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BRIEF HISTORY OF HDFC BANK
Housing Development Finance Corporation Limited more popularly known as HDFC Bank Ltd was established in the year 1994 as a part of the liberalization of the Indian Banking Industry by Reserve Bank of India (RBI) It was one of the first banks to receive an in principle approval from RBI for setting up a bank in the private sector The bank was incorporated with the name HDFC Bank Limited with its registered office in Mumbai The following year it started its operations as a Scheduled Commercial Bank Today the bank boasts of as many as 1412 branches and over 3275 ATMs across India
AmalgamationsIn 2002 HDFC Bank witnessed its merger with Times Bank Limited (a private sector bank promoted by Bennett Coleman amp Co Times Group) With this HDFC and Times became the first two private banks in the New Generation Private Sector Banks to have gone through a merger In 2008 RBI approved the amalgamation of Centurion Bank of Punjab with HDFC Bank With this the Deposits of the merged entity became Rs 122000 crore while the Advances were Rs 89000 crore and Balance Sheet size was Rs 163000 crore
Tech-SavvyHDFC Bank has always prided itself on a highly automated environment be it in terms of information technology or communication systems All the braches of the bank boast of online connectivity with the other ensuring speedy funds transfer for the clients At the same time the banks branch network and Automated Teller Machines (ATMs) allow multi-branch access to retail clients The bank makes use of its up-to-date technology along with market position and expertise to create a competitive advantage and build market share
Capital Structure
At present HDFC Bank boasts of an authorized capital of Rs 550 crore (Rs55 billion) of this the paid-up amount is Rs 4246 crore (Rs42 billion) In terms of equity share the HDFC Group holds 194 Foreign Institutional Investors (FIIs) have around 28 of the equity and about 176 is held by the ADS Depository (in respect of the banks American Depository Shares (ADS) Issue) The bank has about 570000 shareholders Its shares find a listing on the Stock Exchange Mumbai and National Stock Exchange while its American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol HDB
Products amp services
Personal Banking
Savings Accounts Salary Accounts Current Accounts Fixed Deposits Demat Account Safe Deposit Lockers Loans Credit Cards Debit Cards Prepaid Cards Investments amp Insurance
Forex Services Payment Services Net Banking Insta Alerts Mobile Banking Insta Query ATM amp Phone Banking
NRI BankingRupee Current Accounts Rupee Savings Accounts Rupee Fixed Deposits Foreign Currency Deposits Accounts for Returning Indians Quickremit (North America UK Europe Southeast Asia) IndiaLink (Middle East Africa) Cheque LockBox Telegraphic Wire Transfer Funds Transfer through Cheques DDs TCs Mutual Funds Private Banking Portfolio Investment Schemes Loans Payment Services Net Banking Insta Alerts Mobile Banking Insta Query ATM Phone Banking
SHAREHOLDING PATTERN AS ON 30TH SEPTEMBER 2009
The shareholders are divided in to two categories
shareholding of promoter and promoter group public shareholding
Under the first category (shareholding of promoter and promoter group) we have subcategories they are
Indian Foreign
Under Indian the corporate bodies are the promoters(total noof shareholders are four)who holds 82443000 shares which accounts to 1929 of the total shares There are no foreign promoters in this company There has not been any change in the total no of shares when compared with the previous two quarters
Under the second category (public shareholding) we have sub divisions they are
Institutions Non-institutions
Under the institutions the foreign institutional investors(total no of shareholders are 522) holds the major part ie 120326279 shares which accounts to 28When compared with the previous two quarters it has been increased by 3The next major shareholders are the insurance companies(total no of shareholders are 27) that holds 33661939 shares which accounts to 788 and when compared with previous two quarters there has been a negligible increase The institutional shareholders sum up to 4062
The non institutions are the other investors like the private corporate bodies who holds 39281016 shares which accounts to 918 of the total shares and the others hold 80595303 shares which accounts to 1886The shares with the general public is 45148741 which accounts to 10565
and when compared with the previous two quarters there has been a slight decrease The total no of shares are 427348828 and all the percentages sum up to 100
PARTICULARSPERCENTAGE OF SHARES
PROMOTER GROUP 192913MUTUAL FUNDSUTI 45877OTHERS 00903INSURANCE COMPANIES 7788FOREIGN INSTITUTIONAL INVESTORS 281559BODIES CORPORATE 91916INDIVIDUALS- UPTO 1 LAKH 80176INDIVIDUALS- ABOVE 1 LAKH 25471NON RESIDENTS 14718DEPOSITORY RECIEPTS 18859
PROMOTER GROUP
19 MUTUAL FUNDSUTI5
OTHERS0
INSURANCE COMPANIES
8FOREIGN INSTI-TUTIONAL IN-
VESTORS28BODIES CORPORATE
9
INDIVIDUALS- UPTO 1 LAKH
8
INDIVIDUALS- ABOVE 1 LAKH
3
NON RESIDENTS1
DEPOSITORY RECIEPTS
19
PERCENTAGE OF SHARES
PROMOTER
HDFC is Indias premier housing finance company and enjoys an impeccable track record in India as well as in international markets Since its inception in 1977 the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages Its outstanding loan portfolio covers well over a million dwelling units HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities With its experience in the financial markets a strong market reputation large shareholder base and unique consumer franchise HDFC was ideally positioned to promote a bank in the Indian environment
CONTENTS OF THE ANNUAL REPORT-
Directorrsquos report-
Service quality initiatives include the audit of services and improvement on the areas identified on the basis of customer feedback on experiences at various touch-points New elements were added and renewed improvement schemes were installed using technology to ensure customer convenience security of transactions and reduce transaction cost
Risk Management amp Portfolio Quality-
The Bank in the course of its business is exposed to various risks of which the most important are credit risk market risk (including liquidity risk and price risk) and operational risk The identification measurement monitoring and control of risks remain key aspects of the Bankrsquos risk management system Sound risk management supported by a balanced risk-reward trade-off is critical to achieving the Bankrsquos business strategy for business and revenue growth The Bank has distinct policies and processes in place for the retail and wholesale businesses The
INTERNAL AUDIT amp COMPLIANCE-
The Bank has Internal Audit amp Compliance functions which are responsible for independently evaluating the adequacy of all internal controls and ensuring operating and business units adhere to internal processes and procedures as well as to regulatory and legal requirements The audit function also proactively recommends improvements in operational processes and service quality To ensure independence the Audit department has a reporting line to the Chairman of the Board of Directors and the Audit amp Compliance Committee of the Board and only indirectly to the Managing Director
CORPORATE SOCIAL RESPONSIBILITY-
As its operations have grown your bank has retained its focus onvarious areas of corporate sustainability that impact the socio economic ecosystem that we are part of HDFC Bankrsquos focus in the area of corporate sustainability includes social sustainability amp social welfare and financial inclusion
Social Sustainability amp Social Welfare-
The bank has initiated a number of programs to encourage economic social and educational development within the communities that it operates while at the same time contributing to several grass root level development programs across these geographies
STATUTORY DISCLOSURES
The information required under Section 217(2A) of the Companies Act 1956 and the rules made thereunder are given in the annexure appended hereto and forms part of this report
DIRECTORS
Mr Vineet Jain resigned as a Director of the Bank with effect from December 27 2008Mr Arvind Pande and Mr Ashim Samanta retire by rotation atthe ensuing Annual General Meeting and being eligible offer themselves for re-appointment
AUDITORS-
The Auditors Ms Haribhakti amp Co Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment
AUDITORrsquoS REPORT
The attached Balance Sheet of HDFC Bank Limited audited (ldquothe Bankrdquo) as at 31 March 2009 and also the Profit and Loss Account of the Bank and the Cash Flow statement We conducted our audit in accordance with auditingstandards generally accepted in IndiaThe An audit includes examining on a test basis evidence supporting the amounts and disclosures in the financial statements
INFORMATION OF ACCOUNTS OF THE COMPANY-
Balance sheet on date 2008-09(In thousands)
ITEMS 2009 2008
Capital 4253841 3544329
Equity share warrents 4009158 -
Reseves and surplus 142209460 111428076
Total Assests 1832707 1331766032
Current assests 135272112 125531766
Fixed assests 17067290 11750917
The current year capital shows an increment with that of previous year by 1667About the deviation of equity share canrsquot be predicted du to insufficient datathe company showsa high amount of reserves and surplus which may due to the high percentage of general reseve and amalgamation reserve
INFORMATION ABOUT THE PampL ACCOUNT OF THE COMPANY(In thousands)ITEMS 2009 2008INCOME 196228646 123981512EXPENDITURE 173779254 108079582PROFIT 48195737 35222327APPROPRIATIONS 48195737 35222327EARNINGS PER EQUITY SHARE (Face value Rs 10 per share)A) Basic
5285 4622
The income increased by 36817 may be due to high operating income ratioThere is an considerable increase inexpendeture in current year by 37806 compared to last yearThe company has also mainted a good profit increment for the current year which is almost 27
INFORAMAION ABOUT THE CASH FLOW ACTIVITY OF THE COMPANY(In thousands)ITEMS 2009 2008Net cash flow from (used in) operating activities
(17361421) 27231256
Net cash generated from financing activities
29646633 36283464
Net cash used in investing (6637774) (6197812)
The net cash flow in the current year shows a considerable increase by 5688The financing activity ratio also increased by2256About the balance sheet-The company has Authoristed shares 550000000 ( 31 March 2008 550000000) Equity Shares of Rs 10- each out of which 425384109 (31 March 2008 354432920) Equity Shares of Rs 10- eachare issued
The company comprises of following type of reseves-Types 2009 2008
Statutory Reserve 22987291 15193539General Reserve 7360523 5115584
Amalgamation Reserve 10635564 145218Capital Reserve 956510 17850Investment Reserve Account
276250 414800
The company has a propose divedend 27206229 for the year 2009(figs are in thousands)Also it has a bill payable 29224076 for the current year as current libillitesNext the current assest ie if u see the cash in hand for te current year is 15861868 Gross block for the current year is 7160665 which is a 2676 increment then the previous year
Net block for the current year is 11311063 and previous 7322171 which is a 9352 increased percentage Fixed assets are stated at cost less accumulated depreciation as adjusted for impairment if any Cost includes cost of purchase and all expenditure like site preparation installation costs and professional fees incurred on the asset before it is ready to use Subsequent expenditure incurred on assets put to use is capitalized only when it increases the future benefitfunctioning capability fromof such assetsDepreciation is charged over the estimated useful life of the fixed asset on a straight-line basis Income tax comprises the current tax provision the net change in the deferred tax asset or liability in the year and fringe benefit tax
Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences between the carrying values of assets and liabilities and their respective tax bases and operating loss carry forwardsStatement pursuant to Section 212 of the Companies Act 1956 relating to subsidiary Companies
Name of the subsidiary HDFC Securities Ltd HDB Financial Services LtdCapital 1500 10501Reserves and Surplus 8025 (1288)Total Assets 20599 19588Total Liabilities 11074 10375Investments _ _Turnover 12466 2354Profit (Loss) Before Taxation 2809 (919)Provision for Taxation (1152) (9)Profit (Loss) After Taxation 1657 (928)Proposed Dividend including tax 35 _
The New Capital Adequacy Framework is applicable to HDFC Bank Limited (hereinafter referred to as the Bank)and its two subsidiaries (HDFC Securities Ltd and HDB Financial Services Private Ltd) which together constitutes the group in line with
CAPITAL STRUCTURE-
Capital funds are classified into Tier I and Tier II capital under the capital adequacy framework Tier I capital includes paid-up equity capital statutory reserves other disclosed free reserves capital reserves
and innovative perpetual debt instruments Elements of Tier II capital include revaluation reserve if any general provision for standard assets
CAPITAL ADEQECY-
The Bank has a process for assessing its overall Capital Adequacy in relation to their risk profile and a strategy for maintaining their capital level The process provides an assurance that the Bank has adequate capital to support all risk in its business and an appropriate capital buffer based on its business profile The Bank has a structured management framework in the internal capital adequacy assessment process for the identification and evaluation of the significance of all risks that the Bank faces which may have an adverse material impact on its financial position The Bank considers the following risks as material risks
Credit Risk1048707 Market Risk1048707 Interest Rate Risk in the Banking Book1048707 Liquidity Risk1048707 Credit Concentration Risk1048707 Business Risk1048707 Strategic Risk1048707 Compliance Risk1048707 Reputation Risk1048707 Operational Risk
Credit Risk-
Credit Risk is defined as the possibility of losses associated with diminution in the credit quality of borrowers orcounterparties In a bankrsquos portfolio losses stem from outright default due to inability or unwillingness of acustomer or counterparty to meet commitments in relation to lending trading settlement and other financialtransactions
Wal-Mart
PARTICULARS 2006 2005 CHANGESALES 312427 285222 9538184292OPERATING INCOMEOPERATING PROFIT 18530 17091 8419636066INTEREST 1172 986 1886409736NET INCOME NET PROFIT 11231 10267 9389305542OPERATING EXPENSES 56733 51248 107028567SHARE HOLDERS EQUITY 53171 49396 7642319216TOTAL ASSETS 138187 120154 1500823943COST OF GOODS SOLD 240391 219793 9371545045GROSS PROFIT= SALES- COST OF GOODS SOLD 72036 65429 1009796879PRETAXPROFIT=OPERATING PROFIT-INTEREST 17358 16105 7780192487
Profitability Ratios
PARTICULARS 2006 2005 CHANGEGROSS PROFIT RATIO=(GROSSPROFITSALES)100 2305690609 2293967506 0511040513NET INCOME RATIO=(NETPROFITSALES)100 3594759736 3599652201 -0135914933OPERATING PROFIT RATIO= (OPERATING PROFITSALES)100 5930985478 5992174517 -1021149139PRETAX PROFIT RATIO=(PRETAXPROFITSALES)100 5555857848 5646478883 -1604912311OPERATING EXPENSE RATIO=(OPERATING EXPENSESSALES)100 181588019 1796775845 1063256994FINANCIAL EXPENSES RATIO=(INTERESTSALES)100 037512763 0345695634 8513846684RETURN ON SALES=(NETINCOMESALES)100 3594759736 3599652201 -0135914933RETURN ON ASSETS=(NETINCOME ASSETS)100 8127392591 854486742 -4885679419RETURN ON EQUITY=(NET INCOMESHHLDRS EQUITY)100 2112241635 2078508381 1622954929PROFITABILITY=(NETINCOMESALES)100 3594759736 3599652201 -0135914933EFFICIENCY=(SALESASSETS) 2260900085 2373803619 -4756228912LEVERAGE=(ASSETSSHAREHOLDERS EQUITY) 2598916703 2432464167 6842959408DUPONT ANALYSIS 2112241635 2078508381 1622954929
Profitability Ratios Interpretation
PARTICULARS 2006 2005 CHANGEINVENTORY(AVG) 32191 29762 8161413883COST OF GOODS SOLD 240391 219793 9371545045NET CREDIT SALES( NET SALES) 312427 285222 9538184292AVERAGE DEBTORS( RECIEVABLES) 2662 1715 5521865889CASH AND CASH EQUIVALENTS 6414 5488 1687317784CURRENT LIABILITIES 48826 43182 1307026076TOTAL ASSETS 138187 120154 1500823943CURRENT ASSETS 43824 38854 1279147578AVERAGE CREDITORS(PAYABLES) 25373 21987 154000091OPENING STOCK 29762 0 CLOSING STOCK 32191 29762 8161413883FIXED ASSETS = TOTAL ASSETS-CURRENT ASSETS 94363 81300 1606765068PURCHASES= COST OF GOODS SOLD- OPENING STOCK+ CLOSING STOCK 242820 249555 -2698803871NETWORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES -5002 -4328 1557301294
Asset Utilization Ratios
PARTICULARS 2006 2005 CHANGESTOCK TURNOVER RATIO= COST OF GOODS SOLDAVG INVENTORY 7467646237 7385021168 1118819658NUMBER OF DAYS TO INVENTORY=365STOCK TURNOVER RATIO 4887751621 4942436747 -1106440584DEBTORS TURNOVER RATIO= NET CREDIT SALES AVG DEBTORS 1173655147 1663102041 -294297573AVERAGE COLLECTION PERIOD= 365DEBTORS TURNOVER RATIO 3109942483 2194693958 4170278602CREDITOR TURNOVER RATIO= NET CREDIT PURCHASESAVG CREDITORS 9570015371 1135011598 -1568354553AVG PAYMENT PERIOD=365 CREDITOR TURNOVER PERIOD 3813995964 3215826171 1860081241CASH TURNOVER RATIO=SALESCASH AND CASH EQUIVALENTS 4871016526 5197193878 -6276028158CURRENT LIABILITIES TURNOVER RATIO=SALESCURRENT LIABILITIES 6398783435 6605113242 -3123789086WORKING CAPITAL TURNOVER RATIO= SALES NET WORKING CAPITAL -6246041583 -6590157116 -5221659014TOTAL ASSETS TURNOVER RATIO=SALESTOTAL ASSETS 2260900085 2373803619 -4756228912FIXED ASSETS TURNOVER RATIO=SALESFIXED ASSETS 3310905758 3508265683 -5625569525
Asset Utilization Ratios Interpretation
PARTICULARS 2006 2005 CHANGE
TOTAL ASSETS 138187 12015415008239
4
SHHLDRS EQUITY 53171 4939676423192
2
TOTAL LIABILITIES 85016 7075820150371
7
EBIT 18530 1709184196360
7
INTEREST 1172 98618864097
4
EBT=EBIT-INTEREST 17358 1610577801924
9
Leverage ratios
PARTICULARS 2006 2005 CHANGE
ASSETS TO EQUITY RATIO= ASSETSEQUITY259891
7243246
468429594
1
DEBT RATIO= TOTAL LIABILITIESTOTAL ASSETS061522
4058889
444710990
2
DEBT EQUITY RATIO= TOTAL LIABILITIES EQUITY159891
7143246
411620013
9
INTERESTCOVERAGE RATIO= EBIT INTEREST158105
8173336
7-
87868932
FINANCIAL LEVERAGE=EBITEBT106751
9106122
305932848
7
Leverage ratios interpretation
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
Forex Services Payment Services Net Banking Insta Alerts Mobile Banking Insta Query ATM amp Phone Banking
NRI BankingRupee Current Accounts Rupee Savings Accounts Rupee Fixed Deposits Foreign Currency Deposits Accounts for Returning Indians Quickremit (North America UK Europe Southeast Asia) IndiaLink (Middle East Africa) Cheque LockBox Telegraphic Wire Transfer Funds Transfer through Cheques DDs TCs Mutual Funds Private Banking Portfolio Investment Schemes Loans Payment Services Net Banking Insta Alerts Mobile Banking Insta Query ATM Phone Banking
SHAREHOLDING PATTERN AS ON 30TH SEPTEMBER 2009
The shareholders are divided in to two categories
shareholding of promoter and promoter group public shareholding
Under the first category (shareholding of promoter and promoter group) we have subcategories they are
Indian Foreign
Under Indian the corporate bodies are the promoters(total noof shareholders are four)who holds 82443000 shares which accounts to 1929 of the total shares There are no foreign promoters in this company There has not been any change in the total no of shares when compared with the previous two quarters
Under the second category (public shareholding) we have sub divisions they are
Institutions Non-institutions
Under the institutions the foreign institutional investors(total no of shareholders are 522) holds the major part ie 120326279 shares which accounts to 28When compared with the previous two quarters it has been increased by 3The next major shareholders are the insurance companies(total no of shareholders are 27) that holds 33661939 shares which accounts to 788 and when compared with previous two quarters there has been a negligible increase The institutional shareholders sum up to 4062
The non institutions are the other investors like the private corporate bodies who holds 39281016 shares which accounts to 918 of the total shares and the others hold 80595303 shares which accounts to 1886The shares with the general public is 45148741 which accounts to 10565
and when compared with the previous two quarters there has been a slight decrease The total no of shares are 427348828 and all the percentages sum up to 100
PARTICULARSPERCENTAGE OF SHARES
PROMOTER GROUP 192913MUTUAL FUNDSUTI 45877OTHERS 00903INSURANCE COMPANIES 7788FOREIGN INSTITUTIONAL INVESTORS 281559BODIES CORPORATE 91916INDIVIDUALS- UPTO 1 LAKH 80176INDIVIDUALS- ABOVE 1 LAKH 25471NON RESIDENTS 14718DEPOSITORY RECIEPTS 18859
PROMOTER GROUP
19 MUTUAL FUNDSUTI5
OTHERS0
INSURANCE COMPANIES
8FOREIGN INSTI-TUTIONAL IN-
VESTORS28BODIES CORPORATE
9
INDIVIDUALS- UPTO 1 LAKH
8
INDIVIDUALS- ABOVE 1 LAKH
3
NON RESIDENTS1
DEPOSITORY RECIEPTS
19
PERCENTAGE OF SHARES
PROMOTER
HDFC is Indias premier housing finance company and enjoys an impeccable track record in India as well as in international markets Since its inception in 1977 the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages Its outstanding loan portfolio covers well over a million dwelling units HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities With its experience in the financial markets a strong market reputation large shareholder base and unique consumer franchise HDFC was ideally positioned to promote a bank in the Indian environment
CONTENTS OF THE ANNUAL REPORT-
Directorrsquos report-
Service quality initiatives include the audit of services and improvement on the areas identified on the basis of customer feedback on experiences at various touch-points New elements were added and renewed improvement schemes were installed using technology to ensure customer convenience security of transactions and reduce transaction cost
Risk Management amp Portfolio Quality-
The Bank in the course of its business is exposed to various risks of which the most important are credit risk market risk (including liquidity risk and price risk) and operational risk The identification measurement monitoring and control of risks remain key aspects of the Bankrsquos risk management system Sound risk management supported by a balanced risk-reward trade-off is critical to achieving the Bankrsquos business strategy for business and revenue growth The Bank has distinct policies and processes in place for the retail and wholesale businesses The
INTERNAL AUDIT amp COMPLIANCE-
The Bank has Internal Audit amp Compliance functions which are responsible for independently evaluating the adequacy of all internal controls and ensuring operating and business units adhere to internal processes and procedures as well as to regulatory and legal requirements The audit function also proactively recommends improvements in operational processes and service quality To ensure independence the Audit department has a reporting line to the Chairman of the Board of Directors and the Audit amp Compliance Committee of the Board and only indirectly to the Managing Director
CORPORATE SOCIAL RESPONSIBILITY-
As its operations have grown your bank has retained its focus onvarious areas of corporate sustainability that impact the socio economic ecosystem that we are part of HDFC Bankrsquos focus in the area of corporate sustainability includes social sustainability amp social welfare and financial inclusion
Social Sustainability amp Social Welfare-
The bank has initiated a number of programs to encourage economic social and educational development within the communities that it operates while at the same time contributing to several grass root level development programs across these geographies
STATUTORY DISCLOSURES
The information required under Section 217(2A) of the Companies Act 1956 and the rules made thereunder are given in the annexure appended hereto and forms part of this report
DIRECTORS
Mr Vineet Jain resigned as a Director of the Bank with effect from December 27 2008Mr Arvind Pande and Mr Ashim Samanta retire by rotation atthe ensuing Annual General Meeting and being eligible offer themselves for re-appointment
AUDITORS-
The Auditors Ms Haribhakti amp Co Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment
AUDITORrsquoS REPORT
The attached Balance Sheet of HDFC Bank Limited audited (ldquothe Bankrdquo) as at 31 March 2009 and also the Profit and Loss Account of the Bank and the Cash Flow statement We conducted our audit in accordance with auditingstandards generally accepted in IndiaThe An audit includes examining on a test basis evidence supporting the amounts and disclosures in the financial statements
INFORMATION OF ACCOUNTS OF THE COMPANY-
Balance sheet on date 2008-09(In thousands)
ITEMS 2009 2008
Capital 4253841 3544329
Equity share warrents 4009158 -
Reseves and surplus 142209460 111428076
Total Assests 1832707 1331766032
Current assests 135272112 125531766
Fixed assests 17067290 11750917
The current year capital shows an increment with that of previous year by 1667About the deviation of equity share canrsquot be predicted du to insufficient datathe company showsa high amount of reserves and surplus which may due to the high percentage of general reseve and amalgamation reserve
INFORMATION ABOUT THE PampL ACCOUNT OF THE COMPANY(In thousands)ITEMS 2009 2008INCOME 196228646 123981512EXPENDITURE 173779254 108079582PROFIT 48195737 35222327APPROPRIATIONS 48195737 35222327EARNINGS PER EQUITY SHARE (Face value Rs 10 per share)A) Basic
5285 4622
The income increased by 36817 may be due to high operating income ratioThere is an considerable increase inexpendeture in current year by 37806 compared to last yearThe company has also mainted a good profit increment for the current year which is almost 27
INFORAMAION ABOUT THE CASH FLOW ACTIVITY OF THE COMPANY(In thousands)ITEMS 2009 2008Net cash flow from (used in) operating activities
(17361421) 27231256
Net cash generated from financing activities
29646633 36283464
Net cash used in investing (6637774) (6197812)
The net cash flow in the current year shows a considerable increase by 5688The financing activity ratio also increased by2256About the balance sheet-The company has Authoristed shares 550000000 ( 31 March 2008 550000000) Equity Shares of Rs 10- each out of which 425384109 (31 March 2008 354432920) Equity Shares of Rs 10- eachare issued
The company comprises of following type of reseves-Types 2009 2008
Statutory Reserve 22987291 15193539General Reserve 7360523 5115584
Amalgamation Reserve 10635564 145218Capital Reserve 956510 17850Investment Reserve Account
276250 414800
The company has a propose divedend 27206229 for the year 2009(figs are in thousands)Also it has a bill payable 29224076 for the current year as current libillitesNext the current assest ie if u see the cash in hand for te current year is 15861868 Gross block for the current year is 7160665 which is a 2676 increment then the previous year
Net block for the current year is 11311063 and previous 7322171 which is a 9352 increased percentage Fixed assets are stated at cost less accumulated depreciation as adjusted for impairment if any Cost includes cost of purchase and all expenditure like site preparation installation costs and professional fees incurred on the asset before it is ready to use Subsequent expenditure incurred on assets put to use is capitalized only when it increases the future benefitfunctioning capability fromof such assetsDepreciation is charged over the estimated useful life of the fixed asset on a straight-line basis Income tax comprises the current tax provision the net change in the deferred tax asset or liability in the year and fringe benefit tax
Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences between the carrying values of assets and liabilities and their respective tax bases and operating loss carry forwardsStatement pursuant to Section 212 of the Companies Act 1956 relating to subsidiary Companies
Name of the subsidiary HDFC Securities Ltd HDB Financial Services LtdCapital 1500 10501Reserves and Surplus 8025 (1288)Total Assets 20599 19588Total Liabilities 11074 10375Investments _ _Turnover 12466 2354Profit (Loss) Before Taxation 2809 (919)Provision for Taxation (1152) (9)Profit (Loss) After Taxation 1657 (928)Proposed Dividend including tax 35 _
The New Capital Adequacy Framework is applicable to HDFC Bank Limited (hereinafter referred to as the Bank)and its two subsidiaries (HDFC Securities Ltd and HDB Financial Services Private Ltd) which together constitutes the group in line with
CAPITAL STRUCTURE-
Capital funds are classified into Tier I and Tier II capital under the capital adequacy framework Tier I capital includes paid-up equity capital statutory reserves other disclosed free reserves capital reserves
and innovative perpetual debt instruments Elements of Tier II capital include revaluation reserve if any general provision for standard assets
CAPITAL ADEQECY-
The Bank has a process for assessing its overall Capital Adequacy in relation to their risk profile and a strategy for maintaining their capital level The process provides an assurance that the Bank has adequate capital to support all risk in its business and an appropriate capital buffer based on its business profile The Bank has a structured management framework in the internal capital adequacy assessment process for the identification and evaluation of the significance of all risks that the Bank faces which may have an adverse material impact on its financial position The Bank considers the following risks as material risks
Credit Risk1048707 Market Risk1048707 Interest Rate Risk in the Banking Book1048707 Liquidity Risk1048707 Credit Concentration Risk1048707 Business Risk1048707 Strategic Risk1048707 Compliance Risk1048707 Reputation Risk1048707 Operational Risk
Credit Risk-
Credit Risk is defined as the possibility of losses associated with diminution in the credit quality of borrowers orcounterparties In a bankrsquos portfolio losses stem from outright default due to inability or unwillingness of acustomer or counterparty to meet commitments in relation to lending trading settlement and other financialtransactions
Wal-Mart
PARTICULARS 2006 2005 CHANGESALES 312427 285222 9538184292OPERATING INCOMEOPERATING PROFIT 18530 17091 8419636066INTEREST 1172 986 1886409736NET INCOME NET PROFIT 11231 10267 9389305542OPERATING EXPENSES 56733 51248 107028567SHARE HOLDERS EQUITY 53171 49396 7642319216TOTAL ASSETS 138187 120154 1500823943COST OF GOODS SOLD 240391 219793 9371545045GROSS PROFIT= SALES- COST OF GOODS SOLD 72036 65429 1009796879PRETAXPROFIT=OPERATING PROFIT-INTEREST 17358 16105 7780192487
Profitability Ratios
PARTICULARS 2006 2005 CHANGEGROSS PROFIT RATIO=(GROSSPROFITSALES)100 2305690609 2293967506 0511040513NET INCOME RATIO=(NETPROFITSALES)100 3594759736 3599652201 -0135914933OPERATING PROFIT RATIO= (OPERATING PROFITSALES)100 5930985478 5992174517 -1021149139PRETAX PROFIT RATIO=(PRETAXPROFITSALES)100 5555857848 5646478883 -1604912311OPERATING EXPENSE RATIO=(OPERATING EXPENSESSALES)100 181588019 1796775845 1063256994FINANCIAL EXPENSES RATIO=(INTERESTSALES)100 037512763 0345695634 8513846684RETURN ON SALES=(NETINCOMESALES)100 3594759736 3599652201 -0135914933RETURN ON ASSETS=(NETINCOME ASSETS)100 8127392591 854486742 -4885679419RETURN ON EQUITY=(NET INCOMESHHLDRS EQUITY)100 2112241635 2078508381 1622954929PROFITABILITY=(NETINCOMESALES)100 3594759736 3599652201 -0135914933EFFICIENCY=(SALESASSETS) 2260900085 2373803619 -4756228912LEVERAGE=(ASSETSSHAREHOLDERS EQUITY) 2598916703 2432464167 6842959408DUPONT ANALYSIS 2112241635 2078508381 1622954929
Profitability Ratios Interpretation
PARTICULARS 2006 2005 CHANGEINVENTORY(AVG) 32191 29762 8161413883COST OF GOODS SOLD 240391 219793 9371545045NET CREDIT SALES( NET SALES) 312427 285222 9538184292AVERAGE DEBTORS( RECIEVABLES) 2662 1715 5521865889CASH AND CASH EQUIVALENTS 6414 5488 1687317784CURRENT LIABILITIES 48826 43182 1307026076TOTAL ASSETS 138187 120154 1500823943CURRENT ASSETS 43824 38854 1279147578AVERAGE CREDITORS(PAYABLES) 25373 21987 154000091OPENING STOCK 29762 0 CLOSING STOCK 32191 29762 8161413883FIXED ASSETS = TOTAL ASSETS-CURRENT ASSETS 94363 81300 1606765068PURCHASES= COST OF GOODS SOLD- OPENING STOCK+ CLOSING STOCK 242820 249555 -2698803871NETWORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES -5002 -4328 1557301294
Asset Utilization Ratios
PARTICULARS 2006 2005 CHANGESTOCK TURNOVER RATIO= COST OF GOODS SOLDAVG INVENTORY 7467646237 7385021168 1118819658NUMBER OF DAYS TO INVENTORY=365STOCK TURNOVER RATIO 4887751621 4942436747 -1106440584DEBTORS TURNOVER RATIO= NET CREDIT SALES AVG DEBTORS 1173655147 1663102041 -294297573AVERAGE COLLECTION PERIOD= 365DEBTORS TURNOVER RATIO 3109942483 2194693958 4170278602CREDITOR TURNOVER RATIO= NET CREDIT PURCHASESAVG CREDITORS 9570015371 1135011598 -1568354553AVG PAYMENT PERIOD=365 CREDITOR TURNOVER PERIOD 3813995964 3215826171 1860081241CASH TURNOVER RATIO=SALESCASH AND CASH EQUIVALENTS 4871016526 5197193878 -6276028158CURRENT LIABILITIES TURNOVER RATIO=SALESCURRENT LIABILITIES 6398783435 6605113242 -3123789086WORKING CAPITAL TURNOVER RATIO= SALES NET WORKING CAPITAL -6246041583 -6590157116 -5221659014TOTAL ASSETS TURNOVER RATIO=SALESTOTAL ASSETS 2260900085 2373803619 -4756228912FIXED ASSETS TURNOVER RATIO=SALESFIXED ASSETS 3310905758 3508265683 -5625569525
Asset Utilization Ratios Interpretation
PARTICULARS 2006 2005 CHANGE
TOTAL ASSETS 138187 12015415008239
4
SHHLDRS EQUITY 53171 4939676423192
2
TOTAL LIABILITIES 85016 7075820150371
7
EBIT 18530 1709184196360
7
INTEREST 1172 98618864097
4
EBT=EBIT-INTEREST 17358 1610577801924
9
Leverage ratios
PARTICULARS 2006 2005 CHANGE
ASSETS TO EQUITY RATIO= ASSETSEQUITY259891
7243246
468429594
1
DEBT RATIO= TOTAL LIABILITIESTOTAL ASSETS061522
4058889
444710990
2
DEBT EQUITY RATIO= TOTAL LIABILITIES EQUITY159891
7143246
411620013
9
INTERESTCOVERAGE RATIO= EBIT INTEREST158105
8173336
7-
87868932
FINANCIAL LEVERAGE=EBITEBT106751
9106122
305932848
7
Leverage ratios interpretation
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
and when compared with the previous two quarters there has been a slight decrease The total no of shares are 427348828 and all the percentages sum up to 100
PARTICULARSPERCENTAGE OF SHARES
PROMOTER GROUP 192913MUTUAL FUNDSUTI 45877OTHERS 00903INSURANCE COMPANIES 7788FOREIGN INSTITUTIONAL INVESTORS 281559BODIES CORPORATE 91916INDIVIDUALS- UPTO 1 LAKH 80176INDIVIDUALS- ABOVE 1 LAKH 25471NON RESIDENTS 14718DEPOSITORY RECIEPTS 18859
PROMOTER GROUP
19 MUTUAL FUNDSUTI5
OTHERS0
INSURANCE COMPANIES
8FOREIGN INSTI-TUTIONAL IN-
VESTORS28BODIES CORPORATE
9
INDIVIDUALS- UPTO 1 LAKH
8
INDIVIDUALS- ABOVE 1 LAKH
3
NON RESIDENTS1
DEPOSITORY RECIEPTS
19
PERCENTAGE OF SHARES
PROMOTER
HDFC is Indias premier housing finance company and enjoys an impeccable track record in India as well as in international markets Since its inception in 1977 the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages Its outstanding loan portfolio covers well over a million dwelling units HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities With its experience in the financial markets a strong market reputation large shareholder base and unique consumer franchise HDFC was ideally positioned to promote a bank in the Indian environment
CONTENTS OF THE ANNUAL REPORT-
Directorrsquos report-
Service quality initiatives include the audit of services and improvement on the areas identified on the basis of customer feedback on experiences at various touch-points New elements were added and renewed improvement schemes were installed using technology to ensure customer convenience security of transactions and reduce transaction cost
Risk Management amp Portfolio Quality-
The Bank in the course of its business is exposed to various risks of which the most important are credit risk market risk (including liquidity risk and price risk) and operational risk The identification measurement monitoring and control of risks remain key aspects of the Bankrsquos risk management system Sound risk management supported by a balanced risk-reward trade-off is critical to achieving the Bankrsquos business strategy for business and revenue growth The Bank has distinct policies and processes in place for the retail and wholesale businesses The
INTERNAL AUDIT amp COMPLIANCE-
The Bank has Internal Audit amp Compliance functions which are responsible for independently evaluating the adequacy of all internal controls and ensuring operating and business units adhere to internal processes and procedures as well as to regulatory and legal requirements The audit function also proactively recommends improvements in operational processes and service quality To ensure independence the Audit department has a reporting line to the Chairman of the Board of Directors and the Audit amp Compliance Committee of the Board and only indirectly to the Managing Director
CORPORATE SOCIAL RESPONSIBILITY-
As its operations have grown your bank has retained its focus onvarious areas of corporate sustainability that impact the socio economic ecosystem that we are part of HDFC Bankrsquos focus in the area of corporate sustainability includes social sustainability amp social welfare and financial inclusion
Social Sustainability amp Social Welfare-
The bank has initiated a number of programs to encourage economic social and educational development within the communities that it operates while at the same time contributing to several grass root level development programs across these geographies
STATUTORY DISCLOSURES
The information required under Section 217(2A) of the Companies Act 1956 and the rules made thereunder are given in the annexure appended hereto and forms part of this report
DIRECTORS
Mr Vineet Jain resigned as a Director of the Bank with effect from December 27 2008Mr Arvind Pande and Mr Ashim Samanta retire by rotation atthe ensuing Annual General Meeting and being eligible offer themselves for re-appointment
AUDITORS-
The Auditors Ms Haribhakti amp Co Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment
AUDITORrsquoS REPORT
The attached Balance Sheet of HDFC Bank Limited audited (ldquothe Bankrdquo) as at 31 March 2009 and also the Profit and Loss Account of the Bank and the Cash Flow statement We conducted our audit in accordance with auditingstandards generally accepted in IndiaThe An audit includes examining on a test basis evidence supporting the amounts and disclosures in the financial statements
INFORMATION OF ACCOUNTS OF THE COMPANY-
Balance sheet on date 2008-09(In thousands)
ITEMS 2009 2008
Capital 4253841 3544329
Equity share warrents 4009158 -
Reseves and surplus 142209460 111428076
Total Assests 1832707 1331766032
Current assests 135272112 125531766
Fixed assests 17067290 11750917
The current year capital shows an increment with that of previous year by 1667About the deviation of equity share canrsquot be predicted du to insufficient datathe company showsa high amount of reserves and surplus which may due to the high percentage of general reseve and amalgamation reserve
INFORMATION ABOUT THE PampL ACCOUNT OF THE COMPANY(In thousands)ITEMS 2009 2008INCOME 196228646 123981512EXPENDITURE 173779254 108079582PROFIT 48195737 35222327APPROPRIATIONS 48195737 35222327EARNINGS PER EQUITY SHARE (Face value Rs 10 per share)A) Basic
5285 4622
The income increased by 36817 may be due to high operating income ratioThere is an considerable increase inexpendeture in current year by 37806 compared to last yearThe company has also mainted a good profit increment for the current year which is almost 27
INFORAMAION ABOUT THE CASH FLOW ACTIVITY OF THE COMPANY(In thousands)ITEMS 2009 2008Net cash flow from (used in) operating activities
(17361421) 27231256
Net cash generated from financing activities
29646633 36283464
Net cash used in investing (6637774) (6197812)
The net cash flow in the current year shows a considerable increase by 5688The financing activity ratio also increased by2256About the balance sheet-The company has Authoristed shares 550000000 ( 31 March 2008 550000000) Equity Shares of Rs 10- each out of which 425384109 (31 March 2008 354432920) Equity Shares of Rs 10- eachare issued
The company comprises of following type of reseves-Types 2009 2008
Statutory Reserve 22987291 15193539General Reserve 7360523 5115584
Amalgamation Reserve 10635564 145218Capital Reserve 956510 17850Investment Reserve Account
276250 414800
The company has a propose divedend 27206229 for the year 2009(figs are in thousands)Also it has a bill payable 29224076 for the current year as current libillitesNext the current assest ie if u see the cash in hand for te current year is 15861868 Gross block for the current year is 7160665 which is a 2676 increment then the previous year
Net block for the current year is 11311063 and previous 7322171 which is a 9352 increased percentage Fixed assets are stated at cost less accumulated depreciation as adjusted for impairment if any Cost includes cost of purchase and all expenditure like site preparation installation costs and professional fees incurred on the asset before it is ready to use Subsequent expenditure incurred on assets put to use is capitalized only when it increases the future benefitfunctioning capability fromof such assetsDepreciation is charged over the estimated useful life of the fixed asset on a straight-line basis Income tax comprises the current tax provision the net change in the deferred tax asset or liability in the year and fringe benefit tax
Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences between the carrying values of assets and liabilities and their respective tax bases and operating loss carry forwardsStatement pursuant to Section 212 of the Companies Act 1956 relating to subsidiary Companies
Name of the subsidiary HDFC Securities Ltd HDB Financial Services LtdCapital 1500 10501Reserves and Surplus 8025 (1288)Total Assets 20599 19588Total Liabilities 11074 10375Investments _ _Turnover 12466 2354Profit (Loss) Before Taxation 2809 (919)Provision for Taxation (1152) (9)Profit (Loss) After Taxation 1657 (928)Proposed Dividend including tax 35 _
The New Capital Adequacy Framework is applicable to HDFC Bank Limited (hereinafter referred to as the Bank)and its two subsidiaries (HDFC Securities Ltd and HDB Financial Services Private Ltd) which together constitutes the group in line with
CAPITAL STRUCTURE-
Capital funds are classified into Tier I and Tier II capital under the capital adequacy framework Tier I capital includes paid-up equity capital statutory reserves other disclosed free reserves capital reserves
and innovative perpetual debt instruments Elements of Tier II capital include revaluation reserve if any general provision for standard assets
CAPITAL ADEQECY-
The Bank has a process for assessing its overall Capital Adequacy in relation to their risk profile and a strategy for maintaining their capital level The process provides an assurance that the Bank has adequate capital to support all risk in its business and an appropriate capital buffer based on its business profile The Bank has a structured management framework in the internal capital adequacy assessment process for the identification and evaluation of the significance of all risks that the Bank faces which may have an adverse material impact on its financial position The Bank considers the following risks as material risks
Credit Risk1048707 Market Risk1048707 Interest Rate Risk in the Banking Book1048707 Liquidity Risk1048707 Credit Concentration Risk1048707 Business Risk1048707 Strategic Risk1048707 Compliance Risk1048707 Reputation Risk1048707 Operational Risk
Credit Risk-
Credit Risk is defined as the possibility of losses associated with diminution in the credit quality of borrowers orcounterparties In a bankrsquos portfolio losses stem from outright default due to inability or unwillingness of acustomer or counterparty to meet commitments in relation to lending trading settlement and other financialtransactions
Wal-Mart
PARTICULARS 2006 2005 CHANGESALES 312427 285222 9538184292OPERATING INCOMEOPERATING PROFIT 18530 17091 8419636066INTEREST 1172 986 1886409736NET INCOME NET PROFIT 11231 10267 9389305542OPERATING EXPENSES 56733 51248 107028567SHARE HOLDERS EQUITY 53171 49396 7642319216TOTAL ASSETS 138187 120154 1500823943COST OF GOODS SOLD 240391 219793 9371545045GROSS PROFIT= SALES- COST OF GOODS SOLD 72036 65429 1009796879PRETAXPROFIT=OPERATING PROFIT-INTEREST 17358 16105 7780192487
Profitability Ratios
PARTICULARS 2006 2005 CHANGEGROSS PROFIT RATIO=(GROSSPROFITSALES)100 2305690609 2293967506 0511040513NET INCOME RATIO=(NETPROFITSALES)100 3594759736 3599652201 -0135914933OPERATING PROFIT RATIO= (OPERATING PROFITSALES)100 5930985478 5992174517 -1021149139PRETAX PROFIT RATIO=(PRETAXPROFITSALES)100 5555857848 5646478883 -1604912311OPERATING EXPENSE RATIO=(OPERATING EXPENSESSALES)100 181588019 1796775845 1063256994FINANCIAL EXPENSES RATIO=(INTERESTSALES)100 037512763 0345695634 8513846684RETURN ON SALES=(NETINCOMESALES)100 3594759736 3599652201 -0135914933RETURN ON ASSETS=(NETINCOME ASSETS)100 8127392591 854486742 -4885679419RETURN ON EQUITY=(NET INCOMESHHLDRS EQUITY)100 2112241635 2078508381 1622954929PROFITABILITY=(NETINCOMESALES)100 3594759736 3599652201 -0135914933EFFICIENCY=(SALESASSETS) 2260900085 2373803619 -4756228912LEVERAGE=(ASSETSSHAREHOLDERS EQUITY) 2598916703 2432464167 6842959408DUPONT ANALYSIS 2112241635 2078508381 1622954929
Profitability Ratios Interpretation
PARTICULARS 2006 2005 CHANGEINVENTORY(AVG) 32191 29762 8161413883COST OF GOODS SOLD 240391 219793 9371545045NET CREDIT SALES( NET SALES) 312427 285222 9538184292AVERAGE DEBTORS( RECIEVABLES) 2662 1715 5521865889CASH AND CASH EQUIVALENTS 6414 5488 1687317784CURRENT LIABILITIES 48826 43182 1307026076TOTAL ASSETS 138187 120154 1500823943CURRENT ASSETS 43824 38854 1279147578AVERAGE CREDITORS(PAYABLES) 25373 21987 154000091OPENING STOCK 29762 0 CLOSING STOCK 32191 29762 8161413883FIXED ASSETS = TOTAL ASSETS-CURRENT ASSETS 94363 81300 1606765068PURCHASES= COST OF GOODS SOLD- OPENING STOCK+ CLOSING STOCK 242820 249555 -2698803871NETWORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES -5002 -4328 1557301294
Asset Utilization Ratios
PARTICULARS 2006 2005 CHANGESTOCK TURNOVER RATIO= COST OF GOODS SOLDAVG INVENTORY 7467646237 7385021168 1118819658NUMBER OF DAYS TO INVENTORY=365STOCK TURNOVER RATIO 4887751621 4942436747 -1106440584DEBTORS TURNOVER RATIO= NET CREDIT SALES AVG DEBTORS 1173655147 1663102041 -294297573AVERAGE COLLECTION PERIOD= 365DEBTORS TURNOVER RATIO 3109942483 2194693958 4170278602CREDITOR TURNOVER RATIO= NET CREDIT PURCHASESAVG CREDITORS 9570015371 1135011598 -1568354553AVG PAYMENT PERIOD=365 CREDITOR TURNOVER PERIOD 3813995964 3215826171 1860081241CASH TURNOVER RATIO=SALESCASH AND CASH EQUIVALENTS 4871016526 5197193878 -6276028158CURRENT LIABILITIES TURNOVER RATIO=SALESCURRENT LIABILITIES 6398783435 6605113242 -3123789086WORKING CAPITAL TURNOVER RATIO= SALES NET WORKING CAPITAL -6246041583 -6590157116 -5221659014TOTAL ASSETS TURNOVER RATIO=SALESTOTAL ASSETS 2260900085 2373803619 -4756228912FIXED ASSETS TURNOVER RATIO=SALESFIXED ASSETS 3310905758 3508265683 -5625569525
Asset Utilization Ratios Interpretation
PARTICULARS 2006 2005 CHANGE
TOTAL ASSETS 138187 12015415008239
4
SHHLDRS EQUITY 53171 4939676423192
2
TOTAL LIABILITIES 85016 7075820150371
7
EBIT 18530 1709184196360
7
INTEREST 1172 98618864097
4
EBT=EBIT-INTEREST 17358 1610577801924
9
Leverage ratios
PARTICULARS 2006 2005 CHANGE
ASSETS TO EQUITY RATIO= ASSETSEQUITY259891
7243246
468429594
1
DEBT RATIO= TOTAL LIABILITIESTOTAL ASSETS061522
4058889
444710990
2
DEBT EQUITY RATIO= TOTAL LIABILITIES EQUITY159891
7143246
411620013
9
INTERESTCOVERAGE RATIO= EBIT INTEREST158105
8173336
7-
87868932
FINANCIAL LEVERAGE=EBITEBT106751
9106122
305932848
7
Leverage ratios interpretation
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
PROMOTER
HDFC is Indias premier housing finance company and enjoys an impeccable track record in India as well as in international markets Since its inception in 1977 the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages Its outstanding loan portfolio covers well over a million dwelling units HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities With its experience in the financial markets a strong market reputation large shareholder base and unique consumer franchise HDFC was ideally positioned to promote a bank in the Indian environment
CONTENTS OF THE ANNUAL REPORT-
Directorrsquos report-
Service quality initiatives include the audit of services and improvement on the areas identified on the basis of customer feedback on experiences at various touch-points New elements were added and renewed improvement schemes were installed using technology to ensure customer convenience security of transactions and reduce transaction cost
Risk Management amp Portfolio Quality-
The Bank in the course of its business is exposed to various risks of which the most important are credit risk market risk (including liquidity risk and price risk) and operational risk The identification measurement monitoring and control of risks remain key aspects of the Bankrsquos risk management system Sound risk management supported by a balanced risk-reward trade-off is critical to achieving the Bankrsquos business strategy for business and revenue growth The Bank has distinct policies and processes in place for the retail and wholesale businesses The
INTERNAL AUDIT amp COMPLIANCE-
The Bank has Internal Audit amp Compliance functions which are responsible for independently evaluating the adequacy of all internal controls and ensuring operating and business units adhere to internal processes and procedures as well as to regulatory and legal requirements The audit function also proactively recommends improvements in operational processes and service quality To ensure independence the Audit department has a reporting line to the Chairman of the Board of Directors and the Audit amp Compliance Committee of the Board and only indirectly to the Managing Director
CORPORATE SOCIAL RESPONSIBILITY-
As its operations have grown your bank has retained its focus onvarious areas of corporate sustainability that impact the socio economic ecosystem that we are part of HDFC Bankrsquos focus in the area of corporate sustainability includes social sustainability amp social welfare and financial inclusion
Social Sustainability amp Social Welfare-
The bank has initiated a number of programs to encourage economic social and educational development within the communities that it operates while at the same time contributing to several grass root level development programs across these geographies
STATUTORY DISCLOSURES
The information required under Section 217(2A) of the Companies Act 1956 and the rules made thereunder are given in the annexure appended hereto and forms part of this report
DIRECTORS
Mr Vineet Jain resigned as a Director of the Bank with effect from December 27 2008Mr Arvind Pande and Mr Ashim Samanta retire by rotation atthe ensuing Annual General Meeting and being eligible offer themselves for re-appointment
AUDITORS-
The Auditors Ms Haribhakti amp Co Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment
AUDITORrsquoS REPORT
The attached Balance Sheet of HDFC Bank Limited audited (ldquothe Bankrdquo) as at 31 March 2009 and also the Profit and Loss Account of the Bank and the Cash Flow statement We conducted our audit in accordance with auditingstandards generally accepted in IndiaThe An audit includes examining on a test basis evidence supporting the amounts and disclosures in the financial statements
INFORMATION OF ACCOUNTS OF THE COMPANY-
Balance sheet on date 2008-09(In thousands)
ITEMS 2009 2008
Capital 4253841 3544329
Equity share warrents 4009158 -
Reseves and surplus 142209460 111428076
Total Assests 1832707 1331766032
Current assests 135272112 125531766
Fixed assests 17067290 11750917
The current year capital shows an increment with that of previous year by 1667About the deviation of equity share canrsquot be predicted du to insufficient datathe company showsa high amount of reserves and surplus which may due to the high percentage of general reseve and amalgamation reserve
INFORMATION ABOUT THE PampL ACCOUNT OF THE COMPANY(In thousands)ITEMS 2009 2008INCOME 196228646 123981512EXPENDITURE 173779254 108079582PROFIT 48195737 35222327APPROPRIATIONS 48195737 35222327EARNINGS PER EQUITY SHARE (Face value Rs 10 per share)A) Basic
5285 4622
The income increased by 36817 may be due to high operating income ratioThere is an considerable increase inexpendeture in current year by 37806 compared to last yearThe company has also mainted a good profit increment for the current year which is almost 27
INFORAMAION ABOUT THE CASH FLOW ACTIVITY OF THE COMPANY(In thousands)ITEMS 2009 2008Net cash flow from (used in) operating activities
(17361421) 27231256
Net cash generated from financing activities
29646633 36283464
Net cash used in investing (6637774) (6197812)
The net cash flow in the current year shows a considerable increase by 5688The financing activity ratio also increased by2256About the balance sheet-The company has Authoristed shares 550000000 ( 31 March 2008 550000000) Equity Shares of Rs 10- each out of which 425384109 (31 March 2008 354432920) Equity Shares of Rs 10- eachare issued
The company comprises of following type of reseves-Types 2009 2008
Statutory Reserve 22987291 15193539General Reserve 7360523 5115584
Amalgamation Reserve 10635564 145218Capital Reserve 956510 17850Investment Reserve Account
276250 414800
The company has a propose divedend 27206229 for the year 2009(figs are in thousands)Also it has a bill payable 29224076 for the current year as current libillitesNext the current assest ie if u see the cash in hand for te current year is 15861868 Gross block for the current year is 7160665 which is a 2676 increment then the previous year
Net block for the current year is 11311063 and previous 7322171 which is a 9352 increased percentage Fixed assets are stated at cost less accumulated depreciation as adjusted for impairment if any Cost includes cost of purchase and all expenditure like site preparation installation costs and professional fees incurred on the asset before it is ready to use Subsequent expenditure incurred on assets put to use is capitalized only when it increases the future benefitfunctioning capability fromof such assetsDepreciation is charged over the estimated useful life of the fixed asset on a straight-line basis Income tax comprises the current tax provision the net change in the deferred tax asset or liability in the year and fringe benefit tax
Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences between the carrying values of assets and liabilities and their respective tax bases and operating loss carry forwardsStatement pursuant to Section 212 of the Companies Act 1956 relating to subsidiary Companies
Name of the subsidiary HDFC Securities Ltd HDB Financial Services LtdCapital 1500 10501Reserves and Surplus 8025 (1288)Total Assets 20599 19588Total Liabilities 11074 10375Investments _ _Turnover 12466 2354Profit (Loss) Before Taxation 2809 (919)Provision for Taxation (1152) (9)Profit (Loss) After Taxation 1657 (928)Proposed Dividend including tax 35 _
The New Capital Adequacy Framework is applicable to HDFC Bank Limited (hereinafter referred to as the Bank)and its two subsidiaries (HDFC Securities Ltd and HDB Financial Services Private Ltd) which together constitutes the group in line with
CAPITAL STRUCTURE-
Capital funds are classified into Tier I and Tier II capital under the capital adequacy framework Tier I capital includes paid-up equity capital statutory reserves other disclosed free reserves capital reserves
and innovative perpetual debt instruments Elements of Tier II capital include revaluation reserve if any general provision for standard assets
CAPITAL ADEQECY-
The Bank has a process for assessing its overall Capital Adequacy in relation to their risk profile and a strategy for maintaining their capital level The process provides an assurance that the Bank has adequate capital to support all risk in its business and an appropriate capital buffer based on its business profile The Bank has a structured management framework in the internal capital adequacy assessment process for the identification and evaluation of the significance of all risks that the Bank faces which may have an adverse material impact on its financial position The Bank considers the following risks as material risks
Credit Risk1048707 Market Risk1048707 Interest Rate Risk in the Banking Book1048707 Liquidity Risk1048707 Credit Concentration Risk1048707 Business Risk1048707 Strategic Risk1048707 Compliance Risk1048707 Reputation Risk1048707 Operational Risk
Credit Risk-
Credit Risk is defined as the possibility of losses associated with diminution in the credit quality of borrowers orcounterparties In a bankrsquos portfolio losses stem from outright default due to inability or unwillingness of acustomer or counterparty to meet commitments in relation to lending trading settlement and other financialtransactions
Wal-Mart
PARTICULARS 2006 2005 CHANGESALES 312427 285222 9538184292OPERATING INCOMEOPERATING PROFIT 18530 17091 8419636066INTEREST 1172 986 1886409736NET INCOME NET PROFIT 11231 10267 9389305542OPERATING EXPENSES 56733 51248 107028567SHARE HOLDERS EQUITY 53171 49396 7642319216TOTAL ASSETS 138187 120154 1500823943COST OF GOODS SOLD 240391 219793 9371545045GROSS PROFIT= SALES- COST OF GOODS SOLD 72036 65429 1009796879PRETAXPROFIT=OPERATING PROFIT-INTEREST 17358 16105 7780192487
Profitability Ratios
PARTICULARS 2006 2005 CHANGEGROSS PROFIT RATIO=(GROSSPROFITSALES)100 2305690609 2293967506 0511040513NET INCOME RATIO=(NETPROFITSALES)100 3594759736 3599652201 -0135914933OPERATING PROFIT RATIO= (OPERATING PROFITSALES)100 5930985478 5992174517 -1021149139PRETAX PROFIT RATIO=(PRETAXPROFITSALES)100 5555857848 5646478883 -1604912311OPERATING EXPENSE RATIO=(OPERATING EXPENSESSALES)100 181588019 1796775845 1063256994FINANCIAL EXPENSES RATIO=(INTERESTSALES)100 037512763 0345695634 8513846684RETURN ON SALES=(NETINCOMESALES)100 3594759736 3599652201 -0135914933RETURN ON ASSETS=(NETINCOME ASSETS)100 8127392591 854486742 -4885679419RETURN ON EQUITY=(NET INCOMESHHLDRS EQUITY)100 2112241635 2078508381 1622954929PROFITABILITY=(NETINCOMESALES)100 3594759736 3599652201 -0135914933EFFICIENCY=(SALESASSETS) 2260900085 2373803619 -4756228912LEVERAGE=(ASSETSSHAREHOLDERS EQUITY) 2598916703 2432464167 6842959408DUPONT ANALYSIS 2112241635 2078508381 1622954929
Profitability Ratios Interpretation
PARTICULARS 2006 2005 CHANGEINVENTORY(AVG) 32191 29762 8161413883COST OF GOODS SOLD 240391 219793 9371545045NET CREDIT SALES( NET SALES) 312427 285222 9538184292AVERAGE DEBTORS( RECIEVABLES) 2662 1715 5521865889CASH AND CASH EQUIVALENTS 6414 5488 1687317784CURRENT LIABILITIES 48826 43182 1307026076TOTAL ASSETS 138187 120154 1500823943CURRENT ASSETS 43824 38854 1279147578AVERAGE CREDITORS(PAYABLES) 25373 21987 154000091OPENING STOCK 29762 0 CLOSING STOCK 32191 29762 8161413883FIXED ASSETS = TOTAL ASSETS-CURRENT ASSETS 94363 81300 1606765068PURCHASES= COST OF GOODS SOLD- OPENING STOCK+ CLOSING STOCK 242820 249555 -2698803871NETWORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES -5002 -4328 1557301294
Asset Utilization Ratios
PARTICULARS 2006 2005 CHANGESTOCK TURNOVER RATIO= COST OF GOODS SOLDAVG INVENTORY 7467646237 7385021168 1118819658NUMBER OF DAYS TO INVENTORY=365STOCK TURNOVER RATIO 4887751621 4942436747 -1106440584DEBTORS TURNOVER RATIO= NET CREDIT SALES AVG DEBTORS 1173655147 1663102041 -294297573AVERAGE COLLECTION PERIOD= 365DEBTORS TURNOVER RATIO 3109942483 2194693958 4170278602CREDITOR TURNOVER RATIO= NET CREDIT PURCHASESAVG CREDITORS 9570015371 1135011598 -1568354553AVG PAYMENT PERIOD=365 CREDITOR TURNOVER PERIOD 3813995964 3215826171 1860081241CASH TURNOVER RATIO=SALESCASH AND CASH EQUIVALENTS 4871016526 5197193878 -6276028158CURRENT LIABILITIES TURNOVER RATIO=SALESCURRENT LIABILITIES 6398783435 6605113242 -3123789086WORKING CAPITAL TURNOVER RATIO= SALES NET WORKING CAPITAL -6246041583 -6590157116 -5221659014TOTAL ASSETS TURNOVER RATIO=SALESTOTAL ASSETS 2260900085 2373803619 -4756228912FIXED ASSETS TURNOVER RATIO=SALESFIXED ASSETS 3310905758 3508265683 -5625569525
Asset Utilization Ratios Interpretation
PARTICULARS 2006 2005 CHANGE
TOTAL ASSETS 138187 12015415008239
4
SHHLDRS EQUITY 53171 4939676423192
2
TOTAL LIABILITIES 85016 7075820150371
7
EBIT 18530 1709184196360
7
INTEREST 1172 98618864097
4
EBT=EBIT-INTEREST 17358 1610577801924
9
Leverage ratios
PARTICULARS 2006 2005 CHANGE
ASSETS TO EQUITY RATIO= ASSETSEQUITY259891
7243246
468429594
1
DEBT RATIO= TOTAL LIABILITIESTOTAL ASSETS061522
4058889
444710990
2
DEBT EQUITY RATIO= TOTAL LIABILITIES EQUITY159891
7143246
411620013
9
INTERESTCOVERAGE RATIO= EBIT INTEREST158105
8173336
7-
87868932
FINANCIAL LEVERAGE=EBITEBT106751
9106122
305932848
7
Leverage ratios interpretation
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
Social Sustainability amp Social Welfare-
The bank has initiated a number of programs to encourage economic social and educational development within the communities that it operates while at the same time contributing to several grass root level development programs across these geographies
STATUTORY DISCLOSURES
The information required under Section 217(2A) of the Companies Act 1956 and the rules made thereunder are given in the annexure appended hereto and forms part of this report
DIRECTORS
Mr Vineet Jain resigned as a Director of the Bank with effect from December 27 2008Mr Arvind Pande and Mr Ashim Samanta retire by rotation atthe ensuing Annual General Meeting and being eligible offer themselves for re-appointment
AUDITORS-
The Auditors Ms Haribhakti amp Co Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment
AUDITORrsquoS REPORT
The attached Balance Sheet of HDFC Bank Limited audited (ldquothe Bankrdquo) as at 31 March 2009 and also the Profit and Loss Account of the Bank and the Cash Flow statement We conducted our audit in accordance with auditingstandards generally accepted in IndiaThe An audit includes examining on a test basis evidence supporting the amounts and disclosures in the financial statements
INFORMATION OF ACCOUNTS OF THE COMPANY-
Balance sheet on date 2008-09(In thousands)
ITEMS 2009 2008
Capital 4253841 3544329
Equity share warrents 4009158 -
Reseves and surplus 142209460 111428076
Total Assests 1832707 1331766032
Current assests 135272112 125531766
Fixed assests 17067290 11750917
The current year capital shows an increment with that of previous year by 1667About the deviation of equity share canrsquot be predicted du to insufficient datathe company showsa high amount of reserves and surplus which may due to the high percentage of general reseve and amalgamation reserve
INFORMATION ABOUT THE PampL ACCOUNT OF THE COMPANY(In thousands)ITEMS 2009 2008INCOME 196228646 123981512EXPENDITURE 173779254 108079582PROFIT 48195737 35222327APPROPRIATIONS 48195737 35222327EARNINGS PER EQUITY SHARE (Face value Rs 10 per share)A) Basic
5285 4622
The income increased by 36817 may be due to high operating income ratioThere is an considerable increase inexpendeture in current year by 37806 compared to last yearThe company has also mainted a good profit increment for the current year which is almost 27
INFORAMAION ABOUT THE CASH FLOW ACTIVITY OF THE COMPANY(In thousands)ITEMS 2009 2008Net cash flow from (used in) operating activities
(17361421) 27231256
Net cash generated from financing activities
29646633 36283464
Net cash used in investing (6637774) (6197812)
The net cash flow in the current year shows a considerable increase by 5688The financing activity ratio also increased by2256About the balance sheet-The company has Authoristed shares 550000000 ( 31 March 2008 550000000) Equity Shares of Rs 10- each out of which 425384109 (31 March 2008 354432920) Equity Shares of Rs 10- eachare issued
The company comprises of following type of reseves-Types 2009 2008
Statutory Reserve 22987291 15193539General Reserve 7360523 5115584
Amalgamation Reserve 10635564 145218Capital Reserve 956510 17850Investment Reserve Account
276250 414800
The company has a propose divedend 27206229 for the year 2009(figs are in thousands)Also it has a bill payable 29224076 for the current year as current libillitesNext the current assest ie if u see the cash in hand for te current year is 15861868 Gross block for the current year is 7160665 which is a 2676 increment then the previous year
Net block for the current year is 11311063 and previous 7322171 which is a 9352 increased percentage Fixed assets are stated at cost less accumulated depreciation as adjusted for impairment if any Cost includes cost of purchase and all expenditure like site preparation installation costs and professional fees incurred on the asset before it is ready to use Subsequent expenditure incurred on assets put to use is capitalized only when it increases the future benefitfunctioning capability fromof such assetsDepreciation is charged over the estimated useful life of the fixed asset on a straight-line basis Income tax comprises the current tax provision the net change in the deferred tax asset or liability in the year and fringe benefit tax
Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences between the carrying values of assets and liabilities and their respective tax bases and operating loss carry forwardsStatement pursuant to Section 212 of the Companies Act 1956 relating to subsidiary Companies
Name of the subsidiary HDFC Securities Ltd HDB Financial Services LtdCapital 1500 10501Reserves and Surplus 8025 (1288)Total Assets 20599 19588Total Liabilities 11074 10375Investments _ _Turnover 12466 2354Profit (Loss) Before Taxation 2809 (919)Provision for Taxation (1152) (9)Profit (Loss) After Taxation 1657 (928)Proposed Dividend including tax 35 _
The New Capital Adequacy Framework is applicable to HDFC Bank Limited (hereinafter referred to as the Bank)and its two subsidiaries (HDFC Securities Ltd and HDB Financial Services Private Ltd) which together constitutes the group in line with
CAPITAL STRUCTURE-
Capital funds are classified into Tier I and Tier II capital under the capital adequacy framework Tier I capital includes paid-up equity capital statutory reserves other disclosed free reserves capital reserves
and innovative perpetual debt instruments Elements of Tier II capital include revaluation reserve if any general provision for standard assets
CAPITAL ADEQECY-
The Bank has a process for assessing its overall Capital Adequacy in relation to their risk profile and a strategy for maintaining their capital level The process provides an assurance that the Bank has adequate capital to support all risk in its business and an appropriate capital buffer based on its business profile The Bank has a structured management framework in the internal capital adequacy assessment process for the identification and evaluation of the significance of all risks that the Bank faces which may have an adverse material impact on its financial position The Bank considers the following risks as material risks
Credit Risk1048707 Market Risk1048707 Interest Rate Risk in the Banking Book1048707 Liquidity Risk1048707 Credit Concentration Risk1048707 Business Risk1048707 Strategic Risk1048707 Compliance Risk1048707 Reputation Risk1048707 Operational Risk
Credit Risk-
Credit Risk is defined as the possibility of losses associated with diminution in the credit quality of borrowers orcounterparties In a bankrsquos portfolio losses stem from outright default due to inability or unwillingness of acustomer or counterparty to meet commitments in relation to lending trading settlement and other financialtransactions
Wal-Mart
PARTICULARS 2006 2005 CHANGESALES 312427 285222 9538184292OPERATING INCOMEOPERATING PROFIT 18530 17091 8419636066INTEREST 1172 986 1886409736NET INCOME NET PROFIT 11231 10267 9389305542OPERATING EXPENSES 56733 51248 107028567SHARE HOLDERS EQUITY 53171 49396 7642319216TOTAL ASSETS 138187 120154 1500823943COST OF GOODS SOLD 240391 219793 9371545045GROSS PROFIT= SALES- COST OF GOODS SOLD 72036 65429 1009796879PRETAXPROFIT=OPERATING PROFIT-INTEREST 17358 16105 7780192487
Profitability Ratios
PARTICULARS 2006 2005 CHANGEGROSS PROFIT RATIO=(GROSSPROFITSALES)100 2305690609 2293967506 0511040513NET INCOME RATIO=(NETPROFITSALES)100 3594759736 3599652201 -0135914933OPERATING PROFIT RATIO= (OPERATING PROFITSALES)100 5930985478 5992174517 -1021149139PRETAX PROFIT RATIO=(PRETAXPROFITSALES)100 5555857848 5646478883 -1604912311OPERATING EXPENSE RATIO=(OPERATING EXPENSESSALES)100 181588019 1796775845 1063256994FINANCIAL EXPENSES RATIO=(INTERESTSALES)100 037512763 0345695634 8513846684RETURN ON SALES=(NETINCOMESALES)100 3594759736 3599652201 -0135914933RETURN ON ASSETS=(NETINCOME ASSETS)100 8127392591 854486742 -4885679419RETURN ON EQUITY=(NET INCOMESHHLDRS EQUITY)100 2112241635 2078508381 1622954929PROFITABILITY=(NETINCOMESALES)100 3594759736 3599652201 -0135914933EFFICIENCY=(SALESASSETS) 2260900085 2373803619 -4756228912LEVERAGE=(ASSETSSHAREHOLDERS EQUITY) 2598916703 2432464167 6842959408DUPONT ANALYSIS 2112241635 2078508381 1622954929
Profitability Ratios Interpretation
PARTICULARS 2006 2005 CHANGEINVENTORY(AVG) 32191 29762 8161413883COST OF GOODS SOLD 240391 219793 9371545045NET CREDIT SALES( NET SALES) 312427 285222 9538184292AVERAGE DEBTORS( RECIEVABLES) 2662 1715 5521865889CASH AND CASH EQUIVALENTS 6414 5488 1687317784CURRENT LIABILITIES 48826 43182 1307026076TOTAL ASSETS 138187 120154 1500823943CURRENT ASSETS 43824 38854 1279147578AVERAGE CREDITORS(PAYABLES) 25373 21987 154000091OPENING STOCK 29762 0 CLOSING STOCK 32191 29762 8161413883FIXED ASSETS = TOTAL ASSETS-CURRENT ASSETS 94363 81300 1606765068PURCHASES= COST OF GOODS SOLD- OPENING STOCK+ CLOSING STOCK 242820 249555 -2698803871NETWORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES -5002 -4328 1557301294
Asset Utilization Ratios
PARTICULARS 2006 2005 CHANGESTOCK TURNOVER RATIO= COST OF GOODS SOLDAVG INVENTORY 7467646237 7385021168 1118819658NUMBER OF DAYS TO INVENTORY=365STOCK TURNOVER RATIO 4887751621 4942436747 -1106440584DEBTORS TURNOVER RATIO= NET CREDIT SALES AVG DEBTORS 1173655147 1663102041 -294297573AVERAGE COLLECTION PERIOD= 365DEBTORS TURNOVER RATIO 3109942483 2194693958 4170278602CREDITOR TURNOVER RATIO= NET CREDIT PURCHASESAVG CREDITORS 9570015371 1135011598 -1568354553AVG PAYMENT PERIOD=365 CREDITOR TURNOVER PERIOD 3813995964 3215826171 1860081241CASH TURNOVER RATIO=SALESCASH AND CASH EQUIVALENTS 4871016526 5197193878 -6276028158CURRENT LIABILITIES TURNOVER RATIO=SALESCURRENT LIABILITIES 6398783435 6605113242 -3123789086WORKING CAPITAL TURNOVER RATIO= SALES NET WORKING CAPITAL -6246041583 -6590157116 -5221659014TOTAL ASSETS TURNOVER RATIO=SALESTOTAL ASSETS 2260900085 2373803619 -4756228912FIXED ASSETS TURNOVER RATIO=SALESFIXED ASSETS 3310905758 3508265683 -5625569525
Asset Utilization Ratios Interpretation
PARTICULARS 2006 2005 CHANGE
TOTAL ASSETS 138187 12015415008239
4
SHHLDRS EQUITY 53171 4939676423192
2
TOTAL LIABILITIES 85016 7075820150371
7
EBIT 18530 1709184196360
7
INTEREST 1172 98618864097
4
EBT=EBIT-INTEREST 17358 1610577801924
9
Leverage ratios
PARTICULARS 2006 2005 CHANGE
ASSETS TO EQUITY RATIO= ASSETSEQUITY259891
7243246
468429594
1
DEBT RATIO= TOTAL LIABILITIESTOTAL ASSETS061522
4058889
444710990
2
DEBT EQUITY RATIO= TOTAL LIABILITIES EQUITY159891
7143246
411620013
9
INTERESTCOVERAGE RATIO= EBIT INTEREST158105
8173336
7-
87868932
FINANCIAL LEVERAGE=EBITEBT106751
9106122
305932848
7
Leverage ratios interpretation
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
Current assests 135272112 125531766
Fixed assests 17067290 11750917
The current year capital shows an increment with that of previous year by 1667About the deviation of equity share canrsquot be predicted du to insufficient datathe company showsa high amount of reserves and surplus which may due to the high percentage of general reseve and amalgamation reserve
INFORMATION ABOUT THE PampL ACCOUNT OF THE COMPANY(In thousands)ITEMS 2009 2008INCOME 196228646 123981512EXPENDITURE 173779254 108079582PROFIT 48195737 35222327APPROPRIATIONS 48195737 35222327EARNINGS PER EQUITY SHARE (Face value Rs 10 per share)A) Basic
5285 4622
The income increased by 36817 may be due to high operating income ratioThere is an considerable increase inexpendeture in current year by 37806 compared to last yearThe company has also mainted a good profit increment for the current year which is almost 27
INFORAMAION ABOUT THE CASH FLOW ACTIVITY OF THE COMPANY(In thousands)ITEMS 2009 2008Net cash flow from (used in) operating activities
(17361421) 27231256
Net cash generated from financing activities
29646633 36283464
Net cash used in investing (6637774) (6197812)
The net cash flow in the current year shows a considerable increase by 5688The financing activity ratio also increased by2256About the balance sheet-The company has Authoristed shares 550000000 ( 31 March 2008 550000000) Equity Shares of Rs 10- each out of which 425384109 (31 March 2008 354432920) Equity Shares of Rs 10- eachare issued
The company comprises of following type of reseves-Types 2009 2008
Statutory Reserve 22987291 15193539General Reserve 7360523 5115584
Amalgamation Reserve 10635564 145218Capital Reserve 956510 17850Investment Reserve Account
276250 414800
The company has a propose divedend 27206229 for the year 2009(figs are in thousands)Also it has a bill payable 29224076 for the current year as current libillitesNext the current assest ie if u see the cash in hand for te current year is 15861868 Gross block for the current year is 7160665 which is a 2676 increment then the previous year
Net block for the current year is 11311063 and previous 7322171 which is a 9352 increased percentage Fixed assets are stated at cost less accumulated depreciation as adjusted for impairment if any Cost includes cost of purchase and all expenditure like site preparation installation costs and professional fees incurred on the asset before it is ready to use Subsequent expenditure incurred on assets put to use is capitalized only when it increases the future benefitfunctioning capability fromof such assetsDepreciation is charged over the estimated useful life of the fixed asset on a straight-line basis Income tax comprises the current tax provision the net change in the deferred tax asset or liability in the year and fringe benefit tax
Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences between the carrying values of assets and liabilities and their respective tax bases and operating loss carry forwardsStatement pursuant to Section 212 of the Companies Act 1956 relating to subsidiary Companies
Name of the subsidiary HDFC Securities Ltd HDB Financial Services LtdCapital 1500 10501Reserves and Surplus 8025 (1288)Total Assets 20599 19588Total Liabilities 11074 10375Investments _ _Turnover 12466 2354Profit (Loss) Before Taxation 2809 (919)Provision for Taxation (1152) (9)Profit (Loss) After Taxation 1657 (928)Proposed Dividend including tax 35 _
The New Capital Adequacy Framework is applicable to HDFC Bank Limited (hereinafter referred to as the Bank)and its two subsidiaries (HDFC Securities Ltd and HDB Financial Services Private Ltd) which together constitutes the group in line with
CAPITAL STRUCTURE-
Capital funds are classified into Tier I and Tier II capital under the capital adequacy framework Tier I capital includes paid-up equity capital statutory reserves other disclosed free reserves capital reserves
and innovative perpetual debt instruments Elements of Tier II capital include revaluation reserve if any general provision for standard assets
CAPITAL ADEQECY-
The Bank has a process for assessing its overall Capital Adequacy in relation to their risk profile and a strategy for maintaining their capital level The process provides an assurance that the Bank has adequate capital to support all risk in its business and an appropriate capital buffer based on its business profile The Bank has a structured management framework in the internal capital adequacy assessment process for the identification and evaluation of the significance of all risks that the Bank faces which may have an adverse material impact on its financial position The Bank considers the following risks as material risks
Credit Risk1048707 Market Risk1048707 Interest Rate Risk in the Banking Book1048707 Liquidity Risk1048707 Credit Concentration Risk1048707 Business Risk1048707 Strategic Risk1048707 Compliance Risk1048707 Reputation Risk1048707 Operational Risk
Credit Risk-
Credit Risk is defined as the possibility of losses associated with diminution in the credit quality of borrowers orcounterparties In a bankrsquos portfolio losses stem from outright default due to inability or unwillingness of acustomer or counterparty to meet commitments in relation to lending trading settlement and other financialtransactions
Wal-Mart
PARTICULARS 2006 2005 CHANGESALES 312427 285222 9538184292OPERATING INCOMEOPERATING PROFIT 18530 17091 8419636066INTEREST 1172 986 1886409736NET INCOME NET PROFIT 11231 10267 9389305542OPERATING EXPENSES 56733 51248 107028567SHARE HOLDERS EQUITY 53171 49396 7642319216TOTAL ASSETS 138187 120154 1500823943COST OF GOODS SOLD 240391 219793 9371545045GROSS PROFIT= SALES- COST OF GOODS SOLD 72036 65429 1009796879PRETAXPROFIT=OPERATING PROFIT-INTEREST 17358 16105 7780192487
Profitability Ratios
PARTICULARS 2006 2005 CHANGEGROSS PROFIT RATIO=(GROSSPROFITSALES)100 2305690609 2293967506 0511040513NET INCOME RATIO=(NETPROFITSALES)100 3594759736 3599652201 -0135914933OPERATING PROFIT RATIO= (OPERATING PROFITSALES)100 5930985478 5992174517 -1021149139PRETAX PROFIT RATIO=(PRETAXPROFITSALES)100 5555857848 5646478883 -1604912311OPERATING EXPENSE RATIO=(OPERATING EXPENSESSALES)100 181588019 1796775845 1063256994FINANCIAL EXPENSES RATIO=(INTERESTSALES)100 037512763 0345695634 8513846684RETURN ON SALES=(NETINCOMESALES)100 3594759736 3599652201 -0135914933RETURN ON ASSETS=(NETINCOME ASSETS)100 8127392591 854486742 -4885679419RETURN ON EQUITY=(NET INCOMESHHLDRS EQUITY)100 2112241635 2078508381 1622954929PROFITABILITY=(NETINCOMESALES)100 3594759736 3599652201 -0135914933EFFICIENCY=(SALESASSETS) 2260900085 2373803619 -4756228912LEVERAGE=(ASSETSSHAREHOLDERS EQUITY) 2598916703 2432464167 6842959408DUPONT ANALYSIS 2112241635 2078508381 1622954929
Profitability Ratios Interpretation
PARTICULARS 2006 2005 CHANGEINVENTORY(AVG) 32191 29762 8161413883COST OF GOODS SOLD 240391 219793 9371545045NET CREDIT SALES( NET SALES) 312427 285222 9538184292AVERAGE DEBTORS( RECIEVABLES) 2662 1715 5521865889CASH AND CASH EQUIVALENTS 6414 5488 1687317784CURRENT LIABILITIES 48826 43182 1307026076TOTAL ASSETS 138187 120154 1500823943CURRENT ASSETS 43824 38854 1279147578AVERAGE CREDITORS(PAYABLES) 25373 21987 154000091OPENING STOCK 29762 0 CLOSING STOCK 32191 29762 8161413883FIXED ASSETS = TOTAL ASSETS-CURRENT ASSETS 94363 81300 1606765068PURCHASES= COST OF GOODS SOLD- OPENING STOCK+ CLOSING STOCK 242820 249555 -2698803871NETWORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES -5002 -4328 1557301294
Asset Utilization Ratios
PARTICULARS 2006 2005 CHANGESTOCK TURNOVER RATIO= COST OF GOODS SOLDAVG INVENTORY 7467646237 7385021168 1118819658NUMBER OF DAYS TO INVENTORY=365STOCK TURNOVER RATIO 4887751621 4942436747 -1106440584DEBTORS TURNOVER RATIO= NET CREDIT SALES AVG DEBTORS 1173655147 1663102041 -294297573AVERAGE COLLECTION PERIOD= 365DEBTORS TURNOVER RATIO 3109942483 2194693958 4170278602CREDITOR TURNOVER RATIO= NET CREDIT PURCHASESAVG CREDITORS 9570015371 1135011598 -1568354553AVG PAYMENT PERIOD=365 CREDITOR TURNOVER PERIOD 3813995964 3215826171 1860081241CASH TURNOVER RATIO=SALESCASH AND CASH EQUIVALENTS 4871016526 5197193878 -6276028158CURRENT LIABILITIES TURNOVER RATIO=SALESCURRENT LIABILITIES 6398783435 6605113242 -3123789086WORKING CAPITAL TURNOVER RATIO= SALES NET WORKING CAPITAL -6246041583 -6590157116 -5221659014TOTAL ASSETS TURNOVER RATIO=SALESTOTAL ASSETS 2260900085 2373803619 -4756228912FIXED ASSETS TURNOVER RATIO=SALESFIXED ASSETS 3310905758 3508265683 -5625569525
Asset Utilization Ratios Interpretation
PARTICULARS 2006 2005 CHANGE
TOTAL ASSETS 138187 12015415008239
4
SHHLDRS EQUITY 53171 4939676423192
2
TOTAL LIABILITIES 85016 7075820150371
7
EBIT 18530 1709184196360
7
INTEREST 1172 98618864097
4
EBT=EBIT-INTEREST 17358 1610577801924
9
Leverage ratios
PARTICULARS 2006 2005 CHANGE
ASSETS TO EQUITY RATIO= ASSETSEQUITY259891
7243246
468429594
1
DEBT RATIO= TOTAL LIABILITIESTOTAL ASSETS061522
4058889
444710990
2
DEBT EQUITY RATIO= TOTAL LIABILITIES EQUITY159891
7143246
411620013
9
INTERESTCOVERAGE RATIO= EBIT INTEREST158105
8173336
7-
87868932
FINANCIAL LEVERAGE=EBITEBT106751
9106122
305932848
7
Leverage ratios interpretation
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
Amalgamation Reserve 10635564 145218Capital Reserve 956510 17850Investment Reserve Account
276250 414800
The company has a propose divedend 27206229 for the year 2009(figs are in thousands)Also it has a bill payable 29224076 for the current year as current libillitesNext the current assest ie if u see the cash in hand for te current year is 15861868 Gross block for the current year is 7160665 which is a 2676 increment then the previous year
Net block for the current year is 11311063 and previous 7322171 which is a 9352 increased percentage Fixed assets are stated at cost less accumulated depreciation as adjusted for impairment if any Cost includes cost of purchase and all expenditure like site preparation installation costs and professional fees incurred on the asset before it is ready to use Subsequent expenditure incurred on assets put to use is capitalized only when it increases the future benefitfunctioning capability fromof such assetsDepreciation is charged over the estimated useful life of the fixed asset on a straight-line basis Income tax comprises the current tax provision the net change in the deferred tax asset or liability in the year and fringe benefit tax
Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences between the carrying values of assets and liabilities and their respective tax bases and operating loss carry forwardsStatement pursuant to Section 212 of the Companies Act 1956 relating to subsidiary Companies
Name of the subsidiary HDFC Securities Ltd HDB Financial Services LtdCapital 1500 10501Reserves and Surplus 8025 (1288)Total Assets 20599 19588Total Liabilities 11074 10375Investments _ _Turnover 12466 2354Profit (Loss) Before Taxation 2809 (919)Provision for Taxation (1152) (9)Profit (Loss) After Taxation 1657 (928)Proposed Dividend including tax 35 _
The New Capital Adequacy Framework is applicable to HDFC Bank Limited (hereinafter referred to as the Bank)and its two subsidiaries (HDFC Securities Ltd and HDB Financial Services Private Ltd) which together constitutes the group in line with
CAPITAL STRUCTURE-
Capital funds are classified into Tier I and Tier II capital under the capital adequacy framework Tier I capital includes paid-up equity capital statutory reserves other disclosed free reserves capital reserves
and innovative perpetual debt instruments Elements of Tier II capital include revaluation reserve if any general provision for standard assets
CAPITAL ADEQECY-
The Bank has a process for assessing its overall Capital Adequacy in relation to their risk profile and a strategy for maintaining their capital level The process provides an assurance that the Bank has adequate capital to support all risk in its business and an appropriate capital buffer based on its business profile The Bank has a structured management framework in the internal capital adequacy assessment process for the identification and evaluation of the significance of all risks that the Bank faces which may have an adverse material impact on its financial position The Bank considers the following risks as material risks
Credit Risk1048707 Market Risk1048707 Interest Rate Risk in the Banking Book1048707 Liquidity Risk1048707 Credit Concentration Risk1048707 Business Risk1048707 Strategic Risk1048707 Compliance Risk1048707 Reputation Risk1048707 Operational Risk
Credit Risk-
Credit Risk is defined as the possibility of losses associated with diminution in the credit quality of borrowers orcounterparties In a bankrsquos portfolio losses stem from outright default due to inability or unwillingness of acustomer or counterparty to meet commitments in relation to lending trading settlement and other financialtransactions
Wal-Mart
PARTICULARS 2006 2005 CHANGESALES 312427 285222 9538184292OPERATING INCOMEOPERATING PROFIT 18530 17091 8419636066INTEREST 1172 986 1886409736NET INCOME NET PROFIT 11231 10267 9389305542OPERATING EXPENSES 56733 51248 107028567SHARE HOLDERS EQUITY 53171 49396 7642319216TOTAL ASSETS 138187 120154 1500823943COST OF GOODS SOLD 240391 219793 9371545045GROSS PROFIT= SALES- COST OF GOODS SOLD 72036 65429 1009796879PRETAXPROFIT=OPERATING PROFIT-INTEREST 17358 16105 7780192487
Profitability Ratios
PARTICULARS 2006 2005 CHANGEGROSS PROFIT RATIO=(GROSSPROFITSALES)100 2305690609 2293967506 0511040513NET INCOME RATIO=(NETPROFITSALES)100 3594759736 3599652201 -0135914933OPERATING PROFIT RATIO= (OPERATING PROFITSALES)100 5930985478 5992174517 -1021149139PRETAX PROFIT RATIO=(PRETAXPROFITSALES)100 5555857848 5646478883 -1604912311OPERATING EXPENSE RATIO=(OPERATING EXPENSESSALES)100 181588019 1796775845 1063256994FINANCIAL EXPENSES RATIO=(INTERESTSALES)100 037512763 0345695634 8513846684RETURN ON SALES=(NETINCOMESALES)100 3594759736 3599652201 -0135914933RETURN ON ASSETS=(NETINCOME ASSETS)100 8127392591 854486742 -4885679419RETURN ON EQUITY=(NET INCOMESHHLDRS EQUITY)100 2112241635 2078508381 1622954929PROFITABILITY=(NETINCOMESALES)100 3594759736 3599652201 -0135914933EFFICIENCY=(SALESASSETS) 2260900085 2373803619 -4756228912LEVERAGE=(ASSETSSHAREHOLDERS EQUITY) 2598916703 2432464167 6842959408DUPONT ANALYSIS 2112241635 2078508381 1622954929
Profitability Ratios Interpretation
PARTICULARS 2006 2005 CHANGEINVENTORY(AVG) 32191 29762 8161413883COST OF GOODS SOLD 240391 219793 9371545045NET CREDIT SALES( NET SALES) 312427 285222 9538184292AVERAGE DEBTORS( RECIEVABLES) 2662 1715 5521865889CASH AND CASH EQUIVALENTS 6414 5488 1687317784CURRENT LIABILITIES 48826 43182 1307026076TOTAL ASSETS 138187 120154 1500823943CURRENT ASSETS 43824 38854 1279147578AVERAGE CREDITORS(PAYABLES) 25373 21987 154000091OPENING STOCK 29762 0 CLOSING STOCK 32191 29762 8161413883FIXED ASSETS = TOTAL ASSETS-CURRENT ASSETS 94363 81300 1606765068PURCHASES= COST OF GOODS SOLD- OPENING STOCK+ CLOSING STOCK 242820 249555 -2698803871NETWORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES -5002 -4328 1557301294
Asset Utilization Ratios
PARTICULARS 2006 2005 CHANGESTOCK TURNOVER RATIO= COST OF GOODS SOLDAVG INVENTORY 7467646237 7385021168 1118819658NUMBER OF DAYS TO INVENTORY=365STOCK TURNOVER RATIO 4887751621 4942436747 -1106440584DEBTORS TURNOVER RATIO= NET CREDIT SALES AVG DEBTORS 1173655147 1663102041 -294297573AVERAGE COLLECTION PERIOD= 365DEBTORS TURNOVER RATIO 3109942483 2194693958 4170278602CREDITOR TURNOVER RATIO= NET CREDIT PURCHASESAVG CREDITORS 9570015371 1135011598 -1568354553AVG PAYMENT PERIOD=365 CREDITOR TURNOVER PERIOD 3813995964 3215826171 1860081241CASH TURNOVER RATIO=SALESCASH AND CASH EQUIVALENTS 4871016526 5197193878 -6276028158CURRENT LIABILITIES TURNOVER RATIO=SALESCURRENT LIABILITIES 6398783435 6605113242 -3123789086WORKING CAPITAL TURNOVER RATIO= SALES NET WORKING CAPITAL -6246041583 -6590157116 -5221659014TOTAL ASSETS TURNOVER RATIO=SALESTOTAL ASSETS 2260900085 2373803619 -4756228912FIXED ASSETS TURNOVER RATIO=SALESFIXED ASSETS 3310905758 3508265683 -5625569525
Asset Utilization Ratios Interpretation
PARTICULARS 2006 2005 CHANGE
TOTAL ASSETS 138187 12015415008239
4
SHHLDRS EQUITY 53171 4939676423192
2
TOTAL LIABILITIES 85016 7075820150371
7
EBIT 18530 1709184196360
7
INTEREST 1172 98618864097
4
EBT=EBIT-INTEREST 17358 1610577801924
9
Leverage ratios
PARTICULARS 2006 2005 CHANGE
ASSETS TO EQUITY RATIO= ASSETSEQUITY259891
7243246
468429594
1
DEBT RATIO= TOTAL LIABILITIESTOTAL ASSETS061522
4058889
444710990
2
DEBT EQUITY RATIO= TOTAL LIABILITIES EQUITY159891
7143246
411620013
9
INTERESTCOVERAGE RATIO= EBIT INTEREST158105
8173336
7-
87868932
FINANCIAL LEVERAGE=EBITEBT106751
9106122
305932848
7
Leverage ratios interpretation
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
and innovative perpetual debt instruments Elements of Tier II capital include revaluation reserve if any general provision for standard assets
CAPITAL ADEQECY-
The Bank has a process for assessing its overall Capital Adequacy in relation to their risk profile and a strategy for maintaining their capital level The process provides an assurance that the Bank has adequate capital to support all risk in its business and an appropriate capital buffer based on its business profile The Bank has a structured management framework in the internal capital adequacy assessment process for the identification and evaluation of the significance of all risks that the Bank faces which may have an adverse material impact on its financial position The Bank considers the following risks as material risks
Credit Risk1048707 Market Risk1048707 Interest Rate Risk in the Banking Book1048707 Liquidity Risk1048707 Credit Concentration Risk1048707 Business Risk1048707 Strategic Risk1048707 Compliance Risk1048707 Reputation Risk1048707 Operational Risk
Credit Risk-
Credit Risk is defined as the possibility of losses associated with diminution in the credit quality of borrowers orcounterparties In a bankrsquos portfolio losses stem from outright default due to inability or unwillingness of acustomer or counterparty to meet commitments in relation to lending trading settlement and other financialtransactions
Wal-Mart
PARTICULARS 2006 2005 CHANGESALES 312427 285222 9538184292OPERATING INCOMEOPERATING PROFIT 18530 17091 8419636066INTEREST 1172 986 1886409736NET INCOME NET PROFIT 11231 10267 9389305542OPERATING EXPENSES 56733 51248 107028567SHARE HOLDERS EQUITY 53171 49396 7642319216TOTAL ASSETS 138187 120154 1500823943COST OF GOODS SOLD 240391 219793 9371545045GROSS PROFIT= SALES- COST OF GOODS SOLD 72036 65429 1009796879PRETAXPROFIT=OPERATING PROFIT-INTEREST 17358 16105 7780192487
Profitability Ratios
PARTICULARS 2006 2005 CHANGEGROSS PROFIT RATIO=(GROSSPROFITSALES)100 2305690609 2293967506 0511040513NET INCOME RATIO=(NETPROFITSALES)100 3594759736 3599652201 -0135914933OPERATING PROFIT RATIO= (OPERATING PROFITSALES)100 5930985478 5992174517 -1021149139PRETAX PROFIT RATIO=(PRETAXPROFITSALES)100 5555857848 5646478883 -1604912311OPERATING EXPENSE RATIO=(OPERATING EXPENSESSALES)100 181588019 1796775845 1063256994FINANCIAL EXPENSES RATIO=(INTERESTSALES)100 037512763 0345695634 8513846684RETURN ON SALES=(NETINCOMESALES)100 3594759736 3599652201 -0135914933RETURN ON ASSETS=(NETINCOME ASSETS)100 8127392591 854486742 -4885679419RETURN ON EQUITY=(NET INCOMESHHLDRS EQUITY)100 2112241635 2078508381 1622954929PROFITABILITY=(NETINCOMESALES)100 3594759736 3599652201 -0135914933EFFICIENCY=(SALESASSETS) 2260900085 2373803619 -4756228912LEVERAGE=(ASSETSSHAREHOLDERS EQUITY) 2598916703 2432464167 6842959408DUPONT ANALYSIS 2112241635 2078508381 1622954929
Profitability Ratios Interpretation
PARTICULARS 2006 2005 CHANGEINVENTORY(AVG) 32191 29762 8161413883COST OF GOODS SOLD 240391 219793 9371545045NET CREDIT SALES( NET SALES) 312427 285222 9538184292AVERAGE DEBTORS( RECIEVABLES) 2662 1715 5521865889CASH AND CASH EQUIVALENTS 6414 5488 1687317784CURRENT LIABILITIES 48826 43182 1307026076TOTAL ASSETS 138187 120154 1500823943CURRENT ASSETS 43824 38854 1279147578AVERAGE CREDITORS(PAYABLES) 25373 21987 154000091OPENING STOCK 29762 0 CLOSING STOCK 32191 29762 8161413883FIXED ASSETS = TOTAL ASSETS-CURRENT ASSETS 94363 81300 1606765068PURCHASES= COST OF GOODS SOLD- OPENING STOCK+ CLOSING STOCK 242820 249555 -2698803871NETWORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES -5002 -4328 1557301294
Asset Utilization Ratios
PARTICULARS 2006 2005 CHANGESTOCK TURNOVER RATIO= COST OF GOODS SOLDAVG INVENTORY 7467646237 7385021168 1118819658NUMBER OF DAYS TO INVENTORY=365STOCK TURNOVER RATIO 4887751621 4942436747 -1106440584DEBTORS TURNOVER RATIO= NET CREDIT SALES AVG DEBTORS 1173655147 1663102041 -294297573AVERAGE COLLECTION PERIOD= 365DEBTORS TURNOVER RATIO 3109942483 2194693958 4170278602CREDITOR TURNOVER RATIO= NET CREDIT PURCHASESAVG CREDITORS 9570015371 1135011598 -1568354553AVG PAYMENT PERIOD=365 CREDITOR TURNOVER PERIOD 3813995964 3215826171 1860081241CASH TURNOVER RATIO=SALESCASH AND CASH EQUIVALENTS 4871016526 5197193878 -6276028158CURRENT LIABILITIES TURNOVER RATIO=SALESCURRENT LIABILITIES 6398783435 6605113242 -3123789086WORKING CAPITAL TURNOVER RATIO= SALES NET WORKING CAPITAL -6246041583 -6590157116 -5221659014TOTAL ASSETS TURNOVER RATIO=SALESTOTAL ASSETS 2260900085 2373803619 -4756228912FIXED ASSETS TURNOVER RATIO=SALESFIXED ASSETS 3310905758 3508265683 -5625569525
Asset Utilization Ratios Interpretation
PARTICULARS 2006 2005 CHANGE
TOTAL ASSETS 138187 12015415008239
4
SHHLDRS EQUITY 53171 4939676423192
2
TOTAL LIABILITIES 85016 7075820150371
7
EBIT 18530 1709184196360
7
INTEREST 1172 98618864097
4
EBT=EBIT-INTEREST 17358 1610577801924
9
Leverage ratios
PARTICULARS 2006 2005 CHANGE
ASSETS TO EQUITY RATIO= ASSETSEQUITY259891
7243246
468429594
1
DEBT RATIO= TOTAL LIABILITIESTOTAL ASSETS061522
4058889
444710990
2
DEBT EQUITY RATIO= TOTAL LIABILITIES EQUITY159891
7143246
411620013
9
INTERESTCOVERAGE RATIO= EBIT INTEREST158105
8173336
7-
87868932
FINANCIAL LEVERAGE=EBITEBT106751
9106122
305932848
7
Leverage ratios interpretation
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
Wal-Mart
PARTICULARS 2006 2005 CHANGESALES 312427 285222 9538184292OPERATING INCOMEOPERATING PROFIT 18530 17091 8419636066INTEREST 1172 986 1886409736NET INCOME NET PROFIT 11231 10267 9389305542OPERATING EXPENSES 56733 51248 107028567SHARE HOLDERS EQUITY 53171 49396 7642319216TOTAL ASSETS 138187 120154 1500823943COST OF GOODS SOLD 240391 219793 9371545045GROSS PROFIT= SALES- COST OF GOODS SOLD 72036 65429 1009796879PRETAXPROFIT=OPERATING PROFIT-INTEREST 17358 16105 7780192487
Profitability Ratios
PARTICULARS 2006 2005 CHANGEGROSS PROFIT RATIO=(GROSSPROFITSALES)100 2305690609 2293967506 0511040513NET INCOME RATIO=(NETPROFITSALES)100 3594759736 3599652201 -0135914933OPERATING PROFIT RATIO= (OPERATING PROFITSALES)100 5930985478 5992174517 -1021149139PRETAX PROFIT RATIO=(PRETAXPROFITSALES)100 5555857848 5646478883 -1604912311OPERATING EXPENSE RATIO=(OPERATING EXPENSESSALES)100 181588019 1796775845 1063256994FINANCIAL EXPENSES RATIO=(INTERESTSALES)100 037512763 0345695634 8513846684RETURN ON SALES=(NETINCOMESALES)100 3594759736 3599652201 -0135914933RETURN ON ASSETS=(NETINCOME ASSETS)100 8127392591 854486742 -4885679419RETURN ON EQUITY=(NET INCOMESHHLDRS EQUITY)100 2112241635 2078508381 1622954929PROFITABILITY=(NETINCOMESALES)100 3594759736 3599652201 -0135914933EFFICIENCY=(SALESASSETS) 2260900085 2373803619 -4756228912LEVERAGE=(ASSETSSHAREHOLDERS EQUITY) 2598916703 2432464167 6842959408DUPONT ANALYSIS 2112241635 2078508381 1622954929
Profitability Ratios Interpretation
PARTICULARS 2006 2005 CHANGEINVENTORY(AVG) 32191 29762 8161413883COST OF GOODS SOLD 240391 219793 9371545045NET CREDIT SALES( NET SALES) 312427 285222 9538184292AVERAGE DEBTORS( RECIEVABLES) 2662 1715 5521865889CASH AND CASH EQUIVALENTS 6414 5488 1687317784CURRENT LIABILITIES 48826 43182 1307026076TOTAL ASSETS 138187 120154 1500823943CURRENT ASSETS 43824 38854 1279147578AVERAGE CREDITORS(PAYABLES) 25373 21987 154000091OPENING STOCK 29762 0 CLOSING STOCK 32191 29762 8161413883FIXED ASSETS = TOTAL ASSETS-CURRENT ASSETS 94363 81300 1606765068PURCHASES= COST OF GOODS SOLD- OPENING STOCK+ CLOSING STOCK 242820 249555 -2698803871NETWORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES -5002 -4328 1557301294
Asset Utilization Ratios
PARTICULARS 2006 2005 CHANGESTOCK TURNOVER RATIO= COST OF GOODS SOLDAVG INVENTORY 7467646237 7385021168 1118819658NUMBER OF DAYS TO INVENTORY=365STOCK TURNOVER RATIO 4887751621 4942436747 -1106440584DEBTORS TURNOVER RATIO= NET CREDIT SALES AVG DEBTORS 1173655147 1663102041 -294297573AVERAGE COLLECTION PERIOD= 365DEBTORS TURNOVER RATIO 3109942483 2194693958 4170278602CREDITOR TURNOVER RATIO= NET CREDIT PURCHASESAVG CREDITORS 9570015371 1135011598 -1568354553AVG PAYMENT PERIOD=365 CREDITOR TURNOVER PERIOD 3813995964 3215826171 1860081241CASH TURNOVER RATIO=SALESCASH AND CASH EQUIVALENTS 4871016526 5197193878 -6276028158CURRENT LIABILITIES TURNOVER RATIO=SALESCURRENT LIABILITIES 6398783435 6605113242 -3123789086WORKING CAPITAL TURNOVER RATIO= SALES NET WORKING CAPITAL -6246041583 -6590157116 -5221659014TOTAL ASSETS TURNOVER RATIO=SALESTOTAL ASSETS 2260900085 2373803619 -4756228912FIXED ASSETS TURNOVER RATIO=SALESFIXED ASSETS 3310905758 3508265683 -5625569525
Asset Utilization Ratios Interpretation
PARTICULARS 2006 2005 CHANGE
TOTAL ASSETS 138187 12015415008239
4
SHHLDRS EQUITY 53171 4939676423192
2
TOTAL LIABILITIES 85016 7075820150371
7
EBIT 18530 1709184196360
7
INTEREST 1172 98618864097
4
EBT=EBIT-INTEREST 17358 1610577801924
9
Leverage ratios
PARTICULARS 2006 2005 CHANGE
ASSETS TO EQUITY RATIO= ASSETSEQUITY259891
7243246
468429594
1
DEBT RATIO= TOTAL LIABILITIESTOTAL ASSETS061522
4058889
444710990
2
DEBT EQUITY RATIO= TOTAL LIABILITIES EQUITY159891
7143246
411620013
9
INTERESTCOVERAGE RATIO= EBIT INTEREST158105
8173336
7-
87868932
FINANCIAL LEVERAGE=EBITEBT106751
9106122
305932848
7
Leverage ratios interpretation
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
Profitability Ratios Interpretation
PARTICULARS 2006 2005 CHANGEINVENTORY(AVG) 32191 29762 8161413883COST OF GOODS SOLD 240391 219793 9371545045NET CREDIT SALES( NET SALES) 312427 285222 9538184292AVERAGE DEBTORS( RECIEVABLES) 2662 1715 5521865889CASH AND CASH EQUIVALENTS 6414 5488 1687317784CURRENT LIABILITIES 48826 43182 1307026076TOTAL ASSETS 138187 120154 1500823943CURRENT ASSETS 43824 38854 1279147578AVERAGE CREDITORS(PAYABLES) 25373 21987 154000091OPENING STOCK 29762 0 CLOSING STOCK 32191 29762 8161413883FIXED ASSETS = TOTAL ASSETS-CURRENT ASSETS 94363 81300 1606765068PURCHASES= COST OF GOODS SOLD- OPENING STOCK+ CLOSING STOCK 242820 249555 -2698803871NETWORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES -5002 -4328 1557301294
Asset Utilization Ratios
PARTICULARS 2006 2005 CHANGESTOCK TURNOVER RATIO= COST OF GOODS SOLDAVG INVENTORY 7467646237 7385021168 1118819658NUMBER OF DAYS TO INVENTORY=365STOCK TURNOVER RATIO 4887751621 4942436747 -1106440584DEBTORS TURNOVER RATIO= NET CREDIT SALES AVG DEBTORS 1173655147 1663102041 -294297573AVERAGE COLLECTION PERIOD= 365DEBTORS TURNOVER RATIO 3109942483 2194693958 4170278602CREDITOR TURNOVER RATIO= NET CREDIT PURCHASESAVG CREDITORS 9570015371 1135011598 -1568354553AVG PAYMENT PERIOD=365 CREDITOR TURNOVER PERIOD 3813995964 3215826171 1860081241CASH TURNOVER RATIO=SALESCASH AND CASH EQUIVALENTS 4871016526 5197193878 -6276028158CURRENT LIABILITIES TURNOVER RATIO=SALESCURRENT LIABILITIES 6398783435 6605113242 -3123789086WORKING CAPITAL TURNOVER RATIO= SALES NET WORKING CAPITAL -6246041583 -6590157116 -5221659014TOTAL ASSETS TURNOVER RATIO=SALESTOTAL ASSETS 2260900085 2373803619 -4756228912FIXED ASSETS TURNOVER RATIO=SALESFIXED ASSETS 3310905758 3508265683 -5625569525
Asset Utilization Ratios Interpretation
PARTICULARS 2006 2005 CHANGE
TOTAL ASSETS 138187 12015415008239
4
SHHLDRS EQUITY 53171 4939676423192
2
TOTAL LIABILITIES 85016 7075820150371
7
EBIT 18530 1709184196360
7
INTEREST 1172 98618864097
4
EBT=EBIT-INTEREST 17358 1610577801924
9
Leverage ratios
PARTICULARS 2006 2005 CHANGE
ASSETS TO EQUITY RATIO= ASSETSEQUITY259891
7243246
468429594
1
DEBT RATIO= TOTAL LIABILITIESTOTAL ASSETS061522
4058889
444710990
2
DEBT EQUITY RATIO= TOTAL LIABILITIES EQUITY159891
7143246
411620013
9
INTERESTCOVERAGE RATIO= EBIT INTEREST158105
8173336
7-
87868932
FINANCIAL LEVERAGE=EBITEBT106751
9106122
305932848
7
Leverage ratios interpretation
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
PARTICULARS 2006 2005 CHANGEINVENTORY(AVG) 32191 29762 8161413883COST OF GOODS SOLD 240391 219793 9371545045NET CREDIT SALES( NET SALES) 312427 285222 9538184292AVERAGE DEBTORS( RECIEVABLES) 2662 1715 5521865889CASH AND CASH EQUIVALENTS 6414 5488 1687317784CURRENT LIABILITIES 48826 43182 1307026076TOTAL ASSETS 138187 120154 1500823943CURRENT ASSETS 43824 38854 1279147578AVERAGE CREDITORS(PAYABLES) 25373 21987 154000091OPENING STOCK 29762 0 CLOSING STOCK 32191 29762 8161413883FIXED ASSETS = TOTAL ASSETS-CURRENT ASSETS 94363 81300 1606765068PURCHASES= COST OF GOODS SOLD- OPENING STOCK+ CLOSING STOCK 242820 249555 -2698803871NETWORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES -5002 -4328 1557301294
Asset Utilization Ratios
PARTICULARS 2006 2005 CHANGESTOCK TURNOVER RATIO= COST OF GOODS SOLDAVG INVENTORY 7467646237 7385021168 1118819658NUMBER OF DAYS TO INVENTORY=365STOCK TURNOVER RATIO 4887751621 4942436747 -1106440584DEBTORS TURNOVER RATIO= NET CREDIT SALES AVG DEBTORS 1173655147 1663102041 -294297573AVERAGE COLLECTION PERIOD= 365DEBTORS TURNOVER RATIO 3109942483 2194693958 4170278602CREDITOR TURNOVER RATIO= NET CREDIT PURCHASESAVG CREDITORS 9570015371 1135011598 -1568354553AVG PAYMENT PERIOD=365 CREDITOR TURNOVER PERIOD 3813995964 3215826171 1860081241CASH TURNOVER RATIO=SALESCASH AND CASH EQUIVALENTS 4871016526 5197193878 -6276028158CURRENT LIABILITIES TURNOVER RATIO=SALESCURRENT LIABILITIES 6398783435 6605113242 -3123789086WORKING CAPITAL TURNOVER RATIO= SALES NET WORKING CAPITAL -6246041583 -6590157116 -5221659014TOTAL ASSETS TURNOVER RATIO=SALESTOTAL ASSETS 2260900085 2373803619 -4756228912FIXED ASSETS TURNOVER RATIO=SALESFIXED ASSETS 3310905758 3508265683 -5625569525
Asset Utilization Ratios Interpretation
PARTICULARS 2006 2005 CHANGE
TOTAL ASSETS 138187 12015415008239
4
SHHLDRS EQUITY 53171 4939676423192
2
TOTAL LIABILITIES 85016 7075820150371
7
EBIT 18530 1709184196360
7
INTEREST 1172 98618864097
4
EBT=EBIT-INTEREST 17358 1610577801924
9
Leverage ratios
PARTICULARS 2006 2005 CHANGE
ASSETS TO EQUITY RATIO= ASSETSEQUITY259891
7243246
468429594
1
DEBT RATIO= TOTAL LIABILITIESTOTAL ASSETS061522
4058889
444710990
2
DEBT EQUITY RATIO= TOTAL LIABILITIES EQUITY159891
7143246
411620013
9
INTERESTCOVERAGE RATIO= EBIT INTEREST158105
8173336
7-
87868932
FINANCIAL LEVERAGE=EBITEBT106751
9106122
305932848
7
Leverage ratios interpretation
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
Asset Utilization Ratios Interpretation
PARTICULARS 2006 2005 CHANGE
TOTAL ASSETS 138187 12015415008239
4
SHHLDRS EQUITY 53171 4939676423192
2
TOTAL LIABILITIES 85016 7075820150371
7
EBIT 18530 1709184196360
7
INTEREST 1172 98618864097
4
EBT=EBIT-INTEREST 17358 1610577801924
9
Leverage ratios
PARTICULARS 2006 2005 CHANGE
ASSETS TO EQUITY RATIO= ASSETSEQUITY259891
7243246
468429594
1
DEBT RATIO= TOTAL LIABILITIESTOTAL ASSETS061522
4058889
444710990
2
DEBT EQUITY RATIO= TOTAL LIABILITIES EQUITY159891
7143246
411620013
9
INTERESTCOVERAGE RATIO= EBIT INTEREST158105
8173336
7-
87868932
FINANCIAL LEVERAGE=EBITEBT106751
9106122
305932848
7
Leverage ratios interpretation
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
PARTICULARS 2006 2005 CHANGE
TOTAL ASSETS 138187 12015415008239
4
SHHLDRS EQUITY 53171 4939676423192
2
TOTAL LIABILITIES 85016 7075820150371
7
EBIT 18530 1709184196360
7
INTEREST 1172 98618864097
4
EBT=EBIT-INTEREST 17358 1610577801924
9
Leverage ratios
PARTICULARS 2006 2005 CHANGE
ASSETS TO EQUITY RATIO= ASSETSEQUITY259891
7243246
468429594
1
DEBT RATIO= TOTAL LIABILITIESTOTAL ASSETS061522
4058889
444710990
2
DEBT EQUITY RATIO= TOTAL LIABILITIES EQUITY159891
7143246
411620013
9
INTERESTCOVERAGE RATIO= EBIT INTEREST158105
8173336
7-
87868932
FINANCIAL LEVERAGE=EBITEBT106751
9106122
305932848
7
Leverage ratios interpretation
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
PARTICULARS 2006 2005 CHANGE
CURRENT ASSETS 43824 3885412791475
8
CURRENT LIABILITIES 48826 4318213070260
8
QUICK ASSETS(CA-STOCK-PREPAID EXPENSES) 9076 720326003054
3
LIQUID ASSETS(CASHBANMARKETABLE SECURITIES) 6414 548816873177
8
Liquidity Ratios
PARTICULARS 2006 2005 CHANGECURRENT RATIO=CURRENT ASSETSCURRENT LIABILITIES 0897555 0899773 -02465591QUICK RATIO= QUICK ASSETSCURRENT LIABILITIES 0185885 0166806 114378382ABSOLUTE LIQUID RATIO= LIQUID ASSETSCURRENT LIABILTIES 0131364 012709 336332212
Liquidity Ratios Interpretation
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
Strength and Weakness of Wal-mart
To conclude about the overall impression of the wal-martrsquos performance over this period we can say that the it is maintaining a good profitability and efficiency as we can observe that gross profit net profit has increased over this period and even company has reduced its operating expenses to get more operating profits in the 2004 it has ability to reduce operating expenses The company is able to generate the good net income over the sales and even the ROE of the company is above 15 during years 2005 and 2006 so that we can say that company is in very good position which also shows the company is able to generate the good income out of the shares holders equity THE ROE is mainly increased due to the assets to equity which is observed by the investors This ROE very importantly is considered by many investors to take decision in investing in a company rather than considering the EPS as it misguides the investors Asset utilization is not that much good but it is not too bad here it has used the fixed assets very well in the 2005 to generate more sales and the inventory is replenished very well in this year only Then coming to collection period it is really good and even the they were able convince the creditors very well in having credit sales in the 2005the company is also able to acquire more assets with the available equity in the year 2006it has also increased its shares holders equity from 2005 to 2006It is able to attract the investors
But the company has to improve a lot in its liquidity position because it has been far below the ideal situation if it has to meet any short obligations it very much unable The very important problem the company facing is that it not able to maintain the balance between the liquidity and the profitability It is much concentrating on the profitability and not at all bothered about the liquidity where it has to be careful Even it has to improve in the inventory management it has to give more assurance to the creditors in interest payment the company also has to be watchful in reducing financial leverage aspect so
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
that more risk is not provided to the share holders the company has to reduce the operating expenses to get more net margins
Finally as a whole it is having good profitability efficiency and good ROE which is good sigh for investors So I advice fund manager to invest in this company
