Part1

Overview
about Project

1
Introduction
As part of B. Com curriculum of NEP 2020 of Karnataka University,
Dharwad, the VI Semester students are required to undergo Internship
for a specified period in a designated organisation.
But in case of practical difficulties like non-availability of
organisations in sufficient numbers, the students are given a choice to
opt for “Financial Analysis Report” with following objectives,

Explain the art of analyzing the financial statements.

1) Understand the process of interpretation of financial reports.
2) Explain various tools of financial analysis.
In view of the above difficulties, we have chosen “Financial Analysis
Report” for our study.

Scope of the Study

Scope of the study is limited to selected few aspects of the
company like fundamentals of the company, Ratio Analysis,
Comparative Income Statement & Cash Flow Statement. The analysis
is done to know about the company in general and some financial
aspects in particular like Solvency, Liquidity, Profitability, Return on
Investment, overall financial performance & flow of cash in & out of
the business.

2
Objectives of Study
 To understand the structure of Annual Report of a listed Public
Limited Company.
 To understand the tools of analysing a financial statement.
 To study the organizational structure.
 To know nature of business.
 To know the history of the organisation under study.
 To understand usage of different analytical tools like Ratio
Analysis, Comparative Income Statement & Cash Flow
Statement.
 To study the art of drawing conclusions out of analysis done by
using above tools.

Collection of Data
Data collection or data gathering is the process of gathering and
measuring information on targeted variables is an established system,
which then enables one to answer relevant questions and evaluate
outcomes. Data collection is a research component in all study fields,
including physical and social sciences, humanities, and business.

Methodology of Data Collection

Methodology used for any study involves the collection of primary
and secondary data. The collected data was then analysed and
evaluated to provide valuable and meaningful information.

Primary Data
Primary data is the data that is collected for the first time through
personal experiences or evidence, particularly for research. It is also
described as raw data or first-hand information.

3
Secondary Data
Secondary data refers to data that is collected by someone other than
the primary user. Common sources of secondary data are, census,
information collected by government departments, organizational
records, data that was originally collected for other research purposes
and information released by the concerned organisation in public
domain like website, press releases etc. Primary Data, by contrast, are
collected by the investigator conducting the research.
As our study did not include internship, we have collected data only
through secondary sources like websites of the company, press
releases etc.

Limitations
 The information is limited to one company only.
 Availability of abundant information was the limiting factor.
 Given the volume of information in the Annual Reports, the
sophisticated concepts & terms used, time was the limiting factor.

4
 Part-2
Company
Profile

5
Introduction About The Company of
Havells India Ltd

It is pure Indian Company. Havells India Limited is an Indian multinational

electrical equipment company, based in Noida. Havells India Limited is the
country’s leading Fast Moving Electrical Goods (FMEG) manufacturer,
producing a wide range of world class industrial and consumer electrical
products. The Company works in step with the Make in India initiative and has
an extensive production and distribution network across India and the world.
Havells manufacturers 90% all its products in house. The Company has an
extremely strong global presence across 50 countries with manufacturing units
in China, Europe, Africa and Latin America apart from 7 manufacturing
locations in India. Our domestic manufacturing plants are located in Dehli
NCR, Alwar, Baddi, Faridabad, Haridwar, Neemrana and Sahibabad.

History :
It is an Multinational Company established in 1958 by Haveli Ram Gandhi and
later it was sold to Qimat Rai Gupta in 1971.Initially it was a small electrical
trading business. The company started by importing and selling electrical goods.
In 1971, Havells expanded into manufacturing, setting up its first manufacturing
facility for switches.During the 1980s and 1990s, Havells expanded by buying
other companies and adding more products like fans, lights, and home
appliances to its lineup. In 2007, Havells made a big move by buying a
company called Sylvania in Europe, which helped it become more famous
worldwide for making lights. Today, Havells continues to grow by making new

6
types of energy-efficient products and selling them in more than 50 countries.
Recently, Havells has also started selling things like water heaters and air
purifiers for homes, expanding its range of products. Havells is known for
making good-quality electrical items and is one of the top companies in its
industry today.

Founder
Qimat Rai Gupta

Present Board and Executives:

Anil Rai Gupta

He is the son of Qimat Rai Gupta. He is the present Chairman and managing
director of Havells India Ltd. He has been the managing director of this
company since 2008 . He has been serving in this role approximately 16 years.
Sujrit Kumar GuptaJalaja Ashwin Dani
Non Executive & Non independent Director Independent Director

T. V Mohandas Pai Upendra Kumar Sinha

Non Executive & Non independent Director Independent Director

Puneet Bhatia Subhash S Mundra

Non Executive & Non independent Director Independent Director

Siddhart PanditB. Prasada Rao

Whole Time Director Independent Director

7
Rajesh Kumar GuptaVivek Mehra
Whole Time Director Independent Director
NamrataKaul Ashish Bharat Ram
Independent DirectorIndependent Director

CSR Activities ( Corporate Social Responsibility)

Corporate Social Responsibility (CSR) initiatives are designed to support the
nation’s goal of inclusive growth and the United Nations Sustainable
Development Goals(SDGs). Especially focusing on development and well being
of children. Havells believes that children are the future of nation.
Havells India spent over ₹20 crore on CSR activities in the year 2019-2020

Havells CSR key works are :

1.Health and nutrition:
Providing nutrition to eradicate hunger.Performance of F. Y 2022-23 on CSR
activities are Providing Mid-day meal to 70,000+ students on a daily basis at
Alwar, Rajasthan. A holistic initiative that started with serving just 1,500
children across 5 schools expanded to serve over 70,000 students across 700+
schools daily in the district. During the year, we organised a Quality Nutrition -
FOSTAC (Food Safety Training & Certification) programme through FSSAI
team for Mid-day meal food handlers & kitchen staff. This initiative was well
received by all the staff.
Havells company received “Bhamashah Award 2022” towards Mid-day meal
programme from State of Education.
Under Humanitarian causes, Havells distributed 09 Electric Tricycles to Retired
Disabled Soldiers on March 9, 2023 at Alwar, Rajasthan
Organised Drawing Competition for 06 Govt. Schools in MDM complex on
Children’s Day, November 14, 2022.

8
2.Sanitation:
a) Maintenance of 4,000+ Bio-toilets in over 500 schools
b) ~2 Lakh Sanitary napkins distributed in FY 2022-23 and till date,
distributed to over 4 lakh girls.

3.Promoting Education:
a) 300+ students, researchers and faculty members have been using the
Havells Research Building at Plaksha University (Reimagining Higher
Education)
b) Free coaching classes to underprivileged children at Govt. Schools.
"On December 17, 2022, Plaksha University celebrated its first Founder's Day,
marking the inauguration of the Havells Research Building. Since its launch in
2021, over 300 students, researchers, and faculty members have utilized the
building's facilities, including the Makerspace, Physical World Lab, and Nature
Machines Lab, for tinkering, innovation, and professional development.
Notably, the building has attracted a diverse user base, with 50% of users
hailing from tier 2/3 towns and 30% being female students. Many users also
come from underserved communities with limited access to technology
education, making the Havells Research Building a valuable resource for
promoting inclusivity and innovation in the field."

4.Environment Protection:
Planted over 4 Lakh trees in FY 22-23 (18 Lakh trees planted from 2018
till date) at Bhopal (Madhya Pradesh Rajya Van Vibhag Nigam), Alwar and
Neemrana plantation project.
"Havells India Ltd has made significant strides in its tree plantation initiative,
with over 18 lakh trees planted across Bhopal, Neemrana, and Alwar to date. As
part of our commitment to giving back to society, we have engaged the Indian
Institute of Forest Management (IIFM) to conduct a third-party assessment of
our plantation project in Bhopal, Madhya Pradesh. The assessment aims to

9
ascertain the biomass accumulation and carbon capture potential of our
plantation project. Encouragingly, the survival rate of the plantation exceeds
90% across all compartments, reflecting effective management. According to
estimates, the total CO2 sequestration potential of the plantation after the final
harvest (in 60 years) will be approximately 430,687 tonnes."

Financials of 2023
Amount ( in crores)

1. Revenue 17045.40

2. Operating Revenue 16868

3. Per Value of Share

4. Total No. of shares outstanding 60,64,88,642

5. Market Capitalization

6. EPS 17.6

7. PBT 16,868

Brands

10
Products

11
 1. Switch Gears
 Switches
 Domestic switchgears
 Industrial Switchgears
 Automation and control

2. Electrical Consumer Durables

 Fans
 Water Heaters
 Appliances

3. Lighting and Fixtures

12
  Professional lightings
 Consumer lightings

4. Cables
 Power cables
 Flexible cables

5. Lloyd Consumer
 Air Conditioner
 Tv
 Refrigerator
 Washing machine

6. Others
 Motor pumps
 Personal grooming
 Water purifier
 Solar

Organisation Profile at a Glance

Name of the Company Havells India Ltd

904, 9th Floor, Surya Kiran Building, K
Registered Address G Marg, Connaught Place, New Delhi
Central Delhi DL IN 110001.
Havells is a leading electrical equipment
manufacturing company that produces a
wide range of products including
Nature of Business
electrical goods, home appliances, solar
solutions, lighting, switchgear, water
pumps,and personal grooming products.
13
 Date/Year of
1958
Establishment
Founders Qimat Rai Gupta
Present Board of Anil Rai Gupta
Directors Chairman and managing Director

Sujrit Kumar Gupta

Non Executive &Non Independent
Director

TV Mohandas Pai
Non Executive & Non Independence
Director

Puneet Bhatia
Non Executive Director

Siddhart Pandit
Whole Time Director

Rajesh Kumar Gupta

Whole Time Director

Jalaj Ashwin Dani

Independent Director

Upendra Kumar Sinha

Independent Director

Subhash S Mundra
Independent Director

B. Prasada Rao
Independent Director

Vivek Mehra
Independent Director

14
 Namrata Kaul
Independent Director

Ashish Bhart Ram

Independent Director

The capital structure of Havells India

Ltd. is as follows ¹ ²:
- Period: 2023-2024
- Instrument: Equity Share
- Authorized Capital: Rs 103.2 cr
- Issued Capital: Rs 62.7 cr
Capital Structure
- Paid-Up Capital: 626,683,030 shares
(Rs 1 face value each)
- Total Capital: Rs 62.7 cr
- Number of Shares: 626,683,030
- Face Value: Rs 1
- Paid-Up Capital: Rs 62.67 cr
Lloyd
REO
Brand Name Havells
Crabtree
Standard
Products Cables, motors, fans, electrical water
Manufactured (name heaters, television, washing machines,
only few) etc.
RR cabel, Amara Raja, Bajaj Electricals,
Competitors CG power &Industrial solution, Exide
Industries, etc
Present workforce 6000 workers

15
Organisational Structure
Chairman &Managing Director
Anil Rai Gupta

Whole Time Director Whole Time Director Whole Time Director

Rajesh Kumar Gupta Siddhart Pandit Ameet Kumar Gupta

Non Executive Non Executive

Director Director
16
Surjit Kumar Gupta T. V Mohandas Pai
 Independent Director Independent Director Independent Director

Jalaj Ashwin Dani Upendra Kumar Sinha Subhash S Mundra

Independent Director Independent Director

B. Prasaada Rao Vivek Mehra

Independent Director Independent Director

Namrata Kaul Ashish Bharat Ram

17
 Part-3
Data Analysis
& Interpretation

Ratio Analysis
Meaning of Ratio Analysis
Ratio analysis is a financial analysis technique used to evaluate a company's
performance and financial position by calculating and interpreting various ratios
from its financial statements. These ratios provide insight into a company’s
liquidity, profitability, efficiency, solvency and management make informed
decisions.

 Some types of ratios for analysing financial report are as follows:

18
 1) Current Ratio:
Current ratio means the ratio of current assets to current liabilities. It
indicates relationship between current assets and current liabilities. It is
also called as working capital ratio. It is calculated as follows :

Current Ratio = Current Assets /Current liabilities

Current assets are those assets, which can be converted into cash
within a year. Theyinclude cash in hand and at bank, sundry debtors, bills
receivable, stock, marketable securities, prepaid expenses, outstanding incomes
etc. Loose tools should be excluded.
On the other hand, current liabilities are those liabilities that are payable within
a year. They include sundry creditors, bills payable, bank overdraft, outstanding
expenses, provision for taxation etc.
A current ratio of 2:1 is considered to be ideal. It means current assets should be
twice of current liability to provide for sufficient working capital after meeting
current liabilities. A very high ratio is also not desired as it indicates less
efficient use of funds.

 Here , is the calculation for finding current ratio :

Current Assets (₹in
crores)
Cash and cash equivalents 456.86
Trade receivables 971.33
Stock 3708.47
Investment 180.87
Bank balance 1405.01
Other financial assets 116.86
Contract assets 26.67
Other current assets 175.15
Total current assets 7041.25

19
 Current Liabilities (₹in
crores)
Trade payables 2642.54

Provisions 274.91

Borrowings Nil

Lease Liabilities 36.19

Other financial liability 624.85

Contract liability 82.53

Other current liability 138.99

Current tax liability 32.26

Total current Liabilities 3832.27

Current Ratio =7041.25

3832.27
= ₹1.83

Interpretation:A current ratio of 2:1 is considered to be ideal. It means

current assets should be twice of current liability to provide for sufficient
working capital after meeting current liabilities
Here, current ratio for the year March 31st 2023 , is 1.83.This shows that the
company has 1.83 times more current assets than current liability. So here
liabilities can be met by current assets and sufficient working capital can also be
provided for day to day operations.

2) Liquid Ratio :

20
 This ratio is also called as ‘Quick Ratio’. Liquid ratio is ratio of liquid assets
to liquid liabilities.

Liquid Ratio = _Liquid Assets_

Liquid liability
The assets which are immediately convertible into cash are called as liquid
assets. Current assets except stock and prepaid expenses are treated as liquid
assets.
Similarly, the liability which is to be paid immediately is termed as liquid
liability. All current liabilities except bank overdraft are considered as liquid
liabilities.
A liquid ratio of 1:1 indicates highly solvent financial position of a firm. This
ratio is used as supplementary to current ratio in analysing liquidity.
 Here is the calculation of Liquid Ratio:
Liquid Assets (₹in
crores)
Total current assets 7041.25

Stock (3708.47)

Prepaid Expenses (4.71)

Total liquid assets 3328.07

Liquid Liabilities (₹in

crore)
Total current liability 3832.27

(-)Bank overdraft -

Total liquid liabilities 3832.27

21
Liquid Ratio = 3328. 07
3832.27
= ₹ 0.87

Interpretation:A liquid ratio of 1:1 indicates highly solvent financial position

of a firm. Here liquid ratio is 0.87. Generally a liquid ratio of 0.87 indicates a
good but not excellent liquid position. Company nay not able to pay of all it’s
liquid liability immediately by insufficient liquid asset.
So company need to consider improving liquidity to meet it's short term debt.

3) Debt Equity Ratio:

This ratio indicates the relationship between borrowed funds (debt) and
owners funds (equity).This is also called as external and internal equity
ratio. A debt equity ratio of 1:1 is consideredas ideal.

Debt Equity Ratio = Total long term debt

Shareholders fund

• Long term debt = Debentures + Other long term loans

= ( nil) + (nil)
= 0
 Shareholders fund = Pref. cap. + Equity cap+ Reserves &Surplus -
Goodwill – Preliminary expenses.
= nil + 62.65+6551.86- 310.47- nil
= 6304.04

Debt Equity Ratio = ____0__

= 6304.04

= 0

Interpretation: For debt equity ratio 1:1 is considered as ideal. But here in
this company debt equity ratio is nil that us zero. This indicates that the
company has no debt financing. If there is no finance company only depends on
equity.
22
This shows this company is in safe and stable position but limits the ability to
grow or expand the business.

4) Proprietary Ratio:
It is a variant of debt equity ratio. It is the ratio of proprietor’s fund
(shareholders fund) to tangible assets. Formula for calculation of this
ratio is as follows.

Proprietary Ratio = _Shareholders fund_

Total Tangible Assets

Shareholders funds include preference share capital, equity share capital,

all reserves & surplus less goodwill & preliminary expenses.Total
tangible assets include all assets except goodwill and preliminary
expenses. A ratio of 50% is considered safe.

Shareholders Fund (₹ in
crores)
Equity share capital 62.62

Reserves & Surplus 6551.86

(-) Goodwill 310.47

(-) Preliminary expenses (Nil)

Total

Total Tangible Assets (₹in

crores)
Property, plant and equipment 2227.77

Proprietary Ratio = 6304.04

2227.77
= 2.82
= 2.82×100 = 282%

23
Interpretation: For proprietary ratio , ratio of 50% is safe. It is considered as
ideal. But here the company used more than 50% of it’s shareholders fund to
purchase tangible assets.
Using more than that can indicates Over investment inasset and potentially less
efficient use of resources.
In this case, the company has used 283% of its shareholders' funds to purchase
tangible assets, which is significantly higher than the ideal percentage. This may
indicate a potential risk or inefficiency in the company's asset management.

5) Fixed Asset Ratio:

This ratio explains whether the firm has raised adequate long term funds
to meet its fixed assets requirements. It is calculated as follows :

Fixed Asset Ratio = Fixed Asset____

Long term funds

 Here is the calculation for Fixed asset ratio

Fixed Assets (₹ in
crores)
Property, plant and equipment 2227.77

(-)Depreciation 219.37

-Depreciation of right of use of asset 26.13

(-) Investments 0.45

(-) Investments in subsidiaries 20.00

Total 1961.82

Long term funds (₹ in

crores)
Pref. Share capital Nil

24
 Equity share capital 62.65

Other equity 6551.83

(-) Goodwill 310.47

(-) Preliminary expense Nil

Total 6304.04

Fixed Asset Ratio = 1961.82

6304.04
= ₹0.31

Interpretation: The Fixed Asset Ratio of 0.31 or 31% indicates that 31% of
the company's long-term funds are invested in fixed assets, such as property,
plant, and equipment.
Fixed asset ratio of 0.31 that is 31% for Havells India Ltd is slightly lower than
the ideal range suggesting potential for improvement in fixed asset utilization. A
higher ratio (40-50%) is generally considered optimal for the electrical
equipment industry.
A higher ratio indicates a higher proportion of long-term funds invested in fixed
assets, which can be beneficial for company.However, a very high ratio may
also indicate over-investment in fixed assets.

6) Interest Coverage Ratio:

This ratio is also called as ‘Debt Servicing Ratio’. It relates the fixed
interest charges to the income earned by the firm. It shows whether the
firm has earned sufficient profit to pay periodically the interest charges. It
is calculated as follows :

Interest Coverage Ratio = PBIT or EBIT__

Interest Charges

25
 OR

=Net profit before interest &tax

Fixed interest charge
 PBIT = 1450.25
 Interest Charges = Nil (0)
= 1450.25
0
= 0(nil)

Interpretation:
If the Interest Coverage Ratio (ICR) is nil because there is no interest charged, it
means that the company has no debt or interest-bearing liabilities. This can be a
good sign, indicating that the company is debt-free and doesn't have to worry
about making interest payments.
There is no debt burden means lower financial risk. The company focus on
expansion of it’s business without any tension.

7) Solvency Ratio:

It refers to the ability of the firm to pay both short term and long term
liabilities. A company is solvent, if it can meet its outside liability out of
its total assets. It is calculated as follows :

Solvency Ratio = Outside liability × 100

Total assets

Outside liabilities include debentures, long term loans, creditors, bills

payable, bank overdraft, outstanding expenses etc.
Total assets include all assets except goodwill and preliminary expenses.
Lower ratio shows better solvency position of the firm and vice-versa.

 Here is the calculation of solvency ratio:

26
 Total Assets (₹in
crores)
Total current and non current assets 1143.20

(-)Goodwill 310.47

Total 10832.73

Outside Liability (₹in

crores)
Total current liability 696.45

Total non current liability 3832.27

Total 4528.72

Solvency Ratio = 4528.72_ × 100

10832.73
= 0.42×100
= 42%

Interpretation:
It is the ability of the firm to pay both short as well as long term liabilities.
Company is said to be solvent if it can meet it’s outside liability out of it’s total
assets.
Ideal solvency ratio is 50% or higher is generally considered as good. Here the
solvency ratio is 42%.It indicates moderate level of solvency. A moderate level
of solvency means company has some money to pay it’s debts, but not lot extra.

8) Fixed Asset Turnover Ratio:

Fixed asset turnover ratio is a way to check how well a company is using
it’s assets ( like building, machines, & equipment) to generate sales.
27
 This ratio indicates the extent to which the investment in fixed assets
contribute towards sales. It is calculated as follows :
.
Fixed Asset Turnover Ratio = Net Sales__
Fixed Asset

Net sales means sales less returns. Fixed assets are taken net of depreciation.

 Net sales
Sales = ₹16868.38 crores
Sales return = ( Nil )
= ₹16868.38 crores

 Fixed assets
Total non current assets =₹ 4091.42 crores

Fixed Asset Turnover ratio =16868.38

4091.42

= ₹ 4.12

Interpretation:

Here fixed asset turnover is 4.12 which means this company is

making good use of it’s asset to generate sales. It’s like getting a
good return on investment.
This company is making good use of it’s assets very efficiently,
generating lots of sales from it’s investors. Company generating sales
4 times of it’s fixed assets

9) Working capital Turnover Ratio:

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 This ratio shows whether working capital has been efficiently used in
making sales.
High ratio indicates higher operating efficiency of a firm and vice-versa.
It is calculated as follows :

Working Capital Ratio = _____sales______

Working Capital

Sales = Sales – Return

= 16868.38 crore -Nil
= 16868.38 crores

Working Capital = Current Assets – Current Liability

= 7041.25 – 3832.27
= 3208.98 crores

Interpretation:
A working capital ratio of 5.2 indicates that this company has a
significant amount of excess working capital.
This shows there is a sufficient funds to meet short term obligation more
than five times over.
This company has a large surplus of liquid assets compared to it’s current
liabilities. This excess of working capital may be not being utilised
efficiently. It is the sign of inefficient use of resources or a lack of
investment opportunities.

10) Gross profit Ratio:

It is the ratio of gross profit to net sales expressed as a percentage. It is

also called as ‘Gross Margin Ratio’. It is calculated as follows:

Gross Profit Ratio= Gross profit× 100

Net sales

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  Gross profit = Net sales – Cost of goods sold
= 16868.38 –2353.34
= 14515.04

 Net sales = Sales – sales return

= 16868.38 – nil
= 16868.38

So, Gross Profit Ratio = 14515.04× 100

16868.38
= 0.86×100
= 86%

Interpretation :
Gross profit ratio measures how much money the company keeps from each
sale. That is 86% of gross profit ratio in this company.
It shows that the company is making a lot of money from its sale and is doing
very well financially.

11) Net Profit Ratio :

This is the ratio of net profit to net sales. It indicates the relationship
between net profit and net sales in terms of percentage. It is calculated as
follows:

Net profit ratio = Net profit× 100

Net sales

Net Profit is the balance of P&L A/c which is calculated after charging all
operating expenses and incomes. No standard norm can be laid down.
However constant increase in the ratio indicates improvement in the
business.

= 1450.25_×100
30
 16868.38

= 8.59×100

= 8.6%

Interpretation :
Here net profit is 1450.25 that comes after charging all operating
expenses and incomes in p& l account. 1450.25 is profit before
exceptional items and tax.
Here ratio of 8.6% shows constant increase in the ratio. This will
indicates improvement in the business. And thus indicates healthy
profitable level and it shows company is effectively managing it’s
expenses and generating profit from it’s operations.

12) Earning Per Share :

Earning Per Share stands for EPS. It’s a financial metric that measures a
company's profitability on a per share basis.
EPS represents the amount of net income earned by each outstanding
share of a company has generated.
Net Profit is the balance of P&L A/c which is calculated after charging all
operating expenses and incomes. No standard norm can be laid down.
However constant increase in the ratio indicates improvement in the
business.

EPS = Net profit after tax - Preference dividend

No. of equity share
The higher the earnings per share, more attractive will be the investment
plan and vice-versa.
= 1074.95 – Nil
626488642
= 10749500 626488642
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 = 17.5

Interpretation :
Ratioof17.5 is EPS that shows the investment plan is more attractive. And
it measures how much investors are willing to pay for each unit of
earnings.

Comparative Income Statement

Meaning of Comparative Statement :

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A comparative statement, also known as a comparative financial Statement, is a
financial report that shows the financial performance and position of a company
over two or more period.
It shows how a company's financial situation has changed over time.
It compares two or more periods, like this year vs last year, to see if things are
getting better to worse.

The purposes of comparative statement analysis is to :

1. Evaluate financial performance and position over time
2. Identify trends, strengths, and weaknesses
3. Make informed decisions about investments, financing, and operations
4. Assess the effectiveness of business strategies and initiatives
5. Compare performance to industry averages or competitors
6. Identify areas for improvement and opportunities for growth
7. Evaluate management's performance and stewardship
8. Provide stakeholders with a comprehensive view of the company's financial
situation
9. Facilitate forecasting and strategic planning
10. Support credit and investment decisions by lenders and investors

By analysing comparative statements, users can gain a deeper understanding of

a company's financial situation, make more informed decisions, and achieve
their goals.

1) Why increase or decrease in profit?

Havells India Ltd Net profit in F. Y 2023 1,074.95 crore
in F. Y 2022 1184.73 crore

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 Here, net profit decreased by 119.78 crores
So, profit of the company is decreased.

Reasons for decrease in profit :

Statement of profit or loss for Havells India Ltd for the financial year ended
March 31sr 2023, here are some possible reasons for the decrease in profit
compared to the previous year.
1. Increase in expenses :
Even though the revenue from operations increased to 16,868.38 crore in
the F. Y 2023 against 13,888.53 crore in F. Y 2022. And other incomes
also increased as compared to F. Y 2022. But the net profit decreased.
Because the increase in expenses is one of the main reason.
Increase in expenses because:
a) Cost of raw materials and components consumed:
Increased significantly from ₹ 7,772.06 cores in 2022 to ₹
9,317.92 crores in 2023.This suggests higher costs of inputs, which
directly impacts profit margins . Higher cost due to factors such as
increased raw materials prices, higher production volumes, or
changes in supplier terms.

b) Purchase of traded goods :

Increased from ₹ 1831.48 crores in 2022 to ₹ 2994.58 crores in
2023.Increase in purchase cost of traded goods may indicate higher
demand, but if not managed efficiently, it can erode profit margins.

c) Other operating expenses/ Employee benefit expenses :

These include various costs such as employee benefits, repairs and
maintenance, and advertisement and sales promotion. An increase
in these expenses may be necessary for business growth but can
impact profitability if not offset by revenue growth.

2. Exceptional items and impairment losses :

a. Loss due to fire :
There was a loss of ₹ 112.52 crores due to fire incident. Such
unexpected events result in immediate finance loss. But these type
of losses (abnormal losses) insurance will be claim.
34
 b. Impairment losses :
Increased impairment losses on financial and contract asset
indicate potential losses in value, which must be accounted for in
the financial statements reducing net profit.

3. Inventory changes :
A substantial rise in inventories, especially if not matched by a
corresponding increase in sales, can tie up cash flow and increase
carrying costs, thus reducing profitability.

4. Operational efficiency :
Declining efficiency in operations, such as increased production costs or
higher overhead expenses per unit produced, can lead to decreased
profitability.

5. Market conditions :
External factors such as changes in market dynamics, increased
competition, or shifts in consumer preference can impact both revenue
and expenses, affecting overall profitability.

6. Increase in depreciation and amortization :

The company recorder highest depreciation and amortization in 2023.
This could be due to :
 New asset purchased
 Increased usage of assets

7. Income Tax Expense:

Despite a decrease in profit, the income tax expense decreased slightly
from ₹409.06 crores in 2022 to ₹375.30 crores in 2023, which provided
some relief but not enough to offset other cost increases.

8. Overall Profitability Impact :

These expenses can reduce their profits for the year and affect EPS
negatively.

35
 Any factors that reduce Havells' profit can lead to a lower EPS. It's a
measure of how well the company is doing in terms of making money
for its shareholders, so a decrease in EPS usually reflects challenges or
expenses that impacted their profitability during that specific year.

2) What is the amount of capital introduced during the

year?
Capital introduced during the year” refers to new funds or assets injected
into a business, typically by owners or external investors, to support its
operations or expansion.
As March 31st 2022 the company had 626,303,06 Equity shares of
₹ 1 each.
As of March 31st 2023 the company had 626,509,738 Equity shares of ₹
1each.
Therefore, the difference is :
626,509 – 626,509,738 = 206,671 shares
And each shares nominal value is ₹ 1 each. So the amount of capital
introduced during the year is ₹ 206,671. ( 206,671 shares × 1 per share =
206,671)

Cash Flow Statement

36
 Meaning of Cash Flow Statement :

A cash flow statement is a financial statement that shows the inflows and
outflows of cash and cash equivalents of a business over a specific period
of time. It provides a snapshot of the company's ability to generate cash,
manage its finances, and invest in its growth.

The cash flow statement is divided into three main sections:

1. Operating Activities: Shows the cash generated or used in the

company's core operations.
2. Investing Activities: Shows the cash used in investments, such as
purchasing assets or making loans.
3. Financing Activities: Shows the cash used in financing activities, such
as borrowing or repaying loans, or issuing or repurchasing shares.

By analyzing the cash flow statement, investors and analysts can assess a
company's:

- Liquidity
- Solvency
- Ability to pay dividends or interest
- Ability to invest in growth opportunities
- Ability to meet its financial obligations

Overall, the cash flow statement is an essential tool for understanding a

company's financial health and making informed investment decisions.

Purposes of Cash flow statement :

37
 The purpose of a cash flow statement is to provide insights into a
company’s ability to generate and manage cash, which is essential for:

1. Meeting financial obligations (e.g., paying debts, dividends, and

expenses)
2. Investing in growth opportunities (e.g., new projects, acquisitions, and
capital expenditures)
3. Building reserves and buffers for unexpected expenses or revenue
shortfalls
4. Evaluating a company’s liquidity and solvency
5. Assessing its ability to pay dividends or interest
6. Identifying areas for improvement in cash management
7. Making informed decisions about investments, financing,
and other business strategies
8. Monitoring and managing working capital
9. Identifying potential cash flow problems and taking corrective action
10. Communicating financial performance to stakeholders (investors,
creditors, etc.)

By analyzing cash flow, businesses and investors can make more

informed decisions about investments, financing, and other strategic
moves.

38
 Go through the cash flow statement of your company
and identify 2 transactions from operating, investing
and financing activities where there is a major
fluctuations that is where either inflow Or outflow is
highest. &

1) Go through the annual report and identify the

reasons for such fluctuations.
(₹ in crores)
From operating activities
F. Y 2023 F. Y 2022
i. Increase in trade payables (740.39) (348.19)
ii. Decrease in Inventories 272.72 787.52

From Investing Activities

i. Payment for property &
Equipment intangible assets (587.77) (258.28)
ii. Investment in fixed deposits 520.43 ( 605.13)
with bank & financial
institutions

From Financing Activities

i. Repayment of long term (393.69) ( 97.35)
borrowings
ii. Dividends paid to company's (470.30) ( 407.29)
Shareholders

Reasons for such fluctuations :

I. Operating Activities
 Increase in trade payables:

39
 The increase in trade payable from ₹ 787.5 to crores in 2022
rupees 160.24 crores in 2023 indicates a significant rise of rupees
272.72 crores.
An increase in trade payables means a company is delaying
payments to its suppliers, buying more on credit, or has negotiated
longer payment terms, leading to a temporary increase in the
amount owed to suppliers. This can be a normal part of business
operations, but can also impact cash flow and relationships with
suppliers.

 Decrease in inventories
The decrease in inventory is from rupees 348.19 cross in 2023
represent a substantial decline of rupees 740.39 crore.
A decrease in inventories in a cash flow statement means that a
company has sold more products than it produced or purchased, or
has intentionally reduced inventory levels to free up cash or
improve efficiency, resulting in less inventory being held and
therefore less cash being tied up in inventory.

II. Investing Activities :

 Decrease in payment for property, plant and equipment:
The decreasing payment for property plant and equipment from ₹
258.28 crores in 2022 rupees 587.77 crores in 2023 reflects a
significant reduction of rupees 329.49 crores. The reasons for this
decrease is the company reduced investment in new project.Less
spending on new asset.

 Increase in investment in fixed deposits:

A company is putting more money into fixed deposits, which is a
type of short-term investment. This means they have extra cash that
they want to earn interest on, while also keeping it safe and easily
accessible if needed.

III. Financial Activities

 Decrease in repayment of long term borrowings :

40
  When a company decreases its repayment of a long-term loan or
liability, it means they're paying less money towards that debt. This
can be a strategic move to conserve cash for other uses, like
investing in growth or covering expenses. However, it's important
to note that this decision may lead to:

- Longer payoff periods

More interest paid overall
- Potential impact on credit scores or loan terms

By paying less on the loan, the company is essentially extending

the life of the debt, which can have both positive and negative
effects on its financial situation.

 Increase in dividends paid to companies shareholders

The increase in dividend spade reflects the company is
commitment to returning value to shareholders. The decisions to
increase dividend payments may be driven by strong financial
performance, improved profitability, and confidence in the
companies future prospects. It also signals management belief that
the company has sufficient cash reserves to support both grows in
creative and shareholders distributions.
Theses above the reasons for fluctuations.

2) Comment on the oral cash position of the company

compared to last year. That is whether the cash flow
from each activities positive or negative compared to
last a figures.
Overall compared to last year the company is cash position seems to have
improved here is the summary of the cash flow from each activity
compared to last year.

1) Operating Activities :
Cash flow from operating activities decrease from rupees
1744.57 crores to 564.74 crores this indicates a decrease in

41
 cash generated from the company crore business operations
compared to previous year.

2) Investing Activities:
Last year there was a significant outflow of cash amounting
to rupees 759.21 crores, while this year there was a slight in
law of cash amounting to Rupees 39.08 cross this suggest a
positive change in the companies investing activities,
possibly due to reduced investment outlays Or increased
proceeds from asset sales.

3) Financing Activities

The overall cash position of financing activities is negative

in both years, indicating that the company is paying out
more cash than it is receiving from financing activities.
However, the cash outflow from financing activities has
increased in 2023 compared to 2022:
In 2022, the net cash outflow from financing activities was
₹547.34 crores.In 2023, the net cash outflow from financing
activities (was ₹906.93 crores, which is a increase of
₹359.59 crores (or 65.7%) compared to 2022.
This suggests that the company's financing activities have
become more cash-intensive in 2023 compared to the
previous year.

42
Findings

Ratio Calculated Standard

Current Ratio 1.83:1 2:1

Liquid Ratio 0.87:1 1:1

Debt Equity Ratio 0.1 1:1

Proprietary Ratio 282% 50% higher the ratio

less risky
Fixed Asset Ratio 31% Higher the ratio less
risky
Interest Coverage Ratio 0% Higher the ratio
better
Solvency Ratio 42% Lower the ratio better
solvency

Fixed Asset Turnover 4.12 Higher the ratio

ratio better

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 Working capital ratio 5.2 Higher the ratio
better
Gross profit Ratio 86% Higher the ratio
better
Net profit ratio 8.6% Higher the ratio
better
EPS 17.6 More is the good

Comparative Statement:
1.TheCompany Havells Ltd revenue increased by 21% in 2023
compared to last year.
2. The net profit decreased from ₹ 1603.79 crores to 1450.25 crores in
the year 2023. In the year 2023 the company incurred more expenses
compare to P. Y.
3. EPS also decreased from ₹ 19.08 to ₹ 17.16 because of the
decrease in net profit.

Cash Flow Analysis :

1.Operating cash flows decreased from ₹ 1,816.33 crore to ₹
1,653.58 in the year 2023.
2.Investing activities in the year 2023 ₹ 39.08 crore.

44
Conclusion
 Havells India is the leading electrical equipment company.
 It mainly focuses bon it’s quality
 Quality is the main factor which influences the customer in
buying the products of Havells.
 The price of Havells products is bit higher compare to
other brands
 Fast moving consumer electrical goods popularly known
FMCG/FMEG is as the name suggests is the most
demanded product in the market.
 Havells focuses on innovation as one of the main pillars
for growth
 There is a good market awareness about Havells in the
market
 This company is capable to pay it liability by its sufficient
asset.
 Company is earning enough profit and by this profit they
also contributing some of the amount profit towards CSR
activities.
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  From the enough profit company also covers it’s interest
and other expenses.
 Gross profit and net profit ratio are good so company is
growing.
 Company has more than 6000 employees and it gives them
to a healthy environment to work.
 Overall Cash outflow from all the activities reducing year
by year.
Overall Havells India Limited productive strategy and strong market
fundamentals position . It is well for continued success and expansion
both domestically & internationally.

Bibliography
Company’s Annual Report.

Internet Source:-
 www.google.com
 www.wikipedia.com

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  Write website of your company like
www.mahindra.com, www.infosys.com etc.

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