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Contents
Introduction of Bombay Dyeing ................................................................................................. 3 Introduction of Raymond Group................................................................................................ 4 Market Size ................................................................................................................................ 6 Market Share ............................................................................................................................. 6 Balance Sheet of Bombay Dyeing .............................................................................................. 7 Profit and Loss A/c of Bombay Dyeing ....................................................................................... 8 Balance Sheet of Raymond Group ............................................................................................. 9 Profit and Loss A/c of Raymond Group ................................................................................... 10 Liquidity Ratios ......................................................................................................................... 11 Efficiency Ratios ....................................................................................................................... 12 Profitability Ratios.................................................................................................................... 14 Market Valuation Ratios .......................................................................................................... 16
Business activities
Textiles It manufactures wide range of cotton suiting, polyester cotton suiting, shoe lining and duck fabrics, satin furnishings, yarn dyed fabrics, towels, table tops and napkins, satin bed sets, etc. Textile manufacturing is main activity of Bombay Dyeing with 5 manufacturing facilities confirming to international standards. Chemicals Bombay Dyeing is the largest manufacturer of Dimethyl Terephthalate (DMT) in India. It has a capacity to manufacture 165000 tonnes per annum (TPA). DMT is raw material for manufacturing polyester fiber, film, filament & yarn and engineering plastics
Competitors
Grasim Voltas 3M India
Market Share
The current market capitalization stands at Rs.1,337.31 crores.
Competitors
Premium wear, Inc. Sunrise brands, LLC. MAST Industries, Inc.
Market Share
With over 60% market share in India, Raymond Ltd. is one of the largest integrated manufacturer of worsted fabric in the world. The company comprises the following divisions Textiles o With a capacity of 38 million meters in wool & wool-blended fabrics, Raymond commands over 60% market share in worsted suiting in India and ranks amongst the first three fully integrated manufacturers of worsted suiting in the world. Engineering o JK Files (India) Ltd. and Ring Plus Aqua Ltd. are the group companies that are engaged in the manufacture of precision engineering products such as steel files, cutting tools, hand tools, agri tools and auto components. Aviation o Raymond Ltd. is one of the first Corporate House in India to launch Air Charter Services in India in 1996 and since then it has been always a way ahead for Raymond Aviation.
Market Size
The size of Indias textile market in 2011 was US$ 89.0 billion; the market is expected to expand at a compound annual growth rate (CAGR) of 10.1 per cent over 2009 21.
Market Share
In 2012, apparel had a share of 69 per cent of the overall market; textiles contributed the remaining 31 per cent.
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
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Liquidity Ratios
It measures efficiency of the company to meet its short term obligations. Liquidity parameter will be studied with profitability parameter so that while ensuring liquidity, the company does not put profitability at stake.
Current Ratio
It measures relationship between current assets and current liabilities.
Quick Ratio
Its more stringent test of liquidity and is also known as acid test or liquid ration
Cash Ratio
This is final test of liquidity since we use only the readily available cash reserve to service the current liabilities. Ratios Current Ratio Quick Ratio Cash Ratio Bombay Dyeing 1.72 0.87 0.04 Raymond 1.18 0.76 0.02
Interpretation
A look at liquidity position of Bombay Dyeing compared to Raymond implies that it is efficient. In case of Bombay Dyeing, the current ratio is 1.72:1. It implies that current assets are 1.72 times the current liabilities. Similarly, in case of Raymond, current assets are 1.18 times the current liabilities. The liquidity position, as measured by current ratio, is better in the case of Bombay Dyeing as compared to Raymond. This is because the safety of margin in the former is substantially higher than the latter. The ideal current ratio is 2:1. According to this convention, both the firms are inadequately liquid. But, this will differ depending on the development of capital market and the availability of long term funds to finance the assets. Similarly, if we look at quick ratio of Bombay Dyeing and Raymond, they are 0.87 and 0.76 respectively. Ideal quick ratio is 1:1. According to the convention, the reason of having low quick ratio is that a large part of the current assets of the firm is tied up in slow moving and unsaleable inventories and slow paying debts. The firms will find it difficult to pay its current liabilities. If the companies install some inventory management practices then these ratios would further increase. Bombay Dyeings liquidity efficiency compared to Raymond is further proved with cash ratio which shows that the company invest some amount of additional cash in government securities. With an efficiency improvement parameter, the overall liquidity of both the companies will also further improve.
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Efficiency Ratios
Efficiency ratios which is also known as activity ratios or turnover ratios which will help us to know how efficient the business is in employing all its available resources. They help in answering important questions like whether each type of assets that are reported in the Balance Sheet are high, low or reasonable in view with current level of sale. Company Inventory turnover ratio Debtors turnover ratio Creditors turnover ratio Fixed assets turnover ratio Total asset turnover ratio Bombay dyeing 1.81 13.15 1.78 0.88 Raymond 4.04 5.03 1.10 1.00
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Overall interpretation
After seeing the efficiency ratios above, we can interpret that Debtors Turnover Ratio, Fixed Asset Turnover Ratio and Total Asset turnover ratios are higher compared to Raymond company which shows that company is efficient. Although inventory turnover ratio is lower of Bombay dyeing company, company is taking measures to improve the same to improve the efficiency parameter of the company which would further help to improve the overall liquidity position in future of the company.
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Profitability Ratios
Profitability Ratios are significant to all stakeholders of the company since it motivates the stakeholders to have relationships with the Company.
Interpretation
The Gross Profit Ratio of Bombay Dyeing is more than that of Raymond. This shows that Bombay Dyeing is able to meet most of its Prime Cost Expenses and generate more profit compared to Raymond. Also Gross Profit Ratio of 9.72 for Bombay Dyeing is a sign of good management as it implies that the cost of production of the firm is relatively low. It also indicates that the Sales Price of Bombay Dyeing is higher than that of Raymond. Earnings Power Ratio considers all income earned by the company, not just income from operating activity. This gives a more complete picture of how the company makes money. The Earnings Power Ratio of Bombay Dyeing is higher than that of Raymond which shows Bombay Dyeing is able to make more money from all its sources compared to Raymond.
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Both Companies Net Profit Margin is Low and the Company should take necessary steps so that their profitability increases. Though Bombay Dyeings Net Profit Margin Ratio is positive 3.18, still its quite low. Operating Expense Ratio of Bombay Dyeing is more than Raymond shows that the Operating Expenses of Bombay Dyeing are more than Raymonds. It means that Raymonds has 50 % to meet other financial liabilities compared to Bombay Dyeing which has approximately 20%.
Return On Equity
It measures the return of the owners investment in the firm. Both equity and the preference shareholders are considered. After calculating return on equity, it should be compared industry rivals. Bombay dyeing has a return on equity of around 182 % whereas Raymonds has a return on equity of around -77 %. This clearly indicates that Bombay Dyeing has performed better than Raymonds over the past year. There is no preference share capital in both the companies. The net profit of Raymond is negative that why the companys return on equity is negative.
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P/V ratio
Bombay dyeing: 64.80/3.67=17.656 Raymond: 305/-7.79=-39.15 Bombay dyeing has a higher P/E ratio compared to Raymond which is in negative, thats because the earning per share of Raymond is itself negative.so it can be summed up that Bombay Dyeings P/E ratio its MPS is higher signifying that Bombay Dyeings stocks are more attractive, it signifies investors confidence of investing in this company.
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