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Class 12 Accountancy Project CBSE 2020 (Ratios, Cash Flow Statement, Segment Analysis)

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KushShah65

This document provides an analysis of the financial statements of Deepak Nitrite Limited for the years ended March 31, 2020 and March 31, 2019. Some key highlights include: - Cash flow from operating activities increased significantly from Rs. 60.27 crores in 2018-19 to Rs. 764.68 crores in 2019-20, indicating strong core business performance. - Cash flow from investing activities was an outflow of Rs. 427.94 crores in 2019-20 due to purchases of investments, property, plant and equipment to support business growth. - Cash flow from financing activities was an outflow of Rs. 337.56 crores as the company paid down debts and dividends

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ACCOUNTANCYPROJECT ANALYSISOF FINANCIAL STATEMENTS BYKUSHSHAHCLASS12
Specific Project - 1: Name of the Company: Deepak Nitrite Ltd. Introduction to the company: Deepak Nitrite is a leading manufacturer of organic, inorganic, fine and specialty chemicals.The company’s product range includes a spectrum of chemicals which caters to a wide range of industries including Colourants, Agrochemicals, Pharmaceuticals, Rubber, Speciality & Fine chemicals.They also manufacture a wide range of intermediates for use in industrial explosives, paints, cosmetics, lubricants, polymers, optical brighteners, photographic chemicals, petroleum additives, specialty fibre and water treatment chemicals. Inorganic & Performance Chemicals, Fine & Speciality Chemicals, Organic Chemicals, etc..The company also in the business activities of Fluorescent Whitening Agent, Bulk Chemicals & Commodities, Fine and Speciality Chemicals.
List Of Board Of Directors: Names Designation Ajay C Mehta Director Arvind Bajpai Co. Secretary & Compl. Officer Arvind Bajpai Secretary K Mehta Chairman Emeritus Deepak C Mehta Chairman & Managing Director Dileep Choksi Independent Director Indira Parikh Independent Director Maulik D Mehta Whole Time Director Purvi Sheth Independent Director Richard H Rupp Independent Director S K Anand Independent Director Sanjay Asher Independent Director Sanjay Upadhyay Director - Finance & CFO Sudhir Mankad Independent Director Swaminathan Sivaram Independent Director Umesh Asaikar CEO Umesh Asaikar Executive Director & CEO
196 | 49th Annual Report 2019-20 Consolidated Balance sheet as at March 31, 2020 ` in Crores Notes As at March 31, 2020 As at March 31, 2019 i. AsseTs Non-Current Assets 3 ssets 4 7 9 Total Non-Current Assets 2,052.31 1,766.06 Current Assets 11 13 14 Total Current Assets 1,156.30 1,161.72 ToTAL AsseTs 3,208.61 2,927.78 ii. equiTy AND LiABiLiTies equity Total equity 1,571.91 1,071.59 Non-Current Liabilities 17 19 Total Non-Current Liabilities 887.75 972.56 Current Liabilities Total Current Liabilities 748.95 883.63 Total Liabilities 1,636.70 1,856.19 ToTAL equiTy AND LiABiLiTies 3,208.61 2,927.78 1 for DeLoiTTe hAsKiNs & seLLs LLp DeepAK C. MehTA uMesh AsAiKAR suDhiR MANKAD KARTiKeyA RAvAL sANJAy upADhyAy ARviND BAJpAi sANDesh ANAND
Deepak Nitrite Limited | 197 for the year ended March 31, 2020 ` in Crores Notes 2019-20 2018-19 Total income (i+ii) 4,264.91 2,715.04 expenses 31 33 34 Total expenses (iv) 3,458.51 2,447.06 806.40 267.98 Tax expense 611.03 173.66 other Comprehensive income Total other Comprehensive income for the year (viii) (3.80) (2.84) Total Comprehensive income for the year (vii+viii) 607.23 170.82 611.03 173.66 - - (3.80) (2.84) - - 607.23 170.82 - - earnings per equity share ` ` for DeLoiTTe hAsKiNs & seLLs LLp DeepAK C. MehTA uMesh AsAiKAR suDhiR MANKAD KARTiKeyA RAvAL sANJAy upADhyAy ARviND BAJpAi sANDesh ANAND
Accounting Ratios: 1) Current Ratio: Current Assets/Current Liabilities 2018-19=> 1161.72/883.63 = 1.314 2019-20=> 1156.30/748.95 = 1.543 2) Quick Ratio: Quick Assets/Current Liabilities 2018-19=> (1161.72-410.73)/883.63 = 750.99/883.63 = 0.849 2019-20=> (1156.30-394.50)/748.95 = 761.80/748.95 = 1.0171 3) Debt to Equity Ratio: Non Current Liabilities/ Shareholders’ Funds 2018-19=> 972.56/1071.59 = 0.907 2019-20=> 887.75/1571.91 = 0.564 4) Total Assets to Debt Ratio: Total Assets/ Non Current Liabilities 2018-19=> 2927.78/972.56 = 3.056 2019-20=> 3208.61/887.75 = 3.614 5) Proprietary Ratio: (Shareholders’ Funds * 100)/ Total Assets 2018-19=> (1071.59*100)/2927.78 = 107159/2927.78 = 36.6% 2019-20=> (1571.91*100)/3208.61 = 157191/3208.61 = 48.99% 6) Inventory Turnover Ratio: Cost of Revenue from Operations/ Average Inventories Average Inventories(2018-19)= (410.73+325.41)/2= 368.07 2018-19=> (1748.27-153.59+207.33)/368.07 = 1,802.01/368.07 = 4.895 Average Inventories(2019-20)= (394.50+410.73)/2= 402.615
2019-20=> (2347.91+25.59+285.19)/402.615 = 2,658.69/402.615 = 6.603 7) Working Capital Turnover Ratio: Revenue from Operations/Working Capital 2018-19=> 2699.92/(1161.72-883.63) = 2699.92/278.09 = 9.708 2019-20=> 4229.71/(1156.30-748.95) = 4229.71/407.35 = 10.383 Graphical Presentation: 1)Current Ratio: Previous Year= 1.314:1 Active Ratio= 1.543:1 Standard Ratio= 2:1 2) Quick Ratio: Previous Year= 0.849:1 Active Ratio= 1.0171:1 Standard Ratio= 1:1 3) Debt to Equity Ratio: Previous Year= 0.907 Active Ratio= 0.564 Standard Ratio= 2 0 0.5 1 1.5 2 Prev. Yr. Active Standard 0.7 0.8 0.9 1 1.1 Prev. Yr. Active Standard 0 0.5 1 1.5 2 Prev. Yr. Active Standard
4) Total Assets to Debt Ratio: Previous Year= 3.056 Active Ratio= 3.614 Standard Ratio= 1 5) Proprietary Ratio: Previous Year= 36.6% Active Ratio= 48.99% Standard Ratio= 75% 6) Inventory Turnover Ratio: Previous Year= 4.895 Active Ratio= 6.603 Standard Ratio= 5 0 20 40 60 80 Prev. Yr. Active Standard 0 1.75 3.5 5.25 7 Prev. Yr. Active Standard 0 1 2 3 4 Prev. Yr. Active Standard
7) Working Capital Turnover Ratio: Previous Year= 9.708 Active Ratio= 10.383 Standard Ratio= 8 Comments on Ratios: Ratio Name Current Year (2019-20) Previous Year(2018- 19) Comments Current Ratio 1.543 1.314 The company is able to meet its short term obligations. The company is “Growing into” its capacity Quick Ratio 1.017 0.849 The company has increased its capability of repaying the short term debts but still needs to achieve the standard ratio Debt to Equity (D/E) 0.564 0.907 The company has the tendency to borrow very less money through long term debt. It raises more funds through issue of shares. Total Assets to Debt Ratio 3.614 3.056 It indicates that a higher percentage of assets are financed through raising liabilities Proprietary Ratio 48.9% 36.6% It shows that the company has paid a substantial part of their debts and almost all the finance is done through the shareholders’ funds. Inventory Turnover Ratio 6.603 4.895 it means that it is holding its inventory longer than previously measured time periods.  Working Capital Turnover Ratio 10.383 9.708 The company is investing in too many accounts receivable and inventory to support its sales, which could lead to an excessive amount of bad debts or obsolete inventory. 0 2.75 5.5 8.25 11 Prev. Yr. Active Standard
198 | 49th Annual Report 2019-20 Consolidated Cash flow statement for the year ended March 31, 2020 ` in Crores 2019-20 2018-19 (A) CAsh fLoW fRoM opeRATiNg ACTiviTies 806.40 267.98 ` ` 1,074.31 428.66 Cash generated from operations 963.16 116.37 764.68 60.27 (B) CAsh fLoW fRoM iNvesTiNg ACTiviTies ` ` (427.94) (162.55)
Corporate Overview Statutory Reports Financial Statements Deepak Nitrite Limited | 199 ` in Crores 2019-20 2018-19 (C) CAsh fLoW fRoM fiNANCiNg ACTiviTies (337.56) 95.81 (0.82) (6.46) 2.96 9.43 Cash and Cash equivalents at the end of the financial year 2.14 2.96 Reconciliation of Cash and Cash equivalents Total Cash and Cash equivalents as per note 12 A. 2.14 2.96 for DeLoiTTe hAsKiNs & seLLs LLp DeepAK C. MehTA uMesh AsAiKAR suDhiR MANKAD KARTiKeyA RAvAL sANJAy upADhyAy ARviND BAJpAi sANDesh ANAND
(2) Objective: (a) To understand the process of cash planning. (b) To know whether the company has sufficient liquidity or not. (c) To find whether the dividends are paid out of profits and if so, then out of current profits or past profits. (d) To know whether the fixed assets are purchased from long term sources or short term sources. (e) To gain the knowledge about whether the cash received from sale of fixed assets is invested into business or is put to the production cycle. (3) Graphical Presentation: -600 -400 -200 0 200 400 600 800 2019-20 2018-19 Operating Investing Financing (in Rs. Crores) Cash Flow from various activities 22.05% 27.95% 50.01% Operating Activities Investing Activities Financing Activities
—> Analysis of Cash Flow Statements of Deepak Nitrite Limited for the year ended 2020 & 2019 are as follows: Cash Flow from Operating Activities: —> Cash Flow from Operating Activities has a positive inflow of 764.68 Rs. Crores in the year ended 31st March 2020. The company has almost increased the cash flow 12 times from Operating Activities as compared to the previous year’s 60.27 crores. —> Positive cash flow from operating activities indicates that the core business activities of the company are thriving. It provides as additional measure/ indicator of profitability potential of a company, in addition to the traditional ones like net income and EBITDA. It depicts the cash generating abilities of a company’s core business activities. Cash availability allows a business the option to expand, build and launch new products, buy back shares to affirm their strong financial position, pay out dividends to reward and bolster shareholder confidence, or reduce debt to save on interest payments. Investors attempt to look for companies whose share prices are lower and cash flow from operations is showing an upward trend over recent quarters. —> Operating cash flow indicates whether a company can generate sufficient positive cash flow to maintain and grow its operations and plan future of operations, otherwise, it may require external financing for capital expansion. Particulars 2020 2019 Cash Flow Used/Flow from Operating Activities 764.68 60.27 Cash Used/Flow from Investing Activities (427.94) (162.55) Cash Used/Flow from Financing Activities (337.56) 95.81 Net Increase/(Decrease) in Cash & Cash Equivalents -0.82 -6.47 Opening Cash & Cash Equivalents 2.96 9.43 Closing Cash & Cash Equivalents 2.14 2.96
Cash Flow from Investing Activities: —> Cash flow from Investing Activities has an outflow of 427.94 Rs. Crores for the year ended 31st March, 2020 and outflow of 162.55 Rs. Crores for the year ended 31st March, 2019. It shows that investing activity has gone down by nearly 335 Rs. Crores. —> However, negative cash flow from Investing activities might be due to significant amounts of cash being invested in long-term plans. It shows cash generated or spent on investing activities which includes long-term and sometimes short-term assets. —> Negative cash flow does not mean company is making losses or misusing its funds instead it invests in various assets with a vision of higher returns in the future. —> In this case, Deepak Nitrite Limited has purchased a substantial amount of Investments- short term as well as long term- along with lending money in order to gain returns. In addition, to support its rapid growing sales and demand for their products in the market, also invested in buying new machinery, plants and equipments being the main reason behind huge outflow of cash in Investing Activities. Cash Flow from Financing Activities: —> It has an outflow of 337.56 Rs. Crores for the year ended 31st March 2020 and inflow of 95.81 Rs. Crores for the year ended 31st March, 2019. The outflow has almost increased by 450 crores. —> The company has not raised any huge amount of funds. On contrary it has started to pay off debts and dividends to lessen the interest expenses as well as to express its investors how much their kind support means to the company. It means that the company has enough cash flow and doesn’t want any unnecessary debts or outside liabilities.
Specific 3 (1)Segment wise Revenue analysis yearly (a) Basic Chemicals: 2019-20=>(940.32/4293.56)*100 = 21.9% Degree= (940.32/4293.56)*360 = 78.85 (b) Fine and Speciality Chemicals: 2019-20=> (585.26/4293.58)*100 = 13.63% Degree= (585.26/4293.58)*360 = 49.1 (c) Performance Products: 2019-20=> (767.12/4293.56)*100 = 17.86% Degree= (767.12/4293.56)*360 = 64.30 (d) Phenolics: 2019-20=> (2000.86/4293.56)*100 = 46.60% Degree= (2000.86/4293.56)*360 = 167.7 (e) Un-allocable: 0

 Segment Basic Chemicals Fine/Speciality Chemicals Performance Products Phenolics Total Revenue (Rs.) 940.32 585.26 767.12 2000.86 4293.56 % of Total Revenue 21.90% 13.63% 17.87% 46.60% 100% Degrees for Pie Diagram 78.85 49.10 64.30 167.7 359.95 !"#"$% &'#('% &)#")% *&#+$% Basic Chemicals Fine & Speciality Chemicals Performance Products Phenolics
(2) Common size Statement of Segment wise profit. Formula= (Profit of the segment/ Total Profit) * 100 (a) Basic Chemicals: 2019-20=> (209.35/990.52)*100 = 21.1 Degree= (209.35/990.52)*360 = 76.1 (b) Fine & Speciality Chemicals: 2019-2020=> (175.24/990.52)*100 = 17.7% Degree= (175.24/990.52)*360 = 63.7 (c) Performance Products: 2019-20=> (418.62/990.52)*100 = 42.2% Degree= (418.62/990.52)*360 = 152.14 (d) Phenolics: 2019-20=> (187.31/990.52)*100 = 18.9% Degree= (187.31/990.52)*360 = 68.07
Segment Basic Chemicals Fine/Speciality Chemicals Performance Products Phenolics Total Profit (Rs.) 209.35 175.24 418.62 187.31 990.52 % of Total Profit 21.14% 17.69% 42.26% 18.91% 100% Degrees for Pie Diagram 76.1 63.7 152.14 68.07 360.01 18.91% 42.26% 17.69% 21.14% Basic Chemicals Fine & Speciality Chemicals Performance Products Phenolics
(3) Common Size statement of segment wise Capital Employed Capital Employed = Segment Assets-Segment Liabilities For Year ended 31st March 2020 (a) Basic Chemicals: 453.36-115.24= 338.12 (b) Fine & Speciality Chemicals: 381.74-70.65= 311.09 (c) Performance Products: 476.50-56.55= 419.95 (d) Phenolics: 1723.01-1082.68= 640.33 (e) Un-Allocable: 174.00-311.58=(137.58) Bar Graph: -175 0 175 350 525 700 Basic Chemicals Fine & Speciality Chemicals Peformance Products Phenolics Un-Allocable Region 1
(4) Calculation of Return of Investment Formula= (Profit Before Int, Tax (PBIT)/Capital Employed)*100 Graphical Representation of ROI Segment Basic Chemicals Fine & Speciality Chemicals Performance Products Phenolics Total Profit Before Interest and Tax (Segment Result) 209.35 175.24 418.62 187.31 990.52 Capital Employed 338.12 311.09 419.95 640.33 1709.49 ROI(%) 61.916 56.331 99.683 29.252 247.182 0 25 50 75 100 Basic Chemicals Fine & Speciality Chemicals Performance Products Phenolics ROI
(5) Combined Comparative Statement Conclusions: 1) Performance Products has the highest ROI of 99.7%. 2) With the revenue share of 17.87% of total revenue, performance products is able to generate a PBIT of 99.67% 3) Therefore, Performance Products and Basic Chemicals is showing a good performance. 4) Phenolics has a very high revenue generation but comparatively low ROI. This is because it is a new segment that Deepak Nitrite Ltd. has commenced in late 2018. Segment Basic Chemicals Fine & Speciality Chemicals Performanc e Products Phenolics Un- Allocable Total Revenue (%) of Total 21.90% 13.63% 17.87% 46.60% — 100% PBIT (%) of Total 21.14% 17.69% 42.26% 18.91% — 100% Capital Employed (%) of Total 21.510 19.790 26.715 40.935 (8.752) 100% ROI (%) (same as before) 61.916 56.331 99.683 29.252 — 247.182

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Class 12 Accountancy Project CBSE 2020 (Ratios, Cash Flow Statement, Segment Analysis)

  • 2. Specific Project - 1: Name of the Company: Deepak Nitrite Ltd. Introduction to the company: Deepak Nitrite is a leading manufacturer of organic, inorganic, fine and specialty chemicals.The company’s product range includes a spectrum of chemicals which caters to a wide range of industries including Colourants, Agrochemicals, Pharmaceuticals, Rubber, Speciality & Fine chemicals.They also manufacture a wide range of intermediates for use in industrial explosives, paints, cosmetics, lubricants, polymers, optical brighteners, photographic chemicals, petroleum additives, specialty fibre and water treatment chemicals. Inorganic & Performance Chemicals, Fine & Speciality Chemicals, Organic Chemicals, etc..The company also in the business activities of Fluorescent Whitening Agent, Bulk Chemicals & Commodities, Fine and Speciality Chemicals.
  • 3. List Of Board Of Directors: Names Designation Ajay C Mehta Director Arvind Bajpai Co. Secretary & Compl. Officer Arvind Bajpai Secretary K Mehta Chairman Emeritus Deepak C Mehta Chairman & Managing Director Dileep Choksi Independent Director Indira Parikh Independent Director Maulik D Mehta Whole Time Director Purvi Sheth Independent Director Richard H Rupp Independent Director S K Anand Independent Director Sanjay Asher Independent Director Sanjay Upadhyay Director - Finance & CFO Sudhir Mankad Independent Director Swaminathan Sivaram Independent Director Umesh Asaikar CEO Umesh Asaikar Executive Director & CEO
  • 4. 196 | 49th Annual Report 2019-20 Consolidated Balance sheet as at March 31, 2020 ` in Crores Notes As at March 31, 2020 As at March 31, 2019 i. AsseTs Non-Current Assets 3 ssets 4 7 9 Total Non-Current Assets 2,052.31 1,766.06 Current Assets 11 13 14 Total Current Assets 1,156.30 1,161.72 ToTAL AsseTs 3,208.61 2,927.78 ii. equiTy AND LiABiLiTies equity Total equity 1,571.91 1,071.59 Non-Current Liabilities 17 19 Total Non-Current Liabilities 887.75 972.56 Current Liabilities Total Current Liabilities 748.95 883.63 Total Liabilities 1,636.70 1,856.19 ToTAL equiTy AND LiABiLiTies 3,208.61 2,927.78 1 for DeLoiTTe hAsKiNs & seLLs LLp DeepAK C. MehTA uMesh AsAiKAR suDhiR MANKAD KARTiKeyA RAvAL sANJAy upADhyAy ARviND BAJpAi sANDesh ANAND
  • 5. Deepak Nitrite Limited | 197 for the year ended March 31, 2020 ` in Crores Notes 2019-20 2018-19 Total income (i+ii) 4,264.91 2,715.04 expenses 31 33 34 Total expenses (iv) 3,458.51 2,447.06 806.40 267.98 Tax expense 611.03 173.66 other Comprehensive income Total other Comprehensive income for the year (viii) (3.80) (2.84) Total Comprehensive income for the year (vii+viii) 607.23 170.82 611.03 173.66 - - (3.80) (2.84) - - 607.23 170.82 - - earnings per equity share ` ` for DeLoiTTe hAsKiNs & seLLs LLp DeepAK C. MehTA uMesh AsAiKAR suDhiR MANKAD KARTiKeyA RAvAL sANJAy upADhyAy ARviND BAJpAi sANDesh ANAND
  • 6. Accounting Ratios: 1) Current Ratio: Current Assets/Current Liabilities 2018-19=> 1161.72/883.63 = 1.314 2019-20=> 1156.30/748.95 = 1.543 2) Quick Ratio: Quick Assets/Current Liabilities 2018-19=> (1161.72-410.73)/883.63 = 750.99/883.63 = 0.849 2019-20=> (1156.30-394.50)/748.95 = 761.80/748.95 = 1.0171 3) Debt to Equity Ratio: Non Current Liabilities/ Shareholders’ Funds 2018-19=> 972.56/1071.59 = 0.907 2019-20=> 887.75/1571.91 = 0.564 4) Total Assets to Debt Ratio: Total Assets/ Non Current Liabilities 2018-19=> 2927.78/972.56 = 3.056 2019-20=> 3208.61/887.75 = 3.614 5) Proprietary Ratio: (Shareholders’ Funds * 100)/ Total Assets 2018-19=> (1071.59*100)/2927.78 = 107159/2927.78 = 36.6% 2019-20=> (1571.91*100)/3208.61 = 157191/3208.61 = 48.99% 6) Inventory Turnover Ratio: Cost of Revenue from Operations/ Average Inventories Average Inventories(2018-19)= (410.73+325.41)/2= 368.07 2018-19=> (1748.27-153.59+207.33)/368.07 = 1,802.01/368.07 = 4.895 Average Inventories(2019-20)= (394.50+410.73)/2= 402.615
  • 7. 2019-20=> (2347.91+25.59+285.19)/402.615 = 2,658.69/402.615 = 6.603 7) Working Capital Turnover Ratio: Revenue from Operations/Working Capital 2018-19=> 2699.92/(1161.72-883.63) = 2699.92/278.09 = 9.708 2019-20=> 4229.71/(1156.30-748.95) = 4229.71/407.35 = 10.383 Graphical Presentation: 1)Current Ratio: Previous Year= 1.314:1 Active Ratio= 1.543:1 Standard Ratio= 2:1 2) Quick Ratio: Previous Year= 0.849:1 Active Ratio= 1.0171:1 Standard Ratio= 1:1 3) Debt to Equity Ratio: Previous Year= 0.907 Active Ratio= 0.564 Standard Ratio= 2 0 0.5 1 1.5 2 Prev. Yr. Active Standard 0.7 0.8 0.9 1 1.1 Prev. Yr. Active Standard 0 0.5 1 1.5 2 Prev. Yr. Active Standard
  • 8. 4) Total Assets to Debt Ratio: Previous Year= 3.056 Active Ratio= 3.614 Standard Ratio= 1 5) Proprietary Ratio: Previous Year= 36.6% Active Ratio= 48.99% Standard Ratio= 75% 6) Inventory Turnover Ratio: Previous Year= 4.895 Active Ratio= 6.603 Standard Ratio= 5 0 20 40 60 80 Prev. Yr. Active Standard 0 1.75 3.5 5.25 7 Prev. Yr. Active Standard 0 1 2 3 4 Prev. Yr. Active Standard
  • 9. 7) Working Capital Turnover Ratio: Previous Year= 9.708 Active Ratio= 10.383 Standard Ratio= 8 Comments on Ratios: Ratio Name Current Year (2019-20) Previous Year(2018- 19) Comments Current Ratio 1.543 1.314 The company is able to meet its short term obligations. The company is “Growing into” its capacity Quick Ratio 1.017 0.849 The company has increased its capability of repaying the short term debts but still needs to achieve the standard ratio Debt to Equity (D/E) 0.564 0.907 The company has the tendency to borrow very less money through long term debt. It raises more funds through issue of shares. Total Assets to Debt Ratio 3.614 3.056 It indicates that a higher percentage of assets are financed through raising liabilities Proprietary Ratio 48.9% 36.6% It shows that the company has paid a substantial part of their debts and almost all the finance is done through the shareholders’ funds. Inventory Turnover Ratio 6.603 4.895 it means that it is holding its inventory longer than previously measured time periods.  Working Capital Turnover Ratio 10.383 9.708 The company is investing in too many accounts receivable and inventory to support its sales, which could lead to an excessive amount of bad debts or obsolete inventory. 0 2.75 5.5 8.25 11 Prev. Yr. Active Standard
  • 10. 198 | 49th Annual Report 2019-20 Consolidated Cash flow statement for the year ended March 31, 2020 ` in Crores 2019-20 2018-19 (A) CAsh fLoW fRoM opeRATiNg ACTiviTies 806.40 267.98 ` ` 1,074.31 428.66 Cash generated from operations 963.16 116.37 764.68 60.27 (B) CAsh fLoW fRoM iNvesTiNg ACTiviTies ` ` (427.94) (162.55)
  • 11. Corporate Overview Statutory Reports Financial Statements Deepak Nitrite Limited | 199 ` in Crores 2019-20 2018-19 (C) CAsh fLoW fRoM fiNANCiNg ACTiviTies (337.56) 95.81 (0.82) (6.46) 2.96 9.43 Cash and Cash equivalents at the end of the financial year 2.14 2.96 Reconciliation of Cash and Cash equivalents Total Cash and Cash equivalents as per note 12 A. 2.14 2.96 for DeLoiTTe hAsKiNs & seLLs LLp DeepAK C. MehTA uMesh AsAiKAR suDhiR MANKAD KARTiKeyA RAvAL sANJAy upADhyAy ARviND BAJpAi sANDesh ANAND
  • 12. (2) Objective: (a) To understand the process of cash planning. (b) To know whether the company has sufficient liquidity or not. (c) To find whether the dividends are paid out of profits and if so, then out of current profits or past profits. (d) To know whether the fixed assets are purchased from long term sources or short term sources. (e) To gain the knowledge about whether the cash received from sale of fixed assets is invested into business or is put to the production cycle. (3) Graphical Presentation: -600 -400 -200 0 200 400 600 800 2019-20 2018-19 Operating Investing Financing (in Rs. Crores) Cash Flow from various activities 22.05% 27.95% 50.01% Operating Activities Investing Activities Financing Activities
  • 13. —> Analysis of Cash Flow Statements of Deepak Nitrite Limited for the year ended 2020 & 2019 are as follows: Cash Flow from Operating Activities: —> Cash Flow from Operating Activities has a positive inflow of 764.68 Rs. Crores in the year ended 31st March 2020. The company has almost increased the cash flow 12 times from Operating Activities as compared to the previous year’s 60.27 crores. —> Positive cash flow from operating activities indicates that the core business activities of the company are thriving. It provides as additional measure/ indicator of profitability potential of a company, in addition to the traditional ones like net income and EBITDA. It depicts the cash generating abilities of a company’s core business activities. Cash availability allows a business the option to expand, build and launch new products, buy back shares to affirm their strong financial position, pay out dividends to reward and bolster shareholder confidence, or reduce debt to save on interest payments. Investors attempt to look for companies whose share prices are lower and cash flow from operations is showing an upward trend over recent quarters. —> Operating cash flow indicates whether a company can generate sufficient positive cash flow to maintain and grow its operations and plan future of operations, otherwise, it may require external financing for capital expansion. Particulars 2020 2019 Cash Flow Used/Flow from Operating Activities 764.68 60.27 Cash Used/Flow from Investing Activities (427.94) (162.55) Cash Used/Flow from Financing Activities (337.56) 95.81 Net Increase/(Decrease) in Cash & Cash Equivalents -0.82 -6.47 Opening Cash & Cash Equivalents 2.96 9.43 Closing Cash & Cash Equivalents 2.14 2.96
  • 14. Cash Flow from Investing Activities: —> Cash flow from Investing Activities has an outflow of 427.94 Rs. Crores for the year ended 31st March, 2020 and outflow of 162.55 Rs. Crores for the year ended 31st March, 2019. It shows that investing activity has gone down by nearly 335 Rs. Crores. —> However, negative cash flow from Investing activities might be due to significant amounts of cash being invested in long-term plans. It shows cash generated or spent on investing activities which includes long-term and sometimes short-term assets. —> Negative cash flow does not mean company is making losses or misusing its funds instead it invests in various assets with a vision of higher returns in the future. —> In this case, Deepak Nitrite Limited has purchased a substantial amount of Investments- short term as well as long term- along with lending money in order to gain returns. In addition, to support its rapid growing sales and demand for their products in the market, also invested in buying new machinery, plants and equipments being the main reason behind huge outflow of cash in Investing Activities. Cash Flow from Financing Activities: —> It has an outflow of 337.56 Rs. Crores for the year ended 31st March 2020 and inflow of 95.81 Rs. Crores for the year ended 31st March, 2019. The outflow has almost increased by 450 crores. —> The company has not raised any huge amount of funds. On contrary it has started to pay off debts and dividends to lessen the interest expenses as well as to express its investors how much their kind support means to the company. It means that the company has enough cash flow and doesn’t want any unnecessary debts or outside liabilities.
  • 15. Specific 3 (1)Segment wise Revenue analysis yearly (a) Basic Chemicals: 2019-20=>(940.32/4293.56)*100 = 21.9% Degree= (940.32/4293.56)*360 = 78.85 (b) Fine and Speciality Chemicals: 2019-20=> (585.26/4293.58)*100 = 13.63% Degree= (585.26/4293.58)*360 = 49.1 (c) Performance Products: 2019-20=> (767.12/4293.56)*100 = 17.86% Degree= (767.12/4293.56)*360 = 64.30 (d) Phenolics: 2019-20=> (2000.86/4293.56)*100 = 46.60% Degree= (2000.86/4293.56)*360 = 167.7 (e) Un-allocable: 0
  • 16. 
 Segment Basic Chemicals Fine/Speciality Chemicals Performance Products Phenolics Total Revenue (Rs.) 940.32 585.26 767.12 2000.86 4293.56 % of Total Revenue 21.90% 13.63% 17.87% 46.60% 100% Degrees for Pie Diagram 78.85 49.10 64.30 167.7 359.95 !"#"$% &'#('% &)#")% *&#+$% Basic Chemicals Fine & Speciality Chemicals Performance Products Phenolics
  • 17. (2) Common size Statement of Segment wise profit. Formula= (Profit of the segment/ Total Profit) * 100 (a) Basic Chemicals: 2019-20=> (209.35/990.52)*100 = 21.1 Degree= (209.35/990.52)*360 = 76.1 (b) Fine & Speciality Chemicals: 2019-2020=> (175.24/990.52)*100 = 17.7% Degree= (175.24/990.52)*360 = 63.7 (c) Performance Products: 2019-20=> (418.62/990.52)*100 = 42.2% Degree= (418.62/990.52)*360 = 152.14 (d) Phenolics: 2019-20=> (187.31/990.52)*100 = 18.9% Degree= (187.31/990.52)*360 = 68.07
  • 18. Segment Basic Chemicals Fine/Speciality Chemicals Performance Products Phenolics Total Profit (Rs.) 209.35 175.24 418.62 187.31 990.52 % of Total Profit 21.14% 17.69% 42.26% 18.91% 100% Degrees for Pie Diagram 76.1 63.7 152.14 68.07 360.01 18.91% 42.26% 17.69% 21.14% Basic Chemicals Fine & Speciality Chemicals Performance Products Phenolics
  • 19. (3) Common Size statement of segment wise Capital Employed Capital Employed = Segment Assets-Segment Liabilities For Year ended 31st March 2020 (a) Basic Chemicals: 453.36-115.24= 338.12 (b) Fine & Speciality Chemicals: 381.74-70.65= 311.09 (c) Performance Products: 476.50-56.55= 419.95 (d) Phenolics: 1723.01-1082.68= 640.33 (e) Un-Allocable: 174.00-311.58=(137.58) Bar Graph: -175 0 175 350 525 700 Basic Chemicals Fine & Speciality Chemicals Peformance Products Phenolics Un-Allocable Region 1
  • 20. (4) Calculation of Return of Investment Formula= (Profit Before Int, Tax (PBIT)/Capital Employed)*100 Graphical Representation of ROI Segment Basic Chemicals Fine & Speciality Chemicals Performance Products Phenolics Total Profit Before Interest and Tax (Segment Result) 209.35 175.24 418.62 187.31 990.52 Capital Employed 338.12 311.09 419.95 640.33 1709.49 ROI(%) 61.916 56.331 99.683 29.252 247.182 0 25 50 75 100 Basic Chemicals Fine & Speciality Chemicals Performance Products Phenolics ROI
  • 21. (5) Combined Comparative Statement Conclusions: 1) Performance Products has the highest ROI of 99.7%. 2) With the revenue share of 17.87% of total revenue, performance products is able to generate a PBIT of 99.67% 3) Therefore, Performance Products and Basic Chemicals is showing a good performance. 4) Phenolics has a very high revenue generation but comparatively low ROI. This is because it is a new segment that Deepak Nitrite Ltd. has commenced in late 2018. Segment Basic Chemicals Fine & Speciality Chemicals Performanc e Products Phenolics Un- Allocable Total Revenue (%) of Total 21.90% 13.63% 17.87% 46.60% — 100% PBIT (%) of Total 21.14% 17.69% 42.26% 18.91% — 100% Capital Employed (%) of Total 21.510 19.790 26.715 40.935 (8.752) 100% ROI (%) (same as before) 61.916 56.331 99.683 29.252 — 247.182