CHAPTER FOUR

ANALYSIS AND INTERPRETATION

Table 4.1
Comparative Income Statement for March Ending 2011 and March
Ending 2012

Analysis

From the above information it is noted that the Gross Sales has increased by 11.75%
for the year ending 31 March 2012 compared to the previous year ending 2011. It is
also observed that the total revenue has increased by 11.97%, Change in Inventory has
decreased by 25.15%, the profit before tax has drastically decreased by almost 400%
and due to this the profit after tax has also drastically decreased by 491%.

Interpretation

The gross sales has witnessed a marginal growth. The total expenses has also seen little more
growth compared to gross sales. The PBT has substantially come down because the total
expenses of the company has mounted for the year ending 2012. The change in inventory has
seen a negative growth during the year. The employee benefit expenses has also growth may
be due to increase in salaries and related benefits for the employees. The profit after tax has
also decreased owning to the fact that there is substantial loss for the year ending 2012.
 Table 4.2
Comparative Income Statement for March Ending 2012 and March
Ending 2013

Analysis

From the above information it is noted that the Gross Sales has increased by 14.12%
for the year ending 31 March 2013 compared to the previous year ending 2012. It is
also observed that the total revenue has increased by 12.34%, Change in Inventory
has increased drastically by 273.42%, the profit before tax has increased by 77.71%
and the profit after tax has also increased by 73.36%.

Interpretation

The gross sales has witnessed more than marginal growth. The total expenses has also
seen little more growth compared to gross sales. The PBT has increased because the
total expenses of the company has come down compared for the year ending 2012.
The change in inventory has seen a substantial increase growth during the year ending
2013. The company has been able to reduced finance cost. However depreciation and
amortization expenses is bit high. The employee benefit expenses has also growth
may be due to increase in salaries and related benefits for the employees. The profit
after tax has also increased owning to the fact that there is good growth for the year
ending 2013.

Table 4.3
 Comparative Income Statement for March Ending 2013 and March
Ending 2014

Analysis

From the above information it is noted that the Gross Sales has decreased marginally
by Just 1% for the year ending 31 March 2014 compared to the previous year ending
2013. t is also observed that the total revenue has marginally increased by Just 1%,
Change in Inventory has increased drastically by 108%, the profit before tax has
decreased by 12% and the profit after tax has also decreased by 27%.

Interpretation

The gross sales has witnessed just marginal decreased growth because the order
growth for the company for the year ending 2014 was very poor. Interestingly, the
other income has grown by 46% for this period The total expenses has also seen little
more growth compared to gross sales. The PBT has increased because the total
expenses of the company has come down compared for the year ending 2012. The
change in inventory has seen a substantial increase growth during the year ending
2013. The company has been able to reduced finance cost. However depreciation and
amortization expenses is bit high. The employee benefit expenses has also growth
may be due to increase in salaries and related benefits for the employees.

Table 4.4
Comparative Income Statement for March Ending 2014 and March
Ending 2015
Analysis

From the above information it is noted that the Gross Sales has increased by 39% for
the year ending 31 March 2015 compared to the previous year ending 2014. It is also
observed that the total revenue has increased by 40.56%, Change in Inventory has
decreased drastically by 151.60%, the profit before tax has drastically increased by
298.43% and the profit after tax has also drastically increased by 254.17%.

Interpretation

The gross sales and the total revenue has a healthy increase, because the order growth
for the company for the year ending 2015 was good. The change in inventory has seen
a substantial decrease for the year ending 2015 as the closing stock was more than the
opening stock. The PBT has drastically increased because the total expenses over total
revenue has come down compared for the year ending 2015.. The company has been
able to reduced finance cost. The employee benefit expenses has also growth may be
due to increase in salaries and related benefits for the employees. The profit after tax
has drastically increased owning to the fact that there is good order growth for the
year ending 2015.

Table 4.5
Comparative Income Statement for March Ending 2015 and March
Ending 2016
Analysis

From the above information it is noted that the Gross Sales has decreased by 9% for
the year ending 31 March 2016 compared to the previous year ending 2015. It is also
observed that the total revenue has decreased by 8%, variables like cost of raw
materials, finance cost have decreased by 21% and 64% respectively, the profit before
tax has increased by 9% and the profit after tax has also increased by 71%.

Interpretation

The gross sales has witnessed just marginal decreased growth because the order
growth for the company for the year ending 2016 was very poor. Interestingly, the
other income has grown by 133% for this period due to increase in income other than
sales. The total expenses has also seen little more negative growth compared to gross
sales. The PBT has increased because the total expenses of the company has come
down compared for the year ending 2016. The change in inventory has seen a
marginal growth for the year ending 2016. The company has been able to reduced
finance cost to a large extent . The employee benefit expenses has almost remained
same may be due to planned control over salaries and related benefits for the
employees. The profit after tax has also increased owning to the fact that there is good
order growth for the year ending 2016.

Table 4.6
Common-Size Income Statement for March Ending 2012.
Analysis

From the above information it is noted that the cost of raw material constituted 48%
of the net sales. The employee benefit expenses were 11%. The finance cost was 5%
and Depreciation and amortization expenses were 4%. The other expenses is the
second biggest component of expenditure with 33% of the total net sales

Interpretation

From the above analysis the cost of material constitutes a major component among
the expenses. The employee benefit expenses, finance cost and depreciation,
amortization cost constitute small percentages. However, the other expenses
component has also taken a major place in the total expenses

Table 4.7
Common-Size Income Statement for March Ending 2013.
Analysis

From the above information it is noted that the cost of raw material constituted 42%
of the net sales. The employee benefit expenses were 12%. The finance cost was 5%
and Depreciation and amortization expenses were 4%. The other expenses is the
second biggest component of expenditure with 34% of the total net sales

Interpretation

From the above analysis the cost of material constitutes a major component among
the expenses. The employee benefit expenses, finance cost and depreciation,
amortization cost constitute small percentages. However, the other expenses
component has also taken a major place in the total expenses
 Table 4.8
Common-Size Income Statement for March Ending 2014.

Analysis

From the above information it is noted that the cost of raw material constituted 52%
of the net sales. The employee benefit expenses were 14%. The finance cost was 5%
and Depreciation and amortization expenses were 4%. The other expenses is the
second biggest component of expenditure with 35% of the total net sales

Interpretation

From the above analysis the cost of material constitutes a major component among
the expenses forming more than half of the total expenses . The employee benefit
expenses, finance cost and depreciation, amortization cost constitute small
percentages. However, the other expenses component has also taken a major place in
the total expenses
 Table 4.8
Common-Size Income Statement for March Ending 2015.

Analysis

From the above information it is noted that the cost of raw material constituted 40%
of the net sales. The employee benefit expenses were 12%. The finance cost was 5%
and Depreciation and amortization expenses were 3%. The other expenses is the
second biggest component of expenditure with 30% of the total net sales

Interpretation

From the above analysis the cost of material constitutes a major component among
total expenses . The employee benefit expenses, finance cost and depreciation,
amortization cost constitute small percentages. However, the other expenses
component has also taken a major place in the total expenses
 Table 4.8
Common-Size Income Statement for March Ending 2016.

Analysis

From the above information it is noted that the cost of raw material constituted 35%
of the net sales. The employee benefit expenses were 13%. The finance cost was 5%
and Depreciation and amortization expenses were 3%. The other expenses is the
second biggest component of expenditure with 34% of the total net sales

Interpretation

From the above analysis the cost of material constitutes a major component among
total expenses, but the cost of raw materials has decreased compared to the last year .
The employee benefit expenses, finance cost and depreciation, amortization cost
constitute small percentages. However, the other expenses component has also taken a
major place in the total expenses
 Table 4.9
Common-Size Balance Sheets for March Ending 2011 and 2012.

Analysis

From the above information it is noted that the Shareholders Funds Constituted 30%
of the total Equity and Liabilities for the year ending 31 March 2012. Likewise 26%
Constituted Non-Current Liabilities and 44% Constituted Current Liabilities of the
total Equity and Liabilities. On the Other hand, 61% Tangible and Intangible Assets,
while 34% Constituted Current Assets in the Total Assets.
 Pie Chart 4.1
Common-Size Balance Sheets for March Ending 2011 and 2012.

Interpretation

From the above analysis, the reserves of the company have been kept healthy at
26%. The long term borrowings in also good taking the advantage of leverage.
The short term provisions is nil which show that the company has no dues for
short term. More than half of the total assets constitutes only Tangible as the
company deals with major tangible spare parts. The cash and bank balances is
just very minimal taking the advantage of profitability

Table 4.10
 Common-Size Balance Sheets for March Ending 2012 and 2013.

Analysis

From the above information it is noted that the Shareholders Funds Constituted 49%
of the total Equity and Liabilities for the year ending 31 March 2013. Likewise 21%
Constituted Non-Current Liabilities and 30% Constituted Current Liabilities of the
total Equity and Liabilities. On the Other hand, 63% Tangible and Intangible Assets,
while 33% Constituted Current Assets in the Total Assets.
 Pie Chart 4.2
Common-Size Balance Sheets for March Ending 2012 and 2013.

Interpretation

From the above analysis, the reserves of the company have been kept very healthy at
45 %. The other long term liabilities and Long term provision have been nil so the
company need not have any fixed bearing charge on these. The short term provisions
is nil which show that the company has no dues for short term. More than half of the
total assets constitutes only Tangible as the company deals with major tangible spare
parts. The cash and bank balances is just very minimal taking the advantage of
profitability
 Table 4.11
Common-Size Balance Sheets for March Ending 2013 and 2014.

Analysis

From the above information it is noted that the Shareholders Funds Constituted 42%
of the total Equity and Liabilities for the year ending 31 March 2014. Likewise 16%
Constituted Non-Current Liabilities and 39% Constituted Current Liabilities of the
total Equity and Liabilities. On the Other hand, 57% Tangible and Intangible Assets,
while 38% Constituted Current Assets in the Total Assets.

Pie Chart 4.3

Common-Size Balance Sheets for March Ending 2013 and 2014.
Interpretation

From the above analysis, the reserves of the company have been kept very healthy at
42 %. The other long term liabilities and Long term provision have been nil so the
company need not have any fixed bearing charge on these. The short term provisions
is nil which show that the company has no dues for short term. Inventory has also
taken a major place due to increase in orders for the year ending 2014. More than half
of the total assets constitutes only Tangible as the company deals with major tangible
spare parts. The cash and bank balances is just very minimal taking the advantage of
profitability
 Table 4.12
Common-Size Balance Sheets for March Ending 2014 and 2015.

Analysis

From the above information it is noted that the Shareholders Funds Constituted
65.64% of the total Equity and Liabilities for the year ending 31 March 2015.
Likewise 11.61% Constituted Non-Current Liabilities and 18.69% Constituted
Current Liabilities of the total Equity and Liabilities. On the Other hand, 48.29%
Tangible and Intangible Assets, while 45.97% Constituted Current Assets in the Total
Assets.
 Pie Chart 4.4
Common-Size Balance Sheets for March Ending 2013 and 2014.

Interpretation

From the above analysis, the reserves of the company have been kept very healthy at
65 %. The other long term liabilities and Long term provision have been almost nil
so the company need not have any fixed bearing charge on these. The short term
provisions is very less which show that the company has no dues for short term.
Inventory has also taken a important place due to increase in orders for the year
ending 2015. The Tangible Assets have decrease when compared to the previous years
which shows that some assets were sold during the current year. The cash and bank
balances is maintained impressively. However, the company maintained above the
desired level because keeping hard cash or at bank may be unprofitable beyond a
certain point

Table 4.13
 Common-Size Balance Sheets for March Ending 2015 and 2016.

Analysis

From the above information it is noted that the Shareholders Funds Constituted 76%
of the total Equity and Liabilities for the year ending 31 March 2015. Likewise 10%
Constituted Non-Current Liabilities and 14% Constituted Current Liabilities of the
total Equity and Liabilities. On the Other hand, 65% Tangible and Intangible Assets,
while 35% Constituted Current Assets in the Total Assets.
 Pie Chart 4.5

Common-Size Balance Sheets for March Ending 2013 and 2014.

Interpretation

From the above analysis, the reserves of the company have been kept very healthy at
72 %. The other long term liabilities and Long term provision have been almost nil
so the company need not have any fixed bearing charge on these. The short term
provisions is very less which show that the company has no dues for short term.
Inventory has also taken a important place due to increase in orders for the year
ending 2016. The Tangible Assets have decrease when compared to the previous
years which shows that some assets were sold during the current year. The cash and
bank balances is maintained impressively.
 Table 4.13

Dupont Analysis from March Ending 2012 to Ending 2016

DUPONT ANALYSIS THREE STEP MODEL
2011-12 2012-13 2013-14 2014-15 2015-16
Net Profit Margin 0.73% 2.41% 1.89% 4.78% 9%
Asset Turnover Ratio 0.75 0.78 0.71 0.72 0.65
Financial Leverage 27.27 24.00 26.69 24.64 24.50
Return On Equity 3 84.2
144.15
(ROE) 15.05 45.24 5.63 2

Analysis

From the above the Net Profit Margin has seen regular increase from 2012 to 2016
with an exception to 2013-14, from 0.73% in 2011-12 to 9% in 2015-16. The Asset
Turnover Ratio has almost remained the same. The Financial Leverage has also no
seen much change over the study period. The Return on Equity has seen phenomenal
increase from 15.05 in 2011-12 to 144.15 in 2015-16.
 Horizontal Bar Chart 4.6

Dupont Analysis from March Ending 2012 to Ending 2016

144.15
2015-16 24.5

84.22
2014-15 24.64

35.63 Net Profit Margin

2013-14 26.69 Asset Turnover Ratio
Financial Leverage
45.24 Return On Equity (ROE)
2012-13 24

15.05
2011-12 27.27

0.00% 5000.00% 10000.00% 15000.00%

Interpretation

From the above analysis, the Net Profit Margin has seen regular increase from 2012 to
2016 because the net profit has increase over the study period. The Assets turnover
has been mixed growth. The company has managed to take the advantage of financial
leverage by considering the debt in its capital structure. The Return on Equity has
been very impressive over the study period of time because the numbers have
consistently increase over the study period.
 Table 4.14

Trend Analysis of Income Statement Variables from March Ending

2012 to Ending 2016

TREND ANALYSIS OF INCOME STATEMENT VARIABLES

2012 2013 2014 2015 2016
Revenue from
Operations(Net) 100 114 137 160 145
Total Revenue 100 114 115 161 148
Total Expenses 100 111 112 150 135
Profit Before Tax 100 448 401 1599 1748
Profit After Tax 100 375 408 1047 1792

Analysis

From the above the Net Revenue from Operations has seen regular increase from
2012 to 2016 with a positive trend, from 100 in 2011-12 to 145 in 2015-16. The Total
Revenue has shown good positive trend. The Total Expenses has been under control
over the study period. The Profit Before and After Tax has seen phenomenal increase
from 100 in 2011-12 to 1748 in 2015-16(Profit Before Tax), 100 in 2011-12 to 1792
in 2015-16(Profit After Tax).
 Line Chart 4.7

Dupont Analysis from March Ending 2012 to Ending 2016

4500

4000 1792

3500
1047
3000
Profit After Tax
2500 Profit Before Tax
1748 Total Expenses
2000 1599
Total Revenue
Revenue from
1500 Operations(Net)
375 408
1000
448 401
500 100
100 150 135
100 111 112
100 114 137 160 145
0
2012 2013 2014 2015 2016

Interpretation

From the above the Net Revenue from Operations, Total Revenue and Total Expenses
have a positive trend. The profits before Tax and Profit After Tax have witnessed more
than normal positive trend. This is because the base year was 2012 where the volume
of profit was very less compared to the period after five years ie. 2016.
 Table 4.15

Trend Analysis of Income Statement Variables from March Ending

2012 to Ending 2016
TREND ANALYSIS OF BALANCE SHEET VARIABLES
2012 2013 2014 2015 2016
Shareholders
Funds 100 181 186 396 427
Non Current
Liabilities 100 88 74 75 64
Current Liabilities 100 74 107 71 54
Non Current
177
Assets 100 113 114 133
Current Assets 100 104 134 226 172

Analysis

From the above the Shareholders Funds has seen regular increase from 2012 to 2016
with a positive trend, from 100 in 2011-12 to 427 in 2015-16. The Non-Current
Liabilities and Current Liabilities has decrease continuously over the period of study.
The Non Current Assets has Increased over the study period from 100 in 2011-12 to
177 in 2016. The Current Assets have also increased over the study period from 100
to 172 in 2016
 Line Chart 4.8

Trend Analysis of Income Statement Variables from March Ending

2012 to Ending 2016
450
427
400 396

350

300
Shareholders Funds
250 Non Current Liabilities
226
Current Liabilities
200
181 186 Non Current Assets
172
150 Current Assets
134
100 100 104 107
88
74 74 75
71 64
54
50

0
2012 2013 2014 2015 2016

Interpretation

From the above the trend of Shareholders Funds has substantially positive trend. The
Non Current Liabilities and Current Liabilities has seen negative trend because of
increase in the shareholders fund. The Non-Current and Current Assets have
witnessed Positive growth over study period
 Table 4.15

Profitability Ratios from March Ending 2012 to Ending 2016

2011-12 2012-13 2013-14 2014-15 2015-16
NPR 0.73 2.41 1.88 4.77 9.03
ROCE 1.28 4.2 3.6 7.7 9.17
ROSF 2.03 5.02 4.38 8.21 8.32
ROTA 0.51 1.88 1.33 3.41 5.88

Analysis

From the above the Net Profit Ratio has seen regular increase from 2012 to 2016 with
an exception to 2013-14, from 0.73% in 2011-12 to 9% in 2015-16. The Return on
Capital Employed has also witnessed steady increase from 1.28 for 2011-12 to 9.17
for 2015-16. The Return on Shareholder Funds has also witnessed steady increase
from 2.03 for 2011-12 to 8.32 for 2015-16. The Return on Total Assets has also
witnessed steady increase from Just 0.51 for 2011-12 to 5.88 for 2015-16.
 Line Chart 4.9

Profitability Ratios from March Ending 2012 to Ending 2016

10
9 9.17
9.03
8.21 8.32
8
7.7
7
6 5.88 NPR
5 5.02 4.77 ROCE
4.2 4.38 ROSA
4
3.6 3.41 ROTA
3
2.41
22.03 1.88 1.88
1.28 1.33
10.73
0.51
0
2011-12 2012-13 2013-14 2014-15 2015-16

Interpretation

From the above the Net Profit Ratio has seen regular increase from 2012 to 2016
because the company has been able to generate healthy profits over the study period.
The Return on Capital Employed has also witnessed steady increase because the
company has efficiently used the resources . The Return on Shareholder Funds has
also witnessed steady increase due to increase in shareholders EPS.
 Table 4.16

Market Test Ratios from March Ending 2012 to Ending 2016

2011-12 2012-13 2013-14 2014-15 2015-16
EPS 1.5 4.52 3.56 0.84 14.41
PE RATIO 6.41 2.15 2.8 0.89 0.69
PAYOUT RATIO 0.32 0.1 0.14 0.04 0.03

Analysis

From the above the Earnings Per Share has seen Substantial increase from 1.5 in
2011-12 to 14.41 in 2015-16. The Price Earnings Ratio has decrease drastically over
the period of study from 6.41 for 2011-12 to 0.69 for 2015-16. The Dividend Payout
Ratio has witnessed Mixed growth from 2011-12 to 2015-16 .
 Line Chart 4.10

Market Test Ratios from March Ending 2012 to Ending 2016

16 14.41
14

12

10
EPS
8 6.41 PE RATIO
6 4.52 PAYOUT RATIO
3.56
4 2.8
2.15
1.5
2 0.89
0.84 0.69
0.32 0.1 0.14 0.04 0.03
0
2011-12 2012-13 2013-14 2014-15 2015-16

Interpretation

From the above the Earnings Per Share has seen Substantial increase the company has
generated healthy profits over the study period. The Price Earnings Ratio has decrease
drastically over the period of study. The Dividend Payout Ratio has witnessed Mixed
growth which means the company followed strict payout policy by employing the
residual profits for investment purpose without distributing to share holders.
 Table 4.17

Liquidity and Stability Ratios from March Ending 2012 to Ending

2016
2011-12 2012-13 2013-14 2014-15 2015-16
Current Ratio 0.77 1.9 0.97 2.46 2.44
Liquidity Ratio 0.52 0.71 0.97 1.79 1.85
Fixed Asset Ratio 1.29 1.07 3.36 0.45 0.38
Equity Debt Ratio 0.68 0.01 0.34 0.065 0.03
Proprietary Ratio 0.52 0.8 0.81 1.49 1.59

Analysis

From the above the Current Ratio has seen regular increase from 0.77 in 2011-12 to
2.44 in 2015-16 . The Liquidity Ratio also witnessed steady increase from 0.52 for
2011-12 to 1.85 for 2015-16. The Fixed Assets Ratio has decrease drastically over the
period of study from 1.29 for 2011-12 to 0.38 for 2015-16. The Equity Debt Ratio
has decrease drastically over the period of study from 0.68 for 2011-12 to 0.03 for
2015-16. The Proprietary Ratio has Marginally increased from 0.52 in 2011-12 to
1.59 in 2015-16
 Vertical Bar chart 4.11

Liquidity and Stability Ratios from March Ending 2012 to Ending

2016

Chart Current Ratio

Liquidity Ratio
4
Fixed Asset Ratio
3.5 3.36
Equity Debt Ratio
3
2.46 Proprietory
2.44 Ratio
2.5
2 1.9 1.79 1.85
1.49 1.59
1.5 1.29
1.07 0.97
0.97
1 0.77 0.68 0.71 0.8 0.81
0.52 0.52 0.45
0.5 0.34 0.38
0.01 0.07 0.03
0
2011-12 2012-13 2013-14 2014-15 2015-16

Interpretation

From the above analysis both the Current Ratio and liquid Ratio has seen regular
increase indicating that the current ratio is maintained more than the standard. The
Fixed Assets Ratio has decrease drastically over the period of study which shows that
the fixed assets were not used much efficiently. The Proprietary Ratio has increase
steadily over the study period because the shareholders funds have seen substantial
growth over the study period.