CHAPTER-4

DATA ANALYSIS AND INTERPRETATION

BALANCE SHEET (2014-2015 TO 2018-2019)

(In lakhs)
Particulars 14-15 15-16 16-17 17-18 18-19
Sources of Funds:
Auth share capital 100000 100000 100000 100000 100000
Paid up capital 57545 57545 57545 57545 57545
Reserve and surplus --- --- --- 10791 28500
Secured loan 13619 2785 85072 104307 113987
Unsecured loan 76475 75788 42725 8329 ---

Total sources of funds 147639 136118 185342 180972 200032

Application of Funds:

Gross Block(including CWIP) 73251 75734 77436 79349 83178

Net Block(including CWIP) 26887 25706 24149 23652 25419

Investments --- --- 82130 605 5
Deferred tax Assets --- --- --- 3369 2037
Current Assets
Inventories 28595 21496 55159 37363 50023
Sundry Debtors 68236 56541 86632 60052 51764
Others 6130 47507 103523 117391 107567

Total 102961 125544 245314 214806 209354

Current Liabilities and
Provisions 48770 73207 170615 61460 36783
Net Current Assets 54191 52337 74699 153346 172571
Deferred Revenue Exp 131 --- --- --- ---
Accumulated Loss 66430 58075 4364 --- ---
Total Application(funds) 147639 136118 185342 180972 200032

PROJECT EVALUATION THROUGH CAPITAL BUDGETING

STEP1: Capital Budget Estimates:

The first and the foremost step in the evaluation of a project is the budget estimate of the project.
And here the estimate of the project is 300 Lakhs

STEP2: Project Finance and Source of Funds:

The second step in the evaluation of the project is to find the funds to install or to establish a
project.
1. Debt/Loan Funds/Long term Loans
2. Internal Generation of funds
In this project we have funding of 75% from a bank at 11% rate of interest P.a. providing with
long term loans and the rest 25% from Internal generation. With a moratorium of one year and
repayment schedule of 5 years.

STEP3: Phasing of Capital Expenditure:

The third step in the evaluation of the project is the phasing of the expenses or expenditure on the
project. And here the phasing of the project expenditure is as below:

PHASING OF CAPITAL
EXPENDITURE (Rs in Lacs)
2020-21 2021-22 2022-23 Total
Bank Loan 50.00 100.00 75.00 225.00
Interest On LTL 6.88 32.90 15.40 55.17
Internal Generation 20.00 35.00 20.00 75.00
Total value Of the project 76.88 167.90 110.40 355.17
Step4: Repayment Schedule of the Long Term Loan (LTL):

The fourth step in the evaluation of the project is preparing the repayment schedule of the Long
Term Loan (LTL). And here the project repayment schedule is.
REPAYMENT SCHEDULE OF LONG-TERM
LOAN
11% (Rs in Crores)

Interest Year wise Year wise

Opening Closing '@11% Principal Interest
Balance Addition Total Repayment Balance p.a Year repayment repayment
1-Oct-20 75 75 75
1-Jan-21 75 100 175 175 2.06
1-Apr-
21 175 125 300 300 4.81 2020-21 0 6.88
1-Jul-21 300 300 300 8.25
1-Oct-21 300 300 300 8.25
1-Jan-22 300 300 3.75 296.25 8.25
1-Apr-
22 296.25 296.25 8.75 287.5 8.15 2021-22 12.5 32.90
1-Jul-22 287.5 287.5 15.00 272.5 7.91
1-Oct-22 272.5 272.5 15.00 257.5 7.49
1-Jan-23 257.5 257.5 15.00 242.5 7.08
1-Apr-
23 242.5 242.5 15.00 227.5 6.67 2022-23 60.00 29.15
1-Jul-23 227.5 227.5 15.00 212.5 6.26
1-Oct-23 212.5 212.5 15.00 197.5 5.84
1-Jan-24 197.5 197.5 15.00 182.5 5.43
1-Apr-
24 182.5 182.5 15.00 167.5 5.02 2023-24 60.00 22.55
1-Jul-24 167.5 167.5 15.00 152.5 4.61
1-Oct-24 152.5 152.5 15.00 137.5 4.19
1-Jan-25 137.5 137.5 15.00 122.5 3.78
1-Apr-
25 122.5 122.5 15.00 107.5 3.37 2024-25 60.00 15.95
1-Jul-25 107.5 107.5 15.00 92.5 2.96
1-Oct-25 92.5 92.5 15.00 77.5 2.54
1-Jan-26 77.5 77.5 15.00 62.5 2.13
1-Apr-
26 62.5 62.5 15.00 47.5 1.72 2025-26 60.00 9.35
1-Jul-26 47.5 47.5 15.00 32.5 1.31
1-Oct-26 32.5 32.5 15.00 17.5 0.89
1-Jan-27 17.5 17.5 11.25 6.25 0.48
1-Apr-
27 6.25 6.25 6.25 0 0.17 2026-27 47.50 2.85
119.63
 REPAYMENT OF LONG TERM (Rs in
LOAN(LTL) Lakhs)
2023- 2024-
2020-21 2021-22 2022-23 24 25 2025-26 2026-27
Interest Repaid 6.88 32.90 29.15 22.55 15.95 9.35 2.85
Principal Repaid 0 12.5 60.00 60.00 60.00 60.00 47.50
Total 6.88 45.40 89.15 82.55 75.95 69.35 50.35

STEP5: PREPARING THE PROFITABILITY STATEMENT OF THE

PROJECT:
The fifth step in the evaluation of the project is preparing the profitability statement of the
project and the profitability statement of the project here is.

In terms of cost
Cost Elements of Asset p.a
Interest on Loan 11% Tax 32.445%
Depreciation as Per
Insurance 2% IT Act 15%
Salary and Wages 3%
Contract Labour 2%
Repairs and Maintenance 3%
Chemicals 5%
Packing cost 0.50%
Power, Fuel and Water 5%
Depreciation 5.25%
 (Rs in
PROFITABILITY STATEMENT OF THE PROJECT Lakhs)
2023-24 2024-25 2025-26 2026-27 2027-28
Incremental Sales 1534.50 1534.50 1534.50 1534.50 1534.50

TOTAL REVENUE("A") 1534.50 1534.50 1534.50 1534.50 1534.50

EXPENDITURE
Raw Materials 1227.60 1227.60 1227.60 1227.60 1227.60
Interest On Loan 13.75 22.55 15.95 9.35 2.85
Insurance 7.10 7.10 7.10 7.10 7.10
Salary and Wages 10.66 10.66 10.66 10.66 10.66
Contract labor 7.10 7.10 7.10 7.10 7.10
Repairs and maintenance 10.66 10.66 10.66 10.66 10.66
Chemicals 17.76 17.76 17.76 17.76 17.76
Packaging Cost 1.78 1.78 1.78 1.78 1.78
Power, Fuel and Water 17.76 17.76 17.76 17.76 17.76

TOTAL EXPENDITURE ("B") 1314.16 1322.96 1316.36 1309.76 1303.26

PROFITS BEFORE DEPRECIATION

AND TAX "C"(C=A-B) 220.34 211.54 218.14 224.74 231.24

Less: DEPRECIATION "D" 18.65 18.65 18.65 18.65 18.65

PROFIT BEFORE TAX "E"(E=C-D) 201.69 192.89 199.49 206.09 212.59

Less: TAX(AS PER IT ACT) 60.77 58.34 60.16 61.98 63.77

PROFIT AFTER TAX 140.93 134.55 139.33 144.11 148.82

Computation of tax:
COMPUTATION OF
TAX
2023-24 2024-25 2025-26 2026-27 2027-28
Profit Before Tax(PBT) 201.69 192.89 199.49 206.09 212.59

Add: Depreciation (As Per

Companies Act) 18.65 18.65 18.65 18.65 18.65
TOTAL 220.34 211.54 218.14 224.74 231.24

Less: Depreciation (as Per IT Act) 33.05 31.73 32.72 33.71 34.69

Profit After Depreciation 187.29 179.81 185.42 191.03 196.55

TAX 60.77 58.34 60.16 61.98 63.77

STEP6: Valuation of the Asset:

The sixth step in the evaluation of the project is the valuation of the project at different times or
at different periods at different years to come in the future.

VALUATION OF THE
ASSET (Rs In Crores)
2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30
Opening Balance 0.00 301.90 256.61 218.12 185.40 157.59 133.95
Addition 355.17 0.00 0.00 0.00 0.00 0.00 0.00
Total 355.17 301.90 256.61 218.12 185.40 157.59 133.95

Less:Deletion 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total 355.17 301.90 256.61 218.12 185.40 157.59 133.95
Less:Depreciation 53.28 45.28 38.49 32.72 27.81 23.64 43.46

ClOSING
BALANCE 301.90 256.61 218.12 185.40 157.59 133.95 90.49

STEP7: Preparation of Cash Flow Statement:

The seventh step in the evaluation of the project is the preparation of the Cash Flow Statement.
And we need the cash flows to find out the Payback Period and the Internal Rate of Return of the
project

CASH FLOW STATEMENT (Rs in Crores)

2020- 2021- 2022- 2023- 2024- 2025- 2026- 2027-
21 22 23 24 25 26 27 28
Cash Out Flow
Capital Expenditure on the
Project 76.88 167.90 110.40

Cash In Flow
Incremental Profit After Tax 140.93 134.55 139.33 144.11 148.82
Step8: To Find the Viability of the Project by Using Different Techniques Of
Capital Budgeting:

Here in Hypogene the Techniques of capital budgeting used are :

1. Pay-Back Period Method

2. Internal Rate Of Return

1. Evaluation of the Project Using Pay Back Period Method:

It was estimated that the cash in-flows will start from 2015-2016

Cost of the Project- 355.18 Lakhs

Year 2023-24 2024-25 2025-26 2026-27 2027-28

Amount 140.93 134.55 139.33 144.11 148.82

Calculation Of Pay Back Period:

S.no Year Cash Inflows Cumulative Inflows

1 2023-24 140.93 140.93

2 2024-25 134.55 275.48

3 2025-26 139.33 414.81

4 2026-27 144.11 558.92

5 2027-28 148.82 707.74

(a) Cash Outlay : 355.18 Lakhs

(b) Payback Period : INITIAL INVESTMENT

ANNUAL CASH FLOW
79.70
=
2 + 414.81

= 2.2 years

Pay Back Period:

It is assumed that the profit earning of the project will start from 2015-2016.

We should increase this period with same exception as there may be any additional factor and
other cause so rounding of 2.2 to 3 years will be right, so that it will give more assistance to the
calculation.

Suggestion: Any project which has a pay-back period of 3 to 5 years is considered as a good
project…

And here we have got a pay-back period of 2.2 years. So, the project can be considered

2.Evaluation of the Project Using Internal Rate of Return Method:

It was estimated that the cash in-flows will start from 2023-2024
Cost of the Project- 355.18 Lakhs

Year 2023-24 2024-25 2025-26 2026-27 2027-28

Amount 140.93 134.55 139.33 144.11 148.82

Internal Rate of Return:
Discount rate taken as 24% (in Lakhs)

Present Values of
Sl. No Years Cash Inflows DCF (24%) Inflows
1 2023-24 140.93 .806 113.58

2 2024-25 134.55 .660 88.80

3 2025-26 139.33 .524 73.00

4 2026-27 144.11 .422 60.81

5 2027-28 148.82 .341 50.74

6
7
8
9
10
11
12
13
14
15
Total Present Values of Inflows 386.93
Discount rate taken as 26% (in Lakhs)

Present Values of
Sl. No Years Cash Inflows DCF (26%) Inflows
1 2023-24 140.93 .787 110.91

2 2024-25 134.55 .620 83.421

3 2025-26 139.33 .488 68.00

4 2026-27 144.11 .384 55.34

5 2027-28 148.82 .302 50.74

6
7
8
9
10
11
12
13
14
15
Total Present Values of Inflows 366.412

‘
Discount rate taken as 28% (in Lakhs)

Present Values of
Sl. No Years Cash Inflows DCF (28%) Inflows
1 2023-24 140.93 .781 110.06

2 2024-25 134.55 .600 80.73

3 2025-26 139.33 .465 64.78

4 2026-27 144.11 .361 52.02

5 2027-28 148.82 .279 41.52

6
7
8
9
10
11
12
13
14
15
Total Present Values of Inflows 349.11
Calculation of Internal Rate of Return

IRR = L+ A - Cash out lay X (H – L)

A-B

= 26+ 355.18 - 349.123 X (28-26)

(355.18-349.123) + X 2
(366.412-355.18)

= 26 + 6.07 X 2

6.07+11.232
= 26 + 0.350 X 2

= 26.70

Internal Rate of Return (IRR):

In this calculation, is done on the basis of trail and errors. By taking various percentage of
(DCF).So that an appropriate percentage of Internal Rate of Return can be judge out.

Calculated figure is 26.70%, so we can take it as 30% because at market

Uncertainity.

Suggestion:

Any project which has an Internal Rate of Return Between 16% to 20% is considered as a good
project…
And here for this project the Internal Rate of Return is 26.70%. So, the project can be
considered.