Day 3: Issues for Discussion: Solvency Posit

Recap: Financing Decisions and Financial st

Understanding the cpaital employed
Analysis of Solvency Ratios

Tata motors: Calculated DER and relavent r

DER of Sensex companies
Performance indicators

Day 3: Issues for Discussion: Solvency Position

Recap: Financing Decisions and Financial statements
Understanding the cpaital employed
Analysis of Solvency Ratios
Tata motors: Calculated DER and relavent ratios
DER of Sensex companies
Performance indicators

Balance Sheet of X ltd

opening
Capital (10)
Reserves
12% convertible Bonds
Creditors

Income Statement
Incomes

Closing

50000
150000
50000
30000
Expenses
280000

Cash
Plant
Shares of A ltd (1000 of Face Value 10)
stock
Debtors
Bonds

55000
100000
50000
60000
15000
280000

Transactions during the year

Sold 50% stock on credit
Operating expenses(OPEX)

200000
50000

Examine the impact of the following on the financial statements (treat each as independent question)
1) issued 5000 shares at 20
100000
2) Issed 1000 12% bonds of 100 each
3) Distributed 50% cash dividend
4) Declared stock dividend: 1:2

Income Statement

ependent question)

CFS

CFS
opening
CFO
PAT
Add Dep
Intere
Dividend
WC
Creditors
Adv custo
Debtors
Stock
CFO
CFF
Capital
Dividend pai
Bondss
Interest
CFF
CFI
Shares
Dividend
Bonds pur
CFI

Capital
12% Loan

100000
400000
500000
PBIT/Capital Employed 20%
Tax rate
30%
Examine the profitability under different DER

Tata Motors

Balance Sheet

------------------- in Rs. Cr. -------------------

Mar '05
Sources Of Funds
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves

Mar '06

Mar '07

Mar '08

Mar '09

Total Debt

362
0
0
3,750
0
4,111
490
2,006
2,495

383
0
0
5,128
26
5,537
823
2,114
2,937

385
0
0
6,458
26
6,870
2,022
1,987
4,009

386
0
0
7,428
26
7,840
2,462
3,819
6,281

514
0
0
11,855
25
12,394
5,252
7,914
13,166

Total Equity and Debt

6,607

8,474

10,879

14,120

25,560

6,612
3,454
3,158
539
2,912
1,601
811
345
2,758
2,831
1,660
7,249
0
6,143
1,126
7,269

7,972
4,402
3,570
951
2,015
2,012
716
328
3,056
5,965
792
9,812
0
6,674
1,215
7,889

8,776
4,895
3,881
2,513
2,477
2,501
782
536
3,819
6,209
291
10,318
0
6,957
1,364
8,321

10,831
5,444
5,387
5,065
4,910
2,422
1,131
750
4,303
4,831
1,647
10,781
0
10,040
1,989
12,030

13,905
6,260
7,645
6,954
12,968
2,230
1,555
638
4,423
5,910
504
10,837
0
10,969
1,877
12,846

Net Current Assets

-20
18

1,923
14

1,997
10

-1,249
6

-2,010
2

Total Assets

6,607

8,474

10,879

14,120

25,560

Networth
Secured Loans
Unsecured Loans

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

Miscellaneous Expenses

Tata Motors

Profit & Loss account

Income
Sales Turnover
Excise Duty
Net Sales
Other Income

------------------- in Rs. Cr. ------------------20,263

3,063
17,199
404

23,491
3,402
20,089
852

31,090
4,425
26,664
1,114

33,124
4,356
28,768
734

28,538
2,878
25,661
921

Stock Adjustments
Total Income
Expenditure
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing Expenses
Selling and Admin Expenses
Miscellaneous Expenses
Preoperative Exp Capitalised
Total Expenses
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)

144
17,747

257
21,198

350
28,128

-40
29,462

-238
26,344

12,245
238
1,039
593
890
620
-282
15,343

14,633
259
1,143
671
1,061
741
-309
18,199

19,880
327
1,368
873
1,505
1,051
-577
24,427

20,891
325
1,545
905
2,197
965
-1,131
25,697

18,801
305
1,551
867
1,652
1,439
-916
23,700

2,000
2,404
234
2,170
450
67
1,652
-2
1,651
416
1,237
3,098
0
452
63

2,146
2,999
350
2,649
521
74
2,054
0
2,054
525
1,529
3,566
0
498
70

2,587
3,701
456
3,245
586
85
2,574
0
2,574
660
1,913
4,548
0
578
98

3,031
3,765
472
3,293
652
64
2,576
0
2,576
548
2,029
4,806
0
578
81

1,723
2,644
705
1,939
875
51
1,014
15
1,029
13
1,001
4,898
0
312
34

36.2
34
125%
114

38.3
40
130
144

38.5
50
150
178

38.6
53
150
203

51.4
19
60
241

Tata Motors

Cash Flow

------------------- in Rs. Cr. ------------------Mar '05

Mar '06
Mar '07
Mar '08

Mar '09

12 mths

12 mths

Net Profit Before Tax

1,237
Net Cash From Operating Activities
1,250
Net Cash (used in)/from
Investing Activities
-957
Net Cash (used in)/from Financing Activities
941
Net (decrease)/increase In Cash and Cash Equivalents
1,234
Opening Cash & Cash Equivalents
771

12 mths

12 mths

12 mths

1,529
-221

1,913
2,210

2,029
6,175

1,001
1,295

-1
-855
-1,077
2,197

-2,805
304
-291
1,118

-5,722
1,132
1,585
806

-10,645
8,105
-1,245
2,387

Closing Cash & Cash Equivalents

2,005

1,119

827

2,391

1,142

DER of Sensex companies

Company Name
Bajaj Auto Ltd.
Bharat Heavy Electricals Ltd.
Bharti Airtel Ltd.
Cipla Ltd.
Coal India Ltd.
Dr. Reddy'S Laboratories Ltd.
G A I L (India) Ltd.
H D F C Bank Ltd.
Hero Motocorp Ltd.
Hindalco Industries Ltd.
Hindustan Unilever Ltd.
Housing Development Finance Corpn. Ltd.
I C I C I Bank Ltd.
I T C Ltd.
Infosys Ltd.
Jindal Steel & Power Ltd.
Larsen & Toubro Ltd.
Mahindra & Mahindra Ltd.
Maruti Suzuki India Ltd.
N T P C Ltd.
Oil & Natural Gas Corpn. Ltd.
Reliance Industries Ltd.
State Bank Of India
Sterlite Industries (India) Ltd.
Sun Pharmaceutical Inds. Ltd.
Tata Consultancy Services Ltd.
Tata Motors Ltd.
Tata Power Co. Ltd.
Tata Steel Ltd.
Wipro Ltd.

Mar-10
DER
0.45
0.01
0.13
0
0.09
0.09
0.08
0.54
0.02
0.18
0
5.86
1.78
0.01
0
1.02
0.33
0.36
0.04
0.59
0
0.78
1.44
0.11
0
0
0.94
0.54
0.68
0.1

Mar-11
DER
0.06
0.01
0.32
0
0.07
0.24
0.11
0.54
4.41
0.17
0
5.09
1.93
0.01
0
1.04
0.28
0.23
0.02
0.63
0
0.7
1.7
0.09
0
0
0.67
0.6
0.51
0.09

Mar-12
DER
0.02
0.31
0
0.23
0.24
0.77
0.76
0.35
0
5.64
2.29
0
0
0.29
0.26
0.68
0.5
1.45
0.09
0
0.56
0.78
0.39
0.09

Annual Finance Standalone

Annual Finance Standalone
Annual Finance Standalone
Rs. Million
(%)
Rs. Million

Mar-10

Company Name
Bajaj Auto Ltd.
Bajaj Auto Ltd.
Bharat Heavy
Bharat
Electricals
HeavyLtd.
Electricals Ltd.
Bharti AirtelBharti
Ltd. Airtel Ltd.
Cipla Ltd. Cipla Ltd.
Coal India Ltd.
Coal India Ltd.
Dr. Reddy'SDr.
Laboratories
Reddy'S Laboratories
Ltd.
Ltd.
G A I L (India)
G ALtd.
I L (India) Ltd.
Hero Motocorp
HeroLtd.
Motocorp Ltd.
Hindalco Industries
HindalcoLtd.
Industries Ltd.
Hindustan Unilever
Hindustan
Ltd.
Unilever Ltd.
Housing Development
Housing Development
Finance Corpn.
Finance
Ltd. Corpn. Ltd.
I C I C I BankI C
Ltd.
I C I Bank Ltd.
I T C Ltd. I T C Ltd.
Infosys Ltd.Infosys Ltd.
Jindal Steel Jindal
& Power
Steel
Ltd.
& Power Ltd.
Larsen & Toubro
LarsenLtd.
& Toubro Ltd.
Mahindra &Mahindra
Mahindra&Ltd.
Mahindra Ltd.
Maruti Suzuki
Maruti
IndiaSuzuki
Ltd. India Ltd.
N T P C Ltd.N T P C Ltd.
Oil & Natural
OilGas
& Natural
Corpn. Ltd.
Gas Corpn. Ltd.
Reliance Industries
RelianceLtd.
Industries Ltd.
State Bank Of
State
India
Bank Of India
Sterlite Industries
Sterlite(India)
Industries
Ltd. (India) Ltd.
Sun Pharmaceutical
Sun Pharmaceutical
Inds. Ltd. Inds. Ltd.
Tata Consultancy
Tata Consultancy
Services Ltd.Services Ltd.
Tata MotorsTata
Ltd.Motors Ltd.
Tata Power Tata
Co. Ltd.
Power Co. Ltd.
Tata Steel Ltd.
Tata Steel Ltd.
Wipro Ltd. Wipro Ltd.

Total interest
expenses
59.8
335
1073
229.5
2396.9
41
828.7
21
5940.3
69.8
67452.5
175925.7
730
2844.6
5053.1
1834.1
335
25218.4
144.2
19756.8
473224.8
2453.8
4.4
95.4
9935.4
4418.5
19759
1093

Financial charges
as % of total
expenses
PBDITA
0.05
0.1
1.03
1.83
26.03
0.37
0.31
0.09
1.38
0.38
81.5
60.32
0.4
0.01
5.68
1.85
0.84
0.17
2.77
0.03
1.04
60.82
2
2.45
1.24
5.67
6.5
8.22
0.52

25684.2
88017.6
152392
16590.9
43757.1
14399
55528.2
30419.1
33447.5
31125.2
111631.3
279469
67597.2
86450
28004.7
72135.7
34254
44697
153479.4
440454.5
331629.1
675640.5
14211.3
10625
72378.3
63984.5
21960.7
101757.6
64611

Annual Finance Annual

Standalone
Finance Standalone
Annual Finance
Annual
Standalone
Finance
Annual
Standalone
Finance Standalone
Annual Finance Standalone
Rs. Million
(%)
Rs. Million Rs. Million (%)
Rs. Million

Mar-11

Mar-12

Financial
Total interest charges as % of
expenses
total expenses PBDITA
16.9
547.3
6346
51.4
2034.1
48
1186.6
151.7
6102.6
2.4
74803.8
169571.6
583.2
4842.3
6473.5
1012.2
244
29320.9
251
21450
488679.6
3308.1
5.9
200.1
10649.5
4749.8
18174.7
723

0.01
0.14
1.11
0.23
20.6
0.19
0.29
0.11
1.51
0
79.22
62.36
0.33
0
6.1
2.31
0.31
0.08
2.95
0.05
0.95
54.31
2.45
0.03
0.33
3.06
7.42
6.51
0.61

EPS

Total
Financial charges
interest
as % of total
expenses expenses
PBDITA

45953.3
222.4
132926.3
140895
13125
14532.3
121.3
52998.6
14056
629
61425.7
2915
28309.4
213
36654.4
10274
31822.4
12.4
125326.6 108730.9
270281.5 228084.9
80250.8
669.8
95650
39944.8
78872.6
6300.4
40078.6
1593.2
41527
174151.8 36396.9
493562.4
412680
19840
752328 632303.7
24657
5507
15203.5
92546
164
52782.4 10586.1
20841.3
5456.9
126609.2 22099.1
65006
842

0.9

43683.7

3.83
0.44

147172
18091.9

2.43
18694
0.34 67522.9
0.11 39897.8
1.83 39482.4
0.01 37161.6
82.75 169290.1
66.35 341248.3
0.45 97531.7
0.01
124360
2.44
0.5

85709.4
43447.8

3.54 173718.1
0.87
399720
58.15 968698.2
6.03 34127.8
1.45 145801.8
2.92 49131.4
6.13
27632
7.56 132705.7
2.13
75216

2010
117.57
87.26
24.82
12.29
52.01
24.75
111.77
9.42
9.58
98.45
36.1
10.64
100.97
15.89
70.41
34.52
86.45
10.46
78.3
49.65
144.37
13.15
43.39
28.71
61.04
39.56
56.88
33.36

EPS

2011

2012

90.38
121.13
20.32
11.96
7.44
56.07
28.11
100.54
11.16
9.72
24.1
44.73
6.45
112.22
22.09
63.84
41.45
79.22
7.9
21.58
61.97
130.15
4.22
13.36
38.68
33.66
39.67
71.58
19.73

104.07
29.19
15.19
15.83
12.71
48.79
30.48
121.98
10.54
12.89
27.88
60.26
8.2
157.08
25.4
74.52
47.74
52.25
9.03
27.28
58.26
206.77
3.16
17.36
59.84
3.62
5.06
60.06
18.78