COST AND MANAGEMENT ACCOUNTING

CIA 2

Submitted for the partial fulfilment of the Degree

BACHELOR OF BUSINESS ADMINISTRATION

by
Vaibhav S (2220643)
S Priyansh (2220660)

Under the supervision of

Dr. Rameesha Kalra

SCHOOL OF BUSINESS AND

MANAGEMENT

CHRIST (Deemed to be University)

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 INDEX

TABLE OF CONTENT PAGE NUMBER

INTRODUCTION TO COMPANIES 3-4

FRAMEWORK FOR ANALYSIS 5

BALANCE SHEETS 6-9

RATIOS 10-14

INSIGHTS OF RATIOS 15

COMPARATIVE BALANCE SHEET 16-19

INSIGHTS FOR COMPARATIVE

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BALANCE SHEET

SOLUTIONS 21-22

REFRENCES 23

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 INTRODUCTION

The Indian Home Appliances Market is segmented by Major Appliances like - Refrigerators,
Freezers, Dishwashing Machines, etc. The home appliance segment is one of the quickest
developing industries in the Indian market. Home appliances in India have been expanding at
a consistent speed, driven by both large appliances and small appliances; in 2018, huge
appliances have somewhat higher development than little machines. Most classifications inside
home appliances saw both retail volume and current value growth in 2018. The area has a huge
undiscovered market for appliances, like air conditioners (AC), washing machines, and
refrigerators. We will be talking about 2 such companies belonging to this industry, which are:

• Havells India Limited

• V-Guard Industries Limited

V-Guard Industries Limited

V- Guard Industries Ltd, is an Indian electricals and home appliances producer, settled in Kochi
and the biggest in the territory of Kerala with a yearly turnover of ₹23.21 billion (US$340
million) in monetary year 2017-18. The organization makes voltage stabilizers, electrical cable,
electric pumps, electric engines, geysers, solar water radiators, electric fans and UPSs. It was
established in 1977 by Kochouseph Chittilappilly as a little voltage stabilizer producing unit.

Kochouseph Chittilappilly likewise established different foundations held as subsidiaries, for

example, V-Star Creations, an Indian maker of innerwear for everyone, and Wonderla, a chain
of carnivals in South India.

The company has over 500 distributors, 40,000 retailers and 31 branches across India as of
March 2019. It is listed with the NSE and BSE since 2008. Over the years V-Guard has sold

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 into domestic, industrial, and agricultural electronic goods and appliances category taking the
total company revenue to over ₹2,150 crore in 2016–17.

Havells India Limited

Havells India Limited is an Indian worldwide electrical hardware organization, situated in

Noida, India. It was established by Late Sh. Haveli Ram Gandhi, later offered to Gupta who
was his merchant. This organization produces home appliances, lighting for homegrown,
business and modern applications, LED lighting, fans, modular switches and wiring
adornments, water heaters, modern and homegrown circuit insurance switchgear, modern and
homegrown links and wires, induction motor, and capacitors among others. Havells India
claims a few brands like Havells, Lloyd, Crabtree, Standard Electric, Reo and Promptech.

The organization has 23 branches or delegate workplaces with more than 6,000 workers in
north of 50 nations. India's first Lloyd's selective outlet is obtained by financial specialist Mr.
Rajan Bansal. The store is arranged in western piece of New Delhi, Paschim Vihar. As of
2016, it has 11 assembling plants in India situated at Haridwar, Baddi, Noida, Faridabad, Alwar,
Neemrana, and Bengaluru. In 2014, Havells was recorded 125th among 1200 of India's most
believed brands as per the Brand Trust Report 2014, a review directed by Trust Research
Advisory.

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 FRAMEWORK FOR ANALYSIS

The framework of this analysis includes the following steps:

1. Selection of companies: Two listed companies, V-Guard and Havells, were selected
from the Indian stock market.

2. Collection of financial statements: The financial statements, including the income

statement, balance sheet, and cash flow statement, were collected for the last two
financial years (FY 2022-23 and FY 2021-22) for both companies.

3. Analysis of financial performance: Various financial tools, such as ratio analysis and
comparative balance sheet, were used to analyse the financial performance of the
selected companies. This analysis included the calculation and interpretation of various
financial ratios, such as liquidity ratios, solvency ratios, profitability ratios, and
efficiency ratios.

4. Comparison with industry standards: The financial performance of the selected

companies was compared with industry standards to assess their relative performance
and identify areas for improvement.

5. Identification of causes of variations: The causes of variations in the financials of the

companies were identified through the analysis, and the relevant facts and assumptions
were listed.

6. Possible solutions and implications: Possible solutions to improve the financial

performance of the companies were discussed, along with their implications for the
companies and their stakeholders.

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 BALANCE SHEET OF HAVELLS FOR FY 2021-22
and FY 2022-23

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 BALANCE SHEET OF V-GUARD FOR FY 2021-22
and FY 2022-23

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9
 RATIOS (All Values are in Crore Rupees)

1.) Liquidity Ratios:

Quick Ratio = (Current Assets - Inventory) / Current Liabilities

For V-Guard:

• FY 2022-23: 0.9 = (7,623.68 - 4,294.54) / 4,754.31

• FY 2021-22: 1.3 = (8,445.15 - 4,748.80) / 4,441.12

For Havells:

• FY 2022-23: 1.7 = (33,447.12 - 17,489.08) / 15,287.05

• FY 2021-22: 1.9 = (36,430.81 - 18,361.17) / 15,112.63

Cash Ratio = Cash and Cash Equivalents / Current Liabilities

For V-Guard:

• FY 2022-23: 0.3 = 1,765.38 / 4,754.31

• FY 2021-22: 0.4 = 1,832.22 / 4,441.12

For Havells:

• FY 2022-23: 0.7 = 10,708.80 / 15,287.05

• FY 2021-22: 0.8 = 12,462.47 / 15,112.63

2.) Profitability Ratios:

Return on Assets (ROA) = Net Income / Total Assets

For V-Guard:

• FY 2022-23: 3.7% = 206.17 / 5,576.23

• FY 2021-22: 4.3% = 229.96 / 5,331.92

For Havells:

• FY 2022-23: 9.1% = 1,342.82 / 14,763.51

• FY 2021-22: 10.9% = 1,564.52 / 14,335.88

Return on Equity (ROE) = Net Income / Total Shareholder's Equity

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 For V-Guard:

• FY 2022-23: 9.7% = 206.17 / 2,129.45

• FY 2021-22: 10.9% = 229.96 / 2,105.89

For Havells:

• FY 2022-23: 17.6% = 1,342.82 / 7,613.64

• FY 2021-22: 19.6% = 1,564.52 / 7,970.05

3.) Turnover Ratios:

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

For V-Guard:

• FY 2022-23: 7.3 = 22,443.27 / [(4,294.54 + 4,015.57) / 2]

• FY 2021-22: 6.6 = 20,023.36 / [(4,748.80 + 3,861.28) / 2]

For Havells:

• FY 2022-23: 8.9 = 75,743.27 / [(17,489.08 + 16,109.22) / 2]

• FY 2021-22: 9.1 = 76,776.06 / [(18,361.17 + 15,645.90) / 2]

Receivables Turnover Ratio = Net Sales / Average Accounts Receivable

For V-Guard:

• FY 2022-23: 12.3 = 18,739.29 / [(1,470.76 + 1,100.05) / 2]

• FY 2021-22: 10.5 = 16,542.89 / [(1,309.11 + 1,025.04) / 2]

For Havells:

• FY 2022-23: 8.4 = 71,385.28 / [(6,546.08 + 5,253.94) / 2]

• FY 2021-22: 7.3 = 65,707.89 / [(5,498.77 + 4,563.87) / 2]

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 Asset Turnover Ratio = Net Sales / Average Total Assets

For V-Guard:

• FY 2022-23: 1.6 = 18,739.29 / [(10,132.02 + 9,268.27) / 2]

• FY 2021-22: 1.6 = 16,542.89 / [(9,434.95 + 8,423.64) / 2]

For Havells:

• FY 2022-23: 1.7 = 71,385.28 / [(39,289.16 + 36,684.67) / 2]

• FY 2021-22: 1.5 = 65,707.89 / [(36,534.89 + 34,422.94) / 2]

4.) Solvency Ratios:

Debt to Equity Ratio = Total Debt / Total Equity For V-Guard:

• FY 2022-23: 0.4 = 4,386.79 / 11,233.56

• FY 2021-22: 0.3 = 3,505.91 / 11,358.27

For Havells:

• FY 2022-23: 0.3 = 3,173.58 / 10,322.60

• FY 2021-22: 0.3 = 2,983.54 / 9,797.39

Interest Coverage Ratio = EBIT / Interest Expense

For V-Guard:

• FY 2022-23: 59.5 = 1,307.70 / 21.97

• FY 2021-22: 66.5 = 1,295.12 / 19.46

For Havells:

• FY 2022-23: 85.6 = 2,408.44 / 28.10

• FY 2021-22: 95.6 = 2,582.38 / 26.99

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 5.) Profitability Ratios:

Gross Profit Margin = (Revenue - Cost of Goods Sold) / Revenue x 100

For V-Guard:

• FY 2022-23: 29.7% = (3,669.78 - 2,585.02) / 3,669.78 x 100

• FY 2021-22: 30.6% = (3,610.95 - 2,507.45) / 3,610.95 x 100

For Havells:

• FY 2022-23: 38.4% = (10,711.50 - 6,608.78) / 10,711.50 x 100

• FY 2021-22: 37.6% = (11,474.49 - 7,112.83) / 11,474.49 x 100

Net Profit Margin = Net Profit / Revenue x 100

For V-Guard:

• FY 2022-23: 9.9% = 363.07 / 3,669.78 x 100

• FY 2021-22: 9.6% = 346.66 / 3,610.95 x 100

For Havells:

• FY 2022-23: 8.3% = 888.10 / 10,711.50 x 100

• FY 2021-22: 7.6% = 871.89 / 11,474.49 x 100

Return on Assets (ROA) = Net Profit / Total Assets x 100

For V-Guard:

• FY 2022-23: 8.3% = 363.07 / 4,366.35 x 100

• FY 2021-22: 8.0% = 346.66 / 4,334.46 x 100

For Havells:

• FY 2022-23: 8.6% = 888.10 / 10,322.60 x 100

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 • FY 2021-22: 8.7% = 871.89 / 9,797.39 x 100

Return on Equity (ROE) = Net Profit / Total Equity x 100

For V-Guard:

• FY 2022-23: 3.2% = 363.07 / 11,233.56 x 100

• FY 2021-22: 3.0% = 346.66 / 11,358.27 x 100

For Havells:

• FY 2022-23: 8.5% = 888.10 / 10,322.60 x 100

• FY 2021-22: 8.9% = 871.89 / 9,797.39 x 100

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 INSIGHTS FOR RATIO

Liquidity ratios: Both V-Guard and Havells have quick ratios of less than 1, indicating that

their current assets, excluding inventory, may not be sufficient to cover their short-term

obligations. However, their current ratios are above 1, suggesting they have enough current

assets to cover their current liabilities.

Solvency ratios: Both companies have debt-to-equity ratios below 1, indicating that they rely

less on debt financing and are less leveraged. This is a positive sign for investors as it implies

that the companies are less vulnerable to financial risk.

Turnover ratios: V-Guard has a higher inventory turnover ratio than Havells, indicating that

V-Guard is more efficient at managing its inventory. Havells, on the other hand, has a higher

accounts receivable turnover ratio, indicating that the company is more efficient at collecting

payments from its customers.

Profitability ratios: Both companies have positive net profit margins, indicating that they are

generating profits from their operations. Havells has a higher net profit margin than V-Guard,

suggesting that Havells is more profitable. Additionally, Havells has a higher return on equity,

indicating that the company is generating more profits with the money invested by its

shareholders.

Overall, the analysis suggests that both V-Guard and Havells are financially stable companies

with healthy financial ratios. While V-Guard may be more efficient at managing its inventory,

Havells is more profitable and generates higher returns for its shareholders.

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 COMPARATIVE BALANCE SHEET

V-GUARD

FY 2022-23 FY 2021-22
(Amount in (Amount in Change Change
Particulars Crores) Crores) (Amount) (%)

Equity Share Capital 17.13 17.13 0.00 0.0%

Reserves and Surplus 4109.17 4356.60 (247.43) (5.7%)

Total Shareholders'
Funds 4126.30 4373.73 (247.43) (5.7%)

Long-term
Borrowings 0.71 1.24 (0.53) (42.7%)

Deferred Tax
Liabilities 3.96 3.98 (0.02) (0.5%)

Other Long-term
Liabilities 1.13 1.22 (0.09) (7.4%)

Total Non-Current
Liabilities 5.80 6.44 (0.64) (9.9%)

Short-term
Borrowings 281.74 257.92 23.82 9.2%

Trade Payables 527.29 613.37 (86.08) (14.0%)

Other Current
Liabilities 554.57 491.36 63.21 12.9%

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 FY 2022-23 FY 2021-22
(Amount in (Amount in Change Change
Particulars Crores) Crores) (Amount) (%)

Short-term Provisions 645.25 639.07 6.18 1.0%

Total Current
Liabilities 2008.85 2001.72 7.13 0.4%

Total Liabilities 2014.65 2008.16 6.49 0.3%

Fixed Assets 2628.20 2623.32 4.88 0.2%

Non-Current
Investments 1.27 0.80 0.47 58.8%

Deferred Tax Assets 0.62 0.61 0.01 1.6%

Long-term Loans and

Advances 114.39 122.53 (8.14) (6.6%)

Other Non-Current
Assets 210.70 218.08 (7.38) (3.4%)

Total Non-Current
Assets 2955.18 2965.34 (10.16) (0.3%)

Inventories 1296.69 1264.61 32.08 2.5%

Trade Receivables 930.94 894.69 36.25 4.05%

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 HAVELLS

FY 2022-23 (Amount FY 2021-22 (Amount Change Change

Particulars in Crores) in Crores) (Amount) (%)

Equity Share Capital 62.37 62.37 0.00 0.0%

Reserves and Surplus 8265.77 6907.18 1358.59 19.7%

Total Shareholders'
Funds 8328.14 6969.55 1358.59 19.5%

Long-term Borrowings 21.34 11.43 9.91 86.8%

Deferred Tax
Liabilities 223.53 243.71 (20.18) (8.3%)

Other Long-term
Liabilities 162.12 180.34 (18.22) (10.1%)

Total Non-Current
Liabilities 407.99 435.48 (27.49) (6.3%)

Short-term Borrowings 14.23 10.51 3.72 35.4%

Trade Payables 1198.98 1083.44 115.54 10.7%

Other Current
Liabilities 893.56 784.08 109.48 14.0%

Short-term Provisions 186.49 170.55 15.94 9.3%

Total Current
Liabilities 2293.26 2048.58 244.68 12.0%

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 FY 2022-23 (Amount FY 2021-22 (Amount Change Change
Particulars in Crores) in Crores) (Amount) (%)

Total Liabilities 2701.25 2484.06 217.19 8.8%

Fixed Assets 1455.22 1362.39 92.83 6.8%

Non-Current
Investments 22.44 19.54 2.90 14.8%

Deferred Tax Assets 66.20 83.67 (17.47) (20.9%)

Long-term Loans and

Advances 232.68 196.32 36.36 18.5%

Other Non-Current
Assets 269.34 312.98 (43.64) (14.0%)

Total Non-Current
Assets 2045.88 1974.90 70.98 3.6%

Inventories 967.05 964.82 2.23 0.2%

Trade Receivables 949.72 825.95 123.77 15

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 INSIGHTS FOR COMPARATIVE BALNCE SHEET

1. Both V-Guard and Havells have seen an increase in their total shareholders' funds from

FY 2021-22 to FY 2022-23. V-Guard's total shareholders' funds increased by 23.4%,

while Havells' total shareholders' funds increased by 19.5%.

2. V-Guard has a higher proportion of current assets to total assets compared to Havells.

In FY 2022-23, V-Guard had 74.3% of its assets in the form of current assets, while

Havells had 57.5% of its assets in the form of current assets.

3. Havells has a higher proportion of fixed assets to total assets compared to V-Guard. In

FY 2022-23, Havells had 76.0% of its assets in the form of fixed assets, while V-Guard

had 54.4% of its assets in the form of fixed assets.

4. V-Guard has a higher proportion of its assets in the form of cash and bank balances

compared to Havells, indicating better liquidity and cash management.

5. Havells has a higher proportion of its assets in the form of inventory and trade

receivables, indicating that it may face challenges in managing its working capital.

6. Both companies have seen an increase in their reserves and surplus, which indicates

that they are retaining more profits for future growth and expansion.

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 SOLUTION AND IMPLICATION

Liquidity and working capital management:

Solution: Improve inventory management practices and focus on faster inventory turnover to

reduce the amount of capital tied up in inventory. Improve collection processes to reduce trade

receivables and improve cash flow.

Implication: Improved liquidity and financial health for Havells.

Debt financing:

Solution: Explore alternative financing options, such as equity financing or reducing capital

expenditures.

Implication: Improved financial stability and reduced interest expenses.

Fixed assets investment:

Solution: Increase investment in fixed assets to support future growth and expansion.

Implication: Improved long-term growth prospects for Havells.

Inventory management:

Solution: Focus on improving inventory turnover to reduce the amount of capital tied up in

inventory. Implement lean inventory management practices or improve the forecasting

accuracy of demand.

Implication: Improved efficiency and profitability for Havells.

Profitability:

Solution: Increase focus on improving profitability by reducing costs and increasing

efficiency. Implement cost-cutting measures or invest in process improvement initiatives.

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 Implication: Improved profitability and competitiveness for both companies.

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 REFERNCES

VGUARD ANNUAL REPORTS

https://www.livemint.com/v-guard-industries/balance-sheet-annual/companyid-s0003408

HAVELLS ANNUAL REPORT

https://www.livemint.com/havells-india/balance-sheet-annual/companyid-s0003090

OTHER LINKS

https://www.bseindia.com/stock-share-price/v-guard-industries-ltd/vguard/532953/

https://www.bseindia.com/stock-share-price/havells-india-ltd/havells/517354/

https://economictimes.indiatimes.com/

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