PROJECT REPORT

ON

FINANCIAL ANALYSIS OF DLF,UNITECH &

ANSAL API

For
THE PARTIALMENT OF THE AWARD OF DEGREE OF
MASTERS OF BUSINESS ADMINSTRATION
FROM GGS IP UNIVERSITY
DELHI

BATCH:2015-2017

SUBMITTED BY: SUBMITTE TO:

KHILTA SOMRA PROF. PAWAN KUMAR

ARMY INSTITUTE OF MANAGEMENT &

TEHNOLOGY,
GREATER NOIDA(UP)-201306

1
 Supervisor Certificate

This is to certify that khilta somra of Roll.no-03818403915 Student

of Master of Business Administration, BatchMBA-12, Army
Institute Management & Technology, Greater Noida, has successfully
completed her project under my supervision.

During this period, she worked on the project titled Financial

analysis of Dlf,unitech & ansal,api in partial fulfillment for the
award of the degree of Master of Business Administration of GGSIP
University, Delhi.

To the best of my knowledge the project work done by the candidate

has not been submitted to any university for award of any degree.
His performance and conduct has been good.

Date: 30 July, 2016 (Signature)

Prof. pawan kumar
AIMT Greater Noida

2
 Certificate of Originality

I, Ms. Khilta somra, Roll no 03818403915 of MBA 12 batch of

Army Institute of Management & Technology have undergone a
Summer Internship in Dlf home developers limited ,Gurgaon (H.R)
for duration of Eight weeks on a project title Financial analysis of
Dlf,unitech & ansal api, hereby declare that this project is my
original piece of work.

Signature of the student:

Student Name: Khilta somra

Date: 30 th July, 2016

3
 ACKNOWLEDGEMENT
For any successful work, it owes its thanks to many

I want to show my sincere gratitude to all those who made this study
possible. First of all I am thankful to the helpful staff and the faculty of
Army Institute of Management and Technology. Second I would like to
extend my sincere thanks to my Industry Guide, Mr. Mahesh Shukhla, for
her untiring cooperation. One of the most important tasks in every good
study is its critical evaluation and feedback which was performed by my
faculty guide prof. pawan kumar I am very thankful to my Faculty as well
as Industry guide for investing his precious time to discuss and criticize
this study in depth, and explained the meaning of different concepts and
how to think when it comes to problem discussions and theoretical
discussions. My sincere thanks go to my Institute and family, who
supported and encouraged me.

Khilta somra
Course MBA

4
 TABLE CONTENTS

CH CHAPTER PAG
NO. E
NO.
A ABSTRACT 3-4

1 INTRODUCTION 5-9

2 LITERATURE REVIEW 14-

16

3 RESEARCH METHODOLOGY 17-

21

4 DATA ANALYSIS AND INTERPRETATION 22-

41

5 FINDINGS, RECOMMENDATIONS AND CONCLUSION37-45 42-

52

6 CONCLUSION 53-
54

7 LERANING SUMMARY 55-

26
8 BIBLOGRAPHY 57

5
6
 Abstract
The real estate sector , an inherent component of the construction industry , has a
tremendous potential in our country. The proper tapping of the real estate sector will
generate considerable economic opportunities . Real estate sector is olso an
employement intensive sector and the predictions are that it will generate
employement for atleast 17 million people by 2025.According to the estimates every
rupee invested in this sector will result in 78 paisa being added to the GDP.
Accordingly, a unit increase in expenditure has a multiplier effect and the capacity to
generate income as high as five times.

The present project has been carried out with the objective of analyzing the financial
aspects related to the real estate leader companies keeping in view the target
companies as DLF, UNITECH and ANSAL PROPERTIES and
INFRASTRUCTURE .Only three companies were chosen for the purpose of the
analysis due to time constraints. The type of research used was explonatory reaserch
design and the area from which the real estate companies were chosen for financial
analysis was DELHI- NCR. For analyzing the financial statements of these chosen
companies ratio analysis is being carried out .

Various types of ratios such as profitability ratio , liquidity ratio ,solvency ratio ,
activity ratio and market valuation ratios were studied and out of them 10 most
important financial ratios were selected for the analysis. The purpose of the project
was to understand the meaning , advantages and disadvantages of the ratios, to know
the financial strength and long term prospects of the chosen companies and also the
solvency and earning capacity of these companies .
The data was collected by downloading various financials from different websites
such as money control .com , the collected data included the annual reports of the
chosen companies which consisted of balance sheet, the income statement , the cash
flow satement .The sample period is covering the period from 2013-2015. The ratios
are calculated of the chosen companies and they are graphically represented through
bar diagrams. Each of the chosen ratios are then interpreted and various findings and
recommendations are drawn on each of the ratio. This project is very helpfull in

7
understanding the present situation of the company in which I worked that is DLF in
comparison with the other chosen companies. The analysis conducted and the results
drawn shows, where DLF stands.

8
 CHAPTER -1
INTRODUCTION

9
The project was about financial analysis of DLF, UNITECH and ANSAL
PROPERTIES and INFRASTRUCTURE. This chapter deals with the background
of the study, purpose and objectives of the study, area and scope of the study, time
scope, limitations of the study, real estate industry and future scenario of the industry.

1.1 BACKGROUND OF THE STUDY

A detailed technical financial statement with too many arithmetic and numbers may
have mystifying and nerve-wracking effect on investors. But a comprehensive and
precise analysis can give information which can boost number of favourable decisions
as if such financial statement were a gold mine of information. A medium of
disclosure of information is what everybody knows about Financial Statement and a
meaningful analysis is always desirable for investors and other stakeholders.

Griffiths said in his book of Creative Accounting which challenges the reliability of
financial statements, through exaggerated but interested statement: Every company
in the country is fiddling its profits. Every set of published accounts is based on books
which have been gently cooked or completely roasted . . . it is the biggest con trick
since the Trojan horse (Griffiths, 1986).

However, Analytical Procedures the term used instead of Financial Analysis in

(International Standards on Auditing), defines such procedures that includes
evaluations of financial information through analysis of plausible relationships among
both financial and non-financial data. Analytical procedures also encompass such
investigation as is necessary of identified fluctuations or relationships that are
inconsistent with other relevant information or that differ from expected values by a
significant amount.

Conclusively, a complex, covered with massive amount of numbers in a companys

financial statement may be converted in to a meaning full and associated information
for all stakeholders i.e. investors, management, creditors, debtors and auditor and the
government. Financial statement analysis is the process of interpretation of the
companys risk and probability by examining their financial information. It is also the
study of accounting ratios such as asset utilization ratios, profitability ratios, leverage
ratios, liquidity ratios and valuation ratios between different items that are included in
the balance sheet.
10
Furthermore, financial statement analysis is a quantifying process on identifying the
potential, past and present performances of a company. Financial statement analysis
technically outlines the process of accounting and categorizes the account titles and
the amount of money as well. Also, it helps to understand the financial decision that
already made and how it does affect the profit or income. However, Balance sheet
withequivalent

profit and loss must be well compared to find the strength and weaknesses of the firm.
Financial statement analysis shows the health and stability of the company. The
information from these statements provides understanding on the operation of the
business and able to discover if the management used funds and resources wisely.

The term real estate is defined as land, including the air above it and the group below
it, and any building or structure on it is also referred to as realty. It covers residential
housing, commercial offices, and trading spaces such as theater, hotels, and restaurant
retail outlets, industrial buildings such as factories and government buildings. Real
estate involves the purchase, sale and development of land, residential and non-
residential buildings. The main players in the real estate market are the landlords,
developers, builders, real estate agents, tenants, buyers etc. The activities of the real
estate sector encompass the housing and construction sectors also. The real estate
sector in India has assumed growing importance with the liberalization of the
economy. The consequent increase in business opportunities and migration of the
labor force has, in turn, increased the demand for commercial and housing space,
especially rental housing. Developments in the real estate sector are being influenced
by the developments in the retail, hospitality and entertainment (e.g.: Hotels, resorts,
cinema theater) industries, economies services and information technology (IT)
enabled services etc. The real estate sector is a major employment driver, being the
second largest employer next only to agriculture. This is because of the chain of
backward and forward linkage that the sector has with the other sectors of economy.

especially with the housing, construction and commercial sector. About 250 ancillary
industries such as cement, steel, brick, timber, building material etc are dependent on
the real estate industry.The real estate sector in India has witnessed a paradigm shift

11
in the last decade. From being a largely unorganised sector in the past, the sector is
steadily transforming over the years to become a more structured one. Apart from
other factors, much of this transformation can be attributed to investments by
institutional private equity and strategic investors in the sector. The Private Equity
(PE) funding channel within the real estate sector gained significance post the global
financial crisis, as cash flows from other sources of finance (such as capital markets,
banks and private lending) moderated. However, several issues on the macroeconomic
front, including muted growth, rising inflation and falling currency, coupled with a
muted real estate sector, led to modest investments by private equity funds between
2009 and 2015.

In the year 2014-15, India emerged as one of the very few economies with a
favourable market outlook. Political stability and focussed efforts by the government
to strengthen economic revival and growth sparked renewed interest by the global
investor community towards India. Further, policy announcements and reforms

to revive the real estate space, particularly, relaxing the FDI norms, tabling of the
Real Estate (Regulation and Development) Bill and establishment of Real Estate
Investment Trusts (REITs) helped in generating a positive outlook for the real estate
investment market. Such positive sentiment fostered several private equity and
strategic investors, including pension and sovereign funds, to commit significant
funds to the Indian real estate sector in the past 12 to 18 months. Investors committed
or invested around USD4134 million across 78 deals in the past 12 months.

The average deal size increased significantly and renewed interest was witnessed in
entity-level/joint venture equity deals (as opposed to project level structured debt
deals) implying increasing risk appetite and a sense of faith by marquee investors in
the long-term growth prospects of the real estate sector. However, it may be noted that
such equity deals were restricted only to investments in few leading developer entities
with sound fundamentals, an established track record of execution, and have
implemented the best corporate governance practices, with focus on investor interests
and shareholder value

12
Effectuating the governments vision of Housing for All by 2022 and a speedy
revival of the real estate sector would require a further substantial inflow of private
equity capital in the coming years. Additionally, such capital deployment may need to
be in the nature of patient equity capital to fund land acquisitions and initial stages of
the project(s). Such significant quantum and renewed nature of funding from global
investors necessitates adoption of strong corporate governance practices by
developers, and initiation of new policy measures by the government in terms of
streamlining project approval mechanisms and increasing transparency and
accountability in real estate transactions (including a speedy enactment of the Real
Estate (Regulation and Development) Bill).

13
1.2 OBJECTIVE OF THE STUDY

Primary objectives:
To study about the Real estate industry and the chosen companies that are DLF,
Unitech and Ansal Properties and Infrastructure.
To convey awareness to potential investors who want to invest but are reluctant
in making their decisions due to lack of knowledge and information about the
chosen companies.
To evaluate how ratio analysis of three chosen companies help in competitive
decision making this would help in improving operations.
To highlight the chosen companies existing situation and provide suggestions
and recommendations on every ratio of:
a) Profitability
b) Liquidity
c) Solvency
d) Turnover
e) Market valuation
To know the financial strength , earning capacity and capability of paying
interest of the
Chosen Companies.

Secondary objectives:
To understand what are the buyers perspective when they purchase any new
property.
Understanding the basic finance function of the company in which I worked.
Gaining knowledge of the basic routine accounting practices followed in the
company such as preparation of bank reconciliation statement, checking various
types of bills and passing comments on detection of errors, preparation of
cheques to be issued to the third parties.
To gain knowledge of what all activities are done after the closing of the financial
books of the company.

14
1.3SCOPE OF THE STUDY
This documents the boundaries from which the study was limited for effective
investigation.

Geographical scope
The study was limited to DELHI NCR. This was due to limited time, resources and
logistical problems being faced by the researcher which could not allow him to carry
out the research in all areas.

Time scope
The study covered a period of three months, that is, from February 2016 to May 2016.

Content scope
The internship project titled Financial analysis of DLF,UNITECH and ANSAL
PROPERTIES and INFRASTRUCTURE is based on analyzing the financials of
these companies by conducting a ratio analysis.

15
LIMITATION OF THE STUDY
This study has been based on three real estate sector companies as sample but not
considered all the companies. Hence it will reflect only a partial view of the
policies followed by whole real estate industry.
Study is solely based on secondary data and published financial statements of the
selected company, which may lead to some errors and assumptions.
Moreover, it is based on very short period of time i.e. 3 months therefore, a
detailed analysis covering a lengthy period, which may give slightly different
results.
As a financial statement analyst my perspective could be different from other
analysts so it could be a possibility that there are some variations in the findings
and recommendations.
Out of many ratios, only ten most important ratios were chosen to adhere to the
average size of the project report.
All the ratios were calculated by their commonly used formulas, so there could be
possibility that some figures vary by a small margin from the ratios published on
various financial websites may due to following different accounting practices and
using different formulas.

16
REAL ESTATE INDUSTRY
The real estate sector is one of the most globally recognised sectors. In India, real
estate is the second largest employer after agriculture and is slated to grow at 30 per
cent over the next decade.
The Indian real estate market has become one of the most preferred destinations in the
Asia Pacific1 as overseas funds accounted for more than 50 per cent of all investment
activity in India in 2014, compared with just 26 per cent in 2013.
The real estate sector comprises four sub sectors - housing, retail, hospitality, and
commercial. The growth of this sector is well complemented by the growth of the
corporate environment and the demand for office space as well as urban and semi-
urban accommodations.
The construction industry ranks third among the 14 major sectors in terms of direct,
indirect and induced effects in all sectors of the economy.
It is also expected that this sector will incur more non-resident Indian (NRI)
investments in both the short term and the long term. Bengaluru is expected to be the
most favoured property investment destination for NRIs, followed by Ahmedabad,
Pune, Chennai, Goa, Delhi and Dehradun.

Current scenario of Indian real estate sector:

In its 12th five-year plan (FY2012-17), Indian government has proposed to invest
USD 1 trillion in the infrastructure sector and Rs. 7,060 crore has been allocated
to develop 100 new smart cities.
With the introduction of Real Estate Investment trust (REITs) and Infrastructure
Investment Trusts (InvITs), a huge capital inflow is expected in this sector.
The housing loan rebate has been increased from Rs. 150,000 to Rs. 200,000 in
an attempt to revive the .housing and other related segments.
According to World Banks Doing Business 2012 report, India is one of the top
countries in housing & workspace needs, but ranks 181 in terms of construction
permission processes.
A new section in the income tax act 1961 is being inserted and will come into
force wef. April 01, 2017 which ensures 100% profit deduction for the builders
in affordable housing schemes under certain guidelines. It boosts the government
objective-Housing for all .

17
 Chapter -2
LITERATURE
REVIEW

18
1.Ann Wang, Ph.D. (Corresponding author) The University of the District of
Columbia 4200 Connecticut Ave, N.W. Washington, D.C Comparison of Real
Asset Valuation Models.

Abstract:-NPV, decision trees, and real options have been prevalently practiced in
real asset valuation and management. Complexities have been built on the basic
frameworks in strees in real asset valuation are illustrated with literature review.The
pros and cons of each method shed light on future improvement of real asset
investment evaluation and risk modeling.

2.Author: Ka Fai Chan An Exploratory Study of the Effects of Project Finance on

Project Risk Management.

Abstract:-Project finance is a financing arrangement for projects, and it is

characterised by the creation of a legally independent project company financed with
non- or limited recourse loans. It is observed that the popularity of project finance is
increasing in the recent decades, despite of the impact of Asian financial crisis.
Especially in emerging markets, project finance is very common among the public-
private partnership projects. It is possible that project finance yields some benefits in
project management that other forms of funding are not able to provide. This research
aims to explore the impacts of project finance on the risk management of projects, as
well as the mechanisms of the effects of various factors on project risk management.

The research starts with a quantitative analysis which consists of project data from 32
projects in recent years. The regression analysis on these quantitative data reveals that
factors such as the separation of legal entity and existence of third-party guarantees
can effectively reduce the borrowing rates of the projects. The borrowing rates,
expressed in terms of credit spreads over LIBOR, are regarded as a proxy for the
overall risk level of the projects. The qualitative section which involves five
structured interviews further explores the relationships of the attributes of project
finance on project risk management. The interviewees largely agrees on the effects of
the separation of legal entity, non- or limited recourse loans, and the existence of
third-party guarantees in managing political and country risks, business risks, and
principal-agency risks. The involvement of a larger number of stakeholders in the
projects enable the project to enhance its risk management ability by gaining external
expertise and knowledge, influences on government policies, and more importantly,
closer supervisions on project activities.

Apart from revealing the important features of project finance, and the potential
benefits it may yield on project risk management, the effectiveness of these features
are also discussed. The study also examines the relationships between these features
and the common risk factors which may affect all projects. Some recommendations to
enhance the benefits of project finance .

19
 3.The Effects of Environmental Contamination on Real Estate: A Literature
Review Thomas O. Jackson

Abstract:-The literature reviewed in this article reflects the degree to which

practitioners and academics are having difficulty in arriving at consistent findings as
to the effect of environmental contamination on real estate. The valuation literature in
this category deals with appraisal methods, but does not develop a consensus view
studies with respect to contamination source, effect on sales price, persistence and
intervening factors such as strong or weak market conditions.empirical sales price
literature is also inconsistent, with disagreement over the existence and magnitude of
price impacts, persistence of these impacts and other issues. The article concludes by
summarizing. The the results of these

4.dr.S.M.T.tariq zafar,dr,abeel maqbool. Literature review of Pre recession

study on financial leverage in real estate industry and its relative impaction on
shareholders returns.

Abstract :-In this present dynamic and unpredictable business environment

companies performance changes day by day. To meet out its commitment of growth
and return to its shareholders companies require regular flow of funds which can be
obtained in form of debt. Thus leverages are debt fund used judiciously by the
companies in futuristic hope of multiplying and maximizing shareholders return EPS
and ROE. It is a systematic fixed obligation with fixed cost.

It is generated through the goodwill produced by the company by utilizing its

overallresources efficiently and
effectively. Generally investors like to invest in those companies whichmay give them
maximum return with lesser risk. In business world from an operational point of view,
earning per share are perhaps the most important and trusted index of financial
performance. Thus it is very much imperative that real estate companies must realize
the importance of leverages, Cost of Capital, EPS and ROE and their collective
impact on shareholder return. This paper aims to know the effect of various financial
rations upon the bearing of shareholders return and to analyze the impact of real asset
ownership on the systematic risk (beta) and the risk-adjusted return of corporations. In
addition study will examine that if real assets provide diversification benefit, then can
firms with real assets will be in position to achieve a higher rate-of-return for a given
level of risk or a lower level of risk for a given rate-of-return during the period.

The study as a whole is categorized into understanding ofstudy, methodology

adopted and learnings from the study. The first part gives an insight aboutthe
financial ratios and its understandings. And also how many ratios are applied, in order
to find out the relationship among them. Second part signifies the kind of method and
model adopted in order to understandthe study. For this reason we have analyzed
thirty companies of real estate industry on the basis of ratios and model like
regression, so that it would help the investor to choose the right company for the
purpose of investment. In last finding and conclusive remarks are given.

20
 CHAPTER-3
RESEARCH
METHODOLOGY

21
 METHODOLOGY OF THE STUDY

RESEARCH DESIGN:
A research design is the specifics of method and procedures for acquiring the
information needed to structure or solve the problem. It is the overall operational
pattern
of framework of the procedure. On the basis of major purpose of our investigating
theEXPLORATORYRESEARCH was found to be most suitable. This kind of research
has the primary objectives of development of insights into the problem. It studies the
main area where the problem lies and also tries to evaluate some appropriate course of
action.

DATA COLLECTION SOURCES:

The study is qualitative in nature and not much primary data is there. The report has
been prepared after doing a qualitative analysis of the data collected from various
journals and financial websites such as moneycontrol.com Some bar charts, graphs will
be used to make the data more understandable to the reader.

SAMPLING METHOD
Survey was done by random sampling method.
The three chosen companies have a world-wide reputation especially in NCR Delhi.
The results would be more reliable than other small and medium sized companies as
the three chosen companies accounts were audited by one of the big four firms. Based
on the reliability, the volume of work involved financial statement of DLF, UNITECH
andANSAL API have been considered. Moreover, all three companies share the same
industry of Real-Estate and Construction. The data was collected by downloading
through various financial websites such as money control .com. The collected data
includes annual reports of the companies, such as; Balance Sheets, Income Statement,
Cash Flow Statement and Equity Statement. Furthermore, the sample period is covering
the years 2013 to 2015. Copies of comprehensive financial statements are attached in
appendix.

22
SAMPLE SIZE
Sample size is defined as the selection of a part or a group or an aggregate with a view
in obtaining information about the whole population.Here the sample size is the three
chosen companies out of all the real estate companies in DELHI NCR.

SAMPLE AREA(DELHI NCR as the target market)

Delhi is now more or less saturated and the high demand for residential properties has
increased rates beyond the reach of middle class. As a result, the suburban towns
within the NCR; Gurgaon, Noida, Faridabad and Ghaziabad have become destinations
for new residential projects that offer affordable quality housing to the middle class as
well as luxury housing for high end users. As these suburbs are now increasingly
generating employment, they will decide the future growth pattern of the NCR.

The business and trader class still largely dominate old residential areas in west and
northwest Delhi. Similarly the large multi-storey societies in East Delhi in mayur
vihar and Patparganj have found preference with the service class. The blue-collar
segment remains limited to apartments and society developments while big and small
traders occupy the whole of west Delhi, including Rohini. The elite class, in terms of
social status, i.e. politicians, bureaucrats and celebrities, restrict themselves to central
and south Delhi. Suburban areas like Noida and Gurgaon have developed as
alternative housing solutions and are inhabited mostly by professional and service
class people, as well as an increasing upper middle class segment.

Gurgaon offers a good quality of living with many high-end residential projects by
private developers. These new developments offer uninterrupted power supply,
community and health care centers along with facilities like a swimming pool,
clubhouse and other services. As per industry estimates, projects with approximately
5000 dwelling units have been announced in Gurgaon. Since it will be maturing as an
independent city, occupancies will improve but in the present context, it is an
oversupply situation.

23
Noida has experienced rising prices in its existing commercial, retail and residential
real estate. The new developing residential sectors are along the Greater Noida
expressway. Occupancies in Noida are good and prices are looking northward. It is a
good destination for the middle class, as far as accessibility, social and physical
infrastructure and growth perspective are concerned.

24
TOOLS OF ANALYSIS
The section will include the tools used to extract the data that will be used in
conducting the analysis. The tools include various types of financial ratios. However,
the study will only cover the important tools required for the desired analysis.

A- PROFITABILITY RATIOS

1. Net Profit Margin / Profit Margin

2. Return on net worth

B- LIQUIDITY RATIOS

1. Current Ratio
2. Quick Ratio / Acid-Test Ratio / Quick Assets Ratio
3. Cash Coverage Ratio

C- LEVERAGE RATIO

1. Total Debt to Total Assets Ratio

2. Total Debt to Equity Ratio
D- ACTIVITY RATIOS

1. Inventory Turnover Ratio

2. Fixed-Asset Turnover Ratio

F- MARKET VALUE RATIOS

1. Earnings per Share (EPS)

25
 CHAPTER-4
DATA ANALYSIS AND
INTERPRETATION

26
ANALYSIS & INTERPRETATION OF THE
DATA

The analysis and interpretation part includes the calculation and comparison of
ratios of DLF, UNITECH and ANSAL PROPERTIES and
INFRASTRUCTURE. Many ratios were studied and out of that 10 most
important ratios are chosen for the purpose of analysis.These 10 ratios were
chosen from profability ratios, liquidity ratios, solvency ratios, turnover ratios
and market value ratios.After calculation and comparison of the ratios of the
three companies various interpretations were derived. Every ratio had its own
findings and recommendations which will be mentioned in the next chapter of
the study.Calculation of various ratios is shown in excel sheet sent separately.

4.1 Profitability ratios

Profitability ratios measure a companys ability to generate earnings relative to

sales, assets and equity. They highlight how effectively the profitability of a
company is being managed. For most of the ratios a higher value is desirable .A
higher value means company is doing well and it is good at generating profits,
revenues and cash flows. Profitability ratios are of little value in isolation. They
give meaningful information only when they are analyzed in comparison to
competitors as compared to the ratios in the previous period.Various
profitability ratios that were used in my research are as follows:

Net profit margin ratio:

Net profit margin is the ratio of net profits to revenues for a company or
business segment - typically expressed as a percentage that shows how of each
rupee earned by the company is translated into profits. Net profit margin is the
key performance indicator of profitability of the enterprise.Net profit is equal to
total income minus total expenses during a period and revenue is the income
earned from principal business activities. Net profit margin ratio is calculated as
follows:

27
 NET PROFIT/SALES REVENUE*100

Net profit margin of the three companies

Company 2013 2014 2015
DLF 23.32 22.08 31.16
UNITECH 14.43 4.64 -1.63
ANSAL API 4.22 1.46 2.58

Graphical representation

35
30
25 DLF
20
UNITECH
15
10 ANSAL API
5
0
-5 2013 2104 2105

Interpretation:
DLFs net profit margin is the highest among all the three companies in all the
three years. This can be because DLF is operating worldwide with diverse
functions in construction related fields. Moreover high value projects are also
adding up towards profit as compared to other companies. This gives an
indication that DLF is able to control its costs better than the other companies in
all the three years. DLF has the highest profitability amongst them. In the year
2013 and 2014 Ansal API has the lowest net profit margin percentage but in
2015 Unitech has the lowest net profit margin percentage and also it becomes
negative.
DLFs net profit margin is 23.32% in 2013; it slightly falls by 1.24% and reaches
to 22.08% in 2014 and becomes highest in 2015. As it has a net profit margin of
31.16% in the last year, it shows that DLFs cost is very less as compared to its
revenue in 2015 as compared to previous years.

28
 Unitechs net profit margin is continuously falling. It is 14.43% in 2013, and
then it falls to 4.64% in 2014 and then becomes negative in 2015. It can be seen
that Unitech is not able to control its cost and it is spending more money than
making as net profit margin is continuously falling over the years.
Ansal APIs net profit margin ratio is also showing a fluctuating trend. It is
4.22% in 2013. It falls to 1.46% in 2014 and then rises to 2.58% in 2015
because its revenue falls initially then rises by a small amount at the end and its
sales revenue is continuously falling over the years.

Return on equity/ Return on net worth

Return on equity measures a companys profitability by showing how much profit a
company is having with the money that shareholders have invested.
Return on equity is one of the most important financial ratios; it measures how well
a company used business equity to generate profits. Return on equity can be
calculated as follows:

Return on equity= Net income \ Shareholders equity*100

Return on equity ratio for the three companies

Company 2013 2014 2015
DLF 3.43 3.16 5.45
UNITECH 1.55 0.79 -0.16
ANSAL API 2.66 0.82 1.32

29
Graphical represenation

6
5
4 DLF
3 UNITECH
2 ANSAL API
1
0
2013 2014 2015
-1

Interpretation:
In all the three years DLF has the highest return on equity ratio amongst the three
companies. This shows that DLF has a competitive advantage over Ansal API
and Unitech and it is efficiently utilizing the funds provided by its shareholders.
DLF is very efficient in generating income from new investments as its net profit
is continuously increasing along with the increase in shareholders equity.
Unitech has the lowest return on equity in all the three years amongst the three
companies. It shows that it is least efficient in utilizing the funds provided by its
investors in all the three years
In 2013 DLFs return on equity is 3.43 %, it falls by a very negligible margin of
0.27% in 2014 and reaches to 3.16%. Then it becomes the highest as it rises to
5.45% in 2015. It has the strongest earnings growth amongst the three companies.
In 2013 Unitechs return on equity is 14.43%. It falls down by 4.64% in 2014 and
then becomes negative in 2015.From 4.63% it reaches to -1.63 in 2015.It is
continuously showing a decreasing trend over the years showing that its
efficiency in utilizing the investors funds is reducing over the years. The
negativereturn on

equity in 2015 shows that there is a financial loss in Unitech. As a result of this
negative return on equity in 2015, it can cause shareholders and investors to pull
the remaining finances from the business in hope of mitigating lose. As a result it
will affect the total value of the company.

30
 In 2013 return on equity of Ansal API is 2.66% in 2013. It falls to 0.82% in 2014
and again rises to 1.32% in 2015.It is also showing a fluctuating trend over the
years as its net profit and shareholders equity is initially falling and then rising.

4.2Liquidity ratios
Liquidity ratios are a class of financial metric ratios used to determine a companys
ability to pay off its short term debt obligations. Generally higher the value of ratios,
greater is the margin of safety that the company possesses to cover short term debts.
Bankruptcy analysts and mortgage originators frequently use the liquidity ratios to
determine whether a company will be able to continue as a going concern. Liquidity
ratios show the number of times the short term debt obligations are covered by cash
and liquid assets. Various liquidity ratios that were used in my research are as
follows:

Current ratio
The ratio is generally applied to exhibit an idea of the company's ability to pay back
its short-term liabilities (debt and payables) with its short-term assets (cash, inventory,
receivables). Higher is the ratio, higher is the ability to pay back short-term
obligation. A ratio less than 1.0 proposes that the company would be incapable of
paying off its obligations when they become payable at that point. Furthermore, it is a
bad indication of financial health, yet it does not essentially mean that it will go
bankrupt as there are many ways to access financing; however, it is definitely not a
good sign. It is calculated as follows:

Current ratio = current assets/current liablities

Current ratio of three companies
Company 2013 2014 2015
DLF 1.77 1.82 2.20
UNITECH 2.67 2.03 1.92
ANSAL API 1.18 1.21 1.25

31
 Graphical representation

2.5

2 DLF
1.5 UNITECH

1 ANSAL API

0.5

0
2013 2014 2015

Interpretation:
As the three companies that are chosen belong to the real estate sector so it is
considered that the companies should have a current ratio of more than 1
which will provide additional cushion to unforeseen contingencies as there are
various short term obligations that a real estate company has to meet.So it
assumed that current ratio (1<CR>3) is considered satisfactory but if the
current ratio of a company exceeds 3 it is considered unsatisfactory as it will
show an inefficient utilization of working capital.
In 2013 and 2014 Unitech has the highest current ratio as compared to the other
companies. In 2015 DLF has the highest current ratio amongst the three
companies.
DLF is having a current ratio of 1.77 in 2013; it becomes 1.82 in 2014 and then
becomes 2.20 in 2015. It is continuously showing an increasing trend over the
years. This shows that DLFs liquidity position is improving over time becauseit
can be seen from the balance sheet that its current liabilities are declining over
the years which means that DLF is paying them off over the years by using its
current assets.
Although Unitech has the highest current ratio in 2013 and 2014 but its current
ratio is showing a diminishing trend over the years this can be because its
current liabilities such as trade payables, short term borrowings are increasing

32
 over the years and it unable to utilize its growing current assets due to blockage
of money .
Ansal API has a current ratio of 1.18 in 2013; it becomes 1.21in 2014 and then
reaches to 1.25 in 2015. It is continuously increasing over the years because its
total current assets such as inventory, trade receivables are increasing over the
years. This has made its current ratio to increase over the years. Its

current liabilities are increasing initially and then a small amount is paid off
which has made its current liabilities to decrease. This can be because its
money could be blocked in trade receivables and other current assets, so it is
able to pay off only a small portion of its current liabilities at the end by using
its current assets.

QUICK RATIO
The quick ratio is an indicator of a companys short-term liquidity, which is also
measurement of a companys ability to meet its short-term obligations with its
most liquid assets. Furthermore, it measures the amount of liquid assets existing
for each of current liabilities. Higher is the quick ratio, healthier the company's
liquidity situation.

Quick ratio = current assets-inventory\current liabilities

Quick ratio of three companies:

Company 2013 2014 2015
DLF 1.09 1.19 1.40
UNITECH 2.45 1.91 1.81
ANSAL API 0.48 0.49 0.50

33
 Graphical representation:

2.5

1.5 DLF
UNITECH
1
ANSAL API

0.5

0
2013 2014 2015

Interpretation:
Since in a real estate industry short term obligations are many, so a quick ratio
above 1 is considered
satisfactory as it provides a cushion to meet unforeseen contingencies. So a
quick ratio (1<QR>3) is considered satisfactory in the real estate sector but a
quick ratio of greater than 3 is considered unsatisfactory showing insufficient
utilization of quick assets and incompetence in financial management of the
company.
Ansal API has the lowest quick ratio in all the three years compared to other
two, moreover its quick ratio is even less than 1 which shows that current
liabilities are more than its quick assets
DLF is showing an increasing trend over the years. It is 1.09 in 2013. It
becomes 1.19 in 2014 and rises to 1.40 in 2015 showing that liquidity position
of DLF is improving and more assets would be converted to cash if needed. Its
quick assets are sufficient enough to meet its current liabilities. It is paying off
its liabilities by using its most liquid assets over the years.
Unitech is showing a decreasing trend over the years. It is 2.45 in 2013; it
becomes 1.91 in 2014 and then falls to 1.81 in 2015. It can mean it is
becoming difficult for Unitech to pay off its short term liabilities by using its

34
 quick assets as its money is blocked in other current assets and trade
receivables.
Ansal API is also experiencing anincreasing trend over the years. It is 0.48 in
2013. It falls to 0.49 in 2014 and then becomes 0.50 in 2015. Although the
quick ratio is unsatisfactory as it is less than 1 as its quick assets are less than
current liabilities in all the three years but as it is increasing over the years it
shows that Ansal API is trying to improve its most liquid assets so that it can
pay off its short term obligations.

Cash coverage ratio

It is a measure of a company's capability to cover its financial liabilities. In vivid
meaning, a high coverage ratio is a better ability for a company to fulfil its
obligations to its lenders. The cash coverage ratio is beneficial for evaluating the
amount of cash available to pay for a borrower's interest expense. Here EBIT stands
for earnings before interest and taxes and noncash expenses means depreciation and
amortization expense of the company.It is calculated as:

Cash Coverage ratio = EBIT + Non-cash expenses\ Interest expenses

Cash coverage ratio of the three companies

Company 2013 2014 2015
DLF 1.48 1.60 1.91
UNITECH 1.89 1.48 1.04
ANSAL API 2.14 1.98 2.34

35
 Graphical representation

2.5

1.5 DLF
UNITECH
1
ANSAL API
0.5

0
2013 2014 2015

Interpretation:
Ansal API has the highest cash coverage ratio in all the three years as compared to
the other two companies as the interest obligation of Ansal is the lowest in all the
three years .DLF has the lowest cash coverage ratio in 2013 but in 2014 and 2015
Unitech is having the lowest cash coverage ratio.
DLFs cash coverage ratio is showing an increasing trend over the years. It is 1.48 in
2013; it becomes 1.60 in 2014 and then reaches to 1.91 in 2015.The financial risk of
DLF is reducing over the years as its ability to pay off its fixed interest obligation is
increasing over the years. As seen from the profit and loss account the interest
expense of DLF is reducing over the years and its EBITDA is improving which has
led to the increase in cash coverage ratio. The cash position is improving over the
years which makes possible for DLF to pay off its interest obligations. Financial
reliability of DLF is very high compared to the other companies.
Unitech is showing a declining trend in cash coverage ratio. It is 1.89 in 2013; it
falls to 1.48 in 2014 and then reaches to 1.04 in 2015. The ability to meet the fixed
interest obligations is declining over the years. The EBITDA of Unitech is
continuously reducing. The cash position of Unitech is deteriorating and it can be
seen

36
 that Unitech holds the lowest amount of cash with itself. Financial reliability is
deteriorating and will become difficult to obtain a loan in future for Unitech if this
trend continuous.
Although the cash coverage ratio is the highest in all the three years because of its
lowest and continuously declining interest obligations. But it is showing a
fluctuating trend over the years. It is 2.14 in 2013; it falls to 1.98 in 2014 and again
rises and becomes highest at 2.34 in 2015. Interest obligation of Ansal is falling
over the years; moreover its EBITDA is also reducing which has made its cash
coverage ratio to fluctuate.

4.3Solvency ratios
Solvency ratios, also called leverage ratios measures a companys ability to sustain
operationsindefinitely by comparing debt level of the company with it equity, assets
and earnings. Solvency ratios identify going concern issues and firms ability to pay
its bills in the long run. These ratios focus more on the long run stability instead of
current liability payments. The various solvency ratios that were used in my research
are as follows:

Total debt to total asset ratio:

The ratio defines the total value of debt relative to assets, which allows judgments of
leverage to be conducted across various companies. Higher the ratio, higher the
degree of leverage, and consequently higher financial risk. Total debt to total assets is
a wide-ranging ratio that includes long-term, short-term debt and all tangible and
intangible assets.
Total Debt to Total Assets Ratio = Total debts \Total assets

Total debt to total asset ratio of three companies

Company 2013 2014 2015
DLF 0.60 0.55 0.52
UNITECH 0.42 0.48 0.49
ANSAL API 0.68 0.70 0.69

37
Graphical representation:

0.8
0.7
0.6
0.5 DLF
0.4 UNITECH
0.3 ANSAL API
0.2
0.1
0
2013 2014 2015

Interpretation:

Ansal API has the highest debt to total asset ratio in all the three years as
compared to the other two companies. This is because Ansal has the lowest
amount of total assets in all the three years amongst the three companies.
Unitech has the lowest amount of total debt to total asset ratio in all the three
years compared to the other two companies.
DLF ratio is 0.60 in 2013. It falls down to 0.55 in 2014 and then to 0.52 in 2015.
It is showing a decreasing trend over the years as the debt capital of DLF is
reducing over the years. It also shows the ability of the company to get loan for
the new projects as the risk of the company is reducing over the years because
the interest obligations are also reducing with the decrease in the debt capital.
Unitech is showing an increasing trend over the years as the percentage of assets
that are financed by the creditors is increasing over the years .It reduces the
ability of the company to get loans as the lenders will see the company as a
risky asset.
Ansal APIs ratio is 0.68in 2013, it rises to 0.70 in 2014 and then becomes 0.69
in 2015.It is showing a fluctuating trend over the years over the years because
its debt capital is initially increasing and then falling along with the increasing
total assets over the years.

38
 Debt equity ratio
Debt/Equity Ratio is a debt ratio used to measure a company's financialleverage,
calculated by dividing a companys total liabilities by itsstockholders' equity. The
D/E ratio indicates how much debt a company is using to finance its assets relative
to the amount of value represented in shareholders equity. It is calculate as follows:

Total debt to equity ratio = Total debt\total shareholders equity

Debt equity ratio of the three companies

Company 2013 2014 2015
DLF 1.52 1.25 1.08
UNITECH 0.73 0.92 0.99
ANSAL API 2.21 2.36 2.32

Graphical representation:

2.5

1.5 DLF
UNITECH
1
ANSAL API
0.5

0
2013 2014 2015

39
Interpretation:
From the table it is clearly seen that Ansal API has the highest debt equity ratio in
each year compared to the other two companies because it has the lowest amount
of equity capital compared to other companies in all the three years.
DLF has a debt equity ratio of 1.52 in 2013; it falls to 1.25 in 2104 and then
becomes 1.08 in 2015. Debt capital of DLF is reducing over the years and its
equity capital is increasing is increasing showing that the financial risk is reducing
as it has to pay a low amount of interest obligation so the overall financial health of
the company is improving.
Unitechs debt equity ratio is showing an increasing trend over the years. Its debt
capital is increasing and equity capital is reducing. So the company is becoming
more financially risky as its debt burden is increasing with the increase in its debt
capital.
Ansal APIs debt equity ratio is 2.21 in 2013; it rises to 2.36 in 2014 and then falls
to 2.32 in 2015. Its equity capital is fluctuating; it is falling initially and then rises
by a small amount and its debt capital is increasing initially then falls by a small
margin

4.4Turnover ratios/Efficiency ratios

They are a set of financial ratios used to measure the efficiency of various business
operations. These ratios are directly linked to the lifeblood of the business that is
revenue. The efficiency is measured in terms of generation of revenue by the
respective assets. The various ratios that were used in my research were as follows:

Fixed asset turnover ratios

The fixed-asset turnover ratio is a financial ratio of net sales to fixed assets. The
fixed-asset turnover ratio measures a company's ability to generate net sales from
fixed-asset investments. A higher fixed-asset turnover ratio shows that the company
has been more effective in using the investment in fixed assets to generate revenues.
It is calculated as follows:

40
 Fixed asstes turnover ratio =net sales\fixed asstes

Fixed asset turnover ratios of three companies

Company 2013 2014 2015
DLF 0.47 0.69 0.76
UNITECH 10.29 16.62 15.35
ANSAL API 8.25 7.19 7.04

Graphical representation:

18
16
14
12 DLF
10
UNITECH
8
6 ANSAL API
4
2
0
2013 2014 2015

Interpretation:
In every year Unitech has the highest fixed asset turnover ratio compared to the
other two companies. This is because it has the smallest portion of fixed assets in all
the three years amongst the three companies
Although DLF has the lowest fixed asset turnover ratio in all the three years because
of a highest portion of its fixed assets but it is continuously showing an increasing
trend over the years. This shows that efficiency of the company in utilizing the fixed

41
 assets is improving which can be seen from increase in the amount of sales. Its sale
rises from 2150.04 in 2013 to 3016.69 in 2015.
Unitechs fixed asset turnover ratio is 10.29 in 2013; it rises to 16.62 in 2014 and
then becomes 15.35 in 2015. It is showing a fluctuating trend. But still its ratio is the
highest amongst the three companies in all the three years.
As seen from the table above Ansal APIs fixed asset turnover ratio is reducing over
the years showing a decline in the efficiency of the company to utilize its fixed
assets. This can be seen from the falling sales revenue over the years.

Inventory turnover ratio

Inventory turnover ratio measures the efficiency of the company in turning its
inventory into sales. It is one of the efficiency ratios which show the number of
times the inventory is sold and replaced during a fiscal year. It shows how well a
company manages its inventory level and how frequently a company replenishes its
inventory. It is calculated as follows:

Inventory turnover ratio = sales\ Inventory

However average inventory is used for more accuracy.

Inventory turnover ratios of three companies:

Company 2013 2014 2015

DLF 0.25 0.28 0.38
UNITECH 0.91 1.61 1.01
ANSAL API 0.45 0.37 0.33

42
Graphical representation:

1.8
1.6
1.4
1.2
DLF
1
UNITECH
0.8
0.6 ANSAL API
0.4
0.2
0
2013 2014 2015

Interpretation:

Unitech has the highest inventory turnover ratio in all the three years compared
to the other two companies. This is because Unitech has the lowest levels of
inventory in all the three years amongst the three companies. This can be seen
from the balance sheet of Unitech.Its trend is fluctuating in the three years
because the net sales initially rises and then falls along with the continuously
falling inventory level. The falling inventory has started affecting the sales
revenue of the company.
The inventory turnover ratio of DLF is increasing over the years showing that it
is becoming efficient in inventory management which has led to increase in
sales over the years. The preference of the customers for its products is
increasing.
As seen from the table, Ansal API is showing a diminishing trend over the years
because its sales arecontinuously falling along with the rising inventory. Ansal
API is becoming inefficient in managing its inventory management. The
inventory is being added up over the years but the sales are not increasing. The
preference of the customers for its products is declining.

43
 .4.5 Market valuation ratios
Market valuation ratios are those ratios that compare a securities current market
price to any item in the financial statement. Fundamental analysts use these
ratios to help determine whether a security is overvalued or undervalued. These
ratios evaluate the economic status of the company in wider marketplace. Market
valuation ratios gives firm an idea of what the investors think about its future
prospects. The ratios used in my research are as follows:

Earnings per share

This ratio shows how much each share of the stock would receive if all the profits
were distributed to the outstanding shares at the end of the year. It is an important
figure for actual and potential stockholders because the payment of the dividend
and increase in the value of the stock in future largely depends in the earnings of
the company. It is calculated as:

Earnings per share(EPS) = Net income\Total outstandind share

Earnings per share of three companies

Company 2013 2014 2015
DLF 2.95 2.96 5.28
UNITECH 0.58 0.30 -0.06
ANSAL API 2.81 0.86 1.39

44
Graphical representation:

4
DLF
3 UNITECH
2 ANSAL API
1

0
2013 2014 2015
-1

Interpretation:
In each year DLF has the highest earnings per share when compared to the
other companies. This shows that DLF has the highest earnings amongst the
three companies and this shows that DLF is the most reliable company to
invest in. Unitech has the lowest earnings per share which shows that Unitech
has the worst financial position and financial stability amongst the three
companies.
DLFs earnings per share are 2.95 in 2013; it increases to 2.96 in 2014 and then
reaches to 5.28 in 2015. It is continuously increasing over the years. This
indicates that over the years DLFs financial position is becoming stronger and
its earnings are increasing.
As seen from the table Unitechs earning per share is falling over the year
which shows that its earnings are falling continuously and its earnings are
deteriorating. It incurs a loss of -15.81 crore which gives a negative EPS in the
last year.
From the table it is seen that the EPS of Ansal is fluctuating because its
earnings initially falls and then rises in the last year but the number of
outstanding shares remains the same.

45
 CHAPTER-5
FINDINGS,
RECOMMENDATIONS AND
CONCLUSION

46
 5.1 Findings and recommendations on profitability
ratios.

Findings on net profit margin:

Since DLFs net profit margin is showing an increasing trend, DLF is able to
control its cost better than the other two companies. DLF has worldwide operations
and also takes very high value projects which have made its net profit margin to
rise.
Unitechs total cost are increasing continuously and it is becoming difficult for
Unitech to control its cost. Unitech spending are greater than its earnings in the end
year which has, because of which it makes a loss of 15.81 crore.
Ansal API is also not in a good condition, its sales revenue is continuously
dipping. The demand for its products are continuously going down which has
affected its earnings
Recommendations
Unitech and Ansal are not in a good position. So it can be recommended that they
should immediately take some measures to increase sales or reduce its cost.
Measures such as shutting down non performing projects, laying off workers can
reduce its costs. Moreover measures such as giving discounts to customers on early
booking of property, giving easy payment options to customers can improve sales
in future.
It is recommended that DLF should operate in the same way which has made its
earnings to increase.

Findings on return on net worth:

DLF is in a very good position as its return on equity is increasing. DLF is
efficiently utilizing the funds invested by the investors and it is generating profits
from the new investments in a very appropriate way. It has strong earning power
and good financial stability if this trend continuous in future.
Unitechs condition is the worst. It is not capable of utilizing the investors funds in
an efficient manner. It does not have a good financial health and the loss that it
incurs in the last year can provoke the investors to pull their money out of the

47
 business which will give an indication that investors do not have confidence on its
future performance.
Ansal APIs condition is still somewhere better than Unitech but not satisfactory.It
is not in aposition to compete with other real estate giants in the market.

Recommendations :
It is recommended that Unitech should take strict steps to improve its position if it
wants to save itself from liquidation.It can:
Reduce taxes which can improve the profits
Or it can increase its profit margin
Ansal API can also use the above measures to mantain a stable position in future
DLF should continue using the investors fund efficiently which will improve its
performance in future also.

48
5.2 Findings and recommendations on liquidity ratios

Findings on current ratio:

DLFs liquidity position is satisfactory. It is capable of paying off its current
liabilities by using its current assets.
Unitechs current liabilities are increasing continuously and it is not utilizing its
increasing current assets to pay its short term obligations, it shows that it has
money blocked in trade receivables and some other current assets that is making
impossible for Unitech to pay off its short term obligations.
Although Ansal has larger amount of current assets compared to current liabilities
but is paying a small amount of its short term obligations from its current assets.
This can be because its cash must be blocked in the trade receivables and other
current assets Recommendations:
It is recommended that DLF should continue using its current assets to pay off it
short term obligations.
Unitech should try to improve their liquidity by:
Monitoring accounts receivable effectively to ensure prompt payments.
Monitoring the amount of money that is taken out for non business
purposes such as owners draws
Selling off unproductive assets
Ansal API should operate in the same way. Although it must be having some
amount of money blocked in its current assets but its overall cash flow is
improving which is a good sign. If it wants it can monitor its receivables and
other current assets to ensure prompt payments so that it can pay off its short term
obligations with its current assets as well.

49
Findings on quick ratio:

DLF has a sound liquidity position as it is utilizing its quick assets to pay off its
short term obligations. Its liquidity position is improving over the years which is a
good sign for the company as well the creditors because they want to know when
they will be paid back.
Unitechs quick ratio is falling showing that it is becoming difficult for Unitech to
pay off its current liabilities even by its most liquid assets. Its money is blocked in
trade receivables and other current assets.It is becoming difficult for the company
to pay back to its creditors on time.
Ansals quick ratio is increasing by a very minimal number . It is trying to improve
its position of liquid cash so that it can pay off the short term obligations on time
with its most liquid assets. Its overall cash position is increasing which is a good
sign for the company.
Recommendations
DLF should continue to operate in the same way as it is capable of paying back to
the creditors on time
Since Unitech has a worst liquidity position the company should take the same
steps mentioned above in the current ratio to improve its liquidity quickly.
Ansal API should continue to operate in the same way as its liquid cash is
improving, even though by a small amount and its overall cash posiyion is also
improving

Findings on cash coverage ratio:

DLFs cash coverage ratio is improving over the years. The financial health of DLF
is improving over the years. Due to its decreasing interest expense its financial risk
is also diminishing . Moreover its cash flow is good and with its incresing cash
flow its has to pay a lesser interest expense each year which makes it more
financially reliable than the other companies. This will help DLF obtain a loan
easily if it needs in future.
Unitechs condition is worst because Unitech does not holds a large amount of cash
to pay off its interest obligations. So the riskiness of the company is increasing
along with decline in the financial health and financial stability.

50
 From the cash flow statement it can be seen that the overall cash position of Ansal
is improving from which it is capable of meeting its interest obligations.

Recommendations:
Unitech should take immediate measures to improve its overall cash position so
that it can pay off its obligations.It can:
Raise additional equity which would increse the cash flow and will
help the company to pay off its interest obligations.
Or it can sell off some unproductive assests which would help in
bringing some cash flow .
It is recommended that both DLF and Ansal should operate in the same way and
should continue improving its cash position so that it can meet any uncertanity in
the future

51
5.3 Findings and recommendations on solvency ratios:
Findings on total debt to total asset ratio
DLFs debt capital is decreasing over the years which have made its debt to total
asset ratio to decrease over the years. Moreover due to decline in debts, its
interest obligation is reducing which has reduced the financial riskiness of the
company. Ansal APIs debt capital is initially increasing then falling over the
years but its interest expenses are falling over the years.
There is an increase in the assets of Unitech that are financed by the creditors. The
financial risk of Unitech is increasing and it is becoming very difficult for the
company to take new loans when it will require in future.
Recommendations:
It is recommended that Unitech should take strict steps to improve its overall
solvency condition because if this trend continuous, it will become bankrupt
soon. It can:
Lease assets The company can sell its assets and lease them
back. This will increase the cash flow and will help in payng off
the debts.
Increase in sales: The company can focus on increase in the sales
but without any increase in the overhead expenses. It will also
help in reducing debt.
Raise additional equity to increase the cash flow.
DLF should continue its operations in the same way which has made its financial
riskiness to fall.
Till Ansal API has enough cash to pay off its interst expenses(as its interst
expenses are reducing), it should continue the same way. But if its debt capital
increses by a very large margin and it becomes difficult to pay its interst
expenses, it can take any of the above stated steps.

Findings on debt equity ratio:

Debt capital of DLF is falling over the years and its equity capital is increasing
showing that investors want to fund the operations of the company because the

52
 company is performing well. Company is considered a less risky and have good
solvency position
Unitechs debt capital is increasing and equity capital is declining. It shows that
creditors are funding its operations more than the investors and there is a decline
in the financial health of the company over the years. Companys riskiness is
increasing as it has to pay more interest expenses.
Recommendations:
Unitech should take strict and immediate steps which would increase the cash
flow and will help in paying off the fixed obligations. It can take any of the
above stated steps(in the recommendations of the total debt to total asset ratio)
which will help Unitech to reduce its debt capital and overall financial risk.
DLF should continue raising its equity in the same way and reducing its
overhead burden of financial debts and its obligations. But it should also avoid
increasing its equity beyond a certain limit which can also be harmful for the
company as it will dilute the ownership of the existing shareholders.
Ansal API can take the above mentioned steps (in the recommendations of the
total debt to total asset ratio) if its debt exceeds beyond a limit and it becomes
difficult to pay interest obligations with its current cash flow.

53
5.4 Findings and recommendations on the turnover
ratios

Findings on fixed asset turnover ratios

Unitech has the smallest portion of fixed assets in all the three years and it is
showing a fluctuating trend as its net sales initially rises then falls as compared
to the falling fixed assets.
DLF is efficiently utilizing its fixed assets because its sales revenue is
increasing over the years. It shows that the company is in good position.DLF
is good at managing its large portion of its fixed assets.
Ansal API is not efficiently utilizing its fixed assets which can be seen from its
reducing sales volume. It is not a good sign for the company.

Recommendations
.It is recommended that DLF should manage its fixed asset in the same way in
the coming years which will increase its sales revenue in the coming years
also.
It is recommended that Ansal API should take steps for better management of
fixed assets. All these can help in increasing fixed asset turnover ratio.
Increase sales-Ansal API should improve its sales
Liquidate assets- Obsolete or unused assets should be
liquidated quickly.
Leasing- Lease the assets, instead of buying them.
Unitech should take steps to improve its sales by giving promotional
discounts or by giving easy payment options to the customers. This will
again increase its fixed asset turnover ratio in the coming years.
Findings on inventory turnover ratio:

DLFs inventory management techniques are very good. Although DLF is having
a very high inventory base but it is managing its inventory very efficiently which
has led to the increase in sales. Customers preference for its products is
increasing over the years.

54
 Ansal API is not good in inventory management as its inventory base is
increasing but it is not replenishing its inventory over the years as the sales
revenue is not increasing. Moreover the customers do not prefer its products over
the years.
Unitechs inventory level is continuously falling. This has impacted its sales a lot
as its sales have started to decline from the last year. It is not a good sign for the
company.
Recommendations:
It is recommended that DLF should continue managing its inventory in the same
way which would help the company to increase its sales revenue in the future too.
It is recommended that Ansal API should improve its inventory management and
improve its inventory turnover ratio in the future. It should take the following
steps:
Better forecasting- The Company should pay more attention to
the forecasting techniques. If Ansal could forecast the demands
of the customers it has to stock only those items. This will
reduce excess inventory and improve the ratio also.
Reduce the price If Ansal is unable to increase the demand
through marketing strategy, it should reduce the price to an
attractive level and increase sales.

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5.5 Findings and recommendations on market value ratios:
Findings on Earnings per share:

DLFs earning per share is increasing which. Its reliability is increasing with the
growing financial health and financial stability. Its profitability is improving and it
has greater profits to distribute to the shareholders.
Unitechs financial position and financial reliability is deteriorating over the years.
With the falling EPS the confidence of the investors to invest it is also declining,
as its earnings are falling and it even incurs a financial loss of 15.81 crore.
Ansals earnings are fluctuating over the years and its earnings are not enough as
compared to real estate giants.
Recommendations:
It is recommended that DLF should continue increase in its earnings in the future
too, as it is increasing the confidence of the investors to invest in the company.
It is recommended that Ansal should improve its earning in the future so that it
becomes capable of competing with the real estate giants and its earnings per
share also improves.
Unitech should take urgent steps and should revive its financial health as soon as
possible. It is convert its loses into profits in the coming years. If it is able to
convert its loses into profits then it can increase its EPS by:
Share buyback program- It can repurchase its own
shares will reduce the number of outstanding shares and
increase the EPS
Mergers- In case of mergers, its number of outstanding
shares will reduce and EPS would increase.

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 Conclusion
If properly analyzed and interpreted financial statements can provide valuable
insights into a companys financial performance. Financial statement analysis can
be done for a variety of purpose which may range from a simple analysis of a short
term liquidity position of the company to a comprehensive assessment of the
strength of the company in different areas. It is helpful in assessing corporate
excellence, judging credit worthiness and predicting bankruptcy.

The above project that is financial statement analysis of DLF, Unitech and Ansal
API is successfully completed in the period of three months. The 10 ratios which
are used for my research work are studied in detail and then they are calculated by
using the commonly used formulas for the three chosen companies for the period
of three years. These ratios are interpreted in detail and various findings and
recommendations are drawn. Although findings for all ratios are shown above but
liquidity, solvency and profitability are the major elements of financial health of a
company. DLFs liquidity position is very good compared to the other companies. It
has a continuous growth in its cash flow and earnings which improves it long term
prospects. Unitech has the worst liquidity position and Ansal API have a growing
cash flow but it is not satisfactory when compared to DLF.

DLFs profitability position and solvency position which is the ability to pay off its
long term obligations is also best amongst the three companies. Unitech is having
the worst profitability and solvency position. It cash flow is not sufficient enough
to pay off its long term obligations. Ansal APIs. It has the worst financial health
and long term stability. Ansal APIs condition is better than Unitech in terms of
profitability and solvency but it is not in a position to compete with DLF. The
findings on market value ratios and turnover ratios also show that DLF is the best
among the three companies.
So it is concluded that DLF has the best financial health and Unitech has the worst
financial health and long term stability. Ansal API is better than Unitech in most of
the grounds but it is way far from DLF.

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Benefit to the company from my findings:
My findings will benefit my company (DLF) in future planning and taking
necessary steps to strengthen its policies and financial health.
The current and potential investors of my company will gain a lot of information
about the improving financial position of the company in comparison with Unitech
and Ansal API from my findings,

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A Learning Summary (My value additions)

The Summer Internship Programme provides student with a platform to work in

the organization where there is a code of conduct which an employee has to
follow. There is a lot pressure under which a person has to work but the best
thing is when you feel the pride of being appreciated by your boss. A person
learns the habit of interacting with the strangers which minimizes hesitation.

Internshipgives you exposure to new and interesting professional situation with a

safety net. Companies give you real opportunities for practical application of
skill, but are also there to catch you if there is a problem along the way.

SIP helped in learning the softwares such as MS-EXCEL and MS-Word which is
used in day to day life and in future also. The team peers were very helpful as
they understood that being a fresher I am at learning stage so they assisted me as
and Irequired help.

Since in the initiall satges of my internship I had to read about many financial
ratios and had to select 10 most important ratios so I got a detailed understanding
about the ratios which are important from a companys point of view.

I even took some of the assumptions after discussing with the team members,
such as the current ratio and the quick ratio should be in the range of 1 to 3
because after working in the real estate company I understood that there are
various short term obligations that a real estate company has to meet. So the
current assets have to be greater than its liabilities which would help in paying
them off easily.

In the early stages of my internship I even worked in the accounting department.

There I understood the various day to day accounting practices that are
undertaken by the company. I understood about the different bills that comes
from the third party to the company, how are they checked by using there
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respective approvals and how the bank reconciliation is prepare after matching
the bank balance with our book balance along with help in preparation of the
balance sheet of some group companies.

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 Bibliography
Source
1.Ann Wang, Ph.D. (Corresponding author) The University of the District of
Columbia 4200 Connecticut Ave, N.W. Washington, D.C Comparison of Real
Asset Valuation Models.

2.Author: Ka Fai Chan An Exploratory Study of the Effects of Project Finance

on Project Risk Management.

3.The Effects of Environmental Contamination on Real Estate: A Literature

Review Thomas O. Jackson
4.dr.S.M.T.tariq zafar,dr,abeel maqbool. Literature review of Pre recession
study on financial leverage in real estate industry and its relative impaction on
shareholders returns.

Internet
1 .www.dlfhomes.co.in

2. www.moneycontrol.com/financials/dlf/balance-sheet/D04

3. https://en.wikipedia.org/wiki/Unitech_Group

4. www.ansals.com /
5. www.slideshare.net/sharadjhingan/india-real-estate-research

6. www.indianotes.com/research-analysis/company/company-financial.php

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