CASH FLOW ANALYSIS

ITC LTD

BSEId :500875 NSE Id :ITC
ISIN Id :INE154A0102

Sayon das
1421328
MBAL

Introduction
Key Result Activities of ITC are FMCG, Agri business, Paperboards and packaging, Information technology and
hotels. FMCG includes branded packaged foods, education & stationery, lifestyle retailing, personal care products,
safety matches & incense sticks and cigarettes and nicotine gums. Agri-Business includes leaf tobacco, wheat, soya
bean etc. ITC ltd net profit for FY2013 is Rs 8785.21 cr which is higher comparison to previous year which was Rs
7418 cr in FY2012.
ITC is listed in BSE and NSE. BSEId :500875 NSE Id :ITC. Last traded price as on 1 Aug 16:00 is 349.75
decresed Rs 6.45 which opened at 356.20.
Cash flow highlights
Operating profit before working capital changes Rs 13172.42 cr in FY2013 which were Rs 11218 cr in
FY2012.
Net cash from operating activities are Rs 7343.58 in FY2013 crore which increased from FY 2012
7101.83 crore.
Net cash used in investing activities are Rs3254.08 cr which decreased from FY2013 which were rs
3881.35 cr in FY2012.
Net cash used financial activities are Rs 4121.54 cr which increased from Rs 3310.01cr.
Net decrease in cash and cash equivalents are 32.04 cr which decreased from FY 2012 which were 89.53
cr.
Opening cash and cash equivalents are Rs308.52 cr which which were 398.05 in FY2012.
Closing cash and cash equivalents were Rs 276.48 cr which is less than FY2012 that were Rs 308.52.

Note: Cash and Bank balance are Rs 3490.19 cr in FY2013 which were Rs 3828.30 cr.

Gross revenue from sale of products and services
Rs(in cr)
Cigarettes 29076.48
Branded Packaged Food products 5717.32
Others(apparel, education stationery, personal care, etc) 2394.66
Hotels 2394.66
Agri-business
Unmanufactured tobacco 1780.97
Others(wheat, soya, spices etc) 3349.12
Paperboards and paper 2843.97
Printed material 428.65
Sale of products 45591.17
Sale of services 1121.45

Cash flow from operating activities analysis ( FY2013 & FY2012)
Depreciation and amortisation expenses have increased significantly by Rs 87.81 cr in FY2013 which
signifies that there has been greater utilisation of machinery and assets.
Finance costs have decreased hugely from 87 cr to 6cr.
Dividend income has increased both in long term investment and current investment.

Loss on sale of fixed asset has decreased to an extent of 20 cr from FY2012 to FY2013, thus company
should sell its fixed assets by trying to sell at a greater value or retain the asset till it gets higher value.
There has been a huge loss on Net sale of current investments amounting to Rs 182cr which is not a good
sign for the company. Investments should be made with thorough analysis on ROI and resale value. This
loss will create a burden for the company.
Whereas loss on sale of long term investment is only Rs 0.89 cr compared to Rs 121.62 cr which is a good
sign as company has vastly decreased its losses in long term investments.
Thus, company should make investments with greater analysis and research on both ROI and resale value. This
incurring of huge losses is a burden for the company.
Bad and doubtful debts have increased significantly from Rs 9.72 cr to 20.34cr
Provisions of long term investments have been created amounting to Rs 20.67 cr
Thus, ITC should give credit with in-depth credibility analysis of their analysis. This provision would have
been avoided if there was less bad and doubtful debts and cash could have been used for productive purposes.
There has been an decrease of cost of current investments over fair value by Rs 25cr, whereas there is
excess of carrying cost over fair value over current investments by Rs 8cr.
As analysed earlier there should be comprehensive investment analysis conducted by ITC before investments.
Adjustments for trade receivables, loans and advances, other assets are Rs 1546.05 cr, increase in
inventories at Rs 754cr and increase in trade payables other liabilities and provisions are Rs 456.26cr.
There has been significant increase in trade payables and other liabilities and provision which is not a good
sign but there has also been increase in trade receivables, loans and advances and other asset. Inventories are
very high and company should try to dispose greater inventory by manufacturing finish goods.
Cash generated from operations is higher at Rs 11328.06 cr from 10117 cr which is a good sign as it
signifies healthy operational activity.
Cash flow from investing activity
There has been increase in purchase of fixed assets by Rs 243cr and there has been greater sale of fixed
asset by Rs 29 cr.
Purchase of current investments has been increased drastically amounting to Rs 18557 cr which is greater
than the cash generated from operating activity. Yet, ITC is incurring losses on its net sale of current
investment as shown in operating activity.
Purchase of long term investments has decreased nearly 50%. Sale of long term investments has also
decreased which signifies ITC is retaining its long term fixed investments and getting good return on its
investments.
Dividends from current and long term investment have decreased which poses a threat as company has
significantly increased current investments.
There has been maturity of deposit of financial institutions and bank deposits which increase cash inwards
substantially.
Thus, cash used in investing in investing activity has reduced from previous fiscal year amounting to Rs 627 cr.
Cash outwards are mostly due to purchase of current investments and inwards due to maturity of deposits.
Cash flow from financial activity
Proceeds from issue of share capital is lower than previous fiscal year by Rs 231 cr. The company may
have issued lower no. of shares as last year the price of share was approximately equal to current market
price.
Proceeds from long term borrowing have increased and also repayment of long term borrowing has been
greater than previous year.
Dividends paid is higher as there is an increase in Net profit of the company which sends a good sign to
shareholder as company is financially sound and has a positive outlook.
Cash utilized in financial activity has increased primarily due to greater dividend paid.
Thus, cash and cash equivalents has decreased in the company mostly accounting to higher investments, and
payment of dividends, loss on sale on investments, increase in trade payables and other liabilities.
The company is using cash in productive activities which will give return on investment and thus increasing
in Net profit.