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FINANCIAL STATEMENT ANALYSIS AND REPORTING

ADANI ENTERPRISES LTD

Financial Analysis Report

During the year 2005-06 TO2009-10

Submitted by:

SWATI CHOUDHARY

2009292

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TABLE OF CONTENTS
1) Introduction………………………………………………………………………………3
2) Economy Analysis………………………………………………………………………..4
3) Industry Analysis…………………………………………………………………………5
4) Company Analysis……………………………………………………………………….6
5) Operational Analysis……………………………………………………………………7-8
6) Conclusion……………………………………………………………………………..9

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ADANI ENTERPRISES LTD.
The Adani Group, despite a humble beginning in 1988, is one of the fastest growing professionally owned
enterprises in India and in the global arena. The flagship company, Adani Enterprises Ltd. (formerly
known as Adani Exports Ltd.), was established by Mr. Gautam S Adani in 1988 as a partnership firm
with a seed capital of Rs. 5 lacs. An entrepreneurial vision coupled with lofty ambitions and hard work set
the pace for the growth of the company. Adherence to world-class quality standards and a customer
centric approach has helped the Adani Group touch revenues of INR 262 billion (as on March 31, 2009.)

The journey from a being a India’s most trusted trading house to a diversified conglomerate is fast, yet
memorable. Today, the Adani business portfolio is a diverse, yet profitable assortment of Edible Oil,
Logistics, Power Generation, Coal, Oil and Gas Exploration, Gas distribution, Real Estate, Ports, Special
Economic Zones and IT enabled services. Its growth has been organic leading to a synergy among its
business units, making them more productive and competitive together.

Group Values

From inception three values have driven all the activities of the Adani Group. They are central to our
operations worldwide and will continue to be at the core of all our businesses.

Trust - We will deliver on all our promises - our word is our bond.
Courage - We will support our decisions and actions with conviction.
Innovation - We will think laterally and never fight shy of embracing big ideas.

The key Business segments of ADANI ENTERPRISES LTD are:

1)Energy:

a) Petroleum
b) Coal Mining
c) Power and Coal Trading
d) City gas distribution
e) Petro Products
f) Oil exploration

2) Real Estate:

3) Agro commodities

4) Metals and Minerals

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ECONOMIC ANALYSIS

GDP Growth Rate

Year rate

2005-2006 7.5

1
2006-2007 8

2007-2008 8.5

2008-2009 9

2009-2010 7.4

Indian economy grew at 7.5% or more for years 2005 to 2008 then as the whole world experienced the
economic turmoil , the gdp growth slowed down for year 2008-2009 due to inflationary pressure and the
appreciation of rupee,then again for year 2009-10 the economy experienced a favourable gdp growth rate
7.5%. The years of initially fast gdp growth was attributed to factors like sustainable income , increased
demand for fmcg products and growth of retail sector along with that foreign direct investment, with
decrease on import duties and increase demand of Indian goods in foreign markets. But the demographic
profile and rising income levels has led to increase in consumption which is giving a boost to Indian
economy.

INDUSTRY ANALYSIS

Industry organized retail sector, which consists of only 5% of total retail market is estimated to touch
15% by 2025. Industry has grown at CAGR of 30%-35% over three-four years till 2008. But the growth
was muted in the last financial years due to economic slow down, which hurts the disposable income. The
industry has faced decline in footfalls and even de growth in same stores sales. For the quarter ended
March'09, industry has posted dip in profits on the back of marginal growth in sales. In the current
condition government should help the sector to boost its performance.

COMPARATIVE ANALYSIS OF COMPANIES

The analysis of Adani Enterprises with respect to MMTC by comparing various ratios we will find out is
Adani doing better in Industry

ADANI ENTERPISE MMTC

1
Sales of Adani had been increasing with slight bump in year 2008-09 ,but after that it gained the same momentum,

While the PAT and Operating profit for adani had increased in that year. In comparison to adani MMTC sales have
been growing more and as it have been vertically integrating backwards and forwards the company had been doing
well whereas Adani is still diversifying and growing. The operating profit for adani had been good whereas MMTC
had been facing problems due to increase in expense of raw materials and selling and administrative expenses.

LEVERAGE RATIOS

Adani Enterprises Ltd MMTC

The debt to equity of Adani has been declining over the years and the company has been mostly financing through equity

Whereas MMTC debt to Equity ratio has been increasing but is at par with industry standards.

TURNOVER RATIOS

ADANI ENTERPISE MMTC

2
The fixed asset turnover ratio of Adani had been increasing due to expanding operation and purchase of machinery to
install that plant .The inventory turnover had been good for Adani as less inventory has been the apart of current assets
along with that MMTC had been facing problems regarding inventory turnover, inventory is major part of current assets.

LIQUIDITY RATIOS

ADANI ENTERPISE MMTC

2
The current ratio of Adani had been decreasing which gives us the negative sign that the company might face a
situation where it can’t pay its debt off or short term sudden occurrences and which is low according to Industry
standards. Adani is also facing a constraint in quick ratio as the company is facing a problem in increase of current
assets in terms of cash in bank, whereas MMTC had been managing its quick ratio and all very well although this
company is also below industry standards.

PROFITABILITY RATIOS

ADANI ENTERPISE MMTC

The operating profit has been increasing for Adani while the cash profit margin have been constant giving the opinion that

the company has been raising good profits using cash.

EARNINGS RATIOS

3
ADANI ENTERPISE MMTC

OPERATIONAL EFFICENCY

ACCOUNTING POLICIES ADANI ENTERPRISES LTD MMTC

Preparation of Financial statement Under Historic cost on accrual basis Under historic cost on accrual basis

Revenue recognition When sales is dispatched or shipped to On accrual basis expect on items

customer where there is actual realization of

some items under AS-9

Depreciation Straight line basis Written down value

Inventories Till 2006 FIFO ,then weighted Weighted average Value method

average method

Investments Current Investment-lower of cost Current Investment-lower of cost

Or fair value Or fair value

Long term Investment- stated at cost Long term Investment- stated at cost

Or provision for diminution of value. Or provision for diminution of value.

2
Borrowing cost Are charged as a part of cost of such Expense in the period in which they

Assets are incurred

Impairment Of Fixed Asset Is recognized in year to Profit/loss when Is recognized in year to Profit/loss when

It is identified It is identified

Earning Per share The Basic EPS has been computed by Not stated

dividing the income available to equity

shareholders by the weighted average

number of equity shares outstanding

during the accounting year.

The Diluted EPS have been computed

using the weighted average number of

equity shares and dilutive potential equity

shares outstanding at the end of the year.

Provisions for bad debts According to management when they are For 3 years full provision is made and

considered doubtful are written off when unrelisability is

almost established

CONCLUSION
Adani Enterprises have been growing so investing in this company will grow your earnings as well as each year the
company is diversifying in new areas which is adding to the less risk of company. The company is managing its assets

well and the stock price of Adani had been quite increasing over the years.