Group AE2:

Abhijay
Joshi
Dhananjay
Dar Parth
THE EVENTS THAT LED TO THE FALL OF Joshi
Praveen
AN INFRASTRUCTURE GIANT Dwivedi
Namitha
John
Contents

Background:........................................................................................................................................2
Projects:...............................................................................................................................................2
Main Competitors:..........................................................................................................................3
Geographies:....................................................................................................................................3
Company Management.......................................................................................................................5
Board size, composition and number of meeting...........................................................................5
Details of Board members holding directors’ position in other companies.................................6
Regulations with respect to Independent Directors and Women Directors....................................7
Compensation of Directors.............................................................................................................7
A.      Remuneration to Managing Director, Whole-time Directors and/or Manager:............7
B. Compensation to other directors:.....................................................................................8
Shareholders....................................................................................................................................9
AGM...............................................................................................................................................11
Auditors..............................................................................................................................................11
Statutory Auditors.........................................................................................................................11
Auditor’s Opinion:........................................................................................................................11
Cost Auditors.................................................................................................................................11
Secretarial Auditors......................................................................................................................11
Auditor’s Opinion:........................................................................................................................11
Fixed Assets:......................................................................................................................................12
Revenues & Income...........................................................................................................................12
Growth in revenue:-......................................................................................................................12
Policy for revenue recognition......................................................................................................12
Inventories:........................................................................................................................................13
Other analysis:...................................................................................................................................13
Investment: -..................................................................................................................................13
Income from the investment: -......................................................................................................14
 IL&FS Transportation Networks Ltd.
Background:

IL&FS Transportation Networks Ltd. is involved in BOT Road Operations i.e. Build Operate
and Transfer. It was established in the year 2000 as a wholly owner subsidiary of IL&FS
(Infrastructure Leasing and Financing Services Ltd. The transportation vertical was
established after the road projects grew in number and size. In todays date IL&FS
Transportation Networks Ltd. (ITNL) is the largest BOT road asset owner in India. It has
been responsible for developing and operating 13,100 lane km. It also operates metro rail,
city bus services and border check-posts in several cities geographically spread out over the
nation. ILNT also operates projects in nations like Spain, Portugal and Latin America. It
acquired Elsamex S.A., a Spanish highway operations maintenance and allied services
provider, on March 20, 2008. ITNL, being a subsidiary of the 32-year-old industry giant
IL&FS, reaps benefits from its shareholders such as Life Insurance Corporation of India,
Central Bank of India, State Bank of India, Housing and Development Finance Corporation
Limited (HDFC), Orix Corporation of Japan and Abu Dhabi Investment Authority.
ITNL specializes in bidding for large road infrastructure projects, creating feasibility studies,
etc thanks to its in-house teams. It has also devised a semi-automatic toll collection system
for its operational projects.
Projects:

ILNT has completed 22 projects. Following is a description of some of the major projects
under this category.
1. Kharagpur Baleshwar Section of NH-50:
Minor Bridges 48
Major Bridges 4
Toll Plazas 2
Vehicular/Pedestrian Underpass 1

2. Khed-Sinnar Section of NH50:

Flexible Pavement 137 km

Service Road 22.6 km
Major Bridges 9
Minor Bridges 49
Under Pass 32
Junction 88
 3. Chaibasa-Kandra-Chowka:

Road Length 68.7 km

Minor Bridges 17
Toll Plaza 3
Junction 29

ILNT operates and develops several urban transportation projects across India.

Delhi Metro link Sikanderpur Station to Sec-56, Gurugram

Delhi Metro link Sikanderpur Station to NH-8, Gurugram

Automated Car Park, Hyderabad

Madhya Pradesh Check Post

Nagpur City Bus Project

ILNT is also currently working on 2 under construction projects and 2 under development
projects.

Main Competitors:

Reliance Infrastructure, GVK Industries, GMR Group, Larsen and Toubro, Oberoi Realty

Geographies:

New, Delhi, Haryana, Andhra Pradesh, Madhya Pradesh, Maharashtra, Orissa, West Bengal,
Karnataka, Gujarat, Uttar Pradesh, Jharkhand
Company Management

Board size, composition and number of meeting

As on March 31st 2017, the size of the board is 10 out of which 4 are independent directors.
The size of board has followed a declined trend. The size of board was 14 is 2009-10, then 13
in 2014-15 and then 10 in 2017.

There is only a single woman on the board which signifies lack of diversity in terms of
gender. The board is not very diversified in terms of age as well. The average age of board is
76.33 years (source Bloomberg). The education background of board members is good.
Majority of them are ret. IAS officers and all of have at least a graduation degree.

In FY 2017 as on 31st March 2018, there were 6 board meetings. Average attendance % by
member is
Attendance at the
Board meetings and
Name Category Annual General Education qualification
Meeting
Board AGM
Mr. Deepak
Dasgupta Independent 6 Yes Msc
(Chairman)

Mr. R. C. Sinha Independent 6 Yes MA Economics

Mr. H P Jamdar Independent 4 Yes Civil engineering

Ms. Neeru MA International

Independent 4 No
Singh Relationship

Non-
Mr. Ravi Executive,
3 Yes MBA
Parthasarathy Non-
Independent
Non-
Mr. Hari Executive,
6 No MA Economics
Sankaran Non-
Independent
Non-
Mr. Arun K Executive,
6 Yes Mcom
Saha Non-
Independent
 Non-
Mr. Pradeep Executive,
4 No MA History
Puri* Non-
Independent

Mr. K Managing
6 Yes Civil engineering
Ramchand Director

Mr. Mukund Executive

5 Yes Civil engineering
Sapre Director

Details of Board members holding directors’ position in other companies

Number of
Directorships in Number of Committee positions
other public held in other public companies
Name Category
companies
Chairma Directo
Chairman Member
n r
Mr. Deepak
Dasgupta Independent 3 2 1 4
(Chairman)
Mr. R. C. Sinha Independent - 3 - -
Mr. H P Jamdar Independent - 2 - -
Ms. Neeru
Independent - - - -
Singh

Non-
Mr. Ravi Executive,
6 3 - 1
Parthasarathy Non-
Independent
Non-
Mr. Hari Executive,
1 7 - 1
Sankaran Non-
Independent
Non-
Mr. Arun K Executive,
3 6 1 6
Saha Non-
Independent
Non-
Mr. Pradeep Executive,
- - - -
Puri* Non-
Independent
 Mr. K Managing
- 8 1 1
Ramchand Director
Mr. Mukund Executive
- 9 - 3
Sapre Director

Regulations with respect to Independent Directors and Women Directors

INTL follows all the rules and regulations with respect to functioning of directors in a company. The
regulation is given section 149(1). The rules are:

1) Every company shall have a Board of Directors consisting of individuals as

directors and shall have—
(a) a minimum number of three directors in the case of a public company, two
directors in the case of a private company, and one director in the case of a
One Person
Company; and
(b) a maximum of fifteen directors:
Provided that a company may appoint more than fifteen directors after passing a
special resolution:
Provided further that such class or classes of companies as may be prescribed, shall
have at least one-woman director.
Unfortunately, INTL currently have only 1 female director. They should increase the number of
female directors in their company.

Compensation of Directors

A.      Remuneration to Managing Director, Whole-time Directors and/or Manager:

Name of MD/WTD/
Manager

Particulars of K Ramchand Mukund Sapre

Sr. no Total amount
Remuneration
Managing Executive
Director Director
1 Gross salary      

(a) Salary as per

provisions contained in
2,64,73,115 1,65,21,827 4,29,94,942
the section 17(1) of the
Income-tax Act, 1961

 
 (b) Value of perquisites
u/s 17(2) Income-tax
Act, 1961
  - - -

(c) Profits in lieu of

salary under section
17(3) Income-tax Act,
1961
  - - -
2 Stock Option - - -
3 Sweat Equity - - -
4 Commission - - -
a) as % of profit
  - - -
  b) Other - - -
Others, please specify
5      
a) Retirement Benefits 81,61,570 49,84,056 1,31,45,626
 
a)Performance Related 72,50,000 72,50,000 1,45,00,000
  Pay
  Total (A) 4,53,10,265 3,21,02,983 7,74,13,248
Overall Ceiling limit of ` 17.36 Crore (being 10% of
the net profits of the Company calculated as per
  Ceiling as per the Act Section 198 of the Companies Act, 2013)

B. Compensation to other directors:

Name of Directors Total

Sr. Particulars of
no Remuneration
Mr. Mr. H Mr. Mr. Mr.
Mr. R Ms. Mr. Ravi
Deepak P Hari Arun Pradee
C Neeru Parthasarath Amount
Dasgupt Jamda Sankara K p
Sinha Singh y
a r n Saha Puri*

Independent
1                  
Directors
- Fee for attending 8,50,00
  8,00,000 9,00,000 5,50,000 - - - - 31,00,000
board/ 0
  committee meetings                  
12,67,87 ######
  - Commission 12,67,875 9,05,625 - - - - 47,09,250
5 #
- Others, please
  - - - - - - - -  
specify
  Total (1) 78,09,250
Other Non-
2                  
Executive Directors
 - Fee for attending 12,50,00
  - - - - 2,00,000 8,00,000 2,00,000 24,50,000
board/ 0
  committee meetings                  

  - Commission - - - - 6,79,875 6,79,875 6,79,875 5,43,900 25,83,525

- Others, please
  - - - - - - - -  
specify
  Total (2) 50,33,525

1,28,42,77
  Total (B)=(1+2)
5

9,02,56,02
  Total Managerial Remuneration (A+B)
3
Overall Ceiling as ` 19.09 Crore (being 11% of the net profits of the Company calculated as per Section 198 of
     
per the Act the Companies Act, 2013)
Note: Siting fees paid to Directors are not included for calculation in overall ceiling on Managerial Remuneration

Shareholders

No. of Shares held at No. of Shares held at

the beginning of the
year the end of the year %
% of % of
Category of change
Demat Total Demat Total
Shareholders during
Shares Shares
Physical Total Physical Total the year

A. Promoters                  

1 Indian

a) Individual/HUF - - - - - - - - -
Central Govt. or
b) - - - - - - - - -
State Govt.
c) Bodies Corporates 240849000 - 240849000 73.22 240849000 - 240849000 73.22 -

d) Bank/FI                  

e) Any other (PAC) - - - - - - - - -

Sub Total:(A) (1) 240849000 - 240849000 73.22 240849000 - 240849000 73.22 -

2 Foreign

a) NRI- Individuals - - - - - - - - -

b) Other Individuals - - - - - - - - -

c) Bodies Corp. - - - - - - - - -

d) Banks/FI - - - - - - - - -

e) Any other… - - - - - - - - -

Sub Total:(A) (2) - - - - - - - - -

Total Shareholding of
Promoter (A)= (A)(1)+(A) 240849000 - 240849000 73.22 240849000 - 240849000 73.2153 -
(2)
Public
B.                  
Shareholding
Institutions

a) Mutual Funds - - - - - - - - -

b) Banks/FI 23,40,367 - 23,40,367 0.71 22,05,397 - 22,05,397 0.67 -0.04

c) Central govt - - - - - - - - -

d) State Govt. - - - - - - - - -
Venture Capital
e) - - - - - - - - -
Fund
f) Insurance - - - - - - - - -
 Companies
g) FIIS - - - - - - - - -
Foreign Venture
h) - - - - - - - - -
Capital Funds
i) Others (specify) - - - - - - - - -
Foreign Portfolio
i) Investor 2,13,45,870 - 2,13,45,870 6.49 1,57,38,246 - 1,57,38,246 4.78 -1.7
(Corporate)
Sub Total:(B) (1) 2,36,86,237 - 2,36,86,237 7.2 1,79,43,643 - 1,79,43,643 5.45 -1.76

Non Institutions

a) Bodies corporates 82,14,145 - 82,14,145 2.5 82,47,570 - 82,47,570 2.51 0.01

i) Indian - - - - - - - - -

ii) Overseas - - - - - - - - -

b) Individuals - - - - - - - - -
i) Individual
  shareholders 1,61,12,335 6,732 1,61,19,067 4.9 2,05,82,657 6,052 2,05,88,709 6.26 1.36
holding nominal
share capital upto
                   
`2 lakhs
ii) Individuals
  shareholders 1,99,83,820 - 1,99,83,820 6.07 2,06,19,481 - 2,06,19,481 6.27 0.19
holding nominal
share capital in
                   
excess of ` 2 lakhs
c) Others (specify) - - - - - - - - -

  Clearing Member 19,24,669 - 19,24,669 0.57 13,79,369 - 13,79,369 0.42 -0.17

  Foreign Company 1,07,11,561 - 1,07,11,561 3.26 1,07,11,561 - 1,07,11,561 3.26 -

Non Resident
  18,10,684 - 18,10,684 0.55 21,89,763 - 21,89,763 0.67 0.12
Indians (REPAT)
Non Resident
  Indians (NON 4,66,229 - 4,66,229 0.14 8,25,438 - 8,25,438 0.25 0.11
Repat)
Hindu Undivided
  17,87,798 - 17,87,798 0.54 21,98,004 - 21,98,004 0.67 0.12
Family
  Trusts 34,06,817 - 34,06,817 1.04 34,06,975 - 34,06,975 1.04 0

  Any Other - - - - - - - - -

SUB TOTAL:(B) (2) 6,44,18,058 6,732 6,44,24,790 19.58 7,01,61,332 - 7,01,67,384 21.33 1.74
Total Public Shareholding
8,81,04,295 6,732 8,81,11,027 26.78 8,81,04,975 6,052 8,81,11,027 26.78 0
(B) = (B) (1) + (B) (2)
C. Shares held by
Custodian for GDRs &                  
ADRs
32,89,53,29 32,89,60,02 32,89,53,97
Grand Total (A+B+C) 6,732 100 6,052 32,89,60,027 100  
5 7 5

INTL Stock is listed on both BSE and NSE. The price highs and lows are listed below.

NSE BSE
Month
High low High Low
Apr-17 120.65 109.05 120.40 109.15
May-17 124.50 99.45 124.20 99.20
Jun-17 104.55 93.10 104.40 93.65
Jul-17 103.75 89.00 103.60 89.10
Aug-17 92.95 73.40 93.80 73.15
Sep-17 83.40 69.10 83.35 70.00
Oct-17 90.95 71.55 91.00 70.70
Nov-17 92.85 72.70 92.50 73.00
Dec-17 86.95 70.85 86.70 71.25
Jan-18 97.35 77.15 97.35 76.00
Feb-18 81.90 70.00 81.80 70.00
 Mar-18 72.75 58.80 72.30 58.40

AGM

The AGM for FY 2017-18 was held at Mumbai on September 4 th, 2018. The agenda of the
meeting was to receive, consider and adopt the audited standalone financial statements for FY
2017-18. The other issues that were discussed were dividend payment for preferred shares
and reappointment of Mr Arun Saha as independent director.
Auditors

Statutory Auditors

On the 29th of August 2017, the 17th Annual General Meet was held, during which M/s SRBC
& Co LLP (SRBC), Chartered Accountants, Mumbai (ICAI Registration No.324982E/
E300003) was appointed as the Statutory Auditors for a term of 5 consecutive years. They
have also confirmed that they have not been disqualified from practicing as the auditors for
the company.
Auditor’s Opinion:

Considering the essential components of internal control stated in the Guidance Note on
Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of
Chartered Accountants of India, the firm has maintained adequate control over all financial
reporting, and they have been operating effectively as on March 31, 2018.
The Auditors’ Report does not contain any qualification, reservation, adverse remark or
disclaimer.
Cost Auditors

As per the rules of the Companies Act 2013- Section 148 and the Companies (Cost Records
and Audit) Rules, 2014, the Cost Auditors for the financial 2018-19 has been appointed as
M/s. Chivilkar Solanki & Associates, Cost Accountants. This decision was made by the
Board of Directors and confirmed and consented by the firm that they are eligible.
Secretarial Auditors

To carry out the Secretarial Audit, the firm appointed M/s. Jayshree Dagli & Associates,
Practicing Company Secretaries. They were appointed by the Board abiding to the provisions
of Section 204 of the Companies Act, 2013 for FY 2017-18.

Auditor’s Opinion:

A proper balance has been maintained by the Board of Directors for the number of Executive
Directors, Non-Executive Directors and Independent Directors as per the regulations. The
change in the composition of the Board of Directors took place with compliance.
All meetings were informed in advance to all directors with the detailed agenda of the
meeting shared 7 days prior to the meeting. And any meeting that occurred on a shorter
notice had at least one independent director present. A provision was provided to seek
information and clarification about the agenda of such meetings.
The Auditors’ Report does not contain any qualification, reservation, adverse remark or
disclaimer. The payment made to auditors totalled to 8.23 crores.
Fixed Assets:

The investment in Fixed assets constitute a percentage of 96.84% of the total assets as on 31 st
March 2018. The non-current assets can be divided into tangible and non-tangible assets. The
total of tangible and intangible assets would be 175.03 crores, out of which 3.5% is intangible
assets and 96.5% is tangible assets. The gain on disposal of property, plant and equipment is
0.05 crores as on March 31st 2018. Depreciation and amortization expense of fixed assets
stood at 31.32 crores. The revenue from operations was calculated to be 3536.83 crores and
the depreciation and amortization expenses were found to be 0.63% of the total. The net
impairment loss was found to be 363.57 crores. The firm has not made any additional
investment in the current year. Also, the company has not revalued any fixed assets during
the current year. Amount Generated per rupee invested in fixed assets was calculated as
1:18.51. All assets are depreciated on as Straight-Line Method (SLM) of Depreciation.
Return on Total Asset and Return on Fixed Asset

 Amount((in crores)
 Particulars Return

Total Comprehensive Income 247.33  

Total Fixed Asset 191.54 77.44%

Total Asset 438.87 177.40%

Revenues & Income

ITNL's major source of revenue are fees received on account of rendering 1) project
development services; 2) advisory and project management services; 3) construction
supervision services; 4) operation and maintenance service; 5) tolling; and 6) dividend and
interest income on investments.

Growth in revenue:-

During FY 2018, ITNL revenue has increased from 8,402cr in 2017 to 9779cr,i.e., a 16 %
increase in revenue. The development of road infrastructure in India is gaining rapid
momentum. Robust demand, higher investments, attractive opportunities and policy support
changed the face of the road sector in the country within three years. Company has secured
the construction, operation and maintenance of the 14-km long two-lane bi-directional Zojila
Tunnel with Parallel Escape (Egress) Tunnel, excluding approaches on the Srinagar-Leh
section in the State of Jammu & Kashmir.
Policy for revenue recognition

Revenue from rendering of services is recognized when the outcome of the transaction can be
estimated reliably, by reference to the deliverables of the services or stage of completion of
the transaction at the reporting date. Fees for project development, sponsorship and design
are accounted on accrual basis based on the completion of the scope of work for each
activity.
Inventories:

The company holds inventories such as raw materials, Work-in-progress, Semi

Finished/finished goods, stores, spares and consumables.

Inventories (At
lower of cost and As at March As at March
Change Change %
net realisable 31, 2018 31, 2017
value)

Raw materials 23.32 13.03 10.29 79%

Work-in-progress 0.18 68.09 67.91 -1%

Stock-in-trade 12.84 12.84 -1%

Stores and spares 39.44 22.71 16.72 73.60%

Total 62.94 116.67 53.73 -46%

 

Inventories are stated at the lower of cost and net realizable value. Costs of inventories are
determined on a first-in- first-out basis. Net realizable value represents the estimated selling
price for inventories less all estimated costs of completion and costs necessary to make the
sale.

Other analysis:

Investment: -
The company has raised its investment by 1.3 % from last year. The development of road
infrastructure in India is gaining rapid momentum. Robust demand, higher investments,
attractive opportunities and policy support changed the face of the road sector in the country
within three years.
Particulars 2018 2017
  Amount Amount % change
IL&FS Rail Limited(refer
349.23 688.17
note 13) 0.4925236
Barwa Adda Expressway
451.5 326
Limited 27.796235
Rapid Metro Rail Gurgaon
29.65 18.24
Limited (refer note vii) 38.482293
Sikar Bikaner Highway
233.5 124.05
Limited (refer note vii) 46.873662
Barwa Adda Expressway
451.5 326
Limited 27.796235
Amravati Chikhli
119.15 18.05
Expressway Limited 84.851028
Fagne Songadh
262.56 14.15
Expressway Limited 94.610756

Company has purchased Elsamex Maintenance Services Limited, Elsamex India Private
Limited, Yala Contruction Company Liimited and Grusamar India Limited from Elsamex S.
The Company had given sub-debt to its subsidiary, Hazaribagh Ranchi Expressway Limited
of 175.11 crores, Jharkhand Road Projects Implementation Company Limited of 118.17
crores, Sikar Bikaner Highway Limited of 109.45 crores, Rapid Metro Rail Gurgaon Limited
of 11.46 crores and Rapid Metrorail Gurgaon South Limited of 17.74 crores. During the year,
the same has been converted into Investments.
Income from the investment: -

The company has mostly sold its investment equity share and gained a lot of profit. Some of
the them are:-
 During the year ended March 31, 2018, the Company has sold its investment of
2,000,000 equity share held in Rajasthan Land Holding Limited to Pario Developers
Private Limited against consideration received by way of preference shares which is
included as investment in above schedule. The profit on sale of 147.50 Crores is
included under revenue from operations.
 The Company has sold its investment of 14,735,076 equity share held in Gujarat Road
and Infrastructure Company Limited to Oriental Toll ways Private Limited and
IL&FS Financial Services Limited. The profit on sale of 214.13 Crores from this
transaction is included under revenue from operations.
 The Company has sold its Investment of 32,140,691 in equity share held in
Moradabad Bareilly Expressway Limited to Oriental Toll ways Private Limited. The
 profit on sale of 48.21 Crores from this transaction is included under revenue from
operations.
 The Company has sold its investment of 12,000,000 Pipavav Railway Corporation
Limited to IL&FS Financial Services Limited. The profit on sale of 31.88 Crores from
this transaction included under revenue from operations.

Contingent Liabilities

Sometimes companies face potential liabilities due to uncertain situations or events. These
liabilities which can be reasonably estimated, known as contingent liabilities, are recorded in
financial statements to account for the potential expenses in an unlikely event when the
company must pay these expenses. Some of the common examples of contingent liabilities
are pending lawsuits and product or service warranties.

₹ in crores

As at As at
Particulars
March 31, 2018 March 31, 2017
(i) Contingent Liabilities (Refer footnote 1)
a) Claims against the Company not acknowledged
as debts
- Income tax demands contested by the
45.74 10.15
Company
- Indirect tax demands contested by the
2.84 4.87
Company
- Claims made by contractors - -
b) Guarantees (Refer footnote 2) -
- Guarantees/counter guarantees issued to
680.74 1389.05
outsider in respect of group companies (Net)
- Guarantees/counter guarantees issued to
outsider in respect of other than group - 31.72
companies

Footnotes

1. The Company does not expect any outflow of economic resources in respect of the above and therefore no provision is
made in respect thereof.
2. Certain bankers have issued guarantees which have been shown under “Guarantees/counter guarantees issued in
respect of group companies” aggregating ₹ 13 Crore (as at March 31, 2017: ₹ 12.96 Crore) against a first charge on
the receivables (including loans and advances) of the Company.

The company has disputed income tax demands which stands at ₹ 45.74 crores an increase of 78%
from year 2017. Most contingent liabilities count towards guarantees/ counter guarantees issued to
outsiders which amounts to ₹ 68.74 crores. This has reduced by 51% from financial year 2017.

Ratio analysis:-
Return on equity:- It indicates how well company is increasing its profit without the help of
capital inflow. It also indicated how well a company management is deploying the
shareholder capital.. Falling ROE is usually a problem. In FY 15-16, the company have only
4% ROE then it has a boost and increased to 8.4% in FY 16-17 due to capital investment by
the parent company IL&FS. So, it represented the company was trying to improve its
financial position.

The ratio got decreased in FY 17-18 to 8.2%.

Return of equity:- It indicates how well company is increasing its profit without the help of capital
inflow.IT also indicated how well a company management is deploying the shareholder capital. The
higher the ROE the better the company is doing. Falling ROE is usually a problem. In FY 15-16, the
company have only 4% ROE then it has a boost and increased to 8.4% in FY 16-17 due to capital
investment by the parent company IL&FS.

The ratio got decreased in FY 17-18 to 8.2%.

Effective Tax Rate

Effective tax rate represents the percentage of their taxable income that individuals have to pay in
taxes. The effective tax rate of FY16-17 was -2.6%.A negative income tax (NIT) is a welfare system
within an income tax where people earning below a certain amount receive supplemental pay from
the government instead of paying taxes to the government. In the next year,i.e., FY17-18 the
effective tax rate gone up to 4.1%.

Return on Capital Employed

Return on Capital Employed is an indicator of how good a company manages its capital to generate
income. In other words, how much the company produces net profits by utilizing a unit capital.
Better managerial efficiency leads to higher RoCE.

ITNL’s RoCE increased from 13.2% to 16.1% from financial year 2017 to financial year 2018 indicating
that company has been able to better manage its capital to generate more profits. This is visible in
company’s annual report where it reported an increase of almost 70% in profit before tax. This also
means that the firm has used its capital very efficiently.

EBITDA Margin

EBITDA or operating profit is equal to gross profit sans indirect expenses excluding interest and
taxes. EBITDA is a strong indicator of company’s operational efficiency. If a company has high
operating profit, then it means it has been able to reduce its operational expenses very good.

ITNL’s FY18 EBDITA margin stands at 55.8% a thirteen percent increase from FY17. This is a
testament to the fact that company is very efficient in curtailing its operational expenses.

Debt to equity ratio

The debt to equity ratio tells us about the relationship between long term debt of a firm to its total
equity. It is a great way for us to understand INTL’s indebtedness.

We observe that the debt to equity ratio is rising year after year from 1.14 in FY 2014-15 to 2.85 in
FY 2017-18.

The ratio jumped from 1.39 in FY 2015-16 to 3.02 in FY 2016-17, an increase in 122%. The reason is
equity decreased from 4309.72 Cr to 2829.12 Cr and long-term liabilities increased from 5868.27 Cr
to 8565.71 Cr.

It shows that company is doing business in a very risky business and investors should be vary of the
company.

Interest coverage ratio:-

Interest coverage ratio tells us about how many times a company can cover its interest payment
with its available earnings. The lower the ratio, the riskier is the position of the company and the less
chance it has to pay off its interest.

The interest coverage ratio was very low in FY 2016-17 (1.1) and in FY 2017-18 (1.4). It shows that
the chance of INTL to actually pay of its interest is very low and there is a serious risk of default.

Equity ratio:-

Equity ratio shows the relation between owner funds and total capital. A higher ratio indicates that
larger portion of a company’s capital comes from equity than debt. The ratio is 0.2 for FY 2017-18,
0.2 in FY 2016-17, 0.3 in FY 2015-16 and 0.3 in FY 2014-15. The extremely low ratios show that most
of INTL’s capital comes from debt which makes it a very risky proposition.

Debt ratio:-

Debt ratios tells us about company’s long-term debt in comparison to its total capital. Lower the
ratio, stable the company as its long-term liabilities will be a lot smaller than its total capital.

The debt ratio of INTL was 3 in FY 2017-18, 2.9 in FY 2016-17, 1.4 in FY 2015-16 and 1.1 2014-15. The
% increase in ratio from FY 2015-16 to FY 2016-17 is 122%. The high debt ratio of INTL indicates that
its long term liability is very high compared to its total capital which if not controlled can spiral down
into indebtedness.

Current ratio:-

Current ratio is the working capital ratio. The current ratio is 1.2 in FY 2017-18, 1.6 in FY 2016-17, 1.5
in FY 2015-16, 1.2 in FY2014-15. We observe that ratio is decreasing for INTL in 4 years which tells us
that their ability to pay of their current liability might be coming down.

Quick ratio: -

Quick ratio or acid test ratio measures the company’s ability to pay off its current liability (minus a
few) with only selling their quick current assets. The acid test ratios are 1.2 for FY 2017-18, 1.5 for FY
2016-17 1.5 in FY 2015-16 and 1.2 in FY 2014-15. We observe that quick ratios of INTL is decreasing.

Return on assets: -It indicated how well a company utilizes its asset, by determining how
profitable a company is relative to its total asset. It helps an investor to look at the efficiency
of company’s management efficacy to use its asset. Higher ROA indicated more asset
efficiency. From FY 14-15 the company ROA is increased by only few margins. In FY 17-18
it is 10.4%.

Note: - ROA does not account for outstanding liabilities and may indicate a
higher profit level than derived.

Operating Margin
It is calculated by dividing a company’s operating profit by its net sales. The operating
margin measures how much profit a company makes on a dollar of sales, after paying for
variable costs of production, such as wages and raw materials, but before paying interest or
tax. It is calculated by dividing a company’s operating profit by its net sales. Highly variable
operating margins are a prime indicator of business risk. The operating margin is variable
from 28% in FY15-16 to 56% in FY-17-18.

Net Income Margin

The net profit margin, also known as net margin, indicates how much net income a company makes
with total sales achieved. A higher net profit margin means that a company is more efficient at
converting sales into actual profit. In FY16-17 the net income margin is 6.4% which increased to 7.1%
in FY 17-18. Ideally a company should have net income margin of 15%.

From the ratio analysis, we observe that