A Practical Exam Project Report on the Courses of

Accounting for Business Decision

For the Topic

(Annual Report of Cupid Company)

By

Division Roll No. Name of the Student

B 2.1 02 Aditya Kamalakar Chaudhari
B 2.1 06 Ajinkya Dhakad
B 2.1 34 Niharika Kaswan
B 2.1 45 Rucha Thakare
B 2.1 54 Shubham Bawankar
B 2.1 56 Smith Shinde

SUBMITTED TO
Shree Chanakya Education Society’s
Indira Institute of Management, Pune

In partial fulfillment of the requirements of

External Practical Exam Project 2021 (Semester – I)
MASTER OF BUSINESS ADMINISTRATION
YEAR 2020-2022
Table of Contents
1.INTRODUCTION of CUPID Limited- ............................................................................................................ 2
2.Statement of Profit and Loss for the period ended 31st March 2020 ........................................................ 3
2.1.Reasons for growth in performance of company in FY2019-2020: .................................................... 4
3.Explanation of critical items in income statement: ................................................................................... 4
4.Balance sheet at 31st March 2020- ............................................................................................................ 7
5.Explanation of critical items in Balance sheet- .......................................................................................... 8

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1.INTRODUCTION of CUPID Limited-
Cupid Limited (A leading manufacturer & supplier of quality Male condoms, Female Condoms
& Water based Lubricant Jelly) was incorporated as a Public Limited Company in 1993 with the
Registrar of Companies, Maharashtra and listed on BSE (Bombay stock Exchange) in 1995 and
on NSE (National stock Exchange) in 2016.
Our modern facility has a current capacity of over 480 million pieces for Male Condoms ,
52 million pieces of the Female Condoms & 210 million sachets of Lubricant Jelly per annum.
Its manufacturing facility is located at Sinnar near Nashik, about 200 Km. East of Mumbai.
It is the first company in the world to obtain Pre-qualification status from WHO/UNFPA for
supply of both Male & Female condoms.
Cupid Ltd. has an active R&D center in addition to its main production facility. Cupid ltd. works
with healthcare professionals, governments and organizations to support them in promoting good
sexual health and the importance of consistent condom use to prevent HIV and other STDs.
Cupid has an important role to play.

The Company witnessed strong performance in Fiscal Year 2020 with highest turnover and
highest net profit in its 27 years history on the back of strong demand for Male and Female
Condoms especially in the export market. The revenue of the Company increased significantly
by 88.7% from Rs 854.7 mn in FY19 to Rs 1,612.5 mn in FY20. Out of the total operating
revenues, the Female Condoms contributed about 59% in value terms as against 39% for the
Male Condoms, and Water Based Lubricant Jelly added around 2%. From a margin standpoint,
our EBITDA margins improved to 34.6% in FY20 against 27.0% in FY19. At the net profit
level, Cupid closed this financial year with a net profit of Rs 398.4 mn (FY20) as against Rs
152.1 mn in the previous year. Cupid achieved the highest ever export sales at 91% of total
revenue in FY20. Capacity utilization during the year were 86% and 92% for the Male and
Female Condom production respectively. During the year, the Company commenced export of
Female Condoms to Brazil and also exported to Tanzania and South Africa. With sales to 8 new
countries during the year through UNFPA, the company has sold its products to over 80
countries worldwide. Also, the Company received “SPECIAL EXPORT AWARD” by the
Chemical and Allied Export Promotion Council of India (CAPEXIL) for the years 2015-16 &
2016-17 at an award function at Vigyan Bhawan in New Delhi

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 2.Statement of Profit and Loss for the period ended 31st March 2020

%
As at As at % of Total
Particulars Notes growth/decline
31.03.2020 31.03.2019 Revenue
from last year
INCOME
Revenue from operations 21 16,125.05 8,546.69 97.9380535 88.6701167
Other income 22 339.49 247.12 2.06194646
Total income 16,464.54 8,793.81 100
EXPENSES

Cost of materials consumed 23 4,994.80 3,682.23 30.3367115 35.6460623

Changes in inventories of finished goods, work in process and 24 (757.75) 55.26 -4.602315
stock in trade
Employee benefits expense 25 874.08 720.00 5.30886378
Finance costs 26 52.85 10.73 0.32099287
Depreciation and amortisation expense 27 249.96 201.45 1.51817178
Other expenses 28 5,780.20 2,032.80 35.1069632 184.346714
Total expenses 11,194.13 6,702.47 67.9893274 67.014996
Profit / (Loss) before tax 5,270.41 2,091.34 32.0106726 152.011151
Less : Tax expenses 0
- Current tax 1,316.64 561.68 7.99682226
- Short /(excess) provision of earlier years (9.37) 3.31 -0.0569102
- Deferred tax (20.92) 5.44 -0.1270609
Total tax expense 1,286.35 570.43 7.81285113

Profit / (loss) for the year 3,984.06 1,520.91 24.1978215 161.952384

Other Comprehensive Income

Items that will not be reclassified subsequently to profit or loss

Remeasurement of employee defined benefit obligation (33.82) (4.85)
Income tax relating to items that will not be reclassified to profit 8.51 1.41
or loss
(25.31) (3.44)
Total comprehensive income for the year 3,958.75 1,524.35

Earnings per equity share 29

Nominal value of share Rs.10 :Basic 29.87 11.40
Diluted 29.87 11.40

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2.1.Reasons for growth in performance of company in FY2019-2020:
Currently Cupid Limited is a leading condom manufacturing company in India engaged in
designing, manufacturing and marketing of Male Condoms, Female Condoms and Lubricant Jelly.
Factors that are driving the growth of condoms are:
1. Growing awareness of sex education programs
2. Innovations in condom designs
3. increased popularity of female condoms
4. Influence of the internet in shaping the purchasing behaviour among end-users
5. Government initiatives:
The increased demand from institutions such as public health organizations, NGOs, and
global organizations to promote the concept of safe sex and increase the awareness of HIV
and sexually transmitted diseases (STD) is significantly contributing to the growth of the
condom market worldwide. Institutional buyers such as UNFPA, USAID, WHO, and other
UN agencies are the most significant promoters of male and female condoms. Governments
across the globe are making substantial expenditure on condoms and freely distributing in
vulnerable areas to prevent incidence of sexually transmitted diseases and curb the global
population.

3.Explanation of critical items in income statement:

1.Revenue from operations
Cupid Limited achieved the highest ever export sales at 91% of total revenue in FY2020. Capacity
utilization during the year were 86% and 92% for the Male and Female Condom production
respectively. During the year, the Company commenced export of Female Condoms to Brazil and
also exported to Tanzania and South Africa. With sales to 8 new countries during the year through
UNFPA, the company has sold its products to over 80 countries worldwide.
Commencement of export of Female Condoms to Brazil along with other new and repeat orders
led to substantial growth in revenues. In the total operating revenues, the Male Condoms
contributed about 39% in value terms as against 59% for the Female Condoms and Water Based
Lubricant Jelly and Hand Sanitiser collectively contributed around 2% as well.
Revenue from operations includes sale of products of Rs.15,397.38 lacs and Export benefits &
duty drawback incentives of Rs. 549.54 lacs and Gain on foreign exchange fluctuations of Rs.
178.13 lacs for the year ended on 31st march 2020.
Therefore, revenue from operation as of 31st March 2019 was Rs. 8546.69 lacs which is Rs.
16,125.05 lacs as of 31st March 2020 which is 97.93% of total revenue and there is 88.67% of
growth in revenue from operations than that of 2019.
Total revenue increased from Rs. 8,793.81 lac in FY2019 to Rs. 16,464.54 lac in FY2020.

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Cost of materials consumed cost of material consumed includes Raw Materials of Rs.2,197.18
lacs, Furnace Oil of Rs. 76.55 lacs, Packing Material of Rs. 1,976.46 lacs and Stores and
Consumables of Rs. 468.28 lacs.
Cupid Limited is a leading manufacturer and supplier of quality Male condoms, Female condoms
and Water based Lubricant Jelly. So manufacturing is one of the main activities of the company
and therefore the total share of cost of material consumed for producing the products is Rs. 4994.80
lacs which is 30.3% of total revenue of the company.
Cost of materials consumed on 31st March 2019 was Rs. 3682.23 lacs and on 31st March 2020 it
was Rs. 4994.80 lacs. Therefore, it is observed that there is the growth of 35.64% than that of last
year (2019).
2.Other expenses
These are expenses that do not relate to the company’s primary business and are considered the
residual bucket in the Income Statement. In the Income statement, there various heads of
expenses like Finance costs, Fees and commission expenses, Cost of Material Consumed,
Impairment on financial instruments, Purchase of stock in trade, Employee benefits
expenses, Depreciation, and amortization, etc. All the expenses, which do not form part of the
above heads, will be part of it.
Other expenses include expenses like freight and transport, packing handling, power and fuel,
repairs and maintenance, administration expenses.
It is observed that some items from other expenses like packing handling, power and fuel,
commission on sales, trade expenses, GST expenses, clearing freight and transportation are
increased with noticeable amount as compared to last year.
Therefore, the other expenses as of 31 st March 2019 was Rs. 2032.80 lacs which is Rs. 5780.20
lacs as of 31 st March 2020 with a growth of 184.34% than that of last year 2019.
3.Total expenses
Total expenses of Cupid limited are increased as compared to last year because the maximum
components of total expenses have noticeably increased.
Total expenses as on FY 2019 were Rs.6702.47 lacs and as of FY2020 the expenses were Rs.
11194.13 lacs which is 67.98% of total revenue. Therefore we have seen 67.98% growth in F
2020 in total expenses than that of last year.
4.Profit Before Tax
PBT margins improved to 32.01% in FY2020 against 23.11% in FY2019. The reason for
improvement in the PBT was increased production capacity which leads to cost reduction and
finally resulted into improved PBT.

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From the margin standpoint, PBT margins stood at 32.01%in FY2020. On an absolute basis
there was a growth of 152% in PBT than that of last year. It is observed that PBT was increased
from Rs. 2091.34 lac in FY2019 to Rs. 5270.41lac in FY2020.
5.Profit for the year
At the net profit level, company closed this financial year with a net profit of Rs. 3,984.06 lac
as against Rs. 1,520.91 lac in the previous year which is an increase of 162%. Commencement
of export of Female Condoms to Brazil along with other new and repeat orders led to substantial
growth in revenues and this contributed in increase in net profit upto Rs. 3,984.06 lac
Cupid is a leading condom maker in India. It is also one of the only 3 WHO-approved
female condom manufacturers in the world. It exports its products to over 80 countries
around the world now. The company has had a mixed quarter revenue growth of 9% YoY
and flat PAT growth. The company seems to be well placed with a strong order book
ensuring revenues of more than Rs 121 Cr. It is seeing renewed demand for male condoms
and has also been able to improve the margin on this segment to 25%. The company is also
looking to expand in the medical testing space and has already serviced Rs 8.3 Cr of
orders. It also expects this business to bring in sales of Rs 50 Cr in FY2022.

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4.Balance sheet at 31st March 2020-

As at As at % of total
Particulars
31.03.2020 31.03.2019 asset
ASSETS
Non-current assets
Property, Plant and Equipment 2,600.46 2,077.95 15.78010311
Capital Work In Progress 315.64 6.7 1.915365645
Intangible assets 4.99 6.22 0.030280302
Right of Use -Leased Assets 25.3 0.15352538
Financial Non - Current Assets 0
Non Current Investments 0
Other financial assets 84.99 84.99 0.515736048
Other non-current assets 6.36 0.038593732
Total Non - Current Assets 3,037.75 2,175.86 18.4336649
Current assets 0
Inventories 1,647.96 791.4 10.00014564
Financial Current Assets 0
Trade receivables 4,189.12 2,278.51 25.42040468
Current Investments 2,121.87 2,217.56 12.87592479
Cash and cash equivalents 94.7 277.24 0.574658239
Bank balances other than cash & cash equivalents 3,588.83 605.45 21.7777268
Other financial assets 25.22 41.62 0.153039924
Other current assets 1,773.91 906.83 10.76443503
Total Current Assets 13,441.60 7,118.61 81.56627442
Total Assets 16,479.36 9,294.47 100
EQUITY AND LIABILITIES 0
EQUITY 0
Equity Share capital 1,333.80 1,333.80 8.093760923
Other Equity 9,012.47 6,259.72 54.68944182
Total Equity 10,346.27 7,593.52 62.78320275
LIABILITIES 0
Non-current liabilities 0
Deferred tax liabilities (net) 147.85 177.31 0.8971829
Provisions 63.04 31.68 0.382539128
Financial Liabilities 0
Lease Liability 10.29 0.062441745
Total Non Current Liabilities 221.19 208.99 1.342224455
Current liabilities 0
Financial Current Liabilities 0
Current Borrowings 3,129.75 229.25 18.99193901
Trade payables 0

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 i) Total Outstanding dues of Micro, Small and
449.75
Medium Enterprises 249.85 2.729171521
ii) Total Outstanding dues of Vendors other than
1,733.68
above 387.21 10.52031147
Other financial liabilities 203.12 435.24 1.232572139
Lease Liability 6.75 0.040960329
Other current liabilities 166.29 59.01 1.00908045
Income tax liabilities (Net) 222.56 131.4 1.350537885
Total Current Liabilities 5,911.90 1,491.96 35.8745728
Total Equity and Liabilities 16,479.36 9,294.47 100

5.Explanation of critical items in Balance sheet-

1.Property, Plant and Equipment:
Property, plant and equipment are the cost includes the cost of replacing part of the
property, plant and equipment and borrowing costs for long-term construction projects if the
recognition criteria are met. When significant parts of property, plant and equipment are required
to be replaced at intervals.
In the financial year of 2019, we can see that the cost for Property, Plant and equipment total cost
was Rs.2077, While in financial year 2020 it has been increased by 15%, which is in total of
Rs.2600.
Company recognizes such parts as individual assets with specific useful lives and depreciation.
When a major inspection is performed, its cost is recognized in the carrying amount of the plant
and equipment as a replacement if the recognition criteria are satisfied and the carrying amount
of old part is written off. All other repair and maintenance costs are recognized in the statement
of comprehensive income as incurred.
2.Inventories:
Inventories of Raw Materials, Finished Goods, Semi-Finished Goods, Accessories
&Packing Materials are valued at cost or net realizable value, whichever is lower. Goods in
transit are valued at cost or net realizable value, whichever is lower.
In the financial year of 2019, we can see that the cost for total cost for the inventory was Rs.791,
While in financial year 2020 it has been increased by 10%, which is in total of Rs.1647.
The cost of inventory of Raw material, packing material, Accessories and stores and spares
comprises of all cost of purchases, including non-refundable taxes, Semi Finished Goods,
Finished Goods and WIP comprise of conversion cost and other costs incurred in bringing the
inventory to their present location and conditions. Cost is arrived at on Weighted Average basis.
3.Trade Receivables:Trade receivables arise when a business makes sales or provides a service
on credit the total value of trade receivables for a business at any one time represents the amount
of sales which have not yet been paid for by customers.

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For trade receivables, we tested the effectiveness of control over (1) development of the
methodology for allowances for credit losses, including consideration of the current and
estimated future economics condition (2) completeness and accuracy of information used in the
estimation of probability of default and (3) computation of allowances for credit losses.
In the financial year of 2019, we can see that the cost for Trade Receivables total cost was
Rs.2278, While in financial year 2020 it has been increased by 25%, which is in total of Rs.4189.
For a sample of customer, we have tested the input data such as credit report and other credit
related information used in estimating the probability of default by comparing them to external
and internal source of information. We tested the mathematical accuracy and computation of the
allowances by using the same input data used by the company.

4.Current investment
Investments in Mutual Funds at fair value through Profit and loss
• 1096217 Units of Aditya Birla Sun Life Medium term plan - Growth Mutual Fund were
purchased in 2019 but in 2020 there was no additional units were purchased so the
growth was 0%
• 21275599 Units of HDFC Corporate Debt Opp. In 2019 the investment done was 324.56
lac but in 2020 it was increased to 354.16 lac. The growth in the investment was 9.12%
• 5165316 Units of Kotak Income Opportunities Fund. In 2019 the investment done was
1,050.78 lac but in 2020 it was increased to 1,133.82 lac. The growth in the investment
was 7.90%
• 1123254 Units of Kotak Medium Term Fund. In 2019 the investment done was 172.69
lac but in 2020 it was increased to 183.00 lac. The growth in the investment was 5.97%
• Corporate Fixed Deposit were 419.71 lac in 2019 which rise to 450.89 lac with a growth
rate of 7.42%
• Aggregate Value of Current Investments declined from 2,217.56 lac in 2019 to
2,121.87 lac in 2020. So there was an overall fall in the capital investment of 4.31%
as compared to last financial year.
Investing is important, if not critical, to make your money work for you. You work hard for your
money and your money should work hard for you.
As it happens, the bank is certainly not breaking a sweat paying you to keep your money in their
vault. The onus is on you to put your money at work.
Investing is how you take charge of your financial security. It allows you to grow your wealth
but also generate an additional income stream if needed ahead of retirement
Various investments such as stocks, ETFs, bonds, or real estate will provide either growth or
income but in some cases both.
5.Bank balances other than cash & cash equivalents

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Fixed deposits with original maturity of more than 3 to 12 months in 2019 was 530.03 lac which
was increased to 3,475.51 lac in 2020. There was 555.71% growth in the fixed deposits.
• There were 75.42 lac of unpaid dividends in 2019 which rise to 113.32 lac in 2020 with a
growth rate of 50%
• Bank balances other than cash & cash equivalents inclined from 605.45 lac in 2019
to 3,588.83 lac in 2020. So there was an overall rise in the Bank balances other than
cash & cash equivalents of 492.75% as compared to last financial year.

Your portfolio should contain a diversified set of investments for optimal performance. While
you would have invested in shares, mutual funds, bonds and bank fixed deposits, company
deposits is an investment option that you may have overlooked. Here is why you should consider
company deposits as well:

Diversification: Fixed and safe returns in an investment portfolio play a key role in limiting
portfolio risk. When you have predictable returns, you can plan for your future accordingly.
Company fixed deposits offer you stable returns over a fixed period of time.

Higher rate of returns: Company fixed deposits can offer a higher rate of interest than bank
fixed deposits.

Tax benefits: If your annual interest income from a company fixed deposit is less than Rs. 5,000
you do not need to pay any income tax on the returns from your company fixed deposit.

Nomination facility: When you invest in a company fixed deposit you can nominate someone
from your family to receive the proceeds of the deposit in case of your death. This cuts down on
paperwork and is extremely useful facility for investors.

Flexibility: Company fixed deposits are ideal investments in terms of liquidity. In case of a
financial emergency, you can prematurely withdraw money from a company fixed deposit. A
minimum lock-in period of 3 months applies.
6.Other current assets
• Balances with government authorities was at 876.30 lac in 2019 but in 2020 it almost
doubled to 1,637.10 lac with a growth of 86.81%
• Unamortized Portion of Rent didn’t change at all it was same in 2020 as that of 2019 that
is 1.63 lac
• Advance to Supplier was 1.75 lac in 2019 which rise to 73.58 lac in 2020 with a growth
of 4104.57%.
• Prepaid Expenses were also inclined from 18.90 lac in 2019 to 35.11 lac in 2020 with a
growth of 85.76%

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 • Other current assets were 8.25 in 2019 which show a rise of 220% in 2020 that is 26.48
lac.
• Other current assets inclined from 906.83 lac in 2019 to 1,773.91 lac in 2020. So
there was an overall rise in the other current assets of 95.61% as compared to last
financial year.

Current assets are all the assets of a company that are expected to be sold or used as a result of
standard business operations over the next year.

Current assets include cash, cash equivalents, accounts receivable, stock inventory, marketable
securities, pre-paid liabilities, and other liquid assets.

Current assets are important to businesses because they can be used to fund day-to-day business
operations and to pay for the ongoing operating expenses.

7.Current Borrowings
• Working Capital Assistance Loan from Banks has seen a fall from 229.25 lac in 2019 to
1.24 lac in 2020 there is a fall of 99.45%
• Working Capital in Foreign Currency for Pre and Post Shipment was not present in 2019
so in 2020 it was around 3,128.51 lac.
• Current Borrowings inclined from 229.25 lac in 2019 to 3,129.75 lac in 2020. So, there
was an overall rise in the Current Borrowings of 1265.21% as compared to last
financial year.

Suppliers need to be paid before customers settle their debts and this puts continual
pressure on cash flow. Keeping this cycle moving, and to avoid running out of money,
demands that a certain amount of money is available to the business at all times — working
capital.

Over time, the business can finance working capital out of profits, but this only comes after
a period of successful trading. If the business is growing quite fast, the capital required
could always be ahead of the surplus generated from trade, meaning continual borrowing is
needed.

7.Trade payables
• Total Outstanding dues of Micro, Small and Medium Enterprises has seen a rise from
249.85 lac in 2019 to 449.75 in 2020. With a growth of 80%.
• Total Outstanding dues of Vendors other than above has seen a rise from 387.21 lac in
2019 to 1,733.68 in 2020. With a growth of 347.73%
• The value of trade payables has inclined from 637.06 lac in 2019 to 2,183.43 lac in
2020 showing a growth of 242.73% as compared to last financial year.

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 A company may need more cash for its operations compared to its current cash reserves and
trade payables. When a company highly increases the trade payables balance, this decreases
the current and quick ratio of the financial statements.
These ratios involve current liabilities to calculate. The higher are the ratios, the higher it is
more favorable for the company. However, if the company needs more cash, they may
approach the finance providers such as banks.
Because of own interests, the bank will assess the financial performance of the company i.e.
the current and quick ratio. Lower ratios will make the bank reluctant to provide loans.
Other than that, trade payables are a part of the calculation of the credit rating of the
company by external evaluators when evaluating the credit ratings of different companies.

8.Other Equity
The other equity as of 31 march 2019 was 6,259.72 lac which was 9,012.47 lac as of 31
march 2020 with a growth of 43.97% than that of 2019.
Besides determining the value of a company, equity is important to businesses because it can
be used to finance expansion. Funding business expansion by selling shares of stock to
investors is “equity financing.” When a company sells stock, it sells equity to investors for
cash that it can use to fund growth. Equity financing is a way that companies can gain access to
a large amount of cash without having to take on debt.

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