Aricent Technologies Growth

The debt to equity ratio has increased to 0.07 in FY'21 from 0.05 in FY'20 depicting a growth of 53%. This is because the total debt of the company has suddenly increased in FY'20 and FY'21 due to the increase in long term lease liabilities. As a result the total debt has increased, whereas the total equity has increased by just 2.88% in FY'21 over FY'20 due to which D/E ratio has increased.

The company's current ratio has decreased to 3.79 in FY'21. This is because the current liabilities of the company increased sharply in FY'20 and FY'21 due the high jump in accounts payable as well as other current liabilities. As a result, despite the current assets increasing by 25%, the current ratio has shown a decline of 6.68% in FY'21.

The company's interest coverage ratio increased massively in FY'19 due to the interest expenses decreasing to INR 1 Cr since the company had almost negligible debt in that year. But the interest coverage ratio dropped steeply in FY'20 and FY'21 due to the increase in their total debt in those years and has reached 14.73 in FY'21.

The EBIT margin of the company has decreased by 19% in FY'21 over FY'20. This is majorly attributable to the company's expenses in terms of employee benefit expenses as a result of which the EBIT has decreased in FY'21 as well as the revenue from operations increasing because of fixed price contracts increasing by INR 66 Cr and time and material contracts increasing by INR 14 Cr in FY'21. 

The company's net income margin has decreased from 28.49% in FY'20 to 7.7% in FY'21. This is because the company's net income has dropped steeply because the company received a tax refund of INR 354 Cr in FY'20 due to which the profit of the company had increased. On the other hand the company's expenses increased in FY'21 whereas the revenue did not increase commensurately. As a result the company's net income margin declined by 72.98% in FY'21.

The return on equity has decreased steeply to 7.68% in FY'21 over previous year. This is because the company's net income has decreased by 72.11% in FY'21 over FY'20 due to increase in expenses in current year as well as the absence of tax refund which was given to the company in FY'20 due to which the net income increased. Also, The total equity has increased in FY'20 and FY'21 due to the increase in the retained earnings of the company. Hence ROE has decreased in FY'21, which depicts that the company is not in a good position in terms of profitability.

The return on capital employed of the company has shown a decline of 28.4% from14.46% in FY'20 to 10.36% FY'21. This is because the company's capital employed has increased by just 2% in FY'21 over FY'20, which is due to the company's total assets and current liabilities not having a large increase during the mentioned period. On the other hand, the EBIT of the company has decreased by 16.36% in FY'21 over FY'20 due to a large increase in salaries and wages in FY'21. As a result the ROCE has decreased to 10.36% in FY'21.

The company's return on assets has decreased to 5.66% in FY'21. This is primarily due to the company net income decreasing due to the increase in employee benefit expenses amounting to approximately INR 200 Cr as well as increase in other expenses. Also, since the company's net income had increased a lot because of a tax refund given to the company in FY'20, therefore the ROA has declined by 76.6% in FY'21 over FY'20 despite the assets only having a marginal increase in FY'21.