Financial Reporting & Analysis - I

PRELIMINARY REPORT 1
ACC Limited

Submitted to
Prof. Manoj Kumar
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Varun Sood PGP26379

Venkatesan PGP26380
Vijay Kumar Yadav PGP26381
Vikram Raikhelkar PGP26382
Vineet Singh PGP26383
Vishal Khandelwal PGP26384
Question 1: Briefly discuss your assigned company and its industry. How does the industry
scenario of your company looks like? How your company is placed within its industry ?
What are its areas of strengths and weaknesses? What are its future plans? What are
threats and opportunities for your company? Give a recent sales breakdown of your
company’s products. Discuss any interesting anecdotes of your company.

Answer:

INTRODUCTION:

1. ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's
operations are spread throughout the country with 16 modern cement factories, more than 40
Ready mix concrete plants, 20 sales offices, and several zonal offices. It has a workforce of
about 9,000 persons and a countrywide distribution network of over 9,000 dealers. Since
inception in 1936, the company has been a trendsetter and important benchmark for the cement
industry.

ACC was formed in 1936 when ten existing cement companies came together under one
umbrella in a historic merger - the country's first notable merger at a time when the term mergers
and acquisitions was not even coined.

The house of Tata was intimately associated with the heritage and history of ACC, right from its
formation in 1936 up to 2000. Between the years 1999 and 2000, the Tata group sold all 14.45
per cent of its shareholding in ACC in three stages to subsidiary companies of Gujarat Ambuja
Cements Ltd (later called Ambuja Cement Ltd), who then became the largest single shareholder
in ACC.

A new association was forged between ACC and the Holcim group, a world leader in cement as
well as being large suppliers of concrete, aggregates and certain construction-related services.
Holcim is also a respected name in information technology and research and development. The
group has its headquarters in Switzerland with worldwide operations spread across more than 70
countries.

ACC has made significant contributions to the nation building process by way of quality
products, services and sharing expertise. ACC’s brand name is synonymous with cement and
enjoys a high level of equity in the Indian market. It is the only cement company that figures in
the list of Consumer SuperBrands of India.

Vision: To be one of the most respected companies in India; recognized for challenging
conventions and delivering on our promises.

INDUSTRY SCENARIO

The Indian cement industry is the second largest producer of quality cement in the world after
China. It comprises of 140 large and more than 365 mini cement plants. Over the last few years,
the Indian cement industry witnessed strong growth, with demand reporting a compounded
annual growth rate of 9.3% and capacity addition of 5.6% between FY2004 and FY2008. The
industry's capacity at the beginning of the year 2009-10 was 219 million tonnes.The demands
mainly constitute of followings:

1. Housing- 40% (approx.) 2. Infrastructure –40% 3. Industrial/Commercial- 20%.

Increasing population, rising purchasing power of emerging middle class, and increasing
smaller families (nuclear families), housing demand is likely to grow at a steady rate.
Government’s increased focus on infrastructure such as Roads, Highways, Airports, Ports, Rural
urbanization, SEZs etc. would bring in higher demand for cement in coming years.

During the gloomy outlook in fiscal year 2008, cement industry had managed to grow at
7.91%, which shows the resilience of the industry. It is estimated that the cement production
would rise to 236.16 million tonnes in FY11 and to 262.61 million tones in FY12. CARE
research has estimated the domestic demand for cement to grow at 8.8% over the next two years.

COMPANY POSITION IN THE INDUSTRY

Production capacity, Sales, and Net Profit as per Last Annual report of the companies:

ACC Ambuja Ultra Tech Madras India Shree

Cement Cement Cement cement cement
Production 22.4 18.3 19.5 7 10.7 9
Capacity(in mT)
Sales(crores) 8190.90 7181.48 6436.96 2813.80 3805.45 3643.24
Net Profit(crores) 1606.73 1218.37 977.02 353.68 354.34 676.10
Market 15647.8 16958.9 10684.10 2389.21 3400.43 6883.49
Capitalisation(crores)

ACC Limited is India’s foremost cement manufacturer with a countrywide network of factories
and marketing offices. It is second biggest companies on the basis of Market capitalization. Its
profit margin and gross sales is highest in the industry. Company’s captive power plants play a
vital role in providing cost efficient and effective supply of quality power for the plants. This has
given the company a cost advantage amongst the competitors.

Future Plans of ACC:

The company intends to achieve a growth of 12 per cent in the installed capacity of around
27million tonnes at present to 30 million tonnes by end of this financial year through Brownfield
projects.

The Company has planned to promote new applications of cement other than real estate such as
concrete roads, tiles, pre-cast cement products etc.

As a part of its sustainable development program the company intends to reduce CO2 emissions
through upgrading pollution control technology, using alternative fuels and raw materials and
increasing the absorption of materials like fly ash and slag.

Under its alternative fuels and raw materials and waste management programme, the company
aims to derive a bottom line benefit of Rs 100 crore.

It is planning additional captive power generating capacity of 90 MW to be commissioned and

stabilized this year across 3 plants to reduce dependence on grid power.

Strength:

A strong organization backed with global leadership and competence.

ACC’s brand equity is strongest among its competitors, as shown by the AC Nielson research
report.

Pioneer in introducing Ready mixed Concrete in India on a commercial basis

It has country wide supply chain network of 9000 dedicated Dealers.

The company has 40 ready mixed concrete Plants and 16 modern Cement factories of 27 mt
capacity across India.

Weakness:

Competitors are doing much more promotional activity than the company, which has given them
an edge in selling their products.Eg. Birla gold has got tremendous popularity in the recent
years.

Threats:

Large number of players in cement industry makes it more competitive for ACC Limited to
carefully price its product and at the same time satisfy its dealers and customers.
Players such as Jaypee Cement, Prism Cement, and Birla Samrat are eating up considerable
market share.
Due to India’s exponential growth many new international cement companies are expected in
coming years which will bring a tide of change and can start price war.
The emergence of small players in this market may increase the competition and start the
malpractices, and heavy discounts to retailers. They can also influence many retailers by giving
better profit margin, and other benefit.
Excess production capacity of the Cement manufacturers has enabled them to tap the market in
lack of supply by the established player in that market.

Prices of major inputs such as coal, slag, gypsum, fly ash, coal and decontrolling of fuel prices
are pushing up manufacturing and distribution costs.

Opportunities:

The Indian government has considered spending more than US$ 500 Billion on infrastructure in
the 11th Five Year Plan. Government initiatives in the infrastructure sector, coupled with the
housing sector boom and urban development, continue being the main drivers of growth for the
Indian cement industry.

• Increased infrastructure spending has been a key focus area. In the Union Budget 2010-
11, US$ 37.4 billion has been provided for infrastructure development.
 • The government has also increased budgetary allocation for roads by 13 per cent to US$
4.3 billion.

According to the report of the Technical Group on Estimation of Housing Shortage, an estimated
shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12) provides a
big opportunity to the cement industry.

Poor states such as Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh are going under
transformation in terms of Infrastructure, New set up of Industry and Housing Development etc.

TYPES OF PRODUCTS:
ORDINARY PORTLAND CEMENT BLENDED CEMENT
➢ 43 Grade Cement (OPC 43 Grade ) ➢ Fly ash based Portland pozzalana cement
➢ 53 Grade Cement. ➢ Portland Slag Cement.
BULK CEMENT.
CONCRETE – VALUE ADDED SERVICE.

CEMENTS: SEGMENT WISE SALES INFORMATION:

The company has only one business segment “CEMENT” and hence disclosure of
segment wise information is not applicable as per accounting standards 17- Segmental
information notified pursuant to the companies, (Accounting Standards) Rules as amended.

The company caters mainly to the needs of domestic market. The expect turnover is not
significant in the context of total turnover. As such there are no reportable Geographical
segments.

The Sales breakdown of Cement, Power Generation and other consultancy income are shown
below

SALES BREAKDOWN OF PRODUCTS:

Product Name Year Month Sales Quantity Sales Product
(in lakh mT) Value Mix
(Crores)
Cement 2009 12 212.73 7,828.73 96.57
Purchased Cement
2009 12 2.43 98.76 1.21
& Other Products
Power Generation 2009 12 0 58.89 0.72
Clinker 2009 12 2.02 51.47 0.63
Consultancy
2009 12 0 46.49 0.57
Income
Other Sales 2009 12 0 20.04 0.24
Contract
2009 12 0 1.75 0.02
Fabrication

Interesting Anecdotes about the company:

1. Sustainability and Climate change: ACC was honored with FE-EVI Green Business
Leadership Award 2009-10.This award was based on a survey conducted by Financial Express
and Emergent Ventures India (EVI), a company working in the area of climate change, for
contribution towards the environment and excellence in the area of green businesses
2. Conservation of Heritage Structures: The services of ACC’s Concrete experts have often been
utilized in the restoration of several national heritage buildings across the country - such as
sections of the Chhatrapati Shivaji Terminus (formerly Victoria Terminus) at Mumbai, the J N
Petit and David Sassoon Libraries in Mumbai, churches in Goa, palaces and royal mansions in
Mysore and Hyderabad and other old structures in the country.

3. Global Impact: ACC Limited is a signatory to the United Nations Global Compact. As a
member they are committed to the ten principles of the Compact which foster better corporate
responsibility in the areas of human rights, labour, environment and anti-corruption

4. HIV/AIDS Treatment: Anti Retroviral Treatment Centres.ACC set up an Anti Retroviral

Treatment Centre for HIV/AIDS treatment in Wadi in the state of Karnataka The center is fully
equipped with new machines and medical equipment as prescribed by NACO ART guidelines.

5. Disaster Relief: ACC and its employees make timely contribution to help in any national
disaster Apart from the Kargil cause, collective contributions by way of cash, food and clothing
has been sent to help victims of calamities such as the Latur earthquake, Himachal Pradesh
floods, Orissa cyclone, Gujarat earthquake, Tsunami and floods in Maharashtra.

Question 2: Discuss the Independent Auditor’s opinion for the most recent year.
Identify the auditor? Comment on the opinion. How would this opinion influence
your analysis of the financial statements?

Answer:

SR Batliboi & Associates is the firm which has audited the financial statements of ACC
in the most recent year. They have not found any misrepresentation in any of the financial
statements prepared by the company.

The auditors express that the financial statements present fairly, in all material respects
the financial position of the company and the results of its operations and its cash flows. They
have issued an unqualified or clean opinion indicating that the financial statements are fairly
presented in the auditors' opinion, are free of material misstatements, and have been prepared in
accordance with generally accepted accounting principles.
 They have revealed that necessary primary books of accounts have been kept by the
company and the Balance Sheet, Profit and Loss statement and Cash Flow statements are in
accordance with the primary books of account.
Further to this, the company has reports showing the quantitative details and situation of
fixed assets. These reports helped the auditors to value the assets in the exact manner. The
company also maintains proper records of inventory and no material discrepancies were found in
physical verification. The company also maintains an internal audit system commensurate with
the size of its business.
The various financial transactions are also fairly presented and give us a clear view of the
various dealings of the company. All these records give us a feeling that the company is very
meticulous in maintaining proper records of all its activities and gives us a feeling that the
statements presented are accurate and devoid of any material errors.

Another point to be noted is that The Institute of Chartered Accountants of India (ICAI)
conferred on ACC its Gold Shield for being best in the ‘ICAI Awards for Excellence in
Financial Reporting for 2008’ under the Category ‘Manufacturing and Trading Enterprises’. The
award signifies that the accounting policies followed by the enterprise are adjudged the best
amongst the enterprises that participated in the competition on the basis of compliance with
accounting standards, statutory guidelines and other relevant pronouncements.

Influence on our Analysis:

These views increase our confidence in the financial statements published by the company and
assure that these are free from any material errors and are as per the accounting standards
followed in India. There is no exception to any accounting principle seen and hence it reassures
that the company is following all the best practices when preparing its financial statements.
This will help us analyze the financial statements and give us confidence in our findings. The
results that we obtain from our analysis will give us a true picture of the company and help us
know the future potential of the company and the current financial health of the company.
Question 3: Examine the Directors’ report for the most recent year. Comment on
the information contained in the directors’ report and how would it influence your
financial analysis?
Answer:

A lot of importance is usually given to the Director’s report since it is a source of valuable
information about the outlook of the company and is considered to be an absolutely unbiased
account of the company. In case of ACC, the director has presented a very optimistic view of the
company. He begins with emphasizing on the fact that despite the global slowdown, the cement
industry fared well. He also emphasizes the concerns surrounding the cement industry. Some of
the points mentioned by him in the report are as under:

• CEMENT industry posted a steady growth of about 10.3% during the year under review.
• Cement dispatches were 195 million tons as compared to 177 million tons in 2008.
• ACC’s installed capacity rose to 26 million tons per annum at the close of the year as
compared to 23 million tons at the end of 2008.
• Total consolidated income increased by 9%.
• Consolidated profit increased by 42%.
• Additional Capacity of 70 million tons for cement is expected, despite a growing demand
for cement. This may create a surplus.
• The prices of major inputs for cements viz. coal, slag, gypsum, fly ash and petroleum
products have started rising and may push up manufacturing and distribution costs.
Availability of these materials is also one of the areas of concern.
• Supply of railway wagons is also likely to worsen during the course of the current year
affecting cement dispatches to some markets.
Some of the concerns are genuine and appreciable. He has mentioned that the rising cost of
inputs is an area of concern. But there is some skepticism regarding the growth in profits
mentioned in the report. Cement process have started to decline in some of the regions due to an
excess capacity build up in some of the regions. There remains this doubt that whether the
cement companies will be able to pass on the increase in raw materials.

Even the impact of increase in excise duty will have an impact on the margins of the company.
We did not find any views regarding the new competition that is emerging in the industry. There
have been a lot of M & A deals happening in this sector and this too poses a threat to the
dominant position enjoyed by ACC.
Effect on Analysis:

The Director has given a decent account of the company but there are still some areas of concern
that are not highlighted in the report. We would still take into the opinions mentioned but the
expectations would be a little conservative because of some of the threats surrounding the
industry.

Question 4: What revenue recognition policies your company has used in the recent years? Are
these policies consistent in all recent years? Are these policies consistent with the way the
company carries out its business? Do these policies make the reported numbers less conservative
or more conservative?

Answer:

Revenue Recognition Policy of ACC:

As stated in the annual report of the company for the year 2009, the company mentions that
“Revenue is recognized to the extent that it is probable that the economic benefits will flow to
the Company and the revenue can be reliably measured”.

In case of direct sales the revenue is recognized when the significant risks and rewards of
ownership of goods have passed to the buyer. This does not give a clear picture of the
accounting practice being followed. Passing of risk to the buyer is a very general term and
further details are needed to find out the exact process being followed in the company to
recognize the revenue. This kind of policy provides enough leeway to the company to keep
changing its mode of recognizing revenue and may give an indication that the company may not
be following the rules in the right spirit.

While in case of the income from works contract, consultancy and other services rendered the
company accounts for the revenue on a “Percentage of completion” basis.

In case of Interests the revenue is recognised on a time proportion basis taking into account the
amount outstanding and the rate applicable while in case of dividends, it is accounted for when
the shareholders’ right to receive payment is established by Balance Sheet Date. In case of
subsidiaries, dividend is recognised even if same are declared after the Balance Sheet date but
pertains to period on or before the date of balance sheet as per the requirement of Schedule VI of
the Companies Act, 1956.

Comparison with Competitors:

The competitors of ACC such as Ambuja Cement and Ultratech maintain a clear revenue
recognition policy. It is mentioned in Ambuja Cement’s annual report that in case of domestic
sales, it recognizes revenue on dispatch of products to customers, and in case of exports, sales
are accounted on the basis of dates of Bill of Lading. Sales are disclosed net of sales tax / VAT,
discounts and returns, as applicable. Sales exclude self consumption of cement. Thus the
revenue recognition policy of other players in the field is comparatively more transparent.

Policy over the Years:

The policy has not changed over the years except for a minor change in which the company
added a clause to include the income from works contract, to be accounted for on a “percentage
of completion” basis.

Our Take on the Policies being followed:

The policies are consistent with the way the company carries out its business. Being a cement
manufacturer the company takes up the responsibility to deliver the goods to the buyer and
accounts it only when the risk has been passed to the buyer. This could have been given in more
detail by the company in its footnotes to denote better clarity about the policy being followed. In
case of the works contract the income is realised over the long term and hence accounted as per
the “percentage of completion”. As compared to the completed contract method, the percentage
of completion method might look more aggressive as revenue is recognized sooner but it
provides smoother earnings and results in better matching of revenues and expenses over time.

In case of direct sales, ACC’s revenue recognition policies seem to be consistent with the
standards but more clarity would have made the practices more transparent. In case of works
contract, though the policy might look a little aggressive, it fulfils the task of matching revenues
with expenses. In case of interest and dividends, the policies are pretty consistent to what other
listed companies follow.
Question 5: What accounting policy company has for valuation of its tangible and intangible
assets? Has company done revaluation or impairment of any of its tangible or intangible assets?
If yes, what reasons company has specified for doing so?

Answer:

Tangible asset valuation (Book value determination)

a) Fixed assets are stated at cost of acquisition or construction less accumulated

depreciation and impairment losses
b) Leasehold lands are stated at cost value
c) Machinery spares which can be used only in connection with a particular item of fixed
assets and the use of which is irregular, are capitalized at cost net of Cenvat
d) Borrowing costs relating to acquisition of fixed assets which takes substantial period of
time to get ready for its intended use are included to the extent they relate to the period
till such assets are ready to be put to use. All other borrowing costs are charged to
revenue.
e) Current investments are carried at the lower of cost or fair value. Long term investments
are stated at cost. Provision for diminution in the value of long-term investments is made
only if such a decline is other than temporary.
f) In case of new projects and substantial expansion of existing factories, expenditure
incurred including trial production expenses net of revenue earned, and attributable
interest and financing costs, prior to commencement of commercial production are
capitalized.

Intangible asset Valuation

a) Computer software used is stated at cost value and are amortized over a period of three
years
b) Costs incurred to gain access to mineral reserves are capitalized and depreciated over the
life of the quarry, which is based on the estimated tones of raw materials to be extracted
from the reserves.
 c) Expenditure on Research phase is recognized as an expense when it is incurred.
Expenditure on development phase which results in creation of assets is included in
Fixed Assets.

Revaluation or impairment
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication
of impairment based on internal / external factors. An impairment loss will be recognized
wherever the carrying amount of an asset exceeds its estimated recoverable amount. The
recoverable amount is greater of the asset's net selling price and value in use. In assessing the
value in use, the estimated future cash flows are discounted to the present value at the weighted
average cost of capital. Previously recognized impairment loss is further provided or reversed
depending on changes in circumstances. Revaluation and Impairment are captured under
Addition/adjustments and deductions/adjustments columns respectively in the below table.
However no explicit mention is made by the company for revaluation and impairment details.

Below table gives the Book value of tangible and intangible assets as at 31-12-2009
Assets Gross block at cost
Tangible As at 31-12- Additions/Adjustmen Deductions/adjustment As at 31-
2008 ts 12-2009
Leasehold land 300.06 - - 300.06
Buildings 3931.46 942.65 35.93 4838.18
Machinery and Plant 7320.49 1557.34 75.59 8802.14
Furniture, Fixture, 271.79 23.38 53.28 241.29
& Equipment
Motor cars,Trucks 1479.76 26.68 - 1506.44
Electric installations 468.83 304.01 1.84 771
Inventory 566.98 - - 648.94
Stores and spares, & 16.02 - - 29.73
fuels
Intangible
Assets (Software) 8.92 264.39 - 273.31
Question 6: What depreciation policy your company has used in the recent years? Is this policy
consistent in all the years? Is this policy consistent with the way company carries out its
business? Does this policy make the reported numbers more or less conservative?

Answer: Depreciation is provided on the straight line method at the rates prescribed in Schedule
XIV of the Companies Act, 1956, on a pro-rata basis.

✔ The useful life of transit mixers and pumps is estimated at 8 years and 6 years
respectively
✔ Buildings, civil cost and installations are estimated to have useful life of 10 years
✔ Cost of leasehold land is amortized over the period of the lease
✔ Capital assets whose ownership does not vest in the Company have been depreciated
over the period of five years.
✔ Machinery spares which can be used only in connection with a particular item of Fixed
Assets and the use of which is irregular, are capitalized at cost net of Cenvat and are
depreciated over the remaining useful life of the related asset. The written down value of
such spares is charged to the Profit and Loss Account, on issue for consumption.

These assets are depreciated over the useful life on straight line method on a pro-rata basis.
The above assets, if transferred from ACC Limited, under the business purchase agreement, are
depreciated over the remaining useful life considering the period for which ACC Limited has
already used such assets. Useful life of certain assets is tailored based upon the commercial
agreements and the carrying amount of such assets is allocated over their useful life.
In case of Plant & Machinery and Electrical installation at the Ready Mixed Concrete
plants, depreciation has been provided on triple shift basis for the entire year even though the
plants have worked only double and single shifts at various times, based on assessment of
estimated useful life.
All other assets are depreciated on the straight line method at the rates prescribed in
Schedule XIV of the Companies Act, 1956, on a pro-rata basis.
INTANGIBLES

✔ Computer Software cost is amortised over a period of three years.

 ✔ Costs incurred to gain access to mineral reserves are capitalized and depreciated over the
life of the quarry, which is based on the estimated tonnes of raw materials to be extracted
from the reserves.

DEPRECIATION POLICY OVER YEARS

✔ in respect of assets acquired up to July 31, 1968 on the written down value method at the
rates prescribed in Schedule XIV of the Companies Act, 1956;
✔ in respect of assets acquired during the period August 1, 1968 to July 31, 1986 on the
straight line method at the rates in force at the time of acquisition of assets in accordance
with Circular No. : 1/86 dated May 21, 1986 issued by the Department of Company
Affairs;
✔ in respect of assets acquired on or after August 1, 1986 on the straight line method at the
rates prescribed in Schedule XIV of the Companies Act, 1956, on a pro-rata basis.
As on December 2009
ACC AMBUJA SAMRUDDHI ULTRATECHCEMENT SHREE
CEMENTS CEMENTS
GROSS 6,826.27 6,224.13 9,038.70 8,078.14 2,950.86
BLOCK
ACC 2,667.98 2,784.09 2,585.19 3,136.46 2,198.91
DEPN
NET 4,158.29 3,440.04 6,453.51 4,941.68 751.95
BLOCK

The depreciation policy followed by the company is deemed to be slightly on the conservative
side.

The company follows straight line depreciation method which is consistent with the industry
trend. The useful life of mixers, pumps and buildings is given as 8, 6 and 10 years respectively.
In spite of working for single or double shifts the company is depreciating its plants and
machinery on triple shift basis.
The above facts highlight a slightly conservative approach on the part of the company. It is
choosing to depreciate the assets relatively quickly which will lead to reduced profits and lesser
value of assets on the balance sheet thus making the numbers being reported more conservative.

Question 7 : What inventory valuation policies your company has used in the recent years? Are
these policies consistent in all the recent years? Are these policies consistent with the way the
company carries out its business? Do these policies make the reported numbers more
conservative or less conservative?

Answer:

 The various types of inventories in case of ACC are valued as follows:

a) Raw materials, fuels, packing materials, stores and spares
Lower of cost or net realizable value. This is similar to the practice being followed under IFRS.
Net Realizable Value is equal to the estimated sales price less the estimated selling costs. If Net
Realizable Value is less than the balance sheet cost, the inventory is written down to the net
realizable value and a loss is recognized in the income statement.

However, materials and other items held for use in the production of inventories are not written
down below cost if the finished products in which they will be incorporated are expected to be
sold at or above cost. Cost is determined on a weighted average basis.

b) Work-in-progress and finished goods

Lower of cost and net realizable value. Cost includes direct materials and labor and a proportion
of manufacturing overheads based on normal operating capacity. Cost of finished goods includes
excise duty.Net realizable value is the estimated selling price in the ordinary course of business,
less estimated costs of completion and estimated costs necessary to make the sale.

 The company has been following the same policy in the recent years. These policies are
consistent in the recent years.
 Regarding the raw materials used in production of inventories, it is mentioned that the
company does not write them down if the finished goods in which they will be used can
be sold at or above cost. This policy can be debatable because cement prices are usually
pretty volatile in current economic environment. Hence it cannot be said with certainty
 that the finished goods will be sold at or above cost. Raw materials constitute a large
chunk of cost for the cement companies and so if moving forward the prices of raw
materials might come down reducing the cement prices. In such a case, it might be
prudent to record raw materials also at the lower of cost or net realizable value and in
some cases, it might be necessary to write them down.
 A point to note is that the company determines the cost on a weighted average basis
which gives a reasonable estimate of the inventory and is a approach which yields a
value between FIFO and LIFO. In light of the above analysis it can be said that the
company’s policy regarding inventory valuation are not very conservative.

PART 1 : Basic Analytical Techniques

Question 8: Summarize the impact of Clause 49 of the Listing Agreement and other recent
regulatory Corporate Governance initiatives in India on the quality of reporting and
disclosures being done by your company.

Answer: