a report on financial analysis of maytas infra by srikanth seelam

8/3/2019 A Report on Financial Analysis of Maytas Infra by Srikanth Seelam

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Maytas Infra, a leading construction and infrastructure developer in India till 2008,with over two decades of business experience. Founded in 1988 by entrepreneurial legacy of

the Raju Family, the promoters of the $2 billion Satyam Group, the company became India'sFastest Growing Construction Company by 2007.

The business operations of the Company were encouraging till the Satyam events broke

during the December 2008. After the Satyam fiasco, Company has experienced serious hitches

which lead its business to collapse.

This report presents analysis of various financial parameters like Liquidity, Solvency,

Profitability, Turnover, Valuation, of the company- pre & post Satyam fiasco in finding the

circumstances which made the company to fall.

FALL OF MAYTAS INFRAFINANCIALS OF MAYTAS INFRA - PRE & POST SATYAM FIASCO

BY SRIKANTH SEELAM B-TECH (MBA)JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD


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1

FALL OF MAYTAS

INFRAFINANCIALS OF MAYTAS INFRA -

PRE & POST SATYAM FIASCO

Up to 2008, Maytas Infra is a leading construction andinfrastructure developer in India, with over two decades of business

experience with its geographies in India span over 14 States.

With it the successful entrepreneurial legacy of the Raju Family,

the promoters of the $2 billion Satyam Group and the same

philosophies are at its core. This seems to be the strong foundation on

which Maytas Infra is based which lead.

The business operations of the Company were encouraging till

the Satyam events broke during the December 2008. The Company

could achieve a peak order book position of around Rs 12,000 Crores

during the year in the construction business. The Company as a Co-

Sponsor was awarded the prestigious Hyderabad Metro Project during

August 2008. The fallout of Satyam episode has been disastrous to the

Company.

The aftermath of Satyam episode was marked by adverse

reactions from various agencies including some of the clients, financial

institutions / Banks, vendors, employees, resulting in cancellation of

projects of worth Rs 3,800 Crores, bank guarantee invocations of Rs

495 Crores, stoppage of supplies by vendors etc. As a cumulative

effect of all these developments, business operations of the Company

were paralysed for some time. These events have affected the

business operations of the Company during the Financial Year ended

March 31, 2009. The Company incurred an overall net loss of Rs

489.79 Crores and recorded a turnover of Rs 1,335 Crores.

Besides these events, many of its Clients cancelled the projects

awarded and executing by the company. Also the Government of AP

had cancelled the concession agreement on July, 2009 without giving

any prior notice to the company and invoked the security deposit of Rs.

60 Crores.


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2

ABOUT COMPANY

After creating a strong foothold with over 2 decades of experience in the construction space, the

company made significant inroads in the infrastructure sector. The Company participates in competitive

bidding where projects are awarded on the basis of experience, engineering capabilities, technical

expertise and financial resources.

The Company undertakes design engineering, procurement and construction material, fuel and

equipment culminating into the construction. Having established a strong foothold in the sectors of

irrigation, roads & bridges, buildings & structures, company also entered in to sectors of power,

industrial structures, oil & gas infrastructure, and railways. Further, the Company has taken concrete

steps towards foraying into water and waste water management, construction of Special Economic

Zones (SEZ), urban infrastructure, ports and airports as they provide huge growth opportunities. This

provided the Company with much required diversity in terms of nature of the projects and geographies.

The Company has a certificate from AQA International, LLC in respect of the quality management

system (ISO 9001:2000).

By 2011 the operations of the Company are on track after an unprecedented crisis as fallout of the

Satyam episode. Infrastructure Leasing & Financial Services Limited (IL&FS), a new promoter of the

Company, name of the company has changed to IL & FS Engineering and Construction Company

limited. Also the Company was able to induct the Saudi BinLadin Group (SBG) of Saudi Arabia as a

Strategic Partner in the Shareholders consortium.


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3

SOME SUCCESSFUL PROJECTS OF COMPANY

Singapore Class Township,

Pocharam ,Near Hyderabad

Satyam technology Centre,

Hyderabad

GNSS Project, Kadapa, AP

Gautami Power Project, East

Godavari, AP -460 MW gas based

power project

NICE Project, 2KM Express ,Clover

leaf interchange road , Bangalore


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4

5825

53 100

-490

-250

3

-600

-500

-400

-300

-200

-100

0

100

200

2005 2006 2007 2008 2009 2010 2011

Rupeein

Cr.

Profit/Loss after Tax

FINANCIAL PERFORMANCE OF THE COMPANY

Financial Highlights

A. Turn Over of the Company

In Construction Company most of the Revenues are from contracts. Company showed good

improvement from 2005 to 2008.And all time record Rs. 1637 Cr is observed in 2008. After the Satyam

fiasco the companys turn over came down to Rs. 955 Cr. A slight improvement in 2011 is observed.

B. Profit after the Tax :

Companys highest recorded profit is about Rs. 100 Cr which is observed in 2007-2008FY. After the

Satyam episode in Dec 2008,Compnay incurred a loss of Rs.490 Cr in 2009 followed by Rs. 250 Cr

loss in 2010.

290

395

645

1637

1335

9551045

0

200400

600

800

1000

1200

1400

1600

1800

2005 2006 2007 2008 2009 2010 2011

Rupeein

Cr.

Turn Over


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5

26383041

6231

7563 7642

8807

0

10002000

3000

4000

5000

6000

7000

8000

9000

10000

2006 2007 2008 2009 2010 2011

Rupeein

Cr.

Order book

C. Net worth :

In 2008, the company has increased its reserves form Rs.215 Cr to Rs. 593 Cr causing the company

Net worth recorded all time high of Rs. 653 Cr. Maytas lead consortium has won the prestigious

Hyderabad Metro project in this year (2008) only.

D. Companys Order Book :

During these years under review,Company has secured contracts forRoads & Bridges, Buildings, Power,Irrigation and Railway projects.These contracts have been securedon standalone basis and on JointVenture basis with leadingconstruction companies.

Notwithstanding the economic

slowdown and the exigencies,

company has been able to retain itshealthy order book though it has lost

many of its BOT like Hyderabad

Metro & other JV projects.

*Graph excluding the Hyderabad Metro BOT Project worth Rs.12000Crores.

Also company got few Road projects in 2010 carrying a healthy Order Book.

197218

265

653

163

268

582

0

100

200

300

400

500

600

700

2005 2006 2007 2008 2009 2010 2011

Rupeein

Cr.

Net worth

Net worth


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FINANCIAL ANALYSIS

1. Liquidity Ratios:a. Current ratio:

b. Quick ratio:

c. Absolute cash ratio

2. Solvency:

a. Debt-equity ratio:

b. Interest coverage ratio

c. NAV

3. Profitability

a. Gross profit ratio

b. Net Profit ratio

c. Profitability Ratio Based on Investment.

i. Return on Capital Employed

ii. Return on Shareholders funds

4. Turnover:

a. Fixed assets turnover ratios

b. Stock Turnover Ratio

c. Debtors Turnover ratio

d. Creditors Turnover Ratio

5. Valuation:

a. Earnings per Share

b. Price Earnings Ratio

Of

Maytas Infra

Limited


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Liquidity RatiosThe liquidity ratios measure the ability of firm to meet its short-term obligations and reflect the short-

term financial strength /solvency of a firm.

Current RatioMeasures the ability of a company to discharge its day-to-day liabilities out of the cash orcurrent assets that it possesses

Current Assets are the assets (in ordinary course of business) which can be converted into cash within a

short period of time (not exceeding one year) which include Cash, bank balances, inventory of raw materials,

etc.

Current Liabilities are the liabilities which are short-term maturing obligations to meet, as originally

completed within a year , consist of trade creditors, bills payable, bank credit, provision for taxation, dividend

payable and outstanding expenses.

Implication of Current Ratio

As a measure of short term /current financial liquidity, it indicates the rupee of current asset available

for each rupee of current liability or obligation payable. The higher the current ratio, the large the amount of

rupee available per rupee of current liability, the more is the firm ability to meet the current obligations and the

greater is the safety of short term creditors.

High ratio leads to greater the volume of current assets more than the specified norm denotes that the

firm possess excessive current assets than the requirement portrays idle funds invested in the current assets.

Current ratio of Maytas Infra

3.5

3.0

1.5

2.4

2.7

2.42.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2005 2006 2007 2008 2009 2010 2011

Current RatioMaytas Infra Limited

Current Ratio


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8 10

87

227

300

154

244

0

100

200

300

400

2005 2006 2007 2008 2009 2010 2011

RuppesinC

rores

Inventories

Inventories

Analysis of Companys Current Ratio

For last seven years, It is observed that the company maintained an average of Rs 2.6 available for each Rs.1 of

its current liability. Below graph presents the status of the Current Asset and Current Liabilities in Crore rupees.

In 2007 the current ratio is very low of about 1.5 this is because, the company liabilities such as, sundry

creditors (Rs.68Cr), Dues to Sub-contractors (110cr), security deposits payable (Rs.23cr) and other liabilities

are more which made the current year liabilities, four times more compared to previous year (from Rs.100

Cr to 400 Cr) where as its current assets are increased twice (form Rs.300 to 600 Cr).

In 2005 the current ratio is all time high of about 3.5. Even though the companys current assets are less

when compared to other followed years, the company has the Sundry debtors of about Rs.105 Cr, loans and

advances (86 Cr) in the current year. Whereas its total liabilities are about Rs.72 Cr only (Dues to Sub-Con

Rs.26 Cr., Security deposits Rs.13 Cr.)

In 2009 , the value of companys current assets

are high of about Rs.1700Cr which includes sundry

debtors (Rs.476Cr) , Inventory (Rs.300Cr),advance

tax (Rs.65Cr) , Loan & Advances (Rs.780Cr) which

includes inter corporate deposits (Rs.391Cr) , dues

form Joint ventures (Rs.107Cr), Share / Debenture

Application Money to Others (Rs.73Cr).

The Inventory value of the company shown drastic

increment form 2005 to 2009 and went down in

2010.

250300

600

1573

1700

1382

1614

72 100

403

666 637 586 638

0

200

400

600

800

1000

1200

1400

1600

1800

2005 2006 2007 2008 2009 2010 2011

RuppesinC

rores

Current Assets Vs Current LiabilitiesMaytas Infra Limited

Current Assets Current Liabilities


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Quick ratio of

Maytas Infra

Year Ratio

2005 3.4

2006 2.9

2007 1.3

2008 2.0

2009 2.2

2010 2.1

2011 2.1

Absolute

cash ratio of

Maytas Infra

Year Ratio

2005 0.2

2006 0.2

2007 0.1

2008 0.4

2009 0.12010 0.1

2011 0.1

Quick Ratio measures as to how quick, is the ability of a company to discharge its current liabilities net ofworking capital limits out of current assets. Inventory takes the longest of all the current assets to convert into

cash and working capital limits are renewed on a yearly basis and not settled daily. Hence both are excluded. It is

also known as Acid-test ratio.

Implication of Absolute cash Ratio

This ratio is a further refinement of current ratio with tighter as well as realistic

properties as it considers only the liquid assets and liquid liabilities

Analysis ofCompanys Quick Ratio

Except in 2007 ratio is greater than the generally accepted standard of

1:1.This shows that the company have adequate liquid assets available for

business. But this may also means the company unable to utilise the available

cash for its business operations.

Absolute cash Ratiois represented by cash and near cash items. It is aratio of absolute liquid assets to current liabilities. In the computation of this ratio

only the absolute liquid assets are compared with the liquid liabilities. The

absolute liquid assets are cash, bank and marketable securities. It is to be observed that receivables

(debtors/accounts receivables and bills receivables) are eliminated from the list of liquid assets in order to

obtain absolute liquid assets since there may be some doubt in their liquidity.

Implication of Absolute cash Ratio

This ratio gains much significance only when it is used in conjunction with the

current and liquid ratios. A standard of 0.5: 1 absolute liquidity ratio is considered

an acceptable norm.

Analysis of Companys Absolute cash Ratio

Extremely low than the industrial standard of 0.5 except in 2008, the level

of cash maintained by Maytas infra is less than industry average.


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0.3 0.51.0

1.4

4.8

1.30.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2005 2006 2007 2008 2009 2010 2011

Debt-equity ratioMaytas Infra Limited

Solvency RatiosThe capacity of a company to discharge its obligations towards long-term lenders indicates its

financial strength and ensures its long-term survival. Thus its important to study the solvency position

or the leveraging capacity of the company. This ratio is useful for financial institutions, banks and other

lenders to assess the credit-worthiness of the company.

Debt-equity ratiomeasures the proportion of debt and capital (both equity and preference capital) inthe capital structure of the company. It measures the extent of assets financed through long-term borrowings.

Implication of Debt-equity Ratio

Helps in assessing whether a company is relying more on debt or capital for financing its assets. Higher

the debt more is the financial risk which hampers the capacity of the company to raise cheap funds. Higher

capital content means not passing the equity to itsshareholders. The debt/equity ratio also depends on

the industry in which the company operates. For

example, capital-intensive industries such as

auto manufacturing, tend to have a debt/equity ratio

above 2, while personal computer, Construction

companies have a debt/equity of under 0.5.

Analysis of Companys Debt-equity ratio

Is low up to 2008, which implies that the interest

payment will be less and the amount of profitsavailable for the shareholders is high and outside

control in the business will be low.

But it is clear, in 2009 after the Satyam episode the company Net worth came down drastically, which lead the

DebtEquity ratio raise to 4.8, also another thing is that company has raised a huge amount through secured

loans in FY 2008-2009, as the level of debt is high the company is more likely to fall in a debt trap, which kept

the companys shareholders in to great risk just as happen to Satyam Computers.

Interest coverage ratiomeasures the capacity of a company to pay the interests it has incurred on its

long-term borrowings out of its cash profits.

Implication of Interest coverage Ratio

Helps in assessing whether a company is comfortably placed to service its interest obligations. Higher

the ratio, greater the ability of a company to service interest and lesser is the risk involved for lenders .The lower

the ratio, the more the company is burdened by debt expense. When a company's interest coverage ratio is


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1.5 or lower, its ability to meet interest expenses may be questionable. An interest coverage ratio below 1

indicates the company is not generating sufficient revenues to satisfy interest expenses.

Analysis of Companys Interest coverage ratio

Up to 2008, the ratio has been better than 1.5 which implies that the company is generating sufficient profits to

meet its debt/interest expenses currently.

But form 2009 onwards, after the Satyam episode, it gone negative, which indicates the companys insolvency to

pay its debt & increased interest amounts. This made the Banks not invest or issue any kind of loans or Bank

guarantee to the company leading to liquidity crisis .Also this decreased the level of profits.

NAV (___________________): measures the net asset value per equity share of the company. It seeks toassess as to what extent the value of the equity share of a company contributed at par has been created for the

shareholders. It is also known as the net worth per share of book value per share.

Implication of Interest coverage Ratio

This ratio indicates the efficiency of the company management in building up a back-up of reserves and surplus

to fall back upon. Higher the ratio, higher is the capacity of the company to raise further capital.

The NAV vs. Market price value data is shown below:

5.9

1.7

4.8

1.7

-2.9

-2.2

-0.7

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

2005 2006 2007 2008 2009 2010 2011

Interest coverage ratioMaytas Infra Limited


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78%86%

77%

63%57%

66%58%

0%

20%

40%

60%

80%

100%

2005 2006 2007 2008 2009 2010 2011

Gross Profit RatioMaytas Infra Limited

20%

6%

9% 6%

-37%

-26%

0%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

2005 2006 2007 2008 2009 2010 2011

Net Profit RatioMaytas Infra Limited

Profitability RatiosThese ratios attempt to analyse the overall profitability of a company .The main objective of every

business concern is to earn profits. A business must be able to earn adequate profits in relation to the

risk and capital invested in it. The efficiency and the success of a business can be measured with the

help of profitability ratio.

Gross Profit Ratio The ratio elucidates the relationship in between the Gross profit and sales volume.

Implication of Gross Profit Ratio

It facilitates to study the profit earning capacity of the firm out of the manufacturing or trading operations.

Higher the ratio is better the position of the firm which means that the firm earns greater profits out of the sales

and vice versa.

Analysis of Companys Gross Profit Ratio

The margin has been significantly decreasing across

these years. After the 2006 the companys gross profit

was decreasing even though revenue of the company is

raising, this is due to increase in the consumption of

the material.

This indicates that the company may quoted the

tenders at very lower prices in order to get the

contracts which made the companys profit margin

less.

Net Profit Ratio The ratio expresses the relationship in between the Net profit and sales volume.

Implication of Net Profit Ratio

This ratio facilitates to portray the overall operating

efficiency of the firm. The net profit ratio is an indicator

of overall earning capacity of the firm in terms of

return out of sales volume.

Higher the ratio is better the operating efficiency of the

firm which means that the firm earns greater volume of

both operating as well as non-operating profit s.

More analysis on the Profit of the company is discussed

in the following ratios.


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28.6%

9.1% 14.7%

7.5%

-32.8%

-22.1%

0.2%

2005 2006 2007 2008 2009 2010 2011

Return on Capital EmployedMaytas Infra Limited

Return on Capital Employed Ratio

The ratio illustrates that how much return is earned in the form of Net profit after taxes out of the total capital

employed. The capital employed is nothing but the combination of both noncurrent liabilities and owners

equity. The ratio expresses the relationship in between the total earnings after taxation and the total volume of

capital employed.

Implication of Return on Capital Employed Ratio

Higher the ratio is better the utilization of the long term funds raised under the capital structure means that

greater profits are earned out of the total capital employed

Analysis of Companys Return on Capital

Employed Ratio

In year 2005, even the business is small, the company

succeeded in making a very good profit of about 28.63

% which is Rs.57 Cr on the Rs.198Cr. capital employed.

In year 2009, after the Satyam Scandal, and media

hype on the company, company seen a severe loss of

about Rs.490Cr.

It is also observed that the company has purchased an additional material of worth Rs.737Cr &Rs.648Cr in

2008 and 2009 respectively which is all time high in company records.

57 22 53100

-490

-250

3

198 246361

13311494

11311271

-1000

-500

0

500

1000

1500

2000

2005 2006 2007 2008 2009 2010 2011

RuppesinC

rores

Net Profit Vs Capital Employed

Maytas Infra Limited

(Loss) / Profit after tax Capital Employed


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5.68

2.251.06

1.69

-8.31

-0.600.01

2005 2006 2007 2008 2009 2010 2011

Return on Shareholder FundMaytas Infra Limited

Return on Shareholder fund Equity Shareholders of a company are more interested in knowing theearning capacity of their funds in the business. As such, this ratio measures the profitability of the funds

belonging to the equity shareholders.

Where, Shareholder fund = Share capital +Reserve /surplus.

Implication of Return on Shareholder fund

This ratio measures how efficiently the equity shareholders funds are being used in the business. It is a true

measure of the efficiency of the management since it shows what the earning capacity of the equity

shareholders funds. If the ratio is high, it is better, because in such a case equity shareholders may be given a

higher dividend.

Analysis of Companys Return on

Shareholder fund

Clearly this return has significantly decreased

since from 2005 and the pattern continued and

gone negative value of about -8.31 which

indicates the company is fully incapable to

return anything to its shareholders except the

losses.

Thus the shareholders lost their hopes on the

company and the value of the company has

been come down drastically.


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17.1

8.7

3.7 3.9 3.3 3.0 3.7

2005 2006 2007 2008 2009 2010 2011

Fixed Asset Turnover ratioMaytas Infra Limited

Year Working Capital

Turnover ratio

2005 1.92006 2.0

2007 3.1

2008 1.8

2009 1.3

2010 1.3

2011 1.1

Turnover RatiosThe efficient utilization of assets and optimum capital structure are fundamental to any company hence

it is essential to study and analyses these ratios.

Fixed Assets Turnover Ratio.

This ratio measures the extent of turnover or volume of gross income generated by the assets of the company.

Implication of Return on Shareholder fund

As fixed assets generate income to the company,

the more efficiently they are utilised, the more

they would contribute to the revenue.

Analysis of Companysfixed assets turnover

ratio:

It is observed that the company owns a gross block of Rs. 550 Cr worth Fixed assets including the Construction

Machinery like Tunneling Machines, Cranes, etc. which has been kept idle or for long time or purchased

machinery before actually they intended for. The ratio is falling gradually, which implies, fixed assets are not

used efficiently and are hence they became burden to the revenue.

It is also observe that the depreciation of Rs 261 Cr has incurred on the Fixed assets of the company as indicated

in below table.

Fixed Assets Mar '11 Mar '10 Mar '09 Mar '08 Mar '07Gross Block 550.65 537 535.18 431.89 150.75

Less: Accum. Depreciation 261.77 208.89 130.08 63.37 25.14

Net Block 288.88 328.11 405.1 368.52 125.61

Working capital turnover ratio: This ratio reveals how

efficiently working capital has been utilized in making sales.

Implication of Working capital turnover ratio

It shows the number of times working capital has been rotated in producing

sales. A high working capital turnover ratio shows efficient use of workingcapital and quick turnover of current assets like stock and debtors. A low

working capital turnover ratio indicates under-utilisation of working capital.

Analysis of Companysfixed assets turnover ratio:

From 2005 to 2007 the company has showed improvement in utilising the

working capital efficiently. But the ratio came down from 2008 onwards

indicating the improper usage of the working capital.


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6.3

2.8

3.8

2.2

0.6

2.2

2006 2007 2008 2009 2010 2011

Stock Turnover RatioMaytas Infra Limited

Stock Turnover Ratio

The ratio expresses the speed of converting the stock into sales. In other words, how fast the stock is being

converted into sales in a year? The greater the ratio of conversion leads to lesser the number of days /weeks

/months required to convert the stock into sales.

The ratio is also known as Inventory Turnover Ratio.

Implication of Stock turnover ratio

Higher the ratio is better the firm in converting the stock into sales and vice versa.

This ratio indicates whether stock has been used

or not. It shows the speed with which the stock is

rotated into sales or the number of times the

stock is turned into sales during the year. The

higher the ratio, the better it is, since it indicates

that stock is selling quickly. In a business where

stock turnover ratio is high, goods can be sold at a

low margin of profit and even than the

profitability may be quite high.

Analysis of Companysfixed assets turnover ratio:

Inventory of any construction company includes the material that has to be executed in the projects like

Cement, Steel, Electrical equipment, transformers, conductors, etc. The ratio is very low in 2010 compared other

years indicates that the material is kept un-executed for long time. Otherwise the company has ordered forexcess material than it exactly required for the projects.

57

136

598576

329

442

949

157

264227 199

0

100

200

300

400

500

600

700

2006 2007 2008 2009 2010 2011

Ruppes

inC

rores

Cost of Goods sold Vs Average Inventory

Maytas Infra Limited

Cost of goods sold Avg inventory


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Debtors Turnover ratio: This ratio indicates the relationship between credit sales and average

debtors during the year While calculating this ratio, provision for bad and doubtful debts is not deducted from

the debtors, so that it may not give a false impression that debtors are collected quickly.

Implication of Debtors Turnover ratio:

This ratio indicates the speed with which the amount is collected from debtors. The higher the ratio, the better

it is, since it indicates that amount from debtors is being collected more quickly. The more quickly the debtors

pay, the less the risk from bad- debts, and so the lower the expenses of collection and increase in the liquidity of

the firm. By comparing the debtors turnover ratio of the current year with the previous year, it may be assessed

whether the sales policy of the management is efficient or not.

Ratio 2007 2008 2009 2010 2011

Debtors Turnover ratio 2.6 2.5 3.0 1.8 1.9

Debt Collection Period ratio 4.6 4.7 4.1 6.6 6.2

Assumptions:

Here revenue including other income is taken as credit sales and average debtors equal to Sundry debtors form

respective annual reports.

Analysis ofCompanys Debtors Turnover ratio:

Up to 2009 the Debtors turnover ratio is good implying company made good effort in collecting the money form

its debtors. But ratio is fall in 20010 & 2011 which imply the revenue have not been significant which is not true.

Hence the money collected from debtors is not done quickly. Maytas infra should speed up the money collection

process from Debtors.

Creditors Turnover Ratio: This ratio indicates the relationship between credit purchases and average

creditors during the year.

Implication of Creditors Turnover ratio:

This ratio indicates the speed with which the amount is being paid to creditors. The higher the ratio, the better it

is, since it will indicate that the creditors are being paid more quickly which increases the credit worthiness of

the firm.

Ratio 2007 2008 2009 2010 2011

Creditor turnover Ratio 3.1 99.8 2.6 2.0 3.4

Debt Payment Period 3.9 0.1 4.6 5.9 3.5

Analysis of Companys Creditors Turnover ratio:has been In-consistent across the 5 years which indicates

the credit worthiness of Maytas Infra. This may be due to the fact that either business has better liquidity

position which is not true. Hence it is important to note that the business credit rating among suppliers is not

good and also they do not allow reasonable period of credit.


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Valuation RatiosThe capital market is a major source of capital for the company. The ability of a company to raise

capital is largely dependent on promoters, performance of the company, financial position and

investor-servicing track record. Hence it is important for any prospective investor to study these crucial

aspects before making an investment decision. Also it is important for an existing shareholder to study

these aspects to take a hold or to exit decision.

Earnings per Share: measures the overall profitability in terms of per equity share of capital

contributed by the owners. The portion of a company's profit allocated to each outstanding share of common

stock.

Implication of Earnings per ShareThis ratio is helpful in the determining of the market price of the equity share of the company. The ratio is also

helpful in estimating the capacity of the company to declare dividends on equity shares.

Price Earnings Ratio: Price earnings ratio is the ratio between market price per equity share &

earnings per share. The ratio is calculated to make an estimate of appreciation in the value of a share of a

company & is widely used by investors to decide whether or not to buy shares in a particular company.

Implication of Price Earnings Ratio:

This ratio shows how much is to be invested in the market in this companys shares to get each rupee of earning

on its shares. This ratio is used to measure whether the market price of a share is high or low.

Analysis of Companys Price Earnings Ratio:

After the Satyam episode and media hype in 2008 the companys earnings per share fall in 2009 to Rs. -83.2 as

company incurred a loss of about Rs 490 Cr.

Ratio 2007 2008 2009 2010 2011

Earnings per Share (EPS) 10.6 18.4 -83.2 -42.4 -2.6

Price Earnings Ratio (PES) 0.9 0.5 -0.1 -0.2 -3.8


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OVERALL ANALYSIS OF MAYTAS INFRA LIMITED

FROM 2005 TO 2011.

LIQUIDITY

Even in the contingency, the Company has maintained a good Current ratio that is companys

Current Assets are greater than its Current Liabilities for all years which indicates that the current ratio

is greater than 1an industry standard figure. But this may not the good sign, as the Inventory

movement of the company is not prompt. Also Company is maintaining a low level of cash and is less

than industry average.

SOLVENCY:

As the business of the company of experiencing the rapid growth, company took over Rs. 700

Cr of secured loans to enhance its business during 2007-2008 FY. But due to Satyam Fiasco, Companys

shareholders fund which is expected to increase had reduced form Rs. 652 Cr to Rs.348 Cr, during

2008-2009 FY, which lead the companys Debt-Equity Ratio raise to industry high 4.8 which made the

company to fall into insolvency state .

Besides this, companys Interest coverage ratio fall to negative, which indicates the companys

insolvency to pay its debt & increased interest amounts. This made the Banks not invest or issue any

kind of loans or Bank guarantee to the company leading to liquidity crisis .

PROFITABILITY:

It is observed that the Companys Gross Profit Margin is considerably less, implying that the Company

had bid the executing contracts at very lower prices (or) executing the contracts inefficiently which

includes delay in work (out of schedule) for which Clients charge LD on contractors.

Company has incurred a Net loss of about Rs. 490 Cr (-32.8 % on capital ) in 2009 due to decrease in

Contract Revenues and increase in contract & financial Expenses compare to the previous year 2008

where it has made a Net profit ofRs. 100Cr (7.5 % on Capital).


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TURNOVER:

Company owns a gross block of Rs. 550 Cr worth Fixed assets including the Construction Machinery

like Tunneling Machines, Cranes, etc. Growth in the efficiency of fixed assets utilization which is

reflected in EPS and fixed assets turnover ratios. Falling gradually to lower values, the Fixed asset

turnover ratio implies, fixed assets are not used efficiently in the company. This means Machinery has

been kept idle or for long time or purchased the machinery before actually they intended for use.

The Stock turnover ratio is very low in 2010 compared other years indicates that the material is kept un-

executed for long time. Otherwise the company has ordered for excess material than it exactly required

for the projects.

VALUATION:

Earnings per share (EPS) have gone to (negative) Rs. -83. After the Satyam Fiasco the company

became insolvent and shareholders lost their hope on the company. The market price or the stock

price has fall to all time low in 2009 and hence the price earnings ratio has fallen to negative and no

dividend is shared.


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Sno Particularsfor the year ended

31st March 2005

for the year ended

31st March 2006

for the year ended

31st March 2007

for the year ended

31st March 2008

for the year ended

31st March 2009

for the year ended

31st March 2010

for the year ended

31st March 2011

Share Holders Fund

1 Share Capital 10.00 10.00 50.00 58.85 58.96 413.45 384.87

Reserve & Surplus 186.67 207.99 215.26 593.99 289.92 289.92 629.6

2 Loan Funds

Secured Loans 23.32 72.47 255.36 756.67 1590.61 793.74 703.9

Unsecured Loans 31.63 34.10 4.14 179.03 76.61 106.34 143.56

Deferred Tax Liability 5.64

251.62 324.56 530.40 1588.54 2016.1 1603.45 1861.93

1 Fixed Assets

Gross Block 31.09 56.02 150.71 431.66 534.98 537 550.65

Less: Depreciation 10.89 14.54 25.12 63.37 130.08 208.89 261.77

Net Block 20.20 41.48 125.59 368.29 404.9 328.11 288.88

Capital Work in Progress 0.00 3.71 39.00 56.20 26.34 7.25 7.04

2 Investments 53.20 79.42 169.01 262.89 335.96 36.65 158.37

3 Current Assets, Loan & Advances

a Inventories 8 10 87 227 300 154 244

b Cash & Bnk Balances 17.08 19.24 54.81 284.68 57.29 52.48 67.62

c Other Current Assets 139.32 172.25 2.19 13.49 83.54 33.53 45.8

d Sundry Debtors 228.38 649.83 476.79 550.1 566.45

e Loans & Advances 86.05 98.87 226.93 397.72 781.74 592.24 689.4

Total 250 300 600 1573 1700 1382 1614

Less: Current Liabilities & Provisio 72 100 403 666 637 586 638

Net Current Assets/working capita 178 201 197 907 1063 796 975

4 Miscellaneous Expences 0 0

Sources of Funds

Application of Funds

Total

Balance Sheet

BALANCE SHEETS OF MAYTAS INFRA LTD.

AS AT MARCH 31, 2005 TO MARCH 31, 2011(All amounts in Rs. Crores except for share data or as otherwise stated)


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PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED MARCH 31, 2005 TO MARCH 31, 2011(All amounts in Rs. Crores except for share data or as otherwise stated)

Sno Particularsfor the year ended

31st March 2005

for the year ended

31st March 2006

for the year ended

31st March 2007

for the year ended

31st March 2008

for the year ended

31st March 2009

for the year ended

31st March 2010

for the year ended

31st March 2011

1 Income

a Contract Revenues 288.84 393.27 601.01 1637.35 1334.87 955.44 1044.98

b Other Revenues 57.11 2.09 0.35 9.09 75.88 50.32 50.07

345.94 395.36 601.36 1646.44 1410.75 1005.76 1095.05

2 Expenditure

a Decrease/(Increase) in WIP -1.23 -6.36 -35.77 -117.88 -55.16 70.36 95.71

b Material consumed 66.13 63.32 171.71 715.55 630.72 258.70 345.93

c Personnel expenses 6.44 10.75 20.76 69.69 113.09 53.30 58.23

d Contract expenses 183.38 261.01 332.57 701.81 759.36 634.27 545.73

e Administrative and Selling expenses 5.88 8.78 15.38 60.67 92.53 33.80 40.72

f Financial expenses 11.60 18.04 14.18 56.68 180.88 150.94 74.36

g Depreciation/Amortisation 2.85 4.64 11.31 39.09 67.59 83.67 56.96

275.06 360.18 530.14 1525.60 1789.01 1285.04 1217.64

Add : Company's share in (Loss)/Profit in

integrated Joint Ventures 7.62 13.71 -18.29 -1.80 2.07Exceptional items -65.30 39.48 129.08

(Loss) / Profit before tax and prior period 70.88 35.18 78.84 134.56 -461.85 -241.60 8.56

Provision for taxation

a Current tax 12.41 9.68 21.00 39.54

b Fringe benefit tax 0.00 0.16 0.45 1.06 1.30 0.00

c Deferred tax charge / (credit) 0.00 -0.11 4.15 -6.04 0.64 0.00

d Taxes for earlier years 0.02 0.00 0.12 0.35 0.66 0.00 -6.07

Total taxes 12.43 9.73 25.72 34.92 2.60 0.00 -6.07

(Loss) / Profit after tax and before prior p 58.45 25.44 53.12 99.64 -464.45 -241.60 14.63

Prior period expenses -1.65 -2.98 -25.34 -8.05 -11.72

(Loss) / Profit after tax 57 22 53 100 -490 -250 3

Add: Balance brought forward from previ 129.47 185.15 206.47 208.74 293.05 -185.69 -435.33

Appropriations

Transferred (from) / to general reserve 0.00 0.00 45.00 5.00

Proposed dividend 1.00 1.00 5.00 8.83

Dividend tax 0.13 0.14 0.85 1.50

(Deficit) / Surplus carried to Balance Shee 185.15 206.47 208.74 293.05 -196.74 -435.34 -432.42(Loss) / Earnings per share (in Rupees)

Basic 10.62 18.44 -83.23 -42.42 -2.64

Diluted 10.62 18.44 -83.23 -42.42 -2.64

Nominal value of shares 10 10 10 10 10

Profit & Loss Account for the year ended

Total

Total

a report on financial analysis of maytas infra by srikanth seelam

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