Assignment 2: Annual Report Analysis

Notes:

1. Please write the response(s) to the question immediately after the question.
2. The answer should be based on the annual report of the company you have chosen
and the information available in Bloomberg.
3. Answer should be short but should convey the response unambiguously.
4. The evaluation will be done based on the quality of your response.

Objective

Ability to comprehend the company annual report is possibly the best litmus test to check
your understanding of accounting. With this objective in mind you are required to answer the
following questions given below.

1. What is the company’s business? Which industry does it belong to (use GICS
industry classification).

United Spirits LTD Manufactures and Distributes a Variety of Alcohols and Spirits
including Whisky, Brandy and Rum. The Companies well-known Brands include “MC
DOWELLS NO1” Whiskey. United Spirits also Manufactures Indian-made Foreign
Liquor Brands.

It belongs to “Distiller & venters” as per GICS Classification

2. Identify the competitors of the company you have chosen. Analyse the
competitive position of the company in the industry.

etitors of the United Spirits Ltd.

ted Breweries

ico Khaitan Ltd.

on Spirit Ltd.

Agro Inds

bus Spirits Ltd.

knagar Inds

Analyse the competitive position of United Spirits:

 ● United Spirits has a global footprint with exports to over 37 countries, It has in
India
● With distillers and sales office all across the country, and a committed team of
over 7500people dedicated to the fulfilment of the company’s mission.
● It has established Manufacturing and bottling plants in every state of India.
● In addition, to deliver its products to customers located anywhere in india, US
established a robust distribution network covering the whole country.
● USL acquired Balaji Distilleries Ltd. in 2008.this acquisition gave the company
the strategic advantage to consolidate the groups leadership position in critical,
large and

3. What are its main products and services? Name some of the company’s brand.

Products Brands

KY CTOR SPECIAL

CH 69

KY CK &WHITE

KY PIPER

CH CK DOG

NDY OWELLS NO1

KY ATURE

KA NOFF

KA C

KA E MSCHEF

4. How many employees does it have? Why is this information important?

There are 5705 Employees till date.
5. What is the board size of the company? Classify them to Executive, Independent,
Non-executive non-independent directors? What is the remuneration paid to
CEO/Managing Director? What is the remuneration paid to the Independent directors?
 of the Director nation endent neration ngs
(Yes/No) Attended
(%)

d Kripalu CEO

Viswanthan or

v Gupta or

anandan or

du Shahani or

Thomas Kennedy xecutive Director

6. Explain what are financial statements and non-financial statements. Read the
‘Contents’ page and mark the items which are financial statements as ‘FS’ and rest as
‘NFS’.

Contents FS/NFS
Chairman’s Message NFS
MD &CEO’S Message NFS
Report of the Directors FS

Corporate Governance FS
Reports
Management sssssss

7. Identify the regulatory agencies affecting the accounting policies of the company.
 8. Is there any difference in the reported amount in the standalone and consolidated
financial statements listed below:
- statement of profit and loss,
- the statement of retained earnings,
- the balance sheet, cash flow statement.

Explain the reason for the difference in the standalone and consolidated financial statements.
9. How the information in notes to the financial statement is useful? Give five examples
of how notes explain the items in the financial statements.
10. Identify the matters covered in accounting policies? Are there any changes in the
accounting policies reported in the annual report?
11. List the accounting measurement assumptions stated.
12. Who is responsible for information in the financial statements?
13. Think of information that you think would be useful but not disclosed in the financial
statements. Why do you think the information is not disclosed?
14. Who are the company’s auditors? How much was the auditor’s remuneration?
15. Are auditor’s member of the’Big Four Firm’? if yes, which one?
16. To whom auditor’s report is addressed? Why?
17. What are company’s major items of revenue? (use consolidated financial statements
for all the further questions)

nt % of total revenue
n billions)

2018 2017 2018 2017

18. What are the major items of expenses?

nt % of total expense
n billions)

2018 2017 2018 2017

19. The statement of profit and loss has more than one ‘profit’ number. Why?

nt % of total revenue
n billions)
 2018 2017 2018 2017

20. Identify beginning and closing inventory.

Items Amount ventory turnover ratio

(Rs. in billions)

2018 2017 2018 2017

ng inventory

g inventory

21. When does the company recognizes sales revenue?

22. Does company have dividend income? Why?

Items Amount
(Rs. in billions)

2018 2017

end income

23. How much did company spend on advertising? As a percentage of revenue?

Items Amount
Rs. in billions)

2018 017

tisement Expense or sales and

promotional expense

24. Did company provide for doubtful debts? How much receivable did company write
off?

Items Amount
Rs. in billions)

2018 017

ion for doubtful debts

ebts written-off
25. What depreciation method(s) does the company use? Are there any fully depreciated
assets in the company?

2018 017

ciation Method

class 1

class 2 etc

ciation (amount Rs. in billion)

Block of assets

mulated depreciation

ock of assets

26. List the company’s intangible assets?

2018 017

27. How much did company spend on R&D?

2018 017

Expenditure (Rs. in billions)

28. Identify the company’s investments in equity and debt securities.

ments 2018 017

29. Identify the company’s subsidiaries.

Subsidiaries 2018 017

 30. Does the company have any associates/joint ventures? If yes, name it.

Associates/joint ventures 2018 017

31. List the company’s contingent liabilities?

32. List the cash-flows of the company. Comment on the cash flows of the company.

Amount Rs. in billions

2014 2015 2016 017 018

flow from operating activities

flow from investing activities

flow from financing activities

flows during the year

ng balance of cash

g balance of cash

ash flows

33. What is the face value of the company’s shares?

Face value of the company’s share is 2.00 Rs

34. What is the market price of the share as on the balance sheet date?
The market price of the share as on 31.03.18 balance sheet is 625.93

35. Compute profitability ratios listed below and comment on the profitability of the
company.

2014 2015 2016 017 018 dustry

average

ting profit margin

DA margin

margin

margin

n on capital employed (ROCE)

n on equity (ROE)

EPS

d EPS

ive tax rate

36. Compute the liquidity ratios listed below and comment on the liquidity of the
company.

2014 2015 2016 017 018 dustry

average

nt ratio

ratio

37. Compute some of the important solvency ratios and comment on the solvency of the
company.

2014 2015 2016 017 018 dustry

average

quity ratio

o total asset ratio

st coverage ratio

ervice coverage ratio

mberg 1 year default risk

mberg 5 year default risk

38. Compute some of the important activity ratios and comment on the efficiency of the
company.
 2014 2015 2016 017 018 dustry
average

ory turnover ratio

vables turnover ratio

les turnover ratio

vables in days

les in days

ory turnover in days

cycle in days

assets turnover ratio

39. Compute some of the important market standing ratios and comment on the stock
market performance of the company.

2014 2015 2016 017 018 dustry

average

tio

ear stock return

year stock return

ear stock return

end yield

t capitalization

mic value added