Horizontal, Vertical and Ratio Analysis of Financial Statement of ceat tyres

1. Home assignment
(Horizontal, Vertical and Ratio Analysis of Financial Statement)
Submitted By:
Anuj Goyal
NMIMS

2. CEAT TYRE
Company background
CEAT, a part of the RPG Group, is amongst the leading tyre manufacturers in the country
with an overall market share of ~12%. The company’s manufacturing facilities are located in
Bhandup, Nashik and Halol. The company has an overall production capacity of 615TPD
(including outsourced). The company exports to countries across Asia, Africa, Europe and
America. Exports constitute ~20% of CEAT's total volumes. The company has recently
acquired the global rights of the CEAT brand from Italian tyre maker Pirelli - this will enable
the company to expand its global presence. CEAT also operates in Sri Lanka through a JV
and has a ~50% share in Sri Lanka's tyre market.
In the tyre Industry of India there are only 4 major players (CEAT,
APOLLO, MRF, JK ). Their percentage of market share as follow.

3. Finding Based on Horizontal , Vertical and Ratio analysis ( Balance sheet ,
Income statement , Cash Flow statement )
 For the FY 2011-12, Net Sales increased by 28% to Rs. 4,440 crore as compared to
FY 2010-11.
 OPM improved to 5.7% and powered 74% increase in operating profit at Rs 255.56
Crore
 Interest and depreciation cost spiked up by 91% and 106% respectively.
 Resultantly, PBT tumbled 71% to Rs. 9.78 crore. After considering sharp 79% dip in
taxation at Rs. 2.25 crore,
 The consolidated debt levels of the company have slightly increased by ~Rs 94 cr
which was primarily due to higher inventory levels and sluggishness of demand.
 Overall the debt to equity levels is expected to remain at broadly same levels. The
current debt to equity ratio stands at 1.3x.
 The analysis of Gross Profit indicates that company is consistent in maintaining in its
gross profit margin. The Gross Profit Margin was 17.77% in 2011 which rose
significantly in 2012 to 23.07%.
 An analysis of Debt Equity Ratio of past two years indicates that company was quick
in discharging its obligation as soon as it earned profit. The Company Generated
Profit of 28 crore in 2011 and in 2012 it is 10 crore and in the same year the DE
ratio declined from 1.3:1 to 0.92:1.
We expect CEAT to report continuous improvement in its operating performance, led
by improving utilization at the Halol plant and declining raw-material prices. We
believe that the changing product mix, expanding presence and attractive valuations
seem propelling for CEAT
Annexure.xlsx
Annexure