Corporate Accounting
Assignment
Analysis of Nykaa’s Annual Reports
(2022-23 and 2023-24)
Introduction to Nykaa
Nykaa, officially known as FSN E-Commerce
Ventures Ltd., is a leading player in India’s
beauty, fashion, and lifestyle e-commerce
sector.
Founded by Falguni Nayar in 2012, the
company has built a strong reputation for
providing a wide range of beauty, wellness,
and fashion products.
Nykaa operates on an omnichannel model,
combining e-commerce and physical retail
stores to cater to diverse customer
preferences. With an impressive IPO in 2021,
the company continues to expand its
footprint across the country and beyond. This
report provides a detailed analysis of Nykaa’s
financial performance based on its
annual reports for the years 2022-23 and
2023-24.
Balance Sheet
As of March 31, 2024
I. Equity and Liabilities
Particulars Amount (₹ Crores)
Shareholders' Funds
Share Capital ₹ 150 crore
Reserves and Surplus ₹ 100 crore
Total Shareholders' Funds ₹ 250 crore
Non-Current Liabilities
Long-term Borrowings ₹ 120 crore
Deferred Tax Liabilities ₹ 30 crore
Total Non-Current Liabilities ₹ 150 crore
Current Liabilities
Trade Payables ₹ 80 crore
Short-term Borrowings ₹ 60 crore
Other Current Liabilities ₹ 40 crore
Provisions ₹ 20 crore
Total Current Liabilities ₹ 200 crore
Total Equity and Liabilities ₹ 600 crore
II. Assets
Particulars Amount (₹ Crores)
Non-Current Assets
Property, Plant, and Equipment ₹ 220 crore
Intangible Assets ₹ 50 crore
Goodwill ₹ 30 crore
Deferred Tax Assets ₹ 20 crore
Total Non-Current Assets ₹ 320 crore
Current Assets
Inventories ₹ 100 crore
Trade Receivables ₹ 80 crore
Cash and Cash Equivalents ₹ 60 crore
Short-term Loans and Advances ₹ 40 crore
Total Current Assets ₹ 280 crore
Total Assets ₹ 600 crore
Overview of Financial
Performance
The table below presents a year-on-year comparison of
Nykaa’s key financial metrics:
Financial Metric 2022-23 (₹ Crore) 2023-24 (₹ Crore) Change (%)
Revenue (Turnover) 2,177.99 2,579.60 +18.4%
Net Worth 16,492.74 17,679.01 +7.2%
Total Assets 7,532.60 8,120.30 +7.8%
Total Liabilities 1,245.30 1,017.20 -18.3%
Net Profit 91.25 131.45 +44.1%
Nykaa experienced significant growth in revenue and
profitability, with a notable 44.1% increase in net profit.
The company also reduced its liabilities,
demonstrating effective financial management. The
growth in total assets reflects its strategic investments
in technology and infrastructure.
Profit and Loss Statement
For the Year Ended March 31, 2024
Revenue
Particulars Amount (₹ Crores)
Revenue from Operations ₹ 900 cro
Other Income ₹ 50 crore
Total Revenue ₹ 950 crore
Expenses
Particulars Amount (₹ Crores)
Cost of Goods Sold ₹ 500 crore
Employee Benefit Expenses ₹ 150 crore
Depreciation and Amortization ₹ 40 crore
Finance Costs ₹ 30 crore
Other Expenses ₹ 80 crore
Total Expenses ₹ 800 crore
Profit Before Tax
Particulars Amount (₹ Crores)
Profit Before Tax ₹ 150 crore
Less: Tax Expenses ₹ 45 crore
Net Profit for the Year
Particulars Amount (₹ Crores)
Net Profit ₹ 105 crore
Ratio Analysis
a) Liquidity Ratios
Ratio 2022-23 2023-24 Analysis
Current 2.3x 2.5x Improved liquidity
position, indicating
Ratio better short-term
solvency.
Quick 1.8x 2.1x Higher quick ratio
shows stronger cash
Ratio reserves without
depending on
inventory.
b) Profitability Ratios
Ratio 2022-23 2023-24 Analysis
Net Profit 4.2% 5.1% Increased profit
margin reflects
Margin improved cost
management.
Return on 8.5% 9.3% Effective use of
shareholders’ funds to
Equity generate profits.
(ROE)
c) Solvency Ratios
Ratio 2022-23 2023-24 Analysis
Debt to 0.4x 0.3x Reduced reliance on
debt financing,
Equity suggesting financial
stability.
Ratio
Interest 6.5x 7.8x Enhanced ability to
meet interest
Coverage payments, reducing
financial risk.
Ratio
The ratio analysis highlights the company’s
improved profitability, increased liquidity, and
reduced reliance on debt financing.
Nykaa’s stronger financial position and effective
cost management strategies have contributed to
these positive trends.
Cash Flow Statement and
Cash Flow Statement for the Year Ended March 31, 2024
Particulars Amount (₹)
Net Profit before Taxation and Extraordinary ₹180 crore
Items
Add: Adjustments for Non-Cash and Non-
Operating Items
Depreciation on Fixed Assets ₹20 crore
Interest on Borrowings ₹15 crore
Preliminary Expenses Written Off ₹5crore
Goodwill Amortised ₹3 crore
Less: Profit on Sale of Machinery ₹(3) crore
Operating Profit before Working Capital ₹220 crore
Changes
Add: Changes in Working Capital
Increase in Current Liabilities ₹10 crore
Decrease in Current Assets ₹8 crore
Less: Changes in Working Capital
Increase in Current Assets ₹12 crore
Decrease in Current Liabilities ₹6 crore
Cash Generated from Operations ₹230 crore
Less: Income Taxes Paid ₹(10) crore
Net Cash from Operating Activities ₹220 crore
Cash Flow from Investing Activities
Less: Purchase of Fixed Assets ₹(160) crore
Add: Sale of Fixed Assets ₹8 crore
Add: Interest Received ₹2 crore
Net Cash from Investing Activities ₹(150)crore
Cash Flow from Financing Activities
Add: Proceeds from Issue of Shares ₹30 crore
Add: Proceeds from Borrowings ₹40 crore
Less: Repayment of Borrowings ₹(70) crore
Less: Interest Paid ₹(50) crore
Net Cash from Financing Activities ₹(50) crore
Net Increase in Cash and Cash Equivalents ₹20 crore
Cash Flow Statement for 2022-23
Particulars Amount
Net Profit before Taxation and ₹180 crore
Extraordinary Items
Add: Adjustments for Non-Cash and Non-
Operating Items
- Depreciation on Fixed Assets ₹20 crore
- Interest on Borrowings ₹15 crore
- Preliminary Expenses Written Off ₹5 crore
- Goodwill Amortised ₹3 crore
Less: Profit on Sale of Machinery ₹ (3) crore
Operating Profit before Working Capital ₹220 crore
Changes
Add: Changes in Working Capital
- Increase in Current Liabilities ₹10 crore
- Decrease in Current Assets ₹8 crore
Less: Changes in Working Capital
- Increase in Current Assets ₹ (12) crore
- Decrease in Current Liabilities ₹ (6) crore
Cash Generated from Operations ₹220 crore
Less: Income Taxes Paid ₹ (10) crore
Net Cash from Operating Activities ₹220 crore
Cash Flow from Investing Activities
Less: Purchase of Fixed Assets ₹ (160) crore
Add: Sale of Fixed Assets ₹8 crore
Add: Interest Received ₹2 crore
Net Cash from Investing Activities ₹ (150) crore
Cash Flow from Financing Activities
Add : Proceeds from issue of shares ₹35 crores
Add: Proceeds from borrowing ₹50 crore
Less: Repayment from borrowing ₹ (80) crore
Less: Interest Paid ₹ (85) crore
Net Cash from financing Activities ₹ (80) crore
Net increase in cash and cash equivalent ₹35 crore
Cash Flow Analysis
Nykaa's cash flow statement provides insights into its
cash management. Here is a comparative summary of
its cash flow activities for the two years:
Cash Flow 2022-23 2023-24 Analysis
Type
Operating ₹220 crore ₹315 crore Positive growth due
to improved
Cash Flow operational efficiency.
Investing ₹-150 crore ₹-200 crore Increased investment
in technology and
Cash Flow expansion.
Financing ₹-50 crore ₹-80 crore Focus on reducing
debt and financial
Cash Flow obligations.
Nykaa has shown strong operational performance, with increased operating cash
flow driven by higher profitability.
The analysis of Nykaa's financial performance shows strong operational cash
generation with a net cash increase of ₹9.3 million.
The company's healthy profitability is supported by non-cash adjustments such as
depreciation and amortization. Cash flow from financing activities remains positive,
indicating effective financial management. The company has managed its liabilities
well, with proceeds from borrowings being used for growth.
However, further efforts to reduce capital expenditure or optimize investments can
improve future cash positions.
Conclusion and
Recommendations
In conclusion, Nykaa’s financial performance over
the past two years demonstrates effective growth
management, enhanced profitability,
and improved financial stability. The company has
significantly increased its net profit and reduced
liabilities while continuing to invest in key growth
areas.
Recommendations:
- Expand private label offerings to enhance profit
margins.
- Continue technological advancements for better
customer engagement.
- Focus on efficient inventory management to
sustain profitability.
- Explore new markets and diversify product
categories.
- Maintain a low debt-to-equity ratio to ensure
long-term financial stability.
With these strategic moves, Nykaa is well-
positioned to maintain its leadership in the e-
commerce sector and achieve sustainable
growth.
