Havells India Ltd.

INTRODUCTION

Mr. Qimat Rai Gupta is the Founder Chairman and Managing

Director of Havells India Ltd.” His leadership and vision led him to
create QRG Enterprises as one of the players in the power distribution
equipment industry as well as make its mark on the global space.

His belief in team work, implementation of the decisions,

communication and transparency through ethical values, business
integrity and technological expertise have made the QRG group and
especially Havells India Ltd the largest player low voltage power
distribution equipment industry in India and a name to reckon within
the global market. The company’s phenomenal success over the years
has been due to Mr. Qimat Rai Gupta’s mantra, “Growth through
quality, innovation and market consolidation". His focus on research
and development has enabled Havells develop products for consumers
that offer great value. His constant emphasis on promoting energy
conservation and environmental preservation coupled with his
philanthropic service to the economically weaker section of the
society is his way of giving back in return to the society that has
helped this organization realize its true potential.

Havells India Ltd is a billion-dollar-plus Indian electrical equipment

company with products ranging from industrial & domestic circuit
protection switchgear, cables & wires, motors, fans, power capacitors,
compact fluorescent lamps (CFL), and luminaries for domestic,
commercial & industrial applications, modular switches covering
household, commercial and industrial electrical needs. The company
is listed on the Bombay Stock Exchange.

Havells owns global brands like Crabtree, Sylvania, Concord,

Luminance, and Linolite & SLI Lighting. Havells has 91 branches /
representative offices and over 8000 professionals in over 50
countries. Its seven manufacturing plants in India are located at
Haridwar, Baddi, Noida, Faridabad, Alwar, Neemrana, and 8
manufacturing plants are located across Europe, Latin America &
Africa. It has a 20,000 strong global distribution network

Products:-
• Building Circuit Protection

o Miniature Circuit Breaker (MCB)

o Changeover Switch
o Residual Current Circuit Breaker (RCCB)
o Nylon Fuse Base
o Fuse Link and Fuse Base
o RCBO
o Distribution Board (DB)
o Indicator Light

• Industrial Circuit Protection

o Air Circuit Breaker
o MCCB
o Nylon Fuse Base
o Fuse Link and Fuse Base

• Motors
o Inverter Duty Motors with Forced Cooling
o Crane Duty Motors
o Brake Motors`

• Capacitors
o Normal Duty
o Heavy Duty
o Super Heavy Duty
o Agriculture Duty
o Motor Run Capacitors

• Lighting

Consumer lighting
o Commercial Lighting
o down Lighter
o Area Lighting
o Road Lighting

o Specialty Lamps
• CFL

• Fans

Corporate:-
The QRG Group defines corporate governance strategically, which
encompasses not only what Havells does as a company with their
profits, but also how they make them. Company addresses how the
company manages its economic, social, and environmental impacts,
as well as its relationships in all key spheres of influence: the
workplace, the marketplace, the supply chain, the community, and the
public policy realm. Their eco responsibility initiative also focuses on
how they run their business, and includes efforts to develop an
alternative-energy strategy, and thus reduce the environmental
impact of their operations.

Corporate Social Responsibility

Havells contributes to socially responsible activities, like providing
mid-day meal in government schools in Alwar district, covering
15000 students per day. Besides this the company has acquired land
for constructing a larger kitchen with all the modern facilities to serve
freshly cooked food to 50000 students in the area. Havells runs a
mobile Medical Van, equipped with a trained doctor and necessary
medicines in the rural areas of Delhi & NCR for the very poor and
needy villagers. They have also set up free medical check-up camps.
In the past, the company has also contributed to the society during
various national calamities like the Bihar Flood, Tsunami and Kargil
National Relief Fund etc.
Retail initiatives
The company has been promoting its brand through sponsorship of
cricket events like Champions Trophy, Champions League, IPL
Season 2, IPL Season1, and T20 World Cup. The company has also
taken the initiative to reach directly to the consumers through
"Havells Galaxy" – a one stop shop for all electrical and lighting
needs. This is yet another initiative by Havells targeted at end-users,
architects and Consultants, to showcase Havells products. The
products they offer combine the attributes of elegance, technological
advancement and convenience all in one.

HavellsWorld

Havells announced the opening of its first display & learning centres
‘Havells World’ in the country on 29th March, 2010, New Delhi.
Havells has also opened its first Havells World in Mumbai. Havells
World is targeted at the retailer community, involved in retailing the
Havells electrical and lighting products. The Company aims to
accelerate its growth with this initiative and plans to open 10 such
stores in the country. It will serve as the reference location for all the
retailers to get a comprehensive overview of the entire range of the
Havells ‘products.

Giving the consumers, a much wider choice in electrical consumer

products, the Havells World will offer an end to end solution to all
electrical needs from the time electricity enters home to the light
output. Havells World brings to its consumer a wide range in stylish
and high quality low voltage electrical equipments including; Cables,
Wires, Fans, CFLs, LED Lightings, Lighting Fixtures, Crabtree
switches, Motors and Domestic & Industrial Switchgears etc.
REFRENCES
1. http://en.wikipedia.org/wiki/Havells

2. Wikipedia articles with possible conflicts of interest from June

2010 | Articles needing additional references from July 2010
COMPANY PROFILE

 Incorporation Year
  1983

 Chairman
  Qimat Rai Gupta

 Managing Director
  

 Company Secretary
  Sanjay Kumar Gupta

 Auditor
  V R Bansal & Associates

 Registered Office
  1/7 Ram Kishore Road,
  Civil Lines,
  Delhi,  110054,  Delhi

 Telephone
  91-011-23935237/23944469-72

 Fax
  91-011-23921500

 E-mail
  investors@havells.com

 Website
  http://www.havells.com

 Face Value (Rs)

 5

 BSE Code
  517354

 BSE Group
 B

 NSE Code
  HAVELLS

 Bloomberg
  HAVL IN

 Reuters
  HVEL.BO

 ISIN Demat
  INE176B01026

 Market Lot
 1

 Listing
  Mumbai, NSE

 Financial Year End

 3

 Book Closure Month

  Sep

 AGM Month
  Sep

BALANCE SHEET

Year

Mar 10

Mar 09

SOURCES OF FUNDS :

Share Capital +
31.19
30.08

Reserves Total +
1,104.00
901.83

Equity Share Warrants

0.00
2.42

Equity Application Money

0.00
0.00

Total Shareholders’ Funds

1,135.19
934.33

Secured Loans +
115.81
24.36

Unsecured Loans +
0.00
45.92

Total Debt
115.81
70.28

Total Liabilities
1,251.00
1,004.61

APPLICATION OF FUNDS :

Gross Block +
643.95
507.62

Less : Accumulated Depreciation +

72.41
57.93

Less: Impairment of Assets

0.00
0.00
Net Block +
571.54
449.69

Lease Adjustment
0.00
0.00

Capital Work in Progress+

29.69
15.79

Investments +
531.71
387.87

Current Assets, Loans & Advances

Inventories +
330.65
207.53

Sundry Debtors +
79.47
86.74

Cash and Bank+

68.31
157.37

Loans and Advances +

82.82
81.58

Total Current Assets

561.25
533.22

Less : Current Liabilities and Provisions

Current Liabilities +
396.03
347.37

Provisions +
20.14
19.95

Total Current Liabilities

416.17
367.32

Net Current Assets

145.08
165.90

Miscellaneous Expenses not written off +

0.02
0.05

Deferred Tax Assets

21.47
24.07

Deferred Tax Liability

48.51
38.76

Net Deferred Tax

-27.04
-14.69
Total Assets
1,251.00
1,004.61

Contingent Liabilities+
323.55
383.56

PROFIT AND LOSS ACCOUNT

  Year
Mar 10(12) 
Mar 09(12) 

  INCOME :
 
 

  Sales Turnover +
2,573.54
2,330.61

   Excise Duty
104.77
135.46

  Net Sales
2,468.77
2,195.15

  Other Income +
19.28
10.86

  Stock Adjustments +
73.67
-169.00

   Total Income
2,561.72
2,037.01

  EXPENDITURE :
 
 

  Raw Materials +
1,496.97

  Power & Fuel Cost+

35.67
24.33

  Employee Cost +
75.58
85.96

  Other Manufacturing Expenses +

187.15
143.05

  Selling and Administration Expenses +

424.52
361.74

  Miscellaneous Expenses +
16.56
14.56

  Less: Pre-operative Expenses Capitalised+

0.00
0.00

   Total Expenditure
2,236.45
1,826.92

  Operating Profit
325.27
210.09

  Interest +
11.74
25.03

  Gross Profit
313.53
185.06

  Depreciation+
23.27
17.86

  Profit Before Tax

290.26
167.20

  Tax+
49.75
20.90

  Fringe Benefit tax+

0.00
0.00
  Deferred Tax+
12.35
1.07

  Reported Net Profit

228.16
145.23

  Extraordinary Items +
-5.88
-0.68

  Adjusted Net Profit

234.04
145.91

  Adjst. below Net Profit +

0.00
0.00

  P & L Balance brought forward

418.41
305.33

  Statutory Appropriations +
0.00
0.00

  Appropriations +
49.75
32.15

   P & L Balance carried down

596.82
418.41

  Dividend
23.12
15.04

   Preference Dividend
0.00
0.00

  Equity Dividend %
75.00
50.00

   Earnings Per Share-Unit Curr

37.27
23.72

  Earnings Per Share(Adj)-Unit Curr

   Book Value-Unit Curr

188.51
154.91

Cash flow statement of Havells

Mar Mar Mar Mar
Mar 10 Mar 09 Mar 08 Mar 07 Mar 06 Mar 01
05 04 03 02
Cash Flow Summary
Cash and Cash Equivalents at Beginning of the year 155.43 64.22 26.61 0.47 0.35 0.11 0.36 0.63 0.49 1.35

Net Cash from Operating Activities 205.15 273.17 129.02 202.01 142.69 -7.14 9.31 -8.08 12.97 -3.84

- - - - - -
Net Cash Used in Investing Activities -315 -99.09 -62.58 -4.42
309.45 322.35 49.69 2.65 10.36 13.47

Net Cash Used in Financing Activities 16.55 140.39 223.59 -76.78 -79.99 57.07 - 12.23 -2.47 18.23
 6.91

-
Net Inc/(Dec) in Cash and Cash Equivalent -87.75 91.21 37.61 26.14 0.12 0.24 -0.27 0.14 0.92
0.25

Cash and Cash Equivalents at End of the year 67.68 155.43 64.22 26.61 0.47 0.35 0.11 0.36 0.63 2.27

Fund flow statement of Havells

Year Mar 10 Mar 09 Mar 08 Mar 07 Mar 06

Sources of funds

Cash profit 242.64 160.53 154.81 111.06 69.75

Increase in equity 0 1.12 2.08 14.43 6.65

Increase in other net worth 0 136.05 273.4 0 25.26

Increase in loan funds 45.53 34.48 0 0 0

Decrease in gross block 0 0 0 0 0

Decrease in investments 0 0 0 0 0

Decrease in working capital 33.17 1.42 0 55.82 36.89

Others 1.14 0.05 0.04 0 0

Total Inflow 322.48 333.65 430.33 181.31 138.55

Application of funds

Cash loss 0 0 0 0 0

Decrease in net worth 5.29 0 0 15.73 0

Decrease in loan funds 0 0 20.26 53.78 64.38

Increase in gross block 150.23 95.53 154.27 97.96 67.41

Increase in investments 143.84 223.08 161.31 0.31 0

Increase in working capital 0 0 80.01 0 0

Dividend 23.12 15.04 14.48 13.44 6.72

Others 0 0 0 0.09 0.04

Total Outflow 322.48 333.65 430.33 181.31 138.55

FINANCIAL STATEMENTS

Financial statement may refer to any statement or document which discloses

financial information relating to business concern but technically financial
statement includes income statement or profit & loss account and balance sheet.

Financial statements

 Income statement or trading & p/l account

 Position statement or balance sheet
 Statement of retained earning
 Statement of changes in financial position

Tools and techniques of analysis and interpretation:-

1. Comparative financial statement or analysis ,

2. Common –size statement or analysis
3. Trend analysis
4. Ratio analysis
5. Fund flow statement
6. Cash flow statement
7. Cost Analysis

Comparative financial statement or analysis: -

It is an important horizontal Technique in which financial data of two or more
period (year) are presented in a comparative from.

a) A comparative income statement show the comparison of various items

of cost ,expenses and final the result in form of net profit and net loss.

Percent change =absolute change /figure of the previous year *100

b) A comparative balance sheet reveals the position of assets and liabilities

on two or more different data along with changes in these items.
Common –size statement or analysis:-

Common size financial statement facilities both of analysis i.e.; horizontal as

well as vertical. This statement indicates the relationship of various items in
terms of percentage with some common or basis items .it expressed the net sale
in term of percentage.

Trend analysis:-

This analysis is an important tool of horizontal financial analysis .under this

method ratio are calculated for selected items of the financial statement taking
the figure of the base year as 100 and for this purpose the following formula
may be used

Trend ratio =current year amount /base year amount *100

Ratio analysis:-

Ratio analysis is also an important method of analysis of financial statement .it

is adopted to establish meaningful mathematical relation between two items or
two group of items show in financial statement.

Fund flow statement:-

Financial statement can also be analyzed by preparing fund flow statement and
in that case it is known as fund flow analysis .This statement is prepared in
order to reveal the source from which funds are obtained the uses to which they
are being put. Here fund stand for working capital.

Cash flow statement:-

This technique is very useful in the management of cash and analysis of short
term liquidity .under this method a statement is prepared to show the inflow and
outflow of cash related to various activities in the concern during a specific
period.

OBJECTIVE OF ANALYSIS AND INTERPRETATION:-

 To determine and examine the current earning capacity and to estimate

future prospects.

 To estimate overall as well as segment wise performance efficiency and

managerial ability in a business concern

 To determine long term as well as segment wise performance efficiency

and managerial ability in a business concern.

 To forecast the future result and prepare the budgets

 To make inter-firm comparison on the basis of operational efficiency

and financial positive of various firms engaged in the same industry

 To identify financial weaknesses of the firm and to suggest remedial

measures.

 To determine the growth prospects of different division as well of the

firm as a whole.
RESEARCH METHOLOGY:-

STUDY: -

This Research is based on analysis and interpretation of financial statement, to

know the financial position of the company, identify financial weakness of the
firm and to suggest remedial.

DATA COLLECTION:-

 Primary data
 Secondary data

Primary data:-
Primary data are those which are collated a fresh and for the first time & thus
happen to be original in character. Primary data is obtained by the study
specially designed to fulfil the data needs to problem hand. Such data are
original in characters generated by the way of conducting survey

Secondary data:-
Secondary data are those which have already been collected by someone else
and which have already been passed through the statistical process. Secondary
data consists of not only published records and reports but also unpublished
records.

We are using secondary data in our research.

 Financial analysis of Havells India ltd.

Comparative analysis of Balance sheet

Absolute
   Year 2009 2010 change % change
  SOURCES OF FUNDS :
Share capital+ 30.08 31.19 1.11 3.7
Reserves total+ 901.83 1,104.00 202.17 22.4
  Equity Share Warrants 2.42 0 -2.42 -100
   Equity Application Money 0 0 0 0
  Total Shareholders’ Funds 934.33 1,135.19 200.86 21.5
  Secured Loans + 24.36 115.81 91.45 375.4
  Unsecured Loans + 45.92 0 -45.92 -100
   Total Debt 70.28 115.81 45.53 64.8
  Total Liabilities 1,004.61 1,251.00 246.39 24.5
   APPLICATION OF FUNDS :
  Gross Block + 507.62 643.95 136.33 26.8
  Less : Accumulated Depreciation + 57.93 72.41 14.48 25
   Less: Impairment of Assets 0 0 0 0
  Net Block + 449.69 571.54 121.85 27.1
   Lease Adjustment 0 0 0 0
  Capital Work in Progress+ 15.79 29.69 13.9 88
  Investments + 387.87 531.71 143.84 37
  Current Assets, Loans & Advances
  Inventories + 207.53 330.65 123.12 59.3
  Sundry Debtors + 86.74 79.47 -7.27 -8.4
  Cash and Bank+ 157.37 68.31 -89.06 -56.6
  Loans and Advances + 81.58 82.82 1.24 1.5
  Total Current Assets 533.22 561.25 28.03 5.3
   Less : Current Liabilities and Provisions
  Current Liabilities + 347.37 396.03 48.66 14
  Provisions + 19.95 20.14 0.19 0.95
   Total Current Liabilities 367.32 416.17 48.85 13.3
  Net Current Assets 165.9 145.08 -20.82 -12.5
  Miscellaneous Exp. not written off + 0.05 0.02 -0.03 -60
  Deferred Tax Assets 24.07 21.47 -2.6 -10.8
   Deferred Tax Liability 38.76 48.51 9.75 25.2
  Net Deferred Tax -14.69 -27.04 -12.35 -2704
   Total Assets 1,004.61 1,251.00 246.39 24.5
  Contingent Liabilities+ 383.56 323.55 -60.01 -15.6
INTERPRETATION
The balance sheet of Havells India limited show that a large percentage change
between 2009 and 2010 ,the long term investments have increased by 37%

(I.e. Rs 143.84 / Rs 387.87), the current status of company is not good because
the company’s cash, bank balance is in negative. It is decreased by (-56%),
company’s debtors show also a negative figure it means company have bad
debts by (-7%). Havells India limited company financial position is showing not
good.company’s have financial crisis.

Comparative analysis of income statement

Mar Absolute
   Year Mar 09(12)  10(12) change % change
  INCOME :
  Sales Turnover + 2,330.61 2,573.54 242.93 10.4
   Excise Duty 135.46 104.77 -30.69 -22.6
  Net Sales 2,195.15 2,468.77 273.62 12.46
  Other Income + 10.86 19.28 8.42 77
  Stock Adjustments + -169 73.67 242 7300
   Total Income 2,037.01 2,561.72 524.7 25.75
  EXPENDITURE :
  Raw Materials + 1,197.28 1,496.97 300 25
  Power & Fuel Cost+ 24.33 35.67 11.34 46.6
  Employee Cost + 85.96 75.58 -10.38 -12
  Other Manufacturing Expenses + 143.05 187.15 44.1 31
  Selling and Administration Expenses + 361.74 424.52 62.78 17
  Miscellaneous Expenses + 14.56 16.56 2 14
  Less: Pre-operative Expenses Capitalised+ 0 0 0 0
   Total Expenditure 1,826.92 2,236.45 409.5 22.4
  Operating Profit 210.09 325.27 115 55
  Interest + 25.03 11.74 -13.29 -53
  Gross Profit 185.06 313.53 128.47 69
  Depreciation+ 17.86 23.27 5.41 30
  Profit Before Tax 167.2 290.26 123 74
  Tax+ 20.9 49.75 29 139
  Fringe Benefit tax+ 0 0 0 0
  Deferred Tax+ 1.07 12.35 11.3 1056
  Reported Net Profit 145.23 228.16 83 57
  Extraordinary Items + -0.68 -5.88 -5.2 -588
  Adjusted Net Profit 145.91 234.04 88 60
  Adjst. below Net Profit + 0 0 0 0
  P & L Balance brought forward 305.33 418.41 113 37
  Statutory Appropriations + 0 0 0 0
  Appropriations + 32.15 49.75 17.6 55
   P & L Balance carried down 418.41 596.82 178.4 43
  Dividend 15.04 23.12 8.1 54
   Preference Dividend 0 0 0 0
  Equity Dividend % 50 75 25 50
   Earnings Per Share-Unit Curr 23.72 37.27 13.55 57
  Earnings Per Share(Adj)-Unit Curr
   Book Value-Unit Curr 154.91 188.51 34 22

Common size of Balance sheet

   Year 2009 % change 2010 %change
  SOURCES OF FUNDS :
Share capital+ 30.08 3 31.19 2.5
Reserves total+ 901.83 89.76 1,104.00 88
  Equity Share Warrants 2.42 0.24 0 0
   Equity Application Money 0 0 0 0
  Total Shareholders’ Funds 934.33 93 1,135.19 90.7
  Secured Loans + 24.36 2.4 115.81 9.3
  Unsecured Loans + 45.92 4.6 0 0
   Total Debt 70.28 7 115.81
  Total Liabilities 1,004.61 100 1,251.00 100
   APPLICATION OF FUNDS :
  Gross Block + 507.62 50.5 643.95 51.5
  Less : Accumulated Depreciation + 57.93 5.8 72.41 5.8
   Less: Impairment of Assets 0 0 0 0
  Net Block + 449.69 44.8 571.54 45.7
   Lease Adjustment 0 0 0 0
  Capital Work in Progress+ 15.79 1.6 29.69 2.4
  Investments + 387.87 38.6 531.71 42.5
  Current Assets, Loans & Advances
  Inventories + 207.53 20.6 330.65 26
  Sundry Debtors + 86.74 8.6 79.47 6.3
  Cash and Bank+ 157.37 15.7 68.31 5.5
  Loans and Advances + 81.58 8 82.82 6.6
  Total Current Assets 533.22 53 561.25 45
   Less : Current Liabilities and Provisions
  Current Liabilities + 347.37 34.6 396.03 32
  Provisions + 19.95 2 20.14 1.6
   Total Current Liabilities 367.32 36.6 416.17 33
  Net Current Assets 165.9 16.5 145.08 12
  Miscellaneous Exp. not written off + 0.05 0.005 0.02 0.002
  Deferred Tax Assets 24.07 2.4 21.47 1.7
   Deferred Tax Liability 38.76 4 48.51 3.8
  Net Deferred Tax -14.69 -1.5 -27.04 -2.16
   Total Assets 1,004.61 100 1,251.00 100
  Contingent Liabilities+ 383.56 38.18 323.55 26

Common size of income statement

Mar
   Year Mar 09(12)  % change 10(12)  %change
  INCOME :
  Sales Turnover + 2,330.61 106 2573.54 104
   Excise Duty 135.46 6.17 104.77 4.24
  Net Sales 2,195.15 100 2468.77 100
  Other Income + 10.86 0.49 19.28 0.78
  Stock Adjustments + -169 -7.7 73.67 3
   Total Income 2,037.01 92.8 2561.72 103.7
  EXPENDITURE :
  Raw Materials + 1,197.28 54.5 1496.97 60.6
  Power & Fuel Cost+ 24.33 1.11 35.67 1.44
  Employee Cost + 85.96 3.9 75.58 3.06
  Other Manufacturing Expenses + 143.05 6.5 187.15 7.6
  Selling and Administration Expenses + 361.74 16.5 424.52 17.2
  Miscellaneous Expenses + 14.56 0.66 16.56 0.69
  Less: Pre-operative Expenses Capitalised+ 0 0 0 0
   Total Expenditure 1,826.92 83 2236.45 91
  Operating Profit 210.09 9.6 325.27 13.2
  Interest + 25.03 1.14 11.74 0.47
  Gross Profit 185.06 8.4 313.53 0.13
  Depreciation+ 17.86 0.8 23.27 0.94
  Profit Before Tax 167.2 7.6 290.26 11.75
  Tax+ 20.9 0.95 49.75 2.01
  Fringe Benefit tax+ 0 0 0 0
  Deferred Tax+ 1.07 0.04 12.35 0.5
  Reported Net Profit 145.23 6.6 228.16 9.2
  Extraordinary Items + -0.68 -0.003 -5.88 -0.24
  Adjusted Net Profit 145.91 6.64 234.04 9.5
  Adjst. below Net Profit + 0 0 0 0
  P & L Balance brought forward 305.33 13.9 418.41 16.9
  Statutory Appropriations + 0 0 0 0
  Appropriations + 32.15 1.46 49.75 2.01
   P & L Balance carried down 418.41 19 596.82 24.2
  Dividend 15.04 0.68 23.12 0.94
   Preference Dividend 0 0 0 0
  Equity Dividend % 50 2.3 75 3.04
   Earnings Per Share-Unit Curr 23.72 1.08 37.27 1.5
  Earnings Per Share(Adj)-Unit Curr
   Book Value-Unit Curr 154.91 7 188.51 7.6

Trend analysis of Balance sheet

   Year 2009 % change 2010 %change
  SOURCES OF FUNDS :
Share capital+ 30.08 100 31.19 103.7
Reserves total+ 901.83 100 1,104.00 122
  Equity Share Warrants 2.42 100 0 0
   Equity Application Money 0 100 0 0
  Total Shareholders’ Funds 934.33 100 1,135.19 121.5
  Secured Loans + 24.36 100 115.81 475
  Unsecured Loans + 45.92 100 0
   Total Debt 70.28 100 115.81 165
  Total Liabilities 1,004.61 100 1,251.00 124
   APPLICATION OF FUNDS :
  Gross Block + 507.62 100 643.95 127
  Less : Accumulated Depreciation + 57.93 100 72.41 125
   Less: Impairment of Assets 0 100 0 0
  Net Block + 449.69 100 571.54 127
   Lease Adjustment 0 100 0 0
  Capital Work in Progress+ 15.79 100 29.69 188
  Investments + 387.87 100 531.71 137
  Current Assets, Loans & Advances
  Inventories + 207.53 100 330.65 159
  Sundry Debtors + 86.74 100 79.47 92
  Cash and Bank+ 157.37 100 68.31 43.4
  Loans and Advances + 81.58 100 82.82 102
  Total Current Assets 533.22 100 561.25 105
   Less : Current Liabilities and Provisions
  Current Liabilities + 347.37 100 396.03 114
  Provisions + 19.95 100 20.14 101
   Total Current Liabilities 367.32 100 416.17 113
  Net Current Assets 165.9 100 145.08 87.5
  Miscellaneous Exp. not written off + 0.05 100 0.02 40
  Deferred Tax Assets 24.07 100 21.47 89.2
   Deferred Tax Liability 38.76 100 48.51 125
  Net Deferred Tax -14.69 100 -27.04 184
   Total Assets 1,004.61 100 1,251.00 124

Trend analysis of income statement

Year 2009 % 2010 %
INCOME:
Sales Turnover + 2330.61 100 2573.54 110.4
   Excise Duty 135.46 100 104.77 77.3
Net Sales 2195.15 100 2468.77 112.5
Other Income + 10.86 100 19.28 177.5
Stock Adjustments + -169 100 73.67 -9533
Total Income 2037.01 100 2561.72 125.8
EXPENDITURE 1197.28 100 1496.97 125
  Power & Fuel Cost+ 24.33 100 35.67 147
Employee Cost + 85.96 100 75.58 88
Other Manufacturing Expenses +   143.05 100 187.15 131
Selling and Administration Expenses + 361.74 100 424.52 117
Miscellaneous Expenses + 14.56 100 16.56 114
  Less: Pre-operative Expenses
Capitalised+ 0 100 0 0
Expenditure Total 1826.92 100 2236.45 122
Operating Profit 210.09 100 325.27 155
  Interest + 25.03 100 11.74 47
  Gross Profit 185.06 100 313.53 169
  Depreciation+ 17.86 100 23.27 130
Profit Before Tax 167.2 100 290.26 174
  Tax+ 20.9 100 49.75 238
Fringe Benefit tax+ 0 100 0 0
Deferred Tax+ 1.07 100 12.35 1154
Reported Net Profit 145.23 100 228.16 157
Extraordinary Items + -0.68 100 -5.88 -656
Adjusted Net Profit 145.91 100 234.04 160
  Adjst. below Net Profit + 0 100 0 0
  P & L Balance brought forward 305.33 100 418.41 137
Statutory Appropriations + 0 100 0 0
Appropriations + 32.15 100 49.75 155
   P & L Balance carried down 418.41 100 596.82 143
  Dividend 15.04 100 23.12 154
Preference Dividend 0 100 0 0
Equity Dividend % 50 100 75 150
Earnings Per Share-Unit Curr 23.72 100 37.27 157
  Earnings Per Share(Adj)-Unit Curr 100 0
Book Value-Unit Curr 154.91 100 188.51 122
 Ratio Analysis:-

Ratio Analysis can be defined as the study and interpretation of relationships

between various financial variables, by investor or lenders. It is a quantitative
investment technique used for comparing a company’s financial performance to
the market in general. A change in these ratios helps to bring about a change in the
way a company works. It helps to identify areas where the management needs
change.

Types of Ratios calculated:-

A number of ratios are calculated by companies for evaluating their short and long
term performance and also to know liquidity and profitability. Some of the most
commonly used ratios are:

1. Liquidity ratios:
It can be defined as a ratio that indicates what proportion of a company’s assets
can be readily converted into cash in the short term. Some of the liquidity ratios
are:
 Current ratio:-
The current ratio is calculated from balance sheet data as current assets/current
liabilities.The thumb of rule of current ratio 2:1. It means that firm can pay its
current liabilities from its current assets two times over.

Formula:
Current ratio= current Assets/current liabilities

 Quick ratio:-
Some current assets can be converted into cash more easily than others. Such
assets are classified as quick assets. Quick assets include cash, debtors, marketable
securities and other assets which can be converted quickly into cash. Its thumb of
rule 1:1, the company can meet all its current liabilities at a short notice. The acid
test ratio is better indicator of liquidity.
Formula:
Quick ratio= quick assets/current liabilities
 Absolute liquid ratio:-
Absolute liquidity is represented by cash and near cash items. It is a ratio of
absolute liquid assets to current liabilities. In the computation of this ratio only the
absolute liquid assets are compared with the liquid liabilities. The absolute liquid
assets are cash, bank and marketable securities. It is to be observed that
receivables (debtors/accounts receivables and bills receivables) are eliminated
from the list of liquid assets in order to obtain absolute4 liquid assets since there
may be some doubt in their liquidity.
Formula:
Absolute liquid ratio=Absolute liquid assets/current
Liabilities

2. Profitability ratios:
It can be defined as a ratio that explains the profitability of a company during a
specific period of time. It explains how profitable a company is. These ratios can
be compared during different financial years to see the overall performance of a
company. Some of the profitability ratios are:

 Gross Profit ratio:-

The basic components for the calculation of gross profit ratio are gross profit and
net sales. Net sales mean that sale minus sales returns. Gross profit would be the
difference between net sales and cost of goods sold. Cost of goods sold in the case
of a trading concern would be equal to opening stock plus purchases, minus
closing stock plus all direct expenses relating to purchases. In the case of
manufacturing concern, it would be equal to the sum of the cost of raw materials,
wages, direct expenses and all manufacturing expenses. In other words, generally
the expenses charged to profit and loss account or operating expenses are excluded
from the calculation of cost of goods sold.
Formula:
Gross profit ratio=gross profit/Net sales*100
 Net profit ratio:-
This ratio is used by investors, creditors, and lenders to judge the profit earnings
capacity of the organisation. It indicates the overall profitability of the
organisation after meeting all expenses, charges, depreciation, etc.
Formula:

Net profit ratio= Net profit /Net sales*100

 Operating ratio:
Operating ratio indicates the relationship between operating expenses and sales.
This ratio indicates operating efficiency of the organisation and is important to the
management in evaluating its own efficiency.
Formula:
Operating ratio=Operating costs/Net sales*100

 Return on Investment(ROI):-
This ratio measure the percentage returns to the company on the funds it had
employed and is a good indication of the profitability of the organisation. It is also
a useful overall measure of the ability of the management.
Formula:
Return on investment= net profit/shareholder’s
Funds*100

 Return on Equity(ROE):-
Return on equity is the single measure that summarises the financial health of a
company. Number of pennies earned during the year on each dollar. As a very
rough rule of thumb, return on equity consistently above 15% is a sign of good
health of the company; ROE consistently below 15% is sign of trouble.
Formula:
Return on equity= (Net profit-preference dividend)/equity
Shareholders*100
 Earnings Per Share:-
Earnings per share (EPS) are such a fundamental number that we usually forget
that is a financial ratio. The necessary adjustments for dilutive securities. It net
income attribute to each share of common stock.
 Formula:

Earnings per share= (Net profit-preference dividend)

/no. of equity share outstanding

3. Some other ratios are:

 Inventory turnover ratio:-

Stock turnover ratio and inventory turnover ratio are the same. This ratio is a
relationship between the cost of goods sold during a particular period of time and
the cost of average inventory during a particular period. It is expressed in number
of times. Stock turnover ratio / Inventory turnover ratio indicates the number of
time the stock has been turned over during the period and evaluates the efficiency
with which a firm is able to manage its inventory. This ratio indicates whether
investment in stock is within proper limit or not.

Formula:

Inventory turnover ratio=COGS/Average stock

Inventory conversion ratio=365/ITR

 Debtor’s turnover ratio:-

Debtor’s turnover ratio or accounts receivable turnover ratio indicates the

velocity of debt collection of a firm. In simple words it indicates the number of
times average debtors (receivable) are turned over during a year.

Formula:

Debtor’s turnover ratio=Net credit sales/Average debtors

Debtor’s collection period=365/DTR

 Creditors turnover ratio:
This ratio is similar to the debtor turnover ratio. It compares creditors with the
total credit purchases.
Formula:
Creditors turnover ratio=Net credit purchase/Average creditor

Average payment period=365/CTR

 Solvency ratio:
Debt-to-Equity ratio indicates the relationship between the external equities or
outsiders funds and the internal equities or shareholders funds.
Formula:
Debt to equity ratio= total debt /equity

 interest coverage ratio:

Interest coverage ratio is also known as debt service ratio or debt service
coverage ratio.
Formula:
Interest coverage ratio=Earnings before interest tax/ interest
Charges
FOR 2009:-
*LIQUIDITY RATIO
1. Current ratio (rupees in crores)

Current assets = 533.22

Current liability= 367.32

Current ratio = current assets/current liability

= 533.22/367.32

= 1.45

Interpretation

As a rule of thumb a ratio of2:1 is considered sound enough however it is not

universally applicable. In Havells India limited. The current ratio is very high
.it is 1.45 which indicates that the enterprise has not enough finance to meet
their current obligation.

2 .Acid test ratio/Quick ratio

Current assets = 533.22

Current liability = 367.32

Quick ratio =current assets – (investment +prepaid expense)/current liability

=533.22-207.53/367.32

= 325.69/367.32

=0.89

INTERPRETATION
Current ratio and test ratio indicate the ability of the enterprise to meet its
current liability however the acid test ratio is better indicator of liquidity. Acid
test ratio of Havells India limited is 0.89.the acid test ratio of company is not
too much .it means company has not too much financial resources .so
Company cannot easily meet their current liability.

3. Absolute liquid ratio

Absolute liquid assets =cash in hand + cash in bank +marketable securities

Cash and bank =157.37

Current liability=367.32

Absolute liquid ratio =absolute liquid assets/current liability

=157.37/533.22

=0.29

INTERPRETATION

Absolute liquidity is represented by cash and near cash item .the absolute
liquid ratio are cash, bank and marketable securities .A standard of 0.5:1
absolute liquidty is considered. The ratio of absolute liquid ratio is 0.29 which
show that company has too much liquidty assets which is good for the
company .it show a good financial position in the market.

*profitability ratio

1. Gross profit ratio

Gross profit =185.06
Net sales = 2195.15

Gross profit ratio =gross profit/net sales*100

 =185.06/2195.15*100
=8.43%

INTERPRETATION
Gross profit ratio indicates what extent the selling price of goods per
unit may be reduced without incurring losses on operation. It reflects
the efficiency with which a firm produced its product. The ratio of
company is 8.43 which show that company production is good according
to their ratio.

2. Net profit ratio

Net profit= 145.23
Net sales =2195.15

Net profit ratio=net profit/net sales*100

=145.23/2195.15*100
=6.6%

INTERPRETATION

Actually the business totally depends on the profit of the company.

Business is only run success if it earns profit. So net profit ratio of this
company is 6.6% which show that company is not earns a huge net
profit.

3. Operating ratio
Operating cost =COGS + operating expenses
=2010.09+361.74+14.56=2386.39
Net sales = 2195.15
Operating ratio=operating cost /net sales*100
=2386.39/2195.15*100
=108.7%
INTERPRETATION
Operating ratio indicate the relationship between operating expenses
and sales. The ratio indicates operating efficiency of the organisation and
it is important to the management to evaluating its own efficiency.
The ratio of reliance power is 108.7%which indicate the
efficiency of the organisation is good but not better management should
take more steps towards their utilisation of their resources.

4. Return on investment
Net profit =145.23
Shareholder fund=934.33

Return on investment=net profit/shareholder fund*100

=145.23/934.33*100
=15.54%
INTERPRETATION
Through this ratio company can measure the percentage return to the
company on the fund .it is also a good indication of the profitability of
the organisation.
The company has ratio of RETURN OF INVESTMENT is 15.54% this
percentage sufficient for the company because profit is a function of
accounting and operating policies of an enterprise.

5. Return on equity
Net profit=145.23
Preference share dividend=0
Share holder fund=934.33
Return on equity =Net profit-Preference dividend/Shareholder fund*100
=145.23-0/934.33*100
=15.54%
INTERPRETATION
Return on equity measure a corporation ,s profitability by revealing how much
profit a company generate with the money shareholder have invested. The
ratio of ROE is15.54% indicating good performance in generating profit from
that amount which is invested by the shareholder.

6. Earnings per share =Net profit-preference dividend/No. Of equity

share outstanding

*Activity /turnover ratio

1. Inventory turnover ratio

COGS=net sales-gross profit

=2195.15-185.06

=2010.09

Average stock= 207.53

Inventory turnover ratio=COGS/average stock

= 2010.09/ 207.53 =10

INTERPRETATION

Inventory turnover ratio indicate that how many times a company, s inventory
is sold and replaced over a period. A high ratio implies either strong sales or
effective buying. But company ITR is 10 which show that company has good
turnover implies good sales.

2. Debtor’s turnover ratio=net credit annual sales/average

debtors
Net credit sales= 2195.15
 Average debtor= 86.74

Debtor turnover ratio=2195.15/86.74

=25.31

3. Creditors turnover ratio =net credit purchase/average creditor

Average payment period=365/CTR

NOTE – there is no any credit purchase by the company so we could not find.

*solvency ratio
1. Debt to equity ratio

Debt=70.28

Equity= 30.08

Debt to equity ratio= total debt/equity

=70.28/30.08

=2.3

INTERPRETATION

Through this ratio company find out financial power of the

company. A high debt to equity ratio generally means that a company has been
aggressive in financial its growth with debt. If company debt may increase
more than it may lead to bankruptcy.
 Company debt to equity ratio is not much which indicates that company
took debt according to their need.

*coverage ratio

1. Inertest coverage ratio

EBIT=167.20
Interest charges= 25.03
Interest coverage ratio=earnings before interest tax/interest charges
=167.20/25.03
=6.7

INTERPRETATION

Interest coverage ratio determines that how easily a company can pay interest
on outstanding debt. The lower the ratio, the company is burden by debt
expense. But the Havells India limited has interest coverage ratio is 6.7. Which
show that company has not much debt or if company has any debt it can easily
met by the company.

CALCULATION FOR 2010

*LIQUIDITY RATIO
1. Current ratio (rupees in crores)

Current assets = 561.25

 Current liability= 416.17

Current ratio = current assets/current liability

= 561.25 / 416.17

= 1.35

Interpretation

Generally as a rule of thumb a ratio of2:1 is considered sound enough

however it is not universally applicable. In Havells India limited. The current
ratio is very low .it is 1.35 which indicates that the enterprise has not more
finance than it need .the ratio show that company has not much finance.

Thus, a high current ratio means the enterprise has more finance so they can
use efficiently. But company has low current ratio.

2 .Acid test ratio/Quick ratio

Current assets = 561.25

Current liability = 416.17

Quick ratio =current assets – (investment +prepaid expense)/current liability

=561.25-330.65/416.17

= 231/416.17

= 0.56

INTERPRETATION

Current ratio and test ratio indicate the ability of the enterprise to meet its
current liability however the acid test ratio is better indicator of liquidity. Acid
test ratio of havells India limited is 0.56.the acid test ratio of company is not
too much. It means company has not too much finance available.

2. Absolute liquid ratio

 Cash and bank = 68.31

Current liability= 416.17

Absolute liquid assets =cash in hand + cash in bank +marketable securities

=68.31

Absolute liquid ratio =absolute liquid assets/current liability

= 68.31 / 416.17

= 0.16

INTERPRETATION

Absolute liquidity is presented by cash and near cash item .the absolute liquid
ratio are cash, bank and marketable securities .A standard of 0.5:1 absolute
liquidity is considered. The ratio of absolute liquid ratio is 0.16. Which show
that company has not good liquid assets.

*profitability ratio

3. Gross profit ratio

Gross profit = 313.53
Net sales = 2468.77

Gross profit ratio =gross profit/net sales*100

= 313.53 / 2468.77 * 100
= 12.7%
INTERPRETATION
Gross profit ratio indicate what extent the selling price of goods per unit
may be reduced without incurring losses on operation .it reflect the
efficiency with which a firm produced its product. The ratio of company
is 12.7%. Which show that company production is good according to
their ratio.
 4. Net profit ratio
Net profit= 228.16
Net sales =2468.77

Net profit ratio=net profit/net sales*100

= 228.16 / 2468.77 * 100
= 9.24%
INTERPRETATION

Actually the business totally depend on the profit of the company .Business is
only run success if it earn profit. So net profit ratio of this company is 9.24%
which show that company earn a normal net profit .it is good for the company.

3. Operating ratio

Operating cost =COGS+ operating expenses

=2155.24+424.52+16.56
= 2596.32
Net sales = 2468.77
Operating ratio=operating cost /net sales*100
= 2596.32 / 2468.77 *100
= 105%
INTERPRETATION
Operating ratio indicate the relationship between operating expenses
and sales. The ratios indicate operating efficiency of the organisation and
it is important to the management to evaluating its own efficiency.
The ratio of havells India limited is 105%which indicate
the efficiency of the organisation is good but not better management
should take more steps towards their utilisation of their resources.

4. Return on investment
Net profit =228.16
 Shareholder fund= 1135.19

Return on investment=net profit/shareholder fund*100

= 228.16 / 1135.19 *100

= 20 %
INTERPRETATION
Through this ratio company can measure the percentage return to the
company on the fund .it is also a good indication of the profitability of
the organisation.
The company has ratio of RETURN OF INVESTMENT is 20% this
percentage sufficient for the company because profit is a function of
accounting and operating policies of an enterprise.

5. Return on equity
Net profit=228.16
Preference share dividend=0
Share holder fund= 1135.19
Return on equity =Net profit-Preference dividend/Shareholder fund*100
= 228.16 -0 / 1135.19 *100
= 20 %
INTERPRETATION

Return on equity measure a corporation ,s profitability by prevailing

how much profit a company generate with the money shareholder have
invested. The ratio of ROE is indicating good performance in generating
profit from that amount which is invested by the shareholder.

6. Earnings per share =Net profit-preference dividend/No. Of equity

share outstanding
*Activity /turnover ratio
1. Inventory turnover ratio

COGS=net sales-gross profit

= 2468.77 – 313.53

= 2155.24

Average stock= 330.65

Inventory turnover ratio=COGS / average stock

= 2155.24 / 330.65 = 6.5

INTERPRETATION

Inventory turnover ratio indicate that how many times a company, s inventory
is sold and replaced over a period. A high ratio implies either strong sales or
effective buying. But company ITR is 6.5 which show that company has high
turnover implies good sales.

3. Debtor’s turnover ratio=net credit annual sales/average

debtors
Net credit sales= 2468.77
Average debtor= 79.47

Debtor turnover ratio=2468.77 / 79.47

= 31

3. Creditors turnover ratio =net credit purchase/average creditor

Average payment period=365/CTR

NOTE – there is no any credit purchase by the company so we could not find.
*solvency ratio
1. Debt to equity ratio

Debt= 115.81

Equity= 31.19

Debt to equity ratio= total debt/equity

= 115.81 / 31.19

= 3.7

INTERPRETATION

Through this ratio company find out financial power of the company. A high
debt to equity ratio generally means that a company has been aggressive in
financial its growth with debt. If company debt may increase more than it may
lead to bankruptcy.

Company debt to equity ratio is not much which indicates that company
took debt according to their need.

*coverage ratio

3. Inertest coverage ratio

EBIT= 290.26
Interest charges= 11.74
Interest coverage ratio=earnings before interest tax/interest charges
=290.26 / 11.74
= 24.7
INTERPRETATION

Interest coverage ratio determine that how easily a company can pay interest
on outstanding debt .the lower the ratio ,the company is burden by debt
expense. But the reliance power company has interest coverage ratio is 24.7
which show that company has no any debt or if company has any debt it can
easily meet by the company.