FINANCIAL ANALYSIS

OF VIDEOCON

SUBMITTED BY
TARUN BANSAL(191016)
JATIN BATRA(191027)
MAHIMA GUPTA(191029)
MANAN BATRA(191030)
NITISH TANEJA(191038)
PULKIT KAUSHIK(191045)
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Contents
BACKGROUND OF THE COMPANY................................................................................................. 3
MANAGING COMMITTEE OF VIDEOCON .................................................................................. 4
ANALYSIS OF BALANCE SHEET ..................................................................................................... 5
Application of Funds........................................................................................................................... 5
Sources of Funds ................................................................................................................................. 6
ANALYSIS OF PROFIT & LOSS A/C ................................................................................................. 9
CASH FLOW ANALYSIS ................................................................................................................... 11
RATIO ANALYSIS.............................................................................................................................. 13
LIQUIDITY RATIOS ....................................................................................................................... 13
SUPPLEMENTARY RATIOS FOR LIQUDITY ............................................................................ 15
SOLVENCY RATIOS ...................................................................................................................... 18
PROFITABILITY RATIOS ............................................................................................................. 21
RETURN ON INVESTMENT RATIOS .......................................................................................... 23
DU POINT ANALYSIS ................................................................................................................... 26
COMMON SIZE ANALYSIS .............................................................................................................. 28

BACKGROUND OF THE COMPANY

An Indian multinational company, which involved in the key sectors of Consumer Durables,
Display & Color Picture Tube, CRT Glass, Oil & Gas is named as Videocon Industries
Limited. The Company was incorporated in 4th September of the year 1986 as Adhigam
Trading Private Limited for the business of trading in paper tubes. For manufacture the
products under the Videocon, the company have 8 plants situated in Tq- Paithan, Bhalgaon,
Bangalore, Hosur, Kolkata, Maheshwaram Mand and Bharuch.

The Company's Black & White and Color TV, Washing Machines released in the year 1987.
In September of the year 1988, the company decided to diversify in the business of lease
financing, hire purchase and investment activities. The home entertainment systems,
electronic motors and air conditioners were partaken under Videocon during the year 19891990. The Management of the Company underwent a change in the year 1990-91 by way of
transfer of equity shares to the Videocon Group. VIL had outfitted the refrigerators and
coolers in the period of 1991. The name of the company was changed from Adhigam Trading
Private Limited to Videocon Leasing & Industrial Finance Limited in 14th February of the
year 1991. During the year 1995, the company made its footprint in glass shells for CRT
segment. After a year, in 1996, VIL had diversifies into oil sector, the crude oil was the most
concentrated one in the same period. The Company had formulated and released compressors
and compressor motors in the year 1998. The notable thing in the company's saga was
happened in the year 2000; VIL had taken over the Philips color TV plant.

Petrocon India Limited was amalgamated with the Company effect from 31st March of the
year 2004; this resulted in the Company getting into oil and gas business. With merger of
Petrocon, the company had become a member of the consortium that operates the Ravva Oil
and Gas fields. In the same year of 2004, the company had changed its name to Videocon
Industries Limited from Videocon Leasing & Industrial Finance Limited. Videocon
Securities Limited was became as subsidiary of the company with effect from 15th June of
the year 2004. During the year 2005, the company taken the three plants of Electrolux India
and in the same year, VIL had acquired the Thomson Color Picture Tube and also taken
Hyundai Electronics. Since December of the year 2005, Eagle Corporation Limited became a
wholly owned subsidiary of the company. As at 21st July of the year 2006, EKL Appliances
Limited (formerly: Electrolux Kelvinator Limited) amalgamated with the company. To offer
international long-distance (ILD) services in India, US telecom giant Verizon had tie up with
Videocon Industries in February of the year 2007. In November 2007, VIL had acquired
Planet M for Rs 2 billion. Planet M is the music and entertainment retail arm of media house
Bennett, Coleman & Company. In August of the year 2008, West Bengal government had
invited Videocon to set up the Rs 80 billion FAB projects in the state.
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To strengthen and maintain & its leadership status, the Videocon group has clearly charted
out its course for the future. Aggressive development is in full swing at the R & D Centres to
bring out state-of-the-art technologies including True Flat, Slim, Extra Slim, Plasma & LCDs,
at the earliest. In the Oil & Gas business, having all the basic operator capabilities of a
prospecting entity, the group is looking to add more explorations and production depth as
also oil-bearing assets. The group will also get into gas distribution in India significantly.

MANAGING COMMITTEE OF VIDEOCON

Chairman & Managing Director

Venugopal N Dhoot

Whole-time Director-

Pradipkumar N Dhoot

Director -

S Padmanabhan

Director -

Karun Chandra Srivastava

Director-

S C N Jatar

Director-

Arun Laxman Bongirwar

Director

Satya Pal Talwar

Director

Radhey Shyam Agarwal

Nominee

Gunilla Nordstrom

Nominee (ICICI)
Nominee (IDBI)
Company Secretary

Ajay Saraf
Birendra Narain Singh
Vinod Kumar Bohra

ANALYSIS OF BALANCE SHEET

Application of Funds
Fixed assets of Videocon
Videocon owns fixed assets worth Rs 602.03 Billion at depreciated value compared to last
years Rs 592.67 Billion. Within the fixed assets plant and machinery, that is, assets directly
needed for production stands at Rs 445.14 Billion i.e. 73.94% of the total fixed assets. Next is
the amount invested in buildings i.e. Rs 45.50 Billion The company has invested substantially
higher in buildings.
The advance against capital goods worth Rs 94.30 Billion has been included in the total fixed
assets. However this have not been received yet. It may be observed that no depreciation has
been provided on freehold land. The company has almost negligibly decreased leasehold land
while substantially increasing the freehold land from last year by Rs 0.0072 Billion.

Investments
Videocons investments are less than its fixed assets by almost Rs 295.54 Billion totaling to
Rs 306.49 Billion. The total investment is a substantial figure compared to the total asset size.
It has invested almost Rs 26.90 Billion in mutual funds while it has invested Rs 0.05 Billion
in government bonds. Thus it can be said that the co. carries surplus cash in business which it
utilizes in investing. The co. believes in investments. The co has also invested almost Rs
214.73 Billion in its subsidiaries.
Finally, the main reason for 13.70% increase in its investments from last year is that the
company has invested in long term investment proposals which are quoted & the investment
made is Rs 0.79 Billion which is significantly decreased as compared to last yr. i.e. Rs 16.90
Billion.

Current Assets, loans and advances

The company has reported debtors of Rs 70.81 Billion while the total sales are around Rs
916.30 Billion. Also the debts, which are considered doubtful, are around Rs 0.40 Billion,
which is a small figure compared to total debtors. Also it can be seen that the company has
invested around Rs 17.97 Billion in fixed deposits.
Inventories, as taken valued & certified by the management stood at Rs 176.35 Billion while
the total sales is around Rs 916.30 Billion.
Videocon has around Rs 0.07 Billion in cash balances. With the fall in cash balance as
compared to last years of Rs 0.12 Billion, It constitutes an insignificant part of the current
assets.
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Loans and advances of Videocon is around Rs 479.35 Billion which includes security
deposits with various authorities and advance payment of tax as a major constituent. The
debtors, which are outstanding for a period exceeding six months are mostly considered
doubtful, hence a provision has been made for them. No provision has been made for the
debtors for a period of less than six months. In the notes to accounts it has also been stated
that in the opinion of Board, the Current Assets, Loans and Advances have realizable value at
least equal to the amount at which they are stated. It has also been stated that the Debts due
from director/officer of the company is nil.

Current Liabilities and Provisions

In current liabilities, out of Rs 85.37 Billion the sundry creditors for expense forms a major
part of Rs 61.06 Billion. The sundry creditors for goods are Rs 0.0019 Billion which is very
minimum figure compared to purchases. Hence it can be said that the company likes to make
payments to the creditors at the earliest.
Out of Rs 13.02 Billion of provisions, Rs 4.99 Billion is for the dividend proposed. The
company also has provisions for corporate tax on proposed dividend, liabilities disputed,
Gratuity, Leave Salary.
Thus the company has a net asset or net working capital of Rs 781.18 Billion, which means
the company can continue its day to day functions in an efficient manner.

Deferred tax assets and liabilities

The company has shown the deferred tax liability as an independent figure in the sources of
funds which amounts to Rs 53.76 Billion while it has shown the deferred tax assets in the
application of funds which amounts to Rs 2.53 Billion. The net deferred tax liability is Rs
51.23 Billion.

Sources of Funds
Share Capital
The authorized share capital of the company was 500 Million equity shares@ Rs. 10 each &
10 Preference shares @ Rs. 100 each till 2009.
Change in Capital Structure and Listing of shares
The equity share capital has come down in the year 2009 because of the following reasons.
1. 95,078 equity shares of Rs. 10 each have been issued on conversion of 20% Unsecured
Optionally Convertible Debentures.
2. 156,394,378 equity shares of Rs. 10 each were allotted pursuant to amalgamations without
payments being received in cash.
3. 45,777,345 equity shares of Rs. 10 each were issued by way of euro issues represented by
GDRs at the price of US $ 10 per share.
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4. 8,4645,15 equity shares of Rs 10 each have been issued on conversion of 86529 foreign
currency convertible bonds of US $ 1000 each.

The Preference share capital has remained constant.

1. 4,523,990, 8% cumulative Redeemable Preference shares of Rs. 100/- each fully paid up.
2. 76,870, 8% cumulative Redeemable Preference shares of Rs. 100/- each fully paid up.

Reserve and Surplus:

The increase in reserves and surplus in 2009 is mainly because of the increase in general
reserves, capital reserve and profit and loss account balance & creation of DRR.
Capital reserves: The Company has kept on increasing the capital reserves and has not
utilized any amount from it. The increase has come mainly from transfer from forfeiture of
shares.
Share premium Account: Has come down significantly in 09 from 08 because of Premium on
Redemption of Bonds, Reversal of premium on shares forfeiture, allotment money in arrears.
General Reserve: It has gone up in 09 because there has not been anymore issue of bonus
shares. It is seen that the company has steadily decreased the transfer from P/L account to
general reserve.
Debenture Redemption Reserve: The co. has increased the DRR Balance by transfer from P/L
account.
Capital Redemption Reserve & Capital subsidy: Remained constant.
Profit and loss acc: The transfer of the remaining profits from the P/L account has risen
steadily over the years. This indicates that the profit of the company has been rising over the
years.

Secured Loans
Secured loans of Videocon have gone up from Rs 673.50 Billions to Rs 440.13 Billions. The
company has taken term loans and short term loans from banks. The company has taken loan
in the year, thus the figure for secured loans has gone up. The proportion of secured loans to
other sources of funds is considerably small i.e 40%, suggesting that the company does not
depend much on loan funds.

Unsecured Loans
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The companys unsecured loans has fallen from Rs 360.43 Billions to Rs 234.95 Billions.
The company has repaid short term loan from bank & financial institutions to the tune of Rs
729.20 Billions and that the company has taken almost negligible unsecured loans i.e. only to
the extent Rs 3.87 Billions.

Overall Comment
If we look at the balance sheet we will find that the company is highly leveraged. It depends
more on external sources of funds than internal sources. The reserves and surplus of the co
has become very high as compared to share capital, thus there is a possibility of bonus shares
being issued in future. The company has almost half of the investments as compared to fixed
assets and the co has positive net current assets. This is a good sign for the company. There is
an overall increase in the net working capital as compared to the last year.

ANALYSIS OF PROFIT & LOSS A/C

Sales and other income
The sales figure of the company has fallen from Rs 97536.54 millions to Rs 91630.41
millions, there by registering a decline rate of 6%.
The other income of the company has increased from Rs 288.22 millions to Rs 340.15
millions. The other income of the company includes Interest Income, Income from
Investments, Miscellaneous Receipts, Profit on sale of Fixed Assets, Insurance Claim.
If we look at the figures of the sales and other incomes we find that the figure of other
incomes is very less compared to the sales figure which indicates that the company is
completely dependent on the operational activities and does not derive much income from
other sources.

Expenditure
The cost of materials has risen from Rs 52910.47 millions to Rs 56143.96 millions. The cost
of materials includes Raw Materials Consumed, Packing Materials Consumed, purchase of
Finished Products and Adjustment of Stocks in process and Finished Goods. The Raw
Materials Consumed contributes to almost 100.22% to the cost of materials. The packaging
materials also constitute a significant portion which shows that FMCG companies spend
more on packaging than other sector companies. There has been a good growth rate in the
purchases of raw materials and packaging materials.
The manufacturing and other expenses have risen from Rs 7815.63 millions to Rs 9436.94
millions. The manufacturing and other expenses of the company as compared to the sales
figure are not significant.
The next item is Payments to and Provisions for Employees. It has also gone up slightly from
last year. It includes Salaries, Wages and Bonus, Contribution to Provident and other Funds,
Workmen and Staff Welfare.
The next item is the selling and administration expenses. Rent, advertising and publicity,
freight Donation are some of the components of it. It includes directors fees and also freight
expenses and exchange rate fluctuations.
The financial expenses of the company have also risen from last year. It includes interest paid
on fixed loans, bank charges etc.
The company has charged depreciation to the tune of Rs 5772 millions.
Thus the total expenditure of the company is Rs 86187 millions, thereby giving Operating
Net Profit before Taxation at Rs 5783 millions. After provision for taxation the PAT figure
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has been obtained. The PAT of the company has fallen from Rs 8543 millions to Rs 4007
millions. The profit which has been brought from last year has been added. Thereby giving a
total amount available for appropriation as Rs 25363 millions.
The company paid Final dividend @ 100% and transferred Rs 1000 millions to general
reserve. Thus the remaining is carried over to the balance sheet.
The EPS of the company is Rs 20.49 decreasing from Rs 37.44 last year.
The company has not paid huge amount as dividend, instead it has kept back the profits. This
is an indication that the company wants to take some expansion project in future.

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CASH FLOW ANALYSIS

OPERATING ACTIVITIES
Videocon has a net cash inflow in investing activities of Rs 6474.05 million for the
year 2009 as compared to the net cash inflow of Rs 11934.38 million for the year 2008. The
amount of cash inflow as compared to the previous has almost halved. There could be two
reasons for it:

The working capital was not managed as efficiently in the year 2009 as in 2008.

There was a huge cash outflow in terms of the loan repayment because of which the
net inflow of cash in operating activities reduced. Thus the company was in a sound position
to meet its liabilities.

INVESTING ACTIVITIES
Videocon has a net cash outflow in investing activites for the year 2008 as well as
2009 which is a good sign. It shows that the company is growing and diverging by making
investments but the amount invested in the year 2009 reduced by approximately 46 percent
in comparison to 2008.

The company spent majorly in buying the fixed assets worth Rs 10080.15 million. It
shows the growth of the company.

The amount worth of investments sold were more than those purchased which in turn
means availability of more money to purchase more of fixed assets.

It gives an indication of the company making more profits in the future by expanding
itself.

FINANCING ACTIVITIES
Videocon has a net cash inflow in financing activities worth Rs 4815.29 million
which is not quite favorable.

The net inflow indicates that the firm is borrowing more from external sources than
what it is paying out as dividends.

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this.

There is an outflow with respect to fixed assets, which might be an explanation for

Videocons equity for both the years remains almost the same which indicates that its
EPS and RONW values present a fair company evaluation picture.

It also borrowed more long term debts in 2009 as compared to the year 2008 which
could be for the working capital financing.

QUALITY CASH POSITION

The information provided by the cash flow statements of Videocon appears to indicate a
decent quality of cash position. It has been generating cash from operating activities and
utilizing this money in expanding its business and in terms of the growth in paying out
dividends. It has positive working capital and huge investment in fixed assets, along with a
large amount pending for allotment which would raise more funds. These are the good
indicators of companys soundness.

FUTURE PROSPECTS
Videocon has been generating cash from operations consistently which was significant in
view of size of the company. The information provided establishes its ability to generate
steady positive cash flows from operations in future and thus it is in a position to meet its
obligation towards lenders as well as shareholders.

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RATIO ANALYSIS
LIQUIDITY RATIOS
Ratios

Formulae

2009

2008

2007

2006

6.75

7.3

3.63

4.04

4.44

7.9

2.61

2.88

LIQUIDITY RATIOS:

Current Ratio

Current Assets
Current Liabilities

Quick Ratio

Current Assets
Inventory
Current Liabilities

Assumptions:
1.

Total Debt = Long term debt + Short term debt

2.
Deferred tax assets is not included in the current assets and similarly deferred tax
liabilities is not included in current liabilities.

Current Ratio
8
7
Ratio Value

6
5
4
3
2
1
0
Current Ratio

Year 2006

Year 2007

Year 2008

Year 2009

4.04

3.63

7.3

6.75

Current Ratio: It is the ratio of current assets to current liabilities. The ratio has been on the
higher side and presently it stands very high at 6.75 compared to the industry average of 2.42.
This implies that the company has more than adequate resources to discharge its short term
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obligations. This also allows cheaper credit and puts the suppliers and institutions in a more
comfortable position to give loans.
The above-normal ratio can attributed to very high loans and advances, inventories and
sundry debtors. This means that a lot of cash is blocked under the working capital .

Quick Ratio
9
8
Ratio Value

7
6
5
4
3
2
1
0
Quick Ratio

Year 2006

Year 2007

Year 2008

Year 2009

2.88

2.61

7.9

4.44

Quick Ratio: It is the same as current ratio except the fact that it excludes the inventories
from current assets and gives a more realistic picture of the companys financial power. It is
also quite high and this is because of loans and advances acquiring a very large
percentage(55%) of the current assets.

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SUPPLEMENTARY RATIOS FOR LIQUDITY

Ratios

Formulae

2009

2008

2007

2006

3.36

3.37

3.63

3.92

Inventory
No. of days in a year
109
Holding Period
Inventory Turnover Ratio

108

101

93.11

Debtors
Net Sales
Turnover Ratio
Average Debtors

5.56

6.73

6.81

6.82

Debtors
holding Period

66

54.26

53.59

53.51

Creditors
Net Purchases
Turnover Ratio
Average Creditors

10.38

10.05

9.09

9.49

Creditors
Payment
period

35.16

36.31

40.15

38.46

Supplementary Ratios for Liqudity

Inventory
COGS
Turnover Ratio
Average Inventory

No. of days in a year

Debtors Turnover Ratio

No. of days in a year

Creditors Turnover Ratio

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Inventory Holding Period

115

Ratio Value

110
105
100
95
90
85
Inventory Holding
Period

Year 2006

Year 2007

Year 2008

Year 2009

93.11

101

108

109

Inventory Holding Period: This indicates that how fast a company is able to convert its
inventory into cash. Videocons inventory holding period is 109 days and this is very high
compared to the industrys average of 50 days. This implies that the company has excessive
inventory which can be deployed into income generating assets to further strengthen the
financial position.

Debtors Holding Period

70

Ratio Value

60
50
40
30
20
10
0
Debtors Holding
Period

Year 2006

Year 2007

Year 2008

Year 2009

53.51

53.59

54.26

66

Debtors Collection Period: This indicates the credit period extended by a company to its
customer vis a vis the credit enjoyed by its suppliers. Videocons debtors collection period is
66 days which is higher than the industry average i.e. 50 days.

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Period in Days

Creditors Payment Period

41
40
39
38
37
36
35
34
33
32
Creditors Payment
Period

Year 2006

Year 2007

Year 2008

Year 2009

38.46

40.15

36.31

35.16

Creditors Payment Period: This indicates the credit policy extended to a company by its
suppliers vis a vis the credit allowed to its customers. Videocons creditors payment period is
35 days.
A company enjoying a longer but extending a shorter credit period stands to gain.
Considering this statement and both the debtors collection period and creditors payment
period the company is in a bleak position as its creditors payment period is shorter than its
debtors collection period.

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SOLVENCY RATIOS
Ratios

Formulae

2009

2008

2007

2006

1.46

1.37

1.163

2.23

SOLVENCY RATIOS:

Debt Equity
Ratio

Total Debt

Proprietary
Ratio

Proprietary Funds

Interest
Coverage
Ratio

EBDIT

Dividend
Coverage
Ratio

EAT

DSCR

EAT + Interest + Dep.

Shareholders Equity
42 %

.59

Total Asset
2.81

2.47

5.83

7.18

108.84

232.08

232.33

241.65

Interest

Preference Dividend
5.98

Installment

Debt Equity Ratio

2.5

Ratio Value

2
1.5
1
0.5
0
Debt Equity Ratio

Year 2006

Year 2007

Year 2008

Year 2009

2.23

1.16

1.37

1.46

Debt to Equity ratio: this ratio helps in assessing whether a company is relying more on debt
or capital for financing its assets. Higher the debt, more is the financial risk of default in
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interest and debt services. It also hampers the capacity of the company to raise cheaper funds.
Videocons debt to equity ratio is 1.46. This is higher than the industrys average of .95. An
ideal debt to equity ratio is considered to be 1.5 : 1 which is almost same as the company and
also implies that the company has a higher credibility in the market compared to its
competitors.
Proprietary Ratio: This indicates the extent to which assets are owned by owners funds.
Videocon has this value as 42 which is quite commendable.

Interest Coverage Ratio

8
7
Ratio Value

6
5
4
3
2
1
0
Interest Coverage
Ratio

Year 2006

Year 2007

Year 2008

Year 2009

7.18

5.83

2.47

2.81

Interest Coverage Ratio: It is the ratio of interest to interest on long term debt. This indicates
whether a company is comfortably placed to service its interest obligations out of revenue it
is generating. Higher the ratio more comfortable the company is in its ability to serve its
interest obligations. For Videocon, this ratio has substantially decreased and currently stand
at 2.89 which is near the industry average(3). The decline in the ratio can be attributed to the
decrease in operating profit over the years and simultaneously increase in secured and
unsecured loans thereby increasing the interest.

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Dividend Coverage Ratio

300

Ratio Value

250
200
150
100
50
0
Dividend Coverage
Ratio

Year 2006

Year 2007

Year 2008

Year 2009

241.65

232.33

232.08

108.84

Dividend Coverage Ratio: It is the ratio of Profit After Tax (PAT) to Preference Dividends.
This measures the firms ability to pay dividend on preference share which carry a stated rate
of return. Higher the ratio better the ability of a company to pay dividend on preference
shares. This ratio for Videocon considerably decreased in 2009 as the net profit also
decreased considerably this year but still it stands moderately high.
DSCR: It is the ratio of profit before interest and non-cash charges. This indicates whether a
company is comfortably placed to service its due outstanding long term loans and interest
obligations, thereon out of the revenues it is generating. Higher the ratio, more is the
companys ability to make contractual payments. Videocon has this ratio as 5.98 which is
higher than the ideal value of 2 :1, this is due to the fact that Videocon has high liquidity and
has very high assets.

20

PROFITABILITY RATIOS
Ratios

Formulae

2009

2008

2007

2006

28.4 %

37.74

32.6

32.72

19.5

24.70

21.8

22.49

4.3

8.66

10.3

11.33

PROFITABILITY RATIOS:

Gross Profit
Margin

Gross Profit

Operating
profit Margin

Profit Before Tax

Net Profit
Margin

Profit After Tax

Net Sales

Net Sales

Net Sales

Gross Profit Margin

40
MArgin in Percentage

35
30
25
20
15
10
5
0
Gross Profit Margin

Year 2006

Year 2007

Year 2008

Year 2009

32.72

32.6

37.74

28.4

Gross profit margin :- It measures the percentage of each sales rupee remaining after the firm
has paid for its goods. The gross profit margin of Videocon has decreased from past years
this can be attributed to the fact that the net sales of the company have gone down from the
previous year. Due to decrease in net sales the gross profit decreases which again lowers the
ratio of gross profit margin.

21

Operating Profit Margin

Margin in Percentage

30
25
20
15
10
5
0
Operating Profit
Margin

Year 2006

Year 2007

Year 2008

Year 2009

22.49

21.8

24.7

19.5

Operating Profit :- It is the profit after deducting the general expenses from the gross profit
but does not exclude interest , tax and non- cash charges. For Videocon the operating profit
margin has come down because the expenses have gone up substaintialy as compared to
previous years while net sales have gone down thus decreasing the operating profit of the
company. But Videocon still enjoys a higher margin of 19.5 % compared to the industry
average of 12.6 %. This shows that Videocon enjoys a very good market positioning.

Net Profit Margin

Margin in Percentage

12
10
8
6
4
2
0
Net Profit Margin

Year 2006

Year 2007

Year 2008

Year 2009

11.33

10.3

8.66

4.3

Net profit Margin :- It is the margin of the profit over sales after the effect of interest , tax and
other charges have been taken into account. Again for Videocon the interest has gone up from
previous years which has lowered its net profit margin to almost half at 4.83 in comparison
to previous year of 8.33.

22

RETURN ON INVESTMENT RATIOS

Ratios

Formulae

2009

2008

2007

2006

17.33

37.35

38.52

38.13

2.01

1.01

3.63

3.77

11.5

2.72

9.4

9.99

5.54

7.6

8.05

RETURN ON INVESTMENT RATIOS:

Earnings per
share

Net Profit Pref. Div.

Dividend per
share

Equity Dividend

Dividend
payout ratio

DPS

P/E Ratio

Market Price per share

Average Equity shares

Average Equity shares

EPS
15.34

EPS
Return on
Asset Ratio

(Profit After Tax)(Net

Sales)

2.3

(Net Sales) (Total

Assets)

23

Earnings Per Share

45
40
EPS in Rupees

35
30
25
20
15
10
5
0
Earnings Per Share

Year 2006

Year 2007

Year 2008

Year 2009

38.13

38.52

37.35

17.33

Earnings Per Share :- It is the ratio which is used for measuring performance of the
company. This ratio is important to the stake holders of the company . A higher ratio means
a high dividend and suppliers willingness to extend more favourable terms. Videocons EPS
has gone down very steeply this year. This is not a good sign for the company which had an
EPS of 37.35 last year, as this decreases the confidence of the shareholders in the company.
EPS is directly related to Net profit of a company and as the Net profit of the company has
decreased significantly the EPS of the company has gone down.

Dividend Per Share

4

DPS in Rupees

3.5
3
2.5
2
1.5
1
0.5
0
Dividend Per Share

Year 2006

Year 2007

Year 2008

Year 2009

3.77

3.63

1.01

2.01

Dividend per share :- this ratio depicts what is the company giving as dividend to the equity
share holders. DPS decreased in 2008 as the company decided to give a lesser dividend to the
shareholders. But this year the company again decided to increase the dividend and the value
has gone up nearing the previous average of 3.5.

24

Dividend Payout Ratio

14
12
Ratio Value

10
8
6
4
2
0
Dividend Payout Ratio

Year 2006

Year 2007

Year 2008

Year 2009

9.99

9.4

2.72

11.5

Dividend Payment ratio :- This ratio measures the percentage of earning paid to customers.
This is an important indicator for the shareholders of the company. For Videocon this ratio
decreased in 2008 due to decrease in DPS in 2008 which has a major effect on this ratio.

25

DU POINT ANALYSIS
Ratios

Formulae

2009

2008

2007

2006

5.3

12.4

14.9

16.24

DU POINT ANALYSIS:

Return on
Equity Ratio

(ROA)(Total Assets)
Shareholders Equity

Return on Asset Ratio

9
8
Ratio Value

7
6
5
4
3
2
1
0
Return on Asset Ratio

Year 2006

Year 2007

Year 2008

Year 2009

8.05

7.6

5.54

2.3

Return on Equity Ratio

18
16
Ratio Value

14
12
10
8
6
4
2
0
Return on Equity Ratio

Year 2006

Year 2007

Year 2008

Year 2009

16.24

14.9

12.4

5.3

26

Du Point Analysis :- This ratio of return on net worth is important to analyse the effect of
different components that have an impact on ROE like net profit margin, assets turnover ratio
and equity multiplier. Analysing these components can help in improving the component that
is not working correctly. Compare to previous years the net profit margin has decreased, also
the assets of the company has gone up while the net sales have decreased this had again
decreased the assets turnover ratio and has again decreased the ROE. Thus Videocon has to
improve its asssets turnover ratio as most of the assets that the company consists of
inventories and loan and advances which is not good for any company.

27

COMMON SIZE ANALYSIS

Reserves and Surplus

Reserves and Surplus

50
48
46
44
42
40
38
36
Reserves and Surplus

Year 2006

Year 2007

Year 2008

Year 2009

46.97

48.33

42.9

41.01

The reserve and surplus have gone down by 12.69% from 2006-2009. The decrease in reserve
and surplus can be attributed to the decrease in the net profit. The net profit decreased
substantially by 59.7% from 2006 to 2009. Therefore the company might not have been able
to maintain cash rich reserves and surplus.

Deferred Tax Liability

Deferred Tax Liability

3.5
3
2.5
2
1.5
1
0.5
0
Deferred Tax Liability

Year 2006

Year 2007

Year 2008

Year 2009

1.57

2.3

2.8

3.04

28

The Deferred Tax Liability of Videocon has increased by 93.6%. It could be on the account
of changing of the govt.s taxation policy.

Fixed Assets

Fixed Assets
60
50
40
30
20
10
0

Year 2006

Year 2007

Year 2008

Year 2009

48.12

47.51

38.8

35.62

Fixed Assets

The fixed assets of the company have gone down by 25.9%. This can be attributed to the
deduction of certain fixed assets and also increasing amortization of other intangible assets of
the company.

Current Liabilities

Current Liability
12
10
8
6
4
2
0
Current Liability

Year 2006

Year 2007

Year 2008

Year 2009

9.2

9.7

6.1

5.82

29

The current liabilities of the company has decreased by 36.73%. The possible reasons could
be the repayment of unsecured loans. This is thus a good sign for the company as it creates a
good imge in the shareholders mind.

Loans and Advances

Loans/Advances
30
25
20
15
10
5
0
Loans/Advances

Year 2006

Year 2007

Year 2008

Year 2009

7.54

11.52

26.9

28.36

Loans and Advances have increased by 276.12%. This could be negative on the part of the
company as the company is providing too much credit to its customers and employees. This
blocks the capital of the company in these assets and decreases the return of the company.

Manufacturing Expenses

Manufacturing Expense
12
10
8
6
4
2
0
Manufacturing
Expense

Year 2006

Year 2007

Year 2008

Year 2009

8.95

7.67

7.71

10.02

They have increased by a value of 11.9% from the past. It could be because of the rise in the
insurance expenses and rise in rise in freight charges.
30

31