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Project Report
On
Financial Analysis
Of
Presented to
Preface
As a part of our syllabus of MBA programme in Semester-I, we are assigned some
practical and theoretical project work. In partial fulfillment of the Managerial
Accounting-I, course we have prepared a comprehensive project report in Financial
Analysis of the company.
Study of management will be immaterial if it is not coupled with study of financial aspect
of the business. It gives the student an opportunity to learn the connection between
comparison & execution to test & verify application of theories & help in the comparison
of management theories and practice. The study gives a chance to know about the
profitability and financial position of the firm.
We have chosen Wipro Limited which is a $3.5 Billion Global company in Information
Technology Services ,R&D Services, Business Process Outsourcing.
This report contains the analysis of the 5 years data of the company. The Financial
statements of the report are analyzed in three different ways such as
Trend Analysis
Horizontal Analysis
Ratio Analysis
Cashflow Analysis
The ratio analysis of the company has been derived for 23 ratios which help to determine
the companys performance. In the Scenario Analysis of the company we have included
the companys industrial GDP, its Market Share, Market Capitalization, Market Growth
etc.
Date: 20th December ,2008
Place: Kadi
Acknowledgement
With a sense of gratitude and respect, we would like to extend our heartiest thanks
to all of those who provided help and guidance to make this project a big success. No
Project is ever the outcome of single individuals talent or effort. This work is no
exception. This project would not have been possible without the whole hearted
encouragement, support and co-operation of our guide, friends and well-wishers.
Although it is not possible for us to name and thank them all individually, we must make
special mention of some of the personalities and acknowledge our sincere indebtness to
them.
The successful completion of this project rests on the shoulder of many persons who have
helped us directly or indirectly. We wish to take this opportunity to express to all
those, without whose help, completion of this project would have been difficult.
We are indebted and thankful to all the individuals who have guided, advised,
inspired and supported us in making this project a success.
Our gratitude to our honorable guide Prof. Nikunj Patel for giving us the
opportunity for developing the project and his able guidance, inestimable motivation and
constant encouragement throughout our project. Without his help this project would
never have been realized in its entirety.
We are especially thankful to our Head Of Department Prof. Bhavin Pandya for
his valuable support in providing us the facilities and his valuable guidance for the
development of this project.
Date: 20th December ,2008
Place: Kadi
Executive Summary
It is Summarize tin of all report in one or two pages so as to provide an overview of the
company. it is also called synopsis or Abstract. As a partials fulfillment of the
requirement for the Managerial Accounting Cource.We have completed a project report
on financial Analysis of Wipro Ltd.
Net worth of the company is increased in this year because of increase in Reserve
& Surplus
The EPS of Share is increased Rs. 7.43 to Rs 20.62 in 2007-08 So Share holder
are benefited.
Companys Total Assets are increased and it trying to expand its business on the
other hand debt are also increased it shows that company trying to Trading on
Equity.
CONTENT
Preface
Acknowledgement
Executive Summary
1. INTRODUCTION
1.1 Introduction to company
1.2 Group of companies
1.3 History
1.4 Company Profile
1.5 Registered office address
1.6 Board of director
1.7 Auditor
5. RATIO ANALYSIS
5.1 Introduction of the ratio analysis
5.2 Liquidity ratio
5.2.1 Current ratio
5.2.2 Quick ratio
5.2.3 Net working capital
5.3 Profitability ratio
5.3.1 Gross profit
5.3.2 Operating ratio
5.3.3 Net profit ratio
5.3.4 Return on investment
5.3.5 Return on equity
5.4 Assets turnover ratio
5.4.1 total asset turn over ratio
5.4.2 net fixed asset turn over
5.4.3 inventory turn over ratio
5.4.4 average age of inventories
5.4.5 debtor turn over ratio
5.5 Finance structure ratio
5.5.1 debt ratio
5.5.2 debt equity
5.5.3 interest coverage ratio
5.6 Valuation ratio
5.6.1 earning per share
5.6.2 divident pay out ratio
5.6.3 P/E ratio
5.6.4 Profit margin ratio
5.7 Du-Pont chart
6. SCENARIO ANALYSIS
6.1 business unit performance
6.2 company analysis
6.2.1 Share holding pattern
6.2.2 Market capitalization
7 ANNEXURES
8 BIBLIOGRAPHY
Chapter 1.
Introduction
Introduction to company
Group Companies
History
Company Profile
1. INTRODUCTION
1.1. Introduction of company
Wipro Limited (Wipro), together with its subsidiaries and associates (collectively, the
company or the group) is a leading India based provider of IT Services and Products,
including Business Process Outsourcing (BPO) Services, globally. Further,Wipro has
other business such as India and AsiaPac IT Services and products and Consumer
Care and Lighting. Wipro is headquartered in Bangalore, India.Wipro Technologies is
a global services provider delivering technology-driven business solutions that meet
the strategic objectives clients. Wipro has 40+ Centers of Excellence that create
solutions around specific needs of industries. Wipro delivers unmatched business
value to customers through a combination of process excellence, quality frameworks
and service delivery innovation. Wipro is the World's first CMMi Level 5 certified
software services company and the first outside USA to receive the IEEE Software
Process Award.
Wipro is a $3.5 billion Global company in Information Technology Services, R&D
Services, Business process outsourcing. Team wipro is 75,000 Strong from 40
nationalities and growing. Wipro is present across 29 counries,36 Development
canters, Investors across 24 countries.
Largest third party R&D Service provider in the world.
Largest Indian Technology Infrastructure management service provider.
A vendor of choice in the middle east
Among the top 3 Indian BPO Service provider by Revenue (* Nasscom)
Among the top 2 Domestic IT Services companies in India (*IDC India)
Wipro Inc.
cMango Pte Ltd.
Wipro Japan KK
Wipro Shanghai Ltd.
Wipro Trademarks Holding Ltd.
Wipro Travel Services Ltd.
Wipro Cyprus Private Ltd.
Wipro Consumer Care Ltd.
Wipro Health Care Ltd.
Wipro Chandrika Ltd.(a)
Wipro Holdings (Mauritius) Ltd.
Wipro Australia pty Ltd.
WMNETSERV Ltd.(a)
Quantech Global Service Ltd.
3D Network Pte Ltd.
Planet PSG Pte Ltd.
Spectramind Inc.
1.3. History
Wipro started in 1945 with the setting up of an oil factory in Amalner a small town in
Maharashtra in Jalgaon District. The product Sunflower Vanaspati and 787 laundry
soap (largely made from a bi-product of Vanaspati operations) was sold primarily in
Maharashtra and MP. The company was aptly named Western India Products
Limited.
The Birth of the name Wipro - As the organization grew and diversified into
operations of Hydraulic Cylinders and Infotech, the name of the organization did not
adequately reflect its operations. Azim Premji himself in 1979 selected the name
"Wipro" largely an acronym of Western India Products. Thus was born the Brand
Wipro. The name Wipro was unique and gave the feel of an 'International" company.
So much so that some dealers even sent their cheques favouring Wipro (India)
Limited. Fortunately, the banks accepted them!!By the early 90s, Wipro had grown
into various products and services. The Wipro product basket had soaps called Wipro
Shikakai, Baby products under Wipro Baby Soft, Hydraulic Cylinders branded
Wipro, PCs under the brand name Wipro, a joint venture company with GE named
Wipro GE and software services branded Wipro. The Wipro logo was a 'W", but it
was not consistently used in the products.It was clearly felt that the organization was
not leveraging its brand name across the various businesses. The main issue remained
whether a diverse organization such as Wipro could be branded under a uniform look
and feel and could there be consistent communication about Wipro as an
organization.
1.4.Company Profile
Business-Description
Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT
Services Company globally. Wipro provides comprehensive IT solutions and
services, including systems integration, Information Systems outsourcing, package
implementation, software application development and maintenance, and research
and development services to corporations globally.
The Group's principal activity is to offer information technology services. The
services include integrated business, technology and process solutions including
systems integration, package implementation, software application development and
maintenance and transaction processing. These services also comprise of information
technology consulting, personal computing and enterprise products, information
technology infrastructure management and systems integration services. The Group
also offers products related to personal care, baby care and wellness products. The
operations of the Group are conducted in India, the United States of America and
Other countries. During fiscal 2007, the Group acquired Wipro Cyprus Pvt Ltd,
Retailbox Bv, Enabler Informatica SA, Enabler France SAS, Enabler Uk Ltd, Enabler
Brazil Ltd, Enabler and Retail Consult GmbH, Cmango Inc, Cmango (India) Pvt Ltd,
Saraware Oy, Quantech Global Services and Hydroauto Group AB
Global IT Services and Products
The Company's Global IT Services and Products segment provides IT services to
customers in the Americas, Europe and Japan. The range of its services includes IT
consulting, custom application design, development, re-engineering and maintenance,
systems integration, package implementation, technology infrastructure outsourcing,
BPO services and research and development services in the areas of hardware and
software design. Its service offerings in BPO services include customer interaction
services, finance and accounting services and process improvement services for
repetitive processes.
The Global IT Services and Products segment accounted for 74% of the Company's
revenues and 89% of its operating income for the year ended March 31, 2007 (fiscal
2007). Of these percentages, the IT Services and Products segment accounted for
68% of its revenue, and the BPO Services segment accounted for 6% of its revenue
during fiscal 2007.
Customized IT solutions
Wipro provides its clients customized IT solutions in the areas of enterprise IT
services, technology infrastructure support services, and research and development
services. The Company provides a range of enterprise solutions primarily to Fortune
1000 and Global 500 companies. Its services extend from enterprise application
services to e-Business solutions. Its enterprise solutions have served clients from a
range of industries, including energy and utilities, finance, telecom, and media and
entertainment. The enterprise solutions division accounted for 63% of its IT Services
and Products revenues for the fiscal 2007.
Technology Infrastructure Service
Wipro offers technology infrastructure support services, such as help desk
management, systems management and migration, network management and
messaging services. The Company provides its IT Services and Products clients with
around-the-clock support services. The technology infrastructure support services
division accounted for 11% of Wipro's IT Services and Products revenues in fiscal
2007.
Research and Development Services
Wipro's research and development services are organized into three areas of focus:
telecommunications and inter-networking, embedded systems and Internet access
devices, and telecommunications and service providers.The Company provides
software and hardware design, development and implementation services in areas,
such as fiber optics communication networks, wireless networks, data networks,
voice switching networks and networking protocols. Wipro's software solution for
embedded systems and Internet access devices is programmed into the hardware
integrated circuit (IC) or application-specific integrated circuit (ASIC) to eliminate
the need for running the software through an external source. The technology is
particularly important to portable computers, hand-held devices, consumer
electronics, computer peripherals, automotive electronics and mobile phones, as well
Azim H . Premji
Chairman
Dr Ashok S Ganguly
B .C. Prabhakar
Practitioner of Law
N.Vagual
Bill Owens
P. M. Sinba
Former Chairman Pepsico India Holdings
Azim Premji
Chairmen & Managing Director
1.7. Auditors
KPMG
Audit committee
N Vaghul
Chairman
P M Sinha
Member
B C Prabhakar
Member
- Member
P M Sinha
- Member
- Chairman
Azim H Premji
- Member
Chapter 2.
Analysis of Balance
Sheet
Trend Analysis of Balance Sheet
Horizontal Analysis of Balance Sheet
2003
-04
Share Capital
Share application money pending
allotment
100
100
100
100
Secured
100
Unsecured
100
100
Minority Interest
100
100
Goodwill
100
Gross Block
Less:
Accumulated Depreciation
200405
302.2
7
100
138.6
2
140.6
8
200506
202.6
8
622.4
1
122.9
4
125.1
8
22.78
6 208.9
382.5 75.79
4
6
58.94 122.0
7
8
161.9
4 138.5 124.5
5
3
200607
200708
207.37 100.171
290.45
6 114.286
180.99 122.516
181.71
8 121.833
689.7 139.154
577.24
1 1829.68
616.34
3 1171.94
10.929
400
149.28
3 162.162
100
107.8
2
133.9
1
62.29
7
118.7
4
268.62
2 445.384
142.19
5 159.492
100
130.9
5
129.7
4
147.10
7 147.775
Net Block
100
100
100
Investments
100
100
Inventories
100
Sundry Debtors
100
100
100
100
Current Liabilities
100
Provisions
100
Total Liabilities
100
100
100
136.7
2
182.4
3
130.8
3
123.3
3
101.7
9
108.7
5
240.0
3
112.8
4
131.0
9
135.2
3
130.7
8
118.1
9
137.0
8
155.0
3
230.4
2
157.7
1
176.2
97.87
2
129.2
4
143.2
6
61.25
7
102.8
2
231.5
2
138.5
5
120
145.4
239.3
172.9
9
131.4
4
124.5
3
153.66
7 154.22
163.05
6 131.194
175.07
7 220.726
107.90
9 48.1879
99.326
6 89.661
200.96
9
138.16
8
223.77
5
127.84
4
154.95
5
160.578
137.637
198.113
180.692
166.304
181.71
9 118.484
63.311
8 180.879
133.59 130.504
203.29 219.526
149.28
3 162.162
2003-04
2004-05
2005-06
2006-07
2007-08
100
130.827
112.844
175.077
220.726
Interpretation
The fixed assets are increase in current year is good for the company.
Hear fixed assets are increasing as a increasing rate it means the company has
expand its business.
It seems that the company has good future plans and they want to expand their
business so they have invested more and more funds in fixed assets.
Fixed assets are efficiently utilized by the company due to which the profit of
Year
Total Current Assets
Interpretation
The current assets is shows the cash liquidity of the company.
Hear it is increase it year by year it means the company has sufficient liquidity for
generating the business.
Year
Total Liabilities
Interpretation
The total liabilities is highest in 2005-06.
Liabilities is incressing rate it mean company has to developed business. And
purchase raw material on credit basis.
Year
Share holder's Equity
Year
Total Loan Funds
Interpretation
The total trend line is slowly increase up to 2005-06. And after that it is increase at
a high rate.
From 2006-07 onward the loan fund is increase because the company has expanse
its business.
The company has been able to raise its secured loan without shortage of funds.
Increase in secured loan shows that company has very good prestige in
Financial market.
Company increasing loan funds because company want to increase its trading
on equity.
2.1.5
Year
share capital
Share application money
pending allotment
Reserves and Surplus
Total
2003-04
100
100
100
100
2007-08
100.171
622.406
122.944
125.181
114.286
122.516
121.833
138.625
140.684
290.456
180.99
181.718
Reserves & surplus shows a remarkable increase in 2004-05, 2005-06 and 2006-07
and it slowly decrease in 2008. respectively with respect to the base year, this
shows the company has future vision and it would like to expand its business.
Increase in Reserve & surplus shows because of increase in profit every year.
Has a hole we can say that the company is target oriented and its sticking to its
policies as a result share holders funds is increasing year by year.
Year
2003-04
100
Minority Interest
100
100
100
Source Of Funds
2004-05 2005-06
2006-07
2007-08
140.684
5
125.181
181.718
121.833
161.944
6 10.929
400
58.9471
7
122.076
616.343
1171.94
138.553
4 124.52769
149.283
162.162
The loan fund is increases six and twelve time in year 2007, 2008 respectively
compare to 2003-04.
The company has observed an increase in loan funds as compared to the base year
which indicates its growing reputation in the financial market.
Hence the overall sources of funds have shown big increase with respect to the
base year
2.1.7 Investment
Year
Investments
Investment
2003-04
2004-05
100 123.3283
2005-06
131.087
2006-07
107.909
2007-08
48.1879
Investment has increased in 2005, 2006 and after that it has strated decrease in
2007, 2008 which shows not good growth compared to base year.
As they have invested most of their funds in Indian money market mutual
funds.
Shows that the company has not take risk but the company has invested
2.1.8
Application Of Funds
Year
Total Fixed Assets
Investments
Application of funds
2003-04 2004-05 2005-06
130.826
100
7 112.844
123.328
100
3 131.087
2006-07
2007-08
175.077
220.726
107.909
48.1879
100
100
101.789
231.519
7
120
99.3266
89.661
131.437
203.29
219.526
Financial Statement present comparative information for the current year and the
previous year. Horizontal analysis of Balance Sheet deals with the amount changes
and the percentage changes of the items of the Balance Sheet.
YEAR
2007-08
SOURCES OF FUNDS
Share Capital
Share application money pending
allotment
Reserves & Surplus
Secured
Unsecured
Minority Interest
Current Liabilities
Provisions
TOTAL
APPLICATION OF FUNDS
Total Fixed Assets
Investments
Deferred Tax Assets(Net)
Current Assets, Loans & Advances
Inventories
Sundry Debtors
Cash & Bank Balances
Loan & Advances
TOTAL
2005--06
2004-05
2003-04
1.35
2.06
2.91
1.96
0.83
0.02
52.69
0.96
19.77
0.05
18.44
6.72
0.02
65.73
1.05
1.65
0.02
23.78
5.67
0.08
64.42
0.46
0.31
0.00
18.89
12.93
0.02
71.64
0.30
0.56
0.37
17.76
7.39
100
100.00
100.00
100.00
100.00
38.73
7.41
0.24
0.00
3.08
18.70
18.15
13.69
26.82
23.49
0.42
0.00
2.93
20.76
14.00
11.58
22.10
31.41
0.61
0.00
2.10
21.68
9.03
13.07
26.78
32.76
0.69
0.00
2.43
21.63
7.96
7.75
26.08
100
100
100
100
100
2006-07
1.35
0.02
52.69
0.96
65.85
1.68
0.19
0.29
15.79
15.37
33.84
0.86
0.00
2.29
21.07
5.76
10.09
Unsecured
Minority Interest
Current Liabilities
Provisions
19.77
0.05
18.44
6.72
38.73
7.41
0.24
0.00
3.08
18.70
18.15
13.69
Sources of Funds
2003-04
2004-05 2005--06 2006-07
2007-08
97%
98%
99%
96%
72%
3%
1%
1%
4%
28%
100%
100%
100%
100%
100%
Company has raised Share Capital during 2003-04 to 2006-07 and after that it
was reduced at 24% this step has been taken in order to promote expansion of their
business.
In the base year 2003-04 total loan funds is normally up to 2006 and after that
it was increase up to 25%, so it means that company has expand the business.
2.2.4
Application of funds
Year
Total Fixed Assets
Investments
Deferred Tax Assets(Net)
Net Current Assets
Total Application of Funds
Application of Funds
2003200420052006200704
05
06
07
08
38%
36%
32%
38%
52%
49%
44%
46%
33%
10%
1%
1%
1%
1%
0%
12%
20%
21%
28%
38%
100%
100%
100%
100%
100%
The total fixed assets are 38% in 2004 and after that it was decrease up to 4%
in 2006 and after that it was increase 10% so it means the company has bought the
assets for expansion of business.
The net current assets are increase at increasing rate so that company has a
good liquidity.
The companys future plans for expansion seem clear due to increased
investment in Fixed Assets .Efficient use of these Assets has enabled the
company to observe an increased profit.
Chapter 3.
Analysis of Profit &
Loss Account
Trend Analysis of Profit & Loss Account
Horizontal Analysis of Profit & Loss Account
200405
200506
100
139.1
6
100
100
Other Income
100
129.7
3
106.9
4
129.9
3
162.5
8
Total Income
Expenditure
100
100
100
100
Interest
100
Total Expenditure
100
100
100
100
100
2006
-07
200708
Income
100
100
95.25
139.7
4
71.79
138.2
4
130.3
138.1
4
104.3
8
1.812
109.1
2
133.3
8
157.4
8
163.6
1
132.1
8
124.2
1
62.37
137.5
8
131.7
4
156.4
9
-148.9
764.9
7
157.8
8
125.8
7
-1.13
164.2
6
126.9
5
125.5
123.3
3
142 133.12
174 122.77
141 133.21
193 140.87
142 133.36
143 136.91
136 148.91
354 8669.4
149
21.48
143 139.13
139 112.37
114 117.63
143 111.68
-600
-400
102 112.88
142 111.58
Appropriations
Interim dividend
100
Proposed dividend
100
Tax on dividend
TRANSFERTO GENERAL
RESERVE
100
100
40.33
373.6
5
57.05
456.0
2
204.9
2
202.6
8
101.8
8
20 400.69
127 117.43
155 116.03
100
78.68
100
100
78.11
125.6
4
124.8
3
200.5
5
202.1
9
101.0
7
101.6
8
100
100
140 109.70
141 110.29
101 101.69
101 101.69
2007-08
133.36
139.13
160
140
120
100
Total Income
80
60
Total Expenditure
40
20
0
2003- 2004- 2005- 2006- 200704
05
06
07
08
Though the sales has been continuously increased from past 3 years but the
proportionate expenditure is also rising so overall not making any huge effect on net
profit of this company.
In 2006-07 Income from mutual fund dividend increased by 93.57 % and Interest
on debt instrument 567 % increased in 2005-06 compare to previous year.
Year
Profit after tax
2004-05
157.481
2005-06
125.497
2006-07
139
2007-08
112.37
`
Interpretation
PAT has been rising over the years when we compare with the expenditure
PAT has been increased all the years because of increasing in sales.
Year
TRANSFERTO GENERAL
RESERVE
2003-04
2004-05
2005-06
100
456.022
101.883
2006-07 2007-08
155
116.03
Year
Net Sales and
Services
2003-04
2004-05
2005-06
100
139.735
129.93
2006-07 2007-08
141
133.21
Interpretation
From 2005 onward the net sales incresing at a stret line so hear company
should tray to increse net sales.
2003-04
2004-05
2005-06
2006-07
2007-08
99.07%
99.73%
99.29%
98.94%
98.77%
100.00%
0.88%
98.86%
1.14%
100.00%
0.72%
98.57%
1.43%
100.00%
0.88%
98.06%
1.94%
100.00%
100.00%
65.56%
65.51%
85.32%
66.97%
68.75%
9.05%
6.83%
6.51%
6.24%
6.97%
5.19%
0.03%
4.89%
77.89%
22.11%
0.08%
5.14%
78.43%
21.57%
5.27%
20.15%
0.07%
4.64%
77.05%
22.95%
2.81%
3.33%
3.15%
2.53%
2.23%
17.33%
19.62%
0.11%
0.21%
18.95%
0.00%
0.27%
19.04%
0.00%
0.19%
15.94%
19.22%
19.24%
16.10%
1.43%
6.63%
0.93%
4.73%
0.95%
0.83%
11.66%
12.72%
11.07%
1.27%
97.80%
2.20%
0.06%
79.85%
Minority interest
-0.10%
Share in earning of Associates
0.04%
PROFIT FOR THE
PERIOD
19.73%
17.27%
Appropriations
Interim dividend
9.74%
Proposed dividend
4.21%
1.56%
Tax on dividend
0.60%
1.45%
TRANSFERTO GENERAL
RESERVE
14.92%
4.52%
Table 3.2.1 Horizontal Analysis of Profit & Loss Account
0.81%
97.95%
2.05%
0.83%
81.83%
18.17%
-0.01%
0.16%
2.87%
0.73%
Year
Total Income
Total Expenditure
PROFIT BEFORE
TAXATION
2003-04
2005-06
100.00%
77.89%
2006-07
100.00%
78.43%
100.00%
79.85%
2004-05
100.00%
77.05%
20.15%
22.95%
22.11%
21.57%
18.17%
100.00%
2007-08
81.83%
Interpretation
Chapter 4.
activities and investing activities of a concern. It shows the summary of cash flow
on account of these activities.
Operating activities as the principal revenue-production activities of the enterprise
These activities determines the net profit or loss of a concern. Operating Activities
refer to the operations of a business of purchasing, sales etc. Sales generate cash;
purchase and expense use up the cash. Net profit leads to net increase in cash.Net
increase in cash from operating activities is the main source of cash inflow.
Investing activities as the acquisition and disposal of long tern assets and
investments. Acquiring and selling of a subsidiary or other concerns should be
shown as Investing Activity. Investing Activities of acquisition of fixed assets, long
term investing reduces the cash and indicate cash outflow. Investing activities of
disposal of fixed assets etc increase the cash inflow.
Financial activities as the activities resulting in the changes in the size and
composition of the owners capital and borrowing of the enterprise. Owners capital
includes preference capital in case of a company. Financial Activities such as issue
of shares, taking a loan from Bank, sale of fixed assets etc. increase the amount of
cash available and form the source of cash inflow. Financial activities such as
repayment of preference capital or repayment of loan reduce the amount of cash and
indicates cash outflow.
2008
2007
2006
2005
2004
5359
1166
-595
1690
-2802
-771
-174
3,978
1,078
457
125
-2,118
-588
-10
3,096
688
65
35
-1,069
-238
-8
2,456.24
342.62
92.45
56.12
715.15
35.59
109.8
1971.85
-11885
-5157
-1565
6182
-7,633
-299
-1,120
5,445
-6,991
-1,033
-317
6,150
4,433.69
311.74
455.23
4,180.42
20,456.0
0
2,354.70
18,101.3
0
-3670.41
-359.89
-281.5
2748.13
6,465.43
168.98
-4100.97
121.86
28518
-5459
32,303 24,102
-4,252 -4,543
23059
28,051 19,559
-14226
479
231684
-13,005 -7927
149
113
123,57
9 59,047
250013
150
-32790
2490
-25568
122042 52,043
-650 -6608 -2,777
2,118
923
-19533 -16672
Purchase of investments
Proceeds on sale/from maturities on
Investments
Inter-corporate depo sit
Net payment for acquisition of Business
Dividend/interest income received
Net cash generated by/(used in) Investing
C. Cash flows from financing activities:
Proceeds from exercise of Employee Stock
Option
Share application money pending allotment
Interest paid on borrowings
Dividends paid (including distribution tax
Proceeds/(repayment) of long term
Proceeds/(repayment) of short term
Proceeds from issuance of shares by Subsidery
Net cash generated by financing Activities
Net increase in cash and cash equivalents
During the period
Cash and cash equivalents at the Beginning of
the period
Effect of translation of cash balance
Cash and cash equivalents at the end of Period *
70,145.1
1
66,383.5
4
617.99
254.15
144035.2
4,704 2,576.58
63
12.05
-35
56.12
-3,998 7,575.76
-268 -200
432.43
266.19
266
-5209
-132.77
-762.41
-107
-594
-1568.36
-2162.36
-10706.5
48.06
285.3
-465.27
777.85
-14039.7
541
40
-1690
-12632
-74970
110641
55
21985
9,458
35
-125
-8,875
142
1825
35
2495
238.6
19476
11013
3154
2469.95
-958.77
19822
-28
39270
8858
-49
19822
5714
-10
8858
3242.7
0.92
5713.57
4210.08
-8.61
3242.7
-262.36
463.02
147.53
-12954.5
*includes Rs. 7,278 Million in a restricted designated bank account for payment of
interim dividend
Trade and other receivable are also increased by Rs. 8214.59 Million in
between four year.
Investing Activities : Net Cash outflow from investing activities is Rs. 11528
Million because,
Company has increased its plan and equipment worth Rs.10625 Million in
between four year.
Investment is also increase worth Rs. 220977 Million in between four year.
From this inference that these investments has been met out of the cash
from Operations or borrowings.
Financial Activities : From the section on cash flow from Financial Activities
company think to proceeds in both short term and long term borrowings with
proceeds from exercise of employee stock option.
Chapter 5.
Ratio Analysis
5.
RATIO ANALYSIS
Current Assets
Current Liabilities
Year
Ratios
Current Ratio
2003-04
2004-05 2005--06
1.26
1.58
1.44
2006-07
1.67
2007-08
2.13
Company is no where near the ideal ratio in every year but every company can not
achieve this ratio.
Current ratio is increased in 2007-08 as compared to 2003-04 because of increase in
Inventories 100.96% and 123.77 % increased in Cash and Bank balance.
Current ratio is decreased in 2005-06 as compared to the last year because of
increase in liabilities by 45.39% and 93.19% in increasing in Provision.
Quick Assets
Current Liabilities
Year
Ratios
Quick Ratio
2003-04
2004-05 2005--06
1.2
1.5
1.4
2006-07
2007-08
1.6
2.0
In 2005-06 quick ratio is decreased because the increase in quick assets is less
proportionate to the increased quick liabilities.
The Quick ratio was at its peak in 2007-08, while was lowest in the 2004-05.
5.2.3 Networking Captial
Networking capital = Current Assets Current Liabilities
Net working capital
2003-04
2004-05
2005-06
Year
Trend
4534.3
10497.8
13798.0
2006-07
2007-08
28050.0
61577.0
This ratio represents that part of the long term funds represented by the net
worth and long term debt, which are permanently blocked in the current
assets.
It is Increasing Double than year by year because of assets increasing fast than
liabilities.
X 100
Sales
Year
Trend
31.7
32.6
33.7
2007-08
33.0
COGS+Operating expences
X 100
Sales
Year
Trend
Operating ratio
2003-04
2004-05
2005--06
83.5
80.0
79.0
2006-07
2007-08
77.9
81.7
From the graph conclusion is made that company is not on the right track by
efficiently cutting down manufacturing, administrative and selling distribution
expenses.
x 100
Net sales
Year
Trend
2003-04
16.3
19.4
19.2
2006-07
2007-08
19.8
17.7
EBIT
X 100
Total Assets
Year
Trend
Return On Investment
2003-04
2004-05
2005--06
32.7
39.7
2006-07
2007-08
30.6
18.6
35.7
Year
Trend %
2003-04
22.2
Rate of return on
equoty
2004-05
2005--06
11.5
7.1
2006-07
2007-08
10.0
5.5
Output
Input
Assets are inputs which are deployed to generate production (or sales). The same set
of assets when used intensively produces more output or sales. If the asset turnover is
high, it shows efficient or productive use of input.
The following Assets Turnover Ratios are calculated for the company.
Sales
Total Assets
Year
Trend
1.5
1.6
1.5
2007-08
1.2
increased by 24.52%, but sales is increased by 29.92%.So the ratio is increased but
Sales
Net Fixed Assets
Year
Time
2003-04
4.0
4.9
Interpretation
4.0
2.4
Here the ratio of Net Fixed Asset Turnover is continuously increasing up to 2006
and after that it has strated decline.Because sales as wellas assets boths are equally
increase.
Net Fixed Assets Turnover Ratio is increasing year by year because of Sale is
increasing continuously.
It indicates that the company maximizes the use of its fixed assets to earn profit in
the business so that whatever amount is invested by company in fixed asset, gives
maximum productivity which helps to increase sales as well as profit.
COGS
Average stock
Year
Time
30.3
22.6
24.3
19.8
16.0
This ratio indicates the waiting period of the investments in inventories and is measured
in days, weeks or months. Inventory turnover and average age of inventories are
inversely related.
Average age of Inventories Ratio =
360 days
Inventory Turnover
Year
Days
2003-04
11.9
14.8
18.2
2007-08
22.4
Debtor turnover ratio: The debtor turnovers suggest the no. of times the amount of
credit sale is collected during the year.
Debtors Turnover Ratio =
Sales
Average Debtors
Year
Time
2003-04
4.9
3.8
3.7
2007-08
3.7
1.5
Finance Structure Ratios indicate the relative mix or blending of owners funds and
outsiders debt funds in the total capital employed in the business. It should be noted that
equity funds are the prime fund which increase progressively through reinvestment of
profits, while outside debt funds are supplementary funds and are added at the discretion
of the management.
The following Finance Ratios are calculated for the company.
Debt Ratio
Debt-Equity Ratio
Trend
2003-04
0.028
4
Debt Ratio
2004-05 2005-06
0.0165
2006-07
0.0114
2007-08
0.384
0.0383
Debt Ratio
0.4
0.3
0.2
Trend
0.1
0
2006-07
0.030
2007-08
0.376
Debt equityratio
0.4
0.376
0.3
0.2
Trend
0.1
0
0.027
0.012
0.011
0.03
EBIT
Interest
Year
Trend
2003-04
3.4
4.5
2006-07
4.2
2007-08
21.9
P/E Ratio
Profit Margin
Year
Trend(Rs.)
2003-04
7.43
2006-07
20.62
2007-08
22.62
Earningper share
25
20.62
20
15
11.7
22.62
14.7
Trend(Rs.)
7.43
10
5
0
2003-04
2004-05
2005-06
2006-07
2007-08
2007-08
3.43
Dividendpayout ratio
5
4.68
3.77
4
2.94
3
2
3.43
1.54
Trend(Rs.)
1
0
20003-04
31.36
Year
Trend
P/E Ratio
2004-05
19.91
2005-06
15.85
2006-07
11.30
200708
10.30
PEratio
40
30
31.36
19.91
20
15.85
10
0
20003-04
2004-05
2005-06
Trend
11.3
10.3
2006-07
200708
In 2004-05 P/E Ratios is high means Share price of company is Stable and Share
holder are interested to invest in the companys share.
But in 2006-07 P/E Ratio is Falling down word So company share price is not as
stable as compare to previous year.
Year
Net Sales and Services
PAT
Ratio
PAT/Sales*100
32829
2006-07
149982
29,421
2005-06
106030
20674
2004-05
81605.6
16285.4
2003-04
58400.23
10315
16%
20%
19%
20%
18%
2007-08
199796
The ratio is shows equal for middle three year it means the company has maintain
the equal ratio for year 2005 to 2007.
The ratio shows decline in current year it is bad sign for the company.
ROA (IN %)
2007-08
2006-07
2005-06
2004-05
2003-04
30.88
53
63.08
67.8
75.6
2007-08
0.16
2007-08
1.93
2006-07
2005-06
2004-05
2003-04
0.20
0.19
0.20
0.18
2006-07
2005-06
2004-05
2003-04
2.65
3.32
3.39
4.20
Sales
Sales
2007-08 32829
2007-08 199575
2007-08 199575
2007-08 103160
2006-07
2005-06
2004-05
2003-04
2006-07 149751
2005-06 106164
2004-05 81596
2003-04 58648
2006-07
2005-06
2004-05
2003-04
2006-07
2005-06
2004-05
2003-04
29421
20674
16285
10315
149751
106164
81596
58648
Asset
56535
31951
24049
13969
Interpretation
DuPont chart shows that how profitability is there in the business. When profit
margin is multiplied by total Assets turnover ratio that gives ROA. Profit Margin is
obtained by dividing PAT by Total sales. Total Asset Turnover is obtained by the
sales divided total assets.
Total Assets turnover is decreasing in current year because of huge increase in net
fix assets and net current asset which is more than double compare to previous year.
The Chart shows the total assets turnover that indicate the companys efficiency
Chapter 6.
Scenario Analysis
Company Analysis
Share Holding Pattern
Chapter 6.
Scenario Analysis
Company Analysis
Share Holding Pattern
6. SCENARIO ANALYSIS
6.2.Company Analysis
INGS
FIND
Though the sales has been continuously increased from past 3 years but the
proportionate expenditure is also rising so overall not making any huge effect on net
profit of this company.
Hear the in 2005 company has reinvest profit for business expansion it is good
shine for the company.
Fixed assets are efficiently utilized by the company due to which the profit of the
company is increasing every year.
SUG
GESTION
The companys future plans for expansion seem clear due to increased
investment in Fixed Assets .Efficient use of these Assets has enabled the
company to observe an increased profit.
Though the companys sale is continuously rising but the net profit is not so
much increased so management should take some steps to decrease its
expenses.
The profit margin ratio shows decline in current year so that company should
tray to increase profit after tax
Current ratio is very good it is 2.13:1 so company has fully utilize cash
liquidity for business development.
Annexure
ANNEXURE-1
BALANCE SHEET
Rs (In Million)
2007-08
2006-07
2005--06 2004-05 2003-04
SOURCES OF FUNDS
Share Holder's Funds
Share Capital
2923
2918
2852 1407.14
465.52
Share application money
pending a
40
35
75
12.05
Reserves & Surplus
113991
93042
63202 51407.1
37083.7
Share holder's Equity
116954
95995
66129 52826.3
37549.5
Loan Funds
Secured
2072
1489
451
215.89
947.47
Unsecured
42778
2338
307
405.03
105.88
Total Loan Funds
44850
3827
758
620.92
1053.35
Minority Interest
116
29 265.33
163.84
Total Sources of Funds
161920
99851
66887 53712.6
38766.7
APPLICATION OF FUNDS
Fixed assets
Goodwill
42209
9477
3528 5663.16
5252.36
Gross Block
56280
35287
24816 20899.6
15607.1
Less:
Accumulated Depreciation
28067
18993
12911 9951.77
7599.48
Net Block
28213
18294
11905 10947.9
8007.63
Capital work in progress and
advances
13370
10191
6250 2603.85
1427.28
Total Fixed Assets
83792
37962
21683 19214.9
14687.3
Investments
16022
33249
30812 23504.9
19058.8
Deferred Tax Assets(Net)
529
590
594
495
486.3
Current Assets, Loans & Advances
Inventories
6664
4150
2065 1747.25
1292.02
Sundry Debtors
40453
29391
21272 15518.3
11865.6
Cash & Bank Balances
39270
19822
8858 5713.57
3242.7
Loan & Advances
29610
16387
12818 5562.85
5683.78
Total Current Assets
115997
69750
45013
28542
22084.1
Less:
Current Liabilities & Provisions
Current Liabilities
39890
33667
18527 12742.1
8894.2
Provisions
14530
8033
12688 5302.14
8655.58
Total Liabilities
Net Current Assets
Total Application of Funds
54420
61577
41700
28050
31215
13798
18044.2
10497.8
17549.8
4534.28
ANNEXURE-2
PROFIT & LOSS ACCOUNT
RS. (In Million)
Income
Gross Sales and Services
Less: Excise Duty
Net Sales and Services
Other Income
Total Income
Expenditure
Cost of Sales and Services
Selling and marketing
expenses
General and administrative
expenses
Interest
Total Expenditure
PROFIT BEFORE TAXATION
Provision for taxation including FBT
PROFIT BEFORE MINORITY
INTEREST /SHARE IN
EARNING OF ASSOCIATES
Minority interest
Share in earning of Associates
PROFIT FOR THE PERIOD
(PAT)
Appropriations
Interim dividend
Proposed dividend
Tax on dividend
TRANSFERTO GENERAL
RESERVE
2007-08
2006-07
2005-06
2004-05
2003-04
201451
203970
151,330
1348
149982
2963
152945
106805
775
106030
1536
107566
82330.3
724.7
81605.6
944.79
82550.3
59161.07
760.84
58400.23
1315.99
59716.22
140224
102420
71484
54081.4
39150.23
14216
9547
7003
5638.13
5401.64
10750
124
7866
119957
32988
3868
35
5265
83787
23779
3391
56.12
3826.91
63602.6
18947.8
2749.59
3097.15
35.07
47684.39
12031.83
1680.56
333
29120
6
295
20388
-1
288
16198.2
88.12
175.33
10351.27
-59.19
22.92
32829
29,421
20674
16285.4
10315
2919
1489
7238
1459
1268
7129
1000
3478.84
493.38
5818.98
931.04
864.85
22575
19456
12545
12313.2
2700.13
22.62
20.62
20.41
14.7
14.48
11.7
11.6
14.87
14.85
1,426,966,31
8
1,406,505,97
4
1,427,915,72
4
1,391,554,372
693,870,390
1,404,334,25
6
694,545,321
1655
199796
4174
1690
166900
37070
4550
32520
-24
5846
22.51
Number of Shares for calculating EPS
1,451,127,71
Basic (in Rs.)
9
1,458,239,06
Diluted (in Rs.)
0
1441.469,952
ANNEXURE-3
CASH FLOW STATEMENT FOR THE YEAR ENDED ON MARCH 31
Rs(In Million)
2008
2007
2006
2005
2004
5359
1166
-595
1690
-2802
-771
-174
3,978
1,078
457
125
-2,118
-588
-10
3,096
688
65
35
-1,069
-238
-8
2,456.24
342.62
92.45
56.12
715.15
35.59
109.8
1971.85
-11885
-5157
-1565
6182
-7,633
-299
-1,120
5,445
32,303
-4,252
23059
28,051
4,433.69
311.74
455.23
4,180.42
20,456.0
0
2,354.70
18,101.3
0
-3670.41
-359.89
-281.5
2748.13
28518
-5459
-6,991
-1,033
-317
6,150
24,10
2
-4,543
19,55
9
-14226
479
-13,005
149
123,57
9
-7927
113
59,04
7
52,04
3
6,465.43
168.98
-4100.97
121.86
-231684
250013
150
-32790
2490
-25568
541
122042
-650 -6608 -2,777
2,118
923
-19533 16672
9,458
4,704
-132.77
-762.41
-107
-594
-1568.36
-2162.36
70,145.1
1 10706.51
66,383.5
4
48.06
285.3
617.99
-465.27
254.15
777.85
144035.2 14039.68
2,576.58
238.6
40
-1690
-12632
-74970
110641
35
-125
-8,875
142
1825
63
12.05
-35
56.12
-3,998 7,575.76
-268 -200
432.43
55
35
266.19
21985
2495
266
19476
11013
3154
2469.95
-958.77
19822
-28
8858
-49
5714
-10
3242.7
0.92
4210.08
-8.61
39270
19822
8858
5713.57
3242.7
-262.36
463.02
147.53
-5209 12954.48
Bibliography
BIBLIOGRAPHY
Books:
Annual Report of Wipro Limited for Financial Year 2004-05, 2006-07,2007-08.
Narayanaswamy R., (1998): Financial Accounting: A Managerial Perspective,
Prentice-Hall of India Private Ltd, New Delhi., Third Edition, Reprint 2003
Khan M.Y. and Jain P.K., (1992):Financial Management, Tata McGraw-Hill
Publishing Co Ltd., New Delhi., Third Edition.
.
Websites
http://www.wipro.com
http://www.bseindia.com//shareholding/shareholding_new.asp
http://www.cmie.com//indutries//gdp.asp
http://www.wipro.com/investors/annual_reports.htm
http://www.wipro.com/investors/pdf_files/AR07_08_first_book_final.pdf
http://www.wipro.com/investors/pdf_files/AR07_08_second_book_final.pdf
http://www.wipro.com/investors/pdf_files/Wipro_AR_2006_07_Part_1.pdf
http://www.wipro.com/investors/pdf_files/Wipro_AR_2006_07_Part_2.pdf
http://www.wipro.com/investors/pdf_files/Wipro_annual%20report_2005-06.pdf
http://www.wipro.com/investors/pdf_files/Wipro_Annual_Report_2004_2005.pdf