Group1 SectionA ZeeEntertainmentEnterprises FinalReport

8/13/2019 Group1 SectionA ZeeEntertainmentEnterprises FinalReport

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Zee Entertainment

Enterprises Ltd.

Financial Statement

AnalysisFinal Report, Group-1(Sec-A)

Akanksha Trigun

Disha Gupta

Lavanya Yadlapalli

Mayur Shrikhande

Raja SK

Vinit Gawande

11-09-2013

[ This report is part of the requirements for the Financial Accounting Course PGP-2013]


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1. ObjectiveThe objective of the report is to analyse the financial statement of Zee Entertainment

Enterprises Ltd and evaluate its performance and financial position.

2. Business DescriptionSubhash Chandra, one of India's leading entrepreneurs, who sought to create a revolution byfacilitating the convergence of media and communication with a mirror into the common man'slife and ways, created Zee Telefilms Limited in October 1992. This enterprise was to act as thechief content provider for Zee TV - India's first Hindi satellite channel. Zee Telefilms Limited(ZTL) is now known as Zee Entertainment Enterprises Limited (ZEE). It is a subsidiary of theEssel Group.

ZEE is an integrated media and entertainment company engaged primarily in broadcastingand content development, production and its delivery via satellite. The Company has 32 channelsthat serve the widest array of content in India and is the leading broadcaster across the country.ZEE is also the pioneer in the international markets with 29 dedicated channels serving Indian

content across 169 countries.

To become the worlds leading global media company from the emerging markets. As a

Corporation, we will be driven by innovation and creativity and would focus on growth whiledelivering exceptional value to our customers, our viewers and all our stakeholders.is ZEEsmission statement. Through its first-mover advantage, ZEE has established itself as a strong

player in the regional entertainment space, while expanding its global presence. It is the largestproducer and aggregator of Hindi programming in the world, with more than 1 lac+ hours of

original programming in its archives. It is one of the most popular entertainment brands in India;was ranked 9th most popular brand within a decade of its launch. It is one of the largest Indianprogramming content distributors with an estimated reach of more than 670+ million viewers in

over 169 countries including USA, Canada, Europe, Africa, the Middle East, South East Asia,

Australia and New Zealand.

Note:Refer to the Appendix A for basic financial facts & figures of the company.

3. Market Profile, Competition, Strategies & RisksMarket Profile

a. SizeThe Indian Media & Entertainment Industry grew from INR 728 billion in 2011 to INR 821billion in 2012, registering an overall growth of 12.6%. Television continues to be the dominantindustry (45.1%) with an estimated share of INR 370.1 billion in 2012, registering a growth of12.5% over 2011.

b. Key Consumers/Target SegmentsThe television industry has been targeted for all kinds of customers. Various channels havebeen established with focus on particular segments based on Geography (Regional channels),Demography (Channels targeted towards Children, Youth, Old aged, and Women etc.) andLifestyles (Channels for Fashion, Sports, Education etc.)

c. Drivers of SalesThere is a growth in demand for the Television (Media & Entertainment) Industry because ofhigher real incomes and changing lifestyles, falling prices, increasing penetration, growing and


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young consumer base, growing popularity for regional media channels etc. Reform intechnology leading to better service quality and changing lifestyle in rural and urban areas has

led to higher demand for information. All of these factors drive the sales or growth in theindustry.

d. Recent TrendsFollowing are the recent trends for the industry growth: TV Digitization, Greater sophistication

of and segmentation in content, increasing investments in the regional space, increasing mediapenetration, consumer understanding, policies from the government in terms of increasingFDI limits, digitization of cable distribution to improve profitability, increasing liberalizationand tariff relaxation etc.

e. Expected Key Growth AreasThe Indian market is large enough to provide significant growth opportunities for IPTV, digital

cable as well as DTH service providers. Investment in content is also expected to grow.Regional market is expected to grow. Indian channels presence across international markets is

aggressively increasing.

f. Expected Market Growth RateBy 2013, the market is expected to grow to INR 420 billion i.e. 13.5% over 2012. By 2017, themarket is expected to grow to INR 848 billion i.e. 129% over 2012. The share of subscriptionrevenue to total revenue is expected to increase from 66% in 2012 to 72% in 2017.

Note: Refer to Appendix B (Figure-2) for the past, estimated and projected growth rates of the

Television Industry.

Competition

a. Degree of CompetitionThe degree of competition in the entertainment industry is HIGH. The high competition is

because the industry is highly fragmented. And the competitors are highly diversified. But thethreat of new entrants is comparatively less because of the high sunk costs and hitches with thedistribution. The high growth potential of the industry and large number of regional TVchannels which provide the customers with wide range of choices to switch makes the industrymore competitive.

b. Imminent substitutesThere are variety of substitutes like Internet, Film Industry, Major sporting events, andCultural events. These substitutes can reduce the sales of our industry/company. Since thetelevision constitutes more than 40% of the Media and Entertainment industry, catering to thehighly reached and to the lower section of the society, the increase in the substitutes could be

beneficial in terms of the advertisement revenue for the company.

c. Closest CompetitorsSun TV Ltd, DB Corp, Dish TV India, PVR Ltd and SRS are the closest competitors of ZeeEntertainment Enterprises Ltd.

d. Competition MeasureThe 4-firm Concentration ratio is 38.76%. So the Media & Entertainment Industry is in the lowconcentration range. The average industry margin is 8.51%. Due to various reasons fewcompanies experience huge loss. The average industry margin based on the top 8 companies interms of their sales is 12.82%. The overall industry sales have increased marginally by 1.75%from 2012 to 2013.

Note:Refer to AppendixB (Table-4) for the information on the industry top 4 firms.


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Strategy

a. Corporate Strategies to increase ROEThe corporate strategy of Zee Entertainment Enterprises is launching new products and also toscaling up the company for new businesses. The company has increased the ad rates by 20-30%

which increases the ROE of the company. Zee also increased the market share in advertisement

by 8-9% over televisions in 2012.

b. Recent Initiatives to increase Market Share and ROEZee Entertainment Enterprises is continuously launching more channels for different segmentsto increase its market share and ROE. It has launched many regional channels to cover thegeographic segment and more specific interest channels to cover different behaviouralsegments. Recently it has launched the Indias First 24-hour food channel Zee KhanaKhazana for the food lovers and is planning to launch a new Hindi movie channel to engagewith the younger audience.

Risks

The three most important risks the company faces in achieving goals and implementingstrategies are:

1. Ever changing trends in Media sector It may not be possible to consistently predictchanging audience tastes. Repeated failures would have an adverse impact.

2. Macroeconomic environment Moderating growth, along with high inflation, canadversely impact advertising revenues of the company.

3. Increased competitive environment in the Hindi General Entertainment Space.

4.Trend AnalysisA trend analysis on the following has been done for both our main company ZEE and itscompetitor Sun TV Network:

a. Sales Growth Rateb. Net Profit After Tax/Sales

The consolidated financial data for both the companies for the past 7 years has been considered.

Refer to Appendix C for the tables and charts prepared for the analysis.

The Sales Growth Rate for the year 2007 for ZEE was considerably low (-ve) where as for theSun TV Network it was very high (110%). In 2008, despite an economic downturn, ZEEs salesgrowth showed an upward trend. In the same year, Sun TV Networks sales growth rate has

dropped down to a low 28% because in 2008, Zee Networks launched Zee Motion Pictures,an

independent subsidiary of Zee Entertainment Enterprises focusing on development, production,distribution and marketing of mainstream films inHindi and five regional languages(Marathi,Bengali,Telugu,Kannada andTamil).

In 2009, both the companies had a downward trend because of the continuing economicdownturn. In 2010, ZEEs sales growth rate has showed a continuing downward trend whereas

for Sun TV Network, the sales growth rate has increased. In 2011, owing to the industry growthrate, ZEE has considerably increased its sales growth rate. However for Sun TV Network, thesales growth rate was almost stagnant. In 2012, though the industry had a considerable growth,both the companies sales growth rate dropped significantly.

The Profit Margin for ZEE showed an upward trend from 2007 until 2010, but later had adownward trend in 2011 and 2012. Despite a drop in sales growth rate to a 1% in 2010, the profitmargin has increased .This may be attributed to the declaration of dividends and shares in 2010 .We can thus infer that the company might have considerably cut down their expenses so as to
http://en.wikipedia.org/wiki/Hindi_languagehttp://en.wikipedia.org/wiki/Marathi_languagehttp://en.wikipedia.org/wiki/Bengali_languagehttp://en.wikipedia.org/wiki/Telugu_languagehttp://en.wikipedia.org/wiki/Kannada_languagehttp://en.wikipedia.org/wiki/Tamil_languagehttp://en.wikipedia.org/wiki/Tamil_languagehttp://en.wikipedia.org/wiki/Kannada_languagehttp://en.wikipedia.org/wiki/Telugu_languagehttp://en.wikipedia.org/wiki/Bengali_languagehttp://en.wikipedia.org/wiki/Marathi_languagehttp://en.wikipedia.org/wiki/Hindi_language


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increase the profit. For Sun TV Network, the Profit margin has almost a flat trend, with minorvariations across the 7 years. Despite a drop in sales growth rate to a -8% in 2012, the profit

margin had been almost the same as in the previous year. It seems that the company has startedcutting down their expenses owing to the countrys economic downturn.

5.Ratio AnalysisAll the financial ratios for both the companies have been provided in Appendix DRatio Analysis.

a. Return on EquityReturn on Equity for both the companies ZEE and Sun TV Network has an increasing trend until2011 with minor variations, except for Sun TV Network in the year 2009 where it has droppedfrom that of the previous year. However, in 2012, ROE has decreased for both the companies.The fluctuations can be explained by using the Basic Dupont Model Analysis given below.

b.Basic Dupont Model Analysis

The Return on Equity can be split into the following components based on the Basic DupontModel:

Return on Equi ty = Net Prof it M argin X Asset Turnover X F inancial Leverage

From FY2008 to FY2009, the ROE for ZEE has increased but with a minor variation. Thiscan be attributed to the increase in Net Profit Margin with an increase in sales by about 18% even

though there is an increase in the total expenditure by about 25%. The Asset turnover has alsoincreased from that of the previous year. Though the financial leverage decreased, it has a very

minor variation thus not affecting the ROE. For Sun TV Network, the ROE has decreased owingto the decrease in the net profit margin, asset turnover and a not so significant increase infinancial leverage.

From FY2009 to FY2010, the ROE for ZEE has increased owing to the increase in Net Profit

Margin with a slight increase in sales by about 1% and also a decrease in total expenditure byabout 3%. For Sun TV Network, the ROE has a sharp increase owing to an increase in the NetProfit Margin, a sharp increase in the Asset Turnover and a minor increase in the FinancialLeverage.

From FY2010 to FY2011, the ROE for ZEE has a sharp increase. Even though the net profitmargin has significantly dropped from 28% to 20% with a high sales growth of 36% but an evenhigher increase in expenditure by 42%, the Asset turnover has significantly increased from 0.54

to 0.85 thus balancing out the effect of net profit margin. This shows that ZEE is on anexpansion path. For Sun TV Network also, the ROE has a sharp increase, owing to the increasein net profit margin, a significant increase in the Asset Turnover ratio despite a very minordecrease in leverage.

From FY2011 to FY2012, the ROE for ZEE has a decrease. Though the Asset Turnover ratioincreased from 0.85 to 0.92, both the net profit margin and the leverage have decreased. The Netprofit margin has decreased because of a very low growth in sales by about 1% and an increasein expenditure by 10%. For Sun TV Network also, the ROE has a sharp decrease because of aminor variation in Net Profit Margin, a sharp decrease in Asset Turnover ratio and a minorvariation in Leverage. This may be attributed to the growth trend of these companies startingfrom FY2010.


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c. Return on Net Operating AssetsBased on the advanced DuPont model, the return on Net Operating Asset (RNOA) of ZEE has

increased from 27.74% in 2008 to 41.03% in 2012. This increase is strongly because of the highoperating efficiency of 2.3894 in 2012 when compared to the Operating profit margin which is

quite flat from 19.92% in 2008 to 17.17% in 2012 with a slight increase in the years 2008 and2009 and is low compared to its competitor Sun TV network. The trend in the increase of

RNOA is increasingly better in the recent years due to the long amorti zation per iod of movie

rights. But the RNOA of its competitor Sun TV network was increasingly good till 2011 butdecreased to 35.57% from 55.89% in 2012 due to the all egations over the 2G spectrum scam.

The involvement of the major shareholders and the top employees of Sun TV network in the 2Gspectrum case has resulted in the decreased sales in 2012 from 1.529 times the net assets in 2011to 1.0154 times in 2012 and the operating profit margin of Sun TV network quiet constant.

Comparing the ratios of DuPont and Advance DuPont analysis, the Return on net operating

assets (RNOA) is more than twice the return on equities (ROE) because of the huge liabilities,

loans and advances. These liabilities increase the net operating asset turnover ratio to2.3894 whencompared with the net asset turnover ratio of 0.9264 in 2012.

d. Debtor Turnover/Debt Collection PeriodThe debtor turnover ratio of ZEE doesn't show much variation and it is low compared to the

debtor turnover ratio of the competitor Sun TV Network which is above 4 except in FY2012. Thehigher the debtor turnover ratio, the more efficient is the management of debtors/credit policies.It can thus be inferred that Sun TV Network manages its debtors more efficiently than ZEE.However, in 2012, this ratio for ZEE doesnt have much of a variation but for Sun TV Network ithas significantly dropped, probably owing to the economic downturn in the country.

The Debt collection period for ZEE has a varying trend with minor variations and it hasincreased from FY2011 to FY2012 with a minor variation of 6 days. For Sun TV Network, thedebt collection period has always been significantly lower than that of ZEE; however it hasincreased significantly in FY2012 when compared to that of FY2012. This shows that the

economic downturn caused the debtors to be less liquid. Both the companies should change theircredit policies to efficiently manage the debtors and reduce the debt collection period.

e. Inventory Turnover/Inventory Holding PeriodSince both ZEE and Sun TV Network are service providers in the Media & Entertainment

Industry, they dont have any Inventory and henceboth these ratios are Not Applicable.

f. Operating CycleOperating Cycle would be the same as Debt Collection Period as Inventory Holding Period is

not applicable. So the trend is the same as described in the Debtor Turnover/Debt CollectionPeriod section.

g. Payables Turnover/Days PayableSince both these companies are service providers, there wont be any raw material

purchases required and hence these two ratios are Not Applicable.

h. Current RatioThe Current Ratio (Working Capital Ratio) for ZEE increased from FY2008 to FY2009 and

later showed a downward trend until FY2012 when it dropped to a low 2.7598. For Sun TVNetwork also, this ratio has a similar trend, except in FY2012, where it significantly increased toa high 4.1256 (highest across all the years analysed). These trends show that the liquidityposition of ZEE has improved from FY2008 to FY2009 but started deteriorating from then untilFY2012. This could be because of the increasing investments being made by the firm. For SunTV Network, the liquidity position has been improved significantly from FY2008 to FY2009,dropped in FY2010 but improved again by FY2012.


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i. Quick RatioSince there are no inventories for both these companies, Quick Ratio would be the same as

Current Ratio and the analysis would be the same as in above section.

j. Debt to Equity RatioFor ZEE, Debt to Equity ratio has a decreasing trend except for a spike in FY2009. For Sun

TV Network, the ratio has a continuously decreasing trend. In FY2012, both these companies

have a significantly low debt to equity ratio (0.0006 for ZEE and 0.0000 for Sun TV Network).This shows that both the companies rely more on shareholders equity rather than on external

lenders for investments. Thus, we can infer that both the companies have established sound longterm financial policies which make them less risky.

k. Interest CoverageThe Interest coverage for ZEE has decreased from FY2008 to FY2009 and then showed an

upward trend until FY2012 with a value of 175.5800. For Sun TV Network, the ratio has anincreasing trend from FY2008 to FY2011 and then dropped to 256.6838 in 2012 from a high722.9156 in the previous year. So, the ability to pay off debts has considerably been reduced forSun TV Network. However, it is still high than that of ZEE. So, creditors would be interested inlending to Sun TV Network rather than to ZEE.

6.ConclusionBased on the financial analysis performed above, we recommend not investing in Zee

Entertainment Enterprises Ltd in the short-term when compared with SUN TV as the workingcapital ratio is deteriorating for ZEE whereas it is improved significantly for Sun TV Network. Inthe long term, the industry is expected to grow more than double its size by 2017. Both ZEE andSun TV Network have sound long term financial policies, which makes them less risky. ZEE

might outperform its competitors owing to its new investment strategies. Hence, one can invest inZEE in the long-term because of the following observations:

1. The debt to equity ratio of ZEE is higher as compared to the competitor (SUN TV) showingthat the company has high leverage and is considered stable by the creditors who areextending credit to it.

2. The wide difference between ROA and RNOA in 2012 shows that the company (ZEE) is doinga lot better than its competitor in terms of its actual operations.

Referenceshttp://www.nseindia.com/content/corporate/eq_ZEEL_base.pdf

http://www.zeetelevision.com/

http://vidz.zeecdn.com/zeetele/pdfs/zeear2013deluxedt24-06-13-2finalfileforprinting-4f75b99abbf4f2d.pdf

http://www.moneycontrol.com/india/stockpricequote/mediaentertainment/zeeentertainmententerprises/ZEE

http://www.capitaline.comhttp://www.indiainbusiness.nic.in/industry-infrastructure/service-sectors/media-entertainment.htmhttp://www.ibef.org/download/Entertainment-March-220313.pdf

http://vidz.zeecdn.com/zeetele/pdfs/zeear2013deluxedt24-06-13-2finalfileforprinting-4f75b99abbf4f2d.pdf

http://www.ficci.com/spdocument/20217/FICCI-KPMG-Report-13-FRAMES.pdfhttp://www.sify.com/finance/stockpricequote/Zee_Entertainment_Enterprises_Ltd-ZEE/competitors.html

http://www.moneycontrol.com/competition/zeeentertainmententerprises/comparison/ZEE

http://www.moneycontrol.com/stocks/top-companies-in-india/net-sales-bse/media-entertainment.html

http://www.moneycontrol.com/news/results-boardroom/ad-revenue-growth-remains-positive-zee-

entertainment_771316.html

http://www.equitymaster.com/detail.asp?date=10/12/2007&story=3&title=Zee-Entertainment-Porter-analysis
http://www.nseindia.com/content/corporate/eq_ZEEL_base.pdfhttp://www.zeetelevision.com/http://www.zeetelevision.com/http://vidz.zeecdn.com/zeetele/pdfs/zeear2013deluxedt24-06-13-2finalfileforprinting-4f75b99abbf4f2d.pdfhttp://vidz.zeecdn.com/zeetele/pdfs/zeear2013deluxedt24-06-13-2finalfileforprinting-4f75b99abbf4f2d.pdfhttp://www.moneycontrol.com/india/stockpricequote/mediaentertainment/zeeentertainmententerprises/ZEEhttp://www.moneycontrol.com/india/stockpricequote/mediaentertainment/zeeentertainmententerprises/ZEEhttp://www.capitaline.com/http://www.indiainbusiness.nic.in/industry-infrastructure/service-sectors/media-entertainment.htmhttp://www.indiainbusiness.nic.in/industry-infrastructure/service-sectors/media-entertainment.htmhttp://www.ibef.org/download/Entertainment-March-220313.pdfhttp://vidz.zeecdn.com/zeetele/pdfs/zeear2013deluxedt24-06-13-2finalfileforprinting-4f75b99abbf4f2d.pdfhttp://www.ficci.com/spdocument/20217/FICCI-KPMG-Report-13-FRAMES.pdfhttp://www.sify.com/finance/stockpricequote/Zee_Entertainment_Enterprises_Ltd-ZEE/competitors.htmlhttp://www.moneycontrol.com/competition/zeeentertainmententerprises/comparison/ZEEhttp://www.moneycontrol.com/stocks/top-companies-in-india/net-sales-bse/media-entertainment.htmlhttp://www.moneycontrol.com/news/results-boardroom/ad-revenue-growth-remains-positive-zee-entertainment_771316.htmlhttp://www.moneycontrol.com/news/results-boardroom/ad-revenue-growth-remains-positive-zee-entertainment_771316.htmlhttp://www.equitymaster.com/detail.asp?date=10/12/2007&story=3&title=Zee-Entertainment-Porter-analysishttp://www.equitymaster.com/detail.asp?date=10/12/2007&story=3&title=Zee-Entertainment-Porter-analysishttp://www.moneycontrol.com/news/results-boardroom/ad-revenue-growth-remains-positive-zee-entertainment_771316.htmlhttp://www.moneycontrol.com/news/results-boardroom/ad-revenue-growth-remains-positive-zee-entertainment_771316.htmlhttp://www.moneycontrol.com/stocks/top-companies-in-india/net-sales-bse/media-entertainment.htmlhttp://www.moneycontrol.com/competition/zeeentertainmententerprises/comparison/ZEEhttp://www.sify.com/finance/stockpricequote/Zee_Entertainment_Enterprises_Ltd-ZEE/competitors.htmlhttp://www.ficci.com/spdocument/20217/FICCI-KPMG-Report-13-FRAMES.pdfhttp://vidz.zeecdn.com/zeetele/pdfs/zeear2013deluxedt24-06-13-2finalfileforprinting-4f75b99abbf4f2d.pdfhttp://www.ibef.org/download/Entertainment-March-220313.pdfhttp://www.indiainbusiness.nic.in/industry-infrastructure/service-sectors/media-entertainment.htmhttp://www.capitaline.com/http://www.moneycontrol.com/india/stockpricequote/mediaentertainment/zeeentertainmententerprises/ZEEhttp://vidz.zeecdn.com/zeetele/pdfs/zeear2013deluxedt24-06-13-2finalfileforprinting-4f75b99abbf4f2d.pdfhttp://www.zeetelevision.com/http://www.nseindia.com/content/corporate/eq_ZEEL_base.pdf


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Appendix A - Basic Financial FactsThe financial year FY12-13 has been considered for the yearly report data.

GICS Sector Media

Sub-Industry Broadcasting

NSE Stock Code (Symbol) ZEELStock Price as on 15 Jul 2013 (In Rs.) 239.9

52 Week Range (In Rs.) 255.2142.6

Trailing 12 month EPS (In Rs.) 7.5

Trailing 12 month P/E 27.9

Common Shares Outstanding 953,957,720

Market Capitalization (Million Rupees) 200760

Yield (%) 3.13

Dividend Rate/Share Rs. 2

Institutional Ownership (%) 50.4

Credit Rating AA

Rs. 10000 invested 5 years ago (1st

April 2008) Rs. 19, 085 (1st

April 2013)Table 1 - Basic Financial Facts

Figure 1Zee entertainment vs SUN TV network stocks comparison

Revenue (in Crores)

Q1 Q2 Q3 Q4 Year

FY 2012-13 842.96 953.5 938.82 964.29 3699.57

FY 2011-12 698.3 718.4 754.83 869.06 3040.56

FY 2010-11 676.99 711.6 824.88 797.97 3011.41

FY 2009-10 475.93 540.5 530.93 649.29 2196.62

FY 2008-09 541.96 571.7 545.58 513.74 2172.95

FY 2007-08 391.57 398.6 518.2 525.95 1835.37Table 2Revenue Data


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Earnings per Share (in rupees)

Q1 Q2 Q3 Q4 Year

FY 2012-13 1.65 1.96 2.03 1.88 7.54

FY 2011-12 0.74 1.6 1.48 1.55 6.08

FY 2010-11 NA NA 1.72 1.97 6.5

FY 2009-10 NA NA NA NA 14.2

FY 2008-09 NA NA NA NA 11.8FY 2007-08 NA NA NA NA 8.8

Table 3Earnings Data

Appendix B - Market Profile & Competition

Table 4Industry top 4 firms details

Figure 2Television Industry Size

Appendix C Trend Analysis

Companies FY2007 FY2008 FY2009 FY2010 FY2011 FY2012

Zee Entertainment

Enterprises Ltd-8.371 21.076 18.631 1.032 36.777 1.0536

Sun TV Network 110.61 28.316 19.476 39.782 38.588 -8.259

Table 5Sales Growth Rate (%)

Companies Last Price Market Cap. Sales Turnover Net Profit Total Assets

SRS 28.75 400.46 2,888.34 32.67 1,162.33

Zee Entertain 251.65 24,145.97 2,565.88 640.69 3,354.30

Dish TV India 47.85 5,107.05 2,166.80 -65.75 720.73Sun TV Network 419.9 16,547.61 1,817.62 683.34 2,645.24


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Figure 3Trend Chart for Sales Growth Rate

Companies FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012

Zee

Entertainment

Enterprises Ltd

0.129524 0.156694 0.208819 0.235318 0.288411 0.211679 0.193751

Sun TV Network 0.395825 0.362986 0.375536 0.354382 0.357851 0.382307 0.37512Table 6Net Profit after Tax/Sales

Figure 4Trend Chart for Net Profit after Tax/Sale


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Appendix D Ratio Analysis

Ratio Numerator DenominatorCompany

SymbolFY2012 FY2011 FY2010 FY2009 FY2008

Return onEquity(%) Profit after Tax

Average

Shareholder'sEquity

ZEEL 17.35% 20.28% 16.83% 14.64% 13.58%

SUNTV 27.57% 34.24% 27.56% 21.07% 22.55%

Return on Sales

or Profit

Margin(%)

Profit after Tax SalesZEEL 19.42% 20.78% 28.03% 23.98% 22.67%

SUNTV 36.97% 37.78% 34.48% 32.72% 35.98%

Asset Turnover SalesAverage TotalAssets

ZEEL 0.9264 0.8531 0.5488 0.5861 0.5752

SUNTV 0.7335 0.9148 0.7602 0.6132 0.6141

Return on

Assets(%)Profit after Tax

Average TotalAssets

ZEEL 17.99% 17.72% 15.38% 14.06% 13.04%

SUNTV 27.11% 34.56% 26.21% 20.06% 22.10%

Leverage

Measure 1

Average TotalAssets

AverageShareholder's

Equity

ZEEL 0.9640 1.1445 1.0942 1.0413 1.0419

SUNTV 1.0167 0.9906 1.0515 1.0505 1.0204Net Operating

Profit

Margin(%)

Net OperatingProfit

SalesZEEL 17.17% 18.58% 26.85% 24.74% 19.92%

SUNTV 35.03% 36.55% 33.17% 31.10% 33.56%

Net Operating

Asset TurnoverSales

Average NetOperatingAssets

ZEEL 2.3894 1.7596 1.0565 1.3251 1.3928

SUNTV 1.0154 1.5294 1.3243 0.9955 0.9153

Return on Net

Operating

Assets(%)

Net OperatingProfit

Average NetOperating

Assets

ZEEL 41.03% 32.70% 28.36% 32.79% 27.74%

SUNTV 35.57% 55.89% 43.92% 30.96% 30.72%

Debtor

TurnoverSales

AverageDebtors

ZEEL 3.5021 3.7164 3.1596 3.5278 3.2662

SUNTV 3.9379 5.3103 5.0945 4.1679 3.7445

Debt Collection

Period 360

Debtor

Turnover

ZEEL 102.7963 96.8667 113.9375 102.0464 110.2192

SUNTV 91.4203 67.7926 70.6649 86.3735 96.1401

Inventory

Turnover

Cost of GoodsSold

AverageInventories

ZEELNA NA NA NA NA

SUNTV

Inventory

Holding Period360

InventoryTurnover

ZEELNA NA NA NA NA

SUNTV

Operating

Cycle

Debt CollectPeriod + Inv

Holding Period

ZEEL 102.7963 96.8667 113.9375 102.0464 110.2192

SUNTV 91.4203 67.7926 70.6649 86.3735 96.1401

Payables

TurnoverPurchases

Average

AccountsPayable

ZEELNA NA NA NA NA

SUNTV

Days Payable 360 PayablesTurnover

ZEELNA NA NA NA NA

SUNTV

Current Ratio Current AssetsCurrent

Liabilities

ZEEL 2.7598 2.8865 3.1108 4.6571 3.4256

SUNTV 4.1256 2.6075 2.2456 4.0260 3.4376

Quick RatioCurrents Assets- Inventories

CurrentLiabilities

ZEEL 2.7598 2.8865 3.1108 4.6571 3.4256

SUNTV 4.1256 2.6075 2.2456 4.0260 3.4376

Debt to Equity

Ratio

Secured Loans+ UnsecuredLoans

Shareholder'sequity

ZEEL 0.0006 0.0005 0.0312 0.1693 0.1351

SUNTV 0.0000 0.0001 0.0001 0.0421 0.0480

Interest

Coverage

Profit beforeInterest and Tax

Interest ExpenseZEEL 175.5800 105.6705 22.1928 5.2859 12.6676

SUNTV 256.6838 722.9156 227.8968 58.2705 41.1226


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Figure 5Ratio Analysis of Zee Entertainment Ltd.

Figure 6Ratio Analysis of SUN TV network

The following Excel sheet contains the detailed calculations of the above ratios:

Ratio_Analysis_Group1.xlsx

Documents

Group1 SectionA ZeeEntertainmentEnterprises FinalReport