...Group of Companies selected for in depth analysis – ITC Ltd. Introduction ITC is counted as one of India's topmost private sector companies. It has a market capitalisation of USD 45 billion and a turnover of USD 7 billion. The company is involved in most diversified businesses i.e. Fast Moving Consumer Goods (FMCG), Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business and Information Technology. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine and among India's Most Valuable Companies by Business Today. ITC ranks among India's '10 Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC also ranks among Asia's 50 best performing companies compiled by Business Week. Its competitiveness diverse businesses rest on the strong foundations of institutional strengths derived from its product development capability, cutting-edge Research & Development, best in-class manufacturing facilities, brand-building capability, extensive rural linkages, deep consumer insights, efficient trade marketing, dedicated human resources and well managed distribution network. Within a relatively short span of time, ITC has established vital brands like Aashirvaad, Sunfeast, Dark Fantasy, Delishus, Bingo!, Yippee!, Candyman, mint-o, Kitchens of India in the Branded Foods space; Essenza Di Wills, Fiama Di Wills, Vivel, Vivel Cell Renew, Engage and...
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...------------------------------------------------- ITC LIMITED: FINANCIAL ANALYSIS Financial Accounting A MANAGERIAL PRESPECTIVE Submitted To: Ram Kesh Gupta Christ University Institute of Management, Bangalore By: Lavanya Gurram (1120754) Anil Kumar Rauniyar (1120743) Lester Mascarenhas (1120702) Annette Stanley (1120744) Anirudddha K.N. (1120737) Ravi Kwatra (1120728) Table of Contents 1. INTRODUCTION 2. KEY FINANCIAL TRENDS 3. PERFORMANCE EVALUATION USING RATIOS 4. PERFORMANCE EVALUATION USING COMMON-SIZE STATEMENTS 5. ANALYSIS OF THE CASH FLOW STATEMENT 6. QUALITY OF EARNINGS 7. ANALYSIS OF THE DIRECTOR’S REPORT 8. STOCK MARKET ASSESSMENT 9. OVERALL EVALUATION 10. REFERENCES Introduction Meaning of financial Analysis The process of evaluating businesses, projects, budgets and other finance related entities to determine their suitability for investment is known as financial analysis. Typically, financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a specific company, the financial analyst will often focus on the income statement, balance sheet, and cash flow statement. In addition, one key area of financial analysis involves extrapolating the company's past performance into an estimate of the company's future performance. Uses of financial Analysis These statements are used by management, labor, investors, creditors and government regulatory...
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...1. INTRODUCTION TO THE STUDY 1.1 Financial statement: A financial statement is an organized collection of data according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspects of a business firm. It may show a position at a moment of time as in the case of a balance sheet, or may reveal a series of activities over a given period of time, as in the case of an income statement. Thus, the term financial statement generally refers to the basis statements; i) The income statement ii) The balance sheet iii) A statement of retained earnings iv) A statement of charge in financial position in addition to the above two statement. 1.2 Financial statement analysis: It is the process of identifying the financial strength and weakness of a firm from the available accounting data and financial statement. The analysis is done by properly establishing the relationship between the items of balance sheet and profit and loss account the first task of financial analyst is to determine the information relevant to the decision under consideration from the total information contained in the financial statement. The second step is to arrange information in a way to highlight significant relationship. The final step is interpretation and drawing of inferences and conclusion. Thus financial analysis is the process of selection relating and evaluation of the accounting data/information. 1.3 OBJECTIVE...
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...Raghav(DGM - HR) for giving me an opportunity to work with them through this summer project. I am very pleased that, I got the opportunity to work under and thank Mr.Kapil(Manager in Finance & Accounts,Sidcul) for his invaluable guidance, constant encouragement & practical suggestions based on the experience to focus my efforts because of which this work has come to the presentable form. Gracious help from Dr. Surekha Rana, have contributed tremendously to the completion of this project work. I offer my sincere thanks to , Dr. Bindu Arora who guided me in the completion of the project. CONTENTS PREFACE…………………………………………………... OBJECTIVES OF STUDY…………………………………. RESEARCH METHODOLOGY……………………………. COMPANY PROFILE • The Indian FMCG sector…………………………. • ITC profile………………………………………... • HUL profile………………………………………. INTRODUCTION • Financial Analysis………………………………... • Ratio Analysis……………………………………. ANALYSIS & INTERPRETATION Inter Company Analysis…………………………… FINDINGS & CONCLUSION…………………………... RECOMMENDATIONS……………………………………. .. BIBLIOGRAPHY………………………………………... PREFACE The project assigned to me was to study the financial health of...
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...CHOUDHARY (246) SHWETA GOYAL (248) Abstract In this paper, an attempt has been made to examine the financial performance of six leading FMCG companies in India – Britannia Industries, Dabur India, ITC Ltd, Nestle India Ltd, Marico Ltd, and Colgate Palmolive ltd over a period of five years (2009 to 2014). FMCG sector in India has been experiencing a phenomenal pace of growth since last decade, thanks to increasing consumer incomes and rapidly changing consumer tastes and preferences. Large scale and low cost production, modern retailing strategies, branding and maintenance of intense distribution network have given FMCGs an edge over others in raising hovering revenues. In this study we have used ratio analysis and have applied tools of descriptive statistics to compare the financial positions of these companies. We have also studied the basic differences in the accounting policies that are adopted by these companies in the respect of revenue recognition, depreciation and inventory valuation. Objectives of the study Keeping in view the importance of FMCGs in India’s economic and social development, the study generally aims at evaluating the financial performance of the six leading FMCG companies – Britannia Industries and Dabur India, Nestle India Ltd., Marico Ltd , Colgate Palmolive, ITC Ltd. over a period of 5 years (2009 to 2014). The specific objectives of the study are: * To study the profitability and liquidity trend of the selected FMCG companies. * Comparative analysis...
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...Cash Flow and Cost of Capital Learning Objec-ves 2 ¨ Cash flow to invested capital ¤ $4,000.00 $3,500.00 $3,000.00 $2,500.00 Free cash flow NOA NIBCL NOA ¨ Rate cost of capital ¤ NIBCL C IC OA Weighted average cost of capital Includes all costs of capital Fair value of invested capital $2,000.00 $1,500.00 $1,000.00 $500.00 $-‐ IC ¨ Economic profit ¤ ¨ Value of the firm ¤ roic > k FCFi V=∑ i i (1 + k) N ¨ Financial decision criterion over mul-ple periods 3 State-‐ ment of Cash Flows Statement of Cash Flows 4 ¨ ¨ ¨ This financial statement details the change in the balance sheet cash and equivalents accounts, CE, during an accoun-ng period. CEi = CEi-‐1 + CFOi + CFIi + CFFi = CEi-‐1 + ∆CE ∆CE = CFO + CFI + CFF ¤ ¤ ¤ CFO is the cash flow from opera-ng ac-vi-es CFI is the cash flow from inves-ng ac-vi-es CFF is cash flow from financing ac-vi-es Statement of Cash Flows 5 Statement of Cash Flows Balance Sheet ...
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...Indian Institute of Management, Lucknow ITC Ltd: A Strategic Analysis Submitted to: Prof. Arun K Jain In partial fulfillment of the requirements of the course Strategic Management I Submitted by Saurav Goswami (ABM08012) Anuj Saraf (PGP27204) Kaushal Mathur (PGP27219) Sudhanshu Chawla (PGP27255) Section “D” Group 1 Letter of Transmission TO: Prof. Arun K. Jain, Strategy Group Indian Institute of Management, Lucknow FROM: Group 1, Section D Strategic Management Class DATE: March 23, 2012 SUBJECT: Strategic Analysis of ITC Ltd. Dear Sir, You had entrusted us with a project to analyze the strategy of any company of our choice using the frameworks given in the prescribed textbook. We chose ITC Ltd. for this project as it is one of India’s oldest and most diversified companies. This report begins with analyzing the strategic direction of the company which emanates from its vision & mission statements. It then looks at the decisions that the company has taken to achieve its vision by analyzing the environment it operates, the value chain and the core competencies that it has developed over the years and the key factors instrumental in its success. We end by commenting on its future prospects based on our analysis. We are grateful to you for providing us this opportunity to learn the strategic issues in contemporary businesses and giving us the necessary guidance in completing the project. We would also like to thank the entire...
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...Company's strategy of pursuing multiple drivers of growth. This portfolio of traditional and greenfield businesses has built a strong foundation to power the ITC of tomorrow and create enduring value for the Indian society. As in earlier years, I would like to first present to you the highlights of your Company’s Triple Bottom Line performance for the year gone by. ITC: Triple Bottom Line Performance Gross Revenue for the year grew by 19.9% to over Rs 41,800 crores. Net Revenue at over Rs 29,600 crores was primarily driven by a 26.4% growth in both the non-cigarette FMCG as well as the Agri business segments. Profit before tax increased by 20.1%, crossing the Rs 10,000 crore milestone, while Net Profit grew by 20.4% to over Rs 7,400 crores. The non-cigarette segment net revenue has grown 14-fold from about Rs 1,360 crores in 1996 to nearly Rs 19,500 crores in FY13. As a result, 58% of net segment revenue of your Company is now from businesses other than cigarettes. Apart from being the country's leading FMCG marketer, your Company is also the clear market leader in the Indian Paperboard and Packaging industry, a globally acknowledged pioneer in farmer empowerment through its wide-reaching Agri Business, the second largest Hotel Chain in India and a trailblazer in 'green hoteliering'. Your Company's wholly-owned subsidiary, ITC Infotech, is one of India's fast-growing IT companies in...
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.......................................................................................... 2 Macro Factors Affecting the Industry ................................................................................................................................................................. 4 Industry Characteristics.............................................................................................................................................................................................. 6 Major Accounting Policies of the Industry ................................................................................................................................................... 10 Impact of IFRS ................................................................................................................................................................................................................. 14 Major Deviations in Acccounting Policy of Major Players of the Industry.............................................................................. 16 Page 1 CHOICE OF INDUSTRY: FMCG FMCG goods, commonly known as consumer packaged goods, include all consumables FMCG Leading Segments (other than groceries/pulses) that people buy at regular intervals. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving...
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...PROJECT REPORT (Submitted for the degree of B.com Honours in Accounting & Finance under CalcuttaUniversity) ON WORKING CAPITAL MANAGEMENT SUBMITTED BY Name of the Candidate: Registration No. : Roll No. : 0498 Name of the College: Bhawanipur Education Society College Name of University: Calcutta University Submitted on: February 2013 SUPERVISED BY Name of the Supervisor: Name of the College: Annexure- I Supervisor's Certificate This is to certify that Ms. a student of B.Com. Honours in Accounting & Finance ofBHAWANIPUR EDUCATION SOCIETY COLLEGE under the University of Calcutta has worked under mysupervision and guidance for her Project Work and prepared a Project Report with the title “WORKING CAPITAL MANAGEMENT ” which she is submitting, is her genuine and original work to the best of my knowledge. Place: Kolkata Prof. Date: February, 2013 . Annexure- II Student's Declaration I hereby declare that the Project Work with the title “WORKING CAPITAL MANAGEMENT”submitted by me for the partial fulfilment of the degree of B.Com. Honours in Accounting & Finance under the University of Calcutta is my original work and has not been submitted earlier to any other University /Institution for the fulfilment of the requirement for any course of study. I also declare that no chapter of this...
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...Hampton Machine Tool Company On September 14, 1979, Mr. Jerry Eckwood, vice president of the St. Louis National Bank was considering a loan request from a customer located in a nearby city. The company, Hampton Machine Too] Company, had requested renewal of an existing $1 million loan originally due to be repaid on September 30. In addition to the renewal of the existin- loan, Hampton was asking for an additional loan of $350,000 for planned equipment purchases in October. Under the terms of the company's request, both loans, totaling $1.35 million, would be repayable at the end of 1979. Since its establishment in 1915, Hampton Machine Tool Company had successfully weathered the severe cyclical fluctuations characteristic of the macl-tine tool manufacturing business. In the most recent cvcle, Hampton had experienced record production and profitability during the niid- and late 1960s. Because Hampton's major customers included the aircraft manufacturers and automobile manufacturers in the St. Louis area, the company's success in the 1960s reflected a strong automobile market and the heavy defense spending associated with the Vietnam War. Hampton rode the 1960s boom into the early 1970s. Hampton, along with the rest of the capital goods industry, experienced a severe decline in sales and profitability in the rriid-1970s. Precipitous declines in the production of automobiles in St. Louis facilities reflected the Arab oil embargo, subsequent increases in the price of...
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...Fundamental analysis is involve analyzing the characteristics of a company in order to estimate its value. Future performance of the stock. It is mainly concerned with the study of historical price movements of the stocks and on its volume of trade in the market to predict the future trend movements of the stocks. However, it does not a consider any fundamental factors of the company like earnings, dividends, growth rates. It means, technical analysts first predicts the future trend movements of the stocks by using historical data and then take buy decision if trend movement shows upward direction and sell decision if trend movement shows downward direction. In other words, the technical analysis does not involve in determination of any intrinsic value of the stocks instead it studies the past price movements, volume and other chart patterns to happen in the future performance of the shares. Historical share prices, volume of trade in the market, Charts, graphs, are the important inputs, which is required to perform technical analysis. Charting is a key activity in technical analysis and in fact there is no technical analysis without charts...
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...`A Report ON Foreign Investment In The FMCG Sector "There was a time, not long ago FMCG was on the go, Other sectors were mere midgets, Growth was in the double digits. Alas, all of that's in the past! The growth today is not so fast. There are reasons, that's for sure. Nowadays sales tax is more And durables are selling better, The weather surely could be wetter. My job is just to set the stage Describe the current sorry age. Adi, of course, will paint the scene And tell us why the times are lean." Mr. Nadir Godrej Executive summary The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well-established distribution network, intense competition between the organized and unorganized segments and low operational cost. Availability of key raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc. Burgeoning Indian population, particularly...
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...is a developing country, the corporate culture is growing very slightly in our country. One of the important aspects of a corporation is its "Dividend Policy" that affects the financial structure, flow of funds, liquidity, price of stocks, and shareholder's satisfaction. This paper attempts to determine how the British American Tobacco Bangladesh Company Ltd. (BATBC) uses its dividend policy to increase the value of the firm and the impact of dividend policy on its stock price. We tried to illustrate and analyze net income, earning per share, cash dividend, stock dividend, dividend payout ratio and right share for empirical analysis of dividend distribution of British American Tobacco Bangladesh. The expectations of dividends by shareholders helps them determine the share value, therefore, dividend policy is a significant decision taken by the financial managers of any company. 1.2 Introduction: Dividend Policy is concerned with taking a decision regarding paying cash dividend in the present or paying an increased dividend at a later stage. The firm could also pay in the form of stock dividends which unlike cash dividends do not provide liquidity to the investors; however, it ensures capital gains to the stockholders. The expectations of dividends by shareholders helps them determine the share value, therefore, dividend policy is a significant decision taken by the financial managers of any company. British American Tobacco Bangladesh Company Ltd. is the market leader...
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...CASE: Pioneer Petroleum I. Does Pioneer estimate its overall weighted average cost of capital correctly One could argue that their assumption of debt policy staying same (12%) isn't very good since all estimates predict on growing investments worth billions during the next year. In addition, a closer analysis of the sources of the infromation shows that the return on equity (10%) is just an assumption made based on current earnings yield. Their first alternative would have been using divident and growth information, but the most accurate way is using the CAPM. CAPM = | rf+B(rr-rf) | 14,56 | | | | New WACC | (1-TC)*(rD*D)+(rE*E)= | 11,24 | rf | 7,8 | B | 0,8 | rm | 16,25 | This new CAPM based cost of capital is much higher than Pioneers estimation of 9%, so their calculations are incorrect. II. Should Pioneer use a single or multiple divisional costs of capital in evaluating projects? If multiple rates are used, how they should be determined? Because Pioneer Petroleum has divisions in many different economical sectors each having different kind of risk structure and investment strategies, I would recommend using multiple rates of capital costs. The idea of discounting in general is to divide the cash flow of a project with its riskiness and a company-wide discount rate definately wouldn’t tell anything about the risk involved in a specific investment in one of the different divisions. Instead, these multiple discount rates should be determined...
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