Assignment on ratio analysis

LOTUS EYE CARE

Subject:- financial assessment analysis

Submitted To:- Sumit Kumar Sinha Faculty member of master of business administration Central university of Jharkhand Submitted By:- Aman Kumar IMBA - 7th Semester CUJ/1/09/MBA/03 Central University of Jharkhand

S.No

Topic
Organizational Profile

Page No.

Introduction History Objective & Goal Service Offering

2-5

Financials Statement
2 Ratio Analysis Balance sheet Profit and loss A/c

7-10

Formulae

11-12

Ratio analysis
4 Profitability Analysis Liquidity Analysis Management Analysis

LOTUS EYE CARE

Introduction:"Lotus Eye Care Hospital" is a hi-tech super specialty eye care hospital catering its value added service to the society since 1993. Dr. K.Sundramoorthy and his team of ophthalmic experts, who have highly qualified with vast experience in each specialty, offering comprehensive eye care to hundreds of patients daily at their state of the art eye hospitals in Coimbatore, Tirupur and Salem in South India. LOTUS is known for its excellence in Ophthalmic services with personalized care. Lotus is committedly pioneering in the technological revolution in eye care and rendering service to thousands of patients from across the globe to see the world better than ever before. In the year 1998 Lotus introduced Multi Scan Lasik for the first time in India and in the year 2002 Wave front based Esiris Custom Lasik. In 2004 Lotus introduced.Epilasik for the first time in South East Asia. In the year June 2005 Lotus introduced the most advanced technology of Zyoptix Z100 and combined two superior technologies Epilasik and Zyoptix known as Epizyoptix to achieve Supervision. In 2011 Lotus has introduced Zyoptix Supracor technology (Lasik for 40 plus age group for Presbyopia correction) for the first time in Tamilnadu. Lotus with a vision of empowering eyes to illuminate lives is helping to reduce the burden of avoidable blindness with excellence in this country. Lotus Eye Care Hospital is marching towards its vision of becoming Indias best Corporate Hospital with branches in strategic locations where quality eye care is in need.

core values
Serving people to preserve and improve eye sight Innovation based continuous self updating Best customer service

Goal
Wherever we are, we stay No.1 in quality eye care.

History:Lotus Eye care was originally incorporated as Kalaivani Health Centre Pvt. Limited on 14/03/1997 under the Companies Act, 1956 vide Certificate of Incorporation issued by the Registrar of Companies, Tamil Nadu, Coimbatore. The name of the Company was changed to Lotus Eye Care Hospital Pvt. Limited on 23/01/2006. Our Company was promoted by Dr. S.K.Sundaramoorthy and there is no change in management of the company since inception. During the financial year 2006-2007, Dr. S.K.S.Eye Care Centre Pvt. Ltd., a company promoted by Dr.S.K.Sundaramoorthy was merged with our Company w.e.f.01/12/2006 pursuant to order of Honble High Court, Madras dated 09/07/2007.

Management - Lotus Eye Care

Name S K Sundaramoorthy S S Badrinath R Subramanian Sangeetha Sundaramoorthy M Alagiriswamy Name D R Kaarthikeyan Yogesh Shah Kavetha Sundaramoorthy G R Karthikeyan Designation Chairman & Managing Director Director Director Director Additional Director Designation Director Director Alternate Director Director

Role in National Eye Care

Sight is the most important sense among five senses. One of the basic human rights is the Right to See. The vision of Lotus is to eliminate the avoidable blindness. National Programme of Control of Blindness takes place through the District Blindness Control Society. Lotus is actively participating in the District Blindness Control Society - DBCS to reduce the prevalence of blindness.

Lotus is offering the following services: Educating and creating awareness about eye diseases Providing high quality of eye care to the needy Expanding its coverage of eye care services

 Identifying and providing eye care services through Free Eye Screening Programs and Rural Out reach Programmes Lotus is the Training Center for International Council of Ophthalmology (ICO) for training Post Graduate Students all over the world. Lotus is a recognized hospital for DNB Ophthalmology by the National Board of Examinations (a Govt. of India, New Delhi undertaking). Lotus has short term and long term Fellowship Programmes such as Cataract, Glaucoma, Retina, Refractive Surgery, Cornea and Paediatric Ophthalmology. Lotus has conducted many National and International Conferences and Training Programmes for the Ophthalmic Post Graduates and Practicing Ophthalmologists. The consultants from Lotus Eye Care Hospital regularly present papers in the National and International conferences.

Leader in Quality Eye Care

Lotus Eye Care Hospital is a leading Super speciality Corporate Eye Hospital in India. Lotus offers International standard of eye care services combined with state of the art technology and expertise. Lotus is one of the very few centres in India which offers its patients the worlds latest innovation techniques in Cataract, Retina, Glaucoma and Refractive Surgery. The latest equipments and technologies which is right now available in US, Germany, England, etc., are available at Lotus. Lotus always goes for upgrades to new technologies as and when new innovations introduced. Lotus has developed many innovative surgeries and introduced new technologies.
The following techniques introduced at Lotus have been recognized as standard procedures for day to day practice in all over.

Free Cataract surgery with IOL implantation performed for the poor patients in 1994 for the first time in India. \ Stitch less Phacoemulsification Surgery for Cataract for the first time outside Chennai in Tamilnadu in 1994. No Injection Phaco Surgery in 1996. Introduced multiscan Lasik for the first time in India in 1998 Glass free vision. Introduced Epilasik (Glass free Vision Refractive Procedure) for the first time in South East Asia in 2004. Zyoptix integrated Epilasik Procedure in 2005. Introduced Zyoptix Suparacor first in Tamilnadu and second in India in 2011.
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Competitor:ADS Diagnostic Ltd. Apollo Hospitals Enterprise Ltd. Birla Pacific Medspa Ltd. CDR Health Care Ltd. Chennai Meenakshi Multispeciality Hospital Ltd. Dhanvantri Jeevan Rekha Ltd. Dolphin Medical Services Ltd. Dr. Agarwal's Eye Hospital Ltd. Emed.com Technologies Ltd. Fortis Healthcare Ltd. Fortis Malar Hospitals Ltd. Indraprastha Medical Corporation Ltd. KMC Speciality Hospitals (India) Ltd. Kovai Medical Center and Hospital Ltd. Medinova Diagnostics Ltd. Monarch Health Services Ltd. N G Industries Ltd. Noida Medicare Centre Ltd. Regency Hospitals Ltd. Secunderabad Healthcare Ltd. Standard Medical & Pharmaceuticals Ltd. ADSDIA APOLHO BIRPAC CDRHEA DEVHOS DHAJEE DOLMED DRAGA EMETEC FORHEA MALHOS INDRME SEAHOS KOVMED MEDDIA MONHEA NGINDL NOIMED REGHOS SECHEA STAMED

Ratios:-

(in cr.)

Key Financial Ratios of Lotus Eye Care Hospital

Mar '12 Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital

Mar '11 Mar '10 Mar '09 Mar '08

10 -0.75 12.61 ---

10 -1.7 9.2 -0.1 --

10 -1.5 6.81 15.19 --

10 -1.68 5.61 15.28 --

10 -3.83 9.94 5.93 -6

Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales

5.93 -9.76 -9.84 6.62 6.62 -8.51 -8.51 -4.61 -4.42 -4.69 24.48 24.48 -4.61 1.7 1.26 0.01 0.01 107.27 0.01 80.95 86.87 12.48 65.18 12.48 0.42 0.51 0.5 --46.56 -----

18.45 4.62 4.67 17.45 17.45 2.25 2.25 2.02 0.82 1.39 25.47 25.47 2.02 2.16 1.76 --10.44 0 35.88 30.64 11.5 46 11.5 0.32 0.36 0.32 --91.64 -----

20.89 2.76 2.79 16.71 17.58 -1.67 -1.66 1 -0.45 -0.38 25.19 25.19 0.94 1.97 1.43 0.03 0.03 0.79 0.03 4.69 4.6 12.26 35.23 12.26 0.28 0.26 0.28 --53.38 --1.9 --

29.97 15.09 15.71 24.03 24.03 9.56 9.56 3.66 2.21 2.14 25.28 25.28 3.67 7.63 7.96 0.12 0.12 2.89 0.12 4.82 4.58 7.78 27.82 7.78 0.28 0.2 0.28 --582.94 --3.04 --

38.54 28.4 29.17 23.34 23.34 11.77 11.77 13.16 7.54 8.41 15.93 15.93 13.25 2.3 2.29 0.42 0.41 3.63 0.42 4.84 3.65 13.82 39.13 13.82 0.46 0.43 0.46 --143.93 --4.37 -7

Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times

---100 0.15

--100 100 0.05

---100 0.58

--100 100 2.27

--100 100 2.87

Mar '12 Earnings Per Share Book Value -1.08 24.48

Mar '11 Mar '10 Mar '09 Mar '08

0.21 25.56

-0.11 25.35

0.56 25.47

1.2 16.38

Profit & Loss - Lotus Eye Care Hospital Ltd. Mar'12 12 Months INCOME: Sales Turnover 26.23 Excise Duty 0 NET SALES 26.23 Other Income 0 TOTAL INCOME 26.45 EXPENDITURE: Manufacturing Expenses 14.19 Material Consumed -0.4 Personal Expenses 4.52 Selling Expenses 0 Administrative Expenses 6.39 Expenses Capitalised 0 Provisions Made 0 TOTAL EXPENDITURE 24.67 Operating Profit 1.56 EBITDA 1.78 Depreciation 4.14 Other Write-offs 0 EBIT -2.36 Interest 0.02 EBT -2.38

Mar'11 12 Months

Mar'10 12 Months

Mar'09 12 Months

Mar'08 12 Months 10.74 0 10.74 0 11.03 2.55 -0.3 2.24 0.47 1.74 0 0 6.6 4.14 4.43 1.01 0.12 3.3 0.92 2.39
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19.14 0 19.14 0 19.33 8.25 -0.5 2.95 0 4.92 0 0 15.61 3.53 3.72 2.64 0 1.08 0.1 0.98

14.17 0 14.17 0 14.29 5.47 0.34 1.96 0.27 3.01 0 0 11.06 3.11 3.23 2.56 0.15 0.51 0.69 -0.1

11.68 0 11.68 0 12.15 4.71 -0.7 1.54 0.36 2.29 0 0 8.18 3.5 3.98 1.66 0.13 2.19 0.82 1.36

Taxes Profit and Loss for the Year Non Recurring Items Other Non Cash Adjustments Other Adjustments REPORTED PAT KEY ITEMS Preference Dividend Equity Dividend Equity Dividend (%) Shares in Issue (Lakhs) EPS - Annualised (Rs)

0.01 -2.39 0 0.14 0 -2.25 0 0 0 207.96 -1.08

0.24 0.74 0 -0.3 0 0.44 0 0 0 207.96 0.21

0.03 -0.2 0 0 0 -0.2 0 0 0 207.96 -0.1

0.23 1.13 0 0.03 0 1.16 0 0 0 207.96 0.56

0.94 1.45 0.02 -0.1 0 1.3 0 0 0 107.96 1.2

Balance Sheet of Lotus Eye Care Hospital

------------------- in Rs. Cr. -----------------Mar '12 Mar '11 Mar '10 Mar '09 Mar '08 12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities

20.8 20.8 0 0 30.11 0 50.91 0 0.26 0.26 51.17 Mar '12 12 mths

20.8 20.8 0 0 32.37 0 53.17 0.18 0 0.18 53.35 Mar '11 12 mths

20.8 20.8 0 0 31.93 0 52.73 1.46 0 1.46 54.19 Mar '10 12 mths

20.8 20.8 0 0 32.17 0 52.97 6.6 0.02 6.62 59.59 Mar '09 12 mths

10.8 10.8 0 0 6.89 0 17.69 7.26 0.12 7.38 25.07 Mar '08 12 mths

Application Of Funds Gross Block Less: Accum. Depreciation Net Block

62.94 15.24 47.7

59.28 11.4 47.88

51.41 8.77 42.64

41.79 6.2 35.59

23.59 4.54 19.05

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Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

0.07 0 2.1 0.38 0.21 2.69 5.58 0 8.27 0 4.51 0.37 4.88 3.39 0 51.16 0 24.48

0.39 0 1.66 0.42 0.84 2.92 6.16 0 9.08 0 3.93 0.29 4.22 4.86 0.2 53.33 0 25.56

9.09 0 1.16 0.41 -0.08 1.49 1.76 1.03 4.28 0 2.09 0.08 2.17 2.11 0.35 54.19 0 25.35

4.69 0 1.5 0.4 0.38 2.28 15.81 3.32 21.41 0 2.18 0.32 2.5 18.91 0.4 59.59 0 25.47

1.25 0 0.78 0.44 0.59 1.81 4.86 0.36 7.03 0 1.76 0.97 2.73 4.3 0.48 25.08 0 16.38

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Formulae:-

1.Current Ratio=Current Asset/current Liability

Liquidity Ratio

2.Qucik Ratio= Quick Assets/Current Liability

Solvency Ratio

1.Debt Equity Ratio= Long Term Debts/Shareholders funds 2.Toatl Asset to debt Ratio= Total Asset/ Long term Debts 3.Propritory Ratio= Equity/Total Asset*100

Activity Ratio

1. Capital Turnover ratio= Net Sales/Capital Employee 2.Fixed Assets Turnover Ratio= Net sales/Net fixed Assets 3.Working Capital Turnover= Net Sales/ Working Capital

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Profitability Ratio

Gross profit= sales cost of value Gross profit ratio= GP/Sales*100 Net profit ratio= NP/Sales*100 Assets Turnover Ratio=Sales/avg assets Avg Sales=Poening+Closing/2 EPR=EBIT/avg Total Asset Return on Equity (ROE)=EAT/avg Equity Break Even point(unit)= Total fixed Cost/Contribution Break Even point(Rs.)= F/C*S = Fixed Cost/Pv Ratio Pv Ratio= contribution / Sales*100

Ratio Analysis:Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%)
Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

5.93 -9.76 -9.84 6.62 6.62 -8.51 -8.51 -4.61 -4.42

18.45 4.62 4.67 17.45 17.45 2.25 2.25 2.02 0.82

20.89 2.76 2.79 16.71 17.58 -1.67 -1.66 1 -0.45

29.97 15.09 15.71 24.03 24.03 9.56 9.56 3.66 2.21

38.54 28.4 29.17 23.34 23.34 11.77 11.77 13.16 7.54

a) The operating margin (%) in year 2008 was 38.54 which decreased to 29.97 in year 2009. In the year 2010 it again decreased to 20.89 which reached 18.45 in 2011 and again decreased to 5.93 in 2012. This reflects that the operating margin of the company consistently in decreasing order.
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Operating margin ratio or return on sales ratio is the ratio of operating income of a business to its revenue. It is profitability ratio showing operating income as a percentage of revenue.
Operating Margin = Operating Income Revenue

Operating margin ratio of 9% means that a net profit of $0.09 is made on each dollar of sales. Thus a higher value of operating margin ratio is favorable which indicates that more proportion of revenue is converted to operating income. An increase in operating margin ratio overtime means that the profitability is improving. It is also important to compare the gross margin ratio of a business to the average gross profit margin of the industry. In general, a business which is more efficient is controlling its overall costs will have higher operating margin ratio. b) The gross profit margin (%) in year 2008 was 29.17 which decreased to 15.71 in year 2009. In the year 2010 it decreased to 2.79 which reached 4.67 in 2011 and it decreased to -9.84 in 2012. This reflects that the gross profit margin of the company increased till 2011 and declined in 2012. c) The cash profit margin (%) in year 2008 was 23.34 which increased to 24.03 in 2009. In 2010 it again decreased 16.71 which reached to 17.45 in 2011. And it decreases 6.62 in 2012. This shows that cash profit margin increased in 2009 but again it decrease next year but 2011 again it increased and again it gradually decreased. d) The net profit margin (%) in year 2008 was 11.77 and it reached to -1.67 in 2010 and again in next year it increased to 2.65 which also decreased in2012 up to -8.51. this reflects that high loss in the industry. e) The return on net worth (%) in year2008 was 7.54 and consistently decreased till 2012 to -4.42.

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Liquidity And Solvency Ratios

Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio

1.7 1.26 0.01 0.01

2.16 1.76 ---

1.97 1.43 0.03 0.03

7.63 7.96 0.12 0.12

2.3 2.29 0.42 0.41

A) Current ratio is the ratio of current assets of a business to its current liabilities. It is the most important and widely used test of liquidity of a business.

Current Ratio =

Current Assets Current Liabilities

Current ratio matches current assets with current liabilities and tells us whether the current assets are enough to settle current liabilities. Current ratio below 1 shows critical liquidity problems because it means that total current liabilities exceed total current assets. General rule is that higher the current ratio better it is but there is a limit to this. A current ratio higher than 2.5 might indicate existence of idle or underutilized resources in the company. The current ratio in year 2008 was 2.3 which increased to 7.63 in year 2009. In the year 2010 it decreased to 1.97 which increased 2.16 in 2011 and again it decreased to 1.7 in 2012. That reflects current assets of the company decreased in 2012. B) The quick ratio in year 2008 was 2.29 which increased to 7.96 in year 2009.In the year 2010 it decreased to 1.43 which reached to 1.76 in 2011. And it decreased to 1.26 in 2012. It reflects that quick ratio of industry gradually decreased. Quick ratio measures the liquidity of a business by matching its cash and near cash current assets with its total liabilities. It helps us to determine whether a business would be able to pay off all its debts by using its most liquid assets (i.e. cash, marketable securities and accounts receivable).

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C) Debt-to-Equity ratio is the ratio of total liabilities of a business to its shareholders' equity. It is a leverage ratio and it measures the degree to which the assets of the business are financed by the debts and the shareholders' equity of a business. Debt-to-Equity Ratio = Total Liabilities/Shareholders' Equity The debt equity ratio in year 2008 was 0.42 which decreased to 0.12 in year 2009. And it gradually decreased till 0.01in year 2012. This reflects that relative contribution of creditors and owners in the industry. Lower values of debt-to-equity ratio are favorable indicating less risk. Higher debt-toequity ratio is unfavorable because it means that the business relies more on external lenders thus it is at higher risk, especially at higher interest rates. A debt-to-equity ratio of 1.00 means that half of the assets of a business are financed by debts and half by shareholders' equity. A value higher than 1.00 means that more assets are financed by debt that those financed by money of shareholders' and vice versa. An increasing trend in of debt-to-equity ratio is also alarming because it means that the percentage of assets of a business which are financed by the debts is increasing. D) The long term Debt Equity Ratio in year 2008 was 0.41 which decreased to 0.12 in year 2009. In the year 2010 it again decreased to0.03 which reached to 0.01 in 2012.this reflects that the contribution of creditors has consistently decreased.

Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio 12.48 65.18 12.48 0.42 0.51 0.5 11.5 46 11.5 0.32 0.36 0.32 12.26 35.23 12.26 0.28 0.26 0.28 7.78 27.82 7.78 0.28 0.2 0.28 13.82 39.13 13.82 0.46 0.43 0.46

A)The inventory turnover ratio was 13.82 in year 2008 which was decreased to 7.78 in year 2009 and in the next year 2010 it increased to 12.26. Again it decreased to 11.5 in 2011 and which is increases to 12.48 in 2012.

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Inventory turnover ratio is used to measure the inventory management efficiency of a business. In general, a higher value indicates better performance and lower value means inefficiency in controlling inventory levels. A lower inventory turnover ratio may be an indication of overstocking which may pose risk of obsolescence and increased inventory holding costs. However, a very high turnover may result in loss of sales due to inventory shortage. Inventory turnover is different for different industries. Formulae:Inventory Turnover = Cost of Goods Sold Average Inventory

b) Analysis of Fixed Asset turnover ratio , Total Asset Turnover ratio and Asset Turnover Ratio

Net Sales Average Total Assets Net Sales Fixed Asset Turnover Ratio = Average Fixed Assets Total Asset Turnover Ratio =

If a company can generate more sales with fewer assets it has a higher turnover ratio which tells it is a good company because it is using its assets efficiently. A lower turnover ratio tells that the company is not using its assets optimally. Total asset turnover ratio is a key driver of return on equity as discussed in the DuPont analysis. Lotus eye care hospital industry previously it was using their asset efficiently but in the mid-year 2009 to 2011 they were not used their assets efficiently and gradually their asset efficiency is decreases in this year. c) The Debtor Turnover ratio Debtors Turnover Ratio indicates the speed at which the sundry debtors are converted in the form of cash. It indicates the number of times the debtors are turned over a year. It is the reliable measure of receivables from credit sales. The higher the value the more efficient is the management of debtors. Similarly, lower the ratio means inefficient management of debtors. Formula to calculate debtors turnover ratio = Net credit sales/ Closing sundry debtor< /STRONG That means Lotus eye care healthcare is doing the more efficient management of debtors.

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d) Investment Turnover Ratio was 13.82 in year 2008 which decreased to 7.78 in year 2009. In year 2010 it reached 12.26 again it decreased to 11.5 in year 2011. And 2012 it increased to 12.48.

Conclusion:The data of ratio analysis shows the growth rate of lotus eye care. According to data lotus eye care is in decreasing order and growth is very slow.

Bibliography:
www.moneycontrol.com www.economictimes.indiatimes.com www.securities.com www.lotuseye.com

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