A Study on the Financial Reports of Bata India Ltd. and BHEL

Kallol Kumar Sarkar

2011096

IntroductionEstablished in 1932, as Bata

Shoe Company Ltd.

It went public in 1973 ---Bata India Ltd.

One of the largest footwear retailer in India

Batanagar

Company activities & policy

Retail is the core business146 new stores are planned1,50,000 customers are served through 1250 storesEach store is more than 3000 sq ft

Wholesale and Distributers

Exports increased to 169.3 million from 117 million in 2011

Company activities & policy

Capital Expenditure ( CAPEX)

Rs. 1245 million spend in 2011, as against 580 million in 2010

Significant part was for opening new stores and renewing the old ones

It was also used in installation of machineries in factories

Company activities & policy

EPS has increased to Rs. 22.11 in 2011, as against Rs. 14.84 in 2010

Since April, 2010 it finances itself from the internal sources only…..no Bank Borrowings

Paid around Rs. 140 million to Global Footwear Services Ltd., Singapore

Received Rs. 1000 million

Future transfer of shares

JV company, River Bank Developers Pvt. Ltd. (RDPL)

Bata Rehabilitation Housing Complex, Batanagar

Company activities & policyContingent Liabilities stand at Rs. 648 million

Taxes due ( Sales tax, Excise, Customs etc…) is Rs. 4,94,531 stretching from 1987-2007

Share Prices

Year High Low

2008 296.00 78.00

2009 208.90 76.50

2010 391.90 171.00

2011 740.70 295.00

Bata India RatiosParticulars 2011 2010 2009 2008

LIQUIDITY        

Current ratio 1.6 1.63 1.38 1.28

Acid test ratio 0.78 0.64 0.53 0.46

OPERATING        

Debtor's turnover 45.43 42.93 40.62 39.03

Inventory turnover 4.28 4.03 3.47 2.95

Assets Turnover 3.01 2.93 2.83 2.67

LEVERAGE        

Indebtness ratio 0.04 0.08 0.18 0.24

COVERAGE        

Interest coverage 199.4 31.08 13.81 9.06

Debt service coverage 10.13 7.4 6.29 5.71

PROFITABILITY        

Return on assets 56.57 46.15 38.25 32.72

NP margin 7.5 6.09 6.09 5.43

OP margin 14.45 13.43 10.35 8.32

IntroductionEstablished in 1964

Power plant and Engineering equipment manufacturer

Power, Transmission, Energy, Oil & Gas, Defence etc…

15 manufacturing units, 2 repair units, 15 regional offices

Company activities & policy

Company activities & policy

Capital Expenditure ( CAPEX)

Rs. 1245 million spend in 2011, as against 580 million in 2010

Significant part was for opening new stores and renewing the old ones

It was also used in installation of machineries in factories

Company activities & policy

EPS has increased to Rs. 22.11 in 2011, as against Rs. 14.84 in 2010

Since April, 2010 it finances itself from the internal sources only…..no Bank Borrowings

Paid around Rs. 140 million to Global Footwear Services Ltd., Singapore

Received Rs. 1000 million

Future transfer of shares

JV company, River Bank Developers Pvt. Ltd. (RDPL)

Bata Rehabilitation Housing Complex, Batanagar

Accounting PoliciesFixed Assets

Carried at cost of acquisition less depreciation

Cost is the value of internal transfers or market price whichever is lower

Effects of extraordinary items like devaluation or revaluation is added or subtracted

Land acquired from Sate govt. free of cost is valued at Re. 1

Intangible assetsThey are recorded at cost if :

The future economic benefits that are attributable to the asset will flow to the company

The company will have control over the assets

The cost of these assets can be measured reliably and is more than Rs. 10,000. Intangible assets are amortised over their estimated useful lives not exceeding three years in case of software and not exceeding ten years in case of others on a straight line prorate monthly basis.

Inventory Valuation

Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

Finished goods in Plant and work in progress involving Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets are valued at actual/estimated factory cost or at 97.5% of the realisable value, whichever is lower.

In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

Revenue Recognition

For construction contracts entered into on or after 01.04.2003 : Revenue is recognized on percentage completion method based on the percentage of actual cost incurred upto the reporting date to the total estimated cost of the contract.

Income from erection and project management services is recognized on work done based on: Percentage of completion; or The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognized as income when the contract is completed.

BHEL ratios

Particulars 2011 2010 2009 2008

LIQUIDITY        

Current ratio 1.32 1.37 1.36 1.38

Acid test ratio 1.03 1.04 1.02 1.09

OPERATING        

Debtor's turnover 1.75 1.81 1.9 1.8

Inventory turnover 4.11 3.77 3.7 3.88

Assets Turnover 5.31 5.15 5.2 4.48

LEVERAGE        

Indebtness ratio 0.01 0.01 0.01 0.01

COVERAGE        

Interest coverage 164.27 198.19 157.51 127.55

Debt service coverage 172.96 211.86 168.4 135.94

PROFITABILITY        

Return on assets 411.71 325.16 264.32 220.1

NP margin 13.99 12.55 11.36 13.87

OP margin 20.3 18.04 15.71 19.17

Bibliography

www.bhel.com

www.Bata.in

www.nseindia.com

Thank You all