Future Group

ASSIGNMENT

Submitted to: - Prof. Amit Bhati

Submitted by: - Girish Harsha

PGP-II (PGDBA)

Roll No.16

Corporate Information

Board of Directors

Mr. Kishore Biyani Managing Director

Mr. Gopikishan Biyani Wholetime Director

Mr. Rakesh Biyani Wholetime Director

Mr. Shailesh Haribhakti Director

Mr. S. Doreswamy Director

Dr. Darlie Koshy Director

Mr. Anil Harish Director

Ms. Anju Poddar Director

Ms. Bala Deshpande Director

Mr. Ved Prakash Arya Director

Statutory AuditorsNGS & CO.

Risk AdvisorsErnst & Young Pvt. Ltd

THE FUTURE RETAIL SPREAD

Brand Key format No. of Outlets

Big Bazaar Hypermarket chain 97Pantaloon Fashion stores 45Food Bazaar Supermarket Chain 136KB’s Fair Price Food Categories 102Indus League Clothing 102Future Money Consumer finance 150Electronics Bazaar Electronics 90Furniture Bazaar Furniture stores 85Planet Sports Sports related goods,

accessories54

Depot Books, music, gifts 112Lee Cooper Fashion for young 31Shoe Factory Footwear 17

The group also includes Central (high-end lifestyle products; no. of stores-7), and around 100 other specialty retail formats

Kishore Biyani CEO, Future Group

SalesThe company’s turnover has increased from Rs.1758.50 crores to Rs. 3031.44 crores, an increase of 72.39% over the previous year.

Operating profitOperating profit of the Company for the year 2006-2007 stood at Rs.218.74 crores as compared to Rs. 149.64 crores in the previous year, an increase of 46.18% over the previous year. The operating margin has come down to 6.76% in the current year as compared to 8.01% in the previous year. The reported figure is exclusive of extraordinary gain of Rs. 88.88 crores.

InterestInterest & Financial charges outflow has increased from Rs. 36.92 crores in 2005-06 to Rs. 89.76 crores in 2006-07. The increase in interest and financial charges is on account of additional borrowing for funding the growth plans of the Company (Expansion of retail space coverage from 2.70 million Sq. ft. to 5.20 million Sq. ft., an increase of 2.50 million Sq. ft. space on an approximate basis.)The interest & financial charges cover during the year under review has marginally fallen down to 3.43 times as compared to 4.05 times in the preceding year.

Net ProfitNet profit of the Company for the year under review stood at Rs. 119.99 crores as compared to Rs. 64.16 crores in the previous year, an increase of Rs. 55.83 crores and 87.01% over the previous year.

DividendThe Company has proposed the dividend of 25% for the current year amounting to Rs. 8.82 crores. (Including corporate dividend tax)

Capital EmployedThe capital employed in the business increased by Rs.1291.39 crores in 2006-07. This is reflected in the liabilities side of the balance sheet through an increase in borrowings by Rs. 698.19 crores and an

increase in equity by Rs. 565.28 crores. Return on capital employed has been declined from 18.30% to 17.48% on account of significant investment in subsidiaries and joint ventures and lease rental deposits given for stores.

Surplus ManagementThe Company generated a cash profit of Rs.184.78 crores as compared to Rs. 99.85 crores in the last year, registering the growth of 85.06%. The cash outflow on account of proposed dividend is Rs.8.82 crores. The balance amount is ploughed back into the business to fund the growth.

Debt –EquityDebt-equity ratio of the Company has marginally declined with the additional funds borrowed for the expansion of the retail operations of the Company. Debt-equity ratio has increased marginally from 0.50 in the previous year to 0.79 in the current year.

Earning per share (EPS)The Company's Basic Earning Per Share (EPS) is Rs. 8.71, which was Rs. 5.06 in the preceding year registering the growth of 72%. The Company during the year has expanded its equity base from 1344.23lacs equity shares to 1467.51 lacs equity shares.

Cash Earning per share (CEPS)The Company's Cash Earning Per Share (CEPS) is Rs. 11.39, which was Rs. 6.70 in the preceding year registering the growth of 70%.

Cash FlowThe Company has registered the cash profit of Rs.184.78 crores during the year. The growth of the Company has partly been funded by the cash generated from the business as well as from additional funds borrowed and equity funds infused during the year.

Equity Share capitalThe Company during the year has also allotted 60, 62,400 equity shares of Rs. 2/- each at a premium of Rs. 325/- per share on account of conversion of warrants. The allotment is in accordance with provisions contained in Securities and Exchange Board of India (Disclosure & Investor Protection) Guidelines, 2000. The resultant increase in "Equity Funds" on account of allotment of equity shares during the year is Rs. 458.25 crores.

InvestmentThe Company's investment portfolio has increased substantially from Rs. 161.67 crores in 2005-2006 to Rs. 252.01 crores in 2006-2007, increase by 55.88%.

RatiosFinancial Performance Jun-06 Jun-07Cost of goods sold/Net sales 66.53% 68.26%Manpower Cost/Total Income 5.99% 6.19%Advertising and selling cost/Total Income 2.72% 2.80%Interest/Total Income 1.97% 2.70%PBDIT/Interest(Debt-Service Ratio) 4.05 3.43ProfitabilityPBDIT/Total Income 7.99% 9.24%PBDT/Total Income 6.02% 6.54%Net profit/Total income 3.43% 3.60%RONW(Average Worth) 17.15% 14.82%ROCE(Average Capital Employed) 18.30% 17.48%Balance SheetDebt-equity Ratio 0.50 0.79Debtors turnover days 3 7Inventory turnover days 98 99Current ratio 1.44 2.19Quick ratio 0.58 1.08Asset turnover(Total income/Total assets) 1.62 1.96Key financial Parameters (Rs. In Crores)Total revenue 1,871.98 3,328.76

PBDIT 149.64 307.62Profit after Tax 64.16 119.99Cash Profit 99.85 184.78Per share dataBasic Earnings(less extraordinary income 5.06 8.71Basic cash Earnings (Rs.) 6.70 11.39Dividend (Rs.) 0.50 0.50Book Value (Rs.) 39.20 74.42

Inferences

Total assets base of the company has increased by Rs.1, 291.39 crore. In year 2006 total assets was Rs.1, 156.21 and in year 2007 it is Rs. 2,447.60 crore. So we can say that a total asset of the company is good.

Total asset increase by 111.69% in 2007, it is double from 2006(54.52%)

Profits- (Profit after Tax)Year 2007 Rs. 119.99 croreYear 2006 Rs. 64.16 crore

Profits have been increased by Rs. 55.83 crore. Increased by 87.02% as compared to year 2006.

If we take General Reserve it has been increased by Rs.12 crore it is strengthen the financial position of the companyGeneral Reserves-

Year 2007 Rs. 23.31 crore Year 2006 Rs. 11.31 crore

It is increased by 106.10%

Ratio AnalysisLiquidity/ Solvency:

Company’s Current ratio is 2.19:1 and Stock Turnover ratio is 99 days.

Approach B

Beta 1.48

Jensen’s Alpha 9.69% Risk CharacteristicsR Squared 6.00%

ROE-COE 39.66% Investment Performance

ROC-WACC -2.14%

EVA INR-70.89

Current Debt ratio 4.89%

Optimal Debt ratio 5.00% Capital structure

Change in WACC -0.06%

Duration 4.1%

Dividends INR 627.00 Dividend Policy

FCFE INR-8, 797.00

Value/Share INR 1608.00

Price/Share INR 1206.00 Valuations

Return on Shareholder fund

Equity Ratio0.79 i.e. 79%, increase by 0.58 i.e. 58% from previous year

Balance Sheet

Profit and Loss

BALANCE SHEET AS AT 30TH JUNE, 2007

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE, 2007

SCHEDULES TO BALANCE SHEET AS AT 30TH JUNE, 2007