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Debasis Baral

Objective of the Project:


The project report is prepared considering the following objectives:

1. To study the Capital Structure of “Bajaj Auto Ltd.”.


2. To know the financial strength of the company.
3. To know the solvency of the company.
4. To make comparative study with other year performance.
5. To know the capability of payment of dividend and interest.
6. To know the managerial capacity.
7. To know the profitability of the company in the form of ratios.

METHODOLOGY :

Sources:
The investigation relied on books, documents, annual report, literature, files
and personal observation to have an idea about the organizational set up,
functions of financial department and other groups.

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Tools used for analysis of financial Statements:


The numbers given in the financial statement are not of much use to the
decision maker. These numbers are to be analysed over a period of time or
relation to other numbers so that significant conclusions could be drawn
regarding the strengths and weakness of a business enterprise. The tools of
financial analysis help in this regard. These tools include:
Comparative statements;
Common-size statements;
Ratio analysis;
Funds flow statements;
Cash flow statements;
Changes in financial position.

In this project we show or discuss:


1. Comparative statements.
2. Common-size statements &
3. Ratio Analysis of “Bajaj Auto Ltd.”
4. Cash Flow Statements

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COMPANY PROFILE
INTRODUCTION
The Bajaj Group is amongst the top 10 business houses in India. Its footprint
stretches over a wide range of industries, spanning automobiles (two-wheelers
and three-wheelers), home appliances, lighting, iron and steel, insurance, travel
and finance. The group's flagship company, Bajaj Auto, is ranked as the world's
fourth largest two- and three- wheeler manufacturer and the Bajaj brand is well-
known across several countries in Latin America, Africa, Middle East, South and
South East Asia. Founded in 1926, at the height of India's movement for
independence from the British, the group has an illustrious history. The integrity,
dedication, resourcefulness and determination to succeed which are
characteristic of the group today, are often traced back to its birth during those
days of relentless devotion to a common cause. Jamnalal Bajaj, founder of the
group, was a close confidant and disciple of Mahatma Gandhi. In fact, Gandhiji
had adopted him as his son. This close relationship and his deep involvement in
the independence movement did not leave Jamnalal Bajaj with much time to
spend on his newly launched business venture.
His son, Kamalnayan Bajaj, then 27, took over the reigns of business in 1942. He
too was close to Gandhiji and it was only after Independence in 1947, that he was
able to give his full attention to the business. Kamalnayan Bajaj not only
consolidated the group, but also diversified into various manufacturing activities.
The present Chairman of the group, Rahul Bajaj, took charge of the business in
1965. Under his leadership, the turnover of the Bajaj Auto the flagship company
has gone up from Rs.72 million to Rs.46.16 billion (USD 936 million), its product
portfolio has expanded and the brand has found a global market. He is India's one
of the most distinguished business leaders and internationally respected for his
business acumen and entrepreneurial spirit.

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WHY BAJAJ AUTO?
Proud Indian MNC
We are an automobile company with global presence and take pride in our Indian
roots and values.
Be at the forefront of Technological Innovation
Our vibrant engineering minds consistently conceptualize new ideas, feeding
breakthrough technologies and innovative patents at our in-house R&D Center.
World class manufacturing
TPM is the way of life at Bajaj Auto. Latest manufacturing technologies like
robotics, automation build quality in our products.
Grow with us
Our organic growth strategy provides numerous opportunities to our employees
to climb the ladder of authority and responsibility.
Culture of Empowerment
We provide our employees with high degree of autonomy in their day-to-day
decisions and to act on ideas.
Fair and Transparent Annual and Quarterly PMS
Objective goal setting, transparent performance rewards and constructive
feedback in our Performance Management System, help you to exceed
performance expectations by unleashing your potential.
Amongst Top Quartile in Industry Compensation
Competence and performance are the key drivers of our compensation policy.
Best performing employees are awarded with significant rewards.
Employee friendly work practices
Our policies and systems like SAP and ESS, provide transactional ease so that the
tedium does not claim your time and leaves you free to take on challenging
targets.
Superior “Quality of Life”
Our constant efforts towards employee welfare ensure that our employees enjoy
superior quality of life.

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GLOBAL BAJAJ
 Bajaj is present in over 50 countries all over the globe
 Dominant presence in Africa and Latin America with increasing market share
every year
 Market leader in 2-wheelers in Sri Lanka, Bangladesh , Colombia and Central
America
 772,519 units exported in 2008-09, an increase of over 25% over the
previous year
 Largest exporter of three wheelers in the world: 139,056 units exported in
2008-09

BAJAJ GROUP OF COMPANIES


Bajaj Auto is the flagship of the Bajaj group of companies. The group comprises of
34 companies and was founded in the year 1926.
The companies in the group are:
 Bajaj Auto Ltd.
 Bajaj Holdings & Investment Ltd.
 Bajaj Finserv Ltd.
 Bajaj Allianz General Insurance Company Ltd.
 Bajaj Allianz Life Insurance Co. Ltd

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 Bajaj Financial Solutions Ltd.
 Bajaj Auto Finance Ltd.
 Bajaj Allianz Financial Distributors Ltd.
 Bajaj Auto Holdings Ltd.
 P T Bajaj Auto Indonesia (PTBAI)
 Bajaj Auto International Holdings BV
 Bajaj Electricals Ltd.
 Hind Lamps Ltd.
 Bajaj Ventures Ltd.
 Mukand Ltd.
 Mukand Engineers Ltd.
 Mukand International Ltd.
 Bajaj Sevashram Pvt. Ltd.
 Jamnalal Sons Pvt. Ltd.
 Rahul Securities Pvt Ltd
 Shekhar Holdings Pvt Ltd
 Madhur Securities Pvt Ltd
 Niraj Holdings Pvt Ltd
 Shishir Holdings Pvt Ltd
 Kamalnayan Investments & Trading Pvt Ltd
 Sanraj Nayan Investments Pvt. Ltd.
 Hercules Hoists Ltd.
 Hind Musafir Agency Pvt. Ltd.
 Bajaj International Pvt. Ltd.
 Bachhraj Factories Pvt. Ltd.
 Baroda Industries Pvt. Ltd.
 Jeevan Ltd.
 Bachhraj & Co Pvt Ltd
 The Hindustan Housing Co. Ltd.
 Hospet Steels Ltd

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KEY POLICIES

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AWARDS & ACCOLADES

2009-2010
Product Award Award Body

Kawasaki Ninja Bike of the Year IMOTY

Pulsar 135LS Bike of the Year ET NOW - ZigWheels

Discover DTS-Si 100cc Bike of the Year ET NOW - ZigWheels

Pulsar 135LS 150cc Bike of the Year ET NOW - ZigWheels

Kawasaki Ninja 250cc Bike of the Year ET NOW - ZigWheels

Pulsar 135LS 4-V Technology of the Year ET NOW - ZigWheels

Discover DTS-Si Most Value for Money-Bike of the Year ET NOW - ZigWheels

Kawasaki Ninja Motorcycle of the Year - Bike upto 250 cc NDTV Profit - Car & Bike

Bajaj Discover DTS-Si Motorcycle of the Year - Bike upto 125 cc NDTV Profit - Car & Bike

Kawasaki Ninja Two Wheeler of the Year NDTV Profit - Car & Bike

Bajaj Discover And Pulsar Best Integrated Campaign - Two wheelers NDTV Profit - Car & Bike

Kawasaki Ninja Bike of the Year CNBC - Overdrive

Bajaj Discover Best StoryBoard Commercial CNBC - Overdrive

Pulsar135LS Bike of the Year 2010 UTV Bloomberg-AutoCar

Pulsar135LS Viewer's Choice of the Year UTV Bloomberg-AutoCar

Bajaj Discover Best TV Commercial Auto India

Kawasaki Ninja Bike of the Year 2010 BS Motoring

Bajaj Auto Best Advertising Auto India

Pulsar Silver Effie for PulsarMania Ad Effie

Bajaj Auto Most Trusted Brands - Auto Two Wheeler Brand Equity

Bajaj Auto Most Popular Two Wheelers Amongst Youth Global Youth Marketing Forum
2010

Bajaj Auto Chakan Plant - Super Platinum for ET - Frost & Sullivan
Manufacturing Excellence

Bajaj Auto Waluj Plant -Best-In-Class Manufacturing Stars of the Industry Group
Leadership Award - 2Wheeler

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BOARD OF DIRECTORS

 Rahul Bajaj Chairman


 Madhur Bajaj Vice Chairman
 Rajiv Bajaj Managing Director
 Sanjiv Bajaj Executive Director
 D.S. Mehta Director
 Kantikumar R. Podar Director
 Shekhar Bajaj Director
 D.J. Balaji Rao Director
 J.N. Godrej Director
 S.H. Khan Director
 Mrs. Suman Kirloskar Director
 Naresh Chandra Director
 Nanoo Pamnani Director
 Manish Kejriwal Director
 P Murari Director
 Niraj Bajaj Director

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BALANCE SHEET
AS on 31ST MARCH, 2009
Rs. In Crores
As on As on
31.03.2009 31.03.2008
1. SOURCES OF FUNDS
Shareholder’s Funds
Share Capital 514.05 385.54
Reserves & Surplus 11716.10 7453.96
12230.15 7839.50
2. Loan Funds
Secured Loans 5251.65 2461.99
Unsecured Loans 7913.91 3818.53
13165.56 6280.52
3.Foreign Currency Monetary Item
Translation Difference Account (Net) 164.12 -
Deferred tax liability(net) 865.81 975.72
26425.64 15095.74

3. APPLICATION OF FUNDS
Fixed Assets
Gross Block 13905.17 10830.83
Less : Depreciation 6259.90 5443.52
Net Block 7645.27 5387.31
Add: Capital Work-in-progress 6954.04 5064.96
14599.31 10452.27
INVESTMENTS 12968.13 4910.27
Current Assets, Loans & Advances
Interest accrued on investments 0.11 0.86
Inventories 2229.81 2421.83
Sundry Debtors 1555.20 1130.73
Cash & Bank Balances 1141.82 2397.31
Loans & Advances 4764.75 4409.52
9691.69 10360.25
Current Liabilities & Provisions
Current Liabilities 8958.25 8643.67
Provisions 1877.26 1989.43
10835.51 10633.10
Net Current assets (1143.82) (272.85)
Miscellaneous Expenditure 2.02 6.05
(to the extent not written off or
adjusted)
Total Assets (Net) 26425.64 15095.74
Significant Accounting Policies
Notes to Balance Sheet

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PROFIT & LOSS ACCOUNT


FOR THE YEAR ENDED 31ST MARCH, 2009
Rs. In Crores
Particulars 31st March 2009 31st March 2008
Income

Sale of Products and Other Income from 28599.27 33093.93


Operations
Less: Excise Duty 2938.48 4354.52

25660.79 28739.41

Dividend And Other Income 925.97 483.18

26586.76 29222.59

Expenditure

Manufacturing and other expenses 24824.37 26552.05

Expenditure transferred to capital and (916.02) (744.23)


other accounts
23908.35 25807.82

Profit before depreciation, interest, 2678.41 3414.77


exceptional items and tax
Product development expenditure 51.17 64.35

Depreciation 874.54 652.31

Interest and discounting charges[note B(4), 673.68 282.37


page 83]
Profit before exceptional items and tax 1079.02 2415.74

Notional exchange(loss)/gain(net) on 65.26 160.73


revaluation of foreign currency borrowings,
deposits and loans given
Profit before tax 1013.76 2576.47

Tax expense [note A(3)(c) page 77] 12.50 547.55

Profit after tax 1001.26 2028.92

Balance bought forward from previous year 1383.07 1013.83

Add: credit taken for dividend distribution 15.29 -


tax for previous year
Amount available for appropriation 2399.62 3042.75

Appropriations

Proposed dividend 311.61 578.43

Tax on proposed dividend 34.09 81.25

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Debenture redemption reserve 267.80

-
General reserve 100.13 1000.00

Balance carried to balance sheet 1685.99 1383.07

2399.62 3042.75

Earnings per share [note: B(7), page 85]

Ordinary shares

Basic 22.70 52.64

Diluted 20.83 48.04

‘A’ ordinary shares

Basic 23.20 -

Diluted 21.33 -

‘significant accounting policies

Notes to profit and loss account cc

COMPARATIVE STATEMENT:

It refers to the comparison of financial statements of an enterprise for


two consecutive periods. It measures the efforts of the farm by giving a clear
sight of the performance.
Comparative statements are of two types.

 Comparative Income Statement

 Comparative Balance Sheet.

The comparative income statements.


The comparative income statements reflect the operating activities
of the business where as the comparative. Balance Sheet reflects the finance &
investing activities of the enterprise. In such statement the figures are shown
as.
1) In terms of absolute monetary value.
2) Increase/Decrease in absolute value.
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3) Proportionate changes by way of Percentage.

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Comparative Income Statement
For the Year 2008 & 2009
Rs. in Crores
Particulars Absolute Absolute Absolute %
Amount 2008 Amount 2009 Change Change

Sales 33093.93 28599.27 (4494.66) (13.58)

Less: Excise Duty 4354.52 2938.48 (1416.04) (32.51)

Net Sales 28739.41 25660.79 (3078.62) (10.71)

(-) Operating Expenses


(i) Manufacturing & other 26552.05 24824.37 (1727.68) (6.50)
expenses
(ii) Expenditure Transferred to (744.23) (916.02) 171.69 23.06
Capital A/c
Total Operating Exp. (i+ii) 25807.82 23908.35 (1899.47) (7.36)

Operating Profit 2931.59 1752.44 (1179.15) (40.22)


(+) Non Operating Income 483.18 925.97 442.79 91.64

(-) Non Operating Expenses


(i) Interest Charge 282.37 673.68 391.31 138.58

(ii) Product Development Exp. 64.35 51.17 (13.18) (20.48)

Total Non Operating Exp. 346.72 724.85 404.49 159.06

Net Profit Before Tax & 2676.74 1953.56 (723.18) (27.01)


Depreciation & Exceptional
Item
(-) Depreciation 652.31 874.54 222.23 34.06

Net Profit after Depreciation 2415.74 1079.02 (1336.72) (55.33)


& Before Tax & Exceptional
Item
(-) Exceptional Item 160.73 65.26 (95.47) (59.39)

Net Profit after Depreciation 2576.47 1013.76 (1562.71) (60.65)


& Exceptional Item & Before
Tax
(-) Tax 547.55 12.50 (535.05) (97.71)

Net Profit After Depreciation 2028.92 1001.26 (1027.66) (50.65)


& Tax

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Comparative Balance Sheet


For the Year 2008 & 2009
Rs. in Crores

Particulars Amount Amount Absolute %


2008 2009 Change Change
A. Fixed Asset 10452.27 14599.31 4147.04 39.67
B. Investment 4910.27 12968.13 8057.86 164.10
C. Working Capital
i. Current Asset 10360.25 9691.69 (668.56) (6.45)
ii. Current Liability 10633.10 10835.51 202.41 1.91

Net Working Capital (i-ii) (272.85) (1143.82) (870.97) (319.21)


Capital Employed (A+B+C) 15089.69 26423.62 11333.92 75.11
(-) Deffered tax 975.72 865.81 (109.91) (11.26)
(-) Long Term Loan 6280.52 13329.68 7049.16 112.24
Shares Holder’s Fund 7839.85 12230.15 4390.30 55.99
Share Capital 385.54 514.05 128.51 33.33
Reserve & Surplus 7453.96 11716.10 4262.14 57.17
Share Holder’s Funds 7839.85 12230.15 4390.30 55.99

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COMMON SIZE INCOME STATEMENT FOR YEAR 2008 &
2009
Rs. In Crores

% of Change on Sales
Absolute Absolute % of % of sales %
PARTICULARS
Amount Amount sales 2009 change
2008 2009 2008
Net Sales 28739.41 25660.79 - - -
(-) Operating Expenses 25807.82 23908.35 89.79 93.17 3.38
Operating Profit 2931.59 1752.44 10.20 6.82 (3.38)
(-) Non Operating Expenses 346.72 724.85 1.20 2.82 1.62
(+) Non Operating Income 483.18 925.97 1.68 3.60 1.92

Net Profit Before Tax & 2676.74 1853.56 9.31 7.61 (1.7)
Depreciation

(-) Depreciation 652.31 874.54 2.26 3.40 1.14

Net Profit Before Tax & 2415.74 1079.02 8.40 4.20 (4.20)
Depreciation

Exceptional Item (160.73) 65.26 0.55 0.25 (0.30)

Net Profit After 2576.47 1013.76 8.96 3.95 (5.01)


Depreciation & Exceptional
Item before Tax

(-) Tax 547.55 12.50 1.90 0.04 (1.86)

Net Profit After Tax 2028.92 1001.26 7.05 3.90 (3.15)

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COMMON SIZE BALANCE SHEET
AS on 31ST MARCH, 2009
Rs. In Crores
As on As on Change in Change in Diff. in
31.03.2009 31.03.2008 % (2009) % (2008) Change
%
1. SOURCES OF FUNDS
Shareholder’s Funds
Share Capital 514.05 385.54 1.95 2.55 (0.61)
Reserves & Surplus 11716.10 7453.96 44.34 49.38 (5.04)
12230.15 7839.50 46.28 51.93 (5.65)
2. Loan Funds
Secured Loans 5251.65 2461.99 19.87 16.31 3.56
Unsecured Loans 7913.91 3818.53 29.95 25.30 4.65
13165.56 6280.52 49.82 41.60 8.22
3.Foreign Currency Monetary
Item
Translation Difference Account 164.12 -
(Net) 0.62 0.62
Deferred tax liability(net) 865.81 975.72 3.28 6.46 (3.19)
26425.64 15095.74 100.00 100.00 0.00
3. APPLICATION OF FUNDS
Fixed Assets
Gross Block 13905.17 10830.83 52.62 71.75 (19.13)
Less : Depreciation 6259.90 5443.52 23.69 36.06 (12.37)
Net Block 7645.27 5387.31 28.93 35.69 (6.76)
Add: Capital Work-in-progress 6954.04 5064.96 26.32 33.55 (7.24)
14599.31 10452.27 55.25 69.24 (13.99)
INVESTMENTS 12968.13 4910.27 49.07 32.53 16.55
Current Assets, Loans &
Advances
Interest accrued on investments 0.11 0.86 0.00 0.01 (0.01)
Inventories 2229.81 2421.83 8.44 16.04 (7.61)
Sundry Debtors 1555.20 1130.73 5.89 7.49 (1.61)
Cash & Bank Balances 1141.82 2397.31 4.32 15.88 (11.56)
Loans & Advances 4764.75 4409.52 18.03 29.21 (11.18)
9691.69 10360.25 36.68 68.63 (31.95)
Current Liabilities &
Provisions
Current Liabilities 8958.25 8643.67 33.90 57.26 (23.36)
Provisions 1877.26 1989.43 7.10 13.18 (6.07)
10835.51 10633.10 41.00 70.44 (29.43)
Net Current assets (1143.82) (272.85) (4.33) (1.81) (2.52)
Miscellaneous Expenditure 2.02 6.05
(To the extent not written off or adjusted) 0.01 0.04 (0.03)
Total Assets (Net) 26425.64 15095.74 100.00 100.00 0.00

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Comparative Balance sheet for the Year 2008 & 2009
In comparison to share Capital Employed
Rs. In Crores
Particulars Amount Amount % of % of %
2008 2009 Capital Capital change
Employed Employed
2008 2009
A. Fixed Asset 10452.27 14599.31 69.26 55.25 (14.04)
B. Investment 4910.27 12968.13 32.54 49.07 16.53
Working Capital
i. Current Asset 10360.25 9691.69 68.65 36.67 (31.98)
ii. Current Liability 10633.10 10835.51 70.46 41.00 (29.46)

C Working Capital (272.85) (1143.82) 1.80 4.32 2.52


.
(i-ii)
Capital Employed 15089.69 26423.62 - - -
(A+B+C)
(-) Long Term Loan 6280.52 13329.68 4.12 50.44 46.32
(-) Deferred tax 975.72 865.81 6.47 3.72 (2.75)
Shares Holders 7839.85 12230.00 51.95 46.28 (5.67)
Fund
Share Capital 385.54 514.05 2.55 1.95 (0.6)
Reserve & Surplus 7453.96 11716.10 49.39 44.33 (5.06)
Share Holders 7839.85 12230.15 51.95 46.28 (5.67)
Funds

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RATIO ANALYSIS:
Ratio analysis is a powerful tool of financial analysis. A ratio is defined as ‘the indicated
quotient of two mathematical expressions’ and “The relationship between two or more
things.”

In financial analysis, a ratio is used as a benchmark for evaluating the financial position
and performance of a firm. The absolute accounting figures reported in the financial
statements do not provide a meaningful understanding of the performance and financial
position of firm.

A. Short term Solvency:-


Current Ratio:
It is an indicator used to measure the Short term Solvency of a company.
The ideal ratio is 2:1
Current ratio = Current Asset/ Current Liability =
9691.69/10835.51 = 0.89:1
It indicates that the current ratio of the company is not in sound condition. The
company does not have enough liquid funds to repay the current liabilities. Or we
can say that the short term solvency of the company is in jeopardy.
B. Long Term Solvency:
Debt equity Ratio:
It is a measure to ascertain the long term financial policies of Company.
The ideal ratio is 1:1
Debt equity ratio= long Term Debt/Share Holders Funds
= 13165.56/12230.15 = 1.07:1
The debt equity ratio of the company is sound that the enough share
capital is available to meet the long term debt or loan of the company.
C. Capital Turnover Ratio:
It shows whether the capital utilization leads to higher profit or not.
Capital Turnover Ratio= Sales / Capital Employed
= 25660.79/26423.62 = 0.97:1
The company should try to improve the sales during the repayment period
of the long term debts to increase the contribution and cash flow.

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D. Fixed asset Turnover ratio:


It shows the extent to which the investment of the fixed assets contributes
to words sales:
Fixed asset turnover ratio: Net Sales/Net Fixed Assets
= 25660.79/7645.27= 3.35:1
It indicates that fixed asset contributes a much to the sales.
E. Net Working Capital Turnover Ratio:
It shows the unit utilized in the working capital to which extent it produce
sales.
Net working capital turnover ratio= Sales/Net Working Capital
= 25660.79/-1143.82 = -22.43:1
As the working capital is negative the ratio has no importance.
F. Net profit Ratio:
It measures the relationship between Net Profit & Net Sales. It determines
the overall probability due to various factors such as operational efficiency,
trading on equity etc. Higher the ratio greater is the capacity of the
company to withstand adverse economic conditions.
Net Profit Ratio = [Net Profit / Net Sales] x 100
= [1001.26 /25660.79] x 100= 3.90%
The Profitability ratio of the Company during the previous year was 7.06 %
and hence has decreased by 3.16% as compared to the previous year.
Immediate steps are required to boost up the sales and cost control would
also be sought to control the falling net profit ratio.

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Cash Flow Statement for the year ended 31st March,


2009
Rs. In Crores
2008-09 2007-08
A. Cash flow from Operating activities:
Profit after tax 1001.26 2028.92
Adjustments for:
Depreciation(including lease equalization adjusted in 870.05 647.82
income)
Profit on sale of assets(net) 13.07 20.56
Profit on sale of investments(net) 518.56 168.62
Income from transfer of technology 138.83 169.40
Gain on buyback of foreign currency convertible notes 50.74
(FCCN) and convertible alternative reference
securities(CARS)
Reversal of provision for diminution in value of 1.96 62.93
investments(net)
Reversal of provision for inter corporate deposits(net) 5.97 0.77
Gain on transfer of activity relating to financing of 30.00
construction equipment
Wealth tax 0.90 0.30
Tax expense 12.50 547.55
Interest/dividend(net) 270.69 33.36
Exchange differences 126.40 46.34
Employee separation cost 4.03 4.04
555.44
Operating profit before working capital changes 1556.70 2762.77
Adjustments for:
Trade and other receivables 662.40 488.52
Inventories 192.02 79.12
Trade and other payables 30.83 2067.32
501.21 1666.92
Vehicle loans and hire purchases receivables 406.22 2046.80
94.99 3713.72
Cash generated from operations 1461.71 6476.49
Direct taxes paid(net) 166.69 297.02
Net cash from operating activities 1295.02 6179.47

B. Cash flow from investing activities


Purchase of fixed assets (4029.06) (4411.26)
Sale of fixed assets 17.76 39.32
Proceeds from transfer to technology 103.03 169.40
Proceeds from transfer of activity relating to financing of 210.61
construction equipments
Loans to associates and subsidiaries (138.53) (53.34)
Advance against investments in subsidiary companies (388.52) (0.05)
and joint venture

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Investments in subsidiary companies
(8046.76) (664.44)
Investments in associate companies (33.22) (91.91)
Investments in joint venture (117.95) (601.59)
Investments in others - (421.26)
Investment in mutual fund sold/(made)(net) 795.27 (682.72)
Decrease in investments in retained interests in 8.21 14.26
securitization transactions
Sale of investments in subsidiary companies - 164.25
Sale of investments in associate companies 162.70 18.39
Sale/redemption of investments-others 603.53 106.37
Placement of long term inter corporate deposits (265.00) -
receipt of long term inter corporate deposits - 26.92
Decrease in short term inter corporate deposits 85.33 182.34
Interest received 136.94 125.56
Reacquisition dividend received 0.18 -
Dividend/income on investments received 458.42 144.50
Net cash used in investing activities (10644.67) (5724.65
C. Cash flow from financing activities
Stamp duty in foreign currency convertible notes(FCCN) (0.01) (0.01)
conversion
Premium on redemption of FCCN (including tax) (0.05) -
Brokerage on Non-convertible debentures (0.90) -
Proceeds from issue of convertible alternative reference - 1969.99
securities (CARS) (net of issue expenses)
Proceeds from right issues of shares (net of issue 4109.66 -
expenses)
Proceeds from fixed deposits 1232.47 -
Proceeds from long term borrowings 6146.15 2827.70
Prepayment of long term borrowings (3178.46) (2831.24)
Increase in short term loans (net) 1549.42 405.48
Dividend paid (including dividend tax) (642.41) (674.91)
Interest paid {including discounting charges paid. (1111.17) (566.73)
RS.345.30 crores (2007-2008 Rs. 529.59 crores)]

Net cash from financing activities 8104.70 1130.28

Net (decrease)/(increase in cash and cash equivalents (1244.95) 1585.10


Cash and cash equivalents as at march 31, (opening 2397.31 826.76
balance)
Less: exchange fluctuation on FCCN/CARS proceeds kept (10.54) (14.55)
outside India and on foreign currency back balances
Cash and cash equivalents as at March 31, (closing 1141.82 2397.31
balance)

23 Roll No: 68203U07011


Debasis Baral

FINDINGS & SUGGESTIONS:


Analysis of Comparative Income Statement
I) It shows that the Net sales decreased by 10.71%% in the current year in
comparison to 2008.
II) It shows that the operating profit decreased by 40.22% in the current year
in comparison to 2008.
III) The net profit after Depreciation & Tax of the company also increased at a
high rate that is 50.65%. This shows that the profitability of the company
has degraded as compared to the previous year. The reason being decrease
of sales and increase in interest expenses on account of increase in loan
liability.
Analysis of Comparative Balance Sheet (Absolute Change)
The fixed asset of the company has been increased considerably in comparison to
the capital employed. The purchase of fixed asset is financed by long term loans.
So, this Company is more dependent on outsider’s fund. The Company should
take steps for redemption of the long term debt & should rely upon the owner’s
fund through internal funds generation. The working capital of the company also
stands at negative figure which proves that the current assets and the current
liabilities are not proportionately maintained. The ideal current ratio should be 2.
Therefore, it can be rightly said that the company is short of liquid funds.
Analysis Common Size Income Statement
It shows that the net sales of the company increased as compared to
previous year. The Gross Profit & Net Profit also increased proportionately.
However the operating expenses as a percentage of sales increased by 3.38% and
hence there is a scope of cost reduction to that effect. Overall the company has
been able to increase its profitability considerably.
Analysis of Common Size balance sheet
In the present day of economic world, generally companies depend more on
outsiders funds. In this context, both the year have good financial planning but in
2009 is more financed on traditional lines.
In the year company is suffering from inadequacy of working capital. The
percentage of current liability is more than the percentage of current assets. So,
in this case company should take immediate appropriate step to issue more
capital or raise long term loans to raise working capital position.
Analysis of Comparative Balance sheet i n comparison to share Capital
Employed
The company’s fixed assets have been increased considerable in
comparison to the Capital employed. The purchase of fixed assets is mainly by
rising of the long term loans although there was an expansion of share capital. So
the company is more dependent on outsider’s fund. The company should take
steps for redemption of these long term loans & should rely on the owner’s fund
through internal cash generation. A further expansion of paid up share capital
can be an option.

24 Roll No: 68203U07011


Debasis Baral

CONCLUSION:

The Company’s net sales & net profit has been decreased as compared to
previous year. The decreased profit is not a good indicator of the Company’s
future prospects. The company’s fixed asset has increased considerably. There
was an expansion of share capital and loan funds to finance the same. The
increase in interest expenses accounted for the decrease in profitability. The
working capital of the company also stands at a negative figure which speaks
volumes about the poor short term solvency of the company. Dipping of sales
adds to the difficulties of the company financially. The earnings per share has
also decreased considerably.

Immediate steps are required to put the company into the right track.

25 Roll No: 68203U07011