UNIVRSITY OF MUMBAI

PROJECT REPORT

ON

ADVANCED FINANCIAL MANAGEMENT

RATIO ANALYSIS OF IDEA CELLULAR LTD.

BY

MISS YOGITA SAVARMAL VARMA

M.COM (Part II) (SEM III) (Roll No. 64)

ACADEMIC YEAR 2016-2017.

PROJECT GUIDE

PROF. KARIM

PARLE TILAK VIDYALAYA ASSOCIATION’S

M.L.DAHANUKAR COLLEGE OF COMMERCE

DIXIT ROAD, VILE PARLE (EAST)

MUMBAI - 400057.

DECLARATION

I, Miss Varma Yogita Savarmal of PARLE TILAK VIDYALAYA

ASSOCIATION’S M.L.DAHANUKAR COLLEGE OF COMMERCE OF

MCOM (PART II) (Roll no. 64) (Semester III) hereby declare that I have

completed this project on RATIO ANALYSIS OF IDEA CELLULAR LTD. in

academic year 2016-17. The information submitted is true and original in the best

of my knowledge.

(Signature of student)

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ACKNOWLEDGEMENT

To list who all helped me is difficult because they are so numerous and the depth is so

enormous.

I would like to acknowledge the following as being idealistic channels and fresh

dimensions in the completion of this project.

I would firstly thank the University of Mumbai for giving me chance to do this project.

I would like to thank my principal, Dr. Madhavi Pethe for providing the necessary

facilities required for completion of this project.

I even will like to thank our coordinator, for the moral support that we received.

I would like to thank our college library, for providing various books and magazines

related to my project.

Finally, I proudly thank my parents and friends for their support throughout the project.

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TABLE OF CONTENTS

SR NO. CONTENTS PAGE NO.

1 FINANCIAL MANAGEMENT - INTRODUCTION 5-8

2 RATIO ANALYSIS 9-11

3 IDEA CELLULAR LTD - INTRODUCTION 12-24

4 FINANCIAL STATEMENTS OF IDEA CELLULAR LTD 25-28

5 BALANCE SHEET RATIOS 29-33

6 REVENUE STATEMENT RATIOS 34-39

7 COMPOSITE RATIOS 40-44

8 CONCLUSION 45

9 BIBLIOGRAPHY 46

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FINANCIAL MANAGEMENT – INTRODUCTION

Financial management means procurement of funds at minimum costs and effective

utilization in order to maximize the wealth of shareholders.

The term of financial management refers to its relationship with the closely-related fields of economics and accounting, its functions, scope and objectives. Financial management, as an academic discipline, has undergone fundamental changes in its scope and coverage. In the early years of its evolution it was treated synonymously with the raising of funds. In the current literature pertaining to financial management, a broader scope so as to include, in addition to procurement of funds, efficient use of resources is universally recognized.

Financial management, as an integral part of overall management, is not a totally, independent area. It draws heavily on related disciplines and fields of study, such as economics, accounting, marketing, production and quantitative methods. A part from economics and accounting, finance also draws for its key day to day decisions on supportive disciplines such as marketing, production and quantitative methods, for instance, financial managers should consider the impact of new product development and promotion plans made in the marketing area since their plans will require capital outlays and have an impact on the projected cash flows.

Finally, the tools of analysis developed in the quantitative methods area are helpful in analyzing complex financial management problem. Organization makes their planning for the financial sources which are very helpful in the future course of action.

Taking a commercial business as the most common organizational structure, the key objectives of financial management would be to:

Create wealth for the business

Generate cash, and

Provide an adequate return on investment bearing in mind the risks that the business is taking and the resources invested.

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FINANCIAL ANALYSIS:

Financial analysis (also referred to as financial statement analysis or accounting

analysis or Analysis of finance) refers to an assessment of the viability, stability and profitability

of a business, sub-business or project.

It is performed by professionals who prepare reports using ratios that make use of information

taken from financial statements and other reports. These reports are usually presented to top

management as one of their bases in making business decisions. Financial analysis may

determine if a business will:

Continue or discontinue its main operation or part of its business;

Make or purchase certain materials in the manufacture of its product;

Acquire or rent/lease certain machineries and equipment in the production of its goods;

Issue stocks or negotiate for a bank loan to increase its working capital;

Make decisions regarding investing or lending capital;

Make other decisions that allow management to make an informed selection on various

alternatives in the conduct of its business.

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Goals:

Financial analysts often assess the following elements of a firm:

1. Profitability - its ability to earn income and sustain growth in both the short- and long-term.

A company's degree of profitability is usually based on the income statement, which reports on

the company's results of operations;

2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term;

3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations;

Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition

of a business as of a given point in time.

4. Stability - the firm's ability to remain in business in the long run, without having to sustain

significant losses in the conduct of its business. Assessing a company's stability requires the use

of the income statement and the balance sheet, as well as other financial and non-financial

indicators. etc.

Method:

Financial analysts often compare financial ratios (of solvency, profitability, growth, etc.):

Past Performance - Across historical time periods for the same firm (the last 5 years for

example),

Future Performance - Using historical figures and certain mathematical and statistical techniques,

including present and future values, this extrapolation method is the main source of errors in

financial analysis as past statistics can be poor predictors of future prospects.

Comparative Performance - Comparison between similar firms.

These ratios are calculated by dividing a (group of) account balance(s), taken from the balance

sheet and / or the income statement, by another, for example:

Net income / equity = return on equity (ROE)

Net income / total assets = return on assets (ROA)

Stock price / earnings per share = P/E ratio

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Comparing financial ratios is merely one way of conducting financial analysis. Financial ratios

face several theoretical challenges:

They say little about the firm's prospects in an absolute sense. Their insights about

relative performance require a reference point from other time periods or similar firms.

One ratio holds little meaning. As indicators, ratios can be logically interpreted in at least

two ways. One can partially overcome this problem by combining several related ratios to

paint a more comprehensive picture of the firm's performance.

Seasonal factors may prevent year-end values from being representative. A ratio's values

may be distorted as account balances change from the beginning to the end of an

accounting period. Use average values for such accounts whenever possible.

Financial ratios are no more objective than the accounting methods employed. Changes

in accounting policies or choices can yield drastically different ratio values.

Fundamental analysis.

Financial analysts can also use percentage analysis which involves reducing a series of figures as

a percentage of some base amounts. For example, a group of items can be expressed as a

percentage of net income. When proportionate changes in the same figure over a given time

period expressed as a percentage is known as horizontal analysis. Vertical or common-size

analysis reduces all items on a statement to a “common size” as a percentage of some base value

which assists in comparability with other companies of different sizes. As a result, all Income

Statement items are divided by Sales, and all Balance Sheet items are divided by Total Assets.

Another method is comparative analysis. This provides a better way to determine trends.

Comparative analysis presents the same information for two or more time periods and is

presented side-by-side to allow for easy analysis.

RATIO ANALYSIS:

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Ratio analysis is the process of determining and interpreting numerical relationships based on

financial statements. A ratio is a statistical yardstick that provides a measure of the relationship

between two variables or figures.

A ratio analysis is a quantitative analysis of information contained in a company’s financial

statements. Ratio analysis is based on line items in financial statements like the balance

sheet, income statement and cash flow statement; the ratios of one item – or a combination of

items - to another item or combination are then calculated. Ratio analysis is used to evaluate

various aspects of a company’s operating and financial performance such as its

efficiency, liquidity, profitability and solvency. The trend of these ratios over time is studied to

check whether they are improving or deteriorating. Ratios are also compared across different

companies in the same sector to see how they stack up, and to get an idea of comparative

valuations. Ratio analysis is a cornerstone of fundamental analysis.

Objectives of Ratio Analysis: Financial ratios are true test of the profitability, efficiency and

financial soundness of the firm. These ratios have following objectives:

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(1) Measuring the profitability: Profitability is the profit earning capacity of the business. This

can be measured by Gross Profit, Net Profit, Expenses and Other Ratios. If these ratios fall we

can take corrective measures.

(2) Determining operational efficiency: Operational efficiency of the business can be determined

by calculating operating / activity ratios.

(3) Measuring financial position: Short-term and long-term financial position of the business can

be measured by calculating liquidity and solvency ratios. In case of unhealthy short or long-term

position, corrective measures can be taken.

(4) Facilitating comparative analysis: Present performance can be compared with past

performance to discover the plus and minus points. Comparison with the performance of other

competitive firms can also be made.

(5) Indicating overall efficiency: Profit and Loss Account shows the amount of net profit and

Balance Sheet shows the amount of various assets, liabilities and capital. But the profitability can

be known by calculating the financial ratios.

(6) Budgeting and forecasting: Ratio analysis is of much help in financial forecasting and

planning. Ratios calculated for a number of years work as a guide for the future. Meaningful

conclusions can be drawn for future from these ratios.

Limitations:

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The following are the limitations of ratio analysis:

1. It is always a challenging job to find an adequate standard. The conclusions drawn from the

ratios can be no better than the standards against which they are compared.

2. When the two companies are of substantially different size, age and diversified products,,

comparison between them will be more difficult.

3. A change in price level can seriously affect the validity of comparisons of ratios computed for

different time periods and particularly in case of ratios whose numerator and denominator are

expressed in different kinds of rupees.

4. Comparisons are also made difficult due to differences of the terms like gross profit, operating

profit, net profit etc.

5. If companies resort to ‘window dressing’, outsiders cannot look into the facts and affect the

validity of comparison.

6. Financial statements are based upon part performance and part events which can only be

guides to the extent they can reasonably be considered as dues to the future.

7. Ratios do not provide a definite answer to financial problems. There is always the question of

judgment as to what significance should be given to the figures. Thus, one must rely upon one’s

own good sense in selecting and evaluating the ratios.

INTRODUCTION OF IDEA CELLULAR LIMITED

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Idea Cellular is an Aditya Birla Group Company, India's first truly multinational corporation.

Idea is a pan-India integrated GSM operator offering 2G and 3G services, and has its own NLD

and ILD operations, and ISP license. With revenue of Rs. 31,571crore; revenue market share of

nearly 17.5 per cent; and subscriber base of over 161 million in FY 2013, Idea is India’s third

largest mobile operator. Idea ranks among the top 10 country operators in the world with a traffic

of over 1.5 billion minutes a day.

Idea’s robust pan-India coverage is built on a network of over 100,000 2G and 3G cell sites,

spread across over 55,000 towns in India.

Using the latest in technology, Idea provides world-class service delivery through the most

extensive network of customer touch points, comprising nearly 4,500 exclusive Idea outlets, and

over 7,000 call centre seats. Idea’s customer service delivery platform is ISO 9001:2008

certified, making it the only operator in the country to have this standard certification for all 22

service areas and the corporate office.

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Idea has consistently stayed ahead of the industry in VLR reporting. Idea’s thought leadership on

Mobile Number Portability (MNP) has enabled it to stay as the top gainer with the highest net

gain. Every 4th mobile user who exercises choice through MNP prefers Idea.

Idea offers a range of high-speed mobile broadband devices including Android based 3G smart

phones, dongles etc. Idea’s wide portfolio of 3G smart phones offer the latest in 3G applications

and high-end data services such as Idea TV, games, social networking etc. at affordable prices.

Idea has been a pioneer in introducing customized product offerings for segmented customers. It

is the first mobile operator to introduce innovative value added services in the Indian telephony

market, and has remained ahead of the industry in data product offerings.

Idea has received several national and international recognitions for its path-breaking

innovations in mobile telephony products and services. Idea won the prestigious ‘NDTV

Business Leadership Award’ in the telecom category for its solid, consistent performance in

2012. It was the winner of ET Telecom Awards 2012, in the categories — ‘Customer Experience

Enhancement’, ‘Excellence in Marketing’, and ‘Innovative Products’. Idea also won the ‘Best

Ad Campaign of the Year’ award for the popular Honey Bunny campaign at the Tele.Net

Telecom Awards 2012.

Idea won the ‘Best Brand Campaign’ at the esteemed World Communication Awards in 2012

and 2011. It also won the GSM Association Award for ‘Best Billing and Customer Care

Solution’ for two consecutive years, and was awarded ‘Mobile Operator of the Year Award –

India’ for 2007 and 2008 at the Annual Asian Mobile News Awards.

Idea is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in

India.

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MISSION

Mission"We will Delight our Customers while meeting their individual communication needs

anytime anywhere"

We survive because of our customers

VALUES

Integrity - Honesty in Every Action.

At Aditya Birla Group, Integrity is defined as: Acting and taking decisions in a manner that is

fair, honest, following the highest standards of professionalism and also perceived to be so.

Integrity for us means not only financial and intellectual integrity, but in all other forms as are

commonly understood.

Key words that connote Integrity are:

Ethical Truthful Principled Transparent Upright Respectful

Commitment - Deliver on the Promise

At Aditya Birla Group Commitment is defined as: On the foundation of integrity, doing

whatever it takes to deliver value to all stakeholders. In the process, taking ownership of our

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actions and decisions, those of our team and that part of the organization that we are responsible

for.

Key words that connote Commitment are:

Accountability Discipline Responsibility Result -orientation Self-confidence Reliability

Passion - Energized Action

At Aditya Birla Group Passion is defined as: A missionary zeal arising out of emotional

engagement with the organization that makes work joyful and inspires each one to give his or her

best. Relentless pursuit of goals and objectives with the highest level of energy and enthusiasm,

that is voluntary and spontaneous.

Key words that connote Passion are:

Intensity Innovation Transformational Fire-in-the-belly Inspirational Deep sense of purpose

Seamlessness - Without Boundaries in Letter and Spirit

At Aditya Birla Group, Seamlessness is defined as: Thinking and working together across

functional silos, hierarchies, business and geographies. Leveraging the available diversity to

garner synergy benefits and promote openness through sharing and collaborative efforts.

Key words that connote Seamlessness are:

Teamwork Integration Involvement

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Openness Global Learning from the best Empowering

Speed - One Step Ahead Always

At Aditya Birla Group, Speed is defined as: Responding to internal and external customers with

a sense of urgency. Continuously seeking to crash timelines and choosing the right rhythm to

optimize organization efficiencies.

Key words that connote Speed are:

Response time Agile Accelerated Timelines Nimble Prompt Proactive Decisive

KEY PEOPLE

Management Team

Mr. Himanshu Kapania - Managing Director Mr. Ambrish Jain - Deputy Managing Director Mr. Akshaya Moondra – Whole Time Director & Chief Financial Officer Mr. Anil K Tandan - Chief Technology Officer Mr. Prakash K Paranjape - Chief Information Technology Officer Mr. Navanit Narayan - Chief Service Delivery Officer Mr. Vinay Razdan - Chief Human Resources Officer Mr. Rajat Mukarji - Chief Corp Affairs Officer Mr. Rajesh Srivastava - Chief Commercial Officer Mr. P Lakshminarayana - Chief Operating Officer Mr. Sashi Shankar - Chief Marketing Officer Mr. Pankaj Kapdeo - General Counsel and Company Secretary

Board of Directors

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Mr. Akshaya Moondra (Whole Time Director & CFO)

Mr. Kumar Mangalam Birla (Chairman)

Smt. Rajashree Birla

Mr. Himanshu Kapania (Managing Director)

Mr. Arun Thiagarajan

Ms. Tarjani Vakil

Mr. Mohan Gyani

Mr. R.C. Bhargava

Mr. P. Murari

Ms. Madhabi Puri Buch

Mr. Sanjeev Aga

Dr. Shridhir Sariputta Hansa Wijayasuriya

Heads of Circles

Mr. T. G. B. Ramakrishna - Chief Operating Officer, Andhra Pradesh Mr. Monishi Ghosh – Chief Operating Officer, Bihar & Jharkhand Mr. Sanjeev Govil - Chief Operating Officer, Delhi Mr. Mukul Khanna – Joint President – Operations, Rajasthan Mr. Siva Ganapathi - Chief Operating Officer, Karnataka Mr. Vinu Verghese – Chief Operating Officer, Kerala Mr. Rajendra Chourasia - Chief Operating Officer, Maharashtra & Goa Mr. Sunil Tolani - Chief Operating Officer, Mumbai Mr. Rajesh Naik - Chief Operating Officer, Madhya Pradesh & Chattisgarh Mr. Anish Roy - Chief Operating Officer, WB & Kolkata, NESA & Orissa Mr. Puneet Krishnan - Chief Operating Officer, Gujarat Mr. M. D. Prasad - Chief Operating Officer, Tamil Nadu & Chennai Mr. Sanjay David - Chief Operating Officer, Uttar Pradesh (East) Mr. Naozer Firoze Aibara - Chief Operating Officer, Uttar Pradesh (West) Mr. Sudhir Pradhan - Chief Operating Officer, Punjab, J&K and Himachal Pradesh Mr. Rakesh Setia – Joint President – Operations, Haryana

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PARTNERS

Idea welcomes all businesses and individuals interested in partnering with us to enhance and

strengthen the Idea products & services portfolio. .

Some of our partners include:

Value Added Services:-

Altruist Askme Buongiorno Siddhivinayak Astro Services Ltd.

Hungama IMI Mobile Pvt Ltd Indiagames Ltd

Comviva Technologies Ltd Mauj Mobile2win Nazara

NDTV One97 Onmobile Global Ltd

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Realnetworks Shemaroo Shot Formats Spice

Techzone Verse Zapak

Roaming:-

Bics JDSU

Keynote-Sigos Syniverse

Brand:-

DDB-Mudramax Fitch IMRB

Lowe-Lintas-and-Partners Mindshare Platinum-Outdoor

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PROMOTERS

Idea Cellular is part of the Aditya Birla Group, India's first truly multinational corporation.

Global in vision, rooted in Indian values, the Group is driven by a performance ethic pegged on

value creation for its multiple stakeholders.

The group operates in 25 countries, and is anchored by over 100,000 employees belonging to 25

nationalities. The Group has been adjudged 'The Best Employer in India and among the Top 20

in Asia' by the Hewitt-Economic Times and Wall Street Journal Study 2007.

A premium conglomerate, the Aditya Birla Group is a leader in swathe of products - viscose

staple fibre, aluminium, cement, copper, carbon black, insulators, garments.

The Group has also made successful forays into financial services, telecom, software, BPO and

retail sectors. Today, the Group is India's most diversified business house.

Our Promoters are:

Aditya Birla Nuvo Limited

Grasim Industries Limited

Hindalco Industries Limited

Birla TMT Holdings Private Limited

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SUSTAINABILITY

Idea’s Sustainability Initiatives

Telecom services are recognized world-over as an important tool for the socio-economic

development of a nation. It is one of the prime support services essential for rapid growth and

modernization of various sectors of the economy. In India too, the telecommunication sector has

revolutionized the way we communicate and share information, thereby helping over 800

million Indians stay connected, over the last two decades.

The telecom industry globally is cognizant of the fact that it needs to lighten its carbon footprint.

And, in the Indian telecom sector, Idea is leading the search for green energy options.

Idea Cellular, part of the Aditya Birla Group which is India’s first truly global conglomerate, is

of the oldest players in the Indian telecom industry and has played a key role in the development

of mobile telephony, particularly in rural India. As part of a socially responsible corporate

group, Idea has and continues to adopt policies, and business strategies to effectively integrate

emerging environmental, social and economic considerations.

Whether it’s through conserving energy, recycling, or finding innovative solutions to

environmental and social challenges, Idea is committed to being a respectful, responsible and

positive influence on the environment and the society in which we operate. Efficient power

management, infrastructure sharing, use of eco-friendly renewable energy sources, leveraging

the latest in technology to reach out to a large audience in most energy efficient manner such as

video and teleconferencing, smart logistics, etc. are some of the best practices in our network

infrastructure and day-to-day business operations, to ensure a clean and green environment.

Network Infrastructure initiatives

In our effort to give back to the environment and reduce the collective carbon foot print of the

telecom sector in India, Idea pioneered the concept of ‘Shared Telecom Infrastructure’ services,

along with a few other industry leaders in the wireless space. This initiative is committed

towards continuous innovation endeavors; optimization of future tower rollouts; and enhanced

operational efficiencies leading to a substantial reduction of carbon foot print.

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The Indian telecom industry’s first collaborative, cross-industry consortium to encourage the

development of environmentally sustainable mobile networks was also led by Idea, and

supported by the GSMA. The pilot, aimed at developing biofuels as a source of power for

wireless networks in rural India which are located beyond the reach of the national electricity

grid, was conducted in parts of Andhra Pradesh and Maharashtra. The learnings of the research

were later handed to the infrastructure company which owns the towers, to explore broad basing

of the program.

In a bid to reduce energy consumption by our BTS, Idea chose OD BTS (outdoor BTS) as our

preferred BTS type in 2007. Currently, over 40% our total BTS portfolio comprises of OD BTS,

which has resulted in reducing our conventional energy consumption by about 25% as compared

to the ID BTS (indoor BTS). Efforts are also on to re-deploy ID BTS to OD BTS sites, in some

locations, which will further reduce energy consumption at these sites by 25%.

Idea has explored a Solar Hybrid Solution for running our BTS in parts of rural Bihar. We plan

to install Solar Hybrid sets at 200 sites by end of FY 12. This will reduce the fuel consumption of

power generator from running for 15-16 hours to less than 5 hours a day in these locations.

Idea is also part of the Fuel Cell project, initiated by our Group. The project aims at exploring the

usage of Hydrogen as an alternate energy source to power mobile base stations. Currently, a trial

project, if successful, this program has the potential of reducing the usage of a regular power

generator to Zero.

Additionally, we are working on a range of other projects all of which are aimed at

experimenting alternate energy sources to fuel base stations and reduce operating expenditure for

the company.

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Communication initiatives

With a subscriber base of nearly 10 crore, we have an opportunity to influence a large mass of

people by promoting green initiatives through our various communication programs and

customer service initiatives.

It was Idea which germinated the thought of ‘Use Mobile, Save Paper’ in the minds of millions

of mobile users in India, with its aggressive yet thought provoking campaign. Idea designed the

campaign to highlight numerous ways of saving paper, and thereby saving the green cover

necessary for the health of the planet, by using a range of mobile based value added services in

day-to-day activities to replace paper.

Idea was amongst the first mobile operators in India to promote v-Top up recharges for prepaid

users, in a major way. Soon, this led to the virtual phasing out of paper-based recharge vouchers,

which has ultimately resulted in saving tonnes of paper which would have otherwise been used

in making recharges available to millions of mobile users across the country.

Another recent and ongoing initiative is e-Bill which is being consistently promoted by Idea to

ensure that more and more users opt for this service, and contribute towards saving paper.

Breaking all conventions, Idea has now conceived another innovative program which is aimed at

reducing plastic consumption on a large scale. In a major overhaul of its logistics management,

Idea has now introduced the ‘PICO’ card, which is a half-size plastic card that bears the SIM

card, in a new connection kit. For decades, new mobile users have been handed out welcome kits

by operators which carry a large size plastic piece with the SIM card inserted in the box. Idea has

now become one of the first operators, globally, to introduce the new PICO card which is

expected to save over 90% of plastic used in manufacturing regular cards. Considering that Idea

adds about 2 million new connections every month, this initiative would result in substantial

reduction of plastic usage.

As a company listed on BSE and NSE, Idea has a base of over 360,000 shareholders who we

communicate with, on a regular basis. All company communication to our shareholders and

investors, such as Notices, Annual Reports etc. are sent through e-mail rather than printed copies

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through post, thus dramatically reducing our printing and mailing costs while making a positive

impact on the environment.

Employee Based Initiatives

Idea’s HR operations have all been enabled online for it’s over 7,000 employees, to ensure that

there is minimal paper documentation. This has again helped us save tonnes of paper that would

have been used in day-to-day HR related transactions and communication.

We use smart ICT solutions such as teleconferencing, videoconferencing, web chats etc. for

internal communication amongst employees to minimize travel.

We believe that Idea employees are the flag bearers of the organization. They enable the

organization to realize its mission and goals, and meet commitments. Idea employees have

played a key role in keeping our pledge to do our bit for the environment. ‘Bus Karo’ is an

initiative centred around a large group of Idea employees who commute to office, daily in their

own cars. Through the program these employees use a pooled bus service for office commuting

in peak hours, everyday. One such bus potentially lessens 30 cars from everyday traffic jams,

saving over 1200 tonnes of Carbon emissions per annum.

Driven by its socially conscious parent Group, Idea stays committed to the cause of giving back

to the environment. We will continue to drive our efforts towards environment sustainability by

reducing carbon foot print and energy consumption.

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FINANCIAL STATEMENT FOR THE YEAR 2015-16

CASH FLOW STATEMENT

PARTICULAR MAR’16

(Rs. In Cr.)

MAR’15

(Rs. In Cr.)

Net Profit Before Taxes 2,616.66 2,809.84

Adjustments for Expenses & Provisions 9,436.93 7,061.02

Adjustments for Liabilities & Assets -373.91 562.80

Cash Flow from operating activities 10,849.76 9,474.39

Cash Flow from investing activities -12,637.41 -5,405.45

Cash Flow from financing activities -9,332.80 8,544.38

Effect of exchange fluctuation on translation reserve 0.00 0.00

Net increase/(decrease) in cash and cash equivalents -11,120.45 12,613.31

Opening Cash & Cash Equivalents 12,704.09 90.78

Cash & Cash Equivalent on Amalgamation / Take over /

Merger

0.00 0.00

Cash & Cash Equivalent of Subsidiaries under liquidations 0.00 0.00

Translation adjustment on reserves / op cash balalces frgn

subsidiaries

0.00 0.00

Effect of Foreign Exchange Fluctuations 0.00 0.00

Closing Cash & Cash Equivalent 1,583.64 12,704.09

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BALANCE SHEET

PARTICULAR MAR’16(Rs. In Cr.)

MAR’15(Rs. In Cr.)

EQUITY AND LIABILITIESShare Capital 3,600.51 3,597.84Share Warrants & OutstandingsTotal Reserves 20,695.25 18,292.30Shareholder's Funds 24,295.91 21,890.14Long-Term Borrowings 0.00 0.00Secured Loans 4,099.59 6,201.68Unsecured Loans 32,058.72 9,804.81Deferred Tax Assets / Liabilities 2,783.09 1,609.08Other Long Term Liabilities 2,850.95 632.07

Long Term Trade Payables 610.77 542.83

Long Term Provisions 339.42 282.07

Total Non-Current Liabilities 42,742.54 19,072.52Current LiabilitiesTrade Payables 3,278.16 2,970.18Other Current Liabilities 7,494.05 13,292.74Short Term Borrowings 1,645.58 151.39Short Term Provisions 1,133.88 1,181.99

Total Current Liabilities 13,551.67 17,596.30Total Liabilities 80,590.12 58,558.97

ASSETSNon-Current Assets 0.00 0.00Gross Block 92,412.06 55,843.26Less: Accumulated Depreciation 27,495.75 23,729.35

Less: Impairment of Assets 0.00 0.00Net Block 64,916.32 32,113.91Lease Adjustment A/c 0.00 0.00Capital Work in Progress 6,038.83 5,079.45Intangible assets under development 0.00 0.00

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Pre-operative Expenses pending 0.00 0.00Assets in transit 0.00 0.00Non Current Investments 1,666.85 1,646.61Long Term Loans & Advances 3,407.81 3,890.67Other Non Current Assets 0.00 0.00Total Non-Current Assets 76,029.81 42,730.63

Current Assets Loans & AdvancesCurrents Investments 832.10 11,167.50Inventories 85.15 58.30Sundry Debtors 1,136.06 932.19Cash and Bank 757.66 1,541.94Other Current Assets 678.44 418.98

Short Term Loans and Advances 1,070.90 1,709.43Total Current Assets 4,560.31 15,828.34Net Current Assets (Including Current Investments) -8,991.35 -1,767.97Total Current Assets Excluding Current Investments 3,728.21 4,660.84Miscellaneous Expenses not written off 0.00 0.00

Total Assets 80,590.12 58,558.97Contingent Liabilities 12,332.98 12,331.89Total Debt 40,852.93 25,875.42Book Value (in Rs.) 67.28 60.72Adjusted Book Value (in Rs.) 67.28 60.72

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PROFIT AND LOSS STATEMENT

PARTICULAR MAR’16(Rs. In Cr.)

MAR’15(Rs. In Cr.)

Gross Sales 35,816.54 31,279.47Less :Inter divisional transfers 0.00 0.00Less: Sales Returns 0.00 0.00

Less: Excise 0.00 0.00Net Sales 35,816.54 31,279.47EXPENDITURE:Increase/Decrease in Stock 0.00 0.00Raw Materials Consumed 0.00 0.00Power & Fuel Cost 2,517.66 2,447.97Employee Cost 1,464.44 1,358.73Other Manufacturing Expenses 15,942.74 14,356.34General and Administration Expenses 374.05 323.42Selling and Distribution Expenses 3,307.73 2,847.75Miscellaneous Expenses 361.30 256.91Expenses Capitalised 0.00 0.00Total Expenditure 23,967.92 21,591.12PBIDT (Excl OI) 11,848.63 9,688.36Other Income 183.44 452.34Operating Profit 12,032.07 10,140.69Interest 1,822.33 946.60PBDT 10,209.74 9,194.09Depreciation 6,199.50 4,855.01Profit Before Taxation & Exceptional Items 4,010.24 4,339.08Exceptional Income / Expenses 0.00 0.00Profit Before Tax 4,010.24 4,339.08Provision for Tax 1,393.59 1,529.25PAT 2,616.66 2,809.84Extraordinary Items 0.00 0.00Adj to Profit After Tax 0.00 0.00Profit Balance B/F 5,763.45 3,236.73Appropriations 8,380.10 6,046.57Equity Dividend (%) 6.00 6.00Earnings Per Share (in Rs.) 7.27 7.81Book Value (in Rs.) 67.28 60.72

28

RATIO ANALYSIS

Balance Sheet Ratios

CURRENT RATIO

Current assets: 4,560.31

Current liabilities: 13,551.67

Current ratio= current assets / current liabilities

2016 = 4,560.31 / 13,551.67 = 0.33

2015= 15,828.34 / 17,596.30 = 0.89

2014-15 2015-160

0.10.20.30.40.50.60.70.80.9

1 0.890000000000001

0.33

CURRENT RATIO

current ratio

Comment

Current ratio of IDEA cellular ltd is 0.33:1.

A current ratio lower than 2:1 shows-

Unsatisfactory liquidity/ solvency position

Low level of current assets and,

Over trading.

29

LIQUID RATIO

Liquid ratio compares the quick assets with the quick liabilities. It is expressed in the

form of a pure ratio. It is also known as Quick Ratio or Acid Test Ratio.

Quick assets: 4,560.31

Quick liabilities: 13,551.67

Liquid ratio= Quick assets/ Quick liabilities

2016= 4,560.31 / 13,551.67 = 0.33

2015= 15,828.34 / 17,596.30 = 0.89

2014-15 2015-160

0.10.20.30.40.50.60.70.80.9

10.89

0.33Liquid ratio

Comment

Liquid ratio of IDEA cellular ltd is 0.33:1.

30

PROPRIETORY RATIO

Proprietory ratio compares proprietor’s funds with total liabilities (or total assets). It is

usually expressed in the form of percentage. It is also known as Net Worth to Total Assets Ratio,

Equity Ratio, Net Worth Ratio or Asset Backing Ratio.

Proprietory ratio = proprietor’s funds or shareholder’s equity * 100

Total assets or total liabilities

2016 = 24,295.91/80,590.12*100 = 30.15

2015 = 21,890.14/58,558.97*100 = 37.38

Proprietor’s Funds = Equity Capital + Reserves & Surplus + Preference Capital

2016 = 24,295.91

2015 = 21,890.14

Total Assets = Fixed Assets + Investments + Current Assets

2016 = 80,590.12

2015 = 58,558.97

2015 20160.00%

200.00%

400.00%

600.00%

800.00%

1000.00%

1200.00%

37.38%

30.15%

Column3

Comment

Proprietory ratio of IDEA cellular ltd is 30.15%.

31

DEBT – EQUITY RATIO

This ratio compares the long term debts with shareholder’s funds. It is usually expressed

as a pure ratio.

Debt – Equity Ratio = debt/equity = borrowed funds/proprietor’s funds

2016 = 42,742.54/24,295.91 = 1.76

2015 = 19,072.52/21,890.14 = 0.87

borrowed funds includes

- Debentures, loans etc.

- Interest accrued and due on such BF.

Proprietor’s Funds = Equity Capital + Reserves & Surplus + Preference Capital

2015 20160

2

4

6

8

10

12

0.871.76

Column3

Comment

Debt – equity ratio of IDEA cellular ltd is 1.76.

32

CAPITAL GEARING RATIO

Capital Gearing Ratio = Capital Entitled To Fixed Rate of Interest or Dividend

Capital not so Entitled to Fixed Rate of Interest or Dividend

2015 = 19,072.52/24,295.91 = 0.79

2016 = 42,742.54/21,890.14 = 1.95

Capital Entitled To Fixed Rate of Interest or Dividend

- Preference capital

- Debentures, long term loans, i.e. borrowed funds

Capital not so Entitled to Fixed Rate of Interest or Dividend

- Equity capital

- Reserves & surplus

Less: Profit & Loss A/c Dr. Balance

Less: Fictitious Assets

2015 20160

2

4

6

8

10

12

0.79

1.95

Column3

Comment

Capital gearing ratio of IDEA cellular ltd is 1.95.

33

Revenue Statement Ratios

GROSS PROFIT RATIO

This ratio compares gross profit with net sales. It is usually expressed in the form of

percentage.

Gross Profit = Gross Profit/Net Sales*100

2016 = 15891.7/35816.54*100 = 44.37

2015 = 13116.43/61279.47*100 = 41.93

Gross profit = sales less cost of goods sold- Cost of goods sold

Opening stock Add: purchases Add: direct expenses Less: closing stock

Net sales = sales less returns less allowances.

2015 20160.00%

200.00%

400.00%

600.00%

800.00%

1000.00%

1200.00%

41.93%44.37%

Column4

Comment

Gross profit ratio of IDEA cellular ltd is 44.37%.

34

OPERATING RATIO

Operating ratio expresses the relationship between total operating costs and net sales.

It is expressed by way of a percentage.

Operating Ratio = Cost of Goods Sold + Operating Expenses * 100

Net Sales

2015 = 21,591.12/31,279.47*100 = 69.02

2016 = 23,967.92/35,816.54*100 = 66.92

Operating expenses

- Office and administration expenses

- Selling and distribution expenses

- Finance expenses excluding interest on loans and debentures.

2015 20160.00%

200.00%

400.00%

600.00%

800.00%

1000.00%

1200.00%

69.02%

66.92

Column3

Comment

Operating ratio of IDEA cellular ltd is 66.92%.

35

EXPENSES RATIO

This ratio expresses the relationship between each item of expenditure and net sales. It is

expressed as a percentage. Total of all ratios will be equal to operating ratio.

Any Expense Ratio = Expenditure/Net Sales*100

Power & Fuel Cost = 2,517.66/35,816.54*100 = 7.03%

Employee Cost = 1,464.44/35,816.54*100 = 4.09%

Other Manufacturing Expenses = 15,942.74/35,816.54*100 = 44.51%

General and Administration Expenses = 374.05/35,816.54*100 = 1.04%

Selling and Distribution Expenses = 3,307.73/35,816.54*100 = 9.24%

Miscellaneous Expenses = 361.30/35,816.54*100 = 1.01%

Comment

Total of All Expense Ratios is 66.92% which are equal to operating ratio.

36

OPERATING PROFIT RATIO

Operating profit ratio indicates the relationship between operating profit and the

sales. It is usually expressed in the form of a percentage. It is also known as Net Operating Profit

Ratio.

Operating profit ratio = operating profit/net sales*100

2015 = 10,140.69/31,279.47*100 = 32.42

2016 = 12,032.07/35,816.54*100 = 33.59

Operating profit

- Gross profit

- Less: operating expenses

Net sales = sales less returns less allowances.

2015 20160.00%

200.00%

400.00%

600.00%

800.00%

1000.00%

1200.00%

32.42%33.59%

Column3

Comment

Operating profit ratio of IDEA cellular ltd is 33.59%.

37

NET PROFIT RATIO

Net profit ratio indicates the relationship between net profit and the sales. It is usually

expressed in the form of a percentage.

Net profit ratio = net profit (before tax)/net sales*100

2015 = 4,339.08/31,279.47*100 = 13.87

2016 = 4,010.24/35,816.54*100 = 11.19

Net profit before tax

- Operating net profit

- Add: non- operating income

- Less: non- operating expenses

Net sales = sales less returns less allowances.

2015 20160.00%

200.00%

400.00%

600.00%

800.00%

1000.00%

1200.00%

13.87% 11.19%

Column3

Comment

Net profit ratio of IDEA cellular ltd is 11.19%. This indicates ultimate net profit, after considering all non- operating incomes and expenses. It is 11.19% of net sales.

38

STOCK TURNOVER RATIO

Stock turnover ratio shows the relationship between the cost of goods sold and the

average stock. This ratio is normally expressed as a ‘rate’.

Stock turnover ratio = cost of goods sold / average stock

2015 = 13116.43/53.52 = 245.08

2016 = 15891.7/71.72 = 221.58

Net sales = sales less returns less allowances.

Average Stock = opening stock +closing stock/2

Stock velocity = 365/stock turnover ratio

2015 = 365/245.08 = 1.5 days

2016 = 365/221.58 = 1.6 days

39

Composite Ratios

RETURN ON CAPITAL EMPLOYED

This ratio measures the relationship between net profit (before interest and tax) and the capital employed to earn it. It is expressed as a percentage. This ratio is also known as ‘return on investment’ (ROI).

Return on Capital Employed = profit (before interest and tax) * 100

Capital employed

2015 = 5285.68/40962.66*100 = 12.90

2016 = 5832.57/67038.45*100 = 8.70

capital employed- equity capital- add: preference capital + reserves and surplus- add: long term borrowings (term loans + debentures )- less: fictitious assets- less: profit & loss Dr. balance

profit (before interest and tax)

2015 20160.00%

200.00%

400.00%

600.00%

800.00%

1000.00%

1200.00%

12.90% 8.70%

Column3

Comment

Return on capital employed of IDEA cellular ltd is 8.70%.

40

RETURN ON PROPRIETOR’S FUNDS

This ratio measures the relationship between net profit (after interest and tax) and the

proprietor’s capital. It is usually expressed as a percentage. It is also known as return on

proprietor’s equity or return on net worth.

Return on proprietor’s funds = net profit (after tax) *100

Proprietor’s funds

2015 = 2,809.84/21,890.14*100 =12.83

2016 = 2,616.66/24,295.91*100 = 10.76

net profit (after tax) = net profit after interest and tax

Proprietor’s Funds = Equity Capital + Reserves & Surplus + Preference Capital

2015 20160.00%

200.00%

400.00%

600.00%

800.00%

1000.00%

1200.00%

12.83% 10.76%

Column4

Comment

Return on proprietor’s funds of IDEA cellular ltd is 10.76%.

41

RETURN ON EQUITY CAPITAL

This ratio measures the relationship between net profit (after interest, tax and preference dividend) and the equity shareholder’s funds. It is usually expressed as a percentage.

Return on equity capital = profit available to equity shareholder’s *100

Equity shareholder’s funds

2015 = 2,809.84/21,890.14*100 =12.83

2016 = 2,616.66/24,295.91*100 = 10.76

profit available to equity shareholder’s = net profit after interest, tax and preference

dividend

Equity shareholder’s funds

- Equity capital

- Reserves and surplus

2015 20160.00%

200.00%

400.00%

600.00%

800.00%

1000.00%

1200.00%

12.83% 10.76%

Column4

Comment

As there is no preference capital in the company, therefore, return on equity capital will be same

as return on proprietor’s funds i.e. 10.76%.

42

DIVIDEND PAYOUT RATIO

Dividend payout ratio shows the relationship between the dividends paid to equity

shareholder’s out of the profits available to the equity shareholders.

Dividend payout ratio = dividend to equity shareholders *100

Profit available to equity shareholders

2016 = 216.03/2616.66*100 = 8.25

Dividend to equity shareholders means the cash dividend paid to equity shareholders.

Profit available to equity shareholders means net profit after interest, income tax and

preference dividend.

Comment

Dividend payout ratio of IDEA cellular ltd is 8.25.

DEBT SERVICE RATIO/INTEREST COVERAGE RATIO

A debt service ratio shows the relationship between net profits and interest payable on

loans. It is expressed as a pure number. It is also known as interest coverage ratio.

Debt Service Ratio = profit before interest and tax

Interest

2016 = 5832.57/1822.33 = 3.20

Comment

Debt service ratio/interest coverage ratio of IDEA cellular ltd is 3.20.

43

DEBTORS TURNOVER RATIO

This ratio shows the relationship between net credit sales and average trade debtors. It

is expressed as a rate.

Debtors turnover = credit sales

Debtors + bills receivable

2016 = 35,816.54/1,136.06 = 31.53

Debtors velocity (debt collection period)

Debtors velocity means the period (months or days) taken by debtors for settlement of their bills.

It shows the number of days for which credit sales remain outstanding.

Debtors velocity = 12 months or 365 days = 365/31.53 = 12 days

Debtors turnover ratio

CREDITORS TURNOVER RATIO

Creditors turnover ratio shows the relationship between the net credit purchases and the

average trade creditors. This ratio is normally expressed as a rate.

Creditors turnover = credit purchases

Creditors + bills payable

2016 = 15891.7/3278.16 = 4.85

Creditors velocity (debt payment period)

Creditors velocity means the period (months or days) taken by the concern to pay off its

creditors.

Creditors velocity = 365 days or 12 months = 365/4.85 = 75 days

Creditors turnover ratio

44

CONCLUSION

This project of Ratio analysis of concern is not merely a work of the project. But a brief

knowledge and experience of that how to analyze the financial performance of a company. The

study undertaken has brought in to the light of the following conclusions. According to this

project I came to know that from the analysis of financial statements it is clear that idea cellular

ltd have been decreasing the profit during the period of study. So the firm should focus on

getting of more profits in the coming years by taking care internal as well as external factors.

And with regard to resources, the company is taking utilization of the assets properly.

Finance is the life blood of every business. Without effective financial management a company

cannot survive in this competitive world. A Prudent financial Manager has to measure the

working capital policy followed by the company.

 The company’s overall position is at a good position. Through the profits have decreased in the

FY 2015-16, they were able to come out of it successfully and regain into increased profitable

scenario. Particularly the last two year’s position is not so well due to fall in the profit level from

the FY 2015 to FY 2016. It is better for the firm to diversify the funds to different sectors in the

present market scenario. On a whole idea cellular Limited has once again demonstrated its

potential to ride through the difficult times. Despite the slowdown in its growth, it has

determined to grab numerous opportunities that are facing tele-communication sector. However,

rising affordability and the launch of idea 4G is expected to propel the market and refinishes in

the coming years. Higher demand for 4G and internet can be expected in the coming years.

 Also other segments are showing promising opportunities to grow. With these many

opportunities at hand along with the potential player who would be able to make use of the

situation well. So from this we can conclude that there is a better opportunities for investors to

invest in this company.

45

BIBLIOGRAPHY

- http://www.moneycontrol.com/financials/ideacellular/ratios/IC8

- https://craytheon.com/financials/

financial_performance_key_ratios_margin_chart_trend.php?company=IDEA

- http://profit.ndtv.com/stock/idea-cellular-ltd_idea/financials-ratio

- https://www.sanasecurities.com/idea-cellular-equity-research/

- http://www.indianotes.com/research-analysis/company/company-financial.php?

cc=MTUyMDAwMDguMDA=

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