Vishweshwar Education Society’s

Indira Institute of Business Management

PROJECT REPORT

ON

“A STUDY ON FINANCIAL STATEMENT ANALYSIS OF PAYTM”

(For 3 years from 2019 to 2022)

SUBMITTED TO

INDIRA INSTITUTE OF BUSINESS MANAGEMENT, NAVI

MUMBAI

BY

SAKSHI ANIL BAJAJ

Roll No. 2022043

Batch No 2022-24

IN PARTIAL FULFILLMENT OF MASTER OF

MANAGEMENT STUDIES (MMS), UNIVERSITY OF
MUMBAI

MONTH, 2023
 DECLARATION

I, Mr./Ms. Sakshi Bajaj hereby declare that this project report is the
record of authentic work carried out by me during the period from -
______to ______ and has not been submitted to any other University or
Institute for the award of any degree / diploma etc.

Signature
Name of the student
Sakshi Bajaj

Date
CERTIFICATE FROM THE COMPANY/ORGANISATION
 CERTIFICATE

This is to certify that the project entitled

‘---------------------------------------------’ submitted by Mr./Miss
_______________________ of Indira Institute of Business
Management in partial fulfillment for the award of Master of
Management Studies of Mumbai University is his/her original work
and does not form any part of the projects undertaken previously.

This project report is the record of authentic work carried out by

him / her during the period from ----------- to -------------.

He / She has worked under my guidance.

Faculty Guide Name Dr.

(Signature of Faculty Guide) (Signature of the Director)

Place: Navi Mumbai

Date:
 ACKNOWLEDGEMENT
The project is a golden opportunity to me for learning and self-
development. I feel very lucky and blessed to have talented and
wonderful people who lead me through in the completion of this
project.

I express my deepest thanks to the Director of Indira Institute of

Business Management, Dr. Susen Varghese.

My special thanks to my mentor Prof. Febin Varghese for his

valuable time and guidance. He took time from busy schedule and
guiding me to carry out my summer internship project at My
Sharekhan Lmt.

A humble thanks to all other faculties for helping me whenever I

need. I also feel delighted to express my thanks to library staff
and non-teaching staffs who helped me to complete my project on
time.

I express my sincere gratitude to My for giving me this

opportunity. My special thanks to Mr. Praful Sharma, (Kalyan,
Mumbai) for his guidance and support. I am thankful to the entire
staff fraternity of My Sharekhan Ltd for aiding me to complete
the internship successfully.

My gratitude to my friends and family for motivating and

encouraging me through the journey. I express my heartfelt
acknowledgement for the guidance and support from them.
Executive summary
Table of Contents

Chapter no Title Page No.

1 Introduction Approx No. of Pages.

05-06
1.1 Introduction to Financial Statement
Analysis
1.2 Objective of the study

1.3 Scope of the study

1.4 Limitations of the study

2 Profile of the organization

2.1 History & general information

2.2 Structure of the company

2.3 Competitors analysis Approx No. of Pages.

03-04
3 SWOT analysis

4 Review of Literature

5 Finding

6 Recommendations

7 Conclusion
Bibliography

CHAPTER 1

INTRODUCTION:
Introduction to Financial Statement Analysis:

Analyzing financial statements is essential to assessing a company's

performance and financial health. It entails looking over the financial accounts
of the business, which normally consist of the cash flow, income, and balance
sheets. Understanding a company's financial health, profitability, and capacity
to produce cash flows is the main objective of financial statement analysis. A
number of stakeholders, including creditors, investors, management, and other
interested parties, will find this information to be quite helpful.

A. An overview of the main elements of financial statement analysis:

1. Financial Statement Types:

 Balance Sheet: The balance sheet, also known as the statement of financial
position, gives an overview of the assets, liabilities, and shareholders' equity
of a business at a given moment in time. It adheres to the basic equation:
Liabilities + Shareholders' Equity = Assets
 Income Statement (Profit and Loss Statement): An organization's income,
costs, and net income for a certain time period are shown in the income
statement (also known as the profit and loss statement). It demonstrates how
successfully the business is turning a profit.
 Cash Flow Statement: The cash inflows and outflows from financing,
investing, and operating operations are displayed in this statement. It aids in
evaluating a business's capacity to produce and handle cash.
2. Financial Ratios:

Financial statement analysis often involves the calculation and

interpretation of various financial ratios. Some common ratios include:

 Liquidity ratios, such as the quick and current ratios,

 Ratios of profitability (such as return on equity and net profit margin)
 Efficiency Ratios (such as turnover in inventory and accounts receivable)
 Ratios of leverage (such as the debt-to-equity and interest coverage ratios)
3. Trend Analysis:

Finding patterns in a company's financial performance can be

accomplished by looking at financial statements across a number of periods.
This might show whether a business is doing better or getting worse over time.

4. Comparative Analysis:

A company's relative performance and position in the market can be

gained by comparing its financials to those of its rivals or industry benchmarks.

5. Qualitative Factors:

Analysis of financial statements involves more than just statistics.

Understanding a company's financial health also comes from qualitative aspects
including economic conditions, industry dynamics, and managerial caliber.

6. Risk assessment:

A company's future financial performance may be impacted by a number

of risks, including credit, operational, market, and liquidity issues. These risks
can be found with the aid of financial statement analysis.

7. Valuation:

Determining a company's inherent value and choosing which investments

to make require a thorough understanding of its financial statements.

8. Regulatory Compliance:

Generally Accepted Accounting Principles (GAAP) and International

Financial Reporting rules (IFRS) are two examples of pertinent accounting rules
and regulations that must be complied with by a company's financial statements.

Analysis of financial statements is a flexible technique that may be applied to a

number of tasks, such as risk management, credit evaluation, investment
analysis, and strategic decision-making. To obtain a complete picture of a
company's financial situation and future prospects, it is important to take into
account both quantitative and qualitative aspects.

B. ECONOMIC ANALYSIS

Paytm has had significant economic influence in India. It has aided the
expansion of the digital payments industry, resulting in a more efficient and
transparent financial system. Paytm has also contributed to lower transaction
costs for both businesses and consumers. This has simplified business
operations and facilitated customer transactions.

Furthermore, Paytm has created jobs and aided India's economic growth. The
company directly employs over 20,000 people and indirectly supports millions
of jobs through its merchant and partner ecosystem. Paytm adds to the
government's tax revenue as well.

• Digital payments growth: Paytm helped in the expansion of digital payments

in India. Only 10% of Indians made digital payments in 2010. Over 80% of
Indians now make digital payments. Paytm has played a significant part in this
transformation.

• Cost reduction: Paytm helped in lowering transaction costs for both

businesses and consumers. Paytm, for example, provides merchants with a free
payment gateway. This has enabled corporations to cut costs while increasing
earnings.

• Job creation: Paytm has produced jobs and aided India's economic growth.
The company directly employs over 20,000 people and indirectly supports
millions of jobs through its merchant and partner ecosystem. Paytm adds to the
government's tax revenue as well.

In addition to these direct economic benefits, Paytm has a variety of indirect

economic impacts. Paytm, for example, has helped to increase financial
inclusion, which has resulted in more people having access to financial services.

Overall, Paytm has had a good economic impact in India. It has contributed to
the promotion of cashless transactions, financial inclusion, economic growth,
and job creation.
However, Paytm is still a young startup. It is facing increased competition from
other digital payment companies such as Google Pay and PhonePe. Paytm is
also encountering regulatory problems. For example, the Reserve Bank of India
has placed limits on Paytm Payments Bank.

C. MARKET ANALYSIS

Paytm is an important digital payments and financial services firm in India. It is

India's largest digital payments company, with 90 million average monthly
transacting users and over 8 million merchants. Paytm provides a diverse range
of products and services, including mobile payments, e-commerce, bill
payments, financial services, and more.

The Indian digital payments market is quickly expanding. The market is

anticipated to be valued $19 trillion by 2025, up from $13 trillion in 2022.
Paytm is well-positioned to benefit from this expansion. The company has a
strong brand, a significant user base, and a diverse product and service offering.

Paytm is expected to maintain its position as a prominent participant in the

Indian digital payments business. The corporation has several advantages over
its competitors, including a vast user base, a diverse product and service
offering, and a strong brand.

Here are some key trends in the Indian digital payments market that are
likely to impact Paytm:

• The growth of e-commerce: E-commerce is quickly expanding in India. As

more consumers shop online, this is fuelling the expansion of digital payments.

• The rise of UPI: UPI is a real-time payment system that enables users to
instantaneously transfer money between bank accounts. UPI is gaining
popularity in India, and it poses a significant challenge to Paytm, which has
always relied on its own wallet system.

• The government's push for digital payments: The Indian government

encourages digital payments in a variety of ways. The government, for example,
has created the Digital India initiative, which aspires to transform India into a
cashless society.
D. INDUSTRY ANALYSIS

About

Paytm is a company that specializes in digital payments and financial services

in India. This market is rapidly growing because of increased smartphone and
internet adoption and the government's push to promote cashless transactions.
Payment gateways & digital wallets marked the beginning of India's fintech
sector. Some of the pioneers in this field included businesses like Paytm &
freecharge. The main emphasis during this time was on digitalizing and
improving payment processes. Now, Paytm is a leading player in the Indian
digital payments market, and it is well-positioned to benefit from the continued
growth of this market.

The introduction of the Unified Payment Interface (UPI) is 2016 is also played a
significant role in the growth of the fintech industry. It is a game-changer for
India's digital payments ecosystem. UPI transactions in India witnessed a
growth of 650% at the semi-urban and rural stores in India.

Competitors

Paytm is India's leading digital payments and financial services company. It

competes against a variety of other players, including:

• Other popular digital wallets in India include Google Pay, PhonePe, and
Amazon Pay.

• Traditional banks provide digital payments and financial services as well.

• In the Indian digital payments and financial services business, several new
entrants are also developing.

Market Share
PhonePe and Google Pay had the highest UPI app market share of about 43
percent as of first half of financial year 2022. This was followed by Paytm with
app market share of 8 percent.

E. FINANCIAL ANALYSIS

Stock Market Price:

• 839.00 INR as on September 21, 2023

Traded as

• NSE: PAYTM

• BSE: 543396

ISIN Number:

• INE982J01020
Objectives of the study:

1. Financial Health Assessment: Examine Bajaj Finserv's overall financial

health by examining important financial ratios like liquidity, profitability,
leverage, and efficiency.

2. To Identify Trends: To understand how Bajaj Finserv's financial ratios have

changed over a certain time period (for example, the last five years), identify
and analyze trends in the company's financial performance.

3. To understand concept of Ratio Analysis.

4. To compare value is ratio of Bajaj Finserv for the period 2016-2020.

Scope of the Study
1. The study has great significance and provides benefits to various parties
whom directly or indirectly interact with the company.

2. It is beneficial to management of the company by providing crystal clear

picture regarding important aspects like liquidity, leverage, activity and
profitability.

3. The study is also beneficial to employees and offers motivation by showing

how actively they are contributing for company growth.

4. The investors who are interested in investing in the company’s shares will
also get benefited by going through the study and can easily take a decision
whether to invest or not to invest in the company’s shares.

5. To know whether the company is growing or incurring losses or it is stagnant

in its performance
Limitations of the study:

 Differences in definitions
 Limitations of accounting records
 Lack of proper standards
 No allowances for price level changes
 Changes in accounting procedures
 Quantitative factors are ignored
 Limited use of single ratio
 Background is over looked
 Limited use
 Personal bias
Parties Interested in Analysis of Financial Statements
Analysis of financial statement has become very significant due to widespread
interest of various parties in the financial result of a business unit. The various
persons interested in the analysis of financial statements are: -
1. Short- term creditors
They are interested in knowing whether the amounts owing to them will
be paid as and when fall due for payment or not.
2. Long –term creditors
They are interested in knowing whether the principal amount and interest
thereon will be paid on time or not.
3. Shareholders
They are interested in profitability, return and capital appreciation.
4. Management
The management is interested in the financial position and performance
of the enterprise as a whole and of its various divisions.
5. Trade unions
They are interested in financial statements for negotiating the wages or salaries
or bonus agreement with management.
6. Taxation authorities
These authorities are interested in financial statements for determining the tax
liability.
7. Researchers
They are interested in the financial statements in undertaking research in
business affairs and practices.
8. Employees
They are interested as it enables them to justify their demands for bonus and
increase in remuneration. You have seen that different parties are interested in
the results reported in the financial statements. These results are reported by
analyzing financial statements through the use of ratio analysis.
 CHAPTER 2
Profile of the Organization
History & General Information:

Sharekhan was founded by Mumbai-based entrepreneur Shripal Morakhia

in 2000. Sharekhan pioneered the Indian online retail brokerage industry
 and leveraged on the first wave of digitization, when dematerialization
(demat) of securities came into effect and electronic trading was
introduced in the stock exchanges.

Company Profile:

 Name of the company- Sharekhan pvt. Ltd.

 Owner- Shripal Morakhia
 Established in year- 02 Jun, 2000
 Location- 18th Floor, Ruby, Ruby Mills House, Compound, Tulsi Pipe
Rd, Dadar West, Matunga West, Mumbai, Maharashtra 400028
 Industry- Retail brokerage full-service brokerage firm
 Activity- Sharekhan is a full-service broker offering trading and
investment services in equity, derivatives, commodities, currency and
mutual funds etc.
 Branches- 240 Sharekhan Branches Across India
 Total no. of employees- 1,001 to 5,000 employees in India
 Turnover- Rs. 25,737 crores (2021)

Mission and Vision of the company:

 Mission- The company plans to invest around €70 million.

Sharekhan also aims to launch a new website, mobile apps, hire
more people, and upgrade its trading platform
 Vision- “We believe in mobile commerce. Our goal is to become
the most preferred platform for digital savers and investors”

Products offer by sharekhan:

Hierarchy in sharekhan

Sales Side Dealing Side

 Trainees  Junior Dealer
 Super Trainees  Dealer
 Sales Executive  Relationship Manager
 Senior Sales Executive  Senior relationship manager
 Business Development  Equity advisor
Executive
 Assistant Sales Manger  Assistant branch manager
 Deputy Manager  Branch manager
 Territory Manager  Cluster head
 Area sales manager/ cluster  Directors
 manager
 Regional sales manager  CEO
 Regional Head  Regional Head
 Vice president  Vice president

Competitors Analysis:

Broking Business in India.

1. TradeStation
2. RoboMarkets
3. Motilal Oswal
4. CMC Markets
5. Questrade
6. Sarwa
7. Libertex
8. CommSec
9. IIFL Securities
10.Trading212
11.AngelOne
CHAPTER 3
SWOT Analysis of the project
STRENGTH:
1. Relevance

2. Practical Application

3. Contribution to Knowledge

4. Data Availability

5. Learning Opportunity

Weakness:
1. Data Accuracy

2. Limited Scope

3. Subjectivity

4. Resource Intensive

Opportunities:

1. Wider Application

2. Policy Implications:

3. Publication:

4. Consulting or Advisory Roles

Threats:

1. Data Privacy and Security

2. Market Volatility

3. Changing Regulations

4. Competitive Analysis

5. Resource Constraints
 CHAPTER 4

Review of literature
Title: "Financial Ratio Analysis and Interpretation of Financial
Statements"

Author: Charles W. Mulford and Eugene E. Comiskey

Summary: This paper provides a comprehensive overview of financial

ratio analysis techniques and their applications in interpreting financial
statements. It covers various ratios and their significance in evaluating a
company's financial health.

 The existing themes include

 The functional form of the financial ratios, i.e. the proportionality
discussion.
 Distributional characteristics of financial ratios.
 Classification of financial ratios.
 Comparability of ratios across industries, and industry effects.
 Distributional characteristics of financial ratios.
 Classification of financial ratios.
 Comparability of ratios across companying industries, and companying
industry effects.
 Time-series properties of individual financial ratios.
 Companyruptcy prediction models
 Explaining (other) firm characteristics with financial ratios
 Stock markets and financial ratios
 Forecasting ability of financial analysts vs. financial models
 Estimation of internal rate of return from financial statements
The history of financial statement analysis dates far back to the end of the
previous century. However, the modern, quantitative analysis has developed
into its various segments during the last two decades with the advent of the
electronic data processing techniques. The empiricist emphasis in the research
has given rise to several, often only loosely related research trends in
quantitative financial statement analysis. Theoretical approaches have also been
developed, but not always in close interaction with the empirical research.

Classifications of Ratios

The use of ratio analysis is not confined to financial manager only. There
are different parties interested in the ratio analysis for knowing the financial
position of a firm for different purposes. Various accounting ratios can be
classified as follows:
1. Traditional Classification

2. Functional Classification

3. Significance ratios

1. Traditional Classification It includes the following.

 Balance sheet (or) position statement ratio: They deal with the relationship
between two balance sheet items, e.g. the ratio of current assets to current
liabilities etc., both the items must, however, pertain to the same balance sheet.

 Profit & loss account (or) revenue statement ratios: These ratios deal with the
relationship between two profit & loss account items, e.g. the ratio of gross
profit to sales etc.,

 Composite (or) inter statement ratios: These ratios exhibit the relation between
a profit & loss account or income statement item and a balance sheet items, e.g.
stock turnover ratio, or the ratio of total assets to sales.

2. Functional Classification These include liquidity ratios, long term solvency

and leverage ratios, activity ratios and profitability ratios.

3. Significance ratios Some ratios are important than others and the firm may
classify them as primary and secondary ratios. The primary ratio is one, which
is of the prime importance to a concern. The other ratios that support the
primary ratio are called secondary ratios.

In The View of Functional Classification the Ratios Are:

1. Liquidity ratio

2. Leverage ratio

3. Activity ratio

4. Profitability ratio

1. Liquidity Ratios Liquidity refers to the ability of a concern to meet its current
obligations as & when there becomes due. The short term obligations of a firm
can be met only when there are sufficient liquid assets. The short term
obligations are met by realizing amounts from current, floating (or)circulating
assets The current assets should either be calculated liquid (or)near liquidity.
They should be convertible into cash for paying obligations of short term
nature. The sufficiency (or) insufficiency of current assets should be assessed by
comparing them with short-term current liabilities. If current assets can pay off
current liabilities, then liquidity position will be satisfactory. To measure the
liquidity of a firm the following ratios can be calculated

 Current ratio

 Quick (or) Acid-test (or) Liquid ratio

 Absolute liquid ratio (or) Cash position ratio

(a) Current Ratio: Current ratio may be defined as the relationship between
current assets and current liabilities. This ratio also known as Working capital
ratio is a measure of general liquidity and is most widely used to make the
analysis of a short-term financial position (or) liquidity of a firm.

(b) Quick Ratio Quick ratio is a test of liquidity than the current ratio. The term
liquidity refers to the ability of a firm to pay its short-term obligations as
&when they become due. Quick ratio may be defined as the relationship
between quick or liquid assets and current liabilities. An asset is said to be
liquid if it is converted into cash within a short period without loss of value.

(c) Absolute Liquid Ratio Although receivable, debtors and bills receivable are
generally more liquid than inventories, yet there may be doubts regarding their
realization into cash immediately or in time. Hence, absolute liquid ratio should
also be calculated together with current ratio and quick ratio so as to exclude
even receivables from the current assets and find out the absolute liquid assets.
FINDINGS:
1. Current ratio of company in year 2015-16 is 16.73, in year 2016-17 is 7.57, in
year2017-18 is 46.2, year 2018-19 is 30.82 and in the last year 2019-20 is
98.41.
2. Quick Liquid/Acid Test Ratio of company in year 2015-6 is 16.73, in year
2016-17 is 7.57, in year 2017-18 is 46.2, year 2018-19 is 30.82 and in the last
year 2019-20 is 98.41.
3. Debt-Equity Ratio of company in year 2014-15 is 0.4, in year 2015-16 is
0.28, in year 0.21, year 0.16 and in the last year 2018-19 is 0.14.
4. Net profit margin is high in the last year 2019-20, when compared to
remaining years.
5. Capital employed is greater or higher in the year of 2019-20, when compared
to remaining years.
6. Company can have an easy access to cash to meet financial obligations in the
year 2019-20
7. Inventory turnover ratio of the company is not satisfactory because the ratio
is going on decreasing
8. Fixed asset turnover is too high in the year 2019-20, when compared to
remaining years
9. Total asset turnover ratio is high i.e.0.46 (in the year of 2019-20),
10. Gross profit and net profits are increased during the period of study, which
indicates that’s efficient management in manufacturing and trading operating.
11. Current Liabilities were increased compared to base year i.e. 2014.
12. Current ratio of Bajaj Finserv is comparatively lower than other companies
and also the Idea ratio of 2:1.
13. Generally a quick ratio of 1:1 is considered satisfactory as a firm. The ratio
of Bajaj Finserv are comparatively better than other companies.
14. When sales of the company increase the company production process also
increases. It helps to increase the growth of the company
RECOMMENDATIONS:
1) Company check only financial, technical and commercial feasibility of the
project and it should not consider sensitivity analysis and social cost benefit
analysis of the project.

2) Company should consider this because these are also important from the
point of view of risk and economy growth. Company should be caution about
the availability of security and ensure honesty of both borrower and guarantor
so as to avoid the account becoming the loss assets.

3) Institute executive should visit examine & interact on regular basis.

4) They should pay proper attention towards checking of various components of

study material & faculty potential before end user delivery. Otherwise it tends
towards defame of brand name in comparison to rivals.

5) Need to expand counselor services as the consumer base of Bajaj Finserv is

increasing with tremendously fast pace.

6) Proper attention should be paid for advertisement planning otherwise it may

lead to problem for institute.

7) Company should tie up with some event management company to organize

various promotional activities for the increment of student.

8) From the study it is found that there is lack of periodic review & analysis
which is leading to inefficient utilization of resources &its leads to loss when its
compare to previous years apart from current year. So the firm should conduct
quarterly analysis. Hence the problems can be amended in time.

9) After the analysis of Financial Statements, the company status is better,

because the Net working capital of the company is doubled from the last year’s
position.

10) The company is utilizing the fixed assets, which majorly help to the growth
of the organization. The company should maintain that perfectly.

11) The company fixed deposits are raised from the inception, it gives the other
income i.e., Interest on fixed deposits.
 The company must do efficient utilization of shareholders fund to
improve its ROI and ROE to maintain its goodwill in investors mind. The
company can go for some debt borrowing to increase E.P.S for shareholders
CONCLUSION:
Financial statement analysis generally begins with a set of financial ratios
designed to reveal a company’s strength and weakness as compared to other
companies in the same industry and to show whether its financial position has
been improving or deteriorating over time. Also it helps in anticipating firm’s
future conditions and more importantly it is the starting point for planning
actions that will improve the firm’s future performance. As we know financial
report contain a lot of information hence the main objective of financial analysis
is to seek through the information to find useful and data in analyzing a
business.
Efficient management of finance is very important for the success of an
enterprise. Term financial performance is very dynamic term. The subject
matter of financial performance has been changing very rapidly. In present time
greater importance is given to financial performance.
Finance is the life blood of every business. Without effective financial
management a company cannot survive in this competitive world. A Prudent
financial Manager has to measure the working capital policy followed by the
company
The company’s overall position is at a good position. Particularly the
current year’s position is well due to raise in the profit level from the last year
position. It is better for the organization to diversify the funds to different
sectors in the present market scenario.
Higher demand for seating system can be expected in the next decade,
once investments in ports and port development have started to reach fruition.
As India is hopeful of competing with other established shipbuilding nations,
the multinationals are likely to find plentiful opportunity in India, given the
compliance requirements imposed by effects of international legislation on
seating systems.
Also other segments are showing promising opportunities to grow. With
these many opportunities at hand along with the potential player who would be
able to make use of the situation well, researcher would rather start looking at a
career in Bajaj Finserv. So from this researcher can conclude that there is a
better opportunities for investors to invest in this company.
BIBLIOGRAPHY:

Text Books

Murthy - Management Accounting First Edition-2000, S. Viswanathan (Printers

&Publishers), PVT, LTD.

S.M. Maheswari - Management Accounting, Sultan Chand & Sons Educational

Publishers, New Delhi.

R.K. Sharma and Shashi K Gupta Management Accounting and Business

Finance-16th Edition 2008

Murali Krishna Working Capital Management- 2010

Prasanna Chandra Financial Management: Theory & Practice- 2004

Website

www.haritaseating.com

www.acma.in

www.google.com

www.readyratios.com

www.crisilresearcher.com

www.moneycontrol.com

www.investopedia.com