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CRIS
Finalyssis and CRISIL's Data Slicing System
are useful for Banks, Mutual Funds, FIIs, Financial
Institutions, Educational Institutions, companies undertaking
turnkey projects, NBFCs, Venture Funds, other financial
intermediaries and market regulators, such as RBI and
SEBI. CRIS Finalyssis could also be useful for corporates
tracking competitors. It can replace in-house analysis
of Balance Sheets of companies. |
| CRIS
Finalyssis |
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| Overview |
| Audited
Accounts of companies, sometimes, conceal more than
they reveal. While there are prescribed guidelines and
Accounting Standards (whether here or in any other country),
there is always scope for interpreting these guidelines
and standards in different ways.
Recent experience in the global corporate world has
seen several large and financially “sound”
corporations going bust. This partly because of peculiar
accounting practices followed in drawing up the Annual
Statements.
Sometimes, accounting treatment is changed to overstate
profits or reserves, at other times to understate and
postpone profits, or to change leverage ratios or debt
service coverage ratios and so on. |
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| Contents
of CRIS Finalyssis |
At Global
Data Services of India Limited (GDSIL), we do a complete
recast of published accounts of companies, along with
analysis of operational data to include production,
sales, raw material consumption, etc.
Keeping in mind cyclicalities of business ad well as
trend behaviour, we cover accounts for the last 5 years.
However, on specific customer request, we also provide
analysed data for longer periods. Footnotes are given
for all adjustments made by us for better understanding
and reference.
In order to make it usable in a purposeful manner, analysis
is accompanied by a commentary, which covers salient
features and reasons therefore. To eliminate personal
biases, the analysis is based exclusively on information
contained in the Annual Reports. |
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| Significance
of classification procedures |
After
analysing Audited Accounts of over 500 companies, we
find that profits as adjusted by us are substantially
at variance with reported profits in a large number
of cases. The reasons are many. They include, among
others, over-valuation of stocks, understatement of
interest expenses, direct adjustments in reserves and
conversion of sales tax deferral into “income
for the year”. While all such treatment may be
legal and valid as per Accounting Standards, we believe
that such accounting methods often misguide lenders
and investors.
Ingenious methods of accounting have been detected.
Common treatment is given to items such as “own
consumption”, revaluation reserves, intangible
expenses etc. Extraordinary items are segregated from
operational figures and various ratios are calculated
after appropriate re-classification. Critically important
contingent liabilities and the impact on profits due
to changes in accounting policies are also reported.
Procedures are specially focused towards placing all
companies on an equal footing by giving common treatment
to peculiar items that companies often use to distort
their figures. |
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| Interesting
live examples |
| » |
A consumer electronics
company changed its accounting policy with respect
to preliminary and capital issue expenses. Thus,
instead of writing off deferred expenses over
a period in the P&L Account, it wrote off
the entire amount of Rs. 500 mn directly from
general reserve. The impact on profit for the
year was concealed.
The same company also deducted premium on redemption
of debentures of Rs. 400 mn directly from general
reserve, resulting in zero impact on declared
profits. This has been reversed in CRIS Finalyssis,
as redemption premium is very much a finance cost. |
» |
A petrochemical company
declared a profit after tax of Rs. 120 mn and
adjusted a loss of Rs. 1240 mn towards diminution
in value of investments directly against contingency
reserve. The same routed through the profit and
loss would take the company into the red with
a loss of Rs. 1130 mn. |
| » |
Another petrochemicals company has been following
an accounting policy of capitalizing borrowing costs
on advances given to a company promoted by it, which
would eventually be adjusted against equity issued
by the subsidiary. The PAT has been adjusted for
the same in CRIS Finalyssis. Interest and finance
charges have been shown gross of such capitalised
interest. The amount in this case is Rs. 570 mn
for a single year and aggregates more than Rs. 2220
mn over a longer span! |
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| Client
servicing facility |
| » |
Clients can
choose specific companies for which they require
the CRIS Finalyssis from our list of more than
700 companies, for which we have already compiled
analysis. |
» |
In addition to the existing
500 CRIS Finalyssis, we also provide similar analysis
of other companies on request. |
| » |
We also provide services to clients who may choose
to outsource their back office work involving financial
analysis. Clients can provide audited accounts of
listed or unlisted companies or even firms, and
we will do the analysis under confidentiality. |
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| Modes
of delivery |
| CRIS Finalyssis can be purchased either
as |
| Hard Copy |
Delivered as
printed material on paper |
Soft Copy |
Delivered as soft copy through
e-mail |
| Software Package |
Delivered on our proprietary
CRISIL's Data Slicing System (If analysis of a
large number of companies is required)
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