Techmahindra company analyisis

TECH MAHINDRAIT Services and Telecom solutions

INTRODUCTION OF RATIO ANALYSIS

There are various methods or techniques used in analyzing financial statements such

as comparative statements, trend analysis, common – size statements, schedule of changes in

working capital, funds flow and cash flow analysis, cost-volume-profit analysis and ratio

analysis. The ratio analysis is one of the most powerful tools of financial analysis. It is the

process of establishing and interpreting various ratios (quantitative relationship between

figures and group figures). It is with the help of ratios that the financial statements can be

analyzed more clearly and decision made from such analysis.

MEANING OF RATIO:

A ratio is a simple arithmetic expression of relationship of one to other. It may be

defined as the indicated quotient of two mathematical expressions.

According to Accountant’s Handbook by Wixon, Kell and Bedford, a ratio “is an

expression of the quantitative relationship between two numbers”.

According to Myers, Ratio analysis is a “study of relationship among the various

financial factors in a business”.

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INTRODUCTION

Tech Mahindra is a global systems integrator and business transformation consulting

firm focused on the communications industry.

With the convergence of media and telecom, the changing landscape of the telecom

industry is becoming extremely competitive. As companies rapidly strive to gain a

competitive advantage, Tech Mahindra helps companies innovate and transform by

leveraging its unique insights, differentiated services and flexible partnering models. This

has helped our customers reduce operating costs and generate new revenue streams.

Recognizing that margins from connectivity are rapidly falling and that future

growth in revenues and margins will only come from new applications, content and services,

operators today are busy addressing business opportunities revolving around Commerce,

Content, Convergence and Customer Experience to gain a sustainable Competitive

Advantage.

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At Tech Mahindra, we understand this.

For over two decades, Tech Mahindra has been the chosen transformation partner for

wire line, wireless and broadband operators in Europe, Asia-Pacific and North America.

Majority owned by Mahindra & Mahindra, one of the Top 10 industrial houses in India, in

partnership with British Telecommunications plc (BT), world’s leading communications

service provider, Tech Mahindra has grown rapidly to become the 6th largest software

exporter in India (NASSCOM 2007) and the second largest telecom software provider from

India (Voice & Data 2007).

Over 23,000 professionals service clients across the telecom eco-system, from our

global network of development centers and sales offices across Americas, Europe, Middle-

east, Africa and Asia-Pacific.

Committed to quality, Tech Mahindra adds value to client businesses through well-

established methodologies, tools and techniques backed by its stringent quality processes.

Tech Mahindra is ISO 9001:2000 certified and is assessed at SEI-CMMI Level 5. Tech

Mahindra has also been awarded the ISO 20000-1 (IT Service Management standard) and

ISO 27001 (Security Management standard) certification for its development centers across

India and UK.

Tech Mahindra is certified at PCMM Level 5 for its people-care practices and is the

third company in the world to have been appraised for SSE-CMM Level 3.

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Milestones:

1986 - Incorporation in India

1987 - Commencement of Business

1993 - Incorporation of MBT International Inc., the first overseas subsidiary

1994 – Awarded the ISO 9001 certification by BVQI

1995 – Established the UK branch office

2001 - Incorporated MBT GmbH, Germany incorporated

- Re-certified to ISO 9001:1994 by BVQI

2002 - Assessed at Level 5 of SEI CMM by KPMG

- Incorporated MBT Software Technologies Pte. Limited, Singapore

2003 - Re-certified to ISO 9001:2000 by RWTUV

2005 - Certified to BS 7799-2:2002 (Information Security Management Framework)

by RWTUV now known as TUV Nord

- Acquired Axes Technologies (India) Private Limited, including its US and

Singapore subsidiaries

- Assessed at Level 5 of SEI CMMI by KPMG

2006 - Name changed to Tech Mahindra Limited

- Assessed at Level 5 of SEI People-CMM (P-CMM) by QAI India

- Raised Rs4.65 billion ($100 million) from a hugely successful IPO to build a

new facility in Pune, to house about 9,000 staff.

- Formed a JV with Motorola Inc. under the name CanvasM

2007 – Acquired iPolicy Networks Private Limited

- Launched the Tech Mahindra Foundation to address the needs of the

underprivileged in our society, especially children.

2009Satyam Computer Services Ltd, announced today that its Board of Directors has

selected Venturbay Consultants Private Limited, a subsidiary controlled by Tech

Mahindra Limited as the highest bidder to acquire a controlling stake in the

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Company, subject to the approval of the Hon'ble Company Law Board.

Awards & Recognition:

Business Week award for Asia’s Best Performing Companies 2008

The Brand Leadership Award by the Asia Brand Congress 2008

2008 Growth Excellence Award by Frost & Sullivan

Largest Independent Indian IT solutions provider focused on Telecom

Ranked 12th Largest TOMS vendor by Gartner in "Market Share: Telecoms

Operations Management Systems – Worldwide, 2006-2007" April 2008

Vertical Growth Leadership in Telecom Software (Frost & Sullivan Asia ICT

Awards 2007)

Product Innovation Award for Enterprise DRM (Frost & Sullivan Asia ICT Awards

2007)

Winners of "Best Billing Solution" Category at "Billing and OSS World (B/OSS)

Excellence Awards 2008"

6th largest software services company in India (NASSCOM 2008)

Ranked 2nd in the list of Telecom Software providers of India by Voice & Data

(2008)

In the Leaders Category in 'The 2008 Global Outsourcing 100' (IAOP's Annual

Listing of the World's Best Outsourcing Service Providers)

3rd largest BSS Systems Integrator and 5th largest BSS Vendor (Gartner-Dataquest,

World Wide Analysis 2000-2006, published in 2007)

Elite member of the Deloitte Technology Fast 50 India (2007)

Winner of the 'IT People Employer of the Year Award' (IT People Awards for

Excellence in IT 2008)

Winner of the 'Best Overall Recruiting & Staffing Organization of the Year Award'

(RASBIC Awards 2008)

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http://www.techmahindra.com/services/services.aspx


Winner of the 'Organization with the most innovative HR practices Award' (Asia

Pacific HRM Global HR excellence Award 2007)

Winner of the 'Excellence in Marketing Award' (IT People Awards for Excellence in

IT 2007)

Infrastructure

Facilities:

Tech Mahindra's global footprint spans 24 locations in 14 countries including 11

state-of-the-art development centers and 13 sales offices in Americas, Europe, Middle-east,

Africa and Asia-Pacific.

Global Connectivity

Tech Mahindra looks at uninterrupted client connectivity as a vital component of its

global delivery model. This is ensured by understanding the specific needs of each client or

engagement, and is typically achieved through one of the following:

Connectivity over MPLS cloud (Encryption enabled)

Dedicated point-to-point IPLC (Encryption enabled)

Site-to-Site Virtual Private Network (VPN) over Internet

Client-to-Site VPN

Our infrastructure management teams provide dedicated 24x7 support to ensure

uninterrupted client connectivity and seamless engagement execution across locations.

Security Perimeter

Tech Mahindra follows global best practices for data security. It has implemented a

Multi-zone Firewall solution with the following features:

Multiple VPN Gateways with Central Management

Appliance Based Firewall Solution (Throughput / Security / Scalability)

LAN / WAN / RED ( Internet) / DMZ / Customer Zones

VPN Enabled Firewall

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o Unlimited VPN capability

Roaming users, Sales Hubs

Secure connections with multiple clients.

Certifications

ISO 27001 (Security Management standard) certification

Third company in the world to have been appraised for SSE-CMM Level 3.

Business Continuity Planning (BCP) / Disaster Recovery (DR)

In order to ensure a level of readiness to maintain the

continuity of its critical business and services to customers, Tech Mahindra has put together

a business continuity management framework, which encompasses its key functions,

projects and systems.

Tech Mahindra has made sustained investments in developing and implementing an

effective business contingency plan, along with mitigation measures for recovery of IT

infrastructure and operations, in the event of a disaster. Along with the preparation of BCP

and DR plans, regular disaster recovery trials and mock drills are carried out across all

customer projects. Backup copies of essential business data and software are taken regularly

& stored offsite.

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http://www.techmahindra.com/services/IMS.aspx


Corporate Social Responsibility

At Tech Mahindra, ‘community work’ is not just an act of favour or charity, directed

towards doing something for the welfare of the needy. It is, in fact, an initiative that is

voluntarily undertaken to improve the quality of life around us. As an active corporate

member of society, Tech Mahindra is committed to building relationships with local

communities and the society as a whole. Corporate social responsibility reflects both our

brand and our values by addressing some of society's most complex problems and striving to

bring about a sustainable solution.

We at Tech Mahindra have given Corporate Social Responsibility its due importance

with the creation of a foundation dedicated to funding and helping various programs in the

education of the underprivileged which will help in reducing socio-economic disparities.

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Our Aim

To inspire and motivate people around us via effective use of our resources in a

rational manner and with humility.

Focus Areas

Education

Woman empowerment

Computer donations

At Tech Mahindra, we endeavor to make a positive contribution to the underprivileged

by supporting a wide range of educational and socio economic initiatives. Community

projects and programs are driven by active participation from Tech Mahindra employees.

Our commitment to address important community needs extends throughout our

philanthropic outreach programs driven by the Tech Mahindra Foundation

Vision, Mission & Values

Our Vision:

To be the leading global software solutions provider to the Telecom industry.

Our Mission:

To be the global leader in Outsourcing Services to the Telecom industry, building on

our technologies, competencies and customer interests, and creating value for our

shareholders and customers.

The Values that drive us:

Tech Mahindra is focused on creating sustainable value growth through innovative

solutions and unique partnerships. Our values are at the heart of our business reputation and

are essential to our continued success. We foster an environment to instill these values in

every facet of our organization.

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Quality Standards

As a part of its mature quality processes, Tech Mahindra uses well defined

process measurements to monitor the quality of solutions delivered and ensure

continuous improvement. With a strong focus on process management, Tech

Mahindra’s Business Management System (BMS) integrates business needs and

industry best practices to deliver services that constantly improve:

Customer Satisfaction

Productivity and Cycle-Time

Quality of Solutions and Services

Integration of Initiatives

Tech Mahindra's BMS is designed to develop solutions that meet client

specifications in accordance with statutory and other industry-wide standards. Tech

Mahindra’s quality leadership conforms to world-class quality standards and models.

Tech Mahindra is ISO 9001:2000 certified and is assessed at SEI-CMMI Level 5. Tech

Mahindra has also been awarded the ISO 20000-1 (IT Service Management standard)

and ISO 27001 (Security Management standard) certification for its development

centers across India and UK.

Tech Mahindra is certified at P-CMM Level 5 for its people-care practices and is the

third company in the world to have been appraised for SSE-CMM Level 3.

Tech Mahindra's Service Delivery Framework - mASTER™

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Based on proven methodologies and industry best practices, Tech Mahindra

has defined a holistic transition process framework - mASTER™ - for effective service

delivery to customers. mASTER™ offers a methodology for planning, managing,

delivering and operating complex programs through five defined phases as depicted

below:

The mASTER™ methodology covers a broad range of activities that are structured

around quality gates and deliverables, thus ensuring a predictable and measurable

business outcome and consistent quality of deliverables.

METHODOLOGY:

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The study conducted was based upon the financial statement in annual report

and accounts of the firm that were published annually in the internet by the company.

The comparative size analysis has been made earlier to identify the variations

at different levels and interpretations of ratios etc and taken into account for the

period 2004-2008 to clear out the picture of the company earlier form.

To assess accurate profit & losses and estimate the expenses incurred for

financial statement in annual reports and accounts of the firm which were collected

were of secondary nature.

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OBJECTIVES

To know, whether the company is able to pay debt promptly or not.

To study the current financial position of the company.

To know the ability of the firm to meet fixed interest and the cost and repayment

schedules associated with the long term borrowings.

To know about the general profitability of the firm in relation to the sales.

To know about the overall profitability of the firm in relation to its investment.

To find ability of the company in utilizing of its assets.

To find companies long term solvency and survival.

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Limitations

It is difficult to decide in the proper basis of comparison.

The comparison is rendered difficult because of differences in situations of two

companies are of one company over ears.

The price level changes make the interpretation of ratio invalid.

The difference in the definition of items in the balance sheet and the profit and loss

statement make the interpretation of ratio difficult.

The calculated ratios at the point of time are less informative and defective as they suffer

from short term changes.

The ratios generally calculated from the past financial statement and thus there are known

indicators of future.

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FINANCIAL RATIO ANALYSIS:

Ratio analysis is a powerful tool of financial analysis. A ratio

is defined as “the indicated quotient of two mathematical expressions” and as “the

relationship between two or more things”. In financial analysis a ratio is used as a

benchmark for evaluating the financial position and performance of a firm. The absolute

accounting figures reported in the financial statement do not provide a meaningful

understand of the performance and financial position of a firm. An accounting figure

conveys meaning when it is related to some other relevant information.

The relation between two accounting figures, expressed

mathematically is known as a financial ratio (or simply as a ratio) ratio help to

summarize large quantities of financial data and to make qualitative judgment about

the firm’s financial performance. The point to note is that a ratio reflecting a

quantitative relationship helps to form a qualitative judgment.

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NATURE OF RATIO ANALYSIS

Standards of comparison

A single ratio in itself does not indicate favorable or

unfavorable condition. It should be compared with some standards. Standard of

comparison may consist of.

Past ratio i.e. ratio calculated from the financial statement of the some firm.

Competitor’s ratios, i.e. ratios of same selected firms, especially the most

progressive and successful competitor, at the same point in time.

Industry ratios i.e. ratios or the industry to which the firm belongs and

Projected ratios, i.e. ratios developed using the projected or Performa,

financial statements of the same firm.

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There are four types of ratios to be calculated to know the status of the firm.

They are,

1. Liquidity ratio

2. Leverage ratio

3. Activity ratio

4. Profitability ratio

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I. Liquidity ratio

Liquidity ratios measure the ability of the form to meet its current obligation. In fact,

analysis of liquidity needs the preparation of cash budgets and cash and fund flow statement,

but liquidity ratios by establishing a relationship between cash and other current assets to

currents obligations, provide a quick measure of liquidity. A firm ensures that it does not

suffer from lack of liquidity, and also that it does not have excess liquidity, therefore it is

necessary to strike a proper balance between high liquidity and lack of liquidity.

The most common ratios indicate the extent of liquidity or lack of it is:

Current ratio

Quick ratio

Absolute liquidity ratio

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II.LEVERAGE RATIOS

Leverage ratios are calculated t analyze the long-term financial position of the firm.

These indicate mix of funds provided by owners and lenders. As a general rule, there should

be an appropriate mix be debt and owners equity in financing the firm’s assets. The process

of magnifying the shareholders return through the use of debt is called “financial gearing” or

“trading on equity”. Leverage ratios calculated to measure the financial risk and firm’s

ability of using debt to share holder’s advantages.

Interest coverage ratio

Capital equity ratio

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III.ACTIVITY (OR) TURNOVER RATIOS

The turnover ratios indicate the efficiency with which the capital employed is rotated

in the business. The ratios are employed to evaluate the efficiency with which the firm

manages and utilizes its assets to indicate the speed with which assets are being converted

on turned over into sales. A proper balance sales and generally reflects that assets are

managed well.

Debtor’s turnover ratio.

Total assets turnover ratio.

Fixed assets turnover ratio.

Current assets turnover ratio.

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IV.PROFITABILITY RATIO

Profitability is an indication of the efficiency with which the operations of the

business are carried on. Bankers, financial institutions and other creditors look at the

profitability ratios as an indicator whether or not the firm earns substantially more than it

pays interest for the use of borrowed finds and whether the ultimate repayment of their debt

appears reasonably certain. Owners are interested to know the profitability as it indicates

the return, which they can get their investments.

Gross profit ratio

Net profit ratio

Operating profit ratio

Operating ratio

Return on investment ratio

Return on equity

EPS

DPS

Pay out

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1. Current ratio:

This ratio relates current assets to current liabilities. The current ratio indicates the ability of the organization to meet its current obligations. It measures short-term solvency of the concern.

The current ratio is calculated by dividing current assets by current liabilities.

Current assetsCurrent ratio= Current liabilities

years Current assets Current liabilities Current ratio

2004 335.21 126.20 2.66:1

2005 363.31 172.53 2.11:1

2006 525.04 398.06 1.32:1

2007 984 638.12 1.54:1

2008 1488 892.6 1.66:1

Analysis:

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The current ratio of the company is decreased from 2004 to 2006 as 2.66:1, 2.11:1,

1.32:1, later it is increased from 2006 to 2008 as 1.32:1, 1.54:1, and 1.66:1.

The graph between Years and Current ratio shows as below

Interpretation:

In the year of 2004, 2005 the current ratio of Techmahindra maintains the standards

of 2:1. After the situation is less than 2:1 it shows the margin of safety for creditors is low

and company may be struggling to meet their obligations to pay.

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1.Interest coverage:-

The interest coverage ratio or the times-interest-earned is one of the most

conventional coverage ratios used to test the firms debt-servicing capacity.it can be

calculated by dividing EBIT with interest

EBIT

Interest coverage=

INTEREST

years EBIT

(in.Rs.Cr)

INTEREST

(in.Rs.Cr)

Interest coverage

ratio

2004 132.59 9.92 13.37

2005 125.89 11.85 10.62

2006 283.64 10.12 28.03

2007 127.52 28.09 4.54

2008 441.32 28.30 15.59

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Analysis:-

The interest coverage ratio of the firm for 2004 is 13.37 after

the year it decraesed to 10.62 in the year 2005. Again it increased to 28.03 later years it

decreased to 4.54 & it finally reached to 15.59.

The graph between Years and Interest coverage ratio shows as below

Interpretation:-

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The interest coverage ratio of higher ratio is desirable.the analysis indicates that the

firm using debt in conservatively.It is higher in the year 2006 i.e.28.03, it is low in the year

2007 i.e.4.54.

2.Capital equity ratio:-

This is the ratio which expressing the basic relationship between debt and equity.

Calculating the ratio of Net assets to Net worth can find this ratio.

Capital employed

Capital equity ratio =

Net worth

Capital employed = Total debt + Net worth

years Capital employed

(in.Rs.Cr)

Net worth

(in.Rs.Cr)

Capital equity ratio

2004 435.34 435.34 1.00

2005 482.82 482.83 0.99

2006 597.86 597.86 1.00

2007 930.78 878.12 1.06

2008 1323.40 1228.40 1.08

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Analysis:-

Capital equity ratio of the firm for 2004 to 2008 are 1, 0.99, 1, 1.03, 1.08.it is

decreased from 2004 to 2005 after the years it raised to 1.08.

The graph between Years and Capital equity ratios ratio shows as below

Iterpretation:-

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The funds being contributed by the lenders and owners for each rupee is almost i.e.

Rs.1/-.It indicates that the firm maintained the constant capital and equity in the equal

proportion change.

1. Debtors turnover ratio:-

Debtors turnover ratio can be calculated by dividing total sales by dividing debtors.

Sales

Debtors turn over =

Debtors

years Sales Debtors Debtors turnover

ratio

2004 711.50 276.21 2.58times

2005 922.34 217.42 4.24times

2006 1197.14 412.72 2.90times

2007 2753.22 792.02 3.48times

2008 3604.7 1057.40 3.41times

Analysis:-

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Debtor’s turnover ratio for the years 2004, 2005, 2006, 2007 and 2008 are 2.58, 4.24,

2.90, 3.48 and 3.41 respectively. It is raised to 4.24 for the year 2005 after it decreased to

3.41 in the year 2008.

The graph between Years and Debtors turnover ratios shows as below

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Interpretation:-The ratios are more than 2, this indicates the firm is good at the management of

credit. It is high in the year 2005 and least in the year 2004. The firm maintained conversion

of the debtor’s funds to sales is sufficiently.

2. Total assets turnover ratio:-

This ratio shows the firms ability in ngenerating sales from all financial resources

committed ton total assets.

Sales

Total assets turnover=

Total assets

years sales Total assets Total assets turnover

ratio

2004 711.50 435.34 1.63

2005 922.34 482.82 1.91

2006 1197.14 597.86 2.00

2007 2753.22 930.78 2.96

2008 3604.7 1323.40 2.72

Analysis:-

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Total assets turnover ratio of the year 2004 to 2008 are 1.63, 1.91, 2.00, 2.96 and

2.72 times respectively.it is gradually increased year by year.

The graph between Years and total assets turnover ratio shows as below

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Interpretaion:-The total assets turnover ratio of the firm are 1.63, 1.91, 2, 2.96 and 2.72 times it

implies that the firm generate a sales more than one for one rupee investment on total assets.

3.Fixed assets turnover ratio:-

Fixed assets turnover ratio can be calculated by dividing of sales with net fixed

assets.

Sales

Fixed assets turn over ratio=

Net fixed assets

Years sales Net fixed assets Fixed assets

turnover ratio

2004 711.50 133.24 5.34

2005 922.34 170.05 5.42

2006 1197.14 156.79 7.64

2007 2753.22 247.03 11.15

2008 3604.7 290.9 12.39

Analysis:-

The fixed assets turnover ratios for 2004 to 2008 are 5.34, 5.42, 7.64, 11.15 and

12.39 times respectively. It was increased from 2004 to2008.

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The graph between Years and Fixed assets turnover ratio shows as below

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Interpretation:-Increasing fixed assets turnover ratio implies that the firms utilization of fixed assets

is increased.

4.Curent assets turnover ratio:-

Current assets turnover ratio can be calculated by dividing of sales with net current

assets.

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Sales

Current assets turnover ratio=

Net current assets

Years sales Net current assets Current assets turnover

ratio

2004 711.50 209.01 3.40

2005 922.34 190.79 4.83

2006 1197.14 126.99 9.42

2007 2753.22 345.89 7.96

2008 3604.7 595.40 6.05

Analysis:-

The current assets turnover ratios for the years from 2004 to 2008 are 3.40, 4.83,

9.42, 7.96 and 6.05 times.

The graph between Years and current assets turnover ratio shows as below

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Interpretation:-

It is increased from 2004 to 2006 and then decreased to 6.05 times for

the year 2008.it indicates that the usage of current assets is more than its

investments.

1. Gross profit ratio:-

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This ratio expresses relationship between gross profit and net sales. It relates the

efficiency with which management produces each unit of product. It indicates the degree to

which the selling price of goods per unit may decline without resulting in losses from

operations to the firm.

The first profitability ratio n relation to sales is the gross profit ratio it is calculated

by dividing the gross profit by sales.

Gross profit

Gross profit ratio = X 100

Sales

Gross profit = Net sales – cost of goods sold

Cost of goods sold = power & fuel + other manufacturing expenses

Year Gross Profit

(in.Rs.Cr)

Sales

(in.Rs.Cr)

Gross profit Ratio

(%)

2004 655.38 711.50 92.11

2005 819.88 922.34 88.89

2006 994.86 1197.14 83.10

2007 2178.53 2753.22 79.12

2008 2887.40 3604.7 80.11

Analysis:

The calculated gross profit ratio indicates that the proportion of gross profit to sales

shows decreased figures from year 2004 i.e. 92.11 to79.12 in the year 2007 later year it

increased to 80.11

The graph between Years and Gross profit ratio shows as below

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Interpretation:

Gross profit ratio of the firm is highest in the year 2004 is 92.11% it indicates that

firm got more sales for attaining more profit. Firms performance is good in the year 2008 i.e.

80.11%.

2.Net profit ratio:-

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Net profit ratio is obtained when operating expenses; interest and taxes subtracted

from the gross profit. Net profit ratio helps in determining efficiency with which affairs of

the business are being managed. This ratio is the overall measure of the firm’s ability to

turn each rupee sales into net profit. The ratio is thus an effective measure to check the

profitability of business.

The net profit margin ratio is measured by dividing profit after

tax by sales.

Profit after tax Net profit margin= ×100 Net sales

Years Profit after tax(in.Rs.Cr)

Net Sales(in.Rs.Cr)

Net profit margin

2004 94.13 711.50 13.23%

2005 71.09 922.34 7.71%

2006 220.12 1197.14 18.39%

2007 65.23 2753.22 2.37%

2008 325.70 3604.7 9.04%

Analysis:-Net profit margin ratio for the years from 2004 to 2008 are 13.25%, 7.71%, 18.39%,

2.37% and 9.04%.it is highest in the year 2006 i.e. 18.39% and the least in the year 2007 i.e.

2.37%.

The graph between Years and Net profit ratio shows as below

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Interpretation:-Through this ratio overall profitability can be measured after adjusting non-operating

income & non-operating expenses. Firm showing best performance in the year 2006.in the

year 2008 it is good.

3. Operating profit ratio:-

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This ratio measures the relationship between operating profit and net sales. It

determines the operational efficiency of the management.

Operating profit Operating ratio= ×100 Net sales

Years Operating profit(in.Rs.Cr)

Net Sales(in.Rs.Cr)

Operating profit ratio (%)

2004 129.88 711.50 18.25

2005 174.53 922.34 18.92

2006 257.53 1197.14 21.51

2007 720.88 2753.22 26.18

2008 839.40 3604.7 23.29

Analysis:-

The operating profit for the years from 2004 to 2008 are 18.25%, 18.92%, 21.51%,

26.18% and 23.29%.it increased up to 2007 then decreased to 2008 with 23.29%.

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The graph between Years and Operating profit ratio shows as below

Interpretation:

It indicates an average operating margin earned on a sale of Rs.100, remaining can

used for non-operating expenses, to pay dividend and to create reserves is shown by the firm

is very effectively.

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4.Operating ratio:-

This ratio measures the relationship between operating cost and net sales.

Operating expenses

Operating ratio= ×100

Net sales

Operating expenses= power&fuel+empoyee cost+othermanufacturing

expenses+selling & administration expenses+miscellaneous

expenses.

Years Operating expenses Net Sales Operating ratio

2004 581.62 711.50 81.75%

2005 747.81 922.34 81.08%

2006 939.61 1197.14 78.49%

2007 2032.34 2753.22 73.81%

2008 2765.30 3604.7 76.71%

Analysis

The operating ratio of the firm for the years from 2004 to 2008 is 81.75%, 81.08%,

78.49%, 73.81 & 76.71%.

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The graph between Years and Net profit ratio shows as below

Interpretation

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The ratios are in decreasing from 2004 to 2007 and next year i.e. in 2008 increases to

76.71% more over the operating expenses when compare to net sales is decreased.

5. Return on investment:

ROI is one of the very important parameters affecting business plans. It can be

calculated by net profit after tax dividing with net assets.

Profit after tax

ROI = ×100

Net assets

Years Profit after tax Net assets ROI

2004 94.13 435.34 21.62%

2005 71.09 482.82 14.72%

2006 220.12 597.86 36.81%

2007 65.23 930.78 7.01%

2008 325.70 1322.40 24.61%

Analysis:

ROI of the firm for the years from 2004 to 2008 are 21.62%, 14.72%, 36.81%,

7.01% & 24.61%.it is highest in the year 2006 i.e. 36.81%, least in the year 2007 i.e. 7.01%.

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The graph between Years and ROI shows as below

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INTERPRETATION:

This ratio indicates the firm ability of generating profit per rupee of capital

employed. Return to the share holder and lenders is in high in the year 2006, least in the year

2007 and satisfactory return is in 2008

6. Return On Equity (ROE):

The return on equity is net profit after taxes divided by share holders equity, is given

by net worth.

Profit after taxes

ROE=

Net worth

years Profit after taxes Net worth ROE

2004 94.13 435.34 21.62%

2005 71.09 482.83 14.72%

2006 220.12 597.86 36.82%

2007 65.23 878.12 7.43%

2008 325.70 1228.40 26.51%

SITAMS Page 47


Analysis:

ROE of the firm for the year from 2004 to 2008 are 21.62%, 14.72%, 36.82%,

7.43% & 26.51%.

The graph between Years and ROE shows as below

Interpretation:

SITAMS Page 48


This ratio of company should be compared with the ratio for similar companies and

this will reveal the relative performance and strength of the company in attracting future

investment. Returns of the firm are highest in 2006 least in 2007, 2008 it is in satisfaction

level.

7. Earnings per share (EPS):

The profitability of the share holder is depends mainly in earnings per share. The

EPS is calculated by dividing the profit after taxes by the number of ordinary share

outstanding.

Profit after taxes

EPS=

Number of equity shares

years Profit after taxes No. of shares EPS in.Rs

2004 94.13 10.14 9.29

2005 71.09 10.17 6.99

2006 220.12 11.24 19.58

2007 65.23 12.12 5.38

2008 325.70 12.14 26.83

Analysis

SITAMS Page 49


EPS of the firm for the years from 2004 to 2008 are Rs 9.29/-, Rs 6.99/-, Rs19.58/-,

Rs5.38/-& Rs 26.83/-.it is highest in the year 2008 i.e. 26.83/-, least in the year 2006 i.e.

Rs 5.38/-.

The graph between Years and EPS shows as below

Interpretation

SITAMS Page 50


EPS of the year 2008 is highest i.e. Rs 26.83/-and least in the year 2007 i.e. Rs

5.38/-.Firm performance is well.

8. Dividend per share

DPS is the earnings distributed to ordinary share holders divided by the number of

ordinary shares outstanding.

Earnings paid to the share holders

DPS=

Number of ordinary shares outstanding

Years Equity dividend No. of shares DPS in.Rs

2004 37.46 10.14 3.69

2005 22.32 10.17 2.19

2006 103.93 11.24 9.25

2007 26.62 12.12 2.19

2008 66.80 12.14 5.50

Analysis

SITAMS Page 51


DPS of the firm for the years from 2004 to 2008 are Rs 3.69/-, Rs 2.19/-, RS 9.25/-,

Rs 2.19/- & Rs 5.50/-.


SITAMS Page 52


Interpretation:

This ratio shows actual receives to the share holder. It is high in the year 2006, least

in the 2005 & 2007. In 2008 it is in good condition.

9.Divident pay out ratio

The payment of the firm to the equity share hoders can be known through this

ratio.The divident pay out ratio or simple pay out ratio is DPS divided by the EPS.

DPS

Pay out ratio= × 100

EPS

years DPS in.Rs EPS in.Rs Payout ratio

2004 3.69 9.29 39.72%

2005 2.19 6.99 31.33%

2006 9.25 19.58 47.24%

2007 2.19 5.38 40.71%

2008 5.50 26.83 20.50%

Analysis:

SITAMS Page 53


Pay outs ratios of the firm are from the year 2004 to 2008 are 39.72%, 31.33%,

47.24%, 40.71% & 20.50%.it is high in the year 2007 i.e. 47.24, least in the year 2005 i.e.

31.33.


SITAMS Page 54


Interpretation:

Earnings not distributed to share holders are retained in the business actual earnings

in year 2008 is 26.83 and dividend paid is 5.50 only pay out at the year 2008 is very low and

in 2006 it is high.

FINDINGS:

Firm maintained liquidity ratio indicates that it is in standards in the years 2004 &

2005. In the next years it is below the standards.

Debt of the firm is almost equal to its net worth.

Turnover ratios indicate that the firm is in good at conversion assets to sales.

Current assets turnover is very high when compare to the fixed assets turnover.

Gross profit is high in the years 2004 after the years firm gets fluctuations finally it is

in good position.

In the 2004 & 2005 years it is having more operating expenses than to sales it is well

for next years.

Returns is not in preferable way it is below 25% on average.

SITAMS Page 55


Earnings on each share are good condition for the firm.

But the payment to the share holders is below 50%.

SUGGESTIONS:

Although firm maintains sufficient liquidity, it is needed to increase, in order to attain

future demand.

Because of being a soft solutions tech Mahindra ltd need to raise their turnovers to get

good impression on the maintenance.

Firm needed to decrease the operating expenses, in order to sustain in this rescission

period.

Returns are of below 25% there is necessary to increase it. By getting more projects it

will happens.

Although the earnings on each share is good payment to the share holders is below

50%.it is better to maintain 50% to 75%, it will helps attracting share holders towards

invest on Techmahindra.

SITAMS Page 56


Profit & loss account In.Rs.crMar ' 04 Mar ' 05 Mar’ 06 Mar ' 07 Mar’ 08

Income:Sales turnover 711.50 922.34 1197.14 2753.22 3604.70Excise duty 0.00 0.00 0.00 0.00 0.00Net sales 711.50 922.34 1197.14 2753.22 3604.70Other income 6.59 -45.79 27.44 -519.76 -351.80Stock adjustment 0.00 0.00 0.00 0.00 0.00Total income 718.09 876.55 1224.58 2233.46 3252.90ExpenditureRaw Material 0.00 0.00 0.00 0.00 0.00Power & Fuel 3.15 4.70 6.78 14.83 27.50Employee cost 213.91 353.73 467.58 840.41 1222.40Other Manufacturing Expenses 52.97 97.76 195.50 559.86 689.80Selling & Admin expenses 267.93 241.37 200.77 430.85 633.70Miscellaneous expenses 43.66 50.25 68.98 186.39 182.60Preoperative exp capitalized 0.00 0.00 0.00 0.00 0.00Total expenses 518.62 747.81 939.61 2032.34 2765.30

Mar ' 04 Mar ' 05 Mar’ 06 Mar ' 07 Mar’ 08Operating profit 129.88 174.53 257.53 720.88 839.40PBDIT 136.47 128.74 284.97 201.12 487.60Interest 9.92 11.85 10.12 28.09 28.30PBDT 126.55 116.89 274.85 173.03 459.30Depreciation 3.88 2.85 1.33 73.60 46.28Other written offs 0.00 0.00 0.00 0.00 0.00Profit before tax 104.41 85.36 237.47 126.75 385.70Extra-ordinary items 8.67 0.02 3.16 33.95 25.40PBT(Post extra-ord items) 113.08 85.36 240.63 160.70 411.10Tax 15.02 14.28 20.52 61.51 68.90Reported net profit 94.13 71.09 220.12 65.23 325.70

SITAMS Page 57


Total value addition 581.61 747.81 939.60 2032.34 2765.30Preference dividend 0.00 0.00 0.00 0.00 0.00Equity dividend 37.46 22.32 103.93 26.62 66.80Corporate dividend tax 4.80 2.89 14.58 3.73 11.30Per share data(annualized)Shares in issue(lakhs) 1013.64 1017.27 1124.41 1212.17 1213.63Earnings per share(Rs) 9.29 6.99 19.58 5.38 26.84Equity dividend (%) 185.00 110.00 440.00 23.00 55.00Book value(Rs) 42.95 47.46 53.17 72.43 101.22

Balance sheet In.Rs.crMar '04 Mar '05 Mar '06 Mar '07 Mar '08

Sources Of FundsTotal Share Capital 20.27 20.35 20.80 121.22 121.40Equity Share Capital 20.27 20.35 20.80 121.22 121.40Share Application Money 0.00 0.00 0.00 0.14 0.00Preference Share Capital 0.00 0.00 0.00 0.00 0.00Reserves 415.07 462.48 577.06 756.76 1,107.00Revaluation Reserves 0.00 0.00 0.00 0.00 0.00Net worth 435.34 482.83 597.86 878.12 1,228.40Secured Loans 0.00 0.00 0.00 10.01 0.00Unsecured Loans 0.00 0.00 0.00 42.64 95.00Total Debt 0.00 0.00 0.00 52.65 95.00Total Liabilities 435.34 482.83 597.86 930.77 1,323.40

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08Application Of FundsGross Block 216.49 284.12 306.95 442.75 550.50Less: Accum. Depreciation 83.25 114.07 150.16 195.72 259.60Net Block 133.24 170.05 156.79 247.03 290.90Capital Work in Progress 19.85 7.05 19.33 54.65 138.50Investments 73.24 114.93 294.75 283.21 298.60Inventories 0.00 0.00 0.00 0.00 0.00Sundry Debtors 276.21 217.42 412.76 792.02 1,057.40Cash and Bank Balance 13.41 77.07 23.99 12.83 80.00Total Current Assets 289.62 294.49 436.75 804.85 1,137.40Loans and Advances 29.85 23.72 60.70 163.06 349.20Fixed Deposits 15.74 45.10 27.60 16.09 1.40Total CA, Loans & Advances

335.21 363.31 525.05 984.00 1,488.00

Differed Credit 0.00 0.00 0.00 0.00 0.00Current Liabilities 70.36 111.89 195.91 498.84 634.20

SITAMS Page 58


Provisions 55.84 60.63 202.15 139.27 258.40Total CL & Provisions 126.20 172.52 398.06 638.11 892.60Net Current Assets 209.01 190.79 126.99 345.89 595.40Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00Total Assets 435.34 482.82 597.86 930.78 1,323.40Contingent Liabilities 9.33 17.99 46.43 136.38 169.50Book Value (Rs) 42.95 47.46 53.17 72.43 101.22

BIBLIOGRAPHY:

1. Financial management By I .m. Pandey

2. Advanced accountancyBy R.L.GuptaBy M.Radhasway

3. Financial managementBy S.N.Maheswari

Web sites:

www.techmahindra.com

www.reddiffmoneybuzz.com

www.moneycontrol.com

SITAMS Page 59

http://www.moneycontrol.com/

http://www.reddiffmoneybuzz.com/

http://www.techmahindra.com/

Techmahindra company analyisis

Documents

mahindra mahindra

tech mahindra limited

tech mahindra foundation

tech mahindrait services

telecom solutions company

telecom industry

telecom solutions milestones

differentiated services