IRCTC

Indian Railway, Catering and Tourism Corporation

(Financial Analysis Report)

AN ASSIGNMENT REPORT

MASTER OF BUSINESS ADMINISTRATION

(MITTAL SCHOOL OF BUSSINESS)
LOVELY PROFESSIONAL UNIVERSITY
PHAGWARA, PUNJAB

Declaration:
I declare that this Assignment is my work. I have not copied it from any other student’s work or any other
source except where due acknowledgment is made explicitly in the text, nor has any part been written for me
by any other person. I had done this assignment on my own, in this, I have not been assisted in any way by any
person.

NAME: - Ashwani Rai

ROLL NO.:- A03
REGISTRATION NO.:- 12101556
SUBMITTED TO: - Dr. Sachin
COURSE: - FINANCIAL REPORTING, STATEMENTS AND ANALYSIS-I

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INTRODUCTION:-
IRCTC stands for Indian Railway, Catering, and Tourism Corporation. It is
a subsidiary of Indian railways which handles the catering tourism and
online ticket booking operations of railways. The tagline that IRCTC uses
is “Life Line of Nations”. In this report making, we will be having a deep
sight into the financial analysis of the company through the comparative
balance sheet and ratio analysis of the company. Despite having an
epidemic of the year 2020, IRCTC is still holds good market positon and is
financially sound. A tourism package for average tourists covering good
tourist locations across India is called "Bharat Darshan" is also provided
by IRCTC. There is also a facility of adventure tourism which includes water sports, adventure and wildlife track,
etc. The current chairman and managing director of IRCTC is Smt. Rajni Hasija.

HISTORY:-
The company was incorporated in September, 1999 and started its operations year December, 1999. It is a
central public limited enterprise fully owned by government of India and administrative control of ministry of
railway. It has be recognized with the status of Mini-Ratna by the government of India in year 2018. As per the
record says of 31 august 2019, more than 1.40 million passengers travelled on Indian railways out of which
72.60% tickets were booked from IRCTC. The ticket booking window online is open 24x7 and its online services
goes offline just from maintenance proposes daily from 23:45 to 00:20 hours. The company is only authorized
firm for selling and distribution of packed drinking water on railway stations and trains. The brand it uses for
water selling “RAIL NEER”. Currently it has ten rail neer plants in all over India and produces approximately 1.90
million liters of water per day.

OBJECTIVE OF REPORT:-
In this report we will be covering the comparative analysis of balance sheet of three year 2019, 2020, 2021. We
will be interpreting the results of the comparative balance sheet and commenting on the important head of the
balance sheet. We will also it doing the ratio analysis to know the financial strength of the company. For the
ration analysis we will be using the liquidity, efficiency and solvency ratios of the company. There will be also a
peek into the peer pressure of the company by analyzing the profitability ratio of the company and the
competitor. At the last of the report the reader will be sure to invest or not to invest money in company shares.
The main objective of the report is to have over view of the financial condition of the company by the means of
comparative analysis and ratio analysis of the company.

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COMPARATIVE ANALYSIS: -
BALANCE SHEET ANALYSIS:-

Mar-21 Mar-20 Mar-19 Absolute Percentage (%) Absolute Percentage

Change(2020 Changed(2020- Change(201 (%)
-2021) 2021) 9-2020) Changed(2019
-2020)
EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS
Equity Share Capital 160 160 160 0 0 0 0
TOTAL SHARE 160 160 160 0 0 0 0
CAPITAL
Reserves and Surplus 1,306.95 1,167.82 911.02 139.13 11.91 256.8 28.188
TOTAL RESERVES 1,306.95 1,167.82 911.02 139.13 11.91 256.8 28.188
AND SURPLUS
TOTAL 1,466.95 1,327.82 1,071.02 139.13 10.47 256.8 23.977
SHAREHOLDERS
FUNDS
NON-CURRENT
LIABILITIES
Long Term 0 0 0 0 0 0 0
Borrowings
Deferred Tax 0 0 0 0 0 0 0
Liabilities [Net]
Other Long Term 88.75 86.85 20.53 1.9 2.18 66.32 323.04
Liabilities
Long Term Provisions 72.57 48.88 46.16 23.69 48.46 2.72 5.8925
TOTAL NON- 161.31 135.73 66.69 25.58 18.84 69.04 103.52
CURRENT LIABILITIES
CURRENT LIABILITIES
Short Term 0 0 0 0 0 0 0
Borrowings
Trade Payables 180.31 169.54 193.13 10.77 6.35 -23.59 -12.21
Other Current 1,346.62 1,585.64 1,249.64 -239 -15.07 336 26.888
Liabilities
Short Term Provisions 10.85 31.11 13.75 -20.26 -65.12 17.36 126.25
TOTAL CURRENT 1,537.78 1,786.29 1,456.52 -248.5 -13.91 329.77 22.641
LIABILITIES
TOTAL CAPITAL AND 3,166.04 3,249.84 2,594.24 -83.8 -2.578 655.6 25.271
LIABILITIES
ASSETS
NON-CURRENT
ASSETS
Tangible Assets 275.93 251.66 147.05 24.27 9.64 104.61 71.139
Intangible Assets 6.69 4.34 7.55 2.35 54.14 -3.21 -42.52
Capital Work-In- 24.3 16.21 40.38 8.09 49.90 -24.17 -59.86
Progress
Other Assets 27.34 27.39 27.66 -0.05 -0.18 -0.27 -0.976
FIXED ASSETS 334.26 299.6 222.63 34.66 11.56 76.97 34.573
Non-Current 0 0 0 0 0 0 0
Investments

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 Deferred Tax Assets 71.89 65.72 81.72 6.17 9.38 -16 -19.58
[Net]
Long Term Loans And 0.19 0.18 2.39 0.01 5.55 -2.21 -92.47
Advances
Other Non-Current 34.76 26.34 22.95 8.42 31.96 3.39 14.771
Assets
TOTAL NON- 441.1 391.85 329.7 49.25 12.56 62.15 18.85
CURRENT ASSETS
CURRENT ASSETS
Current Investments 0 0 0 0 0 0 0
Inventories 6.54 9.76 7.89 -3.22 -32.99 1.87 23.701
Trade Receivables 540.05 789.41 587.45 -249.4 -31.58 201.96 34.379
Cash And Cash 1,460.50 1,296.43 1,140.04 164.07 12.65 156.39 13.718
Equivalents
Short Term Loans And 11.25 11.89 8.35 -0.64 -5.38 3.54 42.395
Advances
Other Current Assets 706.6 750.5 520.81 -43.9 -5.84 229.69 44.102
TOTAL CURRENT 2,724.94 2,857.99 2,264.54 -133.1 -4.65 593.45 26.206
ASSETS
TOTAL ASSETS 3,166.04 3,249.84 2,594.24 -83.8 -2.57 655.6 25.271

ANALYSIS
COMPARATIVE BALANCE SHEET ANALYSIS:-

1- TOTAL SHAREHOLDER'S FUND:-

Company has not raised any funds from the share market but the rise in the shareholder’s fund is because of
the increase in reserves and surplus which indicates company has retained earns for its future plans. Change of
reserve and surplus is of 28.18% for year 2019 to 2020 and 11.91% for year 2020 to 2021.

TOTAL SHAREHOLDERS ABSOLUTE CHANGE ON

1,600.00 FUNDS SHAREHOLDER'S FUND
1,400.00 300
1,200.00 256.8
250
1,000.00
200
800.00
150
600.00 139.13

400.00 100

200.00 50

0.00 0
1 2 3 1 2

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 2- TOTAL NON-CURRENT LIABILITIES:-
Total of the non-current liabilities has shown increased by 103.53%, as compared to year 2019 to 2020 and
18.84% in year 2020 to 2021. This increase is because of the increase of the long term provisions which shows
company was getting more secure towards the unforeseen future risks. This increase is also because of rise in
the other liabilities of the company which includes customer deposits and differed credit kind of items.

TOTAL NON-CURRENT LIABILITIES

180
160
161.31 135.73
140
120
100
80
60 66.69
40
20
0
1 2 3

3- TOTAL CURRENT LIABILITIES:-

Current liabilities shows the short term or daily burden on company. As the company balance sheet shows there
is rise and fall in current liabilities, for which epidemic could be a possible reason. We see fall in trade payables
in years 2019 to 2020 of 12.21% but
it has raised in year 2020 to 2021 of ABSOLUTE CHANGE IN CURRENT
6.35%. In the contrast we can see fall
of 13.91% in current liability from
LIABILITIES
year 2020 to 2021. This is because of
the fall in the short term provisions
of the company which is by a guess
329.77
that provisions have been used in
epidemic period.

1 2
-248.51

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 4- NON-CURRENT ASSETS:-
Non-current assets hold all the fixed assets and big investments of the company, it is the item of the balance
sheet that owns the biggest proportion of the company’s investments and is termed as the foundation of the
company. Tangible assets of the company shows the rise of 71.13% for year 2019 to 2020 and just a slight rise
of 9.64% for year 2020 to 2021. The company’s deferred tax assets has reduction for year 2019 to 2020 of
19.58% but it has again raised to 71.89cr. Which is still lower than the 2019 levels. The overall change in the
non-current assets is more for the year 2019 to 2020 i.e. 18.85% in compared to the change for year 2020 to
2021, which is just 12.56%. This shows that company has suitable plans for acquisition and disposability of non-
current assets.

TOTAL NON-CURRENT ASSETS

441.1
391.85
329.7

2021 2020 2019

5- CURRENT ASSETS:-
Current assets of the company is showing good liquidity signs, though the current assets chart has hit the
downfall of -4.65% for year 2020 to 2021 as compared with the change of year 2019 to 2020 which is 26.20%.
This fall is because of the epidemic lockdown and stopped operations of railways for almost 6 months. Also
the company’s current invest has fall which shows they were financing their daily operations out of current
investments. Trade receivables of the company are showing good flow of going up and down i.e. it has
increased in year 2020 from 2019 by 34.37% but soon next year they got the payments and it fell by 31.58%
from year 2020 to 2021. This trend shows IRCTC can trust their debtors in regards of the payment cycle.

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 TOTAL CURRENT ASSETS

2019 2,264.54

2020 2,857.99

2021 2,724.94

0.00 500.00 1,000.00 1,500.00 2,000.00 2,500.00 3,000.00 3,500.00

RATIO ANALYSIS:-
1- CURRENT RATIO:-
= CURRENT ASSETS / CURRENT LIABILITIES

For year 2020

= 2857.99/1786.29
=1.59
For year 2021
= 2724.94/1537.78
CURRENT RATIO
=1.77
1.77

1.59

2020 2021

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Favorable current ratio is 2:1 i.e. 2. But we can see that IRCTC has the ratio in both the years below 2 which is
1.59 and 1.77 in year 2020 and 2021 respectively. It shows that IRCTC has lack of liquidity and shortage of
working capital.

2- DEBTOR TURNOVER RATIO:-

=NET CREDIT SALES/AVERAGE DEBTORS
For year 2020
=2275.18/688.43
=3.3
For year 2021
=782.96/664.73
=1.17

DEBTOR TURNOVER RATIO

3.3

1.17

2020 2021

We can see from the above analysis in 2020 IRCTC had better collection of dues over debtors as compared to
the 2021. IRCTC needs to improve its collection policies in order to mat the short term financial needs.

3- DEBT EQUITY RATIO:-

= LONG TERM DEBTS / SHAREHOLDER’S FUND
For year 2020
=175.73/1327.42
=0.13

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For year 2021

=161.31/1306.96
=0.12

DEBT EQUITY RATIO

0.13

0.12

2020 2021

Ideal debt equity ratio is 2:1, but in contrast we see IRCTC has not maintained its debt equity ratio. We can say
that it is safe for the long term lender of the company as their money will be in safe hands and it is protected
from financial goodwill.

4- PROPRIETARY RATIO :-

= PROPRIETOR’S FUND OR SHAREHOLDER’S FUND /NON CURRENT ASSETS+CURRENT ASSETS*100

For year 2020
=1327.82/3249.84*100
=40.85%
For year 2021
=1466.95/3166.04*100
=46.33%

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 PROPRIETARY RATIO

2021 46.33%

2020 40.85%

Improved proprietary ratio shows that company has large proportion of the total assets is provided by equity
and hence the firm is less dependent on external sources of finance. We can clearly see that proprietary ratio
has improved from 40.85% to 4.33% in year 2020 to 2021. This shows company is less depend on the external
sources of finance.

PEER PRESSURE ANALYSIS

The closest competitor of IRCTC is “INFO EDGE INDIA LTD.” the company runs the business of job portal as
“NAUKRI.COM”, matrimony website “JEEVANSATHI.COM” and real estate classifieds platform 99Acres.com.
The company has strong market position and hence making it a closest and toughest competitor of IRCTC.

PROFITIBILITY RATIO:-
1- RETURN ON ASSETS:-
= NET PROFIT AFTER TAX / AVERAGE TOTAL ASSETS

Of IRCTC:-
= 189.90/ (3166.06/2)
=189.90/1583.03
=0.119

OF INFO EDGE INDIA LTD.:-

=270.94/ (5305.89/2)

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 =270.94/2652.94
=0.102

RETURN ON ASSETS

0.119

0.102

IRCTC INFO EDGE INDIA LTD.

IRCTC has shown good return on assets as compared to INFO Edge India Ltd. We can conclude that IRCTC is
getting good return on assets and hence it is dominating it closest competitors too. IRCTC has employed its
assets in best manner as compared to the Info Edge India Ltd.

2- RETURN ON INVESTMENT (ROI):-

= NET PROFIT BEFORE INTEREST, TAX, AND DIVIDENDS/CAPITAL EMPLOYED *100

Of IRCTC:-
=229.64/1539.52*100

=14.91%

OF INFO EDGE INDIA LTD.:-

=916.93/9128.54*100
=10.04%

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 RETURN ON INVESTMENT
20.00%

15.00%
14.91%
10.00%
10.04%
5.00%

0.00%
IRCTC INFO EDGE INDIA LTD.

Return on investment mainly focuses in the profitability efficiency of the capital employed. This ratio is treated
as the economic barometer of the company and hence it is an important ratio of analysis. IRCTC has good ROI
ratio of 14.91% as compared to the Info Edge India Ltd. has ROI of just 10.04%. This shows company is making
more profit on the investment they had done in business as compared to other.

SHOULD WE INVEST IN IRCTC SHARES OR NOT?

Company has good financial performance thought out the three consecutive years. Analysis of company’s
balance sheet in comparative manner shows even in the surge of epidemic, company has shown good response
to the profitability and operations of business. Ratio analysis of the company has shown the company is going
well in almost all aspects of the analysis. For a suggestion point we can say that company should use the
borrowed funds too, it will not only help to improve the area of operations but also it will make its profit wider
Yes, I will be investing in the company’s share because company is doing good as compared
to the competitors like Info Edge India Ltd. The company has good ROI and ROA then its closest competitor and
also company is showing good signs of financial stability. Being the lifeline of India (Indian Railways) authorized
company IRCTC has public faith and also is suitable for the investment in long term as well as short term. The
company shows the good proprietary ratio of 46.33% which means the funds invested will be safer as company
relay on external sources of finance very less.

REFERANCE:-
https://www.moneycontrol.com/india/stockpricequote/miscellaneous/irctcindianrailwaycateringtourismcorp/IRC

https://www.moneycontrol.com/india/stockpricequote/miscellaneous/infoedgeindia/IEI01

https://www.moneycontrol.com/financials/infoedgeindia/balance-sheetVI/IEI01#IEI01

https://www.moneycontrol.com/financials/infoedgeindia/profit-lossVI/IEI01#IEI01

https://www.moneycontrol.com/financials/infoedgeindia/balance-sheetVI/IEI01#IEI01

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