RGIPT

Management Accounting Project

Analysis of financial statement of Gujarat State Petronet limited

T. Amrita Rao 9/21/2012

Management Accounting Project

Serial Number

Content

Page Number

About GSPL

Financial statements

Balance Sheet

Profit and Loss Statement

Cash Flow Statement

11

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GUJARAT STATE PETRONET LIMITED
1) About GSPL:
GSPL (Gujarat State Petronet Limited) is among one of the group companies of GSPC (Gujarat State Petroleum Corporation). It was set up to complement the efforts of GSPC. While GSPC harnesses and procures natural gas, GSPL is building the infrastructure that transmits the gas across the state of Gujarat and ultimately allows last-mile linkage to the end-user.

2) Financial statements:
Financial statements consist of records that outline the financial activities of a business, an individual or any other entity. Financial statements for businesses include: Balance sheet Income statements Statement of cash flows

3) Balance sheet:
Balance sheet is the snapshot of the financial position of the company. Please find below the snapshot and analysis of the balance sheet of GSPL for the year 2011-2012 and 2010-2011. 3.1) Snapshot of the balance sheet: The Company has maintained proper record showing full particulars, including quantitative details and situation of fixed assets. The financial statements are presented in Indian Rupees and all values are rounded in nearest million. STANDALONE BALANCE SHEET AS AT 31ST MARCH, 2012 As At 31st March, 2012 (Rs. in Lakhs) As At 31st March, 2011

Particulars Equity And Liabilities Shareholdersfund Share Capital Reserves and Surplus Non-Current Liabilities Long-Term Borrowings Deferred Tax Liabilities Other Long Term Liabilities Long-Term Provisions Current Liabilities Trade Payables Other Current Liabilities

56,268.91 1,90,398.92 2,46,667.83 1,09,509.61 32,437.15 1,329.03 297.91 1,43,573.70 695.2 49,333.17

56,258.25 1,44,399.07 2,00,657.32 1,21,816.44 26,406.03 604.18 238.63 1,49,065.28 2,357.74 52,526.47

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Short-Term Provisions TOTAL Assets Non-Current Assets Fixed Assets Tangible Assets Intangible Assets Capital Work-In-Progress Non-Current Investments Long-Term Loans and Advances Other Non-Current Assets Current Assets Inventories Trade Receivables Cash and Bank Balances Short-Term Loans and Advances Other Current Assets TOTAL 6,618.37 8,143.59 51,476.47 2,596.61 1,287.04 70,122.08 4,46,864.59 6,226.26 6,768.37 23,896.20 5,083.03 661.8 42,635.66 4,11,415.50 3,02,901.20 11,121.35 41,821.49 11,641.64 8,470.81 786.02 3,76,742.51 3,07,955.06 10,212.78 33,437.26 7,657.50 9,317.87 199.37 3,68,779.84 6,594.69 56,623.06 4,46,864.59 6,808.69 61,692.90 4,11,415.50

3.2) Analysis of the balance sheet: All monetary values are in INR lakhs. 3.2.1) ASSETS: 3.2.1.1) Non-current assets: The assets which are expected to keep providing benefit for more than one year, such as equipment, buildings and real estate. This consists of following sub-divisions Fixed Assets: - Fixed Assets are stated at cost net of recoverable taxes, less accumulated depreciation and impairment loss, if any. o Tangible Assets: - Assets that have a physical form. Tangible assets include both fixed assets, such as machinery, buildings and land, and current assets, such as inventory. Intangible Assets: - Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation, if any. Capital Work-In-Progress: - Capital Work-In-Progress includes expenditure incurred on Assets, which are yet to be commissioned and project inventory.

Non-Current Investments Long-Term Loan And Advances

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Other Non-Current Assets

Total non-current assets of GSPL for 2011-2012: - 376,742.51 Total non-current assets of GSPL for 2010-2011: - 368,779.84 3.2.1.2) Current assets: Cash and other assets that are expected to be realized in cash or sold or consumed during the normal operating cycle of the entity or within one year whichever is longer. Inventories Trade Receivables Cash And Bank Balances Short-Term Loans And Advances Other Current Assets

Total current assets of GSPL for 2011-2012: - 70,122.08 Total current assets of GSPL for 2010-2011: - 42,635.66 3.2.1.3) Total assets: Total assets of GSPL for 2011-2012: - 446,864.59 Total assets of GSPL for 2010-2011: - 411,415.50

5,00,000.00
4,50,000.00 4,00,000.00 3,50,000.00 3,00,000.00 2,50,000.00 2,00,000.00 1,50,000.00 1,00,000.00 50,000.00 0.00 2010-2011 2011-2012 42,635.66 70,122.08 3,68,779.84 Non-Current Assets Current Assets Total Assets 4,11,415.50 4,46,864.59 3,76,742.51

Fig 1.1 Comparison of current, non-current and total assets between financial year 2010-2011 and 2011-2012 From the above figure we can comprehend that the value of current assets, non-current assets and total assets have increased 64.5%, 2.2% and 8.6%, from financial year 2010-2011 to 2011-2012. 3.2.2) Liabilities: Liabilities are obligations of the entity to outside parties who have furnished resources. 3.2.2.1) Non-current liabilities: Liabilities that do not meet the criteria for being classified as current liabilities.

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Long-Term Borrowings Deferred Tax Liabilities (Net) Other Long-Term Liabilities Long-Term Provisions

Total non-current liabilities of GSPL for 2011-2012: - 143,573.70 Total non-current liabilities of GSPL for 2010-2011: - 149,065.28 3.2.2.2) Current liabilities: Liabilities that are expected to be satisfied or extinguished during the normal operating cycle or within one year, whichever is longer. Trade Payables Other Current Liabilities Short-Term Provisions

Total current liabilities of GSPL for 2011-2012: - 143,573.70 Total current liabilities of GSPL for 2010-2011: - 149,065.28 3.2.2.2) Total liabilities: The sum of non-current liabilities and current liabilities. Total liabilities of GSPL for 2011-2012: - 56,623.06 Total liabilities of GSPL for 2010-2011: - 61,692.90 2,50,000.00 2,10,758.18

2,00,000.00
1,49,065.28 1,50,000.00

2,00,196.76

1,43,573.70

Non-Current Liabilities Current Liabilities

1,00,000.00 61,692.90
50,000.00 56,623.06

Total Liabilities

0.00
2010-2011 2011-2012

Fig 1.2 Comparison of current, non-current and total liabilities between financial year 2010-2011 and 2011-2012 From the above figure we can comprehend that the value of current liabilities, non-current liabilities and total liabilities have decreased by 8.22%, 3.7% and 5.01% respectively from financial year 20102011 to 2011-2012. 3.2.2.3) Current ratio: The ratio of current assets to current liabilities is known as current ratio. This is basically a liquidity ratio that measures a companys ability to pay short-term obligations. Current ratio 2011-2012 = Current Assets 2011-2012/ Current Liabilities 2011-2012 = 70,122.08/ 56,623.06 = 1.24

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Current ratio 2010-2011 = Current Assets 2010-2011/ Current Liabilities 2010-2011 = 42,635.66/ 61,692.90 =0.69

1.4 1.2 1 0.8 0.69 0.6 0.4 0.2 0 Current Ratio 1.24

2010-2011

2011-2012

Fig 1.3 Comparison of current ratios of financial year 2010-2011 and 2011-2012 From the above figure we can comprehend that the company was in a better financial health in financial year 2011-2012 compared to financial year 2010-2011.

3.2.2.4) Net worth of the company: Net worth of a company is a synonym for owners equity. It is the amount the owners have invested in the company. Net worth of the company in FY 2011-2012:- 2,46,667.83 Net worth of the company in FY 2010-2011:- 2,00,657.32 Net worth of the company has increased by 22.9%. it signifies that the company is in good financial health and is worth more in FY 2011-2012 compared to 2010-2011.

4) Profit and loss statement:

Profit and loss statement/Income statement is the statement which captures a companys financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how revenues and expenses are incurred through both operating and non-operating activities is the snapshot of the financial position of the company. Please find below the snapshot and analysis of the income statement of GSPL for the year 2011-2012 and 2010-2011. 4.1) Snapshot of profit and loss statement:

STANDALONE STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED ON 31ST MARCH, 2012

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For the year ended 31st March, 2012 1,12,327.75 5,134.98 1,17,462.73 1,969.09 7,036.73 9,005.82 1,08,456.91 18,190.36 24.69 13,019.48 77,222.38 320.86 76,901.52 18,563.79 100.5 6,031.11 52,206.12 (Rs. in Lakhs) For the year ended 31st March, 2011 1,04,651.82 2,163.42 1,06,815.24 1,485.94 6,252.70 7,738.64 99,076.60 15,329.94 9.96 9,907.25 73,829.45 (2,337.54) (32.42) 76,199.41 15,248.49 (3,444.19) 1,404.01 12,352.88 50,638.22

Particulars INCOME: Revenue from Operations Other Income Total Revenue (A) EXPENSES: Employee Benefit Expenses Other Expenses Total Expenses(B)

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) (A)-(B) Depreciation and Amortisation Expenses Preliminary Expenses Written-Off Finance Costs Profit/(Loss) Before Adjustment Depreciation Written Back Prior Period Adjustments Profit/(Loss) Before Tax Tax Expenses Current Tax MAT Credit Entitlement Excess/Short Provision of Income Tax Deferred Tax Profit/(Loss) After Tax carried to Balance Sheet Earning Per Equity Share (EPS) (Nominal Value of Share Rs 10) Basic Earnings Per Share (Rs) Diluted Earnings Per Share (Rs) 9.28 9.28 9 8.97

4.2) Analysis of profit and loss statement: All monetary values are in INR lakhs 4.2.1) Revenue: Cash or account receivable that result from the sale of goods and services to the customers. Revenue during FY 2011-2012:- 1,17,462.73 Revenue during FY 2010-2011:- 1,06,815.24 Revenue has increased by approximately 10% from the FY 2010-2011 to 2011-2012. 4.2.2) Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA): It is a non-GAAP measure that allows a greater amount of discretion to what is included in the calculation.

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EBITDA during FY 2011-2012:- 1,08,456.91 EBITDA during FY 2010-2011:- 99,076.60 The EBITDA has increased by approximately 9.5% from FY 2010-2011 to 2011-2012. 4.2.3) Profit/Loss before taxes: This profitability measure gives fair idea for comparing profits or earnings year to year as the tax expenses are subjected to change. PBT during FY 2011-2012:- 76,901.52 PBT during FY 2010-2011:- 76,199.41

76,901.52
77,000.00 76,800.00 76,600.00 76,400.00 76,200.00 76,000.00 75,800.00 2010-2011 2011-2012 76,199.41 PBT

Fig 1.4 Comparison of profit before taxes of financial year 2010-2011 and 2011-2012 The profit before taxes has increased by approximately 1% from FY 2010-2011 and 2011-2012. We can comprehend that the company is making a fair profit. 4.2.3) Profit/Loss after taxes: It is also known as the net income. PAT during FY 2011-2012:- 52,206.12 PAT during FY 2010-2011:- Rs .50,638.22 PAT has increased by approximately 3% from FY 2010-2011 to 2011-2012. 4.2.4) Profit margin percentage: It is the net income divided by net revenue. It indicates the profitability of the company that has better control over costs. Profit margin percentage for FY 2011-2012 = (52,206.12/1,12,327.75)*100 = 46.5% Profit margin percentage for FY 2010-2011 = (50,638.22/1,04,651.82)*100 = 48.4%

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We can comprehend that in FY 2010-2011 the company had better control over costs compared to FY 2011-2012. 4.2.5) Gross Margin percentage: It is the gross margin divided by the net revenue. As the cost of goods sold is not explicitly given in the balance sheet , we have not determined the gross margin percentage.

5) Cash flow statement:

Cash flow statement has the aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given accounting period. 5.1) Snapshot of cash flow statement: Cash Flows are reported using the indirect method. Profit before Tax is adjusted for the effects of transactions of a non-cash nature. Any deferrals or accruals of past or future operating cash receipts or payments and item of income.

STANDALONE CASH FLOW STATEMENT FOR THE YEAR ENDED ON 31ST MARCH, 2012 Particulars A Cash flow from Operating Activities Profit before Taxes and Extraordinary Items Adjustments for: Depreciation & Amortization of Preliminary Expenditure ESOP Compensation Expenses Donation in Kind Provision for diminution in value of Investment in KGGNL Prior Period Adjustment Prior Period Adjustment Wealth Tax Profit on Sale of Assets Loss on Sale & Retirement of Assets Dividend Income Interest Income Interest & Financial Charges Operating Profit before Working Capital Changes Changes in Current Assets and Current Liabilities (Increase)/Decrease in Inventory (Increase)/Decrease in Trade Receivables (Increase)/Decrease in Loans, Advances & other Current Assets Increase/(Decrease) in Trade Payables & other Current Liabilities Increase/(Decrease) in other Long Term Liabilities Cash generated from Operations Taxes paid Net Cash flow from Operating Activities (A) (392.11) (1,375.22) (945.07) 724.85 95,481.97 95,469.81 (16,214.52) 79,267.45 (3,999.28) 550.27 1,945.23 (19,722.15) 230.00 76,321.90 (16,572.34) 59,749.56 18,215.05 322.63 25.88 234.2 9.53 (2.6) 243.83 (312.85) (4,665.00) 13,019.48 1,03,991.67 13,002.36 157.34 111.25 7.89 (0.2) 1.25 (245.82) (1,822.90) 9,907.25 97,317.83 76,901.52 76,199.41 2011-2012 (` in Lakhs) 2010-2011

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B Cash flow from Investing Activities (Increase) / Decrease in Investment Interest Received Dividend Received Proceeds from Sale of Assets Acquisition of Fixed Assets and Change in Capital Work in Progress Net Cash flow from Investing Activities (B) C Cash flow from financing Activities Proceeds from Issue of Equity Share Capital including Share Premium Proceeds from Share Application Money Increase/ (Decrease) in Borrowing Dividend (Including Corporate Dividend Tax) paid Interest & Financial Charges paid Net Cash flow from financing Activities (C) Net Increase / (Decrease) in Cash and Cash equivalents (A+ B+ C) Cash and Cash equivalents at the beginning of the period Cash and Cash equivalents at the end of the period 22.34 (8,235.35) (6,539.35) (15,523.62) (30,275.98) 27,580.27 23,896.20 51,476.47 22,164.75 (6,559.52) (12,666.59) 2,957.38 6,478.99 17,417.21 23,896.20 (4,010.01) 4,116.73 312.85 3,981.37 (25,812.14) (21,411.20) (1,000.00) 1,457.04 245.82 0.82 (56,931.63) (56,227.95)

18.74

5.2) Analysis of cash flow statement: All monetary values are in INR lakhs. 5.2.1) Cash flow from operating activities: Total cash outflow from operating activities in FY2011-2012 = 32,795.45 Total cash inflow from operating activities in FY2011-2012 = (30,429.52) Net cash flow from operating activities in FY2011-2012 = 79,267.45

Total cash outflow from operating activities in FY2010-2011 = 25,912.84 Total cash inflow from operating activities in FY2010-2011 = (42,362.69) Net cash flow from operating activities in FY2010-2011 = 59,749.56

5.2.2) Cash flow from investing activities: Total cash outflow from investing activities in FY2011-2012 = ( 29,822.15) Total cash inflow from investing activities in FY2011-2012 = 8,410.95 Net cash flow from investing activities in FY2011-2012 = (21,411.20) Total cash outflow from investing activities in FY2010-2011 = (57,931.63) Total cash inflow from investing activities in FY2010-2011 = 1,703.68 Net cash flow from investing activities in FY2010-2011 = (56,227.95) 5.2.3) Cash flow from financing activities: Total cash outflow from financing activities in FY2011-2012 = (29,822.15) Total cash inflow from financing activities in FY2011-2012 = 22.34 Net cash flow from financing activities in FY2011-2012 = (30,275.98)

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Total cash outflow from financing activities in FY2010-2011 = (19,226.11) Total cash inflow from financing activities in FY2010-2011 = 22,183.49 Net cash flow from financing activities in FY2010-2011 = 2,957.38 5.2.4) Net cash inflow and outflow: Total cash outflow in FY2011-2012 = 1,18,130.26 Total cash inflow in FY2011-2012 = (90,549.99) Net cash has increased by the amount 27,580.27 in the financial year 2011-2012. Total cash outflow in FY2010-2011 = 1,18,130.26 Total cash inflow in FY2010-2011 = (90,549.99) Net cash has increased by the amount 6,478.99 in the financial year 2011-2012.

Net Cash flows

79,267.45

59,749.56

56,227.95 21,411.20 2,957.38 -30,275.98 2010-2011 2011-2012

Operating

Investing

Financing

Fig.1.5. Comparison of net cash flows for operating, investing and financing activities of FY 20102011 and 2011-2012 From the above figure we can comprehend the following things: Operating activities have generated higher cash flows in FY 2011-2012 compared to previous year. Hence, we can assume that the sales revenue has increased compared to the previous year. Investing activities have decreased compared to the previous year. The company has done less investment in acquiring fixed assets compared to the previous year. The cash generated from the operating activities in both the years was sufficient to carry the investing activities without any borrowings. GSPL has decreased its borrowing activities majorly. It has borrowed Rs. 22,164.75 lakhs during FY 2010-2011 but it decreased its borrowing by Rs. 8,235.35 lakhs in FY 2011-2012.

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6) CONCLUSION:
GSPLS financial statements provide a fair picture of the company. It shows that the company is in a good financial condition as its PAT has increased by over 3 percent in FY 2011-2012. The companys current ratio is 1.24 which shows that the companys financial health is sound. The company generates revenue from transportation of gas through pipeline and sale of electricity generated from Windmills. To increase the revenue year after year it has to invest in building more pipeline and windmill infrastructure.

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