1. IISWBM
PGDBM 2nd Semester StudentsPresent
A Case study on
Evaluation of Financial Performance
Of
BATA and Shoppers Stop

2. BALANCE SHEET OF Shoppers Stop And Bata
Shoppers Stop Shoppers Stop BATA BATA
As at 31.12.2012
Rs. Millions
As at 31.12.2011
Rs. Millions
As at 31.12.2012
Rs. Millions
As at 31.12.2011
Rs. Millions
EQUITY AND LIABILITIES
Shareholders' Funds
Share Capital 414.898 412.811 642.64 642.64
Reserves & Surplus 6523.322 6172.166 6360.66 5100.42
6938.22 6584.977 7003.3 5743.06
Non-current Liabilites
Trade Payables 561.1 409.55
Long-term provisions 0 216.24
Long Term Borrowings 1125 350
Deferred Tax (Liabilities) 62.543 2.348
1187.543 352.348 561.1 625.79
Current Liabilities
Short-term Borrowings 1943.371 1840.687
Trade Payables 2846.766 2360.754 2379.69 1936.21
Other Current Liabilities 1360.986 1423.441 565.24 436.6
Short Term Provisions 102.807 92.808 794.99 500.3
6253.93 5717.69 3739.92 2873.11
Total 14379.693 12655.015 11304.32 9241.96

3. BALANCE SHEET OF Shoppers Stop And Bata
Shoppers Stop Shoppers Stop BATA BATA
As at 31.12.2012
Rs. Millions
As at 31.12.2011
Rs. Millions
As at 31.12.2012
Rs. Millions
As at 31.12.2011
Rs. Millions
ASSETS
Non-current Assets
Fixed Assets
Tangible Assets 4429.828 4061.834 2406.72 2184.57
Intangible Assets 129.332 106.334 6.77 5.42
Capital work-in-
progress 274.486 297.707 181.77 80.67
4833.646 4465.875 2595.26 2270.66
Non-current investment 3309.74 2842.129 48.51 48.51
Deferred Tax Assets(net) 0 0 443.59 342.15
Long-term loans & advances 2754.034 2502.865 995.38 845.2
Other non-current assets 79.045 0
10976.465 9810.869 4082.74 3506.52
Current Assets
Inventories 2438.249 2120.401 4620.93 3913.22
Trade Receivables 203.636 191.692 449.47 313.94
Cash & Cash equivalents 117.213 71.462 1871.01 1229.46
Short-term Loans &
Advances 585.736 389.248 212.43 238.01
Other Current Assets 58.66 71.343 68.34 40.81
3403.494 2844.146 7222.18 5735.44
Total 14379.959 12655.02 11304.92 9241.96

4. STATEMENT OF PROFIT AND LOSS ACCOUNT for Shoppers Stop And Bata
Shoppers Stop Shoppers Stop BATA BATA
As at 31.12.2012
Rs. Millions
As at 31.12.2011
Rs. Millions
As at 31.12.2012
Rs. Millions
As at 31.12.2011
Rs. Millions
Income
Revenue from Operations (Gross) 22558.892 19297.051 18717.54 15650.78
Less : Excise Duty 293.01 225.43
Revenue for Operations (Net) 18424.53 15425.35
Other Income 172.147 186.876 299.52 1309.14
Total Revenue 22731.039 19483.927 18724.05 16734.49
Expenses
Cost of Raw Material & Components
Consumed 2952.19 2551.71
Purchases of Stock in trade 14393.681 12709.382 6323.01 5590.91
Changes in Inventories of Stock-in-Trade -
(Increse / Decrease) -317.848 -609.035 -594.77 -877.16
Employee benefit & expenses 1610.641 1276.404 1959.33 1858.54
Finance Costs 318.814 250.36 10.32 8.7
Depreciation & amortization expenses 507.471 377.224 513.75 411.01
Other Expenses 5608.311 4501.522 5040.58 3996.75
Total Expenses 22121.07 18505.857 16204.41 13540.46
PROFIT BEFORE EXCEPTIONAL ITEMS + TAX 609.969 978.07 2519.64 3194.03
Exceptional Items 7.406 0
(Loss) /Profit before Tax 602.563 978.07 2519.64 3194.03
Tax Expenses 210.878 335.478 803.61 935.64
(LOSS) / PROFIT FOR THE YEAR 391.685 642.592 1716.03 2258.39
Earnings per equity share [Nominal value of
share Rs. 10 (Previous year : Rs. 10)]
Earnings per share (basic) (Rs.) 4.73 7.8
Earnings per share (diluted) (Rs.) 4.71 7.75
Earnings per share (basic & diluted) (Rs.) 26.7 35.14

5. Ratio Analysis

6. Ratio Analysis
• Purpose:
• To identify aspects of a business’s
performance to aid decision making
• Quantitative process – may need to be
supplemented by qualitative factors to get a
complete picture
• 4 main areas:

7. Ratio Analysis
1. Liquidity – the ability of the firm to pay its way
2. Investment/shareholders – information to enable decisions to be made on
the extent of the risk and the earning potential of a business investment
3. Gearing – information on the relationship between the exposure of the
business to loans as opposed to share capital
4. Profitability – how effective the firm is at generating profits given sales
and or its capital assets

8. Ratio Analysis
Measurement of Liquidity

9. Calculations of Different Ratios
Current Ratio :
Current Asset
Current Ratio = ----------------------
Current Liability
Retailer Item Year-2012 Year-2011
Shoppers stop Current Asset 3,403.49 2,844.15
Current Liabilities 6,253.93 5,717.69
BATA Current Asset 7222.18 5735.44
Current Liabilities 3739.92 2873.11
Shoppers Stop BATA
Year 2012 Year 2011 Year 2012 Year 2011
0.54 0.50 1.93 2.00

10. Calculations of Different Ratios
Quick Ratio :
Quick Asset= (Current Asset - Inventory)
Quick Ratio = -----------------------------------------------------
Current Liability
Retailer Item Year-2012 Year-2011
Shoppers stop Quick Asset 3,403.49- 2,438.25 2,844.15 - 2,120.40
Current Liabilities 6,253.93 5,717.69
BATA Quick Asset 7222.18-4620.93 5735.44-391344
Current Liabilities 3739.92 2873.11
Shoppers Stop BATA
Year 2012 Year 2011 Year 2012 Year 2011
0.15 0.13 0 .70 0.63

11. Calculations of Different Ratios
Inventory Turnover Ratio :
Cost of Goods Sold (Sales - Gross Profit)
IT Ratio= -----------------------------------------------
Average Inventory
Retailer Item Year-2012 Year-2011
Shoppers stop (Sales - Gross Profit) 22,558.89 – 6871.43
Inventory 2,438.25 2,120.40
Average Inventory = (2,438.25+ 2,120.40 )/2= 2279.32
=6.88 times
Average Inventory Holding Period(12/6.88) = 1.74 months
BATA (Sales - Gross Profit) 18,424.53-4547.17
Inventory 4620.93 3913.22
Average Inventory = (4620.93+3913.22 )/2= 4267.07
=3.25 times
Average Inventory Holding Period(12/3.25)= 3.69 months
Shoppers Stop BATA
Year 2012 Year 2012
6.88 3.25

12. Calculations of Different Ratios
Debtors Turnover Ratio :
Credit Sales
Debtors Turnover Ratio = ----------------------
Avg Debtors
Note- Assuming Total sales =Credit Sales
Retailer Item Year-2012 Year-2011
Shoppers stop Net Sales 22558.89 19297.07
Debtors 203.64 191.69
Avg Debtors=(203.64+191.69)/2=197.16 114.41 times
Debtors collection period = 365/114.41=3.19 days
BATA Net Sales 18424.35 15425.35
Debtors 449.47 313.94
Avg Debtors=(449.47 +313.94 )/2=381.70 48.26times
Debtors collection period = 365/48.26=7.56 days
Shoppers Stop BATA
Year 2012 Year 2012
3.19 days 7.56 days

13. Calculations of Different Ratios
Creditors Turnover Ratio :
Credit Purchases
Creditors Turnover Ratio = ----------------------
Avg Creditors
Note- Assuming Total purchases =Credit purchases
Retailer Item Year-2012 Year-2011
Shoppers stop Purchases 14,393.68 12,709.38
Creditors 2,846.77 2,360.75
Avg Creditors=(2,846.77 +2,360.75 )/2= 2603.76 5.52 times
Creditor payment period = 365/5.52=66.12 days
BATA Purchases 9275.20 8142.62
Creditors 561.10 409.55
Avg Creditors=(561.10 + 409.55 )/2= 485.23 19.11 times
Creditor payment period = 365/19.11=19.09 days
Shoppers Stop BATA
Year 2012 Year 2012
66.12 days 19.09 days

14. Ratio Analysis
Leverage / Capital Structure Ratio

15. Calculations of Different Ratios
Debt Equity Ratio :
Total debt Total Debt = (Long Term Debt + Current Liability )
Debt Equity Ratio : = ----------------
Total Equity Total Equity = (Share Capital + Reserve & Surplus)
Retailer Item Year-2012 Year-2011
Shoppers stop Total Debt 7378.93 6067.69
Total Equity 6,938.22 6,584.98
BATA Total Debt 3,739.92 2,873.11
Total Equity 7,003.30 5,743.06
Shoppers Stop BATA
Year 2012 Year 2011 Year 2012 Year 2011
1.06 0.92 0.53 0.50

16. Calculations of Different Ratios
Debt Asset Ratio :
Total debt Total Debt = (Long Term Debt + Current Liability )
Debt Asset Ratio : = ----------------
Total Asset
Retailer Item Year-2012 Year-2011
Shoppers stop Total Debt 7378.93 6067.69
Total Asset 14,379.96 12,655.02
BATA Total Debt 3,739.92 2,873.11
Total Asset 11,304.92 9,241.96
Shoppers Stop BATA
Year 2012 Year 2011 Year 2012 Year 2011
0.51 0.47 0.33 0.31

17. Calculations of Different Ratios
Interest Coverage Ratio :
EBIT
Interest Coverage Ratio: = ----------------
Interest
Retailer Item Year-2012 Year-2011
Shoppers stop EBIT 800.6 1053.3
Interest 190.7 75.2
BATA EBIT 2519.64 3194.03
Interest 10.32 8.70
Shoppers Stop BATA
Year 2012 Year 2011 Year 2012 Year 2011
4.20 14.01 244.51 367.12

18. Ratio Analysis
Profitability Analysis

19. Calculations of Different Ratios
Gross Profit Ratio or G.P Ratio :-
Gross Profit (G.P)
Gross Profit Ratio = ----------------------
Net Sales
G.P. =Sales - Cost of Goods Manufactured
Retailer Item Year-2012 Year-2011
Shoppers stop G.P. (22558.89-15686.47) (19297.05-13376.75)
=6872.42 =5920.30
Net Sales 22558.89 19297.07
BATA G.P. (18424.35-13876.33) (15425.35-11695.64)
= 5485.02 =3729.71
Net Sales 18424.35 15425.35
Shoppers Stop BATA
2012 2011 2012 2011
30.46% 30.68% 24.68% 24.18%

20. Calculations of Different Ratios
EBITDA/ Operating Profit Ratio :-
EBITDA(Earnings before interest, taxes, depreciation and amortization)
E.B.I.T.D.A Ratio = ----------------------
Net Sales
Retailer Item Year-2012 Year-2011
Shoppers stop EBITDA 1308.1 1430.5
Net Sales 22558.89 19297.07
BATA EBITDA 3040.27 3613.99
Net Sales 18424.35 15425.35
Shoppers Stop BATA
Year 2012 Year 2011 Year 2012 Year 2011
5.80% 7.41% 16.50% 23.43%

21. Calculations of Different Ratios
Net Profit Ratio or PAT Ratio :-
N.P
N.P. Ratio = ----------------------
Net Sales
Retailer Item Year-2012 Year-2011
Shoppers stop N.P. 391.69 642.59
Net Sales 22558.89 19297.07
BATA N.P. 1716.03 4548.02
Net Sales 18424.35 15425.35
Shoppers Stop BATA
2012 2011 2012 2011
1.74% 3.33% 9.31% 14.64%

22. Calculations of Different Ratios
Return On Asset Ratio or ROA Ratio :-
PAT + Interest
ROA Ratio : = ----------------------
Average Assets
Retailer Item Year-2012 Year-2011
Shoppers stop PAT+ Interest 391.69
Average Assets 13517.49
BATA PAT+ Interest 1716.03
Average Assets 10273.14
Shoppers Stop BATA
Year 2012 Year 2012
2.90% 16.70%

23. Calculations of Different Ratios
Return on Capital Employed Ratio or ROCE Ratio
PAT
ROCE Ratio : = ----------------------
Total Capital Employed
Capital Employed = Share Holder's Fund + Non Current Liability
Retailer Item Year-2012 Year-2011
Shoppers stop PAT 391.69 642.59
Total Capital Employed 8125.76 6937.33
BATA PAT 1716.03 2258.39
Total Capital Employed 7564.40 6368.85
Shoppers Stop BATA
Year 2012 Year 2011 Year 2012 Year 2011
4.82% 9.26% 22.69% 35.46%

24. Calculations of Different Ratios
Return on Net Worth Ratio or RNW Ratio :
PAT
RNW Ratio : = ----------------------
Share Holders' Fund
Share Holder's Fund = Share Holder's Capital + Reserve & Surplus
Retailer Item Year-2012 Year-2011
Shoppers stop PAT 391.69 642.59
Share Holders' Fund 6938.22 6584.98
BATA PAT 1716.03 2258.39
Share Holders' Fund 7003.30 5743.06
Shoppers Stop BATA
Year 2012 Year 2011 Year 2012 Year 2011
5.65% 9.76% 24.50% 39.14%

25. Calculations of Different Ratios
Earning Per Share or EPS :
Net Profit Available to Equity Holders
EPS Ratio : = ------------------------------------------------------
Total No. of Ordinary Share
Retailer Item Year-2012 Year-2011
Shoppers stop Net Profit Available 391.69 X 1000000 642.59 X 1000000
to Equity share Holders
Total No. of Ordinary Share 82979517 82979517
BATA Net Profit Available
to Equity share Holders 1716.03 X 1000000 2258.39 X 1000000
Total No. of Ordinary Share 64263770 64263770
Shoppers Stop BATA
Year 2012 Year 2011 Year 2012 Year 2011
4.72 7.74 26.70 35.14

26. Calculations of Different Ratios
Trailing PE Ratio :
MPS
Trailing PE Ratio = ----------------------
EPS
Retailer Item Year-2012
Shoppers stop MPS 391
EPS 4.72
BATA MPS 827.8
EPS 26.7
Shoppers Stop BATA
Year 2012 Year 2012
83 31

27. Calculations of Different Ratios
Price to Book Value :
Market Price per share
P/B Value = -------------------------------------
Book Value per share
Shoppers stop: Year-2012
Share Holder's Fund + Reserve & Surplus (414.90+6523.32) X 1000000
Book Value / Share = -------------------------------- = -------------------------------------
No. of Equity Share 82979517
=83.61
391
P/B Value =------------------------ =4.68
83.61
Bata: Year-2012
Share Holder's Fund + Reserve & Surplus (642.64+6360.66) X 1000000
Book Value / Share = -------------------------------- = -------------------------------------
No. of Equity Share 64263770
= 108.98
827.8
P/B Value =------------------------ =7.60
108.98
Shoppers Stop BATA
Year 2012 Year 2012
4.68 7.60

28. Calculations of Different Ratios
PEG Ratio :
PE
PEG Ratio = ----------------------
Expected Earning Growth
It is difficult to judge stock on the basis of PE only. It may be seen that PE
may be high for a stock but PEG ratio Is <1 .

29. Calculations of Different Ratios
Asset Turnover Ratio :
Sales
AT Ratio= -----------------------------------------------
Average Asset
Retailer Item Year-2012 Year-2011
Shoppers stop Sales 22558.89 19297.07
Average Asset 13517.49
BATA Sales 18424.35 15425.35
Average Asset 10273.44
Shoppers Stop BATA
Year 2012 Year 2012
1.66 1.79

30. Calculations of Different Ratios
Du Pont Analysis(NP Ratio X Asset Turnover Ratio) :
Net Profit after Tax Sales
Du Pont Analysis =--------------------------- X ----------------
Sales Total Assets
Retailer Year-2012 Year-2011
Shoppers stop :- (391.69 /22,558.89 ) X (22,558.89 /14,379.96 )
=1.74% X1.56=2.72 %
BATA:- (1716.03/ 18424.35)X(18,424.53 / 11,304.92 )
=0.093% X1.62=15.18%
Shoppers Stop BATA
Year 2012 Year 2011 Year 2012 Year 2011
2.72% 5.08% 15.18% 24.44%

31. Ratio (2012) (2012)
Liquidity
Current Ratio 0.54 1.93
Quick Ratio 0.15 0.70
Inventory Turnover 6.88 3.25
Debtors collection period 3 days 8 days
Creditors Payment period 67 days 20days
Leverage
Debt Equity 1.06 0.53
Debt Asset 0.51 0.33
Interest Coverage 4.20 244.51
Profitability
GP Margin 30.46 % 24.18 %
EBITDA Margin 5.80 % 16.50 %
NP Margin 1.74 % 9.31 %
Return On Asset 2.90 % 16.70 %
ROCE 4.82% 22.69 %
Return On Equity 5.65% 24.60%
PE 83 31
Asset Turnover 1.66 1.79
Earning Power 2.72 % 15.18%

32. Conclusions : -
1. A greater Current Ratio indicates higher solvency of the company. Here in our
comparison we find BATA to be a very solvent and actually ideally solvent
whereas Shopper’s Stop is doing miserably. (acceptance level of solvency by
bank is 1.33:1 ; whereas ideally it should be 2:1 or close, which is sufficed by
BATA)
2. A quick ratio of 1:1 indicates highly solvent position. However, in both the
cases of BATA & Shopper’s Stop the numbers are not in their favour. BATA
seems to be better placed in this respect than Shopper’s Stop.
3. Higher inventory turnover means the number of times the entire of the stock of
the company has been sold. Here Shopper’s Stop has done better than its
counterpart BATA.
4. Here the Shopper’s Stop seems to be in a better position than BATA only
superficially but actual collection period can be compared with the Credit Terms
of the individual company.
5. Here also Shopper’s Stop seems to be ideally maintaining a limit on the days
of Credit payments than BATA.
Overall Liquidity Performance -
BATA’s performance as far as liquidity is concerned is better marring the
facts that Debtor’s collection period & Creditor’s payment period. Hence
we will state that BATA is more solvent than than Shopper’s Stop.

33. Conclusions : -
6. Here BATA has lower ratio than Shopper’s Stop. Hence Shopper’s Stop is
more vulnerable than BATA and BATA is financially sound.
7. Here also the ratio of Shopper’s Stop is more than that of BATA, which
means Shopper’s Stop is "highly leveraged," and could be in danger
if creditors start to demand repayment of debt.
8. BATA has higher interest coverage ratio than Shopper’s Stop which means
BATA is much more solvent than Shopper’s Stop. Thus BATA with higher
Interest coverage Ratio is more likely to get credit easily and on more favorable
terms.
Overall Leaverage Perormance –
In all respect BATA’s performance is better than Shopper’s Stop.
9. Here the GP Ratio for Shopper’s Stop is more than BATA which means that
Shopper’s Stop will make reasonably better profit than BATA , as long as it
keeps the overhead cost in control.
10.The higher the EBITDA margin, the less operating expenses eat into a
company's bottom line, leading to a more profitable operation. Here since
BATA has higher EBITDA than Shopper’s Stop, its operations are
comparatively more profitable.

34. Conclusions : -
11.Performance of BATA is better than Shopper’s Stop here. The higher the
margin is, the more effective the company is in converting revenue into actual
profit.
12.Return on Asset Ratio is better in case of BATA than Shopper’s Stop. Hence
BATA’s efficiency of utilization of assets in generating revenue is better than
Shopper’s Stop.
13.Since BATA’s Return on Capital Employed is more than that of Shopper’s
Stop , it generates more profit per unit of Capital employed and thus
profitability is better in BATA.
14.Higher values Return on Equity are generally favorable meaning that the
company is efficient in generating income on new investment. Hence, BATA is
more favourably placed than Shopper’s Stop on newer investments.
15.A high P/E ratio suggests that investors are expecting higher earnings growth
in the future compared to companies with a lower P/E. However, the P/E ratio
doesn't tell us the whole story by itself. Hence investors expect Shopper’s
Stop earning growth to be better than BATA.
16.If a company can generate more sales with fewer assets it has a higher asset
turnover ratio which tells it is a good company because it is using its assets
efficiently. Here also, BATA out performs Shopper’s Stop

35. Conclusions : -
17.Typically, the higher the asset earnings power ratio a company has relative to
others within its industry, the more efficient that firm is at generating cashflows
from its asset base. Hence here also, BATA is placed well ahead of
Shopper’s Stop.
18.In case of growth firms i.e. firms with higher growth of sales and earning will
have higher ratio, for the reason that the potential future growth in earnings is
reflected in the current stock price. Hence with Price to Book Value Ratio of
BATA being better than Shopper’s Stop, the potential growth/performance of
BATA is better among the two.
19.Du Pont Analysis is a tricky proposition and hence should be employed with
caution. However, breakup in ROE will show actually the strengths and
weaknesses. As far as overall value is concerned, BATA ‘s performance is
better than Shopper’s Stop.
OVERALL CONCLUSION : -
Performance of BATA India is far better than Shopper’s Stop in every aspect
whether it is in solvency or leaverage or Dupont Analysis is concerned.

36. Group Members
Amitava Sengupta (Roll =22)
Abir RoyChowdhury (Roll =24)
Ayan Bhattacharya (Roll =31)
Anamika Roy (Roll =4)
Debasis Kundu (Roll =17)
Dibyendu Ghoshal (Roll =10)
Gaurav Kumar Bose (Roll =15)
Mustafa Alam(Roll =19)
Sudeshna Paul (Roll =1)
Sudipta Karmakar (Roll =3)
Tirthankar Sen (Roll =29)

37. We express our gratitude to
Our Professor Mr. Ashish Mitra

38. Thank You!