A

PROJECT REPORT

ON

FINANCIAL ANALYSIS

OF

DLF LIMITED
PRESENTED TO

Mr. Kalpesh Prajapati

Assistant Professer,

S.V. Institute of Management, Kadi

Gujarat Technological University

In Partial Fulfillment of the Requirements for the Managerial Accounting – I in Master of Business
Administration Programme for the Programming Year 2009-11

SUBMITTED BY

Shefali G. Banodiya (01)

Pooja D. Triklani (58)

PREFACE

S.V Institute of Management, Kadi (2009-11)

Now in current recession period the company is in tough situation to overall development. In real estate
industry are in critical situation in now-a-days, so company is finding

We are doing master in business administration so we are more believe in practical work rather than
rhetorical material. We are developing good analytical ability with this project.

The main purpose in the finance field is to know how the financial analysis is done. We all know that
finance is the blood of any business and without it no business can run. In the field of finance you always
learn something new, and if you like challenging work you should choose finance.

As we like calculative subject and challenges, we have chosen an organization that is DLF LIMITED
where we get exposure of all type of work and can learn many things. It is a india’s largest real estate
company concern which deals in the real estate company.

Financial analysis of a company is very difficult and the most important, most challenging task and we like
challenges so we have chosen the subject of financial analysis and by doing this we are able to know its
financial position and financial structure of the company.

The most important things required for analyzing the financial statements is the annual report of the
company. This annual report contains analysis of the 5 years annual reports.

Every management student should have the knowledge of practical application of the theory that he/she
learns in the classroom. So, this financial project becomes very helpful in doing so.

Acknowledgement

S.V Institute of Management, Kadi (2009-11)

The project study will be considered incomplete without acknowledging the persons who have helped us a
lot to complete it.

It was indeed a great opportunity for us to prepare this report of DLF LIMITED. It makes us aware of the
practical business environment. Here, the student gets an opportunity to learn the practical aspect of
business administration and can apply the theoretical knowledge in practice.

We would like to express our gratitude to Prof. Mr. Nikunj Patel, Prof. Mr. Sushil Mohanti, Prof.
Kalpesh Prajapati,who has given us an opportunity to prepare project report and provided us the project
guidelines and also guide us in preparing the project report.

We are also very thankful to the other teaching & non-teaching staff of the institute for extended their help;
co-operation and support which have greatly ease our work and made our report unproblematic.

At Last but not least we would like to thank all those who helped directly or indirectly for
preparation of this financial report, their efforts have not gone unnoticed.

Thanks for being there.

S.V Institute of Management, Kadi (2009-11)

 EXECUTIVE SUMMARY

For any company analysis is very important because by analyzing company on financial basis you are able
to know its profit & loss that you can do analysis of their current & liquidity position, not only this you are
also able to know the financial position of the company & whether to invest in to or not. You can also
know that it is a good company or loss making company.

This project report is prepared on financial analysis of DLF Ltd. This report containing in two parts: -
Introduction & Main theme of the report that is Financial Analysis.

The initial part of this report is the general information of the DLF Ltd. It contains the introduction of the
company, History, General & Corporate Information, Formal Distribution of Employee.

The second part of this report containing financial analysis of DLF Ltd It containing Ratio analysis,
Horizontal analysis, Vertical analysis, Trend analysis, Fund Flow analysis, Average analysis & their
interpretation

The horizontal analysis containing comparative profit & loss account & comparative balance sheet of Five
financial year 2004-05, 2005-06, 2006-07,2007-08, 2008-09. This part also containing various graphs of
growth & sales some based profit & loss a/c & some on balance sheet based.

 Ratio analysis comprising mainly five types of ratio analysis as under:

S.V Institute of Management, Kadi (2009-11)

 1. Probability Ratios.
2. Liquidity Ratios.
3. Assets Turnover Ratio.
4. Financial Structure Ratio.
5. Valuation Ratio.

The Vertical analysis containing common – size profit & loss a/c & common – size balance sheet of five
years.

The trend analysis containing various components like trends of sales, expenditure & profit, trend in funds
& liabilities, trend in assets.

The du pont chart analysis gives return on investments.

The cash flow analysis containing the operating activities, investing activities & financing activities.

Content

S.V Institute of Management, Kadi (2009-11)

 CHAPTER 1

INTRODUCTION

1.1 Company Profile

DLF Limited or DLF (Delhi Land and Finance) is the India’s biggest real estate developer based in New
Delhi, India. The DLF Group was founded by Chaudhury Raghuvendra Singh in 1946.[5] DLF developed
residential colonies in Delhi such as Krishna Nagar, South Extension, Greater Kailas, Kailash Colony and
Hauz Khas. In 1957, with the passage of Delhi Development Act, the government assumed the control of
real estate development activities in Delhi and the role of private real estate developers was restricted. As a
result DLF began acquiring land at relatively low cost outside the area controlled by the Delhi
Development Authority, particularly in the district of Gurgaon in the adjacent state of Haryana. In the mid-
1970s, the company started developing DLF City] project at Gurgaon.Its upcoming plans include hotels,
infrastructure and special economic zones-related development projects.[3]

The company is currently headed by Indian billionaire Kushal Pal Singh, who inherited the company from
Chaudhury. Kush Pal Singh, according to the Forbes listing of richest billionaires in 2009, now stands as
the 98th richest man in the world and the world's richest property developer. The company's US$ 2 billion
IPO in July, 2007 created India's biggest IPO in history.[4] In July 2007, DLF announced its first quarter
results ending 30 June 2007. The company reported a turnover of Rs. 3,120.98 Crore and PAT at Rs.
1,515.48 Crore.

S.V Institute of Management, Kadi (2009-11)

1.2 Chairman profile

Kushal Pal Singh :-

(Company’s chairman)

Kushal Pal Singh or K.P. Singh was born on August 15, 1931, at Bulandshahar in Uttar Pradesh. Today he
presides over DLF Universal Limited, India’s largest real estate developer. It has an estimated land bank of
10,255 acres (42 km2) with about 3,000 acres (12 km²) being in prime city locations such as Delhi NCR,
Chandigarh and Kolkata

Background:-

Born on August 15, 1931, Mr. K.P. Singh charted a

distinguished and inimitable career, reflected in the
establishment of India’s largest real estate company. Today,
under his leadership, DLF Limited has established an
unrivalled position in real estate industry with an enviable
portfolio in terms of scale of delivery, bandwidth of range of
products and development potential. Mr. K. P. Singh has
conceived and pioneered initiatives, which are today,
recognized as benchmarks in the real estate sector. He has
been the visionary in steering DLF’s growth as a multi-dimensional, diversified, multi-billion dollar
conglomerate. DLF has now become the world’s largest real estate company in terms of revenues,
earnings, market capitalization and developable area. A graduate in science, Mr. K.P. Singh pursued
Aeronautical Engineering in UK, being subsequently selected to the Indian Army by British Officers
Services Selection Board, UK. He was commissioned into the renowned cavalry regiment of ‘The Deccan
Horse’ of the Indian Army. In 1960, he joined American Universal Electric Company and soon after its
merger with DLF Universal Limited in 1979, he took over as the Managing Director of this new company.

S.V Institute of Management, Kadi (2009-11)

  Positions:-
✔ Present positions:

• Chairman of the Board, DLF Limited.

• Chairman and Director of 31 different private companies engaged in various sectors of the economy.
• Me Commerce & Industry (FICCI).
• Member of Delhi Vision Group to overview the Master Plan of Delhi 2021.
• Honorary Consul General, Principality of Monaco.

✔ Positions held:

• President of the apex industry chamber of the country, Associated Chamber of Commerce & Industry of
India (ASSOCHAM).
• President of the PHD Chamber of Commerce and Industry.
• Director of Central Board, Reserve Bank of India (RBI).

S.V Institute of Management, Kadi (2009-11)

1.3 COMPANY HISTORY

2000

The Scheme of Merger/Amalgamation of DLF Industries Limited

With M/s. DLF
Universal Ltd., which was approved by the Hon'ble High
Court of Delhi at New Delhi
And by the Hon'ble High Court of Punjab and Haryana at
Chandigarh came into effect
On 09.10.2000.

2007

The US-based Hilton Hotels Corporation has declared that it will

Develop 10 hotel projects in the country in alliance with DLF Ltd.

Our business was founded by the late Mr. Raghvendra Singh and our
Promoter, Mr. K P Singh.
Our business has a history of over 6 decades, commencing with the

S.V Institute of Management, Kadi (2009-11)

Incorporation of Raisina Cold
Storage and Ice Company Private Limited on 16.03.1946 and Delhi Land
And Finance Private
Limited on 18.09.1946. Since the inception of our Company, Mr. K P
Singh has been the promoter
of the Company.

Pursuant to the order of the Delhi High Court dated 26.10.1970, Delhi
Land and Finance Private
Limited and Raisina Cold Storage and Ice Company Private Limited
Along with another group
Company, DLF Housing and Construction Private Limited, merged with
DLF United Private Limited
With effect from 30.09.1970.

Thereafter, DLF United Limited merged with our Company, then known as
American Universal Electric
(India) Limited, with effect from 1.10.1978, under a scheme of
Amalgamation sanctioned by the Delhi
High Court and the Punjab and Haryana High Court. The merged entity
Was renamed as 'DLF Universal
Electric Limited' with effect from 18.06.1980.

Key events and milestones

Year Key events, milestones and achievements

S.V Institute of Management, Kadi (2009-11)

1963 Incorporation of American Universal Electric (India) Ltd

1979 DLF United Limited amalgamates with American Universal

Electric (India) Limited to form DLF
Universal Electric Limited

1981 DLF Universal Electric Limited changes name to DLF

Universal
Limited

1981 DLF Universal Limited obtains its first license from the
State Government of Haryana and
Commences development of the 'DLF City' in Gurgaon,
Haryana

1985 We initiated plotted developments, self first plot in

Gurgaon, Haryana. Consolidate the development
of DLF City for township development.

1991 Construction of our first office complex, 'DLF Centre', at

New Delhi

1993 Completion of our first condominium project, 'Silver

Oaks',
at DLF City, Gurgaon, Haryana

S.V Institute of Management, Kadi (2009-11)

1996 Construction of 'DLF Corporate Park', our first office
Complex at DLF City, Gurgaon, Haryana.

1999 Development of the DLF golf course

2002 We venture into retail development in Gurgaon, Haryana

2002 We offer integrated family entertainment centers with the

Commencement of operation of 'DT
Cinemas' at Gurgaon, Haryana

2003-04 Development of 'DLF Cybercity', an integrated IT park

Measuring approximately 90 acres at
Gurgaon, Haryana.

2005 * Acquisition of 16.62 acres (approx) of mill land in

Mumbai
* Received 'Corporate Buildings Award' instituted by
'Indian Architect and Builder', a publication
Of Jasubhai Media Group, Mumbai
* Received 'Superbrand' award from Hon'ble Minister for
Civil Aviation, Mr. Praful Patel.

2006 Construction joint venture signed between DLF Universal

Limited and U.K. based Laing O'Rourke
Plc to form DLF Laing O'Rourke (India) Limited

S.V Institute of Management, Kadi (2009-11)

2006 DLF Universal Limited changes name to DLF Limited

2006 Alliance agreement signed between DLF and Hilton

International Co. to incorporate a joint
Venture company in India to develop, own and acquire 50
To 75 hotels and services apartments.

2006 DLF enters into a joint venture with WSP Group Plc. for the
Purposes of providing engineering
And design services, environmental and infrastructural
Facilities and also project management
Services.

2007 DLF enters into a joint venture with Prudential Insurance

To establish a joint venture company to
Undertake life insurance business in India.

Recent history

S.V Institute of Management, Kadi (2009-11)

A major office complex in Gurgaon

Until the mid-1990s, most of DLF’s (Delhi Land and Finance) operations were in Gurgaon and Delhi
metropolitan area. However, with increased assets, DLF has been trying to ramp up its operations all over
India. A major investment made by DLF was a INR 700 Crore (INR 7 billion) buyout of NTC Mill Land in
Mumbai. Some of DLF's other development initiatives include a US$ 2.1 Billion investment in Tamil Nadu[5],
a multi-billion dollar business park in Bangalore[6], a US$ 1.7 billion investment in Madhya Pradesh's real
estate and infrastructure sector[7], and a INR 10 billion investment plan for developing special economic zones
in Orissa.[8]

1.4 Company Profile

BUSSINESS GROUP: DLF GROUP

LISTINNNG : BSE, NSE

ISIN NO: INE271C01023

I NCORPORATION: 18/06/1980

PUBLIC ISSUE DATE: 11/6/2007

Registered Address

S.V Institute of Management, Kadi (2009-11)

Shopping Mall, Third Floor
Arjun Marg, Phase - I, DLF City
Gurgaon
Haryana
122002

Tel: 0124-4334200
Fax: 0124-2355581
Email: investor-relations@dlfgroup.in
Website: http://www.dlf.in

Explore DLF connections

Registrars

Karvy Computershare Private Ltd "Karvy House"

46, Avenue 4,
Street No. 1
Banjara Hills

Tel: 23312454, 23320251/751/752

Fax: 23311968
Email: mailmanager@karvy.com
Website: http://www.karvycomputershare.com

Management - DLF

Name Designation
K P Singh Chairman / Chair Person
T C Goyal Managing Director
Kameshwar Swarup Senior Executive Director
D V Kapur Non Executive Director
M M Sabharwal Non Executive Director
B Bhushan Non Executive Director
Name Designation
S.V Institute of Management, Kadi (2009-11)
Rajiv Singh Vice Chairman
Pia Singh Whole Time Director
G S Talwar Non Executive Director
K N Memani Non Executive Director
Ravinder Narain Non Executive Director
N P Singh Non Executive Director

Auditors
Walker, Chandiok & Co. Company Status
N.A.

1.4.1 Our partener

S.V Institute of Management, Kadi (2009-11)

Construction
In February 2006, DLF entered into a joint venture with UK's leading construction company, Laing O'Rourke
Plc. The joint venture company will improve the quality of construction in all the developments and help in
setting new benchmarks in the real estate sector. The JV Company is currently executing prestigious projects
like- The Magnolias, The Mall of India, IT Parks and many of DLF's retail destinations. DLF-LOR will
construct the Group's infrastructure projects, including roads, bridges, tunnels, pipelines, harbors, runways and
power plants, through this JV.

Laing O'Rourke operates worldwide, in Asia, Europe, the Far East and Australia and employs more than
23,000 people. Their best know projects include Terminal 5 at London Heathrow airport , a terminal at the
Dubai international airport, the Millennium Dome in the UK and a Convention Centre in Hong Kong

Hospitality
DLF's hospitality arm, DLF Hotels, has signed an LoI with Four Seasons Hotels and Resorts to operate a
proposed luxury hotel at DLF Golf Links in DLF City, Gurgaon in Delhi's southern borders. In November
2006, DLF Hotels announced its first joint venture with The Hilton Hotels to acquire and develop 50 to 75
hotels and serviced apartments throughout India.

The joint venture hotels will represent several brands from Hilton Hotels Corporation's brand portfolio,
including Hilton Hotels, Hilton Garden Inn, Homewood Suites by Hilton and Hilton Residences. The JV
Company will develop and build these properties, while Hilton will manage them.

DLF will hold 74 per cent in the joint venture company, and Hilton will hold the remaining stake as its
commitment to the venture. Over the next 5 to 7 years, Hilton has committed to invest up to $ 143 million.

The initial stage of the joint venture will involve 20 hotels in a number of key locations including, Chennai,
Kochi, Bhubaneshwar, Hyderabad, Kolkata and Delhi. Some of these hotels are planned to be Hilton Garden
Inns and Hilton Hotels. Beyond the initial 20, the JV continues to identify and acquire sites and undertake new
hotel developments.

IT Infrastructure
DLF has partnered with IBM to outsource all its IT requirements to the global IT infrastructure giant. Under
this partnership IBM will be responsible for the helpdesk services for all the DLF employees across India
towards the IT infrastructure requirements. The partnership will support the current IT requirements as well as
identify and deploy new solutions for DLF and Indian real estate industry.

At DLF joint ventures and strategic alliances are another facet of the Group's determined growth with some of

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the best names globally.

Asset Management
DLF and Prudential Financial Inc. (PFI) of US, have signed a joint venture to provide a broad array of mutual
fund and investment products, including domestic and eventually international mutual funds to Indian retail
and institutional clients. The JV has been formulated on a 61:39 shareholding pattern between PFI and DLF.
This agreement allows PFI to expand its international investments business and marks its official entry into the
Indian mutual fund market.

1.4.2 DLF's Presence

The following map illustrates the locations of our developments, projects and lands across India, as of
November 30, 2006:

S.V Institute of Management, Kadi (2009-11)

S.V Institute of Management, Kadi (2009-11)
1.4.3 Vision, Mission & Values

DLF Vision
To contribute significantly to building the new India and become the world’s most valuable real estate
company.

DLF Mission
To build world-class real-estate concepts across six business lines with the highest standards of
professionalism, ethics, quality and customer service

DLF Values

• Sustained efforts to enhance customer value and quality

• Ethical and professional service

• Compliance and respect for all community, environmental and legal requirements.

S.V Institute of Management, Kadi (2009-11)

1.4.4 Milestones

S.V Institute of Management, Kadi (2009-11)

The largest real estate developer in India with 266 million square feet worth of developed and under
development projects.

S.V Institute of Management, Kadi (2009-11)

1.4.5 Listing Details - DLF

Key Dates

Year Ending Month Sep

AGM Date (Month) Sep

Book Closure Date (Month) Sep

Listing Information

Face Value of Equity Shares 2

Market Lot of Equity Shares 1

BSE Code 532868

NSE Code DLF

BSE Group A

Whether the Company Forms a Part of the Following Indices-

Senses Yes

Nifty Yes

BSE-100 Yes

BSE-200 Yes

S&P CNX 500 Yes

CNX Midcap No

CNX FMCG No

Listing On

Listed On The Stock Exchange, Mumbai, National Stock Exchange of India Ltd.

S.V Institute of Management, Kadi (2009-11)

 CHAPTER 2

COMPARATIVE
BALANCESHEET &ANALYSIS OF BALANCESHEET

Mar- Mar- Mar- Mar- Mar-

Particulars
09 08 07 06 05
SOURCES OF
FUNDS:
305.8
Share Capital 339.44 340.96 8 37.77 3.51
Share
Warrants &
Outstandings 79.66 41.8 0 0 0
11,955 10,886 346.9 607.1 380.4
Total Reserves .73 .39 2 6 2
Shareholder's 12,374 11,269 644.9 383.9
Funds .82 .15 652.8 3 3
7,979. 4,945. 6,242 3,010 630.1
Secured Loans 97 91 .82 .93 5
Unsecured 1,635. 3,440. 526.4
Loans 00 49 8 2.99 2.95
9,614. 8,386. 6,769 3,013
Total Debts 97 41 .29 .92 633.1
Total 21,989 19,655 7,422 3,658 1,017
Liabilities .79 .55 .10 .85 .03

SOURCES OF FUNDS :-

(A)SHARE CAPITAL:-

EXHIBIT 2.1

S.V Institute of Management, Kadi (2009-11)

 Mar- Mar- Mar- Mar- Mar-
Particulars
09 08 07 06 05
Share
339.44 340.96 305.88 37.77 3.51
Capital

 INTERPRETATION: -The company have very high increasing in equity share capital. The company
more than 100% growth rate in Equity Share Capital.in the year 2009 it is 339.44 crore & it is 3.51
crores in 2005 in equity share capital.

(B) TOTAL RESERVES :-

EXHIBIT 2.2

Particula Mar- Mar- Mar-

Mar-09 Mar-08
rs 07 06 05
Total 11,955.7 10,886.3 346.9 607.1 380.4
Reserves 3 9 2 6 2

INTERPRETATION: -The company is maintaining good reserves and surplus Is 380.42 crore in the year of
2005. Than company is increasing reserves in march 2008 with very high rate is 10,886.39. So company is
maintaining very high reserves.

(C) SECURED LOANS :-

EXHIBIT 2.3

S.V Institute of Management, Kadi (2009-11)

 Particula Mar- Mar- Mar- Mar- Mar-
rs 09 08 07 06 05
Secured 7,979.9 4,945.9 6,242.8 3,010.9 630.1
Loans 7 1 2 3 5

INTERPRETATION:- Company is more using secured loan. In previously company is using more loan
money for company. In 2009 it is highest as 7,979.97.

(D) UNSECURED LOANS

EXHIBIT 2.4

Particular Mar- Mar- Mar-

Mar-09 Mar-08
s 07 06 05
Unsecured 1,635.0 3,440.4 526.4
2.99 2.95
Loans 0 9 8

INTERPRETATION: - Company have some unsecured loan in the year 2005 is 3.2 is very growing in 2008
is 3440.49. So company must maintain the situation and reduce unsecured loan.

S.V Institute of Management, Kadi (2009-11)

 (A) APPLICATION OF FUNDS

EXHIBIT 2.1.1

(B) Net Block

EXHIBIT 2.1.2

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05

Net Block 1,815.53 1,474.37 328.57 79.67 72

INTERPRETATION: -Company’s assets are 72 in 2005 but it is increase at 1,815.53 in 2009 so it is high
increasing in assets.

(C) Capital Work in Progress

EXHIBIT 2.1.3

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 Mar- Mar- Mar-
Particulars Mar-09 Mar-08
07 06 05
Capital Work in
1,657.73 1,781.79 665.03 456.73 406.63
Progress

INTERPRETATION: - Company’s work in progress is also in increasing stage.

(D) Investment :-

EXHIBIT 2.1.4

Mar- Mar-
Particulars Mar-09 Mar-08 Mar-06
07 05
1,397.2
Investments 2,956.32 1,839.83 769.17 173.82
8

INTERPRETATION: - Company’s investment is also at increasing stage it is 2,956.32 in 2009. So

company have good security.

(E) Net current Assets:-

EXHIBIT 2.1.5

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-

S.V Institute of Management, Kadi (2009-11)

 05
Net Current 15,618.5 14,588.5 5,679.5 1,730.8
370.24
Assets 5 2 7 7

INTERPRETATION: - Total net current assets is 370.24 in 2005 while it is increasing stage. So
company’s liquidity is very high like 15,618.55 in 2009.

CHAPTER 3

COMPARISON &ANALYSIS OF PROFIT & LOSS ACCOUNT

Mar- Mar- Mar- Mar- Mar-

Particulars
09 08 07 06 05
No of Months 12 12 12 12 12
INCOME :

S.V Institute of Management, Kadi (2009-11)

 2,827. 5,534. 1,139. 989.6 441.5
Operating Income 90 71 14 2 8
Less :Inter divisional
transfers 0 0 0 0 0
Less: Sales Returns 0 0 0 0 0
Less: Excise Duty 0 0 0 0 0
2,827. 5,534. 1,139. 989.6 441.5
Net Sales 90 71 14 2 8
EXPENDITURE :
Increase/Decrease in
Stock 0 0 0 0 0
Cost of Construction and 2,147. 580.2 259.2
Development 778.34 34 246.47 2 5
Power & Fuel Cost 0.98 1.34 0.69 0.23 1.03
Employee Cost 90.95 114.24 25.5 16.76 22.86
Other Manufacturing
Expenses 15.1 12.43 6.18 3.58 3.1
General and
Administration
Expenses 132.47 132.31 97.45 14.2 34.72
Selling and Distribution
Expenses 59.28 45.7 63.42 26.74 23.69
Miscellaneous Expenses 33.36 13.87 3.77 5.35 1.8
Less: Expenses
Capitalised 0 0 0 0 0
1,110. 2,467. 647.0 346.4
Total Expenditure 48 23 443.48 8 3
Operating Profit (Excl 1,717. 3,067. 342.5
OI) 42 49 695.66 4 95.14
1,017. 155.4
Other Income 38 523.77 290.37 2 38.21
2,734. 3,591. 497.9 133.3
Operating Profit 80 25 986.02 5 5
146.1
Interest 809.86 447.65 356.25 5 33.07
1,924. 3,143. 351.8 100.2
PBDT 94 61 629.77 1 8
Depreciation 114.08 25.69 9.44 3.9 3.4

S.V Institute of Management, Kadi (2009-11)

Profit Before Taxation 1,810. 3,117. 347.9
& Exceptional Items 87 92 620.33 1 96.88
Exceptional Income /
Expenses 0 0 0 0 0
1,810. 3,117. 347.9
Profit Before Tax 87 92 620.33 1 96.88
119.3
Provision for Tax 261 543.52 214.56 9 29.18
1,549. 2,574. 228.5
Profit After Tax 86 40 405.77 2 67.7
3,282. 2,843. 552.5
Appropriations 73 86 932.07 3 326.6
Equity Dividend % 100 200 100 40 40
192.9
Earnings Per Share 9.13 15.1 2.65 60.51 8
Adjusted EPS 9.13 15.1 0 0 0

(A) Capital Work in Progress

EXHIBIT 3.1

Mar- Mar- Mar- Ma Ma

Particulars
09 08 07 r-06 r-05
No of Months 12 12 12 12 12
INCOME :
Operating 2,827 5,534 1,139 989. 441.
Income .90 .71 .14 62 58
Less :Inter
divisional
transfers 0 0 0 0 0
Less: Sales
Returns 0 0 0 0 0
Less: Excise
Duty 0 0 0 0 0
2,827 5,534 1,139 989. 441.
Net Sales .90 .71 .14 62 58

S.V Institute of Management, Kadi (2009-11)

EXPENDITURE :
Increase/Decrease in Stock 0 0 0 0 0
Cost of Construction and 2,147.3
Development 778.34 4 246.47 580.22 259.25
Power & Fuel Cost 0.98 1.34 0.69 0.23 1.03
Employee Cost 90.95 114.24 25.5 16.76 22.86
Other Manufacturing
Expenses 15.1 12.43 6.18 3.58 3.1
General and Administration
Expenses 132.47 132.31 97.45 14.2 34.72
Selling and Distribution
Expenses 59.28 45.7 63.42 26.74 23.69
Miscellaneous Expenses 33.36 13.87 3.77 5.35 1.8
Less: Expenses Capitalised 0 0 0 0 0
1,110.4 2,467.2
Total Expenditure 8 3 443.48 647.08 346.43
1,717.4 3,067.4
Operating Profit (Excl OI) 2 9 695.66 342.54 95.14
1,017.3
Other Income 8 523.77 290.37 155.42 38.21
2,734.8 3,591.2
Operating Profit 0 5 986.02 497.95 133.35
Interest 809.86 447.65 356.25 146.15 33.07
1,924.9 3,143.6
PBDT 4 1 629.77 351.81 100.28
Depreciation 114.08 25.69 9.44 3.9 3.4
Profit Before Taxation & 1,810.8 3,117.9
Exceptional Items 7 2 620.33 347.91 96.88
Exceptional Income /
Expenses 0 0 0 0 0
1,810.8 3,117.9
Profit Before Tax 7 2 620.33 347.91 96.88

S.V Institute of Management, Kadi (2009-11)

Provision for Tax 261 543.52 214.56 119.39 29.18
1,549.8 2,574.4
Profit After Tax 6 0 405.77 228.52 67.7
3,282.7 2,843.8
Appropriations 3 6 932.07 552.53 326.6
Equity Dividend % 100 200 100 40 40
Earnings Per Share 9.13 15.1 2.65 60.51 192.98
Adjusted EPS 9.13 15.1 0 0 0

(B) Total Expenditure

EXHIBIT 3.2

Particula Mar- Mar- Mar Mar Mar

rs 09 08 -07 -06 -05
Total
1,110. 2,467. 443. 647. 346.
Expendit
48 23 48 08 43
ure

(C)PROFIT :-
EXHIBIT3.3

S.V Institute of Management, Kadi (2009-11)

CHAPTER 4

COMMON SIZESTATEMENT

S.V Institute of Management, Kadi (2009-11)

 (A) APPLICATION OF FUND:-
1. Fixed Assets: According to common size statement, fixed assets of the company in
years 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 it were 7.08%, 2.1%, 4.43%, 7.50%
& 8.26% respectively. It is happening due to sales has decreasing trend in this year.
2. Investments: The investments of the company in year 2004-05 was 17.00% but it was
increased by 38.1% in year 2005-06 but it has decreased by 10.36% in year 2006-07. In
the year 2007-08 it was increase of investment i.e. by 9.36%. It indicates that
investments are stated at cost. If investment is more then company get more return.
3. Current Liabilities & Current Assets: The current liabilities of the company go on
increasing every year. It means that there was decrease in working capital that affect
the liquidity position of the company. The current assets has also increased every year
that is 167%, 84.4%, 127.1%, 93.32%, 85.09% for the year 2004-05, 2005-06, 2006-07,
2007-08, 2008-09 accordingly.
The analysis of various figures shows that the company has satisfactory long term &
short-term financial position. It shows financial position of company is sound.

Chart 3.2.1

2009

Chart 3.2.2

2008

Chart 3.2.3

2007

S.V Institute of Management, Kadi (2009-11)

Chart 3.2.4

2006

Chart 3.2.5

2005

 COMM
Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05 ON
SIZE
100.00 100.00 100.00 100.00 100.00
Net Sales % % % % %
Total Expenditure 39.27% 44.58% 38.93% 65.39% 78.45%
Operating Profit (Excl OI) 60.73% 55.42% 61.07% 34.61% 21.55%
Profit Before Taxation &
Exceptional Items 64.04% 56.33% 54.46% 35.16% 21.94%
Provision for Tax 9.23% 9.82% 18.84% 12.06% 6.61%
Profit After Tax 54.81% 46.51% 35.62% 23.09% 15.33%
ANALYSIS PROFIT & LOSS

S.V Institute of Management, Kadi (2009-11)

Chart 3.2.1

Profit statement 2009

Chart 3.2.2

Profit statement 2008

Chart 3.2.3

Profit statement 2007

Chart 3.2.4

Profit statement 2006

S.V Institute of Management, Kadi (2009-11)

Chart 3.2.5

Profit statement 2005

Operating income

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05

100.00 100.00 100.00 100.00 100.00

Net Sales % % % % %
Total Expenditure 39.27% 44.58% 38.93% 65.39% 78.45%

Profit Before Taxation & Exceptional Items

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05

Profit Before Taxation & 64.04 56.33 54.46 35.16 21.94
Exceptional Items % % % % %

S.V Institute of Management, Kadi (2009-11)

Profit After Tax

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05

54.81 46.51 35.62 23.09 15.33
Profit After Tax
% % % % %

CHAPTER 5

TREND ANALYSIS

TREND ANALYSIS OF PROFIT & LOSS A/C

Particulars Mar-05 Mar-04 Mar-03 Mar-02 Mar-01

No of Months 12 12 12 12 12
INCOME :
100.00 224.11 1253.39
Operating Income % % 257.97% % 640.40%
Less :Inter divisional
transfers 0 0 0 0 0
Less: Sales Returns 0 0 0 0 0

S.V Institute of Management, Kadi (2009-11)

Less: Excise Duty 0 0 0 0 0
100.00 224.11 1253.39
Net Sales % % 257.97% % 640.40%
EXPENDITURE :
Increase/Decrease in
Stock 0.00% 0.00% 0.00% 0.00% 0.00%
Cost of Construction and 100.00 223.81
Development % % 95.07% 828.29% 300.23%
100.00
Power & Fuel Cost % 22.33% 66.99% 130.10% 95.15%
100.00
Employee Cost % 73.32% 111.55% 499.74% 397.86%
Other Manufacturing 100.00 115.48
Expenses % % 199.35% 400.97% 487.10%
General and 100.00
Administration Expenses % 40.90% 280.67% 381.08% 381.54%
Selling and Distribution 100.00 112.87
Expenses % % 267.71% 192.91% 250.23%
100.00 297.22
Miscellaneous Expenses % % 209.44% 12.98% 5.40%
Less: Expenses
Capitalised 0.00% 0.00% 0.00% 0.00% 0.00%
100.00 186.79
Total Expenditure % % 128.01% 712.19% 320.55%
100.00 360.04 3224.19 1805.15
Operating Profit (Excl OI) % % 731.20% % %
100.00 406.75 1370.77 2662.60
Other Income % % 759.93% % %
100.00 373.42 2693.10 2050.84
Operating Profit % % 739.42% % %
100.00 441.94 1077.26 1353.64 2448.93
Interest % % % % %
100.00 350.83 3134.83 1919.57
PBDT % % 628.01% % %
100.00 114.71 3355.29
Depreciation % % 277.65% 755.59% %
Profit Before Taxation & 100.00 359.11 640.31% 3218.33 1869.19

S.V Institute of Management, Kadi (2009-11)

Exceptional Items % % % %
Exceptional Income /
Expenses 0.00% 0.00% 0.00% 0.00% 0.00%
100.00 359.11 3218.33 1869.19
Profit Before Tax % % 640.31% % %
100.00 409.15 1862.65
Provision for Tax % % 735.30% % 894.45%
100.00 337.55 3802.66 2289.31
Profit After Tax % % 599.36% % %
100.00 169.18 1005.12
Appropriations % % 285.39% 870.75% %
100.00 100.00
Equity Dividend % % % 250.00% 500.00% 250.00%
100.00
Earnings Per Share % 31.36% 1.37% 7.82% 4.73%
Adjusted EPS 0.00% 0.00% 0.00% 0.00% 0.00%

 INTERPRETATION OF TREND ANALYSIS:-

(A)Total income :-

Particular
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09
s

S.V Institute of Management, Kadi (2009-11)

 100.00 224.11 257.97 1253.39 640.40
Net Sales
% % % % %

(B)Operating profit :-

Particular
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09
s
Operating
100.00 360.04 731.20 3224.19 1805.15
Profit
% % % % %
(Excl OI)

(C)Net profit :-

Particular
Mar-09 Mar-08 Mar-07 Mar-06 Mar-05
s
Profit 100.00 337.55 599.36 3802.66 2289.31
After Tax % % % % %

(C)Earning per share :-

Mar- Mar- Mar-

Particulars Mar-05 Mar-06
07 08 09
Earnings Per 100.00 31.36 7.82 4.73
1.37%
Share % % % %

S.V Institute of Management, Kadi (2009-11)

TREND ANALYSIS OF BALANCESHEET

Mar-
Particulars Mar-06 Mar-07 Mar-08 Mar-09
05
SOURCES OF 100.00 1076.07 8714.53 9670.66
FUNDS: % % % 9713.96% %
Share Capital 0.00% 0.00% 0.00% 0.00% 0.00%
Share Warrants & 100.00 159.60 3142.77
Outstandings % % 91.19% 2861.68% %
100.00 167.98 3223.20
Total Reserves % % 170.03% 2935.21% %
100.00 477.81 1266.36
Shareholder's Funds % % 990.69% 784.88% %
100.00 101.36 17846.78 116626.78 55423.73
Secured Loans % % % % %
100.00 476.06 1069.23 1518.71
Unsecured Loans % % % 1324.66% %
100.00 359.76 2162.16
Total Debts % % 729.78% 1932.64% %
Total Liabilities
APPLICATION OF 100.00 110.23 1992.31
FUNDS : % % 370.02% 1552.35% %
100.00 109.18
Gross Block % % 138.15% 221.50% 570.62%
Less: Accumulated
Depreciation 0.00% 0.00% 0.00% 0.00% 0.00%
Less: Impairment of 100.00 110.65 2521.57
Assets % % 456.35% 2047.74% %
Net Block 0.00% 0.00% 0.00% 0.00% 0.00%
100.00 112.32
Lease Adjustment A/c % % 163.55% 438.18% 407.68%
Capital Work in
Progress 0.00% 0.00% 0.00% 0.00% 0.00%
Pre-operative Expenses
pending 0.00% 0.00% 0.00% 0.00% 0.00%
Assets in transit 100.00 803.87 442.51% 1058.47% 1700.79

S.V Institute of Management, Kadi (2009-11)

 % % %
Investments 0.00% 0.00% 0.00% 0.00% 0.00%
Current Assets, Loans 100.00
& Advances % 65.71% 595.85% 825.09% 922.42%
100.00 767.34 5022.83 42291.33 6152.89
Inventories % % % % %
100.00 577.14 3460.00
Sundry Debtors % % 815.86% 4521.91% %
100.00 215.43 37902.86
Cash and Bank % % 281.71% 374.86% %
100.00 255.60 1085.88
Other Current Assets % % 498.84% 1034.10% %
100.00 180.85 1095.69
Loans and Advances % % 552.68% 1074.01% %
Total Current Assets 0.00% 0.00% 0.00% 0.00% 0.00%
Less : Current
Liabilities and 100.00
Provisions % 92.89% 237.36% 195.32% 127.81%
100.00 289.36 1233.79 2488.30
Current Liabilities % % % 2141.18% %
100.00 101.50
Provisions % % 281.03% 280.60% 231.27%
Total Current 100.00 467.50 1534.02 4218.49
Liabilities % % % 3940.29% %
Net Current Assets 0.00% 0.00% 0.00% 0.00% 0.00%
Miscellaneous
Expenses not written 100.00 100.71 1030.57
off % % 357.77% 511.48% %
Deferred Tax Assets / 100.00 359.76 2162.16
Liabilities % % 729.78% 1932.64% %
100.00 321.00 1269.36
Total Assets % % 908.88% 855.69% %
100.00
Contingent Liabilities % 15.60% 0.39% 6.02% 6.62%
Book Value 0.00% 0.00% 0.00% 0.00% 0.00%
(A)Equity Share Capital

Particulars Mar-05 Mar-06 Mar-07 Mar-08 Mar-09

S.V Institute of Management, Kadi (2009-11)

 SOURCES OF 100.00 1076.07 8714.53 9713.96 9670.66
FUNDS: % % % % %

(B) Unsecured Loans

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05

100.00 476.06 1069.23 1324.66 1518.71
Unsecured Loans
% % % % %

(C) Secured Loans

Mar-
Particulars Mar-09 Mar-08 Mar-07 Mar-06
05
6,242.8 3,010.9
Secured Loans 7,979.97 4,945.91 630.15
2 3

(C) Total Debt

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05

100.00 359.76 729.78 1932.64 2162.16
Total Debts
% % % % %

S.V Institute of Management, Kadi (2009-11)

(D)Sundry Debtors:-

Particulars Mar-05 Mar-06 Mar-07 Mar-08 Mar-09

100.00 577.14 815.86 4521.91 3460.00
Sundry Debtors
% % % % %

HORIZONTAL ANALYSIS

Financial statements present comparative uniformities for the current year and the previous year. A simple
approach to financial statement analysis, known as horizontal analysis is to calculate amount changes &
percentage changes from the previous year to the current year.

Relative = Current year amount – previous year amount

Absolute (%) = ((Current year – Previous Year) \ Previous Year) x 100

COMPARATIVE PROFIT & LOSS ACCOUNT OF DLF LTD FOR THE YEAR ENDED
31st March 2005-06

DLF Ltd. 5-Mar 6-Mar increse/decrease

12Mont 12Mont
Rs.Crore h h Amount Percentage

Total 441.58 989.62 548.04 124.1088817

S.V Institute of Management, Kadi (2009-11)
income
Total
expense 346.43 647.08 300.65 86.78520913
PBDITA 133.35 497.95 364.6 273.415823
PBDTA 100.28 351.81 251.53 250.8276825
PBT 96.88 347.91 251.03 259.1143683
PAT 67.69 228.52 160.83 237.5978727

31st March 2006-07

DLF Ltd. 6-Mar 7-Mar increse/decrease

12Mont 12Mont
Rs.Crore h h Amount Percentage
Total
income 989.62 1,139.14 149.52 15.10882965
Total
expense 647.08 443.48 -203.60 -31.4644248
PBDITA 497.95 986.02 488.07 98.01586505
PBDTA 351.81 629.77 277.96 79.00855575
PBT 347.91 620.33 272.42 78.30185968
PAT 228.52 405.77 177.25 77.56432697

31st March 2007-08

S.V Institute of Management, Kadi (2009-11)

DLF Ltd. 7-Mar 8-Mar increse/decrease
12Mont 12Mont
Rs.Crore h h Amount Percentage
Total
income 1,139.14 5,534.71 4,395.57 385.8674087
Total
expense 443.48 2,467.23 2,023.75 456.3339948
PBDITA 986.02 3,591.25 2,605.23 264.2167502
PBDTA 629.77 3,143.61 2,513.84 399.1679502
PBT 620.33 3,117.92 2,497.59 402.6227975
PAT 405.77 2,574.40 2,168.63 534.4480864

31st March 2008-09

DLF Ltd. 8-Mar 9-Mar increse/decrease

12Mont 12Mont
Rs.Crore h h Amount Percentage

Total
income 5,534.71 2,827.90 -2,706.81 -48.90608541
Total
expense 2,467.23 1,110.48 -1,356.75 -54.99081966
PBDITA 3,591.25 2,734.80 -856.45 -23.84824226
PBDTA 3,143.61 1,924.94 -1,218.67 -38.76657728
PBT 3,117.92 1,810.87 -1,307.05 -41.92057526
PAT 2,574.40 1,549.86 -1,024.54 -39.79723431

COMPARATIVE PROFIT & LOSS ACCOUNT OF

DLF LTD FOR LAST FIVE YEARS

S.V Institute of Management, Kadi (2009-11)

DLF Ltd.
Rs.Crore 5-Mar 6-Mar 7-Mar 8-Mar 9-Mar
Total 12Mont 12Mont 12Mont 12Mont 12Mont
income h h h h h
Total 1,139.1 5,534.7 2,827.9
expense 441.58 989.62 4 1 0
2,467.2 1,110.4
PBDITA 346.43 647.08 443.48 3 8
3,591.2 2,734.8
PBDTA 133.35 497.95 986.02 5 0
3,143.6 1,924.9
PBT 100.28 351.81 629.77 1 4
3,117.9 1,810.8
PAT 96.88 347.91 620.33 2 7
2,574.4 1,549.8
67.69 228.52 405.77 0 6

STATUS OF INCOME, EXPENDETURE AND PROFIT IN FIVE YEARS

Chart 3.2.1

S.V Institute of Management, Kadi (2009-11)

CHAPTER 6

ANALYSIS OF CASH FLOW

Mar- Mar- Mar- Mar- Mar-

Particulars
09 08 07 06 05
No of Months 12 12 12 12 12
1,810.8 3,117.9
Profit Before Tax 7 2 620.33 347.91 96.88
Adjustment -3.98 -21.33 14.4 -6.47 4.45
- -
- 3,991.9 3,004.2 - 466.9
Changes In working Capital 139.44 6 0 360.47 7
-
Cash Flow after changes in Working 1,667.4 - 2,369.4
Capital 5 895.37 7 -19.03 568.3
- -
1,365.8 1,505.8 2,679.0 540.8
Cash From Operating Activities 6 1 5 -64.36 2
- - -
1,151.1 6,482.0 - 2,146.2 -
Cash Flow from Investing Activities 7 0 629.17 3 570.1
Cash from Financing Activities - 8,945.9 3,286.3 2,251.5 23.94
437.54 0 3 2
-
Net Cash Inflow / Outflow 222.85 958.09 -21.89 40.93 -5.31
Opening Cash & Cash Equivalents 982.25 24.16 46.05 5.11 10.43
Cash & Cash Equivalent on
Amalgamation / Take over / Merger 0 0 0 0 0
Cash & Cash Equivalent of Subsidiaries
under liquidations 0 0 0 0 0
Translation adj. on reserves / op cash
balances frgn subsidiaries 0 0 0 0 0
Effect of Foreign Exchange
Fluctuations 0 0 0 0 0

S.V Institute of Management, Kadi (2009-11)

Closing Cash & Cash Equivalents 759.4 982.25 24.16 46.05 5.11

INTERPRETATION:-

CHAPTER 7

RATIO ANALYSIS

The relationship of one item to another expressed in a simple mathematical form is known as the “RATIO”. A
ratio is a quotient to two numbers. It must be interpreted against some standard. In assessing the financial
stability of a firm, a management should, part form profitability, be interested in relative figures. A ratio is of
major importance for financial analysis; it engages qualitative measurement & shows precisely how adequate
is one key item in relation to another. To evaluate the financial condition & the purpose of the firm the

S.V Institute of Management, Kadi (2009-11)

financial analyst needs certain yardsticks. The yardsticks frequently used in ratio or an index relating two
pieces of financial data to each other’s.

UTILITY OF RATIO ANALYSIS:

1. Probability.
2. Liquidity.
3. Efficiency.
4. Inter – Firm Comparison.
5. Indicates Trend.
6. Useful of Budgetary Controls.
7. Useful for Decision Making.

This ratio analysis contains five types of ratio as below:

1. Profitability Ratios.
2. Liquidity Ratios.
3. Assets Turnover Ratios.
4. Finance Structure Ratios.
5. Valuation Ratios.

S.V Institute of Management, Kadi (2009-11)

6.1 Profitability Ratios:

Profitability ratio measures the degree of operating success of a company in an accounting period. Two types
of profitability ratios are there.

1. Profit Margin Ratios.

2. Rate of Return Ratios.

A profit margin ratio shows the relationship between profit & sales. Three popular profits margin ratios are:

• Gross Profit Margin Ratios.

• Net Profit Margin Ratios.
• Operating Profit Ratios.

Gross Profit Margin Ratio:

It shows the margin left after meeting manufacturing costs. It measures the efficiency of production as well as
pricing.

Gross Profit Margin Ratio = Gross Profit/ Sales X 100

S.V Institute of Management, Kadi (2009-11)

 Mar-
s Mar-09 Mar-07 Mar-06 Mar-05
08
5,534.7 1,139.1
Net Sales 2,827.90 1 4 989.62 441.58
3,067.4
Gross profit 1,717.42 8 695.66 342.54 95.15
Gross profit 60.73128 55.422 61.0688 34.6132 21.5476
Ratio 47 6 8 9 2

Net Profit Margin Ratios:

It is most significant of all revenue ratios as it indicates the ultimate profitability of the firm. This ratio is
useful to the shareholders for knowing the EPS and to investors in judging the prospects of return on their
investments higher ratio indicated higher profitability.

Net Profit Margin Ratio = Net Profit / Sales x 100.

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05

Net Profit 1,549.86 2,574.40 405.77 228.52 67.7
Net Sales 2,827.90 5,534.71 1,139.14 989.62 441.58
54.806039 46.5137 35.6207 23.0916 15.3313
Net profit ratio 8 3 3 9 1

Operating Profit Ratio:

S.V Institute of Management, Kadi (2009-11)

This ratio indicate the portion that the cost of sales bears to sales cost of sales includes direct cost of good sold
as well as operating expenses, administrative, selling & distribution expenses which, have matching
relationship with sales. It is calculated as:

Operating Profit ratio = Operating Profit / Sales X 100.

Mar- Mar-
Particulars Mar-09 Mar-08 Mar-07
06 05
5,534.7 1,139.1
Net Sales 2,827.90 1 4 989.62 441.58
3,591.2
Operating Profit 2,734.80 5 986.02 497.95 133.35
Operating Profit
ratio 96.71 64.89 86.56 50.32 30.20

Return on assets or Return on investments:

This is measure of profitability from a given level of investments. It is an excellent indicator of overall
performance of a company. It is also called return on capital employed or return on investment. It measures
how efficiently the capital is employed.

Return on Assets = Net Profit / Average Total Assets X 100

Mar- Mar- Mar- Mar- Ma

S
09 08 07 06 r-05
Profit After 1,549. 2,574.4 405.7 228.5
Tax 86 0 7 2 67.7
20822. 13548.
Avg assets 7 82 5540 2338 948
7.4431 19.000 7.14
Ratio 4 92 7.324 9.774 2

S.V Institute of Management, Kadi (2009-11)

Return On Equity:

It measures the profitability of equity funds invested in firm.

Return on Equity = Profit after Tax / Average Shareholder’s Equity x 100

S Mar-09 Mar-08 Mar-07 Mar-06 Mar-05

Profit After Tax 1,549.86 2,574.40 405.77 228.52 67.7
Avg.share's equity 340.2 323.42 171.825 20.64 3.51
Return Equity's 45557.32 79599.28 23615.31 110717.05 192877.49
Ratio % % % % %

Earning Power:

The earning power is a measure of business performance, which is not affected by Interest & Tax. It is
measure of operating profitability.

Earning Power = Earning before Profit & Tax / Average Total Assets x 100.

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05

Profit Before Tax 1,810.87 3,117.92 620.33 347.91 96.88
Avg.total assets 18526.6 1390.015 6263.44 2398.09 1755.635

S.V Institute of Management, Kadi (2009-11)

 8
977.44 224.3084 9.9040 14.5078
Earning power ratio % % % % 5.5182%

➢ The Earning Power of the company has been increased to 9.7744%in year 2008–2009 from 5.5182%in
year 2004–2005
➢ This is because the increase in earning before interest & tax (EBIT) is more than increase in average
total assets.
➢ In 2005 – 2006 the EBIT is increased by 14.5078% while PBT is increased by 9.7744%because interest
& tax is less.
➢ In year 2006 – 2007 EBIT increased by 9.9040% while PBT is increased by 620.33 because interest &
tax is only by 13%.

6.2 Liquidity Ratios:

Liquidity is the ability of a company to meet its short-term obligations when fall due. A company should have
enough cash % other current assets, which can be converted in to cash so that it can pay its suppliers & lenders
on time.

In evaluating Ashok Leyland Ltd’s liquidity five ratios are presented.

• Current Ratio.
• Quick Ratio or Acid-test Ratio.
• Net Working Capital.
• Cash Generated Per Rupee of Sales.
• Bank Finance Gap Ratio.

• Current Ratio:

S.V Institute of Management, Kadi (2009-11)

Current ratio indicates the firm’s ability to pay its current liabilities, i.e. day-to-day financial obligations. It
shows the strength of credit, strength of working capital & capacity to carry on effective operations. Higher
ratio i.e. more than 2:1 indicates sound solvency position.

Current Ratio = Current Assets/ Current Liabilities.

Where,
Current Assets = Inventories + Debtors + Cash & Bank Balance + Loan & Advances.
Current Liabilities = Liabilities + Provision

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05

18,341.5
Total Current Assets 18,711.78 8 9,438.45 3,088.43 1,707.76
Current Liabilities 1,634.58 2,497.90 3,035.63 1,187.94 1,278.90
11.44745 3.109222 2.5998198 1.3353350
Current Ratio 4 7.3428 8 6 5

➢ Composition of current ratio is very important at the time of interpretation. Current ratio indicates the
sound short term finance from the creditor’s point of view. But on the other hand the higher ratio
indicates blocking of funds in current assets. As a conventional rule, current ratio of 2:1 or more is
considered satisfactory. To through more light on the quality of current assets the percentage of the
current assets is to be calculated.
➢ However, an arbitrary standard of 2:1 should not be blindly followed. Firm’s wit less then 2:1 current
ratios may be doing well, while firms with 2:1 or even higher may be finding great difficulties in
paying their bills. This is because the current ratio is a test of quantity not quality.
➢ Current Ratio is 1.13 in 2004 – 2005 & decreased up to 2.59 in 2006 – 2007 because current liabilities
increased rapid than the increase in current assets.
➢ In the Current ratio it has been found decreasing than the base year, so it is not a favorable sign for the
company, it should take certain measure to increased.

S.V Institute of Management, Kadi (2009-11)

• Quick Ratio or Acid Test Ratio:

The Quick Ratio is a more absolute test of a firm’s ability to meet its immediate liabilities. It base on those
current assets, which are highly liquid inventories, is excluded from the numerators of this ratio because
inventories are deemed to be the least liquid component of current assets.
Quick Ratio = Quick Assets / Liquid Liability.

• Net Working Capital:

This ratio represents that part of the long-term fund represented by the net worth & long-term dept, which are
permanently blocked in current assets. Certain minimum level of safety stock, permanent customers unpaid
bills, compensatory minimum bank balance & minimum cash balance are the example of permanent working
capital.

Net Working Capital = Total Current Assets – Total Current Liabilities

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05

Total Current Assets 18,711.7 18,341.5 9,438.4 3,088.43 1,707.76
8 8 5
3,035.6
Current Liabilities 1,634.58 2,497.90 3 1,187.94 1,278.90
17,077.2 15,843.6 6,402.8
Current Ratio 0 8 2 1,900.49 428.86

• Bank Finance Gap Ratio.

Bank Finance Gap Ratio = Total Current Assets – MPBF under Tandon Committee
MPBF indicates maximum permissible bank finance under tandon committee recommendations of 1975. The
maximum permissible bank finance was restricted to 75% of the working capital gap under three successive
methods of bank leading.

S.V Institute of Management, Kadi (2009-11)

Method 1:

75% (Current Assets – Current Liabilities)

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05

18,711.7 18,341.5
Total Current Assets 8 8 9,438.45 3,088.43 1,707.76
Current Liabilities 1,634.58 2,497.90 3,035.63 1,187.94 1,278.90
17,077.2 15,843.6
CA-CL 0 8 6,402.82 1,900.49 428.86
4802.11 1425.367
75%(CA-CL) 12807.9 11882.76 5 5 321.645

Method 2:

75% (Current Assets) – Current Liabilities

Method 2
Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05
Total Current Assets 18,711.78 18,341.58 9,438.45 3,088.43 1,707.76
10525.376 10317.139 5309.1281 1737.2418
75%CA 8 960.615
Current Liabilities 1,634.58 2,497.90 3,035.63 1,187.94 1,278.90
75%CL 9605.925 8912.07 3601.5863 1069.0256 241.23375

S.V Institute of Management, Kadi (2009-11)

 3
-7971.345 -6414.17 -565.9563 118.91437 1037.6662
(CA-CL) 5 5

DU PONT CHART

Profit margin & assets turnover are the two drivers of return on assets. The Du Pont System of financial
analysis clearly brings out the effects of these two drivers on return on assets. A system is useful for analysis,
which considers important inter relationship based on information found in financial statements.

Importance Of Du Pont Chart:

Any decision affecting the product price per unit costs, volume or efficiency has an impact on the profit
margin or turnover ratios. Similarly any decision affecting the amount & ratio of debt or equity used will affect
the financial structure & the overall cost of capital of a company. Therefore, these financial concepts are very
important to evaluate as every business is competing for Limited Capital Resources. Understanding the inter
relationship among the various ratios such as turnover ratio, average & probability ratios helps companies to
put their money areas where the risk adjusted return is the maximum.

The chart used by “Du Pont Company” of U.S.A is known as Du Pont Chart.

This is the Du Pont Chart applied to DLF Ltd. At the left of the Du Pont Chart is the return on the assets
defined as the product of the Net Profit Margin & the Total Assets Turnover Ratio.

Net Profit Total Assets = Net Profit / Sales X Net Sales / Avg. Total Assets.

S.V Institute of Management, Kadi (2009-11)

Such decomposition helps in understanding how the Net Profit Margin & Total Assets Turnover Ratio
influences the Return on Total Assets.

Suggestions & Recommendations

1. The balance sheet figures are showing the declining trend since last few years. It should be the reason for
higher inventory level which unnecessary blocked the money. For higher the profitability ratio of the firm,
it is required to increase the sales along with:

➢ New advertising techniques through latest media which are more effective and prestigious.
➢ To increase the work efficiency of the workers as well as of the staff members, arrangement of
different training programmes like meetings, seminars, conferences, coaching classes etc. is
required.
➢ For the innovation of new market, select capable market representatives who are more efficient to
recover the more market share.
➢ Try to maintain the quality level as per the market demand which satisfies the customers more.
2. In order to increase the profit the firm should keep proper control over the expenses retaliating to the
purchase of goods, manufacturing and lab ours for that, proper supervision and timely comparison of actual
with budgeted overheads should be taken. This will help the management to know the causes and taking
competitive actions to reduce the expenses.

In order to reduce the expenses relating to payment of interest, the firm should rely more on its share
capital rather than borrowing loans and funds. Firm should also try to maintain proper balance between
debt and equity.

S.V Institute of Management, Kadi (2009-11)

3. To improve the liquidity position of the firm, proper working capital is necessary to recover the daily cash
requirement. For that, the firm should:

➢ Try to reduce the debt collection period which should be main sources for working capital.
➢ Use more credit facility which is given by the creditors.
➢ Firm should also use more short term loans to recover the working capital requirement because the
interest rate for short term loans is less and it should be flexible to use.

1. In order to maximize wealth under uncertainty, the firm must pay enough dividends to satisfy investors. It
should help to increase the moral of the investors and side by side also helps in long term financial strength
of the firm. So, by increasing profits, the firm should pay dividends regularly.

CONCLUSION

We are making the financial analysis from its techniques that we are concluding as follows:

Horizontal Analysis:

DLF Ltd has made good growth in last five years in sales as well as profit. Here growth in sales is increasing
every year against that expenditure has also increased but lower than sales. In 2006-07, the Company’s exports
grew by 23% with the sale of 6,025 vehicles. This improvement was derived from demand in the export
markets and the launch of new products. This is the reason the sale & profit has increased compare to last
years i.e. 2005-06

Vertical Analysis:

S.V Institute of Management, Kadi (2009-11)

It shows that the expenditure of the company is accounting for higher percentage of sales around 99% every
year & because of the every year profit has increased but a decreasing rate. So for the increment of profit in
future, the company is requiring to optimize its expenditure on the side of operating as well as administrative.

Trend Analysis:

It shows good trend in sales & profit but as above said, expenditure also rising that depends the profit of the
company. Reserve & Surplus also shows good trend.

Cash Flow
In Cash Flow Analysis all the activities i.e. operating, investing, financing maintain this year (2006 – 2007).

Ratio Analysis:

We are discussing about mainly 5 kinds of ratio. All the ratios performs very well in last five years that gives
better profitability & liquidity position to the company.

DLF Limited is confident that it can meet the challenges passed by the deregulation scenario with its strength
in refining. Its strategic scenario with its strength in refining its strategic alliance with DLF Limited marketing
and in house productivity improvement, profitability maximization and cost reduction exercises, which have
already been launched in right earnest. These measures would place the company in a position of comfort to
meet the real challenges of the future and we also wish them “Best of Luck” for their bright future. So that
DLF Limited will be a world clean Automotive Company. Now a day, key customer rates company among the
top 5 companies. At last, company is financial healthy.

S.V Institute of Management, Kadi (2009-11)

 BIBLIOGRAPHY

1. Narayanaswamy R.: “Financial Accounting “, 2nd Edition, Prentice Hall Publication (India), 2007.
2. “Advance Accounting ”, ICAI MODULE, 2006.

WEB LINKS

• http://www.dlf.in/jsp

• http://www.moneycontrol.con

• http://www.wikipedia.com/mediakit.jsp

• http://WWW.KOTAKSECURITIES.COM/JSP

S.V Institute of Management, Kadi (2009-11)

Thank you

S.V Institute of Management, Kadi (2009-11)