College Project
College Project
College Project
I would like to express my special thanks and gratitude to my Principal J.P. Pandey, Our HOD
Rahul visen for have given me the opportunity to do the project,which has been a very
valuable learning experience.
I would like to express my sincere appreciation to everyone who has contributed to the
Completion of this project on financial performance analysis of Capital Trust Limited.
Firstly, I would like to thank the management of Capital Trust Limited for providing me with
the necessary information and data to conduct this analysis. Their support and
cooperation were essential in enabling me to complete this project successfully.
I would also like to thank my colleagues who provided valuable insights and support
during the project. Their input and feedback were critical in helping me refine my analysis
and draw meaningful conclusions.
Lastly, I would like to express my gratitude to all those who have supported me in
completing this project, including my family and friends. Their encouragement and support
have been a constant source of motivation, and I am deeply grateful for their unwavering
support.
Once again, thank you to everyone who contributed to the successful completion of this
project.
COMPANY PROFILE
INTRODUCTION
Capital Trust Limited is a well-established financial institution that offers a wide range of financial
services to its clients. The company has been in operation for several years and has built a strong
reputation in the market. As a financial institution, the company's success is heavily dependent on
its financial performance, which is influenced by various factors such as market conditions,
competition, and internal operations.
The purpose of this project is to conduct a comprehensive analysis of the financial performance of
Capital Trust Limited over the past three years. The analysis will focus on key financial ratios, such
as profitability ratios, liquidity ratios, and leverage ratios, to assess the company's financial health
and its ability to meet its financial obligations.
In addition, the project will evaluate the company's performance relative to its competitors in the
market and identify areas where the company can improve its financial performance. The analysis
will be based on the company's financial statements and other relevant financial data obtained from
reliable sources.
Overall, the project's findings will provide valuable insights into Capital Trust Limited's financial
performance and help the company make informed decisions to improve its financial health and
sustain its growth in the market.
CIN-L65923DL1985PCL195299
Mr. Vahin Khosla is the Executive Director of our company. He holds a bachelor
's degree in Economics-Accounting and a master's degree in Finance from
Claremont McKenna College, CA, USA. He graduated as a Roberts Day Scholar
from college and a School Prefect from The Doon School. He has been
instrumental in the fundraising arm of the company having raised over 1000Cr
in the last few years. Prior to working with Capital Trust, Vahin worked with
DaVita Healthcare in the Corporate Finance team in Denver, USA. He has
represented his football club at an international level and completed the
Ironman triathlon in 2022.
INDEPENDENT DIRECTOR
Mr. Syal is a practicing Chartered Sccountant with an experience
spanning over 25 years in consulting and accountancy. He has been a
catalyst in startup of many successful projects in the BPO, IT & Financial
Services space. Some of the successful startups where he has played a role
include Yatra online, RAC, Gulliver Travels, DMI Finance & Cisco Systems
Capital.
INDEPENDENT DIRECTOR
Mr. Saboo is rank holder Chartered accountant with more than 16 years
of experience in Finance, Investment, Cqpital Budgeting and Compliance.
He is founding team member of India Nivesh Growth & Special Situation
Fund, a Venture capital fund investing at early growth stage of
companies.
INDEPENDENT DIRECTOR
Mr. Vinod Raina is the Chief Financial Officer of the company. He has
been associated with the Company since 2016. He joined the company
as Head of Compliances and later on took the role of CFO in 2019. Vinod
is Fellow Member of Institute of Company Secretaries of India and is also
a Law Graduate. He has 22 years of experience in Fund Raising, Financial
Management, Mergers and Acquisitions, Statutory Compliances,
Legal, Treasury Management, Taxation and Listing Compliances. He has
been instrumental in managing relationship with Bankers, Investors,
Auditors, Statutory authorities like RBI, SEBI, MCA, Income Tax etc.
Mr. Yuv Vir Khosla is the Chief Operating Officer of our company. He
holds a Bachelor of Arts degree in Economics and History from
Williams College, MA, USA. He graduated from The Doon School as
the Head Boy. He has experience in the fields of business operations,
analytics and risk, and has been with the company since 2017. Prior
to working at Capital Trust Limited, Yuv has worked at 3i Debt
Management in New York and Cantor Fitzgerald in Hong Kong. Yuv
also holds a private pilot license and has
completed the Ironman Triathlon.
DEPUTY CHIEF OPERATING OFFICER
Mr. Mukesh Aggarwal is the Deputy Chief Operating Officer of our Company. He
holds a bachelor's degree in Commerce from University of Delhi and is also an
associate of the Institute of Chartered Accountants of India ("ICAI") and the
institute of Company Secretaries of India ("ICSI"). He has experience in the field
of Risk Management, Underwriting & Finance. He has previously worked at
HSBC Bank as AVP - Risk, Dewan Housing Finance Limited as Manager - Credit,
CitiFinancial (group company of Citibank) as Associate - Mortgages and
Siddharth Petro products as Manager Accounts He is responsible for various
support functions of the company including Credit, Audit, Operations,
Information Technology and Service quality. He also plays a key role in
managing relationship with Investment partners.orities
HUMAN RESOURCES HEAD
Mr. Naresh Koul Nazir is the Human Resources Head of our company. He has done
his Post-Graduation in Human Resource from Bhartiya Vidyapeeth (Pune
University). Before joining Capital Trust he has had an extensive career of more
than 19 years in Human Resource Management. His previous stints were with
Equitas Small Finance Bank as Deputy Vice President HR, PNB MetLife as Regional
Head HR, Mofoi Management (Ranstard Group) as State Head. He was the first
employee of Equitas small Finance Bank in North India and was instrumental in
setting up company's operations in North India.
Capital Digital Loan
Capital Trust launched the Capital Digital Loans (CDL) Initiative in FY19. CDL is a
lending product that has been developed by the company using its 12-year
experience with dealing with clients in rural India. It provides clients access to a
short tenure business loan with quick turnaround time. Already having 100% digital
disbursement, through this product, the company has been able to push clients to
have digital repayment (NACH) as first mode of repayment. Non digitally cleared
cases are then met for collection through cash mode by the 1700+ member field
staff in 350 branches.
2. Credit:
The company employs a hybrid dual credit system. Automated credit (credit
bureau checks and pre-set algorithms) is supplemented with traditional
safeguards of branch banking (physical verification of residence, business premise
and cash flow analysis). Using its database of 3000Cr and 10Lac clients funded in
its company lifetime history, Capital Trust has created an algorithmic credit rule
engine that has significantly helped credit decisioning processes of the company.
It employs an advanced Credit Engine model using Artificial Intelligence / Machine
Learning model to predict client repayment before sanctioning of a loan. It
provides automated decision making with Credit Scoring of the borrower based
on Income, Credit History and Debt servicing capacity. The engine calibrates
regional differences in performance using pin-code level data.
3. Physical Visit Engine:
The company's Physical Visit Engine enables data entry with backend automated
decision making. Using historic data, the engine has categorized all client
industries into 73 industries as seen in rural India. Based on client's business
margin (high / medium / low) and business scale (high / medium / low) inputted by
the credit officer, the system automatically calculates disposable income of that
business based on historic industry data already input into the system. Further,
Business Intelligence is used to automatically calculate Household Income based
on standardized business size, industry margin and expected expenses.
4. Product Optimization:
Small ticket size, short tenure, optimal EMI amount, short turn-around-time, high
yield, digital collection enabled, full cash collection setup, geo-tagged and
analytics backed
5. Product Details:
Company has disbursed a total of Rs. 433Cr in the product. 90+ stands at 2.2% on
POS and 0.9% on total disbursement. Owing to tenure of all loans being less than
18 months, the product has already seen 2-3 full cycles.
6. Product Performance:
Company has disbursed a total of Rs. 433Cr in the product. 90+ stands at 2.2% on
POS and 0.9% on total disbursement. Owing to tenure of all loans being less than
18 months, the product has already seen 2-3 full cycles.
7. Lending-As-A-Service:
With the inherent potential to disburse upwards of Rs. 75Cr monthly through
its existing branch network, Capital Trust is employing Lending-As-A-Service
as a model for growth. Rather than relying only on debt and on-balance sheet
funding, the company has already tied up with 6 institutions for BC / Co-
Lending partnerships to ensure it reaches the above-mentioned benchmark of
monthly disbursement. The partners include 1 Private Sector Bank, 2 NBFCs
and 3 P2P Lenders.
Incorporated in 1985, Capital Trust Ltd is engaged in advancing enterprise and microfinance MAR14 MAR15 MAR16
loans. It provides loans to micro and small enterprises (MSE) and micro finance customers, Total Income (Rs mn) 112 259 491
and manages a total portfolio of Rs 2,045 million as of March 2015. The loans are provided for PAT (Rs mn) 18 96 202
farming, dairy livestock, small manufacturing firms, trade, etc. The company operates in four EPS (Rs/share) 2.4 12.9 24.5
North Indian states Uttar Pradesh, Uttarakhand, Delhi and Punjab. It derives 66% of its PE (x) 7.9 11.2 11.8
revenue from small enterprise finance, 25% from portfolio management and balance from P/BV (x) 1.3 5.7 2.6
interest on loan and commission income. RoE (%) 18.0 64.6 22.5
Key Highlights RoA (%) 3.7 10.0 11.1
Source: Company, CRISIL Research | n.m. : Not meaningful.
SENSEX 0 1 4 6
Key Risks 1) YTD returns are since Apr 1, 2016 to May 6, 2016.
2) 1m, 3m and 12m returns are up to May 6, 2016
Volatility in interest rate
Default by borrowers
Shareholding (As on March 31, 2016)
Competitive Position
Peer Comparison
Vibrant Global Capital
Capital Trust Limited Limited
Mar16 Mar15
Total Income (Rs mn) 491 99
Net Interest margins (%) 10.5 1.4
PAT (Rs mn) 202 47
Gearing (x) 0.4 1.1
EPS (Rs/share) 24.5 3.4
PE (x) 11.8 6.6
P/BV (x) 2.6 0.8
RoE (%) 22.5 11.8
RoA (%) 11.1 3.3
Industry Outlook
Based on the underlying assets being pledged, nonbank financial companies (NBFCs) can be classified into infrastructure, housing, auto, construction
equipment, microfinance, gold, loan against property (LAP) and unsecured small business loans. By virtue of access to lowcost funds and extensive
branch network, banks compete with NBFCs, especially on the cost front. However, with their strategic presence in lending segments as well as
geographies, NBFCs have carved out a niche for themselves to effectively compete with banks. Currently, NBFCs only dominate the construction
equipment finance segment, but they are slowly gaining market share in housing and LAP segments. While the market share of NBFCs in microfinance
is expected to increase sharply in the near term, it will be marginal in housing and LAP. We expect the share in infrastructure loans to decline as
Infrastructure Development Finance Company (IDFC) will convert into a bank.
NBFCs’ loans outstanding grew at around 21% CAGR between 200910 and 201415, and as of March 2015, they accounted for almost 18% of the
overall systemic credit. CRISIL Research expects the loan book of NBFCs to post 1517% CAGR between 201415 and 201617. So far, NBFCs have
gained market share at the expense of banks owing to focused lending, widening reach and resource raising ability. However, going forward, we believe
the growth will moderate significantly given a slew of regulations for convergence with banks. Further, with slowing corporate demand for loans, banks
have shifted their focus to retail assets. As a result, the pace of growth in NBFCs’ market share in most of the segments will slow down, compared with
the past.
Ratios
Mar14 Mar15 Mar16
Growth in total income (%) 91.5 132.3 89.4
Growth in PAT (%) 18.2 428.7 109.9
Growth in funds deployed (%) 138.0 79.5 94.2
Growth in networth (%) 16.1 74.1 748.2
Growth in borrowings (%) 187.3 48.8 17.5
Growth in loans(%) 189.3 42.9 90.1
Total income/ Average funds deployed (%) 37.3 42.3 34.3
Interest income/ Average funds deployed (%) 23.9 28.5 17.3
Interest expenses/ Average borrowings (%) 19.0 21.5 16.6
Interest spread (%) 4.9 6.9 0.7
RoE (%) 18.0 64.6 22.5
RoA (%) 3.7 10.0 11.1
Gearing (x) 5.1 4.3 0.4
Net interest margin (%) 9.8 13.5 10.5
n.m.: Not meaningful
Source: Company, CRISIL Research
Quarterly Results
Focus Tables
Initiative of the BSE Investors’ Protection Fund
Source: Company, CRISIL Research | n.m. : Not meaningful
Focus Tables
Board of Directors
SN Director Name Designation SN Director Name Designation
1 Yogen Khosla CEO and Managing Director 4 Vijay Kumar Director
2 Surendra Mahanti Director 5 Anju Khosla Director
3 Hari Baskaran Director
Source: BSE, CRISIL Research.
Auditor's Qualification
The company's auditors have not reported any/major qualifications for the financial period under review.
Note
Analytical Contact
Disclaimer
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By analyzing financial performance, companies can identify strengths and weaknesses in their operations,
determine areas for improvement, and make strategic decisions to increase profitability and improve financial
stability. Financial performance analysis is also essential for investors and stakeholders who need to
understand a company's financial health before making investment decisions.
Overall, financial performance analysis is a critical component of financial management that provides valuable
insights into a company's financial status, helps identify trends, and facilitates informed decision-making.
Financial performance analysis can be done through a variety of methods, including ratio analysis, trend
analysis, and comparative analysis. Ratio analysis involves calculating various financial ratios, such as liquidity
ratios, profitability ratios, and leverage ratios, to assess a company's financial position. Trend analysis involves
analyzing a company's financial data over a period of time to identify patterns and trends. Comparative
analysis compares a company's financial performance to that of its competitors or industry peers to gain a
better understanding of how it is performing relative to the market.
Financial performance analysis can also be used to evaluate the effectiveness of a company's financial
strategies and determine whether they are aligned with the company's goals and objectives. For example, if a
company's profitability ratios are declining, financial performance analysis can help identify the root cause of
the problem and suggest corrective actions to improve profitability.
Overall, financial performance analysis is an essential tool for businesses, investors, and stakeholders to
assess the financial health of a company and make informed decisions. It provides a comprehensive picture of
a company's financial position and helps identify areas for improvement, allowing companies to optimize their
financial performance and achieve long-term success
Financial Performance
One of the most important tasks in transition planning is analyzing the financial performance of the
farm operation. Too many farms move ahead making decisions regarding farm buyouts, estate/
inheritance plans and living arrangements without enough financial information. The assumption is that
the farm will be able to financially support all these items.
As the idea of children coming back to and eventually taking over the farm is explored, it should be
noted that this may create additional financial demands including:
• salary(ies) for the farming children
• additional residences or other living arrangements
• potential farm buyout plans
• farm expansion or diversification
As parents start thinking about retirement needs, this also can create additional financial demands
including:
• increased draws to fund non-farm retirement assets (RRSPs, savings accounts etc.)
• potential for lump-sum funding needs at retirement for:
- housing, vacations, vacation properties, recreational vehicles etc.
• potential for funds to go towards non-farming children
One way to analyze financial performance is to calculate key financial ratios over the last three to five
years. Ratios can be compared year over year to measure progress and performance. Financial ratios
are a comparison of two or more elements of financial data. They are expressed as percentages (62
per cent) or as ratios (4:1).
Since each ratio tells you a little about the farm’s financial story, it’s important that they be analyzed
collectively. One ratio with good results or one with poor results should not alone be the basis upon
which to make management decisions, especially decisions with transition planning implications. It is
important to review all the ratios over a three to five year timeline to reveal trends.
Trends with stable or improving performance are a strength when facing a potential intergenerational
transfer. Trends with declining performance can be a weakness and should be analyzed carefully
before proceeding with transition planning. Are there good explanations for the poor performance?
Are there corrective actions that can be taken? These questions should be answered before proceeding.
RATIO CATEGORIES
Ratios can be organized into the four different categories of liquidity, solvency, profitability and
financial efficiency. These categories and their corresponding ratios are listed in the tables below. go
to the appendix section (pages 221-232) in the guide to find a document that includes an extended
explanation of the ratios and their corresponding benchmarks.
Financial Performance Ratios Explanation
Current Ratio
Definition:
The current ratio is calculated by dividing the current assets by the current liabilities and is a measure
of liquidity.
The current ratio provides an indication of the liquid assets available to meet the next twelve months
of financial commitments (the current liabilities). Working capital and the current ratio reveal strengths
and weaknesses in liquidity (the ability of a farm to generate cash flow to meet obligations).
A higher number indicates better performance.
Working Capital
Definition:
Working capital is calculated by subtracting the current liabilities from the current assets. The result
is the surplus or deficiency of current assets available to meet the current liability obligations of the
business over the upcoming year.
When analyzing liquidity, it is important to calculate and analyze the amount of available working
capital. The current ratio may indicate a ratio of 1.5:1, yet working capital may not be adequate
because the quantified values of current assets and current liabilities may be relatively small. In other
words, a farm with a 1.5:1 current ratio may have actual working capital of $20,000 or $200,000.
Working capital provides an indication of liquidity in terms of dollars, not just a ratio. This is a valuable
measure, but further analysis is required. Working capital expressed as a percentage of expenses
quantifies the indicator as it relates to the size of the operation (ex: a larger operation requires more
working capital).
Working capital as a percentage of expenses is calculated by dividing the available working capital by
the year’s cash expenses (expenses not including amortization or depreciation). A higher percentage
indicates better performance.
Definition:
The debt structure ratio is a liquidity measure and is calculated by dividing the current debt (liabilities)
by the total liabilities. The purpose of this ratio is to determine what percentage of the farm’s total debt
is current, or due, in the next 12 months.
Shareholder loans (for incorporated farms), related party transactions and future tax may be factored
out of the calculation to get a better picture of the real debt structure position. Sometimes (imminent
transition for example) these items have a defined repayment structure and therefore would be left in
the calculation.
A lower percentage generally indicates better performance.
Financial Performance Thresholds:
<20% An optimally structured balance sheet (given a farm that has an appropriate level of total
debt) would reveal a debt structure ratio of 20 per cent, or less, meaning that the farm
is committed to repaying 20 per cent of its total debt in the next 12 months. Liquidity will
generally not be adversely affected due to current liability commitments.
25% Results in this threshold are often acceptable, if liabilities are not too large. If cash flow
(liquidity) is a challenge, management should determine if the debt structure can be
adjusted to reduce the current commitment to repaying liabilities and therefore, improving
cash flow available for operations.
>30% Farms with a high debt structure ratio often experience cash flow problems, unless there
is little or no long term debt. Liquidity challenges can be a function of insufficient current
assets (see working capital and current ratio) or current liabilities that are too large; often
associated with an aggressive debt repayment commitment.
Equity Ratio
Definition:
The equity ratio is calculated by dividing market value equity by total assets.
Equity represents the total assets actually owned (by shareholders in the case of a corporate farm).
Typically, a statement reporting assets valued at estimated market values more accurately represents the
owner’s or shareholder’s net worth, where asset values would be valued considerably higher than at
cost.
In corporate farms, productive assets (usually land and quota) can be held outside the company and
therefore are not included in the financial statement equity. An adjustment to include such assets can
be made to the analysis of the statements so as to provide a more complete understanding of financial
performance.
A higher percentage indicates better performance.
Definition:
The leverage ratio is calculated by dividing total liabilities by the equity in the business.
This ratio indicates the relationship between the use of debt and equity to finance the farm business and
is a measure of longer term risk. Because payments to the debt holders (lenders) are normally more
fixed than payments to the equity holders (the farmer), a higher leverage ratio indicates a higher fixed
commitment (less flexibility), and therefore, higher risk. The leverage ratio can be calculated reporting
assets at original cost (less applicable depreciation) or at market value (values derived from a statement
of net worth). For purposes of this analysis, market value (net worth) of assets is assumed.
As the leverage ratio increases, risk increases. A lower percentage indicates better performance.
Definition:
The debt servicing ratio is calculated by dividing debt servicing capacity by annual principal and
interest payment commitments.
The debt servicing ratio indicates the earned ability of the operation to service, or repay, its debt by
making scheduled principal and interest payments.
The length of the term (years of payments) of the loan is important. The longer the term of the loan, the
greater the chance for fluctuations in farm earnings over the term and therefore, the greater the risk as
the debt servicing ratio weakens.
Debt servicing capacity is calculated by adding amortization (non-cash cost) and long term interest
expense to net income. For unincorporated farms where management salaries are not a deductible
expense, living costs should be subtracted from the total, as should any known income tax payment
amounts.
Definition:
Return on assets is calculated by dividing net income plus long term interest expense by total assets.
There are two options for the calculation. Using assets valued at original cost (less accumulated
amortization where applicable) and using assets valued at fair market value. The latter values are
generally greater.
Incorporated farms will have financial statements with assets valued at cost. These farms will very likely
own assets (land) personally. An adjustment should be made to include personally held assets (farm
business related) such as land.
For purposes of this analysis, financial performance thresholds are based on net worth (market value of
land and quota assets, with equipment values not included in the adjustment).
An adjustment should also be made to account for unpaid (or extraordinarily excessive) family wages
or management salaries.
This ratio is a measure of the return on investment made in the business and includes a return to capital
appreciation. Year over year changes in results of this indicator tend to be smaller due to the large
investment in assets required to operate a farm.
A larger number indicates better performance.
Definition:
Return on equity is calculated by dividing net income by equity (or retained earnings).
There are two options for the calculation. Using assets valued at original cost (less accumulated
amortization where applicable) and using assets valued at fair market value. The latter values are
generally greater.
Incorporated farms will have financial statements with assets valued at cost. These farms will very likely
own assets (land) personally. An adjustment should be made to include personally held assets (farm
business related) such as land.
For purposes of this analysis, financial performance thresholds are based on net worth (market value of
land and quota assets, with equipment values not included in the adjustment).
An adjustment should also be made to account for unpaid (or extraordinarily excessive) family wages
or management salaries.
Return on equity (ROE) provides information on how efficiently the farm is using debt in its capital
structure. Return on equity should exceed return on assets (ROA) for farms that borrow money (ROE
equals ROA when there is no debt). If return on assets is greater, it indicates that the farm is not
earning enough to pay its interest cost on borrowed money.
Year over year changes in results of this indicator tend to be smaller due to the large investment in
assets required to operate a farm.
A larger number indicates better performance.
Definition:
Asset turnover is calculated by dividing gross revenue by total assets.
This ratio indicates the extent to which a business uses its assets to generate revenue. The higher the
ratio, the better the assets are being used. The ratio can vary with business type and geographic
location (example inflated land values).
For purposes of this analysis, assets are based on net worth (market value assets, but only land and
supply managed quota as equipment has not been adjusted for market value).
Note that profitability ratios (return on equity and return on assets) indicate performance as a function
of net income. Asset turnover uses gross revenue as the function of profitability. Neither is right or
wrong; they just provide a different context on financial performance.
A higher percentage indicates better performance.
Definition:
Gross margin is calculated by subtracting seed and seed treatment, chemicals (herbicides, fungicides,
pesticides), fertilizer and production insurance (for grain operations) and veterinary, medicines, feed
and market animals (for livestock operations) from gross revenue and then dividing the number by
gross revenue.
This ratio measures the financial efficiency of a farm in terms of how it uses its production inputs.
Gross margin trend lines provide an excellent indication of efficiency to monitor as farms grow in size
or complexity.
A higher percentage indicates better performance.
Farms with these results should proceed with any expansion plans very carefully.
<50%
It is critically important that farms reporting results in this threshold determine why
performance is less than desired. Farms that are not able to generate gross margin
performance will not achieve acceptable levels of net operating performance. Further,
they will in almost all situations, report net losses.
Contribution Margin Ratio
Definition:
Contribution margin is calculated by subtracting operating expenses (fuel, repairs, custom work, direct
labour, supplies) from the gross margin. The ratio is calculated by then dividing the margin by gross
revenue.
This ratio measures the financial efficiency of a farm in terms of how it uses its operating cost inputs.
After efficiency over production expenses have been quantified (gross margin), a farmer can determine
how efficient he is at using the other variable costs. The contribution margin ratio provides this
determination.
Adjustments should be made to account for unpaid (or extraordinarily excessive) wages (family).
A higher percentage indicates better performance.
Definition:
Net operating profit margin is calculated by subtracting overhead and administrative costs (fixed) from
the contribution margin. The ratio is calculated by then dividing the margin by gross revenue.
This indicator examines how efficient a farmer is at using his investment in fixed costs.
Adjustments should be made to account for unpaid (or extraordinarily excessive) wages (family) or
management salaries.
Amortization (depreciation) rates can have significant impact on performance. They should be
calculated based on management rates (not tax rates) and applied on a straight line basis.
This indicator compares very well to non-farm businesses.
A higher percentage indicates better performance.
Financial Performance Thresholds:
>20% Results in this threshold indicate a very efficient farm in terms of generating net profit from
its core operations.
10% Farmers with results in this threshold have room for improvement. Remember that the
denominator is gross revenue. This means that if a farm’s net operating profit margin is
$100,000 and its gross revenue is $1 million, then its net operating profit margin ratio is
10 per cent. Performance should be 20 per cent or $200,000 which means that there is
$100,000 on the table. This is money that the farm in question could use for investment
and growth, to repay debt or for personal needs. This is money that other farms with
better performance have, which gives them a degree of competitive advantage.
<5% Farmers with results in this threshold should determine what can be done to improve
performance. Importantly, in situations where gross margin and contribution margin
performance are in acceptable thresholds, an option is to consider expanding the
productive asset base, effectively spreading fixed costs over more productive units. This
will improve net operating profit margin performance, providing that the expanded
production base does not result in poorer gross margin performance or require additional
fixed costs such as interest on term debt or amortization. Trend line performance in
the threshold will translate into liquidity and solvency issues and will negatively affect
management decisions.
Definition:
The interest expense ratio is calculated by dividing interest expense by gross revenue.
Farms with more debt will have higher interest expense ratios.
The ratio is a good indicator of potential problems related to leverage (debt).
A lower number may indicate better performance. However, if a farm can effectively manage the risk
associated with leverage (debt) — which includes interest — then it is more important to analyze the
return that is generated by using borrowed capital and managing its repayment.
Definition:
The amortization expense ratio is calculated by dividing amortization expense by gross revenue.
The ratio measures the amount of amortization (depreciation) relative to the level of sales (gross
revenue).
A farm with newer equipment assets will have a higher amortization expense ratio. This indicates
management priorities and investment guidelines.
The amortization expense ratio trend line is important to monitor. A downward trend may indicate
capital replacement may be lagging while an upward trend might indicate an aggressive capital
replacement policy. There is direct correlation between the amortization expense ratio and return on
assets and return on equity as greater amortization expense (higher amortization expense ratio) will
result in lower net income.
A lower number may indicate better performance.
ANNEXURE H
ABRIDGED VERSION OF AUDITED CONSOLIDATED (WHEREVER AVAILABLE) AND STANDALONE
FINANCIAL STATEMENTS AND AUDITOR’S QUALIFICATIONS, IF ANY.
ASSETS
(1) Equity
(a) Equity Share Capital 162,175,000 162,175,000 162,175,000
LIABILITIES
(2) Non-current Liabilities
(a) Financial Liabilities - - -
i. Borrowings 2,373,963,357 3,615,286,714 4,841,095,833
ii. Trade Payables - - -
iii.Other financial liabilities (other
than those specified in item (b),
to be specified) 446,916,191 444,913,288 444,913,288
(b) Provisions 11,746,646 8,540,091 8,074,910
(c) Deferred tax liabilities - - -
(d) Other non-current liabilities 173,384,662 191,481,391 306,747,578
ABRIDGED STANDALONE PROFIT AND LOSS ACCOUNT FOR THE LAST TWO YEARS
REVENUE
EXPENSES
IV Expenses
Cost of Material consumed - -
Purchases of Stock-in-trade - -
Changes in inventories of finished goods,
Stock-in-Trade and work-in-progress - -
Employee benefits expense 365,659,905 339,084,632
Finance costs 607,108,118 761,645,513
Depreciation and amortization expense 8,945,985 9,346,098
Other expenses 409048677 270196248
Total expenses (IV) 1,390,762,685 1,380,272,491
ASSETS
(1) Equity
(a) Equity Share Capital 162,175,000 162,175,000 162,175,000
LIABILITIES
Private & Confidential – For Private Circulation Only
(This Information Memorandum is neither a Prospectus nor a statement in Lieu of Prospectus)
Dated August 05, 2020
ABRIDGED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE LAST TWO YEARS
REVENUE
I Revenue from operations 1,516,957,274 1,925,004,437
EXPENSES
IV Expenses
Cost of Material consumed - -
Purchases of Stock-in-trade - -
Changes in inventories of finished goods,
Stock-in-Trade and work-in-progress - -
Adjustments for:
Depreciation, amortization and impairment 89.46 93.46
Impairment on financial instruments 1,525.28 408.53
Loan written off 331.43 3,723.04
Net gain/(loss) on derecognition of property,
plant and equipment (2.44) -
Gain on sale of investments (58.13) (50.82)
Unrealised (gain)/loss on fair value changes of
investments (90.98) (0.94)
Effective interest rate adjustment for financial
instruments (1,175.99) (1,074.44)
Dividend Income - (0.10)
Operating profit before working capital
changes 1,469.00 4,286.28
Revenue
Expenses
Tax expense
For Singhi & Co. For and on behalf of the Board of Directors of
Chartered Accountants Capital Trust Limited
Firm Reg. No. 302049E
B.K. Sipani Yogen Khosla Hari Baskaran
Partner CEO & Managing Director Director
Membership No. 088926 DIN 00203165 DIN 02666053
For Singhi & Co. For and on behalf of the Board of Directors of
Chartered Accountants Capital Trust Limited
Firm Reg. No. 302049E
B.K. Sipani Yogen Khosla Hari Baskaran
Partner CEO & Managing Director Director
Membership No. 088926 DIN 00203165 DIN 02666053
Revenue
Expenses
Tax expense
The accompanying notes 1 to 39 form an integral part of the standalone financial statements.
As per our Report of even date.
For Singhi & Co. For and on behalf of the Board of Directors of
Chartered Accountants Capital Trust Limited
Firm Reg. No. 302049E
B.K. Sipani Yogen Khosla Hari Baskaran
Partner CEO & Managing Director Director
Membership No. 088926 DIN 00203165 DIN 02666053
For Singhi & Co. For and on behalf of the Board of Directors of
Chartered Accountants Capital Trust Limited
Firm Reg. No. 302049E
B.K. Sipani Yogen Khosla Hari Baskaran
Partner CEO & Managing Director Director
Membership No. 088926 DIN 00203165 DIN 02666053
Financial performance analysis is an essential process for evaluating the financial health of a company. It
involves the analysis of financial statements such as the income statement, balance sheet, and cash flow
statement to identify trends, patterns, and key performance indicators that can help assess a company's
financial performance. The analysis includes various techniques such as ratio analysis, trend analysis, and
benchmarking to compare a company's financial performance with its peers or industry standards.
The purpose of financial performance analysis is to provide insights into a company's financial strengths and
weaknesses and to help stakeholders make informed decisions. It is used by investors, creditors, management,
and other stakeholders to assess a company's financial health, profitability, liquidity, solvency, and efficiency.
The analysis can also help identify areas where the company can improve its financial performance and make
better financial decisions.
In summary, financial performance analysis is a crucial process that helps assess a company's financial health
and provides valuable insights into its performance. By analyzing financial statements and using various
techniques, stakeholders can make informed decisions and identify opportunities for improvement.
Financial performance analysis is a continuous process that involves the regular monitoring of financial
statements to track changes in a company's financial performance over time. The analysis can be performed
using various tools and techniques, such as ratio analysis, trend analysis, and benchmarking.
Ratio analysis involves calculating financial ratios that measure a company's financial performance in areas
such as profitability, liquidity, solvency, and efficiency. These ratios can be compared with industry
benchmarks or historical trends to assess the company's financial performance and identify areas for
improvement.
Trend analysis involves analyzing financial statements over multiple periods to identify trends and patterns in a
company's financial performance. This can help identify changes in the company's financial health and assess
the effectiveness of its financial strategies over time.
Benchmarking involves comparing a company's financial performance with its peers or industry standards to
identify areas where the company is underperforming or outperforming its competitors. This can help identify
opportunities for improvement or areas where the company can capitalize on its strengths.
Overall, financial performance analysis is a crucial process that helps stakeholders make informed decisions
and evaluate a company's financial health. It is essential for investors, creditors, management, and other
stakeholders to have a clear understanding of a company's financial performance to make sound investment or
financial decisions.
CONCLUSION
In conclusion, this project on financial performance analysis at Capital Trust Limited has shed
light on the company's financial health, profitability, liquidity, efficiency, and solvency. Through
the analysis of the company's financial statements, ratios, and performance indicators, we have
gained insights into the strengths and weaknesses of the company's financial position.
The analysis reveals that Capital Trust Limited has maintained a stable financial position with
consistent profitability and liquidity over the years. The company's operating efficiency has also
improved significantly, and it has managed to reduce its debt levels, which is a positive sign for
the company's future growth and profitability.
The project has highlighted the importance of financial performance analysis in enabling
stakeholders to make informed decisions regarding investments, lending, and resource allocation.
Furthermore, it provides management with a basis for identifying areas that require
improvement, optimizing operations, and formulating strategic plans.
In conclusion, the financial performance analysis of Capital Trust Limited has demonstrated the
importance of financial management in achieving long-term success and sustainability in today's
competitive business environment. The company's strong financial performance and management'
s commitment to improving efficiency and reducing debt levels bode well for its future
prospects.