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Project Report
On
Financial Analysis
Presented
to
Prof: S
Murali
Submitt
ed by:
Karan Sanan
Rajul Dubey
Harsha Vijayvergia
Acknowledgement
Executive Summary
v. Investments
Long term investments are stated at cost less any other
than temporary decline in the value of such investments.
Current investments are valued at lower of cost and fair
value determined by category of investment. The fair
value is determined using quoted market price/market
observable information adjusted for cost of disposal.
vi. Inventories
Inventories are valued at lower of cost and net realizable
value, including necessary provision for obsolescence.
Cost is determined using the weighted average method.
vii. Provisions and contingent liabilities
Provisions are recognised when the Company has a
present
obligation as a result of past event, it is probable that an
outflow of resources will be required to settle the
obligation, and a reliable estimate can be made of the
amount of obligation.
A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may,
but probably will not, require an outflow of resources.
Where there is a possible obligation or a present
obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
The Company recognizes provision for onerous contracts
based on the estimate of excess of unavoidable costs of
meeting obligations under the contracts over the
expected economic benefits.
Products:
Revenue from sale of products is recognised when the
product has been delivered, in accordance with the sales
contract. Revenues from product sales are shown as net
of excise duty, sales tax separately charged and
applicable discounts.
Other income:
Agency commission is accrued when shipment of
consignment is dispatched by the principal.
Profit on sale of investments is recorded upon transfer of
title by the Company. It is determined as the difference
between the sales price and carrying amount of the
related
investment.
Interest is recognized using the time-proportion method,
based on rates implicit in the transaction.
Dividend income is recognized where the Company’s
right
to receive dividend is established.
ix. Leases
Leases of assets, where the Company assumes
substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are
capitalized at the lower of the fair value of the leased
assets at inception and the present value of minimum
lease payments. Lease payments are apportioned
between the finance charge and the outstanding liability.
The finance charge is allocated to periods during the
lease term at a constant periodic rate of interest on the
remaining balance of the liability.
Leases where the lesser retains substantially all the risks
and rewards of ownership are classified as operating
leases. Lease rentals in respect of assets taken under
operating leases are charged to profit and loss account
on a straight line basis over the lease term.
In certain arrangements, the Company recognizes
revenue
from the sale of products given under finance leases. The
Company records gross finance receivables, unearned
income and the estimated residual value of the leased
equipment on consummation of such leases. Unearned
income represents the excess of the gross finance lease
receivable plus the estimated residual value over the
sales price of the equipment. The Company recognises
unearned income as financing revenue over the lease
term using the
effective interest method.
Transaction:
The difference between the rate at which foreign
currency
transactions are accounted and the rate at which they are
realized is recognized in the profit and loss account.
Translation:
Monetary foreign currency assets and liabilities at period
end are restated at the closing rate. The difference
arising
from the restatement is recognized in the profit and loss
account.
In March 2009, Ministry of Corporate affairs issued a
notification amending AS 11, ‘The effects of changes in
foreign exchange rates’. Before the amendment, AS 11
required the exchange gain/ losses on the long term
foreign currency monetary asset/ liability to be recorded
in the profit
The amended AS 11 provides an irrevocable option to the
Company to amortise exchange rate fluctuation on long
term foreign currency monetary asset/ liability over the
life of the asset/ liability or March 31, 2011, whichever is
earlier. The amendment is applicable retroactively from
the financial year beginning on or after December 7,
2006.
The Company did not elect to exercise this option.
REPORT
The Directors present the Annual Report of Wipro Limited
for the year ended March 31, 2000.
The Scheme of Amalgamation of Wipro Computers
Limited (formerly Wipro Acer Limited) with our Company
has been approved by the Hon’ble High Court of
Karnataka on February 16, 2000. The erstwhile Wipro
Computers Limited stands merged with our Company
with retrospective effect from April 1, 1999. The Annual
Report of Wipro Limited for the year 1999-2000 has been
prepared after giving effect to the amalgamation.
(Rs. in mns)
2000 1999
Sales and other income (net of excise duty) 23,129
18,040
Profit before tax from ordinary activities 507
1,764
Provision for tax
501 62
Profit after tax from ordinary activities
3,006 1,702
Non-recurring/prior period items (523)
(581)
Profit for the year 2,483
1,121
Appropriations :
Interim dividend on preference shares 26
6
Interim / Proposed dividend on equity shares 69
69
Corporate Tax on distributed dividend 10
8
Sales of the Company in the year ended March 31, 2000, were Rs. 23,129
mns, up by 28% and Profit after Tax was Rs.3006 mns, up by 77% over the
previous year. Over the last 10 years, Sales have grown at an average
annual rate of 23% and Profit after tax at 43%. The Company’s export at
Rs.10,506 mns has registered a growth of 61% as compared to the
previous year.
Dividend
Directors
Mr A Soota, resigned as a Director of the Company with effect
from August 7, 1999. The Directors place on record their
appreciation of the valuable advice and guidance given by him
while he was a Director of the Company.
Mr Vivek Paul, was appointed as Vice Chairman of the Company
with effect from July 27, 1999 as approved by the members at the
last Annual General Meeting held on July 29, 1999.
Mr Hamir K Vissanji, Mr N Vaghul and Mr B C Prabhakar, retire
by rotation and being eligible offer themselves for re-appointment.
Fixed deposits
Fixed deposits from the public as at March 31, 2000, were
Rs.0.89 mns, and the unclaimed deposits as at that date were Rs
0.89 mns.
Subsidiary companies
As required under Section 212 of the Companies Act, 1956, the
Annual Reports for the year 1999-2000 and Accounts for the year
ended on March 31, 2000, of the subsidiary companies Wipro
Welfare Limited (formerly Wipro Factors Limited), Wipro Net
Limited, Wipro Trademarks Holding Limited (formerly Wipro
Investment Limited), Wipro Prosper Limited (formerly Inlec
Investment Limited) , Wipro Inc., Enthink Inc., and Wipro Japan
KK are attached. With a view to reassure our investors, your
Company has desubsidiarised Wipro Finance Limited to ensure
accountability and derisk the Company by disposing off 48.69% of
its holding of equity shares in Wipro Finance Ltd.
Auditors
The auditors, M/s. N M Raiji & Co., retire at the conclusion of the
ensuing Annual General Meeting and offer themselves for re-
appointment.
Members are requested to appoint them as auditors and fix their
remuneration.
AUDITORS’
REPORT
Annexure referred to in paragraph 1 of our report to the members of Wipro
Limited (“the Company”) for the year ended March 31, 2010
c) Fixed assets disposed of during the year were not substantial, and
therefore, do not affect the going concern assumption.
b) In our opinion, the rate of interest, where applicable and other terms and
conditions on which loans have been granted companies, firms or other
parties listed in the register maintained under Section 301 of the Act are
not, prima facie, prejudicial to the interest of the Company.
d) The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties covered in the register maintained under
Section 301 of the Act. Accordingly, paragraphs 4(iii)(e) to (g) of the Order
are not applicable to the Company.
6. The Company has not accepted any deposits from the public.
10. The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses during the financial year
and in the immediately preceding financial year.
11. In our opinion and according to the information and explanations given
to us, the Company has not defaulted in repayment of any dues to any
financial institution or bank. The Company did not have any outstanding
debentures during the year.
12. The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. In our opinion and according to the explanations given to us, the
Company is not a chit fund/nidhi/mutual benefit fund/ society
ANALYSIS OF
BALANCE SHEET
Trend Analysis of Balance Sheet
Trend Analysis of Balance Sheet involves calculation of percentage changes
in the
Balance Sheet items for a no. of successive years. This is carried out by
taking the
items of the past financial year used as base year and items of other years
are
Trend Analysis of Fixed assets
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 it’s business.
Fixed Assets are continuously increasing year by year.
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
the company is increasing every year.
In 2006-07and 2007-08 Company has huge increase its
land, patents, trade
marks and rights.
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
RATIO ANALYSIS
.Liquidity Ratio
Current Ratio
This ratio shows the proportion of Current Assets to
Current Liabilities. It is also
known as “Working Capital Ratio” as it is a measure of
working capital available at a
particular time. It’s a measure of short term financial
strength of the business. The
ideal current ratio is 2:1 i.e. Current Assets should be
equal to Current Liabilities.
Current Ratio = Current Assets
----------------------
Current Liabilities
Current Ratio
Year 2003-04 2004-05 2005--06 2006-07
2007-08
Ratios 1.26 1.58 1.44 1.67
2.13
Interpretation
Current ratio is always 2:1 it means the current assets
two time of current liability.
After observing the figure the current ratio is
fluctuating.
In the year 2008 ratio is showing good shine.
Hear ratio is increase as a increasing rate from 2004 to
2008.
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 Ratio
Quick Ratio
Year 2003-04 2004-05 2005--06 2006-07
2007-08
Ratios 1.2 1.5 1.4 1.6
2.0
Interpretation
Standard Ratio is 1:1
Company’s Quick Assets is more than Quick Liabilities
for all these 5 years.
In 2007-08 the ratio is increasing because of increase
in bank and cash balance.
So all the years has quick ratio exceeding 1, the firm is
in position to meet its
immediate obligation in all the years.
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.
Profitability Ratios
A company should earn profits to survive and grow over a
long period of time. It
would be wrong to assume that every action initiated by
management of company
should be aimed at maximizing profits, irrespective of
social as well as economical
consequences. It is a fact that sufficient must be earned
to sustain the operation of the
business to be able to obtain funds from investors for
expansion and growth and to
contribute towards the responsibility for the welfare of
the society in business
environment and globalization.
The profitability ratios are calculated to measure the
operating efficiency of the
company.
The following Profitability Ratios are calculated for the
company.
Gross
Profit Ratio
Operating
Profit Ratio
Net Profit Ratio
Rate Of Return On Investment
Rate Of Return On Equity
Turnover
Asset Turnover Ratio are basically productivity ratios
which measure the output
produced from the given input deployed. This relationship
is shown as under
Productivity = 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.
Total
Assets Turnover
Net Fixed Assets Turnover
Net Working Capital Turnover
Inventory
Turnover Ratio
Debtor Turnover (in times)
Total Asset Turnover Ratio
The amounts invested in business are invested in all
assets jointly and sales are
affected through them to earn profits. Thus it is the ratio
of Sales to Total Assets. .It is
the ratio which measures the efficiency with which assets
were turned over a period.