Content

Scope of the study

Bharat Bijlee
 Analysis
• 2007:
– Driven by low inflation and robust economy, year 2007-08 saw
Highest Sales and relatively low expenditures resulting in record 27%
growth in PAT.
• 2010:
– Although gross income increased by 20% PAT declined by 13%
– This was majorly driven by huge investment in purchase of Investing
Instruments (Specifically HDFC Floating Rate Income Fund - Short
Term Plan - Wholesale - Growth) which increased by 479%.
– These purchases were majorly funded by unsecured short term loan.
– High inflation of 2009 resulted in high input cost increasing the
expenditure by more than 24 % even though sales increased by 17%
hence depleting the PAT.
EMCO
 Analysis
• 2008:
– Capital expenditure in long term asset building , resulted in increase in depreciation
2009 onwards by more than 65% (find assets built)
– Net borrowing in 2007 & 2008, 2009 onwards EMCO started offloading borrowings.
– On 25th March 2008 EMCO declared stock split in 1:5 increasing total shares
outstanding.
• 2009:
– MAT rates increased from 10% to 15% resulting in increase in Tax Expense by 80% even
though Sales declined in the period.
• 2010:
– Accounts receivable decreased approximately 66% suggesting lesser credit sales
shortening the cash cycle. This though affected the sales which declined by 11%
– Operating expense increased by 31% even while sales declined during the period.
– Even while Operating profit declined, EMCO posted a higher Net Income and an increase
in EPS from Rs. to Rs. 21. EMCO Energy Limited sold for Rs. 9849 Lakh reported as
earning from extra-ordinary item.
Crompton Greaves
 Analysis
• In 2007, Crompton Greaves increased its market capitalization by
40% which remained constant for 3 years till 2009.
• New shares were issued and market capitalization was increased by
75% at the end of 2009.
• Conservatism convention was practised to a larger extent which
worked in their favour.Continuos increase in reserves can be
observed in all the years to the tune of around 40%.Contingent
liabilities seem to be increase by as high as 90% in 2007 and then
declined smoothly.
• There is a continuous decline in the debt structure of the
organisation. It portrays their strategy of offloading the debt
payments thereby reducing their interest payment obligations.
• As a result, even in recessionary times their debt-equity ratio and
debt-service ratio seems to be in good shape.
• A remarkable jump of 208% in 2007 in the “Capital work-in-
progress” shows the company’s initiative to build their
infrastructural facilities (highlights the long term perspective of the
company).It seems be financed partly by debt and partly by equity.
• A heavy Capex at the start of 2007 enabled them to sail fairly
throughout the recessionary pressures.In 2007,their net profit
increased by 48.2% and by 26.48% even in 2009.
• Their Policy of Prudency is once again reflected when they
increased their fixed deposits by a humungous rate of 506.54% in
2009.
• 70% manufacturing expenses increased at the start of 2008 which
induced a higher sales in comparison to the previous year.
• In 2008, they increased their provision to by 100%, to deal with the
impending recession. Thus, their Net Working Capital dipped by Rs.
37.72 crores and became negative.
ABB
 Analysis
• Capital management: Company focuses on making company debt free to
reduce interest rate risks. Company in 2009 started investing in
government bonds to receive tax exemptions.
• 2008:
– ABB has focused initiatives on working capital management and
generation of adequate cash from operating activities to make
company debt-free. This reflects in strong retained earnings
• 2009:
– While sales declined by around 8% during the year, operating profit
before interest and depreciation declined more than 33%.
– In April 2009 ABB constructed 18 acre Factory near Bangalore
increasing its Tangible Factory Assets by around 30%.
– Large investments in Tax Free government bonds like 5.25% 10 Year
Tax Free Nuclear Power Corporation Limited Infrastructure Bonds.