ANALYSIS OF

ITD-CEMENTATION

ACCOUNTING AND FINANCE FOR

BUILT ENVIRONMENT – REAL 660 ASSIGNMENT – 01
TH
Date: 16 December,2020
Submitted to: Dr. Amit Kumar
Submitted by: Section A-2, Subgroup-02

NAME ENROLLMENT NO.

Ankur Tyagi A13559020027
Amit Poswal A13559020053
Dipti Agarwal A13559020070
Deepanshu Gautam A13559020091
Aman sadaphal A13559020123
Sooraj R. A13559020124
Prabhath Kumar Polu A13559020129
 ACKNOWLEDGMENT

We would like to express our sincere gratitude for the constant inspiration and
supervision by our faculty, Dr. Amit Kumar. We are grateful to him for his supervision,
expertise, generous understanding, guidance, and support, which made it possible for us
to work on a topic that was of great interest.

Ardent respect and thankfulness to RICS School of Built Environment, Noida for giving us
the platform to conduct such research & studies.

This would not have been possible without everyone’s support.

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 Table of Contents
ACKNOWLEDGMENT................................................................................................................1
Table of Contents.....................................................................................................................2
LIST OF FIGURES.......................................................................................................................4
LIST OF TABLES.........................................................................................................................4
INTRODUCTION........................................................................................................................5
1.1. Background of the Company............................................................................................5
1.2. Principles...........................................................................................................................6
1.3. Promoters.........................................................................................................................6
1.4. Subsidiary or Holdings and Joint-Ventures.......................................................................7
1.5. Core Working Areas..........................................................................................................7
1.6. Corporate Social Responsibility (CSR)...............................................................................7
1.7. Awards & Certificates.......................................................................................................8
1.8. Current position................................................................................................................8
2. FINANCIAL TOOLS................................................................................................................9
2.1 Concept of Financial Statements.......................................................................................9
2.1.1 Balance Sheet.................................................................................................................9
2.1.2 Income Statements.......................................................................................................10
2.1.3 Cashflow Statements....................................................................................................10
2.2 Key Takeaways.................................................................................................................10
2.3 Tools of Financial Statement Analysis.............................................................................11
2.3.1 Comparative Statements..............................................................................................11
2.3.2 Common Size Statements.............................................................................................11
2.3.3 Fund Flow Analysis........................................................................................................11
2.3.4 Cash Flow Analysis........................................................................................................11
2.3.5 Ratio Analysis................................................................................................................12
2.3.6 Cost Volume Profit Analysis..........................................................................................12
3. FINANCIAL STATEMENTS OF THE COMPANY.....................................................................13
3.1 Profit & Loss Account – For year ending 2017, 2019, 2020............................................13

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3.2 Balance Sheet – For year ending 2017, 2019, 2020........................................................14
3.3 Financial Analysis.............................................................................................................15
...............................................................................................................................................16
4. FINANCIAL RATIOS OF THE COMPANY..............................................................................18
4.1 Profitability Ratios............................................................................................................18
4.2 Liquidity Ratios.................................................................................................................22
5. SUMMARY AND CONCLUSIONS.........................................................................................24
REFERENCES...........................................................................................................................25

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LIST OF FIGURES

Figure 1.1: History of the company[ CITATION ITD201 \l 1033 ]

Figure 1.2: Global Presence of the company[ CITATION ITD201 \l 1033 ]
Figure 1.3: Shareholding pattern of the company[ CITATION Tre20 \l 1033 ]
Figure 1.4: Vertical Presence [ CITATION ITD201 \l 16393 ]
Figure 2.1: Brief on Financial Statements[ CITATION Sao20 \l 1033 ]
Figure 3.1: Total Income
Figure 3.2: Total Expense
Figure 3.3: Total Assets owned by the Company
Figure 3.4: Total Liabilities on the Coampany

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LIST OF TABLES

Table 1: Awards received by the company[ CITATION ITD201 \l 1033 ]

Table 3.1: [ CITATION ITD203 \l 1033 ]

INTRODUCTION
1.1. Background of the Company
ITD cementation subsidiary of ITALIAN - THAI DEVELOPMENT (ITD) public company limited is one
of the leading construction company in India and provides many services. The aim of the
company is to satisfy the client with a strong workforce and complete the project with the
required budget and on time with best quality. ITD Cementation ensure operations are
sustainable as they are concerned with Environment, health, and safety and responsible towards
the employees and society. 8 Directors are there in the company in which 7 are Non-Executive
(Independent Directors - 4)[ CITATION ITD20 \l 1033 ]

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 Cementation Company Limited established its operation in India as a branch UK based
company.
In 1978, company converted into Indian Company by taking permission from Reserve
Bank of India and changed name as Cemindia Company Limited
1931-1978 On 6th November 1978, certificate has been obtained for Commencement of
Business

Company is renamed as Trafalgar House Construction India Limited

On 7th September, 1994 fresh certifiacte is obtained
1994

After kvaerner ASA acquired the company it is renamed as Kvaerner Cementation

India Limited (KCIL)
1998

In 2000 Skanska AB acquired Kvaerner Construction Group, KCIL is named as Skanska

Cementation India Limited (SCIL)
2001

At last in 2005 ITD acquired SCIL and named it as ITD Cementation India Limited
2005

Figure 1.1: History of the company[ CITATION ITD201 \l 1033 ]

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 Figure 1.2: Global Presence of the company[ CITATION ITD201 \l 1033 ]
1.2. Principles
 Customers are given priority.
 Training is given to the employees to get the best out of them.
 Importance to quality, health, and safety.
 Projects are started and completed on time.
 Ensure equipment and machinery are in good working condition.
 As a part of business philosophy, focus on Environment awareness [ CITATION ITD201 \l 1033
]
 Mission is to make the company as leading construction firm in India with quality and safety.

1.3. Promoters

Promoter
Public
FII 46.6%
MF8.5%
23.6%
21.3% Figure 1.3: Shareholding pattern of
the company[ CITATION Tre20 \l
1033 ]

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1.4. Subsidiary or Holdings and Joint-Ventures
ITD public Company limited has following Subsidiary or Holding and Joint-Ventures:
Subsidiary:
 ITD Cementation Projects India Limited
Joint Ventures:
 ITD Cem India JV (Construction of road project)
 ITD-ITD Cem JV (Construction for MRTS and water projects)
 ITD- ITD Cem JV (Consortium of ITD - ITD Cementation)
 ITD Cem-Maytas Consortium
 CEC-ITD Cem-TPL JV (Design and construction of underground section) [ CITATION
ITD201 \l 1033 ]

1.5. Core Working Areas

Italian Thai Development Public Company Limited is the parent company of ITD Cementation
India. The company is performing effectively for past 80 years and still recognized for its work in
multiple lines.

Figure 1.4: Vertical Presence [ CITATION ITD201 \l 16393 ]

1.6. Corporate Social Responsibility (CSR)

Company has separate committee working under for this. The committee will study and give the
recommendations to the board about the activities which should be undertaken and complete
by the company for the society.[ CITATION ITD201 \l 1033 ]. Various initiatives taken are:

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 Disaster Relief: Support to families affected by devastating floods in Karnataka through relief
activities. [ CITATION ITD201 \l 16393 ]
Healthcare: The Company in collaboration with Vision Foundation of India made provisions
for free eye check-ups and surgeries for the socio-economically underprivileged people.
Carried 2500 surgeries. [ CITATION ITD201 \l 16393 ]
Animal Welfare: In collaboration with Utkarsh Global Foundation, supported animal
welfare activities and campaigns under the ‘Animal Welfare Movement’. Through this
initiative, free treatment, rehabilitation services and post-medical care to stray animals is
offered. [ CITATION ITD201 \l 16393 ]
Community Infrastructure Development: Improve rural infrastructure and promote school
education in tribal regions. Some schools undertaken are:
 Punarbasan Vidyaniketan High School, west Bengal
 Sri Jayabharati Co-operative High School, Attibele, Bangalore
 Zilla Parishad School, Savroli, Maharashtra
 Schools located in Kallamozhi village and Manapad in Tamil Nadu [ CITATION
ITD201 \l 16393 ]

1.7. Awards & Certificates

CIDC Vishwakarma Award 2014, 2015, 2016

Asia Pacific Excellence Award 2015, 2014
EPC Award 2014
Safety Awards 2013, 2014, 2015, 2016, 2017, 2018,
2019, 2020
Appreciation Letters 2013, 2014
Table 1: Awards received by the company[ CITATION ITD201 \l 1033 ]

1.8. Current position

During the financial year, 2019-2020, several major contracts were completed including-
• Construction of Balance Tunneling Works, KRCL, J&K
• Ground Improvement & Earth work, NPCIL, Haryana-Punjab
• Development of EQ-2 to EQ-5 berths, Visakhapatnam Port Trust
• Civil Works for the project of Oil Berth – 5, Jawahar Dweep, MbPT, Mumbai
• Civil works for CKCEC, Paradip, Odisha
• Architectural Finishing, Plumbing, Tube well, VAC, Electrical, Fire Fighting Works for 6
Elevated Stations, KMRCL, Kolkata
• Buildings for IIT Ropar, CPWD, Ropar-Punjab. [ CITATION ITD201 \l 16393 ]

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 2. FINANCIAL TOOLS

2.1 Concept of Financial Statements

Fiscal summaries are set up accounts that pass on the business exercises and the monetary
presentation of an organization. Budget reports are frequently inspected by government offices,
bookkeepers, firms, and so on to guarantee exactness and for expense, financing, or contributing
purposes. Budget summaries include:
i. Balance sheet
ii. Income explanation
iii. Cash stream explanation. [ CITATION Sao20 \l 1033 ]

Figure 2.1: Brief on Financial Statements[ CITATION Sao20 \l 1033 ]

2.1.1 Balance Sheet

The accounting report gives an outline of an organization's resources, liabilities, and investors'
value as a depiction as expected. The date at the highest point of the asset report reveals to you
when the preview was taken, which is for the most part the finish of the financial year.
Balance Sheet Formula: Assets= (Liabilities + Owner's Equity)
The monetary record sums will be determined as of now, however here is the way you recognize
them:
i. Locate absolute resources on the monetary record for the period.
ii. Total all liabilities, which should be a different posting on the monetary record. It may
exclude unforeseen liabilities.
iii. Locate all out-investor’s value and add the number to add up to liabilities.
iv. Total resources should approach the absolute of liabilities and all-out value. [ CITATION
CHR20 \l 1033 ]

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2.1.2 Income Statements
Not at all like the asset report, has the income statement covered a scope of time, which is a year
for yearly budget summaries and a quarter for quarterly budget reports. The income proclamation
gives a diagram of incomes, costs, total compensation, and profit per share. It generally gives a few
years of information for correlation.
Income Statement Formula: Net Income= (Revenue + Gains) – (Expenses + Losses)
 Total all income or deals for the period.
 Total all costs constantly of working the business.
 Subtract all out costs from income to accomplish total compensation or the benefit for the
period. [ CITATION CHR20 \l 1033 ]

2.1.3 Cashflow Statements

 An income statement gives information with respect to all money inflows an organization gets
from its progressing activities and outside venture sources.
 The income explanation incorporates money made by the business through tasks, venture, and
financing—the amount of which is called net income.
 The first part of the income statement is income from tasks, which incorporates exchanges
from all operational business exercises.
 Cash stream from speculation is the second segment of the income statement and is the
consequence of venture gains and misfortunes.
 Cash stream from financing is the last segment, which gives a diagram of money utilized from
obligation and value.[ CITATION CHR20 \l 1033 ]

2.2 Key Takeaways

 Financial statements are set up accounts that pass on the business exercises and the monetary
exhibition of an organization.
 The accounting report gives a diagram of resources, liabilities, and investors' value as a
depiction as expected.
 The income proclamation principally centers around an organization's incomes and costs
during a specific period. Whenever costs are deducted from incomes, the assertion creates an
organization's benefit figure called net gain.
 The income statement (CFS) quantifies how well an organization produces money to income its
obligation commitments, reserve its working costs, and asset speculations. [ CITATION
Sao20 \l 1033 ]

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2.3 Tools of Financial Statement Analysis
2.3.1 Comparative Statements
Near statements manage the correlation of various things of the Profit and Loss Account and
Balance Sheets of at least two periods. Separate relative proclamations are ready for Profit and
Loss Account as Comparative Income Statement and for Balance Sheets.

Generally, any fiscal summary can be introduced as near proclamation, for example, relative asset
report, similar benefit, and misfortune account, near expense of creation statement, near
explanation of working capital and so forth. [ CITATION DAN20 \l 1033 ]

2.3.2 Common Size Statements

A vertical introduction of monetary data is followed for planning normal size statements. In
addition, the rupee estimation of budget summary substance is not mulled over. Be that as it may,
just rate is considered for planning regular size statement.

The absolute resources or all-out liabilities or deals is taken as 100 and the equilibrium things are
contrasted with the all-out resources, all out liabilities or deals as far as rate. Subsequently, a
typical size explanation shows the connection of every segment to the entirety. Separate regular
size explanation is ready for benefit and misfortune account as Common Size Income Statement
and for monetary record as Common Size Balance Sheet. [ CITATION DAN20 \l 1033 ]

2.3.3 Fund Flow Analysis

Asset stream investigation manages nitty gritty sources and use of assets of the business worry for
a particular period. It shows where subsidizes come from and how they are utilized during the
period under survey. It features the adjustments in the monetary structure of the organization.
[ CITATION DAN20 \l 1033 ]

2.3.4 Cash Flow Analysis

Income investigation depends on the development of money and bank adjusts. All in all, the
development of money rather than development of working capital would be considered in the
income investigation. There are two sorts of incomes. They are genuine incomes and notional
incomes. [ CITATION DAN20 \l 1033 ]

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2.3.5 Ratio Analysis
Proportion examination is an endeavor of creating important connection between singular things
(or gathering of things) yet to be determined sheet or benefit and misfortune account. Proportion
investigation is not simply valuable to inward gatherings of business concern yet additionally
helpful to outside gatherings. Proportion investigation features the liquidity, dissolvability,
productivity, and capital equipping. [ CITATION DAN20 \l 1033 ]

2.3.6 Cost Volume Profit Analysis

This examination uncovers the common relationship among deals, cost, and benefit. The expense
is isolated into two. They are fixed expense and variable expense. There is a consistent connection
among deals and variable expense. Cost examination empowers the administration for better
benefit arranging. [ CITATION DAN20 \l 1033 ]

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 3. FINANCIAL STATEMENTS OF THE COMPANY
3.1 Profit & Loss Account – For year ending 2017, 2019, 2020
(Rs. Lakhs)

Particulars Year Ending Year Ending Year Ending

Dec, 2017 March, 2019 March, 2020

Income      
Revenue from operations 187292.02 228833.61 214199.87
Other Income 3423.69 1775.91 423.67
Total Income 190715.71 230609.52 214623.54
Expenses  
Cost of Construction Materials Consumed 54351.72 74775.36 73329.80
Subcontracting Expenses 42597.64 48559.21 47031.58
Employee Benefits Expense 23614.78 31015.40 28583.14
Finance Costs 8553.80 7784.57 9198.42
Depreciation and Amortisation Expense 5520.30 6958.39 7887.92
Other Expenses 41457.94 48080.75 39189.54
Total Expenses 176096.18 217173.68 205220.40
Profit Before Exceptional Items and Tax 14619.53 13435.84 9403.14
Exceptional Items 2183.94   4093.36
Profit Before Tax 12435.59 13435.84 5309.78
Tax Expense/ (Credit)      
Current Tax 5144.47 5347.44 865.80
Deferred Tax 9.48 -99.00 127.38
Net Tax 5153.95 5248.44 993.18
Profit for the period/ year (A) 7281.64 8187.40 4316.60
Other Comprehensive Income (OCI)      
Items not to be reclassified subsequently to profit or
     
loss
Loss on fair value of defined plans as per actuarial
-317.16 -186.04 -421.60
valuation
Net Items to be reclassified subsequently to profit or
11.76    
loss
Tax effect on above 109.77 65.01 106.11
Other Comprehensive loss for the year/ period, net
-195.63 -121.03 -315.49
of tax (B)
Total Comprehensive Income for the year/ period, net
7086.01 8066.37 4001.11
of tax (A+B)
     
Earnings per equity share of nominal value Rs. 1 each
Basic and diluted (in Rs.) 4.69 4.8 2.51
Table 3.1: [ CITATION ITD203 \l 1033 ]

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3.2 Balance Sheet – For year ending 2017, 2019, 2020
Year Ending Year Ending Year Ending
Particulars
Dec 2017 March 2019 March 2020
Assets      
Non-Current Assets      
Property, plant, and equipment 40639.68 42417.54 46568.70
Right-of-use-assets     6045.55
Capital Work-in-progress 1673.44 538.40 479.93
Intangible Assets   771.99 782.39
Investments in subsidiary and joint ventures 62.49 62.49 19195.46
Financial Assets      
Trade Receivables 309.00 309.00  
Loans 225.29 228.31 743.41
Other Financial Assets 39.00    
Income Tax Assets (Net) 928.06   1946.78
Deferred Tax Assets (Net) 293.98 457.99 436.72
Other Non-Current Assets 19369.16 11328.49 10274.00
Total Non-Current Assets 63540.10 56114.21 86472.94
Current Assets      
Inventories 11960.46 15433.63 19675.59
Financial Assets      
Investments      
Trade Receivables 22388.38 33692.69 46061.39
Cash and Cash Equivalents 10698.91 6714.29 18833.07
Other bank balances 249.91 1514.20 4451.55
Loans 58426.29 46719.25 29001.44
Other Financial Assets 49611.10 31914.65 130.62
Other Current Assets 5413.14 10027.95 60910.61
Total Current Assets 158748.19 146016.66 179064.27
Total Assets 222288.29 202130.87 265537.21
Equity and Liabilities      
Equity      
Equity Share Capital 1551.58 1717.88 1717.88
Other Equity 60176.66 100370.23 103542.94
Total Equity 61728.24 102088.11 105260.82
Liabilities      
Non-Current Liabilities      
Financial Liabilities      
Borrowings 2461.76 1706.27 1664.23
Other Financial Liabilities     4467.21
Provisions 1110.31 3409.95 4060.33
Total Non-Current Liabilities 3572.07 5116.22 10191.77
Current Liabilities      
Financial Liabilities      
Borrowings 42238.52 19238.17 26339.98
Current maturities of long-term debts 4159.57 1082.24  
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 Total Income
250000.00

200000.00

150000.00

3.3
100000.00

50000.00

0.00

Financial Analysis
 Change in Company Policies:
 Valuation Policy of the company changed from First-In-First-Out to Weighted Average
Method
 Duration of the change in policy took 15 months.

 %age Change in Total Income:

 Total Income rose by 20.91% in the year 2019 because of the change in valuation
Policy and increased the valuation of inventory of construction materials.
 Other Income sources fall causing Total Income to fall by 6.93% due to the absence of
principal market in the pandemic period of COVID-19. [ CITATION ITD203 \l 1033 ]

Figure 3.1: Total Income

 %age Change in Total Expenses:
 Due the change in valuation policy, with many other factors like increase on the loan
and pending payments interest etc., the expenses has also rose to 23.32% from 2017
to 2019

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  Market hit by pandemic followed by lockdowns decreased expenses of borrowed
equipment and other imports, but the expenses of internal organization like finance
costs etc. increased, therefore giving a net fall of 5.50% only. [ CITATION ITD203 \l
1033 ]

Total Expenses Figure

250000.00
200000.00 3.2:
150000.00
100000.00 Total
50000.00
0.00

Expenses
 %age Change in Total Assets:
 Due to lack of capital work-in-progress assets, fall of cash and cash equivalents and
increase in intangible assets there is a net fall of assets from 2017 to 2019 by 9.06%.

Total Assets
300000.00

250000.00

200000.00

150000.00

100000.00

50000.00

0.00

Total Non-Current Assets Total Current Assets Total Assets

 Introduction to Right-to-use assets and increase in trade receivables (money

withdrawal from market) resulted in increase of Total Assets by 31.36%. [ CITATION
ITD203 \l 1033 ]
Figure 3.3: Total Assets owned by the Company
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 %age Change in Equity and Total Liabilities :
 ITD’s equity share capital has increased from 2017 to 2019 by 10.71% and remained
the same for 2020.

 Overall Equity has increased by 65.38% in 2019 because of change in company’s

valuation policy (hedge reserve) & by 3.11% in 2020

Equity & Liabilities

300000.00

250000.00

200000.00

150000.00

100000.00

50000.00

0.00

Total Equity Total Current Liabilities Total Equity and Liabilities

 Long term maturities are fully paid in 2019 and new provisions & borrowings are
increasing the liabilities in 2020.[ CITATION ITD203 \l 1033 ]

Figure 3.4: Total Liabilities on the Company

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 4. FINANCIAL RATIOS OF THE COMPANY

4.1 Profitability Ratios

i. Gross Profit Ratio = (Gross Profit/ Net Sales) *100.
 Gross Profit = Net Sales – Cost of Goods Sold
 Net Sales = Sales – Return Inwards
 Cost of Goods Sold = (Opening Stock + Purchase) – (Closing Stock + Any Direct
Expenses) (Rs. Lakhs)

S.No. Particulars March 31, March 31, December 31,

2020 2019 2017
1 Cost of Goods Sold 73,329.80 74,775.36 54,351.72
2 Net Sales 2,14,199.87 2,28,345.92 1,87,292.02
3 Gross Profit (2-1) 1,40,870.07 1,53,570.56 1,32,940.3
4 Gross Profit Ratio % (3/2) 65.76 % 67.25 % 70.98 %

Analysis:
 Gross Profit Ratio (GP Ratio) is a profitability ratio that shows the relationship between
gross profit and total net sales revenue.
 There is a gradual decrease in the ratio for the past 3 years from 71% to 66%.
 This indicates that the gross profit is less than the previous years and so is the net
sales.
 This may be due to various factors that might have affected sales and profit.
 As there were early traces of the pandemic this would have affected the net sales for
the company.[ CITATION Elm20 \l 1033 ]

Recommendations to Improve:

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  So, either increasing sales revenue or decreasing costs will make the Profit margin go
higher.
 By identifying effective ways to add value that client will pay for. Currently Itd-Cem
bids only in Government Project (Public Sector) and they need to pay attention timely
delivery of the project (Penalty in Dmrc-CC26R) and accidents (Kolkata Underground
Metro-2019) so that they can get more projects.
 By finding differentiate ways to stop competing on price because it is affected the
profit of the company. In the recent years due to so much competition in the market,
Company must bid on lower price in many projects.
 By Looking for ways to reduce service delivery costs so more profit falls to the bottom
line. Renegotiate with vendors, eliminate slow-moving products, or streamline your
delivery procedures to reduce labor costs.

ii. Net Profit Ratio = (Net Profit/ Revenue) *100

 Net Profit = Profit After Tax
 Revenue = Total Revenue (Rs. Lakhs)

S.No. Particulars March 31, March 31, December 31,

2020 2019 2017
1 Net Profit 4,001.11 8,066.37 7,086.01
2 Revenue 2,14,199.87 2,28,345.92 1,87,292.02
3 Net Profit Ratio % (1/2) 1.86 % 3.53 % 3.78 %

Analysis:
 The ratio had a notable fall from 3.5% last year (2018-19) to 1.86% in the current year
(2019-2020).
 This indicates that for every Rs.1 sale, net profit is 1.86% of Rs.1.
 Comparing the previous years this has reduced around 1.5 times. The situation is not
that favorable as the net profit for each sale is less. [ CITATION Elm20 \l 1033 ]

Recommendations to Improve:
 By increasing Net Profit over Revenue, Company can increase its Net Profit Ratio.
 By Implementing and monitor a budget in the financial year can be more helpful to
achieve more net profit in the balance sheet.
 By cutting out unnecessary cost in the specific project.
 By exploiting new technologies in the projects can also help to increase the net proifit
ratio of the company.

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 iii. Return on Assets = (Net Income/ Average Assets) *100
 Net Income = Net Profit after Tax
 Average Assets = (Closing Assets + Opening Assets)/2 (Rs. Lakhs)

S.No. Particulars March 31, 2020 March 31, 2019 December 31,
2017
1 Net Income 4,001.11 8,066.37 7,086.01
2 Closing Assets 2,65,537.21 2,02,130.87 2,22,288.29
3 Opening Assets 2,02,130.87 2,22,288.29 1,84,912.05
4 Average Assets ()2+3)/2) 2,33,834.04 2,12,209.58 2,03,600.17
5 Return on Assets % (1/4) 1.71 % 3.80 % 3.48 %

Analysis:
 The ROA was at least 3.5 times in the last two years. But it has reduced to 1.7% in the
financial year 2019-2020.
 This indicates the Net profit/ Income is 1.7% for the average total assets of the
company.
 This is not favorable for the company as it indicates there are more liability and less
profit generated from the assets.[ CITATION Elm20 \l 1033 ]

Recommendations to Improve:
 By increasing net income over average assets can be a way to improve ROA ratio.
 Low ROA means that some assets are underutilizing.
 By increase in production or selling price and it will increase the revenue of the
company and vice versa It will increase the ROA.
 Inventory of the company also effects the total assets so maintaining production levels
that are in line will help to increase ROA.
 By lowering the loans on the company.

iv. Return on Equity = (Net Income/ Average Shareholder’s Equity) *100

 Net Income = Net Profit after Tax
 Average Shareholder’s Equity = Average Total Equity ( Rs. Lakhs)

S. No Particulars March 31, 2020 March 31, 2019 December 31,

2017
1 Net Income 4,001.11 8,066.37 7,086.01

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 2 Total Equity at Beginning of 1,02,088.11 61,728.24 55,202.46
the period
3 Total Equity at Ending of the 1,05,260.82 1,02,088.11 61,728.24
period
4 Average Equity ()2+3)/2) 1,03,674.465 81,908.175 58,465.35
5 Return on Equity % )1/4) 3.85 % 9.84 % 12.12 %

Analysis:
 The ROE has seen a steep decline from 12.1% (2017-18) to 3.85% (2019-2020).
 The average equity share of the company has increased but the decline in the net
profit decreased the ROE ratio.
 Decreases in ROE indicates that company became less efficient at creating profits and
increasing shareholder’s value.

Recommendations to Improve:

 By increasing Net income over average shareholder’s equity will help to increase the
ROE.
 By increasing the amount of debt capital relative to its equity capital, a company can
increase its return on equity.
 By increasing assets turnover because the more sales a company produces relative to
its assets, it will increase the profitability and it’ll increase the ROE.
 By lowering the taxes because ITD CEM is overseas company and tax rates are lower in
comparison with other countries like UAE.

v. Earning Per Share = (Net Income/ Weighted average share)

 Net Income = Net Profit after Tax
 Average Shareholder’s Equity = (Opening Equity+ Closing Equity)/2 (Rs. Lakhs)

S. Particulars March 31, March 31, December 31,

No 2020 2019 2017
1 Net Income 4,001.11 8,066.37 7,086.01
(Numbers)
2 Weighted average share 17,17,87,584 15,51,57,900 15,51,57,900
3 Earnings Per Share 2.32 5.19 4.56

Analysis:

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  The EPS value was Rs.4.77 per share in 2018-2019, further reduced to Rs 2.32 in 2019-
2020.
 This is an indicator that helps investors buying more shares and in peer comparison
based on earnings per share.
 With the company’s current net profit is less, the earnings per share are also less which
is not a favorable situation as there will not be many interested investors. [ CITATION
Elm20 \l 1033 ]
Recommendations to Improve:
 By increasing Net Income over weighted average share can increase the EPS of a
company.
 The EPS can be increased by the company is that they earn more or if they expand
their margin by lowering costs. They can also utilize share buybacks; this means that
they lower the amount of shares that can be bought without making any alterations to
profits. This in turn raises the EPS.[ CITATION Bus20 \l 16393 ]

2 Liquidity Ratios
I. Current Ratio = (Current Assets/ Current Liabilities) (Rs. Lakhs)

S. No Particulars March 31, March 31, December 31,

2020 2019 2017

1 Current Assets 1,79,064.27 1,46,016.66 1,58,748.19

2 Current Liabilities 1,50,084.62 96,783.98 61,728.24
3 Quick Ratio 1.19 1.50 2.57
Analysis:
 The Current ratio at 2018-19 was 1.51, this indicates that the current asset is 1.51
times the current liability which is a good sign for the company.
 It is favorable for the company. But the current situation in 2019-2020 had shown a
decline in the ratio value i.e., 1.19.
 The reason for this decline is due to the increase in current liabilities from the previous
year.[ CITATION Elm20 \l 1033 ]

Recommendations to Improve:

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  By increasing current assets over current liabilities will increase the Current Ratio of
the Company.
 Any delay in capital purchases which would require cash payments will be helpful to
increase Current ratio.
 Personal draw reduction will also be helpful to increase or maintain a good current
ratio.
 If company will start selling its non-performing assets or assets which are not
generating any return, this will increase the current ratio of the company.

ii. Quick Ratio = (Current Assets – Inventory – Prepaid Expenses)/ Current Liabilities
(Rs. Lakhs)
S. No Particulars March 31, March 31, December 31,
2020 2019 2017
1 Current Assets 1,79,064.27 1,46,016.66 1,58,748.19
2 Inventories 19,675.59 15,433.63 11,960.46
3 Prepaid Expenses 2,775.92 37.09 78.69
4 Current Liabilities 1,50,084.62 96,783.98 61,728.24
5 Quick Ratio ()1-2-3)/4) 1.04 1.34 2.37

Analysis:
 The Quick ratio in the year 2019-2020 was 1.04 where the Current Assets neglecting
the stocks is almost equal to the current liability.
 This is not that favorable to the company because it does not favor in adverse
situations as there will not be any security for the company.
 The ratio reduced from the last financial year (2018-2019) from 1.33 to 1.04. This
might be due to much liability & impact of COVID-19 in the construction sector.
[ CITATION Elm20 \l 1033 ]

Recommendations to Improve:
 By Reducing the current liabilities will improve the Quick Ratio of the company.
 By paying off liabilities in time will improve the quick ratio.
 By increasing sales and inventory turn-over, it will increase the sales of the company
and will improve the quick ratio.

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 5. SUMMARY AND CONCLUSIONS

ITD has delivered a strong performance in FY 2019-20 with revenue from operations at
214,199.87 Crores. The company has a good dividend track report and has consistently declared
dividends for the last 5 years. [ CITATION Mon20 \l 16393 ] Although there has been a decline
in the profit margin, but the main reason behind that is reduction of sales, due to unprecedented
outbreak of COVID-19 pandemic, due to which, the operations had to be shut down in the wake
of lockdown in the entire country.

Looking at the current scenarios, ITD should aim to expand more in international businesses
since they already have experience with their reach in Myanmar. It is very important for them to
increase their profit margin since there are other competitors also.

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It being a Public Ltd. Company, it needs to increase their profits, reduce costs so that people still
buy their shares.

For improving profit margin, we suggest:

 Improving productivity:
Productivity rates are measured as total output per unit of output. Maximizing productivity on a
jobsite means working efficiently to control costs and stay on schedule. Projects that are
completed under budget and ahead of schedule usually result in higher profit margins which are
why construction firms are always looking to improve productivity. [ CITATION ken19 \l 16393 ]

 Reducing overhead costs:

Costs which are not directly related to the production.

 Increasing sales:
Since gross profit accounts for net sales, so increasing sales will automatically increase our profit
margin.

REFERENCES

 Businesscase. (n.d.). Businesscase. Retrieved Dec 16, 2020, from

https://businesscasestudies.co.uk/eps-what-you-need-to-know-to-maximize-earnings/

 ITD cem. (2020). Retrieved 12 13, 2020, from https://www.itdcem.co.in/

 ITD Cem. (2020). Retrieved 12 15, 2020, from https://www.itdcem.co.in/about-us/awards-

and-certifications/

 ITD Cementation India Public Company limited. (2018 | 2019 | 2020). Annual Report |
2017-2018 | 2018-2019 | 2019-2020. India: ITD Cementation India Public Company limited.

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  jonnes, k. (2019). construct connect. Retrieved december 14, 2020, from
https://www.constructconnect.com/blog/6-ways-improve-construction-companys-
profitability

 LIBERTO, D. (Nov 21, 2020). Corporate Finance & Accounting.

 Mashkour, S. C. (2020). ANALYSIS OF FINANCIAL STATEMENTS. Iraq 2019ISBN: Alalamia

press Samawah.

 MoneyControl. (2020, december 15). Retrieved from Moneycontrol:

https://www.moneycontrol.com/india/stockpricequote/constructioncontracting-
civil/itdcementationindia/ITD03#sec_charts

 MURPHY, C. B. ( Sep 9, 2020). Financial Statements. investopedia.

 Trendlyne. (2020). Retrieved 12 15, 2020, from https://trendlyne.com/equity/share-

holding/648/ITDCEM/latest/itd-cementation-india-ltd/

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