Financial Analysis on Scooters

India Limited
Submitted By: Puneet Agrawal (2015PGP147)

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Agenda:
Following topics are covered under this analysis report to understand the
financial activity of Scooters India Limited:
1)
2)
3)
4)
5)

Company Overview
Scooters India Limited Balance Sheet Summary
Scooters India Limited Profit and Loss Summary
Scooters India Limited Ratios summary and interpretations
Conclusions and Recommendations

Purpose of the report is to present the financial statement analysis by

going through the past 5 years data that is available across online
databases and portals such as Ace equity, Capitaline or Bloomberg
terminal. Various aspects of financial statements are used to assess
companys performance and also compare its year on year growth with
respect to automotive industry in similar segment of two/three wheelers.

Company Overview:
Incorporated in 1972, Scooters India Limited is an ISO 9001:2000
Company, situated at 16 Km mile stone, South-west of Lucknow, the
capital of Uttar Pradesh.
In 1975, company started its commercial production of Scooters under the
brand name of Vijai Super for domestic market and Lambretta for
overseas market. It added one more wheel to its product range and
introduced three wheelers under the brand name of VIKRAM/LAMBRO.
However, in 1997, strategically, the company discontinued its two-wheeler
production and concentrated only on manufacturing and marketing of 3
wheelers. These three wheelers have become more relevant in the
present socio-economic environment as it transports goods and
passengers at least cost.
Its current market capitalization is 196.4 Crore with sales turnover of 194
crores in 2014. They made a profit of 11.09 Crores in Fiscal year 2015.

Competitors:
Company
Name

Market Cap.
(in Cr.)

Net Profit.
(in Cr.)

1133

Sales
Turnover. (in
Cr.)
7.81

54.76

Total
Assets. (in
Cr.)
268.96

Maharashtra
Scooters Ltd.
Atul Auto Ltd.
LML Auto Ltd.

887.4
60.99

537.82
272.01

39.14
(72.79)

121.58
(381.54)
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VCCL Ltd.
Sooraj
Automobiles
Ltd.

1.45
2.07

0.17
4.65

(0.57)
0.20

(15.12)
6.4

Why Chose Scooters India Ltd.?

A government owned enterprise under the automobile segment

Shown improvement in profit margin and sales over last few years
so it is exciting to analyse the strategy they adapted
Most promising company under the 3 wheeler segment and is
reputed to penetrate market aggressively in coming years

Scooters India Limited Balance Sheet Summary

Analysis of balance sheet
Participation(amo
unts in Cr.)
Cash

2010

2011

2012

2013

2014

19.11

14.4

16.42

32.51

33.37

Inventory
Long term
investment and
accounts
receivable
Net debt to
equity
Retained earning

29.91
0

39.35
0

42.13
0

39.38
0

47.84
0

0.29

0.39

-1.45

-1.69

-1.71

-121

101.6

-15.9

14.55

-121.5

The company has been in loss till 2013 and they made a profit in 2014 owing to
better expense management.
Most remarkable thing is the Debt to equity ratio. Company has acquired more
debt in past few years and this proves their plan to aggressively expand the
operation in the rural market. Company has bought cash to increase its liquidity
in recent years.

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RETAINED EARNING

Column4

The company has last year only gained in the retained earnings and
before that it was in loss.

Operating Ratios
Accounts receivable Turnover

Total Assets Turnover

The company has bought more assets and hence their Asset turnover has
reduced over the period. Though there has been considerable increase in
sales but due to more effect of the buying of the assets the Asset turnover
is reduced.

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Current ratio

Current ratio is increasing in past 2 years because company has more

liquidity as they have bought more cash and cash equivalents in recent
times. Hence the company has more current assets to pay off the
liabilities.

Return on Assets

We can see that the ROA was negative till 2014 and though the assets
increased during the period there has been hand in hand increase in sales.

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Scooters India Limited Income statement Summary

Operating Margin Ratio

The operating margin has been increasing over the years thereby
corroborating to the fact that company has managed expenses very well.
The reduced expenses and increase operating profit resulted in this steady
increase.

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Debt Service Coverage Ratio

There has been consistent rise in income of the company over last two
years. But before that period the debt and loans were high and the
interest expense was exorbitant. Now the company is focussing more on
expansion and reducing costs and increasing sales. Hence there is rise in
the Coverage ratio.

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Scooters India Limited Ratios summary

Profitability
Return on
Equity

163.95
%

130.43
%

152.41
%

141.81
%

121.32
%

Return on
Assets

126.75
%

-47.56%

-60.70%

-10.99%

12.41%

Return on
Capital

-126.75

-51.26

-65.83

-11.51

12.71

Operating
Margin Ratio

-15.00%

-2.93%

-1.31%

-1.30%

8.09%

Net Income
Margin

-21.53%

-10.69%

-9.59%

-3.16%

7.75%

Interpretations:
Net profit margin has increased gradually and
simultaneously the cost efficiency has improved. This
proves it is profitable company and has better command
over costs when compared to its previous years
performance
Net Income margin has also increased hand in hand with
the operating margin. Hence by reducing the costs and
bringing efficiency the company has improved Income
margin.

Recommendation and Conclusion:

As we can see that overall performance in terms of operation efficiency or
liquidity ratio are improving and hence we recommend the company to
carry forward with same strategy and maintain and improve operating
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efficiency. We also see a lot of scope in inventory management and share

pricing.

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