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ANALYSIS OF FINANCIAL STATEMENTS

RELIANCE INFRASTRUCT URE


Submitted to: Prof. C. S Bala Subramaniam

We are not just about scale and size, we are also about the pursuit of excellence, The integrity of our values and the quality of our services.

- ANIL DHIRUBHAI AMBANI

COMPANY PROFILE

A part of Reliance Anil Dhirubhai Ambani Group, one of Indias largest business houses Incorporated in 1929, it ranks among Indias top listed private companies Distributes more than 36 billion units of electricity to over 30 mn consumers Covers an area of 1,24,300 sq. kms & includes Indias two premier cities, Mumbai & Delhi

DIRECTORS REPORT
FINANCIAL PERFORMANCE

During the year under review, company earned an income of Rs. 10,908 crore, against Rs.10,959 crore in previous year Earned Profit After Tax of Rs.1,152 crore as compared to Rs. 1,139 crore in the previous year Shareholders equity (Net Worth) increased to Rs. 15,152 crore from Rs. 11,907 crore in the previous year

DIRECTORS REPORT
DIVIDEND

Board of Directors paid an interim dividend of Rs. 7.10 per share on 24,48,70,262 equity shares of Rs. 10 each (previous year Rs. 7 per share) as on F.Y . ended March 31, 2010. BOD do not propose to pay any final dividend & interim dividend paid is to be treated as final dividend for 2009-10

ACHIEVEMENTS

Commissioning of NK & DS Toll projects Financial Closure of GF Toll Project & submission of Rs. 150 cr upfront premium to H-PWD Winning 5 projects totaling 504 km costing Rs. 7,900 cr Signed Concession agreement for all 5 projects Started tolling on Pune-Satara corridor

RECOGNITION / AWARDS

BSES Yamuna Power Ltd. Received Best Urban Utility for loss reduction in India Power Awards conducted by Council of Power Utilities in India Haryana Electricity Regulatory Commission (HERC) has approved BSES laboratories to carry out independent third-party meter testing for electricity consumers of Haryana BSES was declared as one of the 3 finalists in the Energy & Utility vertical in the prestigious NASSCOM CNBC TV 18 IT User Awards 2009

SECTORAL ALLOCATION OF INFRASTRUCTURE INVESTMENTS IN 11th PLAN (2008-12)

11th plan target is 2.36 X the 10th plan spend Share of private sector to increase from 25% in 10th plan to 50%in 11th plan Envisaged infrastructure development in 11th plan at Rs. 20.6 Tn to double to Rs. 40.7 in 12th plan AIRPORTS Estimated investment of Rs. 0.3 tn in 11th plan vis-vis Rs. 0.7 bn in 10th plan Private sector share at 70% Modernization & redevelopment of 4 metros & 35 non-metro airports Rs. 0.2 tn investments Upgrading ATM facilitiesPOWER Estimated investment of Rs. 6.7 tn in 11th plan vis-vis Rs. 2.9 tn in 10th plan Private sector share at 28% Targets additional generation capacity of 78 GW-Rs. 3.8 tn investment RAILWAYS Estimated investment of Rs. 2.6 tn in 11th plan vis-vis Rs.1.2 tn in 10th plan Private sector share at 19% Targets 8,132 km on new railway line, 7,148 km of gauge conversion, modernization & redevelopmen t of 22 ROADS Estimated investment of Rs. 3.1 tn in 11th plan vis-vis Rs. 1.4 tn in 10th plan (46% in national highways, 40% in State Roads, 12% in Rural Roads) Private sector share at 34% Six Laning 6,500 km of Golden Quadrilateral

BALANCE SHEET OF RELIANCE INFRASTRUCTURE LIMITED AS ON MARCH 31, 2010:Particulars I. Sources of Funds (1) Shareholders' Funds (a) Share Capital (b) Reserves and Surplus (2) Minority Interest (3) Loan Funds (4) Deferred Tax Liability/ (Asset) (net) II. Application of Funds (1) Fixed Assets (2) Investments (3) (A) Current Assets,Loans and Advances Less:(B) Current 11219 13659 13240 9027.66 15936.4 9569.54 786 19918.1 1009.56 15888 2010 2009

114.68 8583.88 156.94 29559.6

111.6 10105.4 211.34 27325.9

8558

7207.72

RATIO ANALYSIS
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Current ratio
=Current

Proprietary ratio

=proprietary funds total asset 100 2010

Return on total investment

=NPBIT total funds employed 100 2010 2009 = 1347.59 29559.56 100 =1337.46 27325.89 100 = 4.56% 4.89%

Return on net worth

=NPAT proprietary fund 100 2010 2009 =1519.39 20704.06 100 =1353.23 16897.6 100

CONCEPTS

Capitalization rate (or "cap rate") is the ratio between the net operating income produced by an asset and its capital cost or alternatively its current market value The rate is calculated in a simple fashion as follows: For example, if a building is purchased for $1,000,000 sale price and it produces $100,000 in positive net operating income (the amount left over after fixed costs and variable costs are subtracted from gross lease income) during one year, then: $100,000 / $1,000,000 = 0.10 = 10% The asset's capitalization rate is TEN percent. If the owner bought the building twenty years ago for $200,000, his cap rate is

USE FOR VALUATION

In real estate investment, real property is often valued according to projected capitalization rates used as investment criteria. This is done by algebraic manipulation of the formula below: Capital Cost (asset price) = Net Operating Income/ Capitalization Rate For example, in valuing the projected sale price of an apartment building that produces a net operating income of $10,000, if we set a projected capitalization rate at 7%, then the asset value (or price we would pay to own it) is $142,857 (142,857 = 10,000 / .07). One advantage of capitalization rate valuation is that it is separate from a "market-comparables" approach

Given the inefficiency of real estate markets, multiple approaches are generally preferred when valuing a real estate asset Capitalization rates for similar properties, and particularly for "pure" income properties, are usually compared to ensure that estimated revenue is being properly valued

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CASH FLOW

The capitalization rate is calculated using a measure of cash flow called net operating income (NOI), not net income. Generally, NOI is defined as income (earnings) before depreciation and interest expenses: Cash flow = Net income + depreciation + interest expenses.

CHANGE IN ASSET VALUE

The cap rate only recognizes the cash flow a real estate investment produces and not the change in value of the property. To get the unlevered rate of return on an investment the real estate investor adds (or subtracts) the price change percentage from the cap rate. For example, a property delivering an 8% capitalization, or cap rate, that increases in value by 2% delivers a 10% overall rate of return. The actual realized rate of return will depend on the amount of borrowed funds, or leverage, used to purchase the asset. In Europe, the term yield is more frequently used in connection with real estate than capitalization rate. Yield is a more general term that refers to

REVERSIONARY

Property values based on capitalization rates are calculated on an "in-place" or "passing rent" basis, i.e. given the rental income generated from current tenancy agreements In addition, a valuer also provides an Estimated Rental Value (ERV). The ERV states the values opinion as to the open market rent which could reasonably be expected to be achieved on the subject property at the time of valuation The difference between the in-place rent and the ERV is the reversionary value of the property For example, with passing rent of $160,000, and an ERV of $200,000, the property is $40,000 reversionary. Holding the valuers cap rate constant at 8%, we could consider the property as having a current value of $2,000,000 based on passing rent,