FINANCIAL STATEMENT ANALYSIS IDEA CELLULAR LTD.COMMON SIZE STATEMENT ANALYSISCOMPARATIVE STATEMENT ANALYSISTREND ANALYSISINTER COMPANY ANALYSISINTER SECTOR ANALYSISSUBMITTED TO BY: DEEPAK SRIVASTVASR.LEC. LALIT BHALA MBA(HONS.) ROLL NO. RQ1002A26
HISTORY OF IDEA:-IDEA Cellular Limited, a part of the Aditya Birla Group and an Indias leading Global System for Mobile communication (GSM) Mobile Servicesoperator was began its journey in the year 1995 as in the name of Birla Communications Limited for providing GSM-based services in the Gujaratand Maharashtra Circles. Later the company has licenses to operate in all 22 Service Areas. Presently, operations exist in 11 Service Areascovering Delhi, Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya Pradesh, Chattisgarh, Uttaranchal, Haryana, UP-West, Himachal Pradesh,UP-East, Rajasthan and Kerala. With a customer base of over 24 million, IDEA Cellulars footprint currently covers approximately 60% of Indiastelecom population. The companys operational 11 Service Areas are broken up into Established and New Service Areas. The established serviceareas are Delhi, Andhra Pradesh, Gujarat and Maharashtra, Haryana, Kerala, Madhya Pradesh and Uttar Pradesh (West) and the New ServiceAreas are Uttar Pradesh (East), Rajasthan and Himachal Pradesh. Changed its name to Birla AT&T Communications Limited followed by joint venture between Grasim Industries and AT&T Corporation in theyear 1996. After a year, in 1997, commenced its operations in the Gujarat and Maharashtra. During the year 2000, the company merged with TataCellular Limited, thereby acquired original license for the Andhra Pradesh Circle. IDEA acquired RPG Cellular Limited and consequently thelicense for the Madhya Pradesh (including Chattisgarh) Circle in the year 2001, and in the same year changed its name from Birla AT&TCommunications Limited to Birla Tata AT&T Limited. Obtained license for providing GSM-based services in the Delhi Circle. Again in 2002, thecompany altered its name to Idea Cellular Limited and launched Idea brand name and commenced its commercial operations in Delhi Circle.During the year, the company reached one million subscriber mark consecutively in the year 2003, reached two million subscriber mark.During the year 2004, the company acquired Escotel Mobile Communications Limited (subsequently renamed as Idea Mobile CommunicationsLimited), reached the four million subscriber mark and the first operator in India to commercially launched EDGE services 2005. Reached the fivemillion subscriber mark in the year 2005 and IDEA won an Award for the Bill Flash service at GSM Association Awards in Barcelona, Spain.The Company became a part of the Aditya Birla Group in the year 2006, subsequent to the TATA Group transferred its entire shareholding in the
Company to the Aditya Birla Group. In the same year 2006, IDEA acquired Escorts Telecommunications Limited (subsequently renamed as IdeaTelecommunications Limited). The Company reached the 10 million subscriber mark and also launched New Circles for obtain more and morecustomers. IDEA has extended its reach to 500 towns in Andhra Pradesh in August of the year 2006.ABNL, the parent of Aditya Birla TelecomLimited, agreed to transfer its entire shareholding in Aditya Birla Telecom Limited to the Company for the consideration of Rs. 100 million. In2007, the company won an award for the CARE service in the Best Billing or Customer Care Solution at the GSM Association Awards inBarcelona, Spain. The Initial Public Offering aggregating to Rs. 28,187 million and the company listed in both Bombay Stock Exchange and the National StockExchange during the year 2007. IDEA merged seven of its subsidiaries and reached the twenty million subscriber mark in the same year 2007. Ason February 2008, IDEA Cellular Ltd tied up with Southern Biotechnologies Ltd to bio-diesel for operating IDEAs gensets at all towers in theAndhra Pradesh region. The Company with Geodesic, an innovator in communication, collaboration and entertainment applications on mobile andInternet platforms jointly announced the launch of Idea Radio, a truly differentiated mobile music service for IDEA customers in the same year2008. Customer Service and Innovation are the drivers of this Cellular Brand. A brand known for their many firsts, IDEA is only the operator to launchGeneral Packet Radio Service (GPRS) and EDGE in the country. IDEA has seen phenomenal growth since its inception, the companys footprintidea is to first achieve critical mass, then drill deep instead of spreading thin, however, does not increasing geographic footprint only, it also drillsdeep and successfully attempts to provide excellent network coverage in all its circles of operations.
IDEA CELLULAR Comparative Profit & loss a/c for the year ended on 31st march (Rs in Crs) Mar Mar Mar Year 08(12) Inc./ Dec. Mar 07(12) % change 08(12) 09(12) Inc. / Dec. % changeINCOME :Sales Turnover 4,366.40 6,719.99 2,353.59 53.90 6,719.99 9,857.08 3,137.09 46.68 Excise Duty - - - - - -Net Sales 4,366.40 6,719.99 2,353.59 53.90 6,719.99 9,857.08 3,137.09 46.68Other Income 46.13 199.05 152.92 331.50 199.05 477.37 278.32 139.82Stock Adjustments (1.19) - 1.19 (100.00) - (0.05) (0.05) 10,334.4 Total Income 4,411.34 6,919.04 2,507.70 56.85 6,919.04 0 3,415.36 49.36EXPENDITURE : - -Raw Materials 4.06 0.01 (4.05) (99.75) 0.01 18.92 18.91 189,100.00Power & Fuel Cost 117.71 235.44 117.73 100.02 235.44 552.35 316.91 134.60Employee Cost 259.29 337.72 78.43 30.25 337.72 462.75 125.03 37.02Other Manufacturing Expenses 1,531.79 2,766.45 1,234.66 80.60 2,766.45 4,720.24 1,953.79 70.62Selling and Administration Expenses 142.56
FINANCIAL STATEMENT ANALYSIS Comparative statement:-1. While comparing the sales, it is clear that sales in 2008 has grown up by 53.90% but when we compare with year 2009 sales has risen only by 46.68%.2. Total income has increased by 2507.70 cr.(56.85%) in 2008 and by 3137.09 cr.(49.36) in 2009.3. Other income of the company has been increased by 331.50 % which is 152.29 cr. it shows that company’s outside income has been increased and from balance sheet is clearly shown that investment is increased by 4020.97% in 2008. In year 2009 other income has risen by 278.32 cr. which shows 139.82 increment because of 764.81% increase in investment.4. Raw material exp. has decreased by 99.75% in 2008 but increased by 189100% in the year 2009 it shows that company has purchased in bulk in 2007 which it has used in 2008 also and once again it bought in bulk in 2009. It shows there is uncertainty in raw material market.5. Power cost and other manufacturing exp. has increased by 117.73cr.(100.02%) and 1234.66cr.(80.60%) in 2008 and 316.91cr.(134.60%) and 1953.79cr.(70.62%).6. Total exp. shows that company is being operating efficiently.7. Int. shows that earlier in the year 2008 company has invested in higher return but in 2009 rate of return is not higher.8. Company paid tax of year 2007 in 2008. So, it is increased by 6044.34% .9. Extraordinary exp. has increased by 29.91 cr .(360.36%).10. P&L b/d has decreased by 777.02cr. in 2008 and due to that profit became loss of 1406.50cr. in 2008.In 2009 loss b/d is 1406.50cr. So, profit of 821.54 cr. Became loss of 405.29 cr.11. The assets of company has increased by 43.48% in 2008 but for that company has taken long term loans, but in year 2009 net increase in assets is only 2358.45 cr.(17.86%). It is due to equity shares.12. The reserve cap. of the company has risen by 7269.18 cr.(801.53%).13. Sundry debtors has increased by 131cr.(65.97%). It shows that company is not able to recover it’s debts on time.14. Cash and bank has decreased by 1322.68 cr.(72.69%) because company’s other manufacturing exp. has risen by 1234.66 cr.15. Total current assets has increased by 3189.85 cr. which is 202.66% in 2009 .16. Current liab. has increased by 449.28cr. in 2008 and by 574.98cr. in 2009, which may be due to increase in current assets.
FINANCIAL STATEMENT ANALYSIS COMMON SIZE1. Other income of the company is increasing per year in 2007 it was only 1.06% , 2.96% in 2008 and it’s percentage is 4.84 in 2009. It is because of company’s huge investment outside the business.2. Company has over valuated it’s closing stock in 07 and09 and it is not able to sale it’s stock on estimating price.3. The percentage of Power and fuel cost has increased because it is direct exp. and sales has increased almost double during this 3years time period. Same case with other manufacturing exp. it is also increased from 35.08% to 41.17%in 2008 and in2009 it is 47.89% of total sales.4. Company purchase raw material in alternative years because in 2007 it is4.06 cr. (0.09%) of sales and in 2008 it has purchased raw material for only 0.01 cr.it is approx. 0% of sales and in the subsequent next year it has purchased raw material of Rs. 18.92 cr.(0.19%).5. The human resource dept. of company is working properly sales is increasing but, employment cost is decreasing.6. Sales and administration exp. has also decreased from 21.24% of sales to 12.75% of sales. It shows marketing dept. is in good position and showing it’s potential.7. Total exp.% has increased because of increase in power and fuel exp. and other manufacturing exp. and because of it operating profit has reduced from 34.85% of sales in 2007 to 32.95% of sales in 2009.8. Interest is 7.81% of sales in 2007 and it is 9.32% sales in 2009 because company has provided large amount of loans and advances. So, income from loans has increased.9. Company is using it’s assets properly because earlier depreciation was 15.39% in 2007 but in 2009 it became only 12.61% of sales.10. In 2009 profit before tax is only 11.03% of sales because of increase in total exp. specially because of manufacturing and power cost. In 2008 it 16..62% of sales because of increase in gross profit.
11. Company has paid deferred tax of 65.13 cr. In 2008 which is 0.97% of sales which cause to reduction in reported net profit. In 2009 deferred tax is only 0.77% of sales.12. In 2007 extraordinary exp. is only 0.19 % of sales it shows company has not spent on uncertain exp. So, adjusted net profit is 497.76 cr. which is 11..31% of it’s total sales. But in 2008 company has spent 0.57% of sales on extraordinary exp. which is 38.21 cr. and net profit decreased to1006.15 cr. which is 14.97% of sales. In 2009 there are some uncertain events occurred in business. So, extraordinary items increased to 1.82 cr. which is 1.82% of sales. So, net profit became 821.54 cr. (8.33%) .13. Company is becoming less dependent on shareholders because in 2007 it was 40.33% of it’s total liab. and in 2008 it became 26.20% of it’s liab. In 2009 company has issued shares of 364.76 cr. but still the proportion is 16.43% of total liab. Because company has created huge amount of reserves.14. Reserves are increasing drastically where it was (413.71 cr.) in 2007 it became 906.91 cr. in 2008 and in 2009 it became 8176.09 cr which is 43.32% of sales. It means financial positions are very sound and it has earned huge amount of profit and it is not distributed among shareholders.15. Total shareholder’s fund was 33.89% of total liab. in 2007 and it is increasing in succeeding years and became 59.84% of total liab. because reserves are increasing from(6.43%) to 43.32% in 2009.16. Percentage of Total debt. is decreasing, it was 66.11% in 2007 and in 2009 it became only 40.16% in 2009 because reserve has increased from (6.43%) to 43.32% in 2009.17. Net block has increased from 5592.44 cr. to 10882.89 cr. but it’s percentage has decreased because company has invested large amount outside business.18. Cash was 28.30% of total liab. in 2007, but in 2008 cash reduced because company has distributed loans and also invested huge amount and then again cash increased to 12.42% of total liab. because company has performed better in 2009.19. Total current liab.is increasing but it’s percentage has decreased it shows that company is paying it’s liab. on time and it is operating in cash more. and debtors are also decreasing it shows that company’s recovery policy is very sound.
FINANCIAL STATEMENT ANALYSIS TREND ANALYSIS1. The index of share cap. has increased from 100 to 119.56. It shows that company has issued 19.56% shares of the year 2007 till 2009.2. Company is performing efficiently because where reserves was (100) in 2007 now it is 1976.29 and it is retaining dividend of shareholder’s. It shows company’s sound financial position.3. Company has taken large amount of unsecured loans it has increased by 183.43 during this period and it is used for purchasing fixed assets.4. Company has not invested more in fixed assets, it has only increased only by 93.53 points.5. Company may be planning to acquire any other company because it has invested large amount in outside business. It has increased from 100 to 35,638.54 . Company is getting more funds from outside business.6. Company has also provided huge amount of loans during this years It has increased by 385.267. Net assets has decreased to (331.91) in 2008 but in 2009 it increased and it became 485.26 due to loans and advances and investment.8. Company uses to purchase raw material in alternative years because in 2007 it was 100 and in 2008 it became 0.25 and in 2009 it once again became 466.01% of 20079. Cost of power and fuel is increasing it became 469.25 in2009 due to increase in sales.10. Operating profit has not increased in proportionate of sales and cost of production has increased in larger figures because cost of production has increased in larger proportion.11. There are some uncertain exp. which company is not able to control .So, it has increased to 2164.70 in 2009. Company should take some serious steps to overcome from it.12. Adjusted net profit has increased to 203.77 in 2008 but it decreased in 2009 and it is 166.38 it is because of increase in manufacturing exp. and power cost.