Comparative Statements

I.
Introduction and methodology

What is finance?
Finance can be defined as the art and science of managing money. Virtually all Individuals and
organizations earn or raise money and spend or invest money. Finance is concerned with the
process, institutions, markets, and instruments involved in the transfer of money among of
Individuals, businesses, and institutions. Most professionals will benefit from an understanding
finance, which will enable them to make better personal financial decisions. Those who work in
financial jobs will benefit by being able to interface effectively with the firm’s financial
personnel, processes, and procedures.
We know business is mainly concerned with the financial activities. In order to ascertain the
financial status of the business every enterprise prepares certain statements, known as financial
statements. Financial statements are mainly prepared for decision making purposes. But the
information as is provided in the financial statements is not adequately helpful in drawing
a meaningful conclusion. Thus, an effective analysis and interpretation of financial statements is
required.
Statements we mean two statements :

(i) Profit and loss Account or Income Statement
(ii) Balance Sheet or Position Statement
These are prepared at the end of a given period of time. They are the indicators of
profitability and financial soundness of the business concern. The term financial analysis is also
known as analysis and interpretation of financial statements. It refers to the establishing
meaningful relationship between various items of the two financial statements i.e. Income
statement and position statement. It determines financial strength and weaknesses of the firm.
Analysis of financial statements is an attempt to assess the efficiency and performance of an
enterprise. Thus, the analysis and interpretation of financial statements is very essential to
measure the efficiency, profitability, financial soundness and future prospects of the business
units. Analysis means establishing a meaningful relationship between various items of the two
financial statements with each other in such a way that a conclusion is drawn.
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VISVODAYA ENGINEERING COLLEGE
RESEARCH METHODOLOGY
Research methodology is the scientific way to solve research problems is this involves all
possible methods of solving the research problems examine the alternative methods one by one
and arriving at the best possible methods .considering the research at the disposal of the
researcher.
Significance of the study
Finance is the life blood of business without finance a business cannot be started nor run.
The study of finance performance is utmost important to take policy decisions and implementing
them. There are number of techniques are available to assess financial performance among them
comparative analysis is a comprehensive and detailed technique .
Several studies have been carried out both at national regional levels to estimate the
financial performance of firms. Most of these Studies are macro level. India is vast country with
varied socio economic conditions. This indicates the need for institutional specific studies. The
present study is an attempt in this direction.
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Objectives of the study
The main objectives of the study are
 To study changes in Operating by comparative analysis

 To study changes in Net profit (or) loss by comparative analysis
 To study changes in operating and non operating expenses
 To study changes in current assets by comparative analysis
 To study changes in current liabilities by comparative analysis
 To study changes in fixed assets by comparative analysis
 To study changes in owner ship and Barrowed funds.
Data collection
Primary data: It is also known as first hand information it is collected through questionnaire my
study is entirely based secondary data. But some intricacies were clarified by directly asking
concerned officials to present clear picture of the study.
Secondary data: It is also known as readymade information. The secondary data is collected
from the publisher reports of Apollo Hospitals Enterprise,Ltd.
Sample Design
As the study is entirely based on secondary data there no specific sample design
technique is used. Five years data is considered for the study. Apollo hospitals is purposively
selected due to close proximity and acquaintance.
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Period of the study
The study has been carried out for the period of Three months. Five years data are
considered for the study.ie, 2007-2011
Tools of analysis
The data collected through secondary Sources have been analyzed using appropriate
reassures like rating and percentages. Diagrams, Tables and graphs are presented to estimate the
facts and figures.
Scope of the study
There are number of techniques are available for studying financial performance of any firm. But
in the present study comparative statements analysis technique is used to assess financial
position i.e changes in income statement and balance sheet.
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Limitations of the study
The study is based on 5 years data 5 years data is not sufficient to present clear picture of
Apollo hospitals Ltd.
1. The accuracy of results depends on the accuracy of publisher reports so the information
cannot be treated as totally free from errors.
2. Figures for the analysis are taken the annual reports .So all the limitations of their statements
will apply to the study.
3. The major constraint for the research was duration of the project which was only three months.
4. No primary data is used
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II. Theoretical Framework for Comparative Statement analysis
Every business organization is mainly concerned with the financial activities. to ascertain
the financial status of the business on a particular date, every firm prepares certain statements,
known as financial statements. Financial statements are mainly prepared for decision making
purposes. But the information as is provided in the financial statements is not adequately helpful
in drawing a meaningful conclusion. Thus, an effective analysis and interpretation of
financial statements is required.
MEANING OF FINANCIAL STATEMENT
A financial statement is a collection of data organized in accordance with logical and consistent
according procedures. In other words, it is the outcome of summarizing process of accounting.
According to John N. Myer “The financial statements provides a summary of the accounts of a
business enterprise, the balance sheet reflecting the assets. Liabilities and capital as on a certain
date and the income statement showing the result of operations daring a certain period.
Thus financial statements are periodic financial reports of a company. They reflect the
company’s overall performance over a period of time and the financial position at a point of
time.
The term financial statement generally refers to two basic statements. They are: (i) the
income statement, and (ii) the balance sheet. Now –a-days, business concerns also prepare two
more statements. They are: (a) Statement of retained earning or surplus statement and (b)
Statement of changes in financial Position.
.TYPES OF FINANCIAL STATEMENTS
A complete set of financial statements consists of:
1. Income Statement or profit and Loss Accounts.

2. Balance Sheet or Position Statement.
3. Statement of changes in Owners Accounts or Surplus Statement, and
4. Statement of changes in Financial Position.
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1. Income Statement (Profit and Loss Account)
Income statement is statement of revenues earned and the expenses incurred for earning that
revenue. Revenue or income is the golden egg, the center of attraction of all those interested in
the concern. Thus revenue or income statement is a performance report recording the changes in
income, expenses, profits and losses as a result of business operations. When the revenues are
more than expenditures, there will be a profit. On the other hand, if the expenditures are in
excess of revenues, there will be a loss. The income statement is prepared for a particular period,
generally a year for determining the operational positions of the concern. Thus all incomes and
expenditures falling due in that year should be taken into account irrespective of their or
payment.
The income statement is prepared in the form of Manufacturing Account to know the cost
of production, in the form of Trading Account to find out gross loss. It is prepared in the form of
a Profit and Loss Account to determine net profit or net loss.
2. Balance Sheet (Position Statement)
The balance sheet is one of the important statements depicting the financial position of
the concern. It lists the sources of funds as well as their uses. In fact, it is a classified summary of
assets and the sources of financing the assets.
The balance sheet is the backbone of Double Entry statement, the master account of
General Ledger. It helps the owners and creditors to estimate the financial stability of the related
enterprise.
The balance sheet is prepared on a particular date, it is static statement as it shows the
position of the business at a certain moment of time.
Nature of Financial Statement
A financial statement is prepared on the basis of recorded facts. Thus it is the end –product of
financial accounting. They reflect a combination of recorded facts, accounting principles and
personal judgments.
In the words of John N.Myer “the financial statements are composed of data which
are the result of a combination of: (1) recorded facts concerning the business transactions,
(2)conventions adopted to facilitate the accounting technique,(3) postulates,or assumptions made
to and (4) personal judgments used in the application of the conventions and postulates.
1. Recorded facts
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The term recorded facts refers to the data taken out from the accounting records. Business
transactions are recorded in the books of accounts of time, these records be come historical in
nature. The financial statements are prepared on the basis of data taken out from these very
accounts and books. Thus the bases of preparing financial statements do not show the current
financial condition of concern.
2. Accounting convention
Accounting conventions imply certain accounting principles developed over time by

custom or tradition. Certain accounting conventions such as disclosure, materiality, the
convention of valuing inventory at cost or market price whichever is less is followed at the time
of preparing financial statements. The use of accounting conventions makes the financial
statements comparable. Simple and realistic.
3. Postulates
The postulates or concepts are assumptions upon which the accounting records are made.
The accountant makes certain assumptions while making accounting records. One of those
assumptions is that the enterprise is trusted as a going concern. The other alternative to this
postulate is that the concern is to be liquidated. Thus the “rupee value” shown in the balance
sheet is “going concern value” whereas the realizable value” at the time of liquidation may be
more or less than the rupee value. Another important assumption is that the value of rupees is
constant at all times though there is drastic change in the purchasing power of money. Thus the
data disclosed by the financial statements are useful and meaningful only till the concern
survives.
4. Personal Judgments
The personal judgment of the accountant plays an important role in preparing financial
statements although certain standard accounting conventions are followed. It may sometimes be
found that the financial statements prepared by two different persons in the same organisation
provide different results mainly on account of the difference in their personal judgments in
applying postulates and conventions. For example, in applying the cost or market value
whichever is less to inventory valuation. the accountant will have to use his judgment in
computing the cost in a particular case. He may follow one of the various methods such as last in
first out, first in first out, average cost method, standard cost, base stock method, etc., for valuing
materials. Thus it is found that the financial statements are greatly affected by the personal
judgments of the accountants.
Objectives of Financial Statements

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The primary reliable of a financial statement is to provide information to decision-makers.
The Accounting Principles Board of America (APB) mentions the following objectives of
financial statements:
1. It provides reliable financial information about economic resources and obligations of a

business concern.
2. It provides other needed information about changes in such economic resources and
obligations
3. It provides reliable information about changes in net resources (resources less

obligations)
4. It provides financial information that helps in estimating the earning potential of a

business.
5. It discloses, to the extent possible, other information related to the financial statements
that is relevant to the needs of the users of these statements.
Characteristics of Ideal Financial Statements

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The financial statements reflect the financial position and operating strengths or
weakness of the concern. Thus the financial statement should be prepared in such a way that it
can give a clear and orderly picture of the concern
The financial statement is said to be ideal when it posses the following characteristics
1. Relevance: the financial statements should be relevant to the objectives for the
organization. The information which is not relevant to the statements should be avoided
by applying the skills and efficiency of the person preparing these statements.
2. Exhibit through Financial Position: The facts and figures incorporated in the financial
statement should be such that a true and correct view of the state of affairs of the concern
is taken. While preparing these statements care should be taken to ensure that no material
information is withheld.
3. Intelligible to Common Man: The financial statements presented in a simple and lucid
from so that they are easily understandable even to a person who is not well-versed with
accounting terminology.
4. Easiness: The financial statements can be prepared easily as the facts which are to be
incorporated in them are readily available from the books of accounts of the concern.
Moreover, the size of the statement should not be very large and columns to be used for
giving information should be less. All these enable to save time preparing in preparing
the statements.
5. Attractive: The financial statement should be prepared in such a way that they should
attract the eye of the reader.
6. Facilitates comparison: The financial statement should facilitate all sorts of

compression they should be prepared in a way that can be compared with a previous
years statements and the figures of other concerns of the same nature. All these help for
the proper assessment for the working of the concern.
7. Brief: The financial statement should be presented briefly so that the reader can form an
idea about that various figures easily. In other words, the financial statements should not
be stuffed with unnecessary details.
8. Promptness: The financial statements should be prepared and presented immediately at

the close f the financial leader.
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9. Analytical Representation: Another figure of an ideal financial statement is that the date
of similar nature is presented at the same place this will help analysts in establishing
relationships between figures of similar nature with less effort.
Importance of Financial statements
Financial statements are largely useful to management, investors, creditors, bankers,

workers, government and public in general. George O.May* states the following major users
of financial statements:
1. As a report of stewardship.
2. As a basis for fiscal policy.
3. To determine the legality of dividends.
4. As a guide to wise dividend action.
5. As a basis for granting credit.
6. As informative for prospective investors in an enterprise.
7. As a guide to the value of investment already made.
8. As an aid to government supervision.
9. As a basis for price or rate regulation.
10. As a basis for taxation.
Parties are interested for financial statement analysis
1. For Management: The management usually requires correct and reliable information for
proper execution of its function. The financial statements provide such information. On the
basics of these information’s. Thus the financial statements are highly useful to the
management for exercising cost control.
2. For Creditors: The creditors are usually interested in current solvency of an organization as
their claims are to be paid within a short spam out of current assets. The calculation of
current and liquid ratio and liquid ratio with the help of data obtained from financial
statements will enable the creditors to assess the current financial positions of the
organization in relation to their debts.
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3. For Bankers: The bankers are usually in need of the detailed information regarding their
customers’ financial position as they are interested to see that loan amount is secure and the
customer can pay the interested. It is through the financial statements that a banker can get all
the information useful in taking decisions regarding the extension of loans to their customers
and the amount of securities it will ask from the customers as a cover for the loans.
4. For Investors: The financial statements are useful for both short-term and long-term
investors. They are much concern in making regular interested payments. Thus the investors
will have to analysis both the present and the future prospects and expansion plans of the
concern. The investors should get all the required information for making the various
analyses from the financial statements.
5. For Government: The financial statements are highly useful to government in the following
respects:
a) To assess the tax liability of the concern.
b) To study the economic situations of the country.
c) To ascertain whether the business is following various rules and regulations or not.
d) To frame and amend various laws for the regulations of business.
6. For Trade Association: Trade Associations may analyse the financial statements with a
view to providing various information to their members. They may develop standard rations
and design uniform system of accounts.
7. For Stock Exchange: The stock exchanges deal with the purchase and sale of securities of
various concerns. Thus the financial statements are highly useful to stock brokers in judging
the financial position of various concerns. Moreover, the determination of prices of stocks
and shares, to a great extent, is based on financial statements.
Limitations of Financial Statements

Although financial statements convey relevant and useful information to the interested
parties, they do not present a final picture of the concern. Thus the financial statements are
subject to the following limitations:
1. Only Interim Report
The financial statements do not present of the concern. The actual position of the concern can
be known only when the business is close down as he data given in the statements are
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approximate. However, the financial statements are required to be prepared for different
accounting periods. But they serve as interim reports only.
2. Do not Disclose Correct Financial Position
The financial statements do not disclose the exact financial position of the concern.
Usually, the financial position of a concern depends on several factors like economic, social and
financial. But the data incorporated in the financial statements reflect only financial factors.
3. On the Basis of Historical Cost
The financial statements are prepared on the basis of historical cost or original cost. In
other words, the statements are not prepared keeping in view the current price changes although
the value of assets decreases with the passage of time. Thus the value of assets shown in the
balance sheet are neither the values at which they can be sold nor the values at which they can be
replaced. That is why the exact financial position of the concern cannot be assessed from the
balance sheet.
Similarly, the profit disclosed by the profit and loss account may not represent the
earning capacity of the concern. The increase in profits need not be due to an increase in
efficiency and may be due to an increase in prices or due to some abnormal causes.
4. Failure to State the Impact of Non-monetary Factors
The success of a business largely depends on certain non-monetary such as the energy,
ability and efficiency of the men who are concerned with the operation of the business. But these
factors are not stated in the financial statements as they could not be measures in the monetary
terms.
5. Lack of Precision
The information given by finance statements are not precise. The date used for preparing
financial statements is developed by conventional procedures followed over the years. Moreover,
they are largely affected by the personal judgments of the parties concerned.
FINANCIAL ANANLYSIS
The various steps involved in financial analysis are:
1. To select the information from the total information in the financial statements which is
relevant for a decision.
2. To highlight important relationships by arranging the information contained in the

Financial statements, and
3. To interpret important relationships and give explanations of the importance.

The term financial statement analysis consists of both analysis and interpretation. However,
distinction can be drawn between the two terms ‘analysis’ and ‘interpretation’. While analysis
is the methodology classification of the data, interpretation involves explaining the meaning
and significance of the data so classified. In fact both analysis and interpretation are
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complementary to each other even impossible. However, most of the authors have used the
term analysis only to cover the meaning of both analysis and interpretation.
Types of Financial Analysis
The various types of financial can be brought into different categories depending upon
External Analysis Internal Analysis Horizontal Analysis Vertical Analysis
(i). the material used and (ii) the method of operations followed in the analysis or modus
operandi of analysis. According to material used, the financial analysis may be either external
analysis or internal analysis. But on the basis of the modus operandi, it can be classified into
horizontal analysis and vertical analysis.
External Analysis
This analysis is done on the basis of information available from published records. Thus
an analysis which is done by outside who do not have access to the detailed records of the
company is known as external analysis. Outsiders include investors, credit agencies, government
agencies and other creditors. External analysis serves only a very limited purpose.
Internal Analysis
This analysis is done on the basis of information obtained from internal records. Thus an
analysis which is conducted by persons who have access to the detailed records of the concern is
known as internal analysis. Such an analysis is usually performed by executives and employees
of the internal analysis.
Horizontal Analysis
Horizontal analysis is also known as dynamic analysis or trend analysis. Analysis which
is done by analyzing the financial data of a company for several years is called horizontal
analysis. Under this analysis, the analysis compares the figures of the various years with that of
the standard or base year to know the periodical trend of various items shown in the statements
with the passage of time. Horizontal analysis helps the management to focus attention on items
that have significantly changed during the period under review.
Vertical Analysis
Vertical Analysis is also known as static analysis or structural analysis. Analysis which is
done by analyzing a single set of financial statement is known as vertical analysis. Under this
analysis, the figures from financial statement of a year are compared with a base selected from
the same year’s statement.
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Vertical Analysis is not very conducive to a proper analysis of financial statements as it
considers data for one period only. However, it may be used along with horizontal analysis to
make it more meaningful.
Tools and Techniques of Financial Analysis
A host of methods or techniques is used to study the relationship between different

statements. However, the following methods of analysis are generally used:
1. Comparative Financial Statements
2. Common-size Statement
3. Trend Analysis
4. Ratio Analysis
5. Funds flow Analysis
6. Cash Flow Analysis
Comparative Financial Statements Analysis
Comparative Financial Statements are statements of financial position at different periods

of time. Usually, two financial statements (Balance sheet and income statements) are prepared in
a comparative from placing figures for two or more periods side by side. These statements
facilitate compression of absolute figures (rupee amounts) pertaining to two or more periods in
order to find out their increases or decreases over the period/periods under consideration.
The financial data are side to be comparative only if the same accounting principles are
used in preparing these statements. If there is any variation in the use of accounting principles
that should be stated at the foot of financial statements. The analysis must be conscious in using
these statements.
The two comparative statements used in the process of analysis are:
(i) Balance Sheet and
(ii) Income Statements
Comparative Balance Sheet

This analysis is the study of the trend of the same items in two more balance sheets of the
same concern on different dates. The changes can be determined by comparing the balance sheet
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at the beginning and at the end of a period. With the help of these changes, the analyst can form
an opinion about the progress of the concern.
The comparative balance sheet should have altogether four columns. The first two
columns are for the date of the original sheets and fourth and fifth columns are used to show
increases/decreases in figures and percentage of increases/decreases respectively.
Guidelines for Analysing Comparative Balance Sheet
While analyzing the Comparative Balance sheet, the analyst should observe:
(i) The current financial position and liquidity positions
(ii) The long-term financial position and\
(iii) The profitable of the concern.
The current financial position of a concern can be known by studying the working capital
of both the years. Working capital is the excess of current assets over current liabilities. The
current financial position is said to be good or improved when the working capital shows an
increases. But increases in current assts accompanied by the increase in current liabilities of the
same amount should not show any changes in the current financial position.
The long-term financial position of a concern can be known by analysing the changes in
fixed assets, long-term liabilities and capital. A change in fixed assets should be compared to
the change in long-term and capital. When the change in fixed assets is greater than the change
in long-term securities, it is said that the part of fixed assets has been financed from the working
capital. On the country, when the change in long-term securities is higher than the change in
fixed assets, it is said that fixed assets have not only been financed from long-term sources but
part of working capital has also been financed from long-term sources. However, a firm’s policy
is said to be wise when fixed assets are financed by raising long-term funds.
The profitability of a concern can be known by analysis the changes in retained earnings,
various resources and surpluses etc. the profitability of a concern is said to be increased when
there is an increase in the balance of Profit and Loss Account and other resources created from
profits. On the other hand, decreases in such accounts may mean payment of dividend, issue of
bonus shares or deterioration in profitability of the concern.
Comparative Income Statement Analysis
The results of the operation of a concern can be known from the income statements. Thus
an idea of the progress of a concern over a period of time should be obtained from the
comparative income statement. Moreover, the profitability of a concern can be analysed with
the help of changes in absolute data in money values and its percentage.
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The income statement also has four columns. When the first two columns give figures of
various items for two years, the third and fourth columns are used to show changes in figures in
absolute amounts and percentage respectively.
Guidelines for Analysing Income Statement Analysis
The analysis of income statement involves the following steps:]
1. First of all, the amount of gross profit should be analyzed. For this purpose, the change in
sales should be compared with the change in cost of goods sold. When the change in sales is
higher than the change in cost of goods sold, the profitability of the concern will be high.
2. Next, the operational profits of the concern should be analyzed. Operating profit is gross
profit minus operating expenses such as office and administrative expenses, selling and
distribution expenses. An increase in operating profit is a sign of increase in sales and
efficiency in controlling operating expenses. On the other hand, a decrease in operating
profits will result from inefficiency in controlling operating expenses or decreases in sales.
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III. Industry And Company profiles
Health care Industry in India:
In India, the Healthcare system is split into a public sector, a private sector and a wide network
of informal healthcare providers operating together in a large and unregulated network. This
irregularity has caused wide disparities in access, especially in regional and rural distribution of
healthcare infrastructure. Currently, the Indian healthcare sector is valued at Rs.1, 360 (US $34)
billion roughly 6 per cent of GDP. The healthcare business is projected to grow to over Rs.1, 600
(US $40) billion or 8.5 per cent of GDP by 2012, according to Price Waterhouse Coopers (PwC)
report, 'Healthcare in India: Emerging market report 2007'
Some Facts
India’s healthcare industry is currently worth Rs 73,000 crores which is roughly 4 percent of the
GDP.The industry is expected to grow at the rate of 13 percent for the next six years which
amounts to an addition of Rs 9,000 crores each year. The national average of proportion of
households in the middle and higher middle income group has increased from 14% in 1990 to 20
% in 1999.The population to bed ratio in India is 1 bed per 1000, in relation to the WHO norm of
1 bed per 300.In India, there exists space for 75000 to 100000 hospital beds. Private insurance
will drive the healthcare revenues. Considering the rising middle and higher middle-income
group we get a conservative estimate of 200 million insurable lives Over the last five years, there
has been an attitudinal change amongst a section of Indians who are spending more on
healthcare.
Corporate hospitals mushroomed in the late eighties. The boom remained short-lived and out of
the 22 listed hospital scrips, most are being trading below par. An increasingly fragmented
market, lack of statistics, capital-intensive operations and a long gestation period are all wise
reasons to shy away from investing in the healthcare industry. Government and trust hospitals
dominate the scene. Many of the trust hospitals suffer from poor management. Good corporate
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hospitals are still too few to amount to a critical mass.Corporate hospitals failed a decade ago
because they emerged in isolation and weren’t part of a larger phenomenon. However, now,
there are the insurance companies, the hospital hardware and the software companies that have
come together to create the boom.
Factors Attracting Corporate In the Healthcare Sector

Recognition as an industry: In the mid 80‟s, the healthcare sector was recognized as an
industry. Hence it became possible to get long term funding from the Financial Institutions. The
government also reduced the import duty on medical equipment’s and technology, thus opening
up the sector. Since the National Health Policy (the policy’s main objective was „Health For All‟
by the Year 2000) was approved in 1983, little has been done to update or amend the policy
evolved as the country changes and the new health problems arise from ecological degradation.
The focus has been on epidemiological profile of the medical care and not on comprehensive
healthcare.
Socio-Economic Changes: The rise of literacy rate, higher levels of income and increasing
awareness through deep penetration of media channels, contributed to greater attention being
paid to health. With the rise in the system of nuclear families, it became necessary for regular
health check-ups and increase in health expenses for the bread-earner of the family.
Brand Development: Many family run business houses, have set-up charity hospitals. By
lending their name to the hospital, they develop a good image in the markets which further
improves the brand image of products from their other businesses.
Extension To Related Business: Some pharmaceutical companies like Wockhardt and Max
India, have ventured into this sector as it is a direct extension to their line of business.
Opening Of The Insurance Sector: In India, approx. 60% of the total health expenditure comes
from self paid category as against governments contribution of 25-30 %. A majority of private
hospitals are expensive for a normal middle class family. The opening up of the insurance sector
to private players is expected to give a shot in the arms of the healthcare industry. Health
Insurance will make healthcare affordable to a large number of people. Currently, in India only 2
million people ( 0.2 % of total population of 1 billion), are covered under Med claim, whereas in
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developed nations like USA about 75 % of the total population are covered under some
insurance scheme. General Insurance Company, has never aggressively marketed health
insurance. Moreover ,GIC takes up to 6 months to process a claim and reimburses customers
after they have paid for treatment out of their own pockets. This will give a great advantage to
private players like Cigna which is planning to launchSmart Cards that can be used in hospitals
patient guidance facilities, travel insurance, etc.The Consultants, Financiers and Insurance
Agencies are to benefit from this boom. The insurers will use PPOs, that will grow into HMOs,
to assume insurance risks on clients behalf. Medical Equipments, Medical Software
And Hospitals will see the biggest boom
SOME PLAYERS:
Fortis Health care

Fortis is the late Ranbaxy‟s Parvinder Singh‟s privately owned company. The company is a 250
crore, 200 bedcardiac hospital, located in the town of Mohali. The company also has 12 cardiac
and information centers in and around the town, to arrange travel and stay for patients and
family. The company has plans of increasing the capacity to around 375 beds and also plans to
tie up with an overseas partner.
Max India
After selling of his stake in Hutchison Max Telecom, Analjit Singh has decided to invest around
200 crores, forsetting up world-class healthcare services in India. Max India plans a three tier
structure of medical services –Max Consultation and Diagnostic Clinics, MaxMed, a 150 bed
multispecialty hospital and Max General, a 400bed hospital. The company has already tied up
with Harvard Medical International, to undertake clinical trials for drugs, under research abroad
and setting up of Max University, for education and research.
Escorts
EHIRC located in New Delhi has more than 220 beds. The hospital has a total 77 Critical Care
beds to provide intensive care to patients after surgery or angioplasty, emergency admissions or
other patients needing highly specialized management including Telecardiology (ECG
transmission through telephone). The EHIRC is unique in the field of Preventive Cardiology
with a fully developed programmed of Monitored Exercise, Yoga and Meditation for Life style
management.
WOCKHARDT and DUNCANS GLENEAGLES INTERNATIONAL
also have major expansion plans.
SWOT Analysis:
Worries of Apollo hospitals: The threat of new entry is quite high: if anyone looks as if they’re
making a sustained profit, new competitors can come into the industry easily, reducing profits;
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Ex.- Fortis , Max, Escort , WOCKHARDT and DUNCANS GLENEAGLES INTERNATIONAL
Competitive rivalry is extremely high: if someone raises prices, they’ll be quickly undercut. Intense
competition puts strong downward pressure on prices. Buyer Power is strong, again implying strong
downward pressure on prices; and There is some threat of substitution. Ex Telemedicine or shifting to
other medicine like ayuraveda or natural care.
Opportunities in hospital:
With global revenues of approximately US$ 2.8 trillion, the healthcare industry is the world‟s
largest industry and India is emerging as a major player in this industry, because of its high
population. As per the Insurance Regulatory and Development Authority (IRDA), the Indian
healthcare industry has the potential to show the same exponential growth that the software and
pharmaceutical industries have shown in the past decade. Further, as per the IRDA, only 10
percent of the market potential has been tapped till date and market studies indicate a 35 percent
growth in the coming year.
A big opportunity for the industry emerges from the privatization of the insurance segment,
which would extrapolate into a new delivery system in India. There is a vast insurable population
in India, given that only 2million people i.e. 0.2 percent of the total population are covered under
Med claim. According to a recent study, there are 315 million potentially insurable lives in the
country. First, there are economic factors that make India an exciting market. Since healthcare is
dependent on the people served, India’s huge population of a billion people represents a big
opportunity. Today, people are spending more on healthcare and preferring private services to
government ones. Hospitals in India are running at 80-90% occupancy. With the demand for
healthcare far exceeding supply, India’s health care industry is expected to grow by around 15%
a year for the next six years. Hospitals in India conduct the latest surgeries at very low cost.
Corporate entities entering the healthcare sector, introducing managerial practices and tools are
showing a marked preference for professionals, leading to the expansion of the hospital
management, education industry.
Threats
The cost burden is set to increase due to the limited resources, and rising incomes will translate to higher
wages, supply and capital costs. Real estate prices have become prohibitively high and a deterrent to take
on new projects. This will add to higher costs of Healthcare delivery which has to be borne by the
consumer. Medical equipment accounts for 40-45% of the total expenditure in hospitals. Any change in
technology will make existing medical equipments obsolete. High rate of advancement in medical
technology is leading to shorter lifespan, obsolescence of medical equipment, requiring medical
professionals to upgrade their skills on a constant basis. The density of doctors per 10,000 population in
India is 6 while the world average is 13. There could be a shortfall of over 450,000 doctors in the year
21
2012.Density of nurses per 10,000population is 13 in India while world average is 28. The migration of
skilled technicians and nursing personnel to developed countries due to higher compensation levels leaves
behind a void in quality of personnel at the disposal of hospitals. Apollo is one of the strongest brands
with minimal threats in the near time. This means, easier access to capital, continuing with the current
leadership position in the market and comprehensive services with relatively greater margin.
Apollo‟s success has been drawn from the fact that it has added a number of synergic revenue streams to
its business. As a result, its multi-income inflow has helped it cover its fixed investments faster than the
other companies in the sector.
Strengths:
Apollo is an integrated healthcare organization with a comprehensive span of healthcare capabilities,
enabling us to provide end-to-end services to patients. We provide seamless delivery of services at every
level of care – primary, secondary and tertiary. Being the largest purchaser and consumer of medical
consumables in the private sector, we are able to leverage on cost and benefit from our group bargaining
position to obtain better terms from our suppliers and service providers. Our quality consciousness and
patient-centric approach has improved our operational and clinical efficiency, and led to numerous
accolades in the medical arena in India. We have implemented clinical governance measures that have
gone a long way in ensuring and improving the quality of clinical care at all levels of healthcare
provision in Apollo Hospitals. We have obtained 4 JCI accreditations across all specialties, the first in the
country to do so. Also, our quality programmers are registered by the Indian Council of Medical
Research, ISO 9002, from Bureau of Indian Standards & British Standards of India. We have focused on
the provision of high-quality healthcare at affordable rates. Our brand name has helped us to expand our
operations in India and overseas, besides extending our range of services. High-quality medical facilities
and services are offered at cost competitive rates when compared to the Western and European regions
making India the preferred choice for medical travel. We have consistently invested in medical
technology and equipment so as to offer the highest quality healthcare services to our patients. The
availability of
Sophisticated medical equipment, such as the PET-CT scan, 320 Slice CT Scanner, Cyber knife ensures
that we are among the few healthcare providers in India capable of offering advanced healthcare
procedures such as stereo tactic radio surgery and bone marrow transplants to our patients. The major
strength contribution to the success of Apollo Hospitals has been the clinical excellence governed by
strong medical value system and ethics. Our Medical success rates have been world class. Apollo stands
unique among the few providers of quaternary care for complicated medical conditions, and is saving
more and more lives every day. We have a professional management team with a strong performance
22
culture. We maintain strong, enduring relationships with doctors and medical professionals. This has
attracted medical professionals returning from abroad to work with us. We believe one of the pillars of
our success is our huge talent of approximately 811 doctors across 50 specialties. We are among the
largest networks of doctors in India, and have approximately 3,130 nurses, 1,104 paramedical personnel
and 513 executives.
Weakness
We have added 297 Stand-alone pharmacies during the year, since most of the pharmacies are in
the incubation stage which can depress the margins. High attrition rates among the nursing
workforce to Western countries and competitors due to higher salaries and perks being offered
necessitates higher investment in training to ensure that the clinical staff is equipped with the
right skills, competencies and expertise needed to deliver quality healthcare. The rising costs of
healthcare delivery makes majority of the private hospitals expensive for a normal middle-class
family. Internal control systems and their adequacy The company deploys a robust system of
internal controls to allow optimal use and protection of assets, facilitate accurate and timely
compilation of financial statements and management reports, and ensure compliance with
statutory laws.
Business strategy
Apollo‟s business model has been a successful as it is able to generate profit even in the face of
being capitalintensive in nature. Our mission is to continuously keep improving the quality of
healthcare services provided to the communities we serve and strive to bring healthcare services
of international standards within the reach of every individual. At the same time, we seek to
generate strong financial performance and appropriate returns to our investors through
disciplined and balanced execution of a comprehensive business strategy that reinforces
both quality of care and financial strength. We seek to further strengthen our position as a
leading healthcare service company by successfully differentiating our service offerings and
increasing the scale of operations. Wewould be looking to dominate the healthcare space by
increasing bed strength in the cities where we are already present in addition to commissioning
of new hospitals in Tier 2 and Tier 3 cities through the “Reach initiative”.The Reach model is
23
expected to be a “no-frills” model, providing cost-effective quality healthcare. Thefacilities shall
be of the level of higher secondary and acute care, capable of developing into a tertiary care
centre. Each facility will be conceptualized to cater to the shortage in nursing infrastructure in
the country, byproviding for nursing colleges. Leverage our intellectual property and domain
knowledge to create “Centres of Excellence” of high-end medical care services at the new and
existing facilities. Share best practices across all the locations to enable increase occupancies at
newly launched hospitals. Improve asset utilization across all the hospitals. We have also made
significant investment in our human capital to meet both our in-house needs and our consultancy
services business through the establishment of nursing schools and colleges and hospital
administration colleges. Growth in Standalone Pharmacies revenues would be driven by new
store rollouts as well as maturity of existing stores. We also believe that growth can also be
achieved as we add new service lines in our existing markets, invest in new technologies desired
by physicians and patients, and demonstrate the quality of the care provided in our facilities.
Given the non-availability of adequate health care facilities in most parts of India, we believe
that high-growth opportunities remain in our existing markets as well as new
geographies that we are seeking to enter.
Competitive and Regulatory Environment
In the healthcare services segment, we face competition from other acute care hospitals,
including tertiary hospitals located in larger markets; specialty hospitals that focus on one or a
small number of lucrative service lines; standalone centers at which surgeries or diagnostic tests
can be performed; and physicians on the medical staffs of our hospitals. The shortage of bed
supply in India continues to be high, although several healthcare service providers have
aggressive organic growth plans. In addition, our competitors are also expanding presence by
acquiring/ partnering with existing smaller hospitals. Going forward, pricing could come under
pressure in our key markets and competition for medical staff could intensify both of which may
have an adverse effect on our operations. It is widely recognized that India has a shortage of
physicians in certain practice areas, including specialists such as cardiologists and orthopedists,
in various areas of the country. Healthcare insurance penetration is Increasing rapidly, which
may lead to a scenario where the costs of providing care rise faster than reimbursement rates. We
are putting in place systems and procedures to increase cost efficiency and transfer best practices
across our hospital network. Our standalone pharmacies (SAPs) compete primarily with the
unorganized sector. Organized sector penetration in the pharmacy sector is currently only 2%,
and unorganized players are able to offer similar services as the organized players. We
differentiate ourselves by ensuring high quality of the drugs supplied through SAPs, ensuring
convenience for and building deeper relationships with the end-customer and creating linkages
between our hospitals and SAPs. The pharmacy supply chain in India has multiple layers of
suppliers, middlemen and retailers. Apart from distribution, costs are another important element
in this price-sensitive market.
24
COMPANY PROFILE
1979
- The company was incorporated on 5th December, at Chennai. The company was promoted by
Dr. Prathap C. Reddy and his associates. TheMain object of the Company is to run Hospitals.
- The Company had set up a comprehensive 250-bed hospital with an emphasis on specialty and super
specialities in over fiftydepartments at Greams Road, Chennai.The main items and medical equipment
acquired included operating surgery unit, autoanalyser, angioscope, gamma cemera, CAT scan, etc.-
The hospital was to consist of cardiology department with CAT, head and body scan, two special
operation theaters and four minor and four major operation theaters.
1982
3,49,900 shares subscribed for by promoters, directors, etc. 26,50,100 shares were then issued at par out of
which 9,50,100 shares were reserved and allotted on a firm basis to promoters, their friends,
etc. (inclusive of 7,00,000 shares to NRI promoters).- Out of the remaining 17,00,000 shares,
5,00,000 shares were reserved for preferential allotment to NRI and investors
(from oil exporting developing countries but only 4,03,450 shares taken up. The balance 12,00,000 shares,
along with 96,550 shares not taken up out of Preferential quota were offered for public subscription
during December.
1984
- During November, simultaneously with the rights issue of equity shares, the company issued
2,00,000-15% partly convertible debenture of Rs 100 each as rights in prop. 5 debenture : 75 equity.
Only 15,537 debentures were taken up. Another 98,133 debentures were allotted privately.
The balance 86,330 debentures devolved
on the underwriters. Interest on the debentures was payable in the form of equity shares at par
for the first two
years. The Convertible portion of Rs 20 out of the face value of each debenture was to be converted into 2
25
equity shares of Rs 10 each at par
on the completion of 3 years from the date of allotment of the debentures. The non-convertible portion of
Rs 80 out of the face value of each debenture was to be redeemed in 4 equity annual installments at the end
the 7th, 8th, 9th and 10 year from the date of allotment of
debentures.- 12,50,000 shares issued at par as rights but only 4,80,301 shares taken up.
Out of the balance7,69,699 shares, 7,69,232 shares were allotted privately and 467 shares remained
unallotted. Another
2,50,000 shares were allotted at par privately.
1985
- 46 beds were added and the hospital was to add another 38 beds during 1986-87.
1986
- The Apollo Health Association (AHA) was inaugurated in April,

based
on credit card system. As per this scheme, the Apollo health
insurance
policy holders get Medicare offered by Apollo and 76 accredited
hospitals in selected cities.
- 29,600 shares forfeited in October, of which forfeiture on 1,050

shares was annulled. Another 12,850 forfeited shares were reissued.
2,56,772 shares were allotted at par in conversion of debenture
interest.
1988
- Till the end of June, 5,18,298 No. of equity shares were allotted
in
conversion of debenture interest and 2,27,340 No. of equity shares
were
allotted in conversion of debentures. Another 1,72,660 shares were
allotted in conversion of debentures during the period from 1st
April,
to 31st March, 1989.
1989
- The hospital was equipped with Magnetic Resonance Imaging (MRI),

one
more SOMATOMCR whole body computed Tomography scanner,
Dideoendoscopy
and Mammography, breast scanning equipment for the detection of
occult
26
carcinoma.
- The Apollo Hospital, Chennai was recognised for teaching and

imparting training to doctors for the examination of Fellow of the
Royal College of Radiologists, (FRCR), U.K.
- The Apollo group had finalised a joint venture project with the
I.R.T.C. of Eye Micro Surgery, USSR to launch the Apollo Fyodorov
Eye
Research Institute.
1991
- The Apollo school of nursing was commissioned in August which

offers
a 3 year diploma programme followed by internship in the hospital.
1992
- 16 intensive care beds and 26 additional patient beds together

with
balancing equipment were added in various disciplines. Also a 24
hour
ambulance service with wireless facility was to be launched shortly.
- The company also was setting up a 150 bed state-of-the-art cancer

treatment and research centre in the heart of Chennai city on Mount
Road.
- The Company had launched a city-wide ambulance service with

wireless
facility by stationing six Ambulances at strategic places in the
city.
1993
- Apollo cancer hospital, situated at Teynampet, Chennai, was

commissioned.
- The Company was introduced state-of-the-art Bone Marrow transplant

facility in Phase II expansion of cancer project in Chennai.
Besides,
the Company to install Gamma Knife equipment and facilities for
organ
transplantation.
27
- Allotted 54,17,831 shares as rights (prop. 1:1) and 4,850 shares
to
employees both at a prem. of Rs 10 per share.
1994
- The bed strength was increased to 465 at the main hospital. A

third
theater was added for cardio thoracic surgery.
- 40,00,000 No. of Equity shares issued at a price of Rs 42 per

share
on private placement basis with various investment institution.
1995
- Cancer hospital in Hyderabad was inaugurated on 19th February.

The
hospital was planning to introduce an innovative application of
tele-technology with the launch of Àpollo Heartline' a simple
device
connecting to subscriber with a heart centre and giving expert
opinion
instantly round-the-clock via telephone lines.
- The hospital has expanded its services to encompass preventive

healthcare in the country.
- The Company has joined hands with the WHO with its mission to
eradicate Tuberculosis in India. The Company has identified
washermanpet area in Chennai for T.B. detection and iradication On
world No. Tobacco day, an asthma clinic and counselling centre for
smokers was launched.
- 10,70,400 No. of Equity shares allotted on conversion of warrants

issued to promoters on preferential basis.
1996
- The Apollo Cancer Hospital Chennai, introduced specialised,

effective
and innovative cancer management offering a host of treatment to
many
kinds of cancer.
- With take over of Orient Hospital, Madurai and Pinakini Hospital,
28
Nellore, the Company had added 300 more beds.
- Apollo college of nursing at Keezhkattalai was inaugurated on 21st

October.
- Home health care facility was launched at Chennai, where the

registered members will be provided medical consultation,
treatments,
preventive health check up at their door-steps. The other services
include, polio drop DPT vaccinations to children, nasal oxygen
therapy,
antienata check ups etc.
1997
- Apollo Hospitals has signed a memorandum of understanding with

Jardine of UK for successful adaptation of the healt maintenance
organisations (HMO) concept for the first time in India by
August-September.
- Apollo Hospitals launched a weekly health awareness programme,

Apollo
Health File, on the Telugu satellite channel Gemini.
1998
- Apollo Hospitals Ltd has signed a memorandum of understanding with

the Sri Lankan Government to build a super-speciality hospital in
Colombo. This is the first time the speciality hospital group is
venturing abroad with investments.
1999
- Apollo Hospital Enterprises Ltd has launched its first poison

information centre in the south.
- Apollo Hospitals is merging its group companies Deccan Hospitals,

Hyderabad, and Indian Hospital Corporation, Chennai, along with
Sindhoori Hotels, Chennai, to emerge as the leading healthcare unit
in
Asia.
2000
- The Company has approved to issue up to 20,00,000 No. of equity

shares of Rs.10 each on private placement basis to FIIs, MFs, FIs
29
and
banks etc, at or above the price calculated in accordance with SEBI
Guidelines.
- Apollo Hositals has announced the launch of its `Mednet' services

for
the medical fraternity in the country in collaboration with Wipro,
NIIT, Satyam Online, ICICI and Citadel Health Ltd.
- Indian Oil Corporation Ltd (IOC) has signed a memorandum of

understanding (MoU) with healthcare major Apollo Hospitals for
setting
up pharmaceutical general stores at the convenience stores of Indian
Oil petrol stations.
- The company has successfully placed 20 lacks equity shares with

various FIIs at a premium of Rs. 355/- per share.
- The Company placed 20 lacs No. of equity shares with various FIIs
at
a premium of Rs 355/- per share.
- The Apollo Hospitals has lined up a string of equity tie-ups to

fuel
an agressive diversification plan in various healthcare-related
areas.
- Apollo Hospitals Group and Royal College of General Practioners

have
entered into a tie-up to lauch three programmes for revalidating and
updating the knowledge of primary healthcare physicians in India.
- Apollo Hospitals has launched a personal accident insurance card.
- Apollo Hospitals launched the Àpollo, the Italian Dental Cliniq'

in
the city.
- Apollo Hospitals has expanded its presence in healthcare with the

launch of Apollo, the Italian Dental Cliniq.
- The Delhi-based NIIT Ltd. and Apollo Hospitals Group are jointing
hands to create `MeDVarsity', an Internet-based virtual medical
university to cater to the medical fraternity.
- The Company has join the big league of pharma companies and
30
research
labs to garner a major share in the booming high-end biotechnology
research business.
- Apollo Hospitals, the Chennai-based Rs 3,000 crore healthcare

giant
has inked an in-principle deal with the Singapore-based Parkway
group,
the Singapore-based Parkway group, the global leader in healthcare
business, to spread its wings to AfroAsian countries.
2001
- The Chennai-based Apollo Hospitals Enterprise has signed a

memorandum
of understanding with the government of Mauritius, appointing the
Apollo Hospitals Group as the preferred healthcare provider for all
the
citizens of Mauritius.
- Apollo Hospitals has entered into a tie-up with a local hospital

initially to deliver mother and child care.
2002
- Apollo Hospitals Enterprise Ltd has informed that Mr Atul Punj has
resigned from the office of the Director of the company. Mr
Habibullah
Badsha has been co-opted to the Board as an Additional Director.
-The Apollo Hospitals Enterprises, has taken over the 50.26 per cent
stake held by the Gauri Prasad Goenka in the Duncan Gleneagles
Hospital for the amount of Rs 3 crore.
- Apollo Hospitals Enterprises Ltd (AHEL) inaugurated the first of

its hospitals in the 'First Med hospitals' chain at Chennai. The
hospital is situated on the Poonamallee high Road and will provide
emergency and trauma care to the neighbouring areas. The hospital
will also have a multi-specialty acute care centre. The hospital will
have over 25 specialties, including cardiology, neurology, nephrology,
urology, orthopaedics and radiology.
-Apollo Hospitals Enterprise Ltd has informed BSE that they have
completed the sale transaction of 1,58,63,504 equity shares of Duncan
Gleneagles Hospitals Ltd (DGHL) Kolkata (unlisted Company), previously
held by Duncans Industries Ltd and its associates and the said shares
31
have been registered in the name of company and its nominees in the
books of DGHL.
2003
-Apollo Hospitals, in tie up with ICICI Lombard has unveiled an

accident insurance product.
-Apollo launches a dedicated paediatric cardiac facility for

children.
-Apollo unveils a telemedicine facility at the government General

Hospital, Eluru.
-Apollo bags an order worth million contract to manage a hospital

in Malaysia.
-Apollo Hospital sets up a 24X7 Chest Pain Clinic to offer round the
clock and immediate
access to quality heart care during the critical period.
-Apollo hospital informs that it has been recognised as 'Superbrand

of India' in the
Healthcare sector.
-The Sagar Apollo Hospital becomes the first hospital in the country
to adopt
electronic processing of Insurance claims.
-AFTL ties up with Apollo for health awareness campaign
-The hospital tied up with SBI to extend loan assistance for

hospital treatment.
2004
-The Apollo Group of Hospitals has entered into a major technology

partnership with the Defence Research & Development Organisation
(DRDO) to leverage mutual strengths
-Apollo Hospital inks pact with Austrian institute
- Apollo Hospitals launched WE (Women's Health Empowerment) scheme

offering them an exclusive Web site and a health card.
-opened a clinic with a 24-hour pharmacy and an ambulance service in
32
the R.A. Puram suburb of Chennai
-Ms Shobana Kamineni, KEI Group - Apollo Hospitals Enterprises Ltd

has been elected as Chairperson of the CII-Southern Region for the
year 2004-05
-Apollo Hospitals has announced the launch of the Àpollo National

Heart Plan' comprising three components of the preventive mode, a
disease management programme (DMP) and the actual treatment and
surgery component
-Apollo Hospitals group on August 09 said it has entered into a

partnership to provide advisory services to Hayel Saeed Anam (HSA)
group, Yemen
2005
-Mundra SEZ forges alliance with Apollo Hospital
-Apollo Hospitals forges alliance with Histotem
-Apollo Hospital Delhi gets JCI certification for its quality of care
in a safe environment
-Apollo Hospitals join hands with Johns Hopkins
2006
-Apollo Hospitals Enterprise Ltd has informed that Dr. Prathap C

Reddy, Chairman of the Apollo Hospitals Group singed the Joint
Venture Agreement with Deutsche Krankenversicherung AG (DKV) on
October 11, 2006.
-Taj, Apollo to forge alliance for medical tourism
-Apollo Hospitals to launch mobile service in rural areas
2007
-Apollo Hospitals rolls out new scan method
-Apollo Hospitals acquires Zavata
-Apollo Hosp forges into health insurance biz
2008
33
Management - Apollo Hospital
Name Designation
Prathap C Reddy Executive Chairman
Suneeta Reddy Joint Managing Director
Shobana Kamineni Executive Director
Deepak Vaidya Director
Khairil Anuar Abdullah Director
Rafeeque Ahamed Director
Sandeep Naik Director
G Venkatraman Director
Name Designation
Preetha Reddy Managing Director
Sangita Reddy Executive Director
T K Balaji Director
Habibullah Badsha Director
Michael Fernandes Alternate Director
Raj Kumar Menon Director
N Vaghul
Company Background - Apollo Hospitals Enterprises

Industry Name Hospitals & Medical Services
House Name Apollo Hospital Group
Collaborative Country Name N.A.
Joint Sector Name N.A.
Year Of Incorporation 1979
Year Of Commercial Production N.A.
Regd. Office
Address #19, Bishop Gardens,, Raja Annamalaipuram
District Chennai (Madras)
State Tamil Nadu
Pin Code 600028
Tel. No. 044-28290956,044-28293896
Fax No. 044-28290956
Email : investor.relations@apollohospitals.com Internet : http://www.apollohospitals.com
Auditors Company Status

S Vishwanathan N.A.
34
IV. Data Analysis and Interpretation
Comparative Income statement for the years 31-3-2006 & 07 ( Rs in Crores )
Absolute Percentage
increase or increase or
Particulars 2006 2007
decrease in decrease in
2007 2007
A. Net Sales 769.59 900.24 130.65 16.98
769.59 900.24 130.65 16.98
C. Less: Operating expenses
Raw materials 372.87 456.71 83.84 22.49
Power & fuel cost 27.12 25.21 1.91 7.04
Employee cost 112.10 129.77 17.67 15.76
Other Manufacturing Expenses 8.94 10.72 1.78 19.91
Selling and administration expenses 101.91 163.46 61.55 60.40
Miscellaneous expenses 22.75 18.20 4.55 20.00
Total operating Expenses 645.69 804.07 158.38 24.53

D. Operating Profit (A-B) 123.90 110.90 13.00 -10.49
E. Add of the income 9.38 88.62 79.24 -844.78
PBDIT 133.28 182.99 49.71 37.30
(-) Interest 24.81 17.11 -7.70 31.00
PBDT 108.47 165.88 57.41 52.92
(-) Depreciation 37.83 40.75 -2.92 7.72
70.64 125.13 54.49 77.14
(-) Other Written of 3.30 2.70 -0.60 -18.18
(-) Extra- ordinary items 6.32 3.35 -2.97 47.00
written of
PBT 61.02 119.08 58.06 95.15
Less Tax 23.84 29.21 5.37 22.53
Net Profit 37.18 89.87 52.69 141.72
35
Less: Equality dividend 22.77 25.82 3.05 13.40
Less: Corporate Tax 3.19 3.93 0.74 23.20
Profit after appropriations 11.22 60.12 48.90 435.83
Interpretation:
1.During the year 2007 sales are increase by 16.98 % and total operating expenses 24.53% this
leads to decrease in operating profit by – 10.49%
2.There is an increase in PBT by 95.15% and net profit 142.72% in 2007.
36
Comparative Income statement for the years 31-3-2007 & 08 ( Rs in Crores )
Absolute Percentage
2007 2008 increase or increase or
Particulars
Rs Rs decrease in decrease in
2008 2008
A. Net Sales 900.24 1151.49 251.25 27.91
900.24 1151.49 251.25 27.91
B .Less: Operating expenses
Raw materials 456.71 585.01 128.30 28.09
Power & fuel cost 25.21 28.81 3.60 14.28
Employee cost 129.77 179.90 50.13 38.63
Selling and administration 163.46 202.56 39.10 23.92
expenses 18.20 29.37 11.17 61.37
Miscellaneous expenses
C .Operating Profit (A-B) 96.17 110.90 14.57 15.13
D .Add of the income 86.82 88.42 1.60 1.84
PBDIT 182.99 199.32 16.33 8.92
(-) Interest 17.11 26.37 9.26 54.12
PBDT 165.88 172.95 7.07 4.26
(-) Depreciation 40.75 51.68 10.93 26.82
125.13 121.27 -3.86 -3.08
(-) Other Written of 2.70 2.29 -0.41 -15.19
(-) Extra- ordinary items 3.35 1.36 --1.99 -59.40
written of
PBT 119.08 117.62 -1.46 -1.23
Less Tax 29.21 36.05 +6.84 23.41
Net Profit 89.87 81.56 -8.31 -9.24
Profit after appropriation 60.12 40.37 -19.75 32.85
37
. Interpretation:
1.During the year 2008 sales are increase by 27.91 % and total operating expenses 29.42%
and operating profit increased by 15.13%
2. There is decrease in PBT by -1.23% and net profit 9.24% in 2008.
38
Comparative Income statement for the years 31-3-2008 & 09 Rs in Crores
Absolute Percentage
Particulars
2009 2009
A. Net Sales 1151.49 1531.07 379.58 32.96
1151.49 1531.07 379.58 32.96
Raw materials 585.01 791.67 206.66 35.21
Power & fuel cost 28.81 31.94 3.13 10.86
Employee cost 179.90 240.62 60.72 33.75
expenses

D. Operating Profit (A-B) 110.90 133.72 22.82 20.58
E. Add of the income 88.42 94.71 6.29 7.11
PBDIT 199.32 228.43 29.11 14.60
(-) Interest 26.37 30.09 3.72 14.11
PBDT 172.95 198.34 25.33 14.68
(-) Depreciation 51.68 63.22 11.54 22.33
121.27 135.12 13.85 11.42
(-) Other Written of 2.29 0.75 1.54 67.25
(-) Extra- ordinary items 1.36 - 1.36 100.00
written of
PBT 117.62 134.37 16.75 14.24
Less Tax 36.05 49.11 12.95 35.92
Net Profit 81.57 85.37 3.80 4.66

39
Profit after appropriations 40.38 38.38 -2.00 -4.95
Interpretation:
1.During the year 2009 sales are increase by 39.26 % and total operating expenses 34.28% and
operating profit increased by 20.58%
2.There is an increase in PBT 14.24%% and net profit 4.66 in 2009
40
Comparative Income statement for the years 31-3-2009 & 10 Rs in Crores
Absolute Percentage
increase or increase or
Particulars 2009 2010
decrease in decrease in
2010 2010
A. Net Sales 1531.07 1920.65 389.58 25.44
1531.07 1920.65 389.58 25.44
Raw materials 791.67 979.06 187.39 23.67
Power & fuel cost 31.94 38.26 6.32 19.79
Employee cost 240.62 308.98 68.35 28.41
expenses

PBDIT 228.43 323.07 94.64 41.43
(-) Interest 30.09 49.72 19.63 65.24
PBDT 198.34 273.35 75.01 37.80
(-) Depreciation 63.22 74.95 11.73 18.55
135.12 198.40 63.28 46.83
(-) Other Written of 0.75 0.75 - -
(-) Extra- ordinary items 0.00 0.08 0.08 100
written of
PBT 134.37 197.57 63.20 47.03
Less Tax 49.00 67.54 18.54 37.84
Net Profit 85.37 130.03 44.66 52.31
Less: Equality dividend 4016 43.25 3.09 7.69
41
Interpretation:
2.There is an increase in PBT 47.03%% and net profit 52.31% in 2009
42
Comparative Income statement for the years 31-3-2010 & 11 ( Rs in Crores)
Absolute Percentage
Particulars
2011 2011
A. Net Sales 1920.65 2463.66 543.01 28.27
1920.65 2463.66 543.01 28.27
Raw materials 979.06 1275.23 296.17 30.25
Power & fuel cost 38.26 47.39 9.13 23.86
Employee cost 308.97 385.65 76.68 24.81
Other Manufacturing Expenses 22.02 19.80 -2.22 -10.08
expenses

PBDIT 323.07 425.95 102.88 31.84
(-) Interest 49.72 69.89 20.17 40.57
PBDT 273.35 356.06 82.71 30.26
(-) Depreciation 74.95 94.17 19.22 25.64
198.40 261.89 63.49 32.00
(-) Other Written of 0.74 0.58 0.17 22.67
(-) Extra- ordinary items 0.08 1.36 1.28 -1600
written of
PBT 197.57 259.95 62.38 31.57
Less Tax 67.54 88.65 21.11 31.26
Net Profit 130.03 171.30 41.27 31.74
43
Interpretation:
2. There is an increase in PBT 31.57.%% and net profit 46.91% in 2011
44
Comparative balance sheet as on 31-3-2006 & 07 Rs in Crores
Absolute Percentage
2006 2007
Particulars increase or increase or
Rs Rs
decrease in 2007 decrease in 2007
A. Source of funds
50.60 51.60 1.04 2.06
Equity share capital
567.44 695.59 128.15 22.58
Reserves
Net Worth
618.04 747.23 129.19 20.90
B. Long term loans -15.85

252.03 212.09 -39.94
Secured loans -52.70
30.76 14.55 -16.21
Un Secured Loans
282.79 226.64 -56.15 -19.89
C. Current Liabilities and
Provisions
172.61 199.78 27.17 15.74
Current Liabilities
90.03 91.80 1.77 1.97
Provisions
262.64 291.58 28.94 11.02
D. Total Liabilities
1163.47 1265.45 101.98 8.77
Application of fundamentals
E. Fixed assets
Gross Block 805.81 679.61 -126.20 15.66
Less: depression 202.40 237.22 34.82 17.20
603.41 442.39 161.02 26.69

Add: Capital work in Process 66.89 187.64 120.75 180.52
Add: Investments 166.33 220.28 53.95 32.44
Total Fixed assets 836.63 850.31 13.68 1.64
45
F. Current Assets &
Loans and advances
Inventories 48.38 56.97 8.59 17.75
Sunday debtors 90.34 102.74 12.40 13.73
Cash & Bank Balances 3.06 48.03 12.97 36.99
Loans & Advances(including 234.06 206.39 -27.67 -11.82
fixed deposits) 407.84 414.13 6.29 1.54
1163.47 1265.45 101.98 8.77
Total Assets
Interpretation:
1.During the year 2007 Net worth( shareholders funds) increased by 20.90% and long term loans
decreased by -19.89%
2.Total current liabilities increased by 11.02%
3.Total fixed assets are increased by 1.64% it is evident that the firm purchased fixed assets from
share holders funds.
4. Total current assets in creased by 1.54% but loans and advances decrease by -11.82%
46
Comparative Balance Sheet as on 31-3-2007 and 2008 Rs in Crores
Absolute
Percentage
2007 2008 increase or
Particulars increase or
Rs Rs decrease in
decrease in 2008
2008
A. Source of funds
Equity share capital 51.64 58.64 7.00 13.56
Reserves 695.59 1226.06 530.47 78.26
Net Worth 747.59 1284.70 537.47 71.93
B. Long term loans
Secured loans 212.90 385.69 173.60 81.85
Un Secured Loans 14.55 13.56 0.99 6.80
226.64 399.25 172.61 76.16
Provisions
Current Liabilities 199.78 219.68 19.90 9.96
Provisions 91.80 141.48 49.68 54.12
291.58 361.16 69.58 23.86
D. Total Liabilities (A+B+C) 1265.45 2045.11 779.66 61.61
E. Fixed assets
Gross Block 679.61 989.10 309.49 45.54
Less: depression 237.22 288.23 51.01 21.50
442.39 700.87 258.48 58.42

Add: Capital work in Process 187.64 75.33 -111.67 -60.00
Add: Investments 220.28 612.78 392.50 178.18
F. Current Assets &
47
Loans and advances
Inventories 56.97 83.85 26.88 47.18
Sunday debtors 102.74 132.73 29.99 29.19
Loans & Advances 206.39 331.30 145.83 70.66
352.22 20.92
Total current assets 414.13 656.13 242 58.44

Total fixed assets 1265.45 2045.11 779.66 61.61
Interpretation:
increased by 76.16%
3.Total fixed assets are increased by 63.35% it is evident that the firm purchased fixed assets
from both share holders funds and long term loans
4. Total current assets in creased by 58.44% but cash and bank balance increased drastically by
81.82%
48
Absolute Percentage
2008 2009
Rs Rs
A. Source of funds
Reserves 1226.06 1400.93 174.87 14.26
Net Worth 1284.75 1461.17 176.42 13.73
B. Long term loans
Secured loans 385.69 531.04 145.35 37.69
Un Secured Loans 13.56 14.22 0.33 4.87
399.25 545.26 146.01 36.55

Provisions
Provisions 141.48 198.23 56.75 40.11
361.17 436.15 74.94 20.75
E. Fixed assets
Gross Block 989.10 1183.02 193.92 19.61
Less: depression 288.23 351.30 63.07 21.88
700.87 834.72 130.85 18.67

Add: Investments 612.78 560.56 52.22 8.52
F. Current Assets &
49
Loans and advances
Inventories 83.85 113.73 29.88 35.63
Sunday debtors 132.73 164.22 123.73 93.22
Cash & Bank Balances 87.33 55.11 -32.22 36.89
Loans & Advances 352.28 464.79
656.19 797.85 141.66 21.59
2045.17 2442.58 397.41 19.43
Interpretation:
increased by 36.55%
4. Total current assets in creased by 21.59% but sundry debtors increased drastically by 93.22%
50
Absolute Percentage
2009 2010
Rs Rs
A. Source of funds
Reserves 1400.93 1591.69 190.76
Net Worth 1461.17 1653.47 192.30 13.16
B. Long term loans
Secured loans 531.04 569.09 38.05 7.17
Un Secured Loans 14.22 219.79 205.57 1445.60
545.26 788.88 243.62 44.68
Provisions
Provisions 198.23 262.60 67.37 33.99
436.11 674.26 238.15 54.60
E. Fixed assets
Gross Block 1183.02 1526.48 343046 29.03
Less: depression 351.30 423.06 71.76 20.42
831.72 1103.42 271.70 32.67

51
Add: Investments 560.56 386.96 -173.60 30.97
F. Current Assets &
Loans and advances
Inventories 113.73 138.62 24.89 21.89
Sunday debtors 164.22 209.82 143.40 87.32
Loans & Advances 464.75 790.66
797.81 1322.52 524.71 65.77
Interpretation:
increased by 44.68%
3.Total fixed assets are increased by 9.08% it is evident that the firm purchased fixed assets from
both share holders funds and long term loans
4. Total current assets in creased by 65.77% but sundry debtors increased drastically by 87.32%
52
Absolute Percentage
2010 2011
Rs Rs
A. Source of funds
Preference share capital - 68.51 68.51 100.00
Reserves 1591.69 1768.08 176.39 11.08
Net Worth 1653.47 1898.95 245.48 14.86
B. Long term loans
Secured loans 569.09 648.28 79.19 13.92
Un Secured Loans 219.79 190.52 -29.27 13.32
788.88 838.80 49.92 6.33
Provisions
Provisions 262.60 271.11 8.51 3.25
674.26 676.25 1.99 0.30
E. Fixed assets
Gross Block 1526.48 1777.38 250.90 16.44
Less: depression 423.06 514.86 91.80 21.70
1103.42 1262.52 342.70 31.06

Add: Capital work in Process 303.71 379.56 75 24.94
Add: Investments 386.96 467.03 85 20.69
53
Total Fixed assets 80.07
1794.09 2109.11 315.02 17.56
F. Current Assets &
Loans and advances
Inventories 138.62 155.70 170.80 12.32
Sunday debtors 209.28 280.50 71.22 34.03
Cash & Bank Balances 183.42 107.01 -76.41 41.66
Loans & Advances 791.20 761.68 29.52 3.73
1322.52 1304.89 -17.63 1.33
Interpretation:
increased by 6.33%
4. Total current assets increased by 1.33% but cash and bank balance decreased drastically by
46.11%
54
V. Summary of findings and suggestions
To keep within reasonable limit the main findings of the study are presented below:
1.The percentages of increase in sales over previous year were in the order of in 2007: 16.98%,
In 2008: 27.91%, 2009 32.96%, 2010 25.44% , 2011 28.3275
2.The percentages of increase in operating expenses were in the order of 2007:2.53%, 2008:
29.42%, 2009: 34.28%, 2010: 23.94% and in 2011: 26.52%
3.There are ups and downs in the net profit were in the order of 2007: 141.42%, but the firm
incurred loss in 2008: -9.24%,,2009: 4.96%, 2010: 52.31% and in 2011:34.74%
4.The net worth increased in the order of 2007: 20.90%, 2008: 76.16%, 2009:14.86%,
2010:13.16 and in 2011:14.86% the increase is highest in 2008.
5.There are ups and downs in the long-term liabilities, the long term liabilities decreased in 2007
By 19.89%, but they are increased by 76.16% in 2008.the increase in subsequent years were
2009: 36.55%, 2010; 44.66% and in 2011 is 6.33
6.The Fixed assets increase in the order of 2007; 1.64, 2008: 63.35%, 2009: 17.56%, 2010:9.08%
2011; 17.56%
55
7.It is evident that fixed assets are purchased both from long term liabilities and ownership
funds.
8.The Current assets and advances are in creased by in the order of 2007:1.54% 2008: 58.44%
2009 by 19.53% and increased in 2010 by 65.77% but decreased in 2011 1.33%
9.The current liabilities are increased in the order of 2007 8.77%, 2008: 23.86%, 2009: 20.75%
2010: 54.6% and 2011 is 0.30.
10.It is evident that the firm has positive working capital
Suggestions
1. It is advised the firm to increase profitability by reducing operating none operating expenses
by implementing cost control techniques like standard costing
Budgeting etc. and increasing sales by offers like bundle packages, trade discounts etc.
2. The firm is advised to improve liquidity position by increasing current assets level and
reducing current liabilities.
3. As there is substantial increase in fixed assets the company is required to increase the working
capital turn over in future.
4. The company purchased fixed out of long term debts. It is advised the firm to reduce much
dependence on debt capital.
56
BIBLIOGRAPHY
RK SHARMA AND SASI GUPTA: Managent accountancy, Kalyani publishers , 2005
SN.Meshwari: MANEGENT ACCOUNTING AND FINANCIAL CONTROL, SULTHAN CHAND 2010
Khan. MY &Jain PK: Financial Management 3rd Edition: New Delhi, Tata Graw hills, 2002.
Prasanna Chandra: Financial management 4th Edition. New Delhi,
Tata McGraw hills, 2002
IM Pandey: Financial management- VIkas publishing house-2001
57
Apollo Hospitals Enterprises
Consolidated Balance Sheet ------------------- in Rs. Cr. -------------------
Mar '11 Mar '10 Mar '09 Mar '08 Mar '07
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 130.86 61.78 60.24 58.69 51.64
Equity Share Capital 62.36 61.78 60.24 58.69 51.64
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 68.51 0.00 0.00 0.00 0.00
Init. Contribution Settler 0.00 0.00 0.00 0.00 0.00
58
Preference Share Application
0.00 0.00 7.71 14.57 6.86
Money
Employee Stock Opiton 0.00 0.00 0.00 0.00 0.00
Reserves 1,768.08 1,591.69 1,400.93 1,226.06 695.59
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 1,898.94 1,653.47 1,461.17 1,284.75 747.23
Secured Loans 648.28 569.09 531.04 385.69 212.09
Unsecured Loans 190.52 219.79 14.22 13.56 14.55
Total Debt 838.80 788.88 545.26 399.25 226.64
Minority Interest 24.88 24.14 26.54 33.84 34.18
Policy Holders Funds 0.00 0.00 0.00 0.00 0.00
Group Share in Joint Venture 189.04 125.02 168.10 156.06 146.85
Total Liabilities 2,737.74 2,442.35 2,006.43 1,684.00 973.87
Application Of Funds
Gross Block 1,777.38 1,526.48 1,183.02 989.10 679.61
Less: Accum. Depreciation 514.85 423.06 351.30 288.23 237.22
Net Block 1,262.53 1,103.42 831.72 700.87 442.39
Capital Work in Progress 379.56 303.71 252.45 75.33 187.64
Investments 467.03 386.96 560.56 612.78 220.28
Inventories 155.70 138.62 113.73 83.85 56.97
59
Sundry Debtors 280.05 209.28 164.22 132.73 102.74
Cash and Bank Balance 107.01 183.42 55.11 87.33 48.03
Total Current Assets 542.76 531.32 333.06 303.91 207.74
Loans and Advances 565.58 535.82 370.55 280.57 177.74
Fixed Deposits 51.99 112.67 24.17 20.92 19.15
Total CA, Loans & Advances 1,160.33 1,179.81 727.78 605.40 404.63
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 405.14 411.66 237.88 219.69 199.78
Provisions 271.11 262.60 198.23 141.48 91.80
Total CL & Provisions 676.25 674.26 436.11 361.17 291.58
Net Current Assets 484.08 505.55 291.67 244.23 113.05
60
Apollo Hospitals Enterprises
Profit & Loss account ------------------- in Rs. Cr. -------------------
Income
Sales Turnover 2,331.96 1,825.78 1,457.98 1,123.81 891.01
Excise Duty 0.00 0.00 0.00 0.00 0.00
Net Sales 2,331.96 1,825.78 1,457.98 1,123.81 891.01
Other Income 17.61 29.41 14.62 26.13 40.53
Stock Adjustments 0.00 0.00 0.00 0.00 0.00
Total Income 2,349.57 1,855.19 1,472.60 1,149.94 931.54
Expenditure
Raw Materials 0.00 0.00 0.00 0.00 0.00
Power & Fuel Cost 0.00 0.00 0.00 0.00 24.82
Employee Cost 357.20 285.34 219.86 167.43 126.66
Other Manufacturing Expenses 1,298.75 1,014.60 825.26 635.45 478.30
Selling and Admin Expenses 227.08 177.43 151.11 116.01 99.41
Miscellaneous Expenses 68.00 62.23 39.99 28.35 18.04
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
Total Expenses 1,951.03 1,539.60 1,236.22 947.24 747.23
61
Operating Profit 380.93 286.18 221.76 176.57 143.78
PBDIT 398.54 315.59 236.38 202.70 184.31
Interest 58.64 38.77 19.64 19.99 16.52
PBDT 339.90 276.82 216.74 182.71 167.79
Depreciation 70.26 54.31 43.92 36.75 30.80
Other Written Off 0.33 0.34 0.58 0.87 1.37
Profit Before Tax 269.31 222.17 172.24 145.09 135.62
Extra-ordinary items 1.36 0.00 0.00 -1.33 -3.35
PBT (Post Extra-ord Items) 270.67 222.17 172.24 143.76 132.27
Tax 88.96 70.20 54.17 42.02 32.21
Reported Net Profit 181.72 151.96 118.07 101.75 100.07
Total Value Addition 1,951.03 1,539.60 1,236.22 947.23 747.23
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 46.77 43.25 40.16 35.21 25.82
Corporate Dividend Tax 7.59 7.18 6.83 5.98 3.93
Per share data (annualised)
Shares in issue (lakhs) 1,247.11 617.85 602.36 586.86 516.39
Earning Per Share (Rs) 14.57 24.60 19.60 17.34 19.38
Equity Dividend (%) 75.00 70.00 65.00 60.00 50.00
Book Value (Rs) 136.61 249.54 226.30 208.48 144.56
62

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Comparative Statements

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I.

Introduction and methodology

Statements we mean two statements :

Significance of the study

 To study changes in Operating by comparative analysis

Scope of the study

4. No primary data is used

MEANING OF FINANCIAL STATEMENT

.TYPES OF FINANCIAL STATEMENTS

A complete set of financial statements consists of:

1. Income Statement or profit and Loss Accounts.

2. Balance Sheet (Position Statement)

Nature of Financial Statement

Accounting conventions imply certain accounting principles developed over time by

Objectives of Financial Statements

1. It provides reliable financial information about economic resources and obligations of a

3. It provides reliable information about changes in net resources (resources less

4. It provides financial information that helps in estimating the earning potential of a

Characteristics of Ideal Financial Statements

6. Facilitates comparison: The financial statement should facilitate all sorts of

8. Promptness: The financial statements should be prepared and presented immediately at

Importance of Financial statements

Financial statements are largely useful to management, investors, creditors, bankers,

2. As a basis for fiscal policy.

3. To determine the legality of dividends.

4. As a guide to wise dividend action.

5. As a basis for granting credit.

6. As informative for prospective investors in an enterprise.

7. As a guide to the value of investment already made.

8. As an aid to government supervision.

9. As a basis for price or rate regulation.

10. As a basis for taxation.

Parties are interested for financial statement analysis

a) To assess the tax liability of the concern.

b) To study the economic situations of the country.

d) To frame and amend various laws for the regulations of business.

Limitations of Financial Statements

1. Only Interim Report

The various steps involved in financial analysis are:

2. To highlight important relationships by arranging the information contained in the

3. To interpret important relationships and give explanations of the importance.

Types of Financial Analysis

External Analysis Internal Analysis Horizontal Analysis Vertical Analysis

Tools and Techniques of Financial Analysis

A host of methods or techniques is used to study the relationship between different

1. Comparative Financial Statements

5. Funds flow Analysis

6. Cash Flow Analysis

Comparative Financial Statements Analysis

Comparative Financial Statements are statements of financial position at different periods

(i) Balance Sheet and

(ii) Income Statements

Comparative Balance Sheet

Guidelines for Analysing Comparative Balance Sheet

(i) The current financial position and liquidity positions

(ii) The long-term financial position and\

(iii) The profitable of the concern.

Comparative Income Statement Analysis

Guidelines for Analysing Income Statement Analysis

The analysis of income statement involves the following steps:]

Factors Attracting Corporate In the Healthcare Sector

Fortis Health care