITC

500875

BSE
30

Nifty
50

Yes F&O
list

92

Pivot Point - Intra-Day Support & Resistance

Pivot
Point

Support1

Support2

Support3

Resistance1

Resistance2

Resistance3

What
is
Pivot
Point

Pivot
Point o
other
Stocks

366.28

360.37

356.63

350.72

370.02

375.93

379.67

Learn
Pivot
Point

Pivot
Point
List

93

Oscillators & Volume Indicators

94

Name

Value

Stochastic D Fast

78.17

Stochastic K Fast

65.71

Stochastic D Slow

79.95

Relative Strength Index (RSI) (14

day)

63.31

Williams %R

-34.29

Rate of Change

3.31

Price Volume Trend

12431200.00

Money Flow Index

61.85

Aroon Up

0.00

Aroon Down

44.00

Ultimate Oscillator

57.32

Average True Range

7.29

On Balance Volume

1089330000.00

Accumulation Distribution

200774000.00

Indicators For I T C Ltd.

Name

Value

MACD (26d ,12d)

1.09

Signal Line

-0.42

Macd Above Signal Line

True

Macd/Signal Line trend days

Macd Above Zero Line

True

Macd/Zero Line trend days

Bollinger Band Upper

368.56

Bollinger Band Middle

355.54

Bollinger Band Low

342.52

Average Directional Index

19.29

ADX +DI

26.14

ADX DI

13.52

Chaikin Money Flow

0.07

95

Interpretation:
In technical analysis we should look
price and volume of the company at which level we
should hold the shares and which level we should sell the
share.
In chart ware the price line shown and a volume line
shown in which the current market price which helps us
to decide future movement of share or company price as
ware a price and volume line intersect in increase level
we got profit when sell our shares. And when line
intersects decrease level we should purchase share and
hold the share.

96

Bibliography
Annual Reports of ITC LTD
1. 2009-10
2. 2010-11
3. 2011-12
4. 2012-13
5. 2013-14

Books
Managerial accounting and financial book by R. Narayanswamy

Web Sites
WWW.ITCPORTAL.IN
WWW.BSEINDIA.COM
WWW.GOOGLE.COM

Software
ACEANALYSER SOFTWARE

97