Professional Documents
Culture Documents
By,
Group 8 - 1st year MBA - Section I
Submitted to,
Prof. Latha Ramesh
Group Members and their contributions:
1. Reeba
2. Naveen Chowdary
3. Toshi Agarwal
4. Saurab
5. Manasa
6. Nitish Agarwal
- Analyse the concepts and assumptions adopted by ACC Ltd., and Sun Pharmaceuticals Industries Ltd.,
for 2012 and 2013
1. Introduction
In the following report we will be discussing about the financial statements and inference of the
following two companies - ACC LTD and Sun Pharmaceuticals Industries Ltd.
Sun Pharmaceuticals Industries LTD It was established by MrDilipShangvi in 1983 in Vapi (Southern
Gujarat). It is a pharmaceutical company headquartered in Mumbai, that manufactures and sells
pharmaceutical formulations and active pharmaceutical ingredients(APIs) (like
steroids,anticancers)primarily in India and US. The company offers formulations in various therapeutic
areas such as cardiology ,psychiatry , neurology,gastroenterology and diabtology.
Sun Pharma's Board of Directors include:
ACC Limited (Formerly The Associated Cement Companies Limited) is one of the largest producers of
cement in India. It's registered office is called Cement House. It is located on Maharishi Karve
Road, Mumbai. The stock price of the company, contributes in calculating BSE Sensex.
The management control of company was taken over by Swiss cement major Holcim in 2004. On 1
September 2006 the name of The Associated Cement Companies Limited was changed to ACC Limited.
The company has the honour of being the only cement company to get "Superbrand" status in India.
History of ACC Ltd.:
In 1936 ten cement companies belonging to Tatas, Khataus, Killick Nixon and F E Dinshaw groups
merged to form a single entity, The Associated Cement Companies. Sir Nowroji B Saklatvala was the first
chairman of ACC. The first board of directors had some prominent industrialists J R D Tata, Ambalal
Sarabhai, Walchand Hirachand, Dharamsey Khatau, Sir Akbar Hydari, Nawab Salar Jung Bahadur and Sir
Homy Mody.
Current Board of Directors of ACC Ltd.:
Mr. N. S. Sekhsaria: Chairman
Mr. Bernard Terver: Deputy Chairman
Mr. Kuldip K Kaura: Chief Executive Officer & Managing Director
Mr. Bernard Fontana: Director
Mr. M L Narula: Director
Mr. Shailesh Haribhakti: Director
Mr. Aidan Lynam: Director
Mr. Sushil Kumar Roongta: Director
Mr. Ashwin Dani: Director
Mr. Farrokh K. Kavarana: Director
Mr. Vijay Kumar Sharma: Director
Mr. Arunkumar Ramanlal Gandhi: Director
Mrs. Falguni Nayar: Director
Before we get into the detailed analysis of the financial reports of the two companies, let us discuss the
importance of financial statements and the limitations of the statements, if any.
Audit is done according to the accounting standards, generally accepted in India and in agreement
with the book of accounts.
Before presenting the financial statement for the financial year on 31 December, 2012 and 2013,
they were approved by the Board of Directors.
Following the proper book of accounts as required by law, accounting principles, generally
accepted in India and Companies act, 1956 were taken into consideration for the financial
statement.
The company has neither granted nor taken any loans, secured (or) unsecured from companies,
firms (or) other parties.
The company is not dealing in (or) trading in shares, securities, debentures and other investments,
not given guarantee for loans taken by others from banks (or) financing companies.
No funds have been raised on short-term basis and used for long-term investment.
Physical verification of inventory at reasonable intervals during the FY by the management.
Company maintained full records of fixed assets and fixed assets disposed off, were not included
in assets, which didnt affect the going concern of company.
Maintained the account of arrangements and contracts made and also the dues and disputes
pending at court were mentioned clearly.
No material fraud was done on company and no fraud was done by the company during financial
year.
b) Sun Pharmaceuticals Industries Limited:
Auditors:
Deloitte Haskins & sells
Chartered accountants
Firm reg.no.117366W
Rajesh.K.Hiranandani
(partner)
Audit Report - Analysis:
Annual report was audited as at 31 March, 2012 and 2013 respectively, which includes the
balance sheet, the statement of profit and loss and the cash flow statement for the financial year
ended on 31 March, 2012 and 31st March 2013 respectively.
The responsibility of auditors, to express their opinion on financial statement.
Includes assessing of accounting principles used and significant estimates made by the
management.
Audit is done according to the accounting standards, generally accepted in India and in agreement
with the book of accounts.
Before presenting the financial statement for the financial year on 31 March, 2012 and 2013, they
were approved by the Board of Directors.
Following the proper book of accounts as required by law, accounting principles, generally
accepted in India and Companies act, 1956 were taken into consideration for the financial
statement.
The company has neither granted nor taken any loans, secured (or) unsecured from companies,
firms (or) other parties.
The company is not dealing in (or) trading in shares, securities, debentures and other investments,
not given guarantee for loans taken by others from banks (or) financing companies.
No funds have been raised on short-term basis and used for long-term investment.
Physical verification of inventory at reasonable intervals during the FY by the management.
Company maintained full records of fixed assets and fixed assets disposed off, were not included
in assets, which didnt affect the going concern of company.
Maintained the account of arrangements and contracts made and also the dues and disputes
pending at court were mentioned clearly.
No material fraud was done on company and no fraud was done by the company during financial
year.
All the transactions related to operating activities are entered in this category. Net profit from profit
and loss statement is based on accrual concept i.e. we record revenues and expenses when earned or
incurred, although we may not have received or paid them at all.
Depreciation, amortization, and provision for doubtful debts do not reflect cash outflows for both
current and future periods. Under this category the following activities are recorded.
Thus, the net profit, we recorded, will not indicate the net cash flow from operations.
Therefore, net cash flow from operating activities is done by undoing accrual accounting adjustments
cash system.
AACRUAL SYSTEM
CASH SYSTEM
ELIMINATE
NON-CASH
REVENUE
REVENUE
NET
PROFIT
EXPENSES
ELIMINATE
NON-CASH
EXPENSES
There are two methods to calculate net cash flow from operating activities:
Direct method and indirect method
DIRECT METHOD:
2013
2012
2011
(in million
(in
(in
rupees)
million
million
43,148.9
rupees)
33,553.6
rupees)
20,359.5
3,361.7
2,911.6
2,048.5
(2.4)
95.8
12.0
Finance costs
431.6
282.0
738.8
Interest income
(2,368.9)
(1,977.6)
(2,232.4)
Dividend income
(24.3)
(0.2)
(0.0)
(1,118.1)
(2,415.2)
(427.5)
116.8
39.5
2.9
190.7
(50.1)
(75.6)
1,075.6
2,225.4
(1,778.5)
44,811.6
34,664.8
18,647.7
CHANGES
ADJUSTMENTS FOR (INCREASE)/DECREASE IN
OPERATING ASSETS:
Inventories
(3,902.2)
(5,975.0)
(813.5)
Trade receivables
(6,479.7)
(9,308.4)
3,697.3
(673.8)
(1,043.4)
(345.9)
Other assets
(133.5)
92.8
(485.8)
OPERATING LIABILITIES:
Trade payables
2,142.4
2,991.1
688.2
Other liabilities
(1,770.1)
1,391.1
557.6
Provisions
10,101.6
1,799.3
1,578.6
44,363.3
24,612.3
23,524.2
(10,734.8)
(2,267.7)
(693.2)
33,628.5
22,344.6
22,831.0
(A)
COMPARISION OF CASH FLOW FROM OPERATING ACTIVITIES OF ACC
ACC
2013
2012
2011
(RS
(RS
(RS
CRORE)
1,213.64
CRORE)
1,440.99
CRORE)
1,505.29
583.79
11.93
3.93
17.86
(61.27)
568.90
335.38
510.04
-
(6.11)
(86.11)
(171.05)
11.06
(36.62)
(30.18)
(124.21)
ADJUSTMENTS FOR:
Depreciation and amortisation expense
Exceptional item
Impairment loss
Loss/(profit) on sale/write off of fixed assets (net)
Provision for diminution in the value of investment
Gain on sale of current investments
Dividend income
Interest income
(157.86)
Finance costs
Provision for doubtful debts and advances (net)
Capital spares consumed
Miscellaneous expenditure written off
OPERATING PROFIT BEFORE WORKING
51.67
7.53
23.22
3.44
1,697.88
114.65
(3.55)
36.36
3.47
2,232.93
96.91
(28.64)
14.76
3.67
1,922.08
(102.77)
12.09
(18.24)
(59.57)
(0.29)
(134.45)
(38.82)
(21.63)
(44.31)
(41.91)
(0.26)
(109.28)
(45.68)
(186.90)
28.33
(24.41)
0.35
(2.30)
OPERATING LIABILITIES:
Trade payables
(17.89)
(152.76)
132.96
79.26
(84.19)
112.09
25.65
5.56
33.86
Short-term provisions
20.29
6.29
2.19
Long-term provisions
(3.26)
31.66
19.82
1,498.70
1,783.28
1,992.39
(430.10)
(206.42)
(416.41)
1,068.60
1,576.86
1,575.98
CAPITAL CHANGES
CHANGES IN WORKING CAPITAL:
ADJUSTMENTS FOR (INCREASE)/DECREASE IN
OPERATING ASSETS:
Trade receivables
Inventories
Short term Loans and advances
Long term loans and advances
Other current assets
Other non-current assets
ADJUSTMENTS FOR INCREASE/(DECREASE) IN
ACTIVITIES (A)
Investing activities of the current period are computed by analysing the changes in the balance sheet
amounts for fixed assets and investments and considering the cash effects of the related transactions
of that period.
Investing activities involve purchases and sale of fixed assets and financial assets.
Interest and dividends received are also recorded under investing activities.
SPIL
2013
2012
2011
(RS
(RS
(RS
MILLION)
(8,454.5)
MILLION)
(7,129.1)
MILLION)
(4,218.5)
136.4
107.9
286.1
(10,194.1)
10,413.8
(156,719.0)
156,249.0
(7,798.2)
6,672.4
(131,751.0)
134,501.8
(9,036.7)
7,068.5
(123,186.1)
126,427.0
equivalents
Fixed deposits/margin money placed
Fixed deposits/margin money matured
Net (loss)/gain on cancellation of forward exchange
(30,119.3)
26,674.3
(190.7)
(22,637.2)
20,442.5
50.1
(18,884.3)
5,641.1
75.6
contracts
Acquisition of subsidiary
Interest received
Dividend received
NET CASH FLOW USED IN INVESTING
(16,414.6)
2,572.1
24.3
(26,350.5)
(2,740.4)
1,653.9
0.2
(8,627.1)
(4,689.3)
2,039.5
0.0
(18,477.1)
ACTIVITIES(B)
COMPARISION OF CASH FLOW FROM INVESTING ACTIVITIES OF ACC
ACC
2013
2012
2011
(RS CRORE)
(962.72)
(RS CRORE)
(572.17)
(RS CRORE)
(484.05)
advances)
Proceeds from sale of fixed assets
Gain on sale of current investments (net)
Purchase of non-current investments
Purchase of investments in subsidiary
7.30
61.27
-
16.40
86.11
(0.34)
(5.00)
36.73
36.62
(6.01)
-
company
Investment in bank deposits (having original
(119.30)
(0.13)
(0.10)
6.59
166.53
(840.33)
3.09
164.13
(307.91)
2.24
125.96
(258.42)
ACTIVITIES
Thus, the net cash used in investing activities is calculated by subtracting or adding the data as shown
above.
Cash flow from financing activities involve raising and repayment of capital and loans.
Cash inflows and outflows from financing activities are calculated by analysing changes in balance
sheet amounts for share holders equity and loan funds.
SPIL
Proceeds from borrowings
Repayment of borrowings
Net increase/(decrease) in working capital
2013
141.8
(1,109.3)
219.0
2012
570.8
(521.6)
(1,097.8)
2011
22.0
(2,102.6)
(1,705.9)
borrowings
Proceeds from issue of shares to minority by
357.4
subsidiary
Payment to minority
Finance costs
Dividends paid
Tax on dividend
NET CASH FLOW USED IN FINANCIAL
(767.0)
(439.3)
(4,401.2)
(714.0)
(6,712.6)
(14.3)
(285.5)
(3,523.7)
(571.8)
(5,443.9)
(69.2)
(865.9)
(2,847.3)
(473.0)
(8,041.9)
ACTIVITIES (C)
NET INCREASE/(DECREASE) IN CASH AND
565.4
8,273.6
(3,688.0)
1,607.3
5,473.9
of subsidiary
Cash or cash equivalents at the beginning of the
17,526.7
8,104.9
6,338.7
year
Effect of exchange differences on restatement of
991.7
1,148.2
(19.7)
20,691.1
17,526.7
8,104.9
The net increase or decrease in cash and cash equivalents is calculated by adding the cash flow from
operating, investing and financial activities.
Cash and cash equivalents taken over on acquisition of subsidiary +Cash or cash equivalents at the
beginning of the year +Effect of exchange differences on restatement of foreign currency cash and cash
equivalents to net increase or decrease in cash and cash equivalents in the above statement.
COMPARISION OF CASH FLOW FROM FINANCING ACTIVITIES OF ACC
ACC
2013
2012
2011
(RS
(RS
(RS
Finance costs
CRORE)
(76.93)
CRORE)
(110.19)
CRORE)
(72.76)
(78.03)
(1.62)
(9.93)
(50.00)
(346.05)
(3.30)
Dividend paid
(560.20)
(522.88)
(585.05)
(95.72)
(85.28)
(97.42)
(860.88)
(1,066.02)
(768.46)
(632.61)
202.93
549.10
CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the
3,155.50
2,952.57
2,303.47
year
Cash and cash equivalents at the end of the year
2,522.89
3,155.50
2,852.57
0.12
0.14
0.16
On current accounts
56.15
111.61
83.23
On deposit account
289.66
531.52
1,542.04
38.04
35.00
32.19
383.97
678.27
1,657.62
1,083.70
1,052.35
609.10
955.22
1,324.88
585.85
100.00
100.00
2,522.89
3,155.50
2,852.57
ACTIVITIES
FLOW STATEMENT
Cash and cash equivalents at the end of the year is decreased in 2013 compared to that of 2012 and 2011.
helped in developing many other principles. Some of the principles followed by ACC Ltd., and Sun
Pharmaceuticals India Ltd., are as follows:
1. Matching Principle: states that income and expenses have to be matched accurately for any given
period. It means that the expenses recognized in a given period has to be matched with the related income
and the income recognized in a given period has to be matched with a related expense. This principle
assures that the debit and credit sides of each financial statement is balanced accurately. This concept also
allows us to calculate the profit/loss earned during a given period by determining the exact income and
expenditure.
2. Revenue Recognition Principle: this is a sublet of the Accrual concept, it states that revenue or income
needs to recognized and recorded when it is earned, regardless of when the monetary value is received. In
order words, income or revenue is recorded when the service is fully rendered to the client or when the
sale occurs, even though the money for the same is not received immediately.
3. Expense Recognition Principle: this is a sublet of the Accrual concept, it states that all expenses must
be recognized and recorded when they are incurred, regardless of when the monetary value is paid. In
order words, an expense is recorded when the benefit has been utilised, regardless of when payment is
made for the same.
4. Historical Cost Principle: states that all Assets and Liabilities must be accounted for at their original
monetary value/acquisition cost. Assets are depreciated consistently over its useful life and liabilities are
written off as and when they are cleared. If the assets and liabilities are recognised at their fair market
value, which fluctuates periodically, then there will be no consistency between the periodical financial
reports.
Differences:
1.
http://en.wikipedia.org/wiki/Generally_Accepted_Accounting_Principles_(United_States)
http://pakaccountants.com/
http://learnfinancialaccounting.com/