Vinati Organics: Comparitive Balance sheet( in INR Cr.

) as on march31, 2021, march 31 2020, march 31 2019    

      Increase     Increase
      (Decrease)     (Decrease)
  2021 2020 Amount % 2020 2019 Amount %
                 
EQUITIES AND LIABILITIES                
SHAREHOLDER'S FUNDS                
Equity Share Capital 10.28 10.28 0 0% 10.28 10.28 0 0%
TOTAL SHARE CAPITAL 10.28 10.28 0 0% 10.28 10.28 0 0%
Reserves and Surplus 1,533.14 1,269.13 264.01 21% 1,269.13 1,041.00 228.13 22%
TOTAL RESERVES AND
SURPLUS 1,533.14 1,269.13 264.01 21% 1,269.13 1,041.00 228.13 22%
TOTAL SHAREHOLDERS FUNDS 1,543.41 1,279.41 264 21% 1,279.41 1,051.28 228.13 22%
NON-CURRENT LIABILITIES                
Long Term Borrowings 0 0 0 0% 0 0 0 0%
Deferred Tax Liabilities [Net] 77.93 70.48 7.45 11% 70.48 84.57 (14.09) (17%)
Other Long Term Liabilities 6.03 4.07 1.96 48% 4.07 2.93 1.14 39%
Long Term Provisions 0 0 0 0% 0 0 0 0%
TOTAL NON-CURRENT
LIABILITIES 83.96 74.56 9.4 13% 74.56 87.5 (12.94) (15%)
CURRENT LIABILITIES                
Short Term Borrowings 2.02 0.35 1.67 477% 0.35 3.68 (3.33) (90%)
Trade Payables 66.37 55.66 10.71 19% 55.66 53.12 2.54 5%
Other Current Liabilities 33.07 28.57 4.5 16% 28.57 28.76 (0.19) (1%)
Short Term Provisions 4.7 4.44 0.26 6% 4.44 3.24 1.2 37%
TOTAL CURRENT LIABILITIES 106.16 89.01 17.15 19% 89.01 88.8 0.21 0%
TOTAL CAPITAL AND
LIABILITIES 1,733.54 1,442.97 290.57 20% 1,442.97 1,227.57 215.4 18%
ASSETS                
NON-CURRENT ASSETS                
Tangible Assets 755.65 749.09 6.56 1% 749.09 471.91 277.18 59%
Intangible Assets 1.18 1.67 (0.49) (29%) 1.67 2.6 (0.93) (36%)
Capital Work-In-Progress 54.69 30.97 23.72 77% 30.97 191.18 (160.21) (84%)
Other Assets 0 0 0 0% 0 0 0 0%
FIXED ASSETS 811.53 781.73 29.8 4% 781.73 665.68 116.05 17%
Non-Current Investments 107.76 0 107.76 0% 0 0 0 0%
Deferred Tax Assets [Net] 0 0 0 0% 0 0 0 0%
Long Term Loans And
Advances 132.88 0 132.88 100% 0 0 0 0%
Other Non-Current Assets 26.45 18.68 7.77 42% 18.68 30.82 (12.14) (39%)
TOTAL NON-CURRENT ASSETS 1,078.61 800.41 278.2 35% 800.41 696.5 103.91 15%
CURRENT ASSETS                
Current Investments 180.91 227.39 (46.48) (20%) 227.39 96.47 130.92 136%
Inventories 121.94 93.17 28.77 31% 93.17 92.39 0.78 1%
Trade Receivables 277.2 201.78 75.42 37% 201.78 243.98 (42.2) (17%)
Cash And Cash Equivalents 6.85 53.7 (46.85) (87%) 53.7 3.8 49.9 1313%
Short Term Loans And
Advances 0.08 0.3 -0.22 -73% 0.3 0.05 0.25 500%
OtherCurrentAssets 67.94 66.22 1.72 3% 66.22 94.38 (28.16) (30%)
TOTAL CURRENT ASSETS 654.92 642.56 12.36 2% 642.56 531.07 111.49 21%
TOTAL ASSETS 1,733.54 1,442.97 290.57 20% 1,442.97 1,227.57 215.4 18%

Interpretation from the previous analysis

1) Current asset of the company in the year 2021 has shown an increase of 2% which shows improvement in liquidity position. In 2020 current asset
has increased by 21% which shows high liquidity position in 2020. Major reason for higher current asset increase in 2020 is due to the increase in
current investments. In 2020 company increased it’s short term current investment by 136%.
2) Current liability of company increased 19% in 2021 , we can see that short term borrowings has sky rocketed and the purchase on credit increased.
This can adversely affect liquidity position. There was no increase in current liability in the year 2020, then purchase on credit increased only for 5%.
3) However the tangible assets has increased merely and intangible assts has decreased, but non- current assets has increased by 35%. It is due to 77%
hike in work in progress and 100% rise in long term loans and advances. High work in progress shows that company is in the path of expansion and
not completed yet. Company began to lend more long term loans and provided advances. In 2020 the fixed assets have increased by 15 % and we
can see that at that time tangible assets contributed more to the total fixed assets, but capital work in progress has decreased. Which clearly gives
the idea that in 2020 company invested on tangible asset’s acquisition and in 2021 work or value addition on it began.
4) In 2021 total non current liabilities has increased by 13%, which shows increase in financial risk due to interest payments. companies obligation to
others and claim of others create risk. In 2020 the non-current liability decreased by 15% shows less financial risk and strong equity position.

A)Current ratio

Item Year Ratio Year Ratio Year Ratio

2021 2020 2019
Current asset 654.92 6.15 642.56 7.22 531.07 5.98
Current liabilities 106.16 89.01 88.8

Current ratio of the company has been higher than the ideal current ratio, which shows that Vinati organics has been in a strong liquidity position.
Company is well able to meet it’s short term financial obligations. In 2020 higher current ratio compared to 2021 and 2019 is found, in 2020 there
was a huge hike in current investment and this contributed to the rise of current assent and at the same time current liabilities remained stagnant.
The trade receivables of the company is very high compared to trade payables, which means company allows its customers to purchase on credit
and seems like Vinati organics is very liberal at debt collection. Poor credit management and over extended credit period can lead to bad debts.
Vinati organics could use that amount to generate further income if they invest that in any kind of short term investments. And Vinati organics is
not utilising its borrowing capacity, credit purchase from their suppliers could benefit the company, But they are not taking advantage of it.
Debtor turnover ratio

Year Ratio Debt collection

period
2021 3.44 106
2020 5.07 72
2019 4.62 79

Debtor turnover ratio was very low in 2021 and debt collection period is very high. For chemical industry the average debtor payback period was 61
and 56 days respectively in 2020 and 2019. (
Source:https://www.readyratios.com/sec/ratio/receivables-turnover) The debt collection period of Vinati organics in 2021 is all times long. Vinati
organics seems very liberal in debt collection. In 2020 trade receivable shows decrease, that lead to increase in debtor turnover ratio. In 2021 it is
very low, we can see from the balance sheet that Trade receivable in 2021 has shown an increase of 37%. Such a liberal and inefficient debtor
collection is very risky and it can increase bad debts. Proper debt collection would help the company to utilise that money to invest any kind of
further investments and create income, here Vinati organics is losing such an opportunity to gain more income. So efficiency of organisation in
collecting revenue is very poor according to its debtor collecting ability.

Debt-equity ratio

Year Ratio
2021 0.00
2020 0.00
2019 0.00

Debt to equity ratio of Vinati organics is zero for the past three years, which means there is no long term debt for Vinati organics. They are not using
any long term borrowed funds, loans, bonds, etc. which is a very good thing. For every company the debt to equity ratio should be lower than 1,
low debt to equity ratio is always preferred for every company, here vinati organics is maintaining zero debt to equity. Low debt means low burden
on the company and financially stable position of the company. For future creditors this reduces their risk.
 Proprietary ratio

Item 2021 Ratio 2020 Ratio 2019 Ratio

Share holder’s 1,543.41 89% 1,279.41 88.7% 1,051.28 85.6%
fund
Total assets 1,733.54 1,442.97 1,227.57

Proprietary ratio of Vinati organics has been showing an increase for the past 3 years and in 2021 compared to 2020 only an increase of 0.3 % is recorded.
89% proprietary ratio means 89 % of the assets of the company is funded with share holders equity. Company has sufficient amount of equity to support it’s
functions. Company is in a great position to pay of it’s creditors if any arises. High proprietary ratio shows strong financial position of Vinati organics. Few
debt reduces interest burden and related risk of company.

From identifying and interpreting four various ratios like Current ratio, debtor turnover ratio, debt equity ratio and proprietary ratio we are able to identify
the liquidity, efficiency and solvency position of Vinati organics. From current ratio we can say that liquidty position of Vinati organics is very strong. From
debtor turnover ratio the efficiency of Vinati organics can be found, in case of efficiency Vinati organics is poor, the ability to recover debts is decreasing the
debt collection period in 2021 is very long, this increases the chance of bad debts. From debt equity ratio and proprietary ratio, solvency position of the
company is identified, Vinati organics is in strong solvency postion. With zero debt equity ratio and 89% proprietary ratio Vinati organics is very stable and
has a strong solvency position.

B) Profitability ratios of Vinati Organics and Arti ltd.

Return on Asset

Ratio Vinati Organics Aarti Industries Ltd.

2021 2020 2021 2020
Return on Asset 15.53 23.13 6.83 8.59
In case of profitability Vinati Organics is more profitable than Arti Industries. Return on assets of Vinati Organics in 2021 is more than two times higher than
the ROA of Aarti industries. In 2020 Vinati organics managed to make ROA almost 3 times higher than Aarti Industries. Which means in 2021, with the asset
worth INR 100 , Vinati Organics made profit of INR 15.53 and Aarti Industries only managed to make a profit of INR 6.83. Vinati organics uses it’s asset
more efficiently than Aarti Industries to make profit. If we look at the net profit of Vinati organics and Aarti industries, Aarti industries has a higher net profit
than Vinati organics, but upon the assets employed by both companies, Vinati organics make more net profit with their assets. In 2021 the ROA of both the
companies are lesser than the previous year. In 2021 the Net profit of both companies were lower than the 2020. Increase in the price of raw materials and
increase in fright charge and change in product mix increased the expense.

Return on Investment( Capital Employed)

Ratio Vinati Organics Aarti Industries Ltd.

2021 2020 2021 2020
Return on Capital 20.61 31.44 14.03 18.18
Employed

In case of Return on capital employed also Vinati organics outperforms Aarti industries. Vinati organics has a higher ROCE than Aarti Organics in both the
years and the difference is not too small, But that difference decreased in 2021 compared to the previous year. 20.61 ROCE means for the capital
employed in the company worth INR 100 makes a profit( EBIT) of INR 20.61. Vinati organics efficiently utilise the capital employed to create more profit
compared to Aarti industries. This ROCE is one of the major ratio in investment decision. In 2021 the ROCE of both the companies reduced compared to
2020. Decline in EBIT was the major reason. Increase in raw materials price, fright charge lead to increase in expense and that lead to decline of EBIT.