Assignment 2

1. Summarized Income equation:- (all figures in Rs. Cr.)

Equation Total Income - Expense - Taxes = Profit/Loss

as on 31st March'2020 7,258.46 - 6,343.76 - -1.2 = 915.90
as on 31st March'2019 7,127.56 - 6,359.13 - 176.85 = 591.58

i) Changes in items in 2020 w.r.t. 2019 – Total Income (2% Up), Expense(--), Taxes ( down 101%) and Profit
(55% Up)
ii) There is a 55% increase in profits majorly on account of steep reduction in taxes (down by 101%). Taxes have
been reduced due to deferred tax entitlement (adjustment – MAT credit & other taxes in relation to current and
previous years).

2. Five biggest items in Revenue and Expense side of Income statement (figures in Rs. Cr.)

Sales/Revenue/Income Expenses/Dividends/Deductions
% of Total % of total
Item Value Item Value
Revenue Expenses
Sales of Products -
6,941.92 96% Cost of materials consumed 3,687.39 58%
manufactured Goods
      Employee benefits expense 541.92 9%
      Depreciation and amortization expense 388.61 6%
      Other expenses 1,525.58 24%

i) Sale of manufactured goods forms the biggest portion of revenue (96%). This shows that M/s SRF
relies mainly on its core business (manufacturing goods) for its revenues.
ii) Cost of material consumed has major proportion (58%) in expenses. This is justified as most of the
revenue is generated from sale of manufacturing goods.

3. Missing (1) and Interesting(1) items in income statement (w.r.t. content discussed in sessions)
Missing
i) There are no advertisement expenses for M/s SRF Limited which shows that company does not do
advertisements (either they are not required or there is scope for further increase in revenue with
advertisements).

Interesting
i) Revenue has not increased much but there is reduction of 8% in COGS. This mainly due to the less
material cost in discontinued operations.