A Project Report

On Financial Analysis Of

Presented to

Miss Mansi Arora

Faculty Member S In the partial fulfillment of the requirements for Management Course By: Vaishally Agarwal (Roll No.Fa11058)

Preface
As a part of our syllabus of PGDM Programme , I have assigned some practical and theoretical project work. In partial fulfillment of the Management , course i have prepared a comprehensive project report in Financial Analysis of the company. Study of management will be immaterial if it is not coupled with study of financial aspect of the business. It gives the student an opportunity to learn the connection between comparison & execution to test & verify application of theories & help in the comparison of management theories and practice. The study gives a chance to know about the profitability and financial position of the firm.I have chosen Wipro Limited which is a $7.30 Billion Global company in Information Technology Services ,R&D Services, Business Process Outsourcing. This report contains the analysis of the 5 years data of the company. The Financial statements of the report are analyzed in three different ways such as Trend Analysis Horizontal Analysis Ratio Analysis Cash flow Analysis

The ratio analysis of the company has been derived for 23 ratios which help to determine the companys performance. In the Scenario Analysis of the company we have included the companys industrial GDP, its Market Share, Market Capitalization, Market Growth etc.

Acknowledgement
With a sense of gratitude and respect, I would like to extend our heartiest thanks to all of those who provided help and guidance to make this project a big success. No Project is ever the outcome of single individuals talent or effort. This work is no exception. This project would not have been possible without the whole hearted encouragement, support and co-operation of our guide, friends and well-wishers. Although it is not possible for us to name and thank them all individually, we must make special mention of some of the personalities and acknowledge our sincere indebtness to them. The successful completion of this project rests on the shoulder of many persons who have helped us directly or indirectly. We wish to take this opportunity to express to all those, without whose help, completion of this project would have been difficult. We are indebted and thankful to all the individuals who have guided, advised, inspired and supported us in making this project a success. Our gratitude to our honorable guide Miss .Mansi Arora for giving methe opportunity for developing the project and his able guidance, inestimable motivation and constant encouragement throughout our project. Without her help this project would never have been realized in its entirety.

Executive Summary
It is Summarize tin of all report in one or two pages so as to provide an overview of the company. it is also called synopsis or Abstract. As a partials fulfillment of the requirement for the Management Course. We have completed a project report on financial Analysis of Wipro Ltd. Sales Figure is increasing at a handsome rate. it is at Rs. 26401 Million. in 201011 and it is increased to Rs. 31803 Million. So Sales is increased 75.05% because of aggressive Selling Policy. Net worth of the company is increased in this year because of increase in Reserve & Surplus Current Ratio of Wipro limited is showing good position. It is 1.26 Times in 2003-04 then it is increased to 2.13 Times in 2007-08 this shows Company has achieved standard Ratio. The returns on the investment is some what decline in current year. Companys Total Assets are increased and it trying to expand its business on the other hand debt are also increased it shows that company trying to Trading on Equity. After analyzing all aspect Companys performance is good.

CONTENT
Preface Acknowledgement Executive Summary 1. INTRODUCTION
1.1 Introduction to company 1.2 Group of companies 1.3 History 1.4 Company Profile 1.5 Registered office address 1.6 Auditor

2. ANALYSIS OF BALANCE SHEET

2.1 Trend analysis of Balance sheet 2.1.1 Trend analysis of fixed assets 2.1.2 Trend analysis of total current assets 2.1.3 Trend analysis of share holders equity 2.1.4 Trend analysis of total current assets 2.1.5 Share holders fund 2.1.6 Sources of fund 2.1.7 Investment 2.1.8 Application of funds 2.2 Horizontal analysis of Balance sheet 2.2.1 Sources of fund 2008 2.2.2 Application of fund 2008 2.2.3 Sources of fund for five years 2.2.4 Application of fund for five years 3. ANALYSIS OF P & L ACCOUNT 3.1 Trend analysis of P & L 3.1.1 Trend analysis of total income 3.1.2 Profit after tax 3.1.3 Transfer to general reserve 3.1.4 Net sales and services 3.2 Horizontal analysis of P & L 3.2.1 Comparison of PBT and Income with expenditure

4. CASH FLOW ANALYSIS

4.1 Introduction 4.2 Cash flow statement 4.3 Interpretation of Cash flow statement

5. RATIO ANALYSIS
5.1 Introduction of the ratio analysis 5.2 Liquidity ratio 5.2.1 Current ratio 5.2.2 Quick ratio 5.2.3 Net working capital 5.3 Profitability ratio 5.3.1 Gross profit 5.3.2 Operating ratio 5.3.3 Net profit ratio 5.3.4 Return on investment 5.3.5 Return on equity 5.4 Assets turnover ratio 5.4.1 total asset turn over ratio 5.4.2 net fixed asset turn over 5.4.3 inventory turn over ratio 5.4.4 average age of inventories 5.4.5 debtor turn over ratio 5.5 Finance structure ratio 5.5.1 debt ratio 5.5.2 debt equity 5.5.3 interest coverage ratio 5.6 Valuation ratio 5.6.1 earning per share 5.6.2 divident pay out ratio 5.6.3 P/E ratio 5.6.4 Profit margin ratio 5.7 Du-Pont chart

6. SCENARIO ANALYSIS 6.1 business unit performance 6.2 company analysis 6.2.1 Share holding pattern 6.2.2 Market capitalization 7 ANNEXURES 8 BIBLIOGRAPHY

. Introduction

Introduction to company Group Companies History Company Profile Registered Office Address Board of Directors Auditors

1. INTRODUCTION
1.1. Introduction of company
Wipro Limited (Wipro), together with its subsidiaries and associates (collectively, the company or the group) is a leading India based provider of IT Services and Products, including Business Process Outsourcing (BPO) Services, globally. Further,Wipro has other business such as India and AsiaPac IT Services and products and Consumer Care and Lighting. Wipro is headquartered in Bangalore, India.Wipro Technologies is a global services provider delivering technology-driven business solutions that meet the strategic objectives clients. Wipro has 40+ Centers of Excellence that create solutions around specific needs of industries. Wipro delivers unmatched business value to customers through a combination of process excellence, quality frameworks and service delivery innovation. Wipro is the World's first CMMi Level 5 certified software services company and the first outside USA to receive the IEEE Software Process Award. Wipro is a $7.83billion Global company in Information Technology Services, R&D Services, Business process outsourcing. Team wipro is 140,000 Strong from 40 nationalities and growing. Wipro is present across 29 counries,36 Development canters, Investors across 24 countries. Largest third party R&D Service provider in the world. Largest Indian Technology Infrastructure management service provider. A vendor of choice in the middle east Among the top 3 Indian BPO Service provider by Revenue (* Nasscom) Among the top 2 Domestic IT Services companies in India (*IDC India)

1.2. Group Companies

Wipro Infrastructure Engineering Ltd.

 Wipro Inc. cMango Pte Ltd. Wipro Japan KK Wipro Shanghai Ltd. Wipro Trademarks Holding Ltd. Wipro Travel Services Ltd. Wipro Cyprus Private Ltd. Wipro Consumer Care Ltd. Wipro Health Care Ltd. Wipro Chandrika Ltd.(a) Wipro Holdings (Mauritius) Ltd. Wipro Australia pty Ltd. WMNETSERV Ltd.(a) Quantech Global Service Ltd. 3D Network Pte Ltd. Planet PSG Pte Ltd. Spectramind Inc.

1.3. History
Wipro started in 1945 with the setting up of an oil factory in Amalner a small town in Maharashtra in Jalgaon District. The product Sunflower Vanaspati and 787 laundry

soap (largely made from a bi-product of Vanaspati operations) was sold primarily in Maharashtra and MP. The company was aptly named Western India Products Limited. The Birth of the name Wipro - As the organization grew and diversified into operations of Hydraulic Cylinders and Infotech, the name of the organization did not adequately reflect its operations. Azim Premji himself in 1979 selected the name "Wipro" largely an acronym of Western India Products. Thus was born the Brand Wipro. The name Wipro was unique and gave the feel of an 'International" company. So much so that some dealers even sent their cheques favouring Wipro (India) Limited. Fortunately, the banks accepted them!!By the early 90s, Wipro had grown into various products and services. The Wipro product basket had soaps called Wipro Shikakai, Baby products under Wipro Baby Soft, Hydraulic Cylinders branded Wipro, PCs under the brand name Wipro, a joint venture company with GE named Wipro GE and software services branded Wipro. The Wipro logo was a 'W", but it was not consistently used in the products.It was clearly felt that the organization was not leveraging its brand name across the various businesses. The main issue remained whether a diverse organization such as Wipro could be branded under a uniform look and feel and could there be consistent communication about Wipro as an organization.

1.4. Company Profile

Business-Description Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT Services Company globally. Wipro provides comprehensive IT solutions and services, including systems integration, Information Systems outsourcing, package implementation, software application development and maintenance, and research and development services to corporations globally. The Group's principal activity is to offer information technology services. The services include integrated business, technology and process solutions including systems integration, package implementation, software application development and maintenance and transaction processing. These services also comprise of information technology consulting, personal computing and enterprise products, information technology infrastructure management and systems integration services. The Group also offers products related to personal care, baby care and wellness products. The operations of the Group are conducted in India, the United States of America and Other countries. During fiscal 2007, the Group acquired Wipro Cyprus Pvt Ltd, Retailbox Bv, Enabler Informatica SA, Enabler France SAS, Enabler Uk Ltd, Enabler Brazil Ltd, Enabler and Retail Consult GmbH, Cmango Inc, Cmango (India) Pvt Ltd, Saraware Oy, Quantech Global Services and Hydroauto Group AB Global IT Services and Products The Company's Global IT Services and Products segment provides IT services to customers in the Americas, Europe and Japan. The range of its services includes IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, technology infrastructure outsourcing, BPO services and research and development services in the areas of hardware and software design. Its service offerings in BPO services include customer interaction services, finance and accounting services and process improvement services for repetitive processes.

. Customized IT solutions Wipro provides its clients customized IT solutions in the areas of enterprise IT services, technology infrastructure support services, and research and development services. The Company provides a range of enterprise solutions primarily to Fortune 1000 and Global 500 companies. Its services extend from enterprise application services to e-Business solutions. Its enterprise solutions have served clients from a range of industries, including energy and utilities, finance, telecom, and media and entertainment. The enterprise solutions division accounted for 63% of its IT Services and Products revenues for the fiscal 2007. Technology Infrastructure Service Wipro offers technology infrastructure support services, such as help desk management, systems management and migration, network management and messaging services. The Company provides its IT Services and Products clients with around-the-clock support services. The technology infrastructure support services division accounted for 11% of Wipro's IT Services and Products revenues in fiscal 2007. Research and Development Services Wipro's research and development services are organized into three areas of focus: telecommunications and inter-networking, embedded systems and Internet access devices, and telecommunications and service providers.The Company provides software and hardware design, development and implementation services in areas, such as fiber optics communication networks, wireless networks, data networks, voice switching networks and networking protocols. Wipro's software solution for embedded systems and Internet access devices is programmed into the hardware integrated circuit (IC) or application-specific integrated circuit (ASIC) to eliminate the need for running the software through an external source. The technology is particularly important to portable computers, hand-held devices, consumer electronics, computer peripherals, automotive electronics and mobile phones, as well as other machines, such as process-controlled equipment. The Company provides software application integration, network integration and maintenance services to

telecommunications service providers, Internet service providers, application service providers and Internet data centers. Business Process Outsourcing Service Wipro BPO's service offerings include customer interaction services, such as ITenabled customer services, marketing services, technical support services and IT helpdesks; finance and accounting services, such as accounts payable and accounts receivable processing, and process improvement services for repetitive processes, such as claims processing, mortgage processing and document management. For BPO projects, the Company has a defined framework to manage the complete BPO process migration and transition. The Company competes with Accenture, EDS, IBM Global Services, Cognizant, Infosys, Satyam and Tata Consultancy Services.India and AsiaPac IT Services and Products The Company's India and AsiaPac IT Services and Products business segment, which is referred to as Wipro Infotech, is focused on the Indian, Asia-Pacific and MiddleEast markets, and provides enterprise clients with IT solutions. The India and AsiaPac IT Services and Products segment accounted for 16% of Wipro's revenue in fiscal 2007. The Company's suite of services and products consists of technology products; technology integration, IT management and infrastructure outsourcing services; custom application development, application integration, package implementation and maintenance, and consulting

Wipro's system integration services Include integration of computing platforms, networks, storage, data center and enterprise management software. These services are typically bundled with sales of the Company's technology products. Wipro's infrastructure management and total outsourcing services include management and operations of customer's IT infrastructure on a day-to-day basis. The Company's technology support services include upgrades, system migrations, messaging, network audits and new system implementation. Wipro designs, develops and implements enterprise applications for corporate customers. The Company's solutions include custom application

development, package implementation, sustenance of enterprise applications, including industry-specific applications, and enterprise application integration. Wipro also provides consulting services in the areas of business continuity and risk management, technology, process and strategy. Consumer Care and Lighting Wipro's Consumer Care and Lighting business segment accounted for 5% of its revenue in fiscal 2007. The Company's product lines include hydrogenated cooking oil, soaps and toiletries, wellness products, light bulbs and fluorescent tubes, and lighting accessories. Its product lines include soaps and toiletries, as well as baby products, using ethnic ingredients. Brands include Santoor, Chandrika and Wipro Active. The Wipro Baby Soft line of infant and child care products includes soap, talcum powder, oil, diapers and feeding bottles and Wipro Sanjeevani line of wellness products. The Company's product line includes incandescent light bulbs, compact fluorescent lamps and luminaries. It operates both in commercial and retail markets. The Company has also developed commercial lighting solutions for pharmaceutical production centers, retail stores, software development centers and other industries. Its product line consists of hydrogenated cooking oils, a cooking medium used in homes, and bulk consumption points like bakeries and restaurants. It sells this product under the brand name Wipro Sunflower.

1.5. Registered Office Address

WIPRO LIMITED Doddakannelli, Sarjapur Road, Bangalore 560 035, India. Former Chairman Pepsico India Holdings

Azim Premji Chairmen & Managing Director

1.6. Auditors
KPMG BSR & Co.

Audit committee N Vaghul P M Sinha B C Prabhakar Chairman Member Member

. Analysis of Balance Sheet

Trend Analysis of Balance Sheet Horizontal Analysis of Balance Sheet

2. ANALYSIS OF BALANCE SHEET

2.1. Trend Analysis of Balance Sheet
Trend Analysis of Balance Sheet involves calculation of percentage changes in the Balance Sheet items for a no. of successive years. This is carried out by taking the items of the past financial year used as base year and items of other years are expressed as percentage of the base year. Here 2003-04 is taken as base year Perticular SOURCES OF FUNDS Equity Share Capital Share Capital Share application money Reserves & Surplus Share holder's Equity Loan Funds Secured Unsecured Total debts Total Liabilites APPLICATION OF FUNDS Fixed assets Gross Block Accumulated Depriciation Net Block Capital work in progress and advances Total Fixed Assets Investments Inventories Sundry Debtors Cash & Bank Balances Loans & Advances 201112 491.7 0 20102011 20092010 20082009 200708

490.8 293.6 0 0 293 490.8 293.6 491.70 0 0 293 0.00 0.70 0.80 1.50 23860 20829 17396 12220 24352 21320 17692 12515 5242 5243 4744 4744 5530 5530 5013 5013

100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

7779 6761 5743 3542 3105 2563 4237 3656 3179 4649 490 603 991 1311 10335 785 7967 3435
8135

8807 4158

10813 8966 6895 724 606 459 5781 4446 5016 2334 1902 1938 6756 5425 4202

Total Current Assets Fixed Deposits Loan & Advances Total CA Current Liabilities

12187 2797 8135 12187 5984

8840 2869 6156 8840 5290

7561 3726 5425 7561 4874

6808 2507 4202 6808 5564 1

100 100 100 100 100

Deffered Credit Provisions Total Liabilities& provisions Net Current Assets Total Assets

0 3016 9000 14120 29595

0 2764 8054 10411 26065

0 2230 7105 9608 23222

0 1810 7375 6142 17528

100 100 100 100 100

Table 2.1.1 Trend Analysis of Balance Sheet

2.1.1 Trend Analysis of Fixed assets Year Total Fixed Assets 2007-08 100

2008-09
3179

2009-10
3656

2010-2011
4237

2011-12
4649

Table 2.1.2 Trend Analysis of Fixed assets

Total Fixed Assets

5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0

Total Fixed Assets

Figure 2.1.1 Trend Analysis of total fixed assets Interpretation The fixed assets are increase in current year is good for the company. Hear fixed assets are increasing as a increasing rate it means the company has expand its business. Fixed Assets are continuously increasing year by year. It seems that the company has good future plans and they want to expand their business so they have invested more and more funds in fixed assets. Fixed assets are efficiently utilized by the company due to which the profit of the company is increasing every year.

2.1.2 Trend Analysis of total current assets Table 2.1.3 Trend Analysis of total current assets

Year
Total Current Assets
25000

2008-09 200-10 2010-11 2011-2012 13517 16713 18466 23120

20000

15000 Total Current Assets 10000

5000

0 2008-09 2009-10 2010-11 2011-2012

Figure 2.1.2 Trend Analysis of total current assets

Interpretation The current assets is shows the cash liquidity of the company. Hear it is increase it year by year it means the company has sufficient liquidity for generating the business.

2 Trend Analysis of Fixed Assets 200708 Total Fixed Assets

200809

200910

20102011

201112

100

3179

3656

4237

4649

Fixed Assets
5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 2008-09 2009-2010 2010-11 2011-12

Fixed Assets

2.1.2 Trend Analysis of total liabilities Table 2.1.4 Trend Analysis of total Liabilities

Year
Total Liabilities

2008-09 2009-10 2010-11 2011-12 2007-08 17528 23222 26065 29595 100

Total Liabilites
35000 30000 25000 20000 15000 10000 5000 0 2008-09 2009-2010 2010-11 2011-12 Total Liabilites

Figure 2.1.3 Trend Analysis of total Liabilities

Interpretation The total liabilities is highest in 2011-12. Liabilities is incressing rate it mean company has to developed business. And purchase raw material on credit basis.

2.1.3 Trend Analysis of share holders equity.

Table 2.1.5 Trend Analysis of share holders equity.

Year
Share holder's Equity

2008-09 2009-10 2010-11 2011-12 2007-08 12515 17692 21320 24352 100

Shareholder Equity
30000 25000 20000 15000 10000 5000 0 2008-09 2009-2010 2010-11 2011-12 Shareholder Equity

Figure 2. 4 Trend Analysis of share holders equity.

Interpretation Share holder equity is increase high in 2011-12 because the company has allocated new share. Share holder equity is showing high fluctuation.

2.1.4 Trend Analysis of total loan fund.

Table 2.1.6 Trend Analysis of total loan fund.

Year

2008-09

2009-10

2010-11

2011-12

Total Loan Funds

5013

5530

4744

5243

Total liabiltes
5600 5400 5200 5000 4800 4600 4400 4200 2008-09 2009-2010 2010-11 2011-12 Total liabiltes

Figure 2.1.5 Trend Analysis of total loan funds Interpretation The total trend line is slowly increase up to2011-12. And after that it is increase at a high rate. From 2008-9onward the loan fund is increase because the company has expanse its business. The company has been able to raise its secured loan without shortage of funds. Increase in secured loan shows that company has very good prestige in Financial market. Company increasing loan funds because company want to increase its trading on equity.

2.1.5

Share Holders Funds

Share capital Share application money pending allotment Reserves and Surplus

2008-09 2009-10 2010-11 2011-12 293 293.60 490.60 491.70 1.50 12220 1.80 17396 0.70 20829 0.00 23860

2007-08 100 100 100

Table 2.1.7 Trend Analysis of Share Holder's Funds

30000 25000 20000 15000 10000 5000 0 2008-09 2009-10 2010-11 2011-12 2007-08 Share capital Share application money pending allotment Reserves and Surplus

Figure 2.1.6 Trend Analysis of Share Holder's Funds Interpretation There is highest share capital in 2011-12 The company has issued new shares in the 2005-06. As a result no. of shares is increased and these funds are implemented for future plans of the company.

2.1.6 Source of Funds Source Of Funds 2007-08 2008-09 2009-10 2010-11 2011-12 100 12515 17692 21320 24352 100 12515 17692 21320 24352

Year Share holder's Equity Total Loan Funds

Table 2.1.8 Trend Analysis of Source Of Funds

Sources Of Funds
Share holder's Equity Total Loan Funds 24352 21320 17692 12515 5013 100100 2007-08 2008-09 2009-10 2010-11 2011-12 5530 4744 5243

Figure 2.1.7 Trend Analysis of Sources of Funds Interpretation The loan fund is increases six and twelve time in year 2008, 2009 respectively compare to previous year. The company has observed an increase in loan funds as compared to the base year which indicates its growing reputation in the financial market. Hence the overall sources of funds have shown big increase with respect to the base year

2.1.7 Investment

Year Investments

Investment 2008-09 2009-10 6895 8966

2010-11 10813

2011-12 10315

2007-08 100

12000 10000 8000 6000 4000 2000 0 2008-09 2009-10 Investments 2010-11 2011-12

Figure 2.1.8 Trend Analysis of Investment

Interpretation Investment figure shows healthy progress of the company. Investment has increased in 2008, 2009 and after that it has strated decrease in 2011-12 which shows not good growth compared to base year. As they have invested most of their funds in Indian money market mutual funds. Shows that the company has not take risk but the company has invested money for developed its own business.

2.1.8 Application Of Funds

Year Total Fixed Assets Investments Deferred Tax Assets(Net) Net Current Assets

Application of funds 2008-09 2009-10 2010-11 3179 3656 4237 6895 8966 10813 4649 4237 3656 12187 8840 7561

2011-12 4649 10315 3179 6808

Table 2. 10 Trend Analysis of Application Of Funds

FInterpretation Company invested more fund in investments in 2011-12

Company has enough cash in hand so that in any condition company can take
Any Financial decision easily.

2.2 Horizontal Analysis of Balance Sheet

Financial Statement present information for the last five year. Horizontal analysis of Balance Sheet deals with the amount changes and the percentage changes of the items of the Balance Sheet. Financial Statement present comparative information for the current year and the previous year. Horizontal analysis of Balance Sheet deals with the amount changes and the percentage changes of the items of the Balance Sheet.
YEAR

2008-09 293 1.50 12220 5013 5984 1810

2009-10 293.60 1.80 17396 5530 5290 2230

2010-11 490.60 0.70 20829 4744 4874 2764

2011-12 491.70 0.00 23860 5242 5564 3016 100

SOURCES OF FUNDS Share Capital Share application money pending allotment Reserves & Surplus Secured Unsecured Current Liabilities Provisions TOTAL APPLICATION OF FUNDS Total Fixed Assets Investments Deferred Tax Assets(Net) Current Assets, Loans & Advances Inventories Sundry Debtors Cash & Bank Balances Loan & Advances TOTAL
0

1.68

3179 6895 4649 12187 459 4446 1902 9202

3656 8966 4237 8840 606 5016 1938 5425

4237 10813 3656 7561 724 5781 2334 6756

4649 10315 3179 6808 785 7967 3435 8135

100

Table 2.2.1 Horizontal Analysis of Balance Sheet

Chapter 3. Analysis of Profit & Loss Account

Trend Analysis of Profit & Loss Account Horizontal Analysis of Profit & Loss Account

3. ANALYSIS OF PROFIT & LOSS ACCOUNT

3.1. Trend Analysis of Profit & Loss Account
Trend Analysis of Profit & Loss Account involves calculation of percentage changes in the P & L Account items for a no. of successive years. This is carried out by taking the items of the past financial year used as base year and items of other years are expressed as percentage of the base year. Here 2004-05 is taken as base year
Profit & Loss account -- in Rs. Cr. -

Mar '12

Mar '11

Mar '10

Mar '09

Mar '08

12 mths

12 mths

12 mths

12 mths

12 mths

Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments 31,803.40 120.5 31,682.90 524.9 -44.9 26,401.20 100.7 26,300.50 603.3 31.6 23,006.30 84.3 22,922.00 866.7 111 21,612.80 105.5 21,507.30 -480.4 -3.8 17,658.10 165.5 17,492.60 326.9 187

Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses

32,162.90

26,935.40

23,899.70

21,023.10

18,006.50

4,684.90 233.4 13,223.70 3,722.90

3,805.60 199.7 10,937.40 2,780.20

3,768.80 141.4 9,062.80 2,145.30

3,438.80 154 9,249.80 1,687.80

3,139.30 0 7,409.10 299.8

Selling and Admin Expenses

2,057.60

1,703.30

1,491.40

1,523.00

557.8

Miscellaneous Expenses Preoperative Exp Capitalised

1,495.80

1,145.00

921.8

691.4

2,558.00

Total Expenses

25,418.30 Mar '12

20,571.20 Mar '11

17,531.50 Mar '10

16,744.80 Mar '09

13,964.00 Mar '08

12 mths

12 mths

12 mths

12 mths

12 mths

Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax

6,219.70 6,744.60 79.9 6,664.70 739.5 6.6 5,918.60

5,760.90 6,364.20 58.6 6,305.60 600.1 0 5,705.50

5,501.50 6,368.20 99.8 6,268.40 579.6 0 5,688.80

4,758.70 4,278.30 196.8 4,081.50 533.6 0 3,547.90

3,715.60 4,042.50 116.8 3,925.70 456 0 3,469.70

Extra-ordinary items

PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition

5,918.60

5,705.50

5,688.80

3,547.90

3,469.70

1,233.50 4,685.10 20,733.40

861.8 4,843.70 16,765.60

790.8 4,898.00 13,762.70

574.1 2,973.80 13,306.00

406.4 3,063.30 10,824.70

Preference Dividend

490.8

Equity Dividend

1,475.20

981.8

880.9

586

876.5

Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%)

239.3

220.4

128.3

99.6

148.9

24,587.56

24,544.09

14,682.11

14,649.81

14,615.00

19.05

17.74

33.36

20.3

20.96

300

200

300

200

300

Book Value (Rs)

99.04

86.86

120.49

85.42

79.05

Table 3.1.1 Trend Analysis of Profit & Loss Account 3.1.1 Trend Analysis of Total Income and Total Expenditure Table 3.1.2 Trend Analysis of Total Income and Total Expenditure Trend analysis of total income & expenditure 2008-09 2009-10 2010-11 2011-12 100 21023 23899 26935 Total Income 16744 17531 20571 25418 Total Expenditure

30000 25000 20000 15000 10000 5000 0 2008-09 2009-10 2010-11 2011-12 Total Income Total Expenditure

Figure 3.1.1 Trend Analysis of Total Income and Total Expenditure Interpretation Though the sales has been continuously increased from past 3 years but the proportionate expenditure is also rising so overall not making any huge effect on net profit of this company. In 2006-07 Income from mutual fund dividend increased by 93.57 % and Interest on debt instrument 567 % increased in 2005-06 compare to previous year. Percentage Expenditures increasing year by year little more than Income increased, so that Profit margin Decrease year by year.

3.1.2

Profit After Tax Profit after tax 2007-08 100

Year Profit after tax

2008-09 574

2009-10 790

2010-11 861

2011-12 1233

Table 3.1.3Trend Analysis of Profit After Tax

Profit after tax

1400 1200 1000 800 600 400 200 0 2007-08 2008-09 2009-10 2010-11 2011-12 Profit after tax

Figure 3.1.2 Trend Analysis of Profit After Tax

`
Interpretation PAT has been rising over the years when we compare with the expenditure which has been incurred to earn this profit is also rising PAT has been increased all the years because of increasing in sales.

3.1.4 Trend Analysis of net sales and services

Year
Net Sales and Services

2007-08 100

2008-09 21807

2009-10 22922

2010-11 2011-12 26300

31682

Table 3.1.5 Trend Analysis of net sales and services

Net Sales and Services

35000 30000 25000 20000 15000 10000 5000 0 2007-08 2008-09 2009-10 2010-11 2011-12 Net Sales and Services

Figure 3.1.4 Trend Analysis of net sales and services

Interpretation Net sales and services are incresing from 2004 to 2005. From 2005 onward the net sales incresing at a stret line so hear company should tray to increse net sales.

Chapter 5. Ratio Analysis

Introduction To The Ratio Analysis Liquidity Ratios Profitability Ratios

 Finance Structure Ratios Valuation Ratios The Du-Pont Chart

4. RATIO ANALYSIS
5.1.
Introduction Of The Ratio Analysis

Ratio analysis involves establishing a comparative relationship between the components of financial statements. It presents the financial statements into various functional areas, which highlight various aspects of the business like liquidity, profitability and assets turnover, financial structure. It is a powerful tool of financial analysis, which recognizes a companys strengths as well as its potential trouble spots. It can be further classified as in different categories of Ratio. Liquidity Ratios Profitability Ratios

 Asset Turnover Ratios Finance Structure Ratios Valuation Ratios

5.2.

Liquidity Ratio

Liquidity refers to the existence of the assets in the cash or near cash form. This ratio indicates the ability of the company to discharge the liabilities as and when they mature. The financial resources contributed by owners or supplemented by outside debt primarily come in the cash form as under in the balance sheet form. The following Liquidity Ratios are calculated for the company. Current Ratio Quick Ratio Net Working Capital

5.2.1. Current Ratio This ratio shows the proportion of Current Assets to Current Liabilities. It is also known as Working Capital Ratio as it is a measure of working capital available at a particular time. Its a measure of short term financial strength of the business. The ideal current ratio is 2:1 i.e. Current Assets should be equal to Current Liabilities. Current Ratio = Current Assets Current Liabilities

Year Ratios

Current Ratio 2007-08 2008-09 2009-10 100 2 1.6

2010-11 1.55

2011-12 2.3

Table 5. 1 Current Ratio Analysis

2.5

1.5 Ratios 1

0.5

0 2008-09 2009-10 2010-11 2011-12

Figure 5. 1 Current Ratio Analysis Interpretation Current ratio is always 2:1 it means the current assets two time of current liability. After observing the figure the current ratio is fluctuating. In the year 2008 ratio is showing good shine. Hear ratio is increase as a increasing rate from 2004 to 2008.

 Company is no where near the ideal ratio in every year but every company can not achieve this ratio. Current ratio is increased in 2007-08 as compared to 2003-04 because of increase in Inventories 100.96% and 123.77 % increased in Cash and Bank balance. Current ratio is decreased in 2005-06 as compared to the last year because of increase in liabilities by 45.39% and 93.19% in increasing in Provision.

5.2.2 Quick Ratio This ratio is designed to show the amount of cash available to meet immediate payments. It is obtained by dividing the quick assets by quick liabilities. Quick Assets are obtained by deducting stocks from current assets. Quick liabilities are obtained by deducting bank over draft from current liabilities. Quick Ratio = Quick Assets Current Liabilities

Year Ratios

Quick Ratio 2007-08 2008-09 2009-10

1.14 1.42

2010-11
1.53

2011-12
1.90

Table 5. 2 Quick Ratio Analysis

Ratios
2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2008-09 2009-10 2010-11 2011-12

Ratios

Figure 5. 2 Quick Ratio Analysis Interpretation Standard Ratio is 1:1 Companys Quick Assets is more than Quick Liabilities for all these 5 years. In 2007-08 the ratio is increasing because of increase in bank and cash balance. So all the years has quick ratio exceeding 1, the firm is in position to meet its immediate obligation in all the years.

 In 2005-06 quick ratio is decreased because the increase in quick assets is less proportionate to the increased quick liabilities. The Quick ratio was at its peak in 2007-08, while was lowest in the 2004-05. 5.2.3 Networking Captial Networking capital = Current Assets Current Liabilities Net working capital 2007-08 2008-09 2009-10
100 1244 2687

Year Trend

2010-11
3550

2011-12
6203

Table 5.3 Networking Capital

7000 6000 5000 4000 Trend 3000 2000 1000 0 2008-09 2009-10 2010-11 2011-12

Figure 5.3 Networking capital Interpretation

This ratio represents that part of the long term funds represented by the net
worth and long term debt, which are permanently blocked in the current assets.

 It is Increasing Double than year by year because of assets increasing fast than
liabilities.

5.3 Profitability Ratios A company should earn profits to survive and grow over a long period of time. It would be wrong to assume that every action initiated by management of company should be aimed at maximizing profits, irrespective of social as well as economical consequences. It is a fact that sufficient must be earned to sustain the operation of the business to be able to obtain funds from investors for expansion and growth and to contribute towards the responsibility for the welfare of the society in business environment and globalization. The profitability ratios are calculated to measure the operating efficiency of the company. The following Profitability Ratios are calculated for the company. Gross Profit Ratio Operating Profit Ratio Net Profit Ratio Rate Of Return On Investment Rate Of Return On Equity

5.3.1 Gross Profit Ratio This is the ratio expressing relationship between gross profit earned to net sales. It is a useful indication of the profitability of business. This ratio is usually expressed as percentage. The ratio shows whether the mark-up obtained on cost of production is sufficient however it must cover its operating expenses. Gross Profit Ratio = Gross Profit Sales Year Trend Gross profit ratio analysis 2007-08 2008-09 2009-10 2010-11
9.7 10.4 10.2

X 100

2011-12
10.1

Table 5.4 Gross Profit Ratio Analysis

Gross profit ratio analysis

35.0 34.0 33.0 32.0 31.0 30.0 29.0 28.0 27.0 2003-04 2004-05 2005--06 2006-07 2007-08 29.8 31.7 Trend 32.6 33.7 33.0

Figure 5.4 Gross Profit Ratio Analysis Interpretation GP Ratio shows how much efficient company is in Production. GP is decreasing 2007-08 due to higher production cost. Gross sales and services are increasing year by year so in effect Gross profit ratio is icreasing year by year up to 2007.

5.3.2 Operating Profit Ratio

This ratio shows the relation between Cost of Goods Sold + Operating Expenses and Net Sales. It shows the efficiency of the company in managing the operating costs base with respect to Sales. The higher the ratio, the less will be the margin available to proprietors. Operating Profit Ratio = COGS+Operating expences Sales X 100

Year Trend

Operating ratio 2007-08 2008-09 2009-10

22.1 23.9

2010-11
21.90

2011-12
19.6

Table 5.5 Operating Profit Ratio Analysis

30 25 20 15 10 5 0 2007-08 2008-09 2009-10 2010-11 2011-12

Figure 5.5 Operating Profit Ratio Analysis Interpretation Operating ratio is lowest during current 2007. This shows that the expenses incurred to earn profit were less compared to the previous two years. Operating ratio is decreses feom 2004 to anward decreasing rate.

 From the graph conclusion is made that company is not on the right track by efficiently cutting down manufacturing, administrative and selling distribution expenses.

5.3.3 Net Profit Ratio = Net profit Net sales Net profit ratio Year Trend Table 5.6 Net Profit Ratio Analysis
25

x 100

2011-12
14.7

2010-11
18.4

20082009-2010 09
21.3 13.8

20

15

10

0 2011-12 2010-11 2009-2010 2008-09

Figure 5.6 Net Profit Ratio Analysis Interpretation After observing the figure the ratio is fluctuating. Company has rise in its net profit in 2006-07 as compared to the previous year because the company has increased its sales 41.45% . Though the companys sale is continuously rising but the net profit is not so much increased so management should take some steps to decrease its expenses. Sales is decrease in 2008 compare to 2007 The overall ratio is showing good position of the company.

5.3.4 Return On Investment Rate of Return on Investment indicates the profitability of business and is very much in use among financial analysts. ROI= EBIT Total Assets X 100

Year Trend

Return On Investment 2011-12 2010-11 2009-2010 2008-09

22.7 24.4 27.4 24.4

Table 5.7 Rate of Return on Investment Ratio Analysis

Figure 5.7 Rate of Return on Investment Ratio Analysis Interpretation From the above observation it can be seen that ratio is fluctuating. In the year 2005-06 Rate of Return on Investment is slightly increase as compared to previous year Ratio is decreasing after 2005 at adecreasing rate because of asseets increase compare to sales. The companys Total Assets is increased to 86.51%, so ROI is decreased so conclusion made that company is not utilizing its assets and investment efficiently.

5.3.5 Rate of Return on Equity Rate of Return on Equity shows what percentage of profit is earned on the capital invested by ordinary share holders. Rate of Return on Equity = Profit for the Equity Net worth

Year Ratio

Rate of return on equity 2007-08 2008-09 2009-10

100 2 3

2010-11
2

2011-12
3

Table 5.8 Rate of Return on Equity Ratio Analysis

3.5 3 2.5 2 Ratio 1.5 1 0.5 0 2008-09 2009-10 2010-11 2011-12

Figure 5.8 Rate of Return on Equity Analysis Interpretation ROE is remaining almost same Between 2005 to 2007, but it is decrease in2008 because the the company has increase share capital but profit not getting that much increase. Company is getting same return on equity. As a result the share holders are getting higher return every year and investment portfolio scheme selection was a judicious decision taken by the company. This happens because Profit and Share Capital both increasing same way.

5.4 Asset Turnover Ratios

Asset Turnover Ratio are basically productivity ratios which measure the output produced from the given input deployed. This relationship is shown as under Productivity = Output Input Assets are inputs which are deployed to generate production (or sales). The same set of assets when used intensively produces more output or sales. If the asset turnover is high, it shows efficient or productive use of input. The following Assets Turnover Ratios are calculated for the company. Total Assets Turnover Net Fixed Assets Turnover Net Working Capital Turnover Inventory Turnover Ratio Debtor Turnover (in times)

5.4.1 Total Asset Turnover Ratio The amounts invested in business are invested in all assets jointly and sales are affected through them to earn profits. Thus it is the ratio of Sales to Total Assets. .It is the ratio which measures the efficiency with which assets were turned over a period. Total Asset Turnover Ratio = Sales Total Assets Year Trend Total assets turnover ratio 2007-08 2008-09 2009-10 2010-11
100 1.23 0.98 1.012

2011-12
1.07

Table 5.9 Total Asset Turnover Ratio Analysis

1.4 1.2 1 0.8 0.6 0.4 0.2 0 2008-09 2009-10 2010-11 2011-12 Ratio

Figure 5.9 Total Asset Turnover Ratio Analysis Interpretation The total assets turnover ratio is almost same in all years. The Assets turnover Ratio is near by 1.5 in all 5 years which shows effective utilization of assets from the companys view point. In the year 2005-06 ratio is increased because of companys total assets is

increased by 24.52%, but sales is increased by 29.92%.So the ratio is increased but in current year it is decreased because sale increasing by 41.45% and Assets increasing by 49.28%.

5.4.2 Net Fixed Assets Turnover To ascertain the efficiency & profitability of business the total fixed assets are compared to sales. The more the sales in relation to the amount invested in fixed assets, the more efficient is the use of fixed assets. It indicates higher efficiency. If the sales are less as compared to investment in fixed assets it means that fixed assets are not adequately utilized in business. Of course excessive sale is an indication of over trading and is dangerous. Net Fixed Assets Turnover Ratio = Sales Net Fixed Assets Year Time Total fixed assets turnover ratio 2008-09 2009-10 2010-11 2011-12
6.79 6.29 6.15 6.8

Table 5.10 Net Fixed Asset Turnover Ratio Analysis

7 6.8 6.6 6.4 6.2 6 5.8 2008-09 2009-10 2010-11 2011-12 Total fixed assets turnover ratio

Figure 5.10 Net Fixed Assets Turnover Ratio Analysis

Interpretation

 Here the ratio of Net Fixed Asset Turnover is continuously increasing up to 2006 and after that it has strated decline.Because sales as wellas assets boths are equally increase. Net Fixed Assets Turnover Ratio is increasing year by year because of Sale is increasing continuously. It indicates that the company maximizes the use of its fixed assets to earn profit in the business so that whatever amount is invested by company in fixed asset, gives maximum productivity which helps to increase sales as well as profit.

5.4.3 Inventory Turnover Ratio Inventory Turnover Ratio: The no. of times the average stock is turned over during the year is known as stock turnover ratio. Inventory Turnover Ratio = COGS Average stock Year Time Total Inventory turnover ratio 2007-08 2008-09 2009-10 2010-11 2011-12

Table 5. 11 Inventory Turnover Ratio Analysis

Total Inventory turnover ratio

35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 2003-04 2004-05 2005--06 2006-07 2007-08 22.6 30.3 24.3 19.8 16.0 Time

Figure 5. 11 Inventory Turnover Ratio Analysis Interpretation From the above calculation we can say that the ratio is decreasing. It mens inventory is not spdly convert in to sales. So that it is bad for the company. In 2003-04 ratio is increased as compared to after that all year so management should take care about good efficiency of stock management. But in 2006 onward ratio is decreasing because of increase in COGS. So company should devise a systematic operational plan for inventory control.

5.4.4 Average age of Inventories

This ratio indicates the waiting period of the investments in inventories and is measured in days, weeks or months. Inventory turnover and average age of inventories are inversely related. Average age of Inventories Ratio = 360 days Inventory Turnover Year Days Average age of Inventories 2007-08 2008-09 2009-10 2010-11
100

2011-12

Table 5. 12 Average age of Inventories Ratio Analysis

Average age of Inventories

25.0 22.4 20.0 15.0 10.0 5.0 0.0 2003-04 2004-05 2005--06 2006-07 11.9 15.9 18.2 14.8 Days

2007-08

Figure 5. 12 Average age of Inventories Ratio Analysis Interpretation This graph shows that inventory convert into cash in short time period. Inventory turnover ratio is low in 2003-04 So In this year inventory is converted in cash 11.9 days. The inventory conversation in to cash time duration is increases from 2004 to every year so the management should tray to efficient inventory conversation,so it will It shows that company effectiveness utilizing its Inventories in quickly.

5.4.5 Debtor Turnover Ratio

Debtor turnover ratio: The debtor turnovers suggest the no. of times the amount of credit sale is collected during the year. Debtors Turnover Ratio = Sales Average Debtors Year Time Debtors turn over in (times) 2007-08 2008-09 2009-10 2010-11
100

2011-12

Table 5. 13 Debtor Turnover Ratio Analysis

Debtor turnover ratio

6.0 5.0 4.0 3.0 2.0 1.0 0.0 2003-04 2004-05 2005--06 2006-07 2007-08 1.5 4.9 3.8 3.7 3.7

Time

Figure 5.13 Debtor Turnover Ratio Analysis Interpretation Debtor turnover indicates how quickly the company can collect its credit sales revenue. Here the ratio is continuously decreasing, so that the companys collection of credit sales is efficient management is improved its collection period every year so it shows that the management have an ability to collect its money from his debtors. So they can invest that money on Assets, HRD and other investments.

5.5 Finance Structure Ratios

Finance Structure Ratios indicate the relative mix or blending of owners funds and outsiders debt funds in the total capital employed in the business. It should be noted that equity funds are the prime fund which increase progressively through reinvestment of profits, while outside debt funds are supplementary funds and are added at the discretion of the management. The following Finance Ratios are calculated for the company. Debt Ratio Debt-Equity Ratio Interest Coverage Ratio

5.5.1 Debt Ratio Debt ratio indicates the long term debt out of the total capital employed. Debt Ratio = Long Term Debt Total Capital Employed

Table 5. 14 Debt Ratio Analysis Debt Ratio 2008-09

Debt Ratio
0.4
0.3 0.2 0.1 0 2003-04 2004-05 2005-06 2006-07 2007-08
Trend

2007-08 Trend

2009-10

2010-11

2011-12

Figure 5. 14 Debt Ratio Analysis Interpretation From the above calculation it seems that the ratio is fluctuating. In 2007-08 the ratio is increased as compared to the previous year because the total loan funds are increased by 661.56%. In 2005-06 Company has issued equity Share and also loan is decreased. Its means that now company trying to increasing Trading on equity.

5.5.2 Debt-Equity Ratio This ratio is only another form proprietary ratio and establishes relation between the outside long term liabilities and owner funds. It shows the proportion of long term external equity & internal Equities. Debt Equity Ratio = Total Long Term debt Share holder equity Table 5.15 Debt - Equity Ratio Analysis Debt- Equity Ratio Year 2007-08 2008-09 2009-10 100 Trend

2010-11

2011-12

Debt equity ratio

0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 0.376

Trend

0.027

0.012

0.011

0.03

2003-04 2004-05 2005-06 2006-07 2007-08

Figure 5. 15 Debt-Equity Ratio Analysis Interpretation It shows companies accumulated more equity than required company has to refocus to its strategic policies and plans and try to accumulate more debt funds in future so as to make the balance between debt and equity. There is only current year ratio is some what sufficient.

5.5.3 Interest Coverage Ratio Interest Coverage Ratio: The ratio indicates as to how many times the profit covers the payment of interest on debentures and other long term loans hence it is also known as times interest earned ratio. It measures the debt service capacity of the firm in respect of fixed interest on long term debts. Interest Coverage Ratio = EBIT Interest Year Trend Interest coverage ratio 2008-09 2009-10
24.2 58.3

2010-11
99.3

2011-12
78.9

Table 5. 16 Interest Coverage Ratio Analysis

Trend
120 100 80 60 40 20 0 2008-09 2009-10 2010-11 2011-12 Interest coverage ratio Trend

Figure 5. 16 Interest Coverage Ratio Analysis Interpretation After observing the figure it shows that the ratio has mix trend up to 2006. In the year 2007-08 company has not much debt compare to EBIT so interest coverage ratio is high but in 2007-08 company increasing its external debt so company have pay more interest among its earnings so interest coverage ratio falling down compare to previous year.

5.6 Valuation Ratios

Valuation ratios are the result of the management of above four categories of the functional ratios. Valuation ratios are generally presented on a per share basis and thus are more useful to the equity investors. The following Valuation Ratios are calculated for the company. Earnings Per Share Dividend pay-out Ratio P/E Ratio Profit Margin

5.6.1 Earnings Per Share This ratio measures profit available to equity share holders on per share basis. It is not the actual amount paid to the share holders as dividend but is the maximum that can be paid to them. Earnings per Share = Net Profits for Equity Shares No. of Equity Shares Table 5.17 Earnings per Share Earnings Per Share 2008-09 2009-10 20.30 33.36

Year Trend(Rs.)

2010-11 17.74

2011-12 19.05

Figure 5.17 Earnings per Share Ratio Analysis

35 30 25 20 15 10 5 0 2008-09 2009-10 2010-11 2011-12 Earnings Per Share Trend(Rs.)

Interpretation Earninig per share is increasing as a increasing rate it is good for invester and share holder. In 2007-08 Profit is increasing by 42.30% and No Equity share Holder increased by 2.03%, Due to that EPS Ratio is increasing in Current year.

5.6.2 Dividend Pay-out Ratio This ratio indicate split of EPS between Cash Dividends and reinvestment of Profit. If the Company has Profitable projects than it will prefer to keep dividend pay out ratio lower. Dividend pay-out Ratio = Dividend per Share in Rs. Earnings per share in Rupees Table 5. 18 Dividend Pay-out Ratio Analysis Dividend pay-out Ratio Year 2007-08 2008-09 2009-10 100 Trend(Rs.)

2010-11

2011-12

Dividend pay out ratio

5 4 3 2 1 0 2003-04 2004-05 2005-06 2006-07 2007-08 1.54 4.68 3.77 2.94 3.43
Trend(Rs.)

Figure 5. 18 Dividend Pay-out Ratio Analysis Interpretation In all years there is fluctuation in ratio. If the company wants to prosper in future with flying colors then ideally more amounts should be reinvested in the business rather than distributing as dividend. In 2005-06 company has reinvested in business for expansion.

5.6.3 P/E Ratio P/E Ratio is computed by dividing the current market price of a share by earning per share. This is Popular measure extensively used in Investment analysis. P/E Ratio = Current Market Price of Share Earnings per Share Table 5. 19 P/E Ratio Analysis P/E Ratio Year Trend
PE ratio
40 30 19.91 20 10 0 20003-04 2004-05 2005-06 2006-07 200708 15.85 11.3 10.3
Trend

31.36

Figure 5. 19 P/E Ratio Analysis Interpretation In 2004-05 P/E Ratios is high means Share price of company is Stable and Share holder are interested to invest in the companys share. But in 2006-07 P/E Ratio is Falling down word So company share price is not as stable as compare to previous year.

5.6.4 Profit margin ratio Profit margin ratio= PAT/Sales*100

Year Net Sales and Services PAT Ratio

2008-09 21507 2973

13.8

2009-10 22922 4898

21.3

2010-11 26300 4843

18.4

2011-12 31682 4685

14.7

Table 5. 20 Profit margin ratio

35000 30000 25000 20000 15000 10000 5000 0 2008-09 2009-10 2010-11 2011-12 Net Sales and Services PAT Ratio

Figure 5. 20 Profit margin ratio Interpretation The ratio is shows equal for middle three year it means the company has maintain the equal ratio for year 2005 to 2007. The ratio shows decline in current year it is bad sign for the company.

5.7 The Du-Pont Chart

ROA (IN %) 2007-08 2006-07 2005-06 2004-05 2003-04 30.88 53 63.08 67.8 75.6

Profit margin (in %) 2007-08 2006-07 2005-06 2004-05 2003-04 0.16 0.20 0.19 0.20 0.18

Assets turn over(in Rs.) 2007-08 2006-07 2005-06 2004-05 2003-04 1.93 2.65 3.32 3.39 4.20

Profit after tax 2007-08 2006-07 2005-06 2004-05 2003-04 32829 29421 20674 16285 10315

Sales 2007-08 199575 2006-07 149751 2005-06 106164 2004-05 81596 2003-04 58648

Sales 2007-08 2006-07 2005-06 2004-05 2003-04 199575 149751 106164 81596 58648

Asset 2007-08 2006-07 2005-06 2004-05 2003-04 103160 56535 31951 24049 13969

Table 5.20 Do-Pont chart

Interpretation DuPont chart shows that how profitability is there in the business. When profit margin is multiplied by total Assets turnover ratio that gives ROA. Profit Margin is obtained by dividing PAT by Total sales. Total Asset Turnover is obtained by the sales divided total assets.

It is like a Tree having various braches connected to each other. It show companys efficiency in making right decision of Investment Total Assets turnover is decreasing in current year because of huge increase in net fix assets and net current asset which is more than double compare to previous year. The Chart shows the total assets turnover that indicate the companys efficiency in utilizing its assets. So overall it can be interpreted that the companys ROA is good .
Company should try its best to increase sales and profit. The Du point chart Shows the complete picture of companys performance.

Chapter 6. Scenario Analysis

Company Analysis Share Holding Pattern

Chapter 6. Scenario Analysis

Company Analysis Share Holding Pattern

6. SCENARIO ANALYSIS

6.1.

Business Unit Performance

6.2.

Company Analysis

6.2.1. Share Holding Pattern

FINDINGS

Though the sales has been continuously increased from past 3 years but the proportionate expenditure is also rising so overall not making any huge effect on net profit of this company.

Hear the in 2005 company has reinvest profit for business expansion it is good shine for the company. The total expenditure is near by 80% of total income in every year. Every year PBT is near by 20% of total income. Fixed assets are efficiently utilized by the company due to which the profit of the company is increasing every year.

Liabilities is incressing rate it mean company has to developed business. And purchase raw material on credit basis.

Company has enough cash in hand so that in any condition company can take
Any Financial decision easily. All the years has quick ratio exceeding 1, the firm is in position to meet its immediate obligation in all the years. GP Ratio shows how much efficient company is in Production.

SUGGESTION
The companys future plans for expansion seem clear due to increased investment in Fixed Assets .Efficient use of these Assets has enabled the company to observe an increased profit.

Though the companys sale is continuously rising but the net profit is not so much increased so management should take some steps to decrease its expenses.

Company should try its best to increase sales and profit.

The profit margin ratio shows decline in current year so that company should tray to increase profit after tax Current ratio is very good it is 2.13:1 so company has fully utilize cash liquidity for business development.

Bibliography

BIBLIOGRAPHY
Books:
Annual Report of Wipro Limited for Financial Year 2004-05, 2006-07,2007-08. Narayanaswamy R., (1998): Financial Accounting: A Managerial Perspective, Prentice-Hall of India Private Ltd, New Delhi., Third Edition, Reprint 2003

 Khan M.Y. and Jain P.K., (1992):Financial Management, Tata McGraw-Hill Publishing Co Ltd., New Delhi., Third Edition. .

Websites
http://www.wipro.com http://www.bseindia.com//shareholding/shareholding_new.asp http://www.cmie.com//indutries//gdp.asp http://www.wipro.com/investors/annual_reports.htm http://www.wipro.com/investors/pdf_files/AR07_08_first_book_final.pdf http://www.wipro.com/investors/pdf_files/AR07_08_second_book_final.pdf http://www.wipro.com/investors/pdf_files/Wipro_AR_2006_07_Part_1.pdf http://www.wipro.com/investors/pdf_files/Wipro_AR_2006_07_Part_2.pdf http://www.wipro.com/investors/pdf_files/Wipro_annual%20report_2005-06.pdf http://www.wipro.com/investors/pdf_files/Wipro_Annual_Report_2004_2005.pdf