This action might not be possible to undo. Are you sure you want to continue?
FOR THE YEAR 1999,2000,2001
SIDDARTH DAS(103) ABHIJIT MAITY(100)
India represents a markedly different picture. with the removal of quantitative restrictions on imports of cigarettes. increasing government regulations. The cigarette industry on its part is witnessing a period of declining volumes. pressure from the antismoking lobby and a higher accent on health consciousness by the consumers. However. This results in tremendous bargaining power to the suppliers. with the presence of innumerable small shops across the country. On their part. Only the government doesn’t seem to be much willing to play ball.3 per cent volume growth in FY 2001) even as in terms of value the Indian smoker blew away an amount that was 77 per cent more than the previous year’s figure. China being the largest producer). the global majors are looking at the option of entering India to compensate for their slow growth in their domestic markets. Key Trends In Domestic Cigarettes Industry: The cigarettes industry is witnessing a period of declining volumes (-8. On account of its rather addictive nature. Either way. Furthermore. India has a very low per capita consumption level of cigarettes as compared to global average.1. demand for cigarettes and other tobacco products is price inelastic in nature. The Indian consumer being predominantly rural in nature exhibits a strong preference for bidis. integration of the distribution network becomes virtually impossible. Over the years. This could be more or less accounted for by the fact that in India cigarettes is just 15 per cent of the total tobacco products consumption where as globally it is 85 per cent.ENVIRONMENT & INDUSTRY PROFILE: The Indian tobacco industry is amongst the largest producers in the world (2nd largest. The option left for the global majors would be to take benefit of a QR Free regime and import cigarettes into India.Domestic regulations prohibit explicit advertisements that encourage the consumption of tobacco through the audio and video media. Also. in terms of consumption. the domestic tobacco industry is set to witness a lot of action in the future. Increasing regulations pursuant to the increasing clout of the anti-smoking lobby means that cigarettes are the perennial whipping boy for all and sundry. The other tobacco products (like biris and chewing tobacco) get away with mild punishments on account of being poor man’s products. . cultivation of tobacco in the country has been on the increase on account of its tremendous revenue generation potential. competition could get tough in a stagnating market place.
under the name. ITC is one of the top-rung private sector companies in India. It has recently entered the Lifestyle Retailing business with the launch of the 'Wills Sport' range of relaxed wear. With a market capitalisation of around US $ 4 billion and a turnover of US $ 2 billion. of India Ltd. Imperial Tobacco Co. VST Industries and GTC dominate the domestic cigarette industry and account for over 95 per cent of all industry sales. Ltd. Godfrey Phillips is the second largest tobacco major in the company and has a market share of around 12. Other activities include tobacco leaf processing.0 per cent of total sales in the industry ITC.5 per cent. Hotels. ITC is one of the largest exporters of Indian agricommodities.5 per cent of the domestic market.Consequently. regular size and micro segments. of India Ltd. Speciality Papers and Paperboards. printing and packaging.000 shareholders. VST Industries also has around 12. to India Tobacco Co. in May 1970. The micro segment accounts for the remaining 18. 2. The name of the Company was changed from the Imperial Tobacco Co. hotels. it is a market leader in India in Cigarettes & Tobacco. Widely perceived to be one of India's most valuable companies. ITC was incorporated as a Private Limited Company on 24th August 1910. ITC employs 14. The company has constantly focused on launching new brands especially in the highly profitable premium category. It has also spun off its Information Technology business into a wholly owned subsidiary to more aggressively pursue emerging opportunities. The Company manufactures and distributes cigarettes and smoking tobaccos and specialty papers including cigarette tissue papers (sole manufacturer in the country). food and exports. Packaging.. The regular segment dominates the industry accounting for over 73.0 per cent of total sales. The King size category accounts for around 8.000 people at over 60 locations across India. Competition in this industry is rather high between the bidis and the cigarette segments.. The Indian cigarette industry is segmented on the basis of size into king size.0 per cent of total cigarette sales. COMPANY PROFILE: An associate of British and American Tobacco. ITC almost controls the market with a market share of around 75 per cent. and has over 180. the bargaining power of buyers is negligible. Godfrey Philips. ITC is committed to enhancing shareholder wealth and meeting .
Current Assets. Current Liabilities and Provisions a) Liabilities 163438 b) Provisions 49613 213051 Net Current Assets 5. Wills.C. 3. Its highly popular portfolio of brands includes India Kings. Berkeley and Bristol.Long Term Liabilities a) Secured Loans b) Unsecured Loans Total II. Gold Flake. Fixed Assets a) Gross Block b) Less: Depreciation c) Net Block d) Capital Work In Progress 2.Deveshwar as its Chairman.APPLICATIONS OF FUNDS 1. Investments As at 31st March As at 31st March As at 31st March 2002(Rs. Its headquarters is located at Calcutta with Y.in Lakhs) 2000(Rs. FINANCIAL STATEMENTS: BALANCE SHEET: BALANCE SHEET I.stakeholder aspirations and societal expectations. Shareholders' Funds a) Capital b) Share Capital Suspense c) Reserves and Surplus 2. Loans and Advances a) Inventories 118027 b) Sundry Debtors 18430 c) Cash and Bank Balances 4421 d) Other Current Assets 75568 e) Loans and Advances 91315 307761 Less: 4. Defered Tax Net Total 94710 -13546 469852 114463 10283 3541 69635 104831 302753 93246 11511 2773 69634 62774 239938 125842 34326 160168 142585 113791 34977 148768 91170 439345 345220 INCOME STATEMENT: .in Lakhs) 24541 210 416647 441398 19924 8530 28454 469852 24541 328910 353451 56577 29317 85894 439345 24541 255392 279933 46392 18895 65287 345220 369458 110190 259268 38727 297995 90693 252193 70742 181451 14615 196066 100694 187113 59225 127888 27436 155324 98726 3. Scissors.in Lakhs) 2001(Rs.SOURCES OF FUNDS 1. Capstan.
In Lakhs) 2000(Rs. In Lakhs) 2000(Rs.INCOME 1. Sales 2. In Lakhs) I.Cash Flow From Financing -104919 Cash In Hand 876 -85851 -12499 751 -31003 -91143 -14305 4.PROFIT Profit Before Taxation Taxation Profit After Taxation Profit Brought Forward 178026 59054 118972 28250 147222 160030 59404 100626 20128 120754 122895 43651 79244 18786 98030 CASH FLOW STATEMENT: As at 31st March 2002 As at 31st March As at 31st March CASH FLOW STATEMENT (Rs.Other Income LOSS As at 31st March As at 31st March As at 31st March 2002(Rs. In Lakhs) 984009 14235 998244 868264 14447 882711 795306 11631 806937 Less: COGS Other Operating Expense Non-Operating Expense Depreciation 185359 607248 7766 19845 820218 148069 553635 6983 13994 722681 154757 503900 13532 11853 684042 II. Cash Flow From Operations 176954 99101 107841 II. In Lakhs) 2001(Rs.PROFIT AND ACCOUNT I.Cash Flow From Investments -71159 III. In Lakhs) 2001(Rs. FINANCIAL STATEMENT ANALYSIS: .
31% 32.41 2.825 2.323 50.723 219.61% 28.89 1.22 5.379 ii) Return On Capital Employed (ROCE) 38.Profitability Ratios (Sales) I) Gross Margin Ratio ii) Operating Profit Ratio iii) Net Profit Ratio iv) Operating Ratio 5.50% 17.976 4.891 1999-2000 1.75% iii) Return On Net Worth (RONW) iv) Earnings Per Share (EPS) v) Propriety Ratio 26.47% 41 2.Solvency Ratios I) Debt Equity Ratios ii)Debt Total Funds Ratio iii)Interest Coverage Ratio 3.283 49.55 6.29% 38.57% 11.20% 28.389 228.428 6.836 58.552 13 2.233 0.57% 19.283 26.14% 17.516 45 1.70% 15.176 Ratios 1.31% 27.LIQUIDITY RATIOS: Current Ratio: .88% 38.46% 28.09% 82.094 3.064 0.69% 9.12 8.613 0.303 5.Efficiency Ratios I)Capital Turnover Ratio ii)Fixed Assets Turnover Ratio iii)Working Capital Turnover Ratio v) Inventory Days vi) Debtors Days vii) Creditors Days 4.07 10.476 18.243 0.302 10.986 1.473 4a) RATIO ANALYSIS: 1.444 0.Liquidity Ratios I) Current Ratio ii) Quick Ratio 2.96% 84.95% 48.089 255.554 27 1. Profitability Ratios (Investment) I) Return On Total Assets (ROTA) 2001-2002 1.59% 82.43% 12.RATIO ANALYSIS: Year 2000-2001 1.06 4.41 1.43% 16.
A low debt equity ratio implies the use of more equity than debt. This has resulted from a considerable difference in the PBIT of the two years primarily because the interest paid on long-term debts is much higher for the period 00-01 than the period 01-02. Again this is because in the period 00-01 a substantial addition had been done on the fixed assets by taking loans from banks.SOLVENCY RATIOS: Debt Equity Ratio: It indicates the margin of safety to long-term creditors. This results in an increase of equity over debt. with ITC LTd. Thus the higher ratio signifies that the firms ability to pay interest has increased from the previous period. Interest Coverage Ratio: This shows the number of times the interest charges are covered by the profits out of which they will be paid. which indicates a larger safety margin for creditors. It is observed that in the year 2000-01 it is the highest compared to other years because there has been a substantial decrease in the bills payable and the outstanding dues of creditors. 3. 2. thus showing a decrease in debt equity ratio from the previous periods.It is the measure of the ability of the firm to meet its short-term obligations and to reflect the short-term financial strength / solvency of a firm.EFFICIENCY RATIOS: Fixed Assets Turnover Ratio: . It indicates the limit beyond which the ability of the firm to service its debt would be adversely affected. It is observed that in the period 2001-02 there has been an increase in the general reserves due to the amalgamation of ITC Bhadrachalam Ltd. It is observed that the ICR has increased considerably from 2000-01 to 2001-02. In other words its objective is to measure the safety margin available for short-term creditors. which means a larger safety of margin for creditors since creditors and vice-versa treat owner’s equity as margin of safety.
It is observed that in the period 2000-2001 the ratio has fallen in comparison to the other 2 periods under consideration. Thus the profitability of the firm has increased over the three-year period. there has been an efficient management and utilization of working capital over the periods. It indicates the firm’s ability to generate sales per rupee of working capital. It is observed in the period 2001-2002 the EPS has increased due to the addition of share capital suspense.100 and what portion of sales is left to cover non-operating expenses. It indicates an average operating margin earned on a sale of Rs.PROFITABILITY RATIOS (SALES): Operating Profit Ratio: This ratio determines the operational efficiency of the company. The same trend has also been observed in ROCE and RONW.PROFITABILITY RATIOS (INVESTMENT): Return on Total Assets (ROTA): The objective of this ratio is to find out how efficiently the total assets have been used by the company. 5. to pay dividend and to create reserves. Working Capital Turnover Ratio: The objective of this ratio is to determine the efficiency with which the working capital is utilized. 4. This is because there has been a decrease in current liabilities in the period 00-01 which has increased the working capital.It indicates the firm’s ability to generate sales per rupee of investment in fixed assets. In general the higher the ratio the more efficient and utilization of fixed assets and vice versa. This is because the proportion by which the operating profit and the net sales have varied over the periods have been the same. It is seen that the ratio has stayed virtually the same over the 3 periods. It is observed that there has been substantial decrease in the ratio over the 3 periods because the firm has been acquiring more fixed assets in the said period. . Thus. It is observed that the returns have been consistent over the periods. The company has more or less maintained its utilization of total assets. It is observed the ratio for the period 2001-2002 is highest among the 3 periods. Earnings Per Share: The ratio measures the earnings available to an equity shareholder on a per share basis.
42 1.64 98.64 98.9 48.55 1.67 14.94 0.58 12.49 1.98 17.32 29.37 0.89 29.5 43.34 85.44 19.2 43.36 1.21 30.01 2001-02 58.57 1.65 2000-01 1999-00 6.06 13.95 0.5.43 98.06 83.7 16.67 13.COMMON SIZE FINANCIAL STATEMENTS: BALANCE SHEET: PERIOD SOURCE OWNER'S FUND LONG TERM LIABILITY CURRENT LIABILITY APPLICATION ASSETS INVESTMENTS CURRENT ASSETS All figures in % 31.74 99-00 56.8 50.11 00-01 56.16 INCOME STATEMENT: 2001-02 INCOME SALES OTHER INCOME EXPENDITURE EXPENSE INTEREST DEPRICIATION PBT 80.52 1. INTER-FIRM ANALYSIS: .46 14.66 32.95 11.
3796 23.51 76 67.22 1098.03 ASSETS 100 TOTAL 19.18 80.For the purpose of intra-firm analysis we have chosen Godfrey-Philips as it is the main challenger to ITC in the Indian tobacco market.63 EXPENSES 11.67 22.32 INVESTMENTS 67.69 350.6 39.05 7.Lakhs) 992.91 1020.4339 25.0405 6 52.33 INVESTMENTS CURRENT 23.Lakhs) SALES OTHER INCOME EXPENDITURE(In 2000-01 1999-00 Rs.64 ASSETS 13.97 187.97 350.85 66.6 15.51 4.22 1098.6 74.73 100 63.69 5. FINANCIAL STATEMENTS OF GODFREY PHILIPS: Balance Sheet: SOURCE(In Rs.03651 4 100 100 Income Statement: .87 153.92299 22.92 1004.75 ASSETS 54.93 CURRENT ASSETS 295 TOTAL 2000-01 1999-00 69.99 TOTAL COMMON SIZE BS AND IS: Balance Sheet: SOURCE(%) OWNER'S FUND LONG TERM LIABILITY CURRENT LIABILITY TOTAL 2000-01 1999-00 APPLICATION(%) 2000-01 1999-00 61.94 79. Lakhs) OWNER'S FUND LONG TERM LIABILITY CURRENT LIABILITY TOTAL 2000-01 1999-00 APPLICATION(In Rs Lakhs) 215.78 199.95 295 Income Statement: INCOME(In Rs.46 1082.1864 57.36 INTEREST DEPRECIATION PBT 1004.62 5.99 TOTAL 2000-01 1999-00 915.76 16.
45951283 0. is more than one.INCOME(%) SALES OTHER INCOME 2000-01 EXPENDITURE(%) 2000-01 91.03 0.21 24.18022002 100 98.97 40.78 99-00 2.47 44.01 35.48863957 INTEREST DEPRECIATION PBT 100 100 TOTAL TOTAL Financial Ratios of Godfrey Philips: RATIOS CURRENT RATIOS DEBT EQUITY RATIOS ROTA ROCE EPS 00-01 2.568062775 100 1999-00 92. Comparing the DER’s of the two companies it is seen that the DER of Godfrey Philips is lower than one while that of ITC Ltd.8588977 0. DU-PONT ANALYSIS: DU-PONT ANALYSIS OF ITC (2001 –2002) .50136944 6.5113604 EXPENSES 1.460058553 0.74 28. This implies a larger margin of safety in the case of creditors of Godfrey Philips. Comparing the ROTA. ITC has a greater return on assets. It means that Godfrey Philips is adequately liquid and has the ability to meet its current obligations better than ITC Ltd.20611021 0.8289419 98. The ROCE of ITC is also higher than Godfrey Philips implying a better generation of profits and better utilization of capital employed.21 0. Also the ROTA for Godfrey Philips has reduced marginally over the comparing period. The EPS of both companies are almost the same and there is little to choose between the two companies.26 23.49 Comparing the ratios of the two companies we see that the Current Ratio of Godfrey Philips is about 2 while that of ITC is less than 2.17105813 1. 7. the ROCE of Godfrey Philips has shown marked improvement over the period.765768457 7. However.
59 SALES / CASH & OTH.11% SALES / OTHER FA = 20.20% PROFIT MARGIN =PBIT/SALES = 18.15 SALES/DBTRS = 53.17 SALES/STOC K = 8.43% NON OP.30 SALES / CA = 3.50% ASSET TURNOVER = SALES / TOTAL ASSETS = 1.ROTA =PBIT/TA = 27. PROFIT/SALE = 1.73% SALES / FURN = 110.84% SALES / L&B = 12.34 ADM.25 DU-PONT ANALYSIS OF ITC (2000 –2001) .39 FAC.2 COGS/SALES = 18.89% SALES / P&M = 6. EXP/SALES = 54.06% SALES / FA = 3. = 5.74 S&D EXP / SALES = 2.PROFIT / SALES = 17.41 OP.EXP/ SALES = 6.
44 FAC. = 4.59 ADM.45 OP.33 SALES/STOC K = 7.EXP/ SALES = 6.43% SALES / FURN = 164 SALES / CASH & OTH.96% SALES / FA = 4.ROTA =PBIT/TA = 28.43 SALES / CA = 2. EXP/SALES = 56% SALES / P&M = 8.95% SALES / OTHER FA = 53.05% SALES / L&B = 12.14% ASSET TURNOVER = SALES / TOTAL ASSETS = 1.57% NON OP.88 S&D EXP / SALES = 2.29% PROFIT MARGIN =PBIT/SALES = 19. PROFIT/SALE = 1.64 DU-PONT ANALYSIS OF ITC (1999-2000) .87 COGS/SALES = 17.49 SALES/DBTRS = 84.PROFIT / SALES = 17.
EXP/SALES = 55.12 SALES / CA = 3.88 S&D EXP / SALES = 2.EXP/ SALES = 6.75% SALES / P&M = SALES/STOC K = 8.95% SALES / FURN = SALES / CASH & OTH.31 COGS/SALES = 19.53 ADM.PROFIT / SALES = 15.0% SALES / FA = 5.09 FAC.ROTA =PBIT/TA = 26.70% ASSET TURNOVER = SALES / TOTAL ASSETS = 1.69% NON OP.15% SALES / OTHER FA = Du-Pont Analysis (2001 –2002): . PROFIT/SALE = 1.46% SALES / L&B = SALES/DBTRS = 69.88% PROFIT MARGIN =PBIT/SALES = 16. = 5.61 OP.
All upgradation/enhancements are generally charged off as revenue expenditure unless they bring similar significant additional benefits. by equal annual instalments. related pre-operational expenses form part of the value of assets capitalised. The main driver for Operating Profit is Factory Expenses.From the Du-Pont chart for 2001-2002 it is observed that the main driver for Profit Margin is Operating Profit. 8. In respect of major projects involving construction. To adjust the original cost of Fixed Assets acquired through foreign currency loans at the end of each financial year by any change in liability arising out of expressing the outstanding foreign loan at the rate of exchange prevailing at the date of Balance Sheet. Capitalisation costs include license fees and costs of implementation / system integration services. To capitalise software where it is expected to provide future enduring economic benefits. 1956. Revaluation of Assets: . The chief drivers for current assets are the debtors from which there is maximum potential for returns. The costs are capitalised in the year in which the relevant software is implemented for use. For Asset Turnover the chief driver is the furniture for which the returns are the maximum. ANALYSIS OF FINANCIAL POLICIES: Fixed Assets: To state Fixed Assets at cost of acquisition inclusive of inward freight. Leasehold properties are amortised over the period of the lease. Expenses capitalised also include applicable borrowing costs. whichever is lower. Capitalised software costs are amortised over a period of five years. Depreciation: To calculate depreciation on Fixed Assets andt rademarks in a manner that amortises the cost of the assets after commissioning. duties and taxes and incidental expenses related to acquisition. over their estimated useful lives or lives based on the rates specified in Schedule XIV to the Companies Act.
from time to time. to transfer to Revaluation Reserve the difference between the written up value of the Fixed Assets revalued and depreciation adjustment and to charge Revaluation Reserve Account with annual depreciation on that portion of the value. in order to make allowance for consequent additional diminution in value on considerations of age. To also charge against revenue. various Funds in respect of Employees’ Retirement Benefit . provision is made where there is a permanent fall in valuation of Long Term Investments. Inventories: To state inventories including work-in-progress at cost or below. slow moving and defective inventories are identified at the time of physical verification of inventories and. inclusive of related tax deducted at source. Proposed Dividend: To provide for Dividends as proposed by the Directors in the books of account. Obsolete. To administer through duly constituted and approved independent trusts. Pension Funds and Gratuity Funds which are charged against revenue. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its location and includes. pending approval at the Annual General Meeting. The cost is calculated on weighted average method. Where applicable. when due. Investments: To state Current Investments at lower of cost and fair value. where applicable. where necessary. where applicable. in order to relate them more closely to current replacement values. under the Workers’ Voluntary Retirement Scheme. and Long Term Investments at cost. Retirement Benefits: To make regular monthly contributions to various Provident Funds. to adjust the provision for depreciation on such revalued Fixed Assets. appropriate overheads based on normal level of activity. Investment Income: To account for Income from Investments on an accrual basis. which is written up. condition and unexpired useful life of such Fixed Assets.To review the original book value of Fixed Assets. actual disbursements made. provision is made for such inventories. and revalue such of those Fixed Assets as have appreciated in value significantly.
Taxes on Income: To provide and determine Current tax as the amount of tax payable in respect of taxable income for the period.MARKET CAPITALIZATION: Market Cap/OF vs Tim e 700000 600000 Market Cap (in 100 lacs)/OF(In lacs) 500000 400000 300000 200000 100000 0 31/03/1999 31/05/1999 31/07/1999 31/05/2000 31/07/2000 30/09/2000 30/11/2000 31/01/2001 31/03/2001 31/05/2001 30/09/1999 30/11/1999 31/01/2000 31/03/2000 31/07/2001 30/09/2001 30/11/2001 31/01/2002 Market Cap(*100lac) Ow ners Fund (In Lacs) Tim e Share Price Movement: . with the exception of Provident Fund and Family Pension contributions in respect of Unionised Staff which are statutorily deposited with the Government.Schemes. To provide and recognise Deferred tax on timing differences between taxable income and accounting income subject to consideration of prudence. Claims: To disclose claims against the Company not acknowledged as debts after a careful evaluation of the facts and legal aspects of the matter involved. 9. Not to recognise Deferred tax assets on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that there will be sufficient future taxable income available to realise such assets.
. has been steadily decreasing. The share value has also been steadily decreasing.ITC Share Behaviour (31/3/99 .31/3/02) 1200 1000 Share Price (Rs) 800 600 400 200 0 31/01/2000 31/03/2000 31/05/2000 31/07/2000 31/01/2001 31/03/2001 31/05/2001 31/01/2002 31/03/1999 31/05/1999 31/07/1999 30/09/1999 30/11/1999 30/09/2000 30/11/2000 31/07/2001 30/09/2001 30/11/2001 Date From the above graphs it is seen that the Market Capitalization of ITC Ltd.
submitted by: abhijit maity (100) siddharth das (103) .study of annual report of itc India ltd.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.