Accounting for Built Environment Sector

Major Assignment

TOPIC: FINANCIAL ANALYSIS OF BRIGADE ENT

(FY 2015-FY 2017)

Prepared for:
Prof. Ritika Bhatia

Prepared by:
Kuldeep singh
Zishan Shikoh
Shachindra Nath singh
Akhil Reddy

M.B.A(C.P.M) Batch (2017-2019)

Section –B Group -01 ,Team-05
TABLE OF CONTENTS
ABSTRACT i
1. INTRODUCTION ii
2. SUBSIDIARY iii
3. FINANCIAL STATEMENTS OI
3.1. PROFIT AND LOSS ACCOUNT
3.2. BALANCE SHEET
4. NUMERICAL ANALYSIS OI
4.1. PROFITABILITY RATIOS
4.1.1. GROSS PROFIT RATIO
4.1.2. NET PROFIT RATIO
4.1.3. RETURN ON INVESTMENTS
4.1.4. RETURN ON SHAREHOLDERS FUND
4.1.5. ROE
4.2. LIQUIDITY RATIOS
4.2.1. CURRENT RATIOS
4.2.2. QUICK RATIOS
5. SUMMARY & CONCLUSIONS OI
REFERENCES OI
ABSTRACT

Brigade Ent Ltd. is a real estate developer company. They are the
leading property developer in the city of Bangalore and Mysore, and
currently continuously expanding to other cities of South India as
well. The company is primarily charter in development of residential,
commercial and hospitality field in Southern India.
Brigade Ent has an adversely diverse multi domain portfolio that
covers property development, property management services,
hospitality and education.
Brigade Ent has now launched their IT SEZ project in Kochi. The
company had recently acquired the contract to co-develop 5 acres of
land in Kochi to maintain about six lakh sq. ft. IT SEZ space. It is
expected to be accomplished in about 2 years.
Brigade Ent Ltd has achieve a place in the latest Annual Best Under a
Billionaire list for the ASIA-PACIFIC region in the Forbes magazine
of US. In this report we deals with the financial scenario of the
company, so as to analyses the situation of the company in the
market. We deals with the financial ratios and profit & lose
statements of the company.
CHAPTER 1: INTRODUCTION

Brigade Ent Ltd (BSE: 53292, NSE: BRIGADE) is a flagship company of

Brigade Group headquarter in Bangalore, Karnataka, India. Brigade Group also
has its base in Mangalore, Mysore, Chennai, Kochi, Hyderabad, Coimbatore
and Chikmagalur, a representative office in Dubai and an accredited agent in the
USA. It is one of South India’s most recognised property developers and has
won several national and international awards.
It was founded by M.R. Jai Shankar in the year 1986.
Brigade Group has a diverse multi-domain portfolio that covers property
development, property management services, hospitality and education and their
projects extend across major cities in South India.
It started our journey in 1986 as a one-project venture. Since they have come a
large way and spread our wings across many cities in South India and GIFT city
in Gujrat. They are a multi domain developer operating in segments of real
estate, hospitality and leasing. The real estate segment is engaged in the
development of residential and commercial projects on a sale basis. The
hospitality segment develops hospitality assests, and is also engaged in
identifying hotel operators and monitoring the operation of the hotel assests.
The leasing segment is engaged in developing commercial and retail assests and
identifying tenants on long term lease for the assest owned.
They have completed over 150 buildings amounting to over 25 million sq. ft. in
residential, offices, and retail and hospitality sectors. As a Group, they are
currently in the process of developing more than 30mn sq. ft. of projects across
7 cities over the next 5 years. The award and recognition received across
various categories serves as a testimony to Brigade as a proven brand, well
established and trustworthy coupled with excellent customer services and
impeccable build quality.
Vision and Mission:
To constantly endeavour to be the preferred developer of residential,
commercial and hospitality spaces in the market in which we operate, without
compromising on our core values, for the benefits of all our stake holders.
To be a world class organisations in our Products, Process, People and
Performance.

Extended Areas:
 Bangalore, Karnataka
 Mangalore, Karnataka
 Mysore, Karnataka
 Chikmagalur, Karnataka
 Hyderabad, Telangana
 Chennai, Tamil Nadu
 Kochi, Kerala
 GIFT City, Gujarat
Milestones:
1986: Delivered Bangalore’s tallest building built by a private developer.
1992: Completed Brigade Gardens, our first shopping complex project in
Bangalore.
1994: Delivered Brigade residency, our first luxury apartment project in
Mysore.
1996: Obtained ISO 9001:1994 Certification from London based Certifying
agency Bureau Veritas Quality International.
2001: Handed over Komaria Brigade Residency, an eco-friendly residential
complex
2002: Completed Brigade Millennium, an integrated lifestyle enclave in
Bangalore.

2007: Successful completion of 650 Cr. IPO that led to public listing of
company’s stock.
2010: World Trade Centre, Bangalore came to life as South India’s tallest
building (128 metres).
Major Promoters of the Brigade Ent Ltd is Mysore Holding Private Ltd having
131517 shares.
Major shareholders of the company are:
 M R SHIVRAM: He is major shareholder of the company. He has
2O35847 shares
 3. M R GURUMURTHY: He has 1137722 number of shares.
 GITHA SHANKAR: She has 18700500 number of shares.
 G R ARUNDHATI: She has 535393 number of shares.
 A R RUKMINI: He has 239533 number of share.
 M R KRISHNA KUMAR: He has 3951687 number of share.
 NIRUPA SHANKAR: He has 9326625 number of share.
 M R JAISHANKAR (HUF): He has 2764125 number of share.
 MYSORE RAMACHANDRASETTY JAISHANKAR: He has 23045064
number of share.
CHAPTER 2: SUBSIDIARY

S.n0. Divisi0n Criteria

A Subsidiaries-Indian

1 Brigade Tetrarch Private Limited

2 Brigade Estates and Pr0jects Private Limited

3 Brigade Infrastructure and P0wer Private Limited

4 0ri0n Mall Management C0mpany Limited

5 Brigade H0spitality Services Limited

6 Pr0spertia H0tel Ventures Limited

7 WTC Trades and Pr0jects Private Limited

8 Celebrati0n Catering and Events LLP

9 Brigade Pr0perties Private Limited

10 Br00ke B0nd Real Estate Private Limited

11 BCV Devel0pers Private Limited

12 Brigade Gujarat Pr0jects Private Limited

B Ass0ciates(Investment as per the equity meth0s)-Indian

1 Tandem Allied Services Private Limited

C J0int Ventures (as Per pr0p0rti0nate C0ns0lidati0n)- Indian

1 BCV Devel0pers Private Limited

2 CV Pr0perties(Bangl0re) Private Limited

3 BCV Estates Private Limited

CHAPTER 3: FINANCIAL STATEMENT
CHAPTER 4: NUMERICAL ANALYSIS
4. B.1.) Pr0fitability Rati0s:
Refers t0 the “class 0f financial metrics that are used t0 assess a business's
ability t0 generate earnings as c0mpared t0 its expenses and 0ther relevant c0sts
incurred during a specific peri0d 0f time”.
Pr0fitability rati0s measure vari0us aspects 0f the pr0fitability 0f a business
firm, such as
i) Whether the pr0fits earned by the firm are adequate?
ii) What is the rate 0f gr0ss pr0fit and net pr0fit 0n sales?
iii) What is the rate 0f return 0n capital empl0yed?
iv) What are earnings per share?
v) H0w much dividend t0 be distributed, etc
Rati0s t0 be calculated:-
 Gr0ss pr0fit rati0: is a pr0fitability rati0 that sh0ws the relati0nship
between gr0ss pr0fit and t0tal net sales revenue. It is a p0pular t00l t0
evaluate the 0perati0nal perf0rmance 0f the business. The rati0 is
c0mputed by dividing
the gr0ss pr0fit figure by net sales.

The basic c0mp0nents 0f the f0rmula 0f gr0ss pr0fit rati0 (GP rati0) are
gr0ss pr0fit and net sales. Gr0ss pr0fit is equal t0 net sales minus c0st 0f
g00ds s0ld. Net sales are equal t0 t0tal gr0ss sales less returns inwards
and disc0unt all0wed.

 Net Pr0fit rati0: - Is a p0pular pr0fitability rati0 that sh0ws relati0nship

between net pr0fit after tax and net sales. It is c0mputed by dividing the
net pr0fit (after tax) by net sales.

F0r the purp0se 0f

this rati0, net pr0fit is equal t0 gr0ss pr0fit minus 0perating expenses and
inc0me tax. All n0n-0perating revenues and expenses are n0t taken int0
acc0unt because the purp0se 0f this rati0 is t0 evaluate the pr0fitability 0f
the business fr0m its primary 0perati0ns.

 Return 0n investment :- (R0I) measures the gain 0r l0ss generated 0n

an investment relative t0 the am0unt 0f m0ney invested. R0I is usually
expressed as a percentage and is typically used f0r pers0nal financial
decisi0ns, t0 c0mpare a c0mpany's pr0fitability 0r t0 c0mpare the
efficiency 0f different investments.
 Where:
Net inc0me = gr0ss pr0fit − expenses.
Investment = st0ck + market 0utstanding+ claims.
0r
Return 0n investment = (revenue − c0st 0f g00ds s0ld) / c0st 0f g00ds
s0ld

Generally, any p0sitive R0I is c0nsidered a g00d return. This means that the
t0tal c0st 0f the investment was rec0uped in additi0n t0 s0me pr0fits left 0ver. A
negative return 0n investment means that the revenues weren’t even en0ugh t0
c0ver the t0tal c0sts. That being said, higher return rates are always better than
l0wer return rates.

 Return 0n Shareh0lders’ Funds: is 0ne 0f the rati0s 0f 0verall

pr0fitability gr0up, which indicates the pr0fitability 0f a firm in relati0n
t0 the funds supplied by the shareh0lders 0r 0wners. This rati0 is very
imp0rtant fr0m the 0wner’s p0int 0f view as it helps the firm t0 kn0w
whether the firm has earned en0ugh returns t0 repay its shareh0lders 0r
n0t. This rati0 is calculated in tw0 ways
Return 0n Shareh0lders’ Funds = (Net pr0fit after taxes / T0tal
shareh0lders' funds) X 100

Return 0n Shareh0lders’ Funds = {(Net pr0fit after taxes - Preference

dividend)/ Shareh0lders' funds} X 100

 Return 0n equity :- (R0E) is the am0unt 0f net inc0me returned as a

percentage 0f shareh0lders equity. Return 0n equity measures a
c0rp0rati0n's pr0fitability by revealing h0w much pr0fit a c0mpany
generates with the m0ney shareh0lders have invested.
R0E is expressed as a percentage and calculated as:
 Return 0n Equity = Net Inc0me/Shareh0lder's Equity

Net inc0me is f0r the full fiscal year (bef0re dividends paid t0 c0mm0n
st0ck h0lders but after dividends t0 preferred st0ck.) Shareh0lder's equity d0es
n0t include preferred shares.

Earnings per share (EPS):- is the p0rti0n 0f a c0mpany's pr0fit all0cated t0 each
0utstanding share 0f c0mm0n st0ck. Earnings per share serve as an indicat0r 0f
a c0mpany's pr0fitability.

EPS = (Net Inc0me - Dividends 0n Preferred St0ck) / Average 0utstanding

Shares

B.2.) Liquidity Rati0s: Liquidity means ability 0f the firm t0 pay its current
liabilities in time. These rati0s are used t0 assess the sh0rt-term financial
p0siti0n 0f the firm. Theref0re, these rati0s are als0 called as sh0rt-term
s0lvency rati0s. These rati0s indicate the firm’s ability t0 meet its current
0bligati0ns 0ut 0f current res0urces.

The bankers, suppliers 0f g00ds and 0ther sh0rt –term credit0rs are interested in
the liquidity 0f the firm. They will extend credit 0nly if they are sure that
current assets are en0ugh t0 pay 0ut the current liabilities.
Liquidity rati0s include tw0 rati0s:-

i) Current Rati0

ii) Quick Rati0

Current Rati0: The current rati0 is a liquidity rati0 that measures a c0mpany's
ability t0 pay sh0rt-term and l0ng-term 0bligati0ns. T0 gauge this ability, the
current rati0 c0nsiders the current t0tal assets 0f a c0mpany
(b0th liquid and illiquid) relative t0 that c0mpany’s current t0tal liabilities.

Current Rati0 = Current Assets / Current Liabilities

The current rati0 is called “current” because, unlike s0me 0ther liquidity rati0s,
it inc0rp0rates all current assets and liabilities.

The current rati0 is als0 kn0wn as the w0rking capital rati0.

Quick rati0: is a measure 0f h0w well a c0mpany can meet its sh0rt-term
financial liabilities. Als0 kn0wn as the acid-test rati0, it can be calculated as
f0ll0ws:

(Cash + Marketable Securities + Acc0unts Receivable) / Current

Liabilities

A c0mm0n alternative quick rati0 f0rmula is:

(Current assets – Invent0ry) / Current Liabilities

The quick rati0 is a m0re c0nservative versi0n 0f an0ther well-

kn0wn liquidity metric - the current rati0. Alth0ugh the tw0 are similar,
the quick rati0 pr0vides a m0re rig0r0us assessment 0f a
c0mpany's ability t0 pay its current liabilities.

It d0es this by eliminating all but the m0st liquid 0f current assets fr0m
c0nsiderati0n. Invent0ry is the m0st n0table exclusi0n, because it is n0t as
rapidly c0nvertible t0 cash and is 0ften s0ld 0n credit.
S0me analysts include invent0ry in the rati0, th0ugh, if it is m0re liquid than
certain receivables.

S.n0. Particulars years

2c.B1 Pr0fitability rati0s FY2017 FY2016 FY2015
Net sales 1,655.56 1,578.27 988.05
Gr0ss pr0fit 1,021.18 627.30 299.84
1 Gr0ss pr0fit rati0 62% 40% 30%

Net pr0fit after tax 167.2 139.1 116.4

Net sales 2,024.14 1,676.11 1,310.83
2 Net pr0fit Rati0 8% 8% 9%
 Net Pr0fit 2058.3 2070.6 1330.8
T0tal Investment 1,031.00 994.02 34.47
3 Return 0n investment 2.00 2.08 38.60

Net inc0me 1,530 1,239 952

Shareh0lder's equity 15822.13 13452.77 13149.17
4 Return 0n Equity 10% 9% 7%

5 Earnings per share 14.53 13.02 6.21

2c.B2 Liquidity Rati0s FY2017 FY2016 FY2015

Current Assets 2437.61 2062.39 1,642.27
Current Liabilities 2,604.87 2,259.35 1932.01
1 Current Rati0s 94% 91% 85%

Cash & Cash Equilvalent 136.3 108.9 82.9

Sh0rt-term investment 12.58 18.26 32.33
Current Receivables 61.65 45.86 16.15
Current Liabilities 2,604.87 2,259.35 1,932.01
2 Quick Rati0 8% 8% 7%
 Profitability ratios
0.70 0.62
0.60
0.50
0.40
Gross profit ratio
0.40
0.30
Net profit Ratio
0.30
Return on Equity
0.20
8%10% 8% 9% 9% 7%
0.10
0.00
FY2017 FY2016 FY2015

Profitability ratios
38.61
40.00
35.00
30.00
25.00
20.00 14.53 Return on investment
13.02
15.00 Earnings per share
10.00 6.21
2.00 2.08
5.00
0.00
FY2017 FY2016 FY2015
years
 Liquidity Ratios
100%
90%
80%
70%
60%
50% Current Ratios
40% Quick Ratio
30%
20%
10%
0%
FY2017 FY2016 FY2015

CHAPTER 5: SUMMARY AND CONCLUSIONS

Though the gross profit & net profit ratios are not very high but its still good
because company has paid huge amount of Interest on Loans, which is also
important for the operations of company. The decent return on investments
i.e.5% which is increased than the previous financial year. The company have
adequate amount of fixed assets that are needed for proper functioning and also
enormous amount of current asset that the company is performing many
contracts. It has vast surplus of trade recievings which can be sufficient for the
repay of current liabilities. It is working efficiently as it has borrowed short term
loans to perform contract works. It has decent total of working capital. Cash
flow statements are positive as compared with the previous financial year. The
company’s liquidity ratios i.e. Quick ratio and Current ratio are increased than
the last Financial Year. Earnings per share is positive and has increased from
13.02 to 14.53Rs/share in a single financial year.
We can also conclude that the company running with more debt percentage as
compared to equity percentage (up to an optimum point) will give higher
earnings per share to the equity shareholders.
REFRENCES

 https://www.indiainfoline.com/company/brigade-enterprises-ltd/summary/28294

 http://www.moneycontrol.com/financials/brigadeenterprises/balance-sheetVI/BE08#BE08