FR Group Assignment

8/3/2019 FR Group Assignment

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Balance Sheet Analysis Bharti Airtel

1

The company chosen by our group is Bharti Airtel and weve taken the financial statements for the

years 2008-2010.

We did the study of the balance sheet of the company of three years and have prepared the Cash

Flow Statement on the basis of the balance sheet only.

Following are the balance sheets and our inferences about the differences:

Balance Sheet as at March 31, 2011(` Millions)

Particulars

As at March

31, 2011

As at March

31, 2010 Change Inferences

SOURCES OF FUNDS

Shareholders Funds

Share Capital 18,988 18,988

No new shares were

issued to the public.

Employee Stock Options

Outstanding 3,694 2,839 855

The outstanding stock

has increased, thatmeans 855000 value

stocks have been issued

to the employees

Less: Deferred Stock

Compensation 908 2,786 978 1,861 -70

Airtel has distributed

70000 deferred stocks

during the year. This also

means it has revoked

voting rights from

individuals.

Reserves and Surplus 4,19,342 3,46,523 72,819

Since we dont know the

profit figure, we are

assuming zero dividendspaid and the reserves

have increased.

Loan Funds

Secured Loans 171 394 -223

Secured loans have been

paid during the year

Unsecured Loans 1,18,804 49,995 68,809

The company has raised

funds more through

unsecured loans.

Deferred Tax Liability (Net) 5,276 33 5,243

The company will, in the

future, pay more income

tax because of a

transaction that took

place during the current

period, such as an

instalment sale

receivable.

Total 5,65,367 4,17,794 1,47,573

Total liabilities have

increased


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APPLICATION OF FUNDS

Fixed Assets

Gross Block 6,14,375 4,42,125 1,72,250

More investment has

been done in Fixed

Assets

Less: Accumulated

Depreciation/Amortisation 2,07,367 1,61,875 45,492

Since fixed assets have

increased, the

accumulated

depreciation has also

increased

Net Block 4,07,008 2,80,250 1,26,758 Net block increased

Capital Work-in-Progress

(including Capital Advances) 64,976 15,947 49,029

Company is expanding

its assets

4,71,984 2,96,197 1,75,787 Total FA increased

Investments 1,18,130 1,57,733 -39,603

Perhaps the shares havebeen sold by the

company

Current Assets, Loans and

Advances

Inventory 344 272 72

Company is stocking

more inventory

Sundry Debtors 23,758 21,050 2,708

More debtors owe

money to the company

Cash and Bank Balances 1,338 8,167 -6,829

Either payments have

increased or receipts

have decreased

Other Current Assets 1,015 664 351

Current assets likeprepaid expenses and

accounts receivables

have increased

Loans and Advances 1,03,037 63,146 39,891

The company has paid

more advances and

given more loans during

the year

1,29,492 93,299 36,193

Total CA has increased

over the year

Less: Current Liabilities andProvisions

Current Liabilities 1,47,963 1,22,848 25,115

The company's debts or

obligations that were

due within the year have

increased


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Provisions 6,276 6,587 -311

Provisions, i.e. liability of

uncertain timing and

uncertain amount, have

decreased

1,54,239 1,29,435 24,804 Total CL has increased

Net Current Assets -24,747 -36,136 11,389 Net CA (= Total CA - CL)has increased

Total 5,65,367 4,17,794 1,47,573Total Assets for the

company have increased

Balance Sheet as at March 31, 2010(` Millions)

Particulars As at March 31, 2010 As at March 31, 2009 Change Inferences

SOURCES

Shareholder's

Funds

Share Capital 18987650 18982398 5252

New shares have

been issued to

raise capital

Share

Application

Money Pending

Allotment 2,933 -2933

The share

application money

has been paid

Employee Stock

Options

Outstanding 28,38,650 19,83,331 855319

The outstanding

stock has

increased, that

means 855319

value stocks have

been issued to the

employees

Less: Deferred

Stock

Compensation 9,77,748 1860902 8,24,092 11,59,239 153656

Airtel has

increased 153656

deferred stocks

during the year.

This also means it

has granted voting

rights to

individuals.

701663

Reserves and

Surplus 346523215 25,62,95,074 90228141

As we dont know

the profit figure,

and assuming zero

dividend paid and

the reserves have

increased because

of the profits

during the year


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Loan Funds

Secured Loans 394296 5,17,304 -123008

Secured loans

have been paid

during the year

Unsecured

Loans 49994936 7,66,19,167

-

26624231

Unsecured loans

have also beenrepaid during the

year

Deferred Tax

Liability (Net) 32543 0 32543

The company will,

in the future, pay

more income tax

because of a

transaction that

took place during

the current

period, such as an

instalment sale

receivable.

Total 41,77,93,542 35,35,76,115 64217427

Total liabilities of

the company

have increased

over the year

APPLICATION

OF FUNDS

Fixed Assets

Gross Block 442125275 37,26,67,023 69458252

More investment

has been done in

Fixed Assets

Less:

Accumulated

Depreciation /

Amortisation 161875635 12,25,33,438 39342197

Since fixed assets

have increased,

the accumulated

depreciation has

also increased

Net Block 280249640 25,01,33,585 30116055

Net block

increased

Capital Work in

Progress

(including

Capital

Advances) 15947360 2,56,66,693 -9719333

Since capital WIP

has decreased,

this means the

WIP are

transforming into

fixed assets

296197000 27,58,00,278 20396722 Total FA increased


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Investments 157733191 11,77,77,582 39955609

The company

might have

acquired more

shares over the

year

Deferred Tax

Asset (Net) 32,71,103 -3271103

Deferred tax asset

has become 0.

This means that

the value might

have been used to

reduce any

subsequent

period's income

tax expense.

Current Assets,

Loans and

Advances

Inventory 272443 6,21,510 -349067

The company hassold out its stock

over the year

Sundry Debtors 21049770 2,55,00,488 -4450718

The company has

acquired money

from the debtors

during the year

Cash and Bank

Balances 8167415 2,25,16,027

-

14348612

Either payments

have increased or

receipts have

decreased

Other Current

Assets 663743 11,97,127 -533384

Current assets like

prepaid expensesand accounts

receivables have

decreased.

Loans and

Advances 62097457 4,44,14,947 17682510

The company has

paid more

advances and

given more loans

during the year

92250828 9,42,50,099 -1999271

Total CA has

decreased over

the year

Less: CurrentLiabilities and

Provisions

Current

Liabilities 121799933 13,11,79,816 -9379883

The company's

debts or

obligations that

were due within

the year have

decreased


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Provisions 6587544 63,44,004 243540

Provisions, i.e.

liability of

uncertain timing

and uncertain

amount, have

increased

12,83,87,477 13,75,23,820 -9136343

Total CL has

decreased

Net Current

Assets -36136649 -4,32,73,721 7137072

Net CA (= Total CA

- CL) has increased

Miscellaneous

Expenditure

(To the extent

not written off

or adjusted) 873 -873

The company has

had no

miscellaneous

expenditure

during the year

Total 417793542 35,35,76,115 64217427

Total Assets forthe company have

increased

Using the above two balance sheets and the inferences drawn, weve prepared the CFS as follows:

CFS for 2010-11(in '000s)

Inflow Outflow

Opening Balance 8167

Stock Issue 925

Payment Towards secured loans 223

Unsecured loans availed/paid 68809

Payment towards FA 172250

Sale/Issue of shares 39603

Purchase/Sale of stock 72

CA (Prepaid Expenses) 351

Pymt towards loans & advances 39891

1,17,504 212787

CIH -95,283


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CFS for 2009-10

Inflow Outflow

Opening Balance 8167415

Stock Issue 701663

Payment Towards secured loans 123008

Unsecured loans availed/paid 26624231

Payment towards FA 69458252

Sale/Issue of shares 39955609

Purchase/Sale of stock 349067

CA (Prepaid Expenses) 533384

Pymt towards loans & advances 17682510

Payment towards share application money 2933

49707138 113890934

CIH -64183796

Note: Since weve not considered any transactions from the Income Statement,

were getting a CIH that is different from the companys figures.

Observations:

On the basis of the balance sheets and the CFS that weve prepared from the balance sheets, weve

had the following observations:

1. Revaluation of assets There is no revaluation reserve present in the companys balancesheet. Hence, we infer that there has been no revaluation of assets by the company.

2. Issue of shares at a premium The balance sheet does not mention share premium. Hence,we infer that the shares have been issued at the face value.

3. Change in reserves of the company over the 3 years time period The Companys reserveshave increased over the 3 years. Since we have not taken the income statement into

account, we infer that no dividends have been paid by the company and the entire profit has

been used to add to the companys reserves.

4. Change in the inventory value from year to year and its impact on the profit of thecompany the Companys inventory has decreased over the year 2009-10. This means that

the company has sold out its stock over the year which would contribute to the profit of the

company. In the year 2010-11, the companys inventory has increased over the year which

means the company has bought stock during the year. We do not know which technique has

the company used for selling out the inventory. If the price of the new stock was higher than

the old stock and the company used FIFO technique, its profits would have been lesser than

that using LIFO technique.

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FR Group Assignment