Financial Analysis Of Satyam Computers - Copy (2)

03/08/09

1

FINANCIAL ANALYSIS OF SATYAM COMPUTERS LTD Presented By:SABYASACHI TARAI(39) BINAYAK MAHAPATRA(11) TRIDEEP SAHU(57)

Agenda Satyam is a leading global business and information technology company, delivering consulting, system integration, and outsourcing solutions. 03/08/09

History and Overview Highlights Accounting Policies Income Balance Sheet Assets Ratio Analysis 2

History • It was incorporated on 24th June 1987. • Main Objective-provide software solutions and consultancy services. • It started under dept. of electronics of GOVT. OF INDIA. • In 1991 it was converted into a public limited company. • In 1992 first IPO was issued. • In 1993 it went into Venture with DUN and BRADSTREET. • Satyam Infoways was the second largest service provider in India. • In 2006 it achieved ISO certification. 03/08/09

3

Highlights (in Rs. crores)

2007

2008

Net revenues

6410.08

8137.28

Net Profit

1423.23

1458.54

Earnings per share

21.73

25.66

Return on net worth

0.24%

0.20%

Cash in Hand

1703.12

1822.6

Total Assets

6777.41

8734.66

03/08/09

4

ACCOUNTING POLICIES • Satyam continues to prepare its consolidated financial statements under “Indian GAAP” for its local statutory reporting purposes.

Basis of Presentation: The financial statements of the Company are prepared under historical cost convention in accordance with the Indian GAAP and the provisions of the Indian Companies Act, 1956.

Revenue Recognition: Revenue from professional services consist primarily of revenue earned from services performed on a “time and material” basis & the related revenue is recognized as and when the services are performed.

Fixed Assets: Fixed assets are stated at actual cost less accumulated depreciation. Depreciation: Depreciation on fixed assets is computed on the straight line method over their estimated useful lives.  Individual assets acquired for less than Rs.5,000 are entirely depreciated in the period/year of acquisition.

03/08/09

5

Contd..

Investments: 

Current investments are carried at the lower of cost and market value.

 Long-term investments are carried at cost less provision made to recognize any decline, other than temporary, in the value of such investments. Foreign Currency Transactions:  Transactions in foreign currency are recorded at exchange rate prevailing on the date of transaction. Monetary assets and

Taxes on Income: 

Tax expense for the year comprises of current tax and deferred tax. Current taxes are measured at the amounts expected to be paid using the applicable tax rates and tax laws.

Earnings per Share:  The earnings considered in ascertaining the Company’s Earnings Per Share (EPS) comprises the net profit after tax (and includes the post tax effect of any extra ordinary items). 03/08/09

6

Income Net Revenues

Net Profit

Earnings / Share EPS

NET PROFIT

NET REVENUES 8000

1470

22

1460

21.5

7000

6000

21

1450

20.5

5000 YEARS

1440

20

4000

1430

19.5

3000

2000

1000

0 2007

03/08/09

2008

1420

19

1410

18.5

1400

18 2007

2008

2007

2008 7

Balance Sheet SOURCES NW loan CL Total ASSETS Fixed Assets Investments CURRENT ASSETS Total 03/08/09

7269.99 23.67 1441 8734.66 883.12 493.8 7357.74 8734.66

SOURCES NW 5746 loan 13.79 CL 1017.62 Total 6777.41 ASSETS Fixed Assets 640 Investments 201.15 CURRENT AS 5936.26 SETS Total 6777.41 8

Income Statement Income Statement For 2007 Revenue(Ex,D&O) 6410.08 Less COGS 0 Less OPEX 4706.96 PBDITA Less Dep. Amotisation PBIT Less Int. PBT Less PFT PAT 03/08/09

1703.12 129.89 0 1573.23 0 1573.23 150 1423.23

Income Statement For 2008 Revenue(Ex&D) Less COGS Less OPEX

8137.28 0 6314.68

PBDITA Less Dep. Amotisation PBIT Less Int. PBT Less PFT PAT

1822.6 137.94 0 1684.66 0 1684.66 226.12 1458.54 9

Cash flow statement CFO CFI CFF Net cash Flow

03/08/09

2007 996.21 (1708.82) 70.19

2008 1328.57 ( 538.68) ( 236.76)

(642.42)

553.13

10

Ratio Analysis Liquidity Ratio Current RatioCurrent Ratio=Current asset/Current Liabilities Quick Ratio/Liquid Ratio Liquid Ratio=CA-Inventories/CL Absolute cash Ratio Absolute Cash Ratio=(CA-InventoriesDebtors)/CL 03/08/09

11

Liquidity Ratio 2007

2008

CA

5936.26

7357.73

CL

1017.63

1441

Debtors

1650

2223

Inventories

0

0

Current Ratio 5.833

5.105

Liquid Ratio

4.212

3.563

Absolute Cash Ratio

4.212

3.563

03/08/09

12

Working Capital • Working Capital=CA-CL

03/08/09

2007

2008

CA

5936.26 7357.73

CL

1017.63 1441

WC

4918.63 5916.73

13

Solvency Ratio DER= Debt/Shareholders Equity

03/08/09

2007

2008

Debt

14

24

Equity

5746

7269.9

DER

0.0023

0.0032 14

Interest Coverage Ratio • ICR=PBIT/Interest 2007

2008

PBIT

1573.23

1684.66

Interest

7.61

5.94

ICR

206.73

283.6

03/08/09

15

Profitability Ratio • Profitability Ratio  Return On Total Assets

(ROTA)=PBIT/TA*100  Return On Capital Employed (ROCE)=PBIT/CE*100  Return ON NET worth (RONW)=PAT/NW

03/08/09

16

ROTA 2007

2008

PBIT

1573.23

1684.66

TA

6777.41

8734.66

ROTA

0.23212

0.19287

03/08/09

17

ROCE 2007

2008

PBIT

1573.23

1684.66

CE(TA-CL)

5759.79

7293.66

ROCE

0.27314

0.230975

03/08/09

18

RONW 2007

2008

PAT

1423.23

1458.54

NW

5746

7269.99

RONW

0.2476

0.2006

03/08/09

19

Earning Per Share(EPS) • EPS=PAT/No.of Shares 2007

2008

PAT

1423.23

1458.54

No.of Shares

654852959

668673978

EPS

21.73

25.66

03/08/09

20

Inter Company Analysis Income Statement (Inter Firm) 2008 Rs(in crores) Infosys Satyam Tcs Sales 16331 8394.48 15656.2 less Expenses 8876 5051.48 8923 GROSS PROFIT 7455 3343 6733.2 less Opex 1809 1263.2 1546 PBDITA 5646 2079.8 5187.2 Less Dep & Amt 546 137.94 458.78 PBIT 5100 1941.86 4728.42 Less Interest 0 0 0 PBT 5100 1941.86 4728.42 Less Taxes 630 226.12 457.58 PAT 4470 1715.74 4270.84 03/08/09

Condensed Balance Sheet (Inter Firm) 2008 Rs(in crores) Infosys Satyam Tcs Net worth 13,391.00 7270 11004.81 LongTermLiab -- 23.67 18.25 Current Liab 3731 1441 3713 Total 17,122.00 8734.7 15146.43 Fixed Assets 3931 883.12 3240.64 Investments 964 493.8 4509.33 Current Assets 12227 7357.7 7396.46 Total 17,122.00 8734.7 15146.43 21

Ratio Analysis Ratio Analysis (Inter Firm) 2008 Infosys Satyam Tcs Current Ratio 3.28 5.1 Quick Ratio 3.28 5.1 Absolute Cash Ratio 2.45 5.76 DER NA 1.49 EPS 78.24 25.59 ICR NA NA NA WAAC (%) 13.32 12.95 ROCE (%) 38.09 26.09 RONW (%) 33.38 26.1 ROTA (%) 31.56 12

03/08/09

1.99 1.98 1.97 0.01 50.76 13.12 33.76 29.23 28.19

Cash Flow Statement (Inter Firm) 2008 Rs(in crores) Infosys Satyam TCS Op CIH 5,470.00 3959.82 557.14 CFO -777 1412.92 3827.91 CFI -978 -641.22 -2404.9 CFF 3,816.00 -227.79 -1424.77 Cl CIH 7,531.00 4503.73 555.38 22

RATIO ANALYSIS • • • • •

The current ratio of Satyam is more as compare with Infosys and TCS. The quick ratio or liquid assets of Satyam is more compare as Infosys and TCS. The absolute Cash ratios is more in Satyam. The EPS of Infosys is more as compared with others which The profitability ratios are compared for the three companies. Infosys have greater profitability ratios as compared with other interfirm companies.

03/08/09

23