Ratio Analysis of Unitech

Constructions
 About Unitech Constructions

 Established in 1971 by a group of technocrats led by Mr.

Ramesh Chandra.
 Over 3 decades of experience in infrastructure and real
estate development
 Market capitalization of ~US$ 6 billion

 Land reserves of nearly 14,000 acres spread across major

centres of economic activity in India.
Unitech’s Business Model
 Liquidity Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

0.43 0.48 0.95 1.24 0.97

The Industry does not maintain

the ideal 2:1 ratio because it is a
high investment sector and
majorly works with loans and
debts.
 Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Total Current Assets 592.09 1,136.40 4,017.01 8,749.16 6,396.35
 Liquidity Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

0.43 0.48 0.95 1.24 0.97

The Industry does not maintain

the ideal 2:1 ratio because it is a
high investment sector and
majorly works with loans and
debts.
 Liquidity Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

0.40 0.46 0.94 1.24 0.97
The Industry does not maintain
the ideal 1:1 ratio because it is a
high investment sector and
majorly works with loans and
debts.

However during the peak period

it reached near to the desired.
 Liquidity Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

0.04 0.032 0.03 0.03 0.01

The Industry does not maintain

a high ratio because it is a high
investment sector and majorly
works with loans and debts.
 Profitability Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

14.81 24.57 59.04 55.52 60.66
It measures the percentage of
each sales rupee remaining
after the firm has paid for its
goods.

The sales declined from 2008 to

2009 , however the Gross profit
increased due to the decrease in
the raw materials and
Manufacturing expenses.
 Profitability Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

10.37 19.85 57.48 53.40 57.65

The operating Expenses

does not change
significantly hence it follows
a same trend as Gross profit.
 Profitability Ratio
Initially, the company had a low
ROI, but later on the ROI kept on
Mar 05 Mar 06 Mar 07 Mar 08 Mar 09
increasing and later on it felt to
17.20 31.01 84.72 48.08 25.87 25%, meaning that the return on
investment is decreasing when
compared to the previous years.

So the investors might look out for

an opportunity to invest in other
stocks.

During the Boom in the real estate

market, Unitech gave a very high
return on Investment, but with the
slowdown hitting the Indian
Economy, the ROI fell down
tremendously.
 Profitability Ratio
The Return on Capital Employed is
fluctuating in nature.
Mar 05 Mar 06 Mar 07 Mar 08 Mar 09
10.42 11.72 24.70 13.88 13.87 This is unfavorable for Company’s
image as it may result in decrease
in the confidence among the
investor’s about the company’s
performance, as investors invest
in those companies which more
often have a constant ROCE or
whose ROCE keeps on increasing.

The company should take

measures to improve it's Return
on Capital Employed, so that the
investors and the shareholders
regain the confidence in the
company.
 Profitability Ratio
This ratio is used to analyze the
Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 ability of the firm's management to
realize an adequate return on the
0.17 0.31 0.85 0.48 0.26
capital invested by the owners of the
firm.

Tendency is to look increasingly to

this ratio as a final criterion of
profitability.

With the slowdown in the real estate

market, the net profits of the
company have fallen.

The Net Worth of the company has

risen tremendously but the profits of
the company have not increased in
lines with the Net worth and hence
 Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

24 56 12 6 5
•Shows the portion of company's
profit allocated to each
outstanding share of common
stock

•Indicator of company’s
profitability

•Stock split
 Profitability Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

4 1 0.5 0.25 0.1

DPS shows how much the

shareholders were actually paid
by way of dividends.

Like EPS, there is a constant

decrease in DPS over the years.
 Profitability Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

16.71 23.31 4.13 3.94 2.76

It measures the relationship

between the earning belonging
to the ordinary shareholders and
the dividend paid to them.

D/P Ratio is significant in the

years 2005 & 2006, however, it
does on decreasing in the
subsequent years.
 Profitability Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

83.29 76.69 95.87 96.06 97.24

Retention Ratio indicates what

percentage share of the net profits is
retained in the business.

The D/P Ratio is low in the years

2007, 2008 & 2009, the earnings
retained by the company is high.
 Profitability Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

1.46 0.04 0.00 0.00 0.00

A financial ratio that shows how

much a company pays out in
dividends each year relative to
its share price.

Dividend Yield Ratio has almost

reached zero in the later years.
 Turnover Ratio

Mar 06 Mar 07 Mar 08 Mar 09

16.01 30.76 47.65 57.60
Stock turn over ratio / Inventory
turn over ratio indicates the
number of time the stock has been
turned over during the period and
evaluates the efficiency with which a
firm is able to manage its inventory.

The Inventory T/o Ratio has

increased from 16 to 57 in the given
period. This is largely due to
decrease in the inventory level of
the company.
 Turnover Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

8.91 8.53 25.03 3.36 2.23
Debtors turnover ratio or
accounts receivable turnover
ratio  indicates the velocity of
debt collection of a firm.

The Debtors T/o Ratio has gone

down considerably which is not
good. A high Debtors T/o Ratio
reflects the liquidity position of a
company to meet its short term
obligations.
 Turnover Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Negative working capital means that

a company currently is unable
-0.64 -0.52 -10.57 1.48 -8.31
to meet its short-term liabilities
with its current assets

In the real estate companies,

products are delivered and sold to
the customer before the company
ever pays for them and hence these
companies do not feel the need to
maintain huge Current Assets.

Only in the year, 2008 the company

had a positive working capital as the
company had generated huge
current assets from selling it's
products.
 Turnover Ratio
Capital Turnover
Ratio
Mar 05 Mar 06 Mar 07 Mar 08 Mar 09
Capital turnover is used to
40.78 52.29 27.93 10.21 5.44 calculate the rate of return on
common equity, and is a measure
of how well a company uses its
stockholders' equity to generate
revenue.

The higher the ratio is, the more

efficiently a company is using its
capital.

As the ratio is falling in the years,

the company is becoming less
efficient.

It might lead to the outflow of the

 Solvency Ratio
•Indicates the relative proportions
Mar 05 Mar 06 Mar 07 Mar 08 Mar 09
of
3.65 6.92 5.77 7.34 4.61
debt and equity in financing the
assets of the firm
•Largely financed by the creditors
of
the firm
•Capital intensive in nature
•New strategy adopted to tackle
high
debt
 Solvency Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 •Indicates to what extent of the

35 25 24 21 27
total
assets is financed through the
owner’s capital

•Ratio does not give a good

picture

•Highly dependent on external

funding
 Solvency Ratio

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

•Shows the relationship between
53.71 32.7 32.2 26.41 37.24
equity share capital including
reserves and surpluses to
preference share capital and other
fixed interest bearing loans

•Company is highly geared

•Burden of interest and loan

repayment

•Might have problems getting loans

Presented By : -

Sharath Bangera 05
Dolly Basantani 06
Dimple Bharil 07
Sumit Bhati 08