ratio analysis of idea cellular ltd

1. UNIVRSITY OF MUMBAI
PROJECT REPORT
ON
ADVANCED FINANCIAL MANAGEMENT
RATIO ANALYSIS OF IDEA CELLULAR LTD.
BY
MISS YOGITA SAVARMAL VARMA
M.COM (Part II) (SEM III) (Roll No. 64)
ACADEMIC YEAR 2016-2017.
PROJECT GUIDE
PROF. KARIM
PARLE TILAK VIDYALAYA ASSOCIATION’S
M.L.DAHANUKAR COLLEGE OF COMMERCE
DIXIT ROAD, VILE PARLE (EAST)
MUMBAI - 400057.

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DECLARATION
I, Miss Varma Yogita Savarmal of PARLE TILAK VIDYALAYA
ASSOCIATION’S M.L.DAHANUKAR COLLEGE OF COMMERCE OF
MCOM (PART II) (Roll no. 64) (Semester III) hereby declare that I have
completed this project on RATIO ANALYSIS OF IDEA CELLULAR LTD. in
academic year 2016-17. The information submitted is true and original in the best
of my knowledge.
(Signature of student)

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ACKNOWLEDGEMENT
To list who all helped me is difficult because they are so numerous and the depth is so
enormous.
I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.
I would firstly thank the Universityof Mumbai for giving me chance to do this project.
I would like to thank my principal, Dr. Madhavi Pethe for providing the necessary
facilities required for completion of this project.
I even will like to thank our coordinator, for the moral support that we received.
I would like to thank our college library, for providing various books and magazines
related to my project.
Finally, I proudly thank my parents and friends for their support throughout the project.

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TABLE OF CONTENTS
SR NO. CONTENTS PAGE NO.
1 FINANCIAL MANAGEMENT - INTRODUCTION 5-8
2 RATIO ANALYSIS 9-11
3 IDEA CELLULAR LTD - INTRODUCTION 12-24
4 FINANCIAL STATEMENTS OF IDEA CELLULAR LTD 25-28
5 BALANCE SHEET RATIOS 29-33
6 REVENUE STATEMENT RATIOS 34-39
7 COMPOSITE RATIOS 40-44
8 CONCLUSION 45
9 BIBLIOGRAPHY 46

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FINANCIAL MANAGEMENT – INTRODUCTION
Financial management means procurement of funds at minimum costs and effective
utilization in order to maximize the wealth of shareholders.
The term of financial management refers to its relationship with the closely-related fields of
economics and accounting, its functions, scope and objectives. Financial management, as an
academic discipline, has undergone fundamental changes in its scope and coverage. In the early
years of its evolution it was treated synonymously with the raising of funds. In the current
literature pertaining to financial management, a broader scope so as to include, in addition to
procurement of funds, efficient use of resources is universally recognized.
Financial management, as an integral part of overall management, is not a totally,
independent area. It draws heavily on related disciplines and fields of study, such as economics,
accounting, marketing, production and quantitative methods. A part from economics and
accounting, finance also draws for its key day to day decisions on supportive disciplines such
as marketing, production and quantitative methods, for instance, financial managers should
consider the impact of new product development and promotion plans made in the marketing
area since their plans will require capital outlays and have an impact on the projected cash flows.
Finally, the tools of analysis developed in the quantitative methods area are helpful in
analyzing complex financial management problem. Organization makes their planning for the
financial sources which are very helpful in the future course of action.
Taking a commercial business as the most common organizational structure, the key
objectives of financial management would be to:
 Create wealth for the business
 Generate cash, and
 Provide an adequate return on investment bearing in mind the risks that the business is
taking and the resources invested.

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FINANCIAL ANALYSIS:
Financial analysis (also referred to as financial statement analysis or accounting
analysis or Analysis of finance) refers to an assessment of the viability, stability and profitability
of a business, sub-business or project.
It is performed by professionals who prepare reports using ratios that make use of information
taken from financial statements and other reports. These reports are usually presented to top
management as one of their bases in making business decisions. Financial analysis may
determine if a business will:
 Continue or discontinue its main operation or part of its business;
 Make or purchase certain materials in the manufacture of its product;
 Acquire or rent/lease certain machineries and equipment in the production of its goods;
 Issue stocks or negotiate for a bank loan to increase its working capital;
 Make decisions regarding investing or lending capital;
 Make other decisions that allow management to make an informed selection on various
alternatives in the conduct of its business.

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Goals:
Financial analysts often assess the following elements of a firm:
1. Profitability - its ability to earn income and sustain growth in both the short- and long-term.
A company's degree of profitability is usually based on the income statement, which reports on
the company's results of operations;
2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term;
3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations;
Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition
of a business as of a given point in time.
4. Stability - the firm's ability to remain in business in the long run, without having to sustain
significant losses in the conduct of its business. Assessing a company's stability requires the use
of the income statement and the balance sheet, as well as other financial and non-financial
indicators. etc.
Method:
Financial analysts often compare financial ratios (of solvency, profitability, growth, etc.):
Past Performance - Across historical time periods for the same firm (the last 5 years for
example),
Future Performance - Using historical figures and certain mathematical and statistical techniques,
including present and future values, this extrapolation method is the main source of errors in
financial analysis as past statistics can be poor predictors of future prospects.
Comparative Performance - Comparison between similar firms.
These ratios are calculated by dividing a (group of) account balance(s), taken from the balance
sheet and / or the income statement, by another, for example:
Net income / equity = return on equity (ROE)
Net income / total assets = return on assets (ROA)

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Stock price / earnings per share = P/E ratio
Comparing financial ratios is merely one way of conducting financial analysis. Financial ratios
face several theoretical challenges:
 They say little about the firm's prospects in an absolute sense. Their insights about
relative performance require a reference point from other time periods or similar firms.
 One ratio holds little meaning. As indicators, ratios can be logically interpreted in at least
two ways. One can partially overcome this problem by combining several related ratios to
paint a more comprehensive picture of the firm's performance.
 Seasonal factors may prevent year-end values from being representative. A ratio's values
may be distorted as account balances change from the beginning to the end of an
accounting period. Use average values for such accounts whenever possible.
 Financial ratios are no more objective than the accounting methods employed. Changes
in accounting policies or choices can yield drastically different ratio values.
 Fundamental analysis.
Financial analysts can also use percentage analysis which involves reducing a series of figures as
a percentage of some base amounts. For example, a group of items can be expressed as a
percentage of net income. When proportionate changes in the same figure over a given time
period expressed as a percentage is known as horizontal analysis. Vertical or common-size
analysis reduces all items on a statement to a “common size” as a percentage of some base value
which assists in comparability with other companies of different sizes. As a result, all Income
Statement items are divided by Sales, and all Balance Sheet items are divided by Total Assets.
Another method is comparative analysis. This provides a better way to determine trends.
Comparative analysis presents the same information for two or more time periods and is
presented side-by-side to allow for easy analysis.

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RATIO ANALYSIS:
Ratio analysis is the process of determining and interpreting numerical relationships based on
financial statements. A ratio is a statistical yardstick that provides a measure of the relationship
between two variables or figures.
A ratio analysis is a quantitative analysis of information contained in a company’s financial
statements. Ratio analysis is based on line items in financial statements like the balance
sheet, income statement and cash flow statement; the ratios of one item – or a combination of
items - to another item or combination are then calculated. Ratio analysis is used to evaluate
various aspects of a company’s operating and financial performance such as its
efficiency, liquidity, profitability and solvency. The trend of these ratios over time is studied to
check whether they are improving or deteriorating. Ratios are also compared across different
companies in the same sector to see how they stack up, and to get an idea of comparative
valuations. Ratio analysis is a cornerstone of fundamental analysis.

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Objectives of Ratio Analysis: Financial ratios are true test of the profitability, efficiency and
financial soundness of the firm. These ratios have following objectives:
(1) Measuring the profitability: Profitability is the profit earning capacity of the business. This
can be measured by Gross Profit, Net Profit, Expenses and Other Ratios. If these ratios fall we
can take corrective measures.
(2) Determining operational efficiency: Operational efficiency of the business can be determined
by calculating operating / activity ratios.
(3) Measuring financial position: Short-term and long-term financial position of the business can
be measured by calculating liquidity and solvency ratios. In case of unhealthy short or long-term
position, corrective measures can be taken.
(4) Facilitating comparative analysis: Present performance can be compared with past
performance to discover the plus and minus points. Comparison with the performance of other
competitive firms can also be made.
(5) Indicating overall efficiency: Profit and Loss Account shows the amount of net profit and
Balance Sheet shows the amount of various assets, liabilities and capital. But the profitability can
be known by calculating the financial ratios.
(6) Budgeting and forecasting: Ratio analysis is of much help in financial forecasting and
planning. Ratios calculated for a number of years work as a guide for the future. Meaningful
conclusions can be drawn for future from these ratios.

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Limitations:
The following are the limitations of ratio analysis:
1. It is always a challenging job to find an adequate standard. The conclusions drawn from the
ratios can be no better than the standards against which they are compared.
2. When the two companies are of substantially different size, age and diversified products,,
comparison between them will be more difficult.
3. A change in price level can seriously affect the validity of comparisons of ratios computed for
different time periods and particularly in case of ratios whose numerator and denominator are
expressed in different kinds of rupees.
4. Comparisons are also made difficult due to differences of the terms like gross profit, operating
profit, net profit etc.
5. If companies resort to ‘window dressing’, outsiders cannot look into the facts and affect the
validity of comparison.
6. Financial statements are based upon part performance and part events which can only be
guides to the extent they can reasonably be considered as dues to the future.
7. Ratios do not provide a definite answer to financial problems. There is always the question of
judgment as to what significance should be given to the figures. Thus, one must rely upon one’s
own good sense in selecting and evaluating the ratios.

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INTRODUCTION OF IDEA CELLULAR LIMITED
Idea Cellular is an Aditya Birla Group Company, India's first truly multinational corporation.
Idea is a pan-India integrated GSM operator offering 2G and 3G services, and has its own NLD
and ILD operations, and ISP license. With revenue of Rs. 31,571crore; revenue market share of
nearly 17.5 per cent; and subscriber base of over 161 million in FY 2013, Idea is India’s third
largest mobile operator. Idea ranks among the top 10 country operators in the world with a traffic
of over 1.5 billion minutes a day.
Idea’s robust pan-India coverage is built on a network of over 100,000 2G and 3G cell sites,
spread across over 55,000 towns in India.
Using the latest in technology, Idea provides world-class service delivery through the most
extensive network of customer touch points, comprising nearly 4,500 exclusive Idea outlets, and
over 7,000 call centre seats. Idea’s customer service delivery platform is ISO 9001:2008
certified, making it the only operator in the country to have this standard certification for all 22
service areas and the corporate office.

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Idea has consistently stayed ahead of the industry in VLR reporting. Idea’s thought leadership on
Mobile Number Portability (MNP) has enabled it to stay as the top gainer with the highest net
gain. Every 4th mobile user who exercises choice through MNP prefers Idea.
Idea offers a range of high-speed mobile broadband devices including Android based 3G smart
phones, dongles etc. Idea’s wide portfolio of 3G smart phones offer the latest in 3G applications
and high-end data services such as Idea TV, games, social networking etc. at affordable prices.
Idea has been a pioneer in introducing customized product offerings for segmented customers. It
is the first mobile operator to introduce innovative value added services in the Indian telephony
market, and has remained ahead of the industry in data product offerings.
Idea has received several national and international recognitions for its path-breaking
innovations in mobile telephony products and services. Idea won the prestigious ‘NDTV
Business Leadership Award’ in the telecom category for its solid, consistent performance in
2012. It was the winner of ET Telecom Awards 2012, in the categories — ‘Customer Experience
Enhancement’, ‘Excellence in Marketing’, and ‘Innovative Products’. Idea also won the ‘Best
Ad Campaign of the Year’ award for the popular Honey Bunny campaign at the Tele.Net
Telecom Awards 2012.
Idea won the ‘Best Brand Campaign’ at the esteemed World Communication Awards in 2012
and 2011. It also won the GSM Association Award for ‘Best Billing and Customer Care
Solution’ for two consecutive years, and was awarded ‘Mobile Operator of the Year Award –
India’ for 2007 and 2008 at the Annual Asian Mobile News Awards.
Idea is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in
India.

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MISSION
Mission
"We will Delight our Customers while meeting their individual communication needs
anytime anywhere"
We survive because of our customers
VALUES
Integrity - Honesty in Every Action.
At Aditya Birla Group, Integrity is defined as: Acting and taking decisions in a manner that is
fair, honest, following the highest standards of professionalism and also perceived to be so.
Integrity for us means not only financial and intellectual integrity, but in all other forms as are
commonly understood.
Key words that connote Integrity are:
 Ethical
 Truthful
 Principled
 Transparent
 Upright
 Respectful
Commitment - Deliver on the Promise
At Aditya Birla Group Commitment is defined as: On the foundation of integrity, doing
whatever it takes to deliver value to all stakeholders. In the process, taking ownership of our

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actions and decisions, those of our team and that part of the organization that we are responsible
for.
Key words that connote Commitment are:
 Accountability
 Discipline
 Responsibility
 Result -orientation
 Self-confidence
 Reliability
Passion - Energized Action
At Aditya Birla Group Passion is defined as: A missionary zeal arising out of emotional
engagement with the organization that makes work joyful and inspires each one to give his or her
best. Relentless pursuit of goals and objectives with the highest level of energy and enthusiasm,
that is voluntary and spontaneous.
Key words that connote Passion are:
 Intensity
 Innovation
 Transformational
 Fire-in-the-belly
 Inspirational
 Deep sense of purpose
Seamlessness - Without Boundaries in Letter and Spirit
At Aditya Birla Group, Seamlessness is defined as: Thinking and working together across
functional silos, hierarchies, business and geographies. Leveraging the available diversity to
garner synergy benefits and promote openness through sharing and collaborative efforts.
Key words that connote Seamlessness are:
 Teamwork
 Integration
 Involvement

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 Openness
 Global
 Learning from the best
 Empowering
Speed - One Step Ahead Always
At Aditya Birla Group, Speed is defined as: Responding to internal and external customers with
a sense of urgency. Continuously seeking to crash timelines and choosing the right rhythm to
optimize organization efficiencies.
Key words that connote Speed are:
 Response time
 Agile
 Accelerated
 Timelines
 Nimble
 Prompt
 Proactive
 Decisive
KEY PEOPLE
 Management Team
 Mr. Himanshu Kapania - Managing Director
 Mr. Ambrish Jain - Deputy Managing Director
 Mr. Akshaya Moondra – Whole Time Director & Chief Financial Officer
 Mr. Anil K Tandan - Chief Technology Officer
 Mr. Prakash K Paranjape - Chief Information Technology Officer
 Mr. Navanit Narayan - Chief Service Delivery Officer
 Mr. Vinay Razdan - Chief Human Resources Officer
 Mr. Rajat Mukarji - Chief Corp Affairs Officer
 Mr. Rajesh Srivastava - Chief Commercial Officer
 Mr. P Lakshminarayana - Chief Operating Officer

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 Mr. Sashi Shankar - Chief Marketing Officer
 Mr. Pankaj Kapdeo - General Counsel and Company Secretary
 Board of Directors
 Mr. Akshaya Moondra (Whole Time Director & CFO)
 Mr. Kumar Mangalam Birla (Chairman)
 Smt. Rajashree Birla
 Mr. Himanshu Kapania (Managing Director)
 Mr. Arun Thiagarajan
 Ms. Tarjani Vakil
 Mr. Mohan Gyani
 Mr. R.C. Bhargava
 Mr. P. Murari
 Ms. Madhabi Puri Buch
 Mr. Sanjeev Aga
 Dr. Shridhir Sariputta Hansa Wijayasuriya
 Heads of Circles
 Mr. T. G. B. Ramakrishna - Chief Operating Officer, Andhra Pradesh
 Mr. Monishi Ghosh – Chief Operating Officer, Bihar & Jharkhand
 Mr. Sanjeev Govil - Chief Operating Officer, Delhi
 Mr. Mukul Khanna – Joint President – Operations, Rajasthan
 Mr. Siva Ganapathi - Chief Operating Officer, Karnataka
 Mr. Vinu Verghese – Chief Operating Officer, Kerala
 Mr. Rajendra Chourasia - Chief Operating Officer, Maharashtra & Goa
 Mr. Sunil Tolani - Chief Operating Officer, Mumbai
 Mr. Rajesh Naik - Chief Operating Officer, Madhya Pradesh & Chattisgarh
 Mr. Anish Roy - Chief Operating Officer, WB & Kolkata, NESA & Orissa
 Mr. Puneet Krishnan - Chief Operating Officer, Gujarat
 Mr. M. D. Prasad - Chief Operating Officer, Tamil Nadu & Chennai
 Mr. Sanjay David - Chief Operating Officer, Uttar Pradesh (East)
 Mr. Naozer Firoze Aibara - Chief Operating Officer, Uttar Pradesh (West)
 Mr. Sudhir Pradhan - Chief Operating Officer, Punjab, J&K and Himachal Pradesh
 Mr. Rakesh Setia – Joint President – Operations, Haryana

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PARTNERS
Idea welcomes all businesses and individuals interested in partnering with us to enhance and
strengthen the Idea products & services portfolio. .
Some of our partners include:
Value Added Services:-
Altruist Askme Buongiorno Siddhivinayak Astro Services Ltd.
Hungama IMI Mobile Pvt Ltd Indiagames Ltd
Comviva Technologies Ltd Mauj Mobile2win Nazara
NDTV One97 Onmobile Global Ltd

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Realnetworks Shemaroo Shot Formats Spice
Techzone Verse Zapak
Roaming:-
Bics JDSU
Keynote-Sigos Syniverse
Brand:-
DDB-Mudramax Fitch IMRB
Lowe-Lintas-and-Partners Mindshare Platinum-Outdoor

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PROMOTERS
Idea Cellular is part of the Aditya Birla Group, India's first truly multinational corporation.
Global in vision, rooted in Indian values, the Group is driven by a performance ethic pegged on
value creation for its multiple stakeholders.
The group operates in 25 countries, and is anchored by over 100,000 employees belonging to 25
nationalities. The Group has been adjudged 'The Best Employer in India and among the Top 20
in Asia' by the Hewitt-Economic Times and Wall Street Journal Study 2007.
A premium conglomerate, the Aditya Birla Group is a leader in swathe of products - viscose
staple fibre, aluminium, cement, copper, carbon black, insulators, garments.
The Group has also made successful forays into financial services, telecom, software, BPO and
retail sectors. Today, the Group is India's most diversified business house.
Our Promoters are:
 Aditya Birla Nuvo Limited
 Grasim Industries Limited
 Hindalco Industries Limited
 Birla TMT Holdings Private Limited

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SUSTAINABILITY
Idea’s Sustainability Initiatives
Telecom services are recognized world-over as an important tool for the socio-economic
development of a nation. It is one of the prime support services essential for rapid growth and
modernization of various sectors of the economy. In India too, the telecommunication sector has
revolutionized the way we communicate and share information, thereby helping over 800
million Indians stay connected, over the last two decades.
The telecom industry globally is cognizant of the fact that it needs to lighten its carbon footprint.
And, in the Indian telecom sector, Idea is leading the search for green energy options.
Idea Cellular, part of the Aditya Birla Group which is India’s first truly global conglomerate, is
of the oldest players in the Indian telecom industry and has played a key role in the development
of mobile telephony, particularly in rural India. As part of a socially responsible corporate
group, Idea has and continues to adopt policies, and business strategies to effectively integrate
emerging environmental, social and economic considerations.
Whether it’s through conserving energy, recycling, or finding innovative solutions to
environmental and social challenges, Idea is committed to being a respectful, responsible and
positive influence on the environment and the society in which we operate. Efficient power
management, infrastructure sharing, use of eco-friendly renewable energy sources, leveraging
the latest in technology to reach out to a large audience in most energy efficient manner such as
video and teleconferencing, smart logistics, etc. are some of the best practices in our network
infrastructure and day-to-day business operations, to ensure a clean and green environment.
Network Infrastructure initiatives
In our effort to give back to the environment and reduce the collective carbon foot print of the
telecom sector in India, Idea pioneered the concept of ‘Shared Telecom Infrastructure’ services,
along with a few other industry leaders in the wireless space. This initiative is committed
towards continuous innovation endeavors; optimization of future tower rollouts; and enhanced
operational efficiencies leading to a substantial reduction of carbon foot print.

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The Indian telecom industry’s first collaborative, cross-industry consortium to encourage the
development of environmentally sustainable mobile networks was also led by Idea, and
supported by the GSMA. The pilot, aimed at developing biofuels as a source of power for
wireless networks in rural India which are located beyond the reach of the national electricity
grid, was conducted in parts of Andhra Pradesh and Maharashtra. The learnings of the research
were later handed to the infrastructure company which owns the towers, to explore broad basing
of the program.
In a bid to reduce energy consumption by our BTS, Idea chose OD BTS (outdoor BTS) as our
preferred BTS type in 2007. Currently, over 40% our total BTS portfolio comprises of OD BTS,
which has resulted in reducing our conventional energy consumption by about 25% as compared
to the ID BTS (indoor BTS). Efforts are also on to re-deploy ID BTS to OD BTS sites, in some
locations, which will further reduce energy consumption at these sites by 25%.
Idea has explored a Solar Hybrid Solution for running our BTS in parts of rural Bihar. We plan
to install Solar Hybrid sets at 200 sites by end of FY 12. This will reduce the fuel consumption of
power generator from running for 15-16 hours to less than 5 hours a day in these locations.
Idea is also part of the Fuel Cell project, initiated by our Group. The project aims at exploring the
usage of Hydrogen as an alternate energy source to power mobile base stations. Currently, a trial
project, if successful, this program has the potential of reducing the usage of a regular power
generator to Zero.
Additionally, we are working on a range of other projects all of which are aimed at
experimenting alternate energy sources to fuel base stations and reduce operating expenditure for
the company.

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Communication initiatives
With a subscriber base of nearly 10 crore, we have an opportunity to influence a large mass of
people by promoting green initiatives through our various communication programs and
customer service initiatives.
It was Idea which germinated the thought of ‘Use Mobile, Save Paper’ in the minds of millions
of mobile users in India, with its aggressive yet thought provoking campaign. Idea designed the
campaign to highlight numerous ways of saving paper, and thereby saving the green cover
necessary for the health of the planet, by using a range of mobile based value added services in
day-to-day activities to replace paper.
Idea was amongst the first mobile operators in India to promote v-Top up recharges for prepaid
users, in a major way. Soon, this led to the virtual phasing out of paper-based recharge vouchers,
which has ultimately resulted in saving tonnes of paper which would have otherwise been used
in making recharges available to millions of mobile users across the country.
Another recent and ongoing initiative is e-Bill which is being consistently promoted by Idea to
ensure that more and more users opt for this service, and contribute towards saving paper.
Breaking all conventions, Idea has now conceived another innovative program which is aimed at
reducing plastic consumption on a large scale. In a major overhaul of its logistics management,
Idea has now introduced the ‘PICO’ card, which is a half-size plastic card that bears the SIM
card, in a new connection kit. For decades, new mobile users have been handed out welcome kits
by operators which carry a large size plastic piece with the SIM card inserted in the box. Idea has
now become one of the first operators, globally, to introduce the new PICO card which is
expected to save over 90% of plastic used in manufacturing regular cards. Considering that Idea
adds about 2 million new connections every month, this initiative would result in substantial
reduction of plastic usage.
As a company listed on BSE and NSE, Idea has a base of over 360,000 shareholders who we
communicate with, on a regular basis. All company communication to our shareholders and
investors, such as Notices, Annual Reports etc. are sent through e-mail rather than printed copies

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through post, thus dramatically reducing our printing and mailing costs while making a positive
impact on the environment.
Employee Based Initiatives
Idea’s HR operations have all been enabled online for it’s over 7,000 employees, to ensure that
there is minimal paper documentation. This has again helped us save tonnes of paper that would
have been used in day-to-day HR related transactions and communication.
We use smart ICT solutions such as teleconferencing, videoconferencing, web chats etc. for
internal communication amongst employees to minimize travel.
We believe that Idea employees are the flag bearers of the organization. They enable the
organization to realize its mission and goals, and meet commitments. Idea employees have
played a key role in keeping our pledge to do our bit for the environment. ‘Bus Karo’ is an
initiative centred around a large group of Idea employees who commute to office, daily in their
own cars. Through the program these employees use a pooled bus service for office commuting
in peak hours, everyday. One such bus potentially lessens 30 cars from everyday traffic jams,
saving over 1200 tonnes of Carbon emissions per annum.
Driven by its socially conscious parent Group, Idea stays committed to the cause of giving back
to the environment. We will continue to drive our efforts towards environment sustainability by
reducing carbon foot print and energy consumption.

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FINANCIAL STATEMENT FOR THE YEAR 2015-16
CASH FLOW STATEMENT
PARTICULAR MAR’16
(Rs. In Cr.)
MAR’15
(Rs. In Cr.)
Net Profit Before Taxes 2,616.66 2,809.84
Adjustments for Expenses & Provisions 9,436.93 7,061.02
Adjustments for Liabilities & Assets -373.91 562.80
Cash Flow from operating activities 10,849.76 9,474.39
Cash Flow from investing activities -12,637.41 -5,405.45
Cash Flow from financing activities -9,332.80 8,544.38
Effect of exchange fluctuation on translation reserve 0.00 0.00
Net increase/(decrease) in cash and cash equivalents -11,120.45 12,613.31
Opening Cash & Cash Equivalents 12,704.09 90.78
Cash & Cash Equivalent on Amalgamation / Take over /
Merger
0.00 0.00
Cash & Cash Equivalent of Subsidiaries under liquidations 0.00 0.00
Translation adjustment on reserves / op cash balalces frgn
subsidiaries
0.00 0.00
Effect of Foreign Exchange Fluctuations 0.00 0.00
Closing Cash & Cash Equivalent 1,583.64 12,704.09

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BALANCE SHEET
PARTICULAR MAR’16
(Rs. In Cr.)
MAR’15
(Rs. In Cr.)
EQUITY AND LIABILITIES
Share Capital 3,600.51 3,597.84
Share Warrants & Outstandings
Total Reserves 20,695.25 18,292.30
Shareholder's Funds 24,295.91 21,890.14
Long-Term Borrowings 0.00 0.00
Secured Loans 4,099.59 6,201.68
Unsecured Loans 32,058.72 9,804.81
Deferred Tax Assets / Liabilities 2,783.09 1,609.08
Other Long Term Liabilities 2,850.95 632.07
Long Term Trade Payables 610.77 542.83
Long Term Provisions 339.42 282.07
Total Non-Current Liabilities 42,742.54 19,072.52
Current Liabilities
Trade Payables 3,278.16 2,970.18
Other Current Liabilities 7,494.05 13,292.74
Short Term Borrowings 1,645.58 151.39
Short Term Provisions 1,133.88 1,181.99
Total Current Liabilities 13,551.67 17,596.30
Total Liabilities 80,590.12 58,558.97
ASSETS
Non-Current Assets 0.00 0.00
Gross Block 92,412.06 55,843.26
Less: Accumulated Depreciation 27,495.75 23,729.35
Less: Impairment of Assets 0.00 0.00
Net Block 64,916.32 32,113.91
Lease Adjustment A/c 0.00 0.00
Capital Work in Progress 6,038.83 5,079.45

27. 27
Intangible assets under development 0.00 0.00
Pre-operative Expenses pending 0.00 0.00
Assets in transit 0.00 0.00
Non Current Investments 1,666.85 1,646.61
Long Term Loans & Advances 3,407.81 3,890.67
Other Non Current Assets 0.00 0.00
Total Non-Current Assets 76,029.81 42,730.63
Current Assets Loans & Advances
Currents Investments 832.10 11,167.50
Inventories 85.15 58.30
Sundry Debtors 1,136.06 932.19
Cash and Bank 757.66 1,541.94
Other Current Assets 678.44 418.98
Short Term Loans and Advances 1,070.90 1,709.43
Total Current Assets 4,560.31 15,828.34
Net Current Assets (Including Current Investments) -8,991.35 -1,767.97
Total Current Assets Excluding Current Investments 3,728.21 4,660.84
Miscellaneous Expenses not written off 0.00 0.00
Total Assets 80,590.12 58,558.97
Contingent Liabilities 12,332.98 12,331.89
Total Debt 40,852.93 25,875.42
Book Value (in Rs.) 67.28 60.72
Adjusted Book Value (in Rs.) 67.28 60.72

28. 28
PROFIT AND LOSS STATEMENT
PARTICULAR MAR’16
(Rs. In Cr.)
MAR’15
(Rs. In Cr.)
Gross Sales 35,816.54 31,279.47
Less :Inter divisional transfers 0.00 0.00
Less: Sales Returns 0.00 0.00
Less: Excise 0.00 0.00
Net Sales 35,816.54 31,279.47
EXPENDITURE:
Increase/Decrease in Stock 0.00 0.00
Raw Materials Consumed 0.00 0.00
Power & Fuel Cost 2,517.66 2,447.97
Employee Cost 1,464.44 1,358.73
Other Manufacturing Expenses 15,942.74 14,356.34
General and Administration Expenses 374.05 323.42
Selling and Distribution Expenses 3,307.73 2,847.75
Miscellaneous Expenses 361.30 256.91
Expenses Capitalised 0.00 0.00
Total Expenditure 23,967.92 21,591.12
PBIDT (Excl OI) 11,848.63 9,688.36
Other Income 183.44 452.34
Operating Profit 12,032.07 10,140.69
Interest 1,822.33 946.60
PBDT 10,209.74 9,194.09
Depreciation 6,199.50 4,855.01
Profit Before Taxation & Exceptional Items 4,010.24 4,339.08
Exceptional Income / Expenses 0.00 0.00
Profit Before Tax 4,010.24 4,339.08
Provision for Tax 1,393.59 1,529.25
PAT 2,616.66 2,809.84
Extraordinary Items 0.00 0.00
Adj to Profit After Tax 0.00 0.00
Profit Balance B/F 5,763.45 3,236.73
Appropriations 8,380.10 6,046.57
Equity Dividend (%) 6.00 6.00
Earnings Per Share (in Rs.) 7.27 7.81
Book Value (in Rs.) 67.28 60.72

29. 29
RATIO ANALYSIS
Balance Sheet Ratios
CURRENT RATIO
Current assets: 4,560.31
Current liabilities: 13,551.67
Current ratio= current assets / current liabilities
2016 = 4,560.31 / 13,551.67 = 0.33
2015= 15,828.34 / 17,596.30 = 0.89
Comment
Current ratio of IDEA cellular ltd is 0.33:1.
A current ratio lower than 2:1 shows-
 Unsatisfactory liquidity/ solvency position
 Low level of current assets and,
 Over trading.
0.89
0.33
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
2014-15 2015-16
CURRENT RATIO
current ratio

30. 30
LIQUID RATIO
Liquid ratio compares the quick assets with the quick liabilities. It is expressed in the
form of a pure ratio. It is also known as Quick Ratio or Acid Test Ratio.
Quick assets: 4,560.31
Quick liabilities: 13,551.67
Liquid ratio= Quick assets/ Quick liabilities
2016= 4,560.31 / 13,551.67 = 0.33
2015= 15,828.34 / 17,596.30 = 0.89
Comment
Liquid ratio of IDEA cellular ltd is 0.33:1.
0.89
0.33
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
2014-15 2015-16
Liquid ratio

31. 31
PROPRIETORYRATIO
Proprietory ratio compares proprietor’s funds with total liabilities (or total assets). It is
usually expressed in the form of percentage. It is also known as Net Worth to Total Assets Ratio,
Equity Ratio, Net Worth Ratio or Asset Backing Ratio.
Proprietory ratio = proprietor’s funds or shareholder’s equity * 100
Total assets ortotal liabilities
2016 = 24,295.91/80,590.12*100 = 30.15
2015 = 21,890.14/58,558.97*100 = 37.38
Proprietor’s Funds = Equity Capital + Reserves & Surplus + Preference Capital
2016 = 24,295.91
2015 = 21,890.14
Total Assets = Fixed Assets + Investments + Current Assets
2016 = 80,590.12
2015 = 58,558.97
Comment
Proprietory ratio of IDEA cellular ltd is 30.15%.
37.38% 30.15%
0 00.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
2015 2016
proprietory
ratio

32. 32
DEBT – EQUITYRATIO
This ratio compares the long term debts with shareholder’s funds. It is usually expressed
as a pure ratio.
Debt – Equity Ratio = debt/equity = borrowed funds/proprietor’s funds
2016 = 42,742.54/24,295.91 = 1.76
2015 = 19,072.52/21,890.14 = 0.87
 borrowed funds includes
- Debentures, loans etc.
- Interest accrued and due on such BF.
 Proprietor’s Funds = Equity Capital + Reserves & Surplus + Preference Capital
Comment
Debt – equity ratio of IDEA cellular ltd is 1.76.
0.87
1.76
0 00
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
2015 2016
DEBT - EQUITY
RATIO

33. 33
CAPITAL GEARING RATIO
Capital Gearing Ratio = Capital Entitled To Fixed Rate of Interest or Dividend
Capital not so Entitled to Fixed Rate of Interest or Dividend
2015 = 19,072.52/24,295.91 = 0.79
2016 = 42,742.54/21,890.14 = 1.95
 Capital Entitled To Fixed Rate of Interest or Dividend
- Preference capital
- Debentures, long term loans, i.e. borrowed funds
 Capital not so Entitled to Fixed Rate of Interest or Dividend
- Equity capital
- Reserves & surplus
Less: Profit & Loss A/c Dr. Balance
Less: Fictitious Assets
Comment
Capital gearing ratio of IDEA cellular ltd is 1.95.
0.79
1.95
0 00
0.5
1
1.5
2
2.5
2015 2016
capital gearing
ratio

34. 34
Revenue Statement Ratios
GROSS PROFIT RATIO
This ratio compares gross profit with net sales. It is usually expressed in the form of
percentage.
Gross Profit = Gross Profit/Net Sales*100
2016 = 15891.7/35816.54*100 = 44.37
2015 = 13116.43/61279.47*100 = 41.93
 Gross profit = sales less cost of goods sold
- Cost of goods sold
 Opening stock
 Add: purchases
 Add: direct expenses
 Less: closing stock
 Net sales = sales less returns less allowances.
Comment
Gross profit ratio of IDEA cellular ltd is 44.37%.
41.93%
44.37%
0 00.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
2015 2016
gross profit
ratio

35. 35
OPERATING RATIO
Operating ratio expresses the relationship between total operating costs and net sales.
It is expressed by way of a percentage.
Operating Ratio = Cost ofGoods Sold + Operating Expenses * 100
Net Sales
2015 = 21,591.12/31,279.47*100 = 69.02
2016 = 23,967.92/35,816.54*100 = 66.92
 Operating expenses
- Office and administration expenses
- Selling and distribution expenses
- Finance expenses excluding interest on loans and debentures.
Comment
Operating ratio of IDEA cellular ltd is 66.92%.
69.02%
66.92
0 00.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
2015 2016
operating
ratio

36. 36
EXPENSES RATIO
This ratio expresses the relationship between each item of expenditure and net sales. It is
expressed as a percentage. Total of all ratios will be equal to operating ratio.
Any Expense Ratio = Expenditure/Net Sales*100
Power & Fuel Cost = 2,517.66/35,816.54*100 = 7.03%
Employee Cost = 1,464.44/35,816.54*100 = 4.09%
Other Manufacturing Expenses = 15,942.74/35,816.54*100 = 44.51%
General and Administration Expenses = 374.05/35,816.54*100 = 1.04%
Selling and Distribution Expenses = 3,307.73/35,816.54*100 = 9.24%
Miscellaneous Expenses = 361.30/35,816.54*100 = 1.01%
Comment
Total of All Expense Ratios is 66.92% which are equal to operating ratio.

37. 37
OPERATING PROFIT RATIO
Operating profit ratio indicates the relationship between operating profit and the
sales. It is usually expressed in the form of a percentage. It is also known as Net Operating Profit
Ratio.
Operating profit ratio = operating profit/net sales*100
2015 = 10,140.69/31,279.47*100 = 32.42
2016 = 12,032.07/35,816.54*100 = 33.59
 Operating profit
- Gross profit
- Less: operating expenses
 Net sales = sales less returns less allowances.
Comment
Operating profit ratio of IDEA cellular ltd is 33.59%.
32.42%
33.59%
0 00.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
2015 2016
operating
profit ratio

38. 38
NET PROFIT RATIO
Net profit ratio indicates the relationship between net profit and the sales. It is usually
expressed in the form of a percentage.
Net profit ratio = net profit (before tax)/net sales*100
2015 = 4,339.08/31,279.47*100 = 13.87
2016 = 4,010.24/35,816.54*100 = 11.19
 Net profit before tax
- Operating net profit
- Add: non- operating income
- Less: non- operating expenses
 Net sales = sales less returns less allowances.
Comment
Net profit ratio of IDEA cellular ltd is 11.19%. This indicates ultimate net profit, after
considering all non- operating incomes and expenses. It is 11.19% of net sales.
13.87%
11.19%
0 00.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
2015 2016
net profit
ratio

39. 39
STOCK TURNOVER RATIO
Stock turnover ratio shows the relationship between the cost of goods sold and the
average stock. This ratio is normally expressed as a ‘rate’.
Stock turnover ratio = cost of goods sold / average stock
2015 = 13116.43/53.52 = 245.08
2016 = 15891.7/71.72 = 221.58
 Net sales = sales less returns less allowances.
 Average Stock = opening stock +closing stock/2
Stock velocity = 365/stock turnover ratio
2015 = 365/245.08 = 1.5 days
2016 = 365/221.58 = 1.6 days

40. 40
Composite Ratios
RETURN ON CAPITALEMPLOYED
This ratio measures the relationship between net profit (before interest and tax) and the
capital employed to earn it. It is expressed as a percentage. This ratio is also known as ‘return on
investment’ (ROI).
Return on Capital Employed = profit (before interest and tax) * 100
Capital employed
2015 = 5285.68/40962.66*100 = 12.90
2016 = 5832.57/67038.45*100 = 8.70
 capital employed
- equity capital
- add: preference capital + reserves and surplus
- add: long term borrowings (term loans + debentures )
- less: fictitious assets
- less: profit & loss Dr. balance
 profit (before interest and tax)
Comment
Return on capital employed of IDEA cellular ltd is 8.70%.
12.90%
8.70%
0 00.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
2015 2016
return on
capital
employed

41. 41
RETURN ON PROPRIETOR’S FUNDS
This ratio measures the relationship between net profit (after interest and tax) and the
proprietor’s capital. It is usually expressed as a percentage. It is also known as return on
proprietor’s equity or return on net worth.
Return on proprietor’s funds = net profit (after tax) *100
Proprietor’s funds
2015 = 2,809.84/21,890.14*100 =12.83
2016 = 2,616.66/24,295.91*100 = 10.76
 net profit (after tax) = net profit after interest and tax
 Proprietor’s Funds = Equity Capital + Reserves & Surplus + Preference Capital
Comment
Return on proprietor’s funds of IDEA cellular ltd is 10.76%.
12.83%
10.76%
0 00.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
2015 2016
return on
proprietor's
funds

42. 42
RETURN ON EQUITYCAPITAL
This ratio measures the relationship between net profit (after interest, tax and
preference dividend) and the equity shareholder’s funds. It is usually expressed as a
percentage.
Return on equity capital = profit available to equity shareholder’s *100
Equity shareholder’s funds
2015 = 2,809.84/21,890.14*100 =12.83
2016 = 2,616.66/24,295.91*100 = 10.76
 profit available to equity shareholder’s = net profit after interest, tax and preference
dividend
 Equity shareholder’s funds
- Equity capital
- Reserves and surplus
Comment
As there is no preference capital in the company, therefore, return on equity capital will be same
as return on proprietor’s funds i.e. 10.76%.
12.83%
10.76%
0 00.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
2015 2016
return on
equity capital

43. 43
DIVIDEND PAYOUT RATIO
Dividend payout ratio shows the relationship between the dividends paid to equity
shareholder’s out of the profits available to the equity shareholders.
Dividend payout ratio = dividend to equity shareholders *100
Profit available to equity shareholders
2016 = 216.03/2616.66*100 = 8.25
 Dividend to equity shareholders means the cash dividend paid to equity shareholders.
 Profit available to equity shareholders means net profit after interest, income tax and
preference dividend.
Comment
Dividend payout ratio of IDEA cellular ltd is 8.25.
DEBT SERVICE RATIO/INTEREST COVERAGE RATIO
A debt service ratio shows the relationship between net profits and interest payable on
loans. It is expressed as a pure number. It is also known as interest coverage ratio.
Debt Service Ratio = profit before interest and tax
Interest
2016 = 5832.57/1822.33 = 3.20
Comment
Debt service ratio/interest coverage ratio of IDEA cellular ltd is 3.20.

44. 44
DEBTORS TURNOVER RATIO
This ratio shows the relationship between net credit sales and average trade debtors. It
is expressed as a rate.
Debtors turnover = credit sales
Debtors + bills receivable
2016 = 35,816.54/1,136.06 = 31.53
Debtors velocity (debt collection period)
Debtors velocity means the period (months or days) taken by debtors for settlement of their bills.
It shows the number of days for which credit sales remain outstanding.
Debtors velocity = 12 months or 365 days = 365/31.53 = 12 days
Debtors turnover ratio
CREDITORS TURNOVER RATIO
Creditors turnover ratio shows the relationship between the net credit purchases and the
average trade creditors. This ratio is normally expressed as a rate.
Creditors turnover = credit purchases
Creditors + bills payable
2016 = 15891.7/3278.16 = 4.85
Creditors velocity (debt payment period)
Creditors velocity means the period (months or days) taken by the concern to pay off its
creditors.
Creditors velocity = 365 days or 12 months = 365/4.85 = 75 days
Creditors turnover ratio

45. 45
CONCLUSION
This project of Ratio analysis of concern is not merely a work of the project. But a brief
knowledge and experience of that how to analyze the financial performance of a company. The
study undertaken has brought in to the light of the following conclusions. According to this
project I came to know that from the analysis of financial statements it is clear that idea cellular
ltd have been decreasing the profit during the period of study. So the firm should focus on
getting of more profits in the coming years by taking care internal as well as external factors.
And with regard to resources, the company is taking utilization of the assets properly.
Finance is the life blood of every business. Without effective financial management a company
cannot survive in this competitive world. A Prudent financial Manager has to measure the
working capital policy followed by the company.
The company’s overall position is at a good position. Through the profits have decreased in the
FY 2015-16, they were able to come out of it successfully and regain into increased profitable
scenario. Particularly the last two year’s position is not so well due to fall in the profit level from
the FY 2015 to FY 2016. It is better for the firm to diversify the funds to different sectors in the
present market scenario. On a whole idea cellular Limited has once again demonstrated its
potential to ride through the difficult times. Despite the slowdown in its growth, it has
determined to grab numerous opportunities that are facing tele-communication sector. However,
rising affordability and the launch of idea 4G is expected to propel the market and refinishes in
the coming years. Higher demand for 4G and internet can be expected in the coming years.
Also other segments are showing promising opportunities to grow. With these many
opportunities at hand along with the potential player who would be able to make use of the
situation well. So from this we can conclude that there is a better opportunities for investors to
invest in this company.

46. 46
BIBLIOGRAPHY
- http://www.moneycontrol.com/financials/ideacellular/ratios/IC8
- https://craytheon.com/financials/financial_performance_key_ratios_margin_chart
_trend.php?company=IDEA
- http://profit.ndtv.com/stock/idea-cellular-ltd_idea/financials-ratio
- https://www.sanasecurities.com/idea-cellular-equity-research/
- http://www.indianotes.com/research-analysis/company/company-
financial.php?cc=MTUyMDAwMDguMDA=