Itc Annual report 2008

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ITC Annual report 2008

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  • Asset turover: efficiency with which assets are utilized Sales Avg total assets
  • ROCE: Operating Profit or PBIT P/E: Mkt price of a share Capital Employed ----------------------Value of all assets employed in business Earnings per share RONW: or ROE: PAT avg shareholder’s equity
  • Itc Annual report 2008

    1. 1. ITC Limited One of India’s Most Valuable Corporations By V.Karthik
    2. 2. About ITC <ul><li>ITC Business Portfolio </li></ul><ul><li>FMCG: Cigarettes, Other FMCG </li></ul><ul><li>Hotels </li></ul><ul><li>Agri Business Leaf Tobacco, Agri Commodities </li></ul><ul><li>Paperboard, Paper & Packaging </li></ul><ul><li>Revenue : $ 4.75 bn </li></ul><ul><li>Chairman :Y.C Deveshwar </li></ul><ul><li>ITC is the market leader in cigarettes in India. </li></ul>
    3. 3. Corporate Governance <ul><li>ITC defines Corporate Governance as a systemic process by which companies are directed and controlled to enhance their wealth-generating capacity. </li></ul><ul><li>ITC's governance philosophy includes </li></ul>Microsoft Confidential <ul><ul><li>Responsibility on the Board of Directors to protect and enhance shareholder value , as well as fulfil obligations to other stakeholders </li></ul></ul>Trusteeship Transparency Empowerment Control <ul><li>Explaining the Company’s policies and actions to those to whom it has responsibilities </li></ul><ul><li>Is a process of encouraging creativity and innovation throughout the organization at all levels & thereby helping actualize the potential of its employees. </li></ul><ul><li>Ensures that f reedom of management is exercised within a framework of checks and balances and is designed to prevent misuse of power </li></ul>
    4. 4. Corporate governance (contd..) <ul><li>The practice of Corporate Governance in ITC is at three interlinked levels: </li></ul><ul><li>i. Strategic supervision - by the Board of Directors </li></ul><ul><li>ii. Strategic management - by the Corporate Management Committee </li></ul><ul><li>iii. Executive management - by the Divisional /Strategic Business Unit (SBU) Chief Executive assisted by the respective Divisional / SBU Management Committee </li></ul>
    5. 5. Auditor’s report <ul><li>First statement- “ Its their opinion on Financial statements” </li></ul><ul><li>Audit is as per accepted standards: </li></ul><ul><ul><ul><li>Check for material misstatement </li></ul></ul></ul><ul><ul><ul><li>Assessing accounting principles used and significant estimates </li></ul></ul></ul><ul><ul><ul><li>Evaluating overall financial presentation. </li></ul></ul></ul><ul><li>The B/S, P/L account and cash flow statement dealt with by this report are in agreement with the books of account; </li></ul><ul><li>The BS, P/L account and cash flow statement dealt with by this report comply with the accounting standards referred to in subsection (3C) of Section 211 of the Companies Act, 1956; </li></ul><ul><li>The said accounts give the information required by the Companies Act, 1956 </li></ul>
    6. 6. Significant Accounting policies <ul><li>Fixed assets </li></ul><ul><ul><li>Expenses capitalized include applicable borrowing costs </li></ul></ul><ul><ul><li>Capitalize soft wares- license fee, implementation costs </li></ul></ul><ul><ul><li>Software upgradation/enhancement considered as revenue expenditure </li></ul></ul><ul><li>Depreciation </li></ul><ul><li>Depreciation has been provided on written down method a s per rates specified in Schedule XIV to the Companies Act, 1956, whichever is lower, by equal annual instalments. </li></ul><ul><li>Inventory – weighted average method </li></ul><ul><li>Sales- net sales after deducting tax and duties </li></ul><ul><li>Income on Investment – Accrual basis. </li></ul>
    7. 7. Management Discussion and analysis & Report of the Directors FMCG-others ( 1704 crores revenue 68%) <ul><li>Branded Packaged goods </li></ul><ul><li>51 % Growth </li></ul><ul><li>150 products under six brands </li></ul><ul><li>“ Aashirwaad” & “ Sunfeast ” more than 500 crore rupee brands. </li></ul><ul><li>“ Bingo ” launched after extensive market research </li></ul>
    8. 8. <ul><li>Life style retailing </li></ul><ul><li>Premium segment </li></ul><ul><ul><ul><ul><li>“ Classic” range – Formal wear </li></ul></ul></ul></ul><ul><ul><ul><ul><li>“ Wills sport” – relaxed wear </li></ul></ul></ul></ul><ul><ul><ul><ul><li>“ wills clublife”- Evening wear </li></ul></ul></ul></ul><ul><li>“ Wills Lifestyle India Fashion Week ”- ramp to rack initiative. “ Wills signature” range of designer wear in select Life style stores </li></ul><ul><li>“ John Players ” has a strong pan India presence </li></ul>Management Discussion and analysis & Report of the Directors
    9. 9. <ul><li>Greeting,Gifting & Stationary </li></ul><ul><li>“ Classmate ”-notebooks has 16% Marketshare in branded segment </li></ul><ul><li>“ Paperkraft ”-premium stationary brand targetted at Executives and college students launched. </li></ul><ul><li>“ Expressions ”- leading greetings brand </li></ul>Management Discussion and analysis & Report of the Directors
    10. 10. B/S, P/L, CF (Excel) analysis
    11. 11.
    12. 12. Ratio Analysis Over Last 5 Years 12.24 % VAT & increasing excise duty put pressure on margins RATIOS 7-Mar 6-Mar 5-Mar Mar-98 Mar-97 Debt-Equity Ratio 0.02 0.02 0.03 0.68 0.62 Current Ratio 1.35 1.15 0.97 1.56 1.38 Profit margin 13.60% 13.53% 16.13% 13.23% 12.25%   ROE(%) 27.86% 26.55% 25.91% 27.34% 28.41% EPS 7.19 6.08 4.91 4.29 3.69 ROI 27.74% 24.80% 28.97% 26.17% 26.42% asset turnover 2.04 1.83 1.8 1.98 2.17
    13. 13. Ratio Analysis b/w ITC & GPI Return on Investment = Profit Margin x Asset Turnover Mar-07 ITC GPI Profit margin 13.60% 5.52% asset turnover 2.04 2.28 ROI 27.74% 12.58% EPS Rs 7.19 Rs 84.73       Liquidity ratio     Current ratio 1.35 1.76 debtor turnover 32.32 117.24       Solvency ratio     Debt-to equity 0.02 0.03
    14. 14. Profit and Loss Statement of 2 Companies for 12 Months Ending 31.03.2007 (in Rs Cr)     Year ITC GPI     INCOME :     Sales Turnover 20,208.77 1596.77 Less : Excise Duty 7,408.08 835.28    Net Sales 12,800.69 761.49   Other Income 377.24 33.6     Total Income 13,487.23 795.09     EXPENDITURE :       Raw Materials 5,512.79 308.04 Mfg,selling,administration expenses etc. 3507.63 346.21 Total expenditure 9,020.42 654.25 PROFIT        Operating Profit [ 1 - 2 ] 4,466.81 140.84 Less : Interest 17.34 3.23    Gross Profit 4,449.47 137.61 Less :  Depreciation 393.78 19.07    Profit Before Tax 4,055.69 118.54 Less : Tax 1,306.54 30.44 Profit After Tax 2,749.15 88.1   Profits brought forward 424.28 230.09 Available for Appropriation 3,173.43 318.19 APPROPRIATION     Reserves 1,464.12 15   Proposed  Dividend 1,166.29 26    Profits carried down (Surplus) 543.02 277.19   3,173.43 318.19       Earnings per share on Profit After Tax Rs 7.19 Rs 84.73
    15. 15. Balance Sheet of Two Companies at 31.03.2007 Cash Flow Statements of Two Companies at 31.03.2007     Year ITC GPI     SOURCES OF FUNDS :     Total Shareholders Funds     (includes share capital, Reserves & surplus 10,437.08 418.15 Loan Funds 200.88 60.73     Total Liabilities 10,637.96 478.88     APPLICATION OF FUNDS :     Fixed Assets 5,610.91 126.55 Investments 3,067.77 246.26 Total Current Assets 6,301.14 254.82 Less :  Total Current Liabilities 3,869.01 145.20 Net Current Assets 2,432.13 109.62 Net Deferred Tax -472.85 -3.55     Total Assets 10,637.96 478.88 ITC GPI NET CASH FROM OPERATING ACTIVITIES 2247.61 84.04       NET CASH USED IN INVESTING ACTIVITIES -1084 -33.57       NET CASH USED IN FINANCING ACTIVITIES -1054.9 -42.89       Net Inc in Cash and Cash Equivalent 108.73 7.58 Cash and Cash Equivalents at Beginning of the year 977.77 6.68 Cash and Cash Equivalents at End of the year 1086.5 14.28
    16. 16. Key ratios that tells the financial health of the company <ul><li>The following financial ratios offer terrific insights into the financial health of a company useful for banks, share holders, debenture holders, Financial Institutions etc. </li></ul><ul><li>Current ratio </li></ul><ul><li>Debt-equity ratio </li></ul><ul><li>Ploughback & Reserves </li></ul><ul><li>Profit margin </li></ul><ul><li>Earnings Per Share </li></ul><ul><li>Return on Capital Employed (ROCE) </li></ul><ul><li>Return on Net Worth (RONW) </li></ul><ul><li>Dividends </li></ul><ul><li>Price to earnings ratio </li></ul>
    17. 17. Comparison b/w ITC & Cigarette Industry
    18. 18. Contd…… The ratio has doubled over 10years.Significant improvement in cash and credit collection policy
    19. 19. Conclusion <ul><li>After a careful analysis of all the ITC’s financial statements, calculating the ratios and studying the financial reports additional information we can make a conclusion that the company stands in a good financial position with improving tendencies. </li></ul><ul><li>We recommend a long–term investment in this company’s stocks. </li></ul><ul><li>If the Govt relaxes Excise and VAT on cigarretes profit margin would increase. </li></ul>

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