Analysis
Analysis
Analysis
Submitted by
Methu Diya D
24NKU35
Content
1) Introduction to Adani Enterprises Limited
2) History
3) Profile
4) Adani Enterprises Vision, Mission and Values
5) Income Statement
6) Balance Sheet
7) Analysis and Interpretation
8) Tools used
9) Financial Year 2019-2020- Vertical, Horizontal, Ratio
Analysis with interpretation for each
10) Financial Year 2020-2021- Vertical, Horizontal, Ratio
Analysis with interpretation for each
11) Financial Year 2021-2022- Vertical, Horizontal, Ratio
Analysis with interpretation for each
12) Financial Year 2022-2023-2024- Vertical, Horizontal,
Ratio Analysis with interpretation for each
13) Conclusion
Introduction:
Adani Enterprises Limited (AEL) is a key player in the Adani Group, headquartered in
Ahmedabad, Gujarat, India1. Founded in 1993, it's a publiclylisted holding company
involved in diverse sectors such as energy, infrastructure, logistics, and food processing.
AEL is recognized as India's largest listed business incubator, focusing on incubating and
nurturing businesses that address national importance and create value for stakeholders
History:
Vision
To be a globally admired leader in integrated infrastructure businesses committed to
nation building
Mission
To profitably tap global business opportunities for stakeholders.
Values
Tools Used
In this report the following analysis has been followed and interpreted:
Definition: This method involves expressing each item in the financial statements as a
percentage of a base figure. Purpose: Helps in understanding the relative proportion of each
Definition: This method involves comparing financial data across multiple periods. Each line
item in the financial statements is compared to the same item in a previous period to
calculate the growth rate or decline.
Purpose: Assists in identifying trends, growth patterns, and any significant changes
overtime.
3. Ratio Analysis:
Definition: This method involves calculating various financial ratios that provide insights
into different aspects of the company's performance, such as liquidity, profitability, and
Solvency.
FINANCIAL YEAR
2019-2020
Horizontal Analysis (Income Statement) for the year 2020
Interpretation:
Overall, Adani Enterprises Limited demonstrated effective cost management and strategic
focus, leading to a significant increase in net income despite some declines in certain revenue
streams.
Balance sheet of the year 2020
Interpretation
Borrowings:
Current Liabilities:
Assets:
This overall indicates a reduction in total liabilities and assets, with significant decreases in
short-term trade payables and current assets, alongside increases in reserves and long-term
investments.
Vertical Analysis (Income Statement) for the year 2020:
Interpretation:
Income
Expenses
Profitability
Overall, the company showed growth in income and profitability, despite some areas of
decline. Effective cost management and extraordinary income significantly boosted the
profits
Balance Sheet for 2020:
Interpretation:
Borrowings:
Current Liabilities:
Assets:
Interpretation
Overall, the company demonstrated positive growth in income and profitability, effective
cost management, increased reserves and equity, while reducing liabilities and
maintaining stable liquidity.
FINANCIAL YEAR
2020-2021
Horizontal Analysis (Income Statement) for the year 2021
Interpretation of Financial Data
Income Analysis
• Total Income: Decreased by ₹31,835 million (18.80%) from ₹169,344.40 million in Mar-
20 to ₹137,509.40 million in Mar-21. This significant drop indicates a decrease in overall
revenue.
• Sales: Decreased by ₹28,623.3 million (17.66%) from ₹162,078 million to ₹133,454.70
million, showing a decline in the core business operations.
• Industrial Sales: Increased by ₹2,024.6 million (9.78%) from ₹20,698.50 million to
₹22,723.10 million, which is a positive sign in this segment.
• Income from Non-Financial Services: Decreased by ₹30,647.9 million (21.68%) from
₹141,379.50 million to ₹110,731.60 million, indicating a decline in this revenue stream.
Expense Analysis
Profitability Analysis
• Profit After Tax: Decreased significantly by ₹3,300.8 million (47.23%) from ₹6,988.90
million to ₹3,688.10 million, indicating a substantial drop in net earnings.
Balance Sheet of the year 2021
Interpretation
• Total Reserves and Funds: Increased by ₹3,669.93 million (10.05%), from ₹36,510.20
million to ₹40,180.10 million.
• Free Reserves: Increased by ₹3,669.92 million (13.75%), from ₹26,683.80 million to
₹30,353.70 million.
• General Reserves: Increased by ₹250 million (6.76%), from ₹3,699.40 million to
₹3,949.40 million.
• Balance as per Profit & Loss Account: Increased by ₹3,419.92 million (14.89%), from
₹22,984.40 million to ₹26,404.30 million.
Borrowings:
• Increased slightly by ₹5.11 million (0.30%), from ₹1,714.40 million to ₹1,719.50 million.
• Total Current Liabilities & Provisions: Decreased by ₹15,529.55 million (17.21%), from
₹90,204.00 million to ₹74,674.50 million.
• Short-term Borrowings: Decreased by ₹2,059.11 million (12.25%), from ₹16,810.30
million to ₹14,751.20 million.
• Short-term Trade Payables and Acceptances: Decreased by ₹16,085.73 million
(24.12%), from ₹66,648.70 million to ₹50,563.00 million.
Assets
Long-term Investments:
• Total Current Assets and Loans & Advances: Decreased by ₹10,808.8 million
(11.79%), from ₹91,665.00 million to ₹80,856.20 million.
• Inventories: Decreased by ₹4,346.3 million
Vertical Analysis of income statement 2021
Key Takeaways:
Conclusion:
The company has demonstrated effective financial management by reducing overall liabilities
and increasing reserves. However, the significant decrease in assets, particularly inventories
and receivables, needs to be closely monitored for its impact on operations and liquidity.
Balance Sheet for the year 2021
Interpretation
1. Stable Capital and Reserves: Indicates solid financial health and prudent management.
2. Increased Borrowings: Higher long-term borrowings suggest investment in long-term
projects.
3. Improved Short-Term Financial Health: Reduced current liabilities and short-term
borrowings enhance financial stability.
4. Decreased Assets: Significant reductions in current assets, inventories, and receivables
need careful monitoring.
Ratios;
Ratio ResultM Result
ar-20 Mar-21
Current Ratio 1.02 1.08
Total Debt to Equity Ratio 3.74 3.22
Gross Profit Rate 13.13% 13.85%
Return on Sales 4.13% 2.68%
Return on Stockholders' Equity 18.71% 8.99%
Interpretation
The company experienced a decline in its financial ratios from Mar-20 to Mar 21.The Gross
Profit Rate has slightly decreased, indicating a minor deterioration in managing production
costs. The Net Profit Margin has seen a significant drop, highlighting reduced overall
profitability. These trends suggest that the company may need to focus on improving cost
management and boosting sales efficiency to enhance its financial performance.
FINANCIAL YEAR
2021-2022
Horizontal Analysis (Income Statement) of the year 2022
Interpretation
Income Analysis:
• Total Income: Increased by ₹1,35,879.3 million (98.81%) from ₹1,59,432.3 million in
2019 to ₹2,73,388.7 million in 2022, indicating significant revenue growth.
• Sales: Grew by ₹1,34,880.8 million (101.07%) from ₹1,53,412.9 million to ₹2,68,335.5
million, showing strong performance in core business operations.
• Income from Non-Financial Services: Increased by ₹82,383.3 million (53.72%) from
₹1,53,412.9 million to ₹2,35,070.7 million, reflecting substantial growth in this revenue
stream.
• Income from Financial Services: Increased by ₹1,624.2 million (42.77%) from ₹5,537.5
million to ₹4,690.7 million, indicating healthy growth in financial services.
• Interest Income: Grew by ₹1,350.7 million (34.49%) from ₹3,337.4 million to ₹4,688.1
million, showing an increase in interest earnings.
• Dividends: Remained relatively stable.
Expense Analysis:
1. Capital and Reserves: Strong growth in capital and reserves indicates robust financial
health and prudent financial management.
2. Increased Borrowings: Significant rise in long-term borrowings suggests investment
in long-term projects or assets.
3. Deferred Tax Adjustments: Changes in deferred tax liabilities and assets indicate
adjustments in tax provisions.
4. Current Liabilities: Increase in current liabilities and provisions reflects higher short-
term obligations.
5. Improved Liquidity: Higher current assets and cash balances suggest improved
liquidity and financial flexibility.
The company has demonstrated strong growth in total assets and liabilities, with a
significant increase in capital and reserves. However, the rise in borrowings and current
liabilities needs to be monitored to ensure sustainable financial health.
Vertical Analysis (Income Statement) for the year 2022
Interpretation
Borrowings:
Current Liabilities:
Assets:
Ratios
Interpretation
Income Analysis:
• Total Liabilities: Increased by ₹85,228.50 million, representing a 64.66% growth
from ₹1,31,878.00 million in 2021 to ₹2,17,106.50 million in 2022. Indicates
higher borrowings and obligations.
• Total Capital: Increased substantially by ₹5,100.00 million, indicating an 82.26%
growth, reflecting improved equity and stronger capital base.
Borrowings:
Deferred Tax:
• Current Assets and Loans & Advances: Increased by 90.22%, reflecting better
liquidity and improved asset management.
• Inventories: Increased by 86.60%, indicating higher stock levels, which could
signify anticipation of increased demand.
• Trade Receivables: Increased by 77.45%, suggesting higher sales on credit.
• Cash and Bank Balance: Increased by 7.45%, showing a moderate improvement
in cash position.
• Short-Term Investments: Maintained stable, reflecting consistent investment
strategies.
Interpretation
Income Analysis:
Interpretation
Income Analysis:
• Total Liabilities: Increased by ₹1,84,883.10 million (45.99%) from 2019 to 2023 and
continued to rise by ₹36,834.82 million (4.82%) from 2023 to 2024.
• Total Assets: Mirrored the liability growth, increasing by ₹1,84,883.10 million from 2019
to 2023 and by ₹36,834.82 million from 2023 to 2024, indicating balanced growth in both
assets and liabilities.
Borrowings:
Current Liabilities:
• Net Fixed Assets: Decreased by ₹155.40 million (0.94%) from 2019 to 2023 and showed a
further decrease of ₹1,273.2 million (8.36%) from 2023 to 2024.
• Net Intangible Assets: Decreased by ₹271.60 million (5.03%) from 2019 to 2023 and by
₹105.5 million (1.99%) from 2023 to 2024.
• Long-Term Investments: Increased significantly by ₹1,41,139.80 million (65.33%) from
2019 to 2023 and continued to rise by ₹76,709.50 million (9.38%) from 2023 to 2024.
• Deferred Tax Assets: Increased by ₹31.30 million (9.63%) from 2019 to 2023 but showed
a slight decrease by ₹9.4 million (2.97%) from 2023 to 2024.
• Current Assets and Loans & Advances: Increased substantially by ₹2,51,365.60 million
(43.37%) from 2019 to 2023 but decreased by ₹21,963.6 million (8.73%) from 2023 to
2024.
• Inventories: Decreased by ₹7,084.00 million (17.09%) from 2019 to 2023 and by
₹10,969.90 million (36.00%) from 2023 to 2024.
• Trade & Bills Receivables: Decreased by ₹11,843.10 million (24.90%) from 2019 to
2023 and by ₹4,674.60 million (11.02%) from 2023 to 2024.
• Cash & Bank Balance: Increased significantly by ₹10,140.70 million (63.78%) from 2019
to 2023 but decreased by ₹3,257.90 million (32.12%) from 2023 to 2024.
Interpretation
Income Analysis:
Interpretation
Income Analysis:
Interpretation
Income Analysis:
Total Liabilities and Assets:
• Total Liabilities: Increased by ₹1,84,883.10 million (45.99%) from 2019 to 2023 and
continued to rise by ₹36,834.82 million (4.82%) from 2023 to 2024.
• Total Assets: Mirrored the liability growth, increasing by ₹1,84,883.10 million from 2019
to 2023 and by ₹36,834.82 million from 2023 to 2024, indicating balanced growth in both
assets and liabilities.
Borrowings:
Current Liabilities:
• Net Fixed Assets: Decreased by ₹155.40 million (0.94%) from 2019 to 2023 and showed a
further decrease of ₹1,273.2 million (8.36%) from 2023 to 2024.
• Net Intangible Assets: Decreased by ₹271.60 million (5.03%) from 2019 to 2023 and by
₹105.5 million (1.99%) from 2023 to 2024.
• Long-Term Investments: Increased significantly by ₹1,41,139.80 million (65.33%) from
2019 to 2023 and continued to rise by ₹76,709.50 million (9.38%) from 2023 to 2024.
• Deferred Tax Assets: Increased by ₹31.30 million (9.63%) from 2019 to 2023 but showed
a slight decrease by ₹9.4 million (2.97%) from 2023 to 2024.
• Current Assets and Loans & Advances: Increased substantially by ₹2,51,365.60 million
(43.37%) from 2019 to 2023 but decreased by ₹21,963.6 million (8.73%) from 2023 to
2024.
• Inventories: Decreased by ₹7,084.00 million (17.09%) from 2019 to 2023 and by
₹10,969.90 million (36.00%) from 2023 to 2024.
• Trade & Bills Receivables: Decreased by ₹11,843.10 million (24.90%) from 2019 to
2023 and by ₹4,674.60 million (11.02%) from 2023 to 2024.
• Cash & Bank Balance: Increased significantly by ₹10,140.70 million (63.78%) from
2019 to 2023 but decreased by ₹3,257.90 million (32.12%) from 2023 to 2024.
Ratio
Interpretation
Conclusion
Financial Overview: Over the analyzed periods, the company has shown substantial growth
in both total liabilities and assets, reflecting significant expansion. Total liabilities increased
from ₹1,49,479.40 million in 2019 to ₹4,22,357.90 million in 2024, while total assets
mirrored this growth, showcasing a balanced financial structure.
Revenue and Profitability: Total income increased dramatically from ₹1,37,509.40 million
in 2021 to ₹6,85,922.20 million in 2023, and then to ₹4,60,205.00 million in 2024, indicating
strong revenue growth. However, profitability ratios like the gross profit rate and net profit
margin showed fluctuations, with the gross profit rate turning negative in some years,
suggesting challenges in cost management.
Capital and Reserves: The company's capital and reserves saw significant growth, with total
reserves increasing from ₹31,388.30 million in 2019 to ₹1,99,913.00 million in 2024. This
highlights improved financial health and strong reserve accumulation, indicating better
profitability and retained earnings.
Borrowings and Debt Management: Borrowing patterns showed considerable fluctuations.
Long-term borrowings excluding current portions showed a significant decrease and later a
slight increase, reflecting adjustments in financing strategies. Current liabilities and
provisions saw a significant rise, indicating higher short-term obligations that require careful
management.
Liquidity and Asset Management: Liquidity improved, with current assets and loans &
advances increasing substantially, indicating better asset management and financial
flexibility. The company maintained higher cash balances and increased its long-term
investments, suggesting a strategic focus on liquidity and future growth.
Cost Management: Operating expenses increased significantly, impacting profitability.
Key expenses such as compensation to employees, selling & distribution expenses, and
purchase of finished goods showed considerable growth, emphasizing the need for
effective cost management.
Key Insights:
Final Thoughts:
The company has demonstrated strong financial growth, with significant increases in
revenue, assets, and reserves. However, the variability in profitability ratios and the
increase in operating expenses suggest areas for improvement in cost management. By
continuing to focus on strategic investments and maintaining robust liquidity, the
company can sustain its growth trajectory while addressing the challenges of cost control
and debt management.