FINANCIAL STATEMENT ANALYSIS

PROJECT
REPORT

Submitted by –
Name - Subham Deb
E.roll no -22BSPHH01C1222
Sec - A
Company Selected –
1)IndusInd Bank Ltd 2)Shivam Autotech Ltd
Submitted to -
Dr. Rajya Lakshmi Kandukuri

1|Page
 Acknowledgement
I would like to extend my sincere gratitude to Dr. Rajya Lakshmi Kandukuri for her invaluable
support throughout the financial statement analysis project. Her guidance and expertise were
instrumental in helping us navigate complex financial data and draw meaningful insights. Her
dedication towards our learning and her unwavering commitment to excellence have been truly
commendable. We greatly appreciate her mentorship, which has enriched our understanding of
financial analysis. This project would not have been successful without her contributions, and
we are deeply thankful for her involvement and guidance.

2|Page
Contents
IndusInd Bank ......................................................................................................................................... 4
Company Profile ................................................................................................................................. 4
Analysis of Cash Flow Statement ....................................................................................................... 4
Analysis of leases................................................................................................................................ 8
Analysis of Income Tax ....................................................................................................................... 8
Analysis of Fixed Assets.................................................................................................................... 10
Analysis of liabilities ......................................................................................................................... 12
Analysis of Equity ............................................................................................................................. 15
Analysis of Business Combination ................................................................................................... 16
Ratio Analysis ................................................................................................................................... 17
COMMON SIZE STATEMENT ............................................................................................................. 19
Shivam Autotech Ltd ............................................................................................................................ 21
Company Profile - ............................................................................................................................. 21
Analysis of Cash Flow Statement ..................................................................................................... 21
Analysis of Inventory ........................................................................................................................ 23
Analysis of Income Taxes.................................................................................................................. 24
Analysis of intercorporate investment ............................................................................................ 25
Analysis of Leases ............................................................................................................................. 26
Analysis of Fixed Assets.................................................................................................................... 27
Analysis of Liability ........................................................................................................................... 29
Analysis of Equity ............................................................................................................................. 31
Ratio Analysis ................................................................................................................................... 33
Dupont analysis ................................................................................................................................ 37
Common Size Statement .................................................................................................................. 38

3|Page
 IndusInd Bank
Company Profile
IndusInd Bank, founded in 1994, has emerged as a prominent player in India's banking sector.
Headquartered in Mumbai, it has rapidly expanded its presence nationwide. The bank's diversified
portfolio encompasses retail and corporate banking, wealth management, and insurance services.
IndusInd Bank is especially recognized for its innovation and customer-centric approach.

One distinguishing factor is its robust digital presence, providing customers with convenient and
efficient banking experiences. It has invested significantly in cutting-edge technology, enabling
services such as online account management, mobile banking, and digital payment solutions.

IndusInd Bank's financial stability and performance have been commendable over the years. Its
adherence to stringent risk management practices has contributed to its resilience in challenging
economic environments. Moreover, the bank's commitment to financial inclusion is notable, as
evidenced by its ownership of Bharat Financial Inclusion Ltd, a subsidiary dedicated to microfinance
and rural outreach.

In terms of subsidiaries, IndusInd Bank holds a 100% shareholding in Bharat Financial Inclusion Ltd,
indicating full control, while it holds a 30% shareholding in IndusInd Marketing & Financial Services
Pvt Ltd, reflecting significant influence but not complete control.

Analysis of Cash Flow Statement

Analysis of cash flow statement for the Financial Year ended 31 March 2021

Cash flow Statement

Mar-21 Mar-22 Mar-23

Cash from Operating Activity 44,976 16,672 -12,442
Cash from Investing Activity -324 -395 -481
Cash from Financing Activity -4,096 -4,302 1,115
Net Cash Flow 40,556 11,975 -11,808

The cash flow statement of Induslnd Bank is crafted in accordance with the Indirect method
prescribed by Indian Accounting Standards (Ind AS) 7. Given its status as a banking entity, the
predominant inflow of cash is derived from interest income, while the principal outflow of cash
arises from interest expenses related to deposits. This interest income and interest expense comprise
integral components of the cash flows emanating from operating activities. Due to its nature as a
banking company its interest income and interest expenditure forms part of its operating activity .

In the financial year ended on March 31, 2021, the cash flow from operating activities amounted to
₹44,975.72 Crores, while the net income before tax stood at ₹3,929.42 Crores. So its Cash flow from
operating activity is significantly higher than its net income before tax . This considerable disparity
between cash flow from operating activities and net income before tax can be attributed to several
adjustments made to cash flow.

Firstly, the provision for credit losses, as mandated by the Reserve Bank of India (RBI) guidelines,
amounted to ₹6,298.54 Crores. This provision is added to the net profit to derive the cash flow from

4|Page
operating activities. Additionally, an amortization expense of ₹239.40 Crores related to the premium
on held-to-maturity securities was added back to the net profit.

The most substantial difference between cash flow from operating activities and net income before
tax arises from adjustments for changes in working capital. These adjustments include a noteworthy
increase in advances amounting to ₹13,145.96 Crores and a significant increase in investments of
₹10,563.19 Crores, both of which are treated as cash outflows and subtracted from operating profit.
Conversely, the sizeable increase in deposits, totaling ₹53,843.11 Crores, is regarded as a cash inflow
and is added back to the operating profit.

In the financial year ending in 2021, we could find that the increase in deposit is higher than the
advances and investments.

The company’s Net cash used in investing activity is ₹331.13 Cr which includes purchase of fixed
asset and sale of fixed asset. So its Cash inflow flow from operating activity is sufficient to cover its
capital expenditure.

Cash Flow out flow of financing activity is ₹4095.79 Cr which majorly cash inflow by issue of equity
shares of ₹5334.95 Cr and cash out flow in terms of decrease in borrowings of 9431.7376 and there
was no dividend paid during the year.

So, its operating cash flow is sufficient to meet its investing as well as financing cash outflow and the
net increase in cash and in cash and cash equivalent is ₹40558.78 Cr.

Analysis of Cash flow statement for the financial year ended 2022.

In the fiscal year ending on March 31, 2022, the net cash flow from operating activities totaled
₹16,672.19 Crores, whereas the net income stood at ₹6,432.82 Crores. The substantial variance
between these two figures can be attributed to a series of adjustments, consistent with the
regulatory requirements and operational dynamics of the banking sector.

Starting with , provisions amounting to ₹6,298 Crores were added back to the net income, reflecting
the prudential measures undertaken in accordance with regulatory guidelines. Additionally, an
amortization expense of ₹375.85 Crores related to held-to-maturity securities was included in the
adjustments.

However, the most significant difference arises from the adjustments made for changes in working
capital. Notably, there was a substantial increase in advances, totalling ₹32,754.68 Crores, and an
increase in investments amounting to ₹2,018 Crores. These increments are considered as cash
outflows and are subtracted from the operating profit.

Conversely, a noteworthy increase in deposits, amounting to ₹37,497.36 Crores, represents a cash

inflow and is added to the operating profit. Thus, in the financial year 2022, it is evident that the
increase in deposits surpasses the increase in advances for the financial year 2022.

The used in Investing activity stood at₹ 406.16 Cr which includes purchase of fixed assets of ₹414.29
Cr and sale of 8.13 Cr . So during the financial year the cash flow from operating activity is sufficient
to meet the cash out flow from investing activity.

The cash used in financing activity stood at ₹4302.15 Cr which included share issue of ₹84.42 Cr ,
redemption of long term infrastructure bonds of 500 cr , perpetual debt instrument of 1000 Cr ,
Dividend paid was ₹386.99 Cr , Decreased borrowings of ₹5299.58 Cr . So, during the financial year

5|Page
ended 2022, the company made a substantial payment of debt as compared to previous financial
year which as reduced its leverage .

During the financial year 2022 the cash flow from operating activity is sufficient to cover its investing
and financing needs and the net increase in cash and cash equivalent activity stood at ₹11974 Cr .

Analysis of cash flow statement for the financial year 2023

In the fiscal year ending on March 31, 2023, the net cash flow from operating activities recorded a
deficit of ₹12,442.27 Crores, whereas the net income amounted to ₹9,932.19 Crores which is higher
as compared to previous financial years. This reason for the difference is due to various adjustments,
indicating important shifts in the company's financial performance compared to the prior fiscal year.

Firstly, provisions made for amounted to ₹4,185.43 Crores, reflecting a decrease from the previous
fiscal year. This reduction suggests an enhancement in the quality of the company's deposits as
compared to the preceding fiscal year. Additionally, an amortization expense of ₹402.15 Crores
related to held-to-maturity securities was included in the adjustments.

However, the primary reason for this difference in cash flow from operating activities is the
substantial increase in advances, totalling ₹55,057.58 Crores, a positive indicator reflecting the
company's optimism regarding the economic environment. Simultaneously, there was an increase in
investments, amounting to ₹12,929.93 Crores, and a noteworthy increase in deposits totaling
₹42,770.72 Crores, which represents a cash inflow and is added to the operating profit.

This fiscal year also witnessed the company's loans and advances surpassing its deposit levels, a
trend not observed in the prior fiscal year which has ultimately resulted in the cash flow from
operating being negative. This development underscores the company's strategic decision to expand
its lending portfolio, signifying its confidence in the prevailing economic conditions and growth
prospects.

The cash used in investing activity stood at ₹560.16 Cr which included purchase of fixed assets of
₹571.09 Cr which is higher as compared to previous financial years so we can infer that the company
is expanding its branches. But the Cash flow from operating is not sufficient to meet its investing
needs.

The net cash flow from financing stood at a surplus of ₹1114.83 Cr which can be attributed to the
fact that company has raised ₹85.70 Cr through equity shares, ₹1114.83 through debt , paid dividend
of ₹658.88 Cr and redeemed perpetual debt of ₹1000 Cr.

So by analysing the cash flow statement we have found the following trends –

➢ The declining trend in cash flow from operating activities from the financial year 2020-21 to
the financial year 2022-23 can be attributed to the bank's constant expansion of its loans and
advances portfolio, resulting in a reduction in operating cash flow, yet its net profit over the
years has increased.
➢ The notable increase in the company's cash flow from investing activities strongly indicates a
strategic expansion initiative, likely involving the establishment of additional branches.
➢ The company's cash flow from financing activities indicates that it's consistently paying off its
debts, which is a responsible financial move. Moreover, they are also raising small amounts

6|Page
 of equity, showing their efforts to gather extra funds by selling ownership shares in the
company.

Analysis of Intercorporate Investment

The company has undertaken a comprehensive evaluation of its investment portfolio, categorizing
these investments into three distinct segments: "Held to Maturity," "Available for Sale," and "Held
for Trading." The classification of these investments has been determined in accordance with the
strategic intentions set forth by the management regarding the holding duration of each security.

The management has chosen to categorize its equity investments in Indusland Enterprises & Finance
Ltd and Ashok Leyland Finance Ltd under the "Held to Maturity" classification, with these
investments being valued at their initial cost.

During the fiscal year ending on March 31, 2021, the company assessed and valued investments
totaling ₹52,878.86 Cr under the "Held to Maturity" category. This sum predominantly comprises
investments in government securities amounting to ₹56,360.97 Cr, investments in subsidiaries
amounting to ₹43.70 Cr, and other investments totaling ₹187.87 Cr. Additionally, an amortization
expense of ₹239.40 Cr related to the premium on "Held to Maturity" securities was recorded.

In the subsequent fiscal year ending on March 31, 2022, the aggregate value of securities under the
"Held to Maturity" category expanded to ₹56,590.48 Cr. This increase primarily resulted from higher
investments in government securities, which reached ₹56,360.97 Cr, while investments in other
categories remained constant. An amortization cost of ₹375.85 Cr was incurred for "Held to
Maturity" securities during this fiscal year.

In the fiscal year ending on March 31, 2023, the value of "Held to Maturity" securities further
increased to ₹66,714.22 Cr, driven by a significant uptick in investments in government securities,
which reached ₹66,514.13 Cr, while investments in other categories remained consistent. The
recorded amortization cost for "Held to Maturity" securities in this fiscal year was ₹402.15 Cr.

In the fiscal year ending on March 31, 2021, investments classified as "Available for Sale" securities
amounted to ₹16,815.85 Cr. This category encompassed ₹12,225.30 Cr invested in government
securities, ₹950.23 Cr invested in shares, and a deduction of ₹119.94 Cr due to a decline in the value
of shares. Consequently, a reduction of ₹768.24 Cr was recognized from the total gross value of
₹17,584.09 Cr, primarily attributable to the decline in net realizable value.

In the subsequent fiscal year ending on March 31, 2022, the total gross value of "Available for Sale"
securities decreased to ₹15,448.43 Cr, primarily driven by declines in government securities and
debentures, resulting in a total reduction of ₹1,070.73 Cr. This amount was transferred to other
comprehensive income, and an additional ₹2.60 Cr in sales were categorized as "Held for Trading."

Finally, in the fiscal year ending on March 31, 2023, the total gross value of "Available for Sale"
investments increased to ₹17,725.08 Cr, primarily due to investments in other types of instruments,
although investments in government bonds and debentures decreased. The total reduction in the
gross value of investments due to declines in their net realizable value amounted to ₹1,323.10 Cr,
with no investments being classified as "Held for Trading" during this fiscal year.

7|Page
Analysis of leases
Upon a thorough examination of the company's financial statements, it is evident that the company
primarily engages in operating leases, characterized by the lessor retaining significant risks and
rewards associated with ownership. Notably, the company does not utilize financial leases. The
expenses related to these leases are disclosed as operating expenses within the profit and loss
statement and the bank has not given any asset under the operating lease.

For the fiscal year ending in 2021, the company recognized total lease charges amounting to ₹341.75
Cr in its profit and loss statement. Looking ahead, the estimated future lease payments beyond one
year are projected to reach ₹1,459.5 Cr.

In the subsequent fiscal year ending in 2022, the company reported total lease charges of ₹378.41 Cr
in its profit and loss statement. The anticipated future lease payments beyond one year for this
period are estimated at ₹1,427.57 Cr.

Moving to the fiscal year ending in 2023, the company's lease charges increased to ₹461.05 Cr, as
reflected in its financial statements. Looking ahead, the estimated future lease obligation beyond
one year for this year is projected to be ₹1,646.75 Cr.

These findings provide a comprehensive overview of the company's lease-related financial activities,
highlighting the continued use of operating leases and the associated financial implications for the
organization.

Analysis of Income Tax

Analysis of Income Tax
Particulars FY 2022- 2023 FY 2021-22 FY 2020-21
Current tax 2,332.02 1773.71 1653.67
Deferred tax 137.91 -211.18 -705.92
Total 2,469.93 1,562.53 947.75

The analysis of IndusInd Bank's income tax based on the provided information for the fiscal years FY
2022-2023, FY 2021-22, and FY 2020-21 reveals notable trends and insights:

1. Current Tax:

• In FY 2020-21, the bank recorded a current tax expense of INR 1,653.67 crores.

• This increased significantly in FY 2021-22 to INR 1,773.71 crores.

• However, in FY 2022-2023, the current tax expense saw a substantial further increase to INR
2,332.02 crores.

The consistent rise in current tax expenses over the three years suggests an increasing tax burden on
IndusInd Bank, likely due to higher taxable income or changes in tax laws. This indicates the need for
effective tax planning and management strategies to optimize tax liabilities.

2. Deferred Tax:

• In FY 2020-21, the bank had a deferred tax credit of INR 705.92 crores, indicating that it
recognized tax benefits related to timing differences between accounting and tax reporting.

• In FY 2021-22, there was a significant change, with the bank recognizing a deferred tax
expense of INR 211.18 crores.

8|Page
 • In FY 2022-2023, the deferred tax expense increased to INR 137.91 crores.

The shift from a deferred tax credit in FY 2020-21 to deferred tax expenses in subsequent years
suggests changes in the bank's expectations regarding the realization of tax benefits from temporary
differences. These changes could be due to revised future income projections, accounting
adjustments, or shifts in tax regulations.

3. Total Income Tax Expense:

• The total income tax expense for FY 2020-21 was INR 947.75 crores.

• This increased to INR 1,562.53 crores in FY 2021-22.

• In FY 2022-2023, it further rose to INR 2,469.93 crores.

The total income tax expense reflects both current and deferred tax elements. The upward trajectory
of this expense indicates the bank's growing tax obligations. It emphasizes the importance of
managing tax liabilities efficiently to optimize the bank's overall financial performance and
profitability.

Over the course of the three financial years, 2021, 2022, and 2023, the company's deferred tax
position exhibited fluctuations, reflecting the accounting treatment disparities between certain items
and their corresponding tax treatment. These variances resulted in the emergence of both deferred
tax assets (DTA) and deferred tax liabilities (DTL), contingent upon whether they implied potential tax
benefits or tax obligations in the future.

In the financial year 2021:

• Deferred Tax Liability (DTL) due to differences in depreciation amounted to 1.96 crores.

• An additional DTL of 353.3 crores arose from disparities in tax treatment.

• However, there were Deferred Tax Assets (DTA) as well:

• DTA of 1809.14 crores due to provisions.

• DTA of 195.43 crores due to other transactions.

Consequently, at the close of the financial year in 2021, the net DTA stood at 1649.31 crores.

Moving to 2022:

• The company saw an increase in DTA related to depreciation, which amounted to 2.33
crores.

• DTA due to provisions remained substantial at 1390.89 crores.

• DTA from other transactions increased to 832.07 crores.

• On the other side, the DTL due to differences in taxes also increased to 364.8 crores.

As a result, the net deferred tax assets at the end of 2022 grew to 1860.49 crores.

In the most recent financial year, 2023:

• DTA due to depreciation continued to rise, reaching 11.24 crores.

• DTA due to provisions remained substantial at 1318.16 crores.

9|Page
 • DTA from other transactions was 791.71 crores.

• However, there was a significant increase in the DTL due to income tax, which amounted to
398.53 crores.

Despite this increase in DTL, the net DTA at the end of 2023 was 1722.58 crores.

Analysis of Fixed Assets

The company's approach to accounting for fixed assets reflects a combination of cost and revaluation
methods, with a particular focus on premises. The use of the cost method is the standard practice for
fixed assets, except for premises, which are accounted for using the revaluation method. Under the
revaluation method, any appreciation in the value of premises is recognized and credited to the
revaluation reserve, a prudent accounting practice.

In cases of assets that have been revalued or impaired, depreciation is applied based on the
remaining useful life of the assets, taking into account the revised asset values. Notably, for premises
carried at revalued amounts, the depreciation on the excess of the revalued amount over historical
cost is annually transferred from the Revaluation Reserve to the General Reserve.

Depreciation is systematically allocated to assets, including intangible assets, utilizing the straight-line
method. The company has established specific estimates for various asset categories, which are
instrumental in accurately reflecting asset consumption and wear over time:

• Computers: Estimated useful life of 3 years.

• Application software and perpetual software licenses: Estimated useful life of 5 years.

• Printers, Scanners, Routers, Switches: Estimated useful life of 5 years.

• ATMs: Estimated useful life of 7 years.

• Network cabling, Electrical Installations, Furniture and Fixtures, Other Office Machinery:
Estimated useful life of 10 years.

• Vehicles: Estimated useful life of 5 years.

• Buildings: Remarkably long estimated useful life of 60 years.

Furthermore, when dealing with Non-Banking Assets (NBAs) acquired in satisfaction of claims, the
company adheres to a conservative approach. These assets are valued at the lower of their net book
value or net realizable value. Additionally, the company creates provisions on NBAs in accordance
with specific directives issued by the Reserve Bank of India (RBI), demonstrating the company's
commitment to regulatory compliance and effective risk management. This comprehensive
accounting framework ensures that the company's financial statements accurately reflect asset
values and depreciation while remaining in line with regulatory guidelines and industry best
practices.

10 | P a g e
 31-03-2023 31-03-2022 31-03-2021
At cost as on 31st March of the preceding year 869.9825 869.9825 874.1574
Additions during the year
869.9825 869.9825 874.1574
Less : Deductions during the year 4.1749
Less : Depreciation to date 144.7205 131.2751 117.9257
TOTAL 725.262 738.7074 752.0568
Other Fixed Assets (including furniture and fixtures)
At cost as on 31st March of the preceding year 3029.506 2908.4713 2602.5804
Additions during the year 486.2616 395.0036 344.7923
3515.7676 3303.4749 2947.3727
Less : Deductions during the year 111.9187 61.0208 38.9013
Less : Depreciation to date 2271.917 2146.9354 1860.0133
TOTAL 1131.9319 1095.5187 1048.4581

Intangible Aassets
Particulars 31-03-2023 31-03-2022 31-03-2021
At cost at the beginning of the year 778.87 687.69 567.89
Addition during the year 158.96 91.04 67.02
Deduction during the year 2.8 2.86 1.47
Accumulated depreciation as at the end of the year 660.46 569.33 487.5

Analysing the company's fixed assets, other fixed assets, and intangible assets reveals important
insights into its financial health.

For the core "Fixed Assets," the net value decreased from ₹738.70 crore in 2022 to ₹725.262 crore in
2023. This decline is primarily due to increased depreciation of ₹144.70 crore, reflecting aging assets.
However, the company made no new additions and incurred minimal deductions. This could indicate
a conservative approach to capital investment.

In the case of "Other Fixed Assets," the net value dropped from ₹1,095.50 crore in 2022 to ₹1,131.90
crore in 2023. Despite higher additions of ₹486.30 crore, increased deductions and depreciation of
₹111.90 crore and ₹227.20 crore, respectively, contributed to the decline. This suggests a need for
efficient asset management and monitoring of deductions.

Regarding "Intangible Assets," there has been a consistent increase in net value from ₹145.90 crore
in 2021 to ₹206.54 crore in 2023. This growth stems from substantial additions and lower
deductions, indicating investments in intangibles like intellectual property or brand development.

In conclusion, the company should carefully assess its depreciation policies for both fixed and other
fixed assets to optimize their value. Meanwhile, the upward trajectory of intangible assets indicates a
focus on intellectual property, which could be a competitive advantage. Overall, a comprehensive
asset management strategy and periodic review are essential for sustainable financial performance.

11 | P a g e
Analysis of liabilities
Analysis of Borrowings

31-03-2023 31-03-2022 31-03-2021

Borrowings in India
Other institutions and agencies 27953.09 24650.22 34601.08
Borrowings in form of Bonds and Debentures 1500 1500 2000
Capital Instrument
a) Unsecured non-convertible perpetual non-cumulative bonds
(tier 1 Capital ) 1489.9 2489.9 3489.9
Unsecured non-convertible redeemable debentures/bonds
(Tier 2 Capital) 2800 2800

Borrowings outside Indai 15268.2442 15883.103 11231.82

Total 49011.2342 47323.223 51322.8

The analysis of borrowings and capital instruments for the years 2021, 2022, and 2023 provides
valuable insights into the financial structure of the project and its ability to manage its debt
obligations.

In 2021, the project had borrowings in India totaling ₹34,601.08 crore. A significant portion of these
borrowings came from other institutions and agencies, amounting to ₹27,953.09 crore. Additionally,
the project had ₹2,000 crore in the form of bonds and debentures. The capital instruments included
unsecured non-convertible perpetual non-cumulative bonds (Tier 1 Capital) amounting to ₹1,489.9
crore and unsecured non-convertible redeemable debentures/bonds (Tier 2 Capital) totaling ₹2,800
crore. Borrowings outside India amounted to ₹11,231.82 crore. The total borrowings for the year
2021 stood at ₹51,322.8 crore.

In 2022, there was a decrease in borrowings in India, with a total of ₹24,650.22 crore. The
borrowings from other institutions and agencies remained the same at ₹24,650.22 crore, and the
project maintained ₹1,500 crore in bonds and debentures. The capital instruments saw a decrease in
the Tier 1 Capital to ₹2,489.9 crore, while Tier 2 Capital remained unchanged at ₹2,800 crore.
Borrowings outside India increased slightly to ₹15,883.10 crore. The total borrowings for the year
2022 amounted to ₹47,323.22 crore.

In 2023, there was a further decrease in borrowings in India, with a total of ₹27,953.09 crore. The
borrowings from other institutions and agencies decreased compared to the previous year. The
project continued to maintain ₹1,500 crore in bonds and debentures. The capital instruments
showed a decrease in Tier 1 Capital to ₹1,489.9 crore, while Tier 2 Capital remained unchanged at
₹2,800 crore. Borrowings outside India increased to ₹15,268.24 crore. The total borrowings for the
year 2023 amounted to ₹49,011.23 crore.

This analysis serves as a critical component as it highlights the project's financial performance and its
ability to manage its debt obligations. Effective debt management and the maintenance of capital
instruments are indicative of the project's commitment to meeting regulatory requirements and
ensuring long-term financial stability. Further evaluation of these figures should be conducted in
conjunction with the project's revenue, profitability, and cash flow to assess its overall financial
health and debt servicing capacity, ensuring a comprehensive understanding of the project's financial
position.

12 | P a g e
Analysis Contingent Liability

Contingent Liability 31-03-2023 31-03-2022 31-03-2021

Claims against the Bank not acknowledged as debts 638.24 733.37 482.35
Liability for partly paid investments
Liability on account of outstanding forward exchange contracts 536483.05 411634.16 381550.05
Liability on account of outstanding derivative contracts 649147.93 427189.17 382279.24
Guarantees given on behalf of constituents
In India 60939.83 61109.945 60033.47
Outside India 308.09 843.94
Acceptances, endorsements and other obligations 16471.09 22714.039 24813.08
Other Items for which the bank is contingently liable 576.16 90.95 66.25

Total 1264256.3 923779.72 850068.38

Contingent liabilities represent potential obligations that may or may not materialize in the future,
but they hold significance for assessing the project's financial risk exposure and overall stability.

In 2021, the project had a total contingent liability of ₹850,068.38 crore, encompassing various
categories such as claims against the project not acknowledged as debts, liability for partly paid
investments, outstanding forward exchange contracts, outstanding derivative contracts, guarantees
provided on behalf of constituents (both within and outside India), acceptances, endorsements, and
other obligations. These contingent liabilities reflect potential financial risks that the project may face
during its operations.

Transitioning to 2022, the total contingent liability increased to ₹923,779.7 crore. A notable uptick
was observed in the liability associated with outstanding forward exchange contracts, which reached
₹411,634.15 crore. Additionally, the project continued to assume significant guarantees on behalf of
constituents, both domestically and internationally, indicating sustained exposure to contingent risks.

In 2023, the project's overall contingent liability expanded further to ₹1,264,256.3 crore. The most
substantial contributor to this escalation was the liability stemming from outstanding derivative
contracts, amounting to ₹649,147.93 crore. This implies an extended engagement in derivative
activities, potentially intensifying market-related risks. Guarantees issued on behalf of constituents in
India and obligations related to acceptances and endorsements also contributed to the heightened
contingent liabilities.

These potential financial risks could impact the project's financial stability and capital adequacy. It is
advisable for the project to implement a comprehensive risk management strategy to mitigate these
contingent risks effectively. Moreover, transparent disclosure of these contingent liabilities in
financial reports is paramount, as it aids investors and stakeholders in accurately assessing the
project's risk profile and financial health.

13 | P a g e
Analysis of Provisions

Provisions
31-03- 31-03-
Provision debited to Profit and Loss Account 31-03-2023 2022 2021
Provisions for depreciation 299.99 305.55 608.81
Provision towards NPA 3885.56 4146.61 5059.79
Provision made towards Income tax 2489.06 1628.18 947.75
Other Provisions and Contingencies 301.29 2151.94 2273.93
Total 6975.9 8232.28 8890.28

Provisions are essential financial elements that companies set aside to cover potential future
expenses or losses, which can significantly impact a company's financial performance.

In 2021, the company had a total of ₹8,890.28 crore in provisions. The most substantial portion of
these provisions was allocated to cover non-performing assets (NPA), amounting to ₹5,059.79 crore,
indicating a concern about the quality of the company's loan portfolio. Provisions for depreciation
accounted for ₹608.81 crore, reflecting anticipated asset wear and tear. The provision for income tax
was ₹947.75 crore, suggesting the company's tax liabilities. Additionally, there were other provisions
and contingencies amounting to ₹2,273.93 crore. These provisions are indicative of the company's
efforts to prepare for potential future financial challenges.

In 2022, there was a slight decrease in the total provisions, which amounted to ₹8,232.28 crore.
Notably, the provision for NPA decreased to ₹4,146.61 crore, which could signify an improvement in
the company's loan portfolio quality. Provisions for depreciation increased slightly to ₹305.55 crore,
while provisions for income tax rose to ₹1,628.18 crore, potentially reflecting increased taxable
income. Other provisions and contingencies remained substantial at ₹2,151.94 crore.

Moving to 2023, the company further reduced its total provisions to ₹6,975.9 crore. The provision for
NPA continued to decline, reaching ₹3,885.56 crore, which suggests ongoing efforts to manage and
mitigate non-performing assets. Provisions for depreciation remained relatively stable at ₹299.99
crore. The provision for income tax increased to ₹2,489.06 crore, indicating potentially higher tax
liabilities. Other provisions and contingencies decreased to ₹301.29 crore.

It is important to note the significance of these provisions in assessing the company's financial
health and risk management. The reduction in provisions for NPA over the years is a positive sign, as
it implies potential improvements in asset quality. However, understanding the reasons behind
changes in provisions, such as fluctuations in income tax provisions, is essential for a comprehensive
evaluation of the company's financial performance. Additionally, it's advisable to compare these
provisions to the actual expenses they were set aside to cover to assess their adequacy.

14 | P a g e
Analysis of Equity
31-03- 31-03-
31-03-2023 2022 2021
Authorized Capital
1,00,00,00,000 (Previous Year 1,00,00,00,000) equity shares of `10
each 1000 1000 857

Issued, Subscribed and Called Up Capital

77,58,95,198 Previous Year (77,46,63,163) equity shares of `10 each 775.8952 774.6632 773.3723

Paid up Capital
77,58,95,198 Previous Year (77,46,63,163) equity shares of `10 each 775.8952 774.6632 773.3723

Total 775.8952 774.6632 773.3723

The company's equity structure over 2021-2023 reveals strategic capital management. Authorized
capital increased from ₹857 crore (2021) to ₹1,000 crore (2022-2023), signaling readiness for future
capital raising. Issued, subscribed, and called-up capital gradually grew from ₹773.37 crore (2021) to
₹775.90 crore (2023), possibly reflecting share issuance, notably under an Employee Stock Option
Plan (ESOP) for employee incentives. Notably, the increase in paid-up capital to ₹775.90 crore
corresponds directly to the issuance of new shares, primarily to employees under the ESOP. This
highlights the company's commitment to aligning employee interests with shareholders and its
ability to incentivize and retain talent. Understanding these equity dynamics is key to assessing the
company's capitalization strategy and its potential for funding future growth while nurturing its
workforce.

Analysis of other equity

31-03-2023 31-03-2022 31-03-2021

Statutory Reserve 8140.1 8140.1 6987.3195

Share Premium Account 18528.5 18444.025 18359.237
Revaluation Reserve 301.66 307.63 313.6
Foreign Currency Translation Reserve 114.8 35.15 24.2
Revenue and Other Reserve
General Reserve 26.24 20.27 14.3
Capital Reserve 644.03 633.84 557.04
Investment Fluctuation Reserve 354.68 351.68 351.68
Amalgamation Reserve 50.62 50.62 50.62

Balance in the profit and loss Account 24176.3 18923.15 15928.6

Total 52336.93 46906.465 42586.597

Analyzing the equity components of the company for the fiscal years 2021, 2022, and 2023 provides
a comprehensive view of its financial reserves and retained earnings.

15 | P a g e
 1. Statutory Reserve: The statutory reserve remained constant at ₹8,140.1 crore throughout
the three years, indicating the company's commitment to maintaining a regulatory-required
reserve level.

2. Share Premium Account: Share premium increased from ₹18,359.24 crore (2021) to
₹18,444.02 crore (2022) and ₹18,528.5 crore (2023), suggesting that the company generated
additional capital from the issuance of shares at a premium.

3. Revaluation Reserve: Revaluation reserve slightly decreased from ₹313.6 crore (2021) to
₹307.63 crore (2022) and further to ₹301.66 crore (2023), potentially reflecting changes in
the valuation of the company's assets.

4. Foreign Currency Translation Reserve: This reserve increased from ₹24.2 crore (2021) to
₹35.15 crore (2022) and ₹114.8 crore (2023), indicating exposure to foreign currency
fluctuations.

5. Revenue and Other Reserves: General reserve increased from ₹14.3 crore (2021) to ₹20.27
crore (2022) and ₹26.24 crore (2023). Capital reserve grew from ₹557.04 crore (2021) to
₹633.84 crore (2022) and ₹644.03 crore (2023). Investment fluctuation reserve remained
constant at ₹351.68 crore. Amalgamation reserve stayed at ₹50.62 crore across all three
years.

6. Balance in Profit and Loss Account: The balance in the profit and loss account increased from
₹15,928.6 crore (2021) to ₹18,923.15 crore (2022) and further to ₹24,176.3 crore (2023),
indicating improving profitability.

The analysis of equity components reveals a stable statutory reserve, consistent share premium
growth, and fluctuations in revaluation and foreign currency translation reserves. General and capital
reserves have seen incremental growth, suggesting improved financial stability. The balance in the
profit and loss account shows increasing profitability over the years. These reserves and retained
earnings collectively strengthen the company's financial position, providing a cushion against
contingencies and potential for strategic investments or dividend distributions.

Analysis of Business Combination

IndusInd Bank has not been involved in any business combinations in the recent year, and as a result,
there is no goodwill on its balance sheet. Goodwill typically arises when a company acquires another
business for a price greater than the fair value of its net assets. Since there have been no recent
acquisitions, there is no goodwill to report.

Subsidiaries: IndusInd Bank has two subsidiaries as of March 31, 2023:

a) Bharat Financial Inclusion Ltd: IndusInd Bank holds a 100% shareholding in Bharat Financial
Inclusion Ltd. This implies that IndusInd Bank has complete ownership and control over this
subsidiary. The financial performance and assets of Bharat Financial Inclusion Ltd may be
consolidated into the financial statements of IndusInd Bank.

b) IndusInd Marketing & Financial Services Pvt Ltd: IndusInd Bank holds a 30% shareholding in
IndusInd Marketing & Financial Services Pvt Ltd. This suggests that IndusInd Bank has significant
influence over this subsidiary but does not exercise full control. The financial performance of this
subsidiary may be accounted for using the equity method, where IndusInd Bank's share of the
subsidiary's income or loss is reported in its financial statements.

16 | P a g e
 Ratio Analysis
Ratio Analysis
Ratio 2021 2022 2023 TREND
key Performance Ratios
Gross NPA % 2.31% 2.01% 2.01%
Net NPA % 0.64% 0.59% 0.59%
Capital Adequacy Ratio 18.42% 17.86% 17.86%
Cost to income ratio 28.13% 30.21% 31.20%
CASA % 41.73 42.72 40.08
Net Interest margin 5.7% 5.2% 6.1%
Loan to deposit ratio 81.49% 86.26% 86.26%

Profitability Ratio
Operating Profit Margin 77.0% 75.6% 74.5%
Net profit Margin 8% 13% 17%
Return on Capital Employed 3.38% 3.36% 3.27%

Valuation ratio
P/E 24.8x 15.6x 11.1x
P/B 1.78x 1.57x 1.51x

Gross NPA % (Non-Performing Assets Percentage): IndusInd Bank has consistently maintained a low
Gross NPA percentage of 2.31% in 2021, which decreased to 2.01% in 2022 and remained stable at
that level in 2023. This demonstrates the bank's effective management of its loan portfolio and asset
quality, with a decreasing trend indicating improving credit risk.

Net NPA %: The Net NPA percentage also stayed low, declining from 0.64% in 2021 to 0.59% in 2022
and maintaining this level in 2023. This signifies prudent provisioning and diligent risk mitigation,
showing a steady trend in maintaining a healthy loan book.

Capital Adequacy Ratio (CAR): While the CAR decreased slightly from 18.42% in 2021 to 17.86% in
2022 and remained stable at that level in 2023, it consistently exceeded regulatory requirements.
This reflects the bank's strong capital position and ability to support growth, with a trend indicating
continued stability.

Cost to Income Ratio: The cost to income ratio increased from 28.13% in 2021 to 30.21% in 2022 and
further to 31.20% in 2023. This upward trend suggests a rise in operating expenses relative to
income, indicating the need for cost management measures to maintain efficiency.

CASA % (Current and Savings Account Percentage): CASA remained healthy, increasing from 41.73%
in 2021 to 42.72% in 2022 but then decreasing to 40.08% in 2023. A rising CASA ratio reflects a stable
source of low-cost funds. The dip in 2023 highlights the importance of retaining and growing these
deposits.

Net Interest Margin (NIM): The NIM showed fluctuations, declining from 5.7% in 2021 to 5.2% in
2022 but rebounding to 6.1% in 2023. This suggests variations in the bank's interest income and the
cost of funds, with the trend pointing towards improved profitability.

17 | P a g e
Loan to Deposit Ratio: The loan to deposit ratio increased from 81.49% in 2021 to 86.26% in 2022
and remained stable at that level in 2023. This indicates an expansion in lending relative to deposits,
potentially signaling growth opportunities and efficient fund utilization, with a consistent trend
reflecting sustained lending expansion.

Operating Profit Margin (OPM): OPM represents the proportion of operating profit generated from
the bank's core operations relative to total revenue. It is a key indicator of operational efficiency. In
2021, the bank had an OPM of 77.0%, which declined slightly to 75.6% in 2022 and further to 74.5%
in 2023. While there was a marginal decrease, the bank has consistently maintained a healthy OPM.
This indicates that it efficiently manages its operating expenses and generates substantial profit from
its core activities, such as lending and fee-based services.

Net Profit Margin (NPM): NPM measures the net profit earned as a percentage of total revenue,
considering all expenses, including interest and taxes. It provides insights into overall profitability.
Indusind Bank demonstrated a significant improvement in NPM, rising from 8% in 2021 to 13% in
2022 and further to 17% in 2023. This upward trend is indicative of the bank's success in controlling
costs and enhancing revenue streams. It reflects that a larger proportion of revenue is translating
into profits, which is a positive sign for investors.

Return on Capital Employed (ROCE): ROCE evaluates the bank's efficiency in generating returns from
its total capital employed, which includes both equity and debt capital. A stable ROCE indicates
effective capital utilization. Indusind Bank's ROCE remained relatively stable, with values of 3.38% in
2021, 3.36% in 2022, and 3.27% in 2023. While the changes are minor, the bank consistently
maintains a positive ROCE, signifying that it generates returns higher than its capital cost. This
suggests prudent capital allocation and financial management, which is crucial for long-term
sustainability.

Price to Earnings ratio (P/E) - The P/E ratio has exhibited a declining trend from 24.8x in 2021 to
15.6x in 2022 and further to 11.1x in 2023. This trend indicates a decreasing willingness among
investors to pay a premium for each unit of the bank's earnings. It suggests that market sentiment
and expectations for future earnings growth may have become more conservative over this period.

Price to book value ratio (P/B) - The P/B ratio has also decreased from 1.78x in 2021 to 1.57x in 2022
and further to 1.51x in 2023. This declining trend indicates that the market is valuing the bank's stock
at a relatively lower multiple of its book value per share. It implies that investors are becoming more
cautious and seeking stocks that are attractively priced in terms of their net asset value.

18 | P a g e
 COMMON SIZE STATEMENT
COMMON SIZE BALANCESHEET
COMMON SIZE BALANCESHEET

Mar 23 Mar-23 Mar-22

EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 0.2% 0.2% 0.2%
Total Share Capital 0.2% 0.2% 0.2%
Revaluation Reserve 0.1% 0.0% 0.1%
Reserves and Surplus 12% 12% 12%
Total Reserves and Surplus 12% 12% 12%
Employees Stock Options 0% 0% 0%
Total ShareHolders Funds 12% 12% 12%
Deposits 73% 73% 73%
Borrowings 11% 11% 12%
Other Liabilities and Provisions 4% 4% 3%
Total Capital and Liabilities 100% 100% 100%
ASSETS 0% 0% 0%
Cash and Balances with Reserve Bank of India 9% 9% 4%
Balances with Banks Money at Call and Short Notice 3% 3% 13%
Investments 18% 18% 18%
Advances 63% 63% 59%
Fixed Assets 0% 0% 0%
Other Assets 6% 6% 5%
Total Assets 100% 100% 100%

19 | P a g e
 COMMON SIZE STATEMENT OF PROFIT AND LOSS
COMMON SIZE STATEMENT OF PROFIT AND LOSS
Mar 23 Mar-22 Mar-21

INCOME
Interest / Discount on Advances / Bills 67% 66% 68%
Income from Investments 11% 11% 11%
Interest on Balance with RBI and Other Inter-Bank funds 3% 3% 2%
Others 1% 1% 1%
Total Interest Earned 82% 81% 82%
Other Income 18% 19% 18%
Total Income 100% 100% 100%
EXPENDITURE 0% 0% 0%
Interest Expended 42% 41% 44%
Payments to and Provisions for Employees 9% 9% 9%
Depreciation 1% 1% 1%
Operating Expenses (excludes Employee Cost & Depreciation) 15% 14% 13%
Total Operating Expenses 25% 24% 23%
Provision Towards Income Tax 6% 0% 0%
Provision Towards Deferred Tax 0% 0% 0%
Other Provisions and Contingencies 10% 22% 25%
Total Provisions and Contingencies 16% 22% 25%
Total Expenditure 83% 87% 92%
Net Profit / Loss for The Year 17% 13% 8%
Net Profit / Loss After EI & Prior Year Items 17% 13% 8%
Share Of Profit/Loss Of Associates 0% 0% 0%
Consolidated Profit/Loss After MI And Associates 17% 13% 8%
Profit / Loss Brought Forward 43% 42% 38%
Transferred on Amalgamation 0% 0% 0%
Total Profit / Loss available for Appropriations 60% 55% 46%

20 | P a g e
 Shivam Autotech Ltd
Company Profile -
Shivam Autotech Limited stands as a leading and highly regarded manufacturer of transmission gears
and shafts in India. Over the past two decades, the company has forged strong partnerships with
numerous automobile manufacturers, serving them as strategic supply chain collaborators.
Throughout its journey, the company has undergone extensive phases of development and
evolution.

As a significant contributor to the 'Make In India' initiative, Shivam Autotech Limited envisions itself as
a global manufacturing solution within the auto component sector. Beyond 2-wheeler components,
the company has diversified its manufacturing operations into various sectors and tailored its products
for automobiles, off-road vehicles, and even aerospace applications, with an expanding export
footprint.

With its headquarters based in Gurugram, Haryana, the company presently employs a workforce
exceeding 3000 individuals. It continuously demonstrates its adaptability and growth potential in the
rapidly evolving auto component industry, solidifying its position as a key player in the sector.

Analysis of Cash Flow Statement

Analysis of Cash flow statement for the financial year 2019-20

Cash Flow Statement

Mar-13 Mar-20 Mar-21 Mar-22
Cash from Operating Activity 82 104 72 65
Cash from Investing Activity -40 -43 -18 -4
Cash from Financing Activity -49 -58 -3 -113
Net Cash Flow -7 2 50 -52

The cash flow statement of Shivam autotech ltd is made as per Ind As 7 . Since it is a manufacturing
company its major inflow of cash is through sales of its manufactured product and its major out flow
of cash is through purchase of raw materials , labour charges and other factory overheads.

In the financial year ended 31 march 2020 the company has generated a operating cash flow of
₹104.11 Cr and a net loss of ₹56.70 Cr. So its operating cash flow is significantly higher than its net loss,
which tells us that although the company is making losses as per the statement of profit and loss but
it is generating cash from its operations . The reason for difference is due to the adjustment made
which includes depreciation and amortization expenses of ₹53.81 Cr since it is manufacturing company
so its depreciation expenses are covers a majority portion of expenses and are added back and the
finance cost of ₹53.06 Cr is also added . As far as the adjustment of working capital is concerned there
is decrease in trade receiables to the extend of ₹17.95 Cr , decrease in inventories to the extend of
₹22.97 Cr and a decrease in trade payables to the extend of ₹3.09 Cr . So we can infer that there is a
decrease in working capital expenditure but the firm which can be detrimental to its growth in terms
of increasing sales in the future.

The cash used in investing activity is ₹43.25 Cr which includes investment in fixed assets of ₹43.71 Cr
but is less as compared to previous financial Year . As a manufacturing company it should continuously
investment in its fixed assets for its growth. Also we can see that its depreciation expenses of ₹54.24
Cr is higher than its investment in fixed assets of ₹43.71 Cr , which is a very negative point and will
erode its growth in the coming future but its cash flow from operating activity is sufficient to cover its
investing needs .

21 | P a g e
Net cash used in financing activity stood at ₹58.47 Cr proceeds from short term borrowing of ₹4.02 Cr
, repayment of long term borrowing of ₹9.49 Cr. Also one of its cash out flow is its finance cost which
is ₹52.14 Cr and covers the large portion of its expenses .

So during the financial ended 2020 its operating cash flow is sufficient to cover both its investing and
financing requirement in the business and has gerenrated a suplus cash cash of ₹2.39 Cr .

Cash flow analysis for the financial year 2020-21

For the financial year 2020-21 the company has incurred a net loss before tax of ₹23.94 Cr and a
positive operating cash flow of ₹71.64 Cr from its operating activity the major portion of adjustment
relate to the adjustment made for depreciation of ₹48.72 Cr which is lower as compared to previous
financial year , which is a negative thing for the business as it suggest that the investment in capex is
reducing which is a detriment for manufacturing company . The trade receivables has reduced as
compared to the prior year which amounts to ₹2.59 Cr which is a negative for a manufacturing
business, inventory has increase but very marginally however the most highlighting point is that the
company’s trade payables has reduced by ₹23.23 Cr which is substantially higher as compared to
previous financial year and the quantum of reduction is also higher which needs detail evaluation .

The company has invested ₹20.88 Cr in its fixed assets which is lower as compared to previous financial
year and most important point is that its investment in fixed assets in not able to cover its yearly
depreciation expenses and as a result its net capex in negative which will erode the wealth of the
company. However, its operating cash flow is sufficient to meet its investing cash flow .

The net used in financing activity stood at 3.21Cr , analysing the financial activity we can interpret that
the company is making a restructuring of its loan and is using a majority of its cash flow in paying its
debt and has paid ₹41.06 Cr of its short term debt and raised ₹92.65 Cr of long term debt. The interest
cost of ₹53.99 Cr is also very high and due to its high debt burden the company is not able to invest in
its capital expenditure but a the end of the financial year the company has generated a positive cash
flow of ₹50.05 Cr .

Analysis of cash flow statement for the financial year ended 31march 2022,

The company has incurred a net loss before tax of ₹14.47 Cr which has reduced as compared to the
previous financial year but has generated a positive operating cash flow of ₹64.92 Cr which is less as
compared to previous financial year , the adjustment due to the gap between the accounting profit
and cash flow is due to the depreciation which has been reducing over the years , which further tells
us that the business is investing less in its fixed assets . However during the financial year there is
increase in the current assets where both trade receiables and inventories has increased and also there
is a decrease in its trade payables . So, overall the business is investing in its working capital a trend
that was not seen in the previous years .

The investment in property plant and equipment stood at ₹4.93 Cr which has reduced significantly as
compared to previous financial year and its depreciation expenses are almost 10 times higher than its
capex . The main reason for the reduced investment is due to the fact that the company is required to
pay a large portion of its operating cash flow to pay off its loan.

The net cash used in financing activity is ₹112.60 Cr which is very high as compared to its previous
years and also surpasses the cash inflow from operating activity it is because the company has paid
the long term debt ₹70.35 Cr and interest of ₹52.86 Cr and also availed equity financing of ₹10 Cr . So

22 | P a g e
by analysing the financing activity we can infer that the company is struggling as far as its debt is
concerned and has resulted into its cash flow turning negative .

Analysis of Inventory
The company has followed Ind as 2 for reporting of Inventory in the financial Statement. The valuation
of inventory is done using the lower of cost or net realizable value whichever is lower and the
identification of inventory is done using first in first out method (FIFO) . Scrap is valued at net realizable
value. Proportion of manufacturing overheads in the cost is based on normal operating capacity.

During the financial year 2020, the company's inventory had a total valuation of ₹85.99 Crores, while
the cost of goods sold amounted to ₹240.70 Crores. This valuation was determined utilizing the First-
In-First-Out (FIFO) method. Consequently, the inventory turnover ratio was computed to be 2.82 times.
This metric signifies that, on average, the company was required to maintain its inventory for
approximately 127 days before successfully converting it into sales.

The noteworthy aspect here is the relatively high average inventory holding duration, which indicates
that the company had to allocate substantial resources to inventory management. Such a prolonged
inventory holding period can be indicative of inefficiencies in the company's inventory management
practices.

Furthermore, it is worth noting that during the financial year, there were no inventory write-offs. This
observation implies that the net present value of the inventory remained higher than its carrying value
throughout the year, indicating a level of financial stability and prudence in inventory valuation
practices.

In the financial year 2021, the company's inventory amounted to ₹88.51 Crores, and the cost of goods
sold was ₹167.96 Crores. Notably, this cost of goods sold is lower in comparison to the previous
financial year. This decline in the cost of goods sold suggests that the company is selling a smaller
volume of inventory, indicating a reduction in sales activity during the year.

The inventory turnover ratio for the year also dropped to 1.88 times. This decrease signifies that, on
average, the company needed to hold its inventory for a longer period of approximately 191 days
before successfully converting it into sales. Such an increase in inventory holding days reflects
inefficiency in inventory management and suggests that the company might be facing challenges in
optimizing its inventory turnover.

On a more positive note, it's worth highlighting that, despite these challenges, there were no inventory
write-offs during the year. This indicates that the company was able to maintain the net present value
of its inventory above its carrying value, showcasing financial prudence and stability in inventory
valuation practices despite the decrease in sales and efficiency challenges in inventory turnover.

In the financial year 2022, the company's inventory amounted to ₹89.58 Crores, and the cost of goods
sold was ₹168.93 Crores. Comparing these figures to the previous year, it's evident that there hasn't
been any significant improvement in inventory management or material consumption. This lack of
improvement suggests that the company's sales are not experiencing expansion or growth during this
period.

Furthermore, the fact that the inventory holding has remained unchanged reinforces the notion that
the business isn't expanding. The static inventory levels indicate that the company is not effectively
managing its inventory turnover to accommodate potential growth.

23 | P a g e
One concerning aspect is the auditor's mention of a discrepancy in inventory value of more than 10%.
Such a significant discrepancy in inventory valuation could have serious implications for the company's
financial statements. It raises questions about the accuracy of the financial reports and could
potentially indicate issues with internal controls or inventory management practices. The need for such
a large adjustment in inventory value may also be a sign of a lack of transparency or oversight in the
company's accounting processes.

Analysis of Income Taxes

Analysis of Income Tax
Particulars FY 2021- 2022 FY 2020-21 FY 2019-20
Current tax 0 0 0.00
Deferred tax 0 -3.54 -17.1
Total 0.00 -3.54 -17.10

Deferred Tax March 31,22 March 31,2021 March 31,2020

Deferred Tax Deferred Tax Deferred Tax
Particluars Asset Liabilities Asset Liabilities Asset Liabilities

Difference due to depreciation

36.25 37.07 40.92
Difference due to provosions
56.14 56.97 1.66
Others 56.23 0.42

Total 56.14 36.25 56.97 37.07 57.89 41.34

Net Deferred Tax Assets 19.89 19.9 16.55

In FY 2021-22, the tax data indicates the following:

1. Current Tax: The current tax liability for the year is reported as ₹0. There was no current tax
payable during this period because the company incurred a loss during the financial Year .

2. Deferred Tax: In the financial year ended 2022 there was no adjustment for deferred tax in
the statement of profit and Loss.

3. Deferred Tax Components: The deferred tax assets and liabilities for March 31, 2022, are as
follows:

• Difference due to Depreciation: The deferred tax liability due to differences in

depreciation values is ₹36.25 Crores, reflecting a decrease from the previous year.

• Difference due to Provisions: The deferred tax asset related to differences in

provisions is ₹56.14 Crores.

The total deferred tax assets for March 31, 2022, amount to ₹56.14 Crores, while the deferred tax
liabilities stand at ₹36.25 Crores. Consequently, the net deferred tax assets for this year are ₹19.89
Crores.

Financial Year 2020-21:

In FY 2020-21, the tax data is as follows:

24 | P a g e
 1. Current Tax: There was no current tax payable during this financial year, with a reported
liability of ₹0.

2. Deferred Tax: The deferred tax of ₹3.54 Crores is reduced from the net loss during the current
financial year with the current rate of tax there by reducing the losses during the year and
with will be used to sett off in the future and as result the amount is deferred tax asset in the
balance sheet .

3. Deferred Tax Components: The deferred tax assets and liabilities for March 31, 2021, are as
follows:

• Difference due to Depreciation: The deferred tax liability due to differences in

depreciation values was ₹37.07 Crores.

• Difference due to Provisions: The deferred tax asset related to differences in

provisions was ₹56.97 Crores.

The total deferred tax assets for March 31, 2021, were ₹56.97 Crores, while the deferred tax liabilities
stood at ₹37.07 Crores. Consequently, the net deferred tax assets for this year were ₹19.9 Crores.

Financial Year 2019-20:

In FY 2019-20, the tax data is as follows:

1. Current Tax: There was no current tax payable during this financial year, with a reported
liability of ₹0.

2. Deferred Tax: The deferred tax of ₹17.10 Crores was reduced from the net loss during the
financial year and will be set off against profit in future, therefore, it remains as a deferred tax
asset in the balance sheet.

3. Deferred Tax Components: The deferred tax assets and liabilities for March 31, 2020, are as
follows:

• Difference due to Depreciation: The deferred tax liabilities due to differences in

depreciation values was ₹40.92 Crores.

• Difference due to Provisions: The deferred tax asset related to differences in

provisions was ₹1.66 Crores.

• Other Differences: There was other transactions contributing to deferred tax assets
amounting to ₹56.23 Crores, and deferred tax liability of ₹0.42 Cr likely due to other
variations in accounting treatment.

The total deferred tax assets for March 31, 2020, were ₹57.89 Crores, while the deferred tax liabilities
stood at ₹41.34 Crores. Consequently, the net deferred tax assets for this year were ₹16.55 Crores.

This analysis provides insights into the bank's tax position for the three consecutive fiscal years,
highlighting changes in deferred tax assets, liabilities, and components affecting the net deferred tax
assets.

Analysis of intercorporate investment

In the course of our comprehensive analysis of Shivam Autotech Ltd's financial statements, it is evident
that the company refrained from engaging in intercorporate investments over the past three fiscal

25 | P a g e
years. This strategic decision aligns with the company's consistent financial losses, which have
necessitated a predominant allocation of its cash flow toward servicing existing debt obligations,
thereby limiting its capacity to pursue investments in both financial instruments and tangible fixed
assets. This prudent approach underscores the company's commitment to bolstering its financial
stability by addressing ongoing losses and managing debt, with a view toward fortifying its financial
position for potential future investment opportunities when conditions permit.

Analysis of Leases
Opearing Lease
Particulars 31-Mar-22 31-Mar-21 31-Mar-20
Not Later than one year 1.41 1.26 1.26
Later than one year but less than 5 years 7.58 5.82 5.25
Later than 5 years 1.77 4.94 9.8
Total 10.76 12.02 16.31

From analysing the financial statement it is found that the company effectively utilizes a mix of
operating and financial leases. Operating leases, with annual payments, offer short-term flexibility,
while financial leases, notably for buildings, represent long-term commitments. This balanced
approach aligns leasing strategies with financial objectives and sustainability, warranting careful
evaluation for stakeholders and investors.
Over the span of three fiscal years from 31-Mar-20 to 31-Mar-22, a discernible trend emerges in the
company's operating lease liabilities. Notably, there has been a significant reduction in total operating
lease liabilities, declining from ₹16.31 Crores to ₹10.76 Crores. This pronounced decrease suggests
that the company may have undertaken strategic measures such as lease renegotiations or a shift
towards alternative forms of financing assets, potentially enhancing its financial flexibility.

Examining the composition of these lease liabilities provides further insights. Short-term lease
obligations, maturing within one year, saw a modest increase from ₹1.26 Crores in 31-Mar-20 to ₹1.41
Crores in 31-Mar-22, indicating ongoing short-term lease commitments. Meanwhile, mid-term lease
liabilities (between one and five years) exhibited a steady growth trajectory, expanding from ₹5.25
Crores to ₹7.58 Crores. This suggests the company's inclination towards mid-term leasing
arrangements.

Remarkably, long-term lease liabilities (beyond five years) showed a noteworthy decline, plummeting
from ₹9.8 Crores to ₹1.77 Crores. This substantial reduction could signify the natural expiration or
active renegotiation of long-term leases, potentially easing the company's long-term financial
obligations.

While the reduction in total operating lease liabilities may improve the company's short-term liquidity
and financial maneuverability, the observed shift in lease composition underlines the importance of
effective lease management to ensure enduring financial stability. For investors and stakeholders,
vigilant monitoring of these trends is advisable to assess the company's evolving lease strategy and its
implications for its financial performance and sustainability.

Analyzing the company's financial lease using the provided information, it's important to focus on the
changes in the Gross Block, Amortization, and Net Block over the three fiscal years (31-Mar-20 to 31-
Mar-22).

1. Gross Block: The Gross Block represents the total cost of assets acquired, adjusted for
disposals. Over this period, the Gross Block exhibited fluctuations, declining from ₹10.72

26 | P a g e
 Crores in 31-Mar-20 to ₹7.66 Crores in 31-Mar-21 and subsequently increasing to ₹9.45 Crores
in 31-Mar-22. This suggests that the company may have made significant asset acquisitions
and disposals during these years, impacting the size of its financial lease portfolio.

2. Amortization: The Amortization represents the systematic allocation of the cost of financial
lease assets over their useful life. Notably, there is a substantial increase in Amortization from
₹-1.47 Crores in 31-Mar-20 (indicating a reversal) to ₹0.85 Crores in 31-Mar-21, and a further
significant increase to ₹3.49 Crores in 31-Mar-22. This suggests that the company has been
actively recognizing and amortizing financial lease assets, possibly due to an increase in the
number or value of leased assets.

3. Net Block: The Net Block reflects the carrying value of financial lease assets after accounting
for Amortization. Over the three years, the Net Block saw a reduction from ₹9.25 Crores in 31-
Mar-20 to ₹6.81 Crores in 31-Mar-21 and then increased to ₹5.96 Crores in 31-Mar-22. This
pattern indicates the impact of Amortization on the value of financial lease assets, with
potential implications for the company's financial health and obligations.

In conclusion, the analysis of the financial lease reveals dynamic changes in the Gross Block,
Amortization, and Net Block over the three fiscal years. These fluctuations may stem from asset
acquisitions, disposals, and changes in recognition and amortization practices, necessitating careful
assessment to understand their impact on the company's lease portfolio and financial position.

Analysis of Fixed Assets

The company adopts a historical cost basis for accounting property, plant, and equipment, with
equipment being assessed at its cost minus accumulated depreciation. The useful lives for depreciation
purposes are as follows:

• Plant & Machinery: 15 years

• Plant & Machinery (Furnace): *

• Buildings: 30 years

• Computers: 3 years

• Office equipment: 5 years

• Furniture & fixtures: 10 years

• Vehicles: 8 years

• Leasehold Improvements: Amortized over the period of the lease

Regarding intangible assets, the company records them when there is a probable future economic
benefit. These intangible assets are assessed at cost minus accumulated amortization and impairment
losses, if any, and are amortized over their estimated useful life using the straight-line method. For
computer software, which represents a significant portion of intangible assets, the useful life is
estimated at 4 years, and corresponding amortization expenses are recognized accordingly.

This accounting approach ensures transparency and adherence to applicable accounting standards,
allowing for an accurate reflection of the company's asset values and their respective amortization
schedules.

27 | P a g e
 Analysis of Fixed Assets

Amount in
lakhs

31-03-
31-03-2022 2021 31-03-2020

Gross Block 881.99 876.77 846.09

Depreciation 493.94 454.74 408.3

Net Bock 388.05 422.03 437.79

The analysis of Sivam Autotech's fixed assets reveals a few key trends over the past three years. Firstly,
the Gross Block, representing the total value of the company's fixed assets, has shown a consistent
upward trajectory, indicating continued investments in acquiring new assets or significant capital
expenditures. Concurrently, the Depreciation expense has also increased over the years, indicating
responsible accounting practices and the recognition of asset depreciation. However, the Net Block,
which represents the book value of fixed assets after accounting for depreciation, has decreased from
422.03 lakhs in 2021 to 388.05 lakhs in 2022, suggesting that either some assets were disposed of or
that depreciation charges exceeded capital investments during that year.
Analysis of Intangible
Assets
Amount in Cr
31-03-
31-03-2022 2021 31-03-2020
Gross Block 6.66 6.18 6.08
Depreciation 6.33 5.6 4.97
Net Block 0.33 0.58 1.11

The analysis of Sivam Autotech's intangible assets over the past three years reveals some noteworthy
trends. As of 31-03-2022, the Gross Block of intangible assets stands at 6.66 lakhs, showing a gradual
increase from 6.18 lakhs in 2021 and 6.08 lakhs in 2020. This suggests that the company has been
investing in or acquiring intangible assets during this period. However, it's important to note that the
Depreciation expense has also risen over the years, reaching 6.33 lakhs in 2022, compared to 5.6 lakhs
in 2021 and 4.97 lakhs in 2020. This increase in Depreciation indicates that the company is recognizing
the reduction in value of its intangible assets over time. Consequently, the Net Block of intangible
assets has decreased significantly, from 1.11 lakhs in 2020 to 0.58 lakhs in 2021 and further down to
0.33 lakhs in 2022. This decline is due to the higher rate of depreciation and impairments in the value
of these assets.

28 | P a g e
Analysis of Liability
Long term borrowings Amount in Cr

31-03-
31-03-2022 2021 31-03-2020

From Banks - Secured 142.53 216.74 194.95

From others - Secured 30.49 11.09

From others - Unsecured 23.04 18.78

From related parties -

Unsecured 17.25

Total 173.02 268.12 213.73

The analysis of Sivam Autotech's long-term debt structure over the past three years, expressed in
crores, reveals several important insights. As of 31-03-2022, the company's total long-term borrowings
amount to 1.73 crores, reflecting a significant decrease compared to 2.68 crores in 2021 and 2.13
crores in 2020. This decrease indicates a successful effort to reduce the overall debt burden.

Breaking down the debt further, it's evident that there has been a substantial reduction in long-term
borrowings from banks, decreasing from 2.16 crores in 2021 to 1.43 crores in 2022. On the other hand,
long-term borrowings from others (secured) have increased from 0.11 crores in 2021 to 0.30 crores in
2022, potentially suggesting a shift in the financing mix or the need to secure additional funds from
other sources.

Additionally, there is a notable increase in unsecured long-term borrowings from others, rising from
0.18 crores in 2020 to 0.23 crores in 2021 and remaining at the same level in 2022. Furthermore, the
company has taken on 0.17 crores in unsecured long-term borrowings from related parties in 2022,
which was not present in the previous years.

In summary, Sivam Autotech's long-term debt has undergone significant changes, characterized by a
decrease in total borrowings and a shift in the composition of the debt sources.

29 | P a g e
 Short term borrowings Amount in Cr

31-03-
31-03-2022 2021 31-03-2020

Secured at amortized cost

Bank -

Cash Credit 49.9 23.75 138.99

Working Capital demand loan 47.05 78.19

other 7.34 35 35

Current maturites of long term debt

a) From Banks 63.94 70.58

b) From others 6.7 6.79

Unsecured at amortized cost 33.68 21.1

Total 208.61 235.41 173.99

Sivam Autotech's financial analysis reveals significant trends in its fixed assets, long-term debt, and
short-term borrowings. Over the past three years, the Gross Block of fixed assets steadily increased,
reflecting investments in acquiring new assets. Concurrently, Depreciation rose, indicating responsible
accounting practices. However, the Net Block decreased in 2022, possibly due to asset disposals or
higher depreciation charges.

In terms of long-term debt, the total decreased from 268.12 crores in 2021 to 173.02 crores in 2022,
reflecting successful debt reduction. A shift in debt sources was observed, with reduced bank
borrowings and increased borrowings from others and related parties.

Short-term borrowings amounted to 2.08 crores in 2022, with a significant increase in secured
borrowings, specifically Cash Credit. Working Capital demand loans decreased, potentially indicating
improved working capital management. Unsecured short-term borrowings rose, warranting careful
liquidity monitoring.

These trends suggest Sivam Autotech's efforts to manage debt efficiently and diversify funding sources
while highlighting the need for close monitoring of short-term liquidity and asset management.

Analysis of Provision

Provisions
Provision debited to Profit and Loss Account 31-03-2023 31-03-2022 31-03-2021
Provisions for depreciation 299.99 305.55 608.81
Provision towards NPA 3885.56 4146.61 5059.79
Provision made towards Income tax 2489.06 1628.18 947.75
Other Provisions and Contingencies 301.29 2151.94 2273.93
Total 6975.9 8232.28 8890.28

Shivam Autotech's provisions, as reflected in its balance sheet for the fiscal year 2022, demonstrate a
strategic focus on managing financial risks. Notably, the provision for doubtful debts or expected
credit losses decreased from 48.72 crores in 2021 to 40.89 crores in 2022, indicating an improved
assessment of credit risk or successful recovery efforts.

30 | P a g e
Conversely, the provision for employee benefits, while maintaining a relatively stable level of 4.44
crores in 2022, had seen a slight reduction from 6.87 crores in 2021 and 6.62 crores in 2020. This could
be attributed to the company's commitment to ensuring adequate provisions for its workforce,
potentially reflecting a focus on employee welfare and retention.

Analysis of Contingent liability

Analysis of Contingent liability - Amount in Cr
31-03-2022 31-03-2021 31-03-2020
Letter of credit opened by banks 4.47 11.83
PF Liability 0.7 0.7 0.7
Bank Gurantees 0.14 0.14
Sales tax related demand 2.84 3.84
Traces demand 0.18 0.17
Income tax demand 0.04 5.34

Shivam Autotech's contingent liability analysis for the years 2022, 2021, and 2020 reveals important
insights into its potential future financial obligations and risks. As of 31-03-2022, the company had
contingent liabilities worth 8.37 crores, a notable decrease from the 20.02 crores recorded in 2021.

The significant reduction in contingent liabilities can be primarily attributed to a substantial decrease
in letter of credit opened by banks, which went from 11.83 crores in 2021 to 4.47 crores in 2022. This
suggests a potential reduction in external financial commitments.

Moreover, the consistent figure of 0.7 crores for PF liability and 0.14 crores for bank guarantees over
the three years indicates stable financial obligations in these areas.

However, the contingent liabilities related to sales tax demands showed a decrease from 3.84 crores
in 2020 to 2.84 crores in 2022, while the traces demand slightly increased from 0.17 crores to 0.18
crores. The most substantial shift was seen in income tax demand, which dropped significantly from
5.34 crores in 2020 to a mere 0.04 crores in 2022, possibly suggesting a successful resolution of tax-
related issues.

Analysis of Equity
Analysis of Equity Amount in Cr

31-03-2022 31-03-2021 31-03-2020

Authorised Share capital

12,50,00,000 (previous year- 12,50,00,000) equity 25 25 25

shares of Rs. 2 /- each

Issued, Subscribed and Fully Paid Up

10,00,00,000 (previous year- 10,00,00,000) equity 20 20 20

shares of Rs 2/- each

The analysis of Shivam Autotech's equity structure reveals a consistent and unchanged pattern over
the past three years. As of 31-03-2022, the authorized share capital remains at 25 crores, consisting of
12,50,00,000 equity shares with a nominal value of Rs. 2 each. This value is identical to the authorized

31 | P a g e
share capital recorded in 2021 and 2020, indicating that the company has not sought to increase its
authorized capital during this period.

Similarly, the issued, subscribed, and fully paid-up capital has remained constant at 20 crores,
comprising 10,00,00,000 equity shares with a nominal value of Rs. 2 each. This consistency reflects the
absence of significant changes in the company's equity issuance or capital structure over the three-
year period.

Analysis of Other Equity

Analysis of Other Equity Amount in Cr

31-03-2022 31-03-2021 31-03-2020

Capital redemption reserve 0.05 0.05 0.05

General Reserve 50.68 50.68 50.68

Surplus in Statement of Profit and loss 26.27 42.33 64.86

Security Premium 35.55

Other Comprehensive Income 114.1 93.02 0.43

Total 226.65 186.08 116.02

The analysis of Shivam Autotech's other equity components demonstrates notable changes and trends
over the three-year period. As of 31-03-2022, the total other equity stands at 226.65 crores, a
substantial increase from 186.08 crores in 2021 and a significant leap from 116.02 crores in 2020.

1. Capital Redemption Reserve: This reserve has remained consistent at 0.05 crores across all
three years, indicating stability in terms of the redemption of the company's capital.

2. General Reserve: The general reserve has maintained the same value of 50.68 crores
throughout the three years, signifying that the company hasn't made any significant
allocations or withdrawals from this reserve.

3. Surplus in Statement of Profit and Loss: There's been a notable decrease from 42.33 crores in
2021 to 26.27 crores in 2022. This suggests that the company may have experienced a lower
level of profit retained in the statement of profit and loss in the most recent year.

4. Security Premium: In 2022, a security premium of 35.55 crores was introduced, potentially
reflecting an infusion of capital through the issuance of shares at a premium.

5. Other Comprehensive Income: This category has witnessed substantial growth, increasing
from 93.02 crores in 2021 to 114.1 crores in 2022, and was negligible in 2020. This indicates
significant fluctuations in the fair value of certain assets or liabilities affecting comprehensive
income.

The overall growth in other equity highlights the company's efforts to bolster its financial position,
potentially through the issuance of shares at a premium and the accumulation of comprehensive

32 | P a g e
income. However, the decrease in surplus in the statement of profit and loss suggests a different
financial performance trend.

Ratio Analysis

Shivam Autotech Ratio Aanlytsis

Ratio 2020 2021 2022 TREND
Liquidity Ratio
Current Ratio 0.538 0.686 0.600
Quick Ratio 0.31 0.44 0.32
Effiency Ratio's
Inventory Turnover 3.45 2.40 2.20
Days sales of Inventory 104.44 149.94 163.34
Accounts Turnover ratio 8.24 7.29 5.71
Average collection period 43.67 49.41 63.05
Fixed Assets Turnover 1.24 1.14 1.19
Total Assets turnover 0.81 0.67 0.74
Equity Multiplier 5.36 6.50 4.62
Leverage Ratios
Total Debt ratio 0.60 0.52 0.53
Long term Debt 0.28 0.33 0.27
Tong term debt to total capitalization 0.60 0.68 0.56
Debt to equity Ratio 2.82 3.38 2.75
Coverage Ratio
Times Interest Earned -0.02 0.57 0.68
Debt service coverage ratio 0.121 0.185 0.175
Profitability Ratio
EBIT Margin -0.20% 6.58% 7.30%
Net profit Margin -6.31% -4.59% -3.39%
Return on total assets 2.20% 4.67% 5.39%
Return on equity -27.47% -19.93% -11.59%
Return on Capital Employed 4% 9% 11%

Valuation Ratios
P/E Ratio -6.38 -7.55 -8.44
P/B Ratio 0.84 1.88 2.89
EV/EBITDA 6.60 7.34 14.69

33 | P a g e
Liquidity Ratio –

Current ratio : The analysis of Shivam Autotech's current ratio over the past three years reveals a
dynamic picture of the company's short-term liquidity. In FY 2020, the current ratio stood at 0.538,
indicating limited short-term liquidity with 53.8% of current assets available to meet immediate
obligations. However, in FY 2021, there was a noticeable improvement as the ratio increased to 0.686,
suggesting better working capital management or an increase in current assets, which is generally a
positive sign. Nonetheless, in FY 2022, the current ratio dipped slightly to 0.600, indicating a small
decrease in liquidity, although it still remains at a reasonable level. These trends suggest that while the
company made progress in bolstering short-term liquidity from 2020 to 2021, there was a minor
setback in 2022.

Quick Ratio - The analysis of Shivam Autotech's quick ratio, which calculates immediate liquidity by
excluding inventory from current assets, reveals valuable insights into the company's short-term
financial position. In FY 2020, the quick ratio stood at 0.31, indicating that 31% of highly liquid assets
were available to meet immediate obligations, while excluding inventory. This signalled relatively low
immediate liquidity, possibly necessitating the sale of less liquid assets to cover essential obligations.
In FY 2021, there was a notable improvement, with a quick ratio of 0.44, reflecting a stronger position
in immediate liquidity, again excluding inventory. However, in FY 2022, the quick ratio decreased to
0.32, indicating a dip in immediate liquidity compared to the previous year, excluding inventory. These
fluctuations underscore the importance of ongoing monitoring and management of the quick ratio,
ensuring that the company maintains an adequate buffer of highly liquid assets (excluding inventory)
to meet short-term financial obligations effectively.

Efficiency Ratio –

Inventory Turnover Ratio: Shivam Autotech's inventory turnover ratio exhibited a consistent trend
over three years. In FY 2020, it was 3.45, indicating efficient inventory management with a short
turnover period. In FY 2021, it decreased to 2.41, reflecting slightly less efficiency. In FY 2022, it further
declined to 2.20, signaling less efficient inventory management. This suggests a recent trend of
carrying higher inventory levels relative to sales, potentially impacting working capital.

Receivables Turnover Ratio: The receivables turnover ratio for Shivam Autotech showcased a trend
over three years. In FY 2020, it was 8.24, reflecting effective credit management. In FY 2021, it
decreased to 7.29, with the average collection period increasing to 49 days. In FY 2022, it declined
further to 5.71, indicating less efficient accounts receivable management. This trend may raise
concerns about credit policies and collection efforts.

Fixed Assets Turnover Ratio: Shivam Autotech's fixed assets turnover ratio demonstrated consistency.
In FY 2020, it was 1.24, reflecting efficient use of fixed assets. In FY 2021, it slightly decreased to 1.14,
implying a minor dip in efficiency. In FY 2022, it improved to 1.19, suggesting better asset utilization or
increased sales relative to fixed assets.

Total Asset Turnover Ratio: The total asset turnover ratio for Shivam Autotech displayed a discernible
trend. In FY 2020, it was 0.81, indicating efficient asset utilization. In FY 2021, it decreased to 0.67,
reflecting reduced asset efficiency. In FY 2022, it partially recovered to 0.74. This indicates efforts to
optimize asset turnover but room for further improvement.

Equity Multiplier: Shivam Autotech's equity multiplier exhibited notable changes. In FY 2020, it was
5.36, suggesting a conservative capital structure. In FY 2021, it increased to 6.5, indicating higher debt
usage. In FY 2022, it decreased to 4.62, suggesting a potential shift toward a balanced capital structure

34 | P a g e
or changes in asset-to-equity composition. These shifts may reflect strategic financing decisions and
growth plans.

Leverage ratios -

Total Debt Ratio: Shivam Autotech's total debt ratio exhibited a significant trend over the past three
years. In FY 2020, the ratio was 0.60, suggesting a substantial reliance on debt, possibly for expansion.
By FY 2021, it decreased to 0.52, indicating active debt reduction efforts and a move toward a more
balanced capital structure. In FY 2022, the ratio remained stable at 0.53, signifying continued debt
reliance. This dynamic trend reflects the company's adaptable approach to capital structure,
emphasizing prudent debt management and a balanced financing strategy to support its objectives
while mitigating financial risk.

Long-term Debt Ratio: Shivam Autotech's long-term debt ratio, which compares long-term debt to
total assets, displayed a noticeable trend over the same three-year period. In FY 2020, the ratio was
0.28, indicating a moderate reliance on long-term debt. In FY 2021, it increased to 0.33, suggesting a
higher reliance, possibly for strategic initiatives. In FY 2022, it decreased to 0.27, indicating a return to
lower long-term debt reliance. This trend highlights the company's adaptability in managing its capital
structure to meet financial objectives while maintaining stability.

Total Debt to Total Capitalization: The total debt to total capitalization ratio, which assesses the
proportion of long-term debt within total capitalization, displayed a dynamic trend. In FY 2020, the
ratio was 0.60, indicating substantial debt within total capitalization, possibly for expansion. In FY 2021,
it rose to 0.68, signifying continued debt-funded growth. However, in FY 2022, it decreased to 0.56,
showing a shift away from heavy debt reliance, possibly due to debt repayment or a strategy for a
more balanced capital structure.

Debt to Equity Ratio: Shivam Autotech's debt to equity ratio, measuring debt relative to equity,
demonstrated a discernible trend. In FY 2020, the ratio was 2.82, indicating moderate financial
leverage and substantial debt reliance. By FY 2021, it increased to 3.38, reflecting higher debt burden.
In FY 2022, it decreased to 2.75, signifying a reduction in debt relative to equity, driven by proactive
debt repayment. This trend highlights the company's ability to adapt its financing approach to align
with financial goals, ultimately contributing to a more balanced financial position.

Coverage ratio –

Interest Coverage Ratio: Shivam Autotech's interest coverage ratio, a critical gauge of its ability to fulfill
interest payments on its debt, has shown significant changes over three years. In FY 2020, the ratio
was concerning at -0.02, indicating that the company's earnings were insufficient to cover interest
expenses, signifying financial distress. However, FY 2021 marked improvement, with the ratio rising to
0.57, suggesting a partial recovery and better earnings coverage of interest payments. By FY 2022, it
improved further to 0.68, indicating a continued positive trend. Despite these advancements, the
interest coverage ratio remains below the ideal level of 1 or higher, indicating ongoing challenges in
managing debt and interest expenses effectively. It's vital for Shivam Autotech to continue enhancing
financial performance for long-term stability and reduced financial risk.

Debt Service Coverage Ratio: Shivam Autotech's debt service coverage ratio, evaluating its capacity to
cover both interest and principal payments, exhibited fluctuations over three years. In FY 2020, the

35 | P a g e
ratio was 0.121, revealing that earnings couldn't cover even 50% of debt obligations, raising concerns
about potential financial vulnerability. Although there was slight improvement in FY 2021 with a ratio
of 0.185, the subsequent dip to 0.175 in FY 2022 suggests ongoing challenges in consistently
generating earnings to comfortably meet debt service commitments. Sustainable financial
management is imperative to address this issue and ensure long-term financial stability.

Profitability ratio –

1. EBIT Margin: Shivam Autotech's EBIT (Earnings Before Interest and Taxes) margin experienced
a significant improvement over the three-year period. In FY 2020, the margin was negative at
-0.20%, indicating a loss-making year. However, there was a remarkable turnaround in FY 2021,
with an EBIT margin of 6.58%, indicating the company's ability to generate positive operating
income. This positive trend continued into FY 2022, with an EBIT margin of 7.30%, suggesting
improved operational efficiency and profitability.

2. Net Profit Margin: The company's net profit margin, which accounts for all expenses including
interest and taxes, remained negative in FY 2020 and FY 2021, at -6.31% and -4.59%,
respectively. However, in FY 2022, there was a notable improvement, with the margin
narrowing to -3.39%. While the margins remain negative, the positive trend indicates efforts
to control costs and improve the bottom line.

3. Return on Total Assets (ROTA): Shivam Autotech's ROTA increased consistently over the three-
year period. In FY 2020, it was 2.20%, signifying that the company generated a 2.20% return
on its total assets. By FY 2022, ROTA had grown to 5.39%, indicating improved asset efficiency
and better utilization of assets to generate returns.

4. Return on Equity (ROE): The ROE, reflecting the return generated on shareholder equity,
showed a steady improvement. Despite a negative ROE of -27.47% in FY 2020, it improved to
-19.93% in FY 2021 and further to -11.59% in FY 2022. While it remained negative, the trend
suggests a move toward more efficient utilization of equity.

5. Return on Capital Employed (ROCE): The ROCE exhibited growth from 4% in FY 2020 to 11%
in FY 2022, indicating a notable increase in capital efficiency. This implies that the company is
generating higher returns relative to its invested capital.

In summary, Shivam Autotech has made significant strides in improving its financial performance and
profitability over the three years, with positive trends in EBIT margin, ROTA, ROE, and ROCE. However,
challenges remain in achieving positive net profit margins and returning to positive ROE, emphasizing
the importance of continued financial management and operational optimization.

Valuation Ratio-

1. P/E Ratio (Price-to-Earnings Ratio): In FY 2020, the P/E ratio was -6.38, indicating a negative
earnings multiple. This suggests that the company had incurred losses, which is not unusual
for certain businesses. However, it implies that there was no positive price-to-earnings
relationship in that year. In FY 2021 and FY 2022, the negative trend continued with P/E ratios
of -7.55 and -8.44, respectively. These figures suggest that the market may have had concerns
about the company's profitability prospects during these years.

36 | P a g e
 2. P/B Ratio (Price-to-Book Ratio): In FY 2020, the P/B ratio was 0.84, indicating that the
company's stock was trading at a discount relative to its book value. This could be due to
market sentiment or perceived risks. In FY 2021, the ratio increased to 1.88, suggesting
improved market confidence and possibly better asset utilization. In FY 2022, the P/B ratio
surged to 2.89, indicating a further increase in market optimism and potential overvaluation
relative to book value.

3. EV/EBITDA (Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and

Amortization): The EV/EBITDA ratio provides insights into a company's overall valuation,
considering its debt and operational earnings. In FY 2020, the ratio was 6.60, indicating that it
took 6.60 years to pay back the enterprise value based on EBITDA. In FY 2021, it increased
slightly to 7.34, suggesting a longer payback period, potentially due to debt considerations.
However, in FY 2022, the ratio surged to 14.69, indicating a significant increase in the time
required to recoup the enterprise value. This could reflect concerns about the company's
financial structure, debt load, or earnings prospects.

Dupont analysis
Dupont Analysis
Ratio 2020 2021 2022
Net profit Margin -6.31% -4.59% -3.39%
Total Assets turnover 81.3% 66.8% 73.9%
Equity Multiplier 5.36 6.50 4.62
Return on Equity -27.47% -19.93% -11.59%

Shivam Autotech's DuPont analysis unveils the drivers of its Return on Equity (ROE) over the three-
year period. In FY 2020, the negative net profit margin (-6.31%) reflected the company's struggles to
turn a profit, significantly impacting ROE. However, the efficiency of asset utilization improved as Total
Assets Turnover increased from 81.3% to 73.9%, positively contributing to ROE. The Equity Multiplier,
indicating financial leverage, saw fluctuations from 5.36 to 6.50 and then a decrease to 4.62,
highlighting changes in the capital structure. Despite remaining negative, ROE improved from -27.47%
to -11.59%, mainly due to better asset turnover and reduced leverage. Addressing the negative net
profit margin remains a pivotal challenge for Shivam Autotech to achieve positive returns on equity in
the future.

37 | P a g e
 Common Size Statement
Common size Balance sheet

Common Size Balance sheet

Mar-22 Mar-21 Mar-20

12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 4% 3% 3%
Total Share Capital 4% 3% 3%
Reserves and Surplus 18% 13% 16%
Total Reserves and Surplus 18% 13% 16%
Total Shareholders Funds 22% 15% 19%
NON-CURRENT LIABILITIES
Long Term Borrowings 27% 33% 28%
Other Long Term Liabilities 1% 1% 1%
Long Term Provisions 1% 1% 1%
Total Non-Current Liabilities 29% 35% 30%
CURRENT LIABILITIES
Short Term Borrowings 33% 19% 25%
Trade Payables 12% 11% 14%
Other Current Liabilities 5% 20% 12%
Short Term Provisions 0% 0% 0%
Total Current Liabilities 50% 49% 51%
Total Capital And Liabilities 100% 100% 100%
ASSETS
NON-CURRENT ASSETS
Tangible Assets 62% 58% 62%
Intangible Assets 0% 0% 0%
Capital Work-In-Progress 0% 0% 4%
Intangible Assets Under Development 0% 0% 0%
Fixed Assets 62% 59% 66%
Deferred Tax Assets [Net] 6% 5% 5%
Long Term Loans And Advances 0% 1% 1%
Other Non-Current Assets 3% 2% 1%
Total Non-Current Assets 70% 66% 73%
CURRENT ASSETS
Inventories 14% 12% 12%
Trade Receivables 13% 9% 10%
Cash And Cash Equivalents 0% 8% 1%
Short Term Loans And Advances 0% 0% 0%
OtherCurrentAssets 3% 4% 5%
Total Current Assets 30% 34% 27%
Total Assets 100% 100% 100%

38 | P a g e
Common Size Statement of profit and loss

Common size Statement of Profit and Loss

Mar-22 Mar-21 Mar-20

12 mths 12 mths 12 mths

INCOME
Revenue From Operations [Gross] 94% 96% 97%
Revenue From Operations [Net] 94% 96% 97%
Other Operating Revenues 6% 4% 3%
Total Operating Revenues 100% 100% 100%
Other Income 1% 1% 0%
Total Revenue 101% 101% 100%
EXPENSES 0% 0% 0%
Cost Of Materials Consumed 42% 44% 50%
Purchase Of Stock-In Trade 0% 0% 0%
Operating And Direct Expenses 5% 7% 7%
Changes In Inventories Of FG,WIP And Stock-In Trade 1% -2% 2%
Employee Benefit Expenses 12% 13% 10%
Finance Costs 11% 12% 9%
Depreciation And Amortisation Expenses 9% 10% 9%
Other Expenses 25% 23% 22%
Total Expenses 104% 106% 109%

Profit/Loss Before Exceptional, ExtraOrdinary Items And Tax -3% -5% -9%
Profit/Loss Before Tax -3% -5% -9%
Tax Expenses-Continued Operations 0% 0% 0%
Current Tax 0% 0% 0%
Deferred Tax 0% -1% -3%
Tax For Earlier Years 0% 0% 0%
Total Tax Expenses 0% 0% -3%
Profit/Loss After Tax And Before ExtraOrdinary Items -3% -5% -6%
Profit/Loss From Continuing Operations -3% -5% -6%
Profit/Loss For The Period -3% -5% -6%

39 | P a g e