Idea Cash Flow

8/8/2019 Idea Cash Flow

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Atibha Garg 191019

Anshuman 191014

Gautam 191025

Bhavna 191021

Surbhi Grover 191058

Rahul Sarin 191046


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Cash Flow Analysis

2009-2010


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CASH FLOW IMPORTANCE

Cash FlowStatement

Depicts the cashgenerated and utilized

by the company

Provides informationon a firms liquidity

and solvency

Provide additionalinformation for

evaluating changesassets, liabilities and

equities

OperatingActivities

Principal revenueproducing activities of thecompany

InvestingActivities

Acquisition and disposalof long term assets andother investments

FinancingActivities

Activities resulting in

change in the size andcomposition of the sharecapital and borrowings of

the company


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CASH, CASH EQUIVALENTS

AND CASH FLOWSCash

Cash on hand

Demanddeposits with

banks

CashEquivalents

Short term,highly liquidinvestments

Readilyconvertible intoknown amounts

of cash

Subject toinsignificant risk

of change invalue

CashFlows

Inflows andOutflows of cash

and cashequivalents


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GENERAL FEATURES

Prepared for the year ended 31st March, 2010 and thus coversthe effects of all cash transactions of the financial year 2009-10

The cash flow has been classified into 3 categories, namely

Operating, Investing and Financial Activities

Comparative position of each element of the CFS for theprevious year also disclosed

Names ofCMD,CEO,CFO and CS of the company mentioned

CFS signed by the partners of Auditing firm, S. R. Batliboi andAssociates


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CASH FLOW STATEMENTIdea Cellular Ltd

Industry :Telecommunications - Service Provider

(Rs in Crs)

Mar-10 Mar-09

Cash Flow Summary

Cash and Cash Equivalents at Beginning of the year 2344.43 497.06

Net Cash from Operating Activities 1985.13 1863.74

Net Cash Used in Investing Activities (1518.55) (7655.37)Net Cash Used in Financing Activities (2530.57) 7639

Net Inc/(Dec) in Cash and Cash Equivalent (2063.99) 1847.37

Cash and Cash Equivalents at End of the year 280.44 2344.43

*All figures in Rs. Crores


8/23

OPERATING ACTIVITIES

Depreciation increased - acquisition Of Assets

Decrease in interest by 47.34% - Repayment ofunsecured loans

No dividends - No investment or no dividendspaid

Loss on sale of assets increased from last year the asset was relatively more obsolete, i.e. the age

of the asset. Profit on sale of investments ` 87.87 Cr in thecurrent year because of market fluctuations & thenumber of investments sold


9/23

OPERATING ACTIVITIES Provisions and w/o net - decreased from last year

Increased confidence in debtors due to payments on doubtful

debts received from them last year

Elimination of debtors who had a higher tendency to default

Others

Last year there were non cash expenses amounting to `14.47 Cr

(could be amortization)

This year there are noncash incomes that amount to `v3.4

(Could be interest on bank deposits)

Increase in debtors is lesser by 45.8 % than the previous year.

Debtors have paid back the amount or we have had lesser

credit sales this year.


10/23

OPERATING ACTIVITIES

Inventories (including SIM cards, net connect cards) - decreased by100.7 % this year Increase in demand for idea services.

Trade payables - increased by `124 Cr this year (70.53%) Lesser credit purchases this year. Thus there was enough cash with the

company for its purchases.

Loans and advances are subtracted as they imply cash goes out toparties the company is liable to.

Others last year there were accrued income amounting to 4.69

which is 14.87 implying. Lesser cash has been received this year inthe form of interests, rent etc.

No payment towards VRS (included here as it is anEXTRAORDINARY ITEM).


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INVESTING ACTIVITIES

*All figures in Rs. Crores

Cash Flow from Investing Activities Amount Amount

Investment in Assets : Mar-10 Mar-09

Purchased of Fixed Assets (3384.32) (2513.36)

Sale of Fixed Assets 8.31 19.72

Financial/Capital Investment :

Purchase ofInvestments 0 (2513.36)

Sale ofInvestments 1014.87 0

Interest Received 265.2 156.71

Others 577.39 (543.97)

Net Cash Used in Investing Activities (1518.55) (7655.37)


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Purchases of Fixed Assets has reduced by 29% from

` 4774.47 Cr (FY-09) to ` 3384.32 Cr (FY-10).

Idea Cellular has invested ` 12606.4 Cr in last 3 years on

fixed assets, hence requirement for fixed assets has

reduced.

Investment in Assets : Mar-10 Mar-09 % change

Purchased of Fixed Assets (3384.32) (2513.36) -0.29 %


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Idea Cellular invested heavily in quoted equity of SpiceCommunications Ltd. in FY-09 and sold part of its equity in

FY-10. This has increased the companys liquidity enabling it to

invest more in operating activities.

Market value of quotes purchased last year may haveappreciated because of post-recession period. Thus purchase

of investment is negligible & sales is high.

Investment in Assets : Mar-10 Mar-09

Purchase ofInvestments 0 (2513.36)

Sale ofInvestments 1014.87 0


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Interest accrued due to high investment in last year has beenpaid to company thus increasing the overall interest received

by 70%.

The proceeds from sale of other investments has increased by

206 % i.e. the company has liquidated more of its investmentsin comparison to last year.


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FINANCIAL ACTIVITIES

Cash and Cash Equivalents for this year are ` 280.44 Cr

(09-10). This has almost decreased by 88% from the last year.

The company did not issue significant amount of shares thisyear(09-10) as compared to last year

The net cash generated from financing activities has howeverfallen down from ` 7639 Cr in 08-09 to ` -2530.57 Cr in 09-10 .This maybe due to less issue of share capital this year ascompared to last year and more payments of short term, longterm borrowing, interest paid and less inflow/proceeds .


16/23

FINANCIAL ACTIVITIES

Less borrowings and more payments of borrowings means the

company can meet its expenses without loans . It has enough

reserves and surplus or cash inflow from operating activities.

The outflow in the cash equivalents has been quite high. It has

increased to ` 2063.99 Cr as compared to an inflow of `

1847.37 Cr last year.


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SOURCES OF CASH


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APPLICATION OF CASH

Fixed assets

Payments ofthe Longterm and

short term

borrowings

InterestPayments


19/23

RELEVANT Q & A

How much cash has been generated from

normal business operating activities of the

company?

Answer: ` 1985.13 Cr

Same as cash from operating activities After basic adjustments in Net profit before tax

After adjustments for changes in working capital

After taxes


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RELEVANT Q & A

How much cash has been spent on investingactivities like purchase of new plant andequipments?

Answer: ` 3384.32 Cr

Includes Purchase of fixed assets


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RELEVANT Q & A

Why did the cash balance decrease despite a net profit?

Ans. Because Money was spent for purchasing Fixed assets

How did the company finance the acquisition of plant and machinery?

Ans. From the investing activities section, it is clear that the companymade a capital expenditure of3384.32 crores. The expenditure has been partlyfinanced by:

(a) Sale of Investments

(b) Interest received

The gap is financed from other sources like cash from operating activities.


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RELEVANT Q & ADoes the company enjoy a fair degree of financial flexibility?

Answer: Yes, the company does enjoy a fair degree of

financial stability as we can infer from the following:

a) It has large cash from operating activities, which reduces

the risk of IDEA to adverse changes in operating

conditions.

b) It can avail credit from suppliers

c) The company can easily get loans from the banks

through its brand image which is globally acceptable.

Therefore the company has very low risk and will certainly

survive during adverse times.


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Idea Cash Flow

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