Question

Hello, I need a three four page document on the below topic which is to be presented. Can you please help in providing a documenter for the same. Consider the following companies from three different industries: Iron & Steel industry: Tata Steel Ltd. FMCG industry: Hindustan Unilever Ltd. (HUL) Software industry: Infosys Ltd. Collect the annual reports and financial statements of these three companies and analyse the cost structure of these companies for the financial year 2016-17. Also comment on the differences you get in the cost structure of these companies. Pointers: If you see the Profit & Loss accounts of these companies, you will find different elements of costs which will vary wide among the companies. For instance, in the case of Tat Steel ltd. (steel sector) you may find that the material cost is the major component of the total costs. On the other hand for HUL (FMCG sector), both material cost as well as selling & advertisement may be of significant portion of the total cost. For Infosys (IT sector), material cost may not be the major one. Also for HUL and Infosys, finance cost or interest on debt capital will be very less unlike that of Tata steel, where this may be a significant one. As these sectors (FMCG and IT) use less amount of debt capital compared to Steel sector. In this way, you may find out the proportion of each element of costs out of the total costs among different companies belonging to different industries. This will help to understand the differences in cost structure across industries. For this you need to look at the details of the notes to accounts of each and every cost element in the financial statements.

Answer 1

please down load the annual report of Sail 2016-2017

Analysis

Balance Sheet : Page 29:

1. Current Assets of Rs 25,500 Cr against Current Liabilities of Rs 46,300 Cr : Shows that the company’s fixed assets are increasingly being financed by short term liabilities. CA/CL ratio has been worsening for the last three years.
2. The company has been making losses in recent years, most of which have been funded by short term bank borrowings and a sharp reduction in ( receivables – payables ) .
3. In the long run, this is an unsustainable position as adverse trade terms will render company’s products uncompetitive and the financial liquidity will suffer
4. The company needs to : a) pause/ defer its capital expenditure plans and even try to monetize some of its PP&E and b) Raise long term resources ( both equity and debt ) to fund its ongoing capex program

FMCG

will have low fixed assets , land and equipment,

their receivables and payables are high,

profit is about one percent of the sales.

their collection period is generally very high.

telecom industry

these industries are capital intensive,very low inventory and raw material.