ACADEMIC TASK NO: 1

MITTAL SCHOOL OF BUSINESS

Course Title: FINANCIAL REPORTING, STATEMENTS & ANALYSIS
Course Code: ACCM506
Student’s Name: Mnyambwa Joseph Kongola
Reg. No: 12100040
Date of submission: 10/16/21

FINANCIAL ANALYSIS ON INDIA GLYCOLS LIMITED:

1. INTRODUCTION:

India Glycols is a leading company that manufactures green technology-based bulk,

specialty and performance chemicals and natural gums, spirits, industrial gases, sugar and
nutraceuticals.

The company was established as a single mono-ethylene glycol plant in 1983. Since then,
IGL has brought together cutting-edge technology, innovation and an unflagging
commitment to quality, to manufacture a wide range of products that have found global
demand.

IGL’s state-of-the-art, integrated facilities manufacture chemicals including glycols,

ethoxylates, glycol ethers and acetates, and various performance chemicals. Its product
range spans the chemicals, spirits, herbal and other phytochemical extracts and guar gum,
industrial gases and realty sectors, and finds application across an increasing number of
industries.

These products are manufactured in compliance with stringent global standards of plant
operations, quality and safety. The company’s facilities have been approved and certified
by international agencies including Det Norske Veritas (DNV). The operations at all
plants are closely monitored through distributed control systems (DCS), which facilitate a
high degree of control over the quality of products.

Keeping in mind the critical dependence on agricultural feedstock, the company has
taken up several initiatives including backward integration into sugar manufacturing to
ensure seamless raw material availability. Other complementary initiatives include co-
opting the cane growing community to ensure cane availability while providing adequate
returns to the farmer.

Apart from chemicals, India Glycols has a significant presence in the natural active
pharmaceuticals and nutraceuticals space with Ennature Biopharma; a well-established
natural gum division manufacturing guar gum and a variety of derivatives; a spirit’s
division that manufactures country and Indian-made foreign liquor adhering to the
highest quality standards; and Shakumbari Sugar – a well-established player in the Indian
sugar industry.
2.0 COMPANY ANALYSIS THROUGH HORIZONATL ANALYSIS:

A: Comparative Balance sheet of the company for the past 3 years (2021, 2020, 2019).
(Consolidated Figures in Rs. Crores)
Below is the Excel sheet indicating the Horizontal Comparative Balance sheet of the
Company for the past 3 years;

The above spreadsheet indicates the change in value and percentage across 3 years of the
company’s balance sheet, source of data was obtained from;
https://www.screener.in/company/INDIAGLYCO/consolidated/#balance-sheet
B: Comments upon the Current Assets & Non-Current Assets, Current Liability & Non-
Current Liabilities:
I. Current Assets & Non-Current Assets:

As it can be observed from the data above the Current Asset of the
company indicates; that the inventory has increased by 5.4% from the
year 2019-2020, that is the company had enough stock to operate the
business, hence enough products to supply at the market. But
considering the financial period 2020-2021, the company has faced a
drastic drop in inventory by negative 10.6%, this indicates that there
was more supply at the market, and this is why the company has less
trade receivables negative 36% which show that the customers have
paid their dues, hence increasing Cash equivalents by 6%.

However, considering the Fixed Assets the company maintain most of

the assets through out the business period that is, no new vehicles,
intangible assets and other fixed assets. But still the company in the
year 2020-2021, had a decrease in plant machinery by (0.2%) that
indicates some machines had retire from operation.

II. Current Liabilities and Non-Current Liabilities:

Given the data above, the Current liabilities particularly Trade payables
have been decreasing throughout the business period by 2019-2020 it
decreased by (2.8%) and 2020-2021 by (19.5%). This indicates that
the company is able to deliver services to its customers and supply them
goods on time.

However, Non-Current liabilities the company has maintained it Equity

capital throughout the business period of 2019-2021 as there is no
change, but the company has been able to increase its reserves as
observed on the period of 2020-2021 there is an increase on reserve by
13.5%, hence this was brought up when the company borrowed revenue
from the public. Which led to also the increase in borrowings by 13.8%.
 2.0 RATIO ANALYSIS:

A. How the company has performed compared to the last two

years.
I. Current Ratio;

Current Ratio = Current Assets/Current Liabilities

The above shown Excel sheet is the data that was calculated according to the given values from
the balance sheet, as it is observed the Current ratios of 3 years there is a very small difference.
That is Given that the Current ratio of 2019,2020 and 2021 are 0.79, 0.89 and 0.97
Respectively. However, the current ratio is still below 1 in the last financial year 2020-2021
which was 0.97, this indicates that the company does not have enough liquid assets to cover any
short-term liabilities.
Eventually in each financial year the company has been improving to meet its liabilities, so it’s a
positive change from the year 2019 to 2021. That means the company is capable of doing better
in the future if it continues with the trend.
 II. Debtor Turnover Ratio:

Debtor Turnover Ratio = Net Sales/ Average Debtors

Whereby; Net Sales = (Sales – Return sales)
Average Debtors = Average debtors = (Beginning + Ending stock)/2

The above table indicates the calculated Debtors Turnover Ratio for the financial period of 2019
to 2021. Data was obtained from,
https://www.screener.in/company/INDIAGLYCO/consolidated/#profit-loss
According to the observation, the company’s Debt ratio has been changing from 2019 to 2021,
that is in the year 2019 the company had a high debt ratio of 6.1 which indicates that the
company was doing a good job at collecting revenue from its customer base.
Eventually from the financial year 2020 to 2021, the debt ratio has dropped to 4.1 in 2020 and
3.5 in 2021. This shows that the company has poor collection which leads to extending credits to
bad customers for a very long period.
 III. Debt Equity Ratio:

Debt Equity Ratio = Total Liabilities/Total Equity

Whereby; Total liabilities = Long-term borrowings + Debentures
Total Equity = Equity share capital + preference share capital + All reserves &
Surplus – Fictitious assets.

The above excel sheet indicates the calculated Debt Equity Ratio of the company for the 3-year
financial period.
According to the observed data, it shows that during the year 2019 the company had a debt ratio
of 1.04, meaning that the company uses Rs.1.04 in debt for every Rs.1 of equity. Hence this was
the highest ratio compared to the current year.
However, the financial years 2020 and 2021 had a small decrease in ratio that was 0.94 and 0.95
respectively this shows that the company has reduced the risk towards loans/debt.

IV. Proprietary Ratio:

Proprietary Ratio = Proprietor’s Funds/Shareholder’s Funds

Total Asset
Where as; Shareholder's Equity or funds or Net-worth = Equity share capital + Preference
shares Capital+ All Reserve & Surplus – Fictitious Assets

The above Excel sheet indicates the Proprietary ration of 3 financial period of the company, as it
is observed the company has a low ratio that is below 1 as seen the ratios are 0.26, 0.26 and 0.29
for the year 2019, 2020 and 2021 respectively.
However, this indicates that the company is at a high risk of bankruptcy due to much use of the
trade payables rather than equity.

3.0 COMPANY’S PERFORMANCE COMPARED TO ITS COMPETITORS:

 Pidilite Industries Ltd:

Pidilite Industries Limited is a leading manufacturer of adhesives and sealants,
construction chemicals, craftsmen products, DIY products and polymer emulsions in
India. We will compare this industry to INDIA GLYCO.

Using profitability ratios;

1. Return on Asset
Where by; Return on asset = Net Income / Total Asset
 Above is the Excel sheet indicating the calculated Return on Asset for financial
years of the companies, 2020 and 2021.

Significantly comparing the two company’s return on asset, it indicates that

PIDILITE Ltd. Has a better performance thus having more return on assets compared
to INDIA GLYCO, which indicates that PIDILITE is making more profit in every
money that is spent in purchasing an asset.

2. Return on Investment:

Whereas; ROI = (Earnings Before Interest and Tax/ Total funds) *100
The above Excel sheet indicates the calculated Return on Investment for both companies, A clear
picture is shown by the competitor PIDILITE Ltd. Its return is higher than INDIA GLYCO. For
both 2 financial years.
CONCLUSION:
So, based on the information collected and analyzed from the above two companies,
PIDILITE and INDIA GLYCO, I would prefer to invest on PIDILITE because it
seems to have a high return at the end of the financial period, hence this indicates that
the company is serious on doing business and has a focused target in the future.