GTPL - Loss Analysis Report

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  • 1. Gactel Turnkey Projects Limited Submitted By: Amit Dhawan 11EX-006 Bishnu Kumar 11EX-013 Harendra Singh Rawat 11EX-020 Kumar Abhishek 11EX-026 Pankaj Mohindroo 11EX-038
  • 2. Managerial Economics: Project Report PGDM-Exec 2011 - Term-IGTPL ProfileGactel Turnkey Projects Limited is a Gammon Group Company founded in 2006. It was constituted to caterspecifically to National and International requirements of Cooling Towers and cooling systems. The Company hasthe technical expertise and financial back-up by Gammon India Limited.Products of GTPLAir Cooled Condensers and Heat ExchangersFRP Package Cooling TowersIndustrial Construction and Customer ServicesPultruded FRP Cooling TowersGTPLs PresencePower SectorMetals / Steel IndustryPetrochemical IndustrySugar industryCaptive Power PlantsPharmaceutical and Chemical IndustryHeating, Ventilation and Air Conditioning (HVAC)Fertiliser IndustryCement IndustryPaper Mills and many more…..Major Clients of GTPLIndian Oil Corporation LimitedBharat Oman Refinery LimitedMonnet Ispat & Energy LimitedBharat Heavy Electricals LimitedMaharashtra State Power GenerationThermax Limited
  • 3. Managerial Economics: Project Report PGDM-Exec 2011 - Term-IMARKET STRUCTURE  Market Structure: Oligopolistic since there are few major players in the market providing homogenous services.  Concentration ratio - 4 firm concentration ratio is more than 60%. Concentration Ratio 4 8 12 16 20 31 71.01 82.94 90.27 95.41 98.46 100  Herfindahl Index - Herfindahl Index is 0.305 (3053.36) which is above 0.25 (2500) which means there is higher degree of concentration in the market.  Out of the 31 companies Gactel Turnkeys Limited ranks 27 in terms of sales turnover.Total Revenue and Total Cost TR, TC Curve 100 88.13 84.38 80 70.32 64.40 60 TR 40 TC Net Profit 20 20.32 18.69 -1.69 -3.83 0 -6 2007 2008 2009 2010 -20  Company total revenue is less than total cost for the last three years so company is in loss.
  • 4. Managerial Economics: Project Report PGDM-Exec 2011 - Term-IReason for LossesP & L Statement Analysis  The revenue from the sale of goods not adequate to meet the expenses Expenses as a Total Year TR percentage of Expenses Revenue 2008 18.69 20.58 110% 2009 64.40 81.49 126% 2010 84.38 88.50 105%  Raw Material Expenses as a percentage of Sales increased drastically Raw Material Raw Material Expenses as a Year Sales Expense percentage of Sales 2008 18.63 4.92 26% 2009 64.32 43.15 43% 2010 84.3 35.78 36%  The profit generation was barely enough to meet the interest burden Year PBIT Interest Paid 2008 2.69 3.59 2009 5.24 9.42 2010 7.9 10.32
  • 5. Managerial Economics: Project Report PGDM-Exec 2011 - Term-IAnalysis of Cash Flow  Borrowing in 2010 was 21 times as that of 2009 Proceeds from Increase in Year borrowing borrowing 2009 8.13 21 times 2010 169.46  Interest burden due to borrowing has also increased to 10.31 crore in 2010 from 9.65 crore in 2009  Net Cash flow from Investing activities is -3.27 in 2009 and -1.26 in 2010 which is negative  Net Cash Flow from Operating Activities in 2009 is -0.23 that means operation is generating negative cash flow in this year  Net Cash Flow from Operating Activities in 2010 is 4.73 Crore  It can be concluded that Company is not able to generate positive cash flow on regular basis.Financial Ratios Analysis 2008 2009 2010 Debt 89.47 80.04 71.92 Assets 128.05 123.58 85.11 Interest payments 10.32 9.42 3.59 EBIT 7.9 5.24 2.69 Debt to Asset ratio 0.7 0.65 0.85 Interest coverage 0.77 0.56 0.75Debt to Asset ratio:This ratio measures the % of total assets financed with debt. For example, debt assets ratio of 0.4 indicates that40% of the companys assets are financed with debt. Generally, higher debt means higher financial risk and thusweaker solvency.Interest coverage:This ratio measures the no. of times a companys EBIT could cover its interest payments. Higher ratio meansindicates solvency, offering greater assurance that the company can service its debt from operating earningsCompany Debt to Asset ratio is high which indicates 85% of companys assets are financed with debt, so interestpayments are higher than its EBIT which makes company in loss. Also Company’s Interest coverage ratio is low,which means weaker solvency.
  • 6. Managerial Economics: Project Report PGDM-Exec 2011 - Term-IConclusions & Suggestions  Company should continue its operations as there are great opportunities for growth which is visible from the following data Growth Year Rate 2008 540 % 2009 245 % 2010 47 % However following points should be taken care of during operations  The company should put a check on its Expenses, as expenses alone in all these years are more than Total Revenue as explained above  Check on Raw Material Expenses should be put as Raw Material Expenses as a percentage of sales is also continuously increasing  With control of expenses Net Cash Flow from operating activities will also improve  Borrowing should be controlled in order to reduce the tax burden
  • 7. Managerial Economics: Project Report PGDM-Exec 2011 - Term-IReferences www.gtpl.co.in http://www.facebook.com/pages/Gactel-Turnkey-Projects-Limited/152136948189609?sk=info CMIE Database www.powertoday.inAnnexure 1 Sales (Rs Market Sq Value of Market S.No. Company Name Million Share Share 1 Larsen & Toubro Ltd. 502850.5 53.70291855 2884.003461 2 Punj Lloyd Ltd. 77558.4 8.283003473 68.60814653 3 B G R Energy Systems Ltd. 47609.4 5.084540495 25.85255205 4 Era Infra Engg. Ltd. 36924.8 3.943457403 15.55085629 5 Ramky Infrastructure Ltd. 31479.3 3.361894408 11.30233401 6 Ircon International Ltd. 31087.9 3.320094067 11.02302461 7 Engineers India Ltd. 26775.4 2.859532058 8.176923593 8 Afcons Infrastructure Ltd. 22305.5 2.382160204 5.674687238 9 Alstom Projects India Ltd. 18487.7 1.974430665 3.898376452 10 Ahluwalia Contracts (India) Ltd. 17548.8 1.874158974 3.512471859 11 Shriram E P C Ltd. 16708.7 1.784438825 3.184221919 12 B L Kashyap & Sons Ltd. 15950 1.70341195 2.901612272 13 I O T Infrastructure & Energy Services Ltd. 15779.4 1.685192384 2.839873371 14 A 2 Z Maintenance & Engg. Services Ltd. 13444 1.4357787 2.061460474 15 M B L Infrastructures Ltd. 10016 1.069678627 1.144212364 16 Hindustan Dorr-Oliver Ltd. 8897.6 0.950236876 0.90295012 17 Sunil Hitech Engineers Ltd. 8055.6 0.860313812 0.740139856 18 Consolidated Construction Consortium Ltd. 7230.4 0.772184938 0.596269579 19 Techno Electric & Engg. Co. Ltd. 7166.1 0.765317892 0.585711476 20 U B Engineering Ltd. 6109.1 0.652433476 0.425669441 21 Jaihind Projects Ltd. 4093.3 0.437152109 0.191101966 22 Welspun Projects Ltd. 2448.8 0.261524463 0.068395045 23 Brahmaputra Infrastructure Ltd. 2062.7 0.220290146 0.048527748 24 Avasarala Technologies Ltd. 1491.3 0.159266347 0.025365769 25 Brahmaputra Consortium Ltd. 1123 0.119933017 0.014383929 26 M S Khurana Engg. Ltd. 1044.2 0.111517414 0.012436134 27 Gactel Turnkey Projects Ltd. 843 0.09002986 0.008105376 28 Techno Electric & Engg. Co. Ltd. [Merged] 755.4 0.080674444 0.006508366 29 Coromandel Engineering Co. Ltd. 241.5 0.025791472 0.0006652 30 Saag R R Infra Ltd. 137 0.014631187 0.000214072 31 Sika Interplant Systems Ltd. 131.2 0.014011765 0.00019633 936356 3053.36Annexure 2 Herfindahl Concentration Ratio Index 4 8 12 16 20 31 3053.36 71.01 82.94 90.27 95.41 98.46 100