A STUDY OF FINANCIAL

STATEMENT OF ITC Ltd.

REPORT SUBMITTED AS SUMMER TRAINING PROJECT TO SAMBALPUR

UNIVERSITY FOR THE PARTIAL FULLFILLMENT FOR THE DEGREE OF
“MASTER IN BUSINESS ADMINISTRATION”

Submitted By:- Submitted to:-

Soumya Ranjan Pradhan Dr Debendra Kumar Mahalik
1420MBA33 Head of the department (MBA)
Department of Business Administration, SAMBALPUR UNIVERSITY
SAMBALPUR UNIVERSITY

2020-2022
DEPARTMENT OF BUSINESS ADMINISTRATION
SAMBALPURUNIVERSITY
Jyoti Vihar, Burla – 768019,
Sambalpur, Odisha, India
 DECLARATION

I do hereby declare that I had personally carried out the work

depicted in the thesis entitled “A STUDY AND ANALYSIS
OF FINANCIAL STATEMENT OF ITC LIMITED” in
partial completion of the requirements for the Degree of
Masters in Business Administration. It is not published
anywhere before, It’s genuinely the true copy. I further not
submitted to any other institute or university for award of any
other degree.

SOUMYA RANJAN PRADHAN

1420MBA33 -3rd Semester
Dept. of MBA,
Sambalpur University

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CERTIFICATE

This is certified that, the project report titled “COMPANY

PROFILE AND FINANCIAL STATEMENT ANALYSIS
OF ITC LIMITED” is based on an authentic work done by
Mr. SOUMYA RANJAN PRADHAN and submitted in
partial fulfillment of the requirement for the award of the
degree of master of Business Administration of Sambalpur
University, Jyoti Vihar, Burla, Sambalpur, Odisha, 768019.

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 ACKNOWLEDGEMENT

I wish to express my deep sense of thankfulness to everyone who helped me through

scholarly and valuable guidance for completing the project. Guidance and Co-
operation drive one to achieve the Everest. It would be impossible to accomplish a
huge task without help guidance and Co-operation of others.
I further thank Dr. Debendra Kumar Mahalik, HOD Department of Business
Administration, Sambalpur University, Jyoti Vihar, Burla, Sambalpur, for lending a
helping hand when it came to solving my problem related to the project. This project
would not have been possible without his valuable time and support.
I would further like to give special thanks to ITC Ltd for make the data available to me
through internet. The data available in Internet, articles and research done by previous
researchers has provided many insights and suggestions that have increased the quality
of information presented here.
Also, I thankful to all other professors, readers and lecturers, teachers, guide of the
department for kind help rendered to me. And I am extremely thankful to my friends
for helping hand in completing the project, guidance in this project.

Thanking You

Yours Sincerely
Soumya Ranjan Pradhan
1420MBA33
3rd Semester
Dept. Of MBA, SUNIV

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 CONTEINT

Page
No.
Chapter -01 Introduction 06
Company profile
Product portfolio
Chapter-02 Review of Literature
Chapter-03 Research Methodology
Chapter-04 Financial Analysis
Chapter-05 Bibliography
Chapter-06 Formulas for Ratio analysis 44

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 INTRODUCTION TO ITC Ltd.

ITC Limited is an Indian conglomerate company headquartered in Kolkata, West

Bengal. ITC has a diversified presence across industries such as FMCG, hotels,
software as ITC Infotech, packaging, paperboards, specialty papers and
agribusiness. The company has 13 businesses in 5 segments. It exports its products
in 90 countries. Its products are available in 6 million retail outlets.

COMPANY PROFILE

Enduring value
The company was converted into a Public Limited Company on 27 October 1954.
ITC's equity shares are listed on Bombay Stock Exchange (BSE), National Stock
Exchange of India (NSE) and Calcutta Stock Exchange (CSE). The company's
Global Depository Receipts (GDRs) are listed on the Luxembourg Stock Exchange.

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ITC is a constituent of two major stock market indices of India: BSE SENSEX and
NIFTY 50 of NSE.
Traded as;
BSE: 500875
NSE: ITC
Shareholding pattern:

Shareholders (as on 31 March 2020) Shareholding

Financial Institutions 42.41%

FIIs and FPIs 14.63%

Foreign Companies 29.47%

NRI's, OCIs, and Foreign Nationals 0.69%

Body Corporates 1.03%

Public and others 11.65%

Share underlying Global Depository Receipts 0.12%

Total 100.0%

MANAGEMENT OF ITC Ltd.

Name Designation

Sanjiv Puri Chairman & Managing Director

Rajiv Tandon Executive Director & CFO

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 Name Designation

Sumant Bhargavan Executive Director

Nakul Anand Executive Director

Arun Duggal Non-Executive Director

Meera Shankar Non-Executive Director

Hemant Bhargava Non-Executive Director

Anand Nayak Non-Executive Director

Shilabhadra Banerjee Non-Executive Director

Sunil Behari Mathur Non-Executive Director

Nirupama Rao Non-Executive Director

Atul Jerath Non-Executive Director

Ajit Kumar Seth Non-Executive Director

Employees: As per the Annual report of the company, it had 36500+ employees as
on 31 March 2021.
Revenue: 74,979 crores INR (In 2020)
Total assets: 77,367 crores INR (In 2020)

ITC's FMCG PORTFOLIO

ITC FOOD BRANDS

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CIGARETTE BRAND

India kings Classic Gold Flake Navy Cut

ITC PERSONAL CARE BRANDS

ITC EDUCATION AND STATIONERY BRANDS

ITC AGARBATTIS & DHOOP BRAND

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ITC SAFETY MATCHES BRANDS

VISION & MISSION OF ITC Ltd

ITC believes that its core values of trusteeship, customer focus, respect for people, excellence,
innovation and nation orientation have been the guiding principles behind the Company's
phenomenal growth, helping it to become one of India's most admired and valued
enterprises.

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 REVIEW OF LITERATURE

The literature survey frames the core of all examination. As a logical examination to prevail in
new ends and set up realities, each exploration expands on existing information. Except if one
needs to waste time, exact mindfulness on the degree of information on a theme is essential
to hang on examination that adds worth to the circle.
A literature audit Services for research is delineated as an overview of logical books, erudite
articles, and the other efficient logical exploration sources applicable to a chose issue, space
of study, or hypothesis, to gracefully a blueprint, outline, and significant examination of an
arrangement, staff of thought, or ideas bearing on the investigation question in examination.
In expansion, the literature survey acquaints the writer to the degree of information in their
field. Once presented as an area of the paper, it sets up to the purposes, the creator's
profundity of comprehension and information of their subject.
The logically applicable literature survey in a very field comprises of the past investigations
inside the space, built up schools of thought, academic articles, and logical diaries among
various things. The literature survey administrations change from field to field. In depleting
sciences, the literature is typically realities and furthermore the survey could likewise be just a
layout of the significant sources. While in delicate sciences, the study gives an outline and
amalgamation of arranged schools of contemplations and their interconnection. A diagram
or a rundown is that the transient record of all enlightening feature from key sources, though
amalgamation is that the rebuilding or rearrangement of the information in a very way that
educates regarding the exposition's set up of work the examination disadvantage.
The basis of financial planning analysis and decision making is the financial information
(Statements). Financial statements are needed to predict, compare and evaluate a firm’s
earning ability. It is also required to aid in economic decision-making investment and financing
decision making. The financial information of an enterprise is contained in the financial
statements. The use of financial statement analysis in investment decision has been addressed
by a series of authors.
According to Gautam, U. S. (2005) Accountancy, Financial Statement is generally explained
as financial information which is the information relating to financial position of any firm in a
capsule form.
Financial statement according to J. A Ohison (1999) was defined as a written report that
summarizes the financial status of an organization for a stated period of time. It includes an
income statement and balance sheet or statement of the financial position describing the
flow of resources, profit and loss and the distribution or retention of profit.
According to Pandey, I.M. (2005 Financial management) profitability is the ability of an entity
to earn income. It can be assessed by computing various relevant measures including the
ratio of net sales to assets, the rate earned on total assets etc.
According to Robert F. Meigns (2001), Financial Statement simply means a declaration of what
is believed to be true and which, communicated in terms of monetary unit. It describes certain
attributes of a company that is considered to fairly represent its financial activities.

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Meigs and Meigs (2003) stated that the rate of return on investment (ROI) is a test of
management’s efficiency in using available resources. This review is organized under the
following sub-heads for ease of comprehension.
I. What is financial statement?
II. Objective of financial statement analysis
III. Uses and users of financial statement analysis
IV. Classification of financial statement
V. Relationship among the Statement of Financial Position, Income Statement, Statement of
Cash Flows and Statement of Retained Earnings.
VI. Techniques of financial statement analysis
VII. Limitations of financial statement analysis
VIII. Impact of inflation on financial statement analysis

I. What is Financial Statement?

According to Meigs and Meigs (2003), financial statement are a structured

representation of the financial position and financial performance of an entity. The objective
of financial statements is to provide information about the financial position, financial
performance and cash flows of an entity that is useful to a wide range of users in making
economic decisions. Financial statements also show the results of the management’s
stewardship of the resources entrusted to it. To meet these objectives, financial statements
provide information about an entity’s:
a) Assets
b) Liabilities
c) Equity
d) Income and expenses, including gains and losses
e) Contribution by and distribution to owners in their capacity as owners, and
f) cash flows
A complete set of financial statement comprises:
1) A statement of financial position as at the end of the period:
2) A statement of comprehensive income for the period;
3) A statement of changes in equity for the period:
4) A statement of cash flow for the period.
5) Notes of Account comprising a summary of significant accounting policies and other
explanatory information; and
6) A statement of financial position as at the beginning of the earliest comparative period
when an entity applies an accounting policy retrospectively or makes a retrospective
restatement of items in its financial statements or when it reclassifies items in its financial
statements.

II. Objective of a Financial Statement Analysis

Business decisions are made on the basis of the best available estimates of the
outcome of such decisions. According to Meigs and Meigs (2003), the purpose of financial
statement analysis is to provide information about a business unit for decision making purpose

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and such information need not to be limited to accounting data. White ratios and other
relationships based on past performance may be helpful in predicting the future earnings
performance and financial health of a company, we must be aware of the inherent limitations
of such data.
According to Meigs and Meigs (2003), the key objectives of financial analysis are to
determine the company’s earnings performance and the soundness and liquidity of its
financial position. We are essentially interested in financial analysis as a predictive tool.
Accordingly, we want to examine both quantitative and qualitative data in order to
ascertain the quality of earnings and the quality and protection of assets. In periods of
recession when business failures are common, the balance sheet takes on increase
importance because the question of liquidity is uppermost in the minds of many in the business
community. However, when business conditions are good, the income statement receives
more attention.
Nevertheless, a financial analyst has to grapple on the above complexities of using financial
statement analysis to achieve a specific purpose.

III. Uses and Users of Financial Statement

According to Akpan (2002), financial statement may be used by users for different purposes:

a) OWNERS AND MANAGERS:

Require financial statement to make important business decisions that affect its operations.
Financial analysis is then performed on these statements to provide management with a more
detailed understanding of the figures. These statements are also used as part of
management’s annual report to the stockholders.

b) EMPLOYERS:

Also need these reports in making collective bargaining agreements (CBA) with the
management, in the case of labour unions or for individuals in discussing their compensation
promotion and rankings.

c) PROSPECTIVE INVESTORS:

They make use of financial statements to assess the viability of investing in a business. Financial
analysis is often used by investors and are prepared by professionals (financial analyst), thus
providing them with the basis for making investment decisions.

d) FINANCIAL INSTITUTIONS:

Financial institutions (banks and other lending company) use them to decide whether to grant
a company with fresh working capital or extend debt securities (such as a long-term bank loan
or debentures) to finance expansion and other significant expenditures.

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e) GOVERNMENT ENTITIES:

Government entities (Tax authorities) need financial statements to ascertain the property and
accuracy of taxes and other duties declared and paid by a company.

f) VENDORS:

They require financial statement to access the credit worthiness of the business

g) MEDIA AND GENERAL PUBLIC:

They are also interested in financial statements for a variety of reasons.

IV. Classification of Financial Statement:

According to Diamond (2006), all watchful business owners have an innate sense of
how well their business is doing. Almost without thinking about it, these business owners can tell
you any time during the month how close they are to butting budgeted figures. Certainly, cash
in bank plays a part, but its more than that. They are three types of financial statements. Each
will give important information about how efficiency and effective the business is operating.
Income statement, balance sheet and statement of cash flow are the basic and the most
important financial statements which interprets the quantitative data of a company’s
performance. Whereas foot notes have the qualitative explanation for the major transactions
and the accounting policy adopted while formulating the financial statements. The publicly
traded companies publish their financial statements quarterly.

a) Income Statement:

Income statement measures the company’s profitability over a period of time. In

the income statement, the net income is calculated by subtracting all the expenses from
income. According to Patrick, Ralph, Barry & Susan (2002), income statement provides the
information of the transactions occurred in a certain period of time cselling expenses,
depreciation, amortization expenses and income tax paid. Initially gross profit is calculated by
subtracting cost of goods sold from net sales. Cost of goods sold is the expense occurred from
the sales of the goods, labour cost, raw materials and overhead expenses occurred during
the sales period falls under the cost of goods sold category.
Operating income is calculated by subtracting the depreciation and the other selling and
administrative expenses. From the operating income, interest and/or amortization is paid
which will result in earning before tax income of the entity.
Finally, income tax is paid from earning before tax resulting in net profit. Management decides
if they want to pay dividends or not. If they do pay dividends then preferred dividends are
paid first and afterwards common stock holders’ dividends are paid. The residue income also
known as the retained earnings are reinvested in the firm. (Charles and Patricia, 1983)

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b) Balance Sheet :

A firm’s assets, liabilities and equity at a given time period are presented in the
balance sheet. It shows the financial position at a point in time There are two sub accounts in
balance sheet. Asset’s account is the first one, which includes all the current and fixed assets
of the company. Current assets include cash, market securities, account receivable,
inventories, prepaid expenses etc. Current assets also named as working capital provide short-
term benefit for the entity. The other items which fall under assets are property, plant,
equipment, goodwill, intangibles, long term investments, note receivable and other long-term
assets. Additionally, the other sub account includes all the liabilities and equity. Accounts
payable, accrued expenses, notes payable, short-term debt are the major components of
current liabilities. While total long-term debt, deferred income tax and minority interest added
to the current liabilities sums up the total liabilities. Total liabilities summed up with total equity
make total liabilities & shareholder´s equity, which is always equal to the total assets. (Frank,
1989)

c) Statement of Cash Flow:

Statement of cash flow shows how cash flows in and out of the company. Cash
generated by the operating, investing and financing activities are shown in the statement of
cash flow. Furthermore, statement of cash flow shows the overall net increase or decrease in
cash of the firm. According to Patrick (2002), cash flow helps the investors and creditors to
access the ability of the firm to generate positive future cash flow, ability to meet the debt
obligations and to shed light on the cash and non-cash aspect of the investing and financial
transactions. Operating activities includes net income, depreciation, the increase or decrease
in marketable securities, accounts receivable, inventory, prepaid expenses, account payable,
and accrued expenses. The cash involved in purchase or sales of fixed assets falls under
investing activities. Finally, sales and retirement of notes, preferred and common stock, other
corporate securities and bonds falls under financial activities in the statement of cash flow
report. (Timothy and Joseph, 2003)

d) Footnotes:

The footnote gives a detailed description of reporting policies and the practices
companies have adopted. It is impossible to present understandable financial statements
without some explanations as all the information cannot be shown on the face of the
statement. Although the quantitative information is shown in the major financial statements,
the foot note provides the vital qualitative understanding of the financial report. Footnotes
have two kinds of information; initially the accounting method company chooses to formulate
its financial statements. The second one explains the major financial results allied accounting
period. Expenses include purchase, administrative expenses
mentioned in the financial statements like income statement, balance sheet and statement
of cash flow. (Charles and Patricia, 1983)

e) The statement of retained earnings:

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 The statement of retained earnings shows the breakdown of retained earnings.
Net income for the year is added to the beginning of year balance, and dividends are
subtracted. This results in the end of year balance for retained earnings.
Remember that expenses, revenues and dividends impact retained earnings. Since net
income equals revenue minus expenses, we need to include dividends when computing end
of period retaining earnings, plus net income and minus dividends.

V. Relationship among the Statement of Financial Position, Income Statement, Statement of Cash Flows and
Statement of Retained Earnings.:

As mentioned above, the balance sheet shows the financial position at a point in
time. It therefore cannot contain information that is related to some period, such as sales or
wages expense.
It is a common practice to include beginning of a period balance sheet as well as an end
period balance sheet in a financial report. This way the reader can form an opinion about
how the firm’s financial position has changed.
The cash flow statement and the income statement-statement both give information about
the firm’s performance over the period, albeit from different angles. The cash flow statement
explains the change in cash. In other words, it explains how the beginning of period cash has
turned into the end of period cash by differentiating between operating, investing and
financial activities. The income statement shows a presentation of the sales, the main expenses
and the resulting net income over the period. Net income is based on accounting principles
which gives guidance/rules on when to recognize revenues and expenses, whereas cash from
operating activities, obviously is cash based.
As dividends do not reduce net income, the income statement does not always explain the
change in retained earnings over the year (Net income always equals the change in retained
earnings when no dividend is paid out). The statement of retained earnings is included to show
how equity has changed because of net income and possible dividend payments. It shows
the beginning value of retained to which net income is added and dividends subtracted,
resulting in end of year retained earnings.
VI. Techniques of Financial Statement Analysis:

Financial statement users and analysts have developed a number of techniques to

help them analyze and interpret financial statements. According to Diamond (2006) the most
common of these includes, horizontal, vertical and ratio analysis. All of these techniques focus
on relationships among items in the financial statement themselves.
In trying to understand the current financial position of firm and its future outlook, it is important,
to consider changes from year to year as well as trends over several years. One way to
accomplish this is to use comparative financial statements and the five-or-ten-year summary
of data found in the firm’s annual report to spot important or emerging trends.
VII. Limitations of Financial Statement Analysis:

In this survey, it will be pertinent to discuss the limitations of financial statement analysis
and recommend ways of minimizing or overcoming them. Categorically, according to
Diamond (2006), three problems involved in such analysis are:

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i) That firms use different accounting principles and methods.
ii) That it is often difficult to define what industry and firm is really a part of and
iii) That accounting principles varies among countries

VIII. The Impact of Inflation of Financial Statement Analysis:

During a period of inflation, financial statements which are prepared in terms of historical costs
do not reflect fully the economic resources or the real income (in terms of purchasing power)
of a business enterprise (Meigs and Meigs 2003).
Therefore, inflation affects financial statement analysis to a greater extent. However, there is
SEC requirement that large corporations disclose in footnotes the replacement cost of
inventories, cost of goods sold, plant and equipment, and depreciation, ibid. financial analyst
should therefore attempt to evaluate the impact of inflation on the financial position and
results on operations of the company being studies. Moreover, according to Diamond (2006),
analysts would raise such questions as: how much of the net income can be attributed to the
increase in the general price level? Is depreciation expense understated in terms of current
price levels? Are profits exaggerated because the replacement cost of inventories is higher
than the cost of units charged to cost of goods sold? Will the company be able to keep its
“physical capital” intact by paying the higher prices necessary to replace plant assets as they
wear out? Therefore, accounting information should be modified to cope with the impact of
inflation.
Since inflation affects the financial statements, there is need or a remedy to be done; this will
be in the form of modifying the accounting. To Meigs and Meigs (1979), two approaches are
generally in use. They are:
a) The adjustment of historical cost financial statements for changes in general purchasing
power; and
b) Current value accounting, this approach envisions a series of traditional steps away from
historical cost accounting, the first of which would be limited to requiring footnotes disclosures
of the current values for inventories, cost of goods sold, plant and equipment, and
depreciation.
It second step would involve preparing supplementary financial statements expressed in
current values for most items, and a final step would call for a set of current value financial
statements to become the primary financial statement of a company.

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 RESEARCH METHODOLOGY

Research methodology is a thoroughfare to methodically solve the research problem. It should

be understood as a science of finding out current research which is done systematically. In
those numerous steps, those are normally adopted by a researcher in observing his problem
with the logic behind them.
The procedure by that researcher set about their work of describing, explaining and predicting
phenomenon referred to as methodology”.

TYPE OF RESEARCH: -

This project “A STUDY AND ANALYSIS OF FINANCIAL STATEMENT OF

ITC LTD’’ is considered as analytical research.
Analytical Research is outlined as the analysis in which, researcher has to use facts or data
already available, and analyze to form a crucial evaluation of the facts, figures, data or
information.

SOURCES OF RESEARCH DATA: -

There are basically two sources through which the data needed for the analysis is collected.
But due to unavoidable circumstances that whole world is sufferer of COVID-19, so that it is
impossible to collect primary data. So that I have done this project using secondary data
available only from internet, articles, research paper done by previous researchers.
SECONDARY DATA:
Researchers typically begins by collecting secondary data through the company’s internal
data base, that provides an honest start point. However, the corporate can additionally tap
a large assortment of external information sources starting from company, public and libraries
to government business and publications.
The secondary data are those that have already gathered and stored. Secondary data simply
get those secondary data from record, annual report of the corporate etc. It’ll save time,
money and efforts to gather the data.
The vital sources of data for this project were collected,
• From the annual report maintained by the BANK OF BARODA
• Data are collected from the BANK OF BARODA. web site.
• Books and journal pertaining to the subject.
• Some more information collected from web.

FINANCIAL ANALYSIS –

To identify the financial strength and weaknesses of a firm financial analysis is one of
the most effective and commonly used tools. It established a relation between balance sheet
and the profit and account’s items with each other. Financial analysis can be under taken by
any stake holder of the firm such as management or parties outside the firm for example

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creditors, investors, media etc. Though the use of financial analysis is similar but the purpose of
financial analysis differs from party to party.

RATIO ANALYSIS –

One of the most powerful tools of the financial analysis is ratio analysis. The term
“ration” means, “The indicated quotients of tow mathematical expression and as the
relationship of two or more things”. Here to find out a benchmark of evaluating the financial
position and performance of firm a ratio is used. Because the figures available in the financial
statement can’t convey any meaning towards the performance of the firm in past years.
Comparing a company to its peers or its industry average is another useful
application for ratio analysis. Calculating one ratio for company’s competitors in a given
industry and comparing across the set of companies can reveal positive and magnetic
information about the current position of the company.
As because companies operating in the same industry have similar kind of capital structure
and they also invest in fixed assets in a similar way the ratio for them should be substantially
the same. But the difference between the ratios is bit more than normal that means one firm
has a potential issue and performing less than its competitors, but in the same time it can be
one company is performing more higher than the industrial average. Analyst use ratio analysis
to review sectors, looking the most and least valued company in the group.

NATURE OF RATIO ANALYSIS

• Ratio analysis can be used to look at trends over time for one company or two compare
companies within an industry or sector.
• Ratio analysis compares line-item data from a company’s financial statement to reveal
insights regarding profitability, liquidity operational efficiency and solvency.
• While ratio offer several types of insights other types of information and analysis are usually
needed to form a complete picture of a company’s financial position.

TYPES OF RATIOS –

From the accounting data of a company several ratios can be calculated they can
be grouped in different categories as per the use. For example, parties those are interested in
financial analysis can be short- and long-term creditors, owners and management. From then
short-term creditors give more importance to the liquidity position or the short term solvency
of the firm but in other hand a long term creditor may be give his main interest on the long
term solvency or profitability of the firm. Similarly, the owners of the firms keep an eye on the
profitability and financial condition of the firm, but in the same time management of the firm
give a focus on evaluating every aspect of the firm’s performance.

LIQUIDITY RATIOS

It is very fundamental for a firm to have the option to meet its commitments as they
become due. Liquidity ratios measure the capacity of the firm to meet its present

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commitments. The most common ratios, which show the degree of liquidity or absence of it,
are current ratio and QUICKRATIO. Other ratios incorporate CASHRATIO, stretch measure and
systems administration capital ratio.

• CURRENT RATIO

The current ratio is a ratio of the association's momentary dissolvability. It

demonstrates the accessibility of current resources in rupees for each one rupee of current
obligation. A ratio of more noteworthy than one implies that the firm has more current
resources than current cases against them. It is determined by isolating current resources by
current liabilities:
Significance: As a customary principle, a current ratio of 2 to at least 1 is viewed as agreeable.
The current ratio speaks to an edge of security for banks. The higher the ratio more noteworthy
the edge of security, the more association's capacity to meet its present commitments.

• QUICK RATIO
Likewise called corrosive test ratio, builds up a connection between snappy, or fluid,
resources and current liabilities. An advantage is fluid in the event that it very well may be
changed over into money promptly or sensibly soon without loss of significant worth. Money is
the most fluid resource. Inventories regularly require some an ideal opportunity for
acknowledging into money; their worth additionally tends to change. The quick ratio is
discovered by separating brisk resources by current liabilities:
Importance: Generally, a quick ratio 1 to 1 is considered to speak to an acceptable current
money related condition. High worth shows that organization has adequate assets to meet its
commitments.

• CASH RATIO

Since money is the most fluid resource, a budgetary investigator may analyze cash ratio
and it’s comparable to current liabilities. Exchange speculation or attractive protections are
likeness money; consequently, they might be remembered for the calculation of cash ratio:
Significance: It is like that of quick ratio.

• LEVERAGE RATIOS

Long haul lenders, similar to debenture holders, money related organizations, and
so forth are more worried about the associations drawn out monetary quality. To pass
judgment on the drawn-out monetary situation of the firm, budgetary influence, or capital
structure ratio are determined. These ratios demonstrate blend of assets gave by proprietors
and moneylenders.

 DEBT RATIO

The firm might be keen on knowing the extent of the enthusiasm bearing obligation in the
capital structure. It might, along these lines, register debt ratio by partitioning absolute
obligation by capital utilized or net resources.

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Significance: Lower the ratio, more advantageous the organization.

• DEBT-EQUITY RATIO

The Debt-equity ratio depicts the loan specialists' commitment for every rupee of proprietors'
commitment. It is legitimately figured by:
Significance: The ideal obligation to equity ratio is 2:1, which implies that at no given purpose
of time should the obligation ought to be more than double the value since it gets more
hazardous to repay and subsequently there is dread of insolvency.

• INTEREST COVERAGE RATIO

Debt ratios portrayed above are static in nature, and neglect to demonstrate the
association's capacity to meet interests (and other fixed charges) commitments. The interest
coverage ratio or the occasion’s premium earned is utilized to test the association's obligation
overhauling limit. The interest coverage ratio is registered by isolating Earnings Before Interest
and Taxes (EBIT) by intrigue charges:
We can likewise figure the premium normal interest ratio as income before intrigue, duties,
deterioration and amortization (EBIDTA) isolated by intrigue:
Significance: The ratio demonstrates the degree to which income may fall without making any
humiliation the firm with respect to instalment of the intrigue charges. A higher ratio is alluring;
yet too high shows that the firm isn't utilizing the credit to the best bit of leeway of investors. A
lower ratio demonstrates extreme utilization of obligation or wasteful operations. Ratio of in
any event 2 is viewed as least worthy sum, investigators like to see a coverage ratio of 3 or
better. Interestingly, under 1 shows a firm can't meet its present intrigue instalment
commitments.

ACTIVITY RATIOS

Activity ratios are utilized to assess the productivity with which the firm oversees and
uses its benefits. These ratios are called turnover ratios in light of the fact that they demonstrate
the speed with which the advantages are being changed over or transformed over into deals.
Subsequently includes a connection among deals and resources.

• Inventory turnover

It shows the productivity of the firm in delivering and selling its item. The complementary of
stock turnover gives normal stock possessions in rate term.
Significance: All organizations are extraordinary thus contrasts the ideal ratio, anyway stock
turnover ratio in between 4-6 is viewed as ideal as a rule. A low turnover infers powerless deals
and conceivably abundance stock. A high ratio might suggest either solid deals or lacking
stock.

 Debtors (Accounts receivable) turnover

ITC Ltd PAGE 21

Indebted person turnover demonstrates the occasions account holders turnover every year.
To an outcast expert, data about credit deals may not be accessible. In this way, borrowers’
turnover can be determined by partitioning all out deals continuously end equalization of
account holders.
The quantity of days for which borrowers stay exceptional is known as the normal assortment
time frame.
Significance: Higher the estimation of borrowers’ turnover, the more effective is the
administration of credit.

• Assets turnover ratio

The connection among deals and resources is called resources turnover.

Significance: Higher the benefit turnover ratio more is the productivity of the firm.

PROFITABILITY RATIOS

Benefit is the distinction among incomes and costs over some stretch of time (typically one
year). Benefit is a definitive yield of go with, and it will have no future on the off chance that it
neglects to make adequate benefits. In this way, the money related chiefs ought to
consistently assess the productivity of the organization in term of benefits. The profitability ratios
are determined to gauge the working proficiency of the organization. Other than the board,
banks and proprietors are additionally keen on the benefit of the firm. For the most part, two
significant sorts of profitability ratios are determined:
• Profitability according to deals
• Profitability according to speculation

i. Gross net revenue

The first profitability ratio according to deals is the gross net revenue (or gross margin ratio). It
mirrors the effectiveness with which the administration creates every unit of item. This ratio
demonstrates the normal spread between the expense of products sold and the business
income.
Significance: A high gross benefit margin ratio is an indication of good administration. High
gross overall revenue comparative with industry normal suggests that the firm can create at
moderately lower cost. A low gross net revenue may reflect greater expense of merchandise
because of the company's failure to buy crude materials at positive terms, wasteful use of
plant and hardware, or over-interest in plant and apparatus, bringing about greater expense
of creation.

ii. Net overall revenue

Net benefit is acquired when working costs, intrigue and assessments are deducted from net
benefit. This ratio is the general ratio of the company's capacity to transform every rupee deals
into net benefit. In the event that the net edge is deficient, the firm will neglect to accomplish
good profit for investors' assets.

ITC Ltd PAGE 22

Importance: A firm with a high net margin ratio would be in invaluable situation to get by
notwithstanding falling selling costs, increasing expenses of creation or declining interest for
the item. It would be truly hard for a low net edge firm to withstand these difficulties.

iii. Operating expense ratio

The operating ratio clarifies the adjustments in the overall revenue (EBIT to sales) ratio. This ratio
is figured by partitioning working costs, viz., cost of merchandise sold in addition to selling costs
and general and regulatory costs (barring enthusiasm) by deals:
Significance: A higher working expenses ratio is ominous since it will leave a limited quantity of
working salary to meet intrigue, profits, and so on.

iv. Return on investment (ROI)

The term investment may allude to add up to resources or net resources. The assets utilized in
net resources is known as capital utilized. Net resources equivalent net fixed resources in
addition to current resources fewer current liabilities barring bank advances. Then again,
capital utilized is equivalent to total assets in addition to add up to obligation.
Where, ROI = Return on investment
ROTA = Return on total assets
RONA = Return on net assets; it is equivalent to Return on capital employed
Significance: A high ROI implies the venture's benefits contrast well with its expense. As an
exhibition measure, ROI is utilized to assess the effectiveness of a venture or to look at the
efficiencies of a few unique speculations. In financial terms, it is one method of relating benefits
to capital contributed.

v. Return on Earning (ROE)

A profit for investors' value is determined to see the gainfulness of proprietors' venture. ROE
demonstrates how well the firm has utilized the assets of proprietors. The profit for value is net
benefit after duties isolated by investors' value which is given by total assets:
Significance: A higher ROE proposes that an organization's supervisory crew is more productive
with regards to using speculation financing to develop their business (and is bound to give
better re-visitations of speculators). A low ROE, notwithstanding, shows that an organization
might be bungled and could be reinvesting profit into useless resources.

vi. Earnings per Share (EPS)

EPS basically shows the productivity of the firm on a for every offer premise. As a benefit file, it is an important and broadly
used ratio.
Importance: When EPS expands, the stock's cost may or probably won't rise. Regularly, EPS is contrasted with agreement
EPS conjectures. Speculation research sites consider numerous examiners' estimates to arrive at agreement EPS. As a rule,
if an association's real EPS doesn't ascend to the level anticipated by agreement, the offer value falls.

ITC Ltd PAGE 23

vii. Dividend per Share

The net benefits after charges have a place with investors. Yet, the salary, which they truly get,
is the measure of income conveyed as money profits. In this manner, countless present and
potential speculators might be keen on DPS as opposed to EPS.
Significance: Increasing DPS is a decent route for an organization to flag solid execution to its
investors. Hence, numerous organizations that deliver a profit Centre around adding to its DPS,
so settled profit paying partnerships will in general brag consistent DPS development.

viii. Dividend-Pay-out ratio

The profit pay-out ratio or just pay-out ratio is DPS (or absolute value profits) partitioned by the
EPS (or benefit after expense):
Significance: Pay-out ratio that are between 55% to 75% are viewed as high on the grounds
that the organization is relied upon to disseminate the greater part of its income as profits,
which suggests less held profit. A higher pay-out ratio saw in disengagement from the profit
speculator's point of view is excellent

ix. Dividend yield and Earnings yield

The profit yield and income yield assess the investors' return comparable to the market
estimation of the offer. The income yield is likewise called the profit value (E/P) ratio. The profit
yield is the profits per share (DPS) partitioned by the market esteem per share (MPS), and the
gaining yield is the income per share (EPS) separated by the market esteem per share (MPS).
That is:
Significance: The higher the outcome, the greater amount of the organization's income it is
relying upon to compensate speculators with profits. In the event that a pay-out ratio is close
or outperforms 100, the organization will most likely be unable to manage the cost of making
instalments later on. The lower the outcome, the more probable the organization can
continue its profit duties.
Income yield is the reverse of the P/ERATIO. Profit yield is one sign of significant worth, as a low
ratio may demonstrate an exaggerated stock or a high worth may show an underestimated
stock

x. Price-earnings ratio

The value earnings ratio is broadly utilized by the security examiners to esteem the association's
exhibition true to form by speculators. It shows speculators' judgment or assumptions regarding
the association's presentation. The board is likewise intrigued by this market evaluation of the
company's exhibition and will get a kick out of the chance to discover the causes if the P/E
ratio decreases.
Significance: A higher P/E ratio shows that speculators are happy to follow through on a higher
offer cost today due to development desires later on.

ITC Ltd PAGE 24

 FINANCIAL ANALYSIS

5 Years Standalone Balance Sheet of ITC Ltd.

Mar 21 Mar 20 Mar 19 Mar 18 Mar 17

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 1,230.88 1,229.22 1,225.86 1,220.43 1,214.74
Total Share Capital 1,230.88 1,229.22 1,225.86 1,220.43 1,214.74
Reserves and Surplus 56,067.18 60,777.76 54,725.99 50,179.64 44,126.22
Total Reserves and
56,067.18 60,777.76 54,725.99 50,179.64 44,126.22
Surplus
Employees Stock Options 1,706.52 2,022.18 1,997.94 0.00 0.00
Total Shareholders
59,004.58 64,029.16 57,949.79 51,400.07 45,340.96
Funds
NON-CURRENT LIABILITIES
Long Term Borrowings 5.28 5.63 7.89 11.13 17.99
Deferred Tax Liabilities
1,727.73 1,617.65 2,044.14 1,917.94 1,871.70
[Net]
Other Long Term
511.71 349.72 41.90 73.66 23.86
Liabilities
Long Term Provisions 157.07 143.79 132.64 121.91 131.37
Total Non-Current
2,401.79 2,116.79 2,226.57 2,124.64 2,044.92
Liabilities
CURRENT LIABILITIES
Short Term Borrowings 0.00 0.00 0.00 0.00 0.01
Trade Payables 4,119.53 3,446.74 3,368.28 3,382.28 2,551.22
Other Current Liabilities 5,885.59 5,524.73 6,228.04 5,435.08 4,237.01
Short Term Provisions 169.05 117.94 25.24 39.24 41.83
Total Current Liabilities 10,174.17 9,089.41 9,621.56 8,856.60 6,830.07

ITC Ltd PAGE 25

Total Capital And
71,580.54 75,235.36 69,797.92 62,381.31 54,215.95
Liabilities
ASSETS
NON-CURRENT ASSETS
Tangible Assets 19,216.75 19,612.74 17,945.65 15,120.00 14,469.32
Intangible Assets 2,581.52 519.45 540.75 445.99 410.92
Capital Work-In-Progress 3,329.97 2,776.31 3,391.47 5,016.85 3,491.33
Intangible Assets Under
3.50 3.89 9.89 8.73 45.69
Development
Other Assets 376.56 385.36 0.00 0.00 0.00
Fixed Assets 25,508.30 23,297.75 21,887.76 20,591.57 18,417.26
Non-Current Investments 12,950.38 13,455.59 14,071.45 13,493.77 8,485.51
Long Term Loans And
2.37 3.31 6.21 7.40 5.84
Advances
Other Non-Current Assets 1,304.07 1,971.80 4,263.54 3,785.57 2,769.95
Total Non-Current
39,765.12 38,728.45 40,228.96 37,878.31 29,678.56
Assets
CURRENT ASSETS
Current Investments 14,046.71 17,175.02 12,506.55 9,903.45 10,099.78
Inventories 9,470.87 8,038.07 7,587.24 7,237.15 7,863.99
Trade Receivables 2,090.35 2,092.00 3,646.22 2,357.01 2,207.50
Cash And Cash
4,001.50 6,843.27 3,768.73 2,594.88 2,747.27
Equivalents
Short Term Loans And
2.77 4.87 5.02 4.15 3.37
Advances
OtherCurrentAssets 2,203.22 2,353.68 2,055.20 2,406.36 1,615.48
Total Current Assets 31,815.42 36,506.91 29,568.96 24,503.00 24,537.39
Total Assets 71,580.54 75,235.36 69,797.92 62,381.31 54,215.95
OTHER ADDITIONAL
INFORMATION
CONTINGENT LIABILITIES,
COMMITMENTS
Contingent Liabilities 2,339.15 2,357.74 2,491.31 2,257.52 2,237.36
CIF VALUE OF IMPORTS
Raw Materials 1,366.00 1,503.00 1,947.00 1,506.00 0.00

ITC Ltd PAGE 26

Capital Goods 298.00 382.00 426.00 532.00 0.00
EXPENDITURE IN FOREIGN
EXCHANGE
REMITTANCES IN FOREIGN
CURRENCIES FOR DIVIDENDS
Dividend Remittance In
- - - - -
Foreign Currency
EARNINGS IN FOREIGN
EXCHANGE
FOB Value Of Goods 5,934.00 3,506.00 3,828.00 3,480.00 -
Other Earnings - - - - -
BONUS DETAILS
Bonus Equity Share
1,113.14 1,113.14 1,113.14 1,113.14 1,113.14
Capital
NON-CURRENT INVESTMENTS
Non-Current Investments
9,984.03 10,592.71 11,218.74 11,096.58 6,344.59
Quoted Market Value
Non-Current Investments
3,465.92 3,091.69 2,882.13 2,432.64 2,191.52
Unquoted Book Value
CURRENT INVESTMENTS
Current Investments
4,302.03 3,122.85 4,624.25 1,792.59 2,380.97
Quoted Market Value
Current Investments
9,774.63 14,061.11 7,885.76 8,111.65 7,723.02
Unquoted Book Value

ITC Ltd PAGE 27

5 Years Consolidated Balance Sheet of ITC Ltd

BALANCE SHEET OF ITC (in Rs. Cr.) MAR 21 MAR 20 MAR 19 MAR 18 MAR 17

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 1,230.88 1,229.22 1,225.86 1,220.43 1,214.74

TOTAL SHARE CAPITAL 1,230.88 1,229.22 1,225.86 1,220.43 1,214.74

Reserves and Surplus 57,409.94 62,021.86 55,917.07 51,289.68 45,198.19

TOTAL RESERVES AND SURPLUS 57,409.94 62,021.86 55,917.07 51,289.68 45,198.19

TOTAL SHAREHOLDERS FUNDS 60,347.34 65,273.26 59,140.87 52,510.11 46,412.93

Minority Interest 346.81 377.47 343.47 334.47 294.74

NON-CURRENT LIABILITIES

Long Term Borrowings 5.58 5.90 8.15 11.50 18.40

Deferred Tax Liabilities [Net] 1,736.39 1,627.20 2,052.06 1,923.02 1,878.77

Other Long Term Liabilities 506.00 348.07 79.92 109.98 59.00

Long Term Provisions 187.50 175.37 161.95 149.63 158.42

TOTAL NON-CURRENT LIABILITIES 2,435.47 2,156.54 2,302.08 2,194.13 2,114.59

CURRENT LIABILITIES

Short Term Borrowings 3.88 1.42 1.86 17.35 19.11

Trade Payables 4,318.73 3,629.83 3,509.58 3,496.18 2,659.33

Other Current Liabilities 6,173.06 5,780.34 6,449.17 5,672.82 4,381.41

ITC Ltd PAGE 28

Short Term Provisions 194.01 148.18 51.38 63.80 61.16

TOTAL CURRENT LIABILITIES 10,689.68 9,559.77 10,011.99 9,250.15 7,121.01

TOTAL CAPITAL AND LIABILITIES 73,819.30 77,367.04 71,798.41 64,288.86 55,943.27

ASSETS

NON-CURRENT ASSETS

Tangible Assets 20,507.69 20,985.44 18,625.74 15,863.68 15,262.27

Intangible Assets 2,011.06 525.37 545.92 457.75 428.68

Capital Work-In-Progress 4,004.45 3,251.61 4,126.18 5,499.60 3,684.20

FIXED ASSETS 26,530.04 24,767.27 23,308.08 21,829.76 19,420.84

Non-Current Investments 10,024.54 10,715.02 11,695.99 11,483.79 6,693.99

Deferred Tax Assets [Net] 58.54 56.29 59.37 47.98 44.95

Long Term Loans And Advances 4.07 5.27 8.34 9.69 8.54

Other Non-Current Assets 1,430.39 2,115.31 4,776.83 4,321.49 3,303.32

TOTAL NON-CURRENT ASSETS 38,827.31 37,861.69 40,051.14 37,895.24 29,674.17

CURRENT ASSETS

Current Investments 14,846.33 17,948.33 13,347.50 10,569.07 10,887.39

Inventories 10,507.22 8,965.53 7,943.97 7,584.53 8,186.15

Trade Receivables 2,501.70 2,562.48 4,035.28 2,682.29 2,474.29

Cash And Cash Equivalents 4,659.02 7,277.34 4,152.03 2,899.60 2,967.40

Short Term Loans And Advances 3.47 6.33 6.75 5.84 6.78

OtherCurrentAssets 2,474.25 2,745.34 2,261.74 2,652.29 1,747.09

TOTAL CURRENT ASSETS 34,991.99 39,505.35 31,747.27 26,393.62 26,269.10

ITC Ltd PAGE 29

TOTAL ASSETS 73,819.30 77,367.04 71,798.41 64,288.86 55,943.27

OTHER ADDITIONAL INFORMATION

CONTINGENT LIABILITIES,
COMMITMENTS

Contingent Liabilities 3,527.64 3,784.02 3,562.53 3,252.13 3,870.68

BONUS DETAILS

Bonus Equity Share Capital 1,113.13 1,113.13 1,113.13 1,113.13 1,113.13

NON-CURRENT INVESTMENTS

Non-Current Investments Quoted Market 10,237.47 10,653.86 11,459.86 11,276.13 6,502.72

Value

Non-Current Investments Unquoted Book 229.50 206.33 211.84 205.45 210.27

Value

CURRENT INVESTMENTS

Current Investments Quoted Market Value 4,544.92 3,456.49 4,973.37 2,394.82 2,743.52

Current Investments Unquoted Book Value 10,331.36 14,500.78 8,377.61 8,351.52 8,148.08

5 Years Standalone Profit and loss statement

PROFIT & LOSS ACCOUNT OF ITC (in MAR 21 MAR 20 MAR 19 MAR 18 MAR 17
Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

INCOME

ITC Ltd PAGE 30

REVENUE FROM OPERATIONS 48,151.24 46,323.72 45,221.41 43,956.90 55,001.69
[GROSS]

Less: Excise/Sevice Tax/Other Levies 3,039.43 1,187.64 788.74 3,702.23 15,359.78

REVENUE FROM OPERATIONS [NET] 45,111.81 45,136.08 44,432.67 40,254.67 39,641.91

TOTAL OPERATING REVENUES 45,485.11 45,619.70 44,995.65 40,627.54 40,088.68

Other Income 3,250.99 3,013.66 2,484.54 2,129.84 1,985.91

TOTAL REVENUE 48,736.10 48,633.36 47,480.19 42,757.38 42,074.59

EXPENSES

Cost Of Materials Consumed 13,605.07 13,121.76 13,184.97 11,756.21 11,765.56

Purchase Of Stock-In Trade 6,896.40 4,289.71 4,300.32 2,991.98 3,566.57

Operating And Direct Expenses 0.00 0.00 0.00 0.00 0.00

Changes In Inventories Of FG,WIP And -526.86 -176.34 -180.14 1,041.85 644.17

Stock-In Trade

Employee Benefit Expenses 2,820.95 2,658.21 2,728.44 2,487.46 2,444.31

Finance Costs 47.47 55.72 34.19 86.65 22.95

Depreciation And Amortisation Expenses 1,561.83 1,563.27 1,311.70 1,145.37 1,038.04

Other Expenses 7,167.09 7,822.11 7,656.55 6,809.06 7,090.03

TOTAL EXPENSES 31,571.95 29,334.44 29,036.03 26,318.58 26,571.63

PROFIT/LOSS BEFORE 17,164.15 19,298.92 18,444.16 16,438.80 15,502.96

EXCEPTIONAL, EXTRAORDINARY
ITEMS AND TAX

Exceptional Items 0.00 -132.11 0.00 412.90 0.00

PROFIT/LOSS BEFORE TAX 17,164.15 19,166.81 18,444.16 16,851.70 15,502.96

ITC Ltd PAGE 31

TAX EXPENSES-CONTINUED
OPERATIONS

Current Tax 4,035.36 4,441.97 5,849.24 5,599.83 5,285.65

Less: MAT Credit Entitlement 0.00 0.00 0.00 0.00 0.00

Deferred Tax 97.15 -411.21 130.60 28.62 16.41

Tax For Earlier Years 0.00 0.00 0.00 0.00 0.00

TOTAL TAX EXPENSES 4,132.51 4,030.76 5,979.84 5,628.45 5,302.06

PROFIT/LOSS AFTER TAX AND 13,031.64 15,136.05 12,464.32 11,223.25 10,200.90

BEFORE EXTRAORDINARY ITEMS

PROFIT/LOSS FROM CONTINUING 13,031.64 15,136.05 12,464.32 11,223.25 10,200.90

OPERATIONS

PROFIT/LOSS FOR THE PERIOD 13,031.64 15,136.05 12,464.32 11,223.25 10,200.90

OTHER ADDITIONAL INFORMATION

EARNINGS PER SHARE

Basic EPS (Rs.) 10.59 12.33 10.19 9.22 8.43

Diluted EPS (Rs.) 10.59 12.31 10.13 9.16 8.38

VALUE OF IMPORTED AND

INDIGENIOUS RAW MATERIALS
STORES, SPARES AND LOOSE
TOOLS

Imported Raw Materials 0.00 0.00 0.00 0.00 0.00

Indigenous Raw Materials 0.00 0.00 0.00 0.00 0.00

STORES, SPARES AND LOOSE

TOOLS

Imported Stores And Spares 0.00 0.00 0.00 0.00 0.00

ITC Ltd PAGE 32

Indigenous Stores And Spares 0.00 0.00 0.00 0.00 0.00

DIVIDEND AND DIVIDEND

PERCENTAGE

Equity Share Dividend 6,152.68 7,048.71 6,285.21 5,770.01 6,840.12

Tax On Dividend 0.00 1,373.52 1,201.69 1,110.24 1,333.52

Equity Dividend Rate (%) 1,075.00 1,015.00 575.00 515.00 475.00

5 Years consolidated profit and loss statement

PROFIT & LOSS ACCOUNT OF ITC (in Rs. MAR 21 MAR 20 MAR 19 MAR 18 MAR 17
Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

INCOME

REVENUE FROM OPERATIONS [GROSS] 52,835.15 50,968.50 49,348.43 47,362.51 58,287.95

Less: Excise/Sevice Tax/Other Levies 3,882.34 1,989.42 1,509.43 4,239.61 15,927.91

REVENUE FROM OPERATIONS [NET] 48,952.81 48,979.08 47,839.00 43,122.90 42,360.04

TOTAL OPERATING REVENUES 49,272.78 49,404.05 48,352.68 43,448.94 42,776.61

Other Income 2,632.56 2,597.89 2,173.79 1,831.86 1,761.53

TOTAL REVENUE 51,905.34 52,001.94 50,526.47 45,280.80 44,538.14

EXPENSES

Cost Of Materials Consumed 13,939.84 13,810.70 13,403.01 11,943.75 11,979.03

Purchase Of Stock-In Trade 6,836.87 4,237.90 4,220.51 2,883.97 3,477.56

ITC Ltd PAGE 33

Operating And Direct Expenses 0.00 0.00 0.00 0.00 0.00

Changes In Inventories Of FGWIP And Stock -645.27 -703.13 -203.19 1,027.76 592.57
In Trade

Employee Benefit Expenses 4,463.33 4,295.79 4,177.88 3,760.90 3,631.73

Finance Costs 44.58 54.68 45.42 89.91 24.30

Depreciation And Amortisation Expenses 1,645.59 1,644.91 1,396.61 1,236.28 1,152.79

Other Expenses 7,675.31 8,502.63 8,348.11 7,349.60 7,659.81

TOTAL EXPENSES 33,960.25 31,843.48 31,388.35 28,292.17 28,517.79

PROFIT/LOSS BEFORE EXCEPTIONAL, 17,945.09 20,158.46 19,138.12 16,988.63 16,020.35

EXTRAORDINARY ITEMS AND TAX

Exceptional Items 0.00 -132.11 0.00 412.90 0.00

PROFIT/LOSS BEFORE TAX 17,945.09 20,026.35 19,138.12 17,401.53 16,020.35

TAX EXPENSES-CONTINUED
OPERATIONS

Current Tax 4,463.74 4,846.15 6,191.62 5,893.19 5,546.16

Less: MAT Credit Entitlement 0.00 0.00 0.00 0.00 0.00

Deferred Tax 91.55 -404.36 122.30 23.24 2.93

Other Direct Taxes 0.00 0.00 0.00 0.00 0.00

TOTAL TAX EXPENSES 4,555.29 4,441.79 6,313.92 5,916.43 5,549.09

PROFIT/LOSS AFTER TAX AND BEFORE 13,389.80 15,584.56 12,824.20 11,485.10 10,471.26
EXTRAORDINARY ITEMS

PROFIT/LOSS FROM CONTINUING 13,389.80 15,584.56 12,824.20 11,485.10 10,471.26

OPERATIONS

PROFIT/LOSS FOR THE PERIOD 13,389.80 15,584.56 12,824.20 11,485.10 10,471.26

Minority Interest -221.69 -286.55 -243.57 -221.48 -187.79

ITC Ltd PAGE 34

CONSOLIDATED PROFIT/LOSS AFTER MI 13,161.19 15,306.23 12,592.33 11,271.20 10,289.44
AND ASSOCIATES

OTHER ADDITIONAL INFORMATION

EARNINGS PER SHARE

Basic EPS (Rs.) 11.00 12.00 10.00 9.00 9.00

Diluted EPS (Rs.) 11.00 12.00 10.00 9.00 8.00

DIVIDEND AND DIVIDEND PERCENTAGE

Equity Share Dividend 6,152.68 7,048.71 6,285.21 5,770.01 6,840.12

Tax On Dividend 0.00 1,407.44 1,213.60 1,136.83 1,338.95

Standalone financial ratio

KEY FINANCIAL RATIOS OF ITC (in MAR 21 MAR 20 MAR 19 MAR 18 MAR 17
Rs. Cr.)

PER SHARE RATIOS

Basic EPS (Rs.) 10.59 12.33 10.19 9.22 8.43

Diluted EPS (Rs.) 10.59 12.31 10.13 9.16 8.38

Cash EPS (Rs.) 11.86 13.59 11.24 10.13 9.25

Book Value [ExclRevalReserve]/Share 47.94 52.09 47.27 42.12 37.33

(Rs.)

Book Value [InclRevalReserve]/Share 47.94 52.09 47.27 42.12 37.33

(Rs.)

Dividend / Share(Rs.) 10.75 10.15 5.75 5.15 4.75

Revenue from Operations/Share (Rs.) 36.95 37.11 36.71 33.29 33.00

ITC Ltd PAGE 35

PBDIT/Share (Rs.) 15.25 17.02 16.14 14.48 13.64

PBIT/Share (Rs.) 13.98 15.75 15.07 13.54 12.78

PBT/Share (Rs.) 13.94 15.59 15.05 13.81 12.76

Net Profit/Share (Rs.) 10.59 12.31 10.17 9.20 8.40

PROFITABILITY RATIOS

PBDIT Margin (%) 41.27 45.85 43.98 43.49 41.31

PBIT Margin (%) 37.84 42.42 41.06 40.67 38.72

PBT Margin (%) 37.73 42.01 40.99 41.47 38.67

Net Profit Margin (%) 28.65 33.17 27.70 27.62 25.44

Return on Networth / Equity (%) 22.08 23.63 21.50 21.83 22.49

Return on Capital Employed (%) 28.02 29.26 30.70 30.87 32.76

Return on Assets (%) 18.20 20.11 17.85 17.99 18.81

Total Debt/Equity (X) 0.00 0.00 0.00 0.00 0.00

Asset Turnover Ratio (%) 63.54 60.63 64.46 65.12 73.94

LIQUIDITY RATIOS

Current Ratio (X) 3.13 4.02 3.07 2.77 3.59

Quick Ratio (X) 2.20 3.13 2.28 1.95 2.44

Inventory Turnover Ratio (X) 4.80 5.68 5.93 5.61 5.10

Dividend Payout Ratio (NP) (%) 47.21 46.56 50.42 51.41 67.05

Dividend Payout Ratio (CP) (%) 42.16 42.20 45.62 46.65 60.86

Earnings Retention Ratio (%) 52.79 53.44 49.58 48.59 32.95

Cash Earnings Retention Ratio (%) 57.84 57.80 54.38 53.35 39.14

ITC Ltd PAGE 36

VALUATION RATIOS

Enterprise Value (Cr.) 264,951.06 204,588.20 359,951.82 309,724.29 337,944.56

EV/Net Operating Revenue (X) 5.83 4.48 8.00 7.62 8.43

EV/EBITDA (X) 14.11 9.78 18.19 17.53 20.40

MarketCap/Net Operating Revenue (X) 5.91 4.63 8.08 7.69 8.50

Retention Ratios (%) 52.78 53.43 49.57 48.58 32.94

Price/BV (X) 4.56 3.30 6.28 6.08 7.51

Price/Net Operating Revenue 5.91 4.63 8.08 7.69 8.50

Earnings Yield 0.05 0.07 0.03 0.04 0.03

Consolidated financial ratio of ITC Ltd.

KEY FINANCIAL RATIOS OF ITC (in MAR 21 MAR 20 MAR 19 MAR 18 MAR 17
Rs. Cr.)

PER SHARE RATIOS

Basic EPS (Rs.) 10.70 12.47 10.30 9.26 8.50

Diluted EPS (Rs.) 10.70 12.45 10.24 9.20 8.45

Cash EPS (Rs.) 12.22 14.02 11.60 10.42 9.57

Book Value [ExclRevalReserve]/Share 49.31 53.41 48.52 43.30 38.45

(Rs.)

Book Value [InclRevalReserve]/Share 49.31 53.41 48.52 43.30 38.45

(Rs.)

Revenue from Operations/Share (Rs.) 40.03 40.19 39.44 35.60 35.21

PBDIT/Share (Rs.) 15.95 17.78 16.79 15.01 14.16

ITC Ltd PAGE 37

PBIT/Share (Rs.) 14.62 16.44 15.65 13.99 13.21

PBT/Share (Rs.) 14.58 16.29 15.61 14.26 13.19

Net Profit/Share (Rs.) 10.88 12.68 10.46 9.41 8.62

NP After MI And SOA / Share (Rs.) 10.69 12.45 10.27 9.24 8.47

PROFITABILITY RATIOS

PBDIT Margin (%) 39.85 44.24 42.56 42.15 40.20

PBIT Margin (%) 36.51 40.91 39.67 39.30 37.50

PBT Margin (%) 36.41 40.53 39.58 40.05 37.45

Net Profit Margin (%) 27.17 31.54 26.52 26.43 24.47

NP After MI And SOA Margin (%) 26.71 30.98 26.04 25.94 24.05

Return on Networth/Equity (%) 21.80 23.44 21.29 21.46 22.16

Return on Capital Employed (%) 28.49 29.80 31.04 31.03 32.86

Return on Assets (%) 17.82 19.78 17.53 17.53 18.39

Total Debt/Equity (X) 0.00 0.00 0.00 0.00 0.00

Asset Turnover Ratio (%) 66.74 63.85 67.34 67.58 76.46

LIQUIDITY RATIOS

Current Ratio (X) 3.27 4.13 3.17 2.85 3.69

Quick Ratio (X) 2.29 3.19 2.38 2.03 2.54

Inventory Turnover Ratio (X) 4.69 5.51 6.09 5.73 5.23

Dividend Payout Ratio (NP) (%) 46.74 46.05 49.91 51.19 66.47

Dividend Payout Ratio (CP) (%) 41.55 41.58 44.92 46.13 59.77

Earnings Retention Ratio (%) 53.26 53.95 50.09 48.81 33.53

ITC Ltd PAGE 38

Cash Earnings Retention Ratio (%) 58.45 58.42 55.08 53.87 40.23

COVERAGE RATIOS

Interest Coverage Ratios (%) 403.54 369.66 422.36 189.95 660.27

Interest Coverage Ratios (Post Tax) (%) 403.54 369.66 422.36 189.95 660.27

VALUATION RATIOS

Enterprise Value (Cr.) 264,644.53 204,533.29 359,914.11 309,771.76 338,038.68

EV/Net Operating Revenue (X) 5.37 4.14 7.44 7.13 7.90

EV/EBITDA (X) 13.48 9.36 17.49 16.91 19.66

MarketCap/Net Operating Revenue (X) 5.46 4.28 7.52 7.19 7.96

Retention Ratios (%) 53.25 53.94 50.08 48.80 33.52

Price/BV (X) 4.46 3.24 6.15 5.95 7.34

Price/Net Operating Revenue 5.46 4.28 7.52 7.19 7.96

Earnings Yield 0.05 0.07 0.03 0.04 0.03

Standalone financial statements:

• Standalone financial statements are the financial statements of one company – in the case of
a group, that of the holding company without considering the financial statements of its
subsidiary companies.

• Standalone financial statements do not reflect the financial condition of the entire group but
only of the single company whose financial statements are prepared.
• In standalone financial statements, all subsidiary transactions and balances are reported such
as inter-company sales and purchases and inter-company receivable and payables,
investment in subsidiaries etc.

ITC Ltd PAGE 39

 Consolidated financial statements:

• Consolidated financial statements are the combined financial statements of the holding
company with all its subsidiary companies.
• Consolidated financial statements of a company by incorporating financial statements of its
subsidiaries reflect a more comprehensive financial condition of the entire group of
companies.
• In consolidated financial statements, subsidiary transactions and balances are not separately
reported as they are knocked off against each other on consolidation of inter-company
transactions.
RATIO ANALYSIS: -
A) LIQUIDITY RATIOS: -
It is the ratio to examine the capability of the firm to meet its day-to-day or short-term
obligation.
1. CURRENT RATIO: -
• Current ratio is outlined as the link between current assets and current liabilities. This
ratio, additionally called as working capital ratio, is a scale of general liquidity and is
generally employed to design the analysis of a short-term financial position or liquidity
of firm.
• It is computed by dividing the total amount of current assets by total amount of the
current liabilities.

Current ratio
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

Current ratio

ITC Ltd PAGE 40

2. QUICK RATIO: -
Quick ratio may be defined as the relationship between quick/liquid assets and current or
quick liabilities. This ratio, also known as Liquid ratio, is a more rigorous test of liquidity than the
current ratio.
It is calculated by dividing the total of quick assets by total of the current liabilities.

𝑄𝑢𝑖𝑐𝑘 𝑅𝑎𝑡𝑖𝑜=𝑄𝑢𝑖𝑐𝑘 𝐴𝑠𝑠𝑒𝑡𝑠𝐶𝑢𝑟𝑟𝑒𝑛𝑡 /𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Quick Assets = Current Assets – (Inventories + Prepaid Expenses)

QUICK RATIO
3.5

2.5

1.5

0.5

0
Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

QUICK RATIO

B. PROFITABILITY RATIO:
➢ Net profit ratio:

Net Profit Margin

35
30
25
20
15
10
5
0
Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

Net Profit Margin

ITC Ltd PAGE 41

 BIBLIOGRAPHY

BOOKS
• Financial management, I.M. Pandey Ninth Edition, Vikas publishing house Private Ltd.

• R.K Sharma & Gupta, Management Accounting, Kalyani Publisher.

• International Accounting, A.K. Das Mohapatra, Second Edition, PHI Learning private LTD.

• Financial Management, Prasanna Chandra, TMH New Delhi

REPORTS
• Annual Report of 2016-17
• Annual Report of 2017-18
• Annual Report of 2018-19
• Annual Report of 2019-20
• Annual Report of 2020-21

WEBSITES
https://www.moneycontrol.com/
https://www.investopedia.com/
https://www.itcportal.com
https://en.wikipedia.org/wiki/ITC_Limited
https://www.tickertape.in/stocks/itc-ITC/financial

ITC Ltd PAGE 42

 FORMULAS FOR RATIO ANALYSIS

S. No. RATIOS FORMULA

1 Current Ratio Current Assets/Current Liabilities

2 Quick Ratio Liquid Assets/Current Liabilities

3 Absolute Liquid Ratio Absolute Liquid Assets/Current Liabilities

4 Gross Profit Ratio Gross Profit/Net Sales X 100

5 Operating Cost Ratio Operating Cost/Net Sales X 100

6 Operating Profit ratio Operating Profit/Net Sales X 100

7 Net Profit Ratio Operating Profit/Net Sales X 100

8 Return on Investment Ratio Net Profit After Interest and Taxes/ Shareholders Funds or
Investments X 100

9 Return on Capital Employed Ratio Net Profit after Taxes/ Gross Capital Employed X 100

10 Earnings Per Share Ratio Net Profit After Tax & Preference Dividend /No of Equity Shares

11 Dividend Pay Out Ratio Dividend Per Equity Share/Earning Per Equity Share X 100

12 Earning Per Equity Share Net Profit after Tax & Preference Dividend / No. of Equity Share

13 Dividend Yield Ratio Dividend Per Share/ Market Value Per Share X 100

14 Price Earnings Ratio Market Price Per Share Equity Share/ Earning Per Share X 100

15 Net Profit to Net Worth Ratio Net Profit after Taxes / Shareholders Net Worth X 100

16 Inventory Ratio Net Sales / Inventory

17 Debtors Turnover Ratio Total Sales / Account Receivables

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18 Debt Collection Ratio Receivables x Months or days in a year / Net Credit Sales for the
year

19 Creditors Turnover Ratio Net Credit Purchases / Average Accounts Payable

20 Average Payment Period Average Trade Creditors / Net Credit Purchases X 100

21 Working Capital Turnover Ratio Net Sales / Working Capital

22 Fixed Assets Turnover Ratio Cost of goods Sold / Total Fixed Assets

23 Debt Equity Ratio Total Long-Term Debts / Shareholders Fund

24 Proprietary Ratio Shareholders Fund/ Total Assets

25 Capital Gearing ratio Equity Share Capital / Fixed Interest-Bearing Funds

26 Debt Service Ratio Net profit Before Interest & Taxes / Fixed Interest Charges

27 Overall Profit Ability Ratio Net Profit / Total Assets

ITC Ltd PAGE 44