MAJOR RESEARCH PROJECT

On
“A comparative study of financial performance of listed
general companies in India”
Submitted To
Devi Ahilya University, Indore
For partial fulfilment of the requirement for the Degree of
Master of Business Administration

Guided by:- Submitted by:

Ms.Ritu Mishra Anupam kumar mishra
Assistant professor MBA III (BE)

IPS ACADEMY, IBMR

Rajendra Nagar, A.B. Road, Indore- 452 012(M.P.)
Affiliated to: Devi Ahilya Vishwavidhyalaya, Indore

PREFACE
1
The bookish knowledge of any program, which we get from educational institutions, is not
enough to be used in our day-to-day life. The more practical knowledge we have, the more
beneficial it is for our learning.

To make the students aware of the working of the business world every student of MASTER
OF BUSINESS ADMINISTRATION (4th Sem.) has to undergo a major research project where
he/she experiences many aspects of business under the supervision of Professional
Managers.

I strongly believe that the knowledge gained from this experience is more than the
knowledge gained from the theories in the book.

PLACE: INDORE

Anupam kumar Mishra

DATE: 10/02/21

2
 CERTIFICATE

This is to certify that Mr Anupam kumar mishra Student of Institute of

Business Management and Research, IPS Academy, Indore of MBA (BE)
program has prepared Major research Project report on topic “A comparative
study of financial performance of listed general companies in India” under
my guidance.

Internal Examiner (Guide) External Examiner

Director

IBMR, IPS Academy

3
 STUDENT DECLARATION

I Anupam kumar mishra student of Institute of Business Management and

Research, IPS Academy, Indore of MBA (BE) program has prepared Major
research Project report on topic “A comparative study of financial
performance of listed general companies in India”.

The Research as per my knowledge is original and genuine and not published in
any research Journal previously.

Anupam kumar mishra

MBA (3th sem)

2019-2021

4
 ACKNOWLEDGEMENT

I often wondered why the project reports always began with acknowledgement. Now, when
I have undertaken project myself, did I realize that project report involves not just the
researcher but so many people that help in making the research possible. Therefore, I take
pleasure in beginning the most beautiful part of the report.

I fall short of words to express my gratitude to my guide Prof. Ritu Mishra who despite their
busy schedule were able to find some time to guide me through trouble and solve my
problems to the best of abilities. Without their unfailing guidance, encouragement and
patience this project would not have been possible. It has been a learning experience under
him/her. I am thankful to my faculty guide Prof. Ritu Mishra who gave me detailed
instructions during my MRP.

5
 INDEX

Chapter Particular Page no.

1 Introduction 7-10
1.1 Background of the study
1.2 Aims and objectives
1.3 Research problem
1.4 Study limitations
2 Review of literature 11-16
3 Rationale of study 17-26
4 Objectives 27-29
5 Research methodology 30-33
6 Analysis & interpretation of results 34-38
7 Findings 39-40
8 Conclusion 41-43
9 Bibliography 44-45

6
 Chapter 1
Introduction

7
 INTRODUCTION

The sector has been playing a vital role in strengthening the Indian economy. Its contribution
was 7.2% to India’s GDP in 2012. In order to compare and set benchmark, a financial
statement analysis should be made of all companies. A financial statement is a collection of
data organized according to logical and consistent accounting procedures. Its purpose is to
convey an understanding of some financial aspects of a business firm. Financial analysis (also
referred to as financial statement analysis or accounting analysis) refers to an assessment of
the viability, stability and profitability of a business, sub-business or project. The present
paper attempts to measure the financial and accounting performances of leading Indian
companies. The paper is structured as follows: it presents a brief review of the literature
dealing with the accounting and financial performance of the sector, followed by a
description of the objectives, data and methodology. Subsequently, it discusses the results,
and finally, offers the conclusion.

This research study is on financial performance analysis of general companies in India in the
post-reform period (2000-2008). All the eight chapters of the study have been designed in a
coherent manner. Chapter 1 introduces the study including the research methodology
adopted. Chapter 2 discusses review of various books, articles, research works etc; and
identifies the research gap. Chapter 3 discusses the development of the general insurance
business in the pre-nationalization era and also in the post- nationalization period. Chapter 4
discusses the reforms initiated and the regulatory measures adopted. Chapter 5 analyses the
financial performance of the public sector companies during the period before and after the
entry of the private players. Chapter 6 analyses the financial performance of the private sector
companies. Chapter 7 undertakes a detailed comparative study of the financial performance
between the public and the private players; and attempts to trace the relative strong and weak
points of both the sectors. Chapter 8 narrates the findings of the study, and the researchers’
suggestions on the basis of the findings of the study.

The sector has been playing a vital role in strengthening the Indian economy. Its contribution
was 7.2% to India’s GDP in 2012. In order to compare and set benchmark, a financial
statement analysis should be made of all companies. A financial statement is a collection of
data organized according to logical and consistent accounting procedures. Its purpose is to
convey an understanding of some financial aspects of a business firm. Financial analysis (also
referred to as financial statement analysis or accounting analysis) refers to an assessment of
the viability, stability and profitability of a business, sub-business or project. The present
paper attempts to measure the financial and accounting performances of leading Indian
companies for the period 2010-2014. The paper is structured as follows: it presents a brief
review of the literature dealing with the accounting and financial performance of the sector,
followed by a description of the objectives, data and methodology. Subsequently, it discusses
the results, and finally, offers the conclusion.

This sector plays a vital role in strengthening the Indian economy. In order to compare and
set benchmark, a financial statement analysis should be made of all companies. The objective
of the present paper is to measure the financial and accounting performances of leading
Indian companies for the period 2010-2014. Financial statements and income statements of

8
Tata Consultancy Services (TCS), Wipro, Infosys and Tech Mahindra were taken from
databases like CMIE Prowess, Money Control and Yahoo Finance. The information derived
from these financial statements were summarized and used to compute financial ratios for the
five-year period. A graphical representation is provided in order to compare the financial
ratios of one industry against the others for the same period. Based on factors like current
ratio, return on shareholder’s equity, earnings per share, debtor turnover ratio and most
importantly debt equity ratio, it is concluded that Infosys is the most sought-after company
for investors. Along similar lines is TCS whose working capital turnover, total asset turnover
and DuPont analysis returns show encouraging signs for shareholders who have profits as
their prime point of consideration.

Indian industry is one of the fastest growing industries and contributes a significant amount to
the country's GDP. India is the fourth largest producer in the world after China, Japan and
USA. Indian industry is contributing around 2 percent to Gross Domestic Product (GDP) and
its weight in the Index of Industrial Production (IIP) is 6.2 percent. The present paper is an
endeavor to examine the financial performance of the Indian steel companies and establish
the linear relationship between liquidity, leverage, efficiency and profitability of the selected
companies. Indian steel companies are selected for the study on the basis of market share in
2008-09 for a period of twenty years ranging from 1991-92 to 2010-2011. The public sector
company Authority of India is holding the highest market share.

Indian industry has played a significant role in development of Indian economy. It has
acquired a place on global map due to its phenomenal performance in steel production,
consumption and foreign trade since last decade. India is currently occupied fourth position
of largest producing nation in the world with a production of 71.3 million tonnes after China,
Japan and U.S.A. At present the apparent consumption in India is about 55 kg per annum
which is very less compared to other economically developed countries. Therefore, there is
an immense scope for the Indian industry to grow further. The major contribution directs the
attention that the steel is having a strong hold in the traditional sectors like infrastructure and
construction, automobile, transportation and industrial application etc. However, during
2001-02 to 2010-11 owing to boom in the infrastructure and automobile sector the industry
experienced a turnaround and records a sharp increase of 8.6 percent compound annual
growth rate. Potential demand also derived by the consumer durables and white goods
industry. Hence, the present study is basically aims to compare the financial performance of
Indian companies under globalization and establish the linear relationship between liquidity,
leverage, efficiency and profitability of the selected companies.

Financial Performance, often used by shareholders and/or investors to proxy company

performance, in the general sense, signifies the extent to which firms financial goals are being
met or have been achieved. Thus, it’s employed to quantify the results of a company’s
operations, policies and processes in financial or economic terms.
It’s an essential feature in finance risk management. It’s employed to gauge a firm's total
financial healthiness within a specified time period. The financial performance of any firm
gives an indication of how efficiently management deploys or utilizes the resources of the
business to deliver results and meet budgetary expectations. It also establishes the liquidity and
solvency positions of firms’ at any given time. The financial position/ health is often assessed
with the use of Financial Analysis, which comprises the examination of financial statements
and reports. Notwithstanding the limitation of financial statements not disclosing exhaustive
information associated with the financial processes of a firm, they give ample information on
the profitability and financial soundness of a firm.

9
Businesses and key stakeholders to whom the financial performance of the firm is relevant
include management, employees, and shareholders, individual and institutional investors,
creditors, competitors and Governments (for tax purposes). Hence there is need or justification
for a robust review of the status of existing literature on the topic and to identify lapses in the
status quo. This will establish the basis for a thorough investigation of the financial
performance of a telecom company in Ghana, which is the specific topic of research. Ghana’s
telecom industry comprises of four key players with the dominant player, MTN, controlling
over 50% of the market share. It is the highest corporate tax payer in Ghana. In 2016, MTN,
according to its financial statement, paid 1.1 billion Ghana Cedis, approximately 2.6 million
dollars in taxes and fees to the government.

10
 Chapter 2
Literature Review

11
 REVIEW OF LITERATURE

Beginning with Beaver (1966) who contended that standard financial ratios can predict the
financial performance of firms, many subsequent studies have attempted to demonstrate the
predictive value of various techniques for estimating actual business performance. Many
research projects were undertaken in an attempt to validate the use of financial ratios for
predicting the financial performance of a firm. Some of the better known studies include
Altman and Narayanan (1977), Norton and Smith (1979), and Mensah (1983). These studies,
like their predecessors, fail to demonstrate that normality of distribution or those necessary
sample assumptions have been met prior to the analysis.
Some other notable studies in this area are Boardman and Vining (1989), Commander et al.
(1996) and La Porta et al. (1997). In the historical approach, ex ante and ex post privatization
performance of the same enterprise is compared. Notable studies that followed this approach
include Megginson et al. (1994), Earle and Estrin (1997), and Dewenter and Malatesta
(1998). This was not the case in countries like Mexico, Chile and Mozambique where a few
years after privatization, the institutions were experiencing financial problems which quickly
got transformed into a systemic crisis (Dammert and Lasagabaster, 2002).
Foster (1986) reviewed the literature describing the methods and theories for evaluating and
predicting the financial performance and revealed that although methods have become
increasingly complex, few researchers have adequately addressed the problems associated
with the sample used. For example, most ratio analysis studies use multivariate analysis that
is based on the assumption of a normal distribution of the financial ratios. Without
confirming the approximation of normality of ratio distribution, the researchers are at a risk
of drawing erroneous inferences. When considering the distribution of financial ratios in any
database, the normality of the distribution can be skewed by data recording errors. Lasher
(2005) debt ratios show how effectively the organization uses other people’s money and
whether it is using a lot of borrowed money. Ross et al. (2007) expressed the concern that
most researchers divide financial ratios into four groups, i.e., profitability, solvency, liquidity
and activity ratios. Lermack (2003) showed the benefits of financial ratios analysis. He
showed that financial ratios are an important and well-established technique of financial
analysis. As for the benefits of financial ratios analysis, Brigham and Ehrhardt (2010) stated
that financial ratios are designed to help evaluate financial statements. Financial ratios are
used as a planning and control tool, and financial ratios analysis is used to evaluate the
performance of an organization. Tiwari and Parray (2012) explained in detail the analysis of
financial statements of Ranbaxy Ltd. They provided insights into two widely used financial
tools, ratio analysis and common size statements analysis. The objective of the paper was to
help the reader understand how these tools should be used to analyze the financial position of
a firm. To demonstrate the process of financial analysis, Ranbaxy Ltd.’s balance sheet and
income statements were analyzed.

12
Lasher (2005) debt ratios show how effectively the organization uses other people’s money
and whether it is using a lot of borrowed money. Ross et al. (2007) expressed the concern that
most researchers divide financial ratios into four groups, i.e., profitability, solvency, liquidity
and activity ratios. Lermack (2003) showed the benefits of financial ratios analysis. He
showed that financial ratios are an important and well-established technique of financial
analysis. As for the benefits of financial ratios analysis, Brigham and Ehrhardt (2010) stated
that financial ratios are designed to help evaluate financial statements. Financial ratios are
used as a planning and control tool, and financial ratios analysis is used to evaluate the
performance of an organization. Tiwari and Parray (2012) explained in detail the analysis of
financial statements of Ranbaxy Ltd. They provided insights into two widely used financial
tools, ratio analysis and common size statements analysis. The objective of the paper was to
help the reader understand how these tools should be used to analyze the financial position of
a firm. To demonstrate the process of financial analysis, Ranbaxy Ltd.’s balance sheet and
income statements were analyzed.

Multiple Regression analysis is a very widely used statistical tool to determine the linear
relationship between the ratios and other performance indicators of the firms. DeVancy
(1993) conducted a study to measure the changes of status in the families of United States of
America by using financial ratios selected from different categories for a period of four years
ranging from 1983 to 1986. This study used the financial ratios as indicators of progress to
answer the question whether the households were able to improve their financial status during
the study period. The importance of ratios is increasing for the purpose of measuring the
financial performance of the company. Cleary (1999) applied regression analysis to different
financial ratios on 1317 U.S firms for a period of seven years started from 1987 to 1994 to
show the relationship between investment and financial status of the firm. Forsaith and Hall
(2000) used regression technique to a number of financial ratios of Australian manufacturing
and wholesale sector firms to observe the relationship between financial ratios and the firm
size. Hence, the study reveals that there is no close relationship between the ratios and firm
size.
Erhardt, Werbel and Shrader (2003) performed a study on 127 large U.S companies and
applied regression method on financial ratios and demographic diversity to check the
relationship between demographic diversity on Board of Directors and financial performance
and indicate that board diversity is positively associated with these financial indicators of
firm performance. Gallizo and Salvador (2003) also carried out a study on financial ratios of
U.S manufacturing firms for a period of eight years since 1993 to 2000 to understand the
behavior and adjustment process of the same. A proper balance between sales and assets
generally specify that the assets are managed and utilized well towards the sales generation.
The main aim of the company is to maximize its profit and profitability ratios helps to
measure overall performance and efficiency of the firm. Raheman and Nasr (2007) carried on
a research on profitability and working capital management of the Pakistani firms for a period
of six years (1999-2004) and applied regression analysis to explore the relationship between
working capital variables and profitability indicators and the result showed a negative
relationship between working capital and profitability due to liquidity-profitability tangle.

13
Gulsun and Umit (2010) applied Multiple Regression technique in their research paper on
Turkish Insurance Companies to develop a warning model to identify the companies that are
experiencing deterioration in financial health. Schneider and Matai (2010) carried on a study
regarding business climate, political risk and FDI on developing and transition countries
covering a period from 1996 to 2008 to develop a model to specify the impact of business
climate and political risk on FDI. Kavita and Manivanna (2010) conducted a research on
Indian software companies for a period of ten years ranging from 1997 to 2007. They applied
regression technique to quantify the strength of relationship between operating profit and
liquidity factors of the concerned firms and also to evaluate the overall financial performance
and operational efficiency of the companies. A study has been conducted by Bhunia (2010)
on private sector steel companies of India to test the short term liquidity trend of the
companies and its effect on the financial performance. The study reveals that the inventory
and receivable management require special attention and proper control over inventory. The
investment in loans and advances should be minimized to the extent possible. A balanced and
proper amount of working capital should be maintained in the business for smooth running of
the same.
The management of the companies should adopt a viable and proficient payment policy. At
the same time maximization of assets and minimization of liabilities should be preserved and
help Indian steel companies to grow further. A proper working capital management system
ensures the hazard free business operations and also enhances the profitability of the
company. Ramaratnam and Jayaraman (2010) used financial ratios in terms of liquidity,
profitability, variability and sustainability to measure the financial performance of Indian
steel industry for a period of five years from 2005 to 2010. Their study reveals that the
critical situation faced by the Indian steel industry is due to over capacity and demand
slowdown resulting in price cuts. The anti-dumping duties imposed by U.S and many
European countries contributed to this demand supply mismatch in the market.
Moradi, Salehi and Erfanian (2010) carried on a research on the corporations listed on
Teheran Stock Exchange for a period of seven years since 2002 to 2008 and applied multiple
regression technique to find out the relationship between financial leverage and earning
response Comparative Study of Financial Performance of Indian Steel Companies Under
Globalization coefficient. Singapurwoko and Mustofa-El-Wahid (2011) conducted a study on
48 companies listed under Indonesian stock exchange selected from different industries for a
period of seven years to explore the relationship between debt and profitability. As the direct
comparison between debt and profitability is not possible so they applied regression model to
determine the relationship.
Existing literature on financial performance across industries as well as those outside Ghana
were reviewed. The reviewed works involved studies that;

i) employed ratio and other statistical analysis on the financial statements of firms to
determine the financial performance

ii) examined the relationship between perceived relevant factors such as Corporate Social
Responsibility (CSR), Capital Structure and financial performance. Others also evaluated the
impact of particular operational practices like JIT, TQM, services outsourcing and ISO
certification on financial performance

14
iii) generated models for financial performance examination based on derived metrics from
firms selected key performance indicators.

2.1 Literature Review on financial performance of firms:

Mikailu et al1 employed pooled ordinary least square regression to examine how corporate
governance mechanisms relate to their financial performance. The parameters used in
measuring firm performance were RoE, RoA, Price- Earnings ratio and Tobin’s Q. The study
advocated for concentrated instead of the ownership of diffused equity. It also made a case for
a ten membership board and contended for a separate CEO position from board chair.
Notwithstanding a lack of evidence to the effect that boards with a greater proportion of
external directors excel more than otherwise, the study found that expatriate CEO managed
firms tend to attain higher measures of performance than those managed by indigenous CEOs.
Some gaps identified in the study are that the sampling criterion was not representative and a
more robust statistical method of analysis could have been used instead of the standard OLS
regression with its attendant weaknesses.

Tehrani et al2 developed a model that evaluates a companies’ performance using the technique
of data envelopment analysis. Performance assessment indexes were generated from financial
statements as well as ratios from articles and books. Due to the huge number of variables, data
envelopment analysis was used to analyze the collected data in the study. Parameters used to
measure performance included Liquidity, Activity, Leverage, Economic Added Value, and
Profitability ratios. The result of the analysis disclosed that nine out of the thirty-six companies
were efficient; implying that the remainder twenty-seven companies were inefficient. Some
gaps identified in the study are that it focused on evaluating the selected companies for internal
efficiency without some form of ranking. It also excluded qualitative indexes in developing the
proposed model.

2.2 Summary of Literature review on Specific Field of Research:

The reviews above focused on the financial performance of firms in general except the telecom
industry. The scope of the works is restricted to basically, the use of financial statements and
other non-financial reports to examine the financial health of firms. Others sought to establish
the interrelatedness or otherwise of some factors (capital structure, market capitalization etc.)
or operational practices and financial performance. They mostly employ financial ratios and
statistical analysis tools as techniques for the investigations. All the studies were conducted in
geographies outside Ghana. The next review explored works on the financial analysis of
companies in Ghana and the telecom sector.

2.3 Literature Review of financial performance of firms in Ghana as well as the telecoms
sector:

This section deals with survey, review and analysis of literature pertaining to the specific topic
of research identified, thus, financial performance of firms in the telecom and financial sectors
of Ghana.

Sebe-Yeboah and Mensah14 analyzed ADB’s financial performance with the deployment of
varied analytical tools. The study delivered an on-going capability to appraise bank’s financial
performance. Secondary data, from audited financial statements together with relevant

15
information from other important sources were used. Of the forty-Seven (47) audited financial
statements since the bank’s , data spanning 2006 to 2012 were gathered from audited financial
statements for the analysis. Vertical and horizontal analysis, Du Pont financial ratio analysis as
well as descriptive statistics were employed in analyzing the available financial information.
The study found that ADB’s attitude towards the financing of agriculture was shrinking. The
liquidity position of the banks indicated a descending trend and fell further down in 2010.
Model limitations were identified due to the availability of more robust alternatives for the
evaluations done. Thus DEA and CAMELS rating could have been employed for more reliable
outcomes. The study also excluded inputs from the customers’ perspective; since customer
experience and satisfaction could impact profitability in the long-term.

16
 Chapter 3
Rationale of Study

17
 RATIONALE OF STUDY

Financial analysts often assess the firm's liquidity, solvency, efficiency, profitability,
operating efficiency and financial stability in both short-term and long-term. Ratio analysis
provides relative measures of the company’s performance and can indicate clues to the
underlying financial position. For measuring financial position and financial efficiency,
appropriate level of financial performance indicators are required with whom comparison can
be made. Generally liquid ratio, debt-equity ratio, interest coverage ratio, inventory turn over
ratio, return on investment ratio and debt to net worth ratio are highly useful in determining
financial position ,financial performance and the financial stability or other wise of such
management.
The exam additives of a Financial Analysis are:
•Liquidity: It evaluates its brief dissolvability organizations.
• Long - term dissolvability: It demonstrates the potential to meet the long haul obligation of
IT corporations.
• Profitability: To examine its aftereffects companies duties and via and big execution and
skillability of the companies. The accompanying techniques are typically implemented
1. Flat Analysis
2. Vertical Analysis
3. Pattern examination
4. Assets motion exam
5. Income research
6. Proportion examination
7. Cost – volume – gain exam.

IT Companies: Indian Information Technology (IT) enterprise has assumed a vital interest in
setting India on the sector manual. At gift, India has emerge as an innovator in IT and ITES
element in anywhere sooner or later of the sector. IT&BPO branch has gotten one of the
massive improvement regions for the Indian financial gadget. Indian IT element urges the
Indian economy to end up similarly. Notwithstanding fuelling India's economic system, this
division is additionally emphatically influencing the manner of life of its family contributors
thru a functioning straight away and backhanded dedication to the unique monetary
parameters, for instance, way of life, business enterprise and first rate variety. IT element has
assumed a big task in converting India's picture from a mild shifting bureaucratic economic
machine to a function of ingenious business agency human beings and a international
participant in giving international magnificence innovation preparations and company

18
administrations. Today IT and ITES factors lead the monetary improvement as a long way as
earnings age, techniques of lifestyles, work, and fare development. Indian IT part is the
primary wellspring of acquiring the far off cash via programming and its administrations.
After the Industrial method of 1991 have become progressed, there has been an ocean of
adjustments in Indian joining of financial system into spherical the arena. The progressions
got here through advancement, privatization and globalization.
Data Technology (IT) is clarified because the plan, development, execution and the
executives of PC based facts frameworks, specially PC system and programming packages.
At gift, it has superior to cowl maximum parts of processing and innovation. The largest
global businesses comprise Infosys, TCS, Deloitte, Cognizant and Amazon. Data Technology
is one of the most big institutions inside the Indian financial system. The IT commercial
enterprise of India has indicated massive development as of late. The IT_BPM area in India
delivered at US$177 billion up in 2019 seeing a development of 6.1 percent three hundred
and sixty five days-on-one year and is classified that the size of the commercial employer
will extend to US$ 350 billion by way of the use of 2025. India's IT and ITeS corporation
raised to US$ 181 billion of every 2018-19. Fares from the company advanced to US$ 137
billion in FY19 even as neighborhood earning (counting device) progressed to US$ 44
billion. IT industry human beings four.1 million people as of FY2019. Spending on records
innovation in India is evaluated to acquire US$ ninety billion out of 2019. Income from
automated fragment is assessed to envelop 38% of the predicted US$ 350 billion enterprise
profits through the use of 2025.
IT Industry in Hyderabad
Hyderabad grow to be tested because the name the 'product getting prepared capital of India-
and as it have to be. The essential interest of the city of Hyderabad to prepare the quantity of
programming professionals, who get sent to diverse quantities of the nation and around the
arena, have empowered the fulfillment of the product business agency in India that we find
out right now. Since 1990, Hyderabad has visible an increasing circulation in the amount of
multinationals and tertiary place administrations, making the city an severe one to contend, as
some distance as IT development. Many home corporations and host organizations have
perceived their most important station right now have introduced to the regular development
of the tertiary division in Telangana. The blast inside the product commercial organisation
has even determined the manner to the development of Hyderabad's private special IT stops,
for instance, HITEC City and Mind space Cyberabad and so on.

Kinds of IT Companies:
There are 3 varieties of IT companies in Hyderabad. They are IT groups, Computer Hardware
organizations and ITES businesses. The IT businesses preserve the specific programming
development programs for the exceptional contemporary additives in Hyderabad and the the
relaxation of the world. Right now, has a massive type of circle of relatives and international
businesses shockingly. This portion of the Hyderabad IT business enterprise acquires the
entire fare profits for the Indian government. The ITES businesses (IT empowered
administrations) settlement to a wonderful extent with BPO corporations and bolster
administrations. This fragment likewise shapes a amazing phase of the IT business

19
organization in Hyderabad. Its 0.33 section companies is the PC equipment corporations. A
few manufacturers of PC tool agencies provide help to global businesses and domestic
agencies and are inside the concept to enlarge their tool to the the rest of the nation.
Coming up subsequent are the essential contemporary form of IT phase –
1. IT administrations
2. IT empowered administrations
3. Equipment
4. Programming devices
IT Services
IT administrations installation a good sized piece of the IT company of India. IT
administrations include patron, server and digital administrations. Chances within the IT
administrations department exist in the territories of counseling administrations, application
protection, the board administrations and net companies. Its large directors administrations
are
• Government
• Financial administrations
• Retail and conveyance
• Banking
• Manufacturing
IT empowered administrations
The administrations which make use of information and media transmission improvements
are considered as IT empowered administrations. The IT empowered administrations is the
maximum giant assist to the improvement of the IT enterprise of India. A portion of the
administrations gave through the ITES phase in India are –
• Customer-connection administrations which consist of call-focuses
• Back-workplace administrations
• HR administrations
• Transcription and interpretation administrations
• Content improvement and interest
• Remote schooling
• Data searching for
• GIS
• Revenue bookkeeping
• Data passage and facts trade
20
• Market take a look at
• Network consultancy
Programming items Programming objects are many of the maximum especially traded
devices from India. The product business enterprise in India installation at some point of the
Nineteen Seventies and developed at a crucial pace over the most state-of-the-art ten years.
This dimension suggests the fares of the information innovation industry from India the
various FY09 and FY18. IT management sends out have been regarded at spherical 70 billion
U.S. Billion greenbacks in FY18.
Equipment
The device phase of the IT commercial organisation accentuates on the assembling and
accumulating of PC machine. The use of PC gadget is high within the neighborhood
marketplace. Because of the ascent in its amount corporations, workstations, servers, gives of
labor areas, switches, and so forth were on the expansion as of late. Numerous residential and
international companies have financed within the PC device show off in India.
Government Support
The administration has improved assist for the improvement and the improvement of the IT
organization in Hyderabad. Numerous international organizations get gives from the
Government of Telangana and India to return and set up their domestic workplace/base for
responsibilities within the state. The legislature additionally help inside the land assignments
mindset in case of constructing an IT park or starting a solitary administrative center.
Numerous companies advanced from the form of the primary IT Park in the town, HITEC
City. Aside from land allotment assist, the control moreover facilitates home and host groups
advantage terrific in class offices with contemporary places of work and global fashioned
engineering.
Hyderabad gives a excellent region, getting one-ofa-kind IT companies to dispatch their
bases, broaden and hook up with every different over the globe. One of the most out of
manage growing economies due to the IT vicinity, Hyderabad is domestic to the most
effective global businesses, highly-priced IT stops and BPO's.
The eventual destiny of the IT agency in Hyderabad ensures development and
accomplishment stories along the growth and in addition modern-day improvement. It is said
that Hyderabad is furthermore recognized as the second one Silicon Valley of India, after
Bangalore. Advanced foundations, throughout the board speculations, and getting prepared
focuses are assisting the development of its quantity stops anyplace the town. The metropolis
has likewise been assigned to residence India's first silicon developing office referred to as
Fab City making Hyderabad honestly India's reducing facet town.
Less high priced land prices, accessibility of gifted difficult paintings and fairly higher
framework are making it an attractive notion for every global and domestic IT companies.

21
First-magnificence ventures:
This 12 months has visible some remarkable ventures. OnePlus, Amazon, Intel, Micron,
telephone writer hardware most critical Skyworth, and Hitachi Vantara are a part of the IT
majors that set up for company in Hyderabad, anywhere in the maximum modern four
months.
As the State goals IT fares of ₹1.2 lakh crore in FY19-20, multiplying the wide variety from
2013- 14, the 12 months it modified into primarily based, Telangana IT Minister KT Rama
Rao viewpoints the success so far to the 'genius dynamic IT method' communicated by using
the usage of the legislature. In 2018-19, it arrived at IT fares of ₹ 1.09 lakh crore.
One first rate purpose for that is the proceeded with need for area via data innovation and IT-
empowered administrations groups. Telangana Minister for IT and Industries K T Rama Rao
said that the TSiPASS, the Industrial Policy propelled after the Telangana Rashtra Samithi
(TRS) framed its female government inside the State, has supplied endorsements to 11,570
groups. "Around eighty percent of the organizations have all started strolling and function
created six lakh employments," he said as of past due. With the IT branch proceeding to be
the pillar, he has solicited government to differentiate the accessibility from land in land
banks and in mechanical parks. The State is also furnishing financial professionals with facts
identified with the accessibility of land to discover their endeavors.
Besides the ordinary IT enterprise, Telangana is also searching consistent development of
recent companies. The surroundings sincerely gets fortified by way of manner of the phase of
world participating place vendors like We Work. The State is staking on the second length of
T-Hub to moreover assist the development environment inside the city.
IISurvey Literature:
B. Mathivanan (2009), this studies expresses that the share examination is one of the systems
of coins related exam wherein proportions are carried out as a measuring stick for assessing
the budgetary condition and execution of a agency. Investigation and translation of numerous
bookkeeping percentage offers a skilled and skilled examiner a advanced comprehension of
the cash associated scenario and execution of the company than what he may want to have
received in particular via an examination of price range summaries. This examination
clarified the productiveness, liquidity studies of IT businesses.
K. Maran (2011), the research clarified the historical backdrop of the Indian programming
enterprise might be figured from 1974, when Tata Consultancy Services (TCS) started out of
its activities. TCS with its joint endeavors got one of the best programming exporters in the
precise 'ol days. The Indian programming Industry has made out of a honest US $ 150 million
out of 1991-ninety to an splendid US $ 5.7 billion of every 1999-2000. Some distinctive
Indian organisation has no longer finished so nicely towards the global competition. In India
the primary wellsprings of pay is thru programming Industry and its fares. Practically all the
product organizations are confronting cash related emergency in particular the principle 10
programming corporations in India. In the three hundred and sixty five days 2005, TCS Net
gain development is 2959 percent however it went all of the way right down to eighty three
percentage inside the year 2008,Wipro net advantage improvement is 24.1 percent in the yr
2002 and it went proper all the way down to 9.24 percentage in 2008. The one of a kind using

22
organizations as like Infosys, Satyam are likewise confronting the money related emergency
inside the international emergency.
Acharekar Sachin Vilas Vijaya (2013), this research depicted about percentage exam is a
specialized of presenting inner and outside occasions influencing the enterprise exchanges
figuring out with its sports, operating consequences and achievement of predecided targets
and locations of a business company to sum matters up and rundown shape. Proportion
examination is the way inside the path of finding out and introducing the relationship of
factors or accumulating of factors inside the financial evaluations. In percent exam, a smooth
surrender is drawn through constructing up quantitative connection between at the least
matters of financial reviews. Outside gatherings, for instance, speculators, consumers, banks
and so forth require data about the cash associated sufficiency or shortcoming of the worry.
Thusly, proportion exam is used by each this kind of gatherings which includes the
executives to evaluate the exhibition of the concern. With the assist of these proportions, the
liquidity function, lengthy haul dissolvability, operating productivity or gainfulness and
effectiveness of a worry can be assessed.

Ashutosh Daga (2014), this paper investigated approximately the economic exhibition of 3
IT monsters of India – Tata Consultancy Services restricted (TCS), Wipro Limited and
Infosys Technologies Pvt. Ltd and expertise their remote marketplace introduction risk. IT
employer frames a fundamental piece of administration component corporation of India.
Administration section of India (specially IT place) has validated a enormous improvement
(annoyed development tempo of seven.Five%, National Statistical Commission, 2001,
workmanship 7.1.2) on account that Indian monetary machine opened in 1992. The extension
in the management segment in India has been pushed via the IT–ITES section, contributing
substantially to increment in GDP, business employer, and fares. As indicated through
manner of Gartner, the "Main Five Indian IT Services Providers" are Tata Consultancy
Services, HCL Technologies, Infosys, Cognizant and Wipro. Along those lines
comprehension of execution research of huge participant of the area TCS, Wipro and Infosys
(joined turnover for FY2013 producing 15.Eight billion, The Indian Express twenty seventh
Aug 'thirteen) is pressing to recognize the eventual fate of Indian IT element and its
introduction to out of doors change put it up for sale. With deterioration of Indian cash
(devalued to almost 60% for the purpose that worldwide monetary emergencies 2008),
expertise the introduction danger of Indian IT department becomes even greater huge. The
investigation is predicated upon on optionally available information protecting the duration
from 2003-2004 to 2012- 2013. For inspecting the cash related execution of each one of the 3
organizations' improvement examination and percentage investigation are determined. To
recognize the out of doors market presentation threat Coefficient of Variation and Ratio
examination of turnover, internet benefit and net advantage for the two companies for 2
numerous period, 2003-2008 and 2008-2013 are taken into consideration and checked out.
Arjun (2014), This examination expresses that any sort of business association requires
forms of capital specially fixed capital and Working capital. Fixed capital is needed to satisfy
lengthy haul intake and running capital is needed for short-time period requests. The two
capitals determine effectiveness level of commercial organisation association. Better strolling
capital control allows in increasing gainfulness function and productivity is essential to pay
comes again to the issuer's belongings, extensively comes returned to buyers. It likewise

23
comes to a choice liquidity role. Viable running capital control can be done through
appropriate supervision over steady sources, modern-day assets and deal.
Akshita Jain (2015), the examination researched the presentation of 20 IT Companies of India
thinking about 10 money related markers. The system corporations the organizations that
display associated execution but not quite much like specific groups. Further, the paper
likewise investigated the bunch exam of the corporations and investigations the example to
group.
The discoveries of the method exposed that Wipro is the nice entertainer and steadily
powerful out of the association of 20 agencies while organization examination abridged that
TCS is the simply one in its private class though Wipro and Infosys are nearly
indistinguishable companies. The medical categorization right here additionally helped the
acknowledgment of the organization execution and gave essential statistics every to
economic specialists and the cutting-edge investors to keep on putting assets into the
organisation and for making new task techniques.
Twinkle Prusty ( 2016), the studies inspected the diploma to which company management via
the board execution, impacts the coins related execution of selected IT businesses in India.
The exam distinguishes whether or not or no longer there can be any vast connection many of
the board advisory business enterprise (BC) and association of board (COB) with ROA and
ROCE of the chose IT organizations. The paper clarified the each year critiques of top five
Indian recorded businesses based totally totally on their wellknown assets as on February
2016, within the interest of the Information innovation corporations (particularly, TCS;
Infosys; Wipro; HCL Technologies; and Tech Mahindra) within the state while growing a
Board Governance Score, that not just supporters the intentional revelation of organisation
management yet its recommendations on the economic exhibitions whilst taking the hobbies
of all partners protected.
The exam time frame considered for the exploration is one year for example from 2014 to
2015. The exam suggests that there's a essential fine connection between the board
management and cash related execution of chose IT agencies. Both, board council (BC) and
corporation of board (COB) have indicated fantastic courting with ROA and ROCE however
BC has validated its crucial impact additionally on ROA and ROCE. The exam, along the
help of massive huge kind of literary works obviously demonstrates that the activity of board
cannot be omitted. The physical activities of board need to be mainly watched and overseen.
The corporation ought do some thing it takes not to maintain board length simplest for
regulation simply but the board duration need to include of ideal degree of prepared
dependable and autonomous executives who can play out their activity efficaciously. The
relationship the various corporation management and budgetary execution of businesses is
specifically huge from the view motive of partners. Results validated that there has been
heterogeneity in the board sports of numerous corporations. Fundamentally the examination
includes the investigation time of only a single 12 months, i.E., 2015. A similarly
confinement lies inside the emotional concept of creating an management listing. Albeit each
exertion emerge as made to restrict this subjectivity however it cannot be completely
evacuated.

24
T. Ambika(2017), the research featured the Financial presentation in more large experience
alludes to how loads economic factors being or has been practiced and is a massive part of
coins risk the executives. It is the manner towards measuring the aftereffects of a commercial
enterprise employer's processes and responsibilities in money related terms. It is implemented
to amount the association's wellknown financial well-being over a given time-frame and
might likewise be applied to reflect onconsideration on comparative groups over a
comparable industry or to have a look at companies or areas in wellknown.
This enterprise become made to recognize the cash related execution of chose IT corporations
in India and their fashionable execution is appropriate. A few contrasts had been set up from
the examination and guidelines had been produced the usage of it. It is normal that the
selected IT agencies can also boom their exhibition at the off hazard that they take into
account the tips produced using the discoveries of the research.

Ms. Devanshi R. Shah (2018), this exam paper broke down the exhibition of 5 groups from
the Information Technology Sector of India. The businesses were assigned based totally
mostly on put it up for sale capitalization. The elements viz Sales, Profit After Tax, Long
Term Debt To Equity, Interest Coverage, Working Capital, Debtors Turnover and Cash
possessions of the organizations had been inspected over a time of 10 years. The examination
communicated that every one of these businesses have completed well regarding Sales and
Profit After Tax. Additionally all of the businesses are price pushed and do not confront any
hassle to fulfill with intrigue willpower. Execution at the facade of running capital has
likewise been determined relatively agreeable. Money possessions of the corporations are
virtually agreeable. All the groups aside from Tech Mahindra are predictable in their
presentation on special parameters. Tech Mahindra has observed out how to be on ground but
with widespread irregularity.
All the IT organizations encased proper now rousing execution on deals the front. While
WIPRO and H.C.L TECHNOLOGIES have stayed amongst 12% to 19%. The fortunes of
Tech Mahindra have diminished proper now. All the groups are fee pushed and espresso
reliant on borrowings. Intrigue inclusion proportion likewise has been at a level contribution
big solace to the companies concerning meeting their Interest determination. This is basically
due to extremely low Debt content material within the capital shape of the business
enterprise. Keeping pace with improvement in Sales, Working Capital requirements of all
companies have extended. Current Ratio and Debtors Ratio have stayed ok with remarkable
cash possessions.
Meghani Prathik R(2019), this paper tried to find out the inducement in the back of the social
wearing sports being directed through the best five IT corporations in India. This examination
carried out each year reviews of selected I.T. Businesses for the years 2007-08 to 2016-17.
The research broke down that the relapse model using SPSS 20 shape programming.
Notwithstanding checking the hypothesis of this studies expressed that whether or not there
was a connection between the elements. Aside from this, scientist has stated that the benefits
earned from Corporate Social Responsibility have confirmed improvement within the
benefits of the companies chose. The idea that become deliberate and tried so the outcome
suggests that the there may be a vast high pleasant dating amongst business enterprise social
responsibility and advantage in chose I.T. Groups in India.

25
Amrita Tatia Karnawat (2020), this exam communicated the connection the diverse
budgetary well being, as evaluated through the Altman ZScore, and company execution, as
envisioned through the Return on Equity (ROE), of recorded IT organizations in Indian
market. A immediately relapse has been appeared among these elements to determine the
quantity and bearing of their connections. The varieties of Z-Scores over a five-12 months
time frame have moreover been analyzed. The studies secured the length from 2015 to 2019
(whole) and had yield excellent courting amongst ROE and the Z-Score however not
measurably fullsize for the business. It determined that there was a positive courting but has
now not gave off an influence of being measurably big among Return on Equity (ROE) and
Altman Z-Scores inside the market. Besides, in our elucidating examination, we noticed that
Indian IT organizations are having stable money related well-being and growing fascinating
returns. From a scholastic willpower point of view, this exam gives a refreshed experimental
knowledge into the connection between cash associated well being and economic execution
of recorded IT agencies in utilizing overdue information from 2015 to 2019.

26
Chapter 4
Objectives

27
 Objective of the study

The present research paper aims to measure the financial performances of Indian IT
companies like TCS, Wipro, Infosys and Tech Mahindra for the period April 2010-March
2014 using comparative financial ratios. As a research procedure, the researcher obtained the
audited financial statements of Indian IT companies for the five-year period (2010-2014)
from CMIE’s Prowess database and company website. The financial information necessary
for financial ratios was derived from these financial statements. The information was then
summarized and processed to come up with comparative financial ratios that were used in the
analysis. In this study, financial ratios were grouped into five categories, i.e., liquidity,
profitability, solvency, market-based, and leverage ratios. The study seeks to answer the
research question – What are the norms, industry figures, and peculiarities in the IT sector of
the Indian market? – using liquidity, activity, leverage, profitability, and market value ratios.
Thus, the study specifically aims to meet the following objectives:
1. The financial ratio analysis to judge the earning capacity, financial soundness and
operating efficiency of a business organization.
2. The use of ratio in accounting and financial management analysis helping the management
to know the profitability, financial position and operating efficiency of an enterprise.
3. Its usefulness in business planning, forecasting and locating the weak spots in the business
even though the overall performance may be quite good.
4. Its usefulness as a measure of inter-firm and intra-firm comparison.
Financial Statement analysisis the collective name for the tools and techniques that are
intended to provide relevant information to decision-makers. The purpose of such an analysis
is to assess a company’s financial health and performance. The primary objective of financial
reporting is to provide information to present and potential investors, creditors and others in
making rational investment, credit and other decisions. Other objectives of these studies are:
a) Standardize financial information for comparisons.
b) Evaluate current operations.
c) Compare performance with past performance.
d) Compare performance against other firms or industry standards.
e) Study the efficiency of operations.
f) Study the risk of operations.
Like objective of financial statement analysis there are certain advantages of financial
analysis like:
a) Quick and simple check on financial health.
b) Small number of ratios gives a picture of the business.

28
c) Provide a starting point for further investigation.
d) Helps Investors for their investment. Like: FIIs or DIIs.
e) Helps other financial institutes like: Mutual funds or Banks.

29
 Chapter 5
Research Methodology

30
 RESEARCH METHODOLOGY

Selected Companies

Tata Consultancy Services (TCS): TCS is a multinational information company

founded in 1968 and is a subsidiary of Tata conglomerate. It is listed in both Bombay Stock
Exchange (BSE) and National Stock Exchange (NSE) of India. It is the leader in global
marketplace and is among the top 10 technology firms in the world. It was also first in the
race among Indiabased companies in 2013, and currently is ranked at the tenth position
among world’s largest companies in terms of revenue. TCS is the largest Indian company in
terms of market capitalization. It is headquartered in Maharashtra, India. TCS is dealing with
various kind of products and services, such as assurance services, BI and performance
management, business process services, consulting, digital enterprise, eco-sustainability
services, engineering and industrial services, enterprise security and risk management,
enterprise solutions, iON small and medium business, infrastructure services, services,
platform solutions, and supply chain management.
Wipro: Wipro Limited (formerly known as Western India Products Limited) is a
multinational IT consulting company founded in 1945. It is India’s largest publicly traded
company and holds the seventh position among world’s largest IT services firms. The
company is equipped with 147,452 employees to serve clients in more than 175 cities across
six continents. With Wipro Consumer Care and Lighting (WCCLG), it has also ventured into
FMCG market and is rapidly increasing its presence in the market. Wipro Infrastructure
Engineering (WIN) is the largest independent hydraulic cylinder manufacturer in the world. It
is headquartered are in Karnataka, India. Wipro is dealing with various kind of products and
services such as analytics applications, business process, cloud, consulting, digital, eco-
energy, information management, infrastructure services, Internet of things, managed
services, mobility, open source, and product engineering.
Infosys: Infosys (formerly known as Infosys Technologies Private Limited) is an Indian
multinational corporation founded in 1981. It was the third largest Indian IT services
company in terms of revenue in 2014, and India’s fifth largest publicly traded company.
Infosys has global presence with more than 160,000 employees and generated revenue of
$8.25 bn in the FY14. It is headquartered in Karnataka, India. Infosys is dealing with various
kind of services such as Aikido: Next-Generation Services, Ki: Knowledge-based
management and evolution of landscapes, Do: Design thinking and design-led initiatives, Ai:
Platforms and platform as a service, business services, business applications, business
intelligence, Digital Infosys Consulting, Oracle, SAP, technology services, application
management, cloud, infrastructure and security engineering services, enterprise mobility,
testing, outsourcing services, application outsourcing, business process outsourcing, customer
service, finance and accounting, human resources, and sourcing and procurement. It is also
dealing with several product categories such as banking suite, big data, cloud, customer
service, digital commerce, digital marketing, distributive trade, micro-commerce, sourcing
and procurement, Edge-Verve, Assist-Edge – customer service experience, Brand-Edge –

31
digital marketing, Credit Finance Edge – micro-commerce, Interact Edge – digital commerce,
Procure Edge – sourcing and procurement, Trade Edge – distributive trade, Infosys Finacle,
core banking, CRM, digital commerce, direct banking, e-Banking consumer, e-Banking
corporate inclusion, Islamic banking, mobile banking, payments, treasury, and wealth
management.
Tech Mahindra: Tech Mahindra Limited is an Indian multinational information technology
company and a part of the Mahindra Group conglomerate. It was ranked fifth among India’s
software services firms and 111th in Fortune India 500 list, 2012. It is equipped with 92,729
employees across 51 countries. It is headquartered in Maharashtra, India. They are dealing
with various products and services like IT, business consulting, business process outsourcing,
application development and management, and network services.
This investigation will help with understanding the cash related skills, gainfulness and
liquidity exam of the chose IT businesses. Budget reviews are orchestrated with the help of
bookkeeping information. In the beyond studies examines, they took the bookkeeping
information which idea about the large scale level and global diploma. The in addition
examination will enhance the estimation of 10 selected IT groups of India. This budgetary
studies will empower the agency to know the general monetary exhibition of chose IT
agencies through all proportions, as an example, liquidity, motion, productivity and super
proportions. The examination additionally will find out its presentation corporations in India
that permits you to decidedly affects the Indian financial gadget. Time of the studies: The
time of the examination has a place with 2009 to 2019.
The present study covers two public sector drug & pharmaceutical enterprises listed on BSE.
The sample of the companies has been selected on a convenient basis and the necessary data
have been obtained from CMIE database and public enterprises survey. We select Karnataka
Antibiotics and Pharmaceuticals Ltd. (KAPL) and Rajasthan Drugs and Pharmaceuticals Ltd.
(RDPL). The study has been undertaken for the period of twelve years from 1997-98 to 2008-
09. In order to analyze financial performance in terms of liquidity, solvency, profitability and
financial efficiency, various accounting ratios have been used. Various statistical measures
have been used i.e., A.M., S.D., C.V., linear multiple regression analysis and test of
hypothesis t-test. Financial analysts often assess the firm's liquidity, solvency, efficiency,
profitability, operating efficiency and financial stability in both short-term and long-term.
Ratio analysis provides relative measures of the company’s performance and can indicate
clues to the underlying financial position. For measuring financial position and financial
efficiency, appropriate level of financial performance indicators are required with whom
comparison can be made. Generally liquid ratio, debtequity ratio, interest coverage ratio,
inventory turnover ratio, return on investment ratio and debt to net worth ratio are highly
useful in determining financial position, financial performance and the financial stability or
otherwise of such management.

32
To deliver the underneath expressed studies goal, the records for this research turn out to be
accumulated from the price range opinions as allocated via IT Companies and other
wellspring of information became alluded from the audit of diverse articles, papers, and
enormous past examinations. For this reason, accumulating records of IT corporations is
utilized which might be recorded on NSE and BSE. For this research 10 enormous IT groups
information has been talking to the time of 2009-2019. To comprehend the liquidity,
productiveness and in popular effectiveness of IT businesses with the help ROA of Debt
Equity, Gross gain, Net benefit, ROI/ROCE, ROE, liquidity and gainfulness proportions.
Altogether, 10 businesses are selected for check especially Tech Mahindra, Infosys, HCL
Technologies, Tata Consultancy Services Ltd, WIPRO, MindTree, L&T Technologies,
Hexaware Technologies, NIIT Technologies, and Tata Elxsi. The statistics has been accrued
from the valid internet websites of economic occasions, Yahoo money and nseindia.
Targets:
1. To supply stable records of selected IT agencies with the help of similar explanation to
exclusive invested individuals to take the challenge choices.
2. To determine the general productiveness of chose IT businesses through vertical
examination.
3. To degree the both present second and long haul dissolvability of selected IT businesses.
4. To dissect the operational productiveness of chose IT corporations through motion
proportions.

33
 Chapter 6
Analysis & Interpretation of
results

34
 Analysis & Interpretation of results
A firm’s performance measurement has been the subject matter of discussion for decision
makers as managers, planners, economists and academic staff since long many years. It is the
process of measuring the results of a firm's policies and operations in monetary terms. Financial
performance analysis includes analysis and interpretation of financial statements in such a way
that it undertakes full diagnosis of the profitability and financial soundness of the business.
This term is also used as a general measure of a firm's overall financial health over a given
period of time, and can be used to compare similar firms across the same companies or to
compare companies or sectors in aggregation. Financial analysts often assess firm's production
and productivity performance, profitability performance, liquidity performance, leverage
performance, asset utilisation performance and growth performance. The financial
performance analysis identifies the financial strengths and weaknesses of the firm by properly
establishing relationships between the items of the balance sheet and profit and loss account.
In this paper an attempt has been made to analyse the profitability position of five leading
pharmaceutical companies of India with the help of mean, standard deviation, co-efficient of
variation, multiple regression, and analysis of variance. The results match with the earlier
studies and the established theory of finance that the increase in profitability will not only yield
greater efficiency but also improve financial performance in future. The study is conducted by
taking into account of the data for five years from 2011-2012 to 2015-2016. The
Pharmaceutical companies selected for study are Lupin, Wochkardt, Glenmark, Abott and
Torrent. The financial performance of these companies are evaluated and found that the
profitability of the selected pharmaceutical companies in India during the study period is
satisfactory.

ANALYSIS OF PROFITABILITY

The profitability of the selected companies are measured with the help of the following ratios,
and the results are interpreted:

 Gross Profit Ratio

 Net Profit Ratio

 Operating Profit Ratio

 Return on Equity

35
  Earnings Per Share

Table 1 shows the gross profit ratios of Pharmaceutical Companies in India during the period
from 2011-2012 to 2015-2016

Table 1

Gross Profit Ratio (Rs. in crores)

Company Mean S.D C.V

Name
Lupin 73.8256 3.04895 4.191
Abott 86.0372 0.836767 2.586

Glenmark 73.4242 6.1754

Torrent 70.2570 48.4025
Wochkardt 63.6988 10.530

• Source: Compiled and Calculated from the data published in www.moneycontrol.com

• Table 1 reveals the gross profit ratio of selected Pharmaceutical Companies in India from
2011-2012 to 2015-2016. This gross profit ratio shows a fluctuating trend during the study
period. It implies the high cost of goods sold due to unfavourable purchasing policies and lesser
sales. The Abott Ltd has the highest average gross profit ratio of 86.0372 per cent and the
Wochkardt Ltd has the lowest average gross profit ratio 63.6988 per cent.

• The Wochkardt Ltd has the highest standard deviation of gross profit ratio of 6.70756 per
cent. The Abott Ltd with lowest standard deviation of gross profit ratio of 0.836767 per cent
and it is found to be stable in gross profit ratio.

• Table 2 shows the Net profit ratios of Pharmaceutical Companies in India during the period
from 2011-2012 to 2015-2016.

36
Table 2

Net Profit in crores.

Company Name Mean S.D C.V

Lupin 21.752 5.0888 23.25
Abott 9.064 0.8325 9.56
Glenmark 19.884 2.584 12.252
Torrent 21.554 3.2522 31.25

Source: Compiled and Calculated from the data published in www.moneycontrol.com

• Table 2 reveals the net profit ratio of selected Pharmaceutical Companies in India from 2011-
2012 to 2015-2016. The net profit ratio shows the fluctuating trend during the study period.
This fluctuation indicates the firm’s capacity to face adverse economic condition such as price
competition, low demand etc. The Glenmark Pharma Ltd has the highest average net profit
ratio of 21.756 per cent and the Abott has the lowest average net profit ratio of 9.064 per cent.

• The Wochkardt pharmaceutical Ltd has the highest standard deviation of net profit ratio of
9.206716 per cent. The Abott Ltd with lowest standard deviation of net profit ratio of 0.836767
per cent and it is found to be stable in net profit ratio.

• Table 3 reveals the operating profit ratio of selected Pharmaceutical Companies in India from
2011-2012 to 2015-2016. The operating profit ratio shows a fluctuating trend during the study
period. This fluctuation implies inability to keep operating expenses properly controlled for
level of sales achieved. The Wochkardt has the highest average operating profit ratio of 5.988
per cent and Torrent Pharma Ltd has the lowest average operating profit ratio of 3.43 per cent.

• The Wochkardt Ltd has the highest standard deviation of operating profit ratio of 3.732850
per cent. The Abott has the lowest standard deviation of operating profit ratio of 1.006121 per
cent and it is found to be stable in operating profit ratio.

37
• The Wochkardt Pharma Ltd has the highest co-efficient variance of operating profit ratio of
62.338 per cent. The Glenmark has the lowest co-efficient variance of operating profit ratio of
25.229 per cent and it is found that there is a consistency in operating profit ratio than the other
Pharmaceutical Companies.

• Source: Compiled and Calculated from the data published in www.moneycontrol.com

• Table 4 reveals the return on equity capital ratio of selected Pharmaceutical Companies in
India from 2011-2012 to 2015-2016 The return on equity capital ratio shows fluctuating trend
during the study period. This fluctuation indicates profit earned by the company and those
profits which can be made non-available to pay dividends to equity shareholders. The
Wochkardt Pharma Ltd has the highest average return on equity capital ratio of 56.862 per cent
and Glenmark has the lowest average return on equity capital ratio of 16.568 per cent.

• The Wochkardt Ltd has the highest standard deviation of return on equity capital ratio of
60.142904 per cent. The Abott has the lowest standard deviation of return on equity capital
ratio of 1.3112665 per cent and it is found to be stable in equity capital ratio.

• The Wochkardt Ltd has the highest co-efficient variance of return on equity capital ratio of
105.769 per cent. Abott has the negative co-efficient variance of return on equity capital ratio
of 5.579 per cent and it is found that there is a consistency in equity capital ratio than the other
Pharmaceutical Companies.

38
Chapter 7
Findings

39
 FINDINGS

The findings of the empirical framework coincided with the theoretical framework based on
the research problems. The study shows how social media has become an important tool for
marketing and creating brand awareness. In fact it is foreseen that in the near future there will
be a paradigm shift from traditional advertising to social media platforms. The study also
identified some challenges the company has faced using social media, unlike in the study where
there have been so many challenges reported.

5.1 Research Limitation

This research was conducted using a cross sectional data from a small case company and
therefore did not provide enough longitudinal data (Longitudinal data are data sources that are
collected over a period of time through repeated contacts with the same respondents) to arrive
at conclusive solution. The research should have also been conducted as a triangulation study
i.e. qualitative and quantitative research. This would have provided data from both the
consumer point of view and the company point of view but because of limited resources the
study was conducted as a single case study to serve a purpose.

40
Chapter 7
Conclusion

41
 CONCLUSION

Based on factors like current ratio, return on shareholder’s equity, earnings per share, debtor
turnover ratio and most importantly debt equity ratio, it can be concluded that Infosys is the
most sought-after company for investors. Along similar lines is TCS, whose working capital
turnover, total asset turnover and DuPont analysis returns show encouraging signs for
shareholders who have profits as their prime point of consideration.

All the IT organizations shrouded right now motivating execution on offers the the front.
Consequently is the scenario with Profit after Tax in perfect phrases. Benefit after Tax to Sales
Ratio execution of TCS and INFOSYS is on higher facet at above 20%, at the same time as
HCL Technologies and Wipro have stayed among 12% to 19%. The fortunes of Tech Mahindra
have declined proper now. All the corporations are fee pushed and much less reliant on
borrowings. Intrigue inclusion share additionally has been at a stage contribution essential
solace to the organizations as a protracted manner as assembly their Interest commitment. This
is normally because of especially low obligation content in the capital shape of the employer.
Keeping tempo with development in Sales, Working Capital necessities of all corporations
have extended. Current Ratio and Debtors Ratio have proceeded with OK with remarkable
coins possessions.

From the study of the financial performance of the select pharmaceutical it can be concluded
that the liquidity position was strong in case of KAPL and it was so poor in case of RDPL
thereby reflecting the ability of the companies to pay short-term obligations on due dates. Long-
term solvency in case of KAPL is lower which shows that companies relied more on external
funds in terms of long-term borrowings thereby providing a lower degree of protection to the
creditors. Financial stability ratios in the vein of debt to net worth ratio in case of RDPL have
showed a downward trend and consequently the financial stability has been decreasing at an

42
intense rate. The Indian pharmaceutical industry will witness an increase in the market share.
The sector is poised not only to take new challenge but to sustain the growth momentum of the
past decade. After analyzing the financial data of all the four companies under the fifteen
financial ratios we can conclude this project under two folds:-For long term and secure
investment one can go for “Hindustan Unilever Limited” as it has shown a stable and steady
growth over the period.While for those who look for short and high returns with a greater risk
factor can go for V2 Retails as it’s a new company and it’s in a growing stage.

43
 Chapter 7
Bibliography

44
 BIBLIOGRAPHY

1. Altman I E R G and Narayana P (1977), “Zeta Analysis: A New Model to Identify

Bankruptcy Risk of Corporations”, Journal of Banking and Finance, pp. 29-54.

2. Beaver W H (1966), “Financial Ratios as Predictors of Failure”, Journal of Accounting

Research, Supplement, pp. 71-127.

3. Bhattacharya Asish K (2007), Introduction to Financial Statement Analysis, Ratio Analysis,

1st Edition, Chapter 03, pp. 32-45, Elsevier, New Delhi.

4. Boardman Anthony and Vining Aidan (1989), “Ownership and Performance in Competitive
Environments: A Comparison of the Performance of Private, Mixed, and State-Owned
Enterprises”, Journal of Law and Economics, Vol. 32, No. 1, pp. 1-33, available at
http://EconPapers.repec.org/RePEc:ucp:jlawec:v:32:y:1989:i:1:p:1-33.

5. Brigham E and Houston J (2009), Fundamentals of Financial Management, Cengage

Learning, Mason.

6. Brigham E F and Ehrhardt M C (2010), Financial Management Theory and Practice, 13th
Edition, pp. 1184, South-Western Cengage Learning, Mason, OH.

45